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 S&P 500 INDEX FUND]
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SEMIANNUAL REPORT
USAA S&P 500 INDEX FUND
MEMBER SHARES o REWARD SHARES
JUNE 30, 2013
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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."
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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
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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.
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TABLE OF CONTENTS
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FUND OBJECTIVE 1
MANAGER'S COMMENTARY 2
INVESTMENT OVERVIEW 4
FINANCIAL INFORMATION
Portfolio of Investments 9
Notes to Portfolio of Investments 30
Financial Statements 32
Notes to Financial Statements 35
EXPENSE EXAMPLE 49
ADVISORY AGREEMENTS 51
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.
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FUND OBJECTIVE
THE USAA S&P 500 INDEX FUND (THE FUND) SEEKS TO MATCH, BEFORE FEES AND EXPENSES,
THE PERFORMANCE OF THE STOCKS COMPOSING THE S&P 500(R) INDEX. THE S&P 500 INDEX
EMPHASIZES STOCKS OF LARGE U.S. COMPANIES.
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TYPES OF INVESTMENTS
The Fund's principal investment strategy is to invest at least 80% of the Fund's
assets in the common stocks of companies composing the S&P 500 Index. This
strategy may be changed upon 60 days' written notice to shareholders.
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.
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FUND OBJECTIVE | 1
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MANAGER'S COMMENTARY ON THE FUND
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o HOW DID THE USAA S&P 500 INDEX FUND (THE FUND) PERFORM DURING THE REPORTING
PERIOD?
The Fund closely tracked its benchmark, the broad-based S&P 500(R) Index
(the Index), for the period ended June 30, 2013. The USAA S&P 500 Index
Fund Member Shares and Reward Shares returned 13.65% and 13.70%,
respectively, during the reporting period versus the Index which returned
13.82%. The Index is a group of large-company stocks that is not available
for direct investment.
o WHAT WERE THE MARKET CONDITIONS DURING THE PERIOD?
U.S. equities performed positively during the first half of the year,
outperforming other major asset classes. At the start of the year, the late
deal reached in congress to avoid the "fiscal cliff" sparked a rally in the
U.S. markets and was accompanied by strong economic indicators which
included strong earnings, housing data, and improvements in the labor
market. Despite the positive economic data, the Federal Reserve continued
with easy monetary policy and announced plans to continue its asset
purchasing program until a 6.5% unemployment rate threshold is met.
Additionally, the European environment was less volatile than in 2012.
Cyprus proved to be a larger issue than many anticipated, but bailout terms
agreed upon by the EU ultimately prevented another market meltdown. These
terms forced the island nation to implement severe capital controls to avoid
massive bank runs.
Refer to pages 5 for benchmark definitions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. o High double-digit
returns are attributable, in part, to unusually favorable market conditions
and may not be repeated or consistently achieved in the future.
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2 | USAA S&P 500 INDEX FUND
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Despite trouble in Cyprus, the U.S. markets continued to perform positively
into the second quarter. U.S. gross domestic product growth was slower than
expected, but it was accompanied by positive economic news regarding housing
and consumer spending. In May, investors began to fear that the positive
economic data would cause the Federal Reserve (the Fed) to begin tapering
its asset purchase program, known as "quantitative easing" (QE3), by the end
of the year, resulting in a rise in bond yields. In his June comments, Fed
Chairman Ben Bernanke mentioned the possibility of tapering bond purchases
by the end of this year. The news sparked a widespread selloff, but the
market regained some of the losses after several Fed officials made comments
suggesting that tapering of the asset purchase program may not come as soon
as many have feared.
o PLEASE DESCRIBE SECTOR PERFORMANCE DURING THE PERIOD.
All sectors showed positive performance in the first half of the year.
Health Care was the top performing sector in the Index, returning 20.26%.
The next best performing sector was Consumer Discretionary, which returned
19.79%. The worst performing sectors in the index were Materials, which
returned 2.90%, Information Technology, which returned 6.35%, and Energy,
which returned 9.77%.
o WHAT INVESTMENT STRATEGIES WILL YOU PURSUE FOR THE FUND IN 2013?
We don't manage the Fund according to a given outlook for the equity markets
or the economy in general, because we're managing an index fund that seeks
to replicate as closely as possible (before deduction of expenses) the broad
diversification and returns of the Index. Nevertheless, we will monitor
economic conditions and their effect on the financial markets as we seek to
track the Index's performance closely.
Thank you for your investment in the Fund.
INVESTING IN SECURITIES PRODUCTS INVOLVES RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. o Diversification is a technique to help reduce risk and does not
guarantee a profit or prevent a loss.
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MANAGER'S COMMENTARY ON THE FUND | 3
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INVESTMENT OVERVIEW
USAA S&P 500 INDEX FUND MEMBER SHARES (MEMBER SHARES) (Ticker Symbol: USSPX)
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6/30/13 12/31/12
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Net Assets $2,299.3 Million $2,116.2 Million
Net Asset Value Per Share $22.91 $20.34
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AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/13*
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12/31/2012-6/30/2013** 1 Year 5 Years 10 Years
13.65% 20.28% 6.76% 7.05%
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EXPENSE RATIOS AS OF 12/31/12***
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Before Reimbursement 0.32% After Reimbursement 0.25%
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.
*Returns for the Member Shares exclude the account maintenance fee.
**Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
***The expense ratios represent 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 are
calculated as a percentage of average net assets. USAA Asset Management Company
(the Manager) has agreed, through May 1, 2014, to make payments or waive
management, administration, and other fees so that the total expenses of the
Member Shares (exclusive of commission recapture, expense offset arrangements,
acquired fund fees and expenses, and extraordinary expenses) do not exceed an
annual rate of 0.25% of the Member Shares' average net assets. This
reimbursement arrangement may not be changed or terminated during this time
period without approval of the Fund's Board of Trustees and may be changed or
terminated by the Manager at any time after May 1, 2014. These expense ratios
may differ from the expense ratios 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. The performance data excludes the impact of a $10 account
maintenance fee that is assessed on acounts of less than $10,000. Performance of
Member Shares will vary from Reward Shares due to differences in expenses.
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4 | USAA S&P 500 INDEX FUND
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
MEMBER SHARES
S&P 500 USAA S&P 500 INDEX
INDEX FUND MEMBER SHARES
6/30/2003 $10,000.00 $10,000.00
7/31/2003 10,176.31 10,177.60
8/31/2003 10,374.78 10,368.85
9/30/2003 10,264.60 10,252.68
10/31/2003 10,845.27 10,835.61
11/30/2003 10,940.69 10,924.76
12/31/2003 11,514.47 11,492.04
1/31/2004 11,725.82 11,698.48
2/29/2004 11,888.80 11,856.75
3/31/2004 11,709.44 11,677.35
4/30/2004 11,525.62 11,491.01
5/31/2004 11,683.79 11,642.84
6/30/2004 11,910.98 11,866.00
7/31/2004 11,516.76 11,471.39
8/31/2004 11,563.34 11,512.92
9/30/2004 11,688.58 11,632.95
10/31/2004 11,867.15 11,813.62
11/30/2004 12,347.32 12,286.17
12/31/2004 12,767.48 12,699.50
1/31/2005 12,456.27 12,391.64
2/28/2005 12,718.41 12,650.52
3/31/2005 12,493.19 12,425.14
4/30/2005 12,256.25 12,186.33
5/31/2005 12,646.22 12,572.64
6/30/2005 12,664.17 12,588.72
7/31/2005 13,135.14 13,054.18
8/31/2005 13,015.29 12,934.29
9/30/2005 13,120.71 13,037.07
10/31/2005 12,901.97 12,817.54
11/30/2005 13,389.95 13,299.09
12/31/2005 13,394.54 13,304.99
1/31/2006 13,749.27 13,653.63
2/28/2006 13,786.58 13,689.20
3/31/2006 13,958.19 13,858.41
4/30/2006 14,145.62 14,037.00
5/31/2006 13,738.49 13,636.96
6/30/2006 13,757.11 13,652.60
7/31/2006 13,841.97 13,731.51
8/31/2006 14,171.31 14,054.36
9/30/2006 14,536.51 14,415.41
10/31/2006 15,010.20 14,883.67
11/30/2006 15,295.63 15,164.63
12/31/2006 15,510.19 15,371.94
1/31/2007 15,744.76 15,603.53
2/28/2007 15,436.81 15,299.56
3/31/2007 15,609.47 15,467.38
4/30/2007 16,300.90 16,150.62
5/31/2007 16,869.72 16,710.29
6/30/2007 16,589.46 16,434.06
7/31/2007 16,075.10 15,923.23
8/31/2007 16,316.07 16,156.75
9/30/2007 16,926.27 16,761.18
10/31/2007 17,195.52 17,025.02
11/30/2007 16,476.63 16,306.79
12/31/2007 16,362.32 16,189.92
1/31/2008 15,380.88 15,217.64
2/29/2008 14,881.22 14,724.14
3/31/2008 14,816.97 14,652.57
4/30/2008 15,538.60 15,370.40
5/31/2008 15,739.86 15,562.81
6/30/2008 14,412.94 14,249.31
7/31/2008 14,291.78 14,130.32
8/31/2008 14,498.51 14,331.12
9/30/2008 13,206.58 13,047.24
10/31/2008 10,988.56 10,856.50
11/30/2008 10,200.09 10,071.42
12/31/2008 10,308.62 10,178.25
1/31/2009 9,439.74 9,319.39
2/28/2009 8,434.62 8,324.92
3/31/2009 9,173.45 9,054.51
4/30/2009 10,051.43 9,919.01
5/31/2009 10,613.64 10,472.60
6/30/2009 10,634.69 10,494.97
7/31/2009 11,439.07 11,287.62
8/31/2009 11,852.07 11,691.56
9/30/2009 12,294.34 12,125.18
10/31/2009 12,065.94 11,895.54
11/30/2009 12,789.70 12,607.43
12/31/2009 13,036.74 12,852.85
1/31/2010 12,567.76 12,391.34
2/28/2010 12,957.07 12,768.24
3/31/2010 13,738.97 13,541.79
4/30/2010 13,955.87 13,750.25
5/31/2010 12,841.48 12,646.21
6/30/2010 12,169.25 11,980.98
7/31/2010 13,021.87 12,818.49
8/31/2010 12,434.01 12,236.89
9/30/2010 13,543.68 13,325.23
10/31/2010 14,059.00 13,831.45
11/30/2010 14,060.81 13,831.45
12/31/2010 15,000.51 14,756.32
1/31/2011 15,356.04 15,100.58
2/28/2011 15,882.13 15,616.98
3/31/2011 15,888.45 15,613.72
4/30/2011 16,358.99 16,078.04
5/31/2011 16,173.81 15,889.16
6/30/2011 15,904.21 15,626.65
7/31/2011 15,580.80 15,302.58
8/31/2011 14,734.42 14,464.73
9/30/2011 13,698.61 13,446.41
10/31/2011 15,195.77 14,915.75
11/30/2011 15,162.19 14,876.03
12/31/2011 15,317.29 15,025.19
1/31/2012 16,003.74 15,695.45
2/29/2012 16,695.77 16,373.70
3/31/2012 17,245.22 16,905.23
4/30/2012 17,136.97 16,800.98
5/31/2012 16,107.03 15,782.50
6/30/2012 16,770.67 16,433.43
7/31/2012 17,003.60 16,659.10
8/31/2012 17,386.57 17,029.84
9/30/2012 17,835.87 17,469.06
10/31/2012 17,506.54 17,137.01
11/30/2012 17,608.10 17,234.19
12/31/2012 17,768.59 17,392.02
1/31/2013 18,688.91 18,289.84
2/28/2013 18,942.61 18,529.26
3/31/2013 19,653.02 19,214.82
4/30/2013 20,031.67 19,584.33
5/31/2013 20,500.25 20,039.78
6/30/2013 20,224.95 19,765.75
[END CHART]
Data from 06/30/03 to 06/30/13.
