UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-07852 | |||||||
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USAA Mutual Funds Trust | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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15935 La Cantera Pkwy, Building Two, San Antonio, Texas |
| 78256 | ||||||
(Address of principal executive offices) |
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Citi Fund Services Ohio, Inc., 4400 Easton Commons, Suite 200, Columbus, OH 43219 | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | 800-235-8396 |
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Date of fiscal year end: | March 31 |
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Date of reporting period: | September 30, 2019 |
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Item 1. Reports to Stockholders.
SEPTEMBER 30, 2019
Semi Annual Report
USAA California Bond Fund
Fund Shares (USCBX)
Adviser Shares (UXABX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 10 | ||||||
Statement of Operations | 11 | ||||||
Statements of Changes in Net Assets | 12 | ||||||
Financial Highlights | 14 | ||||||
Notes to Financial Statements | 16 | ||||||
Supplemental Information | 25 | ||||||
Proxy Voting and Portfolio Holdings Information | 26 | ||||||
Expense Examples | 26 | ||||||
Advisory Contract Approval | 27 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
USAA Mutual Funds Trust
1
| USAA Mutual Funds Trust USAA California Bond Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide California investors with a high level of current interest income that is exempt from federal and California state income taxes.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Municipal Bonds (98.8%) | |||||||||||
California (95.9%): | |||||||||||
| Abag Finance Authority for Nonprofit Corp. Revenue, 5.00%, 7/1/42, Continuously Callable @100 | $ | 1,500 | $ | 1,623 | |||||||
| Abag Finance Authority for Nonprofit Corp. Revenue(NBGA — California Health Insurance Construction Loan Insurance Program), 5.00%, 1/1/33, Continuously Callable @101 | 4,235 | 4,716 | |||||||||
| Adelanto Public Utility Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/39, Continuously Callable @100 | 2,000 | 2,417 | |||||||||
| Alameda Corridor Transportation Authority Revenue, Series B, 5.00%, 10/1/37, Continuously Callable @100 | 2,000 | 2,326 | |||||||||
| Albany Unified School District, GO Series B, 5.00%, 8/1/43, Continuously Callable @100 | 2,000 | 2,399 | |||||||||
Series B, 4.00%, 8/1/46, Continuously Callable @100 | 1,500 | 1,643 | |||||||||
| Anaheim Public Financing Authority Revenue, Series A, 5.00%, 5/1/46, Continuously Callable @100 | 1,500 | 1,707 | |||||||||
| Association of Bay Area Governments Revenue(INS — XL Capital Assurance), Series A, 4.75%, 3/1/36, Callable 3/1/20 @ 100 | 12,830 | 12,984 | |||||||||
| Bay Area Toll Authority Revenue 2.83%, 4/1/36, Callable 10/1/26 @ 100 | 15,000 | 15,877 | |||||||||
Series H, 5.00%, 4/1/49, Continuously Callable @100 | 4,000 | 4,894 | |||||||||
| Burbank Unified School District, GO 0.00%, 8/1/33, Continuously Callable @100 (c) | 3,085 | 3,144 | |||||||||
0.00%, 8/1/34, Continuously Callable @100 (c) | 3,000 | 3,105 | |||||||||
| California Educational Facilities Authority Revenue 5.38%, 4/1/34, Pre-refunded 4/1/20 @ 100 | 6,000 | 6,125 | |||||||||
5.00%, 10/1/43, Continuously Callable @100 | 2,000 | 2,484 | |||||||||
5.00%, 10/1/48, Continuously Callable @100 | 2,000 | 2,466 | |||||||||
5.00%, 10/1/49, Continuously Callable @100 | 3,100 | 3,682 | |||||||||
Series A, 5.00%, 10/1/37, Continuously Callable @100 | 1,000 | 1,183 | |||||||||
| California Enterprise Development Authority Revenue 4.00%, 3/1/39, Continuously Callable @100 | 8,105 | 8,827 | |||||||||
4.00%, 10/1/47, Continuously Callable @100 | 10,000 | 11,079 | |||||||||
4.00%, 11/1/49, Continuously Callable @100 | 1,900 | 2,087 | |||||||||
4.00%, 11/1/50, Continuously Callable @100 | 680 | 740 | |||||||||
Series A, 5.00%, 7/1/33, Continuously Callable @100 | 5,000 | 5,649 | |||||||||
Series A, 5.00%, 11/15/39, Continuously Callable @100 | 2,100 | 2,337 | |||||||||
Series A, 5.00%, 8/15/42, Continuously Callable @100 | 1,000 | 1,183 | |||||||||
Series B, 4.00%, 11/15/41, Continuously Callable @100 | 14,000 | 15,311 | |||||||||
| California Enterprise Development Authority Revenue(NBGA — California Health Insurance Construction Loan Insurance Program) 5.00%, 7/1/39, Continuously Callable @100 | 1,050 | 1,231 | |||||||||
5.00%, 6/1/42, Continuously Callable @100 | 7,805 | 8,504 | |||||||||
5.00%, 7/1/44, Continuously Callable @100 | 2,300 | 2,677 | |||||||||
| California Municipal Finance Authority Revenue 5.00%, 6/1/43, Continuously Callable @100 | 2,500 | 3,051 | |||||||||
Series A, 5.00%, 2/1/37, Continuously Callable @100 | 750 | 889 | |||||||||
Series A, 5.00%, 2/1/42, Continuously Callable @100 | 1,000 | 1,177 | |||||||||
Series A, 4.00%, 10/1/44, Continuously Callable @100 | 2,000 | 2,150 | |||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series A, 5.00%, 2/1/47, Continuously Callable @100 | $ | 1,000 | $ | 1,165 | |||||||
Series A, 5.00%, 7/1/47, Continuously Callable @100 | 1,000 | 1,148 | |||||||||
Series A, 5.00%, 6/1/50, Continuously Callable @100 | 1,000 | 1,132 | |||||||||
| California Municipal Finance Authority Revenue(NBGA — California Health Insurance Construction Loan Insurance Program) 4.13%, 5/15/39, Continuously Callable @100 | 1,900 | 2,142 | |||||||||
4.13%, 5/15/46, Continuously Callable @100 | 2,100 | 2,334 | |||||||||
Series B, 5.00%, 5/15/47, Continuously Callable @102 | 2,500 | 2,954 | |||||||||
| California Pollution Control Financing Authority Revenue 5.00%, 7/1/39, Continuously Callable @100 (a) | 6,000 | 7,414 | |||||||||
5.25%, 8/1/40, Continuously Callable @100 (a) | 4,000 | 4,115 | |||||||||
5.00%, 11/21/45, Continuously Callable @100 (a) | 2,000 | 2,435 | |||||||||
| California Public Finance Authority Revenue 5.00%, 10/15/37, Continuously Callable @100 | 1,000 | 1,146 | |||||||||
5.00%, 10/15/47, Continuously Callable @100 | 3,000 | 3,388 | |||||||||
| California School Finance Authority Revenue 5.00%, 8/1/41, Continuously Callable @100 (a) | 1,750 | 1,940 | |||||||||
5.00%, 8/1/46, Continuously Callable @100 (a) | 2,250 | 2,473 | |||||||||
Series A, 5.00%, 7/1/47, Continuously Callable @100 (a) | 1,370 | 1,575 | |||||||||
Series A, 5.00%, 7/1/49, Continuously Callable @100 (a) | 1,000 | 1,186 | |||||||||
Series A, 5.00%, 7/1/54, Continuously Callable @100 (a) | 2,150 | 2,550 | |||||||||
| California State Public Works Board Revenue Series C, 5.00%, 4/1/31, Continuously Callable @100 | 6,875 | 6,894 | |||||||||
Series D, 5.00%, 4/1/31, Continuously Callable @100 | 5,705 | 5,721 | |||||||||
| California Statewide Communities Development Authority Revenue 5.00%, 5/15/40, Continuously Callable @100 | 2,000 | 2,328 | |||||||||
5.00%, 5/15/42, Continuously Callable @100 | 1,500 | 1,616 | |||||||||
5.00%, 11/1/43, Continuously Callable @100 | 500 | 576 | |||||||||
5.00%, 10/1/46, Continuously Callable @100 | 2,750 | 3,202 | |||||||||
5.00%, 5/15/47, Continuously Callable @100 | 1,000 | 1,167 | |||||||||
5.00%, 5/15/47, Continuously Callable @100 | 1,500 | 1,616 | |||||||||
5.00%, 1/1/48, Continuously Callable @100 | 1,995 | 2,341 | |||||||||
5.00%, 7/1/48, Continuously Callable @100 | 4,000 | 4,704 | |||||||||
5.00%, 5/15/50, Continuously Callable @100 | 1,000 | 1,167 | |||||||||
Series A, 4.00%, 8/15/51, Continuously Callable @100 | 3,000 | 3,239 | |||||||||
Series A, 5.00%, 12/1/53, Continuously Callable @100 | 1,000 | 1,212 | |||||||||
Series A, 5.00%, 12/1/57, Continuously Callable @100 | 2,500 | 2,960 | |||||||||
Series C-1, 1.43%, 4/1/46, Continuously Callable @100 | 10,700 | 10,700 | |||||||||
Series C-3, 1.43%, 4/1/45, Continuously Callable @100 | 15,000 | 15,000 | |||||||||
| California Statewide Communities Development Authority Revenue(NBGA — California Health Insurance Construction Loan Insurance Program) 4.00%, 11/1/46, Continuously Callable @100 | 4,000 | 4,327 | |||||||||
Series S, 5.00%, 8/1/44, Continuously Callable @102 | 2,400 | 2,680 | |||||||||
| Carlsbad Unified School District Certificate of Participation(INS — Assured Guaranty Corp.), Series A, 5.00%, 10/1/34, Pre-refunded 10/1/19 @ 100 | 5,265 | 5,265 | |||||||||
| Centinela Valley Union High School District, GO, Series B, 4.00%, 8/1/50, Continuously Callable @100 | 9,500 | 10,334 | |||||||||
| City of Atwater Wastewater Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 5/1/43, Continuously Callable @100 | 1,300 | 1,550 | |||||||||
City of Chula Vista Revenue, 5.88%, 1/1/34, Continuously Callable @100 | 5,000 | 5,018 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
City of Fillmore Wastewater Revenue, 5.00%, 5/1/47, Continuously Callable @100 | $ | 2,000 | $ | 2,396 | |||||||
| City of Roseville Electric System Revenue, 5.00%, 2/1/37, Pre-refunded 2/1/20 @ 100 | 7,115 | 7,204 | |||||||||
| City of Santa Clara Electric Revenue, Series A, 5.25%, 7/1/32, Continuously Callable @100 | 2,000 | 2,138 | |||||||||
| City of Tulare Sewer Revenue(INS — Assured Guaranty Municipal Corp.) 4.00%, 11/15/41, Continuously Callable @100 | 5,710 | 6,261 | |||||||||
4.00%, 11/15/44, Continuously Callable @100 | 5,000 | 5,483 | |||||||||
| City of Upland Certificate of Participation 4.00%, 1/1/42, Continuously Callable @100 | 3,000 | 3,174 | |||||||||
5.00%, 1/1/47, Continuously Callable @100 | 2,000 | 2,304 | |||||||||
| Corona-Norco Unified School District Special Tax, 5.00%, 9/1/32, Continuously Callable @100 | 1,350 | 1,531 | |||||||||
| County of Sacramento Airport System Revenue, Series B, 5.00%, 7/1/41, Continuously Callable @100 | 1,100 | 1,319 | |||||||||
| Educational Facility Authority(LIQ — Deutsche Bank AG), Series 2017-7007, 1.88%, 3/1/42, Callable 3/1/20 @ 100 (a) (b) | 11,700 | 11,700 | |||||||||
| San Francisco Multifamily Housing(LOC — Deutsche Bank AG), Series DBE-8038, 1.93%, 12/1/52, Callable 12/1/20 @ 100 (a) | 15,000 | 15,000 | |||||||||
| East Bay Municipal Utility District Wastewater System Revenue, Series A-2, 5.00%, 6/1/38 | 9,000 | 12,835 | |||||||||
| Elk Grove Finance Authority Special Tax(INS — Build America Mutual Assurance Co.), 5.00%, 9/1/38, Continuously Callable @100 | 1,500 | 1,759 | |||||||||
| Foothill-Eastern Transportation Corridor Agency Revenue, Series B-2, 3.50%, 1/15/53, Continuously Callable @100 | 1,500 | 1,557 | |||||||||
| Foothill-Eastern Transportation Corridor Agency Revenue(INS — Assured Guaranty Municipal Corp.) 0.00%, 1/15/34€ | 15,000 | 10,343 | |||||||||
0.00%, 1/15/35 (e) | 7,500 | 5,000 | |||||||||
| Golden State Tobacco Securitization Corp. Revenue, Series A, 5.00%, 6/1/35, Continuously Callable @100 | 5,500 | 6,507 | |||||||||
| Grass Valley School District, GO(INS — Build America Mutual Assurance Co.), 5.00%, 8/1/45, Continuously Callable @100 | 2,400 | 2,862 | |||||||||
| Hayward Unified School District, GO(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 8/1/44, Continuously Callable @100 | 3,000 | 3,696 | |||||||||
| Indio Redevelopment Agency Successor Agency Tax Allocation, Series A, 5.25%, 8/15/31, Continuously Callable @100 | 2,940 | 2,949 | |||||||||
| Inglewood Unified School District, GO(INS — Build America Mutual Assurance Co.), Series B, 5.00%, 8/1/38, Continuously Callable @100 | 750 | 877 | |||||||||
| Inland Empire Tobacco Securitization Corp. Revenue, Series B, 5.75%, 6/1/26, Pre-refunded 6/1/20 @ 100 | 1,910 | 1,968 | |||||||||
| Irvine Unified School District Special Tax 5.00%, 9/1/45, Continuously Callable @100 | 1,000 | 1,170 | |||||||||
5.00%, 9/1/49, Continuously Callable @100 | 2,000 | 2,333 | |||||||||
Series A, 4.00%, 9/1/39, Continuously Callable @100 | 1,020 | 1,141 | |||||||||
Series B, 5.00%, 9/1/42, Continuously Callable @100 | 1,000 | 1,182 | |||||||||
Series B, 5.00%, 9/1/47, Continuously Callable @100 | 1,000 | 1,167 | |||||||||
Series C, 5.00%, 9/1/42, Continuously Callable @100 | 1,000 | 1,182 | |||||||||
Series C, 5.00%, 9/1/47, Continuously Callable @100 | 525 | 613 | |||||||||
Series D, 5.00%, 9/1/49, Continuously Callable @100 | 1,000 | 1,167 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Irvine Unified School District Special Tax(INS — Build America Mutual Assurance Co.), 5.00%, 9/1/56, Continuously Callable @100 | $ | 6,000 | $ | 7,282 | |||||||
| Jurupa Public Financing Authority Special Tax, Series A, 5.00%, 9/1/42, Continuously Callable @100 | 1,000 | 1,120 | |||||||||
| Local Public Schools Funding Authority School Improvement District No 2016-1, GO(INS — Build America Mutual Assurance Co.), Series A, 4.00%, 8/1/52, Continuously Callable @100 | 1,500 | 1,653 | |||||||||
Long Beach Bond Finance Authority Revenue, Series A, 5.00%, 11/15/35 | 3,875 | 5,144 | |||||||||
| Los Angeles County Facilities Inc Revenue, 5.00%, 12/1/51, Continuously Callable @100 | 4,000 | 4,862 | |||||||||
| Los Angeles County Public Works Financing Authority Revenue Series A, 5.00%, 12/1/44, Continuously Callable @100 | 2,000 | 2,334 | |||||||||
Series D, 5.00%, 12/1/45, Continuously Callable @100 | 6,000 | 7,122 | |||||||||
| March Joint Powers Redevelopment Agency Successor Agency Tax Allocation(INS — Build America Mutual Assurance Co.), 4.00%, 8/1/41, Continuously Callable @100 | 5,790 | 6,395 | |||||||||
| Monrovia Financing Authority Revenue, 5.00%, 12/1/45, Continuously Callable @100 | 3,435 | 4,084 | |||||||||
| Monrovia Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 12/1/45, Continuously Callable @100 | 2,345 | 2,767 | |||||||||
| Moreno Valley Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series B, 5.00%, 8/1/47, Continuously Callable @100 | 6,500 | 7,978 | |||||||||
| Mountain View School District/Los Angeles County, GO(INS — Build America Mutual Assurance Co.), Series B, 5.00%, 8/1/48, Continuously Callable @100 | 3,315 | 3,952 | |||||||||
| Mountain View Shoreline Regional Park Community Tax Allocation, Series A, 5.63%, 8/1/35, Continuously Callable @100 | 2,000 | 2,145 | |||||||||
| Norco Community Redevelopment Agency Successor Agency Tax Allocation 5.88%, 3/1/32, Pre-refunded 3/1/20 @ 100 | 1,500 | 1,529 | |||||||||
6.00%, 3/1/36, Pre-refunded 3/1/20 @ 100 | 1,250 | 1,275 | |||||||||
| Norwalk Redevelopment Agency Tax Allocation(INS — National Public Finance Guarantee Corp.) Series A, 5.00%, 10/1/30, Continuously Callable @100 | 5,000 | 5,014 | |||||||||
Series A, 5.00%, 10/1/35, Continuously Callable @100 | 3,500 | 3,510 | |||||||||
| Norwalk-La Mirada Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series C, 0.00%, 8/1/30€ | 7,500 | 5,941 | |||||||||
| Palomar Health, GO(INS — Assured Guaranty Municipal Corp.), Series A, 0.00%, 8/1/31 (e) | 12,230 | 9,161 | |||||||||
| Palomar Health, GO(INS — National Public Finance Guarantee Corp.), 0.00%, 8/1/26 (e) | 5,500 | 4,748 | |||||||||
| Perris Union High School District, GO(INS — Assured Guaranty Corp.), Series A, 4.00%, 9/1/48, Continuously Callable @100 | 5,000 | 5,668 | |||||||||
| Pittsburg Successor Agency Redevelopment Agency Tax Allocation(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 9/1/29, Continuously Callable @100 | 2,000 | 2,406 | |||||||||
| Pomona Unified School District, GO(INS — Build America Mutual Assurance Co.), Series F, 5.00%, 8/1/39, Continuously Callable @100 | 1,500 | 1,715 | |||||||||
| Regents of the University of California Medical Center Pooled Revenue, Series L, 4.00%, 5/15/44, Continuously Callable @100 | 2,000 | 2,181 | |||||||||
| Rio Elementary School District, GO(INS — Assured Guaranty Municipal Corp.), Series B, 4.00%, 8/1/45, Continuously Callable @100 | 2,800 | 3,054 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Riverside County Public Financing Authority Tax Allocation(INS — Build America Mutual Assurance Co.) 4.00%, 10/1/36, Continuously Callable @100 | $ | 1,250 | $ | 1,373 | |||||||
4.00%, 10/1/37, Continuously Callable @100 | 1,625 | 1,775 | |||||||||
| Riverside County Redevelopment Successor Agency Tax Allocation(INS — Build America Mutual Assurance Co.), 4.00%, 10/1/37, Continuously Callable @100 | 2,000 | 2,201 | |||||||||
| Riverside County Transportation Commission Revenue, Series A, 5.25%, 6/1/39, Pre-refunded 6/1/23 @ 100 | 2,000 | 2,294 | |||||||||
| RNR School Financing Authority Special Tax(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 9/1/41, Continuously Callable @100 | 2,000 | 2,372 | |||||||||
| Sacramento Area Flood Control Agency Special Assessment, 5.00%, 10/1/44, Continuously Callable @100 | 2,000 | 2,275 | |||||||||
| Sacramento City Unified School District, GO(INS — Build America Mutual Assurance Co.), Series S, 5.00%, 7/1/38, Continuously Callable @100 | 1,020 | 1,135 | |||||||||
| San Bruno Park Elementary School District, GO, Series A, 5.00%, 8/1/48, Continuously Callable @100 | 3,000 | 3,580 | |||||||||
| San Diego County Regional Airport Authority Revenue Series A, 5.00%, 7/1/40, Continuously Callable @100 | 2,000 | 2,052 | |||||||||
Series A, 5.00%, 7/1/47, Continuously Callable @100 | 1,500 | 1,806 | |||||||||
| San Diego Public Facilities Financing Authority Revenue Series A, 5.25%, 5/15/29, Pre-refunded 5/15/20 @ 100 | 1,000 | 1,025 | |||||||||
Series A, 5.00%, 10/15/44, Continuously Callable @100 | 2,500 | 3,019 | |||||||||
| San Francisco City & County Airport Comm-San Francisco International Airport Revenue, Series A, 4.90%, 5/1/29, Continuously Callable @100 | 5,465 | 5,481 | |||||||||
| San Jose Financing Authority Revenue, Series A, 5.00%, 6/1/39, Continuously Callable @100 | 10,000 | 11,294 | |||||||||
| San Leandro Unified School District, GO(INS — Build America Mutual Assurance Co.), Series B, 5.00%, 8/1/43, Continuously Callable @100 | 2,750 | 3,374 | |||||||||
| San Luis & Delta Mendota Water Authority Revenue(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 3/1/38, Continuously Callable @100 | 1,500 | 1,676 | |||||||||
| San Marcos Schools Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 8/15/35, Pre-refunded 8/15/20 @ 100 | 3,000 | 3,099 | |||||||||
| San Ramon Redevelopment Agency Successor Agency Tax Allocation(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 2/1/38, Continuously Callable @100 | 5,000 | 5,797 | |||||||||
| Santa Clarita Community College District, GO, 4.00%, 8/1/46, Continuously Callable @100 | 5,250 | 5,759 | |||||||||
| Santa Cruz County Redevelopment Agency Tax Allocation(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 9/1/35, Continuously Callable @100 | 6,000 | 7,104 | |||||||||
| Santa Rosa High School District, GO(INS — Assured Guaranty Municipal Corp.), Series C, 5.00%, 8/1/43, Continuously Callable @100 | 1,000 | 1,218 | |||||||||
| State of California, GO 5.25%, 2/1/30, Continuously Callable @100 | 4,000 | 4,364 | |||||||||
5.00%, 2/1/43, Continuously Callable @100 | 3,000 | 3,334 | |||||||||
4.00%, 10/1/44, Continuously Callable @100 | 1,000 | 1,147 | |||||||||
5.00%, 9/1/45, Continuously Callable @100 | 2,500 | 3,004 | |||||||||
5.00%, 8/1/46, Continuously Callable @100 | 9,500 | 11,365 | |||||||||
5.00%, 11/1/47, Continuously Callable @100 | 7,000 | 8,563 | |||||||||
| Tahoe-Truckee Unified School District Certificate of Participation(INS — Build America Mutual Assurance Co.), 4.00%, 6/1/43, Continuously Callable @100 | 1,000 | 1,097 | |||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Temecula Valley Unified School District Financing Authority Revenue Special Tax(INS — Build America Mutual Assurance Co.), 5.00%, 9/1/40, Continuously Callable @100 | $ | 1,575 | $ | 1,835 | |||||||
| Temecula Valley Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series B, 4.00%, 8/1/45, Continuously Callable @100 | 7,500 | 8,221 | |||||||||
| Sacramento City Financing Authority(LIQ — Deutsche Bank AG) Series 2016-XG0067, 1.69%, 12/1/30 (a) | 4,955 | 4,955 | |||||||||
Series XG0100, 1.68%, 12/1/33 (a) | 17,765 | 17,765 | |||||||||
| Golden State Tobacco Securitization Corp(LOC — Deutsche Bank AG), Series 2015-XF1038, 1.68%, 6/1/45, Callable 6/1/25 @ 100 (a) | 4,940 | 4,940 | |||||||||
| Twin Rivers Unified School District Certificate of Participation(INS — Assured Guaranty Municipal Corp.), 3.20%, 6/1/41 (Put Date 6/1/20) (d) | 8,485 | 8,498 | |||||||||
| Val Verde Unified School District Certificate of Participation(INS — Build America Mutual Assurance Co.) Series A, 5.00%, 8/1/34, Continuously Callable @100 | 1,105 | 1,308 | |||||||||
Series A, 5.00%, 8/1/35, Continuously Callable @100 | 1,530 | 1,809 | |||||||||
| Val Verde Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series C, 4.00%, 8/1/45, Continuously Callable @100 | 4,475 | 4,882 | |||||||||
| Val Verde Unified School District, GO(INS — Build America Mutual Assurance Co.), Series B, 5.00%, 8/1/44, Continuously Callable @100 | 4,000 | 4,690 | |||||||||
| Victor Valley Union High School District, GO(INS — Assured Guaranty Municipal Corp.), Series B, 4.00%, 8/1/37, Continuously Callable @100 | 5,000 | 5,603 | |||||||||
| Victorville Joint Powers Finance Authority Revenue(LOC — BNP Paribas), Series A, 1.58%, 5/1/40, Continuously Callable @100 (b) | 14,810 | 14,810 | |||||||||
| Washington Township Health Care District Revenue, Series A, 5.00%, 7/1/42, Continuously Callable @100 | 1,000 | 1,159 | |||||||||
| West Kern Water District Certificate of Participation, 5.00%, 6/1/28, Continuously Callable @100 | 4,585 | 4,877 | |||||||||
| Western Placer Unified School District Certificate of Participation(INS — Assured Guaranty Municipal Corp.), 4.00%, 8/1/41, Continuously Callable @100 | 6,000 | 6,588 | |||||||||
688,762 | |||||||||||
Guam (2.2%): | |||||||||||
| Guam Government Waterworks Authority Revenue 5.50%, 7/1/43, Continuously Callable @100 | 4,000 | 4,426 | |||||||||
5.00%, 1/1/46, Continuously Callable @100 | 7,000 | 7,848 | |||||||||
| Guam Power Authority Revenue Series A, 5.00%, 10/1/34, Continuously Callable @100 | 1,000 | 1,076 | |||||||||
Series A, 5.00%, 10/1/40, Continuously Callable @100 | 2,800 | 3,192 | |||||||||
16,542 | |||||||||||
Virgin Islands (0.7%): | |||||||||||
| Virgin Islands Public Finance Authority Revenue 5.00%, 9/1/33, Continuously Callable @100 (a) | 3,000 | 3,316 | |||||||||
Series A, 4.00%, 10/1/22 | 1,125 | 1,114 | |||||||||
4,430 | |||||||||||
Total Municipal Bonds (Cost $668,153) | 709,734 | ||||||||||
Total Investments (Cost $668,153) — 98.8% | 709,734 | ||||||||||
Other assets in excess of liabilities — 1.2% | 8,514 | ||||||||||
NET ASSETS — 100.00% | $ | 718,248 | |||||||||
See notes to financial statements.
8
| USAA Mutual Funds Trust USAA California Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
(a) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless noted otherwise, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $81,364 (thousands) and amounted to 11.3% of net assets.
(b) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
(c) Stepped-coupon security converts to coupon form on 8/01/23 with a rate of 4.3%.
(d) Put Bond.
(e) Zero coupon bond.
GO — General Obligation
LOC — Line Letter of Credit
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
INS Principal and interest payments are insured by the name listed. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations.
LIQ Liquidity enhancement that may, under certain circumstances, provide for repayment of principal and interest upon demand from the name listed.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
9
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA California Bond Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $668,153) | $ | 709,734 | |||||
Cash | 682 | ||||||
Interest receivable | 6,654 | ||||||
Receivable for capital shares issued | 91 | ||||||
Receivable for investments sold | 2,030 | ||||||
Prepaid expenses | 9 | ||||||
Total assets | 719,200 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 283 | ||||||
Capital shares redeemed | 338 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 190 | ||||||
Administration fees | 89 | ||||||
Custodian fees | 24 | ||||||
Transfer agent fees | 16 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
| 12b-1 fees | 1 | ||||||
Other accrued expenses | 11 | ||||||
Total liabilities | 952 | ||||||
Net Assets: | |||||||
Capital | 680,762 | ||||||
Total distributable earnings/(loss) | 37,486 | ||||||
Net assets | $ | 718,248 | |||||
Net Assets | |||||||
Adviser Shares | $ | 7,367 | |||||
Fund Shares | 710,881 | ||||||
Total | $ | 718,248 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Adviser Shares | 648 | ||||||
Fund Shares | 62,448 | ||||||
| Total | 63,096 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Adviser Shares | $ | 11.37 | |||||
Fund Shares | $ | 11.38 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
10
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA California Bond Fund | |||||||
Investment Income: | |||||||
Interest | $ | 11,768 | |||||
Total income | 11,768 | ||||||
Expenses: | |||||||
Investment advisory fees | 1,168 | ||||||
Administration fees — Adviser Shares | 5 | ||||||
Administration fees — Fund Shares | 531 | ||||||
Professional fees | 3 | ||||||
12b-1 fees — Adviser Shares | 9 | ||||||
Custodian fees | 53 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | 1 | ||||||
Legal and audit fees | 36 | ||||||
Transfer agent fees — Adviser Shares | 1 | ||||||
Transfer agent fees — Fund Shares | 82 | ||||||
State registration and filing fees | — | (a) | |||||
Other expenses | — | (a) | |||||
Total expenses | 1,907 | ||||||
Net Investment Income (Loss) | 9,861 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | 702 | ||||||
Net change in unrealized appreciation/depreciation on investment securities | 18,872 | ||||||
Net realized/unrealized gains (losses) on investments | 19,574 | ||||||
Change in net assets resulting from operations | $ | 29,435 | |||||
(a) Rounds to less than $1.
See notes to financial statements.
11
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
USAA California Bond Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 9,861 | $ | 21,496 | |||||||
Net realized gains (losses) from investments | 702 | 762 | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | 18,872 | 8,728 | |||||||||
Change in net assets resulting from operations | 29,435 | 30,986 | |||||||||
Distributions to Shareholders: | |||||||||||
Adviser Shares | (91 | ) | (201 | ) | |||||||
Fund Shares | (9,768 | ) | (21,287 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (9,859 | ) | (21,488 | ) | |||||||
Change in net assets resulting from capital transactions | 276 | 7,415 | |||||||||
Change in net assets | 19,852 | 16,913 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 698,396 | 681,483 | |||||||||
End of period | $ | 718,248 | $ | 698,396 | |||||||
Capital Transactions: | |||||||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 253 | $ | 895 | |||||||
Distributions reinvested | 16 | 37 | |||||||||
Cost of shares redeemed | (106 | ) | (1,008 | ) | |||||||
Total Adviser Shares | $ | 163 | $ | (76 | ) | ||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 39,152 | $ | 67,106 | |||||||
Distributions reinvested | 7,879 | 16,937 | |||||||||
Cost of shares redeemed | (46,918 | ) | (76,552 | ) | |||||||
Total Fund Shares | $ | 113 | $ | 7,491 | |||||||
Change in net assets resulting from capital transactions | $ | 276 | $ | 7,415 | |||||||
Share Transactions: | |||||||||||
Adviser Shares | |||||||||||
Issued | 23 | 82 | |||||||||
Reinvested | 1 | 4 | |||||||||
Redeemed | (9 | ) | (93 | ) | |||||||
Total Adviser Shares | 15 | (7 | ) | ||||||||
Fund Shares | |||||||||||
Issued | 3,488 | 6,162 | |||||||||
Reinvested | 699 | 1,554 | |||||||||
Redeemed | (4,168 | ) | (7,042 | ) | |||||||
Total Fund Shares | 19 | 674 | |||||||||
Change in Shares | 34 | 667 | |||||||||
See notes to financial statements.
12
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13
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Total Distributions | ||||||||||||||||||||||
USAA California Bond Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 11.06 | 0.14 | (e) | 0.31 | 0.45 | (0.14 | ) | (0.14 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 10.91 | 0.32 | 0.15 | 0.47 | (0.32 | ) | (0.32 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.91 | 0.34 | — | (f) | 0.34 | (0.34 | ) | (0.34 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 11.28 | 0.35 | (0.37 | ) | (0.02 | ) | (0.35 | ) | (0.35 | ) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 11.26 | 0.39 | 0.02 | 0.41 | (0.39 | ) | (0.39 | ) | ||||||||||||||||||
| Year Ended March 31, 2015 | $ | 10.82 | 0.40 | 0.44 | 0.84 | (0.40 | ) | (0.40 | ) | ||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 11.07 | 0.16 | (e) | 0.31 | 0.47 | (0.16 | ) | (0.16 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 10.92 | 0.34 | 0.15 | 0.49 | (0.34 | ) | (0.34 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.92 | 0.37 | — | (f) | 0.37 | (0.37 | ) | (0.37 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 11.29 | 0.37 | (0.37 | ) | — | (f) | (0.37 | ) | (0.37 | ) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 11.27 | 0.42 | 0.02 | 0.44 | (0.42 | ) | (0.42 | ) | ||||||||||||||||||
| Year Ended March 31, 2015 | $ | 10.83 | 0.43 | 0.44 | 0.87 | (0.43 | ) | (0.43 | ) | ||||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
(f) Amount is less than $0.005 per share.
(g) Prior to August 1, 2014, AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.90% of the Adviser Shares' average daily net assets.
See notes to financial statements.
14
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||
| Redemption fees added to beneficial interests | Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(d) | ||||||||||||||||||||||||||||
USAA California Bond Fund | |||||||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 11.37 | 4.10 | % | 0.78 | % | 2.52 | % | 0.78 | % | $ | 7,367 | 8 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 11.06 | 4.37 | % | 0.76 | % | 2.92 | % | 0.76 | % | $ | 7,005 | 18 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 10.91 | 3.12 | % | 0.75 | % | 3.08 | % | 0.75 | % | $ | 6,985 | 6 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | (f) | $ | 10.91 | (0.24 | )% | 0.75 | % | 3.09 | % | 0.75 | % | $ | 7,083 | 26 | % | |||||||||||||||||||
| Year Ended March 31, 2016 | — | $ | 11.28 | 3.73 | % | 0.80 | % | 3.49 | % | 0.80 | % | $ | 8,303 | 9 | % | ||||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 11.26 | 7.86 | % | 0.83 | %(g) | 3.58 | % | 0.83 | % | $ | 7,948 | 4 | % | ||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 11.38 | 4.23 | % | 0.53 | % | 2.77 | % | 0.53 | % | $ | 710,881 | 8 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 11.07 | 4.61 | % | 0.52 | % | 3.15 | % | 0.52 | % | $ | 691,391 | 18 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 10.92 | 3.37 | % | 0.51 | % | 3.32 | % | 0.51 | % | $ | 674,498 | 6 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | $ | 10.92 | 0.01 | % | 0.51 | % | 3.34 | % | 0.51 | % | $ | 669,435 | 26 | % | ||||||||||||||||||||
| Year Ended March 31, 2016 | — | $ | 11.29 | 3.98 | % | 0.56 | % | 3.74 | % | 0.56 | % | $ | 698,731 | 9 | % | ||||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 11.27 | 8.14 | % | 0.57 | % | 3.85 | % | 0.57 | % | $ | 675,694 | 4 | % | ||||||||||||||||||||
See notes to financial statements.
15
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA California Bond Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Adviser Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to fees paid under distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Investments in open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 in the fair value hierarchy.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Municipal Bonds | $ | — | $ | 709,734 | $ | — | $ | 709,734 | |||||||||||
Total | $ | — | $ | 709,734 | $ | — | $ | 709,734 | |||||||||||
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
17
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Investment Companies:
The Fund may invest in portfolios of open-end investment companies. These investment companies 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 by the methods established by the board of directors of the underlying funds.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Securities Lending:
The Fund, through a securities lending agreement with Citibank, N.A. ("Citibank"), may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income, net of income retained by Citibank. Borrowers are required to secure their loans for collateral in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked-to-market daily. Any collateral shortfalls associated with increases in the valuation of the securities loaned are cured the next business day once the shortfall exceeds $100,000. Collateral may be cash, U.S. government securities, or other securities as permitted by SEC guidelines. Cash collateral may be invested in high-quality short-term investments, primarily open-end investment companies. Collateral requirements are determined daily based on the value of the Fund's securities on loan as of the end of the prior business day. During the time portfolio securities are on loan, the borrower will pay the Fund any dividends or interest paid on such securities plus any fee negotiated between the parties to the lending agreement. The Fund also earns a return from the collateral. The Fund pays Citibank various fees in connection with the investment of cash collateral and fees based on the investment income received from securities lending activities. Securities lending income (net of these fees) is disclosed on the Statement of Operations. Loans are terminable upon demand and the borrower must return the loaned securities within the lesser of one standard settlement period or five business days. Risks relating to securities-lending transactions include that the borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower. The Fund's agreement with Citibank does not include master netting provisions. Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy borrower default. Cash collateral is listed in the Fund's Portfolio of Investments and Financial Statements while non-cash collateral is not included.
During the six months ended September 30, 2019, the Fund had no securities on loan.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
18
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 6,400 | $ | — | $ | — | ||||||
Fees Paid Indirectly:
Expense offsets to custody fees that arise from credits on cash balances maintained on deposit are reflected on the Statement of Operations, as applicable, as "Fees paid indirectly".
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||
| Purchases | Sales | ||||||
| $ | 55,008 | $ | 82,827 | ||||
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly as a percentage of the average daily net assets of the Fund, on an annual basis equal to 0.50% of the first $50 million, 0.40% of that portion over $50 million but not over $100 million, and 0.30% of
19
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
that portion over $100 million. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $581 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly as a percentage of the average daily net assets of the Fund, which on an annual basis is equal to 0.50% of the first $50 million, 0.40% of that portion over $50 million but not over $100 million, and 0.30% of that portion over $100 million.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the Transaction on July 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper California Municipal Debt Funds Index. The Lipper California Municipal Debt Funds Index tracks the total return performance of funds within the Lipper California Municipal Debt Funds category.
The performance period for each share class consists of the current month plus the previous 35 months. The following table is utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points)(a) | Annual Adjustment Rate (in basis points)(a) | ||||||
+/- 20 to 50 | +/- 4 | ||||||
+/- 51 to 100 | +/- 5 | ||||||
+/- 101 and greater | +/- 6 | ||||||
(a) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper California Municipal Debt Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period April 1, 2019 through June 30, 2019, performance adjustments for Fund Shares and Adviser Sharers were $22 and $0 thousand, respectively, and 0.00% and 0.00% of net assets, respectively. Base fees incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $565 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from July 1, 2019 through September 30, 2019 are $270 and $3 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO") , and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from April 1, 2019 through June 30, 2019 were $261 and $2 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund Shares and Adviser Shares based on an annual charge of $25.50 per shareholder account plus out-of-pocket expenses. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $44 and less than $1 thousand for the Fund Shares and Adviser Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $38 and less than $1 thousand for the Fund Shares and Adviser Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distribution and Service 12b-1 Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the Adviser Shares pursuant to a Distribution Agreement between the Distributor and the Trust. Pursuant to the Distribution and Service Plans adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of up to 0.25% of the average daily net assets of the Adviser Shares. Amounts incurred and paid to the Distributor from July 1, 2019 through September 30, 2019 are $5 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Adviser Shares are offered and sold without imposition of an initial sales charge or a contingent deferred sales charge.
21
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Prior to the Transaction on July 1, 2019, the Fund adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under the plan, the Adviser Shares paid fees to USAA Investment Management Company ("IMCO"), the distributor, for distribution and shareholder services. IMCO paid all or a portion of such fees to intermediaries that made the Adviser Shares available for investment by their customers. The fee was accrued daily and paid monthly at an annual rate of 0.25% of the Adviser Shares' average daily net assets. IMCO also provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis and received no fee or other compensation for these services, but may have received 12b-1 fees as described above, with respect to Adviser Shares. Amounts incurred and paid to IMCO from April 1, 2019 through June 30, 2019 were $4 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.80% and 0.54% for the Adviser Shares and Fund Shares, respectively.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, there are no amounts available to be repaid to the Adviser.
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund concentrates its investments in California tax-exempt securities and, therefore, may be exposed to more credit risk than portfolios with a broader geographical diversification.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $1 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
23
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
The Fund did not utilize or participate in the Facility during the period July 1, 2019 through September 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Tax-Exempt Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 21,488 | $ | — | $ | 21,488 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
| Undistributed Tax-Exempt Income | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation) | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 354 | $ | (4,795 | ) | $ | 22,709 | $ | 18,268 | |||||||||||
As of the most recent tax year ended March 31, 2019, the Fund had net capital loss carryforwards ("CLCFs") not limited as a result of changes in Fund ownership during the year and in prior years and with no expiration date as summarized in the table below (amounts in thousands).
| Short-Term Amount | Long-Term Amount | Total | |||||||||
| $ | 34 | $ | 4,761 | $ | 4,795 | ||||||
During the most recent tax year ended March 31, 2019, the Fund utilized $766 thousand of capital loss carryforwards, to offset capital gains.
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
24
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
28,714,152 | 3,041,972 | 2,372,173 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
25
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Adviser | $ | 1,000.00 | $ | 1,041.00 | $ | 1,021.10 | $ | 3.98 | $ | 3.94 | 0.78 | % | |||||||||||||||
Fund | 1,000.00 | 1,042.30 | 1,022.35 | 2.71 | 2.68 | 0.53 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
26
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses, as compared to comparable investment companies and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
27
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement. The Board considered the level and depth of experience of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust.
The Board also reviewed the compliance and administrative services provided to the Fund by the Manager and its affiliates, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes all no-load retail open-end investment companies with the same investment classification/objective as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment — was below the median of its expense group and expense universe. The data indicated that the Fund's total expense ratio was below the median of its expense group and expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates. The Board also took into account the high quality of services received by the Fund from the Manager. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and its Lipper index for the one-, three-, five- and ten-year periods ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the top 10% of its performance universe for the one-year period ended December 31, 2018, was in the top 40% of its performance universe for the three- and five-year periods ended December 31, 2018, and was in the top 20% of its performance universe for the ten-year period ended December 31,2018. The Board took into account management's discussion of the Fund's performance, including its strong shorter term and longer term performance.
Compensation and Profitability — The Board took into consideration the level and method of computing the Fund's management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability
28
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Analysis prepared by an independent information service. In reviewing the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of services received by the Fund from the Manager. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board noted that the Fund has advisory fee breakpoints that allow the Fund to participate in economies of scale and that such economies of scale currently were reflected in the advisory fee. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that the Fund may realize additional economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
29
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39600-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Global Equity Income Fund
Fund Shares (UGEIX)
Institutional Shares (UIGEX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
USAA Mutual Funds Trust
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Sector Allocations | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 9 | ||||||
Statement of Operations | 10 | ||||||
Statements of Changes in Net Assets | 11 | ||||||
Financial Highlights | 12 | ||||||
Notes to Financial Statements | 14 | ||||||
Supplemental Information | 24 | ||||||
Proxy Voting and Portfolio Holdings Information | 25 | ||||||
Expense Examples | 25 | ||||||
Advisory Contract Approval | 26 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
1
| USAA Mutual Funds Trust USAA Global Equity Income Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Sector Allocations:
Investment Objective: Seeks total return with an emphasis on current income.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Global Equity Income Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Common Stocks (98.6%) | |||||||||||
Communication Services (6.7%): | |||||||||||
BT Group PLC | 49,755 | $ | 109 | ||||||||
CBS Corp., Class B | 2,500 | 101 | |||||||||
Comcast Corp., Class A | 2,900 | 131 | |||||||||
Eutelsat Communications SA | 6,638 | 123 | |||||||||
Hakuhodo DY Holdings, Inc. | 7,400 | 108 | |||||||||
HKT Trust & HKT Ltd. | 95,000 | 151 | |||||||||
Informa PLC | 11,705 | 123 | |||||||||
JCDecaux SA | 4,097 | 111 | |||||||||
KDDI Corp. | 14,400 | 376 | |||||||||
Koninklijke KPN NV | 40,414 | 126 | |||||||||
Nippon Telegraph & Telephone Corp. | 9,800 | 469 | |||||||||
Omnicom Group, Inc. | 4,600 | 359 | |||||||||
Publicis Groupe SA | 2,351 | 116 | |||||||||
RTL Group SA | 2,901 | 139 | |||||||||
Shaw Communications, Inc., Class B | 6,100 | 120 | |||||||||
SoftBank Group Corp., Class C | 17,100 | 674 | |||||||||
Spark New Zealand, Ltd. | 46,184 | 128 | |||||||||
Telenor ASA | 9,612 | 193 | |||||||||
The Interpublic Group of Co., Inc. | 5,500 | 119 | |||||||||
The Walt Disney Co. | 1,000 | 130 | |||||||||
Toho Co. Ltd. | 2,900 | 127 | |||||||||
Verizon Communications, Inc. | 17,781 | 1,073 | |||||||||
WPP PLC | 21,226 | 266 | |||||||||
5,372 | |||||||||||
Consumer Discretionary (10.8%): | |||||||||||
Barratt Developments PLC | 17,376 | 138 | |||||||||
Best Buy Co., Inc. | 1,800 | 124 | |||||||||
Bridgestone Corp. | 5,100 | 198 | |||||||||
Carnival Corp. | 2,700 | 118 | |||||||||
Cie Generale des Etablissements Michelin SCA | 978 | 109 | |||||||||
Compass Group PLC | 5,180 | 133 | |||||||||
Darden Restaurants, Inc. | 1,000 | 118 | |||||||||
Ford Motor Co. | 48,400 | 444 | |||||||||
Garmin Ltd. | 1,600 | 136 | |||||||||
General Motors Co., Class C | 10,600 | 397 | |||||||||
Genuine Parts Co. | 1,200 | 120 | |||||||||
H&R Block, Inc. | 4,200 | 99 | |||||||||
Harley-Davidson, Inc. | 3,500 | 126 | |||||||||
Hasbro, Inc. | 2,000 | 237 | |||||||||
Industria de Diseno Textil SA | 11,197 | 346 | |||||||||
Jardine Cycle & Carriage Ltd. | 4,600 | 100 | |||||||||
Kering SA | 308 | 157 | |||||||||
L Brands, Inc. | 6,500 | 127 | |||||||||
Las Vegas Sands Corp. | 12,200 | 705 | |||||||||
Lowe's Cos., Inc. | 3,300 | 363 | |||||||||
Ross Stores, Inc. | 1,300 | 143 | |||||||||
Sekisui House Ltd. | 7,500 | 148 | |||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Global Equity Income Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Starbucks Corp. | 9,800 | $ | 866 | ||||||||
Target Corp. | 3,800 | 406 | |||||||||
Taylor Wimpey PLC | 77,216 | 154 | |||||||||
The Home Depot, Inc. (a) | 5,300 | 1,231 | |||||||||
The TJX Cos., Inc. | 7,400 | 412 | |||||||||
Toyota Motor Corp. | 15,600 | 1,048 | |||||||||
Tractor Supply Co. | 1,100 | 99 | |||||||||
8,802 | |||||||||||
Consumer Staples (10.7%): | |||||||||||
Campbell Soup Co. | 3,100 | 145 | |||||||||
Church & Dwight Co., Inc. | 1,700 | 128 | |||||||||
Coca-Cola European Partners PLC | 2,200 | 122 | |||||||||
Colgate-Palmolive Co. | 1,700 | 125 | |||||||||
General Mills, Inc. | 4,800 | 265 | |||||||||
Heineken Holding NV | 2,180 | 217 | |||||||||
Heineken NV | 3,019 | 325 | |||||||||
Imperial Brands PLC | 27,477 | 617 | |||||||||
Kimberly-Clark Corp. | 5,100 | 724 | |||||||||
Koninklijke Ahold Delhaize NV | 8,143 | 204 | |||||||||
Sysco Corp. | 2,300 | 183 | |||||||||
The Clorox Co. | 800 | 121 | |||||||||
The J.M. Smucker Co. | 1,100 | 121 | |||||||||
The Procter & Gamble Co. | 19,030 | 2,368 | |||||||||
Tyson Foods, Inc., Class A | 1,500 | 129 | |||||||||
Walgreens Boots Alliance, Inc. | 13,800 | 763 | |||||||||
Walmart, Inc. | 17,180 | 2,039 | |||||||||
8,596 | |||||||||||
Energy (2.4%): | |||||||||||
| BP PLC | 17,818 | 113 | |||||||||
Chevron Corp. | 1,200 | 142 | |||||||||
Enagas SA | 4,650 | 107 | |||||||||
Equinor ASA | 6,285 | 119 | |||||||||
Exxon Mobil Corp. | 2,700 | 191 | |||||||||
Galp Energia, SGPS, SA | 8,068 | 121 | |||||||||
Inter Pipeline Ltd. | 8,000 | 141 | |||||||||
JXTG Holdings, Inc. | 34,100 | 156 | |||||||||
Koninklijke Vopak NV | 2,691 | 138 | |||||||||
ONEOK, Inc. | 1,900 | 140 | |||||||||
Pembina Pipeline Corp. | 3,300 | 122 | |||||||||
Phillips 66 | 1,300 | 133 | |||||||||
Repsol SA | 7,915 | 124 | |||||||||
Royal Dutch Shell PLC, Class B | 3,787 | 112 | |||||||||
TOTAL SA | 4,509 | 235 | |||||||||
2,094 | |||||||||||
Financials (19.2%): | |||||||||||
Aflac, Inc. | 3,700 | 194 | |||||||||
Allianz SE | 5,388 | 1,254 | |||||||||
Ameriprise Financial, Inc. | 1,700 | 250 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA Global Equity Income Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Assicurazioni Generali SpA | 16,026 | $ | 311 | ||||||||
Aviva PLC | 23,469 | 115 | |||||||||
AXA SA | 15,302 | 391 | |||||||||
Bank of America Corp. | 34,420 | 1,004 | |||||||||
Bank of Montreal | 1,600 | 118 | |||||||||
BNP Paribas SA | 13,142 | 638 | |||||||||
BOC Hong Kong Holdings Ltd. | 66,500 | 226 | |||||||||
Capital One Financial Corp. | 2,400 | 218 | |||||||||
CI Financial Corp. | 7,600 | 111 | |||||||||
Citigroup, Inc. | 13,300 | 919 | |||||||||
Citizens Financial Group, Inc. | 3,500 | 124 | |||||||||
Comerica, Inc. | 1,700 | 112 | |||||||||
Credit Agricole SA | 26,064 | 315 | |||||||||
DBS Group Holdings Ltd. | 26,800 | 484 | |||||||||
Deutsche Boerse AG | 1,412 | 220 | |||||||||
Direct Line Insurance Group PLC | 29,460 | 109 | |||||||||
Discover Financial Services | 2,400 | 195 | |||||||||
Fifth Third BanCorp. | 5,000 | 137 | |||||||||
Franklin Resources, Inc. | 26,300 | 759 | |||||||||
Great-West Lifeco, Inc. | 6,400 | 154 | |||||||||
Hang Seng Bank Ltd. | 12,600 | 270 | |||||||||
Huntington Bancshares, Inc. | 13,600 | 194 | |||||||||
Invesco Ltd. | 8,600 | 146 | |||||||||
Legal & General Group PLC | 36,269 | 111 | |||||||||
Manulife Financial Corp. | 6,800 | 125 | |||||||||
MetLife, Inc. | 12,400 | 584 | |||||||||
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen, Class R | 492 | 127 | |||||||||
National Australia Bank Ltd. | 6,616 | 133 | |||||||||
ORIX Corp. | 9,100 | 136 | |||||||||
Oversea-Chinese Banking Corp. Ltd. | 14,700 | 116 | |||||||||
Pargesa Holding SA | 1,609 | 124 | |||||||||
Prudential Financial, Inc. | 1,700 | 153 | |||||||||
Regions Financial Corp. | 8,900 | 141 | |||||||||
Resona Holdings, Inc. | 29,800 | 128 | |||||||||
Skandinaviska Enskilda Banken AB, Class A | 24,767 | 228 | |||||||||
Sumitomo Mitsui Financial Group, Inc. | 10,300 | 354 | |||||||||
Sun Life Financial, Inc. | 3,000 | 134 | |||||||||
Svenska Handelsbanken AB, Class A | 13,722 | 128 | |||||||||
T. Rowe Price Group, Inc. | 2,300 | 263 | |||||||||
The Allstate Corp. | 3,000 | 326 | |||||||||
The Bank of Nova Scotia | 4,500 | 255 | |||||||||
The PNC Financial Services Group, Inc. | 2,500 | 350 | |||||||||
The Progressive Corp. | 4,700 | 363 | |||||||||
The Travelers Co., Inc. | 1,000 | 149 | |||||||||
Tokio Marine Holdings, Inc. | 12,500 | 671 | |||||||||
Unilever NV | 13,272 | 797 | |||||||||
United Overseas Bank Ltd. | 6,400 | 119 | |||||||||
Zurich Insurance Group AG | 1,021 | 391 | |||||||||
15,374 | |||||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA Global Equity Income Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Health Care (13.1%): | |||||||||||
Abbott Laboratories | 2,500 | $ | 210 | ||||||||
AbbVie, Inc. | 18,400 | 1,394 | |||||||||
Alfresa Holdings Corp. | 5,000 | 112 | |||||||||
AmerisourceBergen Corp. | 1,500 | 123 | |||||||||
Amgen, Inc. | 2,100 | 406 | |||||||||
Anthem, Inc. | 1,000 | 240 | |||||||||
Bristol-Myers Squibb Co. | 9,200 | 467 | |||||||||
Cardinal Health, Inc. | 6,100 | 288 | |||||||||
Danaher Corp. | 1,200 | 173 | |||||||||
Johnson & Johnson | 17,300 | 2,239 | |||||||||
Koninklijke Philips NV | 2,858 | 132 | |||||||||
McKesson Corp. | 1,100 | 150 | |||||||||
Medtronic PLC | 1,900 | 206 | |||||||||
Novartis AG | 13,839 | 1,200 | |||||||||
Pfizer, Inc. | 49,400 | 1,775 | |||||||||
Quest Diagnostics, Inc. | 1,500 | 161 | |||||||||
Roche Holding AG | 3,779 | 1,100 | |||||||||
Smith & Nephew PLC | 5,733 | 138 | |||||||||
STERIS PLC | 800 | 116 | |||||||||
Stryker Corp. | 700 | 151 | |||||||||
UnitedHealth Group, Inc. | 500 | 109 | |||||||||
10,890 | |||||||||||
Industrials (13.5%): | |||||||||||
3M Co. | 4,300 | 707 | |||||||||
ABB Ltd. | 6,186 | 122 | |||||||||
ANA Holdings, Inc. (a) | 3,800 | 128 | |||||||||
Atlas Copco AB, Class A | 8,913 | 274 | |||||||||
Aurizon Holdings Ltd. | 32,737 | 131 | |||||||||
Brambles Ltd. | 13,726 | 106 | |||||||||
C.H. Robinson Worldwide, Inc. | 1,500 | 127 | |||||||||
CIMIC Group Ltd. | 3,948 | 84 | |||||||||
Cummins, Inc. | 2,100 | 342 | |||||||||
Delta Air Lines, Inc. | 3,300 | 190 | |||||||||
Dover Corp. | 1,500 | 149 | |||||||||
Eaton Corp. PLC, ADR | 4,100 | 340 | |||||||||
Ferguson PLC | 1,922 | 140 | |||||||||
Geberit AG | 280 | 134 | |||||||||
Honeywell International, Inc. | 5,500 | 931 | |||||||||
Illinois Tool Works, Inc. | 2,500 | 391 | |||||||||
Ingersoll-Rand PLC | 2,400 | 296 | |||||||||
Itochu Corp. | 10,600 | 220 | |||||||||
Japan Airlines Co. Ltd., Class C | 3,900 | 116 | |||||||||
Jardine Matheson Holdings Ltd. | 2,000 | 107 | |||||||||
Jardine Strategic Holdings Ltd. | 3,300 | 99 | |||||||||
Lockheed Martin Corp. | 1,800 | 702 | |||||||||
Mitsubishi Corp. | 11,600 | 286 | |||||||||
Mitsubishi Heavy Industries Ltd. | 4,200 | 165 | |||||||||
Norfolk Southern Corp. | 600 | 108 | |||||||||
NWS Holdings Ltd. | 60,000 | 93 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA Global Equity Income Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Obayashi Corp. | 12,600 | $ | 126 | ||||||||
PACCAR, Inc. | 3,000 | 210 | |||||||||
Parker-Hannifin Corp. | 700 | 126 | |||||||||
Randstad RV | 3,656 | 180 | |||||||||
RELX PLC | 8,774 | 208 | |||||||||
Republic Services, Inc., Class A | 1,400 | 121 | |||||||||
Rockwell Automation, Inc. | 800 | 132 | |||||||||
Safran SA | 1,239 | 195 | |||||||||
Snap-on, Inc. | 700 | 110 | |||||||||
Southwest Airlines Co. | 3,300 | 178 | |||||||||
Sumitomo Corp. | 8,200 | 128 | |||||||||
Thales SA | 1,240 | 143 | |||||||||
The Boeing Co. | 3,000 | 1,141 | |||||||||
Thomson Reuters Corp. | 5,300 | 354 | |||||||||
Union Pacific Corp. | 3,100 | 502 | |||||||||
United Technologies Corp. | 1,000 | 137 | |||||||||
Waste Management, Inc. | 1,100 | 127 | |||||||||
Wolters Kluwer NV | 2,319 | 169 | |||||||||
10,775 | |||||||||||
Information Technology (15.4%): | |||||||||||
Apple, Inc. | 11,900 | 2,665 | |||||||||
Applied Materials, Inc. | 3,700 | 185 | |||||||||
Cisco Systems, Inc. | 37,217 | 1,839 | |||||||||
Fidelity National Information Services, Inc. | 2,500 | 332 | |||||||||
Hitachi Ltd. | 3,700 | 139 | |||||||||
Intel Corp. | 2,600 | 134 | |||||||||
International Business Machines Corp. | 10,457 | 1,520 | |||||||||
Juniper Networks, Inc. | 4,700 | 116 | |||||||||
KLA Corp. | 1,000 | 159 | |||||||||
Lam Research Corp. | 700 | 162 | |||||||||
Maxim Integrated Products, Inc. | 2,100 | 122 | |||||||||
Microsoft Corp. | 10,335 | 1,437 | |||||||||
NetApp, Inc. | 2,000 | 105 | |||||||||
Oracle Corp. | 23,000 | 1,266 | |||||||||
Paychex, Inc. | 3,100 | 257 | |||||||||
QUALCOMM, Inc. | 11,300 | 861 | |||||||||
Texas Instruments, Inc. | 5,700 | 737 | |||||||||
The Western Union Co. | 12,300 | 285 | |||||||||
Visa, Inc., Class A | 1,300 | 224 | |||||||||
12,545 | |||||||||||
Materials (3.1%): | |||||||||||
Akzo Nobel NV | 2,040 | 182 | |||||||||
Amcor PLC | 10,800 | 105 | |||||||||
Asahi Kasei Corp. | 11,700 | 116 | |||||||||
Celanese Corp., Series A | 1,200 | 147 | |||||||||
Fortescue Metals Group Ltd. | 36,691 | 218 | |||||||||
HeidelbergCement AG | 1,533 | 111 | |||||||||
LafargeHolcim Ltd. | 2,542 | 125 | |||||||||
LyondellBasell Industries NV, Class A | 3,600 | 322 | |||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA Global Equity Income Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Packaging Corp. of America | 1,300 | $ | 138 | ||||||||
PPG Industries, Inc. | 1,600 | 189 | |||||||||
Rio Tinto PLC | 19,267 | 1,002 | |||||||||
2,655 | |||||||||||
Real Estate (1.9%): | |||||||||||
Daito Trust Construction Co. Ltd. | 1,000 | 128 | |||||||||
Kerry Properties Ltd. | 29,500 | 91 | |||||||||
Simon Property Group, Inc. | 4,400 | 685 | |||||||||
Stockland | 42,395 | 130 | |||||||||
Swiss Prime Site AG | 1,422 | 139 | |||||||||
Ventas, Inc. | 4,400 | 321 | |||||||||
Vicinity Centres | 72,157 | 125 | |||||||||
1,619 | |||||||||||
Utilities (1.8%): | |||||||||||
AES Corp. | 7,400 | 121 | |||||||||
American Electric Power Co., Inc. | 1,400 | 131 | |||||||||
American Water Works Co., Inc. | 1,100 | 137 | |||||||||
Duke Energy Corp. | 1,400 | 134 | |||||||||
Entergy Corp. | 1,200 | 141 | |||||||||
OGE Energy Corp. | 2,900 | 132 | |||||||||
Power Assets Holdings Ltd. | 17,000 | 114 | |||||||||
Terna Rete Elettrica Nazionale SpA | 19,485 | 125 | |||||||||
The Southern Co. | 2,200 | 136 | |||||||||
United Utilities Group PLC | 12,487 | 127 | |||||||||
Xcel Energy, Inc. | 2,100 | 136 | |||||||||
1,434 | |||||||||||
Total Common Stocks (Cost $75,074) | 80,156 | ||||||||||
Exchange-Traded Funds (0.5%) | |||||||||||
iShares MSCI ACWI ETF | 5,803 | 428 | |||||||||
Total Exchange-Traded Funds (Cost $434) | 428 | ||||||||||
Collateral for Securities Loaned^ (0.5%) | |||||||||||
HSBC U.S. Government Money Market Fund, I Shares, 1.85% (b) | 368,100 | 368 | |||||||||
Total Collateral for Securities Loaned (Cost $368) | 368 | ||||||||||
Total Investments (Cost $75,876) — 99.6% | 80,952 | ||||||||||
Other assets in excess of liabilities — 0.4% | 329 | ||||||||||
NET ASSETS — 100.00% | $ | 81,281 | |||||||||
^ Purchased with cash collateral from securities on loan.
(a) All or a portion of this security is on loan.
(b) Rate disclosed is the daily yield on September 30, 2019.
ADR — American Depositary Receipt
ETF — Exchange-Traded Fund
PLC — Public Limited Company
See notes to financial statements.
8
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Global Equity Income Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $75,876) | $ | 80,952 | (a) | ||||
Foreign currency, at value (Cost $48) | 48 | ||||||
Cash and cash equivalents | 368 | ||||||
Interest and dividends receivable | 161 | ||||||
Receivable for capital shares issued | 26 | ||||||
Reclaims receivable | 199 | ||||||
Receivable from Adviser | 23 | ||||||
Prepaid expenses | 19 | ||||||
Total assets | 81,796 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 368 | ||||||
Capital shares redeemed | 27 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 33 | ||||||
Administration fees | 10 | ||||||
Custodian fees | 8 | ||||||
Transfer agent fees | 11 | ||||||
Chief Compliance Officer fees | — | (b) | |||||
Other accrued expenses | 58 | ||||||
Total liabilities | 515 | ||||||
Net Assets: | |||||||
Capital | 72,003 | ||||||
Total distributable earnings/(loss) | 9,278 | ||||||
Net assets | $ | 81,281 | |||||
Net Assets | |||||||
Fund Shares | $ | 75,902 | |||||
Institutional Shares | 5,379 | ||||||
Total | $ | 81,281 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 7,062 | ||||||
Institutional Shares | 500 | ||||||
| Total | 7,562 | ||||||
Net asset value, offering and redemption price per share: (c) | |||||||
Fund Shares | $ | 10.75 | |||||
Institutional Shares | $ | 10.76 | |||||
(a) Includes $359 of securities on loan.
(b) Rounds to less than $1.
(c) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
9
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Global Equity Income Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 1,630 | |||||
Interest | 5 | ||||||
Securities lending (net of fees) | — | (a) | |||||
Foreign tax withholding | (93 | ) | |||||
Total income | 1,542 | ||||||
Expenses: | |||||||
Investment advisory fees | 204 | ||||||
Professional fees | — | (a) | |||||
Administration fees — Fund Shares | 57 | ||||||
Administration fees — Institutional Shares | 3 | ||||||
Custodian fees | 35 | ||||||
Transfer agent fees — Fund Shares | 66 | ||||||
Transfer agent fees — Institutional Shares | 3 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
Legal and audit fees | 48 | ||||||
State registration and filing fees | 16 | ||||||
Other expenses | 25 | ||||||
Total expenses | 475 | ||||||
Expenses waived/reimbursed by Adviser | (23 | ) | |||||
Expenses waived/reimbursed by AMCO | (48 | ) | |||||
Net expenses | 404 | ||||||
Net Investment Income (Loss) | 1,138 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
| Net realized gains (losses) from investment securities and foreign currency translations | 5,138 | ||||||
| Net change in unrealized appreciation/depreciation on investment securities and foreign currency translations | (3,424 | ) | |||||
Net realized/unrealized gains (losses) on investments | 1,714 | ||||||
Change in net assets resulting from operations | $ | 2,852 | |||||
(a) Rounds to less than $1.
See notes to financial statements.
10
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
| USAA Global Equity Income Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 1,138 | $ | 2,248 | |||||||
Net realized gains (losses) from investments | 5,138 | 1,605 | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | (3,424 | ) | (724 | ) | |||||||
Change in net assets resulting from operations | 2,852 | 3,129 | |||||||||
Distributions to Shareholders: | |||||||||||
Fund Shares | (968 | ) | (5,165 | ) | |||||||
Institutional Shares | (72 | ) | (356 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (1,040 | ) | (5,521 | ) | |||||||
Change in net assets resulting from capital transactions | (878 | ) | (18,809 | ) | |||||||
Change in net assets | 934 | (21,201 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 80,347 | 101,548 | |||||||||
End of period | $ | 81,281 | $ | 80,347 | |||||||
Capital Transactions: | |||||||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 5,601 | $ | 7,528 | |||||||
Distributions reinvested | 793 | 4,126 | |||||||||
Cost of shares redeemed | (7,272 | ) | (30,463 | ) | |||||||
Total Fund Shares | $ | (878 | ) | $ | (18,809 | ) | |||||
Institutional Shares | |||||||||||
Proceeds from shares issued | — | — | |||||||||
Distributions reinvested | — | — | |||||||||
Cost of shares redeemed | — | — | |||||||||
Total Institutional Shares | — | — | |||||||||
Change in net assets resulting from capital transactions | $ | (878 | ) | $ | (18,809 | ) | |||||
Share Transactions: | |||||||||||
Fund Shares | |||||||||||
Issued | 529 | 707 | |||||||||
Reinvested | 74 | 404 | |||||||||
Redeemed | (685 | ) | (2,797 | ) | |||||||
Total Fund Shares | (82 | ) | (1,686 | ) | |||||||
Institutional Shares | |||||||||||
Issued | — | — | |||||||||
Reinvested | — | — | |||||||||
Redeemed | — | — | |||||||||
Total Institutional Shares | — | — | |||||||||
Change in Shares | (82 | ) | (1,686 | ) | |||||||
See notes to financial statements.
11
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Net Realized Gains from Investments | ||||||||||||||||||||||
USAA Global Equity Income Fund | |||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 10.51 | 0.15 | (d) | 0.23 | 0.38 | (0.14 | ) | — | ||||||||||||||||||
| Year Ended March 31, 2019 | $ | 10.88 | 0.27 | 0.06 | 0.33 | (0.27 | ) | (0.43 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.42 | 0.23 | 0.54 | 0.77 | (0.23 | ) | (0.08 | ) | ||||||||||||||||||
| Year Ended March 31, 2017 | $ | 9.39 | 0.21 | 1.03 | 1.24 | (0.21 | ) | — | |||||||||||||||||||
| August 7, 2015(f) through March 31, 2016 | $ | 10.00 | 0.14 | (d) | (0.68 | ) | (0.54 | ) | (0.07 | ) | — | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 10.52 | 0.19 | (d) | 0.19 | 0.38 | (0.14 | ) | — | ||||||||||||||||||
| Year Ended March 31, 2019 | $ | 10.89 | 0.27 | 0.07 | 0.34 | (0.28 | ) | (0.43 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.43 | 0.23 | 0.54 | 0.77 | (0.23 | ) | (0.08 | ) | ||||||||||||||||||
| Year Ended March 31, 2017 | $ | 9.39 | 0.23 | 1.02 | 1.25 | (0.21 | ) | — | |||||||||||||||||||
| August 7, 2015(f) through March 31, 2016 | $ | 10.00 | 0.15 | (d) | (0.68 | ) | (0.53 | ) | (0.08 | ) | — | ||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Prior to August 1, 2018, AMCO voluntarily agreed to limit the annual expenses of the Fund Shares to 1.20% of the Fund Shares' average daily net assets.
(f) Commencement of operations.
(g) Prior to August 1, 2018, AMCO voluntarily agreed to limit the annual expenses of the Institutional Shares to 1.10% of the Institutional Shares' average daily net assets.
(h) Reflects an increase in trading activity due to asset allocation shifts.
See notes to financial statements.
12
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||
| Total Distributions | Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b) | Net Investment Income (Loss)(b) | Gross Expenses(b) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(c) | ||||||||||||||||||||||||||||
USAA Global Equity Income Fund | |||||||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | (0.14 | ) | $ | 10.75 | 3.58 | % | 1.00 | % | 2.74 | % | 1.13 | % | $ | 75,902 | 83 | %(h) | |||||||||||||||||||
| Year Ended March 31, 2019 | (0.70 | ) | $ | 10.51 | 3.43 | % | 1.03 | %(e) | 2.56 | % | 1.10 | % | $ | 75,086 | 15 | % | |||||||||||||||||||
| Year Ended March 31, 2018 | (0.31 | ) | $ | 10.88 | 7.41 | % | 1.05 | % | 2.17 | % | 1.05 | % | $ | 96,101 | 22 | % | |||||||||||||||||||
| Year Ended March 31, 2017 | (0.21 | ) | $ | 10.42 | 13.33 | % | 1.20 | % | 2.28 | % | 1.26 | % | $ | 85,830 | 22 | % | |||||||||||||||||||
| August 7, 2015(f) through March 31, 2016 | (0.07 | ) | $ | 9.39 | (5.35 | )% | 1.20 | % | 2.12 | % | 1.37 | % | $ | 42,080 | 16 | % | |||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | (0.14 | ) | $ | 10.76 | 3.65 | % | 0.90 | % | 3.64 | % | 1.66 | % | $ | 5,379 | 83 | %(h) | |||||||||||||||||||
| Year Ended March 31, 2019 | (0.71 | ) | $ | 10.52 | 3.47 | % | 0.97 | %(g) | 2.58 | % | 1.22 | % | $ | 5,261 | 15 | % | |||||||||||||||||||
| Year Ended March 31, 2018 | (0.31 | ) | $ | 10.89 | 7.35 | % | 1.10 | % | 2.14 | % | 1.29 | % | $ | 5,447 | 22 | % | |||||||||||||||||||
| Year Ended March 31, 2017 | (0.21 | ) | $ | 10.43 | 13.49 | % | 1.10 | % | 2.40 | % | 1.55 | % | $ | 5,214 | 22 | % | |||||||||||||||||||
| August 7, 2015(f) through March 31, 2016 | (0.08 | ) | $ | 9.39 | (5.32 | )% | 1.10 | % | 2.20 | % | 1.79 | % | $ | 4,695 | 16 | % | |||||||||||||||||||
See notes to financial statements.
