(FRONTIER FUNDS, INC. LOGO)
SEMI-ANNUAL REPORT
For the Six Months Ended
March 31, 2000
(FRONTIER FUNDS, INC. LOGO)
TO OUR INVESTORS
Dear Shareholders,
Thank you for your investment in Frontier Funds, Inc. Equity Portfolio. I
appreciate the opportunity to serve you.
The investment objective of the Equity Portfolio is capital appreciation. The
current strategy is to purchase common stock in undervalued companies and to
purchase common stock in companies that management believes has potential for
superior earnings growth.
During the six months ended March 31, 2000, the Equity Fund's net asset value
per share increased from $2.79 as of September 30, 1999 to $6.79 as of March 31,
2000. The increase represents a total return of approximately 143.37%. The
results shown below are for a Fund share outstanding during the entire period
indicated, assuming reinvestment of all dividends and capital gains
distributions, and do not include sales charges. Additional information on our
performance appears under "Financial Highlights" in this Report.
TOTAL RETURN
FOR THE SIX FOR THE YEARS ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ---------------------------------------------------
2000 1999 1998 1997 1996
(UNAUDITED) ------ ------ ------ ------
-----------
143.37% 76.58% -63.08% -35.25% -17.99%
I believe that the investment community will continue to recognize these
small companies as a great place for investment opportunities. I will position
your portfolio to take advantage of the investment opportunities that present
themselves.
I invite your comments and suggestions. Please feel free to write or
telephone. Again, thank you for your confidence in Frontier Funds, Inc.
Sincerely,
/s/ James R. Fay
James R. Fay
President
SCHEDULE OF INVESTMENTS
AS OF MARCH 31, 2000 (UNAUDITED)
QUOTED
MARKET
SHARES VALUE
------ -----
COMMON STOCKS -- 109.43%
APPAREL -- 12.71%
100,000 +<F1> Cygne Designs Inc. $ 25,000
20,000 +<F1> Design Inc. 23,125
20,000 +<F1> G-III Apparel Group 92,500
10,000 +<F1> The Leslie Fay Company 57,500
----------
198,125
----------
BIOTECHNOLOGY & PHARMACEUTICALS -- 11.38%
10,000 +<F1> Ambi Inc. 51,875
5,000 +<F1> Energy Biosystems Corp. 51,250
20,000 +<F1> Human Pheromone Sciences Inc. 46,251
4,000 +<F1> Macrochem Corp. 28,000
----------
177,376
----------
EDUCATION TECHNOLOGY -- 6.97%
20,000 +<F1> EGames, Inc. 41,250
20,000 +<F1> Toymax International Inc. 67,500
----------
108,750
----------
HEALTH CARE TECHNOLOGY -- 8.30%
10,000 +<F1> Cell Robotics International Inc. 54,375
40,000 +<F1> Procyte Corp. 75,000
----------
129,375
----------
INSURANCE -- 4.49%
20,000 Reliance Group Holdings 70,000
----------
INTERNET TECHNOLOGY -- 8.55%
4,000 +<F1> Netrix Corp. 80,750
60,000 +<F1> RSI Systems Inc. 52,500
----------
133,250
----------
OFFICE EQUIPMENT -- 2.56%
20,000 +<F1> Gradco Systems Inc. 40,000
----------
RECREATIONAL PRODUCTS -- 1.24%
10,000 +<F1> Aldila Inc. 19,375
----------
RECYCLING MANAGEMENT -- 4.15%
30,000 +<F1> Hi-Rise Recycling Systems Inc. 64,687
----------
SOFTWARE TECHNOLOGY -- 39.18%
40,000 +<F1> Mitek Systems Inc. 447,500
15,000 +<F1> Zitel Corp. 90,469
1,000 +<F1> Zixit Corp. 72,813
----------
610,782
----------
TECHNOLOGY -- 6.23%
7,001 +<F1> Digital Video Systems Inc. 97,135
----------
TOWING & RECOVERY -- 3.67%
15,000 +<F1> Miller Industries 57,187
----------
TOTAL COMMON STOCK
(Cost $1,375,142) 1,706,042
----------
TOTAL INVESTMENTS
(Cost $1,375,142) 109.43% 1,706,042
Liabilities in excess
of Other Assets (9.43%) (146,955)
------- ----------
TOTAL NET ASSETS 100.00% $1,559,087
------- ----------
------- ----------
+<F1> Non-income producing security
The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
ASSETS:
Investments in securities, at value (cost $1,375,142) (Note 2) $1,706,042
Subscriptions receivable 501
Prepaid expenses 29,895
----------
Total Assets 1,736,438
----------
LIABILITIES:
Cash overdraft 110,227
Payables:
Securities purchased 41,681
Fund shares redeemed 7,170
Accrued expenses 18,273
----------
Total Liabilities 177,351
----------
Net Assets $1,559,087
----------
----------
NET ASSETS CONSIST OF:
Additional paid in capital $1,416,310
Accumulated net realized loss from investment
transactions (Note 6) (188,123)
Net unrealized appreciation on investments 330,900
----------
Net Assets $1,559,087
----------
----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,559,087 / 229,570 shares of capital stock
outstanding) (Note 6) $ 6.79
----------
----------
Maximum offering price per share (net asset value
plus sales charge of 8.00%) $ 7.38
----------
----------
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
INVESTMENT INCOME:
Dividends $ 75
--------
EXPENSES:
Management fee 4,096
Administration fee 15,228
Legal fee 10,825
Transfer agent fee 8,776
Custody fee 5,070
Audit fee 6,249
Printing 3,926
Directors' fees and expenses 4,500
Registration fees 3,275
Insurance 750
Other 820
--------
Total expenses 63,515
