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: DANIEL J. MAVICO
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: JULY 31
Date of reporting period: JANUARY 31, 2014
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED JANUARY 31, 2014
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA VALUE FUND]
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SEMIANNUAL REPORT
USAA VALUE FUND
FUND SHARES o INSTITUTIONAL SHARES o ADVISER SHARES
JANUARY 31, 2014
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PRESIDENT'S MESSAGE
"IN MY OPINION, THE CONTINUATION OF
THE TAPER IS AN INDICATION THAT FED
POLICYMAKERS BELIEVE THE U.S. ECONOMIC [PHOTO OF DANIEL S. McNAMARA]
RECOVERY IS STRENGTHENING."
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FEBRUARY 2014
For much of the reporting period, market sentiment was driven by the potential
for -- and then the reality of -- Federal Reserve (the Fed) "tapering." The Fed
had hinted during the spring of 2013 that it might start reducing its asset
purchase program (also known as quantitative easing, or QE) if U.S. economic
conditions improved. (In September 2012, the U.S. central bank began purchasing
$85 billion of U.S. Treasury securities and mortgage-backed securities every
month to push down long-term interest rates and stimulate economic growth.) The
Fed also continued to reiterate its "forward guidance" -- the promise to hold
short-term interest rates near zero until unemployment falls below 6.5% and
inflation rises above 2.5%.
In general, equity investors seemed to like the Fed's promise of "low rates for
longer" more than they disliked the prospect of the taper. Though stocks had
briefly declined in response to the Fed's springtime "taper talk," they moved
higher overall during the reporting period, reaching new all-time highs in
mid-January 2014. In the bond market, longer-term yields -- especially in
five-year, 10-year, and 30-year maturities -- rose on expectations that the Fed
would begin tapering sooner rather than later. Bond prices, which move in the
opposite direction of yields, declined. However, not all bonds performed the
same way during the reporting period. The fixed-income market is, after all, a
market of bonds and not a single bond market. It comprises different types of
bonds with different maturities and risk characteristics, including U.S.
Treasuries, mortgage-backed securities, investment-grade bonds, high-yield
bonds, municipal securities and more. While U.S. Treasury securities
underperformed during the reporting period, bonds with more exposure to the U.S.
economy's health (I.E., those with credit risk) outperformed.
In December, the Fed announced it would taper its QE asset purchases by $10
billion beginning in January 2014. It subsequently announced additional tapering
of $10 billion in February and suggested it would continue reducing its asset
purchases in $10 billion increments through the end of 2014. In my opinion, the
continuation of the taper is an indication that Fed policymakers believe the
U.S. economic recovery is strengthening. Indeed, near the end of the reporting
period, the U.S. Department of Commerce estimated that fourth-quarter gross
domestic product growth was 3.2%, which was later revised downward to 2.4% on
February 28, 2014. Combined with a third-quarter
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growth rate of 4.1%, the U.S. economy experienced one of its strongest six-month
periods in a decade during the second half of 2013.
In mid-January, stocks underwent a sell-off. According to some observers, the
decline was a response to slowing global economic growth, especially in China
and Brazil, as well as currency weakness in Turkey and South Africa. However, in
my opinion, the predominant driver of market behavior is how investors interpret
macroeconomic data and future earnings trends. Some companies that met or beat
earnings expectations in the fourth-quarter 2013 have guided down forecasts for
coming quarters. Downward earnings guidance feeds into the belief held by many,
including USAA Asset Management Company, that it may be harder than the markets
expect for U.S. companies to find the earnings growth needed to support current
valuations.
Meanwhile, as stocks declined in late January, investors sought safety in U.S.
Treasuries and other conservative fixed-income securities. Though yields trended
down, they generally remained higher at the end of the reporting period than
they were at the beginning. Higher yields mean that investors have the
opportunity to reinvest at higher rates and can potentially earn more on new
investments.
Nevertheless, the shift in market sentiment during January underlines the
importance of diversification. Different asset classes, such as stocks and
bonds, move up and down at different rates and often at different times. I urge
all investors to hold diversified portfolios directly tied to their goals, risk
tolerance and time horizon. It is also a good idea to regularly reassess your
investment risk and rebalance your portfolio. Regular rebalancing can
potentially help you protect your gains and prepare for what happens next.
Looking ahead, I expect U.S. economic growth to continue getting stronger,
albeit slowly. While some investors may believe the economy is already on a
clear path to normalization, I believe the ride will be bumpier than many of us
would like. Rest assured we will continue to monitor economic trends, Fed
policy, geopolitical events, and other factors that could potentially affect
your investments. From all of us at USAA Asset Management Company, thank you for
allowing us to help you with your investment needs.
Sincerely,
/S/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
Past performance is no guarantee of future results. o As interest rates rise,
bond prices generally fall; given the historically low interest rate
environment, risks associated with rising interest rates may be heightened.
o Diversification is a technique intended to help reduce risk and does not
guarantee a profit or prevent a loss. o Financial advice provided by USAA
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
MANAGERS' COMMENTARY 2
INVESTMENT OVERVIEW 7
FINANCIAL INFORMATION
Portfolio of Investments 14
Notes to Portfolio of Investments 21
Financial Statements 22
Notes to Financial Statements 25
EXPENSE EXAMPLE 42
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)2014, USAA. All rights reserved.
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FUND OBJECTIVE
THE USAA VALUE FUND (THE FUND) SEEKS LONG-TERM GROWTH OF CAPITAL.
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TYPES OF INVESTMENTS
The Fund invests its assets primarily in equity securities of companies that are
considered to be undervalued. Although the Fund will invest primarily in U.S.
securities, it may invest up to 20% of its total assets in foreign securities
including securities issued in emerging markets.
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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MANAGERS' COMMENTARY ON THE FUND
Barrow, Hanley, Mewhinney & Strauss, LLC
MARK GIAMBRONE, CPA JAMES S. McCLURE, CFA
JAMES P. BARROW JOHN P. HARLOE, CFA
RAY NIXON, Jr. LEWIS ROPP*
TIMOTHY J. CULLER, CFA
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o HOW DID THE USAA VALUE FUND (THE FUND) PERFORM DURING THE REPORTING PERIOD?
The Fund has three share classes: Fund Shares, Institutional Shares, and
Adviser Shares. For the six-month period ended January 31, 2014, the Fund
Shares, Institutional Shares, and Adviser Shares had a total return of
6.02%, 6.03%, and 5.80%, respectively. This compares to returns of 4.76% for
the Russell 3000(R) Value Index (the Index) and 6.26% for the Lipper Multi-
Cap Value Funds Index.
USAA Asset Management Company is the Fund's investment adviser. As the
investment adviser, USAA Asset Management Company employs dedicated
resources to support the research, selection, and monitoring of the Fund's
subadviser. Barrow, Hanley, Mewhinney & Strauss, LLC (BHMS) is the
subadviser to the Fund. The investment adviser and subadviser each provides
day-to-day discretionary management for a portion of the Fund's assets.
*Effective January 1, 2014, Lewis Ropp co-manages the Fund and replaces
Robert J. Chambers whose retirement was effective December 31, 2013.
Refer to page 8 for benchmark definitions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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2 | USAA VALUE FUND
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o CAN YOU DISCUSS THE MARKET ENVIRONMENT DURING THE REPORTING PERIOD?
Equities overall trended upward for most of the period. While U.S. Treasury
rates continued to drift higher, investors seemed to have gained a comfort
level with the likely impact of plans on the part of the U.S. Federal
Reserve (the Fed) to gradually reduce its policy accommodation from the
economy. Positive sentiment was supported by continued signs of
strengthening in the U.S. economy, highlighted in December by an upward
revision in third quarter gross domestic product growth to 4.1%. Optimism
was further fueled by a more constructive turn in U.S. budget talks,
culminating in a bipartisan two-year deal late in the period. While growth
in China remained a concern, growth appeared to have stabilized at levels
sufficient to support the global economy, and a consensus seemed to emerge
that Europe was finally pulling out of its recession. The net result was a
strong finish to 2013 for stocks, with most broad U.S. indices providing
good returns in the fourth quarter.
In January, the tenor of the market shifted. U.S. data came in below
expectations as gauged by key employment and manufacturing indicators.
China's manufacturing data showed signs of contracting, causing emerging
markets equities to swoon and sovereign debt spreads to widen. As emerging
markets currencies dipped along with other regional asset classes, investors
saw a threat to the profitability of U.S. multinational companies. The net
result was that January saw most broad stock indices give up on half of
their gains achieved from the beginning of the Fund's fiscal period.
o WHAT WERE THE PRINCIPAL FACTORS THAT IMPACTED THE FUND'S RELATIVE PERFORMANCE
DURING THE REPORTING PERIOD?
We have been positioned for continued, if somewhat gradual, economic
improvement. In this vein, we have viewed a number of companies within the
economically sensitive industrials sector as attractively valued, and our
largest overweight was to industrials, which proved
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MANAGERS' COMMENTARY ON THE FUND | 3
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helpful. In addition, selection within the sector was the largest
contributor to the Fund's relative performance. Within the industrials
sector, we have investments in companies with strong global brands, the
potential to grow faster than the economy, and the ability to sustain growth
in dividends. Standout performers included a pair of defense- oriented
companies, Raytheon Co. (Raytheon) and General Dynamics Corp. (General
Dynamics). Both benefited from increased clarity with respect to the U.S.
budget outlook. In addition, Raytheon's defense business has meaningful
international exposure, which continued to perform well, while results for
General Dynamics have been bolstered by its Gulfstream private jet line.
