The CLS AdvisorOne Funds
Annual Report
April 30, 1998
Clark Lanzen Skalla Investment Firm, Inc.
<PAGE>
CLS AdvisorOne Funds
CONTENTS
Fund Objectives
3
Letter to the Shareholders
4
Economic Overview
5
Performance Review
6
Manager's Profile: Ron Baron
10
Portfolio of Investments (Amerigo)
12
Portfolio of Investments (Clermont)
14
Statements of Assets and Liabilities
17
Statements of Operations
18
Statements of Changes in Net Assets
19
Financial Highlights
20
Notes to Financial Statements
21
Independent Auditors' Report
24
<PAGE>
[LOGO] Compass
FUND OBJECTIVES
- ---------------
THE AMERIGO FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND
LONG-TERM GROWTH OF CAPITAL WITHOUT REGARD TO CURRENT INCOME.
THE CLERMONT FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL AND A
REASONABLE LEVEL OF CURRENT INCOME.
CLS AdvisorOne Funds is a FUND OF FUNDS that monitors the vast universe of
mutual funds and determines who are the best managers and which funds are
currently earning the best returns considering the amount of risk. Then,
CLS AdvisorOne Funds attempts to build a portfolio of some of the very best
funds available, and puts it all together so you only have to make one
choice. You no longer have to limit yourself to one or two mutual fund
families. You can build a disciplined, diversified portfolio with one
investment decision. CLS AdvisorOne Funds is a simple solution to a
challenging investment world.
3
<PAGE>
F R O M T H E P R E S I D E N T . . .
Dear Fellow Shareholder,
Since last July, the CLS AdvisorOne Funds have had many successes. While our
goals for the Amerigo Fund and the Clermont Fund are long-term, it is satisfying
to end our first year with such positive accomplishments.
Without actively marketing, we have managed to gain some media access, such as
the January issue of FINANCIAL PLANNING, and hope to continue such exposure.
Meanwhile, the FUND OF FUNDS vehicle has been very successful in providing CLS
AdvisorOne clients special access to: load funds at net asset value,
institutional funds, funds which have been closed to new investors, closed-end
funds and funds with $1,000,000 minimums. We seek to offer access to some of the
top fund managers. As well, we have the freedom to reallocate our clients'
portfolios as often as necessary without incurring extra expenses for such
trading.
The effectiveness of the CLS AdvisorOne Funds' investment methodology was put to
the test by Asia's continued economic crises. As you may know, our methodology
rests on three important fundamentals: core holdings, asset class rotation, and
risk reduction. While our positions included exposure to international funds,
the funds still offered returns of 14.11% (Amerigo Fund) and 9.84% (Clermont
Fund).
While such positive results are very pleasing, growth has also come on other
fronts. At the time of this writing, a total of 32 broker/dealers have signed
agreements to work with the CLS AdvisorOne Funds. Since the last report, we've
completed the process to get the funds approved in all fifty states. We remain
confident in our ability to put forth maximum effort on behalf of the
shareholders of the CLS AdvisorOne Funds.
In this report you will find a performance review, accompanying discussion and a
portfolio break-out for each fund. In addition, we profile Ron Baron, one of our
chosen fund managers; and finally, we offer an economic perspective on the
period since our last report. Thank you for your investment in the CLS
AdvisorOne Funds. If you have any questions about this report, please call (800)
635-3427.
/s/ W. Patrick Clark
- -------------------------------
W. Patrick Clarke
President, CLS AdvisorOne Funds
[LOGO] Compass
<PAGE>
ECONOMIC OVERVIEW
The economic and financial conditions over the last six months were quite
positive. Despite some general concerns over Asia and possible domestic wage
pressure, the U.S. economy had rarely seen better times. Gross Domestic Product,
the best measure of economic growth, finished 1997 with a 3.8% increase, and
rose at a robust 4.2% annual rate in the first quarter of 1998.
The problems in Asia slowed some areas of U.S. growth, shown by weak exports and
high trade deficits. Fortunately, those problems were offset by strength in
other areas of the economy. Consumers fueled the growth with a wave of spending
and refinancing. They pushed Consumption Spending and Housing Starts to big
increases. Manufacturers sent Durable Goods Purchases to the highest rate in 15
years. In a way, the Asian crisis actually stimulated the domestic economy by
keeping prices and interest rates low.
Despite the strong growth and high consumer spending, inflation remained
surprisingly calm. The Consumer Price Index rose only 1.7% for all of 1997, and
an almost unbelievably low 0.2% annualized rate during the first quarter of
1998. The Commerce Department's best gauge of inflation reflected a level not
seen since 1954. Basically, inflation was almost nonexistent.
The Federal Reserve worried that pressure to increase wages could ignite
inflation. Fortunately, such an occurrence did not develop. In fact, employers'
labor costs continued to grow only at low levels. Workers, in turn, benefited as
the very low inflation allowed Real Wages (wages adjusted for inflation) to be
at their highest level since 1986.
