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 | |||||||
| ||||||||
USAA Mutual Funds Trust | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
| ||||||||
15935 La Cantera Pkwy, Building Two, San Antonio, Texas |
| 78256 | ||||||
(Address of principal executive offices) |
| (Zip code) | ||||||
| ||||||||
Citi Fund Services Ohio, Inc., 4400 Easton Commons, Suite 200, Columbus, OH 43219 | ||||||||
(Name and address of agent for service) | ||||||||
| ||||||||
Registrant’s telephone number, including area code: | 800-235-8396 |
| ||||||
| ||||||||
Date of fiscal year end: | May 31 |
| ||||||
| ||||||||
Date of reporting period: | November 30, 2019 |
| ||||||
Item 1. Reports to Stockholders.
NOVEMBER 30, 2019
Semi Annual Report
USAA Cornerstone Aggressive Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 20 | ||||||
Statement of Operations | 21 | ||||||
Statements of Changes in Net Assets | 22 | ||||||
Financial Highlights | 24 | ||||||
Notes to Financial Statements | 26 | ||||||
Supplemental Information | 38 | ||||||
Expense Examples | 38 | ||||||
Proxy Voting and Portfolio Holdings Information | 38 | ||||||
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 Cornerstone Aggressive Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek capital appreciation over the long term and also considers the potential for current income.
Top 10 Holdings*
11/30/19
(% of Net Assets)
iShares Core S&P 500 ETF | 8.2 | % | |||||
Schwab Fundamental International Large Co. Index ETF | 6.3 | % | |||||
iShares Core MSCI EAFE ETF | 6.2 | % | |||||
Vanguard FTSE Developed Markets ETF | 3.6 | % | |||||
Vanguard FTSE Europe ETF | 3.4 | % | |||||
iShares Core MSCI Emerging Markets ETF | 3.2 | % | |||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 3.2 | % | |||||
iShares MSCI Canada ETF | 2.8 | % | |||||
Vanguard Real Estate ETF | 2.4 | % | |||||
Vanguard Total Stock Market ETF | 2.2 | % |
* Does not include short-term investments purchased with cash collateral from securities loaned.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund (continued) | November 30, 2019 |
(Unaudited)
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Asset Backed Securities (0.5%) | |||||||||||
Americredit Automobile Receivables Trust, Series 2018-1, Class C, 3.50%, 1/18/24, Callable 4/18/22 @ 100 | $ | 240 | $ | 246 | |||||||
Americredit Automobile Receivables Trust, Series 2018-2, Class A3, 3.15%, 3/20/23, Callable 8/18/22 @ 100 | 86 | 87 | |||||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2014-2A, Class A, 2.50%, 2/20/21, Callable 2/20/20 @ 100 (a) | 136 | 136 | |||||||||
Credit Acceptance Auto Loan Trust, Series 2018-3A, Class A, 3.55%, 8/15/27, Callable 10/15/21 @ 100 (a) | 165 | 168 | |||||||||
Element Rail Leasing I LLC, Series 2014-1A, Class A2, 3.67%, 4/19/44, Callable 4/19/21 @ 100 (a) | 120 | 121 | |||||||||
Evergreen Credit Card Trust, Series 2019-2, Class A, 1.90%, 9/15/24 (a) | 75 | 75 | |||||||||
Exeter Automobile Receivables Trust, Series 2019-2A, Class C, 3.30%, 3/15/24, Callable 7/15/22 @ 100 (a) | 110 | 112 | |||||||||
Goal Capital Funding Trust, Series 2005-2, Class A4, 2.11% (LIBOR03M+20bps), 8/25/44, Callable 8/25/20 @ 100 (b) | 238 | 229 | |||||||||
Hertz Vehicle Financing II LP, Series 2019-3A, Class A, 2.67%, 12/26/25 (a) | 100 | 100 | |||||||||
HPEFS Equipment Trust, Series 2019-1A, Class C, 2.49%, 9/20/29, Callable 7/20/22 @ 100 (a) | 50 | 50 | |||||||||
Navient Student Loan Trust, Series 2015-2, Class B, 3.21% (LIBOR01M+150bps), 8/25/50, Callable 3/25/28 @ 100 (b) | 50 | 49 | |||||||||
NP SPE II LLC, Series 2017-1A, Class A1, 3.37%, 10/21/47, Callable 10/20/27 @ 100 (a) | 35 | 36 | |||||||||
OSCAR US Funding Trust IX LLC, Series 2018-2A, Class A4, 3.63%, 9/10/25 (a) | 280 | 289 | |||||||||
SCF Equipment Leasing LLC, Series 2017-2A, Class A, 3.41%, 12/20/23, Callable 12/20/19 @ 100 (a) | 63 | 64 | |||||||||
Synchrony Credit Card Master Note Trust, Series 2016-2, Class C, 2.95%, 5/15/24 | 137 | 138 | |||||||||
Westlake Automobile Receivables Trust, Series 2018-2A, Class D, 4.00%, 1/16/24, Callable 9/15/21 @ 100 (a) | 150 | 154 | |||||||||
Total Asset Backed Securities (Cost $2,028) | 2,054 | ||||||||||
Collateralized Mortgage Obligations (0.2%) | |||||||||||
Banc of America Commercial Mortgage Trust, Series 2006-3, Class AM, 5.86%, 7/10/44 (c) | 39 | 12 | |||||||||
Banc of America Commercial Mortgage Trust, Series 2008-1, Class AJ, 6.79%, 2/10/51 (c) | 7 | 7 | |||||||||
Barclays Commercial Mortgage Trust, Series 2019-C5, Class ASB, 2.99%, 11/15/52 | 87 | 90 | |||||||||
Benchmark Mortgage Trust, Series 2019-B14, Class A5, 3.05%, 12/15/61 | 150 | 155 | |||||||||
BTH Mortgage-Backed Securities Trust, Series 2018-21, Class A, 4.28% (LIBOR01M+250bps), 10/7/21 (a) (b) | 160 | 161 | |||||||||
COMM Mortgage Trust, Series 2019-GC44, Class ASB, 2.87%, 8/15/57 (d) | 112 | 115 | |||||||||
Credit Suisse Commercial Mortgage Trust, Series 2007-C1, Class AMFL, 1.95% (LIBOR01M+19bps), 2/15/40 (b) | 2 | 1 | |||||||||
CSAIL Commercial Mortgage Trust, Series 2016-C6, Class XA, 2.06%, 1/15/49 (c) (e) | 620 | 53 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
GE Commercial Mortgage Corp., Series 2007-C1, Class AM, 5.61%, 12/10/49 (c) | $ | 13 | $ | 12 | |||||||
UBS Commercial Mortgage Trust, Series 2012-C1, Class XA, 2.26%, 5/10/45 (a) (c) | 798 | 31 | |||||||||
Total Collateralized Mortgage Obligations (Cost $640) | 637 | ||||||||||
Common Stocks (30.2%) | |||||||||||
Communication Services (2.5%): | |||||||||||
AMC Networks, Inc., Class A (f) (g) | 1,908 | 73 | |||||||||
AT&T, Inc. | 75,799 | 2,833 | |||||||||
CenturyLink, Inc. | 22,655 | 328 | |||||||||
Comcast Corp., Class A | 56,955 | 2,516 | |||||||||
Discovery, Inc., Class C (f) | 8,952 | 273 | |||||||||
Entravision Communications Corp., Class A | 18,529 | 53 | |||||||||
InterActive Corp. (f) | 1,097 | 244 | |||||||||
Liberty Media Corp-Liberty SiriusXM, Class A (f) | 5,627 | 274 | |||||||||
Omnicom Group, Inc. | 5,100 | 405 | |||||||||
Shenandoah Telecommunications Co. | 1,240 | 47 | |||||||||
Sinclair Broadcast Group, Inc., Class A | 1,955 | 68 | |||||||||
Sirius XM Holdings, Inc. (g) | 58,809 | 410 | |||||||||
Take-Two Interactive Software, Inc. (f) | 2,174 | 264 | |||||||||
Tegna, Inc. | 6,510 | 100 | |||||||||
Twitter, Inc. (f) | 6,143 | 190 | |||||||||
Verizon Communications, Inc. | 24,400 | 1,470 | |||||||||
Viacom, Inc., Class B | 9,861 | 237 | |||||||||
Vonage Holdings Corp. (f) | 3,269 | 26 | |||||||||
9,811 | |||||||||||
Consumer Discretionary (3.1%): | |||||||||||
American Axle & Manufacturing Holdings, Inc. (f) | 5,753 | 57 | |||||||||
Asbury Automotive Group, Inc. (f) | 545 | 60 | |||||||||
AutoZone, Inc. (f) | 283 | 333 | |||||||||
Bed Bath & Beyond, Inc. (g) | 6,326 | 92 | |||||||||
Best Buy Co., Inc. | 3,699 | 298 | |||||||||
Big Lots, Inc. | 1,277 | 27 | |||||||||
Bloomin' Brands, Inc. | 1,853 | 45 | |||||||||
Booking Holdings, Inc. (f) | 284 | 541 | |||||||||
Brunswick Corp. | 1,042 | 61 | |||||||||
Carnival Corp. | 7,228 | 326 | |||||||||
Carter's, Inc. | 1,544 | 160 | |||||||||
Cracker Barrel Old Country Store, Inc. (g) | 791 | 122 | |||||||||
Dana, Inc. | 3,963 | 67 | |||||||||
Deckers Outdoor Corp. (f) | 398 | 67 | |||||||||
Del Taco Restaurants, Inc. (f) | 3,863 | 29 | |||||||||
Dick's Sporting Goods, Inc. | 1,633 | 75 | |||||||||
Dollar General Corp. | 1,567 | 246 | |||||||||
eBay, Inc. | 7,441 | 264 | |||||||||
Ethan Allen Interiors, Inc. | 2,456 | 44 | |||||||||
Foot Locker, Inc. | 4,409 | 177 | |||||||||
Ford Motor Co. | 50,542 | 458 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Gentex Corp. | 3,509 | $ | 100 | ||||||||
Group 1 Automotive, Inc. | 930 | 96 | |||||||||
Hasbro, Inc. | 2,134 | 217 | |||||||||
Helen of Troy Ltd. (f) (g) | 197 | 32 | |||||||||
Hilton Worldwide Holdings, Inc. | 3,610 | 379 | |||||||||
Kontoor Brands, Inc. (g) | 1,290 | 46 | |||||||||
La-Z-Boy, Inc. | 1,627 | 51 | |||||||||
Lennar Corp., Class A | 8,496 | 507 | |||||||||
Lowe's Cos., Inc. | 6,455 | 757 | |||||||||
McDonald's Corp. | 3,592 | 699 | |||||||||
Nike, Inc., Class B | 9,958 | 931 | |||||||||
Office Depot, Inc. | 28,220 | 63 | |||||||||
O'Reilly Automotive, Inc. (f) | 481 | 213 | |||||||||
Penske Automotive Group, Inc. | 801 | 40 | |||||||||
Ross Stores, Inc. | 3,065 | 356 | |||||||||
Starbucks Corp. | 13,198 | 1,127 | |||||||||
Steven Madden Ltd. | 1,606 | 68 | |||||||||
Sturm Ruger & Co., Inc. | 1,145 | 52 | |||||||||
The Buckle, Inc. | 1,984 | 55 | |||||||||
The Home Depot, Inc. | 7,637 | 1,685 | |||||||||
Thor Industries, Inc. | 1,615 | 103 | |||||||||
Toll Brothers, Inc. | 1,717 | 69 | |||||||||
Williams-Sonoma, Inc. | 1,271 | 88 | |||||||||
Yum! Brands, Inc. | 3,849 | 387 | |||||||||
11,670 | |||||||||||
Consumer Staples (1.9%): | |||||||||||
Altria Group, Inc. | 13,910 | 691 | |||||||||
Cal-Maine Foods, Inc. | 1,100 | 48 | |||||||||
Colgate-Palmolive Co. | 5,299 | 359 | |||||||||
Flowers Foods, Inc. | 4,376 | 94 | |||||||||
Hostess Brands, Inc. (f) | 4,202 | 57 | |||||||||
Ingles Markets, Inc., Class A | 1,194 | 53 | |||||||||
Kimberly-Clark Corp. | 1,423 | 194 | |||||||||
Nu Skin Enterprises, Inc., Class A | 850 | 33 | |||||||||
Sanderson Farms, Inc. | 328 | 54 | |||||||||
Spectrum Brands Holdings, Inc. | 1,541 | 96 | |||||||||
Sysco Corp. | 3,380 | 272 | |||||||||
The Procter & Gamble Co. | 19,278 | 2,354 | |||||||||
Tyson Foods, Inc., Class A | 3,800 | 342 | |||||||||
US Foods Holding Corp. (f) | 3,421 | 136 | |||||||||
Walgreens Boots Alliance, Inc. | 12,224 | 729 | |||||||||
Walmart, Inc. | 11,372 | 1,354 | |||||||||
6,866 | |||||||||||
Energy (1.4%): | |||||||||||
Chevron Corp. | 6,617 | 775 | |||||||||
ConocoPhillips | 7,809 | 468 | |||||||||
Core Laboratories N.V. | 1,350 | 59 | |||||||||
Delek US Holdings, Inc. | 3,738 | 128 | |||||||||
Dril-Quip, Inc. (f) | 1,367 | 58 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Exxon Mobil Corp. | 17,019 | $ | 1,161 | ||||||||
HollyFrontier Corp. | 4,842 | 250 | |||||||||
Laredo Petroleum, Inc. (f) | 14,531 | 31 | |||||||||
Marathon Petroleum Corp. | 7,838 | 475 | |||||||||
Matador Resources Co. (f) (g) | 3,275 | 46 | |||||||||
Occidental Petroleum Corp. | 7,347 | 283 | |||||||||
Par Pacific Holdings, Inc. (f) | 3,353 | 83 | |||||||||
PBF Energy, Inc., Class A | 4,742 | 148 | |||||||||
Phillips 66 | 7,386 | 848 | |||||||||
Valero Energy Corp. | 5,825 | 556 | |||||||||
5,369 | |||||||||||
Financials (4.2%): | |||||||||||
Ally Financial, Inc. | 10,391 | 331 | |||||||||
American Equity Investment Life Holding Co. | 3,481 | 103 | |||||||||
Bank of Hawaii Corp. | 1,985 | 179 | |||||||||
BankUnited, Inc. | 4,390 | 154 | |||||||||
Cadence BanCorp | 5,644 | 93 | |||||||||
Capital One Financial Corp. | 8,023 | 803 | |||||||||
Chimera Investment Corp. | 7,168 | 146 | |||||||||
Citigroup, Inc. | 30,880 | 2,319 | |||||||||
Cullen/Frost Bankers, Inc. | 1,733 | 162 | |||||||||
Discover Financial Services | 9,349 | 793 | |||||||||
Employers Holdings, Inc. | 2,530 | 109 | |||||||||
Essent Group Ltd. | 3,880 | 212 | |||||||||
FactSet Research Systems, Inc. | 1,108 | 288 | |||||||||
First BanCorp. | 5,226 | 55 | |||||||||
Great Western BanCorp, Inc. | 3,921 | 135 | |||||||||
Intercontinental Exchange, Inc. | 3,913 | 368 | |||||||||
JPMorgan Chase & Co. | 12,783 | 1,684 | |||||||||
Ladder Capital Corp. | 7,181 | 124 | |||||||||
Legg Mason, Inc. | 2,553 | 100 | |||||||||
Lincoln National Corp. | 5,285 | 312 | |||||||||
LPL Financial Holdings, Inc. | 1,727 | 159 | |||||||||
Marsh & McLennan Cos., Inc. | 3,171 | 343 | |||||||||
MetLife, Inc. | 10,985 | 548 | |||||||||
MGIC Investment Corp. | 5,120 | 74 | |||||||||
Nelnet, Inc., Class A | 1,852 | 117 | |||||||||
Primerica, Inc. | 1,068 | 143 | |||||||||
Radian Group, Inc. | 3,786 | 98 | |||||||||
Regions Financial Corp. | 26,872 | 447 | |||||||||
S&P Global, Inc. | 4,317 | 1,143 | |||||||||
Synchrony Financial | 13,138 | 491 | |||||||||
Synovus Financial Corp. | 1,582 | 60 | |||||||||
T. Rowe Price Group, Inc. | 3,506 | 433 | |||||||||
The Allstate Corp. | 2,942 | 328 | |||||||||
The Progressive Corp. | 7,676 | 561 | |||||||||
The Travelers Cos., Inc. | 1,867 | 255 | |||||||||
U.S. Bancorp | 6,077 | 365 | |||||||||
Universal Insurance Holdings, Inc. | 1,506 | 44 | |||||||||
Waddell & Reed Financial, Inc., Class A | 6,385 | 103 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Walker & Dunlop, Inc. | 778 | $ | 51 | ||||||||
Webster Financial Corp. | 2,031 | 99 | |||||||||
Wells Fargo & Co. | 20,388 | 1,110 | |||||||||
Western Alliance Bancorp | 3,395 | 177 | |||||||||
World Acceptance Corp. (f) | 582 | 55 | |||||||||
15,674 | |||||||||||
Health Care (4.1%): | |||||||||||
Abbott Laboratories | 8,098 | 692 | |||||||||
AbbVie, Inc. | 17,816 | 1,563 | |||||||||
Acadia Healthcare Co., Inc. (f) | 1,592 | 51 | |||||||||
Amedisys, Inc. (f) | 903 | 147 | |||||||||
Amgen, Inc. | 6,947 | 1,631 | |||||||||
AMN Healthcare Services, Inc. (f) | 1,629 | 97 | |||||||||
ANI Pharmaceuticals, Inc. (f) | 492 | 30 | |||||||||
Biogen, Inc. (f) | 2,679 | 803 | |||||||||
Bio-Rad Laboratories, Inc., Class A (f) | 223 | 82 | |||||||||
Bristol-Myers Squibb Co. | 7,961 | 453 | |||||||||
Bruker Corp. | 2,509 | 128 | |||||||||
Cambrex Corp. (f) | 591 | 35 | |||||||||
Chemed Corp. | 326 | 140 | |||||||||
Corcept Therapeutics, Inc. (f) | 4,584 | 59 | |||||||||
Covetrus, Inc. (f) | 4,448 | 64 | |||||||||
CVS Health Corp. | 9,218 | 694 | |||||||||
Danaher Corp. | 2,780 | 406 | |||||||||
Eagle Pharmaceuticals, Inc. (f) | 532 | 31 | |||||||||
Edwards Lifesciences Corp. (f) | 1,272 | 312 | |||||||||
Eli Lilly & Co. | 4,196 | 492 | |||||||||
Emergent BioSolutions, Inc. (f) | 730 | 40 | |||||||||
Encompass Health Corp. | 1,481 | 105 | |||||||||
Exelixis, Inc. (f) | 7,396 | 123 | |||||||||
Gilead Sciences, Inc. | 16,359 | 1,100 | |||||||||
Halozyme Therapeutics, Inc. (f) | 3,493 | 68 | |||||||||
HealthEquity, Inc. (f) | 879 | 55 | |||||||||
Hill-Rom Holdings, Inc. | 1,207 | 129 | |||||||||
Horizon Therapeutics PLC (f) | 1,785 | 59 | |||||||||
IQVIA Holdings, Inc. (f) | 2,223 | 326 | |||||||||
Laboratory Corp. of America Holdings (f) | 1,564 | 269 | |||||||||
Lantheus Holdings, Inc. (f) | 1,100 | 23 | |||||||||
Masimo Corp. (f) | 871 | 135 | |||||||||
McKesson Corp. | 2,216 | 321 | |||||||||
Medpace Holdings, Inc. (f) | 643 | 49 | |||||||||
Merck & Co., Inc. | 19,095 | 1,665 | |||||||||
Meridian Bioscience, Inc. | 5,995 | 55 | |||||||||
Molina Healthcare, Inc. (f) | 951 | 129 | |||||||||
Novocure Ltd. (f) | 689 | 64 | |||||||||
Patterson Cos., Inc. | 4,429 | 86 | |||||||||
PerkinElmer, Inc. | 1,688 | 157 | |||||||||
Pfizer, Inc. | 46,594 | 1,795 | |||||||||
Phibro Animal Health Corp., Class A | 1,936 | 47 | |||||||||
PRA Health Sciences, Inc. (f) | 911 | 99 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Prestige Consumer Healthcare, Inc. (f) | 1,823 | $ | 69 | ||||||||
Select Medical Holdings Corp. (f) | 4,899 | 108 | |||||||||
Stryker Corp. | 1,772 | 363 | |||||||||
Supernus Pharmaceuticals, Inc. (f) | 2,113 | 49 | |||||||||
Zoetis, Inc. | 2,969 | 358 | |||||||||
15,756 | |||||||||||
Industrials (2.9%): | |||||||||||
3M Co. | 4,428 | 752 | |||||||||
ACCO Brands Corp. | 5,819 | 53 | |||||||||
AECOM (f) | 3,262 | 141 | |||||||||
Aerojet Rocketdyne Holdings, Inc. (f) | 627 | 28 | |||||||||
Air Transport Services Group, Inc. (f) | 1,054 | 26 | |||||||||
Allison Transmission Holdings, Inc. | 2,665 | 129 | |||||||||
Apogee Enterprises, Inc. | 2,260 | 86 | |||||||||
Atkore International Group, Inc. (f) | 3,514 | 147 | |||||||||
Avis Budget Group, Inc. (f) | 1,850 | 55 | |||||||||
Cintas Corp. | 1,650 | 425 | |||||||||
Cornerstone Building Brands, Inc. (f) | 3,417 | 24 | |||||||||
Crane Co. | 1,408 | 117 | |||||||||
Cummins, Inc. | 1,786 | 327 | |||||||||
Delta Air Lines, Inc. | 5,877 | 337 | |||||||||
Deluxe Corp. | 1,349 | 69 | |||||||||
Eaton Corp. PLC | 7,799 | 722 | |||||||||
EnPro Industries, Inc. | 737 | 49 | |||||||||
FTI Consulting, Inc. (f) | 704 | 77 | |||||||||
Generac Holdings, Inc. (f) | 764 | 75 | |||||||||
Herman Miller, Inc. | 2,375 | 113 | |||||||||
Hexcel Corp. | 527 | 42 | |||||||||
Hillenbrand, Inc. | 2,411 | 76 | |||||||||
IAA, Inc. (f) | 1,277 | 58 | |||||||||
IDEX Corp. | 2,154 | 351 | |||||||||
Illinois Tool Works, Inc. | 1,869 | 326 | |||||||||
Ingersoll-Rand PLC | 1,923 | 252 | |||||||||
Johnson Controls International PLC | 9,236 | 395 | |||||||||
KAR Auction Services, Inc. | 1,632 | 34 | |||||||||
Knoll, Inc. | 3,583 | 99 | |||||||||
L3Harris Technologies, Inc. | 1,525 | 307 | |||||||||
Lockheed Martin Corp. | 1,621 | 634 | |||||||||
Masonite International Corp. (f) | 794 | 57 | |||||||||
Meritor, Inc. (f) | 4,655 | 118 | |||||||||
MSC Industrial Direct Co., Inc. | 1,330 | 98 | |||||||||
Northrop Grumman Corp. | 1,050 | 369 | |||||||||
nVent Electric PLC | 2,507 | 62 | |||||||||
Oshkosh Corp. | 737 | 67 | |||||||||
PACCAR, Inc. | 6,335 | 514 | |||||||||
Patrick Industries, Inc. (f) | 1,367 | 68 | |||||||||
Pitney Bowes, Inc. (g) | 9,680 | 46 | |||||||||
Regal Beloit Corp. | 1,558 | 127 | |||||||||
Rockwell Automation, Inc. | 1,584 | 310 | |||||||||
Roper Technologies, Inc. | 1,058 | 381 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Rush Enterprises, Inc., Class A | 2,044 | $ | 94 | ||||||||
Ryder System, Inc. | 1,165 | 62 | |||||||||
Snap-on, Inc. | 1,492 | 239 | |||||||||
Spirit Aerosystems Holdings, Inc., Class A | 3,343 | 291 | |||||||||
Steelcase, Inc., Class A | 4,545 | 82 | |||||||||
The Boeing Co. | 4,038 | 1,478 | |||||||||
The Greenbrier Cos., Inc. (g) | 1,234 | 35 | |||||||||
The Timken Co. | 2,731 | 144 | |||||||||
Trinity Industries, Inc. | 2,635 | 55 | |||||||||
Wabash National Corp. | 6,172 | 97 | |||||||||
Waste Management, Inc. | 2,507 | 283 | |||||||||
Werner Enterprises, Inc. | 1,617 | 59 | |||||||||
WESCO International, Inc. (f) | 2,047 | 107 | |||||||||
11,569 | |||||||||||
Information Technology (6.7%): | |||||||||||
Apple, Inc. | 21,092 | 5,636 | |||||||||
Automatic Data Processing, Inc. | 2,036 | 348 | |||||||||
Belden, Inc. | 941 | 51 | |||||||||
CACI International, Inc., Class A (f) | 421 | 101 | |||||||||
Cadence Design Systems, Inc. (f) | 3,875 | 272 | |||||||||
Cardtronics PLC, Class A (f) | 878 | 37 | |||||||||
CDW Corp. | 2,188 | 294 | |||||||||
Ciena Corp. (f) | 1,264 | 48 | |||||||||
Cirrus Logic, Inc. (f) | 1,873 | 134 | |||||||||
Coherent, Inc. (f) | 861 | 130 | |||||||||
CoreLogic, Inc. (f) | 2,081 | 86 | |||||||||
CSG Systems International, Inc. | 2,236 | 128 | |||||||||
Euronet Worldwide, Inc. (f) | 992 | 156 | |||||||||
Fair Isaac Corp. (f) | 247 | 91 | |||||||||
Fiserv, Inc. (f) | 2,708 | 315 | |||||||||
Hewlett Packard Enterprises Co. | 20,085 | 318 | |||||||||
HP, Inc. | 21,419 | 430 | |||||||||
Insight Enterprises, Inc. (f) | 1,048 | 69 | |||||||||
Intel Corp. | 36,367 | 2,111 | |||||||||
InterDigital, Inc. | 1,249 | 71 | |||||||||
International Business Machines Corp. | 11,689 | 1,571 | |||||||||
Intuit, Inc. | 1,735 | 449 | |||||||||
J2 Global, Inc. | 1,543 | 150 | |||||||||
Jabil, Inc. | 2,849 | 111 | |||||||||
KEMET Corp. | 2,279 | 61 | |||||||||
Kulicke & Soffa Industries, Inc. | 3,039 | 76 | |||||||||
Lam Research Corp. | 2,307 | 616 | |||||||||
LogMeIn, Inc. | 915 | 71 | |||||||||
Manhattan Associates, Inc. (f) | 1,900 | 159 | |||||||||
Maximus, Inc. | 1,950 | 146 | |||||||||
Methode Electronics, Inc. | 1,780 | 66 | |||||||||
Microsoft Corp. (h) | 28,798 | 4,359 | |||||||||
MKS Instruments, Inc. | 682 | 72 | |||||||||
NCR Corp. (f) | 4,102 | 135 | |||||||||
NIC, Inc. | 5,010 | 114 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Oracle Corp. | 28,950 | $ | 1,625 | ||||||||
Paylocity Holding Corp. (f) | 416 | 51 | |||||||||
PayPal Holdings, Inc. (f) | 6,366 | 687 | |||||||||
Perspecta, Inc. | 2,887 | 80 | |||||||||
QUALCOMM, Inc. | 5,309 | 444 | |||||||||
Science Applications International Corp. | 1,020 | 87 | |||||||||
Seagate Technology PLC | 4,712 | 281 | |||||||||
TE Connectivity Ltd. | 2,685 | 249 | |||||||||
Tech Data Corp. (f) | 959 | 139 | |||||||||
Teradyne, Inc. | 3,031 | 190 | |||||||||
Texas Instruments, Inc. | 4,727 | 568 | |||||||||
The Hackett Group, Inc. | 6,939 | 106 | |||||||||
Ultra Clean Holdings, Inc. (f) | 5,752 | 128 | |||||||||
VeriSign, Inc. (f) | 1,598 | 305 | |||||||||
Visa, Inc., Class A | 8,572 | 1,581 | |||||||||
Western Digital Corp. | 3,192 | 161 | |||||||||
25,664 | |||||||||||
Materials (1.1%): | |||||||||||
Air Products & Chemicals, Inc. | 1,570 | 372 | |||||||||
Berry Global Group, Inc. (f) | 3,248 | 152 | |||||||||
Celanese Corp., Series A | 2,130 | 267 | |||||||||
Cleveland-Cliffs, Inc. (g) | 3,942 | 31 | |||||||||
Corteva, Inc. | 6,291 | 164 | |||||||||
Domtar Corp. | 2,537 | 95 | |||||||||
Huntsman Corp. | 3,057 | 69 | |||||||||
Hycroft Mining Corp. (f) (i) (m) | 8,197 | — | (j) | ||||||||
Kraton Corp. (f) | 1,662 | 37 | |||||||||
LyondellBasell Industries NV, Class A | 7,319 | 677 | |||||||||
Nucor Corp. | 6,077 | 343 | |||||||||
Reliance Steel & Aluminum Co. | 1,416 | 168 | |||||||||
Resolute Forest Products, Inc. | 11,525 | 46 | |||||||||
Schweitzer-Mauduit International, Inc. | 2,533 | 111 | |||||||||
Silgan Holdings, Inc. | 4,734 | 146 | |||||||||
The Sherwin-Williams Co. | 623 | 363 | |||||||||
Trinseo SA | 2,045 | 78 | |||||||||
Warrior Met Coal, Inc. | 2,699 | 55 | |||||||||
Westrock Co. | 8,737 | 352 | |||||||||
3,526 | |||||||||||
Real Estate (1.4%): | |||||||||||
Brixmor Property Group, Inc. | 5,273 | 116 | |||||||||
CBRE Group, Inc., Class A (f) | 10,790 | 615 | |||||||||
CoreCivic, Inc. | 3,807 | 58 | |||||||||
Crown Castle International Corp. | 2,958 | 395 | |||||||||
EPR Properties (g) | 1,807 | 128 | |||||||||
Equity Residential | 3,249 | 276 | |||||||||
Essex Property Trust, Inc. | 604 | 189 | |||||||||
Gaming and Leisure Properties, Inc. | 4,908 | 207 | |||||||||
Host Hotels & Resorts, Inc. | 27,644 | 484 | |||||||||
Jones Lang LaSalle, Inc. | 464 | 77 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Kimco Realty Corp. | 17,002 | $ | 368 | ||||||||
Lamar Advertising Co., Class A (g) | 2,464 | 206 | |||||||||
LTC Properties, Inc. | 3,382 | 158 | |||||||||
Medical Properties Trust, Inc. | 10,675 | 222 | |||||||||
Omega Healthcare Investors, Inc. | 2,784 | 117 | |||||||||
Outfront Media, Inc., Class A | 1,409 | 35 | |||||||||
PotlatchDeltic Corp. | 3,170 | 138 | |||||||||
Public Storage | 740 | 156 | |||||||||
Service Properties Trust | 4,392 | 102 | |||||||||
Spirit Realty Capital, Inc. | 902 | 47 | |||||||||
Tanger Factory Outlet Centers, Inc. (g) | 7,517 | 114 | |||||||||
The GEO Group, Inc. | 6,082 | 84 | |||||||||
Ventas, Inc. | 2,539 | 148 | |||||||||
Vornado Realty Trust | 7,036 | 454 | |||||||||
Welltower, Inc. | 2,028 | 172 | |||||||||
5,066 | |||||||||||
Utilities (0.9%): | |||||||||||
Consolidated Edison, Inc. | 2,598 | 226 | |||||||||
Dominion Energy, Inc. | 2,879 | 239 | |||||||||
DTE Energy Co. | 1,490 | 186 | |||||||||
Duke Energy Corp. | 6,225 | 548 | |||||||||
Evergy, Inc. | 4,798 | 304 | |||||||||
Exelon Corp. | 9,837 | 437 | |||||||||
IDACORP, Inc. | 1,244 | 131 | |||||||||
New Jersey Resources Corp. | 3,140 | 134 | |||||||||
NextEra Energy, Inc. | 1,865 | 436 | |||||||||
PPL Corp. | 9,468 | 322 | |||||||||
Southwest Gas Holdings, Inc. | 1,584 | 120 | |||||||||
The Southern Co. | 3,438 | 213 | |||||||||
3,296 | |||||||||||
Total Common Stocks (Cost $102,785) | 114,267 | ||||||||||
Preferred Stocks (0.2%) | |||||||||||
Communication Services (0.1%): | |||||||||||
Qwest Corp., 6.50%, 9/1/56 | $ | 8,000 | 200 | ||||||||
Consumer Staples (0.1%): | |||||||||||
CHS, Inc., Series 1, cumulative redeemable, 7.88%, 9/26/23 (k) | 8,000 | 221 | |||||||||
Dairy Farmers of America, Inc., cumulative redeemable, 7.88%, 1/14/20 (a) (k) | 2,000 | 197 | |||||||||
418 | |||||||||||
Financials (0.0%): | |||||||||||
Delphi Financial Group, Inc., 5.10% (LIBOR03M+319bps), 5/15/37 (b) (m) | 12,000 | 263 | |||||||||
Total Preferred Stocks (Cost $914) | 881 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Senior Secured Loans (0.1%) | |||||||||||
Academy Ltd., 1st Lien Term Loan B, 5.78% (LIBOR01M+400bps), 7/2/22, Callable 1/10/20 @ 100 (b) | $ | 292 | $ | 217 | |||||||
Total Senior Secured Loans (Cost $248) | 217 | ||||||||||
Corporate Bonds (2.6%) | |||||||||||
Communication Services (0.1%): | |||||||||||
Verizon Communications, Inc., 4.50%, 8/10/33 | 224 | 262 | |||||||||
Consumer Discretionary (0.0%): (l) | |||||||||||
Hasbro, Inc., 3.55%, 11/19/26, Callable 9/19/26 @ 100 | 90 | 90 | |||||||||
Nordstrom, Inc., 4.38%, 4/1/30, Callable 1/1/30 @ 100 | 75 | 76 | |||||||||
166 | |||||||||||
Consumer Staples (0.2%): | |||||||||||
Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide, Inc., 4.70%, 2/1/36, Callable 8/1/35 @ 100 | 187 | 218 | |||||||||
BAT Capital Corp., 2.79%, 9/6/24, Callable 8/6/24 @ 100 | 200 | 200 | |||||||||
Kraft Heinz Foods Co., 3.75%, 4/1/30, Callable 1/1/30 @ 100 (a) | 84 | 86 | |||||||||
Unilever Capital Corp., 2.60%, 5/5/24, Callable 3/5/24 @ 100 | 150 | 153 | |||||||||
657 | |||||||||||
Energy (0.4%): | |||||||||||
Cheniere Corpus Christi Holdings LLC, 3.70%, 11/15/29, Callable 5/18/29 @ 100 (a) | 187 | 190 | |||||||||
Diamondback Energy, Inc., 3.25%, 12/1/26, Callable 10/1/26 @ 100 (d) | 112 | 112 | |||||||||
Enable Midstream Partners LP, 4.15%, 9/15/29, Callable 6/15/29 @ 100 | 150 | 140 | |||||||||
Enbridge Energy Partners LP, 7.38%, 10/15/45, Callable 4/15/45 @ 100 (h) | 100 | 148 | |||||||||
EQM Midstream Partners LP, 4.75%, 7/15/23, Callable 6/15/23 @ 100 | 400 | 391 | |||||||||
National Oilwell Varco, Inc., 3.60%, 12/1/29, Callable 9/1/29 @ 100 | 150 | 146 | |||||||||
Southern Union Co., 4.93% (LIBOR03M+302bps), 11/1/66, Callable 1/13/20 @ 100 (b) | 190 | 132 | |||||||||
Targa Resources Partners LP/Targa Resources Partners Finance Corp., 5.50%, 3/1/30, Callable 3/1/25 @ 102.75 (a) | 75 | 75 | |||||||||
1,334 | |||||||||||
Financials (1.0%): | |||||||||||
Ares Capital Corp., 3.63%, 1/19/22, Callable 12/19/21 @ 100 (h) | 100 | 102 | |||||||||
BancorpSouth Bank, 4.13% (LIBOR03M+247bps), 11/20/29, Callable 11/20/24 @ 100 (b) | 96 | 97 | |||||||||
BBVA USA, 3.88%, 4/10/25, Callable 3/10/25 @ 100 | 200 | 211 | |||||||||
BMW US Capital LLC, 3.25%, 8/14/20 (a) (h) | 400 | 403 | |||||||||
Capital One NA, 2.15%, 9/6/22, Callable 8/6/22 @ 100 | 150 | 150 | |||||||||
Cullen/Frost Capital Trust II, 3.69% (LIBOR03M+155bps), 3/1/34, Callable 1/13/20 @ 100 (b) | 175 | 149 | |||||||||
First Maryland Capital I, 3.00% (LIBOR03M+100bps), 1/15/27, Callable 1/13/20 @ 100 (b) | 50 | 47 | |||||||||
Ford Motor Credit Co. LLC, 4.06%, 11/1/24, Callable 10/1/24 @ 100 | 250 | 252 | |||||||||
Global Atlantic Fin Co., 4.40%, 10/15/29, Callable 7/15/29 @ 100 (a) | 96 | 95 | |||||||||
Harley-Davidson Financial Services, Inc., 3.55%, 5/21/21 (a) (h) | 300 | 305 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
HSB Group, Inc., 2.91% (LIBOR03M+91bps), 7/15/27, Callable 1/13/20 @ 100 (b) | $ | 200 | $ | 172 | |||||||
Hyundai Capital America, 3.75%, 7/8/21 (a) (h) | 350 | 357 | |||||||||
Level 3 Financing, Inc., 3.88%, 11/15/29, Callable 8/15/29 @ 100 (a) | 150 | 151 | |||||||||
Nationwide Mutual Insurance Co., 4.41% (LIBOR03M+229bps), 12/15/24, Callable 1/13/20 @ 100 (a) (b) | 300 | 299 | |||||||||
PNC Bank NA, 2.70%, 10/22/29 | 250 | 251 | |||||||||
Prudential Financial, Inc., 5.62% (LIBOR03M+392bps), 6/15/43, Callable 6/15/23 @ 100 (b) | 200 | 217 | |||||||||
Signature Bank, 4.13% (LIBOR03M+256bps), 11/1/29, Callable 11/1/24 @ 100 (b) | 150 | 152 | |||||||||
SunTrust Capital, 2.58% (LIBOR03M+67bps), 5/15/27, Callable 1/13/20 @ 100 (b) | 200 | 190 | |||||||||
Texas Capital Bank NA, 5.25%, 1/31/26 | 75 | 78 | |||||||||
The Allstate Corp., 5.75% (LIBOR03M+294bps), 8/15/53, Callable 8/15/23 @ 100 (b) | 40 | 43 | |||||||||
Zions Bancorp NA, 3.25%, 10/29/29, Callable 7/29/29 @ 100 | 150 | 148 | |||||||||
3,869 | |||||||||||
Health Care (0.2%): | |||||||||||
AbbVie, Inc., 3.20%, 11/21/29, Callable 8/21/29 @ 100 (a) | 150 | 152 | |||||||||
CVS Health Corp., 3.25%, 8/15/29, Callable 5/15/29 @ 100 | 290 | 296 | |||||||||
HCA, Inc., 5.13%, 6/15/39, Callable 12/15/38 @ 100 | 187 | 207 | |||||||||
Laboratory Corp. of America Holdings, 2.95%, 12/1/29, Callable 9/1/29 @ 100 | 112 | 112 | |||||||||
767 | |||||||||||
Industrials (0.2%): | |||||||||||
Ashtead Capital, Inc. 4.00%, 5/1/28, Callable 5/1/23 @ 102 (a) | 27 | 27 | |||||||||
4.25%, 11/1/29, Callable 11/1/24 @ 102.13 (a) | 20 | 20 | |||||||||
Continental Airlines, 6.25%, 4/11/20 | 24 | 24 | |||||||||
Dover Corp., 2.95%, 11/4/29, Callable 8/4/29 @ 100 | 112 | 113 | |||||||||
General Electric Co., 5.50%, 1/8/20, MTN | 105 | 105 | |||||||||
Ryder System, Inc. 3.50%, 6/1/21, MTN (h) | 350 | 356 | |||||||||
2.90%, 12/1/26, Callable 10/1/26 @ 100, MTN | 187 | 188 | |||||||||
The Conservation Fund A Nonprofit Corp., 3.47%, 12/15/29, Callable 9/15/29 @ 100 | 175 | 176 | |||||||||
United Airlines Pass Through Trust, 2.90%, 11/1/29 | 200 | 201 | |||||||||
1,210 | |||||||||||
Information Technology (0.2%): | |||||||||||
Amphenol Corp., 2.80%, 2/15/30, Callable 11/15/29 @ 100 | 200 | 199 | |||||||||
Microsoft Corp., 3.45%, 8/8/36, Callable 2/8/36 @ 100 | 243 | 267 | |||||||||
466 | |||||||||||
Materials (0.0%): | |||||||||||
Packaging Corp. of America, 3.00%, 12/15/29, Callable 9/15/29 @ 100 | 187 | 188 | |||||||||
Real Estate (0.1%): | |||||||||||
Mid-America Apartments LP, 2.75%, 3/15/30, Callable 12/15/29 @ 100 | 187 | 187 |
See notes to financial statements.
14
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
SBA Tower Trust, 2.84%, 1/15/25 (a) | $ | 87 | $ | 87 | |||||||
VICI Properties LP/VICI Note Co., Inc., 4.63%, 12/1/29, Callable 12/1/24 @ 102.31 (a) | 17 | 18 | |||||||||
292 | |||||||||||
Utilities (0.2%): | |||||||||||
Alabama Power Co., 3.85%, 12/1/42 | 112 | 122 | |||||||||
Cleco Corporate Holdings LLC, 3.38%, 9/15/29, Callable 6/11/29 @ 100 (a) | 183 | 182 | |||||||||
Duke Energy Florida LLC, 3.85%, 11/15/42, Callable 5/15/42 @ 100 | 112 | 122 | |||||||||
NextEra Energy Capital Holdings, Inc., 3.34%, 9/1/20 | 267 | 270 | |||||||||
696 | |||||||||||
Total Corporate Bonds (Cost $9,804) | 9,907 | ||||||||||
Yankee Dollars (0.5%) | |||||||||||
Energy (0.0%): (l) | |||||||||||
Petroleos Mexicanos, 6.49%, 1/23/27, Callable 11/23/26 @ 100 (a) | 64 | 67 | |||||||||
Financials (0.4%): | |||||||||||
Athene Holding Ltd., 4.13%, 1/12/28, Callable 10/12/27 @ 100 | 350 | 361 | |||||||||
Deutsche Bank AG, 3.96%(SOFR+258bps), 11/26/25, Callable 11/26/24 @ 100 (b) | 112 | 113 | |||||||||
Newcrest Finance Pty Ltd., 4.45%, 11/15/21 (a) (h) | 100 | 104 | |||||||||
QBE Capital Funding III Ltd., 7.25%(USSW10+405bps), 5/24/41, Callable 5/24/21 @ 100 (a) (b) | 200 | 211 | |||||||||
Schahin II Finance Co. SPV Ltd. 8.00%, 5/25/20 PIK (a) (i) (p) | 6 | 6 | |||||||||
5.88%, 9/25/22 (a) (m) (q) | 261 | 19 | |||||||||
Sumitomo Mitsui Financial Group, Inc., 2.45%, 9/27/24 | 400 | 400 | |||||||||
1,214 | |||||||||||
Industrials (0.1%): | |||||||||||
CK Hutchison International 19 II Ltd., 2.75%, 9/6/29, Callable 6/6/29 @ 100 (a) | 200 | 197 | |||||||||
Materials (0.0%): | |||||||||||
Braskem Netherlands Finance BV, 4.50%, 1/31/30 (a) | 113 | 109 | |||||||||
Teck Resources Ltd., 6.13%, 10/1/35 | 120 | 139 | |||||||||
248 | |||||||||||
Total Yankee Dollars (Cost $1,879) | 1,726 | ||||||||||
Municipal Bonds (0.4%) | |||||||||||
Florida (0.0%): (l) | |||||||||||
County of Broward Florida Airport System Revenue, Series C, 2.50%, 10/1/28 | 75 | 74 | |||||||||
Georgia (0.1%): (l) | |||||||||||
Athens Housing Authority Revenue, 2.42%, 12/1/26 (d) | 160 | 160 |
See notes to financial statements.
15
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
New Jersey (0.0%): (l) | |||||||||||
New Jersey Economic Development Authority Revenue, Series NNN, 2.88%, 6/15/24 | $ | 72 | $ | 72 | |||||||
North Hudson Sewerage Authority Revenue, 2.88%, 6/1/28 | 37 | 37 | |||||||||
109 | |||||||||||
New York (0.1%): | |||||||||||
New York State Dormitory Authority Revenue, Series B, 2.83%, 7/1/31 (d) | 185 | 185 | |||||||||
New York State Thruway Authority Revenue, Series M, 2.55%, 1/1/28 | 43 | 43 | |||||||||
228 | |||||||||||
Pennsylvania (0.2%): | |||||||||||
Scranton School District, GO(INS — Build America Mutual Assurance Co.), 3.10%, 4/1/30 | 371 | 372 | |||||||||
State Public School Building Authority Revenue, 3.05%, 4/1/28 | 75 | 75 | |||||||||
University of Pittsburgh-of The Commonwealth System of Higher Education Revenue Series C, 2.53%, 9/15/31 (d) | 75 | 75 | |||||||||
Series C, 2.58%, 9/15/32 (d) | 40 | 40 | |||||||||
Series C, 2.63%, 9/15/33 (d) | 75 | 75 | |||||||||
637 | |||||||||||
Texas (0.0%): | |||||||||||
City of Houston, Texas Combined Utility System Revenue, 3.72%, 11/15/28 | 95 | 105 | |||||||||
Harris County Cultural Education Facilities Finance Corp. Revenue, Series B, 2.81%, 5/15/29 (d) | 75 | 75 | |||||||||
State of Texas, GO, 3.00%, 4/1/28 (d) | 112 | 118 | |||||||||
298 | |||||||||||
Total Municipal Bonds (Cost $1,504) | 1,506 | ||||||||||
U.S. Government Agency Mortgages (3.5%) | |||||||||||
Federal Home Loan Mortgage Corporation Series K047, Class A2, 3.33%, 5/25/25 | 300 | 319 | |||||||||
Series K053, Class A2, 3.00%, 12/25/25 | 700 | 734 | |||||||||
3.00%, 4/1/46 | 402 | 412 | |||||||||
3.50%, 4/1/46 | 2,157 | 2,247 | |||||||||
3.00%, 6/1/46 | 1,212 | 1,241 | |||||||||
3.00%, 9/1/46 | 438 | 448 | |||||||||
3.00%, 10/1/46 | 221 | 226 | |||||||||
3.00%, 11/1/46 | 748 | 766 | |||||||||
3.00%, 1/1/47 | 1,555 | 1,591 | |||||||||
3.00%, 1/1/47 | 791 | 810 | |||||||||
3.00%, 3/1/47 | 766 | 784 | |||||||||
3.00%, 4/1/47 | 244 | 250 | |||||||||
3.00%, 4/1/47 | 815 | 831 | |||||||||
3.00%, 9/1/47 | 631 | 644 | |||||||||
3.00%, 10/1/47 | 420 | 428 | |||||||||
3.50%, 4/1/48 | 425 | 437 | |||||||||
12,168 |
See notes to financial statements.
16
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Federal National Mortgage Association Series 2016-M2, Class AV2, 2.15%, 1/25/23 | $ | 229 | $ | 229 | |||||||
4.00%, 4/1/49 | 806 | 838 | |||||||||
1,067 | |||||||||||
Total U.S. Government Agency Mortgages (Cost $13,031) | 13,235 | ||||||||||
U.S. Treasury Obligations (6.4%) | |||||||||||
U.S. Treasury Bonds 3.00%, 8/15/48 (h) | 1,500 | 1,753 | |||||||||
3.38%, 11/15/48 (h) | 1,000 | 1,252 | |||||||||
2.38%, 11/15/49 | 1,000 | 1,038 | |||||||||
U.S. Treasury Inflation Indexed Bonds, 0.13%, 7/15/26 | 1,000 | 1,070 | |||||||||
U.S. Treasury Notes 2.50%, 1/31/21 (h) | 500 | 505 | |||||||||
1.63%, 11/15/22 | 8,000 | 8,004 | |||||||||
1.63%, 4/30/23 | 800 | 800 | |||||||||
2.00%, 2/15/25 | 100 | 102 | |||||||||
2.25%, 11/15/25 | 1,000 | 1,031 | |||||||||
1.63%, 2/15/26 | 3,200 | 3,184 | |||||||||
2.25%, 2/15/27 | 2,600 | 2,692 | |||||||||
2.38%, 5/15/27 (h) | 1,500 | 1,568 | |||||||||
2.75%, 2/15/28 (h) | 1,000 | 1,077 | |||||||||
Total U.S. Treasury Obligations (Cost $23,377) | 24,076 | ||||||||||
Exchange-Traded Funds (54.2%) | |||||||||||
First Trust Global Tactical Commodity Strategy Fund | 16,300 | 298 | |||||||||
Invesco DB Commodity Index Tracking Fund (g) | 28,600 | 438 | |||||||||
Invesco FTSE RAFI Developed Markets ex-US ETF | 69,390 | 2,871 | |||||||||
Invesco FTSE RAFI Emerging Markets ETF | 259,557 | 5,409 | |||||||||
Invesco Fundamental High Yield Corporate Bond ETF (g) | 19,941 | 379 | |||||||||
iShares 20+ Year Treasury Bond ETF | 21,694 | 3,046 | |||||||||
iShares 7-10 Year Treasury Bond ETF | 17,030 | 1,900 | |||||||||
iShares Core MSCI EAFE ETF | 369,200 | 23,562 | |||||||||
iShares Core MSCI Emerging Markets ETF | 238,277 | 12,193 | |||||||||
iShares Core S&P 500 ETF | 97,705 | 30,882 | |||||||||
iShares Core U.S. Aggregate Bond ETF | 17,889 | 2,019 | |||||||||
iShares Edge MSCI Min Vol EAFE ETF | 2,267 | 170 | |||||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 15,063 | 859 | |||||||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 15,509 | 1,985 | |||||||||
iShares MSCI Canada ETF (g) | 355,741 | 10,541 | |||||||||
iShares MSCI United Kingdom ETF (g) | 72,000 | 2,371 | |||||||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 423,120 | 12,139 | |||||||||
Schwab Fundamental International Large Co. Index ETF | 827,101 | 23,754 | |||||||||
Schwab Fundamental International Small Co. Index ETF | 91,800 | 2,996 | |||||||||
SPDR S&P Emerging Markets Smallcap ETF (g) | 14,790 | 653 | |||||||||
U.S. Commodity Index Fund | 48,800 | 1,709 | |||||||||
VanEck Vectors Gold Miners ETF | 138,553 | 3,752 | |||||||||
VanEck Vectors Junior Gold Miners ETF | 12,000 | 458 | |||||||||
Vanguard FTSE All-World ex-US ETF | 61,665 | 3,216 |
See notes to financial statements.
17
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Vanguard FTSE Developed Markets ETF | 315,579 | $ | 13,560 | ||||||||
Vanguard FTSE Emerging Markets ETF | 800 | 34 | |||||||||
Vanguard FTSE Europe ETF (g) | 228,200 | 12,868 | |||||||||
Vanguard Mortgage-Backed Securities ETF | 42,233 | 2,249 | |||||||||
Vanguard Real Estate ETF | 96,195 | 8,953 | |||||||||
Vanguard S&P 500 ETF (h) | 25,975 | 7,498 | |||||||||
Vanguard Short-Term Bond ETF (g) | 44,404 | 3,586 | |||||||||
Vanguard Total Stock Market ETF (h) | 50,940 | 8,151 | |||||||||
WisdomTree Emerging Markets SmallCap Dividend Fund | 16,645 | 756 | |||||||||
Total Exchange-Traded Funds (Cost $189,422) | 205,255 | ||||||||||
Affiliated Exchange-Traded Funds (0.2%) | |||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 16,000 | 692 | |||||||||
Total Affiliated Exchange-Traded Funds (Cost $770) | 692 | ||||||||||
Commercial Paper (0.8%) | |||||||||||
Alliant Energy, 2.86%, 12/2/19 (n) | 500 | 500 | |||||||||
CSLB Holdings, Inc., 2.10%, 12/6/19 (n) | 300 | 300 | |||||||||
Energy Transfer Partner LP, 4.00%, 12/2/19 (n) | 505 | 505 | |||||||||
FMC Corp., 2.64%, 12/2/19 (n) | 540 | 539 | |||||||||
Royal Caribbean Cruises, 2.40%, 12/3/19 (n) | 328 | 328 | |||||||||
Spire, Inc., 2.12%, 12/5/19 (n) | 250 | 250 | |||||||||
Viacom, Inc., 2.64%, 12/2/19 (n) | 447 | 447 | |||||||||
Total Commercial Paper (Cost $2,870) | 2,869 | ||||||||||
Collateral for Securities Loaned^ (3.6%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (o) | 13,551,555 | 13,553 | |||||||||
Total Collateral for Securities Loaned (Cost $13,552) | 13,553 | ||||||||||
Total Investments (Cost $362,825) — 103.4% | 390,875 | ||||||||||
Liabilities in excess of other assets — (3.4)% | (12,833 | ) | |||||||||
NET ASSETS — 100.00% | $ | 378,042 |
^ Purchased with cash collateral from securities on loan.
(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 November 30, 2019, the fair value of these securities was $4,852 (thousands) and amounted to 1.3% of net assets.
(b) Variable or Floating-Rate Security. Rate disclosed is as of November 30, 2019.
(c) The rate for certain asset-backed and mortgage backed securities may vary based on factors relating to the pool of assets underlying the security. The rate disclosed is the rate in effect at November 30, 2019.
(d) Security purchased on a when-issued basis.
(e) Interest only.
(f) Non-income producing security.
See notes to financial statements.
18
USAA Mutual Funds Trust USAA Cornerstone Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(g) All or a portion of this security is on loan.
(h) All or a portion of this security has been segregated as collateral for derivative instruments and/or securities purchased on a when-issued basis.
(i) Security was fair valued based upon procedures approved by the Board of Trustees and represents 0.0% of the Fund's net assets as of November 30, 2019. This security is classified as Level 3 within the fair value hierarchy. (See Note 2)
(j) Rounds to less than $1.
(k) Security is perpetual and has no final maturity date but may be subject to calls at various dates in the future.
(l) Amount represents less than 0.05% of net assets.
(m) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were 0.1% of the Fund's net assets.
(n) Rate represents the effective yield at November 30, 2019.
(o) Rate disclosed is the daily yield on November 30, 2019.
(p) All of the coupon is paid in kind.
(q) Defaulted security
bps — Basis points
ETF — Exchange-Traded Fund
GO — General Obligation
LIBOR — London InterBank Offered Rate
LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LLC — Limited Liability Company
LP — Limited Partnership
MTN — Medium Term Note
PIK — Paid In-Kind security
PLC — Public Limited Company
SOFR — Secured Overnight Financing Rate
USSW10 — USD 10 Year Swap Rate, rate disclosed as of November 30, 2019
See notes to financial statements.
19
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Cornerstone Aggressive Fund | |||||||
Assets: | |||||||
Affiliated investments, at value (Cost $770) | $ | 692 | |||||
Unaffiliated investments, at value (Cost $362,055) | 390,183 | (a) | |||||
Cash and cash equivalents | 1,141 | ||||||
Receivables: | |||||||
Interest and dividends | 480 | ||||||
Capital shares issued | 301 | ||||||
From Adviser | 200 | ||||||
Prepaid expenses | 1 | ||||||
Total assets | 392,998 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 13,552 | ||||||
Investments purchased | 954 | ||||||
Capital shares redeemed | 142 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 186 | ||||||
Administration fees | 46 | ||||||
Custody fees | 2 | ||||||
Transfer agent fees | 11 | ||||||
Compliance fees | — | (b) | |||||
Other accrued expenses | 63 | ||||||
Total liabilities | 14,956 | ||||||
Net Assets: | |||||||
Capital | 344,623 | ||||||
Total distributable earnings/(loss) | 33,419 | ||||||
Net assets | $ | 378,042 | |||||
Shares (unlimited number of shares authorized with no par value): | 29,494 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 12.82 |
(a) Includes $13,122 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.
20
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Cornerstone Aggressive Fund | |||||||
Investment Income: | |||||||
Income distributions from affiliated funds | $ | 2 | |||||
Dividends | 4,096 | ||||||
Interest | 795 | ||||||
Securities lending (net of fees) | 20 | ||||||
Foreign tax withholding | — | (a) | |||||
Total income | 4,913 | ||||||
Expenses: | |||||||
Investment advisory fees | 1,105 | ||||||
Administration fees | 276 | ||||||
Custodian fees | 26 | ||||||
Transfer agent fees | 591 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 1 | ||||||
Legal and audit fees | 44 | ||||||
State registration and filing fees | 12 | ||||||
Sub-Administration fees | 31 | ||||||
Other expenses | 49 | ||||||
Total expenses | 2,155 | ||||||
Expenses waived/reimbursed by Adviser | (111 | ) | |||||
Expenses waived/reimbursed by AMCO | (25 | ) | |||||
Net expenses | 2,019 | ||||||
Net Investment Income (Loss) | 2,894 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from unaffiliated investment securities and foreign currency translations | 1,178 | ||||||
Net realized gains (losses) from futures contracts | 137 | ||||||
Net change in unrealized appreciation/depreciation on affiliated funds | 12 | ||||||
Net change in unrealized appreciation/depreciation on unaffiliated investment securities and foreign currency translations | 28,119 | ||||||
Net change in unrealized appreciation/depreciation on futures contracts | 40 | ||||||
Net realized/unrealized gains (losses) on investments | 29,486 | ||||||
Change in net assets resulting from operations | $ | 32,380 |
(a) Rounds to less than $1.
See notes to financial statements.
21
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Cornerstone Aggressive Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 2,894 | $ | 5,370 | |||||||
Net realized gains (losses) from investments | 1,315 | 4,198 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 28,171 | (20,470 | ) | ||||||||
Change in net assets resulting from operations | 32,380 | (10,902 | ) | ||||||||
Change in net assets resulting from distributions to shareholders | — | (18,397 | ) | ||||||||
Change in net assets resulting from capital transactions | (5,748 | ) | 35,941 | ||||||||
Change in net assets | 26,632 | 6,642 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 351,410 | 344,768 | |||||||||
End of period | $ | 378,042 | $ | 351,410 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 23,473 | $ | 78,995 | |||||||
Distributions reinvested | — | 17,634 | |||||||||
Cost of shares redeemed | (29,221 | ) | (60,688 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (5,748 | ) | $ | 35,941 | ||||||
Share Transactions: | |||||||||||
Issued | 1,899 | 6,440 | |||||||||
Reinvested | — | 1,557 | |||||||||
Redeemed | (2,368 | ) | (4,947 | ) | |||||||
Change in Shares | (469 | ) | 3,050 |
See notes to financial statements.
22
This page is intentionally left blank.
23
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 Cornerstone Aggressive Fund | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 11.73 | 0.10 | (d) | 0.99 | 1.09 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 12.81 | 0.15 | (0.57 | ) | (0.42 | ) | (0.18 | ) | (0.48 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 12.57 | 0.16 | 0.94 | 1.10 | (0.14 | ) | (0.72 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 11.33 | 0.15 | 1.26 | 1.41 | (0.17 | ) | — | |||||||||||||||||||
Year Ended May 31, 2016 | $ | 12.35 | 0.17 | (0.95 | ) | (0.78 | ) | (0.16 | ) | (0.08 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 12.40 | 0.15 | 0.29 | 0.44 | (0.17 | ) | (0.32 | ) |
* 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) The expense ratios exclude the impact of expenses paid by each underlying fund.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Reflects increased trading activity due to usage of quantitative investment strategies.
(f) Reflects increased trading activity due to changes in asset allocation strategies.
See notes to financial statements.
24
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)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a) | ||||||||||||||||||||||||||||
USAA Cornerstone Aggressive Fund | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 12.82 | 9.29 | % | 1.10 | % | 1.58 | % | 1.17 | % | $ | 378,042 | 39 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | (0.66 | ) | $ | 11.73 | (3.04 | )% | 1.10 | % | 1.54 | % | 1.24 | % | $ | 351,410 | 95 | %(e) | |||||||||||||||||||
Year Ended May 31, 2018 | (0.86 | ) | $ | 12.81 | 8.85 | % | 1.10 | % | 1.18 | % | 1.25 | % | $ | 344,768 | 65 | % | |||||||||||||||||||
Year Ended May 31, 2017 | (0.17 | ) | $ | 12.57 | 12.59 | % | 1.10 | % | 1.32 | % | 1.36 | % | $ | 283,867 | 70 | % | |||||||||||||||||||
Year Ended May 31, 2016 | (0.24 | ) | $ | 11.33 | (6.26 | )% | 1.10 | % | 1.57 | % | 1.46 | % | $ | 222,224 | 81 | %(f) | |||||||||||||||||||
Year Ended May 31, 2015 | (0.49 | ) | $ | 12.35 | 3.65 | % | 1.10 | % | 1.32 | % | 1.45 | % | $ | 202,327 | 46 | % |
See notes to financial statements.
25
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Cornerstone Aggressive Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
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 July 1, 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)
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.
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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.
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 November 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 | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 2,054 | $ | — | $ | 2,054 | |||||||||||
Collateralized Mortgage Obligations | — | 637 | — | 637 | |||||||||||||||
Common Stocks | 114,267 | — | — | (a) | 114,267 | ||||||||||||||
Preferred Stocks | 420 | 461 | — | 881 | |||||||||||||||
Senior Secured Loans | — | 217 | — | 217 | |||||||||||||||
Corporate Bonds | — | 9,907 | — | 9,907 | |||||||||||||||
Yankee Dollars | — | 1,720 | 6 | 1,726 | |||||||||||||||
Municipal Bonds | — | 1,506 | — | 1,506 | |||||||||||||||
U.S. Government Agency Mortgages | — | 13,235 | — | 13,235 | |||||||||||||||
U.S. Treasury Obligations | — | 24,076 | — | 24,076 | |||||||||||||||
Exchange-Traded Funds | 205,255 | — | — | 205,255 | |||||||||||||||
Affiliated Exchange-Traded Funds | 692 | — | — | 692 | |||||||||||||||
Commercial Paper | — | 2,869 | — | 2,869 | |||||||||||||||
Collateral for Securities Loaned | 13,553 | — | — | 13,553 | |||||||||||||||
Total | $ | 334,187 | $ | 56,682 | $ | 6 | $ | 390,875 |
(a) Amount is less than $1 thousand.
27
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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.
Mortgage- and Asset-Backed Securities:
The values of some mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values of mortgage and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market's perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as "Ginnie Mae"), while other mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as "Fannie Mae" and "Freddie Mac"), are backed only by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
28
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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 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.
During the period ended November 30, 2019, the Fund held futures contracts primarily for the strategy of gaining exposure to a particular asset class or securities market. The Fund held no futures contracts at November 30, 2019.
29
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Summary of Derivative Instruments:
The following table presents the effect of derivative instruments on the Statement of Operations, categorized by risk exposure, for the six months ended November 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: | $ | 137 | $ | 40 |
All open derivative positions at year end are reflected in the Fund's Schedule of Portfolio Investments. The underlying face value of open derivative positions relative to the Fund's net assets at year end is generally representative of the notional amount of open positions to net assets throughout the period.
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
30
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 13,122 | $ | — | $ | 13,552 |
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 May 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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | U.S. Government Securities | ||||||||||||||
Purchases | Sales | Purchases | Sales | ||||||||||||
$ | 124,007 | $ | 107,668 | $ | 15,812 | $ | 31,469 |
31
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 fees accrued daily and paid monthly at an annual rate of 0.60% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $926 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 0.60% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $179 thousand and reflected on the Statement of Operations as Investment Advisory fees.
In addition, the Fund invests in affiliated USAA exchange-traded fund(s) ("affiliated ETFs"). The Fund's Advisor fee is reimbursed by VCM (and previously AMCO) to the extent of the indirect Advisor fee incurred through the Fund's proportional investment in the affiliated ETF(s). For the period from July 1, 2019 through November 30, 2019, the Fund's Advisor fee was reimbursed by VCM in an amount of $1 thousand, of which $1 thousand is receivable from VCM. For the period from June 1, 2019 through June 30, 2019, the Fund's Advisor fee was reimbursed by AMCO in an amount of less than $1 thousand.
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 November 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 the 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. Amounts incurred from July 1, 2019 through November 30, 2019 are $231 thousand and are presented on the Statement of Operations as Administration fees.
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. Amounts incurred from June 1, 2019 through June 30, 2019 were $45 thousand and 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance fees.
32
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 an annual charge of $23 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 November 30, 2019 was $494 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $97 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.
Effective July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 1.10%.
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 November 30, 2019, the following amounts are available to be repaid
33
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 111 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of 1.10% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $25 thousand. 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.
The Fund has a targeted risk tolerance and a corresponding asset allocation target; however, mere asset allocation and volatility are not the sole determination of risk. The Fund's managers will tactically allocate away from the target allocation as market conditions and the perceived risks warrant. The Fund bears the risk that the managers' tactical allocation will not be successful.
The risks of the Fund directly correspond to the risks of the underlying affiliated funds in which the Fund invests. By investing in the underlying affiliated funds, the Fund has exposure to the risk of many different areas of the market. The degree to which the risks described below apply to the Fund varies according to the Fund's asset allocation. For instance, the more the Fund is allocated to stock funds, the greater the risk associated with equity securities. The Fund also is subject to asset allocation risk (i.e., the risk that allocations will not produce the intended results) and to management risk (i.e., the risk that the selection of underlying affiliated funds will not produce the intended results). In managing a Fund that invests in underlying affiliated funds, the Adviser may have conflicts of interest in allocating the Fund's assets among the various underlying affiliated funds. This is because the fees payable by some of the underlying affiliated funds to the Adviser and/or its affiliates are higher than the fees payable by other underlying affiliated funds, and because the Adviser also manages and administers the underlying affiliated funds.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, to the degree the Fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
34
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
The Fund may invest in shares of ETFs, which generally are investment companies that hold a portfolio of common stocks or debt securities, the shares of which are traded on an exchange. ETFs incur their own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which will be borne indirectly by the Fund as a shareholder in an ETF. As a result, the Fund's investment in an ETF will cause the Fund to indirectly bear the fees and expenses of the ETF and, in turn, the Fund's performance may be lower than if the Fund were to invest directly in the underlying securities held by the ETF. For investments in affiliated ETFs, the Fund's management fee is reimbursed by the Adviser to the extent of the indirect management fee incurred through the Fund's investment in the affiliated ETFs. The Adviser may have conflicts of interest in allocating assets among affiliated and unaffiliated ETFs, because the Adviser also manages and administers the affiliated ETFs, and the Adviser and its affiliates receive other fees from the affiliated ETFs. In addition, the Fund also will be subject to the risks associated with the securities or other investments held by the ETFs.
The fixed-income securities in the Fund's portfolio are subject to credit risk, which is the possibility that an issuer of a fixed-income security will fail to make timely interest and/or principal payments on its securities or that negative market perceptions of the issuer's ability to make such payments will cause the price of that security to decline. The Fund accepts some credit risk as a recognized means to enhance an investor's return. All fixed-income securities, varying from the highest quality to the very speculative, have some degree of credit risk. Fixed-income securities rated below investment grade, also known as "junk" or high-yield bonds, generally entail greater economic, credit, and liquidity risk than investment-grade securities. Their prices may be more volatile, especially during economic downturns, financial setbacks, or liquidity events.
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. 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 Statement 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 June 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 November 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. The interfund loan rate is determined, as specified in the Order, by averaging the current
35
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income annually. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 11,080 | $ | 7,317 | $ | 18,397 |
As of the most recent tax year ended May 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows (amounts in thousands):
Undistributed Long-Term Capital Gains | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||
$ | 1,965 | $ | (209 | ) | $ | (716 | ) | $ | 1,040 |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales, REIT return of capital dividend, non-REIT return of capital dividend, futures contracts marked-to-market, hybrid interest accrual adjustment, partnership basis adjustments and rounding adjustments.
36
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
As of the most recent tax year ended May 31, 2019, the Fund had no capital loss carryforwards, for federal income tax purposes. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the most recent tax year ended May 31, 2019, the Fund deferred to June 1, 2019, post October capital losses of $209,000.
8. Affiliated Securities:
An affiliated security is a security in which the Fund has ownership of at least 5% of the security's outstanding voting shares or an investment company managed by VCM. The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. These underlying funds are noted as affiliated in the Fund's Schedule of Portfolio Investments. The affiliated underlying funds' annual or semiannual reports may be viewed at usaa.com. Transactions in affiliated securities during the six months ended November 30, 2019 were as follows (amount in thousands):
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | |||||||||||||||||||||||||
Affiliated Holdings | |||||||||||||||||||||||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | $ | 680 | $ | — | $ | — | $ | — | $ | 12 | $ | 692 | $ | 2 |
37
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,092.90 | $ | 1,019.50 | $ | 5.76 | $ | 5.55 | 1.10 | % |
* 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).
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.
38
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 | (800) 235-8396 |
97452-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Cornerstone Conservative Fund
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 | 4 | ||||||
Statement of Operations | 5 | ||||||
Statements of Changes in Net Assets | 6 | ||||||
Financial Highlights | 8 | ||||||
Notes to Financial Statements | 10 | ||||||
Supplemental Information | 20 | ||||||
Expense Examples | 20 | ||||||
Proxy Voting and Portfolio Holdings Information | 20 | ||||||
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 Cornerstone Conservative Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek current income. The Fund also considers the potential for capital appreciation.
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include short-term investments purchased with cash collateral from securities loaned.
Percentages are of net assets of the Fund and may not equal 100%.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Cornerstone Conservative Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Affiliated Exchange-Traded Funds (11.6%) | |||||||||||
VictoryShares USAA Core Intermediate-Term Bond ETF | 277,559 | $ | 14,443 | ||||||||
VictoryShares USAA Core Short-Term Bond ETF (a) | 4,500 | 228 | |||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 23,867 | 1,032 | |||||||||
VictoryShares USAA MSCI International Value Momentum Index ETF | 59,919 | 2,758 | |||||||||
VictoryShares USAA MSCI USA Small Cap Value Momentum Index ETF (a) | 12,800 | 683 | |||||||||
VictoryShares USAA MSCI USA Value Momentum Index ETF | 98,450 | 5,227 | |||||||||
Total Affiliated Exchange-Traded Funds (Cost $23,515) | 24,371 | ||||||||||
Affiliated Mutual Funds (87.5%) | |||||||||||
USAA Aggressive Growth Fund, Institutional Shares | 27,891 | 1,263 | |||||||||
USAA Capital Growth Fund, Institutional Shares | 172,185 | 2,027 | |||||||||
USAA Intermediate-Term Bond Fund, Institutional Shares | 3,097,215 | 33,760 | |||||||||
USAA Short-Term Bond Fund, Institutional Shares | 614,594 | 5,673 | |||||||||
USAA Emerging Markets Fund, Institutional Shares | 146,108 | 2,633 | |||||||||
USAA Government Securities Fund, Institutional Shares | 4,326,816 | 42,921 | |||||||||
USAA Growth Fund, Institutional Shares | 55,786 | 1,795 | |||||||||
USAA High Income Fund, Institutional Shares | 795,870 | 6,200 | |||||||||
USAA Income Fund, Institutional Shares | 4,599,191 | 61,950 | |||||||||
USAA Income Stock Fund, Institutional Shares | 139,289 | 2,882 | |||||||||
USAA International Fund, Institutional Shares | 238,942 | 7,424 | |||||||||
USAA Precious Metals and Minerals Fund, Institutional Shares | 56,945 | 883 | |||||||||
USAA 500 Index Fund, Rewards Shares | 148,662 | 6,589 | |||||||||
USAA Small Cap Stock Fund, Institutional Shares | 124,068 | 2,196 | |||||||||
USAA Target Managed Allocation Fund | 381,539 | 4,281 | |||||||||
USAA Value Fund, Institutional Shares | 101,710 | 2,062 | |||||||||
Total Affiliated Mutual Funds (Cost $173,408) | 184,539 | ||||||||||
Collateral for Securities Loaned^ (0.2%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (b) | 384,900 | 385 | |||||||||
Total Collateral for Securities Loaned (Cost $385) | 385 | ||||||||||
Total Investments (Cost $197,308) — 99.3% | 209,295 | ||||||||||
Other assets in excess of liabilities — 0.7% | 1,542 | ||||||||||
NET ASSETS — 100.00% | $ | 210,837 |
^ 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 November 30, 2019.
ETF — Exchange-Traded Fund
See notes to financial statements.
3
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Cornerstone Conservative Fund | |||||||
Assets: | |||||||
Affiliated investments, at value (Cost $196,923) | $ | 208,910 | (a) | ||||
Unaffiliated investments, at value (Cost $385) | 385 | ||||||
Cash and cash equivalents | 1,617 | ||||||
Receivables: | |||||||
Interest | 3 | ||||||
Distributions from affiliated funds | 191 | ||||||
Capital shares issued | 128 | ||||||
Receivable from Adviser | 44 | ||||||
Prepaid expenses | 1 | ||||||
Total assets | 211,279 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 385 | ||||||
Capital shares redeemed | 36 | ||||||
Accrued expenses and other payables: | |||||||
Compliance fees | — | (b) | |||||
Other accrued expenses | 21 | ||||||
Total liabilities | 442 | ||||||
Net Assets: | |||||||
Capital | 200,654 | ||||||
Total distributable earnings/(loss) | 10,183 | ||||||
Net assets | $ | 210,837 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 18,974 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 11.11 |
(a) Includes $374 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.
4
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Cornerstone Conservative Fund | |||||||
Investment Income: | |||||||
Income distributions from affiliated funds | $ | 2,697 | |||||
Interest | 27 | ||||||
Securities lending (net of fees) | 2 | ||||||
Total income | 2,726 | ||||||
Expenses: | |||||||
Custodian fees | 8 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 1 | ||||||
Legal and audit fees | 36 | ||||||
State registration and filing fees | 11 | ||||||
Printing fees | 16 | ||||||
Sub-Administration fees | 7 | ||||||
Other expenses | 7 | ||||||
Total expenses | 106 | ||||||
Expenses waived/reimbursed by AMCO | (4 | ) | |||||
Net expenses | 102 | ||||||
Net Investment Income (Loss) | 2,624 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from sales of affiliated funds | (48 | ) | |||||
Net change in unrealized appreciation/depreciation on affiliated funds | 7,316 | ||||||
Net realized/unrealized gains (losses) on investments | 7,268 | ||||||
Change in net assets resulting from operations | $ | 9,892 |
See notes to financial statements.
5
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Cornerstone Conservative Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 2,624 | $ | 5,681 | |||||||
Net realized gains (losses) from investments | (48 | ) | (1,042 | ) | |||||||
Net change in unrealized appreciation (depreciation) on investments | 7,316 | 2,580 | |||||||||
Change in net assets resulting from operations | 9,892 | 7,219 | |||||||||
Change in net assets resulting from distributions to shareholders | (2,759 | ) | (5,667 | ) | |||||||
Change in net assets resulting from capital transactions | 10,439 | (4,579 | ) | ||||||||
Change in net assets | 17,572 | (3,027 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 193,265 | 196,292 | |||||||||
End of period | $ | 210,837 | $ | 193,265 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 26,167 | $ | 39,964 | |||||||
Distributions reinvested | 2,748 | 5,638 | |||||||||
Cost of shares redeemed | (18,476 | ) | (50,181 | ) | |||||||
Change in net assets resulting from capital transactions | $ | 10,439 | $ | (4,579 | ) | ||||||
Share Transactions: | |||||||||||
Issued | 2,385 | 3,799 | |||||||||
Reinvested | 252 | 542 | |||||||||
Redeemed | (1,683 | ) | (4,778 | ) | |||||||
Change in Shares | 954 | (437 | ) |
See notes to financial statements.
6
This page is intentionally left blank.
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 Cornerstone Conservative Fund | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 10.72 | 0.14 | (d) | 0.40 | 0.54 | (0.15 | ) | — | ||||||||||||||||||
Year Ended May 31, 2019 | $ | 10.64 | 0.32 | 0.08 | 0.40 | (0.32 | ) | — | |||||||||||||||||||
Year Ended May 31, 2018 | $ | 10.76 | 0.30 | (0.11 | ) | 0.19 | (0.31 | ) | — | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 10.27 | 0.31 | 0.49 | 0.80 | (0.31 | ) | — | |||||||||||||||||||
Year Ended May 31, 2016 | $ | 10.68 | 0.35 | (0.37 | ) | (0.02 | ) | (0.34 | ) | (0.05 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 10.77 | 0.31 | (0.06 | ) | 0.25 | (0.32 | ) | (0.02 | ) |
* 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) The expense ratios exclude the impact of expenses paid be each underlying fund.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Reflects a return to normal trading levels after a prior year transition or allocation shift.
(f) Reflects increased trading activity due to changes in asset allocation strategies.
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)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a) | ||||||||||||||||||||||||||||
USAA Cornerstone Conservative Fund | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | (0.15 | ) | $ | 11.11 | 5.07 | % | 0.10 | % | 2.58 | % | 0.10 | % | $ | 210,837 | 2 | % | |||||||||||||||||||
Year Ended May 31, 2019 | (0.32 | ) | $ | 10.72 | 3.84 | % | 0.10 | % | 2.99 | % | 0.12 | % | $ | 193,265 | 22 | % | |||||||||||||||||||
Year Ended May 31, 2018 | (0.31 | ) | $ | 10.64 | 1.79 | % | 0.10 | % | 2.87 | % | 0.12 | % | $ | 196,292 | 5 | % | |||||||||||||||||||
Year Ended May 31, 2017 | (0.31 | ) | $ | 10.76 | 7.93 | % | 0.10 | % | 3.02 | % | 0.15 | % | $ | 174,754 | 7 | %(e) | |||||||||||||||||||
Year Ended May 31, 2016 | (0.39 | ) | $ | 10.27 | (0.05 | )% | 0.10 | % | 3.38 | % | 0.15 | % | $ | 137,705 | 43 | %(f) | |||||||||||||||||||
Year Ended May 31, 2015 | (0.34 | ) | $ | 10.68 | 2.37 | % | 0.10 | % | 3.03 | % | 0.15 | % | $ | 145,626 | 5 | % |
See notes to financial statements.
9
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Cornerstone Conservative Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
The Fund is a "fund of funds" in that it invests in a selection of affiliated mutual funds and exchange-traded funds managed by the Fund's Adviser, Victory Capital Management Inc., an affiliate of the Fund.
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 July 1, 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)
10
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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, including underlying funds, are valued at net asset value. These valuations are typically categorized as Level 1 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 November 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 | ||||||||||||||||
Affiliated Exchange-Traded Funds | $ | 24,371 | $ | — | $ | — | $ | 24,371 | |||||||||||
Affiliated Mutual Funds | 184,539 | — | — | 184,539 | |||||||||||||||
Collateral for Securities Loaned | 385 | — | — | 385 | |||||||||||||||
Total | $ | 209,295 | $ | — | $ | — | $ | 209,295 |
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.
11
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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.
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 374 | $ | — | $ | 385 |
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 May 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.
12
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||
Purchases | Sales | ||||||
$ | 13,589 | $ | 3,597 |
There were no purchases and sales of U.S. government securities during the six months ended November 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. The Adviser does not receive any fees from the Fund for these services.
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. AMCO did not receive any fees from the Fund for these services.
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 does not receive any fees from the Fund for these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. AMCO did not receive any fees from the Fund for these services.
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 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
13
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Adviser for these services. Amounts incurred during the period from July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 nor SAS received any fees from the Fund for these services.
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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.10%.
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 November 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
14
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
available to be recouped at a future time. There were no voluntary waivers or reimbursements for the six months ended November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of 0.10% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limits is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $4 thousand. 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.
The Fund has a targeted risk tolerance and a corresponding asset allocation target; however, mere asset allocation and volatility are not the sole determination of risk. The Fund's managers will tactically allocate away from the target allocation as market conditions and the perceived risks warrant. The Fund bears the risk that the managers' tactical allocation will not be successful.
The Fund may invest in underlying affiliated funds that invest in bonds. There is a risk that the market value of those bonds will fluctuate because of changes in interest rates, changes in supply and demand for fixed-income securities, and other market factors. Bond prices generally are linked to prevailing market interest rates. In general, when interest rates rise, bond prices fall; and conversely, when interest rates fall, bond prices rise. The price volatility of a bond also depends on its maturity. Generally, the longer the maturity of a bond, the greater is its sensitivity to interest rates. To compensate investors for this higher interest rate risk, bonds with longer maturities generally offer higher yields than bonds with shorter maturities.
The fixed-income securities in the Fund's portfolio are subject to credit risk, which is the possibility that an issuer of a fixed-income security will fail to make timely interest and/or principal payments on its securities or that negative market perceptions of the issuer's ability to make such payments will cause the price of that security to decline. The Fund accepts some credit risk as a recognized means to enhance an investor's return. All fixed-income securities, varying from the highest quality to the very speculative, have some degree of credit risk. Fixed-income securities rated below investment grade, also known as "junk" or high-yield bonds, generally entail greater economic, credit, and liquidity risk than investment-grade securities. Their prices may be more volatile, especially during economic downturns, financial setbacks, or liquidity events.
The Fund may invest in shares of ETFs, which generally are investment companies that hold a portfolio of common stocks or debt securities, the shares of which are traded on an exchange. ETFs incur their own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which would be indirectly borne by the Fund. As a result, an investment by the Fund in an ETF will cause the Fund to indirectly bear the fees and expenses of the ETF and, in turn, performance may be lower than if the Fund were to invest directly in the securities underlying the ETF. In addition, the Fund will be indirectly exposed to all of the risk of securities held by the ETFs.
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,
15
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. 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 Statement 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 June 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 November 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. 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 November 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income quarterly. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 5,667 | $ | — | $ | 5,667 |
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||
$ | 1,081 | $ | (2,145 | ) | $ | 4,114 | $ | 3,050 |
** 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 May 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 | |||||||||
$ | 310 | $ | 1,835 | $ | 2,145 |
8. Affiliated Securities:
An affiliated security is a security in which the Fund has ownership of at least 5% of the security's outstanding voting shares or an investment company managed by VCM. The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. These underlying funds are noted as affiliated in the Fund's Schedule of Portfolio Investments. The affiliated underlying funds' annual or semiannual reports may be viewed at usaa.com. Transactions in affiliated securities during the six months ended November 30, 2019 were as follows (amount in thousands):
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
Affiliated Holdings | |||||||||||||||||||||||||||||||||||
USAA Government Securities Fund, Institutional Shares | $ | 39,258 | $ | 4,953 | $ | (1,608 | ) | $ | (35 | ) | $ | — | $ | 353 | $ | 42,921 | $ | 516 | |||||||||||||||||
USAA Capital Growth Fund, Institutional Shares | 1,834 | — | — | — | — | 193 | 2,027 | — | |||||||||||||||||||||||||||
USAA Target Managed Allocation Fund | 3,838 | — | — | — | — | 443 | 4,281 | — | |||||||||||||||||||||||||||
USAA Precious Metals and Minerals Fund, Institutional Shares | 706 | — | — | — | — | 177 | 883 | — | |||||||||||||||||||||||||||
USAA High Income Fund, Institutional Shares | 5,704 | 484 | — | — | — | 12 | 6,200 | 174 | |||||||||||||||||||||||||||
USAA Short-Term Bond Fund, Institutional Shares | 5,582 | 67 | — | — | — | 24 | 5,673 | 79 |
17
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
USAA Intermediate-Term Bond Fund, Institutional Shares | $ | 31,183 | $ | 2,361 | $ | (551 | ) | $ | — | * | $ | — | $ | 767 | $ | 33,760 | $ | 577 | |||||||||||||||||
USAA Income Fund, Institutional Shares | 57,887 | 3,839 | (1,437 | ) | (13 | ) | — | 1,674 | 61,950 | 983 | |||||||||||||||||||||||||
USAA Emerging Markets Fund, Institutional Shares | 2,497 | — | — | — | — | 136 | 2,633 | — | |||||||||||||||||||||||||||
USAA International Fund, Institutional Shares | 6,841 | — | — | — | — | 583 | 7,424 | — | |||||||||||||||||||||||||||
USAA Small Cap Stock Fund, Institutional Shares | 1,949 | — | — | — | — | 247 | 2,196 | — | |||||||||||||||||||||||||||
USAA Value Fund, Institutional Shares | 1,835 | — | — | — | — | 227 | 2,062 | — | |||||||||||||||||||||||||||
USAA Income Stock Fund, Institutional Shares | 2,572 | 26 | — | — | — | 284 | 2,882 | 10 | |||||||||||||||||||||||||||
USAA Growth Fund, Institutional Shares | 1,633 | — | — | — | — | 162 | 1,795 | — | |||||||||||||||||||||||||||
USAA Aggressive Growth Fund, Institutional Shares | 1,160 | — | — | — | — | 103 | 1,263 | — | |||||||||||||||||||||||||||
USAA 500 Index Fund, Reward Shares | 5,716 | 56 | — | — | — | 817 | 6,589 | 55 | |||||||||||||||||||||||||||
VictoryShares USAA Core Intermediate-Term Bond ETF | 12,842 | 1,189 | — | — | — | 412 | 14,443 | 202 | |||||||||||||||||||||||||||
VictoryShares USAA Core Short-Term Bond ETF | 227 | — | — | — | — | 1 | 228 | 3 |
18
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | $ | 803 | $ | 204 | $ | — | $ | — | $ | — | $ | 25 | $ | 1,032 | $ | 2 | |||||||||||||||||||
VictoryShares USAA MSCI International Value Momentum Index ETF | 2,410 | 204 | — | — | — | 144 | 2,758 | 39 | |||||||||||||||||||||||||||
VictoryShares USAA MSCI USA Small Cap Value Momentum Index ETF | 620 | — | — | — | — | 63 | 683 | 8 | |||||||||||||||||||||||||||
VictoryShares USAA MSCI USA Value Momentum Index ETF | 4,553 | 205 | — | — | — | 469 | 5,227 | 49 | |||||||||||||||||||||||||||
Total | $ | 191,650 | $ | 13,588 | $ | (3,596 | ) | $ | (48 | ) | $ | — | $ | 7,316 | $ | 208,910 | $ | 2,697 |
* Amount is less than $1 thousand.