Stock selection within the energy sector was another leading source of
positive relative performance. The clear standout among our energy holdings
was BP plc ADR (BP), formerly known as British Petroleum. BP's results have
continued to show improvement since suffering in the aftermath of the Gulf
Coast disaster. In addition, most investors have come to believe that BP's
Gulf-related legal and financial exposures should be manageable given the
strength of the company's balance sheet. BP's stock is inexpensively valued
by our measures even after its recent strong performance.
Our health care exposure was also a positive contributor. A standout within
the sector was drug distributor Cardinal Health, Inc. (Cardinal). Cardinal
has performed well as management in recent years has tightened the company's
focus, reduced costs, and returned capital to shareholders. In particular,
Cardinal has done a good job of expanding its distribution network through
creative partnerships, including one recently formed with CVS Pharmacy. Many
health care companies have seen their stock prices rebound as clarity has
increased around the implications of the Affordable Healthcare Act. We are
maintaining a significant weight to the health care sector as we believe
prices for many individual companies do not fully reflect the improved
backdrop.
The only material detractor for the six-month reporting period was selection
within the consumer discretionary sector. The principal
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4 | USAA VALUE FUND
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detractors among our holdings were retailer Target Corp. (Target) and slot
machine manufacturer International Game Technology. Target's results have
been hurt recently by a weak retail environment and costs associated with
its expansion into Canada. Adding significantly to negative sentiment over
the period was concern over a breach of credit card data privacy for
customers in its stores. We added Target to our holdings as we believe it
is an excellent retailer and that the stock is trading at very attractive
levels based on what are short-term issues. International Game Technology
has suffered from a drop off in regional casino gaming activity. While its
earnings have flattened out, the company is attractively valued, generates
strong free cash flow, and pays a solid dividend.
Outside of the consumer discretionary sector, banking giant Citigroup, Inc.
(Citigroup) lagged as investors punished the stock in January. Relative to
its peers, Citigroup is viewed as more vulnerable to developments in
emerging markets and has more exposure to any slowing in global growth. We
view Citigroup as having broad-based operations, strong management, a focus
on returning capital to shareholders, and we expect it to weather the
short-term volatility in emerging markets.
o WHAT IS YOUR OUTLOOK?
The Fund continues to be positioned for a gradually improving economic
backdrop, favoring less expensive companies in more economically sensitive
sectors such as industrials. In our view, Europe appears to have stabilized
and may even be poised to join the United States as a positive contributor
to the global growth outlook. Economic activity in China bears continued
close monitoring, but for the most part we view the recent issues with
emerging markets as reflecting the nature of the asset class, which is
always vulnerable to short-term turmoil.
While holding many stocks with attractive dividends, we continue to focus on
broader measures of valuation as well, including low payout
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MANAGERS' COMMENTARY ON THE FUND | 5
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ratios and solid earnings prospects that together suggest the potential for
long-term growth in dividends. In this vein, we are avoiding utilities while
maintaining a significant weighting in consumer discretionary stocks. We
remain confident that our bottom-up approach to evaluating stocks will
continue to generate solid ideas consistent with the Fund's focus on
individual company valuations and fundamentals.
Thank you for your investment in the Fund.
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6 | USAA VALUE FUND
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INVESTMENT OVERVIEW
USAA VALUE FUND SHARES (FUND SHARES) (Ticker Symbol: UVALX)
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1/31/14 7/31/13
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Net Assets $754.5 Million $633.2 Million
Net Asset Value Per Share $18.73 $18.37
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AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/14
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8/1/13-1/31/14* 1 Year 5 Years 10 Years
6.02% 23.97% 19.60% 8.12%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/13
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1 Year 5 Years 10 Years
35.85% 18.65% 8.60%
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EXPENSE RATIO AS OF 7/31/13**
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1.25%
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.
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**The expense ratio represents the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated December 1, 2013, and
is calculated as a percentage of average net assets. The expense ratio may
differ from the expense ratio disclosed in the Financial Highlights, which
excludes acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. The total
returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions or the
redemption of shares.
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INVESTMENT OVERVIEW | 7
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
USAA VALUE RUSSELL 3000 LIPPER MULTI-CAP
FUND SHARES VALUE INDEX VALUE FUNDS INDEX
1/31/2004 $10,000.00 $10,000.00 $10,000.00
2/29/2004 10,246.05 10,212.71 10,190.52
3/31/2004 10,131.81 10,141.32 10,101.36
4/30/2004 9,912.13 9,871.39 9,915.76
5/31/2004 10,000.00 9,973.42 9,962.38
6/30/2004 10,465.73 10,230.21 10,243.05
7/31/2004 10,237.26 10,058.46 9,950.38
8/31/2004 10,298.77 10,197.87 9,985.10
9/30/2004 10,571.18 10,375.97 10,187.05
10/31/2004 10,685.41 10,547.48 10,320.76
11/30/2004 11,379.61 11,114.65 10,861.25
12/31/2004 11,806.14 11,477.52 11,253.25
1/31/2005 11,683.25 11,252.94 11,008.48
2/28/2005 12,099.16 11,613.18 11,298.93
3/31/2005 12,023.54 11,447.15 11,138.94
4/30/2005 11,758.87 11,209.71 10,872.35
5/31/2005 12,061.35 11,513.21 11,226.22
6/30/2005 12,335.48 11,671.69 11,364.44
7/31/2005 12,760.84 12,037.98 11,748.17
8/31/2005 12,619.05 11,965.49 11,660.41
9/30/2005 12,732.48 12,116.79 11,758.25
10/31/2005 12,316.57 11,809.36 11,470.03
11/30/2005 12,619.05 12,205.59 11,855.34
12/31/2005 12,783.98 12,263.84 11,966.13
1/31/2006 13,153.12 12,787.12 12,360.65
2/28/2006 13,191.98 12,858.03 12,380.07
3/31/2006 13,405.70 13,072.50 12,583.35
4/30/2006 13,784.55 13,377.04 12,833.01
5/31/2006 13,405.70 13,019.51 12,502.56
6/30/2006 13,357.12 13,109.65 12,477.31
7/31/2006 13,386.27 13,381.52 12,516.79
8/31/2006 13,609.70 13,621.37 12,757.78
9/30/2006 13,910.84 13,880.30 13,044.90
10/31/2006 14,318.84 14,357.47 13,504.70
11/30/2006 14,639.41 14,692.70 13,785.92
12/31/2006 14,909.76 15,003.96 14,008.79
1/31/2007 15,160.09 15,198.82 14,246.65
2/28/2007 15,049.95 14,966.45 14,003.05
3/31/2007 15,330.32 15,193.22 14,122.23
4/30/2007 15,841.00 15,718.00 14,702.35
5/31/2007 16,481.85 16,285.80 15,264.36
6/30/2007 16,201.47 15,905.51 14,994.02
7/31/2007 15,430.45 15,117.43 14,298.60
8/31/2007 15,510.56 15,297.70 14,327.20
9/30/2007 15,851.01 15,786.04 14,705.67
10/31/2007 15,961.16 15,801.27 14,766.30
11/30/2007 15,380.39 14,996.08 14,017.82
12/31/2007 15,102.28 14,852.34 13,863.24
1/31/2008 14,549.50 14,256.32 13,191.33
2/29/2008 13,944.58 13,661.42 12,724.09
3/31/2008 13,423.09 13,582.67 12,470.30
4/30/2008 14,090.59 14,226.38 13,107.52
5/31/2008 14,424.35 14,243.28 13,342.47
6/30/2008 13,058.05 12,880.54 12,110.70
7/31/2008 12,985.04 12,888.21 11,977.15
8/31/2008 13,183.21 13,138.99 12,112.02
9/30/2008 12,140.23 12,202.63 10,990.55
10/31/2008 9,960.41 10,062.12 8,975.97
11/30/2008 9,219.90 9,304.34 8,379.49
12/31/2008 9,653.54 9,468.13 8,643.88
1/31/2009 8,917.52 8,357.98 7,901.64
2/28/2009 7,808.17 7,237.74 7,032.65
3/31/2009 8,490.85 7,858.49 7,644.73
4/30/2009 9,461.54 8,733.21 8,476.04
5/31/2009 9,898.88 9,243.84 8,982.35
6/30/2009 9,994.88 9,179.36 8,921.25
7/31/2009 11,018.90 9,954.51 9,652.74
