UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07685
Frontegra Funds, Inc.
(Exact name of registrant as specified in charter)
400 Skokie Blvd.
Suite 500
Northbrook, Illinois 60062
(Address of principal executive offices) (Zip code)
William D. Forsyth III
400 Skokie Blvd., Suite 500
Northbrook, Illinois 60062
(Name and address of agent for service)
(847) 509-9860
Registrant's telephone number, including area code
Date of fiscal year end: June 30, 2007
Date of reporting period: June 30, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------
(FRONTEGRA FUNDS LOGO)
ANNUAL REPORT
Frontegra Total Return Bond Fund
Frontegra Investment Grade Bond Fund
Frontegra IronBridge Small Cap Fund
Frontegra IronBridge SMID Fund
Frontegra New Star International Equity Fund
Frontegra Netols Small Cap Value Fund
FRONTEGRA ASSET MANAGEMENT, INC.
June 30, 2007
TABLE OF CONTENTS
SHAREHOLDER LETTER 1
EXPENSE EXAMPLE 2
ALLOCATION OF PORTFOLIO HOLDINGS 5
FRONTEGRA TOTAL RETURN BOND FUND
FRONTEGRA INVESTMENT GRADE BOND FUND
Report from Reams Asset Management Company, LLC 8
Investment Highlights 11
Schedule of Investments 12
Statement of Assets and Liabilities 25
Statement of Operations 26
Statements of Changes in Net Assets 27
Financial Highlights 28
Investment Highlights 29
Schedule of Investments 30
Statement of Assets and Liabilities 41
Statement of Operations 42
Statements of Changes in Net Assets 43
Financial Highlights 44
FRONTEGRA IRONBRIDGE SMALL CAP FUND
FRONTEGRA IRONBRIDGE SMID FUND
Report from IronBridge Capital Management, L.P. 46
Investment Highlights 48
Schedule of Investments 49
Statement of Assets and Liabilities 56
Statement of Operations 57
Statements of Changes in Net Assets 58
Financial Highlights 59
Investment Highlights 60
Schedule of Investments 61
Statement of Assets and Liabilities 67
Statement of Operations 68
Statements of Changes in Net Assets 69
Financial Highlights 70
FRONTEGRA NEW STAR INTERNATIONAL EQUITY FUND
Report from New Star Institutional Managers Limited 72
Investment Highlights 74
Schedule of Investments 75
Portfolio Diversification 80
Statement of Assets and Liabilities 81
Statement of Operations 82
Statements of Changes in Net Assets 83
Financial Highlights 84
FRONTEGRA NETOLS SMALL CAP VALUE FUND
Report from Netols Asset Management, Inc. 86
Investment Highlights 87
Schedule of Investments 88
Statement of Assets and Liabilities 93
Statement of Operations 94
Statements of Changes in Net Assets 95
Financial Highlights 96
NOTES TO FINANCIAL STATEMENTS 97
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 109
ADDITIONAL INFORMATION 110
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors unless
accompanied or preceded by an effective Prospectus for the applicable Fund. The
Prospectus may be obtained by calling 1-888-825-2100. Each Prospectus includes
more complete information about management fees and expenses, investment
objectives, risks and operating policies of the applicable Fund. Please read the
Prospectus carefully.
DEAR FELLOW SHAREHOLDERS:
We are pleased to report on the progress of the Frontegra Funds over the past
twelve months. This has been a particularly strong period for equity markets.
The S&P 500 Index was up 20.59% for the twelve-month period ended June 30, 2007.
Small capitalization stocks were not far behind, with the Russell 2000 Index up
16.43% for the period. Foreign markets continued their recent gains. The MSCI-
EAFE Index returned 27.71%. The U.S. bond market, as measured by the Lehman
Brothers Aggregate Bond Index, was up 6.12% for the twelve months ended June 30,
2007.
FUND RESULTS
The Total Return Bond Fund and the Investment Grade Bond Fund, both managed by
Reams Asset Management, provided returns in excess of their benchmark (the
Lehman Brothers Aggregate Bond Index) for the twelve-month period. The Total
Return Bond Fund returned 7.52%, net of fees, while the Investment Grade Bond
Fund returned 6.26%, net of fees.
The Frontegra IronBridge Small Cap Fund, managed by IronBridge Capital
Management, returned 22.11%, net of fees, versus the 16.43% return for the
benchmark Russell 2000 Index. The IronBridge SMID Fund returned 22.25%, net of
fees, versus the benchmark Russell 2500 Index return of 18.74%.
The Frontegra New Star International Equity Fund, managed by London-based New
Star Asset Management, returned 27.12%, net of fees, versus the benchmark return
of 27.71% for the MSCI EAFE Index.
The Frontegra Netols Small Cap Value Fund, managed by Netols Asset Management,
returned 25.81%, net of fees, versus the benchmark Russell 2000 Value Index
return of 16.05%.
OUTLOOK
At present, core inflation in the U.S. appears to be stable, and the Federal
Reserve seems committed to maintaining this. Global economic activity remains
robust. However, the slowdown in the U.S. housing sector, and continued
difficulties in the sub-prime mortgage market, are two prominent areas of
concern -- and risk -- for the capital markets over the next twelve months.
We will continue to oversee the investment management of the Frontegra Funds
with the care and diligence that have served our shareholders well in the past.
As always, we appreciate your investment and continued confidence in the
Frontegra Funds.
Sincerely,
/s/Thomas J. Holmberg /s/William D. Forsyth
Thomas J. Holmberg, CFA William D. Forsyth, CFA
Frontegra Asset Management, Inc. Frontegra Asset Management, Inc.
Frontegra Funds
EXPENSE EXAMPLE
June 30, 2007
As a shareholder of a mutual fund, you incur two types of costs: (1) transaction
costs, including redemption fees, and (2) ongoing costs, including management
fees and other fund expenses. Although the Funds charge no sales loads, you
will be assessed fees for outgoing wire transfers, returned checks and stop
payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC,
the Funds' transfer agent. If you request that a redemption be made by wire
transfer, currently the Funds' transfer agent charges a $15.00 fee. A
redemption fee of 2.00% of the then current value of the shares redeemed may be
imposed on certain redemptions of shares made within 30 days of purchase for the
Frontegra New Star International Equity Fund.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at the beginning of the period and held for the entire period
(1/1/07 _ 6/30/07).
ACTUAL EXPENSES
The first line of the tables on the following pages provides information about
actual account values and actual expenses. The Example includes management fees,
registration fees, fee waivers/reimbursements and other expenses. However, the
Example does not include portfolio trading commissions and related expenses and
other extraordinary expenses as determined under generally accepted accounting
principles. You may use the information in this line, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period'' to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the tables provides information about hypothetical account
values and hypothetical expenses based on the Funds' actual expense ratios and
an assumed rate of return of 5% per year before expenses, which is not the
Funds' actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Funds and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of the
other funds. Please note that the expenses shown in the tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs could have been higher.
FRONTEGRA TOTAL RETURN BOND FUND
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2007 -
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*<F1>
--------------- ------------- ------------------
Actual $1,000.00 $1,009.90 $1.00
Hypothetical (5% return
before expenses) $1,000.00 $1,023.80 $1.00
*<F1> Expenses are equal to the Fund's annualized expense ratio of 0.20%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
FRONTEGRA INVESTMENT GRADE BOND FUND
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2007 -
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*<F2>
--------------- ------------- ------------------
Actual $1,000.00 $1,009.70 $1.00
Hypothetical (5% return
before expenses) $1,000.00 $1,023.80 $1.00
*<F2> Expenses are equal to the Fund's annualized expense ratio of 0.20%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
FRONTEGRA IRONBRIDGE SMALL CAP FUND
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2007 -
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*<F3>
--------------- ------------- ------------------
Actual $1,000.00 $1,123.10 $5.79
Hypothetical (5% return
before expenses) $1,000.00 $1,019.34 $5.51
*<F3> Expenses are equal to the Fund's annualized expense ratio of 1.10%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
FRONTEGRA IRONBRIDGE SMID FUND
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2007 -
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*<F4>
--------------- ------------- ------------------
Actual $1,000.00 $1,142.90 $5.05
Hypothetical (5% return
before expenses) $1,000.00 $1,020.08 $4.76
*<F4> Expenses are equal to the Fund's annualized expense ratio of 0.95%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
FRONTEGRA NEW STAR INTERNATIONAL EQUITY FUND
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2007 -
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*<F5>
--------------- ------------- ------------------
Actual $1,000.00 $1,133.70 $3.97
Hypothetical (5% return
before expenses) $1,000.00 $1,021.08 $3.76
*<F5> Expenses are equal to the Fund's annualized expense ratio of 0.75%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
FRONTEGRA NETOLS SMALL CAP VALUE FUND
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2007 -
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*<F6>
--------------- ------------- ------------------
Actual $1,000.00 $1,122.90 $5.79
Hypothetical (5% return
before expenses) $1,000.00 $1,019.34 $5.51
*<F6> Expenses are equal to the Fund's annualized expense ratio of 1.10%,
multiplied by the average account value over the period, multiplied by
181/365 to reflect the one-half year period.
Frontegra Funds
ALLOCATION OF PORTFOLIO HOLDINGS
June 30, 2007
FRONTEGRA TOTAL RETURN BOND FUND*<F7>
Mortgage-Backed Securities 65.9%
Short-Term Investments 17.1%
Corporate Bonds 11.0%
U.S. Treasury Obligations 16.8%
Asset-Backed Securities 7.9%
U.S. Government Agency Issues 13.4%
Supranational Issue 0.3%
Supranational Obligations 5.6%
FRONTEGRA INVESTMENT GRADE BOND FUND*<F7>
Mortgage-Backed Securities 76.4%
Short-Term Investments 14.5%
U.S. Treasury Obligations 17.0%
Corporate Bonds 6.2%
Asset-Backed Securities 11.9%
U.S. Government Agency Issues 15.7%
Supranational Issue 0.3%
*<F7> Percentages shown are based on the Fund's total net assets.
FRONTEGRA IRONBRIDGE SMALL CAP FUND*<F8>
Common Stocks 97.4%
Short-Term Investments 3.0%
FRONTEGRA IRONBRIDGE SMID FUND*<F8>
Common Stocks 95.6%
Short-Term Investments 4.5%
FRONTEGRA NEW STAR
INTERNATIONAL EQUITY FUND*<F8>
Common Stocks 97.9%
Short-Term Investments 0.2%
Other Assets 1.9%
FRONTEGRA NETOLS
SMALL CAP VALUE FUND*<F8>
Common Stocks 99.5%
Short-Term Investments 0.2%
Other Assets 0.3%
*<F8> Percentages shown are based on the Fund's total net assets.
FRONTEGRA
TOTAL RETURN BOND FUND
FRONTEGRA
INVESTMENT GRADE
BOND FUND
REPORT FROM REAMS ASSET
MANAGEMENT COMPANY, LLC:
Dear Shareholders:
The Frontegra Total Return Bond Fund strives to achieve a high level of total
return consistent with the preservation of capital by investing in a diversified
portfolio of fixed income securities of varying maturities. This objective is
relative to and measured against the Lehman Brothers Aggregate Bond Index.
The Frontegra Investment Grade Bond Fund strives to achieve a high level of
total return consistent with the preservation of capital by investing in a
diversified portfolio of investment grade bonds of varying maturities. This
objective is relative to and measured against the Lehman Brothers Aggregate Bond
Index.
PERFORMANCE REVIEW
For the 12 month fiscal year ended 6/30/07, the Frontegra Total Return Bond Fund
had a net return of 7.52% compared to a return of 6.12% for the Lehman Brothers
Aggregate Bond Index. The difference in performance was 1.40%. Macro factors
had a negative impact for the period, with duration strategy subtracting 28
basis points as the portfolio was lengthened in 2007 as interest rates continued
to rise. Yield curve strategy subtracted 1 basis point. Sector decisions added
39 basis points and security selection added 157 basis points. Within these
categories, the high yield sector was the biggest contribution, adding 173 basis
points, of which 99 basis points was the recovery of WorldCom class action
proceeds. Mortgage holdings added 29 basis points, non-Treasury government
holdings added 4 basis points, and TIPS added 2 basis points. The
underweighting of investment grade credit subtracted 10 basis points and
nondollar holdings subtracted 2 basis points. Fees reduced net returns by 20
basis points.
For the 12 month fiscal year ended 6/30/07, the Frontegra Investment Grade Bond
Fund had a net return of 6.26% compared to a return of 6.12% for the Lehman
Brothers Aggregate Bond Index. The difference in performance was 0.14%. Macro
factors had a negative impact for the period, with duration strategy subtracting
12 basis points as the portfolio was lengthened in 2007 as interest rates
continued to rise. Yield curve strategy subtracted 1 basis point. Sector
decisions added 23 basis points and security selection added 35 basis points.
Within these categories, the mortgage sector added 43 basis points due to sector
overweighting and good selection, non-Treasury government holdings added 3 basis
points, and TIPS added 1 basis point. Credit holdings added 11 basis points,
with a 15 basis point WorldCom recovery offsetting a negative impact of 4 basis
points from sector underweighting. Fees reduced net returns by 20 basis points.
FIXED INCOME OUTLOOK
While interest rates ended the fiscal year close to June 2006 levels, most rates
traded considerably lower during the year, with 10-year Treasury yields dropping
as low as 4.45% in November 2006 before ending the fiscal year at 5.10%. As a
result, while bond market returns were fairly coupon-like, bonds experienced
considerable volatility during the year. Despite housing-related weakness and
very weak GDP growth early in the year, growth prospects for the U.S. have
recently improved, while core inflation remains relatively stable.
_ Despite very weak 0.7% growth in first quarter U.S. GDP due to
manufacturing and housing retrenchment, forward growth prospects have
improved as manufacturing and trade have rebounded while housing appears
to be bottoming. Strong global economic activity has also been a
positive factor. We expect GDP growth of about 2.5% in the second
quarter and into the second half of the year.
_ U.S. consumption appears to be weakening from its previously above-trend
growth rate, but the underlying employment, wage, and income trends
remain reasonably strong. Leading indicators remain in a prolonged
sideways pattern.
_ Housing will continue to be a major negative factor in the second
quarter, but we expect the decline to flatten out in the second half
based on current statistics on permits, starts, and sales.
_ Food and energy prices have recently lifted the inflation numbers, but
core price inflation, which is more important to monetary policy,
remains in our expected range of 2.0-2.5%.
_ We expect the Fed funds rate to remain at 5.25% for the foreseeable
future.
_ With rates along the entire U.S. Treasury yield curve holding near 5.0%
after rising in May and early June, we think that inflation-adjusted
yields across the curve are reasonably attractive.
TOTAL RETURN PORTFOLIO STRATEGY
_ With inflation-adjusted Treasury yields falling back to neutral levels
after rising higher in early June, we have returned portfolio duration
to a relatively neutral level.
_ Yield curve strategy is relatively neutral, reflecting the substantial
flattening of the curve that has occurred.
_ Mortgages are overweighted, since the sector has cheapened and offers
relatively high yields and low risk. Emphasis is on stable short-
maturity pass-throughs, low coupons, CMBS and short CMOs. The portfolio
does not hold subprime issues. All mortgage holdings are rated "AAA".
_ Investment grade credit exposure is well below benchmark levels,
reflecting low spreads, unattractive values, and buyout risks. Credit
themes isolated from these risks that we currently favor include utility
first mortgage bonds, rail equipment trusts, and GIC-backed insurance
bonds.
_ A TIPS position was added as TIPS yields moved up with Treasuries in May
and became attractive, but the position was eliminated in June as TIPS
improved.
_ High yield exposure was increased slightly in late June as high yield
spreads widened sharply in sympathy with subprime difficulties.
However, high yield holdings remain moderate since spreads remain
historically low.
_ Nondollar holdings are being maintained in unhedged Yen securities and
hedged UK Treasuries.
INVESTMENT GRADE PORTFOLIO STRATEGY
_ With inflation-adjusted Treasury yields falling back to neutral levels
after rising higher in early June, we have returned portfolio duration
to a relatively neutral level.
_ Yield curve strategy is relatively neutral, reflecting the substantial
flattening of the curve that has occurred.
_ Mortgages are overweighted, since the sector has cheapened and offers
relatively high yields and low risk. Emphasis is on stable short-
maturity pass-throughs, low coupons, CMBS and short CMOs. The portfolio
does not hold subprime issues. All mortgage holdings are rated "AAA".
_ Investment grade credit exposure is well below benchmark levels,
reflecting low spreads, unattractive values, and buyout risks. Credit
themes isolated from these risks that we currently favor include utility
first mortgage bonds, rail equipment trusts, and GIC-backed insurance
bonds.
_ A TIPS position was added as TIPS yields moved up with Treasuries in May
and became attractive, but the position was eliminated in June as TIPS
improved.
We appreciate your continued support as shareholders in the Funds.
Regards,
/s/Mark M. Egan /s/Robert A. Crider
Mark M. Egan, CFA, CPA Robert A. Crider, CFA
Reams Asset Management Company, LLC Reams Asset Management Company, LLC
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment (Unaudited)
Frontegra Total Lehman Brothers
Date Return Bond Fund Aggregate Bond Index
---- ---------------- --------------------
6/30/97 $100,000 $100,000
9/30/97 $103,500 $103,320
12/31/97 $105,622 $106,368
3/31/98 $107,639 $108,027
6/30/98 $109,878 $110,555
9/30/98 $114,130 $115,232
12/31/98 $114,541 $115,623
3/31/99 $114,209 $115,045
6/30/99 $113,558 $114,033
9/30/99 $114,625 $114,808
12/31/99 $114,385 $114,671
3/31/2000 $118,056 $117,205
6/30/2000 $121,256 $119,244
9/30/2000 $125,282 $122,845
12/31/2000 $129,804 $128,017
3/31/2001 $134,854 $131,896
6/30/2001 $135,636 $132,635
9/30/2001 $140,641 $138,749
12/31/2001 $139,403 $138,805
3/31/2002 $139,598 $138,929
6/30/2002 $140,296 $144,056
9/30/2002 $141,447 $150,654
12/31/2002 $147,373 $153,019
3/31/2003 $151,735 $155,146
6/30/2003 $158,943 $159,025
9/30/2003 $159,579 $158,786
12/31/2003 $160,967 $159,294
3/31/2004 $165,313 $163,531
6/30/2004 $161,660 $159,541
9/30/2004 $167,075 $164,647
12/31/2004 $169,080 $166,227
3/31/2005 $167,406 $165,429
6/30/2005 $172,981 $170,409
9/30/2005 $173,119 $169,250
12/31/2005 $173,552 $170,249
3/31/2006 $173,170 $169,159
6/30/2006 $173,603 $169,024
9/30/2006 $180,582 $175,463
12/31/2006 $184,826 $177,639
3/31/2007 $188,042 $180,304
6/30/2007 $186,669 $179,366
Portfolio Total Return*<F9>
FOR THE YEAR ENDED 6/30/07
SIX MONTHS 0.99%
ONE YEAR 7.52%
FIVE YEAR
AVERAGE ANNUAL 5.88%
TEN YEAR
AVERAGE ANNUAL 6.44%
SINCE COMMENCEMENT
AVERAGE ANNUAL 6.26%
This chart assumes an initial gross investment of $100,000 made on 6/30/97.
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. To receive current to the most recent month-end performance, please
call 1-888-825-2100.
The Lehman Brothers Aggregate Bond Index is an unmanaged market value-weighted
performance benchmark for investment-grade fixed-rate debt issues, including
government, corporate, asset backed and mortgage backed securities, with
maturities of at least one year. The Index does not reflect investment
management fees, brokerage commissions and other expenses associated with
investing in fixed income securities. A direct investment in the index is not
possible.
*<F9> The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Frontegra Total Return Bond Fund
SCHEDULE OF INVESTMENTS
June 30, 2007
Principal Amount Value
- ---------------- -----
ASSET BACKED SECURITIES 7.9%
American Express Credit Account Master Trust
$ 1,225,000 2005-3, 5.320%, 01/18/2011 (c)<F12>(e)<F14> $ 1,223,554
560,000 2005-6, 5.320%, 03/15/2011 (c)<F12>(e)<F14> 559,104
Bank One Issuance Trust
1,940,000 2003-3A, 5.430%, 12/15/2010 (c)<F12>(e)<F14> 1,941,983
1,720,000 2002-5A, 5.440%, 06/15/2010 (c)<F12>(e)<F14> 1,720,709
Capital One Auto Trust
885,000 2007-A, 5.330%, 05/15/2010 (e)<F14> 884,956
835,000 2007-B, 5.270%, 06/15/2010 (e)<F14> 834,451
790,000 Chase Issuance Trust
2005-1A, 5.330%, 12/15/2010 (c)<F12>(e)<F14> 790,184
545,000 Citibank Credit Card Issuance Trust
2003-A3, 3.100%, 03/10/2010 536,506
2,885,000 Discover Card Master Trust I
2003-2, 5.450%, 08/15/2010 (c)<F12>(e)<F14> 2,887,712
1,440,271 Ford Credit Auto Trust
2006-B, 5.420%, 07/15/2009 (e)<F14> 1,440,643
780,000 Hertz Vehicle Financing LLC
2005-2A, 5.080%, 11/25/2011
(Acquired 12/15/2005, Cost $779,873) (a)<F10> 769,166
1,630,000 Honda Auto Receivables Owner
Series 2006-1, 5.070%, 02/18/2010 1,626,926
201,320 Household Automotive Trust
2007-1, 5.326%, 02/17/2008 201,406
1,890 Mego Mortgage Home Loan Trust
1996-2, 7.275%, 08/25/2017 1,883
704,313 Mid-State Trust
11, 4.864%, 07/15/2038 658,002
2,882,325 SLM Student Loan Trust
2007-1, 5.330%, 04/25/2012 (c)<F12>(e)<F14> 2,883,660
USAA Auto Owner Trust
106,402 2006-4, 5.340%, 12/13/2007 (e)<F14> 106,434
51,231 2006-1, 5.030%, 11/17/2008 (e)<F14> 51,236
2,670,000 2006-1, 5.010%, 09/15/2010 (e)<F14> 2,664,176
------------
TOTAL ASSET BACKED SECURITIES
(Cost $21,835,567) 21,782,691
------------
CORPORATE BONDS 11.0%
Automobiles 0.8%
309,225 Ford Motor Co.
8.320%, 12/15/2013
(Acquired 12/15/2006, Cost $309,225) (a)<F10> 310,771
General Motors Corp.
1,296,750 7.735%, 11/27/2013
(Acquired 11/27/2006, Cost $1,296,750) (a)<F10> 1,301,613
675,000 8.375%, 07/15/2033 615,938
------------
2,228,322
------------
Chemicals 0.2%
541,000 Georgia Gulf Corp.
9.500%, 10/15/2014
(Acquired 09/28/2006, Cost $538,320)(a)<F10> 538,295
------------
Consumer Finance 1.6%
Ford Motor Credit Co.
630,000 7.800%, 06/01/2012 614,582
1,990,000 5.700%, 01/15/2010 1,901,146
780,000 GMAC LLC
6.625%, 05/15/2012 753,231
1,110,000 Residential Capital LLC
6.500%, 04/17/2013 1,072,903
------------
4,341,862
------------
Diversified Financial Services 0.5%
570,000 Pricoa Global Funding I
5.4075%, 03/03/2009
(Acquired 03/01/2006,
Cost $570,000) (a)<F10>(c)<F12>(e)<F14> 570,459
928,388 Windsor Financing LLC
5.881%, 07/15/2017
(Acquired 02/07/2006 and 06/28/2006,
Cost $933,975) (a)<F10> 914,713
------------
1,485,172
------------
Diversified Telecommunication Services 0.2%
705,000 Telecom Italia Capital
5.250%, 11/15/2013 (b)<F11> 671,775
------------
Electric Utilities 3.0%
525,000 Commonwealth Edison Co.
5.950%, 08/15/2016 513,965
952,000 Consumers Energy Co.
4.400%, 08/15/2009 930,236
881,000 Entergy Gulf States Inc.
4.875%, 11/01/2011 844,231
561,000 Entergy Louisiana LLC
5.500%, 04/01/2019 532,354
1,285,000 Great River Energy
5.829%, 07/01/2017
(Acquired 06/21/2007,
Cost $1,285,000) (a)<F10>(e)<F14> 1,287,686
Indianapolis Power & Light Co.
