Commission File No. 333-23459
Commission File No. 811-08095
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
CLS ADVISORONE FUNDS
(Exact Name of Registrant as Specified in Charter)
14747 CALIFORNIA STREET, OMAHA, NE 68154-1979
(Address of Principal Executive Offices-Zip Code)
Registrant's Telephone Number, including Area Code: (402) 493-3313
W. PATRICK CLARKE, CHAIRMAN AND PRESIDENT
14747 CALIFORNIA STREET, OMAHA, NE 68154-1979
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as
practicable after the effective date of this Registration Statement.
It is proposed that this filing will become effective (check
appropriate box).
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/ / on (date) pursuant to paragraph (b) of Rule 485.
/ / 60 days after filing pursuant to paragraph (a)(1).
/ / on (date) pursuant to paragraph (a)(1).
/ / 75 days after filing pursuant to paragraph (a)(2).
/ / on (date) pursuant to paragraph (a)(2) on Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Pursuant to Rule 24f-2(a)(1), Registrant hereby declares that it is
registering under the Securities Act of 1933 an indefinite number of its shares
of beneficial interest of two series of the Registrant which have been
designated The Amerigo Fund and The Clermont Fund.
===========================================================================
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
CLS ADVISORONE FUNDS
THE AMERIGO FUND
THE CLERMONT FUND
CROSS REFERENCE SHEET TO FORM N-1A
PART A.
ITEM A. PROSPECTUS CAPTION
1 Cover Page
2 Highlights
Synopsis of Financial Information
3 Not Applicable
4 The Trust and its Management
Investment Objectives and Policies
Securities and Investment Practices
5 The Trust and its Management
5A Not Applicable
6(a) Other Information - Shares of Beneficial Interest
6(b) Not Applicable
6(c) Other Information - Shares of Beneficial Interest
6(d) Not Applicable
6(e) Highlights
6(f)(g) Dividends, Distributions and Taxes
6(h) Not Applicable
7(a) Not Applicable
7(b) How Net Asset Value is Determined
How to Buy Shares
7(c) How To Buy Shares
Exchange Privilege
Other Shareholder Services
7(d) How To Buy Shares
Highlights
7(e) Not Applicable
7(f) Not Applicable
7(g) Not Applicable
8(a) How To Make Withdrawals (Redemptions)
8(b) How To Make Withdrawals (Redemptions)
8(c) Shareholder Accounts
8(d) How To Make Withdrawals (Redemptions)
9 Not Applicable
<PAGE>
CLS ADVISORONE FUNDS
THE AMERIGO FUND
THE CLERMONT FUND
14747 California Street
Omaha, NE 68154-1979
800-635-3427
402-493-3313
The CLS AdvisorOne Funds (the "Trust") is an open-end, management
investment company consisting of two separate diversified, no-load series with
different investment objectives (each a "Fund" and collectively, the "Funds").
The Funds seek to achieve their investment objectives by investing primarily
in shares of open-end investment companies, commonly known as "mutual funds",
and closed-end investment companies.
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.
ADDITIONAL INFORMATION
This Prospectus sets forth basic information about the Trust and the
Funds that a prospective investor should know before investing and it should
be retained for future reference. A STATEMENT OF ADDITIONAL INFORMATION, dated
__________, 1997, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The Statement of Additional
Information is available upon request and without charge by contacting the
Trust at the address given above or by calling 1-800-808-3829 or (614) 760-2158.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
Highlights................................ 2
Synopsis of Financial Information......... 3
Investment Objectives and Policies........ 4
Securities and Investment Practices....... 7
The Trust and Its Management.............. 18
How To Buy Shares......................... 19
How To Make Withdrawals (Redemptions)..... 21
Other Shareholder Services................ 23
Shareholder Accounts...................... 23
Dividends, Distributions and Taxes........ 23
How Net Asset Value is Determined......... 25
Performance Information and Reports....... 26
Other Information......................... 27
INVESTMENT ADVISER: CLARKE LANZEN SKALLA INVESTMENT FIRM, INC.
PROSPECTUS DATED _________, 1997
<PAGE>
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HIGHLIGHTS
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INVESTMENT 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.
LIQUIDITY: As open-end investment companies, the Funds continuously
offer and redeem shares of beneficial interest at the next determined net
asset value per share. See "How to Buy Shares" and "How to Make Withdrawals
(Redemptions)."
NO SALES OR REDEMPTION CHARGES OR 12B-1 FEES: There are no
commissions, fees or charges for the purchase or redemption of shares. The
Funds also do not charge 12b-1 fees. See "Synopsis of Financial Information",
"How to Buy Shares" and "How to Make Withdrawals (Redemptions)."
MINIMUM INVESTMENT: A minimum investment of $30,000 is required to open
an account, including an IRA account. Subsequent investments must be at least
$100. Each Fund has the right to redeem the shares in an account and pay the
proceeds to the shareholder if the value of the account drops below $1,000
because of shareholder redemptions. The shareholder will be given 30 days
written notice and an opportunity to restore the account to $1,000. See "How to
Buy Shares", "Other Shareholder Services" and "Shareholder Accounts."
INVESTMENT ADVISER AND MANAGER: Clarke Lanzen Skalla Investment Firm,
Inc. is the Funds' investment adviser (the "Investment Adviser" or the
"Manager"). The Manager has been an investment adviser to individuals,
employee benefit plans, trusts and corporations since 1989. See "The Trust and
Its Management."
SHARES AVAILABLE THROUGH: Your investment adviser. See "How to Buy
Shares."
HOW TO BUY SHARES: Complete the New Account Application and forward
with payment as directed. Orders accompanied by payment (ordinary check, bank
check, bank wire, and money order) are accepted immediately and priced at the
next determined net asset value per share after receipt of the order. See
"How to Buy Shares" and "How Net Asset Value is Determined."
SHAREHOLDER INQUIRIES: Shareholder inquiries should be directed to
the Funds by writing the Funds c/o Mutual Funds Service Co., 6000 Memorial
Drive, Dublin, Ohio 43017, or calling 1-800-808-3829. To protect the
confidentiality of shareholder accounts, information relating to a specific
account will be disclosed pursuant to a telephone inquiry if the shareholder
identifies the account by account number or by the taxpayer identification
number listed on the account.
<PAGE>
RISK FACTORS: Each Fund concentrates its investments in the shares of
other investment companies. Consequently, in addition to a shareholder bearing
his proportionate share of the expenses of a Fund, a shareholder also
indirectly bears similar expenses of the underlying investment companies. Each
Fund may invest, through investment companies, in what are sometimes referred
to as "junk bonds." Such securities are speculative investments which carry
greater risks than higher quality debt securities. Each Fund may invest,
through investment companies, in foreign securities which may involve risks in
addition to those of U.S. investments, including increased political and
economic risk, as well as exposure to currency fluctuation. Each Fund may use
various investment techniques to hedge the Fund's risks, including futures
contracts and options, and underlying investment companies may invest in
asset-backed securities. Special risk factors apply to those investments. See
"Investment Objectives and Policies" and "Securities and Investment Practices"
for a more detailed description of the risks associated with an investment in
the Funds.
<TABLE>
<CAPTION>
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SYNOPSIS OF FINANCIAL INFORMATION
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THE AMERIGO FUND THE CLERMONT FUND
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price)....................................... none none
Maximum Deferred Sales Load
(as a percentage of original purchase price
or redemption proceeds, as applicable)...................... none none
Maximum Sales Load Imposed on Reinvested
Dividends.................................................... none none
Redemption Fees................................................... none none
Exchange Fees..................................................... none none
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fees.................................................. 1.00% 1.00%
12b-1 Fees....................................................... none none
Other Expenses (after any expense reimburse-
ment or waiver*)............................................... 0.15% 0.15%
----- -----
TOTAL FUND OPERATING EXPENSES 1.15% 1.15%
(after any expense reimbursement or waiver*)
<PAGE>
<CAPTION>
You would pay the following expense on a $1,000 investment, assuming (1) a 5%
annual return throughout the period and (2) redemption at the end of each
time period:
EXAMPLE:
THE AMERIGO FUND THE CLERMONT FUND
CUMULATIVE EXPENSES CUMULATIVE EXPENSES
PAID FOR THE PERIOD OF: PAID FOR THE PERIOD OF:
1 YEAR 3 YEARS 1 YEAR 3 YEARS
- ------ ------- ------ -------
<S> <C> <C> <C>
$12 $37 $12 $37
<FN>
*The Manager presently intends to waive management fees or reimburse each Fund
through an expense reimbursement fee to the extent necessary to keep total
expenses of each Fund at 1.15% of average daily net assets. The Manager may
change this policy at any time without notice to shareholders. This would, in
some circumstances, have a material adverse effect on the net income of the
Funds and the return earned by shareholders. For planning purposes,
prospective investors and shareholders should assume that expense
reimbursements will not be made.
</FN>
</TABLE>
"Other expenses" is based on estimated amounts for the current fiscal
year. The expense table is meant to assist an investor in understanding the
various costs and expenses that an investor in the Funds will bear directly or
indirectly. The Funds do not impose an exchange fee or redemption fee. For
more complete descriptions of the various costs and expenses of the Funds see
"The Trust and Its Management."
An investor in the Funds should recognize that he may invest directly
in mutual funds and that, by investing in mutual funds indirectly through the
Funds, he will bear not only his proportionate share of the expenses of the
Funds (including operating costs and investment advisory and administrative
fees) but also, indirectly, similar expenses of the underlying funds. An
investor in the Funds through a managed account program who pays an advisory
fee for asset allocation should recognize that the combined expenses of the
program and of the Funds (including their indirect expenses) will involve
greater fees and expenses than present in other types of investments. In
addition, a Fund shareholder indirectly bears expenses paid by an underlying
fund related to the distribution of its shares. Finally, an investor should
recognize that, as a result of the Funds' policies of investing in other
underlying funds, he may receive taxable capital gains distributions to a
greater extent than would be the case if he invested directly in the
underlying funds. See "Dividends, Distributions and Taxes."
The table and hypothetical examples above are for illustrative
purposes only. The investment rate of return and expenses should not be
considered a representation of past or future performance or expenses as
actual rates of return and expenses may be more or less than the rate and
amounts shown.
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INVESTMENT OBJECTIVES AND POLICIES
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GENERAL
Each Fund seeks to achieve its investment objective by investing
primarily in a portfolio of open-end or closed-end investment companies (the
"underlying funds"), although it may invest up to 100% of its total assets in
one underlying fund. At times, for temporary defensive purposes when warranted
by general economic and financial conditions, a Fund may invest up to 100% of
its total assets directly in, or in underlying funds investing in, (or enter
into repurchase agreements (maturing in seven days or less) with banks and
broker-dealers with respect to) short-term debt securities, including U.S.
Treasury bills and other short-term U.S. Government securities, corporate
bonds, commercial paper, certificates of deposit, bankers' acceptances and
other money market instruments. A Fund may also invest directly in, or in
underlying funds investing in, futures contracts and options thereon. However,
a Fund normally will invest its assets in underlying funds. Although the Funds
may invest in shares of the same underlying fund, the percentage of each
Fund's assets so invested may vary and the Manager will determine that such
investments are consistent with the investment objectives and policies of each
Fund. The underlying funds in which a Fund invests may, but need not, have the
same investment policies as the Fund. The investments which may be made by
underlying funds in which the Funds invest and the risks associated with those
investments are further described under "Securities and Investment Practices."
<PAGE>
Although a Fund may invest in a number of different types of mutual
funds, a Fund will typically invest in the following types of mutual funds:
aggressive growth, growth, growth and income, small capitalization, specialty
and industry sector funds; international and global stock funds (including
developed and emerging markets, regional funds and country specific funds) and
international and global bond funds; U.S. Government securities, corporate
bond and high yield bond funds; utility and money market funds. Since a Fund
is subject to the risks of each investment type, the Fund and its performance
are affected by many factors.
The Manager will vary the percentage of a Fund's assets invested in
each type of underlying fund or security based upon the mix of such funds or
securities that the Manager believes will be most likely to achieve the Fund's
investment objective. In allocating assets among asset classes, the Manager
will employ both fundamental and technical analysis to assess relative risk
and reward potential throughout the financial markets, with the objective of
providing shareholders the best opportunity for achieving a Fund's investment
objective. Generally, in seeking a Fund's investment objective, the Manager
will alter the composition of the Fund's portfolio as economic and market
trends change. A Fund's portfolio is expected to vary considerably among the
various asset classes as these changes occur. The Manager substantially
underweights asset classes that it believes have above average market risk
with below average market potential over the short term; and it overweights
asset classes that it believes represent above average market potential with
below average market risk. By allocating its investments in this manner, a
Fund believes it will not be exposed to the same degree of market risk as a
fund which, for example, invests in only one asset class. However, the
allocation process is not limited to determining the degree to which a Fund's
assets should be invested in the different asset classes. The Manager
continually explores opportunities in various subclasses of assets:
geoeconomic considerations (i.e., foreign versus domestic), maturities of
fixed income securities (i.e., "short term" versus "long term"), market
capitalization (i.e., "blue chip" versus small capitalization), and sector
rotation (i.e., "high tech" versus staple industries).
A Fund may purchase "no-load" mutual funds, which are sold and
purchased without a sales charge, and "load" mutual funds, but only if the
load, or sales commission, is by previous agreement waived for purchases or
sales made by a Fund. However, when the Manager believes it is appropriate, a
Fund may also purchase mutual funds that charge a redemption fee of up to 2%
for short-term sales, but not mutual funds that charge a sales load upon
redemption. The underlying mutual funds in which a Fund invests may incur
distribution expenses in the form of 12b-1 fees.
The Manager selects underlying funds in which to invest based, in
part, on their investment objectives and policies, their investment adviser
and portfolio manager, and on analysis of their past performance (absolute,
relative and risk-adjusted). The Manager also considers other factors in the
selection of underlying funds, including, but not limited to, fund size,
liquidity, expense ratio, quality of shareholder service, reputation and
tenure of portfolio manager, general composition of its investment portfolio
and current and expected portfolio holdings. Typically, a Fund will invest its
assets in mutual funds from several different mutual funds families, managed
by a variety of investment advisers, and utilizing a variety of different
investment objectives and styles.
Each Fund is a diversified mutual fund because at least 75 per cent of
the value of each Fund's total assets will be represented by cash and cash items
(including receivables), Government securities, securities of other investment
companies, and other securities for the purposes of this calculation limited in
respect of any one issuer to an amount not greater in value than 5 per cent of
the value of the total assets of each Fund and to not more than 10 per cent of
the outstanding voting securities of such issuer.
<PAGE>
The Trust may, in the future, seek to achieve each Fund's investment
objective by investing all of the Fund's assets in a no-load, diversified,
open-end management investment company having substantially the same
investment objective as the Fund. Each Fund's investment policies permit such
an investment. Shareholders will receive 30 days prior written notice with
respect to any such investment.
Except as otherwise provided herein, each Fund's investment objective
and its related policies and activities are not fundamental and may be changed
by the Trustees of the Trust, on behalf of a Fund, without approval of the
shareholders of that Fund.
THE AMERIGO FUND
The investment objective of the The Amerigo Fund is capital
appreciation and long-term growth of capital without regard to current income.
The underlying funds in which it invests will consist of funds which seek
capital growth or appreciation by investing primarily in common stock or
securities convertible into or exchangeable for common stock (such as
convertible preferred stock, convertible debentures or warrants).
The Fund also may invest up to 20% of its total assets in underlying
funds which invest primarily in long- or short-term bonds and other fixed
income securities (such as securities issued or guaranteed or insured by the
U.S. Government, its agencies or instrumentalities, commercial paper,
preferred stock, convertible preferred stock or convertible debentures)
whenever the Manager believes that these underlying funds offer a potential
for capital appreciation. These underlying funds may invest in investment
grade bonds or in bonds which are not considered investment grade (commonly
referred to as "junk bonds"). See "Securities and Investment Practices - High
Yield Securities."
The underlying funds in which the The Amerigo Fund invests may incur
more risk than those in which the The Clermont Fund invests. For example, they
may trade their portfolios more actively (which results in higher brokerage
commissions and increased realization of taxable capital gains) and/or invest
in companies whose securities are subject to more erratic market movements.
