Blu Giant, LLC

 (COVER)

 
AdvisorOne Funds Semi-Annual Report

 

Table of Contents

 

Letter from the Chief Investment Officer 3
CLS Global Aggressive Equity Fund - Portfolio Summary 6
CLS Global Aggressive Equity Fund - Performance Update 7
CLS Global Diversified Equity Fund - Portfolio Summary 8
CLS Global Diversified Equity Fund - Performance Update 9
CLS Global Growth Fund - Portfolio Summary 10
CLS Global Growth Fund - Performance Update 11
CLS Growth and Income Fund - Portfolio Summary 12
CLS Growth and Income Fund - Performance Update 13
CLS Flexible Income Fund - Portfolio Summary 14
CLS Flexible Income Fund - Performance Update 15
CLS International Equity Fund - Portfolio Summary 16
CLS International Equity Fund - Performance Update 17
CLS Shelter Fund - Portfolio Summary 18
CLS Shelter Fund - Performance Update 19
Milestone Treasury Obligations Fund - Portfolio Summary 20
CLS Global Aggressive Equity Fund - Schedule of Investment 22
CLS Global Diversified Equity Fund - Schedule of Investments 24
CLS Global Growth Fund - Schedule of Investments 26
CLS Growth and Income Fund - Schedule of Investments 28
CLS Flexible Income Fund - Schedule of Investments 30
CLS International Equity Fund - Schedule of Investments 33
CLS Shelter Fund - Schedule of Investments 34
Milestone Treasury Obligations Fund - Schedule of Investments 35
Statements of Assets and Liabilities 36
Statements of Operations 40

1

 

AdvisorOne Funds Semi-Annual Report

 

Table of Contents, cont’d.

 

CLS Global Aggressive Equity Fund - Statements of Changes in Net Assets 42
CLS Global Diversified Equity Fund - Statements of Changes in Net Assets 42
CLS Global Growth Fund - Statements of Changes in Net Assets 43
CLS Growth and Income Fund - Statements of Changes in Net Assets 43
CLS Flexible Income Fund - Statements of Changes in Net Assets 44
CLS International Equity Fund - Statements of Changes in Net Assets 44
CLS Shelter Fund - Statements of Changes in Net Assets 45
Milestone Treasury Obligations Fund - Statements of Changes in Net Assets 45
CLS Global Aggressive Equity Fund - Financial Highlights 46
CLS Global Diversified Equity Fund - Financial Highlights 47
CLS Global Growth Fund - Financial Highlights 48
CLS Growth and Income Fund - Financial Highlights 49
CLS Flexible Income Fund - Financial Highlights 50
CLS International Equity Fund - Financial Highlights 51
CLS Shelter Fund - Financial Highlights 52
Milestone Treasury Obligations Fund - Financial Highlights 53
Notes to Financial Statements 55
Shareholder Expense Example 82

2

 

AdvisorOne Funds Semi-Annual Report

 

Letter from the Portfolio Management Team

 

Dear Shareholders:

 

In our semi-annual update, we can report the eight-year bull market in U.S. large-cap equities remains strong. Recent performance added to those positive returns, and markets around the world also participated in gains.

 

Over the six-month period that ended October 31, 2016, the overall U.S. market, as defined by the Russell 3000 (an index composed of the 3,000 largest U.S. stocks), gained 4.18%. The S&P 500 (an index of 500 large-capitalization companies widely used as a benchmark for larger companies) gained 4.06%, and the Russell 2000 (an index comprised of the 2,000 smallest companies on the Russell 3000 and used as a benchmark for smaller companies) gained 6.13%.

 

Overseas, equity markets were mixed. While the MSCI EAFE (an index of developed markets) had a slight loss of 0.16%, the MSCI EM (an index for emerging markets) was up more than 9.41%.

 

The Bloomberg Barclays U.S. Aggregate Bond Index (a proxy for U.S. investment-grade bond market) was up 1.51%.

 

All in all, it was a good six months for globally diversified portfolios.

 

Unlike last year at this time, the current environment plays into our style of investing. At CLS Investments (CLS), we strongly believe that Risk-Budgeted, global, balanced portfolios help investors succeed over time. We believe this basic approach makes sense for many investors.

 

The CLS Approach

 

Let’s break down our beliefs into a bit more detail as they inform our approach to portfolio management of the CLS AdvisorOne Funds.

 

1.Helping Investors Succeed

 

We believe Risk-Budgeted, global, balanced portfolios, along with clear and transparent communication, help investors achieve success. If portfolios behave as expected, investors are more likely to stay the course with their investment plans.

 

2.Global

 

We believe diversification across domestic and international markets should provide smoother returns and ultimately higher risk-adjusted performance than domestic-only portfolios over time.

3

 

AdvisorOne Funds Semi-Annual Report

 

3.Balanced

 

We believe multi-asset allocations — and managing the proper balance between assets depending on a portfolio’s mandate — works for investors. Again, smoother returns should translate into better investor experiences and results.

 

We also believe in the power of teamwork and discipline. All CLS-managed Funds are team-managed using disciplined processes that we believe are key to long-term success.

 

Investment Outlook

 

As active, multi-asset allocators, we build our various portfolios around the CLS Investment Themes. These Themes are approved by the CLS Investment Committee and guide our approach to managing Funds:

 

Smart Beta:

 

We expect lower U.S. stock market returns in the year(s) ahead and will therefore emphasize factor-based ETFs, otherwise known as smart beta ETFs. These ETFs have a rules-based approach to building a portfolio, which emphasizes a factor, such as value, growth, or high quality.

 

Factor-based ETFs capture the essence of active management but at a fraction of the cost. We believe this emphasis will enhance returns in the year(s) ahead. CLS is an industry leading user of smart beta ETFs, and this emphasis will continue.

 

In addition, we expect market volatility will increase in the year(s) ahead. Market volatility has been at historically low levels in recent years, and this usually sets the stage for increased volatility. We believe utilizing factor-based analysis will give us another tool to help manage risk.

 

International Opportunities:

 

Though we have seen a resurgence in emerging market equity returns in 2016, international markets have still significantly underperformed the U.S. stock market in recent years. Now, however, they have considerably better valuations, which in turn suggest better returns moving forward. As investors, those are the returns we need to build portfolios around.

 

In addition to valuations, yields, monetary policies, and reforms play greater roles in a low-growth world, and international markets are more likely to benefit from these factors than U.S. markets going forward.

4

 

AdvisorOne Funds Semi-Annual Report

 

Creative Diversification:

 

Given the low level of interest rates, we seek to be creative in how we diversify our equity-dominated portfolios. We can do this in two ways. First, we can be active in our fixed-income exposures. For instance, we can actively manage duration (interest-rate sensitivity), credit, and sector exposures. Currently, our portfolios are less interest-rate sensitive than the overall bond market, and our overall credit quality is higher than in years past. Second, we can use alternative asset class segments and strategies, which can include managed futures, hedge Fund strategies, and currencies. This could also mean increased exposure to commodities, which have been beaten down over the last several years (as a result, many commodities are at multi-year price lows).

 

In addition to these three established Investment Themes, the AdvisorOne Funds also share another theme: Global Value. In short, as global investors, we will tilt portfolios toward sectors and regions that appear to be relatively attractive compared to historical norms. Current examples include financial and natural resource stocks.

 

Thank you for your trust and confidence in managing your Funds.

 

Sincerely,

 

Portfolio Management Team

 

6749-NLD-11/14/2016
2655-CLS-11/11/2016
 

The AdvisorOne Funds are each a fund of funds, meaning they invest in underlying mutual funds and exchange traded funds (“Underlying Funds”). In some instances, it may be less expensive for an investor to invest in the Underlying Funds directly. There is also a risk that the investment advisors of those Underlying Funds may make investment decisions detrimental to the performance of the Funds or the Underlying Funds that may be more volatile than investments in other mutual funds. The Funds invest in Underlying Funds as well as equity, bond or derivative securities.

5

 

AdvisorOne Funds Semi-Annual Report
 
CLS Global Aggressive Equity Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS Global Aggressive Equity gained 5.22% over the six-month period ended October 31, 2016. The Fund has a Risk Budget of 110 (over time, it assumes 110% of the risk of a diversified equity portfolio).

 

The Fund outperformed its benchmark during this time frame. Strong performance from technology companies, specifically semiconductors and dividend-paying technology stocks, contributed to the outperformance. Positions in European equities, meanwhile, generally detracted from performance.

 

The largest portfolio tilts remain in technology and materials. Allocations in health care have been reduced in favor of financial services companies. Regionally, Europe and Australia remain overweight. Emerging Asian countries, such as China and India, also remain overweight.

 

Turnover for the Fund over the past six months was 14%.

 

*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIA CHART)

 

*Percentages based on Net Assets

 

Top Ten Portfolio Holdings*  
   
VanEck Vectors Morningstar Wide Moat ETF 8.82%
The Fund is a rules-based, equal weighted index intended to offer exposure to the 20 most attractively price companies with sustainable competitive advantages.
iShares PHLX Semiconductor ETF 7.36%
The Fund seeks to track the investment results of an index composed of U.S. equities in the semiconductor sector.
First Trust NASDAQ Technology Dividend Index Fund 7.02%
The Fund seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the NASDAQ Technology Dividend Index.
First Trust Dorsey Wright International Focus 5 ETF 6.39%
The Fund seeks to provide targeted exposure to the five First Trust sector and industry based ETFs that Dorsey, Wright & Associates (DWA) believes offer the greatest potential to outperform the other ETFs in the selection universe and that satisfy trading volume and liquidity requirements.
iShares Currency Hedged MSCI Japan ETF 5.70%
The Fund seeks to track the investment results of an index composed of large- and mid-capitalization Japanese equities while mitigating exposure to fluctuations between the value of the Japanese yen and the U.S. dollar.
iShares U.S. Medical Devices ETF 5.36%
The Fund seeks to track the investment results of an index composed of U.S. equities in the medical devices sector.
iShares U.S. Insurance ETF 5.34%
The Fund seeks to track the investment results of an index composed of U.S. equities in the insurance sector.
WisdomTree Europe Small Cap Dividend Fund 5.12%
The Fund seeks to track the investment results of dividend-paying small-cap companies in the European equity market.
ProShares Large Cap Core Plus 4.42%
The Fund seeks investment results that track the performance of the Credit Suisse 130/30 Large Cap Index.
Guggenheim MSCI Global Timber 4.17%
The Fund seeks investment results that correspond generally to the performance, before the fund’s fees and expenses, of the MSCI ACWI IMI Timber Select Capped Index.


6

 

AdvisorOne Funds Semi-Annual Report

 

CLS Global Aggressive Equity Fund - Performance Update

 

Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 5.22% 4.27% 3.90% 9.21% N/A 8.79% 10/1/09
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% N/A 13.11% 10/1/09

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS Global Aggressive Equity Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

 

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS Global Aggressive Equity Fund per the most recent prospectus was 1.93%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance over the periods shown above would have been lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

Performance of the risk budget benchmark shows how the Fund’s performance compares to an index with similar investment strategies and underlying holdings as the Fund. The risk budget benchmark consists of (i) 110% of a blended benchmark consisting of 60% of the Russell 3000® Index and 40% of the MSCI ACWI (ex-US). The MSCI ACWI (ex-US) is an index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets.

7

 

AdvisorOne Funds Semi-Annual Report

 

CLS Global Diversified Equity Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS Global Diversified Equity returned 3.84% for the six-month period ended October 31, 2016. The Fund has a Risk Budget of 100 (over time, it is approximately as risk as a diversified equity portfolio).

 

The Fund outperformed its benchmark during this time frame. Exposure to the domestic technology and financial sectors as well as exposure to emerging markets contributed to the outperformance. Exposure to European equities detracted from performance during the period.

 

Regarding our equity positioning among sectors, the largest sector tilt remains technology. Within regional positioning, the largest tilt remains Asia, both developed and emerging. Technology and Asian equities still continue to look attractive on a number of relative valuation, momentum, and Fundamental characteristics.

 

Turnover for the Fund over the last six months was 24%.

 

*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIA CHART)

 

*Percentages based on Net Assets

 

Top Ten Portfolio Holdings*

 

iShares Edge MSCI USA Quality Factor ETF 10.11%
The Fund seeks to track the investment results of an index that measures the performance of U.S. large- and mid-capitalization stocks as identified through three fundamental variables: return on equity, earnings variability and debt-to-equity.
SPDR S&P Emerging Markets Dividend ETF 9.30%
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® Emerging Markets Dividend Opportunities Index.
Technology Select Sector SPDR Fund 9.22%
The Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index.
Vanguard Dividend Appreciation ETF 8.63%
The Fund seeks to track the performance of the NASDAQ US Dividend Achievers Select Index.
JPMorgan Diversified Return International Equity ETF 7.65%
The Fund seeks to track the FTSE Developed ex North America Diversified Factor Index, which was developed in partnership between FTSE and JP MorganVanguard.
Vanguard FTSE Europe ETF 5.41%
The Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe.
iShares Global Energy ETF 4.02%
The Fund seeks to track the investment results of an index composed of global equities in the energy sector.
Vanguard FTSE Pacific ETF 3.91%
The Fund seeks to track the performance of the FTSE Developed Asia Pacific All Cap Index, which measures the investment return of stocks issued by companies located in the major markets of the Pacific region.
SPDR S&P Emerging Asia Pacific ETF 3.89%
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® Asia Pacific Emerging BMI Index.
PowerShares DB Commodity Index Tracking Fund 3.47%
The Fund seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Diversified Commodity Index Excess Return™ (DBIQ Opt Yield Diversified Comm Index ER) plus the interest income from the Fund’s holdings of primarily US Treasury securities and money market income less the Fund’s expenses.


8

 

AdvisorOne Funds Semi-Annual Report

 

CLS Global Diversified Equity Fund - Performance Update

 

Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 3.84% 2.29% 2.76% 7.78% 4.18% 5.39% 7/14/97
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% 6.76% 6.68% 7/14/97

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS Global Diversified Equity Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

  

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS Global Diversified Equity Fund per the most recent prospectus was 1.45%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance would be lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

Performance of the risk budget benchmark shows how the Fund’s performance compares to an index with similar investment strategies and underlying holdings as the Fund. The blended benchmark consists of 60% of the Russell 3000® Index and 40% of the MSCI ACWI (ex-US). The MSCI ACWI (ex-US) is an index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets.

9

 

AdvisorOne Funds Semi-Annual Report
 
CLS Global Growth Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS Global Growth returned 3.24% for the six-month period ended October 31, 2016. The Fund has a Risk Budget of 80 (over time, it is approximately 80% as risky as a diversified equity portfolio).

 

The Fund outperformed its benchmark during this time frame. Exposure to the technology and financial sectors as well as exposure to emerging markets contributed to the out performance. Meanwhile, exposure to European equities detracted from performance.

 

The largest sector tilts are technology and financials. Within regional positioning, the largest tilt remains emerging Asia and Latin America. Technology, financials, emerging Asia, and Latin America continue to look attractive on a number of relative valuation, momentum, and Fundamental characteristics.

 

Turnover for the Fund over the last six months was 4%.

 

 
*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIE CHART)

 

*Percentages based on Net Assets

 

Top Ten Portfolio Holdings*

 

First Trust NASDAQ Technology Dividend Index Fund 9.70%
The Fund seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the NASDAQ Technology Dividend Index.
iShares Edge MSCI Min Vol USA ETF 8.97%
The Fund seeks to track the investment results of an index composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market.
iShares Edge MSCI Min Vol EAFE ETF 8.36%
The Fund seeks to track the investment results of an index composed of developed market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed equity markets, excluding the U.S. and Canada.
iShares Edge MSCI USA Quality Factor ETF 8.21%
The Fund seeks to track the investment results of an index that measures the performance of U.S. large- and mid-capitalization stocks as identified through three fundamental variables: return on equity, earnings variability and debt-to-equity.
Financial Select Sector SPDR Fund 7.33%
The Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Financial Select Sector Index.
Columbia Emerging Markets Consumer ETF 6.99%
The Fund seeks investment results that correspond (before fees and expenses) to the price and yield performance of the Dow Jones Emerging Markets Consumer Titans 30 Index.
Deutsche X-trackers MSCI EAFE Hedged Equity ETF 6.76%
The Fund seeks investment results that correspond generally to the performance, before fees and expense, of the MSCI EAFE US Dollar Hedged Index.
SPDR Doubleline Total Return Tactical ETF 5.13%
The Fund seeks to maximize total return.
PowerShares Emerging Markets Sovereign Debt Portfolio 4.61%
The Fund will normally invest at least 80% of its total assets in securities that comprise the Index. The Index tracks the potential returns of a theoretical portfolio of liquid emerging markets US dollar-denominated government bonds issued by approximately 22 emerging-market countries.
PIMCO 0-5 Year High Yield Corporate Bond Index ETF 4.47%
The Fund tracks The BofA Merrill Lynch 0-5 Year US High Yield Constrained IndexSM, and aims to achieve the yield,volatility level, and low or negative correlations with other asset classes inherent in short maturity high yield.


10

 

AdvisorOne Funds Semi-Annual Report
 
CLS Global Growth Fund - Performance Update
 
Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 3.24% 2.01% 2.50% 6.83% 3.85% 3.74% 1/27/06
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% 6.76% 7.04% 1/27/06

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS Global Growth Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

 

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS Global Growth Fund per the most recent prospectus was 1.55%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance as shown above would have been lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

Performance of the risk budget benchmark shows how the Fund’s performance compares to an index with similar investment strategies and underlying holdings as the Fund. The risk budget benchmark consists of (i) 80% of a blended benchmark consisting of 60% of the Russell 3000® Index and 40% of the MSCI ACWI (ex-US), and (ii) 20% of the 1-3 month Treasury Bill index. The MSCI ACWI (ex-US) is an index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets. The 1-3 Month Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.

11

 

AdvisorOne Funds Semi-Annual Report
 
CLS Growth and Income Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS Growth and Income returned 2.84% for the six-month period ended October, 31, 2016. The Fund has a Risk Budget of 55 (over time, it is approximately 55% as risky as a diversified equity portfolio).

 

The Fund outperformed its benchmark during this time frame. Exposure to the technology sector and emerging markets contributed to the outperformance, while exposure to European equities detracted.

 

The largest sector tilt remains technology and energy. Within regional positioning, the largest tilt remains Asia, both developed and emerging, and Japan. Technology and Asian equities still continue to look attractive on a number of relative valuation, momentum, and fundamental characteristics.

 

The Fund’s interest-rate sensitivity was approximately equivalent to the overall bond market. The Fund is positioned to outperform if high-yield and emerging-market fixed income perform well, which was beneficial to performance for the six-month period.