19
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,050.70 | $ | 1,024.50 | $ | 0.51 | $ | 0.51 | 0.10 | % |
* 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).
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.
20
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 | (800) 235-8396 |
97450-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Cornerstone Equity Fund
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 | 4 | ||||||
Statement of Operations | 5 | ||||||
Statements of Changes in Net Assets | 6 | ||||||
Financial Highlights | 8 | ||||||
Notes to Financial Statements | 10 | ||||||
Supplemental Information | 19 | ||||||
Expense Examples | 19 | ||||||
Proxy Voting and Portfolio Holdings Information | 19 | ||||||
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 Cornerstone Equity Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek capital appreciation over the long term.
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Cornerstone Equity Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Affiliated Exchange-Traded Funds (35.7%) | |||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 240,400 | $ | 10,390 | ||||||||
VictoryShares USAA MSCI International Value Momentum Index ETF | 589,400 | 27,130 | |||||||||
VictoryShares USAA MSCI USA Small Cap Value Momentum Index ETF (a) | 134,800 | 7,196 | |||||||||
VictoryShares USAA MSCI USA Value Momentum Index ETF | 624,755 | 33,169 | |||||||||
Total Affiliated Exchange-Traded Funds (Cost $81,024) | 77,885 | ||||||||||
Affiliated Mutual Funds (63.9%) | |||||||||||
USAA Aggressive Growth Fund, Institutional Shares | 218,441 | 9,893 | |||||||||
USAA Capital Growth Fund, Institutional Shares | 540,273 | 6,359 | |||||||||
USAA Emerging Markets Fund, Institutional Shares | 472,321 | 8,511 | |||||||||
USAA Growth Fund, Institutional Shares | 308,150 | 9,916 | |||||||||
USAA Income Stock Fund, Institutional Shares | 469,001 | 9,704 | |||||||||
USAA International Fund, Institutional Shares | 1,009,314 | 31,360 | |||||||||
USAA Precious Metals and Minerals Fund, Institutional Shares | 81,815 | 1,269 | |||||||||
USAA 500 Index Fund, Rewards Shares | 674,634 | 29,900 | |||||||||
USAA Small Cap Stock Fund, Institutional Shares | 423,519 | 7,496 | |||||||||
USAA Target Managed Allocation Fund | 1,333,868 | 14,966 | |||||||||
USAA Value Fund, Institutional Shares | 483,717 | 9,805 | |||||||||
Total Affiliated Mutual Funds (Cost $112,116) | 139,179 | ||||||||||
Collateral for Securities Loaned^ (0.2%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (b) | 473,000 | 473 | |||||||||
Total Collateral for Securities Loaned (Cost $473) | 473 | ||||||||||
Total Investments (Cost $193,613) — 99.8% | 217,537 | ||||||||||
Other assets in excess of liabilities — 0.2% | 511 | ||||||||||
NET ASSETS — 100.00% | $ | 218,048 |
^ 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 November 30, 2019.
ETF — Exchange-Traded Fund
See notes to financial statements.
3
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Cornerstone Equity Fund | |||||||
Assets: | |||||||
Affiliated investments, at value (Cost $193,140) | $ | 217,064 | (a) | ||||
Unaffiliated investments, at value (Cost $473) | 473 | ||||||
Cash and cash equivalents | 799 | ||||||
Receivables: | |||||||
Interest | 1 | ||||||
Capital shares issued | 211 | ||||||
From Adviser | 59 | ||||||
Prepaid expenses | 1 | ||||||
Total assets | 218,608 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 473 | ||||||
Capital shares redeemed | 53 | ||||||
Accrued expenses and other payables: | |||||||
Compliance fees | — | (b) | |||||
Other accrued expenses | 34 | ||||||
Total liabilities | 560 | ||||||
Net Assets: | |||||||
Capital | 187,308 | ||||||
Total distributable earnings/(loss) | 30,740 | ||||||
Net assets | $ | 218,048 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 14,249 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 15.30 |
(a) Includes $459 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.
4
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Cornerstone Equity Fund | |||||||
Investment Income: | |||||||
Income distributions from affiliated funds | $ | 1,194 | |||||
Interest | 8 | ||||||
Securities lending (net of fees) | 3 | ||||||
Total income | 1,205 | ||||||
Expenses: | |||||||
Custodian fees | 9 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 1 | ||||||
Legal and audit fees | 36 | ||||||
State registration and filing fees | 10 | ||||||
Printing fees | 24 | ||||||
Sub-Administration fees | 7 | ||||||
Other expenses | 8 | ||||||
Total expenses | 115 | ||||||
Expenses waived/reimbursed by AMCO | (6 | ) | |||||
Expenses waived/reimbursed by Adviser | (2 | ) | |||||
Net expenses | 107 | ||||||
Net Investment Income (Loss) | 1,098 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from sales of affiliated funds | 238 | ||||||
Net change in unrealized appreciation/depreciation on affiliated funds | 18,888 | ||||||
Net realized/unrealized gains (losses) on investments | 19,126 | ||||||
Change in net assets resulting from operations | $ | 20,224 |
See notes to financial statements.
5
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Cornerstone Equity Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 1,098 | $ | 3,596 | |||||||
Net realized gains (losses) from investments | 238 | 5,672 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 18,888 | (18,237 | ) | ||||||||
Change in net assets resulting from operations | 20,224 | (8,969 | ) | ||||||||
Change in net assets resulting from distributions to shareholders | — | (11,645 | ) | ||||||||
Change in net assets resulting from capital transactions | (4,464 | ) | 22,715 | ||||||||
Capital Contribution from USAA Transfer Agency Company | — | 1 | |||||||||
Change in net assets | 15,760 | 2,102 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 202,288 | 200,186 | |||||||||
End of period | $ | 218,048 | $ | 202,288 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 17,430 | $ | 54,835 | |||||||
Distributions reinvested | — | 11,622 | |||||||||
Cost of shares redeemed | (21,894 | ) | (43,742 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (4,464 | ) | $ | 22,715 | ||||||
Share Transactions: | |||||||||||
Issued | 1,189 | 3,727 | |||||||||
Reinvested | — | 873 | |||||||||
Redeemed | (1,492 | ) | (2,970 | ) | |||||||
Change in Shares | (303 | ) | 1,630 |
See notes to financial statements.
6
This page is intentionally left blank.
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 | Total Distributions | |||||||||||||||||||||||||
USAA Cornerstone Equity Fund | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 13.90 | 0.08 | (d) | 1.32 | 1.40 | — | — | — | ||||||||||||||||||||||
Year Ended May 31, 2019 | $ | 15.49 | 0.26 | (0.99 | ) | (0.73 | ) | (0.25 | ) | (0.61 | ) | (0.86 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 14.31 | 0.22 | 1.26 | 1.48 | (0.22 | ) | (0.08 | ) | (0.30 | ) | ||||||||||||||||||||
Year Ended May 31, 2017 | $ | 12.51 | 0.19 | 2.02 | 2.21 | (0.19 | ) | (0.22 | ) | (0.41 | ) | ||||||||||||||||||||
Year Ended May 31, 2016 | $ | 13.61 | 0.16 | (0.82 | ) | (0.66 | ) | (0.15 | ) | (0.29 | ) | (0.44 | ) | ||||||||||||||||||
Year Ended May 31, 2015 | $ | 13.22 | 0.24 | 0.42 | 0.66 | (0.24 | ) | (0.03 | ) | (0.27 | ) |
* 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) The expense ratios exclude the impact of expenses paid by each underlying fund.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Amount is less than 0.5%
(f) Reflects increased usage of quantitative investment strategies.
(g) Reflects an increase in trading activity due to asset allocation shifts.
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 | ||||||||||||||||||||||||||||||
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) | |||||||||||||||||||||||||
USAA Cornerstone Equity Fund | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 15.30 | 10.07 | % | 0.10 | % | 1.04 | % | 0.11 | % | $ | 218,048 | — | %(e) | |||||||||||||||||
Year Ended May 31, 2019 | $ | 13.90 | (4.35 | )% | 0.10 | % | 1.79 | %(f) | 0.13 | % | $ | 202,288 | 11 | % | |||||||||||||||||
Year Ended May 31, 2018 | $ | 15.49 | 10.32 | % | 0.10 | % | 1.46 | % | 0.13 | % | $ | 200,186 | 38 | %(g) | |||||||||||||||||
Year Ended May 31, 2017 | $ | 14.31 | 17.99 | % | 0.10 | % | 1.39 | % | 0.20 | % | $ | 143,657 | 7 | % | |||||||||||||||||
Year Ended May 31, 2016 | $ | 12.51 | (4.77 | )% | 0.10 | % | 1.36 | % | 0.22 | % | $ | 99,974 | 15 | % | |||||||||||||||||
Year Ended May 31, 2015 | $ | 13.61 | 5.08 | % | 0.10 | % | 1.77 | % | 0.24 | % | $ | 91,726 | 8 | % |
See notes to financial statements.
9
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Cornerstone Equity Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
The Fund is a "fund of funds" in that it invests in a selection of affiliated mutual funds and exchange-traded funds managed by the Fund's Adviser, Victory Capital Management Inc., an affiliate of the Fund.
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 July 1, 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)
10
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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, including underlying funds, are valued at net asset value. These valuations are typically categorized as Level 1 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 November 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 | ||||||||||||||||
Affiliated Exchange-Traded Funds | $ | 77,885 | $ | — | $ | — | $ | 77,885 | |||||||||||
Affiliated Mutual Funds | 139,179 | — | — | 139,179 | |||||||||||||||
Collateral for Securities Loaned | 473 | — | — | 473 | |||||||||||||||
Total | $ | 217,537 | $ | — | $ | — | $ | 217,537 |
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.
11
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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.
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 459 | $ | — | $ | 473 |
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 May 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.
12
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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.
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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||
Purchases | Sales | ||||||
$ | 353 | $ | 3,354 |
There were no purchases and sales of U.S. government securities during the six months ended November 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. The Adviser does not receive any fees from the Fund for these services.
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. AMCO did not receive any fees from the Fund for these services.
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 does not receive any fees from the Fund for these services.
Prior to the Transaction on July 1, 2019, AMCO provided certain administration and servicing functions for the Fund. AMCO did not receive any fees from the Fund for these services.
13
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 nor SAS received any fees from the Fund for these services. For the year ended May 31, 2019, the Fund recorded a capital contribution and a receivable from SAS of $1,000 for adjustments related to corrections to certain shareholder transactions.
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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 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
14
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Fund's business are excluded from the expense limits. Effective July 1, 2019 through November 30, 2019, the expense limit (excluding voluntary waivers) is 0.10%.
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 November 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 November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 2 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of 0.10% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limits is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $6 thousand. 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.
The risks of the Fund directly correspond to the risks of the underlying affiliated funds in which the Fund invests. By investing in the underlying affiliated funds, the Fund has exposure to the risk of many different areas of the market. The degree to which the risks described below apply to the Fund varies according to the Fund's asset allocation. For instance, the more the Fund is allocated to stock funds, the greater the risk associated with equity securities. The Fund also is subject to asset allocation risk (i.e., the risk that allocations will not produce the intended results) and to management risk (i.e., the risk that the selection of underlying affiliated funds will not produce the intended results).
In managing a Fund that invests in underlying affiliated funds, the Adviser may have conflicts of interest in allocating the Fund's assets among the various underlying affiliated funds. This is because the fees payable by some of the underlying affiliated funds to the Adviser and/or its affiliates are higher than the fees payable by other underlying affiliated funds, and because the Adviser also manages and administers the underlying affiliated funds.
The Fund may invest in underlying affiliated funds that invest in equity securities, which are subject to stock market risk. Stock prices in general may decline over short or even extended periods, regardless of the success or failure of a company's operations. Equity securities tend to be more volatile than bonds. In addition, to the degree an underlying affiliated fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging-market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes.
The Fund may invest in shares of ETFs, which generally are investment companies that hold a portfolio of common stocks or debt securities, the shares of which are traded on an exchange. ETFs incur their
15
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which would be indirectly borne by the Fund. As a result, an investment by the Fund in an ETF will cause the Fund to indirectly bear the fees and expenses of the ETF and, in turn, performance may be lower than if the Fund were to invest directly in the securities underlying the ETF. In addition, the Fund will be indirectly exposed to all of the risk of securities held by the ETFs.
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. 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 Statement 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 June 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 November 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. 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 November 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income annually. Distributable net realized gains, if any, are declared and 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.
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 4,845 | $ | 6,800 | $ | 11,645 |
As of the most recent tax year ended May 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) | ||||||||||||||||
$ | 226 | $ | 5,540 | $ | 4,750 | $ | 10,516 |
** 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 May 31, 2019, the Fund had no capital loss carryforwards, for federal income tax purposes.
8. Affiliated Securities:
An affiliated security is a security in which the Fund has ownership of at least 5% of the security's outstanding voting shares or an investment company managed by VCM. The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. These underlying funds are noted as affiliated in the Fund's Schedule of Portfolio Investments. The affiliated underlying funds' annual or semiannual reports may be viewed at usaa.com. Transactions in affiliated securities during the six months ended November 30, 2019 were as follows (amount in thousands):
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
Affiliated Holdings | |||||||||||||||||||||||||||||||||||
USAA Capital Growth Fund, Institutional Shares | $ | 5,754 | $ | — | $ | — | $ | — | $ | — | $ | 605 | $ | 6,359 | $ | — | |||||||||||||||||||
USAA Target Managed Allocation Fund | 13,419 | — | — | — | — | 1,547 | 14,966 | — | |||||||||||||||||||||||||||
USAA Precious Metals and Minerals Fund, Institutional Shares | 1,014 | — | — | — | — | 255 | 1,269 | — |
17
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
USAA Emerging Markets Fund, Institutional Shares | $ | 8,072 | $ | — | $ | — | $ | — | $ | — | $ | 439 | $ | 8,511 | $ | — | |||||||||||||||||||
USAA International Fund, Institutional Shares | 29,499 | — | (625 | ) | (2 | ) | — | 2,488 | 31,360 | — | |||||||||||||||||||||||||
USAA Small Cap Stock Fund, Institutional Shares | 6,653 | — | — | — | — | 843 | 7,496 | — | |||||||||||||||||||||||||||
USAA Value Fund, Institutional Shares | 8,926 | — | (216 | ) | (1 | ) | — | 1,096 | 9,805 | — | |||||||||||||||||||||||||
USAA Income Stock Fund, Institutional Shares | 8,972 | 90 | (345 | ) | 14 | — | 973 | 9,704 | 89 | ||||||||||||||||||||||||||
USAA Growth Fund, Institutional Shares | 9,330 | — | (323 | ) | 54 | — | 855 | 9,916 | — | ||||||||||||||||||||||||||
USAA Aggressive Growth Fund, Institutional Shares | 9,083 | — | — | — | — | 810 | 9,893 | — | |||||||||||||||||||||||||||
USAA 500 Index Fund, Reward Shares | 27,607 | 265 | (1,846 | ) | 173 | — | 3,701 | 29,900 | 264 | ||||||||||||||||||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 10,209 | — | — | — | — | 181 | 10,390 | 28 | |||||||||||||||||||||||||||
VictoryShares USAA MSCI International Value Momentum Index ETF | 25,738 | — | — | — | — | 1,392 | 27,130 | 416 | |||||||||||||||||||||||||||
VictoryShares USAA MSCI USA Small Cap Value Momentum Index ETF | 6,530 | — | — | — | — | 666 | 7,196 | 193 | |||||||||||||||||||||||||||
VictoryShares USAA MSCI USA Value Momentum Index ETF | 30,132 | — | — | — | — | 3,037 | 33,169 | 204 | |||||||||||||||||||||||||||
Total | $ | 200,938 | $ | 355 | $ | (3,355 | ) | $ | 238 | $ | — | $ | 18,888 | $ | 217,064 | $ | 1,194 |
18
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,100.70 | $ | 1,024.50 | $ | 0.53 | $ | 0.51 | 0.10 | % |
* 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).
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.
19
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 | (800) 235-8396 |
97453-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Cornerstone Moderate Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 21 | ||||||
Statement of Operations | 22 | ||||||
Statements of Changes in Net Assets | 23 | ||||||
Financial Highlights | 24 | ||||||
Notes to Financial Statements | 26 | ||||||
Supplemental Information | 38 | ||||||
Expense Examples | 38 | ||||||
Proxy Voting and Portfolio Holdings Information | 38 | ||||||
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 Cornerstone Moderate Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek a high total return.
Top 10 Holdings*
11/30/19
(% of Net Assets)
iShares Core S&P 500 ETF | 8.0 | % | |||||
Schwab Fundamental International Large Co. Index ETF | 3.5 | % | |||||
U.S. Treasury Note, 1.63%, 11/15/22 | 3.3 | % | |||||
U.S. Treasury Bond, 3.13%, 8/15/44 | 2.8 | % | |||||
iShares MSCI Canada ETF | 2.6 | % | |||||
iShares Core MSCI EAFE ETF | 2.6 | % | |||||
U.S. Treasury Note, 1.13%, 2/28/21 | 2.3 | % | |||||
Vanguard S&P 500 ETF | 2.2 | % | |||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 2.2 | % | |||||
Vanguard FTSE Developed Markets ETF | 2.1 | % |
* Does not include short-term investments purchased with cash collateral from securities loaned.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund (continued) | November 30, 2019 |
(Unaudited)
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include futures and short-term investments purchased with cash collateral from securities loaned.
Percentages are of net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Asset Backed Securities (2.0%) | |||||||||||
Americredit Automobile Receivables Trust, Series 2018-2, Class A3, 3.15%, 3/20/23, Callable 8/18/22 @ 100 (c) | $ | 343 | $ | 347 | |||||||
Americredit Automobile Receivables Trust, Series 2018-1, Class C, 3.50%, 1/18/24, Callable 4/18/22 @ 100 (c) | 2,640 | 2,713 | |||||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2014-2A, Class A, 2.50%, 2/20/21, Callable 2/20/20 @ 100 (a) (c) | 1,352 | 1,352 | |||||||||
BCC Funding Corp. XVI LLC, Series 2019-1A, Class A2, 2.48%, 8/20/24, Callable 9/20/23 @ 100 (a) (c) | 2,500 | 2,503 | |||||||||
Credit Acceptance Auto Loan Trust, Series 2018-3A, Class A, 3.55%, 8/15/27, Callable 10/15/21 @ 100 (a) (c) | 1,503 | 1,529 | |||||||||
Element Rail Leasing I LLC, Series 2014-1A, Class A2, 3.67%, 4/19/44, Callable 4/19/21 @ 100 (a) (c) | 1,320 | 1,333 | |||||||||
Evergreen Credit Card Trust, Series 2019-2, Class A, 1.90%, 9/15/24 (a) (c) | 1,125 | 1,122 | |||||||||
Exeter Automobile Receivables Trust, Series 2019-2A, Class C, 3.30%, 3/15/24, Callable 7/15/22 @ 100 (a) (c) | 970 | 986 | |||||||||
Goal Capital Funding Trust, Series 2005-2, Class A4, 2.11% (LIBOR03M+20bps), 8/25/44, Callable 8/25/20 @ 100 (b) | 715 | 690 | |||||||||
Hertz Vehicle Financing II LP, Series 2019-3A, Class A, 2.67%, 12/26/25 (a) (c) | 867 | 867 | |||||||||
HPEFS Equipment Trust, Series 2019-1A, Class C, 2.49%, 9/20/29, Callable 7/20/22 @ 100 (a) (c) | 437 | 437 | |||||||||
Navient Student Loan Trust, Series 2015-2, Class B, 3.21% (LIBOR01M+150bps), 8/25/50, Callable 3/25/28 @ 100 (b) | 950 | 933 | |||||||||
NP SPE II LLC, Series 2017-1A, Class A1, 3.37%, 10/21/47, Callable 10/20/27 @ 100 (a) (c) | 377 | 382 | |||||||||
OSCAR US Funding Trust IX LLC, Series 2018-2A, Class A4, 3.63%, 9/10/25 (a) (c) | 2,560 | 2,640 | |||||||||
SCF Equipment Leasing LLC, Series 2017-2A, Class A, 3.41%, 12/20/23, Callable 12/20/19 @ 100 (a) (c) | 698 | 703 | |||||||||
SLM Student Loan Trust, Series 2003-14, Class B, 2.49% (LIBOR03M+55bps), 10/25/65, Callable 1/25/29 @ 100 (b) | 356 | 335 | |||||||||
Synchrony Credit Card Master Note Trust, Series 2016-2, Class C, 2.95%, 5/15/24 (c) | 1,461 | 1,470 | |||||||||
Transportation Finance Equipment Trust, Series 2019-1, Class B, 2.06%, 5/23/24, Callable 5/23/23 @ 100 (a) (c) | 900 | 893 | |||||||||
Trinity Rail Leasing LLC, Series 2019-2A, Class A2, 3.10%, 10/18/49, Callable 10/17/20 @ 100 (a) (c) | 2,000 | 1,994 | |||||||||
Trinity Rail Leasing LLC, Series 2019-2A, Class A1, 2.39%, 10/18/49, Callable 10/17/20 @ 100 (a) (c) | 500 | 493 | |||||||||
Westlake Automobile Receivables Trust, Series 2018-2A, Class D, 4.00%, 1/16/24, Callable 9/15/21 @ 100 (a) (c) | 1,000 | 1,026 | |||||||||
Total Asset Backed Securities (Cost $24,489) | 24,748 | ||||||||||
Collateralized Mortgage Obligations (0.8%) | |||||||||||
Banc of America Commercial Mortgage Trust, Series 2006-3, Class AM, 5.86%, 7/10/44 (c) | 1,254 | 384 | |||||||||
Banc of America Commercial Mortgage Trust, Series 2008-1, Class AJ, 6.79%, 2/10/51 (c) | 130 | 136 | |||||||||
BANK, Series 2019-BNK20, Class A3, 3.01%, 9/15/61 (c) | 1,000 | 1,036 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Barclays Commercial Mortgage Trust, Series 2019-C5, Class ASB, 2.99%, 11/15/52 | $ | 754 | $ | 780 | |||||||
Benchmark Mortgage Trust, Series 2019-B14, Class A5, 3.05%, 12/15/61 | 1,295 | 1,344 | |||||||||
BTH Mortgage-Backed Securities Trust, Series 2018-21, Class A, 4.28% (LIBOR01M+250bps), 10/7/21 (a) (b) | 1,200 | 1,202 | |||||||||
Citigroup Commercial Mortgage Trust, Series 2019-PRM, Class A, 3.34%, 5/10/36 (a) (c) | 1,000 | 1,043 | |||||||||
COMM Mortgage Trust, Series 2019-GC44, Class ASB, 2.87%, 8/15/57 (c) (d) | 971 | 1,000 | |||||||||
Credit Suisse Commercial Mortgage Trust, Series 2007-C1, Class AMFL, 1.95% (LIBOR01M+19bps), 2/15/40 (b) | 32 | 31 | |||||||||
CSAIL Commercial Mortgage Trust, Series 2016-C6, Class XA, 2.06%, 1/15/49 (c) (e) | 11,675 | 1,002 | |||||||||
DBJPM Mortgage Trust, Series 2016-SFC, Class A, 2.83%, 8/10/36 (a) | 1,500 | 1,523 | |||||||||
GE Commercial Mortgage Corp., Series 2007-C1, Class AM, 5.61%, 12/10/49 (c) | 69 | 66 | |||||||||
UBS Commercial Mortgage Trust, Series 2012-C1, Class XA, 2.26%, 5/10/45 (a) (c) | 11,710 | 450 | |||||||||
Total Collateralized Mortgage Obligations (Cost $10,548) | 9,997 | ||||||||||
Common Stocks (14.9%) | |||||||||||
Communication Services (1.3%): | |||||||||||
AMC Networks, Inc., Class A (f) | 3,686 | 142 | |||||||||
AT&T, Inc. | 115,124 | 4,303 | |||||||||
CenturyLink, Inc. | 34,408 | 499 | |||||||||
Comcast Corp., Class A | 86,502 | 3,818 | |||||||||
Discovery, Inc., Class C (f) | 13,597 | 415 | |||||||||
Entravision Communications Corp., Class A | 35,793 | 102 | |||||||||
InterActive Corp. (f) | 1,666 | 371 | |||||||||
Liberty Media Corp-Liberty SiriusXM, Class A (f) | 8,547 | 416 | |||||||||
Omnicom Group, Inc. | 7,745 | 616 | |||||||||
Shenandoah Telecommunications Co. | 2,395 | 90 | |||||||||
Sinclair Broadcast Group, Inc., Class A | 3,777 | 132 | |||||||||
Sirius XM Holdings, Inc. (g) | 89,319 | 623 | |||||||||
Take-Two Interactive Software, Inc. (f) | 3,302 | 401 | |||||||||
Tegna, Inc. | 12,576 | 193 | |||||||||
Twitter, Inc. (f) | 9,330 | 288 | |||||||||
Verizon Communications, Inc. | 37,058 | 2,232 | |||||||||
Viacom, Inc., Class B | 14,977 | 360 | |||||||||
Vonage Holdings Corp. (f) | 6,315 | 50 | |||||||||
15,051 | |||||||||||
Consumer Discretionary (1.5%): | |||||||||||
American Axle & Manufacturing Holdings, Inc. (f) | 11,114 | 110 | |||||||||
Asbury Automotive Group, Inc. (f) | 1,053 | 117 | |||||||||
AutoZone, Inc. (f) | 429 | 505 | |||||||||
Bed Bath & Beyond, Inc. (g) | 12,221 | 178 | |||||||||
Best Buy Co., Inc. | 5,618 | 453 | |||||||||
Big Lots, Inc. | 2,466 | 52 | |||||||||
Bloomin' Brands, Inc. | 3,579 | 86 | |||||||||
Booking Holdings, Inc. (f) | 432 | 823 | |||||||||
Brunswick Corp. | 2,013 | 118 | |||||||||
Carnival Corp. | 10,977 | 495 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Carter's, Inc. | 2,983 | $ | 308 | ||||||||
Cracker Barrel Old Country Store, Inc. (g) | 1,529 | 235 | |||||||||
Dana, Inc. | 7,656 | 130 | |||||||||
Deckers Outdoor Corp. (f) | 768 | 129 | |||||||||
Del Taco Restaurants, Inc. (f) | 7,461 | 56 | |||||||||
Dick's Sporting Goods, Inc. | 3,154 | 144 | |||||||||
Dollar General Corp. | 2,381 | 374 | |||||||||
eBay, Inc. | 11,301 | 401 | |||||||||
Ethan Allen Interiors, Inc. | 4,744 | 85 | |||||||||
Foot Locker, Inc. | 8,517 | 341 | |||||||||
Ford Motor Co. | 76,763 | 695 | |||||||||
Gentex Corp. | 6,778 | 192 | |||||||||
Group 1 Automotive, Inc. | 1,797 | 185 | |||||||||
Hasbro, Inc. | 3,241 | 330 | |||||||||
Helen of Troy Ltd. (f) | 381 | 62 | |||||||||
Hilton Worldwide Holdings, Inc. | 5,482 | 576 | |||||||||
Kontoor Brands, Inc. (g) | 2,491 | 89 | |||||||||
La-Z-Boy, Inc. | 3,143 | 99 | |||||||||
Lennar Corp., Class A | 12,903 | 770 | |||||||||
Lowe's Cos., Inc. | 9,804 | 1,150 | |||||||||
McDonald's Corp. | 5,455 | 1,061 | |||||||||
Nike, Inc., Class B | 15,124 | 1,414 | |||||||||
Office Depot, Inc. | 54,512 | 122 | |||||||||
O'Reilly Automotive, Inc. (f) | 731 | 323 | |||||||||
Penske Automotive Group, Inc. | 1,547 | 78 | |||||||||
Ross Stores, Inc. | 4,655 | 541 | |||||||||
Starbucks Corp. | 20,045 | 1,711 | |||||||||
Steven Madden Ltd. | 3,103 | 132 | |||||||||
Sturm Ruger & Co., Inc. | 2,212 | 101 | |||||||||
The Buckle, Inc. (g) | 3,833 | 107 | |||||||||
The Home Depot, Inc. | 11,599 | 2,559 | |||||||||
Thor Industries, Inc. | 3,120 | 199 | |||||||||
Toll Brothers, Inc. | 3,317 | 133 | |||||||||
Williams-Sonoma, Inc. | 2,456 | 170 | |||||||||
Yum! Brands, Inc. | 5,846 | 589 | |||||||||
18,528 | |||||||||||
Consumer Staples (0.9%): | |||||||||||
Altria Group, Inc. | 21,126 | 1,050 | |||||||||
Cal-Maine Foods, Inc. | 2,125 | 93 | |||||||||
Colgate-Palmolive Co. | 8,048 | 546 | |||||||||
Flowers Foods, Inc. | 8,454 | 182 | |||||||||
Hostess Brands, Inc. (f) | 8,116 | 109 | |||||||||
Ingles Markets, Inc., Class A | 2,306 | 102 | |||||||||
Kimberly-Clark Corp. | 2,162 | 295 | |||||||||
Nu Skin Enterprises, Inc., Class A | 1,643 | 63 | |||||||||
Sanderson Farms, Inc. | 633 | 105 | |||||||||
Spectrum Brands Holdings, Inc. | 2,977 | 186 | |||||||||
Sysco Corp. | 5,134 | 414 | |||||||||
The Procter & Gamble Co. | 29,280 | 3,574 | |||||||||
Tyson Foods, Inc., Class A | 5,771 | 518 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
US Foods Holding Corp. (f) | 6,609 | $ | 263 | ||||||||
Walgreens Boots Alliance, Inc. | 18,565 | 1,106 | |||||||||
Walmart, Inc. | 17,272 | 2,057 | |||||||||
10,663 | |||||||||||
Energy (0.7%): | |||||||||||
Chevron Corp. | 10,050 | 1,177 | |||||||||
ConocoPhillips | 11,861 | 711 | |||||||||
Core Laboratories N.V. | 2,608 | 114 | |||||||||
Delek US Holdings, Inc. | 7,220 | 248 | |||||||||
Dril-Quip, Inc. (f) | 2,641 | 112 | |||||||||
Exxon Mobil Corp. | 25,848 | 1,761 | |||||||||
HollyFrontier Corp. | 7,354 | 379 | |||||||||
Laredo Petroleum, Inc. (f) | 28,070 | 61 | |||||||||
Marathon Petroleum Corp. | 11,905 | 722 | |||||||||
Matador Resources Co. (f) | 6,327 | 89 | |||||||||
Occidental Petroleum Corp. | 11,158 | 430 | |||||||||
Par Pacific Holdings, Inc. (f) | 6,477 | 161 | |||||||||
PBF Energy, Inc., Class A | 9,159 | 287 | |||||||||
Phillips 66 | 11,218 | 1,287 | |||||||||
Valero Energy Corp. | 8,848 | 845 | |||||||||
8,384 | |||||||||||
Financials (2.1%): | |||||||||||
Ally Financial, Inc. | 15,782 | 502 | |||||||||
American Equity Investment Life Holding Co. | 6,724 | 200 | |||||||||
Bank of Hawaii Corp. | 3,834 | 345 | |||||||||
BankUnited, Inc. | 8,480 | 297 | |||||||||
Cadence BanCorp | 10,903 | 180 | |||||||||
Capital One Financial Corp. | 12,185 | 1,220 | |||||||||
Chimera Investment Corp. | 13,846 | 282 | |||||||||
Citigroup, Inc. | 46,900 | 3,524 | |||||||||
Cullen/Frost Bankers, Inc. | 3,348 | 313 | |||||||||
Discover Financial Services | 14,199 | 1,205 | |||||||||
Employers Holdings, Inc. | 4,888 | 210 | |||||||||
Essent Group Ltd. | 7,495 | 409 | |||||||||
FactSet Research Systems, Inc. | 1,682 | 437 | |||||||||
First BanCorp. | 10,095 | 106 | |||||||||
Great Western BanCorp, Inc. | 7,573 | 260 | |||||||||
Intercontinental Exchange, Inc. | 5,943 | 560 | |||||||||
JPMorgan Chase & Co. | 19,415 | 2,559 | |||||||||
Ladder Capital Corp. | 13,872 | 240 | |||||||||
Legg Mason, Inc. | 4,931 | 193 | |||||||||
Lincoln National Corp. | 8,027 | 474 | |||||||||
LPL Financial Holdings, Inc. | 3,336 | 308 | |||||||||
Marsh & McLennan Cos., Inc. | 4,817 | 521 | |||||||||
MetLife, Inc. | 16,684 | 832 | |||||||||
MGIC Investment Corp. | 9,890 | 143 | |||||||||
Nelnet, Inc., Class A | 3,577 | 225 | |||||||||
Primerica, Inc. | 2,063 | 276 | |||||||||
Radian Group, Inc. | 7,313 | 189 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Regions Financial Corp. | 40,813 | $ | 679 | ||||||||
S&P Global, Inc. | 6,557 | 1,735 | |||||||||
Synchrony Financial | 19,954 | 746 | |||||||||
Synovus Financial Corp. | 3,056 | 116 | |||||||||
T. Rowe Price Group, Inc. | 5,325 | 658 | |||||||||
The Allstate Corp. | 4,468 | 498 | |||||||||
The Progressive Corp. | 11,659 | 851 | |||||||||
The Travelers Cos., Inc. | 2,836 | 388 | |||||||||
U.S. Bancorp | 9,230 | 554 | |||||||||
Universal Insurance Holdings, Inc. | 2,909 | 85 | |||||||||
Waddell & Reed Financial, Inc., Class A (g) | 12,333 | 199 | |||||||||
Walker & Dunlop, Inc. | 1,502 | 99 | |||||||||
Webster Financial Corp. | 3,923 | 191 | |||||||||
Wells Fargo & Co. | 30,965 | 1,686 | |||||||||
Western Alliance Bancorp | 6,558 | 342 | |||||||||
World Acceptance Corp. (f) | 1,123 | 107 | |||||||||
24,944 | |||||||||||
Health Care (2.0%): | |||||||||||
Abbott Laboratories | 12,299 | 1,052 | |||||||||
AbbVie, Inc. | 27,059 | 2,374 | |||||||||
Acadia Healthcare Co., Inc. (f) | 3,075 | 99 | |||||||||
Amedisys, Inc. (f) | 1,745 | 284 | |||||||||
Amgen, Inc. | 10,551 | 2,476 | |||||||||
AMN Healthcare Services, Inc. (f) | 3,146 | 187 | |||||||||
ANI Pharmaceuticals, Inc. (f) | 951 | 59 | |||||||||
Biogen, Inc. (f) | 4,069 | 1,220 | |||||||||
Bio-Rad Laboratories, Inc., Class A (f) | 431 | 159 | |||||||||
Bristol-Myers Squibb Co. | 12,090 | 688 | |||||||||
Bruker Corp. | 4,847 | 248 | |||||||||
Cambrex Corp. (f) | 1,141 | 68 | |||||||||
Chemed Corp. | 629 | 270 | |||||||||
Corcept Therapeutics, Inc. (f) | 8,855 | 114 | |||||||||
Covetrus, Inc. (f) | 8,592 | 123 | |||||||||
CVS Health Corp. | 14,000 | 1,055 | |||||||||
Danaher Corp. | 4,222 | 616 | |||||||||
Eagle Pharmaceuticals, Inc. (f) | 1,028 | 60 | |||||||||
Edwards Lifesciences Corp. (f) | 1,931 | 473 | |||||||||
Eli Lilly & Co. | 6,373 | 748 | |||||||||
Emergent BioSolutions, Inc. (f) | 1,411 | 77 | |||||||||
Encompass Health Corp. | 2,861 | 202 | |||||||||
Exelixis, Inc. (f) | 14,286 | 238 | |||||||||
Gilead Sciences, Inc. | 24,846 | 1,671 | |||||||||
Halozyme Therapeutics, Inc. (f) | 6,747 | 131 | |||||||||
HealthEquity, Inc. (f) | 1,698 | 107 | |||||||||
Hill-Rom Holdings, Inc. | 2,332 | 250 | |||||||||
Horizon Therapeutics PLC (f) | 3,448 | 113 | |||||||||
IQVIA Holdings, Inc. (f) | 3,377 | 494 | |||||||||
Laboratory Corp. of America Holdings (f) | 2,375 | 409 | |||||||||
Lantheus Holdings, Inc. (f) | 2,125 | 44 | |||||||||
Masimo Corp. (f) | 1,683 | 261 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
McKesson Corp. | 3,366 | $ | 487 | ||||||||
Medpace Holdings, Inc. (f) | 1,242 | 95 | |||||||||
Merck & Co., Inc. | 29,001 | 2,528 | |||||||||
Meridian Bioscience, Inc. | 11,581 | 106 | |||||||||
Molina Healthcare, Inc. (f) | 1,836 | 249 | |||||||||
Novocure Ltd. (f) | 1,331 | 123 | |||||||||
Patterson Cos., Inc. | 8,556 | 166 | |||||||||
PerkinElmer, Inc. | 3,261 | 303 | |||||||||
Pfizer, Inc. | 70,766 | 2,726 | |||||||||
Phibro Animal Health Corp., Class A | 3,740 | 91 | |||||||||
PRA Health Sciences, Inc. (f) | 1,759 | 191 | |||||||||
Prestige Consumer Healthcare, Inc. (f) | 3,522 | 133 | |||||||||
Select Medical Holdings Corp. (f) | 9,464 | 209 | |||||||||
Stryker Corp. | 2,692 | 551 | |||||||||
Supernus Pharmaceuticals, Inc. (f) | 4,081 | 95 | |||||||||
Zoetis, Inc. | 4,509 | 543 | |||||||||
24,966 | |||||||||||
Industrials (1.5%): | |||||||||||
3M Co. | 6,726 | 1,142 | |||||||||
ACCO Brands Corp. | 11,240 | 103 | |||||||||
AECOM (f) | 6,302 | 273 | |||||||||
Aerojet Rocketdyne Holdings, Inc. (f) | 1,211 | 54 | |||||||||
Air Transport Services Group, Inc. (f) | 2,036 | 50 | |||||||||
Allison Transmission Holdings, Inc. | 5,148 | 249 | |||||||||
Apogee Enterprises, Inc. | 4,365 | 167 | |||||||||
Atkore International Group, Inc. (f) | 6,788 | 283 | |||||||||
Avis Budget Group, Inc. (f) | 3,573 | 106 | |||||||||
Cintas Corp. | 2,507 | 644 | |||||||||
Cornerstone Building Brands, Inc. (f) | 6,600 | 46 | |||||||||
Crane Co. | 2,720 | 226 | |||||||||
Cummins, Inc. | 2,712 | 496 | |||||||||
Delta Air Lines, Inc. | 8,927 | 512 | |||||||||
Deluxe Corp. | 2,606 | 133 | |||||||||
Eaton Corp. PLC | 11,846 | 1,096 | |||||||||
EnPro Industries, Inc. | 1,423 | 94 | |||||||||
FTI Consulting, Inc. (f) | 1,361 | 148 | |||||||||
Generac Holdings, Inc. (f) | 1,475 | 145 | |||||||||
Herman Miller, Inc. | 4,587 | 219 | |||||||||
Hexcel Corp. | 1,018 | 81 | |||||||||
Hillenbrand, Inc. | 4,657 | 147 | |||||||||
IAA, Inc. (f) | 2,467 | 112 | |||||||||
IDEX Corp. | 3,271 | 532 | |||||||||
Illinois Tool Works, Inc. | 2,838 | 495 | |||||||||
Ingersoll-Rand PLC | 2,921 | 383 | |||||||||
Johnson Controls International PLC | 14,028 | 600 | |||||||||
KAR Auction Services, Inc. | 3,152 | 67 | |||||||||
Knoll, Inc. | 6,921 | 191 | |||||||||
L3Harris Technologies, Inc. | 2,316 | 466 | |||||||||
Lockheed Martin Corp. | 2,462 | 963 | |||||||||
Masonite International Corp. (f) | 1,535 | 110 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Meritor, Inc. (f) | 8,992 | $ | 227 | ||||||||
MSC Industrial Direct Co., Inc. | 2,568 | 189 | |||||||||
Northrop Grumman Corp. | 1,595 | 561 | |||||||||
nVent Electric PLC | 4,842 | 119 | |||||||||
Oshkosh Corp. | 1,424 | 129 | |||||||||
PACCAR, Inc. | 9,622 | 784 | |||||||||
Patrick Industries, Inc. (f) | 2,641 | 131 | |||||||||
Pitney Bowes, Inc. (g) | 18,699 | 88 | |||||||||
Regal Beloit Corp. | 3,010 | 246 | |||||||||
Rockwell Automation, Inc. | 2,405 | 471 | |||||||||
Roper Technologies, Inc. | 1,606 | 579 | |||||||||
Rush Enterprises, Inc., Class A | 3,949 | 181 | |||||||||
Ryder System, Inc. | 2,250 | 118 | |||||||||
Snap-on, Inc. | 2,267 | 364 | |||||||||
Spirit Aerosystems Holdings, Inc., Class A | 5,078 | 442 | |||||||||
Steelcase, Inc., Class A | 8,779 | 159 | |||||||||
The Boeing Co. | 6,133 | 2,245 | |||||||||
The Greenbrier Cos., Inc. (g) | 2,384 | 67 | |||||||||
The Timken Co. | 5,276 | 277 | |||||||||
Trinity Industries, Inc. | 5,090 | 107 | |||||||||
Wabash National Corp. | 11,922 | 188 | |||||||||
Waste Management, Inc. | 3,808 | 430 | |||||||||
Werner Enterprises, Inc. | 3,123 | 115 | |||||||||
WESCO International, Inc. (f) | 3,954 | 208 | |||||||||
18,758 | |||||||||||
Information Technology (3.3%): | |||||||||||
Apple, Inc. | 32,034 | 8,561 | |||||||||
Automatic Data Processing, Inc. | 3,092 | 528 | |||||||||
Belden, Inc. | 1,818 | 98 | |||||||||
CACI International, Inc., Class A (f) | 813 | 195 | |||||||||
Cadence Design Systems, Inc. (f) | 5,886 | 413 | |||||||||
Cardtronics PLC, Class A (f) | 1,697 | 72 | |||||||||
CDW Corp. | 3,323 | 448 | |||||||||
Ciena Corp. (f) | 2,442 | 93 | |||||||||
Cirrus Logic, Inc. (f) | 3,618 | 259 | |||||||||
Coherent, Inc. (f) | 1,662 | 251 | |||||||||
CoreLogic, Inc. (f) | 4,020 | 167 | |||||||||
CSG Systems International, Inc. (g) | 4,319 | 247 | |||||||||
Euronet Worldwide, Inc. (f) | 1,916 | 301 | |||||||||
Fair Isaac Corp. (f) | 477 | 175 | |||||||||
Fiserv, Inc. (f) | 4,113 | 478 | |||||||||
Hewlett Packard Enterprises Co. | 30,505 | 483 | |||||||||
HP, Inc. | 32,532 | 653 | |||||||||
Insight Enterprises, Inc. (f) | 2,024 | 133 | |||||||||
Intel Corp. | 55,234 | 3,207 | |||||||||
InterDigital, Inc. | 2,413 | 137 | |||||||||
International Business Machines Corp. | 17,754 | 2,387 | |||||||||
Intuit, Inc. | 2,635 | 682 | |||||||||
J2 Global, Inc. | 2,981 | 289 | |||||||||
Jabil, Inc. | 5,504 | 214 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
KEMET Corp. | 4,401 | $ | 118 | ||||||||
Kulicke & Soffa Industries, Inc. | 5,871 | 147 | |||||||||
Lam Research Corp. | 3,505 | 935 | |||||||||
LogMeIn, Inc. | 1,767 | 138 | |||||||||
Manhattan Associates, Inc. (f) | 3,670 | 306 | |||||||||
Maximus, Inc. | 3,766 | 281 | |||||||||
Methode Electronics, Inc. | 3,439 | 128 | |||||||||
Microsoft Corp. (h) | 43,739 | 6,622 | |||||||||
MKS Instruments, Inc. | 1,317 | 140 | |||||||||
NCR Corp. (f) | 7,924 | 260 | |||||||||
NIC, Inc. | 9,678 | 220 | |||||||||
Oracle Corp. | 43,969 | 2,468 | |||||||||
Paylocity Holding Corp. (f) | 803 | 98 | |||||||||
PayPal Holdings, Inc. (f) | 9,668 | 1,044 | |||||||||
Perspecta, Inc. | 5,577 | 154 | |||||||||
QUALCOMM, Inc. | 8,063 | 674 | |||||||||
Science Applications International Corp. | 1,971 | 168 | |||||||||
Seagate Technology PLC | 7,157 | 427 | |||||||||
TE Connectivity Ltd. | 4,078 | 378 | |||||||||
Tech Data Corp. (f) | 1,852 | 268 | |||||||||
Teradyne, Inc. | 5,854 | 366 | |||||||||
Texas Instruments, Inc. | 7,179 | 863 | |||||||||
The Hackett Group, Inc. | 13,404 | 205 | |||||||||
Ultra Clean Holdings, Inc. (f) | 11,111 | 247 | |||||||||
VeriSign, Inc. (f) | 2,426 | 463 | |||||||||
Visa, Inc., Class A | 13,019 | 2,402 | |||||||||
Western Digital Corp. | 4,848 | 244 | |||||||||
40,235 | |||||||||||
Materials (0.5%): | |||||||||||
Air Products & Chemicals, Inc. | 2,385 | 563 | |||||||||
Berry Global Group, Inc. (f) | 6,274 | 293 | |||||||||
Celanese Corp., Series A | 3,235 | 406 | |||||||||
Cleveland-Cliffs, Inc. (g) | 7,614 | 61 | |||||||||
Corteva, Inc. | 9,555 | 249 | |||||||||
Domtar Corp. | 4,901 | 183 | |||||||||
Huntsman Corp. | 5,905 | 134 | |||||||||
Hycroft Mining Corp. (f) (i) (l) | 110,164 | 1 | |||||||||
Kraton Corp. (f) | 3,211 | 72 | |||||||||
LyondellBasell Industries NV, Class A | 11,116 | 1,029 | |||||||||
Nucor Corp. | 9,229 | 520 | |||||||||
Reliance Steel & Aluminum Co. | 2,735 | 323 | |||||||||
Resolute Forest Products, Inc. | 22,262 | 89 | |||||||||
Schweitzer-Mauduit International, Inc. | 4,892 | 214 | |||||||||
Silgan Holdings, Inc. | 9,145 | 282 | |||||||||
The Sherwin-Williams Co. | 946 | 552 | |||||||||
Trinseo SA | 3,950 | 150 | |||||||||
Warrior Met Coal, Inc. | 5,213 | 107 | |||||||||
Westrock Co. | 13,270 | 535 | |||||||||
5,763 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Real Estate (0.7%): | |||||||||||
Brixmor Property Group, Inc. | 10,186 | $ | 223 | ||||||||
CBRE Group, Inc., Class A (f) | 16,387 | 935 | |||||||||
CoreCivic, Inc. | 7,355 | 111 | |||||||||
Crown Castle International Corp. | 4,492 | 600 | |||||||||
EPR Properties | 3,491 | 248 | |||||||||
Equity Residential | 4,934 | 420 | |||||||||
Essex Property Trust, Inc. | 917 | 286 | |||||||||
Gaming and Leisure Properties, Inc. | 9,481 | 400 | |||||||||
Host Hotels & Resorts, Inc. | 41,986 | 735 | |||||||||
Jones Lang LaSalle, Inc. | 897 | 149 | |||||||||
Kimco Realty Corp. | 25,823 | 558 | |||||||||
Lamar Advertising Co., Class A | 4,759 | 397 | |||||||||
LTC Properties, Inc. | 6,532 | 306 | |||||||||
Medical Properties Trust, Inc. | 20,624 | 428 | |||||||||
Omega Healthcare Investors, Inc. | 5,379 | 226 | |||||||||
Outfront Media, Inc., Class A | 2,721 | 68 | |||||||||
PotlatchDeltic Corp. | 6,124 | 266 | |||||||||
Public Storage | 1,124 | 237 | |||||||||
Service Properties Trust | 8,485 | 198 | |||||||||
Spirit Realty Capital, Inc. | 1,741 | 91 | |||||||||
Tanger Factory Outlet Centers, Inc. (g) | 14,521 | 221 | |||||||||
The GEO Group, Inc. | 11,748 | 163 | |||||||||
Ventas, Inc. | 3,856 | 225 | |||||||||
Vornado Realty Trust | 10,686 | 690 | |||||||||
Welltower, Inc. | 3,081 | 261 | |||||||||
8,442 | |||||||||||
Utilities (0.4%): | |||||||||||
Consolidated Edison, Inc. | 3,946 | 343 | |||||||||
Dominion Energy, Inc. | 4,373 | 363 | |||||||||
DTE Energy Co. | 2,263 | 283 | |||||||||
Duke Energy Corp. | 9,454 | 835 | |||||||||
Evergy, Inc. | 7,288 | 461 | |||||||||
Exelon Corp. | 14,940 | 663 | |||||||||
IDACORP, Inc. | 2,402 | 252 | |||||||||
New Jersey Resources Corp. | 6,066 | 258 | |||||||||
NextEra Energy, Inc. | 2,833 | 662 | |||||||||
PPL Corp. | 14,380 | 489 | |||||||||
Southwest Gas Holdings, Inc. | 3,059 | 232 | |||||||||
The Southern Co. | 5,222 | 324 | |||||||||
5,165 | |||||||||||
Total Common Stocks (Cost $166,409) | 180,899 | ||||||||||
Preferred Stocks (1.2%) | |||||||||||
Communication Services (0.2%): | |||||||||||
Qwest Corp., 6.50%, 9/1/56 | 112,000 | 2,793 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Consumer Staples (0.7%): | |||||||||||
CHS, Inc., Series 1, cumulative redeemable, 7.88%, 9/26/23 (j) | 161,682 | $ | 4,459 | ||||||||
Dairy Farmers of America, Inc., cumulative redeemable, 7.88% 1/14/20 (a) (j) | 28,000 | 2,757 | |||||||||
7,216 | |||||||||||
Financials (0.3%): | |||||||||||
American Overseas Group Ltd., Series A, non-cumulative, 7.50% (LIBOR03M+356bps), 12/15/66 (b) (i) (l) | 1,500 | 375 | |||||||||
Delphi Financial Group, Inc., 5.10% (LIBOR03M+319bps), 5/15/37 (b) (l) | 167,198 | 3,678 | |||||||||
4,053 | |||||||||||
Total Preferred Stocks (Cost $14,545) | 14,062 | ||||||||||
Senior Secured Loans (0.2%) | |||||||||||
Academy Ltd., 1st Lien Term Loan B, 5.78% (LIBOR01M+400bps), 7/2/22, Callable 1/10/20 @ 100 (b) | $ | 2,821 | 2,095 | ||||||||
Total Senior Secured Loans (Cost $2,401) | 2,095 | ||||||||||
Corporate Bonds (10.5%) | |||||||||||
Communication Services (0.2%): | |||||||||||
Verizon Communications, Inc., 4.50%, 8/10/33 | 1,943 | 2,275 | |||||||||
Consumer Discretionary (0.2%): | |||||||||||
Hasbro, Inc., 3.55%, 11/19/26, Callable 9/19/26 @ 100 | 777 | 780 | |||||||||
Nordstrom, Inc., 4.38%, 4/1/30, Callable 1/1/30 @ 100 | 648 | 655 | |||||||||
1,435 | |||||||||||
Consumer Staples (0.5%): | |||||||||||
Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide, Inc., 4.70%, 2/1/36, Callable 8/1/35 @ 100 | 1,619 | 1,887 | |||||||||
BAT Capital Corp., 2.79%, 9/6/24, Callable 8/6/24 @ 100 | 1,500 | 1,501 | |||||||||
Kraft Heinz Foods Co., 3.75%, 4/1/30, Callable 1/1/30 @ 100 (a) | 728 | 745 | |||||||||
Unilever Capital Corp., 2.60%, 5/5/24, Callable 3/5/24 @ 100 | 1,500 | 1,534 | |||||||||
5,667 | |||||||||||
Energy (1.4%): | |||||||||||
Cheniere Corpus Christi Holdings LLC, 3.70%, 11/15/29, Callable 5/18/29 @ 100 (a) | 1,618 | 1,635 | |||||||||
Diamondback Energy, Inc., 3.25%, 12/1/26, Callable 10/1/26 @ 100 (d) | 971 | 971 | |||||||||
Enable Midstream Partners LP, 4.15%, 9/15/29, Callable 6/15/29 @ 100 | 1,500 | 1,402 | |||||||||
Enbridge Energy Partners LP, 7.38%, 10/15/45, Callable 4/15/45 @ 100 (h) | 2,950 | 4,375 | |||||||||
Enterprise TE Partners LP, 5.30% (LIBOR03M+278bps), 6/1/67, Callable 1/13/20 @ 100 (b) | 2,500 | 2,331 | |||||||||
EQM Midstream Partners LP, 4.75%, 7/15/23, Callable 6/15/23 @ 100 | 3,300 | 3,221 | |||||||||
National Oilwell Varco, Inc., 3.60%, 12/1/29, Callable 9/1/29 @ 100 | 1,295 | 1,263 | |||||||||
Occidental Petroleum Corp., 3.50%, 8/15/29, Callable 5/15/29 @ 100 | 209 | 211 | |||||||||
Southern Union Co., 4.93% (LIBOR03M+302bps), 11/1/66, Callable 1/13/20 @ 100 (b) | 1,000 | 695 | |||||||||
Targa Resources Partners LP/Targa Resources Partners Finance Corp., 5.50%, 3/1/30, Callable 3/1/25 @ 102.75 (a) | 648 | 650 | |||||||||
16,754 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Financials (4.6%): | |||||||||||
Allfirst Preferred Capital Trust, 3.50% (LIBOR03M+150bps), 7/15/29, Callable 1/13/20 @ 100 (b) | $ | 1,000 | $ | 947 | |||||||
AmTrust Financial Services, Inc., 6.13%, 8/15/23 (g) | 1,921 | 1,952 | |||||||||
Ares Capital Corp., 3.63%, 1/19/22, Callable 12/19/21 @ 100 (h) | 1,600 | 1,625 | |||||||||
Assurant, Inc., 3.70%, 2/22/30, Callable 11/22/29 @ 100 | 1,154 | 1,170 | |||||||||
BancorpSouth Bank, 4.13% (LIBOR03M+247bps), 11/20/29, Callable 11/20/24 @ 100 (b) | 833 | 838 | |||||||||
BBVA USA, 3.88%, 4/10/25, Callable 3/10/25 @ 100 | 2,000 | 2,108 | |||||||||
BMW US Capital LLC, 3.25%, 8/14/20 (a) (h) | 3,200 | 3,228 | |||||||||
Capital One NA, 2.15%, 9/6/22, Callable 8/6/22 @ 100 | 1,500 | 1,498 | |||||||||
Cullen/Frost Capital Trust II, 3.69% (LIBOR03M+155bps), 3/1/34, Callable 1/13/20 @ 100 (b) | 4,000 | 3,407 | |||||||||
First Maryland Capital I, 3.00% (LIBOR03M+100bps), 1/15/27, Callable 1/13/20 @ 100 (b) | 2,850 | 2,694 | |||||||||
Ford Motor Credit Co. LLC, 4.06%, 11/1/24, Callable 10/1/24 @ 100 | 1,250 | 1,258 | |||||||||
Global Atlantic Fin Co., 4.40%, 10/15/29, Callable 7/15/29 @ 100 (a) | 832 | 826 | |||||||||
Harley-Davidson Financial Services, Inc., 3.55%, 5/21/21 (a) (h) | 3,300 | 3,358 | |||||||||
HSB Group, Inc., 2.91% (LIBOR03M+91bps), 7/15/27, Callable 1/13/20 @ 100 (b) | 2,575 | 2,217 | |||||||||
Huntington Capital II, 2.74% (LIBOR03M+63bps), 6/15/28, Callable 1/13/20 @ 100 (b) | 2,000 | 1,798 | |||||||||
Hyundai Capital America, 3.75%, 7/8/21 (a) (h) | 3,250 | 3,312 | |||||||||
Level 3 Financing, Inc., 3.88%, 11/15/29, Callable 8/15/29 @ 100 (a) | 1,295 | 1,302 | |||||||||
Manufactures & Traders Trust Co., 2.78% (LIBOR03M+64bps), 12/1/21, Callable 1/13/20 @ 100 (b) (h) | 2,000 | 1,999 | |||||||||
Nationwide Mutual Insurance Co., 4.41% (LIBOR03M+229bps), 12/15/24, Callable 1/13/20 @ 100 (a) (b) | 5,670 | 5,644 | |||||||||
Pinnacle Financial Partners, Inc., 4.13% (LIBOR03M+278bps), 9/15/29, Callable 9/15/24 @ 100 (b) | 1,000 | 1,005 | |||||||||
PNC Bank NA, 2.70%, 10/22/29 | 2,250 | 2,249 | |||||||||
Prudential Financial, Inc., 5.62% (LIBOR03M+392bps), 6/15/43, Callable 6/15/23 @ 100 (b) | 2,800 | 3,039 | |||||||||
Signature Bank, 4.13% (LIBOR03M+256bps), 11/1/29, Callable 11/1/24 @ 100 (b) | 2,600 | 2,633 | |||||||||
SunTrust Capital, 2.58% (LIBOR03M+67bps), 5/15/27, Callable 1/13/20 @ 100 (b) (g) | 6,000 | 5,691 | |||||||||
Texas Capital Bank NA, 5.25%, 1/31/26 | 647 | 676 | |||||||||
The Allstate Corp., 5.75% (LIBOR03M+294bps), 8/15/53, Callable 8/15/23 @ 100 (b) | 640 | 690 | |||||||||
Zions Bancorp NA, 3.25%, 10/29/29, Callable 7/29/29 @ 100 | 1,295 | 1,280 | |||||||||
58,444 | |||||||||||
Health Care (0.6%): | |||||||||||
AbbVie, Inc., 3.20%, 11/21/29, Callable 8/21/29 @ 100 (a) | 1,295 | 1,314 | |||||||||
Commonspirit Health, 3.35%, 10/1/29, Callable 4/1/29 @ 100 | 1,000 | 1,006 | |||||||||
CVS Health Corp., 3.25%, 8/15/29, Callable 5/15/29 @ 100 | 1,998 | 2,032 | |||||||||
HCA, Inc., 5.13%, 6/15/39, Callable 12/15/38 @ 100 | 1,619 | 1,795 | |||||||||
Laboratory Corp. of America Holdings, 2.95%, 12/1/29, Callable 9/1/29 @ 100 | 971 | 974 | |||||||||
7,121 |
See notes to financial statements.
14
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Industrials (1.3%): | |||||||||||
Ashtead Capital, Inc. 4.00%, 5/1/28, Callable 5/1/23 @ 102 (a) | $ | 1,017 | $ | 1,019 | |||||||
4.25%, 11/1/29, Callable 11/1/24 @ 102.13 (a) | 173 | 175 | |||||||||
BNSF Funding Trust, 6.61% (LIBOR03M+235bps), 12/15/55, Callable 1/15/26 @ 100 (b) | 3,000 | 3,355 | |||||||||
Dover Corp., 2.95%, 11/4/29, Callable 8/4/29 @ 100 | 971 | 979 | |||||||||
General Electric Co., 5.50%, 1/8/20, MTN | 960 | 963 | |||||||||
Hillenbrand, Inc., 4.50%, 9/15/26, Callable 7/15/26 @ 100 | 1,500 | 1,542 | |||||||||
Ryder System, Inc. 3.50%, 6/1/21, MTN (h) | 3,200 | 3,258 | |||||||||
2.90%, 12/1/26, Callable 10/1/26 @ 100, MTN | 1,618 | 1,625 | |||||||||
The Conservation Fund A Nonprofit Corp., 3.47%, 12/15/29, Callable 9/15/29 @ 100 | 1,300 | 1,310 | |||||||||
United Airlines Pass Through Trust, 2.90%, 11/1/29 | 1,500 | 1,507 | |||||||||
15,733 | |||||||||||
Information Technology (0.5%): | |||||||||||
Amphenol Corp., 2.80%, 2/15/30, Callable 11/15/29 @ 100 | 1,500 | 1,489 | |||||||||
Keysight Technologies, Inc., 3.00%, 10/30/29, Callable 7/30/29 @ 100 | 1,803 | 1,803 | |||||||||
Microsoft Corp., 3.45%, 8/8/36, Callable 2/8/36 @ 100 | 2,105 | 2,315 | |||||||||
5,607 | |||||||||||
Materials (0.1%): | |||||||||||
Packaging Corp. of America, 3.00%, 12/15/29, Callable 9/15/29 @ 100 | 1,619 | 1,631 | |||||||||
Real Estate (0.4%): | |||||||||||
Lexington Realty Trust, 4.25%, 6/15/23, Callable 3/15/23 @ 100 | 1,400 | 1,435 | |||||||||
Mid-America Apartments LP, 2.75%, 3/15/30, Callable 12/15/29 @ 100 | 1,619 | 1,619 | |||||||||
Sabra Health Care LP, 5.13%, 8/15/26, Callable 5/15/26 @ 100 | 1,000 | 1,075 | |||||||||
SBA Tower Trust, 2.84%, 1/15/25 (a) | 692 | 694 | |||||||||
VICI Properties LP/VICI Note Co., Inc., 4.63%, 12/1/29, Callable 12/1/24 @ 102.31 (a) | 149 | 154 | |||||||||
4,977 | |||||||||||
Utilities (0.7%): | |||||||||||
Alabama Power Co., 3.85%, 12/1/42 | 971 | 1,057 | |||||||||
CenterPoint Energy, Inc., 2.50%, 9/1/24, Callable 8/1/24 @ 100 | 2,000 | 2,001 | |||||||||
Cleco Corporate Holdings LLC, 3.38%, 9/15/29, Callable 6/11/29 @ 100 (a) | 1,467 | 1,460 | |||||||||
Duke Energy Florida LLC, 3.85%, 11/15/42, Callable 5/15/42 @ 100 | 971 | 1,061 | |||||||||
NextEra Energy Capital Holdings, Inc., 3.34%, 9/1/20 | 2,133 | 2,152 | |||||||||
7,731 | |||||||||||
Total Corporate Bonds (Cost $124,339) | 127,375 | ||||||||||
Yankee Dollars (1.3%) | |||||||||||
Energy (0.0%): (k) | |||||||||||
Petroleos Mexicanos, 6.49%, 1/23/27, Callable 11/23/26 @ 100 (a) | 554 | 583 | |||||||||
Financials (1.0%): | |||||||||||
Athene Holding Ltd., 4.13%, 1/12/28, Callable 10/12/27 @ 100 | 3,200 | 3,301 | |||||||||
Deutsche Bank AG, 3.96% (SOFR+258bps), 11/26/25, Callable 11/26/24 @ 100 (b) | 972 | 978 |
See notes to financial statements.
15
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Newcrest Finance Pty Ltd., 4.45%, 11/15/21 (a) (h) | $ | 2,285 | $ | 2,367 | |||||||
QBE Capital Funding III Ltd., 7.25% (USSW10+405bps), 5/24/41, Callable 5/24/21 @ 100 (a) (b) | 3,430 | 3,625 | |||||||||
Schahin II Finance Co. SPV Ltd. 8.00%, 5/25/20 PIK (a) (i) (n) | 35 | 32 | |||||||||
5.88%, 9/25/22 (a) (l) (p) | 1,407 | 105 | |||||||||
Sumitomo Mitsui Financial Group, Inc., 2.45%, 9/27/24 | 1,000 | 1,000 | |||||||||
Transcanada Trust, 5.63% (LIBOR03M+353bps), 5/20/75, Callable 5/20/25 @ 100 (b) | 600 | 627 | |||||||||
12,035 | |||||||||||
Industrials (0.1%): | |||||||||||
CK Hutchison International 19 II Ltd., 2.75%, 9/6/29, Callable 6/6/29 @ 100 (a) | 1,500 | 1,478 | |||||||||
Materials (0.2%): | |||||||||||
Braskem Netherlands Finance BV, 4.50%, 1/31/30 (a) | 971 | 936 | |||||||||
Teck Resources Ltd., 6.13%, 10/1/35 | 1,038 | 1,200 | |||||||||
2,136 | |||||||||||
Total Yankee Dollars (Cost $16,707) | 16,232 | ||||||||||
Municipal Bonds (0.8%) | |||||||||||
Florida (0.1%): | |||||||||||
County of Broward Florida Airport System Revenue, Series C, 2.50%, 10/1/28 | 648 | 640 | |||||||||
Georgia (0.0%): | |||||||||||
Athens Housing Authority Revenue, 2.42%, 12/1/26 (d) | 1,380 | 1,376 | |||||||||
New Jersey (0.1%): | |||||||||||
New Jersey Economic Development Authority Revenue, Series NNN, 2.88%, 6/15/24 | 624 | 625 | |||||||||
North Hudson Sewerage Authority Revenue, 2.88%, 6/1/28 | 324 | 328 | |||||||||
953 | |||||||||||
New York (0.0%): | |||||||||||
New York State Dormitory Authority Revenue, Series B, 2.83%, 7/1/31 (d) | 1,620 | 1,618 | |||||||||
New York State Thruway Authority Revenue, Series M, 2.55%, 1/1/28 | 373 | 371 | |||||||||
1,989 | |||||||||||
Pennsylvania (0.3%): | |||||||||||
Scranton School District(INS-Build America Mutual Assurance Co.), 3.15%, 4/1/31 | 250 | 253 | |||||||||
State Public School Building Authority Revenue, 3.05%, 4/1/28 | 647 | 647 | |||||||||
University of Pittsburgh-of The Commonwealth System of Higher Education Revenue Series C, 2.53%, 9/15/31 (d) | 645 | 643 | |||||||||
Series C, 2.58%, 9/15/32 (d) | 325 | 324 | |||||||||
Series C, 2.63%, 9/15/33 (d) | 645 | 644 | |||||||||
2,511 | |||||||||||
Texas (0.3%): | |||||||||||
City of Houston, Texas Combined Utility System Revenue, 3.72%, 11/15/28 | 810 | 894 |
See notes to financial statements.
16
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Harris County Cultural Education Facilities Finance Corp. Revenue, Series B, 2.81%, 5/15/29 (d) | $ | 645 | $ | 643 | |||||||
State of Texas, GO, 3.00%, 4/1/28 (d) | 972 | 1,024 | |||||||||
2,561 | |||||||||||
Total Municipal Bonds (Cost $10,027) | 10,030 | ||||||||||
U.S. Government Agency Mortgages (10.6%) | |||||||||||
Federal Home Loan Mortgage Corporation Series K047, Class A2, 3.33%, 5/25/25 | 5,200 | 5,522 | |||||||||
Series K053, Class A2, 3.00%, 12/25/25 | 8,300 | 8,703 | |||||||||
Series K151, Class A3, 3.51%, 4/25/30 | 5,000 | 5,423 | |||||||||
Series K156, Class A2, 3.70%, 1/25/33 | 2,679 | 2,994 | |||||||||
3.00%, 4/1/46 | 6,503 | 6,659 | |||||||||
3.50%, 4/1/46 | 6,797 | 7,080 | |||||||||
3.00%, 6/1/46 | 9,267 | 9,490 | |||||||||
3.00%, 8/1/46 | 7,270 | 7,445 | |||||||||
3.00%, 1/1/47 | 13,442 | 13,765 | |||||||||
3.00%, 1/1/47 | 6,996 | 7,164 | |||||||||
3.00%, 3/1/47 | 14,509 | 14,858 | |||||||||
3.00%, 4/1/47 | 18,702 | 19,150 | |||||||||
3.00%, 8/1/47 | 8,268 | 8,436 | |||||||||
3.50%, 4/1/48 | 6,793 | 6,991 | |||||||||
123,680 | |||||||||||
Federal National Mortgage Association Series 2016-M2, Class AV2, 2.15%, 1/25/23 | 2,059 | 2,065 | |||||||||
4.00%, 11/1/45 | 2,360 | 2,492 | |||||||||
4,557 | |||||||||||
Total U.S. Government Agency Mortgages (Cost $124,962) | 128,237 | ||||||||||
U.S. Treasury Obligations (14.4%) | |||||||||||
U.S. Treasury Bonds 3.13%, 8/15/44 | 29,100 | 34,233 | |||||||||
3.00%, 11/15/44 | 6,000 | 6,921 | |||||||||
2.38%, 11/15/49 | 5,000 | 5,191 | |||||||||
U.S. Treasury Notes 2.50%, 1/31/21 (h) | 5,000 | 5,046 | |||||||||
1.13%, 2/28/21 | 28,500 | 28,298 | |||||||||
1.63%, 11/15/22 | 40,000 | 40,025 | |||||||||
1.63%, 4/30/23 | 17,000 | 17,007 | |||||||||
2.25%, 11/15/25 | 5,000 | 5,155 | |||||||||
1.63%, 2/15/26 | 20,000 | 19,902 | |||||||||
2.25%, 2/15/27 | 5,000 | 5,177 | |||||||||
2.38%, 5/15/29 | 7,850 | 8,252 | |||||||||
Total U.S. Treasury Obligations (Cost $167,680) | 175,207 |
See notes to financial statements.
17
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Exchange-Traded Funds (42.1%) | |||||||||||
First Trust Global Tactical Commodity Strategy Fund | 39,300 | $ | 718 | ||||||||
Invesco DB Commodity Index Tracking Fund (g) | 114,500 | 1,753 | |||||||||
Invesco FTSE RAFI Developed Markets ex-US ETF (g) | 272,628 | 11,279 | |||||||||
Invesco FTSE RAFI Emerging Markets ETF (g) | 680,718 | 14,186 | |||||||||
Invesco Fundamental High Yield Corporate Bond ETF | 44,400 | 845 | |||||||||
iShares 20+ Year Treasury Bond ETF | 144,610 | 20,306 | |||||||||
iShares 7-10 Year Treasury Bond ETF | 22,411 | 2,500 | |||||||||
iShares Core MSCI EAFE ETF | 488,080 | 31,149 | |||||||||
iShares Core MSCI Emerging Markets ETF | 479,371 | 24,529 | |||||||||
iShares Core S&P 500 ETF | 307,374 | 97,149 | |||||||||
iShares Core U.S. Aggregate Bond ETF | 111,189 | 12,549 | |||||||||
iShares Edge MSCI Min Vol EAFE ETF (g) | 167,620 | 12,602 | |||||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 10,192 | 581 | |||||||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 93,458 | 11,960 | |||||||||
iShares iBoxx High Yield Corporate Bond ETF | 23,000 | 2,000 | |||||||||
iShares MSCI Canada ETF | 1,069,176 | 31,679 | |||||||||
iShares MSCI United Kingdom ETF (g) | 258,080 | 8,499 | |||||||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 916,543 | 26,296 | |||||||||
Schwab Fundamental International Large Co. Index ETF | 1,458,263 | 41,881 | |||||||||
Schwab Fundamental International Small Co. Index ETF (g) | 266,700 | 8,705 | |||||||||
SPDR S&P Emerging Markets Smallcap ETF | 34,497 | 1,524 | |||||||||
U.S. Commodity Index Fund | 19,300 | 676 | |||||||||
VanEck Vectors Gold Miners ETF | 401,890 | 10,883 | |||||||||
VanEck Vectors Junior Gold Miners ETF | 47,200 | 1,801 | |||||||||
Vanguard FTSE All-World ex-US ETF | 95,510 | 4,982 | |||||||||
Vanguard FTSE Developed Markets ETF | 591,442 | 25,414 | |||||||||
Vanguard FTSE Emerging Markets ETF | 47,000 | 1,977 | |||||||||
Vanguard FTSE Europe ETF | 421,000 | 23,740 | |||||||||
Vanguard Mortgage-Backed Securities ETF | 218,673 | 11,647 | |||||||||
Vanguard Real Estate ETF | 206,960 | 19,262 | |||||||||
Vanguard S&P 500 ETF (h) | 93,056 | 26,861 | |||||||||
Vanguard Short-Term Bond ETF | 44,595 | 3,601 | |||||||||
Vanguard Small-Capital Value ETF | 2,376 | 319 | |||||||||
Vanguard Total Bond Market ETF | 26,800 | 2,259 | |||||||||
Vanguard Total Stock Market ETF (h) | 47,719 | 7,636 | |||||||||
WisdomTree Emerging Markets SmallCap Dividend Fund | 59,797 | 2,715 | |||||||||
Xtrackers USD High Yield Corporate Bond ETF (g) | 64,114 | 3,197 | |||||||||
Total Exchange-Traded Funds (Cost $466,465) | 509,660 | ||||||||||
Affiliated Exchange-Traded Funds (0.2%) | |||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 51,500 | 2,226 | |||||||||
Total Affiliated Exchange-Traded Funds (Cost $2,636) | 2,226 | ||||||||||
Commercial Paper (1.4%) | |||||||||||
CenterPoint Energy Resou, 2.50%, 12/2/19 (m) | $ | 2,600 | 2,600 | ||||||||
Enbridge US, Inc., 2.64%, 12/2/19 (m) | 1,700 | 1,700 | |||||||||
FMC Corp., 2.64%, 12/2/19 (m) | 4,600 | 4,599 |
See notes to financial statements.
18
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
ONEOK, Inc. 2.65%, 12/3/19 (m) | $ | 600 | $ | 600 | |||||||
2.49%, 12/4/19 (m) | 2,100 | 2,099 | |||||||||
Royal Caribbean Cruises, 2.40%, 12/3/19 (m) | 3,718 | 3,717 | |||||||||
Viacom, Inc., 2.35%, 12/3/19 (m) | 1,400 | 1,400 | |||||||||
Total Commercial Paper (Cost $16,717) | 16,715 | ||||||||||
Convertible Corporate Bonds (0.0%) (k) | |||||||||||
Materials (0.0%): (k) | |||||||||||
Hycroft Mining Corp., 15.00%, 10/22/20 PIK (i) (n) (l) | 410 | 12 | |||||||||
Total Convertible Corporate Bonds (Cost $408) | 12 | ||||||||||
Collateral for Securities Loaned^ (1.1%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (o) | 13,407,049 | 13,407 | |||||||||
Total Collateral for Securities Loaned (Cost $13,407) | 13,407 | ||||||||||
Total Investments (Cost $1,161,740) — 101.5% | 1,230,902 | ||||||||||
Liabilities in excess of other assets — (1.5)% | (18,120 | ) | |||||||||
NET ASSETS — 100.00% | $ | 1,212,782 |
^ Purchased with cash collateral from securities on loan.
(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 November 30, 2019, the fair value of these securities was $59,877 (thousands) and amounted to 4.9% of net assets.
(b) Variable or Floating-Rate Security. Rate disclosed is as of November 30, 2019.
(c) The rate for certain asset-backed and mortgage backed securities may vary based on factors relating to the pool of assets underlying the security. The rate disclosed is the rate in effect at November 30, 2019.
(d) Security purchased on a when-issued basis.
(e) Interest only.
(f) Non-income producing security.
(g) All or a portion of this security is on loan.
(h) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(i) Security was fair valued based upon procedures approved by the Board of Trustees and represents less than 0.0% of the Fund's net assets as of November 30, 2019. This security is classified as Level 3 within the fair value hierarchy. (See Note 2 in the Notes to Financial Statements)
(j) Security is perpetual and has no final maturity date but may be subject to calls at various dates in the future.
(k) Amount represents less than 0.05% of net assets.
See notes to financial statements.
19
USAA Mutual Funds Trust USAA Cornerstone Moderate Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(l) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were 0.3% of the Fund's net assets.
(m) Rate represents the effective yield at November 30, 2019.
(n) All of the coupon is paid in kind.
(o) Rate disclosed is the daily yield on November 30, 2019.
(p) Defaulted security.
bps — Basis points
ETF — Exchange-Traded Fund
GO — General Obligation
LIBOR — London InterBank Offered Rate
LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LLC — Limited Liability Company
LP — Limited Partnership
MTN — Medium Term Note
PIK — Paid In-Kind
PLC — Public Limited Company
SOFR — Secured Overnight Financing Rate
USSW10 — USD 10 Year Swap Rate, rate disclosed as of November 30, 2019
See notes to financial statements.
20
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Cornerstone Moderate Fund | |||||||
Assets: | |||||||
Affiliated investments, at value (Cost $2,636) | $ | 2,226 | |||||
Unaffiliated investments, at value (Cost $1,159,104) | 1,228,676 | (a) | |||||
Cash and cash equivalents | 1,111 | ||||||
Receivables: | |||||||
Interest and dividends | 2,712 | ||||||
Capital shares issued | 825 | ||||||
From Adviser | 206 | ||||||
Prepaid expenses | 4 | ||||||
Total assets | 1.235,760 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 13,407 | ||||||
Investments purchased | 8,244 | ||||||
Capital shares redeemed | 350 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 587 | ||||||
Administration fees | 149 | ||||||
Transfer agent fees | 111 | ||||||
Compliance fees | — | (b) | |||||
Custody fees | 15 | ||||||
Other accrued expenses | 115 | ||||||
Total liabilities | 22,978 | ||||||
Net Assets: | |||||||
Capital | 1,141,331 | ||||||
Total distributable earnings/(loss) | 71,451 | ||||||
Net assets | $ | 1,212,782 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 81,361 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 14.91 |
(a) Includes $12,963 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.
21
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Cornerstone Moderate Fund | |||||||
Investment Income: | |||||||
Income distributions from affiliated funds | $ | 6 | |||||
Dividends | 10,359 | ||||||
Interest | 7,461 | ||||||
Securities lending (net of fees) | 80 | ||||||
Foreign tax withholding | — | (a) | |||||
Total income | 17,906 | ||||||
Expenses: | |||||||
Investment advisory fees | 3,535 | ||||||
Administration fees | 899 | ||||||
Custodian fees | 46 | ||||||
Transfer agent fees | 1,252 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 3 | ||||||
Legal and audit fees | 51 | ||||||
State registration and filing fees | 21 | ||||||
Interest expense on Interfund lending | 1 | ||||||
Sub-Administration fees | 36 | ||||||
Other expenses | 108 | ||||||
Total expenses | 5,972 | ||||||
Expenses waived/reimbursed by Adviser | (2 | ) | |||||
Expenses waived/reimbursed by AMCO | (10 | ) | |||||
Net expenses | 5,960 | ||||||
Net Investment Income (Loss) | 11,946 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from unaffiliated investment securities and foreign currency translations | 7,241 | ||||||
Net realized gains (losses) from futures contracts | (634 | ) | |||||
Net change in unrealized appreciation/depreciation on affiliated funds | 39 | ||||||
Net change in unrealized appreciation/depreciation on unaffiliated investment securities and foreign currency translations | 57,024 | ||||||
Net change in unrealized appreciation/depreciation on futures contracts | 861 | ||||||
Net realized/unrealized gains (losses) on investments | 64,531 | ||||||
Change in net assets resulting from operations | $ | 76,477 |
(a) Rounds to less than $1.
See notes to financial statements.
22
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Cornerstone Moderate Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 11,946 | $ | 24,429 | |||||||
Net realized gains (losses) from investments | 6,607 | 5,112 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 57,924 | (28,770 | ) | ||||||||
Change in net assets resulting from operations | 76,477 | 771 | |||||||||
Change in net assets resulting from distributions to shareholders | (10,890 | ) | (57,045 | ) | |||||||
Change in net assets resulting from capital transactions | (16,179 | ) | 35,616 | ||||||||
Change in net assets | 49,408 | (20,658 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 1,163,374 | 1,184,032 | |||||||||
End of period | $ | 1,212,782 | $ | 1,163,374 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 41,703 | $ | 126,718 | |||||||
Distributions reinvested | 10,838 | 56,759 | |||||||||
Cost of shares redeemed | (68,720 | ) | (147,861 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (16,179 | ) | $ | 35,616 | ||||||
Share Transactions: | |||||||||||
Issued | 2,861 | 8,845 | |||||||||
Reinvested | 749 | 4,109 | |||||||||
Redeemed | (4,717 | ) | (10,306 | ) | |||||||
Change in Shares | (1,107 | ) | 2,648 |
See notes to financial statements.
23
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 Cornerstone Moderate Fund | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 14.11 | 0.15 | (d) | 0.78 | 0.93 | (0.13 | ) | — | ||||||||||||||||||
Year Ended May 31, 2019 | $ | 14.83 | 0.30 | (0.31 | ) | (0.01 | ) | (0.29 | ) | (0.42 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 15.05 | 0.26 | 0.55 | 0.81 | (0.26 | ) | (0.77 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 14.01 | 0.31 | 1.06 | 1.37 | (0.33 | ) | — | |||||||||||||||||||
Year Ended May 31, 2016 | $ | 15.43 | 0.39 | (1.15 | ) | (0.76 | ) | (0.38 | ) | (0.28 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 15.46 | 0.37 | 0.10 | 0.47 | (0.38 | ) | (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) The expense ratios exclude the impact of expenses paid by each underlying fund.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Reflects increased trading activity due to usage of quantitative investment strategies.
(f) Reflects increased trading activity due to changes in asset allocation strategies.
See notes to financial statements.
24
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) | Ratio of Net Expenses^(b)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a) | ||||||||||||||||||||||||||||
USAA Cornerstone Moderate Fund | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | (0.13 | ) | $ | 14.91 | 6.64 | % | 1.00 | % | 2.00 | % | 1.00 | % | $ | 1,212,782 | 40 | % | |||||||||||||||||||
Year Ended May 31, 2019 | (0.71 | ) | $ | 14.11 | 0.13 | % | 1.00 | % | 2.10 | % | 1.02 | % | $ | 1,163,374 | 81 | %(e) | |||||||||||||||||||
Year Ended May 31, 2018 | (1.03 | ) | $ | 14.83 | 5.42 | % | 1.00 | % | 1.73 | % | 1.03 | % | $ | 1,184,032 | 51 | % | |||||||||||||||||||
Year Ended May 31, 2017 | (0.33 | ) | $ | 15.05 | 9.91 | % | 1.00 | % | 2.14 | % | 1.10 | % | $ | 1,119,494 | 66 | % | |||||||||||||||||||
Year Ended May 31, 2016 | (0.66 | ) | $ | 14.01 | (4.89 | )% | 1.00 | % | 2.72 | % | 1.16 | % | $ | 1,057,659 | 70 | %(f) | |||||||||||||||||||
Year Ended May 31, 2015 | (0.50 | ) | $ | 15.43 | 3.10 | % | 1.00 | % | 2.46 | % | 1.19 | % | $ | 1,150,798 | 44 | % |
See notes to financial statements.
25
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Cornerstone Moderate Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
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 July 1, 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)
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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.
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 November 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 | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 24,748 | $ | — | $ | 24,748 | |||||||||||
Collateralized Mortgage Obligations | — | 9,997 | — | 9,997 | |||||||||||||||
Common Stocks | 180,898 | — | 1 | 180,899 | |||||||||||||||
Preferred Stocks | 7,251 | 6,436 | 375 | 14,062 | |||||||||||||||
Senior Secured Loans | — | 2,095 | — | 2,095 | |||||||||||||||
Corporate Bonds | — | 127,375 | — | 127,375 | |||||||||||||||
Yankee Dollars | — | 16,200 | 32 | 16,232 | |||||||||||||||
Municipal Bonds | — | 10,030 | — | 10,030 | |||||||||||||||
U.S. Government Agency Mortgages | — | 128,237 | — | 128,237 | |||||||||||||||
U.S. Treasury Obligations | — | 175,207 | — | 175,207 |
27
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Exchange-Traded Funds | $ | 509,660 | $ | — | $ | — | $ | 509,660 | |||||||||||
Affiliated Exchange-Traded Funds | 2,226 | — | — | 2,226 | |||||||||||||||
Commercial Paper | — | 16,715 | — | 16,715 | |||||||||||||||
Convertible Bonds | — | — | 12 | 12 | |||||||||||||||
Collateral for Securities Loaned | 13,407 | — | — | 13,407 | |||||||||||||||
Total | $ | 713,442 | $ | 517,040 | $ | 420 | $ | 1,230,902 |
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.
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.
Mortgage- and Asset-Backed Securities:
The values of some mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values of mortgage and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or
28
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
collateral and may fluctuate in response to the market's perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as "Ginnie Mae"), while other mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as "Fannie Mae" and "Freddie Mac"), are backed only by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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
29
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
During the period ended November 30, 2019, the Fund held futures contracts primarily for the strategy of hedging or other purposes, including but not limited to, providing liquidity and equitizing cash. The Fund held no futures contracts at November 30, 2019.
Summary of Derivative Instruments:
The following table presents the effect of derivative instruments on the Statement of Operations, categorized by risk exposure, for the six months ended November 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: | $ | (634 | ) | $ | 861 |
All open derivative positions at year end are reflected in the Fund's Schedule of Portfolio Investments. The underlying face value of open derivative positions relative to the Fund's net assets at period 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.
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
30
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 12,963 | $ | — | $ | 13,407 |
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 May 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 November 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) | |||||||||
$ | 791 | $ | — | $ | — |
31
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | U.S. Government Securities | ||||||||||||||
Purchases | Sales | Purchases | Sales | ||||||||||||
$ | 385,970 | $ | 306,185 | $ | 93,599 | $ | 158,278 |
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 fees accrued daily and paid monthly at an annual rate of 0.59% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $2,961 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 0.59% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $574 thousand and reflected on the Statement of Operations as Investment Advisory fees.
In addition, the Fund invests in affiliated USAA exchange-traded fund(s) ("affiliated ETFs"). The Fund's Advisor fee is reimbursed by VCM (and previously AMCO) to the extent of the indirect Advisor fee incurred through the Fund's proportional investment in the affiliated ETF(s). For the period from July 1, 2019 through November 30, 2019, the Fund's Advisor fee was reimbursed by VCM in an amount of $2 thousand, of which $2 thousand is receivable from VCM. For the period from June 1, 2019 through June 30, 2019, the Fund's Advisor fee was reimbursed by AMCO in an amount of less than $1 thousand.
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 November 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 the 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. Amounts incurred from July 1, 2019 through November 30, 2019 are $753 thousand and are presented on the Statement of Operations as Administration fees.
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. Amounts incurred from June 1, 2019 through June 30, 2019 were $146 thousand and are presented on the Statement of Operations as Administration fees.
32
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 an annual charge of $23 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 November 30, 2019 was $1,043 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $209 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.
Effective July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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
33
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
incurred 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 1.00%.
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 November 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 November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 2 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses to 1.00% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $10 thousand. 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.
