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: MAY 31
Date of reporting period: NOVEMBER 30, 2014
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED NOVEMBER 30, 2014
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA CORNERSTONE MODERATELY AGGRESSIVE FUND]
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SEMIANNUAL REPORT
USAA CORNERSTONE MODERATELY
AGGRESSIVE FUND
NOVEMBER 30, 2014
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PRESIDENT'S MESSAGE
"...[A] KEY DETERMINANT OF INVESTMENT
SUCCESS IS THE ABILITY TO DEAL WITH OUR [PHOTO OF BROOKS ENGLEHARDT]
EMOTIONAL REACTIONS."
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JANUARY 2015
The reporting period was perilous for those who believe they can gauge - and
trade - the direction of the financial markets. When the period began in June of
last year, many observers believed that longer-term interest rates could not get
any lower. In fact, they continued to trend down as the Federal Reserve (the
Fed) gradually tapered (or reduced), and eventually, ended its quantitative
easing (QE) bond-buying program. The yield on a 10-year U.S. Treasury, which
began the period at 2.48%, ended it at 2.17%. As yields fell, bond prices rose
(bond prices and yields move in opposite directions), with longer-term and
intermediate-term U.S. Treasuries generating the highest bond-market returns for
the reporting period overall. U.S. large-cap stocks performed even better than
U.S. Treasuries. After dipping sharply in the first two weeks of October,
large-cap stocks rallied and finished the period with a solid gain.
The performance of other asset classes was quite different. During the reporting
period, investors generally sold off European stocks, which ended the period in
negative territory. Japanese equities notched a gain, but they underperformed
versus the broad U.S. stock market. U.S. small-cap stocks declined for most of
the period, rebounding during the final weeks to eke out a small positive
return. Within fixed-income securities, high-yield spreads (or yield
differentials versus risk-free U.S. Treasuries of comparable maturity) widened,
suggesting investors were growing concerned about corporate fundamentals amid
weaker global economic growth.
Indeed, while the U.S. economy continued to strengthen during the reporting
period, other economies did not fare well. Europe's economic growth slowed,
Japan struggled to jumpstart its declining economy, and the former engine of
global growth - China - weakened. The monetary policies of global central banks
reflected the divergence between those economies and our own. As the Fed was
ending its QE program, other central banks were easing monetary policy further,
pushing down interest rates around the world. At the same time, inflation
pressures eased as oil prices fell by nearly a third during the reporting period
and natural gas,
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copper, and agricultural commodity prices also declined. Gold prices, however,
held up relatively well in comparison, falling only modestly.
Few could have foreseen this investment landscape when the reporting period
started. Despite what some experts say, no one can be sure exactly what will
happen in the financial markets. I suspect those who tried to time the markets
were surprised by the performance of certain asset classes. Under the
circumstances, if you decided to adhere to your long-term investment plan, you
have every reason to congratulate yourself. This is all the more true when you
consider the dramatic headlines that dominated the period, including Russia's
involvement in the Ukraine, the Ebola crisis, and the uncertainty in the Middle
East. In my opinion, a key determinant of investment success is the ability to
deal with our emotional reactions. We believe investors should strive to ignore
media noise and focus instead on relevant information, such as the direction of
interest rates and the condition of the U.S. economy, which can provide them
with the perspective they need to manage their investments. In this respect, a
long-term plan can be extremely useful.
That said, as we look ahead to 2015, it may be a good time to review your
investment plan and make sure it still suits your goals, risk tolerance, and
time horizon. You also may want to rebalance your portfolio. Regular rebalancing
can potentially help you protect your gains and prepare for what happens next.
If you would like some help, please call one of our financial advisors. They
would be happy to assist you.
At USAA Investments, we remain committed to providing you with our best advice,
top-notch service and a wide variety of investment choices. Rest assured we will
continue monitoring global economic trends, central bank monetary policy, and
other factors that potentially could affect your investments. From all of us
here, I would like to thank you for the opportunity to serve your investment
needs.
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 Emerging market countries are less diverse and mature than other countries and
tend to be politically less stable. o Precious metals and minerals is a volatile
asset class and is subject to additional risks, such as currency fluctuation,
market illiquidity, political instability, and increased price volatility. It
may be more volatile than other asset classes that diversify across many
industries and companies. o Investments provided by USAA Investment Management
Company and USAA Financial Advisors Inc., both registered broker dealers.
- Financial advice provided by USAA Financial Planning Services Insurance
Agency, Inc. (known as USAA Financial Insurance Agency in California, License #
0E36312), and USAA Financial Advisors, Inc., a registered broker dealer.
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TABLE OF CONTENTS
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FUND OBJECTIVE 1
MANAGERS' COMMENTARY 2
INVESTMENT OVERVIEW 6
FINANCIAL INFORMATION
Portfolio of Investments 10
Notes to Portfolio of Investments 41
Financial Statements 46
Notes to Financial Statements 49
EXPENSE EXAMPLE 65
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)2015, USAA. All rights reserved.
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FUND OBJECTIVE
THE USAA CORNERSTONE MODERATELY AGGRESSIVE FUND (THE FUND) SEEKS CAPITAL
APPRECIATION WITH A SECONDARY FOCUS ON CURRENT INCOME.
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TYPES OF INVESTMENTS
The Fund invests in equity securities, bonds, money market instruments, and
other instruments. The Fund will have a target asset class allocation of
approximately 60% equity securities and 40% fixed-income securities. The actual
asset class allocation can deviate from time to time from these targets as
market conditions warrant. The implementation of the asset allocation may
involve the extensive use of equity and fixed-income exchange-traded funds
(ETFs). The Fund may invest in investment-grade and below-investment-grade
securities.
The Fund also may use alternative investment strategies and other instruments
from time to time, in an attempt to reduce its volatility over time and to
enhance the Fund's return and diversification.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Asset Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
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FUND OBJECTIVE | 1
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MANAGERS' COMMENTARY ON THE FUND
USAA Asset Management Company Quantitative Management Associates LLC
JOHN P. TOOHEY, CFA JACOB POZHARNY, Ph.D.
WASIF A. LATIF JOHN VAN BELLE, Ph.D.
ARNOLD J. ESPE, CFA
DAN DENBOW, CFA
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o HOW DID THE GLOBAL FINANCIAL MARKETS PERFORM DURING THE REPORTING PERIOD?
The U.S. stock market performed very well during the period, with large-cap
companies leading the way. The United States is one of the fastest-growing
developed world economies, and large-cap companies generally feature strong
balance sheets, above-average dividend yields and stable business lines.
Large-cap stocks were, therefore, seen as being a relatively good option at
a time of slower growth overseas, helping the S&P 500(R) Index to finish the
period close to its all-time high. Small-cap stocks, while positive, lagged
large-cap stocks somewhat due to their weak showing during September and the
first half of October. In contrast to the U.S. market, international
equities closed the period with a negative return. While a large portion of
the decline resulted from the falling value of overseas currencies relative
to the U.S. dollar, the asset class was also hurt by signs of weak growth in
both Europe and Japan. Emerging market equities also lost ground,
reflecting concerns about the outlook for the world economy and the
potential impact of falling commodity prices.
The U.S. investment-grade bond market was helped by modest economic growth,
low inflation and the growing expectation that the Federal Reserve will not
be compelled to raise interest rates until late in 2015. Yields on U.S.
Treasury bonds fell, as prices rose, and these gains carried
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2 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
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through to the rest of the market. While investment-grade bonds performed
well, high-yield bonds as a group experienced negative returns during the
six-month period. The asset class was hurt by the unfavorable combination of
investors exiting the asset class generally and an elevated supply of
high-yield bond issues in the early autumn. Later in the period, the sharp
downturn in the price of oil weighed on the performance of bonds issued by
energy companies, which are heavily represented in the high-yield market.
o HOW DID THE USAA CORNERSTONE MODERATELY AGGRESSIVE FUND (THE FUND) PERFORM
DURING THE REPORTING PERIOD?
For the six-month reporting period ended November 30, 2014, the Fund had a
total return of 1.50%. This compares to returns of 8.58% for the S&P 500(R)
Index and 1.32% for the Lipper Index*.
USAA Asset Management Company is the Fund's investment adviser. As the
investment adviser, USAA Asset Management Company employs dedicated
resources to support the research, selection, and monitoring of the Fund's
subadviser. Quantitative Management Associates LLC (QMA) is a subadviser to
the Fund. The investment adviser and the subadviser each provide day-to-day
discretionary management for a portion of the Fund's assets.
o PLEASE DISCUSS THE FACTORS THAT HELPED AND HURT PERFORMANCE.
The Fund's domestic equity allocation delivered a positive return and made
an important contribution to performance. Strong stock selection,
*The Lipper Index tracks the performance of the 30 largest funds within a
category consisting of funds that allocate their investments across various
asset classes, including both domestic and foreign stocks, bonds, and money
market instruments, with a focus on total return, and which have at least
25% of their portfolio invested in securities traded outside of the United
States.
SOURCE: LIPPER, A THOMSON REUTERS COMPANY.
Refer to page 7 for benchmark definitions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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MANAGERS' COMMENTARY ON THE FUND | 3
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particularly in the information technology, consumer discretionary, and
health care sectors, was the key driver of performance in the Fund's
domestic equity segment. Our performance also was helped by our tilt toward
large-cap stocks and away from small-cap stocks. We have held this
positioning for several quarters on the belief that small-cap stocks'
elevated valuations signal the potential for below-average returns over a
three-to-five year interval. This positioning, while a headwind to Fund
returns earlier in the year, began to pay off during the past six months.
In our view, this helps illustrate the potential benefit of taking a long-
term view and using valuation as one of the key pillars of our allocation
decisions.
The strong showing of our investment-grade bond portfolio also was a factor
in the Fund's six-month results. We added the most value through individual
security selection in the corporate bond and commercial mortgage-backed
sectors, where our bottom-up, research-driven approach worked very well. We
maintained our long-standing approach of keeping the portfolio's duration
(or interest-rate sensitivity) below that of the benchmark, while looking
for compelling risk-return opportunities in the higher-yielding segments of
the investment-grade market. This approach has worked well not just in the
past six months, but over the long term as well.
The Fund's international allocation, which is managed by QMA, holds stocks
invested in the emerging markets and developed markets, was a key detractor
from our six-month results given the negative returns of these market
segments. Nevertheless, we believe the international markets represent a
compelling opportunity at a time in which U.S. equities are trading above
longer-term averages based on many valuation metrics.
Our allocation to gold and gold-related equities also detracted from
performance. U.S. dollar strength tends to weigh on the sector by making
gold more expensive for non-U.S. buyers, which in turn dampens demand.
While this led to a negative return for the Fund's precious metals
allocation during the past six months, it's important to keep in mind that
we don't own gold with the goal of boosting short-term performance. Instead,
this segment of the portfolio is intended to provide diversification,
longer-term inflation protection, and a hedge against central bank policy
errors.
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4 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
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The Fund also holds an allocation to high-yield bonds. This position was a
strong, positive contributor to performance through the first half of 2014,
and it has made a favorable contribution over the trailing one-, three-, and
five-year periods as well. In contrast, the more recent weakness in
high-yield bonds caused this allocation to detract from performance during
the past six months. From a longer-term standpoint, however, we believe the
asset class remains supported by the environment of moderate economic
growth, low defaults, and the steady credit outlook for high-yield
companies.
The Fund's hedging strategy - which is designed to help cushion the impact
of large stock market sell-offs - had a neutral impact on overall
performance, but it helped dampen the effect of elevated market volatility
during September and the first half of October. We continue to view the
hedging strategy as a way to protect against the potential for unexpected
volatility in the global equity markets.
We continue to use our diversified, global approach to identify asset
classes that offer the combination of strong fundamentals and attractive
valuations, while tilting away from those that no longer offer a compelling
risk-return profile. We expect this long-term, value-driven methodology
will be critical to generating outperformance if the investment backdrop
becomes more challenging in the year ahead.
Thank you for your investment in the Fund.
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 Foreign investing is subject to additional risks, such
as currency fluctuations, market illiquidity, and political instability.
Emerging market countries are less diverse and mature than other countries
and tend to be politically less stable. o Precious metals and minerals is a
volatile asset class and is subject to additional risks, such as currency
fluctuation, market illiquidity, political instability, and increased price
volatility. It may be more volatile than other asset classes that diversify
across many industries and companies. o Non-investment grade securities are
considered speculative and are subject to significant credit risk. They are
sometimes referred to as "junk" bonds since they represent a greater risk of
default than more creditworthy investment-grade securities.
o Diversification is a technique intended to help reduce risk and does not
guarantee a profit or prevent a loss.
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MANAGERS' COMMENTARY ON THE FUND | 5
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INVESTMENT OVERVIEW
USAA CORNERSTONE MODERATELY AGGRESSIVE FUND (THE FUND) (Ticker Symbol: USCRX)
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11/30/14 5/31/14
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Net Assets $2.5 Billion $2.5 Billion
Net Asset Value Per Share $26.41 $26.02
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AVERAGE ANNUAL TOTAL RETURNS AS OF 11/30/14
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5/31/14 - 11/30/14* 1 YEAR 5 YEARS 10 YEARS
1.50% 6.98% 7.93% 5.26%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR 5 YEARS 10 YEARS
4.71% 7.28% 4.79%
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EXPENSE RATIO AS OF 5/31/14**
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1.26%
(Includes acquired fund fees and expenses of 0.08%)
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 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 October 1, 2014, and is
calculated as a percentage of average net assets. This expense ratio may differ
from the expense ratios disclosed in the Financial Highlights, which excludes
acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions, if any. The
total returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions (including
capital gains distributions), redemption of shares, or reinvested net investment
income.