 

Turnover for the Fund over the last six months was 8%.

 

 
*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIE CHART)

 

*Percentages based on Net Assets

 

Top Ten Portfolio Holdings*

 

PIMCO Total Return Active Exchange-Traded Fund 10.58%
The Fund is a diversified portfolio of high quality bonds that are actively managed in an effort to maximize return in a risk-controlled framework.
iShares TIPS Bond ETF 8.35%
The Fund seeks results that correspond generally to the price and yield performance, before fees and expenses, of the inflation-protected sector of the U.S. Treasury market as defined by the Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L).
iShares Edge MSCI USA Quality Factor ETF 7.53%
The Fund seeks to track the investment results of an index that measures the performance of U.S. large- and mid-capitalization stocks as identified through three fundamental variables: return on equity, earnings variability and debt-to-equity.
PowerShares Fundamental High Yield Corporate Bond Portfolio 7.31%
The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the RAFI®Bonds US High Yield 1-10 Index (the “Underlying Index”).
PowerShares Emerging Markets Sovereign Debt Portfolio 6.37%
The Fund is based on the DB Emerging Market USD Liquid Balanced Index (Index). The Fund will normally invest at least 90% of its total assets in securities that comprise the Index.
Vanguard Dividend Appreciation ETF 4.94%
The Fund seeks to track the performance of the NASDAQ US Dividend Achievers Select Index.
SPDR Doubleline Total Return Tactical ETF 4.54%
The Fund seeks to maximize total return.
iShares Edge MSCI Min Vol EAFE ETF 4.19%
The Fund seeks to track the investment results of an index composed of developed market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed equity markets, excluding the U.S. and Canada.
Fidelity Total Bond ETF 3.51%
The Fund seeks to provide a high level of current income. The fund normally invests at least 80% of its assets in debt securities of all types and repurchase agreements for those securities.
WisdomTree Managed Futures Strategy Fund 3.39%
The Fund seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad market equity or fixed income returns.


12

 

AdvisorOne Funds Semi-Annual Report
 
CLS Growth and Income Fund - Performance Update
 
Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 2.84% 4.44% 2.33% 5.33% 3.17% 3.47% 7/14/97
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% 6.76% 6.68% 7/14/97

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS Growth and Income Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

 

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS Growth and Income Fund per the most recent prospectus was 1.56%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance as shown above would have been lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

Performance of the risk budget benchmark shows how the Fund’s performance compares to an index with similar investment strategies and underlying holdings as the Fund. The risk budget benchmark consists of (i) 55% of a blended benchmark consisting of 60% of the Russell 3000® Index and 40% of the MSCI ACWI (ex-US), and (ii) 45% of the 1-3 month Treasury Bill index. The weightings against this benchmark are consistent with the risk level of the Fund and these indexes are utilized to reflect the Fund’s broad exposure to the global equity market. The MSCI ACWI (ex-US) is an index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets. The 1-3 Month Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.

13

 

AdvisorOne Funds Semi-Annual Report
 
CLS Flexible Income Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS Flexible Income returned 2.21% for the six-month period ended October 31, 2016. The Fund has a Risk Budget of 20 (over time, it is approximately 20% as risky as a diversified equity portfolio).

 

The Fund outperformed its benchmark during the time frame, with high-yield bonds, emerging market bonds, and global equities helping performance. Treasury bonds and

 

commodities detracted from performance during the period.

 

The Fund has increased exposure to senior floating-rate loans and value-oriented equities and reduced exposure to short-term municipal bonds, high-yield bonds, and low-volatility stocks.

 

In terms of sector positioning, the largest overweight remains to corporate bonds, both investment-grade and high-yield. The Fund also has notable overweights to municipal bonds, mortgage-backed bonds, and international bonds. The Fund is underweight to Treasury bonds. We expect short-term interest rates to continue to grind higher, and there are signs inflation is on the rise. This expectation has led to a modestly below-benchmark duration position for the Fund.

 

Turnover for the Fund over the last six months was 2%.

 

 
*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIE CHART)

 

*Percentages based on Net Assets

 

Top Ten Portfolio Holdings*

 

PIMCO Enhanced Short Maturity Active ETF 8.41%
The Fund seeks maximum current income, consistent with preservation of capital and daily liquidity.
SPDR Doubleline Total Return Tactical ETF 8.21%
The Fund seeks to maximize total return.
PowerShares Senior Loan Portfolio 5.90%
The Fund seeks investment results that generally correspond to the price and yield of S&P/LSTA U.S. Leverages Loan 100 Index.
iShares Core U.S. Aggregate Bond ETF 5.35%
The Fund seeks to track the investment results of an index composed of the total U.S. investment-grade bond market.
iShares Intermediate Credit Bond ETF 5.30%
The Fund seeks to track the investment results of an index composed of U.S. dollar-denominated, investment-grade corporate, sovereign, supranational, local authority and non-U.S. agency bonds with remaining maturities between one and ten years.
iShares TIPS Bond ETF 4.61%
The Fund seeks results that correspond generally to the price and yield performance, before fees and expenses, of the inflation-protected sector of the U.S. Treasury market as defined by the Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L).
iShares iBoxx $ High Yield Corporate Bond ETF 4.61%
The Fund seeks investment results that correspond generally to the price and yield performance of the U.S. dollar high yield corporate bond market as defined by the iBoxx $ Liquid High Yield Index.
Vanguard Intermediate-Term Corporate Bond ETF 4.44%
The Fund seeks to track the performance of a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity.
Vanguard Total Bond Market ETF 4.08%
The Fund seeks to track the performance of a broad, market-weighted bond index.
PIMCO Total Return Active ETF 3.40%
The Fund is a diversified portfolio of high quality bonds that is actively managed in an effort to maximize return in a risk-controlled framework.


14

 

AdvisorOne Funds Semi-Annual Report
 
CLS Flexible Income Fund - Performance Update
 
Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 2.21% 4.31% 2.12% 2.41% N/A 3.18% 10/1/09
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% N/A 13.11% 10/1/09
Bloomberg Barclays US Aggregate Bond Index 1.51% 4.37% 3.48% 2.90% N/A 3.89% 10/1/09

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS Flexible Income Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

 

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS Flexible Income Fund per the most recent prospectus was 1.24%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance as shown above would have been lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Barclays Aggregate Bond Index is a market-capitalization-weighted index that covers the USD-denominated, investment-grade (rated Baa3 or above by Moody’s), fixed-rate, and taxable areas of the bond market. Prior to August 24, 2016, the index was known as Barclays Aggregate Bond Index.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

Performance of the risk budget benchmark shows how the Fund’s performance compares to an index with similar investment strategies and underlying holdings as the Fund. The risk budget benchmark consists of (i) 20% of a blended benchmark consisting of 60% of the Russell 3000® Index and 40% of the MSCI ACWI (ex-US), and (ii) 80% of the 1-3 month Treasury Bill index. The MSCI ACWI (ex-US) is an index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets. The 1-3 Month Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.

15

 

AdvisorOne Funds Semi-Annual Report
 
CLS International Equity Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS International Equity generated a return 1.67% for the six-month period ended October 31, 2016. The Fund consists of primarily international equities and is not Risk Budgeted although it is managed with risk considerations and a focus on delivering higher incremental-income relative to its benchmark. The portfolio management methodology is quantitatively driven through the use of fundamental risk factors.

 

The Fund trailed its benchmark during this time frame, primarily due to an overweight to frontier market stocks and exposure to the minimum volatility factor. Individual country allocations, primarily within Asia, and value factor exposures helped performance.

 

At the end of October, the Fund continues to be overweight to emerging markets, both traditional and frontier markets. The Fund is notably underweight to developed Europe. The factor allocation has shifted from minimum volatility to value.

 

Turnover for the Fund over the last six months was approximately 85%.

 

 
*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIE CHART)

 

*Percentages based on Net Assets

 

Top Ten Portfolio Holdings*

 

iShares MSCI EAFE Value ETF 14.33%
The Fund seeks to track the investment results of an index composed of developed market equities, excluding the U.S. and Canada, that exhibit value characteristics.
iShares International Select Dividend ETF 13.89%
The Fund seeks to track the investment results of an index composed of relatively high dividend paying equities in non-U.S. developed markets.
PowerShares FTSE RAFI Emerging Markets Portfolio 13.63%
The Fund is based on the FTSE RAFI Emerging Markets Index (Index). The Fund will normally invest at least 90% of its total assets in securities that comprise the Index and American Depository Receipts (ADRs) based on the securities in the Index. The Index is designed to track the performance of the largest Emerging Market equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends.
iShares Edge MSCI Min Vol Japan ETF 11.35%
The Fund seeks to track the investment results of an index composed of Japanese equities that, in the aggregate, have lower volatility charachteristics relative to the broader Japanese equity markets.
iShares Edge MSCI Min Vol EAFE ETF 5.67%
The Fund seeks to track the investment results of an index composed of developed market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed equity markets, excluding the U.S. and Canada.
iShares Edge MSCI Min Vol Emerging Markets ETF 5.36%
The Fund seeks to track the investment results of an index composed of emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader emerging equity markets.
iShares MSCI Italy Capped ETF 5.27%
The Fund seeks to track the investment results of an index composed of Italian equities.  
iShares MSCI Taiwan ETF 5.10%
The Fund seeks to track the investment results of an index composed of Taiwanese equities.
Global X MSCI Colombia ETF 4.97%
The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Colombia Capped Index.
iShares MSCI Israel Capped ETF 4.57%
The Fund seeks to track the investment results of a broad-based index composed of Israeli equities.


16

 

AdvisorOne Funds Semi-Annual Report
 
CLS International Equity Fund - Performance Update
 
Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 1.67% 5.11% 1.96% 5.22% 2.95% 3.09% 4/19/06
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% 6.76% 6.89% 4/19/06
MSCI ACWI (ex-US) 2.01% 0.22% (1.49)% 3.64% 1.61% 1.93% 4/19/06

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS International Equity Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

 

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS International Equity Fund per the most recent prospectus was 2.66%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance as shown above would have been lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

The MSCI ACWI (ex-US) is a market-capitalization weighted index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets.

17

 

AdvisorOne Funds Semi-Annual Report
 
CLS Shelter Fund - Portfolio Summary

 

Portfolio Commentary

 

CLS Shelter returned 3.52% for the six-month period ended October 31, 2016. The Fund has a risk-based benchmark (75 percent of a blended benchmark consisting of 80 percent of the Russell 3000 Index (composed of the 3,000 largest U.S. stocks) and 20 percent of the MSCI ACWI (ex-US) (a benchmark for international stocks), and 25 percent of the 1-3 month Treasury Bill index (an index of very short-term government debt securities)).

 

During this time frame, upward-trending markets kept the Fund invested mostly in a diversified portfolio of stocks. The protected portion of the allocation peaked at 35% and was frequently below that level. Market declines were relatively modest, so there were no moves to Treasury bills.

 

The Fund began the period with 25% invested in reduced volatility and 75% in diversified stocks. It stayed at those levels until a downturn in late June pushed the protection allocation to 35%. Markets rallied from that point and the Fund moved to fully invested status in early August. This marked the first time in nearly one year that the Fund had no allocation to protection assets. A slight dip in early September pushed the Fund into 5% protection allocation, where it generally remained for the next six weeks.

 

The protection allocation being lower than normal helped performance. Value stocks were particularly beneficial to the portfolio, and emerging market stocks also contributed to performance. Diversified stocks rose and reduced-volatility stocks lagged the benchmark.

 

Turnover for the Fund over the last six months was 127%.

 

 
*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIE CHART)

 

*Percentages based on Net Assets

 

Top Portfolio Holdings*

 

iShares Edge MSCI USA Quality Factor ETF 20.00%
The Fund seeks to track the investment results of an index that measures the performance of U.S. large- and mid-capitalization stocks as identified through three fundamental variables: return on equity, earnings variability and debt-to-equity.
Guggenheim S&P 500 Pure Value ETF 15.20%
The Fund seeks to replicate as closely as possible, before fees and expenses, the performance of the S&P 500 Pure Value Index.
iShares Edge MSCI USA Value Factor ETF 15.11%
The Fund seeks to track the performance of an index that measures the performance of U.S. large- and mid-capitalization stocks with value characteristics and relatively lower valuations, before fees and expenses.
Guggenheim S&P 500 Equal Weight ETF 13.61%
The Fund seeks to replicate as closely as possible the performance of the S&P 500 Equal Weight Index, before fees and expenses, on a daily basis.
iShares Core MSCI Emerging Markets ETF 10.05%
The Fund seeks to track the investment results of an index composed of large-, mid- and small-capitalization emerging market equities.
iShares Core MSCI EAFE ETF 9.98%
The Fund seeks to track the investment results of an index composed of large-, mid- and small-capitalization developed market equities, excluding the U.S. and Canada.
PowerShares S&P 500 Low Volatility Portfolio 5.05%
The Fund will invest at least 90% of its total assets in common stocks that comprise the S&P 500 Index.
iShares MSCI ACWI ETF 5.04%
The Fund seeks to track the investment results of an index composed of large and mid-capitalization developed and emerging market equities.
Deutsche X-trackers MSCI EAFE Hedged Equity ETF 5.01%
The Fund seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EAFE US Dollar Hedged Index.


18

 

AdvisorOne Funds Semi-Annual Report
 
CLS Shelter Fund - Performance Update
 
Annualized Total Returns as of October 31, 2016

 

            Since  
      3 Year 5 Year 10 Year Inception Inception
  6 Months* 1 Year (Annualized) (Annualized) (Annualized) (Annualized) Date
Class N Shares1 3.52% 4.16% 5.02% 6.16% N/A 4.52% 12/30/09
Russell 3000® Index 4.18% 4.24% 8.13% 13.35% N/A 12.04% 12/30/09

 

*Figure is not annualized.

 

1Class N Shares are not subject to an initial sales charge or a CDSC.

 

Growth of a $10,000 Investment

 

This chart illustrates a comparison of a hypothetical investment of $10,000 in the CLS Shelter Fund (assuming reinvestment of all dividends and distributions) versus the Fund’s benchmark index.

 

(LINE GRAPH)

 

 

 

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The Fund’s total annual operating expenses, including underlying fund expenses, for the CLS Shelter Fund per the most recent prospectus was 1.42%. Performance results reflect a contractual fee waiver by the investment advisor as described in the prospectus of the Fund. The Fund’s performance shown above would have been lower had the advisor not waived fees and/or reimbursed expenses. For performance information current to the most recent month-end, please call toll-free 1-866-811-0225.

 

The Russell 3000® Index is a market-capitalization-weighted index that measures 98% of the investable U.S. equity market.

 

Performance of the risk based benchmark shows how the Fund’s performance compares to an index with similar investment strategies and underlying holdings as the Fund. The risk based benchmark consists of (i) 75% of a blended benchmark consisting of 80% of the Russell 3000® Index and 20% of the MSCI ACWI (ex-US), and (ii) 25% of the 1-3 month Treasury Bill index. The MSCI ACWI (ex-US) is an index that provides a broad measure of stock performance throughout the world, with the exception of U.S.-based equities. The index includes both developed and emerging markets. The 1-3 Month Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.

19

 

AdvisorOne Funds Semi-Annual Report
 
Milestone Treasury Obligations Fund - Portfolio Summary

 

Portfolio Commentary

 

During the past six months, the Milestone Treasury Obligations Fund focused on its conservative investment philosophy and management discipline. We are proud to provide this semi-annual report which highlights the results of our conservative, compliance-driven investment philosophy.

 

As we enter 2017, we remain committed to our mission and values. We look forward to continuing to work in partnership with you all to address your liquidity objectives and cash management priorities. We will continue to explore new cash management capabilities in direct response to requests from both current and prospective investors.

 

 
*Based on total net asset value as of October 31, 2016. Portfolio holdings are subject to change and should not be a recommendation to buy individual securities. Concentrating in a small number of investments increases the Fund’s risk because each investment has a greater effect on the Fund’s performance.

 

You cannot invest directly in an index or benchmark.

Portfolio Composition*

 

(PIE CHART)

 

*Percentages based on Net Assets

 

Top Portfolio Holdings*

 

U.S. Treasury Bills 41.5%
A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).
Repurchase Agreements 64.8%
A form of short-term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day.

 

All data is as of April 30, 2016. The Portfolio breakdown is expressed as a percentage of total investments and may vary over time.

 

Please refer to the Portfolio of Investments for a detailed analysis of the Fund’s holdings.



20

 

AdvisorOne Funds Semi-Annual Report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THIS PAGE INTENTIONALLY LEFT BLANK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Global Aggressive Equity Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Equity Funds - 99.95%          
Alternative - 6.78%          
ProShares Large Cap Core Plus +   82,000   $4,279,809 
ProShares Short VIX Short-Term Futures ETF * +   13,000    933,660 
WisdomTree Managed Futures Strategy Fund *   32,500    1,354,925 
         6,568,394 
Developed International - 30.09%          
Deutsche X-trackers MSCI Europe Hedged Equity ETF   111,000    2,864,910 
First Trust Dorsey Wright International Focus 5 ETF +   343,000    6,191,150 
iShares Currency Hedged MSCI Japan ETF   214,000    5,521,200 
iShares International Select Dividend ETF +   99,000    2,880,900 
iShares MSCI Australia ETF +   142,000    2,879,760 
iShares MSCI Europe Financials ETF +   115,000    2,041,250 
iShares MSCI Ireland Capped ETF   50,000    1,811,125 
WisdomTree Europe SmallCap Dividend Fund   93,000    4,962,480 
         29,152,775 
Emerging Markets - 5.67%          
Deutsche X-trackers Harvest CSI 300 China A-Shares ETF   39,000    960,960 
iShares MSCI India ETF   55,304    1,606,028 
SPDR S&P Emerging Asia Pacific ETF   36,000    2,924,280 
         5,491,268 
Global Equity - 5.67%          
Cambria Global Value ETF +   70,100    1,408,309 
Fidelity MSCI Energy Index ETF +   95,000    1,816,400 
Vanguard Total World Stock ETF +   38,000    2,266,700 
         5,491,409 
Large Cap Core - 15.83%          
First Trust NASDAQ Technology Dividend Index Fund +   237,000    6,799,530 
VanEck Vectors Morningstar Wide Moat ETF +   257,000    8,542,680 
         15,342,210 
Large Cap Growth - 9.07%          
iShares PHLX Semiconductor ETF +   64,000    7,127,040 
iShares U.S. Oil Equipment & Services ETF +   44,000    1,663,200 
         8,790,240 
Large Cap Value - 5.04%          
First Trust Capital Strength ETF +   44,000    1,724,800 
iShares U.S. Financial Services ETF +   35,000    3,154,550 
         4,879,350 
Small/Mid Cap Core - 3.14%          
Guggenheim S&P Spin-Off ETF   74,000    3,042,140 
           
Small/Mid Cap Growth - 8.73%          
First Trust US IPO Index Fund   48,000    2,512,205 
iShares U.S. Medical Devices ETF +   38,500    5,192,880 
SPDR S&P Biotech ETF +   13,500    758,025 
         8,463,110 
Small/Mid Cap Value - 9.93%          
Guggenheim MSCI Global Timber   167,000    4,043,070 
iShares U.S. Insurance ETF ^ +   97,500    5,173,350 
US Global Jets ETF   17,000    408,000 
         9,624,420 
Total Equity Funds (cost $83,641,395)        96,845,316 

 22Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Global Aggressive Equity Fund (Unaudited) (Continued)

October 31, 2016

 

   Shares   Value ($) 
Money Market Funds - 0.33%          
Short-Term Cash - 0.33%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% **   320,823   $320,823 
Total Money Market Funds (cost $320,823)        320,823 
           
Collateral for Securities Loaned - 20.12%          
Dreyfus Government Cash Management Institutional Class, 0.28% **   4,496,057    4,496,057 
Milestone Treasury Obligations Fund Institutional Class, 0.16% ** ^   15,000,000    15,000,000 
Total Collateral for Securities Loaned (cost $19,496,057)        19,496,057 
           
Total Investments (cost $103,458,275) (a) - 120.41%       $116,662,196 
Liabilities Less Other Assets - Net - (20.40)%        (19,763,735)
NET ASSETS - 100.00%       $96,898,461 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $18,973,269 at October 31, 2016.