The Fund has a targeted risk tolerance and a corresponding asset allocation target; however, mere asset allocation and volatility are not the sole determination of risk. The Fund's managers will tactically allocate away from the target allocation as market conditions and the perceived risks warrant. The Fund bears the risk that the managers' tactical allocation will not be successful.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, to the degree the Fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
The fixed-income securities in the Fund's portfolio are subject to credit risk, which is the possibility that an issuer of a fixed-income security will fail to make timely interest and/or principal payments on its securities or that negative market perceptions of the issuer's ability to make such payments will
34
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
cause the price of that security to decline. The Fund accepts some credit risk as a recognized means to enhance an investor's return. All fixed-income securities, varying from the highest quality to the very speculative, have some degree of credit risk. Fixed-income securities rated below investment grade, also known as "junk" or high-yield bonds, generally entail greater economic, credit, and liquidity risk than investment-grade securities. Their prices may be more volatile, especially during economic downturns, financial setbacks, or liquidity events.
The Fund may invest in shares of ETFs, which generally are investment companies that hold a portfolio of common stocks or debt securities, the shares of which are traded on an exchange. ETFs incur their own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which will be borne indirectly by the Fund as a shareholder in an ETF. As a result, the Fund's investment in an ETF will cause the Fund to indirectly bear the fees and expenses of the ETF and, in turn, the Fund's performance may be lower than if the Fund were to invest directly in the underlying securities held by the ETF. For investments in affiliated ETFs, the Fund's management fee is reimbursed by the Adviser to the extent of the indirect management fee incurred through the Fund's investment in the affiliated ETFs. The Adviser may have conflicts of interest in allocating assets among affiliated and unaffiliated ETFs, because the Adviser also manages and administers the affiliated ETFs, and the Adviser and its affiliates receive other fees from the affiliated ETFs. In addition, the Fund also will be subject to the risks associated with the securities or other investments held by the ETFs.
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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $2 thousand.
The average borrowing for the days outstanding and average interest rate for each Fund during the six months ended November 30, 2019 were as follows:
Amount Outstanding at November 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | |||||||||||||||
— | 2,933 | 12 | 3.19 | % | $ | 7,800 |
* For the year ended November 30, 2019, based on the number of days borrowings were outstanding.
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. The interfund loan rate is determined, as specified in the Order, by averaging the current
35
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 or lending for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Borrower or Lender | Amount Outstanding at November, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | ||||||||||||||||||
Borrower | $ | — | $ | 3,256 | 4 | 2.69 | % | $ | 3,322 |
* For the six months ended November 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 quarterly. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 34,450 | $ | 22,595 | $ | 57,045 |
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||
$ | 2,842 | $ | (5,660 | ) | $ | 10,368 | $ | 7,550 |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales, REIT return of capital dividend, non-REIT return of capital dividend, futures contracts marked-to-market, hybrid interest accrual adjustment and partnership basis adjustments.
36
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
8. Affiliated Securities:
An affiliated security is a security in which the Fund has ownership of at least 5% of the security's outstanding voting shares or an investment company managed by VCM. The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. These underlying funds are noted as affiliated in the Fund's Schedule of Portfolio Investments. The affiliated underlying funds' annual or semiannual reports may be viewed at usaa.com. Transactions in affiliated securities during the six months ended November 30, 2019 were as follows (amount in thousands):
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
Affiliated Holdings | |||||||||||||||||||||||||||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 2,187 | — | — | — | — | 39 | 2,226 | 6 |
37
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,066.40 | $ | 1,020.00 | $ | 5.17 | $ | 5.05 | 1.00 | % |
* 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).
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.
38
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 | (800) 235-8396 |
27804-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Cornerstone Moderately
Aggressive Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 21 | ||||||
Statement of Operations | 22 | ||||||
Statements of Changes in Net Assets | 23 | ||||||
Financial Highlights | 24 | ||||||
Notes to Financial Statements | 26 | ||||||
Supplemental Information | 39 | ||||||
Expense Examples | 39 | ||||||
Proxy Voting and Portfolio Holdings Information | 39 | ||||||
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 Cornerstone Moderately Aggressive Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek capital appreciation with a secondary focus on current income.
Top 10 Holdings*
11/30/19
(% of Net Assets)
Vanguard FTSE Developed Markets ETF | 5.0 | % | |||||
iShares Core MSCI EAFE ETF | 3.5 | % | |||||
Schwab Fundamental International Large Co. Index ETF | 3.1 | % | |||||
Vanguard FTSE Europe ETF | 2.9 | % | |||||
iShares Core MSCI Emerging Markets ETF | 2.8 | % | |||||
U.S. Treasury Bond, 3.13%, 8/15/44 | 2.8 | % | |||||
iShares Core S&P 500 ETF | 2.5 | % | |||||
iShares MSCI Canada ETF | 2.5 | % | |||||
U.S. Treasury Note, 1.63%, 11/15/22 | 2.4 | % | |||||
Vanguard S&P 500 ETF | 2.4 | % |
* Does not include short-term investments purchased with cash collateral from securities loaned.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund (continued) | November 30, 2019 |
(Unaudited)
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Asset Backed Securities (1.2%) | |||||||||||
Americredit Automobile Receivables Trust, Series 2018-1, Class C, 3.50%, 1/18/24, Callable 4/18/22 @ 100 (c) | $ | 4,640 | $ | 4,766 | |||||||
Americredit Automobile Receivables Trust, Series 2018-2, Class A3, 3.15%, 3/20/23, Callable 8/18/22 @ 100 (c) | 571 | 577 | |||||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2014-2A, Class A, 2.50%, 2/20/21, Callable 2/20/20 @ 100 (a) (c) | 2,265 | 2,266 | |||||||||
Credit Acceptance Auto Loan Trust, Series 2018-3A, Class A, 3.55%, 8/15/27, Callable 10/15/21 @ 100 (a) (c) | 2,701 | 2,748 | |||||||||
Element Rail Leasing I LLC, Series 2014-1A, Class A2, 3.67%, 4/19/44, Callable 4/19/21 @ 100 (a) (c) | 2,320 | 2,343 | |||||||||
Evergreen Credit Card Trust, Series 2019-2, Class A, 1.90%, 9/15/24 (a) (c) | 1,125 | 1,122 | |||||||||
Exeter Automobile Receivables Trust, Series 2019-2A, Class C, 3.30%, 3/15/24, Callable 7/15/22 @ 100 (a) (c) | 1,705 | 1,733 | |||||||||
Goal Capital Funding Trust, Series 2005-2, Class A4, 2.11%(LIBOR03M+20bps), 8/25/44, Callable 8/25/20 @ 100 (b) | 1,429 | 1,380 | |||||||||
Hertz Vehicle Financing II LP, Series 2019-3A, Class A, 2.67%, 12/26/25 (a) (c) | 1,520 | 1,520 | |||||||||
HPEFS Equipment Trust, Series 2019-1A, Class C, 2.49%, 9/20/29, Callable 7/20/22 @ 100 (a) (c) | 766 | 767 | |||||||||
Navient Student Loan Trust, Series 2015-2, Class B, 3.21%(LIBOR01M+150bps), 8/25/50, Callable 3/25/28 @ 100 (b) | 1,800 | 1,768 | |||||||||
NP SPE II LLC, Series 2017-1A, Class A1, 3.37%, 10/21/47, Callable 10/20/27 @ 100 (a) (c) | 683 | 693 | |||||||||
OSCAR US Funding Trust IX LLC, Series 2018-2A, Class A4, 3.63%, 9/10/25 (a) (c) | 4,600 | 4,744 | |||||||||
SCF Equipment Leasing LLC, Series 2017-2A, Class A, 3.41%, 12/20/23, Callable 12/20/19 @ 100 (a) (c) | 1,237 | 1,247 | |||||||||
SLM Student Loan Trust, Series 2006-2, Class B, 2.16%(LIBOR03M+22bps), 1/25/41, Callable 4/25/32 @ 100 (b) | 1,993 | 1,807 | |||||||||
SLM Student Loan Trust, Series 2003-14, Class B, 2.49%(LIBOR03M+55bps), 10/25/65, Callable 1/25/29 @ 100 (b) | 712 | 670 | |||||||||
Synchrony Credit Card Master Note Trust, Series 2016-2, Class C, 2.95%, 5/15/24 (c) | 2,648 | 2,665 | |||||||||
Transportation Finance Equipment Trust, Series 2019-1, Class B, 2.06%, 5/23/24, Callable 5/23/23 @ 100 (a) (c) | 600 | 595 | |||||||||
Trinity Rail Leasing LLC, Series 2019-2A, Class A2, 3.10%, 10/18/49, Callable 10/17/20 @ 100 (a) (c) | 1,000 | 997 | |||||||||
Westlake Automobile Receivables Trust, Series 2018-2A, Class D, 4.00%, 1/16/24, Callable 9/15/21 @ 100 (a) (c) | 1,500 | 1,538 | |||||||||
Total Asset Backed Securities (Cost $35,430) | 35,946 | ||||||||||
Collateralized Mortgage Obligations (0.5%) | |||||||||||
Banc of America Commercial Mortgage Trust, Series 2006-3, Class AM, 5.86%, 7/10/44 (c) | 3,874 | 1,186 | |||||||||
Banc of America Commercial Mortgage Trust, Series 2008-1, Class AJ, 6.79%, 2/10/51 (c) | 130 | 136 | |||||||||
BANK, Series 2019-BNK20, Class A3, 3.01%, 9/15/61 | 1,750 | 1,814 | |||||||||
Barclays Commercial Mortgage Trust, Series 2019-C5, Class ASB, 2.99%, 11/15/52 | 1,322 | 1,367 | |||||||||
Benchmark Mortgage Trust, Series 2019-B14, Class A5, 3.05%, 12/15/61 | 2,269 | 2,355 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
BTH Mortgage-Backed Securities Trust, Series 2018-21, Class A, 4.28% (LIBOR01M+250bps), 10/7/21 (a) (b) | $ | 2,320 | $ | 2,323 | |||||||
COMM Mortgage Trust, Series 2019-GC44, Class ASB, 2.87%, 8/15/57 (d) | 1,701 | 1,751 | |||||||||
Credit Suisse Commercial Mortgage Trust, Series 2007-C1, Class AMFL, 1.95% (LIBOR01M+19bps), 2/15/40 (b) | 71 | 69 | |||||||||
CSAIL Commercial Mortgage Trust, Series 2016-C6, Class XA, 2.06%, 1/15/49 (c) (e) | 22,098 | 1,896 | |||||||||
DBJPM Mortgage Trust, Series 2016-SFC, Class A, 2.83%, 8/10/36 (a) | 1,000 | 1,015 | |||||||||
GE Commercial Mortgage Corp., Series 2007-C1, Class AM, 5.61%, 12/10/49 (c) | 579 | 557 | |||||||||
UBS Commercial Mortgage Trust, Series 2012-C1, Class XA, 2.26%, 5/10/45 (a) (c) | 21,592 | 830 | |||||||||
Total Collateralized Mortgage Obligations (Cost $17,352) | 15,299 | ||||||||||
Common Stocks (23.2%) | |||||||||||
Communication Services (2.1%): | |||||||||||
AMC Networks, Inc., Class A (f) (g) | 6,535 | 251 | |||||||||
AT&T, Inc. | 480,353 | 17,955 | |||||||||
CenturyLink, Inc. | 143,566 | 2,080 | |||||||||
Comcast Corp., Class A | 360,930 | 15,936 | |||||||||
Discovery, Inc., Class C (f) | 56,732 | 1,731 | |||||||||
Entravision Communications Corp., Class A | 63,449 | 180 | |||||||||
InterActive Corp. (f) | 6,953 | 1,549 | |||||||||
Liberty Media Corp-Liberty SiriusXM, Class A (f) | 35,661 | 1,737 | |||||||||
Omnicom Group, Inc. | 32,317 | 2,569 | |||||||||
Shenandoah Telecommunications Co. | 4,246 | 159 | |||||||||
Sinclair Broadcast Group, Inc., Class A | 6,695 | 233 | |||||||||
Sirius XM Holdings, Inc. (g) | 372,683 | 2,601 | |||||||||
Take-Two Interactive Software, Inc. (f) | 13,777 | 1,672 | |||||||||
Tegna, Inc. | 22,292 | 342 | |||||||||
Twitter, Inc. (f) | 38,928 | 1,203 | |||||||||
Verizon Communications, Inc. | 154,625 | 9,315 | |||||||||
Viacom, Inc., Class B | 62,493 | 1,504 | |||||||||
Vonage Holdings Corp. (f) | 11,195 | 89 | |||||||||
61,106 | |||||||||||
Consumer Discretionary (2.4%): | |||||||||||
American Axle & Manufacturing Holdings, Inc. (f) | 19,701 | 194 | |||||||||
Asbury Automotive Group, Inc. (f) | 1,866 | 207 | |||||||||
AutoZone, Inc. (f) | 1,792 | 2,111 | |||||||||
Bed Bath & Beyond, Inc. (g) | 21,664 | 316 | |||||||||
Best Buy Co., Inc. | 23,440 | 1,890 | |||||||||
Big Lots, Inc. | 4,372 | 91 | |||||||||
Bloomin' Brands, Inc. | 6,345 | 153 | |||||||||
Booking Holdings, Inc. (f) | 1,802 | 3,431 | |||||||||
Brunswick Corp. | 3,569 | 210 | |||||||||
Carnival Corp. | 45,803 | 2,065 | |||||||||
Carter's, Inc. | 5,289 | 546 | |||||||||
Cracker Barrel Old Country Store, Inc. (g) | 2,710 | 417 | |||||||||
Dana, Inc. | 13,572 | 230 | |||||||||
Deckers Outdoor Corp. (f) | 1,361 | 229 | |||||||||
Del Taco Restaurants, Inc. (f) | 13,226 | 99 | |||||||||
Dick's Sporting Goods, Inc. | 5,591 | 256 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Dollar General Corp. | 9,933 | $ | 1,563 | ||||||||
eBay, Inc. | 47,155 | 1,675 | |||||||||
Ethan Allen Interiors, Inc. | 8,410 | 150 | |||||||||
Foot Locker, Inc. | 15,099 | 605 | |||||||||
Ford Motor Co. | 320,292 | 2,901 | |||||||||
Gentex Corp. | 12,015 | 342 | |||||||||
Group 1 Automotive, Inc. | 3,186 | 328 | |||||||||
Hasbro, Inc. | 13,523 | 1,375 | |||||||||
Helen of Troy Ltd. (f) (g) | 676 | 109 | |||||||||
Hilton Worldwide Holdings, Inc. | 22,875 | 2,402 | |||||||||
Kontoor Brands, Inc. | 4,416 | 158 | |||||||||
La-Z-Boy, Inc. | 5,571 | 176 | |||||||||
Lennar Corp., Class A | 53,839 | 3,212 | |||||||||
Lowe's Cos., Inc. | 40,907 | 4,800 | |||||||||
McDonald's Corp. | 22,762 | 4,427 | |||||||||
Nike, Inc., Class B | 63,105 | 5,900 | |||||||||
Office Depot, Inc. | 96,633 | 215 | |||||||||
O'Reilly Automotive, Inc. (f) | 3,051 | 1,349 | |||||||||
Penske Automotive Group, Inc. | 2,742 | 138 | |||||||||
Ross Stores, Inc. | 19,421 | 2,256 | |||||||||
Starbucks Corp. | 83,637 | 7,144 | |||||||||
Steven Madden Ltd. | 5,501 | 234 | |||||||||
Sturm Ruger & Co., Inc. | 3,921 | 179 | |||||||||
The Buckle, Inc. (g) | 6,795 | 189 | |||||||||
The Home Depot, Inc. | 48,399 | 10,673 | |||||||||
Thor Industries, Inc. | 5,530 | 353 | |||||||||
Toll Brothers, Inc. | 5,880 | 236 | |||||||||
Williams-Sonoma, Inc. | 4,354 | 302 | |||||||||
Yum! Brands, Inc. | 24,392 | 2,456 | |||||||||
68,292 | |||||||||||
Consumer Staples (1.4%): | |||||||||||
Altria Group, Inc. | 88,148 | 4,381 | |||||||||
Cal-Maine Foods, Inc. | 3,767 | 164 | |||||||||
Colgate-Palmolive Co. | 33,581 | 2,277 | |||||||||
Flowers Foods, Inc. | 14,986 | 322 | |||||||||
Hostess Brands, Inc. (f) | 14,387 | 194 | |||||||||
Ingles Markets, Inc., Class A | 4,087 | 182 | |||||||||
Kimberly-Clark Corp. | 9,020 | 1,230 | |||||||||
Nu Skin Enterprises, Inc., Class A | 2,912 | 111 | |||||||||
Sanderson Farms, Inc. | 1,122 | 186 | |||||||||
Spectrum Brands Holdings, Inc. | 5,278 | 330 | |||||||||
Sysco Corp. | 21,421 | 1,725 | |||||||||
The Procter & Gamble Co. | 122,171 | 14,912 | |||||||||
Tyson Foods, Inc., Class A | 24,080 | 2,164 | |||||||||
US Foods Holding Corp. (f) | 11,716 | 466 | |||||||||
Walgreens Boots Alliance, Inc. | 77,462 | 4,617 | |||||||||
Walmart, Inc. | 72,068 | 8,582 | |||||||||
41,843 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Energy (1.1%): | |||||||||||
Chevron Corp. | 41,932 | $ | 4,911 | ||||||||
ConocoPhillips | 49,490 | 2,966 | |||||||||
Core Laboratories N.V. | 4,623 | 202 | |||||||||
Delek US Holdings, Inc. | 12,799 | 439 | |||||||||
Dril-Quip, Inc. (f) | 4,682 | 198 | |||||||||
Exxon Mobil Corp. | 107,850 | 7,348 | |||||||||
HollyFrontier Corp. | 30,683 | 1,582 | |||||||||
Laredo Petroleum, Inc. (f) | 49,758 | 107 | |||||||||
Marathon Petroleum Corp. | 49,673 | 3,012 | |||||||||
Matador Resources Co. (f) | 11,216 | 158 | |||||||||
Occidental Petroleum Corp. | 46,556 | 1,796 | |||||||||
Par Pacific Holdings, Inc. (f) | 11,481 | 286 | |||||||||
PBF Energy, Inc., Class A | 16,237 | 508 | |||||||||
Phillips 66 | 46,806 | 5,370 | |||||||||
Valero Energy Corp. | 36,916 | 3,525 | |||||||||
32,408 | |||||||||||
Financials (3.2%): | |||||||||||
Ally Financial, Inc. | 65,850 | 2,097 | |||||||||
American Equity Investment Life Holding Co. | 11,919 | 354 | |||||||||
Bank of Hawaii Corp. | 6,797 | 612 | |||||||||
BankUnited, Inc. | 15,033 | 527 | |||||||||
Cadence BanCorp | 19,328 | 319 | |||||||||
Capital One Financial Corp. | 50,840 | 5,085 | |||||||||
Chimera Investment Corp. (g) | 24,544 | 500 | |||||||||
Citigroup, Inc. | 195,691 | 14,701 | |||||||||
Cullen/Frost Bankers, Inc. (g) | 5,935 | 555 | |||||||||
Discover Financial Services | 59,245 | 5,028 | |||||||||
Employers Holdings, Inc. | 8,665 | 372 | |||||||||
Essent Group Ltd. | 13,286 | 725 | |||||||||
FactSet Research Systems, Inc. | 7,019 | 1,822 | |||||||||
First BanCorp. | 17,896 | 188 | |||||||||
Great Western BanCorp, Inc. | 13,425 | 461 | |||||||||
Intercontinental Exchange, Inc. | 24,798 | 2,335 | |||||||||
JPMorgan Chase & Co. | 81,011 | 10,675 | |||||||||
Ladder Capital Corp. | 24,590 | 425 | |||||||||
Legg Mason, Inc. | 8,742 | 342 | |||||||||
Lincoln National Corp. | 33,491 | 1,978 | |||||||||
LPL Financial Holdings, Inc. | 5,914 | 546 | |||||||||
Marsh & McLennan Cos., Inc. | 20,098 | 2,172 | |||||||||
MetLife, Inc. | 69,613 | 3,474 | |||||||||
MGIC Investment Corp. | 17,532 | 253 | |||||||||
Nelnet, Inc., Class A | 6,340 | 399 | |||||||||
Primerica, Inc. | 3,657 | 489 | |||||||||
Radian Group, Inc. | 12,963 | 335 | |||||||||
Regions Financial Corp. | 170,294 | 2,834 | |||||||||
S&P Global, Inc. | 27,357 | 7,240 | |||||||||
Synchrony Financial | 83,259 | 3,115 | |||||||||
Synovus Financial Corp. | 5,418 | 206 | |||||||||
T. Rowe Price Group, Inc. | 22,220 | 2,746 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
The Allstate Corp. | 18,642 | $ | 2,076 | ||||||||
The Progressive Corp. | 48,646 | 3,554 | |||||||||
The Travelers Cos., Inc. | 11,834 | 1,618 | |||||||||
U.S. Bancorp | 38,512 | 2,312 | |||||||||
Universal Insurance Holdings, Inc. | 5,157 | 150 | |||||||||
Waddell & Reed Financial, Inc., Class A (g) | 21,863 | 353 | |||||||||
Walker & Dunlop, Inc. | 2,663 | 175 | |||||||||
Webster Financial Corp. | 6,954 | 339 | |||||||||
Wells Fargo & Co. | 129,200 | 7,036 | |||||||||
Western Alliance Bancorp | 11,625 | 606 | |||||||||
World Acceptance Corp. (f) | 1,992 | 189 | |||||||||
91,318 | |||||||||||
Health Care (3.1%): | |||||||||||
Abbott Laboratories | 51,318 | 4,384 | |||||||||
AbbVie, Inc. (g) | 112,902 | 9,905 | |||||||||
Acadia Healthcare Co., Inc. (f) | 5,450 | 175 | |||||||||
Amedisys, Inc. (f) | 3,093 | 504 | |||||||||
Amgen, Inc. | 44,025 | 10,333 | |||||||||
AMN Healthcare Services, Inc. (f) | 5,577 | 332 | |||||||||
ANI Pharmaceuticals, Inc. (f) | 1,685 | 104 | |||||||||
Biogen, Inc. (f) | 16,977 | 5,090 | |||||||||
Bio-Rad Laboratories, Inc., Class A (f) | 764 | 282 | |||||||||
Bristol-Myers Squibb Co. | 50,447 | 2,872 | |||||||||
Bruker Corp. | 8,592 | 440 | |||||||||
Cambrex Corp. (f) | 2,022 | 121 | |||||||||
Chemed Corp. | 1,116 | 480 | |||||||||
Corcept Therapeutics, Inc. (f) | 15,698 | 201 | |||||||||
Covetrus, Inc. (f) (g) | 15,232 | 218 | |||||||||
CVS Health Corp. | 58,415 | 4,396 | |||||||||
Danaher Corp. | 17,617 | 2,572 | |||||||||
Eagle Pharmaceuticals, Inc. (f) | 1,822 | 107 | |||||||||
Edwards Lifesciences Corp. (f) | 8,058 | 1,974 | |||||||||
Eli Lilly & Co. | 26,593 | 3,121 | |||||||||
Emergent BioSolutions, Inc. (f) | 2,501 | 137 | |||||||||
Encompass Health Corp. | 5,072 | 359 | |||||||||
Exelixis, Inc. (f) | 25,325 | 421 | |||||||||
Gilead Sciences, Inc. | 103,670 | 6,971 | |||||||||
Halozyme Therapeutics, Inc. (f) | 11,960 | 232 | |||||||||
HealthEquity, Inc. (f) | 3,010 | 189 | |||||||||
Hill-Rom Holdings, Inc. | 4,134 | 443 | |||||||||
Horizon Therapeutics PLC (f) | 6,111 | 200 | |||||||||
IQVIA Holdings, Inc. (f) | 14,090 | 2,057 | |||||||||
Laboratory Corp. of America Holdings (f) | 9,911 | 1,708 | |||||||||
Lantheus Holdings, Inc. (f) | 3,768 | 79 | |||||||||
Masimo Corp. (f) | 2,983 | 463 | |||||||||
McKesson Corp. | 14,046 | 2,032 | |||||||||
Medpace Holdings, Inc. (f) | 2,202 | 169 | |||||||||
Merck & Co., Inc. | 121,007 | 10,549 | |||||||||
Meridian Bioscience, Inc. | 20,530 | 188 | |||||||||
Molina Healthcare, Inc. (f) | 3,256 | 441 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Novocure Ltd. (f) | 2,359 | $ | 217 | ||||||||
Patterson Cos., Inc. | 15,168 | 295 | |||||||||
PerkinElmer, Inc. | 5,781 | 537 | |||||||||
Pfizer, Inc. | 295,271 | 11,375 | |||||||||
Phibro Animal Health Corp., Class A | 6,629 | 161 | |||||||||
PRA Health Sciences, Inc. (f) | 3,118 | 339 | |||||||||
Prestige Consumer Healthcare, Inc. (f) | 6,243 | 236 | |||||||||
Select Medical Holdings Corp. (f) | 16,777 | 371 | |||||||||
Stryker Corp. | 11,231 | 2,301 | |||||||||
Supernus Pharmaceuticals, Inc. (f) | 7,234 | 169 | |||||||||
Zoetis, Inc. | 18,814 | 2,267 | |||||||||
92,517 | |||||||||||
Industrials (2.1%): | |||||||||||
3M Co. | 28,063 | 4,764 | |||||||||
ACCO Brands Corp. | 19,925 | 182 | |||||||||
AECOM (f) | 11,172 | 484 | |||||||||
Aerojet Rocketdyne Holdings, Inc. (f) | 2,147 | 95 | |||||||||
Air Transport Services Group, Inc. (f) | 3,609 | 89 | |||||||||
Allison Transmission Holdings, Inc. | 9,126 | 442 | |||||||||
Apogee Enterprises, Inc. | 7,737 | 296 | |||||||||
Atkore International Group, Inc. (f) | 12,033 | 502 | |||||||||
Avis Budget Group, Inc. (f) | 6,334 | 188 | |||||||||
Cintas Corp. (g) | 10,459 | 2,689 | |||||||||
Cornerstone Building Brands, Inc. (f) | 11,700 | 81 | |||||||||
Crane Co. | 4,822 | 401 | |||||||||
Cummins, Inc. | 11,315 | 2,069 | |||||||||
Delta Air Lines, Inc. | 37,247 | 2,135 | |||||||||
Deluxe Corp. | 4,620 | 236 | |||||||||
Eaton Corp. PLC | 49,427 | 4,572 | |||||||||
EnPro Industries, Inc. | 2,523 | 168 | |||||||||
FTI Consulting, Inc. (f) | 2,412 | 263 | |||||||||
Generac Holdings, Inc. (f) | 2,615 | 258 | |||||||||
Herman Miller, Inc. | 8,132 | 389 | |||||||||
Hexcel Corp. | 1,804 | 144 | |||||||||
Hillenbrand, Inc. | 8,255 | 261 | |||||||||
IAA, Inc. (f) | 4,373 | 198 | |||||||||
IDEX Corp. | 13,649 | 2,221 | |||||||||
Illinois Tool Works, Inc. | 11,844 | 2,065 | |||||||||
Ingersoll-Rand PLC (g) | 12,189 | 1,598 | |||||||||
Johnson Controls International PLC | 58,530 | 2,507 | |||||||||
KAR Auction Services, Inc. | 5,588 | 118 | |||||||||
Knoll, Inc. | 12,268 | 338 | |||||||||
L3Harris Technologies, Inc. | 9,664 | 1,943 | |||||||||
Lockheed Martin Corp. | 10,273 | 4,017 | |||||||||
Masonite International Corp. (f) | 2,721 | 195 | |||||||||
Meritor, Inc. (f) | 15,940 | 402 | |||||||||
MSC Industrial Direct Co., Inc. | 4,553 | 334 | |||||||||
Northrop Grumman Corp. | 6,656 | 2,341 | |||||||||
nVent Electric PLC | 8,584 | 212 | |||||||||
Oshkosh Corp. | 2,525 | 228 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
PACCAR, Inc. | 40,146 | $ | 3,266 | ||||||||
Patrick Industries, Inc. (f) | 4,681 | 232 | |||||||||
Pitney Bowes, Inc. | 33,147 | 156 | |||||||||
Regal Beloit Corp. | 5,335 | 436 | |||||||||
Rockwell Automation, Inc. | 10,037 | 1,965 | |||||||||
Roper Technologies, Inc. | 6,703 | 2,416 | |||||||||
Rush Enterprises, Inc., Class A | 6,999 | 321 | |||||||||
Ryder System, Inc. | 3,989 | 209 | |||||||||
Snap-on, Inc. | 9,458 | 1,518 | |||||||||
Spirit Aerosystems Holdings, Inc., Class A | 21,188 | 1,843 | |||||||||
Steelcase, Inc., Class A | 15,563 | 282 | |||||||||
The Boeing Co. | 25,589 | 9,371 | |||||||||
The Greenbrier Cos., Inc. (g) | 4,226 | 119 | |||||||||
The Timken Co. | 9,353 | 492 | |||||||||
Trinity Industries, Inc. | 9,024 | 190 | |||||||||
Wabash National Corp. | 21,134 | 333 | |||||||||
Waste Management, Inc. | 15,888 | 1,794 | |||||||||
Werner Enterprises, Inc. | 5,536 | 204 | |||||||||
WESCO International, Inc. (f) | 7,009 | 369 | |||||||||
64,941 | |||||||||||
Information Technology (5.6%): | |||||||||||
Apple, Inc. | 133,658 | 35,721 | |||||||||
Automatic Data Processing, Inc. | 12,901 | 2,203 | |||||||||
Belden, Inc. | 3,223 | 173 | |||||||||
CACI International, Inc., Class A (f) | 1,442 | 345 | |||||||||
Cadence Design Systems, Inc. (f) | 24,560 | 1,725 | |||||||||
Cardtronics PLC, Class A (f) | 3,008 | 127 | |||||||||
CDW Corp. | 13,864 | 1,872 | |||||||||
Ciena Corp. (f) | 4,329 | 164 | |||||||||
Cirrus Logic, Inc. (f) | 6,414 | 460 | |||||||||
Coherent, Inc. (f) | 2,947 | 445 | |||||||||
CoreLogic, Inc. (f) | 7,126 | 295 | |||||||||
CSG Systems International, Inc. | 7,656 | 438 | |||||||||
Euronet Worldwide, Inc. (f) | 3,396 | 534 | |||||||||
Fair Isaac Corp. (f) | 845 | 311 | |||||||||
Fiserv, Inc. (f) | 17,162 | 1,995 | |||||||||
Hewlett Packard Enterprises Co. | 127,282 | 2,015 | |||||||||
HP, Inc. | 135,738 | 2,726 | |||||||||
Insight Enterprises, Inc. (f) | 3,588 | 235 | |||||||||
Intel Corp. | 230,466 | 13,378 | |||||||||
InterDigital, Inc. | 4,277 | 243 | |||||||||
International Business Machines Corp. | 74,077 | 9,960 | |||||||||
Intuit, Inc. | 10,996 | 2,847 | |||||||||
J2 Global, Inc. | 5,283 | 513 | |||||||||
Jabil, Inc. | 9,757 | 379 | |||||||||
KEMET Corp. | 7,802 | 208 | |||||||||
Kulicke & Soffa Industries, Inc. | 10,408 | 261 | |||||||||
Lam Research Corp. | 14,623 | 3,902 | |||||||||
LogMeIn, Inc. | 3,133 | 244 | |||||||||
Manhattan Associates, Inc. (f) | 6,505 | 543 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Maximus, Inc. | 6,676 | $ | 498 | ||||||||
Methode Electronics, Inc. | 6,096 | 227 | |||||||||
Microsoft Corp. (h) | 182,500 | 27,628 | |||||||||
MKS Instruments, Inc. | 2,335 | 248 | |||||||||
NCR Corp. (f) | 14,047 | 461 | |||||||||
NIC, Inc. | 17,156 | 389 | |||||||||
Oracle Corp. | 183,460 | 10,299 | |||||||||
Paylocity Holding Corp. (f) | 1,423 | 174 | |||||||||
PayPal Holdings, Inc. (f) | 40,341 | 4,357 | |||||||||
Perspecta, Inc. | 9,887 | 273 | |||||||||
QUALCOMM, Inc. | 33,644 | 2,811 | |||||||||
Science Applications International Corp. | 3,495 | 298 | |||||||||
Seagate Technology PLC | 29,863 | 1,782 | |||||||||
TE Connectivity Ltd. | 17,016 | 1,578 | |||||||||
Tech Data Corp. (f) | 3,283 | 476 | |||||||||
Teradyne, Inc. | 10,378 | 650 | |||||||||
Texas Instruments, Inc. | 29,954 | 3,601 | |||||||||
The Hackett Group, Inc. | 23,761 | 364 | |||||||||
Ultra Clean Holdings, Inc. (f) | 19,696 | 438 | |||||||||
VeriSign, Inc. (f) | 10,124 | 1,931 | |||||||||
Visa, Inc., Class A | 54,321 | 10,024 | |||||||||
Western Digital Corp. | 20,227 | 1,018 | |||||||||
153,787 | |||||||||||
Materials (0.7%): | |||||||||||
Air Products & Chemicals, Inc. | 9,951 | 2,352 | |||||||||
Berry Global Group, Inc. (f) | 11,122 | 519 | |||||||||
Celanese Corp., Series A | 13,497 | 1,695 | |||||||||
Cleveland-Cliffs, Inc. (g) | 13,498 | 108 | |||||||||
Corteva, Inc. | 39,870 | 1,037 | |||||||||
Domtar Corp. | 8,688 | 324 | |||||||||
Huntsman Corp. | 10,468 | 237 | |||||||||
Hycroft Mining Corp. (f) (i) (l) | 216,393 | 2 | |||||||||
Kraton Corp. (f) | 5,692 | 128 | |||||||||
LyondellBasell Industries NV, Class A | 46,380 | 4,292 | |||||||||
Nucor Corp. | 38,510 | 2,170 | |||||||||
Reliance Steel & Aluminum Co. | 4,848 | 572 | |||||||||
Resolute Forest Products, Inc. | 39,464 | 158 | |||||||||
Schweitzer-Mauduit International, Inc. | 8,673 | 381 | |||||||||
Silgan Holdings, Inc. | 16,211 | 499 | |||||||||
The Sherwin-Williams Co. | 3,948 | 2,302 | |||||||||
Trinseo SA | 7,001 | 266 | |||||||||
Warrior Met Coal, Inc. | 9,241 | 190 | |||||||||
Westrock Co. | 55,369 | 2,234 | |||||||||
19,466 | |||||||||||
Real Estate (0.9%): | |||||||||||
Brixmor Property Group, Inc. | 18,057 | 396 | |||||||||
CBRE Group, Inc., Class A (f) | 68,376 | 3,899 | |||||||||
CoreCivic, Inc. | 13,038 | 198 | |||||||||
Crown Castle International Corp. (g) | 18,743 | 2,505 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
EPR Properties (g) | 6,189 | $ | 439 | ||||||||
Equity Residential (g) | 20,587 | 1,752 | |||||||||
Essex Property Trust, Inc. | 3,828 | 1,195 | |||||||||
Gaming and Leisure Properties, Inc. | 16,807 | 709 | |||||||||
Host Hotels & Resorts, Inc. | 175,186 | 3,064 | |||||||||
Jones Lang LaSalle, Inc. | 1,590 | 264 | |||||||||
Kimco Realty Corp. | 107,746 | 2,329 | |||||||||
Lamar Advertising Co., Class A | 8,436 | 704 | |||||||||
LTC Properties, Inc. | 11,580 | 542 | |||||||||
Medical Properties Trust, Inc. | 36,560 | 759 | |||||||||
Omega Healthcare Investors, Inc. | 9,535 | 401 | |||||||||
Outfront Media, Inc., Class A | 4,824 | 121 | |||||||||
PotlatchDeltic Corp. | 10,856 | 471 | |||||||||
Public Storage (g) | 4,691 | 988 | |||||||||
Service Properties Trust | 15,041 | 350 | |||||||||
Spirit Realty Capital, Inc. | 3,087 | 162 | |||||||||
Tanger Factory Outlet Centers, Inc. (g) | 25,741 | 392 | |||||||||
The GEO Group, Inc. | 20,826 | 289 | |||||||||
Ventas, Inc. (g) | 16,090 | 938 | |||||||||
Vornado Realty Trust (g) | 44,588 | 2,879 | |||||||||
Welltower, Inc. (g) | 12,854 | 1,087 | |||||||||
26,833 | |||||||||||
Utilities (0.6%): | |||||||||||
Consolidated Edison, Inc. | 16,463 | 1,430 | |||||||||
Dominion Energy, Inc. | 18,247 | 1,517 | |||||||||
DTE Energy Co. | 9,441 | 1,180 | |||||||||
Duke Energy Corp. | 39,448 | 3,477 | |||||||||
Evergy, Inc. | 30,408 | 1,924 | |||||||||
Exelon Corp. | 62,338 | 2,768 | |||||||||
IDACORP, Inc. | 4,258 | 447 | |||||||||
New Jersey Resources Corp. | 10,753 | 457 | |||||||||
NextEra Energy, Inc. | 11,820 | 2,764 | |||||||||
PPL Corp. | 60,001 | 2,042 | |||||||||
Southwest Gas Holdings, Inc. | 5,423 | 411 | |||||||||
The Southern Co. | 21,788 | 1,351 | |||||||||
19,768 | |||||||||||
Total Common Stocks (Cost $604,448) | 672,279 | ||||||||||
Preferred Stocks (0.6%) | |||||||||||
Communication Services (0.2%): | |||||||||||
Qwest Corp., 6.50%, 9/1/56 | 220,000 | 5,487 | |||||||||
Consumer Staples (0.2%): | |||||||||||
CHS, Inc., Series 1, cumulative redeemable, 7.88%, 9/26/23 (j) | 30,000 | 827 | |||||||||
Dairy Farmers of America, Inc., cumulative redeemable, 7.88%, 1/14/20 (a) (j) | 45,000 | 4,432 | |||||||||
5,259 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Financials (0.2%): | |||||||||||
American Overseas Group Ltd., Series A, non-cumulative, 7.50% (LIBOR03M+356bps), 12/15/66 (b) (i) (l) | 3,500 | $ | 875 | ||||||||
Delphi Financial Group, Inc., 5.10% (LIBOR03M+319bps), 5/15/37 (b) (l) | 309,253 | 6,803 | |||||||||
7,678 | |||||||||||
Total Preferred Stocks (Cost $20,110) | 18,424 | ||||||||||
Senior Secured Loans (0.1%) | |||||||||||
Academy Ltd., 1st Lien Term Loan B, 5.78%(LIBOR01M+400bps), 7/2/22, Callable 1/10/20 @ 100 (b) | $ | 5,254 | 3,901 | ||||||||
Total Senior Secured Loans (Cost $4,504) | 3,901 | ||||||||||
Corporate Bonds (7.0%) | |||||||||||
Communication Services (0.1%): | |||||||||||
Verizon Communications, Inc., 4.50%, 8/10/33 | 3,403 | 3,984 | |||||||||
Consumer Discretionary (0.0%): | |||||||||||
Hasbro, Inc., 3.55%, 11/19/26, Callable 9/19/26 @ 100 | 1,361 | 1,366 | |||||||||
Nordstrom, Inc., 4.38%, 4/1/30, Callable 1/1/30 @ 100 | 1,134 | 1,147 | |||||||||
Volkswagen Group of America Finance LLC, 3.20%, 9/26/26, Callable 7/26/26 @ 100 (a) | 711 | 726 | |||||||||
3,239 | |||||||||||
Consumer Staples (0.3%): | |||||||||||
Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide, Inc., 4.70%, 2/1/36, Callable 8/1/35 @ 100 | 2,836 | 3,305 | |||||||||
BAT Capital Corp., 2.79%, 9/6/24, Callable 8/6/24 @ 100 | 3,000 | 3,001 | |||||||||
Kraft Heinz Foods Co., 3.75%, 4/1/30, Callable 1/1/30 @ 100 (a) | 1,277 | 1,306 | |||||||||
Unilever Capital Corp., 2.60%, 5/5/24, Callable 3/5/24 @ 100 | 3,000 | 3,068 | |||||||||
10,680 | |||||||||||
Energy (0.7%): | |||||||||||
Cheniere Corpus Christi Holdings LLC, 3.70%, 11/15/29, Callable 5/18/29 @ 100 (a) | 2,837 | 2,867 | |||||||||
Diamondback Energy, Inc., 3.25%, 12/1/26, Callable 10/1/26 @ 100 (d) | 1,702 | 1,703 | |||||||||
Enable Midstream Partners LP, 4.15%, 9/15/29, Callable 6/15/29 @ 100 | 3,000 | 2,805 | |||||||||
Enbridge Energy Partners LP, 7.38%, 10/15/45, Callable 4/15/45 @ 100 (h) | 1,300 | 1,927 | |||||||||
Enterprise TE Partners LP, 5.30%(LIBOR03M+278bps), 6/1/67, Callable 1/13/20 @ 100 (b) | 500 | 466 | |||||||||
EQM Midstream Partners LP, 4.75%, 7/15/23, Callable 6/15/23 @ 100 | 5,600 | 5,466 | |||||||||
National Oilwell Varco, Inc., 3.60%, 12/1/29, Callable 9/1/29 @ 100 | 2,269 | 2,212 | |||||||||
Occidental Petroleum Corp., 3.50%, 8/15/29, Callable 5/15/29 @ 100 | 419 | 423 | |||||||||
Southern Union Co., 4.93%(LIBOR03M+302bps), 11/1/66, Callable 1/13/20 @ 100 (b) | 2,352 | 1,635 | |||||||||
Targa Resources Partners LP/Targa Resources Partners Finance Corp., 5.50%, 3/1/30, Callable 3/1/25 @ 102.75 (a) | 1,134 | 1,137 | |||||||||
20,641 | |||||||||||
Financials (3.4%): | |||||||||||
Allfirst Preferred Capital Trust, 3.50%(LIBOR03M+150bps), 7/15/29, Callable 1/13/20 @ 100 (b) | 1,000 | 947 | |||||||||
AmTrust Financial Services, Inc., 6.13%, 8/15/23 | 3,607 | 3,665 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Ares Capital Corp., 3.63%, 1/19/22, Callable 12/19/21 @ 100 (h) | $ | 5,950 | $ | 6,041 | |||||||
Assurant, Inc., 3.70%, 2/22/30, Callable 11/22/29 @ 100 | 1,154 | 1,170 | |||||||||
BancorpSouth Bank, 4.13%(LIBOR03M+247bps), 11/20/29, Callable 11/20/24 @ 100 (b) | 1,458 | 1,468 | |||||||||
BBVA USA, 3.88%, 4/10/25, Callable 3/10/25 @ 100 | 2,700 | 2,845 | |||||||||
BMW US Capital LLC, 3.25%, 8/14/20 (a) (h) | 5,700 | 5,749 | |||||||||
Capital One NA, 2.15%, 9/6/22, Callable 8/6/22 @ 100 | 3,000 | 2,995 | |||||||||
Cullen/Frost Capital Trust II, 3.69%(LIBOR03M+155bps), 3/1/34, Callable 1/13/20 @ 100 (b) | 9,000 | 7,666 | |||||||||
First Maryland Capital I, 3.00%(LIBOR03M+100bps), 1/15/27, Callable 1/13/20 @ 100 (b) | 4,000 | 3,781 | |||||||||
Ford Motor Credit Co. LLC, 4.06%, 11/1/24, Callable 10/1/24 @ 100 | 2,000 | 2,012 | |||||||||
Global Atlantic Fin Co., 4.40%, 10/15/29, Callable 7/15/29 @ 100 (a) | 1,459 | 1,449 | |||||||||
Harley-Davidson Financial Services, Inc., 3.55%, 5/21/21 (a) (h) | 5,700 | 5,800 | |||||||||
HSB Group, Inc., 2.91%(LIBOR03M+91bps), 7/15/27, Callable 1/13/20 @ 100 (b) | 4,550 | 3,918 | |||||||||
Huntington Capital II, 2.74%(LIBOR03M+63bps), 6/15/28, Callable 1/13/20 @ 100 (b) | 2,000 | 1,798 | |||||||||
Hyundai Capital America, 3.75%, 7/8/21 (a) (h) | 5,700 | 5,810 | |||||||||
Level 3 Financing, Inc., 3.88%, 11/15/29, Callable 8/15/29 @ 100 (a) | 2,268 | 2,281 | |||||||||
Manufactures & Traders Trust Co., 2.78%(LIBOR03M+64bps), 12/1/21, Callable 1/13/20 @ 100 (b) (h) | 6,039 | 6,038 | |||||||||
Nationwide Mutual Insurance Co., 4.41%(LIBOR03M+229bps), 12/15/24, Callable 1/13/20 @ 100 (a) (b) | 11,510 | 11,456 | |||||||||
Pinnacle Financial Partners, Inc., 4.13%(LIBOR03M+278bps), 9/15/29, Callable 9/15/24 @ 100 (b) | 2,000 | 2,009 | |||||||||
PNC Bank NA, 2.70%, 10/22/29 | 1,500 | 1,499 | |||||||||
Prudential Financial, Inc., 5.62%(LIBOR03M+392bps), 6/15/43, Callable 6/15/23 @ 100 (b) | 5,400 | 5,861 | |||||||||
Signature Bank, 4.13%(LIBOR03M+256bps), 11/1/29, Callable 11/1/24 @ 100 (b) | 2,000 | 2,025 | |||||||||
SunTrust Capital, 2.58%(LIBOR03M+67bps), 5/15/27, Callable 1/13/20 @ 100 (b) | 1,000 | 949 | |||||||||
Texas Capital Bank NA, 5.25%, 1/31/26 | 1,135 | 1,186 | |||||||||
The Allstate Corp., 5.75%(LIBOR03M+294bps), 8/15/53, Callable 8/15/23 @ 100 (b) | 1,180 | 1,273 | |||||||||
Zions Bancorp NA, 3.25%, 10/29/29, Callable 7/29/29 @ 100 | 2,269 | 2,243 | |||||||||
93,934 | |||||||||||
Health Care (0.5%): | |||||||||||
AbbVie, Inc., 3.20%, 11/21/29, Callable 8/21/29 @ 100 (a) | 2,268 | 2,301 | |||||||||
Commonspirit Health, 3.35%, 10/1/29, Callable 4/1/29 @ 100 | 1,500 | 1,508 | |||||||||
CVS Health Corp., 3.25%, 8/15/29, Callable 5/15/29 @ 100 | 3,747 | 3,812 | |||||||||
HCA, Inc., 5.13%, 6/15/39, Callable 12/15/38 @ 100 | 2,836 | 3,144 | |||||||||
Laboratory Corp. of America Holdings, 2.95%, 12/1/29, Callable 9/1/29 @ 100 | 1,702 | 1,708 | |||||||||
12,473 | |||||||||||
Industrials (1.0%): | |||||||||||
Ashtead Capital, Inc. 4.00%, 5/1/28, Callable 5/1/23 @ 102 (a) | 1,405 | 1,407 | |||||||||
4.25%, 11/1/29, Callable 11/1/24 @ 102.13 (a) | 304 | 308 | |||||||||
BNSF Funding Trust, 6.61%(LIBOR03M+235bps), 12/15/55, Callable 1/15/26 @ 100 (b) | 5,325 | 5,955 | |||||||||
Dover Corp., 2.95%, 11/4/29, Callable 8/4/29 @ 100 | 1,702 | 1,716 | |||||||||
General Electric Co., 5.50%, 1/8/20, MTN | 1,725 | 1,730 |
See notes to financial statements.
14
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Hillenbrand, Inc., 4.50%, 9/15/26, Callable 7/15/26 @ 100 | $ | 1,500 | $ | 1,542 | |||||||
Ryder System, Inc. 3.50%, 6/1/21, MTN (h) | 5,750 | 5,854 | |||||||||
2.90%, 12/1/26, Callable 10/1/26 @ 100, MTN | 2,837 | 2,850 | |||||||||
The Conservation Fund A Nonprofit Corp., 3.47%, 12/15/29, Callable 9/15/29 @ 100 | 2,300 | 2,318 | |||||||||
United Airlines Pass Through Trust, 2.90%, 11/1/29 | 3,000 | 3,014 | |||||||||
26,694 | |||||||||||
Information Technology (0.3%): | |||||||||||
Amphenol Corp., 2.80%, 2/15/30, Callable 11/15/29 @ 100 | 3,000 | 2,978 | |||||||||
Keysight Technologies, Inc., 3.00%, 10/30/29, Callable 7/30/29 @ 100 | 2,039 | 2,039 | |||||||||
Microsoft Corp., 3.45%, 8/8/36, Callable 2/8/36 @ 100 | 3,686 | 4,053 | |||||||||
9,070 | |||||||||||
Materials (0.1%): | |||||||||||
Packaging Corp. of America, 3.00%, 12/15/29, Callable 9/15/29 @ 100 | 2,836 | 2,858 | |||||||||
Real Estate (0.2%): | |||||||||||
Lexington Realty Trust, 4.25%, 6/15/23, Callable 3/15/23 @ 100 | 1,400 | 1,435 | |||||||||
Mid-America Apartments LP, 2.75%, 3/15/30, Callable 12/15/29 @ 100 | 2,836 | 2,838 | |||||||||
Sabra Health Care LP, 5.13%, 8/15/26, Callable 5/15/26 @ 100 | 1,000 | 1,075 | |||||||||
SBA Tower Trust, 2.84%, 1/15/25 (a) | 1,125 | 1,128 | |||||||||
VICI Properties LP/VICI Note Co., Inc., 4.63%, 12/1/29, Callable 12/1/24 @ 102.31 (a) | 262 | 270 | |||||||||
6,746 | |||||||||||
Utilities (0.4%): | |||||||||||
Alabama Power Co., 3.85%, 12/1/42 | 1,702 | 1,853 | |||||||||
CenterPoint Energy, Inc., 2.50%, 9/1/24, Callable 8/1/24 @ 100 | 2,000 | 2,001 | |||||||||
Cleco Corporate Holdings LLC, 3.38%, 9/15/29, Callable 6/11/29 @ 100 (a) | 1,650 | 1,642 | |||||||||
Duke Energy Florida LLC, 3.85%, 11/15/42, Callable 5/15/42 @ 100 | 1,702 | 1,860 | |||||||||
NextEra Energy Capital Holdings, Inc., 3.34%, 9/1/20 | 3,800 | 3,834 | |||||||||
11,190 | |||||||||||
Total Corporate Bonds (Cost $198,068) | 201,509 | ||||||||||
Yankee Dollars (1.0%) | |||||||||||
Energy (0.0% (k)): | |||||||||||
Petroleos Mexicanos, 6.49%, 1/23/27, Callable 11/23/26 @ 100 (a) | 973 | 1,025 | |||||||||
Financials (0.8%): | |||||||||||
Athene Holding Ltd., 4.13%, 1/12/28, Callable 10/12/27 @ 100 | 5,750 | 5,930 | |||||||||
Deutsche Bank AG, 3.96%(SOFR+258bps), 11/26/25, Callable 11/26/24 @ 100 (b) | 1,701 | 1,712 | |||||||||
Newcrest Finance Pty Ltd., 4.45%, 11/15/21 (a) (h) | 3,000 | 3,108 | |||||||||
QBE Capital Funding III Ltd., 7.25%(USSW10+405bps), 5/24/41, Callable 5/24/21 @ 100 (a) (b) | 5,900 | 6,233 | |||||||||
Schahin II Finance Co. SPV Ltd. 8.00%, 5/25/20 PIK (a) (i) (n) (p) | 111 | 103 | |||||||||
5.88%, 9/25/22 (a) (l) (q) | 4,465 | 333 | |||||||||
Sumitomo Mitsui Financial Group, Inc., 2.45%, 9/27/24 | 1,600 | 1,600 | |||||||||
Transcanada Trust, 5.63%(LIBOR03M+353bps), 5/20/75, Callable 5/20/25 @ 100 (b) | 1,400 | 1,462 | |||||||||
20,481 |
See notes to financial statements.
15
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Industrials (0.1%): | |||||||||||
CK Hutchison International 19 II Ltd., 2.75%, 9/6/29, Callable 6/6/29 @ 100 (a) | $ | 3,000 | $ | 2,957 | |||||||
Materials (0.1%): | |||||||||||
Braskem Finance Ltd., 6.45%, 2/3/24 | 500 | 555 | |||||||||
Braskem Netherlands Finance BV, 4.50%, 1/31/30 (a) | 1,702 | 1,641 | |||||||||
Teck Resources Ltd., 6.13%, 10/1/35 | 1,818 | 2,102 | |||||||||
4,298 | |||||||||||
Total Yankee Dollars (Cost $31,165) | 28,761 | ||||||||||
Municipal Bonds (0.7%) | |||||||||||
Florida (0.0% (k)): | |||||||||||
County of Broward Florida Airport System Revenue, Series C, 2.50%, 10/1/28 | 1,134 | 1,120 | |||||||||
Georgia (0.2%): | |||||||||||
Athens Housing Authority Revenue, 2.42%, 12/1/26 (d) | 2,420 | 2,413 | |||||||||
New Jersey (0.0%): | |||||||||||
New Jersey Economic Development Authority Revenue, Series NNN, 2.88%, 6/15/24 | 1,094 | 1,096 | |||||||||
North Hudson Sewerage Authority Revenue, 2.88%, 6/1/28 | 567 | 573 | |||||||||
1,669 | |||||||||||
New York (0.2%): | |||||||||||
New York State Dormitory Authority Revenue, Series B, 2.83%, 7/1/31 (d) | 2,835 | 2,833 | |||||||||
New York State Thruway Authority Revenue, Series M, 2.55%, 1/1/28 | 655 | 651 | |||||||||
3,484 | |||||||||||
Pennsylvania (0.0%): | |||||||||||
Scranton School District, GO(INS — Build America Mutual Assurance Co.) 3.05%, 4/1/29 | 800 | 804 | |||||||||
3.10%, 4/1/30 | 579 | 583 | |||||||||
State Public School Building Authority Revenue, 3.05%, 4/1/28 | 1,135 | 1,136 | |||||||||
University of Pittsburgh-of The Commonwealth System of Higher Education Revenue Series C, 2.53%, 9/15/31 (d) | 1,135 | 1,132 | |||||||||
Series C, 2.58%, 9/15/32 (d) | 565 | 564 | |||||||||
Series C, 2.63%, 9/15/33 (d) | 1,135 | 1,133 | |||||||||
5,352 | |||||||||||
Texas (0.3%): | |||||||||||
City of Houston, Texas Combined Utility System Revenue, 3.72%, 11/15/28 | 1,415 | 1,561 | |||||||||
Ector County Hospital District Revenue, Build America Bond 6.80%, 9/15/25, Continuously Callable @100 | 150 | 152 | |||||||||
Series B, 7.18%, 9/15/35, Continuously Callable @100 | 300 | 305 | |||||||||
Harris County Cultural Education Facilities Finance Corp. Revenue, Series B, 2.81%, 5/15/29 (d) | 1,135 | 1,131 | |||||||||
State of Texas, GO, 3.00%, 4/1/28 (d) | 1,701 | 1,792 | |||||||||
4,941 | |||||||||||
Total Municipal Bonds (Cost $18,967) | 18,979 |
See notes to financial statements.
16
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
U.S. Government Agency Mortgages (8.0%) | |||||||||||
Federal Home Loan Mortgage Corporation Series K047, Class A2, 3.33%, 5/25/25 (p) | $ | 8,400 | $ | 8,920 | |||||||
Series K053, Class A2, 3.00%, 12/25/25 | 14,000 | 14,680 | |||||||||
Series K151, Class A3, 3.51%, 4/25/30 | 9,000 | 9,762 | |||||||||
Series K156, Class A2, 3.70%, 1/25/33 (p) | 4,285 | 4,789 | |||||||||
3.00%, 4/1/46 | 11,867 | 12,152 | |||||||||
3.50%, 4/1/46 | 18,456 | 19,223 | |||||||||
3.00%, 6/1/46 | 32,078 | 32,848 | |||||||||
3.00%, 8/1/46 | 3,635 | 3,722 | |||||||||
3.00%, 1/1/47 | 11,271 | 11,542 | |||||||||
3.00%, 1/1/47 | 11,070 | 11,336 | |||||||||
3.00%, 3/1/47 | 34,419 | 35,244 | |||||||||
3.00%, 4/1/47 | 22,767 | 23,314 | |||||||||
3.00%, 4/1/47 | 7,450 | 7,601 | |||||||||
3.00%, 6/1/47 | 12,480 | 12,734 | |||||||||
3.50%, 4/1/48 | 6,793 | 6,991 | |||||||||
4.00%, 7/1/48 | 7,305 | 7,589 | |||||||||
222,447 | |||||||||||
Federal National Mortgage Association Series 2016-M2, Class AV2, 2.15%, 1/25/23 | 3,431 | 3,442 | |||||||||
4.00%, 11/1/45 | 4,720 | 4,984 | |||||||||
8,426 | |||||||||||
Government National Mortgage Association 6.50%, 4/15/24 | 4 | 4 | |||||||||
Total U.S. Government Agency Mortgages (Cost $225,441) | 230,877 | ||||||||||
U.S. Treasury Obligations (12.3%) | |||||||||||
U.S. Treasury Bonds 3.13%, 8/15/44 | 69,200 | 81,407 | |||||||||
2.38%, 11/15/49 | 13,000 | 13,498 | |||||||||
U.S. Treasury Notes 2.50%, 6/30/20 | 10,000 | 10,049 | |||||||||
1.13%, 2/28/21 | 63,000 | 62,555 | |||||||||
1.88%, 7/31/22 | 6,000 | 6,041 | |||||||||
1.63%, 8/15/22 | 26,970 | 26,983 | |||||||||
1.63%, 11/15/22 | 69,390 | 69,433 | |||||||||
1.63%, 4/30/23 | 29,000 | 29,011 | |||||||||
2.75%, 11/15/23 | 1,000 | 1,043 | |||||||||
2.25%, 11/15/25 | 5,000 | 5,155 | |||||||||
1.63%, 2/15/26 | 42,000 | 41,793 | |||||||||
2.38%, 5/15/27 (h) | 8,100 | 8,465 | |||||||||
Total U.S. Treasury Obligations (Cost $339,673) | 355,433 |
See notes to financial statements.
17
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Exchange-Traded Funds (44.4%) | |||||||||||
First Trust Global Tactical Commodity Strategy Fund | 10,000 | $ | 183 | ||||||||
Invesco DB Commodity Index Tracking Fund | 256,100 | 3,921 | |||||||||
Invesco FTSE RAFI Developed Markets ex-US ETF | 592,071 | 24,494 | |||||||||
Invesco FTSE RAFI Emerging Markets ETF | 1,444,718 | 30,108 | |||||||||
Invesco Fundamental High Yield Corporate Bond ETF (g) | 158,356 | 3,014 | |||||||||
Invesco S&P Midcap Low Volatility ETF | 50,000 | 2,670 | |||||||||
iShares 20+ Year Treasury Bond ETF | 304,228 | 42,720 | |||||||||
iShares 7-10 Year Treasury Bond ETF (g) | 101,996 | 11,380 | |||||||||
iShares Core MSCI EAFE ETF | 1,610,315 | 102,769 | |||||||||
iShares Core MSCI Emerging Markets ETF | 1,599,921 | 81,868 | |||||||||
iShares Core S&P 500 ETF | 232,599 | 73,515 | |||||||||
iShares Core U.S. Aggregate Bond ETF | 258,662 | 29,193 | |||||||||
iShares Edge MSCI Min Vol EAFE ETF | 153,197 | 11,517 | |||||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 139,992 | 7,985 | |||||||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 190,086 | 24,325 | |||||||||
iShares MSCI Canada ETF | 2,455,232 | 72,749 | |||||||||
iShares MSCI United Kingdom ETF (g) | 617,520 | 20,335 | |||||||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 2,137,243 | 61,318 | |||||||||
Schwab Fundamental International Large Co. Index ETF | 3,080,514 | 88,472 | |||||||||
Schwab Fundamental International Small Co. Index ETF | 593,600 | 19,375 | |||||||||
SPDR S&P Emerging Markets Smallcap ETF | 107,983 | 4,771 | |||||||||
U.S. Commodity Index Fund | 110,980 | 3,887 | |||||||||
VanEck Vectors Gold Miners ETF | 1,473,718 | 39,908 | |||||||||
VanEck Vectors Junior Gold Miners ETF | 101,000 | 3,853 | |||||||||
Vanguard FTSE All-World ex-US ETF | 333,659 | 17,404 | |||||||||
Vanguard FTSE Developed Markets ETF | 3,401,069 | 146,143 | |||||||||
Vanguard FTSE Europe ETF (g) | 1,498,400 | 84,495 | |||||||||
Vanguard Mid-Capital ETF (g) | 14,000 | 2,449 | |||||||||
Vanguard Mortgage-Backed Securities ETF | 659,209 | 35,109 | |||||||||
Vanguard Real Estate ETF | 597,270 | 55,587 | |||||||||
Vanguard S&P 500 ETF (h) | 237,314 | 68,501 | |||||||||
Vanguard Short-Term Bond ETF | 244,381 | 19,734 | |||||||||
Vanguard Small-Capital Value ETF (g) | 140,914 | 18,932 | |||||||||
Vanguard Total Bond Market ETF | 338,156 | 28,503 | |||||||||
Vanguard Total Stock Market ETF (h) | 217,220 | 34,760 | |||||||||
WisdomTree Emerging Markets SmallCap Dividend Fund | 202,622 | 9,201 | |||||||||
Xtrackers USD High Yield Corporate Bond ETF (g) | 88,170 | 4,396 | |||||||||
Total Exchange-Traded Funds (Cost $1,171,022) | 1,289,544 | ||||||||||
Affiliated Exchange-Traded Funds (0.1%) | |||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 68,000 | 2,939 | |||||||||
Total Affiliated Exchange-Traded Funds (Cost $3,463) | 2,939 | ||||||||||
Commercial Paper (1.1%) | |||||||||||
CSLB Holdings, Inc., 2.40%, 12/3/19 (m) | $ | 2,200 | 2,200 | ||||||||
FMC Corp., 2.64%, 12/2/19 (m) | 8,200 | 8,198 | |||||||||
ONEOK, Inc., 2.49%, 12/4/19 (m) | 8,200 | 8,198 |
See notes to financial statements.
18
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Royal Caribbean Cruises, 2.40%, 12/3/19 (m) | $ | 8,200 | $ | 8,198 | |||||||
Union Electric Co., 2.70%, 12/2/19 (m) | 2,671 | 2,671 | |||||||||
Viacom, Inc., 1.97%, 12/10/19 (m) | 1,700 | 1,699 | |||||||||
Total Commercial Paper (Cost $31,167) | 31,164 | ||||||||||
Convertible Corporate Bonds (0.0% (k)) | |||||||||||
Materials (0.0% (k)): | |||||||||||
Hycroft Mining Corp., 15.00%, PIK 10/22/20 (i) (l) (n) | 1,172 | 35 | |||||||||
Total Convertible Corporate Bonds (Cost $1,165) | 35 | ||||||||||
Collateral for Securities Loaned^ (1.2%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (o) | 30,479,391 | 30,479 | |||||||||
Invesco Government & Agency Portfolio, Institutional Shares, 1.52% (o) | 2,927,746 | 2,928 | |||||||||
Total Collateral for Securities Loaned (Cost $33,407) | 33,407 | ||||||||||
Total Investments (Cost $2,735,382) — 101.4% | 2,938,497 | ||||||||||
Liabilities in excess of other assets — (1.4)% | (40,695 | ) | |||||||||
NET ASSETS — 100.00% | $ | 2,897,802 |
^ Purchased with cash collateral from securities on loan.
(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 November 30, 2019, the fair value of these securities was $91,949 (thousands) and amounted to 3.2% of net assets.
(b) Variable or Floating-Rate Security. Rate disclosed is as of November 30, 2019.
(c) The rate for certain asset-backed and mortgage backed securities may vary based on factors relating to the pool of assets underlying the security. The rate disclosed is the rate in effect at November 30, 2019.
(d) Security purchased on a when-issued basis.
(e) Interest only.
(f) Non-income producing security.
(g) All or a portion of this security is on loan.
(h) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(i) Security was fair valued based upon procedures approved by the Board of Trustees and represents less than 0.0% of the Fund's net assets as of November 30, 2019. This security is classified as Level 3 within the fair value hierarchy. (See Note 2 in the Notes to Financial Statements)
(j) Security is perpetual and has no final maturity date but may be subject to calls at various dates in the future.
(k) Amount represents less than 0.05% of net assets.
(l) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were 0.03% of the Fund's net assets.
See notes to financial statements.
19
USAA Mutual Funds Trust USAA Cornerstone Moderately Aggressive Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(m) Rate represents the effective yield at November 30, 2019.
(n) All of the coupon is paid in kind.
(o) Rate disclosed is the daily yield on November 30, 2019.
(p) 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.
(q) Defaulted security.
bps — Basis points
ETF — Exchange-Traded Fund
GO — General Obligation
LIBOR — London InterBank Offered Rate
LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LLC — Limited Liability Company
LP — Limited Partnership
MTN — Medium Term Note
PLC — Public Limited Company
PIK — Paid In-Kind
SOFR — Secured Overnight Financing Rate
USSW10 — USD 10 Year Swap Rate, rate disclosed as of November 30, 2019
See notes to financial statements.
20
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Cornerstone Moderately Aggressive Fund | |||||||
Assets: | |||||||
Affiliated investments, at value (Cost $3,463) | $ | 2,939 | |||||
Unaffiliated investments, at value (Cost $2,731,919) | 2,935,558 | (a) | |||||
Cash and cash equivalents | 1,903 | ||||||
Receivables: | |||||||
Interest and dividends | 5,984 | ||||||
Capital shares issued | 1,714 | ||||||
Reclaims | 24 | ||||||
From Adviser | 452 | ||||||
Prepaid expenses | 10 | ||||||
Total assets | 2,948,584 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 33,407 | ||||||
Investments purchased | 14,451 | ||||||
Capital shares redeemed | 576 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 1,404 | ||||||
Administration fees | 357 | ||||||
Custodian fees | 42 | ||||||
Transfer agent fees | 314 | ||||||
Compliance fees | — | (b) | |||||
Other accrued expenses | 231 | ||||||
Total liabilities | 50,782 | ||||||
Net Assets: | |||||||
Capital | 2,640,213 | ||||||
Total distributable earnings/(loss) | 257,589 | ||||||
Net assets | $ | 2,897,802 | |||||
Shares (unlimited number of shares authorized with no par value): | 112,591 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 25.74 |
(a) Includes $32,429 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.
21
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Cornerstone Moderately Aggressive Fund | |||||||
Investment Income: | |||||||
Income distributions from affiliated funds | $ | 8 | |||||
Dividends | 26,530 | ||||||
Interest | 14,863 | ||||||
Securities lending (net of fees) | 131 | ||||||
Foreign tax withholding | — | (a) | |||||
Total income | 41,532 | ||||||
Expenses: | |||||||
Investment advisory fees | 8,456 | ||||||
Administration fees | 2,150 | ||||||
Custodian fees | 88 | ||||||
Transfer agent fees | 3,095 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 7 | ||||||
Legal and audit fees | 52 | ||||||
State registration and filing fees | 25 | ||||||
Interest expense on Interfund lending | 3 | ||||||
Sub-Administration fees | 36 | ||||||
Other expenses | 228 | ||||||
Total expenses | 14,160 | ||||||
Expenses waived/reimbursed by Adviser | (107 | ) | |||||
Expenses waived/reimbursed by AMCO | (39 | ) | |||||
Net expenses | 14,014 | ||||||
Net Investment Income (Loss) | 27,518 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from unaffiliated investment securities and foreign currency translations | 6,700 | ||||||
Net realized gains (losses) from futures contracts | (2,060 | ) | |||||
Net change in unrealized appreciation/depreciation on affiliated funds | 51 | ||||||
Net change in unrealized appreciation/depreciation on unaffiliated investment securities and foreign currency translations | 168,472 | ||||||
Net change in unrealized appreciation/depreciation on futures contracts | 1,653 | ||||||
Net realized/unrealized gains (losses) on investments | 174,816 | ||||||
Change in net assets resulting from operations | $ | 202,334 |
(a) Rounds to less than $1.
See notes to financial statements.
22
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Cornerstone Moderately Aggressive Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 27,518 | $ | 53,788 | |||||||
Net realized gains (losses) from investments | 4,640 | 55,243 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 170,176 | (85,067 | ) | ||||||||
Change in net assets resulting from operations | 202,334 | 23,964 | |||||||||
Change in net assets resulting from distributions to shareholders | — | (156,279 | ) | ||||||||
Change in net assets resulting from capital transactions | (81,570 | ) | 415,470 | ||||||||
Change in net assets | 120,764 | 283,155 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 2,777,038 | 2,493,883 | |||||||||
End of period | $ | 2,897,802 | $ | 2,777,038 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 80,585 | $ | 223,097 | |||||||
Reorganization (Note 10) | — | 381,150 | |||||||||
Distributions reinvested | — | 155,094 | |||||||||
Cost of shares redeemed | (162,155 | ) | (343,871 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (81,570 | ) | $ | 415,470 | ||||||
Share Transactions: | |||||||||||
Issued | 3,222 | 9,139 | |||||||||
Reorganization (Note 10) | — | 17,570 | |||||||||
Reinvested | — | 6,492 | |||||||||
Redeemed | (6,478 | ) | (14,084 | ) | |||||||
Change in Shares | (3,256 | ) | 19,117 |
See notes to financial statements.
23
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 Cornerstone Moderately Aggressive Fund | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 23.97 | 0.24 | (d) | 1.53 | 1.77 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 25.78 | 0.46 | (0.79 | ) | (0.33 | ) | (0.39 | ) | (1.09 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 26.09 | 0.42 | 1.28 | 1.70 | (0.44 | ) | (1.57 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 24.08 | 0.45 | 2.06 | 2.51 | (0.50 | ) | — | |||||||||||||||||||
Year Ended May 31, 2016 | $ | 26.27 | 0.55 | (2.06 | ) | (1.51 | ) | (0.56 | ) | (0.12 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 26.02 | 0.56 | 0.33 | 0.89 | (0.64 | ) | — |
* 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) The expense ratios exclude the impact of expenses paid by each underlying fund.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Effective June 22, 2018 AMCO has voluntarily agreed to limit the annual expenses of the Fund to 0.98% of the Fund's average daily net assets.
(f) For the year ended May 31, 2019, the portfolio turnover calculation excludes the value of securities purchased of $370,785 thousand and sold of $3,096 thousand after the Fund's acquisition of First Start Growth Fund. Reflects increased trading activity due to usage of quantitative investment strategies.
(g) Reflects increased trading activity due to changes in subadviser(s) and asset allocation strategies.
See notes to financial statements.
24
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)(c) | Net Investment Income (Loss)(b) | Gross Expenses(b)(c) | Net Assets, End of Period (000's) | Portfolio Turnover(a) | ||||||||||||||||||||||||||||
USAA Cornerstone Moderately Aggressive Fund | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 25.74 | 7.38 | % | 0.98 | % | 1.92 | % | 0.99 | % | $ | 2,897,802 | 38 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | (1.48 | ) | $ | 23.97 | (1.20 | )% | 0.98 | %(e) | 1.91 | % | 1.01 | % | $ | 2,777,038 | 95 | %(f) | |||||||||||||||||||
Year Ended May 31, 2018 | (2.01 | ) | $ | 25.78 | 6.52 | % | 0.97 | % | 1.64 | % | 0.97 | % | $ | 2,493,883 | 56 | % | |||||||||||||||||||
Year Ended May 31, 2017 | (0.50 | ) | $ | 26.09 | 10.59 | % | 1.06 | % | 1.78 | % | 1.06 | % | $ | 2,398,407 | 69 | % | |||||||||||||||||||
Year Ended May 31, 2016 | (0.68 | ) | $ | 24.08 | (5.73 | )% | 1.13 | % | 2.18 | % | 1.13 | % | $ | 2,278,762 | 87 | %(g) | |||||||||||||||||||
Year Ended May 31, 2015 | (0.64 | ) | $ | 26.27 | 3.47 | % | 1.16 | % | 2.14 | % | 1.16 | % | $ | 2,526,548 | 62 | % |
See notes to financial statements.
25
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Cornerstone Moderately Aggressive Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
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 July 1, 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)
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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.
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 November 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 | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 35,946 | $ | — | $ | 35,946 | |||||||||||
Collateralized Mortgage Obligations | — | 15,299 | — | 15,299 | |||||||||||||||
Common Stocks | 672,277 | — | 2 | 672,279 | |||||||||||||||
Preferred Stocks | 6,314 | 11,235 | 875 | 18,424 | |||||||||||||||
Senior Secured Loans | — | 3,901 | — | 3,901 | |||||||||||||||
Corporate Bonds | — | 201,509 | — | 201,509 | |||||||||||||||
Yankee Dollars | — | 28,658 | 103 | 28,761 | |||||||||||||||
Municipal Bonds | — | 18,979 | — | 18,979 | |||||||||||||||
U.S. Government Agency Mortgages | — | 230,877 | — | 230,877 | |||||||||||||||
U.S. Treasury Obligations | — | 355,433 | — | 355,433 | |||||||||||||||
Exchange-Traded Funds | 1,289,544 | — | — | 1,289,544 |
27
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Affiliated Exchange-Traded Funds | $ | 2,939 | $ | — | $ | — | $ | 2,939 | |||||||||||
Commercial Paper | — | 31,164 | — | 31,164 | |||||||||||||||
Convertible Corporate Bonds | — | — | 35 | 35 | |||||||||||||||
Collateral for Securities Loaned | 33,407 | — | — | 33,407 | |||||||||||||||
Total | $ | 2,004,481 | $ | 933,001 | $ | 1,015 | $ | 2,938,497 |
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.
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.
Mortgage- and Asset-Backed Securities:
The values of some mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values of mortgage and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market's perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage
28
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Association, commonly known as "Ginnie Mae"), while other mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as "Fannie Mae" and "Freddie Mac"), are backed only by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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 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.
29
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
During the period ended November 30, 2019, the Fund held futures contracts primarily for gaining exposure to a particular asset class or securities market. The Fund held no futures contracts at November 30, 2019.
Summary of Derivative Instruments:
The following table presents the effect of derivative instruments on the Statement of Operations, categorized by risk exposure, for the six months ended November 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: | $ | (2,060 | ) | $ | 1,653 |
All open derivative positions at year end are reflected in the Fund's Schedule of Portfolio Investments. The underlying face value of open derivative positions relative to the 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.
Withholding taxes on interest, dividends and gains as a result of certain investments in ADRs by the Fund have 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.
30
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Cash collateral is listed in the Fund's Portfolio of Investments and Financial Statements while non-cash collateral is not included. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 32,429 | $ | — | $ | 33,407 |
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 May 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 November 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) | |||||||||
$ | 1,007 | $ | — | $ | — |
31
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | U.S. Government Securities | ||||||||||||||
Purchases | Sales | Purchases | Sales | ||||||||||||
$ | 878,914 | $ | 775,451 | $ | 188,450 | $ | 295,390 |
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 fees accrued daily and paid monthly at an annual rate of 0.59% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $7,083 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 0.59% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $1,373 thousand and reflected on the Statement of Operations as Investment Advisory fees.
In addition, the Fund invests in affiliated exchange-traded fund(s) ("affiliated ETFs"). The Fund's Advisor fee is reimbursed by VCM (and previously AMCO) to the extent of the indirect Advisor fee incurred through the Fund's proportional investment in the affiliated ETF(s). For the period from July 1, 2019 through November 30, 2019, the Fund's Advisor fee was reimbursed by VCM in an amount of $4 thousand, of which $4 thousand is receivable from VCM. For the period from June 1, 2019 through June 30, 2019, the Fund's Advisor fee was reimbursed by AMCO in an amount of less than $1 thousand.
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 November 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 the 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. Amounts incurred from July 1, 2019 through November 30, 2019 are $1,801 thousand and are presented on the Statement of Operations as Administration fees.
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. Amounts incurred from June 1, 2019 through June 30, 2019 were $349 thousand and are presented on the Statement of Operations as Administration fees.
32
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 an annual charge of $23 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 November 30, 2019 was $2,575 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $520 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.
Effective July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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
33
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
incurred 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.98%.
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 November 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 November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 107 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses to 0.98% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $39 thousand. 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.
The Fund has a targeted risk tolerance and a corresponding asset allocation target; however, mere asset allocation and volatility are not the sole determination of risk. The Fund's managers will tactically allocate away from the target allocation as market conditions and the perceived risks warrant. The Fund bears the risk that the managers' tactical allocation will not be successful.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, to the degree the Fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
The fixed-income securities in the Fund's portfolio are subject to credit risk, which is the possibility that an issuer of a fixed-income security will fail to make timely interest and/or principal payments on
34
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
its securities or that negative market perceptions of the issuer's ability to make such payments will cause the price of that security to decline. The Fund accepts some credit risk as a recognized means to enhance an investor's return. All fixed-income securities, varying from the highest quality to the very speculative, have some degree of credit risk. Fixed-income securities rated below investment grade, also known as "junk" or high-yield bonds, generally entail greater economic, credit, and liquidity risk than investment-grade securities. Their prices may be more volatile, especially during economic downturns, financial setbacks, or liquidity events.
The Fund may invest in shares of ETFs, which generally are investment companies that hold a portfolio of common stocks or debt securities, the shares of which are traded on an exchange. ETFs incur their own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which will be borne indirectly by the Fund as a shareholder in an ETF. As a result, the Fund's investment in an ETF will cause the Fund to indirectly bear the fees and expenses of the ETF and, in turn, the Fund's performance may be lower than if the Fund were to invest directly in the underlying securities held by the ETF. For investments in affiliated ETFs, the Fund's management fee is reimbursed by the Adviser to the extent of the indirect management fee incurred through the Fund's investment in the affiliated ETFs. The Adviser may have conflicts of interest in allocating assets among affiliated and unaffiliated ETFs, because the Adviser also manages and administers the affiliated ETFs, and the Adviser and its affiliates receive other fees from the affiliated ETFs. In addition, the Fund also will be subject to the risks associated with the securities or other investments held by the ETFs.
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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $6 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended November 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. 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
35
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 or lending for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Borrower or Lender | Amount Outstanding at November, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | ||||||||||||||||||
Borrower | $ | — | $ | 6,562 | 7 | 2.19 | % | $ | 9,131 |
* For the six months ended November 30, 2019, based on the number of days borrowings were outstanding.
7. 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 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 69,554 | $ | 86,725 | $ | 156,279 |
As of the most recent tax year ended May 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) | ||||||||||||||||
$ | 11,345 | $ | 15,204 | $ | 31,393 | $ | 57,942 |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales, REIT return of capital dividend, non-REIT return of capital dividend, futures contracts marked-to-market, hybrid interest accrual adjustment and partnership basis adjustments.
36
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
8. Affiliated Securities:
An affiliated security is a security in which the Fund has ownership of at least 5% of the security's outstanding voting shares or an investment company managed by VCM. The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. These underlying funds are noted as affiliated in the Fund's Schedule of Portfolio Investments. The affiliated underlying funds' annual or semiannual reports may be viewed at usaa.com. Transactions in affiliated securities during the six months ended November 30, 2019 were as follows (amount in thousands):
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
Affiliated Holdings | |||||||||||||||||||||||||||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | $ | 2,888 | $ | — | $ | — | $ | — | $ | — | $ | 51 | $ | 2,939 | $ | 8 |
9. Acquisition of USAA First Start Growth Fund:
On June 22, 2018, the USAA First Start Growth Fund was acquired by the Fund pursuant to a Plan of Reorganization and Termination, which was approved by shareholders of the First Start Growth Fund on May 30, 2018. The reorganization was accomplished by a tax-free exchange of 17,570,000 shares of the Fund (valued at $440,752,000) for 32,676,000 shares of the USAA First Start Growth Fund (100% of the voting equity interests) outstanding on June 22, 2018. The reason for the transaction was to combine two funds with comparable investment objectives to create one larger fund with the potential for lower total operating expenses borne by shareholders. The tax-free exchange of shares by the Fund for the assets and liabilities of the USAA First Start Growth Fund on the date of the reorganization was as follows:
Shares Issued by USAA Cornerstone Moderately Aggressive Fund | Total Net Assets of the USAA First Start Growth Fund | Merger Ratio | Prior to reorganization Total Net Assets of the Cornerstone Moderately Aggressive Fund | After reorganization Total Net Assets of the Cornerstone Moderately Aggressive Fund | |||||||||||||||
17,570,000 | $ | 440,752,000 | (b) | .538 | $ | 2,490,669,000 | (a) | $ | 2,931,421,000 |
(a) Includes undistributed net investment income of $6,090,000 and unrealized appreciation on investments of $107,487,000 with a fair value of $2,486,634,000 and identified cost of $2,379,147,000.
(b) Includes $59,602,000 of unrealized appreciation on investments.
Assets received, and shares issued by the Fund were recorded at fair value; however, the cost basis of the investments received by the Fund was carried forward to align ongoing reporting of the portfolio's realized and unrealized gains and losses with amounts distributable for tax purposes.
37
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
The pro forma results of operations for the year ended May 31, 2019, assuming the reorganization had been completed on June 1, 2018 (the beginning of the annual period), are as follows:
Net investment income | $ | 55,441,000 | |||||
Net realized gain on investments | $ | 55,309,000 | |||||
Change in unrealized appreciation/(depreciation) on investments and foreign currency translations | $ | (86,226,000 | ) | ||||
Net increase in net assets resulting from operations | $ | 24,524,000 |
The combined investment portfolios have been managed as a single portfolio since the merger was completed on June 22, 2018. Thus, it is not practicable to separate the amounts of revenue and earnings of the First Start Growth Fund that has been included in the Fund's Statement of Operations since June 22, 2018.
38
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,073.80 | $ | 1,020.10 | $ | 5.08 | $ | 4.95 | 0.98 | % |
* 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).
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.
39
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 | (800) 235-8396 |
27800-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Cornerstone Moderately
Conservative Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 16 | ||||||
Statement of Operations | 17 | ||||||
Statements of Changes in Net Assets | 18 | ||||||
Financial Highlights | 20 | ||||||
Notes to Financial Statements | 22 | ||||||
Supplemental Information | 33 | ||||||
Expense Examples | 33 | ||||||
Proxy Voting and Portfolio Holdings Information | 33 | ||||||
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 Cornerstone Moderately Conservative Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek current income with a secondary focus on capital appreciation.
