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 GROWTH AND TAX STRATEGY FUND]
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SEMIANNUAL REPORT
USAA GROWTH AND TAX STRATEGY 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. o
Financial advice provided by USAA Financial Planning Services Insurance Agency,
Inc. (known as USAA Financial Insurance Agency in California, License #
0E36312), and USAA Financial Advisors, Inc., a registered broker dealer.
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TABLE OF CONTENTS
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FUND OBJECTIVE 1
MANAGERS' COMMENTARY 2
INVESTMENT OVERVIEW 5
FINANCIAL INFORMATION
Portfolio of Investments 10
Notes to Portfolio of Investments 34
Financial Statements 37
Notes to Financial Statements 40
EXPENSE EXAMPLE 51
THIS REPORT IS FOR THE INFORMATION OF THE SHAREHOLDERS AND OTHERS WHO HAVE
RECEIVED A COPY OF THE CURRENTLY EFFECTIVE PROSPECTUS OF THE FUND, MANAGED BY
USAA ASSET MANAGEMENT COMPANY. IT MAY BE USED AS SALES LITERATURE ONLY WHEN
PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS, WHICH PROVIDES FURTHER DETAILS
ABOUT THE FUND.
(C)2015, USAA. All rights reserved.
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FUND OBJECTIVE
THE USAA GROWTH AND TAX STRATEGY FUND (THE FUND) IS AN ASSET ALLOCATION FUND
THAT SEEKS A CONSERVATIVE BALANCE FOR THE INVESTOR BETWEEN INCOME, THE MAJORITY
OF WHICH IS EXEMPT FROM FEDERAL INCOME TAX, AND THE POTENTIAL FOR LONG-TERM
GROWTH OF CAPITAL TO PRESERVE PURCHASING POWER.
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TYPES OF INVESTMENTS
USING preset target ranges, the Fund's strategy is to invest a majority of its
assets in tax-exempt bonds and money market instruments and the remainder in
blue chip stocks. The Fund is managed with the goal of minimizing the impact of
federal income tax to shareholders.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Asset Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
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FUND OBJECTIVE | 1
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MANAGERS' COMMENTARY ON THE FUND
USAA Asset Management Company Northern Trust Investments, Inc.
JOHN C. BONNELL, CFA CHRISTOPHER A. FRONK, CFA, CPA
JACOB C. WEAVER
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o WHAT WERE THE MARKET CONDITIONS DURING THE REPORTING PERIOD?
Municipal bonds generated positive returns during the reporting period,
supported by constrained supply and strong demand, as investors continued to
favor tax-advantaged municipal securities and as geopolitical worries
ostensibly drove a flight to quality assets. Municipal bond prices also
benefited from strength in the U.S. Treasury market; the municipal bond
market tends to follow the U.S. Treasury market over time. Longer-term U.S.
Treasury yields trended down for much of the period before spiking in late
August through mid-September. Stronger U.S. economic data and speculation
about the timing of short-term interest rate hikes by the Federal Reserve
(the Fed) were the prime catalysts. In early October, longer-term U.S.
Treasury yields fell again, as global economic weakness drove another flight
to quality. They ended the six-month period near their lows of the period.
U.S. stocks posted a gain during the reporting period as the U.S.
economy continued to improve. After rallying in mid-September, stock prices
declined in the first two weeks of October, with slowing global growth and
a variety of geopolitical concerns driving a flight to safety. The end of
the Fed's quantitative easing asset purchase program and speculation about
the potential of a short-term rate hike in mid-2015 also seemed to weigh on
investor sentiment. Stocks rebounded strongly in the second half of October
and recorded fresh gains in November before dipping near the end of the
month on a sharp drop in crude oil
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2 | USAA GROWTH AND TAX STRATEGY FUND
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prices. Overall, during the reporting period, most of the sectors in the S&P
500(R) Index advanced, with significant divergence between sector returns.
o HOW DID THE USAA GROWTH AND TAX STRATEGY FUND (THE FUND) PERFORM DURING
THE REPORTING PERIOD?