The underlying funds also may invest up to 100% of their assets in securities
of foreign issuers and engage in foreign currency transactions with respect to
these investments; invest up to 15% of their assets in restricted or illiquid
securities; invest up to 5% of their assets in warrants; invest in
asset-backed securities; lend their portfolio securities; sell securities
short; borrow money in amounts up to 25% of their assets for investment
purposes (i.e., leverage their portfolios); write (sell) or purchase call or
put options on securities or on stock indexes; and enter into futures contracts
and options on futures contracts. The risks associated with these investments
are described in "Securities and Investment Practices."
<PAGE>
THE CLERMONT FUND
The investment objective of the The Clermont Fund is growth of
capital and a reasonable level of current income. The underlying funds in
which it invests will consist of funds which invest primarily in common stock
or securities convertible into or exchangeable for common stock (such as
convertible preferred stock, convertible debentures or warrants) and which
seek long-term capital growth or appreciation with current income typically of
secondary importance.
The Fund will also invest at least 20% of its total assets in
underlying funds which invest primarily in long or short-term bonds and other
fixed income securities (such as securities issued or guaranteed or insured by
the U.S. Government, its agencies or instrumentalities, commercial paper,
preferred stock, convertible preferred stock or convertible debentures). These
underlying funds may invest in investment grade bonds or in bonds which are
not considered investment grade (commonly referred to as "junk bonds"). See
"Securities and Investment Practices - High Yield Securities."
The underlying funds in which the The Clermont Fund invests may be
authorized to invest up to 100% of their assets in the securities of foreign
issuers and engage in foreign currency transactions with respect to these
investments; invest up to 10% of their assets in restricted or illiquid
securities; invest up to 5% of their assets in warrants; invest in
asset-backed securities; lend their portfolio securities; sell securities
short; borrow money in amounts up to 25% of their assets for investment
purposes; write or purchase call or put options on securities or stock
indexes; and enter into futures contracts and options on futures contracts. The
risks associated with these investments are described in "Securities and
Investment Practices."
Additional information about the investment policies of the Funds
appears in the Statement of Additional Information. There can be no assurance
that the investment objective of the Funds will be achieved.
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SECURITIES AND INVESTMENT PRACTICES
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The following pages contain more detailed information about types of
instruments in which a Fund or its underlying funds may invest, strategies the
Manager may employ in pursuit of a Fund's investment objective, and a summary
of related risks. Any restrictions listed supplement those discussed earlier.
A complete listing of a Fund's limitations and more detailed information about
each Fund's investments are contained in the Statement of Additional
Information.
OPEN-END INVESTMENT COMPANIES. Any investment in a mutual fund
involves risk and, although the Funds may invest in a number of underlying
funds, this practice does not eliminate investment risk. Moreover, investing
through the Funds in an underlying portfolio of mutual funds involves certain
additional expenses and certain tax results which would not be present in a
direct investment in the underlying funds. See "Dividends, Distributions
and Taxes."
The Funds and any "affiliated persons" (as defined in the 1940 Act)
may purchase in the aggregate only up to 3% of the total outstanding
securities of any underlying fund. Accordingly, when affiliated persons hold
<PAGE>
shares of any of the underlying funds, each Fund's ability to invest fully in
shares of those funds is restricted, and the Manager must then, in some
instances, select alternative investments that would not have been its first
preference.
The 1940 Act also provides that an underlying fund whose shares are
purchased by a Fund will be obligated to redeem shares held by the Fund only
in an amount up to 1% of the underlying fund's outstanding securities during
any period of less than 30 days. Shares held by a Fund in excess of 1% of an
underlying fund's outstanding securities therefore, will be considered not
readily marketable securities which together with other such securities may
not exceed 15% of The Amerigo Fund's assets and 10% of The Clermont Fund's
assets.
Under certain circumstances an underlying fund may determine to make
payment of a redemption by a Fund wholly or partly by a distribution in kind
of securities from its portfolio, in lieu of cash, in conformity with the
rules of the Securities and Exchange Commission. In such cases, the Funds may
hold securities distributed by an underlying fund until the Manager determines
that it is appropriate to dispose of such securities.
Investment decisions by the investment advisers of the underlying
funds are made independently of the Funds and their Manager. Therefore, the
investment adviser of one underlying fund may be purchasing shares of the same
issuer whose shares are being sold by the investment adviser of another such
fund. The result of this would be an indirect expense to a Fund without
accomplishing any investment purpose.
CLOSED-END INVESTMENT COMPANIES. The Funds may invest their assets in
"closed-end" investment companies (or "closed-end funds"), subject to the
investment restrictions set forth below. The Funds, together with any company
or companies controlled by the Funds, and any other investment companies
having the Manager as an investment adviser, may purchase in the aggregate
only up to 3% of the total outstanding voting stock of any closed-end fund.
Shares of closed-end funds are typically offered to the public in a one-time
initial public offering by a group of underwriters who retain a spread or
underwriting commission of between 4% or 6% of the initial public offering
price. Such securities are then listed for trading on the New York Stock
<PAGE>
Exchange, the American Stock Exchange, the National Association of Securities
Dealers Automated Quotation System (commonly known as "NASDAQ") and, in some
cases, may be traded in other over-the-counter markets. Because the shares of
closed-end funds cannot be redeemed upon demand to the issuer like the shares
of an open-end investment company (such as a Fund), investors seek to buy and
sell shares of closed-end funds in the secondary market.
A Fund generally will purchase shares of closed-end funds only in the
secondary market. A Fund will incur normal brokerage costs on such purchases
similar to the expenses a Fund would incur for the purchase of securities of
any other type of issuer in the secondary market. A Fund may, however, also
purchase securities of a closed-end fund in an initial public offering when,
in the opinion of the Manager, based on a consideration of the nature of the
closed-end fund's proposed investments, the prevailing market conditions and
the level of demand for such securities, they represent an attractive
opportunity for growth of capital. The initial offering price typically will
include a dealer spread, which may be higher than the applicable brokerage
cost if a Fund purchased such securities in the secondary market.
The shares of many closed-end funds, after their initial public
offering, frequently trade at a price per share which is less than the net
asset value per share, the difference representing the "market discount" of
such shares. This market discount may be due in part to the investment
objective of long-term appreciation, which is sought by many closed-end funds,
as well as to the fact that the shares of closed-end funds are not redeemable
by the holder upon demand to the issuer at the next determined net asset value
but rather are subject to the principles of supply and demand in the secondary
market. A relative lack of secondary market purchasers of closed-end fund
shares also may contribute to such shares trading at a discount to their net
asset value.
A Fund may invest in shares of closed-end funds that are trading at a
discount to net asset value or at a premium to net asset value. There can be
no assurance that the market discount on shares of any closed-end fund
purchased by a Fund will ever decrease. In fact, it is possible that this
market discount may increase and a Fund may suffer realized or unrealized
capital losses due to further decline in the market price of the securities of
such closed-end funds, thereby adversely affecting the net asset value of a
Fund's shares. Similarly, there can be no assurance that any shares of a
closed-end fund purchased by a Fund at a premium will continue to trade at a
premium or that the premium will not decrease subsequent to a purchase of such
shares by a Fund.
Closed-end funds may issue senior securities (including preferred
stock and debt obligations) for the purpose of leveraging the closed-end
fund's common shares in an attempt to enhance the current return to such
closed-end fund's common shareholders. A Fund's investment in the common
shares of closed-end funds that are financially leveraged may create an
opportunity for greater total return on its investment, but at the same time
may be expected to exhibit more volatility in market price and net asset value
than an investment in shares of investment companies without a leveraged
capital structure.
ILLIQUID AND RESTRICTED SECURITIES. An underlying fund may invest not
more than 15% of its total assets in securities for which there is no readily
available market ("illiquid securities") which would include securities the
disposition of which would be subject to legal restrictions (so-called
<PAGE>
"restricted securities") and repurchase agreements having more than seven days
to maturity. A considerable period of time may elapse between an underlying
fund's decision to dispose of such securities and the time when the fund is
able to dispose of them, during which time the value of the securities (and
therefore the value of the underlying fund's shares held by a Fund) could
decline.
FOREIGN SECURITIES. An underlying fund may invest up to 100% of its
assets in securities of foreign issuers. There may be less publicly available
information about these issuers than is available about companies in the U.S.
and foreign auditing requirements may not be comparable to those in the U.S.
In addition, the value of the underlying fund's foreign securities may be
adversely affected by fluctuations in the exchange rates between foreign
currencies and the U.S. dollar, as well as other political and economic
developments, including the possibility of expropriation, confiscatory
taxation, exchange controls or other foreign governmental restrictions. In
addition, income received by an underlying fund from sources within foreign
countries, such as dividends and interest payable on foreign securities, may
be subject to foreign taxes, including taxes withheld from payments on those
securities. Moreover, the underlying funds will generally calculate their net
asset values and complete orders to purchase, exchange or redeem shares only
on a Monday-Friday basis (excluding holidays on which the NYSE is closed).
Foreign securities in which the underlying funds may invest may be listed
primarily on foreign stock exchanges which may trade on other days (such as
Saturday). As a result, the net asset value of an underlying fund's portfolio
may be significantly affected by such trading on days when the Manager does
not have access to the Funds. Under the Investment Company Act of 1940 (the
"1940 Act"), an underlying fund may maintain its foreign securities in the
custody of non-U.S. banks and securities depositories.
EXPOSURE TO EMERGING MARKETS. An underlying fund may invest in emerging
markets securities. Investments in emerging market securities include additional
risks to those generally associated with foreign investing. The extent of
economic development, political stability, and market depth varies widely in
comparison to more developed nations. The economies of these countries may be
subject to greater social, economic, and political uncertainties or may be based
on only a few industries. All of these factors can make emerging market
securities more volatile.
FOREIGN CURRENCY TRANSACTIONS. In connection with its portfolio
transactions in securities traded in a foreign currency, an underlying fund
may enter into forward contracts to purchase or sell an agreed upon amount of
a specific currency at a future date which may be any fixed number of days
from the date of the contract agreed upon by the parties at a price set at the
time of the contract. Under such an arrangement, concurrently with the entry
into a contract to acquire a foreign security for a specified amount of
currency, the underlying fund would purchase with U.S. dollars the required
amount of foreign currency for delivery at the settlement date of the
purchase. The underlying fund would enter into similar forward currency
transactions in connection with the sale of foreign securities. The effect of
such transactions would be to fix a U.S. dollar price for the security to
protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date on
which payment is made or received, the normal range of which is three to 14
days. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers.
A forward contract generally has no deposit requirement and no commissions are
charged at any stage for trades. Although such contracts tend to minimize the
risk of loss due to a decline in the value of the subject currency, they tend
to limit commensurably any potential gain which might result should the value
of such currency increase during the contract period.
<PAGE>
INDUSTRY CONCENTRATION. Although a Fund will not invest 25% or more of
its total assets in any one industry or underlying funds that concentrate their
investments in any one industry, a Fund, through its investment in the
underlying funds, may indirectly invest 25% or more of its total assets in one
industry.
MASTER DEMAND NOTES. Although the Funds themselves will not do so,
underlying funds (particularly money market mutual funds) may invest up to
100% of their assets in master demand notes. Master demand notes are unsecured
obligations of U.S. corporations redeemable upon notice that permit investment
by an underlying fund of fluctuating amounts at varying rates of interest
pursuant to direct arrangements between the underlying fund and the issuing
corporation. Because they are direct arrangements between the underlying fund
and the issuing corporation, there is no secondary market for the notes.
However, they are redeemable at face value, plus accrued interest, at any
time.
REPURCHASE AGREEMENTS. Underlying funds, particularly money market
funds, may enter into repurchase agreements with banks and broker-dealers
under which they acquire securities subject to an agreement with the seller to
repurchase the securities at an agreed upon time and price. The Funds also may
enter into repurchase agreements. These agreements are considered under the
1940 Act to be loans by the purchaser collateralized by the underlying
securities. If the seller should default on its obligation to repurchase the
securities, the underlying fund may experience delay or difficulties in
exercising its rights to realize upon the securities held as collateral and
might incur a loss if the value of the securities should decline. For a more
complete discussion of repurchase agreements, see "Investment Objectives and
Policies" in the Statement of Additional Information.
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 securities loaned; (2) the Fund or
the underlying fund may at any time call the loan and obtain the return of the
securities loaned; (3) the Fund or the underlying 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 or the underlying fund. Loans of securities involve a
risk that the borrower may fail to return the securities or may fail to
provide additional collateral.
SHORT SALES. An underlying fund may sell securities short. In a short
sale, the underlying fund sells stock which it does not own, making delivery
with securities "borrowed" from a broker. The underlying fund is then
obligated to replace the security borrowed by purchasing it at the market
price at the time of replacement. This price may or may not be less than the
price at which the security was sold by the underlying fund. Until the
security is replaced, the underlying fund is required to pay to the lender any
dividends or interest which accrue during the period of the loan. In order to
borrow the security, the underlying fund may also have to pay a premium which
would increase the cost of the security sold. The proceeds of the short sale
will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
<PAGE>
The underlying fund also must deposit in a segregated account an
amount of cash or U.S. Government securities equal to the difference between
(a) the market value of the securities sold short at the time they were sold
short and (b) the value of the collateral deposited with the broker in
connection with the short sale (not including the proceeds from the short
sale). While the short position is open, the underlying fund must maintain
daily the segregated account at such a level that (1) the amount deposited in
it plus the amount deposited with the broker as collateral equals the current
market value of the securities sold short and (2) the amount deposited in it
plus the amount deposited with the broker as collateral is not less than the
market value of the securities at the time they were sold short. Depending
upon market conditions, up to 80% of the value of the underlying fund's net
assets may be deposited as collateral for the obligation to replace securities
borrowed to effect short sales and allocated to a segregated account in
connection with short sales.
The underlying fund will incur a loss as a result of the short sale
if the price of the security increases between the date of the short sale and
the date on which the underlying fund replaces the borrowed security. The
underlying fund will realize a gain if the security declines in price between
those dates. The amount of any gain will be decreased and the amount of any
loss increased by the amount of any premium, dividends or interest the
underlying fund may be required to pay in connection with a short sale.
A short sale is "against the box" if at all times when the short
position is open the underlying fund owns an equal amount of the securities or
securities convertible into, or exchangeable without further consideration
for, securities of the same issue as the securities sold short. Such a
transaction serves to defer a gain or loss for Federal income tax purposes.
OPTIONS ACTIVITIES. An underlying fund may write (i.e., sell) listed
call options ("calls") if the calls are "covered" throughout the life of the
option. A call is "covered" if the underlying fund owns the optioned
securities. When an underlying fund writes a call, it receives a premium and
gives the purchaser the right to buy the underlying security at any time
during the call period (usually not more than nine months in the case of
common stock) at a fixed exercise price regardless of market price changes
during the call period. If the call is exercised, the underlying fund will
forgo any gain from an increase in the market price of the underlying security
over the exercise price.
An underlying fund may purchase a call on securities only to effect a
"closing purchase transaction" which is the purchase of a call covering the
same underlying security and having the same exercise price and expiration
date as a call previously written by the fund on which it wishes to terminate
its obligation. If the underlying fund is unable to effect a closing purchase
transaction, it will not be able to sell the underlying security until the
call previously written by the underlying fund expires (or until the call is
exercised and the fund delivers the underlying security).
An underlying fund also may write and purchase put options ("puts").
When an underlying fund writes a put, it receives a premium and gives the
<PAGE>
purchaser of the put the right to sell the underlying security to the fund at
the exercise price at any time during the option period. When an underlying
fund purchases a put, it pays a premium in return for the right to sell the
underlying security at the exercise price at any time during the option
period. An underlying fund also may purchase stock index puts which differ
from puts on individual securities in that they are settled in cash based on
the values of the securities in the underlying index rather than by delivery
of the underlying securities. Purchase of a stock index put is designed to
protect against a decline in the value of the portfolio generally rather than
an individual security in the portfolio. If any put is not exercised or sold,
it will become worthless on its expiration date.
An underlying fund's option positions may be closed out only on an
exchange which provides a secondary market for options of the same series, but
there can be no assurance that a liquid secondary market will exist at a given
time for any particular option. In this regard, trading in options on certain
securities (such as U.S. Government securities) is relatively new so that it
is impossible to predict to what extent liquid markets will develop or
continue.
