UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/S
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-7852
Exact name of registrant as specified in charter: USAA MUTUAL FUNDS TRUST
Address of principal executive offices and zip code: 9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Name and address of agent for service: JAMES G. WHETZEL
USAA MUTUAL FUNDS TRUST
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Registrant's telephone number, including area code: (210) 498-0226
Date of fiscal year end: DECEMBER 31
Date of reporting period: JUNE 30, 2013
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED JUNE 30, 2013
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA GLOBAL OPPORTUNITIES FUND]
=======================================================
SEMIANNUAL REPORT
USAA GLOBAL OPPORTUNITIES FUND
JUNE 30, 2013
=======================================================
================================================================================
================================================================================
PRESIDENT'S MESSAGE
"...[W]E BELIEVE THE MARKETS WILL FIND
A WAY TO MANAGE WITHOUT THE FED'S [PHOTO OF DANIEL S. McNAMARA]
QUANTITATIVE EASING PROGRAMS, AS THEY
HAVE FOR MOST OF THE LAST 100 YEARS."
--------------------------------------------------------------------------------
JULY 2013
The power of market psychology was on display during the reporting period as
investors interpreted and then reinterpreted previously misinterpreted comments
by Federal Reserve (the Fed) Chairman Ben Bernanke. At first, stocks and bonds
sold off on the realization that the Fed had an optimistic view of future U.S.
economic growth and expected it to accelerate during the second half of 2013. In
other words, good news was bad news. Meanwhile, inflation pressures, which are
very modest at the time of this writing, were expected to increase, setting the
stage for the Fed to reduce -- or "taper" -- its quantitative easing measures.
From this point of view, higher inflation, usually bad news for central bankers,
was considered good news. (The term "quantitative easing" is generally used to
reference programs in which the Fed uses newly created money to purchase
financial assets.)
The markets generally reacted as though tapering was imminent. Bond yields rose
(and prices, which move in the opposite direction, dropped) in anticipation of
reduced Fed buying. The increase in yields sparked a sell-off across the global
financial markets, including stocks, corporate bonds, emerging markets assets
and precious metals. With more sellers than buyers, liquidity grew tight and
smaller markets, such as emerging markets equities and emerging markets debt,
suffered steeper declines than larger markets, such as U.S. equities.
The sell-off was remarkable because the Fed has always said it would not start
unwinding its stimulus programs until it became clear that economic growth was
self-sustaining. In addition, Bernanke said that the Fed could increase
quantitative easing if the economy stalled or grew more slowly. Indeed,
first-quarter gross domestic product growth was revised downward during the last
week of the reporting period from 2.4% to 1.8%, suggesting that the Fed might
not be tapering any time soon.
Although interest rates did increase during the reporting period, they remain
exceptionally low by historical measures. In the years since the
================================================================================
================================================================================
financial crisis, the 10-year U.S. Treasury yield has been near 2.5% more than
once. At those times, if I recall, many observers considered that a low yield.
When it reached the same level on June 21, 2013, it was perceived as high. In my
opinion, investors have less to fear from rising interest rates than they do
from an extended period of low rates, which some believe could result in a
Japan-like deflationary economy. That said, higher interest rates do mean that
bond investors are likely to see a decrease in their principal value, but they
will also -- for the first time in a long time -- see an increase in the income
they receive from their fixed-income investments.
Meanwhile, the June sell-off should serve as a reminder about the importance of
an investment plan and the need to keep emotion out of the investment process.
At USAA Asset Management Company, we believe every investor should hold a
diversified portfolio that is directly tied to their goals, risk tolerance and
time horizon. Diversification is important because different asset classes, such
as stocks and bonds, move up and down at different rates and often at different
times. If you think you may be over-allocated to fixed-income securities or
equities, you may want to reassess your investment risk and rebalance your
portfolio. Regular rebalancing can potentially help you protect your gains and
prepare for what happens next. I encourage you to contact a USAA advisor with
any questions or for assistance in updating your investment plan.
Whatever happens in the months ahead, you can be assured that our portfolio
management team will continue working on your behalf. "Taper talk" is
distracting and market reaction can be extreme but at USAA Asset Management
Company, we recognize that the Fed's extraordinary monetary stimulus cannot go
on forever. Also, we believe the markets will find a way to manage without the
Fed's quantitative easing programs, as they have for most of the last 100 years.
From all of us here, thank you for your investment.
Sincerely,
/S/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
Past performance is no guarantee of future results. o Diversification is a
technique to help reduce risk and does not guarantee a profit or prevent a loss.
o Financial Planning Services Insurance Agency, Inc. (known as USAA Financial
Insurance Agency in California, License # 0E36312), and USAA Financial Advisors,
Inc., a registered broker dealer.
================================================================================
================================================================================
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FUND OBJECTIVE 1
MANAGERS' COMMENTARY 2
INVESTMENT OVERVIEW 7
FINANCIAL INFORMATION
Portfolio of Investments 10
Notes to Portfolio of Investments 37
Financial Statements 40
Notes to Financial Statements 43
EXPENSE EXAMPLE 60
ADVISORY AGREEMENTS 62
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
USAA ASSET MANAGEMENT COMPANY. IT MAY BE USED AS SALES LITERATURE ONLY WHEN
PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS, WHICH PROVIDES FURTHER DETAILS
ABOUT THE FUND.
(C)2013, USAA. All rights reserved.
================================================================================
================================================================================
FUND OBJECTIVE
EFFECTIVE JULY 12, 2013, THE FUND WAS RENAMED TO GLOBAL MANAGED VOLATILITY FUND,
AND THE NEW OBJECTIVE SEEKS TO ATTAIN LONG-TERM CAPITAL APPRECIATION WHILE
ATTEMPTING TO REDUCE VOLATILITY DURING UNFAVORABLE MARKETS CONDITIONS.
--------------------------------------------------------------------------------
TYPES OF INVESTMENTS
The Fund's principal strategy is to combine a portfolio of domestic and foreign
equity and debt securities with the use of alternative investment strategies to
provide growth with greater downside risk controls. The Fund may invest in
multiple asset classes including U.S. stocks, non-U.S. stocks in developed and
emerging markets, global real estate securities, and fixed-income securities.
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 set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Asset Management Company at
(800) 531-USAA (8722).
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.
================================================================================
FUND OBJECTIVE | 1
================================================================================
MANAGERS' COMMENTARY ON THE FUND
USAA Asset Management Company Quantitative Management Associates LLC
JOHN P. TOOHEY, CFA JACOB POZHARNY, Ph.D.
WASIF A. LATIF JOHN VAN BELLE, Ph.D.
R. MATTHEW FREUND, CFA
ARNOLD J. ESPE, CFA QS Investors, LLC
JULIANNE BASS, CFA ROBERT WANG
DAN DENBOW, CFA RUSSELL SHTERN, CFA
--------------------------------------------------------------------------------
o HOW DID THE USAA GLOBAL OPPORTUNITIES FUND (THE FUND) PERFORM DURING THE
REPORTING PERIOD?
The Fund ended the reporting period with a total return of 2.21%, which
compares to returns of 13.82% for the S&P 500(R) Index (the Index), 6.05% for
the MSCI All-Country World Index, and -2.44% for the Barclays U.S. Aggregate
Bond Index.
o HOW DID THE GLOBAL FINANCIAL MARKETS PERFORM DURING THE REPORTING PERIOD?
During the first six months of 2013, financial market performance was driven
primarily by the outlook for global economic growth and central bank policy.
In the United States, the economy continued to be supported by a rebound in
the housing market, the ongoing strength in the domestic energy sector, and a
steady decline in the headline unemployment rate. The domestic economy appears
to be on track for growth of 2% to 2.5% in 2013, which -- while below the
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Refer to page 8 for benchmark definitions.
================================================================================
2 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
longer-term trend -- is attractive relative to the rest of the world. These
factors contributed to outperformance for U.S. equities, which delivered a
strong return of 13.82% as measured by the Index.
Economic growth trends overseas were not nearly as positive as those here at
home. At a time of weak economic growth in Europe and Japan, along with
slowing growth in key emerging markets such as China and Brazil, investors
gravitated away from international equities. The developed-market MSCI EAFE
Index closed with a gain of 4.11%, while the MSCI Emerging Markets Index
underperformed sharply with a return of -9.57%.
The bond market finished the reporting period with a loss of -2.44%, as gauged
by the Barclays U.S. Aggregate Bond Index. The bond market was pressured by
both the steady improvement in the U.S. economy as well as the fear, toward
the tail end of the period, that the U.S. Federal Reserve (the Fed) may
"taper" (or reduce) the stimulative bond-buying program known as quantitative
easing (QE) before year-end. However, high yield-bonds outperformed due to
their lower degree of interest rate risk and the continued demand for assets
with attractive yields through the first calendar quarter.
o WHAT WERE THE KEY DRIVERS OF THE FUND'S PERFORMANCE DURING THE REPORTING
PERIOD?
The Fund's objective is to provide exposure to the long-term upside of the
global stock markets and at the same time attempt to smooth volatility and
manage the risk of serious losses.
The Fund's largest allocation is to domestic equities, which enabled us to
benefit from the strong performance of the U.S. stock market during the first
half. Our U.S. equity portfolio, managed by QS Investors, LLC (QS),
outperformed the broader market due to the strength in its individual stock
selection.
Our equity hedging strategy, which seeks to manage the risk of stock market
volatility through the use of options, was a slight drag on
================================================================================
MANAGERS' COMMENTARY ON THE FUND | 3
================================================================================
performance at a time of strong, double-digit gains in U.S. equities. The
majority of the shortfall occurred in the first calendar quarter, during which
stocks produced the bulk of their first-half gain. However, the strategy added
modestly to our performance in the second quarter, when the concerns about
tapering led to increased market volatility. We believe this helps illustrate
how our hedging strategy provides a "smoother ride" for the Fund during times
of unsteady market performance.
The Fund's international allocation, which was very positive for our relative
performance in 2012, was a detractor in the first half of the year. On the
plus side, our developed-markets allocation -- a portion of which is
sub-advised by the manager Quantitative Management Associates LLC (QMA) --
finished in positive territory and was augmented by QMA's strong stock
selection. This positive performance was offset, in part, by our positions in
exchange-traded funds (ETFs) linked to the returns of the European region in
general, as well as those that track specific markets, including Germany and
Italy. We added these positions throughout 2012 on the belief that the
European markets had become oversold and offered a compelling value. This
position worked well last year, but it has detracted so far in 2013 given the
underperformance of European equities.
Our emerging market allocation was the largest detractor from performance. Our
weighting in the asset class is diversified among broad-based ETFs, ETFs that
focus on emerging market small-cap stocks, and single-country ETFs that
provide exposure to China, Turkey, Brazil, Russia, and Indonesia. While our
positions in small-cap stocks and Indonesia held up better than the market as
a whole, the overall allocation finished with a negative return.
The Fund also holds a modest allocation to bonds. Although the bond market
suffered a downturn during the reporting period, our bond portfolio
outperformed on the strength of individual security selection and our decision
to maintain an interest rate sensitivity below that of the market as a whole.
While we expect that yields will
================================================================================
4 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
have an upward bias in the longer term, we are maintaining a position in bonds
to augment portfolio diversification and to achieve a measure of defensiveness
in the event of volatility in the global financial markets.
o HOW YOU WOULD CHARACTERIZE YOUR VIEW ON THE U.S. ECONOMY AND FINANCIAL
MARKETS?
We remain cautiously optimistic in our broad outlook. Although the prospect of
tapering of QE caused a substantial market reaction, it is important to
remember that the Fed will only begin to pull back on QE if economic growth is
strong enough to warrant a reduction. What's more, "tapering" is not the same
as "tightening" (removing stimulus altogether). Still, the data-driven nature
of Fed policy is likely to contribute to increased market volatility as
investors give even greater scrutiny to individual economic reports in the
months ahead.
Looking beyond Fed policy, the renewed strength in certain pockets of the U.S.
economy continues to act as a tailwind for the domestic financial markets.
Rising housing prices, increasing homebuilding activity, and a year-over-year
decline in the headline unemployment rate all remain important pillars of
support. In addition, corporate balance sheets are flush with cash, which
provides the opportunity for companies to increase dividends and invest for
future growth. The United States is also experiencing a boom in domestic
natural gas and oil production, leading to lower energy costs for businesses
and consumers.
At the same time, however, there is insufficient evidence to determine whether
the economy is in fact strong enough to stand on its own without the stimulus
from the Fed and other global central banks. Thus far, the recovery has been
muted even with the benefit of aggressive central bank support. Given that
investors have grown increasingly optimistic on the second-half economic
outlook, we are on the lookout for any sign that growth could surprise to the
downside.
================================================================================
MANAGERS' COMMENTARY ON THE FUND | 5
================================================================================
As the stewards of our investors' capital, our response to this uncertain
environment is to look for ways to improve diversification and protect the
portfolio against the full impact of market volatility. Our goal is to capture
as much market upside as possible, while at the same time protecting capital
and managing risk. We believe the value of this approach will be evident over
a full market cycle.
Thank you for your investment in the Fund.
Exchange-traded funds (ETFs) are subject to risks similar to those of stocks.
Investment returns may fluctuate and are subject to market volatility, so that
an investor's shares, when redeemed or sold, may be worth more or less than
their original cost. o Alternative Alternative investments carry specific
investor qualifications which can include high income and net-worth
requirements as well as relatively high investment minimums. They are complex
investment vehicles, generally carry high costs, substantial risks, and may be
highly volatile. There is often limited (or even non-existent) liquidity and a
lack of transparency regarding the underlying assets. o Diversification is a
technique to help reduce risk and does not guarantee a profit or prevent a
loss. o Foreign investing is subject to additional risks, such as currency
fluctuations, market illiquidity, and political instability. Emerging market
countries are most volatile. Emerging market countries are less diverse and
mature than other countries and tend to be politically less stable. o As
interest rates rise, existing bond prices fall.
================================================================================
6 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
INVESTMENT OVERVIEW
USAA GLOBAL OPPORTUNITIES FUND (THE FUND) (Ticker Symbol: UGOFX)
--------------------------------------------------------------------------------
6/30/13 12/31/12
--------------------------------------------------------------------------------
Net Assets $358.0 Million $380.9 Million
Net Asset Value Per Share $10.18 $9.96
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/13
--------------------------------------------------------------------------------
12/31/2012-6/30/2013* 1 Year Since Inception 7/31/08
2.21% 9.59% 2.82%
--------------------------------------------------------------------------------
EXPENSE RATIO AS OF 12/31/12**
--------------------------------------------------------------------------------
0.97%
(Includes acquired fund fees and expenses of 0.17%)
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**The expense ratio represents the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated May 1, 2013, and is
calculated as a percentage of average net assets. This expense ratio may differ
from the expense ratio disclosed in the Financial Highlights, which excludes
acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. The total
returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions or the
redemption of shares.
