(LOGO)
FRONTEGRA FUNDS
SEMI-ANNUAL REPORT
Frontegra Growth Fund
FRONTEGRA ASSET MANAGEMENT, INC.
------------
December 31, 1999
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FRONTEGRA FUNDS
TABLE OF CONTENTS
Shareholder Letter 1
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Investment Highlights 5
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Schedule of Investments 6
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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:
The Frontegra Growth Fund finished the year with a strong fourth quarter gain of
20.9%, thereby contributing to a total return in 1999 of 25.0%.
1/1/99-12/31/99
---------------
Frontegra Growth Fund 25.0%
Russell 1000 Growth Index 33.2%
S&P 500 Stock Index 21.0%
S&P 400 Mid-Cap Index 14.7%
S&P 600 Small-Cap Index 12.4%
The investment environment in 1999 was again one of "haves" versus "have-nots."
The technology sector was the big winner, posting a gain of over 75% while the
non-technology companies were up only 5%. Very large, short-term increases in
stock prices, such as the move in the technology stocks during 1998 and 1999,
are usually accompanied by an increase in risk - generally in the form of higher
P/E multiples. Due to the increased risk and our decision not to invest in the
new and highly unproven business models of most internet companies, the Fund was
underweighted to technology for most of 1999 and thus, modestly underperformed
the technology heavy large-cap growth indices. Our average exposure to
technology was 23% during 1999 versus 33% for the Russell 1000 Growth Index and
22% for the S&P 500 Stock Index. However, while we were underweighted to the
sectors, our stock selection was very good with our technology holdings up over
80% during the year.
Our strategy for achieving long-term performance is to focus on a diversified
portfolio of growth companies with sustainable competitive advantages. During
periods when a very select group of companies drives the overall return of an
index, it is not unexpected that your Fund may trail that index for a short
period of time. Given our more diversified approach and the resulting lower
risk level of the portfolio, we are very happy to report a return of 25% for the
year ended December 31, 1999.
YOUR TOP PERFORMING STOCKS DURING 1999
With the strength in the technology sector during 1999 it is not surprising that
three of our four best performing holdings were from this area. In addition,
while none of these holdings would be considered "dot.com" companies, each did
benefit from the growth in the internet infrastructure and content spending.
LIBERTY MEDIA (LMG.A) holds ownership interests in cable, broadcast-television,
and satellite networks such as Discovery Channel, BET Cable Network, Court TV,
TV Guide Channel and QVC. Liberty Media has been our favorite media company for
the past five years. The company continues to benefit from the increasing
demand for entertainment content from an increasing number of vendors such as
cable, satellite and internet companies. Although the stock increased by over
140% during 1999, we still believe it is the most attractive company in the
media area and we have maintained our position.
EMC (EMC) develops and services computer storage and retrieval products that are
the primary storage management devices for corporate networks and emerging
internet-based services. EMC, which benefited from the 100% annual increase in
the demand for storage and from their very strong competitive position,
continues to see 30% earnings growth potential over the next few years. At the
time the stock was purchased, we did not believe the market was pricing the
stock consistent with its growth potential and competitive position. Therefore,
we were able to buy EMC at a very attractive price and the stock responded with
a gain of over 150% during 1999.
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FRONTEGRA FUNDS
NORTEL NETWORKS (NT) is one of the world's leading suppliers of network and
telephone switching equipment that is the backbone enabling the booming growth
in internet and cellular services. Nortel Networks was our largest active
position in the technology area during 1999 and that investment decision proved
very beneficial as Nortel increased by over 300%. Although we remain very
optimistic about Nortel's competitive positioning in the networking market, the
stock is approaching our price target and the position size was trimmed near
year-end.
ORACLE (ORCL) provides database-management and network products that are used to
store information critical to corporate information systems and more recently,
to manage web based services. Oracle was the first of the enterprise software
companies to provide web-enabled products and the company benefited
significantly from these new products as well as from the boom in demand for
database products from internet companies. After a strong gain of over 290%
during 1999, Oracle reached our target price and the position was reduced
significantly.
OUR BEST SELL DECISION DURING 1999 - XEROX (XRX)
During the first few days of June, Northern Capital received a call from our
Xerox salesman inquiring as to whether we were planning on buying a new copier
anytime during 1999. He indicated that if we would accelerate that purchase
decision we could get a very attractive price. Apparently, sales and orders at
Xerox were very weak and they were offering attractive purchase terms in order
to make their sales target during the quarter. We bought the copier and after
further investigating into the company's prospects versus market expectations,
we sold the stock at $56 per share. In July, the company lowered its revenue
growth guidance for the second half of the year. In October, the company
announced the likelihood for lower earnings in 1999 and further lowered their
guidance for earnings in 2000. Since June the stock has declined by over 60% to
$22. Our decision to sell the stock based on the company's decline in sales and
reduced backlog resulted in significant savings to the portfolio. By the way,
the new digital copier is wonderful!