The underlying fund's custodian, or a securities depository acting
for it, generally acts as escrow agent as to the securities on which the
underlying fund has written puts or calls, or as to other securities
acceptable for such escrow so that no margin deposit is required of the
underlying fund. Until the underlying securities are released from escrow,
they cannot be sold by the underlying fund.
In the event of a shortage of the underlying securities deliverable
on exercise of an option, the Options Clearing Corporation has the authority
to permit other, generally comparable securities to be delivered in
fulfillment of option exercise obligations. If the Options Clearing
Corporation exercises its discretionary authority to allow such other
securities to be delivered, it may also adjust the exercise prices of the
affected options by setting different prices at which otherwise ineligible
securities may be delivered. As an alternative to permitting such substitute
deliveries, the Options Clearing Corporation may impose special exercise
settlement procedures.
FUTURES CONTRACTS. A Fund or an underlying fund may enter into
futures contracts for the purchase or sale of debt securities and stock
indexes. A futures contract is an agreement between two parties to buy and
sell a security or an index for a set price on a future date. Futures
contracts are traded on designated "contract markets" which, through their
clearing corporations, guarantee performance of the contracts.
Generally, if market interest rates increase, the value of
outstanding debt securities declines (and vice versa). Entering into a futures
contract for the sale of securities has an effect similar to the actual sale
of securities, although sale of the futures contract might be accomplished
more easily and quickly. For example, if a Fund or an underlying fund holds
long-term U.S. Government securities and it anticipates a rise in long-term
interest rates, it could, in lieu of disposing of its portfolio securities,
enter into futures contracts for the sale of similar long-term securities. If
rates increased and the value of the Fund or underlying fund's portfolio
securities declined, the value of the Fund or underlying fund's futures
contracts would increase, thereby protecting the Fund or the underlying fund
by preventing the net asset value from declining as much as it otherwise would
have. Similarly, entering into futures contracts for the purchase of
<PAGE>
securities has an effect similar to the actual purchase of the underlying
securities, but permits the continued holding of securities other than the
underlying securities. For example, if a Fund or the underlying fund expects
long-term interest rates to decline, it might enter into futures contracts for
the purchase of long-term securities so that it could gain rapid market
exposure that may offset anticipated increases in the cost of securities it
intends to purchase while continuing to hold higher-yield short-term
securities or waiting for the long-term market to stabilize.
A stock index futures contract may be used to hedge a Fund or an
underlying fund's portfolio with regard to market risk as distinguished from
risk relating to a specific security. A stock index futures contract does not
require the physical delivery of securities, but merely provides for profits
and losses resulting from changes in the market value of the contract to be
credited or debited at the close of each trade day to the respective accounts
of the parties to the contract. On the contract's expiration date, a final
cash settlement occurs. Changes in the market value of a particular stock
index futures contract reflect changes in the specified index of equity
securities on which the future is based.
There are several risks in connection with the use of futures contracts.
In the event of an imperfect correlation between the futures contract and the
portfolio position which is intended to be protected, the desired protection may
not be exposed to risk of loss. Further, unanticipated changes in interest rates
or stock price movements may result in a poorer overall performance for a Fund
or the underlying fund than if it had not entered into futures contracts on debt
securities or stock indexes.
In addition, the market prices of futures contracts may be affected
by certain factors. First, all participants in the futures market are subject
to margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between
the securities and futures markets. Second, from the point of view of
speculators, the deposit requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.
Finally, positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
There is no assurance that a liquid secondary market on an exchange or board
of trade will exist for any particular contract or at any particular time.
OPTIONS ON FUTURES CONTRACTS. A Fund or an underlying fund also may
purchase and sell listed put and call options on futures contracts. An option
on a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put), at a specified
exercise price at any time during the option period. When an option on a
futures contract is exercised, delivery of the futures position is accompanied
by cash representing the difference between the current market price of the
futures contract and the exercise price of the option. A Fund or underlying
fund may purchase put options on futures contracts in lieu of, and for the
<PAGE>
same purpose as, a sale of a futures contract. It also may purchase such put
options in order to hedge a long position in the underlying futures contract
in the same manner as it purchases "protective puts" on securities.
As with options on securities, the holder of an option may terminate
his position by selling an option of the same series. There is no guarantee
that such closing transactions can be effected. A Fund or the underlying fund
is required to deposit initial margin and maintenance margin with respect to
put and call options on futures contracts written by it pursuant to brokers'
requirements similar to those applicable to futures contracts described above
and, in addition, net option premiums received will be included as initial
margin deposits.
In addition to the risks which apply to all options transactions,
there are several special risks relating to options on futures contracts. The
ability to establish and close out positions on such options will be subject
to the development and maintenance of a liquid secondary market. It is not
certain that this market will develop. Compared to the use of futures
contracts, the purchase of options on futures contracts involves less
potential risk to a Fund or the underlying fund because the maximum amount at
risk is the premium paid for the options (plus transaction costs). However,
there may be circumstances when the use of an option on a futures contract
would result in a loss to a Fund or an underlying fund when the use of futures
contract would not, such as when there is no movement in the prices of the
underlying securities. Writing an option on a futures contract involves risks
similar to those arising in the sale of futures contracts, as described above.
HEDGING. A Fund or an underlying fund may employ many of the
investment techniques described in this section not only for investment
purposes, but also for hedging purposes. For example, an underlying fund may
purchase or sell put and call options on common stocks to hedge against
movements in individual common stock prices, or a Fund or an underlying fund
may purchase and sell stock index futures and related options to hedge against
marketwide movements in common stock prices. Although such hedging techniques
generally tend to minimize the risk of loss that is hedged against, they also
may limit commensurably the potential gain that might have resulted had the
hedging transaction not occurred. Also, the desired protection generally
resulting from hedging transactions may not always be achieved.
LEVERAGE THROUGH BORROWING. Each Fund has a fundamental policy that the
Fund may not borrow more than 25% of the value of its net assets on an unsecured
basis from banks to increase its holdings of portfolio securities. Likewise, an
underlying fund may borrow up to 25% of the value of its net assets on an
unsecured basis from banks to increase its holdings of portfolio securities.
Under the 1940 Act, the Fund or the underlying fund is required to maintain
continuous asset coverage of 300% with respect to such borrowings and to sell
(within three days) sufficient portfolio holdings to restore such coverage if it
should decline to less than 300% due to market fluctuations or otherwise, even
if disadvantageous from an investment standpoint. Leveraging will exaggerate the
effect of any increase or decrease in the value of portfolio securities on the
Fund or the underlying fund's net asset value, and money borrowed will be
subject to interest costs (which may include commitment fees and/or the cost of
maintaining minimum average balances) which may or may not exceed the interest
and option premiums received from the securities purchased with borrowed funds.
<PAGE>
WARRANTS. An underlying fund may invest in warrants, which are
options to purchase equity securities at specific prices valid for a specific
period of time. The prices do not necessarily move parallel to the prices of
the underlying securities. Warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer. If a
warrant is not exercised within the specified time period, it will become
worthless and the underlying fund will lose the purchase price and the right
to purchase the underlying security.
HIGH YIELD SECURITIES. Investing in high yield, high risk securities
involves special risks in addition to the risks associated with investments in
higher rated debt securities. High yield, high risk securities may be regarded
as predominantly speculative with respect to the issuer's continuing ability
to meet principal and interest payments.
High yield, high risk securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions than higher
grade securities. The prices of high yield, high risk securities have been
found to be less sensitive to interest rate changes than more highly rated
investments, but more sensitive to adverse economic downturns or individual
corporate developments. A projection of an economic downturn or of a period of
rising interest rates, for example, could cause a decline in high yield, high
risk security prices because the advent of a recession could lessen the
ability of a highly leveraged company to make principal and interest payments
on its debt securities. If the issuer of high yield, high risk securities
defaults, an underlying fund may incur additional expenses to seek recovery.
In the case of high yield securities structured as zero coupon or
payment-in-kind securities, the market prices of such securities are affected
to a greater extent by interest rate changes, and therefore tend to be more
volatile than securities which pay interest periodically and in cash.
The secondary markets on which high yield, high risk securities are
traded may be less liquid than the market for higher grade securities. Less
liquidity in the secondary trading markets could adversely affect and cause
large fluctuations in the daily net asset value of an underlying fund's
shares. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of high yield,
high risk securities, especially in a thinly traded market.
There may be special tax considerations associated with investing in
high yield, high risk securities structured as zero coupon or payment-in-kind
securities. An underlying fund records the interest on these securities as
income even though it receives no cash interest until the security's maturity
or payment date. An underlying fund will be required to distribute all or
substantially all such amounts annually and may have to obtain the cash to do
so by selling securities which otherwise would continue to be held.
Shareholders will be taxed on these distributions.
The use of credit ratings as the sole method of evaluating high
yield, high risk securities can involve certain risks. For example, credit
ratings evaluate the safety of principal and interest payments, not the market
value risk of high yield, high risk securities. Also, credit rating agencies
may fail to change credit ratings in a timely fashion to reflect events since
the security was last rated.
<PAGE>
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
An underlying fund may invest in mortgage pass-through securities,
which are securities representing interest in pools of mortgage loans secured
by residential or commercial real property in which payments of both interest
and principal on the securities are generally made monthly, in effect passing
through monthly payments made by individual borrowers on mortgage loans which
underlie the securities (net of fees paid to the issuer or guarantor of the
securities). Early repayment of principal on some mortgage-related securities
(arising from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose an underlying fund to a lower rate of return upon reinvestment of
principal. Also, if a security subject to prepayment has been purchased at a
premium in the event of prepayment the value of the premium would be lost.
Like other fixed income securities, when interest rates rise, the
value of a mortgage-related security generally will decline; however, when
interest rates are declining, the value of mortgage-related securities with
prepayment features may not increase as much as other fixed income securities.
An underlying fund may invest in collateralized mortgage obligations
(CMOs), which are hybrid mortgage-related instruments. Similar to a bond,
interest and pre-paid principal on a CMO are paid, in most cases,
semiannually. CMOs are collateralized by portfolios of mortgage pass-through
securities and are structured into multiple classes with different stated
maturities. Monthly payments of principal, including prepayments, are first
returned to investors holding the shortest maturity class; investors holding
the longer maturity classes receive principal only after the first class has
been retired.
Other mortgage related securities in which an underlying fund may invest
include other securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans on real property, such as
CMO residuals or stripped mortgage-backed securities ("SMBs"), and may be
structured in classes with rights to receive varying proportions of principal
and interest. SMBs are usually structured with two classes that receive
specified proportions of the monthly interest and principal payments from a pool
of mortgage securities. One class may receive all of the interest payments and
is thus termed an interest-only class ("IO"), while the other class may receive
all of the principal payments and is thus termed the principal-only class
("PO"). The value of IOs tends to increase as rates rise and decrease as rates
fall; the opposite is true for POs. During times when interest rates are
experiencing fluctuations, such securities can be difficult to price on a
consistent basis. The market for SMBs is not as fully developed as other
markets; SMBs, therefore, may be illiquid. In addition, the underlying funds may
invest in other asset-backed securities that have been offered to investors or
will be offered to investors in the future. Several types of asset-backed
securities have already been offered to investors, including certificates for
automobile receivables, which represent undivided fractional interests in a
trust whose assets consist of a pool of motor vehicle retail installment sales
contracts and security interest in the vehicles securing the contracts.
PORTFOLIO TURNOVER
Because the Manager may employ defensive investment strategies when
market trends are not considered favorable, the Manager may occasionally
change the entire portfolios in a Fund. High transaction costs could result
when compared with other funds. Trading may also result in realization of net
short-term capital gains upon which shareholders may be taxed at ordinary tax
rates when distributed from a Fund. See "Dividends, Distributions and Taxes."
<PAGE>
The active asset allocation approach of a Fund can produce high
portfolio turnover ratios when calculated in accordance with SEC rules. The
Amerigo Fund and The Clermont Fund's annual portfolio turnover rates are not
expected to exceed 300% each.
Each Fund intends to comply with the short-term trading restrictions
of Subchapter M of the Internal Revenue Code of 1986, as amended, although
these restrictions could inhibit a rapid change in the Fund's investments.
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THE TRUST AND ITS MANAGEMENT
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The Trust was organized as a Massachusetts business trust on March 3,
1997. Each Fund is a diversified open-end management investment company. The
Trust's offices are at 14747 California Street, Omaha, Nebraska 68154-1979. The
business and affairs of the Trust are under the direction of its Board of
Trustees.
Each Fund has retained the services of Clarke Lanzen Skalla
Investment Firm, Inc. as investment adviser (the "Manager"). The Manager has
been an investment adviser to individuals, employee benefit plans, trusts and
corporations since 1989. Although the Manager has been an investment adviser,
and has been selecting mutual funds for its clients, for eight years, the
Manger has had no prior experience in managing a mutual fund. The Manager
serves each Fund 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, and to furnish all
executive, administrative, and clerical services required for the transaction
of Fund business, other than accounting services and services which are
provided by the Fund's custodian, transfer agent, independent accountants and
legal counsel
The Manager maintains its offices at 14747 California Street, Omaha,
Nebraska 68154-1979. As of January 31, 1997, the Manager held discretionary
investment authority over approximately $530 million of assets. The Manager is
controlled by W. Patrick Clarke through ownership of voting common stock. Mr.
Clarke, a director and the President of the Manager, is Chairman, President
and a Trustee of the Trust.
The Manager earns an annual fee, payable in monthly installments,
from each Fund at the rate of 1.00% of the Fund's average net assets. This fee
may be higher than the fee charged to most other investment companies.
Accounting, stock transfer, and dividend disbursing services are
provided to the Fund by Mutual Funds Service Co., 6000 Memorial Drive, Dublin,
Ohio 43017. Mutual Funds Service Co. also serves as Administrator to the Fund
pursuant to an Administration Services Agreement. Services provided to the
Fund include coordinating and monitoring any third party services to the Fund;
providing the necessary personnel to perform administrative functions for the
Fund; assisting in the preparation, filing and distribution of proxy
materials, periodic reports to Trustees and shareholders, registration
statements and other necessary documents. The Fund incurs an annual
administrative fee, payable monthly, of .05% of the Fund's average net assets,
subject to a minimum annual fee of $30,000.
<PAGE>
A broker-dealer may use a portion of the commissions paid by a Fund
to reduce the Fund's expenses. The Manager may take into account sales of
shares of a Fund in selecting broker-dealers to effect portfolio transactions
on behalf of a Fund.
The Manager may use its resources to pay expenses associated with the
sale of a Fund's shares. This may include payments to parties such as banks or
broker-dealers that provide shareholder support services or engage in the sale
of a Fund's shares. However, the Funds do not pay the Manager any separate
fees for this service.
Each Fund may effect portfolio transactions with or through CLS
Brokerage Services, Inc., an affiliate of the Manager, when the Manager
determines that the Fund will receive the best net price and execution. This
standard would allow CLS Brokerage Services, Inc. to receive no more than the
remuneration that would be expected to be received by an unaffiliated broker
in a commensurate arm's-length transaction.
Information concerning the Trustees and officers of the Trust appears
in the Statement of Additional Information.
PORTFOLIO MANAGER
Randal D. Skalla is the portfolio manager primarily responsible for
the day-to-day management of the Funds.
Mr. Skalla, a Trustee and Vice President of the Trust, has been
employed by the Manager since December, 1989 and has been a director and the
Chief Investment Officer of the Manager since December, 1992. He is a graduate
of Brigham Young University where he earned a Bachelor of Science degree in
Economics and a Masters of Business Administration degree with an emphasis in
Finance and Investments.
TRANSFER AGENT
Mutual Funds Service Co. ("MFSCO"), 6000 Memorial Drive, Dublin, Ohio
43017 provides stock transfer, dividend disbursing and accounting and
administrative services to the Funds.
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HOW TO BUY SHARES
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Shares of each Fund are offered continuously and sold at the net
asset value per share next determined after receipt by the Fund of both a
purchase order and payment. (See "How Net Asset Value is Determined.") Net
asset value generally changes each day.
<PAGE>
MINIMUM INVESTMENT -- The minimum investment to open an account is
$30,000, including an Individual Retirement Account (IRA). Subsequent
investments in any account may be made in amounts of at least $100.