================================================================================
INVESTMENT OVERVIEW | 7
================================================================================
o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
BARCLAYS U.S. MSCI ALL-COUNTRY USAA GLOBAL
AGGREGATE BOND INDEX WORLD INDEX OPPORTUNITIES FUND
7/31/2008 $10,000.00 $10,000.00 $10,000.00
8/31/2008 10,094.91 9,784.46 10,100.00
9/30/2008 9,959.32 8,561.59 9,260.00
10/31/2008 9,724.23 6,865.11 8,820.00
11/30/2008 10,040.76 6,414.09 8,450.00
12/31/2008 10,415.37 6,646.55 8,671.84
1/31/2009 10,323.47 6,078.68 8,097.08
2/28/2009 10,284.50 5,483.51 7,542.48
3/31/2009 10,427.47 5,935.18 7,865.16
4/30/2009 10,477.33 6,635.81 8,389.50
5/31/2009 10,553.32 7,296.99 8,853.34
6/30/2009 10,613.35 7,256.08 8,934.01
7/31/2009 10,784.54 7,894.81 9,407.94
8/31/2009 10,896.20 8,177.17 9,599.52
9/30/2009 11,010.66 8,552.32 9,932.28
10/31/2009 11,065.03 8,420.15 9,821.36
11/30/2009 11,208.28 8,766.46 10,133.95
12/31/2009 11,033.08 8,948.00 10,310.56
1/31/2010 11,201.62 8,561.29 10,020.12
2/28/2010 11,243.45 8,670.35 10,175.71
3/31/2010 11,229.63 9,228.14 10,528.38
4/30/2010 11,346.52 9,243.67 10,600.99
5/31/2010 11,442.00 8,359.22 10,123.85
6/30/2010 11,621.43 8,109.54 9,729.68
7/31/2010 11,745.42 8,769.40 10,082.35
8/31/2010 11,896.55 8,462.84 9,688.19
9/30/2010 11,909.23 9,272.44 10,227.57
10/31/2010 11,951.63 9,607.56 10,331.30
11/30/2010 11,882.94 9,393.79 10,227.57
12/31/2010 11,754.80 10,081.68 10,555.03
1/31/2011 11,768.48 10,239.89 10,607.34
2/28/2011 11,797.92 10,538.07 10,806.09
3/31/2011 11,804.44 10,527.55 10,858.40
4/30/2011 11,954.28 10,958.25 11,067.62
5/31/2011 12,110.29 10,722.70 11,004.85
6/30/2011 12,074.83 10,553.74 10,921.16
7/31/2011 12,266.44 10,381.92 10,858.40
8/31/2011 12,445.65 9,623.53 10,178.44
9/30/2011 12,536.18 8,714.95 9,676.32
10/31/2011 12,549.65 9,648.69 10,251.67
11/30/2011 12,538.76 9,359.86 10,324.89
12/31/2011 12,676.57 9,340.95 10,196.48
1/31/2012 12,787.88 9,884.10 10,569.39
2/29/2012 12,784.95 10,381.40 10,867.72
3/31/2012 12,714.90 10,450.43 10,878.37
4/30/2012 12,855.86 10,330.85 10,771.83
5/31/2012 12,972.18 9,404.60 10,164.51
6/30/2012 12,977.27 9,869.09 10,462.84
7/31/2012 13,156.26 10,004.19 10,526.77
8/31/2012 13,164.86 10,221.72 10,707.90
9/30/2012 13,182.98 10,543.66 10,931.65
10/31/2012 13,208.91 10,473.39 10,889.03
11/30/2012 13,229.75 10,607.32 10,974.26
12/31/2012 13,210.92 10,847.58 11,218.62
1/31/2013 13,118.52 11,347.31 11,601.58
2/28/2013 13,184.27 11,345.54 11,432.63
3/31/2013 13,194.80 11,550.56 11,455.15
4/30/2013 13,328.31 11,883.03 11,657.90
5/31/2013 13,090.51 11,850.43 11,669.16
6/30/2013 12,888.02 11,504.05 11,466.42
[END CHART]
Data since Fund inception 7/31/08 to 6/30/13.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Global Opportunities Fund to the following benchmarks:
o The Barclays U.S. Aggregate Bond Index is an unmanaged index of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index.
o The MCSI All-Country World Index is a free float-adjusted market
capitalization weighted index that is designed to measure the equity market
performance of developed and emerging markets.
Past performance is no guarantee of future results, and the cumulative
performance quoted does not reflect the deduction of taxes that a shareholder
would pay on distributions or the redemption of shares. Indexes are unmanaged
and you cannot invest directly in an index.
================================================================================
8 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
o TOP 10 EQUITY HOLDINGS o
AS OF 6/30/13
(% of Net Assets)
iShares MSCI Germany Index Fund* ......................................... 9.3%
iShares MSCI EAFE Index Fund* ............................................ 6.3%
Vanguard FTSE Emerging Markets ETF* ...................................... 4.1%
iShares MSCI EMU Index Fund* ............................................. 3.7%
WisdomTree Emerging Markets SmallCap Dividend Fund* ...................... 2.8%
iShares MSCI Italy Capped Index Fund* .................................... 2.6%
iShares Core MSCI Emerging Markets ETF* .................................. 1.9%
iShares MSCI Brazil Capped Index Fund* ................................... 1.0%
Exxon Mobil Corp. ........................................................ 1.0%
iShares MSCI Turkey Investable Market Index Fund* ........................ 1.0%
o ASSET ALLOCATION** o
AS OF 6/30/13
(% of Net Assets)
[PIE CHART OF ASSET ALLOCATION]
COMMON STOCKS 51.0%
EQUITY EXCHANGE-TRADED FUNDS* 36.0%
MONEY MARKET INSTRUMENTS 6.5%
CORPORATE OBLIGATIONS 2.3%
COMMERCIAL MORTGAGE SECURITIES 2.3%
EURODOLLAR AND YANKEE OBLIGATIONS 0.4%
PREFERRED STOCKS 0.3%
[END CHART]
* The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth
in the Investment Company Act of 1940, as amended, that would otherwise be
applicable.
** Excludes futures and options.
Percentages are of net assets of the Fund and may not equal 100%.
You will fund a complete list of securities that the Fund owns on pages 10-36.
================================================================================
INVESTMENT OVERVIEW | 9
================================================================================
PORTFOLIO OF INVESTMENTS
June 30, 2013 (unaudited)
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
EQUITY SECURITIES (87.3%)
COMMON STOCKS (51.0%)
CONSUMER DISCRETIONARY (5.8%)
-----------------------------
ADVERTISING (0.1%)
90 Hakuhodo Dy Holdings, Inc. $ 6
3,346 Publicis Groupe S.A. 238
3,963 WPP plc 68
--------
312
--------
APPAREL RETAIL (0.4%)
500 Fast Retailing Co. Ltd. 169
6,600 Foot Locker, Inc. 232
11,000 Gap, Inc. 459
100 Shimamura Co. Ltd. 12
8,600 TJX Companies, Inc. 430
--------
1,302
--------
APPAREL, ACCESSORIES & LUXURY GOODS (0.2%)
842 Adidas AG 91
1,818 Burberry Group plc 37
2,169 Compagnie Financiere Richemont S.A. 192
7,500 Hanesbrands, Inc. 386
102 Swatch Group AG 56
--------
762
--------
AUTO PARTS & EQUIPMENT (0.4%)
800 Aisin Seiki Co. Ltd. 31
441 Continental AG 59
2,100 Denso Corp. 99
3,500 Lear Corp. 212
400 NOK Corp. 6
600 Stanley Electric Co. Ltd. 12
9,300 Toyoda Gosei Co. Ltd. 228
16,900 Toyota Boshoku Corp. 244
600 Toyota Industries Corp. 24
6,600 Visteon Corp.* 416
--------
1,331
--------
================================================================================
10 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
AUTOMOBILE MANUFACTURERS (0.5%)
127 Bayerische Motoren Werke AG $ 11
1,000 Daihatsu Motor Co., Ltd. 19
44,125 Fiat S.p.A.* 308
16,000 Fuji Heavy Industries Ltd. 395
400 Honda Motor Co. Ltd. 15
5,000 Isuzu Motors Ltd. 34
11,000 Mazda Motor Corp.* 43
2,800 Nissan Motor Co. Ltd. 28
816 Peugeot S.A.* 7
2,034 Renault S.A. 137
11,300 Suzuki Motor Corp. 261
7,000 Toyota Motor Corp. 423
123 Volkswagen AG 24
--------
1,705
--------
BROADCASTING (0.1%)
136,327 ITV plc 290
2,300 Scripps Networks Interactive "A" 154
--------
444
--------
CABLE & SATELLITE (0.5%)
2,700 AMC Networks, Inc. "A"* 177
34,200 Comcast Corp. "A" 1,432
--------
1,609
--------
CASINOS & GAMING (0.2%)
13,000 Galaxy Entertainment Group Ltd.* 64
8,200 Las Vegas Sands Corp. 434
14,029 OPAP S.A. 117
8,000 SJM Holdings Ltd. 19
3,493 William Hill plc 24
900 Wynn Resorts Ltd. 115
--------
773
--------
COMPUTER & ELECTRONICS RETAIL (0.3%)
16,300 Best Buy Co., Inc. 446
11,900 GameStop Corp. "A" 500
--------
946
--------
CONSUMER ELECTRONICS (0.0%)
4,300 Sony Corp. 90
--------
DEPARTMENT STORES (0.2%)
5,300 Dillard's, Inc. "A" 435
1,600 Isetan Mitsukoshi Holdings Ltd. 21
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
6,300 Macy's, Inc. $ 302
1,000 Marui Group Co. Ltd. 10
1,042 Next plc 72
4,000 Takashimaya Co. Ltd. 41
--------
881
--------
FOOTWEAR (0.1%)
5,900 NIKE, Inc. "B" 376
--------
GENERAL MERCHANDISE STORES (0.1%)
3,100 Target Corp. 213
--------
HOME FURNISHINGS (0.1%)
3,900 Mohawk Industries, Inc.* 439
--------
HOME IMPROVEMENT RETAIL (0.4%)
14,000 Home Depot, Inc. 1,085
5,700 Lowe's Companies, Inc. 233
--------
1,318
--------
HOMEBUILDING (0.1%)
18,100 PulteGroup, Inc.* 343
2,000 Sekisui Chemical Co. Ltd. 21
2,000 Sekisui House Ltd. 29
--------
393
--------
HOTELS, RESORTS & CRUISE LINES (0.4%)
631 Accor SA 22
6,682 Flight Centre Ltd. 240
7,500 Marriott International, Inc. "A" 303
9,300 Starwood Hotels & Resorts Worldwide, Inc. 588
50,624 TUI Travel plc 275
--------
1,428
--------
HOUSEHOLD APPLIANCES (0.1%)
100 Rinnai Corp. 7
4,100 Whirlpool Corp. 469
--------
476
--------
INTERNET RETAIL (0.2%)
800 Amazon.com, Inc.* 222
700 priceline.com, Inc.* 579
--------
801
--------
LEISURE FACILITIES (0.0%)
200 Oriental Land Co. Ltd. 31
--------
================================================================================
12 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
LEISURE PRODUCTS (0.1%)
3,300 Mattel, Inc. $ 149
13,600 NAMCO BANDAI Holdings, Inc. 221
300 Shimano, Inc. 25
3,100 Yamaha Corp. 36
--------
431
--------
MOVIES & ENTERTAINMENT (0.7%)
5,500 Madison Square Garden Co. "A"* 326
8,500 News Corp. "A" 277
10,366 Time Warner, Inc. 599
2,100 Viacom, Inc. "B" 143
18,700 Walt Disney Co. 1,181
--------
2,526
--------
PUBLISHING (0.1%)
453 Lagardere SCA 12
944 Washington Post Co. "B" 457
--------
469
--------
RESTAURANTS (0.2%)
5,400 McDonald's Corp. 534
4,500 Starbucks Corp. 295
--------
829
--------
SPECIALIZED CONSUMER SERVICES (0.1%)
4,800 H&R Block, Inc. 133
14,100 Service Corp. International 254
--------
387
--------
SPECIALTY STORES (0.1%)
12,900 Staples, Inc. 205
--------
TIRES & RUBBER (0.1%)
2,600 Bridgestone Corp. 89
727 Compagnie Generale des Etablissements Michelin 65
700 Sumitomo Rubber Industries Ltd. 11
--------
165
--------
Total Consumer Discretionary 20,642
--------
CONSUMER STAPLES (5.2%)
-----------------------
AGRICULTURAL PRODUCTS (0.0%)
307,000 Golden Agri-Resources Ltd. 136
--------
BREWERS (0.1%)
537 Anheuser-Busch InBev N.V. 48
700 Asahi Group Holdings Ltd. 17
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
427 Carlsberg A.S. "B" $ 38
4,399 Heineken Holding N.V. 247
922 Heineken N.V. 59
4,000 Kirin Holdings Co. Ltd. 63
336 SABMiller plc 16
--------
488
--------
DISTILLERS & VINTNERS (0.1%)
8,817 Diageo plc 252
--------
DRUG RETAIL (0.4%)
17,100 CVS Caremark Corp. 978
10,200 Walgreen Co. 451
--------
1,429
--------
FOOD RETAIL (0.6%)
2,489 Casino Guichard-Perrachon S.A. 233
3,704 Delhaize Group 229
51,896 J Sainsbury plc 280
13,925 Koninklijke Ahold N.V. 207
7,600 Kroger Co. 263
13,600 Safeway, Inc. 322
2,400 Seven & i Holdings Co. Ltd. 88
4,200 Whole Foods Market, Inc. 216
33,632 William Morrison Supermarket plc 134
1,780 Woolworths Ltd. 53
--------
2,025
--------
HOUSEHOLD PRODUCTS (0.9%)
8,000 Colgate-Palmolive Co. 458
2,408 Henkel AG & Co. KGaA 189
6,300 Kimberly-Clark Corp. 612
21,700 Procter & Gamble Co. 1,671
6,200 Reckitt Benckiser Group plc 438
--------
3,368
--------
HYPERMARKETS & SUPER CENTERS (0.4%)
2,600 Aeon Co. Ltd. 34
1,402 Carrefour S.A. 39
5,900 Costco Wholesale Corp. 652
9,500 Wal-Mart Stores, Inc. 708
--------
1,433
--------
PACKAGED FOODS & MEAT (0.9%)
1,416 Associated British Foods plc 37
758 DANONE S.A. 57
================================================================================
14 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
6,600 Flowers Foods, Inc. $ 146
3,900 Green Mountain Coffee Roasters, Inc.* 293
2,900 Hershey Co. 259
4,700 Hillshire Brands Co. 155
2,200 J.M. Smucker Co. 227
3,366 Kraft Foods Group, Inc. 188
3 Lindt & Spruengli AG 11
11,460 Nestle S.A. 752
1,000 Nippon Meat Packers, Inc. 15
7,416 Suedzucker AG 230
1,839 Tate & Lyle plc 23
15,000 Tyson Foods, Inc. "A" 385
6,151 Unilever N.V. 242
--------
3,020
--------
PERSONAL PRODUCTS (0.2%)
27,300 Avon Products, Inc. 574
4,700 Nu Skin Enterprises, Inc. "A" 287
--------
861
--------
SOFT DRINKS (0.7%)
30,000 Coca-Cola Co. 1,203
14,100 PepsiCo, Inc. 1,153
--------
2,356
--------
TOBACCO (0.9%)
24,900 Altria Group, Inc. 871
12,508 British American Tobacco plc 641
12,200 Japan Tobacco, Inc. 431