245,000 6.300%, 07/01/2013 (Acquired 10/17/2006,
Cost $253,210) (a)<F10> 249,697
525,000 6.050%, 10/01/2036 (Acquired 10/02/2006,
Cost $521,630) (a)<F10> 499,913
630,000 Mackinaw Power LLC
6.296%, 10/31/2023
(Acquired 06/15/2007 and 06/19/2007,
Cost $630,995) (a)<F10> 632,469
475,000 Northern State Power
6.200%, 07/01/2037 479,990
400,000 Public Service Electric & Gas
5.000%, 01/01/2013 386,775
935,000 Southern California Edison Co.
5.460%, 02/02/2009 (c)<F12> 935,402
410,000 Tenaska Gateway Partners
6.052%, 12/30/2023 (Acquired 05/31/2007,
Cost $410,000) (a)<F10> 405,363
745,000 Westar Energy Inc.
6.000%, 07/01/2014 748,153
------------
8,446,234
------------
Gas Utilities 0.6%
102,169 Alliance Pipeline U.S.
4.591%, 12/31/2025
(Acquired 06/08/2006 and 07/12/2006,
Cost $94,578) (a)<F10>(b)<F11> 93,994
675,000 Gulfstream Natural Gas
5.560%, 11/01/2015
(Acquired 10/19/2005 to 05/16/2006,
Cost $671,302) (a)<F10> 654,199
450,000 Source Gas LLC
5.900%, 04/01/2017 (Acquired 04/11/2007,
Cost $448,583) (a)<F10> 437,450
410,000 Southern Star Cent Gas
6.000%, 06/01/2016
(Acquired 04/12/2006 and 05/11/2006,
Cost $406,365) (a)<F10> 398,725
------------
1,584,368
------------
Insurance 0.2%
575,000 Jackson National Life Global Funding
5.125%, 02/10/2011 (Acquired 02/03/2006,
Cost $574,523) (a)<F10> 566,634
------------
Medical Supplies & Services 0.5%
830,000 Community Health Systems, Inc.
5.545%, 07/25/2014 (e)<F14> 830,000
443,888 HCA Inc.
8.110%, 11/17/2013 (Acquired 11/14/2006,
Cost $443,888) (a)<F10> 444,442
------------
1,274,442
------------
Multi-Utilities & Unregulated Power 1.8%
481,471 Aes Eastern Energy 1999-1
Series 1999-1, 9.000%, 01/02/2017 536,840
1,083,018 Borger Energy Funding
Series 1998, 7.260%, 12/31/2022
(Acquired 01/30/2006 to 06/01/2007,
Cost $1,056,370) (a)<F10> 1,072,188
824,291 Edison Mission Energy Funding
7.330%, 09/15/2008
(Acquired 10/23/2002 to 07/12/2005,
Cost $808,751) (a)<F10> 820,170
765,625 Homer City Funding LLC
8.137%, 10/01/2019 811,562
643,323 Kern River Funding Corp.
4.893%, 04/30/2018
(Acquired 05/09/2005 to 09/19/2006,
Cost $626,366) (a)<F10> 614,824
644,085 Kiowa Power Partners LLC
4.811%, 12/30/2013
(Acquired 11/19/2004 to 05/02/2006,
Cost $643,185) (a)<F10> 619,919
Midwest Generation LLC
400,325 8.300%, 07/02/2009 408,331
79,306 8.560%, 01/02/2016 84,560
------------
4,968,394
------------
Natural Gas Transmission 0.2%
Tennessee Gas Pipeline Co.
565,000 7.500%, 04/01/2017 607,963
------------
Oil, Gas & Consumable Fuels 0.7%
78,750 Pemex Finance Ltd.
9.690%, 08/15/2009 (b)<F11> 82,589
585,000 Pioneer Natural Resources Co.
6.650%, 03/15/2017 553,587
700,000 Sabine Pass LNG LP
7.250%, 11/30/2013 (Acquired 11/01/2006,
Cost $700,000) (a)<F10> 694,750
580,000 Tesoro Corp.
6.500%, 06/01/2017
(Acquired 05/23/2007 and 05/24/2007,
Cost $581,700) (a)<F10> 566,950
------------
1,897,876
------------
Paper & Forest Products 0.1%
398,000 Abitibi-Consolidated, Inc.
8.500%, 08/01/2029 (b)<F11> 326,360
------------
Real Estate Investment Trusts 0.3%
855,000 CPG Partners LP
3.500%, 03/15/2009 826,957
------------
Transportation 0.3%
415,068 Burlington North Santa Fe
4.830%, 01/15/2023 378,973
460,000 Union Pacific Railroad Co.
5.866%, 07/02/2030 460,957
------------
839,930
------------
TOTAL CORPORATE BONDS
(Cost $31,292,501) 30,604,584
------------
MORTGAGE BACKED SECURITIES 65.9%
916,247 Banc of America Commercial Mortgage Inc.
Series 2005-2, 4.247%, 07/10/2043 909,454
Banc of America Commercial Mortgage Inc.
2,270,000 Pool # 2004-2, 4.050%, 11/10/2038 2,183,840
667,841 Pool # 2006-6, 5.226%, 10/10/2045 663,197
1,110,000 Pool # 2005-6, 5.165%, 09/10/2047 1,097,594
2,750,000 Citigroup/Deutsche Bank Commercial Mortgage Trust
Series 2007-CD4, 5.322%, 12/11/2049 2,637,944
2,552,058 Commercial Mortgage Pass-Through Certificate
Pool # 2003-LB1A, 3.251%, 10/10/2012 2,419,268
Credit Suisse First Boston
Mortgage Securities Corp.
488,812 Pool # 2005-10, 5.000%, 09/25/2015 481,645
119,843 Pool # 2003-1, 7.000%, 02/25/2033 (e)<F14> 119,714
795,711 Pool # 2003-C3, 2.079%, 05/15/2038 (e)<F14> 783,421
FHLMC Pools
140,281 Pool # M80779, 5.000%, 11/01/2009 139,801
1,648,546 Pool # B14039, 4.000%, 05/01/2014 1,582,566
1,527,892 Pool # G11672, 5.000%, 03/01/2015 1,505,270
389,969 Pool # B19614, 5.000%, 07/01/2015 383,562
1,872,719 Pool # G11745, 5.000%, 07/01/2015 1,842,755
1,215,690 Pool # G11970, 5.000%, 04/01/2016 1,184,875
1,071,102 Pool # E0-1418, 4.000%, 07/01/2018 998,035
38,539 Pool # G1-1657, 4.500%, 12/01/2018 36,734
925,325 Pool # E01647, 4.000%, 05/01/2019 861,119
175,692 Pool # 2802, 4.500%, 02/15/2020 (e)<F14> 175,322
995,256 Pool # G1-1678, 4.500%, 04/01/2020 947,095
387,907 Pool # 2692, 3.500%, 01/15/2023 (e)<F14> 385,233
599,493 Pool # A45788, 6.500%, 05/01/2035 609,654
FHLMC Remic
1,654,841 Series 3196, 5.250%, 08/15/2011 1,645,107
2,933,219 Series R001, 4.375%, 04/15/2015 2,849,314
642,876 Series 2848, 5.000%, 06/15/2015 (e)<F14> 640,369
164,697 Series 2508, 4.500%, 03/15/2016 (e)<F14> 163,392
1,355,448 Series 2786, 4.000%, 08/15/2017 1,298,339
265,730 Series 2912, 5.500%, 12/15/2020 (e)<F14> 265,386
608,002 Series 2695, 3.500%, 11/15/2022 (e)<F14> 599,203
42,461 Series 2574, 4.500%, 05/15/2026 (e)<F14> 42,381
847,444 Series 2731, 4.500%, 11/15/2028 822,270
525,735 Series 2793, 4.500%, 09/15/2029 506,425
1,070,000 Series 3200, 5.000%, 12/15/2031 1,023,299
2,266,010 Series 2990, 4.500%, 02/15/2033 2,167,992
1,686,353 Series 3031, 4.500%, 08/15/2033 1,611,236
1,478,250 Series 3114, 5.000%, 09/15/2033 1,436,893
2,801,697 Series 3169, 5.000%, 06/15/2034 2,716,626
1,710,000 Series 3202, 4.500%, 03/15/2035 1,629,681
999,320 Series 3114, 5.000%, 02/15/2036 764,585
FNMA Pools
1,669,870 Pool # 387219, 4.125%, 01/01/2010 1,620,721
394,359 Pool # 254659, 4.500%, 02/01/2013 384,834
1,634,145 Pool # 254758, 4.500%, 06/01/2013 1,592,824
787,005 Pool # 768008, 5.000%, 06/01/2013 776,446
449,423 Pool # 768009, 5.000%, 06/01/2013 443,526
781,597 Pool # 254806, 4.500%, 07/01/2013 761,612
615,307 Pool # 555648, 4.543%, 06/01/2013 587,185
1,048,669 Pool # 386341, 3.810%, 08/01/2013 967,885
885,881 Pool # 386441, 3.980%, 08/01/2013 832,465
509,698 Pool # 735065, 4.498%, 08/01/2013 483,646
419,520 Pool # 763019, 5.000%, 08/01/2013 414,015
987,952 Pool # 254909, 4.000%, 09/01/2013 950,659
434,606 Pool # 255450, 4.500%, 10/01/2014 421,553
940,194 Pool # 745659, 5.000%, 04/01/2016 915,968
1,040,851 Pool # 745444, 5.500%, 04/01/2016 1,028,665
3,064,251 Pool # 357312, 5.000%, 12/01/2017 2,972,247
694,912 Pool # 254919, 4.000%, 09/01/2018 646,739
2,219,912 Pool # 254865, 4.500%, 09/01/2018 2,115,210
1,448,561 Pool # 725546, 4.500%, 06/01/2019 1,378,192
2,849,617 Pool # 735841, 4.500%, 11/01/2019 2,711,189
4,635,000 Pool # 19355, 6.000%, 08/15/2022 4,653,827
49,465 Pool # 433043, 6.500%, 06/01/2028 50,485
55,767 Pool # 447704, 6.500%, 11/01/2028 56,918
25,187 Pool # 448235, 6.500%, 11/01/2028 25,706
66,283 Pool # 448635, 6.500%, 11/01/2028 67,650
3,766 Pool # 449012, 6.500%, 11/01/2028 3,844
24,736 Pool # 487778, 6.500%, 03/01/2029 25,244
799,341 Pool # 555203, 7.000%, 09/01/2032 821,173
FNMA Remic
60,017 Series 2003-87, 3.500%, 04/25/2011 (e)<F14> 59,834
96,386 Series 2003-88, 3.500%, 04/25/2011 (e)<F14> 96,059
57,447 Series 2002-83, 5.000%, 11/25/2012 (e)<F14> 57,274
985,708 Series 2002-74, 5.000%, 03/25/2015 980,303
3,520,659 Series 2005-35, 4.000%, 08/25/2018 3,371,941
2,994,609 Series 2004-93, 4.250%, 04/25/2019 2,867,881
337,901 Series 2003-58, 3.500%, 10/25/2021 (e)<F14> 335,473
75,000 Series 1994-3, 5.500%, 01/25/2024 73,870
1,718,650 Series 2005-95, 4.500%, 03/25/2033 1,638,493
431,139 Series 2003-W19, 5.500%, 11/25/2043 (e)<F14> 428,818
677,172 Series 2004-T2, 7.000%, 11/25/2043 696,446
FNMA TBA
7,770,000 5.000%, 07/15/2037 (d)<F13> 7,279,519
32,775,000 5.500%, 07/15/2037 (d)<F13> 31,607,391
5,990,000 6.000%, 07/15/2037 (d)<F13> 5,924,481
3,060,000 5.000%, 08/15/2037 (d)<F13> 2,865,880
4,590,000 5.500%, 08/15/2037 (d)<F13> 4,423,613
22,965,000 6.000%, 08/15/2037 (d)<F13> 22,699,479
4,735,000 6.500%, 08/15/2037 (d)<F13> 4,774,954
GMAC Commercial Mortgage Securities Inc.
1,309,009 Pool # 2005-21, 5.000%, 03/20/2035 1,088,433
2,432,577 Pool # 2003-C1, 3.337%, 05/10/2036 2,310,664
15,121 GNMA Pool
Pool # 36629, 9.500%, 10/15/2009 15,690
1,350,000 GS Mortgage Securities Corp. II
Series 2007-EOP, 5.420%, 03/06/2020
(Acquired 06/06/2007,
Cost $1,350,000) (a)<F10>(c)<F12> 1,350,000
2,085,000 Greenwich Capital Commercial Funding Corp.
Pool # 2005-GG5, 5.117%, 04/10/2037 2,061,846
1,695,000 JP Morgan Chase Commercial
Mortgage Securities Corp.
Series 2006-LDP9, 5.336%, 05/15/2047 1,624,656
LB-UBS Commercial Mortgage Trust
403,999 Pool # 2003-C3, 2.599%, 05/15/2027 397,216
715,000 Pool # 2005-C5, 4.885%, 09/15/2030 704,609
3,080,000 Pool # 2005-C7, 5.103%, 11/15/2030 3,044,100
639,288 Master Alternative Loans Trust
Pool # 2004-6, 4.500%, 07/25/2014 625,586
Master Asset Securitization Trust
510,160 Pool # 2004-3, 4.750%, 01/25/2014 501,288
41,998 Pool # 2003-11, 4.000%, 12/25/2033 (e)<F14> 41,868
Merrill Lynch Commercial Mortgage Trust
390,133 Series 2002-MW1, 4.929%, 07/12/2034 (e)<F14> 388,985
1,166,252 Series 2006-C2, 5.601%, 08/12/2043 1,168,196
1,072,622 Series 2006-3, 4.711%, 07/12/2046 1,053,286
Morgan Stanley Capital I
861,769 Pool # 2003-IQ4, 3.270%, 05/15/2040 830,139
21,972 Nomura Asset Acceptance Corp.
Pool # 2005-AP3, 5.211%, 08/25/2035 (c)<F12> 21,973
Wachovia Bank Commercial Mortgage Trust
858,130 Pool # 2003-C5, 2.986%, 06/15/2035 810,312
2,422,440 Pool # 2003-C7, 4.241%, 10/15/2035
(Acquired 09/26/2006 and 01/18/2007,
Cost $2,361,566) (a)<F10> 2,353,192
1,974,250 Wells Fargo Mortgage Backed Securities Trust
Pool # 2006-3, 5.500%, 03/25/2036 1,954,678
------------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $183,325,211) 182,369,450
------------
SUPRANATIONAL ISSUE 0.3%
920,000 European Investment Bank
4.875%, 02/15/2036 (b)<F11> 833,493
------------
TOTAL SUPRANATIONAL ISSUE
(Cost $912,428) 833,493
------------
SUPRANATIONAL OBLIGATIONS 5.6%
JPY 343,000,000 International Bank Reconnaissance & Development
2.000%, 02/18/2008
(Acquired 05/16/2007,
Cost $2,872,653) (a)<F10>(b)<F11> 2,804,496
JPY 330,000,000 Republic Of Finland
0.300%, 10/18/2007
(Acquired 05/10/2007,
Cost $2,743,019) (a)<F10>(b)<F11> 2,675,542
BP 5,630,000 UK Govt. Treasury
4.000%, 09/07/2016 10,131,140
------------
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $15,743,070) 15,611,178
------------
U.S. GOVERNMENT AGENCY ISSUES 13.4%
Federal Home Loan Bank
2,860,000 5.750%, 10/15/2007 2,862,688
1,435,000 5.500%, 12/27/2007 1,435,601
2,515,000 5.500%, 01/28/2008 2,516,424
8,895,000 2.625%, 07/15/2008 8,661,924
8,855,000 5.250%, 08/14/2008 8,851,865
Freddie Mac
745,000 5.500%, 01/18/2008 745,402
6,015,000 5.500%, 08/20/2012 6,069,502
Fannie Mae
5,965,000 5.000%, 09/15/2008 5,945,811
------------
TOTAL U.S. GOVERNMENT AGENCY ISSUES
(Cost $37,114,531) 37,089,217
------------
U.S. TREASURY OBLIGATIONS 16.8%
U.S. Treasury Bonds 0.9%
2,585,000 5.250%, 02/15/2029 (e)<F14> 2,602,772
------------
U.S. Treasury Notes 15.9%
5,970,000 4.500%, 04/30/2012 (e)<F14> 5,858,994
685,000 4.750%, 05/31/2012 679,649
9,575,000 4.625%, 11/15/2016 (e)<F14> 9,279,525
27,425,000 4.625%, 02/15/2017 (e)<F14> 26,559,412
1,545,000 4.500%, 05/15/2017 1,481,268
------------
43,858,848
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $46,174,849) 46,461,620
------------
SHORT-TERM INVESTMENTS 17.1%
US Government Agency Issues (f)<F15> 9.5%
26,236,000 Federal Home Loan Bank Discount Note,
0.000%, 07/02/2007 (e)<F14> 26,232,670
------------
Variable Rate Demand Notes (g)<F16> 7.6%
11,274,428 American Family Financial Services, Inc.,
4.595%, 12/31/2031 (e)<F14> 11,274,428
7,197,485 Wisconsin Corporate Central Credit Union,
4.9900%, 12/31/2031 (e)<F14> 7,197,485
2,676,023 U.S. Bank, N.A., 4.9900%, 12/31/2031 2,676,023
------------
21,147,936
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $47,380,606) 47,380,606
------------
TOTAL INVESTMENTS 138.0%
(Cost $383,778,763) 382,132,839
Liabilities in Excess
of Other Assets (38.0)% (105,303,042)
------------
TOTAL NET ASSETS 100.0% $276,829,797
------------
------------
(a)<F10> Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration normally to qualified institutional buyers. The
total value of these securities amounted to $23,647,620 (8.5% of net
assets) at June 30, 2007.
(b)<F11> Foreign Issued.
(c)<F12> Adjustable Rate.
(d)<F13> When-issued security.
(e)<F14> Security marked as segregated to cover when-issued security.
(f)<F15> The obligations of certain U.S. Government-sponsored entities are
neither issued nor guaranteed by the United States Treasury.
(g)<F16> Variable rate demand notes are considered short-term obligations and
are payable upon demand. Interest rates change periodically on
specified dates. The rates listed are as of June 30, 2007.
JPY - Japanese Yen
BP - British Pounds
CREDIT DEFAULT SWAPS
Expiration Notional
Date Amount Value(a)<F17>
---------- -------- ------------
Pay quarterly a fixed annual rate of 0.12% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of AT&T Corp., par value of the
notional amount of AT&T Corp. 7.300%, 11/15/11 3/20/12 $ 650,000 $ 332
Receive quarterly a fixed annual rate of 0.40% multiplied
by the notional amount and pay to JP Morgan Chase
upon credit event of a Dow Jones CDX North America
High Yield Index reference obligation, par value of the
notional amount of the Dow Jones CDX North America
High Yield Index reference obligation 12/20/11 3,274,000 7,115
Pay quarterly a fixed annual rate of 0.17% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of Comcast Cable, par value of the
notional amount of Comcast Cable 7.125%, 06/15/13 3/20/12 650,000 1,730
Pay quarterly a fixed annual rate of 0.23% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of Cox Communications, Inc., par
value of the notional amount of Cox Communications,
Inc. 6.800%, 08/01/28 3/20/12 650,000 881
Pay quarterly a fixed annual rate of 0.08% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of Walt Disney Co., par value of the
notional amount of Walt Disney Co. 6.375%, 03/01/12 3/20/12 650,000 1,270
Pay quarterly a fixed annual rate of 0.39% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of Sprint Capital Corp., par value of
the notional amount of Sprint Capital Corp.
8.375%, 03/15/12 3/20/12 650,000 5,072
Pay quarterly a fixed annual rate of 0.16% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of News America Inc., par value of the
notional amount of News America, Inc.
7.250%, 05/18/18 3/20/12 650,000 1,109
Pay quarterly a fixed annual rate of 0.20% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of Time Warner Inc., par value of the
notional amount of Time Warner, Inc.
6.875%, 05/01/12 3/20/12 650,000 613
Pay quarterly a fixed annual rate of 0.19% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of Verizon Communications, par
value of the notional amount of Verizon
Communications 4.900%, 09/15/15 3/20/12 $ 650,000 $ (170)
Receive quarterly a fixed annual rate of 5.15% multiplied
by the notional amount and pay to JP Morgan Chase upon
default event of Ford Motor Credit Co., par value of the
notional amount of Ford Motor Credit Co.
7.000%, 10/01/13 3/20/11 1,700,000 208,308
Receive quarterly a fixed annual rate of 6.85% multiplied
by the notional amount and pay to JP Morgan Chase
upon default event of Ford Motor Co., par value of
the notional amount of Ford Motor Co.
7.450%, 07/16/31 12/20/11 1,300,000 141,880
Pay quarterly a fixed annual rate of 5.85% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of General Motors Corp., par value
of the notional amount of General Motors Corp.
7.125%, 07/15/13 12/20/11 1,300,000 (148,142)
Receive quarterly a fixed annual rate of 2.75% multiplied
by the notional amount and pay to Goldman Sachs upon
credit event of a Dow Jones CDX North America High
Yield Index reference obligation, par value of the notional
amount of the Dow Jones CDX North America High
Yield Index reference obligation 6/20/12 5,660,000 28,765
----------- --------
$15,434,000 $248,763
----------- --------
----------- --------
(a)<F17> Includes interest paid or received by the Fund on the notional amount.
The accompanying notes are an integral part of these financial statements.
Frontegra Total Return Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments at value (cost $383,778,763) $382,132,839
Interest receivable 2,489,749
Receivable for investments sold 93,048,319
Receivable for Fund shares sold 210,423
Unrealized appreciation on swaps 151,904
Other assets 11,479
------------
Total assets 478,044,713
------------
LIABILITIES:
Payable for investments purchased 200,471,397
Payable for Fund shares purchased 205,242
Distributions payable 304,266
Due to Custodian 6,751
Upfront fees on swaps due to broker 134,025
Accrued investment advisory fees 17,747
Accrued expenses 75,488
------------
Total liabilities 201,214,916
------------
NET ASSETS $276,829,797
------------
------------
NET ASSETS CONSIST OF:
Paid in capital $282,653,973
Accumulated net investment loss (89,897)
Accumulated net realized loss on investments sold,
swap contracts and foreign currency (4,337,118)
Net unrealized appreciation (depreciation) on:
Investments (1,645,924)
Swap contracts 248,763
------------
NET ASSETS $276,829,797
------------
------------
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 100,000,000
Issued and outstanding 9,105,538
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $30.40
------
------
The accompanying notes are an integral part of these financial statements.
Frontegra Total Return Bond Fund
STATEMENT OF OPERATIONS
YEAR ENDED
JUNE 30, 2007
-------------
INVESTMENT INCOME:
Interest $15,035,510
-----------
EXPENSES:
Investment advisory fees (Note 3) 1,168,809
Fund administration and accounting fees 125,296
Custody fees 44,162
Audit fees 31,280
Legal fees 25,490
Federal and state registration fees 24,471
Shareholder servicing fees 11,826
Compliance support expenses 6,464
Directors' fees and related expenses 5,833
Reports to shareholders 4,491
Other 10,344
-----------
Total expenses before waiver 1,458,466
Waiver of expenses by Adviser (Note 3) (874,012)
-----------
Net expenses 584,454
-----------
NET INVESTMENT INCOME 14,451,056
-----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Realized gain on:
Investments 5,102,933
Swap contracts 68,819
Foreign currency translation 75,201
Change in net unrealized appreciation/depreciation on:
Investments 2,437,286
Swap contracts 254,715
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 7,938,954
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $22,390,010
-----------
-----------
The accompanying notes are an integral part of these financial statements.