13
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Global Equity Income Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Institutional Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
14
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Portfolio securities listed or traded on securities exchanges, including exchange-traded funds ("ETFs"), American Depositary Receipts ("ADRs") and Rights, are valued at the closing price on the exchange or system where the security is principally traded, if available, or at the Nasdaq Official Closing Price. If there have been no sales for that day on the exchange or system, then a security is valued at the last available bid quotation on the exchange or system where the security is principally traded. In each of these situations, valuations are typically categorized as Level 1 in the fair value hierarchy.
Investments in open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 in the fair value hierarchy.
In accordance with procedures adopted by the Board, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time the exchange on which they are traded closes and the time the Fund's net asset value is calculated. The Fund uses a systematic valuation model, provided daily by an independent third party to fair value its international equity securities. These valuations are considered as Level 2 in the fair value hierarchy.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | 54,893 | $ | 25,263 | $ | — | $ | 80,156 | |||||||||||
Exchange-Traded Funds | 428 | — | — | 428 | |||||||||||||||
Collateral for Securities Loaned | 368 | — | — | 368 | |||||||||||||||
Total | $ | 55,689 | $ | 25,263 | $ | — | $ | 80,952 | |||||||||||
Real Estate Investment Trusts ("REITS"):
The Fund may invest in REITS which report information on the source of their distributions annually. REITS are pooled investment vehicles that invest primarily in income producing real estate or real estate related loans or interests (such as mortgages). Certain distributions received from REITS during the year are recorded as realized gains or return of capital as estimated by the Fund or when such information becomes known.
Investment Companies:
Exchange-Traded Funds:
The Fund may invest in ETFs. ETFs are a type of index fund, the shares of which are 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 shares of 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 of an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
15
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Open-End Funds:
The Fund may invest in portfolios of open-end investment companies. These investment companies 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 by the methods established by the board of directors of the underlying funds.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Withholding taxes on interest, dividends and gains as a result of certain investments in ADRs by the Fund has been provided for in accordance with each investment's applicable country's tax rules and rates.
Securities Lending:
The Fund, through a securities lending agreement with Citibank, N.A. ("Citibank"), may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income, net of income retained by Citibank. Borrowers are required to secure their loans for collateral in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked-to-market daily. Any collateral shortfalls associated with increases in the valuation of the securities loaned are cured the next business day once the shortfall exceeds $100,000. Collateral may be cash, U.S. government securities, or other securities as permitted by SEC guidelines. Cash collateral may be invested in high-quality short-term investments, primarily open-end investment companies. Collateral requirements are determined daily based on the value of the Fund's securities on loan as of the end of the prior business day. During the time portfolio securities are on loan, the borrower will pay the Fund any dividends or interest paid on such securities plus any fee negotiated between the parties to the lending agreement. The Fund also earns a return from the collateral. The Fund pays Citibank various fees in connection with the investment of cash collateral and fees based on the investment income received from securities lending activities. Securities lending income (net of these fees) is disclosed on the Statement of Operations. Loans are terminable upon demand and the borrower must return the loaned securities within the lesser of one standard settlement period or five business days. Risks relating to securities-lending transactions include that the borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower. The Fund's agreement with Citibank does not include master netting provisions. Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy borrower default. Cash collateral is listed in the Fund's Portfolio of Investments and Financial Statements while non-cash collateral is not included.
At September 30, 2019, the Fund's value of outstanding securities on loan and the value of collateral are as follows:
| Value of securities on loan | Non-Cash collateral | Cash collateral | |||||||||
| $ | 358,760 | $ | — | $ | 368,100 | ||||||
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Foreign Currency Translations:
The accounting records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities of a fund denominated in a foreign currency are translated into U.S. dollars at current exchange rates. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the exchange rates on the date of the transactions. The Fund does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are disclosed as net change in unrealized appreciation/depreciation on investments and foreign currency translations on the Statement of Operations. Any realized gains or losses from these fluctuations, including foreign currency arising from in-kind redemptions, are disclosed as net realized gains or losses from investment transactions and foreign currency translations on the Statement of Operations.
Foreign Taxes:
The Fund may be subject to foreign taxes related to foreign income received (a portion of which may be reclaimable), capital gains on the sale of securities, and certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable regulations and rates that exist in the foreign jurisdictions in which the Fund invests.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund did not engage in any securities transactions with affiliated funds.
17
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 66,422 | $ | 67,163 | ||||||||
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.50%. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $102 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly at an annualized rate of 0.50% of the Fund's average daily net assets.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the Transaction on July 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper Global Equity Income Funds Index. The Lipper Global Equity Income Funds Index tracks the total return performance of funds within the Lipper Global Equity Income Funds category.
The performance period for each share class consists of the current month plus the previous 35 months. The following table was utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points)(1) | Annual Adjustment Rate (in basis points)(1) | ||||||
+/- 100 to 400 | +/- 4 | ||||||
+/- 401 to 700 | +/- 5 | ||||||
+/- 701 and greater | +/- 6 | ||||||
(1) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper Global Equity Income Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period April 1, 2019 through June 30, 2019, there were no performance adjustments for the Fund. Base fees incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $101 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Effective with the Transaction on July 1, 2019, the Trust relies on an exemptive order granted to VCM and its affiliated funds by the SEC in March 2019 permitting the use of a "manager-of-managers" structure for certain funds. Prior to that date, the Trust relied on a similar exemptive order granted by the SEC to the Trust and its affiliated persons. Under a manager of managers structure, the investment adviser may select (with approval of the Board and without shareholder approval) one or more subadvisers to manage the day-to-day investment of a fund's assets. For the six months ended September 30, 2019, the Fund had no subadvisers.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% and 0.10% of average daily net assets of the Fund Shares and Institutional Shares, respectively. Amounts incurred from July 1, 2019 through September 30, 2019 are $28 and $1 thousand for Fund Shares and Institutional Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% and 0.10% of average daily net assets for the Fund Shares and Institutional Shares, respectively. Amounts incurred from April 1, 2019 through June 30, 2019 were $28 and $1 thousand for Fund Shares and Institutional Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses
19
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund Shares based on annual charge of $23.00 per shareholder account plus out-of-pocket expenses. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Transfer agent's fees for Institutional Shares are paid monthly based on a fee accrued daily at an annualized rate of 0.10% of the Institutional Shares' average daily net assets, plus out of pocket expenses. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $29 and $1 thousand for the Fund Shares and Institutional Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $29 and $1 thousand for the Fund Shares and Institutional Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distributor/Underwriting services:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the shares of the Fund pursuant to a Distribution Agreement between the Distributor and the Trust.
Prior to the Transaction on July 1, 2019, USAA Investment Management Company provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 1.00% and 0.90% for the Fund Shares and Institutional Shares, respectively.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, the following amounts are available to be repaid to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 03/31/2023 | |||||||
$ | 23 | ||||||
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through July 31, 2019, to limit the total annual operating expenses of the Fund Shares and Institutional Shares to 1.00% and 0.90%, respectively, of their average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Fund Shares and Institutional Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect and are not available to be recouped by AMCO. For the period April 1, 2019 through June 30, 2019, the Fund Shares and Institutional Shares incurred reimbursements of $39 and $9 thousand, respectively. These amounts are reflected on the Statement of Operations as Expenses waived/reimbursed by AMCO.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund invests in securities of foreign issuers in various countries. Investing on an international basis involves certain risks not involved in domestic investments including the risk of nationalization or expropriation of assets, imposition of currency exchange controls or restrictions on the repatriation of foreign currency, confiscatory taxation, political or financial instability and diplomatic developments, which could affect the value of a Fund's investments in certain foreign countries. Governments of many countries have exercised and continue to exercise substantial influence over many aspects of the private sector through the ownership or control of many companies, including some of the largest in these countries. As a result, government actions in the future could have a significant effect on economic conditions which may adversely affect prices of certain portfolio securities. There is also generally less government supervision and regulation of stock exchanges, brokers and listed companies than in the U.S. Dividends or interest on, or proceeds from the sale of, foreign securities may be subject to foreign withholding taxes, and special U.S. tax considerations may apply. Moreover, foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital re-investment, resource self-sufficiency and balance of payments position. The Schedule of Portfolio Investments includes information on the Fund's holdings, including industry and/or geographic composition, as relevant.
21
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of less than $1 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
The Fund did not utilize or participate in the Facility during the period July 1, 2019 through September 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare and distribute any net investment income quarterly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 2,577 | $ | 2,944 | $ | 5,521 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
| Undistributed Ordinary Income | Accumulated Capital and Other Losses | Qualified Late Year Losses* | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | |||||||||||||||
$ | 18 | $ | (1,062 | ) | $ | 1,062 | $ | 8,510 | $ | 8,528 | |||||||||
* Under the current tax law, net investment losses realized after October 31 of a Fund's fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes.
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales and non-REIT return of capital dividend adjustments.
As of the most recent tax year ended March 31, 2019, the Fund had no capital loss carryforwards ("CLCFs") for federal income tax purposes.
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
23
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
4,137,834 | 276,927 | 265,146 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
24
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Fund | $ | 1,000.00 | $ | 1,035.80 | $ | 1,020.00 | $ | 5.09 | $ | 5.05 | 1.00 | % | |||||||||||||||
Institutional | 1,000.00 | 1,036.50 | 1,020.50 | 4.58 | 4.55 | 0.90 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services to be provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year in connection with the other funds in the Trust. The Board considered the fees to be paid to the Manager and the services to be provided to the Fund by the Manager under the Advisory Agreement, as well as other services to be provided by the Manager and its affiliates under other agreements, and the personnel who would be responsible for providing these services. The Board also took into consideration that, in addition to the investment advisory services to be provided to the Fund, the Manager and its affiliates will provide administrative services, compliance oversight, shareholder services, oversight of Fund accounting, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement with respect to the other funds in the Trust. The Board considered the level and depth of knowledge of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," was also considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to provide a high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the other funds in the Trust.
The Board also reviewed the compliance and administrative services to be provided to the Fund by the Manager and its affiliates, including oversight of the Fund's day- to- day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of other funds managed by the Manager, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes the Fund and all other no-load retail open-end investment companies with the same investment classifications/objectives as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment as well as any fee waivers or reimbursements — was below the median of its expense group and expense universe. The data indicated that the Fund's total expense ratio, after reimbursements, was below the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the nature and high quality of services provided by the Manager. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee. In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and its Lipper index for the one- and three-year periods ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the top 40% of its performance universe for the one- and three-year periods ended December 31, 2018. The Board took into account management's discussion of the Fund's performance, including its strong performance over the one- and three-year periods.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. In considering the profitability data with respect to the Fund, the Trustees noted that the Manager reimbursed a portion of its management fees to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing
27
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of services received by the Fund from the Manager as well as the type of fund. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board took into account management's discussions of the Fund's advisory fee structure. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that if the Fund's assets increase over time, the Fund may realize other economies of scale if assets increase proportionally more than some expenses. The Board also considered the fee waivers and expense reimbursement arrangements by the Manager. The Board determined that the investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices in view of its limited performance history; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
28
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
98352R-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA New York Bond Fund
Fund Shares (USNYX)
Adviser Shares (UNYBX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
USAA Mutual Funds Trust
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 9 | ||||||
Statement of Operations | 10 | ||||||
Statements of Changes in Net Assets | 11 | ||||||
Financial Highlights | 12 | ||||||
Notes to Financial Statements | 14 | ||||||
Supplemental Information | 23 | ||||||
Proxy Voting and Portfolio Holdings Information | 24 | ||||||
Expense Examples | 24 | ||||||
Advisory Contract Approval | 25 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
1
| USAA Mutual Funds Trust USAA New York Bond Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide New York investors with a high level of current interest income that is exempt from federal income tax and New York State and New York City personal income taxes.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA New York Bond Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Common Stocks (0.3%) | |||||||||||
Utilities (0.3%): | |||||||||||
CMS Liquidating Trust (a) (b) | 200 | $ | 594 | ||||||||
Total Common Stock (Cost $499) | 594 | ||||||||||
Municipal Bonds (99.3%) | |||||||||||
Guam (3.9%): | |||||||||||
| Antonio B. Won Pat International Airport Authority Revenue(INS — Assured Guaranty Municipal Corp.), Series B, 5.75%, 10/1/43, Continuously Callable @100 | $ | 1,000 | 1,134 | ||||||||
| Guam Government Waterworks Authority Revenue 5.50%, 7/1/43, Continuously Callable @100 | 1,000 | 1,106 | |||||||||
Series A, 5.00%, 7/1/29, Continuously Callable @100 | 1,000 | 1,130 | |||||||||
Series A, 5.00%, 7/1/35, Continuously Callable @100 | 500 | 555 | |||||||||
| Guam Power Authority Revenue, Series A, 5.00%, 10/1/37, Continuously Callable @100 | 1,165 | 1,341 | |||||||||
| Guam Power Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/30, Continuously Callable @100 | 1,000 | 1,096 | |||||||||
Series A, 5.00%, 10/1/39, Continuously Callable @100 | 500 | 568 | |||||||||
| Territory of Guam Revenue Series A, 5.00%, 12/1/46, Continuously Callable @100 | 500 | 554 | |||||||||
Series B, 5.00%, 1/1/37, Continuously Callable @100 | 500 | 522 | |||||||||
Series D, 5.00%, 11/15/39, Continuously Callable @100 | 1,000 | 1,111 | |||||||||
9,117 | |||||||||||
New York (94.8%): | |||||||||||
| Albany Capital Resource Corp. Revenue 6.00%, 11/15/25, Pre-refunded 11/15/20 @ 100 | 1,000 | 1,053 | |||||||||
5.00%, 6/1/49, Continuously Callable @100 | 1,500 | 1,645 | |||||||||
| Albany County Airport Authority Revenue, Series A, 5.00%, 12/15/48, Continuously Callable @100 | 1,000 | 1,199 | |||||||||
| Brookhaven Local Development Corp. Revenue, 5.25%, 11/1/36, Continuously Callable @100 | 1,500 | 1,735 | |||||||||
| Buffalo & Erie County Industrial Land Development Corp. Revenue 6.00%, 10/1/31, Continuously Callable @100 | 500 | 532 | |||||||||
5.00%, 6/1/35, Continuously Callable @103 | 1,000 | 1,108 | |||||||||
5.00%, 7/1/40, Continuously Callable @100 | 2,000 | 2,296 | |||||||||
5.00%, 8/1/52, Continuously Callable @100 | 1,000 | 1,101 | |||||||||
| Build NYC Resource Corp. Revenue 5.00%, 6/1/40, Continuously Callable @100 | 700 | 812 | |||||||||
5.00%, 8/1/40, Continuously Callable @100 | 1,000 | 1,151 | |||||||||
5.00%, 7/1/41, Continuously Callable @100 | 500 | 575 | |||||||||
5.00%, 8/1/42, Continuously Callable @100 | 1,500 | 1,620 | |||||||||
4.00%, 8/1/42, Continuously Callable @100 | 1,000 | 1,081 | |||||||||
5.50%, 4/1/43, Continuously Callable @100 | 1,000 | 1,074 | |||||||||
5.00%, 7/1/45, Continuously Callable @100 | 2,000 | 2,265 | |||||||||
5.00%, 11/1/47 | 2,000 | 3,026 | |||||||||
5.00%, 6/1/48, Continuously Callable @102 | 2,000 | 2,151 | |||||||||
4.00%, 7/1/49, Continuously Callable @100 | 500 | 566 | |||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA New York Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Canton Capital Resource Corp. Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 5/1/40, Pre-refunded 5/1/20 @ 100 | $ | 1,000 | $ | 1,022 | |||||||
| Chautauqua Tobacco Asset Securitization Corp. Revenue, 5.00%, 6/1/48, Continuously Callable @100 | 2,000 | 2,061 | |||||||||
| City of New York, GO, Series D-1, 4.00%, 12/1/43, Continuously Callable @100 (c) | 4,000 | 4,489 | |||||||||
| City of New York, GO(LOC — Bank of America Corp.), Series I-3, 1.82%, 4/1/36, Continuously Callable @100 | 800 | 800 | |||||||||
| City of Newburgh, GO Series A, 5.00%, 6/15/23, Continuously Callable @100 | 825 | 903 | |||||||||
Series A, 5.00%, 6/15/24, Continuously Callable @100 | 870 | 952 | |||||||||
City of Poughkeepsie, GO, 5.00%, 6/1/31, Continuously Callable @100 | 600 | 684 | |||||||||
| City of Yonkers, GO(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/24, Continuously Callable @100 | 1,000 | 1,074 | |||||||||
Series A, 3.00%, 7/1/25, Continuously Callable @100 | 665 | 699 | |||||||||
County of Nassau, GO, Series A, 5.00%, 1/1/38, Continuously Callable @100 | 1,000 | 1,171 | |||||||||
| County of Nassau, GO(INS — Assured Guaranty Municipal Corp.), Series C, 5.00%, 4/1/38, Continuously Callable @100 | 1,000 | 1,111 | |||||||||
| County of Rockland, GO 3.75%, 10/1/25, Continuously Callable @100 | 1,265 | 1,297 | |||||||||
Series B, 5.00%, 12/15/21 | 600 | 648 | |||||||||
| Dutchess County Industrial Development Agency Revenue(INS — Assured Guaranty Corp.), 5.50%, 4/1/30, Pre-refunded 10/1/20 @ 100 | 1,000 | 1,041 | |||||||||
| Dutchess County Local Development Corp. Revenue 5.00%, 7/1/46, Continuously Callable @100 | 600 | 678 | |||||||||
Series A, 5.75%, 7/1/40, Pre-refunded 7/1/20 @ 100 | 1,250 | 1,292 | |||||||||
Series A, 5.00%, 7/1/44, Pre-refunded 7/1/24 @ 100 | 1,000 | 1,176 | |||||||||
Series A, 5.00%, 7/1/45, Continuously Callable @100 | 2,000 | 2,324 | |||||||||
Series B, 4.00%, 7/1/41, Continuously Callable @100 | 2,000 | 2,160 | |||||||||
Series B, 4.00%, 7/1/49, Continuously Callable @100 | 1,750 | 1,931 | |||||||||
| East Rochester Housing Authority Revenue(LOC — Citizens Financial Group), Series A, 1.73%, 12/1/36, Continuously Callable @100 (e) | 935 | 935 | |||||||||
| Erie County Industrial Development Agency Revenue, Series A, 5.25%, 5/1/32, Continuously Callable @100 | 250 | 266 | |||||||||
| Hempstead Town Local Development Corp. Revenue 5.00%, 7/1/47, Continuously Callable @100 | 600 | 707 | |||||||||
5.00%, 7/1/48, Continuously Callable @100 | 300 | 344 | |||||||||
| Hudson Yards Infrastructure Corp. Revenue, Series A, 4.00%, 2/15/44, Continuously Callable @100 | 2,000 | 2,213 | |||||||||
| Jefferson County Civic Facility Development Corp. Revenue, 4.00%, 11/1/47, Continuously Callable @100 | 1,000 | 1,048 | |||||||||
| Long Island Power Authority Revenue Series A, 5.00%, 5/1/38, Pre-refunded 5/1/21 @ 100 | 2,000 | 2,119 | |||||||||
Series A, 5.00%, 9/1/44, Continuously Callable @100 | 2,000 | 2,287 | |||||||||
Series B, 5.00%, 9/1/41, Continuously Callable @100 | 1,000 | 1,183 | |||||||||
| Metropolitan Transportation Authority Revenue 2.08% (MUNISPA + 0.45%), 11/15/42, (Put Date 11/15/22) (f) (g) | 1,000 | 999 | |||||||||
Series A, 5.25%, 11/15/38, Pre-refunded 11/15/21 @ 100 | 1,500 | 1,626 | |||||||||
Series A, 5.25%, 11/15/57, Continuously Callable @100 | 1,000 | 1,198 | |||||||||
Series B, 4.00%, 11/15/50, Continuously Callable @100 | 1,000 | 1,098 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA New York Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series C-1, 5.00%, 11/15/35, Continuously Callable @100 | $ | 3,000 | $ | 3,527 | |||||||
Series D-2, 2.03%(MUNISPA + 0.50%), 11/15/44, (Put Date 3/1/22) (f) (g) | 2,000 | 1,996 | |||||||||
| Monroe County Industrial Development Corp. Revenue 5.25%, 10/1/31, Pre-refunded 10/1/21 @ 100 | 500 | 540 | |||||||||
4.00%, 7/1/43, Continuously Callable @100 | 1,000 | 1,119 | |||||||||
5.00%, 12/1/46, Continuously Callable @100 | 1,000 | 1,170 | |||||||||
4.00%, 10/1/47, Continuously Callable @100 | 1,000 | 1,032 | |||||||||
Series A, 5.00%, 12/1/37, Continuously Callable @100 | 1,000 | 1,097 | |||||||||
Series A, 5.00%, 12/1/42, Continuously Callable @100 | 2,000 | 2,186 | |||||||||
| Monroe County Industrial Development Corp. Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 1/15/38, Continuously Callable @100 | 500 | 563 | |||||||||
| Monroe County Industrial Development Corp. Revenue(NBGA — FHA), 5.50%, 8/15/40, Continuously Callable @100 | 2,100 | 2,212 | |||||||||
| Nassau County Local Economic Assistance Corp. Revenue, 5.00%, 7/1/37, Continuously Callable @100 | 1,000 | 1,087 | |||||||||
| New York City Health & Hospital Corp. Revenue, Series A, 5.00%, 2/15/25, Continuously Callable @100 | 1,885 | 1,890 | |||||||||
| New York City Housing Development Corp. Revenue Series D-1, 5.00%, 11/1/42, Continuously Callable @100 | 1,000 | 1,017 | |||||||||
Series K, 4.20%, 11/1/58, Continuously Callable @100 | 3,000 | 3,203 | |||||||||
| New York City Transitional Finance Authority Building Aid Revenue Series S, 5.00%, 7/15/43, Continuously Callable @100 | 1,250 | 1,446 | |||||||||
Series S-1, 4.00%, 7/15/45, Continuously Callable @100 | 2,000 | 2,193 | |||||||||
| New York City Transitional Finance Authority Future Tax Secured Revenue 4.00%, 8/1/41, Continuously Callable @100 | 1,000 | 1,119 | |||||||||
4.00%, 11/1/42, Continuously Callable @100 | 2,000 | 2,280 | |||||||||
Series B, 4.00%, 8/1/41, Continuously Callable @100 | 1,000 | 1,100 | |||||||||
| New York City Trust for Cultural Resources Revenue 5.00%, 8/1/43, Continuously Callable @100 | 1,000 | 1,116 | |||||||||
4.00%, 7/1/46, Continuously Callable @100 | 1,000 | 1,079 | |||||||||
Series A, 5.00%, 12/1/39, Continuously Callable @100 | 2,000 | 2,009 | |||||||||
New York City Water & Sewer System Revenue, Series D, 0.00%, 6/15/20 (i) | 17,090 | 16,941 | |||||||||
| New York Convention Center Development Corp. Revenue 5.00%, 11/15/45, Continuously Callable @100 | 500 | 598 | |||||||||
Series S, 0.00%, 11/15/37 (i) | 1,000 | 635 | |||||||||
| New York Counties Tobacco Trust VI Revenue, 5.00%, 6/1/45, Continuously Callable @100 | 500 | 532 | |||||||||
| New York Liberty Development Corp. Revenue 5.25%, 10/1/35 | 2,500 | 3,432 | |||||||||
5.50%, 10/1/37 | 560 | 807 | |||||||||
5.00%, 11/15/44, Continuously Callable @100 (d) | 1,000 | 1,103 | |||||||||
2.80%, 9/15/69, Continuously Callable @100 (h) | 2,000 | 2,038 | |||||||||
| New York State Dormitory Authority Revenue 5.00%, 7/1/34, Continuously Callable @100 | 500 | 571 | |||||||||
5.25%, 7/1/35, Continuously Callable @100 | 1,000 | 1,011 | |||||||||
5.00%, 12/1/37, Continuously Callable @100 (d) | 1,300 | 1,519 | |||||||||
4.00%, 8/1/38, Continuously Callable @100 | 4,000 | 4,449 | |||||||||
5.50%, 7/1/40, Pre-refunded 7/1/20 @ 100 | 1,000 | 1,032 | |||||||||
5.00%, 7/1/42, Continuously Callable @100 | 250 | 267 | |||||||||
5.00%, 5/1/43, Continuously Callable @100 | 1,000 | 1,148 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA New York Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.75%, 7/1/43, Continuously Callable @100 | $ | 1,000 | $ | 1,121 | |||||||
3.50%, 7/1/44, Continuously Callable @100 | 1,000 | 1,033 | |||||||||
4.00%, 7/1/45, Continuously Callable @100 | 2,000 | 2,192 | |||||||||
Series A, 5.00%, 7/1/26, Continuously Callable @100 | 2,000 | 2,053 | |||||||||
Series A, 5.00%, 7/1/31, Continuously Callable @100 | 1,000 | 1,059 | |||||||||
Series A, 5.00%, 5/1/38, Continuously Callable @100 | 500 | 540 | |||||||||
Series A, 5.00%, 5/1/41, Pre-refunded 5/1/21 @ 100 | 2,000 | 2,117 | |||||||||
Series A, 4.00%, 7/1/41, Continuously Callable @100 | 1,000 | 1,113 | |||||||||
Series A, 4.00%, 7/1/43, Continuously Callable @100 | 2,000 | 2,151 | |||||||||
Series A, 5.00%, 7/1/44, Continuously Callable @100 | 1,500 | 1,671 | |||||||||
Series A, 4.00%, 7/1/45, Continuously Callable @100 | 2,250 | 2,576 | |||||||||
Series A, 4.00%, 3/15/48, Continuously Callable @100 | 3,000 | 3,359 | |||||||||
Series A, 5.00%, 7/1/48, Continuously Callable @100 | 1,000 | 1,221 | |||||||||
Series C, 4.00%, 7/1/47, Continuously Callable @100 | 1,000 | 1,118 | |||||||||
Series D, 5.00%, 5/1/39, Continuously Callable @100 | 500 | 539 | |||||||||
| New York State Dormitory Authority Revenue(INS — AMBAC Assurance Corp.) Series 1, 5.50%, 7/1/40 | 2,000 | 2,893 | |||||||||
Series A, 5.50%, 5/15/30 (c) | 3,275 | 4,489 | |||||||||
| New York State Dormitory Authority Revenue(INS — Assured Guaranty Corp.), Series A, 5.00%, 7/1/30 | 500 | 500 | |||||||||
| New York State Dormitory Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.63%, 11/1/32, Continuously Callable @100 | 500 | 530 | |||||||||
| New York State Dormitory Authority Revenue(NBGA — State of New York Mortgage Agency), 5.00%, 6/1/33, Continuously Callable @100 | 2,500 | 2,506 | |||||||||
| New York State Energy Research & Development Authority Revenue(LOC — Mizuho Corporate Bank Ltd.), Series A-2, 1.58%, 5/1/39, Continuously Callable @100 (e) | 3,140 | 3,140 | |||||||||
| New York State Environmental Facilities Corp. Revenue, Series B, 4.00%, 8/15/46, Continuously Callable @100 | 1,000 | 1,103 | |||||||||
| New York State Housing Finance Agency Revenue(LOC — Wells Fargo & Co.), Series A, 1.62%, 11/1/46, Continuously Callable @100 (e) | 1,700 | 1,700 | |||||||||
| New York State Thruway Authority Revenue, Series A, 4.00%, 1/1/56, Continuously Callable @100 | 1,000 | 1,074 | |||||||||
| New York State Urban Development Corp. Revenue, 5.00%, 3/15/42, Continuously Callable @100 | 3,000 | 3,698 | |||||||||
| Niagara Area Development Corp. Revenue, Series B, 3.50%, 11/1/24, Continuously Callable @100 (d) | 2,000 | 2,082 | |||||||||
| Niagara Tobacco Asset Securitization Corp. Revenue, 5.25%, 5/15/40, Continuously Callable @100 | 750 | 800 | |||||||||
| Onondaga Civic Development Corp. Revenue 5.38%, 7/1/40, Continuously Callable @100 | 1,500 | 1,530 | |||||||||
5.00%, 10/1/40, Continuously Callable @100 | 1,000 | 1,127 | |||||||||
5.00%, 7/1/42, Continuously Callable @100 | 1,000 | 1,069 | |||||||||
5.00%, 1/1/43, Continuously Callable @100 | 740 | 854 | |||||||||
| Onondaga County Trust for Cultural Resources Revenue 5.00%, 12/1/36, Continuously Callable @100 | 1,000 | 1,075 | |||||||||
5.00%, 5/1/40, Continuously Callable @100 | 800 | 953 | |||||||||
| Southold Local Development Corp. Revenue, 5.00%, 12/1/45, Continuously Callable @100 | 1,000 | 1,088 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA New York Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| St. Lawrence County Industrial Development Agency Revenue 4.00%, 7/1/43, Continuously Callable @100 | $ | 500 | $ | 541 | |||||||
5.00%, 9/1/47, Continuously Callable @100 | 1,770 | 2,054 | |||||||||
| State of New York Mortgage Agency Revenue, 3.80%, 10/1/48, Continuously Callable @100 | 1,985 | 2,101 | |||||||||
State of New York, GO, Series A, 5.00%, 2/15/39, Continuously Callable @100 | 1,000 | 1,003 | |||||||||
| Suffolk County Economic Development Corp. Revenue 5.00%, 7/1/28, Pre-refunded 7/1/21 @ 100 | 220 | 234 | |||||||||
5.00%, 7/1/28, Continuously Callable @100 | 1,280 | 1,352 | |||||||||
Series C, 5.00%, 7/1/33, Continuously Callable @100 | 250 | 284 | |||||||||
| Suffolk Tobacco Asset Securitization Corp. Revenue Series B, 5.38%, 6/1/28, Continuously Callable @100 | 1,020 | 1,022 | |||||||||
Series B, 5.00%, 6/1/32, Continuously Callable @100 | 1,450 | 1,567 | |||||||||
| Tompkins County Development Corp. Revenue, 5.00%, 7/1/44, Continuously Callable @100 | 1,375 | 1,515 | |||||||||
| Tompkins County Development Corp. Revenue(INS ��� Assured Guaranty Municipal Corp.), 5.50%, 7/1/33, Pre-refunded 1/1/21 @ 100 | 1,000 | 1,053 | |||||||||
Triborough Bridge & Tunnel Authority Revenue, Series B, 0.00%, 11/15/32 (i) | 1,000 | 739 | |||||||||
| Troy Capital Resource Corp. Revenue, Series A, 5.00%, 9/1/30, Continuously Callable @100 | 2,000 | 2,067 | |||||||||
| TSASC, Inc. Revenue Bonds, Series A, 5.00%, 6/1/41, Continuously Callable @100 | 1,000 | 1,117 | |||||||||
| Westchester County Healthcare Corp. Revenue Series B, 6.00%, 11/1/30, Pre-refunded 11/1/20 @ 100 | 870 | 915 | |||||||||
Series B, 6.00%, 11/1/30, Continuously Callable @100 | 130 | 136 | |||||||||
| Westchester County Local Development Corp. Revenue 5.00%, 1/1/34, Continuously Callable @100 | 1,500 | 1,642 | |||||||||
5.00%, 7/1/42, Continuously Callable @104 | 450 | 519 | |||||||||
5.00%, 11/1/46, Continuously Callable @100 | 1,000 | 1,136 | |||||||||
5.00%, 6/1/47, Continuously Callable @100 | 1,000 | 1,136 | |||||||||
| Westchester Tobacco Asset Securitization Revenue, Series B, 5.00%, 6/1/41, Continuously Callable @100 | 500 | 549 | |||||||||
218,346 | |||||||||||
Puerto Rico (0.6%): | |||||||||||
| Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Authority Revenue, 5.13%, 4/1/32, Continuously Callable @100 | 1,390 | 1,403 | |||||||||
Total Municipal Bonds (Cost $214,649) | 228,866 | ||||||||||
Total Investments (Cost $215,148) — 99.6% | 229,460 | ||||||||||
Other assets in excess of liabilities — 0.4% | 869 | ||||||||||
NET ASSETS — 100.00% | $ | 230,329 | |||||||||
(a) Non-income producing security.
(b) Security was fair valued based upon procedures approved by the Board of Trustees and represents 0.3% of the Fund's net assets as of September 30, 2019. This security is classified as Level 3 within the fair value hierarchy and is deemed to be illiquid by the Fund's Adviser. (See Note 2)
(c) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA New York Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
(d) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless noted otherwise, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $4,704 (thousands) and amounted to 2.0% of net assets.
(e) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
(f) Put Bond.
(g) Variable of Floating-Rate Security. Rate disclosed is as of September 30, 2019.
(h) Security purchased on a when-issued basis.
(i) Zero coupon bond.
AMBAC — American Municipal Bond Assurance Corporation
FHA — Federal Housing Administration
GO — General Obligation
LOC — Line Letter of Credit
MUNISPA — Municipal Swap Index
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
INS Principal and interest payments are insured by the name listed. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
8
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA New York Bond Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $215,148) | $ | 229,460 | |||||
Cash | 677 | ||||||
Interest receivable | 2,465 | ||||||
Receivable for capital shares issued | 33 | ||||||
Prepaid expenses | 6 | ||||||
Total assets | 232,641 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 104 | ||||||
Investments purchased | 2,000 | ||||||
Capital shares redeemed | 73 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 69 | ||||||
Administration fees | 28 | ||||||
Custodian fees | 14 | ||||||
Transfer agent fees | 5 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
| 12b-1 fees | 1 | ||||||
Other accrued expenses | 18 | ||||||
Total liabilities | 2,312 | ||||||
Net Assets: | |||||||
Capital | 219,276 | ||||||
Total distributable earnings/(loss) | 11,053 | ||||||
Net assets | $ | 230,329 | |||||
Net Assets | |||||||
Adviser Shares | $ | 6,724 | |||||
Fund Shares | 223,605 | ||||||
Total | $ | 230,329 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Adviser Shares | 555 | ||||||
Fund Shares | 18,409 | ||||||
| Total | 18,964 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Adviser Shares | $ | 12.12 | |||||
Fund Shares | $ | 12.15 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
9
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA New York Bond Fund | |||||||
Investment Income: | |||||||
Interest | $ | 4,364 | |||||
Total income | 4,364 | ||||||
Expenses: | |||||||
Investment advisory fees | 394 | ||||||
Administration fees — Adviser Shares | 5 | ||||||
Administration fees — Fund Shares | 168 | ||||||
Professional fees | 1 | ||||||
12b-1 fees — Adviser Shares | 8 | ||||||
Custodian fees | 36 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
Legal and audit fees | 36 | ||||||
Transfer Agent fees — Adviser Shares | — | (a) | |||||
Transfer Agent fees — Fund Shares | 26 | ||||||
State registration and filing fees | — | (a) | |||||
Other expenses | 3 | ||||||
Total expenses | 695 | ||||||
Net Investment Income (Loss) | 3,669 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | 84 | ||||||
Net change in unrealized appreciation/depreciation on investment securities | 5,198 | ||||||
Net realized/unrealized gains (losses) on investments | 5,282 | ||||||
Change in net assets resulting from operations | $ | 8,951 | |||||
(a) Rounds to less than $1.
See notes to financial statements.
10
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
USAA New York Bond Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 3,669 | $ | 7,412 | |||||||
Net realized gains (losses) from investments | 84 | 31 | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | 5,198 | 2,350 | |||||||||
Change in net assets resulting from operations | 8,951 | 9,793 | |||||||||
Distributions to Shareholders: | |||||||||||
Adviser Shares | (97 | ) | (190 | ) | |||||||
Fund Shares | (3,571 | ) | (7,221 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (3,668 | ) | (7,411 | ) | |||||||
Change in net assets resulting from capital transactions | (8,222 | ) | 8,825 | ||||||||
Change in net assets | (2,939 | ) | 11,207 | ||||||||
Net Assets: | |||||||||||
Beginning of period | 233,268 | 222,061 | |||||||||
End of period | $ | 230,329 | $ | 233,268 | |||||||
Capital Transactions: | |||||||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 267 | $ | 328 | |||||||
Distributions reinvested | 16 | 30 | |||||||||
Cost of shares redeemed | (5 | ) | (99 | ) | |||||||
Total Adviser Shares | $ | 278 | $ | 259 | |||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 12,098 | $ | 29,922 | |||||||
Distributions reinvested | 2,960 | 5,930 | |||||||||
Cost of shares redeemed | (23,558 | ) | (27,286 | ) | |||||||
Total Fund Shares | $ | (8,500 | ) | $ | 8,566 | ||||||
Change in net assets resulting from capital transactions | $ | (8,222 | ) | $ | 8,825 | ||||||
Share Transactions: | |||||||||||
Adviser Shares | |||||||||||
Issued | 22 | 28 | |||||||||
Reinvested | 1 | 3 | |||||||||
Redeemed | — | (a) | (8 | ) | |||||||
Total Adviser Shares | 23 | 23 | |||||||||
Fund Shares | |||||||||||
Issued | 1,005 | 2,564 | |||||||||
Reinvested | 245 | 507 | |||||||||
Redeemed | (1,958 | ) | (2,333 | ) | |||||||
Total Fund Shares | (708 | ) | 738 | ||||||||
Change in Shares | (685 | ) | 761 | ||||||||
(a) Rounds to less than (1).
See notes to financial statements.
11
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Total Distributions | ||||||||||||||||||||||
USAA New York Bond Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 11.84 | 0.18 | (e) | 0.28 | 0.46 | (0.18 | ) | (0.18 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.73 | 0.37 | 0.11 | 0.48 | (0.37 | ) | (0.37 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 11.85 | 0.38 | (0.12 | ) | 0.26 | (0.38 | ) | (0.38 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 12.25 | 0.39 | (0.40 | ) | (0.01 | ) | (0.39 | ) | (0.39 | ) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 12.26 | 0.41 | (0.01 | ) | 0.40 | (0.41 | ) | (0.41 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 11.90 | 0.41 | 0.36 | 0.77 | (0.41 | ) | (0.41 | ) | ||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 11.87 | 0.19 | (e) | 0.28 | 0.47 | (0.19 | ) | (0.19 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.76 | 0.40 | 0.11 | 0.51 | (0.40 | ) | (0.40 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 11.88 | 0.41 | (0.12 | ) | 0.29 | (0.41 | ) | (0.41 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 12.28 | 0.42 | (0.41 | ) | 0.01 | (0.41 | ) | (0.41 | ) | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 12.29 | 0.43 | (0.01 | ) | 0.42 | (0.43 | ) | (0.43 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 11.93 | 0.44 | 0.36 | 0.80 | (0.44 | ) | (0.44 | ) | ||||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
(f) Prior to August 1, 2014, AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.90% of the Adviser Shares' average daily net assets.
See notes to financial statements.
12
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||
| Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(d) | |||||||||||||||||||||||||
USAA New York Bond Fund | |||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 12.12 | 3.89 | % | 0.83 | % | 2.96 | % | 0.83 | % | $ | 6,724 | 4 | % | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.84 | 4.16 | % | 0.85 | % | 3.15 | % | 0.85 | % | $ | 6,295 | 15 | % | |||||||||||||||||
| Year Ended March 31, 2018 | $ | 11.73 | 2.19 | % | 0.84 | % | 3.18 | % | 0.84 | % | $ | 5,971 | 6 | % | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 11.85 | (0.13 | )% | 0.83 | % | 3.19 | % | 0.83 | % | $ | 6,302 | 10 | % | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 12.25 | 3.30 | % | 0.85 | % | 3.34 | % | 0.85 | % | $ | 5,856 | 10 | % | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 12.26 | 6.51 | % | 0.90 | %(f) | 3.34 | % | 0.90 | %(f) | $ | 5,638 | 5 | % | |||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 12.15 | 4.00 | % | 0.60 | % | 3.19 | % | 0.60 | % | $ | 223,605 | 4 | % | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.87 | 4.41 | % | 0.60 | % | 3.39 | % | 0.60 | % | $ | 226,973 | 15 | % | |||||||||||||||||
| Year Ended March 31, 2018 | $ | 11.76 | 2.45 | % | 0.59 | % | 3.43 | % | 0.59 | % | $ | 216,090 | 6 | % | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 11.88 | 0.10 | % | 0.61 | % | 3.41 | % | 0.61 | % | $ | 208,513 | 10 | % | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 12.28 | 3.50 | % | 0.66 | % | 3.53 | % | 0.66 | % | $ | 211,136 | 10 | % | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 12.29 | 6.76 | % | 0.66 | % | 3.58 | % | 0.66 | % | $ | 211,634 | 5 | % | |||||||||||||||||
See notes to financial statements.
13
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA New York Bond Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Adviser Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to fees paid under distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
14
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Investments in open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 in the fair value hierarchy.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | — | $ | — | $ | 594 | $ | 594 | |||||||||||
Municipal Bonds | — | 228,866 | — | 228,866 | |||||||||||||||
Total | $ | — | $ | 228,866 | $ | 594 | $ | 229,460 | |||||||||||
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
15
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Investment Companies:
The Fund may invest in portfolios of open-end investment companies. These investment companies 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 by the methods established by the board of directors of the underlying funds.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Securities Lending:
The Fund, through a securities lending agreement with Citibank, N.A. ("Citibank"), may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income, net of income retained by Citibank. Borrowers are required to secure their loans for collateral in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked-to-market daily. Any collateral shortfalls associated with increases in the valuation of the securities loaned are cured the next business day once the shortfall exceeds $100,000. Collateral may be cash, U.S. government securities, or other securities as permitted by SEC guidelines. Cash collateral may be invested in high-quality short-term investments, primarily open-end investment companies. Collateral requirements are determined daily based on the value of the Fund's securities on loan as of the end of the prior business day. During the time portfolio securities are on loan, the borrower will pay the Fund any dividends or interest paid on such securities plus any fee negotiated between the parties to the lending agreement. The Fund also earns a return from the collateral. The Fund pays Citibank various fees in connection with the investment of cash collateral and fees based on the investment income received from securities lending activities. Securities lending income (net of these fees) is disclosed on the Statement of Operations. Loans are terminable upon demand and the borrower must return the loaned securities within the lesser of one standard settlement period or five business days. Risks relating to securities-lending transactions include that the borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower. The Fund's agreement with Citibank does not include master netting provisions. Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy borrower default. Cash collateral is listed in the Fund's Portfolio of Investments and Financial Statements while non-cash collateral is not included.
During the six months ended September 30, 2019, the Fund had no securities on loan.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 12,940 | $ | 18,180 | $ | — | ||||||
Fees Paid Indirectly:
Expense offsets to custody fees that arise from credits on cash balances maintained on deposit are reflected on the Statement of Operations, as applicable, as "Fees paid indirectly".
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 10,445 | $ | 9,215 | ||||||||
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly as a percentage of the average daily net assets of the Fund, on an annual basis are equal to 0.50% of the first $50 million, 0.40% of that portion over $50 million but not over $100 million, and 0.30% of that portion over $100 million. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $209 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly as a percentage of the average daily net assets of the Fund, which on an annual basis is equal to 0.50% of the first $50 million, 0.40% of that portion over $50 million but not over $100 million, and 0.30% of that portion over $100 million.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the the Transaction on July 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper New York Municipal Debt Funds Index. The Lipper New York Municipal Debt Funds Index tracks the total return performance of funds within the Lipper New York Municipal Debt Funds category.
The performance period for each share class consisted of the current month plus the previous 35 months. The following table is utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points)(a) | Annual Adjustment Rate (in basis points)(a) | ||||||
+/- 20 to 50 | +/- 4 | ||||||
+/- 51 to 100 | +/- 5 | ||||||
+/- 101 and greater | +/- 6 | ||||||
(a) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper New York Municipal Debt Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period April 1, 2019 through June 30, 2019, performance adjustments for the Fund Shares and Adviser Shares were $(27) and $(1) thousand, respectively, and (0.01%) and (0.01%) of net assets, respectively. Base fees incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $213 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from July 1, 2019 through September 30, 2019 are $84 and $3 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the
18
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from April 1, 2019 through June 30, 2019 were $84 and $2 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund Shares and Adviser Shares based on an annual charge of $25.50 per shareholder account plus out-of-pocket expenses. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $14 and less than $1 thousand for the Fund Shares and Adviser Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $12 and less than $1 thousand for the Fund Shares and Adviser Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distribution and Service 12b-1 Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the Adviser Shares pursuant to a Distribution Agreement between the Distributor and the Trust. Pursuant to the Distribution and Service Plans adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of up to 0.25% of the average daily net assets of the Adviser Shares. Amounts incurred and paid to the Distributor from July 1, 2019 through September 30, 2019 are $4 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Adviser Shares are offered and sold without imposition of an initial sales charge or a contingent deferred sales charge.
Prior to the Transaction on July 1, 2019, the Fund adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under the plan, the Adviser Shares paid fees to USAA Investment Management Company ("IMCO"), the distributor, for distribution and shareholder services.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
IMCO paid all or a portion of such fees to intermediaries that made the Adviser Shares available for investment by their customers. The fee was accrued daily and paid monthly at an annual rate of 0.25% of the Adviser Shares' average daily net assets. IMCO also provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis and received no fee or other compensation for these services, but may have received 12b-1 fees as described above, with respect to Adviser Shares. Amounts incurred and paid to IMCO from April 1, 2019 through June 30, 2019 were $4 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.90% and 0.65% for the Adviser Shares and Fund Shares, respectively.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, there were no amounts available to be repaid to the Adviser.
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
The Fund concentrates its investments in New York tax-exempt securities and, therefore, may be exposed to more credit risk than portfolios with a broader geographical diversification.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of less than $1 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
The Fund did not utilize or participate in the Facility during the period July 1, 2019 through September 30, 2019.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Ordinary Income | Tax-Exempt Income | Total Distributions Paid | |||||||||||||
$ | 13 | $ | 7,398 | $ | 7,411 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
| Undistributed Tax-Exempt Income | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 180 | $ | (3,343 | ) | $ | 9,052 | $ | 5,889 | |||||||||||
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable to partnership basis adjustments.
As of the most recent tax year ended March 31, 2019, the Fund had net capital loss carryforwards ("CLCFs") not limited as a result of changes in Fund ownership during the year and in prior years and with no expiration date as summarized in the table below (amounts in thousands).
| Short-Term Amount | Long-Term Amount | Total | |||||||||
| $ | 816 | $ | 2,527 | $ | 3,343 | ||||||
During the most recent tax year ended March 31, 2019, the Fund utilized $32 thousand of capital loss carryforwards, to offset capital gains.
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
22
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
7,726,022 | 476,514 | 647,700 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
23
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Adviser | $ | 1,000.00 | $ | 1,038.90 | $ | 1,020.85 | $ | 4.23 | $ | 4.19 | 0.83 | % | |||||||||||||||
Fund | 1,000.00 | 1,040.00 | 1,022.00 | 3.06 | 3.03 | 0.60 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
24
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, comparability of fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
25
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement. The Board considered the level and depth of experience of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust.
The Board also reviewed the compliance and administrative services provided to the Fund by the Manager and its affiliates, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with front-end loads and no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes all front-end load and no-load retail open-end investment companies with the same investment classification/objective as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment — was below the median of its expense group and its expense universe. The data indicated that the Fund's total expense ratio was below the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the high quality of services provided by the Manager. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and below its Lipper index for the one- and three-year periods ended December 31, 2018, was below the average of its performance universe and its Lipper index for the five-year period ended December 31, 2018, and was above the average of its performance universe and its Lipper index for the ten-year period ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the top 15% of its performance universe for the one-year period ended December 31, 2018, was in the top 40% of its performance universe for the three-year period ended December 31, 2018, was in the top 50% of its performance universe for the five-year period ended December 31, 2018, and was in the top 30% of its performance universe for the ten-year period ended December 31, 2018.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the
26
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board took into account the high quality of services received by the Fund from the Manager. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board noted that the Fund has advisory fee breakpoints that allow the Fund to participate in economies of scale and that such economies of scale currently were reflected in the advisory fee. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that the Fund may realize additional economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
27
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39608-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Target Managed Allocation Fund (UTMAX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
USAA Mutual Funds Trust
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 5 | ||||||
Statement of Operations | 6 | ||||||
Statements of Changes in Net Assets | 7 | ||||||
Financial Highlights | 8 | ||||||
Notes to Financial Statements | 10 | ||||||
Supplemental Information | 20 | ||||||
Proxy Voting and Portfolio Holdings Information | 21 | ||||||
Expense Examples | 21 | ||||||
Advisory Contract Approval | 22 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
1
| USAA Mutual Funds Trust USAA Target Managed Allocation Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks maximum total return primarily through capital appreciation.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Target Managed Allocation Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
U.S. Treasury Obligations (3.3%) | |||||||||||
U.S. Treasury Note, 1.88%, 4/30/22 (a) (b) | $ | 17,600 | $ | 17,720 | |||||||
Total U.S. Treasury Obligations (Cost $17,322) | 17,720 | ||||||||||
Exchange-Traded Funds (95.6%) | |||||||||||
iShares 20+ Year Treasury Bond ETF | 206,700 | 29,575 | |||||||||
iShares Core U.S. REIT ETF (a) | 1,062,198 | 59,005 | |||||||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 376,001 | 47,933 | |||||||||
iShares MSCI Global Gold Miners ETF | 190,000 | 4,091 | |||||||||
iShares Russell 2000 ETF | 92,677 | 14,026 | |||||||||
VanEck Vectors Gold Miners ETF | 763,568 | 20,395 | |||||||||
Vanguard FTSE Developed Markets ETF | 2,618,255 | 107,558 | |||||||||
Vanguard FTSE Emerging Markets ETF | 519,222 | 20,904 | |||||||||
Vanguard S&P 500 ETF (a) | 417,305 | 113,756 | |||||||||
Vanguard Total Stock Market ETF (a) | 649,683 | 98,102 | |||||||||
Total Exchange-Traded Funds (Cost $484,732) | 515,345 | ||||||||||
Total Investments (Cost $502,054) — 98.9% | 533,065 | ||||||||||
Other assets in excess of liabilities — 1.1% | 6,142 | ||||||||||
NET ASSETS — 100.00% | $ | 539,207 | |||||||||
(a) All or a portion of this security has been segregated as collateral to cover the value of futures contracts at September 30, 2019.
(b) $12,925 thousand is segregated as collateral for initial margin requirements on futures contracts held at September 30, 2019.
ETF — Exchange-Traded Fund
REIT — Real Estate Investment Trust
Futures Contracts Purchased
(Amounts not in thousands) | |||
| Number of Contracts | Expiration Date | Notional Amount | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||
E-Mini S&P 500 Future | 526 | 12/20/19 | $ | 78,888,617 | $ | 78,334,550 | $ | (554,067 | ) | ||||||||||||||
FTSE 100 Index Future | 423 | 12/20/19 | 37,968,838 | 38,401,354 | 432,516 | ||||||||||||||||||
| S&P Toronto Stock Exchange 60 Index Future | 146 | 12/19/19 | 22,237,442 | 21,954,274 | (283,168 | ) | |||||||||||||||||
$ | (404,719 | ) | |||||||||||||||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Target Managed Allocation Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Futures Contracts Sold
(Amounts not in thousands) | |||
| Number of Contracts | Expiration Date | Notional Amount | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||
ASX SPI 200 Index Future | 251 | 12/19/19 | $ | 28,524,191 | $ | 28,300,373 | $ | 223,818 | |||||||||||||||
Russell 2000 Mini Index Futures | 426 | 12/20/19 | 33,270,244 | 32,482,500 | 787,744 | ||||||||||||||||||
Tokyo Price Index Future | 419 | 12/12/19 | 59,690,486 | 61,537,295 | (1,846,809 | ) | |||||||||||||||||
$ | (835,247 | ) | |||||||||||||||||||||
Total unrealized appreciation | $ | 1,444,078 | |||||||||||||||||||||
Total unrealized depreciation | (2,684,044 | ) | |||||||||||||||||||||
Total net unrealized appreciation (depreciation) | $ | (1,239,966 | ) | ||||||||||||||||||||
See notes to financial statements.
4
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Target Managed Allocation Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $502,054) | $ | 533,065 | |||||
Cash and cash equivalents | 3,748 | ||||||
Deposits with brokers for futures contracts | 1,278 | ||||||
Interest and dividends receivable | 687 | ||||||
Variation margin receivable on open futures contracts | 790 | ||||||
Prepaid expenses | 8 | ||||||
Total assets | 539,576 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Variation margin on open futures contracts | 61 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 222 | ||||||
Administration fees | 22 | ||||||
Custodian fees | 11 | ||||||
Transfer agent fees | 22 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
Other accrued expenses | 31 | ||||||
Total liabilities | 369 | ||||||
Net Assets: | |||||||
Capital | 485,970 | ||||||
Total distributable earnings/(loss) | 53,237 | ||||||
Net assets | $ | 539,207 | |||||
Shares (unlimited number of shares authorized with no par value): | 49,696 | ||||||
Net asset value, offering and redemption price per share: (b) | $ | 10.85 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
5
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Target Managed Allocation Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 7,316 | |||||
Interest | 241 | ||||||
Total income | 7,557 | ||||||
Expenses: | |||||||
Investment advisory fees | 1,312 | ||||||
Professional fees | 2 | ||||||
Administration fees | 131 | ||||||
Custodian fees | 41 | ||||||
Transfer agent fees | 131 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | 1 | ||||||
Legal and audit fees | 35 | ||||||
State registration and filing fees | — | (a) | |||||
Other expenses | 8 | ||||||
Total expenses | 1,679 | ||||||
Net Investment Income (Loss) | 5,878 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
| Net realized gains (losses) from investment securities and foreign currency translations | 12,835 | ||||||
Net realized gains (losses) from futures contracts | 6,457 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 6,944 | ||||||
Net change in unrealized appreciation/depreciation on futures contracts | (2,923 | ) | |||||
Net realized/unrealized gains (losses) on investments | 23,313 | ||||||
Change in net assets resulting from operations | $ | 29,191 | |||||
(a) Rounds to less than $1.
See notes to financial statements.
6
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
| USAA Target Managed Allocation Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 5,878 | $ | 8,356 | |||||||
Net realized gains (losses) from investments | 19,292 | 33,339 | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | 4,021 | (34,260 | ) | ||||||||
Change in net assets resulting from operations | 29,191 | 7,435 | |||||||||
| Change in net assets resulting from distributions to shareholders | — | (45,385 | ) | ||||||||
Change in net assets resulting from capital transactions | (2,191 | ) | 62,558 | ||||||||
Change in net assets | 27,000 | 24,608 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 512,207 | 487,599 | |||||||||
End of period | $ | 539,207 | $ | 512,207 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 777 | $ | 139,156 | |||||||
Distributions reinvested | — | 45,385 | |||||||||
Cost of shares redeemed | (2,968 | ) | (121,983 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (2,191 | ) | $ | 62,558 | ||||||
Share Transactions: | |||||||||||
Issued | 74 | 12,530 | |||||||||
Reinvested | — | 4,694 | |||||||||
Redeemed | (284 | ) | (10,761 | ) | |||||||
Change in Shares | (210 | ) | 6,463 | ||||||||
See notes to financial statements.
7
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Net Realized Gains From Investments | ||||||||||||||||||||||
USAA Target Managed Allocation Fund | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 10.26 | 0.12 | (c) | 0.47 | 0.59 | — | — | |||||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.22 | 0.17 | (0.10 | ) | 0.07 | (0.15 | ) | (0.88 | ) | |||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.46 | 0.16 | 0.73 | 0.89 | (0.13 | ) | — | (f) | ||||||||||||||||||
| Year Ended March 31, 2017 | $ | 9.49 | 0.14 | 0.97 | 1.11 | (0.14 | ) | — | |||||||||||||||||||
| August 7, 2015(j) through March 31, 2016 | $ | 10.00 | 0.12 | (c) | (0.51 | ) | (0.39 | ) | (0.12 | ) | — | ||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Per share net investment income (loss) has been calculated using the average daily shares method.
(d) The expense ratio does not correlate to the applicable expense limit in place during the period given that the contractual expense limitation was not in effect until July 1, 2019. Details of the current expense limitation in effect can be found in Item 5 of the accompanying Notes to Financial Statements.
(e) Reflects an increase in trading activity due to asset allocation shifts.
(f) Amount is less than $0.005 per share.
(g) Reflects overall decrease in purchases and sales of securities.
(h) Prior to August 1, 2016, AMCO had voluntarily agreed to limit the annual expenses of the Fund to 0.70% of the Fund's average daily net assets.
(i) Reflects that the Fund did not have a full year of operations in 2016.
(j) Commencement of operations.
See notes to financial statements.
8
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||
| Total Distributions | Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b) | Net Investment Income (Loss)(b) | Gross Expenses(b) | Net Assets, End of Period (000's) | Portfolio Turnover(a) | ||||||||||||||||||||||||||||
USAA Target Managed Allocation Fund | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 10.85 | 5.75 | % | 0.64 | %(d) | 2.24 | % | 0.64 | % | $ | 539,207 | 136 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | (1.03 | ) | $ | 10.26 | 1.32 | % | 0.65 | % | 1.83 | % | 0.65 | % | $ | 512,207 | 195 | %(e) | |||||||||||||||||||
| Year Ended March 31, 2018 | (0.13 | ) | $ | 11.22 | 8.48 | % | 0.65 | % | 1.50 | % | 0.65 | % | $ | 487,599 | 75 | %(g) | |||||||||||||||||||
| Year Ended March 31, 2017 | (0.14 | ) | $ | 10.46 | 11.72 | % | 0.64 | %(h) | 1.37 | % | 0.64 | % | $ | 462,794 | 125 | %(i) | |||||||||||||||||||
| August 7, 2015(j) through March 31, 2016 | (0.12 | ) | $ | 9.49 | (3.91 | )% | 0.65 | % | 1.88 | % | 0.65 | % | $ | 415,896 | 84 | % | |||||||||||||||||||
See notes to financial statements.
9
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Target Managed Allocation Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
The Fund is not offered for sale directly to the general public and is available currently for investment only to other USAA funds participating in a fund-of-funds investment strategy or other persons or legal entities that the Fund may approve from time to time.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
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• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Portfolio securities listed or traded on securities exchanges, including exchange-traded funds ("ETFs"), are valued at the closing price on the exchange or system where the security is principally traded, if available, or at the Nasdaq Official Closing Price. If there have been no sales for that day on the exchange or system, then a security is valued at the last available bid quotation on the exchange or system where the security is principally traded. In each of these situations, valuations are typically categorized as Level 1 in the fair value hierarchy.
Investments in open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 in the fair value hierarchy.
Futures contracts are valued at the settlement price established each day by the board of trade or an exchange on which they are traded. These valuations are typically categorized as Level 1 in the fair value hierarchy.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
U.S. Treasury Obligations | $ | — | $ | 17,720 | $ | — | $ | 17,720 | |||||||||||
Exchange-Traded Funds | 515,345 | — | — | 515,345 | |||||||||||||||
Total | 515,345 | 17,720 | — | 533,065 | |||||||||||||||
Other Financial Investments^:
Assets:
Futures Contracts | 1,444 | — | — | 1,444 | |||||||||||||||
Liabilities:
Futures Contracts | (2,684 | ) | — | — | (2,684 | ) | |||||||||||||
Total | (1,240 | ) | — | — | (1,240 | ) | |||||||||||||
^ Futures Contracts are valued at the unrealized appreciation (depreciation) on the investment.
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Real Estate Investment Trusts ("REITS"):
The Fund may invest in REITS which report information on the source of their distributions annually. REITS are pooled investment vehicles that invest primarily in income producing real estate or real estate related loans or interests (such as mortgages). Certain distributions received from REITS during the year are recorded as realized gains or return of capital as estimated by the Fund or when such information becomes known.
Investment Companies:
Exchange-Traded Funds:
The Fund may invest in ETFs. ETFs are a type of index fund, the shares of which are 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. The Fund may purchase shares of 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 of an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
Open-End Funds:
The Fund may invest in portfolios of open-end investment companies. These investment companies 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 by the methods established by the board of directors of the underlying funds.
Derivative Instruments:
Futures Contracts:
The Fund may enter into contracts for the future delivery of securities or foreign currencies and futures contracts based on a specific security, class of securities, foreign currency or an index, and purchase or sell options on any such futures contracts. A futures contract on a securities index is an agreement obligating either party to pay, and entitling the other party to receive, while the contract is outstanding, cash payments based on the level of a specified securities index. No physical delivery of the underlying asset is made. The Fund may enter into futures contracts in an effort to hedge against market risks. The acquisition of put and call options on futures contracts will give the Fund the right (but not the obligation), for a specified price, to sell or to purchase the underlying futures contract, upon exercise of the option, at any time during the option period. Futures transactions involve brokerage costs and require the Fund to segregate assets to cover contracts that would require it to purchase securities or currencies. A good faith margin deposit, known as initial margin, of cash or government securities with a broker or custodian is required to initiate and maintain open positions in futures contracts. Subsequent payments, known as variation margin, are made or received by the Fund based on the change in the market value of the position and are recorded as unrealized appreciation or depreciation until the contract is closed out, at which time the gain or loss is realized. The Fund may lose the expected benefit of futures transactions if interest rates, exchange rates or securities prices change in an unanticipated manner. Such unanticipated changes may also result in lower overall performance than if the Fund had not entered into any futures transactions. In addition, the value of the Fund's futures positions may not prove to be perfectly or even highly correlated with the value of its portfolio securities or foreign currencies, limiting the Fund's ability to hedge effectively against interest rate, exchange rate and/or market risk and giving rise to additional risks. There is no assurance of liquidity in the secondary market for purposes of closing out futures positions. The collateral held by the Fund is presented on the Statement of Assets and Liabilities under Deposit with broker for futures contracts.
As of September 30, 2019, the Fund entered into futures contracts primarily for the strategy of hedging or other purposes, including but not limited to, providing liquidity and equitizing cash.
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Summary of Derivative Instruments:
The following table summarizes the fair values of derivative instruments on the Statement of Assets and Liabilities, categorized by risk exposure, as of September 30, 2019 (amounts in thousands):
Assets | Liabilities | ||||||||||
| Variation Margin Receivable On Open Futures Contracts* | Variation Margin Payable On Open Futures Contracts* | ||||||||||
Equity Risk Exposure: | $ | 1,444 | $ | 2,684 | |||||||
* Includes cumulative appreciation (depreciation) of futures contracts as reported on the Schedule of Portfolio Investments. Only current day's variation margin for futures contracts is reported within the Statement of Assets and Liabilities.
The following table presents the effect of derivative instruments on the Statement of Operations, categorized by risk exposure, for the period ended September 30, 2019 (amounts in thousands):
| Net Realized Gains (Losses) on Derivatives Recognized as a Result from Operations | Net Change in Unrealized Appreciation/Depreciation on Derivatives Recognized as a Result of Operations | ||||||||||
| Net Realized Gains (Losses) from Futures Contracts | Net Change in Unrealized Appreciation/Depreciation on Futures Contracts | ||||||||||
Equity Risk Exposure: | $ | 6,457 | $ | (2,923 | ) | ||||||
All open derivative positions at year end are reflected in each respective Fund's Schedule of Portfolio Investments. The underlying face value of open derivative positions relative to each Fund's net assets at year end is generally representative of the notional amount of open positions to net assets throughout the year.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Securities Lending:
The Fund, through a securities lending agreement with Citibank, N.A. ("Citibank"), may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income, net of income retained by Citibank. Borrowers are required to secure their loans for collateral in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked-to-market daily. Any collateral shortfalls associated with increases in the valuation of the securities loaned are cured the next business day once the shortfall exceeds $100,000. Collateral may be cash, U.S. government securities, or other securities as permitted by SEC guidelines. Cash collateral may be invested in high-quality short-term investments, primarily open-end investment companies. Collateral requirements are determined daily based on the value of the Fund's securities on loan as of the end of the prior business day. During the time portfolio securities are on loan, the borrower will pay the Fund any dividends or interest paid on such securities plus any fee negotiated between the parties to the lending agreement. The Fund also earns a return from the collateral. The Fund pays Citibank various fees in connection with the investment of cash collateral and fees based on the investment income received from securities lending activities. Securities lending income (net of these fees) is disclosed on the Statement of Operations. Loans are terminable upon demand and the
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borrower must return the loaned securities within the lesser of one standard settlement period or five business days. Risks relating to securities-lending transactions include that the borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower. The Fund's agreement with Citibank does not include master netting provisions. Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy borrower default. Cash collateral is listed in the Fund's Portfolio of Investments and Financial Statements while non-cash collateral is not included.
During the six months ended September 30, 2019, the Fund had no securities on loan.
Foreign Currency Translations:
The accounting records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities of the Fund denominated in a foreign currency are translated into U.S. dollars at current exchange rates. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the exchange rates on the date of the transactions. The Fund does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are disclosed as net change in unrealized appreciation/depreciation on investments and foreign currency translations on the Statement of Operations. Any realized gains or losses from these fluctuations, including foreign currency arising from in-kind redemptions, are disclosed as net realized gains or losses from investment transactions and foreign currency translations on the Statement of Operations.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund did not engage in cross-trade transactions.
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3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 714,289 | $ | 708,288.24 | ||||||||
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. USAA Affiliated Fund Ownership:
The Fund offers its shares for investment by other USAA funds. The USAA fund-of-funds do not invest in the underlying funds for the purpose of exercising management or control, and the affiliated fund-of-funds' annual and semiannual reports may be viewed at vcm.com. As of September 30, 2019, certain USAA fund-of funds owned total outstanding shares of the Fund:
Affiliated USAA Fund | Ownership % | ||||||
Cornerstone Conservative Fund | 1 | ||||||
Cornerstone Equity Fund | 3 | ||||||
Target Retirement Income Fund | 3 | ||||||
Target Retirement 2020 Fund | 8 | ||||||
Target Retirement 2030 Fund | 26 | ||||||
Target Retirement 2040 Fund | 35 | ||||||
Target Retirement 2050 Fund | 21 | ||||||
Target Retirement 2060 Fund | 3 | ||||||
5. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive fees accrued daily and paid monthly at an annualized rate of 0.50%. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $672 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund. The Fund's investment management fee was accrued daily and paid monthly at an annualized rate of 0.50% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $640 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Effective with the Transaction on July 1, 2019, the Trust relies on an exemptive order granted to VCM and its affiliated funds by the SEC in March 2019 permitting the use of a "manager-of-managers" structure for certain funds. Prior to that date, the Trust relied on a similar exemptive order granted by the SEC to the Trust and its affiliated persons. Under a manager of managers structure, the investment adviser may select (with approval of the Board and without shareholder approval) one or more subadvisers to manage the day-to-day investment of a fund's assets. For the six months ended September 30, 2019, the Fund had no subadvisers.
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Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.05% of average daily net assets of the Fund. Amounts incurred from July 1, 2019 through September 30, 2019 are $67 thousand and reflected on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex"), in the aggregate, compensates the Adviser for these services. Amounts incurred from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.05% of the Fund's average daily net assets. Amounts incurred from April 1, 2019 through June 30, 2019 were $64 thousand and reflected on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services based on a fee accrued daily at an annualized rate of 0.05% of the Fund's average daily net assets, plus out of pocket expenses. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 are $67 thousand. Amounts incurred and paid to SAS during the period April 1, 2019 through June 30, 2019 are $64 thousand. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distributor/Underwriting services:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the shares of the Fund pursuant to a Distribution Agreement between the Distributor and the Trust.
Prior to the Transaction on July 1, 2019, USAA Investment Management Company provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
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Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by the Fund in any fiscal year exceed the expense limit for the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.65%.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three fiscal years after such waiver or reimbursement was made to the extent such payments or repayments would not cause the expenses of the Fund to exceed the original expense limitation in place at time of the waiver or reimbursement or any expense limitation agreement in place at the time of repayment. As of September 30, 2019, there are no amounts available to be repaid to the Adviser.
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
6. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
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7. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees. The Fund had no borrowings under this agreement during the period July 1, 2019 to September 30, 2019.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $1 thousand. The Fund had no borrowings under this agreement during the period from April 1, 2019 to June 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
The average borrowing and lending for the days outstanding and average interest rate for the Fund during the six months ended September 30, 2019 were as follows (amounts in thousands):
| Borrower or Lender | Amount Oustanding at September 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate | Maximum Borrowing During the Period | ||||||||||||||||||
| Borrower | $ | — | $ | 468 | 5 | 2.99 | % | $ | 484 | ||||||||||||||
* For the six months ended September 30, 2019, based on the number of days borrowings were outstanding.
8. Federal Income Tax Information:
The Fund intends to declare and distribute any net investment income annually. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
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the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 9,983 | $ | 35,402 | $ | 45,385 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
| Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 2,826 | $ | 696 | $ | 20,524 | $ | 24,046 | ||||||||||||
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales.
As of the most recent tax year ended March 31, 2019, the Fund had no net capital loss carryforwards ("CLCFs") for federal income tax purposes.
9. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
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USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
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Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
65,630,143 | 7,344 | 10,642 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
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Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||
| $ | 1,000.00 | $ | 1,057.50 | $ | 1,021.80 | $ | 3.29 | $ | 3.23 | 0.64 | % | ||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
21
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services to be provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year in connection with the other funds in the Trust. The Board considered the fees paid to the Manager and the services to be provided to the Fund by the Manager under the Advisory Agreement, as well as other services to be provided by the Manager and its affiliates under other agreements, and the personnel who would be responsible for providing these services. The Board also took into consideration that, in addition to the investment advisory services to be provided to the Fund, the Manager and its affiliates will provide administrative services, compliance oversight, shareholder services, oversight of Fund accounting, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
22
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement with respect to the other funds in the Trust. The Board considered the level and depth of knowledge of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The expected allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," was also considered.
The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to provide a high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the other funds in the Trust.
The Board also reviewed the compliance and administrative services to be provided to the Fund by the Manager and its affiliates, including oversight of the Fund's day to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of other funds managed by the Manager, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type (in this case, other funds-of-funds that invest in unaffiliated exchange-traded funds (ETFs)), comparability of investment objective and classification, sales load type, asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes the Fund and all funds-of-funds that invest in unaffiliated exchange traded funds with the same investment classification/objective as the Fund regardless of asset size, , excluding outliers (the "expense universe").
Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services — was below the median of its expense group and its expense universe. The data indicated that the Fund's total expense ratio, including underlying fund expenses, was below the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the nature and high quality of services provided by the Manager. The Board also noted the level and method of computing the management fee.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was below the average of its performance universe and its Lipper index for the one- and three-year periods ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the bottom 50% of its performance universe for the one- and three-year periods ended December 31, 2018.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide
23
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of services received by the Fund from the Manager as well as the type of fund. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board took into account management's discussions of the Fund's advisory fee structure. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that if the Fund's assets increase over time, the Fund may realize other economies of scale if assets increase proportionally more than some expenses. The Board also considered the fee waivers and expense reimbursement arrangements by the Manager. The Board determined that the investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and the Manager is appropriately monitoring the Fund; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
24
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
98356-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Tax Exempt Intermediate-Term Fund
Fund Shares (USATX)
Adviser Shares (UTEIX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
USAA Mutual Funds Trust
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 37 | ||||||
Statement of Operations | 38 | ||||||
Statements of Changes in Net Assets | 39 | ||||||
Financial Highlights | 40 | ||||||
Notes to Financial Statements | 42 | ||||||
Supplemental Information | 51 | ||||||
Proxy Voting and Portfolio Holdings Information | 52 | ||||||
Expense Examples | 52 | ||||||
Advisory Contract Approval | 53 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
1
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide investors with interest income that is exempt from federal income tax.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Municipal Bonds (99.5%) | |||||||||||
Alabama (1.6%): | |||||||||||
| Infirmary Health System Special Care Facilities Financing Authority of Mobile Revenue, 5.00%, 2/1/36, Continuously Callable @100 | $ | 8,000 | $ | 9,240 | |||||||
| Lower Alabama Gas District Revenue Series A, 5.00%, 9/1/27 | 5,000 | 6,055 | |||||||||
Series A, 5.00%, 9/1/28 | 7,000 | 8,617 | |||||||||
Series A, 5.00%, 9/1/34 (a) | 35,000 | 45,820 | |||||||||
| Montgomery Medical Clinic Board Revenue 5.00%, 3/1/33, Continuously Callable @100 | 5,955 | 6,784 | |||||||||
5.00%, 3/1/36, Continuously Callable @100 | 1,750 | 1,982 | |||||||||
78,498 | |||||||||||
Arizona (2.5%): | |||||||||||
| Apache County Industrial Development Authority Revenue, Series A, 4.50%, 3/1/30, Continuously Callable @100 | 20,310 | 21,573 | |||||||||
| Arizona Health Facilities Authority Revenue 5.00%, 2/1/27, Continuously Callable @100 | 6,000 | 6,456 | |||||||||
3.43%(MUNISPA + 1.85%), 2/1/48 (Put Date 2/1/23) (f) (g) | 30,000 | 31,220 | |||||||||
| City of Phoenix Civic Improvement Corp. Revenue(INS — National Public Finance Guarantee Corp.) 5.50%, 7/1/24 | 3,270 | 3,839 | |||||||||
5.50%, 7/1/25 | 2,115 | 2,555 | |||||||||
| Maricopa County Industrial Development Authority Revenue, 2.15%, 1/1/35, Callable 10/18/23 @ 100 | 2,500 | 2,454 | |||||||||
| Pinal County Industrial Development Authority Revenue(INS — ACA Financial Guaranty Corp.) 5.25%, 10/1/20, Continuously Callable @100 | 2,000 | 2,006 | |||||||||
5.25%, 10/1/22, Continuously Callable @100 | 1,250 | 1,254 | |||||||||
4.50%, 10/1/25, Continuously Callable @100 | 2,000 | 2,005 | |||||||||
| State of Arizona Certificate of Participation(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/19 | 3,540 | 3,540 | |||||||||
Series A, 5.25%, 10/1/20 | 7,275 | 7,276 | |||||||||
| The Industrial Development Authority of the City of Phoenix Revenue 3.75%, 7/1/24 | 5,585 | 5,793 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 11,100 | 12,257 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 1,675 | 1,871 | |||||||||
5.00%, 10/1/36, Continuously Callable @100 | 4,250 | 4,848 | |||||||||
| The Industrial Development Authority of the County of Pima Revenue 4.00%, 6/15/22 (b) | 695 | 710 | |||||||||
4.13%, 6/15/29, Continuously Callable @100 (b) | 4,900 | 5,030 | |||||||||
Series A, 4.50%, 6/1/30, Continuously Callable @100 | 2,680 | 2,866 | |||||||||
| The Industrial Development Authority of the County of Yavapai Revenue 1.30%, 4/1/29 | 3,000 | 3,000 | |||||||||
4.00%, 8/1/38, Continuously Callable @100 | 1,000 | 1,134 | |||||||||
121,687 | |||||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Arkansas (0.8%): | |||||||||||
| Arkansas Development Finance Authority Revenue, 3.13%(MUNISPA + 1.55%), 9/1/44 (Put Date 9/1/22) (f) (g) | $ | 29,000 | $ | 29,699 | |||||||
| University of Arkansas — Pulaski Technical College Revenue(INS — Build America Mutual Assurance Co.), 5.00%, 9/1/30, Continuously Callable @100 | 4,290 | 5,114 | |||||||||
34,813 | |||||||||||
California (7.1%): | |||||||||||
| Anaheim Public Financing Authority Revenue Series A, 5.00%, 5/1/28, Continuously Callable @100 | 500 | 584 | |||||||||
Series A, 5.00%, 5/1/29, Continuously Callable @100 | 500 | 584 | |||||||||
Series A, 5.00%, 5/1/30, Continuously Callable @100 | 1,000 | 1,168 | |||||||||
| Bay Area Toll Authority Revenue 2.68%(MUNISPA + 1.10%), 4/1/45 (Put Date 4/1/24) (f) (g) | 17,000 | 17,639 | |||||||||
2.48%(MUNISPA + 0.90%), 4/1/45 (Put Date 5/1/23) (f) (g) | 10,000 | 10,145 | |||||||||
| California Health Facilities Financing Authority Revenue 2.00%, 10/1/36 (Put Date 10/1/25) (f) | 8,500 | 8,662 | |||||||||
Series D, 5.00%, 8/15/27, Continuously Callable @100 | 2,000 | 2,139 | |||||||||
Series D, 5.25%, 8/15/31, Continuously Callable @100 | 5,000 | 5,333 | |||||||||
| California School Finance Authority Revenue 5.00%, 8/1/31, Continuously Callable @100 (b) | 500 | 566 | |||||||||
5.00%, 8/1/36, Continuously Callable @100 (b) | 1,600 | 1,792 | |||||||||
| California State Public Works Board Revenue Series A, 5.00%, 3/1/25, Continuously Callable @100 | 1,250 | 1,405 | |||||||||
Series A, 5.00%, 3/1/26, Continuously Callable @100 | 1,365 | 1,534 | |||||||||
Series A, 5.00%, 4/1/28, Continuously Callable @100 | 10,000 | 10,884 | |||||||||
Series A, 5.00%, 4/1/29, Continuously Callable @100 | 5,000 | 5,442 | |||||||||
Series B, 5.00%, 10/1/31, Continuously Callable @100 | 11,465 | 13,412 | |||||||||
Series B-1, 5.13%, 3/1/23, Continuously Callable @100 | 3,000 | 3,050 | |||||||||
Series B-1, 5.25%, 3/1/24, Continuously Callable @100 | 2,500 | 2,543 | |||||||||
Series B-1, 5.38%, 3/1/25, Continuously Callable @100 | 2,000 | 2,035 | |||||||||
Series G, 5.00%, 11/1/23, Continuously Callable @100 | 1,185 | 1,314 | |||||||||
Series G, 5.00%, 11/1/24, Continuously Callable @100 | 2,000 | 2,218 | |||||||||
Series G, 5.00%, 11/1/28, Continuously Callable @100 | 7,000 | 7,760 | |||||||||
| California State University Revenue Series A, 5.00%, 11/1/29, Continuously Callable @100 | 10,000 | 11,857 | |||||||||
Series A, 5.00%, 11/1/33, Continuously Callable @100 | 10,000 | 12,032 | |||||||||
| California Statewide Communities Development Authority Revenue 5.13%, 5/15/31, Continuously Callable @100 | 1,000 | 1,055 | |||||||||
5.00%, 5/15/32, Continuously Callable @100 | 1,250 | 1,479 | |||||||||
5.00%, 5/15/33, Continuously Callable @100 | 2,000 | 2,361 | |||||||||
5.00%, 5/15/34, Continuously Callable @100 | 1,250 | 1,471 | |||||||||
5.00%, 5/15/35, Continuously Callable @100 | 2,000 | 2,350 | |||||||||
| Cerritos Community College District, GO Series D, 0.00%, 8/1/25 (i) | 1,510 | 1,385 | |||||||||
Series D, 0.00%, 8/1/27 (i) | 1,000 | 882 | |||||||||
Series D, 0.00%, 8/1/28 (i) | 1,000 | 861 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Chula Vista Municipal Financing Authority Special Tax Series B, 5.00%, 9/1/27, Continuously Callable @100 | $ | 1,520 | $ | 1,795 | |||||||
Series B, 5.00%, 9/1/28, Continuously Callable @100 | 1,700 | 2,002 | |||||||||
Series B, 5.00%, 9/1/29, Continuously Callable @100 | 1,785 | 2,099 | |||||||||
Series B, 5.00%, 9/1/30, Continuously Callable @100 | 2,635 | 3,091 | |||||||||
Series B, 5.00%, 9/1/31, Continuously Callable @100 | 2,095 | 2,452 | |||||||||
City of Irvine Special Assessment, 5.00%, 9/2/29, Callable 9/2/23 @ 100 | 1,000 | 1,134 | |||||||||
| City of San Diego Tobacco Settlement Revenue Funding Corp. Revenue, Series C, 4.00%, 6/1/32, Continuously Callable @100 | 905 | 973 | |||||||||
| City of Tulare Sewer Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 11/15/32, Continuously Callable @100 | 1,605 | 1,918 | |||||||||
5.00%, 11/15/33, Continuously Callable @100 | 1,570 | 1,874 | |||||||||
5.00%, 11/15/34, Continuously Callable @100 | 3,655 | 4,358 | |||||||||
5.00%, 11/15/35, Continuously Callable @100 | 2,340 | 2,788 | |||||||||
| City of Upland Certificate of Participation, 6.00%, 1/1/26, Pre-refunded 1/1/21 @ 100 | 10,000 | 10,599 | |||||||||
County of Los Angeles Certificate of Participation, 5.00%, 3/1/23 | 1,300 | 1,463 | |||||||||
| San Francisco Multifamily Housing Revenue(LOC — Deutsche Bank AG), Series DBE-8038, 1.93%, 12/1/52, Callable 12/1/20 @ 100 (b) (d) | 26,500 | 26,500 | |||||||||
| El Camino Community College District, GO Series C, 0.00%, 8/1/26 (i) | 6,810 | 6,126 | |||||||||
Series C, 0.00%, 8/1/27 (i) | 7,665 | 6,778 | |||||||||
Series C, 0.00%, 8/1/28 (i) | 5,500 | 4,744 | |||||||||
| Foothill-Eastern Transportation Corridor Agency Revenue(INS — Assured Guaranty Municipal Corp.), 0.00%, 1/15/35 (i) | 5,500 | 3,667 | |||||||||
| Fresno Joint Powers Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 4/1/32, Continuously Callable @100 | 1,000 | 1,231 | |||||||||
Series A, 5.00%, 4/1/35, Continuously Callable @100 | 1,000 | 1,222 | |||||||||
Series A, 5.00%, 4/1/36, Continuously Callable @100 | 420 | 513 | |||||||||
| Golden State Tobacco Securitization Corp. Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 0.00%, 6/1/25 (i) | 46,605 | 41,363 | |||||||||
| Irvine Unified School District Special Tax(INS — Assured Guaranty Municipal Corp.), 4.50%, 9/1/20, Continuously Callable @100 | 2,500 | 2,506 | |||||||||
| Pittsburg Successor Agency Redevelopment Agency Tax Allocation (INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 9/1/27, Continuously Callable @100 | 3,500 | 4,257 | |||||||||
Series A, 5.00%, 9/1/28, Continuously Callable @100 | 2,640 | 3,188 | |||||||||
| San Diego Public Facilities Financing Authority Revenue Series A, 5.00%, 10/15/33, Continuously Callable @100 | 1,635 | 1,977 | |||||||||
Series A, 5.00%, 10/15/34, Continuously Callable @100 | 1,000 | 1,208 | |||||||||
Series A, 5.00%, 10/15/35, Continuously Callable @100 | 1,250 | 1,510 | |||||||||
Series B, 5.00%, 10/15/30, Continuously Callable @100 | 775 | 942 | |||||||||
Series B, 5.00%, 10/15/31, Continuously Callable @100 | 1,000 | 1,210 | |||||||||
Series B, 5.00%, 10/15/32, Continuously Callable @100 | 1,000 | 1,210 | |||||||||
| San Francisco City & County Airport Comm-San Francisco International Airport Revenue, Series A, 4.90%, 5/1/29, Continuously Callable @100 | 4,555 | 4,568 | |||||||||
| State of California, GO 5.25%, 10/1/22, Continuously Callable @100 | 20,000 | 20,063 | |||||||||
4.00%, 10/1/34, Continuously Callable @100 | 20,615 | 24,279 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Sacramento City Financing Authority Revenue (LIQ — Deutsche Bank AG), Series XG0100, 1.68%, 12/1/33 (b) | $ | 10,000 | $ | 10,000 | |||||||
| Tobacco Securitization Authority of Southern California Revenue, Series A1, 4.75%, 6/1/25, Continuously Callable @100 | 2,685 | 2,688 | |||||||||
| Washington Township Health Care District Revenue, Series A, 5.00%, 7/1/25, Continuously Callable @100 | 3,500 | 3,587 | |||||||||
347,825 | |||||||||||
Colorado (2.4%): | |||||||||||
Adams & Arapahoe Joint School District 28J Aurora, GO, 0.00%, 12/1/22 (i) | 5,000 | 4,778 | |||||||||
| Colorado Health Facilities Authority Revenue 5.00%, 6/1/28, Pre-refunded 6/1/23 @ 100 | 2,750 | 3,109 | |||||||||
5.00%, 12/1/28, Continuously Callable @100 | 1,000 | 1,150 | |||||||||
5.00%, 12/1/29, Continuously Callable @100 | 1,500 | 1,722 | |||||||||
5.00%, 6/1/31, Pre-refunded 6/1/25 @ 100 | 2,310 | 2,773 | |||||||||
5.00%, 6/1/32, Pre-refunded 6/1/25 @ 100 | 2,000 | 2,400 | |||||||||
5.00%, 6/1/33, Pre-refunded 6/1/25 @ 100 | 2,470 | 2,965 | |||||||||
5.00%, 6/1/34, Pre-refunded 6/1/25 @ 100 | 6,385 | 7,663 | |||||||||
5.00%, 6/1/34, Pre-refunded 6/1/27 @ 100 | 4,455 | 5,580 | |||||||||
5.00%, 6/1/35, Pre-refunded 6/1/25 @ 100 | 3,385 | 4,063 | |||||||||
5.00%, 6/1/35, Pre-refunded 6/1/27 @ 100 | 2,000 | 2,505 | |||||||||
5.00%, 12/1/35, Continuously Callable @100 | 4,000 | 4,536 | |||||||||
5.00%, 6/1/36, Pre-refunded 6/1/27 @ 100 | 4,000 | 5,010 | |||||||||
Series A, 4.00%, 8/1/38, Continuously Callable @100 | 1,000 | 1,097 | |||||||||
Series A, 4.00%, 8/1/39, Continuously Callable @100 | 1,250 | 1,367 | |||||||||
| Denver Health & Hospital Authority Revenue Series A, 5.00%, 12/1/34, Continuously Callable @100 (b) | 7,355 | 8,788 | |||||||||
Series A, 4.00%, 12/1/37, Continuously Callable @100 | 1,250 | 1,396 | |||||||||
Series A, 4.00%, 12/1/38, Continuously Callable @100 | 1,250 | 1,381 | |||||||||
Series A, 4.00%, 12/1/39, Continuously Callable @100 | 1,000 | 1,105 | |||||||||
| Park Creek Metropolitan District Revenue 5.00%, 12/1/32, Continuously Callable @100 | 1,250 | 1,456 | |||||||||
5.00%, 12/1/34, Continuously Callable @100 | 1,000 | 1,160 | |||||||||
| Regional Transportation District Certificate of Participation Series A, 5.00%, 6/1/25, Pre-refunded 6/1/20 @ 100 | 9,135 | 9,353 | |||||||||
Series A, 5.00%, 6/1/25, Continuously Callable @100 | 865 | 886 | |||||||||
Series A, 5.00%, 6/1/29, Continuously Callable @100 | 7,585 | 8,565 | |||||||||
Series A, 5.00%, 6/1/30, Continuously Callable @100 | 14,175 | 15,994 | |||||||||
Series A, 5.00%, 6/1/31, Continuously Callable @100 | 15,005 | 16,917 | |||||||||
117,719 | |||||||||||
Connecticut (3.7%): | |||||||||||
| City of Bridgeport, GO Series B, 5.00%, 8/15/27 | 335 | 421 | |||||||||
Series B, 5.00%, 8/15/27 | 4,665 | 5,675 | |||||||||
| City of New Haven, GO Series A, 5.00%, 8/1/28 | 1,000 | 1,183 | |||||||||
Series A, 5.50%, 8/1/30, Continuously Callable @100 | 1,000 | 1,214 | |||||||||
Series A, 5.50%, 8/1/32, Continuously Callable @100 | 1,200 | 1,448 | |||||||||
Series A, 5.50%, 8/1/36, Continuously Callable @100 | 1,810 | 2,170 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| City of New Haven, GO(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 8/15/30, Continuously Callable @100 | $ | 1,000 | $ | 1,173 | |||||||
Series A, 5.00%, 8/15/32, Continuously Callable @100 | 1,000 | 1,167 | |||||||||
Series A, 5.00%, 8/15/33, Continuously Callable @100 | 1,000 | 1,164 | |||||||||
Series A, 5.00%, 8/15/34, Continuously Callable @100 | 1,350 | 1,566 | |||||||||
| City of West Haven, GO Series B, 5.00%, 11/1/32, Continuously Callable @100 | 400 | 455 | |||||||||
Series B, 5.00%, 11/1/37, Continuously Callable @100 | 350 | 393 | |||||||||
| Connecticut State Health & Educational Facilities Authority Revenue 5.00%, 7/1/32, Continuously Callable @100 | 1,950 | 2,349 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 725 | 862 | |||||||||
5.00%, 7/1/35, Continuously Callable @100 | 1,170 | 1,386 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 1,125 | 1,331 | |||||||||
5.00%, 7/1/37, Continuously Callable @100 | 1,275 | 1,505 | |||||||||
Series A, 4.00%, 7/1/38, Continuously Callable @100 | 7,000 | 7,794 | |||||||||
Series E, 5.00%, 7/1/34, Continuously Callable @100 | 10,000 | 11,278 | |||||||||
| Harbor Point Infrastructure Improvement District Tax Allocation, 5.00%, 4/1/30, Continuously Callable @100 (b) | 10,000 | 11,640 | |||||||||
Mashantucket Western Pequot Tribe Revenue, 2.05%, 7/1/31 (e) | 8,346 | 311 | |||||||||
| Metropolitan District, GO 5.00%, 7/15/33, Continuously Callable @100 | 750 | 932 | |||||||||
5.00%, 7/15/34, Continuously Callable @100 | 1,000 | 1,232 | |||||||||
5.00%, 7/15/35, Continuously Callable @100 | 750 | 923 | |||||||||
5.00%, 7/15/36, Continuously Callable @100 | 1,000 | 1,231 | |||||||||
4.00%, 7/15/37, Continuously Callable @100 | 1,000 | 1,130 | |||||||||
| State of Connecticut Special Tax Revenue 5.00%, 1/1/34, Continuously Callable @100 | 20,000 | 24,293 | |||||||||
5.00%, 1/1/35, Continuously Callable @100 | 20,000 | 24,253 | |||||||||
Series B, 5.00%, 10/1/37, Continuously Callable @100 | 6,000 | 7,324 | |||||||||
Series B, 5.00%, 10/1/38, Continuously Callable @100 | 4,000 | 4,875 | |||||||||
| State of Connecticut, GO Series A, 5.00%, 4/15/33, Continuously Callable @100 | 5,000 | 6,084 | |||||||||
Series A, 5.00%, 4/15/34, Continuously Callable @100 | 5,575 | 6,767 | |||||||||
Series A, 5.00%, 4/15/35, Continuously Callable @100 | 5,000 | 6,061 | |||||||||
Series A, 4.00%, 4/15/37, Continuously Callable @100 | 1,825 | 2,046 | |||||||||
Series C, 5.00%, 6/15/33, Continuously Callable @100 | 1,100 | 1,348 | |||||||||
Series C, 5.00%, 6/15/34, Continuously Callable @100 | 2,625 | 3,194 | |||||||||
Series C, 5.00%, 6/15/35, Continuously Callable @100 | 2,500 | 3,035 | |||||||||
Series E, 5.00%, 9/15/35, Continuously Callable @100 | 2,000 | 2,434 | |||||||||
Series E, 5.00%, 9/15/37, Continuously Callable @100 | 2,000 | 2,431 | |||||||||
Series G, 5.00%, 11/15/35, Continuously Callable @100 | 5,000 | 5,832 | |||||||||
| Town of Hamden, GO(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 8/15/30, Continuously Callable @100 | 1,200 | 1,464 | |||||||||
| University of Connecticut Revenue Series A, 5.00%, 4/15/34, Continuously Callable @100 | 6,805 | 8,299 | |||||||||
Series A, 5.00%, 4/15/35, Continuously Callable @100 | 6,500 | 7,913 | |||||||||
Series A, 5.00%, 4/15/36, Continuously Callable @100 | 11,175 | 13,599 | |||||||||
193,185 | |||||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
District of Columbia (0.7%): | |||||||||||
| District of Columbia Revenue 5.00%, 7/1/23 | $ | 375 | $ | 402 | |||||||
6.00%, 7/1/33, Pre-refunded 7/1/23 @ 100 | 1,280 | 1,497 | |||||||||
5.00%, 7/1/39, Continuously Callable @100 | 800 | 963 | |||||||||
Series A, 5.63%, 10/1/25, Continuously Callable @100 | 3,870 | 4,050 | |||||||||
Series A, 5.75%, 10/1/26, Continuously Callable @100 | 5,000 | 5,237 | |||||||||
Series A, 5.75%, 10/1/27, Pre-refunded 4/1/21 @ 100 | 6,000 | 6,390 | |||||||||
| District of Columbia Revenue(LIQ — Deutsche Bank AG), Series 2016-XG0094, 1.81%, 10/1/41, Callable 4/1/21 @ 100 (b) | 20,560 | 20,560 | |||||||||
39,099 | |||||||||||
Florida (5.2%): | |||||||||||
| City of Cape Coral Water & Sewer Revenue 4.00%, 10/1/35, Continuously Callable @100 | 1,485 | 1,659 | |||||||||
4.00%, 10/1/36, Continuously Callable @100 | 1,400 | 1,559 | |||||||||
4.00%, 10/1/37, Continuously Callable @100 | 3,000 | 3,333 | |||||||||
| City of Jacksonville Revenue 5.00%, 10/1/28, Continuously Callable @100 | 3,500 | 3,852 | |||||||||
1.80%, 5/1/29, Continuously Callable @100 | 15,190 | 15,190 | |||||||||
City of Port St. Lucie Special Assessment | |||||||||||
4.00%, 7/1/31, Continuously Callable @100 | 3,195 | 3,544 | |||||||||
4.00%, 7/1/32, Continuously Callable @100 | 2,000 | 2,212 | |||||||||
4.00%, 7/1/33, Continuously Callable @100 | 2,785 | 3,069 | |||||||||
| City of Port St. Lucie Utility System Revenue, 4.00%, 9/1/31, Continuously Callable @100 | 1,000 | 1,131 | |||||||||
| Cityplace Community Development District Special Assessment (INS — Assured Guaranty Municipal Corp.) 0.00%, 5/1/33 (i) | 3,470 | 3,113 | |||||||||
0.00%, 5/1/38, Continuously Callable @100 (i) | 7,900 | 7,508 | |||||||||
| County of Broward Airport System Revenue, Series O, 5.00%, 10/1/24, Continuously Callable @100 | 2,500 | 2,507 | |||||||||
County of Escambia Revenue | |||||||||||
1.80%, 7/1/22 | 1,400 | 1,400 | |||||||||
1.81%, 4/1/39, Continuously Callable @100 | 21,500 | 21,500 | |||||||||
County of Lee Airport Revenue, 5.00%, 10/1/33, Continuously Callable @100 | 4,000 | 4,695 | |||||||||
County of Lee Revenue | |||||||||||
5.00%, 10/1/23 | 2,500 | 2,843 | |||||||||
5.00%, 10/1/24 | 2,700 | 3,158 | |||||||||
| County of Miami-Dade Aviation Revenue Series B, 5.00%, 10/1/26, Pre-refunded 10/1/20 @ 100 | 6,440 | 6,674 | |||||||||
Series B, 5.00%, 10/1/27, Pre-refunded 10/1/20 @ 100 | 7,000 | 7,253 | |||||||||
| County of Miami-Dade Revenue, Series A, 5.00%, 10/1/25, Continuously Callable @100 | 2,000 | 2,205 | |||||||||
County of St Lucie Revenue, 1.79%, 9/1/28, Continuously Callable @100 | 7,750 | 7,750 | |||||||||
| County of St Lucie Sales Tax Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 10/1/28, Continuously Callable @100 | 7,370 | 8,323 | |||||||||
| Florida Higher Educational Facilities Financial Authority Revenue, 5.00%, 3/1/39, Continuously Callable @100 | 1,250 | 1,431 | |||||||||
See notes to financial statements.
8
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Halifax Hospital Medical Center Revenue 5.00%, 6/1/35, Continuously Callable @100 | $ | 2,325 | $ | 2,659 | |||||||
5.00%, 6/1/36, Continuously Callable @100 | 2,750 | 3,140 | |||||||||
| Lake County School Board Certificate of Participation (INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 6/1/29, Continuously Callable @100 | 1,250 | 1,439 | |||||||||
Series A, 5.00%, 6/1/30, Continuously Callable @100 | 2,225 | 2,558 | |||||||||
| Lee County Industrial Development Authority Revenue 5.00%, 10/1/28, Continuously Callable @100 | 7,245 | 7,690 | |||||||||
5.00%, 11/15/39, Continuously Callable @103 | 1,500 | 1,764 | |||||||||
| Lee County School Board Certificate of Participation, Series A, 5.00%, 8/1/28, Continuously Callable @100 | 3,750 | 4,354 | |||||||||
| Lee Memorial Health System Revenue, Series A-1, 4.00%, 4/1/37, Continuously Callable @100 | 5,000 | 5,614 | |||||||||
| Miami Beach Health Facilities Authority Revenue, 5.00%, 11/15/29, Continuously Callable @100 | 6,560 | 7,180 | |||||||||
| Miami-Dade County Expressway Authority Revenue Series A, 5.00%, 7/1/28, Continuously Callable @100 | 10,000 | 10,873 | |||||||||
Series A, 5.00%, 7/1/29, Continuously Callable @100 | 7,000 | 7,609 | |||||||||
Series A, 5.00%, 7/1/29, Continuously Callable @100 | 1,000 | 1,145 | |||||||||
Series A, 5.00%, 7/1/30, Continuously Callable @100 | 1,610 | 1,843 | |||||||||
Series A, 5.00%, 7/1/31, Continuously Callable @100 | 1,255 | 1,435 | |||||||||
Series A, 5.00%, 7/1/32, Continuously Callable @100 | 2,000 | 2,286 | |||||||||
Series A, 5.00%, 7/1/33, Continuously Callable @100 | 2,000 | 2,282 | |||||||||
Series A, 5.00%, 7/1/34, Continuously Callable @100 | 2,000 | 2,281 | |||||||||
Series B, 5.00%, 7/1/30, Continuously Callable @100 | 2,000 | 2,289 | |||||||||
Series B, 5.00%, 7/1/31, Continuously Callable @100 | 2,000 | 2,287 | |||||||||
| Miami-Dade County Health Facilities Authority Revenue 5.00%, 8/1/27, Continuously Callable @100 | 4,750 | 5,330 | |||||||||
5.00%, 8/1/28, Continuously Callable @100 | 4,950 | 5,553 | |||||||||
5.00%, 8/1/29, Continuously Callable @100 | 5,250 | 5,887 | |||||||||
5.00%, 8/1/30, Continuously Callable @100 | 3,500 | 3,922 | |||||||||
5.00%, 8/1/31, Continuously Callable @100 | 5,780 | 6,472 | |||||||||
| Miami-Dade County Industrial Development Authority Revenue, 1.78%, 6/1/21, Continuously Callable @100 | 1,825 | 1,825 | |||||||||
| Orange County Health Facilities Authority Revenue 5.25%, 10/1/22, Pre-refunded 10/1/19 @ 100 | 12,000 | 12,000 | |||||||||
5.38%, 10/1/23, Pre-refunded 10/1/19 @ 100 | 5,000 | 5,000 | |||||||||
Series A, 5.00%, 10/1/35, Continuously Callable @100 | 4,000 | 4,793 | |||||||||
| Osceola County School Board Certificate of Participation, Series A, 5.00%, 6/1/28, Continuously Callable @100 | 3,055 | 3,427 | |||||||||
| Palm Beach County Health Facilities Authority Revenue, 5.00%, 11/15/23, Continuously Callable @100 | 7,595 | 8,200 | |||||||||
| Pinellas County Educational Facilities Authority Revenue 5.00%, 10/1/21 | 1,995 | 2,086 | |||||||||
4.00%, 10/1/22 | 1,080 | 1,121 | |||||||||
4.00%, 10/1/23, Continuously Callable @100 | 1,415 | 1,467 | |||||||||
5.38%, 10/1/26, Continuously Callable @100 | 2,045 | 2,150 | |||||||||
5.00%, 10/1/27, Continuously Callable @100 | 1,895 | 2,017 | |||||||||
6.50%, 10/1/31, Continuously Callable @100 | 2,615 | 2,804 | |||||||||
See notes to financial statements.
9
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Pinellas County Industrial Development Authority Revenue, 5.00%, 7/1/29 | $ | 1,000 | $ | 1,198 | |||||||
| Putnam County Development Authority Revenue, 1.78%, 9/1/24, Continuously Callable @100 | 4,000 | 4,000 | |||||||||
| School District of Broward County Certificate of Participation Series A, 5.00%, 7/1/29, Continuously Callable @100 | 2,000 | 2,364 | |||||||||
Series A, 5.00%, 7/1/30, Continuously Callable @100 | 2,000 | 2,359 | |||||||||
| Southeast Overtown Park West Community Redevelopment Agency Tax Allocation, Series A-1, 5.00%, 3/1/30, Continuously Callable @100 (b) | 3,195 | 3,571 | |||||||||
| St. Lucie County School Board Certificate of Participation Series A, 5.00%, 7/1/25, Continuously Callable @100 | 2,045 | 2,300 | |||||||||
Series A, 5.00%, 7/1/26, Continuously Callable @100 | 1,500 | 1,687 | |||||||||
Sunshine State Governmental Financing Commission Revenue, 5.00%, 9/1/20 | 5,525 | 5,709 | |||||||||
| Sunshine State Governmental Financing Commission Revenue (INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 9/1/21 | 1,055 | 1,123 | |||||||||
| Volusia County Educational Facility Authority Revenue Series B, 5.00%, 10/15/28, Continuously Callable @100 | 1,000 | 1,164 | |||||||||
Series B, 5.00%, 10/15/29, Continuously Callable @100 | 1,000 | 1,163 | |||||||||
Series B, 5.00%, 10/15/30, Continuously Callable @100 | 1,500 | 1,739 | |||||||||
Series B, 5.00%, 10/15/32, Continuously Callable @100 | 1,560 | 1,802 | |||||||||
290,870 | |||||||||||
Georgia (0.6%): | |||||||||||
| Appling County Development Authority Revenue, 1.82%, 9/1/41, Continuously Callable @100 (d) | 2,500 | 2,500 | |||||||||
| Burke County Development Authority Revenue, 1.82%, 7/1/49, Continuously Callable @100 | 4,100 | 4,100 | |||||||||
Cobb County Development Authority Revenue, Series A, 2.25%, 4/1/33 | 4,975 | 4,970 | |||||||||
| Main Street Natural Gas, Inc. Revenue Series A, 5.00%, 5/15/37 | 1,500 | 1,984 | |||||||||
Series A, 5.00%, 5/15/38 | 2,500 | 3,315 | |||||||||
| Monroe County Development Authority Revenue, 1.82%, 11/1/48, Continuously Callable @100 (d) | 8,400 | 8,400 | |||||||||
| Private Colleges & Universities Authority Revenue Series A, 5.25%, 10/1/27, Continuously Callable @100 | 3,000 | 3,194 | |||||||||
Series C, 5.25%, 10/1/27, Continuously Callable @100 | 2,000 | 2,191 | |||||||||
30,654 | |||||||||||
Guam (0.1%): | |||||||||||
| Guam Government Waterworks Authority Revenue 5.00%, 7/1/28, Continuously Callable @100 | 1,000 | 1,106 | |||||||||
5.25%, 7/1/33, Continuously Callable @100 | 3,000 | 3,334 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 1,250 | 1,421 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 1,000 | 1,151 | |||||||||
Series A, 5.00%, 7/1/23 | 750 | 831 | |||||||||
Series A, 5.00%, 7/1/24 | 600 | 680 | |||||||||
Series A, 5.00%, 7/1/25, Continuously Callable @100 | 750 | 850 | |||||||||
Series A, 5.00%, 7/1/29, Continuously Callable @100 | 1,000 | 1,130 | |||||||||
| Guam Power Authority Revenue Series A, 5.00%, 10/1/29, Continuously Callable @100 | 1,000 | 1,124 | |||||||||
Series A, 5.00%, 10/1/30, Continuously Callable @100 | 1,000 | 1,122 | |||||||||
Series A, 5.00%, 10/1/31, Continuously Callable @100 | 695 | 778 | |||||||||
See notes to financial statements.
10
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Guam Power Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/27, Continuously Callable @100 | $ | 1,000 | $ | 1,096 | |||||||
Series A, 5.00%, 10/1/30, Continuously Callable @100 | 1,000 | 1,096 | |||||||||
Series A, 5.00%, 10/1/32, Continuously Callable @100 | 1,000 | 1,146 | |||||||||
| Territory of Guam Revenue Series A, 5.00%, 12/1/30, Continuously Callable @100 | 1,500 | 1,735 | |||||||||
Series A, 5.00%, 12/1/31, Continuously Callable @100 | 2,000 | 2,306 | |||||||||
20,906 | |||||||||||
Idaho (0.3%): | |||||||||||
| Idaho Health Facilities Authority Revenue 5.00%, 3/1/35, Continuously Callable @100 | 5,805 | 6,916 | |||||||||
5.00%, 3/1/36, Continuously Callable @100 | 4,085 | 4,857 | |||||||||
5.00%, 3/1/37, Continuously Callable @100 | 3,000 | 3,563 | |||||||||
15,336 | |||||||||||
Illinois (15.5%): | |||||||||||
| Champaign County Community Unit School District No. 4 Champaign, GO 4.00%, 6/1/34, Continuously Callable @100 (h) | 1,000 | 1,128 | |||||||||
4.00%, 6/1/35, Continuously Callable @100 (h) | 1,290 | 1,447 | |||||||||
4.00%, 6/1/36, Continuously Callable @100 (h) | 1,575 | 1,760 | |||||||||
| Chicago Board of Education, GO Series A, 0.00%, 12/1/25 (i) | 1,600 | 1,340 | |||||||||
Series A, 2.98%, 12/1/26 | 3,700 | 2,993 | |||||||||
| Chicago Midway International Airport Revenue Series B, 5.00%, 1/1/27, Continuously Callable @100 | 6,525 | 7,235 | |||||||||
Series B, 5.00%, 1/1/29, Continuously Callable @100 | 11,750 | 13,383 | |||||||||
Series B, 5.00%, 1/1/30, Continuously Callable @100 | 5,175 | 5,888 | |||||||||
Series B, 5.00%, 1/1/31, Continuously Callable @100 | 8,910 | 10,125 | |||||||||
Series B, 5.00%, 1/1/32, Continuously Callable @100 | 6,000 | 6,803 | |||||||||
Series B, 5.25%, 1/1/33, Continuously Callable @100 | 1,635 | 1,819 | |||||||||
Series B, 4.00%, 1/1/34, Continuously Callable @100 | 3,500 | 3,876 | |||||||||
Series B, 4.00%, 1/1/35, Continuously Callable @100 | 3,000 | 3,323 | |||||||||
| Chicago O'Hare International Airport Revenue 5.00%, 1/1/33, Continuously Callable @100 | 11,560 | 13,381 | |||||||||
5.00%, 1/1/34, Continuously Callable @100 | 5,675 | 6,563 | |||||||||
Series B, 5.25%, 1/1/29, Continuously Callable @100 | 13,480 | 15,057 | |||||||||
Series C, 5.25%, 1/1/24, Continuously Callable @100 | 9,000 | 9,084 | |||||||||
| Chicago O'Hare International Airport Revenue (INS — Assured Guaranty Municipal Corp.) 5.00%, 1/1/28, Continuously Callable @100 | 3,620 | 4,008 | |||||||||
5.00%, 1/1/29, Continuously Callable @100 | 1,500 | 1,661 | |||||||||
5.13%, 1/1/30, Continuously Callable @100 | 2,150 | 2,389 | |||||||||
City of Chicago Special Assessment, 6.63%, 12/1/22, Continuously Callable @100 | 2,134 | 2,139 | |||||||||
| City of Chicago Wastewater Transmission Revenue 5.00%, 1/1/31, Continuously Callable @100 | 1,000 | 1,110 | |||||||||
5.00%, 1/1/32, Continuously Callable @100 | 1,000 | 1,106 | |||||||||
Series B, 5.00%, 1/1/35, Continuously Callable @100 | 8,000 | 9,240 | |||||||||
Series C, 5.00%, 1/1/33, Continuously Callable @100 | 3,500 | 3,936 | |||||||||
Series C, 5.00%, 1/1/35, Continuously Callable @100 | 1,250 | 1,401 | |||||||||
See notes to financial statements.
11
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| City of Chicago Wastewater Transmission Revenue Bonds, Series C, 5.00%, 1/1/34, Continuously Callable @100 | $ | 1,000 | $ | 1,124 | |||||||
| City of Chicago Waterworks Revenue 5.00%, 11/1/28, Continuously Callable @100 | 1,500 | 1,778 | |||||||||
5.00%, 11/1/29, Continuously Callable @100 | 725 | 859 | |||||||||
5.00%, 11/1/30, Continuously Callable @100 | 2,000 | 2,366 | |||||||||
5.00%, 11/1/31, Continuously Callable @100 | 2,000 | 2,281 | |||||||||
5.00%, 11/1/33, Continuously Callable @100 | 2,000 | 2,275 | |||||||||
5.00%, 11/1/36, Continuously Callable @100 | 2,665 | 3,177 | |||||||||
Series A-1, 5.00%, 11/1/29, Continuously Callable @100 | 1,000 | 1,184 | |||||||||
Series A-1, 5.00%, 11/1/31, Continuously Callable @100 | 1,000 | 1,183 | |||||||||
| City of Chicago Waterworks Revenue(INS — Assured Guaranty Municipal Corp.) 5.25%, 11/1/34, Continuously Callable @100 | 2,105 | 2,546 | |||||||||
5.25%, 11/1/35, Continuously Callable @100 | 1,635 | 1,968 | |||||||||
Series 2017-2, 5.00%, 11/1/36, Continuously Callable @100 | 3,145 | 3,718 | |||||||||
Series 2017-2, 5.00%, 11/1/37, Continuously Callable @100 | 2,500 | 2,948 | |||||||||
| City of Chicago, GO(INS — National Public Finance Guarantee Corp.), 0.00%, 1/1/23 (i) | 30,000 | 27,547 | |||||||||
| City of Springfield Electric Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 3/1/34, Continuously Callable @100 | 3,000 | 3,432 | |||||||||
City of Springfield, GO, 5.00%, 12/1/30, Continuously Callable @100 | 8,500 | 9,917 | |||||||||
| County of Cook Sales Tax Revenue 4.00%, 11/15/34, Continuously Callable @100 | 3,750 | 4,133 | |||||||||
5.00%, 11/15/35, Continuously Callable @100 | 7,000 | 8,336 | |||||||||
5.00%, 11/15/36, Continuously Callable @100 | 5,000 | 5,945 | |||||||||
| County of Cook, GO 5.00%, 11/15/34, Continuously Callable @100 | 2,000 | 2,307 | |||||||||
5.00%, 11/15/35, Continuously Callable @100 | 2,000 | 2,304 | |||||||||
Series A, 5.00%, 11/15/31, Continuously Callable @100 | 2,500 | 2,910 | |||||||||
| Illinois Educational Facilities Authority Revenue 4.45%, 11/1/36, Continuously Callable @102 | 4,500 | 4,979 | |||||||||
4.00%, 11/1/36, Continuously Callable @102 | 9,750 | 10,597 | |||||||||
3.90%, 11/1/36, Continuously Callable @102 | 2,220 | 2,400 | |||||||||
| Illinois Finance Authority Revenue 5.00%, 2/15/20 | 2,080 | 2,107 | |||||||||
5.00%, 2/15/22, Pre-refunded 2/15/20 @ 100 | 1,710 | 1,733 | |||||||||
3.25%, 5/15/22 | 1,670 | 1,686 | |||||||||
5.00%, 4/1/23, Continuously Callable @100 | 2,000 | 2,004 | |||||||||
5.13%, 2/15/25, Pre-refunded 2/15/20 @ 100 | 7,140 | 7,240 | |||||||||
5.00%, 4/1/25, Continuously Callable @100 | 4,165 | 4,173 | |||||||||
5.00%, 2/15/27 | 7,650 | 7,849 | |||||||||
5.40%, 4/1/27, Continuously Callable @100 | 1,435 | 1,436 | |||||||||
4.00%, 5/15/27 | 3,065 | 3,242 | |||||||||
5.50%, 7/1/28, Continuously Callable @100 | 8,250 | 9,319 | |||||||||
3.90%, 3/1/30, Continuously Callable @100 | 20,000 | 21,417 | |||||||||
5.00%, 5/15/30, Continuously Callable @100 | 1,000 | 1,119 | |||||||||
5.00%, 5/15/31, Continuously Callable @100 | 1,875 | 2,051 | |||||||||
5.00%, 8/15/32, Continuously Callable @100 | 1,500 | 1,728 | |||||||||
5.00%, 8/15/33, Continuously Callable @100 | 1,155 | 1,327 | |||||||||
5.00%, 8/15/34, Continuously Callable @100 | 1,000 | 1,146 | |||||||||
See notes to financial statements.
12
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 12/1/34, Continuously Callable @100 | $ | 3,500 | $ | 4,040 | |||||||
5.00%, 5/15/35, Continuously Callable @100 | 1,100 | 1,219 | |||||||||
5.00%, 8/15/35, Continuously Callable @100 | 4,000 | 4,501 | |||||||||
5.00%, 10/1/35, Continuously Callable @100 | 600 | 736 | |||||||||
4.00%, 12/1/35, Continuously Callable @100 | 5,000 | 5,343 | |||||||||
5.00%, 5/15/36, Continuously Callable @100 | 1,400 | 1,509 | |||||||||
4.00%, 12/1/36, Continuously Callable @100 | 3,000 | 3,193 | |||||||||
5.00%, 2/15/37, Continuously Callable @100 | 1,000 | 1,148 | |||||||||
5.00%, 10/1/37, Continuously Callable @100 | 700 | 857 | |||||||||
5.00%, 10/1/39, Continuously Callable @100 | 700 | 853 | |||||||||
Series A, 4.50%, 5/15/25, Continuously Callable @100 | 8,210 | 8,806 | |||||||||
Series A, 5.38%, 8/15/26, Continuously Callable @100 | 7,665 | 8,210 | |||||||||
Series A, 4.00%, 10/1/31, Continuously Callable @100 | 1,000 | 1,123 | |||||||||
Series A, 4.00%, 10/1/32, Continuously Callable @100 | 1,000 | 1,116 | |||||||||
Series A, 5.00%, 9/1/34, Continuously Callable @100 | 3,385 | 3,863 | |||||||||
Series A, 4.00%, 10/1/34, Continuously Callable @100 | 1,000 | 1,109 | |||||||||
Series A, 5.00%, 11/15/34, Continuously Callable @100 | 3,700 | 4,284 | |||||||||
Series A, 5.00%, 11/15/35, Continuously Callable @100 | 3,000 | 3,468 | |||||||||
Series C, 4.00%, 2/15/36, Continuously Callable @100 | 18,000 | 19,955 | |||||||||
| Illinois Municipal Electric Agency Revenue, Series A, 4.00%, 2/1/33, Continuously Callable @100 | 14,650 | 16,069 | |||||||||
| Illinois Sports Facilities Authority Revenue 5.25%, 6/15/30, Continuously Callable @100 | 3,000 | 3,379 | |||||||||
5.00%, 6/15/30, Continuously Callable @100 | 1,025 | 1,226 | |||||||||
5.25%, 6/15/31, Continuously Callable @100 | 5,000 | 5,620 | |||||||||
5.25%, 6/15/32, Continuously Callable @100 | 5,000 | 5,607 | |||||||||
| Illinois State Toll Highway Authority Revenue Series A, 5.00%, 12/1/32, Continuously Callable @100 | 5,000 | 5,884 | |||||||||
Series A, 5.00%, 1/1/34, Continuously Callable @100 | 5,870 | 6,832 | |||||||||
Series A, 5.00%, 1/1/35, Continuously Callable @100 | 5,600 | 6,510 | |||||||||
Series A, 5.00%, 1/1/36, Continuously Callable @100 | 7,000 | 8,131 | |||||||||
| Kane Cook & DuPage Counties School District No. U-46 Elgin, GO Series D, 5.00%, 1/1/32, Continuously Callable @100 | 2,800 | 3,123 | |||||||||
Series D, 5.00%, 1/1/33, Continuously Callable @100 | 4,000 | 4,454 | |||||||||
| Kendall Kane & Will Counties Community Unit School District No. 308, GO 5.00%, 2/1/35, Continuously Callable @100 | 5,000 | 5,769 | |||||||||
5.00%, 2/1/36, Continuously Callable @100 | 6,000 | 6,913 | |||||||||
| Madison County Community Unit School District No. 7 Edwardsville, GO (INS — Build America Mutual Assurance Co.) 5.00%, 12/1/28, Continuously Callable @100 | 1,210 | 1,401 | |||||||||
5.00%, 12/1/29, Continuously Callable @100 | 1,250 | 1,445 | |||||||||
| Madison-Macoupin Etc. Counties Community College District No. 536, GO (INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 11/1/31, Continuously Callable @100 | 1,000 | 1,163 | |||||||||
Series A, 5.00%, 11/1/32, Continuously Callable @100 | 2,000 | 2,321 | |||||||||
Series A, 5.00%, 11/1/33, Continuously Callable @100 | 750 | 869 | |||||||||
| Metropolitan Pier & Exposition Authority Revenue (INS — Assured Guaranty Municipal Corp.), 0.00%, 6/15/26 (i) | 5,000 | 4,255 | |||||||||
| Northern Illinois Municipal Power Agency Revenue Series A, 4.00%, 12/1/31, Continuously Callable @100 | 1,800 | 2,006 | |||||||||
See notes to financial statements.
13
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series A, 4.00%, 12/1/32, Continuously Callable @100 | $ | 2,100 | $ | 2,330 | |||||||
Series A, 4.00%, 12/1/33, Continuously Callable @100 | 4,000 | 4,418 | |||||||||
Series A, 4.00%, 12/1/35, Continuously Callable @100 | 5,000 | 5,470 | |||||||||
| Railsplitter Tobacco Settlement Authority Revenue, 5.50%, 6/1/23, Pre-refunded 6/1/21 @ 100 | 10,000 | 10,686 | |||||||||
| Regional Transportation Authority Revenue Series A, 4.00%, 7/1/34, Continuously Callable @100 | 23,160 | 25,659 | |||||||||
Series A, 4.00%, 7/1/35, Continuously Callable @100 | 11,650 | 12,841 | |||||||||
| Sangamon County School District No. 186 Springfield, GO (INS — Build America Mutual Assurance Co.) Series B, 5.00%, 2/1/24 | 3,700 | 4,184 | |||||||||
Series B, 5.00%, 2/1/25, Continuously Callable @100 | 7,200 | 8,138 | |||||||||
Series B, 5.00%, 2/1/26, Continuously Callable @100 | 4,215 | 4,760 | |||||||||
| State of Illinois, GO 5.25%, 2/1/31, Continuously Callable @100 | 9,000 | 9,825 | |||||||||
5.00%, 11/1/32, Continuously Callable @100 | 10,000 | 11,166 | |||||||||
Series B, 5.00%, 9/1/25 | 11,000 | 12,329 | |||||||||
Series C, 5.00%, 11/1/29, Continuously Callable @100 | 15,500 | 17,690 | |||||||||
| State of Illinois, GO(INS — Assured Guaranty Municipal Corp.) 5.00%, 1/1/21, Continuously Callable @100 | 5,000 | 5,046 | |||||||||
4.00%, 2/1/30, Continuously Callable @100 | 7,000 | 7,654 | |||||||||
Series A, 5.00%, 4/1/29, Continuously Callable @100 | 10,000 | 10,924 | |||||||||
| State of Illinois, GO(INS — Build America Mutual Assurance Co.), Series D, 5.00%, 11/1/25 (a) | 10,000 | 11,552 | |||||||||
| State of Illinois, GO(LIQ — Barclays Bank plc) Series 2015-XF1006, 1.64%, 4/1/37, Callable 4/1/24 @ 100 (b) | 2,990 | 2,990 | |||||||||
Series 2015-XF1010, 1.64%, 2/1/39, Callable 2/1/24 @ 100 (b) | 18,995 | 18,995 | |||||||||
| Chicago Board of Education, GO(LIQ — Deutsche Bank AG) Series 2016-XG0073, 1.87%, 12/1/39, Callable 12/1/21 @ 100 (b) | 12,000 | 12,000 | |||||||||
Series 2017-XM0188, 1.91%, 12/1/39, Callable 12/1/21 @ 100 (b) | 5,000 | 5,000 | |||||||||
University of Illinois Revenue, Series A, 4.00%, 4/1/33, Continuously Callable @100 | 12,475 | 13,749 | |||||||||
| Village of Bolingbrook, GO(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 1/1/29, Continuously Callable @100 | 1,750 | 2,137 | |||||||||
Series A, 5.00%, 1/1/30, Continuously Callable @100 | 1,500 | 1,821 | |||||||||
Series A, 5.00%, 1/1/31, Continuously Callable @100 | 2,400 | 2,902 | |||||||||
Series A, 5.00%, 1/1/32, Continuously Callable @100 | 2,350 | 2,832 | |||||||||
Series A, 5.00%, 1/1/33, Continuously Callable @100 | 1,450 | 1,736 | |||||||||
Series A, 5.00%, 1/1/38, Continuously Callable @100 | 1,500 | 1,779 | |||||||||
| Village of Gilberts Special Tax(INS — Build America Mutual Assurance Co.), 5.00%, 3/1/30, Continuously Callable @100 | 5,225 | 5,974 | |||||||||
| Village of Rosemont, GO(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 12/1/25 | 2,010 | 2,346 | |||||||||
Series A, 5.00%, 12/1/26 | 2,110 | 2,503 | |||||||||
| Volo Village Special Service Area No. 3 & 6 Special Tax (INS — Assured Guaranty Municipal Corp.) 5.00%, 3/1/34, Continuously Callable @100 | 2,997 | 3,370 | |||||||||
4.00%, 3/1/36, Continuously Callable @100 | 1,250 | 1,323 | |||||||||
| Williamson Jackson Etc. Counties Community Unit School District No. 4, GO (INS — Assured Guaranty Municipal Corp.) 5.00%, 12/1/28, Continuously Callable @100 | 1,835 | 2,127 | |||||||||
See notes to financial statements.
14
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 12/1/29, Continuously Callable @100 | $ | 1,925 | $ | 2,227 | |||||||
5.00%, 12/1/30, Continuously Callable @100 | 2,025 | 2,338 | |||||||||
5.00%, 12/1/34, Continuously Callable @100 | 6,000 | 6,890 | |||||||||
742,007 | |||||||||||
Indiana (1.2%): | |||||||||||
City of Rockport Revenue, Series A, 3.05%, 6/1/25 | 5,750 | 6,101 | |||||||||
| Hammond Multi-School Building Corp. Revenue 5.00%, 7/15/33, Continuously Callable @100 | 1,165 | 1,400 | |||||||||
5.00%, 7/15/34, Continuously Callable @100 | 1,000 | 1,201 | |||||||||
5.00%, 7/15/35, Continuously Callable @100 | 1,250 | 1,496 | |||||||||
5.00%, 7/15/38, Continuously Callable @100 | 3,000 | 3,581 | |||||||||
| Indiana Finance Authority Revenue 3.13%, 12/1/24 | 6,000 | 6,390 | |||||||||
1.30%, 5/1/28 | 5,000 | 5,000 | |||||||||
5.00%, 9/1/30, Continuously Callable @100 | 1,250 | 1,496 | |||||||||
5.00%, 9/1/31, Continuously Callable @100 | 1,500 | 1,793 | |||||||||
5.00%, 11/15/33, Continuously Callable @103 | 2,000 | 2,312 | |||||||||
4.00%, 7/1/36, Continuously Callable @100 | 3,660 | 4,039 | |||||||||
4.00%, 7/1/38, Continuously Callable @100 | 4,030 | 4,433 | |||||||||
5.00%, 11/15/38, Continuously Callable @103 | 3,000 | 3,433 | |||||||||
4.00%, 7/1/39, Continuously Callable @100 | 3,605 | 3,951 | |||||||||
Series A, 5.00%, 5/1/24, Continuously Callable @100 | 1,470 | 1,637 | |||||||||
Series A, 5.00%, 5/1/27, Continuously Callable @100 | 1,200 | 1,335 | |||||||||
Series A, 5.00%, 6/1/32, Continuously Callable @100 | 10,500 | 11,125 | |||||||||
Richmond Hospital Authority Revenue, 5.00%, 1/1/35, Continuously Callable @100 | 6,500 | 7,387 | |||||||||
68,110 | |||||||||||
Iowa (0.5%): | |||||||||||
| Iowa Finance Authority Revenue Series E, 4.00%, 8/15/35, Continuously Callable @100 | 5,425 | 5,880 | |||||||||
Series E, 4.00%, 8/15/36, Continuously Callable @100 | 15,105 | 16,310 | |||||||||
22,190 | |||||||||||
Kansas (0.5%): | |||||||||||
City of Burlington Revenue, 1.80%, 9/1/35, Continuously Callable @100 | 6,550 | 6,550 | |||||||||
| City of Wichita Revenue 4.20%, 9/1/27, Continuously Callable @100 | 3,000 | 3,058 | |||||||||
4.63%, 9/1/33, Continuously Callable @100 | 10,000 | 10,206 | |||||||||
19,814 | |||||||||||
Kentucky (3.0%): | |||||||||||
City of Ashland Revenue, 4.00%, 2/1/36, Continuously Callable @100 | 2,410 | 2,481 | |||||||||
| City of Pikeville Revenue 5.75%, 3/1/26, Pre-refunded 3/1/21 @ 100 | 795 | 844 | |||||||||
5.75%, 3/1/26, Continuously Callable @100 | 2,930 | 3,056 | |||||||||
County of Trimble Revenue, 3.75%, 6/1/33, Continuously Callable @100 | 15,000 | 16,286 | |||||||||
| Kentucky Economic Development Finance Authority Revenue 5.00%, 5/15/26 | 6,750 | 7,330 | |||||||||
1.30%, 4/1/31 | 3,000 | 3,000 | |||||||||
5.00%, 5/15/31, Continuously Callable @100 | 7,205 | 7,930 | |||||||||
5.00%, 5/15/36, Continuously Callable @100 | 2,500 | 2,711 | |||||||||
See notes to financial statements.
15
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series B, 0.00%, 10/1/24 (i) | $ | 6,130 | $ | 5,432 | |||||||
Series C, 1.73%, 5/1/34, Continuously Callable @100 | 5,740 | 5,740 | |||||||||
| Kentucky Municipal Power Agency Revenue, Series A, 3.45%, 9/1/42 (Put Date 3/1/26) (f) | 7,000 | 7,525 | |||||||||
| Kentucky Public Energy Authority Revenue Series C-1, 4.00%, 12/1/49 (Put Date 6/1/25) (f) | 20,000 | 22,028 | |||||||||
Series C-3, 2.63%(MUNISPA + 1.05%), 12/1/49 (Put Date 6/1/25) (f) (g) | 20,000 | 20,151 | |||||||||
| Kentucky State Property & Building Commission Revenue 5.00%, 5/1/35, Continuously Callable @100 | 1,000 | 1,205 | |||||||||
5.00%, 5/1/36, Continuously Callable @100 | 1,000 | 1,203 | |||||||||
5.00%, 5/1/37, Continuously Callable @100 | 3,000 | 3,608 | |||||||||
Series A, 5.00%, 2/1/32, Continuously Callable @100 | 2,000 | 2,340 | |||||||||
Series A, 5.00%, 2/1/33, Continuously Callable @100 | 2,250 | 2,630 | |||||||||
| Louisville/Jefferson County Metropolitan Government Revenue 5.00%, 12/1/22, Pre-refunded 6/1/22 @ 100 | 3,830 | 4,201 | |||||||||
5.00%, 12/1/23, Pre-refunded 6/1/22 @ 100 | 2,760 | 3,027 | |||||||||
5.00%, 12/1/24, Pre-refunded 6/1/22 @ 100 | 7,160 | 7,854 | |||||||||
1.75%, 2/1/35 | 5,000 | 4,985 | |||||||||
135,567 | |||||||||||
Louisiana (5.4%): | |||||||||||
| Calcasieu Parish Memorial Hospital Service District Revenue, 5.00%, 12/1/39, Continuously Callable @100 | 1,000 | 1,176 | |||||||||
| City of New Orleans Sewerage Service Revenue 5.00%, 6/1/31, Continuously Callable @100 | 700 | 814 | |||||||||
5.00%, 6/1/32, Continuously Callable @100 | 1,150 | 1,335 | |||||||||
5.00%, 12/1/33, Continuously Callable @100 | 1,500 | 1,737 | |||||||||
5.00%, 6/1/34, Continuously Callable @100 | 1,500 | 1,734 | |||||||||
5.00%, 12/1/35, Continuously Callable @100 | 1,500 | 1,731 | |||||||||
| City of Shreveport Water & Sewer Revenue Series B, 5.00%, 12/1/31, Continuously Callable @100 | 5,330 | 6,147 | |||||||||
Series B, 5.00%, 12/1/32, Continuously Callable @100 | 5,125 | 5,901 | |||||||||
| City of Shreveport Water & Sewer Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 12/1/33, Continuously Callable @100 | 1,515 | 1,775 | |||||||||
5.00%, 12/1/34, Continuously Callable @100 | 1,500 | 1,754 | |||||||||
5.00%, 12/1/35, Continuously Callable @100 | 1,510 | 1,764 | |||||||||
| City of Shreveport Water & Sewer Revenue(INS — Build America Mutual Assurance Co.) Series C, 5.00%, 12/1/30, Continuously Callable @100 | 1,000 | 1,263 | |||||||||
Series C, 5.00%, 12/1/31, Continuously Callable @100 | 2,000 | 2,519 | |||||||||
| Jefferson Parish Hospital Service District No. 1 Revenue (INS — Assured Guaranty Municipal Corp.) Series A, 5.50%, 1/1/26, Pre-refunded 1/1/21 @ 100 | 2,750 | 2,890 | |||||||||
Series A, 5.38%, 1/1/31, Pre-refunded 1/1/21 @ 100 | 3,000 | 3,148 | |||||||||
| Louisiana Local Government Environmental Facilities & Community Development Authority Revenue 3.50%, 11/1/32, Continuously Callable @100 | 18,750 | 20,025 | |||||||||
Series A, 6.50%, 8/1/29, Continuously Callable @100 | 3,750 | 3,901 | |||||||||
See notes to financial statements.
16
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Louisiana Public Facilities Authority Revenue 5.00%, 7/1/28, Continuously Callable @100 | $ | 1,745 | $ | 2,063 | |||||||
5.00%, 7/1/30, Continuously Callable @100 | 1,695 | 1,985 | |||||||||
5.00%, 7/1/33, Continuously Callable @100 | 750 | 872 | |||||||||
5.00%, 7/1/33, Continuously Callable @100 | 8,940 | 10,305 | |||||||||
5.00%, 7/1/33, Pre-refunded 7/1/25 @ 100 | 55 | 66 | |||||||||
5.00%, 5/15/34, Continuously Callable @100 | 2,225 | 2,590 | |||||||||
5.00%, 5/15/34, Pre-refunded 5/15/26 @ 100 | 25 | 31 | |||||||||
5.00%, 5/15/34, Continuously Callable @100 | 2,975 | 3,518 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 13,465 | 15,484 | |||||||||
5.00%, 7/1/34, Pre-refunded 7/1/25 @ 100 | 85 | 102 | |||||||||
4.00%, 5/15/35, Continuously Callable @100 | 3,465 | 3,794 | |||||||||
4.00%, 5/15/35, Pre-refunded 5/15/26 @ 100 | 35 | 41 | |||||||||
5.00%, 5/15/35, Continuously Callable @100 | 2,000 | 2,360 | |||||||||
5.00%, 5/15/36, Continuously Callable @100 | 1,560 | 1,837 | |||||||||
4.00%, 5/15/36, Pre-refunded 5/15/26 @ 100 | 15 | 17 | |||||||||
4.00%, 5/15/36, Continuously Callable @100 | 1,485 | 1,623 | |||||||||
Series A, 4.00%, 12/15/32, Continuously Callable @100 | 2,735 | 3,054 | |||||||||
Series A, 4.00%, 12/15/33, Continuously Callable @100 | 3,095 | 3,457 | |||||||||
Series B, 3.50%, 6/1/30, Continuously Callable @100 | 14,000 | 14,326 | |||||||||
| Louisiana Public Facilities Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 6/1/36, Continuously Callable @100 | 2,000 | 2,298 | |||||||||
| Louisiana State University & Agricultural & Mechanical College Revenue Series A, 4.00%, 7/1/31, Continuously Callable @100 | 1,000 | 1,115 | |||||||||
Series A, 4.00%, 7/1/32, Continuously Callable @100 | 1,000 | 1,110 | |||||||||
Series A, 4.00%, 7/1/33, Continuously Callable @100 | 1,000 | 1,110 | |||||||||
| New Orleans Aviation Board Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 1/1/35, Continuously Callable @100 | 1,840 | 2,213 | |||||||||
5.00%, 1/1/36, Continuously Callable @100 | 1,250 | 1,502 | |||||||||
5.00%, 1/1/37, Continuously Callable @100 | 1,500 | 1,801 | |||||||||
5.00%, 10/1/37, Continuously Callable @100 | 2,000 | 2,422 | |||||||||
5.00%, 1/1/38, Continuously Callable @100 | 1,300 | 1,560 | |||||||||
Parish of St. Charles Revenue, 4.00%, 12/1/40 (Put Date 6/1/22) (f) | 16,750 | 17,709 | |||||||||
| Parish of St. James Revenue Series A-1, 1.77%, 11/1/40, Continuously Callable @100 | 33,500 | 33,500 | |||||||||
Series B-1, 1.70%, 11/1/40, Continuously Callable @100 | 34,000 | 34,000 | |||||||||
Parish of St. John the BaptiSt. Revenue, 2.20%, 6/1/37 (h) | 11,750 | 11,831 | |||||||||
| Terrebonne Parish Hospital Service District No.1 Revenue 5.00%, 4/1/22, Pre-refunded 4/1/20 @ 100 | 875 | 891 | |||||||||
5.00%, 4/1/22, Continuously Callable @100 | 1,565 | 1,591 | |||||||||
5.00%, 4/1/23, Pre-refunded 4/1/20 @ 100 | 925 | 942 | |||||||||
5.00%, 4/1/23, Continuously Callable @100 | 1,645 | 1,673 | |||||||||
4.65%, 4/1/24, Pre-refunded 4/1/20 @ 100 | 720 | 732 | |||||||||
4.65%, 4/1/24, Continuously Callable @100 | 1,280 | 1,299 | |||||||||
5.00%, 4/1/28, Pre-refunded 4/1/20 @ 100 | 1,535 | 1,563 | |||||||||
5.00%, 4/1/28, Continuously Callable @100 | 2,715 | 2,760 | |||||||||
| Tobacco Settlement Financing Corp. Revenue Series A, 5.00%, 5/15/23 | 5,000 | 5,595 | |||||||||
Series A, 5.25%, 5/15/31, Continuously Callable @100 | 10,000 | 10,528 | |||||||||
266,884 | |||||||||||
See notes to financial statements.
17
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Maine (0.3%): | |||||||||||
| Maine Health & Higher Educational Facilities Authority Revenue 5.00%, 7/1/24, Continuously Callable @100 | $ | 1,635 | $ | 1,795 | |||||||
6.00%, 7/1/26, Continuously Callable @100 | 11,500 | 12,154 | |||||||||
5.00%, 7/1/26, Continuously Callable @100 | 1,000 | 1,096 | |||||||||
5.00%, 7/1/27, Continuously Callable @100 | 1,000 | 1,096 | |||||||||
16,141 | |||||||||||
Maryland (1.3%): | |||||||||||
| City of Gaithersburg Revenue 5.00%, 1/1/33, Continuously Callable @104 | 3,000 | 3,419 | |||||||||
5.00%, 1/1/36, Continuously Callable @104 | 1,000 | 1,133 | |||||||||
| Maryland Economic Development Corp. Revenue Series A, 5.00%, 6/1/30, Continuously Callable @100 | 1,250 | 1,528 | |||||||||
Series A, 5.00%, 6/1/31, Continuously Callable @100 | 1,000 | 1,218 | |||||||||
Series A, 5.00%, 6/1/32, Continuously Callable @100 | 1,000 | 1,214 | |||||||||
Series A, 5.00%, 6/1/35, Continuously Callable @100 | 2,000 | 2,399 | |||||||||
| Maryland Health & Higher Educational Facilities Authority Revenue 5.50%, 1/1/29, Continuously Callable @100 | 1,415 | 1,711 | |||||||||
5.50%, 1/1/30, Continuously Callable @100 | 1,750 | 2,111 | |||||||||
5.50%, 1/1/31, Continuously Callable @100 | 1,585 | 1,911 | |||||||||
5.00%, 7/1/31, Continuously Callable @100 | 3,190 | 3,700 | |||||||||
5.00%, 7/1/32, Continuously Callable @100 | 6,505 | 7,526 | |||||||||
5.00%, 7/1/33, Continuously Callable @100 | 1,000 | 1,159 | |||||||||
5.00%, 7/1/33, Continuously Callable @100 | 3,600 | 4,154 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 2,200 | 2,551 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 2,500 | 2,877 | |||||||||
5.50%, 1/1/36, Continuously Callable @100 | 5,000 | 5,968 | |||||||||
Series A, 5.00%, 7/1/33, Continuously Callable @100 | 1,000 | 1,176 | |||||||||
Series A, 5.00%, 7/1/34, Continuously Callable @100 | 1,000 | 1,173 | |||||||||
Series A, 5.00%, 7/1/35, Continuously Callable @100 | 1,310 | 1,534 | |||||||||
Series A, 5.00%, 7/1/36, Continuously Callable @100 | 1,000 | 1,170 | |||||||||
| Health & Higher Educational Facilities Authority Revenue (LIQ — Deutsche Bank AG), Series 2015-XF1021, 1.68%, 8/15/42, Callable 2/15/25 @ 100 (b) | 29,600 | 29,600 | |||||||||
79,232 | |||||||||||
Massachusetts (0.8%): | |||||||||||
| Massachusetts Clean Water Trust Revenue, Series 11, 4.75%, 8/1/25, Continuously Callable @100 | 110 | 110 | |||||||||
| Massachusetts Development Finance Agency Revenue 6.25%, 1/1/27, Pre-refunded 1/1/21 @ 100 | 2,700 | 2,864 | |||||||||
5.00%, 7/1/30, Continuously Callable @100 | 2,000 | 2,045 | |||||||||
5.00%, 7/1/30, Continuously Callable @100 | 2,000 | 2,359 | |||||||||
5.00%, 7/1/31, Continuously Callable @100 | 1,675 | 1,970 | |||||||||
5.00%, 7/1/32, Continuously Callable @100 | 1,250 | 1,486 | |||||||||
4.00%, 10/1/32, Continuously Callable @105 (b) | 3,600 | 3,886 | |||||||||
5.00%, 4/15/33, Continuously Callable @100 | 2,155 | 2,379 | |||||||||
5.00%, 7/1/33, Continuously Callable @100 | 1,250 | 1,483 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 1,000 | 1,184 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 895 | 1,090 | |||||||||
See notes to financial statements.
18
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | $ | 1,000 | $ | 1,233 | |||||||
5.00%, 7/1/36, Continuously Callable @100 | 2,000 | 2,329 | |||||||||
5.00%, 7/1/37, Continuously Callable @100 | 1,215 | 1,478 | |||||||||
5.00%, 7/1/37, Continuously Callable @100 | 800 | 985 | |||||||||
5.00%, 10/1/37, Continuously Callable @105 (b) | 1,000 | 1,109 | |||||||||
5.00%, 7/1/38, Continuously Callable @100 | 600 | 738 | |||||||||
5.00%, 7/1/38, Continuously Callable @100 | 335 | 407 | |||||||||
Series A, 5.00%, 7/1/20 | 640 | 655 | |||||||||
Series A, 5.00%, 7/1/22 | 1,480 | 1,603 | |||||||||
Series A, 5.00%, 7/1/27, Continuously Callable @100 | 1,720 | 1,859 | |||||||||
Series A, 5.00%, 1/1/31, Continuously Callable @100 | 450 | 533 | |||||||||
Series A, 5.00%, 1/1/32, Continuously Callable @100 | 645 | 763 | |||||||||
Series A, 5.00%, 1/1/33, Continuously Callable @100 | 535 | 631 | |||||||||
Series A, 5.00%, 1/1/34, Continuously Callable @100 | 700 | 824 | |||||||||
Series A, 5.00%, 1/1/35, Continuously Callable @100 | 735 | 863 | |||||||||
Series A, 5.00%, 1/1/36, Continuously Callable @100 | 1,000 | 1,173 | |||||||||
Series A, 5.00%, 7/1/36, Continuously Callable @100 | 2,000 | 2,418 | |||||||||
Series A, 5.00%, 7/1/38, Continuously Callable @100 | 1,000 | 1,208 | |||||||||
Series A, 5.00%, 7/1/39, Continuously Callable @100 | 2,250 | 2,712 | |||||||||
Series E, 5.00%, 7/1/35, Continuously Callable @100 | 1,500 | 1,737 | |||||||||
Series E, 5.00%, 7/1/36, Continuously Callable @100 | 1,000 | 1,157 | |||||||||
Series I, 6.25%, 1/1/27, Pre-refunded 1/1/21 @ 100 | 1,800 | 1,909 | |||||||||
Series J2, 5.00%, 7/1/35, Continuously Callable @100 | 5,375 | 6,540 | |||||||||
Series J2, 5.00%, 7/1/36, Continuously Callable @100 | 4,415 | 5,367 | |||||||||
Series J2, 5.00%, 7/1/37, Continuously Callable @100 | 5,285 | 6,421 | |||||||||
Series J2, 5.00%, 7/1/38, Continuously Callable @100 | 5,000 | 6,068 | |||||||||
| Massachusetts Health & Educational Facilities Authority Revenue, Series E, 5.00%, 7/15/27, Continuously Callable @100 | 4,000 | 4,008 | |||||||||
77,584 | |||||||||||
Michigan (2.3%): | |||||||||||
| Detroit Downtown Development Authority Tax Allocation(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 7/1/36, Continuously Callable @100 | 1,000 | 1,115 | |||||||||
Series A, 5.00%, 7/1/37, Continuously Callable @100 | 2,000 | 2,225 | |||||||||
| Grand Traverse County Hospital Finance Authority Revenue, Series A, 5.00%, 7/1/29, Continuously Callable @100 | 10,000 | 10,593 | |||||||||
| Great Lakes Water Authority Water Supply System Revenue, Series D, 4.00%, 7/1/32, Continuously Callable @100 | 13,560 | 15,123 | |||||||||
| Kent Hospital Finance Authority Revenue, Series A, 5.00%, 11/15/29, Continuously Callable @100 | 12,000 | 12,885 | |||||||||
| Livonia Public Schools, GO(INS — Assured Guaranty Municipal Corp.) 5.00%, 5/1/32, Continuously Callable @100 | 2,775 | 3,311 | |||||||||
5.00%, 5/1/33, Continuously Callable @100 | 2,875 | 3,426 | |||||||||
5.00%, 5/1/34, Continuously Callable @100 | 2,965 | 3,526 | |||||||||
5.00%, 5/1/35, Continuously Callable @100 | 3,065 | 3,639 | |||||||||
5.00%, 5/1/36, Continuously Callable @100 | 2,770 | 3,286 | |||||||||
| Michigan Finance Authority Revenue 5.00%, 11/1/34, Continuously Callable @100 | 1,000 | 1,247 | |||||||||
5.00%, 11/1/35, Continuously Callable @100 | 1,000 | 1,238 | |||||||||
4.00%, 11/15/35, Continuously Callable @100 | 6,000 | 6,615 | |||||||||
See notes to financial statements.