 

*Non-income producing security.

 

**Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

ETF - Exchange Traded Fund

 

IPO - Initial Public Stock Offering

 

MSCI - Morgan Stanley Capital International

 

PHLX - Philadelphia Stock Exchange

 

SPDR - Standard & Poors’ Depositary Receipts

 23Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Global Diversified Equity Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Equity Funds - 98.66%          
Commodity Funds - 3.47%          
PowerShares DB Commodity Index Tracking Fund * +   959,000   $14,346,640 
           
Developed International - 26.44%          
First Trust Europe AlphaDEX Fund   180,000    5,142,600 
First Trust STOXX European Select Dividend Index Fund   423,000    4,881,420 
iShares Europe ETF   204,900    7,812,837 
iShares MSCI Europe Financials ETF   365,000    6,478,750 
iShares MSCI Italy Capped ETF +   122,000    1,376,160 
iShares MSCI Japan ETF   842,500    10,640,775 
iShares MSCI Spain Capped ETF +   70,000    1,921,500 
iShares MSCI United Kingdom ETF +   24,800    372,000 
JPMorgan Diversified Return International Equity ETF ^ +   630,000    31,600,800 
Vanguard FTSE Europe ETF +   475,000    22,329,750 
Vanguard FTSE Pacific ETF +   269,000    16,145,380 
Vanguard International Dividend Appreciation ETF +   9,000    492,120 
         109,194,092 
Emerging Markets - 19.16%          
Goldman Sachs ActiveBeta Emerging Markets Equity ETF +   489,000    13,872,930 
iShares Edge MSCI Minimum Volatility Emerging Markets ETF   90,000    4,754,700 
iShares MSCI Russia Capped ETF   295,000    4,292,250 
Morgan Stanley China A Share Fund, Inc.   97,967    1,768,304 
SPDR S&P Emerging Asia Pacific ETF   198,000    16,083,540 
SPDR S&P Emerging Markets Dividend ETF ^ +   1,375,000    38,390,000 
         79,161,724 
           
Global Equity - 7.87%          
Cambria Global Value ETF +   28,000    562,520 
iShares Global 100 ETF +   142,200    10,541,286 
iShares Global Energy ETF +   513,000    16,600,680 
iShares Global Healthcare ETF +   51,000    4,786,860 
         32,491,346 
           
Large Cap Core - 8.63%          
Vanguard Dividend Appreciation ETF +   433,016    35,641,547 
           
Large Cap Growth - 25.00%          
Fidelity MSCI Information Technology Index ETF +   71,000    2,576,590 
iShares Edge MSCI USA Quality Factor ETF   631,840    41,770,942 
iShares Russell 1000 Growth ETF +   139,900    14,233,426 
SPDR Technology Select Sector Fund   803,000    38,078,260 
Vanguard Information Technology ETF +   55,000    6,584,600 
         103,243,818 
           
Large Cap Value - 4.42%          
SPDR Financial Select Sector Fund   613,100    12,102,594 
SPDR S&P Global Natural Resources ETF   157,500    6,155,100 
         18,257,694 
           
Small/Mid Cap Core - 0.15%          
Royce Value Trust, Inc. +   52,040    621,358 
           
Small/Mid Cap Value - 3.52%          
First Trust Financial AlphaDEX Fund +   431,000    10,378,480 
Guggenheim S&P Smallcap 600 Pure Value ETF +   68,528    4,149,371 
         14,527,851 
Total Equity Funds (cost $354,624,785)        407,486,070 

 24Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Global Diversified Equity Fund (Unaudited) (Continued)

October 31, 2016

 

   Shares   Value ($) 
Money Market Funds - 1.25%          
Short-Term Cash - 1.25%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% **   5,167,033   $5,167,033 
Total Money Market Funds (cost $5,167,033)        5,167,033 
           
Collateral for Securities Loaned - 12.02%          
Dreyfus Government Cash Management Institutional Class, 0.28% **   14,648,300    14,648,300 
Milestone Treasury Obligations Fund Institutional Class, 0.16% ** ^   35,000,000    35,000,000 
Total Collateral for Securities Loaned (cost $49,648,300)        49,648,300 
           
Total Investments (cost $409,440,118) (a) - 111.93%       $462,301,403 
Liabilities Less Other Assets - Net - (11.93)%        (49,288,553)
NET ASSETS - 100.00%       $413,012,850 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $48,489,469 at October 31, 2016.

 

*Non-income producing security.

 

**Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

DB - Deutsche Bank

 

ETF - Exchange Traded Fund

 

FTSE - Financial Times Stock Exchange

 

MSCI - Morgan Stanley Capital International

 

SPDR - Standard & Poors’ Depositary Receipts

 25Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Global Growth Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Bond Funds - 15.65%          
High Yield Bonds - 4.47%          
PIMCO 0-5 Year High Yield Corporate Bond Index ETF   104,700   $10,307,715 
           
Intermediate/Long-Term Bonds - 5.13%          
SPDR Doubleline Total Return Tactical ETF   237,551    11,846,669 
           
International Bond - 6.05%          
PowerShares Emerging Markets Sovereign Debt Portfolio +   358,152    10,629,951 
Vanguard Total International Bond ETF +   60,000    3,316,800 
         13,946,751 
           
Total Bond Funds (cost $34,310,611)        36,101,135 
           
Equity Funds - 84.12%          
Commodity Funds - 2.71%          
PowerShares DB Commodity Index Tracking Fund * +   417,000    6,238,320 
           
Developed International - 20.08%          
Deutsche X-trackers MSCI EAFE Hedged Equity ETF +   586,000    15,599,320 
iShares Edge MSCI Minimum Volatility EAFE ETF +   300,000    19,287,000 
iShares MSCI Europe Financials ETF +   136,292    2,419,183 
iShares MSCI Eurozone ETF +   156,000    5,325,840 
WisdomTree Japan Hedged Equity Fund +   82,000    3,702,300 
         46,333,643 
Emerging Markets - 11.22%          
Columbia Emerging Markets Consumer ETF +   660,000    16,117,200 
iShares Edge MSCI Minimum Volatility Emerging Markets ETF   162,000    8,558,460 
PowerShares FTSE RAFI Emerging Markets Portfolio   65,000    1,219,400 
         25,895,060 
Global Equity - 9.47%          
FlexShares STOXX Global Broad Infrastructure Index Fund +   130,000    5,666,700 
iShares Global Energy ETF   224,600    7,268,056 
iShares Global Healthcare ETF   95,000    8,916,700 
         21,851,456 
Large Cap Core - 9.70%          
First Trust NASDAQ Technology Dividend Index Fund +   780,000    22,378,200 
           
Large Cap Growth - 11.91%          
iShares Edge MSCI USA Quality Factor ETF   286,500    18,940,515 
iShares Russell Top 200 Growth ETF +   155,500    8,535,395 
         27,475,910 

 26Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Global Growth Fund (Unaudited) (Continued)

October 31, 2016

 

   Shares   Value ($) 
Large Cap Value - 17.43%          
Guggenheim S&P 500 Pure Value ETF   50,000   $2,615,500 
iShares Edge MSCI Minimum Volatility USA ETF +   468,500    20,698,330 
SPDR Financial Select Sector Fund   856,450    16,906,323 
         40,220,153 
Real Estate - 1.60%          
SPDR Real Estate Select Sector Fund   119,171    3,688,343 
           
Total Equity Funds (cost $178,490,708)        194,081,085 
           
Money Market Funds - 0.35%          
Short-Term Cash - 0.35%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% **   813,634    813,634 
Total Money Market Funds (cost $813,634)        813,634 
           
Collateral for Securities Loaned - 14.67%          
Dreyfus Government Cash Management Institutional Class, 0.28% **   5,945,356    5,945,356 
Milestone Treasury Obligations Fund Institutional Class, 0.16% ** ^   27,900,000    27,900,000 
Total Collateral for Securities Loaned (cost $33,845,356)        33,845,356 
           
Total Investments (cost $247,460,309) (a) - 114.79%       $264,841,210 
Liabilities Less Other Assets - Net - (14.79)%        (34,127,156)
NET ASSETS - 100.00%       $230,714,054 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $32,779,873 at October 31, 2016.

 

*Non-income producing security.

 

**Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

DB - Deutsche Bank

 

EAFE - Europe, Australasia, Far East

 

ETF - Exchange Traded Fund

 

MSCI - Morgan Stanley Capital International

 

SPDR - Standard & Poors’ Depositary Receipts

 27Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Growth and Income Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Bond Funds - 44.66%          
High Yield Bonds - 9.95%          
PowerShares Fundamental High Yield Corporate Bond Portfolio   1,356,853   $25,346,014 
SPDR Blackstone / GSO Senior Loan ETF   154,816    7,324,345 
VanEck Vectors International High Yield Bond ETF +   75,500    1,832,898 
         34,503,257 
Intermediate/Long-Term Bonds - 26.97%          
Fidelity Total Bond ETF ^ +   240,000    12,162,360 
iShares TIPS Bond ETF   249,900    28,953,414 
PIMCO Total Return Active ETF   343,114    36,690,896 
SPDR Doubleline Total Return Tactical ETF +   315,864    15,752,138 
         93,558,808 
International Bond - 6.63%          
PowerShares Emerging Markets Sovereign Debt Portfolio   743,958    22,080,674 
Templeton Global Income Fund +   146,395    928,144 
         23,008,818 
Short-Term Bonds - 1.11%          
PIMCO Enhanced Short Maturity Active ETF +   37,856    3,842,384 
           
Total Bond Funds (cost $150,344,818)        154,913,267 
           
Equity Funds - 54.62%          
Alternative - 3.39%          
WisdomTree Managed Futures Strategy Fund * ^   281,932    11,753,745 
           
Balanced - 0.32%          
PowerShares CEF Income Composite Portfolio +   50,000    1,110,000 
           
Commodity Funds - 2.95%          
PowerShares DB Commodity Index Tracking Fund * +   685,000    10,247,600 
           
Developed International - 13.11%          
iShares Edge MSCI Minimum Volatility EAFE ETF   225,888    14,522,340 
iShares MSCI Europe Financials ETF   259,000    4,597,250 
iShares MSCI Eurozone ETF +   133,100    4,544,034 
iShares MSCI Japan ETF   765,000    9,661,950 
iShares MSCI Pacific ex Japan ETF +   38,000    1,559,140 
Vanguard FTSE Europe ETF   225,000    10,577,250 
         45,461,964 
Emerging Markets - 9.01%          
iShares Core MSCI Emerging Markets ETF +   175,200    7,908,528 
iShares Edge MSCI Minimum Volatility Emerging Markets ETF   72,100    3,809,043 
iShares MSCI Russia Capped ETF   150,000    2,182,500 
Morgan Stanley China A Share Fund, Inc. +   78,689    1,420,336 
PowerShares FTSE RAFI Emerging Markets Portfolio +   502,800    9,432,528 
SPDR S&P Emerging Asia Pacific ETF +   80,000    6,498,400 
         31,251,335 
Global Equity - 2.45%          
FlexShares Global Upstream Natural Resources Index Fund +   250,000    6,860,000 
iShares Global Healthcare ETF +   17,500    1,642,550 
         8,502,550 

 28Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Growth and Income Fund (Unaudited) (Continued)

October 31, 2016

 

   Shares   Value ($) 
Large Cap Core - 4.94%          
Vanguard Dividend Appreciation ETF   208,300   $17,145,173 
           
Large Cap Growth - 14.04%          
iShares Edge MSCI USA Quality Factor ETF   395,113    26,120,920 
Powershares QQQ Trust Series 1   44,100    5,159,259 
SPDR Technology Select Sector Fund   209,000    9,910,780 
VanEck Vectors Gold Miners ETF +   140,000    3,432,800 
Vanguard Information Technology ETF +   34,000    4,070,480 
         48,694,239 
Large Cap Value - 3.95%          
SPDR Energy Select Sector Fund   93,000    6,381,660 
SPDR Financial Select Sector Fund +   370,607    7,315,782 
         13,697,442 
Real Estate - 0.46%          
SPDR Real Estate Select Sector Fund +   51,567    1,595,999 
           
Total Equity Funds (cost $169,113,755)        189,460,047 
           
Money Market Funds - 0.82%          
Short-Term Cash - 0.82%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% **   2,848,355    2,848,355 
Total Money Market Funds (cost $2,848,355)        2,848,355 
           
Collateral for Securities Loaned - 6.24%          
Dreyfus Government Cash Management Institutional Class, 0.28% **   14,325,307    14,325,307 
Milestone Treasury Obligations Fund Institutional Class, 0.16% ** ^   7,300,000    7,300,000 
Total Collateral for Securities Loaned (cost $21,625,307)        21,625,307 
           
Total Investments (cost $343,932,235) (a) - 106.34%       $368,846,976 
Liabilities Less Other Assets - Net - (6.34)%        (21,984,202)
NET ASSETS - 100.00%       $346,862,774 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $21,119,494 at October 31, 2016.

 

*Non-income producing security.

 

**Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

CEF - Closed-End Fund

 

DB - Deutsche Bank

 

EAFE - Europe, Australasia, Far East

 

ETF - Exchange Traded Fund

 

FTSE - Financial Times Stock Exchange

 

MSCI - Morgan Stanley Capital International

 

RAFI - Research Affiliates

 

SPDR - Standard & Poors’ Depositary Receipts

 

TIPS - Treasury Inflation-Protected Securities

 29Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Flexible Income Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Bond Funds - 84.90%          
High Yield Bonds - 19.11%          
BlackRock Corporate High Yield Fund, Inc.   78,416   $824,936 
iShares iBoxx $ High Yield Corporate Bond ETF +   101,080    8,694,902 
PIMCO 0-5 Year High Yield Corporate Bond Index ETF   56,295    5,542,243 
PowerShares Senior Loan Portfolio   479,800    11,121,764 
SPDR Blackstone / GSO Senior Loan ETF   82,500    3,903,075 
SPDR Bloomberg Barclays Short Term High Yield Bond ETF +   216,775    5,956,977 
         36,043,897 
Intermediate/Long-Term Bonds - 43.90%          
iShares 3-7 Year Treasury Bond ETF   41,200    5,175,544 
iShares 20+ Year Treasury Bond ETF +   11,000    1,443,750 
iShares Core U.S. Aggregate Bond ETF +   90,626    10,086,674 
iShares Intermediate Credit Bond ETF   90,380    10,002,355 
iShares National Muni Bond ETF +   31,275    3,485,912 
iShares TIPS Bond ETF +   75,048    8,695,061 
iShares US Credit Bond ETF   33,450    3,756,435 
PIMCO Total Return Active ETF   59,909    6,406,369 
SPDR Doubleline Total Return Tactical ETF   310,414    15,480,346 
Vanguard Intermediate-Term Corporate Bond ETF   94,483    8,367,414 
Vanguard Mortgage-Backed Securities ETF +   41,000    2,201,700 
Vanguard Total Bond Market ETF +   92,385    7,685,508 
         82,787,068 
International Bond - 7.95%          
iShares Emerging Markets Local Currency Bond ETF * +   52,400    2,359,048 
iShares JP Morgan USD Emerging Markets Bond ETF   50,350    5,774,642 
PowerShares Emerging Markets Sovereign Debt Portfolio   112,561    3,340,810 
SPDR Citi International Government Inflation-Protected Bond ETF +   63,675    3,517,407 
         14,991,907 
Short-Term Bonds - 13.94%          
PIMCO 1-5 Year U.S. TIPS Index ETF   71,372    3,759,163 
PIMCO Enhanced Short Maturity Active ETF   156,167    15,850,950 
SPDR Nuveen Barclays Short Term Municipal Bond ETF   42,533    2,071,357 
Vanguard Short-Term Corporate Bond ETF +   57,375    4,608,360 
         26,289,830 
Total Bond Funds (cost $160,407,754)        160,112,702 
           
Equity Funds - 8.60%          
Commodity - 0.79%          
United States Commodity Index Fund *   35,500    1,491,000 
           
Currency - 1.19%          
PowerShares DB US Dollar Index Bullish Fund * +   88,000    2,236,960 
           
Developed International - 0.78%          
iShares MSCI EAFE ETF   12,500    722,750 
iShares MSCI EAFE Value ETF +   16,000    739,520 
         1,462,270 
Emerging Markets - 0.24%          
Vanguard FTSE Emerging Markets ETF   12,000    453,000 
           
Large Cap Core - 1.77%          
iShares Core S&P 500 ETF   15,660    3,346,386 

 30Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Flexible Income Fund (Unaudited) (Continued)

October 31, 2016

 

   Shares   Value ($) 
Large Cap Growth - 0.23%          
Vanguard Growth ETF +   4,000   $437,520 
           
Large Cap Value - 1.29%          
Vanguard High Dividend Yield ETF +   17,000    1,210,740 
Vanguard Value ETF +   14,105    1,213,735 
         2,424,475 
Preferred Security - 1.67%          
iShares US Preferred Stock ETF +   46,775    1,821,886 
PowerShares Preferred Portfolio +   88,700    1,328,726 
         3,150,612 
Small/Mid Cap Value - 0.64%          
Alerian MLP ETF +   99,500    1,216,885 
           