Frontegra Total Return Bond Fund
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
OPERATIONS:
Net investment income $14,451,056 $14,549,285
Net realized gain (loss) on:
Investments 5,102,933 (9,636,045)
Swap contracts 68,819 295,964
Foreign currency translation 75,201 (2,627)
Options _ 29,000
Change in net unrealized appreciation/depreciation on:
Investments 2,437,286 (4,068,396)
Swap contracts 254,715 (20,310)
Foreign currency _ 1,731
------------ ------------
Net increase in net assets
resulting from operations 22,390,010 1,148,602
------------ ------------
DISTRIBUTIONS
PAID FROM:
Net investment income (14,405,929) (14,981,085)
Net realized gain on investments _ (4,433,906)
------------ ------------
Net decrease in net assets resulting
from distributions paid (14,405,929) (19,414,991)
------------ ------------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 31,004,977 16,902,712
Shares issued to holders in
reinvestment of distributions 13,258,827 18,315,887
Shares redeemed (89,297,680) (19,547,094)
------------ ------------
Net increase (decrease) in net assets
resulting from capital share transactions (45,033,876) 15,671,505
------------ ------------
TOTAL DECREASE IN NET ASSETS (37,049,795) (2,594,884)
------------ ------------
NET ASSETS:
Beginning of year 313,879,592 316,474,476
------------ ------------
End of year
(includes undistributed net investment loss
of $(89,897) and $(96,487), respectively) $276,829,797 $313,879,592
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements.
Frontegra Total Return Bond Fund
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
NET ASSET VALUE,
BEGINNING OF YEAR $29.72 $31.50 $30.51 $31.92 $30.21
INCOME (LOSS)
FROM INVESTMENT
OPERATIONS:
Net investment income 1.54 1.41 1.13 0.99 1.80
Net realized and unrealized
gain (loss) on investments 0.68 (1.30) 0.98 (0.45) 2.06
------ ------ ------ ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS 2.22 0.11 2.11 0.54 3.86
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
PAID:
From net investment income (1.54) (1.45) (1.12) (0.98) (1.87)
From net realized gain on investments _ (0.44) _ (0.97) (0.28)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS PAID (1.54) (1.89) (1.12) (1.95) (2.15)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $30.40 $29.72 $31.50 $30.51 $31.92
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 7.52% 0.36% 7.00% 1.71% 13.29%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of year (in thousands) $276,830 $313,880 $316,474 $346,733 $358,052
Ratio of expenses to average net assets(1)<F18> 0.20% 0.20% 0.408% 0.425% 0.425%
Ratio of net investment income
to average net assets(1)<F18> 4.95% 4.59% 3.30% 2.71% 5.78%
Portfolio turnover rate 978% 1,247% 1,222% 1,409% 489%
(1)<F18> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net
assets would have been 0.50%, 0.50%, 0.501%, 0.507% and 0.505%, and
the ratio of net investment income to average net assets would have
been 4.65%, 4.29%, 3.21%, 2.63% and 5.70% for the years ended June 30,
2007, June 30, 2006, June 30, 2005, June 30, 2004 and June 30, 2003,
respectively.
The accompanying notes are an integral part of these financial statements.
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment (Unaudited)
Frontegra Investment Lehman Brothers
Date Grade Bond Fund Aggregate Bond Index
---- -------------------- --------------------
2/23/2001*<F19> $100,000 $100,000
3/31/2001 $101,242 $101,377
6/30/2001 $101,975 $101,949
9/30/2001 $106,197 $106,652
12/31/2001 $106,384 $106,699
3/31/2002 $106,324 $106,800
6/30/2002 $109,262 $110,746
9/30/2002 $111,830 $115,820
12/31/2002 $113,632 $117,642
3/31/2003 $115,161 $119,281
6/30/2003 $117,928 $122,264
9/30/2003 $118,839 $122,086
12/31/2003 $119,424 $122,471
3/31/2004 $122,455 $125,729
6/30/2004 $119,728 $122,657
9/30/2004 $123,561 $126,578
12/31/2004 $124,865 $127,788
3/31/2005 $123,651 $127,174
6/30/2005 $127,291 $131,000
9/30/2005 $127,322 $130,115
12/31/2005 $127,974 $130,887
3/31/2006 $127,040 $130,045
6/30/2006 $127,156 $129,940
9/30/2006 $132,037 $134,886
12/31/2006 $133,817 $136,555
3/31/2007 $135,901 $138,602
6/30/2007 $135,114 $137,883
*<F19> 2/23/01 commencement of operations.
Portfolio Total Return**<F20>
FOR THE YEAR ENDED 6/30/07
SIX MONTHS 0.97%
ONE YEAR 6.26%
FIVE YEAR
AVERAGE ANNUAL 4.34%
SINCE COMMENCEMENT
AVERAGE ANNUAL 4.85%
This chart assumes an initial gross investment of $100,000 made on 2/23/01
(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. To receive current to
the most recent month-end performance, please call 1-888-825-2100.
The Lehman Brothers Aggregate Bond Index is an unmanaged market value-weighted
performance benchmark for investment-grade fixed-rate debt issues, including
government, corporate, asset backed and mortgage backed securities, with
maturities of at least one year. The Index does not reflect investment
management fees, brokerage commissions and other expenses associated with
investing in fixed income securities. A direct investment in the index is not
possible.
**<F20> The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Frontegra Investment Grade Bond Fund
SCHEDULE OF INVESTMENTS
June 30, 2007
Principal Amount Value
- ---------------- -----
ASSET BACKED SECURITIES 11.9%
American Express Credit Account Master Trust
$ 410,000 2005-3, 5.320%, 01/18/2011 (c)<F23>(e)<F25> $ 409,516
185,000 2005-6, 5.320%, 03/15/2011 (c)<F23>(e)<F25> 184,704
Bank One Issuance Trust
650,000 2003-3A, 5.430%, 12/15/2010 (c)<F23>(e)<F25> 650,664
610,000 2002-5A, 5.440%, 06/15/2010 (c)<F23>(e)<F25> 610,252
Burlington North Santa Fe
35,985 1996-B, 6.960%, 03/22/2009 36,388
540,383 1998-C, 6.230%, 07/02/2018 554,325
605,794 2004-1, 4.575%, 01/15/2021 569,287
Capital One Auto Trust
295,000 2007-A, 5.330%, 05/15/2010 (e)<F25> 294,985
280,000 2007-B, 5.270%, 06/15/2010 (e)<F25> 279,816
256,598 Carmax Auto Trust
2006-2, 5.290%, 06/15/2009 (e)<F25> 256,578
265,000 Chase Issuance Trust
2005-1A, 5.330%, 12/15/2010 (c)<F23>(e)<F25> 265,062
180,000 Citibank Credit Card Issuance Trust
2003-A3, 3.100%, 03/10/2010 177,194
58,405 CNH Equipment Trust
2006-B, 5.393%, 10/15/2007 58,420
970,000 Discover Card Master Trust I
2003-2, 5.450%, 08/15/2010 (c)<F23>(e)<F25> 970,912
438,681 Ford Credit Auto Trust
2006-B, 5.420%, 07/15/2009 (e)<F25> 438,794
664,172 GS Auto Loan Trust
2006-1, 5.470%, 02/15/2009 (e)<F25> 664,371
240,000 Hertz Vehicle Financing LLC
2005-2A, 5.080%, 11/25/2011
(Acquired 12/15/2005, Cost $239,961) (a)<F21> 236,666
550,000 Honda Auto Receivables Owner Trust
2006-1, 5.070%, 02/18/2010 548,963
67,861 Household Automotive Trust
2007-1, 5.326%, 02/17/2008 67,890
47,588 Keystone Owner Trust
1998-P1, 7.530%, 05/25/2025
(Acquired 04/22/2003, Cost $49,711) (a)<F21> 47,415
236,965 Mid-State Trust
11, 4.864%, 07/15/2038 221,384
332,186 PF Export Receivables Master Trust
2003-B, 3.748%, 06/01/2013
(Acquired 05/14/2003 and 05/15/2003,
Cost $332,376) (a)<F21> 309,103
969,240 SLM Student Loan Trust
2007-1, 5.330%, 04/25/2012 (c)<F23>(e)<F25> 969,689
484,124 Union Pacific Corp.
2004-1, 5.404%, 07/02/2025 470,670
USAA Auto Owner Trust
31,408 2006-4, 5.340%, 12/13/2007 (e)<F25> 31,417
16,321 2006-1, 5.030%, 11/17/2008 (e)<F25> 16,323
600,630 2006-3, 5.470%, 04/15/2009 (e)<F25> 600,935
905,000 2006-1, 5.010%, 09/15/2010 903,026
------------
TOTAL ASSET BACKED SECURITIES
(Cost $10,956,457) 10,844,749
------------
CORPORATE BONDS 6.2%
Diversified Financial Services 0.5%
130,000 Pricoa Global Funding I
5.331%, 03/03/2009
(Acquired 03/01/2006,
Cost $130,000) (a)<F21>(c)<F23>(e)<F25> 130,104
293,175 Windsor Financing LLC
5.881%, 07/15/2017
(Acquired 02/07/2006 and 06/28/2006,
Cost $292,518) (a)<F21> 288,857
------------
418,961
------------
Diversified Telecommunication Services 0.3%
240,000 Telecom Italia Capital
5.250%, 11/15/2013 (b)<F22> 228,690
------------
Electric Utilities 3.0%
175,000 Commonwealth Edison Co.
5.950%, 08/15/2016 171,321
156,000 Consumers Energy Co.
4.400%, 08/15/2009 152,434
322,000 Entergy Arkansas Inc.
5.000%, 07/01/2018 291,904
172,000 Entergy Gulf States Inc.
4.875%, 11/01/2011 164,822
30,000 Entergy Louisiana LLC
5.500%, 04/01/2019 28,468
142,034 FPL Energy Virginia Funding Corp.
7.520%, 06/30/2019
(Acquired 02/10/2006, Cost $151,903) (a)<F21> 152,436
430,000 Great River Energy
5.829%, 07/01/2017
(Acquired 06/21/2007,
Cost $430,000) (a)<F21>(e)<F25> 430,899
Indianapolis Power & Light Co.
65,000 6.300%, 07/01/2013
(Acquired 10/17/2006, Cost $67,178) (a)<F21> 66,246
140,000 6.050%, 10/01/2036
(Acquired 10/02/2006, Cost $139,101) (a)<F21> 133,310
215,000 Mackinaw Power LLC
6.296%, 10/31/2023
(Acquired 06/15/2007 and 06/19/2007,
Cost $215,342) (a)<F21> 215,843
160,000 Northern State Power
6.200%, 07/01/2037 161,681
370,000 Public Service Electric & Gas
5.000%, 01/01/2013 357,767
290,000 Southern California Edison Co.
4.740%, 02/02/2009 290,125
110,000 Westar Energy Inc.
6.000%, 07/01/2014 110,466
------------
2,727,722
------------
Gas Utilities 1.4%
370,362 Alliance Pipeline U.S.
4.591%, 12/31/2025
(Acquired 04/27/2006,
Cost $342,845) (a)<F21>(b)<F22> 340,726
180,000 Gulfstream Natural Gas
5.560%, 11/01/2015
(Acquired 10/19/2005 to 09/22/2006,
Cost $180,318) (a)<F21> 174,453
505,000 Northern Natural Gas Co.
5.375%, 10/31/2012 (Acquired 04/05/2006,
Cost $500,920) (a)<F21> 499,107
150,000 Source Gas LLC
5.900%, 04/01/2017
(Acquired 04/11/2007, Cost $149,528) (a)<F21> 145,816
140,000 Southern Star Cent Gas
6.000%, 06/01/2016
(Acquired 04/06/2006, Cost $139,528) (a)<F21> 136,150
------------
1,296,252
------------
Insurance 0.2%
220,000 Jackson National Life Global Funding
5.125%, 02/10/2011
(Acquired 02/03/2006 and 06/25/2007,
Cost $218,294) (a)<F21> 216,799
------------
Multi-Utilities & Unregulated Power 0.6%
215,798 Kern River Funding Corp.
4.893%, 04/30/2018
(Acquired 05/09/2005 to 04/02/2007,
Cost $210,104) (a)<F21> 206,238
391,138 Kiowa Power Partners LLC
4.811%, 12/30/2013
(Acquired 11/22/2004, Cost $392,430) (a)<F21> 376,463
------------
582,701
------------
Oil, Gas & Consumable Fuels 0.2%
137,250 Pemex Finance Ltd.
Series 1999-2, 9.690%, 08/15/2009 (b)<F22> 143,941
------------
TOTAL CORPORATE BONDS
(Cost $5,705,046) 5,615,066
------------
MORTGAGE BACKED SECURITIES 76.4%
Banc of America Commercial Mortgage Inc.
725,000 Pool # 2004-2, 4.050%, 11/10/2038 697,482
310,264 Pool # 2005-2, 4.247%, 07/10/2043 307,963
970,000 Pool # 2005-5, 5.001%, 10/10/2045 955,226
224,170 Pool # 2006-6, 5.226%, 10/10/2045 222,611
345,000 Pool # 2005-6, 5.165%, 09/10/2047 341,144
930,000 Citigroup/Deutsche Bank Commercial Mortgage Trust
Series 2007-CD4, 5.322%, 12/11/2049 892,105
828,959 Commercial Mortgage Pass-Through Certificate
Pool # 2003-LB1A, 3.251%, 06/10/2038 785,826
Credit Suisse First Boston Mortgage Securities Corp.
153,627 Pool # 2005-10, 5.000%, 09/25/2015 151,374
39,574 Pool # 2003-1, 7.000%, 02/25/2033 (e)<F25> 39,532
241,498 Pool # 2003-C3, 2.079%, 05/15/2038 (e)<F25> 237,768
362,935 FHLMC PC GOLD CASH
Pool # E0-1418, 4.000%, 07/01/2018 338,177
FHLMC PC GOLD CASH
13,017 Pool # G1-1657, 4.500%, 12/01/2018 12,408
339,043 Pool # G1-1678, 4.500%, 04/01/2020 (e)<F25> 322,637
FHLMC Pools
12,920 Pool # 25, 6.500%, 12/25/2008 (e)<F25> 12,891
283,470 Pool # 2775, 3.000%, 11/15/2013 277,280
496,902 Pool # B14039, 4.000%, 05/01/2014 477,015
535,823 Pool # G11786, 5.000%, 10/01/2014 528,418
595,995 Pool # B18639, 4.000%, 01/01/2015 570,071
404,528 Pool # G11672, 5.000%, 03/01/2015 398,538
118,384 Pool # B19614, 5.000%, 07/01/2015 116,438
548,843 Pool # G11745, 5.000%, 07/01/2015 540,061
382,863 Pool # G11970, 5.000%, 04/01/2016 373,159
294,096 Pool # E01647, 4.000%, 05/01/2019 273,689
52,851 Pool # 2802, 4.500%, 02/15/2020 (e)<F25> 52,740
114,645 Pool # 2692, 3.500%, 01/15/2023 (e)<F25> 113,855
178,854 Pool # A45788, 6.500%, 05/01/2035 181,886
FHLMC Remic
559,608 Series 3196, 5.250%, 08/15/2011 556,316
1,624,743 Series R001, 4.375%, 04/15/2015 1,578,267
199,614 Series 2848, 5.000%, 06/15/2015 (e)<F25> 198,836
49,811 Series 2508, 4.500%, 03/15/2016 (e)<F25> 49,416
428,537 Series 2786, 4.000%, 08/15/2017 410,482
81,395 Series 2912, 5.500%, 12/15/2020 (e)<F25> 81,289
86,518 Series 2827, 5.000%, 01/15/2021 (e)<F25> 86,330
162,346 Series 2695, 3.500%, 11/15/2022 (e)<F25> 159,997
13,423 Series 2574, 4.500%, 05/15/2026 (e)<F25> 13,398
265,060 Series 2731, 4.500%, 11/15/2028 257,186
153,194 Series 2793, 4.500%, 09/15/2029 147,568
713,885 Series 2990, 4.500%, 02/15/2033 683,005
523,826 Series 3031, 4.500%, 08/15/2033 500,493
468,830 Series 3114, 5.000%, 09/15/2033 455,714
838,536 Series 3169, 5.000%, 06/15/2034 813,075
455,000 Series 3202, 4.500%, 03/15/2035 433,629
315,293 Series 3114, 5.000%, 02/15/2036 241,233
FNMA Pass-Thru
206,668 Pool # 555648, 4.543%, 06/01/2013 197,222
171,327 Pool # 735065, 4.498%, 08/01/2013 162,570
234,726 Pool # 254919, 4.000%, 09/01/2018 218,454
958,575 Pool # 735841, 4.500%, 11/01/2019 (e)<F25> 912,009
FNMA Pools
524,295 Pool # 387219, 4.125%, 01/01/2010 508,864
1,644,000 Pool # 385537, 4.745%, 11/01/2012 1,588,454
104,201 Pool # 254659, 4.500%, 02/01/2013 101,684
505,177 Pool # 254758, 4.500%, 06/01/2013 492,403
240,474 Pool # 768008, 5.000%, 06/01/2013 237,247
137,232 Pool # 768009, 5.000%, 06/01/2013 135,431
227,590 Pool # 254806, 4.500%, 07/01/2013 221,770
328,674 Pool # 386341, 3.810%, 08/01/2013 303,355
268,592 Pool # 386441, 3.980%, 08/01/2013 252,396
127,091 Pool # 763019, 5.000%, 08/01/2013 125,423
292,111 Pool # 254909, 4.000%, 09/01/2013 281,084
137,091 Pool # 255450, 4.500%, 10/01/2014 132,973
985,000 Pool # 14382, 5.500%, 07/01/2015 (e)<F25> 970,225
359,353 Pool # 745456, 5.500%, 03/01/2016 358,299
296,903 Pool # 745659, 5.000%, 04/01/2016 289,253
331,180 Pool # 745444, 5.500%, 04/01/2016 327,303
1,218,628 Pool # 357312, 5.000%, 12/01/2017 1,182,039
136,459 Pool # 254759, 4.500%, 06/01/2018 130,022
642,006 Pool # 254865, 4.500%, 09/01/2018 611,725
457,785 Pool # 725546, 4.500%, 06/01/2019 435,546
1,565,000 Pool # 19355, 6.000%, 08/15/2022 (e)<F25> 1,571,357
242,573 Pool # 555203, 7.000%, 09/01/2032 249,199
274,768 Pool # 386320, 4.550%, 10/01/2033 240,323
FNMA Remic
18,410 Series 2003-87, 3.500%, 04/25/2011 (e)<F25> 18,354
28,570 Series 2003-88, 3.500%, 04/25/2011 (e)<F25> 28,473
17,387 Series 2002-83, 5.000%, 11/25/2012 (e)<F25> 17,335
334,987 Series 2002-74, 5.000%, 03/25/2015 333,150
1,028,764 Series 2005-35, 4.000%, 08/25/2018 985,307
915,199 Series 2004-93, 4.250%, 04/25/2019 876,469
92,023 Series 2003-58, 3.500%, 10/25/2021 (e)<F25> 91,362
544,938 Series 2005-95, 4.500%, 03/25/2033 519,522
222,226 Series 2004-64, 5.000%, 03/25/2034 215,556
133,011 Series 2003-W19, 5.500%, 11/25/2043 (e)<F25> 132,295
217,953 Series 2004-T2, 7.000%, 11/25/2043 224,157
FNMA TBA
2,220,000 5.000%, 07/15/2037 (d)<F24> 2,065,809
11,145,000 5.500%, 07/15/2037 (d)<F24> 10,747,959
2,030,000 6.000%, 07/15/2037 (d)<F24> 2,007,796
4,295,000 5.000%, 08/15/2037 (d)<F24> 4,022,534
1,540,000 5.500%, 08/15/2037 (d)<F24> 1,484,175
7,745,000 6.000%, 08/15/2037 (d)<F24> 7,655,452
1,605,000 6.500%, 08/15/2037 (d)<F24> 1,618,543
741,268 GMAC Commercial Mortgage Securities Inc.
Pool # 2003-C1, 3.337%, 05/10/2036 704,117
413,960 GNMA Pool
Pool # 2005-21, 5.000%, 03/20/2035 344,205
635,000 Greenwich Capital Commercial Funding Corp.
Pool # 2005-GG5, 5.117%, 04/10/2037 627,948
455,000 GS Mortgage Securities Corp. II
Series 2007-EOP, 5.410%, 03/06/2020
(Acquired 06/01/2007,
Cost $455,000) (a)<F21>(c)<F23> 455,000
570,000 JP Morgan Chase Commercial Mortgage Securities Corp.
Series 2006-LDP9, 5.336%, 05/15/2047 546,345
LB-UBS Commercial Mortgage Trust
1,025,000 Pool # 2002-C7, 3.899%, 12/15/2026 (e)<F25> 1,018,213
138,141 Pool # 2003-C3, 2.599%, 05/15/2027 135,822
220,000 Pool # 2005-C5, 4.885%, 09/15/2030 216,803
945,000 Pool # 2005-C7, 5.103%, 11/15/2030 933,985
198,246 Master Alternative Loans Trust
Pool # 2004-6, 4.500%, 07/25/2014 193,997
Master Asset Securitization Trust
154,740 Pool # 2004-3, 4.750%, 01/25/2014 152,049
12,534 Pool # 2003-11, 4.000%, 12/25/2033 (e)<F25> 12,495
Merrill Lynch Commercial Mortgage Trust
119,024 Pool 2002-MW1, 4.929%, 07/12/2034 118,673
388,751 Pool 2006-C2, 5.601%, 08/12/2043 389,399
287,554 Pool 2006-3, 4.711%, 07/12/2046 282,370
279,090 Morgan Stanley Capital I
Pool # 2003-IQ4, 3.270%, 05/15/2040 268,846
6,631 Nomura Asset Acceptance Corp.
Pool # 2005-AP3, 5.211%, 08/25/2035 (c)<F23>(e)<F25> 6,632
Wachovia Bank Commercial Mortgage Trust
387,196 Pool # 2003-C5, 2.986%, 06/15/2035 365,620
692,126 Pool # 2003-C7, 4.241%, 10/15/2035
(Acquired 09/26/2006 and 01/18/2007,
Cost $674,596) (a)<F21> 672,340
701,214 Wells Fargo Mortgage Backed Securities Trust
Pool # 2006-3, 5.500%, 03/25/2036 694,262
------------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $69,767,364) 69,306,527
------------
SUPRANATIONAL ISSUE 0.3%
290,000 European Investment Bank
4.875%, 02/15/2036 (b)<F22> 262,732
------------
TOTAL SUPRANATIONAL ISSUE
(Cost $287,613) 262,732
------------
U.S. GOVERNMENT AGENCY ISSUES 15.7%
Federal Home Loan Bank
970,000 5.750%, 10/15/2007 970,912
480,000 5.500%, 12/27/2007 480,201
840,000 5.500%, 01/28/2008 840,475
3,000,000 2.625%, 07/15/2008 2,921,391
2,985,000 5.250%, 08/14/2008 2,983,943
Fannie Mae
1,730,000 5.250%, 10/30/2007 1,729,118
2,010,000 5.000%, 09/15/2008 2,003,534
Freddie Mac
250,000 5.500%, 01/18/2008 250,135
2,025,000 5.500%, 08/20/2012 2,043,349
------------
TOTAL U.S. GOVERNMENT AGENCY ISSUES
(Cost $14,232,364) 14,223,058
------------
U.S. TREASURY OBLIGATIONS 17.0%
U.S. Treasury Bonds 2.2%
2,000,000 5.250%, 02/15/2029 (e)<F25> 2,013,750
------------
U.S. Treasury Notes 14.8%
4,805,000 4.500%, 04/30/2012 (e)<F25> 4,715,656
230,000 4.750%, 05/31/2012 228,203
3,475,000 4.625%, 11/15/2016 (e)<F25> 3,367,765
4,900,000 4.625%, 02/15/2017 (e)<F25> 4,745,346
415,000 4.500%, 05/15/2017 397,881
------------
13,454,851
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $15,349,691) 15,468,601
------------
SHORT-TERM INVESTMENTS 14.5%
US Government Agency Issues (f)<F26> 8.0%
7,265,000 Federal Home Loan Bank Discount Notes,
0.000%, 07/02/2007 (e)<F25> 7,264,078
------------
Variable Rate Demand Notes (g)<F27> 6.5%
3,595,797 American Family Financial Services, Inc.,
4.595%, 12/31/2031 (e)<F25> 3,595,797
34,526 U.S. Bank Demand Note, 4.949%, 12/31/2031 34,526
2,306,723 Wisconsin Corporate Central Credit Union,
4.869%, 12/31/2031 (e)<F25> 2,306,723
------------
5,937,046
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $13,201,124) 13,201,124
------------
TOTAL INVESTMENTS 142.0%
(Cost $129,499,659) 128,921,857
Liabilities in Excess of Other Assets (42.0)% (38,150,763)
------------
TOTAL NET ASSETS 100.0% $ 90,771,094
------------
------------
(a)<F21> Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration normally to qualified institutional buyers. The
total value of these securities amounted to $5,233,971 (5.8% of net
assets) at June 30, 2007.