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6 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
USAA CORNERSTONE
S&P 500 INDEX MODERATELY AGGRESSIVE FUND LIPPER INDEX
11/30/04 10,000.00 10,000.00 10,000.00
12/31/04 10,340.29 10,338.95 10,284.67
01/31/05 10,088.24 10,164.64 10,102.08
02/28/05 10,300.54 10,404.81 10,339.17
03/31/05 10,118.14 10,226.62 10,146.74
04/30/05 9,926.24 10,071.67 10,040.52
05/31/05 10,242.08 10,276.98 10,232.92
06/30/05 10,256.62 10,311.84 10,344.48
07/31/05 10,638.05 10,613.99 10,591.15
08/31/05 10,540.98 10,687.59 10,652.01
09/30/05 10,626.36 10,753.44 10,847.89
10/31/05 10,449.21 10,517.15 10,640.18
11/30/05 10,844.42 10,741.82 10,902.49
12/31/05 10,848.14 10,910.60 11,190.77
01/31/06 11,135.43 11,201.38 11,644.52
02/28/06 11,165.65 11,176.10 11,635.87
03/31/06 11,304.63 11,319.38 11,798.09
04/30/06 11,456.43 11,525.88 12,046.38
05/31/06 11,126.70 11,167.67 11,748.29
06/30/06 11,141.78 11,184.53 11,657.67
07/31/06 11,210.51 11,277.24 11,668.77
08/31/06 11,477.24 11,530.09 11,917.43
09/30/06 11,773.01 11,627.02 12,058.70
10/31/06 12,156.64 11,930.44 12,330.26
11/30/06 12,387.81 12,233.86 12,624.83
12/31/06 12,561.59 12,417.82 12,759.25
01/31/07 12,751.56 12,571.41 12,875.68
02/28/07 12,502.15 12,524.87 12,813.19
03/31/07 12,641.99 12,664.50 12,915.80
04/30/07 13,201.97 12,994.96 13,230.49
05/31/07 13,662.66 13,269.57 13,500.68
06/30/07 13,435.67 13,143.90 13,476.07
07/31/07 13,019.10 12,915.83 13,412.29
08/31/07 13,214.26 12,920.49 13,365.37
09/30/07 13,708.46 13,427.81 13,838.27
10/31/07 13,926.52 13,800.16 14,157.27
11/30/07 13,344.30 13,246.29 13,755.57
12/31/07 13,251.72 13,166.54 13,618.44
01/31/08 12,456.86 12,520.75 13,137.89
02/29/08 12,052.19 12,424.69 13,093.95
03/31/08 12,000.15 12,227.21 13,024.81
04/30/08 12,584.59 12,622.16 13,437.20
05/31/08 12,747.59 12,899.68 13,575.17
06/30/08 11,672.93 12,163.17 12,847.15
07/31/08 11,574.80 11,896.32 12,588.42
08/31/08 11,742.23 11,736.20 12,476.47
09/30/08 10,695.91 10,594.07 11,312.04
10/31/08 8,899.55 8,806.16 9,528.56
11/30/08 8,260.97 8,304.47 8,999.67
12/31/08 8,348.87 8,628.65 9,210.09
01/31/09 7,645.17 8,060.40 8,696.64
02/28/09 6,831.13 7,448.00 8,074.62
03/31/09 7,429.51 7,856.27 8,537.34
04/30/09 8,140.58 8,573.48 9,177.36
05/31/09 8,595.91 9,494.83 9,893.94
06/30/09 8,612.96 9,594.13 9,948.38
07/31/09 9,264.42 10,167.91 10,595.49
08/31/09 9,598.90 10,487.89 10,951.79
09/30/09 9,957.09 11,039.60 11,326.35
10/31/09 9,772.11 11,056.15 11,159.40
11/30/09 10,358.28 11,403.72 11,541.51
12/31/09 10,558.36 11,618.96 11,698.95
01/31/10 10,178.53 11,465.48 11,472.10
02/28/10 10,493.83 11,641.70 11,638.89
03/31/10 11,127.08 12,130.56 12,158.20
04/30/10 11,302.75 12,244.25 12,296.26
05/31/10 10,400.22 11,607.59 11,570.33
06/30/10 9,855.79 11,374.53 11,378.37
07/31/10 10,546.31 11,931.60 11,908.95
08/31/10 10,070.21 11,744.02 11,685.44
09/30/10 10,968.92 12,488.68 12,312.53
10/31/10 11,386.28 12,807.01 12,724.06
11/30/10 11,387.74 12,704.69 12,566.92
12/31/10 12,148.80 13,203.44 13,093.85
01/31/11 12,436.74 13,291.04 13,129.67
02/28/11 12,862.82 13,658.93 13,445.15
03/31/11 12,867.93 13,787.41 13,529.61
04/30/11 13,249.02 14,196.18 13,971.03
05/31/11 13,099.05 14,044.35 13,786.18
06/30/11 12,880.70 13,828.28 13,549.59
07/31/11 12,618.77 13,740.69 13,496.05
08/31/11 11,933.30 13,016.57 12,878.20
09/30/11 11,094.40 12,210.70 11,992.67
10/31/11 12,306.94 12,853.06 12,667.91
11/30/11 12,279.74 12,800.50 12,573.41
12/31/11 12,405.35 12,697.74 12,479.15
01/31/12 12,961.30 13,179.17 13,002.28
02/29/12 13,521.78 13,516.17 13,423.22
03/31/12 13,966.77 13,552.28 13,515.16
04/30/12 13,879.10 13,510.15 13,415.60
05/31/12 13,044.96 12,926.42 12,711.47
06/30/12 13,582.44 13,245.37 13,066.25
07/31/12 13,771.08 13,377.76 13,221.21
08/31/12 14,081.25 13,600.42 13,456.39
09/30/12 14,445.13 13,901.31 13,719.95
10/31/12 14,178.41 13,937.42 13,666.88
11/30/12 14,260.66 14,015.65 13,794.83
12/31/12 14,390.64 14,224.75 14,011.55
01/31/13 15,136.01 14,607.70 14,416.69
02/28/13 15,341.48 14,595.35 14,399.36
03/31/13 15,916.83 14,786.83 14,619.99
04/30/13 16,223.50 15,040.07 14,894.23
05/31/13 16,602.99 14,928.89 14,812.36
06/30/13 16,380.03 14,539.76 14,413.48
07/31/13 17,213.52 14,959.77 14,896.18
08/31/13 16,714.99 14,725.06 14,680.56
09/30/13 17,239.16 15,089.48 15,149.64
10/31/13 18,031.61 15,528.02 15,561.41
11/30/13 18,581.10 15,614.49 15,694.50
12/31/13 19,051.50 15,768.27 15,880.57
01/31/14 18,392.81 15,534.25 15,603.16
02/28/14 19,234.17 16,046.58 16,155.20
03/31/14 19,395.85 16,097.18 16,107.63
04/30/14 19,539.22 16,230.00 16,166.73
05/31/14 19,997.89 16,457.70 16,476.42
06/30/14 20,411.00 16,754.98 16,702.95
07/31/14 20,129.51 16,590.53 16,479.87
08/31/14 20,934.79 16,849.85 16,747.67
09/30/14 20,641.21 16,451.38 16,352.74
10/31/14 21,145.37 16,533.60 16,530.33
11/30/14 21,714.07 16,704.38 16,693.67
[END CHART]
Data from 11/30/04 to 11/30/14.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Cornerstone Moderately Aggressive Fund to the following benchmarks:
o The unmanaged S&P 500 Index represents the weighted average performance of a
group of 500 widely held, publicly traded stocks.
o The Lipper Index tracks the performance of the 30 largest funds within a
category consisting of funds that allocate their investments across various
asset classes, including both domestic and foreign stocks, bonds, and money
market instruments, with a focus on total return, and which have at least
25% of their portfolio invested in securities traded outside of the United
States. SOURCE: LIPPER, A THOMSON REUTERS COMPANY.
Past performance is no guarantee of future results, and the cumulative
performance quoted does not reflect the deduction of taxes that a shareholder
would pay on distributions or the redemption of shares. Indexes are unmanaged
and you cannot invest directly in an index. The return information for the
indexes does not reflect the deduction of any fees, expenses, or taxes.
================================================================================
INVESTMENT OVERVIEW | 7
================================================================================
o TOP 10 HOLDINGS* - 11/30/14 o
(% of Net Assets)
iShares Core MSCI Emerging Markets ETF** ................................. 4.4%
iShares Core S&P 500 ETF** ............................................... 3.7%
U.S. Treasury Bond 3.13%, 8/15/2044 ...................................... 3.4%
iShares Core S&P Mid-Cap ETF** ........................................... 3.2%
iShares MSCI EAFE ETF** .................................................. 2.3%
iShares Core MSCI EAFE ETF** ............................................. 2.0%
iShares MSCI Germany ETF** ............................................... 1.8%
U.S. Treasury Note 2.38%, 8/15/2024 ...................................... 1.5%
U.S. Treasury Note 1.75%, 5/15/2022 ...................................... 1.3%
Vanguard Mid-Cap ETF** ................................................... 1.1%
* Excludes futures, options, and money market instruments.
** The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth
in the Investment Company Act of 1940, as amended, that would otherwise be
applicable.
You will find a complete list of securities that the Fund owns on pages 10-40.
================================================================================
8 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
o ASSET ALLOCATION** - 11/30/14 o
[PIE CHART OF ASSET ALLOCATION]
U.S. EQUITY SECURITIES* 34.3%
INTERNATIONAL EQUITY SECURITIES* 26.1%
CORPORATE OBLIGATIONS 13.4%
COMMERCIAL MORTGAGE SECURITIES 8.1%
U.S. TREASURY SECURITIES 6.8%
EURODOLLAR AND YANKEE OBLIGATIONS 4.2%
MONEY MARKET INSTRUMENTS 3.3%
PRECIOUS METALS AND COMMODITY-RELATED SECURITIES 2.6%
GLOBAL REAL ESTATE EQUITY SECURITIES 0.4%
ASSET-BACKED SECURITIES 0.2%
COLLATERALIZED MORTGAGE OBLIGATIONS 0.1%
[END CHART]
* The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth
in the Investment Company Act of 1940, as amended, that would otherwise be
applicable.
** Excludes futures and options.
Percentages are of the net assets of the Fund and may not equal 100%.
================================================================================
INVESTMENT OVERVIEW | 9
================================================================================
PORTFOLIO OF INVESTMENTS
November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
U.S. EQUITY SECURITIES (34.3%)
COMMON STOCKS (23.7%)
CONSUMER DISCRETIONARY (3.1%)
-----------------------------
ADVERTISING (0.2%)
71,800 Omnicom Group, Inc. $ 5,548
----------
AUTO PARTS & EQUIPMENT (0.7%)
165,000 Johnson Controls, Inc. 8,250
82,700 Magna International, Inc. 8,903
----------
17,153
----------
AUTOMOBILE MANUFACTURERS (0.2%)
345,000 Ford Motor Co. 5,427
----------
CABLE & SATELLITE (0.4%)
154,590 Comcast Corp. "A" 8,818
----------
CASINOS & GAMING (0.2%)
171,000 MGM Resorts International* 3,900
----------
DEPARTMENT STORES (0.1%)
59,900 Kohl's Corp. 3,571
----------
GENERAL MERCHANDISE STORES (0.1%)
53,500 Dollar General Corp.* 3,570
----------
HOME IMPROVEMENT RETAIL (0.2%)
52,200 Home Depot, Inc. 5,189
----------
HOTELS, RESORTS & CRUISE LINES (0.4%)
161,000 Carnival Corp. 7,110
45,000 Royal Caribbean Cruises Ltd. 3,318
----------
10,428
----------
SPECIALIZED CONSUMER SERVICES (0.3%)
193,900 H&R Block, Inc. 6,523
----------
SPECIALTY STORES (0.3%)
54,351 Signet Jewelers Ltd. 7,118
----------
Total Consumer Discretionary 77,245
----------
================================================================================
10 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
CONSUMER STAPLES (1.4%)
-----------------------
DRUG RETAIL (1.1%)
166,180 CVS Health Corp. $ 15,182
191,800 Walgreen Co. 13,160
----------
28,342
----------
FOOD DISTRIBUTORS (0.1%)
70,000 Sysco Corp. 2,818
----------
HOUSEHOLD PRODUCTS (0.2%)
40,800 Procter & Gamble Co. 3,689
----------
Total Consumer Staples 34,849
----------
ENERGY (2.3%)
-------------
INTEGRATED OIL & GAS (0.7%)
24,230 Chevron Corp. 2,638
195,100 Occidental Petroleum Corp. 15,563
----------
18,201
----------
OIL & GAS DRILLING (0.1%)
100,300 Transocean Ltd. 2,108
8,135 Transocean Ltd. 172
----------
2,280
----------
OIL & GAS EQUIPMENT & SERVICES (1.0%)
321,050 Halliburton Co. 13,548
136,000 Schlumberger Ltd. 11,689
----------
25,237
----------
OIL & GAS EXPLORATION & PRODUCTION (0.5%)
59,400 Anadarko Petroleum Corp. 4,702
242,300 Marathon Oil Corp. 7,007
----------
11,709
----------
Total Energy 57,427
----------
FINANCIALS (4.2%)
-----------------
ASSET MANAGEMENT & CUSTODY BANKS (0.1%)
25,000 Ameriprise Financial, Inc. 3,294
----------
CONSUMER FINANCE (0.6%)
167,470 Capital One Financial Corp. 13,934
----------
DIVERSIFIED BANKS (1.8%)
470,000 Bank of America Corp. 8,009
189,417 Citigroup, Inc. 10,223
279,900 JPMorgan Chase & Co. 16,838
163,620 Wells Fargo & Co. 8,914
----------
43,984
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE (0.2%)
97,200 Morgan Stanley $ 3,420
----------
LIFE & HEALTH INSURANCE (0.3%)
148,380 MetLife, Inc. 8,251
----------
MULTI-LINE INSURANCE (0.1%)
55,300 American International Group, Inc. 3,030
----------
REGIONAL BANKS (0.7%)
84,600 CIT Group, Inc. 4,128
745,000 KeyCorp 10,058
48,700 PNC Financial Services Group, Inc. 4,260
----------
18,446
----------
SPECIALIZED FINANCE (0.4%)
43,920 Intercontinental Exchange, Inc. 9,926
----------
Total Financials 104,285
----------
HEALTH CARE (3.5%)
------------------
BIOTECHNOLOGY (1.1%)
32,000 Amgen, Inc. 5,290
218,600 Gilead Sciences, Inc.* 21,930
----------
27,220
----------
HEALTH CARE DISTRIBUTORS (0.3%)
88,301 Cardinal Health, Inc. 7,257
----------
HEALTH CARE EQUIPMENT (0.4%)
136,100 Medtronic, Inc. 10,054
----------
LIFE SCIENCES TOOLS & SERVICES (0.0%)
5,303 Qiagen N.V.* 127
----------
PHARMACEUTICALS (1.7%)
335,540 AbbVie, Inc. 23,219
65,290 Johnson & Johnson 7,068
45,400 Merck & Co., Inc. 2,742
294,202 Pfizer, Inc. 9,164
----------
42,193
----------
Total Health Care 86,851
----------
INDUSTRIALS (3.4%)
------------------
AEROSPACE & DEFENSE (0.5%)
33,500 Raytheon Co. 3,574
117,000 Spirit AeroSystems Holdings, Inc. "A"* 5,044
30,740 United Technologies Corp. 3,384
----------
12,002
----------
================================================================================
12 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.1%)
31,190 United Parcel Service, Inc. "B" $ 3,429
----------
AIRLINES (0.4%)
157,500 United Continental Holdings, Inc.* 9,644
----------
ELECTRICAL COMPONENTS & EQUIPMENT (0.7%)
255,700 Eaton Corp. plc 17,344
----------
ENVIRONMENTAL & FACILITIES SERVICES (0.3%)
166,400 Republic Services, Inc. 6,591
----------
INDUSTRIAL CONGLOMERATES (1.0%)
38,500 Carlisle Companies, Inc. 3,442
848,860 General Electric Co. 22,486
----------
25,928
----------
INDUSTRIAL MACHINERY (0.2%)
43,500 Parker Hannifin Corp. 5,613
----------