IT'S ALL RELATIVE!
During the last few years we have discussed how expensive some large-cap
technology stocks were trading versus their underlying earnings prospects. One
of these companies, Microsoft (MSFT), maintained the highest P/E ratio of any
large-cap company for most of the 1990s. In November, we increased our holdings
in Microsoft such that is was the largest position in the Fund. At that time,
Microsoft was the most attractive large-cap technology company in our universe.
- Microsoft was trading at a P/E ratio of 45 times, which was a
significant discount to the other large-cap technology leaders:
Yahoo! 300x QUALCOMM 80x
America Online 225x Sun Microsystems 65x
Cisco Systems 85x EMC 60x
- The relative P/E multiple at 1.5 times the overall market was very
attractive versus its historical average of over 3 times.
- Earnings growth, which has been over 20% for the past ten years, was
expected to remain robust as Windows 2000 is expected to be available
in January of 2000.
- The stock underperformed the technology sector by over 25% during the
first three quarters of 1999.
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FRONTEGRA FUNDS
In summary, Microsoft was a very compelling purchase candidate relative to its
peer group and versus its own history. We were quite fortunate with the timing
of our purchase decision as the stock increased by over 30% during the month of
December, closing the relative valuation gap that attracted us to the stock.
THE FUND'S TEN LARGEST HOLDINGS ON DECEMBER 31, 1999
NAME TICKER POSITION SIZE
------------------------------------------------------------
Microsoft MSFT 5.9%
Dayton Hudson DH 3.9%
Intel INTC 3.9%
Dell Computer DELL 3.9%
General Electric GE 3.8%
Seagate Technology SEG 3.5%
Bristol-Myers Squibb BMY 3.4%
First Data FDC 3.1%
Ralston Purina RAL 2.9%
Pfizer PFE 2.9%
LARGEST SECTOR EXPOSURES
Technology 18.1%
Healthcare 15.7%
Networking & Telecommunications 11.8%
Information Software & Services 11.0%
Consumer Staples 10.7%
Retail 9.5%
Media & Leisure 5.8%
THE OVERALL MARKET DURING 1999
The increase in the S&P 500 Stock Index during 1999 marked the fifth consecutive
year in which stocks gained in excess of 20%. There has been a distinct pattern
to the gain in equities during 1998 and 1999 with stocks up nicely from the
beginning of the year through June, a rather sharp correction occurring in the
fall, and then a very strong fourth quarter rally. Although 1999 seemed
fundamentally similar to 1998, the underlying data does not provide very
compelling support for that conclusion. Interest rates, as defined by the five-
year treasury yield, declined by over 110 basis points during 1998 with the
majority of the decline occurring during the fourth quarter - concurrent with
the large gain in the stock market. During 1999 however, interest rates
increased by over 170 basis points or over 35%, which is one the largest twelve-
month increases in the last twenty years.
The gains in the stock market against this negative interest rate outlook
resulted in a disconnect between stock and bond prices and may signal the
increased likelihood for a modest correction in stock prices. If a pullback
occurs, we anticipate it to be relatively minor and narrowly focused with the
majority of downside risk being in the highly priced technology areas. Our
portfolios are positioned to benefit from a change in investor sentiment and we
would look to further benefit from any decline by making opportunistic purchases
of high-quality companies at lower prices.
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FRONTEGRA FUNDS
SUMMARY
In September of 1999, Northern Capital celebrated its 20th anniversary of
providing investment advisory services. Although the Fund has a relatively short
history under Northern Capital, our 20th anniversary and the end of the century
warrant a reflective pause in which we would like to thank you for investing
with us. As we move into the new century, we want to reaffirm our dedication to
providing you with the best possible investment services and our goal of
achieving long-term performance that exceeds the returns of the overall market.
Please visit the Frontegra website at www.frontegra.com for daily prices and
portfolio data.<F1>
We thank you for your continued support and we encourage you to e-mail or write
with comments or questions about your Fund.
Sincerely,
/s/Daniel T. Murphy, CFA /s/Brian A. Hellmer, CFA /s/Stephen L. Hawk, Ph.D.
Daniel T. Murphy, CFA Brian A. Hellmer, CFA Stephen L. Hawk, Ph.D.
