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: DECEMBER 31
Date of reporting period: JUNE 30, 2014
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED JUNE 30, 2014
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA GLOBAL MANAGED VOLATILITY FUND]
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SEMIANNUAL REPORT
USAA GLOBAL MANAGED VOLATILITY FUND
FUND SHARES o INSTITUTIONAL SHARES
JUNE 30, 2014
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PRESIDENT'S MESSAGE
"...[W]E HAVE BELIEVED FOR SOME TIME THE
ECONOMIC RECOVERY WILL BE MORE GRADUAL [PHOTO OF BROOKS ENGLEHARDT]
THAN THE MARKET'S INITIAL EXPECTATIONS."
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AUGUST 2014
The six-month reporting period was a reminder that nothing should be taken for
granted, especially when it comes to the economy and financial markets. In
January 2014, when the six-month period began, many observers anticipated U.S.
economic growth of more than 3% in 2014. Interest rates were expected to rise
once the U.S. Federal Reserve (the Fed) began tapering (or reducing) its
quantitative easing (QE) asset purchases. The equity market was expected to
become more volatile, as Fed tapering continued. Instead, stock market
volatility remained low, interest rates fell, and U.S. economic growth slowed.
At USAA Asset Management Company, we have believed for some time the economic
recovery will be more gradual than the market's initial expectations. Indeed,
economic growth disappointed many during the reporting period, contracting by
2.9% in the first quarter of 2014. Some attributed the deceleration to the
extreme winter weather, but we are not entirely convinced. For example, in
Canada, where the winter weather was equally harsh, economic growth remained
positive. In the second quarter, economic growth appeared to pick up -
manufacturing data and construction spending improved, for example - suggesting
the economy was getting healthier. Nevertheless, we believe that gross domestic
product growth for 2014 is likely to fall short of the market's expectations at
the beginning of the year.
At the same time, inflationary pressures are increasing. The Fed has a
long-stated inflation target of 2%. By many measures, inflation is at or near
that range. If inflation continues to rise, the Fed may taper its QE asset
purchases more aggressively.
Meanwhile, the U.S. stock market generated positive returns during the reporting
period, with little to no increase in market volatility. International stocks
also generated positive returns. We remain concerned, and are also
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uncertain, if the improving economy can generate the revenue and earnings growth
needed to justify current valuations and serve as a foundation for future price
gains. Valuations will continue to rise, in our opinion, if economic growth
accelerates and profit margins can maintain their current levels. If growth
stalls and profit margins decrease, earnings may disappoint and stocks may trim
their gains. Based on fundamental valuation at the time of this writing, we are
more optimistic about the near-term prospects for international stocks than for
U.S. stocks.
As for interest rates, they declined after the Fed started tapering its QE asset
purchases. By the end of the reporting period, the Fed - which had bought $85
billion of U.S. Treasury securities and mortgage-backed securities every month
during 2013 - had cut its asset purchases by more than half, with $35 billion
slated for purchase in July 2014. Longer-term interest rates, which had been
expected to increase, dropped and bond prices (which tend to move inversely with
rates) increased. We have long believed that, while interest rates would rise
over the longer term, it would be at a much more gradual pace than the market
was expecting.
In the months ahead, we will continue to monitor the direction of interest rates
and central bank policy, as well as the financial markets, corporate earnings,
economic trends, and other factors that could potentially affect your
investments. Assuming the U.S. economy regains its footing and continues to
strengthen, we expect the Fed to end its QE asset purchases by the end of 2014.
We believe that other global central banks are likely to maintain their easy
monetary policies, using rate cuts and/or asset purchases, to boost economic
growth in their countries and to support their financial markets.
On behalf of everyone at USAA Asset Management Company, thank you for allowing
us to help you manage your investments. We appreciate your continued investment
in our family of mutual funds.
Sincerely,
/S/ BROOKS ENGLEHARDT
Brooks Englehardt
President
USAA Asset 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.
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TABLE OF CONTENTS
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FUND OBJECTIVE 1
MANAGER(S) COMMENTARY 2
INVESTMENT OVERVIEW 6
FINANCIAL INFORMATION
Portfolio of Investments 11
Notes to Portfolio of Investments 37
Financial Statements 40
Notes to Financial Statements 44
EXPENSE EXAMPLE 62
ADVISORY AGREEMENT(S) 64
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 GLOBAL MANAGED VOLATILITY FUND (THE FUND) SEEKS TO ATTAIN LONG-TERM
CAPITAL APPRECIATION WHILE ATTEMPTING TO REDUCE VOLATILITY DURING UNFAVORABLE
MARKET CONDITIONS.
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TYPES OF INVESTMENTS
The Fund employs several strategies across multiple asset classes in seeking to
achieve its objective. The Fund's principal strategy is to combine a portfolio
of domestic and foreign equity and debt securities with the use of alternative
investment strategies to provide growth with greater downside risk controls.
The Fund may invest in multiple asset classes including U.S. stocks, non-U.S.
stocks in developed and emerging markets, global real estate securities, and
fixed-income securities. The Fund will move its allocation between these asset
classes to take advantage of opportunities and to manage risk.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Asset Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
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FUND OBJECTIVE | 1
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MANAGER(S) COMMENTARY ON THE FUND
USAA Asset Management Company Quantitative Management Associates LLC
JOHN P. TOOHEY, CFA* JACOB POZHARNY, Ph.D.
WASIF A. LATIF JOHN VAN BELLE, Ph.D.
R. MATTHEW FREUND, CFA*
ARNOLD J. ESPE, CFA QS Investors, LLC
JULIANNE BASS, CFA*
DAN DENBOW, CFA* ROBERT WANG
RUSSELL SHTERN, CFA
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o HOW DID THE USAA GLOBAL MANAGED VOLATILITY FUND (THE FUND) PERFORM DURING
THE REPORTING PERIOD?
The Fund has two share classes: Fund Shares and Institutional Shares. For
the six-month reporting period ended June 30, 2014, the Fund Shares and
Institutional Shares had a total return of 2.69% and 2.78%, respectively.
This compares to a total return of 6.18% for the MSCI All-Country World
Index and 3.93% for the Barclays U.S. Aggregate Bond Index, the Fund's
benchmarks.
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
subadvisers. QS Investors, LLC (QS) and Quantitative Management Associates
LLC (QMA) are subadvisers to the Fund. The investment adviser and each
subadviser provide day-to-day discretionary management for a portion of the
Fund's assets.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Refer to page 7 for benchmark definitions.
*Per the prospectus dated May 1, 2014, this portfolio manager no longer is a
co-manager of the Fund.
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2 | USAA GLOBAL MANAGED VOLATILITY FUND
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o WHAT FACTORS HELPED AND HURT FUND PERFORMANCE?
The Fund's objective is to provide exposure to the long-term upside of the
global stock markets and at the same time attempt to smooth volatility and
manage the risk of serious losses. While the Fund indeed produced a
positive total return with below-average volatility during the first half,
it fell short of its benchmark returns due to the impact of its hedging
strategy. This strategy, which is designed to help cushion the impact of
large stock market sell-offs, detracted from performance at a time of
strong returns for global stocks. However, we continue to view the hedging
strategy as a way to protect against the potential for unexpected downturns
in the global stock markets, and we believe the substantial increase in
U.S. stock market valuations warrants continued hedging in the portfolio.
We believe this hedging strategy is essential to our goal of limiting the
Fund's share price volatility over time.
The Fund's holdings in the global stock and bond markets delivered positive
performance across the board during the past six months.
The Fund's domestic stock allocation added value in the first half of the
year, as the U.S. market produced a healthy gain as a result of improving
economic growth and hearty investor risk appetites. The domestic stock
portfolio - which is managed by QS - outperformed the Fund's benchmarks
during the reporting period. The Fund's domestic allocation is invested
entirely in large-cap stocks. The Fund did not hold any small-cap stocks
during the first six months of 2014, based on our belief that the asset
class has become overvalued following its strong performance in 2013.
The Fund's substantial developed-market international stock allocation
incorporates exchange-traded funds (ETFs), as well as a portfolio of
individual stocks managed by QMA. QMA generated a positive absolute return
and outpaced its benchmark by a wide margin, which aided Fund performance.
The Fund's position in an ETF linked to European stocks also was a plus
given that the region outperformed the broader international markets.
However, the Fund's holding in an ETF linked to the German stock market
detracted from returns. At USAA Asset Management Company, we continue to
believe the foreign markets in general, and Europe in particular, are a
source of opportunity at a
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MANAGER(S) COMMENTARY ON THE FUND | 3
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time in which U.S. stocks are trading above longer-term averages based on
many valuation metrics.
The Fund's position in the emerging markets, which we achieve via
broad-based and individual-country ETFs, was an additional positive for Fund
performance. Signs of stabilizing growth trends in large economies such as
China, India, and Brazil led to renewed investor interest in this market
segment. Within the Fund's emerging-market allocation, we added quite a bit
of value through our decision to target ETFs that focus on specific
countries and market segments. We generated substantial outperformance
relative to the broader asset class via ETFs that are invested in small-cap
stocks and a select group of specific countries that includes India, the
Philippines, and Turkey. The Fund continues to hold a sizeable position in
the emerging markets, as we believe the asset class remains undervalued in
light of the faster growth, lower government debt, and favorable
demographics relative to the developed markets.
The Fund also holds a modest allocation to bonds in order to generate
income, improve portfolio diversification, and achieve a measure of
defensiveness against financial-market volatility. The Fund's bond
portfolio outpaced the broader bond market in the first half of 2014 thanks
to robust individual security selection. Instead of attempting to generate
outperformance by taking on interest-rate risk, we seek to do so through
individual security selection in the more credit-sensitive areas of the
market - an approach that worked well in the past six months.
o WHAT IS YOUR OUTLOOK FOR THE ECONOMY AND FINANCIAL MARKETS?
We believe the renewed strength in market segments that lagged in 2013-
such as bonds, gold stocks, and emerging market stocks - helps illustrate
the value of our steady approach. Rather than trying to chase performance
in whatever the "hot" market segment happens to be at any given time, we
build well-diversified portfolios that are designed to outperform over the
long term.
While stocks and bonds both performed very well in the first half,
investors now face the challenge of determining where the markets go from
here. On the plus side, we see little on the horizon to disrupt key
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4 | USAA GLOBAL MANAGED VOLATILITY FUND
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pillars of market performance, including the gradual economic expansion,
favorable central bank policies, and the unattractive return potential of
the lowest-risk investments. At the same time, it's important to keep in
mind that the financial-market strength of the past five years has
coincided with a massive expansion of the U.S. Federal Reserve's (the Fed)
balance sheet. Now that the Fed is tapering its quantitative easing policy,
it may become more difficult for the U.S. markets to maintain their upward
trajectories.
Despite this potential headwind, recent market performance indicates a high
degree of complacency among investors. Additionally, U.S. stocks have moved
to slightly overvalued levels. Together with the strong stock market return
of the first half of the year - and indeed, the past five years - we
believe this raises the odds that the favorable performance trends of the
first half may be vulnerable to unexpected developments.
Our approach to this investment environment is to keep a close eye on the
potential risks rather than attempting to chase incremental returns in
market segments that no longer offer value. Instead, we continue to use our
diversified, global approach to identify areas of the market that offer the
combination of strong fundamentals and attractive valuations, while tilting
away from those that no longer offer a compelling risk-return profile. We
believe this long-term, value-driven methodology will be critical to
generating outperformance in the second half of the year and beyond.
Thank you for your investment in the Fund.
Exchange-traded funds (ETFs) are subject to risks similar to those of
stocks. Investment returns may fluctuate and are subject to market
volatility, so that an investor's shares, when redeemed or sold, may be
worth more or less than their original cost. o Alternative investments
carry specific investor qualifications which can include high income and
net-worth requirements as well as relatively high investment minimums. They
are complex investment vehicles, generally carry high costs, substantial
risks, and may be highly volatile. There is often limited (or even
non-existent) liquidity and a lack of transparency regarding the underlying
assets. o Diversification is a technique intended to help reduce risk and
does not guarantee a profit or prevent a loss. o Foreign investing is
subject to additional risks, such as currency fluctuations, market
illiquidity, and political instability. Emerging market countries are most
volatile. Emerging market countries are less diverse and mature than other
countries and tend to be politically less stable. o As interest rates rise,
existing bond prices generally fall; given the historically low interest
rate environment, risks associated with rising interest rates may be
heightened.
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MANAGER(S) COMMENTARY ON THE FUND | 5
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INVESTMENT OVERVIEW
USAA GLOBAL MANAGED VOLATILITY FUND SHARES (FUND SHARES) (Ticker Symbol: UGMVX)
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6/30/14 12/31/13*
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Net Assets $15.0 Million $10.8 Million
Net Asset Value Per Share $11.44 $11.14
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AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/14
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12/31/13 - 6/30/14** SINCE INCEPTION 7/12/13**
2.69% 9.48%
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EXPENSE RATIOS AS OF 12/31/13***
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BEFORE REIMBURSEMENT 1.54% AFTER REIMBURSEMENT 1.30%
(Includes acquired fund fees and expenses of 0.20%)
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.
*The Fund commenced operations on July 12, 2013.
**Total returns for periods of less than one year are not annualized. This
return is cumulative.
***The expense ratios represent the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated May 1, 2014, and are
calculated as a percentage of average net assets. USAA Asset Management Company
(the Manager) has agreed, through May 1, 2015, to make payments or waive
management, administration, and other fees to limit the expenses of the Fund so
that the total annual operating expenses of the Fund Shares (exclusive of
commission recapture, expense offset arrangements, acquired fund fees and
expenses, and extraordinary expenses) do not exceed an annual rate of 1.10% of
the Fund Shares' average net assets. This reimbursement arrangement may not be
changed or terminated during this time period without approval of the Fund's
Board of Trustees and may be changed or terminated by the Manager at any time
after May 1, 2015. These expense ratios may differ from the expense ratios
disclosed in the Financial Highlights, which excludes acquired fund fees and
expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions, if any. 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 (including
capital gains distributions), redemption of shares, or reinvested net investment
income.