Solid corporate earnings and low inflation provided the fundamental strength for
the stock market. All the major equity indexes, from the `blue-chip' Dow Jones
Industrial Average to the `small company' Russell 2000, were at or near record
highs. Stocks were bolstered by large-scale merger announcements. Another boost
came from pharmaceutical stocks as a series of important new products came to
market, or were in rapid development.
Europe dominated the international equity arena. Mutual funds investing in
Europe were among the best performing funds. In addition, 11 nations of the
European Union finalized plans to switch to a new currency in 1999. It will be
called the "Euro" and will replace their current domestic currencies. It should
provide for easier trading and increased competition.
Although Asia still lagged, the situation did improve. Assistance and reforms
from the International Monetary Fund helped several countries stabilize their
currency. International observers welcomed additional economic reforms in Japan
that included tax-cuts. It is hoped Japanese consumers, with more of their own
money to keep, and therefore spend, will be able to help the Japanese economy
recover from its slump.
Much of America's focus is on the Federal Reserve and its next course of action
or inaction. The Fed has not raised interest rates since early 1997. The economy
continues to put pressure on them to "tap the brakes" and slow it down before
inflation gets rolling. A Fed rate hike would undoubtedly have a negative
short-term effect on the stock market. In addition, we are very far along in the
current business cycle. In fact, it is on the verge of being the longest
expansion ever. We should be prepared for some slowdown in the economy and the
stock market. However, as long as corporate earnings remain solid and inflation
remains low, the long-term outlook should continue to be positive.
5
<PAGE>
PERFORMANCE
The total return for CLS AdvisorOne Funds since July 14, 1997 through April 30,
1998 was presented as a bar graph:
FUND TOTAL RETURN
- ---- ------------
Clermont 9.84%
Amerigo 14.11%
A M E R I G O F U N D R E V I E W
The total return for the Amerigo Fund since inception on July 14, 1997 through
April 30, 1998 was 14.11%. (The Advisor has chosen to cap the expenses at 1.15%.
Without that cap the performance calculation would be different.) During this
time period the S&P 500 Composite Stock Price Index rose 22.46% and the average
Multi-Asset Global mutual fund monitored by Morningstar, Inc. rose 6.23%.*
Because the Amerigo Fund owns small-, mid- and large- cap funds, as well as
international funds and bond funds, there is no perfect performance benchmark
for the Amerigo Fund. Over the long term, our goal is to outperform the broad
U.S. stock market. However, there will be many time periods when this is not the
case. These time periods will occur whenever the large, blue chip U.S. companies
are leading the way.
SOME OF THE BEST PERFORMING FUNDS AMERIGO HAS OWNED ARE AS FOLLOWS:
SINCE PAST
7/14/97 6 MONTHS
Rydex Nova +27.27% +30.31%
Turner Small Cap Equity +24.11% +17.17%
Federated Int'l Small Co. +22.95% +27.30%
Rydex OTC +19.99% +22.64%
Oakmark Select +32.65% +19.88%
Since the Fund's inception on July 14, 1997, these very large U.S. companies
have been among the best places in the world to invest. The Amerigo Fund had
significant exposure to these types of companies during this time period. The
fund also had exposure to small company stocks and international stocks. This is
by design as Amerigo is an asset allocation fund diversifying its assets across
many different asset classes. The International funds Amerigo owns have
underperformed the U.S. market as international markets, especially Asia,
suffered substantially due to the Asian currency crises. Although we did have
some exposure to Asian markets, the positions held were minor in comparison to
the overall portfolio. The reason the fund is diversified is to lessen the
amount of risk exposure. Since its inception, the Amerigo Fund has taken
significantly less risk than the S&P 500 (see beta chart for Amerigo and
Clermont funds on next page) while still maintaining very good performance.**
** PAST PERFORMANCE DOES NOT GUARANTEE FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
*STANDARD & POOR'S 500: is an unmanaged group of securities considered to be
representative of the stock market in general. An investment cannot be made
directly in an index. (Beta comparisons are used for Equities). This index is
widely used by professional traders as a performance benchmark and is considered
more representative of the US stock market than the DJIA.
MORGAN STANLEY EUROPE-AUSTRALIA-FAR EAST (EAFE) INDEX: is compiled from 18 other
stock market indexes. It is generally used as a measure of stock market
performance outside of the US.
MULTI ASSET GLOBAL: Funds that seek total returns by investing in varying
combinations of equities, fixed income securities, and other asset classes.
These funds may invest a significant portion of assets in securities of foreign
issuers.
<PAGE>
P E R F O R M A N C E R E V I E W
C L E R M O N T F U N D R E V I E W
The total return for the Clermont Fund from inception on July 14, 1997 through
April 30, 1998 was 9.84%. During this time period, the S&P 500 Composite Stock
Price Index rose 22.46% and the average Multi-Asset Global mutual fund monitored
by Morningstar, Inc. rose 6.23%.