The graph illustrates how a $10,000 hypothetical investment in the USAA S&P 500
Index Fund's Member Shares closely tracks the S&P 500 Index. The S&P 500 Index
is an unmanaged index representing the weighted average performance of a group
of 500 widely held, publicly traded stocks.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for our use. The USAA S&P 500 Index Fund is not sponsored, endorsed, sold, or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding the advisability of investing in the USAA S&P 500 Index Fund. o Index
products incur fees and expenses and may not always be invested in all
securities of the index the Fund attempts to mirror.
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.
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INVESTMENT OVERVIEW | 5
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USAA S&P 500 INDEX FUND REWARD SHARES (REWARD SHARES) (Ticker Symbol: USPRX)
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6/30/13 12/31/12
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Net Assets $1,471.0 Million $1,173.6 Million
Net Asset Value Per Share $22.92 $20.34
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AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/13
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12/31/2012-6/30/2013* 1 Year 5 Years 10 Years
13.70% 20.39% 6.90% 7.18%
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EXPENSE RATIOS AS OF 12/31/12**
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Before Reimbursement 0.27% After Reimbursement 0.15%
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 ratios represent 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 are
calculated as a percentage of average net assets. USAA Asset Management Company
(the Manager) has agreed, through May 1, 2014, to make payments or waive
management, administration, and other fees so that the total expenses of the
Reward Shares (exclusive of commission recapture, expense offset arrangements,
acquired fund fees and expenses, and extraordinary expenses) do not exceed an
annual rate of 0.15% of the Reward Shares' average net assets. This
reimbursement arrangement may not be changed or terminated during this time
period without approval of the Fund's Board of Trustees and may be changed or
terminated by the Manager at any time after May 1, 2014. These expense ratios
may differ from the expense ratios 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.
The Reward Shares are currently offered for sale to qualified shareholders, USAA
discretionary managed account program, and a USAA Fund participating in a
fund-of-funds investment strategy.
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6 | USAA S&P 500 INDEX FUND
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
REWARD SHARES
S&P 500 USAA S&P 500 INDEX
INDEX FUND REWARD SHARES
6/30/2003 $10,000.00 $10,000.00
7/31/2003 10,176.31 10,177.60
8/31/2003 10,374.78 10,368.85
9/30/2003 10,264.60 10,257.45
10/31/2003 10,845.27 10,840.65
11/30/2003 10,940.69 10,929.85
12/31/2003 11,514.47 11,502.35
1/31/2004 11,725.82 11,708.98
2/29/2004 11,888.80 11,874.29
3/31/2004 11,709.44 11,692.60
4/30/2004 11,525.62 11,506.02
5/31/2004 11,683.79 11,658.05
6/30/2004 11,910.98 11,888.48
7/31/2004 11,516.76 11,493.12
8/31/2004 11,563.34 11,534.74
9/30/2004 11,688.58 11,659.65
10/31/2004 11,867.15 11,833.78
11/30/2004 12,347.32 12,314.37
12/31/2004 12,767.48 12,729.35
1/31/2005 12,456.27 12,420.76
2/28/2005 12,718.41 12,680.26
3/31/2005 12,493.19 12,455.05
4/30/2005 12,256.25 12,222.71
5/31/2005 12,646.22 12,609.95
6/30/2005 12,664.17 12,622.14
7/31/2005 13,135.14 13,095.91
8/31/2005 13,015.29 12,975.70
9/30/2005 13,120.71 13,075.18
10/31/2005 12,901.97 12,855.01
11/30/2005 13,389.95 13,345.07
12/31/2005 13,394.54 13,347.38
1/31/2006 13,749.27 13,697.12
2/28/2006 13,786.58 13,732.81
3/31/2006 13,958.19 13,905.75
4/30/2006 14,145.62 14,092.11
5/31/2006 13,738.49 13,683.54
6/30/2006 13,757.11 13,703.07
7/31/2006 13,841.97 13,789.48
8/31/2006 14,171.31 14,113.52
9/30/2006 14,536.51 14,479.36
10/31/2006 15,010.20 14,949.47
11/30/2006 15,295.63 15,231.53
12/31/2006 15,510.19 15,443.67
1/31/2007 15,744.76 15,676.23
2/28/2007 15,436.81 15,370.99
3/31/2007 15,609.47 15,535.91
4/30/2007 16,300.90 16,229.47
5/31/2007 16,869.72 16,791.63
6/30/2007 16,589.46 16,510.93
7/31/2007 16,075.10 15,997.71
8/31/2007 16,316.07 16,239.66
9/30/2007 16,926.27 16,843.34
10/31/2007 17,195.52 17,108.47
11/30/2007 16,476.63 16,394.09
12/31/2007 16,362.32 16,281.03
1/31/2008 15,380.88 15,303.73
2/29/2008 14,881.22 14,800.26
3/31/2008 14,816.97 14,739.31
4/30/2008 15,538.60 15,453.58
5/31/2008 15,739.86 15,654.47
6/30/2008 14,412.94 14,339.17
7/31/2008 14,291.78 14,212.01
8/31/2008 14,498.51 14,421.45
9/30/2008 13,206.58 13,135.63
10/31/2008 10,988.56 10,923.79
11/30/2008 10,200.09 10,141.37
12/31/2008 10,308.62 10,245.84
1/31/2009 9,439.74 9,388.86
2/28/2009 8,434.62 8,387.79
3/31/2009 9,173.45 9,118.02
4/30/2009 10,051.43 9,996.22
5/31/2009 10,613.64 10,553.69
6/30/2009 10,634.69 10,572.62
7/31/2009 11,439.07 11,371.13
8/31/2009 11,852.07 11,785.74
9/30/2009 12,294.34 12,219.58
10/31/2009 12,065.94 11,995.86
11/30/2009 12,789.70 12,713.30
12/31/2009 13,036.74 12,958.15
1/31/2010 12,567.76 12,492.86
2/28/2010 12,957.07 12,880.60
3/31/2010 13,738.97 13,657.62
4/30/2010 13,955.87 13,867.86
5/31/2010 12,841.48 12,762.16
6/30/2010 12,169.25 12,088.62
7/31/2010 13,021.87 12,941.48
8/31/2010 12,434.01 12,354.65
9/30/2010 13,543.68 13,457.97
10/31/2010 14,059.00 13,968.93
11/30/2010 14,060.81 13,968.93
12/31/2010 15,000.51 14,900.82
1/31/2011 15,356.04 15,248.45
2/28/2011 15,882.13 15,769.90
3/31/2011 15,888.45 15,780.52
4/30/2011 16,358.99 16,241.62
5/31/2011 16,173.81 16,058.77
6/30/2011 15,904.21 15,790.42
7/31/2011 15,580.80 15,462.95
8/31/2011 14,734.42 14,624.31
9/30/2011 13,698.61 13,591.62
10/31/2011 15,195.77 15,076.82
11/30/2011 15,162.19 15,044.71
12/31/2011 15,317.29 15,192.14
1/31/2012 16,003.74 15,877.93
2/29/2012 16,695.77 16,555.64
3/31/2012 17,245.22 17,105.14
4/30/2012 17,136.97 16,991.60
5/31/2012 16,107.03 15,969.67
6/30/2012 16,770.67 16,623.96
7/31/2012 17,003.60 16,852.24
8/31/2012 17,386.57 17,227.28
9/30/2012 17,835.87 17,676.01
10/31/2012 17,506.54 17,348.22
11/30/2012 17,608.10 17,446.55
12/31/2012 17,768.59 17,602.24
1/31/2013 18,688.91 18,510.91
2/28/2013 18,942.61 18,761.88
3/31/2013 19,653.02 19,461.86
4/30/2013 20,031.67 19,835.96
5/31/2013 20,500.25 20,297.06
6/30/2013 20,224.95 20,014.27
[END CHART]
Data from 06/30/03 to 06/30/13.
See page 5 for benchmark definition.
The graph illustrates how a $10,000 hypothetical investment in the USAA S&P 500
Index Fund's Reward Shares closely tracks the S&P 500 Index.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for our use. The USAA S&P 500 Index Fund is not sponsored, endorsed, sold, or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding the advisability of investing in the USAA S&P 500 Index Fund. o Index
products incur fees and expenses and may not always be invested in all
securities of the index the Fund attempts to mirror.
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.
================================================================================
INVESTMENT OVERVIEW | 7
================================================================================
o TOP 10 EQUITY HOLDINGS o
AS OF 6/30/13
(% of Net Assets)
Exxon Mobil Corp. ......................................................... 2.8%
Apple, Inc. ............................................................... 2.5%
Microsoft Corp. ........................................................... 1.8%
Johnson & Johnson ......................................................... 1.7%
General Electric Co. ...................................................... 1.6%
Google, Inc. "A" .......................................................... 1.6%
Chevron Corp. ............................................................. 1.6%
Procter & Gamble Co. ...................................................... 1.4%
Berkshire Hathaway, Inc. "B". ............................................. 1.4%
Wells Fargo & Co........................................................... 1.4%
You will find a complete list of securities that the Fund owns on pages 9-29.
o SECTOR ALLOCATION* -- 6/30/2013 o
[PIE CHART OF SECTOR ALLOCATION]
INFORMATION TECHNOLOGY 17.4%
FINANCIALS 16.3%
HEALTH CARE 12.5%
CONSUMER DISCRETIONARY 12.0%
ENERGY 10.3%
CONSUMER STAPLES 10.3%
INDUSTRIALS 10.0%
UTILITIES 3.3%
MATERIALS 3.2%
TELECOMMUNICATION SERVICES 2.8%
[END CHART]
* Excludes money market instruments.
Percentages are of the net assets of the Fund, and may not equal 100%.