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6 | USAA GLOBAL MANAGED VOLATILITY FUND
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
MSCI ALL-COUNTRY USAA GLOBAL MANAGED BARCLAYS U.S. AGGREGATE
WORLD INDEX VOLATILITY FUND SHARES BOND INDEX
7/31/2013 $10,000.00 $10,000.00 $10,000.00
8/31/2013 9,791.66 9,808.80 9,948.88
9/30/2013 10,297.41 10,181.64 10,043.07
10/31/2013 10,711.29 10,439.77 10,124.27
11/30/2013 10,862.98 10,544.93 10,086.36
12/31/2013 11,050.38 10,660.87 10,029.36
1/31/2014 10,608.36 10,316.35 10,177.55
2/28/2014 11,120.83 10,660.87 10,231.66
3/31/2014 11,170.27 10,699.15 10,214.23
4/30/2014 11,276.61 10,756.57 10,300.43
5/31/2014 11,516.46 10,861.84 10,417.70
6/30/2014 11,733.28 10,947.97 10,423.09
[END CHART]
Data from 7/31/13 to 6/30/14.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Global Managed Volatility Fund Shares to the following benchmarks:
o The MCSI All-Country World Index is a free float-adjusted market
capitalization weighted index that is designed to measure the equity market
performance of developed and emerging markets.
o The Barclays U.S. Aggregate Bond Index is an unmanaged index of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index.
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
indexes does not reflect the deduction of any fees or expenses.
*The performance of the Barclays U.S. Aggregate Bond Index and the MCSI
All-Country World Index is calculated from the end of the month, July 31, 2013,
while the Fund Shares initially invested in securities on July 15, 2013. There
may be a slight variation of performance numbers because of this difference.
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INVESTMENT OVERVIEW | 7
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USAA GLOBAL MANAGED VOLATILITY FUND INSTITUTIONAL SHARES (INSTITUTIONAL SHARES)
(Ticker Symbol: UGOFX)
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6/30/14 12/31/13
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Net Assets $305.0 Million $343.0 Million
Net Asset Value Per Share $11.47 $11.16
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AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/14
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12/31/13 - 6/30/14* 1 YEAR 5 YEAR SINCE INCEPTION 7/31/08
2.78% 12.79% 7.68% 4.44%
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EXPENSE RATIO AS OF 12/31/13**
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1.02%
(Includes acquired fund fees and expenses of 0.20%)
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**The expense ratio represents the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated May 1, 2014, and is
calculated as a percentage of average net assets. This expense ratio may differ
from the expense ratio disclosed in the Financial Highlights, which excludes
acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions, if any. 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 (including
capital gains distributions), redemption of shares, or reinvested net investment
income.
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.
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8 | USAA GLOBAL MANAGED VOLATILITY FUND
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
BARCLAYS U.S. USAA GLOBAL MANAGED
MSCI ALL-COUNTRY AGGREGATE BOND VOLATILITY FUND
WORLD INDEX INDEX INSTITUTIONAL SHARES
7/31/2008 $10,000.00 $10,000.00 $10,000.00
8/31/2008 9,784.46 10,094.91 10,100.00
9/30/2008 8,561.59 9,959.32 9,260.00
10/31/2008 6,865.11 9,724.23 8,820.00
11/30/2008 6,414.09 10,040.76 8,450.00
12/31/2008 6,646.55 10,415.37 8,671.84
1/31/2009 6,078.68 10,323.47 8,097.08
2/28/2009 5,483.51 10,284.50 7,542.48
3/31/2009 5,935.18 10,427.47 7,865.16
4/30/2009 6,635.81 10,477.33 8,389.50
5/31/2009 7,296.99 10,553.32 8,853.34
6/30/2009 7,256.08 10,613.35 8,934.01
7/31/2009 7,894.81 10,784.54 9,407.94
8/31/2009 8,177.17 10,896.20 9,599.52
9/30/2009 8,552.32 11,010.66 9,932.28
10/31/2009 8,420.15 11,065.03 9,821.36
11/30/2009 8,766.46 11,208.28 10,133.95
12/31/2009 8,948.00 11,033.08 10,310.56
1/31/2010 8,561.29 11,201.62 10,020.12
2/28/2010 8,670.35 11,243.45 10,175.71
3/31/2010 9,228.14 11,229.63 10,528.38
4/30/2010 9,243.67 11,346.52 10,600.99
5/31/2010 8,359.22 11,442.00 10,123.85
6/30/2010 8,109.54 11,621.43 9,729.68
7/31/2010 8,769.40 11,745.42 10,082.35
8/31/2010 8,462.84 11,896.55 9,688.19
9/30/2010 9,272.44 11,909.23 10,227.57
10/31/2010 9,607.56 11,951.63 10,331.30
11/30/2010 9,393.79 11,882.94 10,227.57
12/31/2010 10,081.68 11,754.80 10,555.03
1/31/2011 10,239.89 11,768.48 10,607.34
2/28/2011 10,538.07 11,797.92 10,806.09
3/31/2011 10,527.55 11,804.44 10,858.40
4/30/2011 10,958.25 11,954.28 11,067.62
5/31/2011 10,722.70 12,110.29 11,004.85
6/30/2011 10,553.74 12,074.83 10,921.16
7/31/2011 10,381.92 12,266.44 10,858.40
8/31/2011 9,623.53 12,445.65 10,178.44
9/30/2011 8,714.95 12,536.18 9,676.32
10/31/2011 9,648.69 12,549.65 10,251.67
11/30/2011 9,359.86 12,538.76 10,324.89
12/31/2011 9,340.95 12,676.57 10,196.48
1/31/2012 9,884.10 12,787.88 10,569.39
2/29/2012 10,381.40 12,784.95 10,867.72
3/31/2012 10,450.43 12,714.90 10,878.37
4/30/2012 10,330.85 12,855.86 10,771.83
5/31/2012 9,404.60 12,972.18 10,164.51
6/30/2012 9,869.09 12,977.27 10,462.84
7/31/2012 10,004.19 13,156.26 10,526.77
8/31/2012 10,221.72 13,164.86 10,707.90
9/30/2012 10,543.66 13,182.98 10,931.65
10/31/2012 10,473.39 13,208.91 10,889.03
11/30/2012 10,607.32 13,229.75 10,974.26
12/31/2012 10,847.58 13,210.92 11,218.62
1/31/2013 11,347.31 13,118.52 11,601.58
2/28/2013 11,345.54 13,184.27 11,432.63
3/31/2013 11,550.56 13,194.80 11,455.15
4/30/2013 11,883.03 13,328.31 11,657.90
5/31/2013 11,850.43 13,090.51 11,669.16
6/30/2013 11,504.05 12,888.02 11,466.42
7/31/2013 12,054.78 12,905.64 11,838.12
8/31/2013 11,803.63 12,839.67 11,567.79
9/30/2013 12,413.30 12,961.22 12,007.07
10/31/2013 12,912.22 13,066.01 12,311.19
11/30/2013 13,095.08 13,017.09 12,435.09
12/31/2013 13,321.00 12,943.53 12,583.66
1/31/2014 12,788.15 13,134.78 12,166.46
2/28/2014 13,405.92 13,204.61 12,583.66
3/31/2014 13,465.52 13,182.12 12,640.04
4/30/2014 13,593.71 13,293.36 12,696.42
5/31/2014 13,882.84 13,444.71 12,831.72
6/30/2014 14,144.22 13,451.66 12,933.20
[END CHART]
Data since Fund inception 7/31/08 to 6/30/14.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Global Managed Volatility Fund Institutional Shares to the benchmarks
listed above (see page 7 for benchmark definitions).
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
indexes does not reflect the deduction of any fees or expenses.
================================================================================
INVESTMENT OVERVIEW | 9
================================================================================
o TOP 10 EQUITY HOLDINGS o
AS OF 6/30/14
(% of Net Assets)
iShares MSCI Germany ETF* ................................................ 8.8%
iShares Core MSCI Emerging Markets ETF* .................................. 7.5%
iShares MSCI EAFE ETF* ................................................... 7.2%
WisdomTree Emerging Markets SmallCap Dividend Fund* ...................... 3.7%
iShares MSCI EMU Index Fund* ............................................. 3.0%
iShares MSCI Turkey ETF* ................................................. 2.1%
iShares MSCI South Korea Capped ETF* ..................................... 1.9%
iShares Core MSCI EAFE ETF* .............................................. 1.8%
Apple, Inc. .............................................................. 1.1%
SPDR S&P Emerging Markets SmallCap ETF* .................................. 0.9%
o ASSET ALLOCATION** - 6/30/14 o
[PIE CHART OF ASSET ALLOCATION]
COMMON STOCKS 52.1%
EXCHANGE-TRADED FUNDS* 38.6%
CORPORATE OBLIGATIONS 2.9%
COMMERCIAL MORTGAGE SECURITIES 2.3%
MONEY MARKET INSTRUMENTS 1.0%
EURODOLLAR AND YANKEE OBLIGATIONS 0.6%
PREFERRED STOCKS 0.1%
[END CHART]
* The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set
forth in the Investment Company Act of 1940, as amended, that would
otherwise be applicable.
** Excludes futures and options.
Percentages are of 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 11-36.
================================================================================
10 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
PORTFOLIO OF INVESTMENTS
June 30, 2014 (unaudited)
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
EQUITY SECURITIES (90.8%)
COMMON STOCKS (52.1%)
CONSUMER DISCRETIONARY (5.5%)
-----------------------------
ADVERTISING (0.1%)
800 Dentsu, Inc. $ 32
5,735 JC Decaux S.A. 214
4,144 REA Group Ltd. 167
---------
413
---------
APPAREL RETAIL (0.0%)
2,700 Foot Locker, Inc. 137
---------
APPAREL, ACCESSORIES & LUXURY GOODS (0.3%)
215 Christian Dior S.A. 43
3,900 Hanesbrands, Inc. 384
4,040 Pandora A/S 310
191 Swatch Group AG 21
1,800 VF Corp. 113
---------
871
---------
AUTO PARTS & EQUIPMENT (0.3%)
2,800 BorgWarner, Inc. 183
613 Continental AG 142
4,800 Gentex Corp. 140
2,600 Lear Corp. 232
1,000 NGK Spark Plug Co. Ltd. 28
700 Toyota Industries Corp. 36
2,332 Valeo S.A. 313
---------
1,074
---------
AUTOMOBILE MANUFACTURERS (0.7%)
1,375 Bayerische Motoren Werke AG 175
7,689 Daimler AG 720
3,615 Fiat S.p.A.* 36
13,500 Fuji Heavy Industries Ltd. 374
20,786 Peugeot S.A.* 307
252 Renault S.A. 23
1,600 Suzuki Motor Corp. 50
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
5,900 Toyota Motor Corp. $ 354
129 Volkswagen AG 33
---------
2,072
---------
AUTOMOTIVE RETAIL (0.3%)
700 Advance Auto Parts, Inc. 95
700 AutoZone, Inc.* 375
2,200 O'Reilly Automotive, Inc.* 331
900 USS Co. Ltd. 15
---------
816
---------
BROADCASTING (0.1%)
119,347 ITV plc 364
181 RTL Group S.A. 20
---------
384
---------
CABLE & SATELLITE (0.4%)
15,000 Comcast Corp. "A" 805
2,800 Time Warner Cable, Inc. 413
---------
1,218
---------
CASINOS & GAMING (0.3%)
5,400 Las Vegas Sands Corp. 411
4,000 MGM China Holdings Ltd. 14
10,900 MGM Resorts International* 288
9,600 Sands China Ltd. 73
1,300 Wynn Resorts Ltd. 270
---------
1,056
---------
COMPUTER & ELECTRONICS RETAIL (0.1%)
5,100 Best Buy Co., Inc. 158
---------
CONSUMER ELECTRONICS (0.3%)
3,400 Harman International Industries, Inc. 365
33,200 Panasonic Corp. 404
2,800 Sony Corp. 47
---------
816
---------
DEPARTMENT STORES (0.2%)
4,200 Macy's, Inc. 244
3,679 Next plc 407
1,000 Takashimaya Co. Ltd. 10
---------
661
---------
EDUCATION SERVICES (0.1%)
3,400 DeVry, Inc. 144
342 Graham Holdings Co. "B" 245
---------
389
---------
================================================================================
12 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
FOOTWEAR (0.0%)
3,000 Yue Yuen Industrial Holdings Ltd. $ 10
---------
GENERAL MERCHANDISE STORES (0.1%)
3,400 Big Lots, Inc.* 155
---------
HOME IMPROVEMENT RETAIL (0.3%)
9,600 Home Depot, Inc. 777
5,000 Lowe's Companies, Inc. 240
---------
1,017
---------
HOMEBUILDING (0.1%)
500 Iida Group Holdings Co. Ltd. 8
10,339 Persimmon plc 225
13,000 Sekisui Chemical Co. Ltd. 150
2,300 Sekisui House Ltd. 32
---------
415
---------
HOMEFURNISHING RETAIL (0.3%)
28,000 Aaron's, Inc. 998
---------
HOTELS, RESORTS & CRUISE LINES (0.4%)
664 Accor S.A. 35
13,000 Hilton Worldwide Holdings, Inc.* 303
7,900 Marriott International, Inc. "A" 506
3,300 Starwood Hotels & Resorts Worldwide, Inc. 267
37,622 TUI Travel plc 256
---------
1,367
---------
HOUSEHOLD APPLIANCES (0.0%)
857 Electrolux AB "B" 22
---------
INTERNET RETAIL (0.1%)
200 Netflix, Inc.* 88
200 Priceline Group, Inc.* 241
---------
329
---------
LEISURE FACILITIES (0.0%)
200 Oriental Land Co. Ltd. 34
---------
LEISURE PRODUCTS (0.0%)
700 NAMCO BANDAI Holdings, Inc. 17
300 Shimano, Inc. 33
---------
50
---------
MOVIES & ENTERTAINMENT (0.7%)
11,800 Time Warner, Inc. 829
2,200 Viacom, Inc. "B" 191
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
13,800 Walt Disney Co. $ 1,183
---------
2,203
---------
PUBLISHING (0.0%)
453 Lagardere SCA 15
---------
RESTAURANTS (0.2%)