(b)<F22> Foreign Issued.
(c)<F23> Adjustable Rate.
(d)<F24> When-issued security.
(e)<F25> Security marked as segregated to cover when-issued security.
(f)<F26> The obligations of certain U.S. Government-sponsored entities are
neither issued nor guaranteed by the United States Treasury.
(g)<F27> Variable rate demand notes are considered short-term obligations and
are payable upon demand. Interest rates change periodically on
specified dates. The rates listed are as of June 30, 2007.
CREDIT DEFAULT SWAPS
Expiration Notional
Date Amount Value(a)<F28>
---------- -------- -------------
Pay quarterly a fixed annual rate of 0.12% multiplied by
the notional amount and receive from JP Morgan Chase
upon default event of AT&T Corp., par value of the
notional amount of AT&T Corp. 7.300%, 11/15/11 3/20/12 $ 220,000 $ 112
Receive quarterly a fixed annual rate of 0.40% multiplied
by the notional amount and pay to JP Morgan Chase upon
credit event of a Dow Jones CDX North America High
Yield Index reference obligation, par value of the notional
amount of the Dow Jones CDX North America High
Yield Index reference obligation 12/20/11 1,095,000 2,394
Pay quarterly a fixed annual rate of 0.17% multiplied by the
notional amount and receive from JP Morgan Chase upon
default event of Comcast Cable, par value of the notional
amount of Comcast Cable 7.125%, 06/15/13 3/20/12 220,000 585
Pay quarterly a fixed annual rate of 0.23% multiplied by the
notional amount and receive from JP Morgan Chase upon
default event of Cox Communications, Inc., par value
of the notional amount of Cox Communications, Inc.
6.800%, 08/01/28 3/20/12 220,000 298
Pay quarterly a fixed annual rate of 0.08% multiplied by the
notional amount and receive from JP Morgan Chase upon
default event of Walt Disney Co., par value of the
notional amount of Walt Disney Co. 6.375%, 03/01/12 3/20/12 220,000 430
Pay quarterly a fixed annual rate of 0.39% multiplied by the
notional amount and receive from JP Morgan Chase upon
default event of Sprint Capital Corp., par value of the
notional amount of Sprint Capital Corp.
8.375%, 03/15/12 3/20/12 220,000 1,717
Pay quarterly a fixed annual rate of 0.16% multiplied by the
notional amount and receive from JP Morgan Chase upon
default event of News America Inc., par value of the
notional amount of News America, Inc. 7.250%, 05/18/18 3/20/12 220,000 375
Pay quarterly a fixed annual rate of 0.20% multiplied by the
notional amount and receive from JP Morgan Chase upon
default event of Time Warner Inc., par value of the
notional amount of Time Warner, Inc. 6.875%, 05/01/12 3/20/12 220,000 207
Pay quarterly a fixed annual rate of 0.19% multiplied by the
notional amount and receive from JP Morgan Chase
upon default event of Verizon Communications,
par value of the notional amount of Verizon
Communications 4.900%, 09/15/15 3/20/12 220,000 (57)
---------- ------
$2,855,000 $6,061
---------- ------
---------- ------
(a)<F28> Includes interest paid or received by the Fund on the notional
amount.
The accompanying notes are an integral part of these financial statements.
Frontegra Investment Grade Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments at value (cost $129,499,659) $128,921,857
Interest receivable 738,552
Receivable for investments sold 28,474,155
Receivable from Adviser 6,717
Unrealized appreciation on swaps 5,722
Other assets 11,529
------------
Total assets 158,158,532
------------
LIABILITIES:
Payable for investments purchased 66,334,152
Payable for Fund shares purchased 220,000
Distributions payable 513,726
Payable to Custodian 259,876
Accrued expenses 59,684
------------
Total liabilities 67,387,438
------------
NET ASSETS $ 90,771,094
------------
------------
NET ASSETS CONSIST OF:
Paid in capital $94,336,932
Undistributed net investment income 23,908
Accumulated net realized loss on investments sold (3,018,005)
Net unrealized appreciation (depreciation) on:
Investments (577,802)
Swap contracts 6,061
------------
NET ASSETS $ 90,771,094
------------
------------
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 50,000,000
Issued and outstanding 9,087,918
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $9.99
-----
-----
The accompanying notes are an integral part of these financial statements.
Frontegra Investment Grade Bond Fund
STATEMENT OF OPERATIONS
YEAR ENDED
JUNE 30, 2007
-------------
INVESTMENT INCOME:
Interest $4,503,014
----------
EXPENSES:
Investment advisory fees (Note 3) 380,729
Fund administration and accounting fees 74,426
Custody fees 38,905
Audit fees 31,139
Federal and state registration fees 21,834
Legal fees 21,329
Shareholder servicing fees 11,309
Compliance support expenses 6,464
Directors' fees and related expenses 5,834
Reports to shareholders 2,231
Other 3,502
----------
Total expenses before waiver and reimbursement 597,702
Waiver and reimbursement of expenses by Adviser (Note 3) (416,403)
----------
Net expenses 181,299
----------
NET INVESTMENT INCOME 4,321,715
----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 346,908
Change in net unrealized
appreciation/depreciation on:
Investments 834,722
Swap contracts 6,061
----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 1,187,691
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $5,509,406
----------
----------
The accompanying notes are an integral part of these financial statements.
Frontegra Investment Grade Bond Fund
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
OPERATIONS:
Net investment income $ 4,321,715 $ 4,117,876
Net realized gain (loss) on investments 346,908 (3,050,529)
Change in net unrealized
appreciation/depreciation on:
Investments 834,722 (1,221,096)
Swap contracts 6,061 _
----------- -----------
Net increase (decrease) in net assets
resulting from operations 5,509,406 (153,749)
----------- -----------
DISTRIBUTIONS
PAID FROM:
Net investment income (4,275,494) (4,205,872)
Net realized gain on investments _ (536,017)
----------- -----------
Net decrease in net assets resulting
from distributions paid (4,275,494) (4,741,889)
----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 9,412,455 12,127,530
Shares issued to holders in
reinvestment of distributions 2,230,746 2,844,314
Shares redeemed (18,992,991) (8,908,417)
----------- -----------
Net increase (decrease) in net assets resulting
from capital share transactions (7,349,790) 6,063,427
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,115,878) 1,167,789
----------- -----------
NET ASSETS:
Beginning of year 96,886,972 95,719,183
----------- -----------
End of year
(includes undistributed net investment income
of $23,908 and $32,118, respectively) $90,771,094 $96,886,972
----------- -----------
----------- -----------
The accompanying notes are an integral part of these financial statements.
Frontegra Investment Grade Bond Fund
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------
NET ASSET VALUE,
BEGINNING OF YEAR $ 9.86 $10.36 $10.22 $10.62 $10.28
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.48 0.42 0.37 0.31 0.35
Net realized and unrealized
gain (loss) on investments 0.13 (0.43) 0.27 (0.15) 0.45
------ ------ ------ ------ ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.61 (0.01) 0.64 0.16 0.80
------ ------ ------ ------ ------
LESS DISTRIBUTIONS PAID:
From net investment income (0.48) (0.43) (0.37) (0.31) (0.35)
From net realized gain on investments _ (0.06) (0.13) (0.25) (0.11)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS PAID (0.48) (0.49) (0.50) (0.56) (0.46)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.99 $ 9.86 $10.36 $10.22 $10.62
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 6.26% (0.11)% 6.32% 1.53% 7.93%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of year (in thousands) $90,771 $96,887 $95,719 $123,913 $135,211
Ratio of expenses to average net assets(1)<F29> 0.20% 0.20% 0.40% 0.42% 0.42%
Ratio of net investment income
to average net assets(1)<F29> 4.77% 4.20% 3.07% 2.39% 3.78%
Portfolio turnover rate 980% 1,121% 1,080% 1,104% 625%
(1)<F29> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net
assets would have been 0.66%, 0.65%, 0.62%, 0.62% and 0.62% and the
ratio of net investment income to average net assets would have been
4.31%, 3.75%, 2.85%, 2.19% and 3.58% for the years ended June 30,
2007, June 30, 2006, June 30, 2005, June 30, 2004 and June 30, 2003,
respectively.
The accompanying notes are an integral part of these financial statements.
FRONTEGRA
IRONBRIDGE
SMALL CAP FUND
FRONTEGRA
IRONBRIDGE
SMID FUND
REPORT FROM IRONBRIDGE CAPITAL MANAGEMENT, L.P.:
Dear Fellow Shareholders:
The Frontegra IronBridge Small Cap Fund strives to achieve capital appreciation
by investing in a diversified portfolio of equity securities of companies with
small market capitalizations. The objective is relative to and measured against
the Russell 2000 Index.
The Frontegra IronBridge SMID Fund strives to achieve capital appreciation by
investing in a diversified portfolio of equity securities of companies with
small and mid market capitalizations. The objective is relative to and measured
against the Russell 2500 Index.
PERFORMANCE REVIEW
For the year ended June 30, 2007, the Frontegra IronBridge Small Cap Fund has
significantly outperformed the benchmark, returning 22.11% after fees. That
compares with the Russell 2000 Index return of 16.43% for the same period.
SMALL CAP FUND WINNERS RETURN SMALL CAP FUND LOSERS RETURN
- ---------------------- ------ --------------------- ------
AQUANTIVE INC 156.9% SYMYX TECHNOLOGIES COM -55.7%
AMERICAN SUPERCONDUCTOR 122.5% PROGRESSIVE GAMING -53.6%
FLIR SYSTEMS INC 97.9% OPENWAVE SYSTEMS INC -41.3%
APOGEE ENTERPRISES INC 93.7% SOURCE INTERLINK COS INC -38.9%
ALBEMARLE CORP 84.5% UNIVERSAL FST PRODS COM -32.4%
QUANTA SERVICES INC 83.1% WITNESS SYSTEMS INC -31.0%
VARIAN SEMICONDUCTOR 78.1% FOXHOLLOW TECHNOLOGIES -29.8%
WOODWARD GOVERNOR CO 77.5% SECURE COMPUTING CORP -27.8%
OAKLEY INC 76.0% MERCANTILE BANK CORP -27.5%
PARAMETRIC TECHNOLOGY 71.6% CONNETICS CORP -27.0%
The Frontegra IronBridge SMID Fund outperformed its benchmark, the Russell 2500
Index, for the 12-month period ended June 30, 2007. The Fund returned 22.25%
net of fees, versus the 18.74% return of the Russell 2500 Index.
SMID FUND WINNERS RETURN SMID FUND LOSERS RETURN
- ----------------- ------ ---------------- ------
MEDIMMUNE INC 91% SYMYX TECHNOLOGIES COM -52%
INFRASOURCE SERVICES 75% OPENWAVE SYSTEMS INC -44%
VARIAN SEMICONDUCTOR 61% DIGITAS INC -32%
AGRIUM INC 52% UNIT CORP -23%
LUBRIZOL CORP COM 51% FOXHOLLOW TECHNOLOGIES -23%
EFUNDS CORP 50% GETTY IMAGES INC -23%
CABOT OIL & GAS CORP 49% AVAYA INC -20%
JACOBS ENGINEERING GROUP 48% MASSEY ENERGY CO -19%
GOODRICH CORP 47% VERISIGN INC -19%
AFFILIATED MANAGERS GROUP 45% VARIAN MEDICAL SYSTEMS -17%
PORTFOLIO OUTLOOK:
As the old Wall Street adage goes, "The market climbs a wall of worry." The
ladder the market is climbing is built on an abundance of global liquidity,
merger mania, a Fed committed to bringing inflation within its comfort zone, and
genuinely solid corporate profits and growth driven by globalization. In many
ways, this is our kind of market. Mini meltdowns in housing-related and sub-
prime markets have benefited the portfolio because we refused to chase companies
without economic justification. Of course, having quite a few of our companies
taken over helps too.
Corporate earnings season is about to kick off, so we will get an update on the
forces that have been driving the markets higher. So far, the driving forces
remain in place and include plenty of global liquidity, increased private equity
activity, robust corporate profits, and reasonable growth driven by
globalization. However, we do not expect the market to go straight up. There
will be adjustments along the way. It is impossible to predict whether these
adjustments will be caused by one or more of the worries that we have
highlighted or, more likely, something none of us is currently thinking about.
That is what makes this business so challenging. That is why it is so important
to have a solid discipline and stick to it. While we do not have a crystal ball
to tell us the future, we do have a solid discipline founded on wealth creation
principles, valuation expertise, and risk controls to help us meet our goal of
consistently delivering excess return for our clients.
Thank you for your continued support.
/s/Christopher C. Faber /s/Jeffrey B. Madden
Christopher C. Faber Jeffrey B. Madden
IronBridge Capital Management, L.P. IronBridge Capital Management, L.P.
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment (Unaudited)
Frontegra IronBridge Russell
Date Small Cap Fund 2000 Index
---- -------------------- ----------
8/30/2002*<F30> $100,000 $100,000
9/30/2002 $95,200 $92,819
12/31/2002 $106,200 $98,534
3/31/2003 $104,500 $94,108
6/30/2003 $130,400 $116,152
9/30/2003 $136,000 $126,696
12/31/2003 $152,713 $145,098
3/31/2004 $160,082 $154,179
6/30/2004 $162,027 $154,900
9/30/2004 $159,571 $150,479
12/31/2004 $181,408 $171,683
3/31/2005 $166,490 $162,520
6/30/2005 $175,746 $169,543
9/30/2005 $189,575 $177,506
12/31/2005 $188,832 $179,516
3/31/2006 $210,057 $204,544
6/30/2006 $200,709 $194,266
9/30/2006 $200,819 $195,121
12/31/2006 $218,234 $212,482
3/31/2007 $228,953 $216,617
6/30/2007 $245,092 $226,182
*<F30> 8/30/02 commencement of operations.
Portfolio Total Return**<F31>
FOR THE YEAR ENDED 6/30/07
SIX MONTHS 12.31%
ONE YEAR 22.11%
THREE YEAR
AVERAGE ANNUAL 14.79%
SINCE COMMENCEMENT
AVERAGE ANNUAL 20.38%
This chart assumes an initial gross investment of $100,000 made on 8/30/02
(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. To receive current to the most recent
month-end performance, please call 1-888-825-2100.
The Russell 2000 Index measures the performance of the 2,000 smallest companies
in the Russell 3000 Index. The Russell 3000 Index measures the performance of
the 3,000 largest U.S. companies based on total market capitalization. The
Index does not reflect investment management fees, brokerage commissions and
other expenses associated with investing in equity securities. A direct
investment in the index is not possible.
**<F31> The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Frontegra IronBridge Small Cap Fund
SCHEDULE OF INVESTMENTS
June 30, 2007
Number of Shares Value
- ---------------- -----
COMMON STOCKS 97.4%
Aerospace & Defense 3.6%
1,430 Mercury Computer Systems, Inc. (a)<F32> $ 17,446
124,959 Moog Inc. - Class A (a)<F32> 5,511,942
160,432 Orbital Sciences Corp. (a)<F32> 3,370,676
68,491 Triumph Group, Inc. 4,484,106
39,252 United Industrial Corp. 2,354,335
------------
15,738,505
------------
Auto Components 0.8%
109,928 Gentex Corp. 2,164,482
63,820 Superior Industries International, Inc. 1,388,723
------------
3,553,205
------------
Biotechnology 1.8%
248,805 Cepheid, Inc. (a)<F32> 3,632,553
171,174 Exelixis, Inc. (a)<F32> 2,071,205
38,769 Techne Corp. (a)<F32> 2,217,975
------------
7,921,733
------------
Building Products 1.8%
132,105 Apogee Enterprises, Inc. 3,675,161
100,705 Universal Forest Products, Inc. 4,255,793
------------
7,930,954
------------
Capital Markets 2.9%
72,939 A.G. Edwards, Inc. 6,166,992
243,335 Jefferies Group, Inc. 6,565,178
------------
12,732,170
------------
Chemicals 4.3%
84,810 FMC Corp. 7,581,166
96,975 Lubrizol Corp. 6,259,736
140,699 Methanex Corp. (b)<F33> 3,537,173
110,670 Symyx Technologies, Inc. (a)<F32> 1,273,812
------------
18,651,887
------------
Commercial Banks 6.4%
138,747 Cathay General Bancorp 4,653,574
109,925 Community Bank System, Inc. 2,200,699
151,925 First Midwest Bancorp, Inc. 5,394,857
5,289 Frontier Financial Corp. 119,161
17,591 Mercantile Bank Corp. 476,716
139,941 Pacific Capital Bancorp 3,775,608
280,009 Sterling Bancshares, Inc. 3,166,902
151,425 United Bankshares, Inc. 4,815,315
67,747 Westamerica Bancorporation 2,997,127
------------
27,599,959
------------
Commercial Services & Supplies 3.0%
74,121 ICF International, Inc. (a)<F32> 1,491,315
147,456 Mobile Mini, Inc. (a)<F32> 4,305,715
80,813 Quanta Services, Inc. (a)<F32> 2,478,535
33,553 Strayer Education, Inc. 4,419,266
------------
12,694,831
------------
Communications Equipment 2.3%
108,288 Polycom, Inc. (a)<F32> 3,638,477
211,791 Tekelec (a)<F32> 3,054,026
95,466 ViaSat, Inc. (a)<F32> 3,064,459
------------
9,756,962
------------
Computer Programming Services 0.5%
94,774 Perficient, Inc. (a)<F32> 1,961,822
------------
Distributors 0.0%
1,745 Source Interlink Companies, Inc. (a)<F32> 8,690
------------
Electric Utilities 1.0%
111,440 Black Hills Corp. 4,429,740
------------
Electrical Equipment 2.9%
144,872 American Superconductor Corp. (a)<F32> 2,797,478
75,065 Thomas & Betts Corp. (a)<F32> 4,353,770
100,661 Woodward Governor Co. 5,402,476
------------
12,553,724
------------
Electronic Equipment & Instruments 7.0%
283,646 Aeroflex, Inc. (a)<F32> 4,019,264
112,629 Flir Systems, Inc. (a)<F32> 5,209,091
1,397 Kemet Corp. (a)<F32> 9,849
104,247 National Instruments Corp. 3,395,325
82,245 Novatel, Inc. (a)<F32>(b)<F33> 2,985,494
65,568 Rofin-Sinar Technologies, Inc. (a)<F32> 4,524,192
200,278 Trimble Navigation Ltd. (a)<F32> 6,448,952
167,852 Veeco Instruments, Inc. (a)<F32> 3,481,250
------------
30,073,417
------------
Energy Equipment & Services 4.7%
57,522 FMC Technologies, Inc. (a)<F32> 4,556,893
34,151 Lufkin Industries, Inc. 2,204,447
84,558 Oceaneering International, Inc. (a)<F32> 4,451,133
111,990 Oil States International, Inc. (a)<F32> 4,629,667
67,885 Unit Corp. (a)<F32> 4,270,645
------------
20,112,785
------------
Food Products 1.7%
90,098 Corn Products International, Inc. 4,094,954
126,112 Peet's Coffee & Tea, Inc. (a)<F32> 3,106,139
------------
7,201,093
------------
Gas Utilities 1.0%
109,332 AGL Resources, Inc. 4,425,759
------------
Health Care Equipment & Supplies 4.9%
184,192 ABIOMED, Inc. (a)<F32> 1,985,590
33,478 Analogic Corp. 2,460,968
31,921 IDEXX Laboratories, Inc. (a)<F32> 3,020,684
88,838 Respironics, Inc. (a)<F32> 3,783,610
113,026 SonoSite, Inc. (a)<F32> 3,552,407
126,521 Thoratec Corp. (a)<F32> 2,326,721
73,709 Varian, Inc. (a)<F32> 4,041,464
------------
21,171,444
------------
Health Care Providers & Services 3.6%
115,686 Allscripts Healthcare Solutions, Inc. (a)<F32> 2,947,679
135,687 Cerner Corp. (a)<F32> 7,526,558
83,686 Owens & Minor, Inc. 2,923,989
125,309 Phase Forward, Inc. (a)<F32> 2,108,950
------------
15,507,176
------------
Hotels, Restaurants & Leisure 1.0%
200,014 California Pizza Kitchen, Inc. (a)<F32> 4,296,301
------------
Household Durables 0.4%
92,609 iRobot Corp. (a)<F32> 1,838,289
------------
Household Products 0.5%
69,298 WD-40 Co. 2,277,825
------------
Industrial Conglomerates 0.8%
101,361 Raven Industries, Inc. 3,619,601
------------
Insurance 3.5%
112,332 Argonaut Group, Inc. (a)<F32> 3,505,882
72,906 FBL Financial Group, Inc. - Class A 2,866,664
94,499 The Midland Co. 4,435,783
80,453 Selective Insurance Group, Inc. 2,162,577
49,916 Stewart Information Services Corp. 1,988,154
------------
14,959,060
------------
Internet & Catalog Retail 0.5%
148,278 Stamps.com Inc. (a)<F32> 2,043,271
------------
Internet Software & Services 2.3%
157,602 aQuantive, Inc. (a)<F32> 10,055,008
------------
IT Services 1.0%
120,229 eFunds Corp. (a)<F32> 4,242,881
------------
Leisure Equipment & Products 3.6%
246,912 Callaway Golf Co. 4,397,503
384,076 Leapfrog Enterprises, Inc. (a)<F32> 3,936,779
257,978 Oakley, Inc. 7,326,575
------------
15,660,857
------------
Machinery 5.7%
112,870 Astec Industries, Inc. (a)<F32> 4,765,371
174,454 IDEX Corp. 6,723,457
118,282 Kaydon Corp. 6,164,858
92,032 Lincoln Electric Holdings, Inc. 6,832,456
------------
24,486,142
------------
Marine 0.9%
76,872 Alexander & Baldwin, Inc. 4,082,672
------------
Media 0.5%
62,900 Media General, Inc. 2,092,683
------------
Medical Supplies & Services 0.5%
109,243 Foxhollow Technologies, Inc. (a)<F32> 2,320,321
------------
Metals & Mining 1.0%
74,006 Commercial Metals Co. 2,499,183
27,130 RTI International Metals, Inc. (a)<F32> 2,044,788
------------
4,543,971
------------
Multi-Utilities & Unregulated Power 1.1%
212,219 Avista Corp. 4,573,319
------------
Oil & Gas 1.6%
187,022 Cabot Oil & Gas Corp. 6,897,371
------------
Real Estate 4.4%
334,488 Annaly Mortgage Management, Inc. 4,823,317
133,956 Corporate Office Properties Trust 5,493,536
70,490 First Industrial Realty Trust, Inc. 2,732,192
117,004 Mid-America Apartment Communities, Inc. 6,140,370
------------
19,189,415
------------
Semiconductor & Semiconductor Equipment 4.1%
122,668 Cohu, Inc. 2,729,363
241,898 Cypress Semiconductor Corp. (a)<F32> 5,633,804
125,037 Intevac, Inc. (a)<F32> 2,658,287
166,871 Varian Semiconductor
Equipment Associates, Inc. (a)<F32> 6,684,852
------------
17,706,306
------------
Software 2.4%
99,562 Manhattan Associates, Inc. (a)<F32> 2,778,775
348,547 Parametric Technology Corp. (a)<F32> 7,532,101
------------
10,310,876
------------
Specialty Retail 4.0%
144,622 Men's Wearhouse, Inc. 7,385,846
178,114 Stage Stores, Inc. 3,733,269
120,580 Tractor Supply Co. (a)<F32> 6,276,189
------------
17,395,304
------------
Textiles, Apparel & Luxury Goods 2.5%
89,356 Oxford Industries, Inc. 3,962,045
240,739 Wolverine World Wide, Inc. 6,670,878
------------
10,632,923
------------
Thrifts & Mortgage Finance 0.9%
137,105 PFF Bancorp, Inc. 3,829,343
------------
TOTAL COMMON STOCKS
(Cost $316,671,541) 421,079,595
------------
Principal Amount
- ----------------
SHORT-TERM INVESTMENTS 3.0%
Variable Rate Demand Notes (c)<F34> 3.0%
$12,138,893 American Family Financial Services, Inc.,
4.9931%, 12/31/2031 12,138,893
34,550 U.S. Bank, N.A., 5.07%, 12/31/2031 34,550
677,348 Wisconsin Corporate Central Credit Union,
4.99%, 12/31/2031 677,348
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $12,850,791) 12,850,791
------------
TOTAL INVESTMENTS 100.4%
(Cost $329,522,332) 433,930,386
Liabilities in Excess of Other Assets 0.4% (1,527,421)
------------
TOTAL NET ASSETS 100.0% $432,402,965
------------
------------
(a)<F32> Non-income producing.