8/31/2009 11,498.91 10,471.29 10,069.32
9/30/2009 11,808.25 10,885.40 10,474.31
10/31/2009 11,541.58 10,520.79 10,212.05
11/30/2009 12,266.93 11,093.59 10,666.00
12/31/2009 12,622.19 11,339.18 10,942.01
1/31/2010 12,363.05 11,019.19 10,641.64
2/28/2010 12,816.54 11,380.25 10,986.85
3/31/2010 13,583.16 12,138.07 11,618.48
4/30/2010 13,874.69 12,497.19 11,896.61
5/31/2010 12,751.76 11,467.46 10,905.40
6/30/2010 11,877.17 10,791.94 10,230.60
7/31/2010 12,762.55 11,525.67 10,931.91
8/31/2010 11,985.14 11,003.10 10,405.39
9/30/2010 13,194.45 11,881.77 11,307.90
10/31/2010 13,529.17 12,246.46 11,691.35
11/30/2010 13,604.75 12,211.50 11,639.73
12/31/2010 14,654.81 13,179.19 12,533.04
1/31/2011 15,112.78 13,453.46 12,812.51
2/28/2011 15,592.55 13,964.78 13,273.66
3/31/2011 15,712.49 14,031.58 13,404.71
4/30/2011 16,159.55 14,393.06 13,761.43
5/31/2011 15,995.99 14,232.25 13,564.23
6/30/2011 15,734.30 13,935.54 13,276.86
7/31/2011 14,981.93 13,473.45 12,809.02
8/31/2011 13,956.97 12,604.01 11,811.91
9/30/2011 12,779.35 11,617.70 10,686.94
10/31/2011 14,371.31 12,974.31 12,022.96
11/30/2011 14,393.12 12,910.33 11,944.15
12/31/2011 14,593.09 13,165.89 12,017.12
1/31/2012 15,222.29 13,693.55 12,701.05
2/29/2012 15,895.65 14,211.94 13,295.93
3/31/2012 16,392.39 14,634.78 13,601.98
4/30/2012 16,094.34 14,480.59 13,434.02
5/31/2012 15,012.56 13,628.64 12,467.99
6/30/2012 15,586.57 14,303.54 12,963.62
7/31/2012 15,696.95 14,429.27 13,016.95
8/31/2012 16,072.27 14,752.43 13,409.01
9/30/2012 16,458.62 15,225.06 13,774.92
10/31/2012 16,381.35 15,141.49 13,724.43
11/30/2012 16,447.58 15,139.14 13,780.67
12/31/2012 16,709.47 15,476.22 14,088.14
1/31/2013 17,606.02 16,475.72 14,992.95
2/28/2013 17,830.16 16,708.52 15,182.48
3/31/2013 18,592.23 17,373.03 15,824.19
4/30/2013 18,917.23 17,614.10 16,023.34
5/31/2013 19,623.26 18,071.73 16,555.94
6/30/2013 19,488.78 17,919.00 16,343.74
7/31/2013 20,587.06 18,900.90 17,254.09
8/31/2013 19,959.47 18,174.53 16,729.21
9/30/2013 20,710.33 18,676.45 17,298.01
10/31/2013 21,472.40 19,477.35 18,048.46
11/30/2013 22,245.68 20,037.99 18,553.63
12/31/2013 22,699.65 20,534.97 18,988.61
1/31/2014 21,825.69 19,800.48 18,333.53
[END CHART]
Data from 1/31/04 to 1/31/14.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Value Fund Shares to the following benchmarks:
o The unmanaged Russell 3000 Value Index measures the performance of those
Russell 3000 Index companies with lower price-to-book ratios and lower
forecasted growth values. The stocks in this index are also members of
either the unmanaged Russell 1000(R) Value or the unmanaged Russell 2000
Value indexes.
o The unmanaged Lipper Multi-Cap Value Funds Index tracks the total return
performance of the 30 largest funds within the Lipper Multi-Cap Value Funds
category.
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. The return information for the
indices does not reflect the deduction of any fees or expenses.
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8 | USAA VALUE FUND
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USAA VALUE FUND INSTITUTIONAL SHARES (INSTITUTIONAL SHARES)
(Ticker Symbol: UIVAX)
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1/31/14 7/31/13
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Net Assets $213.0 Million $214.9 Million
Net Asset Value Per Share $18.71 $18.36
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AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/14
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8/1/13-1/31/14* 1 Year 5 Years Since Inception 8/01/08
6.03% 24.07% 19.83% 10.13%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/13
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1 Year 5 Years Since Inception 8/01/08
36.05% 18.88% 11.11%
--------------------------------------------------------------------------------
EXPENSE RATIO AS OF 7/31/13**
--------------------------------------------------------------------------------
1.01%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**The expense ratio represents the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated December 1, 2013, and
is calculated as a percentage of average net assets. The expense ratio may
differ from the expense ratio disclosed in the Financial Highlights, which
excludes acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. The total
returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions or the
redemption of shares.
The Institutional Shares are available for investment through a USAA
discretionary managed account program, and certain advisory programs sponsored
by financial intermediaries, such as brokerage firms, investment advisors,
financial planners, third-party administrators, and insurance companies.
Institutional Shares also are available to institutional investors, which
include retirement plans, endowments, foundations, and bank trusts, as well as
other persons or legal entities that the Fund may approve from time to time, or
for purchase by a USAA Fund participating in a fund-of-funds investment strategy
(USAA fund-of-funds) and not to the general public.
================================================================================
INVESTMENT OVERVIEW | 9
================================================================================
o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
USAA VALUE FUND RUSSELL 3000 LIPPER MULTI-CAP
INSTITUTIONAL SHARES VALUE INDEX VALUE FUNDS INDEX
7/31/2008 $10,000.00 $10,000.00 $10,000.00
8/31/2008 10,177.13 10,194.58 10,112.61
9/30/2008 9,371.98 9,468.06 9,176.26
10/31/2008 7,689.21 7,807.23 7,494.25
11/30/2008 7,117.55 7,219.27 6,996.23
12/31/2008 7,454.67 7,346.36 7,216.98
1/31/2009 6,885.67 6,484.98 6,597.26
2/28/2009 6,036.30 5,615.78 5,871.72
3/31/2009 6,555.82 6,097.43 6,382.76
4/30/2009 7,306.24 6,776.13 7,076.84
5/31/2009 7,644.34 7,172.32 7,499.57
6/30/2009 7,726.80 7,122.29 7,448.56
7/31/2009 8,518.44 7,723.74 8,059.30
8/31/2009 8,897.78 8,124.71 8,407.11
9/30/2009 9,136.92 8,446.01 8,745.24
10/31/2009 8,930.76 8,163.12 8,526.27
11/30/2009 9,499.76 8,607.55 8,905.29
12/31/2009 9,771.02 8,798.10 9,135.74
1/31/2010 9,570.25 8,549.82 8,884.95
2/28/2010 9,921.61 8,829.97 9,173.17
3/31/2010 10,515.56 9,417.97 9,700.54
4/30/2010 10,749.80 9,696.61 9,932.75
5/31/2010 9,871.41 8,897.64 9,105.17
6/30/2010 9,202.16 8,373.50 8,541.76
7/31/2010 9,888.14 8,942.80 9,127.30
8/31/2010 9,285.82 8,537.34 8,687.70
9/30/2010 10,231.13 9,219.10 9,441.23
10/31/2010 10,490.47 9,502.06 9,761.38
11/30/2010 10,557.39 9,474.94 9,718.28
12/31/2010 11,371.72 10,225.77 10,464.12
1/31/2011 11,727.35 10,438.58 10,697.46
2/28/2011 12,108.38 10,835.32 11,082.49
3/31/2011 12,201.52 10,887.14 11,191.90
4/30/2011 12,548.69 11,167.62 11,489.74
5/31/2011 12,421.68 11,042.85 11,325.09
6/30/2011 12,218.46 10,812.63 11,085.16
7/31/2011 11,642.68 10,454.09 10,694.55
8/31/2011 10,846.74 9,779.49 9,862.04
9/30/2011 9,932.26 9,014.21 8,922.77
10/31/2011 11,168.50 10,066.81 10,038.25
11/30/2011 11,185.44 10,017.17 9,972.45
12/31/2011 11,350.72 10,215.45 10,033.37
1/31/2012 11,840.49 10,624.87 10,604.40
2/29/2012 12,364.64 11,027.09 11,101.08
3/31/2012 12,751.30 11,355.17 11,356.60
4/30/2012 12,519.30 11,235.54 11,216.37
5/31/2012 11,685.83 10,574.51 10,409.81
6/30/2012 12,124.05 11,098.16 10,823.63
7/31/2012 12,218.56 11,195.72 10,868.15
8/31/2012 12,510.71 11,446.46 11,195.49
9/30/2012 12,811.44 11,813.17 11,501.00
10/31/2012 12,751.30 11,748.33 11,458.85
11/30/2012 12,802.85 11,746.51 11,505.80
12/31/2012 13,012.21 12,008.05 11,762.52
1/31/2013 13,711.32 12,783.57 12,517.96
2/28/2013 13,886.10 12,964.19 12,676.21
3/31/2013 14,480.34 13,479.79 13,211.98
4/30/2013 14,733.77 13,666.84 13,378.26
5/31/2013 15,293.06 14,021.92 13,822.94
6/30/2013 15,179.45 13,903.41 13,645.77
7/31/2013 16,044.61 14,665.28 14,405.84
8/31/2013 15,546.49 14,101.68 13,967.60
9/30/2013 16,140.74 14,491.12 14,442.51
10/31/2013 16,734.98 15,112.54 15,069.08
11/30/2013 17,337.97 15,547.54 15,490.86
12/31/2013 17,702.51 15,933.16 15,854.03
1/31/2014 17,011.50 15,363.26 15,307.09
[END CHART]
Data from 7/31/08 to 1/31/14.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Value Fund Institutional Shares to the Fund's benchmarks listed above (see
page 8 for benchmark definitions).
*The performance of the Russell 3000 Value Index and the Lipper Multi-Cap Value
Funds Index is calculated from the end of the month, July 31, 2008, while the
Institutional Shares' inception date is August 1, 2008. There may be a slight
variation of performance numbers because of this difference.