The Fund had a total return of 4.62% for the six-month reporting period
ended November 30, 2014. This compares to total returns of 8.58% for the
S&P 500(R) Index (the Index), 2.45% for the Barclays Municipal Bond Index,
and 4.81% for the Composite 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. Northern Trust Investments, Inc. (NTI) 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 HOW DID THE MUNICIPAL BOND PORTION OF THE FUND PERFORM?
Overall, the municipal bond portfolio continued to benefit from our
focus on income generation, wherein we seek to maximize tax-free income
without taking undue risk. The long-term income distribution provided by
the municipal bond portfolio, not its price appreciation, continues to
contribute to the majority of its total return. To help us identify
attractive opportunities for the portfolio, we continued to work with our
in-house team of credit analysts. We conduct independent credit research on
every security we consider for purchase. Issues are selected one at time
based on fundamental analysis, rather than thematic or sector trends, with
a focus on the issuer's ability and willingness to repay its debt. We
believe
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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the Fund remains well diversified, and we avoid municipal bonds subject
to the federal alternative minimum tax for individuals.
o HOW DID THE EQUITY PORTION OF THE FUND PERFORM?
During the reporting period, the equity portion of the Fund provided a
positive return close to the 8.58% return of the Index. Stock selection
added to results as we sought to match the performance of the Index. In
addition, because the equity portfolio's sector exposures are similar to
those of the Index, the relative strength or weakness of certain sectors
did not have an outsized impact on portfolio returns during the period.
In keeping with our investment approach, we sought to limit both short-term
and long-term capital gains. As we bought and sold stocks during the
period, we carefully considered the tax implications of the transactions.
Our objective is to limit the sale of securities that have increased in
value and to realize capital losses on securities that have decreased in
value, thereby offsetting realized capital gains. During the reporting
period overall, we generated a small realized loss. As always, we attempt
to continue managing the portfolio's "active risk" (the risk that it will
not perform in line with the Index because of our efforts to achieve tax
efficiency).
During the reporting period, the equity portfolio continued to receive
dividend income from its stock holdings. Because of the solid dividend
growth of S&P 500 Index-listed companies, the portfolio maintained a
dividend yield similar to prior periods even though the stock market
appreciated in value.
Thank you for your continued investment in the Fund.
As interest rates rise, existing bond prices generally fall; given the
historically low interest rate environment, risks associated with rising
interest rates may be heightened. o Diversification is a technique intended to
help reduce risk and does not guarantee a profit or prevent a loss. o Some
income may have been subject to state or local taxes but not the federal
alternative minimum tax.
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4 | USAA GROWTH AND TAX STRATEGY FUND
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INVESTMENT OVERVIEW
USAA GROWTH AND TAX STRATEGY FUND (THE FUND) (Ticker Symbol: USBLX)
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11/30/14 5/31/14
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Net Assets $247.0 Million $221.4 Million
Net Asset Value Per Share $17.43 $16.86
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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
4.62% 11.39% 10.25% 6.23%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR 5 YEARS 10 YEARS
10.48% 10.00% 5.96%
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30-DAY SEC YIELD** AS OF 11/30/14 EXPENSE RATIO AS OF 5/31/14***
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1.68% 0.92%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**Calculated as prescribed by the Securities and Exchange Commission.
***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 ratio disclosed in the Financial Highlights, which excludes
acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions, if any. The
total returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions (including
capital gains distributions), redemption of shares, or reinvested net investment
income.