(b)<F33> U.S.-dollar denominated security of foreign issuer.
(c)<F34> Variable rate demand notes are considered short-term obligations and
are payable upon demand. Interest rates change periodically on
specified dates. The rates listed are as of June 30, 2007.
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments at value (cost $329,522,332) $433,930,386
Cash 2,279
Interest and dividend receivable 658,741
Receivable for investments sold 833,018
Receivable for Fund shares sold 1,043,969
Other assets 18,573
------------
Total assets 436,486,966
------------
LIABILITIES:
Payable for investments purchased 632,199
Payable for Fund shares purchased 3,001,432
Accrued investment advisory fees 371,954
Accrued expenses 78,416
------------
Total liabilities 4,084,001
------------
NET ASSETS $432,402,965
------------
------------
NET ASSETS CONSIST OF:
Paid in capital $308,865,183
Undistributed net realized gain 19,129,728
Net unrealized appreciation on investments 104,408,054
------------
NET ASSETS $432,402,965
------------
------------
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 50,000,000
Issued and outstanding 21,248,038
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $20.35
------
------
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge Small Cap Fund
STATEMENT OF OPERATIONS
YEAR ENDED
JUNE 30, 2007
-------------
INVESTMENT INCOME:
Dividends(1)<F35> $ 3,360,446
Interest 753,449
-----------
4,113,895
-----------
EXPENSES:
Investment advisory fees (Note 3) 4,019,684
Fund administration and accounting fees 125,976
Custody fees 33,070
Audit fees 29,580
Federal and state registration fees 29,399
Legal fees 20,170
Shareholder servicing fees 17,196
Reports to shareholders 12,865
Compliance support expenses 5,894
Directors' fees and related expenses 5,833
Other 13,865
-----------
Total expenses before recapture 4,313,532
Expenses recaptured by Adviser (Note 3) 108,120
-----------
Total expenses 4,421,652
-----------
NET INVESTMENT LOSS (307,757)
-----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 26,990,992
Change in net unrealized
appreciation/depreciation on investments 53,525,309
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 80,516,301
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $80,208,544
-----------
-----------
(1)<F35> Net of $10,747 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge Small Cap Fund
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
OPERATIONS:
Net investment income (loss) $ (307,757) $ 587,649
Net realized gain on investments 26,990,992 31,429,334
Change in net unrealized
appreciation/depreciation on investments 53,525,309 15,646,688
------------ ------------
Net increase in net assets
resulting from operations 80,208,544 47,663,671
------------ ------------
DISTRIBUTIONS
PAID FROM:
Net investment income (409,379) -
Net realized gain on investments (34,371,912) (3,758,723)
------------ ------------
Net decrease in net assets resulting
from distributions paid (34,781,291) (3,758,723)
------------ ------------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 35,281,886 80,988,917
Shares issued to holders in
reinvestment of distributions 33,624,374 3,621,889
Shares redeemed (86,149,770) (43,377,633)
------------ ------------
Net increase (decrease) in net assets resulting
from capital share transactions (17,243,510) 41,233,173
------------ ------------
TOTAL INCREASE IN NET ASSETS 28,183,743 85,138,121
------------ ------------
NET ASSETS:
Beginning of year 404,219,222 319,081,101
------------ ------------
End of year
(includes undistributed net investment income
of $0 and $489,564, respectively) $432,402,965 $404,219,222
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge Small Cap Fund
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2007 2006 2005 2004 2003(1)<F36>(6)<F41>
-------- -------- -------- -------- --------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $18.25 $16.14 $15.83 $13.04 $10.00
INCOME (LOSS)
FROM INVESTMENT
OPERATIONS:
Net investment income (loss) (0.00) 0.03 (0.03) (0.04) -(5)<F40>
Net realized and unrealized
gain on investments 3.82 2.25 1.38 3.17 3.04
------ ------ ------ ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS 3.82 2.28 1.35 3.13 3.04
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
PAID:
From net investment income (0.02) - - - -
From net realized gain on investments (1.70) (0.17) (1.04) (0.34) -
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS PAID (1.72) (0.17) (1.04) (0.34) -
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $20.35 $18.25 $16.14 $15.83 $13.04
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN(2)<F37> 22.11% 14.20% 8.47% 24.25% 30.40%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of period (in thousands) $432,403 $404,219 $319,081 $144,988 $54,074
Ratio of expenses
to average net assets(3)<F38>(4)<F39> 1.10% 1.10% 1.10% 1.10% 1.10%
Ratio of net investment income (loss)
to average net assets(3)<F38>(4)<F39> (0.08)% 0.15% (0.27)% (0.29)% (0.07)%
Portfolio turnover rate(2)<F37> 34% 60% 56% 94% 28%
(1)<F36> Commenced operations on August 30, 2002.
(2)<F37> Not annualized for periods less than a full year.
(3)<F38> Net of waivers, reimbursements and expense recapture by Adviser.
Without expense recapture, the ratio of expenses to average net
assets would have been 1.07% and 1.08% and the ratio of net
investment income (loss) to average net assets would have been
(0.05)% and 0.17% for the periods ended June 30, 2007 and June 30,
2006, respectively. Without waivers and reimbursements of expenses,
the ratio of expenses to average net assets would have been 1.11%,
1.21% and 2.15% and the ratio of net investment loss to average net
assets would have been (0.28)%, (0.40)% and (1.12)% for the periods
ended June 30, 2005, June 30, 2004 and June 30, 2003, respectively.
(4)<F39> Annualized.
(5)<F40> Less than one cent per share.
(6)<F41> Formerly the Frontegra Horizon Fund for the period ended June 30,
2003.
The accompanying notes are an integral part of these financial statements.
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment (Unaudited)
Date Frontegra IronBridge SMID Fund Russell 2500 Index
---- ------------------------------ ------------------
12/31/2004*<F42> $100,000 $100,000
3/31/2005 $98,100 $96,857
6/30/2005 $100,000 $101,234
9/30/2005 $106,700 $106,179
12/31/2005 $108,615 $108,094
3/31/2006 $118,744 $120,135
6/30/2006 $111,022 $114,919
9/30/2006 $112,426 $115,515
12/31/2006 $118,760 $125,562
3/31/2007 $126,684 $130,021
6/30/2007 $135,726 $136,449
*<F42> 12/31/04 commencement of operations.
Portfolio Total Return**<F43>
FOR THE YEAR ENDED 6/30/07
SIX MONTHS 14.29%
ONE YEAR 22.25%
SINCE COMMENCEMENT
AVERAGE ANNUAL 13.02%
This chart assumes an initial gross investment of $100,000 made on 12/31/04
(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. To receive current to the most recent
month-end performance, please call 1-888-825-2100.
The Russell 2500 Index measures the performance of the 2,500 smallest companies
in the Russell 3000 Index. The Russell 3000 Index measures the performance of
the 3,000 largest U.S. companies based on total market capitalization. The
Index does not reflect investment management fees, brokerage commissions and
other expenses associated with investing in equity securities. A direct
investment in the index is not possible.
**<F43> The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Frontegra IronBridge SMID Fund
SCHEDULE OF INVESTMENTS
June 30, 2007
Number of Shares Value
- ---------------- -----
COMMON STOCKS 95.6%
Aerospace & Defense 4.0%
43,054 Goodrich Corp. $ 2,564,296
54,308 Moog Inc. - Class A (a)<F44> 2,395,526
59,246 Teledyne Technologies, Inc. (a)<F44> 2,722,354
------------
7,682,176
------------
Auto Components 0.7%
72,634 Gentex Corp. 1,430,164
------------
Biotechnology 2.5%
85,279 Affymetrix, Inc. (a)<F44> 2,122,594
23,130 Cephalon, Inc. (a)<F44> 1,859,421
85,167 Millennium Pharmaceuticals, Inc. (a)<F44> 900,215
------------
4,882,230
------------
Capital Markets 2.6%
18,850 Affiliated Managers Group, Inc. (a)<F44> 2,427,126
95,235 Jefferies Group, Inc. 2,569,440
------------
4,996,566
------------
Chemicals 6.4%
41,483 Agrium, Inc. (b)<F45> 1,814,881
57,566 Airgas, Inc. 2,757,411
50,627 Lubrizol Corp. 3,267,973
62,321 Methanex Corp. (b)<F45> 1,566,750
68,220 Sigma-Aldrich Corp. 2,910,947
------------
12,317,962
------------
Commercial Banks 3.9%
53,020 Cullen/Frost Bankers, Inc. 2,834,979
73,160 Synovus Financial Corp. 2,246,012
61,543 Wilmington Trust Corp. 2,554,650
------------
7,635,641
------------
Commercial Services & Supplies 1.1%
74,073 Mobile Mini, Inc. (a)<F44> 2,162,932
------------
Communications Equipment 4.4%
39,505 Harris Corp. 2,154,998
80,058 Polycom, Inc. (a)<F44> 2,689,949
276,554 Tellabs, Inc. (a)<F44> 2,975,721
19,303 ViaSat, Inc. (a)<F44> 619,626
------------
8,440,294
------------
Construction & Engineering 2.1%
41,614 InfraSource Services, Inc. (a)<F44> 1,543,879
43,540 Jacobs Engineering Group, Inc. (a)<F44> 2,503,985
------------
4,047,864
------------
Distributors 1.4%
56,190 Genuine Parts Co. 2,787,024
------------
Diversified Financial Services 1.6%
54,769 CIT Group, Inc. 3,002,984
------------
Electric Utilities 2.6%
51,278 Allegheny Energy, Inc. (a)<F44> 2,653,124
54,693 Wisconsin Energy Corp. 2,419,071
------------
5,072,195
------------
Electrical Equipment 1.5%
73,204 AMETEK, Inc. 2,904,735
------------
Electronic Equipment & Instruments 2.9%
66,812 National Instruments Corp. 2,176,067
107,846 Trimble Navigation Ltd. (a)<F44> 3,472,641
------------
5,648,708
------------
Energy Equipment & Services 1.6%
51,950 ENSCO International Inc. 3,169,470
------------
Food & Staples Retailing 1.0%
40,510 Supervalu, Inc. 1,876,423
------------
Food Products 3.7%
73,267 Corn Products International, Inc. 3,329,985
102,686 Hormel Foods Corp. 3,835,322
------------
7,165,307
------------
Gas Utilities 1.3%
48,056 Questar Corp. 2,539,760
------------
Health Care Equipment & Supplies 3.9%
13,020 IDEXX Laboratories, Inc. (a)<F44> 1,232,083
19,082 Intuitive Surgical, Inc. (a)<F44> 2,648,009
122,070 Thoratec Corp. (a)<F44> 2,244,867
33,393 Varian Medical Systems, Inc. (a)<F44> 1,419,536
------------
7,544,495
------------
Health Care Providers & Services 5.0%
55,101 Cerner Corp. (a)<F44> 3,056,453
119,355 IMS Health, Inc. 3,834,876
70,659 Pharmaceutical Product Development, Inc. 2,704,120
------------
9,595,449
------------
Hotels Restaurants & Leisure 1.4%
63,140 Royal Caribbean Cruises Ltd. (b)<F45> 2,713,757
------------
Insurance 3.7%
54,089 American Financial Group, Inc. 1,847,139
47,450 Nationwide Financial Services Inc. - Class A 2,999,789
21,857 SAFECO Corp. 1,360,817
22,730 Stewart Information Services Corp. 905,336
------------
7,113,081
------------
IT Services 1.5%
81,463 eFunds Corp. (a)<F44> 2,874,829
------------
Leisure Equipment & Products 2.1%
75,645 Leapfrog Enterprises, Inc. (a)<F44> 775,361
117,980 Oakley, Inc. 3,350,632
------------
4,125,993
------------
Machinery 3.0%
42,440 ITT Industries, Inc. 2,897,803
29,220 Parker Hannifin Corp. 2,860,930
------------
5,758,733
------------
Marine 1.9%
69,084 Alexander & Baldwin, Inc. 3,669,051
------------
Media 0.5%
27,988 Media General, Inc. - Class A 931,161
------------
Medical Supplies & Services 0.5%
46,077 Foxhollow Technologies, Inc. (a)<F44> 978,676
------------
Metal & Mining 1.3%
71,920 Arch Coal, Inc. 2,502,816
------------
Oil & Gas 1.2%
61,920 Cabot Oil & Gas Corp. 2,283,610
------------
Paper & Forest Products 2.0%
86,888 Rayonier Inc. 3,922,124
------------
Pharmaceuticals 1.5%
57,240 Barr Pharmaceuticals Inc. (a)<F44> 2,875,165
------------
Real Estate 4.3%
159,590 Annaly Mortgage Management, Inc. 2,301,288
32,169 Forest City Enterprises, Inc. - Class A 1,977,750
88,430 The St. Joe Co. 4,097,846
------------
8,376,884
------------
Road & Rail 1.1%
31,864 Canadian Pacific Railway Ltd. (b)<F45> 2,192,881
------------
Semiconductor & Semiconductor Equipment 1.2%
58,050 Varian Semiconductor
Equipment Associates, Inc. (a)<F44> 2,325,483
------------
Software 4.9%
114,525 Cadence Design Systems, Inc. (a)<F44> 2,514,969
75,211 Citrix Systems, Inc. (a)<F44> 2,532,354
205,855 Parametric Technology Corp. (a)<F44> 4,448,527
------------
9,495,850
------------
Specialty Retail 6.5%
31,349 Abercrombie & Fitch Co. - Class A 2,287,850
27,511 Guitar Center, Inc. (a)<F44> 1,645,433
53,479 Men's Wearhouse, Inc. 2,731,173
70,799 O'Reilly Automotive, Inc. (a)<F44> 2,587,704
63,041 Tractor Supply Co. (a)<F44> 3,281,284
------------
12,533,444
------------
Textiles, Apparel & Luxury Goods 1.3%
89,013 Wolverine World Wide, Inc. 2,466,550
------------
Water Utilities 1.5%
124,625 Aqua America, Inc. 2,802,816
------------
TOTAL COMMON STOCKS
(Cost $154,709,871) 184,845,283
------------
Principal Amount
- ----------------
SHORT-TERM INVESTMENTS 4.5%
Variable Rate Demand Notes (c)<F46> 4.5%
$7,609,003 American Family Financial Services, Inc.,
4.9931%, 12/31/2031 7,609,003
1,269 U.S. Bank, N.A., 5.07%, 12/31/2031 1,269
1,135,000 Wisconsin Corporate Central Credit Union,
4.99%, 12/31/2031 1,135,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $8,745,272) 8,745,272
------------
TOTAL INVESTMENTS 100.1%
(Cost $163,455,143) 193,590,555
Liabilities in Excess of Other Assets (0.1)% (166,390)
------------
TOTAL NET ASSETS 100.0% $193,424,165
------------
------------
(a)<F44> Non-income producing.
(b)<F45> U.S.-dollar denominated security of foreign issuer.
(c)<F46> Variable rate demand notes are considered short-term obligations and
are payable upon demand. Interest rates change periodically on
specified dates. The rates listed are as of June 30, 2007.
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge SMID Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments at value (cost $163,455,143) $193,590,555
Cash 6,951
Interest and dividend receivable 146,910
Receivable for Fund shares sold 579,522
Other assets 10,159
------------
Total assets 194,334,097
------------
LIABILITIES:
Payable for investments purchased 610,400
Payable for Fund shares purchased 122,107
Accrued investment advisory fees 127,736
Accrued expenses 49,689
------------
Total liabilities 909,932
------------
NET ASSETS $193,424,165
------------
------------
NET ASSETS CONSIST OF:
Paid in capital $154,756,110
Undistributed net investment income 186,635
Undistributed net realized gain 8,346,008
Net unrealized appreciation on investments 30,135,412
------------
NET ASSETS $193,424,165
------------
------------
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 50,000,000
Issued and outstanding 14,477,733
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $13.36
------
------
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge SMID Fund
STATEMENT OF OPERATIONS
YEAR ENDED
JUNE 30, 2007
-------------
INVESTMENT INCOME:
Dividends(1)<F47> $ 1,513,177
Interest 268,420
-----------
1,781,597
-----------
EXPENSES:
Investment advisory fees (Note 3) 1,438,918
Fund administration and accounting fees 67,959
Federal and state registration fees 30,690
Audit fees 28,280
Custody fees 23,817
Legal fees 23,340
Shareholder servicing fees 13,861
Reports to shareholders 7,585
Compliance support expenses 5,894
Directors' fees and related expenses 5,833
Other 5,104
-----------
Total expenses before waiver 1,651,281
Waiver of expenses by Adviser (Note 3) (43,079)
-----------
Net expenses 1,608,202
-----------
NET INVESTMENT INCOME 173,395
-----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 8,354,738
Change in net unrealized
appreciation/depreciation on investments 27,486,376
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 35,841,114
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $36,014,509
-----------
-----------
(1)<F47> Net of $7,550 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge SMID Fund
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
OPERATIONS:
Net investment income $ 173,395 $ 227,660
Net realized gain on investments 8,354,738 2,671,035
Change in net unrealized
appreciation/depreciation on investments 27,486,376 1,603,263
------------ ------------
Net increase in net assets
resulting from operations 36,014,509 4,501,958
------------ ------------
DISTRIBUTIONS
PAID FROM:
Net investment income (64,902) (201,965)
Net realized gain on investments (2,103,711) _
------------ ------------
Net decrease in net assets resulting
from distributions paid (2,168,613) (201,965)
------------ ------------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 56,990,350 91,416,841
Shares issued to holders in
reinvestment of distributions 1,884,048 162,875
Shares redeemed (32,354,509) (4,459,042)
------------ ------------
Net increase in net assets resulting
from capital share transactions 26,519,889 87,120,674
------------ ------------
TOTAL INCREASE IN NET ASSETS 60,365,785 91,420,667
------------ ------------
NET ASSETS:
Beginning of year 133,058,380 41,637,713
------------ ------------
End of year
(includes undistributed net investment income
of $186,635 and $110,989, respectively) $193,424,165 $133,058,380
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements.
Frontegra IronBridge SMID Fund
FINANCIAL HIGHLIGHTS
YEAR YEAR PERIOD
ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30,
2007 2006 2005(1)<F48>
-------- -------- ------------
NET ASSET VALUE,
BEGINNING OF PERIOD $11.07 $10.00 $10.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.06(5)<F52> 0.04(5)<F52>
Net realized and unrealized
gain (loss) on investments 2.43 1.04 (0.04)
------ ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS 2.44 1.10 0.00
------ ------ ------
LESS DISTRIBUTIONS PAID:
From net investment income - (6)<F53> (0.03) -
From net realized gain on investments (0.15) - -
------ ------ ------
TOTAL DISTRIBUTIONS PAID (0.15) (0.03) -
------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.36 $11.07 $10.00
------ ------ ------
------ ------ ------
TOTAL RETURN(2)<F49> 22.25% 11.02% 0.00%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of period (in thousands) $193,424 $133,058 $41,638
Ratio of expenses
to average net assets(3)<F50>(4)<F51> 0.95% 0.95% 0.95%
Ratio of net investment income
to average net assets(3)<F50>(4)<F51> 0.10% 0.28% 0.89%
Portfolio turnover rate(2)<F49> 71% 91% 44%
(1)<F48> Commenced operations on December 31, 2004.
(2)<F49> Not annualized for periods less than a full year.
(3)<F50> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net
assets would have been 0.98%, 1.08% and 1.49% and the ratio of net
investment income to average net assets would have been 0.07%, 0.15%
and 0.35% for the periods ended June 30, 2007, June 30, 2006 and
June 30, 2005, respectively.
(4)<F51> Annualized.
(5)<F52> Per share net investment income has been calculated using the daily
average share method.
(6)<F53> Less than one cent per share.
The accompanying notes are an integral part of these financial statements.
FRONTEGRA
NEW STAR INTERNATIONAL
EQUITY FUND
REPORT FROM NEW STAR
INSTITUTIONAL MANAGERS LIMITED:
Dear Fellow Shareholders:
The Frontegra New Star International Equity Fund strives to achieve capital
appreciation by investing in a diversified portfolio of securities of large- and
mid-cap companies located outside the United States. The objective is relative
to and measured against the Morgan Stanley Capital International EAFE Index.
PERFORMANCE REVIEW
The Frontegra New Star International Equity Fund returned 27.12%, net of fees,
for the one year period ended June 30, 2007. The Fund's return trailed the
27.71% return of its benchmark, the MSCI EAFE Index.
EXECUTIVE SUMMARY
Another twelve months goes by and on the surface nothing much has changed.
International stock markets have had another year of strong returns very similar
to the last. The markets have been driven again by mid cap stocks and in
particular the cyclical companies. But the general backdrop has changed, which
suggests that events may unfold somewhat differently in the coming twelve
months.
Over the last year the general liquidity environment has remained buoyant, which
remains the key to the strength in markets. A year ago much of this liquidity
was driven by central bank rate cuts. Now most central banks are raising rates
to ward off inflation fears. The slack has been taken up by the continued growth
in hedge funds, the Asian savings surplus, and the dramatic increase in private
equity activity and other takeover activity.
Although short-term interest rates have risen steadily over the last year,
longer term yields have stayed relatively low. This has allowed private equity
companies to borrow cheaply and structure numerous takeovers. These takeovers
were initially concentrated in the regulated return industries. As their
confidence has grown this has spilled over into other sectors, including many
cyclical companies. This has probably been the key driver of sectorial return
patterns, especially in Europe.
Cyclical companies have had another year where earnings revisions have surprised
the market. This extraordinary earnings growth has kept valuations within
reasonable historical ranges. The growth in the BRIC (Brazil, Russia, India and
China) markets is the main reason for this continued performance and will likely
continue as long as these countries are growing. This explains our increased
exposure in this area.
Looking out, there are some problems that suggest we will struggle to have a
third straight year of such high returns. The Federal Reserves determination to
reign in inflation has triggered problems in the sub-prime market. This has
transmitted itself to a general rise in bond yields globally, which is in turn
affecting the general liquidity picture. The private equity firms are also
likely to find life more difficult in this kind of environment.
The U.S. Dollar has continued to weaken over the last year. The fiscal and trade
deficits continue to weigh on sentiment. Interest rate increases have helped a
little but they are often matched in Europe. Until the relative growth picture
improves for the U.S. it would appear unlikely that the dollar will strengthen
significantly in the near term.
PORTFOLIO OUTLOOK AND STRATEGY
An interesting development in recent months has been the better performance from
large capitalization stocks. Mainly as a result of the increased risk premium
that the market has demanded since the sub-prime crisis emerged. This is wholly
justified by valuation but needed a catalyst to get investors to reduce their
mid cap exposure.
Earnings momentum has stayed surprisingly robust through the last year. The
classic defensive growth sectors have still struggled against the continued
stellar earnings from the cyclicals. We believe that it's still difficult to
justify broad sector biases. It is a case of finding individual stock ideas that
fulfill our normal high return on invested capital ("ROIC") screening criteria,
regardless of what sectors they are in. Having said that we do have some
sectorial differences; we are overweight European oils and IT and underweight
European banks in particular.
The only significant regional bet is the overweight in Hong Kong/ China at the
expense of the UK. We feel that Hong Kong is and will continue to benefit from
the huge Chinese savings pool that the authorities are encouraging to drift
outside the mainland.