9,300 Lorillard, Inc. 406
9,800 Philip Morris International, Inc. 849
842 Swedish Match AB 30
--------
3,228
--------
Total Consumer Staples 18,596
--------
ENERGY (4.9%)
-------------
INTEGRATED OIL & GAS (2.8%)
418 BG Group plc 7
115,703 BP plc 801
18,900 Chevron Corp. 2,237
20,233 ENI S.p.A. 416
40,300 Exxon Mobil Corp. 3,641
2,700 Hess Corp. 180
7,000 Murphy Oil Corp. 426
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
5,000 Occidental Petroleum Corp. $ 446
5,707 OMV AG 258
5,548 Repsol S.A. 117
10,184 Royal Dutch Shell plc "A" 325
14,981 Royal Dutch Shell plc "B" 496
13,651 Total S.A. 666
--------
10,016
--------
OIL & GAS DRILLING (0.1%)
3,800 Helmerich & Payne, Inc. 238
1,440 Transocean Ltd. 69
--------
307
--------
OIL & GAS EQUIPMENT & SERVICES (0.2%)
8,200 Schlumberger Ltd. 588
9,500 Superior Energy Services, Inc.* 246
--------
834
--------
OIL & GAS EXPLORATION & PRODUCTION (1.1%)
2,000 Anadarko Petroleum Corp. 172
6,500 Cabot Oil & Gas Corp. 462
18,400 ConocoPhillips 1,113
5,400 EOG Resources, Inc. 711
2,000 EQT Corp. 159
3 INPEX Corp. 12
20,600 Marathon Oil Corp. 712
13,300 Southwestern Energy Co.* 486
--------
3,827
--------
OIL & GAS REFINING & MARKETING (0.7%)
4,200 HollyFrontier Corp. 180
100 Idemitsu Kosan Co. Ltd. 8
19,600 JX Holdings, Inc. 95
8,800 Marathon Petroleum Corp. 625
512 Neste Oil Oyj 7
8,100 Phillips 66 477
15,800 Tesoro Corp. 827
14,700 Valero Energy Corp. 511
--------
2,730
--------
Total Energy 17,714
--------
FINANCIALS (10.4%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (1.0%)
45,234 3i Group plc 232
46,728 Aberdeen Asset Management plc 272
1,400 BlackRock, Inc. 360
================================================================================
16 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
6,700 Eaton Vance Corp. $ 252
3,200 Franklin Resources, Inc. 435
11,200 Invesco Ltd. 356
253 Partners Group Holding AG 69
431 Schroders plc 15
5,600 SEI Investments Co. 159
7,900 State Street Corp. 515
4,800 T. Rowe Price Group, Inc. 351
11,800 Waddell & Reed Financial, Inc. "A" 513
--------
3,529
--------
CONSUMER FINANCE (0.2%)
7,900 American Express Co. 590
6,100 Discover Financial Services 291
--------
881
--------
DIVERSIFIED BANKS (1.9%)
88,000 Aozora Bank Ltd. 275
20,415 Australia and New Zealand Banking Group Ltd. 534
1,121 Banco Santander S.A. 7
4,340 Bank Hapoalim B.M.* 20
4,800 Bank of East Asia Ltd. 17
532 BNP Paribas S.A. 29
13,000 BOC Hong Kong Holdings Ltd. 40
10,235 Commonwealth Bank of Australia 648
3,000 DBS Group Holdings Ltd. 37
13,355 DnB NOR ASA 193
50,581 HSBC Holdings plc 525
54,400 Mitsubishi UFJ Financial Group, Inc. 336
186,700 Mizuho Financial Group, Inc. 388
9,979 National Australia Bank Ltd. 271
15,131 Nordea Bank AB 169
10,000 Oversea-Chinese Banking Corp. Ltd. 79
6,251 Skandinaviska Enskilda Banken "A" 60
5,403 Standard Chartered plc 117
10,600 Sumitomo Mitsui Financial Group, Inc. 486
12,000 Sumitomo Mitsui Trust Holdings, Inc. 56
2,054 Svenska Handelsbanken AB "A" 82
15,589 Swedbank AB "A" 357
2,000 United Overseas Bank Ltd. 31
33,100 Wells Fargo & Co. 1,366
21,398 Westpac Banking Corp. 565
--------
6,688
--------
DIVERSIFIED CAPITAL MARKETS (0.1%)
11,962 UBS AG 204
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
DIVERSIFIED REAL ESTATE ACTIVITIES (0.2%)
300 DAITO Trust Construction Co. Ltd. $ 28
9,000 Hang Lung Properties Ltd. 31
15,000 New World Development Co. Ltd. 21
2,000 UOL Group Ltd. 11
36,000 Wharf Holdings Ltd. 303
50,000 Wheelock & Co. Ltd. 250
--------
644
--------
INVESTMENT BANKING & BROKERAGE (0.4%)
18,000 Daiwa Securities Group, Inc. 151
5,100 Goldman Sachs Group, Inc. 771
2,149 ICAP plc 12
10,500 Morgan Stanley 257
15,700 Nomura Holdings, Inc. 116
--------
1,307
--------
LIFE & HEALTH INSURANCE (0.2%)
40,773 AEGON N.V. 273
3,100 AFLAC, Inc. 180
66,139 Legal & General Group plc 172
10,393 Prudential plc 170
9,521 Standard Life plc 50
--------
845
--------
MULTI-LINE INSURANCE (0.3%)
7,439 Ageas 261
1,820 Allianz SE 266
4,000 American International Group, Inc.* 179
12,579 AXA S.A. 247
4,126 Sampo Oyj "A" 161
--------
1,114
--------
MULTI-SECTOR HOLDINGS (0.1%)
12,285 Industrivarden AB "C" 205
10,314 Investor AB "B" 277
--------
482
--------
OTHER DIVERSIFIED FINANCIAL SERVICES (1.3%)
90,100 Bank of America Corp. 1,159
28,310 Citigroup, Inc. 1,358
37,400 JPMorgan Chase & Co. 1,974
4,400 ORIX Corp. 60
--------
4,551
--------
================================================================================
18 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
PROPERTY & CASUALTY INSURANCE (1.7%)
8,400 Allstate Corp. $ 404
11,600 AXIS Capital Holdings Ltd. 531
16,100 Berkshire Hathaway, Inc. "B"* 1,802
7,400 Chubb Corp. 627
10,600 Cincinnati Financial Corp. 487
7,800 Fidelity National Financial, Inc. "A" 186
13,200 Old Republic International Corp. 170
29,000 Progressive Corp. 737
10,500 Travelers Companies, Inc. 839
1,109 Tryg A/S 91
4,600 W.R. Berkley Corp. 188
7,300 XL Group plc 221
--------
6,283
--------
REAL ESTATE DEVELOPMENT (0.0%)
23,000 Sino Land Co. 32
--------
REAL ESTATE OPERATING COMPANIES (0.1%)
58,000 Hysan Development Co. Ltd. 251
--------
REAL ESTATE SERVICES (0.1%)
9,200 CBRE Group, Inc. "A"* 215
1,700 Jones Lang LaSalle, Inc. 155
--------
370
--------
REGIONAL BANKS (0.9%)
4,000 Bank of Yokohama Ltd. 21
12,200 BankUnited, Inc. 317
3,000 Chiba Bank Ltd. 20
1,600 First Citizens BancShares, Inc. "A" 307
44,200 First Niagara Financial Group, Inc. 445
3,000 Fukuoka Financial Group, Inc. 13
1,000 Iyo Bank Ltd. 10
2,000 Joyo Bank Ltd. 11
19,600 KeyCorp 216
3,700 PNC Financial Services Group, Inc. 270
17,800 Popular, Inc.* 540
40,000 Regions Financial Corp. 381
8,100 Resona Holdings, Inc. 39
8,800 SunTrust Banks, Inc. 278
3,000 Yamaguchi Financial Group, Inc. 30
15,200 Zions Bancorp 439
--------
3,337
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
REINSURANCE (0.5%)
4,600 Arch Capital Group Ltd.* $ 236
1,400 Everest Re Group Ltd. 180
2,646 Hannover Rueckversicherung AG 191
2,066 Muenchener Rueckversicherungs-Gesellschaft AG 380
3,500 RenaissanceRe Holdings Ltd. 304
4,997 Swiss Re AG 372
--------
1,663
--------
REITs - DIVERSIFIED (0.0%)
37,000 BGP Holdings plc, acquired 8/06/2009; cost: $0*(a),(b),(c) -
80 Gecina S.A. 9
6,886 GPT Group 24
--------
33
--------
REITs - INDUSTRIAL (0.0%)
1 Nippon Prologis REIT, Inc. 9
--------
REITs - RETAIL (0.3%)
10,000 CapitaMall Trust 16
7,200 CBL & Associates Properties, Inc. 154
8,003 CFS Retail Property Trust 15
9 Japan Retail Fund Investment Corp. 19
47,000 Link REIT 231
1,000 Simon Property Group, Inc. 158
6,600 Weingarten Realty Investors 203
91,198 Westfield Retail Trust 258
--------
1,054
--------
REITs - SPECIALIZED (0.8%)
6,858 Corrections Corp. of America 232
4,600 Extra Space Storage, Inc. 193
5,600 HCP, Inc. 255
33,200 Host Hotels & Resorts, Inc. 560
3,100 Public Storage 475
3,600 Rayonier, Inc. 200
30,400 Weyerhaeuser Co. 866
--------
2,781
--------
SPECIALIZED FINANCE (0.3%)
12,400 CBOE Holdings, Inc. 578
3,000 CME Group, Inc. 228
200 Japan Exchange Group, Inc. 20
3,100 McGraw-Hill Companies, Inc. 165
4,400 Moody's Corp. 268
--------
1,259
--------
Total Financials 37,317
--------
================================================================================
20 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
HEALTH CARE (6.9%)
------------------
BIOTECHNOLOGY (1.0%)
4,476 Actelion Ltd. $ 270
2,700 Alexion Pharmaceuticals, Inc.* 249
6,300 Amgen, Inc. 621
3,300 Biogen Idec, Inc.* 710
5,700 Celgene Corp.* 666
2,696 CSL Ltd. 152
10,800 Gilead Sciences, Inc.* 553
6,400 Myriad Genetics, Inc.* 172
4,600 United Therapeutics Corp.* 303
--------
3,696
--------
HEALTH CARE DISTRIBUTORS (0.2%)
200 Alfresa Holdings Corp. 11
7,300 AmerisourceBergen Corp. 407
2,600 McKesson Corp. 298
500 Medipal Holdings Corp. 7
--------
723
--------
HEALTH CARE EQUIPMENT (0.5%)
21,100 Abbott Laboratories 736
2,900 Baxter International, Inc. 201
2,500 Becton, Dickinson & Co. 247
7,800 Medtronic, Inc. 401
3,945 Smith & Nephew plc 44
200 Terumo Corp. 10
2,800 Zimmer Holdings, Inc. 210
--------
1,849
--------
HEALTH CARE FACILITIES (0.1%)
3,100 Community Health Systems, Inc. 145
3,200 Tenet Healthcare Corp.* 148
--------
293
--------
HEALTH CARE SERVICES (0.1%)
2,500 Express Scripts Holding Co.* 154
292 Fresenius SE & Co. KGaA 36
200 Miraca Holdings, Inc. 9
--------
199
--------
HEALTH CARE SUPPLIES (0.0%)
1,385 Coloplast A/S "B" 78
--------
HEALTH CARE TECHNOLOGY (0.1%)
2,600 Cerner Corp.* 250
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 21
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.1%)
3,700 Covance, Inc.* $ 282
3,000 Illumina, Inc.* 224
738 Lonza Group AG 56
--------
562
--------
MANAGED HEALTH CARE (1.2%)
12,900 Aetna, Inc. 819
5,900 CIGNA Corp. 428
35,900 Health Net, Inc.* 1,142
2,700 Humana, Inc. 228
5,800 UnitedHealth Group, Inc. 380
17,800 WellPoint, Inc. 1,457
--------
4,454
--------
PHARMACEUTICALS (3.6%)
9,700 AbbVie, Inc. 401
1,700 Actavis, Inc.* 215
2,800 Allergan, Inc. 236
4,990 AstraZeneca plc 236
1,175 Bayer AG 125
15,400 Bristol-Myers Squibb Co. 688
20,900 Eli Lilly and Co. 1,027
28,305 GlaxoSmithKline plc 709
29,700 Johnson & Johnson 2,550
23,400 Merck & Co., Inc. 1,087
800 Mitsubishi Tanabe Pharma Corp. 10
7,025 Novartis AG 499
3,032 Novo Nordisk A/S "B" 473
9,575 Orion Oyj "B" 225
1,500 Otsuka Holdings Co. Ltd. 50
2,100 Perrigo Co. 254
61,700 Pfizer, Inc. 1,728
3,911 Roche Holding AG 973
2,700 Salix Pharmaceuticals Ltd.* 179
3,405 Sanofi 353
1,300 Shionogi & Co. Ltd. 27
10,430 Teva Pharmaceutical Industries Ltd. 403
200 Tsumura & Co. 6
14,300 Warner Chilcott plc "A" 284
--------
12,738
--------
Total Health Care 24,842
--------
================================================================================
22 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
INDUSTRIALS (5.1%)
------------------
AEROSPACE & DEFENSE (2.0%)
3,200 Alliant Techsystems, Inc. $ 263
43,807 BAE Systems plc 255
10,200 Boeing Co. 1,045
10,500 Engility Holdings, Inc. 298
7,144 European Aeronautic Defense and Space Co. EADS N.V. 382
43,800 Exelis, Inc. 604
2,400 General Dynamics Corp. 188
7,500 Honeywell International, Inc. 595
9,100 Huntington Ingalls Industries, Inc. 514
5,200 Lockheed Martin Corp. 564
21,620 Meggitt plc 170
7,100 Northrop Grumman Corp. 588
1,600 Precision Castparts Corp. 362
9,800 Raytheon Co. 648
2,757 Thales S.A. 129
3,800 United Technologies Corp. 353
--------
6,958
--------
AIR FREIGHT & LOGISTICS (0.1%)
3,569 Deutsche Post AG 89
4,200 United Parcel Service, Inc. "B" 363
--------
452
--------
AIRLINES (0.2%)
12,438 easyJet plc 245
3,551 International Consolidated Airlines Group SA* 14
5,250 Ryanair Holdings plc ADR 271
12,600 Southwest Airlines Co. 162
--------
692
--------
AIRPORT SERVICES (0.1%)
79,512 Auckland International Airport Ltd. 183
--------
BUILDING PRODUCTS (0.2%)
147 Geberit AG 37
3,100 Lennox International, Inc. 200
18,200 Masco Corp. 355
1,000 Toto Ltd. 10
--------
602
--------
COMMERCIAL PRINTING (0.1%)
2,000 Dai Nippon Printing Co. Ltd. 18
32,800 R.R. Donnelley & Sons Co. 460
2,000 Toppan Printing Co. Ltd. 14
--------
492
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 23
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.2%)
1,984 Bouygues S.A. $ 51
1,000 Chiyoda Corp. 12
16,501 Ferrovial S.A. 264
127 Hochtief AG 8
1,000 JGC Corp. 36
4,000 Taisei Corp. 14
7,292 Vinci S.A. 366
--------
751
--------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.4%)
24,000 Hino Motors Ltd. 352
400 Hitachi Construction Machinery Co. Ltd. 8
5,000 Kubota Corp. 73
9,200 Oshkosh Corp.* 349
6,400 Terex Corp.* 168
3,600 Toro Co. 164
4,000 WABCO Holdings, Inc.* 299
--------
1,413
--------
ELECTRICAL COMPONENTS & EQUIPMENT (0.1%)
3,100 Emerson Electric Co. 169
2,000 Fuji Electric Co. Ltd. 7
1,518 Schneider Electric S.A. 110
--------
286
--------
ENVIRONMENTAL & FACILITIES SERVICES (0.0%)
300 Park24 Co. Ltd. 6
--------
HEAVY ELECTRICAL EQUIPMENT (0.0%)
1,464 ABB Ltd. 32
799 Alstom S.A. 26
--------
58
--------
HOMEBUILDING (0.0%)
633 Persimmon plc 11
