The CLS AdvisorOne Funds
Semiannual Report
October 31, 1998
[LOGO] Compass
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CLS AdvisorOne Funds
[LOGO] Compass
CONTENTS OF THE REPORT
Fund Objectives 3
Letter to the Shareholders 4
Economic Overview 5
Performance Review 6
Manager's Profile: Wallace Weitz 9
Portfolio of Investments: Amerigo 10
Portfolio of Investments: Clermont 12
Statements of Assets and Liabilities 15
Statements of Operations 16
Statements of Changes in Net Assets 17
Financial Highlights 18
Notes to Financial Statements 19
2 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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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 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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LETTER FROM THE PRESIDENT
[PHOTO] W. Patrick Clarke
President, CLS AdvisorOne Funds
Dear Fellow Shareholder,
As we made our way through the last six months, the convictions of investors
everywhere were put to the test. Most investors found it to be a very
frustrating period, especially after becoming accustomed this decade to a very
easygoing bull market environment. We sympathize with everyone who has recently
felt the discomfort of watching the value of their portfolio suffer short-term
declines. While the past few months have not met the expectations of most mutual
fund investors, October's recent upswing serves as a prominent reminder of the
importance of keeping the perspective of a long-term investor.
The Amerigo Fund and the Clermont Fund are both diversified among various asset
classes, styles and individual securities to bring the expertise of many fund
managers to you through a single investment. They are held together by our
investment methodology, which rests on three important fundamentals: core
holdings, asset class rotation, and risk reduction. Our methodology is designed
to temper major market fluctuations, and has demonstrated its perseverance
through recent volatility.
While it's true we depend greatly on the methodology and diversification of The
CLS AdvisorOne Funds, we could not be successful without the expertise of the
managers of the holdings within our funds of funds. We believe strongly in each
of their abilities to weather temporary periods of underperformance. In each
previous report, one of our selected fund managers has been profiled to give our
investors a closer look at the basic level of their investment philosophies.
Initially, we profiled Randal D. Skalla, Chief Investment Officer of The CLS
AdvisorOne Funds, and discussed his responsibility for selecting the individual
fund managers within our fund family. And in the last report, you read about the
successes of Ron Baron, President of the Baron Funds. In this report, you will
find a profile of Wallace Weitz, President of the Weitz family of funds. You
will also find an economic overview, a review of our funds' performance with
accompanying discussion, and a portfolio break-out for each fund. 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 Clarke
W. Patrick Clarke
President, CLS AdvisorOne Funds
<PAGE>
ECONOMIC OVERVIEW By Analysts, Philip Mead & Tony Riggs
Since our last report, equity markets have taken investors on a roller-coaster
ride, reaching all-time highs in mid-July, only to suffer severe corrections
through August and September. With a welcomed turnaround in October, investors
were treated to one of the greatest one-month point increases in history. Just
how crazy was it? Well, from its peak on July 17th of 9337.97, the Dow Jones
Industrial Average (DJIA) would fall as much as 19 percent over the next several
weeks. The average stock mutual fund was down more than 15 percent for the third
quarter, according to Lipper Analytical Services.
Markets continued the correction through September and the first week of
October. But the last three and a half weeks of October would see the greatest
one-month point gain in the DJIA of 749.48 points. By the end of October, major
market indices were around the levels of late spring before the summer
correction. The market changed its focus from fear and panic to positive market
fundamentals.
A constant throughout this period, and the last couple of years, was
historically low inflation. Low inflation and correspondingly low interest rates
were major contributors to keeping the correction from becoming a full-blown
bear market. Undoubtedly the biggest factors in the equity market's rebound were
the cuts the Federal Reserve made in two key interest rates.
At their scheduled meeting on Sept. 29, members of the Federal Open Market
Committee voted to cut a quarter percentage point from the Fed Funds Rate but
not the Discount Rate. The market reaction was not enthusiastic as investors had
hoped for a more substantial cut. Sixteen days later, the Fed took the markets
by surprise when it slashed a quarter percent from the Discount Rate, and yet
another quarter point from the Fed Funds Rate. This came between regular Fed
meetings, which is historically uncommon.