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INVESTMENT OVERVIEW | 5
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
USAA GROWTH BARCLAYS
COMPOSITE & TAX STRATEGY MUNICIPAL BOND
S&P 500 INDEX INDEX FUND INDEX
11/30/04 $10,000.00 $10,000.00 $10,000.00 $10,000.00
12/31/04 10,340.29 10,219.26 10,296.24 10,122.12
01/31/05 10,088.24 10,157.59 10,134.49 10,216.72
02/28/05 10,300.54 10,237.23 10,211.85 10,182.73
03/31/05 10,118.14 10,105.96 10,041.37 10,118.51
04/30/05 9,926.24 10,075.98 10,006.01 10,278.08
05/31/05 10,242.08 10,275.87 10,359.58 10,350.73
06/30/05 10,256.62 10,325.65 10,523.44 10,414.94
07/31/05 10,638.05 10,486.65 10,743.87 10,367.87
08/31/05 10,540.98 10,494.29 10,708.32 10,472.55
09/30/05 10,626.36 10,515.69 10,797.70 10,402.01
10/31/05 10,449.21 10,421.70 10,676.21 10,338.84
11/30/05 10,844.42 10,641.47 10,933.47 10,388.47
12/31/05 10,848.14 10,707.42 11,019.71 10,477.81
01/31/06 11,135.43 10,869.05 11,134.82 10,506.08
02/28/06 11,165.65 10,888.75 11,203.88 10,576.62
03/31/06 11,304.63 10,953.12 11,201.27 10,503.68
04/30/06 11,456.43 11,003.81 11,263.07 10,500.07
05/31/06 11,126.70 10,868.81 11,124.02 10,546.84
06/30/06 11,141.78 10,851.00 11,101.61 10,507.14
07/31/06 11,210.51 10,900.12 11,202.75 10,632.12
08/31/06 11,477.24 11,115.28 11,397.24 10,789.88
09/30/06 11,773.01 11,269.56 11,581.57 10,864.93
10/31/06 12,156.64 11,490.74 11,793.00 10,933.06
11/30/06 12,387.81 11,649.85 11,941.78 11,024.20
12/31/06 12,561.59 11,686.29 11,995.76 10,985.25
01/31/07 12,751.56 11,767.33 12,071.74 10,957.12
02/28/07 12,502.15 11,739.45 12,021.09 11,101.50
03/31/07 12,641.99 11,781.82 12,065.89 11,074.13
04/30/07 13,201.97 12,040.98 12,346.29 11,106.92
05/31/07 13,662.66 12,215.88 12,533.23 11,057.74
06/30/07 13,435.67 12,108.70 12,391.33 11,000.44
07/31/07 13,019.10 11,971.51 12,228.84 11,085.71
08/31/07 13,214.26 11,980.56 12,254.50 11,037.89
09/30/07 13,708.46 12,279.85 12,577.92 11,201.22
10/31/07 13,926.52 12,428.19 12,689.84 11,251.15
11/30/07 13,344.30 12,196.65 12,397.13 11,322.89
12/31/07 13,251.72 12,157.28 12,299.67 11,354.32
01/31/08 12,456.86 11,882.06 11,970.06 11,497.50
02/29/08 12,052.19 11,421.77 11,423.60 10,971.11
03/31/08 12,000.15 11,503.89 11,592.87 11,284.69
04/30/08 12,584.59 11,860.09 11,951.05 11,416.73
05/31/08 12,747.59 12,011.74 12,055.89 11,485.77
06/30/08 11,672.93 11,473.89 11,489.04 11,356.13
07/31/08 11,574.80 11,388.19 11,401.01 11,399.29
08/31/08 11,742.23 11,513.74 11,568.28 11,532.69
09/30/08 10,695.91 10,681.40 10,712.10 10,991.87
10/31/08 8,899.55 9,628.59 9,629.35 10,879.67
11/30/08 8,260.97 9,198.82 9,238.85 10,914.26
12/31/08 8,348.87 9,261.64 9,187.45 11,073.38
01/31/09 7,645.17 9,132.94 9,070.81 11,478.70
02/28/09 6,831.13 8,745.27 8,747.81 11,539.01
03/31/09 7,429.51 9,092.56 9,055.06 11,541.11
04/30/09 8,140.58 9,678.68 9,571.20 11,771.67
05/31/09 8,595.91 10,074.37 9,960.57 11,896.20
06/30/09 8,612.96 10,015.65 9,935.29 11,784.75
07/31/09 9,264.42 10,472.84 10,364.48 11,981.92
08/31/09 9,598.90 10,787.13 10,638.43 12,186.76
09/30/09 9,957.09 11,250.07 11,178.96 12,624.12