RAILROADS (0.2%)
25,000 Kansas City Southern 2,973
27,000 Union Pacific Corp. 3,153
----------
6,126
----------
Total Industrials 86,677
----------
INFORMATION TECHNOLOGY (5.0%)
-----------------------------
APPLICATION SOFTWARE (0.1%)
50,000 Adobe Systems, Inc.* 3,684
----------
COMMUNICATIONS EQUIPMENT (0.8%)
541,317 Cisco Systems, Inc. 14,962
245,000 Juniper Networks, Inc. 5,429
----------
20,391
----------
DATA PROCESSING & OUTSOURCED SERVICES (0.3%)
24,700 Visa, Inc. "A" 6,377
----------
INTERNET SOFTWARE & SERVICES (0.6%)
62,400 Facebook, Inc. "A"* 4,849
16,260 Google, Inc. "A"* 8,928
----------
13,777
----------
SEMICONDUCTOR EQUIPMENT (0.4%)
449,200 Applied Materials, Inc. 10,803
----------
SEMICONDUCTORS (0.7%)
114,200 Broadcom Corp. "A" 4,926
263,070 Intel Corp. 9,799
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
72,600 Texas Instruments, Inc. $ 3,951
----------
18,676
----------
SYSTEMS SOFTWARE (0.8%)
421,860 Microsoft Corp. 20,169
----------
TECHNOLOGY HARDWARE, STORAGE, & PERIPHERALS (1.3%)
117,840 Apple, Inc. 14,015
346,900 Hewlett-Packard Co. 13,550
80,800 Seagate Technology plc 5,342
----------
32,907
----------
Total Information Technology 126,784
----------
MATERIALS (0.4%)
----------------
DIVERSIFIED CHEMICALS (0.2%)
203,000 Huntsman Corp. 5,181
----------
DIVERSIFIED METALS & MINING (0.1%)
65,000 Freeport-McMoRan Copper & Gold, Inc. 1,745
----------
PAPER PRODUCTS (0.1%)
49,600 International Paper Co. 2,669
----------
Total Materials 9,595
----------
TELECOMMUNICATION SERVICES (0.4%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (0.4%)
185,655 Verizon Communications, Inc. 9,392
----------
Total Common Stocks (cost: $464,687) 593,105
----------
PREFERRED STOCKS (1.3%)
CONSUMER STAPLES (0.4%)
-----------------------
AGRICULTURAL PRODUCTS (0.4%)
90,000 Dairy Farmers of America, Inc., 7.88%,
cumulative redeemable, perpetual(a) 9,619
----------
ENERGY (0.5%)
-------------
OIL & GAS STORAGE & TRANSPORTATION (0.5%)
2,500 Kinder Morgan G.P., Inc., 4.13%, cumulative
redeemable(a) 2,337
369,399 NuStar Logistics, LP, 7.63% 9,838
----------
12,175
----------
Total Energy 12,175
----------
FINANCIALS (0.4%)
-----------------
LIFE & HEALTH INSURANCE (0.4%)
381,253 Delphi Financial Group, Inc., 7.38%, cumulative
redeemable 9,567
----------
================================================================================
14 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
REINSURANCE (0.0%)
3,000 American Overseas Group Ltd., 7.50%, non-cumulative,
perpetual, acquired 1/23/2007 - 3/02/2007;
cost $3,065*(b),(c) $ 750
----------
REITs - OFFICE (0.0%)
28,227 Equity Commonwealth, Series E, 7.25%, cumulative
redeemable, perpetual 725
----------
Total Financials 11,042
----------
TELECOMMUNICATION SERVICES (0.0%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (0.0%)
8,500 Qwest Corp., 7.50% 231
----------
Total Preferred Stocks (cost: $32,802) 33,067
----------
EXCHANGE-TRADED FUNDS (8.2%)
439,000 iShares Core S&P 500 ETF 91,567
562,618 iShares Core S&P Mid-Cap ETF 81,163
5,455 iShares Core S&P Small-Cap ETF 607
17,200 SPDR S&P 500 ETF Trust 3,564
222,400 Vanguard Mid-Cap ETF 27,742
----------
Total Exchange-Traded Funds (cost: $169,294) 204,643
----------
FIXED-INCOME EXCHANGE-TRADED FUNDS (1.1%)
260,300 iShares 7-10 Year Treasury Bond ETF (cost $27,312) 27,642
----------
Total U.S. Equity Securities (cost: $694,095) 858,457
----------
INTERNATIONAL EQUITY SECURITIES (26.1%)
COMMON STOCKS (13.2%)
CONSUMER DISCRETIONARY (1.6%)
-----------------------------
ADVERTISING (0.0%)
5,200 Hakuhodo Dy Holdings, Inc. 50
----------
APPAREL RETAIL (0.0%)
600 ABC-MART, Inc. 30
21,313 Hennes & Mauritz AB "B" 913
----------
943
----------
APPAREL, ACCESSORIES & LUXURY GOODS (0.1%)
1,371 Luxottica Group S.p.A. 73
23,191 Pandora A/S 2,058
1,110 Swatch Group AG 102
----------
2,233
----------
AUTO PARTS & EQUIPMENT (0.4%)
3,498 Continental AG 736
70,000 Delphi Automotive plc 5,107
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
2,000 Koito Manufacturing Co. Ltd. $ 63
4,000 NGK Spark Plug Co. Ltd. 120
51,600 NOK Corp. 1,291
17,300 Sumitomo Electric Industries Ltd. 225
23,000 Toyota Industries Corp. 1,149
----------
8,691
----------
AUTOMOBILE MANUFACTURERS (0.5%)
15,074 Bayerische Motoren Werke AG 1,723
30,041 Daimler AG 2,533
18,858 Fiat Chrysler Automobiles N.V.* 235
76,400 Fuji Heavy Industries Ltd. 2,779
13,400 Isuzu Motors Ltd. 175
55,600 Nissan Motor Co. Ltd. 519
116,473 Peugeot S.A.* 1,492
59,000 Toyota Motor Corp. 3,635
653 Volkswagen AG 148
----------
13,239
----------
BROADCASTING (0.0%)
175,456 ITV plc 587
847 RTL Group S.A. 82
----------
669
----------
CABLE & SATELLITE (0.0%)
1,905 Altice S.A.* 128
20,049 British Sky Broadcasting Group plc 292
----------
420
----------
CASINOS & GAMING (0.0%)
16,964 TABCORP Holdings Ltd. 59
----------
COMPUTER & ELECTRONICS RETAIL (0.1%)
240,640 Dixons Carphone plc 1,591
----------
CONSUMER ELECTRONICS (0.1%)
172,400 Panasonic Corp. 2,226
65,800 Sony Corp. 1,441
----------
3,667
----------
DEPARTMENT STORES (0.0%)
6,000 Takashimaya Co. Ltd. 50
----------
HOMEBUILDING (0.1%)
63,044 Persimmon plc 1,510
10,000 Sekisui Chemical Co. Ltd. 124
----------
1,634
----------
================================================================================
16 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
HOMEFURNISHING RETAIL (0.0%)
1,500 Nitori Holdings Co. Ltd. $ 83
----------
LEISURE FACILITIES (0.0%)
3,800 Oriental Land Co. Ltd. 827
----------
LEISURE PRODUCTS (0.1%)
68,300 BANDI NAMCO Holdings, Inc. 1,478
1,100 Sankyo Co. 35
1,700 Shimano, Inc. 231
----------
1,744
----------
PUBLISHING (0.1%)
2,559 Lagardere SCA 73
39,056 Wolters Kluwer N.V. 1,144
----------
1,217
----------
RESTAURANTS (0.1%)
9,204 Compass Group plc 157
15,298 Sodexo 1,543
4,113 Whitbread plc 294
----------
1,994
----------
Total Consumer Discretionary 39,111
----------
CONSUMER STAPLES (1.3%)
-----------------------
AGRICULTURAL PRODUCTS (0.1%)
2,648,000 Golden Agri-Resources Ltd. 934
636,000 Wilmar International Ltd. 1,565
----------
2,499
----------
BREWERS (0.1%)
25,384 Anheuser-Busch InBev N.V. 2,981
6,622 Carlsberg A.S. "B" 590
2,234 Heineken Holding N.V. 153
----------
3,724
----------
DISTILLERS & VINTNERS (0.0%)
5,328 Diageo plc 165
4,803 Pernod Ricard S.A. 569
----------
734
----------
FOOD DISTRIBUTORS (0.0%)
19,733 Metcash Ltd. 44
196,000 Olam International Ltd. 325
----------
369
----------
FOOD RETAIL (0.2%)
1,267 Casino Guichard-Perrachon S.A. 122
9,837 Delhaize Group 719
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
417,533 J Sainsbury plc $ 1,522
43,476 Koninklijke Ahold N.V. 768
1,400 Lawson, Inc. 86
558,610 Wm Morrison Supermarkets plc 1,558
----------
4,775
----------
HOUSEHOLD PRODUCTS (0.1%)
18,496 Henkel AG & Co. KGaA 1,832
13,070 Svenska Cellulosa AB "B" 308
----------
2,140
----------
HYPERMARKETS & SUPER CENTERS (0.1%)
14,165 Carrefour S.A. 448
22,169 Wesfarmers Ltd. 782
----------
1,230
----------
PACKAGED FOODS & MEAT (0.4%)
1,949 Aryzta AG 156
2 Lindt & Spruengli AG 120
53,577 Nestle S.A. 4,023
4,000 NH Foods Ltd. 80
10,513 Tate & Lyle plc 99
61,954 Unilever N.V. 2,523
61,894 Unilever plc 2,616
----------
9,617
----------
TOBACCO (0.3%)
46,729 British American Tobacco plc 2,770
52,744 Imperial Tobacco Group plc 2,438
63,000 Japan Tobacco, Inc. 2,018
----------
7,226
----------
Total Consumer Staples 32,314
----------
ENERGY (0.8%)
-------------
INTEGRATED OIL & GAS (0.8%)
417,264 BP plc(d) 2,739
86,876 ENI S.p.A. 1,736
132,817 Royal Dutch Shell plc "A"(d) 4,424
90,731 Royal Dutch Shell plc "B"(d) 3,150
28,900 Royal Dutch Shell plc ADR 1,919
67,238 Statoil ASA 1,270
71,887 Total S.A.(d) 4,022
----------
19,260
----------
OIL & GAS EXPLORATION & PRODUCTION (0.0%)
14,873 Woodside Petroleum Ltd. 452
----------
================================================================================
18 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
OIL & GAS REFINING & MARKETING (0.0%)
4,200 Showa Shell Sekiyu K.K. $ 35
----------
Total Energy 19,747
----------
FINANCIALS (2.8%)
-----------------
ASSET MANAGEMENT & CUSTODY BANKS (0.0%)
21,857 3i Group plc 151
664 Partners Group Holding AG 191
----------
342
----------
DIVERSIFIED BANKS (1.6%)
495,000 Aozora Bank Ltd. 1,609
25,355 Australia and New Zealand Banking Group Ltd. 689
443,509 Banco Santander S.A.(d) 3,998
308,391 Bank Hapoalim B.M. 1,538
92,799 Bank Leumi Le-Israel* 327
5,618 BNP Paribas S.A. 360
81,000 BOC Hong Kong Holdings Ltd. 287
54,871 Commonwealth Bank of Australia(d) 3,769
127,924 Credit Agricole S.A. 1,798
16,919 Danske Bank A/S 481
38,600 DBS Group Holdings Ltd. 587
97,010 DnB NOR ASA 1,611
431,498 HSBC Holdings plc(d) 4,293
80,900 HSBC Holdings plc ADR 4,025
21,412 Intesa Sanpaolo 58
68,084 Lloyds Banking Group plc* 85
549,500 Mitsubishi UFJ Financial Group, Inc. 3,177
524,600 Mizuho Financial Group, Inc. 904
3,132 National Australia Bank Ltd. 87
239,267 Natixis 1,691
3,988 Oversea-Chinese Banking Corp. Ltd. 32
154,239 Skandinaviska Enskilda Banken "A" 2,037
65,900 Sumitomo Mitsui Financial Group, Inc. 2,484
74,000 Sumitomo Mitsui Trust Holdings, Inc. 308
42,794 Svenska Handelsbanken AB "A" 2,090
20,635 Swedbank AB "A" 541
28,000 United Overseas Bank Ltd. 515
21,502 Westpac Banking Corp. 596
----------
39,977
----------
DIVERSIFIED CAPITAL MARKETS (0.1%)
180,611 Investec plc 1,670
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE (0.0%)
37,000 Daiwa Securities Group, Inc. $ 297
8,442 Macquarie Group Ltd. 420
----------
717
----------
LIFE & HEALTH INSURANCE (0.2%)
12,800 AIA Group Ltd. 74
376,289 Legal & General Group plc 1,450
57,434 Prudential plc 1,389
7,145 Swiss Life Holding AG 1,637
----------
4,550
----------
MULTI-LINE INSURANCE (0.3%)
10,263 Allianz SE 1,767
43,737 Aviva plc 347
103,242 AXA S.A. 2,492
12,447 Baloise Holdings AG 1,626
10,131 Sampo Oyj "A" 500
514,890 Unipolsai Spa 1,472
----------
8,204
----------
MULTI-SECTOR HOLDINGS (0.2%)
74,935 Industrivarden AB "C" 1,325
33,622 Investment Kinnevik AB "B" 1,166
46,153 Investor AB "B" 1,734
----------
4,225
----------
OTHER DIVERSIFIED FINANCIAL SERVICES (0.0%)
29,600 ORIX Corp. 391
----------
PROPERTY & CASUALTY INSURANCE (0.1%)
33,691 Direct Line Insurance Group 155
309,340 Insurance Australia Group Ltd. 1,677
139,523 Suncorp Group Ltd. 1,702
----------
3,534
----------
REAL ESTATE DEVELOPMENT (0.0%)
64,000 Cheung Kong Holdings Ltd. 1,177
----------
REAL ESTATE OPERATING COMPANIES (0.1%)
6,511 Deutsche Wohnen AG 156
312,000 Hysan Development Co. Ltd. 1,446
25,800 Swire Properties Ltd. 80
3,705 Swiss Prime Site AG 286
----------
1,968
----------
================================================================================
20 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
REGIONAL BANKS (0.1%)
116,484 Bank of Queensland Ltd. $ 1,221
16,000 Chiba Bank Ltd. 107
48,200 Resona Holdings, Inc. 260
7,000 Shizuoka Bank Ltd. 67
----------
1,655
----------
REINSURANCE (0.1%)
1,359 Hannover Rueck SE 121
3,907 Muenchener Rueckversicherungs-Gesellschaft AG 805
4,413 Swiss Re AG 377
----------
1,303
----------
Total Financials 69,713
----------
HEALTH CARE (1.5%)
------------------
BIOTECHNOLOGY (0.0%)
7,172 Actelion Ltd. 853
4,743 CSL Ltd. 333
----------
1,186
----------
HEALTH CARE DISTRIBUTORS (0.1%)
73,600 Alfresa Holdings Corp. 850
110,900 Medipal Holdings Corp. 1,232
1,600 Suzuken Co. Ltd. 41
----------
2,123
----------
HEALTH CARE EQUIPMENT (0.0%)
1,185 Sonova Holding AG 179
----------
HEALTH CARE SERVICES (0.0%)
10,107 Fresenius SE & Co. KGaA 548
8,244 Sonic Healthcare Ltd. 122
----------
670
----------
LIFE SCIENCES TOOLS & SERVICES (0.0%)
1,183 Lonza Group AG 139
----------
PHARMACEUTICALS (1.4%)
28,415 AstraZeneca plc 2,122
8,836 Bayer AG 1,329
112,793 GlaxoSmithKline plc 2,616
2,872 Merck KGaA 286
68,740 Novartis AG(d) 6,652
72,400 Novartis AG ADR 6,997
8,428 Novo Nordisk A/S "B" 384
60,300 Otsuka Holdings Co. Ltd. 1,906
================================================================================
PORTFOLIO OF INVESTMENTS | 21
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
20,671 Roche Holding AG $ 6,191
26,611 Sanofi 2,576
3,042 Shire plc 217
45,193 Teva Pharmaceutical Industries Ltd. 2,572
----------
33,848
----------
Total Health Care 38,145
----------
INDUSTRIALS (1.7%)
------------------
AEROSPACE & DEFENSE (0.1%)
15,066 BAE Systems plc 113
29,840 Safran S.A. 1,931
19,035 Thales S.A. 1,010
----------
3,054
----------
AGRICULTURAL & FARM MACHINERY (0.0%)
21,052 CNH Industrial N.V. 165
----------
AIR FREIGHT & LOGISTICS (0.0%)
21,813 Deutsche Post AG 725
14,679 Royal Mail plc 96
15,505 Toll Holdings Ltd. 74
----------
895
----------
AIRLINES (0.1%)
25,000 Cathay Pacific Airways 55
35,117 Deutsche Lufthansa AG 627
3,596 easyJet plc 93
22,302 International Consolidated Airlines Group S.A.* 159
20,600 Ryanair Holdings plc ADR* 1,295
----------