2,700 Brinker International, Inc. 132
1,500 McDonald's Corp. 151
4,400 Yum! Brands, Inc. 357
---------
640
---------
TIRES & RUBBER (0.1%)
7,200 Bridgestone Corp. 252
---------
Total Consumer Discretionary 17,572
---------
CONSUMER STAPLES (4.2%)
-----------------------
AGRICULTURAL PRODUCTS (0.2%)
7,000 Archer-Daniels-Midland Co. 309
185,000 Golden Agri-Resources Ltd. 82
128,000 Wilmar International Ltd. 328
---------
719
---------
BREWERS (0.2%)
3,348 Anheuser-Busch InBev N.V. 384
1,200 Asahi Group Holdings Ltd. 38
1,148 Carlsberg A.S. "B" 124
3,200 Kirin Holdings Co. Ltd. 46
3,200 Molson Coors Brewing Co. "B" 237
---------
829
---------
DISTILLERS & VINTNERS (0.1%)
5,246 Diageo plc 168
---------
DRUG RETAIL (0.2%)
6,900 CVS Caremark Corp. 520
3,600 Walgreen Co. 267
---------
787
---------
FOOD RETAIL (0.4%)
2,447 Casino Guichard-Perrachon S.A. 324
57,008 J Sainsbury plc 308
10,422 Koninklijke Ahold N.V. 196
6,700 Safeway, Inc. 230
1,900 Seven & i Holdings Co. Ltd. 80
6,046 Wm Morrison Supermarkets plc 19
---------
1,157
---------
================================================================================
14 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (0.7%)
5,000 Colgate-Palmolive Co. $ 341
1,716 Henkel AG & Co. KGaA 173
4,600 Kimberly-Clark Corp. 511
12,300 Procter & Gamble Co. 967
2,417 Reckitt Benckiser Group plc 211
---------
2,203
---------
HYPERMARKETS & SUPER CENTERS (0.3%)
7,998 Carrefour S.A. 295
1,400 Costco Wholesale Corp. 161
5,600 Wal-Mart Stores, Inc. 420
4,252 Wesfarmers Ltd. 168
---------
1,044
---------
PACKAGED FOODS & MEAT (0.8%)
3,966 Kraft Foods Group, Inc. 238
1,100 Mead Johnson Nutrition Co. 102
9,935 Nestle S.A. 770
3,000 NH Foods Ltd. 59
11,512 Suedzucker AG 232
7,900 Tyson Foods, Inc. "A" 297
9,445 Unilever N.V. 413
12,097 Unilever plc 549
---------
2,660
---------
SOFT DRINKS (0.5%)
11,200 Coca-Cola Co. 475
2,800 Dr. Pepper Snapple Group, Inc. 164
1,300 Monster Beverage Corp.* 92
9,100 PepsiCo, Inc. 813
---------
1,544
---------
TOBACCO (0.8%)
12,500 Altria Group, Inc. 524
8,098 British American Tobacco plc 482
8,700 Japan Tobacco, Inc. 317
4,600 Lorillard, Inc. 281
10,300 Philip Morris International, Inc. 868
---------
2,472
---------
Total Consumer Staples 13,583
---------
ENERGY (5.3%)
-------------
COAL & CONSUMABLE FUELS (0.0%)
2,500 CONSOL Energy, Inc. 115
---------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
INTEGRATED OIL & GAS (2.4%)
424 BG Group plc $ 9
113,678 BP plc 1,002
7,400 Chevron Corp. 966
9,441 ENI S.p.A. 258
23,800 Exxon Mobil Corp. 2,396
2,900 Hess Corp. 287
6,000 Occidental Petroleum Corp. 616
599 OMV AG 27
11,167 Royal Dutch Shell plc "A" 462
10,479 Royal Dutch Shell plc "B" 456
10,115 Statoil ASA 311
13,284 Total S.A. 960
---------
7,750
---------
OIL & GAS DRILLING (0.4%)
3,300 Helmerich & Payne, Inc. 383
9,400 Nabors Industries Ltd. 276
6,200 Patterson-UTI Energy, Inc. 217
1,448 Transocean Ltd.* 65
3,500 Unit Corp.* 241
---------
1,182
---------
OIL & GAS EQUIPMENT & SERVICES (0.6%)
5,700 Baker Hughes, Inc. 424
1,500 FMC Technologies, Inc.* 92
3,900 Halliburton Co. 277
8,800 RPC, Inc. 207
8,000 Schlumberger Ltd. 943
---------
1,943
---------
OIL & GAS EXPLORATION & PRODUCTION (1.7%)
1,600 Anadarko Petroleum Corp. 175
3,100 Apache Corp. 312
12,800 Chesapeake Energy Corp. 398
800 Cimarex Energy Co. 115
16,800 ConocoPhillips 1,440
2,700 Devon Energy Corp. 214
7,700 EOG Resources, Inc. 900
3,200 EQT Corp. 342
3,400 INPEX Corp. 52
8,000 Newfield Exploration Co.* 354
1,100 Pioneer Natural Resources Co. 253
17,700 SandRidge Energy, Inc.* 126
1,400 SM Energy Co. 118
================================================================================
16 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
4,000 Southwestern Energy Co.* $ 182
2,300 Whiting Petroleum Corp.* 184
2,523 Woodside Petroleum Ltd. 98
---------
5,263
---------
OIL & GAS REFINING & MARKETING (0.2%)
63 Delek Group Ltd. 26
400 Idemitsu Kosan Co. Ltd. 9
7,046 Neste Oil Oyj 137
700 Showa Shell Sekiyu K.K. 8
8,600 Valero Energy Corp. 431
---------
611
---------
Total Energy 16,864
---------
FINANCIALS (10.2%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (0.5%)
41,086 3i Group plc 283
1,000 Affiliated Managers Group, Inc.* 205
2,000 Ameriprise Financial, Inc. 240
1,000 BlackRock, Inc. 320
6,445 Schroders plc 276
4,200 T. Rowe Price Group, Inc. 355
---------
1,679
---------
CONSUMER FINANCE (0.3%)
2,600 American Express Co. 247
6,800 Capital One Financial Corp. 562
2,800 Discover Financial Services 173
---------
982
---------
DIVERSIFIED BANKS (3.5%)
68,000 Aozora Bank Ltd. 224
22,246 Australia and New Zealand Banking Group Ltd. 699
2,044 Banco Bilbao Vizcaya Argentaria S.A. 26
20,990 Banco Santander S.A. 219
44,637 Bank Hapoalim B.M. 258
49,300 Bank of America Corp. 758
455 BNP Paribas S.A. 31
14,000 BOC Hong Kong Holdings Ltd. 41
18,210 Citigroup, Inc. 858
5,600 Comerica, Inc. 281
11,005 Commonwealth Bank of Australia 839
21,969 Credit Agricole S.A. 310
6,000 DBS Group Holdings Ltd. 81
21,274 DnB NOR ASA 389
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
3,400 Hang Seng Bank Ltd. $ 56
48,525 HSBC Holdings plc 492
3,669 Intesa Sanpaolo 10
17,000 JPMorgan Chase & Co. 980
18,178 Lloyds Banking Group plc* 23
107,900 Mitsubishi UFJ Financial Group, Inc. 661
237,200 Mizuho Financial Group, Inc. 487
927 National Australia Bank Ltd. 29
21,542 Natixis 138
16,082 Nordea Bank AB 227
10,000 Oversea-Chinese Banking Corp. Ltd. 77
29,427 Skandinaviska Enskilda Banken "A" 393
5,000 Sumitomo Mitsui Financial Group, Inc. 209
1,975 Svenska Handelsbanken AB "A" 97
3,329 Swedbank AB "A" 88
29,800 Wells Fargo & Co. 1,566
23,517 Westpac Banking Corp. 751
---------
11,298
---------
DIVERSIFIED CAPITAL MARKETS (0.0%)
1,055 Investec plc 9
1,076 UBS AG 20
---------
29
---------
DIVERSIFIED REAL ESTATE ACTIVITIES (0.1%)
2,000 Daiwa House Industry Co. Ltd. 42
5,500 Henderson Land Development Co. Ltd. 32
4,500 St. Joe Co.* 114
4,000 Wheelock & Co. Ltd. 17
---------
205
---------
INVESTMENT BANKING & BROKERAGE (0.5%)
14,200 Charles Schwab Corp. 382
13,200 E*Trade Financial Corp.* 281
2,000 Goldman Sachs Group, Inc. 335
5,500 Lazard Ltd. "A" 284
1,290 Macquarie Group Ltd. 72
3,300 Morgan Stanley 107
---------
1,461
---------
LIFE & HEALTH INSURANCE (0.6%)
27,864 AEGON N.V. 243
2,864 CNP Assurances 60
3,000 Lincoln National Corp. 154
19,426 Old Mutual plc 66
================================================================================
18 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
11,000 Principal Financial Group, Inc. $ 555
1,100 Prudential Financial, Inc. 98
13,610 Prudential plc 312
1,265 Swiss Life Holding AG 300
---------
1,788
---------
MULTI-LINE INSURANCE (0.3%)
874 Ageas 35
2,133 Allianz SE 356
190 Baloise Holdings AG 22
5,028 Sampo Oyj "A" 254
79,821 Unipolsai Spa 257
585 Zurich Financial Services AG 176
---------
1,100
---------
MULTI-SECTOR HOLDINGS (0.7%)
10,600 Berkshire Hathaway, Inc. "B"* 1,341
16,385 Industrivarden AB "C" 324
11,297 Investor AB "B" 424
534 Kinnevik Investment AB "B" 23
---------
2,112
---------
OTHER DIVERSIFIED FINANCIAL SERVICES (0.0%)
5,200 ORIX Corp. 86
---------
PROPERTY & CASUALTY INSURANCE (1.0%)
3,400 ACE Ltd. 353
12,900 Allied World Assurance Co. 490
4,600 Arch Capital Group Ltd.* 264
6,900 Aspen Insurance Holdings Ltd. 313
7,200 Hanover Insurance Group, Inc. 455
41,952 Insurance Australia Group Ltd. 231
28,100 Old Republic International Corp. 465
2,700 Tokio Marine Holdings, Inc. 89
600 Travelers Companies, Inc. 56
7,900 W.R. Berkley Corp. 366
---------
3,082
---------
REAL ESTATE DEVELOPMENT (0.0%)
5,000 Cheung Kong Holdings Ltd. 89
14,000 Sino Land Co. 23
---------
112
---------
REAL ESTATE OPERATING COMPANIES (0.1%)
1,179 Deutsche Wohnen AG 25
57,000 Hysan Development Co. Ltd. 268
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
4,040 Immofinanz AG $ 14
4,600 Swire Properties Ltd. 14
---------
321
---------
REAL ESTATE SERVICES (0.2%)
13,800 CBRE Group, Inc. "A"* 442
2,300 Jones Lang LaSalle, Inc. 291
---------
733
---------
REGIONAL BANKS (0.9%)
18,700 Associated Banc Corp. 338
1,468 Bank of Queensland Ltd. 17
5,000 Bank of Yokohama Ltd. 29
1,904 Bendigo and Adelaide Bank Ltd. 22
3,000 Chiba Bank Ltd. 21
1,700 First Citizens BancShares, Inc. "A" 417
3,000 Fukuoka Financial Group, Inc. 14
11,100 Fulton Financial Corp. 138
2,000 Hachijuni Bank Ltd. 12
18,500 KeyCorp 265
7,100 PNC Financial Services Group, Inc. 632
15,900 Popular, Inc.* 543
8,100 Resona Holdings, Inc. 47
2,000 Shizuoka Bank Ltd. 22
12,700 SunTrust Banks, Inc. 509
---------
3,026
---------
REINSURANCE (0.6%)
1,700 Alleghany Corp.* 745
237 Hannover Rueck SE 21
804 Muenchener Rueckversicherungs-Gesellschaft AG 178
4,200 PartnerRe Ltd. 459
616 SCOR SE 21
4,733 Swiss Re AG 421
---------
1,845
---------
REITs - DIVERSIFIED (0.1%)
37,000 BGP Holdings plc, acquired 8/06/2009; cost: $0*(b),(c),(d) -
4,002 British Land Co. plc 48
22,320 Dexus Property Group 23
86 Gecina S.A. 13
6,637 GPT Group 24
3,335 Land Securities Group plc 59
---------
167
---------
================================================================================
20 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
REITs - HEALTH CARE (0.1%)
3,600 Health Care REIT, Inc. $ 226
---------
REITs - HOTEL & RESORT (0.1%)
7,100 Host Hotels & Resorts, Inc. 156
---------
REITs - INDUSTRIAL (0.0%)
24,576 Segro plc 145
---------
REITs - MORTGAGE (0.2%)
19,200 Annaly Capital Management, Inc. 219
31,000 MFA Financial, Inc. 255
14,300 Two Harbors Investment Corp. 150
---------
624
---------
REITs - OFFICE (0.0%)
8,000 CapitaCommercial Trust 11
---------
REITs - RETAIL (0.3%)
9,000 CapitaMall Trust 14
1,100 Federal Realty Investment Trust 133
127,193 Federation Centres 299
30,038 Hammerson plc 298
3,493 Liberty International plc 19
9,000 Link REIT 48
8,600 Retail Properties of America "A" 132
378 Unibail-Rodamco 110
---------
1,053
---------
REITs - SPECIALIZED (0.1%)
4,500 American Tower Corp. 405
---------
SPECIALIZED FINANCE (0.0%)
5,900 Interactive Brokers Group, Inc. "A" 137
---------
Total Financials 32,783
---------
HEALTH CARE (6.6%)
------------------
BIOTECHNOLOGY (1.0%)
420 Actelion Ltd. 53
2,300 Alexion Pharmaceuticals, Inc.* 359
4,600 Amgen, Inc. 545
1,400 Biogen Idec, Inc.* 441
4,000 Celgene Corp.* 344
11,500 Gilead Sciences, Inc.* 953
623 Grifola S.A. 34
300 Regeneron Pharmaceuticals, Inc.* 85
================================================================================
PORTFOLIO OF INVESTMENTS | 21
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
2,600 United Therapeutics Corp.* $ 230
---------
3,044
---------
HEALTH CARE DISTRIBUTORS (0.2%)
1,400 Alfresa Holdings Corp. 90
1,200 Henry Schein, Inc.* 142
1,400 McKesson Corp. 261
19,300 Medipal Holdings Corp. 274
300 Suzuken Co. Ltd. 11
---------
778
---------
HEALTH CARE EQUIPMENT (0.7%)
2,700 Becton, Dickinson & Co. 319
24,700 Boston Scientific Corp.* 315
1,200 C.R. Bard, Inc. 172
3,800 Edwards Lifesciences Corp.* 326
8,400 Medtronic, Inc. 536
3,571 Smith & Nephew plc 63
3,100 St. Jude Medical, Inc. 215
2,200 Stryker Corp. 186
---------
2,132
---------
HEALTH CARE FACILITIES (0.0%)
1,100 Universal Health Services, Inc. "B" 105
---------
HEALTH CARE SERVICES (0.1%)
501 Fresenius SE & Co. KGaA 75
4,300 MEDNAX, Inc.* 250
906 Sonic Healthcare Ltd. 15
---------
340
---------
HEALTH CARE SUPPLIES (0.1%)
3,631 Coloplast A/S "B" 328
---------
LIFE SCIENCES TOOLS & SERVICES (0.4%)
3,500 Charles River Laboratories International, Inc.* 187
1,900 Illumina, Inc.* 339
800 Mettler-Toledo International, Inc.* 203
5,200 Quintiles Transnational Holdings, Inc. 277
3,600 Thermo Fisher Scientific, Inc. 425
---------
1,431
---------
MANAGED HEALTH CARE (0.6%)
7,400 Aetna, Inc. 600
10,200 Cigna Corp. 938
3,200 Health Net, Inc.* 133
700 Humana, Inc. 89
================================================================================
22 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