10/31/09 9,772.11 10,987.15 10,912.13 12,359.12
11/30/09 10,358.28 11,289.84 11,234.16 12,461.24
12/31/09 10,558.36 11,472.72 11,397.66 12,503.35
01/31/10 10,178.53 11,306.26 11,230.59 12,568.47
02/28/10 10,493.83 11,519.09 11,453.35 12,690.29
03/31/10 11,127.08 11,838.62 11,770.66 12,659.91
04/30/10 11,302.75 11,995.06 11,920.12 12,813.77
05/31/10 10,400.22 11,540.43 11,471.72 12,909.87
06/30/10 9,855.79 11,238.26 11,180.59 12,917.54
07/31/10 10,546.31 11,681.68 11,604.10 13,078.62
08/31/10 10,070.21 11,568.40 11,519.40 13,378.06
09/30/10 10,968.92 12,079.66 11,982.96 13,357.15
10/31/10 11,386.28 12,286.07 12,163.09 13,320.15
11/30/10 11,387.74 12,098.92 11,982.96 13,053.80
12/31/10 12,148.80 12,334.17 12,209.90 12,800.84
01/31/11 12,436.74 12,386.28 12,248.09 12,706.54
02/28/11 12,862.82 12,670.49 12,563.12 12,908.82
03/31/11 12,867.93 12,644.57 12,535.49 12,865.81
04/30/11 13,249.02 12,942.80 12,833.27 13,096.21
05/31/11 13,099.05 13,011.30 12,910.12 13,320.00
06/30/11 12,880.70 12,946.57 12,840.56 13,366.48
07/31/11 12,618.77 12,890.73 12,801.89 13,502.88
08/31/11 11,933.30 12,629.94 12,560.16 13,733.89
09/30/11 11,094.40 12,262.52 12,317.82 13,875.87
10/31/11 12,306.94 12,875.21 12,882.59 13,824.28
11/30/11 12,279.74 12,888.20 12,902.06 13,905.95
12/31/11 12,405.35 13,058.07 13,111.24 14,170.49
01/31/12 12,961.30 13,570.78 13,611.37 14,498.21
02/29/12 13,521.78 13,860.58 13,905.56 14,512.50
03/31/12 13,966.77 14,004.29 14,074.29 14,418.20
04/30/12 13,879.10 14,045.90 14,123.60 14,584.54
05/31/12 13,044.96 13,687.04 13,827.72 14,705.60
06/30/12 13,582.44 13,945.08 14,075.24 14,689.81
07/31/12 13,771.08 14,167.30 14,283.68 14,922.63
08/31/12 14,081.25 14,344.53 14,452.43 14,939.62
09/30/12 14,445.13 14,551.32 14,648.23 15,029.86
10/31/12 14,178.41 14,497.94 14,568.41 15,072.27
11/30/12 14,260.66 14,709.18 14,738.04 15,320.58
12/31/12 14,390.64 14,688.81 14,688.17 15,131.23
01/31/13 15,136.01 15,129.74 15,090.58 15,194.24
02/28/13 15,341.48 15,240.51 15,221.37 15,240.26
03/31/13 15,916.83 15,469.33 15,470.03 15,174.54
04/30/13 16,223.50 15,708.44 15,692.62 15,340.88
05/31/13 16,602.99 15,791.98 15,773.56 15,153.49
06/30/13 16,380.03 15,394.57 15,408.07 14,724.40
07/31/13 17,213.52 15,663.54 15,743.91 14,595.67
08/31/13 16,714.99 15,321.23 15,387.71 14,387.37
09/30/13 17,239.16 15,763.07 15,806.32 14,697.03
10/31/13 18,031.61 16,131.96 16,205.83 14,813.14
11/30/13 18,581.10 16,334.69 16,431.20 14,782.61
12/31/13 19,051.50 16,511.04 16,621.02 14,744.86
01/31/14 18,392.81 16,430.60 16,528.22 15,032.12
02/28/14 19,234.17 16,920.31 16,971.58 15,208.38
03/31/14 19,395.85 17,025.00 17,069.95 15,233.95
04/30/14 19,539.22 17,153.84 17,235.98 15,416.98
05/31/14 19,997.89 17,492.66 17,495.40 15,615.50
06/30/14 20,411.00 17,657.36 17,675.89 15,629.04
07/31/14 20,129.51 17,527.15 17,571.48 15,656.56
08/31/14 20,934.79 17,948.43 17,926.46 15,846.21
09/30/14 20,641.21 17,856.83 17,830.68 15,862.30
10/31/14 21,145.37 18,085.16 18,072.20 15,971.04
11/30/14 21,714.07 18,334.90 18,303.23 15,998.71
[END CHART]
Data from 11/30/04 to 11/30/14.