Total Equity Funds (cost $15,571,710)        16,219,108 
           
   Principal ($)      
U.S. Government and Agency Obligations - 6.09%          
Fannie Mae, 3.50%, due 12/1/2030  $240,421    253,962 
Fannie Mae, 3.50%, due 7/1/2032   518,245    549,988 
Fannie Mae, 4.00%, due 2/1/2040   274,136    294,418 
Fannie Mae, 4.00%, due 10/1/2040   237,013    254,464 
Fannie Mae, 4.00%, due 6/1/2041   484,397    520,697 
Fannie Mae, 4.00%, due 9/1/2041   519,430    556,934 
Fannie Mae, 4.00%, due 12/1/2041   315,905    338,855 
Fannie Mae, 5.00%, due 11/1/2039   289,264    325,302 
Fannie Mae, 5.00%, due 2/1/2040   435,292    482,973 
Fannie Mae, 5.50%, due 12/1/2039   201,919    229,868 
Fannie Mae, 5.50%, due 4/1/2040   235,449    266,645 
Fannie Mae, 6.00%, due 12/1/2035   281,391    324,950 
Fannie Mae, 6.00%, due 12/1/2038   97,811    112,030 
Federal Home Loan Banks, 2.90%, due 4/20/2017   112,646    113,714 
Federal Home Loan Mortgage Corp., 2.00%, due 3/12/2020   1,000,000    1,025,869 
Federal National Mortgage Association, 2.00%, due 8/28/2020   1,000,000    1,026,064 
Freddie Mac Gold Pool, 4.50%, due 2/1/2041   302,579    332,824 
Freddie Mac Gold Pool, 5.50%, due 6/1/2034   241,217    274,920 
Freddie Mac Gold Pool, 6.00%, due 5/1/2037   87,519    100,952 
Freddie Mac Gold Pool, 6.50%, due 4/1/2039   110,228    128,142 
Government National Mortgage Association, 3.50%, due 7/16/2039   115,257    119,925 
Government National Mortgage Association, 4.00%, due 2/20/2039   232,437    238,556 
United States Treasury Note/Bond, 4.25%, due 11/15/2017   2,500,000    2,590,527 
United States Treasury Note/Bond, 4.50%, due 5/15/2017   1,000,000    1,021,172 
           
Total U.S. Government and Agency Obligations (cost $11,102,397)        11,483,751 

 31Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Flexible Income Fund (Unaudited) (Continued)

October 31, 2016

 

   Shares   Value ($) 
Money Market Funds - 0.43%          
Short-Term Cash - 0.43%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% **   798,762   $798,762 
Total Money Market Funds (cost $798,762)        798,762 
           
Collateral for Securities Loaned - 16.97%          
Dreyfus Government Cash Management Institutional Class, 0.28% **   8,497,285    8,497,285 
Milestone Treasury Obligations Fund Institutional Class, 0.16% ** ^   23,500,000    23,500,000 
Total Collateral for Securities Loaned (cost $31,997,285)        31,997,285 
           
Total Investments (cost $219,877,908) (a) - 116.99%       $220,611,608 
Liabilities Less Other Assets - Net - (16.99)%        (32,031,283)
NET ASSETS - 100.00%       $188,580,325 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $ 31,254,250 at October 31, 2016.

 

*Non-income producing security.

 

**Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

DB - Deutsche Bank

 

EAFE - Europe, Australasia, Far East

 

ETF - Exchange Traded Fund

 

FTSE - Financial Times Stock Exchange

 

MLP - Master Limited Partnership

 

MSCI - Morgan Stanley Capital International

 

SPDR - Standard & Poors’ Depositary Receipts

 

TIPS - Treasury Inflation-Protected Security

 32Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS International Equity Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Equity Funds - 99.38%          
Developed International - 64.78%          
iShares Edge MSCI Minimum Volatility EAFE ETF   16,500   $1,060,785 
iShares Edge MSCI Minimum Volatility Japan ETF ^   35,000    2,123,100 
iShares International Select Dividend ETF   89,300    2,598,630 
iShares MSCI Australia ETF +   24,000    486,720 
iShares MSCI Canada ETF +   14,600    370,110 
iShares MSCI EAFE Value ETF +   58,000    2,680,760 
iShares MSCI Israel Capped ETF   18,400    854,864 
iShares MSCI Italy Capped ETF +   87,500    987,000 
iShares MSCI Japan ETF   24,000    303,120 
iShares MSCI Spain Capped ETF +   17,000    466,650 
iShares MSCI Switzerland Capped ETF +   6,500    188,565 
         12,120,304 
Emerging Markets - 34.60%          
Global X MSCI Colombia ETF +   101,000    928,190 
Global X MSCI Nigeria ETF +   157,000    720,630 
iShares Edge MSCI Minimum Volatility Emerging Markets ETF   19,000    1,003,770 
iShares MSCI Taiwan ETF +   60,500    953,480 
PowerShares FTSE RAFI Emerging Markets Portfolio +   136,000    2,551,360 
VanEck Vectors Egypt Index ETF +   8,500    317,305 
         6,474,735 
Total Equity Funds (cost $18,122,843)        18,595,039 
           
Money Market Funds - 0.67%          
Short-Term Cash - 0.67%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% *   126,118    126,118 
Total Money Market Funds (cost $126,118)        126,118 
           
Collateral for Securities Loaned - 30.02%          
Dreyfus Government Cash Management Institutional Class, 0.28% *   5,617,750    5,617,750 
Total Collateral for Securities Loaned (cost $5,617,750)        5,617,750 
           
Total Investments (cost $23,866,711) (a) - 130.07%       $24,338,907 
Liabilities Less Other Assets - Net - (30.07)%        (5,626,917)
NET ASSETS - 100.00%       $18,711,990 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $5,460,943 at October 31, 2016.

 

*Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

EAFE - Europe, Australasia, Far East

 

ETF - Exchange Traded Fund

 

FTSE - Financial Times Stock Exchange

 

MSCI - Morgan Stanley Capital International

 

RAFI - Research Affiliates

 33Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Schedule of Investments - CLS Shelter Fund (Unaudited)

October 31, 2016

 

   Shares   Value ($) 
Equity Funds - 99.06%          
Developed International - 20.04%          
Deutsche X-trackers MSCI EAFE Hedged Equity ETF   193,000   $5,137,660 
iShares Core MSCI EAFE ETF   190,000    10,229,600 
iShares MSCI ACWI ETF +   89,000    5,159,330 
         20,526,590 
Emerging Markets - 10.05%          
iShares Core MSCI Emerging Markets ETF   228,000    10,291,920 
           
Large Cap Core - 13.61%          
Guggenheim S&P 500 Equal Weight ETF +   171,000    13,945,050 
           
Large Cap Growth - 20.00%          
iShares Edge MSCI USA Quality Factor ETF   310,000    20,494,100 
           
Large Cap Value - 35.36%          
Guggenheim S&P 500 Pure Value ETF   297,700    15,572,687 
iShares Edge MSCI USA Value Factor ETF +   240,000    15,480,000 
PowerShares S&P 500 Low Volatility Portfolio +   128,000    5,178,880 
         36,231,567 
           
Total Equity Funds (cost $98,770,513)        101,489,227 
           
Money Market Funds - 0.90%          
Federated Prime Cash Obligations Fund Institutional Class, 0.27% *   917,480    917,480 
Total Money Market Funds (cost $917,480)        917,480 
           
Collateral for Securities Loaned - 19.27%          
Dreyfus Government Cash Management Institutional Class, 0.28% *   17,744,434    17,744,434 
Milestone Treasury Obligations Fund Institutional Class, 0.16% * ^   2,000,000    2,000,000 
Total Collateral for Securities Loaned (cost $19,744,434)        19,744,434 
           
Total Investments (cost $119,432,427) (a) - 119.23%       $122,151,141 
Liabilities Less Other Assets - Net - (19.23)%        (19,697,149)
NET ASSETS - 100.00%       $102,453,992 

 

+All or a portion of this security is on loan. Total loaned securities had a value of $19,207,402 at October 31, 2016.

 

*Money Market Fund; Interest rate reflects seven-day effective yield on October 31, 2016.

 

^Affiliated issuer.

 

ACWI - All Country World Index

 

EAFE - Europe, Australasia, Far East

 

ETF - Exchange Traded Fund

 

MSCI - Morgan Stanley Capital International

 34Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Schedule of Investments - Milestone Treasury Obligations Fund (Unaudited)

October 31, 2016

 

   Principal           
   Amount ($)   Interest Rate  Maturity Date  Value ($) 
               
U.S. Government Obligations - 41.46%                
                 
U.S. Treasury Bills * - 41.46%                
   $25,000,000   0.335% - 0.340%  1/5/17  $24,984,743 
    20,000,000   0.392% - 0.395%  1/12/17   19,984,300 
    10,000,000   0.430%  1/19/17   9,990,564 
    30,000,000   0.350% - 0.395%  2/2/17   29,971,423 
    10,000,000   0.440%  2/9/17   9,987,778 
    15,000,000   0.445%  2/16/17   14,980,160 
    35,000,000   0.410% - 0.470%  3/9/17   34,945,778 
    20,000,000   0.540%  3/16/17   19,959,500 
    10,000,000   0.490%  3/23/17   9,980,672 
    10,000,000   0.490%  4/13/17   9,977,814 
    15,000,000   0.500%  5/4/17   14,962,083 
               199,724,815 
Total U.S. Government Obligations                
(cost $199,724,815)              199,724,815 

 

Repurchase Agreements - 64.76%

 

BNP Paribas Securities Corp., dated 10/31/2016, repurchase price $75,000,000 (Collateralized by: U.S. Treasury Inflationary Note: $24,613,200, 0.125%, 04/15/2018; aggregate market value plus accrued interest $25,899,845; U.S. Treasury Notes: $49,622,400, 0.875% - 3.500%, 01/31/2017 - 05/31/2022; aggregate market value plus accrued interest $50,600,233)

 

    75,000,000   0.320%  11/1/16   75,000,000 

 

Credit Agricole, dated 10/31/2016, repurchase price $102,425,000 (Collateralized by: U.S. Treasury Inflationary Note: $104,917,800, 1.125%, 02/28/2021; aggregate market value plus accrued interest $104,473,548)

 

    102,425,000   0.320%  11/1/16   102,425,000 

 

Credit Suisse Securities (USA) LLC, dated 10/31/2016, repurchase price $84,500,000 (Collateralized by: U.S. Treasury Notes: $86,001,100, 0.625% - 1.375%, 12/15/2016 - 11/30/2019; aggregate market value plus accrued interest $86,190,143)

 

    84,500,000   0.310%  11/1/16   84,500,000 

 

Societe Generale, dated 10/31/2016, repurchase price $50,000,000 (Collateralized by: U.S. Treasury Bond: $48,812,300, 2.750%, 11/15/2042; aggregate market value plus accrued interest $51,000,022)

 

    50,000,000   0.330%  11/1/16   50,000,000 

 

Total Repurchase Agreements (cost $311,925,000)   311,925,000 
      
Total Investments (cost $511,649,815) - 106.22% (a)  $511,649,815 
Liabilities Less Other Assets - Net - (6.22)%   (29,966,586)
Net Assets - 100.00%  $481,683,229 

 

*Interest rate shown is the discounted rate at time of purchase for U.S. Treasury Bills.

 

(a)The cost stated also approximates the aggregate cost for Federal income tax purposes.

 35Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Assets and Liabilities (Unaudited)

October 31, 2016

 

   CLS Global   CLS Global       CLS Growth 
   Aggressive   Diversified   CLS Global   and Income 
Assets:  Equity Fund   Equity Fund   Growth Fund   Fund 
Unaffiliated investments, at cost  $84,430,844   $308,079,343   $219,560,309   $312,993,048 
Affiliated Investments, at cost   19,027,431    101,360,775    27,900,000    30,939,187 
Unaffiliated investments in securities, at value *  $96,488,846   $357,310,603   $236,941,210   $337,630,871 
Affiliated Investments in securities, at value   20,173,350    104,990,800    27,900,000    31,216,105 
Repurchase agreements, at value and cost                
Cash                
Receivable for securities sold   1,401,369    956,182         
Receivable for fund shares sold   8,342    214,323    106,142    106,582 
Receivable for security lending   37,239    60,878    37,459    57,651 
Interest and dividends receivable   33    78,710    179    86,970 
Receivable due from advisor                
Prepaid expenses and other assets   22,387    21,579    14,501    26,922 
Total Assets   118,131,566    463,633,075    264,999,491    369,125,101 
                     
Liabilities:                    
Securities lending collateral (Note 8)   19,496,057    49,648,300    33,845,356    21,625,307 
Accrued advisory fees   37,531    241,053    120,213    198,795 
Payable for securities purchased   1,537,208             
Payable for fund shares redeemed   117,617    530,020    206,609    316,005 
Accrued shareholder servicing fees   18,618    88,616    32,039    74,508 
Payable to affiliates   6,460    59,375    42,564    21,424 
Dividends payable                
Accrued expenses and other liabilities   19,614    52,861    38,656    26,288 
Total Liabilities   21,233,105    50,620,225    34,285,437    22,262,327 
Net Assets  $96,898,461   $413,012,850   $230,714,054   $346,862,774 
                     
Net Assets:                    
Paid in capital ($0 par value, unlimited shares authorized)  $81,932,400   $348,544,463   $205,135,303   $314,873,512 
                     
Undistributed net investment income   657,665    10,523,814    6,003,511    6,824,026 
                     
Accumulated net realized gain (loss) on investments   1,104,475    1,083,288    2,194,339    250,495 
                     
Net unrealized appreciation on investments   13,203,921    52,861,285    17,380,901    24,914,741 
                     
Net Assets  $96,898,461   $413,012,850   $230,714,054   $346,862,774 

 36Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Assets and Liabilities (Unaudited) (Continued)

October 31, 2016

 

   CLS Global   CLS Global       CLS Growth 
   Aggressive   Diversified   CLS Global   and Income 
Assets:  Equity Fund   Equity Fund   Growth Fund   Fund 
Investor Shares:                    
Net assets  $   $   $   $ 
Net asset value, offering price, and redemption price per share                    
(Net assets ÷ Total shares of beneficial interest outstanding)  $   $   $   $ 
Total shares outstanding at end of year                
                     
Institutional Shares:                    
Net assets  $   $   $   $ 
Net asset value, offering price, and redemption price per share                    
(Net assets ÷ Total shares of beneficial interest outstanding)  $   $   $   $ 
Total shares outstanding at end of year                
                     
Class N Shares:                    
Net assets  $96,898,461   $413,012,850   $230,714,054   $346,862,774 
Net asset value, offering price, and redemption price per share                    
(Net assets ÷ Total shares of beneficial interest outstanding)  $12.90   $16.77   $10.82   $10.85 
Total shares outstanding at end of year   7,509,435    24,630,300    21,322,573    31,955,150 

 

* Includes Securities Loaned $18,973,269; $48,489,469; $32,779,873; $21,119,494.

 37Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Assets and Liabilities (Unaudited) (Continued)

October 31, 2016

 

               Milestone 
       CLS       Treasury 
   CLS Flexible   International   CLS   Obligations 
Assets:  Income Fund   Equity Fund   Shelter Fund   Fund 
Unaffiliated investments, at cost  $196,377,908   $21,906,866   $117,432,427   $199,724,815 
Affiliated Investments, at cost   23,500,000    1,959,845    2,000,000     
Unaffiliated investments in securities, at value *  $197,111,608   $22,215,807   $120,151,141   $199,724,815 
Affiliated Investments in securities, at value   23,500,000    2,123,100    2,000,000     
Repurchase agreements, at value and cost               311,925,000 
Cash           305,132      
Receivable for securities sold                
Receivable for fund shares sold   90,816    2,863    212,996     
Receivable for security lending   40,367    8,597    4,785     
Interest and dividends receivable   96,459    17    267    2,763 
Receivable due from advisor       11,855         
Prepaid expenses and other assets   24,113    9,785    15,591    9,936 
Total Assets   220,863,363    24,372,024    122,384,780    511,967,646 
                     
Liabilities:                    
Securities lending collateral (Note 8)   31,997,285    5,617,750    19,744,434     
Accrued advisory fees   28,102        69,082    44,944 
Payable for securities purchased               29,948,813 
Payable for fund shares redeemed   196,868    19,388    51,749     
Accrued shareholder servicing fees   40,441    3,977    21,851    111,986 
Payable to affiliates       822    17,936    27,443 
Dividends payable               62,753 
Accrued expenses and other liabilities   20,342    18,097    25,736    88,478 
Total Liabilities   32,283,038    5,660,034    19,930,788    30,284,417 
Net Assets  $188,580,325   $18,711,990   $102,453,992   $481,683,229 
                     
Net Assets:                    
Paid in capital ($0 par value, unlimited shares authorized)  $188,286,118   $18,448,503   $97,855,965   $481,670,724 
Undistributed net investment income   673,783    196,194    527,180     
Accumulated net realized gain (loss) on investments   (1,113,276)   (404,903)   1,352,133    12,505 
Net unrealized appreciation on investments   733,700    472,196    2,718,714     
Net Assets  $188,580,325   $18,711,990   $102,453,992   $481,683,229 

 38Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Assets and Liabilities (Unaudited) (Continued)

October 31, 2016

 

               Milestone 
       CLS       Treasury 
   CLS Flexible   International   CLS   Obligations 
Assets:  Income Fund   Equity Fund   Shelter Fund   Fund 
Investor Shares:                    
Net assets  $   $   $   $26,219,158 
Net asset value, offering price, and redemption price per share                    
(Net assets ÷ Total shares of beneficial interest outstanding)  $   $   $   $1.00 
Total shares outstanding at end of year               26,194,757 
                     
Institutional Shares:                    
Net assets  $   $   $   $455,464,071 
Net asset value, offering price, and redemption price per share                    
(Net assets ÷ Total shares of beneficial interest outstanding)  $   $   $   $1.00 
Total shares outstanding at end of year               455,377,846 
                     
Class N Shares:                    
Net assets  $188,580,325   $18,711,990   $102,453,992   $ 
Net asset value, offering price, and redemption price per share                    
(Net assets ÷ Total shares of beneficial interest outstanding)  $10.28   $4.26   $12.06   $ 
Total shares outstanding at end of year   18,341,551    4,393,290    8,498,347     

 

*Includes Securities Loaned $31,254,250; $5,460,943; $19,207,402; $0.