19
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 11/1/36, Continuously Callable @100 | $ | 1,000 | $ | 1,238 | |||||||
4.00%, 11/15/36, Continuously Callable @100 | 1,000 | 1,100 | |||||||||
5.00%, 11/1/37, Continuously Callable @100 | 1,250 | 1,548 | |||||||||
Series 2016, 5.00%, 12/1/34, Continuously Callable @100 | 8,200 | 9,738 | |||||||||
Series 2016, 5.00%, 12/1/35, Continuously Callable @100 | 4,600 | 5,458 | |||||||||
| Michigan Finance Authority Revenue(NBGA — Michigan School Bond Qualification and Loan Program) Series A, 5.00%, 5/1/24 | 2,000 | 2,307 | |||||||||
Series A, 5.00%, 5/1/25 | 1,700 | 2,014 | |||||||||
| Michigan State Building Authority Revenue, Series I-A, 5.00%, 10/15/29, Continuously Callable @100 | 3,000 | 3,400 | |||||||||
| State of Michigan Trunk Line Revenue 5.00%, 11/1/19 | 3,000 | 3,009 | |||||||||
5.00%, 11/1/20, Continuously Callable @100 | 2,000 | 2,006 | |||||||||
100,047 | |||||||||||
Minnesota (0.1%): | |||||||||||
| City of Minneapolis Revenue, Series A, 5.00%, 11/15/36, Continuously Callable @100 | 5,000 | 6,119 | |||||||||
| Housing & Redevelopment Authority of The City of St Paul Minnesota Revenue 5.00%, 11/15/29, Pre-refunded 11/15/25 @ 100 | 1,750 | 2,118 | |||||||||
5.00%, 11/15/30, Pre-refunded 11/15/25 @ 100 | 1,275 | 1,543 | |||||||||
9,780 | |||||||||||
Mississippi (1.4%): | |||||||||||
| Mississippi Business Finance Corp. Revenue 3.20%, 9/1/28, Continuously Callable @100 | 6,000 | 6,155 | |||||||||
1.60%, 12/1/30, Callable 11/1/19 @ 100 | 12,685 | 12,685 | |||||||||
Series B, 1.77%, 12/1/30, Callable 11/1/19 @ 100 | 16,260 | 16,260 | |||||||||
Series K, 1.77%, 11/1/35, Callable 11/1/19 @ 100 | 8,250 | 8,250 | |||||||||
| Mississippi Development Bank Revenue, 5.00%, 4/1/28, Continuously Callable @100 | 1,840 | 2,023 | |||||||||
| Mississippi Development Bank Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 9/1/30, Continuously Callable @100 | 7,000 | 7,559 | |||||||||
| Mississippi Hospital Equipment & Facilities Authority Revenue 1.80%, 9/1/22 | 2,665 | 2,664 | |||||||||
4.00%, 1/1/36, Continuously Callable @100 | 2,240 | 2,494 | |||||||||
4.00%, 1/1/37, Continuously Callable @100 | 2,260 | 2,513 | |||||||||
4.00%, 1/1/39, Continuously Callable @100 | 1,850 | 2,047 | |||||||||
4.00%, 1/1/40, Continuously Callable @100 | 2,675 | 2,950 | |||||||||
65,600 | |||||||||||
Missouri (1.2%): | |||||||||||
| Cape Girardeau County Industrial Development Authority Revenue 5.00%, 3/1/32, Continuously Callable @100 | 500 | 584 | |||||||||
5.00%, 3/1/36, Continuously Callable @100 | 750 | 873 | |||||||||
Series A, 5.00%, 6/1/25, Continuously Callable @100 | 1,780 | 1,944 | |||||||||
Series A, 5.00%, 6/1/27, Continuously Callable @100 | 2,555 | 2,789 | |||||||||
Series A, 6.00%, 3/1/33, Continuously Callable @103 | 2,460 | 2,799 | |||||||||
Health & Educational Facilities Authority of the State of Missouri Revenue | |||||||||||
5.00%, 2/1/29, Continuously Callable @104 | 1,000 | 1,155 | |||||||||
See notes to financial statements.
20
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 5/1/30, Continuously Callable @100 | $ | 2,310 | $ | 2,489 | |||||||
5.00%, 5/15/32, Continuously Callable @103 | 1,555 | 1,751 | |||||||||
5.25%, 5/1/33, Continuously Callable @100 | 2,350 | 2,544 | |||||||||
5.00%, 2/1/34, Continuously Callable @104 | 2,000 | 2,292 | |||||||||
5.00%, 5/15/36, Continuously Callable @103 | 4,565 | 5,090 | |||||||||
| Missouri Development Finance Board Revenue Series A, 5.00%, 6/1/30, Continuously Callable @100 | 1,000 | 1,109 | |||||||||
Series A, 5.00%, 6/1/31, Continuously Callable @100 | 4,215 | 4,670 | |||||||||
| Missouri State Environmental Improvement & Energy Resources Authority Revenue, Series A-R, 2.90%, 9/1/33, Continuously Callable @102 | 25,000 | 25,615 | |||||||||
| St. Louis County Industrial Development Authority Revenue 5.00%, 9/1/23 | 1,130 | 1,207 | |||||||||
5.50%, 9/1/33, Continuously Callable @100 | 2,750 | 3,041 | |||||||||
| Stoddard County Industrial Development Authority Revenue, Series B, 6.00%, 3/1/37, Continuously Callable @103 | 2,040 | 2,310 | |||||||||
62,262 | |||||||||||
Montana (0.2%): | |||||||||||
City of Forsyth Revenue, 3.90%, 3/1/31, Callable 3/1/23 @ 100 (d) | 8,500 | 8,995 | |||||||||
Nebraska (0.2%): | |||||||||||
Central Plains Energy Project Revenue, Series A, 5.00%, 9/1/36 | 3,550 | 4,686 | |||||||||
| Douglas County Hospital Authority No. 3 Revenue 5.00%, 11/1/28, Continuously Callable @100 | 1,250 | 1,473 | |||||||||
5.00%, 11/1/30, Continuously Callable @100 | 1,600 | 1,878 | |||||||||
| Public Power Generation Agency Revenue, 5.00%, 1/1/37, Continuously Callable @100 | 2,400 | 2,817 | |||||||||
10,854 | |||||||||||
Nevada (1.6%): | |||||||||||
| City of Carson City Revenue 5.00%, 9/1/29, Continuously Callable @100 | 620 | 748 | |||||||||
5.00%, 9/1/31, Continuously Callable @100 | 1,000 | 1,192 | |||||||||
5.00%, 9/1/33, Continuously Callable @100 | 1,000 | 1,186 | |||||||||
5.00%, 9/1/37, Continuously Callable @100 | 1,950 | 2,293 | |||||||||
| City of North Las Vegas, GO(INS — Assured Guaranty Municipal Corp.) 4.00%, 6/1/35, Continuously Callable @100 | 1,870 | 2,078 | |||||||||
4.00%, 6/1/37, Continuously Callable @100 | 7,345 | 8,096 | |||||||||
4.00%, 6/1/38, Continuously Callable @100 | 6,135 | 6,741 | |||||||||
| County of Clark Department of Aviation Revenue 5.00%, 7/1/26 | 3,660 | 4,483 | |||||||||
5.00%, 7/1/27 | 2,220 | 2,778 | |||||||||
Series A-2, 5.00%, 7/1/32, Continuously Callable @100 | 20,470 | 23,646 | |||||||||
Series A-2, 5.00%, 7/1/33, Continuously Callable @100 | 10,845 | 12,506 | |||||||||
| Las Vegas Convention & Visitors Authority Revenue Series C, 4.00%, 7/1/33, Continuously Callable @100 | 2,000 | 2,221 | |||||||||
Series C, 4.00%, 7/1/34, Continuously Callable @100 | 4,560 | 5,028 | |||||||||
Series C, 4.00%, 7/1/35, Continuously Callable @100 | 5,075 | 5,565 | |||||||||
78,561 | |||||||||||
See notes to financial statements.
21
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
New Hampshire (0.2%): | |||||||||||
| New Hampshire Health and Education Facilities Authority Act Revenue 5.00%, 8/1/34, Continuously Callable @100 | $ | 2,880 | $ | 3,489 | |||||||
5.00%, 8/1/35, Continuously Callable @100 | 2,700 | 3,263 | |||||||||
5.00%, 8/1/36, Continuously Callable @100 | 2,000 | 2,415 | |||||||||
5.00%, 8/1/37, Continuously Callable @100 | 1,500 | 1,809 | |||||||||
10,976 | |||||||||||
New Jersey (6.9%): | |||||||||||
| Casino Reinvestment Development Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 11/1/29, Continuously Callable @100 | 1,000 | 1,140 | |||||||||
5.00%, 11/1/30, Continuously Callable @100 | 1,000 | 1,138 | |||||||||
| City of Atlantic City , GO(INS — Assured Guaranty Municipal Corp.) Series B, 5.00%, 3/1/32, Continuously Callable @100 | 1,660 | 1,986 | |||||||||
Series B, 5.00%, 3/1/37, Continuously Callable @100 | 1,250 | 1,487 | |||||||||
| City of Atlantic City , GO(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 3/1/32, Continuously Callable @100 | 630 | 754 | |||||||||
| City of Atlantic City, GO(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 3/1/37, Continuously Callable @100 | 750 | 892 | |||||||||
| City of Bayonne, GO(INS — Build America Mutual Assurance Co.) 5.00%, 7/1/34, Continuously Callable @100 | 1,135 | 1,336 | |||||||||
5.00%, 7/1/35, Continuously Callable @100 | 1,000 | 1,175 | |||||||||
| Essex County Improvement Authority Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 6.00%, 11/1/25, Pre-refunded 11/1/20 @ 100 | 4,535 | 4,763 | |||||||||
| New Brunswick Parking Authority Revenue(INS — Build America Mutual Assurance Co.) Series A, 5.00%, 9/1/35, Continuously Callable @100 | 1,455 | 1,757 | |||||||||
Series A, 5.00%, 9/1/36, Continuously Callable @100 | 2,000 | 2,414 | |||||||||
| New Jersey Building Authority Revenue Series A, 4.00%, 6/15/30, Pre-refunded 6/15/26 @ 100 | 400 | 469 | |||||||||
Series A, 4.00%, 6/15/30, Continuously Callable @100 | 600 | 645 | |||||||||
| New Jersey Economic Development Authority Revenue 5.25%, 9/1/22, Pre-refunded 3/1/21 @ 100 | 7,300 | 7,704 | |||||||||
5.25%, 9/1/22, Continuously Callable @100 | 2,700 | 2,835 | |||||||||
5.00%, 3/1/25, Continuously Callable @100 | 18,410 | 20,346 | |||||||||
5.00%, 6/15/26, Continuously Callable @100 | 2,500 | 2,709 | |||||||||
3.13%, 9/1/27, Callable 3/1/23 @ 100 | 10,000 | 9,886 | |||||||||
3.18%, 3/1/28, Callable 3/1/23 @ 100 (d) | 10,000 | 9,839 | |||||||||
Series A, 4.45%, 6/1/23, Continuously Callable @100 | 3,500 | 3,570 | |||||||||
Series A, 5.00%, 6/15/25 | 5,125 | 5,954 | |||||||||
Series A, 3.13%, 7/1/29, Continuously Callable @100 | 1,085 | 1,122 | |||||||||
Series A, 3.38%, 7/1/30, Continuously Callable @100 | 1,000 | 1,039 | |||||||||
Series B, 5.00%, 6/15/36, Continuously Callable @100 | 16,455 | 19,293 | |||||||||
Series B, 5.00%, 6/15/37, Continuously Callable @100 | 16,280 | 19,054 | |||||||||
Series WW, 5.25%, 6/15/33, Continuously Callable @100 | 9,000 | 10,238 | |||||||||
| New Jersey Economic Development Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 6/15/25, Continuously Callable @100 | 10,000 | 11,397 | |||||||||
| New Jersey Educational Facilities Authority Revenue Series B, 5.50%, 9/1/28, Continuously Callable @100 | 5,740 | 6,836 | |||||||||
Series B, 5.50%, 9/1/29, Continuously Callable @100 | 4,000 | 4,744 | |||||||||
See notes to financial statements.
22
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series B, 5.50%, 9/1/30, Continuously Callable @100 | $ | 3,000 | $ | 3,547 | |||||||
Series B, 5.50%, 9/1/31, Continuously Callable @100 | 4,590 | 5,415 | |||||||||
Series B, 5.50%, 9/1/32, Continuously Callable @100 | 8,075 | 9,512 | |||||||||
Series F, 4.00%, 7/1/33, Continuously Callable @100 | 500 | 554 | |||||||||
Series F, 4.00%, 7/1/34, Continuously Callable @100 | 750 | 830 | |||||||||
Series F, 4.00%, 7/1/35, Continuously Callable @100 | 1,250 | 1,383 | |||||||||
| New Jersey Educational Facilities Authority Revenue (INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 7/1/34, Continuously Callable @100 | 3,000 | 3,609 | |||||||||
Series A, 5.00%, 7/1/35, Continuously Callable @100 | 3,350 | 4,025 | |||||||||
Series A, 4.00%, 7/1/36, Continuously Callable @100 | 1,800 | 1,951 | |||||||||
| New Jersey Health Care Facilities Financing Authority Revenue 5.00%, 10/1/33, Continuously Callable @100 | 2,000 | 2,331 | |||||||||
5.00%, 10/1/34, Continuously Callable @100 | 2,000 | 2,325 | |||||||||
5.00%, 10/1/35, Continuously Callable @100 | 2,620 | 3,037 | |||||||||
| New Jersey Health Care Facilities Financing Authority Revenue (INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 7/1/27, Continuously Callable @100 | 2,000 | 2,378 | |||||||||
Series A, 5.00%, 7/1/30, Continuously Callable @100 | 1,500 | 1,766 | |||||||||
| New Jersey Transportation Trust Fund Authority Revenue 5.00%, 6/15/30, Continuously Callable @100 | 3,000 | 3,503 | |||||||||
5.00%, 6/15/31, Continuously Callable @100 | 3,000 | 3,493 | |||||||||
2.78% (MUNISPA + 1.20%), 6/15/34 (Put Date 12/15/21) (f) (g) | 10,000 | 10,043 | |||||||||
Series A, 0.00%, 12/15/25 (i) | 20,000 | 17,195 | |||||||||
Series A, 5.00%, 12/15/35, Continuously Callable @100 | 17,550 | 20,594 | |||||||||
Series AA, 5.25%, 6/15/33, Continuously Callable @100 | 2,000 | 2,275 | |||||||||
Series AA, 5.25%, 6/15/34, Continuously Callable @100 | 3,000 | 3,408 | |||||||||
| New Jersey Transportation Trust Fund Authority Revenue (INS — AMBAC Assurance Corp.), Series B, 5.25%, 12/15/22 | 5,000 | 5,547 | |||||||||
| New Jersey Turnpike Authority Revenue Series A, 5.00%, 1/1/34, Continuously Callable @100 | 10,000 | 11,509 | |||||||||
Series A, 5.00%, 1/1/34, Continuously Callable @100 | 7,675 | 9,105 | |||||||||
Series A, 5.00%, 1/1/35, Continuously Callable @100 | 4,725 | 5,591 | |||||||||
Series B, 4.00%, 1/1/35, Continuously Callable @100 | 3,500 | 3,955 | |||||||||
| Newark Housing Authority Revenue(INS — Assured Guaranty Municipal Corp.) 4.00%, 12/1/29, Continuously Callable @100 | 500 | 554 | |||||||||
4.00%, 12/1/30, Continuously Callable @100 | 750 | 825 | |||||||||
4.00%, 12/1/31, Continuously Callable @100 | 500 | 549 | |||||||||
| South Jersey Transportation Authority Revenue Series A, 5.00%, 11/1/30, Continuously Callable @100 | 500 | 565 | |||||||||
Series A, 5.00%, 11/1/31, Continuously Callable @100 | 750 | 846 | |||||||||
Series A, 5.00%, 11/1/34, Continuously Callable @100 | 1,085 | 1,216 | |||||||||
| Morris County Improvement Authority Revenue (LIQ — Deutsche Bank AG), Series 2018-XF1067, 1.83%, 10/1/47, Callable 10/1/25 @ 100 (b) (d) | 11,070 | 11,070 | |||||||||
| Tobacco Settlement Financing Corp. Revenue, Series A, 5.00%, 6/1/36, Continuously Callable @100 | 5,000 | 5,983 | |||||||||
317,011 | |||||||||||
See notes to financial statements.
23
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
New Mexico (1.3%): | |||||||||||
| City of Farmington Revenue 4.70%, 5/1/24, Continuously Callable @100 | $ | 20,000 | $ | 20,662 | |||||||
1.87%, 4/1/33 (Put Date 10/1/21) (f) | 12,000 | 12,009 | |||||||||
5.20%, 6/1/40 (Put Date 6/1/20) (f) | 20,000 | 20,448 | |||||||||
| New Mexico Hospital Equipment Loan Council Revenue, 5.00%, 7/1/39, Continuously Callable @102 | 1,075 | 1,223 | |||||||||
54,342 | |||||||||||
New York (2.7%): | |||||||||||
| Chautauqua Tobacco Asset Securitization Corp. Revenue, 5.00%, 6/1/34, Continuously Callable @100 | 3,700 | 3,909 | |||||||||
City of New York, GO, Series F-5, 1.77%, 6/1/44, Continuously Callable @100 | 5,000 | 5,000 | |||||||||
| City of New York, GO(LOC — Bank of America Corp.), Series I-3, 1.82%, 4/1/36, Continuously Callable @100 | 300 | 300 | |||||||||
| City of New York, GO(LOC — Mizuho Corporate Bank Ltd.), Series A-3, 2.00%, 10/1/40, Continuously Callable @100 | 2,800 | 2,800 | |||||||||
City of Newburgh, GO, Series B, 5.00%, 6/15/23, Continuously Callable @100 | 575 | �� | 629 | ||||||||
| City of Yonkers, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 10/1/23, Continuously Callable @100 | 2,600 | 2,794 | |||||||||
| County of Nassau, GO Series A, 5.00%, 1/1/35, Continuously Callable @100 | 1,100 | 1,294 | |||||||||
Series A, 5.00%, 1/1/36, Continuously Callable @100 | 1,150 | 1,350 | |||||||||
| County of Rockland, GO 3.50%, 10/1/21, Continuously Callable @100 | 1,585 | 1,620 | |||||||||
3.63%, 10/1/22, Continuously Callable @100 | 1,190 | 1,218 | |||||||||
3.63%, 10/1/23, Continuously Callable @100 | 1,560 | 1,596 | |||||||||
3.63%, 10/1/24, Continuously Callable @100 | 1,665 | 1,704 | |||||||||
| Erie County Industrial Development Agency Revenue, 5.00%, 5/1/28, Continuously Callable @100 | 2,000 | 2,265 | |||||||||
| Hudson Yards Infrastructure Corp. Revenue, Series A, 5.00%, 2/15/37, Continuously Callable @100 | 2,500 | 3,034 | |||||||||
| Metropolitan Transportation Authority Revenue 4.00%, 11/15/35, Continuously Callable @100 | 18,340 | 20,776 | |||||||||
Series C-1, 5.00%, 11/15/34, Continuously Callable @100 | 10,000 | 11,778 | |||||||||
Series C-1, 5.00%, 11/15/35, Continuously Callable @100 | 2,000 | 2,351 | |||||||||
Series F, 5.00%, 11/15/34, Continuously Callable @100 | 2,000 | 2,356 | |||||||||
Series F, 5.00%, 11/15/35, Continuously Callable @100 | 3,000 | 3,527 | |||||||||
| Monroe County Industrial Development Corp. Revenue (LOC — Citizens Financial Group), 1.73%, 7/1/27, Continuously Callable @100 | 880 | 880 | |||||||||
| Monroe County Industrial Development Corp. Revenue(NBGA — FHA), 5.75%, 8/15/30, Continuously Callable @100 | 5,000 | 5,296 | |||||||||
| New York Liberty Development Corp. Revenue 2.63%, 9/15/69, Continuously Callable @100 (h) | 3,350 | 3,390 | |||||||||
2.80%, 9/15/69, Continuously Callable @100 (h) | 1,500 | 1,528 | |||||||||
| New York State Dormitory Authority Revenue 5.00%, 12/1/35, Continuously Callable @100 (b) | 600 | 704 | |||||||||
Series A, 5.00%, 5/1/23 | 15 | 17 | |||||||||
Series A, 5.00%, 5/1/23 | 735 | 804 | |||||||||
Series A, 5.00%, 5/1/24, Pre-refunded 5/1/23 @ 100 | 15 | 17 | |||||||||
Series A, 5.00%, 5/1/24, Continuously Callable @100 | 735 | 803 | |||||||||
See notes to financial statements.
24
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series A, 5.00%, 5/1/25, Pre-refunded 5/1/23 @ 100 | $ | 25 | $ | 28 | |||||||
Series A, 5.00%, 5/1/25, Continuously Callable @100 | 1,175 | 1,284 | |||||||||
Series A, 5.00%, 5/1/26, Pre-refunded 5/1/23 @ 100 | 20 | 23 | |||||||||
Series A, 5.00%, 5/1/26, Continuously Callable @100 | 980 | 1,070 | |||||||||
Series B, 5.00%, 2/15/32, Continuously Callable @100 | 20,000 | 23,476 | |||||||||
| New York State Dormitory Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/27, Continuously Callable @100 | 1,000 | 1,171 | |||||||||
Series A, 5.00%, 10/1/28, Continuously Callable @100 | 1,000 | 1,170 | |||||||||
Series A, 5.00%, 10/1/29, Continuously Callable @100 | 1,300 | 1,520 | |||||||||
| Niagara Falls City School District Certificate of Participation(INS — Assured Guaranty Municipal Corp.) 5.00%, 6/15/23 | 1,670 | 1,876 | |||||||||
5.00%, 6/15/24 | 1,450 | 1,674 | |||||||||
5.00%, 6/15/25, Continuously Callable @100 | 1,670 | 1,927 | |||||||||
| Saratoga County Capital Resource Corp. Revenue, Series A, 5.00%, 12/1/28, Continuously Callable @100 | 790 | 894 | |||||||||
| Suffolk County Economic Development Corp. Revenue 5.00%, 7/1/28, Pre-refunded 7/1/21 @ 100 | 220 | 234 | |||||||||
5.00%, 7/1/28, Continuously Callable @100 | 1,280 | 1,352 | |||||||||
| Town of Oyster Bay, GO 4.00%, 2/15/24 | 5,415 | 5,865 | |||||||||
4.00%, 2/15/25 | 9,750 | 10,718 | |||||||||
4.00%, 2/15/26 | 3,000 | 3,342 | |||||||||
| Westchester County Local Development Corp. Revenue, 5.00%, 1/1/28, Continuously Callable @100 | 1,350 | 1,484 | |||||||||
142,848 | |||||||||||
North Carolina (0.2%): | |||||||||||
North Carolina Capital Facilities Finance Agency Revenue, 1.30%, 7/1/34 | 4,500 | 4,500 | |||||||||
| North Carolina Medical Care Commission Revenue 5.00%, 10/1/25 | 1,500 | 1,664 | |||||||||
6.38%, 7/1/26, Pre-refunded 7/1/21 @ 100 | 4,805 | 5,222 | |||||||||
5.00%, 10/1/30, Continuously Callable @100 | 1,850 | 2,035 | |||||||||
13,421 | |||||||||||
North Dakota (0.4%): | |||||||||||
City of Grand Forks Revenue, 5.00%, 12/1/29, Continuously Callable @100 | 11,085 | 11,812 | |||||||||
County of Ward Revenue, Series C, 5.00%, 6/1/34, Continuously Callable @100 | 4,000 | 4,642 | |||||||||
16,454 | |||||||||||
Ohio (3.1%): | |||||||||||
| American Municipal Power, Inc. Revenue Series C, 5.00%, 2/15/21, Pre-refunded 2/15/20 @ 100 | 3,000 | 3,041 | |||||||||
Series C, 5.00%, 2/15/22, Pre-refunded 2/15/20 @ 100 | 2,760 | 2,798 | |||||||||
| Buckeye Tobacco Settlement Financing Authority Revenue, Series A-2, 5.13%, 6/1/24, Continuously Callable @100 | 6,765 | 6,765 | |||||||||
City of Centerville Revenue, 5.25%, 11/1/37, Continuously Callable @100 | 2,250 | 2,534 | |||||||||
| City of Cleveland Airport System Revenue Series A, 5.00%, 1/1/30, Pre-refunded 1/1/22 @ 100 | 2,000 | 2,150 | |||||||||
Series A, 5.00%, 1/1/31, Pre-refunded 1/1/22 @ 100 | 1,000 | 1,075 | |||||||||
See notes to financial statements.
25
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| City of Fairview Park, GO(INS — National Public Finance Guarantee Corp.), 4.13%, 12/1/20, Continuously Callable @100 | $ | 140 | $ | 140 | |||||||
| County of Allen Hospital Facilities Revenue Series A, 4.00%, 8/1/36, Continuously Callable @100 | 5,000 | 5,511 | |||||||||
Series A, 4.00%, 8/1/37, Continuously Callable @100 | 10,800 | 11,905 | |||||||||
| County of Cuyahoga Revenue 4.00%, 2/15/29, Continuously Callable @100 | 7,430 | 8,107 | |||||||||
5.00%, 2/15/37, Continuously Callable @100 | 4,000 | 4,580 | |||||||||
| County of Hamilton Revenue 5.00%, 1/1/31, Continuously Callable @100 | 1,350 | 1,525 | |||||||||
5.00%, 1/1/36, Continuously Callable @100 | 1,400 | 1,568 | |||||||||
| County of Hamilton Sales Tax Revenue(INS — AMBAC Assurance Corp.), Series B, 0.00%, 12/1/25 (i) | 4,365 | 3,911 | |||||||||
County of Hancock Revenue, 6.50%, 12/1/30, Pre-refunded 6/1/21 @ 100 | 9,000 | 9,770 | |||||||||
County of Montgomery Revenue, 3.00%, 11/15/36, Continuously Callable @100 | 7,000 | 6,992 | |||||||||
County of Ross Revenue, 5.00%, 12/1/39, Continuously Callable @100 | 2,405 | 2,947 | |||||||||
| Dayton City School District, GO 5.00%, 11/1/28 | 2,805 | 3,543 | |||||||||
5.00%, 11/1/29 | 3,655 | 4,689 | |||||||||
5.00%, 11/1/30 | 3,160 | 4,106 | |||||||||
5.00%, 11/1/31 | 2,000 | 2,633 | |||||||||
| Ohio Higher Educational Facility Commission Revenue 5.00%, 5/1/31, Continuously Callable @100 | 1,000 | 1,149 | |||||||||
5.00%, 5/1/33, Continuously Callable @100 | 500 | 572 | |||||||||
| Ohio Turnpike & Infrastructure Commission Revenue, 5.25%, 2/15/29, Continuously Callable @100 | 2,000 | 2,243 | |||||||||
| Ohio Water Development Authority Revenue, 4.00%, 12/1/33 (Put Date 6/3/2019) (f) (j) | 30,000 | 24,809 | |||||||||
Southeastern Ohio Port Authority Revenue | |||||||||||
5.50%, 12/1/29, Continuously Callable @100 | 750 | 842 | |||||||||
5.00%, 12/1/35, Continuously Callable @100 | 750 | 811 | |||||||||
| State of Ohio Revenue 5.00%, 1/15/34, Continuously Callable @100 | 7,210 | 8,404 | |||||||||
5.00%, 1/15/35, Continuously Callable @100 | 6,000 | 6,978 | |||||||||
1.30%, 11/1/35 | 2,500 | 2,500 | |||||||||
5.00%, 1/15/36, Continuously Callable @100 | 3,070 | 3,567 | |||||||||
| Village of Bluffton Revenue 5.00%, 12/1/31, Continuously Callable @100 | 1,500 | 1,817 | |||||||||
4.00%, 12/1/32, Continuously Callable @100 | 1,500 | 1,670 | |||||||||
4.00%, 12/1/33, Continuously Callable @100 | 1,600 | 1,776 | |||||||||
4.00%, 12/1/34, Continuously Callable @100 | 1,795 | 1,977 | |||||||||
149,405 | |||||||||||
Oklahoma (0.9%): | |||||||||||
Comanche County Hospital Authority Revenue, Series A, 5.00%, 7/1/21 | 1,380 | 1,424 | |||||||||
| Garfield County Industrial Authority Revenue, Series A, 1.65%, 1/1/25, Callable 11/6/19 @ 100 | 18,070 | 18,070 | |||||||||
Muskogee Industrial Trust Revenue | |||||||||||
Series A, 1.63%, 1/1/25, Callable 11/6/19 @ 100 | 14,200 | 14,200 | |||||||||
Series A, 1.65%, 6/1/27, Continuously Callable @100 | 5,600 | 5,600 | |||||||||
See notes to financial statements.
26
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Oklahoma Development Finance Authority Revenue, Series B, 5.00%, 8/15/33, Continuously Callable @100 | $ | 4,100 | $ | 4,938 | |||||||
| Tulsa County Industrial Authority Revenue 5.00%, 11/15/28, Continuously Callable @102 | 940 | 1,088 | |||||||||
5.00%, 11/15/30, Continuously Callable @102 | 1,780 | 2,045 | |||||||||
47,365 | |||||||||||
Oregon (0.0% (c)): | |||||||||||
| Clackamas County Hospital Facility Authority Revenue 5.00%, 11/15/32, Continuously Callable @102 | 500 | 572 | |||||||||
5.00%, 11/15/37, Continuously Callable @102 | 500 | 564 | |||||||||
1,136 | |||||||||||
Pennsylvania (6.7%): | |||||||||||
| Allegheny County Higher Education Building Authority Revenue, Series A, 5.13%, 3/1/25, Pre-refunded 3/1/21 @ 100 | 1,410 | 1,484 | |||||||||
| Allegheny County Hospital Development Authority Revenue 5.00%, 4/1/35, Continuously Callable @100 | 7,315 | 8,746 | |||||||||
5.00%, 4/1/36, Continuously Callable @100 | 8,000 | 9,549 | |||||||||
4.00%, 7/15/37, Continuously Callable @100 | 2,000 | 2,273 | |||||||||
4.00%, 7/15/38, Continuously Callable @100 | 1,500 | 1,695 | |||||||||
4.00%, 7/15/39, Continuously Callable @100 | 1,440 | 1,613 | |||||||||
| Allegheny County Sanitary Authority Revenue(INS — Assured Guaranty Municipal Corp.) 4.00%, 12/1/33, Continuously Callable @100 | 1,500 | 1,678 | |||||||||
4.00%, 12/1/34, Continuously Callable @100 | 1,475 | 1,645 | |||||||||
| Berks County Industrial Development Authority Revenue 4.00%, 11/1/33, Continuously Callable @100 | 1,300 | 1,431 | |||||||||
5.00%, 11/1/34, Continuously Callable @100 | 2,000 | 2,384 | |||||||||
5.00%, 11/1/35, Continuously Callable @100 | 3,000 | 3,571 | |||||||||
| Berks County Municipal Authority Revenue, 3.08% (MUNISPA + 1.50%), 11/1/39 (Put Date 7/1/22) (f) (g) | 11,000 | 11,091 | |||||||||
Bethlehem Authority Revenue, 5.00%, 11/15/30, Continuously Callable @100 | 3,000 | 3,309 | |||||||||
| Bucks County Industrial Development Authority Revenue 5.00%, 10/1/30, Continuously Callable @103 | 325 | 370 | |||||||||
5.00%, 10/1/31, Continuously Callable @103 | 450 | 511 | |||||||||
5.00%, 10/1/32, Continuously Callable @103 | 790 | 896 | |||||||||
5.00%, 10/1/37, Continuously Callable @103 | 1,250 | 1,407 | |||||||||
| Butler County Hospital Authority Revenue, 5.00%, 7/1/35, Continuously Callable @100 | 1,885 | 2,162 | |||||||||
| Chester County Industrial Development Authority Revenue 5.00%, 10/1/34, Continuously Callable @100 | 1,000 | 1,097 | |||||||||
Series A, 5.13%, 10/15/37, Continuously Callable @100 | 2,750 | 2,995 | |||||||||
| Commonwealth Financing Authority Revenue 5.00%, 6/1/33, Continuously Callable @100 | 1,250 | 1,537 | |||||||||
5.00%, 6/1/34, Continuously Callable @100 | 2,000 | 2,452 | |||||||||
Series A, 5.00%, 6/1/34, Continuously Callable @100 | 5,000 | 5,794 | |||||||||
| Commonwealth of Pennsylvania Certificate of Participation Series A, 5.00%, 7/1/34, Continuously Callable @100 | 1,350 | 1,642 | |||||||||
Series A, 5.00%, 7/1/35, Continuously Callable @100 | 750 | 909 | |||||||||
Series A, 5.00%, 7/1/37, Continuously Callable @100 | 800 | 969 | |||||||||
See notes to financial statements.
27
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| County of Beaver, GO(INS — Build America Mutual Assurance Co.) 4.00%, 4/15/28 | $ | 2,890 | $ | 3,374 | |||||||
4.00%, 4/15/29, Continuously Callable @100 | 2,500 | 2,904 | |||||||||
4.00%, 4/15/30, Continuously Callable @100 | 5,000 | 5,759 | |||||||||
| County of Luzerne, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 11/15/29, Continuously Callable @100 | 5,000 | 5,810 | |||||||||
| Cumberland County Municipal Authority Revenue, Series C-6, 4.00%, 12/1/26, Continuously Callable @102 | 6,500 | 6,653 | |||||||||
| Dauphin County General Authority Revenue 4.00%, 6/1/30, Continuously Callable @100 | 2,000 | 2,246 | |||||||||
4.00%, 6/1/31, Continuously Callable @100 | 1,000 | 1,106 | |||||||||
| Delaware County Authority Revenue, 5.00%, 10/1/25, Continuously Callable @100 | 1,000 | 1,022 | |||||||||
| Delaware River Joint Toll Bridge Commission Revenue, 5.00%, 7/1/34, Continuously Callable @100 | 3,000 | 3,671 | |||||||||
| Delaware River Port Authority Revenue, 5.00%, 1/1/25, Continuously Callable @100 | 2,720 | 3,000 | |||||||||
| Montgomery County Higher Education & Health Authority Revenue 5.00%, 9/1/34, Continuously Callable @100 | 1,750 | 2,142 | |||||||||
5.00%, 9/1/35, Continuously Callable @100 | 1,850 | 2,248 | |||||||||
4.00%, 9/1/36, Continuously Callable @100 | 1,100 | 1,238 | |||||||||
4.00%, 9/1/37, Continuously Callable @100 | 1,000 | 1,125 | |||||||||
5.00%, 9/1/37, Continuously Callable @100 | 1,750 | 2,124 | |||||||||
4.00%, 9/1/38, Continuously Callable @100 | 900 | 1,008 | |||||||||
4.00%, 9/1/39, Continuously Callable @100 | 1,000 | 1,113 | |||||||||
| Montgomery County Industrial Development Authority Revenue 5.00%, 11/15/23, Continuously Callable @100 | 1,200 | 1,296 | |||||||||
5.00%, 11/15/24, Continuously Callable @100 | 2,750 | 2,968 | |||||||||
| Montour School District, GO(INS — Assured Guaranty Municipal Corp.) Series B, 5.00%, 4/1/33, Continuously Callable @100 | 1,000 | 1,182 | |||||||||
Series B, 5.00%, 4/1/34, Continuously Callable @100 | 1,500 | 1,769 | |||||||||
Series B, 5.00%, 4/1/35, Continuously Callable @100 | 1,500 | 1,767 | |||||||||
| Northampton County General Purpose Authority Revenue, 2.50% (70% of 1 mo. LIBOR + 1.04%), 8/15/48 (Put Date 8/15/24) (f) (g) | 4,645 | 4,617 | |||||||||
| Northeastern Pennsylvania Hospital & Education Authority Revenue, Series A, 5.00%, 3/1/37, Continuously Callable @100 | 1,525 | 1,703 | |||||||||
| Pennsylvania Economic Development Financing Authority Revenue 4.00%, 10/1/23, Continuously Callable @100 | 13,000 | 13,290 | |||||||||
3.00%, 4/1/39, Continuously Callable @100 | 30,000 | 30,936 | |||||||||
| Pennsylvania Higher Educational Facilities Authority Revenue 5.00%, 7/1/32, Pre-refunded 7/1/22 @ 100 | 1,625 | 1,785 | |||||||||
Series A, 5.25%, 7/15/25, Continuously Callable @100 | 1,730 | 1,907 | |||||||||
Series A, 5.25%, 7/15/26, Continuously Callable @100 | 2,020 | 2,225 | |||||||||
Series A, 5.25%, 7/15/27, Continuously Callable @100 | 2,125 | 2,340 | |||||||||
Series A, 5.25%, 7/15/28, Continuously Callable @100 | 2,245 | 2,472 | |||||||||
Series A, 5.00%, 7/15/30, Continuously Callable @100 | 2,415 | 2,634 | |||||||||
Series A, 5.25%, 7/15/33, Continuously Callable @100 | 1,965 | 2,154 | |||||||||
| Pennsylvania Turnpike Commission Revenue 5.00%, 6/1/35, Continuously Callable @100 | 10,655 | 12,316 | |||||||||
5.00%, 6/1/36, Continuously Callable @100 | 8,255 | 9,532 | |||||||||
See notes to financial statements.
28
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series A-1, 5.00%, 12/1/32, Continuously Callable @100 | $ | 1,500 | $ | 1,712 | |||||||
Series A-1, 5.00%, 12/1/33, Continuously Callable @100 | 4,345 | 4,950 | |||||||||
Series A-1, 5.00%, 12/1/34, Continuously Callable @100 | 3,000 | 3,470 | |||||||||
Series A-1, 5.00%, 12/1/35, Continuously Callable @100 | 3,320 | 3,835 | |||||||||
Series A-1, 5.00%, 12/1/36, Continuously Callable @100 | 3,690 | 4,258 | |||||||||
Series B, 5.00%, 12/1/32, Continuously Callable @100 | 3,500 | 4,065 | |||||||||
Series B, 5.00%, 12/1/33, Continuously Callable @100 | 7,145 | 8,283 | |||||||||
Series B, 4.00%, 6/1/34, Continuously Callable @100 | 20,000 | 21,678 | |||||||||
Series B, 5.00%, 12/1/34, Continuously Callable @100 | 6,250 | 7,229 | |||||||||
Series B, 5.00%, 12/1/34, Continuously Callable @100 | 2,000 | 2,356 | |||||||||
Series B, 5.00%, 12/1/35, Continuously Callable @100 | 5,700 | 6,585 | |||||||||
Series B, 5.00%, 12/1/35, Continuously Callable @100 | 2,000 | 2,354 | |||||||||
| Philadelphia Authority for Industrial Development Revenue 5.00%, 5/1/35, Continuously Callable @100 | 750 | 913 | |||||||||
5.00%, 5/1/36, Continuously Callable @100 | 1,500 | 1,825 | |||||||||
5.00%, 5/1/38, Continuously Callable @100 | 1,000 | 1,215 | |||||||||
| Pittsburgh Water & Sewer Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series B, 4.00%, 9/1/34, Continuously Callable @100 | 1,750 | 2,015 | |||||||||
Series B, 4.00%, 9/1/35, Continuously Callable @100 | 300 | 345 | |||||||||
| Reading School District, GO(INS — Assured Guaranty Municipal Corp.) 5.00%, 3/1/36, Continuously Callable @100 | 2,000 | 2,371 | |||||||||
5.00%, 3/1/37, Continuously Callable @100 | 1,500 | 1,775 | |||||||||
| School District of Philadelphia, GO Series A, 5.00%, 9/1/34, Continuously Callable @100 | 1,000 | 1,221 | |||||||||
Series A, 5.00%, 9/1/35, Continuously Callable @100 | 1,000 | 1,217 | |||||||||
Series A, 5.00%, 9/1/36, Continuously Callable @100 | 1,000 | 1,215 | |||||||||
Series A, 5.00%, 9/1/37, Continuously Callable @100 | 1,000 | 1,214 | |||||||||
Series F, 5.00%, 9/1/31, Continuously Callable @100 | 9,895 | 11,705 | |||||||||
Series F, 5.00%, 9/1/32, Continuously Callable @100 | 5,000 | 5,909 | |||||||||
Series F, 5.00%, 9/1/33, Continuously Callable @100 | 4,000 | 4,719 | |||||||||
Series F, 5.00%, 9/1/34, Continuously Callable @100 | 5,100 | 6,009 | |||||||||
| School District of the City of Erie, GO(INS — Assured Guaranty Municipal Corp.), Series A, 4.00%, 4/1/33, Continuously Callable @100 | 1,150 | 1,319 | |||||||||
| Scranton School District, GO(INS — Build America Mutual Assurance Co.) Series E, 5.00%, 12/1/32, Continuously Callable @100 | 1,000 | 1,202 | |||||||||
Series E, 5.00%, 12/1/33, Continuously Callable @100 | 1,600 | 1,920 | |||||||||
Series E, 5.00%, 12/1/35, Continuously Callable @100 | 750 | 898 | |||||||||
| State Public School Building Authority Revenue 5.00%, 4/1/23, Continuously Callable @100 | 1,250 | 1,350 | |||||||||
5.00%, 6/1/29, Continuously Callable @100 | 10,000 | 11,973 | |||||||||
| State Public School Building Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 6/1/31, Continuously Callable @100 | 6,100 | 7,236 | |||||||||
4.00%, 12/1/31, Continuously Callable @100 | 15,380 | 17,181 | |||||||||
374,168 | |||||||||||
Puerto Rico (0.1%): | |||||||||||
| Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Authority Revenue, 5.00%, 4/1/27, Continuously Callable @100 | 2,600 | 2,646 | |||||||||
See notes to financial statements.
29
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Rhode Island (0.2%): | |||||||||||
| Rhode Island Health & Educational Building Corp. Revenue, 6.00%, 9/1/33, Pre-refunded 9/1/23 @ 100 | $ | 2,000 | $ | 2,353 | |||||||
| Rhode Island Turnpike & Bridge Authority Revenue Series A, 5.00%, 10/1/33, Continuously Callable @100 | 1,350 | 1,596 | |||||||||
Series A, 5.00%, 10/1/35, Continuously Callable @100 | 4,345 | 5,120 | |||||||||
| Tobacco Settlement Financing Corp. Revenue Series A, 5.00%, 6/1/28, Continuously Callable @100 | 2,000 | 2,288 | |||||||||
Series A, 5.00%, 6/1/29, Continuously Callable @100 | 2,000 | 2,284 | |||||||||
Series A, 5.00%, 6/1/30, Continuously Callable @100 | 2,500 | 2,847 | |||||||||
16,488 | |||||||||||
South Carolina (1.3%): | |||||||||||
| Lexington County Health Services District, Inc. Revenue 4.00%, 11/1/31, Continuously Callable @100 | 1,000 | 1,119 | |||||||||
4.00%, 11/1/32, Continuously Callable @100 | 1,000 | 1,117 | |||||||||
| Patriots Energy Group Financing Agency Revenue, Series B, 2.26% (67% of 1 mo. LIBOR + 0.86%), 10/1/48 (Put Date 2/1/24) (f) (g) | 20,000 | 20,085 | |||||||||
| Piedmont Municipal Power Agency Revenue(INS — Assured Guaranty Corp.) Series C, 5.00%, 1/1/28, Continuously Callable @100 | 7,200 | 7,604 | |||||||||
Series D, 5.00%, 1/1/28, Continuously Callable @100 | 2,700 | 2,852 | |||||||||
| South Carolina Public Service Authority Revenue Series A, 5.00%, 12/1/34, Continuously Callable @100 | 9,835 | 11,607 | |||||||||
Series A, 5.00%, 12/1/35, Continuously Callable @100 | 7,000 | 8,244 | |||||||||
52,628 | |||||||||||
South Dakota (0.1%): | |||||||||||
| South Dakota Health & Educational Facilities Authority Revenue, 5.00%, 11/1/24, Continuously Callable @100 | 1,700 | 1,705 | |||||||||
| Health & Educational Facilities Authority Revenue (LIQ — Deutsche Bank AG), Series 2016-XG0096, 1.75%, 11/1/40, Callable 11/7/19 @ 100 (b) | 4,600 | 4,600 | |||||||||
6,305 | |||||||||||
Tennessee (0.4%): | |||||||||||
| Greeneville Health & Educational Facilities Board Revenue 5.00%, 7/1/35, Continuously Callable @100 | 2,710 | 3,236 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 3,000 | 3,577 | |||||||||
5.00%, 7/1/37, Continuously Callable @100 | 3,500 | 4,170 | |||||||||
| Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board Revenue, 5.00%, 7/1/35, Continuously Callable @100 | 5,000 | 5,871 | |||||||||
16,854 | |||||||||||
Texas (11.4%): | |||||||||||
| Austin Convention Enterprises, Inc. Revenue 5.00%, 1/1/34, Continuously Callable @100 | 1,105 | 1,290 | |||||||||
5.00%, 1/1/34, Continuously Callable @100 | 550 | 630 | |||||||||
| Board of Managers Joint Guadalupe County-City of Seguin Hospital Revenue 5.00%, 12/1/25 | 2,740 | 3,077 | |||||||||
5.00%, 12/1/27, Continuously Callable @100 | 2,990 | 3,335 | |||||||||
5.00%, 12/1/28, Continuously Callable @100 | 1,640 | 1,823 | |||||||||
5.00%, 12/1/29, Continuously Callable @100 | 1,600 | 1,772 | |||||||||
See notes to financial statements.
30
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 12/1/30, Continuously Callable @100 | $ | 1,700 | $ | 1,877 | |||||||
5.25%, 12/1/35, Continuously Callable @100 | 5,150 | 5,677 | |||||||||
| Boerne School District, GO(NBGA — Texas Permanent School Fund), 0.00%, 2/1/26, Continuously Callable @80 (i) | 4,240 | 3,395 | |||||||||
| Central Texas Regional Mobility Authority Revenue 5.00%, 1/1/21 | 700 | 729 | |||||||||
0.00%, 1/1/22 (i) | 885 | 845 | |||||||||
5.00%, 1/1/22 | 500 | 537 | |||||||||
5.00%, 1/1/23 | 500 | 552 | |||||||||
2.28%, 1/1/24 | 7,000 | 6,357 | |||||||||
5.75%, 1/1/25, Pre-refunded 1/1/20 @ 100 | 2,500 | 2,527 | |||||||||
0.00%, 1/1/26 (i) | 2,535 | 2,194 | |||||||||
5.00%, 1/1/33, Continuously Callable @100 | 3,500 | 3,850 | |||||||||
Series A, 5.00%, 1/1/34, Continuously Callable @100 | 1,250 | 1,441 | |||||||||
Series A, 5.00%, 1/1/35, Continuously Callable @100 | 1,100 | 1,266 | |||||||||
| Central Texas Turnpike System Revenue Series C, 5.00%, 8/15/33, Continuously Callable @100 | 10,000 | 11,321 | |||||||||
Series C, 5.00%, 8/15/34, Continuously Callable @100 | 8,500 | 9,604 | |||||||||
| City of Arlington Special Tax(INS — Build America Mutual Assurance Co.) Series C, 5.00%, 2/15/34, Continuously Callable @100 | 1,500 | 1,808 | |||||||||
Series C, 5.00%, 2/15/35, Continuously Callable @100 | 1,500 | 1,805 | |||||||||
Series C, 5.00%, 2/15/36, Continuously Callable @100 | 3,100 | 3,723 | |||||||||
Series C, 5.00%, 2/15/37, Continuously Callable @100 | 3,305 | 3,966 | |||||||||
Series C, 5.00%, 2/15/38, Continuously Callable @100 | 4,380 | 5,251 | |||||||||
| City of Corpus Christi Utility System Revenue 4.00%, 7/15/32, Continuously Callable @100 | 1,800 | 2,016 | |||||||||
4.00%, 7/15/33, Continuously Callable @100 | 1,100 | 1,228 | |||||||||
4.00%, 7/15/34, Continuously Callable @100 | 1,050 | 1,168 | |||||||||
4.00%, 7/15/35, Continuously Callable @100 | 1,000 | 1,108 | |||||||||
| City of Houston Hotel Occupancy Tax & Special Revenue 5.00%, 9/1/29, Continuously Callable @100 | 2,300 | 2,654 | |||||||||
5.00%, 9/1/30, Continuously Callable @100 | 1,000 | 1,152 | |||||||||
5.00%, 9/1/32, Continuously Callable @100 | 5,615 | 6,450 | |||||||||
5.00%, 9/1/33, Continuously Callable @100 | 5,345 | 6,132 | |||||||||
5.00%, 9/1/34, Continuously Callable @100 | 2,150 | 2,463 | |||||||||
5.00%, 9/1/35, Continuously Callable @100 | 1,575 | 1,803 | |||||||||
| City of Laredo Waterworks & Sewer System Revenue 4.00%, 3/1/32, Continuously Callable @100 | 740 | 830 | |||||||||
4.00%, 3/1/33, Continuously Callable @100 | 1,000 | 1,118 | |||||||||
4.00%, 3/1/34, Continuously Callable @100 | 1,000 | 1,118 | |||||||||
4.00%, 3/1/36, Continuously Callable @100 | 1,500 | 1,662 | |||||||||
| Clifton Higher Education Finance Corp. Revenue(NBGA — Texas Permanent School Fund), Series A, 4.00%, 8/15/32, Continuously Callable @100 | 1,300 | 1,444 | |||||||||
| Dallas/Fort Worth International Airport Revenue Series D, 5.25%, 11/1/28, Continuously Callable @100 | 2,000 | 2,294 | |||||||||
Series D, 5.25%, 11/1/29, Continuously Callable @100 | 7,500 | 8,594 | |||||||||
| Decatur Hospital Authority Revenue Series A, 5.25%, 9/1/29, Continuously Callable @100 | 1,000 | 1,126 | |||||||||
Series A, 5.00%, 9/1/34, Continuously Callable @100 | 1,000 | 1,104 | |||||||||
See notes to financial statements.
31
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Harris County Cultural Education Facilities Finance Corp. Revenue 5.00%, 12/1/27, Continuously Callable @100 | $ | 4,710 | $ | 5,193 | |||||||
5.00%, 6/1/28, Continuously Callable @100 | 1,400 | 1,522 | |||||||||
| Harris County Industrial Development Corp. Revenue, 5.00%, 2/1/23, Pre-refunded 12/1/19 @ 100 | 40,000 | 40,235 | |||||||||
| Harris County Municipal Utility District No. 165, GO(INS — Build America Mutual Assurance Co.) 5.00%, 3/1/30, Continuously Callable @100 | 750 | 871 | |||||||||
5.00%, 3/1/31, Continuously Callable @100 | 2,030 | 2,357 | |||||||||
5.00%, 3/1/32, Continuously Callable @100 | 2,500 | 2,902 | |||||||||
| Houston Higher Education Finance Corp. Revenue Series A, 5.25%, 9/1/31, Continuously Callable @100 | 3,850 | 4,242 | |||||||||
Series A, 5.25%, 9/1/32, Continuously Callable @100 | 4,075 | 4,486 | |||||||||
| Karnes County Hospital District Revenue 5.00%, 2/1/29, Continuously Callable @100 | 4,000 | 4,361 | |||||||||
5.00%, 2/1/34, Continuously Callable @100 | 4,000 | 4,317 | |||||||||
| Main Street Market Square Redevelopment Authority Tax Allocation (INS — Build America Mutual Assurance Co.) 5.00%, 9/1/29, Continuously Callable @100 | 1,215 | 1,415 | |||||||||
5.00%, 9/1/30, Continuously Callable @100 | 1,380 | 1,605 | |||||||||
5.00%, 9/1/31, Continuously Callable @100 | 2,000 | 2,322 | |||||||||
5.00%, 9/1/32, Continuously Callable @100 | 1,500 | 1,739 | |||||||||
5.00%, 9/1/33, Continuously Callable @100 | 2,680 | 3,105 | |||||||||
| Mesquite Health Facilities Development Corp. Revenue 5.00%, 2/15/26 | 3,100 | 3,162 | |||||||||
5.00%, 2/15/35, Continuously Callable @100 | 1,075 | 1,074 | |||||||||
| New Braunfels Independent School District, GO(NBGA — Texas Permanent School Fund), 0.00%, 2/1/23, Continuously Callable @91 (i) | 2,155 | 1,959 | |||||||||
| New Hope Cultural Education Facilities Finance Corp. Revenue 5.00%, 11/1/31, Continuously Callable @102 | 1,000 | 1,134 | |||||||||
4.00%, 11/1/36, Continuously Callable @102 | 1,475 | 1,551 | |||||||||
Series A, 5.00%, 7/1/30, Continuously Callable @100 | 7,500 | 7,020 | |||||||||
Series A, 5.00%, 7/1/35, Continuously Callable @100 | 9,000 | 8,424 | |||||||||
| Newark Higher Education Finance Corp. Revenue 4.00%, 4/1/32, Continuously Callable @100 | 1,635 | 1,783 | |||||||||
4.00%, 4/1/33, Continuously Callable @100 | 2,000 | 2,166 | |||||||||
4.00%, 4/1/34, Continuously Callable @100 | 4,470 | 4,814 | |||||||||
4.00%, 4/1/35, Continuously Callable @100 | 1,650 | 1,769 | |||||||||
4.00%, 4/1/36, Continuously Callable @100 | 2,150 | 2,303 | |||||||||
| North East Texas Regional Mobility Authority Revenue 5.00%, 1/1/36, Continuously Callable @100 | 7,000 | 8,116 | |||||||||
Series B, 5.00%, 1/1/36, Continuously Callable @100 | 5,485 | 6,279 | |||||||||
| North Texas Tollway Authority Revenue Series A, 5.00%, 1/1/32, Continuously Callable @100 | 8,000 | 9,279 | |||||||||
Series A, 5.00%, 1/1/34, Continuously Callable @100 | 1,515 | 1,786 | |||||||||
Series A, 4.00%, 1/1/39, Continuously Callable @100 | 14,620 | 16,505 | |||||||||
Series B, 5.00%, 1/1/31, Continuously Callable @100 | 1,500 | 1,712 | |||||||||
Series B, 5.00%, 1/1/34, Continuously Callable @100 | 7,500 | 8,673 | |||||||||
| North Texas Tollway Authority Revenue(INS — Assured Guaranty Corp.), 0.00%, 1/1/29 (i) | 20,000 | 16,524 | |||||||||
See notes to financial statements.
32
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| North Texas Tollway Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series B, 4.00%, 1/1/35, Continuously Callable @100 | $ | 2,000 | $ | 2,234 | |||||||
Series B, 4.00%, 1/1/36, Continuously Callable @100 | 1,695 | 1,892 | |||||||||
| Permanent University Fund — University of Texas System Revenue 5.00%, 7/1/32, Continuously Callable @100 | 2,230 | 2,644 | |||||||||
5.00%, 7/1/33, Continuously Callable @100 | 3,250 | 3,849 | |||||||||
5.00%, 7/1/34, Continuously Callable @100 | 2,500 | 2,958 | |||||||||
| Port of Port Arthur Navigation District Revenue 1.87%, 4/1/40, Continuously Callable @100 (d) | 33,475 | 33,475 | |||||||||
1.74%, 11/1/40, Continuously Callable @100 (a) (d) | 16,000 | 16,000 | |||||||||
1.73%, 11/1/40, Continuously Callable @100 (d) | 39,720 | 39,720 | |||||||||
Series B, 1.87%, 4/1/40, Continuously Callable @100 | 28,870 | 28,870 | |||||||||
Series C, 1.76%, 4/1/40, Continuously Callable @100 (d) | 21,375 | 21,375 | |||||||||
| San Antonio Housing Trust Finance Corp. Revenue(NBGA — Federal Home Loan Mortgage Corp.), 3.50%, 4/1/43 (Put Date 10/01/28) (f) | 14,935 | 15,732 | |||||||||
| Tarrant County Cultural Education Facilities Finance Corp. Revenue 3.88%, 11/15/22, Continuously Callable @100 | 2,000 | 2,001 | |||||||||
5.00%, 11/15/30, Continuously Callable @100 | 2,145 | 2,513 | |||||||||
5.00%, 11/15/31, Continuously Callable @100 | 2,250 | 2,628 | |||||||||
5.00%, 11/15/32, Continuously Callable @100 | 2,365 | 2,753 | |||||||||
6.63%, 11/15/37, Continuously Callable @100 | 5,000 | 5,872 | |||||||||
5.00%, 11/15/37, Continuously Callable @100 | 2,175 | 2,505 | |||||||||
Series B, 5.00%, 7/1/37, Continuously Callable @100 | 18,225 | 22,306 | |||||||||
Series B, 5.00%, 7/1/38, Continuously Callable @100 | 19,115 | 23,359 | |||||||||
Texas Transportation Commission State Highway Fund Revenue, 5.00%, 10/1/26 | 7,235 | 8,900 | |||||||||
| Trophy Club Public Improvement District No. 1 Special Assessment (INS — Assured Guaranty Municipal Corp.), 5.00%, 6/1/33, Continuously Callable @100 | 6,960 | 7,929 | |||||||||
| Tyler Health Facilities Development Corp. Revenue, 5.50%, 7/1/27, Pre-refunded 7/1/21 @ 100 | 10,000 | 10,711 | |||||||||
573,047 | |||||||||||
Utah (0.1%): | |||||||||||
Jordanelle Special Service District Special Assessment | |||||||||||
Series A, 12.00%, 8/1/30, Continuously Callable @100 (b) | 4,322 | 3,669 | |||||||||
Series B, 12.00%, 8/1/30, Continuously Callable @100 (b) | 2,366 | 2,008 | |||||||||
5,677 | |||||||||||
Vermont (0.3%): | |||||||||||
Vermont Economic Development Authority Revenue, 5.00%, 12/15/20 | 9,000 | 9,326 | |||||||||
| Vermont Educational & Health Buildings Financing Agency Revenue, Series A, 5.00%, 12/1/36, Continuously Callable @100 | 2,500 | 2,939 | |||||||||
12,265 | |||||||||||
Virgin Islands (0.1%): | |||||||||||
| Virgin Islands Public Finance Authority Revenue, 5.00%, 9/1/30, Continuously Callable @100 (b) | 6,500 | 7,257 | |||||||||
Virginia (1.1%): | |||||||||||
Chesapeake Hospital Authority Revenue | |||||||||||
4.00%, 7/1/36, Continuously Callable @100 | 1,175 | 1,330 | |||||||||
4.00%, 7/1/37, Continuously Callable @100 | 1,205 | 1,361 | |||||||||
See notes to financial statements.
33
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Fairfax County Economic Development Authority Revenue, Series A, 5.00%, 10/1/36, Continuously Callable @102 | $ | 2,150 | $ | 2,438 | |||||||
| Roanoke Economic Development Authority Revenue, 5.00%, 7/1/25, Continuously Callable @100 | 10,000 | 10,263 | |||||||||
| Stafford County Economic Development Authority Revenue 5.00%, 6/15/33, Continuously Callable @100 | 750 | 882 | |||||||||
5.00%, 6/15/34, Continuously Callable @100 | 2,620 | 3,072 | |||||||||
5.00%, 6/15/35, Continuously Callable @100 | 1,930 | 2,260 | |||||||||
| Virginia College Building Authority Revenue 5.00%, 6/1/21, Continuously Callable @100 | 985 | 985 | |||||||||
5.00%, 6/1/26, Continuously Callable @100 | 11,280 | 11,055 | |||||||||
4.00%, 2/1/34, Continuously Callable @100 | 10,000 | 11,354 | |||||||||
4.00%, 2/1/36, Continuously Callable @100 | 3,000 | 3,380 | |||||||||
| Virginia Small Business Financing Authority Revenue(LOC — Wells Fargo & Co.), 1.58%, 7/1/42, Continuously Callable @100 | 1,800 | 1,800 | |||||||||
50,180 | |||||||||||
Washington (0.6%): | |||||||||||
Tobacco Settlement Authority Revenue, 5.25%, 6/1/31, Continuously Callable @100 | 5,000 | 5,112 | |||||||||
| Washington Health Care Facilities Authority Revenue 5.00%, 8/15/33, Continuously Callable @100 | 3,090 | 3,594 | |||||||||
5.00%, 8/15/34, Continuously Callable @100 | 3,470 | 4,023 | |||||||||
5.00%, 7/1/35, Continuously Callable @100 | 2,355 | 2,847 | |||||||||
5.00%, 7/1/36, Continuously Callable @100 | 2,250 | 2,715 | |||||||||
4.00%, 7/1/37, Continuously Callable @100 | 3,125 | 3,449 | |||||||||
21,740 | |||||||||||
West Virginia (0.4%): | |||||||||||
| West Virginia Hospital Finance Authority Revenue 5.00%, 6/1/33, Continuously Callable @100 | 1,850 | 2,226 | |||||||||
5.00%, 1/1/34, Continuously Callable @100 | 2,360 | 2,862 | |||||||||
5.00%, 6/1/34, Continuously Callable @100 | 2,970 | 3,558 | |||||||||
5.00%, 1/1/35, Continuously Callable @100 | 2,920 | 3,527 | |||||||||
5.00%, 6/1/35, Continuously Callable @100 | 2,405 | 2,876 | |||||||||
5.00%, 9/1/38, Continuously Callable @100 | 1,000 | 1,212 | |||||||||
5.00%, 9/1/39, Continuously Callable @100 | 1,000 | 1,210 | |||||||||
17,471 | |||||||||||
Wisconsin (0.5%): | |||||||||||
| Public Finance Authority Revenue 4.00%, 6/15/29, Continuously Callable @100 (b) | 325 | 338 | |||||||||
5.25%, 5/15/37, Continuously Callable @102 (b) | 1,000 | 1,109 | |||||||||
5.00%, 6/15/39, Continuously Callable @100 (b) | 410 | 443 | |||||||||
Series A, 5.25%, 10/1/38, Continuously Callable @100 | 3,250 | 3,776 | |||||||||
Series D, 4.05%, 11/1/30, Continuously Callable @100 | 1,500 | 1,597 | |||||||||
| Wisconsin Health & Educational Facilities Authority Revenue 5.00%, 8/15/34, Continuously Callable @100 | 1,000 | 1,126 | |||||||||
4.00%, 11/15/36, Continuously Callable @100 | 9,830 | 10,755 | |||||||||
Series A, 5.00%, 7/15/28, Pre-refunded 7/15/21 @ 100 | 2,000 | 2,129 | |||||||||
Series A, 5.13%, 4/15/31, Pre-refunded 4/15/23 @ 100 | 5,000 | 5,652 | |||||||||
See notes to financial statements.
34
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series C, 5.00%, 8/15/26, Pre-refunded 8/15/22 @ 100 | $ | 1,500 | $ | 1,655 | |||||||
Series C, 5.00%, 8/15/29, Pre-refunded 8/15/22 @ 100 | 1,935 | 2,135 | |||||||||
30,715 | |||||||||||
Total Municipal Bonds (Cost $4,730,362) | 4,994,619 | ||||||||||
Total Investments (Cost $4,730,362) — 99.5% | 4,994,619 | ||||||||||
Other assets in excess of liabilities — 0.5% | 23,376 | ||||||||||
NET ASSETS — 100.00% | $ | 5,017,995 | |||||||||
(a) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(b) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless noted otherwise, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $193,935 (thousands) and amounted to 3.9% of net assets.
(c) Amount represents less than 0.05% of net assets.
(d) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
(e) Up to 2.05% of the coupon may be PIK.
(f) Put Bond.
(g) Variable or Floating-Rate security. Rate disclosed is as of September 30, 2019.
(h) Security purchased on a when-issued basis.
(i) Zero coupon bond.
(j) Defaulted security.
AMBAC — American Municipal Bond Assurance Corporation
FHA — Federal Housing Administration
GO — General Obligation
LIBOR — London InterBank Offered Rate
LOC — Line Letter of Credit
MUNISPA — Municipal Swap Index
PIK — Payment in Kind
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
INS Principal and interest payments are insured by the name listed. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations.
See notes to financial statements.
35
| USAA Mutual Funds Trust USAA Tax Exempt Intermediate-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
LIQ Liquidity enhancement that may, under certain circumstances, provide for repayment of principal and interest upon demand from the name listed.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
36
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Tax Exempt Intermediate- Term Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $4,730,362) | $ | 4,994,619 | |||||
Cash | 3,670 | ||||||
Interest receivable | 50,787 | ||||||
Receivable for capital shares issued | 3,340 | ||||||
Receivable from Adviser | 4 | ||||||
Prepaid expenses | 34 | ||||||
Total assets | 5,052,454 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 1,701 | ||||||
Investments purchased | 25,960 | ||||||
Capital shares redeemed | 4,480 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 1,154 | ||||||
Administration fees | 618 | ||||||
Custodian fees | 92 | ||||||
Transfer agent fees | 179 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
| 12b-1 fees | 2 | ||||||
Other accrued expenses | 273 | ||||||
Total liabilities | 34,459 | ||||||
Net Assets: | |||||||
Capital | 4,829,433 | ||||||
Total distributable earnings/(loss) | 188,562 | ||||||
Net assets | $ | 5,017,995 | |||||
Net Assets | |||||||
Adviser Shares | $ | 23,596 | |||||
Fund Shares | 4,994,399 | ||||||
Total | $ | 5,017,995 | |||||
Shares (unlimited number of shares with no par value): | |||||||
Adviser Shares | 1,730 | ||||||
Fund Shares | 366,044 | ||||||
Total | 367,774 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Adviser Shares | $ | 13.64 | |||||
Fund Shares | $ | 13.64 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
37
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Tax Exempt Intermediate- Term Fund | |||||||
Investment Income: | |||||||
Interest | $ | 82,957 | |||||
Total income | 82,957 | ||||||
Expenses: | |||||||
Investment advisory fees | 7,333 | ||||||
Administration fees — Adviser Shares | 18 | ||||||
Administration fees — Fund Shares | 3,669 | ||||||
Professional fees | 18 | ||||||
12b-1 fees — Adviser Shares | 30 | ||||||
Custodian fees | 238 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | 5 | ||||||
Legal and audit fees | 38 | ||||||
Transfer agent fees — Adviser Shares | 8 | ||||||
Transfer agent fees — Fund Shares | 753 | ||||||
Interfund lending fees | 2 | ||||||
State registration and filing fees | 101 | ||||||
Other expenses | 230 | ||||||
Total expenses | 12,461 | ||||||
Expenses waived/reimbursed by AMCO | (14 | ) | |||||
Expenses waived/reimbursed by Adviser | (4 | ) | |||||
Net expenses | 12,443 | ||||||
Net Investment Income (Loss) | 70,514 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | 170 | ||||||
Net change in unrealized appreciation/depreciation on investment securities | 100,578 | ||||||
Net realized/unrealized gains (losses) on investments | 100,748 | ||||||
Change in net assets resulting from operations | $ | 171,262 | |||||
See notes to financial statements.
38
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
| USAA Tax Exempt Intermediate-Term Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 70,514 | $ | 143,593 | |||||||
Net realized gains (losses) from investments | 170 | (26,355 | ) | ||||||||
| Net change in unrealized appreciation (depreciation) on investments | 100,578 | 112,323 | |||||||||
Change in net assets resulting from operations | 171,262 | 229,561 | |||||||||
Distributions to Shareholders: | |||||||||||
Adviser Shares | (315 | ) | (753 | ) | |||||||
Fund Shares | (70,441 | ) | (142,284 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (70,756 | ) | (143,037 | ) | |||||||
Change in net assets resulting from capital transactions | 140,281 | 58,744 | |||||||||
Change in net assets | 240,787 | 145,268 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 4,777,208 | 4,631,940 | |||||||||
End of period | $ | 5,017,995 | $ | 4,777,208 | |||||||
Capital Transactions: | |||||||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 2,066 | $ | 9,970 | |||||||
Distributions reinvested | 266 | 679 | |||||||||
Cost of shares redeemed | (2,121 | ) | (14,742 | ) | |||||||
Total Adviser Shares | $ | 211 | $ | (4,093 | ) | ||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 412,642 | $ | 885,615 | |||||||
Distributions reinvested | 60,251 | 121,052 | |||||||||
Cost of shares redeemed | (332,823 | ) | (943,830 | ) | |||||||
Total Fund Shares | $ | 140,070 | $ | 62,837 | |||||||
Change in net assets resulting from capital transactions | $ | 140,281 | $ | 58,744 | |||||||
Share Transactions: | |||||||||||
Adviser Shares | |||||||||||
Issued | 154 | 768 | |||||||||
Reinvested | 21 | 52 | |||||||||
Redeemed | (158 | ) | (1,119 | ) | |||||||
Total Adviser Shares | 17 | (299 | ) | ||||||||
Fund Shares | |||||||||||
Issued | 30,449 | 67,541 | |||||||||
Reinvested | 4,435 | 9,222 | |||||||||
Redeemed | (24,561 | ) | (72,055 | ) | |||||||
Total Fund Shares | 10,323 | 4,708 | |||||||||
Change in Shares | 10,340 | 4,409 | |||||||||
See notes to financial statements.