OPENING AN ACCOUNT --You may open an account through your investment
adviser (by mail or bank wire) as follows:
By Mail: To purchase shares, fill out the New Account Application accompanying
this Prospectus (including the Client Profile) and give it to your investment
adviser. A check payable to The The Amerigo Fund or The The Clermont Fund must
accompany the New Account Application. Your investment adviser should mail the
New Account Application and the check to the following address:
CLS ADVISORONE FUNDS, C/O MUTUAL FUNDS SERVICE CO., P.O. BOX 7177, DUBLIN,
OHIO 43017
By Bank Wire: If the wire order is for a new account in a Fund, you must
telephone the Fund prior to making your initial investment. Call
1-800-808-3829, or (614) 760-2158. Advise the Fund of the amount you wish
to invest and obtain an account number and instructions. Have your bank
wire federal funds to:
STAR BANK, N.A. CINTI/TRUST
(ABA #: 042-00001-3)
ATTENTION: THE CLS ADVISORONE FUNDS
(and Name of Fund -- see below)
Credit Account Number (account number for Fund as follows):
THE AMERIGO FUND
Account Number 486464423
THE CLERMONT FUND
Account Number 486464431
Account Name (your name)
Personal Account No. (your CLS AdvisorOne Funds account number)
On new accounts, your investment adviser must send a completed New
Account Application (including the Client Profile) to CLS AdvisorOne Funds c/o
Mutual Funds Service Co., P.O. Box 7177, Dublin, OH 43017 on the same day your
wire is sent. A Fund will not permit redemptions until it receives the New
Account Application in good order.
SUBSEQUENT INVESTMENTS--Subsequent investments in an existing account
in a Fund may be made by mailing a check payable to The Amerigo Fund and/or The
Clermont Fund (please include your account number(s) on the check) and mail as
follows:
THE CLS ADVISORONE FUNDS
c/o Mutual Funds Service Co.
P.O. Box 7177
Dublin, OH 43017
<PAGE>
Subsequent investments may also be made by bank wire as described
above. It is necessary to notify a Fund prior to each wire purchase. Wires
sent without notifying the Fund will result in a delay of the effective date
of your purchase.
AUTOMATIC ACCOUNT BUILDER--Periodic investments in an existing account
can be made by selecting this option. (See "Other Shareholder Services.")
WHEN PURCHASES ARE EFFECTIVE--Shares of each Fund are sold at net
asset value per share next determined after receipt by Mutual Funds Service
Co. of both a purchase order and payment.
If a shareholder's check is dishonored, the purchase and any
dividends paid thereon, if any, will be reversed. If shares are purchased with
federal funds, they may be redeemed at any time thereafter and the shareholder
may secure his funds as explained below. (See "How to Make Withdrawals
(Redemptions).") However, if shares are purchased by check(s) or the Automatic
Account Builder, Mutual Funds Service Co. will delay payment of redemption
proceeds until the check used to purchase shares, or Automatic Account Builder
order, has cleared which could be fifteen (15) calendar days or more
subsequent to the purchase of the shares. A Fund will forward the proceeds
promptly once the check has cleared.
FINANCIAL INSTITUTIONS--You may buy shares or sell shares of a Fund
through a broker or financial institution who may charge you a fee for this
service. If you are purchasing shares of a Fund through a program of services
offered or administered by a securities dealer or financial institution, you
should read the program materials in conjunction with this Prospectus.
Certain financial institutions that have entered into sales
agreements with the Trust may enter confirmed purchase orders on behalf of
customers by telephone to purchase shares of a Fund. Payment is due no later
than a Fund's pricing on the following business day. If payment for the
purchase of shares is not received in a timely manner, the financial
institution could be held liable for any loss incurred by a Fund.
- ------------------------------------------------------------------------------
HOW TO MAKE WITHDRAWALS (REDEMPTIONS)
- ------------------------------------------------------------------------------
Shares are redeemed and funds withdrawn at net asset value per share,
and there are no redemption fees. (See "How Net Asset Value Is Determined.")
BY MAIL--A shareholder may redeem shares by mailing a written request
in good order to CLS AdvisorOne Funds c/o Mutual Funds Service Co., P.O. Box
7177, Dublin, OH 43017. Good order means that the request must be signed by
the shareholder(s) and the signature(s) must be guaranteed by an eligible
guarantor institution (a bank, broker-dealer, credit union, securities
exchange and association, clearing agency and savings association). The Funds
do not accept signatures guaranteed by a notary public. Further documentation
may be required as to the authority of the person requesting redemption of
<PAGE>
shares held of record in the name of corporations, executors, administrators,
trustees, guardians or other fiduciaries. The Funds may waive these
requirements in certain instances.
Amounts withdrawn are mailed without charge to the address printed on
your account statement.
BY TELEPHONE--A shareholder may redeem by telephone: 1-800-808-3829,
or call (614) 760-2158. Shareholders who wish to use this procedure must so
elect on the New Account Application. Amounts withdrawn from an account by
telephone are mailed without charge to the address printed on your account
statement.
As a special service, a shareholder may arrange to have amounts in
excess of $1,000 wired in federal funds to a designated commercial bank
account. To use this procedure please designate on the New Account Application
a bank and bank account number to receive the proceeds of wire withdrawals.
There is no charge for this service.
A shareholder may change the bank account designated to receive
redemptions. This may be done at any time upon written request to the Funds.
The shareholder's signature must be guaranteed. Further documentation may be
required from corporations, executors, administrators, trustees, guardians, or
other fiduciaries.
Neither the Funds nor Mutual Funds Service Co. ("MFSCo") will be
responsible for any loss, expense, or cost arising from any telephone
redemption request made according to the authorization set forth in the New
Account Application if they reasonably believe such request to be genuine and
follow reasonable procedures designed to verify the identity of the person
requesting the redemption. If MFSCo fails to follow reasonable procedures,
MFSCo or the Funds may be liable for losses due to unauthorized or fraudulent
transactions. MFSCo will provide each investor seeking telephone redemption
privileges with a personalized security code which, along with other
information, will be required of the caller upon request of a telephone
redemption. Other information may also be required and calls may be recorded.
WHEN REDEMPTIONS ARE EFFECTIVE--Redemptions are made at the net asset
value per share next determined after receipt of a redemption request in
good order. (See "How Net Asset Value Is Determined.")
WHEN PAYMENTS ARE MADE--Amounts withdrawn by telephone are normally
mailed or wired on the next business day following the effective date of the
order for withdrawal. Amounts withdrawn by mail are normally sent by mail
within one business day after request is received, and must be mailed within
seven days with the following exception: If shares are purchased by check,
Mutual Funds Service Co. will not pay a redemption until reasonably satisfied
the check, used to purchase shares, has been collected which could be fifteen
(15) calendar days or more after shares are first paid for, unless payment was
made with federal funds. The Fund will forward proceeds promptly once the
check has cleared. (See "How to Buy Shares.")
<PAGE>
- ------------------------------------------------------------------------------
OTHER SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
AUTOMATIC ACCOUNT BUILDER: Regular investments in a Fund of $100 or
more may be deducted from a shareholder's checking or savings account and
invested in shares of the Fund. A shareholder's bank must be a member of the
Automated Clearing House (ACH). Shareholders wishing to add to their
investment account must complete the Automatic Account Builder section of the
New Account Application. There is no additional charge for this service.
SYSTEMATIC WITHDRAWAL PROGRAM: A Systematic Withdrawal Program is
offered for any investor who wishes to receive regular distributions of $100
or more from his account. The investor must either own or purchase shares
having a value of at least $10,000 and advise a Fund in writing of the amount
to be distributed and the desired frequency, i.e., monthly, quarterly or
annually. This option may be exercised by completing the appropriate section
of the New Account Application. The investor should realize that if
withdrawals exceed income dividends, the invested principal may be depleted.
The investor may make additional investments and may change or stop the
program at any time. There is no charge for this program.
- ------------------------------------------------------------------------------
SHAREHOLDER ACCOUNTS
- ------------------------------------------------------------------------------
Each Fund maintains an account for each shareholder in full and
fractional shares. Each Fund reserves the right to reject any purchase order,
and to waive minimum purchase requirements.
CONFIRMATION STATEMENT -- All purchase and sale transactions, and
dividend reinvestments, are confirmed promptly after they become effective.
ACCOUNTS BELOW MINIMUM -- Each Fund reserves the right to redeem shares
in any account for their then current net asset value and pay the proceeds to
the shareholder if at any time the account has shares valued at less than $1,000
as a result of redemptions by the shareholder. Each Fund also reserves the right
to redeem the shares in any account which may have been opened under a waiver of
minimum purchase requirements if sufficient additional shares were not
subsequently purchased to meet these requirements. Before a redemption is
processed, the shareholder will be allowed 30 days after written notice from a
Fund to make an additional investment sufficient to bring the value of shares in
the account to $1,000.
- ------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In
any year in which a Fund qualifies as a regulated investment company and
distributes substantially all of its investment company taxable income (which
includes, among other items, the excess of net short-term capital gains over
net long-term capital losses) and its net capital gains (the excess of net
<PAGE>
long-term capital gains over net short-term capital losses) the Fund will not
be subject to Federal income tax to the extent it distributes to shareholders
such income and capital gains in the manner required under the Code. Amounts
not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax each Fund must distribute for each
calendar year an amount equal to the sum of (1) at least 98% of its net
ordinary income (excluding any capital gains or losses) for the calendar year,
(2) at least 98% of the excess of its capital gains over capital losses
(adjusted for certain ordinary losses) realized during the one-year period
ending October 31 of such year, and (3) all ordinary income and capital gains
for previous years that were not distributed during such years. A distribution
will be treated as paid on December 31 of the calendar year if it is declared
by the Fund in October, November or December of that year with a record date
in such a month and paid by the Fund during January of the following calendar
year. Such distributions will be taxable to shareholders in the calendar year
in which the distributions are declared, rather than the calendar year in
which the distributions are received. The Fund intends to distribute its
income in accordance with this requirement to prevent application of the
excise tax.
Each year the Trust will notify shareholders of the tax status of
dividends and distributions.
Income received by a Fund from a mutual fund in that Fund's portfolio
(including dividends and distributions of short-term capital gains), as well
as interest received on money market instruments and net short-term capital
gains received by the Fund on the sale of mutual fund shares, will be
distributed by the Fund (after deductions for expenses) and will be taxable to
shareholders as ordinary income. Because the Funds are actively managed and
can realize taxable net short-term capital gains by selling shares of an
underlying fund with unrealized portfolio appreciation, investing in the Fund
rather than directly in the underlying funds may result in increased tax
liability to the shareholder, since the Fund must distribute its gain in
accordance with the rules in the Code. The Fund's ability to dispose of shares
of mutual funds held less than three months may be limited by requirements
relating to a Fund's qualification as a regulated investment company for
federal income tax purposes.
Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses) received by a Fund from
mutual funds, as well as net long-term capital gains realized by a Fund from
the purchase and sale (or redemption) of mutual fund shares or other
securities held (generally) by a Fund for more than one year, will be
distributed by the Fund and will be taxable to shareholders as long-term
capital gains (even if the shareholder has held the shares for less than one
year). However, if a shareholder who has received a capital gains distribution
suffers a loss on the sale of his shares not more than six months after
purchase, the loss will be treated as a long-term capital loss to the extent
of the capital gains distribution received. The long-term capital gains,
including distributions of net capital gains are currently subject to a
maximum federal tax rate of 28% which is less than the maximum rate imposed on
other types of taxable income. Furthermore, capital gains may be advantageous
because, unlike ordinary income, they may be offset by capital losses.
<PAGE>
For purposes of determining the character of income received by a
Fund when an underlying fund distributes net capital gains to the Fund, the
Fund will treat the distribution as a long-term capital gain, even if it has
held shares of the mutual fund for less than one year. However, any loss
incurred by the Fund on the sale of that underlying fund's shares held for six
months or less will be treated as a long-term capital loss to the extent of
the gain distribution.
The tax treatment of distributions from a Fund is the same whether
the distributions are received in additional shares or in cash. Shareholders
receiving distributions in the form of additional shares will have a cost
basis for Federal income tax purposes in each shares received equal to the net
asset value of a shares of the Fund on the reinvestment date.
A Fund may invest in underlying funds with capital loss
carry-forwards. If such an underlying fund realizes capital gains, it will be
able to offset the gains to the extent of its loss carry-forwards in
determining the amount of capital gains which must be distributed to its
shareholders. To the extent that gains are offset in this manner,
distributions to the Fund (and its shareholders) will not be characterized as
capital gain dividends, but may be ordinary income.
Depending on the residence of the shareholder for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes. Shareholders should consult their own tax advisers as to
the tax consequences of ownership of shares of the Trust in their particular
circumstances.
The Funds generally will be required to withhold Federal income tax
at a rate of 31% ("backup withholding") from dividends paid to shareholders if
(a) the payee fails to furnish the Trust with and to certify the payee's
correct taxpayer identification number or social security number, (b) the
Internal Revenue Service (the "IRS") notifies the Trust that the payee has
failed to report properly certain interest and dividend income to the IRS and
to respond to notices to that effect or (c) the payee fails to certify that he
is not subject to backup withholding.
Each Fund will distribute investment company taxable income
quarterly. Each Fund will distribute any net realized capital gains at least
annually. All dividends and distributions will be reinvested automatically at
net asset value in additional shares of the Fund making the distribution,
unless the shareholder has notified the Fund in writing of his election to
receive distributions in cash.
- ------------------------------------------------------------------------------
HOW NET ASSET VALUE IS DETERMINED
- ------------------------------------------------------------------------------
Net asset value per share is determined at each closing of the New
York Stock Exchange each day the Exchange is open for business and each other
day during which there is a sufficient degree of trading that the current net
asset value of a Fund's shares might be materially affected by changes in the
value of the securities held by the Fund. Net asset value is obtained by
dividing the value of a Fund's assets, less its liabilities, by the total
number of its shares of beneficial interest outstanding at the time.
<PAGE>
The assets of each Fund consist primarily of underlying funds, which are
valued at their respective net asset values under the 1940 Act. The underlying
funds value securities in their portfolios for which market quotations are
readily available at their current market value (generally the last reported
sale price) and all other securities and assets at fair value pursuant to
methods established in good faith by the board of directors of the underlying
fund. Money market funds with portfolio securities with a remaining maturity of
thirteen months or less and a weighted average maturity not exceeding 90 days
may use the amortized cost method to value their securities. Securities having
60 days or less remaining to maturity generally are valued at their amortized
cost which approximates market value.
Other assets of each Fund are valued at their current market value if
market quotations are readily available and, if market quotations are not
available, they are valued at fair value pursuant to methods established in
good faith by the Board of Trustees. Securities having 60 days or less
remaining to maturity are valued at their amortized cost.
- ------------------------------------------------------------------------------
PERFORMANCE INFORMATION AND REPORTS
- ------------------------------------------------------------------------------
A Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment
results and/or comparisons of its investment results to various unmanaged
indices or results of other mutual funds or investment or savings vehicles. A
Fund's investment results as used in such communications will be calculated on
a total rate of return basis in the manner set forth below. From time to time,
fund rankings may be quoted from various sources, such as Lipper Analytical
Services, Inc.
A Fund may provide period and average annualized "total return"
quotations. A Fund's "total return" refers to the change in the value of an
investment in the Fund over a stated period based on any change in net asset
value per share and including the value of any shares purchasable with any
dividends or capital gains distributed during such period. Period total return
may be annualized. Average annual total return smoothes out variations in
performance.
An annualized total return is a compounded total return which assumes
that the period total return is generated over a one-year period, and that all
dividends and capital gain distributions are reinvested. An annualized total
return will be slightly higher than a period total return if the period is
shorter than one year, because of the assumed reinvestment.
Unlike some bank deposits or other investments which pay a fixed
yield for a stated period of time, the total return of a Fund will vary
depending upon interest rates, the current market value of the securities held
by the Fund and changes in the Fund's expenses. In addition, during certain
periods for which total return quotations may be provided, the Manager may
have voluntarily agreed to waive portions of its fees or reimburse Fund
operating expenses on a month-to-month basis. Such waivers will have the
effect of increasing a Fund's net income (and therefore its total return)
during the period such waivers are in effect.
<PAGE>
Shareholders will receive financial reports semi-annually that
include a Fund's financial statements, including listings of investment
securities held by the Fund at those dates. Annual reports are audited by
independent accountants.