 39Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Operations (Unaudited)

For the Six Months Ended October 31, 2016

 

   CLS Global   CLS Global       CLS Growth 
   Aggressive   Diversified   CLS Global   and Income 
Assets:  Equity Fund   Equity Fund   Growth Fund   Fund 
Investment Income:                    
Interest income  $307   $11,887   $1,908   $11,039 
Dividend income - Unaffiliated   939,647    6,963,535    6,924,360    6,481,959 
Dividend income - Affiliated   44,217    1,480,449        170,400 
Securities lending income-net *   251,282    402,241    230,065    446,906 
Total Investment Income   1,235,453    8,858,112    7,156,333    7,110,304 
                     
Expenses:                    
Investment advisory fees   376,890    1,600,507    902,717    1,353,679 
Shareholder Service Fees:                    
Class N   125,630    531,616    300,906    451,226 
Investor Shares                
Institutional Shares                
Distribution fees (12b-1) - Class C Shares       7,480         
Transfer agent fees   86,080    115,257    137,380    106,722 
Administration fees   50,179    156,904    90,949    142,399 
Accounting fees   21,038    42,759    28,293    36,342 
Registration & filing fees   12,350    22,685    12,602    13,610 
Printing and postage expense   5,776    34,406        14,285 
Professional fees   10,202    9,359    13,737    17,142 
Trustees’ fees   19,708    25,087    27,322    17,065 
Custodian fees   4,852    21,302    15,182    17,218 
Insurance expense   2,620    17,351    7,664    10,186 
Chief compliance officer fees   2,349    9,509    6,887    12,030 
Miscellaneous fees and expenses                
Total Expenses   717,674    2,594,222    1,543,639    2,191,904 
Less: Fees waived and expenses reimbursed by advisor   (139,886)   (134,512)   (159,791)   (116,873)
Net Expenses   577,788    2,459,710    1,383,848    2,075,031 
Net Investment Income   657,665    6,398,402    5,772,485    5,035,273 
                     
Net Realized and Unrealized Gain (Loss) on Investments:                    
Net realized gain (loss) on:                    
Investments - Unaffiliated   1,076,111    9,609,636    738,297    (494,137)
Total net realized gain (loss)   1,076,111    9,609,636    738,297    (494,137)
Net change in unrealized appreciation (depreciation) on:                    
Investments - Unaffiliated   3,143,493    (1,659,570)   1,232,210    6,046,964 
Investments - Affiliated   263,250    1,606,900        (123,275)
Total net change in unrealized appreciation (depreciation)   3,406,743    (52,670)   1,232,210    5,923,689 
                     
Net Realized and Unrealized Gain on Investments   4,482,854    9,556,966    1,970,507    5,429,552 
                     
Net Increase in Net Assets Resulting from Operations  $5,140,519   $15,955,368   $7,742,992   $10,464,825 

 

*A portion of securities lending income is from affiliated securities.

 40Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Operations (Unaudited) (Continued)

For the Six Months Ended October 31, 2016

 

               Milestone 
       CLS       Treasury 
   CLS Flexible   International   CLS Shelter   Obligations 
Assets:  Income Fund   Equity Fund   Fund   Fund 
Investment Income:                    
Interest income  $167,341   $143   $2,122   $822,820 
Dividend income - Unaffiliated   2,645,553    242,622    994,864     
Dividend income - Affiliated       11,569         
Securities lending income-net *   283,018    52,571    99,840     
Total Investment Income   3,095,912    306,905    1,096,826    822,820 
                     
Expenses:                    
Investment advisory fees   387,324    72,224    371,349    229,012 
Shareholder Service Fees:                    
Class N   242,077    24,075    123,783     
Investor Shares               22,563 
Institutional Shares               187,760 
Distribution fees (12b-1) - Class C Shares                
Transfer agent fees   148,055    49,615    17,885    17,254 
Administration fees   90,686    18,465    35,017    91,605 
Accounting fees   25,942    13,173    17,873     
Registration & filing fees   12,854    12,602    11,594    27,600 
Printing and postage expense   12,908    513        5,337 
Professional fees   14,429        9,748    19,242 
Trustees’ fees   16,294    23,636    24,019    18,930 
Custodian fees   11,577    3    6,286    16,263 
Insurance expense   5,410    920    1,965    9,200 
Chief compliance officer fees   5,192        3,594    727 
Miscellaneous fees and expenses               4,857 
Total Expenses   972,748    215,226    623,113    650,350 
Less: Fees waived and expenses reimbursed by advisor   (198,235)   (104,515)   (53,467)   (196,978)
Net Expenses   774,513    110,711    569,646    453,372 
Net Investment Income   2,321,399    196,194    527,180    369,448 
                     
Net Realized and Unrealized Gain (Loss) on Investments:                    
Net realized gain (loss) on:                    
Investments - Unaffiliated   404,239    650,130    4,319,825    12,271 
Total net realized gain (loss)   404,239    650,130    4,319,825    12,271 
Net change in unrealized appreciation (depreciation) on:                    
Investments - Unaffiliated   1,437,721    (700,756)   (1,603,437)    
Investments - Affiliated       163,255         
Total net change in unrealized appreciation (depreciation)   1,437,721    (537,501)   (1,603,437)    
                     
Net Realized and Unrealized Gain on Investments   1,841,960    112,629    2,716,388    12,271 
                     
Net Increase in Net Assets Resulting from Operations  $4,163,359   $308,823   $3,243,568   $381,719 

 

*A portion of securities lending income is from affiliated securities.

 41Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

Statements of Changes in Net Assets

 

   CLS Global Aggressive   CLS Global Diversified 
   Equity Fund   Equity Fund 
                 
   Six Months       Six Months     
   Ended       Ended     
   Oct. 31, 2016   Year Ended   Oct. 31, 2016   Year Ended 
   (Unaudited)   April 30, 2016   (Unaudited)   April 30, 2016 
Increase (Decrease) in Net Assets:                    
                     
From Operations:                    
Net investment income  $657,665   $1,964,125   $6,398,402   $7,625,987 
Net realized gain (loss) on investments   1,076,111    23,821    9,609,636    (8,645,464)
Distributions of realized gains by underlying investment companies       158,706        1,043,190 
Net change in unrealized appreciation (depreciation) on investments   3,406,743    (8,603,155)   (52,670)   (43,667,059)
                     
Net increase (decrease) in net assets resulting from operations   5,140,519    (6,456,503)   15,955,368    (43,643,346)
                     
From Distributions to Shareholders:                    
From Net Investment Income:                    
Class C               (1,215)
Class N       (2,113,494)       (3,469,765)
Investor Shares                
Institutional Shares                
Financial Shares                
Premium Shares                
From Net Realized Gains:                    
Class C               (84,872)
Class N       (2,834,458)       (15,849,061)
Investor Shares                
Institutional Shares                
Total Dividends and Distributions to Shareholders       (4,947,952)       (19,404,913)
From Fund Share Transactions (Note 7)   (8,686,473)   10,648,270    (29,873,552)   (80,102,664)
Total Increase (Decrease) in Net Assets   (3,545,954)   (756,185)   (13,918,184)   (143,150,923)
                     
Net Assets:                    
Beginning of period   100,444,415    101,200,600    426,931,034    570,081,957 
End of period  $96,898,461   $100,444,415   $413,012,850   $426,931,034 
Undistributed net investment income at end of period  $657,665   $   $10,523,814   $4,125,412 

 42Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Statements of Changes in Net Assets (Continued)

 

   CLS Global   CLS Growth 
   Growth Fund   and Income Fund 
         
   Six Months       Six Months     
   Ended       Ended     
   Oct. 31, 2016   Year Ended   Oct. 31, 2016   Year Ended 
   (Unaudited)   April 30, 2016   (Unaudited)   April 30, 2016 
Increase (Decrease) in Net Assets:                    
                     
From Operations:                    
Net investment income  $5,772,485   $3,255,231   $5,035,273   $5,406,061 
Net realized gain (loss) on investments   738,297    (192,728)   (494,137)   3,455,868 
Distributions of realized gains by underlying investment companies       391,834        837,911 
Net change in unrealized appreciation (depreciation) on investments   1,232,210    (20,358,020)   5,923,689    (20,273,105)
                     
Net increase (decrease) in net assets resulting from operations   7,742,992    (16,903,683)   10,464,825    (10,573,265)
                     
From Distributions to Shareholders:                    
From Net Investment Income:                    
Class C                
Class N       (2,962,069)       (4,928,971)
Investor Shares                
Institutional Shares                
Financial Shares                
Premium Shares                
From Net Realized Gains:                    
Class C                
Class N       (7,987,904)       (2,385,105)
Investor Shares                
Institutional Shares                
                     
Total Dividends and Distributions to Shareholders       (10,949,973)       (7,314,076)
From Fund Share Transactions (Note 7)   (17,435,760)   (31,423,526)   (29,211,323)   (39,989,032)
Total Increase (Decrease) in Net Assets   (9,692,768)   (59,277,182)   (18,746,498)   (57,876,373)
                     
Net Assets:                    
Beginning of period   240,406,822    299,684,004    365,609,272    423,485,645 
End of period  $230,714,054   $240,406,822   $346,862,774   $365,609,272 
Undistributed net investment income at end of period  $6,003,511   $231,026   $6,824,026   $1,788,753 

 43Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Statements of Changes in Net Assets (Continued)

 

   CLS Flexible Income Fund   CLS International Equity Fund 
         
   Six Months       Six Months     
   Ended       Ended     
   Oct. 31, 2016   Year Ended   Oct. 31, 2016   Year Ended 
   (Unaudited)   April 30, 2016   (Unaudited)   April 30, 2016 
Increase (Decrease) in Net Assets:                    
                     
From Operations:                    
Net investment income  $2,321,399   $4,446,202   $196,194   $364,884 
Net realized gain (loss) on investments   404,239    (897,137)   650,130    (1,034,745)
Distributions of realized gains by underlying investment companies       42,087        10,021 
Net change in unrealized appreciation (depreciation) on investments   1,437,721    (2,043,633)   (537,501)   112,120 
                     
Net increase (decrease) in net assets resulting from operations   4,163,359    1,547,519    308,823    (547,720)
                     
From Distributions to Shareholders:                    
From Net Investment Income:                    
Class C                
Class N   (2,310,407)   (4,518,964)       (525,700)
Investor Shares                
Institutional Shares                
Financial Shares                
Premium Shares                
From Net Realized Gains:                    
Class C                
Class N                
Investor Shares                
Institutional Shares                
Total Dividends and Distributions to Shareholders   (2,310,407)   (4,518,964)       (525,700)
From Fund Share Transactions (Note 7)   (7,876,017)   (125,333)   (1,350,277)   6,943,222 
Total Increase (Decrease) in Net Assets   (6,023,065)   (3,096,778)   (1,041,454)   5,869,802 
                     
Net Assets:                    
Beginning of period   194,603,390    197,700,168    19,753,444    13,883,642 
End of period  $188,580,325   $194,603,390   $18,711,990   $19,753,444 
Undistributed net investment income at end of period  $673,783   $662,791   $196,194   $ 

 44Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Statements of Changes in Net Assets (Continued)

 

   CLS Shelter Fund   Milestone Treasury Obligations Fund 
   Six Months       Six Months         
   Ended       Ended   Five Months   Year Ended 
   Oct. 31, 2016   Year Ended   Oct. 31, 2016   Ended   November 
   (Unaudited)   April 30, 2016   (Unaudited)   April 30, 2016   30, 2015 
Increase (Decrease) in Net Assets:                         
                          
From Operations:                         
Net investment income  $527,180   $1,124,556   $369,448   $202,462   $21,458 
Net realized gain (loss) on investments   4,319,825    3,302,339    12,271    273    11,086 
Distributions of realized gains by underlying investment companies                    
Net change in unrealized appreciation depreciation) on investments   (1,603,437)   (8,824,233)            
Net increase (decrease) in net assets resulting from operations   3,243,568    (4,397,338)   381,719    202,735    32,544 
                          
From Distributions to Shareholders:                         
From Net Investment Income:                         
Class C                    
Class N       (1,660,095)            
Investor Shares           (16,856)   (15,225)   (1,395)
Institutional Shares           (352,592)   (187,237)   (16,819)
Financial Shares                   (1,557)
Premium Shares                   (1,687)
From Net Realized Gains:                         
Class C                    
Class N       (6,625,288)            
Investor Shares               (737)    
Institutional Shares               (10,206)    
Total Dividends and Distributions to Shareholders       (8,285,383)   (369,448)   (213,405)   (21,458)
From Fund Share Transactions (Note 7)   4,881,534    8,770,859    139,009,711    (10,351,223)   (178,437,737)
Total Increase (Decrease) in Net Assets   8,125,102    (3,911,862)   139,021,982    (10,361,893)   (178,426,651)
                          
Net Assets:                         
Beginning of period   94,328,890    98,240,752    342,661,247    353,023,140    531,449,791 
End of period  $102,453,992   $94,328,890   $481,683,229   $342,661,247   $353,023,140 
Undistributed net investment income at end of period  $527,180   $   $   $   $ 

 45Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS Global Aggressive Equity Fund

 

Selected data based on  Class N Shares 
a share outstanding                        
throughout each  Six Months                     
period indicated.  Ended                     
   October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $12.26   $13.73   $13.47   $13.37   $12.52   $13.37 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.08    0.26    0.24    0.08    0.05    0.05 
Net realized and unrealized gain (loss) on investments   0.56    (1.14)   0.74    2.26    1.35    (0.57)
Total income (loss) from investment operations   0.64    (0.88)   0.98    2.34    1.40    (0.52)
                               
Less distributions from:                              
Net investment income       (0.25)   (0.22)   (0.23)   (0.05)    
Net realized gains       (0.34)   (0.50)   (2.01)   (0.50)   (0.33)
Total distributions from net investment income and net realized gains       (0.59)   (0.72)   (2.24)   (0.55)   (0.33)
                               
Net asset value, end of period  $12.90   $12.26   $13.73   $13.47   $13.37   $12.52 
                               
Total return (c)   5.22% (f)   (6.39)%   7.50%   17.87%   11.55%   (3.54)%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $96,898   $100,444   $101,201   $92,176   $90,657   $83,544 
Ratio of expenses to average net assets (d)   1.15% (e)   1.15%   1.15%   1.15%   1.15%   1.15%
Ratio of expenses to average net assets before waivers and reimbursements (d)   1.43% (e)   1.38%   1.36%   1.37%   1.38%   1.37%
Ratio of net investment income to average net assets (b)   1.31% (e)   2.10%   1.81%   0.61%   0.42%   0.40%
Portfolio turnover rate   14% (f)   35%   50%   24%   162%   49%

 

(a)Net investment income has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and Gemini Fund Services, LLC (“GFS”) not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Annualized for periods less than one year.

 

(f)Not annualized.

 46Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS Global Diversified Equity Fund

 

Selected data based on a  Class N Shares 
share outstanding                        
throughout each period  Six Months                     
indicated.  Ended                     
   October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $16.15   $18.26   $17.61   $15.43   $13.72   $14.44 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.25    0.27    0.21    0.13    0.10    0.08 
Net realized and unrealized gain (loss) on investments   0.37    (1.66)   0.95    2.17    1.67    (0.71)
Total income (loss) from investment operations   0.62    (1.39)   1.16    2.30    1.77    (0.63)
                               
Less distributions from:                              
Net investment income       (0.13)   (0.34)   (0.12)   (0.06)   (0.09)
Net realized gains       (0.59)   (0.17)            
Total distributions from net investment income and net realized gains       (0.72)   (0.51)   (0.12)   (0.06)   (0.09)
                               
Net asset value, end of period  $16.77   $16.15   $18.26   $17.61   $15.43   $13.72 
                               
Total return (c)   3.84% (f)   (7.59)%   6.68%   14.93%   12.91%   (4.31)%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $413,013   $424,701   $567,510   $484,015   $483,612   $500,675 
Ratio of expenses to average net assets (d)   1.15% (e)   1.15%   1.15%   1.15%   1.15%   1.15%
Ratio of expenses to average net assets before waivers and reimbursements (d)   1.22% (e)   1.19%   1.17%   1.18%   1.18%   1.17%
Ratio of net investment income to average net assets (b)   3.01% (e)   1.59%   1.19%   0.78%   0.72%   0.59%
Portfolio turnover rate   24% (f)   58%   33%   27%   69%   19%

 

(a)Net investment income has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Annualized for periods less than one year.

 

(f)Not annualized.

 47Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS Global Growth Fund

 

Selected data based on a  Class N Shares 
share outstanding                        
throughout each period  Six Months                     
indicated.  Ended                     
   October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $10.48   $11.59   $11.17   $10.91   $9.81   $10.22 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.26    0.13    0.13    0.09    0.15    0.16 
Net realized and unrealized gain (loss) on investments   0.08    (0.77)   0.50    1.10    1.06    (0.41)
Total income (loss) from investment operations   0.34    (0.64)   0.63    1.19    1.21    (0.25)
                               
Less distributions from:                              
Net investment income       (0.13)   (0.13)   (0.38)   (0.11)   (0.16)
Net realized gains       (0.34)   (0.08)   (0.55)        
Total distributions from net investment income and net realized gains       (0.47)   (0.21)   (0.93)   (0.11)   (0.16)
                               
Net asset value, end of period  $10.82   $10.48   $11.59   $11.17   $10.91   $9.81 
                               
Total return (c)   3.24% (f)   (5.55)%   5.64%   11.04%   12.43%   (2.31)%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $230,714   $240,407   $299,684   $234,427   $225,393   $230,562 
Ratio of expenses to average net assets (d)   1.15% (e)   1.15%   1.15%   1.15%   1.15%   1.15%
Ratio of expenses to average net assets before waivers and reimbursements (d)   1.28% (e)   1.25%   1.24%   1.28%   1.27%   1.27%
Ratio of net investment income to average net assets (b)   4.80% (e)   1.25%   1.16%   0.81%   1.45%   1.68%
Portfolio turnover rate   4% (f)   88%   29%   46%   69%   33%

 

(a)Net investment income has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Annualized for periods less than one year.

 

(f)Not annualized.