2,229
----------
BUILDING PRODUCTS (0.0%)
5,300 Daikin Industries Ltd. 352
543 Geberit AG 189
----------
541
----------
COMMERCIAL PRINTING (0.0%)
13,000 Dai Nippon Printing Co. Ltd. 114
12,000 Toppan Printing Co. Ltd. 77
----------
191
----------
CONSTRUCTION & ENGINEERING (0.2%)
43,717 ACS Actividades de Construccion y Servicios S.A. 1,545
5,289 Ferrovial S.A. 108
20,120 Hochtief AG 1,516
================================================================================
22 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
83,708 Leighton Holdings Ltd. $ 1,434
23,000 Taisei Corp. 120
----------
4,723
----------
CONSTRUCTION MACHINERY & HEAVY TRUCKS (0.0%)
799 MAN SE 91
1,126,000 Yangzijiang Shipbuilding Holdings Ltd. 1,058
----------
1,149
----------
ELECTRICAL COMPONENTS & EQUIPMENT (0.0%)
12,000 Fuji Electric Co. Ltd. 52
----------
HEAVY ELECTRICAL EQUIPMENT (0.1%)
159,000 Mitsubishi Electric Corp. 1,911
1,396 Vestas Wind Systems A/S* 51
----------
1,962
----------
HIGHWAYS & RAILTRACKS (0.0%)
7,000 Hopewell Highway Infrastructure Ltd. ADR 3
----------
HUMAN RESOURCE & EMPLOYMENT SERVICES (0.1%)
97,105 Capita plc 1,623
----------
INDUSTRIAL CONGLOMERATES (0.2%)
196,500 Hopewell Holdings Ltd. 720
47,000 Hutchison Whampoa Ltd. 589
53,000 Keppel Corp. Ltd. 366
34,000 NWS Holdings Ltd. 63
17,825 Siemens AG 2,109
----------
3,847
----------
INDUSTRIAL MACHINERY (0.2%)
8,000 Amada Co. Ltd. 72
8,803 Atlas Copco AB "B" 234
4,300 FANUC Corp. 725
42,701 Kone Oyj "B" 1,965
67,000 Mitsubishi Heavy Industries Ltd. 391
12,000 NSK Ltd. 151
13,000 Sumitomo Heavy Industries Ltd. 71
2,600 THK Co. Ltd. 63
21,471 Vallourec S.A. 712
6,167 Wartsila Corp. Oyj "B" 276
----------
4,660
----------
MARINE (0.1%)
87 A.P. Moller-Maersk A/S "A" 178
840 A.P. Moller-Maersk A/S "B" 1,752
================================================================================
PORTFOLIO OF INVESTMENTS | 23
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
6,118 Kuehne & Nagel International AG $ 824
36,000 Nippon Yusen Kabushiki Kaisha 101
----------
2,855
----------
RAILROADS (0.4%)
41,100 Canadian Pacific Railway Ltd. 7,939
3,200 Central Japan Railway Co. 466
25,000 Hankyu Hanshin Holdings, Inc. 137
29,000 MTR Corp. Ltd. 116
6,800 West Japan Railway Co. 325
----------
8,983
----------
SECURITY & ALARM SERVICES (0.0%)
4,700 Secom Co. Ltd. 272
6,983 Securitas AB "B" 84
----------
356
----------
TRADING COMPANIES & DISTRIBUTORS (0.2%)
7,935 Bunzl plc 221
33,300 ITOCHU Corp. 383
38,000 Marubeni Corp. 240
56,700 Mitsubishi Corp. 1,072
131,000 Mitsui & Co. Ltd. 1,807
137,100 Sumitomo Corp. 1,462
5,931 Wolseley plc ADR 333
----------
5,518
----------
TRUCKING (0.0%)
44,000 ComfortDelGro Corp. Ltd. 88
----------
Total Industrials 42,894
----------
INFORMATION TECHNOLOGY (1.1%)
-----------------------------
COMMUNICATIONS EQUIPMENT (0.0%)
10,959 LM Ericsson Telephone Co. "B" ADR 138
84,178 Nokia Oyj 700
----------
838
----------
ELECTRONIC COMPONENTS (0.1%)
9,700 HOYA Corp. 345
4,500 Murata Manufacturing Co. Ltd. 486
28,400 Omron Corp. 1,320
2,800 TDK Corp. 169
----------
2,320
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.0%)
5,841 Hexagon AB "B" 186
1,400 Hitachi High-Technologies Corp. 40
================================================================================
24 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
44,000 Hitachi Ltd. $ 340
1,000 Keyence Corp. 462
----------
1,028
----------
IT CONSULTING & OTHER SERVICES (0.1%)
24,945 Cap Gemini 1,828
260,000 Fujitsu Ltd. 1,485
----------
3,313
----------
SEMICONDUCTORS (0.7%)
25,522 Infineon Technologies AG 250
194,839 NXP Semiconductors N.V.* 15,160
10,200 ROHM Co. 660
----------
16,070
----------
TECHNOLOGY HARDWARE, STORAGE, & PERIPHERALS (0.2%)
83,300 Brother Industries Ltd. 1,556
10,100 FUJIFILM Holdings Corp. 335
59,000 NEC Corp. 186
16,300 Ricoh Co. Ltd. 177
47,100 Seiko Epson Corp. 2,273
----------
4,527
----------
Total Information Technology 28,096
----------
MATERIALS (1.0%)
----------------
COMMODITY CHEMICALS (0.1%)
203,000 Asahi Kasei Corp. 1,765
7,600 Kuraray Co. Ltd. 92
----------
1,857
----------
CONSTRUCTION MATERIALS (0.1%)
14,177 HeidelbergCement AG 1,075
13,000 Taiheiyo Cement Corp. 41
----------
1,116
----------
DIVERSIFIED CHEMICALS (0.0%)
9,212 BASF SE 836
----------
DIVERSIFIED METALS & MINING (0.5%)
88,342 Antofagasta plc 1,017
91,334 BHP Billiton Ltd.(d) 2,403
47,989 BHP Billiton plc 1,137
6,189 Boliden AB 105
25,000 Mitsubishi Materials Corp. 78
10,002 Rio Tinto Ltd. 503
28,516 Rio Tinto plc 1,333
================================================================================
PORTFOLIO OF INVESTMENTS | 25
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
111,800 Rio Tinto plc ADR $ 5,210
102,000 Sumitomo Metal Mining Co. Ltd. 1,561
----------
13,347
----------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.1%)
57,503 K and S AG 1,726
34,905 Yara International ASA 1,484
----------
3,210
----------
PAPER PRODUCTS (0.0%)
11,917 UPM-Kymmene Oyj 198
----------
SPECIALTY CHEMICALS (0.1%)
183,000 Daicel Corp. 2,106
207 Givaudan S.A. 369
3,600 Nitto Denko Corp. 190
----------
2,665
----------
STEEL (0.1%)
22,563 ArcelorMittal ADR 277
121,578 Fortescue Metals Group Ltd. 304
10,800 JFE Holdings, Inc. 230
169,000 Kobe Steel Ltd. 269
120,000 Nippon Steel & Sumitomo Metal Corp. 309
38,012 Voestalpine AG 1,578
----------
2,967
----------
Total Materials 26,196
----------
TELECOMMUNICATION SERVICES (0.9%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (0.4%)
178,650 BT Group plc 1,145
72,147 Koninklijke (Royal) KPN N.V. 240
38,300 Nippon Telegraph & Telephone Corp. 2,049
141,372 Orange 2,490
1,153,000 PCCW Ltd. 769
41,026 Spark New Zealand Ltd. 98
205,697 Telecom Italia S.p.A. 182
146,788 Telefonica S.A. 2,351
45,159 Telekom Austria AG 308
96,495 Telstra Corp. Ltd. 467
----------
10,099
----------
WIRELESS TELECOMMUNICATION SERVICES (0.5%)
21,600 KDDI Corp. 1,384
1,424 Millicom International Cellular S.A.
Swedish Depository Receipts 118
600 SoftBank Corp. 40
================================================================================
26 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
1,037,338 Vodafone Group plc $ 3,791
193,936 Vodafone Group plc ADR 7,088
----------
12,421
----------
Total Telecommunication Services 22,520
----------
UTILITIES (0.5%)
----------------
ELECTRIC UTILITIES (0.3%)
214,000 Cheung Kong Infrastructure Holdings Ltd. 1,587
15,000 Chubu Electric Power Co., Inc.* 175
6,800 Chugoku Electric Power Co., Inc. 88
1,354 EDF S.A. 41
325,357 EDP-Energias de Portugal S.A. 1,335
78,010 Fortum Oyj 1,957
3,900 Hokuriku Electric Power Co. 50
22,975 Iberdrola S.A. 170
15,500 Kansai Electric Power Co., Inc.*(d) 155
9,900 Kyushu Electric Power Co., Inc.* 101
39,500 Power Assets Holdings Ltd. 377
2,470 Red Electrica Corporacion S.A. 226
4,000 Shikoku Electric Power Co.* 50
21,524 SSE plc 551
10,600 Tohoku Electric Power Co., Inc. 123
30,600 Tokyo Electric Power Co., Inc.* 112
----------
7,098
----------
GAS UTILITIES (0.0%)
6,932 Enagas S.A. 232
46,516 Snam S.p.A. 247
----------
479
----------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.0%)
2,600 Electric Power Development Co. Ltd. 90
----------
MULTI-UTILITIES (0.2%)
113,953 Centrica plc 507
45,038 E.ON SE 798
170,656 National Grid plc 2,479
----------
3,784
----------
WATER UTILITIES (0.0%)
14,256 Severn Trent plc 455
----------
Total Utilities 11,906
----------
Total Common Stocks (cost: $297,984) 330,642
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 27
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
PREFERRED STOCKS (0.1%)
CONSUMER DISCRETIONARY (0.1%)
-----------------------------
AUTOMOBILE MANUFACTURERS (0.1%)
1,180 Bayerische Motoren Werke AG $ 100
3,708 Volkswagen AG 854
----------
954
----------
Total Consumer Discretionary 954
----------
CONSUMER STAPLES (0.0%)
-----------------------
HOUSEHOLD PRODUCTS (0.0%)
3,993 Henkel AG & Co. KGaA 443
----------
Total Preferred Stocks (cost: $1,403) 1,397
----------
EXCHANGE-TRADED FUNDS (12.8%)
319,748 EGShares Emerging Markets Consumer ETF 8,672
868,475 iShares Core MSCI EAFE ETF 50,424
2,189,286 iShares Core MSCI Emerging Markets ETF 108,983
916,000 iShares MSCI EAFE ETF 58,615
1,600,000 iShares MSCI Germany ETF 46,080
154,620 iShares MSCI Philippines ETF 5,971
153,062 iShares MSCI Turkey ETF 8,829
107,983 SPDR S&P Emerging Markets SmallCap ETF 5,037
170,548 WisdomTree Emerging Markets Equity Income Fund 7,797
182,288 WisdomTree Emerging Markets SmallCap Dividend Fund 8,194
322,900 WisdomTree India Earnings Fund 7,507
112,700 WisdomTree Japan Hedged Equity Index Fund 6,244
----------
Total Exchange-Traded Funds (cost: $311,372) 322,353
----------
Total International Equity Securities (cost: $610,759) 654,392
----------
PRECIOUS METALS AND COMMODITY-RELATED SECURITIES (2.6%)
GOLD (1.4%)
AFRICAN GOLD COMPANIES (0.2%)
265,200 AngloGold Ashanti Ltd. ADR* 2,270
340,000 Gold Fields Ltd. ADR 1,394
545,000 Harmony Gold Mining Co. Ltd. ADR* 932
----------
4,596
----------
AUSTRALIAN GOLD COMPANIES (0.1%)
238,000 Newcrest Mining Ltd.*(c) 2,012
----------
================================================================================
28 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
EUROPEAN GOLD COMPANIES (0.1%)
41,500 Randgold Resources Ltd. ADR $ 2,684
----------
NORTH AMERICAN GOLD COMPANIES (0.9%)
77,000 Agnico-Eagle Mines Ltd. 1,809
100,000 Alamos Gold, Inc. 689
295,857 AuRico Gold, Inc. 1,018
525,000 B2Gold Corp.* 854
157,000 Barrick Gold Corp. 1,867
250,000 Centerra Gold, Inc. 1,154
565,000 Dundee Precious Metals, Inc.* 1,462
358,000 Eldorado Gold Corp. 2,245
90,000 Goldcorp, Inc. 1,768
390,000 IAMGOLD Corp.* 823
650,000 Kinross Gold Corp.* 1,820
300,000 New Gold, Inc.* 1,203
51,000 Newmont Mining Corp. 938
121,400 Primero Mining Corp.* 495
41,000 Royal Gold, Inc. 2,611
387,884 Semafo, Inc.* 1,153
150,000 Yamana Gold, Inc. 567
----------
22,476
----------
SOUTH AMERICAN GOLD COMPANIES (0.1%)
254,000 Compania de Minas Buenaventura S.A. ADR 2,349
----------
Total Gold (cost: $54,455) 34,117
----------
SILVER (0.2%)
235,000 Pan American Silver Corp. 2,200
120,000 Silver Wheaton Corp. 2,390
97,000 Tahoe Resources, Inc.* 1,549
----------
Total Silver (cost: $8,062) 6,139
----------
EXCHANGE-TRADED FUNDS (1.0%)
297,334 iShares Silver Trust* 4,409
178,295 SPDR Gold Shares* 19,989
----------
Total Exchange-Traded Funds (cost: $34,763) 24,398
----------
Total Precious Metals and Commodity-Related
Securities (cost: $97,280) 64,654
----------
GLOBAL REAL ESTATE EQUITY SECURITIES (0.4%)
COMMON STOCKS (0.3%)
DIVERSIFIED REAL ESTATE ACTIVITIES (0.1%)
5,700 Daiwa House Industry Co. Ltd. 108
209,400 Henderson Land Development Co. Ltd. 1,403
================================================================================
PORTFOLIO OF INVESTMENTS | 29
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
14,500 Kerry Properties Ltd. $ 52
74,147 Lend Lease Group 967
159,000 New World Development Co. Ltd. 190
20,000 Wheelock & Co. Ltd. 101
----------
2,821
----------
REITs - DIVERSIFIED (0.0%)
108,472 BGP Holdings plc, acquired 8/06/2009; cost: $0*(b),(c) -
22,222 British Land Co. plc 267
39,418 GPT Group 139
17,166 Land Securities Group plc 318
----------
724
----------
REITs - OFFICE (0.0%)
54,380 Dexus Property Group 329
----------
REITs - RETAIL (0.2%)
54,000 CapitaMall Trust 82
696,104 Federation Centres 1,641
308,921 INTU Properties plc 1,722
340,500 Link REIT 2,160
----------
5,605
----------
Total Common Stocks (cost: $8,532) 9,479
----------
PREFERRED STOCKS (0.1%)
REITs - MORTGAGE (0.1%)
-----------------------
60,000 Arbor Realty Trust, Inc., 7.38% (cost: $1,500) 1,490
----------
Total Global Real Estate Equity Securities
(cost: $10,032) 10,969
----------
------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON
(000) RATE MATURITY
------------------------------------------------------------------------------------------------------------
BONDS (32.8%)
CORPORATE OBLIGATIONS (13.4%)
CONSUMER DISCRETIONARY (0.1%)
-----------------------------
SPECIALTY STORES (0.1%)
$ 2,000 Guitar Center, Inc.(a) 6.50% 4/15/2019 1,745
1,000 Toys R Us Property Co. II, LLC 8.50 12/01/2017 1,000
----------
2,745
----------
Total Consumer Discretionary 2,745
----------
================================================================================
30 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
ENERGY (2.3%)
-------------
OIL & GAS DRILLING (0.1%)
$ 1,799 Schahin II Finance Co.(a) 5.88% 9/25/2023 $ 1,587
----------
OIL & GAS EXPLORATION & PRODUCTION (0.5%)
1,900 Alta Mesa Holdings, LP 9.63 10/15/2018 1,852
2,000 American Energy - Permian Basin, LLC(a) 7.13 11/01/2020 1,630
2,000 California Resources Corp.(a) 6.00 11/15/2024 1,794
2,000 Fieldwood Energy, LLC(e) 8.38 9/30/2020 1,824
2,050 Rex Energy Corp. 8.88 12/01/2020 2,040
1,000 Sabine Oil & Gas, LLC(e) 8.75 12/31/2018 932