================================================================================
8 | USAA S&P 500 Index Fund
================================================================================
PORTFOLIO OF INVESTMENTS
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
COMMON STOCKS (98.1%)
CONSUMER DISCRETIONARY (12.0%)
------------------------------
ADVERTISING (0.2%)
110,639 Interpublic Group of Companies, Inc. $ 1,610
67,182 Omnicom Group, Inc. 4,223
----------
5,833
----------
APPAREL & ACCESSORIES & LUXURY GOODS (0.4%)
72,701 Coach, Inc. 4,150
13,576 Fossil Group, Inc.* 1,403
20,965 PVH Corp. 2,622
15,719 Ralph Lauren Corp. 2,731
22,632 VF Corp. 4,369
----------
15,275
----------
APPAREL RETAIL (0.6%)
20,778 Abercrombie & Fitch Co. "A" 940
74,879 Gap, Inc. 3,125
61,854 L Brands, Inc. 3,046
57,054 Ross Stores, Inc. 3,698
185,944 TJX Companies, Inc. 9,308
28,446 Urban Outfitters, Inc.* 1,144
----------
21,261
----------
AUTO PARTS & EQUIPMENT (0.3%)
30,108 BorgWarner, Inc.* 2,594
74,709 Delphi Automotive plc 3,787
176,803 Johnson Controls, Inc. 6,328
----------
12,709
----------
AUTOMOBILE MANUFACTURERS (0.6%)
1,016,558 Ford Motor Co. 15,726
199,142 General Motors Co.* 6,633
----------
22,359
----------
AUTOMOTIVE RETAIL (0.3%)
9,477 AutoNation, Inc.* 411
9,338 AutoZone, Inc.* 3,957
58,268 CarMax, Inc.* 2,690
================================================================================
PORTFOLIO OF INVESTMENTS | 9
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
28,710 O'Reilly Automotive, Inc.* $ 3,233
----------
10,291
----------
BROADCASTING (0.4%)
147,431 CBS Corp. "B" 7,205
63,252 Discovery Communications, Inc. "A"* 4,884
22,173 Scripps Networks Interactive "A" 1,480
----------
13,569
----------
CABLE & SATELLITE (1.2%)
55,993 Cablevision Systems Corp. "A" 942
680,498 Comcast Corp. "A" 28,499
144,327 DIRECTV* 8,893
75,194 Time Warner Cable, Inc. 8,458
----------
46,792
----------
CASINOS & GAMING (0.1%)
67,511 International Game Technology 1,128
20,745 Wynn Resorts Ltd. 2,655
----------
3,783
----------
COMPUTER & ELECTRONICS RETAIL (0.1%)
69,738 Best Buy Co., Inc. 1,906
31,138 GameStop Corp. "A" 1,309
----------
3,215
----------
CONSUMER ELECTRONICS (0.0%)
27,986 Garmin Ltd. 1,012
17,447 Harman International Industries, Inc. 946
----------
1,958
----------
DEPARTMENT STORES (0.3%)
36,760 J.C. Penney Co., Inc.* 628
52,668 Kohl's Corp. 2,660
99,117 Macy's, Inc. 4,758
38,274 Nordstrom, Inc. 2,294
----------
10,340
----------
DISTRIBUTORS (0.1%)
39,922 Genuine Parts Co. 3,117
----------
FOOTWEAR (0.3%)
186,714 NIKE, Inc. "B" 11,890
----------
GENERAL MERCHANDISE STORES (0.5%)
77,966 Dollar General Corp.* 3,932
57,614 Dollar Tree, Inc.* 2,929
24,873 Family Dollar Stores, Inc. 1,550
================================================================================
10 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
165,829 Target Corp. $ 11,419
----------
19,830
----------
HOME FURNISHINGS (0.0%)
36,569 Leggett & Platt, Inc. 1,137
----------
HOME IMPROVEMENT RETAIL (1.1%)
377,486 Home Depot, Inc. 29,244
277,127 Lowe's Companies, Inc. 11,334
----------
40,578
----------
HOMEBUILDING (0.1%)
73,270 D.R. Horton, Inc. 1,559
42,269 Lennar Corp. "A" 1,524
89,570 Pulte Group, Inc.* 1,699
----------
4,782
----------
HOMEFURNISHING RETAIL (0.1%)
56,489 Bed Bath & Beyond, Inc.* 4,005
----------
HOTELS, RESORTS & CRUISE LINES (0.3%)
114,550 Carnival Corp. 3,928
61,918 Marriott International, Inc. "A" 2,500
49,990 Starwood Hotels & Resorts Worldwide, Inc. 3,159
35,213 Wyndham Worldwide Corp. 2,015
----------
11,602
----------
HOUSEHOLD APPLIANCES (0.1%)
20,484 Whirlpool Corp. 2,342
----------
HOUSEWARES & SPECIALTIES (0.1%)
75,003 Newell Rubbermaid, Inc. 1,969
----------
INTERNET RETAIL (1.1%)
94,127 Amazon.com, Inc.* 26,138
24,015 Expedia, Inc. 1,444
14,456 Netflix, Inc.* 3,052
13,313 Priceline.com, Inc.* 11,012
28,884 TripAdvisor, Inc.* 1,758
----------
43,404
----------
LEISURE PRODUCTS (0.1%)
30,277 Hasbro, Inc. 1,357
88,997 Mattel, Inc. 4,033
----------
5,390
----------
MOTORCYCLE MANUFACTURERS (0.1%)
57,576 Harley-Davidson, Inc. 3,156
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
MOVIES & ENTERTAINMENT (1.8%)
513,963 News Corp. "A" $ 16,755
241,005 Time Warner, Inc. 13,935
115,245 Viacom, Inc. "B" 7,843
465,467 Walt Disney Co. 29,394
----------
67,927
----------
PUBLISHING (0.1%)
59,647 Gannett Co., Inc. 1,459
1,136 Washington Post Co. "B" 549
----------
2,008
----------
RESTAURANTS (1.4%)
7,998 Chipotle Mexican Grill, Inc.* 2,914
33,841 Darden Restaurants, Inc. 1,708
259,117 McDonald's Corp. 25,653
193,148 Starbucks Corp. 12,649
116,512 Yum! Brands, Inc. 8,079
----------
51,003
----------
SPECIALIZED CONSUMER SERVICES (0.0%)
70,447 H&R Block, Inc. 1,955
----------
SPECIALTY STORES (0.2%)
26,694 PetSmart, Inc. 1,788
170,542 Staples, Inc. 2,705
31,230 Tiffany & Co. 2,275
----------
6,768
----------
TIRES & RUBBER (0.0%)
63,115 Goodyear Tire & Rubber Co.* 965
----------
Total Consumer Discretionary 451,213
----------
CONSUMER STAPLES (10.3%)
------------------------
AGRICULTURAL PRODUCTS (0.2%)
170,396 Archer-Daniels-Midland Co. 5,778
----------
BREWERS (0.0%)
41,017 Molson Coors Brewing Co. "B" 1,963
----------
DISTILLERS & VINTNERS (0.2%)
41,782 Beam, Inc. 2,637
38,953 Brown-Forman Corp. "B" 2,631
39,891 Constellation Brands, Inc. "A"* 2,079
----------
7,347
----------
================================================================================
12 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
DRUG RETAIL (0.7%)
316,463 CVS Caremark Corp. $ 18,095
223,227 Walgreen Co. 9,867
----------
27,962
----------
FOOD DISTRIBUTORS (0.1%)
153,430 Sysco Corp. 5,241
----------
FOOD RETAIL (0.3%)
133,718 Kroger Co. 4,619
61,604 Safeway, Inc. 1,457
89,166 Whole Foods Market, Inc. 4,590
----------
10,666
----------
HOUSEHOLD PRODUCTS (2.1%)
33,854 Clorox Co. 2,815
226,616 Colgate-Palmolive Co. 12,983
99,388 Kimberly-Clark Corp. 9,654
708,317 Procter & Gamble Co.(f) 54,533
----------
79,985
----------
HYPERMARKETS & SUPER CENTERS (1.2%)
112,864 Costco Wholesale Corp. 12,479
423,412 Wal-Mart Stores, Inc.(f) 31,540
----------
44,019
----------
PACKAGED FOODS & MEAT (1.5%)
46,052 Campbell Soup Co. 2,063
108,102 ConAgra Foods, Inc. 3,776
166,067 General Mills, Inc. 8,059
38,940 Hershey Co. 3,477
35,142 Hormel Foods Corp. 1,356
27,909 J.M. Smucker Co. 2,879
65,320 Kellogg Co. 4,195
153,605 Kraft Foods Group, Inc. "A" 8,582
34,104 McCormick & Co., Inc. 2,400
52,251 Mead Johnson Nutrition Co. 4,140
461,098 Mondelez International, Inc. Companies 13,155
74,239 Tyson Foods, Inc. "A" 1,906
----------
55,988
----------
PERSONAL PRODUCTS (0.2%)
112,630 Avon Products, Inc. 2,369
62,312 Estee Lauder Companies, Inc. "A" 4,098
----------
6,467
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
SOFT DRINKS (2.1%)
989,772 Coca-Cola Co. $ 39,700
66,418 Coca-Cola Enterprises, Inc. 2,335
53,139 Dr Pepper Snapple Group, Inc. 2,441
37,129 Monster Beverage Corp.* 2,256
399,579 PepsiCo, Inc. 32,682
----------
79,414
----------
TOBACCO (1.7%)
518,085 Altria Group, Inc. 18,128
97,839 Lorillard, Inc. 4,274
422,630 Philip Morris International, Inc. 36,608
82,672 Reynolds American, Inc. 3,999
----------
63,009
----------
Total Consumer Staples 387,839
----------
ENERGY (10.3%)
--------------
COAL & CONSUMABLE FUELS (0.1%)
59,802 CONSOL Energy, Inc. 1,621
69,779 Peabody Energy Corp. 1,021
----------
2,642
----------
INTEGRATED OIL & GAS (5.0%)
501,186 Chevron Corp. 59,310
1,148,989 Exxon Mobil Corp.(f) 103,811
77,438 Hess Corp. 5,149
46,515 Murphy Oil Corp. 2,832
208,191 Occidental Petroleum Corp. 18,577
----------
189,679
----------
OIL & GAS DRILLING (0.3%)
17,796 Diamond Offshore Drilling, Inc. 1,224
60,308 Ensco plc "A" 3,505
27,527 Helmerich & Payne, Inc. 1,719
76,248 Nabors Industries Ltd. 1,167
66,027 Noble Corp. 2,481
32,240 Rowan Companies plc "A"* 1,099
----------
11,195
----------
OIL & GAS EQUIPMENT & SERVICES (1.4%)
113,750 Baker Hughes, Inc. 5,247
63,868 Cameron International Corp.* 3,906
61,290 FMC Technologies, Inc.* 3,413
240,382 Halliburton Co. 10,029
110,695 National Oilwell Varco, Inc. 7,627
================================================================================
14 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
343,639 Schlumberger Ltd. $ 24,625
----------
54,847
----------
OIL & GAS EXPLORATION & PRODUCTION (2.4%)
129,533 Anadarko Petroleum Corp. 11,131
101,492 Apache Corp. 8,508
54,603 Cabot Oil & Gas Corp. 3,878
132,998 Chesapeake Energy Corp. 2,711
315,895 ConocoPhillips 19,112
96,266 Denbury Resources, Inc.* 1,667
97,374 Devon Energy Corp. 5,052
70,414 EOG Resources, Inc. 9,272
38,972 EQT Corp. 3,093
183,728 Marathon Oil Corp. 6,353
34,544 Newfield Exploration Co.* 825
92,568 Noble Energy, Inc. 5,558
35,290 Pioneer Natural Resources Co. 5,108
47,024 QEP Resources, Inc. 1,306
42,381 Range Resources Corp. 3,277
90,823 Southwestern Energy Co.* 3,318
50,575 WPX Energy, Inc.* 958
----------
91,127
----------
OIL & GAS REFINING & MARKETING (0.6%)
83,900 Marathon Petroleum Corp. 5,962
159,931 Phillips 66 9,422
35,423 Tesoro Corp. 1,853
140,898 Valero Energy Corp. 4,899
----------
22,136
----------
OIL & GAS STORAGE & TRANSPORTATION (0.5%)
163,535 Kinder Morgan, Inc. 6,239
172,561 Spectra Energy Corp. 5,947
177,223 Williams Companies, Inc. 5,754
----------
17,940
----------
Total Energy 389,566
----------
FINANCIALS (16.3%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (1.2%)
52,309 Ameriprise Financial, Inc. 4,231
300,617 Bank of New York Mellon Corp., Inc. 8,432
32,257 BlackRock, Inc. 8,285
35,828 Franklin Resources, Inc. 4,873