 48Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS Growth and Income Fund

 

Selected data based on  Class N Shares 
a share outstanding                        
throughout each  Six Months                     
period indicated.  Ended                     
   October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $10.55   $10.99   $10.82   $10.94   $10.10   $10.21 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.15    0.15    0.14    0.09    0.19    0.20 
Net realized and unrealized gain (loss) on investments   0.15    (0.40)   0.22    0.56    0.83    (0.10)
Total income (loss) from investment operations   0.30    (0.25)   0.36    0.65    1.02    0.10 
                               
Less distributions from:                              
Net investment income       (0.13)   (0.11)   (0.31)   (0.18)   (0.21)
Net realized gains       (0.06)   (0.08)   (0.46)        
Total distributions from net investment income and net realized gains       (0.19)   (0.19)   (0.77)   (0.18)   (0.21)
                               
Net asset value, end of period  $10.85   $10.55   $10.99   $10.82   $10.94   $10.10 
                               
Total return (c)   2.84% (f)   (2.14)%   3.31%   6.08%   10.20%   1.12%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $346,863   $365,609   $423,486   $305,585   $300,478   $278,309 
Ratio of expenses to average net assets (d)   1.15% (e)   1.15%   1.15%   1.15%   1.15%   1.15%
Ratio of expenses to average net assets before waivers and reimbursements (d)   1.21% (e)   1.19%   1.19%   1.23%   1.22%   1.22%
Ratio of net investment income to average net assets (b)   2.79% (e)   1.42%   1.33%   0.82%   1.83%   2.09%
Portfolio turnover rate   8% (f)   56%   31%   39%   89%   13%

 

(a)Net investment income has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Annualized for periods less than one year.

 

(f)Not annualized.

 49Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS Flexible Income Fund

 

Selected data based on  Class N Shares 
a share outstanding                        
throughout each  Six Months                     
period indicated.  Ended                     
   October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $10.18   $10.35   $10.40   $10.76   $10.58   $10.37 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.12    0.24    0.23    0.22    0.26    0.28 
Net realized and unrealized gain (loss) on investments   0.10    (0.17)   (0.05)   (0.23)   0.23    0.22 
Total income (loss) from investment operations   0.22    0.07    0.18    (0.01)   0.49    0.50 
                               
Less distributions from:                              
Net investment income   (0.12)   (0.24)   (0.23)   (0.22)   (0.26)   (0.29)
Net realized gains               (0.13)   (0.05)    
Total distributions from net investment income and net realized gains   (0.12)   (0.24)   (0.23)   (0.35)   (0.31)   (0.29)
                               
Net asset value, end of period  $10.28   $10.18   $10.35   $10.40   $10.76   $10.58 
                               
Total return (c)   2.21% (f)   0.71%   1.75%   (0.01)%   4.76%   4.94%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $188,580   $194,603   $197,700   $164,000   $166,348   $143,125 
Ratio of expenses to average net assets (d)   0.80% (e)   0.80%   0.80%   0.80%   0.80%   0.80%
Ratio of expenses to average net assets before waivers and reimbursements (d)   1.00% (e)   0.94%   0.93%   0.97%   0.98%   0.98%
Ratio of net investment income to average net assets (b)   2.40% (e)   2.33%   2.24%   2.08%   2.40%   2.71%
Portfolio turnover rate   2% (f)   19%   5%   24%   51%   8%

 

(a)Net investment income has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Annualized for periods less than one year.

 

(f)Not annualized.

 50Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS International Equity Fund

 

Selected data based on a  Class N Shares 
share outstanding                        
throughout each period  Six Months                     
indicated.  Ended                     
   October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $4.19   $4.68   $10.61   $10.75   $10.16   $10.48 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.04    0.10    0.11    0.08    0.10    0.09 
Net realized and unrealized gain (loss) on investments   0.03    (0.48)   0.33    0.73    0.77    (0.12)
Total income (loss) from investment operations   0.07    (0.38)   0.44    0.81    0.87    (0.03)
                               
Less distributions from:                              
Net investment income       (0.11)   (0.23)   (0.08)   (0.09)   (0.10)
Net realized gains           (6.14)   (0.87)   (0.19)   (0.19)
Total distributions from net investment income and net realized gains       (0.11)   (6.37)   (0.95)   (0.28)   (0.29)
                               
Net asset value, end of period  $4.26   $4.19   $4.68   $10.61   $10.75   $10.16 
                               
Total return (c)   1.67% (h)   (8.11)%   9.82%   7.75%   8.66%   (0.09)%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $18,712   $19,753   $13,884   $255,231   $248,326   $233,472 
Ratio of expenses to average net assets, excluding dividends from securities sold short and interest expense (d)   1.15% (g)   1.15%   1.15% (e)   1.15% (e)   1.15%   1.15%
Ratio of expenses to average net assets before waivers and reimbursements, excluding dividends from securities sold short and interest expense (d)   2.24% (g)   2.21%   1.37% (f)   1.25% (f)   1.24%   1.24%
Ratio of net investment income to average net assets (b)   2.04% (g)   2.55%   1.06%   0.72%   0.93%   0.91%
Portfolio turnover rate   85% (h)   230%   45%   44%   84%   46%

 

(a)Net investment income has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Including dividends from securities sold short and interest expense, the ratio of net expenses to average net assets would have been 1.19% for the year ended April 30, 2015 and 1.23% for the year ended April 30, 2014.

 

(f)Including dividends from securities sold short and interest expense, the ratio of net expenses to average net assets would have been 1.41% for the year ended April 30, 2015 and 1.33% for the year ended April 30, 2014. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(g)Annualized for periods less than one year.

 

(h)Not annualized.

 51Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
CLS Shelter Fund

 

Selected data based on  Class N Shares 
a share outstanding  Six Months                     
throughout each  Ended                     
period indicated.  October 31,   Fiscal Years Ending April 30, 
   2016   2016   2015   2014   2013   2012 
   (Unaudited)                     
Net asset value, beginning of period  $11.65   $13.35   $12.21   $10.59   $9.93   $11.74 
                               
Income (loss) from investment operations:                              
Net investment income (a) (b)   0.07    0.15    0.13    0.09    0.04    (0.02)
Net realized and unrealized gain (loss) on investments   0.34    (0.75)   1.10    1.57    0.62    (1.70)
Total income (loss) from investment operations   0.41    (0.60)   1.23    1.66    0.66    (1.72)
                               
Less distributions from:                              
Net investment income       (0.22)   (0.09)   (0.04)        
Net realized gains       (0.88)               (0.09)
Total distributions from net investment income and net realized gains       (1.10)   (0.09)   (0.04)       (0.09)
                               
Net asset value, end of period  $12.06   $11.65   $13.35   $12.21   $10.59   $9.93 
                               
Total return (c)   3.52% (f)   (4.43)%   10.11%   15.66%   6.65%   (14.60)%
                               
Ratios and Supplemental Data:                              
Net assets, end of period (in 000’s)  $102,454   $94,329   $98,241   $69,314   $42,828   $63,207 
Ratio of expenses to average net assets (d)   1.15% (e)   1.15%   1.15%   1.15%   1.15%   1.15%
Ratio of expenses to average net assets before waivers and reimbursements (d)   1.26% (e)   1.24%   1.27%   1.37%   1.37%   1.29%
Ratio of net investment income to average net assets (b)   1.06% (e)   1.19%   0.99%   0.75%   0.39%   (0.15)%
Portfolio turnover rate   127% (f)   346%   106%   158%   291%   311%

 

(a)Net investment income (loss) has been calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(c)Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, and assume no sales charge. Had the advisor and GFS not absorbed a portion of the expenses, total returns would have been lower.

 

(d)Does not include the expenses of the investment companies in which the Fund invests.

 

(e)Annualized for periods less than one year.

 

(f)Not annualized.

 52Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
Milestone Treasury Obligations Fund

 

Selected data based on a  Investor Shares 
share outstanding  Six   Five                     
throughout each period  Months   Months                     
indicated.  Ended   Ended                     
   Oct. 31,   April 30,   Years Ended November 30, 
   2016   2016   2015   2014   2013   2012   2011 
   (Unaudited)                         
Net asset value, beginning of period  $1.00   $1.00   $1.00   $1.00   $1.00   $1.00   $1.00 
                                    
Activity from investment operations:                                   
Net investment income (a)   0.001    0.001    0.000 (b)   0.000 (b)   0.000 (b)   0.000 (b)   0.000 (b)
                                    
Less distributions from:                                   
Net investment income   (0.001)   (0.000) (b)   (0.000) (b)   (0.000) (b)   (0.000) (b)   (0.000) (b)   (0.000) (b)
Net realized gains       0.000 (b)           (0.000) (b)        
Total distributions   (0.001)   (0.000)   (0.000)   (0.000)   (0.000)   (0.000)   (0.000)
                                    
Net asset value, end of period  $1.00   $1.00   $1.00   $1.00   $1.00   $1.00   $1.00 
                                    
Total return   0.08% (h)   0.04% (h)   0.00%   0.00%   0.00%   0.01%   0.01%
                                    
Net assets, end of period (in 000’s)  $26,219   $19,973   $23,537   $43,239   $50,829   $54,039   $53,492 
Ratio of gross expenses to average net assets (c)   0.41% (g)   0.43% (g)   0.41%   0.45%   0.41%   0.46%   0.55%
Ratio of net expenses to average net assets   0.20% (g)   0.19% (g)   0.09% (d)   0.06% (d)   0.10% (d)   0.18% (d)   0.13% (e)
Ratio of net investment income to average net assets   0.16% (g)   0.12% (g)   0.00% (f)   0.00% (f)   0.00% (f)   0.01%   0.00% (f)

 

(a)Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(b)Amount represents less than $0.001 per share.

 

(c)Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the advisor.

 

(d)The advisor, CLS Investments, LLC, has agreed to waive additional fees in order to maintain a positive return. The additional waiver, 0.27%, 0.16% and 0.16% for the years ended November 30, 2012, November 30, 2013, November 30, 2014 respectively, and 0.09% for the year ended November 30, 2015, decreased the net expense ratio.

 

(e)The previous advisor, Milestone Capital Management, LLC, had agreed to waive additional fees in order to maintain a positive return. The additional waiver 0.32% for the year ended November 30, 2011, respectively, decreased the net expense ratio. A portion of the fees for the year ended November 30, 2011 were waived by CLS Investments, LLC.

 

(f)Less than 0.005%.

 

(g)Annualized for periods less than one year.

 

(h)Not annualized.

 53Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report
 
Financial Highlights
Milestone Treasury Obligations Fund

 

Selected data based on a  Institutional Shares 
share outstanding  Six   Five                     
throughout each period  Months   Months                     
indicated.  Ended   Ended                     
   Oct. 31,   April 30,   Years Ended November 30, 
   2016   2016   2015   2014   2013   2012   2011 
   (Unaudited)                         
Net asset value, beginning of period  $1.00   $1.00   $1.00   $1.00   $1.00   $1.00   $1.00 
                                    
Activity from investment operations:                                   
Net investment income (a)   0.001    0.000 (b)   0.000 (b)   0.000 (b)   0.000 (b)   0.000 (b)   0.000 (b)
                                    
Less distributions from:                                   
Net investment income   (0.001)   (0.000) (b)   (0.000) (b)   (0.000) (b)   (0.000) (b)   (0.000) (b)   (0.000) (b)
Net realized gains       (0.000) (b)           (0.000) (b)        
Total distributions   (0.000)   (0.000)   (0.000)   (0.000)   (0.000)   (0.000)   (0.000)
                                    
Net asset value, end of period  $1.00   $1.00   $1.00   $1.00   $1.00   $1.00   $1.00 
                                    
Total return   0.08% (h)   0.04% (h)   0.00%   0.00%   0.01%   0.01%   0.01%
                                    
Net assets, end of period (in 000’s)  $455,464   $322,688   $302,841   $381,208   $79,964   $75,810   $240,723 
Ratio of gross expenses to average net assets (c)   0.28% (g)   0.28% (g)   0.26%   0.30%   0.27%   0.30%   0.34%
Ratio of net expenses to average net assets   0.20% (g)   0.19% (g)   0.09% (d)   0.06% (d)   0.09% (d)   0.14% (d)   0.13% (e)
Ratio of net investment income to average net assets   0.16% (g)   0.12% (g)   0.00% (f)   0.00% (f)   0.01%   0.01%   0.00% (f)

 

(a)Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(b)Amount represents less than $0.001 per share.

 

(c)Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements by the advisor.

 

(d)The advisor, CLS Investments, LLC, has agreed to waive additional fees in order to maintain a positive return. The additional waiver, 0.06%, 0.08% and 0.14% for the years ended November 30, 2012, November 30, 2013 and November 30, 2014 , respectively, and 0.09% for the year ended November 30, 2015, decreased the net expense ratio.

 

(e)The previous advisor, Milestone Capital Management, LLC, had agreed to waive additional fees in order to maintain a positive return. The additional waiver of 0.07% for the year ended November 30, 2011, respectively, decreased the net expense ratio. A portion of the fees for the year ended November 30, 2011 were waived by CLS Investments, LLC.

 

(f)Less than 0.005%.

 

(g)Annualized for periods less than one year.

 

(h)Not annualized.

 54Refer to the Notes to Financial Statements
in this Report for further information
regarding the values set forth above.

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited)

October 31, 2016

 

1.Organization

 

AdvisorOne Funds (the “Trust” or the “Funds”) was organized as a Delaware Business Trust in December 1996 and is registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as an open-end management investment company. The CLS Global Aggressive Equity Fund, CLS Global Diversified Equity Fund, CLS Global Growth Fund, CLS Growth and Income Fund, CLS Flexible Income Fund, CLS International Equity Fund, CLS Shelter Fund and Milestone Treasury Obligations Fund, collectively the “Funds” and each individually a “Fund” are each a diversified series of the Trust. The Milestone Treasury Obligations Fund, formerly known as the Treasury Obligations Portfolio (“Predecessor Fund”), was reorganized into the AdvisorOne Funds (the “Trust”) on January 23, 2012. The Predecessor Fund was a series of the Milestone Funds, a Delaware business trust formed on July 14, 1994. The Funds each offer an unlimited number of shares of beneficial interest without par value. The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services—Investment Companies”.

 

Fund The primary investment objective of each Fund is as follows:
CLS Global Aggressive Equity Fund Long-term growth
CLS Global Diversified Equity Fund Long-term growth of capital without regard to current income
CLS Global Growth Fund Total return, consisting of capital growth and income
CLS Growth and Income Fund Combination of current income and growth of capital
CLS Flexible Income Fund Total return, consisting of capital growth and income, consistent with preservation of capital
CLS International Equity Fund Growth of capital and current income
CLS Shelter Fund Limiting the impact of large equity market declines. The Fund’s secondary investment objective is growth of capital.
Milestone Treasury Obligations Fund Provide its shareholders with the maximum current income that is consistent with the preservation of capital and the maintenance of liquidity.

 

The Funds offer the following classes of shares:

 

Class Funds Offering Class
Class N CLS Global Aggressive Equity Fund, CLS Global Diversified Equity Fund, CLS
  Global Growth Fund, CLS Growth and Income Fund, CLS Flexible Income
  Fund, CLS International Equity Fund and CLS Shelter Fund
Investor Shares Milestone Treasury Obligations Fund
Institutional Shares Milestone Treasury Obligations Fund

 

CLS Diversified Equity Fund’s Class C shares were closed on August 29, 2016.

55

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

2.Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the year. Actual results could differ from those estimates. The Funds follow the specialized accounting and reporting requirements under GAAP that are applicable to investment companies.

 

Security Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price (“NOCP”). In the absence of a sale such securities shall be valued at the mean between the current bid and ask prices on the primary exchange on the day of valuation. Exchange traded options, futures and options on futures are valued at the settlement price determined by the exchange. Short-term investments that mature in 60 days or less may be valued at amortized cost, provided such valuations represent fair value. Under the amortized cost method, a portfolio instrument is valued at cost and any premium or discount is amortized to maturity. Amortization of premium and accretion of market discount are charged to income. Debt securities (other than short-term obligations) are valued each day by an independent pricing service approved by the Trust’s Board of Trustees (the “Board”) based on methods which include consideration of: yields or prices of securities of comparable quality, coupon, maturity and type, indications as to values from dealers, and general market conditions or market quotations from a major market maker in the securities.

 

The Funds may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the “fair value” procedures approved by the Board. The Board has delegated execution of these procedures to a fair value team composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor. The team may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.

56

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Fair Valuation Process – As noted above, the fair value team is composed of one or more representatives from each of the (i) Trust, (ii) Administrator, and (iii) Advisor. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the advisor, the prices or values available do not represent the fair value of the instrument. Factors which may cause the advisor to make such a judgment include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset value. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or illiquid securities, such as private placements or non-traded securities are valued via inputs from the advisor based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the advisor is unable to obtain a current bid from such independent dealers or other independent parties, the fair value team shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of a Fund’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.

 

Valuation of Fund of Funds – The Funds may invest in portfolios of open-end or closed-end investment companies (the “Underlying Funds”). The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value to the methods established by the board of directors of the Underlying Funds.

57

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Open-ended investment companies are valued at their respective net asset values as reported by such investment companies. The shares of many closed-end investment companies, after their initial public offering, frequently trade at a price per share, which is different than the net asset value per share. The difference represents a market premium or market discount of such shares. There can be no assurances that the market discount or market premium on shares of any closed-end investment company purchased by their Funds will not change.

 

The Funds utilize various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that a Fund has the ability to access.

 

Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing a Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

 

Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes the inputs used as of October 31, 2016 for the Funds’ investments measured at fair value:

58

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

CLS Global Aggressive Equity Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Equity Funds  $96,845,316   $   $   $96,845,316 
Money Market Funds   320,823            320,823 
Collateral for Securities Loaned   19,496,057            19,496,057 
Total  $116,662,196   $   $   $116,662,196 

 

CLS Global Diversified Equity Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Equity Funds  $407,486,070   $   $   $407,486,070 
Money Market Funds   5,167,033            5,167,033 
Collateral for Securities Loaned   49,648,300            49,648,300 
Total  $462,301,403   $   $   $462,301,403 

 

CLS Global Growth Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Bond Funds  $36,101,135   $   $   $36,101,135 
Equity Funds   194,081,085            194,081,085 
Money Market Funds   813,634            813,634 
Collateral for Securities Loaned   33,845,356             33,845,356 
Total  $264,841,210   $   $   $264,841,210 

 

CLS Growth and Income Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Bond Funds  $154,913,267   $   $   $154,913,267 
Equity Funds   189,460,047            189,460,047 
Money Market Funds   2,848,355            2,848,355 
Collateral for Securities Loaned   21,625,307             21,625,307 
Total  $368,846,976   $   $   $368,846,976 

 

CLS Flexible Income Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Bond Funds  $160,112,702   $   $   $160,112,702 
Equity Funds   16,219,108            16,219,108 
U.S. Government & Agency Obligations       11,483,751        11,483,751 
Money Market Funds   798,762            798,762 
Collateral for Securities Loaned   31,997,285            31,997,285 
Total  $209,127,857   $11,483,751   $   $220,611,608 

 

CLS International Equity Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Equity Funds  $18,595,039   $   $   $18,595,039 
Money Market Funds   126,118            126,118 
Collateral for Securities Loaned   5,617,750            5,617,750 
Total  $24,338,907   $   $   $24,338,907 

59

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

CLS Shelter Fund

 

Assets  Level 1   Level 2   Level 3   Total 
Equity Funds  $101,489,227   $   $   $101,489,227 
Money Market Funds   917,480            917,480 
Collateral for Securities Loaned   19,744,434            19,744,434 
Total  $122,151,141   $   $   $122,151,141 

 

Milestone Treasury Obligations Fund

 

Assets  Level 1   Level 2   Level 3   Total 
U.S. Treasury Bills  $   $199,724,815   $   $199,724,815 
Repurchase Agreements       311,925,000        311,925,000 
Total  $   $511,649,815   $   $511,649,815 

 

The Funds did not hold any Level 3 securities during the period. There were no transfers into or out of any level during the period. It is the Funds’ policy to recognize transfers between Level 1 & Level 2 at the end of the reporting period.