See next page for benchmark definitions.
Past performance is no guarantee of future results, and the cumulative
performance quoted does not reflect the deduction of taxes that a shareholder
would pay on distributions or the redemption of shares. Indexes are unmanaged
and you cannot invest directly in an index. The return information for the
indexes does not reflect the deduction of any fees, expenses, or taxes.
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6 | USAA GROWTH AND TAX STRATEGY FUND
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The graph on page 6 illustrates the comparison of a $10,000 hypothetical
investment in the USAA Growth and Tax Strategy 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 Composite Index is comprised of 51% of the Lipper General Municipal
Debt Funds Index and 49% of the Lipper Large-Cap Core Funds Index. The
unmanaged Lipper General Municipal Debt Funds Index tracks the total return
performance of the 30 largest funds within this category. This category
includes funds that invest at least 65% of their assets in municipal debt
issues in the top four credit categories. The unmanaged Lipper Large-Cap
Core Funds Index tracks the total return performance of the 30 largest
funds within this category. This category includes funds that, by portfolio
practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) of greater than
300% of the dollar-weighted median market capitalization of the middle
1,000 securities of the S&P 1500 Index. Large-cap core funds have more
latitude in the companies in which they invest. These funds have an
above-average price-to-earnings ratio, price-to-book ratio, and three-year
sales growth figure, compared to the S&P 500 Index.
o The unmanaged Barclays Municipal Bond Index is a benchmark of total return
performance for the long-term, investment-grade, tax-exempt bond market.
================================================================================
INVESTMENT OVERVIEW | 7
================================================================================
o TOP 10 INDUSTRIES - 11/30/14 o
(% of Net Assets)
Pharmaceuticals .........................................................2.9%
Technology Hardware, Storage, & Peripherals .............................2.4%
Diversified Banks .......................................................2.3%
Integrated Oil & Gas ....................................................1.7%
Internet Software & Services ............................................1.5%
Systems Software ........................................................1.4%
Biotechnology .......................................................... 1.4%
Aerospace & Defense .....................................................1.2%
Integrated Telecommunication Services ...................................1.1%
Industrial Conglomerates ................................................1.1%
o TOP 5 TAX-EXEMPT BONDS - 11/30/14 o
(% of Net Assets)
Lewisville ..............................................................2.5%
Oneida County IDA .......................................................1.4%
Rockport ................................................................1.3%
Orlando .................................................................1.3%
MTA .....................................................................1.3%
o TOP 5 BLUE CHIP STOCKS - 11/30/14 o
(% of Net Assets)
Apple, Inc. .............................................................1.8%
Exxon Mobil Corp. .......................................................1.0%
Microsoft Corp. .........................................................1.0%
Johnson & Johnson .......................................................0.8%
General Electric Co. ....................................................0.7%
You will find a complete list of securities that the Fund owns on pages 10-33.
================================================================================
8 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
o ASSET ALLOCATION - 11/30/14 o
[PIE CHART OF ASSET ALLOCATION]
TAX-EXEMPT BONDS 50.5%
BLUE CHIP STOCKS 46.2%
TAX-EXEMPT MONEY MARKET INSTRUMENTS 3.1%
[END CHART]
Percentages are of the net assets of the Fund and may not equal 100%.