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. The return information for the
indices does not reflect the deduction of any fees or expenses.
================================================================================
10 | USAA VALUE FUND
================================================================================
USAA VALUE FUND ADVISER SHARES (ADVISER SHARES) (Ticker Symbol: UAVAX)
--------------------------------------------------------------------------------
1/31/14 7/31/13
--------------------------------------------------------------------------------
Net Assets $8.3 Million $8.2 Million
Net Asset Value Per Share $18.68 $18.29
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/14
--------------------------------------------------------------------------------
8/1/13-1/31/14* 1 Year Since Inception 8/01/10
5.80% 23.49% 15.32%
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/13
--------------------------------------------------------------------------------
1 Year Since Inception 8/01/10
35.34% 17.09%
--------------------------------------------------------------------------------
EXPENSE RATIO AS OF 7/31/13**
--------------------------------------------------------------------------------
1.57%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**The expense ratio represents the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated December 1, 2013, and
is calculated as a percentage of average net assets. The expense ratio may
differ from the expense ratio disclosed in the Financial Highlights, which
excludes acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. The total
returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions or the
redemption of shares.
================================================================================
INVESTMENT OVERVIEW | 11
================================================================================
o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
RUSSELL 3000 LIPPER MULTI-CAP USAA VALUE FUND
VALUE INDEX VALUE FUNDS INDEX ADVISER SHARES
7/31/2010 $10,000.00 $10,000.00 $10,000.00
8/31/2010 9,546.60 9,518.37 9,188.07
9/30/2010 10,308.96 10,343.94 10,115.99
10/31/2010 10,625.37 10,694.71 10,364.54
11/30/2010 10,595.04 10,647.48 10,422.54
12/31/2010 11,434.64 11,464.64 11,223.33
1/31/2011 11,672.60 11,720.29 11,565.96
2/28/2011 12,116.24 12,142.13 11,933.67
3/31/2011 12,174.19 12,262.00 12,017.24
4/30/2011 12,487.83 12,588.32 12,351.51
5/31/2011 12,348.30 12,407.93 12,217.80
6/30/2011 12,090.87 12,145.05 12,017.24
7/31/2011 11,689.95 11,717.09 11,432.25
8/31/2011 10,935.60 10,804.98 10,655.06
9/30/2011 10,079.84 9,775.91 9,744.15
10/31/2011 11,256.88 10,998.04 10,955.91
11/30/2011 11,201.37 10,925.95 10,964.26
12/31/2011 11,423.10 10,992.71 11,111.07
1/31/2012 11,880.92 11,618.33 11,590.87
2/29/2012 12,330.68 12,162.50 12,095.92
3/31/2012 12,697.55 12,442.46 12,466.29
4/30/2012 12,563.77 12,288.82 12,239.02
5/31/2012 11,824.60 11,405.14 11,414.10
6/30/2012 12,410.16 11,858.52 11,843.39
7/31/2012 12,519.25 11,907.30 11,919.15
8/31/2012 12,799.63 12,265.94 12,196.93
9/30/2012 13,209.69 12,600.66 12,483.12
10/31/2012 13,137.19 12,554.48 12,424.20
11/30/2012 13,135.15 12,605.92 12,466.29
12/31/2012 13,427.61 12,887.18 12,666.85
1/31/2013 14,294.80 13,714.86 13,339.35
2/28/2013 14,496.78 13,888.23 13,509.61
3/31/2013 15,073.34 14,475.24 14,079.96
4/30/2013 15,282.50 14,657.41 14,318.31
5/31/2013 15,679.55 15,144.61 14,846.10
6/30/2013 15,547.04 14,950.50 14,735.43
7/31/2013 16,398.96 15,783.25 15,569.66
8/31/2013 15,768.74 15,303.11 15,084.44
9/30/2013 16,204.22 15,823.42 15,654.79
10/31/2013 16,899.10 16,509.90 16,216.63
11/30/2013 17,385.53 16,972.01 16,795.49
12/31/2013 17,816.73 17,369.90 17,142.70
1/31/2014 17,179.46 16,770.66 16,472.50
[END CHART]
Data from 7/31/10 to 1/31/14.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Value Fund Adviser Shares to the Fund's benchmarks listed above (see page 8
for benchmark definitions).
*The performance of the Russell 3000 Value Index and the Lipper Multi-Cap Value
Funds Index is calculated from the end of the month, July 31, 2010, while the
Adviser Shares' inception date is August 1, 2010. There may be a slight
variation of performance numbers because of this difference.
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. The return information for the
indices does not reflect the deduction of any fees or expenses.
================================================================================
12 | USAA VALUE FUND
================================================================================
o TOP 10 HOLDINGS o
AS OF 1/31/2014
(% of Net Assets)
Capital One Financial Corp. ............................................. 2.4%
Wells Fargo & Co. ....................................................... 2.0%
Delphi Automotive plc ................................................... 2.0%
JPMorgan Chase & Co. .................................................... 2.0%
Medtronic, Inc. ......................................................... 1.9%
Pfizer, Inc. ............................................................ 1.9%
Microsoft Corp. ......................................................... 1.9%
BP plc ADR .............................................................. 1.9%
SLM Corp. ............................................................... 1.8%
American Express Co. .................................................... 1.8%
o ASSET ALLOCATION -- 1/31/2014 o
[PIE CHART OF ASSET ALLOCATION]
FINANCIALS 23.1%
HEALTH CARE 17.4%
INDUSTRIALS 17.2%
CONSUMER DISCRETIONARY 10.5%
INFORMATION TECHNOLOGY 9.4%
ENERGY 8.8%
CONSUMER STAPLES 3.9%
TELECOMMUNICATION SERVICES 2.7%
MATERIALS 2.7%
UTILITIES 1.5%
MONEY MARKET INSTRUMENTS 2.7%
[END CHART]
Percentages are of the net assets of the Fund and may not equal 100%.
You will find a complete list of securities that the Fund owns on pages 14-20.
================================================================================
INVESTMENT OVERVIEW | 13
================================================================================
PORTFOLIO OF INVESTMENTS
January 31, 2014 (unaudited)
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
COMMON STOCKS (97.2%)
CONSUMER DISCRETIONARY (10.5%)
------------------------------
APPAREL RETAIL (1.1%)
112,100 L Brands, Inc. $ 5,870
95,400 Men's Wearhouse, Inc. 4,583
--------
10,453
--------
APPAREL, ACCESSORIES & LUXURY GOODS (0.9%)
120,000 Hanesbrands, Inc. 8,537
--------
AUTO PARTS & EQUIPMENT (2.5%)
263,500 American Axle & Manufacturing Holdings, Inc.* 4,906
319,770 Delphi Automotive plc 19,471
--------
24,377
--------
AUTOMOBILE MANUFACTURERS (0.4%)
284,400 Ford Motor Co. 4,255
--------
AUTOMOTIVE RETAIL (0.3%)
84,800 Murphy USA, Inc. 3,285
--------
CASINOS & GAMING (0.5%)
322,800 International Game Technology 4,658
--------
GENERAL MERCHANDISE STORES (1.3%)
229,210 Target Corp. 12,982
--------
HOME FURNISHINGS (0.1%)
22,300 Tempur Sealy International, Inc.* 1,099
--------
HOTELS, RESORTS & CRUISE LINES (2.1%)
290,939 Carnival Corp. 11,402
175,900 Royal Caribbean Cruises Ltd. 8,725
--------
20,127
--------
HOUSEHOLD APPLIANCES (0.5%)
35,700 Whirlpool Corp. 4,759
--------
LEISURE PRODUCTS (0.5%)
108,300 Brunswick Corp. 4,490
--------
================================================================================
14 | USAA VALUE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
PUBLISHING (0.3%)
56,100 John Wiley & Sons, Inc. "A" $ 3,037
--------
Total Consumer Discretionary 102,059
--------
CONSUMER STAPLES (3.9%)
-----------------------
DRUG RETAIL (0.4%)
77,724 Walgreen Co. 4,457
--------
TOBACCO (3.5%)
243,277 Altria Group, Inc. 8,568
109,600 Lorillard, Inc. 5,395
191,020 Philip Morris International, Inc. 14,926
103,000 Reynolds American, Inc. 4,996
--------
33,885
--------
Total Consumer Staples 38,342
--------
ENERGY (8.8%)
-------------
INTEGRATED OIL & GAS (3.5%)
379,213 BP plc ADR 17,781
180,708 Occidental Petroleum Corp. 15,825
--------
33,606
--------
OIL & GAS DRILLING (1.0%)
62,300 Helmerich & Payne, Inc. 5,485