39
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Total Distributions | ||||||||||||||||||||||
USAA Tax Exempt Intermediate-Term Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 13.36 | 0.18 | (e) | 0.28 | 0.46 | (0.18 | ) | (0.18 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 13.12 | 0.38 | 0.23 | 0.61 | (0.37 | ) | (0.37 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 13.07 | 0.38 | 0.05 | 0.43 | (0.38 | ) | (0.38 | ) | ||||||||||||||||||
| Year Ended March 31, 2017 | $ | 13.61 | 0.38 | (0.54 | ) | (0.16 | ) | (0.38 | ) | (0.38 | ) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 13.58 | 0.41 | 0.03 | 0.44 | (0.41 | ) | (0.41 | ) | ||||||||||||||||||
| Year Ended March 31, 2015 | $ | 13.36 | 0.42 | 0.22 | 0.64 | (0.42 | ) | (0.42 | ) | ||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 13.37 | 0.19 | (e) | 0.28 | 0.47 | (0.20 | ) | (0.20 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 13.12 | 0.41 | 0.24 | 0.65 | (0.40 | ) | (0.40 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 13.08 | 0.41 | 0.04 | 0.45 | (0.41 | ) | (0.41 | ) | ||||||||||||||||||
| Year Ended March 31, 2017 | $ | 13.61 | 0.42 | (0.53 | ) | (0.11 | ) | (0.42 | ) | (0.42 | ) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 13.59 | 0.44 | 0.02 | 0.46 | (0.44 | ) | (0.44 | ) | ||||||||||||||||||
| Year Ended March 31, 2015 | $ | 13.36 | 0.45 | 0.23 | 0.68 | (0.45 | ) | (0.45 | ) | ||||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
See notes to financial statements.
40
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||
| Redemption fees added to beneficial interests | Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(d) | ||||||||||||||||||||||||||||
USAA Tax Exempt Intermediate-Term Fund | |||||||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 13.64 | 3.45 | % | 0.75 | % | 2.63 | %(g) | 0.90 | % | $ | 23,596 | 7 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 13.36 | 4.75 | % | 0.75 | % | 2.85 | % | 0.84 | % | $ | 22,888 | 8 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 13.12 | 3.28 | % | 0.77 | %(g) | 2.83 | % | 0.85 | % | $ | 26,397 | 11 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | (h) | $ | 13.07 | (1.19 | )% | 0.80 | % | 2.84 | % | 0.83 | % | $ | 37,351 | 16 | % | |||||||||||||||||||
| Year Ended March 31, 2016 | — | (h) | $ | 13.61 | 3.28 | % | 0.80 | % | 3.02 | % | 0.88 | % | $ | 42,054 | 10 | % | |||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 13.58 | 4.81 | % | 0.79 | %(i) | 3.06 | % | 0.88 | % | $ | 36,848 | 4 | % | ||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 13.64 | 3.50 | % | 0.51 | %(f) | 2.87 | % | 0.51 | % | $ | 4,994,399 | 7 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 13.37 | 5.06 | % | 0.52 | % | 3.07 | % | 0.52 | % | $ | 4,754,320 | 8 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 13.12 | 3.47 | % | 0.51 | % | 3.09 | % | 0.51 | % | $ | 4,605,543 | 11 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | (h) | $ | 13.08 | (0.84 | )% | 0.52 | % | 3.13 | % | 0.52 | % | $ | 4,280,892 | 16 | % | |||||||||||||||||||
| Year Ended March 31, 2016 | — | $ | 13.61 | 3.48 | % | 0.54 | % | 3.28 | % | 0.54 | % | $ | 4,332,360 | 10 | % | ||||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 13.59 | 5.14 | % | 0.55 | % | 3.31 | % | 0.55 | % | $ | 3,894,482 | 4 | % | ||||||||||||||||||||
(f) The expense ratio does not correlate to the applicable expense limit in place during the period given that the contractual expense limitation was not in effect until July 1, 2019. Details of the current expense limitation in effect can be found in Item 4 of the accompanying Notes to Financial Statements.
(g) Effective August 1, 2017, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.75% of the Adviser Shares' average daily net assets. Prior to this date, the voluntary expense limit was 0.80%.
(h) Amount is less than $0.005 per share.
(i) Effective August 1, 2014, the Manager voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.80% of the Adviser Shares' average daily net assets. Prior to this date, the voluntary expense limit was 0.75%.
See notes to financial statements.
41
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Tax Exempt Intermediate-Term Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Adviser Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to fees paid under distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
42
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands).
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Municipal Bonds | $ | — | $ | 4,994,619 | $ | — | $ | 4,994,619 | |||||||||||
Total | $ | — | $ | 4,994,619 | $ | — | $ | 4,994,619 | |||||||||||
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
43
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 30,830 | $ | 33,285 | $ | — | ||||||
Fees Paid Indirectly:
Expense offsets to custody fees that arise from credits on cash balances maintained on deposit are reflected on the Statement of Operations, as applicable, as "Fees paid indirectly".
44
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 347,533 | $ | 316,259 | ||||||||
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management Fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.28%. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $3,513 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly at an annualized rate of 0.28% of the Fund's average daily net assets.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the Transaction on July 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper Intermediate Municipal Debt Funds Index.
The performance period for each share class consists of the current month plus the previous 35 months. The following table is utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points) (a) | Annual Adjustment Rate (in basis points) (a) | ||||||
+/- 20 to 50 | +/- 4 | ||||||
+/- 51 to 100 | +/- 5 | ||||||
+/- 101 and greater | +/- 6 | ||||||
(a) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which was 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper Intermediate Municipal Debt Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period April 1, 2019 through June 30, 2019, performance adjustments for Fund Shares and Adviser Shares were $452 and $0 thousand, respectively, and 0.01% and 0.00% of net assets, respectively. Base fees incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $3,367 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from July 1, 2019 through September 30, 2019 are $2,776 and $9 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from April 1, 2019 through June 30, 2019 were $893 and $9 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund Shares and Adviser Shares based on an annual charge of $25.50 per shareholder account plus out-of-pocket expenses. VCTA pays a
46
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $397 and $3 thousand for the Fund Shares and Adviser Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $356 and $5 thousand for the Fund Shares and Adviser Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distribution and Service 12b-1 Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the Adviser Shares pursuant to a Distribution Agreement between the Distributor and the Trust. Pursuant to the Distribution and Service Plans adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of up to 0.25% of the average daily net assets of the Adviser Shares. Amounts incurred and paid to the Distributor from July 1, 2019 through September 30, 2019 are $15 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Adviser Shares are offered and sold without imposition of an initial sales charge or a contingent deferred sales charge.
Prior to the Transaction on July 1, 2019, the Fund adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under the plan, the Adviser Shares paid fees to USAA Investment Management Company ("IMCO"), the distributor, for distribution and shareholder services. IMCO paid all or a portion of such fees to intermediaries that made the Adviser Shares available for investment by their customers. The fee was accrued daily and paid monthly at an annual rate of 0.25% of the Adviser Shares' average daily net assets. IMCO also provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis and received no fee or other compensation for these services, but may have received 12b-1 fees as described above, with respect to Adviser Shares. Amounts incurred and paid to IMCO from April 1, 2019 through June 30, 2019 are $15 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.75% and 0.48% for the Adviser Shares and Fund Shares, respectively.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, the following amounts are available to be repaid to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 03/31/2023 | |||||||
$ | 4 | ||||||
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through July 31, 2019, to limit the total annual operating expenses of the Adviser Shares to 0.75% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Adviser Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect and are not available to be recouped by AMCO. For the period April 1, 2019 through June 30, 2019, amounts reimbursed by the Adviser Shares are reflected on the Statement of Operations as Expenses waived/reimbursed by AMCO.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
48
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $10 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
The average borrowing and lending for the days outstanding and average interest rate for the Fund during the six months ended September 30, 2019 were as follows (amounts in thousands):
| Borrower or Lender | Amount Oustanding at September 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate | Maximum Borrowing During the Period | ||||||||||||||||||
| Borrower | $ | — | $ | 4,376 | 5 | 2.70 | % | $ | 6,030 | ||||||||||||||
* For the six months ended September 30, 2019, based on the number of days borrowings were outstanding.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Tax-Exempt Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 143,037 | $ | — | $ | 143,037 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
| Undistributed Tax-Exempt Income | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 4,639 | $ | (76,351 | ) | $ | 163,609 | $ | 91,897 | |||||||||||
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales.
As of the most recent tax year ended March 31, 2019, the Fund had net capital loss carryforwards ("CLCFs") not limited as a result of changes in Fund ownership during the year and in prior years and with no expiration date as summarized in the table below (amounts in thousands).
| Short-Term Amount | Long-Term Amount | Total | |||||||||
| $ | 20,996 | $ | 55,355 | $ | 76,351 | ||||||
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
50
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
168,754,363 | 14,825,033 | 8,198,176 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid During Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Adviser Shares | $ | 1,000.00 | $ | 1,034.50 | $ | 1,021.25 | $ | 3.81 | $ | 3.79 | 0.75 | % | |||||||||||||||
Fund Shares | 1,000.00 | 1,035.00 | 1,022.45 | 2.59 | 2.58 | 0.51 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
52
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with their Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, comparability of fees and total expenses, and profitability. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of its duties under the Advisory Agreement. The Board considered the level and depth of knowledge of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust.
The Board also reviewed the compliance and administrative services provided to the Fund by the Manager and its affiliates, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes all no-load retail open-end investment companies with same investment classifications/objectives as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment — was below the median of its expense group and above the median of its expense universe. The data indicated that the Fund's total expense ratio was below the median of its expense group and above the median of its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the high quality of services provided by the Manager. The Board also took into account management's discussion of the Fund's expenses. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee. In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and its Lipper index for the one-, three-, five-, and ten-year periods ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the top 20% of its performance universe for the one-, three- and five-year periods ended December 31, 2018 and was in the top 10% of its performance universe for the ten-year period ended December 31, 2018. The Board took into account management's discussion of the Fund's performance, including its strong performance over the long-term.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the
54
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of services received by the Fund from the Manager. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board considered whether there should be changes in the management fee rate or structure in order to enable the Fund to participate in any economies of scale. The Board took into account management's discussion of the current advisory fee structure. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that if the Fund's assets increase over time, the Fund may realize other economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
55
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39594-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Tax Exempt Long-Term Fund
Fund Shares (USTEX)
Adviser Shares (UTELX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 24 | ||||||
Statement of Operations | 25 | ||||||
Statements of Changes in Net Assets | 26 | ||||||
Financial Highlights | 28 | ||||||
Notes to Financial Statements | 30 | ||||||
Supplemental Information | 39 | ||||||
Proxy Voting and Portfolio Holdings Information | 40 | ||||||
Expense Examples | 40 | ||||||
Advisory Contract Approval | 41 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
USAA Mutual Funds Trust
1
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide investors with interest income that is exempt from federal income tax.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Municipal Bonds (99.5%) | |||||||||||
Alabama (1.6%): | |||||||||||
| Chatom Industrial Development Board Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 8/1/37, Continuously Callable @ 100 | $ | 4,245 | $ | 4,364 | |||||||
| Homewood Educational Building Authority Revenue, 5.00%, 12/1/47, Continuously Callable @ 100 | 4,500 | 5,257 | |||||||||
Lower Alabama Gas District Revenue, Series A, 5.00%, 9/1/46 | 11,500 | 16,106 | |||||||||
| Montgomery Medical Clinic Board Revenue, 5.00%, 3/1/36, Continuously Callable @ 100 | 1,750 | 1,982 | |||||||||
| Selma Industrial Development Board Revenue, 5.80%, 5/1/34, Continuously Callable @ 100 | 2,000 | 2,044 | |||||||||
| State of Alabama Docks Department Revenue, 6.00%, 10/1/35, Pre-refunded 10/1/20 @ 100 | 7,000 | 7,322 | |||||||||
37,075 | |||||||||||
Arizona (3.0%): | |||||||||||
| Apache County Industrial Development Authority Revenue, Series A, 4.50%, 3/1/30, Continuously Callable @ 100 | 5,000 | 5,311 | |||||||||
| Arizona Health Facilities Authority Revenue 5.00%, 2/1/42, Continuously Callable @ 100 | 6,000 | 6,399 | |||||||||
3.43% (MUNISPA +1.85%), 2/1/48, (Put Date 2/1/23) (g) (h) | 5,000 | 5,204 | |||||||||
| Arizona Industrial Development Authority Revenue, 5.00%, 7/1/52, Continuously Callable @ 100 | 1,725 | 2,002 | |||||||||
| City of Goodyear Water & Sewer Revenue, 5.63%, 7/1/39, Continuously Callable @ 100 | 5,000 | 5,151 | |||||||||
| City of Phoenix Civic Improvement Corp. Revenue(INS — National Public Finance Guarantee Corp.) Series B, 5.50%, 7/1/29 (a) | 1,000 | 1,317 | |||||||||
Series B, 5.50%, 7/1/30 (a) | 1,500 | 2,008 | |||||||||
| Maricopa County Industrial Development Authority Revenue, 5.00%, 7/1/47, Continuously Callable @ 100 | 1,600 | 1,757 | |||||||||
| Maricopa County Pollution Control Corp. Revenue, 5.00%, 6/1/35, Continuously Callable @ 100 | 7,000 | 7,174 | |||||||||
| Pinal County Electric District No. 3 Revenue, 4.00%, 7/1/41, Continuously Callable @ 100 | 10,000 | 10,839 | |||||||||
| The Industrial Development Authority of the City of Phoenix Revenue 5.00%, 7/1/41, Continuously Callable @ 100 | 1,200 | 1,325 | |||||||||
5.00%, 7/1/42, Continuously Callable @ 100 | 1,250 | 1,462 | |||||||||
5.00%, 7/1/44, Continuously Callable @ 100 | 6,000 | 6,488 | |||||||||
| The Industrial Development Authority of the County of Pima Revenue 4.00%, 9/1/29, Continuously Callable @ 100 | 3,000 | 3,192 | |||||||||
5.00%, 6/15/52, Continuously Callable @ 100 (b) | 2,000 | 2,058 | |||||||||
Series A, 4.50%, 6/1/30, Continuously Callable @ 100 | 2,685 | 2,871 | |||||||||
Series A, 5.25%, 10/1/40, Continuously Callable @ 100 | 3,000 | 3,094 | |||||||||
| The Industrial Development Authority of the County of Yavapai Revenue, 4.00%, 8/1/43, Continuously Callable @ 100 | 1,725 | 1,936 | |||||||||
69,588 | |||||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Arkansas (0.1%): | |||||||||||
| Arkansas Development Finance Authority Revenue(INS — AMBAC Assurance Corp.) 0.00%, 7/1/28 (k) | $ | 1,000 | $ | 822 | |||||||
0.00%, 7/1/29 (k) | 1,165 | 929 | |||||||||
0.00%, 7/1/30 (k) | 1,150 | 887 | |||||||||
0.00%, 7/1/36 (k) | 2,500 | 1,513 | |||||||||
4,151 | |||||||||||
California (6.7%): | |||||||||||
| California Health Facilities Financing Authority Revenue, 5.00%, 11/15/56, Continuously Callable @ 100 | 1,000 | 1,218 | |||||||||
| California State Public Works Board Revenue 5.00%, 6/1/31, Continuously Callable @ 100 | 2,950 | 3,336 | |||||||||
Series B, 5.00%, 10/1/30, Pre-refunded 10/1/21 @ 100 | 2,000 | 2,152 | |||||||||
Series B, 5.00%, 10/1/31, Pre-refunded 10/1/21 @ 100 | 1,110 | 1,195 | |||||||||
Series B, 5.00%, 10/1/39, Continuously Callable @ 100 | 3,500 | 4,056 | |||||||||
Series D, 5.00%, 12/1/29, Continuously Callable @ 100 | 2,500 | 2,692 | |||||||||
Series D, 5.00%, 12/1/31, Continuously Callable @ 100 | 2,000 | 2,154 | |||||||||
| Cerritos Community College District, GO Series D, 0.00%, 8/1/31 (k) | 1,000 | 787 | |||||||||
Series D, 0.00%, 8/1/32 (k) | 2,500 | 1,901 | |||||||||
Series D, 0.00%, 8/1/33 (k) | 2,175 | 1,592 | |||||||||
Series D, 0.00%, 8/1/34 (k) | 1,000 | 704 | |||||||||
Series D, 0.00%, 8/1/35 (k) | 1,500 | 1,016 | |||||||||
Series D, 0.00%, 8/1/36 (k) | 2,200 | 1,438 | |||||||||
| Coachella Valley Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series D, 0.00%, 8/1/41 (k) | 8,500 | 4,385 | |||||||||
| Health & Educational Facility Authority Revenue(LIQ — Deutsche Bank AG), Series 2017-7007, 1.88%, 3/1/42, Callable 3/1/20 @ 100 (b) (a) | 5,700 | 5,700 | |||||||||
| San Francisco Multifamily Housing Revenue(LOC — Deutsche Bank AG), Series DBE-8038, 1.93%, 12/1/52, Callable 12/1/20 @ 100 (b) (a) | 10,000 | 10,000 | |||||||||
| El Camino Community College District, GO Series C, 0.00%, 8/1/34 (k) | 3,000 | 2,180 | |||||||||
Series C, 0.00%, 8/1/38 (k) | 3,000 | 1,837 | |||||||||
| El Monte Union High School District, GO(INS — Assured Guaranty Municipal Corp.), 0.00%, 6/1/42 (k) | 10,000 | 4,959 | |||||||||
| Escondido Union High School District Certificate of Participation (INS — Assured Guaranty Municipal Corp.), 5.00%, 6/1/37, Continuously Callable @ 100 | 2,500 | 2,559 | |||||||||
| Golden State Tobacco Securitization Corp. Revenue, Series A, 5.00%, 6/1/30, Continuously Callable @ 100 | 2,000 | 2,261 | |||||||||
| Indio Redevelopment Agency Successor Agency Tax Allocation, Series A, 5.25%, 8/15/35, Continuously Callable @ 100 | 1,580 | 1,585 | |||||||||
| Inland Empire Tobacco Securitization Corp. Revenue, Series B, 5.75%, 6/1/26, Pre-refunded 6/1/20 @ 100 | 5,415 | 5,579 | |||||||||
| Jurupa Public Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 9/1/33, Callable 9/1/20 @ 100 | 2,000 | 2,066 | |||||||||
| Los Alamitos Unified School District Certificate of Participation 0.00%, 8/1/34, Continuously Callable @ 100 (c) | 1,200 | 1,312 | |||||||||
0.00%, 8/1/42, Continuously Callable @ 100 (d) | 4,500 | 4,691 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Monterey Peninsula Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.50%, 8/1/34, Pre-refunded 8/1/21 @ 100 | $ | 3,000 | $ | 3,236 | |||||||
| Paramount Unified School District, GO 0.00%, 8/1/34 (k) | 1,860 | 1,302 | |||||||||
0.00%, 8/1/35 (k) | 2,000 | 1,349 | |||||||||
0.00%, 8/1/36 (k) | 2,750 | 1,791 | |||||||||
0.00%, 8/1/37 (k) | 2,750 | 1,730 | |||||||||
| Sacramento City Schools Joint Powers Financing Authority Revenue(INS — Build America Mutual Assurance Co.) Series A, 5.00%, 3/1/36, Continuously Callable @ 100 | 2,560 | 2,866 | |||||||||
Series A, 5.00%, 3/1/40, Continuously Callable @ 100 | 2,000 | 2,225 | |||||||||
| San Diego Public Facilities Financing Authority Revenue, Series A, 5.00%, 10/15/44, Continuously Callable @ 100 | 2,500 | 3,019 | |||||||||
| San Marcos Schools Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 8/15/40, Pre-refunded 8/15/20 @ 100 | 3,000 | 3,099 | |||||||||
| San Ysidro School District, GO(INS — Assured Guaranty Municipal Corp.) Series G, 0.00%, 8/1/36 (k) | 13,605 | 7,763 | |||||||||
Series G, 0.00%, 8/1/37 (k) | 14,285 | 7,794 | |||||||||
| Santa Ana Unified School District Certificate of Participation(INS — Assured Guaranty Municipal Corp.), 0.00%, 4/1/29 (k) | 15,000 | 11,332 | |||||||||
| Southern California Public Power Authority Revenue, Series A, 5.00%, 7/1/40, Continuously Callable @ 100 | 5,000 | 5,136 | |||||||||
| State of California, GO 5.25%, 4/1/35, Continuously Callable @ 100 | 8,000 | 8,734 | |||||||||
5.00%, 2/1/38, Continuously Callable @ 100 | 6,750 | 7,518 | |||||||||
5.00%, 10/1/47, Continuously Callable @ 100 | 5,000 | 5,954 | |||||||||
| Stockton Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series D, 0.00%, 8/1/34 (k) | 8,885 | 5,971 | |||||||||
| Sacramento City Financing Authority Revenue(LIQ — Deutsche Bank AG), Series 2016-XG0067, 1.69%, 12/1/30 (b) (a) | 400 | 400 | |||||||||
| Washington Township Health Care District Revenue Series A, 5.25%, 7/1/30, Continuously Callable @ 100 | 5,180 | 5,314 | |||||||||
Series A, 5.50%, 7/1/38, Continuously Callable @ 100 | 5,000 | 5,131 | |||||||||
165,019 | |||||||||||
Colorado (1.8%): | |||||||||||
| Colorado Educational & Cultural Facilities Authority Revenue 4.00%, 12/1/48, Continuously Callable @ 100 | 2,500 | 2,736 | |||||||||
5.00%, 4/1/53, Continuously Callable @ 100 | 750 | 870 | |||||||||
Series A, 5.25%, 4/1/43, Continuously Callable @ 100 | 2,500 | 2,721 | |||||||||
| Colorado Health Facilities Authority Revenue 5.00%, 12/1/42, Pre-refunded 6/1/22 @ 100 | 5,000 | 5,476 | |||||||||
5.00%, 6/1/45, Pre-refunded 6/1/25 @ 100 | 6,000 | 7,201 | |||||||||
5.00%, 6/1/47, Pre-refunded 6/1/27 @ 100 | 1,250 | 1,566 | |||||||||
Series A, 4.00%, 8/1/49, Continuously Callable @ 100 | 2,500 | 2,686 | |||||||||
| Denver Health & Hospital Authority Revenue, Series A, 4.00%, 12/1/40, Continuously Callable @ 100 | 750 | 828 | |||||||||
| E-470 Public Highway Authority Revenue, Series C, 5.38%, 9/1/26, Continuously Callable @ 100 | 2,000 | 2,071 | |||||||||
| E-470 Public Highway Authority Revenue(INS — National Public Finance Guarantee Corp.), Series B, 0.00%, 9/1/35, Continuously Callable @ 64 (k) | 10,000 | 5,163 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Park Creek Metropolitan District Revenue 5.00%, 12/1/45, Continuously Callable @ 100 | $ | 1,000 | $ | 1,145 | |||||||
5.00%, 12/1/46, Continuously Callable @ 100 | 2,500 | 2,861 | |||||||||
5.00%, 12/1/51, Continuously Callable @ 100 | 2,000 | 2,291 | |||||||||
| Rampart Range Metropolitan District No. 1 Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 12/1/47, Continuously Callable @ 100 | 4,000 | 4,809 | |||||||||
| Regional Transportation District Certificate of Participation, Series A, 5.00%, 6/1/44, Continuously Callable @ 100 | 5,000 | 5,572 | |||||||||
| Southlands Metropolitan District No. 1, GO, Series A-1, 5.00%, 12/1/47, Continuously Callable @ 100 | 1,000 | 1,120 | |||||||||
49,116 | |||||||||||
Connecticut (0.7%): | |||||||||||
| Connecticut State Health & Educational Facilities Authority Revenue Series A, 4.00%, 7/1/49, Continuously Callable @ 100 | 3,000 | 3,267 | |||||||||
Series O, 5.00%, 7/1/35, Pre-refunded 7/1/20 @ 100 | 2,000 | 2,055 | |||||||||
Mashantucket Western Pequot Tribe Revenue, 2.05%, 7/1/31 (f) | 58,980 | 2,204 | |||||||||
| State of Connecticut, GO Series A, 5.00%, 4/15/38, Continuously Callable @ 100 | 5,500 | 6,649 | |||||||||
Series A, 5.00%, 4/15/39, Continuously Callable @ 100 | 1,550 | 1,897 | |||||||||
16,072 | |||||||||||
Delaware (0.2%): | |||||||||||
| Delaware State Economic Development Authority Revenue, 5.40%, 2/1/31, Continuously Callable @ 100 | 4,000 | 4,118 | |||||||||
District of Columbia (1.6%): | |||||||||||
| District of Columbia Revenue 5.00%, 7/1/36, Continuously Callable @ 100 | 1,305 | 1,424 | |||||||||
5.00%, 7/1/42, Continuously Callable @ 100 | 1,500 | 1,631 | |||||||||
6.00%, 7/1/43, Pre-refunded 7/1/23 @ 100 | 1,700 | 1,988 | |||||||||
6.00%, 7/1/48, Pre-refunded 7/1/23 @ 100 | 1,450 | 1,696 | |||||||||
5.00%, 7/1/49, Continuously Callable @ 100 | 1,275 | 1,512 | |||||||||
5.00%, 7/1/54, Continuously Callable @ 100 | 1,140 | 1,338 | |||||||||
| Metropolitan Washington Airports Authority Dulles Toll Road Revenue, 5.00%, 10/1/53, Continuously Callable @ 100 | 10,000 | 10,716 | |||||||||
| Metropolitan Washington Airports Authority Revenue, Series A, 5.00%, 10/1/39, Continuously Callable @ 100 | 5,000 | 5,170 | |||||||||
| Washington Convention & Sports Authority Tax Allocation, 5.00%, 10/1/40, Continuously Callable @ 100 | 10,000 | 10,324 | |||||||||
35,799 | |||||||||||
Florida (8.3%): | |||||||||||
| City of Atlantic Beach Revenue Series A, 5.00%, 11/15/48, Continuously Callable @ 103 | 2,000 | 2,255 | |||||||||
Series B, 5.63%, 11/15/43, Continuously Callable @ 100 | 7,000 | 7,823 | |||||||||
| City of Clearwater Water & Sewer Revenue, Series A, 5.25%, 12/1/39, Pre-refunded 12/1/19 @ 100 | 2,000 | 2,013 | |||||||||
| City of Gainesville Utilities System Revenue, Series C, 5.25%, 10/1/34, Continuously Callable @ 100 | 3,950 | 4,098 | |||||||||
City of Jacksonville Revenue, 5.00%, 10/1/29, Continuously Callable @ 100 | 2,270 | 2,498 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| City of Lakeland Revenue 5.00%, 9/1/37, Continuously Callable @ 100 | $ | 500 | $ | 542 | |||||||
5.00%, 9/1/42, Continuously Callable @ 100 | 1,000 | 1,082 | |||||||||
| City of Miami Beach Parking Revenue, Series B, 5.00%, 9/1/40, Continuously Callable @ 100 | 2,000 | 2,056 | |||||||||
| City of Miami Parking System Revenue(INS — Assured Guaranty Corp.), 5.00%, 10/1/34, Continuously Callable @ 100 | 1,500 | 1,504 | |||||||||
| City of Miami Revenue(INS — Assured Guaranty Municipal Corp.) Series A, 5.25%, 7/1/35, Continuously Callable @ 100 | 13,125 | 13,481 | |||||||||
Series A, 5.25%, 7/1/39, Continuously Callable @ 100 | 4,000 | 4,106 | |||||||||
| County of Escambia Revenue, Series B, 6.25%, 11/1/33, Continuously Callable @ 100 | 1,500 | 1,505 | |||||||||
| County of Miami-Dade Aviation Revenue 5.00%, 10/1/29, Pre-refunded 10/1/20 @ 100 | 525 | 544 | |||||||||
5.00%, 10/1/29, Pre-refunded 10/1/20 @ 100 | 6,350 | 6,580 | |||||||||
5.38%, 10/1/35, Pre-refunded 10/1/20 @ 100 | 18,330 | 19,063 | |||||||||
5.38%, 10/1/35, Pre-refunded 10/1/20 @ 100 | 4,875 | 5,070 | |||||||||
| County of Miami-Dade Rickenbacker Causeway Revenue, 5.00%, 10/1/43, Continuously Callable @ 100 | 1,750 | 1,967 | |||||||||
| County of Miami-Dade Water & Sewer System Revenue, 5.00%, 10/1/34, Pre-refunded 10/1/20 @ 100 | 3,950 | 4,093 | |||||||||
| Florida Department of Children & Families Certificate of Participation, 5.00%, 10/1/25, Continuously Callable @ 100 | 5,675 | 5,691 | |||||||||
| Florida Higher Educational Facilities Financial Authority Revenue 5.00%, 3/1/44, Continuously Callable @ 100 | 4,280 | 4,875 | |||||||||
5.00%, 3/1/49, Continuously Callable @ 100 | 1,250 | 1,418 | |||||||||
Series A, 5.00%, 4/1/32, Continuously Callable @ 100 | 600 | 647 | |||||||||
Series A, 5.25%, 4/1/42, Continuously Callable @ 100 | 1,500 | 1,616 | |||||||||
| Florida Municipal Loan Council Revenue(INS — Assured Guaranty Municipal Corp.), Series D, 5.25%, 10/1/33, Continuously Callable @ 100 | 2,500 | 2,677 | |||||||||
| Halifax Hospital Medical Center Revenue, 5.00%, 6/1/46, Continuously Callable @ 100 | 3,000 | 3,391 | |||||||||
| Lee County Industrial Development Authority Revenue 5.75%, 10/1/42, Continuously Callable @ 100 | 4,000 | 4,278 | |||||||||
5.00%, 11/15/44, Continuously Callable @ 103 | 3,750 | 4,365 | |||||||||
5.50%, 10/1/47, Continuously Callable @ 102 | 5,000 | 5,407 | |||||||||
5.00%, 11/15/49, Continuously Callable @ 103 | 8,600 | 9,994 | |||||||||
| Lee Memorial Health System Revenue, Series A-1, 4.00%, 4/1/49, Continuously Callable @ 100 | 4,500 | 4,925 | |||||||||
| Miami-Dade County Expressway Authority Revenue Series A, 5.00%, 7/1/39, Continuously Callable @ 100 | 5,000 | 5,676 | |||||||||
Series A, 5.00%, 7/1/40, Continuously Callable @ 100 | 5,000 | 5,117 | |||||||||
| Miami-Dade County Health Facilities Authority Revenue, 4.00%, 8/1/47, Continuously Callable @ 100 | 2,000 | 2,132 | |||||||||
| Orange County Health Facilities Authority Revenue, Series B, 4.00%, 10/1/45, Continuously Callable @ 100 | 1,500 | 1,625 | |||||||||
| Orlando-Orange County Expressway Authority Revenue Series A, 5.00%, 7/1/35, Pre-refunded 7/1/20 @ 100 | 4,745 | 4,871 | |||||||||
Series A, 5.00%, 7/1/35, Pre-refunded 7/1/20 @ 100 | 1,255 | 1,288 | |||||||||
Series C, 5.00%, 7/1/35, Pre-refunded 7/1/20 @ 100 | 2,000 | 2,053 | |||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Palm Beach County Health Facilities Authority Revenue 5.00%, 5/15/41, Continuously Callable @ 100 | $ | 5,000 | $ | 5,564 | |||||||
5.00%, 11/15/45, Continuously Callable @ 103 | 2,000 | 2,303 | |||||||||
| Palm Beach County Solid Waste Authority Revenue 5.00%, 10/1/31, Pre-refunded 10/1/21 @ 100 | 155 | 166 | |||||||||
5.00%, 10/1/31, Continuously Callable @ 100 | 9,845 | 10,539 | |||||||||
| Pinellas County Educational Facilities Authority Revenue 5.00%, 10/1/27, Continuously Callable @ 100 | 1,000 | 1,064 | |||||||||
5.25%, 10/1/30, Continuously Callable @ 100 | 1,000 | 1,071 | |||||||||
6.00%, 10/1/41, Continuously Callable @ 100 | 3,650 | 3,866 | |||||||||
| Polk County Industrial Development Authority Revenue 5.00%, 1/1/49, Continuously Callable @ 103 | 1,000 | 1,113 | |||||||||
5.00%, 1/1/55, Continuously Callable @ 103 | 1,000 | 1,114 | |||||||||
| Sarasota County Health Facilities Authority Revenue, 5.00%, 5/15/48, Continuously Callable @ 103 | 1,835 | 2,046 | |||||||||
| St. Petersburg Health Facilities Authority Revenue, 6.50%, 11/15/39, Pre-refunded 11/15/19 @ 100 | 3,000 | 3,017 | |||||||||
Tampa Housing Authority Revenue, 4.85%, 7/1/36, Callable 11/1/19 @ 100 | 2,200 | 2,205 | |||||||||
| Tampa-Hillsborough County Expressway Authority Revenue, Series B, 5.00%, 7/1/42, Pre-refunded 7/1/22 @ 100 | 3,050 | 3,345 | |||||||||
| Avenir Community Development District Revenue(LIQ — Deutsche Bank AG), Series 2018-XF1074, 1.83%, 5/1/49, Callable 11/1/38 @ 100 (b) (a) | 8,655 | 8,655 | |||||||||
| Volusia County Educational Facility Authority Revenue, Series B, 5.00%, 10/15/45, Continuously Callable @ 100 | 2,000 | 2,280 | |||||||||
| Volusia County Educational Facility Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 10/15/29, Pre-refunded 10/15/21 @ 100 | 2,350 | 2,523 | |||||||||
203,197 | |||||||||||
Georgia (1.9%): | |||||||||||
| Appling County Development Authority Revenue, 1.82%, 9/1/41, Continuously Callable @ 100 (c) | 12,700 | 12,700 | |||||||||
| City of Atlanta GA Department of Aviation Revenue, Series A, 5.00%, 1/1/35, Continuously Callable @ 100 | 3,500 | 3,531 | |||||||||
| Dahlonega Downtown Development Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/40, Pre-refunded 7/1/20 @ 100 | 4,000 | 4,110 | |||||||||
| Floyd County Development Authority Revenue, 1.82%, 9/1/26, Continuously Callable @ 100 (a) | 880 | 880 | |||||||||
| Glynn-Brunswick Memorial Hospital Authority Revenue, 5.00%, 8/1/47, Continuously Callable @ 100 | 1,500 | 1,704 | |||||||||
| Heard County Development Authority Revenue, 1.84%, 9/1/26, Continuously Callable @ 100 (a) | 1,300 | 1,300 | |||||||||
Main Street Natural Gas, Inc. Revenue, Series A, 5.00%, 5/15/49 | 3,000 | 4,154 | |||||||||
| Monroe County Development Authority Revenue 1.82%, 4/1/32, Continuously Callable @ 100 (a) | 6,400 | 6,400 | |||||||||
1.82%, 11/1/48, Continuously Callable @ 100 (a) | 4,490 | 4,490 | |||||||||
| Private Colleges & Universities Authority Revenue, Series A, 5.00%, 10/1/32, Continuously Callable @ 100 | 1,600 | 1,693 | |||||||||
See notes to financial statements.
8
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Thomasville Hospital Authority Revenue 5.25%, 11/1/35, Pre-refunded 11/2/20 @ 100 | $ | 1,000 | $ | 1,042 | |||||||
5.38%, 11/1/40, Pre-refunded 11/2/20 @ 100 | 1,250 | 1,305 | |||||||||
43,309 | |||||||||||
Idaho (0.1%): | |||||||||||
| Idaho Health Facilities Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/35, Pre-refunded 7/1/20 @ 100 | 1,500 | 1,540 | |||||||||
Illinois (14.0%): | |||||||||||
| Bureau County Township High School District No. 502, GO(INS — Build America Mutual Assurance Co.) Series A, 5.00%, 12/1/37, Continuously Callable @ 100 | 1,530 | 1,804 | |||||||||
Series A, 5.00%, 12/1/38, Continuously Callable @ 100 | 1,555 | 1,830 | |||||||||
Series A, 5.00%, 12/1/39, Continuously Callable @ 100 | 1,400 | 1,646 | |||||||||
| Chicago Board of Education, GO, Series H, 5.00%, 12/1/36, Continuously Callable @ 100 | 5,000 | 5,688 | |||||||||
| Chicago Midway International Airport Revenue Series B, 5.00%, 1/1/41, Continuously Callable @ 100 | 2,500 | 2,927 | |||||||||
Series B, 5.00%, 1/1/46, Continuously Callable @ 100 | 3,500 | 4,087 | |||||||||
| Chicago O'Hare International Airport Revenue 5.75%, 1/1/39, Pre-refunded 1/1/21 @ 100 | 4,200 | 4,429 | |||||||||
5.75%, 1/1/39, Continuously Callable @ 100 | 800 | 840 | |||||||||
5.75%, 1/1/43, Continuously Callable @ 100 | 5,000 | 5,568 | |||||||||
Series C, 5.00%, 1/1/41, Continuously Callable @ 100 | 5,000 | 5,948 | |||||||||
Chicago Park District, GO, Series A, 5.00%, 1/1/40, Continuously Callable @ 100 | 3,000 | 3,422 | |||||||||
City of Chicago Special Assessment, 6.75%, 12/1/32, Continuously Callable @ 100 | 3,924 | 3,932 | |||||||||
| City of Chicago Wastewater Transmission Revenue 5.00%, 1/1/44, Continuously Callable @ 100 | 4,000 | 4,331 | |||||||||
Series C, 5.00%, 1/1/39, Continuously Callable @ 100 | 3,000 | 3,345 | |||||||||
| City of Chicago Wastewater Transmission Revenue Bonds, Series A, 5.00%, 1/1/47, Continuously Callable @ 100 | 3,000 | 3,392 | |||||||||
| City of Chicago Waterworks Revenue, 5.00%, 11/1/44, Continuously Callable @ 100 | 3,000 | 3,377 | |||||||||
| City of Springfield Electric Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 3/1/40, Continuously Callable @ 100 | 3,000 | 3,409 | |||||||||
| Cook County Community College District No. 508, GO(INS — Build America Mutual Assurance Co.), 5.00%, 12/1/47, Continuously Callable @ 100 | 9,500 | 11,030 | |||||||||
County of Cook Sales Tax Revenue, 5.00%, 11/15/38, Continuously Callable @ 100 | 7,750 | 9,188 | |||||||||
County of Will, GO, 4.00%, 11/15/47, Continuously Callable @ 100 | 2,000 | 2,193 | |||||||||
| Illinois Finance Authority Revenue 5.00%, 4/1/26, Continuously Callable @ 100 | 2,000 | 2,004 | |||||||||
3.90%, 3/1/30, Continuously Callable @ 100 | 14,000 | 14,992 | |||||||||
5.00%, 4/1/31, Continuously Callable @ 100 | 4,500 | 4,509 | |||||||||
5.50%, 4/1/32, Continuously Callable @ 100 | 7,065 | 7,066 | |||||||||
4.00%, 2/1/33, Continuously Callable @ 100 | 6,000 | 6,294 | |||||||||
5.00%, 4/1/36, Continuously Callable @ 100 | 7,000 | 7,018 | |||||||||
5.00%, 5/15/37, Continuously Callable @ 100 | 700 | 774 | |||||||||
4.00%, 3/1/38, Continuously Callable @ 100 | 2,000 | 2,198 | |||||||||
5.25%, 10/1/39, Continuously Callable @ 100 | 1,205 | 1,208 | |||||||||
4.00%, 2/15/41, Pre-refunded 2/15/27 @ 100 | 20 | 24 | |||||||||
See notes to financial statements.
9
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
4.00%, 2/15/41, Continuously Callable @ 100 | $ | 10,980 | $ | 12,172 | |||||||
5.00%, 8/1/42, Continuously Callable @ 100 | 750 | 844 | |||||||||
6.00%, 7/1/43, Continuously Callable @ 100 | 5,000 | 5,650 | |||||||||
5.00%, 1/1/44, Continuously Callable @ 100 | 10,000 | 11,561 | |||||||||
5.00%, 8/15/44, Continuously Callable @ 100 | 2,000 | 2,243 | |||||||||
4.00%, 12/1/46, Continuously Callable @ 100 | 4,500 | 4,618 | |||||||||
5.00%, 2/15/47, Continuously Callable @ 100 | 1,000 | 1,124 | |||||||||
5.00%, 5/15/47, Continuously Callable @ 100 | 1,155 | 1,258 | |||||||||
5.00%, 8/1/47, Continuously Callable @ 100 | 750 | 836 | |||||||||
5.00%, 12/1/47, Continuously Callable @ 100 | 2,000 | 2,195 | |||||||||
5.00%, 10/1/49, Continuously Callable @ 100 | 1,250 | 1,500 | |||||||||
5.00%, 2/15/50, Continuously Callable @ 100 | 500 | 561 | |||||||||
5.00%, 10/1/51, Continuously Callable @ 100 | 1,000 | 1,191 | |||||||||
Series A, 6.00%, 10/1/32, Pre-refunded 4/1/21 @ 100 | 8,000 | 8,553 | |||||||||
Series A, 4.00%, 7/1/38, Continuously Callable @ 100 | 5,000 | 5,385 | |||||||||
Series A, 4.00%, 10/1/40, Continuously Callable @ 100 | 12,395 | 13,480 | |||||||||
| Illinois State Toll Highway Authority Revenue, Series A, 4.00%, 1/1/44, Continuously Callable @ 100 | 4,000 | 4,481 | |||||||||
| Metropolitan Pier & Exposition Authority Revenue(INS — National Public Finance Guarantee Corp.) 5.50%, 6/15/20, Continuously Callable @ 100 (a) | 660 | 662 | |||||||||
5.55%, 6/15/21, Continuously Callable @ 100 (a) | 1,045 | 1,048 | |||||||||
| Northern Illinois Municipal Power Agency Revenue, Series A, 4.00%, 12/1/41, Continuously Callable @ 100 | 9,000 | 9,743 | |||||||||
| Railsplitter Tobacco Settlement Authority Revenue, 5.50%, 6/1/23, Pre-refunded 6/1/21 @ 100 | 10,000 | 10,686 | |||||||||
| Regional Transportation Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.75%, 6/1/20 | 23,980 | 24,644 | |||||||||
| Regional Transportation Authority Revenue(INS — National Public Finance Guarantee Corp.), 6.50%, 7/1/30 (j) | 37,550 | 51,769 | |||||||||
| Sangamon County Water Reclamation District, GO Series A, 4.00%, 1/1/49, Continuously Callable @ 100 | 15,000 | 16,196 | |||||||||
Series A, 5.75%, 1/1/53, Continuously Callable @ 100 | 2,000 | 2,399 | |||||||||
State of Illinois, GO, Series A, 5.00%, 10/1/33, Continuously Callable @ 100 | 2,000 | 2,273 | |||||||||
| State of Illinois, GO(INS — Assured Guaranty Municipal Corp.) 4.00%, 2/1/31, Continuously Callable @ 100 | 1,000 | 1,091 | |||||||||
4.00%, 2/1/32, Continuously Callable @ 100 | 1,000 | 1,090 | |||||||||
Series A, 5.00%, 4/1/29, Continuously Callable @ 100 | 8,000 | 8,739 | |||||||||
| University of Illinois Revenue, Series A, 5.13%, 4/1/36, Continuously Callable @ 100 | 1,000 | 1,050 | |||||||||
| Village of Rosemont, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 12/1/46, Continuously Callable @ 100 | 10,000 | 11,448 | |||||||||
348,963 | |||||||||||
Indiana (1.7%): | |||||||||||
| Evansville Redevelopment Authority Revenue(INS — Build America Mutual Assurance Co.) 4.00%, 2/1/38, Continuously Callable @ 100 | 5,540 | 6,069 | |||||||||
4.00%, 2/1/39, Continuously Callable @ 100 | 3,605 | 3,922 | |||||||||
| Indiana Finance Authority Revenue 5.00%, 2/1/40, Continuously Callable @ 100 | 1,495 | 1,677 | |||||||||
See notes to financial statements.
10
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.00%, 10/1/44, Continuously Callable @ 100 | $ | 4,000 | $ | 4,349 | |||||||
5.00%, 11/15/53, Continuously Callable @ 103 | 6,000 | 6,769 | |||||||||
Series A, 5.00%, 6/1/39, Continuously Callable @ 100 | 5,000 | 5,241 | |||||||||
Series A, 5.50%, 4/1/46, Continuously Callable @ 100 | 5,000 | 5,576 | |||||||||
| Richmond Hospital Authority Revenue, 5.00%, 1/1/39, Continuously Callable @ 100 | 7,000 | 7,918 | |||||||||
41,521 | |||||||||||
Iowa (0.5%): | |||||||||||
| Iowa Finance Authority Revenue 5.00%, 5/15/41, Continuously Callable @ 100 | 6,235 | 6,939 | |||||||||
Series B, 5.00%, 2/15/48, Continuously Callable @ 100 | 4,000 | 4,752 | |||||||||
11,691 | |||||||||||
Kansas (0.4%): | |||||||||||
| City of Coffeyville Electric System Revenue(INS — National Public Finance Guarantee Corp.), Series B, 5.00%, 6/1/42, Continuously Callable @ 100 (b) | 2,500 | 2,881 | |||||||||
City of Lawrence Revenue, 5.00%, 7/1/48, Continuously Callable @ 100 | 5,000 | 5,912 | |||||||||
| Wyandotte County-Kansas City Unified Government Utility System Revenue, Series A, 5.00%, 9/1/45, Continuously Callable @ 100 | 2,000 | 2,338 | |||||||||
11,131 | |||||||||||
Kentucky (0.5%): | |||||||||||
City of Ashland Revenue, 5.00%, 2/1/40, Continuously Callable @ 100 | 1,000 | 1,102 | |||||||||
County of Owen Revenue, Series A, 6.25%, 6/1/39, Continuously Callable @ 100 | 2,000 | 2,007 | |||||||||
| Kentucky Economic Development Finance Authority Revenue 5.00%, 5/15/46, Continuously Callable @ 100 | 5,500 | 5,843 | |||||||||
Series B, 5.00%, 8/15/41, Continuously Callable @ 100 | 3,000 | 3,457 | |||||||||
| Kentucky Economic Development Finance Authority Revenue(INS — Assured Guaranty Municipal Corp.) | |||||||||||
4.00%, 12/1/41, Continuously Callable @ 100 | 500 | 544 | |||||||||
Series A, 5.00%, 12/1/45, Continuously Callable @ 100 | 2,000 | 2,379 | |||||||||
15,332 | |||||||||||
Louisiana (4.1%): | |||||||||||
| City of Shreveport Water & Sewer Revenue 5.00%, 12/1/40, Continuously Callable @ 100 | 1,000 | 1,150 | |||||||||
Series B, 5.00%, 12/1/41, Continuously Callable @ 100 | 5,500 | 6,427 | |||||||||
Series B, 4.00%, 12/1/49, Continuously Callable @ 100 | 1,000 | 1,096 | |||||||||
| City of Shreveport Water & Sewer Revenue(INS — Assured Guaranty Municipal Corp.), Series B, 5.00%, 12/1/41, Continuously Callable @ 100 | 2,100 | 2,553 | |||||||||
| City of Shreveport Water & Sewer Revenue(INS — Build America Mutual Assurance Co.), Series B, 4.00%, 12/1/37, Continuously Callable @ 100 | 1,100 | 1,208 | |||||||||
| Jefferson Sales Tax District Revenue, Series B, 4.00%, 12/1/42, Continuously Callable @ 100 | 7,000 | 7,868 | |||||||||
| Lafayette Public Trust Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.50%, 10/1/35, Pre-refunded 10/1/20 @ 100 | 2,500 | 2,602 | |||||||||
| Louisiana Local Government Environmental Facilities & Community Development Authority Revenue | |||||||||||
3.50%, 11/1/32, Continuously Callable @ 100 | 6,250 | 6,675 | |||||||||
Series A, 6.50%, 8/1/29, Continuously Callable @ 100 | 3,750 | 3,901 | |||||||||
See notes to financial statements.
11
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Louisiana Local Government Environmental Facilities & Community Development Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 10/1/39, Continuously Callable @ 100 | $ | 1,685 | $ | 2,002 | |||||||
4.00%, 10/1/46, Continuously Callable @ 100 | 8,210 | 8,816 | |||||||||
5.00%, 10/1/48, Continuously Callable @ 100 | 5,000 | 5,815 | |||||||||
| Louisiana Public Facilities Authority Revenue 5.00%, 7/1/37, Continuously Callable @ 100 | 1,500 | 1,728 | |||||||||
4.00%, 5/15/41, Pre-refunded 5/15/26 @ 100 | 15 | 17 | |||||||||
4.00%, 5/15/41, Continuously Callable @ 100 | 1,235 | 1,299 | |||||||||
5.00%, 11/1/45, Continuously Callable @ 100 | 6,000 | 6,748 | |||||||||
5.00%, 5/15/46, Continuously Callable @ 100 | 5,000 | 5,789 | |||||||||
4.00%, 12/15/50, Continuously Callable @ 100 | 1,000 | 1,105 | |||||||||
5.00%, 7/1/52, Continuously Callable @ 100 | 400 | 464 | |||||||||
4.00%, 1/1/56, Continuously Callable @ 100 | 9,000 | 9,362 | |||||||||
5.00%, 7/1/57, Continuously Callable @ 100 | 2,000 | 2,311 | |||||||||
| Louisiana Public Facilities Authority Revenue(INS — Build America Mutual Assurance Co.), 5.25%, 6/1/51, Continuously Callable @ 100 | 5,000 | 5,753 | |||||||||
Parish of St. Charles Revenue, 4.00%, 12/1/40 (a) | 6,750 | 7,137 | |||||||||
| State of Louisiana Gasoline & Fuels Tax Revenue, Series C, 5.00%, 5/1/45, Continuously Callable @ 100 | 6,000 | 7,190 | |||||||||
| Tobacco Settlement Financing Corp. Revenue, Series A, 5.25%, 5/15/35, Continuously Callable @ 100 | 1,500 | 1,659 | |||||||||
100,675 | |||||||||||
Maine (0.4%): | |||||||||||
| Maine Health & Higher Educational Facilities Authority Revenue, Series A, 4.00%, 7/1/46, Continuously Callable @ 100 | 9,000 | 9,419 | |||||||||
Massachusetts (1.2%): | |||||||||||
| Massachusetts Development Finance Agency Revenue 5.00%, 4/15/40, Continuously Callable @ 100 | 1,000 | 1,088 | |||||||||
5.00%, 7/1/44, Continuously Callable @ 100 | 3,000 | 3,390 | |||||||||
5.00%, 7/1/44, Continuously Callable @ 100 | 3,000 | 3,489 | |||||||||
5.00%, 7/1/46, Continuously Callable @ 100 | 1,000 | 1,147 | |||||||||
5.00%, 7/1/47, Continuously Callable @ 100 | 2,280 | 2,551 | |||||||||
Series A, 5.50%, 7/1/44, Continuously Callable @ 100 | 4,000 | 4,377 | |||||||||
Series A, 4.00%, 10/1/46, Continuously Callable @ 100 | 3,370 | 3,464 | |||||||||
Series A, 4.00%, 6/1/49, Continuously Callable @ 100 | 1,000 | 1,072 | |||||||||
Series E, 4.00%, 7/1/38, Continuously Callable @ 100 | 1,000 | 1,077 | |||||||||
Series J2, 5.00%, 7/1/53, Continuously Callable @ 100 | 10,000 | 11,877 | |||||||||
| Massachusetts Health & Educational Facilities Authority Revenue Series E, 5.00%, 7/15/32, Continuously Callable @ 100 | 3,500 | 3,506 | |||||||||
Series E, 5.00%, 7/15/37, Continuously Callable @ 100 | 500 | 501 | |||||||||
37,539 | |||||||||||
Michigan (1.9%): | |||||||||||
| County of Genesee, GO, Series B, 4.00%, 2/1/41, Continuously Callable @ 100 | 2,000 | 2,164 | |||||||||
| County of Genesee, GO(INS — Build America Mutual Assurance Co.), Series B, 5.00%, 2/1/46, Continuously Callable @ 100 | 2,900 | 3,373 | |||||||||
| Downriver Utility Wastewater Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 4/1/43, Continuously Callable @ 100 | 2,500 | 3,025 | |||||||||
See notes to financial statements.
12
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Jackson Public Schools, GO(NBGA — Michigan School Bond Qualification and Loan Program) | |||||||||||
5.00%, 5/1/45, Continuously Callable @ 100 | $ | 6,000 | $ | 7,185 | |||||||
5.00%, 5/1/48, Continuously Callable @ 100 | 3,000 | 3,590 | |||||||||
| Karegnondi Water Authority Revenue, 5.00%, 11/1/45, Continuously Callable @ 100 | 2,750 | 3,234 | |||||||||
| Lansing Board of Water & Light Revenue, Series A, 5.00%, 7/1/37, Continuously Callable @ 100 | 4,500 | 4,766 | |||||||||
| Livonia Public Schools, GO(INS — Assured Guaranty Municipal Corp.), 5.00%, 5/1/45, Continuously Callable @ 100 | 4,000 | 4,701 | |||||||||
| Michigan Finance Authority Revenue 5.00%, 11/1/43, Continuously Callable @ 100 | 1,000 | 1,226 | |||||||||
4.00%, 2/15/47, Continuously Callable @ 100 | 8,000 | 8,812 | |||||||||
Series A, 4.00%, 11/15/50, Continuously Callable @ 100 | 3,000 | 3,308 | |||||||||
| Michigan State Building Authority Revenue, 4.00%, 4/15/54, Continuously Callable @ 100 | 2,000 | 2,205 | |||||||||
Michigan Strategic Fund Revenue, 5.63%, 7/1/20 | 3,000 | 3,096 | |||||||||
50,685 | |||||||||||
Minnesota (0.1%): | |||||||||||
| Minnesota Higher Education Facilities Authority Revenue, Series A, 5.00%, 10/1/39, Pre-refunded 10/1/19 @ 100 | 2,500 | 2,500 | |||||||||
Mississippi (0.1%): | |||||||||||
County of Warren Revenue, 5.38%, 12/1/35, Continuously Callable @ 100 | 3,000 | 3,209 | |||||||||
Missouri (2.4%): | |||||||||||
| Cape Girardeau County Industrial Development Authority Revenue 5.00%, 3/1/36, Continuously Callable @ 100 | 750 | 873 | |||||||||
Series A, 6.00%, 3/1/33, Continuously Callable @ 103 | 2,460 | 2,799 | |||||||||
| Hannibal Industrial Development Authority Revenue, 5.00%, 10/1/47, Continuously Callable @ 100 | 3,000 | 3,450 | |||||||||
| Health & Educational Facilities Authority of the State of Missouri Revenue 5.00%, 5/15/40, Continuously Callable @ 103 | 5,510 | 6,101 | |||||||||
5.00%, 2/1/42, Continuously Callable @ 104 | 3,500 | 3,976 | |||||||||
4.00%, 2/1/48, Continuously Callable @ 100 (i) | 10,000 | 10,540 | |||||||||
Series A, 5.00%, 11/15/43, Continuously Callable @ 100 | 1,000 | 1,201 | |||||||||
Series A, 4.00%, 2/15/54, Continuously Callable @ 100 | 2,500 | 2,758 | |||||||||
| Missouri Development Finance Board Revenue, 4.00%, 6/1/46, Continuously Callable @ 100 | 17,775 | 18,633 | |||||||||
| St. Louis County Industrial Development Authority Revenue 5.88%, 9/1/43, Continuously Callable @ 100 | 5,000 | 5,526 | |||||||||
5.00%, 9/1/48, Continuously Callable @ 100 | 2,000 | 2,227 | |||||||||
| St. Louis Municipal Finance Corp. Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 10/1/38, Continuously Callable @ 100 | 3,065 | 3,696 | |||||||||
| Stoddard County Industrial Development Authority Revenue, Series B, 6.00%, 3/1/37, Continuously Callable @ 103 | 2,040 | 2,310 | |||||||||
64,090 | |||||||||||
See notes to financial statements.
13
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Montana (0.4%): | |||||||||||
| City of Forsyth Revenue 3.90%, 3/1/31, Callable 3/1/23 @ 100 (a) | $ | 4,000 | $ | 4,233 | |||||||
5.00%, 5/1/33, Continuously Callable @ 102 | 5,000 | 5,168 | |||||||||
9,401 | |||||||||||
Nebraska (0.3%): | |||||||||||
Central Plains Energy Project Revenue, Series A, 5.00%, 9/1/42 | 2,000 | 2,730 | |||||||||
| Douglas County Hospital Authority No. 3 Revenue, 5.00%, 11/1/48, Continuously Callable @ 100 | 3,400 | 3,895 | |||||||||
6,625 | |||||||||||
Nevada (1.4%): | |||||||||||
City of Carson City Revenue, 5.00%, 9/1/47, Continuously Callable @ 100 | 2,775 | 3,208 | |||||||||
| County of Clark Department of Aviation Revenue, Series A, 5.13%, 7/1/34, Continuously Callable @ 100 | 11,000 | 11,099 | |||||||||
| County of Clark Department of Aviation Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.25%, 7/1/39, Continuously Callable @ 100 | 5,000 | 5,045 | |||||||||
| Las Vegas Convention & Visitors Authority Revenue Series C, 4.00%, 7/1/41, Continuously Callable @ 100 | 4,400 | 4,729 | |||||||||
Series C, 4.00%, 7/1/46, Continuously Callable @ 100 | 12,140 | 12,945 | |||||||||
37,026 | |||||||||||
New Jersey (5.2%): | |||||||||||
| New Jersey Economic Development Authority Revenue 3.18%, 3/1/28, Callable 3/1/23 @ 100 (a) | 20,000 | 19,679 | |||||||||
5.00%, 6/15/28, Continuously Callable @ 100 | 2,000 | 2,162 | |||||||||
Series A, 5.00%, 6/15/47, Continuously Callable @ 100 | 3,000 | 3,384 | |||||||||
Series AAA, 5.00%, 6/15/41, Continuously Callable @ 100 | 4,000 | 4,513 | |||||||||
Series B, 5.00%, 6/15/43, Continuously Callable @ 100 | 3,500 | 4,015 | |||||||||
Series GG, 5.00%, 9/1/24, Continuously Callable @ 100 | 6,000 | 6,280 | |||||||||
Series UU, 5.00%, 6/15/40, Continuously Callable @ 100 | 10,000 | 10,970 | |||||||||
Series WW, 5.25%, 6/15/40, Continuously Callable @ 100 | 3,000 | 3,392 | |||||||||
| New Jersey Economic Development Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 6/1/42, Continuously Callable @ 100 | 1,200 | 1,417 | |||||||||
| New Jersey Educational Facilities Authority Revenue Series B, 5.00%, 9/1/36, Continuously Callable @ 100 | 5,000 | 5,665 | |||||||||
Series F, 5.00%, 7/1/47, Continuously Callable @ 100 | 3,000 | 3,412 | |||||||||
| New Jersey Health Care Facilities Financing Authority Revenue 5.00%, 10/1/38, Continuously Callable @ 100 | 2,250 | 2,592 | |||||||||
Series A, 5.63%, 7/1/32, Pre-refunded 7/1/21 @ 100 | 15,000 | 16,090 | |||||||||
| New Jersey Health Care Facilities Financing Authority Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 7/1/46, Continuously Callable @ 100 | 1,250 | 1,426 | |||||||||
New Jersey Transportation Trust Fund Authority Revenue | |||||||||||
5.25%, 6/15/43, Continuously Callable @ 100 | 4,000 | 4,685 | |||||||||
Series A, 5.00%, 12/15/36, Continuously Callable @ 100 | 2,125 | 2,489 | |||||||||
Series AA, 5.25%, 6/15/41, Continuously Callable @ 100 | 2,000 | 2,239 | |||||||||
Series BB, 4.00%, 6/15/50, Continuously Callable @ 100 (i) | 15,000 | 15,561 | |||||||||
See notes to financial statements.
14
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Morris County Improvement Authority Revenue(LIQ — Deutsche Bank AG), Series 2018-XF1067, 1.83%, 10/1/47, Callable 10/1/25 @ 100 (b) (a) | $ | 13,150 | $ | 13,150 | |||||||
| Tobacco Settlement Financing Corp. Revenue, Series A, 5.25%, 6/1/46, Continuously Callable @ 100 | 3,000 | 3,462 | |||||||||
126,583 | |||||||||||
New Mexico (0.5%): | |||||||||||
City of Farmington Revenue, 5.90%, 6/1/40, Continuously Callable @ 100 | 5,000 | 5,122 | |||||||||
| New Mexico Hospital Equipment Loan Council Revenue, Series LA, 5.00%, 7/1/49, Continuously Callable @ 102 | 5,750 | 6,474 | |||||||||
11,596 | |||||||||||
New York (2.0%): | |||||||||||
| Buffalo & Erie County Industrial Land Development Corp. Revenue, 5.38%, 10/1/41, Continuously Callable @ 100 | 2,040 | 2,146 | |||||||||
Metropolitan Transportation Authority Revenue, Series A, 2.46%, 11/15/32 | 5,000 | 3,627 | |||||||||
| New York Liberty Development Corp. Revenue 5.25%, 10/1/35 | 16,130 | 22,140 | |||||||||
2.80%, 9/15/69, Continuously Callable @ 100 (i) | 1,500 | 1,528 | |||||||||
| New York State Dormitory Authority Revenue, 5.25%, 7/1/29, Continuously Callable @ 100 | 2,250 | 2,256 | |||||||||
| New York State Thruway Authority Revenue, Series A, 5.00%, 1/1/51, Continuously Callable @ 100 | 2,000 | 2,332 | |||||||||
| Triborough Bridge & Tunnel Authority Revenue Series A, 0.00%, 11/15/31 (k) | 5,000 | 3,747 | |||||||||
Series A, 0.00%, 11/15/32 (k) | 3,000 | 2,175 | |||||||||
Series B, 0.00%, 11/15/32 (k) | 2,500 | 1,846 | |||||||||
| Troy Capital Resource Corp. Revenue, Series A, 5.00%, 9/1/30, Continuously Callable @ 100 | 2,000 | 2,067 | |||||||||
| TSASC, Inc. Revenue Bonds, Series A, 5.00%, 6/1/41, Continuously Callable @ 100 | 1,000 | 1,117 | |||||||||
44,981 | |||||||||||
North Carolina (0.7%): | |||||||||||
| Columbus County Industrial Facilities & Pollution Control Financing Authority Revenue, Series A, 6.25%, 11/1/33, Continuously Callable @ 100 | 5,000 | 5,018 | |||||||||
| North Carolina Capital Facilities Finance Agency Revenue, 4.63%, 11/1/40, Continuously Callable @ 100 | 10,000 | 10,310 | |||||||||
| North Carolina Medical Care Commission Revenue, 5.00%, 1/1/49, Continuously Callable @ 104 | 2,725 | 3,048 | |||||||||
18,376 | |||||||||||
North Dakota (0.6%): | |||||||||||
City of Fargo Revenue, 6.25%, 11/1/31, Continuously Callable @ 100 | 4,685 | 5,133 | |||||||||
County of McLean Revenue, Series A, 4.88%, 7/1/26, Continuously Callable @ 100 | 2,500 | 2,559 | |||||||||
County of Ward Revenue, Series C, 5.00%, 6/1/53, Continuously Callable @ 100 | 7,500 | 8,468 | |||||||||
16,160 | |||||||||||
Ohio (2.7%): | |||||||||||
| Buckeye Tobacco Settlement Financing Authority Revenue Series A-2, 5.88%, 6/1/30, Continuously Callable @ 100 | 10,000 | 10,079 | |||||||||
Series A-2, 5.75%, 6/1/34, Continuously Callable @ 100 | 10,000 | 10,003 | |||||||||
See notes to financial statements.
15
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
City of Centerville Revenue, 5.25%, 11/1/47, Continuously Callable @ 100 | $ | 2,700 | $ | 2,991 | |||||||
| City of Cleveland Airport System Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 1/1/31, Pre-refunded 1/1/22 @ 100 | 1,000 | 1,073 | |||||||||
County of Cuyahoga Revenue, 4.75%, 2/15/47, Continuously Callable @ 100 | 9,000 | 9,811 | |||||||||
County of Hamilton Revenue, 5.00%, 1/1/51, Continuously Callable @ 100 | 2,500 | 2,745 | |||||||||
County of Lake Revenue, 5.63%, 8/15/29, Continuously Callable @ 100 | 320 | 321 | |||||||||
County of Lucas Revenue, 5.25%, 11/15/48, Continuously Callable @ 100 | 6,000 | 7,201 | |||||||||
| County of Montgomery Revenue 4.00%, 11/15/42, Continuously Callable @ 100 | 2,000 | 2,181 | |||||||||
4.00%, 11/15/45, Continuously Callable @ 100 | 2,000 | 2,157 | |||||||||
| County of Ross Revenue 5.00%, 12/1/44, Continuously Callable @ 100 | 3,100 | 3,752 | |||||||||
5.00%, 12/1/49, Continuously Callable @ 100 | 6,000 | 7,234 | |||||||||
Ohio Air Quality Development Authority Revenue, Series A, 5.70%, 8/1/20 (e) | 6,000 | 4,962 | |||||||||
| Ohio Higher Educational Facility Commission Revenue, 5.25%, 1/1/48, Continuously Callable @ 104 | 1,000 | 1,047 | |||||||||
| Ohio Turnpike & Infrastructure Commission Revenue, 5.25%, 2/15/33, Continuously Callable @ 100 | 2,000 | 2,237 | |||||||||
67,794 | |||||||||||
Oklahoma (0.9%): | |||||||||||
| Comanche County Hospital Authority Revenue, Series A, 5.00%, 7/1/32, Continuously Callable @ 100 | 4,200 | 4,401 | |||||||||
| Oklahoma Development Finance Authority Revenue, Series B, 5.50%, 8/15/57, Continuously Callable @ 100 | 4,250 | 5,063 | |||||||||
| Oklahoma Municipal Power Authority Revenue, Series A, 4.00%, 1/1/47, Continuously Callable @ 100 | 10,000 | 10,708 | |||||||||
| Tulsa County Industrial Authority Revenue, 5.25%, 11/15/45, Continuously Callable @ 102 | 2,000 | 2,261 | |||||||||
22,433 | |||||||||||
Oregon (0.2%): | |||||||||||
City of Keizer Special Assessment, 5.20%, 6/1/31, Continuously Callable @ 100 | 960 | 963 | |||||||||
| Deschutes County Hospital Facilities Authority Revenue, 4.00%, 1/1/46, Continuously Callable @ 100 | 2,000 | 2,095 | |||||||||
| Salem Hospital Facility Authority Revenue, 5.00%, 5/15/48, Continuously Callable @ 102 | 1,000 | 1,144 | |||||||||
| Yamhill County Hospital Authority Revenue, 5.00%, 11/15/51, Continuously Callable @ 102 | 1,180 | 1,304 | |||||||||
5,506 | |||||||||||
Pennsylvania (6.3%): | |||||||||||
| Allegheny County Higher Education Building Authority Revenue, Series A, 5.50%, 3/1/31, Pre-refunded 3/1/21 @ 100 | 750 | 793 | |||||||||
| Allegheny County Hospital Development Authority Revenue, 5.00%, 4/1/47, Continuously Callable @ 100 | 6,500 | 7,629 | |||||||||
| Allegheny County Sanitary Authority Revenue, 5.00%, 6/1/43, Continuously Callable @ 100 | 3,170 | 3,849 | |||||||||
| Allegheny County Sanitary Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 6/1/40, Continuously Callable @ 100 | 4,000 | 4,146 | |||||||||
See notes to financial statements.
16
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Allentown Commercial & Industrial Development Authority Revenue, 6.25%, 7/1/47, Continuously Callable @ 100 (b) | $ | 5,000 | $ | 5,116 | |||||||
| Altoona Area School District, GO(INS — Build America Mutual Assurance Co.) 5.00%, 12/1/45, Continuously Callable @ 100 | 1,000 | 1,160 | |||||||||
5.00%, 12/1/48, Continuously Callable @ 100 | 300 | 348 | |||||||||
| Armstrong School District, GO Series A, 4.00%, 3/15/38, Continuously Callable @ 100 (i) | 1,000 | 1,141 | |||||||||
Series A, 4.00%, 3/15/41, Continuously Callable @ 100 (i) | 2,250 | 2,531 | |||||||||
| Berks County Industrial Development Authority Revenue 5.00%, 5/15/48, Continuously Callable @ 102 | 1,000 | 1,124 | |||||||||
5.00%, 11/1/50, Continuously Callable @ 100 | 8,500 | 9,796 | |||||||||
| Bucks County Industrial Development Authority Revenue, 4.00%, 8/15/50, Continuously Callable @ 100 | 3,000 | 3,220 | |||||||||
| Canon Mcmillan School District, GO 4.00%, 6/1/48, Continuously Callable @ 100 (i) | 4,605 | 5,047 | |||||||||
4.00%, 6/1/50, Continuously Callable @ 100 (i) | 6,065 | 6,632 | |||||||||
| Chester County Industrial Development Authority Revenue, Series A, 5.25%, 10/15/47, Continuously Callable @ 100 | 3,250 | 3,510 | |||||||||
| Commonwealth Financing Authority Revenue, 5.00%, 6/1/35, Continuously Callable @ 100 | 500 | 611 | |||||||||
| Commonwealth of Pennsylvania Certificate of Participation, Series A, 5.00%, 7/1/43, Continuously Callable @ 100 | 1,000 | 1,192 | |||||||||
| Delaware River Joint Toll Bridge Commission Revenue, 5.00%, 7/1/47, Continuously Callable @ 100 | 5,000 | 6,015 | |||||||||
| Erie Parking Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.13%, 9/1/32, Pre-refunded 9/1/20 @ 100 | 480 | 496 | |||||||||
5.13%, 9/1/32, Continuously Callable @ 100 | 1,390 | 1,431 | |||||||||
5.20%, 9/1/35, Pre-refunded 9/1/20 @ 100 | 595 | 616 | |||||||||
5.20%, 9/1/35, Continuously Callable @ 100 | 1,700 | 1,751 | |||||||||
| Montgomery County Higher Education & Health Authority Revenue 4.00%, 9/1/49, Continuously Callable @ 100 | 2,500 | 2,714 | |||||||||
4.00%, 9/1/51, Continuously Callable @ 100 | 3,500 | 3,780 | |||||||||
| Montgomery County Industrial Development Authority Revenue 5.00%, 12/1/44, Continuously Callable @ 103 | 1,000 | 1,160 | |||||||||
5.00%, 12/1/48, Continuously Callable @ 102 | 2,000 | 2,258 | |||||||||
5.00%, 12/1/49, Continuously Callable @ 103 | 1,000 | 1,154 | |||||||||
| Northampton County General Purpose Authority Revenue 4.00%, 8/15/40, Continuously Callable @ 100 | 4,000 | 4,281 | |||||||||
5.00%, 8/15/48, Continuously Callable @ 100 | 2,440 | 2,903 | |||||||||
| Northeastern Pennsylvania Hospital & Education Authority Revenue 5.00%, 5/1/44, Continuously Callable @ 100 | 1,000 | 1,165 | |||||||||
5.00%, 5/1/49, Continuously Callable @ 100 | 1,350 | 1,574 | |||||||||
| Pennsylvania Economic Development Financing Authority Revenue, 4.00%, 10/1/23, Continuously Callable @ 100 | 7,000 | 7,156 | |||||||||
| Pennsylvania Higher Educational Facilities Authority Revenue Series A, 5.25%, 7/15/33, Continuously Callable @ 100 | 1,970 | 2,160 | |||||||||
Series A, 5.50%, 7/15/38, Continuously Callable @ 100 | 2,750 | 3,028 | |||||||||
| Pennsylvania Turnpike Commission Revenue 5.00%, 12/1/37, Continuously Callable @ 100 | 1,000 | 1,188 | |||||||||
Series A, 4.00%, 12/1/49, Continuously Callable @ 100 | 5,000 | 5,516 | |||||||||
See notes to financial statements.