Top 10 Holdings*
11/30/19
(% of Net Assets)
U.S. Treasury Note, 1.63%, 11/15/22 | 3.4 | % | |||||
iShares Core S&P 500 ETF | 3.4 | % | |||||
U.S. Treasury Note, 1.13%, 2/28/21 | 3.2 | % | |||||
Vanguard FTSE Europe ETF | 2.9 | % | |||||
Schwab Fundamental International Large Co. Index ETF | 2.9 | % | |||||
U.S. Treasury Bond, 3.13%, 8/15/44 | 2.8 | % | |||||
U.S. Treasury Note, 2.25%, 11/15/25 | 2.7 | % | |||||
Vanguard Total Bond Market ETF | 2.4 | % | |||||
iShares MSCI Canada ETF | 2.4 | % | |||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 2.0 | % |
* Does not include and short-term investments purchased with cash collateral from securities loaned.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund (continued) | November 30, 2019 |
(Unaudited)
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Asset Backed Securities (2.7%) | |||||||||||
Americredit Automobile Receivables Trust, Series 2018-1, Class C, 3.50%, 1/18/24, Callable 4/18/22 @ 100 | $ | 480 | $ | 493 | |||||||
Americredit Automobile Receivables Trust, Series 2018-2, Class A3, 3.15%, 3/20/23, Callable 8/18/22 @ 100 | 143 | 144 | |||||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2014-2A, Class A, 2.50%, 2/20/21, Callable 2/20/20 @ 100 (a) | 304 | 304 | |||||||||
BCC Funding Corp. XVI LLC, Series 2019-1A, Class A2, 2.48%, 8/20/24, Callable 9/20/23 @ 100 (a) | 1,500 | 1,501 | |||||||||
Credit Acceptance Auto Loan Trust, Series 2018-3A, Class A, 3.55%, 8/15/27, Callable 10/15/21 @ 100 (a) | 329 | 335 | |||||||||
Element Rail Leasing I LLC, Series 2014-1A, Class A2, 3.67%, 4/19/44, Callable 4/19/21 @ 100 (a) | 240 | 242 | |||||||||
Evergreen Credit Card Trust, Series 2019-2, Class A, 1.90%, 9/15/24 (a) | 175 | 175 | |||||||||
Exeter Automobile Receivables Trust, Series 2019-2A, Class C, 3.30%, 3/15/24, Callable 7/15/22 @ 100 (a) | 215 | 219 | |||||||||
Goal Capital Funding Trust, Series 2005-2, Class A4, 2.11%(LIBOR03M+20bps), 8/25/44, Callable 8/25/20 @ 100 (b) | 476 | 460 | |||||||||
Hertz Vehicle Financing II LP, Series 2019-3A, Class A, 2.67%, 12/26/25 (a) | 192 | 192 | |||||||||
HPEFS Equipment Trust, Series 2019-1A, Class C, 2.49%, 9/20/29, Callable 7/20/22 @ 100 (a) | 97 | 97 | |||||||||
Navient Student Loan Trust, Series 2015-2, Class B, 3.21%(LIBOR01M+150bps), 8/25/50, Callable 3/25/28 @ 100 (b) | 200 | 196 | |||||||||
NP SPE II LLC, Series 2017-1A, Class A1, 3.37%, 10/21/47, Callable 10/20/27 @ 100 (a) | 82 | 84 | |||||||||
OSCAR US Funding Trust IX LLC, Series 2018-2A, Class A4, 3.63%, 9/10/25 (a) | 560 | 578 | |||||||||
SCF Equipment Leasing LLC, Series 2017-2A, Class A, 3.41%, 12/20/23, Callable 12/20/19 @ 100 (a) | 143 | 144 | |||||||||
Synchrony Credit Card Master Note Trust, Series 2016-2, Class C, 2.95%, 5/15/24 | 320 | 322 | |||||||||
Trinity Rail Leasing LLC, Series 2019-2A, Class A1, 2.39%, 10/18/49, Callable 10/17/20 @ 100 (a) | 500 | 493 | |||||||||
Westlake Automobile Receivables Trust, Series 2018-2A, Class D, 4.00%, 1/16/24, Callable 9/15/21 @ 100 (a) | 350 | 359 | |||||||||
Total Asset Backed Securities (Cost $6,282) | 6,338 | ||||||||||
Collateralized Mortgage Obligations (0.9%) | |||||||||||
Banc of America Commercial Mortgage Trust, Series 2006-3, Class AM, 5.86%, 7/10/44 (c) | 155 | 47 | |||||||||
Banc of America Commercial Mortgage Trust, Series 2008-1, Class AJ, 6.79%, 2/10/51 (c) | 26 | 27 | |||||||||
BANK, Series 2019-BNK20, Class A3, 3.01%, 9/15/61 | 250 | 259 | |||||||||
Barclays Commercial Mortgage Trust, Series 2019-C5, Class ASB, 2.99%, 11/15/52 | 167 | 172 | |||||||||
Benchmark Mortgage Trust, Series 2019-B14, Class A5, 3.05%, 12/15/61 | 286 | 297 | |||||||||
BTH Mortgage-Backed Securities Trust, Series 2018-21, Class A, 4.28%(LIBOR01M+250bps), 10/7/21 (a) (b) | 320 | 321 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
COMM Mortgage Trust, Series 2019-GC44, Class ASB, 2.87%, 8/15/57 (d) | $ | 215 | $ | 221 | |||||||
Credit Suisse Commercial Mortgage Trust, Series 2007-C1, Class AMFL, 1.95%(LIBOR01M+19bps), 2/15/40 (b) | 4 | 4 | |||||||||
CSAIL Commercial Mortgage Trust, Series 2016-C6, Class XA, 2.06%, 1/15/49 (c) (e) | 2,464 | 211 | |||||||||
DBJPM Mortgage Trust, Series 2016-SFC, Class A, 2.83%, 8/10/36 (a) | 500 | 509 | |||||||||
GE Commercial Mortgage Corp., Series 2007-C1, Class AM, 5.61%, 12/10/49 (c) | 57 | 54 | |||||||||
UBS Commercial Mortgage Trust, Series 2012-C1, Class XA, 2.26%, 5/10/45 (a) (c) (e) | 2,517 | 97 | |||||||||
Total Collateralized Mortgage Obligations (Cost $2,258) | 2,219 | ||||||||||
Common Stocks (12.0%) | |||||||||||
Communication Services (1.3%): | |||||||||||
AT&T, Inc. | 22,289 | 833 | |||||||||
CenturyLink, Inc. | 6,662 | 97 | |||||||||
Comcast Corp., Class A | 16,748 | 739 | |||||||||
Discovery, Inc., Class C (f) | 2,632 | 80 | |||||||||
InterActive Corp. (f) | 323 | 72 | |||||||||
Liberty Media Corp-Liberty SiriusXM, Class A (f) | 1,655 | 81 | |||||||||
Omnicom Group, Inc. | 1,500 | 119 | |||||||||
Sirius XM Holdings, Inc. | 17,293 | 121 | |||||||||
Take-Two Interactive Software, Inc. (f) | 639 | 77 | |||||||||
Twitter, Inc. (f) | 1,806 | 56 | |||||||||
Verizon Communications, Inc. | 7,175 | 432 | |||||||||
Viacom, Inc., Class B | 2,900 | 70 | |||||||||
2,777 | |||||||||||
Consumer Discretionary (1.2%): | |||||||||||
AutoZone, Inc. (f) | 83 | 98 | |||||||||
Best Buy Co., Inc. | 1,088 | 88 | |||||||||
Booking Holdings, Inc. (f) | 84 | 160 | |||||||||
Carnival Corp. | 2,125 | 96 | |||||||||
Dollar General Corp. | 461 | 73 | |||||||||
eBay, Inc. | 2,188 | 78 | |||||||||
Ford Motor Co. | 14,862 | 135 | |||||||||
Hasbro, Inc. | 628 | 64 | |||||||||
Hilton Worldwide Holdings, Inc. | 1,061 | 111 | |||||||||
Lennar Corp., Class A | 2,498 | 149 | |||||||||
Lowe's Cos., Inc. | 1,898 | 223 | |||||||||
McDonald's Corp. | 1,056 | 205 | |||||||||
Nike, Inc., Class B | 2,928 | 274 | |||||||||
O'Reilly Automotive, Inc. (f) | 142 | 63 | |||||||||
Ross Stores, Inc. | 901 | 105 | |||||||||
Starbucks Corp. | 3,881 | 332 | |||||||||
The Home Depot, Inc. | 2,246 | 494 | |||||||||
Yum! Brands, Inc. | 1,132 | 114 | |||||||||
2,862 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Consumer Staples (0.8%): | |||||||||||
Altria Group, Inc. | 4,090 | $ | 203 | ||||||||
Colgate-Palmolive Co. | 1,558 | 106 | |||||||||
Kimberly-Clark Corp. | 419 | 57 | |||||||||
Sysco Corp. | 994 | 80 | |||||||||
The Procter & Gamble Co. | 5,669 | 692 | |||||||||
Tyson Foods, Inc., Class A | 1,117 | 100 | |||||||||
Walgreens Boots Alliance, Inc. | 3,594 | 214 | |||||||||
Walmart, Inc. | 3,344 | 399 | |||||||||
1,851 | |||||||||||
Energy (0.6%): | |||||||||||
Chevron Corp. | 1,946 | 228 | |||||||||
ConocoPhillips | 2,296 | 138 | |||||||||
Exxon Mobil Corp. | 5,004 | 341 | |||||||||
HollyFrontier Corp. | 1,424 | 73 | |||||||||
Marathon Petroleum Corp. | 2,305 | 140 | |||||||||
Occidental Petroleum Corp. | 2,160 | 83 | |||||||||
Phillips 66 | 2,172 | 249 | |||||||||
Valero Energy Corp. | 1,713 | 164 | |||||||||
1,416 | |||||||||||
Financials (1.6%): | |||||||||||
Ally Financial, Inc. | 3,056 | 97 | |||||||||
Capital One Financial Corp. | 2,359 | 236 | |||||||||
Citigroup, Inc. | 9,080 | 683 | |||||||||
Discover Financial Services | 2,749 | 233 | |||||||||
FactSet Research Systems, Inc. | 326 | 85 | |||||||||
Intercontinental Exchange, Inc. | 1,151 | 108 | |||||||||
JPMorgan Chase & Co. | 3,759 | 496 | |||||||||
Lincoln National Corp. | 1,554 | 92 | |||||||||
Marsh & McLennan Cos., Inc. | 933 | 101 | |||||||||
MetLife, Inc. | 3,230 | 161 | |||||||||
Regions Financial Corp. | 7,902 | 131 | |||||||||
S&P Global, Inc. | 1,269 | 336 | |||||||||
Synchrony Financial | 3,863 | 145 | |||||||||
T. Rowe Price Group, Inc. | 1,031 | 127 | |||||||||
The Allstate Corp. | 865 | 96 | |||||||||
The Progressive Corp. | 2,257 | 165 | |||||||||
The Travelers Cos., Inc. | 549 | 75 | |||||||||
U.S. Bancorp | 1,787 | 107 | |||||||||
Wells Fargo & Co. | 5,995 | 326 | |||||||||
3,800 | |||||||||||
Health Care (1.6%): | |||||||||||
Abbott Laboratories | 2,381 | 203 | |||||||||
AbbVie, Inc. | 5,239 | 460 | |||||||||
Amgen, Inc. | 2,043 | 480 | |||||||||
Biogen, Inc. (f) | 788 | 236 | |||||||||
Bristol-Myers Squibb Co. | 2,341 | 133 | |||||||||
CVS Health Corp. | 2,711 | 205 | |||||||||
Danaher Corp. | 817 | 119 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Edwards Lifesciences Corp. (f) | 374 | $ | 92 | ||||||||
Eli Lilly & Co. | 1,234 | 145 | |||||||||
Gilead Sciences, Inc. | 4,810 | 323 | |||||||||
IQVIA Holdings, Inc. (f) | 654 | 95 | |||||||||
Laboratory Corp. of America Holdings (f) | 460 | 79 | |||||||||
McKesson Corp. | 652 | 94 | |||||||||
Merck & Co., Inc. | 5,615 | 490 | |||||||||
Pfizer, Inc. | 13,701 | 528 | |||||||||
Stryker Corp. | 521 | 107 | |||||||||
Zoetis, Inc. | 873 | 105 | |||||||||
3,894 | |||||||||||
Industrials (1.0%): | |||||||||||
3M Co. | 1,302 | 221 | |||||||||
Cintas Corp. | 485 | 125 | |||||||||
Cummins, Inc. | 525 | 96 | |||||||||
Delta Air Lines, Inc. | 1,728 | 99 | |||||||||
Eaton Corp. PLC | 2,293 | 212 | |||||||||
IDEX Corp. | 633 | 103 | |||||||||
Illinois Tool Works, Inc. | 550 | 96 | |||||||||
Ingersoll-Rand PLC | 566 | 74 | |||||||||
Johnson Controls International PLC | 2,716 | 116 | |||||||||
L3Harris Technologies, Inc. | 448 | 90 | |||||||||
Lockheed Martin Corp. | 477 | 186 | |||||||||
Northrop Grumman Corp. | 309 | 109 | |||||||||
PACCAR, Inc. | 1,863 | 152 | |||||||||
Rockwell Automation, Inc. | 466 | 91 | |||||||||
Roper Technologies, Inc. | 311 | 112 | |||||||||
Snap-on, Inc. | 439 | 70 | |||||||||
Spirit Aerosystems Holdings, Inc., Class A | 983 | 86 | |||||||||
The Boeing Co. | 1,187 | 434 | |||||||||
Waste Management, Inc. | 737 | 83 | |||||||||
2,555 | |||||||||||
Information Technology (2.9%): | |||||||||||
Apple, Inc. | 6,201 | 1,657 | |||||||||
Automatic Data Processing, Inc. | 599 | 102 | |||||||||
Cadence Design Systems, Inc. (f) | 1,140 | 80 | |||||||||
CDW Corp. | 643 | 87 | |||||||||
Fiserv, Inc. (f) | 796 | 93 | |||||||||
Hewlett Packard Enterprises Co. | 5,906 | 93 | |||||||||
HP, Inc. | 6,299 | 126 | |||||||||
Intel Corp. | 10,694 | 621 | |||||||||
International Business Machines Corp. | 3,437 | 462 | |||||||||
Intuit, Inc. | 510 | 132 | |||||||||
Lam Research Corp. | 679 | 181 | |||||||||
Microsoft Corp. (g) | 8,468 | 1,281 | |||||||||
Oracle Corp. | 8,513 | 478 | |||||||||
PayPal Holdings, Inc. (f) | 1,872 | 202 | |||||||||
QUALCOMM, Inc. | 1,561 | 130 | |||||||||
Seagate Technology PLC | 1,386 | 83 | |||||||||
TE Connectivity Ltd. | 790 | 73 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Texas Instruments, Inc. | 1,390 | $ | 167 | ||||||||
VeriSign, Inc. (f) | 470 | 90 | |||||||||
Visa, Inc., Class A | 2,521 | 465 | |||||||||
Western Digital Corp. | 939 | 47 | |||||||||
6,650 | |||||||||||
Materials (0.2%): | |||||||||||
Air Products & Chemicals, Inc. | 462 | 109 | |||||||||
Celanese Corp., Series A | 626 | 79 | |||||||||
Corteva, Inc. | 1,850 | 48 | |||||||||
Hycroft Mining Corp. (f) (h) (k) | 24,262 | — | (i) | ||||||||
LyondellBasell Industries NV, Class A | 2,152 | 199 | |||||||||
Nucor Corp. | 1,787 | 101 | |||||||||
The Sherwin-Williams Co. | 183 | 107 | |||||||||
Westrock Co. | 2,569 | 104 | |||||||||
747 | |||||||||||
Real Estate (0.4%): | |||||||||||
CBRE Group, Inc., Class A (f) | 3,173 | 181 | |||||||||
Crown Castle International Corp. | 870 | 116 | |||||||||
Equity Residential | 955 | 81 | |||||||||
Essex Property Trust, Inc. | 178 | 56 | |||||||||
Host Hotels & Resorts, Inc. | 8,129 | 142 | |||||||||
Kimco Realty Corp. | 5,000 | 108 | |||||||||
Public Storage | 218 | 46 | |||||||||
Ventas, Inc. | 747 | 44 | |||||||||
Vornado Realty Trust | 2,069 | 134 | |||||||||
Welltower, Inc. | 596 | 50 | |||||||||
958 | |||||||||||
Utilities (0.4%): | |||||||||||
Consolidated Edison, Inc. | 764 | 66 | |||||||||
Dominion Energy, Inc. | 847 | 71 | |||||||||
DTE Energy Co. | 438 | 55 | |||||||||
Duke Energy Corp. | 1,830 | 162 | |||||||||
Evergy, Inc. | 1,411 | 89 | |||||||||
Exelon Corp. | 2,893 | 128 | |||||||||
NextEra Energy, Inc. | 548 | 128 | |||||||||
PPL Corp. | 2,784 | 95 | |||||||||
The Southern Co. | 1,011 | 63 | |||||||||
857 | |||||||||||
Total Common Stocks (Cost $26,031) | 28,367 | ||||||||||
Preferred Stocks (1.1%) | |||||||||||
Communication Services (0.2%): | |||||||||||
Qwest Corp., 6.50%, 9/1/56 | 20,000 | 499 | |||||||||
Consumer Staples (0.6%): | |||||||||||
CHS, Inc., Series 1, cumulative redeemable, 7.88%, 9/26/23 (j) | 32,000 | 883 | |||||||||
Dairy Farmers of America, Inc., cumulative redeemable, 7.88%, 1/14/20 (a) (j) | 5,000 | 492 | |||||||||
1,375 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Financials (0.3%): | |||||||||||
Delphi Financial Group, Inc., 5.10%(LIBOR03M+319bps), 5/15/37 (b) (k) | 27,414 | $ | 603 | ||||||||
Total Preferred Stocks (Cost $2,517) | 2,477 | ||||||||||
Senior Secured Loans (0.2%) | |||||||||||
Academy Ltd., 1st Lien Term Loan B, 5.78%(LIBOR01M+400bps), 7/2/22, Callable 1/10/20 @ 100 (b) | $ | 584 | 434 | ||||||||
Total Senior Secured Loans (Cost $498) | 434 | ||||||||||
Corporate Bonds (9.6%) | |||||||||||
Communication Services (0.2%): | |||||||||||
Verizon Communications, Inc., 4.50%, 8/10/33 | 430 | 503 | |||||||||
Consumer Discretionary (0.2%): | |||||||||||
Hasbro, Inc., 3.55%, 11/19/26, Callable 9/19/26 @ 100 | 172 | 173 | |||||||||
Nordstrom, Inc., 4.38%, 4/1/30, Callable 1/1/30 @ 100 | 143 | 145 | |||||||||
318 | |||||||||||
Consumer Staples (0.6%): | |||||||||||
Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide, Inc., 4.70%, 2/1/36, Callable 8/1/35 @ 100 | 358 | 417 | |||||||||
BAT Capital Corp., 2.79%, 9/6/24, Callable 8/6/24 @ 100 | 300 | 300 | |||||||||
Kraft Heinz Foods Co., 3.75%, 4/1/30, Callable 1/1/30 @ 100 (a) | 161 | 165 | |||||||||
Unilever Capital Corp., 2.60%, 5/5/24, Callable 3/5/24 @ 100 | 350 | 358 | |||||||||
1,240 | |||||||||||
Energy (1.3%): | |||||||||||
Cheniere Corpus Christi Holdings LLC, 3.70%, 11/15/29, Callable 5/18/29 @ 100 (a) | 358 | 362 | |||||||||
Diamondback Energy, Inc., 3.25%, 12/1/26, Callable 10/1/26 @ 100 (d) | 215 | 215 | |||||||||
Enable Midstream Partners LP, 4.15%, 9/15/29, Callable 6/15/29 @ 100 | 350 | 327 | |||||||||
Enbridge Energy Partners LP, 7.38%, 10/15/45, Callable 4/15/45 @ 100 (g) | 650 | 964 | |||||||||
EQM Midstream Partners LP, 4.75%, 7/15/23, Callable 6/15/23 @ 100 | 700 | 683 | |||||||||
National Oilwell Varco, Inc., 3.60%, 12/1/29, Callable 9/1/29 @ 100 | 286 | 279 | |||||||||
Southern Union Co., 4.93%(LIBOR03M+302bps), 11/1/66, Callable 1/13/20 @ 100 (b) | 200 | 139 | |||||||||
Targa Resources Partners LP/Targa Resources Partners Finance Corp., 5.50%, 3/1/30, Callable 3/1/25 @ 102.75 (a) | 143 | 143 | |||||||||
3,112 | |||||||||||
Financials (4.3%): | |||||||||||
AmTrust Financial Services, Inc., 6.13%, 8/15/23 | 332 | 337 | |||||||||
Ares Capital Corp., 3.63%, 1/19/22, Callable 12/19/21 @ 100 (g) | 350 | 355 | |||||||||
BancorpSouth Bank, 4.13%(LIBOR03M+247bps), 11/20/29, Callable 11/20/24 @ 100 (b) | 184 | 185 | |||||||||
BBVA USA, 3.88%, 4/10/25, Callable 3/10/25 @ 100 | 100 | 105 | |||||||||
BMW US Capital LLC, 3.25%, 8/14/20 (a) (g) | 700 | 706 | |||||||||
Capital One NA, 2.15%, 9/6/22, Callable 8/6/22 @ 100 | 350 | 349 | |||||||||
Cullen/Frost Capital Trust II, 3.69%(LIBOR03M+155bps), 3/1/34, Callable 1/13/20 @ 100 (b) | 1,000 | 852 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
First Maryland Capital I, 3.00%(LIBOR03M+100bps), 1/15/27, Callable 1/13/20 @ 100 (b) | $ | 100 | $ | 95 | |||||||
Ford Motor Credit Co. LLC, 4.06%, 11/1/24, Callable 10/1/24 @ 100 | 500 | 503 | |||||||||
Global Atlantic Fin Co., 4.40%, 10/15/29, Callable 7/15/29 @ 100 (a) (q) | 184 | 183 | |||||||||
Harley-Davidson Financial Services, Inc., 3.55%, 5/21/21 (a) (g) | 700 | 712 | |||||||||
HSB Group, Inc., 2.91%(LIBOR03M+91bps), 7/15/27, Callable 1/13/20 @ 100 (b) | 550 | 474 | |||||||||
Hyundai Capital America, 3.75%, 7/8/21 (a) (g) | 700 | 714 | |||||||||
Level 3 Financing, Inc., 3.88%, 11/15/29, Callable 8/15/29 @ 100 (a) | 287 | 289 | |||||||||
Nationwide Mutual Insurance Co., 4.41%(LIBOR03M+229bps), 12/15/24, Callable 1/13/20 @ 100 (a) (b) | 1,100 | 1,095 | |||||||||
PNC Bank NA, 2.70%, 10/22/29 | 1,000 | 999 | |||||||||
Prudential Financial, Inc., 5.62%(LIBOR03M+392bps), 6/15/43, Callable 6/15/23 @ 100 (b) | 600 | 651 | |||||||||
Signature Bank, 4.13%(LIBOR03M+256bps), 11/1/29, Callable 11/1/24 @ 100 (b) | 250 | 253 | |||||||||
SunTrust Capital, 2.58%(LIBOR03M+67bps), 5/15/27, Callable 1/13/20 @ 100 (b) | 1,000 | 948 | |||||||||
Texas Capital Bank NA, 5.25%, 1/31/26 | 143 | 149 | |||||||||
The Allstate Corp., 5.75%(LIBOR03M+294bps), 8/15/53, Callable 8/15/23 @ 100 (b) | 140 | 151 | |||||||||
Zions Bancorp NA, 3.25%, 10/29/29, Callable 7/29/29 @ 100 | 286 | 283 | |||||||||
10,388 | |||||||||||
Health Care (0.6%): | |||||||||||
AbbVie, Inc., 3.20%, 11/21/29, Callable 8/21/29 @ 100 (a) | 287 | 291 | |||||||||
CVS Health Corp., 3.25%, 8/15/29, Callable 5/15/29 @ 100 | 534 | 543 | |||||||||
HCA, Inc., 5.13%, 6/15/39, Callable 12/15/38 @ 100 | 358 | 397 | |||||||||
Laboratory Corp. of America Holdings, 2.95%, 12/1/29, Callable 9/1/29 @ 100 | 215 | 216 | |||||||||
1,447 | |||||||||||
Industrials (1.0%): | |||||||||||
Ashtead Capital, Inc. | |||||||||||
4.00%, 5/1/28, Callable 5/1/23 @ 102 (a) | 51 | 52 | |||||||||
4.25%, 11/1/29, Callable 11/1/24 @ 102.13 (a) | 38 | 38 | |||||||||
Continental Airlines, 6.25%, 4/11/20 | 102 | 104 | |||||||||
Dover Corp., 2.95%, 11/4/29, Callable 8/4/29 @ 100 | 215 | 217 | |||||||||
General Electric Co., 5.50%, 1/8/20, MTN | 210 | 211 | |||||||||
Ryder System, Inc. | |||||||||||
3.50%, 6/1/21, MTN (g) | 700 | 712 | |||||||||
2.90%, 12/1/26, Callable 10/1/26 @ 100, MTN | 358 | 360 | |||||||||
The Conservation Fund A Nonprofit Corp., 3.47%, 12/15/29, Callable 9/15/29 @ 100 | 325 | 328 | |||||||||
United Airlines Pass Through Trust, 2.90%, 11/1/29 | 300 | 301 | |||||||||
2,323 | |||||||||||
Information Technology (0.4%): | |||||||||||
Amphenol Corp., 2.80%, 2/15/30, Callable 11/15/29 @ 100 | 300 | 298 | |||||||||
Keysight Technologies, Inc., 3.00%, 10/30/29, Callable 7/30/29 @ 100 | 263 | 263 | |||||||||
Microsoft Corp., 3.45%, 8/8/36, Callable 2/8/36 @ 100 | 466 | 512 | |||||||||
1,073 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Materials (0.2%): | |||||||||||
Packaging Corp. of America, 3.00%, 12/15/29, Callable 9/15/29 @ 100 | $ | 358 | $ | 361 | |||||||
Real Estate (0.2%): | |||||||||||
Mid-America Apartments LP, 2.75%, 3/15/30, Callable 12/15/29 @ 100 | 358 | 359 | |||||||||
SBA Tower Trust, 2.84%, 1/15/25 (a) | 173 | 173 | |||||||||
VICI Properties LP/VICI Note Co., Inc., 4.63%, 12/1/29, Callable 12/1/24 @ 102.31 (a) | 33 | 34 | |||||||||
566 | |||||||||||
Utilities (0.6%): | |||||||||||
Alabama Power Co., 3.85%, 12/1/42 | 215 | 234 | |||||||||
Cleco Corporate Holdings LLC, 3.38%, 9/15/29, Callable 6/11/29 @ 100 (a) | 367 | 365 | |||||||||
Duke Energy Florida LLC, 3.85%, 11/15/42, Callable 5/15/42 @ 100 | 215 | 235 | |||||||||
NextEra Energy Capital Holdings, Inc., 3.34%, 9/1/20 | 467 | 471 | |||||||||
1,305 | |||||||||||
Total Corporate Bonds (Cost $22,178) | 22,636 | ||||||||||
Yankee Dollars (1.5%) | |||||||||||
Energy (0.1%): | |||||||||||
Petroleos Mexicanos, 6.49%, 1/23/27, Callable 11/23/26 @ 100 (a) | 123 | 130 | |||||||||
Financials (1.1%): | |||||||||||
Athene Holding Ltd., 4.13%, 1/12/28, Callable 10/12/27 @ 100 | 700 | 722 | |||||||||
Deutsche Bank AG, 3.96%(SOFR+258bps), 11/26/25, Callable 11/26/24 @ 100 (b) | 215 | 216 | |||||||||
Newcrest Finance Pty Ltd., 4.45%, 11/15/21 (a) (g) | 300 | 311 | |||||||||
QBE Capital Funding III Ltd., 7.25%(USSW10+405bps), 5/24/41, Callable 5/24/21 @ 100 (a) (b) | 250 | 264 | |||||||||
Schahin II Finance Co. SPV Ltd. 8.00%, 5/25/20 PIK (a) (h) (o) | 23 | 21 | |||||||||
5.88%, 9/25/22 (a) (k) (r) | 912 | 68 | |||||||||
Sumitomo Mitsui Financial Group, Inc., 2.45%, 9/27/24 | 1,000 | 1,000 | |||||||||
2,602 | |||||||||||
Industrials (0.1%): | |||||||||||
CK Hutchison International 19 II Ltd., 2.75%, 9/6/29, Callable 6/6/29 @ 100 (a) | 300 | 296 | |||||||||
Materials (0.2%): | |||||||||||
Braskem Netherlands Finance BV, 4.50%, 1/31/30 (a) | 214 | 206 | |||||||||
Teck Resources Ltd., 6.13%, 10/1/35 | 230 | 266 | |||||||||
472 | |||||||||||
Total Yankee Dollars (Cost $4,110) | 3,500 | ||||||||||
Municipal Bonds (0.9%) | |||||||||||
Florida (0.1%): | |||||||||||
County of Broward Florida Airport System Revenue, Series C, 2.50%, 10/1/28 | 143 | 141 | |||||||||
Georgia (0.0%): | |||||||||||
Athens Housing Authority Revenue, 2.42%, 12/1/26 (d) | 305 | 304 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
New Jersey (0.1%): | |||||||||||
New Jersey Economic Development Authority Revenue, Series NNN, 2.88%, 6/15/24 | $ | 138 | $ | 138 | |||||||
North Hudson Sewerage Authority Revenue, 2.88%, 6/1/28 | 72 | 73 | |||||||||
211 | |||||||||||
New York (0.1%): | |||||||||||
New York State Dormitory Authority Revenue, Series B, 2.83%, 7/1/31 (d) | 360 | 359 | |||||||||
New York State Thruway Authority Revenue, Series M, 2.55%, 1/1/28 | 83 | 83 | |||||||||
442 | |||||||||||
Pennsylvania (0.3%): | |||||||||||
State Public School Building Authority Revenue, 3.05%, 4/1/28 | 143 | 143 | |||||||||
University of Pittsburgh-of The Commonwealth System of Higher Education Revenue Series C, 2.53%, 9/15/31 (d) | 145 | 145 | |||||||||
Series C, 2.58%, 9/15/32 (d) | 70 | 70 | |||||||||
Series C, 2.63%, 9/15/33 (d) | 145 | 145 | |||||||||
503 | |||||||||||
Texas (0.3%): | |||||||||||
City of Houston, Texas Combined Utility System Revenue, 3.72%, 11/15/28 | 180 | 199 | |||||||||
Harris County Cultural Education Facilities Finance Corp. Revenue, Series B, 2.81%, 5/15/29 (d) | 145 | 145 | |||||||||
State of Texas, GO, 3.00%, 4/1/28 (d) | 215 | 226 | |||||||||
570 | |||||||||||
Total Municipal Bonds (Cost $2,170) | 2,171 | ||||||||||
U.S. Government Agency Mortgages (11.2%) | |||||||||||
Federal Home Loan Mortgage Corporation Series 7/15/29, Class A2, 3.33%, 5/25/25 (q) | 1,100 | 1,168 | |||||||||
3.00%, 4/1/46 | 1,341 | 1,373 | |||||||||
3.50%, 4/1/46 | 3,901 | 4,063 | |||||||||
3.00%, 6/1/46 | 3,208 | 3,285 | |||||||||
3.00%, 9/1/46 | 1,459 | 1,494 | |||||||||
3.00%, 10/1/46 | 736 | 753 | |||||||||
3.00%, 11/1/46 | 1,496 | 1,532 | |||||||||
3.00%, 1/1/47 | 2,372 | 2,429 | |||||||||
3.00%, 1/1/47 | 3,498 | 3,582 | |||||||||
3.00%, 3/1/47 | 4,312 | 4,416 | |||||||||
3.50%, 4/1/48 | 1,698 | 1,748 | |||||||||
25,843 | |||||||||||
Federal National Mortgage Association Series 2016-M2, Class AV2, 2.15%, 1/25/23 | 457 | 459 | |||||||||
Total U.S. Government Agency Mortgages (Cost $25,871) | 26,302 | ||||||||||
U.S. Treasury Obligations (19.1%) | |||||||||||
U.S. Treasury Bonds 3.13%, 8/15/44 | 5,700 | 6,706 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
3.00%, 8/15/48 (g) | $ | 1,000 | $ | 1,169 | |||||||
3.38%, 11/15/48 (g) | 1,000 | 1,252 | |||||||||
2.38%, 11/15/49 | 1,000 | 1,038 | |||||||||
U.S. Treasury Notes 2.50%, 1/31/21 (g) | 2,000 | 2,018 | |||||||||
1.13%, 2/28/21 | 7,600 | 7,546 | |||||||||
1.63%, 11/15/22 | 8,000 | 8,005 | |||||||||
2.00%, 2/15/23 | 618 | 625 | |||||||||
1.63%, 4/30/23 | 3,800 | 3,801 | |||||||||
2.50%, 5/15/24 | 1,500 | 1,556 | |||||||||
2.25%, 11/15/25 | 6,200 | 6,393 | |||||||||
1.63%, 2/15/26 | 2,000 | 1,990 | |||||||||
2.25%, 2/15/27 | 1,000 | 1,035 | |||||||||
2.38%, 5/15/27 (g) | 2,000 | 2,090 | |||||||||
Total U.S. Treasury Obligations (Cost $43,274) | 45,224 | ||||||||||
Exchange-Traded Funds (37.8%) | |||||||||||
First Trust Global Tactical Commodity Strategy Fund | 6,700 | 122 | |||||||||
Invesco DB Commodity Index Tracking Fund (l) | 22,900 | 351 | |||||||||
Invesco FTSE RAFI Developed Markets ex-US ETF | 45,132 | 1,867 | |||||||||
Invesco FTSE RAFI Emerging Markets ETF | 99,400 | 2,071 | |||||||||
Invesco Fundamental High Yield Corporate Bond ETF | 16,600 | 316 | |||||||||
iShares 20+ Year Treasury Bond ETF | 31,413 | 4,411 | |||||||||
iShares Core MSCI EAFE ETF | 63,935 | 4,080 | |||||||||
iShares Core MSCI Emerging Markets ETF | 85,807 | 4,391 | |||||||||
iShares Core S&P 500 ETF | 25,200 | 7,964 | |||||||||
iShares Core U.S. Aggregate Bond ETF | 20,144 | 2,273 | |||||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 2,787 | 159 | |||||||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 22,257 | 2,848 | |||||||||
iShares iBoxx High Yield Corporate Bond ETF | 19,000 | 1,652 | |||||||||
iShares MSCI Canada ETF | 190,522 | 5,645 | |||||||||
iShares MSCI United Kingdom ETF | 44,000 | 1,449 | |||||||||
Schwab Fundamental Emerging Markets Large Co. Index ETF | 160,268 | 4,598 | |||||||||
Schwab Fundamental International Large Co. Index ETF | 236,622 | 6,795 | |||||||||
Schwab Fundamental International Small Co. Index ETF | 50,100 | 1,635 | |||||||||
SPDR S&P Emerging Markets Smallcap ETF | 7,496 | 331 | |||||||||
U.S. Commodity Index Fund (l) | 5,900 | 207 | |||||||||
VanEck Vectors Gold Miners ETF | 73,369 | 1,987 | |||||||||
VanEck Vectors Junior Gold Miners ETF | 8,800 | 336 | |||||||||
Vanguard FTSE All-World ex-US ETF | 11,514 | 601 | |||||||||
Vanguard FTSE Developed Markets ETF | 96,297 | 4,138 | |||||||||
Vanguard FTSE Europe ETF (l) | 121,100 | 6,828 | |||||||||
Vanguard Mortgage-Backed Securities ETF | 63,300 | 3,371 | |||||||||
Vanguard Real Estate ETF | 32,884 | 3,061 | |||||||||
Vanguard S&P 500 ETF (g) | 15,149 | 4,373 | |||||||||
Vanguard Short-Term Bond ETF (l) | 5,000 | 404 | |||||||||
Vanguard Small-Capital Value ETF (l) | 27,400 | 3,681 | |||||||||
Vanguard Total Bond Market ETF | 68,118 | 5,742 | |||||||||
Vanguard Total Stock Market ETF (g) | 5,759 | 922 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
WisdomTree Emerging Markets SmallCap Dividend Fund | 5,259 | $ | 239 | ||||||||
Xtrackers USD High Yield Corporate Bond ETF (l) | 8,000 | 399 | |||||||||
Total Exchange-Traded Funds (Cost $82,669) | 89,247 | ||||||||||
Affiliated Exchange-Traded Funds (0.2%) | |||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | 9,770 | 422 | |||||||||
Total Affiliated Exchange-Traded Funds (Cost $469) | 422 | ||||||||||
Commercial Paper (2.7%) | |||||||||||
CSLB Holdings, Inc., 2.40%, 12/3/19 (m) | 300 | 300 | |||||||||
DuPont Ei De Nemours Co., 2.00%, 12/9/19 (m) | 1,000 | 1,000 | |||||||||
Energy Transfer Partner LP, 4.00%, 12/2/19 (m) | 1,000 | 1,000 | |||||||||
ONEOK, Inc., 2.65%, 12/3/19 (m) | 1,000 | 999 | |||||||||
PVH Corp., 2.52%, 12/5/19 (m) | 1,000 | 1,000 | |||||||||
Royal Caribbean Cruises, 2.40%, 12/3/19 (m) | 1,000 | 999 | |||||||||
Spire, Inc., 2.12%, 12/5/19 (m) | 740 | 740 | |||||||||
Viacom, Inc., 1.97%, 12/10/19 (m) | 300 | 300 | |||||||||
Total Commercial Paper (Cost $6,339) | 6,338 | ||||||||||
Convertible Corporate Bonds (0.0% (n)) | |||||||||||
Materials (0.0%): | |||||||||||
Hycroft Mining Corp., 15.00%, 10/22/20 PIK (h) (o) (k) | $ | 782 | 23 | ||||||||
Total Convertible Corporate Bonds (Cost $777) | 23 | ||||||||||
Collateral for Securities Loaned^ (3.4%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (p) | 7,912,521 | 7,913 | |||||||||
Total Collateral for Securities Loaned (Cost $7,913) | 7,913 | ||||||||||
Total Investments (Cost $233,356) — 103.3% | 243,611 | ||||||||||
Liabilities in excess of other assets — (3.3)% | (7,829 | ) | |||||||||
NET ASSETS — 100.00% | $ | 235,782 |
^ Purchased with cash collateral from securities on loan.
(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 November 30, 2019, the fair value of these securities was $12,756 (thousands) and amounted to 5.4% of net assets.
(b) Variable or Floating-Rate Security. Rate disclosed is as of November 30, 2019.
(c) The rate for certain asset-backed and mortgage backed securities may vary based on factors relating to the pool of assets underlying the security. The rate disclosed is the rate in effect at November 30, 2019.
(d) Security purchased on a when-issued basis.
(e) Interest only.
(f) Non-income producing security.
See notes to financial statements.
14
USAA Mutual Funds Trust USAA Cornerstone Moderately Conservative Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(g) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(h) Security was fair valued based upon procedures approved by the Board of Trustees and represents less than 0.05% of the Fund's net assets as of November 30, 2019. This security is classified as Level 3 within the fair value hierarchy. (See Note 2 in the Notes to Financial Statements)
(i) Rounds to less than $1.
(j) Security is perpetual and has no final maturity date but may be subject to calls at various dates in the future.
(k) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were 0.3% of the Fund's net assets.
(l) All or a portion of this security is on loan.
(m) Rate represents the effective yield at November 30, 2019.
(n) Amount represents less than 0.05% of net assets.
(o) All of the coupon is PIK.
(p) Rate disclosed is the daily yield on November 30, 2019.
(q) 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.
(r) Defaulted security.
bps — Basis points
ETF — Exchange-Traded Fund
GO — General Obligation
LIBOR — London InterBank Offered Rate
LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LLC — Limited Liability Company
LP — Limited Partnership
MTN — Medium Term Note
PIK — Paid in Kind security
PLC — Public Limited Company
SOFR — Secured Overnight Financing Rate
USSW10 — USD 10 Year Swap Rate, rate disclosed as of November 30, 2019
See notes to financial statements.
15
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Cornerstone Moderately Conservative Fund | |||||||
Assets: | |||||||
Affiliated investments, at value (Cost $469) | $ | 422 | |||||
Unaffiliated investments, at value (Cost $232,887) | 243,189 | (a) | |||||
Cash and cash equivalents | 1,344 | ||||||
Receivables: | |||||||
Interest and dividends | 542 | ||||||
Capital shares issued | 160 | ||||||
From Adviser | 142 | ||||||
Prepaid expenses | 1 | ||||||
Total assets | 245,800 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 7,913 | ||||||
Investments purchased | 1,830 | ||||||
Capital shares redeemed | 93 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 97 | ||||||
Administration fees | 29 | ||||||
Custody fees | 1 | ||||||
Transfer agent fees | 11 | ||||||
Compliance fees | — | (b) | |||||
Other accrued expenses | 44 | ||||||
Total liabilities | 10,018 | ||||||
Net Assets: | |||||||
Capital | 224,595 | ||||||
Total distributable earnings/(loss) | 11,187 | ||||||
Net assets | $ | 235,782 | |||||
Shares (unlimited number of shares authorized with no par value): | 20,601 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 11.44 |
(a) Includes $7,689 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.
16
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Cornerstone Moderately Conservative Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 2,241 | |||||
Interest | 1,153 | ||||||
Securities lending (net of fees) | 10 | ||||||
Total income | 3,404 | ||||||
Expenses: | |||||||
Investment advisory fees | 583 | ||||||
Administration fees | 175 | ||||||
Custodian fees | 21 | ||||||
Transfer agent fees | 269 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 1 | ||||||
Legal and audit fees | 43 | ||||||
State registration and filing fees | 10 | ||||||
Sub-Administration fees | 24 | ||||||
Other expenses | 29 | ||||||
Total expenses | 1,175 | ||||||
Expenses waived/reimbursed by Adviser | (103 | ) | |||||
Expenses waived/reimbursed by AMCO | (26 | ) | |||||
Net expenses | 1,046 | ||||||
Net Investment Income (Loss) | 2,358 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities and foreign currency translations | 1,643 | ||||||
Net realized gains (losses) from futures contracts | (151 | ) | |||||
Net change in unrealized appreciation/depreciation on affiliated funds | 7 | ||||||
Net change in unrealized appreciation/depreciation on unaffiliated investments securities and foreign currency translations | 8,696 | ||||||
Net change in unrealized appreciation/depreciation on futures contracts | 98 | ||||||
Net realized/unrealized gains (losses) on investments | 10,293 | ||||||
Change in net assets resulting from operations | $ | 12,651 |
See notes to financial statements.
17
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Cornerstone Moderately Conservative Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 2,358 | $ | 4,923 | |||||||
Net realized gains (losses) from investments | 1,492 | (236 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 8,801 | (2,517 | ) | ||||||||
Change in net assets resulting from operations | 12,651 | 2,170 | |||||||||
Change in net assets resulting from distributions to shareholders | (2,228 | ) | (8,928 | ) | |||||||
Change in net assets resulting from capital transactions | (1,125 | ) | 11,521 | ||||||||
Change in net assets | 9,298 | 4,763 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 226,484 | 221,721 | |||||||||
End of period | $ | 235,782 | $ | 226,484 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 14,834 | $ | 46,063 | |||||||
Distributions reinvested | 2,117 | 8,481 | |||||||||
Cost of shares redeemed | (18,076 | ) | (43,023 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (1,125 | ) | $ | 11,521 | ||||||
Share Transactions: | |||||||||||
Issued | 1,318 | 4,196 | |||||||||
Reinvested | 189 | 792 | |||||||||
Redeemed | (1,607 | ) | (3,919 | ) | |||||||
Change in Shares | (100 | ) | 1,069 |
See notes to financial statements.
18
This page is intentionally left blank.
19
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 | Total Distributions | |||||||||||||||||||||||||
USAA Cornerstone Moderately Conservative Fund | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 10.94 | 0.11 | (d) | 0.50 | 0.61 | (0.11 | ) | — | (0.11 | ) | ||||||||||||||||||||
Year Ended May 31, 2019 | $ | 11.29 | 0.24 | (0.14 | ) | 0.10 | (0.24 | ) | (0.21 | ) | (0.45 | ) | |||||||||||||||||||
Year Ended May 31, 2018 | $ | 11.34 | 0.21 | 0.23 | 0.44 | (0.21 | ) | (0.28 | ) | (0.49 | ) | ||||||||||||||||||||
Year Ended May 31, 2017 | $ | 10.67 | 0.23 | 0.68 | 0.91 | (0.24 | ) | — | (0.24 | ) | |||||||||||||||||||||
Year Ended May 31, 2016 | $ | 11.42 | 0.28 | (0.68 | ) | (0.40 | ) | (0.26 | ) | (0.09 | ) | (0.35 | ) | ||||||||||||||||||
Year Ended May 31, 2015 | $ | 11.52 | 0.26 | 0.03 | 0.29 | (0.27 | ) | (0.12 | ) | (0.39 | ) |
* 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) The expense ratios exclude the impact of expenses paid by each underlying fund.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Reflects increased usage of quantitative investment strategies.
(f) Reflects increased trading activity due to changes in asset allocation strategies.
See notes to financial statements.
20
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) | |||||||||||||||||||||||||
USAA Cornerstone Moderately Conservative Fund | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 11.44 | 5.58 | % | 0.90 | % | 2.03 | % | 1.01 | % | $ | 235,782 | 37 | % | |||||||||||||||||
Year Ended May 31, 2019 | $ | 10.94 | 0.99 | % | 0.90 | % | 2.22 | % | 1.08 | % | $ | 226,484 | 77 | %(e) | |||||||||||||||||
Year Ended May 31, 2018 | $ | 11.29 | 3.89 | % | 0.90 | % | 1.84 | % | 1.07 | % | $ | 221,721 | 45 | % | |||||||||||||||||
Year Ended May 31, 2017 | $ | 11.34 | 8.65 | % | 0.90 | % | 2.12 | % | 1.09 | % | $ | 209,270 | 55 | % | |||||||||||||||||
Year Ended May 31, 2016 | $ | 10.67 | (3.50 | )% | 0.90 | % | 2.56 | % | 1.09 | % | $ | 194,376 | 70 | %(f) | |||||||||||||||||
Year Ended May 31, 2015 | $ | 11.42 | 2.58 | % | 0.90 | % | 2.43 | % | 1.05 | % | $ | 204,535 | 37 | % |
See notes to financial statements.
21
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Cornerstone Moderately Conservative Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
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 July 1, 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)
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.
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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.
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 November 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 | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 6,338 | $ | — | $ | 6,338 | |||||||||||
Collateralized Mortgage Obligations | — | 2,219 | — | 2,219 | |||||||||||||||
Common Stocks | 28,367 | — | (a) | 28,367 | |||||||||||||||
Preferred Stocks | 1,381 | 1,096 | — | 2,477 | |||||||||||||||
Senior Secured Loans | — | 434 | — | 434 | |||||||||||||||
Corporate Bonds | — | 22,636 | — | 22,636 | |||||||||||||||
Yankee Dollars | — | 3,479 | 21 | 3,500 | |||||||||||||||
Municipal Bonds | — | 2,171 | — | 2,171 | |||||||||||||||
U.S. Government Agency Mortgages | — | 26,302 | — | 26,302 | |||||||||||||||
U.S. Treasury Obligations | — | 45,224 | — | 45,224 | |||||||||||||||
Exchange-Traded Funds | 89,247 | — | — | 89,247 | |||||||||||||||
Affiliated Exchange-Traded Funds | 422 | �� | — | — | 422 | ||||||||||||||
Commercial Paper | — | 6,338 | — | 6,338 | |||||||||||||||
Convertible Corporate Bonds | — | — | 23 | 23 | |||||||||||||||
Collateral for Securities Loaned | 7,913 | — | — | 7,913 | |||||||||||||||
Total | $ | 127,330 | $ | 116,237 | $ | 44 | $ | 243,611 |
(a) Amount is less than $1.
23
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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.
Mortgage- and Asset-Backed Securities:
The values of some mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values of mortgage and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market's perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as "Ginnie Mae"), while other mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as "Fannie Mae" and "Freddie Mac"), are backed only by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
24
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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 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.
During the period ended November 30, 2019, the Fund held futures contracts primarily for the strategy of gaining exposure to a particular asset class or securities market. The Fund held no futures contracts at November 30, 2019.
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
25
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 7,689 | $ | — | $ | 7,913 |
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 May 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
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | U.S. Government Securities | ||||||||||||||
Purchases | Sales | Purchases | Sales | ||||||||||||
$ | 65,079 | $ | 50,463 | $ | 18,480 | $ | 31,440 |
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 fees accrued daily and paid monthly at an annual rate of 0.50% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $488 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 0.50% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $95 thousand and reflected on the Statement of Operations as Investment Advisory fees.
In addition, the Fund invests in affiliated USAA exchange-traded fund(s) ("affiliated ETFs"). The Fund's Advisor fee is reimbursed by VCM (and previously AMCO) to the extent of the indirect Advisor fee incurred through the Fund's proportional investment in the affiliated ETF(s). For the period from July 1, 2019 through November 30, 2019, the Fund's Advisor fee was reimbursed by VCM in an amount of
27
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
$1 thousand, of which $1 thousand is receivable from VCM. For the period from June 1, 2019 through June 30, 2019, the Fund's Advisor fee was reimbursed by AMCO in an amount of less than $1 thousand.
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 November 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 the 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. Amounts incurred from July 1, 2019 through November 30, 2019 are $147 thousand and are presented on the Statement of Operations as Administration fees.
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. Amounts incurred from June 1, 2019 through June 30, 2019 were $28 thousand and 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 an annual charge of $23 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 November 30, 2019 was $224 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $45 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
28
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.90%.
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 November 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 November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 103 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses to 0.90% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limits is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $26 thousand. 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.
29
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
The Fund has a targeted risk tolerance and a corresponding asset allocation target; however, mere asset allocation and volatility are not the sole determination of risk. The Fund's managers will tactically allocate away from the target allocation as market conditions and the perceived risks warrant. The Fund bears the risk that the managers' tactical allocation will not be successful.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, to the degree the Fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
The fixed-income securities in the Fund's portfolio are subject to credit risk, which is the possibility that an issuer of a fixed-income security will fail to make timely interest and/or principal payments on its securities or that negative market perceptions of the issuer's ability to make such payments will cause the price of that security to decline. The Fund accepts some credit risk as a recognized means to enhance an investor's return. All fixed-income securities, varying from the highest quality to the very speculative, have some degree of credit risk. Fixed-income securities rated below investment grade, also known as "junk" or high-yield bonds, generally entail greater economic, credit, and liquidity risk than investment-grade securities. Their prices may be more volatile, especially during economic downturns, financial setbacks, or liquidity events.
The Fund may invest in shares of ETFs, which generally are investment companies that hold a portfolio of common stocks or debt securities, the shares of which are traded on an exchange. ETFs incur their own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which will be borne indirectly by the Fund as a shareholder in an ETF. As a result, the Fund's investment in an ETF will cause the Fund to indirectly bear the fees and expenses of the ETF and, in turn, the Fund's performance may be lower than if the Fund were to invest directly in the underlying securities held by the ETF. For investments in affiliated ETFs, the Fund's management fee is reimbursed by the Adviser to the extent of the indirect management fee incurred through the Fund's investment in the affiliated ETFs. The Adviser may have conflicts of interest in allocating assets among affiliated and unaffiliated ETFs, because the Adviser also manages and administers the affiliated ETFs, and the Adviser and its affiliates receive other fees from the affiliated ETFs. In addition, the Fund also will be subject to the risks associated with the securities or other investments held by the ETFs.
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, 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
30
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
(one month LIBOR plus one percent) on amounts borrowed. Interest charged to the Fund during the period is presented on the Statement 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 June 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 November 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. 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 November 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income quarterly. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 6,347 | $ | 2,581 | $ | 8,928 |
31
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||
$ | 617 | $ | (991 | ) | $ | 1,308 | $ | 934 |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales, REIT return of capital dividend, non-REIT return of capital dividend, futures contracts marked-to-market, hybrid interest accrual adjustment and partnership basis adjustments.
8. Affiliated Securities:
An affiliated security is a security in which the Fund has ownership of at least 5% of the security's outstanding voting shares or an investment company managed by VCM. The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. These underlying funds are noted as affiliated in the Fund's Schedule of Portfolio Investments. The affiliated underlying funds' annual or semiannual reports may be viewed at usaa.com. Transactions in affiliated securities during the six months ended November 30, 2019 were as follows (amount in thousands):
Fair Value 5/31/2019 | Purchases at Cost | Proceeds from Sales | Realized Gain (Loss) | Capital Gain Distribution | Net Change in Unrealized Appreciation/ Depreciation | Fair Value 11/30/2019 | Dividend Income | ||||||||||||||||||||||||||||
Affiliated Holdings | |||||||||||||||||||||||||||||||||||
VictoryShares USAA MSCI Emerging Markets Value Momentum ETF | $ | 415 | $ | — | $ | — | $ | — | $ | — | $ | 7 | $ | 422 | $ | — |
32
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,055.80 | $ | 1,020.50 | $ | 4.63 | $ | 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).
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.
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 | (800) 235-8396 |
97451-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Emerging Markets Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 18 | ||||||
Statement of Operations | 19 | ||||||
Statements of Changes in Net Assets | 20 | ||||||
Financial Highlights | 22 | ||||||
Notes to Financial Statements | 26 | ||||||
Supplemental Information | 37 | ||||||
Expense Examples | 37 | ||||||
Proxy Voting and Portfolio Holdings Information | 38 | ||||||
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 Emerging Markets Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek capital appreciation.
Top 10 Industries
11/30/19
(% of Net Assets)
Banks | 17.0 | % | |||||
Semiconductors & Semiconductor Equipment | 7.4 | % | |||||
Oil, Gas & Consumable Fuels | 6.9 | % | |||||
Internet & Direct Marketing Retail | 5.5 | % | |||||
Interactive Media & Services | 5.3 | % | |||||
Technology Hardware, Storage & Peripherals | 4.2 | % | |||||
Entertainment | 3.7 | % | |||||
Electronic Equipment, Instruments & Components | 3.2 | % | |||||
Insurance | 2.8 | % | |||||
IT Services | 2.7 | % |
The Schedule of Portfolio Investments uses the Global Industry Classification Standard (GICS), which may differ from the Fund's compliance classification.
Top 10 Equity Holdings
11/30/19
(% of Net Assets)
Alibaba Group Holding Ltd. | 4.7 | % | |||||
Samsung Electronics Co. Ltd. | 4.2 | % | |||||
Tencent Holdings Ltd. | 3.6 | % | |||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 3.3 | % | |||||
Ping An Insurance Group Co. of China Ltd. | 2.3 | % | |||||
NetEase, Inc. | 2.0 | % | |||||
China Construction Bank Corp. | 1.9 | % | |||||
SK Hynix, Inc. | 1.8 | % | |||||
Sberbank of Russia PJSC | 1.7 | % | |||||
Reliance Industries Ltd. | 1.7 | % |
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Emerging Markets Fund (continued) | November 30, 2019 |
(Unaudited)
Country Allocation:
11/30/19
(% of Net Assets)
* Includes countries with less than 3.0% of portfolio and short-term investment purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Common Stocks (97.7%) | |||||||||||
Bangladesh (0.0%): (a) | |||||||||||
Financials (0.0%): (a) | |||||||||||
BRAC Bank Ltd. | 281,733 | $ | 193 | ||||||||
Brazil (7.1%): | |||||||||||
Consumer Discretionary (1.0%): | |||||||||||
Construtora Tenda SA | 207,800 | 1,170 | |||||||||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 390,900 | 2,479 | |||||||||
Grupo SBF SA | 583,500 | 3,724 | |||||||||
Tupy SA | 113,300 | 527 | |||||||||
7,900 | |||||||||||
Consumer Staples (0.2%): | |||||||||||
Ambev SA, ADR | 330,430 | 1,391 | |||||||||
1,391 | |||||||||||
Energy (0.7%): | |||||||||||
Enauta Participacoes SA | 163,500 | 532 | |||||||||
Petroleo Brasileiro SA, ADR | 347,377 | 5,117 | |||||||||
5,649 | |||||||||||
Financials (2.5%): | |||||||||||
Banco Bradesco SA, ADR (b) | 1,270,447 | 9,973 | |||||||||
Banco do Brasil SA | 813,395 | 9,187 | |||||||||
19,160 | |||||||||||
Health Care (0.6%): | |||||||||||
Notre Dame Intermedica Participacoes SA | 40,700 | 545 | |||||||||
Qualicorp Consultoria e Corretora de Seguros SA | 422,500 | 3,673 | |||||||||
4,218 | |||||||||||
Industrials (0.9%): | |||||||||||
CCR SA | 875,120 | 3,554 | |||||||||
Companhia de Locacao das Americas | 603,900 | 2,478 | |||||||||
JSL SA | 83,100 | 420 | |||||||||
6,452 | |||||||||||
Information Technology (0.5%): | |||||||||||
Cielo SA, ADR (b) | 798,965 | 1,422 | |||||||||
StoneCo Ltd., Class A | 66,225 | 2,714 | |||||||||
4,136 | |||||||||||
Real Estate (0.5%): | |||||||||||
Aliansce Sonae Shopping Centers SA | 362,411 | 3,808 | |||||||||
Utilities (0.2%): | |||||||||||
Eneva SA | 118,700 | 1,068 | |||||||||
Omega Geracao SA | 43,300 | 378 | |||||||||
1,446 | |||||||||||
54,160 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Canada (0.5%): | |||||||||||
Materials (0.5%): | |||||||||||
First Quantum Minerals Ltd. | 417,324 | $ | 3,818 | ||||||||
Chile (0.4%): | |||||||||||
Communication Services (0.1%): | |||||||||||
Empresa Nacional de Telecomunicaciones SA | 137,607 | 836 | |||||||||
Financials (0.2%): | |||||||||||
Banco de Credito e Inversiones SA | 34,663 | 1,552 | |||||||||
Real Estate (0.1%): | |||||||||||
Parque Arauco SA | 150,883 | 324 | |||||||||
Utilities (0.0%): (a) | |||||||||||
AES Gener SA | 1,379,332 | 263 | |||||||||
2,975 | |||||||||||
China (25.3%): | |||||||||||
Communication Services (6.8%): | |||||||||||
Baidu, Inc., ADR | 25,719 | 3,048 | |||||||||
Momo, Inc., ADR | 59,622 | 2,232 | |||||||||
NetEase, Inc., ADR | 49,460 | 15,596 | |||||||||
Tencent Holdings Ltd. | 654,800 | 27,630 | |||||||||
Wuhu Sanqi Interactive Entertainment Network Technology Group Co. Ltd., Class A | 1,081,300 | 3,338 | |||||||||
51,844 | |||||||||||
Consumer Discretionary (6.5%): | |||||||||||
Alibaba Group Holding Ltd., ADR (c) | 179,904 | 35,981 | |||||||||
Hisense Home Appliances Group Co. Ltd., Class H | 318,000 | 295 | |||||||||
Huayu Automotive Systems Co. Ltd., Class A | 608,300 | 2,244 | |||||||||
JD.com, Inc., ADR | 127,955 | 4,178 | |||||||||
New Oriental Education & Technology Group, Inc., ADR | 24,710 | 2,992 | |||||||||
Tianneng Power International Ltd. (b) | 406,000 | 267 | |||||||||
Tongcheng-Elong Holdings Ltd. | 1,272,000 | 2,114 | |||||||||
Topsports International Holdings Ltd. (d) | 1,656,864 | 1,863 | |||||||||
49,934 | |||||||||||
Consumer Staples (1.4%): | |||||||||||
China Mengniu Dairy Co. Ltd. | 934,000 | 3,573 | |||||||||
China Modern Dairy Holdings Ltd. | 2,654,000 | 390 | |||||||||
Wuliangye Yibin Co. Ltd., Class A | 356,995 | 6,484 | |||||||||
10,447 | |||||||||||
Energy (1.1%): | |||||||||||
China Oilfield Services Ltd., Class H | 3,492,000 | 4,701 | |||||||||
China Shenhua Energy Co. Ltd., Class H | 1,632,500 | 3,161 | |||||||||
Hilong Holdings Ltd. | 3,887,000 | 432 | |||||||||
8,294 | |||||||||||
Financials (5.2%): | |||||||||||
China Construction Bank Corp., Class H | 18,187,000 | 14,469 | |||||||||
China Galaxy Securities Co. Ltd., Class H | 6,513,000 | 3,309 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
China Merchants Bank Co. Ltd., Class H | 1,016,500 | $ | 4,803 | ||||||||
Ping An Insurance Group Co. of China Ltd. | 1,529,000 | 17,363 | |||||||||
39,944 | |||||||||||
Health Care (0.2%): | |||||||||||
China Animal Healthcare Ltd. (e) (f) (h) | 1,673,000 | 55 | |||||||||
Shandong Weigao Group Medical Polymer Co. Ltd., Class H | 444,000 | 536 | |||||||||
Sinopharm Group Co. Ltd., Class H | 63,200 | 209 | |||||||||
YiChang HEC ChangJiang Pharmaceutical Co. Ltd., Class H (d) | 100,800 | 530 | |||||||||
1,330 | |||||||||||
Industrials (1.9%): | |||||||||||
China Lesso Group Holdings Ltd. | 532,000 | 557 | |||||||||
China State Construction International Holdings Ltd. | 4,334,538 | 3,421 | |||||||||
Focused Photonics Hangzhou, Inc., Class A | 1,177,730 | 2,323 | |||||||||
Sany Heavy Equipment International Holdings Co. Ltd. | 637,000 | 320 | |||||||||
Shenzhen Expressway Co. Ltd., Class H | 422,000 | 563 | |||||||||
Zoomlion Heavy Industry Science & Technology Co. Ltd., Class H (b) | 4,262,200 | 3,016 | |||||||||
ZTO Express Cayman, Inc., ADR | 215,531 | 4,586 | |||||||||
14,786 | |||||||||||
Information Technology (0.6%): | |||||||||||
Beijing Sinnet Technology Co. Ltd., Class A | 1,039,700 | 2,834 | |||||||||
Chinasoft International Ltd. (b) | 796,000 | 378 | |||||||||
Kingdee International Software Group Co. Ltd. | 1,631,000 | 1,617 | |||||||||
4,829 | |||||||||||
Materials (0.9%): | |||||||||||
Anhui Conch Cement Co. Ltd., Class H (b) | 1,122,500 | 7,181 | |||||||||
7,181 | |||||||||||
Real Estate (0.7%): | |||||||||||
China SCE Group Holdings Ltd. | 5,997,000 | 2,859 | |||||||||
Sunac China Holdings Ltd. | 476,000 | 2,323 | |||||||||
5,182 | |||||||||||
Utilities (0.0%): (a) | |||||||||||
China Tian Lun Gas Holdings Ltd. | 451,000 | 396 | |||||||||
194,167 | |||||||||||
Colombia (0.8%): | |||||||||||
Financials (0.8%): | |||||||||||
Bancolombia SA, ADR | 133,776 | 6,457 | |||||||||
6,457 | |||||||||||
Cyprus (0.3%): | |||||||||||
Financials (0.3%): | |||||||||||
TCS Group Holding PLC, GDR | 131,449 | 2,415 | |||||||||
2,415 | |||||||||||
Egypt (0.5%): | |||||||||||
Communication Services (0.1%): | |||||||||||
Telecom Egypt Co. | 706,120 | 459 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Financials (0.4%): | |||||||||||
Commercial International Bank Egypt SAE, GDR | 551,023 | $ | 2,649 | ||||||||
Credit Agricole Egypt SAE | 184,821 | 506 | |||||||||
3,155 | |||||||||||
3,614 | |||||||||||
Greece (0.7%): | |||||||||||
Communication Services (0.3%): | |||||||||||
Hellenic Telecommunications Organization SA | 164,854 | 2,476 | |||||||||
Industrials (0.3%): | |||||||||||
Mytilineos Holdings SA | 185,451 | 2,062 | |||||||||
2,062 | |||||||||||
Utilities (0.1%): | |||||||||||
Terna Energy SA | 64,964 | 532 | |||||||||
5,070 | |||||||||||
Hong Kong (4.1%): | |||||||||||
Communication Services (0.5%): | |||||||||||
China Mobile Ltd., ADR | 80,523 | 3,038 | |||||||||
NetDragon Websoft Holdings Ltd. | 189,000 | 437 | |||||||||
3,475 | |||||||||||
Consumer Discretionary (0.5%): | |||||||||||
Stella International Holdings Ltd. | 180,000 | 297 | |||||||||
Techtronic Industries Co. Ltd. (b) | 512,000 | 3,848 | |||||||||
4,145 | |||||||||||
Consumer Staples (0.0%): (a) | |||||||||||
Vinda International Holdings Ltd. | 191,000 | 334 | |||||||||
Energy (0.8%): | |||||||||||
CNOOC Ltd. | 2,205,000 | 3,201 | |||||||||
Kunlun Energy Co. Ltd. | 3,862,000 | 3,271 | |||||||||
6,472 | |||||||||||
Financials (0.1%): | |||||||||||
Far East Horizon Ltd. | 416,000 | 378 | |||||||||
Health Care (0.6%): | |||||||||||
CSPC Pharmaceutical Group Ltd. | 1,968,000 | 4,479 | |||||||||
Industrials (0.1%): | |||||||||||
Sinotruk Hong Kong Ltd. | 265,000 | 447 | |||||||||
Information Technology (0.4%): | |||||||||||
Kingboard Laminates Holdings Ltd. | 2,613,500 | 2,948 | |||||||||
Materials (0.1%): | |||||||||||
China Resources Cement Holdings Ltd. | 590,000 | 707 | |||||||||
Real Estate (0.7%): | |||||||||||
China Overseas Grand Oceans Group Ltd. | 672,000 | 377 | |||||||||
Shimao Property Holdings Ltd. | 1,350,000 | 4,891 | |||||||||
5,268 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Utilities (0.3%): | |||||||||||
Beijing Enterprises Water Group Ltd. | 3,576,000 | $ | 1,755 | ||||||||
Canvest Environmental Protection Group Co. Ltd. | 786,000 | 336 | |||||||||
China Water Affairs Group Ltd. (b) | 478,000 | 367 | |||||||||
2,458 | |||||||||||
31,111 | |||||||||||
Hungary (0.4%): | |||||||||||
Financials (0.4%): | |||||||||||
OTP Bank Nyrt (f) | 68,083 | 3,203 | |||||||||
India (10.3%): | |||||||||||
Consumer Discretionary (1.0%): | |||||||||||
Aditya Birla Fashion & Retail Ltd. | 521,172 | 1,635 | |||||||||
Bajaj Auto Ltd. | 76,604 | 3,390 | |||||||||
Crompton Greaves Consumer Electricals Ltd. | 94,830 | 337 | |||||||||
The Indian Hotels Co. Ltd. | 680,819 | 1,417 | |||||||||
Trident Ltd. | 695,232 | 636 | |||||||||
7,415 | |||||||||||
Consumer Staples (0.1%): | |||||||||||
Kaveri Seed Co. Ltd. | 53,050 | 363 | |||||||||
Energy (2.0%): | |||||||||||
Petronet LNG Ltd. | 610,922 | 2,311 | |||||||||
Reliance Industries Ltd. | 609,182 | 13,159 | |||||||||
15,470 | |||||||||||
Financials (3.6%): | |||||||||||
Axis Bank Ltd., GDR | 113,060 | 5,794 | |||||||||
Axis Bank Ltd. | 322,944 | 3,324 | |||||||||
Cholamandalam Investment and Finance Co. Ltd. | 540,417 | 2,350 | |||||||||
City Union Bank Ltd. | 133,321 | 418 | |||||||||
Federal Bank Ltd. | 290,025 | 359 | |||||||||
Housing Development Finance Corp. Ltd. | 185,211 | 5,928 | |||||||||
ICICI Bank Ltd., ADR | 565,383 | 7,966 | |||||||||
Multi Commodity Exchange of India Ltd. | 24,366 | 399 | |||||||||
Muthoot Finance Ltd. | 70,075 | 662 | |||||||||
Power Finance Corp. Ltd. (c) | 364,984 | 582 | |||||||||
27,782 | |||||||||||
Health Care (0.2%): | |||||||||||
Alembic Pharmaceuticals Ltd. | 45,183 | 347 | |||||||||
Granules India Ltd. | 379,158 | 675 | |||||||||
Ipca Laboratories Ltd. | 41,826 | 666 | |||||||||
1,688 | |||||||||||
Industrials (0.6%): | |||||||||||
Adani Ports & Special Economic Zone Ltd. | 602,755 | 3,208 | |||||||||
Engineers India Ltd. | 216,476 | 319 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Escorts Ltd. | 38,573 | $ | 342 | ||||||||
PNC Infratech Ltd. | 185,352 | 503 | |||||||||
4,372 | |||||||||||
Information Technology (1.6%): | |||||||||||
HCL Technologies Ltd. | 275,851 | 4,335 | |||||||||
Infosys Ltd., ADR | 413,460 | 4,064 | |||||||||
Tata Consultancy Services Ltd. | 139,933 | 4,005 | |||||||||
12,404 | |||||||||||
Materials (1.1%): | |||||||||||
APL Apollo Tubes Ltd. | 18,693 | 408 | |||||||||
Berger Paints India Ltd. | 331,131 | 2,291 | |||||||||
Birla Corp. Ltd. | 59,206 | 540 | |||||||||
Coromandel International Ltd. | 52,287 | 346 | |||||||||
HeidelbergCement India Ltd. | 235,148 | 624 | |||||||||
UltraTech Cement Ltd. | 43,842 | 2,602 | |||||||||
UPL Ltd. | 230,291 | 1,839 | |||||||||
8,650 | |||||||||||
Real Estate (0.0%): (a) | |||||||||||
Sobha Ltd. | 53,666 | 310 | |||||||||
Utilities (0.1%): | |||||||||||
CESC Ltd. | 37,520 | 393 | |||||||||
Gujarat Gas Ltd. | 157,919 | 468 | |||||||||
861 | |||||||||||
79,315 | |||||||||||
Indonesia (2.7%): | |||||||||||
Communication Services (0.5%): | |||||||||||
Media Nusantara Citra Tbk PT | 3,821,000 | 339 | |||||||||
Telekomunikasi Indonesia Persero Tbk PT, ADR | 117,400 | 3,248 | |||||||||
3,587 | |||||||||||
Consumer Discretionary (0.0%): (a) | |||||||||||
Mitra Adiperkasa Tbk PT | 5,014,300 | 361 | |||||||||
Financials (1.6%): | |||||||||||
Bank Mandiri Persero Tbk PT | 6,798,990 | 3,359 | |||||||||
Bank Negara Indonesia Persero Tbk PT | 6,671,700 | 3,545 | |||||||||
Bank Rakyat Indonesia Persero Tbk PT | 18,556,400 | 5,378 | |||||||||
12,282 | |||||||||||
Industrials (0.3%): | |||||||||||
Wijaya Karya Persero Tbk PT | 20,434,100 | 2,513 | |||||||||
2,513 | |||||||||||
Materials (0.3%): | |||||||||||
Indocement Tunggal Prakarsa Tbk PT | 1,657,200 | 2,278 | |||||||||
21,021 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Jersey (0.1%): | |||||||||||
Information Technology (0.1%): | |||||||||||
WNS Holdings Ltd., ADR | 12,479 | $ | 788 | ||||||||
788 | |||||||||||
Korea, Republic Of (13.4%): | |||||||||||
Communication Services (1.0%): | |||||||||||
AfreecaTV Co. Ltd. | 7,081 | 407 | |||||||||
Innocean Worldwide, Inc. | 28,189 | 1,535 | |||||||||
NCSoft Corp. | 12,812 | 5,355 | |||||||||
7,297 | |||||||||||
Consumer Discretionary (1.6%): | |||||||||||
F&F Co. Ltd. | 4,088 | 383 | |||||||||
Fila Korea Ltd. | 36,793 | 1,610 | |||||||||
GS Home Shopping, Inc. | 2,506 | 318 | |||||||||
Hyundai Mobis Co. Ltd. | 37,475 | 7,782 | |||||||||
Kia Motors Corp. | 45,364 | 1,663 | |||||||||
SL Corp. | 22,865 | 364 | |||||||||
Youngone Corp. | 15,294 | 461 | |||||||||
12,581 | |||||||||||
Consumer Staples (0.6%): | |||||||||||
KT&G Corp. | 23,381 | 1,937 | |||||||||
Maeil Dairies Co. Ltd. | 11,883 | 845 | |||||||||
NeoPharm Co. Ltd. | 44,682 | 1,786 | |||||||||
4,568 | |||||||||||
Energy (0.4%): | |||||||||||
SK Innovation Co. Ltd. | 25,669 | 3,191 | |||||||||
Financials (0.8%): | |||||||||||
Hana Financial Group, Inc. | 86,390 | 2,620 | |||||||||
Hanwha Life Insurance Co. Ltd. | 33,089 | 64 | |||||||||
KIWOOM Securities Co. Ltd. | 7,155 | 458 | |||||||||
Shinhan Financial Group Co. Ltd. | 79,836 | 2,949 | |||||||||
6,091 | |||||||||||
Health Care (0.6%): | |||||||||||
Hanmi Pharm Co. Ltd. | 12,761 | 3,459 | |||||||||
Korea United Pharmaceuticals, Inc. | 28,547 | 451 | |||||||||
Seegene, Inc. | 20,820 | 496 | |||||||||
Value Added Technology Co. Ltd. | 18,276 | 421 | |||||||||
4,827 | |||||||||||
Industrials (0.6%): | |||||||||||
KEPCO Plant Service & Engineering Co. Ltd. | 12,414 | 374 | |||||||||
Posco International Corp. | 37,783 | 584 | |||||||||
Samsung Engineering Co. Ltd. (c) | 206,860 | 3,301 | |||||||||
4,259 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Information Technology (7.4%): | |||||||||||
DuzonBizon Co. Ltd. | 46,864 | $ | 2,836 | ||||||||
NHN KCP Corp. | 20,536 | 338 | |||||||||
Partron Co. Ltd. | 51,490 | 518 | |||||||||
Samsung Electro-Mechanics Co. Ltd. | 64,296 | 6,054 | |||||||||
Samsung Electronics Co. Ltd. | 747,488 | 31,958 | |||||||||
SFA Engineering Corp. | 22,156 | 801 | |||||||||
SK Hynix, Inc. | 205,162 | 14,120 | |||||||||
56,625 | |||||||||||
Materials (0.4%): | |||||||||||
Korea Petrochemical Ind Co. Ltd. | 2,650 | 265 | |||||||||
Soulbrain Co. Ltd. | 9,207 | 549 | |||||||||
Ssangyong Cement Industrial Co. Ltd. | 512,681 | 2,375 | |||||||||
3,189 | |||||||||||
102,628 | |||||||||||
Luxembourg (0.1%): | |||||||||||
Communication Services (0.0%): (a) | |||||||||||
Play Communications SA (d) | 44,092 | 368 | |||||||||
Materials (0.1%): | |||||||||||
Ternium SA, ADR | 19,400 | 418 | |||||||||
418 | |||||||||||
786 | |||||||||||
Malaysia (0.7%): | |||||||||||
Communication Services (0.1%): | |||||||||||
TIME dotCom Berhad | 212,700 | 464 | |||||||||
Consumer Discretionary (0.0%): (a) | |||||||||||
Padini Holdings Berhad | 394,300 | 326 | |||||||||
Energy (0.1%): | |||||||||||
Serba Dinamik Holdings Berhad | 674,900 | 705 | |||||||||
Financials (0.3%): | |||||||||||
AMMB Holdings Berhad | 1,935,900 | 1,850 | |||||||||
Syarikat Takaful Malaysia Keluarga Berhad | 350,000 | 485 | |||||||||
2,335 | |||||||||||
Health Care (0.1%): | |||||||||||
Supermax Corp. Berhad | 1,381,600 | 450 | |||||||||
Industrials (0.0%): (a) | |||||||||||
Muhibbah Engineering M Berhad | 392,000 | 221 | |||||||||
Information Technology (0.1%): | |||||||||||
V.S. Industry Berhad | 1,756,700 | 564 | |||||||||
Materials (0.0%): (a) | |||||||||||
Scientex Berhad | 156,400 | 349 | |||||||||
5,414 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Mexico (3.2%): | |||||||||||
Communication Services (1.0%): | |||||||||||
America Movil SAB de CV, Series L, ADR | 479,077 | $ | 7,325 | ||||||||
7,325 | |||||||||||
Consumer Discretionary (0.2%): | |||||||||||
Alsea SAB de CV (b) | 707,843 | 1,916 | |||||||||
Urbi Desarrollos Urbanos Sab de CV | 318,404 | 16 | |||||||||
1,932 | |||||||||||
Consumer Staples (0.4%): | |||||||||||
Grupo Lala SAB de CV | 198,844 | 196 | |||||||||
Kimberly-Clark de Mexico SAB de CV, Series A | 1,003,300 | 1,920 | |||||||||
La Comer SAB de CV (b) | 476,078 | 630 | |||||||||
2,746 | |||||||||||
Financials (0.6%): | |||||||||||
Banco del Bajio SA (d) | 218,300 | 338 | |||||||||
Credito Real Sab de CV | 333,447 | 392 | |||||||||
Gentera SAB de CV | 2,230,564 | 2,130 | |||||||||
Grupo Financiero Banorte SAB de CV | 314,200 | 1,653 | |||||||||
4,513 | |||||||||||
Industrials (0.3%): | |||||||||||
Controladora Vuela Cia de Aviacion SAB de CV, ADR | 184,558 | 1,929 | |||||||||
Grupo Aeroportuario del Centro Norte SAB de CV | 88,847 | 589 | |||||||||
2,518 | |||||||||||
Materials (0.3%): | |||||||||||
Grupo Cementos de Chihuahua SAB de CV | 82,700 | 433 | |||||||||
Grupo Mexico SAB de CV, Series B | 750,500 | 1,959 | |||||||||
2,392 | |||||||||||
Real Estate (0.4%): | |||||||||||
Concentradora Fibra Danhos SA de CV | 361,825 | 531 | |||||||||
Corp Inmobiliaria Vesta SAB de CV | 1,357,192 | 2,287 | |||||||||
Prologis Property Mexico SA de CV (b) | 208,153 | 441 | |||||||||
3,259 | |||||||||||
24,685 | |||||||||||
Peru (0.8%): | |||||||||||
Financials (0.7%): | |||||||||||
Credicorp Ltd. | 23,044 | 4,867 | |||||||||
Industrials (0.1%): | |||||||||||
Ferreycorp SAA | 1,473,473 | 927 | |||||||||
5,794 | |||||||||||
Philippines (1.1%): | |||||||||||
Communication Services (0.1%): | |||||||||||
PLDT, Inc., ADR | 46,670 | 1,011 | |||||||||
1,011 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Consumer Discretionary (0.0%): (a) | |||||||||||
Bloomberry Resorts Corp. | 1,762,800 | $ | 387 | ||||||||
Financials (0.8%): | |||||||||||
BDO Unibank, Inc. | 1,221,990 | 3,650 | |||||||||
Metropolitan Bank & Trust Co. | 1,641,120 | 2,140 | |||||||||
5,790 | |||||||||||
Industrials (0.1%): | |||||||||||
Cebu Air, Inc. | 250,000 | 455 | |||||||||
Materials (0.0%): (a) | |||||||||||
Nickel Asia Corp. | 4,761,000 | 289 | |||||||||
Real Estate (0.1%): | |||||||||||
Vista Land & Lifescapes, Inc. | 4,170,800 | 624 | |||||||||
8,556 | |||||||||||
Poland (0.7%): | |||||||||||
Communication Services (0.4%): | |||||||||||
CD Projekt SA | 48,822 | 3,274 | |||||||||
Energy (0.3%): | |||||||||||
Grupa Lotos SA | 93,511 | 2,192 | |||||||||
5,466 | |||||||||||
Qatar (0.1%): | |||||||||||
Energy (0.1%): | |||||||||||
Qatar Gas Transport Co. Ltd. | 633,416 | 440 | |||||||||
Russian Federation (5.3%): | |||||||||||
Communication Services (1.4%): | |||||||||||
Mobile TeleSystems PJSC, ADR | 345,400 | 3,261 | |||||||||
Yandex NV, Class A | 169,300 | 7,105 | |||||||||
10,366 | |||||||||||
Energy (1.8%): | |||||||||||
Gazprom PJSC, ADR | 285,789 | 2,270 | |||||||||
LUKOIL PJSC, ADR | 121,571 | 11,583 | |||||||||
TMK PJSC | 418,730 | 338 | |||||||||
14,191 | |||||||||||
Financials (1.7%): | |||||||||||
Sberbank of Russia PJSC | 2,660,579 | 9,671 | |||||||||
Sberbank of Russia PJSC, ADR | 251,134 | 3,666 | |||||||||
13,337 | |||||||||||
Materials (0.4%): | |||||||||||
MMC Norilsk Nickel PJSC, ADR | 107,317 | 2,820 | |||||||||
2,820 | |||||||||||
40,714 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Saudi Arabia (0.8%): | |||||||||||
Consumer Discretionary (0.4%): | |||||||||||
Jarir Marketing Co. | 39,583 | $ | 1,671 | ||||||||
Leejam Sports Co. JSC | 84,532 | 1,625 | |||||||||
3,296 | |||||||||||
Financials (0.4%): | |||||||||||
Arab National Bank | 397,009 | 2,707 | |||||||||
6,003 | |||||||||||
South Africa (2.8%): | |||||||||||
Communication Services (0.4%): | |||||||||||
Naspers Ltd. | 22,731 | 3,240 | |||||||||
Consumer Discretionary (0.1%): | |||||||||||
Super Group Ltd. | 296,205 | 578 | |||||||||
Consumer Staples (0.4%): | |||||||||||
The SPAR Group Ltd. (b) | 236,122 | 3,317 | |||||||||
Energy (0.1%): | |||||||||||
Exxaro Resources Ltd. | 53,957 | 492 | |||||||||
Financials (1.2%): | |||||||||||
Liberty Holdings Ltd. | 517,989 | 3,943 | |||||||||
Nedbank Group Ltd. | 185,481 | 2,772 | |||||||||
Standard Bank Group Ltd. | 212,718 | 2,403 | |||||||||
9,118 | |||||||||||
Materials (0.5%): | |||||||||||
African Rainbow Minerals Ltd. | 72,446 | 751 | |||||||||
AngloGold Ashanti Ltd. | 146,137 | 2,761 | |||||||||
Impala Platinum Holdings Ltd. (c) | 82,266 | 633 | |||||||||
4,145 | |||||||||||
Real Estate (0.1%): | |||||||||||
Resilient REIT Ltd. | 132,231 | 604 | |||||||||
21,494 | |||||||||||
Taiwan (10.2%): | |||||||||||
Consumer Discretionary (0.5%): | |||||||||||
Fulgent Sun International Holding Co. Ltd. | 89,000 | 365 | |||||||||
Giant Manufacturing Co. Ltd. | 360,000 | 2,607 | |||||||||
Merida Industry Co. Ltd. | 121,000 | 694 | |||||||||
Poya International Co. Ltd. | 23,000 | 326 | |||||||||
3,992 | |||||||||||
Financials (1.4%): | |||||||||||
Chailease Holding Co. Ltd. | 637,927 | 2,851 | |||||||||
Fubon Financial Holding Co. Ltd. | 1,960,000 | 2,877 | |||||||||
King's Town Bank Co. Ltd. | 443,000 | 475 | |||||||||
Yuanta Financial Holding Co. Ltd. | 6,523,000 | 4,223 | |||||||||
10,426 |
See notes to financial statements.
14
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Health Care (0.1%): | |||||||||||
Bioteque Corp. | 159,000 | $ | 691 | ||||||||
Industrials (0.7%): | |||||||||||
Chicony Power Technology Co. Ltd. | 327,000 | 686 | |||||||||
Far Eastern New Century Corp. | 3,037,000 | 2,962 | |||||||||
Kung Long Batteries Industrial Co. Ltd. | 147,000 | 703 | |||||||||
Teco Electric & Machinery Co. Ltd. | 624,000 | 554 | |||||||||
Wisdom Marine Lines Co. Ltd. | 467,000 | 452 | |||||||||
5,357 | |||||||||||
Information Technology (7.4%): | |||||||||||
Accton Technology Corp. | 127,000 | 662 | |||||||||
Chipbond Technology Corp. | 262,000 | 539 | |||||||||
Elan Microelectronics Corp. | 213,000 | 624 | |||||||||
Globalwafers Co. Ltd. | 490,000 | 5,310 | |||||||||
Hon Hai Precision Industry Co. Ltd., GDR | 436,413 | 2,502 | |||||||||
King Yuan Electronics Co. Ltd. | 605,000 | 732 | |||||||||
Largan Precision Co. Ltd. | 31,406 | 4,564 | |||||||||
MediaTek, Inc. | 379,000 | 5,236 | |||||||||
Merry Electronics Co. Ltd. | 72,000 | 369 | |||||||||
Parade Technologies Ltd. | 26,000 | 510 | |||||||||
Radiant Opto-Electronics Corp. | 178,000 | 683 | |||||||||
Silicon Motion Technology Corp., ADR | 86,199 | 3,819 | |||||||||
Simplo Technology Co. Ltd. | 40,000 | 400 | |||||||||
Sinbon Electronics Co. Ltd. | 225,000 | 863 | |||||||||
Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 120,100 | 6,376 | |||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 1,878,000 | 18,891 | |||||||||
Taiwan Union Technology Corp. | 115,000 | 504 | |||||||||
Tripod Technology Corp. | 229,000 | 950 | |||||||||
Unimicron Technology Corp. | 290,000 | 438 | |||||||||
Walsin Technology Corp. | 568,000 | 3,164 | |||||||||
57,136 | |||||||||||
Real Estate (0.1%): | |||||||||||
Chong Hong Construction Co. Ltd. | 215,000 | 577 | |||||||||
78,179 | |||||||||||
Thailand (2.1%): | |||||||||||
Communication Services (0.3%): | |||||||||||
Advanced Info Service PCL | 281,900 | 1,978 | |||||||||
Major Cineplex Group PCL | 471,300 | 385 | |||||||||
2,363 | |||||||||||
Consumer Discretionary (0.5%): | |||||||||||
Com7 PCL | 3,839,600 | 3,560 | |||||||||
Somboon Advance Technology PCL | 602,400 | 315 | |||||||||
3,875 | |||||||||||
Consumer Staples (0.2%): | |||||||||||
CP ALL PCL | 585,600 | 1,474 |
See notes to financial statements.
15
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Financials (0.4%): | |||||||||||
AEON Thana Sinsap Thailand PCL | 49,600 | $ | 316 | ||||||||
Siam Commercial Bank PCL | 636,100 | 2,546 | |||||||||
Thanachart Capital PCL | 224,700 | 415 | |||||||||
3,277 | |||||||||||
Industrials (0.3%): | |||||||||||
Gunkul Engineering PCL | 21,508,300 | 2,147 | |||||||||
Materials (0.3%): | |||||||||||
Tipco Asphalt PCL | 3,609,000 | 2,663 | |||||||||
Real Estate (0.1%): | |||||||||||
Supalai PCL | 980,000 | 565 | |||||||||
16,364 | |||||||||||
Turkey (1.5%): | |||||||||||
Consumer Discretionary (0.2%): | |||||||||||
Tofas Turk Otomobil Fabrikasi AS | 443,058 | 1,872 | |||||||||
Consumer Staples (0.4%): | |||||||||||
BIM Birlesik Magazalar AS | 363,773 | 2,915 | |||||||||
Coca-Cola Icecek AS | 71,957 | 433 | |||||||||
3,348 | |||||||||||
Energy (0.3%): | |||||||||||
Tupras Turkiye Petrol Rafinerileri AS | 88,806 | 1,915 | |||||||||
Industrials (0.5%): | |||||||||||
KOC Holding AS, ADR | 186,580 | 3,243 | |||||||||
Tekfen Holding AS | 139,930 | 460 | |||||||||
3,703 | |||||||||||
Materials (0.1%): | |||||||||||
Anadolu Cam Sanayii AS | 695,669 | 437 | |||||||||
Soda Sanayii AS | 420,462 | 425 | |||||||||
862 | |||||||||||
11,700 | |||||||||||
United Arab Emirates (0.9%): | |||||||||||
Health Care (0.9%): | |||||||||||
NMC Health PLC | 222,028 | 7,200 | |||||||||
United Kingdom (0.8%): | |||||||||||
Communication Services (0.3%): | |||||||||||
Airtel Africa PLC (d) | 2,123,273 | 2,155 | |||||||||
Consumer Staples (0.0%): (a) | |||||||||||
Unilever NV | 5,324 | 317 | |||||||||
Materials (0.5%): | |||||||||||
Anglo American PLC | 52,413 | 1,371 | |||||||||
Antofagasta PLC | 224,440 | 2,514 | |||||||||
3,885 | |||||||||||
6,357 | |||||||||||
Total Common Stocks (Cost $629,293) | 750,087 |
See notes to financial statements.
16
USAA Mutual Funds Trust USAA Emerging Markets Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Preferred Stocks (0.4%) | |||||||||||
Brazil (0.4%): | |||||||||||
Financials (0.1%): | |||||||||||
Banco do Estado do Rio Grande do Sul SA | 90,300 | $ | 429 | ||||||||
Industrials (0.3%): | |||||||||||
Randon SA Implementos e Participacoes | 962,700 | 2,454 | |||||||||
2,883 | |||||||||||
Total Preferred Stocks (Cost $3,086) | 2,883 | ||||||||||
Collateral for Securities Loaned^ (0.9%) | |||||||||||
United States (0.9%): | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (g) | 7,114,049 | 7,114 | |||||||||
Total Collateral for Securities Loaned (Cost $7,114) | 7,114 | ||||||||||
Total Investments (Cost $639,493) — 99.0% | 760,084 | ||||||||||
Other assets in excess of liabilities — 1.0% | 7,341 | ||||||||||
NET ASSETS — 100.00% | $ | 767,425 |
^ Purchased with cash collateral from securities on loan.
(a) Amount represents less than 0.05% of net assets.
(b) All or a portion of this security is on loan.
(c) Non-income producing security.
(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 otherwise noted, based upon procedures approved by the Board of Trustees. As of November 30, 2019, the fair value of these securities was $5,254 (thousands) and amounted to 0.7% of net assets.
(e) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were less than 0.05% of the Fund's net assets.
(f) Security was fair valued based upon procedures approved by the Board of Trustees and represents 0.4% of the Fund's net assets as of November 30, 2019.
(g) Rate disclosed is the daily yield on November 30, 2019.
(h) This security is classified as Level 3 within the fair value hierarchy. (See Note 2 in the Notes to Financial Statements)
ADR — American Depositary Receipt
GDR — Global Depository Receipt
PCL — Public Company Limited
PLC — Public Limited Company
REIT — Real Estate Investment Trust
See notes to financial statements.