115,310 Invesco Ltd. 3,667
28,070 Legg Mason, Inc. 871
56,079 Northern Trust Corp.(c) 3,247
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
117,739 State Street Corp. $ 7,678
67,300 T. Rowe Price Group, Inc. 4,923
----------
46,207
----------
CONSUMER FINANCE (1.0%)
247,030 American Express Co. 18,468
151,014 Capital One Financial Corp. 9,485
126,672 Discover Financial Services 6,035
114,825 SLM Corp. 2,625
----------
36,613
----------
DIVERSIFIED BANKS (1.9%)
48,466 Comerica, Inc. 1,930
478,026 U.S. Bancorp 17,281
1,272,977 Wells Fargo & Co. 52,536
----------
71,747
----------
INSURANCE BROKERS (0.3%)
79,521 Aon plc 5,117
142,596 Marsh & McLennan Companies, Inc. 5,693
----------
10,810
----------
INVESTMENT BANKING & BROKERAGE (0.9%)
284,082 Charles Schwab Corp. 6,031
74,304 E*TRADE Financial Corp.* 940
111,404 Goldman Sachs Group, Inc. 16,850
354,677 Morgan Stanley 8,665
----------
32,486
----------
LIFE & HEALTH INSURANCE (1.0%)
120,061 AFLAC, Inc. 6,978
68,902 Lincoln National Corp. 2,513
283,112 MetLife, Inc. 12,955
71,177 Principal Financial Group, Inc. 2,666
120,499 Prudential Financial, Inc. 8,800
23,797 Torchmark Corp. 1,550
69,646 Unum Group 2,045
----------
37,507
----------
MULTI-LINE INSURANCE (0.7%)
13,675 American International Group, Inc.* -
381,149 American International Group, Inc.* 17,037
19,514 Assurant, Inc. 994
128,217 Genworth Financial, Inc. "A"* 1,463
117,920 Hartford Financial Services Group, Inc. 3,646
79,052 Loews Corp. 3,510
----------
26,650
----------
================================================================================
16 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
MULTI-SECTOR HOLDINGS (0.0%)
77,273 Leucadia National Corp. $ 2,026
----------
OTHER DIVERSIFIED FINANCIAL SERVICES (3.3%)
2,785,852 Bank of America Corp.(f) 35,826
786,477 Citigroup, Inc. 37,727
976,955 JPMorgan Chase & Co. 51,574
----------
125,127
----------
PROPERTY & CASUALTY INSURANCE (2.3%)
88,093 ACE Ltd. 7,883
121,303 Allstate Corp. 5,837
471,572 Berkshire Hathaway, Inc. "B"* 52,778
66,842 Chubb Corp. 5,658
38,431 Cincinnati Financial Corp. 1,764
143,581 Progressive Corp. 3,650
97,253 Travelers Companies, Inc. 7,772
75,052 XL Group plc 2,276
----------
87,618
----------
REAL ESTATE SERVICES (0.0%)
77,590 CBRE Group, Inc.* 1,812
----------
REGIONAL BANKS (1.0%)
180,979 BB&T Corp. 6,132
225,713 Fifth Third Bancorp 4,074
218,318 Huntington Bancshares, Inc. 1,720
238,456 KeyCorp 2,633
31,842 M&T Bank Corp. 3,558
136,540 PNC Financial Services Group, Inc. 9,957
362,477 Regions Financial Corp. 3,454
139,823 SunTrust Banks, Inc. 4,414
48,459 Zions Bancorp 1,400
----------
37,342
----------
REITs - DIVERSIFIED (0.1%)
44,049 Vornado Realty Trust 3,649
----------
REITs - INDUSTRIAL (0.1%)
128,879 Prologis, Inc. 4,861
----------
REITs - OFFICE (0.1%)
39,120 Boston Properties, Inc. 4,126
----------
REITs - RESIDENTIAL (0.3%)
37,405 Apartment Investment & Management Co. "A" 1,124
31,334 AvalonBay Communities, Inc. 4,227
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
82,925 Equity Residential Properties Trust $ 4,814
----------
10,165
----------
REITs - RETAIL (0.5%)
106,749 Kimco Realty Corp. 2,288
35,412 The Macerich Company 2,159
80,390 Simon Property Group, Inc. 12,695
----------
17,142
----------
REITs - SPECIALIZED (1.0%)
101,969 American Tower Corp. 7,461
117,029 HCP, Inc. 5,318
73,581 Health Care REIT, Inc. 4,932
192,794 Host Hotels & Resorts, Inc. 3,253
42,315 Plum Creek Timber Co., Inc. 1,975
37,285 Public Storage 5,717
75,828 Ventas, Inc. 5,267
141,325 Weyerhaeuser Co. 4,026
----------
37,949
----------
SPECIALIZED FINANCE (0.5%)
79,284 CME Group, Inc. 6,024
18,681 IntercontinentalExchange, Inc.* 3,321
70,840 McGraw-Hill Companies, Inc. 3,768
50,082 Moody's Corp. 3,052
30,260 Nasdaq OMX Group, Inc. 992
62,276 NYSE Euronext 2,578
----------
19,735
----------
THRIFTS & MORTGAGE FINANCE (0.1%)
121,994 Hudson City Bancorp, Inc. 1,117
88,108 People's United Financial, Inc. 1,313
----------
2,430
----------
Total Financials 616,002
----------
HEALTH CARE (12.5%)
-------------------
BIOTECHNOLOGY (2.0%)
50,574 Alexion Pharmaceuticals, Inc.* 4,665
193,773 Amgen, Inc. 19,118
61,330 Biogen Idec, Inc.* 13,198
107,914 Celgene Corp.* 12,616
394,095 Gilead Sciences, Inc.* 20,182
19,699 Regeneron Parmaceuticals, Inc.* 4,430
----------
74,209
----------
================================================================================
18 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
HEALTH CARE DISTRIBUTORS (0.4%)
59,342 AmerisourceBergen Corp. $ 3,313
88,477 Cardinal Health, Inc. 4,176
58,631 McKesson Corp. 6,713
21,752 Patterson Companies, Inc. 818
----------
15,020
----------
HEALTH CARE EQUIPMENT (2.1%)
403,010 Abbott Laboratories 14,057
140,179 Baxter International, Inc. 9,710
50,009 Becton, Dickinson & Co. 4,942
347,331 Boston Scientific Corp.* 3,220
19,503 C.R. Bard, Inc. 2,120
56,267 Carefusion Corp.* 2,073
121,624 Covidien plc 7,643
28,952 Edwards Lifesciences Corp.* 1,946
10,344 Intuitive Surgical, Inc.* 5,240
260,995 Medtronic, Inc. 13,433
72,923 St. Jude Medical, Inc. 3,328
74,211 Stryker Corp. 4,800
28,178 Varian Medical Systems, Inc.* 1,901
43,666 Zimmer Holdings, Inc. 3,272
----------
77,685
----------
HEALTH CARE FACILITIES (0.0%)
26,389 Tenet Healthcare Corp.* 1,217
----------
HEALTH CARE SERVICES (0.5%)
21,839 DaVita, Inc.* 2,638
211,017 Express Scripts Holding Company* 13,018
23,812 Laboratory Corp. of America Holdings* 2,383
40,803 Quest Diagnostics, Inc. 2,474
----------
20,513
----------
HEALTH CARE SUPPLIES (0.1%)
37,184 DENTSPLY International, Inc. 1,523
----------
HEALTH CARE TECHNOLOGY (0.1%)
37,959 Cerner Corp.* 3,647
----------
LIFE SCIENCES TOOLS & SERVICES (0.5%)
89,426 Agilent Technologies, Inc. 3,824
44,657 Life Technologies Corp.* 3,305
29,129 PerkinElmer, Inc. 947
92,739 Thermo Fisher Scientific, Inc. 7,848
22,240 Waters Corp.* 2,225
----------
18,149
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
MANAGED HEALTH CARE (1.0%)
97,373 Aetna, Inc. $ 6,187
74,009 CIGNA Corp. 5,365
40,540 Humana, Inc. 3,421
263,498 UnitedHealth Group, Inc. 17,254
77,731 WellPoint, Inc. 6,361
----------
38,588
----------
PHARMACEUTICALS (5.8%)
409,254 AbbVie, Inc. 16,918
33,145 Actavis, Inc.* 4,183
76,598 Allergan, Inc. 6,453
424,478 Bristol-Myers Squibb Co. 18,970
256,079 Eli Lilly and Co. 12,579
61,191 Forest Laboratories, Inc.* 2,509
42,208 Hospira, Inc.* 1,617
725,786 Johnson & Johnson 62,316
780,362 Merck & Co., Inc. 36,248
98,431 Mylan, Inc.* 3,054
22,970 Perrigo Co. 2,779
1,719,062 Pfizer, Inc.(f) 48,151
132,916 Zoetis, Inc. 4,106
----------
219,883
----------
Total Health Care 470,434
----------
INDUSTRIALS (10.0%)
-------------------
AEROSPACE & DEFENSE (2.5%)
176,476 Boeing Co. 18,078
85,746 General Dynamics Corp. 6,717
203,340 Honeywell International, Inc. 16,133
23,258 L-3 Communications Holdings, Inc. 1,994
68,947 Lockheed Martin Corp. 7,478
60,552 Northrop Grumman Corp. 5,014
37,814 Precision Castparts Corp. 8,546
84,273 Raytheon Co. 5,572
35,213 Rockwell Collins, Inc. 2,233
71,880 Textron, Inc. 1,872
218,605 United Technologies Corp. 20,317
----------
93,954
----------
AIR FREIGHT & LOGISTICS (0.7%)
41,772 C.H. Robinson Worldwide, Inc. 2,352
53,056 Expeditors International of Washington, Inc. 2,017
76,188 FedEx Corp. 7,510
================================================================================
20 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
183,658 United Parcel Service, Inc. "B" $ 15,883
----------
27,762
----------
AIRLINES (0.1%)
186,628 Southwest Airlines Co. 2,406
----------
BUILDING PRODUCTS (0.0%)
91,546 Masco Corp. 1,784
----------
CONSTRUCTION & ENGINEERING (0.2%)
41,802 Fluor Corp. 2,479
33,858 Jacobs Engineering Group, Inc.* 1,867
55,397 Quanta Services, Inc.* 1,466
----------
5,812
----------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.9%)
170,002 Caterpillar, Inc. 14,024
45,410 Cummins, Inc. 4,925
100,059 Deere & Co. 8,130
27,137 Joy Global, Inc. 1,317
91,266 PACCAR, Inc. 4,897
----------
33,293
----------
DIVERSIFIED SUPPORT SERVICES (0.1%)
26,613 Cintas Corp. 1,212
43,578 Iron Mountain, Inc. 1,160
----------
2,372
----------
ELECTRICAL COMPONENTS & EQUIPMENT (0.6%)
122,310 Eaton Corp. plc 8,049
185,669 Emerson Electric Co. 10,127
35,810 Rockwell Automation, Inc. 2,977
25,710 Roper Industries, Inc. 3,194
----------
24,347
----------
ENVIRONMENTAL & FACILITIES SERVICES (0.3%)
76,800 Republic Services, Inc. 2,606
22,174 Stericycle, Inc.* 2,449
113,088 Waste Management, Inc. 4,561
----------
9,616
----------
HUMAN RESOURCE & EMPLOYMENT SERVICES (0.0%)
35,856 Robert Half International, Inc. 1,192
----------
INDUSTRIAL CONGLOMERATES (2.4%)
164,148 3M Co. 17,950
150,510 Danaher Corp. 9,527
2,672,422 General Electric Co. 61,973
----------
89,450
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 21
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
INDUSTRIAL MACHINERY (0.8%)
44,282 Dover Corp. $ 3,439
37,239 Flowserve Corp. 2,011
107,083 Illinois Tool Works, Inc. 7,407
71,962 Ingersoll-Rand plc 3,995
28,600 Pall Corp. 1,900
38,653 Parker-Hannifin Corp. 3,687
52,723 Pentair, Ltd. 3,042
15,290 Snap-On, Inc. 1,367
41,934 Stanley Black & Decker, Inc. 3,241
48,511 Xylem, Inc. 1,307
----------
31,396
----------
OFFICE SERVICES & SUPPLIES (0.0%)
25,394 Avery Dennison Corp. 1,086
51,949 Pitney Bowes, Inc. 762
----------
1,848
----------
RAILROADS (0.9%)
264,153 CSX Corp. 6,126
28,404 Kansas City Southern 3,010
81,669 Norfolk Southern Corp. 5,933
120,485 Union Pacific Corp. 18,588
----------
33,657
----------
RESEARCH & CONSULTING SERVICES (0.1%)
10,550 Dun & Bradstreet Corp. 1,028