/s/Mark Beale
Mark Beale
New Star Institutional Managers Limited
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment (Unaudited)
Frontegra New Star Morgan Stanley Capital
Date International Equity Fund International EAFE Index
---- ------------------------- ------------------------
1/8/2004*<F54> $100,000 $100,000
3/31/2004 $100,600 $101,609
6/30/2004 $100,300 $102,052
9/30/2004 $99,900 $101,861
12/31/2004 $111,807 $117,515
3/31/2005 $112,008 $117,420
6/30/2005 $111,204 $116,586
9/30/2005 $120,345 $128,786
12/31/2005 $123,206 $134,118
3/31/2006 $133,245 $146,850
6/30/2006 $132,738 $148,278
9/30/2006 $137,808 $154,200
12/31/2006 $148,837 $170,298
3/31/2007 $156,483 $177,410
6/30/2007 $168,738 $189,365
*<F54> 1/08/04 commencement of operations.
Portfolio Total Return**<F55>
FOR THE YEAR ENDED 6/30/07
SIX MONTHS 13.37%
ONE YEAR 27.12%
THREE YEAR 18.93%
SINCE COMMENCEMENT
AVERAGE ANNUAL 16.25%
This chart assumes an initial gross investment of $100,000 made on 1/08/04
(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. To receive current to the most recent
month-end performance, please call 1-888-825-2100.
The Morgan Stanley Capital International EAFE Index measures the overall
performance of stock markets in 21 countries within Europe, Australasia and the
Far East. The Index does not reflect investment management fees, brokerage
commissions and other expenses associated with investing in equity securities.
A direct investment in the index is not possible.
**<F55> The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Frontegra New Star International Equity Fund
SCHEDULE OF INVESTMENTS
June 30, 2007
Number of Shares Value
- ---------------- -----
COMMON STOCKS 97.9%
Australia 6.1%
1,024,261 Axa Asia Pacific Holdings Ltd. $ 6,451,997
237,579 Orica Ltd. 6,002,318
262,800 QBE Insurance Group Ltd. 6,951,438
166,034 Rio Tinto Ltd. 13,906,080
320,369 Santos Ltd. 3,786,238
155,310 Woodside Petroleum Ltd. 6,024,003
------------
43,122,074
------------
Austria 0.7%
78,200 OMV AG 5,238,029
------------
Belgium 1.6%
4,000 Belgacom SA 177,844
59,300 Delhaize Group 5,846,931
124,140 Fortis 5,294,243
------------
11,319,018
------------
Finland 2.6%
156,900 Fortum Oyj 4,924,560
75,004 Metso Oyj 4,448,366
331,600 Nokia Oyj 9,339,644
------------
18,712,570
------------
France 12.6%
52,000 Alstom (a)<F56> 8,742,560
138,600 Arcelor Mittal 8,736,011
63,311 Bouygues SA 5,328,972
113,196 CapGemini SA 8,329,792
115,600 Carrefour SA 8,157,791
51,454 Compagnie Generale
des Etablissements Michelin - Class B 7,232,182
60,734 LVMH Moet Hennessy Louis Vuitton SA 7,031,449
136,066 Publicis Groupe 6,012,797
105,180 Technip SA 8,726,445
160,676 Total SA 13,104,603
197,719 Vivendi 8,539,234
------------
89,941,836
------------
Germany 9.3%
38,100 Allianz AG 8,900,399
169,098 Commerzbank AG 8,067,544
103,300 DaimlerChrysler AG 9,542,160
51,777 E.ON AG 8,660,918
84,243 Fresenius Medical Care AG 3,880,069
133,681 Gea Group AG (a)<F56> 4,633,648
161,600 Karstadt Quelle AG (a)<F56> 5,443,898
114,222 Metro AG 9,461,171
53,300 Siemens AG 7,650,355
------------
66,240,162
------------
Greece 1.0%
219,212 Alpha Bank A.E. 6,912,959
------------
Hong Kong 5.9%
464,000 Cheung Kong (Holdings) Ltd. 6,076,529
35,000 China Mobile Ltd. 375,774
116,964 China Mobile (Hong Kong) Ltd. - ADR 6,304,360
5,865,000 Guangdong Investment Ltd. 3,420,350
1,842,000 Hang Lung Properties Ltd. 6,348,718
12,337,000 Industrial & Commercial Bank Of China Ltd. 6,847,578
459,000 Sun Hung Kai Properties Ltd. 5,523,826
1,024,000 Television Broadcasts Ltd. 7,202,783
------------
42,099,918
------------
India 0.7%
91,300 Infosys Technologies Ltd. - ADR 4,599,694
------------
Italy 2.4%
285,281 Eni SPA 10,386,491
749,199 UniCredito Italiano SPA 6,722,866
------------
17,109,357
------------
Japan 19.4%
163,200 Aeon Co. Ltd. 3,035,354
449,000 The Bank of Yokohama, Ltd. 3,150,749
935 East Japan Railway Co. 7,214,213
70,400 Fanuc Ltd. 7,272,999
958,000 Fujitsu, Ltd. 7,064,885
151,000 IBIDEN CO., LTD. 9,762,112
607 Inpex Holdings, Inc. 5,669,442
160,000 Isetan Co. Ltd. 2,631,472
329,000 Kao Corp. 8,523,939
12,600 Komatsu Ltd. 366,360
187,300 Mitsubishi Corp. 4,913,535
899 Mitsubishi Tokyo Financial Group, Inc. 9,930,071
24,000 Mitsui & Co., Ltd. 478,538
276,000 Mitsui Fudosan Co., Ltd. 7,756,020
108,700 Murata Manufacturing Co., Ltd. 8,201,608
397,000 Nippon Electric Glass Co., Ltd. 7,012,995
465,900 Nomura Holdings, Inc. 9,081,503
88,100 Sony Corp. 4,529,324
1,067,000 Sumitomo Metal Industries, Ltd. 6,291,509
593,000 The Sumitomo Trust & Banking Co., Ltd. 5,659,086
190,600 Toyota Motor Corp. 12,074,558
267,800 Yamaha Motor Co., Ltd. 7,786,591
------------
138,406,863
------------
Netherlands 4.8%
86,833 Akzo Nobel NV 7,516,869
284,260 ASML Holding NV (a)<F56> 7,887,027
178,200 ING Groep NV 7,908,477
236,600 Koninklijke (Royal) KPN NV 3,945,201
232,505 Wolters Kluwer NV 7,127,615
------------
34,385,189
------------
Russia 1.8%
30,900 LUKOIL - ADR 2,370,030
57,758 Lukoil Oil Company 4,401,160
554,365 VTB Bank OJSC - GDR (a)<F56> 5,987,142
------------
12,758,332
------------
Singapore 2.3%
989,000 Capitaland Ltd. 5,233,317
356,000 Great Eastern Holdings Ltd. 4,302,466
453,000 United Overseas Bank Ltd. 6,510,534
------------
16,046,317
------------
Spain 0.7%
202,206 Indra Sistemas, SA 5,068,492
------------
Sweden 2.1%
184,300 Skanska AB 3,974,770
133,980 Swedbank AB 4,877,913
1,573,000 Telefonaktiebolaget LM Ericsson - Class B 6,315,736
------------
15,168,419
------------
Switzerland 7.2%
75,700 Holcim Ltd. 8,230,012
235,698 Novartis AG 13,314,091
74,600 Roche Holding AG 13,277,151
123,264 UBS AG 7,427,123
28,938 Zurich Financial Services AG 8,984,639
------------
51,233,016
------------
Taiwan 0.6%
389,437 Taiwan Semiconductor Manufacturing Co. Ltd. - ADR 4,334,435
------------
Turkey 0.0%
6,326 Turkcell Iletisim Hizmetleri AS - ADR 105,328
------------
United Kingdom 16.1%
445,800 Aviva plc 6,655,936
1,116,000 BAE Systems plc 9,076,268
499,282 Barclays plc 6,978,197
567,000 British Sky Broadcasting Group plc 7,287,040
359,166 EMAP plc 5,935,853
215,476 Experian Group Ltd (a)<F56> 2,723,847
469,100 GlaxoSmithKline plc 12,293,175
289,700 Invesco plc 3,761,016
2,764,780 Legal & General Group plc 8,333,537
512,995 National Grid plc 7,602,520
827,084 Rolls-Royce Group plc 8,943,828
3,598,590 Rolls-Royce Group plc - Class B 7,371
195,300 Royal Dutch Shell plc - Class A 7,977,031
301,618 Scottish & Newcastle plc 3,879,399
205,333 Smiths Group plc 4,886,132
3,698,853 Vodafone Group plc 12,463,704
131,864 Wolseley plc 3,182,869
325,100 Yell Group plc 3,017,741
------------
115,005,464
------------
TOTAL COMMON STOCKS
(Cost $553,255,495) 697,807,472
------------
SHORT-TERM INVESTMENT 0.2%
Investment Company 0.2%
1,033,617 First American Prime Obligations Fund 1,033,617
------------
TOTAL SHORT-TERM INVESTMENT
(Cost $1,033,617) 1,033,617
------------
TOTAL INVESTMENTS 98.1%
(Cost $554,289,112) 698,841,089
Other Assets in Excess of Liabilities 1.9% 13,779,182
------------
TOTAL NET ASSETS 100.0% $712,620,271
------------
------------
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
(a)<F56> Non-income producing
As of June 30, 2007, the currency diversification as a percentage of net assets
was as follows:
European Monetary Unit 35.9%
Japanese Yen 19.6%
British Pounds 16.4%
Swiss Francs 7.2%
Australian Dollars 6.1%
Hong Kong Dollars 5.0%
Other 9.8%*<F57>
------
100.0%
------
------
*<F57> None of the remaining currencies (comprised of five other currencies)
exceeds 5.0% each of net assets.
The accompanying notes are an integral part of these financial statements.
Frontegra New Star International Equity Fund
PORTFOLIO DIVERSIFICATION
June 30, 2007
Value Percentage
----- ----------
Aerospace & Defense $22,906,228 3.2%
Auto Components 7,232,182 1.0%
Automobiles 29,403,309 4.1%
Beverages 3,879,399 0.5%
Capital Markets 20,269,641 2.8%
Chemicals 13,519,187 1.9%
Commercial Banks 71,644,639 10.1%
Communications Equipment 15,655,380 2.2%
Computers & Peripherals 7,064,885 1.0%
Construction & Engineering 3,974,771 0.6%
Construction Materials 8,230,012 1.2%
Diversified Financial Services 15,926,567 2.2%
Diversified Telecommunication Services 4,123,045 0.6%
Electric Utilities 13,585,478 1.9%
Electronic Equipment & Instruments 24,976,715 3.5%
Energy Equipment & Services 8,733,816 1.2%
Food & Staples Retailing 26,501,248 3.7%
Health Care Providers & Services 3,880,070 0.5%
Household Durables 4,529,324 0.6%
Household Products 8,523,939 1.2%
Industrial Conglomerates 7,650,355 1.1%
Information Technology Services 17,997,977 2.5%
Insurance 50,580,412 7.1%
Machinery 25,463,931 3.6%
Media 45,123,063 6.3%
Metals & Mining 28,933,600 4.1%
Multiline Retail 8,075,370 1.1%
Multi-Utilities 7,602,520 1.1%
Oil, Gas & Consumable Fuels 58,957,027 8.3%
Pharmaceuticals 38,884,416 5.5%
Real Estate Management & Development 30,938,411 4.3%
Road & Rail 7,214,213 1.0%
Semiconductors & Semiconductor Equipment 12,221,462 1.7%
Textiles, Apparel & Luxury Goods 7,031,449 1.0%
Trading Companies & Distributors 8,574,943 1.2%
Water Utilities 3,420,350 0.5%
Wireless Telecommunication Services 24,578,138 3.5%
------------ ------
TOTAL COMMON STOCKS 697,807,472 97.9%
TOTAL SHORT-TERM INVESTMENTS 1,033,617 0.2%
------------ ------
TOTAL INVESTMENTS 698,841,089 98.1%
Other Assets in Excess of Liabilities 13,779,182 1.9%
------------ ------
TOTAL NET ASSETS $712,620,271 100.0%
------------ ------
------------ ------
The accompanying notes are an integral part of these financial statements.
Frontegra New Star International Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments at value (cost $554,289,112) $698,841,089
Foreign currencies at value (cost $4,427,623) 4,451,037
Cash 28,579
Interest and dividend receivable 1,889,831
Receivable for investments sold 15,205,556
Receivable for Fund shares sold 406,514
Other assets 10,643
------------
Total assets 720,833,249
------------
LIABILITIES:
Payable for investments purchased 7,717,415
Accrued investment advisory fees 297,806
Accrued expenses 197,757
------------
Total liabilities 8,212,978
------------
NET ASSETS $712,620,271
------------
------------
NET ASSETS CONSIST OF:
Paid in capital $527,801,212
Undistributed net investment income 8,461,283
Undistributed net realized gain 31,793,583
Net unrealized appreciation on:
Investments 144,532,561
Foreign currency 31,632
------------
NET ASSETS $712,620,271
------------
------------
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 100,000,000
Issued and outstanding 44,226,189
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $16.11
------
------
The accompanying notes are an integral part of these financial statements.
Frontegra New Star International Equity Fund
STATEMENT OF OPERATIONS
YEAR ENDED
JUNE 30, 2007
-------------
INVESTMENT INCOME:
Dividends(1)<F58> $ 14,085,239
Interest 220,800
------------
14,306,039
------------
EXPENSES:
Investment advisory fees (Note 3) 5,736,266
Custody fees 388,454
Fund administration and accounting fees 202,299
Audit fees 37,531
Federal and state registration fees 32,883
Legal fees 21,578
Reports to shareholders 15,362
Shareholder servicing fees 13,400
Compliance support expenses 5,853
Directors' fees and related expenses 5,833
Other 16,931
------------
Total expenses before waiver 6,476,390
Waiver of expenses by Adviser (Note 3) (1,947,759)
------------
Net expenses 4,528,631
------------
NET INVESTMENT INCOME 9,777,408
------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain on:
Investments 36,652,409
Foreign currency transactions 722,655
Change in net unrealized
appreciation/depreciation on:
Investments 99,800,538
Foreign currency translation (31,386)
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 137,144,216
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $146,921,624
------------
------------
(1)<F58> Net of $1,446,677 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements.
Frontegra New Star International Equity Fund
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
OPERATIONS:
Net investment income $ 9,777,408 $ 7,042,014
Net realized gain on:
Investments 36,652,409 5,641,146
Foreign currency transactions 722,655 429,294
Change in net unrealized
appreciation/depreciation on:
Investments 99,800,538 39,629,627
Foreign currency translation (31,386) 91,550
------------ ------------
Net increase in net assets
resulting from operations 146,921,624 52,833,631
------------ ------------
DISTRIBUTIONS
PAID FROM:
Net investment income (8,904,855) (2,078,944)
Net realized gain on investments (10,220,846) (1,246,828)
------------ ------------
Net decrease in net assets resulting
from distributions paid (19,125,701) (3,325,772)
------------ ------------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 119,965,159 353,446,231
Shares issued to holders in
reinvestment of distributions 16,269,562 2,853,747
Shares redeemed (82,731,619)(1)<F59> (11,964,291)
------------ ------------
Net increase in net assets resulting
from capital share transactions 53,503,102 344,335,687
------------ ------------
TOTAL INCREASE IN NET ASSETS 181,299,025 393,843,546
------------ ------------
NET ASSETS:
Beginning of year 531,321,246 137,477,700
------------ ------------
End of year
(includes undistributed net investment income
of $8,461,283 and $6,715,313, respectively) $712,620,271 $531,321,246
------------ ------------
------------ ------------
(1)<F59> Net of redemption fees of $476 for the year ended June 30, 2007.
The accompanying notes are an integral part of these financial statements.
Frontegra New Star International Equity Fund
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2007 2006 2005 2004(1)<F60>
-------- -------- -------- ------------
NET ASSET VALUE,
BEGINNING OF PERIOD $13.08 $11.07 $10.03 $10.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.25 0.31(5)<F64> 0.21(5)<F64> 0.09(5)<F64>
Net realized and unrealized
gain (loss) on investments 3.25 1.81 0.87 (0.08)
------ ------ ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS 3.50 2.12 1.08 0.01
------ ------ ------ ------
LESS DISTRIBUTIONS PAID:
From net investment income (0.22) (0.07) (0.01) _
From net realized gain on investments (0.25) (0.04) (0.03) _
------ ------ ------ ------
TOTAL DISTRIBUTIONS PAID (0.47) (0.11) (0.04) _
------ ------ ------ ------
Payment by Affiliates _ _ _ 0.02
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $16.11 $13.08 $11.07 $10.03
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN(2)<F61> 27.12% 19.27% 10.87% 0.30%(6)<F65>
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of period (in thousands) $712,620 $531,321 $137,478 $12,130
Ratio of expenses
to average net assets(3)<F62>(4)<F63> 0.75% 0.75% 0.95% 0.95%
Ratio of net investment income
to average net assets(3)<F62>(4)<F63> 1.62% 1.94% 1.96% 2.01%
Portfolio turnover rate(2)<F61> 62% 35% 44% 17%
(1)<F60> Commenced operations on January 8, 2004.
(2)<F61> Not annualized for periods less than a full year.
(3)<F62> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net
assets would have been 1.07%, 1.09%, 1.31% and 4.41% and the ratio of
net investment income (loss) to average net assets would have been
1.30%, 1.60%, 1.60% and (1.45)% for the periods ended June 30, 2007,
June 30, 2006, June 30, 2005 and June 30, 2004, respectively.
(4)<F63> Annualized.
(5)<F64> Per share net investment income has been calculated using the daily
average share method.
(6)<F65> During the period ended June 30, 2004, 0.20% of the Fund's total
return consists of a voluntary reimbursement by the Adviser.
Excluding this item, total return would have been 0.10%.
The accompanying notes are an integral part of these financial statements.
FRONTEGRA
NETOLS SMALL CAP
VALUE FUND
REPORT FROM NETOLS
ASSET MANAGEMENT:
Dear Fellow Shareholders:
Since its inception on December 16, 2005, the Frontegra Netols Small Cap Value
Fund has outperformed the benchmark after fees, returning 18.29% annualized,
compared to 16.39% for the Russell 2000 Value Index.
PERFORMANCE REVIEW
For the year ended June 30, 2007, the Frontegra Netols Small Cap Value Fund has
outperformed, returning 25.81%, net of fees, compared to 16.05% for the Russell
2000 Value Index.
PORTFOLIO REVIEW
Continued strength of the global economy was the dominant market factor in the
first half of 2007. As a result, the economically sensitive Energy, Materials
and Industrial sectors were the best performing sectors for the second quarter.
Additionally, global mergers and acquisitions totaling approximately $2.9
trillion helped fuel further gains in the equity markets. While the market
posted healthy returns, questions remained regarding the strength of the
domestic economy and the potential threat of inflation. Additionally, the sub-
prime meltdown and resultant credit tightening continued to play out during the
second quarter. These factors drove bond yields higher and resulted in
underperformance by the Consumer Discretionary and Financial sectors.
Our market outlook has not changed since the beginning of 2007. The world
economy continues to remain strong, even as the rate of domestic growth slows.
Driving international growth are commodity and energy exportation regions with
cash surpluses and the continued economic development of China. We also believe
we may be seeing the beginning of a credit tightening cycle, reversing the trend
of the past two decades. Therefore, we believe small cap equities with strong
balance sheets and continued profit strength should provide positive returns.
Positive Contributions to Relative Performance July 2006 through June 2007:
_ Stock selection - materials and processing; consumer discretionary
_ Underweight - financials; overweight industrials
_ Best performing stocks - General Cable, Brush Engineered Materials,
Robbins and Myers, Matrix Service Corp, Sturm Ruger
Negative Contributions to Relative Performance July 2006 through June 2007:
_ Stock selection - financials; technology
_ Underweight - materials
_ Worst performing stocks - Diversa, Applied Signal Technology, Nautilus,
James River Coal, Airtran Holdings
Thank you for your continued support.
/s/Jeff Netols
Jeff Netols
Netols Asset Management
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment (Unaudited)
Frontegra Netols Russell 2000
Date Small Cap Value Fund Value Index
---- -------------------- ------------
12/16/2005*<F66> $100,000 $100,000
12/31/2005 $98,900 $98,570
3/31/2006 $110,300 $111,883
6/30/2006 $102,900 $108,858
9/30/2006 $106,500 $111,636
12/31/2006 $115,288 $121,711
3/31/2007 $119,308 $123,494
6/30/2007 $129,460 $126,344
*<F66> 12/16/05 commencement of operations.
Portfolio Total Return**<F67>
FOR THE YEAR ENDED 6/30/07
SIX MONTHS 12.29%
ONE YEAR 25.81%
SINCE COMMENCEMENT
AVERAGE ANNUAL 18.29%
This chart assumes an initial gross investment of $100,000 made on 12/16/05
(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. To receive current to the most recent
month-end performance, please call 1-888-825-2100.
The Russell 2000 Value Index measures the performance of those Russell 2000
companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index measures the performance of the 2,000 smallest companies
in the Russell 3000 Index. The Russell 3000 Index measures the performance of
the 3,000 largest U.S. companies based on total market capitalization. The
Index does not reflect investment management fees, brokerage commissions and
other expenses associated with investing in equity securities. A direct
investment in the index is not possible.