2,200 WellPoint, Inc. $ 237
---------
1,997
---------
PHARMACEUTICALS (3.5%)
14,900 AbbVie, Inc. 841
900 Actavis plc* 201
3,400 Allergan, Inc. 575
4,700 AstraZeneca plc 349
1,879 Bayer AG 265
6,300 Bristol-Myers Squibb Co. 306
2,800 Daiichi Sankyo Co. Ltd. 52
5,700 Eli Lilly and Co. 354
19,276 GlaxoSmithKline plc 516
21,900 Johnson & Johnson 2,291
1,000 Kyowa Hakko Kirin Co. Ltd. 14
16,400 Merck & Co., Inc. 949
512 Merck KGaA 44
12,907 Novartis AG 1,169
540 Novo Nordisk A/S "B" 25
399 Orion Oyj "B" 15
11,100 Otsuka Holdings Co. Ltd. 344
38,800 Pfizer, Inc. 1,152
2,797 Roche Holding AG 834
2,908 Sanofi 309
2,468 Shire plc 193
4,908 Teva Pharmaceutical Industries Ltd. 260
---------
11,058
---------
Total Health Care 21,213
---------
INDUSTRIALS (6.4%)
------------------
AEROSPACE & DEFENSE (1.7%)
6,700 Boeing Co. 852
5,200 General Dynamics Corp. 606
4,200 Honeywell International, Inc. 390
5,900 Huntington Ingalls Industries, Inc. 558
3,600 L-3 Communications Holdings, Inc. 435
5,400 Lockheed Martin Corp. 868
5,600 Northrop Grumman Corp. 670
3,200 Raytheon Co. 295
1,141 Safran S.A. 75
379 Thales S.A. 23
6,000 United Technologies Corp. 693
719 Zodiac Aerospace 24
---------
5,489
---------
================================================================================
PORTFOLIO OF INVESTMENTS | 23
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.2%)
2,000 C.H. Robinson Worldwide, Inc. $ 128
9,494 Deutsche Post AG 343
1,911 TNT Express N.V. 17
2,500 United Parcel Service, Inc. "B" 257
---------
745
---------
AIRLINES (0.6%)
18,000 Delta Air Lines, Inc. 697
10,457 Deutsche Lufthansa AG 224
13,447 easyJet plc 314
4,097 International Consolidated Airlines Group S.A.* 26
27,800 Southwest Airlines Co. 747
---------
2,008
---------
BUILDING PRODUCTS (0.2%)
3,100 A.O. Smith Corp. 154
1,100 Daikin Industries Ltd. 69
1,088 Geberit AG 382
1,200 LIXIL Group Corp. 32
---------
637
---------
COMMERCIAL PRINTING (0.1%)
2,000 Dai Nippon Printing Co. Ltd. 21
9,500 R.R. Donnelley & Sons Co. 161
3,000 Toppan Printing Co. Ltd. 23
---------
205
---------
CONSTRUCTION & ENGINEERING (0.3%)
6,268 ACS Actividades de Construccion y Servicios S.A. 287
1,794 Ferrovial S.A. 40
377 Leighton Holdings Ltd. 7
5,100 Quanta Services, Inc.* 176
6,777 Vinci S.A. 507
---------
1,017
---------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.3%)
5,800 Caterpillar, Inc. 630
3,700 Komatsu Ltd. 86
6,800 Trinity Industries, Inc. 297
8,000 Yangzijiang Shipbuilding Holdings Ltd. 7
---------
1,020
---------
DIVERSIFIED SUPPORT SERVICES (0.0%)
2,175 Babcock International Group plc 43
---------
================================================================================
24 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT (0.0%)
2,000 Fuji Electric Co. Ltd. $ 10
1,500 Nidec Corp. 92
---------
102
---------
ENVIRONMENTAL & FACILITIES SERVICES (0.1%)
1,900 Stericycle, Inc.* 225
---------
HEAVY ELECTRICAL EQUIPMENT (0.0%)
9,000 Mitsubishi Electric Corp. 111
242 Vestas Wind Systems A/S* 12
---------
123
---------
HIGHWAYS & RAILTRACKS (0.0%)
2,445 Groupe Eurotunnel S.A. 33
---------
HUMAN RESOURCE & EMPLOYMENT SERVICES (0.3%)
528 Adecco S.A. 44
17,743 Capita plc 348
6,200 Manpowergroup, Inc. 526
1,300 Robert Half International, Inc. 62
2,890 Seek Ltd. 43
---------
1,023
---------
INDUSTRIAL CONGLOMERATES (1.0%)
3,900 3M Co. 559
1,400 Carlisle Companies, Inc. 121
2,200 Danaher Corp. 173
48,800 General Electric Co. 1,282
48,500 Hopewell Holdings Ltd. 169
24,000 Hutchison Whampoa Ltd. 328
155,000 NWS Holdings Ltd. 288
922 Siemens AG 122
---------
3,042
---------
INDUSTRIAL MACHINERY (0.6%)
11,955 Alfa Laval AB 308
2,000 Amada Co. Ltd. 21
1,834 Atlas Copco AB "B" 49
800 FANUC Corp. 138
4,000 IDEX Corp. 323
5,000 IHI Corp. 23
4,400 Illinois Tool Works, Inc. 385
12,000 Mitsubishi Heavy Industries Ltd. 75
2,000 NSK Ltd. 26
1,800 Parker Hannifin Corp. 226
================================================================================
PORTFOLIO OF INVESTMENTS | 25
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
200 SMC Corp. $ 54
2,000 Snap-On, Inc. 237
500 THK Co. Ltd. 12
730 Wartsila Corp. Oyj "B" 36
---------
1,913
---------
MARINE (0.3%)
10 A.P. Moller-Maersk A/S "A" 23
160 A.P. Moller-Maersk A/S "B" 398
2,300 Kirby Corp.* 269
36,000 Nippon Yusen Kabushiki Kaisha 104
---------
794
---------
OFFICE SERVICES & SUPPLIES (0.1%)
7,200 Pitney Bowes, Inc. 199
---------
RAILROADS (0.2%)
8,711 Aurizon Holdings Ltd. 41
4,000 Hankyu Hanshin Holdings, Inc. 23
4,000 MTR Corp. Ltd. 15
5,100 Union Pacific Corp. 509
---------
588
---------
TRADING COMPANIES & DISTRIBUTORS (0.4%)
1,306 Bunzl plc 36
7,000 ITOCHU Corp. 90
6,000 Marubeni Corp. 44
14,900 Mitsubishi Corp. 310
9,400 Mitsui & Co. Ltd. 151
5,400 Sojitz Corp. 9
24,500 Sumitomo Corp. 331
1,002 Travis Perkins plc 28
1,700 United Rentals, Inc.* 178
---------
1,177
---------
TRUCKING (0.0%)
1,300 Landstar System, Inc. 83
---------
Total Industrials 20,466
---------
INFORMATION TECHNOLOGY (7.9%)
-----------------------------
APPLICATION SOFTWARE (0.2%)
1,900 FactSet Research Systems, Inc. 229
4,400 Intuit, Inc. 354
185 SAP AG 14
---------
597
---------
================================================================================
26 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (0.7%)
28,200 Cisco Systems, Inc. $ 701
2,900 Harris Corp. 220
8,500 Juniper Networks, Inc.* 209
13,100 QUALCOMM, Inc. 1,037
---------
2,167
---------
DATA PROCESSING & OUTSOURCED SERVICES (0.8%)
700 Alliance Data Systems Corp.* 197
2,928 Amadeus IT Holding S.A. "A" 121
8,300 Broadridge Financial Solutions, Inc. 346
4,400 Computer Sciences Corp. 278
1,800 Computershare Ltd. 21
2,400 DST Systems, Inc. 221
1,100 FleetCor Technologies, Inc.* 145
1,100 Global Payments, Inc. 80
5,100 Jack Henry & Associates, Inc. 303
4,500 MasterCard, Inc. "A" 331
3,500 Visa, Inc. "A" 737
---------
2,780
---------
ELECTRONIC COMPONENTS (0.1%)
100 Hirose Electric Co. Ltd. 15
1,900 HOYA Corp. 63
800 Murata Manufacturing Co. Ltd. 75
800 Omron Corp. 34
---------
187
---------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.2%)
900 Citizen Holdings Co. Ltd. 7
12,700 FUJIFILM Holdings Corp. 354
18,000 Hitachi Ltd. 132
1,200 Zebra Technologies Corp. "A"* 99
---------
592
---------
HOME ENTERTAINMENT SOFTWARE (0.2%)
5,200 Activision Blizzard, Inc. 116
17,000 Electronic Arts, Inc.* 610
---------
726
---------
INTERNET SOFTWARE & SERVICES (0.8%)
4,700 Akamai Technologies, Inc.* 287
5,300 eBay, Inc.* 265
9,500 Facebook, Inc. "A"* 639
1,200 Google, Inc. "A"* 702
================================================================================
PORTFOLIO OF INVESTMENTS | 27
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
700 Google, Inc. "C"* $ 403
439 United Internet AG 19
5,500 Yahoo! Inc.* 193
---------
2,508
---------
IT CONSULTING & OTHER SERVICES (0.6%)
2,500 Accenture plc "A" 202
3,100 Amdocs Ltd. 144
6,000 Cognizant Technology Solutions Corp. "A"* 293
39,000 Fujitsu Ltd. 292
5,200 International Business Machines Corp. 943
---------
1,874
---------
SEMICONDUCTOR EQUIPMENT (0.1%)
4,600 Lam Research Corp. 311
---------
SEMICONDUCTORS (1.2%)
4,500 Altera Corp. 156
3,500 Analog Devices, Inc. 189
26,627 Infineon Technologies AG 333
36,900 Intel Corp. 1,140
5,500 Maxim Integrated Products, Inc. 186
11,700 Micron Technology, Inc.* 386
15,700 NVIDIA Corp. 291
800 ROHM Co. 46
10,400 Skyworks Solutions, Inc. 488
12,900 Texas Instruments, Inc. 617
---------
3,832
---------
SYSTEMS SOFTWARE (1.0%)
4,000 MICROS Systems, Inc.* 272
51,400 Microsoft Corp. 2,143
21,800 Oracle Corp. 883
---------
3,298
---------
TECHNOLOGY DISTRIBUTORS (0.0%)
2,000 Arrow Electronics, Inc.* 121
---------
TECHNOLOGY HARDWARE, STORAGE, & PERIPHERALS (2.0%)
38,500 Apple, Inc.(a) 3,578
5,400 Brother Industries Ltd. 94
4,300 Canon, Inc. 140
23,400 Hewlett-Packard Co. 788
16,200 Lexmark International, Inc. "A" 780
2,600 Ricoh Co. Ltd. 31
================================================================================
28 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
4,500 SanDisk Corp. $ 470
10,000 Seiko Epson Corp. 425
---------
6,306
---------
Total Information Technology 25,299
---------
MATERIALS (2.3%)
----------------
ALUMINUM (0.1%)
27,600 Alcoa, Inc. 411
---------
COMMODITY CHEMICALS (0.2%)
5,000 Asahi Kasei Corp. 38
1,000 Kaneka Corp. 6
2,100 LyondellBasell Industries N.V. "A" 205
2,600 Westlake Chemical Corp. 218
---------
467
---------
CONSTRUCTION MATERIALS (0.0%)
5,000 Taiheiyo Cement Corp. 20
---------
DIVERSIFIED CHEMICALS (0.4%)
3,570 BASF SE 416
10,500 Dow Chemical Co. 540
4,100 E.I. du Pont de Nemours & Co. 268
5,800 Mitsubishi Chemical Holdings Corp. 26
---------
1,250
---------
DIVERSIFIED METALS & MINING (0.7%)
18,884 BHP Billiton Ltd. 639
19,924 BHP Billiton plc 644
5,000 Compass Minerals International, Inc. 479
3,534 Rio Tinto plc 188
25,000 Sumitomo Metal Mining Co. Ltd. 406
---------
2,356
---------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.3%)
10,325 K and S AG 340
800 Monsanto Co. 100
2,700 Scotts Miracle-Gro Co. "A" 153
5,215 Yara International ASA 261
---------
854
---------
INDUSTRIAL GASES (0.0%)
1,000 Air Water, Inc. 16
---------
METAL & GLASS CONTAINERS (0.0%)
700 Toyo Seikan Holdings Ltd. 11
---------
================================================================================
PORTFOLIO OF INVESTMENTS | 29
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
PAPER PRODUCTS (0.0%)
3,000 Oji Holdings Corp. $ 12
2,380 UPM-Kymmene Oyj 41
---------
53
---------
SPECIALTY CHEMICALS (0.4%)
35,000 Daicel Corp. 334
3,800 Hitachi Chemical Co. Ltd. 63
2,500 International Flavors & Fragrances, Inc. 261
412 Novozymes A/S "B" 21
1,400 PPG Industries, Inc. 294
2,700 Sigma-Aldrich Corp. 274
9 Sika AG 37
---------
1,284
---------
STEEL (0.2%)
3,775 ArcelorMittal ADR 56
2,200 JFE Holdings, Inc. 45
10,000 Kobe Steel Ltd. 15
28,000 Nippon Steel & Sumitomo Metal Corp. 90
6,340 Voestalpine AG 302
---------
508
---------
Total Materials 7,230
---------
TELECOMMUNICATION SERVICES (1.9%)
---------------------------------
ALTERNATIVE CARRIERS (0.1%)
6,000 Level 3 Communications, Inc.* 263
---------
INTEGRATED TELECOMMUNICATION SERVICES (1.4%)
34,800 AT&T, Inc. 1,231
31,610 BT Group plc 208
551 Elisa Oyj 17
7,300 Nippon Telegraph & Telephone Corp. 455
7,230 Orange 114
2,924 Portugal Telecom SGPS S.A. 11
273,631 Telecom Italia S.p.A. 270
23,954 Telefonica S.A. 411
11,135 Telstra Corp. Ltd. 55
34,100 Verizon Communications, Inc. 1,668
---------
4,440
---------
WIRELESS TELECOMMUNICATION SERVICES (0.4%)
7,800 KDDI Corp. 476
302 Millicom International Cellular S.A. Swedish Depository Receipts 27
================================================================================
30 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
1,200 SBA Communications Corp. "A"* $ 123
185,411 Vodafone Group plc 619
---------
1,245
---------
Total Telecommunication Services 5,948
---------
UTILITIES (1.8%)
----------------
ELECTRIC UTILITIES (1.1%)
4,600 American Electric Power Co., Inc. 257
14,000 Cheung Kong Infrastructure Holdings Ltd. 97
2,900 Chubu Electric Power Co., Inc.* 36
1,200 Chugoku Electric Power Co., Inc. 16
5,400 Duke Energy Corp. 401
993 EDF S.A. 31
4,300 Edison International 250
39,858 EDP-Energias de Portugal S.A. 200
9,500 Entergy Corp. 780
8,300 Exelon Corp. 303
14,254 Fortum Oyj 383
700 Hokuriku Electric Power Co. 9
3,200 Kansai Electric Power Co., Inc.* 30
1,900 Kyushu Electric Power Co., Inc.* 21
1,400 NextEra Energy, Inc. 143
3,000 OGE Energy Corp. 117
408 Red Electrica Corporacion S.A. 37
700 Shikoku Electric Power Co.* 10
6,874 SSE plc 184
2,200 Tohoku Electric Power Co., Inc. 26
6,600 Tokyo Electric Power Co., Inc.* 28
4,700 Weststar Energy, Inc. 180
---------
3,539
---------
GAS UTILITIES (0.2%)
4,600 AGL Resources, Inc. 253
5,418 Enagas S.A. 174
1,598 Gas Natural SDG S.A. 51
8,605 Snam S.p.A. 52
---------
530
---------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.0%)