Many international central banks quickly followed the U.S.'s lead by cutting
their interest rates. World markets didn't respond as strongly as U.S. markets.
They had been performing well, but the menacing market problems of Southeast
Asia and later in Russia slowed growth. A debt default by Russia resulted in a
great deal of stock selling in Europe and the U.S. while another crisis occurred
in Latin America, hitting Brazil especially hard. In response to the damaged
financial markets of Russia, Asia and Latin America, seven nations (the U.S.,
Japan, Germany, United Kingdom, France, Italy and Canada) approved $90 billion
in reserves to the International Monetary Fund (IMF). The result was an easing
of Asia's market turmoil, with some Asian markets beginning to rebound and
others remaining a long way from complete recovery. Early IMF intervention has
helped keep the Latin American problems from being as severe as those of Asia.
The overall domestic economy shows few problems. Late October figures for
economic growth, as measured by Gross Domestic Product, showed a 3.3 percent
annualized growth rate. As mentioned earlier, inflation remains at very low
levels, while we continue to see low unemployment rates. Low prices and
available jobs kept Consumer Confidence high. As a result, Consumer Spending was
strong and continues to be a major driving force behind the economy.
Investors were severely tested over the past six months. Equities climbed to new
highs but the lingering international financial crises made many investors
nervous enough to sell without considering the underlying economic fundamentals.
Despite all the market volatility, the overall U.S. economy remained healthy and
the stock market returned to its earlier levels, rewarding investors who stayed
disciplined in their investment strategy.
5 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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THE CLS ADVISORONE FUNDS
10/31/98
PERFORMANCE REVIEW
[GRAPH] The following information was presented as a bar graph:
Total returns for CLS AdvisorOne Funds
since May 1, 1998 through October 31, 1998.
Amerigo -9.50%
Clermont -7.68%
S&P 500 -0.4%
Multi-Asset Global -6.26%
AMERIGO FUND REVIEW
The total return for the Amerigo Fund during the past six months ending October
31, 1998 was -9.50%. During this same time period the S&P 500 Composite Stock
Price Index declined -.40%, and the average Multi-Asset Global mutual fund
monitored by Morningstar, Inc. declined -6.26%. These performance numbers
include the 3rd quarter of 1998, a period in which mutual funds turned in their
largest quarterly loss in eight years. It has clearly not been an easy
environment for investors to make money.
Since 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 use as a comparison. Over the long-term, our goal is to outperform the broad
U.S. stock market. However, there will be time periods when this is not the
case. These time periods will occur whenever the largest U.S. companies are
posting the best performance. This was indeed the case over the last six months
as well as all of 1998.
It can best be illustrated by analyzing a broader group of indexes. The
following chart shows how returns differ between indexes. The data shows returns
for the six month period ending October 31, 1998.
S&P 400 Mid Cap -11.00%
Russell 2000 Small Cap -21.70%
Average International
Fund from Morningstar -13.06%
(Data: Morningstar)
During the last six months the performance gap between large companies and small
companies is the largest recorded since the early 1970's when the small cap
indexes were first formulated. This has led to most mutual funds underperforming
the major large cap indexes. Through the end of October, less than 10% of all
6 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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mutual funds were beating the S&P 500 for year-to-date performance. In fact,
through early November, the average mutual fund was more than 14 percentage
points behind the S&P 500.
By design, the Amerigo Fund is an asset allocation fund diversifying its assets
across many different asset classes. The Amerigo Fund has significant exposure
to the largest domestic companies; but the fund also had exposure to small
company and international stocks. Over the last six months we have been steadily
increasing our weightings of funds owning the largest capitalization stocks. We
will continue to do so until the relative performance shifts back in favor of
the small and mid-size companies.
Some of the best performing funds Amerigo has owned over the last six months are
as follows:
Past
6 months
Rydex OTC +13.05%
Fidelity Growth Opportunities + 0.47%
Rydex Nova - 5.33%
Oakmark Select - 6.30%
CLERMONT FUND REVIEW
The total return for the Clermont Fund during the past six months ending October
31, 1998 was -7.68%. During this same time period the S&P 500 Composite Stock
Price Index declined -.40% and the average Multi-Asset Global mutual fund
monitored by Morningstar, Inc. declined -6.26%.
