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: MARCH 31
Date of reporting period: SEPTEMBER 30, 2014
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED SEPTEMBER 30, 2014
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA TAX EXEMPT MONEY MARKET FUND]
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SEMIANNUAL REPORT
USAA TAX EXEMPT MONEY MARKET FUND
SEPTEMBER 30, 2014
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PRESIDENT'S MESSAGE
"SMALL DECISIONS TODAY, AS YOU WORK TO
GROW YOUR SAVINGS AND BUILD YOUR PORTFOLIO, [PHOTO OF BROOKS ENGLEHARDT]
CAN HAVE A BIG IMPACT IN THE FUTURE."
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NOVEMBER 2014
In the financial markets, nothing should be taken for granted. During the
reporting period, a number of so-called "experts" predicted that longer-term
interest rates would rise after the Federal Reserve (the Fed) began reducing (or
tapering) its quantitative easing (QE) asset purchases. (Through QE, the Fed had
been buying $85 billion of U.S. Treasury securities and mortgage-backed
securities every month in an effort to push down long-term interest rates and
stimulate economic growth.) However, instead of longer-term interest rates
rising, they fell. They continued to trend down through much of the reporting
period as the Fed continued tapering its asset purchases. Although interest
rates spiked during September of this year, the increase was temporary and
seemed to be a reaction to improved U.S. economic data, speculation about the
timing of Fed short-term interest rate cuts, and growing geopolitical concerns,
including extremist threats in the Middle East. At the end of the reporting
period, longer-term interest rates were lower than they were at the beginning of
the period.
The investment environment is multi-faceted, and short-term market moves can be
influenced by many different things. It is therefore vital, I believe, to have
an investment plan - one that is based on your financial objectives, time
horizon, and risk tolerance. Small decisions today, as you work to grow your
savings and build your portfolio, can have a big impact in the future.
At USAA Investments, we have believed for some time that longer-term interest
rates were likely to remain lower for longer than many market participants
expected. The U.S. economic recovery remains fragile. Growth contracted during
the first quarter, with U.S. gross domestic product (GDP) declining 2.1%.
Although GDP reportedly grew 4.6% in the second quarter, economic growth in the
first half of 2014 was lower than many expected at the beginning of the calendar
year. In addition, the global economy has slowed. Growth has stagnated in a
number of euro zone countries, and Europe could potentially experience a new
recession. China's economy has unexpectedly softened amid a slump in that
country's real estate sector, while Japan's second-quarter change in GDP was
weaker than anticipated. Meanwhile, geopolitical tensions sparked dramatic
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headlines during the reporting period and are likely to persist. Shareholders
must try to look through the media noise and focus on information relevant to
their investment plan.
Eventually, longer-term interest rates may start to rise, and we expect the
increase to be more gradual than the markets seem to believe. Once interest
rates do rise, bond prices will fall (bond prices move in the opposite direction
of interest rates). However, this will be offset, we believe, in part by the
income generated by those bonds. We also expect that our USAA fixed-income
portfolio managers will have the opportunity to reinvest and achieve higher
yields. It is our view that, in the coming months, you should expect the
majority of your potential total return to come from the income generated by
your bond funds.
Meanwhile, we believe that tax-exempt bonds are likely to remain attractive,
perhaps more so given that marginal income tax rates are higher today than they
were a few years ago. We expect many investors to continue favoring them for the
tax-free income they provide.
At the same time, most money market funds are yielding almost zero percent.
Some shareholders may find that other investments, such as short duration bond
funds - which generally offer higher yields than money markets - could be
attractive alternatives. If you would like to review your investment plan to
ensure it still matches your time horizon, investment goals, and risk tolerance,
please do not hesitate to call one of our financial advisors. They can also help
you determine if it might be appropriate to rebalance your portfolio. Regular
rebalancing potentially can help you protect your gains and prepare for what
happens next.
From all of us here at USAA Investments, thank you for your continued investment
in our family of tax-exempt mutual funds. We will continue working hard on your
behalf.
Sincerely,
/S/ BROOKS ENGLEHARDT
Brooks Englehardt
President
USAA Investments
Past performance is no guarantee of future results. o As interest rates rise,
bond prices generally fall; given the historically low interest rate
environment, risks associated with rising interest rates may be heightened. o
Investments provided by USAA Investment Management Company and USAA Financial
Advisors Inc., both registered broker dealers. o Financial advice provided by
USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial
Insurance Agency in California, License # 0E36312), and USAA Financial Advisors,
Inc., a registered broker dealer.
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TABLE OF CONTENTS
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FUND OBJECTIVE 1
MANAGER'S COMMENTARY 2
INVESTMENT OVERVIEW 4
FINANCIAL INFORMATION
Portfolio of Investments 8
Notes to Portfolio of Investments 24
Financial Statements 25
Notes to Financial Statements 28
EXPENSE EXAMPLE 36
ADVISORY AGREEMENT(S) 38
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 TAX EXEMPT MONEY MARKET FUND (THE FUND) PROVIDES INVESTORS WITH
INTEREST INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX AND A FURTHER OBJECTIVE
OF PRESERVING CAPITAL AND MAINTAINING LIQUIDITY.
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TYPES OF INVESTMENTS
The Fund invests primarily in high-quality tax-exempt securities with remaining
maturities of 397 days or less. During normal market conditions, at least 80% of
the Fund's net assets will consist of tax-exempt securities.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Asset Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
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FUND OBJECTIVE | 1
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MANAGER'S COMMENTARY ON THE FUND
DALE R. HOFFMANN [PHOTO OF DALE R. HOFFMANN]
USAA Asset Management Company
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o WHAT WERE THE MARKET CONDITIONS DURING THE REPORTING PERIOD?
Yields on money market funds stayed at or near zero throughout the reporting
period, as the Federal Reserve (the Fed) continued holding the federal funds
target rate between 0% and 0.25%. As a result, money market funds provided
very low absolute yields, though investors continued to rely on them for the
potential safety and liquidity they offer.
Meanwhile, the Fed continued to taper (or reduce) its quantitative easing
asset purchases and announced plans to end them in October of this year.
Accordingly, market participants began to speculate on the timing of a rate
hike, with some predicting the Fed might raise the federal funds target rate
in mid-2015.
The SIFMA Municipal Swap Index, the index of seven-day variable-rate demand
notes (VRDNs), stayed in a narrow range, starting the reporting period at
0.06%, rising to a high of 0.12% on April 23, 2014 amid tax season-related
redemptions, and ending the reporting period at 0.04%.
The SIFMA Municipal Swap Index is a 7-day high-grade market index comprised
of tax-exempt variable-rate demand obligations (VRDOs) with certain
characteristics. The index is calculated and published by Bloomberg. The
index is overseen by SIFMA's Municipal Swap Index Committee. o
Variable-rate demand notes (VRDNs) are securities for which the interest
rate is reset periodically; typically weekly, although reset intervals may
vary.
Refer to page 5 for benchmark definition.
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2 | USAA TAX EXEMPT MONEY MARKET FUND
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o HOW DID THE USAA TAX EXEMPT MONEY MARKET FUND (THE FUND) PERFORM DURING THE
REPORTING PERIOD?
For the six-month period ended September 30, 2014, the Fund had a return of
0.01%, compared to an average return of less than 0.01% for the tax-exempt
money market funds category, according to iMoneyNet, Inc.
USAA Asset Management Company is the Fund's investment adviser. The
investment adviser provides day-to-day discretionary management for the
Fund's assets.
o WHAT WERE YOUR STRATEGIES IN THIS ENVIRONMENT?
The majority of the Fund's assets are invested in VRDNs. The VRDNs owned by
the Fund provide both flexibility and liquidity because they can be sold at
par value (100% of face value) upon seven days' or less notice. In addition,
many of these VRDNs are guaranteed by a bank letter of credit for the
payment of both principal and interest. As a result, they offer the Fund a
degree of safety.
We also sought to enhance the Fund's yield by investing in securities with
longer maturities. However, given that interest rates were so low, these
securities did not significantly increase the Fund's yield. We relied on our
in-house team of credit analysts to help us identify potential investments
for the Fund. They also continued to analyze and monitor every holding in
the portfolio.
We appreciate the opportunity to help you with your investment needs.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. o As interest rates
rise, bond prices generally fall; given the historically low interest rate
environment, risks associated with rising interest rates may be heightened.
o Investing in securities products involves risk, including possible loss of
principal. o Some income may be subject to state or local taxes but not the
federal alternative minimum tax.
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MANAGER'S COMMENTARY ON THE FUND | 3
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INVESTMENT OVERVIEW
USAA TAX EXEMPT MONEY MARKET FUND (THE FUND) (Ticker Symbol: USEXX)
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9/30/14 3/31/14
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Net Assets $2.7 Billion $2.7 Billion
Net Asset Value Per Share $1.00 $1.00
Dollar-Weighted Average
Portfolio Maturity(+) 48 Days 38 Days
(+)Obtained by multiplying the dollar value of each investment by the number of
days left to its maturity, adding those figures together, and dividing them by
the total dollar value of the Fund's portfolio.