2,000 Samson Investment Co.(e) 5.00 9/25/2018 1,829
----------
11,901
----------
OIL & GAS STORAGE & TRANSPORTATION (1.7%)
10,000 DCP Midstream, LLC(a) 5.85 5/21/2043 9,987
8,680 Enbridge Energy Partners, LP 8.05 10/01/2077 9,678
13,030 Energy Transfer Partners, LP 3.25(f) 11/01/2066 12,123
7,980 Enterprise Products Operating, LLC 7.00 6/01/2067 8,348
1,900 Martin Midstream Partners, LP 7.25 2/15/2021 1,891
2,352 Southern Union Co. 3.25(f) 11/01/2066 1,953
----------
43,980
----------
Total Energy 57,468
----------
FINANCIALS (8.0%)
-----------------
ASSET MANAGEMENT & CUSTODY BANKS (0.8%)
10,000 Prospect Capital Corp. 5.00 7/15/2019 10,385
8,010 State Street Capital Trust IV 1.23(f) 6/01/2077 6,788
2,400 Walter Investment Management Corp. 7.88 12/15/2021 2,172
----------
19,345
----------
DIVERSIFIED BANKS (0.5%)
5,000 JPMorgan Chase Capital XIII 1.18(f) 9/30/2034 4,284
10,000 JPMorgan Chase Capital XXI 1.18(f) 1/15/2087 8,350
----------
12,634
----------
LIFE & HEALTH INSURANCE (1.4%)
12,342 Lincoln National Corp. 7.00 5/17/2066 12,651
1,000 Lincoln National Corp. 6.05 4/20/2067 1,015
7,800 Prudential Financial, Inc. 5.63 6/15/2043 8,093
2,135 Prudential Financial, Inc. 5.20 3/15/2044 2,135
10,935 StanCorp Financial Group, Inc. 6.90 6/01/2067 11,372
----------
35,266
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 31
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
MULTI-LINE INSURANCE (1.4%)
$ 15,127 Genworth Holdings, Inc. 6.15% 11/15/2066 $ 10,173
12,255 Glen Meadow Pass-Through Trust(a) 6.51 2/12/2067 12,102
12,810 Nationwide Mutual Insurance Co.(a) 5.81(f) 12/15/2024 12,826
----------
35,101
----------
MULTI-SECTOR HOLDINGS (0.2%)
5,325 BNSF Funding Trust I 6.61 12/15/2055 6,021
----------
PROPERTY & CASUALTY INSURANCE (2.0%)
10,800 Allstate Corp. 5.75 8/15/2053 11,414
10,000 AmTrust Financial Services, Inc. 6.13 8/15/2023 10,572
11,050 HSB Group, Inc.(c) 1.14(f) 7/15/2027 8,039
14,215 Oil Insurance Ltd.(a) 3.22(f) -(g) 13,133
6,500 Travelers Companies, Inc. 6.25 3/15/2067 7,077
----------
50,235
----------
REAL ESTATE DEVELOPMENT (0.1%)
1,800 Forestar USA Real Estate Group, Inc.(a) 8.50 6/01/2022 1,838
----------
REGIONAL BANKS (1.1%)
1,000 Allfirst Preferred Capital Trust 1.73(f) 7/15/2029 890
8,000 Cullen/Frost Capital Trust II 1.78(f) 3/01/2034 7,023
4,000 First Maryland Capital Trust I 1.23(f) 1/15/2027 3,600
5,000 Fulton Capital Trust I 6.29 2/01/2036 4,900
2,000 Huntington Capital Trust II "B" 0.86(f) 6/15/2028 1,720
3,500 M&T Capital Trust I 8.23 2/01/2027 3,538
5,039 Manufacturers & Traders Trust Co. 5.63 12/01/2021 5,281
----------
26,952
----------
REINSURANCE (0.3%)
4,000 Alterra USA Holdings Ltd.(a) 7.20 4/14/2017 4,411
3,750 Platinum Underwriters Finance, Inc. 7.50 6/01/2017 4,238
----------
8,649
----------
REITs - RETAIL (0.1%)
3,000 Brixmor, LLC 5.30 1/15/2015 3,015
----------
THRIFTS & MORTGAGE FINANCE (0.1%)
2,000 Ocwen Financial Corp.(a) 6.63 5/15/2019 1,905
----------
Total Financials 200,961
----------
INDUSTRIALS (0.3%)
------------------
AEROSPACE & DEFENSE (0.2%)
1,250 Moog, Inc.(a) 5.25 12/01/2022 1,275
3,000 Textron Financial Corp.(a) 6.00 2/15/2067 2,767
----------
4,042
----------
================================================================================
32 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
AIRLINES (0.0%)
$ 873 America West Airlines, Inc. Pass-Through Trust (INS) 7.93% 7/02/2020 $ 964
----------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
3,137 ILFC E-Capital Trust I(a) 4.84(f) 12/21/2065 2,996
----------
Total Industrials 8,002
----------
MATERIALS (0.1%)
----------------
GOLD (0.1%)
CAD 3,000 Allied Nevada Gold Corp.(a) 8.75 6/01/2019 1,062
----------
UTILITIES (2.6%)
----------------
ELECTRIC UTILITIES (0.9%)
6,085 NextEra Energy Capital Holdings, Inc. 6.35 10/01/2066 6,024
7,000 NextEra Energy Capital Holdings, Inc. 6.65 6/15/2067 7,092
500 NextEra Energy Capital Holdings, Inc. 7.30 9/01/2067 545
7,400 PPL Capital Funding, Inc. 6.70 3/30/2067 7,496
4,041 Texas Competitive Electric Holdings Co., LLC(e),(h) 4.65 10/10/2017 2,938
----------
24,095
----------
MULTI-UTILITIES (1.7%)
6,350 Dominion Resources, Inc. 7.50 6/30/2066 6,779
3,500 Dominion Resources, Inc. 2.53(f) 9/30/2066 3,312
5,291 Integrys Energy Group, Inc. 6.11 12/01/2066 5,376
12,464 Puget Sound Energy, Inc. 6.97 6/01/2067 13,107
13,000 Wisconsin Energy Corp. 6.25 5/15/2067 13,273
----------
41,847
----------
Total Utilities 65,942
----------
Total Corporate Obligations (cost: $306,672) 336,180
----------
EURODOLLAR AND YANKEE OBLIGATIONS (4.2%)
ENERGY (0.4%)
-------------
OIL & GAS STORAGE & TRANSPORTATION (0.4%)
9,650 TransCanada Pipelines Ltd. 6.35 5/15/2067 9,626
----------
FINANCIALS (2.0%)
-----------------
DIVERSIFIED BANKS (1.1%)
2,000 Barclays Bank plc 0.56(f) -(g) 1,310
5,485 Barclays Bank plc 0.63(f) -(g) 3,606
11,500 Barclays Bank plc 0.69(f) -(g) 7,647
2,000 Barclays Bank plc(a) 7.70 -(g) 2,200
2,000 Compass Bank 6.40 10/01/2017 2,204
1,600 HSBC Bank plc 0.60(f) -(g) 1,078
8,000 HSBC Bank plc 0.69(f) -(g) 5,390
================================================================================
PORTFOLIO OF INVESTMENTS | 33
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
$ 2,500 LBI HF, acquired 10/12/2007;
cost $2,500(a),(b),(c),(h) 7.43% -(g) $ -
5,150 Lloyds Bank plc 0.56(f) -(g) 3,412
----------
26,847
----------
LIFE & HEALTH INSURANCE (0.4%)
9,800 Great-West Life & Annuity Insurance Capital, LP(a) 7.15 5/16/2046 10,205
----------
PROPERTY & CASUALTY INSURANCE (0.5%)
11,850 QBE Capital Funding III Ltd.(a) 7.25 5/24/2041 12,948
----------
REGIONAL BANKS (0.0%)
3,000 Glitnir Banki hf, acquired 9/11/2006 - 10/18/2006;
cost $3,043(a),(b),(c),(h) 7.45 -(g) -
----------
Total Financials 50,000
----------
INDUSTRIALS (0.1%)
------------------
MARINE (0.1%)
1,900 Navios Maritime Holdings, Inc.(a) 7.38 1/15/2022 1,840
----------
TRADING COMPANIES & DISTRIBUTORS (0.0%)
1,300 Ashtead Capital, Inc.(a) 5.63 10/01/2024 1,375
----------
Total Industrials 3,215
----------
MATERIALS (0.7%)
----------------
DIVERSIFIED METALS & MINING (0.1%)
1,900 Vedanta Resources plc(a) 6.00 1/31/2019 1,838
----------
GOLD (0.6%)
9,200 Kinross Gold Corp.(a) 5.95 3/15/2024 8,808
5,000 Newcrest Finance Proprietary Ltd.(a) 4.45 11/15/2021 4,750
4,200 St. Barbara Ltd.(a) 8.88 4/15/2018 3,444
----------
17,002
----------
Total Materials 18,840
----------
TELECOMMUNICATION SERVICES (0.1%)
---------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.1%)
3,000 NII International Telecom SCA(a),(h) 7.88 8/15/2019 2,205
----------
UTILITIES (0.9%)
----------------
ELECTRIC UTILITIES (0.8%)
4,000 EDP Finance B.V.(a) 4.13 1/15/2020 4,064
7,400 Electricite De France S.A.(a) 5.25 -(g) 7,687
6,800 Enel S.p.A.(a) 8.75 9/24/2073 7,959
1,000 SPI Electricity Property Ltd. (INS)(a) 7.25 12/01/2016 1,086
----------
20,796
----------
================================================================================
34 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
$ 700 AES Gener S.A.(a) 8.38% 12/18/2073 $ 782
----------
Total Utilities 21,578
----------
Total Eurodollar and Yankee Obligations
(cost: $103,778) 105,464
----------
ASSET-BACKED SECURITIES (0.2%)
FINANCIALS (0.2%)
-----------------
ASSET-BACKED FINANCING (0.2%)
3,000 SLC Student Loan Trust 0.68(f) 7/15/2036 2,692
1,241 SLM Student Loan Trust 0.78(f) 10/25/2038 1,133
----------
3,825
----------
Total Financials 3,825
----------
Total Asset-Backed Securities (cost: $3,318) 3,825
----------
COLLATERALIZED MORTGAGE OBLIGATIONS (0.1%)
FINANCIALS (0.1%)
-----------------
1,384 Sequoia Mortgage Trust 1.06(f) 9/20/2033 1,212
1,356 Wells Fargo Mortgage Backed Securities Trust 4.83(f) 4/25/2035 1,304
----------
2,516
----------
Total Collateralized Mortgage Obligations
(cost: $2,556) 2,516
----------
COMMERCIAL MORTGAGE SECURITIES (8.1%)
FINANCIALS (8.1%)
-----------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (8.1%)
2,444 Banc of America Commercial Mortgage, Inc.(a) 5.23 12/10/2042 2,337
2,000 Banc of America Commercial Mortgage, Inc. 4.77 7/10/2043 1,976
10,000 Banc of America Commercial Mortgage, Inc. 6.05 7/10/2044 10,347
8,500 Banc of America Commercial Mortgage, Inc. 5.76 5/10/2045 8,942
2,000 Banc of America Commercial Mortgage, Inc. 5.42 10/10/2045 2,081
6,000 Banc of America Commercial Mortgage, Inc. 5.35 9/10/2047 6,132
5,277 Banc of America Commercial Mortgage, Inc.(a) 6.14 9/10/2047 5,407
3,500 Banc of America Commercial Mortgage, Inc. 6.47 2/10/2051 3,768
2,000 Bear Stearns Commercial Mortgage Securities, Inc. 5.59 12/11/2040 1,970
4,000 Bear Stearns Commercial Mortgage Securities, Inc. 5.21 2/11/2041 4,008
3,000 Bear Stearns Commercial Mortgage Securities, Inc.(a) 5.66 9/11/2041 2,932
2,000 Bear Stearns Commercial Mortgage Securities, Inc. 5.60 10/12/2041 2,025
1,600 CD Commercial Mortgage Trust 5.69 10/15/2048 1,557
8,000 Citigroup Commercial Mortgage Trust 5.96 3/15/2049 8,371
2,000 Citigroup Commercial Mortgage Trust 6.34 12/10/2049 2,033
================================================================================
PORTFOLIO OF INVESTMENTS | 35
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
$ 10,000 Commercial Mortgage Loan Trust 6.01% 7/10/2038 $ 10,331
6,000 Commercial Mortgage Loan Trust 6.24 12/10/2049 6,204
2,000 Commercial Mortgage Loan Trust(a) 5.54 12/11/2049 2,102
2,000 Credit Suisse Commercial
Mortgage Pass-Through Trust 6.00 6/15/2038 2,054
16,400 Credit Suisse Commercial
Mortgage Pass-Through Trust 0.35 2/15/2040 14,228
1,000 Credit Suisse First Boston
Mortgage Securities Corp. 0.40 4/15/2037 985
8,000 GE Capital Commercial Mortgage Corp. 5.27 3/10/2044 8,148
2,000 GE Capital Commercial Mortgage Corp. 5.49 11/10/2045 2,019
9,355 GE Capital Commercial Mortgage Corp. 5.61 12/10/2049 9,870
3,500 GMAC Commercial Mortgage Securities, Inc. 4.97 12/10/2041 3,556
1,000 GMAC Commercial Mortgage Securities, Inc. 4.98 12/10/2041 1,020
4,000 GS Mortgage Securities Corp. II 5.71 4/10/2038 4,127
2,800 GS Mortgage Securities Corp. II 4.78 7/10/2039 2,826
625 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 5.00 10/15/2042 641
11,225 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 5.04 10/15/2042 11,416
8,000 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 5.57 4/15/2043 8,330
2,000 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 5.56 12/15/2044 2,076
2,000 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 5.56 12/15/2044 2,063
3,675 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 6.06 4/15/2045 3,697
5,000 J.P. Morgan Chase Commercial
Mortgage Securities Corp. 5.41 5/15/2047 4,309
2,000 LB-UBS Commercial Mortgage Trust 5.28 2/15/2041 2,034
2,500 Merrill Lynch Mortgage Trust 5.41 7/12/2038 2,463
1,000 Merrill Lynch Mortgage Trust 5.44 7/12/2038 955
11,500 Merrill Lynch Mortgage Trust 5.86 5/12/2039 11,592
7,000 Merrill Lynch Mortgage Trust 5.01 10/12/2041 7,022
1,000 Merrill Lynch Mortgage Trust 5.60 1/12/2044 1,020
3,000 ML-CFC Commercial Mortgage Trust 5.42 8/12/2048 3,172
3,000 ML-CFC Commercial Mortgage Trust 6.08 8/12/2049 3,080
1,000 Morgan Stanley Capital I Trust 5.67 3/12/2044 1,008
878 Morgan Stanley Capital I, Inc. 5.15 8/13/2042 892
723 Morgan Stanley Capital I, Inc. 5.17 8/13/2042 732
================================================================================
36 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
$ 3,400 Wachovia Bank Commercial Mortgage Trust 5.90% 5/15/2043 $ 3,530
1,337 Wachovia Bank Commercial Mortgage Trust(a) 4.99 5/15/2044 1,311
----------
202,699
----------
Total Financials 202,699
----------
Total Commercial Mortgage Securities (cost: $184,504) 202,699
----------
U.S. GOVERNMENT AGENCY ISSUES (0.0%)(i)
MORTGAGE-BACKED PASS-THROUGH SECURITIES (0.0%)
3 Government National Mortgage Assn. I 6.50 5/15/2023 3
12 Government National Mortgage Assn. I 6.50 4/15/2024 13
9 Government National Mortgage Assn. I 7.50 3/15/2017 9
6 Government National Mortgage Assn. I 7.50 3/15/2017 6
2 Government National Mortgage Assn. I 8.00 11/15/2016 2
1 Government National Mortgage Assn. I 8.50 6/15/2016 1
1 Government National Mortgage Assn. I 8.50 6/15/2016 1
1 Government National Mortgage Assn. I 8.50 7/15/2016 1
1 Government National Mortgage Assn. I 8.50 9/15/2016 1
2 Government National Mortgage Assn. I 8.50 12/15/2016 2
1 Government National Mortgage Assn. I 8.50 1/15/2017 1
- Government National Mortgage Assn. I 9.00 9/15/2016 1
- Government National Mortgage Assn. I 9.00 10/15/2016 1
1 Government National Mortgage Assn. I 9.50 11/15/2016 1
----------
43
----------
Total U.S. Government Agency Issues (cost: $40) 43
----------
U.S. TREASURY SECURITIES (6.8%)
BONDS (3.4%)
81,500 3.13%, 8/15/2044 84,837
----------
NOTES (3.4%)
32,000 1.75%, 5/15/2022(l) 31,525
37,500 2.38%, 8/15/2024 38,106
7,000 2.50%, 5/15/2024 7,198
8,000 2.75%, 11/15/2023 8,416
----------
85,245
----------