Less: Waiver of management fee (4,096)
--------
Net expenses 59,419
--------
Net investment loss (59,344)
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS (NOTE 2)
Net realized gain from investment transactions 163,430
Net change in unrealized appreciation of investments 598,466
--------
Net realized and unrealized gain on investments 761,896
--------
Net increase in net assets resulting from operations $702,552
--------
--------
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE
MARCH 31, 2000 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1999
----------- ------------------
Net investment loss $ (59,344) $(108,174)
Net realized gain from
investment transactions 163,430 84,976
Net change in unrealized
appreciation of investments 598,466 216,838
---------- ---------
Net increase in net assets resulting
from operations 702,552 193,640
Net capital share transactions (Note 4) 366,900 40,152
---------- ---------
Net increase in net assets 1,069,452 233,792
NET ASSETS:
Beginning of period 489,635 255,843
---------- ---------
End of period (including accumulated
Undistributed net investment income
of $0, and $0, respectively) $1,559,087 $ 489,635
---------- ---------
---------- ---------
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
FOR THE SIX FOR THE YEARS ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ---------------------------------------------------
2000 1999 1998 1997 1996
(UNAUDITED) ------ ------ ------ ------
-----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 2.79 $ 1.58 $ 4.28 $ 6.61 $ 8.06
------ ------ ------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.32) (0.67) (0.58) (0.59) (0.51)
Net realized and unrealized
gain (loss) on investments 4.32 1.88 (2.12) (1.74) (0.94)
------ ------ ------ ------ ------
Total from investment operations 4.00 1.21 (2.70) (2.33) (1.45)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- -- --
Distribution from realized gains from
security transactions -- -- -- -- --
Distributions in excess of book realized gains -- -- -- -- --
------ ------ ------ ------ ------
Total distributions -- -- -- -- --
------ ------ ------ ------ ------
Net asset value, end of period $ 6.79 $ 2.79 $ 1.58 $ 4.28 $ 6.61
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total return**<F2> 143.37% 76.58% (63.08%) (35.25%) (17.99%)
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in 000's) 1,559 490 256 856 1,445
Ratio of expenses to average net assets 15.40% 28.93% 20.72% 13.29% 8.29%
Ratio of net expenses to average net assets 14.41% 27.93% 19.72% 12.29% 7.29%
Ratio of net investment income (loss)
to average net assets before fee waiver (15.38%) (28.93%) (20.58%) (13.29%) (8.24%)
Ratio of net investment income (loss)
to average net assets (14.39%) (27.93%) (19.58%) (12.29%) (7.26%)
Portfolio turnover rate 38.32% 83.55% 47.78% 74.85% 133.42%
</TABLE>
**<F2> Based on net asset value per share. The Fund's sales charge is not
reflected in total return in this table.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED)
NOTE 1. ORGANIZATION
Frontier Funds, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management company. The Corporation was established under the laws of Maryland
on October 24, 1991. The Corporation permits the Trustees to issue 200,000,000
shares of capital stock in separate series, with each series representing
interests in a separate portfolio of securities and other assets, each with its
own investment objectives and policies. The Equity Fund Portfolio, to which
Frontier's Board of Directors has initially allocated 80,000,000 shares, is the
only current series of the Frontier Funds. The investment objective of the
Equity Fund is to provide capital appreciation on its assets.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements:
Security Valuation - Securities which are traded on any exchange or on
the NASDAQ over-the-counter market are valued at the last quoted sale price. All
other securities for which over-the-counter market quotations are readily
available are valued at their last bid price. When market quotations are not
readily available, when it is determined that the last bid price does not
accurately reflect the current value or when restricted securities are being
valued, such securities are valued as determined in good faith under procedures
established by and under the general supervision of the Fund's directors.
Fixed income securities generally are valued by using market
quotation, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. Short term investments
in fixed income securities with maturities of less than 60 days when acquired,
or which subsequently are within 60 days of maturity, are valued by using the
amortized cost method of valuation, unless the Board of Directors determine that
the amortized cost does not reflect the securities' fair value, in which case
these securities will be valued at their fair value as determined by the Board
of Directors.