President and Chief Senior Vice President and Chairman and
Investment Officer Director of Research Chief Executive Officer
Northern Capital Northern Capital Northern Capital
Management Management Management
[email protected] [email protected] [email protected]
<F1> The Fund is an actively managed portfolio. The companies discussed in this
letter may or may not be currently held by the Fund.
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FRONTEGRA FUNDS
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment
Frontegra S&P 500/R Russell 1000
Growth Stock Growth
Fund Index Index
--------- ----------- ------------
3/18/98 $100,000 $100,000 $100,000
6/30/98 102,000 104,875 106,362
9/30/98 85,800 94,443 96,700
12/31/98 108,939 114,556 122,555
3/31/99 113,144 120,264 130,347
6/30/99 119,452 128,742 135,363
9/30/99 112,643 120,710 130,400
12/31/99 136,161 138,670 163,176
- -----------------------------
Portfolio Total Return
FOR THE PERIOD ENDED 12/31/99
- -----------------------------
ONE YEAR 24.99%
AVERAGE ANNUAL
SINCE COMMENCEMENT 18.83%
- -----------------------------
This chart assumes an initial gross investment of $100,000 made on 3/18/98
(commencement of operations). 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 S&P 500 Stock Index includes 500 common stocks, most of which are listed on
The New York Stock Exchange. The Index is a market capitalization-weighted index
representing approximately two-thirds of the total market value of all domestic
common stocks.
The Russell 1000 Growth Index is comprised of those securities in the Russell
1000 Index which have higher price-to-book ratios and higher forecasted growth
values. The Russell 1000 Index is comprised of the 1000 largest securities in
the Russell 3000 Index. The Russell 3000 Index is comprised of the 3000 largest
U.S. companies based on market capitalization.
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FRONTEGRA FUNDS
Frontegra Growth Fund
SCHEDULE OF INVESTMENTS
December 31, 1999 (Unaudited)
Number of Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS 100.3%
Building Products 0.9%
3,900 Masco Corp. $98,963
-----------
Cosmetics & Toiletries 4.4%
2,200 Colgate-Palmolive Co. 143,000
2,900 Kimberly-Clark Corp. 189,187
1,475 Procter & Gamble Co. (The) 161,605
-----------
493,792
-----------
Electronic Components 2.2%
1,900 Applied Materials, Inc.<F1> 240,706
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Financial 4.7%
1,325 Chase Manhattan Corp. (The) 102,936
4,289 Citigroup Inc. 238,308
6,975 MBNA Corp. 190,069
-----------
531,313
-----------
Food & Beverages 3.4%
8,400 Kroger Co. (The)<F1> 158,550
6,350 PepsiCo, Inc. 223,837
-----------
382,387
-----------
Healthcare 15.8%
7,050 Abbott Laboratories 256,003
2,850 Baxter International Inc. 179,016
6,000 Bristol-Myers Squibb Co. 385,125
4,785 Eli Lilly and Co. 318,203
4,550 Merck & Co. 305,134
10,175 Pfizer Inc. 330,052
-----------
1,773,533
-----------
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
SCHEDULE OF INVESTMENTS (continued)
December 31, 1999 (Unaudited)
Number of Shares Value
- --------------------------------------------------------------------------------
Information Services & Software 25.0%
3,075 Cisco Systems, Inc.<F1> $ 329,409
8,650 Dell Computer Corp.<F1> 441,150
1,575 EMC Corp.<F1> 172,069
7,005 First Data Corp. 345,434
5,750 Microsoft Corp.<F1> 671,312
2,099 Oracle Corp.<F1> 235,219
8,600 Seagate Technology, Inc.<F1> 400,438
2,850 Sun Microsystems, Inc.<F1> 220,697
-----------
2,815,728
-----------
Leisure & Entertainment 6.0%
4,425 AT&T Corp. - Liberty Media Group<F1> 251,119
2,825 MediaOne Group, Inc.<F1> 216,995
2,800 Time Warner, Inc. 202,825
-----------
670,939
-----------
Multi-Sector Companies 12.0%
2,800 General Electric Co. 433,300
2,975 Honeywell International Inc. 171,620
12,175 Ralston-Ralston Purina Group 339,378
4,775 Tyco International Ltd. 185,628
7,300 Williams Companies, Inc. (The) 223,106
-----------
1,353,032
-----------
Oil & Gas 1.9%
4,400 Phillips Petroleum Co. 206,800
-----------
Retailing & Restaurants 11.7%
8,325 CVS Corp. 332,480
8,100 Cendant Corp.<F1> 215,156
1,875 Costco Companies, Inc.<F1> 171,094
6,075 Dayton Hudson Corp. 446,133
2,213 Home Depot, Inc. (The) 151,695
-----------
1,316,558
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See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
SCHEDULE OF INVESTMENTS (continued)
December 31, 1999 (Unaudited)
Number of Shares Value