17
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series A-1, 5.00%, 12/1/46, Continuously Callable @ 100 | $ | 3,000 | $ | 3,429 | |||||||
Series A-1, 5.00%, 12/1/47, Continuously Callable @ 100 | 4,000 | 4,785 | |||||||||
Series A-2, 5.00%, 12/1/33, Continuously Callable @ 100 (a) | 1,250 | 1,524 | |||||||||
Series B, 5.00%, 6/1/39, Continuously Callable @ 100 | 8,000 | 9,262 | |||||||||
Series B, 5.00%, 12/1/43, Continuously Callable @ 100 | 5,000 | 6,049 | |||||||||
Series B, 5.25%, 12/1/44, Continuously Callable @ 100 | 10,000 | 11,414 | |||||||||
Series B-1, 5.00%, 6/1/42, Continuously Callable @ 100 | 4,000 | 4,691 | |||||||||
| Pittsburgh Water & Sewer Authority Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 9/1/44, Continuously Callable @ 100 | 5,000 | 6,190 | |||||||||
| Reading School District, GO(INS — Build America Mutual Assurance Co.), Series A, 4.00%, 4/1/44, Continuously Callable @ 100 (i) | 1,055 | 1,157 | |||||||||
| School District of Philadelphia, GO Series B, 5.00%, 9/1/43, Continuously Callable @ 100 | 2,500 | 2,992 | |||||||||
Series F, 5.00%, 9/1/37, Continuously Callable @ 100 | 1,000 | 1,175 | |||||||||
Series F, 5.00%, 9/1/38, Continuously Callable @ 100 | 2,000 | 2,349 | |||||||||
| Scranton School District, GO(INS — Build America Mutual Assurance Co.), Series E, 4.00%, 12/1/37, Continuously Callable @ 100 | 1,025 | 1,150 | |||||||||
| Washington County Industrial Development Authority Revenue, 5.00%, 11/1/36, Pre-refunded 5/1/20 @ 100 | 3,200 | 3,267 | |||||||||
| Wilkes-Barre Area School District, GO(INS — Build America Mutual Assurance Co.) 4.00%, 4/15/49, Continuously Callable @ 100 | 750 | 835 | |||||||||
5.00%, 4/15/59, Continuously Callable @ 100 | 3,000 | 3,601 | |||||||||
172,061 | |||||||||||
Puerto Rico (0.1%): | |||||||||||
| Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Authority Revenue, 5.38%, 4/1/42, Continuously Callable @ 100 | 2,000 | 2,018 | |||||||||
Rhode Island (0.1%): | |||||||||||
| Rhode Island Health & Educational Building Corp. Revenue, 6.00%, 9/1/33, Pre-refunded 9/1/23 @ 100 | 2,000 | 2,353 | |||||||||
| Rhode Island Housing & Mortgage Finance Corp. Revenue, Series 15-A, 6.85%, 10/1/24, Continuously Callable @ 100 | 180 | 181 | |||||||||
2,534 | |||||||||||
South Carolina (0.5%): | |||||||||||
| City of Rock Hill Combined Utility System Revenue, Series A, 4.00%, 1/1/49, Continuously Callable @ 100 | 2,500 | 2,776 | |||||||||
County of Greenwood Revenue, 5.38%, 10/1/39, Pre-refunded 10/1/19 @ 100 | 2,250 | 2,250 | |||||||||
| South Carolina Public Service Authority Revenue, Series E, 5.25%, 12/1/55, Continuously Callable @ 100 | 7,000 | 8,172 | |||||||||
13,198 | |||||||||||
South Dakota (0.3%): | |||||||||||
| Educational Enhancement Funding Corp. Revenue, Series B, 5.00%, 6/1/27, Continuously Callable @ 100 | 500 | 556 | |||||||||
| South Dakota Health & Educational Facilities Authority Revenue 5.25%, 11/1/29, Continuously Callable @ 100 | 2,500 | 2,507 | |||||||||
Series A, 5.00%, 7/1/42, Continuously Callable @ 100 | 4,000 | 4,212 | |||||||||
7,275 | |||||||||||
See notes to financial statements.
18
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Tennessee (0.5%): | |||||||||||
| Chattanooga Health Educational & Housing Facility Board Revenue, Series C, 1.75%, 5/1/39, Continuously Callable @ 100 (a) | $ | 900 | $ | 900 | |||||||
| Greeneville Health & Educational Facilities Board Revenue, 5.00%, 7/1/44, Continuously Callable @ 100 | 2,000 | 2,343 | |||||||||
| Johnson City Health & Educational Facilities Board Revenue, 5.00%, 8/15/42, Continuously Callable @ 100 | 2,000 | 2,147 | |||||||||
| Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board Revenue 5.00%, 10/1/45, Continuously Callable @ 100 | 1,500 | 1,728 | |||||||||
5.00%, 7/1/46, Continuously Callable @ 100 | 4,000 | 4,646 | |||||||||
11,764 | |||||||||||
Texas (18.0%): | |||||||||||
| Arlington Higher Education Finance Corp. Revenue(NBGA — Texas Permanent School Fund) 4.00%, 8/15/43, Continuously Callable @ 100 | 10,000 | 11,253 | |||||||||
Series A, 5.00%, 2/15/41, Continuously Callable @ 100 | 3,000 | 3,507 | |||||||||
Series A, 5.00%, 12/1/53, Continuously Callable @ 100 | 7,200 | 8,531 | |||||||||
| Bexar County Health Facilities Development Corp. Revenue 5.00%, 7/15/42, Continuously Callable @ 105 | 600 | 667 | |||||||||
4.00%, 7/15/45, Continuously Callable @ 100 | 8,450 | 8,579 | |||||||||
| Central Texas Regional Mobility Authority Revenue 5.75%, 1/1/31, Pre-refunded 1/1/21 @ 100 | 6,000 | 6,321 | |||||||||
4.00%, 1/1/41, Continuously Callable @ 100 | 5,000 | 5,278 | |||||||||
5.00%, 1/1/42, Continuously Callable @ 100 | 2,500 | 2,721 | |||||||||
Series A, 5.00%, 1/1/45, Continuously Callable @ 100 | 3,500 | 3,985 | |||||||||
| Central Texas Turnpike System Revenue Series A, 5.00%, 8/15/41, Continuously Callable @ 100 | 3,850 | 4,185 | |||||||||
Series C, 5.00%, 8/15/42, Continuously Callable @ 100 | 6,500 | 7,286 | |||||||||
| Central Texas Turnpike System Revenue(INS — AMBAC Assurance Corp.), Series A, 0.00%, 8/15/30 (k) | 18,530 | 14,258 | |||||||||
| City of Arlington Special Tax(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 2/15/48, Continuously Callable @ 100 | 7,500 | 8,968 | |||||||||
| City of Corpus Christi Utility System Revenue, 4.00%, 7/15/39, Continuously Callable @ 100 | 5,900 | 6,472 | |||||||||
| City of Houston Hotel Occupancy Tax & Special Revenue, 5.00%, 9/1/40, Continuously Callable @ 100 | 3,715 | 4,236 | |||||||||
City of Irving Revenue, Series B, 5.00%, 8/15/43, Continuously Callable @ 100 | 2,390 | 2,395 | |||||||||
| City of Laredo Waterworks & Sewer System Revenue, 4.00%, 3/1/41, Continuously Callable @ 100 | 700 | 768 | |||||||||
| Clifton Higher Education Finance Corp. Revenue 6.00%, 8/15/33, Continuously Callable @ 100 | 1,000 | 1,144 | |||||||||
6.00%, 8/15/43, Continuously Callable @ 100 | 2,750 | 3,144 | |||||||||
| Clifton Higher Education Finance Corp. Revenue(NBGA — Texas Permanent School Fund) 5.00%, 8/15/39, Continuously Callable @ 100 | 4,250 | 4,841 | |||||||||
5.00%, 8/15/48, Continuously Callable @ 100 | 10,000 | 11,989 | |||||||||
| County of Bexar Revenue 4.00%, 8/15/44, Continuously Callable @ 100 | 500 | 562 | |||||||||
4.00%, 8/15/49, Continuously Callable @ 100 | 1,700 | 1,892 | |||||||||
See notes to financial statements.
19
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Dallas/Fort Worth International Airport Revenue, Series G, 5.00%, 11/1/34, Continuously Callable @ 100 | $ | 4,000 | $ | 4,147 | |||||||
| Del Mar College District, GO, Series A, 5.00%, 8/15/48, Continuously Callable @ 100 | 6,500 | 7,684 | |||||||||
| Harris County Cultural Education Facilities Finance Corp. Revenue 5.25%, 10/1/29 | 4,000 | 4,000 | |||||||||
5.00%, 6/1/38, Continuously Callable @ 100 | 6,100 | 6,532 | |||||||||
| Harris County Hospital District Revenue, 4.00%, 2/15/42, Continuously Callable @ 100 | 15,000 | 16,257 | |||||||||
| Harris County Industrial Development Corp. Revenue, 5.00%, 2/1/23, Pre-refunded 12/1/19 @ 100 | 7,000 | 7,041 | |||||||||
| Houston Higher Education Finance Corp. Revenue, Series A, 5.00%, 9/1/42, Continuously Callable @ 100 | 10,000 | 10,853 | |||||||||
| Karnes County Hospital District Revenue, 5.00%, 2/1/44, Continuously Callable @ 100 | 6,000 | 6,395 | |||||||||
| Kerrville Health Facilities Development Corp. Revenue, 5.00%, 8/15/35, Continuously Callable @ 100 | 1,900 | 2,179 | |||||||||
| Laredo Community College District Revenue(INS — Assured Guaranty Municipal Corp.), 5.25%, 8/1/35, Pre-refunded 8/1/20 @ 100 | 3,000 | 3,095 | |||||||||
Matagorda County Navigation District No. 1 Revenue | |||||||||||
4.00%, 6/1/30, Continuously Callable @ 100 | 9,615 | 10,177 | |||||||||
4.00%, 6/1/30, Continuously Callable @ 100 | 6,000 | 6,351 | |||||||||
| Midlothian Independent School District, GO(NBGA — Texas Permanent School Fund), 5.00%, 2/15/47, Continuously Callable @ 100 | 15,000 | 18,153 | |||||||||
| New Hope Cultural Education Facilities Finance Corp. Revenue 5.00%, 7/1/47, Continuously Callable @ 102 | 1,000 | 1,069 | |||||||||
5.00%, 4/1/48, Continuously Callable @ 100 | 1,250 | 1,283 | |||||||||
Series A, 5.00%, 7/1/47, Continuously Callable @ 100 | 6,000 | 5,616 | |||||||||
| New Hope Cultural Education Facilities Finance Corp. Revenue Bonds, 5.00%, 7/1/47, Continuously Callable @ 102 | 1,000 | 912 | |||||||||
| New Hope Cultural Education Facilities Finance Corp. Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/48, Continuously Callable @ 100 | 1,000 | 1,165 | |||||||||
| North Fort Bend Water Authority Revenue, 5.00%, 12/15/36, Continuously Callable @ 100 | 5,000 | 5,371 | |||||||||
| North Texas Tollway Authority Revenue 5.00%, 1/1/48, Continuously Callable @ 100 | 2,000 | 2,389 | |||||||||
5.00%, 1/1/50, Continuously Callable @ 100 | 1,750 | 2,091 | |||||||||
Series B, 0.00%, 9/1/37, Pre-refunded 9/1/31 @ 64.1040 (k) | 3,000 | 1,503 | |||||||||
Series B, 5.00%, 1/1/45, Continuously Callable @ 100 | 5,000 | 5,719 | |||||||||
| North Texas Tollway Authority Revenue(INS — National Public Finance Guarantee Corp.), Series B, 5.00%, 1/1/48, Continuously Callable @ 100 | 5,000 | 5,893 | |||||||||
| Port of Port Arthur Navigation District Revenue 1.87%, 4/1/40, Continuously Callable @ 100 (a) | 14,400 | 14,400 | |||||||||
1.74%, 11/1/40, Continuously Callable @ 100 (a) (j) | 29,100 | 29,100 | |||||||||
1.73%, 11/1/40, Continuously Callable @ 100 (a) | 6,500 | 6,500 | |||||||||
Series C, 1.76%, 4/1/40, Continuously Callable @ 100 (a) | 23,945 | 23,945 | |||||||||
| Princeton Independent School District, GO(NBGA — Texas Permanent School Fund), 5.00%, 2/15/48, Continuously Callable @ 100 | 7,000 | 8,485 | |||||||||
| Prosper Independent School District, GO, 5.00%, 2/15/48, Continuously Callable @ 100 | 15,000 | 18,305 | |||||||||
See notes to financial statements.
20
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Red River Education Finance Corp. Revenue 4.00%, 6/1/41, Continuously Callable @ 100 | $ | 2,000 | $ | 2,072 | |||||||
5.50%, 10/1/46, Continuously Callable @ 100 | 3,000 | 3,429 | |||||||||
| Tarrant County Cultural Education Facilities Finance Corp. Revenue 5.63%, 11/15/27, Continuously Callable @ 100 | 6,315 | 4,395 | |||||||||
5.75%, 11/15/37, Continuously Callable @ 100 | 4,000 | 2,784 | |||||||||
6.75%, 11/15/47, Continuously Callable @ 100 | 2,500 | 2,902 | |||||||||
6.75%, 11/15/52, Continuously Callable @ 100 | 4,000 | 4,625 | |||||||||
Series A, 5.00%, 11/15/45, Continuously Callable @ 100 | 4,500 | 4,621 | |||||||||
Series B, 5.00%, 11/15/36, Continuously Callable @ 100 | 3,600 | 3,759 | |||||||||
Series B, 5.00%, 11/15/46, Continuously Callable @ 100 | 7,000 | 7,861 | |||||||||
Series B, 5.00%, 7/1/48, Continuously Callable @ 100 | 10,000 | 11,979 | |||||||||
Series E, 5.00%, 11/15/46, Continuously Callable @ 100 | 1,000 | 1,131 | |||||||||
| Texas Transportation Commission Revenue, 5.00%, 8/1/57, Continuously Callable @ 100 | 5,000 | 5,854 | |||||||||
Uptown Development Authority Tax Allocation | |||||||||||
5.00%, 9/1/37, Continuously Callable @ 100 | 4,365 | 4,903 | |||||||||
5.00%, 9/1/40, Continuously Callable @ 100 | 2,490 | 2,778 | |||||||||
Series A, 5.00%, 9/1/39, Continuously Callable @ 100 | 1,645 | 1,862 | |||||||||
| West Harris County Regional Water Authority Revenue 4.00%, 12/15/45, Continuously Callable @ 100 | 1,600 | 1,817 | |||||||||
4.00%, 12/15/49, Continuously Callable @ 100 | 3,945 | 4,405 | |||||||||
| Wood County Central Hospital District Revenue, 6.00%, 11/1/41, Pre-refunded 11/1/21 @ 100 | 4,770 | 5,223 | |||||||||
435,992 | |||||||||||
Vermont (0.1%): | |||||||||||
| Vermont Educational & Health Buildings Financing Agency Revenue, 5.00%, 10/15/46, Continuously Callable @ 100 | 3,000 | 3,396 | |||||||||
Virginia (2.2%): | |||||||||||
| Alexandria Industrial Development Authority Revenue, 5.00%, 10/1/50, Continuously Callable @ 100 | 5,000 | 5,617 | |||||||||
| Industrial Development Authority Revenue(LOC — Deutsche Bank AG), 1.93%, 1/1/57, Callable 1/1/23 @ 100 (b) (a) | 30,000 | 30,000 | |||||||||
| Lewistown Commerce Center Community Development Authority Tax Allocation 6.05%, 3/1/44, Continuously Callable @ 103 | 3,575 | 3,516 | |||||||||
6.05%, 3/1/44, Continuously Callable @ 103 | 1,726 | 1,698 | |||||||||
Series C, 6.05%, 3/1/54, Continuously Callable @ 100 (e) | 5,697 | 1,037 | |||||||||
| Virginia College Building Authority Revenue 5.00%, 6/1/26, Continuously Callable @ 100 | 11,280 | 11,055 | |||||||||
5.00%, 6/1/29, Continuously Callable @ 100 | 5,000 | 4,831 | |||||||||
| Watkins Centre Community Development Authority Revenue, 5.40%, 3/1/20, Continuously Callable @ 100 | 448 | 449 | |||||||||
58,203 | |||||||||||
Washington (0.9%): | |||||||||||
| King County Public Hospital District No. 1, GO, 5.00%, 12/1/43, Continuously Callable @ 100 | 9,000 | 10,683 | |||||||||
| Health Care Facilities Authority Revenue(LIQ — JP Morgan Chase & Co.), Series 2016-XM0424, 1.90%, 9/6/20 (b) | 3,800 | 3,800 | |||||||||
See notes to financial statements.
21
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Washington Health Care Facilities Authority Revenue, 4.00%, 7/1/42, Continuously Callable @ 100 | $ | 5,500 | $ | 6,042 | |||||||
| Washington State Housing Finance Commission Revenue, 5.00%, 1/1/43, Continuously Callable @ 102 (b) | 3,055 | 3,436 | |||||||||
23,961 | |||||||||||
West Virginia (0.2%): | |||||||||||
| West Virginia Economic Development Authority Revenue, Series A, 5.38%, 12/1/38, Continuously Callable @ 100 | 2,000 | 2,072 | |||||||||
| West Virginia Hospital Finance Authority Revenue, 5.00%, 1/1/43, Continuously Callable @ 100 | 2,000 | 2,357 | |||||||||
4,429 | |||||||||||
Wisconsin (2.1%): | |||||||||||
| City of Kaukauna WI Electric System Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 12/15/35, Pre-refunded 12/15/22 @ 100 | 7,800 | 8,699 | |||||||||
| Public Finance Authority Revenue 5.25%, 5/15/42, Continuously Callable @ 102 (b) | 2,200 | 2,422 | |||||||||
5.00%, 7/1/44, Continuously Callable @ 100 | 6,000 | 7,086 | |||||||||
5.00%, 11/15/44, Continuously Callable @ 103 | 1,460 | 1,688 | |||||||||
5.00%, 7/1/47, Continuously Callable @ 100 | 1,000 | 1,078 | |||||||||
5.00%, 6/15/49, Continuously Callable @ 100 (b) | 520 | 547 | |||||||||
5.00%, 6/15/49, Continuously Callable @ 100 | 1,480 | 1,697 | |||||||||
5.00%, 11/15/49, Continuously Callable @ 103 | 1,400 | 1,612 | |||||||||
5.00%, 7/1/52, Continuously Callable @ 100 | 1,000 | 1,079 | |||||||||
5.00%, 6/15/53, Continuously Callable @ 100 | 1,000 | 1,135 | |||||||||
5.00%, 6/15/54, Continuously Callable @ 100 (b) | 455 | 476 | |||||||||
Series A, 5.25%, 10/1/43, Continuously Callable @ 100 | 3,090 | 3,523 | |||||||||
Series A, 4.00%, 10/1/49, Continuously Callable @ 100 | 11,000 | 11,944 | |||||||||
| Public Finance Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 7/1/54, Continuously Callable @ 100 | 1,285 | 1,504 | |||||||||
5.00%, 7/1/58, Continuously Callable @ 100 | 1,500 | 1,754 | |||||||||
| Wisconsin Health & Educational Facilities Authority Revenue 5.38%, 8/15/37, Pre-refunded 2/15/20 @ 100 | 2,500 | 2,537 | |||||||||
5.00%, 7/1/49, Continuously Callable @ 100 | 1,000 | 1,156 | |||||||||
Series A, 5.00%, 9/15/50, Continuously Callable @ 100 | 5,000 | 5,256 | |||||||||
Series B, 5.00%, 9/15/45, Continuously Callable @ 100 | 1,000 | 1,043 | |||||||||
56,236 | |||||||||||
Total Municipal Bonds (Cost $2,364,601) | 2,483,287 | ||||||||||
Total Investments (Cost $2,364,601) — 99.5% | 2,483,287 | ||||||||||
Other assets in excess of liabilities — 0.5% | 10,687 | ||||||||||
NET ASSETS — 100.00% | $ | 2,493,974 | |||||||||
(a) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
See notes to financial statements.
22
| USAA Mutual Funds Trust USAA Tax Exempt Long-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
(b) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless otherwise noted, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $88,641 (thousands) and amounted to 3.6% of net assets.
(c) Stepped-coupon security converts to coupon form on 08/01/24 with a rate of 5.95%.
(d) Stepped-coupon security converts to coupon form on 08/01/24 with a rate of 6.05%.
(e) Defaulted security.
(f) Up to 2.05% of the coupon may be PIK.
(g) Put Bond.
(h) Variable or Floating-Rate security. Rate disclosed is as of September 30, 2019.
(i) Security purchased on a when-issued basis.
(j) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(k) Zero coupon bond.
AMBAC — American Municipal Bond Assurance Corporation
GO — General Obligation
LOC — Line Letter of Credit
MUNISPA — Municipal Swap Index
PIK — Payment in Kind
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
INS Principal and interest payments are insured by the name listed. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations.
LIQ Liquidity enhancement that may, under certain circumstances, provide for repayment of principal and interest upon demand from the name listed.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
23
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Tax Exempt Long-Term Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $2,364,601) | $ | 2,483,287 | |||||
Cash | 556 | ||||||
Interest receivable | 28,937 | ||||||
Receivable for capital shares issued | 1,343 | ||||||
Receivable for investments sold | 28,660 | ||||||
Receivable from Adviser | 4 | ||||||
Prepaid expenses | 32 | ||||||
Total assets | 2,542,819 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 1,211 | ||||||
Investments purchased | 43,919 | ||||||
Capital shares redeemed | 2,676 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 574 | ||||||
Administration fees | 307 | ||||||
Custodian fees | 49 | ||||||
Transfer agent fees | 68 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
| 12b-1 fees | 1 | ||||||
Other accrued expenses | 40 | ||||||
Total liabilities | 48,845 | ||||||
Net Assets: | |||||||
Capital | 2,436,866 | ||||||
Total distributable earnings/(loss) | 57,108 | ||||||
Net assets | $ | 2,493,974 | |||||
Net Assets | |||||||
Adviser shares | 8,064 | ||||||
Fund shares | 2,485,910 | ||||||
Total | $ | 2,493,974 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Adviser shares | 595 | ||||||
Fund shares | 182,821 | ||||||
Total | 183,416 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Adviser shares | $ | 13.58 | |||||
Fund shares | $ | 13.60 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
24
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Tax Exempt Long-Term Fund | |||||||
Investment Income: | |||||||
Interest | $ | 47,701 | |||||
Total income | 47,701 | ||||||
Expenses: | |||||||
Investment advisory fees | 3,419 | ||||||
Administration fees — Adviser Shares | 6 | ||||||
Administration fees — Fund Shares | 1,826 | ||||||
Professional fees | 9 | ||||||
12b-1 fees — Adviser Shares | 10 | ||||||
Custodian fees | 134 | ||||||
Trustees fees | 18 | ||||||
Chief Compliance Officer fees | 3 | ||||||
Legal and audit fees | 33 | ||||||
Transfer agent fees — Adviser Shares | 1 | ||||||
Transfer agent fees — Fund Shares | 351 | ||||||
State registration and filing fees | 31 | ||||||
Other expenses | 22 | ||||||
Total expenses | 5,863 | ||||||
Expenses waived/reimbursed by AMCO | (10 | ) | |||||
Expenses waived/reimbursed by Adviser | (4 | ) | |||||
Net expenses | 5,849 | ||||||
Net Investment Income (Loss) | 41,852 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | (906 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities | 56,833 | ||||||
Net realized/unrealized gains (losses) on investments | 55,927 | ||||||
Change in net assets resulting from operations | $ | 97,779 | |||||
See notes to financial statements.
25
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
| USAA Tax Exempt Long-Term Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 41,852 | $ | 86,740 | |||||||
Net realized gains (losses) from investments | (906 | ) | (5,644 | ) | |||||||
| Net change in unrealized appreciation (depreciation) on investments | 56,833 | 19,735 | |||||||||
Change in net assets resulting from operations | 97,779 | 100,831 | |||||||||
Distributions to Shareholders: | |||||||||||
Adviser shares | (125 | ) | (278 | ) | |||||||
Fund shares | (40,918 | ) | (87,489 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (41,043 | ) | (87,767 | ) | |||||||
Change in net assets resulting from capital transactions | 66,674 | (10,032 | ) | ||||||||
Change in net assets | 123,410 | 3,032 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 2,370,564 | 2,367,532 | |||||||||
End of period | $ | 2,493,974 | $ | 2,370,564 | |||||||
Capital Transactions: | |||||||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 277 | $ | 593 | |||||||
Distributions reinvested | 35 | 77 | |||||||||
Cost of shares redeemed | (178 | ) | (1,530 | ) | |||||||
Total Adviser Shares | $ | 134 | $ | (860 | ) | ||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 159,375 | $ | 189,996 | |||||||
Distributions reinvested | 32,919 | 69,306 | |||||||||
Cost of shares redeemed | (125,754 | ) | (268,474 | ) | |||||||
Total Fund Shares | $ | 66,540 | $ | (9,172 | ) | ||||||
Change in net assets resulting from capital transactions | $ | 66,674 | $ | (10,032 | ) | ||||||
Share Transactions: | |||||||||||
Adviser Shares | |||||||||||
Issued | 22 | 45 | |||||||||
Reinvested | 3 | 6 | |||||||||
Redeemed | (14 | ) | (118 | ) | |||||||
Total Adviser Shares | 11 | (67 | ) | ||||||||
Fund Shares | |||||||||||
Issued | 11,816 | 14,499 | |||||||||
Reinvested | 2,435 | 5,289 | |||||||||
Redeemed | (9,319 | ) | (20,520 | ) | |||||||
Total Fund Shares | 4,932 | (732 | ) | ||||||||
Change In Shares | 4,943 | (799 | ) | ||||||||
See notes to financial statements.
26
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27
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Total Distributions | ||||||||||||||||||||||
USAA Tax Exempt Long-Term Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 13.26 | 0.22 | (e) | 0.31 | 0.53 | (0.21 | ) | (0.21 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 13.19 | 0.46 | 0.08 | 0.54 | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 13.23 | 0.48 | (0.04 | ) | 0.44 | (0.48 | ) | (0.48 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 13.71 | 0.49 | (0.48 | ) | 0.01 | (0.49 | ) | (0.49 | ) | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 13.76 | 0.54 | (0.05 | ) | 0.49 | (0.54 | ) | (0.54 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 13.43 | 0.54 | 0.32 | 0.86 | (0.53 | ) | (0.53 | ) | ||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 13.28 | 0.23 | (e) | 0.32 | 0.55 | (0.23 | ) | (0.23 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 13.21 | 0.49 | 0.07 | 0.56 | (0.49 | ) | (0.49 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 13.25 | 0.51 | (0.03 | ) | 0.48 | (0.52 | ) | (0.52 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 13.73 | 0.54 | (0.48 | ) | 0.06 | (0.54 | ) | (0.54 | ) | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 13.78 | 0.58 | (0.05 | ) | 0.53 | (0.58 | ) | (0.58 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 13.45 | 0.58 | 0.32 | 0.90 | (0.57 | ) | (0.57 | ) | ||||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
See notes to financial statements.
28
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||
| Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(d) | |||||||||||||||||||||||||
USAA Tax Exempt Long-Term Fund | |||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 13.58 | 3.95 | % | 0.70 | % | 3.21 | % | 1.06 | % | $ | 8,064 | 10 | % | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 13.26 | 4.16 | % | 0.70 | % | 3.51 | % | 0.94 | % | $ | 7,745 | 13 | % | |||||||||||||||||
| Year Ended March 31, 2018 | $ | 13.19 | 3.36 | % | 0.74 | %(f) | 3.57 | % | 0.92 | % | $ | 8,577 | 14 | % | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 13.23 | 0.07 | % | 0.80 | % | 3.64 | % | 0.87 | % | $ | 10,976 | 15 | % | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 13.71 | 3.65 | % | 0.80 | % | 3.94 | % | 0.90 | % | $ | 11,249 | 6 | % | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 13.76 | 6.52 | % | 0.81 | %(g) | 3.94 | % | 0.99 | % | $ | 10,896 | 7 | % | |||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 13.60 | 4.06 | % | 0.48 | % | 3.43 | % | 0.48 | % | $ | 2,485,910 | 10 | % | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 13.28 | 4.39 | % | 0.48 | % | 3.73 | % | 0.48 | % | $ | 2,362,819 | 13 | % | |||||||||||||||||
| Year Ended March 31, 2018 | $ | 13.21 | 3.62 | % | 0.47 | % | 3.83 | % | 0.47 | % | $ | 2,358,955 | 14 | % | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 13.25 | 0.41 | % | 0.48 | % | 3.97 | % | 0.48 | % | $ | 2,343,165 | 15 | % | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 13.73 | 3.94 | % | 0.51 | % | 4.23 | % | 0.51 | % | $ | 2,421,551 | 6 | % | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 13.78 | 6.79 | % | 0.55 | % | 4.22 | % | 0.55 | % | $ | 2,386,904 | 7 | % | |||||||||||||||||
(f) Prior to August 1, 2017, AMCO voluntarily agreed to reimburse the Adviser Shares for expenses in excess of 0.80% of their annual average daily net assets.
(g) Prior to August 1, 2014, AMCO voluntarily agreed to reimburse the Adviser Shares for expenses in excess of 0.85% of their annual average daily net assets.
See notes to financial statements.
29
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Tax Exempt Long-Term Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Adviser Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to fees paid under distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Municipal Bonds | $ | — | $ | 2,483,287 | $ | — | $ | 2,483,287 | |||||||||||
Total | $ | — | $ | 2,483,287 | $ | — | $ | 2,483,287 | |||||||||||
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis
31
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 5,300 | $ | 31,440 | $ | — | ||||||
Fees Paid Indirectly:
Expense offsets to custody fees that arise from credits on cash balances maintained on deposit are reflected on the Statement of Operations, as applicable, as "Fees paid indirectly".
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 316,875 | $ | 234,921 | ||||||||
32
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.28%. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $1,746 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly at an annualized rate of 0.28% of the Fund's average daily net assets. Amounts incurred from April 1, 2019 through June 30, 2019 are $1,673 thousand. Amounts incurred are reflected on the Statement of Operations as Investment Advisory fees.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the Transaction on July 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper General & Insured Municipal Debt Funds Index.
The performance period for each share class consists of the current month plus the previous 35 months. The following table is utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points)(a) | Annual Adjustment Rate (in basis points)(a) | ||||||
+/- 20 to 50 | +/- 4 | ||||||
+/- 51 to 100 | +/- 5 | ||||||
+/- 101 and greater | +/- 6 | ||||||
(a) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper General & Insured Municipal Debt Funds Index over that period, even if the class has overall negative returns during the performance period.
33
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
For the period April 1, 2019 through June 30, 2019, performance adjustments for the Fund Shares and Adviser Shares were $0 and $1 thousand, respectively, and represented 0.00% and 0.01% of net assets, respectively. Performance adjustments are reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from July 1, 2019 through September 30, 2019 are $932 and $3 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from April 1, 2019 through June 30, 2019 are $894 and $3 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate the Adviser, provides transfer agent services to the Fund Shares and Adviser Shares based on an annual charge of $25.50 per shareholder account plus out-of-pocket expenses. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $186 and $1 thousand for the Fund Shares and Adviser Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $165 and $1 thousand for the Fund Shares and Adviser Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between
34
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distribution and Service 12b-1 Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the Adviser Shares pursuant to a Distribution Agreement between the Distributor and the Trust. Pursuant to the Distribution and Service Plans adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of up to 0.25% of the average daily net assets of the Adviser Shares. Amounts incurred and paid to the Distributor from July 1, 2019 through September 30, 2019 are $5 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Adviser Shares are offered and sold without imposition of an initial sales charge or a contingent deferred sales charge.
Prior to the Transaction on July 1, 2019, the Fund adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under the plan, the Adviser Shares paid fees to USAA Investment Management Company ("IMCO"), the distributor, for distribution and shareholder services. IMCO paid all or a portion of such fees to intermediaries that made the Adviser Shares available for investment by their customers. The fee was accrued daily and paid monthly at an annual rate of 0.25% of the Adviser Shares' average daily net assets. IMCO also provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis and received no fee or other compensation for these services, but may have received 12b-1 fees as described above, with respect to Adviser Shares. Amounts incurred and paid to IMCO from April 1, 2019 through June 30, 2019 are $5 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.70% and 0.48% for the Adviser Shares and Fund Shares, respectively.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, the following amounts are available to be repaid to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
35
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Expires 03/31/2023 | |||||||
$ | 4 | ||||||
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through July 31, 2019, to limit the total annual operating expenses of the Adviser Shares to 0.70% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Adviser Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect and are not available to be recouped by AMCO. For the period April 1, 2019 through June 30, 2019, amounts reimbursed by the Adviser Shares are reflected on the Statement of Operations as Expenses waived/reimbursed by AMCO.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest
36
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
(one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $5 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
The Fund did not utilize or participate in the Facility during the period July 1, 2019 through September 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Tax-Exempt Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 87,767 | $ | — | $ | 87,767 | ||||||||||
37
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
| Undistributed Tax-Exempt Income | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 3,689 | $ | (60,625 | ) | $ | 61,354 | $ | 4,418 | |||||||||||
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales.
As of the most recent tax year ended March 31, 2019, the Fund had net capital loss carryforwards ("CLCFs") not limited as a result of changes in Fund ownership during the year and in prior years and with no expiration date as summarized in the table below (amounts in thousands).
| Short-Term Amount | Long-Term Amount | Total | |||||||||
| $ | 12,229 | $ | 48,396 | $ | 60,625 | ||||||
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
38
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
80,136,139 | 10,341,276 | 6,108,544 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
39
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid During Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Adviser Shares | $ | 1,000.00 | $ | 1,039.50 | $ | 1,021.50 | $ | 3.57 | $ | 3.54 | 0.70 | % | |||||||||||||||
Fund Shares | 1,000.00 | 1,040.60 | 1,022.60 | 2.45 | 2.43 | 0.48 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
40
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with their Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
41
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of its duties under the Advisory Agreement. The Board considered the level and depth of knowledge of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust.
The Board also reviewed the compliance and administrative services provided to the Fund by the Manager and its affiliates, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes all no-load retail open-end investment companies with the same investment classification/objective as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment — was below the median of its expense group and its expense universe. The data indicated that the Fund's total expense ratio was below the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the high quality of services provided by the Manager. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and below its Lipper index for the one- and five-year periods ended December 31, 2018, was above the average of its performance universe and equal to its Lipper index for the three-year period ended December 31, 2018, and was above the average of its performance universe and its Lipper index for the ten-year period ended December 31, 2018.The Board also noted that the Fund's percentile performance ranking was in the top 35% of its performance universe for the one-year period ended December 31, 2018, was in the top 30% of its performance universe for the three-year period ended December 31, 2018, was in the top 40% of its performance universe for the five-year period ended December 31, 2018, and was in the top 25% of its performance universe for the ten-year period ended December 31, 2018. The Board took into account management's discussion of the Fund's performance, including its strong performance over the long-term.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the
42
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of services received by the Fund from the Manager. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board considered whether there should be changes in the management fee rate or structure in order to enable the Fund to participate in any economies of scale. The Board took into account management's discussion of the current advisory fee structure. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that if the Fund's assets increase over time, the Fund may realize other economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of the services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
43
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39596-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Tax Exempt Money Market Fund (USEXX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
USAA Mutual Funds Trust
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 12 | ||||||
Statement of Operations | 13 | ||||||
Statements of Changes in Net Assets | 14 | ||||||
Financial Highlights | 16 | ||||||
Notes to Financial Statements | 18 | ||||||
Supplemental Information | 25 | ||||||
Proxy Voting and Portfolio Holdings Information | 26 | ||||||
Expense Examples | 26 | ||||||
Advisory Contract Approval | 27 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
1
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide investors with interest income that is exempt from federal income tax, with a further objective of preserving capital and maintaining liquidity.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Municipal Bonds (91.9%) | |||||||||||
Alabama (7.4%): | |||||||||||
| Columbia Industrial Development Board Revenue 1.57%, 12/1/37, Continuously Callable @100 (c) | $ | 10,000 | $ | 10,000 | |||||||
1.83%, 12/1/37, Continuously Callable @100 (c) | 5,250 | 5,250 | |||||||||
| Huntsville-Oakwood College Educational Building Authority Revenue(LOC — BB&T Corp.), 1.78%, 12/1/22, Continuously Callable @100 (c) | 700 | 700 | |||||||||
| Industrial Development Board of the City of Mobile Alabama Revenue, 1.57%, 6/1/34, Callable 10/7/19 @ 100 (c) | 31,300 | 31,300 | |||||||||
| Mobile County Industrial Development Authority Revenue(LOC — Swedbank AB) Series A, 1.78%, 7/1/40, Continuously Callable @100 (c) | 32,500 | 32,500 | |||||||||
Series B, 1.78%, 7/1/40, Continuously Callable @100 (c) | 20,000 | 20,000 | |||||||||
| West Jefferson Industrial Development Board Revenue, 1.68%, 6/1/28, Continuously Callable @100 (c) | 5,190 | 5,190 | |||||||||
104,940 | |||||||||||
Arkansas (0.4%): | |||||||||||
| City of Texarkana Revenue(LOC — PNC Financial Services Group), 1.73%, 3/1/21, Continuously Callable @100 (c) | 5,175 | 5,175 | |||||||||
California (3.5%): | |||||||||||
| Alameda County Industrial Development Authority Revenue(LOC — BNP Paribas), Series A, 1.58%, 12/1/40, Callable 12/1/19 @ 100 (c) | 3,700 | 3,700 | |||||||||
| Alameda County Industrial Development Authority Revenue(LOC — Comerica Bank N.A.), Series A, 1.58%, 12/1/40, Callable 12/1/19 @ 100 (c) | 2,890 | 2,890 | |||||||||
| California Enterprise Development Authority Revenue(LOC — Federal Home Loan Bank of San Francisco), 1.60%, 12/1/42, Continuously Callable @100 (a) (c) | 10,000 | 10,000 | |||||||||
| California Pollution Control Financing Authority Revenue(LOC — BNP Paribas), Series A, 1.63%, 11/1/19, Continuously Callable @100 (c) | 3,200 | 3,200 | |||||||||
| California Pollution Control Financing Authority Revenue(LOC — Comerica Bank N.A.), Series A, 1.57%, 12/1/30, Callable 10/9/19 @ 100 (c) | 780 | 780 | |||||||||
| City of Los Angeles Certificate of Participation(LOC — U.S. Bancorp), 1.46%, 8/1/35, Continuously Callable @100 (c) | 5,885 | 5,885 | |||||||||
| San Jose Multifamily Housing Revenue(LIQ — Deutsche Bank AG) Series 2019-XF1085, 1.88%, 8/1/59, Callable 8/1/34 @ 100 (a) (c) | 5,085 | 5,085 | |||||||||
| Sacramento City Financing Authority Revenue(LIQ — Deutsche Bank AG) Series XG0100, 1.68%, 12/1/33 (a) (c) | 11,300 | 11,300 | |||||||||
| Statewide Communities Development Authority Revenue(LIQ — JP Morgan Chase & Co.), Series 2015-ZF0199, 1.58%, 10/1/20 (a) (c) | 5,605 | 5,605 | |||||||||
48,445 | |||||||||||
Colorado (0.7%): | |||||||||||
| Colorado Educational & Cultural Facilities Authority Revenue(LOC — Fifth Third Bank), 1.81%, 1/1/29, Continuously Callable @100 (c) | 1,750 | 1,750 | |||||||||
| Sheridan Redevelopment Agency Tax Allocation(LOC — JP Morgan Chase & Co.), 1.60%, 12/1/29, Callable 11/1/19 @ 100 (c) | 8,280 | 8,280 | |||||||||
10,030 | |||||||||||
Connecticut (0.3%): | |||||||||||
| Connecticut State Health & Educational Facilities Authority Revenue(LOC — Bank of America Corp.), Series B, 1.62%, 7/1/30, Callable 11/1/19 @ 100 (c) | 5,000 | 5,000 | |||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
District of Columbia (1.0%): | |||||||||||
| District of Columbia Revenue(LOC — Bank of America Corp.), 1.80%, 7/1/22, Callable 11/6/19 @ 100 (c) | $ | 900 | $ | 900 | |||||||
| Metropolitan Washington Airports Authority Revenue(LOC — Sumitomo Mitsui Banking Corp.), Series C-2, 1.60%, 10/1/39, Continuously Callable @100 (c) | 13,590 | 13,590 | |||||||||
14,490 | |||||||||||
Florida (1.7%): | |||||||||||
City of Jacksonville Revenue, 1.80%, 5/1/29, Continuously Callable @100 (c) | 1,000 | 1,000 | |||||||||
| County of Escambia Revenue 1.80%, 7/1/22 (c) | 15,700 | 15,700 | |||||||||
1.81%, 4/1/39, Continuously Callable @100 (c) | 1,100 | 1,100 | |||||||||
County of Jackson Revenue, 1.80%, 7/1/22, Continuously Callable @100 (c) | 1,200 | 1,200 | |||||||||
County of Martin Revenue, 1.78%, 7/15/22, Continuously Callable @100 (c) | 3,600 | 3,600 | |||||||||
22,600 | |||||||||||
Georgia (0.9%): | |||||||||||
| Roswell Housing Authority Revenue(LOC — Northern Trust Corp.), Series A, 1.61%, 9/1/27 (c) | 12,600 | 12,600 | |||||||||
Illinois (9.1%): | |||||||||||
| City of Galesburg Revenue(LOC — PNC Financial Services Group), 1.60%, 3/1/31, Continuously Callable @100 | 10,900 | 10,900 | |||||||||
| County of Kane Revenue(LOC — Fifth Third Bank), 1.71%, 2/1/28, Continuously Callable @100 (c) | 4,250 | 4,250 | |||||||||
| Illinois Development Finance Authority Revenue(LOC — Bank of America Corp.), 1.62%, 9/1/32, Continuously Callable @100 (c) | 1,195 | 1,195 | |||||||||
| Illinois Development Finance Authority Revenue(LOC — Fifth Third Bank), 1.71%, 2/1/33, Continuously Callable @100 (c) | 12,000 | 12,000 | |||||||||
| Illinois Development Finance Authority Revenue(LOC — PNC Financial Services Group), 1.59%, 3/1/32, Continuously Callable @100 (c) | 9,100 | 9,100 | |||||||||
| Illinois Finance Authority Revenue(LOC — Huntington National Bank), 1.69%, 10/1/33, Continuously Callable @100 (c) | 5,645 | 5,645 | |||||||||
| Illinois Finance Authority Revenue(LOC — Key Bank N.A.), Series A, 1.64%, 11/1/39, Continuously Callable @100 (c) | 13,145 | 13,145 | |||||||||
| Illinois Finance Authority Revenue(LOC — Northern Trust Corp.), 1.66%, 4/1/33, Continuously Callable @100 (c) | 3,970 | 3,970 | |||||||||
| Illinois Finance Authority Revenue(LOC — PNC Financial Services Group), 1.60%, 4/1/37, Continuously Callable @100 (c) | 15,635 | 15,635 | |||||||||
| Illinois Finance Authority Revenue(LIQ — Deutsche Bank AG), Series 2018-XF1077, 1.83%, 4/1/58, Callable 10/1/28 @ 100 (a) (c) | 20,000 | 20,000 | |||||||||
| Illinois State Educational Facilities Revenue(LOC — Fifth Third Bank), 1.75%, 7/1/24, Continuously Callable @100 (c) | 1,170 | 1,170 | |||||||||
| Illinois State Educational Facilities Revenue(LOC — Huntington National Bank), Series A, 1.69%, 10/1/32, Continuously Callable @100 | 2,675 | 2,675 | |||||||||
| Metropolitan Pier & Exposition Authority Revenue(LIQ — Barclays Bank PLC) Series 2015-XF1045, 1.76%, 6/15/52, Callable 6/15/22 @ 100 (a) (c) | 6,550 | 6,550 | |||||||||
Series 2015-XF1046, 1.64%, 6/15/50, Callable 6/15/20 @ 100 (a) (c) | 22,360 | 22,360 | |||||||||
128,595 | |||||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Indiana (1.3%): | |||||||||||
| City of Berne Revenue(LOC — Federal Home Loan Bank of Indianapolis), 1.62%, 10/1/33, Continuously Callable @100 (c) | $ | 4,995 | $ | 4,995 | |||||||
| City of Evansville Revenue(LOC — Fifth Third Bank), 1.75%, 1/1/25, Callable 10/11/19 @ 100 (c) | 2,740 | 2,740 | |||||||||
| Indiana Finance Authority Revenue(LOC — Federal Home Loan Bank of Indianapolis), 1.64%, 7/1/29, Continuously Callable @100 (c) | 7,450 | 7,450 | |||||||||
| Indiana Finance Authority Revenue(LOC — Fifth Third Bank), 1.76%, 8/1/31, Callable 10/11/19 @ 100 | 3,745 | 3,745 | |||||||||
18,930 | |||||||||||
Iowa (7.8%): | |||||||||||
City of Chillicothe Revenue, 1.59%, 1/1/23, Continuously Callable @100 (c) | 6,850 | 6,850 | |||||||||
City of Council Bluffs Revenue, 1.59%, 1/1/25, Continuously Callable @100 (c) | 12,750 | 12,750 | |||||||||
County of Louisa Revenue, 1.62%, 10/1/24, Continuously Callable @100 (c) | 33,400 | 33,400 | |||||||||
| Iowa Finance Authority Revenue 1.62%, 9/1/36, Continuously Callable @100 (c) | 41,763 | 41,763 | |||||||||
1.58%, 9/1/36, Callable 11/1/19 @ 100 (c) | 7,150 | 7,150 | |||||||||
1.62%, 6/1/39, Continuously Callable @100 (c) | 9,600 | 9,600 | |||||||||
111,513 | |||||||||||
Kansas (1.6%): | |||||||||||
City of Burlington Revenue, 1.80%, 9/1/35, Continuously Callable @100 (c) | 8,250 | 8,250 | |||||||||
City of St Marys Revenue, 1.76%, 4/15/32, Continuously Callable @100 (c) | 15,000 | 15,000 | |||||||||
23,250 | |||||||||||
Kentucky (0.9%): | |||||||||||
| City of Georgetown Revenue(LOC — Fifth Third Bank), 1.75%, 11/15/29, Callable 10/15/19 @ 100 (c) | 10,820 | 10,820 | |||||||||
| Lexington-Fayette Urban County Government Revenue(LOC — Federal Home Loan Bank of Cincinnati), 1.83%, 12/1/27, Callable 10/10/19 @ 100 (c) | 2,085 | 2,085 | |||||||||
12,905 | |||||||||||
Louisiana (3.6%): | |||||||||||
| City of New Orleans Revenue(LOC — Capital One N.A.), 1.78%, 8/1/24, Continuously Callable @100 (c) | 3,940 | 3,940 | |||||||||
| Hammond Area Economic & Industrial Development District Revenue(LOC — Federal Home Loan Bank of Dallas), 1.63%, 3/1/33, Continuously Callable @100 (c) | 1,345 | 1,345 | |||||||||
| Louisiana Local Government Environmental Facilities & Community Development Authority Revenue, Series B, 1.60%, 12/1/30, Callable 11/1/19 @ 100 (c) | 7,500 | 7,500 | |||||||||
| Parish of St. James Revenue, Series A-1, 1.77%, 11/1/40, Continuously Callable @100 (c) | 32,755 | 32,755 | |||||||||
| St. Tammany Corp. Revenue(LOC — Federal Home Loan Bank of Dallas), 1.63%, 3/1/33, Continuously Callable @100 (c) | 5,500 | 5,500 | |||||||||
51,040 | |||||||||||
Maryland (0.6%): | |||||||||||
| Town of Williamsport Revenue(LOC — Manufacturers & Traders Trust Co.), 1.63%, 11/1/37 (c) | 8,810 | 8,810 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Michigan (0.9%): | |||||||||||
| Michigan Finance Authority Revenue(LOC — Fifth Third Bank), 1.63%, 12/1/32, Callable 11/6/19 @ 100 (c) | $ | 3,735 | $ | 3,735 | |||||||
| Michigan Finance Authority Revenue(LIQ — Barclays Bank PLC), Series 2019-XF2837, 1.73%, 11/15/50, Callable 11/2/29 @ 100 (a) (c) | 4,605 | 4,605 | |||||||||
| Michigan State Strategic Fund Revenue(LOC — Fifth Third Bank) 1.71%, 10/1/27, Callable 11/1/19 @ 100 (c) | 735 | 735 | |||||||||
1.76%, 3/1/37, Continuously Callable @100 | 2,700 | 2,700 | |||||||||
11,775 | |||||||||||
Minnesota (0.4%): | |||||||||||
| City of New ULM Revenue(LOC — Federal Home Loan Bank of Chicago), 1.66%, 10/1/40, Continuously Callable @100 (c) | 4,340 | 4,340 | |||||||||
| Sanford Canby Community Hospital District No. 1 Revenue, 1.96%, 11/1/26, Continuously Callable @100 (c) | 1,650 | 1,650 | |||||||||
5,990 | |||||||||||
Mississippi (0.5%): | |||||||||||
| Mississippi Business Finance Corp. Revenue, 1.80%, 4/1/44, Continuously Callable @100 (c) | 2,600 | 2,600 | |||||||||
| Mississippi Business Finance Corp. Revenue(LOC — Federal Home Loan Bank of Dallas), 1.63%, 3/1/33, Continuously Callable @100 (c) | 3,885 | 3,885 | |||||||||
6,485 | |||||||||||
Missouri (3.3%): | |||||||||||
| Health & Educational Facilities Authority of the State of Missouri Revenue(LOC — Fifth Third Bank), 1.71%, 11/1/20, Continuously Callable @100 (c) | 1,300 | 1,300 | |||||||||
| Jackson County Industrial Development Authority Revenue(LOC — Commerce Bank N.A.), 1.62%, 7/1/25, Continuously Callable @100 (c) | 20,000 | 20,000 | |||||||||
| RBC Municipal Products, Inc. Trust Revenue(LIQ — Royal Bank of Canada), 1.64%, 9/1/39 (a) (c) | 25,500 | 25,500 | |||||||||
46,800 | |||||||||||
Montana (0.7%): | |||||||||||
| Montana Board of Investments Revenue(NBGA — Montana Board of Investments Intercap Program), 1.87%, 3/1/29, Callable 3/1/20 @ 100 (c) | 10,000 | 10,000 | |||||||||
Nebraska (1.4%): | |||||||||||
| County of Washington Revenue, Series B, 1.61%, 12/1/40, Continuously Callable @100 (c) | 10,000 | 10,000 | |||||||||
| Central Plains Energy Project Revenue(LIQ — Royal Bank of Canada), Series 2016-XM0185, 1.62%, 3/1/20 (a) (c) | 10,000 | 10,000 | |||||||||
20,000 | |||||||||||
Nevada (1.6%): | |||||||||||
| County of Clark Revenue(LOC — Bank of America Corp.), 2.08%, 12/1/41, Continuously Callable @100 (c) | 23,570 | 23,570 | |||||||||
New Hampshire (2.8%): | |||||||||||
| New Hampshire Business Finance Authority Revenue(LOC — Landesbank Hessen-Thuringen), 1.62%, 9/1/30, Continuously Callable @100 (c) | 34,990 | 34,990 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| New Hampshire Health and Education Facilities Authority Revenue(LOC — TD Bank N.A.), Series B, 1.58%, 10/1/30, Continuously Callable @100 (c) | $ | 6,240 | $ | 6,240 | |||||||
41,230 | |||||||||||
New Jersey (0.9%): | |||||||||||
| New Jersey Economic Development Authority Revenue(LOC — Bank of America Corp.), 1.58%, 11/1/27, Callable 11/6/19 @ 100 (c) | 2,675 | 2,675 | |||||||||
| Morris County Improvement Authority Revenue(LIQ — Deutsche Bank AG), Series 2018-XF1067, 1.83%, 10/1/47, Callable 10/1/25 @ 100 (a) (c) | 9,865 | 9,865 | |||||||||
12,540 | |||||||||||
New Mexico (0.3%): | |||||||||||
| New Mexico Hospital Equipment Loan Council Revenue(LOC — Fifth Third Bank), 1.72%, 7/1/25, Continuously Callable @100 (c) | 5,000 | 5,000 | |||||||||
New York (9.3%): | |||||||||||
| Build NYC Resource Corp. Revenue(LOC — TD Bank N.A.), 1.68%, 12/1/45, Continuously Callable @100 (c) | 5,680 | 5,680 | |||||||||
Campbell-Savona Central School District, GO, 2.00%, 6/26/20 | 7,225 | 7,251 | |||||||||
Chenango Valley Central School District, GO, 2.00%, 6/26/20 | 10,000 | 10,038 | |||||||||
| County of Chautauqua Industrial Development Agency Revenue(LOC — Citizens Financial Group), Series A, 1.67%, 8/1/27, Continuously Callable @100 (c) | 1,745 | 1,745 | |||||||||
| Guilderland Industrial Development Agency Revenue(LOC — Key Bank N.A.), Series A, 1.67%, 7/1/32, Continuously Callable @100 (c) | 3,065 | 3,065 | |||||||||
Highland Falls-Fort Montgomery Central School District, GO, 2.00%, 6/26/20 | 10,500 | 10,538 | |||||||||
| New York City Capital Resources Corp. Revenue(LOC — Manufacturers & Traders Trust Co.), 1.70%, 12/1/40, Continuously Callable @100 (c) | 7,500 | 7,500 | |||||||||
| Niagara County Industrial Development Agency Revenue(LOC — Key Bank N.A.), Series A, 1.67%, 9/1/21, Continuously Callable @100 (c) | 350 | 350 | |||||||||
| Oneida County Industrial Development Agency Revenue(LOC — Citizens Financial Group), 1.58%, 7/1/37, Continuously Callable @100 (c) | 3,805 | 3,805 | |||||||||
| Onondaga County Industrial Development Agency Revenue(LOC — Manufacturers & Traders Trust Co.), 1.63%, 12/1/31, Continuously Callable @100 (c) | 5,920 | 5,920 | |||||||||
| Ramapo Housing Authority Revenue(LOC — Manufacturers & Traders Trust Co.), 1.68%, 12/1/29, Continuously Callable @100 (c) | 8,685 | 8,685 | |||||||||
| Seneca County Industrial Development Agency Revenue(LOC — Key Bank N.A.), 1.67%, 4/1/20, Continuously Callable @100 (c) | 515 | 515 | |||||||||
| St. Lawrence County Industrial Development Agency Revenue(LOC — Citizens Financial Group), 1.82%, 7/1/37 (c) | 1,930 | 1,930 | |||||||||
| Syracuse Industrial Development Agency Revenue(LOC — Key Bank N.A.), 1.67%, 1/1/33, Continuously Callable @100 (c) | 3,055 | 3,055 | |||||||||
| Hudson Yards Infrastructure Corp. Revenue(LIQ — Royal Bank of Canada) Series 2016-ZF0463, 1.63%, 8/15/20 (a) (c) | 22,400 | 22,400 | |||||||||
| Liberty Development Corp. Revenue(LIQ — Royal Bank of Canada) Series 2016-ZF0464, 1.63%, 11/15/19 (a) (c) | 15,000 | 15,000 | |||||||||
| The Erie County Industrial Development Agency Revenue(LOC — Key Bank N.A.) 1.67%, 6/1/22, Continuously Callable @100 (c) | 440 | 440 | |||||||||
1.67%, 6/1/22, Continuously Callable @100 (c) | 745 | 745 | |||||||||
Union Endicott Central School District, GO, 2.00%, 6/26/20 | 10,000 | 10,038 | |||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Warsaw Central School District, GO, 2.00%, 6/26/20 | $ | 9,400 | $ | 9,436 | |||||||
Wayland-Cohocton Central School District, GO, 2.00%, 6/26/20 | 9,500 | 9,536 | |||||||||
137,672 | |||||||||||
Ohio (0.4%): | |||||||||||
| Cincinnati & Hamilton County Port Authority Revenue(LOC — Fifth Third Bank), 1.81%, 9/1/25 (c) | 1,900 | 1,900 | |||||||||
County of Hamilton Revenue(LOC — Fifth Third Bank), 1.75%, 12/1/24 | 2,900 | 2,900 | |||||||||
| Highland County Joint Township Hospital District Revenue(LOC — Fifth Third Bank), 1.76%, 8/1/24 (c) | 910 | 910 | |||||||||
5,710 | |||||||||||
Oklahoma (4.8%): | |||||||||||
| Edmond Economic Development Authority Revenue(LOC — Bank of Oklahoma N.A.), Series A, 1.67%, 6/1/31, Callable 11/1/19 @ 100 (c) | 5,600 | 5,600 | |||||||||
| Garfield County Industrial Authority Revenue, Series A, 1.65%, 1/1/25, Callable 11/6/19 @ 100 (c) | 28,700 | 28,700 | |||||||||
| Muskogee Industrial Trust Revenue Series A, 1.63%, 1/1/25, Callable 11/6/19 @ 100 (c) | 1,900 | 1,900 | |||||||||
Series A, 1.65%, 6/1/27, Continuously Callable @100 (c) | 26,000 | 26,000 | |||||||||
| Tulsa Industrial Authority Revenue(LOC — Bank of Oklahoma N.A.), 1.67%, 11/1/26, Continuously Callable @100 (c) | 7,165 | 7,165 | |||||||||
69,365 | |||||||||||
Pennsylvania (3.0%): | |||||||||||
| Allegheny County Hospital Development Authority Revenue(LOC — PNC Financial Services Group), Series A, 1.60%, 6/1/35, Continuously Callable @100 (c) | 2,855 | 2,855 | |||||||||
| Bucks County Industrial Development Authority Revenue(LOC — PNC Financial Services Group), Series B, 1.60%, 7/1/39, Continuously Callable @100 (c) | 15,525 | 15,525 | |||||||||
| Delaware Valley Regional Finance Authority Revenue(LOC — PNC Financial Services Group), Series B, 1.60%, 6/1/42, Continuously Callable @100 (c) | 12,385 | 12,385 | |||||||||
| Derry Township Industrial & Commercial Development Authority Revenue(LOC — PNC Financial Services Group), 1.60%, 11/1/30, Continuously Callable @100 (c) | 10,690 | 10,690 | |||||||||
| RBC Municipal Products, Inc. Trust Revenue(LIQ — Royal Bank of Canada), Series E, 1.75%, 4/1/22, Callable 10/23/19 @ 100 (a) (c) | 800 | 800 | |||||||||
42,255 | |||||||||||
Rhode Island (0.7%): | |||||||||||
| Rhode Island Commerce Corp. Revenue(LOC — Citizens Financial Group), 1.70%, 3/1/38, Callable 11/1/19 @ 100 (c) | 3,775 | 3,775 | |||||||||
| Rhode Island Health & Educational Building Corp. Revenue(LOC — Citizens Financial Group), 1.80%, 6/1/35, Callable 11/1/19 @ 100 (c) | 5,580 | 5,580 | |||||||||
9,355 | |||||||||||
South Carolina (1.1%): | |||||||||||
| Jobs Economic Development Authority Revenue(LIQ — Deutsche Bank AG), Series 2016-XG0098, 1.65%, 11/1/29, Callable 11/1/22 @ 100 (a) (c) | 15,055 | 15,055 | |||||||||
See notes to financial statements.
8
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
South Dakota (0.8%): | |||||||||||
| South Dakota Health & Educational Facilities Authority Revenue 1.96%, 11/1/25, Continuously Callable @100 (c) | $ | 2,015 | $ | 2,015 | |||||||
1.96%, 11/1/27, Continuously Callable @100 (c) | 4,095 | 4,095 | |||||||||
Series B, 1.96%, 11/1/20, Continuously Callable @100 (c) | 5,975 | 5,975 | |||||||||
12,085 | |||||||||||
Tennessee (2.5%): | |||||||||||
| Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board Revenue(LOC — Fifth Third Bank), 1.75%, 12/1/24, Callable 10/11/19 @ 100 (c) | 10,375 | 10,375 | |||||||||
| Chattanooga Health Educational & Housing Facility Board Revenue(LIQ — Barclays Bank PLC), Series 2015-XF1023, 1.62%, 1/1/45 (a) (c) | 17,720 | 17,720 | |||||||||
| Wilson County Sports Authority Revenue(LOC — PNC Financial Services Group), 1.60%, 9/1/29, Continuously Callable @100 (c) | 8,825 | 8,825 | |||||||||
36,920 | |||||||||||
Texas (10.0%): | |||||||||||
| Atascosa County Industrial Development Corp. Revenue(NBGA — National Rural Utility Corp.), 1.65%, 6/30/20, Continuously Callable @100 (c) | 32,200 | 32,200 | |||||||||
| Brazos Harbor Industrial Development Corp. Revenue, 1.60%, 7/1/22, Callable 11/1/19 @ 100 (c) | 7,200 | 7,200 | |||||||||
| Indiana Finance Authority Revenue(LOC — Barclays Bank PLC), 1.77%, 11/1/37, Continuously Callable @100 | 3,400 | 3,400 | |||||||||
| Port of Arthur Navigation District Industrial Development Corp. Revenue 1.60%, 6/1/41, Callable 11/1/19 @ 100 (c) | 25,000 | 25,000 | |||||||||
Series A, 1.60%, 12/1/40, Callable 11/1/19 @ 100 (c) | 16,000 | 16,000 | |||||||||
| Port of Port Arthur Navigation District Revenue 1.73%, 11/1/40, Continuously Callable @100 (c) | 30,500 | 30,500 | |||||||||
Series B, 1.87%, 4/1/40, Continuously Callable @100 (c) | 7,395 | 7,395 | |||||||||
Series C, 1.76%, 4/1/40, Continuously Callable @100 (c) | 14,035 | 14,035 | |||||||||
| Trinity River Public Facilities Corp. Revenue(LIQ — Deutsche Bank AG), Series 2019-XF1083, 1.93%, 4/1/59, Callable 4/1/30 @ 101 (a) (c) | 10,625 | 10,625 | |||||||||
146,355 | |||||||||||
Utah (0.5%): | |||||||||||
| Utah Housing Corporation Revenue(LIQ — Deutsche Bank AG), Series 2019-XF1081, 1.93%, 3/1/62, Callable 2/1/31 @ 100 (a) (c) | 6,565 | 6,565 | |||||||||
Virginia (3.9%): | |||||||||||
| Alexandria Industrial Development Authority Revenue(LOC — Bank of America Corp.), Series A, 1.68%, 7/1/26, Callable 11/1/19 @ 100 (c) | 1,110 | 1,110 | |||||||||
| Industrial Development Authority Revenue(LOC — Deutsche Bank AG), 1.93%, 1/1/57, Callable 1/1/23 @ 100 (a) (c) | 7,000 | 7,000 | |||||||||
| Fairfax County Economic Development Authority Revenue(LOC — SunTrust Bank), 1.64%, 6/1/37, Continuously Callable @100 (c) | 1,400 | 1,400 | |||||||||
| Fairfax County Industrial Development Authority Revenue, 1.59%, 5/15/42, Continuously Callable @100 | 7,415 | 7,415 | |||||||||
| Loudoun County Economic Development Authority Revenue Series A, 1.58%, 2/15/38, Callable 11/1/19 @ 100 (c) | 8,500 | 8,500 | |||||||||
Series E, 1.57%, 2/15/38, Callable 11/1/19 @ 100 (c) | 12,700 | 12,700 | |||||||||
See notes to financial statements.
9
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Loudoun County Economic Development Authority Revenue(LOC — Northern Trust Corp.), 1.60%, 6/1/34, Callable 11/1/19 @ 100 (c) | $ | 7,000 | $ | 7,000 | |||||||
| College Building Authority(LIQ — JP Morgan Chase & Co.), Series 2016-XM0355, 1.61%, 2/1/21 (a) (c) | 2,800 | 2,800 | |||||||||
| Commonwealth Transportation Board(LIQ — Royal Bank of Canada), Series 2016-XM0142, 1.61%, 5/15/20 (a) (c) | 6,775 | 6,775 | |||||||||
54,700 | |||||||||||
Washington (0.6%): | |||||||||||
| Washington Higher Education Facilities Authority Revenue, 1.62%, 10/1/31, Callable 11/6/19 @ 100 (c) | 9,020 | 9,020 | |||||||||
West Virginia (0.7%): | |||||||||||
County of Marshall Revenue, 1.67%, 3/1/26, Continuously Callable @100 (c) | 9,630 | 9,630 | |||||||||
Wisconsin (0.0%): (b) | |||||||||||
| Wisconsin Health & Educational Facilities Authority Revenue(LOC — JP Morgan Chase & Co.), 1.70%, 5/1/26, Callable 11/1/19 @ 100 (c) | 530 | 530 | |||||||||
Total Municipal Bonds (Cost $1,316,930) | 1,316,930 | ||||||||||
Commercial Papers (7.5%) | |||||||||||
City of Austin, 1.62%, 10/2/19 (d) | 11,085 | 11,085 | |||||||||
Dallas Area Rapid, 1.36%, 11/5/19 (d) | 15,000 | 15,000 | |||||||||
Houston Housing Authority(LOC — Barclays Bank PLC), 1.33%, 11/13/19 (d) | 20,000 | 20,000 | |||||||||
Maryland Health & Higher Educational Facilities Authority, 1.27%, 11/5/19 (d) | 24,800 | 24,800 | |||||||||
| Staunton Industrial Development Authority(LOC — Bank of America Corp.), 1.36%, 10/10/19 (d) | 37,320 | 37,320 | |||||||||
Total Commercial Papers (Cost $108,205) | 108,205 | ||||||||||
Total Investments (Cost $1,425,135) — 99.4% | 1,425,135 | ||||||||||
Other assets in excess of liabilities — 0.6% | 8,123 | ||||||||||
NET ASSETS — 100.00% | $ | 1,433,258 | |||||||||
(a) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless noted otherwise, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $235,610 (thousands) and amounted to 16.4% of net assets.
(b) Amount represents less than 0.05% of net assets.
(c) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
(d) Rate represents the effective yield at September 30, 2019.
GO — General Obligation
LOC — Line Letter of Credit
PLC — Public Limited Company
See notes to financial statements.
10
| USAA Mutual Funds Trust USAA Tax Exempt Money Market Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
LIQ Liquidity enhancement that may, under certain circumstances, provide for repayment of principal and interest upon demand from the name listed.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
11
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Tax Exempt Money Market Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $1,425,135) | $ | 1,425,135 | |||||
Cash | 128 | ||||||
Interest receivable | 2,771 | ||||||
Receivable for investments sold | 12,885 | ||||||
Receivable from Adviser | 12 | ||||||
Prepaid expenses | 16 | ||||||
Total assets | 1,440,947 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 1,075 | ||||||
Investments purchased | 5,885 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 333 | ||||||
Administration fees | 119 | ||||||
Custodian fees | 33 | ||||||
Transfer agent fees | 178 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
Other accrued expenses | 66 | ||||||
Total liabilities | 7,689 | ||||||
Net Assets: | |||||||
Capital | 1,433,042 | ||||||
Total distributable earnings | 216 | ||||||
Net assets | $ | 1,433,258 | |||||
Shares (unlimited number of shares authorized with no par value): | 1,433,034 | ||||||
Net asset value, offering and redemption price per share: (b) | $ | 1.00 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
12
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Tax Exempt Money Market Fund | |||||||
Investment Income: | |||||||
Interest | $ | 12,459 | |||||
Total income | 12,459 | ||||||
Expenses: | |||||||
Investment advisory fees | 2,127 | ||||||
Administration fees | 760 | ||||||
Professional fees | 12 | ||||||
Custodian fees | 91 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | 2 | ||||||
Legal and audit fees | 27 | ||||||
Transfer Agent fees | 1,139 | ||||||
State registration and filing fees | 17 | ||||||
Other expenses | 90 | ||||||
Total expenses | 4,283 | ||||||
Expenses waived/reimbursed by Adviser | (12 | ) | |||||
Net expenses | 4,271 | ||||||
Net Investment Income | 8,188 | ||||||
Realized Gains from Investments: | |||||||
Net realized gains from investment securities | 57 | ||||||
Change in net assets resulting from operations | $ | 8,245 | |||||
See notes to financial statements.
13
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
| USAA Tax Exempt Money Market Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income | $ | 8,188 | $ | 17,619 | |||||||
Net realized gains from investments | 57 | 167 | |||||||||
Change in net assets resulting from operations | 8,245 | 17,786 | |||||||||
Change in net assets resulting from distributions to shareholders | (8,188 | ) | (17,599 | ) | |||||||
Change in net assets resulting from capital transactions | (165,013 | ) | (163,622 | ) | |||||||
Change in net assets | (164,956 | ) | (163,435 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 1,598,214 | 1,761,649 | |||||||||
End of period | $ | 1,433,258 | $ | 1,598,214 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 512,051 | $ | 1,196,892 | |||||||
Distributions reinvested | 7,048 | 17,423 | |||||||||
Cost of shares redeemed | (684,112 | ) | (1,377,937 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (165,013 | ) | $ | (163,622 | ) | |||||
Share Transactions: | |||||||||||
Issued | 512,051 | 1,196,892 | |||||||||
Reinvested | 7,048 | 17,423 | |||||||||
Redeemed | (684,112 | ) | (1,377,937 | ) | |||||||
Change in Shares | (165,013 | ) | (163,622 | ) | |||||||
See notes to financial statements.