From inception on July 14, 1997, the Clermont Fund has held an average weighting
of 65% equities and 35% bonds. The bond weightings helped to stabilize the
portfolio last fall during periods of market weakness brought on by the effects
of the Asian currency crises. However, during 1998, the bond position has been a
drag on the performance of the fund as equities have far and away outperformed
bonds. The bond weighting in the Clermont Fund is by design and we will always
have a portion of the portfolio in bonds in order to reduce the risk level and
the day-to-day volatility of the fund. This is a plus when the markets are
moving down or sideways, but it may cause underperformance when the markets are
moving steadily higher.
SOME OF THE BEST PERFORMING FUNDS HELD BY CLERMONT DURING THIS TIME PERIOD WERE
AS FOLLOWS:
Since Past
7/14/97 6 MONTHS
Rydex Nova +27.27% +30.31%
Baron Growth & Income +19.03% +10.89%
Tweedy Browne Global Value +17.42% +19.32%
Oakmark +18.47% +15.45%
Invesco Total Return +16.14% +13.48%
R I S K R E D U C T I O N
One of the key features of both the Amerigo Fund and the Clermont Fund is the
attention to risk that is given in managing the funds. Both funds are designed
to provide favorable return while taking only a moderate amount of risk. The
Amerigo Fund is designed to take more risk than the Clermont Fund; therefore,
its returns during up markets are expected to be above those of the Clermont
Fund. Conversely, in a down market the Clermont Fund may retain more of its
value than the Amerigo Fund.
AMERIGO BETA CLERMONT BETA
.760 (***) .557 (***)
- --------------------------------------------------------------------------------
(***) BETA IS THE MEASURE THAT ANALYZES THE MARKET RISK OF AN INVESTMENT,
SHOWING HOW RESPONSIVE A FUND IS TO A GIVEN MARKET INDEX (S&P 500 BETA=1.00). A
FUND WITH A BETA GREATER THAN 1.00 TAKES MORE RISK THAN THE INDEX, WHILE A BETA
OF LESS THAN 1.00 TAKES LESS RISK.
7
<PAGE>
TO ILLUSTRATE HOW THE FUNDS ARE PRESERVING SHAREHOLDER VALUE DURING MARKET
DECLINES, WE HAVE INCLUDED A CHART THAT COMPARES THE PERFORMANCE OF THE AMERIGO
AND CLERMONT FUNDS TO THE MARKET ON THE WORST DOWN DAYS FOR THE MARKET OVER THE
PAST NINE MONTHS.
The following information was presented as a series of bar graphs:
DATE AMERIGO CLERMONT DOW POINTS DOW S&P 500 NASDAQ
8/08/97 -0.87% -0.98% -157 -1.91% -1.86% -1.58%
8/14/97 -1.08% -0.99% -247 -3.11% -2.59% -1.55%
10/22/97 -1.79% -1.16% -187 -2.33% -1.84% -2.16%
10/27/97 -4.91% -3.24% -554 -7.18% -6.87% -7.02%
11/12/97 -1.40% -0.90% -157 -2.08% -1.93% -2.72%
12/11/97 -1.39% -0.79% -130 -1.63% -1.53% -2.38%
1/09/98 -2.41% -1.30% -222 -2.85% -2.97% -3.36%
3/23/98 0.27% 0.00% -90 -1.01% -0.33% 0.19%
4/22-28/98 -3.54% -2.47% -278 -3.03% -4.02% -4.48%
8
<PAGE>
P E R F O R M A N C E R E V I E W
The following information was presented as a line graph:
(BELOW) CLS ADVISORONE FUNDS VS. S&P 500 COMPOSITE STOCK PRICE INDEX,
MORNINGSTAR'S MULTI ASSET GLOBAL FUND AND EAFE (7/97 - 4/98)
AMERIGO CLERMONT S&P 500 EAFE MS Multi Asset
------- -------- ------- ---- --------------
07/14/97 $10,000 $10,000 $10,000 $10,000 $10,000
07/31/97 10,210 10,200 10,387 9,951 10,161
08/31/97 9,950 9,930 9,805 9,208 9,826
09/30/97 10,500 10,300 10,342 9,723 10,232
10/31/97 10,060 9,980 9,996 8,976 9,826
11/30/97 9,989 10,010 10,459 8,884 9,784
12/31/97 10,156 10,172 10,639 8,961 9,831
01/31/98 10,126 10,223 10,757 9,371 9,897
02/28/98 10,808 10,629 11,533 9,972 10,236
03/31/98 11,321 10,994 12,123 10,280 10,539
04/30/98 11,411 10,984 12,246 10,361 10,623
Both the Amerigo and the Clermont Funds are well positioned for the coming six
months. The CLS AdvisorOne Funds seeks to use funds managed by some of the best
fund managers in the business. The FUND OF FUNDS concept makes a great deal of
sense because we can select funds managed by some of the top fund managers and
put them together into one diversified fund. You achieve instant diversification
and access to some of the best managers in the business. Many of these managers
are not available to retail customers, however, you gain access to them through
the Fund of Funds vehicle.