--------
HUMAN RESOURCE & EMPLOYMENT SERVICES (0.1%)
17,880 Capita plc 262
3,900 Manpowergroup, Inc. 214
--------
476
--------
INDUSTRIAL CONGLOMERATES (0.7%)
2,900 3M Co. 317
71,500 General Electric Co. 1,658
================================================================================
24 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
27,000 Hopewell Holdings Ltd. $ 90
27,000 Hutchison Whampoa Ltd. 284
1,855 Siemens AG 187
--------
2,536
--------
INDUSTRIAL MACHINERY (0.2%)
1,000 Amada Co. Ltd. 7
1,581 Atlas Copco AB "B" 34
5,000 IHI Corp. 19
4,200 ITT Corp. 123
2,417 Kone Oyj "B" 192
400 Makita Corp. 22
39,000 Mitsubishi Heavy Industries Ltd. 217
1,100 Valmont Industries, Inc. 157
--------
771
--------
MARINE (0.1%)
11 A.P. Moller-Maersk A/S "A" 74
5 A.P. Moller-Maersk A/S "B" 36
7,900 Matson, Inc. 198
--------
308
--------
OFFICE SERVICES & SUPPLIES (0.1%)
7,000 Avery Dennison Corp. 299
--------
RAILROADS (0.3%)
3,000 Central Japan Railway Co. 367
2,000 Odakyu Electric Railway Co. Ltd. 20
4,000 Tokyu Corp. 26
4,000 Union Pacific Corp. 617
700 West Japan Railway Co. 30
--------
1,060
--------
SECURITY & ALARM SERVICES (0.0%)
900 Secom Co. Ltd. 49
--------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
1,194 Bunzl plc 23
25,900 ITOCHU Corp. 299
7,000 Marubeni Corp. 47
1,600 Mitsui & Co. Ltd. 20
4,700 Sojitz Corp. 8
4,000 Sumitomo Corp. 50
--------
447
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 25
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
TRUCKING (0.1%)
8,000 ComfortDelGro Corp. Ltd. $ 12
4,000 Nippon Express Co. Ltd. 19
4,500 Ryder System, Inc. 273
--------
304
--------
Total Industrials 18,154
--------
INFORMATION TECHNOLOGY (7.6%)
-----------------------------
APPLICATION SOFTWARE (0.2%)
18,900 Cadence Design Systems, Inc.* 274
610 SAP AG 45
6,500 Synopsys, Inc.* 232
--------
551
--------
COMMUNICATIONS EQUIPMENT (0.8%)
42,000 AAC Technologies Holdings, Inc. 236
64,700 Cisco Systems, Inc. 1,573
16,000 QUALCOMM, Inc. 977
--------
2,786
--------
COMPUTER HARDWARE (1.2%)
7,800 Apple, Inc. 3,090
17,400 Dell, Inc. 232
36,300 Hewlett-Packard Co. 900
10,000 NEC Corp. 22
--------
4,244
--------
COMPUTER STORAGE & PERIPHERALS (0.5%)
12,100 EMC Corp. 286
16,600 Lexmark International, Inc. "A" 507
2,600 SanDisk Corp.* 159
12,600 Western Digital Corp. 782
--------
1,734
--------
DATA PROCESSING & OUTSOURCED SERVICES (0.8%)
18,900 Computer Sciences Corp. 827
20,300 CoreLogic, Inc.* 470
2,300 FleetCor Technologies, Inc.* 187
6,100 Jack Henry & Associates, Inc. 287
800 MasterCard, Inc. "A" 460
3,600 Visa, Inc. "A" 658
--------
2,889
--------
ELECTRONIC COMPONENTS (0.2%)
17,300 AVX Corp. 203
100 Hirose Electric Co. Ltd. 13
================================================================================
26 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
1,600 HOYA Corp. $ 33
900 Murata Manufacturing Co. Ltd. 69
800 Omron Corp. 24
23,600 Vishay Intertechnology, Inc.* 328
1,000 Yaskawa Electric Corp. 12
--------
682
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.1%)
9,500 FUJIFILM Holdings Corp. 209
300 Hitachi High-Technologies Corp. 7
6,000 Hitachi Ltd. 39
500 Keyence Corp. 160
--------
415
--------
HOME ENTERTAINMENT SOFTWARE (0.1%)
26,300 Activision Blizzard, Inc. 375
6,700 Electronic Arts, Inc.* 154
--------
529
--------
INTERNET SOFTWARE & SERVICES (0.9%)
12,000 AOL, Inc. 438
12,700 eBay, Inc.* 657
2,100 Google, Inc. "A"* 1,849
700 LinkedIn Corp. "A"* 125
297 Yahoo Japan Corp. 146
--------
3,215
--------
IT CONSULTING & OTHER SERVICES (0.7%)
5,000 Accenture plc "A" 360
20,900 Booz Allen Hamilton Holding 363
5,875 Cap Gemini 286
8,300 International Business Machines Corp. 1,586
400 Nomura Research Institute Ltd. 13
--------
2,608
--------
OFFICE ELECTRONICS (0.2%)
900 Brother Industries Ltd. 10
4,500 Canon, Inc. 147
2,000 Konica Minolta, Inc. 15
23,000 Ricoh Co. Ltd. 274
14,800 Xerox Corp. 134
--------
580
--------
SEMICONDUCTOR EQUIPMENT (0.1%)
20,000 Applied Materials, Inc. 298
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 27
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
SEMICONDUCTORS (0.8%)
15,930 ARM Holdings plc $ 193
24,200 Atmel Corp.* 178
5,000 Cree, Inc.* 319
43,400 Intel Corp. 1,051
18,000 Marvell Technology Group Ltd. 211
143 Mellanox Technologies Ltd.* 7
4,900 Microchip Technology, Inc. 183
14,400 Micron Technology, Inc.* 206
28,000 ON Semiconductor Corp.* 226
13,500 Texas Instruments, Inc. 471
--------
3,045
--------
SYSTEMS SOFTWARE (1.0%)
16,300 CA, Inc. 466
61,600 Microsoft Corp. 2,127
30,200 Oracle Corp. 928
--------
3,521
--------
Total Information Technology 27,097
--------
MATERIALS (2.1%)
----------------
COMMODITY CHEMICALS (0.4%)
31,000 Asahi Kasei Corp. 205
2,000 Denki Kagaku Kogyo Kabushiki Kaisha 7
1,000 Kaneka Corp. 7
18,100 Kuraray Co. Ltd. 254
6,400 LyondellBasell Industries N.V. "A" 424
7,000 Westlake Chemical Corp. 675
--------
1,572
--------
CONSTRUCTION MATERIALS (0.0%)
1,906 Imerys S.A. 117
--------
DIVERSIFIED CHEMICALS (0.3%)
6,125 BASF SE 547
6,000 Mitsubishi Chemical Holdings Corp. 28
1,000 Mitsubishi Gas Chemical Co., Inc. 7
2,500 PPG Industries, Inc. 366
4,000 Showa Denko K.K. 5
4,000 UBE Industries, Ltd. 8
--------
961
--------
DIVERSIFIED METALS & MINING (0.3%)
9,310 BHP Billiton Ltd. 267
7,900 BHP Billiton plc 202
1,007 Boliden AB 12
================================================================================
28 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
41,040 Glencore Xstrata plc $ 170
5,000 Mitsubishi Materials Corp. 18
21,000 Sumitomo Metal Mining Co. Ltd. 234
--------
903
--------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.4%)
1,600 CF Industries Holdings, Inc. 274
6,674 K+S AG 247
6,900 Monsanto Co. 682
373 Syngenta AG 146
6,183 Yara International ASA 246
--------
1,595
--------
INDUSTRIAL GASES (0.0%)
1,000 Air Water, Inc. 14
--------
PAPER PACKAGING (0.2%)
6,200 Bemis Co., Inc. 243
5,400 Packaging Corp. of America 264
2,800 Rock-Tenn Co. "A" 280
--------
787
--------
PAPER PRODUCTS (0.2%)
2,900 Domtar Corp. 193
4,800 International Paper Co. 213
3,000 Oji Holdings Corp. 12
20,471 Stora Enso Oyj "R" 137
--------
555
--------
SPECIALTY CHEMICALS (0.2%)
28,000 Daicel Corp. 245
33 EMS-Chemie Holding AG 10
400 Hitachi Chemical Co. Ltd. 6
700 JSR Corp. 14
1,000 Kansai Paint Co. Ltd. 13
600 Nitto Denko Corp. 39
1,300 Sherwin-Williams Co. 229
--------
556
--------
STEEL (0.1%)
77,354 Fortescue Metals Group Ltd. 215
1,000 Hitachi Metals Ltd. 11
2,000 JFE Holdings, Inc. 44
200 Maruichi Steel Tube Ltd. 5
461 Voestalpine AG 17
--------
292
--------
Total Materials 7,352
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 29
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES (1.6%)
---------------------------------
ALTERNATIVE CARRIERS (0.0%)
92 Iliad S.A. $ 20
2,088 Ziggo N.V. 83
--------
103
--------
INTEGRATED TELECOMMUNICATION SERVICES (1.4%)
46,300 AT&T, Inc. 1,639
7,186 Bezeq Israeli Telecommunication Corp. Ltd. 10
83,333 BT Group plc 392
6,600 CenturyLink, Inc. 233
24,932 Deutsche Telekom AG 291
7,478 France Telecom S.A. 71
6,900 Nippon Telegraph & Telephone Corp. 358
16,000 PCCW Ltd. 7
2,792 TDC A/S 23
131,660 Telecom Italia S.p.A. 73
916 Telekom Austria AG 6
2,868 Telenor ASA 57
9,581 TeliaSonera AB 62
28,934 Telstra Corp. Ltd. 126
29,700 Verizon Communications, Inc. 1,495
3,473 Vivendi S.A. 66
--------
4,909
--------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
2,100 KDDI Corp. 109
261 Millicom International Cellular S.A. Swedish Depository Receipts 19
61 NTT DOCOMO, Inc. 95
8,701 Telephone & Data Systems, Inc. 214
121,454 Vodafone Group plc 347
--------
784
--------
Total Telecommunication Services 5,796
--------
UTILITIES (1.4%)
----------------
ELECTRIC UTILITIES (0.6%)
5,200 American Electric Power Co., Inc. 233
2,600 Chubu Electric Power Co., Inc. 37
1,200 Chugoku Electric Power Co., Inc. 19
2,500 Duke Energy Corp. 169
957 EDF S.A. 22
3,900 Edison International 188
================================================================================
30 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
80,645 EDP-Energias de Portugal S.A. $ 260
6,400 Great Plains Energy, Inc. 144
800 Hokkaido Electric Power Co., Inc.* 11
700 Hokuriku Electric Power Co. 11
63,085 Iberdrola S.A. 333
2,800 Kansai Electric Power Co., Inc.* 38
1,800 Kyushu Electric Power Co., Inc.* 27
7,400 Pinnacle West Capital Corp. 411
700 Shikoku Electric Power Co.* 13
4,200 Southern Co. 185
6,858 SP AusNet 7
2,000 Tohoku Electric Power Co., Inc.* 25
5,600 Tokyo Electric Power Co., Inc.* 29
--------
2,162
--------
GAS UTILITIES (0.1%)
1,859 Enagas S.A. 46
5,661 Gas Natural SDG S.A. 114
4,000 Tokyo Gas Co. Ltd. 22
--------
182
--------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.0%)
500 Electric Power Development Co. Ltd. 16
--------
MULTI-UTILITIES (0.7%)
18,500 Ameren Corp. 637
10,972 Centrica plc 60
4,400 Consolidated Edison, Inc. 257
22,799 E.ON SE 374
3,596 Gaz de France S.A. 71
10,300 MDU Resources Group, Inc. 267
21,395 National Grid plc 243
5,700 Public Service Enterprise Group, Inc. 186
1,955 RWE AG 62
12,800 Vectren Corp. 433
--------
2,590
--------
WATER UTILITIES (0.0%)
3,600 American Water Works Co., Inc. 148
--------
Total Utilities 5,098
--------
Total Common Stocks (cost: $150,407) 182,608
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 31
================================================================================
----------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
----------------------------------------------------------------------------------------
PREFERRED STOCKS (0.3%)
CONSUMER DISCRETIONARY (0.0%)
-----------------------------
AUTOMOBILE MANUFACTURERS (0.0%)
217 Bayerische Motoren Werke AG $ 15
491 Volkswagen AG 99
--------
114
--------
Total Consumer Discretionary 114
--------
ENERGY (0.3%)
-------------
OIL & GAS EXPLORATION & PRODUCTION (0.3%)
1,000 Chesapeake Energy Corp., 5.75%, perpetual(b) 1,037
--------
Total Preferred Stocks (cost: $1,041) 1,151
--------
RIGHTS (0.0%)
ENERGY (0.0%)
-------------
INTEGRATED OIL & GAS (0.0%)
5,548 Repsol S.A.* 3
--------
FINANCIALS (0.0%)
-----------------
DIVERSIFIED REAL ESTATE ACTIVITIES (0.0%)
188 New Hotel*(b),(c) -
--------
Total Rights (cost: $3) 3
--------
EQUITY EXCHANGE-TRADED FUNDS (36.0%)
146,000 iShares Core MSCI Emerging Markets ETF 6,725
85,000 iShares MSCI Brazil Capped Index Fund 3,728
100,000 iShares MSCI Canada Index Fund 2,620
391,630 iShares MSCI EAFE Index Fund 22,472
405,000 iShares MSCI EMU Index Fund 13,154
1,350,000 iShares MSCI Germany Index Fund 33,345
100,000 iShares MSCI Indonesia Investable Market Index Fund 3,117
800,000 iShares MSCI Italy Capped Index Fund 9,448
70,000 iShares MSCI Russia Capped Index Fund 1,345
60,000 iShares MSCI Turkey Investable Market Index Fund 3,551
36,216 SPDR S&P China ETF 2,321
25,000 SPDR S&P Emerging Markets SmallCap ETF 1,100
375,000 Vanguard FTSE Emerging Markets ETF 14,542
220,000 WisdomTree Emerging Markets SmallCap Dividend Fund 10,129
80,000 WisdomTree India Earnings Fund 1,293
--------
Total Equity Exchange-Traded Funds (cost: $121,226) 128,890
--------
Total Equity Securities (cost: $272,677) 312,652
--------
================================================================================
32 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------
BONDS (5.0%)
CORPORATE OBLIGATIONS (2.3%)
FINANCIALS (1.2%)
-----------------
LIFE & HEALTH INSURANCE (0.3%)
$1,000 StanCorp Financial Group, Inc. 6.90% 6/01/2067 $ 1,023
--------
MULTI-LINE INSURANCE (0.9%)
2,000 Genworth Holdings, Inc. 6.15 11/15/2066 1,742
500 Glen Meadow Pass-Through Trust(b) 6.51 2/12/2067 475
1,000 Nationwide Mutual Insurance Co.(b) 5.81 12/15/2024 1,018
--------
3,235
--------
Total Financials 4,258
--------
INDUSTRIALS (0.8%)
------------------
AEROSPACE & DEFENSE (0.2%)
1,000 Textron Financial Corp.(b) 6.00 2/15/2067 880
--------
AIRLINES (0.3%)
929 US Airways Group, Inc. Pass-Through Trust (INS) 7.08 3/20/2021 988
--------
TRADING COMPANIES & DISTRIBUTORS (0.3%)