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AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/14
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3/31/14-9/30/14* 1 YEAR 5 YEARS 10 YEARS
0.01% 0.02% 0.03% 1.18%
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7- DAY YIELD AS OF 9/30/14 EXPENSE RATIO AS OF 3/31/14**
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SUBSIDIZED 0.01% 0.56%
UNSUBSIDIZED -0.41%
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 August 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.
An investment in a money market fund is not insured or guaranteed by the FDIC or
any other government agency. Although the Fund seeks to preserve the value of
your investment at $1 per share, it is possible to lose money by investing in
the Fund.
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 or
reinvested net invstment income. Yields and returns fluctuate. The seven-day
yield quotation more closely reflects current earnings of the Fund than the
total return quotation.
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4 | USAA TAX EXEMPT MONEY MARKET FUND
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o 7-DAY YIELD COMPARISON o
[CHART OF 7-DAY YIELD COMPARISON]
IMONEY NET USAA TAX EXEMPT MONEY
AVERAGE 0.01% MARKET FUND 0.01%
9/30/2013 0.01 0.01
10/28/2013 0.01 0.01
11/25/2013 0.01 0.01
12/30/2013 0.01 0.01
1/27/2014 0.01 0.01
2/24/2014 0.01 0.01
3/31/2014 0.01 0.01
4/28/2014 0.01 0.01
5/23/2014 0.01 0.01
6/30/2014 0.01 0.01
7/28/2014 0.01 0.01
8/25/2014 0.01 0.01
9/29/2014 0.01 0.01
[END CHART]
Data represent the last Monday of each month. Ending date 9/29/14.
The graph tracks the USAA Tax Exempt Money Market Fund's seven-day yield against
an average of money market fund yields of all tax-free national retail money
funds average of money market fund yields calculated by iMoneyNet, Inc.
iMoneyNet, Inc. is an organization that tracks the performance of money market
funds.
Past performance is no guarantee of future results.
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INVESTMENT OVERVIEW | 5
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o TOP 10 INDUSTRIES - 9/30/14 o
(% of Net Assets)
General Obligation ....................................................... 16.2%
Education ................................................................ 13.4%
Electric Utilities ....................................................... 10.4%
Hospital ................................................................. 9.3%
Nursing/CCRC ............................................................. 6.8%
Agricultural Products .................................................... 5.4%
Electric/Gas Utilities ................................................... 5.2%
Community Service ........................................................ 5.0%
Special Assessment/Tax/Fee ............................................... 4.5%
Multifamily Housing ...................................................... 3.9%
o PORTFOLIO MIX - 9/30/14 o
[PIE CHART OF PORTFOLIO MIX - 9/30/14 ]
VARIABLE-RATE DEMAND NOTES 69.2%
FIXED-RATE INSTRUMENTS 25.8%
PUT BONDS 4.6%
ADJUSTABLE-RATE NOTES 0.7%
[END CHART]
Percentages are of the net assets of the Fund and may not equal 100%.
You will find a complete list of securities that the Fund owns on pages 11-23.
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6 | USAA TAX EXEMPT MONEY MARKET FUND
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o CUMULATIVE PERFORMANCE OF $10,000 o
[CHART OF CUMULATIVE PERFORMANCE OF $10,000]
USAA TAX EXEMPT
MONEY MARKET FUND
09/30/04 $10,000.00
10/31/04 10,010.80
11/30/04 10,021.18
12/31/04 10,032.94
01/31/05 10,043.85
02/28/05 10,055.51
03/31/05 10,068.65
04/30/05 10,086.26
05/31/05 10,106.52
06/30/05 10,123.43
07/31/05 10,139.74
08/31/05 10,157.36
09/30/05 10,176.67
10/31/05 10,195.09
11/30/05 10,215.93
12/31/05 10,240.96
01/31/06 10,262.11
02/28/06 10,283.21
03/31/06 10,307.99
04/30/06 10,331.78
05/31/06 10,358.89
06/30/06 10,388.22
07/31/06 10,414.28
08/31/06 10,441.58
09/30/06 10,469.29
10/31/06 10,495.98
11/30/06 10,523.16
12/31/06 10,553.89
01/31/07 10,580.40
02/28/07 10,606.39
03/31/07 10,635.67
04/30/07 10,663.83
05/31/07 10,695.23
06/30/07 10,725.30
07/31/07 10,753.70
08/31/07 10,786.82
09/30/07 10,814.09
10/31/07 10,843.17
11/30/07 10,872.78
12/31/07 10,899.97
01/31/08 10,924.94
02/29/08 10,946.29
03/31/08 10,971.63
04/30/08 10,992.64
05/31/08 11,015.28
06/30/08 11,032.93
07/31/08 11,049.79
08/31/08 11,068.03
09/30/08 11,099.27
10/31/08 11,134.82
11/30/08 11,148.23
12/31/08 11,161.53
01/31/09 11,169.47
02/28/09 11,176.51
03/31/09 11,184.86
04/30/09 11,193.51
05/31/09 11,203.65
06/30/09 11,212.47
07/31/09 11,221.07
08/31/09 11,227.68
09/30/09 11,232.54
10/31/09 11,234.95
11/30/09 11,236.19
12/31/09 11,238.80
01/31/10 11,238.89
02/28/10 11,238.98
03/31/10 11,239.07
04/30/10 11,239.17
05/31/10 11,239.61
06/30/10 11,239.83
07/31/10 11,239.93
08/31/10 11,240.03
09/30/10 11,240.12
10/31/10 11,240.21
11/30/10 11,240.30
12/31/10 11,240.42
01/31/11 11,240.51
02/28/11 11,240.60
03/31/11 11,240.70
04/30/11 11,240.79
05/31/11 11,240.88
06/30/11 11,240.97
07/31/11 11,241.07
08/31/11 11,241.16
09/30/11 11,241.26
10/31/11 11,241.35
11/30/11 11,241.44
12/31/11 11,241.66
01/31/12 11,244.51
02/29/12 11,244.60
03/31/12 11,244.70
04/30/12 11,244.79
05/31/12 11,244.88
06/30/12 11,244.98
07/31/12 11,245.07
08/31/12 11,245.17
09/30/12 11,245.26
10/31/12 11,245.35
11/30/12 11,245.45
12/31/12 11,245.99
01/31/13 11,246.09
02/28/13 11,246.17
03/31/13 11,246.27
04/30/13 11,246.36
05/31/13 11,246.45
06/30/13 11,246.55
07/31/13 11,246.64
08/31/13 11,246.74
09/30/13 11,246.83
10/31/13 11,246.92
11/30/13 11,247.02
12/31/13 11,248.13
01/31/14 11,248.22
02/28/14 11,248.31
03/31/14 11,248.40
04/30/14 11,248.49
05/31/14 11,248.59
06/30/14 11,248.68
07/31/14 11,248.78
08/31/14 11,248.87
09/30/14 11,248.96
[END CHART]
Data from 9/30/04 through 9/30/14.
The graph illustrates the performance of a hypothetical $10,000 investment in
the USAA Tax Exempt Money Market Fund.
Past performance is no guarantee of future results. The cumulative performance
quoted does not reflect the deduction of taxes that a shareholder would pay on
reinvested net investment income and realized capital gain distributions or on
the redemption of shares. Some income may be subject to federal, state, or local
taxes. For seven-day yield information, please refer to the Fund's Investment
Overview.
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INVESTMENT OVERVIEW | 7
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PORTFOLIO OF INVESTMENTS
September 30, 2014 (unaudited)
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o CATEGORIES AND DEFINITIONS
VARIABLE-RATE DEMAND NOTES (VRDNS) - provide the right to sell the security
at face value on either that day or within the rate-reset period. The
interest rate is adjusted at a stipulated daily, weekly, monthly, quarterly,
or other specified time interval to reflect current market conditions. The
effective maturity of these instruments is deemed to be less than 397 days
in accordance with detailed regulatory requirements.
PUT BONDS - provide the right to sell the bond at face value at specific
tender dates prior to final maturity. The put feature shortens the effective
maturity of the security.
ADJUSTABLE-RATE NOTES - similar to VRDNs in the fact that the interest rate
is adjusted periodically to reflect current market conditions. These
interest rates are adjusted at a given time, such as monthly or quarterly.
However, these securities do not offer the right to sell the security at
face value prior to maturity.
FIXED-RATE INSTRUMENTS - consist of municipal bonds, notes, and commercial
paper. The interest rate is constant to maturity. Prior to maturity, the
market price of a fixed-rate instrument generally varies inversely to the
movement of interest rates.
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 values of the securities.