17
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Emerging Markets Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $639,493) | $ | 760,084 | (a) | ||||
Foreign currency, at value (Cost $1,722) | 1,697 | ||||||
Cash and cash equivalents | 9,947 | ||||||
Receivables: | |||||||
Interest and dividends | 2,102 | ||||||
Capital shares issued | 418 | ||||||
Investments sold | 727 | ||||||
Class actions | 2,664 | ||||||
Reclaims | 67 | ||||||
From Adviser | 19 | ||||||
Prepaid expenses | 9 | ||||||
Total assets | 777,734 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 7,114 | ||||||
Investments purchased | 1,456 | ||||||
Capital shares redeemed | 427 | ||||||
Accrued foreign capital gains taxes | 275 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 669 | ||||||
Administration fees | 78 | ||||||
Custodian fees | 132 | ||||||
Transfer agent fees | 72 | ||||||
Compliance fees | — | (b) | |||||
12b-1 fees | 1 | ||||||
Other accrued expenses | 85 | ||||||
Total liabilities | 10,309 | ||||||
Net Assets: | |||||||
Capital | 779,853 | ||||||
Total distributable earnings/(loss) | (12,428 | ) | |||||
Net assets | $ | 767,425 | |||||
Net Assets | |||||||
Fund Shares | $ | 341,018 | |||||
Institutional Shares | 421,400 | ||||||
Adviser Shares | 5,007 | ||||||
Total | $ | 767,425 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 18,823 | ||||||
Institutional Shares | 23,304 | ||||||
Adviser Shares | 278 | ||||||
Total | 42,405 | ||||||
Net asset value, offering and redemption price per share: (c) | |||||||
Fund Shares | $ | 18.12 | |||||
Institutional Shares | $ | 18.08 | |||||
Adviser Shares | $ | 18.03 |
(a) Includes $6,747 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.
18
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Emerging Markets Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 15,980 | |||||
Interest | 130 | ||||||
Securities lending (net of fees) | 52 | ||||||
Foreign tax withholding | (1,118 | ) | |||||
Total income | 15,044 | ||||||
Expenses: | |||||||
Investment advisory fees | 3,815 | ||||||
Administration fees — Fund Shares | 257 | ||||||
Administration fees — Institutional Shares | 211 | ||||||
Administration fees — Adviser Shares | 4 | ||||||
12b-1 fees — Adviser Shares | 6 | ||||||
Custodian fees | 155 | ||||||
Transfer agent fees — Fund Shares | 428 | ||||||
Transfer agent fees — Institutional Shares | 211 | ||||||
Transfer agent fees — Adviser Shares | — | (a) | |||||
Trustees' fees | 20 | ||||||
Compliance fees | 2 | ||||||
Legal and audit fees | 143 | ||||||
State registration and filing fees | 25 | ||||||
Interest expense on Interfund lending | — | (a) | |||||
Sub-Administration fees | 24 | ||||||
Other expenses | 97 | ||||||
Total expenses | 5,398 | ||||||
Expenses waived/reimbursed by Adviser | (94 | ) | |||||
Net expenses | 5,304 | ||||||
Net Investment Income (Loss) | 9,740 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities and foreign currency translations | 14,927 | ||||||
Net realized gains (losses) from proceeds on class actions | 3,615 | ||||||
Foreign taxes on realized gains | (106 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities and foreign currency translations | 15,281 | ||||||
Net change in accrued foreign taxes on unrealized gains | (154 | ) | |||||
Net realized/unrealized gains (losses) on investments | 33,563 | ||||||
Change in net assets resulting from operations | $ | 43,303 |
(a) Rounds to less than $1.
See notes to financial statements.
19
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Emerging Markets Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 9,740 | $ | 10,267 | |||||||
Net realized gains (losses) from investments | 18,436 | (40,644 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 15,127 | (45,173 | ) | ||||||||
Change in net assets resulting from operations | 43,303 | (75,550 | ) | ||||||||
Distributions to Shareholders: | |||||||||||
Fund Shares | — | (4,143 | ) | ||||||||
Institutional Shares | — | (7,618 | ) | ||||||||
Adviser Shares | — | (43 | ) | ||||||||
Change in net assets resulting from distributions to shareholders | — | (11,804 | ) | ||||||||
Change in net assets resulting from capital transactions | (113,066 | ) | (79,230 | ) | |||||||
Change in net assets | (69,763 | ) | (166,584 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 837,188 | 1,003,772 | |||||||||
End of period | $ | 767,425 | $ | 837,188 | |||||||
Capital Transactions: | |||||||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 14,958 | $ | 48,985 | |||||||
Distributions reinvested | — | 4,094 | |||||||||
Cost of shares redeemed | (33,199 | ) | (79,610 | ) | |||||||
Total Fund Shares | $ | (18,241 | ) | $ | (26,531 | ) | |||||
Institutional Shares | |||||||||||
Proceeds from shares issued | $ | 14,077 | $ | 73,201 | |||||||
Distributions reinvested | — | 7,272 | |||||||||
Cost of shares redeemed | (108,901 | ) | (133,195 | ) | |||||||
Total Institutional Shares | $ | (94,824 | ) | $ | (52,722 | ) | |||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 3 | $ | 34 | |||||||
Distributions reinvested | — | 1 | |||||||||
Cost of shares redeemed | (4 | ) | (12 | ) | |||||||
Total Adviser Shares | $ | (1 | ) | $ | 23 | ||||||
Change in net assets resulting from capital transactions | $ | (113,066 | ) | $ | (79,230 | ) |
See notes to financial statements.
20
USAA Mutual Funds Trust | Statements of Changes in Net Assets — continued |
(Amounts in Thousands)
USAA Emerging Markets Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
Share Transactions: | |||||||||||
Fund Shares | |||||||||||
Issued | 850 | 2,810 | |||||||||
Reinvested | — | 255 | |||||||||
Redeemed | (1,886 | ) | (4,569 | ) | |||||||
Total Fund Shares | (1,036 | ) | (1,504 | ) | |||||||
Institutional Shares | |||||||||||
Issued | 808 | 4,211 | |||||||||
Reinvested | — | 455 | |||||||||
Redeemed | (6,282 | ) | (7,617 | ) | |||||||
Total Institutional Shares | (5,474 | ) | (2,951 | ) | |||||||
Adviser Shares | |||||||||||
Issued | — | (a) | 2 | ||||||||
Reinvested | — | — | (a) | ||||||||
Redeemed | — | (a) | — | (a) | |||||||
Total Adviser Shares | — | (a) | 2 | ||||||||
Change in Shares | (6,510 | ) | (4,453 | ) |
(a) Rounds to less than 1.
See notes to financial statements.
21
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 Emerging Markets Fund | |||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 17.14 | 0.22 | (e) | 0.76 | 0.98 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 18.84 | 0.17 | (1.67 | ) | (1.50 | ) | (0.20 | ) | (0.20 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 17.60 | 0.16 | 1.15 | 1.31 | (0.07 | ) | (0.07 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 14.24 | 0.07 | 3.43 | 3.50 | (0.14 | ) | (0.14 | ) | ||||||||||||||||||
Year Ended May 31, 2016 | $ | 16.46 | 0.11 | (e) | (2.22 | ) | (2.11 | ) | (0.11 | ) | (0.11 | ) | |||||||||||||||
Year Ended May 31, 2015 | $ | 18.14 | 0.08 | (1.52 | ) | (1.44 | ) | (0.24 | ) | (0.24 | ) | ||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 17.10 | 0.23 | (e) | 0.75 | 0.98 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 18.79 | 0.18 | (1.62 | ) | (1.44 | ) | (0.25 | ) | (0.25 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 17.55 | 0.20 | 1.14 | 1.34 | (0.10 | ) | (0.10 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 14.21 | 0.12 | (e) | 3.40 | 3.52 | (0.18 | ) | (0.18 | ) | |||||||||||||||||
Year Ended May 31, 2016 | $ | 16.42 | 0.18 | (2.25 | ) | (2.07 | ) | (0.14 | ) | (0.14 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 18.10 | 0.13 | (1.53 | ) | (1.40 | ) | (0.28 | ) | (0.28 | ) |
* 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 5 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 May 31 fiscal years ended 2019, 2018, 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) During the period ended November 30, 2019, the fund received class action settlements in the amount of $3,615 thousand. The effect of these settlements on the Fund Shares and Institutional Shares increased the total return by 0.35%.
See notes to financial statements.
22
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 Emerging Markets Fund | |||||||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 18.12 | 5.72 | %(f) | 1.49 | % | 2.44 | % | 1.52 | % | $ | 341,018 | 78 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 17.14 | (7.86 | )% | 1.48 | % | 1.02 | % | 1.48 | % | $ | 340,465 | 68 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 18.84 | 7.41 | % | 1.46 | % | 0.86 | % | 1.46 | % | $ | 402,401 | 59 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 17.60 | 24.70 | % | 1.51 | % | 0.50 | % | 1.51 | % | $ | 374,130 | 45 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 14.24 | (12.77 | )% | 1.58 | % | 0.73 | % | 1.58 | % | $ | 302,012 | 47 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 16.46 | (7.84 | )% | 1.50 | % | 0.71 | % | 1.50 | % | $ | 500,510 | 46 | % | ||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 18.08 | 5.79 | %(f) | 1.30 | % | 2.62 | % | 1.31 | % | $ | 421,400 | 78 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 17.10 | (7.58 | )% | 1.25 | % | 1.24 | % | 1.25 | % | $ | 491,978 | 68 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 18.79 | 7.62 | % | 1.28 | % | 1.09 | % | 1.28 | % | $ | 596,185 | 59 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 17.55 | 24.93 | % | 1.29 | % | 0.75 | % | 1.29 | % | $ | 585,468 | 45 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 14.21 | (12.53 | )% | 1.30 | % | 1.11 | % | 1.30 | % | $ | 603,981 | 47 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 16.42 | (7.64 | )% | 1.27 | % | 0.93 | % | 1.27 | % | $ | 637,007 | 46 | % |
See notes to financial statements.
23
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 | ||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 17.08 | 0.19 | (e) | 0.76 | 0.95 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 18.76 | 0.10 | (1.62 | ) | (1.52 | ) | (0.16 | ) | (0.16 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 17.55 | 0.12 | 1.13 | 1.25 | (0.04 | ) | (0.04 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 14.20 | 0.05 | 3.42 | 3.47 | (0.12 | ) | (0.12 | ) | ||||||||||||||||||
Year Ended May 31, 2016 | $ | 16.40 | 0.09 | (2.21 | ) | (2.12 | ) | (0.08 | ) | (0.08 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 18.08 | 0.05 | (1.53 | ) | (1.48 | ) | (0.20 | ) | (0.20 | ) |
* 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 5 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 May 31 fiscal years ended 2019, 2018, 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) During the period ended November 30, 2019, the fund received class action settlements in the amount of $3,615,000. The effect of these settlements on the Adviser Shares increased the total return by 0.35%.
(g) Prior to October 1, 2017, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.65% of the Advisers Shares' average daily net assets.
(h) Prior to October 1, 2016, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.75% of the Advisers Shares' average daily net assets.
(i) Amount is less than $0.005 per share.
(j) Prior to October 1, 2014, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 2.00% of the Advisers Shares' average daily net assets.
See notes to financial statements.
24
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) | ||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 18.03 | 5.56 | %(f) | 1.75 | % | 2.15 | % | 1.80 | % | $ | 5,007 | 78 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 17.08 | (8.07 | )% | 1.75 | % | 0.73 | % | 1.79 | % | $ | 4,745 | 68 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 18.76 | 7.09 | % | 1.72 | %(g) | 0.61 | % | 1.81 | % | $ | 5,186 | 59 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 17.55 | 24.53 | % | 1.66 | %(h) | 0.35 | % | 1.87 | % | $ | 4,864 | 45 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 14.20 | (12.93 | )% | 1.75 | % | 0.60 | % | 1.92 | % | $ | 3,931 | 47 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | (i) | $ | 16.40 | (8.09 | )% | 1.79 | %(j) | 0.41 | % | 1.95 | % | $ | 4,560 | 46 | % |
See notes to financial statements.
25
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Emerging Markets Fund (the "Fund"). The Fund offers three classes of shares: Fund Shares, Institutional 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 July 1, 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.)
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 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.
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 November 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 | $ | 473,639 | $ | 276,393 | $ | 55 | $ | 750,087 | |||||||||||
Preferred Stocks | 2,883 | — | — | 2,883 | |||||||||||||||
Collateral for Securities Loaned | 7,114 | — | — | 7,114 | |||||||||||||||
Total | $ | 483,636 | $ | 276,393 | $ | 55 | $ | 760,084 |
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:
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
27
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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
28
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||||||
$ | 6,747 | $ | — | $ | 7,114 |
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.
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 May 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.
29
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 576,400 | $ | 594,847 |
There were no purchases and sales of U.S. government securities during the six months ended November 30, 2019.
4. 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 usaa.com. As of November 30, 2019, certain USAA fund-of funds owned total outstanding shares of the Fund:
Affiliated USAA Fund | Ownership % | ||||||
Cornerstone Conservative Fund | 0.6 | ||||||
Cornerstone Equity Fund | 2.0 | ||||||
Target Retirement Income Fund | 0.3 | ||||||
Target Retirement 2020 Fund | 0.6 | ||||||
Target Retirement 2030 Fund | 1.5 | ||||||
Target Retirement 2040 Fund | 2.5 | ||||||
Target Retirement 2050 Fund | 1.8 | ||||||
Target Retirement 2060 Fund | 0.2 |
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 a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 1.00% of average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $3,197 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
30
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 investment management fee was accrued daily and paid monthly at an annualized rate of 1.00% 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. Only performance beginning as of July 1, 2019, and thereafter will be utilized in calculating future performance adjustments.
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 Emerging Markets Funds Index. The Lipper Emerging Markets Fund Index tracks the total return performance of the funds within the Lipper Emerging Markets Funds category.
The performance period for each share class consists of the current month plus the previous 35 months (or the number of months beginning July 1, 2019, if fewer). 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) | ||||||
+/- 100 to 400 | +/- 4 | ||||||
+/- 401 to 700 | +/- 5 | ||||||
+/- 701 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 Emerging Markets Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period June 1, 2019 through June 30, 2019, performance adjustments for Fund Shares, Institutional Shares and Adviser Shares were $(12), $(19), and less than $(1) thousand, respectively. For the Fund Shares, Institutional Shares, and Adviser Shares, the performance adjustments were all (0.00%) of net assets, respectively. Base fees incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $618 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.
Effective July 1, 2019, VCM entered into Investment Subadvisory Agreements with Brandes Investment Partners, L.P. ("Brandes"), Lazard Asset Management LLC ("Lazard"), under which Brandes and Lazard,
31
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
each direct the investment and reinvestment of a portion of the Fund's assets (as allocated from time to time by VCM). These arrangements provide for monthly fees that are paid by VCM. VCM (not the Fund) pays the subadviser fees.
Prior to July 1, 2019, AMCO entered into Investment Subadvisory Agreements with Brandes, Lazard, and Victory Capital Management, Inc. under which each directed the investment and reinvestment of a portion of the Fund's assets (as allocated from time to time by the AMCO). These arrangements provided for monthly fees that were paid by AMCO. AMCO (not the Fund) paid the subadviser fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under the 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, and 0.10% of average daily net assets of the Institutional Shares. Amounts incurred from July 1, 2019 through November 30, 2019 are $214, $175, and $3 thousand for Fund Shares, Institutional Shares, and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
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, and 0.10% of average daily net assets of the Institutional Shares. Amounts incurred from June 1, 2019 through June 30, 2019 are $43, $36, and $1 thousand for Fund Shares, Institutional 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 $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 average daily net assets, plus out-of pocket
32
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
expenses. Amounts incurred and paid to VCTA from July 1, 2019 through November 30, 2019 was $356, $175, and less than $1 thousand for the Fund Shares, Institutional Shares, and Adviser Shares, respectively. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $72, $36, and less than $1 thousand for the Fund Shares, Institutional 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 November 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 June 1, 2019 through June 30, 2019 were $1 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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 November 30, 2019, the expense limit (excluding voluntary waivers) is 1.48%, 1.29%, and 1.75% for the Fund Shares, Institutional Shares, and Adviser 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 November 30, 2019, the following amounts are available to be repaid
33
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
to the Adviser (amounts in thousands). Amounts repaid to the Adviser during the six months ended November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 94 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of the Adviser Shares to 1.75% 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. For the period June 1, 2019 through June 30, 2019, the Fund did not incur reimbursements. These amounts would have been 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.
6. Risks:
The Fund may be subject to other risks in addition to these identified risks.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, the Fund invests primarily in foreign securities. There is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging-market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
The Fund's performance could be closely tied to the market, currency, economic, political, regulatory, geopolitical, or other conditions and developments in the countries or regions in which the Fund invests. As such, the Fund's performance could be more volatile than the performance of more geographically diversified funds.
The Fund also is subject to over-the-counter ("OTC") risk. OTC transactions involve risk in addition to those incurred by transactions in securities traded on exchanges. OTC-listed companies may have limited product lines, markets, or financial resources. Many OTC stocks trade less frequently and in smaller volume than exchange-listed stocks.
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
34
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $2 thousand.
The average borrowing for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Amount Outstanding at November 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | |||||||||||||||
$ | — | $ | 4,891 | 21 | 3.10 | % | $ | 15,400 |
* For the year ended November 30, 2019, based on the number of days borrowings were outstanding.
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. 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 November 30, 2019 were as follows:
Borrower or Lender | Amount Outstanding at November, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | ||||||||||||||||||
Borrower | $ | — | $ | 1,538 | 2 | 2.55 | % | $ | 2,000 |
* For the six months ended November 30, 2019, based on the number of days borrowings were outstanding.
8. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income annually. Distributable net realized gains, if any, are declared and 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.
35
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 11,804 | $ | — | $ | 11,804 |
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 1,279 | $ | (142,663 | ) | $ | 85,660 | $ | (55,724 | ) |
** 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 passive foreign investment company.
As of the most recent tax year ended May 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 | Long Term | Total | |||||||||
$ | 103,676 | $ | 38,987 | $ | 142,663 |
36
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||||||
Fund Shares | $ | 1,000.00 | $ | 1,057.20 | $ | 1,017.55 | $ | 7.66 | $ | 7.52 | 1.49 | % | |||||||||||||||
Institutional Shares | 1,000.00 | 1,057.90 | 1,018.50 | 6.69 | 6.56 | 1.30 | % | ||||||||||||||||||||
Adviser Shares | 1,000.00 | 1,055.60 | 1,016.25 | 8.99 | 8.82 | 1.75 | % |
* 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).
Effective July 1, 2019, the Fund entered into an expense limitation agreement with the Advisor to limit expenses of the Fund Shares and Institutional Shares to 1.48% and 1.29%, respectively. The annualized expense ratios of 1.49% and 1.30% for the Fund Shares and Institutional Shares, respectively, as represented in the table above, reflects this expense limit. The values in the table below reflect your costs (in dollars) of investing in the Funds, had this expense limit been in effect for the entire six months ended November 30, 2019.
Beginning Account Value 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Paid During Period 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||||||
Fund Shares | $ | 1,000.00 | $ | 1,057.20 | $ | 1,017.60 | $ | 7.61 | $ | 7.47 | 1.48 | % | |||||||||||||||
Institutional Shares | 1,000.00 | 1,057.90 | 1,018.55 | 6.64 | 6.51 | 1.29 | % |
*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).
37
USAA Mutual Funds Trust | Supplemental Information — continued November 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.
38
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 | (800) 235-8396 |
25559-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Government Securities Fund
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 | 26 | ||||||
Expense Examples | 26 | ||||||
Proxy Voting and Portfolio Holdings Information | 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.
USAA Mutual Funds Trust
1
USAA Mutual Funds Trust USAA Government Securities Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to provide investors a high level of current income consistent with preservation of principal.
Asset Allocation:
11/30/19
(% of Net Assets)
Percentages are of the net assets of the Fund and may not equal 100%.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Asset Backed Securities (4.4%) | |||||||||||
Goal Capital Funding Trust, Series 2005-2, Class A4, 2.11%(LIBOR03M+20bps), 8/25/44, Callable 8/25/20 @ 100 (a) | $ | 7,623 | $ | 7,359 | |||||||
Montana Higher Education Student Assistance Corp., Series 2012-1, Class A2, 2.85%(LIBOR01M+100bps), 5/20/30, Callable 12/20/29 @ 100 (a) | 7,499 | 7,483 | |||||||||
Navient Student Loan Trust, Series 2014-1, Class A3, 2.22%(LIBOR01M+51bps), 6/25/31, Callable 5/25/30 @ 100 (a) | 2,721 | 2,683 | |||||||||
Navient Student Loan Trust, Series 2016-2, Class A2, 2.76%(LIBOR01M+105bps), 6/25/65, Callable 8/25/31 @ 100 (a) (b) | 1,199 | 1,205 | |||||||||
Navient Student Loan Trust, Series 2019-1, Class A1, 2.04%(LIBOR01M+33bps), 12/27/67, Callable 11/25/31 @ 100 (a) (b) | 2,683 | 2,683 | |||||||||
Nelnet Student Loan Trust, Series 2006-3, Class B, 2.36%(LIBOR03M+25bps), 6/25/41, Callable 9/25/24 @ 100 (a) | 3,033 | 2,898 | |||||||||
Nelnet Student Loan Trust, Series 2015-3, Class A2, 2.31%(LIBOR01M+60bps), 2/27/51, Callable 11/25/34 @ 100 (a) (b) | 4,711 | 4,673 | |||||||||
PHEAA Student Loan Trust, Series 2011-1, Class A1, 3.21%(LIBOR03M+110bps), 6/25/38, Callable 12/25/28 @ 100 (a) (b) | 2,707 | 2,711 | |||||||||
SLC Student Loan Trust, Series 2005-3, Class A4, 2.27%(LIBOR03M+15bps), 12/15/39, Callable 3/15/28 @ 100 (a) | 7,000 | 6,618 | |||||||||
SLM Student Loan Trust, Series 2006-4, Class B, 2.14%(LIBOR03M+20bps), 1/25/70, Callable 1/25/32 @ 100 (a) | 4,486 | 4,209 | |||||||||
SLM Student Loan Trust, Series 2013-6, Class A3, 2.36%(LIBOR01M+65bps), 6/25/55, Callable 1/25/28 @ 100 (a) | 3,504 | 3,497 | |||||||||
SLM Student Loan Trust, Series 2006-6, Class A3, 2.05%(LIBOR03M+11bps), 10/27/25, Callable 7/25/31 @ 100 (a) | 30 | 30 | |||||||||
SunTrust Student Loan Trust, Series 2006-1A, Class B, 2.21%(LIBOR03M+27bps), 10/28/37, Callable 7/28/26 @ 100 (a) (b) | 1,268 | 1,133 | |||||||||
Total Asset Backed Securities (Cost $47,454) | 47,182 | ||||||||||
Municipal Bonds (3.7%) | |||||||||||
Connecticut (0.5%): | |||||||||||
State of Connecticut, GO, 2.92%, 8/1/23 | 5,000 | 5,140 | |||||||||
Kansas (0.3%): | |||||||||||
Kansas Development Finance Authority Revenue, Series H, 3.94%, 4/15/26 | 3,000 | 3,260 | |||||||||
New York (1.3%): | |||||||||||
New York City Transitional Finance Authority Future Tax Secured Revenue, Series A3, 2.85%, 8/1/24 | 9,530 | 9,820 | |||||||||
The Port Authority of New York & New Jersey Revenue, Series 187, 2.53%, 10/15/20 | 5,000 | 5,028 | |||||||||
14,848 | |||||||||||
Texas (1.6%): | |||||||||||
City of Abilene, GO 2.41%, 2/15/26 (c) | 1,715 | 1,721 | |||||||||
2.54%, 2/15/27 (c) | 1,195 | 1,202 | |||||||||
2.64%, 2/15/29 (c) | 1,000 | 1,006 |
See notes to financial statements.
3
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
City of Houston, Texas Combined Utility System Revenue 3.72%, 11/15/28 | $ | 1,530 | $ | 1,688 | |||||||
3.82%, 11/15/29, Continuously Callable @100 | 3,000 | 3,313 | |||||||||
Texas Public Finance Authority State of Texas, GO Series C, 2.83%, 10/1/25 | 3,000 | 3,116 | |||||||||
Series C, 3.01%, 10/1/26, Continuously Callable @100 | 4,000 | 4,174 | |||||||||
16,220 | |||||||||||
Total Municipal Bonds (Cost $37,799) | 39,468 | ||||||||||
U.S. Government Agency Mortgages (64.5%) | |||||||||||
Federal Home Loan Mortgage Corporation Series K011, Class A2, 4.08%, 11/25/20 (g) | 2,850 | 2,882 | |||||||||
5.00%, 1/1/21 | 24 | 25 | |||||||||
Series K715, Class A2, 2.86%, 1/25/21 | 4,890 | 4,904 | |||||||||
Series K019, Class A2, 2.27%, 3/25/22 | 2,248 | 2,259 | |||||||||
Series K026, Class A1, 1.69%, 4/25/22 | 1,857 | 1,844 | |||||||||
Series K720, Class A2, 2.72%, 6/25/22 | 4,000 | 4,053 | |||||||||
Series K022, Class A2, 2.36%, 7/25/22 | 3,000 | 3,029 | |||||||||
Series K023, Class A2, 2.31%, 8/25/22 | 10,000 | 10,085 | |||||||||
Series K026, Class A2, 2.51%, 11/25/22 | 5,000 | 5,074 | |||||||||
Series K027, Class A2, 2.64%, 1/25/23 | 5,000 | 5,096 | |||||||||
Series K029, Class A2, 3.32%, 2/25/23 (g) | 3,000 | 3,119 | |||||||||
Series K722, Class A2, 2.41%, 3/25/23 | 3,000 | 3,028 | |||||||||
Series K725, Class A2, 3.00%, 1/25/24 | 5,000 | 5,173 | |||||||||
Series K037, Class A2, 3.49%, 1/25/24 | 10,030 | 10,576 | |||||||||
Series K038, Class A2, 3.39%, 3/25/24 | 3,000 | 3,160 | |||||||||
Series K727, Class A2, 2.95%, 7/25/24 | 20,000 | 20,637 | |||||||||
Series K052, Class A1, 2.60%, 1/25/25 | 3,000 | 3,042 | |||||||||
Series K045, Class A2, 3.02%, 1/25/25 | 3,000 | 3,134 | |||||||||
Series K730, Class A2, 3.59%, 1/25/25 | 5,000 | 5,316 | |||||||||
Series K048, Class A2, 3.28%, 6/25/25 (g) | 10,000 | 10,595 | |||||||||
Series K056, Class A1, 2.20%, 7/25/25 | 4,300 | 4,311 | |||||||||
Series K049, Class A2, 3.01%, 7/25/25 | 4,000 | 4,187 | |||||||||
Series KC02, Class A2, 3.37%, 7/25/25 (d) | 30,000 | 31,802 | |||||||||
Series K733, Class A2, 3.75%, 8/25/25 | 15,000 | 16,170 | |||||||||
Series K051, Class A2, 3.31%, 9/25/25 | 20,000 | 21,278 | |||||||||
Series K733, Class AM, 3.75%, 9/25/25 | 5,000 | 5,403 | |||||||||
Series KIR1, Class A2, 2.85%, 3/25/26 (d) | 7,709 | 8,015 | |||||||||
Series K056, Class A2, 2.53%, 5/25/26 | 5,000 | 5,117 | |||||||||
Series K057, Class A2, 2.57%, 7/25/26 | 17,000 | 17,443 | |||||||||
Series K058, Class A2, 2.65%, 8/25/26 (d) | 5,000 | 5,154 | |||||||||
Series K061, Class A1, 3.01%, 8/25/26 | 2,288 | 2,368 | |||||||||
Series 3987, Class A, 2.00%, 9/15/26 | 1,606 | 1,594 | |||||||||
Series K059, Class A2, 3.12%, 9/25/26 (g) | 4,500 | 4,761 | |||||||||
Series K061, Class A2, 3.35%, 11/25/26 (g) | 4,000 | 4,291 | |||||||||
Series K066, Class A2, 3.12%, 6/25/27 | 3,000 | 3,179 | |||||||||
Series K067, Class A2, 3.19%, 7/25/27 | 9,274 | 9,880 | |||||||||
Series K069, Class A2, 3.19%, 9/25/27 (g) | 2,879 | 3,067 | |||||||||
Series K071, Class A2, 3.29%, 11/25/27 | 5,000 | 5,357 | |||||||||
Series K076, Class A2, 3.90%, 4/25/28 | 7,000 | 7,817 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series K080, Class A2, 3.93%, 7/25/28 (g) | $ | 30,000 | $ | 33,597 | |||||||
Series K081, Class A2, 3.90%, 8/25/28 (g) | 13,000 | 14,548 | |||||||||
Series K082, Class A2, 3.92%, 9/25/28 (g) | 5,000 | 5,603 | |||||||||
Series K084, Class A2, 3.78%, 10/25/28 (g) | 10,000 | 11,087 | |||||||||
Series K085, Class A2, 4.06%, 10/25/28 (g) | 9,706 | 10,979 | |||||||||
3.00%, 3/1/32 | 4,901 | 5,043 | |||||||||
3.00%, 2/1/33 | 7,372 | 7,590 | |||||||||
3.00%, 9/1/33 | 5,834 | 5,984 | |||||||||
3.00%, 10/1/33 | 8,309 | 8,523 | |||||||||
3.50%, 10/1/33 | 18,519 | 19,195 | |||||||||
4.00%, 10/1/33 | 10,680 | 11,153 | |||||||||
5.50%, 12/1/35 | 495 | 559 | |||||||||
Series 3134, Class FA, 2.07%(LIBOR01M+30bps), 3/15/36 (a) | 765 | 758 | |||||||||
4.00%, 9/1/40 | 1,281 | 1,371 | |||||||||
Series 4023, Class PF, 2.32%(LIBOR01M+55bps), 10/15/41 (a) | 1,140 | 1,140 | |||||||||
3.50%, 5/1/42 | 5,021 | 5,288 | |||||||||
3.00%, 6/1/42 | 4,164 | 4,294 | |||||||||
4.00%, 7/1/48 | 14,610 | 15,178 | |||||||||
3.50%, 8/1/48 | 7,728 | 7,954 | |||||||||
4.00%, 8/1/48 | 3,592 | 3,736 | |||||||||
4.50%, 9/1/48 | 5,486 | 5,785 | |||||||||
Series K078, Class A2, 3.85%, 6/25/51 | 12,500 | 13,922 | |||||||||
461,512 | |||||||||||
Federal National Mortgage Association 1.58%, 1/1/20 | 9,280 | 9,262 | |||||||||
3.50%, 5/1/21 | 330 | 332 | |||||||||
2.63%, 9/1/21 | 10,000 | 10,108 | |||||||||
2.42%, 11/1/22 | 20,154 | 20,381 | |||||||||
2.50%, 4/1/23 | 8,265 | 8,395 | |||||||||
Series M1, Class A2, 3.32%, 7/25/23 (g) | 1,292 | 1,339 | |||||||||
Series M7, Class AV2, 2.16%, 10/25/23 | 4,908 | 4,922 | |||||||||
Series M13, Class A2, 2.80%, 6/25/25 (g) | 2,356 | 2,431 | |||||||||
2.13%, 4/24/26 | 18,000 | 18,380 | |||||||||
Series M1, Class A1, 2.50%, 9/25/26 (g) | 1,122 | 1,132 | |||||||||
3.00%, 2/1/27 | 3,112 | 3,193 | |||||||||
3.00%, 2/1/27 | 1,882 | 1,930 | |||||||||
Series M8, Class A2, 3.06%, 5/25/27 (g) | 4,000 | 4,230 | |||||||||
Series M12, Class A2, 3.18%, 6/25/27 (g) | 6,250 | 6,632 | |||||||||
Series 73, Class DC, 1.50%, 7/25/27 | 2,886 | 2,846 | |||||||||
Series 102, Class GA, 1.38%, 9/25/27 | 1,370 | 1,337 | |||||||||
Series 100, Class BA, 1.50%, 9/25/27 | 1,074 | 1,051 | |||||||||
Series 103, Class HB, 1.50%, 9/25/27 | 1,141 | 1,125 | |||||||||
Series 107, Class GC, 1.50%, 10/25/27 | 1,249 | 1,223 | |||||||||
Series M4, Class A2, 3.14%, 3/25/28 (g) | 2,842 | 3,009 | |||||||||
Series M10, Class A2, 3.50%, 7/25/28 (g) | 8,049 | 8,724 | |||||||||
Series 29, Class FY, 2.01%(LIBOR01M+30bps), 4/25/35 (a) | 1,322 | 1,311 | |||||||||
5.00%, 12/1/35 | 640 | 710 | |||||||||
Series 84, Class F, 2.01%(LIBOR01M+30bps), 8/25/37 (a) | 976 | 966 | |||||||||
5.50%, 11/1/37 | 200 | 224 | |||||||||
6.00%, 5/1/38 | 353 | 395 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
4.00%, 8/1/39 | $ | 1,808 | $ | 1,933 | |||||||
3.50%, 1/1/42 | 3,203 | 3,374 | |||||||||
3.50%, 5/1/42 | 4,923 | 5,182 | |||||||||
3.00%, 1/1/48 | 4,323 | 4,409 | |||||||||
3.50%, 2/1/48 | 8,351 | 8,657 | |||||||||
4.00%, 5/1/48 | 7,438 | 7,731 | |||||||||
3.00%, 8/1/48 | 4,328 | 4,399 | |||||||||
4.00%, 8/1/49 (d) | 4,843 | 5,031 | |||||||||
3.50%, 9/1/49 (d) | 5,875 | 6,031 | |||||||||
162,335 | |||||||||||
Government National Mortgage Association 8.50%, 6/15/21 | 4 | 4 | |||||||||
9.00%, 7/15/21 | 2 | 2 | |||||||||
6.00%, 8/15/22 | 150 | 157 | |||||||||
8.00%, 12/20/22 | 6 | 6 | |||||||||
8.00%, 6/15/23 | 21 | 22 | |||||||||
4.50%, 4/20/24 | 943 | 977 | |||||||||
4.50%, 5/15/24 | 347 | 361 | |||||||||
4.50%, 9/15/24 | 390 | 406 | |||||||||
4.50%, 9/15/24 | 322 | 335 | |||||||||
4.50%, 10/15/24 | 453 | 473 | |||||||||
4.50%, 10/15/24 | 354 | 369 | |||||||||
7.00%, 5/15/27 | 105 | 115 | |||||||||
8.00%, 5/15/27 | 99 | 106 | |||||||||
7.50%, 2/15/28 | 59 | 64 | |||||||||
6.00%, 4/15/28 | 208 | 227 | |||||||||
6.50%, 5/15/28 | 19 | 20 | |||||||||
6.50%, 5/15/28 | 76 | 81 | |||||||||
6.75%, 5/15/28 | 8 | 8 | |||||||||
6.50%, 7/15/28 | 47 | 51 | |||||||||
7.00%, 7/15/28 | 11 | 12 | |||||||||
7.00%, 8/15/28 | 22 | 25 | |||||||||
6.50%, 9/15/28 | 43 | 45 | |||||||||
7.00%, 9/15/28 | 60 | 65 | |||||||||
6.00%, 11/15/28 | 28 | 30 | |||||||||
6.50%, 11/15/28 | 77 | 81 | |||||||||
6.50%, 1/15/29 | 6 | 7 | |||||||||
6.50%, 1/15/29 | 21 | 22 | |||||||||
6.00%, 2/15/29 | 112 | 119 | |||||||||
7.50%, 3/15/29 | 13 | 15 | |||||||||
7.50%, 4/15/29 | 31 | 33 | |||||||||
7.00%, 5/15/29 | 242 | 273 | |||||||||
7.00%, 6/15/29 | 289 | 326 | |||||||||
6.00%, 7/15/29 | 120 | 132 | |||||||||
7.50%, 10/15/29 | 77 | 87 | |||||||||
7.50%, 10/15/29 | 18 | 19 | |||||||||
8.00%, 7/15/30 | 65 | 69 | |||||||||
8.00%, 8/20/30 | 200 | 234 | |||||||||
8.00%, 9/15/30 | 21 | 24 | |||||||||
7.00%, 9/20/30 | 227 | 259 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
7.50%, 1/15/31 | $ | 9 | $ | 9 | |||||||
6.50%, 3/15/31 | 62 | 66 | |||||||||
6.00%, 3/20/31 | 109 | 122 | |||||||||
7.50%, 4/20/31 | 45 | 53 | |||||||||
6.50%, 5/20/31 | 70 | 80 | |||||||||
6.50%, 7/20/31 | 50 | 58 | |||||||||
7.00%, 8/15/31 | 25 | 25 | |||||||||
6.50%, 8/20/31 | 127 | 145 | |||||||||
7.00%, 9/15/31 | 56 | 64 | |||||||||
6.50%, 10/15/31 | 161 | 177 | |||||||||
7.00%, 10/15/31 | 43 | 47 | |||||||||
7.50%, 11/15/31 | 18 | 19 | |||||||||
6.50%, 1/15/32 | 99 | 111 | |||||||||
6.50%, 4/20/32 | 187 | 216 | |||||||||
6.00%, 5/15/32 | 224 | 245 | |||||||||
7.00%, 6/15/32 | 18 | 20 | |||||||||
6.50%, 6/20/32 | 206 | 238 | |||||||||
7.00%, 7/15/32 | 81 | 93 | |||||||||
6.50%, 8/15/32 | 159 | 181 | |||||||||
6.00%, 8/20/32 | 297 | 337 | |||||||||
6.50%, 9/15/32 | 686 | 784 | |||||||||
6.00%, 9/20/32 | 266 | 301 | |||||||||
6.00%, 1/15/33 | 652 | 736 | |||||||||
6.00%, 2/15/33 | 288 | 325 | |||||||||
5.50%, 4/20/33 | 250 | 278 | |||||||||
5.00%, 5/20/33 | 844 | 912 | |||||||||
6.00%, 7/15/33 | 212 | 238 | |||||||||
5.00%, 7/20/33 | 1,024 | 1,106 | |||||||||
6.00%, 9/15/33 | 213 | 237 | |||||||||
5.50%, 10/15/33 | 1,788 | 1,999 | |||||||||
6.00%, 10/20/33 | 273 | 310 | |||||||||
5.50%, 12/15/33 | 748 | 835 | |||||||||
6.00%, 12/20/33 | 241 | 266 | |||||||||
6.00%, 2/20/34 | 903 | 1,030 | |||||||||
5.50%, 3/20/34 | 853 | 951 | |||||||||
6.00%, 3/20/34 | 787 | 896 | |||||||||
5.00%, 6/20/34 | 669 | 724 | |||||||||
5.50%, 7/15/34 | 471 | 529 | |||||||||
6.50%, 8/20/34 | 619 | 722 | |||||||||
6.00%, 9/20/34 | 538 | 613 | |||||||||
6.00%, 10/20/34 | 1,481 | 1,691 | |||||||||
6.00%, 11/20/34 | 95 | 106 | |||||||||
5.50%, 2/20/35 | 3,021 | 3,382 | |||||||||
5.50%, 4/20/35 | 2,651 | 2,968 | |||||||||
5.50%, 7/20/35 | 1,242 | 1,391 | |||||||||
5.00%, 9/20/35 | 1,518 | 1,641 | |||||||||
5.50%, 10/15/35 | 1,087 | 1,219 | |||||||||
6.00%, 5/20/36 | 515 | 587 | |||||||||
5.50%, 1/20/37 | 514 | 574 | |||||||||
5.00%, 2/20/37 | 312 | 337 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
6.00%, 3/15/37 | $ | 234 | $ | 264 | |||||||
6.00%, 9/15/37 | 118 | 128 | |||||||||
5.50%, 3/15/38 | 468 | 518 | |||||||||
5.50%, 4/15/38 | 895 | 996 | |||||||||
6.00%, 5/15/38 | 245 | 273 | |||||||||
6.00%, 5/15/38 | 476 | 540 | |||||||||
6.00%, 9/15/38 | 310 | 356 | |||||||||
6.00%, 10/15/38 | 297 | 341 | |||||||||
6.00%, 12/15/38 | 456 | 521 | |||||||||
5.00%, 2/15/39 | 271 | 296 | |||||||||
5.50%, 6/15/39 | 1,752 | 1,970 | |||||||||
4.50%, 9/15/39 | 2,978 | 3,215 | |||||||||
4.50%, 11/15/39 | 1,967 | 2,123 | |||||||||
4.50%, 12/15/39 | 3,076 | 3,320 | |||||||||
4.50%, 2/15/40 | 9,011 | 9,793 | |||||||||
4.50%, 3/15/40 | 1,875 | 2,017 | |||||||||
4.50%, 6/15/40 | 1,162 | 1,250 | |||||||||
4.00%, 7/15/40 | 657 | 695 | |||||||||
4.50%, 7/15/40 | 1,582 | 1,701 | |||||||||
4.00%, 8/15/40 | 981 | 1,048 | |||||||||
4.00%, 9/15/40 | 2,456 | 2,600 | |||||||||
4.00%, 11/20/40 | 1,812 | 1,937 | |||||||||
4.50%, 1/15/41 | 1,896 | 2,039 | |||||||||
73,596 | |||||||||||
Total U.S. Government Agency Mortgages (Cost $666,292) | 697,443 | ||||||||||
U.S. Treasury Obligations (26.1%) | |||||||||||
U.S. Treasury Notes 1.38%, 1/15/20 | 8,500 | 8,497 | |||||||||
2.38%, 4/30/20 | 6,000 | 6,018 | |||||||||
1.50%, 8/15/20 | 10,000 | 9,988 | |||||||||
2.63%, 8/31/20 | 5,000 | 5,035 | |||||||||
2.75%, 11/30/20 | 12,000 | 12,125 | |||||||||
1.13%, 2/28/21 | 6,000 | 5,958 | |||||||||
2.63%, 6/15/21 | 20,000 | 20,285 | |||||||||
2.13%, 6/30/21 | 3,000 | 3,021 | |||||||||
2.63%, 7/15/21 | 15,000 | 15,226 | |||||||||
2.75%, 8/15/21 | 10,000 | 10,180 | |||||||||
2.75%, 9/15/21 | 35,000 | 35,666 | |||||||||
2.88%, 11/15/21 | 10,000 | 10,236 | |||||||||
2.00%, 2/15/22 | 3,000 | 3,024 | |||||||||
2.13%, 6/30/22 | 20,000 | 20,263 | |||||||||
1.88%, 7/31/22 | 10,000 | 10,069 | |||||||||
1.63%, 8/31/22 | 20,000 | 20,011 | |||||||||
2.00%, 11/30/22 | 11,000 | 11,125 | |||||||||
1.38%, 6/30/23 | 5,000 | 4,960 | |||||||||
2.13%, 11/30/23 | 22,000 | 22,426 | |||||||||
2.00%, 6/30/24 | 20,000 | 20,320 | |||||||||
1.88%, 8/31/24 | 10,000 | 10,109 | |||||||||
2.25%, 11/15/24 | 5,000 | 5,144 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Government Securities Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
2.13%, 11/30/24 | $ | 4,000 | $ | 4,092 | |||||||
2.00%, 2/15/25 | 4,000 | 4,069 | |||||||||
2.13%, 5/15/25 | 4,500 | 4,606 | |||||||||
Total U.S. Treasury Obligations (Cost $278,575) | 282,453 | ||||||||||
Investment Companies (0.0%) (e) | |||||||||||
Federated Treasury Obligations Fund, Institutional Shares, 1.52% (f) | 688 | 1 | |||||||||
Total Investment Companies (Cost $1) | 1 | ||||||||||
Repurchase Agreements (1.3%) | |||||||||||
Credit Agricole CIB NY, 1.62%, 12/2/19, Purchased on 11/29/19, with maturity date of 12/2/19, value of $13,767,858, collateralized by U.S. Treasury Notes, 1.38%, 1/15/20, fair value $13,969,951 | 13,766,000 | 13,766 | |||||||||
Total Repurchase Agreements (Cost $13,766) | 13,766 | ||||||||||
Total Investments (Cost $1,043,887) — 100.0% | 1,080,313 | ||||||||||
Liabilities in excess of other assets — 0.0% (e) | (133 | ) | |||||||||
NET ASSETS — 100.00% | $ | 1,080,180 |
(a) Variable or Floating-Rate Security. Rate disclosed is as of November 30, 2019.
(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 November 30, 2019, the fair value of these securities was $12,405 (thousands) and amounted to 1.1% of net assets.
(c) Security purchased on a when-issued basis.
(d) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued basis.
(e) Amount represents less than 0.05% of net assets.
(f) Rate disclosed is the daily yield on November 30, 2019.
(g) 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.
bps — Basis points
GO — General Obligation
LIBOR — London InterBank Offered Rate
LIBOR01M — 1 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
LIBOR03M — 3 Month US Dollar LIBOR, rate disclosed as of November 30, 2019, based on the last reset date of the security
See notes to financial statements.
9
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Government Securities Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $1,043,887) | $ | 1,080,313 | |||||
Receivables: | |||||||
Interest | 4,209 | ||||||
Capital shares issued | 114 | ||||||
From Adviser | 8 | ||||||
Prepaid expenses | 13 | ||||||
Total assets | 1,084,657 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Investments purchased | 3,910 | ||||||
Capital shares redeemed | 207 | ||||||
Accrued expenses and other payables: | |||||||
Investment Advisory fees | 111 | ||||||
Administration fees | 102 | ||||||
Custody fees | 15 | ||||||
Transfer agent fees | 82 | ||||||
Compliance fees | — | (a) | |||||
12b-1 fees | 1 | ||||||
Other accrued expenses | 49 | ||||||
Total liabilities | 4,477 | ||||||
Net Assets: | |||||||
Capital | 1,046,030 | ||||||
Total distributable earnings/(loss) | 34,150 | ||||||
Net assets | $ | 1,080,180 | |||||
Net Assets | |||||||
Fund Shares | $ | 333,733 | |||||
Institutional Shares | 734,747 | ||||||
Adviser Shares | 5,106 | ||||||
R6 Shares | 6,594 | ||||||
Total | $ | 1,080,180 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 33,645 | ||||||
Institutional Shares | 74,057 | ||||||
Adviser Shares | 515 | ||||||
R6 Shares | 665 | ||||||
Total | 108,882 | ||||||
Net asset value, offering and redemption price per share: (b) | |||||||
Fund Shares | $ | 9.92 | |||||
Institutional Shares | $ | 9.92 | |||||
Adviser Shares | $ | 9.91 | |||||
R6 Shares | $ | 9.91 |
(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 November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Government Securities Fund | |||||||
Investment Income: | |||||||
Interest | $ | 15,434 | |||||
Securities lending (net of fees) | — | (a) | |||||
Total income | 15,434 | ||||||
Expenses: | |||||||
Investment Advisory fees | 703 | ||||||
Administration fees — Fund Shares | 250 | ||||||
Administration fees — Institutional Shares | 371 | ||||||
Administration fees — Adviser Shares | 4 | ||||||
Administration fees — R6 Shares | 2 | ||||||
12b-1 fees — Adviser Shares | 6 | ||||||
Custodian fees | 37 | ||||||
Transfer agent fees — Fund Shares | 198 | ||||||
Transfer agent fees — Institutional Shares | 371 | ||||||
Transfer agent fees — Adviser Shares | — | (a) | |||||
Transfer agent fees — R6 Shares | — | (a) | |||||
Trustees' fees | 20 | ||||||
Compliance fees | 3 | ||||||
Legal and audit fees | 43 | ||||||
State registration and filing fees | 33 | ||||||
Sub-Administration fees | 9 | ||||||
Other expenses | 27 | ||||||
Total expenses | 2,077 | ||||||
Expenses waived/reimbursed by Adviser | (3 | ) | |||||
Expenses waived/reimbursed by AMCO | (4 | ) | |||||
Net expenses | 2,070 | ||||||
Net Investment Income (Loss) | 13,364 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | 295 | ||||||
Net change in unrealized appreciation/depreciation on investment securities | 8,739 | ||||||
Net realized/unrealized gains (losses) on investments | 9,034 | ||||||
Change in net assets resulting from operations | $ | 22,398 |
(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 Government Securities Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 13,364 | $ | 23,271 | |||||||
Net realized gains (losses) from investments | 295 | (457 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 8,739 | 35,278 | |||||||||
Change in net assets resulting from operations | 22,398 | 58,092 | |||||||||
Distributions to Shareholders: | |||||||||||
Fund Shares | (4,142 | ) | (7,783 | ) | |||||||
Institutional Shares | (9,523 | ) | (15,121 | ) | |||||||
Adviser Shares | (56 | ) | (103 | ) | |||||||
Class R6 Shares | (84 | ) | (158 | ) | |||||||
Change in net assets resulting from distributions to shareholders | (13,805 | ) | (23,165 | ) | |||||||
Change in net assets resulting from capital transactions | (10,236 | ) | 450,985 | ||||||||
Capital Contribution from USAA Transfer Agency Company | — | 1 | |||||||||
Change in net assets | (1,643 | ) | 485,913 | ||||||||
Net Assets: | |||||||||||
Beginning of period | 1,081,823 | 595,910 | |||||||||
End of period | $ | 1,080,180 | $ | 1,081,823 | |||||||
Capital Transactions: | |||||||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 25,980 | $ | 36,701 | |||||||
Distributions reinvested | 3,790 | 7,207 | |||||||||
Cost of shares redeemed | (26,692 | ) | (58,880 | ) | |||||||
Total Fund Shares | $ | 3,078 | $ | (14,972 | ) | ||||||
Institutional Shares | |||||||||||
Proceeds from shares issued | $ | 13,548 | $ | 474,117 | |||||||
Distributions reinvested | 9,382 | 15,202 | |||||||||
Cost of shares redeemed | (36,390 | ) | (23,341 | ) | |||||||
Total Institutional Shares | $ | (13,460 | ) | $ | 465,978 | ||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 30 | $ | 110 | |||||||
Distributions reinvested | 2 | 3 | |||||||||
Cost of shares redeemed | (6 | ) | (24 | ) | |||||||
Total Adviser Shares | $ | 26 | $ | 89 | |||||||
Class R6 Shares | |||||||||||
Proceeds from shares issued | $ | 303 | $ | 147 | |||||||
Distributions reinvested | 18 | 35 | |||||||||
Cost of shares redeemed | (201 | ) | (292 | ) | |||||||
Total Class R6 Shares | $ | 120 | $ | (110 | ) | ||||||
Change in net assets resulting from capital transactions | $ | (10,236 | ) | $ | 450,985 |
See notes to financial statements.
12
USAA Mutual Funds Trust | Statements of Changes in Net Assets — continued |
(Amounts in Thousands)
USAA Government Securities Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
Share Transactions: | |||||||||||
Fund Shares | |||||||||||
Issued | 2,616 | 3,829 | |||||||||
Reinvested | 381 | 751 | |||||||||
Redeemed | (2,687 | ) | (6,159 | ) | |||||||
Total Fund Shares | 310 | (1,579 | ) | ||||||||
Institutional Shares | |||||||||||
Issued | 1,362 | 49,953 | |||||||||
Reinvested | 944 | 1,582 | |||||||||
Redeemed | (3,648 | ) | (2,450 | ) | |||||||
Total Institutional Shares | (1,342 | ) | 49,085 | ||||||||
Adviser Shares | |||||||||||
Issued | 4 | 11 | |||||||||
Reinvested | — | (a) | — | (a) | |||||||
Redeemed | (1 | ) | (2 | ) | |||||||
Total Adviser Shares | 3 | 9 | |||||||||
Class R6 Shares | |||||||||||
Issued | 30 | 15 | |||||||||
Reinvested | 2 | 4 | |||||||||
Redeemed | (20 | ) | (31 | ) | |||||||
Total Class R6 Shares | 12 | (12 | ) | ||||||||
Change in Shares | (1,017 | ) | 47,503 |
(a) Rounds to less than 1.
See notes to financial statements.
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 Government Securities Fund | |||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 9.84 | 0.12 | (d) | 0.08 | 0.20 | (0.12 | ) | (0.12 | ) | |||||||||||||||||
Year Ended May 31, 2019 | $ | 9.55 | 0.23 | 0.29 | 0.52 | (0.23 | ) | (0.23 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 9.86 | 0.20 | (0.31 | ) | (0.11 | ) | (0.20 | ) | (0.20 | ) | ||||||||||||||||
Year Ended May 31, 2017 | $ | 10.00 | 0.20 | (0.14 | ) | 0.06 | (0.20 | ) | (0.20 | ) | |||||||||||||||||
Year Ended May 31, 2016 | $ | 10.04 | 0.22 | (0.04 | ) | 0.18 | (0.22 | ) | (0.22 | ) | |||||||||||||||||
Year Ended May 31, 2015 | $ | 10.02 | 0.25 | 0.03 | 0.28 | (0.26 | ) | (0.26 | ) | ||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 9.85 | 0.12 | (d) | 0.08 | 0.20 | (0.13 | ) | (0.13 | ) | |||||||||||||||||
Year Ended May 31, 2019 | $ | 9.55 | 0.24 | 0.30 | 0.54 | (0.24 | ) | (0.24 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 9.86 | 0.21 | (0.31 | ) | (0.10 | ) | (0.21 | ) | (0.21 | ) | ||||||||||||||||
Year Ended May 31, 2017 | $ | 10.00 | 0.21 | (0.14 | ) | 0.07 | (0.21 | ) | (0.21 | ) | |||||||||||||||||
August 7, 2015 (e) through May 31, 2016 | $ | 9.94 | 0.18 | 0.06 | 0.24 | (0.18 | ) | (0.18 | ) | ||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 9.84 | 0.10 | (d) | 0.08 | 0.18 | (0.11 | ) | (0.11 | ) | |||||||||||||||||
Year Ended May 31, 2019 | $ | 9.54 | 0.21 | 0.30 | 0.51 | (0.21 | ) | (0.21 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 9.85 | 0.18 | (0.31 | ) | (0.13 | ) | (0.18 | ) | (0.18 | ) | ||||||||||||||||
Year Ended May 31, 2017 | $ | 10.00 | 0.17 | (0.15 | ) | 0.02 | (0.17 | ) | (0.17 | ) | |||||||||||||||||
Year Ended May 31, 2016 | $ | 10.04 | 0.19 | (0.04 | ) | 0.15 | (0.19 | ) | (0.19 | ) | |||||||||||||||||
Year Ended May 31, 2015 | $ | 10.01 | 0.22 | 0.04 | 0.26 | (0.23 | ) | (0.23 | ) | ||||||||||||||||||
Class R6 Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 9.84 | 0.12 | (d) | 0.08 | 0.20 | (0.13 | ) | (0.13 | ) | |||||||||||||||||
Year Ended May 31, 2019 | $ | 9.55 | 0.24 | 0.29 | 0.53 | (0.24 | ) | (0.24 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 9.85 | 0.22 | (0.30 | ) | (0.08 | ) | (0.22 | ) | (0.22 | ) | ||||||||||||||||
December 1, 2016 (e) through May 31, 2017 | $ | 9.80 | 0.11 | 0.05 | 0.16 | (0.11 | ) | (0.11 | ) |
* 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 5 of the accompanying Notes to Financial Statements.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
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) | Net Investment Income (Loss)(b) | Gross Expenses(b) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(c) | ||||||||||||||||||||||||||||
USAA Government Securities Fund | |||||||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 9.92 | 2.05 | % | 0.44 | % | 2.41 | % | 0.44 | % | $ | 333,733 | 5 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 9.84 | 5.56 | % | 0.47 | % | 2.42 | % | 0.47 | % | $ | 328,123 | 9 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 9.55 | (1.09 | )% | 0.48 | % | 2.09 | % | 0.48 | % | $ | 333,464 | 15 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 9.86 | 0.62 | % | 0.48 | % | 2.02 | % | 0.48 | % | $ | 390,897 | 18 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 10.00 | 1.80 | % | 0.51 | % | 2.17 | % | 0.51 | % | $ | 432,471 | 14 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 10.04 | 2.78 | % | 0.51 | % | 2.52 | % | 0.51 | % | $ | 435,421 | 15 | % | ||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 9.92 | 2.09 | % | 0.35 | % | 2.49 | % | 0.35 | % | $ | 734,747 | 5 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 9.85 | 5.76 | % | 0.38 | % | 2.55 | % | 0.38 | % | $ | 742,233 | 9 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 9.55 | (1.01 | )% | 0.39 | % | 2.18 | % | 0.39 | % | $ | 251,297 | 15 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 9.86 | 0.71 | % | 0.40 | % | 2.12 | % | 0.40 | % | $ | 133,607 | 18 | % | ||||||||||||||||||||
August 7, 2015 (e) through May 31, 2016 | — | $ | 10.00 | 2.39 | % | 0.44 | % | 2.16 | % | 0.44 | % | $ | 106,692 | 14 | % | ||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 9.91 | 1.79 | % | 0.75 | % | 2.09 | % | 0.92 | % | $ | 5,106 | 5 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 9.84 | 5.37 | % | 0.75 | % | 2.14 | % | 0.87 | % | $ | 5,042 | 9 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | (f) | $ | 9.54 | (1.36 | )% | 0.75 | % | 1.82 | % | 0.87 | % | $ | 4,804 | 15 | % | |||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 9.85 | 0.25 | % | 0.75 | % | 1.76 | % | 0.93 | % | $ | 6,089 | 18 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 10.00 | 1.55 | % | 0.75 | % | 1.93 | % | 0.95 | % | $ | 5,088 | 14 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | (f) | $ | 10.04 | 2.58 | % | 0.80 | %(g) | 2.22 | % | 1.05 | % | $ | 5,116 | 15 | % | |||||||||||||||||||
Class R6 Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 9.91 | 1.99 | % | 0.35 | % | 2.49 | % | 0.44 | % | $ | 6,594 | 5 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 9.84 | 5.68 | % | 0.35 | % | 2.54 | % | 0.51 | % | $ | 6,425 | 9 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 9.55 | (0.87 | )% | 0.35 | % | 2.22 | % | 0.64 | % | $ | 6,345 | 15 | % | ||||||||||||||||||||
December 1, 2016 (e) through May 31, 2017 | — | $ | 9.85 | 1.62 | % | 0.35 | % | 2.22 | % | 1.12 | % | $ | 5,027 | 18 | % |
(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) Commencement of operations.
(f) Amount is less than $0.005.
(g) Prior to October 1, 2014, AMCO voluntarily agreed to reimburse the Adviser Shares for expenses in excess of 0.90% of their average daily net assets.
See notes to financial statements.
15
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Government Securities Fund (the "Fund"). The Fund offers four classes of shares: Fund Shares, Institutional Shares, Adviser Shares and R6 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 July 1, 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
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
• 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)
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 November 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 | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 47,182 | $ | — | $ | 47,182 | |||||||||||
Municipal Bonds | — | 39,468 | — | 39,468 | |||||||||||||||
U.S. Government Agency Mortgages | — | 697,443 | — | 697,443 | |||||||||||||||
U.S. Treasury Obligations | — | 282,453 | — | 282,453 | |||||||||||||||
Investment Companies | 1 | — | — | 1 | |||||||||||||||
Repurchase Agreements | — | 13,766 | — | 13,766 | |||||||||||||||
Total | $ | 1 | $ | 1,080,312 | $ | — | $ | 1,080,313 |
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.
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
17
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
Mortgage- and Asset-Backed Securities:
The values of some mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values of mortgage and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market's perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as "Ginnie Mae"), while other mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as "Fannie Mae" and "Freddie Mac"), are backed only by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
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
18
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 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 May 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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | U.S. Government Securities | ||||||||||||||
Purchases | Sales | Purchases | Sales | ||||||||||||
$ | 20,238 | $ | 16,557 | $ | 28,536 | $ | 44,412 |
19
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
4. 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 usaa.com. As of November 30, 2019, certain USAA fund-of funds owned total outstanding shares of the Fund:
Affiliated USAA Fund | Ownership % | ||||||
Cornerstone Conservative Fund | 5.8 | ||||||
Target Retirement Income Fund | 13.5 | ||||||
Target Retirement 2020 Fund | 19.9 | ||||||
Target Retirement 2030 Fund | 29.4 | ||||||
Target Retirement 2040 Fund | 19.0 | ||||||
Target Retirement 2050 Fund | 8.9 | ||||||
Target Retirement 2060 Fund | 1.2 |
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 a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.125% of average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $568 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 0.125% 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. Only performance beginning as of July 1, 2019, and thereafter will be utilized in calculating future performance adjustments.
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 U.S. Government Funds Index. The Lipper Intermediate U.S. Government Funds Index measures the total return performance of funds tracked by Lipper that invest 65% of fund assets in securities issued or guaranteed by the U.S. government, its agency, or its instrumentalities, with dollar-weighted average maturities of five to ten years. The performance period for each share class consists of the current month plus the previous 35 months (or the number of months beginning July 1, 2019, if fewer). 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 |
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
(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 Intermediate U.S. Government Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period June 1, 2019 through June 30, 2019, performance adjustments for Fund Shares, Institutional Shares, Adviser Shares, and R6 Shares were $0, $0, $0, and less than $(1) thousand, respectively and 0.00%, 0.00%, 0.00%, and less than (0.005%) of net assets, respectively. Base fees incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $135 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 November 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 the 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, 0.10% of average daily net assets of the Institutional Shares, and 0.05% of average daily net assets of the R6 Shares. Amounts incurred from July 1, 2019 through November 30, 2019 are $210, $310, $3, and $2 thousand for Fund Shares, Institutional Shares, Adviser Shares, and R6 Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
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, 0.10% of average daily net assets of the Institutional Shares, and 0.05% of average daily net assets of the R6 Shares. Amounts incurred from June 1, 2019 through June 30, 2019 are $40, $61, $1, and less than $1 thousand for Fund Shares, Institutional Shares, Adviser Shares, and R6 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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
21
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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. Transfer agent's fees for Institutional Shares and R6 Shares are paid monthly based on a fee accrued daily at an annualized rate of 0.10% of the Institutional Shares' and 0.01% of the R6 Shares' average daily net assets, plus out-of pocket expenses. Amounts incurred and paid to VCTA from July 1, 2019 through November 30, 2019 was $164, $310, less than $1, and less than $1 thousand for the Fund Shares, Institutional Shares, Adviser Shares, and R6 Shares, respectively. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $34, $61, less than $1, and less than $1 thousand for the Fund Shares, Institutional Shares, Adviser Shares, and R6 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 November 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 June 1, 2019 through June 30, 2019 were $1 thousand and reflected on the Statement of Operations as 12b-1 Fees.
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.48%, 0.39%, 0.75% and 0.35% for the Fund Shares, Institutional Shares, Adviser Shares, and R6 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 November 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 November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||||||
$ | 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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of the Adviser Shares and R6 Shares to 0.75% and 0.35%, respectively, of their average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Adviser Shares and R6 Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, these expense limits are no longer in effect. This amount is 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.
6. Risks:
The Fund may be subject to other risks in addition to these identified risks.
The Fund is subject to the risk that the value of its investments will fluctuate because of changes in interest rates, changes in supply of and demand for fixed-income securities, or other market factors. If interest rates increase, the yield of the Fund may increase and the market value of the Fund's securities may decline, adversely affecting the Fund's net asset value ("NAV") and total return. If interest rates decrease, the yield of the Fund may decrease.
In addition, the market value of the Fund's securities may increase, which may increase the Fund's NAV and total return. In addition, market developments and other factors, including a general rise in interest rates, have the potential to cause investors to move out of fixed-income securities on a large
23
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
scale, which may increase redemptions from mutual funds that hold large amounts of fixed-income securities. Such a move, coupled with a reduction in the ability or willingness of dealers and other institutional investors to buy or hold fixed-income securities, may result in decreased liquidity and increased volatility in the fixed-income markets. Heavy redemptions of fixed-income mutual funds and decreased liquidity of fixed-income securities could hurt the Fund's performance.
The Fund is subject to legislative risk, which is the risk that changes in government policies may affect the value of the investments held by the Fund in ways we cannot anticipate, and that such policies could have an adverse impact on the value of the Fund's investments and the Fund's NAV.
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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $2 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended November 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. 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 November 30, 2019.
8. 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 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
24
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
(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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||
Distributions paid from | |||||||||||
Ordinary Income | Total Distributions Paid | ||||||||||
$ | 23,165 | $ | 23,165 |
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||
$ | 174 | $ | (2,278 | ) | $ | 27,688 | $ | 25,584 |
** 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 May 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 | |||||||||
$ | 1,533 | $ | 745 | $ | 2,278 |
25
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||||||
Fund Shares | $ | 1,000.00 | $ | 1,020.50 | $ | 1,022.80 | $ | 2.22 | $ | 2.23 | 0.44 | % | |||||||||||||||
Institutional Shares | 1,000.00 | 1,020.90 | 1,023.25 | 1.77 | 1.77 | 0.35 | % | ||||||||||||||||||||
Adviser Shares | 1,000.00 | 1,017.90 | 1,021.25 | 3.78 | 3.79 | 0.75 | % | ||||||||||||||||||||
R6 Shares | 1,000.00 | 1,019.90 | 1,023.25 | 1.77 | 1.77 | 0.35 | % |
* 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).
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.
26
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 | (800) 235-8396 |
23414-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Growth and Tax Strategy Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 27 | ||||||
Statement of Operations | 28 | ||||||
Statements of Changes in Net Assets | 29 | ||||||
Financial Highlights | 30 | ||||||
Notes to Financial Statements | 32 | ||||||
Supplemental Information | 43 | ||||||
Expense Examples | 43 | ||||||
Proxy Voting and Portfolio Holdings Information | 43 | ||||||
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 Growth and Tax Strategy Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek a conservative balance for the investor between income, the majority of which is exempt from federal income tax, and the potential for long-term growth of capital to preserve purchasing power.
Top 10 Industries
11/30/19
(% of Net Assets)
Software | 3.5 | % | |||||
Banks | 2.9 | % | |||||
IT Services | 2.6 | % | |||||
Interactive Media & Services | 2.5 | % | |||||
Technology Hardware, Storage & Peripherals | 2.3 | % | |||||
Pharmaceuticals | 2.2 | % | |||||
Semiconductors & Semiconductor Equipment | 2.1 | % | |||||
Oil, Gas & Consumable Fuels | 1.8 | % | |||||
Health Care Equipment & Supplies | 1.7 | % | |||||
Internet & Direct Marketing Retail | 1.5 | % |
The Schedule of Portfolio Investments uses the Global Industry Classification Standard (GICS), which may differ from the Fund's compliance classification.
Top 5 Tax-Exempt Bonds
11/30/19
(% of Net Assets)
Port of Port Arthur Navigation District Revenue | 2.0 | % | |||||
Illinois Finance Authority Revenue | 1.9 | % | |||||
Massachusetts Development Finance Agency Revenue | 1.8 | % | |||||
New Jersey Economic Development Authority Revenue | 1.3 | % | |||||
Deutsche Bank Spears/Lifers Trust Revenue | 0.8 | % |
Top 5 Blue Chip Stocks
11/30/19
(% of Net Assets)
Microsoft Corp. | 2.1 | % | |||||
Apple, Inc. | 2.1 | % | |||||
Amazon.com, Inc. | 1.3 | % | |||||
Facebook, Inc. | 1.0 | % | |||||
Berkshire Hathaway, Inc. | 0.9 | % |
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund (continued) | November 30, 2019 |
(Unaudited)
Asset Allocation*:
11/30/19
(% of Net Assets)
* Does not include futures and short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Common Stocks (49.1%) | |||||||||||
Communication Services (5.3%): | |||||||||||
Activision Blizzard, Inc. | 9,016 | $ | 494 | ||||||||
Alphabet, Inc., Class A (a) | 3,334 | 4,348 | |||||||||
Alphabet, Inc., Class C (a) | 3,360 | 4,385 | |||||||||
AT&T, Inc. (b) | 81,314 | 3,040 | |||||||||
CBS Corp., Class B | 3,467 | 140 | |||||||||
CenturyLink, Inc. | 12,491 | 181 | |||||||||
Charter Communications, Inc., Class A (a) | 2,057 | 967 | |||||||||
Comcast Corp., Class A | 48,391 | 2,136 | |||||||||
Discovery Communications, Inc., Class A (a) (c) | 1,428 | 47 | |||||||||
Discovery, Inc., Class C (a) | 3,181 | 97 | |||||||||
DISH Network Corp., Class A (a) | 2,685 | 92 | |||||||||
Electronic Arts, Inc. (a) | 3,504 | 354 | |||||||||
Facebook, Inc., Class A (a) | 30,773 | 6,205 | |||||||||
Fox Corp., Class A | 4,573 | 164 | |||||||||
Fox Corp., Class B | 2,077 | 73 | |||||||||
Netflix, Inc. (a) | 5,648 | 1,777 | |||||||||
News Corp., Class A | 3,584 | 46 | |||||||||
Omnicom Group, Inc. | 1,859 | 148 | |||||||||
Take-Two Interactive Software, Inc. (a) | 1,245 | 151 | |||||||||
The Interpublic Group of Co., Inc. | 4,035 | 90 | |||||||||
The Walt Disney Co. | 20,412 | 3,094 | |||||||||
TripAdvisor, Inc. | 735 | 21 | |||||||||
Twitter, Inc. (a) | 10,162 | 314 | |||||||||
Verizon Communications, Inc. | 52,559 | 3,166 | |||||||||
Viacom, Inc., Class B | 2,735 | 66 | |||||||||
31,596 | |||||||||||
Consumer Discretionary (4.5%): | |||||||||||
Advance Auto Parts, Inc. | 905 | 142 | |||||||||
Amazon.com, Inc. (a) | 4,420 | 7,961 | |||||||||
Aptiv PLC | 2,948 | 277 | |||||||||
AutoZone, Inc. (a) | 296 | 349 | |||||||||
Best Buy Co., Inc. | 2,415 | 195 | |||||||||
Booking Holdings, Inc. (a) | 464 | 883 | |||||||||
BorgWarner, Inc. | 1,420 | 60 | |||||||||
Capri Holdings Ltd. (a) | 1,686 | 63 | |||||||||
CarMax, Inc. (a) | 1,691 | 164 | |||||||||
Carnival Corp. | 5,263 | 237 | |||||||||
Chipotle Mexican Grill, Inc. (a) | 245 | 199 | |||||||||
D.R. Horton, Inc. | 4,281 | 238 | |||||||||
Darden Restaurants, Inc. | 1,204 | 143 | |||||||||
Delphi Technologies PLC (a) | 1 | — | (d) | ||||||||
Dollar General Corp. | 2,615 | 411 | |||||||||
Dollar Tree, Inc. (a) | 2,253 | 206 | |||||||||
eBay, Inc. | 10,566 | 375 | |||||||||
Expedia, Inc. | 742 | 75 | |||||||||
Ford Motor Co. | 49,043 | 444 | |||||||||
Garmin Ltd. | 1,028 | 100 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
General Motors Co., Class C | 12,922 | $ | 465 | ||||||||
Genuine Parts Co. | 1,656 | 173 | |||||||||
H&R Block, Inc. | 1,670 | 41 | |||||||||
Hanesbrands, Inc. | 4,557 | 69 | |||||||||
Harley-Davidson, Inc. | 1,559 | 57 | |||||||||
Hasbro, Inc. | 1,004 | 102 | |||||||||
Hilton Worldwide Holdings, Inc. | 3,115 | 327 | |||||||||
Kohl's Corp. | 1,141 | 54 | |||||||||
L Brands, Inc. | 2,568 | 49 | |||||||||
Las Vegas Sands Corp. (b) | 4,370 | 274 | |||||||||
Leggett & Platt, Inc. | 859 | 45 | |||||||||
Lennar Corp., Class A | 3,426 | 204 | |||||||||
Lennar Corp., Class B | 1 | — | (d) | ||||||||
LKQ Corp. (a) | 3,724 | 131 | |||||||||
Lowe's Cos., Inc. | 9,955 | 1,168 | |||||||||
Macy's, Inc. | 3,437 | 53 | |||||||||
Marriott International, Inc., Class A | 3,316 | 465 | |||||||||
McDonald's Corp. | 9,008 | 1,753 | |||||||||
MGM Resorts International | 6,137 | 196 | |||||||||
Mohawk Industries, Inc. (a) | 761 | 106 | |||||||||
Newell Brands, Inc. | 4,782 | 92 | |||||||||
Nike, Inc., Class B | 14,032 | 1,311 | |||||||||
Nordstrom, Inc. | 1,027 | 39 | |||||||||
Norwegian Cruise Line Holdings Ltd. (a) | 2,715 | 146 | |||||||||
NVR, Inc. (a) | 38 | 144 | |||||||||
O'Reilly Automotive, Inc. (a) | 788 | 349 | |||||||||
PulteGroup, Inc. | 2,649 | 105 | |||||||||
PVH Corp. | 605 | 59 | |||||||||
Ralph Lauren Corp. | 657 | 71 | |||||||||
Ross Stores, Inc. | 4,514 | 524 | |||||||||
Royal Caribbean Cruises Ltd. | 2,077 | 249 | |||||||||
Starbucks Corp. | 12,390 | 1,059 | |||||||||
Tapestry, Inc. | 3,670 | 99 | |||||||||
Target Corp. | 5,924 | 741 | |||||||||
The Gap, Inc. | 2,668 | 44 | |||||||||
The Home Depot, Inc. | 12,059 | 2,659 | |||||||||
The TJX Cos., Inc. | 13,371 | 817 | |||||||||
Tiffany & Co. | 1,361 | 182 | |||||||||
Tractor Supply Co. | 1,196 | 113 | |||||||||
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 550 | 129 | |||||||||
Under Armour, Inc., Class A (a) (c) | 682 | 13 | |||||||||
Under Armour, Inc., Class C (a) | 1,138 | 20 | |||||||||
VF Corp. | 3,798 | 335 | |||||||||
Whirlpool Corp. | 798 | 114 | |||||||||
Wynn Resorts Ltd. | 903 | 109 | |||||||||
Yum! Brands, Inc. | 3,123 | 314 | |||||||||
28,091 | |||||||||||
Consumer Staples (3.7%): | |||||||||||
Altria Group, Inc. | 21,851 | 1,086 | |||||||||
Archer-Daniels-Midland Co. | 7,185 | 308 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Brown-Forman Corp., Class B | 1,744 | $ | 118 | ||||||||
Campbell Soup Co. | 2,319 | 108 | |||||||||
Church & Dwight Co., Inc. | 2,460 | 173 | |||||||||
Colgate-Palmolive Co. | 11,279 | 765 | |||||||||
Conagra Brands, Inc. | 5,746 | 166 | |||||||||
Constellation Brands, Inc., Class A | 1,572 | 292 | |||||||||
Costco Wholesale Corp. | 4,892 | 1,467 | |||||||||
Coty, Inc., Class A (b) | 3,743 | 43 | |||||||||
General Mills, Inc. | 6,961 | 371 | |||||||||
Hormel Foods Corp. | 2,891 | 129 | |||||||||
Kellogg Co. | 2,970 | 193 | |||||||||
Kimberly-Clark Corp. | 4,441 | 605 | |||||||||
Lamb Weston Holdings, Inc. | 1,805 | 152 | |||||||||
McCormick & Co., Inc. | 1,216 | 206 | |||||||||
Molson Coors Brewing Co., Class B | 806 | 41 | |||||||||
Mondelez International, Inc., Class A | 16,937 | 890 | |||||||||
Monster Beverage Corp. (a) | 4,648 | 278 | |||||||||
PepsiCo, Inc. | 18,381 | 2,497 | |||||||||
Philip Morris International, Inc. | 20,453 | 1,696 | |||||||||
Spectrum Brands Holdings, Inc. | 71 | 4 | |||||||||
Sysco Corp. | 5,677 | 457 | |||||||||
The Clorox Co. | 1,652 | 245 | |||||||||
The Coca-Cola Co. | 50,590 | 2,702 | |||||||||
The Estee Lauder Cos., Inc. | 2,575 | 504 | |||||||||
The Hershey Co. | 1,318 | 195 | |||||||||
The J.M. Smucker Co. | 1,064 | 112 | |||||||||
The Kraft Heinz Co. | 5,677 | 173 | |||||||||
The Kroger Co. | 10,167 | 278 | |||||||||
The Procter & Gamble Co. | 27,492 | 3,356 | |||||||||
Tyson Foods, Inc., Class A | 3,456 | 311 | |||||||||
Walgreens Boots Alliance, Inc. | 8,393 | 500 | |||||||||
Walmart, Inc. | 15,825 | 1,885 | |||||||||
22,306 | |||||||||||
Energy (1.9%): | |||||||||||
Apache Corp. | 4,739 | 106 | |||||||||
Baker Hughes, Inc. | 8,533 | 191 | |||||||||
Cabot Oil & Gas Corp. | 2,764 | 44 | |||||||||
Chevron Corp. | 24,956 | 2,922 | |||||||||
Concho Resources, Inc. | 2,643 | 192 | |||||||||
ConocoPhillips | 14,593 | 875 | |||||||||
Devon Energy Corp. | 3,610 | 79 | |||||||||
EOG Resources, Inc. | 7,629 | 541 | |||||||||
Exxon Mobil Corp. (b) | 39,750 | 2,708 | |||||||||
Halliburton Co. | 11,300 | 237 | |||||||||
Helmerich & Payne, Inc. | 1,393 | 55 | |||||||||
Hess Corp. | 2,905 | 180 | |||||||||
HollyFrontier Corp. | 1,930 | 99 | |||||||||
Kinder Morgan, Inc. | 19,537 | 383 | |||||||||
Marathon Petroleum Corp. | 8,655 | 525 | |||||||||
National Oilwell Varco, Inc. | 4,864 | 110 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Noble Energy, Inc. | 3,962 | $ | 82 | ||||||||
Occidental Petroleum Corp. | 5,190 | 200 | |||||||||
ONEOK, Inc. | 5,094 | 362 | |||||||||
Phillips 66 | 5,897 | 677 | |||||||||
Pioneer Natural Resources Co. | 2,157 | 276 | |||||||||
Schlumberger Ltd. | 1,278 | 46 | |||||||||
TechnipFMC PLC | 5,518 | 104 | |||||||||
The Williams Cos., Inc. | 15,933 | 362 | |||||||||
Valero Energy Corp. | 4,457 | 426 | |||||||||
11,782 | |||||||||||
Financials (6.6%): | |||||||||||
Affiliated Managers Group, Inc. | 666 | 57 | |||||||||
Aflac, Inc. | 7,793 | 427 | |||||||||
American Express Co. | 6,948 | 835 | |||||||||
American International Group, Inc. | 10,289 | 542 | |||||||||
Ameriprise Financial, Inc. | 1,688 | 277 | |||||||||
Aon PLC | 2,636 | 537 | |||||||||
Arthur J. Gallagher & Co. | 2,040 | 190 | |||||||||
Assurant, Inc. | 756 | 100 | |||||||||
Bank of America Corp. | 108,066 | 3,601 | |||||||||
BB&T Corp. | 9,655 | 528 | |||||||||
Berkshire Hathaway, Inc., Class B (a) | 24,318 | 5,358 | |||||||||
BlackRock, Inc., Class A | 1,516 | 750 | |||||||||
Capital One Financial Corp. | 5,920 | 592 | |||||||||
CBOE Holdings, Inc. | 970 | 115 | |||||||||
Chubb Ltd. | 5,396 | 818 | |||||||||
Cincinnati Financial Corp. | 1,525 | 163 | |||||||||
Citigroup, Inc. | 26,864 | 2,018 | |||||||||
Citizens Financial Group, Inc. | 5,777 | 222 | |||||||||
CME Group, Inc. | 4,708 | 953 | |||||||||
Comerica, Inc. | 1,631 | 115 | |||||||||
Discover Financial Services | 4,081 | 346 | |||||||||
E*TRADE Financial Corp. | 3,084 | 137 | |||||||||
Everest Re Group Ltd. | 476 | 129 | |||||||||
Fifth Third BanCorp. | 9,109 | 275 | |||||||||
First Republic Bank | 2,170 | 238 | |||||||||
Franklin Resources, Inc. | 3,194 | 88 | |||||||||
Globe Life, Inc. | 995 | 102 | |||||||||
Hartford Financial Services Group, Inc. | 4,006 | 248 | |||||||||
Huntington Bancshares, Inc. | 11,994 | 179 | |||||||||
Intercontinental Exchange, Inc. | 5,711 | 538 | |||||||||
Invesco Ltd. | 3,240 | 57 | |||||||||
Jefferies Financial Group, Inc. | 2,843 | 59 | |||||||||
JPMorgan Chase & Co. | 35,496 | 4,676 | |||||||||
KeyCorp | 9,302 | 180 | |||||||||
Lincoln National Corp. | 1,769 | 104 | |||||||||
Loews Corp. | 3,175 | 162 | |||||||||
M&T Bank Corp. | 1,595 | 263 | |||||||||
MarketAxess Holdings, Inc. | 497 | 201 | |||||||||
Marsh & McLennan Cos., Inc. | 6,078 | 658 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
MetLife, Inc. | 10,989 | $ | 549 | ||||||||
Moody's Corp. | 1,807 | 410 | |||||||||
Morgan Stanley | 14,012 | 693 | |||||||||
MSCI, Inc. | 992 | 257 | |||||||||
Nasdaq, Inc. | 1,159 | 121 | |||||||||
Northern Trust Corp. (e) | 2,627 | 282 | |||||||||
Principal Financial Group, Inc. | 3,124 | 172 | |||||||||
Prudential Financial, Inc. | 4,473 | 419 | |||||||||
Raymond James Financial, Inc. | 1,592 | 143 | |||||||||
Regions Financial Corp. | 12,771 | 213 | |||||||||
S&P Global, Inc. | 2,912 | 771 | |||||||||
State Street Corp. | 4,122 | 310 | |||||||||
SunTrust Banks, Inc. | 5,453 | 386 | |||||||||
SVB Financial Group (a) | 573 | 133 | |||||||||
Synchrony Financial | 6,818 | 255 | |||||||||
T. Rowe Price Group, Inc. | 2,905 | 359 | |||||||||
The Allstate Corp. | 4,327 | 482 | |||||||||
The Bank of New York Mellon Corp. | 9,352 | 458 | |||||||||
The Charles Schwab Corp. | 12,946 | 641 | |||||||||
The Goldman Sachs Group, Inc. | 3,634 | 804 | |||||||||
The PNC Financial Services Group, Inc. | 5,743 | 880 | |||||||||
The Progressive Corp. | 5,810 | 424 | |||||||||
The Travelers Cos., Inc. | 2,645 | 362 | |||||||||
U.S. Bancorp | 16,402 | 985 | |||||||||
Unum Group | 2,028 | 62 | |||||||||
Wells Fargo & Co. (b) | 51,822 | 2,822 | |||||||||
Willis Towers Watson PLC | 1,438 | 282 | |||||||||
Zions Bancorp NA | 2,072 | 103 | |||||||||
40,616 | |||||||||||
Health Care (6.9%): | |||||||||||
Abbott Laboratories (b) | 22,580 | 1,930 | |||||||||
AbbVie, Inc. | 16,641 | 1,460 | |||||||||
ABIOMED, Inc. (a) | 581 | 114 | |||||||||
Agilent Technologies, Inc. | 3,901 | 315 | |||||||||
Alexion Pharmaceuticals, Inc. (a) | 2,893 | 330 | |||||||||
Align Technology, Inc. (a) | 809 | 224 | |||||||||
Allergan PLC | 4,232 | 783 | |||||||||
AmerisourceBergen Corp. | 1,410 | 124 | |||||||||
Amgen, Inc. | 7,334 | 1,722 | |||||||||
Anthem, Inc. | 3,139 | 906 | |||||||||
Baxter International, Inc. | 4,950 | 406 | |||||||||
Becton, Dickinson & Co. | 3,189 | 824 | |||||||||
Biogen, Inc. (a) | 2,058 | 617 | |||||||||
Boston Scientific Corp. (a) | 16,157 | 699 | |||||||||
Bristol-Myers Squibb Co. | 28,943 | 1,648 | |||||||||
Cardinal Health, Inc. | 3,662 | 202 | |||||||||
Centene Corp. (a) | 5,336 | 323 | |||||||||
Cerner Corp. | 3,904 | 279 | |||||||||
Cigna Corp. | 4,871 | 974 | |||||||||
CVS Health Corp. | 16,776 | 1,263 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Danaher Corp. | 6,575 | $ | 961 | ||||||||
DaVita, Inc. (a) | 1,271 | 91 | |||||||||
Dentsply Sirona, Inc. | 2,679 | 151 | |||||||||
Edwards Lifesciences Corp. (a) | 2,279 | 558 | |||||||||
Eli Lilly & Co. | 11,093 | 1,302 | |||||||||
Gilead Sciences, Inc. | 16,648 | 1,119 | |||||||||
HCA Healthcare, Inc. | 2,781 | 386 | |||||||||
Henry Schein, Inc. (a) | 1,879 | 129 | |||||||||
Hologic, Inc. (a) | 3,379 | 173 | |||||||||
Humana, Inc. | 1,659 | 566 | |||||||||
IDEXX Laboratories, Inc. (a) | 862 | 217 | |||||||||
Illumina, Inc. (a) | 1,897 | 608 | |||||||||
Incyte Pharmaceuticals, Inc. (a) | 2,303 | 217 | |||||||||
Intuitive Surgical, Inc. (a) | 1,247 | 739 | |||||||||
IQVIA Holdings, Inc. (a) | 1,614 | 236 | |||||||||
Johnson & Johnson (b) | 26,313 | 3,618 | |||||||||
Laboratory Corp. of America Holdings (a) | 1,243 | 214 | |||||||||
McKesson Corp. | 2,308 | 334 | |||||||||
Medtronic PLC | 15,494 | 1,727 | |||||||||
Merck & Co., Inc. | 28,722 | 2,504 | |||||||||
Mettler-Toledo International, Inc. (a) | 250 | 180 | |||||||||
PerkinElmer, Inc. | 1,398 | 130 | |||||||||
Perrigo Co. PLC | 1,463 | 75 | |||||||||
Pfizer, Inc. | 71,349 | 2,748 | |||||||||
Quest Diagnostics, Inc. | 1,359 | 145 | |||||||||
Regeneron Pharmaceuticals, Inc. (a) | 1,031 | 380 | |||||||||
ResMed, Inc. | 1,423 | 213 | |||||||||
Stryker Corp. | 3,126 | 640 | |||||||||
Teleflex, Inc. | 536 | 189 | |||||||||
The Cooper Co., Inc. | 549 | 172 | |||||||||
Thermo Fisher Scientific, Inc. | 4,383 | 1,376 | |||||||||
UnitedHealth Group, Inc. | 9,606 | 2,687 | |||||||||
Universal Health Services, Inc., Class B | 812 | 113 | |||||||||
Varian Medical Systems, Inc. (a) | 1,048 | 140 | |||||||||
Vertex Pharmaceuticals, Inc. (a) | 3,161 | 701 | |||||||||
Waters Corp. (a) | 742 | 165 | |||||||||
WellCare Health Plans, Inc. (a) | 567 | 183 | |||||||||
Zimmer Biomet Holdings, Inc. | 2,527 | 367 | |||||||||
Zoetis, Inc. | 5,626 | 678 | |||||||||
42,275 | |||||||||||
Industrials (4.8%): | |||||||||||
3M Co. (b) | 7,563 | 1,284 | |||||||||
A.O. Smith Corp. | 1,778 | 86 | |||||||||
Alaska Air Group, Inc. | 1,486 | 103 | |||||||||
Allegion PLC | 880 | 106 | |||||||||
AMETEK, Inc. | 2,658 | 263 | |||||||||
Arconic, Inc. | 5,092 | 158 | |||||||||
C.H. Robinson Worldwide, Inc. | 1,279 | 98 | |||||||||
Caterpillar, Inc. | 7,258 | 1,051 | |||||||||
Cintas Corp. | 814 | 209 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Copart, Inc. (a) | 2,286 | $ | 203 | ||||||||
CSX Corp. | 8,883 | 635 | |||||||||
Cummins, Inc. | 1,746 | 319 | |||||||||
Deere & Co. | 3,504 | 589 | |||||||||
Delta Air Lines, Inc. | 7,308 | 419 | |||||||||
Dover Corp. | 1,832 | 204 | |||||||||
Eaton Corp. PLC | 4,316 | 399 | |||||||||
Emerson Electric Co. | 6,845 | 506 | |||||||||
Equifax, Inc. | 1,407 | 196 | |||||||||
Expeditors International of Washington, Inc. | 1,997 | 149 | |||||||||
Fastenal Co. | 7,214 | 256 | |||||||||
FedEx Corp. | 3,002 | 480 | |||||||||
Flowserve Corp. | 1,210 | 59 | |||||||||
Fortive Corp. | 3,809 | 275 | |||||||||
Fortune Brands Home & Security, Inc. | 1,691 | 107 | |||||||||
General Dynamics Corp. | 3,206 | 583 | |||||||||
General Electric Co. (b) | 114,724 | 1,293 | |||||||||
Honeywell International, Inc. | 8,006 | 1,430 | |||||||||
Huntington Ingalls Industries, Inc. | 499 | 126 | |||||||||
IDEX Corp. | 997 | 162 | |||||||||
IHS Markit Ltd. (a) | 4,585 | 333 | |||||||||
Illinois Tool Works, Inc. | 3,682 | 642 | |||||||||
Ingersoll-Rand PLC | 2,877 | 377 | |||||||||
J.B. Hunt Transport Services, Inc. | 1,073 | 124 | |||||||||
Jacobs Engineering Group, Inc. | 1,348 | 124 | |||||||||
Johnson Controls International PLC | 9,815 | 421 | |||||||||
Kansas City Southern | 1,279 | 195 | |||||||||
L3Harris Technologies, Inc. | 2,880 | 579 | |||||||||
Lockheed Martin Corp. | 2,638 | 1,032 | |||||||||
Masco Corp. | 3,700 | 172 | |||||||||
Nielsen Holdings PLC | 4,676 | 91 | |||||||||
Norfolk Southern Corp. | 2,915 | 564 | |||||||||
Northrop Grumman Corp. | 1,969 | 693 | |||||||||
PACCAR, Inc. | 4,366 | 355 | |||||||||
Parker-Hannifin Corp. | 1,448 | 288 | |||||||||
Pentair PLC | 2,168 | 96 | |||||||||
Quanta Services, Inc. | 1,704 | 71 | |||||||||
Raytheon Co. | 3,052 | 664 | |||||||||
Republic Services, Inc. | 2,497 | 221 | |||||||||
Robert Half International, Inc. | 1,300 | 76 | |||||||||
Rockwell Automation, Inc. | 1,436 | 281 | |||||||||
Rollins, Inc. | 1,857 | 67 | |||||||||
Roper Technologies, Inc. | 1,119 | 403 | |||||||||
Snap-on, Inc. | 451 | 72 | |||||||||
Southwest Airlines Co. | 5,733 | 330 | |||||||||
Stanley Black & Decker, Inc. | 1,616 | 255 | |||||||||
Textron, Inc. | 2,562 | 118 | |||||||||
The Boeing Co. | 5,615 | 2,055 | |||||||||
TransDigm Group, Inc. | 482 | 273 | |||||||||
Union Pacific Corp. | 9,089 | 1,600 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
United Airlines Holdings, Inc. (a) | 2,785 | $ | 258 | ||||||||
United Parcel Service, Inc., Class B | 7,452 | 893 | |||||||||
United Rentals, Inc. (a) | 947 | 145 | |||||||||
United Technologies Corp. | 8,948 | 1,327 | |||||||||
Verisk Analytics, Inc., Class A | 1,865 | 276 | |||||||||
W.W. Grainger, Inc. | 478 | 152 | |||||||||
Wabtec Corp. | 2,395 | 188 | |||||||||
Waste Management, Inc. | 3,869 | 437 | |||||||||
Xylem, Inc. | 2,267 | 176 | |||||||||
28,172 | |||||||||||
Information Technology (11.1%): | |||||||||||
Accenture PLC, Class A | 7,048 | 1,418 | |||||||||
Adobe, Inc. (a) | 6,262 | 1,938 | |||||||||
Advanced Micro Devices, Inc. (a) | 14,004 | 548 | |||||||||
Akamai Technologies, Inc. (a) | 1,627 | 142 | |||||||||
Amphenol Corp., Class A | 3,766 | 391 | |||||||||
Analog Devices, Inc. | 4,322 | 488 | |||||||||
ANSYS, Inc. (a) | 1,058 | 269 | |||||||||
Apple, Inc. (b) | 47,909 | 12,803 | |||||||||
Applied Materials, Inc. | 11,477 | 665 | |||||||||
Autodesk, Inc. (a) | 2,558 | 463 | |||||||||
Automatic Data Processing, Inc. | 5,598 | 956 | |||||||||
Broadcom, Inc. | 5,135 | 1,624 | |||||||||
Broadridge Financial Solutions, Inc. | 1,368 | 169 | |||||||||
Cadence Design Systems, Inc. (a) | 3,311 | 233 | |||||||||
CDW Corp. | 1,611 | 218 | |||||||||
Cisco Systems, Inc. | 44,905 | 2,034 | |||||||||
Citrix Systems, Inc. | 1,327 | 150 | |||||||||
Cognizant Technology Solutions Corp., Class A | 7,260 | 465 | |||||||||
Corning, Inc. | 9,936 | 289 | |||||||||
DXC Technology Co. | 3,443 | 129 | |||||||||
F5 Networks, Inc. (a) | 561 | 82 | |||||||||
Fidelity National Information Services, Inc. | 8,064 | 1,114 | |||||||||
Fiserv, Inc. (a) | 3,938 | 458 | |||||||||
FleetCor Technologies, Inc. (a) | 1,102 | 338 | |||||||||
FLIR Systems, Inc. | 1,385 | 74 | |||||||||
Fortinet, Inc. (a) | 1,647 | 173 | |||||||||
Gartner, Inc. (a) | 1,147 | 184 | |||||||||
Global Payments, Inc. | 3,409 | 617 | |||||||||
Hewlett Packard Enterprises Co. | 14,736 | 233 | |||||||||
HP, Inc. | 15,371 | 309 | |||||||||
Intel Corp. | 48,424 | 2,812 | |||||||||
International Business Machines Corp. | 6,153 | 827 | |||||||||
Intuit, Inc. | 2,769 | 717 | |||||||||
IPG Photonics Corp. (a) | 456 | 65 | |||||||||
Jack Henry & Associates, Inc. | 769 | 117 | |||||||||
Juniper Networks, Inc. | 3,064 | 77 | |||||||||
Keysight Technologies, Inc. (a) | 2,386 | 255 | |||||||||
KLA Corp. | 2,035 | 333 | |||||||||
Lam Research Corp. | 1,595 | 426 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Leidos Holdings, Inc. | 1,777 | $ | 161 | ||||||||
Mastercard, Inc., Class A | 9,934 | 2,904 | |||||||||
Maxim Integrated Products, Inc. | 2,767 | 157 | |||||||||
Microchip Technology, Inc. | 2,607 | 246 | |||||||||
Micron Technology, Inc. (a) | 12,129 | 576 | |||||||||
Microsoft Corp. (b) | 84,968 | 12,862 | |||||||||
Motorola Solutions, Inc. | 2,135 | 357 | |||||||||
NetApp, Inc. | 3,113 | 189 | |||||||||
NortonLifeLock, Inc. | 7,282 | 181 | |||||||||
Nvidia Corp. | 7,855 | 1,702 | |||||||||
Oracle Corp. | 26,866 | 1,508 | |||||||||
Paychex, Inc. | 4,092 | 352 | |||||||||
PayPal Holdings, Inc. (a) | 15,178 | 1,639 | |||||||||
Qorvo, Inc. (a) | 1,188 | 124 | |||||||||
QUALCOMM, Inc. | 15,682 | 1,310 | |||||||||
Salesforce.com, Inc. (a) | 11,313 | 1,843 | |||||||||
Seagate Technology PLC | 2,733 | 163 | |||||||||
ServiceNow, Inc. (b) | 2,007 | 568 | |||||||||
Skyworks Solutions, Inc. | 2,215 | 218 | |||||||||
Synopsys, Inc. (a) | 1,398 | 197 | |||||||||
TE Connectivity Ltd. | 3,470 | 322 | |||||||||
Texas Instruments, Inc. | 9,684 | 1,164 | |||||||||
The Western Union Co. | 4,287 | 115 | |||||||||
VeriSign, Inc. (a) | 1,070 | 204 | |||||||||
Visa, Inc., Class A | 19,218 | 3,547 | |||||||||
Western Digital Corp. | 3,599 | 181 | |||||||||
Xerox Holdings Corp. | 1,978 | 77 | |||||||||
Xilinx, Inc. | 2,527 | 234 | |||||||||
67,704 | |||||||||||
Materials (1.5%): | |||||||||||
Air Products & Chemicals, Inc. | 2,643 | 625 | |||||||||
Albemarle Corp. | 1,394 | 91 | |||||||||
Amcor PLC | 20,955 | 215 | |||||||||
Avery Dennison Corp. | 1,065 | 139 | |||||||||
Ball Corp. | 3,726 | 246 | |||||||||
Celanese Corp., Series A | 1,596 | 200 | |||||||||
CF Industries Holdings, Inc. | 2,306 | 107 | |||||||||
Corteva, Inc. | 4,452 | 116 | |||||||||
Dow, Inc. | 7,495 | 400 | |||||||||
DuPont de Nemours, Inc. | 9,799 | 635 | |||||||||
Eastman Chemical Co. | 1,632 | 128 | |||||||||
Ecolab, Inc. | 2,532 | 473 | |||||||||
FMC Corp. | 1,542 | 151 | |||||||||
Freeport-McMoRan, Inc. | 16,950 | 193 | |||||||||
International Flavors & Fragrances, Inc. (c) | 1,366 | 193 | |||||||||
International Paper Co. | 4,862 | 225 | |||||||||
Linde PLC | 5,948 | 1,226 | |||||||||
LyondellBasell Industries NV, Class A | 3,284 | 304 | |||||||||
Martin Marietta Materials, Inc. | 772 | 207 | |||||||||
Newmont Goldcorp Corp. | 8,551 | 328 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Nucor Corp. | 2,663 | $ | 150 | ||||||||
Packaging Corp. of America | 1,161 | 130 | |||||||||
PPG Industries, Inc. | 3,023 | 389 | |||||||||
Sealed Air Corp. | 1,340 | 51 | |||||||||
The Sherwin-Williams Co. | 964 | 562 | |||||||||
Vulcan Materials Co. | 1,496 | 212 | |||||||||
Westrock Co. | 3,274 | 132 | |||||||||
7,828 | |||||||||||
Real Estate (1.3%): | |||||||||||
Alexandria Real Estate Equities, Inc. | 1,101 | 179 | |||||||||
American Tower Corp. | 4,297 | 920 | |||||||||
Apartment Investment & Management Co. | 1,818 | 98 | |||||||||
AvalonBay Communities, Inc. | 1,564 | 335 | |||||||||
Boston Properties, Inc. | 1,478 | 205 | |||||||||
CBRE Group, Inc., Class A (a) | 3,942 | 225 | |||||||||
Crown Castle International Corp. | 5,001 | 668 | |||||||||
Digital Realty Trust, Inc. | 2,408 | 291 | |||||||||
Duke Realty Investments, Inc. | 3,869 | 136 | |||||||||
Equinix, Inc. | 1,002 | 568 | |||||||||
Equity Residential | 4,165 | 354 | |||||||||
Essex Property Trust, Inc. | 612 | 191 | |||||||||
Extra Space Storage, Inc. | 1,147 | 122 | |||||||||
Federal Realty Investment Trust | 945 | 125 | |||||||||
Healthpeak Properties, Inc. | 5,381 | 188 | |||||||||
Host Hotels & Resorts, Inc. | 8,538 | 149 | |||||||||
Iron Mountain, Inc. | 3,774 | 121 | |||||||||
Kimco Realty Corp. | 4,841 | 105 | |||||||||
Mid-America Apartment Communities, Inc. | 1,273 | 173 | |||||||||
Prologis, Inc. | 7,055 | 646 | |||||||||
Public Storage | 1,339 | 282 | |||||||||
Realty Income Corp. | 3,181 | 244 | |||||||||
Regency Centers Corp. | 1,543 | 100 | |||||||||
SBA Communications Corp. | 1,391 | 329 | |||||||||
Simon Property Group, Inc. | 2,004 | 303 | |||||||||
SL Green Realty Corp. | 1,063 | 91 | |||||||||
The Macerich Co. | 1,448 | 39 | |||||||||
UDR, Inc. | 2,624 | 126 | |||||||||
Ventas, Inc. | 3,290 | 192 | |||||||||
Vornado Realty Trust | 2,188 | 141 | |||||||||
Welltower, Inc. | 4,975 | 421 | |||||||||
Weyerhaeuser Co. | 9,150 | 270 | |||||||||
8,337 | |||||||||||
Utilities (1.5%): | |||||||||||
AES Corp. | 8,366 | 158 | |||||||||
Alliant Energy Corp. | 2,301 | 122 | |||||||||
Ameren Corp. | 2,468 | 183 | |||||||||
American Electric Power Co., Inc. | 6,492 | 593 | |||||||||
American Water Works Co., Inc. | 1,992 | 241 | |||||||||
Atmos Energy Corp. | 1,369 | 146 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
CenterPoint Energy, Inc. | 2,918 | $ | 72 | ||||||||
CMS Energy Corp. | 3,064 | 188 | |||||||||
Consolidated Edison, Inc. | 3,864 | 336 | |||||||||
Dominion Energy, Inc. | 10,603 | 880 | |||||||||
DTE Energy Co. | 2,031 | 254 | |||||||||
Duke Energy Corp. | 7,096 | 626 | |||||||||
Edison International | 4,707 | 325 | |||||||||
Entergy Corp. | 1,967 | 229 | |||||||||
Evergy, Inc. | 3,068 | 194 | |||||||||
Eversource Energy | 3,443 | 285 | |||||||||
Exelon Corp. | 9,621 | 427 | |||||||||
FirstEnergy Corp. | 6,966 | 332 | |||||||||
NextEra Energy, Inc. | 5,140 | 1,203 | |||||||||
NiSource, Inc. | 4,111 | 109 | |||||||||
NRG Energy, Inc. | 2,789 | 111 | |||||||||
Pinnacle West Capital Corp. | 1,308 | 114 | |||||||||
PPL Corp. | 8,675 | 295 | |||||||||
Public Service Enterprise Group, Inc. | 4,781 | 284 | |||||||||
Sempra Energy | 3,297 | 485 | |||||||||
The Southern Co. | 12,049 | 747 | |||||||||
WEC Energy Group, Inc. | 2,943 | 261 | |||||||||
Xcel Energy, Inc. | 5,211 | 320 | |||||||||
9,520 | |||||||||||
Total Common Stocks (Cost $147,166) | 298,227 | ||||||||||
Rights (0.0%) (f) | |||||||||||
Communication Services (0.0%): (f) | |||||||||||
DISH Network Corp. Expires 12/10/19 @ $33.52 | 145 | — | (d) | ||||||||
Total Rights (Cost $—) | — | ||||||||||
Municipal Bonds (51.2%) | |||||||||||
Alabama (0.2%): | |||||||||||
Lower Alabama Gas District Revenue, Series A, 5.00%, 9/1/46 | $ | 1,000 | 1,389 | ||||||||
Arizona (1.3%): | |||||||||||
Arizona Industrial Development Authority Revenue, 5.00%, 7/1/47, Continuously Callable @100 | 1,000 | 1,148 | |||||||||
Industrial Development Authority Revenue 5.00%, 7/1/46, Continuously Callable @100 | 1,300 | 1,418 | |||||||||
5.00%, 6/15/47, Continuously Callable @100 (g) | 1,000 | 1,025 | |||||||||
Maricopa County Industrial Development Authority Revenue Series A, 5.00%, 9/1/42, Continuously Callable @100 | 500 | 599 | |||||||||
Series A, 5.00%, 7/1/49, Continuously Callable @100 (h) | 1,000 | 1,187 | |||||||||
Series A, 5.00%, 7/1/54, Continuously Callable @100 (h) | 1,275 | 1,499 | |||||||||
Student & Academic Services LLC Revenue, 5.00%, 6/1/44, Continuously Callable @100 | 1,000 | 1,118 | |||||||||
7,994 |
See notes to financial statements.