1,000 ILFC E-Capital Trust II(b) 6.25 12/21/2065 915
--------
Total Industrials 2,783
--------
UTILITIES (0.3%)
----------------
ELECTRIC UTILITIES (0.3%)
1,906 Texas Competitive Electric Holdings Co., LLC(d) 4.72 10/10/2017 1,335
--------
Total Corporate Obligations (cost: $6,094) 8,376
--------
EURODOLLAR AND YANKEE OBLIGATIONS (0.4%)
FINANCIALS (0.4%)
-----------------
DIVERSIFIED BANKS (0.3%)
1,000 BayernLB Capital Trust l 6.20 3/29/2049 734
200 LBG Capital No.1 plc 8.00 -(i) 204
--------
938
--------
PROPERTY & CASUALTY INSURANCE (0.1%)
600 Oil Insurance Ltd.(b) 3.27(e) -(i) 525
--------
Total Financials 1,463
--------
Total Eurodollar and Yankee Obligations (cost: $935) 1,463
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 33
================================================================================
------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE SECURITIES (2.3%)
FINANCIALS (2.3%)
-----------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (2.3%)
$1,000 Banc of America Commercial Mortgage, Inc. 5.95% 5/10/2045 $ 1,046
1,000 Bear Stearns Commercial Mortgage Securities, Inc. 4.99 9/11/2042 1,021
1,000 Citigroup Commercial Mortgage Trust 5.94 3/15/2049 1,020
1,000 GE Capital Commercial Mortgage Corp. 5.47 3/10/2044 993
1,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.04 10/15/2042 1,014
1,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.48 5/15/2045 1,010
1,000 Merrill Lynch Mortgage Trust 5.14 7/12/2038 1,036
1,000 Merrill Lynch Mortgage Trust 5.87 5/12/2039 994
--------
8,134
--------
Total Financials 8,134
--------
Total Commercial Mortgage Securities (cost: $7,072) 8,134
--------
Total Bonds (cost: $14,101) 17,973
--------
------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES
------------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS (6.5%)
MONEY MARKET FUNDS (6.5%)
23,211,858 State Street Institutional Liquid Reserve Fund, 0.09%(f),(g)
(cost: $23,212) 23,212
--------
TOTAL INVESTMENTS (COST: $309,990) $353,837
========
------------------------------------------------------------------------------------------------------
NUMBER
OF CONTRACTS
------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS (1.3%)
10,600 Put - iShares MSCI EAFE Index expiring August 17, 2013 at 56 1,156
10,400 Put - iShares MSCI EAFE Index expiring Fund August 17, 2013 at 55 868
9,100 Put - iShares MSCI Emerging Markets Index expiring August 17, 2013 at 36 542
3,000 Put - iShares MSCI Emerging Markets Index expiring August 17, 2013 at 37 249
295 Put - S&P 500 Index expiring August 17, 2013 at 1520 432
300 Put - S&P 500 Index expiring August 17, 2013 at 1550 624
270 Put - S&P 500 Index expiring August 17, 2013 at 1565 664
--------
TOTAL PURCHASED OPTIONS (COST: $6,787) $ 4,535
========
================================================================================
34 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF CONTRACTS SECURITY (000)
------------------------------------------------------------------------------------------------------
WRITTEN OPTIONS (0.2%)
(3,000) Put - iShares MSCI EAFE Index expiring August 17, 2013 at 52 $ (117)
(7,000) Put - iShares MSCI EAFE Index expiring July 20, 2013 at 53 (133)
(3,000) Put - iShares MSCI Emerging Markets Index expiring August 17, 2013 at 33 (72)
(3,000) Put - iShares MSCI Emerging Markets Index expiring July 20, 2013 at 36 (75)
(300) Put - S&P 500 Index expiring August 17, 2013 at 1450 (190)
--------
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED: $943) $ (587)
========
------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER CONTRACT APPRECIATION/
OF CONTRACTS EXPIRATION VALUE (DEPRECIATION)
LONG/(SHORT) DATE (000) (000)
------------------------------------------------------------------------------------------------------
FUTURES (0.4%)
18 S&P 500 E-Mini Index Futures(h) 9/20/2013 $1,439 $(21)
------ ----
TOTAL FUTURES $1,439 $(21)
====== ====
================================================================================
PORTFOLIO OF INVESTMENTS | 35
================================================================================
----------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
----------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
----------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $182,608 $ - $- $182,608
Preferred Stocks 114 1,037 - 1,151
Rights 3 - - 3
Equity Exchange-Traded Funds 128,890 - - 128,890
Bonds:
Corporate Obligations - 8,376 - 8,376
Eurodollar and Yankee Obligations - 1,463 - 1,463
Commercial Mortgage Securities - 8,134 - 8,134
Money Market Instruments:
Money Market Funds 23,212 - - 23,212
Purchased Options 4,535 - - 4,535
----------------------------------------------------------------------------------------------------
Total $339,362 $19,010 $- $358,372
----------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
LIABILITIES FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
----------------------------------------------------------------------------------------------------
Futures* $ (21) $- $- $ (21)
Written Options (587) - - (587)
----------------------------------------------------------------------------------------------------
Total $(608) $- $- $(608)
----------------------------------------------------------------------------------------------------
*Futures are valued at the unrealized appreciation/depreciation on the
investment.
For the period of January 1, 2013, through June 30, 2013, equity securities with
a fair value of $30,273,000 were transferred from Level 2 to Level 1. Due to an
assessment of events at the end of the prior reporting period, these securities
had adjustments to their foreign market closing prices to reflect changes in
value that occurred after the close of foreign markets and prior to the close of
the U.S. securities markets. The Fund's policy is to recognize any transfers
into and out of the levels as of the beginning of the period in which the event
or circumstance that caused the transfer occurred.
================================================================================
36 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
Investments in foreign securities were 49.0% of net assets at June 30, 2013.
The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth
in the Investment Company Act of 1940, as amended, that would otherwise be
applicable.
o CATEGORIES AND DEFINITIONS
ASSET-BACKED AND COMMERCIAL MORTGAGE-BACKED SECURITIES -- Asset-backed
securities represent a participation in, or are secured by and payable from, a
stream of payments generated by particular assets. Commercial mortgage-backed
securities reflect an interest in, and are secured by, mortgage loans on
commercial real property. These securities represent ownership in a pool of
loans and are divided into pieces (tranches) with varying maturities. The
stated final maturity of such securities represents when the final principal
payment will be made for all underlying loans. The weighted average life is
the average time for principal to be repaid, which is calculated by assuming
prepayment rates of the underlying loans. The weighted average life is likely
to be substantially shorter than the stated final maturity as a
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 37
================================================================================
result of scheduled principal payments and unscheduled principal prepayments.
Stated interest rates on commercial mortgage-backed securities may change
slightly over time as underlying mortgages pay down.
EURODOLLAR AND YANKEE OBLIGATIONS -- Eurodollar obligations are dollar-
denominated instruments that are issued outside the U.S. capital markets by
foreign corporations and financial institutions and by foreign branches of
U.S. corporations and financial institutions. Yankee obligations are
dollar-denominated instruments that are issued by foreign issuers in the U.S.
capital markets.
RIGHTS -- enable the holder to buy a specified number of shares of new issues
of a common stock before it is offered to the public.
o PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
ADR American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in U.S.
dollars.
REIT Real estate investment trust
CREDIT ENHANCEMENTS -- add 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 MBIA Insurance Corp.
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.
o SPECIFIC NOTES
(a) Security deemed illiquid by USAA Asset Management Company (the Manager),
under liquidity guidelines approved by the Board of Trustees (the Board).
The aggregate market value of these
================================================================================
38 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
securities at June 30, 2013, was less than $500, which represented less
than .01% of the Fund's net assets.
(b) Restricted security that is not registered under the Securities Act of
1933. A resale of this security in the United States may occur in an
exempt transaction to a qualified institutional buyer as defined by Rule
144A, and as such has been deemed liquid by the Manager under liquidity
guidelines approved by the Board, unless otherwise noted as illiquid.
(c) Security was fair valued at June 30, 2013, by the Manager in accordance
with valuation procedures approved by the Board. The total value of the
security was less than $500, which represented less than .01% of net
assets of the Fund.
(d) Senior loan (loan) -- is not registered under the Securities Act of 1933.
The loan contains certain restrictions on resale and cannot be sold
publicly. The interest rate is adjusted periodically, and the rate
disclosed represents the current rate at June 30, 2013. The weighted
average life of the loan is likely to be shorter than the stated final
maturity date due to mandatory or optional prepayments. The loan is deemed
liquid by the Manager, under liquidity guidelines approved by the Board,
unless otherwise noted as illiquid.
(e) Variable-rate or floating-rate security -- interest rate is adjusted
periodically. The interest rate disclosed represents the current rate at
June 30, 2013.
(f) The security, or a portion thereof, is segregated to cover the value of
open futures contracts at June 30, 2013.
(g) Rate represents the money market fund annualized seven-day yield at June
30, 2013.
(h) Cash with a value of $157,000 is segregated as collateral for initial
margin requirements on open futures contracts.
(i) Security is perpetual and has no final maturity date but may be subject to
calls at various dates in the future.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 39
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $309,990) $353,837
Purchased options, at market value (cost of $6,787) 4,535
Cash 66
Cash denominated in foreign currencies (identified cost of $185) 183
Receivables:
Capital shares sold 69
Dividends and interest 2,449
Securities sold 42
Unrealized appreciation on foreign currency contracts held, at value 1
--------
Total assets 361,182
--------
LIABILITIES
Payables:
Securities purchased 1,002
Capital shares redeemed 1,318
Written options, at market value (premiums received of $943) 587
Variation margin on futures contracts 21
Accrued management fees 181
Other accrued expenses and payables 56
--------
Total liabilities 3,165
--------
Net assets applicable to capital shares outstanding $358,017
========
NET ASSETS CONSIST OF:
Paid-in capital $333,487
Accumulated undistributed net investment income 4,380
Accumulated net realized loss on investments, options, and
futures transactions (21,775)
Net unrealized appreciation of investments, options, and
futures contracts 41,930
Net unrealized depreciation of foreign currency translations (5)
--------
Net assets applicable to capital shares outstanding $358,017
========
Capital shares outstanding, unlimited number of shares
authorized, no par value 35,163
========
Net asset value, redemption price, and offering price per share $ 10.18
========
See accompanying notes to financial statements.