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8 | USAA TAX EXEMPT MONEY MARKET FUND
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The Fund's purchases consist of securities meeting the requirements to
qualify as "eligible securities" under the Securities and Exchange
Commission (SEC) rules applicable to money market funds. With respect to
quality, eligible securities generally are rated or subject to a guarantee
that is rated in one of the two highest categories for short-term
securities by at least two Nationally Recognized Statistical Rating
Organizations (NRSROs), or by one NRSRO if the security is rated by only one
NRSRO, or if unrated, determined by USAA Asset Management Company (the
Manager) to be of comparable quality. In addition, the Manager must consider
whether a particular investment presents minimal credit risk in accordance
with SEC guidelines applicable to money market funds.
(INS) Principal and interest payments are insured by Berkshire Hathaway
Assurance 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.
(LIQ) Liquidity enhancement that may, under certain circumstances,
provide for repayment of principal and interest upon demand from
one of the following: Bank of America, N.A., Citibank, N.A.,
Deutsche Bank A.G., or JPMorgan Chase Bank, N.A.
(LOC) Principal and interest payments are guaranteed by a bank letter of
credit or other bank credit agreement.
(NBGA) Principal and interest payments or, under certain circumstances,
underlying mortgages are guaranteed by a nonbank guarantee
agreement from one of the following: Minnesota General Obligation,
Montana Board of Investments Intercap Program, or National Rural
Utility Corp.
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PORTFOLIO OF INVESTMENTS | 9
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PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
ABAG Association of Bay Area Governments
CSD Central School District
EDA Economic Development Authority
EDC Economic Development Corp.
IDA Industrial Development Authority/Agency
IDB Industrial Development Board
IDC Industrial Development Corp.
ISD Independent School District
SPEAR Short Puttable Exempt Adjustable Receipts
USD Unified School District
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10 | USAA TAX EXEMPT MONEY MARKET FUND
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INVESTMENTS
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PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
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VARIABLE-RATE DEMAND NOTES (69.2%)
ALABAMA (2.8%)
$ 10,000 Chatom IDB (NBGA) 0.19% 8/01/2041 $ 10,000
6,550 Eutaw IDB 0.07 12/01/2020 6,550
1,470 Huntsville Educational Building Auth.
(LOC - Branch Banking & Trust Co.) 0.05 12/01/2022 1,470
25,000 Mobile County IDA (LOC - Swedbank AB) 0.07 7/01/2040 25,000
32,500 Tuscaloosa County Port Auth.
(LOC - PNC Bank, N.A.) 0.07 12/01/2031 32,500
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75,520
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ARKANSAS (0.2%)
5,175 Texarkana (LOC - PNC Bank, N.A.) 0.19 3/01/2021 5,175
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CALIFORNIA (5.5%)
9,600 ABAG Finance Auth. for Nonprofit Corps.
(LOC - KBC Bank N.V.) 0.31 5/15/2035 9,600
6,020 Anaheim Public Financing Auth. (LIQ)
(LOC - Deutsche Bank A.G.)(a) 0.21 9/01/2030 6,020
13,910 Golden State Tobacco Securitization Corp.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.13 6/01/2027 13,910
6,000 Golden State Tobacco Securitization Corp.
(INS) (LIQ) (a) 0.08 12/01/2037 6,000
29,715 Grossmont Healthcare District (LIQ)
(LOC - Deutsche Bank A.G.)(a) 0.12 7/15/2033 29,715
2,600 Manteca USD (LIQ) (LOC - Deutsche Bank A.G.)(a) 0.10 8/01/2035 2,600
500 Pasadena (LOC - Bank of America, N.A.) 0.04 2/01/2035 500
3,945 Sacramento City Financing Auth. (LIQ)
(LOC - Deutsche Bank A.G.)(a) 0.13 12/01/2033 3,945
19,890 San Jose USD (LIQ) (LOC - Deutsche Bank A.G.)(a) 0.11 6/01/2031 19,890
14,200 SPEAR (LIQ) (LOC - Deutsche Bank A.G.)(a) 0.13 8/01/2031 14,200
37,450 Statewide Communities Dev. Auth.
(LIQ) (LOC - Citibank, N.A.)(a) 0.54 12/14/2016 37,450
3,125 Ukiah USD (LIQ) (LOC - Deutsche Bank A.G.)(a) 0.13 8/01/2030 3,125
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146,955
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PORTFOLIO OF INVESTMENTS | 11
================================================================================
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PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
COLORADO (1.7%)
$ 1,440 El Paso County (LOC - JPMorgan Chase Bank, N.A.) 0.15% 11/01/2021 $ 1,440
6,495 Health Facilities Auth. (LIQ)(a) 0.24 3/01/2016 6,495
6,665 Health Facilities Auth. (LIQ)(a) 0.24 2/01/2019 6,665
13,015 Health Facilities Auth. (LIQ)(a) 0.29 10/01/2034 13,015
17,500 Health Facilities Auth. (LIQ)(a) 0.26 10/01/2041 17,500
----------
45,115
----------
CONNECTICUT (0.2%)
5,000 Health and Educational Facilities Auth.
(LOC - Bank of America, N.A.) 0.08 7/01/2030 5,000
----------
DELAWARE (0.3%)
6,600 EDA IDA 0.55 12/01/2014 6,600
----------
DISTRICT OF COLUMBIA (0.4%)
2,400 District of Columbia (LOC - Bank of America, N.A.) 0.15 7/01/2022 2,400
7,940 Metropolitan Washington Airports Auth.
(LOC - TD Bank, N.A.) 0.03 10/01/2039 7,940
----------
10,340
----------
FLORIDA (2.0%)
1,200 Jackson County 0.05 7/01/2022 1,200
3,140 Lee County IDA (LOC - Fifth Third Bank) 0.17 6/01/2025 3,140
9,030 Seminole County IDA (LOC - Fifth Third Bank) 0.15 12/01/2037 9,030
13,010 St. Lucie County 0.04 9/01/2028 13,010
9,005 UCF Health Facilities Corp. (LOC - Fifth Third Bank) 0.15 7/01/2037 9,005
16,600 Univ. of North Florida Financing Corp.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.09 11/01/2027 16,600
----------
51,985
----------
GEORGIA (1.1%)
3,000 Appling County Dev. Auth. 0.04 9/01/2041 3,000
13,000 Bartow County Dev. Auth. 0.08 12/01/2032 13,000
2,400 Cobb County Dev. Auth. (LOC - Federal Home
Loan Bank of Atlanta) 0.07 2/01/2030 2,400
2,500 Floyd County Dev. Auth. (LOC - PNC Bank, N.A.) 0.08 4/01/2017 2,500
7,200 Monroe County Dev. Auth. 0.10 7/01/2049 7,200
----------
28,100
----------
ILLINOIS (7.0%)
4,200 Dev. Finance Auth. 0.10 1/01/2016 4,200
20,000 Dev. Finance Auth. (LOC - JPMorgan
Chase Bank, N.A.) 0.06 10/01/2029 20,000
28,000 Dev. Finance Auth. (LOC - JPMorgan
Chase Bank, N.A.) 0.05 9/01/2031 28,000
3,080 Dev. Finance Auth. (LOC - Bank of America, N.A.) 0.15 9/01/2032 3,080
================================================================================
12 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
$ 10,000 Dev. Finance Auth. (LOC - JPMorgan Chase
Bank, N.A.) (LOC - Northern Trust Co.) 0.05% 12/01/2033 $ 10,000
1,520 Educational Facilities Auth. (LOC - Fifth Third Bank) 0.15 7/01/2024 1,520
20,000 Finance Auth. (LOC - JPMorgan Chase Bank, N.A.) 0.05 11/15/2029 20,000
2,790 Finance Auth. (LOC - Fifth Third Bank) 0.24 3/01/2031 2,790
12,720 Finance Auth. (LOC - JPMorgan Chase Bank, N.A.) 0.05 5/01/2038 12,720
15,725 Finance Auth. (LOC - Fifth Third Bank) 0.08 6/01/2038 15,725
2,595 McHenry County (LIQ) (LOC - Deutsche
Bank A.G.)(a) 0.11 1/15/2026 2,595
14,125 Metropolitan Pier and Exposition Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.11 6/15/2034 14,125
24,760 Metropolitan Pier and Exposition Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.11 12/15/2039 24,760
4,350 Skokie Economic Dev. (LOC - Bank of America, N.A.) 0.15 12/01/2014 4,350
4,249 Springfield Airport Auth. 0.60 10/15/2016 4,249
12,535 Village of Morton Grove (LOC - Bank of
America, N.A.) 0.07 12/01/2041 12,535
6,250 Will County (LOC - FirstMerit Bank, N.A.) 0.11 7/01/2034 6,250
----------
186,899
----------
INDIANA (1.5%)
6,055 Berne (LOC - Federal Home Loan
Bank of Indianapolis) 0.09 10/01/2033 6,055
6,125 Dev. Finance Auth. (LOC - Fifth Third Bank) 0.15 2/01/2023 6,125
4,540 Evansville (LOC - Fifth Third Bank) 0.15 1/01/2025 4,540
9,620 Finance Auth. (LOC - Federal Home Loan
Bank of Indianapolis) 0.08 7/01/2029 9,620
1,220 Finance Auth. (LOC - Fifth Third Bank) 0.17 9/01/2031 1,220
2,530 Finance Auth. (LOC - PNC Bank, N.A.) 0.09 6/01/2037 2,530
5,110 Westfield Multi-School Building (LIQ)
(LOC - Deutsche Bank A.G.)(a) 0.10 7/15/2027 5,110
5,760 Winona Lake (LOC - Key Bank, N.A.) 0.24 7/01/2031 5,760
----------
40,960
----------
IOWA (7.7%)
6,850 Chillicothe 0.10 1/01/2023 6,850
12,750 Council Bluffs 0.10 1/01/2025 12,750
10,000 Finance Auth. 0.06 6/01/2039 10,000
29,000 Finance Auth. 0.07 6/01/2036 29,000
32,000 Finance Auth. 0.07 9/01/2036 32,000
30,000 Finance Auth. (LOC - U.S. Bank, N.A.) 0.09 12/01/2042 30,000
2,200 Higher Educational Loan Auth.