Total U.S. Treasury Securities (cost: $163,280) 170,082
----------
Total Bonds (cost: $764,148) 820,809
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 37
================================================================================
------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
------------------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS (3.3%)
COMMERCIAL PAPER (0.3%)
MATERIALS (0.3%)
----------------
COMMODITY CHEMICALS (0.3%)
$ 6,444 Cabot Corp.(a),(j) 0.32% 12/01/2014 $ 6,444
----------
------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES
------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS (3.0%)
75,414,337 State Street Institutional Liquid Reserves
Fund Premier Class, 0.08%(k) 75,414
----------
------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000)
------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS (0.0%)
$ 400 0.02%, 3/19/2015(l),(m) 400
----------
Total Money Market Instruments (cost: $82,258) 82,258
----------
TOTAL INVESTMENTS (COST: $2,258,572) $2,491,539
==========
------------------------------------------------------------------------------------------------------------
NUMBER OF
CONTRACTS
------------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS (0.0%)
2,700 Put - iShares MSCI EAFE ETF
expiring January 17, 2015 at 61 (cost: $240) $ 129
==========
------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF APPRECIATION/
CONTRACTS EXPIRATION CONTRACT (DEPRECIATION)
LONG/(SHORT) DATE VALUE (000) (000)
------------------------------------------------------------------------------------------------------------
FUTURES (0.1%)
32 Mini MSCI EAFE 12/19/2014 $2,938 $ (91)
====== ==========
================================================================================
38 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
---------------------------------------------------------------------------------------------------
($ 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
---------------------------------------------------------------------------------------------------
U.S. Equity Securities:
Common Stocks $ 593,105 $ - $ - $ 593,105
Preferred Stocks - 32,317 750 33,067
Exchange-Traded Funds 204,643 - - 204,643
Fixed-Income Exchange-
Traded Funds 27,642 - - 27,642
International Equity Securities:
Common Stocks 330,642 - - 330,642
Preferred Stocks 1,397 - - 1,397
Exchange-Traded Funds 322,353 - - 322,353
Precious Metals and
Commodity-Related
Securities:
Gold 32,105 2,012 - 34,117
Silver 6,139 - - 6,139
Exchange-Traded Funds 24,398 - - 24,398
Global Real Estate Equity
Securities:
Common Stocks 9,479 - - 9,479
Preferred Stocks - 1,490 - 1,490
Bonds:
Corporate Obligations - 328,141 8,039 336,180
Eurodollar and Yankee
Obligations - 105,464 - 105,464
Asset-Backed Securities - 3,825 - 3,825
Collateralized Mortgage
Obligations - 2,516 - 2,516
Commercial Mortgage
Securities - 202,699 - 202,699
U.S. Government
Agency Issues - 43 - 43
U.S. Treasury Securities 170,082 - - 170,082
Money Market Instruments:
Commercial Paper - 6,444 - 6,444
Money Market Funds 75,414 - - 75,414
U.S. Treasury Bills 400 - - 400
Purchased Options 129 - - 129
---------------------------------------------------------------------------------------------------
Total $1,797,928 $684,951 $8,789 $2,491,668
---------------------------------------------------------------------------------------------------
================================================================================
PORTFOLIO OF INVESTMENTS | 39
================================================================================
---------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
LIABILITIES FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
---------------------------------------------------------------------------------------------------
Futures(1) $(91) $- $- $(91)
---------------------------------------------------------------------------------------------------
Total $(91) $- $- $(91)
---------------------------------------------------------------------------------------------------
(1) Futures are valued at the unrealized appreciation/depreciation on the
investment.
Reconciliation of investments in which significant unobservable inputs (Level 3)
were used in determining value:
---------------------------------------------------------------------------------------------------
PREFERRED CORPORATE
STOCKS OBLIGATIONS
---------------------------------------------------------------------------------------------------
Balance as of May 31, 2014 $ 6,140 $8,619
Purchases - -
Sales (5,565) -
Transfers into Level 3 - -
Transfers out of Level 3 - -
Net realized gain (loss) on investments (385) -
Change in net unrealized appreciation/depreciation of investments 560 (580)
---------------------------------------------------------------------------------------------------
Balance as of November 30, 2014 $ 750 $8,039
---------------------------------------------------------------------------------------------------
For the period of June 1, 2014, through November 30, 2014, common stocks with a
fair value of $3,956,000 were transferred from Level 2 to Level 1. Due to an
assessment of events at the end of the prior reporting period, these securities
had adjustments to their foreign market closing prices to reflect changes in
value that occurred after the close of foreign markets and prior to the close of
the U.S. securities markets. At November 30, 2014, closing prices were not
adjusted for these securities. Common stocks with a fair value of $2,157,000
were transferred from Level 1 to Level 2. Due to an assessment of events at the
end of the current reporting period, these securities had adjustments to their
foreign market closing prices to reflect changes in value that occurred after
the close of foreign markets and prior to the close of the U.S. securities
markets. Such adjustments were not made at the end of the prior reporting
period. The Fund's policy is to recognize any transfers into and out of the
levels as of the beginning of the period in which the event or circumstance that
caused the transfer occurred.
================================================================================
40 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
Investments in foreign securities were 32.1% of net assets at November 30,
2014.
The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth
in the Investment Company Act of 1940, as amended, that would otherwise be
applicable.
o CATEGORIES AND DEFINITIONS
ASSET-BACKED AND COMMERCIAL MORTGAGE-BACKED SECURITIES - Asset-backed
securities represent a participation in, or are secured by and payable from,
a stream of payments generated by particular assets. Commercial
mortgage-backed securities reflect an interest in, and are secured by,
mortgage loans on commercial real property. These securities represent
ownership in a pool of loans and are divided into pieces (tranches) with
varying maturities. The stated final maturity of such securities represents
when the final principal payment will be made for all underlying loans. The
weighted average life is the average time for principal to be repaid, which
is calculated by assuming prepayment rates of the underlying loans. The
weighted average life is likely to be substantially shorter than
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 41
================================================================================
the stated final maturity as a result of scheduled principal payments and
unscheduled principal prepayments. Stated interest rates on commercial
mortgage-backed securities may change slightly over time as underlying
mortgages pay down.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs) - Collateralized mortgage
obligations are debt obligations of a legal entity that are fully
collateralized by a portfolio of mortgages or mortgage-related securities.
CMOs are issued in multiple classes (tranches), with specific adjustable or
fixed interest rates, varying maturities, and must be fully retired no later
than its final distribution date. The cash flow from the underlying mortgages
is used to pay off each tranche separately. CMOs are designed to provide
investors with more predictable maturities than regular mortgage securities
but such maturities can be difficult to predict because of the effect of
prepayments.
EURODOLLAR AND YANKEE OBLIGATIONS - Eurodollar obligations are dollar-
denominated instruments that are issued outside the U.S. capital markets by
foreign corporations and financial institutions and by foreign branches of
U.S. corporations and financial institutions. Yankee obligations are
dollar-denominated instruments that are issued by foreign issuers in the
U.S. capital markets.
o PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
ADR American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in
U.S. dollars.
CAD Canadian dollars
REIT Real estate investment trust
CREDIT ENHANCEMENTS - add the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal and
interest payments when due. The enhancement may be provided by a high-
quality bank, insurance company or other corporation, or a collateral trust.
The enhancements do not guarantee the market values of the securities.
================================================================================
42 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
(INS) Principal and interest payments are insured by AMBAC 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.
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 USAA Asset Management
Company (the Manager) under liquidity guidelines approved by USAA Mutual
Funds Trust's Board of Trustees (the Board), unless otherwise noted as
illiquid.
(b) Security deemed illiquid by the Manager, under liquidity guidelines
approved by the Board. The aggregate market value of these securities
at November 30, 2014, was $750,000, which represented less than 0.1%
of the Fund's net assets.
(c) Security was fair valued at November 30, 2014, by the Manager in
accordance with valuation procedures approved the Board. The total
value of all such securities was $10,801,000, which represented 0.4% of
the Fund's net assets.
(d) The security, or a portion thereof, is segregated to cover the value of
open futures contracts at November 30, 2014.
(e) Senior loan (loan) - is not registered under the Securities Act of 1933.
The loan contains certain restrictions on resale and cannot be sold
publicly. The interest rate is adjusted periodically, and the rate
disclosed represents the current rate at November 30, 2014. The weighted
average life of the loan is likely to be shorter than the stated final
maturity date due to mandatory or optional prepayments. The loan is
deemed liquid by the Manager, under liquidity guidelines approved by the
Board, unless otherwise noted as illiquid.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 43
================================================================================
(f) Variable-rate or floating-rate security - interest rate is adjusted
periodically. The interest rate disclosed represents the rate at
November 30, 2014.
(g) Security is perpetual and has no final maturity date but may be subject
to calls at various dates in the future.
(h) At November 30, 2014, the issuer was in default with respect to interest
and/or principal payments.
(i) U.S. government agency issues - Mortgage-backed securities issued
by certain U.S. Government Sponsored Enterprises (GSEs) such as the
Government National Mortgage Association (GNMA or Ginnie Mae) and
certain other U.S. government guaranteed securities are supported by
the full faith and credit of the U.S. government. Securities issued by
other GSEs, such as Freddie Mac (Federal Home Loan Mortgage Corporation
or FHLMC) and Fannie Mae (Federal National Mortgage Association or
FNMA), indicated with a "+", are supported only by the right of the GSE
to borrow from the U.S. Treasury, the discretionary authority of the
U.S. government to purchase the GSEs' obligations, or only by the
credit of the issuing agency, instrumentality, or corporation, and are
neither issued nor guaranteed by the U.S. Treasury. In September of
2008, the U.S. Treasury placed Fannie Mae and Freddie Mac under
conservatorship and appointed the Federal Housing Finance Agency (FHFA)
to act as conservator and oversee their daily operations. In addition,
the U.S. Treasury entered into purchase agreements with Fannie Mae and
Freddie Mac to provide them with capital in exchange for senior
preferred stock. While these arrangements are intended to ensure that
Fannie Mae and Freddie Mac can continue to meet their obligations, it
is possible that actions by the U.S. Treasury, FHFA, or others could
adversely impact the value of the Fund's investments in securities
issued by Fannie Mae and Freddie Mac.