================================================================================
INVESTMENT OVERVIEW | 9
================================================================================
PORTFOLIO OF INVESTMENTS
November 30, 2014 (unaudited)
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
TAX-EXEMPT SECURITIES (53.6%)
TAX-EXEMPT BONDS (50.5%)
ARIZONA (1.8%)
$ 1,000 Pima County IDA 5.75% 9/01/2029 $ 1,004
1,000 Student and Academic Service, LLC (INS) 5.00 6/01/2044 1,113
2,250 Univ. Medical Center Corp. 5.00 7/01/2035 2,280
-------
4,397
-------
CALIFORNIA (3.8%)
1,200 Jurupa Public Financing Auth. 5.00 9/01/2042 1,321
2,000 Monterey Peninsula USD (INS) 5.50 8/01/2034 2,301
1,000 State 5.00 2/01/2043 1,121
1,000 Statewide Communities Development Auth. (INS) 5.00 11/15/2049 1,091
1,500 Twin Rivers USD (INS) 5.00 8/01/2040 1,676
4,435 West Contra Costa USD (INS) 5.05(a) 8/01/2034 1,898
-------
9,408
-------
COLORADO (1.6%)
1,000 Health Facilities Auth. 5.00 12/01/2042 1,064
2,000 Regional Transportation District 5.38 6/01/2031 2,281
500 Univ. of Colorado Hospital Auth. 5.00 11/15/2037 515
-------
3,860
-------
CONNECTICUT (0.2%)
3,790 Mashantucket (Western) Pequot Tribe, acquired
7/01/2013-9/30/2014; cost $2,275(b),(d) 7.03(e) 7/01/2031 531
-------
DISTRICT OF COLUMBIA (0.5%)
1,100 District of Columbia 5.00 7/01/2042 1,177
-------
FLORIDA (5.5%)
1,875 Escambia County Housing Finance Auth. (INS) 5.75 6/01/2031 2,162
1,000 Jacksonville 5.00 10/01/2029 1,141
2,000 Lee County IDA 5.00 11/01/2025 2,272
645 Lee County IDA 5.50 10/01/2047 680
1,300 Miami-Dade County 5.00 10/01/2034 1,470
3,000 Orlando (INS) 5.13 11/01/2027 3,150
1,000 Southeast Overtown/Park West Community
Redevelopment Agency(f) 5.00 3/01/2030 1,109
================================================================================
10 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
$ 1,505 Tampa-Hillsborough County Expressway Auth. 5.00% 7/01/2037 $ 1,659
-------
13,643
-------
GEORGIA (0.4%)
1,000 Fayette County School District (INS)(PRE) 4.95 3/01/2025 1,059
-------
GUAM (0.8%)
750 International Airport Auth. (INS) 5.50 10/01/2033 852
1,000 Waterworks Auth. 5.50 7/01/2043 1,145
-------
1,997
-------
ILLINOIS (2.7%)
1,000 Chicago 5.00 1/01/2044 1,095
1,000 Chicago 5.00 11/01/2044 1,098
1,000 Chicago-O'Hare International Airport (INS) 5.25 1/01/2033 1,136
1,000 Finance Auth. 3.90 3/01/2030 1,025
2,000 Finance Auth. 6.00 10/01/2032 2,376
-------
6,730
-------
INDIANA (3.2%)
500 Ball State Univ. of Indiana 5.00 7/01/2030 562
1,250 Finance Auth. 5.38 11/01/2032 1,397
1,000 Finance Auth. 5.00 2/01/2040 1,087
1,000 Finance Auth. 5.00 10/01/2044 1,068
550 Health and Educational Facility Financing Auth. 5.25 2/15/2036 564
3,000 Rockport (INS) 4.63 6/01/2025 3,191
-------
7,869
-------
KANSAS (0.6%)
1,250 Wyandotte County/Kansas City 5.00 9/01/2044 1,393
-------
KENTUCKY (0.4%)