================================================================================
40 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $108) $ 4,870
Interest 729
-------
Total income 5,599
-------
EXPENSES
Management fees 1,124
Administration and servicing fees 94
Transfer agent's fees 94
Custody and accounting fees 128
Postage 1
Shareholder reporting fees 10
Trustees' fees 5
Professional fees 55
Other 6
-------
Total expenses 1,517
-------
NET INVESTMENT INCOME 4,082
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY, OPTIONS, AND FUTURES CONTRACTS
Net realized gain (loss) on:
Investments 16,188
Foreign currency transactions (17)
Options (9,796)
Futures transactions 233
Change in net unrealized appreciation/depreciation of:
Investments (2,573)
Foreign currency translations (6)
Options 441
Futures contracts (7)
-------
Net realized and unrealized gain 4,463
-------
Increase in net assets resulting from operations $ 8,545
=======
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 41
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended June 30, 2013 (unaudited), and year ended December 31,
2012
-------------------------------------------------------------------------------------
6/30/2013 12/31/2012
-------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 4,082 $ 7,685
Net realized gain on investments 16,188 10,978
Net realized loss on foreign currency transactions (17) (8)
Net realized loss on options (9,796) (39,749)
Net realized gain on futures transactions 233 498
Change in net unrealized appreciation/depreciation of:
Investments (2,573) 55,834
Foreign currency translations (6) (2)
Options 441 3,987
Futures contracts (7) (62)
----------------------
Increase in net assets resulting from operations 8,545 39,161
----------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - (9,300)
Net realized gains - (11,479)
----------------------
Distributions to shareholders - (20,779)
----------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 18,378 32,050
Reinvested dividends - 20,779
Cost of shares redeemed (49,794) $(131,968)
----------------------
Decrease in net assets from capital share transactions (31,416) (79,139)
----------------------
Net decrease in net assets (22,871) (60,757)
NET ASSETS
Beginning of period 380,888 441,645
----------------------
End of period $358,017 $ 380,888
======================
Accumulated undistributed net investment income:
End of period $ 4,380 $ 298
======================
CHANGE IN SHARES OUTSTANDING
Shares sold 1,795 3,208
Shares issued for dividends reinvested - 2,083
Shares redeemed (4,863) (13,194)
----------------------
Decrease in shares outstanding (3,068) (7,903)
======================
See accompanying notes to financial statements.
================================================================================
42 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USAA MUTUAL FUNDS TRUST (the Trust), registered under the Investment Company Act
of 1940, as amended (the 1940 Act), is an open-end management investment company
organized as a Delaware statutory trust consisting of 50 separate funds. The
information presented in this semiannual report pertains only to the USAA Global
Opportunities Fund (the Fund), which is classified as diversified under the 1940
Act. The Fund's investment objective is to seek an average annual return that is
greater than the 1-year U.S. Treasury Bond, before fees and expenses, over a
full market cycle, while seeking to limit the Fund's exposure to large negative
returns. The Fund is not offered for sale directly to the general public and is
available currently for investment through a USAA managed account program or
other persons or legal entities that the Fund may approve from time to time.
Effective July 12, 2013, the Fund was renamed as the "USAA Global Managed
Volatility Fund." The Fund's investment objective was also changed. Effective
July 12, 2013, the Fund's investment objective is "to obtain long-term capital
appreciation while attempting to reduce volatility during unfavorable market
conditions." These changes were approved by the Board of Trustees of the USAA
Mutual Funds Trust on February 27, 2013.
Effective July 12, 2013, the Fund will consist of two classes of shares. The
existing share class will be designated "Global Managed Volatility Fund
Institutional Shares (Institutional Shares)" and a new share class designated
"Global Managed Volatility Fund Shares (Fund Shares)" will commence operations.
Each class of shares will have equal rights to assets and earnings, except that
each class will bear certain class-related
================================================================================
NOTES TO FINANCIAL STATEMENTS | 43
================================================================================
expenses specific to the particular class. These expenses include administration
and servicing fees, transfer agent fees, postage, shareholder reporting fees,
and certain registration and custodian fees. Expenses not attributable to a
specific class, income, and realized gains or losses on investments will be
allocated to each class of shares based on each class's relative net assets.
Each class will have exclusive voting rights on matters related solely to that
class and separate voting rights on matters that relate to both classes. The
Institutional Shares are available for investment only through a USAA
discretionary managed account program, and certain advisory programs sponsored
by financial intermediaries, such as brokerage firms, investment advisors,
financial planners, third-party administrators, and insurance companies.
Institutional Shares also are available to institutional investors, which
include retirement plans, endowments, foundations, and bank trusts, as well as
other persons or legal entities that the Fund may approve from time to time, or
for purchase by a USAA Fund participating in a fund-of-funds investment strategy
(USAA fund-of-funds) and not to the general public. The Institutional Shares are
not offered for sale directly to the general public and are available currently
for investment through a USAA managed account program or other persons or legal
entities that the Fund may approve from time to time.
A. SECURITY VALUATION -- The Trust's Board of Trustees (the Board) has
established the Valuation 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. Among other things,
these policies and procedures allow the Fund to utilize independent pricing
services, quotations from securities dealers, and a wide variety of sources
and information to establish and adjust the fair value of securities as
events occur and circumstances warrant.
The Committee reports to the Board on a quarterly basis and makes
recommendations to the Board as to pricing methodologies and services used
by the Fund and presents additional information to the Board regarding
application of the pricing and fair valuation policies and procedures during
the preceding quarter.
================================================================================
44 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
The Committee meets as often as necessary to make pricing and fair value
determinations. In addition, the Committee holds regular monthly meetings to
review prior actions taken by the Committee and USAA Asset Management
Company (the Manager). Among other things, these monthly meetings include a
review and analysis of back testing reports, pricing service quotation
comparisons, illiquid securities and fair value determinations, pricing
movements, and daily stale price monitoring.
The value of each security is determined (as of the close of trading on the
New York Stock Exchange (NYSE) on each business day the NYSE is open) as set
forth below:
1. Equity securities, including Exchange-Traded Funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities exchange or
the Nasdaq over-the-counter markets, are valued at the last sales price
or official closing price on the exchange or primary market on which
they trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according to
local market convention, available at the time the Fund is valued. If no
last sale or official closing price is reported or available, the
average of the bid and asked prices generally is used.
2. Equity securities trading in various foreign markets may take place on
days when the NYSE is closed. Further, when the NYSE is open, the
foreign markets may be closed. Therefore, the calculation of the Fund's
net asset value (NAV) may not take place at the same time the prices of
certain foreign securities held by the Fund are determined. In most
cases, events affecting the values of foreign securities that occur
between the time of their last quoted sales or official closing prices
and the close of normal trading on the NYSE on a day the Fund's NAV is
calculated will not be reflected in the value of the Fund's foreign
securities. However, the Manager, an affiliate of the Fund, and the
Fund's subadviser, if applicable, will monitor for events that would
================================================================================
NOTES TO FINANCIAL STATEMENTS | 45
================================================================================
materially affect the value of the Fund's foreign securities. The Fund's
subadvisers have agreed to notify the Manager of significant events they
have identified that would materially affect the value of the Fund's
foreign securities. If the Manager determines that a particular event
would materially affect the value of the Fund's foreign securities, then
the Manager, under valuation procedures approved by the Board, will
consider such available information that it deems relevant to determine
a fair value for the affected foreign securities. In addition, the Fund
may use information from an external vendor or other sources to adjust
the foreign market closing prices of foreign equity securities to
reflect what the Fund 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 that
occur on a fairly regular basis (such as U.S. market movements) are
significant.
3. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their NAV at the end of each business
day.
4. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
5. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the Board.
The Service uses an evaluated mean between quoted bid and asked prices
or the last sales price to price securities when, in the Service's
judgment, these prices are readily available and are representative of
the securities' market values. For many securities, such prices are not
readily available. The Service generally prices these securities based
on methods that include consideration of yields or prices of securities
of comparable quality, coupon, maturity, and type; indications as to
values from dealers in securities; and general market conditions.
================================================================================
46 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
6. Repurchase agreements are valued at cost, which approximates market
value.
7. Futures are valued based upon the last sale price at the close of market
on the principal exchange on which they are traded.
8. Options are valued by a pricing service at the National Best Bid/Offer
(NBBO) composite price, which is derived from the best available bid and
ask prices in all participating options exchanges determined to most
closely reflect market value of the options at the time of computation
of the Fund's NAV.
9. Securities for which market quotations are not readily available or are
considered unreliable, or whose values have been materially affected by
events occurring after the close of their primary markets but before the
pricing of the Fund, are valued in good faith at fair value, using
methods determined by the Manager in consultation with the Fund's
subadviser, if applicable, under valuation procedures approved by the
Board. 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 NAV to be more reliable than
it otherwise would be.
Fair value methods used by the Manager include, but are not limited to,
obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any restrictions
on disposition of the securities, and an evaluation of the forces that
influenced the market in which the securities are purchased and sold.
B. FAIR VALUE MEASUREMENTS -- 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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 47
================================================================================
date. The three-level valuation hierarchy disclosed in the portfolio of
investments is based upon the transparency of inputs to the valuation of an
asset or liability as of the measurement date. The three levels are defined
as follows:
Level 1 -- inputs to the valuation methodology are quoted prices
(unadjusted) in active markets for identical securities.
Level 2 -- inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices. Level 2 securities
include certain preferred stocks and all bonds, which are valued based on
methods discussed in Note 1A5.
Level 3 -- inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
C. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -- The Fund may buy, sell, and
enter into certain types of derivatives, including, but not limited to
futures contracts, options, and options on futures contracts, under
circumstances in which such instruments are expected by the portfolio
manager to aid in achieving the Fund's investment objective. The Fund also
may use derivatives in circumstances where the portfolio manager believes
they offer an economical means of gaining exposure to a particular asset
class or securities market or to keep cash on hand to meet shareholder
redemptions or other needs while maintaining exposure to the market. With
exchange-listed futures contracts and options, counterparty credit risk to
the Fund is limited to the exchange's clearinghouse which, as counterparty
to all exchange-traded futures contracts and options, guarantees the
transactions against default from the actual counterparty to the trade.
================================================================================
48 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
FUTURES CONTRACTS -- The Fund is subject to equity price risk, interest rate
risk, and foreign currency exchange rate risk in the normal course of
pursuing its investment objectives. The Fund may use futures contracts to
gain exposure to, or hedge against, changes in the value of equities,
interest rates, or foreign currencies. A futures contract represents a
commitment for the future purchase or sale of an asset at a specified price
on a specified date. Upon entering into such contracts, the Fund is required
to deposit with the broker in either cash or securities an initial margin in
an amount equal to a certain percentage of the contract amount. Subsequent
payments (variation margin) are made or received by the Fund each day,
depending on the daily fluctuations in the value of the contract, and are
recorded for financial statement purposes as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Upon entering into such
contracts, the Fund bears the risk of interest or exchange rates or
securities prices moving unexpectedly in an unfavorable direction, in which
case, the Fund may not achieve the anticipated benefits of the futures
contracts.
OPTIONS TRANSACTIONS -- The Fund is subject to equity price risk in the
normal course of pursuing its investment objectives. The Fund may use
options on underlying instruments, namely, equity securities, ETFs, and
equity indexes, to gain exposure to, or hedge against, changes in the value
of equity securities, ETFs, or equity indexes. A call option gives the
purchaser the right to buy, and the writer the obligation to sell, the
underlying instrument at a specified price during a specified period.
Conversely, a put option gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying instrument at a specified price
during a specified period. The purchaser of the option pays a premium to the
writer of the option.
Premiums paid for purchased options are included in the Fund's statement of
assets and liabilities as an investment. If a purchased option expires
unexercised, the premium paid is recognized as a realized loss. If a
purchased call option on a security is exercised,
================================================================================
NOTES TO FINANCIAL STATEMENTS | 49
================================================================================
the cost of the security acquired includes the exercise price and the
premium paid. If a purchased put option on a security is exercised, the
realized gain or loss on the security sold is determined from the exercise
price, the original cost of the security, and the premium paid. The risk
associated with purchasing a call or put option is limited to the premium
paid.
Premiums received from writing options are included in the Fund's statement
of assets and liabilities as a liability. If a written option expires
unexercised, the premium received is recognized as a realized gain. If a
written call option on a security is exercised, the realized gain or loss on
the security sold is determined from the exercise price, the original cost
of the security, and the premium received. If a written put option on a
security is exercised, the cost of the security acquired is the exercise
price paid less the premium received. The Fund, as a writer of an option,
bears the market risk of an unfavorable change in the price of the security
underlying the written option.
In an attempt to reduce the Fund's volatility over time, the Fund may
implement a strategy that involves purchasing and selling options on indexes
or ETFs that represent the Fund's exposure against a highly correlated stock
portfolio. The combination of the diversified stock portfolio with index or
ETF options is designed to provide the Fund with consistent returns over a
wide range of equity market environments. This strategy may not fully
protect the Fund against declines in the portfolio's value, and the Fund
could experience a loss. Options on ETFs are similar to options on
individual securities in that the holder of the ETF call (or put) has the
right to receive (or sell) shares of the underlying ETF at the strike price
on or before exercise date. Options on securities indexes are different from
options on individual securities in that the holder of the index option has
the right to receive an amount of cash equal to the difference between the
exercise price and the settlement value of the underlying index as defined
by the exchange. If an index option is exercised, the realized gain or loss
is determined by the exercise price, the settlement value, and the premium
amount paid or received.
================================================================================
50 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
FAIR VALUES OF DERIVATIVE INSTRUMENTS AS OF JUNE 30, 2013*
(IN THOUSANDS)
ASSET DERIVATIVES LIABILITY DERIVATIVES
--------------------------------------------------------------------------------------------
STATEMENT OF STATEMENT OF
ASSETS AND ASSETS AND
DERIVATIVES NOT ACCOUNTED LIABILITIES LIABILITIES
FOR AS HEDGING INSTRUMENTS LOCATION FAIR VALUE LOCATION FAIR VALUE
--------------------------------------------------------------------------------------------
Equity contracts Purchased options $4,535 Written options; $608**
Net unrealized
depreciation of
futures contracts
--------------------------------------------------------------------------------------------
*For open derivative instruments as of June 30, 2013, see the portfolio of
investments, which also is indicative of activity for the period ended
June 30, 2013.
**Includes cumulative appreciation (depreciation) of futures contracts as
reported on the portfolio of investments. Only current day's variation
margin is reported within the statement of assets and liabilities.