9
<PAGE>
CLS AdvisorOne Funds Annual Report April 30, 1998
M A N A G E R P R O F I L E
RON BARON, BARON FUNDS
IN THE LAST CLS ADVISORONE FUNDS SEMIANNUAL REPORT (OCTOBER 31, 1997) RANDY
SKALLA, CHIEF INVESTMENT OFFICER OF CLARKE LANZEN SKALLA INVESTMENT FIRM, INC.,
DISCUSSED CLS' STRATEGY FOR DECIDING WHICH FUNDS TO BUY FOR AMERIGO AND
CLERMONT. THROUGH EACH REPORT, WE WILL TRY TO GIVE YOU A BETTER IDEA OF WHO IS
HELPING US MANAGE YOUR MONEY BY PROFILING ONE OF THE MANAGERS WE CURRENTLY USE.
WE WILL BEGIN BY PROFILING RON BARON.
Ron Baron is a fund manager we currently use in both the Amerigo and Clermont
funds. For Amerigo, we use the more aggressive Baron Asset Fund, and for
Clermont we use the more conservative Baron Growth & Income Fund. The Baron Fund
has a 24.56% annualized rate of return over the past five years, and a 18.73%
return for the past 10 years. The Growth & Income Fund, which has existed for a
little under three years, has an annualized rate of return of 35.52% since
inception.
Based upon his track record to date, Ron Baron is among the best Small Company
Growth managers in the world. At 53 years of age, he has been managing money for
more than 25 years. He has been managing money in the Baron Funds since 1987,
accumulating more than $2.5 billion in assets. Baron has a long-term focus when
it comes to managing his funds. He looks for growth companies he believes will
appreciate by at least 50% within a two-year time span. It is also important
that the companies he buys have strong leadership among their management, as
well as healthy balance sheets and sound business strategies. Portfolio turnover
at the Baron Funds is relatively low because Baron likes to hold his stocks for
10
<PAGE>
CLS AdvisorOne Funds Annual Report April 30, 1998
RON BARON
many years. An example of a company that both funds have held for many years
which has been very profitable is Charles Schwab. The Baron fund first purchased
Schwab back in 1992 for $6 per share. Today, it is trading around $36.
Ron Baron is an extremely hard worker with a passion for investing and a daily
planner bursting at the seams. He will put in, on average, a 70 hour work week.
In an average year, he will meet with managers of more than 600 companies. When
asked about his relentless meeting schedule, Baron responds, "With small firms,
one or two key individuals can be the difference between success and failure. I
want to get a feel for those individuals." Ron Baron usually has no trouble
emerging from these meetings with the answers he was looking for. He is
described by MONEY as the most relentless inquisitor this side of Ted Koppel
(Money, October 1996).
Ron Baron's stated money management goal is to double his shareholders' money
every three to five years. So far, he has delivered on this promise, and there
is every reason to believe he will keep on delivering in the future. With such a
determined philosophy, and the ability to reach his goals, the CLS AdvisorOne
Funds will continue to rely on Ron Baron.
CLS AdvisorOne Funds likes Ron Baron as a money manager because he is a
confident, independent thinker who is willing to take big positions in companies
he believes in. He has shown himself to be an excellent stock picker and an
extremely hard worker, willing to do what it takes to understand thoroughly the
companies he is buying. For these reasons, the Baron Fund and the Baron Growth &
Income Fund are core holdings in the CLS AdvisorOne Funds.
11
<PAGE>
The following information was presented on pages 12 and 13 of the report:
CLS AdvisorOne Funds
PORTFOLIO OF INVESTMENTS
April 30, 1998
<TABLE>
T H E A M E R I G O F U N D
<CAPTION>
Mutual Funds
% OF
LARGE CAP VALUE SHARES NET ASSETS VALUE
<S> <C> <C> <C>
Fidelity Advisor Growth Opportunities I Fund 14,821 9.12% $ 689,038
Warburg Pincus Growth and Income Fund 18,422 4.50% 340,068
Neuberger & Berman Partners Fund 3,607 1.39% 105,134
LARGE CAP GROWTH
Masters' Select Equity Fund 40,143 7.35% 555,176
Rydex OTC Fund (#) 18,860 7.06% 533,360
Rydex Nova Fund (#) 15,363 6.14% 464,125
MID CAP VALUE
Oakmark Select Fund (#) 35,941 9.20% 695,460
Neuberger & Berman Genesis Fund (#) 33,584 7.55% 570,262
Baron Asset Fund (#) 8,844 6.16% 465,299
SMALL CAP VALUE
Heartland Value Plus Fund 41,175 9.12% 689,270
Barr Rosenberg U.S. Small Capitalization Fund -- Advisor Class(#) 20,450 2.68% 202,453