500 Electric Power Development Co. Ltd. 16
3,400 NRG Energy, Inc. 127
---------
143
---------
================================================================================
PORTFOLIO OF INVESTMENTS | 31
================================================================================
------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
------------------------------------------------------------------------------------------------
MULTI-UTILITIES (0.5%)
17,948 Centrica plc $ 96
14,567 GDF Suez 401
15,702 National Grid plc 226
10,900 Public Service Enterprise Group, Inc. 444
7,900 Vectren Corp. 336
---------
1,503
---------
WATER UTILITIES (0.0%)
982 Severn Trent plc 32
---------
Total Utilities 5,747
---------
Total Common Stocks (cost: $130,718) 166,705
---------
PREFERRED STOCKS (0.1%)
CONSUMER DISCRETIONARY (0.1%)
-----------------------------
AUTOMOBILE MANUFACTURERS (0.1%)
222 Bayerische Motoren Werke AG 21
564 Volkswagen AG 148
---------
169
---------
Total Consumer Discretionary 169
---------
Total Preferred Stocks (cost: $160) 169
---------
EXCHANGE-TRADED FUNDS (38.6%)
93,215 iShares Core MSCI EAFE ETF 5,799
465,230 iShares Core MSCI Emerging Markets ETF 24,052
337,500 iShares MSCI EAFE ETF 23,075
225,000 iShares MSCI EMU Index Fund 9,522
900,000 iShares MSCI Germany ETF 28,152
74,900 iShares MSCI Philippines ETF 2,759
96,000 iShares MSCI South Korea Capped ETF 6,242
119,544 iShares MSCI Turkey ETF 6,642
55,000 SPDR S&P Emerging Markets SmallCap ETF 2,766
250,000 WisdomTree Emerging Markets SmallCap Dividend Fund 12,005
112,500 WisdomTree India Earnings Fund 2,528
---------
Total Exchange-Traded Funds (cost: $105,538) 123,542
---------
Total Equity Securities (cost: $236,416) 290,416
---------
================================================================================
32 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
BONDS (5.8%)
CORPORATE OBLIGATIONS (2.9%)
FINANCIALS (1.5%)
-----------------
LIFE & HEALTH INSURANCE (0.3%)
$1,000 StanCorp Financial Group, Inc. 6.90% 6/01/2067 $ 1,048
--------
MULTI-LINE INSURANCE (1.0%)
2,000 Genworth Holdings, Inc. 6.15 11/15/2066 1,907
500 Glen Meadow Pass-Through Trust(d) 6.51 2/12/2067 498
1,000 Nationwide Mutual Insurance Co.(d) 5.81(e) 12/15/2024 1,025
--------
3,430
--------
PROPERTY & CASUALTY INSURANCE (0.2%)
600 Oil Insurance Ltd.(d) 3.22(e) -(f) 558
--------
Total Financials 5,036
--------
INDUSTRIALS (0.9%)
------------------
AEROSPACE & DEFENSE (0.3%)
1,000 Textron Financial Corp.(d) 6.00 2/15/2067 920
--------
AIRLINES (0.3%)
805 US Airways Group, Inc. Pass-Through Trust (INS) 7.08 3/20/2021 897
--------
TRADING COMPANIES & DISTRIBUTORS (0.3%)
1,000 ILFC E-Capital Trust II(d) 6.25 12/21/2065 1,005
--------
Total Industrials 2,822
--------
UTILITIES (0.5%)
----------------
ELECTRIC UTILITIES (0.5%)
1,925 Texas Competitive Electric Holdings Co., LLC(g) 4.65 10/10/2017 1,580
--------
Total Corporate Obligations (cost: $6,279) 9,438
--------
EURODOLLAR AND YANKEE OBLIGATIONS (0.6%)
FINANCIALS (0.3%)
-----------------
DIVERSIFIED BANKS (0.3%)
1,000 BayernLB Capital Trust l(h) 6.20 -(f) 940
--------
MATERIALS (0.3%)
----------------
GOLD (0.3%)
1,000 St. Barbara Ltd.(d) 8.88 4/15/2018 832
--------
Total Eurodollar and Yankee Obligations (cost: $1,427) 1,772
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 33
================================================================================
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE SECURITIES (2.3%)
FINANCIALS (2.3%)
-----------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (2.3%)
$1,000 Banc of America Commercial Mortgage, Inc. 5.95% 5/10/2045 $ 1,068
1,000 Bear Stearns Commercial Mortgage Securities, Inc. 4.99 9/11/2042 1,039
1,000 Citigroup Commercial Mortgage Trust 5.97 3/15/2049 1,049
1,000 GE Capital Commercial Mortgage Corp. 5.46 3/10/2044 1,015
1,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.04 10/15/2042 1,027
1,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.48 5/15/2045 1,068
1,000 Merrill Lynch Mortgage Trust 5.86 5/12/2039 1,022
--------
7,288
--------
Total Financials 7,288
--------
Total Commercial Mortgage Securities (cost: $6,188) 7,288
--------
Total Bonds (cost: $13,894) 18,498
--------
MONEY MARKET INSTRUMENTS (1.0%)
U.S. TREASURY BILLS (0.0%)
40 0.02%, 9/18/2014(a),(i),(j) 40
--------
--------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES
--------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS (1.0%)
3,234,220 State Street Institutional Liquid Reserve Fund, 0.06%(a),(k) 3,234
--------
Total Money Market Instruments (cost: $3,274) 3,274
--------
TOTAL INVESTMENTS (COST: $253,584) $312,188
========
--------------------------------------------------------------------------------------------------------
NUMBER
OF CONTRACTS
--------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS (1.8%)
7,700 Put - iShares MSCI EAFE ETF expiring January 17, 2015 at 65 1,336
2,780 Put - iShares MSCI EAFE ETF expiring January 17, 2015 at 67 651
6,770 Put - iShares MSCI EAFE ETF expiring September 20, 2014 at 66 504
4,090 Put - iShares MSCI Emerging Markets ETF expiring January 17, 2015 at 40 454
8,900 Put - iShares MSCI Emerging Markets ETF expiring September 20, 2014 at 41 441
598 Put - S&P 500 Index expiring January 17, 2015 at 1825 2,326
--------
TOTAL PURCHASED OPTIONS (COST: $9,854) $ 5,712
========
================================================================================
34 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF CONTRACTS SECURITY (000)
--------------------------------------------------------------------------------------------------------
WRITTEN OPTIONS (0.4%)
(2,000) Put - iShares MSCI EAFE ETF expiring December 20, 2014 at 62 $ (188)
(4,000) Put - iShares MSCI EAFE ETF expiring September 20, 2014 at 58 (60)
(3,000) Put - iShares MSCI EAFE ETF expiring September 20, 2014 at 62 (91)
(3,000) Put - iShares MSCI Emerging Markets ETF expiring December 20, 2014 at 37 (147)
(6,000) Put - iShares MSCI Emerging Markets ETF expiring September 20, 2014 at 37 (81)
(325) Put - S&P 500 Index expiring January 17, 2015 at 1700 (642)
--------
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED: $2,253) $ (1,209)
========
--------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF CONTRACT APPRECIATION/
CONTRACTS EXPIRATION VALUE (DEPRECIATION)
LONG/(SHORT) DATE (000) (000)
--------------------------------------------------------------------------------------------------------
FUTURES (0.8%)
7 Mini MSCI EAFE 9/19/2014 $ 689 $(3)
19 S&P 500 E-Mini Index Futures 9/19/2014 1,855 6
------ ---
TOTAL FUTURES $2,544 $ 3
====== ===
================================================================================
PORTFOLIO OF INVESTMENTS | 35
================================================================================
--------------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
--------------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
--------------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $166,705 $ - $- $166,705
Preferred Stocks 169 - - 169
Exchange-Traded Funds 123,542 - - 123,542
Bonds:
Corporate Obligations - 9,438 - 9,438
Eurodollar and Yankee Obligations - 1,772 - 1,772
Commercial Mortgage Securities - 7,288 - 7,288
Money Market Instruments:
U.S. Treasury Bills 40 - - 40
Money Market Funds 3,234 - - 3,234
Purchased Options 5,712 - - 5,712
Futures(1) 6 - - 6
--------------------------------------------------------------------------------------------------------
Total $299,408 $18,498 $- $317,906
--------------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
LIABILITIES FOR IDENTICAL LIABILITIES INPUTS INPUTS TOTAL
--------------------------------------------------------------------------------------------------------
Futures(1) $ (3) $- $- $ (3)
Written Options (1,209) - - (1,209)
--------------------------------------------------------------------------------------------------------
Total $(1,212) $- $- $(1,212)
--------------------------------------------------------------------------------------------------------
(1) Futures are valued at the unrealized appreciation/depreciation on the
investment.
For the period of January 1, 2014, through June 30, 2014, equity securities with
a fair value of $18,811,000 were transferred from Level 2 to Level 1. Due to an
assessment of events at the beginning of the reporting period, this security had
adjustments to its foreign market closing prices to reflect changes in value
that occurred after the close of foreign markets and prior to the close of the
U.S. securities markets. The foreign market closing adjustments were not deemed
necessary at the end of the period. The Fund's policy is to recognize any
transfers into and out of the levels as of the beginning of the period in which
the event or circumstance that caused the transfer occurred.
================================================================================
36 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
June 30, 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 55.6% of net assets at
June 30, 2014.
The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set
forth in the Investment Company Act of 1940, as amended, that would
otherwise be applicable.
o CATEGORIES AND DEFINITIONS
ASSET-BACKED AND COMMERCIAL MORTGAGE-BACKED SECURITIES - Asset-backed
securities represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets. Commercial
mortgage-backed securities reflect an interest in, and are secured by,
mortgage loans on commercial real property. These securities represent
ownership in a pool of loans and are divided into pieces (tranches) with
varying maturities. The stated final maturity of such securities represents
when the final principal payment will be made for all underlying loans.
The weighted average life is the average time for principal to be repaid,
which is calculated by assuming prepayment rates of the underlying loans.
The weighted average life is likely to be substantially shorter than the
stated final maturity as a result of scheduled principal payments and
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 37
================================================================================
unscheduled principal prepayments. Stated interest rates on commercial
mortgage-backed securities may change slightly over time as underlying
mortgages pay down.
EURODOLLAR AND YANKEE OBLIGATIONS - Eurodollar obligations are dollar-
denominated instruments that are issued outside the U.S. capital markets by
foreign corporations and financial institutions and by foreign branches of
U.S. corporations and financial institutions. Yankee obligations are
dollar-denominated instruments that are issued by foreign issuers in the
U.S. capital markets.
o PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
ADR - American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in U.S. dollars.
REIT - Real estate investment trust
CREDIT ENHANCEMENTS - add the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal and
interest payments when due. The enhancement may be provided by a
high-quality bank, insurance company or other corporation, or a collateral
trust. The enhancements do not guarantee the market values of the
securities.
(INS) Principal and interest payments are insured by MBIA Insurance
Corp. Although bond insurance reduces the risk of loss due to
default by an issuer, such bonds remain subject to the risk that
value may fluctuate for other reasons, and there is no assurance
that the insurance company will meet its obligations.
o SPECIFIC NOTES
(a) The security, or a portion thereof, is segregated to cover the value of
open futures contracts at June 30, 2014.
(b) Security deemed illiquid by USAA Asset Management Company (the
Manager), under liquidity guidelines approved by the USAA Mutual Funds
Trust's Board of Trustees (the Board). The aggregate market value of
these securities at June 30, 2014, was zero.