30,776 Equifax, Inc. 1,814
----------
2,842
----------
SECURITY & ALARM SERVICES (0.2%)
56,591 ADT Corp. 2,255
120,028 Tyco International Ltd. 3,955
----------
6,210
----------
TRADING COMPANIES & DISTRIBUTORS (0.2%)
70,199 Fastenal Co. 3,219
15,396 W.W. Grainger, Inc. 3,882
----------
7,101
----------
TRUCKING (0.0%)
13,505 Ryder System, Inc. 821
----------
Total Industrials 375,863
----------
================================================================================
22 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (17.4%)
------------------------------
APPLICATION SOFTWARE (0.5%)
129,758 Adobe Systems, Inc.* $ 5,912
57,954 Autodesk, Inc.* 1,967
48,781 Citrix Systems, Inc.* 2,943
72,522 Intuit, Inc. 4,426
140,288 salesforce.com, Inc.* 5,356
----------
20,604
----------
COMMUNICATIONS EQUIPMENT (1.9%)
1,381,227 Cisco Systems, Inc. 33,578
20,303 F5 Networks, Inc.* 1,397
28,588 Harris Corp. 1,408
62,277 JDS Uniphase Corp.* 895
129,808 Juniper Networks, Inc.* 2,507
70,242 Motorola Solutions, Inc. 4,055
446,570 QUALCOMM, Inc. 27,276
----------
71,116
----------
COMPUTER HARDWARE (3.0%)
242,582 Apple, Inc.(f) 96,082
379,706 Dell, Inc. 5,069
498,434 Hewlett-Packard Co. 12,361
----------
113,512
----------
COMPUTER STORAGE & PERIPHERALS (0.7%)
543,592 EMC Corp. 12,840
93,133 NetApp, Inc.* 3,518
62,931 SanDisk Corp.* 3,845
82,357 Seagate Technology plc 3,692
55,000 Western Digital Corp. 3,415
----------
27,310
----------
DATA PROCESSING & OUTSOURCED SERVICES (1.7%)
125,412 Automatic Data Processing, Inc. 8,636
38,621 Computer Sciences Corp. 1,690
75,608 Fidelity National Information Services, Inc. 3,239
34,150 Fiserv, Inc.* 2,985
27,027 MasterCard, Inc. "A" 15,527
84,186 Paychex, Inc. 3,075
41,090 Total System Services, Inc. 1,006
130,989 Visa, Inc. "A" 23,938
143,680 Western Union Co. 2,458
----------
62,554
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 23
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS (0.2%)
41,011 Amphenol Corp. "A" $ 3,197
379,973 Corning, Inc. 5,407
----------
8,604
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.0%)
35,860 FLIR Systems, Inc. 967
----------
ELECTRONIC MANUFACTURING SERVICES (0.2%)
47,976 Jabil Circuit, Inc. 978
35,030 Molex, Inc. 1,028
107,344 TE Connectivity Ltd. 4,888
----------
6,894
----------
HOME ENTERTAINMENT SOFTWARE (0.0%)
77,400 Electronic Arts, Inc.* 1,778
----------
INTERNET SOFTWARE & SERVICES (2.3%)
45,590 Akamai Technologies, Inc.* 1,940
301,882 eBay, Inc.* 15,613
69,450 Google, Inc. "A"* 61,142
38,750 VeriSign, Inc.* 1,730
246,227 Yahoo!, Inc.* 6,183
----------
86,608
----------
IT CONSULTING & OTHER SERVICES (1.9%)
168,020 Accenture plc "A" 12,091
77,796 Cognizant Technology Solutions Corp. "A"* 4,871
269,367 International Business Machines Corp. 51,479
72,799 SAIC, Inc. 1,014
42,487 Teradata Corp.* 2,134
----------
71,589
----------
OFFICE ELECTRONICS (0.1%)
315,545 Xerox Corp. 2,862
----------
SEMICONDUCTOR EQUIPMENT (0.3%)
311,235 Applied Materials, Inc. 4,640
42,754 KLA-Tencor Corp. 2,383
41,894 Lam Research Corp.* 1,858
48,916 Teradyne, Inc.* 859
----------
9,740
----------
SEMICONDUCTORS (1.8%)
155,910 Advanced Micro Devices, Inc.* 636
82,642 Altera Corp. 2,726
80,163 Analog Devices, Inc. 3,612
134,959 Broadcom Corp. "A" 4,556
================================================================================
24 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
17,165 First Solar, Inc.* $ 768
1,284,775 Intel Corp. 31,117
60,134 Linear Technology Corp. 2,215
145,375 LSI Corp.* 1,038
51,529 Microchip Technology, Inc. 1,920
266,300 Micron Technology, Inc.* 3,816
149,495 NVIDIA Corp. 2,098
286,688 Texas Instruments, Inc. 9,997
68,387 Xilinx, Inc. 2,709
----------
67,208
----------
SYSTEMS SOFTWARE (2.8%)
33,971 BMC Software, Inc.* 1,534
85,226 CA, Inc. 2,440
1,942,152 Microsoft Corp.(f) 67,063
949,579 Oracle Corp. 29,171
49,545 Red Hat, Inc.* 2,369
180,081 Symantec Corp. 4,046
----------
106,623
----------
Total Information Technology 657,969
----------
MATERIALS (3.2%)
----------------
ALUMINUM (0.1%)
273,870 Alcoa, Inc. 2,142
----------
COMMODITY CHEMICALS (0.2%)
98,063 LyondellBasell Industries NV 6,498
----------
CONSTRUCTION MATERIALS (0.0%)
34,042 Vulcan Materials Co. 1,648
----------
DIVERSIFIED CHEMICALS (0.9%)
312,673 Dow Chemical Co. 10,059
237,908 E.I. du Pont de Nemours & Co. 12,490
39,939 Eastman Chemical Co. 2,796
34,916 FMC Corp. 2,132
36,709 PPG Industries, Inc. 5,374
----------
32,851
----------
DIVERSIFIED METALS & MINING (0.2%)
267,610 Freeport-McMoRan Copper & Gold, Inc. 7,389
----------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.5%)
15,332 CF Industries Holdings, Inc. 2,629
138,113 Monsanto Co. 13,646
71,730 Mosaic Co. 3,860
----------
20,135
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 25
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
GOLD (0.1%)
128,473 Newmont Mining Corp. $ 3,848
----------
INDUSTRIAL GASES (0.4%)
54,049 Air Products & Chemicals, Inc. 4,949
17,028 Airgas, Inc. 1,625
76,464 Praxair, Inc. 8,806
----------
15,380
----------
METAL & GLASS CONTAINERS (0.1%)
38,623 Ball Corp. 1,604
41,739 Owens-Illinois, Inc.* 1,160
----------
2,764
----------
PAPER PACKAGING (0.1%)
27,127 Bemis Co., Inc. 1,062
45,312 MeadWestvaco Corp. 1,545
50,015 Sealed Air Corp. 1,198
----------
3,805
----------
PAPER PRODUCTS (0.1%)
115,004 International Paper Co. 5,096
----------
SPECIALTY CHEMICALS (0.4%)
69,008 Ecolab, Inc. 5,879
21,350 International Flavors & Fragrances, Inc. 1,605
22,135 Sherwin-Williams Co. 3,909
30,955 Sigma-Aldrich Corp. 2,487
----------
13,880
----------
STEEL (0.1%)
27,990 Allegheny Technologies, Inc. 737
39,192 Cliffs Natural Resources, Inc. 637
82,719 Nucor Corp. 3,583
36,743 United States Steel Corp. 644
----------
5,601
----------
Total Materials 121,037
----------
TELECOMMUNICATION SERVICES (2.8%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (2.5%)
1,390,377 AT&T, Inc.(f) 49,219
157,407 CenturyLink, Inc. 5,564
264,094 Frontier Communications Corp. 1,070
739,378 Verizon Communications, Inc. 37,220
150,371 Windstream Corp. 1,160
----------
94,233
----------
================================================================================
26 | USAA S&P 500 INDEX FUND
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
75,846 Crown Castle International Corp.* $ 5,491
777,831 Sprint Nextel Corp.* 5,460
----------
10,951
----------
Total Telecommunication Services 105,184
----------
UTILITIES (3.3%)
----------------
ELECTRIC UTILITIES (1.5%)
125,395 American Electric Power Co., Inc. 5,615
84,625 Edison International 4,076
46,253 Entergy Corp. 3,223
220,376 Exelon Corp. 6,805
108,448 FirstEnergy Corp. 4,050
109,698 NextEra Energy, Inc. 8,938
81,820 Northeast Utilities 3,438
64,072 Pepco Holdings, Inc. 1,292
28,089 Pinnacle West Capital Corp. 1,558
152,946 PPL Corp. 4,628
225,102 Southern Co. 9,934
128,479 Xcel Energy, Inc. 3,641
----------
57,198
----------
GAS UTILITIES (0.1%)
30,059 AGL Resources, Inc. 1,288
53,424 ONEOK, Inc. 2,207
----------
3,495
----------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
159,243 AES Corp. 1,909
82,492 NRG Energy, Inc. 2,203
----------
4,112
----------
MULTI-UTILITIES (1.6%)
62,350 Ameren Corp. 2,147
111,483 CenterPoint Energy, Inc. 2,619
69,463 CMS Energy Corp. 1,887
75,883 Consolidated Edison, Inc. 4,425
148,843 Dominion Resources, Inc. 8,457
44,718 DTE Energy Co. 2,997
182,683 Duke Energy Corp. 12,331
20,638 Integrys Energy Group, Inc. 1,208
81,147 NiSource, Inc. 2,324
114,220 PG&E Corp. 5,223
131,228 Public Service Enterprise Group, Inc. 4,286
35,741 SCANA Corp. 1,755
================================================================================
PORTFOLIO OF INVESTMENTS | 27
================================================================================
--------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------
58,286 Sempra Energy $ 4,765
51,502 TECO Energy, Inc. 885
59,297 Wisconsin Energy Corp. 2,431
----------
57,740
----------
Total Utilities 122,545
----------
Total Common Stocks (cost: $2,628,786) 3,697,652
----------
MONEY MARKET INSTRUMENTS (1.8%)
MONEY MARKET FUND (1.7%)
62,690,218 Northern Institutional Funds - Diversified Assets
Portfolio, 0.01%(a),(d) 62,690
----------
--------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000)
--------------------------------------------------------------------------------------
U.S. TREASURY BILLS (0.1%)
$4,909 0.08%, 10/17/13(b),(e) 4,909
----------
Total Money Market Instruments (cost: $67,599) 67,599
----------
TOTAL INVESTMENTS (COST: $2,696,385) $3,765,251
==========
================================================================================
28 | USAA S&P 500 INDEX FUND
================================================================================
-----------------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
-----------------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
-----------------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $3,697,652 $- $- $3,697,652
Money Market Instruments:
Money Market Fund 62,690 - - 62,690
U.S. Treasury Bills 4,909 - - 4,909
Other financial instruments* (502) - - (502)
-----------------------------------------------------------------------------------------------------------
Total $3,764,749 $- $- $3,764,749
-----------------------------------------------------------------------------------------------------------
*Other financial instruments are derivative instruments not reflected in the
portfolio of investments, such as futures, which are valued at the unrealized
appreciation/depreciation on the investment.