- ------------------------------------------------------------------------------
OTHER INFORMATION
- ------------------------------------------------------------------------------
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 in
each of the Trust's existing funds and to create additional funds. All shares
have a par value of $.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 Fund of the Trust issues its own series of shares of beneficial
interest. The shares of each Fund represent an interest only in the Fund's
assets (and profits or losses) and in the event of liquidation, each share of
a particular Fund would have the same rights to dividends and assets as every
other share of the Fund. The Trust's Board of Trustees may authorize the
creation of additional series under the Declaration of Trust, each of which
would invest its assets in separate, individually managed portfolios.
Each full or fractional share has a proportionate vote. On some
issues, such as the election of Trustees, all shares of the Trust vote
together as one series. On an issue affecting a particular Fund, only its
shares vote as a separate series. An example of such an issue would be a
fundamental investment restriction pertaining to only one Fund.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business
trust may, under certain circumstances, be held personally liable as partners
for its obligations. However, the risk of a shareholder incurring financial
loss as a result of shareholder liability is limited to circumstances in which
both inadequate insurance existed and the Fund itself was unable to meet its
obligations.
When matters are submitted for shareholder vote, shareholders of each
Fund will have one vote for each full share held and proportionate, fractional
votes for fractional shares held. A separate vote of a Fund is required on any
matter affecting the Fund on which shareholders are entitled to vote.
Shareholders of one Fund are not entitled to vote on a matter that does not
affect that Fund but that does require a separate vote of any other Fund.
There normally will be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of Trustees
holding office have been elected by shareholders, at which time the Trustees
then in office will call a shareholders' meeting for the election of Trustees.
Any Trustee may be removed from office upon the vote of shareholders holding
at least two-thirds of the Trust's outstanding shares at a meeting called for
that purpose. The Trustees are required to call such a meeting upon the
written request of shareholders holding at least 10% of the Trust's
outstanding shares. Shareholders have under certain circumstances (e.g., upon
<PAGE>
application and submission of certain specified documents to the Trustees of
the Fund by a specified number of shareholders) the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees.
As stated in "Investment Objectives and Policies," except as
otherwise expressly provided herein, each Fund's investment objective and
policies are not fundamental and may be changed by the Trustees without
shareholder approval. (No such change would be made, however, without 30 days
written notice to shareholders.)
<PAGE>
INVESTMENT ADVISER
Clarke Lanzen Skalla Investment Firm, Inc.
ADDRESS OF FUNDS AND ADVISER
14747 California Street
Omaha, NE 68154-1979
800-635-3427
402-493-3313
CUSTODIAN
Star Bank, N.A.
Star Bank Center
425 Walnut Street
Cincinnati, 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
CLS ADVISORONE FUNDS
THE AMERIGO FUND
THE CLERMONT FUND
14747 California Street
Omaha, NE 68154-1979
800-635-3427
402-493-3313
<PAGE>
CLS ADVISORONE FUNDS
THE AMERIGO FUND
THE CLERMONT FUND
CROSS REFERENCE SHEET TO FORM N-1A
PART B.
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
10 Cover Page
11 Table of Contents
12 Not applicable
13(a)(b)(c) Investment Objectives and Policies
Investment Restrictions
13(d) Portfolio Turnover
14(a)(b) Officers and Trustees
14(c) Not applicable
15(a)(b) Not applicable
15(c) Officers and Trustees
16(a) Investment Adviser and Manager
Officers and Trustees
16(b) Investment Adviser and Manager
16(c) Purchase and Sale of Portfolio Securities
16(d) Not applicable
16(e) Not applicable
16(f) Not applicable
16(g) Not applicable
16(h) Description of the Trust
16(i) Not applicable
17 Purchase and Sale of Portfolio Securities
18(a) Description of the Trust
18(b) Not applicable
19(a) Additional Purchase and Redemption Information
19(b) Valuation of Portfolio Securities
Additional Purchase and Redemption Information
19(c) Not applicable
20 Distributions and Taxes
21(a) Not applicable
21(b) Not applicable
21(c) Not applicable
22(a) Not applicable
22(b) Performance Information
23 Not applicable
<PAGE>
THE AMERIGO FUND
AND
THE CLERMONT FUND
FUNDS OF CLS ADVISORONE FUNDS TRUST
STATEMENT OF ADDITIONAL INFORMATION DATED ___________, 1997
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectus of CLS AdvisorOne Funds
dated __________, 1997. A copy of the Prospectus may be obtained from CLS
AdvisorOne Funds c/o Mutual Funds Service Co., 6000 Memorial Drive, Dublin,
Ohio 43017, or by calling: 1-800-808-3829. Capitalized terms used and not
otherwise defined herein have the same meanings as defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Investment Objectives and Policies 1
Investment Restrictions 10
Portfolio Turnover 12
Purchase and Sale of Portfolio Securities 12
Valuation of Portfolio Securities 14
Performance Information 14
Additional Purchase and Redemption Information 17
Distributions and Taxes 19
Investment Adviser and Manager 20
Officers and Trustees 21
Description of the Trust 23
Financial Statements 24
Appendix
INVESTMENT ADVISER TRANSFER AGENT
Clarke Lanzen Skalla Investment Firm, Inc. Mutual Funds Service Co.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The investment policies set forth below in this section
represent the Funds' policies as of the date of this Statement of Additional
Information. The investment policies are not fundamental and they may be
changed by the Trustees without shareholder approval. (No such change would be
made, however, without 30 days written notice to shareholders.)
Each Fund has adopted certain investment restrictions which cannot be
changed except with the vote of a majority of the Fund's outstanding shares.
These restrictions are applicable to the Funds and are described under
"Investment Restrictions" in this Statement of Additional Information.
For temporary defensive purposes, each Fund may invest up to 100% of
its total assets directly in, or in underlying funds investing in, (or enter
into repurchase agreements (maturing in seven days or less) with banks and
broker-dealers with respect to) short-term debt securities, including U.S.
Treasury bills and other short-term U.S. Government Securities, corporate
bonds, commercial paper, certificates of deposit, bankers' acceptances and
other money market instruments. Each Fund may also directly invest in futures
contracts and options thereon to the extent and for the purposes set forth in
the Trust's Prospectus.
MONEY MARKET INSTRUMENTS AND BONDS. When investing directly in money
market instruments or bonds, each Fund will limit its purchases, denominated
in U.S. dollars, to the following securities.
* U.S. Government Securities and Securities of its Agencies and
Instrumentalities obligations issued or guaranteed as to
principal or interest by the United States or its agencies (such
as the Export Import Bank of the United States, Federal Housing
Administration, and Government National Mortgage Association) or
its instrumentalities (such as the Federal Home Loan Bank,
Federal Intermediate Credit Banks and Federal Land Bank),
including Treasury bills, notes and bonds.
* Bank Obligations and Instruments Secured Thereby - obligations
(including certificates of deposit, time deposits and bankers'
acceptances) of domestic banks having total assets of
$1,000,000,000 or more, instruments secured by such obligations
and obligations of foreign branches of such banks, if the
domestic parent bank is unconditionally liable to make payment on
the instrument if the foreign branch fails to make payment for
any reason. Each Fund may also invest in obligations (including
certificates of deposit and bankers' acceptances) of domestic
<PAGE>
branches of foreign banks having assets of $1,000,000,000 or more,
if the domestic branch is subject to the same regulation as
United States banks.
* High Quality Commercial Paper - Each Fund may invest in
commercial paper rated no lower than "A-2" by Standard & Poor's
Corporation or "Prime-2" by Moody's Investors Services, Inc.,
or, if not rated, issued by a company having an outstanding debt
issue rated at least A by Standard & Poor's or Moody's. See
rating information in the Appendix attached hereto.
* Private Placement Commercial Paper - Private placement
commercial paper ("Rule 144A securities") consists of
unregistered securities which are traded in public markets to
qualified institutional investors, such as the Funds. A Fund's
risk is that the universe of potential buyers for the
securities, should the Fund desire to liquidate a position, is
limited to qualified dealers and institutions, and therefore
such securities could have the effect of being illiquid.
* High Grade Corporate Obligations - obligations rated at least A
by Standard & Poor's or Moody's. See rating information in the
Appendix attached hereto.
* Repurchase Agreements Pertaining to the Above - Each Fund may
invest without limit in any of the above securities subject to
repurchase agreements with any Federal Reserve reporting
dealer or member bank of the Federal Reserve System. A repurchase
agreement is an instrument under which the purchaser (i.e., a
Fund) acquires ownership of a debt security and the seller agrees,
at the time of the sale, to repurchase the obligation at a
mutually agreed upon time and price, thereby determining the
yield during the purchaser's holding period. This results in a
fixed rate of return insulated from market fluctuations during
such period. The underlying securities could be any of those
described above, some of which might bear maturities exceeding
one year. A Fund's risk is that the seller may fail to repurchase
the security on the delivery date. If the seller defaults, the
underlying security constitutes collateral for the seller's
obligation to pay. It is a policy of each Fund to make settlement
on repurchase agreements only upon proper delivery of the
underlying collateral. Repurchase agreements usually are for
short periods, such as one week or less, but could be longer. A
Fund may enter into repurchase agreements with its custodian
(Star Bank, N.A., Cincinnati) when it is advantageous to do so.
The Manager exercises due care in the selection of money market
instruments and bonds. However there is a risk that the issuers of the
securities may not be able to meet their obligations to pay interest or
principal when due. There is also a risk that some of a Fund's securities
might have to be liquidated prior to maturity at a price less than original
amortized cost or value, face amount or maturity value to meet larger than
expected redemptions. Any of these risks, if encountered, could cause a
reduction in net income or in the net asset value of a Fund.
<PAGE>
Description of Permitted Money Market Investments:
Commercial Paper - refers to promissory notes issued by corporations
in order to finance their short term credit needs.
U.S. Government Obligations - are bills, certificates of
indebtedness, notes and bonds issued by the U.S. Treasury and agencies,
authorities and instrumentalities of the U.S. Government established under the
authority of an act of Congress. Some obligations of U.S. Government agencies,
authorities and instrumentalities are supported by the full faith and credit
of the U.S. Treasury, as for example, the Government National Mortgage
Association; others by the right of the issuer to borrow from the Treasury, as
in the case of Federal Farm Credit Banks and Federal National Mortgage
Association; and others only by the credit of the agency, authority or
instrumentality; as for example, Federal Home Loan Mortgage and Federal Home
Loan Bank.
Repurchase Agreements - A repurchase transaction occurs when an
investor buys a security and simultaneously agrees to resell it at a later
date to the person from whom it was bought, at a higher price.
The price differential represents interest for the period the
security is held. Repurchase transactions will normally be entered into with
banks and securities brokers. A Fund could suffer a loss if the bank or
securities broker with which the Fund had a repurchase agreement were to
default.
Certificates of Deposit - are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a specified or
variable rate of return and are normally negotiable.
Banker's Acceptances - are short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
Corporate Obligations - include bonds and notes issued by
corporations in order to finance longer term credit needs.
EXPOSURE TO FOREIGN MARKETS. Each Fund does not have a limitation on the
amount of its assets that may be invested in underlying funds investing
in foreign securities. Foreign securities, foreign currencies, and securities
issued by U.S. entities with substantial foreign operations may involve
significant risks in addition to the risks inherent in U.S. investments. The
value of securities denominated in foreign currencies and of dividends and
interest paid with respect to such securities will fluctuate based on the
relative strength of the U.S. dollar.
Foreign investments involve a risk of local political, economic, or
social instability, military action or unrest, or adverse diplomatic
developments, and may be affected by actions of foreign governments adverse to
<PAGE>
the interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There is
no assurance that the Manager will be able to anticipate these potential
events or counter their effects. These risks are magnified for underlying
funds investing in developing countries, which may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. Foreign
markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases underlying funds' best available market for
foreign securities will be on an exchange or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where underlying funds' assets
may be released prior to receipt of payment, may result in increased risk in
the event of a failed trade or the insolvency of a foreign broker-dealer, and
may involve substantial delays. In addition, the underlying funds' costs of
foreign investing, including withholding taxes, brokerage commissions and
custodial costs, are generally higher than for investing in U.S. securities.
In general, there is less overall governmental supervision and regulation of
securities exchanges, brokers, and listed companies than in the United States.
It may also be difficult for underlying funds to enforce legal rights in
foreign countries. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
Some underlying funds may invest in American Depository Receipts
("ADR's"). ADR's are certificates evidencing ownership of shares of a foreign
issuer. These certificates are issued by depository banks and generally trade
on an established market in the United States or elsewhere. The underlying
shares are held in trust by a custodian bank or similar financial institution
in the issuer's home country. The depository bank may not have physical
custody of the underlying securities at all times and may charge fees for
various services, including forwarding dividends and interest and corporate
actions. ADR's are an alternative to directly purchasing the underlying
foreign securities in their national markets and currencies. However, ADR's
continue to be subject to many of the risks associated with investing directly
<PAGE>
in foreign securities. These risks include foreign exchange risk as well as
the political and economic risks of the underlying issuer's country.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Each Fund will
comply with guidelines established by the Securities and Exchange Commission
with respect to coverage of options and futures strategies by mutual funds,
and if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a result,
there is a possibility that segregation of a large percentage of a Fund's
assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
CORRELATION OF PRICE CHANGES. Each Fund may invest in futures
contracts and options thereon. An underlying fund may invest in options
(including options on futures contracts) and futures contracts. Because there
are a limited number of types of exchange-traded options and futures
contracts, it is likely that the standardized contracts available will not
match a Fund or underlying fund's current or anticipated investments exactly.
A Fund or an underlying fund may invest in options and futures contracts based
on securities with different issuers, maturities, or other characteristics
from the securities in which it typically invests, which involves a risk that
the options or futures position will not track the performance of the Fund or
underlying fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund or
underlying fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from differing levels of demand in the
options and futures markets and the securities markets, from structural
differences in how options and futures and securities are traded, or from
imposition of daily price fluctuation limits or trading halts. A Fund or an
underlying fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility
between the contract and the securities, although this may not be successful
in all cases. If price changes in a Fund or underlying fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are
not offset by gains in other investments.
FUTURES CONTRACTS. When a Fund or an underlying fund purchases a
futures contract, it agrees to purchase a specified underlying instrument at a
specified future date. When a Fund or an underlying fund sells a futures
contract, it agrees to sell the underlying instrument at a specified future
date. The price at which the purchase and sale will take place is fixed when
the Fund or the underlying fund enters into the contract. Some currently
available futures contracts are based on specific securities, such as U.S.
<PAGE>
Treasury bonds or notes, and some are based on indices of securities prices,
such as the Standard & Poor's Composite Index of 500 Stocks (S&P 500). Futures
can be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore, purchasing
futures contracts will tend to increase a Fund or an underlying fund's
exposure to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument directly.
When a Fund or an underlying fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction contrary to the
market. Selling futures contracts, therefore, will tend to offset both
positive and negative market price changes, much as if the underlying
instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures
contract is not required to deliver or pay for the underlying instrument
unless the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a futures
broker, known as a futures commission merchant ("FCM") when the contract is
entered into. Initial margin deposits are typically equal to a percentage of
the contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may be
entitled to receive all or a portion of this amount. Initial and variation
margin payments do not constitute purchasing securities on margin for purposes
of a Fund or an underlying fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a Fund or an underlying
fund, the Fund or the underlying fund may be entitled to a retum of margin
owed to it only in proportion to the amount received by the FCM's other
customers, potentially resulting in losses to the Fund or the underlying fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each Fund has filed
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission (CFTC)
and the National Futures Association which regulate trading in the futures
markets. Each Fund intends to comply with Rule 4.5 under the Commodity
Exchange Act, which limits the extent to which the Fund can commit assets to
initial margin deposits and option premiums.
The above limitations on a Fund or underlying fund's investments in
futures contracts and options, and the Fund or underlying fund's policies
regarding futures contracts and options discussed elsewhere in this Statement
of Additional Information, may be changed as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily price
<PAGE>
fluctuation limits for options and futures contracts, and may halt trading if
a contract's price moves upward or downward more than the limit in a given
day. On volatile trading days when the price fluctuation limit is reached or a
trading halt is imposed, it may be impossible for a Fund or an underlying fund
to enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
potentially could require the Fund or an underlying fund to continue to hold a
position until delivery or expiration regardless of changes in its value. As a
result, the Fund or the underlying fund's access to other assets held to cover
its options or futures positions could also be impaired.