117,100 SeaDrill Ltd. 4,181
--------
9,666
--------
OIL & GAS EXPLORATION & PRODUCTION (3.7%)
213,987 ConocoPhillips 13,899
126,480 Linn Co., LLC 4,071
327,483 Marathon Oil Corp. 10,738
131,000 Murphy Oil Corp. 7,416
--------
36,124
--------
OIL & GAS REFINING & MARKETING (0.6%)
84,862 Phillips 66 6,203
--------
Total Energy 85,599
--------
FINANCIALS (23.1%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (2.2%)
57,700 Ameriprise Financial, Inc. 6,095
243,100 Janus Capital Group, Inc. 2,672
184,426 State Street Corp. 12,347
--------
21,114
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
CONSUMER FINANCE (6.8%)
202,314 American Express Co. $ 17,201
328,698 Capital One Financial Corp. 23,209
150,400 Discover Financial Services 8,069
768,531 SLM Corp. 17,492
--------
65,971
--------
DIVERSIFIED BANKS (2.0%)
442,704 Wells Fargo & Co. 20,072
--------
INSURANCE BROKERS (0.5%)
114,300 Willis Group Holdings Ltd. plc 4,922
--------
MULTI-LINE INSURANCE (0.5%)
357,000 Genworth Financial, Inc. "A"* 5,266
--------
OTHER DIVERSIFIED FINANCIAL SERVICES (4.8%)
864,682 Bank of America Corp. 14,483
278,072 Citigroup, Inc. 13,189
346,508 JPMorgan Chase & Co. 19,183
--------
46,855
--------
PROPERTY & CASUALTY INSURANCE (0.1%)
27,265 ProAssurance Corp. 1,267
--------
REGIONAL BANKS (4.9%)
144,700 CIT Group, Inc. 6,736
71,900 City National Corp. 5,202
415,000 Fifth Third Bancorp 8,723
463,600 First Niagara Financial Group, Inc. 4,006
81,800 Hanmi Financial Corp. 1,764
204,938 PNC Financial Services Group, Inc. 16,371
75,100 Prosperity Bancshares, Inc. 4,698
--------
47,500
--------
REITs - OFFICE (0.0%)
7,900 Corporate Office Properties Trust 196
--------
THRIFTS & MORTGAGE FINANCE (1.3%)
443,800 New York Community Bancorp, Inc. 7,185
361,000 People's United Financial, Inc. 5,130
--------
12,315
--------
Total Financials 225,478
--------
HEALTH CARE (17.4%)
-------------------
HEALTH CARE DISTRIBUTORS (1.5%)
222,130 Cardinal Health, Inc. 15,109
--------
================================================================================
16 | USAA VALUE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT (2.9%)
331,776 Medtronic, Inc. $ 18,765
151,900 St. Jude Medical, Inc. 9,225
--------
27,990
--------
HEALTH CARE FACILITIES (0.5%)
160,200 HealthSouth Corp. 4,986
--------
HEALTH CARE SERVICES (1.0%)
156,600 Omnicare, Inc. 9,781
--------
HEALTH CARE SUPPLIES (0.2%)
54,300 Haemonetics Corp.* 2,058
--------
LIFE SCIENCES TOOLS & SERVICES (0.4%)
38,900 Covance, Inc.* 3,678
--------
MANAGED HEALTH CARE (3.5%)
95,500 Cigna Corp. 8,243
174,160 UnitedHealth Group, Inc. 12,588
156,110 WellPoint, Inc. 13,425
--------
34,256
--------
PHARMACEUTICALS (7.4%)
172,599 Johnson & Johnson 15,270
291,978 Merck & Co., Inc. 15,466
601,533 Pfizer, Inc. 18,286
242,119 Sanofi ADR 11,840
259,738 Teva Pharmaceutical Industries Ltd. ADR 11,592
--------
72,454
--------
Total Health Care 170,312
--------
INDUSTRIALS (17.2%)
-------------------
AEROSPACE & DEFENSE (4.8%)
108,964 General Dynamics Corp. 11,039
173,227 Honeywell International, Inc. 15,804
26,700 L-3 Communications Holdings, Inc. 2,966
177,832 Raytheon Co. 16,906
--------
46,715
--------
AIR FREIGHT & LOGISTICS (0.4%)
86,200 Forward Air Corp. 3,839
--------
BUILDING PRODUCTS (1.0%)
125,225 Gibraltar Industries, Inc.* 2,236
79,500 Simpson Manufacturing Co., Inc. 2,592
65,300 Trex Co., Inc.* 4,593
--------
9,421
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (1.0%)
121,800 Aegion Corp.* $ 2,499
135,003 Comfort Systems USA, Inc. 2,300
177,400 KBR, Inc. 5,553
--------
10,352
--------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (1.7%)
140,800 Joy Global, Inc. 7,433
86,400 Oshkosh Corp. 4,677
123,800 Terex Corp. 5,076
--------
17,186
--------
DIVERSIFIED SUPPORT SERVICES (0.5%)
129,700 Mobile Mini, Inc.* 5,016
--------
ELECTRICAL COMPONENTS & EQUIPMENT (2.9%)
101,100 Eaton Corp. plc 7,389
196,648 Emerson Electric Co. 12,967
268,200 II-VI, Inc.* 4,096
49,700 Regal-Beloit Corp. 3,682
--------
28,134
--------
INDUSTRIAL MACHINERY (4.6%)
37,900 Barnes Group, Inc. 1,419
136,267 Illinois Tool Works, Inc. 10,747
105,800 Pentair Ltd. 7,864
82,000 SPX Corp. 8,165
198,714 Stanley Black & Decker, Inc. 15,380
35,600 Xylem, Inc. 1,188
--------
44,763
--------
OFFICE SERVICES & SUPPLIES (0.3%)
97,400 Herman Miller, Inc. 2,730
--------
Total Industrials 168,156
--------
INFORMATION TECHNOLOGY (9.4%)
-----------------------------
APPLICATION SOFTWARE (0.3%)
133,700 Mentor Graphics Corp. 2,781
--------
DATA PROCESSING & OUTSOURCED SERVICES (0.5%)
172,100 Total System Services, Inc. 5,142
--------
ELECTRONIC COMPONENTS (0.8%)
42,300 Littelfuse, Inc. 3,786
267,100 Vishay Intertechnology, Inc.* 3,627
--------
7,413
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.3%)
47,600 FARO Technologies, Inc.* 2,462
--------
================================================================================
18 | USAA VALUE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
ELECTRONIC MANUFACTURING SERVICES (0.9%)
151,900 Mercury Computer Systems, Inc.* $ 1,625
81,200 Park Electrochemical Corp. 2,450
132,500 Plexus Corp.* 5,181
--------
9,256
--------
SEMICONDUCTOR EQUIPMENT (0.4%)
258,000 Brooks Automation, Inc. 2,619
182,400 Photronics, Inc.* 1,514
--------
4,133
--------
SEMICONDUCTORS (3.5%)
141,700 Diodes, Inc.* 3,247
263,100 Fairchild Semiconductor International, Inc.* 3,357
450,761 Intel Corp. 11,062
122,900 Microchip Technology, Inc. 5,513
266,140 Texas Instruments, Inc. 11,284
--------
34,463
--------
SYSTEMS SOFTWARE (2.7%)
245,000 CA, Inc. 7,859
475,817 Microsoft Corp. 18,010
--------
25,869
--------
Total Information Technology 91,519
--------
MATERIALS (2.7%)
----------------
CONSTRUCTION MATERIALS (0.3%)
102,200 CRH plc ADR 2,647
--------
DIVERSIFIED CHEMICALS (0.6%)
88,165 E.I. du Pont de Nemours & Co. 5,379
--------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.5%)
85,700 Scotts Miracle-Gro Co. "A" 5,090
--------
SPECIALTY CHEMICALS (1.3%)
151,400 PolyOne Corp. 5,384
110,400 Rockwood Holdings, Inc. 7,565
--------
12,949
--------
Total Materials 26,065
--------
TELECOMMUNICATION SERVICES (2.7%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (2.1%)
252,941 AT&T, Inc. 8,428
245,973 Verizon Communications, Inc. 11,812
--------
20,240
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.6%)
175,800 Vodafone Group plc ADR $ 6,515
--------
Total Telecommunication Services 26,755
--------
UTILITIES (1.5%)
----------------
ELECTRIC UTILITIES (1.2%)
86,883 Entergy Corp. 5,476
56,400 Pinnacle West Capital Corp. 2,969
98,000 Xcel Energy, Inc. 2,833
--------
11,278
--------
MULTI-UTILITIES (0.3%)
132,400 CenterPoint Energy, Inc. 3,098
--------
Total Utilities 14,376
--------
Total Common Stocks (cost: $653,239) 948,661
--------
MONEY MARKET INSTRUMENTS (2.7%)
MONEY MARKET FUNDS (2.7%)
26,610,534 State Street Institutional Liquid Reserve Fund, 0.06%(a)
(cost: $26,610) 26,610
--------
TOTAL INVESTMENTS (COST: $679,849) $975,271
========
----------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
----------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
----------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $948,661 $- $- $948,661
Money Market Instruments:
Money Market Funds 26,610 - - 26,610
----------------------------------------------------------------------------------------------------
Total $975,271 $- $- $975,271
----------------------------------------------------------------------------------------------------
For the period of August 1, 2013, through January 31, 2014, there were no
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.
================================================================================
20 | USAA VALUE FUND
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
January 31, 2014 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
Investments in foreign securities were 9.5% of net assets at January 31,
2014.
o PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
ADR American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in U.S.
dollars.