THE EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR THE
SIX-MONTH PERIOD ENDED JUNE 30, 2013 (IN THOUSANDS)
CHANGE IN
UNREALIZED
REALIZED GAIN APPRECIATION
DERIVATIVES NOT ACCOUNTED STATEMENT OF (LOSS) ON (DEPRECIATION)
FOR AS HEDGING INSTRUMENTS OPERATIONS LOCATION DERIVATIVES ON DERIVATIVES
------------------------------------------------------------------------------------------
Equity contracts Net realized gain (loss) on $(9,563) $434
options and futures
transactions/Change in
net unrealized appreciation/
depreciation of options and
futures contracts
------------------------------------------------------------------------------------------
D. SECURITIES PURCHASED 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 can take place a month or more after
the trade date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may increase or
decrease in value prior to their delivery. The Fund maintains segregated
assets with a market value equal to or greater than the amount of its
purchase
================================================================================
NOTES TO FINANCIAL STATEMENTS | 51
================================================================================
commitments. The purchase of securities on a delayed-delivery or when-issued
basis may increase the volatility of the Fund's NAV to the extent that the
Fund makes such purchases while remaining substantially fully invested.
E. FEDERAL TAXES -- The Fund's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its income to its shareholders. Therefore,
no federal income tax provision is required.
F. INVESTMENTS IN SECURITIES -- Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses from
sales of investment securities are computed on the identified cost basis.
Dividend income, less foreign taxes, if any, is recorded on the ex-dividend
date. If the ex-dividend date has passed, certain dividends from foreign
securities are recorded upon notification. Interest income is recorded daily
on the accrual basis. Discounts and premiums are amortized over the life of
the respective securities, using the effective yield method for long-term
securities and the straight-line method for short-term securities.
G. FOREIGN CURRENCY TRANSLATIONS -- The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency. Since
the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the exchange
rate obtained from an independent pricing service on the respective
dates of such transactions.
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of
================================================================================
52 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
securities held. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
Separately, net realized foreign currency gains/losses may arise from
sales of foreign currency, currency gains/losses realized between the
trade and settlement dates on security transactions, and from the
difference between amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts received. At the end of the Fund's fiscal
year, these net realized foreign currency gains/losses are reclassified
from accumulated net realized gain/loss to accumulated undistributed net
investment income on the statement of assets and liabilities as such
amounts are treated as ordinary income/loss for tax purposes. Net
unrealized foreign currency exchange gains/losses arise from changes in
the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rate.
H. EXPENSES PAID INDIRECTLY -- A portion of the brokerage commissions that
the Fund pays may be recaptured as a credit that is tracked and used by
the custodian to directly reduce expenses paid by the Fund. In addition,
through arrangements with the Fund's custodian and other banks utilized
by the Fund for cash management purposes, realized credits, if any,
generated from cash balances in the Fund's bank accounts may be used to
directly reduce the Fund's expenses. Effective January 1, 2013, the
Fund's custodian suspended the bank credit arrangement. For the
six-month period ended June 30, 2013, the Fund did not receive any
brokerage commission recapture credits. For the six-month period ended
June 30, 2013, custodian and other bank credits reduced the Fund's
expenses by less than $500.
I. INDEMNIFICATIONS -- 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 Trust. In
addition, in the normal course of business, the Trust enters into
contracts that contain a variety of representations and warranties that
provide general indemnifications. The Trust's maximum exposure under
these arrangements is unknown, as this would
================================================================================
NOTES TO FINANCIAL STATEMENTS | 53
================================================================================
involve future claims that may be made against the Trust that have not
yet occurred. However, the Trust expects the risk of loss to be remote.
J. USE OF ESTIMATES -- The preparation of financial statements in
conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that may affect the
reported amounts in the financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $500 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at a rate per annum equal to
the rate at which CAPCO obtains funding in the capital markets, with no markup.
The USAA Funds that are party to the loan agreement are assessed facility fees
by CAPCO in the amount of 7.0 basis points of the amount of the committed loan
agreement. Prior to September 30, 2012, the Funds were assessed facility fees by
CAPCO in the amount of 7.5 basis points of the amount of the committed loan
agreement. The facility fees are allocated among the Funds based on their
respective average net assets for the period.
For the six-month period ended June 30, 2013, the Fund paid CAPCO facility fees
of $1,000, which represents 0.6% of the total fees paid to CAPCO by the USAA
Funds. The Fund had no borrowings under this agreement during the six-month
period ended June 30, 2013.
(3) DISTRIBUTIONS
The tax basis of distributions and accumulated undistributed net investment
income will be determined based upon the Fund's tax year-end of December 31,
2013, in accordance with applicable tax law.
================================================================================
54 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
Distributions of realized gains from security transactions not offset by capital
losses are made annually in the succeeding fiscal year or as otherwise required
to avoid the payment of federal taxes.
Under the Regulated Investment Company Modernization Act of 2010 (the Act) a
fund is permitted to carry forward net capital losses indefinitely.
Additionally, such capital losses that are carried forward will retain their
character as short-term and or long-term capital losses. Post-enactment capital
loss carryforwards must be used before pre-enactment capital loss carryforwards.
As a result, pre-enactment capital loss carryforwards may be more likely to
expire unused.
At December 31, 2012, the Fund had no pre-enactment capital loss carryforwards
and post-enactment capital loss carryforwards of $24,886,000, for federal income
tax purposes. It is unlikely that the Board will authorize a distribution of
capital gains realized in the future until the capital loss carryforwards have
been used or expire.
For the six-month period ended June 30, 2013, the Fund did not incur any income
tax, interest, or penalties, and has recorded no liability for net unrecognized
tax benefits relating to uncertain income tax positions. On an ongoing basis the
Manager will monitor its tax positions to determine if adustments to this
conclusion are necessary. The statute of limitations on the Fund's tax return
filings generally remain open for the three preceeding fiscal reporting year
ends and remain subject to examination by the Internal Revenue Service and state
taxing authorities.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended June 30, 2013, were
$130,176,000 and $189,122,000, respectively.
As of June 30, 2013, the cost of securities, including short-term securities,
for federal income tax purposes, was approximately the same as that reported in
the financial statements.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 55
================================================================================
Gross unrealized appreciation and depreciation of investments as of June 30,
2013, were $51,440,000 and $9,845,000, respectively, resulting in net unrealized
appreciation of $41,595,000.
For the six-month period ended June 30, 2013, transactions in written call and
put options* were as follows:
PREMIUMS
NUMBER OF RECEIVED
CONTRACTS (000's)
---------------------------------
Outstanding December 31, 2012 200 $ 87
Options written 127,640 21,689
Options terminated in closing
purchase transactions (111,440) (20,815)
Options expired (100) (18)
---------------------------------
Outstanding at June 30, 2013 16,300 $ 943
=================================
*Refer to Note 1C for a discussion of derivative instruments and how they are
accounted for in the Fund's financial statements.
(5) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and affairs of the Fund,
subject to the authority of and supervision by the Board. The Manager also
is authorized to select (with approval of the Board and without shareholder
approval) one or more subadvisers to manage the actual day-to-day investment
of a portion of the Fund's assets. The Manager monitors each subadviser's
performance through quantitative and qualitative analysis, and periodically
recommends to the Board as to whether each subadviser's agreement should be
renewed, terminated, or modified. The Manager also is responsible for
allocating assets to the subadvisers. The allocation for each subadviser can
range from 0% to 100% of the Fund's assets, and the Manager can change the
allocations without shareholder approval. The Fund's management fees are
accrued daily and paid monthly at an annualized rate of 0.60% of the Fund's
average net assets for the fiscal year. For the six-month period
================================================================================
56 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
ended June 30, 2013, the Fund incurred total management fees, paid or
payable to the Manager, of $1,124,000.
B. SUBADVISORY ARRANGEMENT(s) -- The Manager has entered into investment
subadvisory agreements with Quantitative Management Associates LLC (QMA) and
QS Investors, LLC (QS), under which each subadviser provides day-to-day
discretionary management of certain of the Fund's assets in accordance with
the Fund's investment objectives, policies, and restrictions, subject to the
general supervision of the Board and the Manager.
The Manager (not the Fund) pays QMA a subadvisory fee in the annual amount
of 0.25% of the portion of the Fund's average net assets that QMA manages.
For the six-month period ended June 30, 2013, the Manager incurred
subadvisory fees, paid or payable to QMA, of $56,000.
The Manager (not the Fund) pays QS a subadvisory fee in an annual amount of
0.15% of the portion of the Fund's average net assets that QS manages. For
the six-month period ended June 30, 2013, the Manager incurred subadvisory
fees, paid or payable to QS, of $114,000.
C. ADMINISTRATION AND SERVICING FEES -- The Manager provides certain
administration and servicing functions for the Fund. For such services, the
Manager receives a fee accrued daily and paid monthly at an annualized rate
of 0.05% of the Fund's average net assets for the fiscal year. For the
six-month period ended June 30, 2013, the Fund incurred administration and
servicing fees, paid or payable to the Manager, of $94,000.
In addition to the services provided under its Administration and Servicing
Agreement with the Fund, the Manager also provides certain compliance and
legal services for the benefit of the Fund. The Board has approved the
reimbursement of a portion of these expenses incurred by the Manager. For
the six-month period ended June 30, 2013, the Fund reimbursed the Manager
$5,000 for these compliance and legal services. These expenses are included
in the professional fees on the Fund's statement of operations.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 57
================================================================================
D. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund. The Fund's transfer agent's fees are
accrued daily and paid monthly at an annualized rate of 0.05% of the Fund's
average net assets for the fiscal year. For the six-month period ended June
30, 2013, the Fund incurred transfer agent's fees, paid or payable to SAS,
of $94,000.
E. UNDERWRITING SERVICES -- USAA Investment Management Company provides
exclusive underwriting and distribution of the Fund's shares on a continuing
best-efforts basis and receives no commissions or fees for this service.
(6) TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
================================================================================
58 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
(7) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH PERIOD
PERIOD ENDED ENDED
JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
-----------------------------------------------------------------------------
2013 2012 2011 2010 2009 2008***
-----------------------------------------------------------------------------
Net asset value at
beginning of period $ 9.96 $ 9.57 $ 10.09 $ 9.94 $ 8.61 $ 10.00
------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .12 .22 .17 .13 .09 .07(a)
Net realized and
unrealized gain .10 .73 (.51) .11 1.52 (1.39)(a),(b)
------------------------------------------------------------------------
Total from investment
operations .22 .95 (.34) .24 1.61 (1.32)(a)
------------------------------------------------------------------------
Less distributions from:
Net investment income - (.25) (.18) (.09) (.06) (.07)
Realized capital gains - (.31) - - (.22) -
------------------------------------------------------------------------
Total distributions - (.56) (.18) (.09) (.28) (.07)
------------------------------------------------------------------------
Net asset value at
end of period $ 10.18 $ 9.96 $ 9.57 $ 10.09 $ 9.94 $ 8.61
========================================================================
Total return (%)* 2.21 10.02 (3.40) 2.37 18.76 (13.18)(b)
Net assets at
end of period (000) $358,017 $380,888 $441,645 $475,075 $318,074 $73,563
Ratios to average
net assets:**
Expenses (%)(c) .81(d) .80(e) .79 .80 .94 1.00(d)
Expenses, excluding
reimbursements (%)(c) .81(d) .80 .79 .80 .94 1.12(d)
Net investment income (%) 2.18(d) 1.86 1.61 1.46 1.63 1.73(d)
Portfolio turnover (%) 36 106(f) 144 156 107 60
* 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. Total returns for periods of less than one year are
not annualized.
** For the six-month period ended June 30, 2013, average net assets were
$377,771,000.
*** Fund commenced operations on July 31, 2008.
(a) Calculated using average shares.
(b) During the year ended December 31, 2008, the Manager reimbursed the Fund
$30,000 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's net
realized loss per share and total return was less than $0.01/0.01%.
(c) Reflects total operating expenses of the Fund before reductions of any
expenses paid indirectly. The Fund's expenses paid indirectly decreased the
expense ratios by less than 0.01%.
(d) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(e) Prior to May 1, 2012, the Manager had voluntarily agreed to limit the annual
expenses of the Fund to 1.00% of the Fund's average net assets.
(f) Decrease in trading activity due to changes in subadvisers and asset
allocation strategies.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 59
================================================================================
EXPENSE EXAMPLE
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: direct costs, such
as wire fees, redemption fees, and low balance fees; and indirect costs,
including management fees, transfer agency fees, and other Fund operating
expenses. This example is intended to help you understand your indirect costs,
also referred to as "ongoing costs" (in dollars), of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire six-month period of January 1, 2013, through June
30, 2013.
ACTUAL EXPENSES
The first line of the table on the next page provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested at the beginning of the period, 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 first line under the heading
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides 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
================================================================================
60 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2013 -
JANUARY 1, 2013 JUNE 30, 2013 JUNE 30, 2013
-------------------------------------------------------
Actual $1,000.00 $1,022.10 $4.06
Hypothetical
(5% return before expenses) 1,000.00 1,020.78 4.06
* Expenses are equal to the Fund's annualized expense ratio of 0.81%, which is
net of any reimbursements and expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 181 days/365 days (to
reflect the one-half-year period). The Fund's ending account value on the
first line in the table is based on its actual total return of 2.21% for the
six-month period of January 1, 2013, through June 30, 2013.
================================================================================
EXPENSE EXAMPLE | 61
================================================================================
ADVISORY AGREEMENTS
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
At a meeting of the Board of Trustees (the Board) held on April 30, 2013, the
Board, including the Trustees who are not "interested persons" of the Trust (the
Independent Trustees), approved for an annual period the continuance of the
Advisory Agreement between the Trust and the Manager with respect to the Fund
and the Subadvisory Agreements between the Manager and the Subadvisers with
respect to the Fund.
In advance of the meeting, the Trustees received and considered a variety of
information relating to the Advisory Agreement and Subadvisory Agreements and
the Manager and each Subadviser, and were given the opportunity to ask questions
and request additional information from management. The information provided to
the Board included, among other things: (i) a separate report prepared by an
independent third party, which provided a statistical analysis comparing the
Fund's investment performance, expenses, and fees to comparable investment
companies; (ii) information concerning the services rendered to the Fund, as
well as information regarding the Manager's revenues and costs of providing
services to the Fund and compensation paid to affiliates of the Manager; and
(iii) information about the Manager's and Subadvisers' operations and personnel.