14
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
California (3.0%): | |||||||||||
California Statewide Communities Development Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 11/15/49, Continuously Callable @100 | $ | 1,000 | $ | 1,148 | |||||||
Deutsche Bank Spears/Lifers Trust Revenue, Series DBE-8038, 1.45%, 12/1/52, Callable 12/1/20 @ 100 (g) (j) | 5,000 | 5,000 | |||||||||
Jurupa Public Financing Authority, Series A, 5.00%, 9/1/42, Continuously Callable @100 | 1,200 | 1,350 | |||||||||
Monterey Peninsula Unified School District, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.50%, 8/1/34, Pre-refunded 8/1/21 @ 100 | 2,000 | 2,149 | |||||||||
State of California, GO 5.00%, 2/1/43, Continuously Callable @100 | 1,000 | 1,104 | |||||||||
5.00%, 8/1/45, Continuously Callable @100 | 1,000 | 1,171 | |||||||||
Sutter Butte Flood Agency(INS — Build America Mutual Assurance Co.), 5.00%, 10/1/40, Continuously Callable @100 | 1,000 | 1,154 | |||||||||
Twin Rivers Unified School District, GO(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 8/1/40, Continuously Callable @100 | 1,500 | 1,696 | |||||||||
Val Verde Unified School District, GO(INS — Build America Mutual Assurance Co.), Series B, 5.00%, 8/1/44, Continuously Callable @100 | 1,000 | 1,165 | |||||||||
West Contra Costa Unified School District, GO(INS — National Public Finance Guarantee Corp.), 8/1/34 (zero coupon) | 4,435 | 3,057 | |||||||||
18,994 | |||||||||||
Colorado (1.8%): | |||||||||||
Colorado Educational & Cultural Facilities Authority Revenue 5.00%, 12/1/38, Continuously Callable @100 | 1,000 | 1,210 | |||||||||
5.00%, 4/1/48, Continuously Callable @100 | 710 | 820 | |||||||||
Colorado Health Facilities Authority Revenue 5.00%, 12/1/42, Pre-refunded 6/1/22 @ 100 | 1,000 | 1,095 | |||||||||
5.00%, 6/1/45, Pre-refunded 6/1/25 @ 100 | 1,000 | 1,200 | |||||||||
Denver Convention Center Hotel Authority Revenue, 5.00%, 12/1/40, Continuously Callable @100 | 1,000 | 1,130 | |||||||||
Denver Health & Hospital Authority, 5.00%, 12/1/48, Continuously Callable @100 | 1,900 | 2,205 | |||||||||
Park Creek Metropolitan District Revenue 5.00%, 12/1/41, Continuously Callable @100 | 250 | 286 | |||||||||
5.00%, 12/1/45, Continuously Callable @100 | 1,000 | 1,119 | |||||||||
Rampart Range Metropolitan District No. 1 Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 12/1/47, Continuously Callable @100 | 1,000 | 1,195 | |||||||||
Regional Transportation District, Series A, 5.38%, 6/1/31, Continuously Callable @100 | 2,000 | 2,040 | |||||||||
12,300 | |||||||||||
Connecticut (0.4%): | |||||||||||
Mashantucket Western Pequot Tribe Revenue, 2.05%, 7/1/31PIK (i) (m) | 4,815 | 172 | |||||||||
State of Connecticut, GO Series A, 5.00%, 4/15/36, Continuously Callable @100 | 1,500 | 1,852 | |||||||||
Series A, 5.00%, 4/15/37, Continuously Callable @100 | 1,000 | 1,211 | |||||||||
3,235 |
See notes to financial statements.
15
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
District of Columbia (0.2%): | |||||||||||
Deutsche Bank Spears/Lifers Trust Revenue(LIQ — Deutsche Bank A.G.), 5.00%, 7/1/42, Continuously Callable @100 | $ | 1,100 | $ | 1,182 | |||||||
Florida (2.4%): | |||||||||||
City of Atlantic Beach Revenue, Series A, 5.00%, 11/15/48, Continuously Callable @103 | 1,000 | 1,129 | |||||||||
City of Jacksonville Revenue, 5.00%, 10/1/29, Continuously Callable @100 | 1,000 | 1,099 | |||||||||
County of Miami-Dade Water & Sewer System Revenue, 5.00%, 10/1/34, Pre-refunded 10/1/20 @ 100 | 1,300 | 1,341 | |||||||||
Halifax Hospital Medical Center Revenue, 5.00%, 6/1/46, Continuously Callable @100 | 1,000 | 1,115 | |||||||||
Lee County Industrial Development Authority Revenue 5.00%, 11/1/25, Continuously Callable @100 | 2,000 | 2,069 | |||||||||
5.50%, 10/1/47, Continuously Callable @102 | 645 | 694 | |||||||||
Lee Memorial Health System Revenue, Series A-1, 5.00%, 4/1/44, Continuously Callable @100 | 1,450 | 1,731 | |||||||||
Palm Beach County Health Facilities Authority Revenue, 5.00%, 11/15/45, Continuously Callable @103 | 1,000 | 1,145 | |||||||||
Sarasota County Health Facilities Authority Revenue, 5.00%, 5/15/38, Continuously Callable @103 | 700 | 786 | |||||||||
Southeast Overtown Park West Community Redevelopment Agency, Series A-1, 5.00%, 3/1/30, Continuously Callable @100 (g) | 1,000 | 1,118 | |||||||||
Tampa-Hillsborough County Expressway Authority Revenue, Series A, 5.00%, 7/1/37, Continuously Callable @100 | 1,505 | 1,634 | |||||||||
Volusia County Educational Facility Authority Revenue, Series B, 5.00%, 10/15/45, Continuously Callable @100 | 1,000 | 1,127 | |||||||||
14,988 | |||||||||||
Georgia (0.6%): | |||||||||||
Appling County Development Authority Revenue, 1.27%, 9/1/41, Continuously Callable @100 (j) | 2,500 | 2,500 | |||||||||
Glynn-Brunswick Memorial Hospital Authority Revenue, 5.00%, 8/1/47, Continuously Callable @100 | 1,000 | 1,140 | |||||||||
3,640 | |||||||||||
Guam (0.3%): | |||||||||||
Antonio B Won Pat International Airport Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.50%, 10/1/33, Continuously Callable @100 | 750 | 860 | |||||||||
Guam Government Waterworks Authority Revenue, 5.50%, 7/1/43, Continuously Callable @100 | 1,000 | 1,102 | |||||||||
1,962 | |||||||||||
Illinois (4.5%): | |||||||||||
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 | 1,000 | 1,181 | |||||||||
Chicago Midway International Airport Revenue, Series B, 5.00%, 1/1/41, Continuously Callable @100 | 1,000 | 1,155 | |||||||||
Chicago O'Hare International Airport Revenue, Series C, 5.00%, 1/1/41, Continuously Callable @100 | 1,000 | 1,181 |
See notes to financial statements.
16
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Chicago O'Hare International Airport Revenue(INS — Assured Guaranty Municipal Corp.), 5.25%, 1/1/33, Continuously Callable @100 | $ | 1,000 | $ | 1,108 | |||||||
City of Chicago Wastewater Transmission Revenue 5.00%, 1/1/44, Continuously Callable @100 | 1,000 | 1,086 | |||||||||
Series A, 5.00%, 1/1/47, Continuously Callable @100 | 1,000 | 1,129 | |||||||||
City of Chicago Waterworks Revenue, 5.00%, 11/1/44, Continuously Callable @100 | 1,000 | 1,109 | |||||||||
Cook County Community College District No. 508, GO(INS — Build America Mutual Assurance Co.), 5.00%, 12/1/47, Continuously Callable @100 | 1,000 | 1,153 | |||||||||
County of Cook Sales Tax Revenue, 5.00%, 11/15/38, Continuously Callable @100 | 1,000 | 1,166 | |||||||||
Illinois Educational Facilities Authority Revenue, 4.00%, 11/1/36, Continuously Callable @102 | 1,000 | 1,095 | |||||||||
Illinois Finance Authority Revenue 3.90%, 3/1/30, Continuously Callable @100 | 1,000 | 1,091 | |||||||||
5.00%, 5/15/37, Continuously Callable @100 | 1,000 | 1,112 | |||||||||
5.00%, 5/15/40, Continuously Callable @100 | 1,275 | 1,357 | |||||||||
4.00%, 2/15/41, Continuously Callable @100 | 1,000 | 1,089 | |||||||||
5.00%, 8/15/44, Continuously Callable @100 | 1,000 | 1,107 | |||||||||
5.00%, 10/1/44, Continuously Callable @100 | 1,000 | 1,205 | |||||||||
5.00%, 5/15/45, Continuously Callable @100 | 1,000 | 1,084 | |||||||||
Series A, 6.00%, 10/1/32, Pre-refunded 4/1/21 @ 100 | 2,000 | 2,128 | |||||||||
Series A, 4.00%, 10/1/40, Continuously Callable @100 | 1,000 | 1,089 | |||||||||
Northern Illinois Municipal Power Agency Revenue, Series A, 4.00%, 12/1/41, Continuously Callable @100 | 1,000 | 1,063 | |||||||||
Sangamon County Water Reclamation District, GO Series A, 4.00%, 1/1/49, Continuously Callable @100 | 1,000 | 1,071 | |||||||||
Series A, 5.75%, 1/1/53, Continuously Callable @100 | 1,235 | 1,464 | |||||||||
26,223 | |||||||||||
Indiana (1.0%): | |||||||||||
Ball State University Revenue, Series P, 5.00%, 7/1/30, Pre-refunded 7/1/20 @ 100 | 500 | 511 | |||||||||
Evansville Redevelopment Authority Revenue(INS — Build America Mutual Assurance Co.), 4.00%, 2/1/39, Continuously Callable @100 | 1,000 | 1,085 | |||||||||
Indiana Finance Authority Revenue 5.00%, 2/1/40, Continuously Callable @100 | 1,000 | 1,115 | |||||||||
5.00%, 10/1/44, Continuously Callable @100 | 1,000 | 1,074 | |||||||||
Richmond Hospital Authority Revenue, 5.00%, 1/1/39, Continuously Callable @100 | 1,500 | 1,659 | |||||||||
5,444 | |||||||||||
Kansas (1.0%): | |||||||||||
City of Coffeyville Electric System Revenue(INS — National Public Finance Guarantee Corp.), Series B, 5.00%, 6/1/42, Continuously Callable @100 (g) | 1,000 | 1,125 | |||||||||
City of Lawrence Revenue, 5.00%, 7/1/43, Continuously Callable @100 | 1,500 | 1,772 | |||||||||
City of Wichita Revenue, 4.63%, 9/1/33, Continuously Callable @100 | 1,000 | 1,021 |
See notes to financial statements.
17
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Wyandotte County-Kansas City Unified Government Utility System Revenue Series A, 5.00%, 9/1/44, Continuously Callable @100 | $ | 1,250 | $ | 1,416 | |||||||
Series A, 5.00%, 9/1/45, Continuously Callable @100 | 1,000 | 1,154 | |||||||||
6,488 | |||||||||||
Kentucky (0.6%): | |||||||||||
City of Ashland Revenue, 5.00%, 2/1/40, Continuously Callable @100 | 1,000 | 1,113 | |||||||||
Kentucky Economic Development Finance Authority Revenue, 5.00%, 5/15/46, Continuously Callable @100 | 1,000 | 1,036 | |||||||||
Kentucky Economic Development Finance Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 12/1/45, Continuously Callable @100 | 1,000 | 1,162 | |||||||||
3,311 | |||||||||||
Louisiana (2.9%): | |||||||||||
City of Shreveport Water & Sewer Revenue, Series B, 4.00%, 12/1/44, Continuously Callable @100 | 500 | 552 | |||||||||
City of Shreveport Water & Sewer Revenue(INS — Build America Mutual Assurance Co.), Series C, 5.00%, 12/1/39, Continuously Callable @100 | 1,000 | 1,136 | |||||||||
City of Shreveport Water & Sewer Revenue, 5.00%, 12/1/40, Continuously Callable @100 | 1,000 | 1,143 | |||||||||
Jefferson Sales Tax District Revenue, Series B, 4.00%, 12/1/42, Continuously Callable @100 | 1,500 | 1,685 | |||||||||
Louisiana Local Government Environmental Facilities & Community Development Authority Revenue(INS — Assured Guaranty Municipal Corp.) 5.00%, 10/1/39, Continuously Callable @100 | 1,000 | 1,174 | |||||||||
5.00%, 10/1/43, Continuously Callable @100 | 1,000 | 1,183 | |||||||||
4.00%, 10/1/46, Continuously Callable @100 | 1,000 | 1,076 | |||||||||
Louisiana Public Facilities Authority Revenue 5.00%, 11/1/45, Continuously Callable @100 | 1,000 | 1,105 | |||||||||
5.00%, 7/1/52, Continuously Callable @100 | 1,000 | 1,156 | |||||||||
4.00%, 1/1/56, Continuously Callable @100 | 1,000 | 1,056 | |||||||||
Louisiana Public Facilities Authority Revenue(INS — Build America Mutual Assurance Co.), 5.25%, 6/1/51, Continuously Callable @100 | 1,000 | 1,152 | |||||||||
Parish of East Baton Rouge Capital Improvements District Revenue, 4.00%, 8/1/44, Continuously Callable @100 (h) | 1,400 | 1,561 | |||||||||
State of Louisiana Gasoline & Fuels Tax Revenue, Series C, 5.00%, 5/1/45, Continuously Callable @100 | 1,500 | 1,796 | |||||||||
Tobacco Settlement Financing Corp. Revenue, Series A, 5.25%, 5/15/35, Continuously Callable @100 | 1,000 | 1,101 | |||||||||
16,876 | |||||||||||
Maine (0.2%): | |||||||||||
Maine Health & Higher Educational Facilities Authority Revenue, Series A, 4.00%, 7/1/46, Continuously Callable @100 | 1,000 | 1,047 | |||||||||
Massachusetts (1.8%): | |||||||||||
Massachusetts Development Finance Agency Revenue 5.00%, 4/15/40, Continuously Callable @100 | 1,000 | 1,083 | |||||||||
5.25%, 11/15/41, Continuously Callable @100 | 1,000 | 1,108 | |||||||||
5.00%, 7/1/46, Continuously Callable @100 | 1,000 | 1,145 | |||||||||
5.00%, 10/1/57, Continuously Callable @105 (g) | 1,000 | 1,092 | |||||||||
Series A, 5.00%, 6/1/39, Continuously Callable @100 | 1,000 | 1,187 |
See notes to financial statements.
18
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Series A, 5.50%, 7/1/44, Continuously Callable @100 | $ | 1,000 | $ | 1,090 | |||||||
Series A, 5.00%, 7/1/44, Continuously Callable @100 | 1,600 | 1,875 | |||||||||
Series D, 5.00%, 7/1/44, Continuously Callable @100 | 1,000 | 1,120 | |||||||||
Series F, 5.75%, 7/15/43, Continuously Callable @100 | 1,000 | 1,092 | |||||||||
10,792 | |||||||||||
Michigan (1.4%): | |||||||||||
City of Wyandotte Electric System Revenue(INS — Build America Mutual Assurance Co.), Series A, 5.00%, 10/1/44, Continuously Callable @100 | 1,000 | 1,139 | |||||||||
Detroit Downtown Development Authority(INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/43, Continuously Callable @100 | 1,750 | 1,928 | |||||||||
Jackson Public Schools, GO(NBGA — Michigan School Bond Qualification & Loan Program), 5.00%, 5/1/42, Continuously Callable @100 | 1,000 | 1,203 | |||||||||
Karegnondi Water Authority Revenue, 5.00%, 11/1/41, Continuously Callable @100 | 1,000 | 1,169 | |||||||||
Lincoln Consolidated School District, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 5/1/40, Continuously Callable @100 | 1,250 | 1,461 | |||||||||
Livonia Public Schools, GO(INS — Assured Guaranty Municipal Corp.), 5.00%, 5/1/45, Continuously Callable @100 | 1,000 | 1,171 | |||||||||
Wayne County Airport Authority Revenue, 5.00%, 12/1/44, Continuously Callable @100 | 1,000 | 1,141 | |||||||||
9,212 | |||||||||||
Minnesota (0.4%): | |||||||||||
Housing & Redevelopment Authority Revenue 5.00%, 11/15/44, Pre-refunded 11/15/25 @ 100 | 1,000 | 1,214 | |||||||||
5.00%, 11/15/47, Continuously Callable @100 | 1,000 | 1,187 | |||||||||
2,401 | |||||||||||
Missouri (0.7%): | |||||||||||
Health & Educational Facilities Authority of the State of Missouri Revenue, 4.00%, 2/1/48, Continuously Callable @100 | 1,500 | 1,576 | |||||||||
Health & Educational Facilities Authority Revenue 5.00%, 8/1/45, Continuously Callable @100 | 1,270 | 1,382 | |||||||||
4.00%, 2/15/49, Continuously Callable @100 | 250 | 273 | |||||||||
St. Louis Municipal Finance Corp. Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 10/1/38, Continuously Callable @100 | 1,000 | 1,191 | |||||||||
4,422 | |||||||||||
Nebraska (0.2%): | |||||||||||
Douglas County Hospital Authority No. 3 Revenue, 5.00%, 11/1/48, Continuously Callable @100 | 1,000 | 1,143 | |||||||||
Nevada (0.8%): | |||||||||||
City of Carson City Revenue, 5.00%, 9/1/42, Continuously Callable @100 | 1,000 | 1,156 | |||||||||
Las Vegas Convention & Visitors Authority Revenue, Series C, 4.00%, 7/1/41, Continuously Callable @100 | 1,555 | 1,684 | |||||||||
Las Vegas Redevelopment Agency, 5.00%, 6/15/45, Continuously Callable @100 | 1,500 | 1,684 | |||||||||
4,524 |
See notes to financial statements.
19
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
New Jersey (2.5%): | |||||||||||
New Jersey Economic Development Authority Revenue 5.00%, 6/15/29, Continuously Callable @100 | $ | 1,000 | $ | 1,077 | |||||||
5.00%, 6/15/42, Continuously Callable @100 | 2,000 | 2,237 | |||||||||
5.00%, 6/15/43, Continuously Callable @100 | 1,000 | 1,137 | |||||||||
Series A, 4.00%, 7/1/34, Continuously Callable @100 | 1,000 | 1,062 | |||||||||
Series A, 5.00%, 6/15/47, Continuously Callable @100 | 1,000 | 1,120 | |||||||||
Series B, 5.00%, 6/15/43, Continuously Callable @100 | 1,000 | 1,137 | |||||||||
New Jersey Economic Development Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 6/1/37, Continuously Callable @100 | 500 | 589 | |||||||||
New Jersey Educational Facilities Authority Revenue, Series B, 5.00%, 9/1/36, Continuously Callable @100 | 1,000 | 1,121 | |||||||||
New Jersey Health Care Facilities Financing Authorty Revenue, 5.00%, 10/1/37, Continuously Callable @100 | 1,000 | 1,142 | |||||||||
New Jersey Transportation Trust Fund Authority Revenue Series A, 5.00%, 12/15/35, Continuously Callable @100 | 1,000 | 1,156 | |||||||||
Series AA, 5.00%, 6/15/44, Continuously Callable @100 | 1,000 | 1,082 | |||||||||
South Jersey Transportation Authority LLC Revenue, Series A, 5.00%, 11/1/39, Continuously Callable @100 | 1,250 | 1,395 | |||||||||
Tobacco Settlement Financing Corp. Revenue, Series A, 5.25%, 6/1/46, Continuously Callable @100 | 500 | 582 | |||||||||
14,837 | |||||||||||
New Mexico (0.4%): | |||||||||||
City of Farmington Revenue, 5.90%, 6/1/40, Continuously Callable @100 | 1,000 | 1,018 | |||||||||
New Mexico Hospital Equipment Loan Council Revenue, Series LA, 5.00%, 7/1/49, Continuously Callable @102 | 1,000 | 1,111 | |||||||||
2,129 | |||||||||||
New York (1.3%): | |||||||||||
Metropolitan Transportation Authority Revenue, Series C, 5.00%, 11/15/42, Continuously Callable @100 | 1,000 | 1,102 | |||||||||
New York City Trust for Cultural Resources Revenue, Series A, 5.00%, 12/1/39, Continuously Callable @100 | 2,000 | 2,000 | |||||||||
New York Liberty Development Corp. Revenue 5.25%, 10/1/35 | 630 | 858 | |||||||||
5.50%, 10/1/37 | 1,500 | 2,137 | |||||||||
2.80%, 9/15/69, Continuously Callable @100 | 1,000 | 1,007 | |||||||||
New York State Dormitory Authority Revenue(INS — AMBAC Assurance Corp.), Series 1, 5.50%, 7/1/40 | 1,205 | 1,725 | |||||||||
8,829 | |||||||||||
North Carolina (0.5%): | |||||||||||
North Carolina Medical Care Commission Revenue 5.00%, 10/1/35, Continuously Callable @100 | 1,000 | 1,155 | |||||||||
5.00%, 1/1/49, Continuously Callable @104 | 1,500 | 1,677 | |||||||||
2,832 | |||||||||||
North Dakota (0.2%): | |||||||||||
County of Ward Revenue, Series C, 5.00%, 6/1/48, Continuously Callable @100 | 1,000 | 1,126 |
See notes to financial statements.
20
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Ohio (0.2%): | |||||||||||
County of Warren Revenue, Series A, 4.00%, 7/1/45, Continuously Callable @100 | $ | 735 | $ | 786 | |||||||
Southeastern Ohio Port Authority Revenue, 5.00%, 12/1/43, Continuously Callable @100 | 750 | 789 | |||||||||
1,575 | |||||||||||
Oklahoma (0.9%): | |||||||||||
Comanche County Hospital Authority Revenue, Series A, 5.00%, 7/1/32, Continuously Callable @100 | 1,315 | 1,375 | |||||||||
Muskogee Industrial Trust Revenue, Series A, 1.23%, 1/1/25, Callable 1/1/20 @ 100 (j) | 2,480 | 2,480 | |||||||||
Oklahoma Development Finance Authority Revenue, Series B, 5.50%, 8/15/57, Continuously Callable @100 | 1,000 | 1,192 | |||||||||
Tulsa County Industrial Authority Revenue, 5.25%, 11/15/37, Continuously Callable @102 | 750 | 857 | |||||||||
5,904 | |||||||||||
Oregon (0.2%): | |||||||||||
Salem Hospital Facility Authority Revenue, 5.00%, 5/15/43, Continuously Callable @102 | 1,250 | 1,443 | |||||||||
Pennsylvania (5.3%): | |||||||||||
Allegheny County Hospital Development Authority Revenue 4.00%, 7/15/39, Continuously Callable @100 | 1,185 | 1,316 | |||||||||
5.00%, 4/1/47, Continuously Callable @100 | 1,000 | 1,165 | |||||||||
Altoona Area School District, GO(INS — Build America Mutual Assurance Co.), 5.00%, 12/1/48, Continuously Callable @100 | 1,000 | 1,138 | |||||||||
Berks County Industrial Development Authority Revenue 5.00%, 5/15/43, Continuously Callable @102 | 350 | 390 | |||||||||
5.00%, 11/1/50, Continuously Callable @100 | 1,500 | 1,707 | |||||||||
Bucks County Industrial Development Authority Revenue, 4.00%, 8/15/44, Continuously Callable @100 | 1,000 | 1,073 | |||||||||
Butler County Hospital Authority Revenue, 5.00%, 7/1/39, Continuously Callable @100 | 1,125 | 1,259 | |||||||||
Canon Mcmillan School District, GO, 4.00%, 6/1/48, Continuously Callable @100 | 1,500 | 1,627 | |||||||||
Chester County Industrial Development Authority Revenue, 5.00%, 10/1/44, Continuously Callable @100 | 1,000 | 1,086 | |||||||||
Commonwealth Financing Authority Revenue, 5.00%, 6/1/35, Continuously Callable @100 | 1,000 | 1,209 | |||||||||
Commonwealth of Pennsylvania, Series A, 5.00%, 7/1/43, Continuously Callable @100 | 1,000 | 1,185 | |||||||||
County of Lehigh Pennsylvania Revenue, 4.00%, 7/1/49, Continuously Callable @100 | 1,000 | 1,084 | |||||||||
Indiana County Hospital Authority Revenue, Series A, 6.00%, 6/1/39, Continuously Callable @100 | 1,625 | 1,773 | |||||||||
Lancaster County Hospital Authority Revenue, 5.00%, 11/1/35, Continuously Callable @100 | 1,000 | 1,131 | |||||||||
Montgomery County Industrial Development Authority Revenue, 5.25%, 1/15/45, Continuously Callable @100 | 1,000 | 1,117 |
See notes to financial statements.
21
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Northampton County General Purpose Authority Revenue 4.00%, 8/15/40, Continuously Callable @100 | $ | 1,000 | $ | 1,071 | |||||||
5.00%, 8/15/43, Continuously Callable @100 | 1,000 | 1,179 | |||||||||
Pennsylvania Turnpike Commission Revenue Series A-1, 5.00%, 12/1/46, Continuously Callable @100 | 1,000 | 1,142 | |||||||||
Series A-1, 5.00%, 12/1/47, Continuously Callable @100 | 1,000 | 1,190 | |||||||||
Series B, 5.00%, 12/1/39, Continuously Callable @100 | 1,000 | 1,205 | |||||||||
Series B, 5.25%, 12/1/44, Continuously Callable @100 | 1,000 | 1,146 | |||||||||
Philadelphia School District, GO, Series A, 5.00%, 9/1/38, Continuously Callable @100 | 1,000 | 1,197 | |||||||||
Reading School District, GO(INS — Assured Guaranty Municipal Corp.), 5.00%, 3/1/38, Continuously Callable @100 | 1,500 | 1,771 | |||||||||
School District of Philadelphia, GO, Series F, 5.00%, 9/1/37, Continuously Callable @100 | 1,000 | 1,164 | |||||||||
Wilkes-Barre Area School District, GO(INS — Build America Mutual Assurance Co.), 4.00%, 4/15/49, Continuously Callable @100 | 1,500 | 1,666 | |||||||||
30,991 | |||||||||||
Puerto Rico (0.2%): | |||||||||||
Commonwealth of Puerto Rico, GO(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 7/1/35, Continuously Callable @100 | 1,000 | 1,041 | |||||||||
Rhode Island (0.2%): | |||||||||||
Rhode Island Housing & Mortgage Finance Corp. Revenue, Series 15-A, 6.85%, 10/1/24, Continuously Callable @100 | 40 | 40 | |||||||||
Rhode Island Turnpike & Bridge Authority Revenue, Series A, 5.00%, 10/1/40, Continuously Callable @100 | 1,000 | 1,164 | |||||||||
1,204 | |||||||||||
South Carolina (0.3%): | |||||||||||
Piedmont Municipal Power Agency Revenue(INS — Assured Guaranty Municipal Corp.), Series D, 5.75%, 1/1/34, Continuously Callable @100 | 2,000 | 2,131 | |||||||||
Tennessee (0.7%): | |||||||||||
Greeneville Health & Educational Facilities Board Revenue, 5.00%, 7/1/37, Continuously Callable @100 | 1,500 | 1,778 | |||||||||
Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board Revenue 5.00%, 10/1/45, Continuously Callable @100 | 1,000 | 1,142 | |||||||||
5.00%, 7/1/46, Continuously Callable @100 | 1,000 | 1,156 | |||||||||
5.00%, 10/1/48, Continuously Callable @100 | 500 | 574 | |||||||||
4,650 | |||||||||||
Texas (8.8%): | |||||||||||
Arlington Higher Education Finance Corp. Revenue, 4.00%, 8/15/44, Continuously Callable @100 (h) | 2,165 | 2,414 | |||||||||
Austin Convention Enterprises, Inc. Revenue, 5.00%, 1/1/34, Continuously Callable @100 | 1,380 | 1,567 | |||||||||
Bexar County Health Facilities Development Corp. Revenue, 5.00%, 7/15/37, Continuously Callable @105 | 1,000 | 1,124 | |||||||||
Central Texas Regional Mobility Authority Revenue 4.00%, 1/1/41, Continuously Callable @100 | 1,000 | 1,062 | |||||||||
Series A, 5.00%, 1/1/45, Continuously Callable @100 | 1,000 | 1,139 |
See notes to financial statements.
22
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
Central Texas Turnpike System Revenue, Series C, 5.00%, 8/15/42, Continuously Callable @100 | $ | 1,000 | $ | 1,130 | |||||||
City of Arlington(INS — Assured Guaranty Municipal Corp.), Series A, 5.00%, 2/15/48, Continuously Callable @100 | 1,000 | 1,191 | |||||||||
City of Houston Hotel Occupancy Tax & Special Revenue 5.00%, 9/1/39, Continuously Callable @100 | 1,000 | 1,133 | |||||||||
5.00%, 9/1/40, Continuously Callable @100 | 1,000 | 1,134 | |||||||||
City of Irving Texas Rvenue, 5.00%, 8/15/43, Continuously Callable @100 (h) | 1,000 | 1,180 | |||||||||
City of Laredo Waterworks & Sewer System Revenue, 4.00%, 3/1/41, Continuously Callable @100 | 1,000 | 1,089 | |||||||||
City of Lewisville(INS — ACA Insurance), 5.80%, 9/1/25 (b) | 3,920 | 4,181 | |||||||||
Clifton Higher Education Finance Corp. Revenue, 4.00%, 8/15/44, Continuously Callable @100 | 1,000 | 1,124 | |||||||||
Clifton Higher Education Finance Corp. Revenue(NBGA — Texas Permanent School Fund), 5.00%, 8/15/39, Continuously Callable @100 | 1,000 | 1,144 | |||||||||
County of Bexar Revenue, 4.00%, 8/15/44, Continuously Callable @100 | 1,500 | 1,664 | |||||||||
Harris County Cultural Education Facilities Finance Corp. Revenue, 5.00%, 6/1/38, Continuously Callable @100 | 1,000 | 1,065 | |||||||||
Harris County Hospital District Revenue, 4.00%, 2/15/42, Continuously Callable @100 | 1,000 | 1,081 | |||||||||
Karnes County Hospital District Revenue, 5.00%, 2/1/44, Continuously Callable @100 | 1,000 | 1,074 | |||||||||
Matagorda County Navigation District No. 1 Revenue, 4.00%, 6/1/30, Continuously Callable @100 | 1,000 | 1,059 | |||||||||
Mesquite Health Facilities Development Corp. Revenue, 5.00%, 2/15/35, Continuously Callable @100 | 1,000 | 994 | |||||||||
New Hope Cultural Education Facilities Finance Corp. Revenue Series A, 5.00%, 4/1/47, Continuously Callable @100 | 1,600 | 1,704 | |||||||||
Series A, 5.00%, 7/1/47, Continuously Callable @100 | 1,000 | 938 | |||||||||
New Hope Cultural Education Facilities Finance Corp. Revenue(INS — Assured Guaranty Municipal Corp.), Series A1, 5.00%, 7/1/38, Continuously Callable @100 | 225 | 263 | |||||||||
North Texas Tollway Authority Revenue Series B, 5.00%, 1/1/31, Continuously Callable @100 | 1,500 | 1,706 | |||||||||
Series B, 5.00%, 1/1/45, Continuously Callable @100 | 1,000 | 1,137 | |||||||||
Port of Port Arthur Navigation District Revenue 1.27%, 11/1/40, Continuously Callable @100 (b) (j) | 3,250 | 3,250 | |||||||||
Series C, 1.27%, 4/1/40, Continuously Callable @100 (j) | 8,600 | 8,600 | |||||||||
Princeton Independent School District, GO(NBGA — Texas Permanent School Fund), 5.00%, 2/15/43, Continuously Callable @100 | 1,000 | 1,217 | |||||||||
Prosper Independent School District, GO, 5.00%, 2/15/48, Continuously Callable @100 | 1,000 | 1,206 | |||||||||
Tarrant County Cultural Education Facilities Finance Corp. Revenue 5.00%, 11/15/46, Continuously Callable @100 | 1,000 | 1,134 | |||||||||
Series A, 5.00%, 11/15/45, Continuously Callable @100 | 1,000 | 1,015 | |||||||||
Series B, 5.00%, 11/15/36, Continuously Callable @100 | 1,000 | 1,043 | |||||||||
Series B, 5.00%, 7/1/48, Continuously Callable @100 | 1,500 | 1,786 | |||||||||
52,548 |
See notes to financial statements.
23
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares or Principal Amount | Value | |||||||||
Virginia (0.8%): | |||||||||||
Alexandria Industrial Development Authority Revenue, 5.00%, 10/1/50, Continuously Callable @100 | $ | 1,000 | $ | 1,104 | |||||||
Deutsche Bank Spears/Lifers Trust Revenue(LIQ — Deutsche Bank A.G.), Series DBE-8039, 1.45%, 1/1/57, Callable 1/1/23 @ 100 (g) (j) | 3,570 | 3,570 | |||||||||
4,674 | |||||||||||
Washington (1.2%): | |||||||||||
Washington Health Care Facilities Authority Revenue 5.00%, 2/1/21, Continuously Callable @100(LIQ — JP Morgan Chase & Co.) (g) (j) | 3,700 | 3,700 | |||||||||
4.00%, 7/1/42, Continuously Callable @100 | 1,000 | 1,093 | |||||||||
5.00%, 1/1/47, Continuously Callable @100 | 1,000 | 1,155 | |||||||||
Washington State Housing Finance Commission Revenue, 5.00%, 1/1/38, Continuously Callable @102 (g) | 1,000 | 1,135 | |||||||||
7,083 | |||||||||||
West Virginia (0.3%): | |||||||||||
West Virginia Hospital Finance Authority Revenue, 4.00%, 1/1/38, Continuously Callable @100 | 1,500 | 1,618 | |||||||||
Wisconsin (1.3%): | |||||||||||
Public Finance Authority Revenue 5.00%, 7/1/38, Continuously Callable @100 | 1,000 | 1,182 | |||||||||
Series A, 5.25%, 10/1/48, Continuously Callable @100 | 1,500 | 1,696 | |||||||||
Series A, 4.00%, 10/1/49, Continuously Callable @100 | 1,500 | 1,620 | |||||||||
Public Finance Authority Revenue(INS — Assured Guaranty Municipal Corp.), 5.00%, 7/1/44, Continuously Callable @100 | 600 | 702 | |||||||||
Wisconsin Health & Educational Facilities Authority Revenue 5.25%, 4/15/35, Pre-refunded 4/15/23 @ 100 | 1,000 | 1,134 | |||||||||
5.00%, 9/15/45, Continuously Callable @100 | 1,000 | 1,047 | |||||||||
7,381 | |||||||||||
Wyoming (0.2%): | |||||||||||
County of Laramie Revenue, 5.00%, 5/1/37, Continuously Callable @100 | 1,250 | 1,307 | |||||||||
Total Municipal Bonds (Cost $296,704) | 310,870 | ||||||||||
U.S. Treasury Obligations (0.1%) | |||||||||||
U.S. Treasury Bills, 1.47%, 1/9/20 (k) (b) | 325 | 324 | |||||||||
Total U.S. Treasury Obligations (Cost $324) | 324 | ||||||||||
Collateral for Securities Loaned^ (0.0%) (f) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (l) | 66,568 | 67 | |||||||||
Total Collateral for Securities Loaned (Cost $67) | 67 | ||||||||||
Total Investments (Cost $444,261) — 100.4% | 609,488 | ||||||||||
Liabilities in excess of other assets — (0.4)% | (2,336 | ) | |||||||||
NET ASSETS — 100.00% | $ | 607,152 |
^ Purchased with cash collateral from securities on loan.
(a) Non-income producing security.
See notes to financial statements.
24
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(b) All or a portion of this security has been segregated as collateral for derivative instruments and/or securities purchased on a when-issued basis.
(c) All or a portion of this security is on loan.
(d) Rounds to less than $1.
(e) Northern Trust Corp. is the parent of Northern Trust Investments Inc., which is the sub-adviser of the Fund.
(f) Amount represents less than 0.05% of net assets.
(g) 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 November 30, 2019, the fair value of these securities was $17,765 (thousands) and amounted to 2.9% of net assets.
(h) Security purchased on a when-issued basis.
(i) The Fund's Advisor has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were less than 0.05% of the Fund's net assets.
(j) 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.
(k) Rate represents the effective yield at November 30, 2019.
(l) Rate disclosed is the daily yield on November 30, 2019.
(m) All of the coupon is paid in kind.
AMBAC — American Municipal Bond Assurance Corporation
GO — General Obligation
LLC — Limited Liability Company
PIK — Paid in Kind
PLC — Public Limited Company
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.
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.
25
USAA Mutual Funds Trust USAA Growth and Tax Strategy Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Futures Contracts Purchased
(Amounts not in thousands)
Number of Contracts | Expiration Date | Notional Amount | Value | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
E-Mini S&P 500 Future | 4 | 12/20/19 | $ | 583,622 | $ | 628,740 | $ | 45,118 | |||||||||||||||
Total unrealized appreciation | $ | 45,118 | |||||||||||||||||||||
Total unrealized depreciation | — | ||||||||||||||||||||||
Total net unrealized appreciation(depreciation) | $ | 45,118 |
See notes to financial statements.
26
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Growth and Tax Strategy Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $444,261) | $ | 609,488 | (a) | ||||
Cash and cash equivalents | 7,389 | ||||||
Receivables: | |||||||
Interest and dividends | 4,213 | ||||||
Capital shares issued | 581 | ||||||
Investments sold | 4,558 | ||||||
Variation margin on open futures contracts | 20 | ||||||
Prepaid expenses | 14 | ||||||
Total assets | 626,263 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 67 | ||||||
Investments purchased | 18,387 | ||||||
Capital shares redeemed | 324 | ||||||
Variation margin on open futures contracts | 31 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 147 | ||||||
Administration fees | 74 | ||||||
Custody fees | 18 | ||||||
Transfer agent fees | 9 | ||||||
Compliance fees | — | (b) | |||||
Other accrued expenses | 54 | ||||||
Total liabilities | 19,111 | ||||||
Net Assets: | |||||||
Capital | 445,589 | ||||||
Total distributable earnings/(loss) | 161,563 | ||||||
Net assets | $ | 607,152 | |||||
Shares (unlimited number of shares authorized with no par value): | 28,062 | ||||||
Net asset value, offering and redemption price per share: (c) | $ | 21.64 |
(a) Includes $65 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.
27
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Growth and Tax Strategy Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 2,725 | |||||
Interest | 5,252 | ||||||
Securities lending (net of fees) | — | (a) | |||||
Total income | 7,977 | ||||||
Expenses: | |||||||
Investment advisory fees | 851 | ||||||
Administration fees | 425 | ||||||
Custodian fees | 25 | ||||||
Transfer agent fees | 179 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 1 | ||||||
Legal and audit fees | 50 | ||||||
State registration and filing fees | 19 | ||||||
Sub-Administration fees | 16 | ||||||
Other expenses | 36 | ||||||
Total expenses | 1,622 | ||||||
Net Investment Income (Loss) | 6,355 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | (2,461 | ) | |||||
Net realized gains (losses) from futures contracts | 352 | ||||||
Net change in unrealized appreciation/depreciation on investment securities | 40,410 | ||||||
Net change in unrealized appreciation/depreciation on futures contracts | 232 | ||||||
Net realized/unrealized gains (losses) on investments | 38,533 | ||||||
Change in net assets resulting from operations | $ | 44,888 |
(a) Rounds to less than $1.
See notes to financial statements.
28
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Growth and Tax Strategy Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 6,355 | $ | 12,004 | |||||||
Net realized gains (losses) from investments | (2,109 | ) | (3,046 | ) | |||||||
Net change in unrealized appreciation (depreciation) on investments | 40,642 | 13,921 | |||||||||
Change in net assets resulting from operations | 44,888 | 22,879 | |||||||||
Change in net assets resulting from distributions to shareholders | (5,935 | ) | (12,847 | ) | |||||||
Change in net assets resulting from capital transactions | 41,879 | 56,606 | |||||||||
Change in net assets | 80,832 | 66,638 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 526,320 | 459,682 | |||||||||
End of period | $ | 607,152 | $ | 526,320 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 81,999 | $ | 135,329 | |||||||
Distributions reinvested | 5,445 | 11,981 | |||||||||
Cost of shares redeemed | (45,565 | ) | (90,704 | ) | |||||||
Change in net assets resulting from capital transactions | $ | 41,879 | $ | 56,606 | |||||||
Share Transactions: | |||||||||||
Issued | 3,899 | 6,806 | |||||||||
Reinvested | 261 | 610 | |||||||||
Redeemed | (2,175 | ) | (4,593 | ) | |||||||
Change in Shares | 1,985 | 2,823 |
See notes to financial statements.
29
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 Growth and Tax Strategy Fund | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 20.18 | 0.24 | (c) | 1.44 | 1.68 | (0.22 | ) | — | ||||||||||||||||||
Year Ended May 31, 2019 | $ | 19.77 | 0.47 | 0.47 | 0.94 | (0.48 | ) | (0.05 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 18.76 | 0.44 | 1.01 | 1.45 | (0.44 | ) | — | |||||||||||||||||||
Year Ended May 31, 2017 | $ | 17.79 | 0.42 | 0.96 | 1.38 | (0.41 | ) | — | |||||||||||||||||||
Year Ended May 31, 2016 | $ | 17.48 | 0.43 | 0.35 | 0.78 | (0.47 | ) | — | |||||||||||||||||||
Year Ended May 31, 2015 | $ | 16.86 | 0.44 | 0.59 | 1.03 | (0.41 | ) | — |
* 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.
See notes to financial statements.
30
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 Growth and Tax Strategy Fund | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | (0.22 | ) | $ | 21.64 | 8.34 | % | 0.57 | % | 2.24 | % | 0.57 | % | $ | 607,152 | 9 | % | |||||||||||||||||||
Year Ended May 31, 2019 | (0.53 | ) | $ | 20.18 | 4.83 | % | 0.60 | % | 2.44 | % | 0.60 | % | $ | 526,320 | 7 | % | |||||||||||||||||||
Year Ended May 31, 2018 | 0.44 | $ | 19.77 | 7.81 | % | 0.68 | % | 2.32 | % | 0.68 | % | $ | 459,682 | 10 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | (0.41 | ) | $ | 18.76 | 7.88 | % | 0.84 | % | 2.33 | % | 0.84 | % | $ | 391,020 | 4 | % | |||||||||||||||||||
Year Ended May 31, 2016 | (0.47 | ) | $ | 17.79 | 4.60 | % | 0.87 | % | 2.53 | % | 0.87 | % | $ | 327,334 | 10 | % | |||||||||||||||||||
Year Ended May 31, 2015 | (0.41 | ) | $ | 17.48 | 6.16 | % | 0.85 | % | 2.63 | % | 0.85 | % | $ | 283,181 | 9 | % |
See notes to financial statements.
31
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Growth and Tax Strategy Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
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 July 1, 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)
32
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
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 November 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 | $ | 298,227 | $ | — | $ | — | $ | 298,227 | |||||||||||
Rights | — | (a) | — | — | — | ||||||||||||||
Municipal Bonds | — | 310,870 | — | 310,870 | |||||||||||||||
U.S. Treasury Obligations | — | 324 | — | 324 | |||||||||||||||
Collateral for Securities Loaned | 67 | — | — | 67 | |||||||||||||||
Total | $ | 298,294 | $ | 311,194 | $ | — | $ | 609,488 | |||||||||||
Other Financial Investments^: | — | — | — | — |
Assets:
Futures Contracts | 45 | — | — | 45 | |||||||||||||||
Total | $ | 45 | $ | — | $ | — | $ | 45 |
^ Futures Contracts are valued at the unrealized appreciation (depreciation) on the investment.
(a) Amount is less than $1.
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
33
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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:
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.
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.
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
34
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
As of November 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.
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 November 30, 2019 (amounts in thousands):
Assets | Liabilities | ||||||||||
Variation Margin Receivable on Open Futures Contracts* | Variation Margin Payable on Open Futures Contracts* | ||||||||||
Equity Risk Exposure: | $ | 45 | $ | — |
* 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 November 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: | $ | 352 | $ | 232 |
All open derivative positions at year end are reflected in the Fund's Schedule of Portfolio Investments. The underlying face value of open derivative positions relative to the 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
35
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 65 | $ | — | $ | 67 |
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 May 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 November 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) | |||||||||
$ | 2,400 | $ | 800 | $ | — |
36
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||||||
Purchases | Sales | ||||||||||
$ | 104,609 | $ | 52,274 |
There were no purchases and sales of U.S. government securities during the six months ended November 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 0.30% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $719 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 0.30% 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. Only performance beginning as of July 1, 2019, and thereafter will be utilized in calculating future performance adjustments.
Prior to the Transaction on July 1, 2019, the performance adjustment was calculated monthly by comparing the Fund's performance to that of the Composite Index which is comprised of 51% of the Lipper General Municipal Bond Funds Index, which measures the total return performance of the largest funds tracked by Lipper that invest at least 65% of their assets in municipal debt issues in the top four credit categories, and 49% of the Lipper Large-Cap Core Funds Index, which measures the total return performance of the funds tracked by Lipper that by portfolio practice invest at least 75% of their equity assets in companies with market capitalizations of greater than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P 1500 Index.
37
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
The performance period consists of the current month plus the previous 35 months (or the number of months beginning July 1, 2019, if fewer). 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 Fund and its relevant index, rounded to the nearest basis point. Average daily net assets of the Fund are calculated over a rolling 36-month period.
The annual performance adjustment rate is multiplied by the average daily net assets of the Fund 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, the Fund pays a positive performance fee adjustment for a performance period whenever the Fund outperforms the Composite Index over that period, even if the Fund has overall negative returns during the performance period.
For the period June 1, 2019 through June 30, 2019, there were no performance adjustments for the Fund. Base fees incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $132 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.
Effective July 1, 2019, VCM entered into a Subadvisory Agreement with Northern Trust Investments, Inc. ("NTI") under which NTI directs the investment and reinvestment of the Fund's assets invested in blue chip stocks (as allocated from time to time by VCM). This arrangement provides for monthly fees that are paid by VCM. VCM (not the Fund) pays the subadviser fees.
Prior to July 1, 2019, AMCO, entered into an Investment Subadvisory Agreement with NTI, under which NTI directed the investment and reinvestment of the portion of the Fund's assets invested in blue chip stocks (as allocated from time to time by AMCO). This arrangement provided for monthly fees that were paid by AMCO. AMCO (not the Fund) paid the subadviser fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under the 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. Amounts incurred from July 1, 2019 through November 30, 2019 are $359 thousand and are presented on the Statement of Operations as Administration fees.
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. Amounts incurred from June 1, 2019 through June 30, 2019 were $66 thousand and are presented on the Statement of Operations as Administration fees.
38
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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.
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.
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 an annual charge of $23 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 November 30, 2019 was $150 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $29 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.
Effective July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 in any fiscal year exceed the expense limit for the Fund. Such excess amounts will be the
39
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.61%.
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 November 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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of 1.10% of average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, this expense limit is no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund did not incur reimbursements. These amounts would have been 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.
The fixed-income securities in the Fund's portfolio are subject to credit risk, which is the possibility that an issuer of a fixed-income security will fail to make timely interest and/or principal payments on its securities or that negative market perceptions of the issuer's ability to make such payments will cause the price of that security to decline. The Fund accepts some credit risk as a recognized means to enhance an investor's return. All fixed-income securities, varying from the highest quality to the very speculative, have some degree of credit risk. Fixed-income securities rated below investment grade, also known as "junk" or high-yield bonds, generally entail greater economic, credit, and liquidity risk than investment-grade securities. Their prices may be more volatile, especially during economic downturns, financial setbacks, or liquidity events.
As a mutual fund that has the ability to invest in bonds, the Fund is subject to the risk that the market value of the bonds in its portfolio will fluctuate because of changes in interest rates, changes in the supply of and demand for tax-exempt securities, and other market factors. Bond prices generally are linked to the prevailing market interest rates. In general, when interest rates rise, bond prices fall; conversely, when interest rates fall, bond prices rise. The price volatility of a bond also depends on its duration. Generally, the longer the duration of a bond, the greater is its sensitivity to interest rates. To compensate investors for this higher interest rate risk, bonds with longer durations generally offer higher yields than bonds with shorter durations.
During a period of declining interest rates, many municipal bonds may be "called," or redeemed, by the issuer before the stated maturity. An issuer might call, or refinance, a higher-yielding bond for the same reason that a homeowner would refinance a home mortgage. When bonds are called, the Fund is affected in several ways. Most likely, the Fund will reinvest the bond-call proceeds in bonds with lower interest rates. The Fund's income may drop as a result. The Fund also may realize a taxable capital gain (or loss).
40
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $1 thousand.
The average borrowing for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Amount Outstanding at November 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | |||||||||||||||
$ | — | $ | 1,400 | 5 | 3.31 | % | $ | 1,400 |
* For the year ended November 30, 2019, based on the number of days borrowings were outstanding.
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. 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 November 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income quarterly. Distributable net realized gains, if any, are declared and 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.
41
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Tax-Exempt Income | Total Long-Term Capital Gains | Distributions Paid | ||||||||||||
$ | 3,664 | $ | 8,201 | $ | 982 | $ | 12,847 |
As of the most recent tax year ended May 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 | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | |||||||||||||||
$ | 1,361 | $ | 756 | $ | (4,217 | ) | $ | 124,841 | $ | 122,741 |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales, non-REIT return of capital dividend, and REIT return of capital dividend adjustments.
At May 31, 2019, the Fund had no capital loss carryforwards, for federal income tax purposes. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the year ended May 31, 2019, the Fund deferred to June 1, 2019, post October capital losses of $4,217,000.
42
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,083.40 | $ | 1,022.15 | $ | 2.97 | $ | 2.88 | 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).
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.
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 | (800) 235-8396 |
27801-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA International Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 29 | ||||||
Statement of Operations | 30 | ||||||
Statements of Changes in Net Assets | 31 | ||||||
Financial Highlights | 34 | ||||||
Notes to Financial Statements | 40 | ||||||
Supplemental Information | 51 | ||||||
Expense Examples | 51 | ||||||
Proxy Voting and Portfolio Holdings Information | 51 | ||||||
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 International Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek capital appreciation.
Top 10 Industries
11/30/19
(% of Net Assets)
Banks | 9.9 | % | |||||
Oil, Gas & Consumable Fuels | 6.3 | % | |||||
Pharmaceuticals | 6.2 | % | |||||
Insurance | 5.3 | % | |||||
Metals & Mining | 4.0 | % | |||||
Capital Markets | 3.7 | % | |||||
Machinery | 3.7 | % | |||||
Diversified Telecommunication Services | 3.2 | % | |||||
Automobiles | 3.1 | % | |||||
Professional Services | 3.0 | % |
The Schedule of Portfolio Investments uses the Global Industry Classification Standard (GICS), which may differ from the Fund's compliance classification.
Top 10 Equity Holdings*
11/30/19
(% of Net Assets)
Nestle SA | 2.0 | % | |||||
Roche Holding AG | 1.8 | % | |||||
Toyota Motor Corp. | 1.7 | % | |||||
Novartis AG | 1.5 | % | |||||
Total SA | 1.4 | % | |||||
LVMH Moet Hennessy Louis Vuitton SE | 1.4 | % | |||||
Enel SpA | 1.3 | % | |||||
SAP SE | 1.1 | % | |||||
Atlas Copco AB | 1.1 | % | |||||
Allianz SE | 1.0 | % |
* Does not include short-term investments purchased with cash collateral from securities loaned.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA International Fund (continued) | November 30, 2019 |
(Unaudited)
Country Allocation:
11/30/19
(% of Net Assets)
* Includes countries with less than 3.0% of portfolio and short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Common Stocks (97.5%) | |||||||||||
Argentina (0.1%): | |||||||||||
Energy (0.1%): | |||||||||||
YPF SA, ADR | 209,798 | $ | 2,016 | ||||||||
2,016 | |||||||||||
Australia (5.0%): | |||||||||||
Consumer Discretionary (0.3%): | |||||||||||
Aristocrat Leisure Ltd. | 111,726 | 2,565 | |||||||||
Baby Bunting Group Ltd. | 392,652 | 887 | |||||||||
IDP Education Ltd. | 75,761 | 930 | |||||||||
JB Hi-Fi Ltd. (a) | 112,873 | 2,860 | |||||||||
Jumbo Interactive Ltd. | 35,302 | 491 | |||||||||
Lovisa Holdings Ltd. | 35,739 | 293 | |||||||||
Super Retail Group Ltd. | 185,205 | 1,256 | |||||||||
9,282 | |||||||||||
Energy (0.3%): | |||||||||||
Beach Energy Ltd. | 4,525,268 | 7,336 | |||||||||
Karoon Energy Ltd. (b) | 830,875 | 626 | |||||||||
Santos Ltd. | 752,750 | 4,148 | |||||||||
Whitehaven Coal Ltd. | 311,147 | 662 | |||||||||
12,772 | |||||||||||
Financials (0.9%): | |||||||||||
Australia & New Zealand Banking Group Ltd. | 118,054 | 1,982 | |||||||||
Macquarie Group Ltd. | 323,952 | 30,263 | |||||||||
32,245 | |||||||||||
Health Care (1.0%): | |||||||||||
Clinuvel Pharmaceuticals Ltd. (a) | 54,956 | 1,046 | |||||||||
CSL Ltd. | 159,848 | 30,665 | |||||||||
Healius Ltd. | 245,903 | 511 | |||||||||
Pro Medicus Ltd. | 144,334 | 2,413 | |||||||||
Regis Healthcare Ltd. | 163,521 | 329 | |||||||||
34,964 | |||||||||||
Industrials (0.1%): | |||||||||||
Austal Limited | 604,986 | 1,720 | |||||||||
Nrw Holdings Ltd. | 279,072 | 564 | |||||||||
Qantas Airways Ltd. | 491,796 | 2,432 | |||||||||
4,716 | |||||||||||
Information Technology (0.2%): | |||||||||||
Appen Ltd. | 133,128 | 2,206 | |||||||||
Bravura Solutions Ltd. | 196,713 | 659 | |||||||||
Dicker Data Ltd. | 341,645 | 1,485 | |||||||||
EML Payments Ltd. (b) | 572,510 | 1,832 | |||||||||
6,182 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Materials (1.3%): | |||||||||||
BHP Billiton Ltd. (a) | 1,157,674 | $ | 29,842 | ||||||||
Independence Group NL | 286,310 | 1,132 | |||||||||
Jupiter Mines Ltd. | 3,694,104 | 624 | |||||||||
Perenti Global Ltd. | 773,709 | 1,018 | |||||||||
Perseus Mining Ltd. (b) | 600,427 | 354 | |||||||||
Red 5 Ltd. (b) | 3,726,352 | 706 | |||||||||
Regis Resources Ltd. | 219,014 | 704 | |||||||||
Rio Tinto Ltd. | 140,959 | 9,239 | |||||||||
Saracen Mineral Holdings Ltd. (b) | 1,081,942 | 2,254 | |||||||||
45,873 | |||||||||||
Real Estate (0.9%): | |||||||||||
Centuria Metropolitan REIT | 846,441 | 1,810 | |||||||||
Cromwell Property Group | 4,248,254 | 3,520 | |||||||||
Ingenia Communities Group | 356,407 | 1,132 | |||||||||
Lendlease Group | 162,228 | 2,125 | |||||||||
Mirvac Group | 1,283,643 | 2,922 | |||||||||
National Storage REIT | 1,141,120 | 1,490 | |||||||||
Scentre Group | 7,152,110 | 19,033 | |||||||||
32,032 | |||||||||||
178,066 | |||||||||||
Austria (0.5%): | |||||||||||
Communication Services (0.0%): (c) | |||||||||||
Telekom Austria AG | 85,966 | 691 | |||||||||
Financials (0.2%): | |||||||||||
BAWAG Group AG (d) | 60,381 | 2,422 | |||||||||
Erste Group Bank AG | 68,394 | 2,447 | |||||||||
Raiffeisen Bank International AG | 90,313 | 2,118 | |||||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe | 48,781 | 1,348 | |||||||||
8,335 | |||||||||||
Industrials (0.0%): (c) | |||||||||||
PORR AG (a) | 27,749 | 512 | |||||||||
Information Technology (0.1%): | |||||||||||
ams AG (b) | 47,924 | 2,313 | |||||||||
Materials (0.1%): (c) | |||||||||||
RHI Magnesita NV | 30,597 | 1,503 | |||||||||
Real Estate (0.1%): | |||||||||||
IMMOFINANZ AG (a) | 103,174 | 2,790 | |||||||||
S IMMO AG | 49,366 | 1,239 | |||||||||
4,029 | |||||||||||
Utilities (0.0%): (c) | |||||||||||
EVN AG | 65,621 | 1,192 | |||||||||
18,575 | |||||||||||
Belgium (0.8%): | |||||||||||
Consumer Staples (0.0%): (c) | |||||||||||
Ontex Group NV | 19,250 | 366 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Financials (0.3%): | |||||||||||
Ackermans & Van Haaren NV | 24,384 | $ | 3,666 | ||||||||
Ageas | 102,929 | 6,175 | |||||||||
KBC Group NV | 34,371 | 2,502 | |||||||||
12,343 | |||||||||||
Information Technology (0.3%): | |||||||||||
Melexis NV (a) | 121,265 | 8,840 | |||||||||
Materials (0.1%): (c) | |||||||||||
Solvay SA, Class A | 14,958 | 1,714 | |||||||||
Real Estate (0.1%): | |||||||||||
Aedifica SA | 18,504 | 2,263 | |||||||||
Befimmo SA | 24,462 | 1,576 | |||||||||
Intervest Offices & Warehouses NV | 12,012 | 360 | |||||||||
4,199 | |||||||||||
27,462 | |||||||||||
Brazil (0.3%): | |||||||||||
Communication Services (0.1%): | |||||||||||
TIM Participacoes SA | 742,100 | 2,374 | |||||||||
Financials (0.2%): | |||||||||||
Banco Santander Brasil SA | 545,000 | 5,678 | |||||||||
Materials (0.0%): | |||||||||||
Vale SA (b) | 159,500 | 1,883 | |||||||||
9,935 | |||||||||||
Canada (1.7%): | |||||||||||
Consumer Discretionary (0.1%): | |||||||||||
BRP, Inc. | 60,236 | 2,949 | |||||||||
Consumer Staples (0.1%): | |||||||||||
Alimentation Couche-Tard, Inc., Class B | 86,685 | 2,837 | |||||||||
Energy (0.5%): | |||||||||||
ARC Resources Ltd. (a) | 193,245 | 969 | |||||||||
Cameco Corp. (a) | 136,040 | 1,239 | |||||||||
Encana Corp. | 1,511,334 | 5,929 | |||||||||
Parex Resources, Inc. (b) | 270,813 | 4,007 | |||||||||
Suncor Energy, Inc. | 88,463 | 2,760 | |||||||||
Tourmaline Oil Corp. | 103,880 | 967 | |||||||||
15,871 | |||||||||||
Financials (0.5%): | |||||||||||
Bank of Montreal | 43,047 | 3,313 | |||||||||
Canadian Imperial Bank of Commerce | 57,462 | 4,996 | |||||||||
iA Financial Corp., Inc. | 58,773 | 3,009 | |||||||||
Sun Life Financial, Inc. (a) | 93,498 | 4,267 | |||||||||
The Bank of Nova Scotia | 49,563 | 2,797 | |||||||||
18,382 | |||||||||||
Industrials (0.1%): | |||||||||||
Air Canada (b) | 115,416 | 4,349 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Materials (0.4%): | |||||||||||
Barrick Gold Corp. | 396,292 | $ | 6,618 | ||||||||
Kinross Gold Corp. (b) | 736,593 | 3,189 | |||||||||
Kirkland Lake Gold Ltd. | 85,698 | 3,600 | |||||||||
Teck Resources Ltd., Class B | 126,473 | 1,981 | |||||||||
15,388 | |||||||||||
59,776 | |||||||||||
China (2.7%): | |||||||||||
Communication Services (1.0%): | |||||||||||
China Telecom Corp. Ltd., Class H | 12,418,747 | 4,700 | |||||||||
Huya, Inc., ADR (a) (b) | 96,758 | 2,042 | |||||||||
Leyou Technologies Holdings Ltd. (b) | 2,260,000 | 722 | |||||||||
NetEase, Inc., ADR | 8,326 | 2,625 | |||||||||
Tencent Holdings Ltd. | 590,200 | 24,904 | |||||||||
34,993 | |||||||||||
Consumer Discretionary (0.6%): | |||||||||||
Alibaba Group Holding Ltd., ADR (b) | 61,909 | 12,382 | |||||||||
ANTA Sports Products Ltd. | 419,000 | 3,940 | |||||||||
Dongfeng Motor Group Co. Ltd., Class H | 6,408,056 | 6,155 | |||||||||
22,477 | |||||||||||
Financials (0.7%): | |||||||||||
Bank of China Ltd. | 6,965,000 | 2,793 | |||||||||
China Merchants Bank Co. Ltd., Class H | 3,378,000 | 15,962 | |||||||||
Industrial & Commercial Bank of China Ltd., Class H | 6,904,000 | 4,921 | |||||||||
Ping An Insurance Group Co. of China Ltd. | 205,000 | 2,328 | |||||||||
26,004 | |||||||||||
Health Care (0.1%): | |||||||||||
Sinopharm Group Co. Ltd., Class H | 604,000 | 1,995 | |||||||||
Industrials (0.0%): (c) | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | 1,094,900 | 825 | |||||||||
Materials (0.2%): | |||||||||||
Anhui Conch Cement Co. Ltd., Class H | 823,000 | 5,265 | |||||||||
Real Estate (0.1%): | |||||||||||
Country Garden Holdings Co. Ltd. | 2,010,000 | 2,803 | |||||||||
94,362 | |||||||||||
Denmark (1.3%): | |||||||||||
Consumer Staples (0.8%): | |||||||||||
Carlsberg A/S, Class B | 23,907 | 3,440 | |||||||||
Royal Unibrew A/S | 261,248 | 23,517 | |||||||||
26,957 | |||||||||||
Energy (0.0%): (c) | |||||||||||
The Drilling Co. of 1972 (b) | 7,399 | 448 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Health Care (0.1%): | |||||||||||
Bavarian Nordic A/S (b) | 14,145 | $ | 358 | ||||||||
Novo Nordisk A/S, Class B | 51,998 | 2,923 | |||||||||
Veloxis Pharmaceuticals A/S (a) (b) | 628,121 | 556 | |||||||||
3,837 | |||||||||||
Industrials (0.2%): | |||||||||||
A.P. Moeller-Maersk A/S, Class B | 5,326 | 7,445 | |||||||||
Per Aarsleff Holding A/S | 21,182 | 662 | |||||||||
8,107 | |||||||||||
Information Technology (0.1%): | |||||||||||
Simcorp A/S | 45,072 | 4,826 | |||||||||
Utilities (0.1%): | |||||||||||
Orsted A/S (d) | 36,338 | 3,349 | |||||||||
47,524 | |||||||||||
Faroe Islands (0.1%): | |||||||||||
Consumer Staples (0.1%): | |||||||||||
Bakkafrost P/F | 34,345 | 2,303 | |||||||||
Finland (0.4%): | |||||||||||
Consumer Discretionary (0.0%): (c) | |||||||||||
Tokmanni Group Corp. | 59,858 | 799 | |||||||||
Industrials (0.1%): | |||||||||||
Metso Oyj | 59,567 | 2,284 | |||||||||
Information Technology (0.1%): | |||||||||||
Nokia Oyj | 1,032,385 | 3,653 | |||||||||
Materials (0.2%): | |||||||||||
Huhtamaki OYJ | 66,795 | 2,932 | |||||||||
Kemira Oyj | 221,781 | 3,465 | |||||||||
6,397 | |||||||||||
13,133 | |||||||||||
France (8.7%): | |||||||||||
Communication Services (0.2%): | |||||||||||
Lagardere SCA | 121,056 | 2,644 | |||||||||
Vivendi SA | 119,616 | 3,284 | |||||||||
5,928 | |||||||||||
Consumer Discretionary (2.5%): | |||||||||||
Compagnie Generale des Etablissements Michelin SCA | 108,942 | 13,064 | |||||||||
Faurecia SE | 333,863 | 17,696 | |||||||||
Kaufman & Broad SA | 9,115 | 368 | |||||||||
Kering SA | 6,196 | 3,731 | |||||||||
LVMH Moet Hennessy Louis Vuitton SE | 110,886 | 49,639 | |||||||||
Renault SA | 99,332 | 4,753 | |||||||||
89,251 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Consumer Staples (0.2%): | |||||||||||
L'Oreal SA | 12,367 | $ | 3,526 | ||||||||
Pernod Ricard SA (a) | 11,310 | 2,077 | |||||||||
5,603 | |||||||||||
Energy (1.5%): | |||||||||||
Gaztransport Et Technigaz SA | 49,351 | 4,359 | |||||||||
Total SA | 963,455 | 50,533 | |||||||||
54,892 | |||||||||||
Financials (1.2%): | |||||||||||
AXA SA | 782,756 | 21,295 | |||||||||
BNP Paribas SA | 169,833 | 9,520 | |||||||||
Coface SA | 129,695 | 1,433 | |||||||||
Eurazeo SE | 36,339 | 2,476 | |||||||||
Societe Generale SA | 242,785 | 7,629 | |||||||||
42,353 | |||||||||||
Health Care (0.2%): | |||||||||||
Korian SA | 109,309 | 4,807 | |||||||||
Sanofi | 45,594 | 4,250 | |||||||||
9,057 | |||||||||||
Industrials (1.1%): | |||||||||||
Air France-KLM (b) | 165,607 | 1,948 | |||||||||
Airbus SE | 20,760 | 3,050 | |||||||||
Alstom SA | 44,575 | 1,944 | |||||||||
Compagnie de Saint-Gobain | 265,145 | 10,734 | |||||||||
Elis SA | 229,207 | 4,573 | |||||||||
Mersen | 47,467 | 1,573 | |||||||||
Rexel SA | 563,542 | 6,879 | |||||||||
Teleperformance | 18,927 | 4,484 | |||||||||
Vinci SA | 22,516 | 2,454 | |||||||||
37,639 | |||||||||||
Information Technology (0.9%): | |||||||||||
Alten SA | 19,790 | 2,285 | |||||||||
Capgemini SE | 214,147 | 25,330 | |||||||||
Ingenico Group SA | 25,207 | 2,690 | |||||||||
SOITEC (b) | 15,076 | 1,595 | |||||||||
31,900 | |||||||||||
Materials (0.6%): | |||||||||||
Arkema SA | 222,705 | 23,077 | |||||||||
23,077 | |||||||||||
Real Estate (0.1%): | |||||||||||
Nexity SA | 44,205 | 2,228 | |||||||||
Utilities (0.2%): | |||||||||||
Engie SA | 362,267 | 5,730 | |||||||||
307,658 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Germany (6.2%): | |||||||||||
Communication Services (0.2%): | |||||||||||
CTS Eventim AG & Co. KGAA | 117,320 | $ | 7,153 | ||||||||
Freenet AG | 36,143 | 841 | |||||||||
New Work SE | 3,153 | 1,068 | |||||||||
9,062 | |||||||||||
Consumer Discretionary (0.3%): | |||||||||||
Ceconomy AG (b) | 306,635 | 1,472 | |||||||||
Daimler AG, Registered Shares | 127,183 | 7,158 | |||||||||
Hornbach Holding AG & Co. KgaA | 13,187 | 773 | |||||||||
9,403 | |||||||||||
Consumer Staples (0.0%): (c) | |||||||||||
METRO AG | 105,403 | 1,698 | |||||||||
Financials (1.2%): | |||||||||||
Allianz SE | 154,590 | 36,970 | |||||||||
Hannover Rueck SE | 24,423 | 4,531 | |||||||||
Wuestenrot & Wuerttembergische AG | 38,663 | 824 | |||||||||
42,325 | |||||||||||
Health Care (0.7%): | |||||||||||
Bayer AG, Registered Shares | 141,902 | 10,716 | |||||||||
Compugroup Medical SE | 20,554 | 1,405 | |||||||||
Dermapharm Holding SE | 26,892 | 1,116 | |||||||||
Eckert & Ziegler Strahlen- und Medizintechnik AG | 9,976 | 2,129 | |||||||||
Evotec SE (a) (b) | 84,158 | 1,863 | |||||||||
Fresenius Medical Care AG & Co. KGaA | 34,958 | 2,559 | |||||||||
Gerresheimer AG | 55,768 | 4,100 | |||||||||
23,888 | |||||||||||
Industrials (1.4%): | |||||||||||
Amadeus Fire AG | 10,889 | 1,461 | |||||||||
Deutsche Lufthansa AG, Registered Shares | 206,650 | 3,919 | |||||||||
Hamburger Hafen Und Logistik AG | 27,757 | 749 | |||||||||
Kloeckner & Co. SE | 214,537 | 1,360 | |||||||||
MTU Aero Engines Holding AG | 15,525 | 4,203 | |||||||||
Siemens AG | 211,422 | 27,242 | |||||||||
Washtec AG | 159,497 | 9,290 | |||||||||
48,224 | |||||||||||
Information Technology (1.2%): | |||||||||||
Elmos Semiconductor AG | 21,472 | 677 | |||||||||
ISRA Vision AG (a) | 18,317 | 782 | |||||||||
LPKF Laser & Electronics AG (b) | 72,314 | 1,324 | |||||||||
Nemetschek SE | 20,450 | 1,209 | |||||||||
SAP SE | 295,502 | 40,142 | |||||||||
44,134 | |||||||||||
Materials (0.1%): | |||||||||||
HeidelbergCement AG | 25,152 | 1,853 | |||||||||
Salzgitter AG | 38,703 | 764 | |||||||||
2,617 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Real Estate (0.8%): | |||||||||||
Alstria Office REIT-AG | 118,985 | $ | 2,171 | ||||||||
DIC Asset AG | 176,007 | 2,939 | |||||||||
Leg Immobilien AG | 23,246 | 2,624 | |||||||||
Vonovia SE (a) | 392,507 | 20,429 | |||||||||
28,163 | |||||||||||
Utilities (0.3%): | |||||||||||
E.ON SE | 645,774 | 6,757 | |||||||||
Encavis AG | 216,964 | 2,073 | |||||||||
RWE AG | 80,353 | 2,380 | |||||||||
11,210 | |||||||||||
220,724 | |||||||||||
Hong Kong (2.0%): | |||||||||||
Communication Services (0.4%): | |||||||||||
China Mobile Ltd. | 784,465 | 5,914 | |||||||||
China Unicom Hong Kong Ltd. | 7,699,435 | 6,596 | |||||||||
HKBN Ltd. (a) | 568,000 | 1,000 | |||||||||
HKT Trust & HKT Ltd. | 1,457,000 | 2,137 | |||||||||
15,647 | |||||||||||
Consumer Discretionary (0.1%): | |||||||||||
Galaxy Entertainment Group Ltd. | 313,000 | 2,050 | |||||||||
Melco International Development Ltd. | 785,000 | 1,926 | |||||||||
Perfect Shape Medical Ltd. | 1,644,000 | 783 | |||||||||
4,759 | |||||||||||
Energy (0.1%): | |||||||||||
CNOOC Ltd. | 1,637,208 | 2,377 | |||||||||
Kunlun Energy Co. Ltd. | 2,196,000 | 1,860 | |||||||||
4,237 | |||||||||||
Financials (0.5%): | |||||||||||
AIA Group Ltd. | 1,573,600 | 15,748 | |||||||||
BOC Hong Kong Holdings Ltd. | 834,000 | 2,833 | |||||||||
18,581 | |||||||||||
Industrials (0.2%): | |||||||||||
CK Hutchison Holdings Ltd. | 430,500 | 3,910 | |||||||||
Johnson Electric Holdings Ltd. | 698,500 | 1,567 | |||||||||
Shun Tak Holdings Ltd. | 4,490,000 | 1,824 | |||||||||
7,301 | |||||||||||
Real Estate (0.6%): | |||||||||||
CK Asset Holdings Ltd. | 2,964,000 | 19,710 | |||||||||
K Wah International Holdings Ltd. | 1,306,000 | 716 | |||||||||
20,426 | |||||||||||
Utilities (0.1%): (c) | |||||||||||
China Water Affairs Group Ltd. (a) | 1,900,000 | 1,459 | |||||||||
72,410 |
See notes to financial statements.