Since inception on July 14, 1997, the Clermont Fund has held an average
weighting of 65% equities and 35% bonds. The bond weightings have both helped
and hurt the fund during the past six months. While the market was heading to
all time highs during May, June and July our bond positions were a very large
drag on performance. However, during the 3rd quarter sell-off in the equity
markets, those bond positions added a great amount of stability to the
portfolio. The bond weighting in the Clermont Fund is by design, and we will
always have a portion of the portfolio in bonds to reduce the risk level and the
day-to-day volatility of the fund.
The Clermont Fund, being more conservative than the Amerigo fund, has had a
heavy weighting in mutual funds that invest in value stocks. These are stocks
with lower price to earnings ratios and have higher dividends. Historically,
these types of funds have performed much better when the markets go through
corrections. Unfortunately, this was not the case over the past six months as
value stocks significantly underperformed growth stocks. As a result, we have
been steadily increasing our exposure to growth mutual funds while reducing our
7 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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exposure to value funds. We will continue to do so as long as the relative
performance favors growth over value.
Some of the best performing funds held by the Clermont Fund during this time
period were as follows:
Past
6 months
Strong Corporate Bond +2.08%
Invesco Utilities +1.27%
Invesco Total Return -0.30%
Brinson Global -2.99%
B/R Market Neutral -3.17%
RISK REDUCTION
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 a very respectable return while taking only a moderate amount of
risk. The Amerigo Fund is designed to take more risk than the Clermont Fund, so
its returns during up markets should be expected to outperform the Clermont
Fund. Conversely, in a down market the Clermont Fund should retain more of its
value than the Amerigo Fund, clearly illustrated during the most recent market
correction (7/17 - 10/8) as the Clermont Fund declined 9.74% less than the
Amerigo Fund.
Both the Amerigo and the Clermont Funds are well positioned for future growth in
the coming six months. The Fund of Funds concept makes a great deal of sense to
us because we can select from the best fund managers in the business and put
them together into one diversified fund. You achieve instant diversification and
access to the some of the best funds, many of which are not offered to retail
customers.
The recent market volatility and sharp corrections in the equity markets have
demonstrated the importance of maintaining a diversified portfolio. To go
through corrections is very normal for the market. It has gone through many in
the past and will continue to experience more in the future. During these time
periods it is important to remember that if you are investing to reach long-term
goals, you must stay disciplined to a long-term strategy without panicking
during short-term market fluctuations.
8 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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FUND MANAGER PROFILE
Wallace Weitz - THE WEITZ FUNDS
Throughout 1998, while many investors categorized the term VALUE FUND with the
stigma of a 10% loss, Weitz Value is up nearly 10%. A member of the Weitz family
of funds is held in each of The CLS AdvisorOne Funds. Wallace Weitz is the
Manager of Weitz Series Value Portfolio and Weitz Partners Value. They have
become leaders among small-cap value funds while taking roughly half the market
risk of those with similar objectives. More importantly, Weitz is a manager who
has learned to distinguish the real characteristics from the superficial-- to
separate storytelling ability from the facts. As a fund manager, he attempts to
identify those companies whose stock price is substantially lower than the value
of the company.
Weitz has produced impressive returns with notably low levels of market risk;
but when asked about his strengths, Weitz doesn't purport to have better
insight, harder work or more exclusive sources; rather, he claims to bring to
the table two simple attributes: patience and common sense. His basic strategy
is to identify the INTRINSIC VALUE of a company.
"WHAT I CALL VALUE INVESTING-MEASURING INTRINSIC VALUE AND TRYING TO BUY AT A
DISCOUNT-TENDS TO SEEM BORING." 1 But, not only might this strategy seem boring
at times, such a style seeking out relatively unpopular companies during their
fiscal lows may be taxing to the average investor. Weitz sites the negative
reinforcement between clients, consultants, and money managers through an
example of the cable and cellular business.