(LOC - Fifth Third Bank) 0.06 5/01/2029 2,200
7,900 Higher Educational Loan Auth.
(LOC - Fifth Third Bank) 0.06 4/01/2035 7,900
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
$ 29,500 Louisa County 0.05% 9/01/2016 $ 29,500
3,900 Louisa County 0.05 3/01/2017 3,900
34,900 Louisa County 0.05 10/01/2024 34,900
550 Sheldon 0.34 11/01/2015 550
5,500 Urbandale (LOC - Wells Fargo Bank, N.A.) 0.10 11/01/2020 5,500
----------
205,050
----------
KENTUCKY (0.5%)
9,770 Georgetown (LOC - Fifth Third Bank) 0.15 11/15/2029 9,770
330 Lexington-Fayette Urban County
(LOC - JPMorgan Chase Bank, N.A.) 0.45 7/01/2021 330
2,845 Lexington-Fayette Urban County
(LOC - Federal Home Loan Bank of Cincinnati) 0.29 12/01/2027 2,845
----------
12,945
----------
LOUISIANA (2.3%)
590 Environmental Facilities and Community Dev. Auth.
(LOC - Federal Home Loan Bank of Dallas) 0.07 4/01/2018 590
12,140 Environmental Facilities and Community Dev. Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.12 2/01/2039 12,140
1,665 Hammond Area Economic and Industrial Dev. District
(LOC - Federal Home Loan Bank of Dallas) 0.07 3/01/2033 1,665
7,070 New Orleans (LOC - Capital One, N.A.) 0.39 8/01/2024 7,070
795 Public Facilities Auth. (LOC - Federal Home
Loan Bank of Dallas) 0.07 12/01/2014 795
1,100 Public Facilities Auth. 0.07 8/01/2017 1,100
1,465 Public Facilities Auth. (LOC - Capital One, N.A.) 0.41 7/01/2023 1,465
240 Public Facilities Auth. (LOC - Capital One, N.A.) 0.43 7/01/2023 240
385 Public Facilities Auth. (LOC - Capital One, N.A.) 0.43 7/01/2023 385
265 Public Facilities Auth. (LOC - Capital One, N.A.) 0.43 7/01/2027 265
4,800 Public Facilities Auth. 0.04 8/01/2050 4,800
25,000 St. James Parish (LOC - Natixis S.A.) 0.21 1/01/2039 25,000
6,810 St. Tammany Parish Dev. District
(LOC - Federal Home Loan Bank of Dallas) 0.07 3/01/2033 6,810
----------
62,325
----------
MARYLAND (0.4%)
10,245 Williamsport (LOC - Manufacturers &
Traders Trust Co.) 0.09 11/01/2037 10,245
----------
MASSACHUSETTS (0.5%)
6,720 Dev. Finance Agency (LOC - Manufacturers &
Traders Trust Co.) 0.09 4/01/2041 6,720
6,730 Dev. Finance Agency (LOC - RBS Citizens, N.A.) 0.23 4/01/2041 6,730
----------
13,450
----------
================================================================================
14 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
MICHIGAN (1.7%)
$ 7,500 Finance Auth. (LOC - Fifth Third Bank) 0.15% 12/01/2032 $ 7,500
1,500 Finance Auth. (LOC - Fifth Third Bank) 0.15 12/01/2032 1,500
5,560 Higher Educational Facilities Auth.
(LOC - Comerica Bank, N.A.) 0.05 11/01/2036 5,560
4,580 Higher Educational Facilities Auth.
(LOC - Federal Home Loan Bank of Boston) 0.04 7/01/2037 4,580
6,715 Hospital Finance Auth. (LOC - Fifth Third Bank) 0.15 6/01/2035 6,715
2,215 Kent Hospital Finance Auth. (LOC - Fifth Third Bank) 0.15 10/01/2041 2,215
10,000 Oakland County EDC (LOC - Fifth Third Bank) 0.15 3/01/2029 10,000
2,675 Strategic Fund (LOC - Fifth Third Bank) 0.15 10/01/2015 2,675
1,025 Strategic Fund (LOC - Fifth Third Bank) 0.15 10/01/2027 1,025
2,565 Strategic Fund (LOC - Fifth Third Bank) 0.17 4/01/2035 2,565
----------
44,335
----------
MINNESOTA (1.6%)
2,400 Canby Community Hospital District No.1 0.34 11/01/2026 2,400
4,590 New Ulm (LOC - Federal Home Loan
Bank of Chicago) 0.07 10/01/2040 4,590
4,675 Rochester (LOC - Royal Bank of Scotland N.V.) 0.31 4/01/2022 4,675
21,985 St. Paul Housing and Redevelopment Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.14 10/01/2033 21,985
10,100 St. Paul Housing and Redevelopment Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.14 10/01/2033 10,100
----------
43,750
----------
MISSISSIPPI (0.5%)
4,800 Business Finance Corp. (LOC - Federal Home
Loan Bank of Dallas) 0.07 3/01/2033 4,800
8,780 Business Finance Corp. (LOC - PNC Bank, N.A.) 0.07 12/01/2036 8,780
----------
13,580
----------
MISSOURI (1.2%)
1,050 Health and Educational Facilities Auth.
(LOC - Fifth Third Bank) 0.15 11/01/2020 1,050
6,650 Health and Educational Facilities Auth.
(LOC - Commerce Bank, N.A.) 0.09 7/01/2026 6,650
5,770 Health and Educational Facilities Auth.
(LOC - Commerce Bank, N.A.) 0.06 11/01/2032 5,770
5,000 Health and Educational Facilities Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.12 11/15/2048 5,000
8,400 Jackson County IDA (LOC - Commerce Bank, N.A.) 0.09 7/01/2025 8,400
3,565 St. Louis County IDA (LOC - U.S. Bank, N.A.) 0.07 6/15/2024 3,565
1,400 St. Louis County IDA (LOC - Fifth Third Bank) 0.11 9/01/2038 1,400
----------
31,835
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
NEBRASKA (0.4%)
$ 10,000 Washington County 0.07% 12/01/2040 $ 10,000
----------
NEW HAMPSHIRE (0.8%)
10,000 Business Finance (LOC - Landesbank
Hessen-Thuringen) 0.12 9/01/2030 10,000
4,540 Health and Education Facilities Auth.
(LOC - RBS Citizens, N.A.) 0.22 7/01/2037 4,540
6,530 Health and Education Facilities Auth.