REIT Real estate investment trust
o SPECIFIC NOTES
(a) Rate represents the money market fund annualized seven-day yield at
January 31, 2014.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 21
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
January 31, 2014 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $679,849) $975,271
Receivables:
Capital shares sold:
Affiliated transactions (Note 7) 29
Nonaffiliated transactions 793
Dividends and interest 770
Securities sold 5,582
--------
Total assets 982,445
--------
LIABILITIES
Payables:
Securities purchased 5,457
Capital shares redeemed 411
Accrued management fees 624
Accrued transfer agent's fees 38
Other accrued expenses and payables 69
--------
Total liabilities 6,599
--------
Net assets applicable to capital shares outstanding $975,846
========
NET ASSETS CONSIST OF:
Paid-in capital $668,544
Accumulated undistributed net investment income 363
Accumulated net realized gain on investments 11,517
Net unrealized appreciation of investments 295,422
--------
Net assets applicable to capital shares outstanding $975,846
========
Net asset value, redemption price, and offering price per share:
Fund Shares (net assets of $754,528/40,289 shares outstanding) $ 18.73
========
Institutional Shares (net assets of $212,999/11,383
shares outstanding) $ 18.71
========
Adviser Shares (net assets of $8,319/445 shares outstanding) $ 18.68
========
See accompanying notes to financial statements.
================================================================================
22 | USAA VALUE FUND
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended January 31, 2014 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $18) $ 9,666
Interest 11
-------
Total income 9,677
-------
EXPENSES
Management fees 3,510
Administration and servicing fees:
Fund Shares 519
Institutional Shares 107
Adviser Shares 6
Transfer agent's fees:
Fund Shares 569
Institutional Shares 107
Distribution and service fees (Note 6F):
Adviser Shares 11
Custody and accounting fees:
Fund Shares 50
Institutional Shares 15
Adviser Shares 1
Postage:
Fund Shares 15
Shareholder reporting fees:
Fund Shares 13
Trustees' fees 7
Registration fees:
Fund Shares 21
Institutional Shares 12
Adviser Shares 13
Professional fees 47
Other 8
-------
Net expenses 5,031
-------
NET INVESTMENT INCOME 4,646
-------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain 24,132
Change in net unrealized appreciation/depreciation 20,924
-------
Net realized and unrealized gain 45,056
-------
Increase in net assets resulting from operations $49,702
=======
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 23
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended January 31, 2014 (unaudited), and year ended
July 31, 2013
--------------------------------------------------------------------------------
1/31/2014 7/31/2013
--------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 4,646 $ 10,095
Net realized gain on investments 24,132 39,028
Change in net unrealized appreciation/depreciation
of investments 20,924 146,405
---------------------
Increase in net assets resulting from operations 49,702 195,528
---------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Fund Shares (7,457) (6,968)
Institutional Shares (2,381) (3,055)
Adviser Shares (56) (77)
---------------------
Total distributions of net investment income (9,894) (10,100)
---------------------
Net realized gains:
Fund Shares (19,995) -
Institutional Shares (6,055) -
Adviser Shares (246) -
---------------------
Total distributions of net realized gains (26,296) -
---------------------
Distributions to shareholders (36,190) -
---------------------
NET INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 5)
Fund Shares 111,588 75,015
Institutional Shares (5,484) (6,896)
Adviser Shares (90) (26)
---------------------
Total net increase in net assets from capital
share transactions 106,014 68,093
---------------------
Net increase in net assets 119,526 253,521
NET ASSETS
Beginning of period 856,320 602,799
---------------------
End of period $975,846 $856,320
=====================
Accumulated undistributed net investment income:
End of period $ 363 $ 5,611
=====================
See accompanying notes to financial statements.
================================================================================
24 | USAA VALUE FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS
January 31, 2014 (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 52 separate funds. The
information presented in this semiannual report pertains only to the USAA Value
Fund (the Fund), which is classified as diversified under the 1940 Act. The
Fund's investment objective is to seek long-term growth of capital.
The Fund consists of three classes of shares: Value Fund Shares (Fund Shares),
Value Fund Institutional Shares (Institutional Shares), and Value Fund Adviser
Shares (Adviser 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 agent fees, postage, shareholder reporting fees, distribution and
service (12b-1) 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 all classes. The
Institutional Shares are available for investment through a USAA discretionary
managed account program, and certain advisory programs sponsored by financial
intermediaries, such as brokerage firms, investment advisors, financial
planners, third-party administrators, and insurance companies. Institutional
Shares also are available to institutional investors, which include retirement
plans, endowments, foundations, and bank trusts, as well as other persons
================================================================================
NOTES TO FINANCIAL STATEMENTS | 25
================================================================================
or legal entities that the Fund may approve from time to time, or for purchase
by a USAA Fund participating in a fund-of-funds investment strategy (USAA
fund-of-funds) and not to the general public. The Adviser Shares permit
investors to purchase shares through financial intermediaries, including banks,
broker-dealers, insurance companies, investment advisers, plan sponsors, and
financial professionals that provide various administrative and distribution
services.
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 USAA Asset Management
Company (the Manager). Among other things, these monthly meetings include a
review and analysis of back testing reports, pricing service quotation
comparisons, illiquid securities and fair value determinations, pricing
movements, and daily stale price monitoring.
The value of each security is determined (as of the close of trading on the
New York Stock Exchange (NYSE) on each business day the NYSE is open) as set
forth below:
1. Equity securities, including exchange-traded funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities
================================================================================
26 | USAA VALUE FUND
================================================================================
exchange or the Nasdaq over-the-counter markets, are valued at the last
sales price or official closing price on the exchange or primary market
on which they trade. Equity securities traded primarily on foreign
securities exchanges or markets are valued at the last quoted sales
price, or the most recently determined official closing price calculated
according to local market convention, available at the time the Fund is
valued. If no last sale or official closing price is reported or
available, the average of the bid and asked prices generally is used.
2. Equity securities trading in various foreign markets may take place on
days when the NYSE is closed. Further, when the NYSE is open, the
foreign markets may be closed. Therefore, the calculation of the Fund's
net asset value (NAV) may not take place at the same time the prices of
certain foreign securities held by the Fund are determined. In most
cases, events affecting the values of foreign securities that occur
between the time of their last quoted sales or official closing prices
and the close of normal trading on the NYSE on a day the Fund's NAV is
calculated will not be reflected in the value of the Fund's foreign
securities. However, the Manager and the Fund's subadviser(s), if
applicable, will monitor for events that would materially affect the
value of the Fund's foreign securities. The Fund's subadviser(s) has
agreed to notify the Manager of significant events it identifies that
would materially affect the value of the Fund's foreign securities. If
the Manager determines that a particular event would materially affect
the value of the Fund's foreign securities, then the Manager, under
valuation procedures approved by the Board, will consider such available
information that it deems relevant to determine a fair value for the
affected foreign securities. In addition, the Fund may use information
from an external vendor or other sources to adjust the foreign market
closing prices of foreign equity securities to reflect what the Fund
believes to be the fair value of the securities as of the close of the
NYSE. Fair valuation of affected foreign equity securities may occur
frequently based on an
================================================================================
NOTES TO FINANCIAL STATEMENTS | 27
================================================================================
assessment that events that occur on a fairly regular basis (such as
U.S. market movements) are significant.
3. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their NAV at the end of each business day.
4. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
5. Repurchase agreements are valued at cost, which approximates market
value.
6. 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(s), if applicable, under valuation procedures approved by the
Board. The effect of fair value pricing is that securities may not be
priced on the basis of quotations from the primary market in which they
are traded and the actual price realized from the sale of a security may
differ materially from the fair value price. Valuing these securities at
fair value is intended to cause the Fund's NAV to be more reliable than
it otherwise would be.
Fair value methods used by the Manager include, but are not limited to,
obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any restrictions
on disposition of the securities, and an evaluation of the forces that
influenced the market in which the securities are purchased and sold.
B. FAIR VALUE MEASUREMENTS -- Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an
================================================================================
28 | USAA VALUE FUND
================================================================================
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. 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.
D. 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.
E. FOREIGN CURRENCY TRANSLATIONS -- The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 29
================================================================================
Since the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the exchange
rate obtained from an independent pricing service on the respective
dates of such transactions.
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Separately, net realized foreign currency gains/losses may arise from sales
of foreign currency, currency gains/losses realized between the trade and
settlement dates on security transactions, and from the difference between
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts received. At
the end of the Fund's fiscal year, these net realized foreign currency
gains/losses are reclassified from accumulated net realized gain/loss to
accumulated undistributed net investment income on the statement of assets
and liabilities as such amounts are treated as ordinary income/loss for tax
purposes. Net unrealized foreign currency exchange gains/losses arise from
changes in the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rate.
F. EXPENSES PAID INDIRECTLY -- A portion of the brokerage commissions that the
Fund pays may be recaptured as a credit that is tracked and used by the
custodian to directly reduce expenses paid by the Fund. In addition,
through arrangements with the Fund's custodian and other banks utilized by
the Fund for cash management purposes, realized credits, if any, generated
from cash balances in the Fund's bank accounts may be used to directly
reduce the Fund's expenses. For the
================================================================================
30 | USAA VALUE FUND
================================================================================
six-month period ended January 31, 2014, brokerage commission recapture
credits reduced the expenses of the Fund Shares by less than $500,
respectively. For the six-month period ended January 31, 2014 there were no
custodian and other bank credits.
G. 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.
H. 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 an interest rate based on
the London Interbank Offered Rate (LIBOR).
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. The facility fees are allocated among the Funds based on their
respective average net assets for the period.
For the six-month period ended January 31, 2014, the Fund paid CAPCO facility
fees of $3,000, which represents 1.4% 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 January 31, 2014.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 31
================================================================================
(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 July 31, 2014,
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 July 31, 2013, the Fund had no pre-enactment or post-enactment capital loss
carryforwards, for federal income tax purposes.