 

Refer to the Schedules of Investments for security classifications.

 

Repurchase Agreements

 

The Milestone Treasury Obligations Fund may purchase securities from financial institutions subject to the seller’s agreement to repurchase and the Fund’s agreement to resell the securities at par. The advisor only enters into repurchase agreements with financial institutions that are primary dealers and deemed to be creditworthy by the investment adviser in accordance with procedures adopted by the Board. Securities purchased subject to repurchase agreements are maintained with a custodian of the Fund and must have, at all times, an aggregate market value plus accrued interest greater than or equal to the repurchase price. If the market value of the underlying securities falls below 102% of the value of the repurchase price, the Fund will require the seller to deposit additional collateral by the next business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Fund has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller.

60

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Offsetting of Financial Assets and Derivative Liabilities – The following table presents the Fund’s liability derivatives available for offset, net of collateral pledged as of October 31, 2016:

 

               Gross Amounts Not     
               Offset in the Statement     
Assets:              of Assets & Liabilities     
       Gross   Net Amounts             
       Amounts   of Assets             
   Gross   Offset in the   Presented in             
   Amounts of   Statement   the Statement       Cash     
   Recognized   of Assets &   of Assets &   Financial   Collateral   Net 
Description  Assets   Liabilities   Liabilities   Instruments   Received   Amount 
BNP Paribas Securities Corp.  $75,000,000 (1)  $   $75,000,000   $(75,000,000)  $ (2)  $ 
Credit Agricole   102,425,000 (1)       102,425,000    (102,425,000)    (2)    
Credit Suisse Securities (USA) LLC   84,500,000 (1)       84,500,000    (84,500,000)     (2)    
Societe Generale   50,000,000 (1)       50,000,000    (50,000,000)    (2)    
Total  $311,925,000   $   $311,925,000   $(311,925,000)  $   $ 

 

(1)Repurchase Agreements at value as presented in the Portfolio of Investments.

 

(2)The amount is limited to the derivative liability balanced and, accordingly, does not include excess collateral pledged.

 

Foreign Currency Translations

 

The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, and income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency rates established at the approximate time of the trade.

 

Net realized gains and losses on foreign currency transactions represent net gains and losses from currency realized between the trade and settlement dates on securities transactions and the difference between income accrued versus income received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities.

61

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Exchange Traded Funds

 

The Funds may invest in exchange traded funds (“ETFs”). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A Fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.

 

Exchange Traded Notes

 

The Funds may invest in exchange traded notes (“ETNs”). ETNs are a type of debt security that is linked to the performance of underlying securities. The risks of owning ETNs generally reflect the risks of owning the underlying securities they are designed to track. In addition, ETNs are subject to credit risk generally to the same extent as debt securities.

 

The Funds are subject to equity price risk in the normal course of pursuing their investment objectives and may purchase or sell options to help hedge against this risk.

 

The Funds may write call options only if they (i) own an offsetting position in the underlying security or (ii) have an absolute or immediate right to acquire that security without additional cash consideration or exchange of other securities held in its portfolio.

 

When a Fund writes a call option, an amount equal to the premium received is included in the statement of assets and liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if a Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. As writer of an option, a Fund has no control over whether the option will be exercised and, as a result, retains the market risk of an unfavorable change in the price of the security underlying the written option.

 

The Funds may purchase put and call options. Put options are purchased to hedge against a decline in the value of securities held in a Fund’s portfolio. If such a decline occurs, the put options will permit the Funds to sell the securities underlying such options at the exercise price, or to close out the options at a profit. The premium paid for a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Funds upon exercise of the option, and, unless the price of the underlying security rises or declines sufficiently, the option may expire worthless to the Funds.

62

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

In addition, in the event that the price of the security in connection with which an option was purchased moves in a direction favorable to the Funds, the benefits realized by the Funds as a result of such favorable movement will be reduced by the amount of the premium paid for the option and related transaction costs. Written and purchased options are non-income producing securities. With purchased options, there is minimal counterparty credit risk to the Funds since these options are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded options, guarantees against a possible default.

 

Income Taxes

 

It is each Fund’s policy to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and gains to its shareholders and therefore, no provision for federal income tax has been made. Each Fund is treated as a separate taxpayer for federal income tax purposes.

 

The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2014-2016), or expected to be taken in the Funds’ 2017 tax returns. The Funds identified their major tax jurisdictions as U.S. Federal, Nebraska and foreign jurisdictions where the Funds make significant investments; however, the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

 

Security Transactions and Related Income

 

Investment security transactions are accounted for on a trade date basis. Cost is determined and gains and losses are based upon the specific identification method for both financial statement and Federal income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Purchase discounts and premiums on securities are accreted and amortized over the life of the respective securities.

 

Expenses

 

Expenses of the Trust that are directly identifiable to a specific Fund, are charged to that Fund. Expenses, which are not readily identifiable to a specific Fund, are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the Funds. Each Fund’s income, expenses (other than the class specific distribution and shareholder service fees) and realized and unrealized gains and losses are allocated proportionally each day between the classes based upon the relative net assets of each class.

63

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Distributions to Shareholders

 

Income will normally be declared and distributed at least annually for all Funds with exception of Milestone Treasury Obligations Fund. Income will normally be declared daily and distributed monthly for the Milestone Treasury Obligations Fund. The Funds declare and pay net realized capital gains, if any, annually. The character of income and gains to be distributed is determined in accordance with income tax regulations which may differ from GAAP. These differences are primarily due to the treatment of wash sale losses, grantor trust and partnership income.

 

Indemnification

 

The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnities. A Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Trust expects the risk of loss due to these warranties and indemnities to be remote.

 

3.Fees and Compensation Paid to Affiliates and Other Parties

 

Advisory Fees

 

The Trust has entered into an Investment Advisory Agreement with CLS Investments, LLC (the “Advisor”, formerly Clarke Lanzen Skalla Investment Firm, LLC), a subsidiary of NorthStar Financial Services Group, LLC. As compensation for the services rendered, facilities furnished, and expenses borne by the Advisor, the Funds will pay the Advisor a fee accrued daily and paid monthly, at the annualized rate of 0.75% of net assets for CLS Global Aggressive Equity Fund, CLS Global Diversified Equity Fund, CLS Global Growth Fund, CLS Growth and Income Fund, CLS International Equity Fund, and CLS Shelter Fund; CLS Flexible Income at the annualized rate of 0.40%; and Milestone Treasury Obligations Fund at the annualized rate of 0.10%.

 

The Trustees have adopted a Shareholder Servicing Plan with respect to the Class N Shares of the Funds (“Class N Plan”). The Class N Plan allows each of the Funds to use part of its assets for the payment of certain shareholder servicing expenses, including administrative or other shareholder support services. For these services under the Class N Plan, the Funds pay CLS an amount equal to 0.25% of average net assets attributable to Class N Shares, as applicable, of the respective Funds on an annualized basis. CLS shall use monies to compensate other parties that have entered into shareholder servicing agreements with CLS with respect to the servicing of Fund shares. In addition, the Milestone Treasury Obligations Fund accrues Shareholder Servicing Fees at an amount equal to 0.25% for Investor Shares, and 0.10% for Institutional Shares.

64

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

The Advisor has contractually agreed to waive or limit its management fees and to reimburse expenses, other than expenses relating to dividends on short sales, interest expense, indirect fees and expenses of underlying funds, and extraordinary or non-recurring expenses, through December 31, 2017, so that the annual operating expenses of the Funds do not exceed the percentage of the average daily net assets as indicated below:

 

  Expense Limitation  
Class N    
CLS Global Aggressive Equity    
CLS Global Diversified Equity    
CLS Global Growth 1.15%  
CLS Growth and Income    
CLS International Equity    
CLS Shelter    
     
Class N 0.80%  
CLS Flexible Income    
     
Investor Shares 0.45%  
Milestone Treasury Obligations Fund    
     
Institutional Shares 0.20%  
Milestone Treasury Obligations Fund    

 

The waivers and reimbursements, if any, of the Advisor’s fees for the six months ended October 31, 2016, were as follows:

 

Fund  Waiver/Reimbursement ($) 
CLS Global Aggressive Equity Fund  $139,886 
CLS Global Diversified Equity Fund   134,512 
CLS Global Growth Fund   159,791 
CLS Growth and Income Fund   116,873 
CLS Flexible Income Fund   198,235 
CLS International Equity Fund   104,515 
CLS Shelter Fund   53,467 
Milestone Treasury Obligations Fund   6,280 

65

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Fees waived or expenses reimbursed may be recouped by the Advisor from a Fund for a period up to three years from the date the fee or expense was waived or reimbursed. However, no recoupment payment will be made by a Fund if it would result in the Fund exceeding the contractual expense limitation described above. Except as noted below, during the six months ended October 31, 2016, the Advisor recaptured no fees for prior period expense waivers/reimbursements from the Funds. The table below contains the amounts of fee waivers and expense reimbursements subject to recapture by the Advisor through April 30 of the years indicated:

 

Fund  2017 ($)   2018 ($)   2019 ($)   Total ($) 
CLS Global Aggressive Equity Fund  $205,128   $204,172   $216,606   $625,906 
CLS Global Diversified Equity Fund   152,064    100,527    184,484    437,075 
CLS Global Growth Fund   310,466    255,228    257,009    822,703 
CLS Growth and Income Fund   236,881    146,025    162,615    545,521 
CLS Flexible Income Fund   279,009    235,410    272,835    787,254 
CLS International Equity Fund   247,165    262,496    151,643    661,304 
CLS Shelter Fund   114,933    102,029    84,181    301,143 

 

During the six months ended October 31, 2016, the Advisor recaptured no fees for prior period expense waivers/reimbursements from the Funds. The table below contains the amounts of fee waivers and expense reimbursements subject to recapture by the Advisor for Milestone Treasury Obligations Fund through:

 

November 30, 2016   November 30, 2017   November 30, 2018   Total 
$62,391   $66,261   $12,352   $141,004 

 

The Advisor has voluntarily agreed to waive additional fees for Milestone Treasury Obligations Fund in order to maintain a positive yield. This agreement may be terminated at any time.

 

For the six months ended October 31, 2016, the Milestone Treasury Obligations Fund incurred shareholder service fees in the amount of $210,323. The Fund waived shareholder service fees as follows:

 

Share Class  Expense Waiver ($) 
Investor Shares  $21,435 
Institutional Shares   169,263 
Total   190,698 

66

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Distributor

 

The distributor of the Funds is Northern Lights Distributors, LLC (the “Distributor”), an affiliate of the advisor. The Trust, with respect to the Funds, has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (the “Plan”). The Plan provides for the payment of a distribution fee to the Distributor at an annualized rate of 1.00% of the average daily net assets attributable to Class C shares. During the six months ended October 31, 2016, the Global Diversified Equity Fund Class C shares incurred $7,480 pursuant to the Plan. Class N shares do not pay any 12b-1 distribution fees, but pay the Advisor 0.25% for payments to third parties for shareholder services.

 

Administration, Fund Accounting, Transfer Agent, Custody Administration Fees

 

Gemini Fund Services, LLC (“GFS”), an affiliate of the distributor and advisor, provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to a separate servicing agreement with GFS, the Funds pay GFS customary fees for providing administration, fund accounting, and transfer agency services to the Funds. Certain officers of the Trust are also officers of GFS, and are not paid any fees directly by the Funds for serving in such capacities.

 

In addition, certain affiliates of the distributor provide ancillary services to the Funds as follows:

 

Blu Giant, LLC (“Blu Giant”), an affiliate of GFS, the distributor and the advisor, provides EDGAR conversion and filing services as well as print management services for the Funds on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Funds.

 

Chief Compliance Officer

 

Northern Lights Compliance Services, LLC (“NLCS”), an affiliate of GFS, the distributor and the advisor, provides a Chief Compliance Officer to the Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives customary fees from the Funds.

 

Trustees Fees

 

The Trust pays each Trustee of the Trust who was not an interested person a flat fee of $24,000 per year plus $6,000 for an in-person quarterly meeting or $1,000 per quarter if participating in the meeting by telephone. In every instance, the cost of the fees are to be allocated among the participating Funds in accordance with a formula that takes into account the overall asset size of each affected Fund. The Trust also reimburses the Trustees for travel and other expenses incurred in attending meetings of the Board. Officers of the Trust and Trustees who are interested persons of the Trust do not receive any direct compensation from the Trust.

 

Certain officers of the Trust are officers of GFS, NLCS, the advisor and/or the distributor.

67

 

AdvisorOne Funds Semi-Annual Report

 

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

4.Aggregate Unrealized Appreciation and Depreciation

 

The identified cost of investments in securities (including written options and short sales) owned by each Fund for federal income tax purposes, and their respective gross unrealized appreciation and depreciation at October 31, 2016, were as follows:

 

               Net Unrealized 
       Gross Unrealized   Gross Unrealized   Appreciation/ 
Fund  Tax Cost ($)   Appreciation ($)   Depreciation ($)   (Depreciation) ($) 
CLS Global Aggressive Equity Fund  $103,458,275   $14,044,596   $(840,675)  $13,203,921 
CLS Global Diversified Equity Fund   409,847,358    56,073,012    (3,618,967)   52,454,045 
CLS Global Growth Fund   247,460,309    20,215,941    (2,835,040)   17,380,901 
CLS Growth and Income Fund   343,348,348    27,106,114    (1,607,486)   25,498,628 
CLS Flexible Income Fund   219,631,787    4,567,383    (3,587,562)   979,821 
CLS International Equity Fund   23,930,981    692,365    (284,439)   407,926 
CLS Shelter Fund   119,598,381    2,929,815    (377,055)   2,552,760 
Milestone Treasury Obligations Fund   511,649,815             

 

5.Investment Transactions

 

The cost of purchases and the proceeds from sales of investments, other than short-term securities, for the six months October 31, 2016, were as follows:

 

Fund  Purchases ($)   Sales ($) 
CLS Global Aggressive Equity Fund  $13,815,830   $21,894,294 
CLS Global Diversified Equity Fund   101,813,344    124,445,650 
CLS Global Growth Fund   9,258,194    21,203,282 
CLS Growth and Income Fund   28,901,854    47,518,326 
CLS Flexible Income Fund   4,117,900    11,501,604 
CLS International Equity Fund   16,246,092    17,371,144 
CLS Shelter Fund   129,147,980    123,694,542 

68

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued) October 31, 2016

 

6.Investments in Affiliated Companies

 

An affiliated company is a company in which a Fund has ownership of at least 5% of the voting securities. Companies that are affiliates at October 31, 2016 are noted in the Funds’ Portfolio of Investments. Transactions during the period with companies that are affiliates or were affiliates at the beginning of the period are as follows:

 

CLS Global Aggressive Equity

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/       Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   Value-End   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   of Period ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $8,000,000   $7,000,000   $   $   $   $   $15,000,000    15,000,000 
464288786  iShares U.S. Insurance ETF   4,910,100            44,217        263,250    5,173,350    97,500 
Total     $12,910,100   $7,000,000   $   $44,217   $   $263,250   $20,173,350    15,097,500 

 

CLS Global Diversified Equity

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/       Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   Value-End   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   of Period ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $29,000,000   $6,000,000   $   $   $   $   $35,000,000    35,000,000 
46641Q209  JPMorgan Diversified Return International Equity ETF       31,203,900                396,900    31,600,800    630,000 
78463X533  SPDR S&P Emerging Markets Dividend ETF   37,180,000            1,480,449        1,210,000    38,390,000    1,375,000 
Total     $66,180,000   $37,203,900   $   $1,480,449   $   $1,606,900   $104,990,800    37,005,000 

69

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

CLS Global Growth

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/       Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   Value-End   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   of Period ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $34,400,000   $   $6,500,000   $   $   $   $27,900,000    27,900,000 

 

CLS Growth and Income

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/   Value-End   Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   of Period   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $25,800,000   $   $18,500,000   $   $   $   $7,300,000    7,300,000 
316188309  Fidelity Total Bond ETF   11,930,400            170,400        231,960    12,162,360    240,000 
97717W125  WisdomTree Managed Futures Strategy Fund   12,108,980                    (355,235)   11,753,745    281,932 
Total     $49,839,380   $   $18,500,000   $170,400   $   $(123,275)  $31,216,105    7,821,932 

 

CLS Flexible Income

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/   Value-End   Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   of Period   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $20,500,000   $3,000,000   $   $   $   $   $23,500,000    23,500,000 

70

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

CLS International Equity

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/   Value-End   Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   of Period   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $4,000,000   $   $4,000,000   $   $   $   $     
46434V712  iShares Edge MSCI Minimum Volatility Japan ETF   1,858,025    144,700        11,569        120,375    2,123,100    35,000 
Total     $5,858,025   $144,700   $4,000,000   $11,569   $   $120,375   $2,123,100    35,000 

 

CLS Shelter

 

                          Change in         
      Value-                   Unrealized       Shares 
      Beginning       Sales   Dividends   Realized   Appreciation/   Value-End   Held at 
      of Period   Purchases   Proceeds   Credited to   Gain   (Depreciation)   of Period   End of 
CUSIP  Description  ($)   ($)   ($)   Income ($)   (Loss) ($)   ($)   ($)   Period 
00764F383  Milestone Treasury Obligations Fund  $2,000,000   $   $   $   $   $   $2,000,000    2,000,000 

71

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

7.Shareholders’ Transactions

 

As of October 31, 2016, the Funds had an unlimited number of shares authorized. Following is a summary of shareholder transactions for each Fund:

 

   Period Ended   Year Ended 
   October 31, 2016   April 30, 2016 
                     
CLS Global Aggressive Equity Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   378,832   $4,777,998    3,412,573   $43,263,066 
Shares issued to shareholders in reinvestment           404,947    4,944,407 
Shares redeemed   (1,060,946)   (13,464,471)   (2,998,187)   (37,559,203)
Net increase (decrease)   (682,114)  $(8,686,473)   819,333   $10,648,270 
                     