Federal Income Taxes - It is the policy of The Fund to comply with
the requirements of The Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its net investment income as
dividends to its shareholders. In addition, The Fund intends to distribute an
amount sufficient to avoid imposition of any excise tax under Section 4982 of
The Internal Revenue Code. Therefore, no provision for Federal income or excise
taxes has been made.
Other - The Fund follows industry practice and records security
transactions on the trade date. The specific identification method is used for
determining gains or losses for financial statement and income tax purposes.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis. Discounts and premiums on securities purchased
are amortized over the life of the respective securities.
Capital Loss Carryforwards - As of September 30, 1999, the Fund has
Federal Income Tax Capital Loss carryforwards of approximately $ 375,636,
expiring in 2006. It is management's intention to make no distribution of any
realized capital gains until the Federal Income Tax capital loss carryforward is
exhausted.
Estimates - 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement with Freedom Investors
Corp. ("the Advisor", with whom certain officers and directors of the Fund are
affiliated). Under the terms of the management agreement, a monthly fee is paid
to the investment advisor based on 1/12th of 1% (1% on an annual basis) of the
average daily net asset value. The Advisor waived the management fee of $4,096
for the six months ended March 31, 2000 and has continued to waive the fee until
further notice to the Board of Directors.
The Fund pays Freedom Investors Corp. (the "Distributor") commissions
on sales of Fund shares. Total commissions paid to the Distributor for the six
months ended March 31, 2000, were approximately $2,966.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of March 31, 2000 there was 80,000,000, $0.01 par value shares of
capital stock authorized for the Equity Portfolio.
Transactions in capital stock were as follows:
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
------------------------ ------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold 85,140 $561,297 39,324 $101,040
Shares issued in
reinvestment of dividends 0 0 0 0
Shares redeemed (30,782) (194,397) (26,107) (60,888)
------- -------- ------- --------
Net increase (decrease) 54,358 $366,900 13,217 $ 40,152
------- -------- ------- --------
NOTE 5. ADMINISTRATION AGREEMENT
The Fund has agreements with American Data Services, Inc. (the
"Administrator") to provide shareholder servicing, fund accounting, and
administrative services to the Fund. For the administrative and fund accounting
services, the Fund pays the Administrator a fee computed daily and payable
monthly, the greater of approximately $2,268 per month, or based upon the total
net assets of the Fund, at the rate of 1/12th of 0.10% on the first $75 million
of the average total monthly assets, 0.05% on the next $100 million of the
average total monthly assets and 0.03% on the average total monthly assets in
excess of $175 million. For the shareholder services, the Fund pays a monthly
fee of approximately $1,448. In addition, the Fund will reimburse the
Administrator its reasonable out-of-pocket expenses.
NOTE 6. INVESTMENT TRANSACTIONS
Purchases and sales, excluding short term securities, for the six
months ended March 31, 2000, aggregated $753,585 and $316,141, respectively for
the Equity Fund.
NOTE 7. ACCUMULATED UNREALIZED APPRECIATION
Aggregate gross unrealized appreciation (depreciation) as of March 31,
2000, based on investment cost ($1,375,142) for Federal Income Tax purposes is
as follows:
Aggregate gross unrealized appreciation $ 577,073
Aggregate gross unrealized depreciation (246,173)
---------
Net unrealized appreciation $ 330,900
---------
---------
NOTE 8. RECLASSIFICATION
In accordance with SOP 93-2, the Fund has recorded a reclassification
in the capital accounts. As of September 30, 1999 the fund recorded permanent
book/tax differences of $(108,174) from undistributed net investment income to
paid in capital. This reclassification has no impact on the net asset value of
the Fund and is designed generally to present undistributed income on a tax
basis which is considered to be more informative to shareholders.
FRONTIER FUNDS, INC.
OFFICERS AND DIRECTORS
James R. Fay President and Director
Amy L. Siesennop Vice President and Director
Jeffrey S. Ackley Director
Kenneth W. Coshun Director
Matthew G. Drew Director
INVESTMENT ADVISOR
FREEDOM INVESTORS CORP.
NATIONAL DISTRIBUTOR
Freedom Investors Corp.
CUSTODIAN,
RETIREMENT PLAN CUSTODIAN
Firstar Bank, N.A.
SHAREHOLDER SERVICES
1-800-231-2901
SECURITIES DEALERS SERVICES
1-800-759-6598
(FRONTIER FUNDS, INC. LOGO)
FRONTIER FUNDS, INC.
P.O.Box 68
101 W. Wisconsin Ave.
Pewaukee, WI 53072-0068
(262) 691-1196
This report is intended solely for use by the shareholders of Frontier
Funds, Inc. If it is provided to any member of the public, it must be
preceded or accompanied by a currently effective prospectus of the Fund.