"THESE COMPANIES WERE ADDING SUBSCRIBERS AND INCREASING CASH FLOW, BUT THERE WAS
A PERCEPTION OF A PROBLEM. IN THE FALL OF 1996, I WAS AT A BEAR STEARNS MEDIA
CONFERENCE, AND A CABLE ANALYST AND A CELLULAR ANALYST WERE BOTH SAYING, "THESE
STOCKS ARE REALLY CHEAP. IT'S REALLY A GREAT BUSINESS, AND TWO OR THREE YEARS
FROM NOW THE STOCKS OUGHT TO BE MUCH HIGHER. BUT DON'T BUY THEM NOW BECAUSE
THERE'S ANOTHER BAD QUARTER AHEAD." MONEY MANAGERS AGREED, SAYING, "I'M NOT
GOING TO BUY NOW BECAUSE MY INVESTORS DON'T HAVE THE PATIENCE TO STICK THROUGH
ANOTHER BAD QUARTER OR TWO." 2
On the contrary, Weitz didn't choose to avoid such a potentially endangered
industry. In fact, he doubled up.
"WE ALREADY HAD BIG POSITIONS, BUT I JUST KEPT BUYING. THE SAME THING HAPPENED
MOST RECENTLY WITH CENTENNIAL CELLULAR, WHERE THE STOCK PRICE DOUBLED IN FOUR
YEARS, AND SO DID THE VALUE OF THE BUSINESS. THE STOCK DID JUST WHAT IT SHOULD
HAVE DONE, BUT FIRST IT WENT DOWN 60% AND THEN UP 500%... BUT WHAT'S RIGHT ABOUT
CENTENNIAL WAS BUYING IT FOUR YEARS AGO AT $20 AND TO KEEP BUYING IT ALL THE WAY
DOWN. IT WASN'T A MATTER OF BEING SMART IN THE LAST NINE MONTHS." 1
While a fund manager might take a lot of heat for holding a stock through a
couple of down quarters, the reward comes when that manager gets credit for just
holding on while the value of the company they've owned for several months is
finally realized. That devotion, discipline, and patience helps align The Weitz
Funds with the methodology of our analysts at CLS. For that reason, we believe
Wallace Weitz is a strong fund manager who will help support our long-term goals
for our clients.
1 DOW JONES INVESTMENT ADVISOR, October 1998
2 BARRON'S, October 26, 1998
9 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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CLS AdvisorOne Funds
PORTFOLIO OF INVESTMENTS
October 31, 1998
(Unaudited)
THE AMERIGO FUND
MUTUAL FUNDS % OF NET
SHARES ASSETS VALUE
LARGE CAP VALUE
Fidelity Advisor Growth Opportunities I Fund 18,262 6.46% $ 852,996
Masters Select Equity Fund 61,598 5.61% 740,410
LARGE CAP GROWTH
Rydex OTC Fund 47,731 11.56% 1,525,955
Warburg Pincus Health Sciences Fund 59,584 6.50% 858,611
Nations Marsico Focused Equities
Fund - Advisor Class 40,511 3.90% 514,496
Rydex Nova Fund 15,363 3.33% 439,390
SSgA Growth and Income Fund 22,855 3.23% 426,468
Janus Growth and Income Fund 8,414 1.69% 222,549
Strong Growth and Income Fund 10,087 1.43% 188,921
MID CAP VALUE
Oakmark Select Fund 45,047 6.19% 816,700
SMALL CAP VALUE
Weitz Series Hickory Fund 18,948 3.88% 512,724
Barr Rosenberg U.S. Small Capitalization
Fund - Advisor Class 28,871 1.70% 224,038
Neuberger & Berman Genesis Fund 6,206 0.67% 88,932
Franklin Mutual Discovery Fund - Class Z 3,886 0.50% 66,450
SMALL CAP GROWTH
Baron Asset Fund 8,671 2.82% 372,425
TIP Funds Turner Small Cap Equity Fund 12,214 2.01% 264,807
O'Shaughnessy Cornerstone Growth Fund 19,947 1.57% 207,053
INTERNATIONAL EQUITY
Janus Overseas Fund 55,889 7.60% 1,003,211
Federated International Small Company
Fund - Class A 38,472 4.91% 648,257
Total Mutual Funds
(Cost $9,959,063) 75.56% 9,974,393
Depositary Receipts
S&P Depositary Receipts 22,400 18.69% 2,466,800
Total Depositary Receipts (Cost $2,487,712) 18.69% 2,466,800
Money Market Mutual Funds Alliance Prime Portfolio
Total Money Market Mutual Funds (Cost $50,446) 50,446 0.38% 50,446
0.38% 50,446
Total Investments (Cost $12,497,221) 12,491,639
Other Assets in Excess of Liabilities 5.37% 709,731
Total Net Assets 100% $13,201,370
See accompanying notes to financial statements.