For the six-month period ended January 31, 2014, 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
adjustments to this conclusion are necessary. The statute of limitations on the
Fund's tax return filings generally remain open for the three preceding 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 January 31, 2014, were
$175,041,000 and $90,265,000, respectively.
As of January 31, 2014, the cost of securities, including short-term securities,
for federal income tax purposes, was approximately the same as that reported in
the financial statements.
================================================================================
32 | USAA VALUE FUND
================================================================================
Gross unrealized appreciation and depreciation of investments as of January 31,
2014, were $299,229,000 and $3,807,000, respectively, resulting in net
unrealized appreciation of $295,422,000.
(5) CAPITAL SHARE TRANSACTIONS
At January 31, 2014, there were an unlimited number of shares of capital stock
at no par value authorized for the Fund.
Capital share transactions for the Institutional Shares resulted from purchases
and sales by the affiliated USAA fund-of-funds. Capital share transactions for
all classes were as follows, in thousands:
SIX-MONTH
PERIOD ENDED YEAR ENDED
JANUARY 31, 2014 JULY 31, 2013
------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------
FUND SHARES:
Shares sold 7,367 $140,543 9,639 $156,599
Shares issued from reinvested
dividends 1,424 27,183 456 6,873
Shares redeemed (2,965) (56,138) (5,517) (88,457)
-----------------------------------------------
Net increase from capital
share transactions 5,826 $111,588 4,578 $ 75,015
===============================================
INSTITUTIONAL SHARES:
Shares sold 370 $ 6,979 1,331 $ 20,888
Shares issued from reinvested
dividends 442 8,436 203 3,055
Shares redeemed (1,132) (20,899) (1,880) (30,839)
-----------------------------------------------
Net decrease from capital
share transactions (320) $ (5,484) (346) $ (6,896)
===============================================
ADVISER SHARES:
Shares sold 2 $ 31 3 $ 53
Shares issued from reinvested
dividends -* 3 -* 2
Shares redeemed (7) (124) (5) (81)
-----------------------------------------------
Net decrease from capital
share transactions (5) $ (90) (2) $ (26)
===============================================
*Represents less than 500 shares.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 33
================================================================================
(6) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and affairs of the Fund,
and for directly managing the day-to-day investment of a portion of the
Fund's assets, 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 a portion of the Fund's assets.
The Manager monitors each subadviser's performance through quantitative and
qualitative analysis, and periodically reports 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 subadviser(s). The
allocation for each subadviser could range from 0% to 100% of the Fund's
assets, and the Manager could change the allocations without shareholder
approval.
The investment management fee for the Fund is comprised of a base fee and a
performance adjustment. The Fund's base fee is accrued daily and paid
monthly at an annualized rate of 0.75% of the Fund's average net assets for
the fiscal year.
The performance adjustment is calculated separately for each share class on
a monthly basis by comparing each class's performance to that of the Lipper
Multi-Cap Value Funds Index over the performance period. The Lipper
Multi-Cap Value Funds Index tracks the total return performance of the 30
largest funds in the Lipper Multi-Cap Value Funds category. The performance
period for each class consists of the current month plus the
================================================================================
34 | USAA VALUE FUND
================================================================================
previous 35 months. The following table is utilized to determine
the extent of the performance adjustment:
OVER/UNDER PERFORMANCE ANNUAL ADJUSTMENT RATE
RELATIVE TO INDEX(1) AS A % OF THE FUND'S AVERAGE NET ASSETS(1)
-----------------------------------------------------------------------------
+/- 1.00% to 4.00% +/- 0.04%
+/- 4.01% to 7.00% +/- 0.05%
+/- 7.01% and greater +/- 0.06%
(1)Based on the difference between average annual performance of the
relevant share class of the Fund and its relevant index, rounded to the
nearest basis point (0.01%). Average net assets of the share class are
calculated over a rolling 36-month period.
Each class's annual performance adjustment rate is multiplied by the average
net assets of each respective class over the entire performance period,
which is then multiplied by a fraction, the numerator of which is the number
of days in the month and the denominator of which is 365 (366 in leap
years). The resulting amount is then added to (in the case of
overperformance) or subtracted from (in the case of underperformance) the
base fee.
Under the performance fee arrangement, each class will pay a positive
performance fee adjustment for a performance period whenever the class
outperforms the Lipper Multi-Cap Value Funds Index over that period, even if
the class had overall negative returns during the performance period.
For the six-month period ended January 31, 2014, the Fund incurred total
management fees, paid or payable to the Manager, of $3,510,000, which
included a performance adjustment for the Fund Shares and Institutional
Shares of $55,000 and $28,000, respectively. For the Fund Shares and
Institutional Shares, the performance adjustments were 0.02% and 0.03%,
respectively. The Adviser Shares did not include a performance adjustment
for the Fund for the six-month period ended January 31, 2014.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
================================================================================
B. SUBADVISORY ARRANGEMENT(S) -- The Manager has entered into an investment
subadvisory agreement with Barrow, Hanley, Mewhinney & Strauss, LLC (BHMS),
under which BHMS 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 BHMS a subadvisory fee based on the aggregate average net assets
that BHMS manages in the USAA Value Fund and the USAA Growth & Income Fund
combined, in the annual amount of 0.75% on the first $15 million in assets,
0.55% on assets over $15 million and up to $25 million, 0.45% on assets over
$25 million and up to $100 million, 0.35% on assets over $100 million and up
to $200 million, 0.25% on assets over $200 million and up to $1 billion, and
0.15% on assets over $1 billion. For the six-month period ended January 31,
2014, the Manager incurred subadvisory fees, paid or payable to BHMS, of
$1,196,000.
C. ADMINISTRATION AND SERVICING FEES -- The Manager provides certain
administration and servicing functions for the Fund. For such services, the
Manager receives a fee accrued daily and paid monthly at an annualized rate
of 0.15% of average net assets of the Fund Shares and Adviser Shares, and
0.10% of average net assets of the Institutional Shares. For the six-month
period ended January 31, 2014, the Fund Shares, Institutional Shares, and
Adviser Shares incurred administration and servicing fees, paid or payable
to the Manager, of $519,000, $107,000, and $6,000, respectively.
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 January 31, 2014, the Fund reimbursed the Manager
$13,000 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 had agreed, through December 1, 2013,
to limit the total annual operating expenses of the Fund Shares and the
Adviser Shares to 1.15% and 1.65%, respectively, of
================================================================================
36 | USAA VALUE FUND
================================================================================
their average net assets, excluding extraordinary expenses and before
reductions of any expenses paid indirectly, and to reimburse the Fund Shares
and Adviser Shares for all expenses in excess of those amounts. Effective
December 1, 2013, the Manager terminated this agreement for the Fund Shares
and Adviser Shares.
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. Transfer agent's fees for both the Fund
Shares and Adviser Shares are paid monthly based on an annual charge of $23
per shareholder account plus out-of-pocket expenses. SAS pays a portion of
these fees to certain intermediaries for the administration and servicing of
accounts that are held with such intermediaries. Transfer agent's fees for
Institutional Shares are paid monthly based on a fee accrued daily at an
annualized rate of 0.10% of the Institutional Shares' average net assets,
plus out-of-pocket expenses. For the six-month period ended January 31,
2014, the Fund Shares, Institutional Shares, and Adviser Shares incurred
transfer agent's fees, paid or payable to SAS, of $569,000, $107,000, and
less than $500, respectively.
F. DISTRIBUTION AND SERVICE (12b-1) FEES -- The Fund has adopted a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Adviser
Shares. Under the plan, the Adviser Shares pay fees to USAA Investment
Management Company, the distributor, for distribution and shareholder
services. USAA Investment Management Company pays all or a portion of such
fees to intermediaries that make the Adviser Shares available for investment
by their customers. The fee is accrued daily and paid monthly at an annual
rate of 0.25% of the Adviser Shares' average net assets. Adviser Shares are
offered and sold without imposition of an initial sales charge or a
contingent deferred sales charge. For the six-month period ended January 31,
2014, the Adviser Shares incurred distribution and service (12b-1) fees of
$11,000.
G. UNDERWRITING SERVICES -- USAA Investment Management Company provides
exclusive underwriting and distribution of the Fund's shares
================================================================================
NOTES TO FINANCIAL STATEMENTS | 37
================================================================================
on a continuing best-efforts basis and receives no commissions or fees for
this service.
(7) TRANSACTIONS WITH AFFILIATES
The Fund offers its Institutional Shares for investment by other USAA Funds and
is one of 17 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 January 31, 2014, the Fund
recorded a receivable for capital shares sold of $29,000 for the USAA
fund-of-funds' purchases and redemptions of Institutional Shares. As of January
31, 2014, the USAA fund-of-funds owned the following percentages of the total
outstanding shares of the Fund:
AFFILIATED USAA FUND OWNERSHIP %
-----------------------------------------------------------------------------
USAA Cornerstone Conservative Fund 0.1
USAA Cornerstone Equity Fund 0.4
USAA Target Retirement Income Fund 0.9
USAA Target Retirement 2020 Fund 2.4
USAA Target Retirement 2030 Fund 6.0
USAA Target Retirement 2040 Fund 7.8
USAA Target Retirement 2050 Fund 4.0
USAA Target Retirement 2060 Fund 0.1
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At January 31,
2014, USAA and its affiliates owned 441,000 shares which represents 98.9% of the
Adviser Shares and 0.8% of the Fund.