14
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USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized Gains on Investments(a) | Total from Investment Activities | Net Investment Income | Net Realized Gains From Investments | ||||||||||||||||||||||
USAA Tax Exempt Money Market Fund | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 1.00 | 0.01 | (e) | — | 0.01 | (0.01 | ) | — | ||||||||||||||||||
| Year Ended March 31, 2019 | $ | 1.00 | 0.01 | — | 0.01 | (0.01 | ) | — | |||||||||||||||||||
| Year Ended March 31, 2018 | $ | 1.00 | 0.01 | — | 0.01 | (0.01 | ) | — | |||||||||||||||||||
| Year Ended March 31, 2017 | $ | 1.00 | — | (a) | — | — | (a) | — | (a) | — | (a) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 1.00 | — | (a) | — | — | (a) | — | (a) | — | (a) | ||||||||||||||||
| Year Ended March 31, 2015 | $ | 1.00 | — | (a) | — | — | (a) | — | (a) | — | (a) | ||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Amount is less than $0.005 per share.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
(d) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
(f) Prior to August 1, 2017, AMCO voluntarily agreed, on a temporary basis, to reimburse management, administrative, or other fees to limit the Fund's expenses and attempt to prevent a negative yield.
See notes to financial statements.
16
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||
| Total Distributions | Net Asset Value, End of Period | Total Return*(b) | Net Expenses^(c)(d) | Net Investment Income(c) | Gross Expenses(c)(d) | Net Assets, End of Period (000's) | |||||||||||||||||||||||||
USAA Tax Exempt Money Market Fund | |||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | (0.01 | ) | $ | 1.00 | 0.54 | % | 0.56 | % | 1.08 | % | 0.56 | % | $ | 1,433,258 | |||||||||||||||||
| Year Ended March 31, 2019 | (0.01 | ) | $ | 1.00 | 1.05 | % | 0.56 | % | 1.04 | % | 0.56 | % | $ | 1,598,214 | |||||||||||||||||
| Year Ended March 31, 2018 | (0.01 | ) | $ | 1.00 | 0.51 | %(f) | 0.56 | %(f) | 0.50 | % | 0.56 | % | $ | 1,761,649 | |||||||||||||||||
| Year Ended March 31, 2017 | — | (a) | $ | 1.00 | 0.23 | % | 0.54 | % | 0.11 | % | 0.58 | % | $ | 2,007,091 | |||||||||||||||||
| Year Ended March 31, 2016 | — | (a) | $ | 1.00 | 0.02 | % | 0.17 | % | 0.01 | % | 0.58 | % | $ | 2,634,454 | |||||||||||||||||
| Year Ended March 31, 2015 | — | (a) | $ | 1.00 | 0.01 | % | 0.15 | % | 0.01 | % | 0.58 | % | $ | 2,676,708 | |||||||||||||||||
See notes to financial statements.
17
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Tax Exempt Money Market Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
The Fund operates as a retail money market fund in compliance with the requirements of Rule 2a-7 under the 1940 Act; and as a retail money market fund, shares of the Fund are available for sale only to accounts that are beneficially owned by natural persons.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings, Inc., a global investment management firm headquartered in Cleveland, Ohio (the Transaction). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
18
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
The inputs or methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the 1940 Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
All securities held in the Fund are short-term debt securities, which are valued pursuant to Rule 2a-7 under the 1940 Act. This method values a security at its purchase price, and thereafter, assumes a constant amortization to maturity of any premiums or discounts.
Securities for which amortized cost valuations are considered unreliable or whose values have been materially affected by a significant event are valued in good faith, at fair value, using methods determined by the Committee, under procedures to stabilize net assets and valuation procedures approved by the Board
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax
19
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 9,200 | $ | 21,040 | $ | — | ||||||
Fees Paid Indirectly:
Expense offsets to custody fees that arise from credits on cash balances maintained on deposit are reflected on the Statement of Operations, as applicable, as "Fees paid indirectly".
3. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fees accrued daily and paid monthly at an annualized rate of 0.28%. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $995 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The Fund's investment management fee was accrued daily and paid monthly at an annualized rate of 0.28% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $1,132 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.10% of average daily net assets. Amounts incurred from July 1, 2019 through September 30, 2019 are $356 thousand and reflected on the Statement of Operations as Administration fees.
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.10% of the Fund's average daily net assets. Amounts incurred from April 1, 2019 through June 30, 2019 were $404 thousand and reflected on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")) provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund. Fees for these services are accrued daily and paid monthly at an annualized rate of 0.15% of the Fund's average daily net assets. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $557 thousand. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $582 thousand. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distributor/Underwriting services:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the shares of the Fund pursuant to a Distribution Agreement between the Distributor and the Trust.
Prior to the Transaction on July 1, 2019, USAA Investment Management Company provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
21
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by the Fund in any fiscal year exceed the expense limit for the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.56%.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, the following amounts are available to be repaid to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 03/31/2023 | |||||||
$ | 12 | ||||||
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
4. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
Although the Fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund's liquidity falls below required minimums because of certain market conditions or other factors. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Under applicable federal securities laws, the Fund qualifies as "retail" (retail money market funds) and is permitted to utilize amortized cost to value their portfolio securities and to transact at a stable $1 net asset value ("NAV") per share. The Fund operates as a retail money market fund in compliance with the requirements of Rule 2a-7.
In addition, as a retail money market fund, the Fund may impose liquidity fees on redemptions and/or temporarily suspend redemptions (gates) if the Fund's weekly liquid assets fall below certain thresholds, such as during times of market stress. The imposition of a liquidity fee would reduce the amount you would receive upon redemption of your shares of the Fund. The imposition of a redemption gate also would delay your ability to redeem your investments in the Fund.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
5. Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $3 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
6. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net
23
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Tax-Exempt Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 17,599 | $ | — | $ | 17,599 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
Undistributed Ordinary Income | Undistributed Tax-Exempt Income | Undistributed Long-Term Capital Gains | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 132 | $ | 35 | $ | 27 | $ | 194 | ||||||||||||
As of the most recent tax year ended March 31, 2019, the Fund had no net capital loss carryforwards ("CLCFs") for federal income tax purposes. For the tax year ended March 31, 2019, the Fund utilized $9 thousand of CLCFs.
7. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
24
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
711,578,221 | 94,089,924 | 55,268,044 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
25
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||
| $ | 1,000.00 | $ | 1,005.40 | $ | 1,005.00 | $ | 2.81 | $ | 2.87 | 0.56 | % | ||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
26
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
27
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement. The Board considered the level and depth of experience of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust. The Board also reviewed the compliance and administrative services provided to the Fund by the Manager, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes the Fund and all other no-load retail open-end investment companies with the same investment classification/objective as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services — was above the median of its expense group and its expense universe. The data indicated that the Fund's total expense ratio was above the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the nature and high quality of the services provided by the Manager. The Board also noted the level and method of computing the management fee. The Board took into account management's discussion of the Fund's expenses.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was below the average of its performance universe and its Lipper index for the one-, three-, and five-year periods ended December 31, 2018, and was above the average of its performance universe and its Lipper index for the ten-year period ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the bottom 50% of its performance universe for the one-, three-, and five-year periods ended December 31, 2018, and was in the top 40% of its performance universe for the ten-year period ended December 31, 2018. The Board took into account the relatively narrow range of the performance returns of the funds in the performance universe. The Board also took into account management's discussion of the impact of market conditions on the Fund's performance.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship
28
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of the services received by the Fund from the Manager as well as the type of fund. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board considered whether there should be changes in the management fee rate or structure in order to enable the Fund to participate in any economies of scale. The Board took into account management's discussion of the current advisory fee structure. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that if the Fund's assets increase over time, the Fund may realize other economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
29
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39598-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Tax Exempt Short-Term Fund
Fund Shares (USSTX)
Adviser Shares (UTESX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 15 | ||||||
Statement of Operations | 16 | ||||||
Statements of Changes in Net Assets | 17 | ||||||
Financial Highlights | 18 | ||||||
Notes to Financial Statements | 20 | ||||||
Supplemental Information | 29 | ||||||
Proxy Voting and Portfolio Holdings Information | 30 | ||||||
Expense Examples | 30 | ||||||
Advisory Contract Approval | 31 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
USAA Mutual Funds Trust
1
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide investors with interest income that is exempt from federal income tax.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Municipal Bonds (101.9%) | |||||||||||
Alabama (1.0%): | |||||||||||
| Black Belt Energy Gas District Revenue, Series B-1, 2.30% (67% of 1 mo. LIBOR + 0.90%), 12/1/48, (Put Date 12/1/23) (h) (i) | $ | 10,000 | $ | 9,835 | |||||||
| Prattville Industrial Development Board Revenue 2.00%, 11/1/33 (e) (g) | 450 | 450 | |||||||||
2.00%, 11/1/33 (e) (g) | 425 | 425 | |||||||||
Selma Industrial Development Board Revenue, 2.00%, 11/1/33 (e) (g) | 3,650 | 3,654 | |||||||||
14,364 | |||||||||||
Alaska (1.1%): | |||||||||||
| Alaska Industrial Development & Export Authority Revenue, 3.50%, 12/1/20, Continuously Callable @100 | 15,000 | 15,049 | |||||||||
Arizona (4.6%): | |||||||||||
| Arizona Health Facilities Authority Revenue, 3.43% (MUNISPA + 1.85%), 2/1/48, (Put Date 2/1/23) (h) (i) | 25,000 | 26,017 | |||||||||
| Industrial Development Authority of the County of Yavapai Revenue, Series A, 5.00%, 8/1/20 | 1,105 | 1,138 | |||||||||
| Maricopa County Industrial Development Authority Revenue 2.15%, 1/1/35, Callable 10/18/23 @ 100 (e) | 2,500 | 2,454 | |||||||||
Series C, 2.38% (MUNISPA + 0.80%), 9/1/48, (Put Date 9/1/24) (h) (i) | 7,735 | 7,834 | |||||||||
| Tender Option Bond Trust Receipts/Certificates Revenue(LIQ — Barclays Bank plc), Series 2016-XF2337, 1.62%, 6/1/36 (a) (e) | 20,000 | 20,000 | |||||||||
| Verrado Western Overlay Community Facilities District, GO(LOC — Compass Bank), 1.81%, 7/1/29, Continuously Callable @100 (e) | 7,400 | 7,400 | |||||||||
64,843 | |||||||||||
California (3.2%): | |||||||||||
| Anaheim Public Financing Authority Revenue Series A, 5.00%, 5/1/22 | 500 | 547 | |||||||||
Series A, 5.00%, 5/1/24 | 250 | 292 | |||||||||
| California Infrastructure & Economic Development Bank Revenue, Series B, 2.78% (MUNISPA + 1.20%), 8/1/37, (Put Date 6/1/22) (h) (i) | 8,000 | 8,016 | |||||||||
| California State Public Works Board Revenue Series A, 5.00%, 4/1/20 | 1,000 | 1,018 | |||||||||
Series A, 5.00%, 4/1/21 | 1,500 | 1,580 | |||||||||
Series G, 5.00%, 11/1/19 | 2,700 | 2,708 | |||||||||
City of Irvine Special Assessment, 5.00%, 9/2/21 | 1,125 | 1,203 | |||||||||
| County of Los Angeles Certificate of Participation 5.00%, 3/1/21 | 500 | 526 | |||||||||
5.00%, 9/1/21 | 1,000 | 1,071 | |||||||||
| Health & Educational Facility Authority Revenue(LIQ — Deutsche Bank AG), Series 2017-7007, 1.88%, 3/1/42, Callable 3/1/20 @ 100 (a) (e) | 13,155 | 13,155 | |||||||||
| Victorville Joint Powers Finance Authority Revenue(LOC — BNP Paribas), Series A, 1.58%, 5/1/40, Continuously Callable @100 (e) | 15,150 | 15,150 | |||||||||
45,266 | |||||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Colorado (1.2%): | |||||||||||
| Arista Metropolitan District, GO(LOC — Compass Bank), 1.81%, 12/1/30, Callable 10/9/19 @ 100 (e) | $ | 7,395 | $ | 7,395 | |||||||
| Colorado Health Facilities Authority Revenue 4.00%, 12/1/19 | 1,250 | 1,254 | |||||||||
Series A, 5.00%, 8/1/29 | 500 | 624 | |||||||||
Series B-2, 5.00%, 8/1/49, Callable 2/1/26 @ 100 | 1,000 | 1,185 | |||||||||
| Southlands Metropolitan District No. 1, GO Series A-1, 3.00%, 12/1/22 | 213 | 216 | |||||||||
Series A-1, 3.50%, 12/1/27 | 1,000 | 1,056 | |||||||||
| Health Facilities Authority Revenue(LIQ — JP Morgan Chase & Co.), Series 2016-ZF0371, 1.90%, 9/6/20 (a) (e) | 5,000 | 5,000 | |||||||||
16,730 | |||||||||||
Connecticut (1.5%): | |||||||||||
City of Bridgeport, GO, Series B, 5.00%, 8/15/26 | 3,450 | 4,124 | |||||||||
| City of New Haven, GO Series A, 5.00%, 8/1/22 | 1,190 | 1,284 | |||||||||
Series A, 5.00%, 8/1/24 | 1,000 | 1,124 | |||||||||
Series A, 5.00%, 8/1/25 | 580 | 663 | |||||||||
Series A, 5.00%, 8/1/26 | 580 | 671 | |||||||||
Series A, 5.00%, 8/1/27 | 1,000 | 1,170 | |||||||||
| City of West Haven, GO Series A, 3.00%, 11/1/19 | 300 | 300 | |||||||||
Series A, 4.00%, 11/1/21 | 800 | 823 | |||||||||
Series A, 5.00%, 11/1/23 | 800 | 874 | |||||||||
Series A, 5.00%, 11/1/24 | 815 | 906 | |||||||||
Series A, 5.00%, 11/1/27 | 650 | 754 | |||||||||
City of West Haven, GO(INS — Assured Guaranty Municipal Corp.), 5.00%, 8/1/20 | 2,235 | 2,298 | |||||||||
Harbor Point Infrastructure Improvement District Tax Allocation, 5.00%, 4/1/22 (a) | 4,250 | 4,440 | |||||||||
19,431 | |||||||||||
District of Columbia (1.4%): | |||||||||||
| District of Columbia Revenue(LIQ — Deutsche Bank AG), Series 2016-XG0094, 1.81%, 10/1/41, Callable 4/1/21 @ 100 (a) (e) | 20,000 | 20,000 | |||||||||
Florida (4.4%): | |||||||||||
| City of Atlantic Beach Revenue, Series B-2, 3.00%, 11/15/23, Continuously Callable @100 | 2,750 | 2,764 | |||||||||
City of Gulf Breeze Revenue, 3.10%, 12/1/20 | 4,500 | 4,592 | |||||||||
| City of Jacksonville Revenue 5.00%, 10/1/19 | 1,000 | 1,000 | |||||||||
5.00%, 10/1/20 | 4,580 | 4,739 | |||||||||
1.80%, 5/1/29, Continuously Callable @100 (e) | 13,700 | 13,700 | |||||||||
| County of Escambia Revenue 2.00%, 11/1/33 (e) (g) | 775 | 774 | |||||||||
1.81%, 4/1/39, Continuously Callable @100 (e) | 17,600 | 17,600 | |||||||||
County of Manatee Revenue, 1.78%, 9/1/24, Continuously Callable @100 (e) | 2,300 | 2,300 | |||||||||
County of St Lucie Revenue, 1.79%, 9/1/28, Continuously Callable @100 (e) | 3,500 | 3,500 | |||||||||
| Florida Higher Educational Facilities Financial Authority Revenue, Series A, 5.00%, 4/1/21 | 1,385 | 1,456 | |||||||||
Lee County Industrial Development Authority Revenue, 4.75%, 10/1/22 | 2,585 | 2,688 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Miami Beach Health Facilities Authority Revenue 5.00%, 11/15/19 | $ | 1,775 | $ | 1,782 | |||||||
5.00%, 11/15/20 | 1,250 | 1,296 | |||||||||
Pinellas County Educational Facilities Authority Revenue, 4.00%, 10/1/20 | 1,915 | 1,940 | |||||||||
| Southeast Overtown Park West Community Redevelopment Agency Tax Allocation Series A-1, 5.00%, 3/1/20 (a) | 1,325 | 1,342 | |||||||||
Series A-1, 5.00%, 3/1/23 (a) | 1,000 | 1,098 | |||||||||
62,571 | |||||||||||
Georgia (4.2%): | |||||||||||
| Appling County Development Authority Revenue 1.82%, 9/1/29, Continuously Callable @100 (e) | 6,500 | 6,500 | |||||||||
2.40%, 1/1/38 (Put Date 4/1/20) (h) (e) | 10,000 | 10,024 | |||||||||
1.82%, 9/1/41, Continuously Callable @100 (e) | 2,300 | 2,300 | |||||||||
| Burke County Development Authority Revenue 1.82%, 7/1/49, Continuously Callable @100 (e) | 10,600 | 10,600 | |||||||||
1.70%, 12/1/49 | 7,500 | 7,407 | |||||||||
1.82%, 11/1/52, Continuously Callable @100 (e) | 10,600 | 10,600 | |||||||||
| Main Street Natural Gas, Inc. Revenue Series A, 5.00%, 5/15/28 | 1,000 | 1,220 | |||||||||
Series A, 5.00%, 5/15/29 | 1,775 | 2,194 | |||||||||
| Private Colleges & Universities Authority Revenue Series A, 5.00%, 10/1/19 | 1,265 | 1,265 | |||||||||
Series A, 5.00%, 10/1/20 | 3,770 | 3,889 | |||||||||
Series C, 5.00%, 10/1/19 | 1,255 | 1,255 | |||||||||
Savannah Economic Development Authority Revenue, 2.00%, 11/1/33 (e) (g) | 815 | 816 | |||||||||
58,070 | |||||||||||
Guam (0.6%): | |||||||||||
Guam Government Waterworks Authority Revenue, Series A, 5.00%, 7/1/20 | 860 | 880 | |||||||||
| Guam Power Authority Revenue(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/19 | 1,000 | 1,000 | |||||||||
Series A, 5.00%, 10/1/20 | 1,500 | 1,548 | |||||||||
| Territory of Guam Revenue Series A, 5.00%, 12/1/23 | 1,500 | 1,669 | |||||||||
Series A, 5.00%, 12/1/24 | 2,000 | 2,269 | |||||||||
7,366 | |||||||||||
Idaho (1.8%): | |||||||||||
| American Falls Reservoir District Revenue, 1.70%, 2/1/25, Continuously Callable @100 (e) | 19,885 | 19,885 | |||||||||
County of Nez Perce Revenue, 2.75%, 10/1/24 | 5,000 | 5,178 | |||||||||
25,063 | |||||||||||
Illinois (12.3%): | |||||||||||
| Chicago Board of Education, GO Series A, 4.00%, 12/1/27 | 1,400 | 1,517 | |||||||||
Series B, 5.00%, 12/1/22 | 1,500 | 1,622 | |||||||||
Chicago Park District, GO, Series SER 2015-XF2111, 1.88%, 1/1/22 (a) | 10,200 | 10,200 | |||||||||
| Chicago Transit Authority Revenue 5.00%, 6/1/25 | 1,720 | 1,996 | |||||||||
5.00%, 6/1/26 | 1,000 | 1,184 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| City of Chicago Waterworks Revenue 5.00%, 11/1/25 | $ | 4,000 | $ | 4,685 | |||||||
5.00%, 11/1/26 | 1,000 | 1,192 | |||||||||
Series A-1, 5.00%, 11/1/25 | 2,000 | 2,342 | |||||||||
Series A-1, 4.00%, 11/1/26 | 2,500 | 2,816 | |||||||||
| Illinois Finance Authority Revenue 5.00%, 7/1/20 | 1,420 | 1,455 | |||||||||
2.33%(MUNISPA + 0.75%), 1/1/46, (Put Date 7/1/23) (h) (i) | 9,000 | 8,860 | |||||||||
Series C, 4.00%, 2/15/25 | 10,000 | 11,225 | |||||||||
Illinois Sports Facilities Authority Revenue, 5.00%, 6/15/28 | 1,000 | 1,185 | |||||||||
| Madison County Community Unit School District No. 7 Edwardsville, GO(INS — Build America Mutual Assurance Co.), 4.00%, 12/1/20 | 2,085 | 2,132 | |||||||||
| Railsplitter Tobacco Settlement Authority Revenue 5.25%, 6/1/20 | 4,160 | 4,266 | |||||||||
5.25%, 6/1/21 | 1,090 | 1,158 | |||||||||
| State of Illinois, GO Series A, 5.00%, 10/1/23 | 3,000 | 3,282 | |||||||||
Series B, 5.00%, 9/1/25 | 5,000 | 5,604 | |||||||||
Series C, 5.00%, 11/1/29, Continuously Callable @100 | 4,500 | 5,136 | |||||||||
Series D, 5.00%, 11/1/26 | 4,485 | 5,092 | |||||||||
| State of Illinois, GO(INS — Build America Mutual Assurance Co.), Series D, 5.00%, 11/1/25 (j) | 15,000 | 17,327 | |||||||||
| Sports Facilities Authority Revenue(LIQ — Barclays Bank plc), Series 2015-XF1009, 1.64%, 6/15/32 (a) | 17,390 | 17,390 | |||||||||
| Metropolitan Pier & Exposition Authority Revenue(LIQ — Barclays Bank PLC), Series 2015-XF1046, 1.64%, 6/15/50, Callable 6/15/20 @ 100 (a) (e) | 9,940 | 9,940 | |||||||||
| Chicago Board of Education(LIQ — Barclays Bank PLC), Series 2017-XG0108, 1.76%, 4/1/46, Callable 4/1/27 @ 100 (a) (e) | 14,300 | 14,300 | |||||||||
| State of Illinois, GO(LIQ — Barclays Bank plc), Series 2015-XF1010, 1.64%, 2/1/39, Callable 2/1/24 @ 100 (a) (e) | 7,000 | 7,000 | |||||||||
| Chicago Board of Education, GO(LIQ — Deutsche Bank AG) Series 2016-XG0073, 1.87%, 12/1/39, Callable 12/1/21 @ 100 (a) (e) | 10,000 | 10,000 | |||||||||
Series 2017-XM0188, 1.91%, 12/1/39, Callable 12/1/21 @ 100 (a) (e) | 5,000 | 5,000 | |||||||||
| Cook County, GO(LIQ — JP Morgan Chase & Co.), Series 2015-XF0124, 1.81%, 11/15/20 (a) (e) | 11,160 | 11,160 | |||||||||
| Village of Rosemont, GO(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 12/1/22 | 1,735 | 1,900 | |||||||||
Series A, 5.00%, 12/1/23 | 1,825 | 2,046 | |||||||||
Series A, 5.00%, 12/1/24 | 1,915 | 2,193 | |||||||||
175,205 | |||||||||||
Indiana (1.1%): | |||||||||||
Hammond Local Public Improvement Bond Bank Revenue, 3.10%, 12/31/19 | 10,000 | 10,042 | |||||||||
Indiana Finance Authority Revenue, 2.95%, 10/1/22, Continuously Callable @100 | 5,000 | 5,199 | |||||||||
15,241 | |||||||||||
Kansas (1.3%): | |||||||||||
City of Burlington Revenue, 1.80%, 9/1/35, Continuously Callable @100 (e) | 1,700 | 1,700 | |||||||||
City of Wamego Revenue, 1.76%, 4/15/32, Continuously Callable @100 (e) | 15,000 | 15,000 | |||||||||
City of Wichita Revenue, 3.00%, 9/1/23, Continuously Callable @100 | 895 | 895 | |||||||||
17,595 | |||||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Kentucky (2.6%): | |||||||||||
County of Carroll Revenue, 1.55%, 9/1/42 (e) | $ | 5,000 | $ | 4,937 | |||||||
| Kentucky Economic Development Finance Authority Revenue 1.30%, 4/1/31 (Put Date 6/3/19) (h) | 3,000 | 3,000 | |||||||||
Series C, 1.73%, 5/1/34, (Put Date 4/5/19) (h) | 8,650 | 8,650 | |||||||||
| Kentucky Public Energy Authority Revenue Series C-1, 4.00%, 12/1/49, (Put Date 6/1/25) (h) | 10,000 | 11,014 | |||||||||
Series C-3, 2.63%(MUNISPA + 1.05%), 12/1/49, (Put Date 6/1/25) (h) (i) | 10,000 | 10,076 | |||||||||
37,677 | |||||||||||
Louisiana (4.8%): | |||||||||||
| Consolidated Government of the City of Baton Rouge & Parish of East Baton Rouge Revenue 1.75%, 11/1/19, OBLIGOR EXXON MOBIL CORP., Continuously Callable @100 (e) | 3,800 | 3,800 | |||||||||
1.87%, 3/1/22, Continuously Callable @100 (e) | 6,100 | 6,100 | |||||||||
| Louisiana Public Facilities Authority Revenue 1.75%, 12/1/43, Continuously Callable @100 (e) | 1,300 | 1,300 | |||||||||
2.23% (MUNISPA + 0.65%), 9/1/57, (Put Date 9/1/23) (h) (i) | 10,000 | 9,998 | |||||||||
Parish of St. Charles Revenue, 4.00%, 12/1/40(Put Date 6/1/22) (h) | 4,000 | 4,229 | |||||||||
| Parish of St. James Revenue Series A-1, 1.77%, 11/1/40, Continuously Callable @100 (e) | 14,000 | 14,000 | |||||||||
Series B-1, 1.70%, 11/1/40, Continuously Callable @100 (e) | 14,400 | 14,400 | |||||||||
| Parish of St. John the Baptist. Revenue 2.10%, 6/1/37 (e) (g) | 2,000 | 2,001 | |||||||||
2.20%, 6/1/37 (e) | 6,750 | 6,796 | |||||||||
Tobacco Settlement Financing Corp. Revenue, Series A, 5.00%, 5/15/22 | 5,000 | 5,440 | |||||||||
68,064 | |||||||||||
Maryland (0.4%): | |||||||||||
| Maryland Economic Development Corp. Revenue Series A, 5.00%, 6/1/25 | 1,500 | 1,746 | |||||||||
Series A, 5.00%, 6/1/26 | 2,000 | 2,378 | |||||||||
Series A, 5.00%, 6/1/27 | 1,340 | 1,623 | |||||||||
5,747 | |||||||||||
Massachusetts (1.1%): | |||||||||||
| Massachusetts Development Finance Agency Revenue 5.00%, 7/1/25 | 1,250 | 1,454 | |||||||||
5.00%, 7/1/26 | 1,500 | 1,782 | |||||||||
2.06% (MUNISPA + 0.48%), 7/1/50, (Put Date 1/29/20) (h) (i) | 12,000 | 11,998 | |||||||||
Series A, 5.00%, 7/1/29, Continuously Callable @100 | 1,425 | 1,774 | |||||||||
17,008 | |||||||||||
Minnesota (0.7%): | |||||||||||
| Housing & Redevelopment Authority of The City of St Paul Minnesota Revenue 5.00%, 11/15/20 | 1,250 | 1,299 | |||||||||
5.00%, 11/15/21 | 1,575 | 1,692 | |||||||||
Kanabec Hospital Revenue, 2.75%, 12/1/19, Continuously Callable @100 | 7,000 | 7,003 | |||||||||
9,994 | |||||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Mississippi (5.5%): | |||||||||||
County of Jackson Revenue, 1.77%, 6/1/23, Callable 11/1/19 @ 100 (e) | $ | 20,000 | $ | 20,000 | |||||||
| County of Perry Revenue(NBGA — Georgia-Pacific Corp.), 1.83%, 2/1/22, Continuously Callable @100 (a) (e) | 20,100 | 20,100 | |||||||||
County of Warren Revenue, 2.90%, 9/1/32 (Put Date 9/1/23) (h) | 2,000 | 2,076 | |||||||||
| Mississippi Business Finance Corp. Revenue 3.20%, 9/1/28, Continuously Callable @100 | 4,000 | 4,103 | |||||||||
Series A, 1.77%, 12/1/30, Callable 11/1/19 @ 1009 (e) | 5,500 | 5,500 | |||||||||
Series K, 1.77%, 11/1/35, Callable 11/1/19 @ 100 (e) | 8,000 | 8,000 | |||||||||
| Mississippi Hospital Equipment & Facilities Authority Revenue 5.00%, 9/1/24 | 10,000 | 11,328 | |||||||||
2.88% (MUNISPA + 1.30%), 8/15/36, (Put Date 8/15/20) (h) (i) | 7,000 | 7,026 | |||||||||
78,133 | |||||||||||
Missouri (0.4%): | |||||||||||
| City of Sikeston MO Electric System Revenue(INS — Build America Mutual Assurance Co.), 5.00%, 6/1/20 | 5,000 | 5,118 | |||||||||
Montana (0.6%): | |||||||||||
City of Forsyth Revenue, 2.00%, 8/1/23 | 6,000 | 6,055 | |||||||||
| Montana State Board of Regents Revenue, Series F, 2.03% (MUNISPA + 0.45%), 11/15/35, (Put Date 9/1/23) (h) (i) | 3,370 | 3,344 | |||||||||
9,399 | |||||||||||
Nevada (0.3%): | |||||||||||
County of Washoe Revenue, Series B, 3.00%, 3/1/36 (Put Date 6/1/22) (h) | 4,400 | 4,559 | |||||||||
New Jersey (11.5%): | |||||||||||
| Casino Reinvestment Development Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 11/1/24 | 1,000 | 1,149 | |||||||||
| City of Newark, GO 3.50%, 10/9/19 | 14,825 | 14,830 | |||||||||
Series D, 3.50%, 12/20/19 | 7,100 | 7,127 | |||||||||
Lyndhurst Township School District, GO, 2.00%, 9/11/20 | 11,974 | 12,018 | |||||||||
| New Jersey Building Authority Revenue Series A, 3.00%, 6/15/23 | 400 | 424 | |||||||||
Series A, 3.00%, 6/15/23 | 600 | 627 | |||||||||
Series A, 5.00%, 6/15/24 | 1,595 | 1,862 | |||||||||
Series A, 5.00%, 6/15/24 | 2,405 | 2,743 | |||||||||
| New Jersey Economic Development Authority Revenue 5.00%, 6/15/20 | 8,000 | 8,187 | |||||||||
5.00%, 6/15/21 | 7,000 | 7,391 | |||||||||
Series BBB, 5.00%, 6/15/23 | 7,000 | 7,809 | |||||||||
Series XX, 5.00%, 6/15/22 (j) | 20,000 | 21,738 | |||||||||
| New Jersey Economic Development Authority Revenue(LOC — Valley National Bank) 1.88%, 3/1/31, Continuously Callable @100 (e) | 1,575 | 1,575 | |||||||||
1.87%, 11/1/40, Continuously Callable @100 (e) | 10,810 | 10,810 | |||||||||
| New Jersey Educational Facilities Authority Revenue Series B, 5.00%, 9/1/22 | 4,735 | 5,177 | |||||||||
Series B, 5.00%, 9/1/23 | 4,000 | 4,485 | |||||||||
Series B, 4.00%, 9/1/24 | 4,730 | 5,172 | |||||||||
New Jersey Health Care Facilities Financing Authority Revenue, 5.00%, 7/1/20 | 2,000 | 2,052 | |||||||||
See notes to financial statements.
8
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| New Jersey Transportation Trust Fund Authority Revenue 5.00%, 6/15/24 | $ | 5,095 | $ | 5,826 | |||||||
2.78% (MUNISPA + 1.20%), 6/15/34, (Put Date 12/15/21) (h) (i) | 10,000 | 10,043 | |||||||||
Series AA, 5.00%, 6/15/22 | 1,500 | 1,630 | |||||||||
Series AA, 5.00%, 6/15/23 | 3,835 | 4,278 | |||||||||
| New Jersey Transportation Trust Fund Authority Revenue(INS — Assured Guaranty Municipal Corp.), Series A, 5.25%, 12/15/20 | 5,000 | 5,221 | |||||||||
| New Jersey Transportation Trust Fund Authority Revenue(INS — National Public Finance Guarantee Corp.), Series B, 5.50%, 12/15/20 | 3,160 | 3,305 | |||||||||
Tobacco Settlement Financing Corp. Revenue, Series B, 3.20%, 6/1/27 | 1,540 | 1,572 | |||||||||
Town of Kearny, GO, 2.50%, 4/24/20 | 9,235 | 9,266 | |||||||||
Township of Belleville, GO, 3.00%, 2/11/20 | 8,000 | 8,047 | |||||||||
164,364 | |||||||||||
New Mexico (1.8%): | |||||||||||
| City of Farmington Revenue 1.87%, 4/1/29 (Put Date 4/1/20) (h) | 5,000 | 5,005 | |||||||||
1.87%, 4/1/29 (Put Date 4/1/20) (h) | 7,000 | 7,002 | |||||||||
1.87%, 4/1/33 (Put Date 10/1/21) (h) | 6,000 | 6,004 | |||||||||
2.12%, 6/1/40 (Put Date 6/1/22) (h) | 2,000 | 2,013 | |||||||||
Series A, 1.87%, 4/1/29 (Put Date 4/1/20) (h) | 5,000 | 5,006 | |||||||||
25,030 | |||||||||||
New York (10.4%): | |||||||||||
City of Long Beach, GO, Series D, 2.00%, 2/7/20 | 10,621 | 10,630 | |||||||||
City of New York, GO, Series F-5, 1.77%, 6/1/44, Continuously Callable @100 (e) | 12,500 | 12,500 | |||||||||
| City of New York, GO(LOC — Bank of America Corp.), Series I-3, 1.82%, 4/1/36, Continuously Callable @100 (e) | 10,200 | 10,200 | |||||||||
| City of New York, GO(LOC — Mizuho Corporate Bank Ltd.), Series A-3, 2.00%, 10/1/40, Continuously Callable @100 (e) | 4,130 | 4,130 | |||||||||
City of Poughkeepsie, GO, Series A, 3.00%, 5/2/20 | 1,410 | 1,419 | |||||||||
County of Monroe, GO, 5.00%, 6/1/20 | 5,170 | 5,294 | |||||||||
| County of Rockland, GO 3.50%, 10/1/19 | 1,520 | 1,520 | |||||||||
3.50%, 10/1/20 | 1,575 | 1,609 | |||||||||
| County of Rockland, GO(INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 3/1/23 | 2,500 | 2,806 | |||||||||
Series A, 5.00%, 3/1/24 | 1,600 | 1,849 | |||||||||
Hempstead Union Free School District, GO, 2.50%, 6/25/20 | 3,000 | 3,018 | |||||||||
| Long Island Power Authority Revenue Series B, 1.65%, 9/1/49, Callable 3/1/24 @ 100 (e) | 4,500 | 4,481 | |||||||||
Series C, 2.21% (70% of 1 mo. LIBOR + 0.75%), 5/1/33, (Put Date 10/1/23) (h) (i) | 5,000 | 4,984 | |||||||||
Series C, 2.21% (70% of 1 mo. LIBOR + 0.75%), 5/1/33, (Put Date 10/1/23) (h) (i) | 4,000 | 3,990 | |||||||||
| Metropolitan Transportation Authority Revenue 2.08% (MUNISPA + 0.50%), 11/15/42, (Put Date 3/1/22) (h) (i) | 10,000 | 9,992 | |||||||||
Series A-2, 2.16% (MUNISPA + 0.58%), 11/1/31 (Put Date 11/1/19) (h) (i) | 12,000 | 11,987 | |||||||||
Series D-2, 2.03% (MUNISPA + 0.45%), 11/15/44 (Put Date 11/15/22) (h) (i) | 8,000 | 7,983 | |||||||||
| New York Liberty Development Corp. Revenue 2.63%, 9/15/69, Continuously Callable @100 (g) | 1,650 | 1,670 | |||||||||
2.80%, 9/15/69, Continuously Callable @100 (g) | 1,000 | 1,019 | |||||||||
See notes to financial statements.
9
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| New York State Dormitory Authority Revenue 5.00%, 12/1/24 (a) | $ | 1,200 | $ | 1,374 | |||||||
5.00%, 12/1/25 (a) | 1,200 | 1,405 | |||||||||
| New York State Energy Research & Development Authority Revenue, 2.00%, 2/1/29 (Put Date 5/1/20) (h) | 6,000 | 6,015 | |||||||||
| New York State Energy Research & Development Authority Revenue(LOC — Mizuho Corporate Bank Ltd.), Series A-2, 1.58%, 5/1/39, Continuously Callable @100 (e) | 1,460 | 1,460 | |||||||||
| New York State Housing Finance Agency Revenue(LOC — Wells Fargo & Co.), Series A, 1.62%, 11/1/46, Continuously Callable @100 (e) | 2,100 | 2,100 | |||||||||
| Niagara Area Development Corp. Revenue, Series B, 3.50%, 11/1/24, Continuously Callable @100 (a) | 500 | 521 | |||||||||
Owego Apalachin Central School District, GO, Series D, 2.63%, 10/25/19 | 4,455 | 4,457 | |||||||||
Suffolk County Economic Development Corp. Revenue, 5.00%, 7/1/20 | 2,640 | 2,707 | |||||||||
Village of Johnson City, GO, Series B, 2.25%, 10/2/20 (g) | 12,484 | 12,401 | |||||||||
Village of Valley Stream, GO, Series A, 3.00%, 5/21/20 | 3,050 | 3,065 | |||||||||
Wyandanch Union Free School District, GO, 2.50%, 6/26/20 | 13,950 | 13,990 | |||||||||
150,576 | |||||||||||
North Carolina (1.1%): | |||||||||||
| Columbus County Industrial Facilities & Pollution Control Financing Authority Revenue 2.00%, 11/1/33 (e) (g) | 825 | 826 | |||||||||
2.00%, 11/1/33 (e) (g) | 825 | 826 | |||||||||
North Carolina Capital Facilities Finance Agency Revenue, 1.30%, 7/1/34 (e) | 13,500 | 13,500 | |||||||||
15,152 | |||||||||||
Ohio (2.2%): | |||||||||||
| American Municipal Power, Inc. Revenue, Series A, 2.25%, 2/15/48, (Put Date 8/15/21) (h) | 5,000 | 5,055 | |||||||||
County of Lucas Revenue, 5.00%, 11/15/19 | 1,160 | 1,165 | |||||||||
| Ohio Air Quality Development Authority Revenue, 2.40%, 12/1/38, Callable 10/1/24 @ 100 (e) (g) | 3,250 | 3,269 | |||||||||
| Ohio Higher Educational Facility Commission Revenue 5.00%, 5/1/21 | 1,000 | 1,053 | |||||||||
5.00%, 5/1/22 | 500 | 543 | |||||||||
5.00%, 5/1/23 | 550 | 614 | |||||||||
5.00%, 5/1/24 | 1,000 | 1,145 | |||||||||
| Ohio Water Development Authority Revenue 1.55%, 7/1/21 (e) | 1,800 | 1,798 | |||||||||
4.00%, 6/1/33 (Put Date 6/3/19) (h) (l) | 7,000 | 5,789 | |||||||||
| Southeastern Ohio Port Authority Revenue 5.00%, 12/1/21 | 1,150 | 1,206 | |||||||||
5.00%, 12/1/25, Continuously Callable @100 | 1,000 | 1,108 | |||||||||
| State of Ohio Revenue 1.30%, 11/1/35 (e) | 2,500 | 2,500 | |||||||||
1.79%, 1/15/45, (Put Date 4/5/19) (h) | 5,500 | 5,500 | |||||||||
30,745 | |||||||||||
See notes to financial statements.
10
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Oklahoma (1.0%): | |||||||||||
| Muskogee Industrial Trust Revenue, Series A, 1.63%, 1/1/25, Callable 11/6/19 @ 100 (e) | $ | 9,100 | $ | 9,100 | |||||||
| Oklahoma Development Finance Authority Revenue Series B, 5.00%, 8/15/23 | 500 | 556 | |||||||||
Series B, 5.00%, 8/15/24 | 600 | 683 | |||||||||
Series B, 5.00%, 8/15/25 | 550 | 640 | |||||||||
Oklahoma Municipal Power Authority Revenue, Series A, 1.97%, 1/1/23 (e) | 5,940 | 5,932 | |||||||||
16,911 | |||||||||||
Pennsylvania (6.8%): | |||||||||||
| Berks County Municipal Authority Revenue, 3.08% (MUNIPSA + 1.50%), 11/1/39, (Put Date 7/1/22) (h) (i) | 7,575 | 7,638 | |||||||||
| Bethlehem Authority Revenue(INS — Build America Mutual Assurance Co.), 5.00%, 11/15/20 | 1,000 | 1,039 | |||||||||
Chester County Industrial Development Authority Revenue, 3.75%, 10/1/24 | 705 | 735 | |||||||||
Coatesville School District, GO, 0.00%, 8/15/20 (k) | 5,305 | 5,213 | |||||||||
| Coatesville School District, GO(INS — Assured Guaranty Municipal Corp.) 5.00%, 8/1/24 | 1,000 | 1,145 | |||||||||
5.00%, 8/1/25 | 800 | 939 | |||||||||
Commonwealth Financing Authority Revenue, 5.00%, 6/1/26 | 2,000 | 2,427 | |||||||||
| Cumberland County Municipal Authority Revenue, Series C-6, 3.25%, 12/1/22, Continuously Callable @101 | 1,870 | 1,883 | |||||||||
| Geisinger Authority Revenue, 2.44% (67% of 1 mo. LIBOR + 1.07%), 6/1/28, (Put Date 6/1/24) (h) (i) | 7,000 | 7,010 | |||||||||
| General Authority of Southcentral Pennsylvania Revenue, 2.18% (MUNIPSA + 0.60%), 6/1/49, (Put Date 6/1/24) (h) (i) | 6,000 | 5,938 | |||||||||
| Hospitals & Higher Education Facilities Authority of Philadelphia Revenue, 5.00%, 7/1/22 | 1,595 | 1,728 | |||||||||
| Luzerne County Industrial Development Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 12/15/25 | 550 | 632 | |||||||||
5.00%, 12/15/26, Continuously Callable @100 | 500 | 576 | |||||||||
5.00%, 12/15/27, Continuously Callable @100 | 1,000 | 1,151 | |||||||||
| Montgomery County Higher Education & Health Authority Revenue, 2.30% (MUNIPSA + 0.72%), 9/1/51, (Put Date 9/1/23) (h) (i) | 6,250 | 6,250 | |||||||||
| Montgomery County Industrial Development Authority Revenue, Series A, 2.60%, 3/1/34 (Put Date 9/1/20) (h) | 5,000 | 5,037 | |||||||||
| Northampton County General Purpose Authority Revenue 2.98% (MINIPSA + 1.40%), 8/15/43, (Put Date 8/15/20) (h) (i) | 7,000 | 7,068 | |||||||||
2.50% (70% of 1 mo. LIBOR + 1.04%), 8/15/48, (Put Date 8/15/24) (h) (i) | 1,855 | 1,844 | |||||||||
| Pennsylvania Higher Educational Facilities Authority Revenue Series A, 5.00%, 7/15/20 | 600 | 613 | |||||||||
Series A, 5.00%, 7/15/21 | 1,090 | 1,141 | |||||||||
| Pennsylvania Turnpike Commission Revenue Series B, 2.85%, 12/1/20, Callable 6/1/20 @ 100 (e) | 6,000 | 6,022 | |||||||||
Series B-1, 2.56%, 12/1/21, Callable 6/1/21 @ 100 (e) | 6,500 | 6,548 | |||||||||
| RBC Municipal Products, Inc. Trust Revenue(LIQ — Royal Bank of Canada), Series E, 1.75%, 4/1/22, Callable 10/23/19 @ 100 (a) | 1,900 | 1,900 | |||||||||
See notes to financial statements.
11
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| School District of Philadelphia, GO Series D, 5.00%, 9/1/21 | $ | 5,000 | $ | 5,320 | |||||||
Series D, 5.00%, 9/1/22 | 5,500 | 6,023 | |||||||||
| Scranton School District, GO 2.27% (68% of 1 mo. LIBOR + 0.85%), 4/1/31, (Put Date 4/1/21) (h) (i) | 6,715 | 6,732 | |||||||||
Series A, 5.00%, 6/1/23 | 2,435 | 2,699 | |||||||||
| West Mifflin School District, GO(INS — Assured Guaranty Municipal Corp.), 5.00%, 10/1/21 | 1,570 | 1,678 | |||||||||
96,929 | |||||||||||
Puerto Rico (0.0% (b)): | |||||||||||
| Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Authority Revenue, 4.00%, 4/1/20 | 700 | 701 | |||||||||
South Carolina (0.7%): | |||||||||||
| Patriots Energy Group Financing Agency Revenue, Series B, 2.26% (67% of 1 mo. LIBOR + 0.86%), 10/1/48, (Put Date 2/1/24) (h) (i) | 10,000 | 10,042 | |||||||||
South Dakota (0.6%): | |||||||||||
| Health & Educational Facilities Authority Revenue(LIQ — Deutsche Bank AG), Series 2016-XG0096, 1.75%, 11/1/40, Callable 11/7/19 @ 100 (a) (e) | 8,610 | 8,610 | |||||||||
Tennessee (1.2%): | |||||||||||
| Chattanooga Health Educational & Housing Facility Board Revenue, Series C, 1.75%, 5/1/39, Continuously Callable @100 (e) | 16,850 | 16,850 | |||||||||
Texas (7.2%): | |||||||||||
| Austin Convention Enterprises, Inc. Revenue 5.00%, 1/1/24 | 1,100 | 1,222 | |||||||||
5.00%, 1/1/25 | 400 | 453 | |||||||||
5.00%, 1/1/27 | 400 | 469 | |||||||||
| Decatur Hospital Authority Revenue Series A, 5.00%, 9/1/21 | 700 | 735 | |||||||||
Series A, 5.00%, 9/1/24 | 780 | 873 | |||||||||
| Gulf Coast Industrial Development Authority Revenue, 1.75%, 11/1/41, Continuously Callable @100 (e) | 15,000 | 15,000 | |||||||||
| Harris County Municipal Utility District No. 165, GO(INS — Build America Mutual Assurance Co.) 3.00%, 3/1/20 | 480 | 483 | |||||||||
3.00%, 3/1/21 | 565 | 576 | |||||||||
3.00%, 3/1/22 | 650 | 671 | |||||||||
3.00%, 3/1/23 | 520 | 543 | |||||||||
Indiana Finance Authority Revenue, 1.77%, 11/1/37, Continuously Callable @100 | 6,700 | 6,700 | |||||||||
| Irving Hospital Authority Revenue, 2.68% (MUNIPSA + 1.10%), 10/15/44, (Put Date 15/15/23) (h) (i) | 1,750 | 1,750 | |||||||||
Karnes County Hospital District Revenue, 5.00%, 2/1/24 | 3,000 | 3,146 | |||||||||
Matagorda County Navigation District No. 1 Revenue, 2.60%, 11/1/29 | 4,000 | 4,112 | |||||||||
| New Hope Cultural Education Facilities Finance Corp. Revenue Series A, 5.00%, 7/1/23 | 1,250 | 1,170 | |||||||||
Series A, 5.00%, 7/1/24 | 2,300 | 2,153 | |||||||||
Series A, 5.00%, 7/1/25 | 2,135 | 1,998 | |||||||||
| Northside Independent School District, GO(NBGA — Texas Permanent School Fund), 2.13%, 8/1/40, (Put Date 8/1/20) (h) (e) | 8,860 | 8,883 | |||||||||
See notes to financial statements.
12
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Port of Port Arthur Navigation District Revenue 1.87%, 4/1/40, Continuously Callable @100 (e) | $ | 8,700 | $ | 8,700 | |||||||
1.74%, 11/1/40, Continuously Callable @100 (e) (j) | 7,000 | 7,000 | |||||||||
1.73%, 11/1/40, Continuously Callable @100 (e) | 20,105 | 20,105 | |||||||||
Series B, 1.87%, 4/1/40, Continuously Callable @100 (e) | 9,620 | 9,620 | |||||||||
| Red River Authority Revenue(INS — National Public Finance Guarantee Corp.), 4.45%, 6/1/20 | 7,175 | 7,296 | |||||||||
103,658 | |||||||||||
Virginia (0.5%): | |||||||||||
Chesapeake Bay Bridge & Tunnel District Revenue, 5.00%, 11/1/23 | 5,140 | 5,822 | |||||||||
Marquis Community Development Authority Revenue, 9/1/45 (a) (c) (f) | 1,074 | 487 | |||||||||
| Marquis Community Development Authority Tax Allocation Series A, 5.10%, 9/1/36 (c) | 3,506 | 1,481 | |||||||||
Series C, 0.00%, 9/1/41, (d) (k) | 5,111 | 236 | |||||||||
8,026 | |||||||||||
Washington (0.4%): | |||||||||||
| Washington Health Care Facilities Authority Revenue 5.00%, 8/15/26 | 2,000 | 2,341 | |||||||||
5.00%, 8/15/27 | 2,175 | 2,585 | |||||||||
4,926 | |||||||||||
Wisconsin (0.4%): | |||||||||||
| Wisconsin Health & Educational Facilities Authority Revenue 2.23% (MUNIPSA + 0.65%), 8/15/54, (Put Date 7/31/24) (h) (i) | 1,700 | 1,709 | |||||||||
Series A, 2.65%, 11/1/20, Continuously Callable @100 | 3,500 | 3,501 | |||||||||
Series C, 5.00%, 8/15/21 | 1,200 | 1,278 | |||||||||
6,488 | |||||||||||
Total Municipal Bonds (Cost $1,440,712) | 1,451,501 | ||||||||||
Total Investments (Cost $1,440,712) — 101.9% | 1,451,501 | ||||||||||
Liabilities in excess of other assets — (1.9)% | (26,592 | ) | |||||||||
NET ASSETS — 100.00% | $ | 1,424,909 | |||||||||
(a) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless otherwise noted, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $184,422 (thousands) and amounted to 12.9% of net assets.
(b) Amount represents less than 0.05% of net assets.
(c) This security is classified as Level 3 within the fair value hierarchy. (See Note 2)
(d) This security is classified as Level 3 within the fair value hierarchy and is deemed to be illiquid by the Fund's Adviser. (See Note 2)
(e) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
(f) Stepped-coupon security converts to coupon form on 09/01/21 with a rate of 7.5%.
See notes to financial statements.
13
| USAA Mutual Funds Trust USAA Tax Exempt Short-Term Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
(g) Security purchased on a when-issued basis.
(h) Put bond.
(i) Variable or Floating-Rate security. Rate disclosed is as of September 30, 2019.
(j) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(k) Zero coupon bond.
(l) Defaulted security.
GO — General Obligation
LOC — Line Letter of Credit
MUNISPA — Municipal Swap Index
PLC — Public Limited Company
LIBOR — London InterBank Offered Rate
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
INS Principal and interest payments are insured by the name listed. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations.
LIQ Liquidity enhancement that may, under certain circumstances, provide for repayment of principal and interest upon demand from the name listed.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
14
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Tax Exempt Short-Term Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $1,440,712) | $ | 1,451,501 | |||||
Cash | 1,624 | ||||||
Interest receivable | 9,143 | ||||||
Receivable for capital shares issued | 288 | ||||||
Receivable from Adviser | 3 | ||||||
Prepaid expenses | 18 | ||||||
Total assets | 1,462,577 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 399 | ||||||
Investments purchased | 34,974 | ||||||
Capital shares redeemed | 1,646 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 329 | ||||||
Administration fees | 176 | ||||||
Custodian fees | 30 | ||||||
Transfer agent fees | 62 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
| 12b-1 fees | 1 | ||||||
Other accrued expenses | 51 | ||||||
Total liabilities | 37,668 | ||||||
Net Assets: | |||||||
Capital | 1,437,752 | ||||||
Total distributable earnings/(loss) | (12,843 | ) | |||||
Net assets | $ | 1,424,909 | |||||
Net Assets | |||||||
Adviser Shares | $ | 10,048 | |||||
Fund Shares | 1,414,861 | ||||||
Total | $ | 1,424,909 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Adviser Shares | 956 | ||||||
Fund Shares | 134,804 | ||||||
| Total | 135,760 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Adviser Shares | $ | 10.51 | |||||
Fund Shares | $ | 10.50 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
15
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Tax Exempt Short-Term Fund | |||||||
Investment Income: | |||||||
Interest | $ | 17,102 | |||||
Total income | 17,102 | ||||||
Expenses: | |||||||
Investment advisory fees | 2,157 | ||||||
Administration fees — Adviser Shares | 9 | ||||||
Administration fees — Fund Shares | 1,089 | ||||||
Professional fees | 6 | ||||||
12b-1 fees — Adviser Shares | 14 | ||||||
Custodian fees | 91 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | 2 | ||||||
Legal and audit fees | 35 | ||||||
Transfer agent fees — Adviser Shares | 2 | ||||||
Transfer agent fees — Fund Shares | 353 | ||||||
State registration fees | 24 | ||||||
Other expenses | 36 | ||||||
Total expenses | 3,836 | ||||||
Expenses waived/reimbursed by Adviser | (10 | ) | |||||
Expenses waived/reimbursed by AMCO | (3 | ) | |||||
Net expenses | 3,823 | ||||||
Net Investment Income (loss) | 13,279 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | (7 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities | 1,849 | ||||||
Net realized/unrealized gains (losses) on investments | 1,842 | ||||||
Change in net assets resulting from operations | $ | 15,121 | |||||
See notes to financial statements.
16
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
| USAA Tax Exempt Short-Term Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investment Activities: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 13,279 | $ | 27,957 | |||||||
Net realized gains (losses) from investments | (7 | ) | (4,305 | ) | |||||||
| Net change in unrealized appreciation (depreciation) on investments | 1,849 | 14,543 | |||||||||
Change in net assets resulting from operations | 15,121 | 38,195 | |||||||||
Distributions to Shareholders: | |||||||||||
Adviser Shares | (91 | ) | (168 | ) | |||||||
Fund Shares | (13,150 | ) | (27,546 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (13,241 | ) | (27,714 | ) | |||||||
Change in net assets resulting from capital transactions | (77,467 | ) | (72,328 | ) | |||||||
Change in net assets | (75,587 | ) | (61,847 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 1,500,496 | 1,562,343 | |||||||||
End of period | $ | 1,424,909 | $ | 1,500,496 | |||||||
Capital Transactions: | |||||||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 7,795 | $ | 20,399 | |||||||
Distributions reinvested | 70 | 139 | |||||||||
Cost of shares redeemed | (8,546 | ) | (21,191 | ) | |||||||
Total Adviser Shares | $ | (681 | ) | $ | (653 | ) | |||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 88,171 | $ | 275,176 | |||||||
Distributions reinvested | 10,338 | 21,955 | |||||||||
Cost of shares redeemed | (175,295 | ) | (368,806 | ) | |||||||
Total Fund Shares | $ | (76,786 | ) | $ | (71,675 | ) | |||||
Change in net assets resulting from capital transactions | $ | (77,467 | ) | $ | (72,328 | ) | |||||
Share Transactions: | |||||||||||
Adviser Shares | |||||||||||
Issued | 742 | 1,949 | |||||||||
Reinvested | 7 | 13 | |||||||||
Redeemed | (813 | ) | (2,031 | ) | |||||||
Total Adviser Shares | (64 | ) | (69 | ) | |||||||
Fund Shares | |||||||||||
Issued | 8,387 | 26,365 | |||||||||
Reinvested | 983 | 2,103 | |||||||||
Redeemed | (16,677 | ) | (35,346 | ) | |||||||
Total Fund Shares | (7,307 | ) | (6,878 | ) | |||||||
Change in Shares | (7,371 | ) | (6,947 | ) | |||||||
See notes to financial statements.
17
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Total Distributions | ||||||||||||||||||||||
USAA Tax Exempt Short-Term Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 10.49 | 0.08 | (e) | 0.02 | 0.10 | (0.08 | ) | (0.08 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 10.42 | 0.17 | 0.06 | 0.23 | (0.16 | ) | (0.16 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.46 | 0.13 | (0.03 | ) | 0.10 | (0.14 | ) | (0.14 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 10.59 | 0.12 | (0.13 | ) | (0.01 | ) | (0.12 | ) | (0.12 | ) | ||||||||||||||||
| Year Ended March 31, 2016 | $ | 10.67 | 0.13 | (0.08 | ) | 0.05 | (0.13 | ) | (0.13 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 10.71 | 0.14 | (0.04 | ) | 0.10 | (0.14 | ) | (0.14 | ) | |||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 10.48 | 0.10 | (e) | 0.02 | 0.12 | (0.10 | ) | (0.10 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 10.41 | 0.19 | 0.07 | 0.26 | (0.19 | ) | (0.19 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 10.45 | 0.16 | (0.03 | ) | 0.13 | (0.17 | ) | (0.17 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 10.59 | 0.15 | (0.14 | ) | 0.01 | (0.15 | ) | (0.15 | ) | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 10.68 | 0.16 | (0.09 | ) | 0.07 | (0.16 | ) | (0.16 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 10.71 | 0.17 | (0.03 | ) | 0.14 | (0.17 | ) | (0.17 | ) | |||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
See notes to financial statements.
18
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||
| Redemption fees added to beneficial interests | Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(d) | ||||||||||||||||||||||||||||
USAA Tax Exempt Short-Term Fund | |||||||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 10.51 | 0.99 | % | 0.75 | %(f) | 1.59 | % | 0.97 | % | $ | 10,048 | 19 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 10.49 | 2.27 | % | 0.77 | %(g) | 1.56 | % | 0.92 | % | $ | 10,707 | 31 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 10.42 | 0.91 | % | 0.80 | % | 1.27 | % | 0.83 | % | $ | 11,349 | 25 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | $ | 10.46 | (0.08 | )% | 0.80 | % | 1.16 | % | 0.81 | % | $ | 32,191 | 34 | % | ||||||||||||||||||||
| Year Ended March 31, 2016 | — | (h) | $ | 10.59 | 0.46 | % | 0.80 | % | 1.17 | % | 0.83 | % | $ | 31,017 | 25 | % | |||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 10.67 | 0.94 | % | 0.80 | % | 1.32 | % | 0.98 | % | $ | 16,805 | 30 | % | ||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 10.50 | 1.10 | % | 0.52 | % | 1.82 | % | 0.52 | % | $ | 1,414,861 | 19 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 10.48 | 2.52 | % | 0.52 | % | 1.84 | % | 0.52 | % | $ | 1,489,789 | 31 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 10.41 | 1.21 | % | 0.51 | % | 1.57 | % | 0.51 | % | $ | 1,550,994 | 25 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | $ | 10.45 | 0.09 | % | 0.54 | % | 1.43 | % | 0.54 | % | $ | 1,669,691 | 34 | % | ||||||||||||||||||||
| Year Ended March 31, 2016 | — | $ | 10.59 | 0.62 | % | 0.55 | % | 1.47 | % | 0.55 | % | $ | 1,760,074 | 25 | % | ||||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 10.68 | 1.29 | % | 0.55 | % | 1.56 | % | 0.55 | % | $ | 1,929,648 | 30 | % | ||||||||||||||||||||
(f) The expense ratio does not correlate to the applicable expense limit in place during the period given that the contractual expense limitation was not in effect until July 1, 2019. Details of the current expense limitation in effect can be found in Item 4 of the accompanying Notes to Financial Statements.
(g) Prior to August 1, 2018, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.80% of the Adviser Shares' average daily net assets.
(h) Amount is less than $0.005 per share.
See notes to financial statements.
19
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Tax Exempt Short-Term Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Adviser Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to fees paid under distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Municipal Bonds | $ | — | $ | 1,449,297 | $ | 2,204 | $ | 1,451,501 | |||||||||||
Total | $ | — | $ | 1,449,297 | $ | 2,204 | $ | 1,451,501 | |||||||||||
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 50,525 | $ | 27,285 | $ | — | ||||||
Fees Paid Indirectly:
Expense offsets to custody fees that arise from credits on cash balances maintained on deposit are reflected on the Statement of Operations, as applicable, as "Fees paid indirectly".
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 188,496 | $ | 251,282 | ||||||||
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fees and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.28%. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $1,017 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly at an annualized rate of 0.28% of the Fund's average daily net assets.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the Transaction on July 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper Short Municipal Debt Funds Index. The Lipper Short Municipal Debt Funds Index tracks the total return performance of funds within the Lipper Short Municipal Debt Funds category.
The performance period for each share class consists of the current month plus the previous 35 months. The following table was utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points)(a) | Annual Adjustment Rate (in basis points)(a) | ||||||
+/- 20 to 50 | +/- 4 | ||||||
+/- 51 to 100 | +/- 5 | ||||||
+/- 101 and greater | +/- 6 | ||||||
(a) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper Short Municipal Debt Funds Index over that period, even if the class has overall negative returns during the performance period.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
For the period April 1, 2019 through June 30, 2019, performance adjustments for Fund Shares and Adviser Shares were $106 and $0 thousand, respectively, and 0.01% and 0.00% of net assets, respectively. Base fees incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $1,033 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from July 1, 2019 through September 30, 2019 are $540 and $4 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from April 1, 2019 through June 30, 2019 were $549 and $5 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")), provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund Shares and Adviser Shares based on an annual charge of $25.50 per shareholder account plus out-of-pocket expenses. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $190 and $1 thousand for the Fund Shares and Adviser Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $163 and $1 thousand for the Fund Shares and Adviser Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Distribution and Service 12b-1 Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the Adviser Shares pursuant to a Distribution Agreement between the Distributor and the Trust. Pursuant to the Distribution and Service Plans adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of up to 0.25% of the average daily net assets of the Adviser Shares. Amounts incurred and paid to the Distributor from July 1, 2019 through September 30, 2019 are $7 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Adviser Shares are offered and sold without imposition of an initial sales charge or a contingent deferred sales charge.
Prior to the Transaction on July 1, 2019, the Fund adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under the plan, the Adviser Shares paid fees to USAA Investment Management Company ("IMCO"), the distributor, for distribution and shareholder services. IMCO paid all or a portion of such fees to intermediaries that made the Adviser Shares available for investment by their customers. The fee was accrued daily and paid monthly at an annual rate of 0.25% of the Adviser Shares' average daily net assets. IMCO also provided exclusive underwriting and distribution of the Fund's shares on a continuing best-efforts basis and received no fee or other compensation for these services, but may have received 12b-1 fees as described above, with respect to Adviser Shares. Amounts incurred and paid to IMCO from April 1, 2019 through June 30, 2019 were $7 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.75% and 0.51% for the Adviser Shares and Fund Shares, respectively.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, the following amounts are available to be repaid to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Expires 03/31/2023 | |||||||
$ | 3 | ||||||
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through July 31, 2019, to limit the total annual operating expenses of the Adviser Shares to 0.75% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Adviser Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect and are not available to be recouped by AMCO. For the period April 1, 2019 through June 30, 2019, amounts reimbursed by the Adviser Shares are reflected on the Statement of Operations as Expenses waived/reimbursed by AMCO.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $3 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
The average borrowing and lending for the days outstanding and average interest rate for the Fund during the six months ended September 30, 2019 were as follows (amounts in thousands):
| Borrower or Lender | Amount Oustanding at September 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate | Maximum Borrowing During the Period | ||||||||||||||||||
| Borrower | $ | — | $ | 6,559 | 3 | 2.66 | % | $ | 6,559 | ||||||||||||||
* For the six months ended September 30, 2019, based on the number of days borrowings were outstanding.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually. The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
| Tax-Exempt Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 27,714 | $ | — | $ | 27,714 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
Undistributed Tax-Exempt Income | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation) | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 457 | $ | (23,619 | ) | $ | 8,940 | $ | (14,222 | ) | ||||||||||
As of the most recent tax year ended March 31, 2019, the Fund had net capital loss carryforwards ("CLCFs") not limited as a result of changes in Fund ownership during the year and in prior years and with no expiration date as summarized in the table below (amounts in thousands).
| Short-Term Amount | Long-Term Amount | Total | |||||||||
| $ | 644 | $ | 22,975 | $ | 23,619 | ||||||
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
28
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
74,505,310 | 5,805,957 | 2,789,387 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Adviser | $ | 1,000.00 | $ | 1,009.90 | $ | 1,050.00 | $ | 3.77 | $ | 3.84 | 0.75 | % | |||||||||||||||
Fund | 1,000.00 | 1,011.00 | 1,050.00 | 2.61 | 2.67 | 0.52 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present.
At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of its duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
31
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement. The Board considered the level and depth of experience of the Manager, including the professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust.
The Board also reviewed the compliance and administrative services provided to the Fund by the Manager and its affiliates, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objectives and classifications, sales load type (in this case, investment companies with front-end loads and no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes all no-load and front-end load retail open- end investment companies with same investment classifications/objectives as the Fund regardless of asset size, excluding outliers (the "expense universe"). Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment — was below the median of its expense group and above the median of its expense universe. The data indicated that the Fund's total expense ratio was below the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the high quality of services provided by the Manager. The Board also took into account management's discussion of the Fund's expenses. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and its Lipper index for the one-, three-, five-, and ten-year periods ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the top 15% of its performance universe for the one-year period ended December 31, 2018, was in the top 20% of its performance universe for the three- and five-year periods ended December 31, 2018, and was in the top 10% of its performance universe for the ten-year period ended December 31, 2018. The Board took into account management's discussion of the Fund's performance, including its strong performance over the long-term.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship
32
USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The Board also took into account the high quality of services received by the Fund from the Manager. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board considered whether there should be changes in the management fee rate or structure in order to enable the Fund to participate in any economies of scale. The Board took into account management's discussion of the current advisory fee structure. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that if the Fund's assets increase over time, the Fund may realize other economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and to relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of the services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
33
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39592-1119
SEPTEMBER 30, 2019
Semi Annual Report
USAA Virginia Bond Fund
Fund Shares (USVAX)
Adviser Shares (UVABX)
Beginning January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on usaa.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com.
You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by notifying your financial intermediary directly, or if you are a direct investor, by calling (800) 235-8396 or logging on to usaa.com. Your election to receive reports in paper will apply to all funds held with the USAA family of funds or your financial intermediary.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
USAA Mutual Funds Trust
TABLE OF CONTENTS
Financial Statements | |||||||
Investment Objective & Portfolio Holdings | 2 | ||||||
Schedule of Portfolio Investments | 3 | ||||||
Statement of Assets and Liabilities | 10 | ||||||
Statement of Operations | 11 | ||||||
Statements of Changes in Net Assets | 12 | ||||||
Financial Highlights | 14 | ||||||
Notes to Financial Statements | 16 | ||||||
Supplemental Information | 25 | ||||||
Proxy Voting and Portfolio Holdings Information | 26 | ||||||
Expense Examples | 26 | ||||||
Advisory Contract Approval | 27 | ||||||
Privacy Policy (inside back cover) | |||||||
This report is for the information of the shareholders and others who have received a copy of the currently effective prospectus of the Fund, managed by Victory Capital Management Inc. It may be used as sales literature only when preceded or accompanied by a current prospectus, which provides further details about the Fund.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable portion of your distribution and, if you live in a state that requires state income tax withholding, at your state's tax rate. However, you may elect not to have withholding apply or to have income tax withheld at a higher rate. Any withholding election that you make will apply to any subsequent distribution unless and until you change or revoke the election. If you wish to make a withholding election, or change or revoke a prior withholding election, call (800) 235-8396.
If you do not have a withholding election in place by the date of a distribution, federal income tax will be withheld from the taxable portion of your distribution at a rate of 10%. If you must pay estimated taxes, you may be subject to estimated tax penalties if your estimated tax payments are not sufficient and sufficient tax is not withheld from your distribution.
For more specific information, please consult your tax adviser.
1
| USAA Mutual Funds Trust USAA Virginia Bond Fund | September 30, 2019 | ||||||
(Unaudited)
Investment Objective & Portfolio Holdings:
Investment Objective: Seeks to provide Virginia investors with a high level of current interest income that is exempt from federal and Virginia state income taxes.
Portfolio Holdings*:
* Percentages are of total investments of the Fund.
2
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Municipal Bonds (99.1%) | |||||||||||
District of Columbia (4.2%): | |||||||||||
| Metropolitan Washington Airports Authority Dulles Toll Road Revenue 5.00%, 10/1/53, Continuously Callable @100 | $ | 4,000 | $ | 4,287 | |||||||
Series A, 5.00%, 10/1/39 | 11,230 | 11,231 | |||||||||
Series A, 5.00%, 10/1/44, Continuously Callable @100 | 1,500 | 1,835 | |||||||||
| Metropolitan Washington Airports Authority Dulles Toll Road Revenue (INS — Assured Guaranty Municipal Corp.), Series B, 0.00%, 10/1/30 (i) | 5,500 | 4,195 | |||||||||
Metropolitan Washington Airports Authority Revenue, Series B, 5.00%, 10/1/29 | 2,825 | 2,825 | |||||||||
| Metropolitan Washington Airports Authority Revenue (LOC — TD Bank N.A.), Series D-2, 1.80%, 10/1/39, Continuously Callable @100 (e) | 100 | 100 | |||||||||
| Washington Metropolitan Area Transit Authority Revenue, 5.00%, 7/1/43, Continuously Callable @100 | 5,000 | 6,082 | |||||||||
30,555 | |||||||||||
Guam (5.4%): | |||||||||||
| Antonio B. Won Pat International Airport Authority Revenue, Series B, 5.75%, 10/1/43, Continuously Callable @100 | 1,255 | 1,424 | |||||||||
| Guam Government Limited Obligation Revenue (LIQ — Barclays Bank PLC), Series 2017-XF2510, 1.78%, 12/1/46, Callable 12/1/26 @ 100 (a) (e) | 10,870 | 10,870 | |||||||||
| Guam Government Waterworks Authority Revenue 5.00%, 7/1/37, Continuously Callable @100 | 1,000 | 1,151 | |||||||||
5.00%, 7/1/40, Continuously Callable @100 | 3,250 | 3,705 | |||||||||
5.50%, 7/1/43, Continuously Callable @100 | 4,000 | 4,426 | |||||||||
Series A, 5.00%, 7/1/35, Continuously Callable @100 | 2,850 | 3,163 | |||||||||
| Guam Power Authority Revenue Series A, 5.00%, 10/1/31, Continuously Callable @100 | 500 | 560 | |||||||||
Series A, 5.00%, 10/1/34, Continuously Callable @100 | 1,000 | 1,076 | |||||||||
Series A, 5.00%, 10/1/40, Continuously Callable @100 | 4,000 | 4,560 | |||||||||
| Guam Power Authority Revenue (INS — Assured Guaranty Municipal Corp.) Series A, 5.00%, 10/1/39, Continuously Callable @100 | 750 | 852 | |||||||||
Series A, 5.00%, 10/1/44, Continuously Callable @100 | 1,000 | 1,134 | |||||||||
| Port Authority of Guam Revenue, Series A, 5.00%, 7/1/48, Continuously Callable @100 | 1,500 | 1,751 | |||||||||
| Territory of Guam Revenue Series A, 5.00%, 12/1/46, Continuously Callable @100 | 1,250 | 1,385 | |||||||||
Series B-1, 5.00%, 1/1/42, Continuously Callable @100 | 1,500 | 1,563 | |||||||||
Series D, 5.00%, 11/15/39, Continuously Callable @100 | 2,000 | 2,222 | |||||||||
39,842 | |||||||||||
Virginia (89.5%): | |||||||||||
| Alexandria Industrial Development Authority Revenue, Series A, 4.75%, 1/1/36, Pre-refunded 1/1/20 @ 100 | 1,000 | 1,008 | |||||||||
| Amherst Industrial Development Authority Revenue 5.00%, 9/1/26, Continuously Callable @100 | 1,795 | 1,796 | |||||||||
4.75%, 9/1/30, Continuously Callable @100 | 2,000 | 2,000 | |||||||||
| Arlington County Industrial Development Authority Revenue 5.00%, 7/1/31, Continuously Callable @100 | 15,000 | 15,342 | |||||||||
5.00%, 2/15/43, Continuously Callable @100 | 1,775 | 2,169 | |||||||||
See notes to financial statements.