Robertson Stephens Partners Fund 3,386 0.80% 60,643
Heartland Small Cap Contrarian Fund 374 0.07% 5,041
SMALL CAP GROWTH
TIP Funds Turner Small Cap Equity Fund (#) 9,856 3.73% 281,878
BONDS
Strong High Yield Bond Fund 15,958 2.55% 192,938
INTERNATIONAL STOCK
Janus Overseas Fund 37,345 10.07% 761,090
Federated International Small Company Fund -- Class A (#) 18,468 4.57% 345,356
SSgA Emerging Markets Fund 15,077 2.17% 164,187
Templeton Developing Markets Trust -- Advisor Class 7,183 1.29% 97,397
TOTAL MUTUAL FUNDS (Cost $6,506,397) 95.52% 7,218,175
------ ---------
Money Market Mutual Funds 200,000 2.65% 200,000
Alliance Prime Portfolio
Total Money Market Mutual Funds (Cost $200,000) 2.65% 200,000
----- ---------
TOTAL INVESTMENTS (COST $6,706,397) 98.17% 7,418,175
------ ---------
Other Assets in Excess of Liabilities 1.83% 139,357
----- -------
TOTAL NET ASSETS 100% $7,557,532
==== ==========
<FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
(#) REPRESENTS NON-INCOME PRODUCING SECURITIES
</FN>
</TABLE>
The following information was The Amerigo Fund's Investment
presented as a pie chart: Style % in U.S. stock funds
April 30, 1998:
COMPOSITION %
- ------------- VALUE BLEND GROWTH
Composition % based on 15.01% 20.55% LARGE
holdings of underlying
funds at April 30, 1998. 22.91% MEDIUM
U.S. Stocks 64.7% 12.67% 3.73% SMALL
International Stocks 21.0%
Cash 8.4%
Bonds 4.3%
Other 0.7%
<PAGE>
The following information was presented on pages 14 and 15 of the report:
CLS AdvisorOne Funds
PORTFOLIO OF INVESTMENTS
April 30, 1998
<TABLE>
T H E C L E R M O N T F U N D
<CAPTION>
Mutual Funds % OF
SHARES NET ASSETS VALUE
<S> <C> <C> <C>
LARGE CAP VALUE
Oakmark Fund 13,754 13.63% $605,311
Invesco Total Return Fund 14,919 10.60% 470,559
Invesco Financial Strategic Utilities Fund 10,680 3.53% 156,677
LARGE CAP GROWTH
Rydex Nova Fund (#) 6,915 4.70% 208,893
MID CAP GROWTH
Baron Growth & Income Fund 9,142 5.52% 245,182
SMALL CAP VALUE
Third Avenue Value Fund 10,200 7.87% 349,252
Oakmark Small Capital Fund (#) 6,552 3.05% 135,306
Barr Rosenberg U.S. Small Capitalization Fund - Advisor Class (#) 10,958 2.44% 108,482
BONDS
Strong Corporate Bond Fund 39,785 10.06% 446,787
Fidelity Advisor High-Yield Fund 29,546 8.54% 379,368
Berwyn Income Fund 15,736 4.55% 202,046
INTERNATIONAL STOCK
Tweedy Browne Global Value Fund 37,930 16.25% 721,423
Oakmark International Small Cap Fund 15,111 3.20% 141,892
Brinson Global Equity Fund 3.11% 138,017
Total Mutual Funds (Cost $4,041,863) 97.05% 4,309,195
------ ---------
Other Assets in Excess of Liabilities 2.95% 131,359
----- -------
TOTAL NET ASSETS 100% $4,440,554
==== ==========
<FN>
(#) REPRESENTS NON-INCOME PRODUCING SECURITIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
The following information was The Clermont Fund's Investment
presented as a pie chart: Style % in U.S. stock funds
April 30, 1998:
COMPOSITION %
- ------------- VALUE BLEND GROWTH
Composition % based on 27.76% 4.70% LARGE
holdings of underlying
funds at April 30, 1998. 5.52% MEDIUM
U.S. Stocks 43.9% 13.36% SMALL
Bonds 24.5%
International Stocks 17.9%
Cash 10.7%
Other 3.0%
<PAGE>
(This page intentionally left blank)
<PAGE>
CLS AdvisorOne Funds
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1998
The The
Amerigo Clermont
Fund Fund
Assets:
Investments, at market value
(cost $6,706,397 and $4,041,863,
respectively) $7,418,175 $ 4,309,195
Cash 125,310 105,904
Receivable from advisor 29,749 27,805
Unamortized organization costs 43,709 43,709
Prepaid expense and other assets 2,723 2,723
Total Assets 7,619,666 4,489,336
Less Liabilities:
Management fees payable 32,144 21,799
Other accrued liabilities 29,990 26,983
Total Liabilities 62,134 48,782
Net Assets $ 7,557,532 $ 4,440,554
=========== ===========
Components of Net Assets:
Capital $ 6,782,973 $ 4,160,163
Accumulated undistributed
net investment income --- 1,247
Accumulated undistributed
net realized gains 62,781 11,812
Net unrealized appreciation of investments 711,778 267,332
TOTAL NET ASSETS $7,557,532 $4,440,554
========== ==========
Capital Stock Outstanding 664,460 410,965
======= =======
Net Asset Value -- Offering and $11.37 $10.81
Redemption Price Per Share ====== ======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
CLS AdvisorOne Funds
STATEMENTS OF OPERATIONS
For the Period from July 14, 1997* through April 30, 1998
The The
Amerigo Clermont
Fund Fund