- --------------------------------------------------------------------------------
Technology 6.2%
5,330 Intel Corp. $438,726
1,750 Lucent Technologies Inc. 130,922
1,350 Texas Instruments Inc. 130,781
-----------
700,429
-----------
Telecommunications 6.1%
2,332 AT&T Corp. 118,349
2,350 CenturyTel, Inc. 111,331
4,200 MCI WorldCom, Inc.<F1> 222,862
2,260 Nortel Networks Corp. 228,260
-----------
680,802
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TOTAL COMMON STOCKS
(cost $9,214,783) 11,264,982
-----------
Principal Amount
- ----------------
SHORT-TERM INVESTMENT 0.4%
Variable Rate Demand Note 0.4%
$39,155 Pitney Bowes Credit Corp. 39,155
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $39,155) 39,155
-----------
TOTAL INVESTMENTS 100.7%
(cost $9,253,938) 11,304,137
Liabilities, less Other Assets (0.7)% (75,405)
-----------
NET ASSETS 100.0% $11,228,732
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<F1> Non-income producing
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
ASSETS:
Investments at value (cost $9,253,938) $11,304,137
Cash 128
Receivable for investments sold 472,443
Interest and dividends receivable 6,814
Receivable from adviser 10,800
Other assets 1,779
-----------
Total assets 11,796,101
-----------
LIABILITIES:
Payable for investments purchased 373,990
Payable for Fund shares redeemed 176,067
Accrued investment advisory fee 7,318
Accrued expenses 9,994
-----------
Total liabilities 567,369
-----------
NET ASSETS $11,228,732
===========
NET ASSETS CONSIST OF:
Paid in capital $9,158,292
Accumulated undistributed net realized gain 20,241
Net unrealized appreciation on investments 2,050,199
-----------
NET ASSETS $11,228,732
===========
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 100,000,000
Issued and outstanding 829,567
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $13.54
======
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
STATEMENT OF OPERATIONS
SIX MONTHS
ENDED
DECEMBER 31,
1999
(UNAUDITED)
------------
INVESTMENT INCOME:
Dividends (net of $138 foreign
withholding taxes) $33,811
Interest 2,964
-----------
36,775
-----------
EXPENSES:
Investment advisory fees 34,278
Fund administration and accounting fees 27,095
Audit fees 6,924
Legal fees 6,855
Shareholder servicing fees 6,621
Custody fees 6,479
Reports to shareholders 3,776
Federal and state registration fees 3,653
Directors' fees and related expenses 905
Other 115
-----------
Total expenses before waiver and reimbursement 96,701
Waiver and reimbursement of expenses by adviser (62,414)
-----------
Net expenses 34,287
-----------
NET INVESTMENT INCOME 2,488
-----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 54,170
Change in net unrealized appreciation
on investments 1,473,874
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 1,528,044
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,530,532
===========
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
STATEMENTS OF CHANGES IN NET ASSETS
SIX
MONTHS EIGHT
ENDED MONTHS PERIOD
DECEMBER 31, ENDED ENDED
1999 JUNE 30, OCTOBER 31,
(UNAUDITED) 1999 1998<F1>
----------- ----------- -----------
OPERATIONS:
Net investment income $2,488 $3,778 $2,486
Net realized gain (loss)
on investments 54,170 104,466 (95,500)
Change in net unrealized appreciation
(depreciation) on investments 1,473,874 659,763 (83,438)
----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations 1,530,532 768,007 (176,452)
----------- ----------- -----------
DISTRIBUTIONS PAID FROM:
Net investment income (6,376) (3,813) -
Net realized gain on investments (42,785) - -
----------- ----------- -----------
Net decrease in net assets resulting
from distributions paid (49,161) (3,813) -
----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 5,342,445 1,563,725 2,533,745
Shares issued to holders in
reinvestment of distributions 49,091 3,813 -
Shares redeemed (263,414) (55,261) (14,525)
----------- ----------- -----------
Net increase in net assets resulting
from capital share transactions 5,128,122 1,512,277 2,519,220
----------- ----------- -----------
TOTAL INCREASE
IN NET ASSETS 6,609,493 2,276,471 2,342,768
----------- ----------- -----------
NET ASSETS:
Beginning of period 4,619,239 2,342,768 -
----------- ----------- -----------
End of period
(includes accumulated
undistributed net investment
income of $0, $3,778 and
$3,813, respectively) $11,228,732 $4,619,239 $2,342,768
=========== =========== ===========
<F1> Commenced operations on March 18, 1998.