1,000 Economic Dev. Finance Auth. (INS) 6.00 12/01/2033 1,083
-------
LOUISIANA (2.2%)
985 Local Government Environmental Facilities and
Community Dev. Auth. (INS) 6.55 9/01/2025 1,079
2,000 Parish of St. John the Baptist 5.13 6/01/2037 2,113
1,000 Shreveport (INS)(g) 5.00 12/01/2039 1,107
1,000 Tobacco Settlement Financing Corp. 5.25 5/15/2035 1,102
-------
5,401
-------
MASSACHUSETTS (1.3%)
1,000 Dev. Finance Agency 5.25 11/15/2041 1,117
1,000 Dev. Finance Agency 5.75 7/15/2043 1,114
1,000 Dev. Finance Agency 5.50 7/01/2044 1,087
-------
3,318
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
MICHIGAN (1.7%)
$ 3,000 Hospital Finance Auth. (INS) 5.00% 11/15/2026 $ 3,056
1,000 Wayne County Airport Auth. 5.00 12/01/2044 1,102
-------
4,158
-------
MISSOURI (0.6%)
1,500 Health and Educational Facility Financing Auth. 5.38 2/01/2035 1,504
-------
NEW JERSEY (1.8%)
1,000 EDA 5.00 6/15/2029 1,099
2,000 EDA 5.00 9/01/2033 2,207
1,000 Transportation Trust Fund Auth. 5.00 6/15/2044 1,067
-------
4,373
-------
NEW MEXICO (0.9%)
1,000 Farmington 4.88 4/01/2033 1,028
1,000 Farmington 5.90 6/01/2040 1,117
-------
2,145
-------
NEW YORK (5.5%)
1,000 Dormitory Auth. 5.50 5/01/2037 1,110
3,000 MTA 5.00 11/15/2030 3,101
1,000 MTA 5.00 11/15/2042 1,107
1,000 New York City 5.25 8/15/2023 1,143
1,500 New York City Housing Dev. Corp. (INS)(PRE) 5.00 7/01/2025 1,543
2,000 New York City Trust for Cultural Resources 5.00 12/01/2039 2,141
8,455 Oneida County IDA (INS) 4.65(a) 7/01/2035 3,391
-------
13,536
-------
NORTH CAROLINA (0.4%)
1,000 Charlotte-Mecklenberg Hospital Auth. (PRE) 4.88 1/15/2032 1,006
-------
OKLAHOMA (0.6%)
1,315 Comanche County Hospital Auth. 5.00 7/01/2032 1,389
-------
PENNSYLVANIA (1.2%)
1,625 Indiana County Hospital Auth. 6.00 6/01/2039 1,852
1,000 Turnpike Commission 5.25 12/01/2044 1,133
-------
2,985
-------
PUERTO RICO (0.4%)
1,000 Commonwealth (INS) 5.00 7/01/2035 1,000
-------
RHODE ISLAND (0.0%)
50 Housing and Mortgage Finance Corp. 6.85 10/01/2024 50
-------
SOUTH CAROLINA (0.9%)
2,000 Piedmont Municipal Power Agency (INS) 5.75 1/01/2034 2,295
-------
================================================================================
12 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
TENNESSEE (0.3%)
$ 2,000 Knox County Health, Educational and
Housing Facilities Board 5.01%(a) 1/01/2035 $ 717
TEXAS (8.9%)
1,000 Clifton Higher Education Finance Corp. (NBGA) 5.00 8/15/2039 1,137
2,000 Duncanville ISD (NBGA) 4.63 2/15/2029 2,044
2,000 El Paso (INS)(h) 4.75 8/15/2033 2,090
1,000 Harris County Cultural Education
Facilities Finance Corp. 5.00 6/01/2038 1,073
2,000 Hidalgo County Health Services Corp. 5.00 8/15/2026 2,073
1,000 Houston 5.00 9/01/2039 1,122
1,000 Karnes County Hospital District 5.00 2/01/2044 1,047
5,675 Lewisville (INS)(h) 5.80 9/01/2025 6,157
1,500 Manor ISD (NBGA) 5.00 8/01/2037 1,596
1,000 Matagorda County 4.00 6/01/2030 1,017