Investment Income:
Dividends $42,300 $79,860
Total Investment Income 42,300 79,860
Expenses:
Investment advisory fees 32,144 21,799
Audit fees 9,891 9,910
Custodian fees 5,525 4,002
Trustee fees 10,387 10,335
Legal expense 4,802 4,802
Amortization of organization expense 8,423 8,423
Transfer agent fees 14,373 13,659
Fund accounting fees 15,932 15,932
Administrative fees 23,897 23,897
Printing and postage expense 12,155 12,155
Registration 1,342 1,342
Miscellaneous expenses 4,349 2,906
TOTAL EXPENSES BEFORE VOLUNTARY EXPENSE
REDUCTIONS AND REIMBURSEMENTS 143,220 129,162
------- -------
Expenses voluntarily reduced (3,028) (3,028)
Reimbursement of expenses by advisor (102,771) (101,142)
Net Expenses 37,421 24,992
Net Investment Income 4,879 54,868
Realized and Unrealized Gains from Investments:
Net realized gains from investment transactions 62,781 11,812
Net increase in unrealized appreciation
of investments 711,778 267,332
Net Realized and Unrealized Gains
from Investments 774,559 279,144
Net Increase in Net Assets Resulting
from Operations $ 779,438 $ 334,012
========= ==========
* Date of commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
CLS AdvisorOne Funds
STATEMENTS OF CHANGES IN NET ASSETS
For the Period from July 14, 1997* through April 30, 1998
The The
Amerigo Clermont
Fund Fund
Increase In Net Assets:
Operations:
Net investment income $ 4,879 $ 54,868
Net realized gains from
investment transactions 62,781 11,812
Net increase in unrealized
appreciation of investments 711,778 267,332
Net Increase in Net Assets Resulting
from Operations 779,438 334,012
Dividends and Distributions to Shareholders:
From net investment income (4,879) (53,621)
In excess of net investment income (12,682) --
Net Decrease in Net Assets Resulting
from Dividends and Distributions
to Shareholders (17,561) (53,621)
Capital Transactions:
Proceeds from shares subscribed 7,093,071 4,416,816
Reinvestment of dividends 17,561 53,621
Cost of shares redeemed (364,977) (360,274)
Net Increase in Net Assets Resulting
from Capital Transactions 6,745,655 4,110,163
Net Increase In Net Assets 7,507,532 4,390,554
Net Assets - Beginning of Period 50,000 50,000
NET ASSETS - END OF PERIOD $ 7,557,532 $ 4,440,554
=========== ===========
Share Transactions:
Subscribed 692,016 435,133
Reinvested 1,735 5,288
Redeemed (34,291) (34,456)
Net Increase in Shares Outstanding 659,460 405,965
======= =======
* Date of commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
CLS AdvisorOne Funds
FINANCIAL HIGHLIGHTS
For the Period from July 14, 1997* through April 30, 1998
The The
Amerigo Clermont
Fund Fund
Net Asset Value, Beginning of Period $ 10.00 $ 10.00
Investment Operations:
Net investment income 0.02 0.17
Net realized and unrealized gains
from investments 1.39 0.80
Total 1.41 0.97
Distributions:
From net investment income (0.02) (0.16)
In excess of net investment income (0.02) --
Total (0.04) (0.16)
Net Asset Value, End of Period $ 11.37 $ 10.81
Total Return
14.11%(1) 9.84%(1)
Ratios/Supplemental Data:
Net assets, end of period
Ratio of expenses to average net assets $ 7,557,532 $ 4,440,554
Ratio of net investment income to 1.15%(2) 1.15%(2)
average net assets
Ratio of expenses to average net 0.15%(2) 2.53%(2)
assets, before voluntary expense
reductions and reimbursements
Ratio of net investment income (loss) 4.45%(2) 5.95%(2)
to average net assets before voluntary
expense reductions and reimbursements
Portfolio turnover rate (3.15%)(2) (2.27%)(2)
14.36%(1) 22.24%(1)
(1) Not annualized.
(2) Annualized.
* Date of commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
CLS AdvisorOne Funds
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
The CLS AdvisorOne Funds (the "Trust") was organized as a Massachusetts business
trust on March 3, 1997 and is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company. The
Trust consists of The Amerigo Fund and The Clermont Fund (individually, a
"Fund"; collectively, the "Funds") which are two separate diversified, no-load
series with different investment objectives. Each Fund commenced operations July
14, 1997. Prior to the commencement of operations, the Trust had no operations
other than incurring organizational expenses and the sale of initial shares of
beneficial interest. The Amerigo Fund's investment objective is capital
appreciation and long-term growth of capital without regard to current income.