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COMPOSITION %
Composition % based on holdings of underlying funds within Amerigo as of
October 31, 1998.
[GRAPH] The following informatiom was presented as a pie chart:
74.0% U.S. Stocks
16.4% International Stocks
6.6% Cash
1.3% Bonds
1.7% Other
The Amerigo Fund's Investment
Style in U.S. stock funds
October 31, 1998
Value Blend Growth
- ----- ----- ------
12.07% 18.69% 31.64% Large
6.19% Mid
6.75% 6.40% Small
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CLS AdvisorOne Funds
PORTFOLIO OF INVESTMENTS
October 31, 1998
(Unaudited)
THE CLERMONT FUND
MUTUAL FUNDS % OF NET
SHARES ASSETS VALUE
LARGE CAP VALUE
Oakmark Fund 18,308 9.23% $ 690,772
Invesco Total Return Fund 14,466 5.99% 448,310
Invesco Financial Strategic Utilities Fund 10,738 2.12% 158,714
LARGE CAP GROWTH
Invesco Growth Fund 134,274 10.74% 804,300
Rydex Nova Fund 6,915 2.64% 197,760
MID CAP VALUE
Weitz Series Fund Value Portfolio 13,973 5.16% 386,501
Oakmark Equity and Income Fund 7,919 1.53% 114,590
SMALL CAP GROWTH
Baron Growth & Income Fund 6,155 1.74% 130,484
SMALL CAP VALUE
Third Avenue Value Fund 10,200 4.11% 307,840
Barr Rosenberg U.S. Small Capitalization
Fund - Advisor Class 10,958 1.14% 85,032
BONDS
Strong Corporate Bond Fund 75,902 11.25% 841,752
Fidelity Advisor Intermediate Bond Fund 36,199 5.21% 390,224
Barr Rosenberg Market Neutral Fund 34,635 4.53% 338,728
Invesco High-Yield Bond Fund 22,685 1.95% 146,321
INTERNATIONAL EQUITY
Tweedy Browne Global Value Fund 53,367 12.01% 899,233
Brinson Global Equity Fund 10,686 1.79% 133,894
Total Mutual Funds (Cost $6,162,602) 81.14% 6,074,455
Depositary Receipts
S&P Depositary Receipts 9,300 13.68% 1,024,162
Total Depositary Receipts (Cost $1,036,237) 13.68% 1,024,162
Money Market Mutual Funds
Alliance Prime Portfolio 0.03% 2,024
Total Money Market Mutual Funds (Cost $2,024) 2,024 0.03% 2,204
Total Investments (Cost $7,200,863) 7,100,641
Other Assets in Excess of Liabilities 5.15% 384,774
Total Net Assets 100% $7,485,415
See accompanying notes to financial statements.
12 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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COMPOSITION %
Composition % based on holdings of underlying funds within Clermont as of
October 31, 1998.