================================================================================
38 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
(c) Security was fair valued at June 30, 2014, by the Manager in accordance
with valuation procedures approved by the Board. The total value of all
such securities was zero.
(d) Restricted security that is not registered under the Securities Act of
1933. A resale of this security in the United States may occur in an
exempt transaction to a qualified institutional buyer as defined by
Rule 144A, and as such has been deemed liquid by the Manager under
liquidity guidelines approved by the Board, unless otherwise noted as
illiquid.
(e) Variable-rate or floating-rate security - interest rate is adjusted
periodically. The interest rate disclosed represents the rate at June
30, 2014.
(f) Security is perpetual and has no final maturity date but may be subject
to calls at various dates in the future.
(g) Senior loan (loan) - is not registered under the Securities Act of
1933. The loan contains certain restrictions on resale and cannot be
sold publicly. The interest rate is adjusted periodically, and the rate
disclosed represents the current rate at June 30, 2014. The weighted
average life of the loan is likely to be shorter than the stated final
maturity date due to mandatory or optional prepayments. The loan is
deemed liquid by the Manager, under liquidity guidelines approved by
the Board, unless otherwise noted as illiquid.
(h) At June 30, 2014, the issuer was in default with respect to interest
and/or principal payments.
(i) Securities with a value of $40,000 are segregated as collateral for
initial margin requirements on open futures contracts.
(j) Zero-coupon security. Rate represents the effective yield at the date
of purchase.
(k) Rate represents the money market fund annualized seven-day yield at
June 30, 2014.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 39
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
June 30, 2014 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $253,584) $312,188
Purchased options, at market value (cost of $9,854) 5,712
Cash denominated in foreign currencies (identified cost of $197) 199
Receivables:
Capital shares sold 7
USAA Asset Management Company (Note 6D) 4
Dividends and interest 2,172
Securities sold 4,130
Variation margin on futures contracts 101
--------
Total assets 324,513
--------
LIABILITIES
Payables:
Securities purchased 2,535
Capital shares redeemed 389
Bank overdraft 163
Written options, at market value (premiums received of $2,253) 1,209
Accrued management fees 160
Other accrued expenses and payables 63
--------
Total liabilities 4,519
--------
Net assets applicable to capital shares outstanding $319,994
========
NET ASSETS CONSIST OF:
Paid-in capital $253,842
Accumulated undistributed net investment income 10,139
Accumulated net realized gain on investments, options,
and futures transactions 499
Net unrealized appreciation of investments, options,
and futures contracts 55,509
Net unrealized appreciation of foreign currency translations 5
--------
Net assets applicable to capital shares outstanding $319,994
========
Net asset value, redemption price, and offering price per share:
Fund Shares (net assets of $15,022/1,313 shares outstanding) $ 11.44
========
Institutional Shares (net assets of $304,972/26,589
shares outstanding) $ 11.47
========
See accompanying notes to financial statements.
================================================================================
40 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended June 30, 2014 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $118) $ 4,568
Interest 614
--------
Total income 5,182
--------
EXPENSES
Management fees 988
Administration and servicing fees:
Fund Shares 10
Institutional Shares 79
Transfer agent's fees:
Fund Shares 4
Institutional Shares 79
Custody and accounting fees:
Fund Shares 7
Institutional Shares 134
Postage:
Institutional Shares 1
Shareholder reporting fees:
Fund Shares 1
Institutional Shares 12
Trustees' fees 11
Registration fees:
Fund Shares 24
Institutional Shares 16
Professional fees 55
Other 7
--------
Total expenses 1,428
Expenses reimbursed:
Fund Shares (17)
--------
Net expenses 1,411
--------
NET INVESTMENT INCOME 3,771
--------
================================================================================
FINANCIAL STATEMENTS | 41
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY, OPTIONS, AND FUTURES CONTRACTS
Net realized gain (loss) on:
Investments 18,028
Foreign currency transactions (14)
Options (9,313)
Futures transactions 101
Change in net unrealized appreciation/depreciation of:
Investments (3,925)
Foreign currency translations 3
Options (13)
Futures contracts (2)
--------
Net realized and unrealized gain 4,865
--------
Increase in net assets resulting from operations $ 8,636
========
See accompanying notes to financial statements.
================================================================================
42 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended June 30, 2014 (unaudited), and year ended
December 31, 2013
--------------------------------------------------------------------------------------------
6/30/2014 12/31/2013
--------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 3,771 $ 6,345
Net realized gain on investments 18,028 44,627
Net realized loss on foreign currency transactions (14) (21)
Net realized loss on options (9,313) (24,851)
Net realized gain on futures transactions 101 425
Change in net unrealized appreciation/depreciation of:
Investments (3,925) 16,109
Foreign currency translations 3 1
Options (13) (748)
Futures contracts (2) 19
---------------------------
Increase in net assets resulting from operations 8,636 41,906
---------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Fund Shares* - (11)
Institutional Shares - (364)
---------------------------
Distributions to shareholders - (375)
---------------------------
NET DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (NOTE 5)
Fund Shares* 3,854 10,230
Institutional Shares (46,229) (78,916)
---------------------------
Total net decrease in net assets from capital
share transactions (42,375) (68,686)
---------------------------
Net decrease in net assets (33,739) (27,155)
NET ASSETS
Beginning of period 353,733 380,888
---------------------------
End of period $ 319,994 $ 353,733
===========================
Accumulated undistributed net investment income:
End of period $ 10,139 $ 6,368
===========================
*Fund shares were initiated on July 12, 2013
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 43
================================================================================
NOTES TO FINANCIAL STATEMENTS
June 30, 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 Global
Managed Volatility Fund (the Fund), which is classified as diversified under the
1940 Act. The Fund's investment objective is to attain long-term capital
appreciation while attempting to reduce volatility during unfavorable market
conditions.
The Fund consists of two classes of shares: Global Managed Volatility Fund
Shares (Fund Shares) and Global Managed Volatility Fund Institutional Shares
(Institutional 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, and certain
registration and custodian fees. Expenses not attributable to a specific class,
income, and realized gains or losses on investments are allocated to each class
of shares based on each class's relative net assets. Each class has exclusive
voting rights on matters related solely to that class and separate voting rights
on matters that relate to both classes. The 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
================================================================================
44 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
by a USAA Fund participating in a fund-of-funds investment strategy (USAA
fund-of-funds) and not to the general public.
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 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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 45
================================================================================
the Fund is valued. If no last sale or official closing price is
reported or available, the average of the bid and asked prices
generally is used.
2. Equity securities trading in various foreign markets may take place on
days when the NYSE is closed. Further, when the NYSE is open, the
foreign markets may be closed. Therefore, the calculation of the Fund's
net asset value (NAV) may not take place at the same time the prices of
certain foreign securities held by the Fund are determined. In most
cases, events affecting the values of foreign securities that occur
between the time of their last quoted sales or official closing prices
and the close of normal trading on the NYSE on a day the Fund's NAV is
calculated will not be reflected in the value of the Fund's foreign
securities. However, the Manager, an affiliate of the Fund, and the
Fund's subadviser(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
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.
================================================================================
46 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
5. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the Board.
The Service uses an evaluated mean between quoted bid and asked prices
or the last sales price to price securities when, in the Service's
judgment, these prices are readily available and are representative of
the securities' market values. For many securities, such prices are not
readily available. The Service generally prices these securities based
on methods that include consideration of yields or prices of securities
of comparable quality, coupon, maturity, and type; indications as to
values from dealers in securities; and general market conditions.
6. Repurchase agreements are valued at cost, which approximates market
value.
7. Futures are valued based upon the last sale price at the close of
market on the principal exchange on which they are traded.
8. Options are valued by a pricing service at the National Best Bid/Offer
(NBBO) composite price, which is derived from the best available bid
and ask prices in all participating options exchanges determined to
most closely reflect market value of the options at the time of
computation of the Fund's NAV.
9. Securities for which market quotations are not readily available or are
considered unreliable, or whose values have been materially affected by
events occurring after the close of their primary markets but before
the pricing of the Fund, are valued in good faith at fair value, using
methods determined by the Manager in consultation with the Fund's
subadviser(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,
================================================================================
NOTES TO FINANCIAL STATEMENTS | 47
================================================================================
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any
restrictions on disposition of the securities, and an evaluation of the
forces that influenced the market in which the securities are purchased
and sold.
B. FAIR VALUE MEASUREMENTS - Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments
is based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 - inputs to the valuation methodology are quoted prices
(unadjusted) in active markets for identical securities.
Level 2 - inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices. Level 2 securities
include bonds, which are valued based on methods discussed in Note 1A5.
Level 3 - inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
C. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - The Fund may buy, sell, and
enter into certain types of derivatives, including, but not limited to
futures contracts, options, and options on futures contracts, under
circumstances in which such instruments are expected by the portfolio
manager to aid in achieving the Fund's investment objective. The Fund also
may use derivatives in circumstances where the portfolio manager believes
they offer an economical means of gaining exposure to a particular asset
class or securities market or to keep cash on hand to meet shareholder
redemptions or other needs while maintaining
================================================================================
48 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
exposure to the market. With exchange-listed futures contracts and options,
counterparty credit risk to the Fund is limited to the exchange's
clearinghouse which, as counterparty to all exchange-traded futures
contracts and options, guarantees the transactions against default from the
actual counterparty to the trade. The Fund's derivative agreements held at
June 30, 2014 did not include master netting provisions.
FUTURES CONTRACTS - The Fund is subject to equity price risk, interest rate
risk, and foreign currency exchange rate risk in the normal course of
pursuing its investment objectives. The Fund may use futures contracts to
gain exposure to, or hedge against, changes in the value of equities,
interest rates, or foreign currencies. A futures contract represents a
commitment for the future purchase or sale of an asset at a specified price
on a specified date. Upon entering into such contracts, the Fund is
required to deposit with the broker in either cash or securities an initial
margin in an amount equal to a certain percentage of the contract amount.
Subsequent payments (variation margin) are made or received by the Fund
each day, depending on the daily fluctuations in the value of the contract,
and are recorded for financial statement purposes as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed. Upon entering into
such contracts, the Fund bears the risk of interest or exchange rates or
securities prices moving unexpectedly in an unfavorable direction, in which
case, the Fund may not achieve the anticipated benefits of the futures
contracts.
OPTIONS TRANSACTIONS - The Fund is subject to equity price risk in the
normal course of pursuing its investment objectives. The Fund may use
options on underlying instruments, namely, equity securities, ETFs, and
equity indexes, to gain exposure to, or hedge against, changes in the value
of equity securities, ETFs, or equity indexes. A call option gives the
purchaser the right to buy, and the writer the obligation to sell, the
underlying instrument at a specified price during a specified period.
Conversely, a put option gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying instrument at a specified
price during a specified period. The purchaser of the option pays a premium
to the writer of the option.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 49
================================================================================
Premiums paid for purchased options are included in the Fund's statement of
assets and liabilities as an investment. If a purchased option expires
unexercised, the premium paid is recognized as a realized loss. If a
purchased call option on a security is exercised, the cost of the security
acquired includes the exercise price and the premium paid. If a purchased
put option on a security is exercised, the realized gain or loss on the
security sold is determined from the exercise price, the original cost of
the security, and the premium paid. The risk associated with purchasing a
call or put option is limited to the premium paid.
Premiums received from writing options are included in the Fund's statement
of assets and liabilities as a liability. If a written option expires
unexercised, the premium received is recognized as a realized gain. If a
written call option on a security is exercised, the realized gain or loss
on the security sold is determined from the exercise price, the original
cost of the security, and the premium received. If a written put option on
a security is exercised, the cost of the security acquired is the exercise
price paid less the premium received. The Fund, as a writer of an option,
bears the market risk of an unfavorable change in the price of the security
underlying the written option.
In an attempt to reduce the Fund's volatility over time, the Fund may
implement a strategy that involves purchasing and selling options on
indexes or ETFs that represent the Fund's exposure against a highly
correlated stock portfolio. The combination of the diversified stock
portfolio with index or ETF options is designed to provide the Fund with
consistent returns over a wide range of equity market environments. This
strategy may not fully protect the Fund against declines in the portfolio's
value, and the Fund could experience a loss. Options on ETFs are similar to
options on individual securities in that the holder of the ETF call (or
put) has the right to receive (or sell) shares of the underlying ETF at the
strike price on or before exercise date. Options on securities indexes are
different from options on individual securities in that the holder of the
index option has the right to receive an amount of cash equal to the
difference between the exercise price and the settlement value of the
underlying index as defined by the exchange. If an index option is
exercised, the realized gain or loss is determined by the exercise price,
the settlement value, and the premium amount paid or received.
================================================================================
50 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
FAIR VALUES OF DERIVATIVE INSTRUMENTS AS OF JUNE 30, 2014*
(IN THOUSANDS)
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------------------------------------------------------------------
STATEMENT OF STATEMENT OF
DERIVATIVES NOT ASSETS AND ASSETS AND
ACCOUNTED FOR AS LIABILITIES LIABILITIES
HEDGING INSTRUMENTS LOCATION FAIR VALUE LOCATION FAIR VALUE
------------------------------------------------------------------------------------------
Equity contracts Purchased $5,813** Written $1,209
options; Net options
unrealized
appreciation of
investments,
options, and
futures
contracts
--------------------------------------------------------------------------------------
* For open derivative instruments as of June 30, 2014, see the portfolio
of investments, which also is indicative of activity for the six-month
period ended June 30, 2014.
** Includes cumulative appreciation (depreciation) of futures contracts as
reported on the portfolio of investments. Only current day's variation
margin is reported within the statement of assets and liabilities.
THE EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2014
(IN THOUSANDS)
CHANGE IN
UNREALIZED
DERIVATIVES NOT APPRECIATION
ACCOUNTED FOR AS STATEMENT OF REALIZED GAIN (LOSS) (DEPRECIATION)
HEDGING INSTRUMENTS OPERATIONS LOCATION ON DERIVATIVES ON DERIVATIVES
--------------------------------------------------------------------------------------
Equity contracts Net realized gain $(9,212) $(15)
(loss) on options
and futures
transactions/
Change in net
unrealized
appreciation/
depreciation of
options and
futures contracts
--------------------------------------------------------------------------------------
D. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS - Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis or for delayed draws on loans can
take place a month or more after the trade date. During the period prior to
settlement, these securities do not earn interest, are subject to market
fluctuation, and may increase or decrease in value prior to their delivery.