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.
================================================================================
38 | USAA VALUE FUND
================================================================================
(8) FINANCIAL HIGHLIGHTS -- FUND SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31,
----------------------------------------------------------------------------
2014 2013 2012 2011 2010 2009
----------------------------------------------------------------------------
Net asset value at
beginning of period $ 18.37 $ 14.22 $ 13.74 $ 11.82 $ 10.33 $ 12.45
----------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .08 .21 .23 .14 .13 .19
Net realized and
unrealized gain (loss) 1.03 4.17 .41 1.91 1.50 (2.11)
----------------------------------------------------------------------------
Total from investment
operations 1.11 4.38 .64 2.05 1.63 (1.92)
----------------------------------------------------------------------------
Less distributions from:
Net investment income (.20) (.23) (.16) (.13) (.14) (.20)
Realized capital gains (.55) - - - - -
----------------------------------------------------------------------------
Total distributions (.75) (.23) (.16) (.13) (.14) (.20)
----------------------------------------------------------------------------
Net asset value at end
of period $ 18.73 $ 18.37 $ 14.22 $ 13.74 $ 11.82 $ 10.33
============================================================================
Total return (%)* 6.02 31.15 4.77 17.39 15.82 (15.14)
Net assets at end of
period (000) $754,528 $633,228 $425,071 $585,536 $437,995 $347,492
Ratios to average
net assets:**
Expenses (%)(a) 1.12(b),(c) 1.15 1.15 1.15 1.15 1.15
Expenses, excluding
reimbursements (%)(a) 1.12(b) 1.25 1.31 1.25 1.32 1.41
Net investment income (%) .99(b) 1.40 1.48 1.10 1.16 2.00
Portfolio turnover (%) 10 26 20 22 17 26
* 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 January 31, 2014, average net assets were $687,633,000.
(a) Reflects total operating expenses of the Fund Shares before reductions of any expenses paid
indirectly. The Fund Shares' expenses paid indirectly decreased the expense ratios as follows:
(.00%)(+) (.00%)(+) (.01%) (.01%) (.01%) (.01%)
(+) Represents less than 0.01% of average net assets.
(b) Annualized. The ratio is not necessarily indicative of 12 months of operations.
(c) Prior to December 1, 2013, the Manager had voluntarily agreed to limit the annual expenses of the
Fund Shares to 1.15% of the Fund Shares' average net assets.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 39
================================================================================
(8) FINANCIAL HIGHLIGHTS (CONTINUED) -- INSTITUTIONAL SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31, JULY 31,
----------------------------------------------------------------------------
2014 2013 2012 2011 2010 2009***
----------------------------------------------------------------------------
Net asset value at
beginning of period $ 18.36 $ 14.22 $ 13.75 $ 11.82 $ 10.34 $ 12.42
-------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .11 .25 .21 .18 .18 .18(a)
Net realized and
unrealized gain (loss) 1.00 4.15 .45 1.91 1.47 (2.05)(a)
-------------------------------------------------------------------------
Total from investment
operations 1.11 4.40 .66 2.09 1.65 (1.87)(a)
-------------------------------------------------------------------------
Less distributions from:
Net investment income (.21) (.26) (.19) (.16) (.17) (.21)
Realized capital gains (.55) - - - - -
-------------------------------------------------------------------------
Total distributions (.76) (.26) (.19) (.16) (.17) (.21)
-------------------------------------------------------------------------
Net asset value at end
of period $ 18.71 $ 18.36 $ 14.22 $ 13.75 $ 11.82 $ 10.34
=========================================================================
Total return (%)* 6.03 31.31 4.95 17.74 15.97 (14.73)
Net assets at end of
period (000) $212,999 $214,855 $171,322 $141,668 $87,698 $29,437
Ratios to average
net assets:**
Expenses (%)(c) 1.02(b) 1.01 1.00 .90(d) .90(d) .90(b),(d)
Net investment income (%) 1.11(b) 1.54 1.61 1.35 1.38 2.06(b)
Portfolio turnover (%) 10 26 20 22 17 26
* 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 January 31, 2014, average net assets were $211,514,000.
*** Institutional Shares were initiated on August 1, 2008.
(a) Calculated using average shares.
(b) Annualized. The ratio is not necessarily indicative of 12 months of operations.
(c) Reflects total operating expenses of the Institutional Shares before reductions of any expenses paid
indirectly. The Institutional Shares' expenses paid indirectly decreased the expense ratios as follows:
(.00%)(+) (.00%)(+) (.01%) (.01%) (.01%) (.00%)(+)
(+) Represents less than 0.01% of average net assets.
(d) Prior to December 1, 2010, the Manager had voluntarily agreed to limit the annual expenses of the
Institutional Shares to 0.91% of the Institutional Shares' average net assets.
================================================================================
40 | USAA VALUE FUND
================================================================================
(8) FINANCIAL HIGHLIGHTS (CONTINUED) -- ADVISER SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31, JULY 31,
-----------------------------------------------------
2014 2013 2012 2011***
-----------------------------------------------------
Net asset value at beginning of period $18.29 $14.16 $13.68 $12.07
------------------------------------------------
Income from investment operations:
Net investment income .06 .15 .13 .08(a)
Net realized and unrealized gain 1.01 4.15 .44 1.65(a)
------------------------------------------------
Total from investment operations 1.07 4.30 .57 1.73(a)
------------------------------------------------
Less distributions from:
Net investment income (.13) (.17) (.09) (.12)
Realized capital gains (.55) - - -
------------------------------------------------
Total distributions (.68) (.17) (.09) (.12)
------------------------------------------------
Net asset value at end of period $18.68 $18.29 $14.16 $13.68
================================================
Total return (%)* 5.80 30.63 4.26 14.32
Net assets at end of period (000) $8,319 $8,237 $6,406 $6,161
Ratios to average net assets:**
Expenses (%)(c) 1.48(b),(d) 1.57 1.65 1.65(b)
Expenses, excluding reimbursements (%)(c) 1.48(b) 1.57 1.66 2.00(b)
Net investment income (%) .65(b) .99 .97 .58(b)
Portfolio turnover (%) 10 26 20 22
* 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 January 31, 2014, average net assets were $8,406,000.
*** Adviser Shares were initiated on August 1, 2010.
(a) Calculated using average shares.
(b) Annualized. The ratio is not necessarily indicative of 12 months of operations.
(c) Reflects total operating expenses of the Adviser Shares before reductions of any expenses paid
indirectly. The Adviser Shares' expenses paid indirectly decreased the expense ratios as follows:
(.00%)(+) (.00%)(+) (.01%) (.00%)(+)
(+) Represents less than 0.01% of average net assets.
(d) Prior to December 1, 2013, the Manager had voluntarily agreed to limit the annual expenses of
the Adviser Shares to 1.65% of the Adviser Shares' average net assets.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 41
================================================================================
EXPENSE EXAMPLE
January 31, 2014 (unaudited)
--------------------------------------------------------------------------------
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: direct costs, such
as wire fees, redemption fees, and low balance fees; and indirect costs,
including management fees, transfer agency fees, distribution and service
(12b-1) 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 August 1, 2013, through
January 31, 2014.
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.
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
================================================================================
42 | USAA VALUE FUND
================================================================================
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 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 AUGUST 1, 2013 -
AUGUST 1, 2013 JANUARY 31, 2014 JANUARY 31, 2014
--------------------------------------------------------------
FUND SHARES
Actual $1,000.00 $1,060.20 $5.82
Hypothetical
(5% return before expenses) 1,000.00 1,019.56 5.70
INSTITUTIONAL SHARES
Actual 1,000.00 1,060.30 5.30
Hypothetical
(5% return before expenses) 1,000.00 1,020.06 5.19
ADVISER SHARES
Actual 1,000.00 1,058.00 7.68
Hypothetical
(5% return before expenses) 1,000.00 1,017.74 7.53
* Expenses are equal to the annualized expense ratio of 1.12% for Fund
Shares, 1.02% for Institutional Shares, and 1.48% for Adviser Shares, which
are net of any reimbursements and expenses paid indirectly, multiplied by
the average account value over the period, multiplied by 184 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 6.02% for Fund Shares, 6.03%
for Institutional Shares, and 5.80% for Adviser Shares for the six-month
period of August 1, 2013, through January 31, 2014.
================================================================================
EXPENSE EXAMPLE | 43
================================================================================
TRUSTEES Daniel S. McNamara
Robert L. Mason, Ph.D.
Jefferson C. Boyce
Paul L. McNamara
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
--------------------------------------------------------------------------------
ADMINISTRATOR AND USAA Asset Management Company
INVESTMENT ADVISER P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
UNDERWRITER AND USAA Investment Management Company
DISTRIBUTOR P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
--------------------------------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "My Accounts" on
SELF-SERVICE 24/7 usaa.com select your mutual fund
AT USAA.COM account and either click the link or
select 'I want to...' and select
OR CALL the desired action.
(800) 531-USAA
(8722)
--------------------------------------------------------------------------------
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)
============================================================================
40847-0314 (C)2014, 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 January 31, 2014
By:* /S/ DANIEL J. MAVICO
-----------------------------------------------------------
Signature and Title: Daniel J. Mavico, Assistant Secretary
Date: 03/31/2014
------------------------------
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: 03/31/2014
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 03/31/2014
------------------------------
*Print the name and title of each signing officer under his or her signature.