11
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Hungary (0.1%): | |||||||||||
Financials (0.1%): | |||||||||||
OTP Bank Nyrt (e) | 75,603 | $ | 3,557 | ||||||||
India (0.6%): | |||||||||||
Communication Services (0.1%): | |||||||||||
Zee Entertainment Enterprises Ltd. | 685,555 | 2,801 | |||||||||
Energy (0.1%): | |||||||||||
Reliance Industries Ltd. | 134,269 | 2,900 | |||||||||
Financials (0.2%): | |||||||||||
Canara Bank (b) | 853,548 | 2,700 | |||||||||
HDFC Bank Ltd. | 150,597 | 2,670 | |||||||||
Power Finance Corp. Ltd. (b) | 1,261,672 | 2,012 | |||||||||
7,382 | |||||||||||
Health Care (0.1%): | |||||||||||
Ipca Laboratories Ltd. | 165,957 | 2,642 | |||||||||
Information Technology (0.0%): | |||||||||||
HCL Technologies Ltd. | 159,805 | 2,511 | |||||||||
Utilities (0.1%): | |||||||||||
NTPC Ltd. | 314,958 | 511 | |||||||||
Power Grid Corp. of India Ltd. | 829,603 | 2,235 | |||||||||
2,746 | |||||||||||
20,982 | |||||||||||
Indonesia (0.1%): | |||||||||||
Industrials (0.1%): | |||||||||||
Wijaya Karya Persero Tbk PT | 26,270,800 | 3,230 | |||||||||
Utilities (0.0%): (c) | |||||||||||
Perusahaan Gas Negara Tbk PT | 12,207,700 | 1,662 | |||||||||
4,892 | |||||||||||
Ireland (1.0%): | |||||||||||
Consumer Staples (0.0%): (c) | |||||||||||
C&C Group PLC | 318,848 | 1,609 | |||||||||
Financials (0.2%): | |||||||||||
AIB Group PLC | 553,930 | 1,810 | |||||||||
Bank of Ireland Group PLC | 1,020,367 | 5,116 | |||||||||
6,926 | |||||||||||
Health Care (0.2%): | |||||||||||
ICON PLC (b) | 34,152 | 5,572 | |||||||||
Industrials (0.6%): | |||||||||||
Experian PLC | 541,972 | 17,975 | |||||||||
Fly Leasing Ltd., ADR (b) | 179,600 | 3,526 | |||||||||
21,501 | |||||||||||
35,608 | |||||||||||
Isle of Man (0.0%): | |||||||||||
Consumer Discretionary (0.0%): | |||||||||||
GVC Holdings PLC | 181,634 | 2,000 |
See notes to financial statements.
12
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Israel (0.4%): | |||||||||||
Financials (0.2%): | |||||||||||
Israel Discount Bank Ltd., Class A | 1,555,014 | $ | 7,154 | ||||||||
Industrials (0.0%): (c) | |||||||||||
Shikun & Binui Ltd. | 378,403 | 1,660 | |||||||||
Information Technology (0.1%): | |||||||||||
AudioCodes Ltd. | 124,596 | 2,986 | |||||||||
CyberArk Software Ltd. (b) | 3,000 | 368 | |||||||||
Formula Systems 1985 Ltd. | 9,968 | 709 | |||||||||
4,063 | |||||||||||
Real Estate (0.1%): | |||||||||||
Alony Hetz Properties & Investment Ltd. | 93,313 | 1,395 | |||||||||
Melisron Ltd. | 23,273 | 1,505 | |||||||||
2,900 | |||||||||||
15,777 | |||||||||||
Italy (4.0%): | |||||||||||
Energy (0.4%): | |||||||||||
Eni SpA | 762,167 | 11,483 | |||||||||
Saipem SpA (a) (b) | 853,859 | 3,901 | |||||||||
15,384 | |||||||||||
Financials (1.2%): | |||||||||||
Anima Holding SpA (d) | 258,593 | 1,324 | |||||||||
Assicurazioni Generali SpA | 209,339 | 4,269 | |||||||||
Banca Farmafactoring SpA (d) | 155,188 | 934 | |||||||||
Banca Generali SpA | 547,775 | 18,066 | |||||||||
Banca Sistema SpA (d) | 296,005 | 601 | |||||||||
BPER Banca (a) | 674,551 | 3,261 | |||||||||
Mediobanca Banca di Credito Finanziario SpA | 235,712 | 2,632 | |||||||||
UniCredit SpA (a) | 641,075 | 8,848 | |||||||||
Unipol Gruppo SpA | 377,884 | 2,212 | |||||||||
42,147 | |||||||||||
Health Care (0.5%): | |||||||||||
El.En. SpA | 11,187 | 410 | |||||||||
Recordati SpA | 385,019 | 16,138 | |||||||||
16,548 | |||||||||||
Industrials (0.1%): | |||||||||||
Astm SpA | 76,494 | 2,339 | |||||||||
Fiera Milano SpA | 135,067 | 765 | |||||||||
Tinexta SpA | 59,332 | 824 | |||||||||
3,928 | |||||||||||
Information Technology (0.1%): | |||||||||||
Eurotech SpA (b) | 301,883 | 2,727 | |||||||||
Materials (0.0%): (c) | |||||||||||
Buzzi Unicem SpA | 43,092 | 1,065 | |||||||||
Real Estate (0.0%): (c) | |||||||||||
Immobiliare Grande Distribuzione SIIQ SpA | 148,344 | 1,052 |
See notes to financial statements.
13
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Utilities (1.7%): | |||||||||||
ACEA SpA | 134,469 | $ | 2,795 | ||||||||
Enel SpA | 6,193,613 | 46,807 | |||||||||
Hera SpA | 809,008 | 3,567 | |||||||||
Iren SpA | 1,614,655 | 5,005 | |||||||||
58,174 | |||||||||||
141,025 | |||||||||||
Japan (24.6%): | |||||||||||
Communication Services (1.4%): | |||||||||||
Akatsuki, Inc. (a) | 13,600 | 798 | |||||||||
Avex, Inc. | 93,900 | 1,125 | |||||||||
DeNa Co. Ltd. | 180,231 | 2,903 | |||||||||
Dip Corp. (a) | 43,000 | 1,234 | |||||||||
Fuji Media Holdings, Inc. | 97,854 | 1,325 | |||||||||
Gree, Inc. | 423,307 | 2,014 | |||||||||
Internet Initiative Japan, Inc. | 67,000 | 1,551 | |||||||||
KDDI Corp. | 119,100 | 3,422 | |||||||||
Nippon Telegraph & Telephone Corp. | 523,300 | 26,441 | |||||||||
Nippon Television Holdings, Inc. | 188,347 | 2,477 | |||||||||
SKY Perfect JSAT Holdings, Inc. | 333,800 | 1,429 | |||||||||
Yahoo Japan Corp. | 1,810,032 | 6,240 | |||||||||
50,959 | |||||||||||
Consumer Discretionary (4.4%): | |||||||||||
Bandai Namco Holdings, Inc. | 50,700 | 3,076 | |||||||||
Benesse Holdings, Inc. | 45,106 | 1,191 | |||||||||
Daido Metal Co. Ltd. | 124,200 | 812 | |||||||||
Dcm Holdings Co. Ltd. (a) | 83,700 | 813 | |||||||||
Doutor Nichires Holdings Co. Ltd. | 34,400 | 697 | |||||||||
FJ Next Co. Ltd. (a) | 115,800 | 1,142 | |||||||||
Foster Electric Co. Ltd. | 36,200 | 670 | |||||||||
Hikari Tsushin, Inc. | 61,900 | 14,449 | |||||||||
Honda Motor Co. Ltd. | 429,052 | 12,063 | |||||||||
Honeys Holdings Co. Ltd. | 78,900 | 1,018 | |||||||||
KFC Holdings Japan Ltd. | 13,300 | 352 | |||||||||
KNT-CT Holdings Co. Ltd. (b) | 43,100 | 583 | |||||||||
Kojima Co. Ltd. | 385,200 | 1,586 | |||||||||
Komeri Co. Ltd. | 63,200 | 1,352 | |||||||||
Kourakuen Holdings Corp. | 21,500 | 410 | |||||||||
Kura Sushi, Inc. (a) | 26,100 | 1,163 | |||||||||
Mitsubishi Motors Corp. | 677,394 | 3,036 | |||||||||
Nikon Corp. | 311,453 | 4,277 | |||||||||
Nissan Motor Co. Ltd. | 720,492 | 4,450 | |||||||||
Nojima Corp. | 33,400 | 693 | |||||||||
Pressance Corp. | 50,400 | 809 | |||||||||
Resorttrust, Inc. | 20,600 | 346 | |||||||||
Riso Kyoiku Co. Ltd. | 368,900 | 1,403 | |||||||||
Shimamura Co. Ltd. | 58,728 | 4,713 | |||||||||
Sony Corp. | 156,600 | 9,939 | |||||||||
Sumitomo Riko Co., Ltd. | 96,400 | 879 | |||||||||
Takashimaya Co. Ltd. | 180,500 | 2,133 |
See notes to financial statements.
14
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Tama Home Co. Ltd. (a) | 169,500 | $ | 2,857 | ||||||||
Tamron Co. Ltd. | 49,100 | 1,148 | |||||||||
Tokyo Dome Corp. | 151,600 | 1,413 | |||||||||
Topre Corp. | 70,900 | 1,116 | |||||||||
Toyota Motor Corp. | 872,600 | 61,057 | |||||||||
United Arrows Ltd. | 475,400 | 14,320 | |||||||||
Wealth Management, Inc. (a) | 23,600 | 435 | |||||||||
156,401 | |||||||||||
Consumer Staples (1.3%): | |||||||||||
Arcs Co. Ltd. | 80,800 | 1,682 | |||||||||
Heiwado Co. Ltd. | 29,800 | 567 | |||||||||
Hokuto Corp. | 60,700 | 1,096 | |||||||||
Ito En Ltd. | 163,400 | 8,159 | |||||||||
Kewpie Corp. (a) | 95,000 | 2,113 | |||||||||
Key Coffee, Inc. | 39,800 | 862 | |||||||||
Life Corp. | 22,800 | 522 | |||||||||
Marudai Food Co. Ltd. | 20,100 | 426 | |||||||||
Matsumotokiyoshi Holdings Co. Ltd. | 478,400 | 18,296 | |||||||||
Mitsubishi Shokuhin Co. Ltd. | 36,200 | 961 | |||||||||
Nihon Chouzai Co. Ltd. | 10,600 | 366 | |||||||||
Nippon Suisan Kaisha Ltd. | 452,000 | 2,716 | |||||||||
Prima Meat Packers Ltd. | 34,100 | 791 | |||||||||
Showa Sangyo Co. Ltd. | 37,100 | 1,086 | |||||||||
The Nisshin Oillio Group Ltd. | 47,700 | 1,697 | |||||||||
Toyo Suisan Kaisha Ltd. | 48,600 | 2,098 | |||||||||
Transaction Co. Ltd. | 167,200 | 1,530 | |||||||||
Yokohama Reito Co. Ltd. | 139,100 | 1,358 | |||||||||
46,326 | |||||||||||
Energy (0.2%): | |||||||||||
Inpex Corp. | 677,218 | 6,614 | |||||||||
Japan Petroleum Exploration Co. Ltd. | 29,600 | 759 | |||||||||
7,373 | |||||||||||
Financials (4.0%): | |||||||||||
Credit Saison Co. Ltd. | 132,900 | 2,199 | |||||||||
Fuyo General Lease Co. Ltd. | 21,200 | 1,401 | |||||||||
Jaccs Co. Ltd. | 30,300 | 747 | |||||||||
Jafco Co. Ltd. | 230,100 | 8,878 | |||||||||
Japan Securities Finance Co. Ltd. | 255,500 | 1,264 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 6,720,584 | 35,631 | |||||||||
Mizuho Financial Group, Inc. | 4,523,552 | 7,006 | |||||||||
Nishi-Nippon Financial Holdings, Inc. | 126,300 | 976 | |||||||||
Nomura Holdings, Inc. | 1,229,064 | 6,301 | |||||||||
North Pacific Bank Ltd. | 314,000 | 686 | |||||||||
ORIX Corp. | 306,700 | 5,028 | |||||||||
Resona Holdings, Inc. | 1,347,652 | 5,720 | |||||||||
Ricoh Leasing Co. Ltd. | 13,700 | 478 | |||||||||
Shinsei Bank Ltd. | 149,000 | 2,361 | |||||||||
Sumitomo Mitsui Financial Group, Inc. | 335,216 | 12,277 | |||||||||
Sumitomo Mitsui Trust Holdings, Inc. | 201,263 | 7,714 |
See notes to financial statements.
15
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
T&D Holdings, Inc. | 750,639 | $ | 8,844 | ||||||||
The 77 Bank Ltd. | 155,000 | 2,505 | |||||||||
The Dai-ichi Life Insurance Co. Ltd. | 343,049 | 5,533 | |||||||||
The Hyakujushi Bank Ltd. | 30,200 | 628 | |||||||||
The Juroku Bank Ltd. | 57,200 | 1,383 | |||||||||
Tokio Marine Holdings, Inc. | 433,600 | 23,594 | |||||||||
TOMONY Holdings, Inc. | 272,700 | 1,035 | |||||||||
142,189 | |||||||||||
Health Care (2.3%): | |||||||||||
Alfresa Holdings Corp. | 37,000 | 765 | |||||||||
Astellas Pharma, Inc. | 239,500 | 4,090 | |||||||||
Daito Pharmaceutical Co. Ltd. | 22,800 | 664 | |||||||||
Eisai Co. Ltd. | 31,596 | 2,343 | |||||||||
Hoya Corp. | 346,600 | 31,672 | |||||||||
Nikkiso Co. Ltd. | 114,100 | 1,409 | |||||||||
Shin Nippon Biomedical Laboratories Ltd. | 83,200 | 601 | |||||||||
Shionogi & Co. Ltd. | 411,200 | 24,209 | |||||||||
Takeda Pharmaceutical Co. Ltd. | 227,031 | 9,252 | |||||||||
Toho Holdings Co. Ltd. | 65,800 | 1,513 | |||||||||
Torii Pharmaceutical Co. Ltd. | 39,800 | 1,042 | |||||||||
Towa Pharmaceutical Co. Ltd. | 91,500 | 2,355 | |||||||||
Vital KSK Holdings, Inc. | 134,900 | 1,364 | |||||||||
81,279 | |||||||||||
Industrials (5.7%): | |||||||||||
Altech Corp. | 45,500 | 745 | |||||||||
Bellssytem24 Holdings, Inc. | 70,900 | 1,114 | |||||||||
Bunka Shutter Co. Ltd. | 222,600 | 1,966 | |||||||||
Central Japan Railway Co. | 21,700 | 4,386 | |||||||||
Chiyoda Corp. (a) (b) | 194,967 | 491 | |||||||||
Daiseki Co. Ltd. | 21,100 | 619 | |||||||||
Duskin Co. Ltd. | 28,000 | 780 | |||||||||
en-japan, Inc. | 490,000 | 22,912 | |||||||||
Fuji Electric Co. Ltd. | 746,700 | 23,005 | |||||||||
Fujikura Ltd. | 175,700 | 756 | |||||||||
Furukawa Co. Ltd. | 70,000 | 968 | |||||||||
GS Yuasa Corp. | 18,300 | 371 | |||||||||
Hitachi Construction Machinery Co. Ltd. | 786,500 | 20,761 | |||||||||
ITOCHU Corp. | 1,039,700 | 22,705 | |||||||||
JGC Corp. | 357,620 | 5,205 | |||||||||
Kamigumi Co. Ltd. | 36,100 | 801 | |||||||||
Kandenko Co. Ltd. | 315,000 | 2,998 | |||||||||
Kawada Technologies, Inc. | 6,600 | 408 | |||||||||
Kyowa Exeo Corp. | 192,000 | 5,003 | |||||||||
Mitsubishi Electric Corp. | 191,800 | 2,652 | |||||||||
Mitsubishi Heavy Industries Ltd. | 123,566 | 4,732 | |||||||||
Mitsui & Co. Ltd. | 214,800 | 3,811 | |||||||||
Mitsui-Soko Holdings Co. Ltd. | 121,900 | 2,215 | |||||||||
Nikkon Holdings Co. Ltd. | 63,200 | 1,570 | |||||||||
Nippon Carbon Co. Ltd. (a) | 50,500 | 1,968 | |||||||||
Nippon Sheet Glass Co. Ltd. | 357,000 | 2,110 |
See notes to financial statements.
16
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Obayashi Corp. | 232,300 | $ | 2,464 | ||||||||
OKUMA Corp. | 258,900 | 14,327 | |||||||||
Organo Corp. | 60,000 | 3,644 | |||||||||
PS Mitsubishi Construction Co. Ltd. | 188,400 | 1,201 | |||||||||
Relia, Inc. | 150,000 | 1,941 | |||||||||
Sanki Engineering Co. Ltd. | 157,000 | 2,090 | |||||||||
Sankyo Tateyama, Inc. | 41,500 | 469 | |||||||||
Sanwa Holdings Corp. | 1,500,900 | 16,481 | |||||||||
SEC Carbon Ltd. (a) | 12,600 | 1,038 | |||||||||
Secom Co. Ltd. | 23,600 | 2,005 | |||||||||
Seibu Holdings, Inc. | 115,900 | 2,045 | |||||||||
Seino Holdings Co. Ltd. | 97,300 | 1,334 | |||||||||
Sintokogio Ltd. | 54,500 | 511 | |||||||||
Sumitomo Densetsu Co. Ltd. | 33,400 | 759 | |||||||||
SWCC Showa Holdings Co. Ltd. | 96,000 | 897 | |||||||||
Taisei Corp. | 50,900 | 1,999 | |||||||||
Takara Standard Co. Ltd. | 40,200 | 738 | |||||||||
Takasago Thermal Engineering Co. Ltd. | 87,400 | 1,517 | |||||||||
Tanseisha Co. Ltd. | 70,000 | 760 | |||||||||
Tekken Corp. | 44,700 | 1,155 | |||||||||
THK Co. Ltd. | 117,501 | 3,305 | |||||||||
Tokyu Construction Co. Ltd. | 376,600 | 2,683 | |||||||||
Toyo Construction Co. Ltd. | 254,400 | 1,166 | |||||||||
Will Group, Inc. | 137,400 | 1,469 | |||||||||
201,050 | |||||||||||
Information Technology (2.4%): | |||||||||||
Advantest Corp. | 85,600 | 4,194 | |||||||||
CAC Holdings Corp. | 123,900 | 1,759 | |||||||||
Canon, Inc. | 102,433 | 2,838 | |||||||||
Citizen Watch Co. Ltd. | 467,376 | 2,591 | |||||||||
Denki Kogyo Co. Ltd. | 26,100 | 743 | |||||||||
Digital Garage, Inc. | 29,700 | 1,130 | |||||||||
Ferrotec Holdings Corp. (a) | 124,300 | 1,047 | |||||||||
FUJIFILM Holdings Corp. | 53,700 | 2,540 | |||||||||
Fujitsu Ltd. | 215,051 | 19,572 | |||||||||
Furuno Electric Co. Ltd. | 53,600 | 616 | |||||||||
Future Corp. | 25,200 | 430 | |||||||||
Hitachi Ltd. | 74,300 | 2,927 | |||||||||
Hosiden Corp. | 86,200 | 1,049 | |||||||||
Mamezou Holdings Co. Ltd. | 38,800 | 520 | |||||||||
Mimasu Semiconductor Industry Co. Ltd. | 40,200 | �� | 746 | ||||||||
Nippon Electric Glass Co. Ltd. | 29,600 | 628 | |||||||||
Nippon Signal Co. Ltd. | 70,300 | 832 | |||||||||
Nohmi Bosai Ltd. | 50,500 | 1,088 | |||||||||
NSD Co. Ltd. | 39,300 | 1,281 | |||||||||
NTT Data Corp. | 180,700 | 2,466 | |||||||||
Obic Co. Ltd. | 24,800 | 3,295 | |||||||||
Oracle Corp. Japan | 170,200 | 15,676 | |||||||||
Restar Holdings Corp. | 38,700 | 706 | |||||||||
Roland DG Corp. | 25,300 | 487 | |||||||||
Ryoyo Electro Corp. | 50,800 | 944 |
See notes to financial statements.
17
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Scala, Inc. | 113,900 | $ | 814 | ||||||||
Seikoh Giken Co. Ltd. | 26,100 | 844 | |||||||||
SK-Electronics Co. Ltd. | 52,400 | 1,011 | |||||||||
Taiyo Yuden Co. Ltd. | 32,600 | 852 | |||||||||
TIS, Inc. | 22,500 | 1,337 | |||||||||
Ulvac, Inc. | 270,400 | 10,649 | |||||||||
United, Inc. | 70,100 | 908 | |||||||||
V Technology Co. Ltd. (a) | 10,500 | 569 | |||||||||
87,089 | |||||||||||
Materials (1.1%): | |||||||||||
Daiki Aluminium Industry Co. Ltd. | 179,300 | 1,271 | |||||||||
DIC Corp. | 117,000 | 3,180 | |||||||||
Fujimi, Inc. | 13,200 | 352 | |||||||||
Godo Steel Ltd. | 89,500 | 2,142 | |||||||||
Hitachi Metals Ltd. | 251,013 | 3,517 | |||||||||
Hokuetsu Corp. | 393,100 | 2,064 | |||||||||
JSR Corp. | 360,515 | 6,388 | |||||||||
Kanto Denka Kogyo Co. Ltd. | 153,900 | 1,517 | |||||||||
Kumiai Chemical Industry Co. Ltd. | 213,500 | 2,025 | |||||||||
Kureha Corp. | 63,600 | 3,773 | |||||||||
Nasu Denki Tekko Co. Ltd. (a) | 7,700 | 1,114 | |||||||||
Nitto Denko Corp. | 73,417 | 4,122 | |||||||||
Showa Denko KK | 50,600 | 1,353 | |||||||||
Tosoh Corp. | 107,900 | 1,608 | |||||||||
UBE Industries Ltd. | 140,500 | 3,021 | |||||||||
37,447 | |||||||||||
Real Estate (1.2%): | |||||||||||
AEON REIT Investment Corp. | 679 | 945 | |||||||||
B-Lot Co. Ltd. | 16,900 | 308 | |||||||||
Daiwa House Industry Co. Ltd. | 106,700 | 3,267 | |||||||||
Daiwa Office Investment Corp. (a) | 717 | 5,384 | |||||||||
Goldcrest Co. Ltd. | 146,500 | 2,904 | |||||||||
Mirai Corp. | 1,529 | 858 | |||||||||
Mitsubishi Estate Co. Ltd. | 243,720 | 4,471 | |||||||||
One REIT, Inc. | 1,260 | 4,031 | |||||||||
SAMTY Co. Ltd. | 119,700 | 2,288 | |||||||||
Sekisui House REIT, Inc. | 6,199 | 5,482 | |||||||||
Sumitomo Realty & Development Co. Ltd. | 343,900 | 11,993 | |||||||||
Tosei Corp. (a) | 75,600 | 921 | |||||||||
42,852 | |||||||||||
Utilities (0.6%): | |||||||||||
Chubu Electric Power Co., Inc. | 1,306,600 | 18,222 | |||||||||
Hokkaido Electric Power Co., Inc. | 294,100 | 1,408 | |||||||||
The Kansai Electric Power Co., Inc. | 182,900 | 2,087 | |||||||||
21,717 | |||||||||||
874,682 |
See notes to financial statements.
18
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Korea, Republic Of (1.0%): | |||||||||||
Communication Services (0.2%): | |||||||||||
Cheil Worldwide, Inc. | 111,011 | $ | 2,226 | ||||||||
KT Corp. | 253,616 | 5,789 | |||||||||
8,015 | |||||||||||
Consumer Discretionary (0.1%): | |||||||||||
Hyundai Motor Co. | 19,767 | 2,029 | |||||||||
Financials (0.4%): | |||||||||||
KB Financial Group, Inc. | 149,320 | 5,835 | |||||||||
Shinhan Financial Group Co. Ltd. | 221,179 | 8,171 | |||||||||
14,006 | |||||||||||
Industrials (0.1%): | |||||||||||
Samsung Engineering Co. Ltd. (b) | 149,735 | 2,389 | |||||||||
Information Technology (0.2%): | |||||||||||
LG Innotek Co. Ltd. | 32,300 | 3,346 | |||||||||
Samsung Electronics Co. Ltd. | 132,145 | 5,650 | |||||||||
8,996 | |||||||||||
Materials (0.0%): (c) | |||||||||||
POSCO | 8,949 | 1,742 | |||||||||
37,177 | |||||||||||
Luxembourg (0.1%): | |||||||||||
Materials (0.1%): | |||||||||||
ArcelorMittal | 190,400 | 3,251 | |||||||||
Real Estate (0.0%): (c) | |||||||||||
Corestate Capital Holding SA (a) | 41,714 | 1,489 | |||||||||
4,740 | |||||||||||
Macau (0.6%): | |||||||||||
Consumer Discretionary (0.6%): | |||||||||||
Wynn Macau Ltd. (a) | 9,387,200 | 20,645 | |||||||||
Malaysia (0.1%): | |||||||||||
Financials (0.1%): | |||||||||||
CIMB Group Holdings Berhad | 1,236,809 | 1,535 | |||||||||
RHB Capital Berhad | 2,911,900 | 3,947 | |||||||||
5,482 | |||||||||||
Mexico (0.2%): | |||||||||||
Consumer Discretionary (0.0%): | |||||||||||
El Puerto de Liverpool Sab de CV | 371,876 | 1,832 | |||||||||
Consumer Staples (0.1%): | |||||||||||
Wal-Mart de Mexico SAB de CV | 964,400 | 2,685 | |||||||||
Industrials (0.1%): | |||||||||||
Grupo Aeroportuario del Centro Norte SAB de CV | 370,380 | 2,458 | |||||||||
6,975 |
See notes to financial statements.
19
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Netherlands (3.8%): | |||||||||||
Communication Services (0.7%): | |||||||||||
Koninklijke KPN NV | 6,588,093 | $ | 20,289 | ||||||||
VEON Ltd., ADR | 1,040,680 | 2,747 | |||||||||
23,036 | |||||||||||
Consumer Staples (0.1%): | |||||||||||
Koninklijke Ahold Delhaize NV | 129,766 | 3,342 | |||||||||
Energy (0.3%): | |||||||||||
Royal Dutch Shell PLC, Class B | 409,549 | 11,616 | |||||||||
SBM Offshore NV | 20,369 | 343 | |||||||||
11,959 | |||||||||||
Financials (1.3%): | |||||||||||
ABN AMRO Group NV (d) | 339,617 | 5,788 | |||||||||
Euronext NV (d) | 28,195 | 2,129 | |||||||||
ING Groep NV | 3,110,104 | 35,762 | |||||||||
NN Group NV | 73,332 | 2,813 | |||||||||
46,492 | |||||||||||
Industrials (1.3%): | |||||||||||
Aalberts NV | 205,038 | 8,679 | |||||||||
AerCap Holdings NV (b) | 57,619 | 3,561 | |||||||||
Intertrust NV (d) | 85,572 | 1,607 | |||||||||
koninklijke Volkerwessels NV | 99,174 | 2,399 | |||||||||
PostNL NV | 899,811 | 1,901 | |||||||||
Signify NV (d) | 21,702 | 647 | |||||||||
Wolters Kluwer NV | 379,645 | 27,265 | |||||||||
46,059 | |||||||||||
Information Technology (0.1%): | |||||||||||
NXP Semiconductor NV | 27,970 | 3,233 | |||||||||
Real Estate (0.0%): (c) | |||||||||||
Wereldhave NV (a) | 60,779 | 1,453 | |||||||||
135,574 | |||||||||||
New Zealand (0.1%): | |||||||||||
Health Care (0.0%): (c) | |||||||||||
Summerset Group Holdings Ltd. | 172,489 | 852 | |||||||||
Utilities (0.1%): (c) | |||||||||||
Infratil Ltd. | 450,319 | 1,417 | |||||||||
2,269 | |||||||||||
Norway (0.9%): | |||||||||||
Energy (0.3%): | |||||||||||
Aker BP ASA | 352,476 | 10,100 | |||||||||
Financials (0.5%): | |||||||||||
DNB ASA | 204,483 | 3,431 | |||||||||
SpareBank 1 SMN | 1,321,903 | 13,752 | |||||||||
17,183 |
See notes to financial statements.
20
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Information Technology (0.0%): (c) | |||||||||||
Opera Ltd., ADR (b) | 43,800 | $ | 444 | ||||||||
Materials (0.1%): | |||||||||||
Elkem ASA (d) | 213,397 | 493 | |||||||||
Norsk Hydro ASA | 1,567,480 | 5,543 | |||||||||
6,036 | |||||||||||
33,763 | |||||||||||
Poland (0.1%): | |||||||||||
Consumer Staples (0.1%): | |||||||||||
Dino Polska SA (b) (d) | 82,759 | 2,854 | |||||||||
Portugal (0.3%): | |||||||||||
Communication Services (0.1%): (c) | |||||||||||
NOS SGPS SA | 317,647 | 1,721 | |||||||||
Consumer Staples (0.1%): | |||||||||||
Sonae SGPS SA | 1,921,674 | 1,929 | |||||||||
Energy (0.1%): | |||||||||||
Galp Energia SGPS SA | 209,494 | 3,407 | |||||||||
Industrials (0.0%): (c) | |||||||||||
Mota-Engil SGPS SA | 589,023 | 1,237 | |||||||||
Materials (0.0%): (c) | |||||||||||
Altri SGPS SA | 146,023 | 908 | |||||||||
9,202 | |||||||||||
Russian Federation (0.8%): | |||||||||||
Energy (0.4%): | |||||||||||
Gazprom PJSC, ADR | 675,164 | 5,354 | |||||||||
LUKOIL PJSC, ADR | 80,450 | 7,665 | |||||||||
13,019 | |||||||||||
Financials (0.2%): | |||||||||||
Sberbank of Russia PJSC, ADR | 216,686 | 3,164 | |||||||||
Sberbank of Russia PJSC | 697,420 | 2,535 | |||||||||
5,699 | |||||||||||
Materials (0.2%): | |||||||||||
Evraz PLC | 1,773,805 | 8,493 | |||||||||
27,211 | |||||||||||
Saudi Arabia (0.1%): | |||||||||||
Health Care (0.1%): | |||||||||||
Mouwasat Medical Services Co. | 102,436 | 2,286 | |||||||||
Singapore (0.4%): | |||||||||||
Financials (0.1%): | |||||||||||
DBS Group Holdings Ltd. | 172,600 | 3,186 | |||||||||
Singapore Exchange Ltd. | 321,800 | 2,082 | |||||||||
5,268 | |||||||||||
Industrials (0.0%): (c) | |||||||||||
Frencken Group Ltd. | 1,599,200 | 1,042 |
See notes to financial statements.
21
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Real Estate (0.3%): | |||||||||||
Ascott Residence Trust | 1,050,700 | $ | 1,038 | ||||||||
Keppel DC REIT | 1,726,900 | 2,526 | |||||||||
Mapletree Commercial Trust | 3,664,500 | 6,324 | |||||||||
9,888 | |||||||||||
16,198 | |||||||||||
South Africa (0.4%): | |||||||||||
Communication Services (0.2%): | |||||||||||
MTN Group Ltd. | 404,331 | 2,548 | |||||||||
Naspers Ltd. | 20,441 | 2,914 | |||||||||
5,462 | |||||||||||
Materials (0.2%): | |||||||||||
Anglo American Platinum Ltd. | 12,260 | 1,015 | |||||||||
Gold Fields | 633,281 | 3,381 | |||||||||
Impala Platinum Holdings Ltd. (b) | 241,548 | 1,860 | |||||||||
Kumba Iron Ore Ltd. | 79,732 | 2,047 | |||||||||
8,303 | |||||||||||
13,765 | |||||||||||
Spain (2.3%): | |||||||||||
Communication Services (1.0%): | |||||||||||
Masmovil Ibercom SA (b) | 203,782 | 4,590 | |||||||||
Telefonica SA | 4,226,936 | 32,325 | |||||||||
36,915 | |||||||||||
Consumer Discretionary (0.1%): (c) | |||||||||||
CIE Automotive SA | 71,189 | 1,714 | |||||||||
Energy (0.1%): | |||||||||||
Repsol SA | 174,181 | 2,742 | |||||||||
Financials (0.7%): | |||||||||||
Banco Santander SA | 4,806,419 | 18,719 | |||||||||
CaixaBank SA | 2,379,591 | 7,011 | |||||||||
25,730 | |||||||||||
Health Care (0.1%): | |||||||||||
Almirall SA | 112,590 | 1,913 | |||||||||
Faes Farma SA | 415,251 | 2,441 | |||||||||
4,354 | |||||||||||
Industrials (0.2%): | |||||||||||
ACS, Actividades de Construccion y Servicios SA | 116,330 | 4,522 | |||||||||
Grupo Empresarial San Jose SA (b) | 103,356 | 752 | |||||||||
Sacyr SA | 608,441 | 1,652 | |||||||||
Talgo SA (b) (d) | 73,009 | 481 | |||||||||
7,407 | |||||||||||
Information Technology (0.0%): (c) | |||||||||||
Indra Sistemas SA (b) | 116,692 | 1,250 |
See notes to financial statements.
22
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Utilities (0.1%): | |||||||||||
Atlantica Yield PLC | 89,810 | $ | 2,328 | ||||||||
82,440 | |||||||||||
Sweden (2.8%): | |||||||||||
Communication Services (0.1%): | |||||||||||
Nordic Entertainment Group AB, Class B | 39,908 | 1,230 | |||||||||
Tele2 AB | 141,072 | 2,082 | |||||||||
3,312 | |||||||||||
Consumer Discretionary (0.1%): | |||||||||||
Evolution Gaming Group AB (d) | 121,155 | 3,202 | |||||||||
Consumer Staples (0.1%): | |||||||||||
Axfood AB | 102,347 | 2,205 | |||||||||
Energy (0.0%): (c) | |||||||||||
Tethys Oil AB | 148,332 | 1,159 | |||||||||
Financials (0.1%): | |||||||||||
Skandinaviska Enskilda Banken AB, Class A | 270,194 | 2,317 | |||||||||
Health Care (0.1%): | |||||||||||
Biotage AB | 151,914 | 1,964 | |||||||||
Recipharm AB | 58,056 | 844 | |||||||||
Swedish Orphan Biovitrum AB (b) | 65,502 | 1,094 | |||||||||
Vitrolife AB | 58,086 | 1,136 | |||||||||
5,038 | |||||||||||
Industrials (1.8%): | |||||||||||
AF POYRY AB | 26,285 | 569 | |||||||||
Atlas Copco AB, Class B | 1,204,569 | 38,953 | |||||||||
Epiroc AB, Class B (a) | 864,199 | 9,717 | |||||||||
Instalco AB | 53,691 | 732 | |||||||||
Intrum Justitia AB (a) | 64,725 | 1,635 | |||||||||
Inwido AB | 81,108 | 565 | |||||||||
Lifco AB (a) | 18,756 | 1,034 | |||||||||
Lindab International AB | 207,887 | 2,471 | |||||||||
Loomis AB, Class B | 50,162 | 2,096 | |||||||||
Volvo AB, Class B | 289,183 | 4,472 | |||||||||
62,244 | |||||||||||
Materials (0.1%): | |||||||||||
Boliden AB | 82,752 | 2,135 | |||||||||
SSAB AB, A Shares (a) | 226,832 | 706 | |||||||||
SSAB AB, B Shares | 196,481 | 552 | |||||||||
3,393 | |||||||||||
Real Estate (0.4%): | |||||||||||
Dios Fastigheter AB | 197,376 | 1,701 | |||||||||
Fastighets AB Balder (b) | 121,476 | 5,063 | |||||||||
Hemfosa Fastigheter AB | 314,880 | 3,841 | |||||||||
Klovern AB (a) | 511,177 | 996 |
See notes to financial statements.
23
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Kungsleden AB | 90,656 | $ | 868 | ||||||||
Nyfosa AB (b) | 331,829 | 2,506 | |||||||||
14,975 | |||||||||||
97,845 | |||||||||||
Switzerland (8.1%): | |||||||||||
Consumer Staples (2.1%): | |||||||||||
Barry Callebaut AG, Registered Shares | 1,063 | 2,138 | |||||||||
Coca-Cola HBC AG | 63,522 | 2,118 | |||||||||
Nestle SA, Registered Shares | 681,591 | 70,805 | |||||||||
75,061 | |||||||||||
Financials (1.9%): | |||||||||||
Cembra Money Bank AG | 138,723 | 14,442 | |||||||||
Helvetia Holding AG, Registered Shares | 43,255 | 5,908 | |||||||||
Julius Baer Group Ltd. | 136,560 | 6,435 | |||||||||
Partners Group Holding AG | 2,715 | 2,290 | |||||||||
Swiss Life Holding AG | 14,668 | 7,277 | |||||||||
UBS Group AG, Registered Shares | 2,443,151 | 29,592 | |||||||||
65,944 | |||||||||||
Health Care (3.5%): | |||||||||||
Galenica AG (d) | 35,806 | 2,155 | |||||||||
Lonza Group AG, Registered Shares | 6,997 | 2,378 | |||||||||
Novartis AG | 593,079 | 54,692 | |||||||||
Roche Holding AG | 211,319 | 65,171 | |||||||||
124,396 | |||||||||||
Industrials (0.2%): | |||||||||||
Adecco Group AG | 139,908 | 8,663 | |||||||||
Information Technology (0.1%): | |||||||||||
Landis+Gyr Group AG | 6,238 | 637 | |||||||||
Logitech International SA, Class R | 68,583 | 2,999 | |||||||||
3,636 | |||||||||||
Materials (0.3%): | |||||||||||
LafargeHolcim Ltd. | 146,759 | 7,567 | |||||||||
SIG Combibloc Group AG | 76,478 | 1,059 | |||||||||
Vetropack Holding AG | 284 | 787 | |||||||||
9,413 | |||||||||||
287,113 | |||||||||||
Taiwan (0.7%): | |||||||||||
Financials (0.2%): | |||||||||||
Chailease Holding Co. Ltd. | 683,000 | 3,052 | |||||||||
Shin Kong Financial Holding Co. Ltd. | 8,428,840 | 2,776 | |||||||||
5,828 |
See notes to financial statements.
24
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Information Technology (0.5%): | |||||||||||
Accton Technology Corp. | 654,000 | $ | 3,407 | ||||||||
Innolux Corp. | 8,064,897 | 2,087 | |||||||||
Radiant Opto-Electronics Corp. | 709,000 | 2,719 | |||||||||
Realtek Semiconductor Corp. | 560,000 | 4,230 | |||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 567,000 | 5,704 | |||||||||
18,147 | |||||||||||
23,975 | |||||||||||
Thailand (0.2%): | |||||||||||
Communication Services (0.1%): | |||||||||||
Advanced Info Service PCL | 287,100 | 2,014 | |||||||||
Consumer Staples (0.0%): | |||||||||||
Charoen Pokphand Foods Public Co. Ltd. | 2,102,900 | 1,913 | |||||||||
Financials (0.1%): | |||||||||||
Kasikornbank PCL | 696,242 | 3,571 | |||||||||
7,498 | |||||||||||
Turkey (0.1%): | |||||||||||
Consumer Staples (0.1%): | |||||||||||
BIM Birlesik Magazalar AS | 254,214 | 2,037 | |||||||||
United Kingdom (13.8%): | |||||||||||
Communication Services (0.4%): | |||||||||||
BT Group PLC | 2,313,192 | 5,726 | |||||||||
Cineworld Group PLC | 1,385,604 | 3,719 | |||||||||
Future PLC | 72,448 | 1,239 | |||||||||
Vodafone Group PLC | 998,558 | 1,977 | |||||||||
12,661 | |||||||||||
Consumer Discretionary (1.8%): | |||||||||||
Barratt Developments PLC | 342,971 | 2,956 | |||||||||
Card Factory PLC | 501,749 | 1,026 | |||||||||
Countryside Properties PLC (d) | 370,611 | 1,895 | |||||||||
Crest Nicholson Holdings PLC | 243,453 | 1,211 | |||||||||
Dunelm Group PLC | 309,896 | 3,417 | |||||||||
Fiat Chrysler Automobiles NV | 140,348 | 2,065 | |||||||||
Games Workshop Group PLC | 56,261 | 4,163 | |||||||||
Gamesys Group PLC (b) | 71,912 | 656 | |||||||||
Greggs PLC | 111,991 | 3,013 | |||||||||
JD Sports Fashion PLC | 439,678 | 4,318 | |||||||||
Kingfisher PLC | 1,779,633 | 4,824 | |||||||||
Marks & Spencer Group PLC | 1,197,846 | 3,009 | |||||||||
Mitchells & Butlers PLC (b) | 343,711 | 1,992 | |||||||||
Moneysupermarket.com Group PLC | 343,957 | 1,514 | |||||||||
Next PLC | 232,486 | 20,310 | |||||||||
Pets at Home Group PLC | 807,280 | 2,623 | |||||||||
Redrow PLC | 329,198 | 2,812 | |||||||||
SSP Group PLC | 136,931 | 1,192 | |||||||||
62,996 |
See notes to financial statements.
25
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Consumer Staples (2.9%): | |||||||||||
British American Tobacco PLC | 86,449 | $ | 3,421 | ||||||||
Britvic PLC | 1,669,346 | 20,891 | |||||||||
Cranswick PLC | 33,620 | 1,360 | |||||||||
Diageo PLC | 801,061 | 32,723 | |||||||||
J Sainsbury PLC | 2,199,156 | 6,088 | |||||||||
Tate & Lyle PLC | 1,166,234 | 11,025 | |||||||||
Tesco PLC | 1,557,389 | 4,618 | |||||||||
Unilever PLC | 361,818 | 21,430 | |||||||||
101,556 | |||||||||||
Energy (1.9%): | |||||||||||
BP PLC | 5,133,761 | 31,971 | |||||||||
Cairn Energy PLC (b) | 771,001 | 1,797 | |||||||||
Genel Energy PLC | 523,909 | 1,293 | |||||||||
Royal Dutch Shell PLC, Class A | 1,127,292 | 32,289 | |||||||||
67,350 | |||||||||||
Financials (2.7%): | |||||||||||
3i Group PLC | 508,961 | 7,045 | |||||||||
Barclays PLC | 974,981 | 2,154 | |||||||||
Close Brothers Group PLC | 497,943 | 9,567 | |||||||||
HSBC Holdings PLC | 4,499,438 | 33,516 | |||||||||
Integrafin Holdings PLC | 143,604 | 742 | |||||||||
Intermediate Capital Group PLC | 142,058 | 2,808 | |||||||||
Investec PLC | 286,232 | 1,622 | |||||||||
Legal & General Group PLC | 7,371,222 | 26,746 | |||||||||
Lloyds Banking Group PLC | 3,041,885 | 2,398 | |||||||||
Man Group PLC | 1,002,730 | 1,965 | |||||||||
Standard Chartered PLC | 856,237 | 7,702 | |||||||||
TP ICAP PLC | 146,397 | 731 | |||||||||
96,996 | |||||||||||
Health Care (0.7%): | |||||||||||
AstraZeneca PLC | 34,505 | 3,333 | |||||||||
CVS Group PLC | 100,854 | 1,414 | |||||||||
GlaxoSmithKline PLC | 195,707 | 4,445 | |||||||||
Hikma Pharmaceuticals PLC | 126,195 | 3,123 | |||||||||
Smith & Nephew PLC | 646,048 | 14,418 | |||||||||
26,733 | |||||||||||
Industrials (1.3%): | |||||||||||
Aggreko PLC | 278,738 | 2,988 | |||||||||
Ashtead Group PLC | 202,777 | 6,155 | |||||||||
Babcock International Group PLC | 443,603 | 3,385 | |||||||||
CNH Industrial NV | 318,119 | 3,399 | |||||||||
Dart Group PLC | 190,194 | 3,647 | |||||||||
Firstgroup PLC (b) | 1,147,786 | 1,787 | |||||||||
Howden Joinery Group PLC | 123,159 | 1,004 | |||||||||
National Express Group PLC | 382,942 | 2,294 | |||||||||
Qinetiq Group PLC | 151,936 | 656 | |||||||||
RELX PLC | 685,412 | 16,590 |
See notes to financial statements.
26
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
The Go-Ahead Group PLC | 57,331 | $ | 1,625 | ||||||||
Vesuvius PLC | 258,421 | 1,516 | |||||||||
45,046 | |||||||||||
Information Technology (0.3%): | |||||||||||
Avast PLC (d) | 1,081,824 | 6,259 | |||||||||
Computacenter PLC | 68,034 | 1,328 | |||||||||
Dialog Semiconductor PLC (b) | 37,282 | 1,895 | |||||||||
Softcat PLC | 172,313 | 2,508 | |||||||||
11,990 | |||||||||||
Materials (1.5%): | |||||||||||
Anglo American PLC | 526,596 | 13,777 | |||||||||
Croda International PLC | 169,407 | 10,905 | |||||||||
Forterra PLC (d) | 119,758 | 452 | |||||||||
Hill & Smith Holdings PLC | 64,184 | 1,126 | |||||||||
Rio Tinto PLC | 477,212 | 25,975 | |||||||||
52,235 | |||||||||||
Real Estate (0.2%): | |||||||||||
Grainger PLC | 438,197 | 1,606 | |||||||||
Land Securities Group PLC | 264,307 | 3,274 | |||||||||
Londonmetric Property PLC | 364,201 | 1,095 | |||||||||
The British Land Co. PLC | 394,713 | 2,937 | |||||||||
8,912 | |||||||||||
Utilities (0.1%): | |||||||||||
Centrica PLC | 3,170,475 | 3,289 | |||||||||
489,764 | |||||||||||
Total Common Stocks (Cost $3,122,429) | 3,461,280 | ||||||||||
Preferred Stocks (0.4%) | |||||||||||
Brazil (0.1%): | |||||||||||
Energy (0.1%): | |||||||||||
Petroleo Brasileiro SA | 397,400 | 2,737 | |||||||||
Germany (0.3%): | |||||||||||
Consumer Discretionary (0.3%): | |||||||||||
Schaeffler AG | 284,237 | 3,102 | |||||||||
Volkswagen AG | 39,308 | 7,583 | |||||||||
10,685 | |||||||||||
Total Preferred Stocks (Cost $13,337) | 13,422 | ||||||||||
Rights (0.0%) | |||||||||||
Australia (0.0%): (c) | |||||||||||
Information Technology (0.0%): | |||||||||||
EML Payments Ltd. Expires 12/02/19 @ $3.55 (b) (f) (e) | 114,502 | 91 | |||||||||
Materials (0.0%): | |||||||||||
Saracen Mineral Holdings Ltd. Expires 12/09/19 @ $2.95 (b) (e) (h) | 188,163 | — | |||||||||
Total Rights (Cost $—) | 91 |
See notes to financial statements.
27
USAA Mutual Funds Trust USAA International Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Exchange-Traded Funds (0.4%) | |||||||||||
United States (0.4%): | |||||||||||
iShares Core MSCI EAFE ETF | 4,747 | $ | 303 | ||||||||
iShares Core MSCI Emerging Markets ETF | 12,916 | 661 | |||||||||
iShares MSCI EAFE ETF | 178,768 | 12,188 | |||||||||
13,152 | |||||||||||
Total Exchange-Traded Funds (Cost $12,527) | 13,152 | ||||||||||
Collateral for Securities Loaned^ (2.1%) | |||||||||||
United States (2.1%): | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (g) | 74,082,764 | 74,083 | |||||||||
Total Collateral for Securities Loaned (Cost $74,083) | 74,083 | ||||||||||
Total Investments (Cost $3,222,376) — 100.4% | 3,562,028 | ||||||||||
Liabilities in excess of other assets — (0.4)% | (14,195 | ) | |||||||||
NET ASSETS — 100.00% | $ | 3,547,833 |
^ Purchased with cash collateral from securities on loan.
(a) All or a portion of this security is on loan.
(b) Non-income producing security.
(c) Amount represents less than 0.05% of net assets.
(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 November 30, 2019, the fair value of these securities was $36,592 (thousands) and amounted to 1.0% of net assets.
(e) Security was fair valued based upon procedures approved by the Board of Trustees and represents 0.1% of the Fund's net assets as of November 30, 2019.
(f) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were less than 0.05% of the Fund's net assets.
(g) Rate disclosed is the daily yield on November 30, 2019.
(h) This security is classified as Level 3 within the fair value hierarchy. (See Note 2 in the Notes to Financial Statements)
ADR — American Depositary Receipt
ETF — Exchange-Traded Fund
PCL — Public Company Limited
PLC — Public Limited Company
REIT — Real Estate Investment Trust
See notes to financial statements.
28
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA International Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $3,222,376) | $ | 3,562,028 | (a) | ||||
Foreign currency, at value (Cost $3,004) | 3,040 | ||||||
Cash and cash equivalents | 39,591 | ||||||
Receivables: | |||||||
Interest and dividends | 9,464 | ||||||
Capital shares issued | 4,457 | ||||||
Investments sold | 99 | ||||||
Reclaims | 8,496 | ||||||
From Adviser | 11 | ||||||
Prepaid expenses | 16 | ||||||
Total assets | 3,627,202 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 74,083 | ||||||
Capital shares redeemed | 2,191 | ||||||
Accrued foreign capital gains taxes | 34 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 2,207 | ||||||
Administration fees | 367 | ||||||
Custodian fees | 137 | ||||||
Transfer agent fees | 238 | ||||||
Compliance fees | — | (b) | |||||
12b-1 fees | 1 | ||||||
Other accrued expenses | 111 | ||||||
Total liabilities | 79,369 | ||||||
Net Assets: | |||||||
Capital | 2,488,290 | ||||||
Total distributable earnings/(loss) | 1,059,543 | ||||||
Net assets | $ | 3,547,833 | |||||
Net Assets | |||||||
Fund Shares | $ | 1,771,080 | |||||
Institutional Shares | 1,761,716 | ||||||
Adviser Shares | 9,244 | ||||||
R6 Shares | 5,793 | ||||||
Total | $ | 3,547,833 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 56,850 | ||||||
Institutional Shares | 56,700 | ||||||
Adviser Shares | 298 | ||||||
R6 Shares | 185 | ||||||
Total | 114,033 | ||||||
Net asset value, offering and redemption price per share: (c) | |||||||
Fund Shares | $ | 31.15 | |||||
Institutional Shares | $ | 31.07 | |||||
Adviser Shares | $ | 30.98 | |||||
R6 Shares | $ | 31.14 |
(a) Includes $69,352 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.
29
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA International Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 49,533 | |||||
Interest | 996 | ||||||
Securities lending (net of fees) | 312 | ||||||
Foreign tax withholding | (4,601 | ) | |||||
Total income | 46,240 | ||||||
Expenses: | |||||||
Investment advisory fees | 13,951 | ||||||
Administration fees — Fund Shares | 1,303 | ||||||
Administration fees — Institutional Shares | 967 | ||||||
Administration fees — Adviser Shares | 6 | ||||||
Administration fees — R6 Shares | 1 | ||||||
12b-1 fees — Adviser Shares | 11 | ||||||
Custodian fees | 259 | ||||||
Transfer agent fees — Fund Shares | 1,026 | ||||||
Transfer agent fees — Institutional Shares | 967 | ||||||
Transfer agent fees — Adviser Shares | 1 | ||||||
Transfer agent fees — R6 Shares | — | (a) | |||||
Trustees' fees | 20 | ||||||
Compliance fees | 9 | ||||||
Legal and audit fees | 101 | ||||||
State registration and filing fees | 47 | ||||||
Interest expense on Interfund lending | 1 | ||||||
Sub-Administration fees | 26 | ||||||
Other expenses | 20 | ||||||
Total expenses | 18,716 | ||||||
Expenses waived/reimbursed by Adviser | (8 | ) | |||||
Expenses waived/reimbursed by AMCO | (5 | ) | |||||
Net expenses | 18,703 | ||||||
Net Investment Income (Loss) | 27,537 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities and foreign currency translations | 653,456 | ||||||
Foreign taxes on realized gains | (3,624 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities and foreign currency translations | (384,992 | ) | |||||
Net change in accrued foreign taxes on unrealized gains | 2,844 | ||||||
Net realized/unrealized gains (losses) on investments | 267,684 | ||||||
Change in net assets resulting from operations | $ | 295,221 |
(a) Rounds to less than $1.
See notes to financial statements.
30
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA International Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 27,537 | $ | 69,481 | |||||||
Net realized gains (losses) from investments | 649,832 | 72,035 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | (382,148 | ) | (361,351 | ) | |||||||
Change in net assets resulting from operations | 295,221 | (219,835 | ) | ||||||||
Distributions to Shareholders: | |||||||||||
Fund Shares | — | (127,420 | ) | ||||||||
Institutional Shares | — | (153,261 | ) | ||||||||
Adviser Shares | — | (536 | ) | ||||||||
R6 Shares | ��� | (364 | ) | ||||||||
Change in net assets resulting from distributions to shareholders | — | (281,581 | ) | ||||||||
Change in net assets resulting from capital transactions | (430,120 | ) | (49,254 | ) | |||||||
Change in net assets | (134,899 | ) | (550,670 | ) | |||||||
Net Assets: | |||||||||||
Beginning of period | 3,682,732 | 4,233,402 | |||||||||
End of period | $ | 3,547,833 | $ | 3,682,732 | |||||||
Capital Transactions: | |||||||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 78,006 | $ | 201,762 | |||||||
Distributions reinvested | — | 125,125 | |||||||||
Cost of shares redeemed | (139,691 | ) | (286,917 | ) | |||||||
Total Fund Shares | $ | (61,685 | ) | $ | 39,970 | ||||||
Institutional Shares | |||||||||||
Proceeds from shares issued | $ | 73,101 | $ | 212,013 | |||||||
Distributions reinvested | — | 153,184 | |||||||||
Cost of shares redeemed | (443,285 | ) | (460,053 | ) | |||||||
Total Institutional Shares | $ | (370,184 | ) | $ | (94,856 | ) | |||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 1,036 | $ | 740 | |||||||
Distributions reinvested | — | 6 | |||||||||
Cost of shares redeemed | (195 | ) | (114 | ) | |||||||
Total Adviser Shares | $ | 841 | $ | 632 | |||||||
R6 Shares | |||||||||||
Proceeds from shares issued | $ | 930 | $ | 5,000 | |||||||
Cost of shares redeemed | (22 | ) | — | ||||||||
Total Class R6 Shares | $ | 908 | $ | 5,000 | |||||||
Change in net assets resulting from capital transactions | $ | (430,120 | ) | $ | (49,254 | ) |
See notes to financial statements.
31
USAA Mutual Funds Trust | Statements of Changes in Net Assets — continued |
(Amounts in Thousands)
USAA International Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
Share Transactions: | |||||||||||
Fund Shares | |||||||||||
Issued | 2,609 | 6,664 | |||||||||
Reinvested | — | 4,674 | |||||||||
Redeemed | (4,673 | ) | (9,590 | ) | |||||||
Total Fund Shares | (2,064 | ) | 1,748 | ||||||||
Institutional Shares | |||||||||||
Issued | 2,476 | 7,022 | |||||||||
Reinvested | — | 5,739 | |||||||||
Redeemed | (14,970 | ) | (15,361 | ) | |||||||
Total Institutional Shares | (12,494 | ) | (2,600 | ) | |||||||
Adviser Shares | |||||||||||
Issued | 35 | 25 | |||||||||
Reinvested | — | — | (a) | ||||||||
Redeemed | (7 | ) | (3 | ) | |||||||
Total Adviser Shares | 28 | 22 | |||||||||
R6 Shares | |||||||||||
Issued | 30 | 156 | |||||||||
Redeemed | (1 | ) | — | ||||||||
Total Class R6 Shares | 29 | 156 | |||||||||
Change in Shares | (14,501 | ) | (674 | ) |
(a) Rounds to less than 1.
See notes to financial statements.
32
This page is intentionally left blank.
33
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 | Total Distributions | |||||||||||||||||||||||||
USAA International Fund | |||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 28.70 | 0.22 | (e) | 2.23 | 2.45 | — | — | — | ||||||||||||||||||||||
Year Ended May 31, 2019 | $ | 32.82 | 0.53 | (2.41 | ) | (1.88 | ) | (0.44 | ) | (1.80 | ) | (2.24 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 31.16 | 0.60 | 2.08 | 2.68 | (0.63 | ) | (0.39 | ) | (1.02 | ) | ||||||||||||||||||||
Year Ended May 31, 2017 | $ | 26.40 | 0.42 | 4.76 | 5.18 | (0.42 | ) | — | (0.42 | ) | |||||||||||||||||||||
Year Ended May 31, 2016 | $ | 30.90 | 0.35 | (e) | (3.34 | ) | (2.99 | ) | (0.37 | ) | (1.14 | ) | (1.51 | ) | |||||||||||||||||
Year Ended May 31, 2015 | $ | 31.25 | 0.38 | 0.16 | 0.54 | (0.50 | ) | (0.39 | ) | (0.89 | ) |
* 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 5 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 May 31 fiscal years ended 2019, 2018, 2017, and 2016. 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) Reflects increased trading activity due to changes in subadviser(s).
See notes to financial statements.
34
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 International Fund | |||||||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 31.15 | 8.46 | % | 1.06 | % | 1.44 | % | 1.06 | % | $ | 1,771,080 | 85 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 28.70 | (5.14 | )% | 1.08 | % | 1.76 | % | 1.08 | % | $ | 1,690,782 | 30 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 32.82 | 8.61 | % | 1.08 | % | 1.58 | % | 1.08 | % | $ | 1,876,020 | 36 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 31.16 | 19.87 | % | 1.11 | % | 1.33 | % | 1.11 | % | $ | 1,696,372 | 40 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 26.40 | (9.75 | )% | 1.13 | % | 1.27 | % | 1.13 | % | $ | 1,430,667 | 62 | %(f) | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 30.90 | 1.97 | % | 1.12 | % | 1.42 | % | 1.12 | % | $ | 1,958,773 | 17 | % |
(continues on next page)
See notes to financial statements.
35
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 | Total Distributions | |||||||||||||||||||||||||
USAA International Fund | |||||||||||||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 28.61 | 0.23 | (e) | 2.23 | 2.46 | — | — | — | ||||||||||||||||||||||
Year Ended May 31, 2019 | $ | 32.72 | 0.56 | (2.41 | ) | (1.85 | ) | (0.46 | ) | (1.80 | ) | (2.26 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 31.07 | 0.64 | 2.06 | 2.70 | (0.66 | ) | (0.39 | ) | (1.05 | ) | ||||||||||||||||||||
Year Ended May 31, 2017 | $ | 26.34 | 0.45 | 4.74 | 5.19 | (0.46 | ) | — | (0.46 | ) | |||||||||||||||||||||
Year Ended May 31, 2016 | $ | 30.82 | 0.47 | (e) | (3.42 | ) | (2.95 | ) | (0.39 | ) | (1.14 | ) | (1.53 | ) | |||||||||||||||||
Year Ended May 31, 2015 | $ | 31.17 | 0.46 | 0.12 | 0.58 | (0.54 | ) | (0.39 | ) | (0.93 | ) |
* 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 5 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 May 31 fiscal years ended 2019, 2018, 2017, and 2016. 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) Reflects increased trading activity due to changes in subadviser(s).
See notes to financial statements.
36
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 International Fund | |||||||||||||||||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 31.07 | 8.52 | % | 0.98 | % | 1.55 | % | 0.98 | % | $ | 1,761,716 | 85 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 28.61 | (5.06 | )% | 1.00 | % | 1.81 | % | 1.00 | % | $ | 1,979,758 | 30 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 32.72 | 8.68 | % | 1.00 | % | 1.62 | % | 1.00 | % | $ | 2,349,281 | 36 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 31.07 | 19.97 | % | 1.00 | % | 1.43 | % | 1.00 | % | $ | 2,308,470 | 40 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 26.34 | (9.61 | )% | 1.00 | % | 1.74 | % | 1.00 | % | $ | 1,996,349 | 62 | %(f) | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 30.82 | 2.11 | % | 0.99 | % | 1.53 | % | 0.99 | % | $ | 1,735,756 | 17 | % |
(continues on next page)
See notes to financial statements.
37
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 | Total Distributions | |||||||||||||||||||||||||
USAA International Fund | |||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 28.58 | 0.17 | (e) | 2.23 | 2.40 | — | — | — | ||||||||||||||||||||||
Year Ended May 31, 2019 | $ | 32.67 | 0.47 | (2.41 | ) | (1.94 | ) | (0.35 | ) | (1.80 | ) | (2.15 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 31.04 | 0.53 | 2.04 | 2.57 | (0.55 | ) | (0.39 | ) | (0.94 | ) | ||||||||||||||||||||
Year Ended May 31, 2017 | $ | 26.31 | 0.35 | 4.74 | 5.09 | (0.36 | ) | — | (0.36 | ) | |||||||||||||||||||||
Year Ended May 31, 2016 | $ | 30.77 | 0.31 | (3.35 | ) | (3.04 | ) | (0.28 | ) | (1.14 | ) | (1.42 | ) | ||||||||||||||||||
Year Ended May 31, 2015 | $ | 31.13 | 0.32 | 0.12 | 0.44 | (0.41 | ) | (0.39 | ) | (0.80 | ) | ||||||||||||||||||||
R6 Shares | |||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 28.66 | 0.24 | (e) | 2.24 | 2.48 | — | — | — | ||||||||||||||||||||||
August 17, 2018(j) through May 31, 2019 | $ | 32.01 | 0.52 | (e) | (1.54 | ) | (1.02 | ) | (0.53 | ) | (1.80 | ) | (2.33 | ) |
* 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 5 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 May 31 fiscal years ended 2019, 2018, 2017, and 2016. 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.
See notes to financial statements.
38
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 International Fund | |||||||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 30.98 | 8.32 | % | 1.35 | % | 1.14 | % | 1.43 | % | $ | 9,244 | 85 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 28.58 | (5.39 | )% | 1.35 | % | 1.52 | % | 1.41 | % | $ | 7,715 | 30 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 32.67 | 8.29 | % | 1.35 | % | 1.29 | % | 1.42 | % | $ | 8,101 | 36 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 31.04 | 19.58 | % | 1.35 | % | 1.08 | % | 1.51 | % | $ | 7,540 | 40 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | (f) | $ | 26.31 | (9.94 | )% | 1.37 | %(g) | 1.14 | % | 1.46 | % | $ | 6,362 | 62 | %(h) | |||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 30.77 | 1.62 | % | 1.44 | %(i) | 1.07 | % | 1.51 | % | $ | 7,481 | 17 | % | ||||||||||||||||||||
R6 Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 31.14 | 8.61 | % | 0.85 | % | 1.60 | % | 1.25 | % | $ | 5,793 | 85 | % | ||||||||||||||||||||
August 17, 2018(j) through May 31, 2019 | — | $ | 28.66 | (2.55 | )% | 0.85 | % | 2.19 | % | 2.03 | % | $ | 4,477 | 30 | % |
(e) Per share net investment income (loss) has been calculated using the average daily shares method.
(f) Rounds to less than $0.005 per share.
(g) Prior to October 1, 2015, AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.40% of the Adviser Shares' average daily net assets
(h) Reflects increased trading activity due to changes in subadviser(s).
(i) Prior to October 1, 2014, AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.55% of the Adviser Shares' average daily net assets
(j) Commencement of operations.
See notes to financial statements.
39
USAA Mutual Funds Trust | Notes to Financial Statements November 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 International Fund (the "Fund"). The Fund offers four classes of shares: Fund Shares, Institutional Shares, Adviser Shares and R6 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 July 1, 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
40
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
• 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)
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 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.
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 November 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 | $ | 2,409,822 | $ | 1,051,458 | $ | — | $ | 3,461,280 | |||||||||||
Preferred Stocks | 10,320 | 3,102 | — | 13,422 | |||||||||||||||
Rights | — | 91 | — | 91 | |||||||||||||||
Exchange-Traded Funds | 13,152 | — | — | 13,152 | |||||||||||||||
Collateral for Securities Loaned | 74,083 | — | — | 74,083 | |||||||||||||||
Total | $ | 2,507,377 | $ | 1,054,651 | $ | — | $ | 3,562,028 |
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.
41
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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
42
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 69,352 | $ | 1 | $ | 74,083 |
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.
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 May 31.
43
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||
Purchases | Sales | ||||||
$ | 3,061,647 | $ | 3,459,849 |
There were no purchases and sales of U.S. government securities during the six months ended November 30, 2019.
4. 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 usaa.com. As of November 30, 2019, certain USAA fund-of funds owned total outstanding shares of the Fund:
Affiliated USAA Fund | Ownership % | ||||||
Cornerstone Conservative Fund | 0.4 | ||||||
Cornerstone Equity Fund | 1.8 | ||||||
Target Retirement Income Fund | 0.2 | ||||||
Target Retirement 2030 Fund | 0.5 | ||||||
Target Retirement 2040 Fund | 1.5 | ||||||
Target Retirement 2050 Fund | 1.4 | ||||||
Target Retirement 2060 Fund | 0.2 |
44
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.75% of average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $11,482 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 0.75% 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. Only performance beginning as of July 1, 2019, and thereafter will be utilized in calculating future performance adjustments.
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 International Funds Index. The Lipper International Funds Index tracks the total return performance of funds within the Lipper International Funds category.
The performance period for each share class consists of the current month plus the previous 35 months (or the number of months beginning July 1, 2019, if fewer). 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) | ||||||
+/- 100 to 400 | +/- 4 | ||||||
+/- 401 to 700 | +/- 5 | ||||||
+/- 701 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 International Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period June 1, 2019 through June 30, 2019, there were no performance adjustments for Fund Shares, Institutional Shares, Adviser Shares, and R6 Shares, respectively. Base fees incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $2,469 thousand and reflected on the Statement of Operations as Investment Advisory fees.
45
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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.
Effective July 1, 2019, VCM entered into Investment Subadvisory Agreements with Lazard Asset Management LLC ("Lazard") and Wellington Management Company LLP ("Wellington Management") and terminated an Investment Subadvisory Agreement with MFS Investment Management ("MFS"). Lazard and Wellington Management each directed the investment and reinvestment of a portion of the Fund's assets (as allocated from time to time by VCM). These arrangements provide for monthly fees that are paid by VCM. VCM (not the Fund) pays the subadviser fees.
Prior to July 1, 2019, AMCO entered into Investment Subadvisory Agreements with Lazard, MFS, and Wellington Management under which each direct the investment and reinvestment of a portion of the Fund's assets (as allocated from time to time by the AMCO). These arrangements provided for monthly fees that were paid by AMCO. AMCO (not the Fund) paid the subadviser fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under the 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, 0.10% of average daily net assets of the Institutional Shares, and 0.05% of average daily net assets of the R6 Shares. Amounts incurred from July 1, 2019 through November 30, 2019 are $1,088, $800, $5, and $1 thousand for Fund Shares, Institutional Shares, Adviser Shares, and R6 Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
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, 0.10% of average daily net assets of the Institutional Shares, and 0.05% of average daily net assets of the R6 Shares. Amounts incurred from June 1, 2019 through June 30, 2019 are $215, $167, $1, and less than $1 thousand for Fund Shares, Institutional Shares, Adviser Shares, and R6 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Fund under the Fund Administration, Servicing, and Accounting Agreement.
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.
46
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 $23 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 and R6 Shares are paid monthly based on a fee accrued daily at an annualized rate of 0.10% of the Institutional Shares' and 0.01% of the R6 Shares' average daily net assets, plus out-of pocket expenses. Amounts incurred and paid to VCTA from July 1, 2019 through November 30, 2019 was $853, $800, $1, and less than $1 thousand for the Fund Shares, Institutional Shares, Adviser Shares, and R6 Shares, respectively. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $173, $167, less than $1, and less than $1 thousand for the Fund Shares, Institutional Shares, Adviser Shares, and R6 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 November 30, 2019 are $9 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 June 1, 2019 through June 30, 2019 were $2 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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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.
47
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Effective July 1, 2019 through November 30, 2019, the expense limit (excluding voluntary waivers) is 1.06%, 0.99%, 1.35%, and 0.85% for the Fund Shares, Institutional Shares, Adviser Shares, and R6 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 November 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, November 30, 2019 if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||||||
$ | 8 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of the Adviser Shares and R6 Shares to 1.35% and 0.85%, respectively, of their average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Adviser Shares and R6 Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, these expense limits are no longer in effect. 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.
6. Risks:
The Fund may be subject to other risks in addition to these identified risks.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, the Fund invests primarily in foreign securities. There is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
The Fund's performance could be closely tied to the market, currency, economic, political, regulatory, geopolitical, or other conditions and developments in the countries or regions in which the Fund invests. As such, the Fund's performance could be more volatile than the performance of more geographically diversified funds.
The Fund may invest in securities of companies of any market capitalization and is subject to mid- and small-cap company risk, which is the greater risk of investing in smaller, less well-known companies, as opposed to investing in established companies with proven track records. Mid- and small-cap companies also may have limited product lines, markets, or financial resources. Securities of such
48
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
companies may be less liquid and more volatile than securities of larger companies or the market in general and, therefore, may involve greater risk than investing in the securities of larger companies.
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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $8 thousand.
The average borrowing for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Amount Outstanding at November 30, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | |||||||||||||||||||
$ | — | $ | 10,567 | 6 | 2.90 | % | $ | 21,500 |
* For the year ended November 30, 2019, based on the number of days borrowings were outstanding.
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. 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 for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Borrower or Lender | Amount Outstanding at November, 2019 | Average Borrowing* | Days Borrowing Outstanding | Average Interest Rate* | Maximum Borrowing During the Period | ||||||||||||||||||||||
Borrower | $ | — | $ | 2,507 | 9 | 2.32 | % | $ | 3,396 |
* For the six months ended November 30, 2019, based on the number of days borrowings were outstanding.
49
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
8. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income annually. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
USAA International Fund | $ | 87,922 | $ | 193,659 | $ | 281,581 |
As of the most recent tax year ended May 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) | ||||||||||||||||
USAA International Fund | $ | 59,228 | $ | 17,759 | $ | 687,335 | $ | 764,322 |
** 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 passive foreign investment company adjustments.
As of the most recent tax year ended May 31, 2019, the Fund had no net capital loss carryforwards.
50
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||||||
Fund Shares | $ | 1,000.00 | $ | 1,084.60 | $ | 1,019.70 | $ | 5.52 | $ | 5.35 | 1.06 | % | |||||||||||||||
Institutional Shares | 1,000.00 | 1,085.20 | 1,020.10 | 5.11 | 4.95 | 0.98 | % | ||||||||||||||||||||
Adviser Shares | 1,000.00 | 1,083.20 | 1,018.25 | 7.03 | 6.81 | 1.35 | % | ||||||||||||||||||||
R6 Shares | 1,000.00 | 1,086.10 | 1,020.75 | 4.43 | 4.29 | 0.85 | % |
* 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).
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.
51
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 | (800) 235-8396 |
23410-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Managed Allocation Fund
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 | 4 | ||||||
Statement of Operations | 5 | ||||||
Statements of Changes in Net Assets | 6 | ||||||
Financial Highlights | 8 | ||||||
Notes to Financial Statements | 10 | ||||||
Supplemental Information | 18 | ||||||
Expense Examples | 18 | ||||||
Proxy Voting and Portfolio Holdings Information | 18 | ||||||
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 Managed Allocation Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek to maximize total return, consisting primarily of capital appreciation.
Asset Allocation:
11/30/19
(% of Net Assets)
Percentages are of net assets of the Fund and may not equal 100%.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Managed Allocation Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Exchange-Traded Funds (100.0%) (a) | |||||||||||
iShares 7-10 Year Treasury Bond ETF | 1,635,852 | $ | 182,512 | ||||||||
iShares Core S&P 500 ETF | 588,380 | 185,963 | |||||||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 1,441,475 | 184,466 | |||||||||
iShares JP Morgan USD Emerging Markets Bond ETF | 1,620,386 | 181,678 | |||||||||
Total Exchange-Traded Funds (Cost $701,805) | 734,619 | ||||||||||
Total Investments (Cost $701,805) — 100.0% | 734,619 | ||||||||||
Liabilities in excess of other assets — 0.0% | (235 | ) | |||||||||
NET ASSETS — 100.00% | $ | 734,384 |
(a) Represents investments greater than 25% of the Fund's net assets. Performance of the Fund may be adversely impacted by concentrated investments in securities. The financial statements and portfolio holdings for these securities can be found at www.sec.gov
ETF — Exchange-Traded Fund
See notes to financial statements.
3
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Managed Allocation Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $701,805) | $ | 734,619 | |||||
Cash and cash equivalents | 646 | ||||||
Receivables: | |||||||
Interest and dividends | 2 | ||||||
Capital shares issued | 97 | ||||||
From Adviser | 97 | ||||||
Prepaid expenses | 10 | ||||||
Total assets | 735,471 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Capital shares redeemed | 615 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 363 | ||||||
Administration fees | 30 | ||||||
Custodian fees | 17 | ||||||
Transfer agent fees | 30 | ||||||
Compliance fees | — | (a) | |||||
Other accrued expenses | 32 | ||||||
Total liabilities | 1,087 | ||||||
Net Assets: | |||||||
Capital | 716,418 | ||||||
Total distributable earnings/(loss) | 17,966 | ||||||
Net assets | $ | 734,384 | |||||
Net Assets | |||||||
Shares (unlimited number of shares authorized with no par value): | 61,493 | ||||||
Net asset value, offering and redemption price per share: (b) | $ | 11.94 |
(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.
4
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Managed Allocation Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 11,362 | |||||
Interest | 38 | ||||||
Securities lending (net of fees) | 36 | ||||||
Total income | 11,436 | ||||||
Expenses: | |||||||
Investment advisory fees | 2,241 | ||||||
Administration fees | 187 | ||||||
Custodian fees | 25 | ||||||
Transfer agent fees | 187 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 2 | ||||||
Legal and audit fees | 36 | ||||||
State registration and filing fees | 14 | ||||||
Interest expense on Interfund lending | — | (a) | |||||
Sub-Administration fees | 7 | ||||||
Other expenses | 54 | ||||||
Total expenses | 2,773 | ||||||
Expenses waived/reimbursed by Adviser | (500 | ) | |||||
Net expenses | 2,273 | ||||||
Net Investment Income (Loss) | 9,163 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities | (5,174 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities | 50,206 | ||||||
Net realized/unrealized gains (losses) on investments | 45,032 | ||||||
Change in net assets resulting from operations | $ | 54,195 |
(a) Rounds to less than $1.
See notes to financial statements.
5
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Managed Allocation Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 9,163 | $ | 13,137 | |||||||
Net realized gains (losses) from investments | (5,174 | ) | (17,330 | ) | |||||||
Net change in unrealized appreciation (depreciation) on investments | 50,206 | (43,917 | ) | ||||||||
Change in net assets resulting from operations | 54,195 | (48,110 | ) | ||||||||
Change in net assets resulting from distributions to shareholders | — | (12,583 | ) | ||||||||
Change in net assets resulting from capital transactions | (44,330 | ) | (23,297 | ) | |||||||
Change in net assets | 9,865 | (83,990 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 724,519 | 808,509 | |||||||||
End of period | $ | 734,384 | $ | 724,519 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 23,143 | $ | 74,923 | |||||||
Distributions reinvested | — | 12,583 | |||||||||
Cost of shares redeemed | (67,473 | ) | (110,803 | ) | |||||||
Change in net assets resulting from capital transactions | $ | (44,330 | ) | $ | (23,297 | ) | |||||
Share Transactions: | |||||||||||
Issued | 1,989 | 6,501 | |||||||||
Reinvested | — | 1,192 | |||||||||
Redeemed | (5,761 | ) | (9,730 | ) | |||||||
Change in Shares | (3,772 | ) | (2,037 | ) |
See notes to financial statements.
6
This page is intentionally left blank.
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 Managed Allocation Fund | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 11.10 | 0.14 | (c) | 0.70 | 0.84 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 12.01 | 0.20 | (0.92 | ) | (0.72 | ) | (0.11 | ) | (0.08 | ) | ||||||||||||||||
Year Ended May 31, 2018 | $ | 11.61 | 0.23 | 0.46 | 0.69 | (0.29 | ) | — | |||||||||||||||||||
Year Ended May 31, 2017 | $ | 10.90 | 0.24 | 0.72 | 0.96 | (0.25 | ) | — | |||||||||||||||||||
Year Ended May 31, 2016 | $ | 11.99 | 0.24 | (c) | (0.97 | ) | (0.73 | ) | (0.21 | ) | (0.15 | ) | |||||||||||||||
Year Ended May 31, 2015 | $ | 11.99 | 0.23 | — | (g) | 0.23 | (0.23 | ) | — |
* 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) Reflects an increase in trading activity due to asset allocation shifts.
(e) Reflects a return to normal trading levels after a prior year transition or allocation shift.
(f) Reflects increased trading activity due to large shareholder redemptions.
(g) Amount is less than $0.005 per share.
(h) Reflects overall decrease in purchases and sales of securities.
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 Managed Allocation Fund | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 11.94 | 7.57 | % | 0.61 | % | 2.46 | % | 0.74 | % | $ | 734,384 | 50 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | (0.19 | ) | $ | 11.10 | (5.92 | )% | 0.75 | % | 1.72 | % | 0.75 | % | $ | 724,519 | 156 | %(d) | |||||||||||||||||||
Year Ended May 31, 2018 | (0.29 | ) | $ | 12.01 | 5.91 | % | 0.74 | % | 1.83 | % | 0.74 | % | $ | 808,509 | 97 | %(e) | |||||||||||||||||||
Year Ended May 31, 2017 | (0.25 | ) | $ | 11.61 | 8.94 | % | 0.76 | % | 2.13 | % | 0.76 | % | $ | 765,879 | 194 | %(d) | |||||||||||||||||||
Year Ended May 31, 2016 | (0.36 | ) | $ | 10.90 | (6.13 | )% | 0.75 | % | 2.09 | % | 0.75 | % | $ | 708,592 | 90 | %(f) | |||||||||||||||||||
Year Ended May 31, 2015 | (0.23 | ) | $ | 11.99 | 1.98 | % | 0.74 | % | 2.04 | % | 0.74 | % | $ | 1,398,614 | 35 | %(h) |
See notes to financial statements.
9
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Managed Allocation Fund (the "Fund"). The Fund is classified as diversified under the 1940 Act.
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 July 1, 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)
10
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 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 November 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 | ||||||||||||||||
Exchange-Traded Funds | $ | 734,619 | $ | — | $ | — | $ | 734,619 | |||||||||||
Total | $ | 734,619 | $ | — | $ | — | $ | 734,619 |
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.
11
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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.
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 November 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 May 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.
12
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||
Purchases | Sales | ||||||
$ | 373,864 | $ | 409,139 |
There were no purchases and sales of U.S. government securities during the six months ended November 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 fees accrued daily and paid monthly at an annualized rate of 0.60% of the Fund's average daily net assets. The Adviser has contractually agreed to waive its management fee from 0.60% to 0.44%. These waivers are not available for recoupment and are reflected on the Statement of Operations as Expenses waived/reimbursed by Adviser. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $1,875 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 0.60% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $366 thousand and are 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 November 30, 2019, the Fund had no subadvisers.
13
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under the 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. Amounts incurred from July 1, 2019 through November 30, 2019 are $156 thousand and are presented on the Statement of Operations as Administration fees.
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 average daily net assets. Amounts incurred from June 1, 2019 through June 30, 2019 were $31 thousand and 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 based on an annual rate of 0.05% of average daily net assets 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 November 30, 2019 was $156 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $31 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.
14
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.74%.
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 November 30, 2019, there are no amounts available to be repaid to the Advisor.
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 November 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.
The Fund may change the allocation of its portfolio holdings on a frequent basis, which may result in higher portfolio turnover. In purchasing and selling securities in order to reallocate the portfolio, the Fund will pay more brokerage commissions than it would without a reallocation policy. In addition, the Fund may have a higher proportion of capital gains and a potentially lower return than a fund that does not reallocate from time to time.
Because the Fund invests in stocks and other instruments whose value is tied to stocks, it is subject to stock market risk, which is the possibility that the value of the Fund's investments in stocks will decline regardless of the success or failure of a company's operations. In addition, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange rate fluctuations; foreign market illiquidity; emerging-market risk; increased price volatility; uncertain political conditions and environments; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; less publicly available information about foreign issuers; difficulties in obtaining legal judgments; and foreign withholding taxes.
ETFs, which generally are registered investment companies, incur their own management and other fees and expenses, such as trustees' fees, operating expenses, registration fees, and marketing expenses, a proportionate share of which will be borne indirectly by the Fund as a shareholder in an ETF. As a result, the Fund's investment in an ETF will cause the Fund to indirectly bear the fees and expenses of
15
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
the ETF and, in turn, the Fund's performance may be lower than if the Fund were to invest directly in the underlying securities held by the ETF. For investments in affiliated ETFs, the Fund's management fee is reimbursed by the Adviser to the extent of the indirect management fee incurred through the Fund's investment in the affiliated ETFs. The Adviser may have conflicts of interest in allocating assets among affiliated and unaffiliated ETFs, because the Adviser also manages and administers the affiliated ETFs, and the Adviser and its affiliates receive other fees from the affiliated ETFs. In addition, the Fund also will be subject to the risks associated with the securities or other investments held by the ETFs.
There is a risk that the value of the Fund's investment in REITs will decrease because of a decline in real estate values more broadly. Investing in REITs may subject the Fund to many of the same risks associated with the direct ownership of real estate. Additionally, REITs are dependent upon the capabilities of the REIT's manager(s); have limited diversification; and may be particularly sensitive to economic downturns or changes in interest rates, real estate values, cash flows of underlying real estate assets, occupancy rates, zoning laws, and tax laws. Because REITs are pooled investment vehicles that incur expenses of their own, the Fund will indirectly bear its proportionate share of those expenses.
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. 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 Statement 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 June 1, 2019 to June 30, 2019, the Fund paid CAPCO facility fees of $2 thousand.
The Fund had no borrowings under either agreement with Citibank or CAPCO during the six months ended November 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. 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.
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
The average borrowing or lending for the days outstanding and average interest rate for the Fund during the six months ended November 30, 2019 were as follows:
Borrower or Lender | Amount Outstanding at November, 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 November 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 annually. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 7,497 | $ | 5,086 | $ | 12,583 |
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 4,477 | $ | (22,756 | ) | $ | (17,950 | ) | $ | (36,229 | ) |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on wash sales.
For the most recent tax year ended May 31, 2019, the Fund utilized capital loss carryforwards of $898,000, to offset capital gains. At May 31, 2019, the Fund had no capital loss carryforwards, for federal income tax purposes. For the year ended May 31, 2019, the Fund deferred to June 1, 2019, post October capital losses of $22,756,000.
17
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,075.70 | $ | 1,021.95 | $ | 3.17 | $ | 3.08 | 0.61 | % |
* 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).
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.
18
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 | (800) 235-8396 |
93924-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Precious Metals and Minerals Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 7 | ||||||
Statement of Operations | 8 | ||||||
Statements of Changes in Net Assets | 9 | ||||||
Financial Highlights | 10 | ||||||
Notes to Financial Statements | 14 | ||||||
Supplemental Information | 25 | ||||||
Expense Examples | 25 | ||||||
Proxy Voting and Portfolio Holdings Information | 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.
USAA Mutual Funds Trust
1
USAA Mutual Funds Trust USAA Precious Metals and Minerals Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek long-term capital appreciation and to protect the purchasing power of shareholders' capital against inflation.