**<F67> The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Frontegra Netols Small Cap Value Fund
SCHEDULE OF INVESTMENTS
June 30, 2007
Number of Shares Value
- ---------------- -----
COMMON STOCKS 99.5%
Aerospace & Defense 3.3%
4,807 American Science & Engineering, Inc. (a)<F68> $ 273,278
7,144 BE Aerospace, Inc. (a)<F68> 295,047
-----------
568,325
-----------
Auto Components 3.5%
7,678 Keystone Automotive Industries, Inc. (a)<F68> 317,639
8,060 Tenneco Automotive, Inc. (a)<F68> 282,422
-----------
600,061
-----------
Automobiles 0.9%
17,607 Fleetwood Enterprises, Inc. (a)<F68> 159,343
-----------
Beverages 2.0%
23,660 Cott Corp. (a)<F68>(b)<F69> 340,467
-----------
Chemicals 3.2%
9,941 Spartech Corp. 263,934
11,641 Terra Industries Inc. (a)<F68> 295,914
-----------
559,848
-----------
Commercial Banks 1.8%
45,357 W Holding Co., Inc. 119,743
4,218 Westamerica Bancorporation 186,604
-----------
306,347
-----------
Commercial Services & Supplies 5.4%
17,311 Corinthian Colleges, Inc. (a)<F68> 281,996
6,749 DeVry, Inc. 229,601
16,630 Diamond Management & Technology Consultants, Inc. 219,516
5,978 School Specialty, Inc. (a)<F68> 211,860
-----------
942,973
-----------
Construction & Engineering 1.7%
24,072 ENGlobal Corp. (a)<F68> 292,475
-----------
Diversified Financial Services 1.0%
3,576 GATX Corp. 176,118
-----------
Diversified Telecommunication Services 1.7%
18,625 Alaska Communications Systems Group Inc. 295,020
-----------
Electrical Equipment 7.0%
4,502 Acuity Brands, Inc. 271,381
33,996 C&D Technologies, Inc. (a)<F68> 190,378
5,550 General Cable Corp. (a)<F68> 420,413
18,968 LSI Industries, Inc. 339,527
-----------
1,221,699
-----------
Electronic Equipment & Instruments 1.0%
13,722 GTSI Corp. (a)<F68> 177,151
-----------
Energy Equipment & Services 3.2%
11,673 Global Industries, Ltd. (a)<F68> 313,070
10,054 Hanover Compressor Co. (a)<F68> 239,788
-----------
552,858
-----------
Food Products 1.4%
10,472 Lance, Inc. 246,720
-----------
Health Care Equipment & Services 0.7%
7,150 PSS World Medical, Inc. (a)<F68> 130,273
-----------
Health Care Equipment & Supplies 8.1%
4,988 Haemonetics Corp. (a)<F68> 262,419
10,064 Medical Action Industries Inc. (a)<F68> 181,756
17,243 Merit Medical Systems, Inc. (a)<F68> 206,226
6,702 PolyMedica Corp. 273,777
4,856 SurModics, Inc. (a)<F68> 242,800
4,323 Varian, Inc. (a)<F68> 237,030
-----------
1,404,008
-----------
Health Care Providers & Services 5.7%
14,218 Gentiva Health Services, Inc. (a)<F68> 285,213
9,501 Matria Healthcare, Inc. (a)<F68> 287,690
6,781 Sunrise Senior Living, Inc. (a)<F68> 271,172
10,334 U.S. Physical Therapy, Inc. (a)<F68> 139,199
-----------
983,274
-----------
Hotels Restaurants & Leisure 1.0%
8,635 O'Charleys, Inc. 174,082
-----------
Household Durables 1.5%
26,394 Champion Enterprises, Inc. (a)<F68> 259,453
-----------
Insurance 1.2%
4,412 Hanover Insurance Group Inc. 215,262
-----------
IT Services 2.9%
5,549 CACI International Inc. - Class A (a)<F68> 271,069
7,561 Mantech International Corp. - Class A (a)<F68> 233,106
-----------
504,175
-----------
Leisure Equipment & Products 2.8%
13,081 Nautilus, Inc. 157,495
20,957 Sturm, Ruger & Company, Inc. (a)<F68> 325,253
-----------
482,748
-----------
Machinery 7.0%
15,248 Federal Signal Corp. 241,833
5,500 IDEX Corp. 211,970
8,380 Robbins & Myers, Inc. 445,229
8,612 Wabtec Corp. 314,596
-----------
1,213,628
-----------
Marine 3.8%
4,435 Alexander & Baldwin, Inc. 235,543
7,083 American Commercial Lines Inc. (a)<F68> 184,512
9,250 General Maritime Corp. (b)<F69> 247,715
-----------
667,770
-----------
Media 2.8%
6,339 Arbitron Inc. 326,649
10,913 Cox Radio, Inc. (a)<F68> 155,401
-----------
482,050
-----------
Metals & Mining 4.2%
3,455 Brush Engineered Materials, Inc. (a)<F68> 145,075
7,994 Commercial Metals Co. 269,957
636 Compass Minerals International, Inc. 22,044
7,065 Foundation Coal Holdings, Inc. 287,122
-----------
724,198
-----------
Multiline Retail 1.5%
19,238 99 Cents Only Stores (a)<F68> 252,210
-----------
Oil & Gas 4.6%
8,614 Encore Acquisition Co. (a)<F68> 239,469
6,864 Forest Oil Corp. (a)<F68> 290,073
6,767 Whiting Petroleum Corp. (a)<F68> 274,199
-----------
803,741
-----------
Personal Products 1.8%
4,964 Chattem, Inc. (a)<F68> 314,618
-----------
Pharmaceuticals 3.5%
10,207 K-V Pharmaceutical Co. - Class A (a)<F68> 278,039
11,732 Par Pharmaceutical Companies, Inc. (a)<F68> 331,194
-----------
609,233
-----------
Real Estate 3.3%
9,642 Cedar Shopping Centers Inc. 138,363
4,832 First Industrial Realty Trust, Inc. 187,288
8,210 Sun Communities, Inc. 244,412
-----------
570,063
-----------
Semiconductor & Semiconductor Equipment 1.0%
4,489 Varian Semiconductor
Equipment Associates, Inc. (a)<F68> 179,829
-----------
Software 1.1%
11,709 EPIQ Systems, Inc. (a)<F68> 189,217
-----------
Specialty Retail 2.1%
23,099 Casual Male Retail Group Inc. (a)<F68> 233,300
16,074 Cost Plus, Inc. (a)<F68> 136,308
-----------
369,608
-----------
Textiles, Apparel & Luxury Goods 1.8%
12,050 Carter's, Inc. (a)<F68> 312,577
-----------
TOTAL COMMON STOCKS
(Cost $15,219,044) 17,281,422
-----------
SHORT-TERM INVESTMENTS 0.2%
Investment Company 0.2%
34,249 Fidelity Institutional Money Market Portfolio 34,249
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $34,249) 34,249
-----------
TOTAL INVESTMENTS 99.7%
(Cost $15,253,293) 17,315,671
Other Assets in Excess of Liabilities 0.3% 52,109
-----------
TOTAL NET ASSETS 100.0% $17,367,780
-----------
-----------
(a)<F68> Non-income producing.
(b)<F69> U.S.-dollar denominated security of foreign issuer.
The accompanying notes are an integral part of these financial statements.
Frontegra Netols Small Cap Value Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2007
ASSETS:
Investments at value (cost $15,253,293) $17,315,671
Interest and dividend receivable 13,420
Receivable for investments sold 111,610
Other assets 1,673
-----------
Total assets 17,442,374
-----------
LIABILITIES:
Payable for investments purchased 32,920
Accrued investment advisory fees 4,362
Accrued expenses 37,312
-----------
Total liabilities 74,594
-----------
NET ASSETS $17,367,780
-----------
-----------
NET ASSETS CONSIST OF:
Paid in capital $15,008,280
Undistributed net investment income 35,966
Undistributed net realized gain 261,156
Net unrealized appreciation on investments 2,062,378
-----------
NET ASSETS $17,367,780
-----------
-----------
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 50,000,000
Issued and outstanding 1,348,604
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $12.88
------
------
The accompanying notes are an integral part of these financial statements.
Frontegra Netols Small Cap Value Fund
STATEMENT OF OPERATIONS
YEAR ENDED
JUNE 30, 2007
-------------
INVESTMENT INCOME:
Dividends(1)<F70> $ 143,743
Interest 17,300
----------
161,043
----------
EXPENSES:
Investment advisory fees (Note 3) 114,875
Fund administration and accounting fees 27,914
Legal fees 23,835
Audit fees 22,281
Custody fees 17,839
Shareholder servicing fees 11,847
Federal and state registration fees 6,828
Compliance support expenses 5,867
Directors' fees and related expenses 5,833
Reports to shareholders 3,342
Other 810
----------
Total expenses before waiver and reimbursement 241,271
Waiver and reimbursement of expenses by Adviser (Note 3) (114,909)
----------
Net expenses 126,362
----------
NET INVESTMENT INCOME 34,681
----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 303,294
Change in net unrealized
appreciation/depreciation on investments 2,313,934
----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 2,617,228
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,651,909
----------
----------
(1)<F70> Net of $138 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements.
Frontegra Netols Small Cap Value Fund
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED PERIOD ENDED
JUNE 30, 2007 JUNE 30, 2006(1)<F71>
------------- ---------------------
OPERATIONS:
Net investment income $ 34,681 $ 1,079
Net realized gain on investments 303,294 13,904
Change in net unrealized
appreciation/depreciation on investments 2,313,934 (251,556)
----------- ----------
Net increase (decrease) in net assets
resulting from operations 2,651,909 (236,573)
----------- ----------
DISTRIBUTIONS
PAID FROM:
Net realized gain on investments (55,832) _
----------- ----------
Net decrease in net assets resulting
from distributions paid (55,832) _
----------- ----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 7,964,269 7,982,146
Shares issued to holders in
reinvestment of distributions 55,832 _
Shares redeemed (976,290) (17,681)
----------- ----------
Net increase in net assets resulting
from capital share transactions 7,043,811 7,964,465
----------- ----------
TOTAL INCREASE IN NET ASSETS 9,639,888 7,727,892
----------- ----------
NET ASSETS:
Beginning of period 7,727,892 _
----------- ----------
End of period
(includes undistributed net investment income
of $35,966 and $0, respectively) $17,367,780 $7,727,892
----------- ----------
----------- ----------
(1)<F71> Commenced operations on December 16, 2005.
The accompanying notes are an integral part of these financial statements.
Frontegra Netols Small Cap Value Fund
FINANCIAL HIGHLIGHTS
YEAR PERIOD
ENDED ENDED
JUNE 30, JUNE 30,
2007 2006(1)<F72>
-------- ------------
NET ASSET VALUE,
BEGINNING OF PERIOD $10.29 $10.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.03 _ (5)<F76>
Net realized and unrealized
gain on investments 2.62 0.29
------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS 2.65 0.29
------ ------
LESS DISTRIBUTIONS PAID:
From net realized gain on investments (0.06) _
------ ------
TOTAL DISTRIBUTIONS PAID (0.06) _
------ ------
NET ASSET VALUE, END OF PERIOD $12.88 $10.29
------ ------
------ ------
TOTAL RETURN(2)<F73> 25.81% 2.90%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of period (in thousands) $17,368 $7,728
Ratio of expenses to average net assets(3)<F74>(4)<F75> 1.10% 1.10%
Ratio of net investment income
to average net assets(3)<F74>(4)<F75> 0.30% 0.05%
Portfolio turnover rate(2)<F73> 49% 41%
(1)<F72> Commenced operations on December 16, 2005.
(2)<F73> Not annualized for periods less than a full year.
(3)<F74> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net
assets would have been 2.10% and 4.59% and the ratio of net
investment loss to average net assets would have been (0.70)% and
(3.44)% for the periods ended June 30, 2007 and June 30, 2006,
respectively.
(4)<F75> Annualized.
(5)<F76> Less than one cent per share.
The accompanying notes are an integral part of these financial statements.
Frontegra Funds
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
(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 six
series: the Frontegra Total Return Bond Fund, the Frontegra Investment
Grade Bond Fund, the Frontegra IronBridge Small Cap Fund (formerly
Frontegra Horizon Fund), the Frontegra IronBridge SMID Fund, the Frontegra
New Star International Equity Fund and the Frontegra Netols Small Cap Value
Fund (the "Funds"). The Frontegra Total Return Bond and Investment Grade
Bond Funds seek a high level of total return, consistent with the
preservation of capital. The investment objective of the Frontegra
IronBridge Small Cap Fund, the Frontegra IronBridge SMID Fund, the
Frontegra New Star International Equity Fund and the Frontegra Netols Small
Cap Value Fund is capital appreciation. The Frontegra Total Return Bond and
Investment Grade Bond Funds, sub-advised by Reams Asset Management Company,
LLC ("Reams"), commenced operations on November 25, 1996 and February 23,
2001, respectively. The Frontegra IronBridge Small Cap and IronBridge SMID
Funds, sub-advised by IronBridge Capital Management, L.P. ("IronBridge"),
commenced operations on August 30, 2002 and December 31, 2004,
respectively. The Frontegra New Star International Equity Fund, sub-
advised by New Star Institutional Managers Limited ("New Star"), commenced
operations on January 8, 2004. The Frontegra Netols Small Cap Value Fund,
sub-advised by Netols Asset Management, Inc. ("Netols"), commenced
operations on December 16, 2005.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements.
(a) Investment Valuation
Securities are stated at value. Debt securities (other than short-term
instruments) are valued by an independent pricing service, which uses
valuation methods such as matrix pricing and other analytical pricing
models as well as market transactions and dealer quotations.
Securities (other than short-term investments) 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. With respect to all Funds,
all equity securities that are traded using the National Association
of Securities Dealers' Automated Quotation System ("NASDAQ") are
valued using the NASDAQ Official Closing Price ("NOCP"). Shares of
underlying mutual funds are valued at their respective NAVs. Most
securities that are primarily traded on foreign exchanges generally
are valued at the last sale price of such securities on their
respective exchange. In certain countries market maker prices,
usually the mean between the bid and ask prices, are used. In certain
circumstances, such as when a significant event occurs in a foreign
market so that the last sale price no longer reflects actual value,
the fair value of these securities may be determined using fair
valuation procedures approved by the Board of Directors. The Directors
have retained an independent fair value pricing service to assist in
valuing foreign securities held by the Frontegra New Star
International Equity Fund. In valuing assets, prices denominated in
foreign currencies are converted to U.S. dollar equivalents at the
current exchange rate, which approximates market value. Securities
maturing within 60 days or less when purchased are valued by the
amortized cost method. Any securities or other assets for which
market quotations are not readily available are valued at their fair
value as determined in good faith by Reams, IronBridge, New Star and
Netols pursuant to guidelines established by the Board of Directors.
In September 2006, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 157,
"Fair Value Measurements". SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in accordance with
GAAP, and expands disclosure about fair value measurements. SFAS No.
157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. Management is currently evaluating
the implications of SFAS No. 157, and its impact on the financial
statements has not yet been determined.
(b) Federal Income Taxes
Each Fund intends to comply with the requirements of Subchapter M of
the Internal Revenue Code necessary to qualify as a regulated
investment company and to make the requisite distributions of income
and capital gains to its shareholders sufficient to relieve it from
all or substantially all federal income taxes. Therefore, no federal
income tax provision has been provided.
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain
tax positions should be recognized, measured, presented and disclosed
in the financial statements. FIN 48 requires the evaluation of tax
positions taken or expected to be taken in the course of preparing the
Funds' tax returns to determine whether the tax positions are "more
likely than not" of being sustained by the applicable tax authority.
A tax position that meets the more likely than not threshold is
measured to determine the amount of benefit or expense to recognize in
the financial statements. Adoption of FIN 48 is required as of the
date of the last Net Asset Value ("NAV") calculation in the first
required financial statement reporting period for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax
years as of the effective date. At this time, management is
evaluating the application of FIN 48 and its impact on the Funds'
financial statements has not yet been determined.
(c) Distributions to Shareholders
Dividends from net investment income are usually declared and paid
quarterly for the Frontegra Total Return Bond and Frontegra Investment
Grade Bond Funds and at least annually for the Frontegra IronBridge
Small Cap Fund, Frontegra IronBridge SMID Fund, Frontegra New Star
International Equity Fund and the Frontegra Netols Small Cap Value
Fund. Distributions of net realized gains, if any, are declared and
paid at least annually for all Funds. All short-term capital gains are
included in ordinary income for tax purposes. Distributions to
shareholders are recorded on the ex-dividend date.
The tax character of distributions paid during the periods ended June
30, 2007 and June 30, 2006 were as follows:
YEAR ENDED PERIOD ENDED
JUNE 30, 2007 JUNE 30, 2006
------------------------- --------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAINS INCOME CAPITAL GAINS
-------- ------------- -------- -------------
Frontegra Total
Return Bond Fund $14,405,929 $ _ $19,414,991 $ _
Frontegra Investment
Grade Bond Fund 4,275,494 _ 4,741,889 _
Frontegra IronBridge
Small Cap Fund 11,937,049 22,844,243 1,464,976 2,293,747
Frontegra IronBridge
SMIDFund 1,276,328 892,285 201,965 _
Frontegra New Star
International Equity Fund 13,562,503 5,563,199 3,121,217 204,555
Frontegra Netols
Small Cap Value Fund(1)<F77> 54,889 943 _ _
(1)<F77> Commenced operations on December 16, 2005.
As of June 30, 2007, the components of accumulated earnings (losses)
for income tax purposes were as follows:
FRONTEGRA FRONTEGRA
FRONTEGRA INVESTMENT IRONBRIDGE
TOTAL RETURN GRADE SMALL CAP
BOND FUND BOND FUND FUND
------------ ---------- ----------
Cost basis of investments for
federal income tax purposes $386,713,274 $130,371,588 $329,523,507
------------ ------------ ------------
------------ ------------ ------------
Gross tax unrealized appreciation $ 1,394,083 $ 64 $118,637,102
Gross tax unrealized depreciation (5,974,518) (1,449,795) (14,230,223)
------------ ------------ ------------
Net tax unrealized appreciation (depreciation) (4,580,435) (1,449,731) 104,406,879
------------ ------------ ------------
------------ ------------ ------------
Undistributed ordinary income 30,337 29,969 8,541,747
Undistributed long-term capital gain _ _ 10,589,156
------------ ------------ ------------
Total distributable earnings 30,337 29,969 19,130,903
------------ ------------ ------------
------------ ------------ ------------
Other accumulated losses (1,274,078) (2,146,076) _
------------ ------------ ------------
Total accumulated earnings (losses) $ (5,824,176) $ (3,565,838) $123,537,782
------------ ------------ ------------
------------ ------------ ------------
FRONTEGRA FRONTEGRA
FRONTEGRA NEW STAR NETOLS
IRONBRIDGE INTERNATIONAL SMALL CAP
SMID FUND EQUITY FUND VALUE FUND
---------- ------------- ----------
Cost basis of investments for
federal income tax purposes $163,455,334 $554,468,973 $15,257,080
------------ ------------ -----------
------------ ------------ -----------
Gross tax unrealized appreciation $ 34,146,238 $149,711,183 $ 2,763,162
Gross tax unrealized depreciation (4,011,017) (5,339,067) (704,571)
------------ ------------ -----------
Net tax unrealized appreciation (depreciation) 30,135,221 144,372,116 2,058,591
------------ ------------ -----------
------------ ------------ -----------
Undistributed ordinary income 5,013,022 26,059,867 143,297
Undistributed long-term capital gain 3,519,812 14,374,860 157,612
------------ ------------ -----------
Total distributable earnings 8,532,834 40,434,727 300,909
------------ ------------ -----------
------------ ------------ -----------
Other accumulated gains (losses) _ 12,216 _
------------ ------------ -----------
Total accumulated earnings $ 38,668,055 $184,819,059 $ 2,359,500
------------ ------------ -----------
------------ ------------ -----------
The difference between book-basis and tax-basis unrealized
appreciation is attributable primarily to the tax deferral of losses
on wash sales and swaps.
The Funds intend to utilize provisions of the federal income tax laws,
which allow them to carry a realized capital loss forward for eight
years following the year of loss and offset such losses against any
future realized capital gains. At June 30, 2007, the Frontegra Total
Return Bond Fund had a capital loss carryover of $1,402,608, which
expires in 2014; the Frontegra Investment Grade Bond Fund had capital
loss carryovers of $889,497 and $845,241, which expire in 2014 and
2015, respectively.
At June 30, 2007, the Frontegra Investment Grade Bond Fund had a post-
October capital loss of $417,031. This loss is treated as occurring
on July 1, 2007 for tax purposes.
(d) When-Issued Securities
The Frontegra Total Return Bond and Investment Grade Bond Funds may
purchase securities on a when-issued basis. The price of securities
purchased on a when-issued basis is fixed at the time the commitment
to purchase is made, but delivery and payment for the securities take
place at a later date, normally within 45 days of the purchase. At the
time of purchase, the Funds will record the transaction and reflect
the value of the security and related liability in determining their
net asset value. During the period between the purchase and
settlement, no payment is made by the Funds to the issuer and no
interest is accrued. The Funds maintain segregated cash, U.S.
government securities and liquid securities equal in value to
commitments for when-issued securities.
(e) Mortgage Dollar Rolls
The Frontegra Total Return Bond and Investment Grade Bond Funds may
enter into mortgage dollar rolls, in which a Fund would sell mortgage-
backed securities for delivery in the current month and simultaneously
contract to purchase similar securities on a specified future date.
While a Fund would forego principal and interest paid on the mortgage-
backed securities during the roll period, it would be compensated by
the difference between the current sale price and the lower price for
the future purchase as well as by any interest earned on the proceeds
of the initial sale. A Fund also could be compensated through the
receipt of fee income equivalent to a lower forward price.
(f) Futures Contracts
Each Fund may enter into futures contracts, including index and
interest rate futures contracts. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as
required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as variation
margin and are recorded by the Fund as unrealized gains and losses.
When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed. As collateral
for futures contracts, the Fund is required under the 1940 Act to
maintain assets consisting of cash, cash equivalents or other liquid
securities. This collateral is required to be adjusted daily to
reflect the market value of the purchase obligation for long futures
contracts or the market value of the instrument underlying the
contract, but not less than the market price at which the futures
contract was established, for short futures contracts.
The risks inherent in the use of futures contracts include 1) adverse
changes in the value of such instruments; and 2) the possible absence
of a liquid secondary market for any particular instrument at any
time. There were no futures contracts open at June 30, 2007.
(g) Credit Default Swaps
The Total Return Bond and Investment Grade Bond Funds may enter into
credit default swap agreements. The credit default swap agreement may
have as a reference obligation one or more securities that are not
currently held by a Fund. The buyer in a credit default swap
agreement is obligated to pay the seller a periodic fee, typically
expressed in basis points on the principal amount of the underlying
obligation (the "notional" amount), over the term of the agreement in
return for a contingent payment upon the occurrence of a credit event
with respect to the underlying reference obligation. A credit event
is typically a default.
A Fund may be either the buyer or seller of protection in the
transaction. As a seller, a Fund accrues for and receives a fixed
rate of income throughout the term of the agreement, which typically
is between one month and five years, provided that no credit event
occurs. If a credit event occurs, the maximum payout amount for a
sale contract is limited to the notional amount of the swap contract
("Maximum Payout Amount"). At June 30, 2007, the Frontegra Total
Return Bond Fund had sale contracts outstanding with Maximum Payout
Amounts aggregating $11,907,000, with net unrealized appreciation of
$386,068. At June 30, 2007, the Frontegra Investment Grade Bond Fund
had sale contracts outstanding with Maximum Payout Amounts aggregating
$1,095,000 with net unrealized appreciation of $2,394. If a Fund is a
buyer and no credit event occurs, the Fund may lose its investment and
recover nothing. However, if a credit event occurs, the buyer
typically receives full notional value for a reference obligation that
may have little or no value. Until a credit default swap agreement is
closed, the gain or loss on the notional amount in addition to the
interest paid or received by a Fund on the notional amount is recorded
as unrealized gains or losses on swaps and when the agreement is
closed, the gain or loss is recorded as realized gains or losses on
swaps.
Credit default swaps may involve greater risks than if a Fund had
invested in the reference obligation directly. Credit default swaps
are subject to general market risk, liquidity risk, counterparty
credit risk and credit risk of the issuer. As noted above, if a Fund
is a buyer in a credit default swap agreement and no credit event
occurs, it will lose its investment. In addition, the value of the
reference obligation received by a Fund as a seller if a credit event
occurs, coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting in a
loss of value to the Fund.
(h) Foreign Currency Translation
Values of investments denominated in foreign currencies are converted
into U.S. dollars using a spot market rate of exchange on the day of
valuation. Purchases and sales of investments and dividend and
interest income are translated to U.S. dollars using a spot market
rate of exchange prevailing on the respective dates of such
transactions. The portion of security gains or losses resulting from
changes in foreign exchange rates is included with net realized and
unrealized gain or loss from investments, as appropriate, for both
financial reporting and tax purposes.
(i) Indemnifications
Under the Funds' organizational documents, their officers and
directors are indemnified against certain liabilities arising out of
the performance of their duties to the Funds. In addition, in the
normal course of business, the Funds enter into contracts that provide
general indemnifications to other parties. The Funds' maximum
exposure under these arrangements is unknown as this would involve
future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses
pursuant to these contracts and expect the risk of loss to be remote.
(j) Other
Investment transactions are accounted for on the trade date. The Funds
determine the gain or loss realized from investment transactions by
comparing the original cost of the specifically identified security
lot sold with the net sale proceeds. Dividend income, less foreign
taxes withheld, is recognized on the ex-dividend date, except that
certain dividends from foreign securities are recorded as soon as the
information becomes available to the Funds. Interest income is
recognized on an accrual basis. All discounts/premiums are
accreted/amortized using the effective interest method and are
included in interest income. Expenses attributable to the Funds are
generally allocated to each Fund based on net assets. Expenses
attributable to a particular Fund are allocated directly to that Fund.
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles in the United States 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.
Additionally, U.S. generally accepted accounting principles require that
certain components of net assets relating to permanent differences be
reclassified between financial and tax reporting. These reclassifications
have no effect on net assets or net asset value per share. For the year
ended June 30, 2007, the following table shows the reclassifications made:
FRONTEGRA FRONTEGRA
FRONTEGRA INVESTMENT IRONBRIDGE
TOTAL RETURN GRADE SMALL CAP
BOND FUND BOND FUND FUND
------------ ---------- ----------
Paid in capital $ _ $ 380 $ _
Accumulated net investment income (loss) (38,537) (54,431) 227,572
Accumulated net realized gain (loss) 38,537 54,051 (227,572)
FRONTEGRA FRONTEGRA
FRONTEGRA NEW STAR NETOLS
IRONBRIDGE INTERNATIONAL SMALL CAP
SMID FUND EQUITY FUND VALUE FUND
------------ ---------- ----------
Paid in capital $ (162) $ 1 $ 4
Accumulated net investment income (loss) (32,847) 873,417 1,285
Accumulated net realized gain (loss) 33,009 (873,418) (1,289)
The permanent differences primarily relate to foreign currency, paydown,
swap and Real Estate Investment Trust (REIT) adjustments with differing
book and tax methods.