The Fund receives a commitment fee for delayed draws on loans. The Fund
maintains segregated assets with a market value equal to or greater
================================================================================
NOTES TO FINANCIAL STATEMENTS | 51
================================================================================
than the amount of its purchase commitments. The purchase of securities on
a delayed-delivery or when-issued basis and delayed-draw loan commitments
may increase the volatility of the Fund's NAV to the extent that the Fund
makes such purchases and commitments while remaining substantially fully
invested.
E. FEDERAL TAXES - The Fund's policy is to comply with the requirements of the
Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income to
its shareholders. Therefore, no federal income tax provision is required.
F. INVESTMENTS IN SECURITIES - Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses
from sales of investment securities are computed on the identified cost
basis. Dividend income, less foreign taxes, if any, is recorded on the
ex-dividend date. If the ex-dividend date has passed, certain dividends
from foreign securities are recorded upon notification. Interest income is
recorded daily on the accrual basis. Discounts and premiums are amortized
over the life of the respective securities, using the effective yield
method for long-term securities and the straight-line method for short-term
securities.
G. FOREIGN CURRENCY TRANSLATIONS - The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency. Since
the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the exchange
rate obtained from an independent pricing service on the respective
dates of such transactions.
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain or
loss from investments.
================================================================================
52 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
Separately, net realized foreign currency gains/losses may arise from sales
of foreign currency, currency gains/losses realized between the trade and
settlement dates on security transactions, and from the difference between
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts received.
At the end of the Fund's fiscal year, these net realized foreign currency
gains/losses are reclassified from accumulated net realized gain/loss to
accumulated undistributed net investment income on the statement of assets
and liabilities as such amounts are treated as ordinary income/loss for tax
purposes. Net unrealized foreign currency exchange gains/losses arise from
changes in the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rate.
H. EXPENSES PAID INDIRECTLY - A portion of the brokerage commissions that the
Fund pays may be recaptured as a credit that is tracked and used by the
custodian to directly reduce expenses paid by the Fund. In addition,
through arrangements with the Fund's custodian and other banks utilized by
the Fund for cash management purposes, realized credits, if any, generated
from cash balances in the Fund's bank accounts may be used to directly
reduce the Fund's expenses. For the six-month period ended June 30, 2014,
the Fund did not receive any brokerage commission recapture credits. For
the six-month period ended June 30, 2014, there were no custodian and other
bank credits.
I. INDEMNIFICATIONS - Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, in the normal course
of business, the Trust enters into contracts that contain a variety of
representations and warranties that provide general indemnifications. The
Trust's maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust expects the risk of loss to be remote.
J. USE OF ESTIMATES - The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 53
================================================================================
(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 June 30, 2014, the Fund paid CAPCO facility fees
of $1,000, which represents 0.5% of the total fees paid to CAPCO by the USAA
Funds. The Fund had no borrowings under this agreement during the six-month
period ended June 30, 2014.
(3) DISTRIBUTIONS
The tax basis of distributions and accumulated undistributed net investment
income will be determined based upon the Fund's tax year-end of December 31,
2014, in accordance with applicable tax law.
Distributions of realized gains from security transactions not offset by capital
losses are made annually in the succeeding fiscal year or as otherwise required
to avoid the payment of federal taxes.
The Fund is permitted to carry forward net capital losses indefinitely.
Additionally, such capital losses that are carried forward will retain their
character as short-term and/or long-term capital losses. Post-enactment capital
loss carryforwards must be used before pre-enactment capital loss carryforwards.
As a result, pre-enactment capital loss carryforwards may be more likely to
expire unused.
At December 31, 2013, the Fund had no pre-enactment capital loss carryforwards
and post-enactment capital loss carryforwards of $10,262,000, for federal income
tax purposes. It is unlikely that the Board will authorize a
================================================================================
54 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
distribution of capital gains realized in the future until the capital loss
carryforwards have been used or expire.
For the six-month period ended June 30, 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 adustments to this
conclusion are necessary. The statute of limitations on the Fund's tax return
filings generally remains open for the three preceeding fiscal reporting year
ends and remain subject to examination by the Internal Revenue Service and state
taxing authorities.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended June 30, 2014, were
$132,879,000 and $187,024,000, respectively.
As of June 30, 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.
Gross unrealized appreciation and depreciation of investments as of June 30,
2014, were $59,996,000 and $5,534,000, respectively, resulting in net unrealized
appreciation of $54,462,000.
For the six-month period ended June 30, 2014, transactions in written call and
put options* were as follows:
PREMIUMS
NUMBER OF RECEIVED
CONTRACTS (000's)
--------------------------------
Outstanding December 31, 2013 5,250 $ 331
Options written 50,425 4,944
Options terminated in closing
purchase transactions (37,350) (3,022)
Options expired - -
--------------------------------
Outstanding at June 30, 2014 18,325 $ 2,253
================================
* Refer to Note 1C for a discussion of derivative instruments and how they are
accounted for in the Fund's financial statements.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 55
================================================================================
(5) CAPITAL SHARE TRANSACTIONS
At June 30, 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
JUNE 30, 2014 DECEMBER 31, 2013
--------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------
FUND SHARES:
(INITIATED ON JULY 12, 2013)
Shares sold 812 $ 9,067 1,283 $ 13,632
Shares issued from reinvested
dividends - - -* 5
Shares redeemed (465) (5,213) (317) (3,407)
------------------------------------------------
Net increase from capital
share transactions 347 $ 3,854 966 $ 10,230
================================================
INSTITUTIONAL SHARES:
Shares sold 384 $ 4,282 2,492 $ 25,802
Shares issued from reinvested
dividends - - 33 364
Shares redeemed (4,527) (50,511) (10,024) (105,082)
------------------------------------------------
Net decrease from capital
share transactions (4,143) $(46,229) (7,499) $ (78,916)
================================================
* Represents less than 500 shares.
(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 also is authorized to select (with approval of the Board and
without shareholder approval) one or more
================================================================================
56 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
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 Fund's management fees are accrued daily and paid monthly at an
annualized rate of 0.60% of the Fund's average net assets for the fiscal
year. For the six-month period ended June 30, 2014, the Fund incurred total
management fees, paid or payable to the Manager, of $988,000.
B. SUBADVISORY ARRANGEMENT(S) - The Manager has entered into investment
subadvisory agreements with Quantitative Management Associates, LLC (QMA)
and QS Investors, LLC (QS), under which each subadviser provides day-to-day
discretionary management of a portion of the Fund's assets in accordance
with the Fund's investment objectives, policies, and restrictions, subject
to the general supervision of the Board and the Manager.
The Manager (not the Fund) pays QMA a subadvisory fee in the annual amount
of 0.25% of the portion of the Fund's average net assets that QMA manages.
For the six-month period ended June 30, 2014, the Manager incurred
subadvisory fees, paid or payable to QMA, of $70,000.
The Manager (not the Fund) pays QS a subadvisory fee in an annual amount of
0.15% of the portion of the Fund's average net assets that QS manages. For
the six-month period ended June 30, 2014, the Manager incurred subadvisory
fees, paid or payable to QS, of $92,000.
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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 57
================================================================================
0.05% of average net assets of the Institutional Shares. For the six-month
period ended June 30, 2014, the Fund Shares and Institutional Shares
incurred administration and servicing fees, paid or payable to the Manager,
of $10,000 and $79,000, 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 June 30, 2014, the Fund reimbursed the Manager
$4,000 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 voluntarily agreed, through May 1, 2015,
to limit the total annual operating expenses of the Fund Shares to 1.10% of
its average net assets, excluding extraordinary expenses, and before
reductions of any expenses paid indirectly, and will reimburse the Fund for
all expenses in excess of that amount. This expense limitation arrangement
may not be changed or terminated through May 1, 2015, without approval of
the Board, and may be changed or terminated by the Manager at any time
after that date. For the six-month period ended June 30, 2014, the Fund
incurred reimbursable expenses of $17,000, of which $4,000 was receivable
from the Manager.
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 Fund Shares
are paid monthly based on an annual charge of $23.00 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 0.05% of the Institutional Shares' average net assets,
plus out-of-pocket expenses. For the six-month period ended June 30, 2014,
the Fund Shares and Institutional Shares incurred transfer agent's fees,
paid or payable to SAS, of $4,000 and $79,000, respectively.
================================================================================
58 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
F. UNDERWRITING SERVICES - USAA Investment Management Company provides
exclusive underwriting and distribution of the Fund's shares on a
continuing best-efforts basis and receives no commissions or fees for this
service.
(7) TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At June 30, 2014,
USAA and its affiliates owned 478,000 Fund Shares, which represents 36.4% of the
Fund Shares, and 1.7% of the Fund.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 59
================================================================================
(8) FINANCIAL HIGHLIGHTS - FUND SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED PERIOD ENDED
JUNE 30, DECEMBER 31,
-----------------------------------
2014 2013***
-----------------------------------
Net asset value at beginning of period $ 11.14 $ 10.46
------------------------------
Income from investment operations:
Net investment income(a) .13 .07
Net realized and unrealized gain(a) .17 .62
------------------------------
Total from investment operations(a) .30 .69
------------------------------
Less distributions from:
Net investment income - (.01)
------------------------------
Net asset value at end of period $ 11.44 $ 11.14
==============================
Total return (%)* 2.69 6.61
Net assets at end of period (000) $15,022 $10,771
Ratios to average net assets:**
Expenses (%)(c) 1.10 1.10(b)
Expenses, excluding reimbursements (%)(c) 1.36 1.34(b)
Net investment income (%)(c) 2.33 1.29
Portfolio turnover (%) 41 92
* Assumes reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in
accordance with U.S. generally accepted accounting principles and could
differ from the Lipper reported return. Total returns for periods of less
than one year are not annualized.
** For the six-month period ended June 30, 2014, average net assets were
$12,715,000.
*** Fund Shares commenced operations on July 12, 2013.
(a) Calculated using average shares. For the six-month period ended June 30,
2014, average shares were 1,140,000.
(b) Reflects total annual operating expenses of the Fund Shares before
reductions of any expenses paid indirectly. The Fund Shares' expenses paid
indirectly decreased the expense ratios by less than 0.01%.
(c) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
60 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
(8) FINANCIAL HIGHLIGHTS (CONTINUED) - INSTITUTIONAL SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
2014 2013*** 2012 2011 2010 2009
----------------------------------------------------------------------------
Net asset value at
beginning of period $ 11.16 $ 9.96 $ 9.57 $ 10.09 $ 9.94 $ 8.61
---------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .13(d) .21 .22 .17 .13 .09
Net realized and
unrealized gain (loss) .18(d) 1.00 .73 (.51) .11 1.52
---------------------------------------------------------------------------
Total from investment
operations .31(d) 1.21 .95 (.34) .24 1.61
---------------------------------------------------------------------------
Less distributions from:
Net investment income - (.01) (.25) (.18) (.09) (.06)
Realized capital gains - - (.31) - - (.22)
---------------------------------------------------------------------------
Total distributions - (.01) (.56) (.18) (.09) (.28)
---------------------------------------------------------------------------
Net asset value at
end of period $ 11.47 $ 11.16 $ 9.96 $ 9.57 $ 10.09 $ 9.94
===========================================================================
Total return (%)* 2.78 12.17 10.02 (3.40) 2.37 18.76
Net assets at
end of period (000) $304,972 $342,962 $380,888 $441,645 $475,075 $318,074
Ratios to average
net assets:**
Expenses (%) .85(e) .82(a) .80(a),(b) .79(a) .80(a) .94(a)
Expenses, excluding
reimbursements (%) .85(e) .82(a) .80(a) .79(a) .80(a) .94(a)
Net investment income (%) 2.29(e) 1.72 1.86 1.61 1.46 1.63
Portfolio turnover (%) 41 92 106(c) 144 156 107
* Assumes reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in
accordance with U.S. generally accepted accounting principles and could
differ from the Lipper reported return. Total returns for periods of less
than one year are not annualized.
** For the six-month period ended June 30, 2014, average net assets were
$318,967,000.
*** Effective July 12, 2013, the existing share class was designated "Global
Managed Volatility Fund Institutional Shares (Institutional Shares)".
(a) Reflects total annual operating expenses of the Institutional Shares before
reductions of any expenses paid indirectly. The Institutional Shares'
expenses paid indirectly decreased the expense ratios by less than 0.01%.
(b) Prior to May 1, 2012, the Manager had voluntarily agreed to limit the
annual expenses of the Institutional Shares to 1.00% of the Institutional
Shares' average net assets.
(c) Decrease in trading activity due to changes in subadvisers and asset
allocation strategies.
(d) Calculated using average shares. For the six-month period ended June 30,
2014, average shares were 28,555,000.
(e) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 61
================================================================================
EXPENSE EXAMPLE
June 30, 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, and other Fund operating
expenses. This example is intended to help you understand your indirect costs,
also referred to as "ongoing costs" (in dollars), of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire six-month period of January 1, 2014, through June
30, 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.
================================================================================
62 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the line labeled "hypothetical"
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2014 -
JANUARY 1, 2014 JUNE 30, 2014 JUNE 30, 2014
-------------------------------------------------------
FUND SHARES
Actual $1,000.00 $1,026.90 $5.53
Hypothetical
(5% return before expenses) 1,000.00 1,019.34 5.51
INSTITUTIONAL SHARES
Actual 1,000.00 1,027.80 4.27
Hypothetical
(5% return before expenses) 1,000.00 1,020.58 4.26
* Expenses are equal to the annualized expense ratio of 1.10% for Fund Shares
and 0.85% for Institutional Shares, which are net of any reimbursements and
expenses paid indirectly, multiplied by the average account value over the
period, multiplied by 181 days/365 days (to reflect the one-half-year
period). The Fund's actual ending account values are based on its actual
total returns of 2.69% for Fund Shares and 2.78% for Institutional Shares for
the six-month period of January 1, 2014, through June 30, 2014.