CLS Global Diversified Equity Fund   Shares    Dollars    Shares    Dollars 
Class C Shares:                    
                     
Shares Sold   690   $10,573    3,486   $55,002 
Shares issued to shareholders in reinvestment           5,676    85,078 
Shares redeemed   (147,927)   (2,345,111)   (11,689)   (179,955)
Net decrease   (147,237)  $(2,334,538)   (2,527)  $(39,875)
                     
CLS Global Diversified Equity Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   1,756,970   $29,073,988    3,801,749   $62,676,801 
Shares issued to shareholders in reinvestment           1,201,496    19,163,867 
Shares redeemed   (3,418,029)   (56,613,002)   (9,783,135)   (161,903,457)
Net decrease   (1,661,059)  $(27,539,014)   (4,779,890)  $(80,062,789)
                     
CLS Global Growth Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   1,311,445   $14,122,842    3,838,356   $41,385,123 
Shares issued to shareholders in reinvestment           1,046,674    10,874,943 
Shares redeemed   (2,924,572)   (31,558,602)   (7,800,451)   (83,683,592)
Net increase decrease   (1,613,127)  $(17,435,760)   (2,915,421)  $(31,423,526)

72

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

   Period Ended   Year Ended 
   October 31, 2016   April 30, 2016 
                     
CLS Growth and Income Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   1,966,945   $21,164,626    7,728,138   $80,785,077 
Shares issued to shareholders in reinvestment           711,313    7,255,385 
Shares redeemed   (4,682,024)   (50,375,949)   (12,299,432)   (128,029,494)
Net decrease   (2,715,079)  $(29,211,323)   (3,859,981)  $(39,989,032)
                     
CLS Flexible Income Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   1,652,607   $17,038,080    6,060,273   $60,901,842 
Shares issued to shareholders in reinvestment   223,976    2,306,241    448,027    4,509,178 
Shares redeemed   (2,642,356)   (27,220,338)   (6,496,474)   (65,536,353)
Net increase (decrease)   (765,773)  $(7,876,017)   11,826   $(125,333)
                     
CLS International Equity Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   374,466   $1,576,094    3,503,399   $14,160,477 
Shares issued to shareholders in reinvestment           131,548    523,560 
Shares redeemed   (697,293)   (2,926,371)   (1,888,196)   (7,740,815)
Net increase (decrease)   (322,827)  $(1,350,277)   1,746,751   $6,943,222 
                     
CLS Shelter Fund   Shares    Dollars    Shares    Dollars 
Class N Shares:                    
                     
Shares Sold   1,371,303   $16,480,263    2,615,053   $31,975,517 
Shares issued to shareholders in reinvestment           717,947    8,285,104 
Shares redeemed   (971,995)   (11,598,729)   (2,590,654)   (31,489,762)
Net increase   399,308   $4,881,534    742,346   $8,770,859 

73

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

   Six Months Ended   Five Months Ended   Year Ended 
   October 31, 2016   April 30, 2016   November 30, 2015 
Milestone Treasury Obligations Fund Investor Shares:   Shares    Dollars    Shares    Dollars    Shares    Dollars 
Shares Sold   17,995,666   $17,995,666    28,236,832   $28,236,832    99,946,856   $99,946,856 
Shares issued to shareholders in reinvestment   13,921    13,921    15,961    15,961    929    929 
Shares redeemed   (11,759,434)   (11,759,434)   (31,815,990)   (31,815,990)   (119,650,358)   (119,650,358)
Net increase (decrease)   6,250,153   $6,250,153    (3,563,197)  $(3,563,197)   (19,702,573)  $(19,702,573)
                               
Milestone Treasury Obligations Fund Institutional Shares:   Shares    Dollars    Shares    Dollars    Shares    Dollars 
Shares Sold   2,504,614,716   $2,504,614,716    2,160,535,237   $2,160,535,237    2,958,988,389   $2,958,988,389 
Shares issued to shareholders in reinvestment   17,035    17,035    13,203    13,203    823    823 
Shares redeemed   (2,371,872,193)   (2,371,872,193)   (2,140,655,575)   (2,140,655,575)   (3,037,364,122)   (3,037,364,122)
Net increase (decrease)   132,759,558   $132,759,558    19,892,865   $19,892,865    (78,374,910)  $(78,374,910)

74

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

8.Securities Lending

 

The CLS Global Aggressive Equity Fund, CLS Global Diversified Equity Fund, CLS Global Growth Fund, CLS Growth and Income Fund, CLS Flexible Income Fund, CLS International Equity Fund, and CLS Shelter Fund have entered into a securities lending arrangement with The Bank of New York Mellon (the “Lending Agent”). Under the terms of the agreement, the Funds are authorized to loan securities through the Lending Agent to approved third-party borrowers. In exchange, the Funds receive cash collateral in the amount of at least 102% of the value of the securities loaned. The value of securities loaned is disclosed in a footnote on the statement of Assets & Liabilities and on the Schedule of Investments. Securities lending income is disclosed in the Funds’ Statements of Operations. Although risk is mitigated by the collateral, the Funds could experience a delay in recovering their securities and possible loss of income or value if the Borrower fails to return them.

 

The Lending Agent may invest the cash collateral received in connection with securities lending transactions in the Milestone Treasury Obligations Fund. The Milestone Treasury Obligations Fund is deemed an affiliate of the Trust and is managed by CLS Investments, LLC. The Milestone Treasury Obligations Fund is registered under the 1940 Act as an open end investment company, is subject to Rule 2a-7 under the 190 Act, which CLS may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Milestone Treasury Obligations Fund.

 

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 (“ASU No. 2014-11”), “Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures”. ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

 

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of October 31, 2016.

 

CLS Global Aggressive Equity  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $18,973,269   $   $   $   $18,973,269 
Total Borrowings   18,973,269                18,973,269 
Gross amount of recognized liabilities for securities lending transactions   $18,973,269 

75

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

CLS Global Diversified Equity  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $48,489,469   $   $   $   $48,489,469 
Total Borrowings   48,489,469                48,489,469 
Gross amount of recognized liabilities for securities lending transactions   $48,489,469 

 

CLS Global Growth  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $32,779,873   $   $   $   $32,779,873 
Total Borrowings   32,779,873                32,779,873 
Gross amount of recognized liabilities for securities lending transactions   $32,779,873 

 

 

CLS Growth and Income  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $21,119,494   $   $   $   $21,119,494 
Total Borrowings   21,119,494                21,119,494 
Gross amount of recognized liabilities for securities lending transactions   $21,119,494 

 

 

CLS Flexible Income  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $31,254,250   $   $   $   $31,254,250 
Total Borrowings   31,254,250                31,254,250 
Gross amount of recognized liabilities for securities lending transactions   $31,254,250 

76

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

CLS International Equity  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $5,460,943   $   $   $   $5,460,943 
Total Borrowings   5,460,943                5,460,943 
Gross amount of recognized liabilities for securities lending transactions   $5,460,943 

 

CLS Shelter  Remaining Contractual Maturity of the Agreements as of October 31, 2016 
                     
   Overnight and                 
   Continuous       Between 30 &         
Securities Lending Transactions  ($)   < 30 days ($)   90 days ($)   > 90 days ($)   Total ($) 
Exchange Traded Funds  $19,207,402   $   $   $   $19,207,402 
Total Borrowings   19,207,402                19,207,402 
Gross amount of recognized liabilities for securities lending transactions   $19,207,402 

 

Securities Lending income is a portion of total investment income and may not continue in the future due to market conditions.

 

       Gross Amounts not offset in the     
       Statement of Assets & Liabilities     
   Gross Amounts             
   Recognized             
   in Statements   Financial   Cash     
   of Assets &   Instruments   Collateral   Net Amount 
Fund  Liabilities ($)   Pledged ($)   Pledged ($)   of Assets ($) 
CLS Global Aggressive Equity Fund  $19,496,057 (1)  $19,496,057 (2)  $   $ 
CLS Global Diversified Equity Fund   49,648,300 (1)   49,648,300 (2)        
CLS Global Growth Fund   33,845,356 (1)   33,845,356 (2)        
CLS Growth and Income Fund   21,625,307 (1)   21,625,307 (2)        
CLS Flexible Income Fund   31,997,285 (1)   31,997,285 (2)        
CLS International Equity Fund   5,617,750 (1)   5,617,750 (2)        
CLS Shelter Fund   19,744,434 (1)   19,744,434 (2)        

 

(1)Collateral for Securities Loaned at value as presented in the Schedule of Investments.

 

(2)The amount is limited to the liability balance and accordingly, does not include excess collateral pledged.

77

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

9.Beneficial Ownership

 

The beneficial ownership, either directly or indirectly, of more than 25% of voting securities of a fund creates a presumption of control of the Fund, under Section 2(a)(9) of the 1940 Act. As of October 31, 2016, Nationwide Trust Company held the following voting securities for the sole benefit of customers and may be deemed to control the Funds:

 

Fund  
CLS Global Aggressive Equity Fund 35.70%
CLS Global Diversified Equity Fund 29.20%
CLS Global Growth Fund 29.40%
CLS Growth and Income Fund 29.17%
CLS Flexible Income Fund 27.02%
CLS International Equity Fund 37.33%

78

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

10.Distributions to Shareholders and Tax Components of Capital

 

The tax character of distributions for the following periods were as follows:

 

For the year ended April 30, 2016:

 

       Long-Term     
Portfolio  Ordinary Income ($)   Capital Gains ($)   Total ($) 
CLS Global Aggressive Equity Fund  $2,087,040   $2,860,912   $4,947,952 
CLS Global Diversified Equity Fund   3,472,351    15,932,562    19,404,913 
CLS Global Growth Fund   2,962,069    7,987,904    10,949,973 
CLS Growth and Income Fund   4,928,971    2,385,105    7,314,076 
CLS Flexible Income Fund   4,518,964        4,518,964 
CLS International Equity Fund   525,700        525,700 
CLS Shelter Fund   1,725,147    6,560,236    8,285,383 
Milestone Treasury Obligations Fund   185,688        185,688 

 

For the year ended April 30, 2015:

 

       Long-Term     
Portfolio  Ordinary Income ($)   Capital Gains ($)   Total ($) 
CLS Global Aggressive Equity Fund  $1,735,518   $3,643,692   $5,379,210 
CLS Global Diversified Equity Fund   9,862,039    6,244,211    16,106,250 
CLS Global Growth Fund   3,113,963    2,344,973    5,458,936 
CLS Growth and Income Fund   4,114,557    3,030,552    7,145,109 
CLS Flexible Income Fund   4,115,620        4,115,620 
CLS International Equity Fund   787,595    8,940,169    9,727,764 
CLS Shelter Fund   630,936        630,936 

 

For the year ended November 30, 2015:

 

       Long-Term     
Portfolio  Ordinary Income ($)   Capital Gains ($)   Total ($) 
Milestone Treasury Obligations Fund  $22,291   $   $22,291 

79

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

As of April 30, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

           Post   Capital             
       Undistributed   October   Loss   Other   Unrealized   Total 
   Undistributed   Long-Term   Loss and   Carry   Book/Tax   Appreciation/   Accumulated 
   Ordinary   Capital Gains   Late Year   Forwards   Differences   (Depreciation)   Earnings/ 
Portfolio  Income ($)   ($)   Loss ($)   ($)   ($)   ($)   (Deficits) ($) 
CLS Global Aggressive Equity Fund  $   $28,364   $   $   $   $9,797,178   $9,825,542 
                                    
CLS Global Diversified Fund   4,125,412        (3,317,681)   (4,801,427)       52,506,715    48,513,019 
                                    
CLS Global Growth Fund   231,026    1,456,042                16,148,691    17,835,759 
                                    
CLS Growth and Income Fund   1,204,866    744,632                19,574,939    21,524,437 
                                    
CLS Flexible Income Fund   415,631        (925,652)   (590,824)       (457,900)   (1,558,745)
                                    
CLS International Equity Fund           (290,323)   (700,440)       945,427    (45,336)
                                    
CLS Shelter Fund           (2,801,738)           4,156,197    1,354,459 
                                    
Milestone Treasury Obligations Fund   29,227                (28,993)       234 

 

 

The difference between book basis and tax basis undistributed net investment income, accumulated net realized gain/(loss), and unrealized appreciation/(depreciation) from investments is primarily attributable to the tax deferral of losses on wash sales, adjustments for partnerships and C-Corporation return of capital distributions. In addition, the amount listed under other book/tax differences is primarily attributable to dividends payable.

80

 

AdvisorOne Funds Semi-Annual Report

 

Notes to Financial Statements (Unaudited) (Continued)

October 31, 2016

 

Capital losses incurred after October 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Funds incurred and elected to defer such capital losses as follows:

 

Portfolio  Post October Losses ($) 
CLS Global Diversified Fund  $3,317,681 
CLS Flexible Income Fund   925,652 
CLS International Equity Fund   290,323 
CLS Shelter Fund   2,801,738 

 

At April 30, 2016, the Funds had capital loss carry forwards for federal income tax purposes available to offset future capital gains as follows:

 

       Non-Expiring   Non-Expiring     
Portfolio  2018($)   Short-Term ($)   Long-Term ($)   Total ($) 
CLS Global Diversified Fund  $   $4,801,427   $   $4,801,427 
CLS Flexible Income Fund       262,808    328,016    590,824 
CLS International Equity Fund       692,157    8,283    700,440 

 

Permanent book and tax differences, primarily attributable to the reclassification of Fund distributions, and adjustments for paydowns, partnerships and non-deductible expenses, resulted in reclassifications for the year ended April 30, 2016 as follows:

 

       Undistributed Ordinary   Undistributed Long- 
Portfolio  Paid In Capital ($)   Income (Loss) ($)   Term Gains (Loss) ($) 
CLS Global Aggressive Equity Fund  $(17)  $26,471   $(26,454)
CLS Global Diversified Equity Fund       (29,595)   29,595 
CLS Global Growth Fund       (1,266,294)   1,266,294 
CLS Growth and Income Fund       517,228    (517,228)
CLS Flexible Income Fund       189,353    (189,353)
CLS International Equity Fund   (160,816)   160,816     
CLS Shelter Fund       (65,052)   65,052 

 

11.Subsequent Events

 

Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has concluded that there are no other material items requiring adjustment or disclosure in the financial statements.

81

 

AdvisorOne Funds Semi-Annual Report

 

Shareholder Expense Example (Unaudited)

 

As a shareholder of the Funds you may incur two types of costs: (1) transaction costs, including contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution and/or service (12b-1 fees) fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.

 

Actual Expenses: The first section of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the applicable number under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Examples for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

82

 

AdvisorOne Funds Semi-Annual Report

 

Shareholder Expense Example (Unaudited)(Continued)

 

   Beginning   Ending Account   Expense  Expenses Paid 
   Account Value   Value   Ratio  During the 
   5/1/16 ($)   10/31/16 ($)   (Annualized)  Period ($) 
CLS Global Diversified Fund                  
Actual:  $1,000.00   $1,038.40   1.15%  $5.91 *
Hypothetical (5% return before expenses):  $1,000.00   $1,019.41   1.15%  $5.85 *
                   
CLS Growth and Income Fund                  
Actual  $1,000.00   $1,028.40   1.15%  $5.88 *
Hypothetical (5% return before expenses):  $1,000.00   $1,019.41   1.15%  $5.85 *
                   
CLS Global Growth Fund                  
Actual  $1,000.00   $1,032.40   1.15%  $5.89 *
Hypothetical (5% return before expenses):  $1,000.00   $1,019.41   1.15%  $5.85 *
                   
CLS International Equity Fund                  
Actual  $1,000.00   $1,016.70   1.15%  $5.85 *
Hypothetical (5% return before expenses):  $1,000.00   $1,019.41   1.15%  $5.85 *
                   
CLS Flexible Income Fund                  
Actual  $1,000.00   $1,022.10   0.80%  $4.08 *
Hypothetical (5% return before expenses):  $1,000.00   $1,021.17   0.80%  $4.08 *
                   
CLS Global Aggressive Equity Fund                  
Actual  $1,000.00   $1,052.20   1.15%  $5.95 *
Hypothetical (5% return before expenses):  $1,000.00   $1,019.41   1.15%  $5.85 *
                   
CLS Shelter Fund                  
Actual  $1,000.00   $1,035.20   1.15%  $5.90 *
Hypothetical (5% return before expenses):  $1,000.00   $1,019.41   1.15%  $5.85 *
                   
Milestone Treasury Obligations Fund                  
Actual:                  
Investor Class  $1,000.00   $1,000.80   0.20%  $1.01 *
Institutional Class  $1,000.00   $1,000.80   0.20%  $1.01 *
Hypothetical (5% return before expenses):                  
Investor Class  $1,000.00   $1,024.20   0.20%  $1.02 *
Institutional Class  $1,000.00   $1,024.20   0.20%  $1.02 *

 

*Expenses are equal to each Fund’s respective annual expense ratios for the most recent six month period, multiplied by the average account value over the period, multiplied by 184/365.

83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THIS PAGE INTENTIONALLY LEFT BLANK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84

 

AdvisorOne Funds Semi-Annual Report

 

Proxy Voting Policy

 

Information regarding how the Funds voted proxies relating to portfolio securities for the most recent twelve month period ended June 30 as well as a description of the policies and procedures that the Funds use to determine how to vote proxies is available without charge, upon request, by calling 1-866-811-0225 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

Portfolio Holdings

 

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (1-800-SEC-0330). The information on Form N-Q is available without charge, upon request, by calling 1-866-811-0225.

85

 

ABOUT CLS

 

CLS Investments (CLS) is a third party investment manager, ETF strategist, and long-time trusted partner in the financial industry. CLS’s extensive risk management experience, active asset allocation approach, and customizable strategy offerings have led clients to entrust their portfolios to CLS since 1989.

 

Through CLS’s partnership structure, your financial advisor maintains a direct relationship with you, while CLS’s portfolio management and analytics teams take on the day-to-day research, trading, and operations required to manage your account. Together, you and your advisor use the tools CLS provides to determine the investing strategy, investment types, and risk tolerance level most appropriate for you. Your advisor provides this information to CLS so we can accordingly make timely active asset allocation decisions within your portfolio. Through this mutually beneficial connection, CLS enhances your advisor’s service to you.

 
1989
Founded
 
 
$6.9B*
Assets Under Management
 
35K+
CLS clients
 
 
13
Portfolio managers & analysts
 
 
170+
Years of combined investment management experience
 
*As of 10/31/16


(CLS INVESTMENT LOGO)

 

     
888.455.4244 CLSinvest.com Follow us: @clsinvestments