For the period ended June 30, 2013, there were no significant transfers of
securities between levels. 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.
================================================================================
PORTFOLIO OF INVESTMENTS | 29
================================================================================
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.
o PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
REIT -- Real estate investment trust
o SPECIFIC NOTES
(a) Rate represents the money market fund annualized seven-day yield at
June 30, 2013.
(b) Rate represents an annualized yield at time of purchase, not a coupon
rate.
(c) Northern Trust Corp. is the parent to Northern Trust Investments, N.A.
(NTI), which is the subadviser of the Fund.
(d) NTI is both the subadviser of the Fund and the adviser of the Northern
Institutional Funds.
(e) Security with a value of $4,909,000 is segregated as collateral for
initial margin requirements on open futures contracts.
================================================================================
30 | USAA S&P 500 INDEX FUND
================================================================================
(f) Security, or a portion thereof, is segregated to cover the value of
open futures contracts at June 30, 2013, as shown in the following
table:
VALUE AT
JUNE 30, UNREALIZED
TYPE OF FUTURE EXPIRATION CONTRACTS POSITION 2013 DEPRECIATION
---------------------------------------------------------------------------------------------
E-mini S&P 500
Index Futures September 20, 2013 891 Long $71,249,000 ($502,000)
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 31
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $2,696,385) $3,765,251
Receivables:
Capital shares sold 2,364
USAA Asset Management Company (Note 6D) 746
Dividends and interest 4,573
Securities sold 459
Other 7
----------
Total assets 3,773,400
----------
LIABILITIES
Payables:
Securities purchased 728
Capital shares redeemed 1,653
Variation margin on futures contracts 324
Accrued management fees 291
Accrued administration and servicing fees 18
Accrued transfer agent's fees 38
Other accrued expenses and payables 54
----------
Total liabilities 3,106
----------
Net assets applicable to capital shares outstanding $3,770,294
==========
NET ASSETS CONSIST OF:
Paid-in capital $2,714,123
Accumulated undistributed net investment income 1,240
Accumulated net realized loss on investments and futures transactions (13,433)
Net unrealized appreciation of investments and futures contracts 1,068,364
----------
Net assets applicable to capital shares outstanding $3,770,294
==========
Net asset value, redemption price, and offering price per share:
Member Shares (net assets of $2,299,282/100,343 shares outstanding) $ 22.91
==========
Reward Shares (net assets of $1,471,012/64,189 shares outstanding) $ 22.92
==========
See accompanying notes to financial statements.
================================================================================
32 | USAA S&P 500 INDEX FUND
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 38,380
--------
EXPENSES
Management fees 1,770
Administration and servicing fees:
Member Shares 665
Reward Shares 397
Transfer agent's fees:
Member Shares 1,352
Reward Shares 241
Custody and accounting fees:
Member Shares 12
Reward Shares 7
Postage:
Member Shares 68
Reward Shares 2
Shareholder reporting fees:
Member Shares 46
Reward Shares 2
Trustees' fees 6
Registration fees:
Member Shares 25
Reward Shares 22
Professional fees 116
Other 41
--------
Total expenses 4,772
Expenses reimbursed:
Member Shares (561)
Reward Shares (383)
--------
Net expenses 3,828
--------
NET INVESTMENT INCOME 34,552
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS
Net realized gain (loss) on:
Investments (4,980)
Futures transactions 3,881
Change in net unrealized appreciation/depreciation of:
Investments 418,370
Futures contracts (531)
--------
Net realized and unrealized gain 416,740
--------
Increase in net assets resulting from operations $451,292
========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 33
================================================================================
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 $ 34,552 $ 69,632
Net realized gain(loss) on investments (4,980) 207,580
Net realized gain on futures transactions 3,881 4,156
Change in net unrealized appreciation/depreciation of:
Investments 418,370 214,452
Futures contracts (531) (3)
--------------------------
Increase in net assets resulting from operations 451,292 495,817
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Member Shares (20,394) (43,728)
Reward Shares (13,179) (26,855)
--------------------------
Total distributions of net investment income (33,573) (70,583)
--------------------------
Net realized gains:
Member Shares - (100,264)
Reward Shares (2) (55,636)
--------------------------
Total distributions of net realized gains (2) (155,900)
--------------------------
Distributions to shareholders (33,575) (226,483)
--------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (NOTE 5)
Member Shares (82,897) (11,173)
Reward Shares 145,683 (253,110)
--------------------------
Total net increase (decrease) in net assets
from capital share transactions 62,786 (264,283)
--------------------------
Capital contribution from USAA Transfer Agency
Company:
Reward Shares - 3
--------------------------
Net increase in net assets 480,503 5,054
NET ASSETS
Beginning of period 3,289,791 3,284,737
--------------------------
End of period $3,770,294 $3,289,791
==========================
Accumulated undistributed net investment income:
End of period $ 1,240 $ 261
==========================
See accompanying notes to financial statements.
================================================================================
34 | USAA S&P 500 INDEX 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 S&P
500 Index Fund (the Fund), which is classified as diversified under the 1940
Act. The Fund seeks to match, before fees and expenses, the performance of the
S&P 500 Index. USAA Asset Management Company (the Manager), an affiliate of the
Fund, has retained Northern Trust Investments, Inc. (NTI) to serve as subadviser
for the Fund. NTI is responsible for investing the Fund's assets. Under normal
market conditions, NTI attempts to achieve the Fund's objective by investing at
least 80% of the Fund's assets in the common stocks of companies composing the
S&P 500 Index.
The Fund has two classes of shares: Member Shares and Reward Shares. Each class
of shares has equal rights to assets and earnings, except that each class bears
certain class-related expenses specific to the particular class. These expenses
include administration and servicing fees, transfer agency 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 are allocated to each class of shares based on each
class's relative net assets. Each class has exclusive voting rights on matters
related solely to that class and separate voting rights on matters that relate
to both classes. The Reward Shares are currently offered for sale to qualified
shareholders, USAA discretionary managed account program, and a USAA Fund
participating in a fund-of-funds investment strategy (USAA fund-of-funds).
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
================================================================================
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.
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 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. If no last sale or official closing price is reported
or available, the average of the bid and asked prices generally is used.
2. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their net asset value (NAV) at the end
of each business day.
================================================================================
36 | USAA S&P 500 INDEX FUND
================================================================================
3. Debt securities purchased with original or remaining maturities of
60 days or less may be valued at amortized cost, which approximates
market value.
4. 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.
5. Repurchase agreements are valued at cost, which approximates market
value.
6. Futures are valued based upon the last sale price at the close of
market on the principal exchange on which they are traded.
7. 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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 37
================================================================================
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 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 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
================================================================================
38 | USAA S&P 500 INDEX FUND
================================================================================
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.
FUTURES CONTRACTS -- The Fund is subject to cash flow and tracking error
risk in the normal course of pursuing its investment objectives. The Fund
may use stock index futures contracts in an attempt to reduce any
performance discrepancies between the Fund and the S&P 500 Index. 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.
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 - $- Net unrealized $(502)**
depreciation of
investments and
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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 39
================================================================================
**Includes cumulative appreciation (depreciation) of futures 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
DERIVATIVES NOT REALIZED APPRECIATION
ACCOUNTED FOR AS STATEMENT OF GAIN (LOSS) (DEPRECIATION)
HEDGING INSTRUMENTS OPERATIONS LOCATION ON DERIVATIVES ON DERIVATIVES
---------------------------------------------------------------------------------
Equity contracts Net realized gain $3,881 ($531)
(loss) on futures
transactions/Change
in net unrealized
appreciation/depreciation
of futures contracts
---------------------------------------------------------------------------------
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 on short-term
securities are amortized on a straight-line basis over the life of the
respective securities.
G. EXPENSES PAID INDIRECTLY -- Through arrangements with 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, bank credits reduced the expenses of the Member Shares and Reward
Shares by less than $500.