(LOC - RBS Citizens, N.A.) 0.22 7/01/2038 6,530
----------
21,070
----------
NEW JERSEY (0.2%)
3,955 EDA (LOC - Bank of America, N.A.) 0.14 11/01/2027 3,955
----------
NEW MEXICO (0.2%)
5,000 Hospital Equipment Loan Council
(LOC - Fifth Third Bank) 0.17 7/01/2025 5,000
----------
NEW YORK (6.1%)
4,290 Albany IDA (LOC - RBS Citizens, N.A.) 0.27 5/01/2035 4,290
9,555 Albany IDA (LOC - Key Bank, N.A.) 0.11 7/01/2035 9,555
12,305 Broome County IDA (LOC - Manufacturers &
Traders Trust Co.) 0.09 7/01/2040 12,305
2,540 Chautauqua County IDA (LOC - RBS
Citizens, N.A.) 0.22 8/01/2027 2,540
4,115 Clinton County IDA (LOC - Key Bank, N.A.) 0.11 7/01/2017 4,115
7,275 Clinton County IDA (LOC - Key Bank, N.A.) 0.11 7/01/2042 7,275
2,210 Erie County IDA (LOC - Key Bank, N.A.) 0.16 6/01/2022 2,210
3,900 Erie County IDA (LOC - Key Bank, N.A.) 0.16 3/01/2024 3,900
2,305 Guilderland IDA (LOC - Key Bank, N.A.) 0.16 7/01/2032 2,305
10,000 Housing Finance Agency (LOC - Landesbank
Hessen-Thuringen) 0.04 5/01/2042 10,000
5,200 Housing Finance Agency (LOC - Landesbank
Hessen-Thuringen) 0.07 5/01/2042 5,200
5,100 Long Island Power Auth. (LOC - JPMorgan
Chase Bank, N.A.) 0.04 5/01/2033 5,100
5,300 Long Island Power Auth. (LOC - Bayerische
Landesbank) 0.05 5/01/2033 5,300
1,470 Monroe County IDA (LOC - Key Bank, N.A.) 0.16 8/01/2018 1,470
3,100 New York City (LIQ)(a) 0.04 8/01/2020 3,100
8,000 New York City (LOC - Bayerische Landesbank) 0.04 8/01/2022 8,000
6,500 New York City (LOC - Sumitomo Mitsui
Banking Corp.) 0.04 9/01/2035 6,500
================================================================================
16 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
$ 4,900 New York City (LOC - Manufacturers & Traders
Trust Co.) 0.10% 12/01/2040 $ 4,900
6,160 New York City IDA (LOC - Key Bank, N.A.) 0.14 7/01/2037 6,160
6,240 New York City IDA (LOC - Key Bank, N.A.)(b) 0.14 7/01/2038 6,240
1,520 Niagara County IDA (LOC - Key Bank, N.A.) 0.16 9/01/2021 1,520
5,690 Oneida County IDA (LOC - Manufacturers & Traders
Trust Co.) 0.09 6/01/2030 5,690
3,385 Onondaga County IDA (LOC - Key Bank, N.A.) 0.11 7/01/2025 3,385
7,800 Onondaga County IDA (LOC - Manufacturers & Traders
Trust Co.) 0.09 12/01/2031 7,800
1,500 Ontario County IDA (LOC - Royal Bank of
Scotland N.V.) 0.31 3/01/2028 1,500
6,570 Ontario County IDA (LOC - Key Bank, N.A.) 0.11 7/01/2030 6,570
8,920 Ramapo Housing Auth. (LOC - Manufacturers & Traders
Trust Co.) 0.14 12/01/2029 8,920
2,215 St. Lawrence County (LOC - RBS Citizens, N.A.) 0.36 7/01/2037 2,215
5,800 State Housing Finance Agency (LOC - Landesbank
Hessen-Thuringen) 0.05 11/01/2037 5,800
600 State Housing Finance Agency (LOC - Landesbank
Hessen-Thuringen) 0.07 5/01/2042 600
2,805 Syracuse IDA (LOC - Key Bank, N.A.) 0.16 1/01/2033 2,805
4,745 Tompkins County IDA (LOC - Bank of America, N.A.) 0.13 2/01/2037 4,745
----------
162,015
----------
OHIO (4.3%)
3,535 Akron Metropolitan Housing Auth.
(LOC - FirstMerit Bank, N.A.) 0.12 4/01/2018 3,535
40,000 Buckeye Tobacco Settlement Finance Auth.
(LIQ) (LOC - Deutsche Bank A.G.)(a) 0.31 6/01/2024 40,000
14,595 Butler County (LOC - Fifth Third Bank) 0.15 5/15/2036 14,595
1,340 Cadiz Health Care Facilities Auth.
(LOC - PNC Bank, N.A.) 0.29 1/01/2033 1,340
2,900 Cincinnati and Hamilton County
(LOC - Fifth Third Bank) 0.11 9/01/2025 2,900
1,080 Clermont County (LOC - Fifth Third Bank) 0.15 8/01/2022 1,080
1,020 Columbus-Franklin County Finance Auth.
(LOC - Fifth Third Bank) 0.17 6/01/2027 1,020
7,850 Delaware County (LOC - Fifth Third Bank) 0.15 10/01/2033 7,850
5,310 Hamilton County (LOC - Fifth Third Bank) 0.15 12/01/2024 5,310
12,300 Hamilton County (LOC - Fifth Third Bank) 0.15 12/01/2026 12,300
4,235 Higher Educational Facilities
(LOC - Fifth Third Bank) 0.13 9/01/2036 4,235
1,845 Highland County (LOC - Fifth Third Bank) 0.17 8/01/2024 1,845
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
$ 11,150 Pike County Health Care Facilities
(LOC - Bank of America, N.A.) 0.08% 11/01/2033 $ 11,150
2,345 Pike County Health Care Facilities
(LOC - Bank of America, N.A.) 0.08 11/01/2033 2,345
2,290 Summit County (LOC - Fifth Third Bank) 0.15 12/01/2029 2,290
2,185 Wayne County (LOC - Fifth Third Bank) 0.22 9/01/2021 2,185
----------
113,980
----------
OKLAHOMA (3.5%)
7,055 Edmond EDA (LOC - Bank of Oklahoma, N.A.) 0.12 6/01/2031 7,055
8,700 Garfield County Industrial Auth. 0.08 1/01/2025 8,700
32,400 Muskogee Industrial Trust(b) 0.10 1/01/2025 32,400
36,000 Muskogee Industrial Trust(b) 0.06 6/01/2027 36,000
9,700 Tulsa Industrial Auth. (LOC - Bank of
Oklahoma, N.A.) 0.25 11/01/2026 9,700
----------
93,855
----------
OREGON (1.7%)
6,585 Facilities Auth. (LOC - Bank of the West) 0.14 10/01/2037 6,585
38,100 Port of Portland (LOC - Bank of
Tokyo-Mitsubishi UFJ, Ltd.) 0.25 12/01/2014 38,100
----------
44,685
----------
PENNSYLVANIA (0.9%)
5,250 Chartiers Valley Industrial and Commercial
Dev. Auth. 1.10 11/15/2017 5,250
5,000 Delaware Valley Regional Finance Auth.
(LOC - Bayerische Landesbank) 0.25 12/01/2020 5,000
9,295 Derry Township Industrial and Commercial
Dev. Auth. (LOC - PNC Bank, N.A.) 0.05 11/01/2030 9,295
5,080 Philadelphia Gas Works (LIQ)
(LOC - Deutsche Bank A.G.)(a) 0.10 10/01/2018 5,080
----------
24,625
----------
SOUTH CAROLINA (0.4%)
4,600 EDA (LOC - Fifth Third Bank) 0.15 2/01/2028 4,600
6,060 Public Service Auth. (LIQ)(a) 0.16 6/01/2037 6,060
----------
10,660
----------
SOUTH DAKOTA (0.6%)
5,975 Health and Educational Facilities Auth. 0.34 11/01/2020 5,975
3,090 Health and Educational Facilities Auth. 0.34 11/01/2025 3,090
6,455 Health and Educational Facilities Auth. 0.34 11/01/2027 6,455
----------
15,520
----------
================================================================================
18 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
TENNESSEE (0.6%)
$ 7,100 Hendersonville IDB (LOC - Fifth Third Bank) 0.17% 5/01/2036 $ 7,100
1,540 Metropolitan Government of Nashville and
Davidson County (LOC - Fifth Third Bank) 0.15 3/01/2023 1,540
4,860 Metropolitan Government of Nashville and
Davidson County (LOC - Fifth Third Bank) 0.15 12/01/2024 4,860
2,325 Williamson County IDB (LOC - Fifth Third Bank) 0.17 12/01/2027 2,325
----------
15,825
----------
TEXAS (3.0%)
13,300 Atascosa County IDC (NBGA) 0.09 6/30/2020 13,300
3,235 Houston (LIQ) (LOC - Deutsche Bank A.G.)(a) 0.12 12/01/2028 3,235
9,100 Metropolitan Higher Education Auth.
(LOC - JPMorgan Chase Bank, N.A.) 0.08 5/01/2019 9,100
15,000 Port Arthur 0.05 12/01/2040 15,000
25,000 Port Arthur 0.05 6/01/2041 25,000
13,000 Port of Port Arthur Navigation District 0.17 12/01/2039 13,000
----------
78,635
----------
VIRGINIA (2.2%)
2,000 College Building Auth. (LIQ)(a) 0.05 2/01/2021 2,000
2,580 Fairfax County IDA 0.06 5/15/2035 2,580
2,200 Hampton Roads Sanitation District 0.04 11/01/2041 2,200
3,620 Hanover County EDA (LOC - U.S. Bank, N.A.) 0.04 11/01/2025 3,620
4,670 Lexington IDA 0.05 1/01/2035 4,670
12,500 Loudoun County IDA 0.03 2/15/2038 12,500
6,300 Madison County IDA (LOC - SunTrust Bank) 0.09 10/01/2037 6,300
1,900 Peninsula Ports Auth. (LOC - U.S. Bank, N.A.) 0.05 7/01/2016 1,900
19,100 Stafford County IDA (LOC - Bank of America, N.A.) 0.05 8/01/2028 19,100
4,415 Univ. of Virginia (LIQ)(a) 0.03 6/01/2032 4,415
----------
59,285
----------
WASHINGTON (1.1%)
15,000 Health Care Facilities Auth. (LIQ)(a) 0.24 10/01/2016 15,000
8,880 Housing Finance Commission (LOC - Key Bank, N.A.) 0.14 7/01/2043 8,880
4,880 Snohomish County Housing Auth.