PURCHASING PUT AND CALL OPTIONS. Each Fund may invest in futures
contracts and options thereon. An underlying fund may invest in options
(including options on futures contracts) and futures contracts. By purchasing
a put option, the Fund or an underlying fund obtains the right (but not the
obligation) to sell the option's underlying instrument at a fixed strike
price. In return for this right, the Fund or an underlying fund pays the
current market price for the option (known as the option premium). Options
have various types of underlying instruments, including specific securities,
indices of securities prices, and futures contracts. A Fund or an underlying
fund may terminate its position in a put option it has purchased by allowing
it to expire or by exercising the option. If the option is allowed to expire,
a Fund or an underlying fund will lose the entire premium it paid. If a Fund
or an underlying fund exercises the option, it completes the sale of the
underlying instrument at the strike price. A Fund or an underlying fund may
also terminate a put option position by closing it out in the secondary market
at its current price, if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time the buyer can expect to
suffer a loss if security prices do not rise sufficiently to offset the cost
of the option.
WRITING PUT AND CALL OPTIONS. When a Fund or an underlying fund
writes a put option, it takes the opposite side of the transaction from the
option's purchaser. In return for receipt of the premium, the Fund or the
underlying fund assumes the obligation to pay the strike price for the
option's underlying instrument if the other party to the option chooses to
exercise it. When writing an option on a futures contract, a Fund or an
underlying fund will be required to make margin payments to an FCM as
described above for futures contracts. A Fund or an underlying fund may seek
<PAGE>
to terminate its position in a put option it writes before exercise by closing
out the option in the secondary market at its current price. If the secondary
market is not liquid for a put option the Fund or the underlying fund has
written, however, the Fund or the underlying fund must continue to be prepared
to pay the strike price while the option is outstanding, regardless of price
changes, and must continue to set aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that the
writer will also profit, because it should be able to close out the option at
a lower price. If security prices fall, the put writer would expect to suffer
a loss. This loss should be less than the loss from purchasing the underlying
instrument directly, however, because the premium received for writing the
option should mitigate the effects of the decline.
Writing a call option obligates a Fund or an underlying fund to sell
or deliver the option's underlying instrument. in return for the strike price,
upon exercise of the option. The characteristics of writing call options are
similar to those of writing put options, except that writing calls generally
is a profitable strategy if prices remain the same or fall. Through receipt of
the option premium, a call writer mitigates the effects of a price decline. At
the same time, because a call writer must be prepared to deliver the
underlying instrument in return for the strike price, even if its current
value is greater, a call writer gives up some ability to participate in
security price increases.
ILLIQUID INVESTMENTS. Each Fund and an underlying fund may invest in
illiquid investments, subject to certain restrictions provided in the
Prospectus and herein. Illiquid investments are investments that cannot be
sold or disposed of in the ordinary course of business at approximately the
prices at which they are valued. Under the supervision of the Board of
Trustees, the Manager determines the liquidity of the Fund's investments and,
through reports from the Manager, the Board monitors investments in illiquid
instruments. In determining the liquidity of the Fund's investments, the
Manager may consider various factors, including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4) the nature of the
security (including any demand or tender features), and (5) the nature of the
marketplace for trades (including the ability to assign or offset the Fund's
rights and obligations relating to the investment).
Investments currently considered by the Fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days, and an investment in an underlying fund exceeding
1% of the total outstanding securities of the underlying fund. Also, the
Manager may determine some restricted securities to be illiquid.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by the Board of Trustees. If through
a change in values, net assets, or other circumstances, The Amerigo Fund and
<PAGE>
The Clermont Fund were in a position where more than 15% and 10% of their net
assets, respectively, were invested in illiquid securities, they would seek to
take appropriate steps to protect liquidity.
LOWER-QUALITY DEBT SECURITIES. Each Fund may invest in underlying
funds investing in lower quality debt securities. The market for lower-quality
debt securities may be thinner and less active than that for higher-quality
debt securities, which can adversely affect the prices at which the former are
sold. If market quotations are not available, lower-quality debt securities
will be valued in accordance with procedures established by the trustees of an
underlying fund, including the use of outside pricing services. Judgment plays
a greater role in valuing high-yield corporate debt securities than is the
case for securities for which more external sources for quotations and
last-sale information are available. Adverse publicity and changing investor
perceptions may affect the ability of outside pricing services to value
lower-quality debt securities and an underlying fund's ability to dispose of
these securities.
Since the risk of default is higher for lower-quality debt
securities, the underlying fund manager's research and credit analysis are an
especially important part of managing securities of this type held by the
underlying fund. In considering investments for the underlying fund, the
underlying fund manager will attempt to identify those issuers of
high-yielding securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. The
underlying fund manager's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earnings prospects,
and the experience and managerial strength of the issuer.
The underlying fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it determines
this to be in the best interest of the underlying fund's shareholders.
RESTRICTED SECURITIES. Each Fund and an underlying fund may invest in
restricted securities as described in the Prospectus and herein. Restricted
securities generally can be sold in privately negotiated transactions,
pursuant to an exemption from registration under the Securities Act of 1933,
or in a registered public offering. Where registration is required, a Fund or
an underlying fund may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to
seek registration and the time it may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, a Fund or an underlying fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
SHORT SALES. An underlying fund may enter into short sales. For
example, if the manager of an underlying fund anticipates a decline in the
price of a stock the underlying fund holds, it may sell the stock short. If
the stock price subsequently declines, the proceeds of the short sale could be
<PAGE>
expected to offset all or a portion of the effect of the stock's decline.
When an underlying fund enters into a short sale, it will be required
to set aside securities equivalent in kind and amount to those sold short (or
securities convertible or exchangeable into such securities) and will be
required to hold them aside while the short sale is outstanding. An underlying
fund will incur transaction costs, including interest expense, in connection
with opening, maintaining, and closing short sales.
ZERO COUPON BONDS. An underlying fund may invest in zero coupon
bonds. Zero coupon bonds do not make interest payments; instead, they are sold
at a deep discount from their face value and are redeemed at face value when
they mature. Because zero coupon bonds do not pay current income, their prices
can be very volatile when interest rates change. In calculating its dividends,
the underlying fund takes into account as income a portion of the difference
between a zero coupon bond's purchase price and its face value.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Trust with
respect to each Fund as fundamental policies. Under the 1940 Act, a
"fundamental" policy may not be changed without the vote of a majority of the
outstanding voting securities of a Fund, which is defined in the 1940 Act as
the lesser of (a) 67 percent or more of the shares present at a shareholder
meeting if the holders of more than 50 percent of the outstanding shares are
present or represented by proxy, or (b) more than 50 percent of the
outstanding shares ("Majority Vote"). The percentage limitations contained in
the restrictions listed below apply at the time of the purchase of the
securities.
Provided that nothing in the following investment restrictions shall
prevent a Fund from investing all or part of its assets in an open-end
investment company having substantially the same investment objective as the
Fund, neither of the Funds may:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) underwrite securities issued by others, except to the extent that
a Fund may be deemed to be an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities:
(3) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund from investing in underlying funds which invest in securities or other
instruments backed by real estate or securities of companies engaged in the
real estate business);
<PAGE>
(4) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent a
Fund from investing in underlying funds which purchase or sell options and
futures contracts or from investing in underlying funds which invest in
securities or other instruments backed by physical commodities);
The following investment limitations are not fundamental and may be
changed without shareholder approval.
(i) The Funds do not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin payments
in connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(ii) The Amerigo Fund does not currently intend to purchase any
security if, as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or disposed
of in the ordinary course of business at approximately the prices at which
they are valued.
(iii) The Clermont Fund does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or disposed
of in the ordinary course of business at approximately the prices at which
they are valued.
(iv) The Fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than 5%
of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(v) Each Fund does not currently intend to purchase warrants, valued
at the lower of cost or market, in excess of 5% of the Fund's net assets.
Warrants acquired by the Fund in units or attached to securities are not
subject to these restrictions.
(vi) Each Fund does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases.
(vii) Each Fund does not currently intend to purchase the securities
of any issuer if those officers and Trustees of the Trust and those officers
and directors of the Manager who individually own more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of such issuer's
securities.
<PAGE>
PORTFOLIO TURNOVER
Turnover rates are primarily a function of the Manager's response to
market conditions. In the Manager's opinion, it may be in the best interest of
a Fund to change its portfolio to a fully or partially defensive position at
times. This defensive investment strategy can produce high portfolio turnover
ratios when calculated in accordance with SEC rules.
The portfolio turnover rate for each Fund is not expected to exceed
300% in the current year.
PURCHASE AND SALE OF PORTFOLIO SECURITIES
The Manager is authorized to place orders for the purchase and sale
of portfolio securities, and will do so in accordance with the policies
described below. The Manager is also responsible for the placement of
transaction orders for other accounts for which it or its affiliates act as
investment adviser. In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, the Manager considers various
relevant factors, including, but not limited to: the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's execution
services rendered on a continuing basis; the reasonableness of any
commissions; and arrangements for payment of a Fund's expenses.
Each Fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the Fund or other accounts over
which the Manager or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and the
availability of securities or the purchasers or sellers of securities. In
addition, such broker-dealers may furnish analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and performance of accounts; effect securities transactions, and
perform functions incidental thereto (such as clearance and settlement).
The receipt of research from broker-dealers that execute transactions
on behalf of a Fund may be useful to the Manager in rendering investment
management services to the Fund or its other clients, and conversely, such
research provided by broker-dealers who have executed transaction orders on
behalf of other clients may be useful to the Manager in carrying out its
obligations to the Fund. The receipt of such research has not reduced the
Manager's normal independent research activities; however, it enables the
Manager to avoid the additional expenses that could be incurred if the Manager
tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
<PAGE>
recognition of their research and execution services. In order to cause a Fund
to pay such higher commissions, the Manager must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage and
research services provided by such executing broker-dealers, viewed in terms
of a particular transaction or the Manager's overall responsibilities to the
Fund and its other clients. In reaching this determination, the Manager will
not attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what position of the compensation should be
related to those services.
The Manager is authorized to use research services provided by and to
place portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of a Fund to the extent permitted by
law. The Manager may use research services provided by and place agency
transactions with CLS Brokerage Services, Inc., an affiliate of the Manager,
if the commissions are fair, reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services.
The Manager may allocate brokerage transactions to broker-dealers who
have entered into arrangements with the Manager under which the broker-dealer
allocates a portion of the commissions paid by a Fund toward payment of the
Fund's expenses, such as transfer agent fees or custodian fees. The
transaction quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits
members of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board of
Trustees has authorized the Manager to execute portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
The Trustees periodically review the Manager's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of each Fund and review the commissions paid by the Fund over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Fund.
From time to time, the Trustees will review whether the recapture for
the benefit of a Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. Each Fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture arrangements
are in effect. The Trustees intend to continue to review whether recapture
opportunities are available and are legally permissible and, if so, to
determine in the exercise of their business judgment whether it would be
advisable for each fund to seek such recapture.
<PAGE>
VALUATION OF PORTFOLIO SECURITIES
Securities owned by each Fund and listed or traded on any national
securities exchange are valued at each closing of the New York Stock Exchange
on the basis of the last sale on such exchange each day that the exchange is
open for business. If there is no sale on that day, or if the security is not
listed, it is valued at its last bid quotation on the exchange or, in the case
of unlisted securities, as obtained from an established market maker. Futures
contracts are valued on the basis of the cost of closing out the liability,
i.e., at the settlement price of a closing contract or at the asked quotation
for such a contract if there is no sale. Money market instruments
(certificates of deposit, commercial paper, etc.) are valued either at
amortized cost or at original cost plus accrued interest, both of which
approximate current value. Fixed income securities are priced at the current
quoted bid price. However, U.S. Government Securities and other fixed income
securities may be valued on the basis of prices provided by an independent
pricing service when such prices are believed to reflect the fair market value
of such securities. The prices provided by a pricing service are determined
without regard to bid or last sale prices but take into account securities
prices, yields, maturities, call features, ratings, institutional size trading
in similar groups of securities and developments related to specific
securities. Portfolio securities for which market quotations are not readily
available are to be valued by the Manager in good faith at its own expense
under the direction of the Trustees. Investments in mutual funds are valued at
net asset value; provided, however, the Funds' investment in underlying mutual
funds may be subject to a redemption fee.
Other assets, which include cash, prepaid and accrued items and
amounts receivable as income on investments and from the sale of portfolio
securities, are carried at book value, as are all liabilities. Liabilities
include accrued expenses, sums owed for securities purchased, and dividends
payable.
PERFORMANCE INFORMATION
TOTAL RETURN. From time to time, each Fund may advertise its average
annual total returns for various periods of time. When applicable, depending
on the Fund, the periods of time shown will be for a one-year period; a
five-year period (or relevant portion thereof) and since inception. The
calculation assumes the reinvestment of all dividends and distributions.
Examples of the total return calculation for a Fund will assume a hypothetical
investment of $1,000 at the beginning of each period.
It is computed by finding the average annual compounded rates of
return over the length of the base periods that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
P (1+T)(to the nth power) = ERV
P = initial investment of $1,000
T = average annual total return
n = Number of years
<PAGE>
ERV = ending redeemable value at the end of the base period
Total returns quoted in advertising reflect all aspects of a Fund's return,
including the effect of reinvesting dividends and capital gain distributions,
and any change in the Fund's net asset value per share (NAV) over the period.
Average annual returns are calculated by determining the growth or decline in
value of a hypothetical historical investment in a Fund over a stated period,
and then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady
annual return rate that would equal 100% growth on a compounded basis in ten
years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that a Fund's performance is
not constant over time, but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of a Fund.
NONSTANDARDIZED TOTAL RETURN. In addition to the performance
information described above, a Fund may provide total return information for
designated periods, such as for the most recent rolling six months or most
recent rolling twelve months. A Fund may quote unaveraged or cumulative total
returns reflecting the simple change in value of an investment over a stated
period. Average annual and cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, and/or a series of redemptions over any
time period. Total returns may be broken down into their components of income
and capital (including capital gains and changes in shares price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns and other performance information may be quoted
numerically or in a table, graph or similar illustration.
OTHER INFORMATION CONCERNING FUND PERFORMANCE. A Fund may quote its
performance in various ways, using various types of comparisons to market
indices, other funds or investment alternatives, or to general increases in
the cost of living. All performance information supplied by a Fund in
advertising is historical and is not intended to indicate future returns. A
Fund's share prices and total returns fluctuate in response to market
conditions and other factors, and the value of a Fund's shares when redeemed
may be more or less than their original cost.
A Fund may compare its performance over various periods to various
indices or benchmarks, including, but not limited to, the performance record
of the Standard & Poor's 500 Composite Stock Price Index (S&P), the Dow Jones
Industrial Average (DJIA), the NASDAQ Industrial Index, the Ten Year Treasury
Benchmark and the cost of living (measured by the Consumer Price Index, or
CPI) over the same period. Comparisons may also be made to yields on
certificates of deposit, treasury instruments or money market instruments. The
comparisons to the S&P and DJIA show how such Fund's total return compared to
the record of a broad average of common stock prices (S&P) and a narrower set
of stocks of major industrial companies (DJIA). The Fund may have the ability
<PAGE>
to invest in securities or underlying funds not similar in composition to the
indices. Figures for the S&P and DJIA are based on the prices of unmanaged
groups of stocks, and unlike a Fund's returns, their returns do not include
the effect of paying brokerage commissions and other costs of investing.
Comparisons may be made on the basis of a hypothetical initial
investment in a Fund (such as $1,000), and reflect the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(that is, their cash value at the time they were reinvested). Such comparisons
may also reflect the change in value of such an investment assuming
distributions are not reinvested. Tax consequences of different investments
may not be factored into the figures presented.
A Fund's performance may be compared in advertising to the
performance of other mutual funds in general or to the performance of
particular types of mutual funds, especially those with similar objectives.
Other groupings of funds prepared by Lipper Analytical Services, Inc.
("Lipper") and other organizations may also be used for comparison to the Fund.
Although Lipper and other organizations such as Investment Company Data, Inc.
("ICD"), CDA Investment Technologies, Inc. ("CDA") and Morningstar Investors,
Inc. ("Morningstar"), include funds within various classifications based upon
similarities in their investment objectives and policies, investors should be
aware that these may differ significantly among funds within a grouping.