================================================================================
40 | USAA S&P 500 INDEX FUND
================================================================================
H. 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 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.
I. 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 $11,000, which represents 6.1% 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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 41
================================================================================
(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.
Distributions of net investment income and 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 or post-enactment capital
loss carryforwards, for federal income tax purposes. 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
$48,887,000 and $39,298,000, 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.
================================================================================
42 | USAA S&P 500 INDEX FUND
================================================================================
Gross unrealized appreciation and depreciation of investments as of June 30,
2013, were $1,381,718,000 and $312,852,000, respectively, resulting in net
unrealized appreciation of $1,068,866,000.
(5) CAPITAL SHARE TRANSACTIONS
At June 30, 2013, there were an unlimited number of shares of capital stock at
no par value authorized for the Fund.
Capital share transactions were as follows, in thousands:
SIX-MONTH
PERIOD ENDED YEAR ENDED
JUNE 30, 2013 DECEMBER 31, 2012
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------
MEMBER SHARES:
Shares sold 8,593 $ 191,354 12,185 $ 250,575
Shares issued from reinvested
dividends 882 19,882 6,927 141,601
Shares redeemed (13,184) (294,133) (19,549) (403,349)
--------------------------------------------
Net decrease from capital
share transactions (3,709) $ (82,897) (437) $ (11,173)
============================================
REWARD SHARES:
Shares sold 10,042 $ 224,404 13,312 $ 274,486
Shares issued from reinvested
dividends 559 12,612 3,866 79,124
Shares redeemed (4,111) (91,333) (29,389) (606,720)
--------------------------------------------
Net increase (decrease) from
capital share transactions 6,490 $ 145,683 (12,211) $(253,110)
============================================
(6) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager provides investment management services to
the Fund pursuant to an Management 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 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 the Fund's assets. The Manager monitors each subadviser's performance
================================================================================
NOTES TO FINANCIAL STATEMENTS | 43
================================================================================
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 0.10% of the Fund's average net
assets for the fiscal year. For the six-month period ended June 30, 2013,
the Fund incurred management fees, paid or payable to the Manager, of
$1,770,000.
B. SUBADVISORY ARRANGEMENT(S) -- The Manager has entered into an investment
subadvisory agreement with NTI, under which NTI directs the investment and
reinvestment of the Fund's assets (as allocated from time to time by the
Manager). The Manager (not the Fund) pays NTI a subadvisory fee in an annual
amount of 0.02% of the Fund's average daily net assets on amounts up to $1.5
billion; 0.01% of the Fund's average daily net assets for the next $1.5
billion; and 0.005% of the Fund's average daily net assets that exceed $3
billion. For the six-month period ended June 30, 2013, the Manager incurred
subadvisory fees, paid or payable to NTI, of $235,000.
NTI has agreed to remit to the Fund all subadvisory fees earned on Fund
assets invested in any of NTI's affiliated money market funds. For the
six-month period ended June 30, 2013, NTI remitted $3,000 to the Fund for
the investments in the Northern Institutional Funds Money Market Portfolios.
This is not reflected on the Fund's statement of operations due to the
settlement of a payable to Lehman Brothers, Inc.
NTI is a direct subsidiary of The Northern Trust Company, the Fund's
custodian and accounting agent.
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 0.06% of the Fund's average net assets for the fiscal year. For the
six-month period ended June 30, 2013, the Member Shares and Reward Shares
incurred administration and servicing fees, paid or payable to the Manager,
of $665,000 and $397,000, respectively.
================================================================================
44 | USAA S&P 500 INDEX FUND
================================================================================
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
$52,000 for these compliance and legal services. These expenses are included
in the professional fees on the Fund's statement of operations.
D. EXPENSE LIMITATION -- The Manager has agreed, through May 1, 2014, to
limit the annual expenses of the Member Shares and the Reward Shares to
0.25% and 0.15%, respectively, of their average net assets, excluding
extraordinary expenses and before reductions of any expenses paid
indirectly, and will reimburse the Fund for all expenses in excess of those
amounts. This expense limitation arrangement may not be changed or
terminated through May 1, 2014, without approval of the Board, and may be
changed or terminated by the Manager at any time after that date. For the
six-month period ended June 30, 2013, the Fund incurred reimbursable
expenses from the Manager for the Member Shares and the Reward Shares of
$561,000 and $383,000, respectively, of which $746,000 in total was
receivable from the Manager.
In addition, NTI has contractually agreed to reimburse the Fund for all
license fees paid by the Fund to Standard & Poor's, in amounts not exceeding
the annual rate of 0.001% of the average daily net assets of the Fund. For
the six-month period ended June 30, 2013, the Fund incurred reimbursable
expenses from NTI for the Member Shares and the Reward Shares of $15,000 and
$9,000, respectively.
E. 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 based on an annual charge of $20 per
shareholder account plus out-of-pocket expenses. The Fund also pays SAS fees
that are related to the administration and servicing of accounts that are
traded on an omnibus basis. For the six-month period ended June 30, 2013,
the Fund incurred transfer agent's fees, paid or payable to SAS for the
Member Shares and Reward Shares, of $1,352,000 and $241,000, respectively.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 45
================================================================================
F. 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.
G. ACCOUNT MAINTENANCE FEE -- SAS assesses a $10 annual account maintenance
fee to allocate part of the fixed cost of maintaining shareholder accounts.
This fee is charged directly to the shareholders' accounts and does not
impact the Fund. The fee is waived on accounts with balances of $10,000 or
more.
(7) 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.
The Fund's Reward Shares is one of 14 USAA mutual funds in which the affiliated
USAA fund-of-funds may invest. The USAA fund-of-funds do not invest in the
underlying funds for the purpose of exercising management or control. As of June
30, 2013, the USAA fund-of-funds owned the following percentages of the total
outstanding shares of the Fund:
AFFILIATED USAA FUND OWNERSHIP %
---------------------------------------------------------------------------
USAA Cornerstone Equity Fund 0.1
USAA Cornerstone Conservative Fund 0.0*
USAA Target Retirement Income Fund 0.3
USAA Target Retirement 2020 Fund 0.7
USAA Target Retirement 2030 Fund 1.5
USAA Target Retirement 2040 Fund 1.9
USAA Target Retirement 2050 Fund 1.0
*Represents less than 0.1%
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.
================================================================================
46 | USAA S&P 500 INDEX FUND
================================================================================
(8) FINANCIAL HIGHLIGHTS -- MEMBER SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
2013 2012 2011 2010 2009 2008
---------------------------------------------------------------------------
Net asset value at
beginning of period $ 20.34 $ 18.83 $ 18.86 $ 16.71 $ 13.51 $ 21.98
---------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .21 .41 .39 .30 .30 .39
Net realized and
unrealized gain (loss) 2.56 2.54 (.05) 2.15 3.20 (8.47)
---------------------------------------------------------------------------
Total from investment
operations 2.77 2.95 .34 2.45 3.50 (8.08)
---------------------------------------------------------------------------
Less distributions from:
Net investment income (.20) (.43) (.37) (.30) (.30) (.39)
Realized capital gains - (1.01) - - - -
---------------------------------------------------------------------------
Total distributions (.20) (1.44) (.37) (.30) (.30) (.39)
---------------------------------------------------------------------------
Net asset value at
end of period $ 22.91 $ 20.34 $ 18.83 $ 18.86 $ 16.71 $ 13.51
===========================================================================
Total return (%)* 13.65 15.75 1.82 14.81 26.28 (37.13)
Net assets at
end of period (000) $2,299,282 $2,116,203 $1,967,983 $2,021,901 $1,831,645 $1,446,160
Ratios to average
net assets:**
Expenses (%)(a),(b) .25(c) .25 .25 .25 .25 .23
Expenses, excluding
reimbursements (%)(b) .30(c) .32 .33 .36 .40 .37
Net investment
income (%) 1.88(c) 2.06 2.03 1.75 2.11 2.12
Portfolio turnover (%) 1 4 3 4 5 3
* Assumes reinvestment of all net investment income and realized capital
gain distributions, if any, during the period; does not reflect $10 annual
account maintenance fee. 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
$2,272,003,000.
(a) Effective May 1, 2008, the Manager voluntarily agreed to reimburse the
Member Shares for expenses in excess of 0.25% of their average net assets.
Prior to May 1, 2008, the Manager voluntarily agreed to reimburse the Member
Shares for expenses in excess of 0.19% of their average net assets from
October 1, 2004, through April 30, 2008.
(b) Reflects total operating expenses of the Member Shares before reductions
of any expenses paid indirectly. The Member Shares' expenses paid indirectly
decreased the expense ratios by less than 0.01%.
(c) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 47
================================================================================
(8) FINANCIAL HIGHLIGHTS (CONTINUED) -- REWARD SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
2013 2012 2011 2010 2009 2008
---------------------------------------------------------------------------
Net asset value at
beginning of period $ 20.34 $ 18.83 $ 18.86 $ 16.71 $ 13.51 $ 21.99
---------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .22 .43 .40 .33 .32 .41
Net realized and
unrealized gain (loss) 2.57 2.54 (.04) 2.15 3.20 (8.48)
---------------------------------------------------------------------------
Total from investment
operations 2.79 2.97 .36 2.48 3.52 (8.07)
---------------------------------------------------------------------------
Less distributions from:
Net investment income (.21) (.45) (.39) (.33) (.32) (.41)
Realized capital gains - (1.01) - - - -
---------------------------------------------------------------------------
Total distributions (.21) (1.46) (.39) (.33) (.32) (.41)
---------------------------------------------------------------------------
Net asset value at
end of period $ 22.92 $ 20.34 $ 18.83 $ 18.86 $ 16.71 $ 13.51
===========================================================================
Total return (%)* 13.75 15.86 1.96 14.99 26.47 (37.07)
Net assets at
end of period (000) $1,471,012 $1,173,588 $1,316,754 $1,159,476 $894,035 $697,750
Ratios to average
net assets:**
Expenses (%)(a),(b) .15(c) .15 .13 .09 .09 .09
Expenses, excluding
reimbursements (%)(a) .21(c) .27 .24 .24 .23 .21
Net investment income (%) 1.98(c) 2.15 2.14 1.92 2.26 2.27
Portfolio turnover (%) 1 4 3 4 5 3
* 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
$1,359,963,000.
(a) Reflects total operating expenses of the Reward Shares before reductions
of any expenses paid indirectly. The Reward Shares' expenses paid indirectly
decreased the expense ratios by less than 0.01%.
(b) Effective May 1, 2011, the Manager voluntarily agreed to reimburse the
Reward Shares for expenses in excess of 0.15% of their average net assets.
Prior to May 1, 2011, the Manager voluntarily agreed to reimburse the Reward
Shares for expenses in excess of 0.09% of their average net assets.
(c) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
48 | USAA S&P 500 INDEX FUND
================================================================================
EXPENSE EXAMPLE
June 30, 2013 (unaudited)
--------------------------------------------------------------------------------
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: direct costs, such
as account maintenance fees, 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 line labeled "actual" under each share class in 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 for your share
class in the "actual" line under the heading "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Actual expenses in the table on the next page do not reflect the effect of the
annual $10.00 account maintenance fee that is assessed on accounts with balances
of less than $10,000, at a rate of $2.50 per quarter. To include the effect of
this fee on the expenses that you paid, add $5.00 ($2.50 for two quarters) to
your calculated estimated expenses. If you are currently assessed this fee, your
ending account value reflects the quarterly deduction from your account.