(LOC - Bank of America, N.A.) 0.06 7/01/2036 4,880
----------
28,760
----------
WEST VIRGINIA (1.8%)
38,185 Hospital Finance Auth. (LOC - Fifth Third Bank) 0.13 10/01/2033 38,185
9,630 Marshall County 0.07 3/01/2026 9,630
----------
47,815
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
WISCONSIN (1.8%)
$ 5,730 Health and Educational Facilities Auth.
(LOC - KBC Bank N.V.) 0.07% 5/01/2025 $ 5,730
550 Health and Educational Facilities Auth.
(LOC - JPMorgan Chase Bank, N.A.) 0.15 5/01/2026 550
11,440 Health and Educational Facilities Auth.
(LOC - KBC Bank N.V.) 0.14 3/01/2038 11,440
19,800 Public Finance Auth. (LOC - Bank of Scotland) 0.07 6/01/2041 19,800
5,325 Public Finance Auth. (LIQ)
(LOC - Deutsche Bank A.G.)(a) 0.14 9/01/2049 5,325
6,205 Wind Point (LOC - U.S. Bank, N.A.) 0.14 9/01/2035 6,205
----------
49,050
----------
WYOMING (0.5%)
13,000 Gillette 0.22 1/01/2018 13,000
----------
Total Variable-Rate Demand Notes (cost: $1,837,899) 1,837,899
----------
PUT BONDS (4.6%)
ALABAMA (2.1%)
4,030 Housing Finance Auth. 0.35 6/01/2017 4,030
25,000 Mobile IDB(b) 0.28 6/01/2034 25,000
25,000 Mobile IDB(b) 0.32 7/15/2034 25,000
----------
54,030
----------
GEORGIA (0.1%)
3,100 Atlanta Urban Residential Finance Auth. 0.30 5/01/2015 3,100
----------
LOUISIANA (0.2%)
5,500 Housing Corp. 0.35 6/01/2017 5,500
----------
MONTANA (2.0%)
9,040 Board of Investments (NBGA) 0.16 3/01/2017 9,040
11,695 Board of Investments (NBGA) 0.16 3/01/2018 11,695
11,335 Board of Investments (NBGA) 0.16 3/01/2025 11,335
12,450 Board of Investments (NBGA)(b) 0.16 3/01/2028 12,450
2,450 Board of Investments (NBGA) 0.16 3/01/2029 2,450
5,975 Board of Investments (NBGA) 0.16 3/01/2035 5,975
----------
52,945
----------
TEXAS (0.2%)
2,700 Department of Housing and Community Affairs 0.35 6/01/2017 2,700
2,900 Department of Housing and Community Affairs 0.35 6/01/2017 2,900
----------
5,600
----------
Total Put Bonds (cost: $121,175) 121,175
----------
================================================================================
20 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
ADJUSTABLE-RATE NOTES (0.7%)
CALIFORNIA (0.7%)
$ 17,000 Golden Empire Schools Financing Auth. 0.24% 5/01/2015 $ 17,000
----------
Total Adjustable-Rate Notes (cost: $17,000) 17,000
----------
FIXED-RATE INSTRUMENTS (25.8%)
CALIFORNIA (2.7%)
6,025 San Diego County Water Auth. 0.06 10/02/2014 6,025
26,900 San Diego County Water Auth. 0.07 10/02/2014 26,900
5,000 San Diego County Water Auth. 0.07 10/03/2014 5,000
2,500 San Diego County Water Auth. 0.08 11/04/2014 2,500
5,000 San Diego County Water Auth. 0.08 11/06/2014 5,000
26,000 Statewide Communities Dev. Auth. 0.14 11/05/2014 26,000
----------
71,425
----------
MARYLAND (1.6%)
20,000 Johns Hopkins Univ. 0.08 11/06/2014 20,000
21,517 Johns Hopkins Univ. 0.09 12/08/2014 21,517
----------
41,517
----------
MINNESOTA (0.1%)
1,455 Hermantown ISD (NBGA) 3.00 2/01/2015 1,469
1,300 Kimball ISD (NBGA) 0.90 8/27/2015 1,307
----------
2,776
----------
NEW YORK (11.1%)
8,553 Addison CSD 1.25 9/15/2015 8,623
10,000 Averill Park CSD 0.75 7/15/2015 10,034
3,025 Babylon Union Free School District 1.00 6/18/2015 3,040
3,030 Beacon City School District 0.75 6/26/2015 3,035
20,000 Binghamton City School District 1.00 11/21/2014 20,016
5,690 Campbell-Savona CSD 1.00 6/18/2015 5,718
14,220 Canton CSD 0.75 6/30/2015 14,262
2,420 Dansville CSD 1.00 6/24/2015 2,430
6,880 Dundee CSD 0.75 6/18/2015 6,902
3,096 East Irondequoit CSD 1.00 6/26/2015 3,112
10,165 Franklinville CSD 0.75 6/26/2015 10,194
4,225 Fulton City School District 0.75 7/17/2015 4,239
6,150 Geneva City School District 1.00 8/14/2015 6,183
3,122 Hannibal CSD 0.75 6/26/2015 3,130
4,600 Jamestown City School District(c) 0.75 6/25/2015 4,611
6,650 Lackawanna City School District 1.00 3/05/2015 6,663
5,100 Lewis County 1.00 8/14/2015 5,124
================================================================================
PORTFOLIO OF INVESTMENTS | 21
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
$ 7,404 Middletown 1.00% 2/20/2015 $ 7,423
24,650 Northern Adirondack CSD 0.75 6/25/2015 24,711
4,612 Oneonta City School District 0.75 6/26/2015 4,622
3,000 Oswego City School District 1.00 4/22/2015 3,009
4,500 Oswego City School District 0.75 7/23/2015 4,513
17,115 Potsdam CSD 1.00 6/30/2015 17,163
3,000 Red Hook CSD 0.75 6/25/2015 3,009
14,270 Rome City School District 1.00 8/06/2015 14,346
11,750 Schoharie County 1.25 11/14/2014 11,758
7,685 Sherburne-Earlville CSD 0.75 6/26/2015 7,712
7,974 Sidney CSD 0.75 7/31/2015 7,997
10,815 Silver Creek CSD 1.00 6/18/2015 10,869
2,744 Solvay Union Free School District 0.75 7/16/2015 2,751
7,350 Sullivan County 1.00 3/06/2015 7,373
9,498 Tonawanda City School District 1.00 3/11/2015 9,522
17,763 Waverly CSD 0.75 6/26/2015 17,822
2,669 West Genesee CSD 0.75 7/10/2015 2,676
6,425 Whitney Point CSD 0.75 6/25/2015 6,444
15,000 Yorkshire-Pioneer CSD 0.75 7/21/2015 15,060
----------
296,096
----------
SOUTH CAROLINA (1.8%)
28,457 Public Service Auth. 0.09 12/03/2014 28,457
8,678 Public Service Auth. 0.10 12/04/2014 8,678
11,542 Public Service Auth. 0.10 12/04/2014 11,542
----------
48,677
----------
TEXAS (5.3%)
10,000 Dallas Area Rapid Transit 0.08 12/03/2014 10,000
10,000 Dallas Area Rapid Transit 0.08 12/04/2014 10,000
10,000 Dallas Area Rapid Transit 0.10 2/03/2015 10,000
5,000 Houston 0.09 11/05/2014 5,000
5,100 Houston 0.09 11/18/2014 5,100
10,000 Houston 0.10 2/11/2015 10,000
10,000 Houston 0.10 2/11/2015 10,000
33,000 San Antonio 0.09 10/06/2014 33,000
15,000 San Antonio 0.09 12/03/2014 15,000
25,000 Univ. of Texas 0.08 11/06/2014 25,000
8,342 Univ. of Texas 0.08 12/01/2014 8,342
----------
141,442
----------
VIRGINIA (3.2%)
8,000 Univ. of Virginia 0.08 10/02/2014 8,000
20,000 Univ. of Virginia 0.07 10/06/2014 20,000
9,535 Univ. of Virginia 0.08 10/07/2014 9,535
================================================================================
22 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------------
$ 22,010 Univ. of Virginia 0.08% 11/05/2014 $ 22,010
20,000 Univ. of Virginia 0.08 12/03/2014 20,000
4,500 Univ. of Virginia 0.09 12/04/2014 4,500
----------
84,045
----------
Total Fixed-Rate Instruments (cost: $685,978) 685,978
----------
TOTAL INVESTMENTS (COST: $2,662,052) $2,662,052
==========
------------------------------------------------------------------------------------------------------------------
($ 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
------------------------------------------------------------------------------------------------------------------
Variable-Rate Demand Notes $- $1,837,899 $- $1,837,899
Put Bonds - 121,175 - 121,175
Adjustable-Rate Notes - 17,000 - 17,000
Fixed-Rate Instruments - 685,978 - 685,978
------------------------------------------------------------------------------------------------------------------
Total $- $2,662,052 $- $2,662,052
------------------------------------------------------------------------------------------------------------------
================================================================================
PORTFOLIO OF INVESTMENTS | 23
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
September 30, 2014 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Values of securities are determined by procedures and practices discussed in
Note 1 to the financial statements.