(j) Commercial paper issued in reliance on the "private placement"
exemption from registration afforded by Section 4(2) of the Securities
Act of 1933. Unless this commercial paper is subsequently registered, a
resale of this commercial paper in the United States must be effected
================================================================================
44 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
in a transaction exempt from registration under the Securities Act of
1933. Section 4(2) commercial paper is normally resold to other
investors through or with the assistance of the issuer or an investment
dealer who makes a market in this security, and as such has been deemed
liquid by the Manager under liquidity guidelines approved by the Board,
unless otherwise noted as illiquid.
(k) Rate represents the money market fund annualized seven-day yield at
November 30, 2014.
(l) Securities and cash with a value of $33,891,000 are segregated as
collateral for initial margin requirements on open futures contracts.
(m) Securities offered at a discount to face value rather than at a stated
coupon rate. Rates represent the discount rates at purchase date.
(n) In U.S. dollars unless otherwise noted.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 45
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $2,258,572) $2,491,539
Purchased options, at market value (cost of $240) 129
Cash 3,563
Cash denominated in foreign currencies (identified cost of $900) 874
Receivables:
Capital shares sold 1,199
Dividends and interest 10,756
Securities sold 9,062
Other 55
----------
Total assets 2,517,177
----------
LIABILITIES
Payables:
Securities purchased 9,917
Capital shares redeemed 740
Variation margin on futures contracts 24
Accrued management fees 1,536
Accrued administration and servicing fees 10
Accrued transfer agent's fees 60
Other accrued expenses and payables 131
----------
Total liabilities 12,418
----------
Net assets applicable to capital shares outstanding $2,504,759
==========
NET ASSETS CONSIST OF:
Paid-in capital $2,254,675
Accumulated undistributed net investment income 51,588
Accumulated net realized loss on investments, options,
and futures transactions (34,164)
Net unrealized appreciation of investments, options,
and futures contracts 232,765
Net unrealized depreciation of foreign currency translations (105)
----------
Net assets applicable to capital shares outstanding $2,504,759
==========
Capital shares outstanding, unlimited number of shares authorized,
no par value 94,858
==========
Net asset value, redemption price, and offering price per share $ 26.41
==========
See accompanying notes to financial statements.
================================================================================
46 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $241) $ 18,525
Interest 23,090
--------
Total income 41,615
--------
EXPENSES
Management fees 9,412
Administration and servicing fees 1,882
Transfer agent's fees 2,614
Custody and accounting fees 253
Postage 129
Shareholder reporting fees 71
Trustees' fees 12
Registration fees 26
Professional fees 71
Other 19
--------
Total expenses 14,489
--------
NET INVESTMENT INCOME 27,126
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY, OPTIONS, AND FUTURES CONTRACTS
Net realized gain (loss) on:
Unaffiliated transactions 77,940
Affiliated transactions (Note 7) 198
Foreign currency transactions (144)
Options (5,214)
Futures transactions 1,495
Change in net unrealized appreciation/depreciation of:
Investments (68,140)
Foreign currency translations (99)
Options 5,016
Futures contracts (1,157)
--------
Net realized and unrealized gain 9,895
--------
Increase in net assets resulting from operations $ 37,021
========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 47
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended November 30, 2014 (unaudited), and year ended May 31,
2014
----------------------------------------------------------------------------------------------
11/30/2014 5/31/2014
----------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 27,126 $ 57,986
Net realized gain on investments 78,138 107,337
Net realized loss on foreign currency transactions (144) (44)
Net realized loss on options (5,214) (17,283)
Net realized gain (loss) on futures transactions 1,495 (86)
Change in net unrealized appreciation/depreciation of:
Investments (68,140) 90,200
Foreign currency translations (99) 27
Options 5,016 (8,115)
Futures contracts (1,157) 1,066
---------------------------
Increase in net assets resulting from operations 37,021 231,088
---------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - (55,904)
---------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 132,720 315,849
Reinvested dividends - 55,317
Cost of shares redeemed (156,469) (349,623)
---------------------------
Increase (decrease) in net assets from capital
share transactions (23,749) 21,543
---------------------------
Net increase in net assets 13,272 196,727
NET ASSETS
Beginning of period 2,491,487 2,294,760
---------------------------
End of period $2,504,759 $2,491,487
===========================
Accumulated undistributed net investment income:
End of period $ 51,588 $ 24,462
===========================
CHANGE IN SHARES OUTSTANDING
Shares sold 5,059 12,710
Shares issued for dividends reinvested - 2,227
Shares redeemed (5,964) (14,098)
---------------------------
Increase (decrease) in shares outstanding (905) 839
===========================
See accompanying notes to financial statements.
================================================================================
48 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS
November 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
Cornerstone Moderately Aggressive Fund (the Fund), which is classified as
diversified under the 1940 Act. The Fund's investment objective is to seek
capital appreciation with a secondary focus on current income.
A. SECURITY VALUATION - The Trust's Board of Trustees (the Board) has
established the Valuation Committee (the Committee), and subject to Board
oversight, the Committee administers and oversees the Fund's valuation
policies and procedures which are approved by the Board. Among other
things, these policies and procedures allow the Fund to utilize independent
pricing services, quotations from securities dealers, and a wide variety of
sources and information to establish and adjust the fair value of securities
as events occur and circumstances warrant.
The Committee reports to the Board on a quarterly basis and makes
recommendations to the Board as to pricing methodologies and services used
by the Fund and presents additional information to the Board regarding
application of the pricing and fair valuation policies and procedures during
the preceding quarter.
The Committee meets as often as necessary to make pricing and fair value
determinations. In addition, the Committee holds regular monthly meetings to
review prior actions taken by the Committee and USAA Asset Management
Company (the Manager). Among other things, these monthly meetings include a
review and analysis of back testing reports, pricing service quotation
comparisons, illiquid securities and
================================================================================
NOTES TO FINANCIAL STATEMENTS | 49
================================================================================
fair value determinations, pricing movements, and daily stale price
monitoring.
The value of each security is determined (as of the close of trading on the
New York Stock Exchange (NYSE) on each business day the NYSE is open) as set
forth below:
1. Equity securities, including exchange-traded funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities exchange or
the Nasdaq over-the-counter markets, are valued at the last sales price
or official closing price on the exchange or primary market on which
they trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according to
local market convention, available at the time the Fund is valued. If no
last sale or official closing price is reported or available, the
average of the bid and asked prices generally is used.
2. Equity securities trading in various foreign markets may take place on
days when the NYSE is closed. Further, when the NYSE is open, the
foreign markets may be closed. Therefore, the calculation of the Fund's
net asset value (NAV) may not take place at the same time the prices of
certain foreign securities held by the Fund are determined. In most
cases, events affecting the values of foreign securities that occur
between the time of their last quoted sales or official closing prices
and the close of normal trading on the NYSE on a day the Fund's NAV is
calculated will not be reflected in the value of the Fund's foreign
securities. However, the Manager, an affiliate of the Fund, and the
Fund's subadviser(s), if applicable, will monitor for events that would
materially affect the value of the Fund's foreign securities. The Fund's
subadviser has agreed to notify the Manager of significant events it
identifies that would materially affect the value of the Fund's foreign
securities. If the Manager determines that a particular event would
materially affect the value of the Fund's foreign securities, then the
Manager, under valuation procedures approved by the Board, will consider
such available information that it deems relevant to determine a fair
================================================================================
50 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
value for the affected foreign securities. In addition, the Fund may use
information from an external vendor or other sources to adjust the
foreign market closing prices of foreign equity securities to reflect
what the Fund believes to be the fair value of the securities as of the
close of the NYSE. Fair valuation of affected foreign equity securities
may occur frequently based on an assessment that events that occur on a
fairly regular basis (such as U.S. market movements) are significant.
3. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their NAV at the end of each business
day.
4. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
5. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the Board.
The Service uses an evaluated mean between quoted bid and asked prices
or the last sales price to price securities when, in the Service's
judgment, these prices are readily available and are representative of
the securities' market values. For many securities, such prices are not
readily available. The Service generally prices these securities based
on methods that include consideration of yields or prices of securities
of comparable quality, coupon, maturity, and type; indications as to
values from dealers in securities; and general market conditions.
6. Repurchase agreements are valued at cost, which approximates market
value.
7. Futures are valued based upon the last sale price at the close of
market on the principal exchange on which they are traded.
8. Options are valued by a pricing service at the National Best Bid/Offer
(NBBO) composite price, which is derived from the best available bid and
ask prices in all participating options exchanges determined to most
closely reflect market value of the options at the time of computation
of the Fund's NAV.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 51
================================================================================
9. Forward currency contracts are valued on a daily basis using foreign
currency exchange rates obtained from an independent pricing service.
10. Securities for which market quotations are not readily available or
are considered unreliable, or whose values have been materially affected
by events occurring after the close of their primary markets but before
the pricing of the Fund, are valued in good faith at fair value, using
methods determined by the Manager in consultation with the Fund's
subadviser(s), if applicable, under valuation procedures approved by the
Board. The effect of fair value pricing is that securities may not be
priced on the basis of quotations from the primary market in which they
are traded and the actual price realized from the sale of a security may
differ materially from the fair value price. Valuing these securities at
fair value is intended to cause the Fund's NAV to be more reliable than
it otherwise would be.
Fair value methods used by the Manager include, but are not limited to,
obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any restrictions
on disposition of the securities, and an evaluation of the forces that
influenced the market in which the securities are purchased and sold.
B. FAIR VALUE MEASUREMENTS - Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments is
based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted)
in active markets for identical securities.
Level 2 - inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices. Level 2 securities
================================================================================
52 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
include certain equity securities which are valued based on methods
discussed in Notes 1A1 and 1A2, certain bonds, which are valued based on
methods discussed in Note 1A5, and commercial paper, which is valued at
amortized cost.
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 the securities valued using significant unobservable inputs, market
quotations were not available from the pricing services. As such, the
securities were valued in good faith using methods determined by the
Manager, under valuation procedures approved by the Board. The valuation of
some securities falling in the Level 3 category are primarily supported by
discounted prior tender offer or quoted prices obtained from broker-dealers
participating in the market for these securities. However, these securities
are included in the Level 3 category due to limited market transparency and
or a lack of corroboration to support the quoted prices.
Refer to the portfolio of investments for a reconciliation of investments in
which significant unobservable inputs (Level 3) were used in determining
value.
C. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - The Fund may buy, sell,
and enter into certain types of derivatives, including, but not limited to
futures contracts, options, options on futures contracts, and forward
currency contracts, under circumstances in which such instruments are
expected by the portfolio manager to aid in achieving the Fund's investment
objective. The Fund also may use derivatives in circumstances where the
portfolio manager believes they offer an economical means of gaining
exposure to a particular asset class or securities market or to keep cash on
hand to meet shareholder redemptions or other needs while maintaining
exposure to the market. With exchange-listed futures contracts and options,
counterparty credit risk to the Fund is limited to the exchange's
clearinghouse which, as counterparty to all exchange-traded
================================================================================
NOTES TO FINANCIAL STATEMENTS | 53
================================================================================
futures contracts and options, guarantees the transactions against default
from the actual counterparty to the trade. The Fund's derivative agreements
held at November 30, 2014 did not include master netting provisions.
FUTURES CONTRACTS - The Fund is subject to equity price risk, interest rate
risk, and foreign currency exchange rate risk in the normal course of
pursuing its investment objectives. The Fund may use futures contracts to
gain exposure to, or hedge against, changes in the value of equities,
interest rates, or foreign currencies. A futures contract represents a
commitment for the future purchase or sale of an asset at a specified price
on a specified date. Upon entering into such contracts, the Fund is required
to deposit with the broker in either cash or securities an initial margin in
an amount equal to a certain percentage of the contract amount. Subsequent
payments (variation margin) are made or received by the Fund each day,
depending on the daily fluctuations in the value of the contract, and are
recorded for financial statement purposes as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Upon entering into such
contracts, the Fund bears the risk of interest or exchange rates or
securities prices moving unexpectedly in an unfavorable direction, in which
case, the Fund may not achieve the anticipated benefits of the futures
contracts.
OPTIONS TRANSACTIONS - The Fund is subject to equity price risk in the
normal course of pursuing its investment objectives. The Fund may use
options on underlying instruments, namely, equity securities, ETFs, and
equity indexes, to gain exposure to, or hedge against, changes in the value
of equity securities, ETFs, or equity indexes. A call option gives the
purchaser the right to buy, and the writer the obligation to sell, the
underlying instrument at a specified price during a specified period.
Conversely, a put option gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying instrument at a specified price
during a specified period. The purchaser of the option pays a premium to the
writer of the option.
================================================================================
54 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
Premiums paid for purchased options are included in the Fund's statement of
assets and liabilities as an investment. If a purchased option expires
unexercised, the premium paid is recognized as a realized loss. If a
purchased call option on a security is exercised, the cost of the security
acquired includes the exercise price and the premium paid. If a purchased
put option on a security is exercised, the realized gain or loss on the
security sold is determined from the exercise price, the original cost of
the security, and the premium paid. The risk associated with purchasing a
call or put option is limited to the premium paid.
Premiums received from writing options are included in the Fund's statement
of assets and liabilities as a liability. If a written option expires
unexercised, the premium received is recognized as a realized gain. If a
written call option on a security is exercised, the realized gain or loss on
the security sold is determined from the exercise price, the original cost
of the security, and the premium received. If a written put option on a
security is exercised, the cost of the security acquired is the exercise
price paid less the premium received. The Fund, as a writer of an option,
bears the market risk of an unfavorable change in the price of the security
underlying the written option.
In an attempt to reduce the Fund's volatility over time, the Fund may
implement a strategy that involves purchasing and selling options on
indexes or ETFs that represent the Fund's exposure against a highly
correlated stock portfolio. The combination of the diversified stock
portfolio with index or ETF options is designed to provide the Fund with
consistent returns over a wide range of equity market environments. This
strategy may not fully protect the Fund against declines in the portfolio's
value, and the Fund could experience a loss. Options on ETFs are similar
to options on individual securities in that the holder of the ETF call (or
put) has the right to receive (or sell) shares of the underlying ETF at the
strike price on or before exercise date. Options on securities indexes
are different from options on individual securities in that the holder of
the index option has the right to receive an amount of cash equal to
the difference between the exercise price and the settlement value of
the underlying index as defined by the exchange. If an index option is
================================================================================
NOTES TO FINANCIAL STATEMENTS | 55
================================================================================
exercised, the realized gain or loss is determined by the exercise price, the
settlement value, and the premium amount paid or received.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AS OF NOVEMBER 30, 2014* (IN THOUSANDS)
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------------------------------------------------------------------
STATEMENT OF STATEMENT OF
DERIVATIVES NOT ASSETS AND ASSETS AND
ACCOUNTED FOR AS LIABILITIES LIABILITIES
HEDGING INSTRUMENTS LOCATION FAIR VALUE LOCATION FAIR VALUE
------------------------------------------------------------------------------------------
Equity contracts Purchased options; $38** - $-
Net unrealized
appreciation of
investments,
options, and
futures contracts
------------------------------------------------------------------------------------------
* For open derivative instruments as of November 30, 2014, see the portfolio
of investments, which also is indicative of activity for the six-month period
ended November 30, 2014.