================================================================================
EXPENSE EXAMPLE | 49
================================================================================
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The line labeled "hypothetical" under each share class in the table provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratios for each class and an assumed rate of return of
5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of 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 account
maintenance fees, wire fees, redemption fees, or low balance fees. Therefore,
the line labeled "hypothetical" 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
------------------------------------------------------------
MEMBER SHARES
Actual $1,000.00 $1,136.50 $1.32
Hypothetical
(5% return before expenses) 1,000.00 1,023.55 1.25
REWARD SHARES
Actual 1,000.00 1,137.50 0.79
Hypothetical
(5% return before expenses) 1,000.00 1,024.05 0.75
* Expenses are equal to the Fund's annualized expense ratio of 0.25% for
Member Shares and 0.15% for Reward Shares, which are 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 actual ending account values are based
on its actual total returns of 13.65% for Member Shares and 13.75% for Reward
Shares for the six-month period of January 1, 2013, through June 30, 2013.
================================================================================
50 | USAA S&P 500 INDEX FUND
================================================================================
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
Management Agreement between the Trust and the Manager with respect to the Fund
and the Subadvisory Agreement between the Manager and the Subadviser with
respect to the Fund.
In advance of the meeting, the Trustees received and considered a variety of
information relating to the Management Agreement and Subadvisory Agreement and
the Manager and the 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 Subadviser's operations and personnel.
Prior to voting, the Independent Trustees reviewed the proposed continuance of
the Management Agreement and the Subadvisory Agreement 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 Management Agreement and the Subadvisory Agreement with
respect to the Fund. The Independent Trustees also reviewed the proposed
continuation of the Management Agreement and the Subadvisory Agreement 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
================================================================================
ADVISORY AGREEMENTS | 51
================================================================================
the Fund's performance and related services provided by the Manager and by the
Subadviser. At the meeting at which the renewal of the Management Agreement and
Subadvisory Agreement is considered, particular focus is given to information
concerning Fund performance, comparability of fees and total expenses, and
profitability. However, the Board noted that the evaluation process with respect
to the Manager and the Subadviser is an ongoing one. In this regard, the Board's
and its committees' consideration of the Management Agreement and Subadvisory
Agreement included certain information previously received at such meetings.
MANAGEMENT AGREEMENT
After full consideration of a variety of factors, the Board, including the
Independent Trustees, voted to approve the Management Agreement. In approving
the Management 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 Management
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 Management 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 Management Agreement. The Board considered the
================================================================================
52 | USAA S&P 500 INDEX FUND
================================================================================
level and depth of knowledge of the Manager, including the professional
experience and qualifications of senior personnel and investment personnel, as
well as current staffing levels. The Board discussed the Manager's effectiveness
in monitoring the performance of the 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 also was considered. The Board also considered the Manager's risk
management processes. The Board considered the Manager's financial condition and
that it had the financial wherewithal to continue to provide the same scope and
high quality of services under the Management Agreement. In reviewing the
Management 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
Management Agreement, the Board evaluated the advisory fees and total expense
ratios of each of the Member Shares and Reward Shares classes of the Fund as
compared to other open-end investment companies deemed to be comparable to each
class of the Fund as determined by the independent third party in its report.
The expenses of each class of the Fund were compared to (i) a group of
investment companies chosen by the independent third party to be comparable to
the class of the Fund based upon certain factors, including fund type,
comparability of investment objective and classification, sales load type (in
this case, pure-index 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 and no-load
load retail open-end investment companies in the same investment
================================================================================
ADVISORY AGREEMENTS | 53
================================================================================
classification/objective as the Fund regardless of asset size, excluding
outliers (the "expense universe"). Among other data, the Board noted that the
Fund's management fee rate -- which includes advisory and administrative
services and the effects of any reimbursements -- was below the median of its
expense group and its expense universe for the Member Shares and for the Reward
Shares. The data indicated that the Fund's total expenses, after reimbursements,
were below the median of its expense group and its expense universe for the
Member Shares and for the Reward Shares. The Trustees also took into account the
Manager's current undertakings to maintain expense limitations for the Fund. The
Board took into account the various services provided to the Fund by the Manager
and its affiliates. The Board also noted the high level of correlation between
the S&P 500 Index and the Fund and the relatively low tracking error between the
Fund and the S&P 500 Index, and noted that it reviews such information on a
quarterly basis. The Board also noted the level and method of computing the
management fee. The Trustees also took into account that the subadvisory fees
under the Subadvisory Agreement are paid by the Manager. The Board also
considered and discussed information about the Subadviser's fees, including the
amount of management fees retained by the Manager after payment of the
subadvisory fee.
In considering the Fund's performance, the Board noted that it reviews at its
regularly scheduled meetings information about the Fund's performance results.
The Trustees also reviewed various comparative data provided to them in
connection with their consideration of the renewal of the Management Agreement,
including, among other information, a comparison of the average annual total
return of each class of the Fund 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 performance universe of each class
of the Fund 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 performance of the Fund's Member Shares
was above the average of its performance universe and its Lipper index for the
one- and three-year periods ended December 31, 2012, and was above the average
of its performance universe and below its Lipper index for the five-year period
================================================================================
54 | USAA S&P 500 INDEX FUND
================================================================================
ended December 31, 2012. The comparison indicated that the performance of the
Fund's Reward Shares was above the average of its performance universe and its
Lipper index for the one-, three-, and five-year periods ended December 31,
2012. The Board also noted that the percentile performance ranking of the Fund's
Member Shares was in the top 25% of its performance universe for the one-year
period ended December 31, 2012, was in the top 30% of its performance universe
for the three-year period ended December 31, 2012, and was in the top 35% of its
performance universe for the five-year period ended December 31, 2012, and that
the percentile performance ranking for the Fund's Reward Shares was in the top
15% of its performance universe for the one-, three-, and five-year periods
ended December 31, 2012.
COMPENSATION AND PROFITABILITY -- The Board took into consideration the level
and method of computing the Fund's management fee. The information considered by
the Board included operating profit margin information for the Manager's
business as a whole. The Board also received and considered profitability
information related to the level of management revenues from the Fund. This
information included a review of the methodology used in the allocation of
certain costs to the Fund. In considering the profitability data with respect to
the Fund, the Trustees noted that the Manager reimbursed a portion of its
management fees to the Fund and also pays the Fund's subadvisory fees. The
Trustees reviewed the profitability of the Manager's relationship with the Fund
before tax expenses. 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 able 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
================================================================================
ADVISORY AGREEMENTS | 55
================================================================================
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 fee waivers and expense reimbursements arrangements by the
Manager and noted the fact that the Manager pays the subadvisory fee. The Board
also considered the effects of each class's growth and size on the class's
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
Management 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 Management Agreement; (ii) the Manager maintains
an appropriate compliance program; (iii) the performance of the Fund is
reasonable in relation to the performance of funds with similar investment
objectives and to relevant indices; (iv) the Fund's advisory expenses are
reasonable in relation to those of similar funds and to the services to be
provided by the Manager; and (v) the Manager's level of profitability, if any,
from its relationship with the Fund is reasonable. Based on its conclusions, the
Board determined that continuation of the Management Agreement would be in the
best interests of the Fund and its shareholders.
SUBADVISORY AGREEMENT
In approving the Fund's Subadvisory Agreement, the Board considered various
factors, among them: (i) the nature, extent, and quality of services provided to
the Fund, including the personnel providing services; (ii) the 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 the 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 the Subadvisory Agreement. In
================================================================================
56 | USAA S&P 500 INDEX FUND
================================================================================
approving the 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
Trustees considered information provided to them regarding the services provided
by the Subadviser, including information presented periodically throughout the
previous year. The Board noted that the Subadviser and its affiliates also
provide accounting and custody services to the Fund at no additional charge. The
Board considered the Subadviser's level of knowledge and investment style. The
Board reviewed the experience and credentials of the investment personnel who
are responsible for managing the investment of portfolio securities with respect
to the Fund and the Subadviser's level of staffing. The Trustees noted that the
materials provided to them 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 Trustees also noted the
Subadviser's brokerage practices. The Board also considered the Subadviser's
regulatory and compliance history. The Board also took into account the
Subadviser's risk management processes. The Board noted that the Manager's
monitoring processes of the Subadviser include: (i) regular telephonic meetings
to discuss, among other matters, investment strategies and to review portfolio
performance; (ii) monthly portfolio compliance checklists and quarterly
compliance certifications to the Board; and (iii) due diligence visits to the
Subadviser.
SUBADVISER COMPENSATION -- The Board also took into consideration the financial
condition of the Subadviser. In considering the cost of services to be provided
by the Subadviser and the profitability to the Subadviser of its relationship
with the Fund, the Trustees noted the undertakings of the Manager to maintain
expense limitations for the Fund and also noted that the fees under the
Subadvisory Agreement were paid by the Manager and that the Subadviser had
agreed to reimburse the Fund for license fees paid to Standard & Poor's. The
Trustees also relied on the ability of the Manager to negotiate the Subadvisory
Agreement and the fees thereunder at arm's length. For the above reasons, the
Board determined that the profitability
================================================================================
ADVISORY AGREEMENTS | 57
================================================================================
of the 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 the Subadviser's management of the Fund was
not a material factor in considering the Subadvisory Agreement, although the
Board noted that the Subadvisory Agreement contains breakpoints in its fee
schedule.
SUBADVISORY FEES AND FUND PERFORMANCE -- The Board noted that it was reported
that the subadvisory fees that the Subadviser charges the Fund are unique due to
the type of fund and could not be compared to the fees that the Subadviser
charges to other clients. The Board considered that the Fund pays a management
fee to the Manager and that, in turn, the Manager pays a subadvisory fee to the
Subadviser. As noted above, the Board considered, among other data, the Fund's
performance with respect to each class during the one-, three-, and five-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 noted the Manager's expertise and
resources in monitoring the performance, investment style, and risk-adjusted
performance of the Subadviser.
CONCLUSIONS -- The Board reached the following conclusions regarding the
Subadvisory Agreement, among others: (i) the Subadviser is qualified to manage
the Fund's assets in accordance with its investment objectives and policies;
(ii) the Subadviser maintains an appropriate compliance program; (iii) the
performance of the Fund is reasonable in relation to the performance of funds
with similar investment objectives and to relevant indices; 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 the Subadviser. Based on its
conclusions, the Board determined that approval of the subadvisory Agreement
with respect to the Fund would be in the best interests of the Fund and its
shareholders.
================================================================================
58 | USAA S&P 500 INDEX FUND
================================================================================
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 The Northern Trust Company
ACCOUNTING AGENT 50 S. LaSalle St.
Chicago, Illinois 60603
--------------------------------------------------------------------------------
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)
============================================================================
28651-0813 (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.