Performance rankings and ratings reported periodically in national
financial publications such as Money Magazine, Forbes, Business Week, The Wall
Street Journal, Micropal, Inc., Morningstar, Stanger's, Barron's, etc. will
also be used.
Ibbotson Associates of Chicago, Illinois (Ibbotson) and others
provide historical returns of the capital markets in the United States. A Fund
may compare its performance to the long-term performance of the U.S. capital
markets in order to demonstrate general long-term risk versus reward
investment scenarios. Performance comparisons could also include the value of
a hypothetical investment in common stocks, long-term bonds or treasuries. A
Fund may discuss the performance of financial markets and indices over various
time periods.
A Fund may also discuss in advertising the relative performance of
various types of investment instruments, such as stocks, treasury securities
and bonds, over various time periods and covering various holding periods.
Such comparisons may compare these investment categories to each other or to
changes in the CPI.
A Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
the investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
<PAGE>
against loss in a declining market, the investor's average cost per share can
be lower than if fixed numbers of shares had been purchased at those
intervals. In evaluating such a plan, investors should consider their ability
to continue purchasing shares through periods of low price levels.
The Funds may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually, compounded monthly, would have an
after-tax value of $2,009 after ten years, assuming tax was deducted from the
return each year at a 31% rate. An equivalent tax-deferred investment would
have an after-tax value of $2,178 after ten years, assuming tax was deducted
at a 31% rate from the deferred earnings at the end of the ten-year period.
Evaluations of a Fund's performance made by independent sources may
also be used in advertisements concerning the Fund, including reprints of, or
selections from, editorials or articles about the Fund. These editorials or
articles may include quotations of performance from other sources such as
Lipper or Morningstar.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each Fund is open for business and its net asset value per share
(NAV) is calculated each day the NYSE is open for trading. The NYSE has
designated the following holiday closings: New Year's Day, Washington's
Birthday (observed), Good Friday, Memorial Day (observed), Independence Day
(observed), Labor Day, Thanksgiving Day, and Christmas Day (observed). The
NYSE may modify its holiday schedule at any time.
Each Fund's net asset value is determined as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier if
trading on the NYSE is restricted or as permitted by the SEC. To the extent
that portfolio securities are traded in other markets on days when the NYSE is
closed, a Fund's NAV may be affected on days when investors do not have access
to the Fund to purchase or redeem shares.
Shareholders of The Amerigo Fund will be able to exchange their
shares for shares of The Clermont Fund. Shareholders of The Clermont Fund will
be able to exchange their shares for shares of The Amerigo Fund. No fee or
sales load will be imposed upon any such exchange.
Additional details about the exchange privilege is available from the
Fund's Transfer Agent. The exchange privilege may be modified, terminated or
suspended on 60 days' notice, and either Fund has the right to reject any
exchange application relating to such Fund's shares. The 60-day notification
requirement may be waived if (i) the only effect of a modification would be to
reduce or eliminate any applicable administrative fee, redemption fee, or
<PAGE>
deferred sales charge ordinarily payable at the time of an exchange, or (ii) a
Fund suspends the redemption of the shares to be exchanged as permitted under
the 1940 Act or the rules and regulations thereunder or the Fund to be
acquired suspends the sale of its shares because it is unable to invest
amounts effectively in accordance with its investment objective and policies.
In the Prospectus, each Fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse exchange
purchases by any person or group if, in the Manager's judgment, the Fund would
be unable to invest effectively in accordance with its investment objective
and policies, or would otherwise potentially be adversely affected.
AUTOMATIC ACCOUNT BUILDER. An investor may arrange to have a fixed
amount of $100 or more automatically invested in shares of a Fund monthly by
authorizing his or her bank account to be debited to invest specified dollar
amounts in shares of the Fund. The investor's bank must be a member of the
Automatic Clearing House System. Stock certificates are not issued to
Automatic Account Builder participants.
Further information about these programs and an application form can
be obtained from the Transfer Agent.
SYSTEMATIC WITHDRAWAL PROGRAM. A systematic withdrawal plan is
available for shareholders having shares of a Fund with a minimum value of
$10,000, based upon the offering price. The plan provides for monthly,
quarterly or annual checks in any amount, but not less than $100 (which amount
is not necessarily recommended). Except as otherwise provided in the
Prospectus, to the extent such withdrawals exceed the current net asset value
of reinvested dividends, they may be subject to the contingent deferred sales
charge. See "How to Buy Shares" and "Other Shareholder Services" in the
Prospectus.
Dividends and/or distributions on shares held under this plan are
invested in additional full and fractional shares at net asset value. The
Transfer Agent acts as agent for the shareholder in redeeming sufficient full
and fractional shares to provide the amount of the periodic withdrawal
payment. The plan may be terminated at any time.
Withdrawal payments should not be considered as dividends, yield or
income. If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.
Furthermore, each withdrawal constitutes a redemption of shares, and
any gain or loss realized must be recognized for federal income tax purposes.
In addition, withdrawals made concurrently with purchases of additional shares
are inadvisable because of the applicable sales charges to the withdrawal of
<PAGE>
the Fund's shares. Each shareholder should consult his or her own tax adviser
with regard to the tax consequences of the plan, particularly if used in
connection with a retirement plan.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS.. If you request to have distributions mailed to you
and the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, the Manager may reinvest your distributions at
the then-current NAV. All subsequent distributions will then be reinvested
until you provide the Manager with alternate instructions.
DIVIDENDS. A portion of a Fund's dividends derived from certain U.S.
government obligations may be exempt from state and local taxation. Each Fund
will send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by a Fund
on the sale of securities by the Fund and distributed to shareholders of the
Fund are federally taxable as long-term capital gains regardless of the length
of time shareholders have held their shares. If a shareholder receives a
long-term capital gain distribution on shares of a Fund and such shares are
held six months or less and are sold at a loss, the portion of the loss equal
to the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by a Fund are taxable to
shareholders as dividends not as capital gains. Distributions from short-term
capital gains do not qualify for the dividends-received deduction.
TAX STATUS OF THE FUND. Each Fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be liable
for federal tax on income and capital gains distributed to shareholders. In
order to qualify as a regulated investment company and avoid being subject to
federal income or excise taxes at the Fund level, the Fund intends to
distribute substantially all of its net investment income (consisting of the
income it earns from its investment in the Portfolio, less expenses) and net
realized capital gains within each calendar year as well as on a fiscal year
basis. Each Fund intends to comply with other tax rules applicable to regulated
investment companies, including a requirement that capital gains from the sale
of securities held less than three months constitute less than 30% of the
Fund's gross income for each fiscal year. Gains from futures contracts and
options are included in this 30% calculation, which may limit the Fund's
investments in such instruments.
Each Fund is treated as a separate entity from the other CLS
AdvisorOne Funds.
OTHER TAX INFORMATION. The information above is only a
summary of some of the tax consequences generally affecting each Fund and its
shareholders, and no attempt has been made to discuss individual tax
<PAGE>
consequences. In addition to federal income taxes, shareholders may be subject
to state and local taxes on a Fund's distributions. Investors should consult
their tax advisers to determine whether the Fund is suitable to their
particular tax situation.
INVESTMENT ADVISER AND MANAGER
Clarke Lanzen Skalla Investment Firm, Inc. (the "Manager") is the
investment adviser and manager for, and has an Investment Advisory Contract
with, each Fund.
Pursuant to the Investment Advisory Contract with each Fund, the
Manager, subject to the supervision of the Board of Trustees and in conformity
with the stated objective and policies of the Fund, manages both the
investment operations of the Fund and the composition of the Fund's portfolio,
including the purchase, retention, disposition and loan of securities. In
connection therewith, the Manager is obligated to keep certain books and
records of each Fund. The Manager also administers each Fund's corporate
affairs, and in connection therewith, furnishes each Fund with office
facilities, together with those ordinary clerical and bookkeeping services
which are not being furnished by Star Bank, N.A., each Fund's custodian and
Mutual Funds Service Co., each Fund's transfer and disbursing agent. The
management services of the Manager are not exclusive under the terms of the
Investment Advisory Contract and the Manager is free to, and does, render
management services to others.
The Investment Advisory Contract for each Fund was separately
approved by a vote of a majority of the Trustees, including a majority
of those Trustees who are not "interested persons" (as defined in the
Investment Company Act of 1940) of the Fund. The Investment Advisory Contract
for each Fund is to remain in force so long as renewal thereof is specifically
approved at least annually by a majority of the Trustees or by vote of a
majority of the outstanding voting shares of the Fund, and in either case by
vote of a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act of 1940) at a meeting called for the
purpose of voting on such renewal.
Each Investment Advisory Contract provides that the Manager
will not be liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
the Investment Advisory Contract relates except for a loss resulting
from willful misfeasance, bad faith, gross negligence or reckless disregard of
duty. The Investment Advisory Contract will terminate automatically if
assigned and may be terminated without penalty at any time upon 60 days' prior
written notice by Majority Vote of the Fund, by the Trustees, or by the
Manager.
Costs, expenses and liabilities of the Trust attributable to a
particular Fund are allocated to that Fund. Costs, expenses and liabilities
which are not readily attributable to a particular Fund are allocated among
all of the Trust's Funds. Thus, each Fund pays its proportionate share of: the
<PAGE>
fees of the Trust's independent auditors, legal counsel, custodian, transfer
agent and accountants; insurance premiums; the fees and expenses of Trustees
who do not receive compensation from the Manager; association dues; the cost
of printing and mailing confirmations, prospectuses, proxies, proxy
statements, notices and reports to existing shareholders; state registration
fees, including the cost of printing and mailing of prospectuses and other
materials incident to soliciting new accounts; and other miscellaneous
expenses.
The Manager earns an annual fee, payable in monthly installments as
follows. The fee for each Fund is based upon the average net assets of each
Fund and is at the rate of 1% of each Fund's average net assets.
The Manager presently intends to waive management fees or reimburse
each Fund through an expense reimbursement fee to the extent necessary to keep
total expenses at 1.15% of average daily net assets of each Fund. The Manager
may change this policy at any time without notice to shareholders.
Clarke Lanzen Skalla Investment Firm, Inc. was incorporated in Nebraska
on March 3, 1989 and maintains its principal offices at 14747 California Street,
Omaha, NE 68154-1979. The Manager is controlled by W. Patrick Clarke through the
ownership of voting common stock. The Manager's officers and directors are as
set forth as follows: W. Patrick Clarke, a director, President and Chief
Executive Officer; Randal D. Skalla, a director and Chief Investment Officer;
Gary W. Lanzen, a director, Chief Financial Officer, Secretary and Treasurer and
Todd P. Clarke, Executive Vice President. Each of the foregoing individuals is a
Trustee and officer of the Trust.
OFFICERS AND TRUSTEES
The Trustees and executive officers of the Trust are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 14747 California Street, Omaha,
NE 68154-1979, which is also the address of the Manager. Those Trustees who are
"interested persons" (as defined in the Investment Company Act of 1940) by
virtue of their affiliation with either Fund, the Trust or the Manager are
indicated by an asterisk (*).
The Trust is managed by its Trustees and officers. Their names,
addresses, ages, positions and principal occupations during the past five
years are listed below:
<TABLE>
<CAPTION>
POSITION PRINCIPAL
NAME, ADDRESS AND AGE HELD OCCUPATION
<S> <C> <C>
W. Patrick Clarke*+, 52 Trustee, Chairman President and Chief
and President Executive Officer, Clarke
Lanzen Skalla Investment
Firm, Inc., an investment
adviser
<PAGE>
<CAPTION>
<S> <C> <C>
Randal D. Skalla*+, 35 Trustee, Vice Chief Investment Officer,
President Clarke Lanzen Skalla
Investment Firm, Inc., an
investment adviser
Gary W. Lanzen*+, 43 Trustee, Secretary Chief Financial Officer,
and Treasurer Secretary and Treasurer of
Clarke Lanzen Skalla
Investment Firm, Inc., an
investment adviser
Todd P. Clarke*+, 28 Trustee, Assistant Executive Vice President of
Secretary and Clarke Lanzen Skalla
Assistant Treasurer Investment Firm, Inc., an
investment adviser
H. Reese Hansen, 55 Trustee Dean of Brigham Young
Brigham Young University University J. Reuben
J. Rueben Clark Law School Clark Law School
P. O. Box 28000
Provo, UT 84602-8000
L. Merill Bryan, Jr., 52 Trustee President and Chief
16747 Kehrs Mill Estates Drive Executive Officer, Union
Chesterfield, MO 63005 Pacific Technologies, a
computer and
telecommunications systems
and services company
Richard A. Zehnacker, 40 Trustee President, First Data
10825 Farnam Drive-C43 Resources, a credit card
Omaha, NE 68154 processing company.
<FN>
+ 14747 California Street, Omaha, Nebraska 68154-1979.
* W. Patrick Clarke is Todd P. Clarke's father and H. Reese Hansen's brother-in-law.
</FN>
</TABLE>
The Trust pays each Trustee who is not an "interested person" an
annual fee of $4,000, plus $1,500 for each meeting of the Board of Trustees
attended in person or $750 for each meeting of the Board of Trustees attended
telephonically. H. Reese Hansen, L. Merill Bryan, Jr. and Richard A.
Zehnacker comprise the Audit Committee for the Trust. Each member of the
Audit Committee is paid $400 for each meeting of the Audit Committee attended.
<PAGE>
All other officers and Trustees serve without compensation from the Trust.
The Trustees and officers of the Trust own, in the aggregate, less than 1% of
each Fund's total outstanding shares.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. The assets of the Trust received for the issue or
sale of the shares of a Fund and all income, earnings, profits, and proceeds
thereof, subject only to the rights of creditors, are especially allocated to
the Fund and constitute the underlying assets of the Fund. The underlying
assets of each Fund are segregated on the books of account, and are to be
charged with the liabilities with respect to the Fund and with a share of the
general expenses of the Trust. Expenses with respect to the Trust are to be
allocated in proportion to the asset value of the respective funds except
where allocations of direct expense can otherwise be fairly made. The officers
of the Trust, subject to the general supervision of the Board of Trustees,
have the power to determine which expenses are allocable to a given fund, or
which are general or allocable to all of the funds. In the event of the
dissolution or liquidation of the Trust, shareholders of each fund are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of
the type commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the trust. The
Declaration of Trust provides that the Trust shall not have any claim against
shareholders except for the payment of the purchase price of shares and
requires that each agreement, obligation, or instrument entered into or
executed by the Trust or the Trustees include a provision limiting the
obligations created thereby to the Trust and its assets.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder held personally liable for the obligations
of the Fund. The Declaration of Trust also provides that each Fund shall, upon
request, assume the defense of any claim made against any shareholder for any
act or obligation of the Fund and satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which a Fund itself would be unable to meet its
obligations. The Manager believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees against
any liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of their office.
<PAGE>
VOTING RIGHTS. Each Fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each share you own. The
shares have no preemptive or conversion rights; the voting and dividend rights
the right of redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set forth under
the heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Trust or a Fund may, as set forth in the
Declaration of Trust, call meetings of the Trust or the Fund for any purpose
related to the Trust or Fund, as the case may be, including, in the case of a
meeting of the entire Trust, the purpose of voting on removal of one or more
Trustees. The Trust or a Fund may be terminated upon the sale of its assets to
another open-end management investment company, or upon liquidation and
distribution of its assets, if approved by the Board of Trustees. If not so
terminated, the Trust and the Fund will continue indefinitely.
CUSTODIAN. Star Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202,
is custodian of the assets of the Portfolio. The custodian is responsible for
the safekeeping of each Fund's assets and the appointment of subcustodian
banks and clearing agencies. The custodian takes no part in determining the
investment policies of a Fund or in deciding which securities are purchased or
sold by a Fund. Each Fund may, however, invest in obligations of the custodian
and may purchase or sell securities from or to the custodian.
AUDITOR. KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio
43215 serves as the Trust's independent accountant. The auditor performs an
annual audit of the financial statements for each Fund and may provide other
audit, tax, and related services.
FINANCIAL STATEMENTS
Financial statements for the Funds are presented on the following pages.