** Includes cumulative appreciation (depreciation) of futures as reported on
the portfolio of investments. Only current day's variation margin is reported
within the statement of assets and liabilities.
THE EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR
THE SIX-MONTH PERIOD ENDED NOVEMBER 30, 2014 (IN THOUSANDS)
CHANGE IN
UNREALIZED
DERIVATIVES NOT APPRECIATION
ACCOUNTED FOR AS STATEMENT OF REALIZED GAIN (LOSS) (DEPRECIATION)
HEDGING INSTRUMENTS OPERATIONS LOCATION ON DERIVATIVES ON DERIVATIVES
--------------------------------------------------------------------------------------------------
Interest rate Net realized and $ 1,506 $ (852)
contracts unrealized gain (loss)
on futures transactions/
Change in unrealized
appreciation
(depreciation) of
futures contracts
--------------------------------------------------------------------------------------------------
Equity contracts Net realized gain (loss) (5,225) 4,711
on options and futures
transactions/Change in net
unrealized appreciation
(depreciation) of options
and futures contracts
--------------------------------------------------------------------------------------------------
Total $(3,719) $3,859
--------------------------------------------------------------------------------------------------
================================================================================
56 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
D. 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.
E. INVESTMENTS IN SECURITIES - Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses from
sales of investment securities are computed on the identified cost basis.
Dividend income, less foreign taxes, if any, is recorded on the ex-dividend
date. If the ex-dividend date has passed, certain dividends from foreign
securities are recorded upon notification. Interest income is recorded daily
on the accrual basis. Discounts and premiums are amortized over the life of
the respective securities, using the effective yield method for long-term
securities and the straight-line method for short-term securities.
F. FOREIGN CURRENCY TRANSLATIONS - The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency. Since
the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the
exchange rate obtained from an independent pricing service on the
respective dates of such transactions.
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Separately, net realized foreign currency gains/losses may arise from sales
of foreign currency, currency gains/losses realized between the trade and
settlement dates on security transactions, and from the difference between
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts received. At
the end of the Fund's fiscal year, these net realized foreign currency
================================================================================
NOTES TO FINANCIAL STATEMENTS | 57
================================================================================
gains/losses are reclassified from accumulated net realized gain/loss to
accumulated undistributed net investment income on the statement of assets
and liabilities as such amounts are treated as ordinary income/loss for tax
purposes. Net unrealized foreign currency exchange gains/losses arise from
changes in the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rate.
G. 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. The purchase of securities on a delayed-delivery or
when-issued basis may increase the volatility of the Fund's NAV to the
extent that the Fund makes such purchases while remaining substantially
fully invested.
H. 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 Fund's bank accounts
may be used to directly reduce the Fund's expenses. For the six-month period
ended November 30, 2014, there were no custodian and other bank credits.
I. INDEMNIFICATIONS - Under the Trust's organizational documents, its
officers and trustees are indemnified against certain liabilities arising
out of the performance of their duties to the Trust. In addition, in the
normal course of business, the Trust enters into contracts that contain a
variety of representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Trust that have not yet occurred. However, the Trust expects the risk of
loss to be remote.
J. USE OF ESTIMATES - The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
================================================================================
58 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
(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 November 30, 2014, the Fund paid CAPCO facility
fees of $6,000, which represents 3.7% 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 November 30, 2014.
(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 May 31, 2015, in
accordance with applicable tax law.
Distributions of net investment income and realized gains from security
transactions not offset by capital losses are made annually in the succeeding
fiscal year or as otherwise required to avoid the payment of federal taxes.
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 May 31, 2014, the Fund had pre-enactment capital loss carryforwards of
$107,438,000, and no post-enactment capital loss carryforwards, for federal
income tax purposes. If not offset by subsequent capital gains, the pre-
enactment capital loss carryforwards will expire in 2018. It is unlikely that
================================================================================
NOTES TO FINANCIAL STATEMENTS | 59
================================================================================
the Board will authorize a distribution of capital gains realized in the future
until the capital loss carryforwards have been used or expire.
For the six-month period ended November 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) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended November 30, 2014, were
$793,219,000 and $785,430,000, respectively.
As of November 30, 2014, the cost of securities, including short-term
securities, for federal income tax purposes, was approximately the same as that
reported in the financial statements.
Gross unrealized appreciation and depreciation of investments as of November 30,
2014, were $309,212,000 and $76,356,000, respectively, resulting in net
unrealized appreciation of $232,856,000.
For the six-month period ended November 30, 2014, transactions in written call
and put options* were as follows:
PREMIUMS
NUMBER OF RECEIVED
CONTRACTS (000's)
-------------------------------
Outstanding May 31, 2014 19,550 $ 2,366
Options written - -
Options terminated in closing purchase transactions (1,050) (127)
Options expired (18,500) (2,239)
-------------------------------
Outstanding at November 30, 2014 - $ -
===============================
*Refer to Note 1C for a discussion of derivative instruments and how they are
accounted for in the Fund's financial statements.
================================================================================
60 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
(5) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES - The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and affairs of the Fund and
for directly managing the day-to-day investment of a portion of the Fund's
assets, subject to the authority of and supervision by the Board. The
Manager is also authorized to select (with approval of the Board and without
shareholder approval) one or more subadvisers to manage the day-to-day
investment of a portion of the Fund's assets. The Manager monitors each
subadviser's performance through quantitative and qualitative analysis, and
periodically recommends to the Board as to whether each subadviser's
agreement should be renewed, terminated, or modified. The Manager is also
responsible for allocating assets to the subadviser(s). The allocation for
each subadviser can range from 0% to 100% of the Fund's assets, and the
Manager can change the allocations without shareholder approval.
The investment management fee for the Fund is comprised of a base fee and a
performance adjustment. The Fund's base fee is accrued daily and paid
monthly at an annualized rate of 0.75% of the Fund's average net assets for
the fiscal year.
The performance adjustment is calculated monthly by comparing the Fund's
performance to that of the Lipper Index over the performance period. The
Lipper Index tracks the total return performance of the 30 largest funds
within a category consisting of funds that allocate their investments across
various asset classes, including both domestic and foreign stocks, bonds,
and money market instruments with a focus on total return, and which have at
least 25% of their portfolio invested in securities traded outside of the
United States. The performance period for the Fund consists of the current
month plus the previous 35 months. The following table is utilized to
determine the extent of the performance adjustment:
OVER/UNDER PERFORMANCE ANNUAL ADJUSTMENT RATE (IN BASIS POINTS
RELATIVE TO INDEX (IN BASIS POINTS)(1) AS A % OF THE FUND'S AVERAGE NET ASSETS)(1)
---------------------------------------------------------------------------------------
+/- 100 to 400 +/- 4
+/- 401 to 700 +/- 5
+/- 701 and greater +/- 6
(1)Based on the difference between average annual performance of the Fund and
its relevant index, rounded to the nearest basis point. Average net assets
are calculated over a rolling 36-month period.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 61
================================================================================
The annual performance adjustment rate is multiplied by the average net
assets of the Fund over the entire performance period, which is then
multiplied by a fraction, the numerator of which is the number of days in
the month and the denominator of which is 365 (366 in leap years). The
resulting amount is then added to (in the case of overperformance), or
subtracted from (in the case of underperformance) the base fee.
Under the performance fee arrangement, the Fund will pay a positive
performance fee adjustment for a performance period whenever the Fund
outperforms the Lipper Index over that period, even if the Fund had overall
negative returns during the performance period.
For the six-month period ended November 30, 2014, the Fund incurred total
management fees, paid or payable to the Manager, of $9,412,000.
B. SUBADVISORY ARRANGEMENT(S) - The Manager has entered into an investment
subadvisory agreement with Quantitative Management Associates, LLC (QMA),
under which QMA directs the investment and reinvestment of a portion of the
Fund's assets (as allocated from time to time by the Manager). The Manager
(not the Fund) pays QMA a subadvisory fee in the annual amount of 0.25% of
the portion of the Fund's average net assets that QMA manages. For the
six-month period ended November 30, 2014, the Manager incurred subadvisory
fees, paid or payable to QMA, of $380,000.
C. ADMINISTRATION AND SERVICING FEES - The Manager provides certain
administration and servicing functions for the Fund. For such services, the
Manager receives a fee accrued daily and paid monthly at an annualized rate
of 0.15% of the Fund's average net assets. For the six-month period ended
November 30, 2014, the Fund incurred administration and servicing fees, paid
or payable to the Manager, of $1,882,000.
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 November 30, 2014, the Fund reimbursed the
Manager $40,000 for these compliance and legal
================================================================================
62 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
services. These expenses are included in the professional fees on the Fund's
statement of operations.
D. TRANSFER AGENT'S FEES - USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund based on an annual charge of $23 per
shareholder account plus out-of-pocket expenses. SAS pays a portion of these
fees to certain intermediaries for the administration and servicing of
accounts that are held with such intermediaries. For the six-month period
ended November 30, 2014, the Fund incurred transfer agent's fees, paid or
payable to SAS, of $2,614,000.
E. UNDERWRITING SERVICES - USAA Investment Management Company provides
exclusive underwriting and distribution of the Fund's shares on a continuing
best-efforts basis and receives no commissions or fees for this service.
(6) TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
(7) SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
During the six-month period ended November 30, 2014, in accordance with
affiliated transaction procedures approved by the Board, purchases and sales of
security transactions were executed between the Fund and the following
affiliated USAA Funds at the then-current market price with no brokerage
commissions incurred.
NET REALIZED
COST TO GAIN TO
SELLER PURCHASER PURCHASER SELLER
-----------------------------------------------------------------------------------
USAA Cornerstone Moderately USAA Real
Aggressive Fund Return Fund $2,094,000 $123,000
USAA Cornerstone Moderately USAA Cornerstone
Aggressive Fund Aggressive Fund 644,000 32,000
USAA Cornerstone Moderately USAA Cornerstone
Aggressive Fund Moderately Conservative
Fund 953,000 43,000
================================================================================
NOTES TO FINANCIAL STATEMENTS | 63
================================================================================
(8) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31,
---------------------------------------------------------------------------------
2014 2014 2013 2012 2011 2010
---------------------------------------------------------------------------------
Net asset value at
beginning of period $ 26.02 $ 24.17 $ 21.48 $ 24.05 $ 20.43 $ 17.21
---------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .29 .62 .61 .65 .57 .65
Net realized and
unrealized gain (loss) .10 1.83 2.69 (2.58) 3.67(a) 3.19
---------------------------------------------------------------------------------
Total from investment
operations .39 2.45 3.30 (1.93) 4.24 3.84
---------------------------------------------------------------------------------
Less distributions from:
Net investment income - (.60) (.61) (.64) (.62) (.62)
---------------------------------------------------------------------------------
Net asset value at
end of period $ 26.41 $ 26.02 $ 24.17 $ 21.48 $ 24.05 $ 20.43
=================================================================================
Total Return (%)* 1.50 10.24 15.49 (7.96) 20.93(a) 22.31
Net assets at
end of period (000) $2,504,759 $2,491,487 $2,294,760 $2,030,805 $2,294,249 $1,924,153
Ratios to average
net assets:**
Expenses (%)(b) 1.15(e) 1.18(c) 1.22 1.27 1.25(c) 1.19
Expenses, excluding
reimbursements (%)(b) 1.15(e) 1.18 1.22 1.27 1.27 1.31
Net investment income (%) 2.16(e) 2.46 2.54 2.87 2.51 3.23
Portfolio turnover (%) 33 57 81 77(d) 117 151
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any,
during the period. Includes adjustments in accordance with U.S. generally accepted accounting principles
and could differ from the Lipper reported return. Total returns for periods of less than one year are not
annualized.
** For the six-month period ended November 30, 2014, average net assets were $2,503,889,000.
(a) During the year ended May 31, 2011, the Manager reimbursed the Fund $10,000 for a loss incurred
from the disposal of an investment in error. The effect of this reimbursement of the Fund's net realized
loss and total return was less than $0.01/0.01% per share.
(b) 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 as follows:
- (.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+)
(+) Represents less than 0.01% of average net assets.
(c) Prior to October 13, 2013, the Manager voluntarily agreed to limit the annual expenses of the Fund to
1.28% of the Fund's average net assets. Prior to October 1, 2010, the voluntary expense limit was 1.19%.
(d) Trading activity due to changes in subadvisers and asset allocation strategies.
(e) Annualized. The ratio is not necessarily indicative of 12 months of operations.
================================================================================
64 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
EXPENSE EXAMPLE
November 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 June 1, 2014, through
November 30, 2014.
ACTUAL EXPENSES
The line labeled "actual" in the table 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 "actual" line under the heading
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The line labeled "hypothetical" in the table provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to
--------------------------------------------------------------------------------
EXPENSE EXAMPLE | 65
--------------------------------------------------------------------------------
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the line labeled "hypothetical"
in 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 JUNE 1, 2014 -
JUNE 1, 2014 NOVEMBER 30, 2014 NOVEMBER 30, 2014
---------------------------------------------------------
Actual $1,000.00 $1,015.00 $5.81
Hypothetical
(5% return before expenses) 1,000.00 1,019.30 5.82
* Expenses are equal to the Fund's annualized expense ratio of 1.15%, 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 actual ending account value is
based on its actual total return of 1.50% for the six-month period of June 1,
2014, through November 30, 2014.
================================================================================
66 | USAA CORNERSTONE MODERATELY AGGRESSIVE FUND
================================================================================
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
--------------------------------------------------------------------------------
ADMINISTRATOR AND USAA Asset Management Company
INVESTMENT ADVISER P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
UNDERWRITER AND USAA Investment Management Company
DISTRIBUTOR P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
--------------------------------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "My Accounts" on
SELF-SERVICE 24/7 USAA.COM select your mutual fund
AT USAA.COM account and either click the link or
select 'I want to...' and select
OR CALL the desired action.
(800) 531-USAA
(8722)
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund,
are available without charge (i) by calling (800) 531-USAA (8722); (ii) at
USAA.COM; and (iii) in summary within the Statement of Additional Information
on the SEC's website at HTTP://WWW.SEC.GOV. Information regarding how the
Fund voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available without charge (i) at USAA.COM;
and (ii) on the SEC's website at HTTP://WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. These Forms N-Q
are available at no charge (i) by calling (800) 531-USAA (8722); (ii) at
USAA.COM; and (iii) on the SEC's website at HTTP://WWW.SEC.GOV. These Forms
N-Q also may be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling (800) 732-0330.
200991-0115
================================================================================
USAA
9800 Fredericksburg Road --------------
San Antonio, TX 78288 PRSRT STD
U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on USAA.COM select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA We know what it means to serve.(R)
=============================================================================
27800-0115 (C)2015, 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 November 30, 2014
By:* /S/ DANIEL J. MAVICO
-----------------------------------------------------------
Signature and Title: Daniel J. Mavico, Assistant Secretary
Date: 01/26/2015
------------------------------
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: 01/27/2015
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 01/27/2015
------------------------------
*Print the name and title of each signing officer under his or her signature.