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
FINANCIAL HIGHLIGHTS
SIX
MONTHS EIGHT
ENDED MONTHS PERIOD
DECEMBER 31, ENDED ENDED
1999 JUNE 30, OCTOBER 31,
(UNAUDITED) 1999 1998<F1>
----------- ----------- -----------
NET ASSET VALUE,
BEGINNING OF PERIOD $11.93 $9.29 $10.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.00)<F5> 0.01 0.01
Net realized and unrealized gain
(loss) on investments 1.67 2.64 (0.72)
--------- --------- ---------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.67 2.65 (0.71)
--------- --------- ---------
LESS DISTRIBUTIONS PAID:
From net investment income (0.01) (0.01) -
From net realized gain
on investments (0.05) - -
--------- --------- ---------
TOTAL DISTRIBUTIONS PAID (0.06) (0.01) -
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $13.54 $11.93 $9.29
========= ========= =========
TOTAL RETURN<F2> 13.99% 28.58% (7.10)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $11,229 $4,619 $2,343
Ratio of expenses to average
net assets<F3><F4> 0.80% 0.80% 0.80%
Ratio of net investment income
to average net assets<F3><F4> 0.06% 0.16% 0.28%
Portfolio turnover rate<F2> 112% 106% 67%
<F1> Commenced operations on March 18, 1998.
<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 2.24%, 4.52% and 9.23%, and the ratio of net investment
income to average net assets would have been (1.38)%, (3.56)% and (8.15)%
for the periods ended December 31, 1999, June 30, 1999 and October 31,
1998, respectively.
<F4> Annualized.
<F5> Less than one cent per share.
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Growth Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 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 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 Growth Fund (the "Fund"), the Frontegra Total
Return Bond Fund and the Frontegra Opportunity Fund. The Fund is sub-
advised by Northern Capital Management, Inc. The Fund commenced operations
on March 18, 1998.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
(a) Investment Valuation
Securities (other than short-term instruments) for which market
quotations are readily available are valued at the last trade price on
the national securities exchange on which such securities are
primarily traded. Securities for which there were no transactions on a
given day or securities not listed on a national securities exchange
are valued at the most recent bid price. Securities maturing within 60
days or less when purchased are valued by the amortized cost method.
Any securities for which market quotations are not readily available
are valued at their fair value as determined in good faith by Northern
Capital Management, Inc. pursuant to guidelines established by the
Board of Directors.
(b) Federal Income Taxes
No federal income tax provision has been made since the Fund intends
to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all
investment company net taxable income and net capital gains to
shareholders in a manner which results in no tax cost to the Fund.
(c) Distributions to Shareholders
Dividends from net investment income and distributions of net realized
gains, if any, will be declared and paid at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
The character of distributions made during the period from net
investment income or net realized gains may differ from the
characterization for federal income tax 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.
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FRONTEGRA FUNDS
Frontegra Growth Fund
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 (Unaudited)
(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 Frontegra Asset Management, Inc. (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 0.80% of the Fund's average daily net assets. Pursuant to an
expense cap agreement dated February 26, 1999, as amended August 2 and
December 31, 1999, the Adviser has agreed to waive its management fee
and/or reimburse the Fund's operating expenses (exclusive of brokerage,
interest, taxes and extraordinary expenses) to ensure that the Fund's
operating expenses do not exceed 0.80% of the Fund's average daily net
assets. The term of this expense cap agreement is twelve months.
(4) CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
SIX MONTHS EIGHT MONTHS
ENDED ENDED
DECEMBER 31, 1999 JUNE 30, 1999
----------------- -----------------
Shares sold 458,782 139,727
Shares issued to holders in
reinvestment of distributions 3,634 351
Shares redeemed (20,117) (5,018)
---------- ----------
Net increase in shares outstanding 442,299 135,060
========== ==========
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FRONTEGRA FUNDS
Frontegra Growth Fund
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 (Unaudited)
(5) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the six months ended December 31, 1999, are
summarized below:
Purchases $12,751,994
Sales $7,604,946
There were no purchases or sales of U.S. government securities.
At December 31, 1999, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $9,434,229,
were as follows:
Appreciation $2,262,206
Depreciation (392,298)
----------
Net appreciation on investments $1,869,908
==========
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FRONTEGRA FUNDS, INC.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701, Milwaukee, Wisconsin 53201-0701
FG-408-0100