<PAGE>
CLS AdvisorOne Funds
The Amerigo Fund
Statement of Assets and Liabilities
June 9, 1997
Assets:
Cash $ 50,000
Deferred organization expenses 52,132
Total Assets $102,132
Liabilities:
Organization expenses payable and accrued $ 52,132
Net Assets $ 50,000
Net asset value, redemption price and offering price per share
of beneficial interest ($50,000 / 5,000 shares outstanding) $ 10
Notes:
(1) The CLS AdvisorOne Funds, a Massachusetts business trust (the "Trust"),
was organized on March 3, 1997 and has been inactive since that date, with
respect to The Amerigo Fund (the "Fund"), except for matters relating to the
registration under the Securities Act of 1933 of the Fund's shares of beneficial
interest ("Shares") and the sale of an aggregate of 5,000 Shares ("Initial
Shares") of the Fund to Patrick Clarke, Gary Lanzen, Randy Skalla, and Clarke
Lanzen Skalla Investment Firm, Inc. (the "Stockholders"). Clarke Lanzen Skalla
Investment Firm, Inc. serves as investment adviser to the Fund. The Fund is
currently one of two series of the Trust.
(2) Organization expenses are being deferred and will be amortized over a
period not to exceed five years that commences on June 9, 1997. The amount paid
by the Trust on any redemption by the Stockholders of any of the Initial Shares
will be reduced by a portion of any unamortized organization expenses,
determined by the proportion of the amount of the Initial shares redeemed to the
aggregate amount of the Initial Shares then outstanding after taking into
account any prior redemptions of any of the Initial Shares.
(3) The Trust has entered into Administration and Service Agreements with
Mutual Funds Service Co. under which Mutual Funds Service Co. provides
administration and transfer agency services and Star Bank, N.A. provides custody
services to the Fund pursuant to a Custody Agreement.
<PAGE>
CLS AdvisorOne Funds
The Clermont Fund
Statement of Assets and Liabilities
June 9, 1997
Assets:
Cash $ 50,000
Deferred organization expenses 52,132
Total Assets $102,132
Liabilities:
Organization expenses payable and accrued $ 52,132
Net Assets $ 50,000
Net asset value, redemption price and offering price per share
of beneficial interest ($50,000 / 5,000 shares outstanding) $ 10
Notes:
(1) The CLS AdvisorOne Funds, a Massachusetts business trust (the "Trust"),
was organized on March 3, 1997 and has been inactive since that date, with
respect to The Clermont Fund (the "Fund"), except for matters relating to the
registration under the Securities Act of 1933 of the Fund's shares of beneficial
interest ("Shares") and the sale of an aggregate of 5,000 Shares ("Initial
Shares") of the Fund to Patrick Clarke, Gary Lanzen, Randy Skalla, and Clarke
Lanzen Skalla Investment Firm, Inc. (the "Stockholders"). Clarke Lanzen Skalla
Investment Firm, Inc. serves as investment adviser to the Fund. The Fund is
currently one of two series of the Trust.
(2) Organization expenses are being deferred and will be amortized over a
period not to exceed five years that commences on June 9, 1997. The amount paid
by the Trust on any redemption by the Stockholders of any of the Initial Shares
will be reduced by a portion of any unamortized organization expenses,
determined by the proportion of the amount of the Initial shares redeemed to the
aggregate amount of the Initial Shares then outstanding after taking into
account any prior redemptions of any of the Initial Shares.
(3) The Trust has entered into Administration and Service Agreements with
Mutual Funds Service Co. under which Mutual Funds Service Co. provides
administration and transfer agency services and Star Bank, N.A. provides custody
services to the Fund pursuant to a Custody Agreement.
<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 (the Funds), as of
June 9, 1997. These financial statements are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstate-
ment. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. 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 audit provides a reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of the Funds as
of June 9, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
June 10, 1997
<PAGE>
- ------------------------------------------------------------------------------
APPENDIX
- ------------------------------------------------------------------------------
DESCRIPTION OF MOODY'S INVESTORS SERVICE INC.'S CORPORATE BOND RATINGS:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
<PAGE>
Moody's applies numerical modifiers, 1,2, and 3, in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BBB-rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB-rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or, economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The CCC
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied B or B-rating.
CC - Debt rated CC is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC debt rating.
<PAGE>
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC-debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI- The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating will also be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
The ratings from AA to D may be modified by the addition of a plus or minus to
show relative standing within the major rating categories.
A-1 AND P-1 COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P")
has the following characteristics: Liquidity ratios are adequate to
meet cash requirements. Long term senior debt is rated "A" or
better. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determines
whether the issuer's commercial paper is A-1, A-2, or A-3.
The rating P-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Among the factors considered by
Moody's in assigning ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent
in certain areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality
of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issuer; and (8) recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations.
<PAGE>
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PART C
- ------------------------------------------------------------------------------
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Financial Statements included in Part A
Not Applicable.
Financial Statements included in Part B
Statements of Assets and Liabilities -- June 9, 1997
Notes to Financial Statements
Independent Auditors' Report dated June 10, 1997
Statements and schedules other than those listed above are omitted because
they are not required, or because the information required is included in the
financial statements or notes thereto.
(b) EXHIBITS:
1. Declaration of Trust -- filed as an exhibit to Registrant's
Registration Statement on Form N-1A filed with the
Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
2. By-laws of the Trust -- filed as an exhibit to Registrant's
Registration Statement on Form N-1A filed with the
Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
3. Not Applicable.
4. Not Applicable.
5. (i) Investment Advisory Agreement, dated March 3, 1997,
between Clarke Lanzen Skalla Investment Firm, Inc. and
Registrant with regard to The Amerigo Fund -- filed as an
exhibit to Registrant's Registration Statement on Form N-1A
filed with the Commission on or about March 17, 1997, which
exhibit is incorporated herein by reference.
(ii) Investment Advisory Agreement, dated March 3, 1997,
between Clarke Lanzen Skalla Investment Firm, Inc. and
Registrant with regard to The Clermont Fund -- filed as an
exhibit to Registrant's Registration Statement on Form N-1A
filed with the Commission on or about March 17, 1997, which
exhibit is incorporated herein by reference.
6. Not Applicable.
7. Not Applicable.
8. Custody Agreement between Registrant and Star Bank, National
Association -- filed as an exhibit to Registrant's
Registration Statement on Form N-1A filed with the
Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
9. (i) Administration Agreement between the Trust and Mutual
Funds Service Co. -- filed as an exhibit to Registrant's
Registration Statement on Form N-1A filed with the
Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
(ii) Accounting Services Agreement between the Trust and
Mutual Funds Service Co. -- filed as an exhibit to
Registrant's Registration Statement on Form N-1A filed with
the Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
(iii) Administration Services Agreement between the Trust
and Mutual Funds Service Co. -- filed as an exhibit to
Registrant's Registration Statement on Form N-1A filed with
the Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
10. Opinion and Consent of Counsel is filed herewith.
<PAGE>
11. Auditor's Consent is filed herewith.
12. Not Applicable.
13. Investment Representation Letter of Initial Shareholder is
filed herewith.
14. Not Applicable.
15. Not Applicable.
16. (i) Schedule for computation of performance quotation for
The Amerigo Fund -- filed as an exhibit to Registrant's
Registration Statement on Form N-1A filed with the
Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
(ii) Schedule for computation of performance quotation for
The Clermont Fund -- filed as an exhibit to Registrant's
Registration Statement on Form N-1A filed with the
Commission on or about March 17, 1997, which exhibit is
incorporated herein by reference.
17. Not Applicable
18. Not Applicable.
19. Powers of Attorney of Trustees of Registrant -- filed as an
exhibit to Registrant's Registration Statement on Form N-1A
filed with the Commission on or about March 17, 1997, which
exhibit is incorporated herein by reference.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES AT June 12, 1997.
Title of Number of
CLASS FUND RECORD HOLDERS
Shares of
Beneficial Interest The Amerigo Fund 1
Shares of
Beneficial Interest The Clermont Fund 1
Item 27. INDEMNIFICATION
Reference is made to Section 5.3 of the Declaration of Trust
filed herewith. As provided therein, the Trust is required
to indemnify its officers and trustees against claims and
liability arising in connection with the affairs of the
Trust, except liability arising from breach of trust, bad
faith, willful misfeasance, gross negligence or reckless
disregard of duties. The Trust is obligated to undertake the
defense of any action brought against any officer, trustee
or shareholder, and to pay the expenses thereof if he or she
<PAGE>
acted in good faith and in a manner he reasonably believed
to in or not opposed to the best interest of the Trust, and
with respect to any criminal action had no reasonable cause
to believe his or her conduct was unlawful. Other conditions
are applicable to the right of indemnification as set forth
in the Declaration of Trust. In applying these provisions,
the Trust will comply with the provisions of Investment
Company Act.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not Applicable.
Item 29. PRINCIPAL UNDERWRITERS.
Not Applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Registrant's Declaration of Trust, By-laws, and Minutes of
Trustees' and Shareholders' Meetings, and contracts and like
documents are in the physical possession of Mutual Funds
Service Co., the Registrant's fund accountant, administrator
and transfer agent, at 6000 Memorial Drive, Dublin, Ohio
43017 or Clarke Lanzen Skalla Investment Firm, Inc., 14747
California Street, Omaha, NE 68154-1979. Certain custodial
records are in the custody of Star Bank, N.A., each Fund's
custodian, at 425 Walnut Street, Cincinnati, Ohio 45202. All
other records are kept in the custody of Clarke Lanzen
Skalla Investment Firm, Inc., 14747 California Street,
Omaha, NE 68154-1979 and Mutual Funds Service Co., 6000
Memorial Drive, Dublin, OH 43017.
Item 31. MANAGEMENT SERVICES.
Not Applicable.
Item 32. UNDERTAKINGS.
(a) Registrant undertakes to file an amendment to this
Registration Statement with certified financial
statements showing the initial capital received
before accepting subscriptions from any persons in
excess of 25 if Registrant proposes to raise its
initial capital pursuant to Section 14(a)(3) of the
1940 Act.
(b) Registrant undertakes to file a post-effective
amendment, including financial statements for The
Amerigo Fund and The Clermont Fund which need not
be certified, within four to six months following
commencement of operations.
<PAGE>
(c) If the information call for by Item 5A of this
Registration Statement is contained in the latest
annual report to shareholders, Registrant
undertakes to furnish each person to whom a
prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders,
upon request and without charge.
(d) The Registrant undertakes to call a meeting of
shareholders for the purpose of voting upon the
question of removal of one or more trustees, if
requested to do so by the holders of at least 10%
of the Registrant's outstanding shares, and will
assist communications among shareholders as set
forth within Section 16(c) of the 1940 Act.
<PAGE>
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SIGNATURES
- ------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment to the Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of Omaha,
and the State of Nebraska on the 13th day of June, 1997.
CLS ADVISORONE FUNDS
BY: /s/ Gary W. Lanzen
-----------------------
Gary W. Lanzen
Secretary/Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
SIGNATURE TITLE
/s/ W. Patrick Clarke* Chairman, President and Trustee
- ---------------------
W. Patrick Clarke
/s/ Gary W. Lanzen Secretary, Treasurer, Principal Financial
- ------------------- Officer, Principal Accounting Officer and
Gary W. Lanzen Trustee
/s/ Randal D. Skalla* Vice President and Trustee
- -------------------
Randal D. Skalla
/s/ Todd P. Clarke* Assistant Treasurer, Assistant Secretary
- -------------------- and Trustee
Todd P. Clarke
/s/ H. Reese Hansen* Trustee
- --------------------
H. Reese Hansen
/s/ L. Merill Bryan, Jr.* Trustee
- ------------------------
L. Merill Bryan, Jr.
/s/ Richard A. Zehnacker* Trustee
- ------------------------
Richard A. Zehnacker
*By: /s/ Gary W. Lanzen
--------------------
Gary W. Lanzen
Executed by Gary W. Lanzen on behalf
of those indicated pursuant to Powers of Attorney
June 13, 1997
CLS AdvisorOne Funds
9802 Nicholas Street
Suite 205
Omaha, NE 68114
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and sale from
time to time of an indefinite number of units of beneficial interest, par value
$0.10 per share (the "Shares"), of CLS AdvisorOne Funds (the "Trust"), a
Massachusetts business trust, in registration under the Securities Act of 1933
by a Registration Statement on Form N-1A (File No. 333-23459; 811-8095) as
amended from time to time (the "Registration Statement").
We have acted as counsel to the Trust since its inception, and we are familiar
with the actions taken by its Trustees to authorize the issuance of the Shares.
We have reviewed the Declaration of Trust, the By-laws, and the minute books of
the Trust, and such other certificates, documents and opinions of counsel as we
deem necessary for the purpose of this opinion.
In addition, we have reviewed the Trust's Notification of Registration on Form
N-8A under the Investment Company Act of 1940. We have reviewed the Trust's
Registration Statement, including all pre-effective amendments thereto, filed or
to be filed with the Securities and Exchange Commission.
In our review we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents purporting to be originals
(whether reviewed by us in original or in copy form), and the conformity to the
originals of all documents purporting to be copies.
We have assumed the appropriate action will be taken to register or qualify the
sale of the Shares under any applicable state and federal laws regulating sales
and offerings of securities.
Based upon the foregoing, we are of the opinion that:
1. The Trust is a business trust validly existing under the laws of the
Commonwealth of Massachusetts. The Trust is authorized under its
Declaration of Trust to issue an unlimited number of Shares in series
representing interests in The Amerigo Fund and The Clermont Fund, and in
such other series as the Trustees may hereafter duly authorize.
2. Upon the issuance of any Shares of any series of the Trust for payment
therefor as described in, and in accordance with the Registration Statement
and the Declaration of Trust and By-laws of the Trust, the Shares so issued
will be validly issued, fully paid and non-assessable, except that, as set
forth in the Registration Statement, shareholders of the Shares of the
Trust may under certain circumstances be held personally liable for its
obligations.
This opinion is intended only for your use in connection with the offering of
Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit 10 to the Trust's
Pre-Effective Amendment No. 1 to be filed with the Securities and Exchange
Commission and to the reference to our firm under the caption "Legal Counsel" in
the Prospectus filed as part of such Amendment.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
AUDITORS' CONSENT
The Board of Directors of
the CLS AdvisorOne Funds:
We consent to the use of our report included herein dated June 10, 1997 for the
CLS AdvisorOne Funds -- The Amerigo Fund and The Clermont Fund -- as of June 9,
1997 and to the reference to our firm under the heading "Auditor" in the
Statement of Additional Information.
KMPG Peat Marwick LLP
Columbus, Ohio
June 11, 1997
June 9, 1997
CLS AdvisorOne Funds
The Clermont Fund
14747 California Street
Omaha, NE 68154-1979
Ladies and Gentlemen:
With respect to our purchase from you of 5,000 shares of beneficial
interest, $.10 par value per share, of CLS AdvisorOne Funds' The Clermont Fund
(the "Fund") for a total purchase price of $50,000, we hereby advise you that we
are purchasing such shares for investment purposes only and not with a present
intention toward distribution, resale or redemption thereof.
We acknowledge and agree that the Fund will reduce the redemption proceeds
otherwise payable with regard to such shares by a portion of any unamortized
organization expenses of the Fund determined by the proportion of the number of
initial shares of beneficial interest of the Fund being redeemed to the total
number of initial shares of beneficial interest of the Fund then outstanding at
the time of such redemption, after taking into account any prior redemptions of
any of such initial shares.
Very truly yours,
Clarke Lanzen Skalla Investment Firm, Inc.
/s/ W. Patrick Clarke
- ----------------------
W. Patrick Clarke
President/CEO
<PAGE>
June 9, 1997
CLS AdvisorOne Funds
The Amerigo Fund
14747 California Street
Omaha, NE 68154-1979
Ladies and Gentlemen:
With respect to our purchase from you of 5,000 shares of beneficial
interest, $.10 par value per share, of CLS AdvisorOne Funds' The Amerigo Fund
(the "Fund") for a total purchase price of $50,000, we hereby advise you that we
are purchasing such shares for investment purposes only and not with a present
intention toward distribution, resale or redemption thereof.
We acknowledge and agree that the Fund will reduce the redemption proceeds
otherwise payable with regard to such shares by a portion of any unamortized
organization expenses of the Fund determined by the proportion of the number of
initial shares of beneficial interest of the Fund being redeemed to the total
number of initial shares of beneficial interest of the Fund then outstanding at
the time of such redemption, after taking into account any prior redemptions of
any of such initial shares.
Very truly yours,
Clarke Lanzen Skalla Investment Firm, Inc.
/s/ W. Patrick Clarke
- ----------------------
W. Patrick Clarke
President/CEO