(3) INVESTMENT ADVISER
Each of the Funds has entered into an agreement with Frontegra Asset
Management, Inc. (the "Adviser"), with whom certain officers and a director
of the Funds are affiliated, to furnish investment advisory services to the
Funds. The terms of these agreements are as follows:
The Frontegra Total Return Bond Fund will pay the Adviser a monthly fee at
the annual rate of 0.40% of the Fund's average daily net assets. Pursuant
to an expense cap agreement, the Adviser agreed to waive its management fee
and/or reimburse the Fund's operating expenses (exclusive of brokerage,
interest, taxes and extraordinary expenses) to ensure that the Fund's
operating expenses do not exceed 0.20% of the Fund's average daily net
assets through October 31, 2007 and 0.35% of the Fund's average daily net
assets beginning November 1, 2007. This expense cap agreement will continue
in effect until October 31, 2008 with successive renewal terms of one year
unless terminated by the Adviser or the Fund prior to any such renewal.
The Frontegra Investment Grade Bond Fund will pay the Adviser a monthly fee
at the annual rate of 0.42% of the Fund's average daily net assets.
Pursuant to an expense cap agreement, the Adviser agreed to waive its
management fee and/or reimburse the Fund's operating expenses (exclusive of
brokerage, interest, taxes and extraordinary expenses) to ensure that the
Fund's operating expenses do not exceed 0.20% of the Fund's average daily
net assets through October 31, 2007 and 0.35% of the Fund's average daily
net assets beginning November 1, 2007. This expense cap agreement will
continue in effect until October 31, 2008 with successive renewal terms of
one year unless terminated by the Adviser or the Fund prior to any such
renewal.
The Frontegra IronBridge Small Cap Fund will pay the Adviser a monthly fee
at the annual rate of 1.00% of the Fund's average daily net assets.
Pursuant to an expense cap agreement, 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 1.10% of the Fund's average daily
net assets. This expense cap agreement will continue in effect until
October 31, 2007 with successive renewal terms of one year unless
terminated by the Adviser or the Fund prior to any such renewal.
The Frontegra IronBridge SMID Fund will pay the Adviser a monthly fee at
the annual rate of 0.85% of the Fund's average daily net assets. Pursuant
to an expense cap agreement, the Adviser has agreed to waive its management
fee and/or reimburse the Fund's operating expenses (excluding brokerage,
interest, taxes and extraordinary expenses) to ensure that the Fund's
operating expenses do not exceed 0.95% of the Fund's average daily net
assets. This expense cap agreement will continue in effect until October
31, 2007 with successive renewal terms of one year unless terminated by the
Adviser or the Fund prior to any such renewal.
The Frontegra New Star International Equity Fund will pay the Adviser a
monthly fee at the annual rate of 0.95% of the Fund's average daily net
assets. Pursuant to an expense cap agreement, 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 0.75% of the Fund's
average daily net assets. This expense cap agreement will continue in
effect until October 31, 2007 with successive renewal terms of one year
unless terminated by the Adviser or the Fund prior to any such renewal.
The Frontegra Netols Small Cap Value Fund will pay the Adviser a monthly
fee at the annual rate of 1.00% of the Fund's average daily net assets.
Pursuant to an expense cap agreement, the Adviser has agreed to waive its
management fee and/or reimburse the Fund's operating expenses (excluding
brokerage, interest, taxes and extraordinary expenses) to ensure that the
Fund's operating expenses do not exceed 1.10% of the Fund's average daily
net assets. This expense cap agreement will continue in effect until
October 31, 2007 with successive renewal terms of one year unless
terminated by the Adviser or the Fund prior to any such renewal.
Any waivers or reimbursements are subject to later adjustment to allow the
Adviser to recoup amounts waived or reimbursed to the extent actual fees
and expenses for a fiscal period are less than each Fund's expense
limitation cap, provided, however, that the Adviser shall only be entitled
to recoup such amounts for a period of three years from the date such
amount was waived or reimbursed.
The following table shows the waived or reimbursed expenses subject to
potential recovery expiring in:
FRONTEGRA FRONTEGRA FRONTEGRA
FRONTEGRA FRONTEGRA IRONBRIDGE FRONTEGRA NEW STAR NETOLS
TOTAL RETURN INVESTMENT GRADE SMALL CAP IRONBRIDGE INTERNATIONAL SMALL CAP
BOND FUND BOND FUND FUND SMID FUND EQUITY FUND VALUE FUND
------------ ---------------- ---------- ---------- ------------- ----------
2008 $320,062 $245,625 $32,371 $66,381 $293,414 _
2009 $965,488 $438,461 _ $109,169 $1,248,571 $71,972
2010 $874,012 $416,403 _ $43,079 $1,947,759 $114,909
---------- ---------- ------- -------- ---------- --------
$2,159,562 $1,100,489 $32,371 $218,629 $3,489,744 $186,881
---------- ---------- ------- -------- ---------- --------
---------- ---------- ------- -------- ---------- --------
The Adviser recouped $108,120 of previously waived/reimbursed expenses in
the Frontegra IronBridge Small Cap Fund during the year ended June 30,
2007.
(4) CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Frontegra Total Return Bond Fund were as
follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
Shares sold 998,449 551,979
Shares issued to holders in
reinvestment of distributions 431,576 603,982
Shares redeemed (2,884,808) (641,478)
---------- --------
Net increase (decrease) in shares outstanding (1,454,783) 514,483
---------- --------
---------- --------
Transactions in shares of the Frontegra Investment Grade Bond Fund were as
follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
Shares sold 918,821 1,196,877
Shares issued to holders in
reinvestment of distributions 220,493 283,583
Shares redeemed (1,877,895) (890,018)
---------- --------
Net increase (decrease) in shares outstanding (738,581) 590,442
---------- --------
---------- --------
Transactions in shares of the Frontegra IronBridge Small Cap Fund were as
follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
Shares sold 1,845,972 4,611,129
Shares issued to holders in
reinvestment of distributions 1,862,846 210,453
Shares redeemed (4,612,068) (2,433,885)
---------- ----------
Net increase (decrease) in shares outstanding (903,250) 2,387,697
---------- ----------
---------- ----------
Transaction in shares of the Frontegra IronBridge SMID Fund were as
follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
Shares sold 4,918,242 8,238,261
Shares issued to holders in
reinvestment of distributions 160,618 15,123
Shares redeemed (2,616,818) (399,882)
---------- ---------
Net increase in shares outstanding 2,462,042 7,853,502
---------- ---------
---------- ---------
Transaction in shares of the Frontegra New Star International Equity Fund
were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
Shares sold 8,261,623 28,889,663
Shares issued to holders in
reinvestment of distributions 1,150,606 235,847
Shares redeemed (5,796,757) (939,273)
---------- ----------
Net increase in shares outstanding 3,615,472 28,186,237
---------- ----------
---------- ----------
Transaction in shares of the Frontegra Netols Small Cap Value Fund were as
follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006(1)<F78>
------------- ---------------------
Shares sold 675,621 752,389
Shares issued to holders in
reinvestment of distributions 4,880 _
Shares redeemed (82,580) (1,706)
------- -------
Net increase in shares outstanding 597,921 750,683
------- -------
------- -------
(1)<F78> Commenced operations on December 16, 2005.
(5) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments and U.S. government securities, for the Funds for the year
ended June 30, 2007 are summarized below.
FRONTEGRA FRONTEGRA FRONTEGRA
TOTAL RETURN INVESTMENT GRADE IRONBRIDGE
BOND FUND BOND FUND SMALL CAP FUND
------------ ---------------- --------------
Purchases $1,714,914,122 $524,262,186 $130,663,062
Sales $1,718,270,070 $515,994,220 $183,804,631
FRONTEGRA FRONTEGRA
FRONTEGRA NEW STAR NETOLS
IRONBRIDGE INTERNATIONAL SMALL CAP
SMID FUND EQUITY FUND VALUE FUND
---------- ------------- ----------
Purchases $135,669,791 $416,696,385 $12,911,139
Sales $116,133,946 $367,489,614 $ 5,613,507
Purchases and sales of long-term U.S. Government securities for the
Frontegra Total Return Bond Fund were $1,633,593,824 and $1,652,519,485,
respectively. Purchases and sales of long-term U.S. Government securities
for the Frontegra Investment Grade Bond Fund were $523,577,400 and
$525,310,286, respectively.
There were no purchases or sales of long-term U.S. Government securities
for the Frontegra IronBridge Small Cap Fund, the Frontegra IronBridge SMID
Fund, the Frontegra New Star International Equity Fund or the Frontegra
Netols Small Cap Value Fund.
(6) DIRECTORS FEES
The Independent Directors of the Funds were paid $35,000 in director fees
during the year ended June 30, 2007. The Interested Director did not
receive any remuneration from the Funds.
(7) SUBSEQUENT EVENT
On August 3, 2007, the tax-free reorganizations of the Columbus Core Plus
Fund into the Frontegra Total Return Bond Fund and the Columbus Core Fund
into the Frontegra Investment Grade Bond Fund were completed pursuant to
separate agreements and plans of reorganization. As a result of the
reorganizations, all of the assets and liabilities of each Columbus Fund
have been transferred to the corresponding Frontegra Fund. The Frontegra
Total Return Bond Fund issued 4,545,717.862 shares (valued at $139,917,196)
for assets of the Columbus Core Plus Fund. The Frontegra Investment Grade
Bond Fund issued 1,425,240.639 shares (valued at $14,423,435) for assets of
the Columbus Core Fund. Pursuant to the agreements and plans of
reorganization and effective August 6, 2007, the names of the following
series of Frontegra Funds, Inc. have been changed as follows:
Former Name New Name
----------- --------
Frontegra Total Return Bond Fund Frontegra Columbus Core Plus Fund
Frontegra Investment Grade Bond Fund Frontegra Columbus Core Fund
Frontegra Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
June 30, 2007
To the Shareholders and Board of Directors of Frontegra Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Frontegra Funds, Inc. (comprising,
respectively, Frontegra Total Return Bond Fund, Frontegra Investment Grade Bond
Fund, Frontegra IronBridge Small Cap Fund, Frontegra IronBridge SMID Fund,
Frontegra New Star International Fund, and Frontegra Netols Small Cap Value
Fund, collectively referred to as the "Funds") as of June 30, 2007, and the
related statements of operations, the statements of changes in net assets, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Funds' internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds' internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2007, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting Frontegra Funds, Inc. at June 30, 2007, the
results of their operations, the changes in their net assets, and the financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/Ernst & Young LLP
Chicago, Illinois
August 29, 2007
Frontegra Funds
ADDITIONAL INFORMATION
(Unaudited)
The business and affairs of the Funds are managed under the direction of the
Funds' Board of Directors. Information pertaining to the Directors and Officers
of the Funds is set forth below. The SAI includes additional information about
the Funds' Directors and Officers and is available without charge, upon request
by calling 1-888-825-2100.
INTERESTED DIRECTOR AND OFFICERS
NUMBER OF
PRINCIPAL FUNDS IN OTHER
POSITION(S) OCCUPATION(S) COMPLEX DIRECTORSHIPS
NAME, ADDRESS AND AGE HELD WITH TERM OF DURING PAST OVERSEEN HELD BY
AS OF JUNE 30, 2007 FUNDS OFFICE FIVE YEARS BY DIRECTOR DIRECTOR
- --------------------- ----------- ------- ------------- ----------- -------------
William D. Forsyth III*<F79> Co-President, Elected Mr. Forsyth received his B.S. in 6 None
Frontegra Asset Treasurer and annually Finance from the University of
Management, Inc. Assistant by the Illinois in 1986 and his M.B.A.
400 Skokie Boulevard Secretary Board of from the University of Chicago
Suite 500 since Directors in 1988. Mr. Forsyth has served
Northbrook, IL 60062 May 1996 as Co-President, Treasurer, Assistant
Age: 43 Secretary and a Director of the Adviser
Director Indefinite since May 1996. From July 1993 until
since the present, Mr. Forsyth also served as
May 1996 a Partner of Frontier Partners, Inc., a
consulting/marketing firm. From April
1987 until June 1993, Mr. Forsyth served
as a Partner of Brinson Partners, Inc., an
investment advisor, and from June 1986
until April 1987, he served as a product
marketing representative of Harris Trust
& Savings Bank. Mr. Forsyth received
his CFA designation in 1991.
Thomas J. Holmberg, Jr.*<F79> Co-President, Elected Mr. Holmberg received his B.A. in N.A. N.A.
Frontegra Asset Secretary and annually Economics from the College of William
Management, Inc. Assistant by the and Mary in 1980 and his M.P.P.M from
400 Skokie Boulevard Treasurer Board of Yale University in 1987. Mr. Holmberg
Suite 500 since Directors. has served as Co-President, Secretary,
Northbrook, IL 60062 May 1996; Assistant Treasurer and a Director of the
Age: 48 Chief Adviser since May 1996 and as Chief
Compliance Compliance Officer of the Adviser since
Officer since September 2004. From July 1993 until
September the present, Mr. Holmberg also served as
2004; a Partner of Frontier Partners, Inc., a
Anti-Money consulting/marketing firm. From February
Laundering 1989 until July 1993, Mr. Holmberg served
Compliance as a Partner of, and Account Manager for,
Officer since Brinson Partners, Inc., an investment
August 2006; advisor. From July 1987 until January
Director 1989, Mr. Holmberg served as an associate
from May in the fixed income sales area of Goldman,
1996 to Sachs & Co. Mr. Holmberg received his
May 2002 CFA designation in 1991.
*<F79> Mr. Forsyth and Mr. Holmberg are each an "interested person" of the
Funds because each serves as a director and officer of the Adviser and
each owns 50% of the Adviser.
INDEPENDENT DIRECTORS
NUMBER OF
PRINCIPAL FUNDS IN OTHER
POSITION(S) OCCUPATION(S) COMPLEX DIRECTORSHIPS
NAME, ADDRESS AND AGE HELD WITH TERM OF DURING PAST OVERSEEN HELD BY
AS OF JUNE 30, 2007 FUNDS OFFICE FIVE YEARS BY DIRECTOR DIRECTOR
- --------------------- ----------- ------- ------------- ----------- -------------
David L. Heald Director Indefinite Mr. Heald received his B.A. in English 6 None
400 Skokie Boulevard since from Denison University in 1966 and
Suite 260 June his J.D. from Vanderbilt University
Northbrook, IL 60062 1996 School of Law in 1969. Mr. Heald has
Age: 63 been a principal and a Director of
Consulting Fiduciaries, Inc. ("CFI"), a
registered investment adviser, since
August of 1994. CFI provides
professional, independent, fiduciary
decision making, consultation and
alternative dispute resolution services
to ERISA plans, plan sponsors and
investment managers. Between April
1994 and August 1994, Mr. Heald
engaged in the private practice of law.
From August 1992 until April 1994, Mr.
Heald was a managing director and the
chief administrative officer of Calamos
Asset Management, Inc., a registered
investment adviser specializing in
convertible securities, and he served as
an officer and director of CFS Investment
Trust, a registered investment company
comprised of four series. From January
1990 until August 1992, Mr. Heald was
a partner in the Chicago based law firm
of Gardner, Carton & Douglas.
James M. Snyder Director Indefinite Mr. Snyder received his B.S. in Finance 6 None
400 Skokie Boulevard since May from Indiana University in 1969 and his
Suite 500 2002 M.B.A. from DePaul University in 1973.
Northbrook, IL 60062 Mr. Snyder served as an investment
Age: 60 professional with Northern Trust from
June 1969 until his retirement in June
2001. He served in a variety of
capacities at Northern Trust, most
recently as Executive Vice President of
Northern Trust and Vice Chairman of
Northern Trust Global Investments.
Mr. Snyder is a Chartered Financial
Analyst (CFA).
FOREIGN TAX CREDIT
For the year ended June 30, 2007, Frontegra New Star International Fund earned
foreign source income and paid foreign taxes, which it intends to pass through
to its shareholders pursuant to Section 853 of the Internal Revenue Code as
follows:
FOREIGN SOURCE FOREIGN
INCOME EARNED TAXES PAID
-------------- ----------
Australia $ 770,995.74 $ 43,110.59
Belgium 554,080.48 83,112.09
Brazil 3,827,983.57 117,836.98
China 23,459.16 (9,311.06)
Denmark 7,221.67 1,083.25
Finland 325,007.32 48,751.11
France 1,943,573.43 290,352.20
Germany 1,025,142.55 153,771.37
Greece 207,467.38 _
Hong Kong 681,994.63 _
India 9,718.75 937.50
Italy 760,062.03 115,001.03
Japan 1,412,729.30 98,891.05
Netherlands 838,380.44 125,757.09
Russia 233,374.19 36,685.77
Singapore 493,306.54 _
Spain 339,139.90 51,952.16
Sweden 470,420.87 70,563.12
Switzerland 1,117,869.29 167,680.40
Taiwan 173,920.28 34,784.06
Thailand 157,721.57 15,772.15
Turkey 158,346.57 _
-------------- -------------
Total $15,531,915.66 $1,446,730.86
-------------- -------------
-------------- -------------
QUALIFIED DIVIDEND INCOME/DIVIDENDS RECEIVED DEDUCTION
For the fiscal year ended June 30, 2007, certain dividends paid by the Funds may
be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth
Tax Relief Reconciliation Act of 2003. The percentage of dividends declared
from ordinary income designated as qualified dividend income was as follows:
Frontegra IronBridge Small Cap Fund 28.45%
Frontegra IronBridge SMID Fund 50.76%
Frontegra New Star International Equity Fund 77.69%
Frontegra Netols Small Cap Value Fund 52.48%
For corporate shareholders, the percent of ordinary income distributions
qualifying for the corporate dividends received deduction for the fiscal year
ended June 30, 2007 was as follows:
Frontegra IronBridge Small Cap Fund 27.20%
Frontegra IronBridge SMID Fund 47.70%
Frontegra Netols Small Cap Value Fund 24.40%
ADDITIONAL INFORMATION APPLICABLE TO FOREIGN SHAREHOLDERS ONLY
The percent of ordinary income distributions designated as interest related
dividends for the fiscal year ended June 30, 2007 was as follows:
Frontegra Total Return Bond Fund 99.97%
Frontegra Investment Grade Bond Fund 99.66%
Frontegra IronBridge Small Cap Fund 3.45%
Frontegra IronBridge SMID Fund 6.97%
Frontegra New Star International Equity Fund 2.40%
Frontegra Netols Small Cap Value Fund 8.49%
The percent of ordinary income distributions designated as short-term capital
gain distributions for the fiscal year ended June 30, 2007 was as follows:
Frontegra IronBridge Small Cap Fund 96.57%
Frontegra IronBridge SMID Fund 94.91%
Frontegra New Star International Equity Fund 34.34%
Frontegra Netols Small Cap Value Fund 100%
A NOTE ON FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements such as adviser, sub-adviser
and/or portfolio manager predictions, assessments, analyses or outlooks for
individual securities, industries, market sectors and/or markets. These
statements involve risks and uncertainties. In addition to the general risks
described for the Funds in the current Prospectuses, other factors bearing on
these statements include the accuracy of the adviser's, sub-advisers' or
portfolio manager's forecasts and predictions, and the appropriateness of the
investment programs designed by the adviser, sub-adviser or portfolio manager to
implement their strategies efficiently and effectively. Any one or more of
these factors, as well as other risks affecting the securities markets and
investment instruments generally, could cause the actual results of the Funds to
differ materially as compared to benchmarks associated with the Funds.
In addition, portfolio composition will change due to ongoing management of the
Funds. Specific securities named in this report may not currently be owned by
the applicable Fund, or the Fund's position in the securities may have changed.
ADDITIONAL INFORMATION
Frontegra Funds has adopted proxy voting policies and procedures that delegate
to Frontegra Asset Management, Inc., the Funds' investment adviser (the
"Adviser"), the authority to vote proxies. The proxy voting policies permit the
Adviser to delegate its authority to vote proxies to each Fund's subadviser. A
description of the Frontegra Funds' proxy voting policies and procedures is
available without charge, upon request, by calling the Funds toll free at 1-888-
825-2100. A description of these policies and procedures is also included in
the Funds' Statement of Additional Information, which is available on the SEC's
website at http://www.sec.gov.
The actual voting records relating to each Fund's portfolio securities during
the most recent twelve months ended June 30 are available without charge by
calling the Funds toll free at 1-888-825-2100 or by accessing the SEC's website
at http://www.sec.gov.
Each Fund files a complete schedule of portfolio holdings for its first and
third fiscal quarters with the SEC on Form N-Q. The Form N-Q is available on
the SEC's website at http://www.sec.gov. The Form N-Q may also be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. Information on
the operation of the Public Reference Room may be obtained by calling toll-free
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
- -----------------------
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officers and principal financial officer. The registrant
has not made any amendments to its code of ethics during the period covered by
this report. The registrant has not granted any waivers from any provisions of
the code of ethics during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- ----------------------------------------
The registrant's board of directors has determined that it does not have an
audit committee financial expert serving on its audit committee. At this time,
the registrant believes that the experience provided by each member of the audit
committee together offers the registrant adequate oversight for the registrant's
level of financial complexity.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- -----------------------------------------------
Fees Billed by Ernst & Young LLP. The aggregate fees billed for professional
services by Ernst & Young LLP ("E&Y") during fiscal 2007 and fiscal 2006 were:
Type of Fees FYE 6/30/2007 FYE 6/30/2006
- ------------ ------------- -------------
Audit Fees $ 148,410 $ 123,000
Audit-Related Fees - -
Tax Fees 31,200 29,400
All Other Fees - -
In the above table, "audit fees" are fees billed for professional services for
the audit of the registrant's annual financial statements or for services that
are normally provided by the accountant in connection with statutory and
regulatory filings or engagements. "Tax fees" are fees billed for professional
services rendered by E&Y for tax compliance, tax advice and tax planning.
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant with respect to any engagement that directly relates to the
operations and financial reporting of the registrant. In accordance with its
pre-approval policies and procedures, the audit committee pre-approved all audit
and tax services provided by E&Y during fiscal 2007. During the last two fiscal
years, there were no non-audit services rendered by E&Y to the registrant's
investment adviser or any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant. All of E&Y's hours spent on auditing the registrant's financial
statements were attributed to work performed by full-time permanent employees of
E&Y.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
- ----------------------------------------------
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. SCHEDULE OF INVESTMENTS.
- --------------------------------
Schedule of Investments is included as part of the report to shareholders filed
under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
- -------------------------------------------------------------------------
MANAGEMENT INVESTMENT COMPANIES.
- --------------------------------
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
- ------------------------------------------------------------------------
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
- ---------------------------------------------------------------------------
COMPANY AND AFFILIATED PURCHASERS.
- ----------------------------------
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------------------------------------------------------------
Not Applicable.
ITEM 11. CONTROLS AND PROCEDURES.
- ---------------------------------
(a) Based on an evaluation of the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940 (the "Act")) as of a date within 90 days prior to the filing date of
this Form N-CSR, the Registrant's Co-Presidents and Treasurer have
concluded that the disclosure controls and procedures are effective.
(b) There were no changes in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by this report that have
materially affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
- -----------------
(a) (1) Any code of ethics or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit. Incorporated by
reference to the Registrant's Form N-CSR filed on September 8, 2005.
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Frontegra Funds, Inc.
By: /s/Thomas J. Holmberg, Jr.
--------------------------------------------------
Thomas J. Holmberg, Jr., Co-President
(Principal Executive Officer)
Date: September 4, 2007
-----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/Thomas J. Holmberg, Jr.
--------------------------------------------------
Thomas J. Holmberg, Jr., Co-President
(Principal Executive Officer)
Date: September 4, 2007
--------------------------------------------------
By: /s/William D. Forsyth III
--------------------------------------------------
William D. Forsyth III, Co-President and Treasurer
(Principal Executive and Financial Officer)
Date: September 4, 2007
-----------------------------------