The Clermont Fund's investment objective is growth of capital and a reasonable
level of current income.
1. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant
accounting policies followed by the Trust in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. Preparation of the financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses for the period. Actual results could differ from these
estimates.
SECURITY VALUATION: Each Fund seeks to achieve its investment objective by
investing in a portfolio of open-end or closed-end investment companies (the
"underlying funds"). Underlying open-end funds are valued at their respective
net asset values as reported by such investment companies under the 1940 Act.
The underlying funds value securities in their portfolios for which market
quotations are readily available at their current market values (generally the
last reported sale price) and all other securities and assets at fair value
pursuant to methods established by the board of directors of the underlying
funds. Other assets of each Fund are valued at their current market value if
quotations are readily available. Otherwise, they are valued at fair value
pursuant to methods established in good faith by the Board of Trustees.
The shares of many closed-end investment companies, after their initial public
offering, frequently trade at a price per share which is different than the net
asset value per share. The difference represents a market premium or market
discount of such shares. There can be no assurance that the market discount on
shares of any closed-end investment company purchased by a Fund will decrease.
Similarly, there can be no assurance that the market premium on shares of any
closed-end investment company purchased by a Fund will not decrease.
FOREIGN SECURITIES: An underlying fund may invest its assets in securities of
foreign issuers. Investment in securities of foreign issuers carry certain risks
not ordinarily associated with investments in securities of domestic issuers.
Such risks include political and economic developments, including the possible
expropriation of assets, confiscatory taxation, imposition of exchange controls
or other foreign governmental laws and restrictions. In addition, there may be
less publicly available information about foreign issuers than is available
about domestic issuers, and the value of the underlying funds' foreign
securities may be adversely affected by fluctuations in exchange rates between
foreign currencies and the U.S. dollar. Interest and dividend income from
foreign sources received by an underlying fund may be subject to foreign taxes.
<PAGE>
CLS AdvisorOne Funds
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
LOANS OF PORTFOLIO SECURITIES: A Fund may lend its portfolio securities
provided: (1) the loan is secured continuously by collateral consisting of U.S.
Government securities or cash or cash equivalents maintained on a daily
mark-to-market basis in an amount at least equal to the current market value of
the loaned securities; (2) the Fund may at any time call the loan and obtain the
return of the securities loaned; (3) the Fund will receive any interest or
dividends paid on the loaned securities; and (4) the aggregate market value of
securities loaned will not at any time exceed one-third of the total assets of
the Fund. Loans of securities involve a risk that the borrower may fail to
return the securities or may fail to provide additional collateral. As of April
30, 1998, the Funds had no outstanding loans of securities.
REPURCHASE AGREEMENTS: Repurchase agreements are transactions in which the Funds
purchase securities from a bank or recognized securities dealer and
simultaneously commit to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. The Funds may invest in
repurchase agreements with institutions believed by Clarke Lanzen Skalla
Investment Firm, Inc. to present minimal credit risk. Each repurchase agreement
is recorded at cost. The Funds require that the securities purchased in a
repurchase agreement be transferred to the custodian in a manner sufficient to
enable the Funds to obtain those securities in the event of a counterparty
default. The seller, under the repurchase agreement, is required to maintain the
value of the securities at least equal to the repurchase price, including
accrued interest.
SECURITY TRANSACTIONS: The Funds record purchases and sales of investments on
the trade date. The Funds calculate realized gains and losses from sales of
investments on the first-in first-out basis. The Funds recognize interest income
on the accrual basis and record dividend income on the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS: The Funds record distributions to shareholders on
the ex-dividend date. On a quarterly basis, the Funds declare and pay dividends
from net investment income, if any. On an annual basis, the Funds declare and
pay net capital gain dividends, if any. Dividends from net investment income and
net capital gain dividends are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to expiring capital losses carried forward
and deferrals of certain losses. Permanent book and tax basis differences have
been reclassified among the components of net assets.
FEDERAL INCOME TAXES: Each Fund intends to qualify as a regulated investment
company by complying with provisions of the Internal Revenue Code available to
investment companies. Each Fund will distribute its taxable income to its
shareholders sufficient to relieve it from all Federal income taxes and excise
taxes. Therefore, neither Fund recognized a provision for Federal income taxes
or excise taxes for the period ended April 30, 1998.
OTHER: Expenses directly attributable to a Fund are charged to the Fund, while
expenses which are attributable to more than one series of the Trust are
allocated among the respective series based upon relative net assets or another
appropriate basis.
2. RELATED PARTY TRANSACTIONS: Each Fund has retained Clarke Lanzen Skalla
Investment Firm, Inc. (the "Manager") as investment advisor pursuant to an
Investment Advisory Contract under the terms of which it has agreed to provide
an investment program within the limitations of the Fund's investment policies
and restrictions. Certain officers and directors of the Fund are also
<PAGE>
officers and directors of the Manager. The Manager earns an annual fee from each
Fund at the rate of 1.00% of each Fund's average daily net assets.