The cost of securities at September 30, 2014, for federal income tax
purposes, was approximately the same as that reported in the financial
statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
o SPECIFIC NOTES
(a) 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 USAA Mutual Funds Trust's Board of
Trustees (the Board), unless otherwise noted as illiquid.
(b) At September 30, 2014, the security, or a portion thereof, was
segregated to cover delayed-delivery and/or when-issued purchases.
(c) At September 30, 2014, the aggregate market value of securities
purchased on a delayed delivery basis was $4,611,000, of which all
were when-issued securities.
See accompanying notes to financial statements.
================================================================================
24 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
September 30, 2014 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities (amortized cost approximates market value) $2,662,052
Cash 492
Receivables:
Capital shares sold 2,809
USAA Asset Management Company (Note 4D) 1,026
Interest 1,435
----------
Total assets 2,667,814
----------
LIABILITIES
Payables:
Securities purchased 4,612
Capital shares redeemed 6,851
Dividends on capital shares 18
Accrued management fees 616
Accrued transfer agent's fees 332
Other accrued expenses and payables 48
----------
Total liabilities 12,477
----------
Net assets applicable to capital shares outstanding $2,655,337
==========
NET ASSETS CONSIST OF:
Paid-in capital $2,655,327
Undistributed net investment income 2
Accumulated net realized gain on investments 8
----------
Net assets applicable to capital shares outstanding $2,655,337
==========
Capital shares outstanding, unlimited number of shares
authorized, no par value 2,655,319
==========
Net asset value, redemption price, and offering price per share $ 1.00
==========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 25
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended September 30, 2014 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income $ 2,410
-------
EXPENSES
Management fees 3,782
Administration and servicing fees 1,351
Transfer agent's fees 2,199
Custody and accounting fees 141
Postage 29
Shareholder reporting fees 30
Trustees' fees 12
Registration fees 17
Professional fees 68
Other 21
-------
Total expenses 7,650
Expenses reimbursed (5,377)
-------
Net expenses 2,273
-------
NET INVESTMENT INCOME 137
-------
Increase in net assets resulting from operations $ 137
=======
See accompanying notes to financial statements.
================================================================================
26 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended September 30, 2014 (unaudited), and year ended March 31,
2014
------------------------------------------------------------------------------------------------------------------
9/30/2014 3/31/2014
------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 137 $ 272
Net realized gain on investments - 77
-----------------------------------------
Increase in net assets resulting from operations 137 349
-----------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (135) (272)
Net realized gains - (247)
-----------------------------------------
Distributions to shareholders (135) (519)
-----------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 441,661 1,166,189
Reinvested dividends 134 515
Cost of shares redeemed (534,231) (1,102,121)
-----------------------------------------
Increase (decrease) in net assets from
capital share transactions (92,436) 64,583
-----------------------------------------
Net increase (decrease) in net assets (92,434) 64,413
NET ASSETS
Beginning of period 2,747,771 2,683,358
-----------------------------------------
End of period $2,655,337 $2,747,771
=========================================
Undistributed net investment income:
End of period $ 2 $ -
=========================================
CHANGE IN SHARES OUTSTANDING
Shares sold 441,661 1,166,189
Shares issued for dividends reinvested 134 515
Shares redeemed (534,231) (1,102,121)
-----------------------------------------
Increase (decrease) in shares outstanding (92,436) 64,583
=========================================
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 27
================================================================================
NOTES TO FINANCIAL STATEMENTS
September 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
Tax Exempt Money Market Fund (the Fund), which is classified as diversified
under the 1940 Act. The Fund's investment objective is to provide investors with
interest income that is exempt from federal income tax, with a further objective
of preserving capital and maintaining liquidity.
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
================================================================================
28 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
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. Pursuant to Rule 2a-7 under the 1940 Act, securities in the Fund are
valued at amortized cost, which approximates market value. This method
values a security at its cost on the date of purchase and, thereafter,
assumes a constant amortization to maturity of any premiums or
discounts.
2. Securities for which amortized cost valuations are considered
unreliable or whose values have been materially affected by a
significant event are valued in good faith at fair value, using methods
determined by the Manager, an affiliate of the Fund, under procedures
to stabilize net asset value (NAV) and valuation procedures approved by
the Board.
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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 29
================================================================================
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.
For example, money market securities are valued using amortized cost, in
accordance with rules under the 1940 Act. Generally, amortized cost
approximates the current fair value of a security, but since the value is
not obtained from a quoted price in an active market, such securities are
reflected as Level 2.
C. 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.
D. INVESTMENTS IN SECURITIES - Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses from
sales of investment securities are computed on the identified cost basis.
Interest income is recorded daily on the accrual basis. Premiums and
discounts are amortized over the life of the respective securities using the
straight-line method.
E. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS - Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after
the trade date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may increase or
decrease in value prior to their delivery. The Fund maintains segregated
assets with a market value equal to or greater than the amount of its
purchase commitments. As of September 30, 2014, the Fund's outstanding
delayed-delivery commitments, including interest purchased, were $4,611,000;
of which all were when-issued securities.
F. EXPENSES PAID INDIRECTLY - 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
================================================================================
30 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
Fund's bank accounts may be used to directly reduce the Fund's expenses. For
the six-month period ended September 30, 2014, custodian and other bank
credits reduced the Fund's expenses by less than $500.
G. INDEMNIFICATIONS - Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, in the normal course
of business, the Trust enters into contracts that contain a variety of
representations and warranties that provide general indemnifications. The
Trust's maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust expects the risk of loss to be remote.
H. USE OF ESTIMATES - The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $500 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at an interest rate based on
the London Interbank Offered Rate (LIBOR).
The USAA Funds that are party to the loan agreement are assessed facility fees
by CAPCO in the amount of 7.0 basis points of the amount of the committed loan
agreement. The facility fees are allocated among the Funds based on their
respective average net assets for the period.
For the six-month period ended September 30, 2014, the Fund paid CAPCO facility
fees of $7,000, which represents 3.9% 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 September 30, 2014.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 31
================================================================================
(3) DISTRIBUTIONS
The tax basis of distributions and any accumulated undistributed net investment
income will be determined based upon the Fund's tax year-end of March 31, 2015,
in accordance with applicable tax law.
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. 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 post-enactment 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 March 31, 2014, the Fund had no capital loss carryforwards, for federal
income tax purposes.
For the six-month period ended September 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
adjustments to this conclusion are necessary. The statute of limitations on the
Fund's tax return filings generally remain open for the three preceding fiscal
reporting year ends and remain subject to examination by the Internal Revenue
Service and state taxing authorities.
(4) 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 the Fund's assets, subject to
the authority of and supervision by the Board.
================================================================================
32 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
The Fund's investment management fee is accrued daily and paid monthly at an
annualized rate of 0.28% of the Fund's average net assets for the fiscal
year. For the six-month period ended September 30, 2014, the Fund incurred
total management fees, paid or payable to the Manager, of $3,782,000.
B. 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 0.10% of the Fund's average net assets. For the six-month period ended
September 30, 2014, the Fund incurred administration and servicing fees,
paid or payable to the Manager, of $1,351,000.
In addition to the services provided under its Administration and Servicing
Agreement with the Fund, the Manager also provides certain compliance and
legal services for the benefit of the Fund. The Board has approved the
reimbursement of a portion of these expenses incurred by the Manager. For
the six-month period ended September 30, 2014, the Fund reimbursed the
Manager $34,000 for these compliance and legal services. These expenses are
included in the professional fees on the Fund's statement of operations.
C. TRANSFER AGENT'S FEES - USAA Transfer Agency Company, d/b/a USAA Shareholder
Account Services (SAS), an affiliate of the Manager, provides transfer agent
services to the Fund based on an annual charge of $25.50 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. For the six-month period ended September
30, 2014, the Fund incurred transfer agent's fees, paid or payable to SAS,
of $2,199,000.
D. EXPENSE LIMITATION - The Manager has voluntarily agreed, on a temporary
basis, to reimburse management, administrative, or other fees to limit the
Fund's expenses and attempt to prevent a negative yield. The Manager can
modify or terminate this arrangement at any
================================================================================
NOTES TO FINANCIAL STATEMENTS | 33
================================================================================
time without prior notice to shareholders. For the six-month period ended
September 30, 2014, the Fund incurred reimbursable expenses of $5,377,000,
of which $1,026,000 was receivable from the Manager.
E. UNDERWRITING SERVICES - USAA Investment Management Company provides
exclusive underwriting and distribution of the Fund's shares on a continuing
best-efforts basis and receives no commissions or fees for this service.
(5) 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.