3
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Capital Region Airport Commission Revenue Series A, 4.00%, 7/1/36, Continuously Callable @100 | $ | 700 | $ | 784 | |||||||
Series A, 4.00%, 7/1/38, Continuously Callable @100 | 750 | 839 | |||||||||
| Charles City County Economic Development Authority Revenue, Series A, 2.88%, 2/1/29, Continuously Callable @101 (e) | 10,000 | 10,507 | |||||||||
| Chesapeake Bay Bridge & Tunnel District Revenue 5.50%, 7/1/25 ETM | 5,000 | 6,044 | |||||||||
5.00%, 7/1/51, Continuously Callable @100 | 9,240 | 10,612 | |||||||||
| Chesapeake Bay Bridge & Tunnel District Revenue (INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/41, Continuously Callable @100 | 5,000 | 5,893 | |||||||||
| Chesapeake Hospital Authority Revenue 4.00%, 7/1/39, Continuously Callable @100 | 1,000 | 1,123 | |||||||||
4.00%, 7/1/43, Continuously Callable @100 | 4,000 | 4,464 | |||||||||
| City of Chesapeake Expressway Toll Road Revenue 0.00%, 7/15/32, Continuously Callable @100 (f) | 6,520 | 6,581 | |||||||||
0.00%, 7/15/40, Continuously Callable @100 (g) | 3,000 | 2,928 | |||||||||
City of Lynchburg, GO, 4.00%, 6/1/44, Continuously Callable @100 | 5,000 | 5,333 | |||||||||
| City of Norfolk, GO (LIQ — Bank of America Corp.), 1.58%, 8/1/37, Continuously Callable @100 (e) | 6,780 | 6,780 | |||||||||
| City of Portsmouth, GO 5.00%, 2/1/33, Pre-refunded 2/1/23 @ 100 | 880 | 986 | |||||||||
5.00%, 2/1/33, Continuously Callable @100 | 120 | 134 | |||||||||
| City of Richmond Public Utility Revenue 4.00%, 1/15/40, Continuously Callable @100 | 6,000 | 6,601 | |||||||||
Series A, 5.00%, 1/15/38, Continuously Callable @100 | 6,000 | 6,675 | |||||||||
| City of Richmond, GO Series D, 5.00%, 3/1/32 | 800 | 1,103 | |||||||||
Series D, 5.00%, 3/1/33 | 1,000 | 1,398 | |||||||||
| Industrial Development Authority Revenue (LOC — Deutsche Bank AG), 1.93%, 1/1/57, Callable 1/1/23 @ 100 (a) (e) | 25,000 | 25,000 | |||||||||
| Fairfax County Economic Development Authority Revenue 5.00%, 4/1/47, Continuously Callable @100 | 4,000 | 4,796 | |||||||||
Series A, 5.00%, 10/1/29, Continuously Callable @100 | 2,000 | 2,344 | |||||||||
Series A, 5.00%, 10/1/30, Continuously Callable @100 | 2,000 | 2,340 | |||||||||
Series A, 5.00%, 10/1/31, Continuously Callable @100 | 2,000 | 2,336 | |||||||||
Series A, 5.00%, 10/1/32, Continuously Callable @100 | 1,500 | 1,751 | |||||||||
Series A, 5.00%, 12/1/32, Continuously Callable @100 | 1,500 | 1,649 | |||||||||
Series A, 5.00%, 10/1/33, Continuously Callable @100 | 2,200 | 2,565 | |||||||||
Series A, 5.00%, 10/1/34, Continuously Callable @100 | 2,000 | 2,329 | |||||||||
Series A, 5.00%, 10/1/42, Continuously Callable @102 | 2,250 | 2,531 | |||||||||
Series A, 4.00%, 10/1/42, Continuously Callable @102 | 2,750 | 2,855 | |||||||||
Series A, 5.00%, 12/1/42, Continuously Callable @100 | 2,800 | 3,038 | |||||||||
Series B, 5.00%, 10/1/35, Continuously Callable @100 | 2,620 | 3,231 | |||||||||
Series B, 5.00%, 10/1/36, Continuously Callable @100 | 2,000 | 2,462 | |||||||||
| Fairfax County Industrial Development Authority Revenue 5.00%, 5/15/37, Continuously Callable @100 | 14,000 | 15,218 | |||||||||
4.00%, 5/15/42, Continuously Callable @100 | 1,000 | 1,035 | |||||||||
Series A, 4.00%, 5/15/44, Continuously Callable @100 | 6,900 | 7,308 | |||||||||
Series S, 4.00%, 5/15/48, Continuously Callable @100 | 1,500 | 1,664 | |||||||||
See notes to financial statements.
4
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Front Royal & Warren County Industrial Development Authority Revenue, 4.00%, 1/1/50, Continuously Callable @103 | $ | 5,000 | $ | 5,424 | |||||||
| Greater Richmond Convention Center Authority Revenue, 5.00%, 6/15/32, Continuously Callable @100 | 1,500 | 1,765 | |||||||||
| Hampton Roads Sanitation District Revenue Series A, 5.00%, 8/1/43, PRE 8/1/26 @ 100 | 4,700 | 5,823 | |||||||||
Series B, 1.60%, 8/1/46, Continuously Callable @100 (Put Date 11/12/19) (e) | 1,750 | 1,750 | |||||||||
| Hampton Roads Transportation Accountability Commission Revenue, Series A, 5.00%, 7/1/52, Continuously Callable @100 | 15,000 | 18,293 | |||||||||
| Hanover County Economic Development Authority Revenue 5.00%, 7/1/51, Continuously Callable @103 | 1,200 | 1,312 | |||||||||
Series A, 4.50%, 7/1/30, Continuously Callable @100 | 2,795 | 2,928 | |||||||||
Series A, 4.50%, 7/1/32, Continuously Callable @100 | 1,100 | 1,149 | |||||||||
Series A, 5.00%, 7/1/42, Continuously Callable @100 | 2,000 | 2,092 | |||||||||
| Henrico County Economic Development Authority Revenue 5.00%, 6/1/24, Continuously Callable @100 | 1,200 | 1,282 | |||||||||
4.25%, 6/1/26, Continuously Callable @100 | 140 | 147 | |||||||||
5.00%, 11/1/30, Pre-refunded 11/1/22 @ 100 | 2,105 | 2,340 | |||||||||
4.00%, 10/1/35, Continuously Callable @100 | 2,500 | 2,562 | |||||||||
5.00%, 10/1/37, Continuously Callable @103 | 2,500 | 2,869 | |||||||||
| Lewistown Commerce Center Community Development Authority Tax Allocation 6.05%, 3/1/44, Continuously Callable @103 | 1,468 | 1,444 | |||||||||
6.05%, 3/1/44, Continuously Callable @103 | 707 | 695 | |||||||||
Series C, 6.05%, 3/1/54, Continuously Callable @100 (b) | 2,340 | 426 | |||||||||
| Lexington Industrial Development Authority Revenue 4.00%, 1/1/31, Continuously Callable @102 | 750 | 803 | |||||||||
4.00%, 1/1/37, Continuously Callable @102 | 1,000 | 1,028 | |||||||||
5.00%, 1/1/43, Continuously Callable @100 | 2,000 | 2,149 | |||||||||
5.00%, 1/1/48, Continuously Callable @100 | 1,000 | 1,216 | |||||||||
Series A, 5.00%, 1/1/42, Continuously Callable @103 | 1,000 | 1,089 | |||||||||
Series A, 5.00%, 1/1/48, Continuously Callable @103 | 1,250 | 1,361 | |||||||||
| Loudoun County Economic Development Authority Revenue 5.00%, 12/1/31, Continuously Callable @100 | 1,135 | 1,330 | |||||||||
5.00%, 12/1/32, Continuously Callable @100 | 800 | 937 | |||||||||
5.00%, 12/1/33, Continuously Callable @100 | 775 | 907 | |||||||||
5.00%, 12/1/34, Continuously Callable @100 | 805 | 941 | |||||||||
Series A, 1.58%, 2/15/38, Callable 11/1/19 @ 100 (Put Date 11/12/19) (e) | 2,900 | 2,900 | |||||||||
Series B, 1.58%, 2/15/38, Callable 11/1/19 @ 100 (Put Date 11/12/19) (e) | 1,815 | 1,815 | |||||||||
Series C, 1.59%, 2/15/38, Callable 11/1/19 @ 100 (Put Date 11/12/19) (e) | 4,255 | 4,255 | |||||||||
Series D, 1.59%, 2/15/38, Callable 11/1/19 @ 100 (Put Date 11/12/19) (e) | 3,300 | 3,300 | |||||||||
Series F, 1.57%, 2/15/38, Callable 11/1/19 @ 100 (Put Date 11/12/19) (e) | 6,120 | 6,120 | |||||||||
| Lynchburg Economic Development Authority Revenue 5.00%, 9/1/43, Continuously Callable @100 | 3,000 | 3,267 | |||||||||
Series A, 5.00%, 1/1/47, Continuously Callable @100 (Put Date 11/12/19) (e) | 2,250 | 2,613 | |||||||||
| Lynchburg Economic Development Authority Revenue (LOC — Branch Banking & Trust Co.), Series C, 1.54%, 1/1/47, Continuously Callable @100 | 1,375 | 1,375 | |||||||||
| Marquis Community Development Authority of York County Virginia Tax Allocation, Series B, 0.00%, 9/1/41 (d) (i) | 3,532 | 1,492 | |||||||||
Marquis Community Development Authority Revenue, 9/1/45 (a) (d) (e) | 1,093 | 495 | |||||||||
See notes to financial statements.
5
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Marquis Community Development Authority Tax Allocation, Series C, 9/1/41 (c) (i) | $ | 5,389 | $ | 248 | |||||||
| Montgomery County Economic Development Authority Revenue, Series A, 5.00%, 6/1/35, Pre-refunded 6/1/20 @ 100 | 5,000 | 5,121 | |||||||||
Norfolk Airport Authority Revenue, 5.00%, 7/1/43, Continuously Callable @100 | 2,800 | 3,472 | |||||||||
| Norfolk Economic Development Authority Revenue 5.00%, 11/1/30, Pre-refunded 11/1/22 @ 100 | 1,000 | 1,112 | |||||||||
1.58%, 11/1/34, Continuously Callable @100 (e) | 10,555 | 10,555 | |||||||||
Series B, 5.00%, 11/1/43, Continuously Callable @100 | 3,500 | 3,821 | |||||||||
Series B, 5.00%, 11/1/48, Put 11/1/28 (e) (h) | 1,600 | 2,029 | |||||||||
Series B, 4.00%, 11/1/48, Continuously Callable @100 | 1,100 | 1,226 | |||||||||
Norfolk Redevelopment & Housing Authority Revenue, 5.50%, 11/1/19 | 350 | 351 | |||||||||
| Prince Edward County Industrial Development Authority Revenue 4.00%, 9/1/43, Continuously Callable @100 | 2,250 | 2,424 | |||||||||
5.00%, 9/1/48, Continuously Callable @100 | 2,055 | 2,430 | |||||||||
| Prince William County Industrial Development Authority Revenue 5.50%, 9/1/31, Pre-refunded 9/1/21 @ 100 | 1,705 | 1,838 | |||||||||
5.50%, 9/1/31, Continuously Callable @100 | 2,000 | 2,151 | |||||||||
5.50%, 9/1/34, Pre-refunded 9/1/21 @ 100 | 1,000 | 1,078 | |||||||||
5.00%, 11/1/46, Continuously Callable @100 | 10,000 | 10,925 | |||||||||
| Radford Industrial Development Authority Revenue (NBGA — Fannie Mae), 3.50%, 9/15/29, Continuously Callable @100 | 4,000 | 4,158 | |||||||||
| Rappahannock Regional Jail Authority Revenue 5.00%, 10/1/34, Continuously Callable @100 | 2,340 | 2,775 | |||||||||
5.00%, 10/1/35, Continuously Callable @100 | 1,165 | 1,381 | |||||||||
| Roanoke Economic Development Authority Revenue 5.00%, 7/1/33, Continuously Callable @100 | 1,150 | 1,180 | |||||||||
Series A, 5.00%, 9/1/36, Continuously Callable @100 | 1,640 | 1,931 | |||||||||
Series A, 5.00%, 9/1/43, Continuously Callable @100 | 4,060 | 4,676 | |||||||||
| Roanoke Economic Development Authority Revenue (INS — Assured Guaranty Municipal Corp.) 5.00%, 7/1/38, Pre-refunded 7/1/20 @ 100 (e) | 110 | 113 | |||||||||
Series B, 5.00%, 7/1/38, Continuously Callable @100 | 6,890 | 7,047 | |||||||||
| Stafford County Economic Development Authority Revenue 5.00%, 6/15/36, Continuously Callable @100 | 5,900 | 6,899 | |||||||||
4.00%, 6/15/37, Continuously Callable @100 | 6,495 | 7,047 | |||||||||
| Economic Development Authority Revenue (LIQ — JP Morgan Chase & Co. ) Series 2018-XL0075, 1.73%, 1/1/25 (a) (e) | 5,400 | 5,400 | |||||||||
Series 2016-XF0453, 1.61%, 11/1/19 (a) (e) | 5,000 | 5,000 | |||||||||
| Tobacco Settlement Financing Corp. Revenue, Series B-1, 5.00%, 6/1/47, Continuously Callable @100 | 10,000 | 10,000 | |||||||||
| University of Virginia Revenue Series A, 5.00%, 6/1/37, Pre-refunded 6/1/23 @ 100 | 4,405 | 4,988 | |||||||||
Series A, 5.00%, 4/1/42, Continuously Callable @100 | 4,000 | 4,882 | |||||||||
Series A, 5.00%, 4/1/47, Continuously Callable @100 | 5,000 | 6,082 | |||||||||
Series A-1, 4.00%, 4/1/45, Continuously Callable @100 | 5,000 | 5,458 | |||||||||
Series B, 5.00%, 4/1/46, Continuously Callable @100 | 5,000 | 6,089 | |||||||||
| Upper Occoquan Sewage Authority Revenue, 4.00%, 7/1/39, Continuously Callable @100 | 5,000 | 5,501 | |||||||||
See notes to financial statements.
6
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
| Virginia Beach Development Authority Revenue 5.00%, 9/1/40, Continuously Callable @103 | $ | 3,250 | $ | 3,770 | |||||||
5.00%, 9/1/44, Continuously Callable @103 | 4,865 | 5,624 | |||||||||
Series A, 5.00%, 5/1/29, Continuously Callable @100 | 1,795 | 2,084 | |||||||||
| Virginia College Building Authority Revenue 5.00%, 6/1/29, Continuously Callable @100 | 5,000 | 4,831 | |||||||||
5.00%, 2/1/31, Continuously Callable @100 | 10,000 | 12,621 | |||||||||
5.00%, 9/1/31, Continuously Callable @100 | 2,725 | 3,177 | |||||||||
5.00%, 2/1/32, Continuously Callable @100 | 4,000 | 5,035 | |||||||||
5.00%, 9/1/32, Continuously Callable @100 | 5,615 | 6,538 | |||||||||
4.00%, 1/15/33, Continuously Callable @100 | 965 | 1,083 | |||||||||
5.00%, 9/1/33, Continuously Callable @100 | 6,380 | 7,419 | |||||||||
5.00%, 3/1/34, Continuously Callable @100 | 10,000 | 10,150 | |||||||||
4.00%, 1/15/35, Continuously Callable @100 | 545 | 607 | |||||||||
4.00%, 1/15/36, Continuously Callable @100 | 650 | 722 | |||||||||
5.00%, 6/1/36, Continuously Callable @100 | 11,710 | 10,799 | |||||||||
5.00%, 3/1/41, Continuously Callable @100 | 2,540 | 2,577 | |||||||||
4.00%, 1/15/43, Continuously Callable @100 | 1,285 | 1,395 | |||||||||
Series A, 4.00%, 2/1/35, Continuously Callable @100 | 8,000 | 8,864 | |||||||||
| Virginia College Building Authority Revenue (LIQ — U.S. Bancorp), 1.55%, 8/1/34, Callable 11/6/19 @ 100 | 9,590 | 9,590 | |||||||||
| Virginia Commonwealth Transportation Board Revenue 5.00%, 3/15/32, Continuously Callable @100 | 3,350 | 4,172 | |||||||||
5.00%, 9/15/32, Continuously Callable @100 | 9,190 | 11,425 | |||||||||
4.00%, 5/15/42, Continuously Callable @100 | 10,000 | 11,286 | |||||||||
Series A, 4.00%, 5/15/36, Continuously Callable @100 | 2,000 | 2,264 | |||||||||
| Virginia Commonwealth University Health System Authority Revenue 4.75%, 7/1/36, Pre-refunded 7/1/21 @ 100 | 6,315 | 6,689 | �� | ||||||||
4.75%, 7/1/41, Pre-refunded 7/1/21 @ 100 | 3,000 | 3,178 | |||||||||
5.00%, 7/1/46, Continuously Callable @100 | 5,500 | 6,559 | |||||||||
| Virginia Commonwealth University Revenue Series A, 4.00%, 11/1/37, Continuously Callable @100 | 750 | 854 | |||||||||
Series A, 5.00%, 11/1/38, Continuously Callable @100 | 350 | 436 | |||||||||
Series A, 4.00%, 5/1/48, Continuously Callable @100 | 2,475 | 2,745 | |||||||||
| Virginia Housing Development Authority Revenue Series B, 4.50%, 10/1/36, Continuously Callable @100 | 3,175 | 3,257 | |||||||||
Series B, 3.60%, 5/1/46, Continuously Callable @100 | 7,000 | 7,200 | |||||||||
Series D, 4.60%, 9/1/40, Continuously Callable @100 | 4,480 | 4,520 | |||||||||
| Virginia Public Building Authority Revenue, Series A, 4.00%, 8/1/30, Continuously Callable @100 | 4,000 | 4,615 | |||||||||
Virginia Public School Authority Revenue, 5.00%, 8/1/24 | 10,000 | 11,707 | |||||||||
| Virginia Resources Authority Revenue 5.00%, 11/1/40, Pre-refunded 11/1/20 @ 100 | 1,270 | 1,320 | |||||||||
5.00%, 11/1/40, Continuously Callable @100 | 165 | 171 | |||||||||
4.00%, 11/1/41, Continuously Callable @100 | 7,310 | 7,734 | |||||||||
Series A, 5.00%, 11/1/32, Continuously Callable @100 | 1,030 | 1,178 | |||||||||
| Virginia Small Business Financing Authority Revenue 5.00%, 4/1/25, Continuously Callable @100 | 420 | 426 | |||||||||
5.25%, 4/1/26, Continuously Callable @100 | 185 | 188 | |||||||||
5.50%, 4/1/28, Continuously Callable @100 | 855 | 870 | |||||||||
See notes to financial statements.
7
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
5.50%, 4/1/33, Continuously Callable @100 | $ | 750 | $ | 763 | |||||||
5.00%, 11/1/40, Continuously Callable @100 | 11,945 | 12,169 | |||||||||
| Virginia Small Business Financing Authority Revenue (LOC — Bank of America Corp.), 1.81%, 7/1/30 | 5,600 | 5,600 | |||||||||
| Washington County Industrial Development Authority Revenue 5.25%, 8/1/30, Pre-refunded 8/1/20 @ 100 | 2,165 | 2,235 | |||||||||
5.50%, 8/1/40, Pre-refunded 8/1/20 @ 100 | 2,160 | 2,234 | |||||||||
| Watkins Centre Community Development Authority Revenue, 5.40%, 3/1/20, Continuously Callable @100 | 747 | 749 | |||||||||
| Western Regional Jail Authority Revenue 5.00%, 12/1/35, Continuously Callable @100 | 3,085 | 3,736 | |||||||||
5.00%, 12/1/38, Continuously Callable @100 | 2,000 | 2,413 | |||||||||
| Winchester Economic Development Authority Revenue 5.00%, 1/1/44, Continuously Callable @100 | 3,250 | 3,762 | |||||||||
Series S, 5.00%, 1/1/44, Continuously Callable @100 | 3,250 | 3,646 | |||||||||
| Wise County Industrial Development Authority Revenue, Series 2009-A, 2.15%, 10/1/40, Put 9/1/20 (e) (h) | 5,000 | 5,026 | |||||||||
648,647 | |||||||||||
Total Municipal Bonds (Cost $691,072) | 719,044 | ||||||||||
Total Investments (Cost $691,072) — 99.1% | 719,044 | ||||||||||
Other assets in excess of liabilities — 0.9% | 6,334 | ||||||||||
NET ASSETS — 100.00% | $ | 725,378 | |||||||||
(a) Rule 144A security or other security that is restricted as to resale to institutional investors. The Fund's Adviser has deemed this security to be liquid, unless noted otherwise, based upon procedures approved by the Board of Trustees. As of September 30, 2019, the fair value of these securities was $46,765 (thousands) and amounted to 6.4% of net assets.
(b) Illiquid
(c) This security is classified as Level 3 within the fair value hierarchy and is deemed to be illiquid by the Fund's Adviser. (See Note 2)
(d) This security is classified as Level 3 within the fair value hierarchy. (See Note 2)
(e) Variable Rate Demand Notes that provide the rights to sell the security at face value on either that day or within the rate-reset period. The interest rate is reset on the put date at a stipulated daily, weekly, monthly, quarterly, or other specified time interval to reflect current market conditions. These securities do not indicate a reference rate and spread in their description.
(f) Stepped-coupon security converts to coupon form on 07/01/23 with a rate of 4.75%.
(g) Stepped-coupon security converts to coupon form on 07/01/23 with a rate of 4.875%.
(h) Put Bond.
(i) Zero coupon bond.
See notes to financial statements.
8
| USAA Mutual Funds Trust USAA Virginia Bond Fund | Schedule of Portfolio Investments — continued September 30, 2019 | ||||||
(Amounts in Thousands, Except for Shares) (Unaudited)
ETM — Escrowed to final maturity
GO — General Obligation
LOC — Letter of Credit
PLC — Public Limited Company
PRE — Pre-refunded to a date prior to maturity
Credit Enhancements — Adds the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. The enhancement may be provided by a high-quality bank, insurance company or other corporation, or a collateral trust. The enhancements do not guarantee the market values of the securities.
INS Principal and interest payments are insured by the name listed. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations.
LIQ Liquidity enhancement that may, under certain circumstances, provide for repayment of principal and interest upon demand from the name listed.
LOC Principal and interest payments are guaranteed by a bank letter of credit or other bank credit agreement.
NBGA Principal and interest payments or, under certain circumstances, underlying mortgages, are guaranteed by a nonbank guarantee agreement from the name listed.
See notes to financial statements.
9
USAA Mutual Funds Trust | Statement of Assets and Liabilities September 30, 2019 | ||||||
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
| USAA Virginia Bond Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $691,072) | $ | 719,044 | |||||
Cash | 160 | ||||||
Interest receivable | 7,648 | ||||||
Receivable for capital shares issued | 285 | ||||||
Receivable for investments sold | 3,500 | ||||||
Prepaid expenses | 8 | ||||||
Total assets | 730,645 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Distributions | 263 | ||||||
Investments purchased | 4,000 | ||||||
Capital shares redeemed | 600 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 192 | ||||||
Administration fees | 90 | ||||||
Custodian fees | 16 | ||||||
Transfer agent fees | 22 | ||||||
Chief Compliance Officer fees | — | (a) | |||||
| 12b-1 fees | 2 | ||||||
Other accrued expenses | 82 | ||||||
Total liabilities | 5,267 | ||||||
Net Assets: | |||||||
Capital | 707,112 | ||||||
Total distributable earnings/(loss) | 18,266 | ||||||
Net assets | $ | 725,378 | |||||
Net Assets | |||||||
Adviser Shares | $ | 20,066 | |||||
Fund Shares | 705,312 | ||||||
Total | $ | 725,378 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Adviser Shares | 1,747 | ||||||
Fund Shares | 61,379 | ||||||
| Total | 63,126 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Adviser Shares | $ | 11.48 | |||||
Fund Shares | $ | 11.49 | |||||
(a) Rounds to less than $1.
(b) Per share amount may not recalculate due to rounding of net assets and/or shares outstanding.
See notes to financial statements.
10
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended September 30, 2019 | ||||||
(Amounts in Thousands) (Unaudited)
| USAA Virginia Bond Fund | |||||||
Investment Income: | |||||||
Interest | $ | 11,906 | |||||
Total income | 11,906 | ||||||
Expenses: | |||||||
Investment advisory fees | 1,219 | ||||||
Administration fees — Adviser Shares | 15 | ||||||
Administration fees — Fund Shares | 520 | ||||||
Professional fees | 3 | ||||||
12b-1 fees — Adviser Shares | 25 | ||||||
Custodian fees | 57 | ||||||
Transfer agent fees — Adviser Shares | 5 | ||||||
Transfer agent fees — Fund Shares | 105 | ||||||
Trustees' fees | 18 | ||||||
Chief Compliance Officer fees | 1 | ||||||
Legal and audit fees | 37 | ||||||
State registration and filing fees | — | (a) | |||||
Other expenses | 59 | ||||||
Total expenses | 2,064 | ||||||
Expenses waived/reimbursed by AMCO | (3 | ) | |||||
Net expenses | 2,061 | ||||||
Net Investment Income (Loss) | 9,845 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | 179 | ||||||
Net change in unrealized appreciation/depreciation on investment securities | 11,769 | ||||||
Net realized/unrealized gains (losses) on investments | 11,948 | ||||||
Change in net assets resulting from operations | $ | 21,793 | |||||
(a) Rounds to less than $1.
See notes to financial statements.
11
USAA Mutual Funds Trust | Statements of Changes in Net Assets | ||||||
(Amounts in Thousands)
USAA Virginia Bond Fund | |||||||||||
| Six Months Ended September 30, 2019 (unaudited) | Year Ended March 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 9,845 | $ | 20,502 | |||||||
Net realized gains (losses) from investments | 179 | (3,552 | ) | ||||||||
| Net change in unrealized appreciation (depreciation) on investments | 11,769 | 11,703 | |||||||||
Change in net assets resulting from operations | 21,793 | 28,653 | |||||||||
Distributions to Shareholders: | |||||||||||
Adviser Shares | (256 | ) | (542 | ) | |||||||
Fund Shares | (9,735 | ) | (19,922 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (9,991 | ) | (20,464 | ) | |||||||
Change in net assets resulting from capital transactions | 21,946 | (3,225 | ) | ||||||||
Change in net assets | 33,748 | 4,964 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 691,630 | 686,666 | |||||||||
End of period | $ | 725,378 | $ | 691,630 | |||||||
Capital Transactions: | |||||||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 1,489 | $ | 2,637 | |||||||
Distributions reinvested | 251 | 534 | |||||||||
Cost of shares redeemed | (1,442 | ) | (3,851 | ) | |||||||
Total Adviser Shares | $ | 298 | $ | (680 | ) | ||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 48,284 | $ | 72,506 | |||||||
Distributions reinvested | 8,011 | 16,145 | |||||||||
Cost of shares redeemed | (34,647 | ) | (91,196 | ) | |||||||
Total Fund Shares | $ | 21,648 | $ | (2,545 | ) | ||||||
Change in net assets resulting from capital transactions | $ | 21,946 | $ | (3,225 | ) | ||||||
Share Transactions: | |||||||||||
Adviser Shares | |||||||||||
Issued | 131 | 237 | |||||||||
Reinvested | 22 | 48 | |||||||||
Redeemed | (127 | ) | (347 | ) | |||||||
Total Adviser Shares | 26 | (62 | ) | ||||||||
Fund Shares | |||||||||||
Issued | 4,224 | 6,513 | |||||||||
Reinvested | 700 | 1,451 | |||||||||
Redeemed | (3,027 | ) | (8,217 | ) | |||||||
Total Fund Shares | 1,897 | (253 | ) | ||||||||
Change in Shares | 1,923 | (315 | ) | ||||||||
See notes to financial statements.
12
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13
USAA Mutual Funds Trust | Financial Highlights | ||||||
For a Share Outstanding Throughout Each Period
Investment Activities | Distributions to Shareholders From | ||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Activities | Net Investment Income | Total Distributions | ||||||||||||||||||||||
USAA Virginia Bond Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 11.29 | 0.15 | (e) | 0.19 | 0.34 | (0.15 | ) | (0.15 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.16 | 0.32 | 0.12 | 0.44 | (0.31 | ) | (0.31 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 11.20 | 0.31 | (0.04 | ) | 0.27 | (0.31 | ) | (0.31 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 11.51 | 0.33 | (0.31 | ) | 0.02 | (0.33 | ) | (0.33 | ) | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 11.53 | 0.38 | (0.02 | ) | 0.36 | (0.38 | ) | (0.38 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 11.17 | 0.40 | 0.36 | 0.76 | (0.40 | ) | (0.40 | ) | ||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | $ | 11.30 | 0.16 | (e) | 0.19 | 0.35 | (0.16 | ) | (0.16 | ) | |||||||||||||||||
| Year Ended March 31, 2019 | $ | 11.16 | 0.34 | 0.14 | 0.48 | (0.34 | ) | (0.34 | ) | ||||||||||||||||||
| Year Ended March 31, 2018 | $ | 11.21 | 0.34 | (0.05 | ) | 0.29 | (0.34 | ) | (0.34 | ) | |||||||||||||||||
| Year Ended March 31, 2017 | $ | 11.52 | 0.35 | (0.31 | ) | 0.04 | (0.35 | ) | (0.35 | ) | |||||||||||||||||
| Year Ended March 31, 2016 | $ | 11.53 | 0.41 | (0.01 | ) | 0.40 | (0.41 | ) | (0.41 | ) | |||||||||||||||||
| Year Ended March 31, 2015 | $ | 11.17 | 0.43 | 0.35 | 0.78 | (0.42 | ) | (0.42 | ) | ||||||||||||||||||
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could differ from the Lipper reported return.
^ The net expense ratio may not correlate to the applicable expense limits in place during the period since the current contractual expense limitation is applied for a two year period beginning July 1, 2019 and in effect through June 30, 2021, instead of coinciding with the Fund's fiscal year end. Details of the current contractual expense limitation in effect can be found in Note 4 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) Reflects total annual operating expenses for reductions of expenses paid indirectly for the March 31 fiscal years ended 2017, 2016, and 2015. Expenses paid indirectly decreased the expense ratio for each of these respective years by less than 0.01%.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
(f) The expense ratio does not correlate to the applicable expense limit in place during the period given that the contractual expense limitation was not in effect until July 1, 2019. Details of the current expense limitation in effect can be found in Item 4 of the accompanying Notes to Financial Statements.
See notes to financial statements.
14
USAA Mutual Funds Trust | Financial Highlights — continued | ||||||
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||
| Redemption fees added to beneficial interests | Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(d) | ||||||||||||||||||||||||||||
USAA Virginia Bond Fund | |||||||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 11.48 | 3.00 | % | 0.80 | % | 2.54 | % | 0.83 | % | $ | 20,066 | 6 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 11.29 | 4.05 | % | 0.80 | % | 2.82 | % | 0.86 | % | $ | 19,439 | 9 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | (g) | $ | 11.16 | 2.42 | % | 0.79 | %(h) | 2.76 | % | 0.81 | % | $ | 19,894 | 11 | % | |||||||||||||||||||
| Year Ended March 31, 2017 | — | $ | 11.20 | 0.12 | % | 0.81 | % | 2.85 | % | 0.81 | % | $ | 25,496 | 13 | % | ||||||||||||||||||||
| Year Ended March 31, 2016 | — | (g) | $ | 11.51 | 3.24 | % | 0.84 | % | 3.34 | % | 0.84 | % | $ | 22,951 | 3 | % | |||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 11.53 | 6.84 | % | 0.84 | %(i) | 3.44 | % | 0.84 | % | $ | 21,029 | 12 | % | ||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
| Six Months Ended September 30, 2019 (unaudited) | — | $ | 11.49 | 3.12 | % | 0.57 | %(f) | 2.77 | % | 0.57 | % | $ | 705,312 | 6 | % | ||||||||||||||||||||
| Year Ended March 31, 2019 | — | $ | 11.30 | 4.36 | % | 0.59 | % | 3.03 | % | 0.59 | % | $ | 672,191 | 9 | % | ||||||||||||||||||||
| Year Ended March 31, 2018 | — | $ | 11.16 | 2.56 | % | 0.56 | % | 2.98 | % | 0.56 | % | $ | 666,772 | 11 | % | ||||||||||||||||||||
| Year Ended March 31, 2017 | — | $ | 11.21 | 0.36 | % | 0.58 | % | 3.10 | % | 0.58 | % | $ | 658,452 | 13 | % | ||||||||||||||||||||
| Year Ended March 31, 2016 | — | $ | 11.52 | 3.58 | % | 0.60 | % | 3.57 | % | 0.60 | % | $ | 648,913 | 3 | % | ||||||||||||||||||||
| Year Ended March 31, 2015 | — | $ | 11.53 | 7.10 | % | 0.59 | % | 3.70 | % | 0.59 | % | $ | 648,331 | 12 | % | ||||||||||||||||||||
(g) Amount is less than $0.005 per share.
(h) Effective October 12, 2017, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.80% of the Adviser Shares' average daily net assets.
(i) Prior to August 1, 2014, AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 0.90% of the Adviser Shares' average daily net assets.
See notes to financial statements.
15
USAA Mutual Funds Trust | Notes to Financial Statements September 30, 2019 | ||||||
(Unaudited)
1. Organization:
USAA Mutual Funds Trust (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust is comprised of 47 funds and is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value.
The accompanying financial statements are those of the USAA Virginia Bond Fund (the "Fund"). The Fund offers two classes of shares: Fund Shares and Adviser Shares. The Fund is classified as diversified under the 1940 Act.
Each class of shares of the Fund has substantially identical rights and privileges except with respect to fees paid under distribution plans, expenses allocable exclusively to each class of shares, voting rights on matters solely affecting a single class of shares, and the exchange privilege of each class of shares.
On November 6, 2018, United Services Automobile Association ("USAA"), the parent company of USAA Asset Management Company ("AMCO"), the investment adviser to the Fund, and USAA Transfer Agency Company, d/b/a USAA Shareholder Account Services ("SAS"), the transfer agent to the Fund, announced that AMCO and SAS would be acquired by Victory Capital Holdings Inc., a global investment management firm headquartered in Cleveland, Ohio (the "Transaction"). The Transaction closed on July 1, 2019. A special shareholder meeting was held on April 18, 2019, at which shareholders of the Fund approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc ("VCM" or "Adviser"). Effective July 1, 2019, VCM replaced AMCO as the investment adviser to the Fund and Victory Capital Transfer Agency Company replaced SAS as the Fund's transfer agent. In addition, effective on that same date, shareholders of the Fund also elected the following two new directors to the Board of the Trust to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an Interested Trustee; and (2) John C. Walters, to serve as an Independent Trustee. Effective August 5, 2019, Citibank, N.A. is the new custodian for the USAA Mutual Funds.
Under the Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects that risk of loss to be remote.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP 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 period. Actual results could differ from those estimates. The Fund follows the specialized accounting and reporting requirements under GAAP that are applicable to investment companies under Accounting Standards Codification Topic 946.
Investment Valuation:
The Fund records investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The inputs used for valuing the Fund's investments are summarized in the three broad levels listed below:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities or interest rates applicable to those securities, etc.)
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The inputs or methodologies used for valuation techniques are not necessarily an indication of the risk associated with entering into those investments.
The Trust's Board of Trustees (the "Board") has established the Pricing and Liquidity Committee (the "Committee"), and subject to Board oversight, the Committee administers and oversees the Fund's valuation policies and procedures, which are approved by the Board.
Investments in open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 in the fair value hierarchy.
Debt securities of United States ("U.S.") issuers, along with corporate and municipal securities, including short-term investments maturing in 60 days or less, may be valued using evaluated bid or the last sales price to price securities by dealers or an independent pricing service approved by the Board. These valuations are typically categorized as Level 2 in the fair value hierarchy.
In the event that price quotations or valuations are not readily available, are not reflective of market value, or a significant event has been recognized in relation to a security or class of securities, the securities are valued in good faith by the Committee in accordance with valuation procedures approved by the Board. These valuations are typically categorized as Level 2 or Level 3 in the fair value hierarchy, based on the observability of inputs used to determine the fair value. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund's net asset value ("NAV") to be more reliable than it otherwise would be.
A summary of the valuations as of September 30, 2019, based upon the three levels defined above, is included in the table below while the breakdown, by category, of investments is disclosed in the Schedule of Portfolio Investments (amounts in thousands):
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Municipal Bonds | $ | — | $ | 716,809 | $ | 2,235 | $ | 719,044 | |||||||||||
Total | $ | — | $ | 716,809 | $ | 2,235 | $ | 719,044 | |||||||||||
Securities Purchased on a Delayed-Delivery or When-Issued Basis:
The Fund may purchase securities on a delayed-delivery or when-issued basis. Delivery and payment for securities that have been purchased by the Fund on a delayed-delivery or when-issued basis or for delayed draws on loans can take place a month or more after the trade date. At the time the Fund makes the commitment to purchase a security on a delayed-delivery or when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. No interest accrues to the Fund until the transaction settles and payment takes place. A segregated account is established and the Fund maintains cash and/or marketable securities at least equal in value to commitments for delayed-delivery or when-issued securities. If the Fund owns delayed-delivery or when-issued securities, these values are included in "Payable for investments purchased" on the accompanying Statement of Assets and Liabilities and the segregated assets are identified in the Schedule of Portfolio Investments.
Municipal Obligations:
The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Investment Companies:
The Fund may invest in portfolios of open-end investment companies. These investment companies 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 by the methods established by the board of directors of the underlying funds.
Investment Transactions and Related Income:
Changes in holdings of investments are accounted for no later than one business day following the trade date. For financial reporting purposes, however, investment transactions are accounted for on trade date on the last business day of the reporting period. Interest income is determined on the basis of coupon interest accrued using the effective interest method which adjusts, where applicable, the amortization of premiums or accretion of discount. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
Securities Lending:
The Fund, through a securities lending agreement with Citibank, N.A. ("Citibank"), may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income, net of income retained by Citibank. Borrowers are required to secure their loans for collateral in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked-to-market daily. Any collateral shortfalls associated with increases in the valuation of the securities loaned are cured the next business day once the shortfall exceeds $100,000. Collateral may be cash, U.S. government securities, or other securities as permitted by SEC guidelines. Cash collateral may be invested in high-quality short-term investments, primarily open-end investment companies. Collateral requirements are determined daily based on the value of the Fund's securities on loan as of the end of the prior business day. During the time portfolio securities are on loan, the borrower will pay the Fund any dividends or interest paid on such securities plus any fee negotiated between the parties to the lending agreement. The Fund also earns a return from the collateral. The Fund pays Citibank various fees in connection with the investment of cash collateral and fees based on the investment income received from securities lending activities. Securities lending income (net of these fees) is disclosed on the Statement of Operations. Loans are terminable upon demand and the borrower must return the loaned securities within the lesser of one standard settlement period or five business days. Risks relating to securities-lending transactions include that the borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower. The Fund's agreement with Citibank does not include master netting provisions. Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy borrower default. Cash collateral is listed in the Fund's Portfolio of Investments and Financial Statements while non-cash collateral is not included.
During the six months ended September 30, 2019, the Fund had no securities on loan.
Federal Income Taxes:
It is the Fund's policy to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has a tax year end of March 31.
Management of the Fund has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., all open tax years and the interim tax period since then). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
Allocations:
Expenses directly attributable to the Fund are charged to the Fund, while expenses which are attributable to more than one fund in the Trust, or jointly with an affiliated trust, are allocated among the respective funds in the Trust and/or affiliated trust based upon net assets or another appropriate basis.
Income, expenses (other than class-specific expenses such as transfer agent fees, state registration fees, printing and 12b-1 fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets on the date income is earned or expenses and realized and unrealized gains and losses are incurred.
Cross-Trade Transactions:
Pursuant to Rule 17a-7 under the 1940 Act, the Fund may engage in cross-trades which are securities transactions with affiliated investment companies and advisory accounts managed by the Adviser and any applicable sub-adviser. Any such purchase or sale transaction must be effected without brokerage commission or other remuneration, except for customary transfer fees. The transaction must be effected at the current market price, which is either the security's last sale price on an exchange or, if there are no transactions in the security that day, at the average of the highest bid and lowest asked price. For the six months ended September 30, 2019, the Fund engaged in the following securities transactions with affiliated funds, which resulted in the following net realized gains (losses): (amounts in thousands)
| Purchases | Sales | Net Realized Gains (Losses) | |||||||||
| $ | 11,840 | $ | — | $ | — | ||||||
3. Purchases and Sales:
Cost of purchases and proceeds from sales/maturities of securities (excluding securities maturing less than one year from acquisition) for the six months ended September 30, 2019 were as follows for the Fund (amounts in thousands):
| Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 39,031 | $ | 52,310 | ||||||||
There were no purchases and sales of U.S. Government Securities during the six months ended September 30, 2019.
4. Fees and Transactions with Affiliates and Related Parties:
Investment Advisory and Management fees:
Effective with the Transaction on July 1, 2019, investment advisory services are provided to the Fund by the Adviser, a New York corporation registered as an investment adviser with the Securities and Exchange Commission ("SEC"). The Adviser is a wholly-owned indirect subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation, and a wholly-owned direct subsidiary of Victory Capital Operating, LLC. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly as a percentage of the average daily net assets of the Fund, on an annual basis equal to 0.50% of the first $50 million, 0.40% of that portion over $50 million but not over $100 million, and 0.30% of that portion over $100 million. Amounts incurred and paid to VCM from July 1, 2019 through September 30, 2019 are $585 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
Prior to the Transaction on July 1, 2019, AMCO provided investment management services to the Fund pursuant to an Advisory Agreement. Under this agreement, AMCO was responsible for managing the
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
business and affairs of the Fund, and for directly managing day-to-day investment of the Fund's assets, subject to the authority of and supervision by the Board. The investment management fee for the Fund was comprised of a base fee and a performance adjustment. The Fund's base fee was accrued daily and paid monthly as a percentage of the average daily net assets of the Fund, which on an annual basis is equal to 0.50% of the first $50 million, 0.40% of that portion over $50 million but not over $100 million, and 0.30% of that portion over $100 million.
Effective with the Transaction on July 1, 2019, no performance adjustments will be made for periods beginning July 1, 2019, through June 30, 2020, and only performance beginning as of July 1, 2020, and thereafter will be utilized in calculating performance adjustments through June 30, 2020.
Prior to the Transaction on July, 1, 2019, the performance adjustment for each share class was calculated monthly by comparing the Fund's performance to that of the Lipper Virginia Municipal Debt Funds Index. The Lipper Virginia Municipal Debt Funds Index tracks the total return performance of funds within the Lipper Virginia Municipal Debt Funds category.
The performance period for each share class consists of the current month plus the previous 35 months. The following table is utilized to determine the extent of the performance adjustment:
| Over/Under Performance Relative to Index (in basis points)(a) | Annual Adjustment Rate (in basis points)(a) | ||||||
+/- 20 to 50 | +/- 4 | ||||||
+/- 51 to 100 | +/- 5 | ||||||
+/- 101 and greater | +/- 6 | ||||||
(a) Based on the difference between average annual performance of the relevant share class of the Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the share class are calculated over a rolling 36-month period.
Each class' annual performance adjustment rate is multiplied by the average daily net assets of each respective class over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance), or subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, each class pays a positive performance fee adjustment for a performance period whenever the class outperforms the Lipper Virginia Municipal Debt Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period April 1, 2019 through June 30, 2019, performance adjustments for Fund Shares and Adviser Shares were $72 and $2 thousand, respectively, and 0.01% and 0.01% of net assets, respectively. Base fees incurred and paid to AMCO from April 1, 2019 through June 30, 2019 were $560 thousand and reflected on the Statement of Operations as Investment Advisory fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under a Fund Administration, Servicing and Accounting Agreement, VCM is paid for its services an annual fee at a rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from July 1, 2019 through September 30, 2019 are $266 and $8 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
Effective with the Transaction on July 1, 2019, the Fund (as part of the Trust) has entered into an agreement to provide compliance services with the Adviser, pursuant to which the Adviser furnishes its compliance personnel, including the services of the Chief Compliance Officer ("CCO"), and other resources reasonably necessary to provide the Trust with compliance oversight services related to the design, administration and oversight of a compliance program for the Trust in accordance with Rule 38a-1 under the 1940 Act. The CCO is an employee of the Adviser, which pays the compensation
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
of the CCO and his support staff. Funds in the Trust, Victory Variable Insurance Funds, Victory Portfolios and Victory Portfolios II (collectively, the "Victory Funds Complex") in the aggregate, compensates the Adviser for these services. Amounts incurred during the period from April 1, 2019 to June 30, 2019 are reflected on the Statement of Operations as Chief Compliance Officer Fees.
Effective with the Transaction on July 1, 2019, Citi Fund Services Ohio, Inc. ("Citi"), an affiliate of Citibank, acts as sub-administrator and sub-fund accountant to the Fund pursuant to a Sub-Administration and Sub-Fund Accounting Services Agreement between VCM and Citi. VCM pays Citi a fee for providing these services. The Trust reimburses VCM and Citi for all of their reasonable out-of-pocket expenses incurred in providing these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. For such services, AMCO received a fee accrued daily and paid monthly at an annualized rate of 0.15% of average daily net assets for both the Fund Shares and Adviser Shares. Amounts incurred from April 1, 2019 through June 30, 2019 were $254 and $7 thousand for Fund Shares and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
In addition to the services provided under its Administration and Servicing Agreement with the Fund, AMCO also provided certain compliance and legal services for the benefit of the Fund prior to the Transaction on July 1, 2019. The Board approved the reimbursement of a portion of these expenses incurred by AMCO. Amounts reimbursed by the Fund to AMCO for these compliance and legal services are presented on the Statement of Operations as Professional fees.
Transfer Agency Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Transfer Agency, Inc. ("VCTA"), (formerly, USAA Shareholder Account Services ("SAS")) provides transfer agency services to the Fund. VCTA, an affiliate of the Adviser, provides transfer agent services to the Fund Shares and Adviser Shares based on an annual charge of $25.50 per shareholder account plus out-of-pocket expenses. VCTA pays a portion of these fees to certain intermediaries for the administration and servicing of accounts that are held with such intermediaries. Amounts incurred and paid to VCTA from July 1, 2019 through September 30, 2019 was $56 and $3 thousand for the Fund Shares and Adviser Shares, respectively. Amounts incurred and paid to SAS from April 1, 2019 through June 30, 2019 was $49 and $2 thousand for the Fund Shares and Adviser Shares, respectively. These amounts are reflected on the Statement of Operations as Transfer agent fees.
Effective with the Transaction on July 1, 2019, FIS Investor Services LLC serves as sub-transfer agent and dividend disbursing agent for the Fund pursuant to a Sub-Transfer Agent agreement between VCTA and FIS Investor Services LLC. VCTA provides FIS Investor Services LLC a fee for providing these services.
Distribution and Service 12b-1 Fees:
Effective with the Transaction on July 1, 2019, Victory Capital Advisers, Inc. (the "Distributor"), an affiliate of the Adviser, serves as distributor for the continuous offering of the Adviser Shares pursuant to a Distribution Agreement between the Distributor and the Trust. Pursuant to the Distribution and Service Plans adopted in accordance with Rule 12b-1 under the 1940 Act, the Distributor may receive a monthly distribution and service fee, at an annual rate of up to 0.25% of the average daily net assets of the Adviser Shares. Amounts incurred and paid to the Distributor from July 1, 2019 through September 30, 2019 are $13 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Adviser Shares are offered and sold without imposition of an initial sales charge or a contingent deferred sales charge.
Prior to the Transaction on July 1, 2019, the Fund adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under the plan, the Adviser Shares paid fees to USAA Investment Management Company (IMCO), the distributor, for distribution and shareholder services. IMCO paid all or a portion of such fees to intermediaries that made the Adviser Shares available for investment by their customers. The fee was accrued daily and paid monthly at an annual rate of 0.25% of the Adviser Shares' average daily net assets. IMCO also provided exclusive underwriting and
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
distribution of the Fund's shares on a continuing best-efforts basis and received no fee or other compensation for these services, but may have received 12b-1 fees as described above, with respect to Adviser Shares. Amounts incurred and paid to IMCO from April 1, 2019 through June 30, 2019 were $12 thousand and reflected on the Statement of Operations as 12b-1 Fees.
Other Fees:
Prior to the Transaction on July 1, 2019, State Street Bank and Trust Company served as the Fund's accounting agent and custodian.
Effective August 5, 2019, Citibank, N.A., serves as the Fund's custodian.
The Trust pays an annual retainer and quarterly meeting fees to each Independent Trustee and a retainer and quarterly meeting fees to each Chair of each Committee of the Board, of which there are four positions. The Chair of the Board also receives an annual retainer. The aggregate amount of the fees and expenses of the Independent Trustees and Chair are allocated amongst all the funds in the Trust and are presented in the Statements of Operations. Amounts incurred during the six month period ended June 30, 2019 are reflected on the Statement of Operations as Trustees' Fees.
K&L Gates LLP provides legal services to the Trust.
Effective with the Transaction on July 1, 2019, the Adviser has entered into an expense limitation agreement with the Fund until at least June 30, 2021. Under the terms of the agreement, the Adviser has agreed to waive fees or reimburse certain expenses to the extent that ordinary operating expenses incurred by certain classes of the Fund in any fiscal year exceed the expense limit for such classes of the Fund. Such excess amounts will be the liability of the Adviser. Interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund's business are excluded from the expense limits. Effective July 1, 2019 through September 30, 2019, the expense limit (excluding voluntary waivers) is 0.80% and 0.54% for the Adviser Shares and Fund Shares, respectively.
Under this expense limitation agreement, the Fund has agreed to repay fees and expenses that were waived or reimbursed by the Adviser for a period up to three years after the fiscal year in which the waiver or reimbursement took place, subject to the lesser of any operating expense limits in effect at the time of: (a) the original waiver or expense reimbursement; or (b) the recoupment, after giving effect to the recoupment amount. As of September 30, 2019, there are no amounts available to be repaid to the Adviser.
The Adviser, may voluntarily waive or reimburse additional fees to assist the Fund in maintaining competitive expense ratios. Voluntary waivers and reimbursements applicable to the Fund are not available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended September 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through July 31, 2019, to limit the total annual operating expenses of the Adviser Shares to 0.80% of the average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Adviser Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect and are not available to be recouped by AMCO. For the period April 1, 2019 through June 30, 2019, any reimbursements from the Adviser Shares are reflected on the Statement of Operations as Expenses waived/reimbursed by AMCO.
Certain officers and/or interested trustees of the Fund are also officers and/or employees of the Adviser, Administrator, Sub-Administrator, Sub-Fund Accountant, and Legal.
5. Risks:
The Fund may be subject to other risks in addition to these identified risks.
An investment in the Fund's shares represent an indirect investment in the securities owned by the Fund, some of which will be traded on a national securities exchange or in the over-the-counter markets. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which the Fund invests may
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
affect the value of the Fund's shares. An investment in the Fund's shares at any point in time may be worth less than the original investment, even after taking into account the reinvestment of the Fund's distributions.
The Fund concentrates its investments in Virginia tax-exempt securities and, therefore, may be exposed to more credit risk than portfolios with a broader geographical diversification.
The Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties for financial instruments entered into by the Fund. The Fund may be negatively impacted if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in bankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund typically enters into transactions with counterparties whose credit ratings are investment grade, as determined by a nationally recognized statistical rating organization or, if unrated, judged by the Adviser to be of comparable quality.
The Fund is subject to credit and interest rate risk with respect to fixed income securities. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rates may rise, or the rate of inflation may increase, impacting the value if investments in fixed income securities. A debt issuers' credit quality may be downgraded, or an issuer may default. Interest rates may fluctuate due to changes in governmental fiscal policy initiatives and resulting market reaction to those initiatives.
6. Borrowing and Interfund Lending:
Line of Credit:
Effective with the Transaction on July 1, 2019, the Victory Funds Complex participates in a short-term, demand note "Line of Credit" agreement with Citibank. Under the agreement with Citibank, the Victory Funds Complex could borrow up to $600 million, of which $300 million is committed and $300 million is uncommitted. $40 million of the Line of Credit is reserved for use by the Victory Floating Rate Fund, another series of the Victory Funds Complex, with that Fund paying the related commitment fees for that amount. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Citibank receives an annual commitment fee of 0.15% on $300 million for providing the Line of Credit. Each fund in the Victory Funds Complex pays a pro-rata portion of the commitment fees plus any interest (one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statements of Operations under line of credit fees.
Prior to the Transaction on July 1, 2019, the line of credit among the Trust, with respect to its funds, and USAA Capital Corporation ("CAPCO") terminated. For the period from April 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $1 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended September 30, 2019.
Interfund Lending:
Effective with the Transaction on July 1, 2019, the Trust and Adviser rely on an exemptive order granted by the SEC in March 2017 (the "Order"), permitting the establishment and operation of an Interfund Lending Facility (the "Facility"). The Facility allows the Fund to directly lend and borrow money to or from any other Fund in the Victory Fund Complex relying upon the Order at rates beneficial to both the borrowing and lending funds. Advances under the Facility are allowed for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund's borrowing restrictions. The interfund loan rate is determined, as specified in the Order, by averaging the current repurchase agreement rate and the current bank loan rate. As a Borrower, interest charged to the Fund during the period is presented on the Statement of Operations under Interest expense on Interfund lending. As a Lender, interest earned by the Fund during the period is presented on the Statement of Operations under Income on Interfund lending.
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USAA Mutual Funds Trust | Notes to Financial Statements — continued September 30, 2019 | ||||||
(Unaudited)
The Fund did not utilize or participate in the Facility during the period July 1, 2019 through September 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income monthly. Distributable net realized gains, if any, are declared and distributed paid at least annually.
The amounts of dividends from net investment income and distributions from net realized gains (collectively distributions to shareholders) are determined in accordance with federal income tax regulations, which may differ from GAAP. To the extent these "book/tax" differences are permanent in nature (e.g., net operating loss and distribution reclassification,), such amounts are reclassified within the components of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require reclassification. To the extent dividends and distributions exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. Net investment losses incurred by the Fund may be reclassified as an offset to capital on the accompanying Statement of Assets and Liabilities.
The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) will be determined at the end of the current tax year ending March 31, 2020.
The tax character of distributions paid during the most recent tax years ended as noted below were as follows (total distributions paid may differ from the Statement of Changes in Net Assets because, for tax purposes, dividends are recognized when actually paid) (amounts in thousands).
Year Ended March 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Tax-Exempt Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 20,464 | $ | — | $ | 20,464 | ||||||||||
As of the most recent tax year ended March 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
Undistributed Tax-Exempt Income | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 1,225 | $ | (10,086 | ) | $ | 16,203 | $ | 7,342 | |||||||||||
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable to partnership basis adjustments.
As of the most recent tax year ended March 31, 2019, the Fund had net capital loss carryforwards ("CLCFs") not limited as a result of changes in Fund ownership during the year and in prior years and with no expiration date as summarized in the table below (amounts in thousands).
| Short-Term Amount | Long-Term Amount | Total | |||||||||
| $ | 1,007 | $ | 9,079 | $ | 10,086 | ||||||
8. Subsequent Events:
The Fund has evaluated the need for additional disclosures or adjustments resulting from subsequent events through the date these financial statements were issued. Based on this evaluation, there were no subsequent events to report that would have a material impact on the Fund's financial statements.
24
USAA Mutual Funds Trust | Supplemental Information September 30, 2019 | ||||||
(Unaudited)
Shareholder Voting Results
On April 18, 2019, a special meeting of shareholders was held to vote on two proposals relating to the series of the USAA Mutual Funds Trust ("Trust"). Shareholders of record on February 8, 2019, were entitled to vote on each proposal shown below. The proposals were approved by the shareholders.
The following proposals and voting results pertain to one or more series within the Trust. Votes shown for Proposal 1 are for the Fund, a series of the Trust. Votes shown for Proposal 2 are for all series of the Trust. The effective date of the Proposals was July 1, 2019.
PROPOSAL 1
To approve a new Investment Advisory Agreement between the Trust, on behalf of the Fund, and Victory Capital Management, Inc. ("Victory Capital"), an independent investment adviser. The new Investment Advisory Agreement became effective upon the closing of the Transaction (as defined and discussed in Note 1 to the Financial Statements) whereby USAA Asset Management Company ("AMCO") was acquired by Victory Capital Holdings Inc., the parent company of Victory Capital.
Number of Shares Voting | |||||||||||||||
For | Against | Abstain | |||||||||||||
27,053,678 | 2,637,360 | 1,728,399 | |||||||||||||
PROPOSAL 2
Election of two new trustees to the Trust's Board of Trustees to serve upon the closing of the Transaction: (1) David C. Brown, to serve as an "interested trustee" as defined in the Investment Company Act of 1940, as amended (1940 Act); and (2) John C. Walters, to serve as a trustee who is not an "interested person" as is defined under the 1940 Act ("Independent Trustee").
Number of Shares Voting | |||||||||||||||
Trustees | For | Votes Withheld | |||||||||||||
David C. Brown | 8,299,565,565 | 820,887,736 | |||||||||||||
John C. Walters | 8,317,935,885 | 802,517,416 | |||||||||||||
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Proxy Voting and Portfolio Holdings Information
Proxy Voting:
Information regarding the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800-539-3863. The information is also included in the Fund's Statement of Additional Information, which is available on the SEC's website at www.sec.gov.
Information relating to how the Fund voted proxies relating to portfolio securities held during the most recent 12 months ended June 30 is available on the SEC's website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Trust files a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarter of each fiscal year on Form N-PORT. Prior to the implementation of Form N-PORT, the trust filed a complete list of Schedules of Portfolio Investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-PORT and Forms N-Q are available on the SEC's website at www.sec.gov.
Expense Examples
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2019, through September 30, 2019.
The Actual Expense figures in the table below provide information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
The Hypothetical Expense figures in the table below provide information about hypothetical account values and hypothetical expenses based on the 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 this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. If these transactional costs were included, your costs would have been higher.
| Beginning Account Value 4/1/19 | Actual Ending Account Value 9/30/19 | Hypothetical Ending Account Value 9/30/19 | Actual Expenses Paid During Period 4/1/19- 9/30/19* | Hypothetical Expenses Paid During Period 4/1/19- 9/30/19* | Annualized Expense Ratio During Period 4/1/19- 9/30/19 | ||||||||||||||||||||||
Adviser Shares | $ | 1,000.00 | $ | 1,030.00 | $ | 1,050.00 | $ | 4.06 | $ | 4.10 | 0.80 | % | |||||||||||||||
Fund Shares | 1,000.00 | 1,031.20 | 1,050.00 | 2.89 | 2.92 | 0.57 | % | ||||||||||||||||||||
* Expenses are equal to the average account value multiplied by the Fund's annualized expense ratio multiplied by 183/366 (the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year).
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Advisory Contract Approval
At an in-person meeting of the Board of Trustees (the "Board") held on April 17, 2019, the Board, including the Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940, as amended) of the Trust (the "Independent Trustees"), approved for an annual period the continuance of the Advisory Agreement between the Trust and the Manager with respect to the Fund.1
In advance of the meeting, the Trustees received and considered a variety of information relating to the Advisory Agreement and the Manager and were given the opportunity to ask questions and request additional information from management. The information provided to the Board included, among other things: (i) a separate report prepared by an independent third party, which provided a statistical analysis comparing the Fund's investment performance, expenses, and fees to comparable investment companies; (ii) information concerning the services rendered to the Fund, as well as information regarding the Manager's revenues and costs of providing services to the Fund and compensation paid to affiliates of the Manager; and (iii) information about the Manager's operations and personnel. Prior to voting, the Independent Trustees reviewed the proposed continuation of the Advisory Agreement with management and with experienced counsel retained by the Independent Trustees ("Independent Counsel") and received materials from such Independent Counsel discussing the legal standards for their consideration of the proposed continuation of the Advisory Agreement with respect to the Fund. The Independent Trustees also reviewed the proposed continuation of the Advisory Agreement with respect to the Fund in private sessions with Independent Counsel at which no representatives of management were present. At each regularly scheduled meeting of the Board and its committees, the Board receives and reviews, among other things, information concerning the Fund's performance and related services provided by the Manager. At the meeting at which the renewal of the Advisory Agreement is considered, particular focus is given to information concerning Fund performance, fees and total expenses as compared to comparable investment companies, and the Manager's profitability with respect to the Fund. However, the Board noted that the evaluation process with respect to the Manager is an ongoing one. In this regard, the Board's and its committees' consideration of the Advisory Agreement included information previously received at such meetings.
Advisory Agreement
After full consideration of a variety of factors, the Board, including the Independent Trustees, voted to approve the Advisory Agreement. In approving the Advisory Agreement, the Trustees did not identify any single factor as controlling, and each Trustee may have attributed different weights to various factors. Throughout their deliberations, the Independent Trustees were represented and assisted by Independent Counsel.
Nature, Extent, and Quality of Services — In considering the nature, extent, and quality of the services provided by the Manager under the Advisory Agreement, the Board reviewed information provided by the Manager relating to its operations and personnel. The Board also took into account its knowledge of the Manager's management and the quality of the performance of the Manager's duties through Board meetings, discussions, and reports during the preceding year. The Board considered the fees paid to the Manager and the services provided to the Fund by the Manager under the Advisory Agreement, as well as other services provided by the Manager and its affiliates under other agreements, and the personnel who provide these services. In addition to the investment advisory services provided to the Fund, the Manager and its affiliates provide administrative services, shareholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements, and other services necessary for the operation of the Fund and the Trust.
The Board also considered the significant risks assumed by the Manager in connection with the services provided to the Fund, including investment, operational, enterprise, litigation, regulatory and compliance risks.
The Board considered the Manager's management style and the performance of the Manager's duties under the Advisory Agreement. The Board considered the level and depth of experience of the Manager, including the
1 At an in-person meeting held on January 15, 2019, the Board, including the Independent Trustees, approved a new investment advisory agreement between the Trust, on behalf of the Fund, and Victory Capital Management Inc. ("Victory Capital"). Upon the closing of the transaction whereby the Manager is acquired by Victory Capital Holdings, Inc., the parent company of Victory Capital, the Advisory Agreement between the Trust and the Manager will terminate and the new investment advisory agreement between the Trust and Victory Capital will go into effect. The factors the Board considered in approving the new investment advisory agreement with Victory Capital are included in this annual report.
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
professional experience and qualifications of its senior and investment personnel, as well as current staffing levels. The allocation of the Fund's brokerage, including the Manager's process for monitoring "best execution," also was considered. The Manager's role in coordinating the activities of the Fund's other service providers also was considered. The Board also considered the Manager's risk management processes. The Board considered the Manager's financial condition and that it had the financial wherewithal to continue to provide the same scope and high quality of services under the Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on the experience, resources, and strengths of the Manager and its affiliates in managing the Fund, as well as the other funds in the Trust. The Board also reviewed the compliance and administrative services provided to the Fund by the Manager, including the Manager's oversight of the Fund's day-to-day operations and oversight of Fund accounting. The Trustees, guided also by information obtained from their experiences as trustees of the Trust, also focused on the quality of the Manager's compliance and administrative staff.
Expenses and Performance — In connection with its consideration of the Advisory Agreement, the Board evaluated the Fund's advisory fees and total expense ratio as compared to other open-end investment companies deemed to be comparable to the Fund as determined by the independent third party in its report. The Fund's expenses were compared to (i) a group of investment companies chosen by the independent third party to be comparable to the Fund based upon certain factors, including fund type, comparability of investment objective and classification, sales load type (in this case, investment companies with front-end loads or with no sales loads), asset size, and expense components (the "expense group") and (ii) a larger group of investment companies that includes all no-load and front-end load retail open-end investment companies with the same investment classification/objective as the Fund regardless of asset size, excluding outliers (the "expense universe").
Among other data, the Board noted that the Fund's management fee rate — which includes advisory and administrative services and the effects of any performance adjustment — was above the median of its expense group and its expense universe. The data indicated that the Fund's total expense ratio was below the median of its expense group and its expense universe. The Board took into account the various services provided to the Fund by the Manager and its affiliates, including the nature and high quality of services provided by the Manager. The Board took into account management's discussion of the Fund's expenses. The Board also noted the level and method of computing the management fee, including any performance adjustment to such fee.
In considering the Fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the Fund's performance results. The Trustees also reviewed various comparative data provided to them in connection with their consideration of the renewal of the Advisory Agreement, including, among other information, a comparison of the Fund's average annual total return with its Lipper index and with that of other mutual funds deemed to be in its peer group by the independent third party in its report (the "performance universe"). The Fund's performance universe consisted of the Fund and all retail and institutional open-end investment companies with the same classification/objective as the Fund regardless of asset size or primary channel of distribution. This comparison indicated that, among other data, the Fund's performance was above the average of its performance universe and its Lipper index for the one-, three, five-, and ten-year periods ended December 31, 2018. The Board also noted that the Fund's percentile performance ranking was in the top 40% of its performance universe for the one-year period ended December 31, 2018, was in the top 20% of its performance universe for the three- and five-year periods ended December 31, 2018, and was in the top 30% of its performance universe for the ten-year period ended December 31, 2018.
Compensation and Profitability — The Board took into consideration the level and method of computing the management fee. The information considered by the Board included operating profit margin information for the Manager's business as a whole. The Board also received and considered profitability information related to the management revenues from the Fund. This information included a review of the methodology used in the allocation of certain costs to the Fund. The Trustees reviewed the profitability of the Manager's relationship with the Fund before tax expenses. The Board was also provided with an Investment Management Profitability Analysis prepared by an independent information service. In reviewing the overall profitability of the management fee to the Manager, the Board also considered the fact that the Manager and its affiliates provide shareholder servicing and administrative services to the Fund for which they receive compensation. The Board also considered the possible direct and indirect benefits to the Manager from its relationship with the Trust, including that the Manager may derive reputational and other benefits from its association with the Fund. The
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USAA Mutual Funds Trust | Supplemental Information — continued September 30, 2019 | ||||||
(Unaudited)
Board also took into account the high quality of services received by the Fund from the Manager. The Trustees recognized that the Manager should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the Fund and the entrepreneurial and other risks that it assumes as Manager.
Economies of Scale — The Board noted that the Fund has advisory fee breakpoints that allow the Fund to participate in economies of scale and that such economies of scale currently were reflected in the advisory fee. The Board also considered the effect of the Fund's growth and size on its performance and fees, noting that the Fund may realize additional economies of scale if assets increase proportionally more than some expenses. The Board determined that the current investment management fee structure was reasonable.
Conclusions — The Board reached the following conclusions regarding the Fund's Advisory Agreement with the Manager, among others: (i) the Manager has demonstrated that it possesses the capability and resources to perform the duties required of it under the Advisory Agreement; (ii) the Manager maintains an appropriate compliance program; (iii) the performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives and relevant indices; (iv) the Fund's advisory expenses are reasonable in relation to those of similar funds and to the services to be provided by the Manager; and (v) the Manager's and its affiliates' level of profitability from its relationship with the Fund is reasonable in light of the nature and high quality of services provided by the Manager and the type of fund. Based on its conclusions, the Board determined that continuation of the Advisory Agreement would be in the best interests of the Fund and its shareholders.
29
Privacy Policy
Protecting the Privacy of Information
The Trust respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. This is the information we collect from you on applications or other forms, and from the transactions you make with us or third parties. It may include your name, address, social security number, account transactions and balances, and information about investment goals and risk tolerance.
We do not disclose any information about you or about former customers to anyone except as permitted or required by law. Specifically, we may disclose the information we collect to companies that perform services on our behalf, such as the transfer agent that processes shareholder accounts and printers and mailers that assist us in the distribution of investor materials. We may also disclose this information to companies that perform marketing services on our behalf. This allows us to continue to offer you Victory investment products and services that meet your investing needs, and to effect transactions that you request or authorize. These companies will use this information only in connection with the services for which we hired them. They are not permitted to use or share this information for any other purpose.
To protect your personal information internally, we permit access only by authorized employees and maintain physical, electronic and procedural safeguards to guard your personal information.*
* You may have received communications regarding information about privacy policies from other financial institutions which gave you the opportunity to "opt-out" of certain information sharing with companies which are not affiliated with that financial institution. The Trust does not share information with other companies for purposes of marketing solicitations for products other than the Trust. Therefore, the Trust does not provide opt-out options to their shareholders.
15935 La Cantera Pkwy
Building Two
San Antonio, Texas 78256
Visit our website at: | Call | ||||||
usaa.com | 1-800-235-8396 | ||||||
39604-1119
Item 2. Code of Ethics.
Not applicable — only for annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable — only for annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable — only for annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The Corporate Governance Committee selects and nominates candidates for membership on the Board as independent trustees. The Corporate Governance Committee has adopted procedures to consider Board candidates suggested by shareholders. The procedures are initiated by the receipt of nominations submitted by a fund shareholder sent to Board member(s) at the address specified in fund disclosure documents or as received by the Adviser or a fund officer. Any recommendations for a nomination by a shareholder, to be considered by the Board, must include at least the following information: name; date of birth; contact information; education; business profession and other expertise; affiliations; experience relating to serving on the Board; and references. The Corporate Governance Committee gives shareholder recommendations the same consideration as any other candidate.
Item 11. Controls and Procedures.
(a)The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b)There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
(a)(1) Not applicable.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) are furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | USAA Mutual Funds Trust |
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By (Signature and Title)* | /s/ James K. De Vries |
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| James K. De Vries, Principal Financial Officer | |||
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Date | November 21, 2019 |
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Christopher K. Dyer |
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| Christopher K. Dyer, Principal Executive Officer | ||
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Date | November 22, 2019 |
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By (Signature and Title)* | /s/ James D. De Vries |
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| James K. De Vries, Principal Financial Officer | ||
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Date | November 21, 2019 |
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