The Manager presently intends to waive management fees or reimburse each Fund
through an expense reimbursement to the extent necessary to keep total expenses
of each Fund at or below 1.15% of average daily net assets. The Manager may
change this policy at any time without notice to shareholders. Pursuant to such
intentions, the Manager reimbursed The Amerigo Fund and The Clermont Fund
$102,771 and $101,142, respectively, for the period from July 14, 1997
(commencement of operations) through April 30, 1998. To the extent the Funds do
not increase net assets, the Funds are reliant on the ability of the advisor to
continue to provide fee waivers and reimbursements. The advisor is dependent
upon achieving its own financial goals, including targeted increases in the
Funds' net assets through net sales of fund shares, in order to provide such
support to the funds.
In addition to the aforementioned reimbursements, Mutual Funds Services Co., the
Funds Administrator, Accountant, and Shareholder Servicing Dividend and Transfer
Agent voluntarily agreed to waive its fees for the period from the commencement
of operations through July 31, 1997.
3. INVESTMENT TRANSACTIONS: For the period from July 14, 1997 (commencement of
operations) through April 30, 1998, purchases and sales of portfolio securities
(excluding short-term securities) were as follows:
The Amerigo Fund The Clermont Fund
Purchases $7,146,619 $4,735,852
Sales $605,436 $635,098
Cost of investments for financial reporting purposes differs from cost basis for
Federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of Federal income tax reporting purposes. As of
April 30, 1998, the gross unrealized appreciation and depreciation of
investments and the aggregate cost basis of investments for Federal income tax
purposes was as follows:
The Amerigo Fund The Clermont Fund
Gross unrealized appreciation $726,248 $280,832
Gross unrealized depreciation (15,005) (15,917)
----------------- -----------------
Net unrealized appreciation $711,243 $264,915
----------------- -----------------
Aggregate cost basis $6,706,932 $4,044,280
4. SHARES OF BENEFICIAL INTEREST: The Trust's Declaration of Trust permits the
Trust to offer and sell an unlimited number of full and fractional shares of
beneficial interest ("shares") in each of the Trust's existing Funds and to
create additional Funds. Each Fund issues its own series of shares. All shares
have a par value of $0.10 per share, are fully-paid, non-assessable and
fully-transferable when issued. All shares are issued as full or fractional
shares. A fraction of a share has the same rights and privileges as a full
share. Each full or fractional share has a proportionate vote. On issues
affecting the Trust as a whole, all shares of the Trust vote together as one
series. On issues affecting a particular Fund, only its shares vote.
23
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Trustees of The CLS AdvisorOne Funds:
We have audited the accompanying statements of assets and liabilities of The CLS
AdvisorOne Funds-- The Amerigo Fund and The Clermont Fund including the
portfolios of investments, as of April 30, 1998, and the related statements of
operations, statements of changes in net assets and the financial highlights for
the period from July 14, 1997 (date of commencement of operations) through April
30, 1998. These financial statements and the financial highlights are the
responsibility of The CLS AdvisorOne 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of April
30, 1998, by confirmation with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. 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 aforementioned funds comprising The CLS AdvisorOne Funds at April 30,
1998, the results of their operations, the changes in their net assets and the
financial highlights for the period from July 14, 1997 through April 30, 1998,
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Columbus, Ohio
May 22, 1998
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<PAGE>
CLS AdvisorOne Funds
THE AMERIGO FUND
THE CLERMONT FUND
14747 California Street
Omaha, NE 68154-1979
800-635-3427
402-493-3313
INVESTMENT ADVISOR
Clarke Lanzen Skalla Investment Firm, Inc.
CUSTODIAN
Star Bank, N.A.
Star Bank Center
425 Walnut Street
Cincinatti, OH 45202
TRANSFER AGENT & DIVIDEND DISBURSING AGENT
Mutual Funds Service Co.
6000 Memorial Drive
Dublin, OH 43017
800-808-3829
614-760-2158 (in Central Ohio)
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20030
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, OH 43215
26
<PAGE>
The CLS AdvisorOne Funds
The Amerigo Fund o The Clermont Fund
1-800-635-3427
For current net asset value prices of the CLS AdvisorOne
Funds, call 1-800-808-3829.
27
<PAGE>
Past performance is not a guarantee of future results.
This report is authorized for use when preceded or accompanied by a prospectus
for the CLS AdvisorOne Funds. Read it carefully before investing. Share price
and returns will fluctuate, and investors may have a gain or loss when they
redeem shares. Statements and other information in this report are dated and
subject to change. CLS AdvisorOne Funds, Omaha, NE 68154.
Clarke Lanzen Skalla Investment Firm, Inc.
-----------------------------------------------
14747 California Street
Omaha, NE 68154
1-800-635-3427
CLS AdvisorOne Funds ANNUAL REPORT, APRIL 30, 1998