(6) REGULATORY MATTERS
In July 2014, the Securities and Exchange Commission (SEC) adopted amendments to
the rules that govern money market mutual funds under the 1940 Act, to reform
the structure and operations of these funds. The amendments will require certain
money market funds to sell and redeem shares at prices based on their market
value (a floating net asset value). It will also allow money market funds to
impose liquidity fees and suspend redemptions temporarily, and will impose new
requirements related to diversification, stress testing, and disclosure.
Management is currently evaluating the impact of these rules amendments.
Compliance dates for the various amendments range from nine months to two years.
================================================================================
34 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
(7) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
SEPTEMBER 30, YEAR ENDED MARCH 31,
----------------------------------------------------------------------------------------
2014 2014 2013 2012 2011 2010
----------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income(a) .00 .00 .00 .00 .00 .00
Net realized and
unrealized gain(a) .00 .00 .00 .00 .00 .00
Total from investmen
operations(a) .00 .00 .00 .00 .00 .00
-------------------------------------------------------------------------------------
Less distributions from:
Net investment income(a) (.00) (.00) (.00) (.00) (.00) (.00)
Realized capital gains - (.00)(a) (.00)(a) (.00)(a) - (.00)(a)
-------------------------------------------------------------------------------------
Total distributions(a) (.00) (.00) (.00) (.00) .00 .00
-------------------------------------------------------------------------------------
Net asset value at end
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=====================================================================================
Total return (%)*(d) .01 .02 .01 .04(c) .01 .48(b)
Net assets at end
of period (000) $2,655,337 $2,747,771 $2,683,358 $2,640,375 $2,842,986 $3,331,284
Ratios to average
net assets:**
Expenses (%)(d),(e) .17(f) .21 .34 .42(c) .49 .52(b)
Expenses, excluding
reimbursements (%)(e) .57(f) .56 .56 .57(c) .55 .53(b)
Net investment income (%) .01(f) .01 .01 .03 .01 .47
* 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
iMoneyNet reported return. Total returns for periods of less than one year
are not annualized.
** For the six-month period ended September 30, 2014, average net assets were
$2,693,547,000.
(a) Represents less than $0.01 per share.
(b) During the year ended March 31, 2010, SAS reimbursed the Fund $87,000 for
corrections in fees paid for the administration and servicing of certain
accounts. The effect of this reimbursement on the Fund's total return was
less than 0.01%. The reimbursement decreased the Fund's expense ratio by
0.01%. This decrease is excluded from the expense ratio in the Financial
Highlights table.
(c) During the year ended March 31, 2012, SAS reimbursed the Fund $654,000 for
corrections in fees paid for the administration and servicing of certain
accounts. The effect of this reimbursement on the Fund's total return was
less than 0.01%. The reimbursement decreased the Fund's expense ratio by
0.02%. This decrease is excluded from the expense ratio in the Financial
Highlights table.
(d) Effective January 7, 2010, the Manager voluntarily agreed, on a temporary
basis, to reimburse management, administrative, or other fees to limit the
Fund's expenses and attempt to prevent a negative yield.
(e) Reflects total annual operating expenses of the Fund before reductions of
any expenses paid indirectly. The Fund's expenses paid indirectly decreased
the expense ratios by less than 0.01%.
(f) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
================================================================================
EXPENSE EXAMPLE
September 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 April 1, 2014, through
September 30, 2014.
ACTUAL EXPENSES
The first line of the table on the next page provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested at the beginning of the period, to
estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number in the first line under the heading
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you
================================================================================
36 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
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 second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE APRIL 1, 2014 -
APRIL 1, 2014 SEPTEMBER 30, 2014 SEPTEMBER 30, 2014
-----------------------------------------------------------------
Actual $1,000.00 $1,000.10 $0.85
Hypothetical
(5% return before expenses) 1,000.00 1,024.22 0.86
* Expenses are equal to the Fund's annualized expense ratio of 0.17%, which is
net of any reimbursements and expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 183 days/365 days (to
reflect the one-half-year period). The Fund's ending account value on the
first line in the table is based on its actual total return of 0.01% for the
six-month period of April 1, 2014, through September 30, 2014.
================================================================================
EXPENSE EXAMPLE | 37
================================================================================
ADVISORY AGREEMENT(S)
September 30, 2014 (unaudited)
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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.
In advance of the meeting, the Trustees received and considered a variety of
information relating to the Advisory Agreement and the Manager 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 operations
and personnel. Prior to voting, the Independent Trustees reviewed the proposed
continuation of the Advisory Agreement with management and with experienced
independent counsel and received materials from such counsel discussing the
legal standards for their consideration of the proposed continuation of the
Advisory Agreement with respect to the Fund. The Independent Trustees also
reviewed the proposed continuation of the Advisory Agreement with respect to the
Fund in private sessions with their counsel at which no representatives of
management were present.
At each regularly scheduled meeting of the Board and its committees, the Board
receives and reviews, among other things, information concerning the Fund's
performance and related services provided by the Manager. At the meeting at
which the renewal of the Advisory Agreement is considered, particular focus is
given to information concerning Fund performance,
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38 | USAA TAX EXEMPT MONEY MARKET FUND
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comparability of fees and total expenses, and profitability. However, the Board
noted that the evaluation process with respect to the Manager is an ongoing one.
In this regard, the Board's and its committees' consideration of the Advisory
Agreement included 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 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
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ADVISORY AGREEMENT(S) | 39
================================================================================
service providers also was considered. The Board also considered the Manager's
risk management processes. The Board considered the Manager's financial
condition and that it had the financial wherewithal to continue to provide the
same scope and high quality of services under the 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, investment companies with no sales loads and
frontend loads), asset size, and expense components (the "expense group") and
(ii) a larger group of investment companies that includes the Fund and all other
no-load and front-end load retail open-end investment companies in the same
investment classification/objective as the Fund regardless of asset size,
excluding outliers (the "expense universe"). Among other data, the Board noted
that the Fund's management fee rate - which includes advisory and administrative
services and the effects of any fee waivers or reimbursements - was above the
median of its expense group and below the median of its expense universe. The
data indicated that the Fund's total expense ratio, after reimbursements, was
above 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 nature and high quality of the services
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40 | USAA TAX EXEMPT MONEY MARKET FUND
================================================================================
provided by the Manager. The Board also noted the level and method of computing
the management fee. The Board took into account management's discussion of the
Fund's expenses, noting that the Manager had reimbursed Fund expenses during the
previous year.
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 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 its Lipper
index for the one-, three-, and five-year periods ended December 31, 2013. The
Board also noted that the Fund's percentile performance ranking was in the top
25% of its performance universe for the one- and three-year periods ended
December 31, 2013, and was in the top 5% of its performance universe for the
five-year period ended December 31, 2013.
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. In
considering the profitability data with respect to the Fund, the Trustees noted
that the Manager reimbursed a portion of its management fees to the Fund. The
Trustees reviewed the profitability of the Manager's relationship with the Fund
before tax expenses. In reviewing the overall profitability of the management
fee to the Manager, the Board also considered the fact that affiliates provide
shareholder servicing and administrative services to the Fund for which they
receive
================================================================================
ADVISORY AGREEMENT(S) | 41
================================================================================
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 Board also took into account the high quality of the services received
by the Fund from the Manager as well as the type of 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 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 also
considered the fee waiver and expense reimbursement arrangements by the Manager.
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
reasonable in relation to the performance of funds with similar investment
objectives and to relevant indices; (iv) the Fund's advisory expenses are
reasonable in relation to those of similar funds and to the services to be
provided by the Manager; and (v) the Manager's and its affiliates' level of
profitability from its relationship with the Fund is reasonable in light of the
nature and high quality of services provided by the Manager and the type of
fund. 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.
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42 | USAA TAX EXEMPT MONEY MARKET 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 78265-9825
--------------------------------------------------------------------------------
UNDERWRITER AND USAA Investment Management Company
DISTRIBUTOR P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
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INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "My Accounts" on
SELF-SERVICE 24/7 usaa.com select your mutual fund
AT USAA.COM account and either click the link or
select `I want to...' and select
OR CALL the desired action.
(800) 531-USAA
(8722)
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund, are
available without charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) in summary within the Statement of Additional Information on the SEC's
website at HTTP://WWW.SEC.GOV. Information regarding how the Fund voted proxies
relating to portfolio securities during the most recent 12-month period ended
June 30 is available without charge (i) at USAA.COM; and (ii) on the SEC's
website at HTTP://WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. These Forms N-Q are
available at no charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's website at HTTP://WWW.SEC.GOV. These Forms N-Q also may
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) 732-0330.
211738-1114
================================================================================
USAA --------------
9800 Fredericksburg Road PRSRT STD
San Antonio, TX 78288 U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on usaa.com select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA WE KNOW WHAT IT MEANS TO SERVE.(R)
============================================================================
39598-1114 (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 September 30, 2014
By:* /S/ DANIEL J. MAVICO
-----------------------------------------------------------
Signature and Title: Daniel J. Mavico, Assistant Secretary
Date: 11/20/2014
------------------------------
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: 11/21/2014
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 11/20/2014
------------------------------
*Print the name and title of each signing officer under his or her signature.