[GRAPH] The following informatiom was presented as a pie chart:
56.4% U.S. Stocks
27.9% Bonds
10.8% International
4.9% Cash
The Clermont Fund's Investment
Style in U.S. stock funds
October 31, 1998
Value Blend Growth
- ----- ----- ------
12.34% 13.68% 13.38% Large
6.69% Mid
5.25% 1.74% Small
13 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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CLS AdvisorOne Funds
THE AMERIGO FUND
THE CLERMONT FUND
14747 California Street
Omaha, NE 68154-1979
800-635-3427
402-493-3313
CURRENT NAV FOR
AMERIGO AND CLERMONT
(800) 808-3829
TICKER SYMBOL FOR AMERIGO
CLSAX
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
614-760-2108 (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
<PAGE>
CLS AdvisorOne Funds
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1998
(Unaudited)
Assets: THE AMERIGO FUND THE CLERMONT FUND
Investments, at market value
(cost $12,497,221 and
$7,200,863, respectively) $ 12,491,639 $ 7,100,641
Cash 689,523 351,628
Interest and dividends receivable 239 108
Receivable from advisor -- 5,172
Unamortized organization costs 38,428 38,428
Prepaid expense and other assets 20,597 17,590
Total Assets 13,240,426 7,513,567
Liabilities:
Management fees payable 16,083 611
Other accrued liabilities 22,973 27,541
Total Liabilities 39,056 28,152
Net Assets $ 13,201,370 $ 7,485,415
Components of Net Assets:
Capital $ 13,329,393 $ 7,603,246
Accumulated undistributed net
investment income (loss) (9,787) 58
Accumulated net realized losses (112,654) (17,667)
Net unrealized depreciation
from investments (5,582) (100,222)
Total Net Assets $ 13,201,370 $ 7,485,415
Capital Stock Outstanding 1,282,996 752,486
Net Asset Value - Offering and
Redemption Price Per Share $ 10.29 $ 9.95
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
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CLS AdvisorOne Funds
STATEMENTS OF OPERATIONS
October 31, 1998
(Unaudited)
Investment Income: THE AMERIGO FUND THE CLERMONT FUND
Dividends $ 41,883 $ 48,205
Interest 5,605 2,157
Total Investment Income 47,488 50,362
Fund Expenses:
Investment advisory fees 50,220 29,526
Administrative fees 15,201 15,201
Transfer agent fees 10,301 9,385
Fund accounting fees 10,130 10,150
Printing and postage expense 12,860 13,272
Registration 10,222 10,233
Trustee fees 6,308 8,565
Audit fees 6,148 7,461
Amortization of organization
expense 5,282 5,282
Insurance expense 4,478 4,478
Legal expense 3,634 3,443
Custodian fees 1,936 2,124
Miscellaneous expenses 1,090 1,090
Total expenses before
reimbursements 137,810 120,210
Reimbursement of expenses
by advisor (80,535) (86,223)
Net Expenses 57,275 33,987
Net Investment Income (Loss) (9,787) 16,375
Realized and Unrealized Losses
from Investments
Net realized losses from
investment transactions (175,435) (29,479)
Net decrease in unrealized
depreciation from investments (717,360) (367,554)
Net realized and unrealized
losses from investments (892,795) (397,033)
Net Decrease in Net Assets
Resulting from Operations $ (902,582) $ (380,658)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CLS AdvisorOne Funds
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
THE AMERIGO FUND THE CLERMONT FUND
For the Six For the Period For the Six For the Period
Months from Months from
Increase in Net Assets Ended October July 14, 1997* Ended October July 14, 1997*
31, 1998 Through April 31, 1998 Through April
Operations: (Unaudited) 30, 1998 (Unaudited) 30, 1998
<S> <C> <C> <C> <C>
Net investment income (loss) $ (9,787) $ 4,879 $ 16,375 $ 54,868
Net realized gains (losses) from
investment transactions (175,435) 62,781 (29,479) 11,812
Net increase (decrease) in unrealized
appreciation (depreciation)
of investments (717,360) 711,778 (367,554) 267,332
Net Decrease in Net Assets
Resulting from Operations (902,582) 779,438 (380,658) 334,012
Dividends and Distributions
to Shareholders:
From net investment income -- (4,879) (17,564) (53,621)
In excess of net investment income -- (12,682) -- --
Net Decrease in Net Assets Resulting
from Dividends and Distributions
to Shareholders -- (17,561) (17,564) (53,621)
Capital Transactions:
Proceeds from shares subscribed 7,559,502 7,093,071 3,921,774 4,416,816
Reinvestment of dividends -- 17,561 17,423 53,621
Cost of shares redeemed (1,013,082) (364,977) (496,114) (360,274)
Net Increase in Net Assets Resulting
from Capital Transactions 6,546,420 6,745,655 3,443,083 4,110,163
Total Increase in Net Assets 5,643,838 7,507,532 3,044,861 4,390,554
Net Assets - Beginning of Period 7,557,532 50,000 4,440,554 50,000