Top 10 Equity Holdings*
11/30/19
(% of Net Assets)
Newmont Goldcorp Corp. | 9.2 | % | |||||
Barrick Gold Corp. | 9.1 | % | |||||
Newcrest Mining Ltd. | 6.2 | % | |||||
Franco-Nevada Corp. | 5.2 | % | |||||
Kinross Gold Corp. | 4.7 | % | |||||
Kirkland Lake Gold Ltd. | 4.7 | % | |||||
Detour Gold Corp. | 4.2 | % | |||||
Agnico Eagle Mines Ltd. | 4.0 | % | |||||
B2Gold Corp. | 3.8 | % | |||||
Sibanye Gold Ltd. | 3.1 | % |
* Does not include short-term investments purchased with cash collateral from securities loaned.
2
USAA Mutual Funds Trust USAA Precious Metals and Minerals Fund (continued) | November 30, 2019 |
(Unaudited)
Porfolio Composition*:
11/30/19
(% of Net Assets)
* Does not include short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
3
USAA Mutual Funds Trust USAA Precious Metals and Minerals Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Common Stocks (99.7%) | |||||||||||
Metals & Mining (99.7%): | |||||||||||
Agnico Eagle Mines Ltd. (a) | 408,500 | $ | 24,347 | ||||||||
Alacer Gold Corp. (b) | 1,031,100 | 5,543 | |||||||||
Alamos Gold, Inc. | 982,100 | 5,568 | |||||||||
Alio Gold, Inc. (a) (b) | 512,400 | 309 | |||||||||
AngloGold Ashanti Ltd. | 932,744 | 17,457 | |||||||||
Argonaut Gold, Inc. (b) | 655,200 | 913 | |||||||||
Asanko Gold, Inc. (a) (b) (c) | 310,600 | 271 | |||||||||
Axmin, Inc. (b) (c) | 240,000 | 80 | |||||||||
B2Gold Corp. (b) | 6,209,957 | 22,958 | |||||||||
Barrick Gold Corp., ADR | 3,281,826 | 55,135 | |||||||||
Centamin PLC | 4,216,310 | 5,968 | |||||||||
Centerra Gold, Inc. (b) | 2,078,012 | 17,774 | |||||||||
China Gold International Resources Corp. Ltd. (b) | 516,300 | 393 | |||||||||
Coeur Mining, Inc. (b) | 61,306 | 402 | |||||||||
Continental Gold, Inc. (b) | 618,400 | 2,268 | |||||||||
Detour Gold Corp. (b) | 1,385,300 | 25,659 | |||||||||
Dundee Precious Metals, Inc. (b) | 1,781,264 | 6,800 | |||||||||
Eldorado Gold Corp. (b) | 278,600 | 2,184 | |||||||||
Endeavour Mining Corp. (b) | 311,957 | 5,959 | |||||||||
Evolution Mining Ltd. | 5,228,638 | 13,824 | |||||||||
Franco-Nevada Corp. | 320,500 | 31,534 | |||||||||
Gold Fields Ltd., ADR | 2,191,772 | 11,726 | |||||||||
Gold Resource Corp. | 202,002 | 901 | |||||||||
Golden Star Resources Ltd. (a) (b) | 464,607 | 1,538 | |||||||||
Great Basin Gold Ltd. (b) (c) (d) | 6,500,000 | — | (e) | ||||||||
Great Basin Gold Ltd. (b) (c) (d) | 8,566,400 | — | (e) | ||||||||
Guyana Goldfields, Inc. (a) (b) | 1,562,700 | 659 | |||||||||
Harmony Gold Mining Co. Ltd. (b) | 1,300,562 | 3,998 | |||||||||
IAMGOLD Corp. (a) (b) | 1,265,194 | 4,580 | |||||||||
Kinross Gold Corp. (b) | 6,551,532 | 28,368 | |||||||||
Kirkland Lake Gold Ltd. | 672,566 | 28,253 | |||||||||
Koza Altin Isletmeleri AS (b) | 210,243 | 2,688 | |||||||||
Leagold Mining Corp. (b) | 207,800 | 338 | |||||||||
Lundin Gold, Inc. (b) | 78,200 | 450 | |||||||||
McEwen Mining, Inc. (a) | 494,100 | 558 | |||||||||
Nautilus Minerals, Inc. (b) (c) (d) | 5,757,622 | — | (e) | ||||||||
New Gold, Inc. (b) | 1,183,000 | 1,015 | |||||||||
Newcrest Mining Ltd. | 1,802,214 | 37,486 | |||||||||
Newmont Goldcorp Corp. | 1,453,868 | 55,829 | |||||||||
Northern Star Mining Corp. (b) (d) | 375,000 | — | (e) | ||||||||
Northern Star Resources Ltd. | 1,443,189 | 9,359 | |||||||||
Novagold Resources, Inc. (b) | 421,400 | 2,932 | |||||||||
OceanaGold Corp. | 3,283,648 | 6,552 | |||||||||
Osisko Gold Royalties Ltd. (a) | 303,400 | 2,668 | |||||||||
Perseus Mining Ltd. (b) (c) | 5,838,238 | 3,341 | |||||||||
Polymetal International PLC | 965,842 | 14,550 | |||||||||
Polyus PJSC | 55,099 | 5,905 | |||||||||
Premier Gold Mines Ltd. (b) | 493,500 | 751 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA Precious Metals and Minerals Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Pretium Resources, Inc. (a) (b) | 319,100 | $ | 3,111 | ||||||||
Ramelius Resources Ltd. (b) | 5,296,556 | 3,635 | |||||||||
Regis Resources Ltd. | 2,634,938 | 8,463 | |||||||||
Royal Gold, Inc. | 141,613 | 16,607 | |||||||||
Sandstorm Gold Ltd. (a) (b) | 1,079,600 | 7,227 | |||||||||
Saracen Mineral Holdings Ltd. (b) | 2,161,365 | 4,501 | |||||||||
Seabridge Gold, Inc. (a) (b) | 95,100 | 1,253 | |||||||||
SEMAFO, Inc. (b) | 1,634,750 | 3,434 | |||||||||
Shandong Gold Mining Co. Ltd., Class H (a) (f) | 911,750 | 1,878 | |||||||||
Sibanye Gold Ltd. (b) | 9,492,462 | 18,721 | |||||||||
Silver Lake Resources Ltd. (a) (b) | 4,043,361 | 3,035 | |||||||||
SSR Mining, Inc. (a) (b) | 1,143,061 | 17,900 | |||||||||
St Barbara Ltd. | 2,845,151 | 5,041 | |||||||||
Teranga Gold Corp. (b) | 227,200 | 975 | |||||||||
TMAC Resources, Inc. (b) | 98,100 | 258 | |||||||||
Torex Gold Resources, Inc. (b) | 1,012,700 | 15,243 | |||||||||
Wesdome Gold Mines Ltd. (b) | 578,000 | 3,799 | |||||||||
Yamana Gold, Inc. | 3,023,400 | 10,824 | |||||||||
Zhaojin Mining Industry Co. Ltd., Class H | 2,250,500 | 2,329 | |||||||||
Zijin Mining Group Co. Ltd., Class H | 19,678,000 | 7,365 | |||||||||
605,390 | |||||||||||
Total Common Stocks (Cost $543,332) | 605,390 | ||||||||||
Rights (0.3%) | |||||||||||
Materials (0.3%): | |||||||||||
Pan American Silver Corp. (a) (b) (c) (d) (h) | 2,400,000 | 1,720 | |||||||||
Saracen Mineral Holdings Ltd. Expires 12/9/19 @ $2.95 (b) (d) | 375,889 | — | |||||||||
1,720 | |||||||||||
Total Rights (Cost $1,502) | 1,720 | ||||||||||
Collateral for Securities Loaned^ (2.1%) | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (g) | 12,519,525 | 12,520 | |||||||||
Total Collateral for Securities Loaned (Cost $12,520) | 12,520 | ||||||||||
Total Investments (Cost $557,354) — 102.1% | 619,630 | ||||||||||
Liabilities in excess of other assets — (2.1)% | (12,494 | ) | |||||||||
NET ASSETS — 100.00% | $ | 607,136 |
^ Purchased with cash collateral from securities on loan.
(a) All or a portion of this security is on loan.
(b) Non-income producing security.
(c) The Fund's Adviser has deemed this security to be illiquid based upon procedures approved by the Board of Trustees. As of November 30, 2019, illiquid securities were 0.9% of the Fund's net assets.
(d) 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 November 30, 2019. This security is classified as Level 3 within the fair value hierarchy. (See Note 2 in the Notes to Financial Statements)
See notes to financial statements.
5
USAA Mutual Funds Trust USAA Precious Metals and Minerals Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(e) Rounds to less than $1.
(f) 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 November 30, 2019, the fair value of these securities was $1,878 (thousands) and amounted to 0.3% of net assets.
(g) Rate disclosed is the daily yield on November 30, 2019.
(h) Expiration is subject to contingencies upon first commercial shipment of silver concentrate from Escobal mines following resumption of operations. Rights are transferable and have a term of 10 years.
ADR — American Depositary Receipt
PLC — Public Limited Company
See notes to financial statements.
6
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Precious Metals and Minerals Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $557,354) | $ | 619,630 | (a) | ||||
Foreign currency, at value (Cost $790) | 788 | ||||||
Cash and cash equivalents | 152 | ||||||
Receivables: | |||||||
Interest and dividends | 258 | ||||||
Capital shares issued | 482 | ||||||
Reclaims | 9 | ||||||
From Adviser | 9 | ||||||
Prepaid expenses | 8 | ||||||
Total assets | 621,336 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 12,520 | ||||||
Capital shares redeemed | 156 | ||||||
Accrued foreign capital gains taxes | 903 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 372 | ||||||
Administration fees | 73 | ||||||
Custodian fees | 16 | ||||||
Transfer agent fees | 74 | ||||||
Compliance fees | — | (b) | |||||
12b-1 fees | 2 | ||||||
Other accrued expenses | 84 | ||||||
Total liabilities | 14,200 | ||||||
Net Assets: | |||||||
Capital | 1,361,946 | ||||||
Total distributable earnings/(loss) | (754,810 | ) | |||||
Net assets | $ | 607,136 | |||||
Net Assets | |||||||
Fund Shares | 559,158 | ||||||
Institutional Shares | 26,731 | ||||||
Adviser Shares | 21,247 | ||||||
Total | $ | 607,136 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 36,793 | ||||||
Institutional Shares | 1,724 | ||||||
Adviser Shares | 1,413 | ||||||
Total | 39,930 | ||||||
Net asset value, offering and redemption price per share: (c) | |||||||
Fund Shares | $ | 15.20 | |||||
Institutional Shares | 15.51 | ||||||
Adviser Shares | 15.03 |
(a) Includes $12,113 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.
7
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Precious Metals and Minerals Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 2,868 | |||||
Interest | 63 | ||||||
Securities lending (net of fees) | 67 | ||||||
Foreign tax withholding | (479 | ) | |||||
Total income | 2,519 | ||||||
Expenses: | |||||||
Investment advisory fees | 2,288 | ||||||
Administration fees — Fund Shares | 422 | ||||||
Administration fees — Institutional Shares | 13 | ||||||
Administration fees — Adviser Shares | 15 | ||||||
12b-1 fees — Adviser Shares | 26 | ||||||
Custodian fees | 29 | ||||||
Transfer agent fees — Fund Shares | 682 | ||||||
Transfer agent fees — Institutional Shares | 13 | ||||||
Transfer agent fees — Adviser Shares | 2 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 1 | ||||||
Legal and audit fees | 50 | ||||||
State registration and filing fees | 28 | ||||||
Sub-Administration fees | 9 | ||||||
Other expenses | 70 | ||||||
Total expenses | 3,668 | ||||||
Expenses waived/reimbursed by Adviser | (5 | ) | |||||
Expenses waived/reimbursed by AMCO | (4 | ) | |||||
Net expenses | 3,659 | ||||||
Net Investment Income (Loss) | (1,140 | ) | |||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities and foreign currency translations | (101,168 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities and foreign currency translations | 227,558 | ||||||
Net change in accrued foreign taxes on unrealized gains | (192 | ) | |||||
Net realized/unrealized gains (losses) on investments | 126,198 | ||||||
Change in net assets resulting from operations | $ | 125,058 |
See notes to financial statements.
8
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Precious Metals and Minerals Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | (1,140 | ) | $ | (1,042 | ) | |||||
Net realized gains (losses) from investments | (101,168 | ) | (12,422 | ) | |||||||
Net change in unrealized appreciation (depreciation) on investments | 227,366 | (17,660 | ) | ||||||||
Change in net assets resulting from operations | 125,058 | (31,124 | ) | ||||||||
Change in net assets resulting from capital transactions | (25,201 | ) | (23,062 | ) | |||||||
Change in net assets | 99,857 | (54,186 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 507,279 | 561,465 | |||||||||
End of period | $ | 607,136 | $ | 507,279 | |||||||
Capital Transactions: | |||||||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 40,307 | $ | 50,928 | |||||||
Cost of shares redeemed | (64,853 | ) | (94,610 | ) | |||||||
Total Fund Shares | $ | (24,546 | ) | $ | (43,682 | ) | |||||
Institutional Shares | |||||||||||
Proceeds from shares issued | $ | 938 | $ | 31,991 | |||||||
Cost of shares redeemed | (880 | ) | (12,919 | ) | |||||||
Total Institutional Shares | $ | 58 | $ | 19,072 | |||||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 5,596 | $ | 6,048 | |||||||
Cost of shares redeemed | (6,309 | ) | (4,500 | ) | |||||||
Total Adviser Shares | $ | (713 | ) | $ | 1,548 | ||||||
Change in net assets resulting from capital transactions | $ | (25,201 | ) | $ | (23,062 | ) | |||||
Share Transactions: | |||||||||||
Fund Shares | |||||||||||
Issued | 2,618 | 4,375 | |||||||||
Redeemed | (4,318 | ) | (7,930 | ) | |||||||
Total Fund Shares | (1,700 | ) | (3,555 | ) | |||||||
Institutional Shares | |||||||||||
Issued | 62 | 2,582 | |||||||||
Redeemed | (58 | ) | (1,140 | ) | |||||||
Total Institutional Shares | 4 | 1,442 | |||||||||
Adviser Shares | |||||||||||
Issued | 369 | 531 | |||||||||
Redeemed | (430 | ) | (382 | ) | |||||||
Total Adviser Shares | (61 | ) | 149 | ||||||||
Change in Shares | (1,757 | ) | (1,964 | ) |
See notes to financial statements.
9
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 Precious Metals & Minerals Fund | |||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 12.16 | (0.03 | )(d) | 3.07 | 3.04 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 12.87 | (0.03 | )(d) | (0.68 | ) | (0.71 | ) | — | — | |||||||||||||||||
Year Ended May 31, 2018 | $ | 12.93 | (0.05 | )(d) | (0.01 | ) | (0.06 | ) | — | — | |||||||||||||||||
Year Ended May 31, 2017 | $ | 13.90 | 0.14 | (0.60 | ) | (0.46 | ) | (0.51 | ) | (0.51 | ) | ||||||||||||||||
Year Ended May 31, 2016 | $ | 12.29 | 0.08 | 1.53 | (e) | 1.61 | — | — | |||||||||||||||||||
Year Ended May 31, 2015 | $ | 14.12 | (0.06 | )(d) | (1.61 | ) | (1.67 | ) | (0.16 | ) | (0.16 | ) |
* 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 5 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) During the year ended May 31, 2016, AMCO reimbursed the Fund Shares $50,000 for a loss incurred from the sale of a security that exceeded the amount allowed to be held of that type of security under the Fund's investment restrictions. The effect of this reimbursement on the Fund Shares' net realized loss and total return was less than $0.005/0.005% per share.
See notes to financial statements.
10
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) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(c) | ||||||||||||||||||||||||||||
USAA Precious Metals & Minerals Fund | |||||||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 15.20 | 25.00 | % | 1.21 | % | (0.38 | )% | 1.21 | % | $ | 559,158 | 45 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 12.16 | (5.52 | )% | 1.31 | % | (0.22 | )% | 1.31 | % | $ | 468,208 | 7 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 12.87 | (0.46 | )% | 1.23 | % | (0.36 | )% | 1.23 | % | $ | 540,952 | 13 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 12.93 | (2.68 | )% | 1.22 | % | 0.02 | % | 1.22 | % | $ | 585,515 | 14 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 13.90 | 13.10 | %(e) | 1.33 | % | (0.31 | )% | 1.33 | % | $ | 647,140 | 17 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 12.29 | (11.77 | )% | 1.25 | % | (0.46 | )% | 1.25 | % | $ | 573,456 | 8 | % |
(continues on next page)
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 Precious Metals & Minerals Fund | |||||||||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 12.40 | (0.01 | )(d) | 3.12 | 3.11 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 13.06 | 0.01 | (0.67 | ) | (0.66 | ) | — | — | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 13.07 | (0.01 | ) | — | (f) | (0.01 | ) | — | — | |||||||||||||||||
Year Ended May 31, 2017 | $ | 13.98 | 0.07 | (0.47 | ) | (0.40 | ) | (0.51 | ) | (0.51 | ) | ||||||||||||||||
Year Ended May 31, 2016 | $ | 12.34 | 0.01 | 1.63 | (g) | 1.64 | — | — | |||||||||||||||||||
Year Ended May 31, 2015 | $ | 14.17 | (0.03 | ) | (1.60 | ) | (1.63 | ) | (0.20 | ) | (0.20 | ) | |||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 12.04 | (0.04 | )(d) | 3.03 | 2.99 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 12.74 | (0.03 | )(d) | (0.67 | ) | (0.70 | ) | — | — | |||||||||||||||||
Year Ended May 31, 2018 | $ | 12.82 | 0.16 | (0.24 | ) | (0.08 | ) | — | — | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 13.79 | 0.04 | (0.50 | ) | (0.46 | ) | (0.51 | ) | (0.51 | ) | ||||||||||||||||
Year Ended May 31, 2016 | $ | 12.20 | (0.04 | )(d) | 1.63 | (g) | 1.59 | — | — | ||||||||||||||||||
Year Ended May 31, 2015 | $ | 14.01 | (0.08 | )(d) | (1.58 | ) | (1.66 | ) | (0.15 | ) | (0.15 | ) |
* 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 5 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) Effective June 6, 2018, AMCO has voluntarily agreed to limit the annual expenses of the Institutional Shares to 1.00% of the Institutional 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 | ||||||||||||||||||||||||||||||||||
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) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(c) | ||||||||||||||||||||||||||||
USAA Precious Metals & Minerals Fund | |||||||||||||||||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 15.51 | 25.08 | % | 1.00 | % | (0.17 | )% | 1.06 | % | $ | 26,731 | 45 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 12.40 | (5.05 | )% | 1.00 | %(e) | 0.12 | % | 1.19 | % | $ | 21,327 | 7 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | $ | 13.06 | (0.08 | )% | 0.89 | % | (0.07 | )% | 0.89 | % | $ | 3,632 | 13 | % | ||||||||||||||||||||
Year Ended May 31, 2017 | — | $ | 13.07 | (2.23 | )% | 0.76 | % | 0.46 | % | 0.76 | % | $ | 2,893 | 14 | % | ||||||||||||||||||||
Year Ended May 31, 2016 | — | $ | 13.98 | 13.29 | %(g) | 0.99 | % | 0.13 | % | 0.99 | % | $ | 14,050 | 17 | % | ||||||||||||||||||||
Year Ended May 31, 2015 | — | $ | 12.34 | (11.46 | )% | 0.99 | % | (0.20 | )% | 0.99 | % | $ | 161,591 | 8 | % | ||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | $ | 15.03 | 24.83 | % | 1.32 | % | (0.50 | )% | 1.32 | % | $ | 21,247 | 45 | % | ||||||||||||||||||||
Year Ended May 31, 2019 | — | $ | 12.04 | (5.49 | )% | 1.38 | % | (0.27 | )% | 1.38 | % | $ | 17,744 | 7 | % | ||||||||||||||||||||
Year Ended May 31, 2018 | — | (f) | $ | 12.74 | (0.62 | )% | 1.30 | % | (0.43 | )% | 1.30 | % | $ | 16,881 | 13 | % | |||||||||||||||||||
Year Ended May 31, 2017 | — | (f) | $ | 12.82 | (2.68 | )% | 1.30 | % | (0.04 | )% | 1.30 | % | $ | 18,309 | 14 | % | |||||||||||||||||||
Year Ended May 31, 2016 | — | (f) | $ | 13.79 | 13.03 | %(g) | 1.37 | % | (0.36 | )% | 1.37 | % | $ | 16,873 | 17 | % | |||||||||||||||||||
Year Ended May 31, 2015 | — | (f) | $ | 12.20 | (11.83 | )% | 1.39 | %(h) | (0.60 | )% | 1.39 | % | $ | 12,357 | 8 | % |
(f) Amount is less than $0.005 per share.
(g) During the year ended May 31, 2016, AMCO reimbursed the Institutional Shares and Adviser Shares $1,000, and $1,000, respectively, for a loss incurred from the sale of a security that exceeded the amount allowed to be held of that type of security under the Fund's investment restrictions. The effect of this reimbursement on the net realized loss and total return of the Institutional Shares and Adviser Shares was less than $0.005/0.005% per share, respectively.
(h) Prior to October 1, 2014, AMCO voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.45% of the Adviser Shares' average daily net assets.
See notes to financial statements.
13
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Precious Metals & Minerals Fund (the "Fund"). The Fund offers three classes of shares: Fund Shares, Institutional Shares, and Adviser Shares. The Fund is classified as non-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 July 1, 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 November 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.
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.
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.
The Adviser will monitor for events that materially affect the value of the Fund's foreign securities and the Committee will consider such available information that it deems relevant and will determine a fair value for the affected foreign securities in accordance with valuation procedures. In addition, information from an external vendor or other sources may be used to adjust the foreign market closing prices of foreign equity securities to reflect what the Committee believes to be the fair value of the securities as of the close of the NYSE. Fair valuation of affected foreign equity securities may occur frequently based on an assessment that events which occur on a fairly regular basis (such as U.S. market movements) are significant.
15
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
A summary of the valuations as of November 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 | $ | 599,485 | $ | 5,905 | $ | — | (a) | $ | 605,390 | ||||||||||
Rights | — | — | 1,720 | 1,720 | |||||||||||||||
Collateral for Securities Loaned | 12,520 | — | — | 12,520 | |||||||||||||||
Total | $ | 612,005 | $ | 5,905 | $ | 1,720 | $ | 619,630 |
(a) Amount is less than $1.
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.
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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 have 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
16
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 12,113 | $ | — | $ | 12,520 |
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.
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 May 31.
17
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||
Purchases | Sales | ||||||
$ | 265,470 | $ | 284,715 |
There were no purchases and sales of U.S. government securities during the six months ended November 30, 2019.
4. 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 usaa.com. As of November 30, 2019, certain USAA fund-of funds owned total outstanding shares of the Fund:
Affiliated USAA Fund | Ownership % | ||||||
Cornerstone Conservative Fund | 3.3 | ||||||
Cornerstone Equity Fund | 4.7 | ||||||
Target Retirement Income Fund | 3.7 | ||||||
Target Retirement 2020 Fund | 6.4 | ||||||
Target Retirement 2030 Fund | 14.5 | ||||||
Target Retirement 2040 Fund | 16.1 | ||||||
Target Retirement 2050 Fund | 9.0 | ||||||
Target Retirement 2060 Fund | 1.1 |
18
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 a base fee and a performance adjustment. The Fund's base fee is accrued daily and paid monthly at an annualized rate of 0.75% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $1,952 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 0.75% 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. Only performance beginning as of July 1, 2019, and thereafter will be utilized in calculating future performance adjustments.
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 Precious Metals Equity Funds Index. The Lipper Precious Metals Equity Funds Index tracks the total return performance of the funds within the Lipper Precious Metals Equity Funds category.
The performance period for each share class consists of the current month plus the previous 35 months (or the number of months beginning July 1, 2019, if fewer). 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) | ||||||
+/- 100 to 400 | +/- 4 | ||||||
+/- 401 to 700 | +/- 5 | ||||||
+/- 701 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 Precious Metals Equity Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period June 1, 2019 through June 30, 2019, there were no performance adjustments for Fund Shares, Institutional Shares and Adviser Shares, respectively. Base fees incurred and paid to AMCO
19
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
from June 1, 2019 through June 30, 2019 were $336 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 November 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 the 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, and 0.10% of average daily net assets of the Institutional Shares. Amounts incurred from July 1, 2019 through November 30, 2019 are $360, $11, and $13 thousand for Fund Shares, Institutional Shares, and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
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, and 0.10% of average daily net assets of the Institutional Shares. Amounts incurred from June 1, 2019 through June 30, 2019 are $62, $2, and $2 thousand for Fund Shares, Institutional 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 $23 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', plus out-of pocket expenses.
20
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Amounts incurred and paid to VCTA from July 1, 2019 through November 30, 2019 was $567, $11, and $2 thousand for the Fund Shares, Institutional Shares, and Adviser Shares, respectively. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $115, $2, and less than $1 thousand for the Fund Shares, Institutional 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 November 30, 2019 are $22 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 June 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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 November 30, 2019, the expense limit (excluding voluntary waivers) is 1.27%, 1.00%, and 1.34% for the Fund Shares, Institutional Shares, and Adviser 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 November 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
21
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||
$ | 5 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of the Institutional Shares to 1.00% of its average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the 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. 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.
6. Risks:
The Fund may be subject to other risks in addition to these identified risks.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, to the extent the Fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks, such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
Because of commodity price volatility and the increased impact such volatility has on the profitability of precious metals and minerals and natural resources industries, there are additional risks involved in investing in the securities of companies in these industries. The natural resources and precious metals and minerals industries can be significantly affected by global economic, financial, and political developments. Investments related to natural resources and precious metals and minerals may fluctuate in price significantly over short periods of time. However, because the market action of such securities has tended to move independently of the broader financial markets, the addition of these securities to a portfolio may reduce overall fluctuations in portfolio value.
The Fund is non-diversified, which means that it may invest a greater percentage of its assets in a single issuer, such as a single stock or bond. Because a relatively high percentage of the Fund's total assets may be invested in the securities of a single issuer or a limited number of issuers, the securities of the Fund may be more sensitive to changes in the market value of a single issuer, a limited number of issuers, or large companies generally. Such a focused investment strategy may increase the volatility of the Fund's investment results because this Fund may be more susceptible to risks associated with a single issuer or economic, political, or regulatory event compared to those of a diversified fund.
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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. 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 Statement 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 June 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 November 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. 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 November 30, 2019.
8. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income annually. Distributable net realized gains, if any, are declared and 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 May 31, 2020.
23
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
As of the most recent tax year ended May 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) | ||||||||||||||||
$ | — | $ | (684,826 | ) | $ | (195,041 | ) | $ | (879,867 | ) |
** The difference between the book-basis and tax-basis of unrealized appreciation/depreciation is attributable primarily to tax deferral of losses on passive foreign investment company, wash sales and mark-to-market adjustments.
As of the most recent tax year ended May 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 | |||||||||
$ | 14,983 | $ | 669,843 | $ | 684,826 |
24
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||||||
Fund Shares | $ | 1,000.00 | $ | 1,250.00 | $ | 1,018.95 | $ | 6.81 | $ | 6.11 | 1.21 | % | |||||||||||||||
Institutional Shares | 1,000.00 | 1,250.80 | 1,020.00 | 5.63 | 5.05 | 1.00 | % | ||||||||||||||||||||
Adviser Shares | 1,000.00 | 1,248.30 | 1,018.40 | 7.42 | 6.66 | 1.32 | % |
* 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).
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.
25
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 | (800) 235-8396 |
23408-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA Treasury Money Market Trust®
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 | 4 | ||||||
Statement of Operations | 5 | ||||||
Statements of Changes in Net Assets | 6 | ||||||
Financial Highlights | 8 | ||||||
Notes to Financial Statements | 10 | ||||||
Supplemental Information | 16 | ||||||
Expense Examples | 16 | ||||||
Proxy Voting and Portfolio Holdings Information | 16 | ||||||
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 Treasury Money Market Trust | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek to provide investors maximum current income while maintaining the highest degree of safety and liquidity.
Portfolio Mix:
11/30/19
(% of Net Assets)
Percentages are of the net assets of the Fund and may not equal 100%.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA Treasury Money Market Trust | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Principal Amount | Value | |||||||||
U.S. Treasury Obligations (46.8%) | |||||||||||
U.S. Treasury Bills 1.83%, 12/5/19 (a) | $ | 82,700 | $ | 82,679 | |||||||
1.72%, 12/12/19 (a) | 100,000 | 99,943 | |||||||||
1.78%, 12/19/19 (a) | 100,000 | 99,906 | |||||||||
1.81%, 12/26/19 (a) | 200,000 | 199,738 | |||||||||
1.50%, 1/23/20 (a) | 200,000 | 199,551 | |||||||||
1.50%, 2/6/20 (a) | 200,000 | 199,434 | |||||||||
1.51%, 2/20/20 (a) | 200,000 | 199,313 | |||||||||
1.82%, 3/5/20 (a) | 100,000 | 99,518 | |||||||||
1.67%, 3/12/20 (a) | 200,000 | 199,050 | |||||||||
1.52%, 4/9/20 (a) | 200,000 | 198,902 | |||||||||
1.49%, 4/16/20 (a) | 200,000 | 198,863 | |||||||||
1.83%, 8/13/20 (a) | 100,000 | 98,713 | |||||||||
U.S. Treasury Notes 1.57%(USBMMY3M+0bps), 1/31/20 (b) | 392,000 | 391,976 | |||||||||
1.60%(USBMMY3M+3bps), 4/30/20 (b) | 150,000 | 150,002 | |||||||||
1.61%(USBMMY3M+4bps), 7/31/20 (b) | 100,000 | 99,944 | |||||||||
Total U.S. Treasury Obligations (Cost $2,517,532) | 2,517,532 | ||||||||||
Repurchase Agreements (53.2%) | |||||||||||
Fixed Income Clearing Corporation-State Street Bank & Trust Co., 1.63%, purchase 11/29/19, due on 12/2/19, with a value of $2,860,388 (collateralized by U.S. Treasury Notes, 1.38%-3.38%, due 11/30/24-11/15/48, with a value of $2,917,204) | 2,860,000 | 2,860,000 | |||||||||
Total Repurchase Agreements (Cost $2,860,000) | 2,860,000 | ||||||||||
Total Investments (Cost $5,377,532) — 100.0% | 5,377,532 | ||||||||||
Other assets in excess of liabilities — 0.0% (c) | 827 | ||||||||||
NET ASSETS — 100.00% | $ | 5,378,359 |
(a) Rate represents the effective yield at November 30, 2019.
(b) Variable or Floating-Rate Security. Rate disclosed is as of November 30, 2019.
(c) Amount is less than 0.05%.
bps — Basis points
USBMMY3M — 3 Month Treasury Bill Rate
See notes to financial statements.
3
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA Treasury Money Market Trust | |||||||
Assets: | |||||||
Investments, at value (Cost $5,377,532) | $ | 5,377,532 | |||||
Cash | 1,302 | ||||||
Receivables: | |||||||
Interest | 1,131 | ||||||
Capital shares sold | 26 | ||||||
Prepaid expenses | 24 | ||||||
Total assets | 5,380,015 | ||||||
Liabilities: | |||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 550 | ||||||
Administration fees | 440 | ||||||
Custodian fees | 49 | ||||||
Transfer agent fees | 442 | ||||||
Compliance fees | 1 | ||||||
Other accrued expenses | 174 | ||||||
Total liabilities | 1,656 | ||||||
Net Assets: | |||||||
Capital | 5,378,359 | ||||||
Net assets | $ | 5,378,359 | |||||
Shares (unlimited number of shares authorized with no par value): | 5,378,359 | ||||||
Net asset value, offering and redemption price per share: | $ | 1.00 |
See notes to financial statements.
4
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA Treasury Money Market Trust | |||||||
Investment Income: | |||||||
Interest | $ | 53,541 | |||||
Expenses: | |||||||
Investment advisory fees | 3,235 | ||||||
Administration fees | 2,588 | ||||||
Custodian fees | 89 | ||||||
Transfer agent fees | 2,589 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 13 | ||||||
Legal and audit fees | 41 | ||||||
State registration and filing fees | 24 | ||||||
Sub-Administration fees | 13 | ||||||
Other expenses | 251 | ||||||
Total expenses | 8,863 | ||||||
Net Investment Income | 44,678 |
See notes to financial statements.
5
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA Treasury Money Market Trust | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income | $ | 44,678 | $ | 82,178 | |||||||
Change in net assets resulting from operations | 44,678 | 82,178 | |||||||||
Change in net assets resulting from distributions to shareholders | (44,678 | ) | (82,178 | ) | |||||||
Change in net assets resulting from capital transactions | 519,361 | 1,126,639 | |||||||||
Change in net assets | 519,361 | 1,126,639 | |||||||||
Net Assets: | |||||||||||
Beginning of period | 4,858,998 | 3,732,359 | |||||||||
End of period | $ | 5,378,359 | $ | 4,858,998 | |||||||
Capital Transactions: | |||||||||||
Proceeds from shares issued | $ | 5,799,561 | $ | 12,721,521 | |||||||
Distributions reinvested | 44,658 | 82,115 | |||||||||
Cost of shares redeemed | (5,324,858 | ) | (11,676,997 | ) | |||||||
Change in net assets resulting from capital transactions | $ | 519,361 | $ | 1,126,639 | |||||||
Share Transactions: | |||||||||||
Issued | 5,799,561 | 12,721,521 | |||||||||
Reinvested | 44,658 | 82,115 | |||||||||
Redeemed | (5,324,858 | ) | (11,676,997 | ) | |||||||
Change in Shares | 519,361 | 1,126,639 |
See notes to financial statements.
6
This page is intentionally left blank.
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 | Total from Investment Activities | Net Investment Income | Total Distributions | |||||||||||||||||||
USAA Treasury Money Market Trust | |||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 1.00 | 0.01 | (c) | 0.01 | (0.01 | ) | (0.01 | ) | ||||||||||||||
Year Ended May 31, 2019 | $ | 1.00 | 0.02 | 0.02 | (0.02 | ) | (0.02 | ) | |||||||||||||||
Year Ended May 31, 2018 | $ | 1.00 | 0.01 | 0.01 | (0.01 | ) | (0.01 | ) | |||||||||||||||
Year Ended May 31, 2017 | $ | 1.00 | — | (e) | — | (e) | — | (e) | — | (e) | |||||||||||||
Year Ended May 31, 2016 | $ | 1.00 | — | (e) | — | (e) | — | (e) | — | (e) | |||||||||||||
Year Ended May 31, 2015 | $ | 1.00 | — | (e) | — | (e) | — | (e) | — | (e) |
* 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 3 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) 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.
(e) Amount is less than $0.005 per share.
(f) Amount is less than 0.005%.
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 | ||||||||||||||||||||||||||
Net Asset Value, End of Period | Total Return*(a) | Net Expenses^(b) | Net Investment Income(b) | Gross Expenses(b) | Net Assets, End of Period (000's) | ||||||||||||||||||||||
USAA Treasury Money Market Trust | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 1.00 | 0.86 | % | 0.34 | % | 1.73 | % | 0.34 | % | $ | 5,378,359 | |||||||||||||||
Year Ended May 31, 2019 | $ | 1.00 | 1.88 | % | 0.35 | % | 1.88 | % | 0.35 | % | $ | 4,858,998 | |||||||||||||||
Year Ended May 31, 2018 | $ | 1.00 | 0.89 | % | 0.35 | %(d) | 0.91 | % | 0.35 | % | $ | 3,732,359 | |||||||||||||||
Year Ended May 31, 2017 | $ | 1.00 | 0.08 | % | 0.35 | % | 0.12 | % | 0.39 | % | $ | 2,626,050 | |||||||||||||||
Year Ended May 31, 2016 | $ | 1.00 | — | %(f) | 0.17 | % | — | %(f) | 0.49 | % | $ | 188,863 | |||||||||||||||
Year Ended May 31, 2015 | $ | 1.00 | — | %(f) | 0.06 | % | — | %(f) | 0.52 | % | $ | 119,654 |
See notes to financial statements.
9
USAA Mutual Funds Trust | Notes to Financial Statements November 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 Treasury Money Market Trust (the "Fund"). The Fund is classified as diversified under the 1940 Act.
The Fund operates as a government money market fund in compliance with the requirements of Rule 2a-7 under the 1940 Act; and as a government 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 July 1, 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.)
10
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
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.
Repurchase agreements are valued at cost.
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
Repurchase Agreements:
The Fund may enter into repurchase agreements with commercial banks or recognized security dealers pursuant to the terms of a Master Repurchase Agreement. A repurchase agreement is an arrangement wherein the Fund purchases securities and the seller agrees to repurchase the securities at an agreed upon time and at an agreed upon price. The purchased securities are marked-to-market daily to ensure their value is equal to or in excess of the purchase price plus accrued interest and are held by the Fund, either through its regular custodian or through a special "tri-party" custodian that maintains separate accounts for both the Fund and its counterparty, until maturity of the repurchase agreement. Master Repurchase Agreements typically contain netting provisions, which provide for the net settlement of all transactions and collateral with the Fund through a single payment in the event of default or termination. Repurchase agreements are subject to credit risk, and the Fund's Manager monitors the creditworthiness of sellers with which the Fund may enter into repurchase agreements.
Investments in repurchase agreements as presented on the Portfolio of Investments are not net settlement amounts but gross. At November 30, 2019, the value of the related collateral exceeded the value of the repurchase agreements, reducing the net settlement amount to zero. Details on the collateral are included on the Portfolio of Investments.
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.
11
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 May 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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
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. The Fund's Investment Adviser fee is accrued daily and paid monthly at an annualized rate of 0.13% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $2,731 thousand and are reflected on the Statement of Operations as Investment Advisory fees.
12
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 Fund's investment management fee was accrued daily and paid monthly at an annualized rate of 0.13% of the Fund's average daily net assets. Amounts incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $504 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 the 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 November 30, 2019 are $2,185 thousand and are presented on the Statement of Operations as Administration fees.
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 average daily net assets. Amounts incurred from June 1, 2019 through June 30, 2019 were $403 thousand and 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance 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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 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 November 30, 2019 was $2,186 thousand. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $403 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.
13
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 July 1, 2019, Citibank, N.A., serves as the Fund's custodian.
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 in any fiscal year exceed the expense limit. 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 0.35%.
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 November 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 November 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.
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so.
An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC") or any other government agency. 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. Any investment involves risk, and there is no assurance that the Fund's objective will be achieved. The Fund is actively managed, and the investment techniques and risk analyses used by the Fund's portfolio managers may not produce the desired results. As you consider an investment in the Fund, you also should take into account your tolerance for the daily fluctuations of the financial markets and whether you can afford to leave your money in the Fund for long periods of time to ride out down periods. As with other mutual funds, losing money is a risk of investing in the Fund.
14
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
As a money market fund, the Fund is permitted, pursuant to applicable federal securities laws, to use amortized cost to value its portfolio securities and to transact at a stable $1 net asset value ("NAV") per share. The Fund intends to qualify as a government money market fund in compliance with the requirements of Rule 2a-7.
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. 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 Statement 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 June 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 November 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 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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 82,178 | $ | — | $ | 82,178 |
As of the most recent tax year ended May 31, 2019, the Fund had no net capital loss carryforwards.
15
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||
$ | 1,000.00 | $ | 1,008.60 | $ | 1,023.30 | $ | 1.71 | $ | 1.72 | 0.34 | % |
* 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).
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.
16
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 | (800) 235-8396 |
23416-0120
NOVEMBER 30, 2019
Semi Annual Report
USAA World Growth Fund
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 | 4 | ||||||
Statement of Assets and Liabilities | 13 | ||||||
Statement of Operations | 14 | ||||||
Statements of Changes in Net Assets | 15 | ||||||
Financial Highlights | 18 | ||||||
Notes to Financial Statements | 22 | ||||||
Supplemental Information | 32 | ||||||
Expense Examples | 32 | ||||||
Proxy Voting and Portfolio Holdings Information | 32 | ||||||
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 World Growth Fund | November 30, 2019 |
(Unaudited)
Investment Objective & Portfolio Holdings:
The Fund's investment objective is to seek capital appreciation.
Top 10 Industries
11/30/19
(% of Net Assets)
Banks | 8.2 | % | |||||
Capital Markets | 5.8 | % | |||||
Pharmaceuticals | 5.6 | % | |||||
Beverages | 4.6 | % | |||||
Interactive Media & Services | 3.9 | % | |||||
IT Services | 3.8 | % | |||||
Software | 3.8 | % | |||||
Technology Hardware, Storage & Peripherals | 3.6 | % | |||||
Health Care Equipment & Supplies | 3.6 | % | |||||
Oil, Gas & Consumable Fuels | 3.5 | % |
The Schedule of Portfolio Investments uses the Global Industry Classification Standard (GICS), which may differ from the Fund's compliance classification.
Top 10 Equity Holdings*
11/30/19
(% of Net Assets)
Microsoft Corp. | 3.1 | % | |||||
Apple, Inc. | 2.6 | % | |||||
JPMorgan Chase & Co. | 2.0 | % | |||||
Roche Holding AG | 2.0 | % | |||||
Mastercard, Inc. | 2.0 | % | |||||
Honeywell International, Inc. | 1.8 | % | |||||
Bank of America Corp. | 1.6 | % | |||||
PepsiCo, Inc. | 1.5 | % | |||||
Alphabet, Inc. | 1.5 | % | |||||
Johnson & Johnson | 1.5 | % |
* Does not include short-term investments purchased with cash collateral from securities loaned.
Refer to the Schedule of Portfolio Investments for a complete list of securities.
2
USAA Mutual Funds Trust USAA World Growth Fund (continued) | November 30, 2019 |
(Unaudited)
Country Allocation:
11/30/19
(% of Net Assets)
* Includes countries with less than 3.0% of portfolio and short-term investments purchased with cash collateral from securities loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
3
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Common Stocks (98.6%) | |||||||||||
Australia (1.5%): | |||||||||||
Financials (0.4%): | |||||||||||
Macquarie Group Ltd. | 60,983 | $ | 5,697 | ||||||||
Health Care (1.1%): | |||||||||||
CSL Ltd. | 85,463 | 16,395 | |||||||||
22,092 | |||||||||||
Austria (0.1%): | |||||||||||
Financials (0.1%): | |||||||||||
Erste Group Bank AG | 31,039 | 1,110 | |||||||||
Belgium (0.4%): | |||||||||||
Information Technology (0.4%): | |||||||||||
Melexis NV (a) | 75,402 | 5,497 | |||||||||
Bermuda (0.6%): | |||||||||||
Industrials (0.6%): | |||||||||||
Triton International Ltd. | 224,607 | 8,508 | |||||||||
Brazil (0.1%): | |||||||||||
Consumer Staples (0.1%): | |||||||||||
Ambev SA | 239,129 | 1,020 | |||||||||
Canada (2.2%): | |||||||||||
Energy (0.4%): | |||||||||||
Parex Resources, Inc. (b) | 375,050 | 5,549 | |||||||||
Industrials (1.2%): | |||||||||||
Canadian National Railway Co. | 68,860 | 6,272 | |||||||||
Canadian Pacific Railway Ltd. | 46,968 | 11,125 | |||||||||
17,397 | |||||||||||
Materials (0.6%): | |||||||||||
Kirkland Lake Gold Ltd. | 190,138 | 7,987 | |||||||||
30,933 | |||||||||||
China (1.6%): | |||||||||||
Communication Services (1.0%): | |||||||||||
Tencent Holdings Ltd. | 333,800 | 14,085 | |||||||||
Financials (0.6%): | |||||||||||
Industrial & Commercial Bank of China Ltd., Class H | 11,386,000 | 8,115 | |||||||||
22,200 | |||||||||||
Curacao (0.1%): | |||||||||||
Energy (0.1%): | |||||||||||
Schlumberger Ltd. | 33,669 | 1,219 |
See notes to financial statements.
4
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Denmark (0.9%): | |||||||||||
Consumer Staples (0.9%): | |||||||||||
Carlsberg A/S, Class B | 14,421 | $ | 2,075 | ||||||||
Royal Unibrew A/S | 116,763 | 10,511 | |||||||||
12,586 | |||||||||||
France (6.8%): | |||||||||||
Consumer Discretionary (2.0%): | |||||||||||
Faurecia SE | 128,240 | 6,797 | |||||||||
Hermes International | 1,086 | 814 | |||||||||
LVMH Moet Hennessy Louis Vuitton SE | 45,629 | 20,426 | |||||||||
28,037 | |||||||||||
Consumer Staples (0.8%): | |||||||||||
Danone SA | 69,027 | 5,679 | |||||||||
Pernod Ricard SA (a) | 32,107 | 5,898 | |||||||||
11,577 | |||||||||||
Energy (0.7%): | |||||||||||
Total SA | 199,127 | 10,444 | |||||||||
Financials (1.3%): | |||||||||||
BNP Paribas SA | 328,992 | 18,442 | |||||||||
Health Care (0.1%): | |||||||||||
Essilor Luxottica SA | 9,755 | 1,515 | |||||||||
Industrials (0.8%): | |||||||||||
Legrand SA | 47,596 | 3,758 | |||||||||
Schneider Electric SE | 85,590 | 8,256 | |||||||||
12,014 | |||||||||||
Materials (1.1%): | |||||||||||
Air Liquide SA | 27,179 | 3,685 | |||||||||
Arkema SA | 107,973 | 11,188 | |||||||||
14,873 | |||||||||||
96,902 | |||||||||||
Germany (1.6%): | |||||||||||
Financials (0.1%): | |||||||||||
Deutsche Boerse AG | 9,925 | 1,519 | |||||||||
Health Care (0.7%): | |||||||||||
Bayer AG, Registered Shares | 83,168 | 6,281 | |||||||||
Merck KGaA | 25,872 | 3,019 | |||||||||
9,300 | |||||||||||
Industrials (0.7%): | |||||||||||
Brenntag AG | 35,809 | 1,908 | |||||||||
MTU Aero Engines Holding AG | 10,012 | 2,710 | |||||||||
Washtec AG | 104,721 | 6,100 | |||||||||
10,718 |
See notes to financial statements.
5
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Real Estate (0.1%): | |||||||||||
Deutsche Wohnen SE | 28,834 | $ | 1,126 | ||||||||
22,663 | |||||||||||
Hong Kong (0.5%): | |||||||||||
Energy (0.5%): | |||||||||||
CNOOC Ltd. | 4,861,792 | 7,058 | |||||||||
Indonesia (0.5%): | |||||||||||
Communication Services (0.5%): | |||||||||||
Telekomunikasi Indonesia Persero Tbk PT | 26,195,600 | 7,280 | |||||||||
Ireland (1.9%): | |||||||||||
Communication Services (0.2%): | |||||||||||
WPP PLC | 279,492 | 3,609 | |||||||||
Industrials (1.0%): | |||||||||||
Eaton Corp. PLC | 154,498 | 14,291 | |||||||||
Information Technology (0.7%): | |||||||||||
Accenture PLC, Class A | 46,342 | 9,322 | |||||||||
27,222 | |||||||||||
Israel (0.3%): | |||||||||||
Information Technology (0.3%): | |||||||||||
Check Point Software Technologies Ltd. (b) | 36,530 | 4,306 | |||||||||
Italy (2.2%): | |||||||||||
Financials (0.5%): | |||||||||||
Banca Generali SpA | 236,651 | 7,805 | |||||||||
Health Care (0.6%): | |||||||||||
Recordati SpA | 204,358 | 8,566 | |||||||||
Utilities (1.1%): | |||||||||||
Enel SpA | 2,060,811 | 15,574 | |||||||||
31,945 | |||||||||||
Japan (7.5%): | |||||||||||
Consumer Discretionary (1.8%): | |||||||||||
Hikari Tsushin, Inc. | 30,800 | 7,190 | |||||||||
Toyota Motor Corp. | 191,200 | 13,379 | |||||||||
United Arrows Ltd. | 150,400 | 4,530 | |||||||||
25,099 | |||||||||||
Financials (1.0%): | |||||||||||
Jafco Co. Ltd. | 117,400 | 4,530 | |||||||||
Resona Holdings, Inc. | 2,149,500 | 9,124 | |||||||||
13,654 | |||||||||||
Health Care (1.8%): | |||||||||||
As One Corp. | 105,400 | 9,087 | |||||||||
Hoya Corp. | 139,900 | 12,784 | |||||||||
Olympus Corp. | 199,600 | 2,965 | |||||||||
24,836 |
See notes to financial statements.
6
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Industrials (2.2%): | |||||||||||
en-japan, Inc. | 191,300 | $ | 8,945 | ||||||||
Hitachi Construction Machinery Co. Ltd. | 371,800 | 9,814 | |||||||||
Kubota Corp. | 299,300 | 4,622 | |||||||||
Kyowa Exeo Corp. | 91,900 | 2,394 | |||||||||
OKUMA Corp. | 109,900 | 6,082 | |||||||||
31,857 | |||||||||||
Information Technology (0.4%): | |||||||||||
Ulvac, Inc. | 143,600 | 5,655 | |||||||||
Materials (0.3%): | |||||||||||
DIC Corp. | 177,300 | 4,818 | |||||||||
105,919 | |||||||||||
Korea, Republic Of (1.0%): | |||||||||||
Information Technology (1.0%): | |||||||||||
Samsung Electronics Co. Ltd. | 333,751 | 14,269 | |||||||||
14,269 | |||||||||||
Macau (0.5%): | |||||||||||
Consumer Discretionary (0.5%): | |||||||||||
Sands China Ltd. | 122,400 | 579 | |||||||||
Wynn Macau Ltd. (a) | 2,910,400 | 6,401 | |||||||||
6,980 | |||||||||||
Mexico (0.4%): | |||||||||||
Financials (0.1%): | |||||||||||
Grupo Financiero Banorte SAB de CV | 159,363 | 838 | |||||||||
Industrials (0.3%): | |||||||||||
Promotora y Operadora de Infraestructura SAB de CV | 443,220 | 4,234 | |||||||||
5,072 | |||||||||||
Netherlands (1.3%): | |||||||||||
Consumer Staples (0.2%): | |||||||||||
Heineken NV | 29,201 | 3,025 | |||||||||
Industrials (0.8%): | |||||||||||
Wolters Kluwer NV | 151,867 | 10,906 | |||||||||
Materials (0.3%): | |||||||||||
Akzo Nobel NV | 47,731 | 4,571 | |||||||||
18,502 | |||||||||||
Norway (0.6%): | |||||||||||
Energy (0.3%): | |||||||||||
Aker BP ASA (a) | 152,376 | 4,366 | |||||||||
Financials (0.3%): | |||||||||||
SpareBank 1 SMN | 466,280 | 4,851 | |||||||||
9,217 |
See notes to financial statements.
7
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Russian Federation (0.3%): | |||||||||||
Materials (0.3%): | |||||||||||
Evraz PLC | 1,005,387 | $ | 4,814 | ||||||||
Singapore (1.1%): | |||||||||||
Financials (1.1%): | |||||||||||
Singapore Exchange Ltd. | 2,404,600 | 15,560 | |||||||||
Spain (0.3%): | |||||||||||
Industrials (0.3%): | |||||||||||
Aena SME SA (c) | 21,529 | 3,950 | |||||||||
Sweden (2.0%): | |||||||||||
Consumer Staples (0.5%): | |||||||||||
Essity AB, Class B | 243,911 | 7,668 | |||||||||
Industrials (1.5%): | |||||||||||
Atlas Copco AB, Class B | 477,548 | 15,443 | |||||||||
Nolato AB, Class B | 96,350 | 5,334 | |||||||||
20,777 | |||||||||||
28,445 | |||||||||||
Switzerland (3.4%): | |||||||||||
Consumer Discretionary (0.3%): | |||||||||||
Compagnie Financiere Richemont SA, Registered Shares | 48,594 | 3,686 | |||||||||
Consumer Staples (0.7%): | |||||||||||
Nestle SA, Registered Shares | 90,079 | 9,358 | |||||||||
Financials (0.3%): | |||||||||||
Julius Baer Group Ltd. | 30,837 | 1,453 | |||||||||
UBS Group AG, Registered Shares | 239,850 | 2,905 | |||||||||
4,358 | |||||||||||
Health Care (2.0%): | |||||||||||
Roche Holding AG | 91,241 | 28,139 | |||||||||
Sonova Holding AG, Registered Shares | 3,437 | 785 | |||||||||
28,924 | |||||||||||
Industrials (0.1%): | |||||||||||
Adecco Group AG | 28,539 | 1,767 | |||||||||
48,093 | |||||||||||
Thailand (0.0%): (d) | |||||||||||
Financials (0.0%): (d) | |||||||||||
Kasikornbank PCL | 110,000 | 565 | |||||||||
United Kingdom (6.7%): | |||||||||||
Consumer Discretionary (1.2%): | |||||||||||
Aptiv PLC | 19,869 | 1,865 | |||||||||
Burberry Group PLC | 69,133 | 1,880 | |||||||||
Compass Group PLC | 121,948 | 2,988 |
See notes to financial statements.
8
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Next PLC | 94,583 | $ | 8,263 | ||||||||
Whitbread PLC | 32,792 | 1,947 | |||||||||
16,943 | |||||||||||
Consumer Staples (2.4%): | |||||||||||
Britvic PLC | 412,321 | 5,160 | |||||||||
Diageo PLC | 402,247 | 16,432 | |||||||||
Reckitt Benckiser Group PLC | 84,767 | 6,653 | |||||||||
Unilever PLC | 105,010 | 6,219 | |||||||||
34,464 | |||||||||||
Financials (0.9%): | |||||||||||
Aon PLC | 21,125 | 4,301 | |||||||||
Close Brothers Group PLC | 275,104 | 5,286 | |||||||||
HSBC Holdings PLC | 435,775 | 3,246 | |||||||||
12,833 | |||||||||||
Industrials (0.5%): | |||||||||||
RELX PLC | 312,945 | 7,575 | |||||||||
Materials (1.7%): | |||||||||||
Croda International PLC | 53,286 | 3,430 | |||||||||
Linde PLC | 36,620 | 7,540 | |||||||||
Rio Tinto PLC | 228,197 | 12,421 | |||||||||
23,391 | |||||||||||
95,206 | |||||||||||
United States (52.2%): | |||||||||||
Communication Services (5.7%): | |||||||||||
Alphabet, Inc., Class C (b) | 16,697 | 21,789 | |||||||||
Comcast Corp., Class A | 233,823 | 10,323 | |||||||||
Facebook, Inc., Class A (b) | 100,054 | 20,175 | |||||||||
Omnicom Group, Inc. | 20,248 | 1,609 | |||||||||
The Walt Disney Co. | 51,671 | 7,832 | |||||||||
Verizon Communications, Inc. | 310,038 | 18,677 | |||||||||
80,405 | |||||||||||
Consumer Discretionary (5.0%): | |||||||||||
Amazon.com, Inc. (b) | 10,907 | 19,641 | |||||||||
eBay, Inc. | 75,898 | 2,696 | |||||||||
Harley-Davidson, Inc. | 26,642 | 969 | |||||||||
Marriott International, Inc., Class A | 19,692 | 2,764 | |||||||||
McDonald's Corp. | 58,914 | 11,458 | |||||||||
Ross Stores, Inc. | 132,604 | 15,402 | |||||||||
Sally Beauty Holdings, Inc. (b) | 34,268 | 632 | |||||||||
The TJX Cos., Inc. | 281,774 | 17,225 | |||||||||
Wynn Resorts Ltd. | 4,983 | 602 | |||||||||
71,389 | |||||||||||
Consumer Staples (4.2%): | |||||||||||
Colgate-Palmolive Co. | 261,506 | 17,736 | |||||||||
Kellogg Co. | 45,273 | 2,948 |
See notes to financial statements.
9
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
PepsiCo, Inc. | 161,209 | $ | 21,897 | ||||||||
The Estee Lauder Cos., Inc. | 86,951 | 16,996 | |||||||||
59,577 | |||||||||||
Energy (1.6%): | |||||||||||
ConocoPhillips | 148,931 | 8,927 | |||||||||
National Oilwell Varco, Inc. | 23,294 | 525 | |||||||||
Phillips 66 | 121,135 | 13,897 | |||||||||
23,349 | |||||||||||
Financials (8.2%): | |||||||||||
American Express Co. | 36,651 | 4,403 | |||||||||
Bank of America Corp. | 676,402 | 22,538 | |||||||||
CME Group, Inc. | 24,600 | 4,987 | |||||||||
JPMorgan Chase & Co. | 217,128 | 28,609 | |||||||||
MSCI, Inc. | 59,220 | 15,349 | |||||||||
State Street Corp. | 63,534 | 4,771 | |||||||||
TD Ameritrade Holding Corp. | 65,254 | 3,382 | |||||||||
The Bank of New York Mellon Corp. | 97,116 | 4,756 | |||||||||
The Goldman Sachs Group, Inc. | 18,067 | 3,999 | |||||||||
The PNC Financial Services Group, Inc. | 82,493 | 12,639 | |||||||||
The Progressive Corp. | 154,004 | 11,250 | |||||||||
116,683 | |||||||||||
Health Care (8.6%): | |||||||||||
Abbott Laboratories | 61,914 | 5,291 | |||||||||
Amedisys, Inc. (b) | 69,933 | 11,396 | |||||||||
Amgen, Inc. | 65,483 | 15,370 | |||||||||
CVS Health Corp. | 184,721 | 13,904 | |||||||||
Eli Lilly & Co. | 96,353 | 11,307 | |||||||||
Johnson & Johnson | 157,684 | 21,680 | |||||||||
Medtronic PLC | 96,582 | 10,758 | |||||||||
Stryker Corp. | 30,189 | 6,185 | |||||||||
The Cooper Co., Inc. | 11,836 | 3,706 | |||||||||
Thermo Fisher Scientific, Inc. | 35,994 | 11,300 | |||||||||
Waters Corp. (b) | 18,620 | 4,135 | |||||||||
Zimmer Biomet Holdings, Inc. | 44,555 | 6,473 | |||||||||
121,505 | |||||||||||
Industrials (4.8%): | |||||||||||
3M Co. | 79,069 | 13,423 | |||||||||
Equifax, Inc. | 23,235 | 3,244 | |||||||||
HD Supply Holdings, Inc. (b) | 173,549 | 6,911 | |||||||||
Honeywell International, Inc. | 143,962 | 25,704 | |||||||||
Kansas City Southern | 47,125 | 7,183 | |||||||||
NOW, Inc. (b) | 13,620 | 153 | |||||||||
Resideo Technologies, Inc. (b) | 8,359 | 82 | |||||||||
Union Pacific Corp. | 16,746 | 2,947 | |||||||||
United Parcel Service, Inc., Class B | 36,430 | 4,362 | |||||||||
United Technologies Corp. | 25,931 | 3,847 | |||||||||
67,856 |
See notes to financial statements.
10
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
Security Description | Shares | Value | |||||||||
Information Technology (11.9%): | |||||||||||
Amphenol Corp., Class A | 18,864 | $ | 1,962 | ||||||||
Apple, Inc. | 140,406 | 37,523 | |||||||||
Cisco Systems, Inc. | 384,122 | 17,405 | |||||||||
Cognizant Technology Solutions Corp., Class A | 53,905 | 3,456 | |||||||||
Mastercard, Inc., Class A | 95,463 | 27,897 | |||||||||
Microchip Technology, Inc. (a) | 15,557 | 1,471 | |||||||||
Microsoft Corp. | 290,015 | 43,902 | |||||||||
Oracle Corp. | 91,966 | 5,163 | |||||||||
PayPal Holdings, Inc. (b) | 22,047 | 2,381 | |||||||||
Texas Instruments, Inc. | 144,344 | 17,352 | |||||||||
Visa, Inc., Class A | 60,345 | 11,134 | |||||||||
169,646 | |||||||||||
Materials (0.3%): | |||||||||||
PPG Industries, Inc. | 34,641 | 4,463 | |||||||||
Real Estate (0.9%): | |||||||||||
Liberty Property Trust | 201,936 | 12,443 | |||||||||
Utilities (1.0%): | |||||||||||
MGE Energy, Inc. | 183,558 | 14,229 | |||||||||
741,545 | |||||||||||
Total Common Stocks (Cost $1,120,698) | 1,400,678 | ||||||||||
Preferred Stocks (0.5%) | |||||||||||
Brazil (0.5%): | |||||||||||
Financials (0.5%): | |||||||||||
Itau Unibanco Holding SA | 853,800 | 7,019 | |||||||||
Total Preferred Stocks (Cost $8,287) | 7,019 | ||||||||||
Collateral for Securities Loaned^ (0.9%) | |||||||||||
United States (0.9%): | |||||||||||
HSBC US Government Money Market Fund, I Shares, 1.58% (e) | 12,574,785 | 12,575 | |||||||||
Total Collateral for Securities Loaned (Cost $12,575) | 12,575 | ||||||||||
Total Investments (Cost $1,141,560) — 100.0% | 1,420,272 | ||||||||||
Other assets in excess of liabilities — 0.0% (d) | 494 | ||||||||||
NET ASSETS — 100.00% | $ | 1,420,766 |
^ Purchased with cash collateral from securities on loan.
(a) All or a portion of this security is on loan.
(b) Non-income producing security.
(c) 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 November 30, 2019, the fair value of these securities was $3,950 (thousands) and amounted to 0.3% of net assets.
See notes to financial statements.
11
USAA Mutual Funds Trust USAA World Growth Fund | Schedule of Portfolio Investments — continued November 30, 2019 |
(Amounts in Thousands, Except for Shares) (Unaudited)
(d) Amount represents less than 0.05% of net assets.
(e) Rate disclosed is the daily yield on November 30, 2019.
PCL — Public Company Limited
PLC — Public Limited Company
See notes to financial statements.
12
USAA Mutual Funds Trust | Statement of Assets and Liabilities November 30, 2019 |
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
USAA World Growth Fund | |||||||
Assets: | |||||||
Investments, at value (Cost $1,141,560) | $ | 1,420,272 | (a) | ||||
Foreign currency, at value (Cost $491) | 484 | ||||||
Cash and cash equivalents | 10,548 | ||||||
Receivables: | |||||||
Interest and dividends | 1,787 | ||||||
Capital shares issued | 404 | ||||||
Reclaims | 2,161 | ||||||
From Adviser | 12 | ||||||
Prepaid expenses | 11 | ||||||
Total assets | 1,435,679 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Collateral received on loaned securities | 12,575 | ||||||
Investments purchased | 269 | ||||||
Capital shares redeemed | 763 | ||||||
Accrued foreign capital gains taxes | 50 | ||||||
Accrued expenses and other payables: | |||||||
Investment advisory fees | 870 | ||||||
Administration fees | 173 | ||||||
Custodian fees | 42 | ||||||
Transfer agent fees | 83 | ||||||
Compliance fees | — | (b) | |||||
12b-1 fees | 1 | ||||||
Other accrued expenses | 87 | ||||||
Total liabilities | 14,913 | ||||||
Net Assets: | |||||||
Capital | 711,018 | ||||||
Total distributable earnings/(loss) | 709,748 | ||||||
Net assets | $ | 1,420,766 | |||||
Net Assets | |||||||
Fund Shares | $ | 1,397,896 | |||||
Institutional Shares | 13,830 | ||||||
Adviser Shares | 9,040 | ||||||
Total | $ | 1,420,766 | |||||
Shares (unlimited number of shares authorized with no par value): | |||||||
Fund Shares | 40,302 | ||||||
Institutional Shares | 399 | ||||||
Adviser Shares | 260 | ||||||
Total | 40,961 | ||||||
Net asset value, offering and redemption price per share: (c) | |||||||
Fund Shares | $ | 34.69 | |||||
Institutional Shares | 34.72 | ||||||
Adviser Shares | 34.70 |
(a) Includes $11,893 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.
13
USAA Mutual Funds Trust | Statement of Operations For the Six Months Ended November 30, 2019 |
(Amounts in Thousands) (Unaudited)
USAA World Growth Fund | |||||||
Investment Income: | |||||||
Dividends | $ | 13,651 | |||||
Interest | 217 | ||||||
Securities lending (net of fees) | 9 | ||||||
Foreign tax withholding | (500 | ) | |||||
Total income | 13,377 | ||||||
Expenses: | |||||||
Investment advisory fees | 5,197 | ||||||
Administration fees — Fund Shares | 1,014 | ||||||
Administration fees — Institutional Shares | 7 | ||||||
Administration fees — Adviser Shares | 6 | ||||||
12b-1 fees — Adviser Shares | 11 | ||||||
Custodian fees | 61 | ||||||
Transfer agent fees — Fund Shares | 863 | ||||||
Transfer agent fees — Institutional Shares | 7 | ||||||
Transfer agent fees — Adviser Shares | 3 | ||||||
Trustees' fees | 20 | ||||||
Compliance fees | 3 | ||||||
Legal and audit fees | 51 | ||||||
State registration and filing fees | 27 | ||||||
Sub-Administration fees | 14 | ||||||
Other expenses | 84 | ||||||
Total expenses | 7,368 | ||||||
Expenses waived/reimbursed by Adviser | (8 | ) | |||||
Expenses waived/reimbursed by AMCO | (6 | ) | |||||
Net expenses | 7,354 | ||||||
Net Investment Income (Loss) | 6,023 | ||||||
Realized/Unrealized Gains (Losses) from Investments: | |||||||
Net realized gains (losses) from investment securities and foreign currency translations | 408,183 | ||||||
Foreign taxes on realized gains | (35 | ) | |||||
Net change in unrealized appreciation/depreciation on investment securities and foreign currency translations | (248,434 | ) | |||||
Net change in accrued foreign taxes on unrealized gains | (5 | ) | |||||
Net realized/unrealized gains (losses) on investments | 159,709 | ||||||
Change in net assets resulting from operations | $ | 165,732 |
See notes to financial statements.
14
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands)
USAA World Growth Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
From Investments: | |||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 6,023 | $ | 14,474 | |||||||
Net realized gains (losses) from investments | 408,148 | 45,224 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | (248,439 | ) | (18,728 | ) | |||||||
Change in net assets resulting from operations | 165,732 | 40,970 | |||||||||
Distributions to Shareholders: | |||||||||||
Fund Shares | — | (79,970 | ) | ||||||||
Institutional Shares | — | (695 | ) | ||||||||
Adviser Shares | — | (564 | ) | ||||||||
Change in net assets resulting from distributions to shareholders | — | (81,229 | ) | ||||||||
Change in net assets resulting from capital transactions | (46,327 | ) | (52,501 | ) | |||||||
Change in net assets | 119,405 | (92,760 | ) | ||||||||
Net Assets: | |||||||||||
Beginning of period | 1,301,361 | 1,394,121 | |||||||||
End of period | $ | 1,420,766 | $ | 1,301,361 |
(continues on next page)
See notes to financial statements.
15
USAA Mutual Funds Trust | Statements of Changes in Net Assets |
(Amounts in Thousands) (continued)
USAA World Growth Fund | |||||||||||
Six Months Ended November 30, 2019 (unaudited) | Year Ended May 31, 2019 | ||||||||||
Capital Transactions: | |||||||||||
Fund Shares | |||||||||||
Proceeds from shares issued | $ | 33,969 | $ | 65,889 | |||||||
Distributions reinvested | — | 78,879 | |||||||||
Cost of shares redeemed | (79,815 | ) | (178,538 | ) | |||||||
Total Fund Shares | $ | (45,846 | ) | $ | (33,770 | ) | |||||
Institutional Shares | |||||||||||
Proceeds from shares issued | $ | 472 | $ | 2,667 | |||||||
Distributions reinvested | — | 363 | |||||||||
Cost of shares redeemed | (830 | ) | (20,065 | ) | |||||||
Total Institutional Shares | $ | (358 | ) | $ | (17,035 | ) | |||||
Adviser Shares | |||||||||||
Proceeds from shares issued | $ | 275 | $ | 523 | |||||||
Distributions reinvested | — | 175 | |||||||||
Cost of shares redeemed | (398 | ) | (2,394 | ) | |||||||
Total Adviser Shares | $ | (123 | ) | $ | (1,696 | ) | |||||
Change in net assets resulting from capital transactions | $ | (46,327 | ) | $ | (52,501 | ) | |||||
Share Transactions: | |||||||||||
Fund Shares | |||||||||||
Issued | 1,033 | 2,120 | |||||||||
Reinvested | — | 2,792 | |||||||||
Redeemed | (2,429 | ) | (5,761 | ) | |||||||
Total Fund Shares | (1,396 | ) | (849 | ) | |||||||
Institutional Shares | |||||||||||
Issued | 15 | 85 | |||||||||
Reinvested | — | 13 | |||||||||
Redeemed | (25 | ) | (638 | ) | |||||||
Total Institutional Shares | (10 | ) | (540 | ) | |||||||
Adviser Shares | |||||||||||
Issued | 8 | 17 | |||||||||
Reinvested | — | 6 | |||||||||
Redeemed | (12 | ) | (76 | ) | |||||||
Total Adviser Shares | (4 | ) | (53 | ) | |||||||
Change in Shares | (1,410 | ) | (1,442 | ) |
See notes to financial statements.
16
This page is intentionally left blank.
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 | Net Realized Gains from Investments | ||||||||||||||||||||||
USAA World Growth Fund | |||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 30.71 | 0.14 | (d) | 3.84 | 3.98 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 31.82 | 0.33 | 0.51 | 0.84 | (0.28 | ) | (1.67 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 31.16 | 0.30 | 1.78 | 2.08 | (0.23 | ) | (1.19 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 27.20 | 0.19 | 4.55 | 4.74 | (0.21 | ) | (0.57 | ) | ||||||||||||||||||
Year Ended May 31, 2016 | $ | 28.69 | 0.21 | (0.95 | ) | (0.74 | ) | (0.19 | ) | (0.56 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 28.00 | 0.24 | 1.16 | 1.40 | (0.28 | ) | (0.43 | ) | ||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 30.74 | 0.16 | (d) | 3.82 | 3.98 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 31.75 | 0.38 | 0.48 | 0.86 | (0.20 | ) | (1.67 | ) | ||||||||||||||||||
Year Ended May 31, 2018 | $ | 31.14 | 0.29 | 1.80 | 2.09 | (0.29 | ) | (1.19 | ) | ||||||||||||||||||
Year Ended May 31, 2017 | $ | 27.14 | 0.20 | 4.55 | 4.75 | (0.18 | ) | (0.57 | ) | ||||||||||||||||||
August 7, 2015 (f) through May 31, 2016 | $ | 28.83 | 0.24 | (1.11 | ) | (0.87 | ) | (0.26 | ) | (0.56 | ) |
* 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 classes of shares issued.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Effective October 1, 2018, AMCO had voluntarily agreed to limit the annual expenses of the Institutional Shares to 1.00% of the Institutional Shares' average daily net assets.
(f) Commencement of operations.
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 | ||||||||||||||||||||||||||||||||||||||
Total Distributions | 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) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(c) | |||||||||||||||||||||||||||||||
USAA World Growth Fund | |||||||||||||||||||||||||||||||||||||||
Fund Shares | |||||||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | — | $ | 34.69 | 12.96 | % | 1.07 | % | 0.88 | % | 1.07 | % | $ | 1,397,896 | 81 | % | |||||||||||||||||||||||
Year Ended May 31, 2019 | (1.95 | ) | — | $ | 30.71 | 3.23 | % | 1.09 | % | 1.09 | % | 1.09 | % | $ | 1,280,661 | 8 | % | ||||||||||||||||||||||
Year Ended May 31, 2018 | (1.42 | ) | — | $ | 31.82 | 6.68 | % | 1.10 | % | 0.98 | % | 1.10 | % | $ | 1,353,880 | 10 | % | ||||||||||||||||||||||
Year Ended May 31, 2017 | (0.78 | ) | — | $ | 31.16 | 17.81 | % | 1.13 | % | 0.72 | % | 1.13 | % | $ | 1,319,357 | 12 | % | ||||||||||||||||||||||
Year Ended May 31, 2016 | (0.75 | ) | — | $ | 27.20 | (2.49 | )% | 1.17 | % | 0.81 | % | 1.17 | % | $ | 1,157,148 | 10 | % | ||||||||||||||||||||||
Year Ended May 31, 2015 | (0.71 | ) | — | $ | 28.69 | 5.10 | % | 1.17 | % | 0.91 | % | 1.17 | % | $ | 1,208,909 | 9 | % | ||||||||||||||||||||||
Institutional Shares | |||||||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | — | $ | 34.72 | 12.98 | % | 1.00 | % | 0.95 | % | 1.13 | % | $ | 13,830 | 81 | % | |||||||||||||||||||||||
Year Ended May 31, 2019 | (1.87 | ) | — | $ | 30.74 | 3.29 | % | 1.05 | %(e) | 1.13 | % | 1.11 | % | $ | 12,567 | 8 | % | ||||||||||||||||||||||
Year Ended May 31, 2018 | (1.48 | ) | — | $ | 31.75 | 6.70 | % | 1.10 | % | 1.19 | % | 1.10 | % | $ | 30,127 | 10 | % | ||||||||||||||||||||||
Year Ended May 31, 2017 | (0.75 | ) | — | $ | 31.14 | 17.89 | % | 1.09 | % | 0.78 | % | 1.37 | % | $ | 6,877 | 12 | % | ||||||||||||||||||||||
August 7, 2015 (f) through May 31, 2016 | (0.82 | ) | — | $ | 27.14 | (2.92 | )% | 1.10 | % | 1.11 | % | 1.54 | % | $ | 5,228 | 10 | % |
(continues on next page)
See notes to financial statements.
19
USAA Mutual Funds Trust | Financial Highlights — continued |
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 World Growth Fund | |||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | $ | 30.77 | 0.10 | (d) | 3.83 | 3.93 | — | — | |||||||||||||||||||
Year Ended May 31, 2019 | $ | 31.86 | 0.24 | (d) | 0.53 | 0.77 | (0.19 | ) | (1.67 | ) | |||||||||||||||||
Year Ended May 31, 2018 | $ | 31.07 | 0.18 | (d) | 1.80 | 1.98 | — | (e) | (1.19 | ) | |||||||||||||||||
Year Ended May 31, 2017 | $ | 27.13 | 0.12 | 4.53 | 4.65 | (0.14 | ) | (0.57 | ) | ||||||||||||||||||
Year Ended May 31, 2016 | $ | 28.55 | 0.14 | (0.93 | ) | (0.79 | ) | (0.07 | ) | (0.56 | ) | ||||||||||||||||
Year Ended May 31, 2015 | $ | 27.90 | 0.19 | 1.13 | 1.32 | (0.24 | ) | (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) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(d) Per share net investment income (loss) has been calculated using the average daily shares method.
(e) Amount is less than $0.005 per share.
See notes to financial statements.
20
USAA Mutual Funds Trust | Financial Highlights — continued |
For a Share Outstanding Throughout Each Period
Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||||||
Total Distributions | 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) | Net Assets, End of Period (000's) | Portfolio Turnover(a)(c) | |||||||||||||||||||||||||||||||
USAA World Growth Fund | |||||||||||||||||||||||||||||||||||||||
Adviser Shares | |||||||||||||||||||||||||||||||||||||||
Six Months Ended November 30, 2019 (unaudited) | — | — | $ | 34.70 | 12.77 | % | 1.35 | % | 0.60 | % | 1.47 | % | $ | 9,040 | 81 | % | |||||||||||||||||||||||
Year Ended May 31, 2019 | (1.86 | ) | — | $ | 30.77 | 2.98 | % | 1.35 | % | 0.76 | % | 1.46 | % | $ | 8,133 | 8 | % | ||||||||||||||||||||||
Year Ended May 31, 2018 | (1.19 | ) | — | (e) | $ | 31.86 | 6.36 | % | 1.39 | %(f) | 0.57 | % | 1.43 | % | $ | 10,114 | 10 | % | |||||||||||||||||||||
Year Ended May 31, 2017 | (0.71 | ) | — | (e) | $ | 31.07 | 17.50 | % | 1.42 | % | 0.45 | % | 1.42 | % | $ | 19,722 | 12 | % | |||||||||||||||||||||
Year Ended May 31, 2016 | (0.63 | ) | — | (e) | $ | 27.13 | (2.72 | )% | 1.42 | % | 0.49 | % | 1.42 | % | $ | 16,580 | 10 | % | |||||||||||||||||||||
Year Ended May 31, 2015 | (0.67 | ) | — | (e) | $ | 28.55 | 4.84 | % | 1.38 | %(g) | 0.72 | % | 1.38 | % | $ | 26,797 | 9 | % |
(f) Effective October 1, 2017 AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.35% of the Adviser Shares' average daily net assets.
(g) Effective October 1, 2014 AMCO had voluntarily agreed to limit the annual expenses of the Adviser Shares to 1.60% of the Adviser Shares' average daily net assets.
See notes to financial statements.
21
USAA Mutual Funds Trust | Notes to Financial Statements November 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 World Growth Fund (the "Fund"). The Fund offers three classes of shares: Fund Shares, Institutional 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 July 1, 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.)
22
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 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.
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 November 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 | $ | 1,252,491 | $ | 148,187 | $ | — | $ | 1,400,678 | |||||||||||
Preferred Stocks | 7,019 | 7,019 | |||||||||||||||||
Collateral for Securities Loaned | 12,575 | — | — | 12,575 | |||||||||||||||
Total | $ | 1,272,085 | $ | 148,187 | $ | — | $ | 1,420,272 |
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.
Foreign Exchange Currency Contracts:
The Fund may enter into foreign exchange currency contracts to convert U.S. dollars to and from various foreign currencies. A foreign exchange currency contract is an obligation by the Fund to purchase or sell a specific currency at a future date at a price (in U.S. dollars) set at the time of the
23
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
contract. The Fund does not engage in "cross-currency" foreign exchange contracts (i.e., contracts to purchase or sell one foreign currency in exchange for another foreign currency). The Fund's foreign exchange currency contracts might be considered spot contracts (typically a contract of one week or less) or forward contracts (typically a contract term over one week). A spot contract is entered into for purposes of hedging against foreign currency fluctuations relating to a specific portfolio transaction, such as the delay between a security transaction trade date and settlement date. Forward contracts are entered into for purposes of hedging portfolio holdings or concentrations of such holdings. Each foreign exchange currency contract is adjusted daily by the prevailing spot or forward rate of the underlying currency, and any appreciation or depreciation is recorded for financial statement purposes as unrealized until the contract settlement date, at which time the Fund records realized gains or losses equal to the difference between the value of a contract at the time it was opened and the value at the time it was closed. The Fund could be exposed to risk if a counterparty is unable to meet the terms of a foreign exchange currency contract or if the value of the foreign currency changes unfavorably. In addition, the use of foreign exchange currency contracts does not eliminate fluctuations in the underlying prices of the securities. As of November 30, 2019, the Fund had no open forward foreign exchange currency contracts.
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. The following table (amounts in thousands) is a summary of the Fund's securities lending transactions as of November 30, 2019.
24
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Value of Securities on Loan | Non-Cash Collateral | Cash Collateral | |||||||||
$ | 11,893 | $ | — | $ | 12,575 |
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.
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 May 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 November 30, 2019, the Fund did not engage in any Rule 17a-7 transactions under the 1940 Act.
25
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 November 30, 2019 were as follows for the Fund (amounts in thousands):
Excluding U.S. Government Securities | |||||||
Purchases | Sales | ||||||
$ | 1,085,559 | $ | 1,121,191 |
There were no purchases and sales of U.S. government securities during the six months ended November 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 0.75% of the Fund's average daily net assets. Amounts incurred and paid to VCM from July 1, 2019 through November 30, 2019 are $4,318 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 0.75% 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. Only performance beginning as of July 1, 2019, and thereafter will be utilized in calculating future performance adjustments.
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 Funds Index. The Lipper Global Funds Index tracks the total return performance of the funds within the Lipper Global Funds category.
The performance period for each share class consists of the current month plus the previous 35 months (or the number of months beginning July 1, 2019, if fewer). 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) | ||||||
+/- 100 to 400 | +/- 4 | ||||||
+/- 401 to 700 | +/- 5 | ||||||
+/- 701 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.
26
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 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 Funds Index over that period, even if the class has overall negative returns during the performance period.
For the period June 1, 2019 through June 30, 2019, no performance adjustments were applied for Fund Shares, Institutional Shares and Adviser Shares, respectively. Base fees incurred and paid to AMCO from June 1, 2019 through June 30, 2019 were $879 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.
Effective July 1, 2019, VCM entered into an Investment Subadvisory Agreement with MFS Investment Management ("MFS"), under which MFS directs the investment and reinvestment of the Fund's assets (as allocated from time to time by VCM). This arrangement provides for monthly fees that are paid by VCM. VCM (not the Fund) pays the subadviser fees.
Prior to July 1, 2019, AMCO entered into an Investment Subadvisory Agreement with MFS, under which MFS directed the investment and reinvestment of a portion of the Fund's assets (as allocated from time to time by AMCO). This arrangement provided for monthly fees that were paid by AMCO. AMCO (not the Fund) paid the subadviser fees.
Administration and Servicing Fees:
Effective with the Transaction on July 1, 2019, VCM serves as the Fund's administrator and fund accountant. Under the 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, and 0.10% of average daily net assets of the Institutional Shares. Amounts incurred from July 1, 2019 through November 30, 2019 are $850, $6, and $5 thousand for Fund Shares, Institutional Shares, and Adviser Shares, respectively. These amounts are presented on the Statement of Operations as Administration fees.
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, and 0.10% of average daily net assets of the Institutional Shares. Amounts incurred from June 1, 2019 through June 30, 2019 are $164, $1, and $1 thousand for Fund Shares, Institutional 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 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 July 1, 2019 to November 30, 2019 are reflected on the Statement of Operations as Compliance fees.
27
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 and certain other expenses specifically allocated to the Funds under the Fund Administration, Servicing, and Accounting Agreement.
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.
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 $23 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', plus out-of pocket expenses. Amounts incurred and paid to VCTA from July 1, 2019 through November 30, 2019 was $716, $6, and $3 thousand for the Fund Shares, Institutional Shares, and Adviser Shares, respectively. Amounts incurred and paid to SAS from June 1, 2019 through June 30, 2019 was $147, $1, and less than $1 thousand for the Fund Shares, Institutional 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 November 30, 2019 are $9 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 June 1, 2019 through June 30, 2019 were $2 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.
28
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
Effective July 1, 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 Statement of Operations. Amounts incurred during the six month period ended November 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 November 30, 2019, the expense limit (excluding voluntary waivers) is 1.09%, 1.00%, and 1.35% for the Fund Shares, Institutional Shares, and Adviser 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 November 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 November 30, 2019, if any, are reflected on the Statement of Operations as "Recoupment of prior expenses waived/reimbursed by Adviser".
Expires 05/31/2023 | |||||||
$ | 8 |
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 November 30, 2019.
Prior to the Transaction on July 1, 2019, AMCO agreed, through September 30, 2019, to limit the total annual operating expenses of the Institutional Shares and Advisor Shares to 1.00% and 1.35%, respectively, of their average daily net assets, excluding extraordinary expenses and before reductions of any expenses paid indirectly, and to reimburse the Institutional Shares and Advisor Shares for all expenses in excess of those amounts. Effective with the Transaction on July 1, 2019, these expense limits are no longer in effect. For the period June 1, 2019 through June 30, 2019, the Fund incurred reimbursements of $6 thousand. 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.
The equity securities in the Fund's portfolio are subject to stock market risk. A company's stock price in general may decline over short or even extended periods, regardless of the success or failure of the company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when stock prices generally go down. Equity securities tend to be more volatile than debt securities. In addition, to the extent the Fund invests in foreign securities, there is a possibility that the value of the Fund's investments in foreign securities will decrease because of unique risks,
29
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
such as currency exchange-rate fluctuations; foreign market illiquidity; emerging market risk; increased price volatility; uncertain political conditions; exchange control regulations; foreign ownership limits; different accounting, reporting, and disclosure requirements; difficulties in obtaining legal judgments; and foreign withholding taxes. These risks are particularly heightened in this Fund because investments in emerging-market countries generally are more volatile than investments in developed markets. Emerging-market countries are less economically diverse and mature than more developed countries and tend to be politically less stable.
The Fund's performance could be closely tied to the market, currency, economic, political, regulatory, geopolitical, or other conditions and developments in the countries or regions in which the Fund invests. As such, the Fund's performance could be more volatile than the performance of more geographically diversified funds. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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, 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 Statement 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 June 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 November 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. 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 November 30, 2019.
7. Federal Income Tax Information:
The Fund intends to declare daily and distribute any net investment income annually. Distributable net realized gains, if any, are declared and 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
30
USAA Mutual Funds Trust | Notes to Financial Statements — continued November 30, 2019 |
(Unaudited)
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 May 31, 2020.
The tax character of distributions paid during the most recent tax year ended 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 May 31, 2019 | |||||||||||||||
Distributions paid from | |||||||||||||||
Ordinary Income | Net Long-Term Capital Gains | Total Distributions Paid | |||||||||||||
$ | 13,991 | $ | 67,238 | $ | 81,229 |
As of the most recent tax year ended May 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 | Unrealized Appreciation (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||
$ | 10,765 | $ | 8,956 | $ | 524,295 | $ | 544,016 |
** 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 May 31, 2019, the Fund had no net capital loss carryforwards.
31
USAA Mutual Funds Trust | Supplemental Information November 30, 2019 |
(Unaudited)
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 June 1, 2019 through November 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 6/1/19 | Actual Ending Account Value 11/30/19 | Hypothetical Ending Account Value 11/30/19 | Actual Expenses Paid During Period 6/1/19- 11/30/19* | Hypothetical Expenses Paid During Period 6/1/19- 11/30/19* | Annualized Expense Ratio During Period 6/1/19- 11/30/19 | ||||||||||||||||||||||
Fund Shares | $ | 1,000.00 | $ | 1,129.60 | $ | 1,019.65 | $ | 5.70 | $ | 5.40 | 1.07 | % | |||||||||||||||
Institutional Shares | 1,000.00 | 1,129.80 | 1,020.00 | 5.32 | 5.05 | 1.00 | % | ||||||||||||||||||||
Adviser Shares | 1,000.00 | 1,127.70 | 1,018.25 | 7.18 | 6.81 | 1.35 | % |
* 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).
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.
32
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 | (800) 235-8396 |
23412-0120
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 |
| ||
|
| |||
By (Signature and Title)* | /s/ James K. De Vries |
| ||
| James K. De Vries, Principal Financial Officer | |||
|
| |||
Date | February 4, 2020 |
| ||
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 |
| |
| Christopher K. Dyer, Principal Executive Officer | ||
|
| ||
Date | February 4, 2020 |
| |
|
| ||
By (Signature and Title)* | /s/ James D. De Vries |
| |
| James K. De Vries, Principal Financial Officer | ||
|
| ||
Date | February 4, 2020 |
| |