Prior to voting, the Independent Trustees reviewed the proposed continuance of
the Advisory Agreement and Subadvisory Agreements with management and with
experienced independent counsel and received materials from such counsel
discussing the legal standards for their consideration of the proposed
continuation of the Advisory Agreement and Subadvisory Agreements with respect
to the Fund. The Independent Trustees also reviewed the proposed continuation of
the Advisory Agreement and the Subadvisory Agreements with respect to the Fund
in private sessions with their counsel at which no representatives of management
were present.
At each regularly scheduled meeting of the Board and its committees, the Board
receives and reviews, among other things, information concerning
================================================================================
62 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
the Fund's performance and related services provided by the Manager and each
Subadviser. At the meeting at which the renewal of the Advisory Agreement and
Subadvisory Agreements is considered, particular focus is given to information
concerning Fund performance, comparability of fees and total expenses, and
profitability. However, the Board noted that the evaluation process with respect
to the Manager and each Subadviser is an ongoing one. In this regard, the
Board's and its committees' consideration of the Advisory Agreement and
Subadvisory Agreements included certain information previously received at such
meetings.
ADVISORY AGREEMENT
After full consideration of a variety of factors, the Board, including the
Independent Trustees, voted to approve the Advisory Agreement. In approving the
Advisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee may have attributed different weights to various
factors. Throughout their deliberations, the Independent Trustees were
represented and assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES -- In considering the nature, extent,
and quality of the services provided by the Manager under the Advisory
Agreement, the Board reviewed information provided by the Manager relating to
its operations and personnel. The Board also took into account its knowledge of
the Manager's management and the quality of the performance of the Manager's
duties through Board meetings, discussions, and reports during the preceding
year. The Board considered the fees paid to the Manager and the services
provided to the Fund by the Manager under the Advisory Agreement, as well as
other services provided by the Manager and its affiliates under other
agreements, and the personnel who provide these services. In addition to the
investment advisory services provided to the Fund, the Manager and its
affiliates provide administrative services, stockholder services, oversight of
Fund accounting, marketing services, assistance in meeting legal and regulatory
requirements, and other services necessary for the operation of the Fund and the
Trust.
The Board considered the Manager's management style and the performance of its
duties under the Advisory Agreement. The Board considered the
================================================================================
ADVISORY AGREEMENTS | 63
================================================================================
level and depth of knowledge of the Manager, including the professional
experience and qualifications of its senior and investment personnel, as well as
current staffing levels. The Board discussed the Manager's effectiveness in
monitoring the performance of each Subadviser and its timeliness in responding
to performance issues. The allocation of the Fund's brokerage, including the
Manager's process for monitoring "best execution," also was considered. The
Manager's role in coordinating the activities of the Fund's other service
providers was also considered. The Board also considered the Manager's risk
management processes. The Board considered the Manager's financial condition and
that it had the financial wherewithal to continue to provide the same scope and
high quality of services under the Advisory Agreement. In reviewing the Advisory
Agreement, the Board focused on the experience, resources, and strengths of the
Manager and its affiliates in managing the Fund, as well as the other funds in
the Trust.
The Board also reviewed the compliance and administrative services provided to
the Fund by the Manager, including the Manager's oversight of the Fund's
day-to-day operations and oversight of Fund accounting. The Trustees, guided
also by information obtained from their experiences as trustees of the Trust,
also focused on the quality of the Manager's compliance and administrative
staff.
EXPENSES AND PERFORMANCE -- In connection with its consideration of the Advisory
Agreement, the Board evaluated the Fund's advisory fees and total expense ratio
as compared to other open-end investment companies deemed to be comparable to
the Fund as determined by the independent third party in its report. The Fund's
expenses were compared to (i) a group of investment companies chosen by the
independent third party to be comparable to the Fund based upon certain factors,
including fund type, comparability of investment objective and classification,
sales load type (in this case, retail investment companies with front-end loads
and no sales loads), asset size, and expense components (the "expense group")
and (ii) a larger group of investment companies that includes all front-end load
and no-load retail open-end investment companies in the same investment
classification/objective as the Fund regardless of asset size, excluding
outliers (the "expense universe"). Among other data, the Board noted that the
Fund's management fee rate -- which includes advisory and
================================================================================
64 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
administrative services -- was below the median of its expense group and its
expense universe. The data indicated that the Fund's total expenses were below
the median of its expense group and its expense universe. The Board took into
account the various services provided to the Fund by the Manager and its
affiliates. The Board also noted the level and method of computing the
management fee. The Board also took into account that the subadvisory fees under
the Subadvisory Agreements are paid by the Manager. The Board also considered
and discussed information about the Subadvisers' fees, including the amount of
management fees retained by the Manager after payment of the subadvisory fees.
In considering the Fund's performance, the Board noted that it reviews at its
regularly scheduled meetings information about the Fund's performance results.
The Trustees also reviewed various comparative data provided to them in
connection with their consideration of the renewal of the Advisory Agreement,
including, among other information, a comparison of the Fund's average annual
total return with its Lipper index and with that of other mutual funds deemed to
be in its peer group by the independent third party in its report (the
"performance universe"). The Fund's performance universe consisted of the Fund
and all retail and institutional open-end investment companies with the same
classification/objective as the Fund regardless of asset size or primary channel
of distribution. This comparison indicated that, among other data, the Fund's
performance was lower than the average of its performance universe and its
Lipper index for the one- and three-year periods ended December 31, 2012. The
Board also noted that the Fund's percentile performance ranking was in the
bottom 50% of its performance universe for the one-and three-year periods ended
December 31, 2012. The Board took into account management's discussion of the
Fund's performance and recent steps taken by management to address the Fund's
performance.
COMPENSATION AND PROFITABILITY -- The Board took into consideration the level
and method of computing the management fee. The information considered by the
Board included operating profit margin information for the Manager's business as
a whole. The Board also received and considered profitability information
related to the management revenues from the Fund. This information included a
review of the methodology used in the
================================================================================
ADVISORY AGREEMENTS | 65
================================================================================
allocation of certain costs to the Fund. The Trustees reviewed the profitability
of the Manager's relationship with the Fund before tax expenses. In considering
the profitability data with respect to the Fund, the Trustees noted that the
Manager pays the subadvisory fees. In reviewing the overall profitability of the
management fee to the Manager, the Board also considered the fact that
affiliates provide shareholder servicing and administrative services to the Fund
for which they receive compensation. The Board also considered the possible
direct and indirect benefits to the Manager from its relationship with the
Trust, including that the Manager may derive reputational and other benefits
from its association with the Fund. The Trustees recognized that the Manager
should be entitled to earn a reasonable level of profits in exchange for the
level of services it provides to the Fund and the entrepreneurial risk that it
assumes as Manager.
ECONOMIES OF SCALE -- The Board considered whether there should be changes in
the management fee rate or structure in order to enable the Fund to participate
in any economies of scale. The Board took into account management's discussion
of the Fund's current advisory fee structure. The Board also considered the
effect of the Fund's growth and size on its performance and fees, noting that if
the Fund's assets increase over time, the Fund may realize other economies of
scale if assets increase proportionally more than some expenses. The Board
determined that the current investment management fee structure was reasonable.
CONCLUSIONS -- The Board reached the following conclusions regarding the Fund's
Advisory Agreement with the Manager, among others: (i) the Manager has
demonstrated that it possesses the capability and resources to perform the
duties required of it under the Advisory Agreement; (ii) the Manager maintains
an appropriate compliance program; (iii) the performance of the Fund is being
addressed; (iv) the Fund's advisory expenses are reasonable in relation to those
of similar funds and to the services to be provided by the Manager; and (v) the
Manager's and its affiliates' level of profitability from their relationship
with the Fund is reasonable. Based on its conclusions, the Board determined that
continuation of the Advisory Agreement would be in the best interests of the
Fund and its shareholders.
================================================================================
66 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
SUBADVISORY AGREEMENTS
In approving each Subadvisory Agreement with respect to the Fund, the Board
considered various factors, among them: (i) the nature, extent, and quality of
services provided to the Fund by the respective Subadviser, including the
personnel providing services; (ii) each Subadviser's compensation and any other
benefits derived from the subadvisory relationship; (iii) comparisons, to the
extent applicable, of subadvisory fees and performance to comparable investment
companies; and (iv) the terms of each Subadvisory Agreement. The Board's
analysis of these factors is set forth below.
After full consideration of a variety of factors, the Board including the
Independent Trustees, voted to approve each Subadvisory Agreement. In approving
each Subadvisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee may have attributed different weights to various
factors. Throughout their deliberations, the Independent Trustees were
represented and assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED; INVESTMENT PERSONNEL -- The
Board considered information provided to it regarding the services provided by
each Subadviser, including information presented periodically throughout the
previous year. The Board considered each Subadviser's level of knowledge and
investment style. The Board reviewed the experience and credentials of the
investment personnel who would be responsible for managing the investment of
portfolio securities with respect to the Fund and each Subadviser's level of
staffing. The Board noted that the materials provided to it by each Subadviser
indicated that the method of compensating portfolio managers is reasonable and
includes appropriate mechanisms to prevent a manager with underperformance from
taking undue risks. The Board also noted each Subadviser's brokerage practices.
The Board also considered each Subadviser's regulatory and compliance history.
The Board also took into account each Subadviser's risk management processes.
The Board noted that the Manager's monitoring processes of the Subadvisers would
include: (i) regular telephonic meetings to discuss, among other matters,
investment strategies, and to review portfolio performance; (ii) monthly
portfolio compliance checklists and
================================================================================
ADVISORY AGREEMENTS | 67
================================================================================
quarterly compliance certifications to the Board; and (iii) due diligence
reviews of each Subadviser.
SUBADVISER COMPENSATION -- The Board also took into consideration the financial
condition of each Subadviser. In considering the cost of services to be provided
by each Subadviser and the profitability to each Subadviser of its relationship
with the Fund, the Board noted that the fees under the Subadvisory Agreements
were paid by the Manager. The Board also relied on the ability of the Manager to
negotiate the Subadvisory Agreements and the fees thereunder at arm's length.
For the above reasons, the Board determined that the profitability of each
Subadviser from its relationship with the Fund was not a material factor in its
deliberations with respect to the consideration of the approval of the
Subadvisory Agreement. For similar reasons, the Board concluded that the
potential for economies of scale in each Subadviser's management of the Fund was
not a material factor in considering the Subadvisory Agreement.
SUBADVISORY FEES AND FUND PERFORMANCE -- The Board compared the subadvisory fees
for the Fund with the fees each Subadviser charges to comparable clients, as
applicable. The Board considered that the Fund pays a management fee to the
Manager and that, in turn, the Manager pays a subadvisory fee to each
Subadviser. As noted above, the Board considered the Fund's performance during
the one- and three-year periods ended December 31, 2012, as compared to the
Fund's peer group and noted that the Board reviews at its regularly scheduled
meetings information about the Fund's performance results. The Board also
considered the performance of each Subadviser. The Board noted the Manager's
expertise and resources in monitoring the performance, investment style, and
risk-adjusted performance of each Subadviser. The Board was mindful of the
Manager's focus on each Subadviser's performance and the explanations of
management regarding the performance of the Fund. The Board also noted each
Subadviser's long-term performance record for similar accounts, as applicable.
CONCLUSIONS -- The Board reached the following conclusions regarding each
Subadvisory Agreement, among others: (i) each Subadviser is qualified to manage
a portion of the Fund's assets in accordance with
================================================================================
68 | USAA GLOBAL OPPORTUNITIES FUND
================================================================================
its investment objectives and policies; (ii) each Subadviser maintains an
appropriate compliance program; (iii) the performance of the Fund is being
addressed; and (iv) the Fund's advisory expenses are reasonable in relation to
those of similar funds and to the services to be provided by the Manager and
each Subadviser. Based on its conclusions, the Board determined that approval of
each Subadvisory Agreement with respect to the Fund would be in the best
interests of the Fund and its shareholders.
================================================================================
ADVISORY AGREEMENTS | 69
================================================================================
TRUSTEES Daniel S. McNamara
Robert L. Mason, Ph.D.
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
Paul L. McNamara
--------------------------------------------------------------------------------
ADMINISTRATOR AND USAA Asset Management Company
INVESTMENT ADVISER P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
UNDERWRITER AND USAA Investment Management Company
DISTRIBUTOR P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
--------------------------------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "My Accounts" on
SELF-SERVICE 24/7 usaa.com select "Investments,"
AT USAA.COM then "Mutual Funds"
OR CALL Under "Investments" view
(800) 531-USAA account balances, or click
(8722) "I want to...," and select
the desired action.
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund, are
available without charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) in summary within the Statement of Additional Information on the SEC's
website at HTTP://WWW.SEC.GOV. Information regarding how the Fund voted proxies
relating to portfolio securities during the most recent 12-month period ended
June 30 is available without charge (i) at USAA.COM; and (ii) on the SEC's
website at HTTP://WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. These Forms N-Q are
available at no charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's website at HTTP://WWW.SEC.GOV. These Forms N-Q also may
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) 732-0330.
================================================================================
USAA --------------
9800 Fredericksburg Road PRSRT STD
San Antonio, TX 78288 U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on USAA.COM select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA WE KNOW WHAT IT MEANS TO SERVE.(R)
============================================================================
88395-0813 (C)2013, USAA. All rights reserved.
ITEM 2. CODE OF ETHICS.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Filed as part of the report to shareholders.
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 directors. Currently, there is no
procedure for shareholders to recommend candidates to serve on the Board.
ITEM 11. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of USAA Mutual
Funds Trust (Trust) have concluded that the Trust's disclosure controls and
procedures are sufficient to ensure that information required to be disclosed by
the Trust in this Form N-CSR/S was recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms, based upon such officers' evaluation of these controls and
procedures as of a date within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation. The only change to the
procedures was to document the annual disclosure controls and procedures
established for the new section of the shareholder reports detailing the factors
considered by the Funds' Board in approving the Funds' advisory agreements.
ITEM 12. EXHIBITS.
(a)(1). NOT APPLICABLE. This item must be disclosed only in annual reports.
(a)(2). Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit
99.CERT.
(a)(3). Not Applicable.
(b). Certification pursuant to Rule 30a-2(b) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(b))is filed and attached hereto as Exhibit
99.906CERT.
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, Period Ended June 30, 2013
By:* /S/ JAMES G. WHETZEL
-----------------------------------------------------------
Signature and Title: JAMES G. WHETZEL, Secretary
Date: 08/22/2013
------------------------------
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:* /S/ DANIEL S. MCNAMARA
-----------------------------------------------------
Signature and Title: Daniel S. McNamara, President
Date: 08/26/2013
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 08/23/2013
------------------------------
*Print the name and title of each signing officer under his or her signature.