Net Assets - End of Period $ 13,201,370 $ 7,557,532 $ 7,485,415 $ 4,440,554
Share Transactions:
Subscribed 718,040 692,016 388,314 435,133
Reinvested -- 1,735 1,721 5,288
Redeemed (99,504) (34,291) (48,514) (34,456)
Net Increase in Shares Outstanding 618,536 659,460 341,521 405,965
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
* DATE OF COMMENCEMENT OF OPERATIONS
<PAGE>
CLS AdvisorOne Funds
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THE AMERIGO FUND THE CLERMONT FUND
For the Six For the Period For the Six For the Period
Months from Months from
Ended October July 14, 1997* Ended October July 14, 1997*
31, 1998 Through April 31, 1998 Through April
(Unaudited) 30, 1998 (Unaudited) 30, 1998
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 11.37 $ 10.00 $ 10.81 $ 10.00
Investment Operations:
Net investment income (loss) (0.01) 0.02 0.05 0.17
Net realized and unrealized gains
(losses) from investment (1.07) 1.39 (0.86) 0.80
Total (1.08) 1.41 (0.81) 0.97
Distributions
From net investment income -- (0.02) (0.05) (0.16)
In excess of net investment income -- (0.02) -- --
Total -- (0.04) (0.05) (0.16)
Net Asset Value, End of Period $ 10.29 $ 11.37 $ 9.95 $ 10.81
Total Return (9.50%)(1) 14.11%(1) (7.68%)(1) 9.84%(1)
Ratios/ Supplemental Data:
Net assets, end of period $ 13,201,370 $ 7,557,532 $ 7,485,415 $ 4,440,554
Ratio of expense to average
net assets 1.15%(2) 1.15% (2) 1.15%(2) 1.15%(2)
Ratio of net investment
income (loss)
to average net assets (0.20%)(2) 0.15% (2) 0.56%(2) 2.53%(2)
Ratio of expense to average net
assets, before voluntary
fee reductions 2.77%(2) 4.45% (2) 4.11%(2) 5.95%(2)
Ratio of net investment income
(loss) to average net assets
before voluntary fee reductions (1.82%)(2) (3.15%)(2) (2.40%)(2) (2.27%)(2)
Portfolio turnover rate 27.97%(1) 14.36% (1) 21.42%(1) 22.24%(1)
<FN>
(1) Not annualized.
(2) Annualized.
* DATE OF COMMENCEMENT OF OPERATIONS
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CLS AdvisorOne Funds
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
(Unaudited)
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 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.
19 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
<PAGE>
CLS AdvisorOne Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998
(Unaudited)
LOANS OF PORTFOLIO SECURITIES: A Fund or an underlying 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 October 31, 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 minimum 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 October 31, 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
20 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
<PAGE>
CLS AdvisorOne Funds
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998
(Unaudited)
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 Funds are also 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
$80,535 and $86,223, respectively, for the six months ended October 31, 1998. To
the extent the Funds do not increase net assets, the Funds are reliant on the
ability of the adviser to continue to provide fee waivers and reimbursements.
The adviser 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.
3.INVESTMENT TRANSACTIONS: For the six months ended October 31, 1998, purchases
and sales of portfolio securities (excluding short-term securities) were as
follows:
The Amerigo Fund The Clermont Fund
Purchases $8,650,497 $4,399,146
Sales $2,705,129 $1,207,263
Cost of investments for financial reporting purposes may differ from cost basis
for Federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of the amount of losses recognized for Federal
income tax reporting purposes. As of October 31, 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 $547,927 $120,351
Gross unrealized depreciation (554,044) (222,990)
--------- ---------
Net unrealized depreciation ($6,117) ($102,639)
--------- ---------
Aggregate cost basis $12,497,756 $7,203,280
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 as a
separate series.
21 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
<PAGE>
(This page intentionally left blank)
<PAGE>
CLS AdvisorOne Funds
[LOGO] Compass
The Amerigo Fund * The Clermont Fund
1-800-635-3427
For current net asset value prices of the CLS AdvisorOne Funds, call
1-800-808-3829.
23 The CLS AdvisorOne Funds Semiannual Report October 31, 1998
<PAGE>
This report is authorized for use when preceded or accompanied by a
prospectus for the CLS AdvisorOne Funds. Read it carefully before
investing. Past performance is not a guarantee of future results. 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