================================================================================
EXPENSE EXAMPLE | 63
================================================================================
ADVISORY AGREEMENT(S)
June 30, 2014 (unaudited)
--------------------------------------------------------------------------------
At an in-person meeting of the Board of Trustees (the Board) held on April 30,
2014, the Board, including the Trustees who are not "interested persons" of the
Trust (the Independent Trustees), approved for an annual period the continuance
of the Advisory Agreement between the Trust and the Manager with respect to the
Fund and the Subadvisory Agreements between the Manager and the Subadvisers with
respect to the Fund.
In advance of the meeting, the Trustees received and considered a variety of
information relating to the Advisory Agreement and Subadvisory Agreements and
the Manager and each Subadviser, and were given the opportunity to ask questions
and request additional information from management. The information provided to
the Board included, among other things: (i) a separate report prepared by an
independent third party, which provided a statistical analysis comparing the
Fund's investment performance, expenses, and fees to comparable investment
companies; (ii) information concerning the services rendered to the Fund, as
well as information regarding the Manager's revenues and costs of providing
services to the Fund and compensation paid to affiliates of the Manager; and
(iii) information about the Manager's and Subadvisers' operations and personnel.
Prior to voting, the Independent Trustees reviewed the proposed continuance of
the Advisory Agreement and Subadvisory Agreements with management and with
experienced independent counsel and received materials from such counsel
discussing the legal standards for their consideration of the proposed
continuation of the Advisory Agreement and Subadvisory Agreements with respect
to the Fund. The Independent Trustees also reviewed the proposed continuation of
the Advisory Agreement and the Subadvisory Agreements with respect to the Fund
in private sessions with their counsel at which no representatives of management
were present.
At each regularly scheduled meeting of the Board and its committees, the Board
receives and reviews, among other things, information concerning the Fund's
performance and related services provided by the Manager and each Subadviser. At
the meeting at which the renewal of the Advisory Agreement
================================================================================
64 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
and Subadvisory Agreements is considered, particular focus is given to
information concerning Fund performance, comparability of fees and total
expenses, and profitability. However, the Board noted that the evaluation
process with respect to the Manager and each Subadviser is an ongoing one. In
this regard, the Board's and its committees' consideration of the Advisory
Agreement and Subadvisory Agreements included certain information previously
received at such meetings.
ADVISORY AGREEMENT
After full consideration of a variety of factors, the Board, including the
Independent Trustees, voted to approve the Advisory Agreement. In approving the
Advisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee may have attributed different weights to various
factors. Throughout their deliberations, the Independent Trustees were
represented and assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES - In considering the nature, extent, and
quality of the services provided by the Manager under the Advisory Agreement,
the Board reviewed information provided by the Manager relating to its
operations and personnel. The Board also took into account its knowledge of the
Manager's management and the quality of the performance of the Manager's duties
through Board meetings, discussions, and reports during the preceding year. The
Board considered the fees paid to the Manager and the services provided to the
Fund by the Manager under the Advisory Agreement, as well as other services
provided by the Manager and its affiliates under other agreements, and the
personnel who provide these services. In addition to the investment advisory
services provided to the Fund, the Manager and its affiliates provide
administrative services, stockholder services, oversight of Fund accounting,
marketing services, assistance in meeting legal and regulatory requirements, and
other services necessary for the operation of the Fund and the Trust.
The Board considered the Manager's management style and the performance of the
Manager's duties under the Advisory Agreement. The Board considered the level
and depth of knowledge of the Manager, including the professional experience and
qualifications of its senior and investment personnel, as well as current
staffing levels. The Board discussed the Manager's effectiveness in
================================================================================
ADVISORY AGREEMENT(S) | 65
================================================================================
monitoring the performance of each Subadviser and its timeliness in responding
to performance issues. The allocation of the Fund's brokerage, including the
Manager's process for monitoring "best execution," also was considered. The
Manager's role in coordinating the activities of the Fund's other service
providers was also considered. The Board also considered the Manager's risk
management processes. The Board considered the Manager's financial condition and
that it had the financial wherewithal to continue to provide the same scope and
high quality of services under the Advisory Agreement. In reviewing the Advisory
Agreement, the Board focused on the experience, resources, and strengths of the
Manager and its affiliates in managing the Fund, as well as the other funds in
the Trust.
The Board also reviewed the compliance and administrative services provided to
the Fund by the Manager, including the Manager's oversight of the Fund's
day-to-day operations and oversight of Fund accounting. The Trustees, guided
also by information obtained from their experiences as trustees of the Trust,
also focused on the quality of the Manager's compliance and administrative
staff.
EXPENSES AND PERFORMANCE - In connection with its consideration of the Advisory
Agreement, the Board evaluated the Fund's advisory fees and total expense ratio
as compared to other open-end investment companies deemed to be comparable to
the Fund as determined by the independent third party in its report. The Fund's
expenses were compared to (i) a group of investment companies chosen by the
independent third party to be comparable to the Fund based upon certain factors,
including fund type, comparability of investment objective and classification,
sales load type (in this case, institutional investment companies), asset size,
and expense components (the "expense group") and (ii) a larger group of
investment companies that includes institutional investment companies in the
same investment classification/objective as the Fund regardless of asset size,
excluding outliers (the "expense universe"). Among other data, the Board noted
that the Fund's management fee rate - which includes advisory and administrative
services - was below the median of its expense group and its expense universe.
The data indicated that the Fund's total expenses were below the median of its
expense group and its expense universe. The Board took into account the various
services provided to the Fund by the Manager and its affiliates, including the
high quality of services received by the Fund from the Manager. The Board also
noted the level and method of
================================================================================
66 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
computing the management fee. The Board also took into account that the
subadvisory fees under the Subadvisory Agreements are paid by the Manager. The
Board also considered and discussed information about the Subadvisers' fees,
including the amount of management fees retained by the Manager after payment of
the subadvisory fees.
In considering the Fund's performance, the Board noted that it reviews at its
regularly scheduled meetings information about the Fund's performance results.
The Trustees also reviewed various comparative data provided to them in
connection with their consideration of the renewal of the Advisory Agreement,
including, among other information, a comparison of the Fund's average annual
total return with its Lipper index and with that of other mutual funds deemed to
be in its peer group by the independent third party in its report (the
"performance universe"). The Fund's performance universe consisted of the Fund
and all retail and institutional open-end investment companies with the same
classification/objective as the Fund regardless of asset size or primary channel
of distribution. This comparison indicated that, among other data, the Fund's
performance was above the average of its performance universe and lower than its
Lipper index for the one- and three-year periods ended December 31, 2013, and
was lower than the average of its performance universe and its Lipper index for
the five-year period ended December 31, 2013. The Board also noted that the
Fund's percentile performance ranking was in the top 40% of its performance
universe for the one-year period ended December 31, 2013 and was in the bottom
50% of its performance universe for the three- and five-year periods ended
December 31, 2013. The Board took into account management's discussion of the
Fund's performance and recent steps taken by management to address the Fund's
performance.
COMPENSATION AND PROFITABILITY - The Board took into consideration the level and
method of computing the management fee. The information considered by the Board
included operating profit margin information for the Manager's business as a
whole. The Board also received and considered profitability information related
to the management revenues from the Fund. This information included a review of
the methodology used in the allocation of certain costs to the Fund. The
Trustees reviewed the profitability of the Manager's relationship with the Fund
before tax expenses. In considering the profitability data with respect to the
Fund, the Trustees noted that the
================================================================================
ADVISORY AGREEMENT(S) | 67
================================================================================
Manager pays the subadvisory fees. In reviewing the overall profitability of the
management fee to the Manager, the Board also considered the fact that
affiliates provide shareholder servicing and administrative services to the Fund
for which they receive compensation. The Board also considered the possible
direct and indirect benefits to the Manager from its relationship with the
Trust, including that the Manager may derive reputational and other benefits
from its association with the Fund. The Trustees recognized that the Manager
should be entitled to earn a reasonable level of profits in exchange for the
level of services it provides to the Fund and the entrepreneurial risk that it
assumes as Manager.
ECONOMIES OF SCALE - The Board considered whether there should be changes in the
management fee rate or structure in order to enable the Fund to participate in
any economies of scale. The Board took into account management's discussion of
the Fund's current advisory fee structure. The Board also considered the effect
of the Fund's growth and size on its performance and fees, noting that if the
Fund's assets increase over time, the Fund may realize other economies of scale
if assets increase proportionally more than some expenses. The Board determined
that the current investment management fee structure was reasonable.
CONCLUSIONS - The Board reached the following conclusions regarding the Fund's
Advisory Agreement with the Manager, among others: (i) the Manager has
demonstrated that it possesses the capability and resources to perform the
duties required of it under the Advisory Agreement; (ii) the Manager maintains
an appropriate compliance program; (iii) the performance of the Fund is being
addressed; (iv) the Fund's advisory expenses are reasonable in relation to those
of similar funds and to the services to be provided by the Manager; and (v) the
Manager's and its affiliates' level of profitability from their relationship
with the Fund is reasonable. Based on its conclusions, the Board determined that
continuation of the Advisory Agreement would be in the best interests of the
Fund and its shareholders.
SUBADVISORY AGREEMENTS
In approving each Subadvisory Agreement with respect to the Fund, the Board
considered various factors, among them: (i) the nature, extent, and quality of
services provided to the Fund by the respective Subadviser, including the
================================================================================
68 | USAA GLOBAL MANAGED VOLATILITY FUND
================================================================================
personnel providing services; (ii) each Subadviser's compensation and any other
benefits derived from the subadvisory relationship; (iii) comparisons, to the
extent applicable, of subadvisory fees and performance to comparable investment
companies; and (iv) the terms of each Subadvisory Agreement. The Board's
analysis of these factors is set forth below.
After full consideration of a variety of factors, the Board including the
Independent Trustees, voted to approve each Subadvisory Agreement. In approving
each Subadvisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee may have attributed different weights to various
factors. Throughout their deliberations, the Independent Trustees were
represented and assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED; INVESTMENT PERSONNEL - The
Board considered information provided to it regarding the services provided by
each Subadviser, including information presented periodically throughout the
previous year. The Board considered each Subadviser's level of knowledge and
investment style. The Board reviewed the experience and credentials of the
investment personnel who would be responsible for managing the investment of
portfolio securities with respect to the Fund and each Subadviser's level of
staffing. The Board noted that the materials provided to it by each Subadviser
indicated that the method of compensating portfolio managers is reasonable and
includes appropriate mechanisms to prevent a manager with underperformance from
taking undue risks. The Board also noted each Subadviser's brokerage practices.
The Board also considered each Subadviser's regulatory and compliance history.
The Board also took into account each Subadviser's risk management processes.
The Board noted that the Manager's monitoring processes of the Subadvisers would
include: (i) regular telephonic meetings to discuss, among other matters,
investment strategies, and to review portfolio performance; (ii) monthly
portfolio compliance checklists and quarterly compliance certifications to the
Board; and (iii) due diligence reviews of each Subadviser.
SUBADVISER COMPENSATION - The Board also took into consideration the financial
condition of each Subadviser. In considering the cost of services to be provided
by each Subadviser and the profitability to each Subadviser of its relationship
with the Fund, the Board noted that the fees under the Subadvisory Agreements
were paid by the Manager. The Board also relied
================================================================================
ADVISORY AGREEMENT(S) | 69
================================================================================
on the ability of the Manager to negotiate the Subadvisory Agreements and the
fees thereunder at arm's length. For the above reasons, the Board determined
that the profitability of each Subadviser from its relationship with the Fund
was not a material factor in its deliberations with respect to the consideration
of the approval of the Subadvisory Agreement. For similar reasons, the Board
concluded that the potential for economies of scale in each Subadviser's
management of the Fund was not a material factor in considering the Subadvisory
Agreement.
SUBADVISORY FEES AND FUND PERFORMANCE - The Board compared the subadvisory fees
for the Fund with the fees each Subadviser charges to comparable clients, as
applicable. The Board considered that the Fund pays a management fee to the
Manager and that, in turn, the Manager pays a subadvisory fee to each
Subadviser. As noted above, the Board considered the Fund's performance during
the one-, three-, and five-year periods ended December 31, 2013, as compared to
the Fund's peer group and noted that the Board reviews at its regularly
scheduled meetings information about the Fund's performance results. The Board
also considered the performance of each Subadviser. The Board noted the
Manager's expertise and resources in monitoring the performance, investment
style, and risk-adjusted performance of each Subadviser. The Board was mindful
of the Manager's focus on each Subadviser's performance and the explanations of
management regarding the performance of the Fund. The Board also noted each
Subadviser's long-term performance record for similar accounts, as applicable.
CONCLUSIONS - The Board reached the following conclusions regarding each
Subadvisory Agreement, among others: (i) each Subadviser is qualified to manage
a portion of the Fund's assets in accordance with its investment objectives and
policies; (ii) each Subadviser maintains an appropriate compliance program;
(iii) the performance of the Fund is being addressed; and (iv) the Fund's
advisory expenses are reasonable in relation to those of similar funds and to
the services to be provided by the Manager and each Subadviser. Based on its
conclusions, the Board determined that approval of each Subadvisory Agreement
with respect to the Fund would be in the best interests of the Fund and its
shareholders.
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70 | USAA GLOBAL MANAGED VOLATILITY FUND
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TRUSTEES Daniel S. McNamara
Robert L. Mason, Ph.D.
Jefferson C. Boyce
Dawn M. Hawley
Paul L. McNamara
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
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ADMINISTRATOR AND USAA Asset Management Company
INVESTMENT ADVISER P.O. Box 659453
San Antonio, Texas 78265-9453
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UNDERWRITER AND USAA Investment Management Company
DISTRIBUTOR P.O. Box 659453
San Antonio, Texas 78265-9453
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TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
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CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
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INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
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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 Ref erence Room may be obtained by
calling (800) 732-0330.
================================================================================
USAA
9800 Fredericksburg Road --------------
San Antonio, TX 78288 PRSRT STD
U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on USAA.COM select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA WE KNOW WHAT IT MEANS TO SERVE.(R)
=============================================================================
88395-0814 (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 June 30, 2014
By:* /S/ DANIEL J. MAVICO
-----------------------------------------------------------
Signature and Title: Daniel J. Mavico, Assistant Secretary
Date: 08/27/2014
------------------------------
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: 08/27/2014
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 08/27/2014
------------------------------
*Print the name and title of each signing officer under his or her signature.