1,500 North Texas Tollway Auth. 5.00 1/01/2031 1,682
10 Public Finance Auth. (INS) 5.00 2/15/2036 10
1,000 San Leanna Education Facilities Corp. 4.75 6/01/2032 1,023
-------
22,071
-------
WASHINGTON (0.6%)
1,500 Economic Dev. Finance Auth. (INS)(PRE) 5.00 6/01/2038 1,572
-------
WEST VIRGINIA (0.6%)
1,500 Pleasants County 5.25 10/15/2037 1,561
-------
WISCONSIN (0.5%)
1,000 Health and Educational Facility Finance Auth. 5.25 4/15/2035 1,118
-------
WYOMING (0.6%)
1,250 Laramie County 5.00 5/01/2037 1,346
-------
Total Tax-Exempt Bonds (cost: $118,436) 124,692
-------
TAX-EXEMPT MONEY MARKET INSTRUMENTS (3.1%)
VARIABLE-RATE DEMAND NOTES (3.0%)
CALIFORNIA (1.4%)
2,595 Educational Facilities Auth.
(LOC - Santander Bank, N.A.) 0.67 11/01/2042 2,595
875 Victorville Joint Powers Financing Auth.
(LOC - BNP Paribas) 1.04 5/01/2040 875
-------
3,470
-------
OREGON (0.5%)
1,360 Port of Morrow 0.17 2/01/2027 1,360
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
--------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------------------------------------
PENNSYLVANIA (1.1%)
$ 2,650 Luzerne County (INS) (LIQ) 0.65% 11/15/2026 $ 2,650
-------
7,480
-------
--------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES
--------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS (0.1%)
201,128 State Street Institutional Tax Free Money Market Fund, 0.00%(i) 201
-------
Total Tax-Exempt Money Market Instruments (cost: $7,681) 7,681
-------
Total Tax-Exempt Securities (cost: $126,117) 132,373
-------
BLUE CHIP STOCKS (46.2%)
CONSUMER DISCRETIONARY (5.6%)
-----------------------------
ADVERTISING (0.1%)
2,760 Interpublic Group of Companies, Inc. 56
1,760 Omnicom Group, Inc. 136
-------
192
-------
APPAREL RETAIL (0.2%)
1,580 Gap, Inc. 63
1,450 L Brands, Inc. 117
864 Ross Stores, Inc. 79
4,570 TJX Companies, Inc. 302
60 Urban Outfitters, Inc.* 2
-------
563
-------
APPAREL, ACCESSORIES & LUXURY GOODS (0.2%)
1,740 Coach, Inc. 65
287 Fossil Group, Inc.* 32
1,067 Michael Kors Holdings Ltd.* 82
507 PVH Corp. 64
420 Ralph Lauren Corp. 78
987 Under Armour, Inc."A"* 71
2,040 VF Corp. 153
-------
545
-------
AUTO PARTS & EQUIPMENT (0.2%)
1,420 BorgWarner, Inc. 81
1,621 Delphi Automotive plc 118
4,140 Johnson Controls, Inc. 207
-------
406
-------
================================================================================
14 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
AUTOMOBILE MANUFACTURERS (0.3%)
23,451 Ford Motor Co. $ 369
7,736 General Motors Co. 258
-------
627
-------
AUTOMOTIVE RETAIL (0.1%)
610 AutoNation, Inc.* 36
230 AutoZone, Inc.* 133
1,390 CarMax, Inc.* 79
550 O'Reilly Automotive, Inc.* 101
-------
349
-------
BROADCASTING (0.1%)
3,863 CBS Corp."B" 212
919 Discovery Communications, Inc."A"* 32
1,108 Discovery Communications, Inc."C"* 38
630 Scripps Networks Interactive"A" 49
-------
331
-------
CABLE & SATELLITE (0.6%)
530 Cablevision Systems Corp."A" 11
15,902 Comcast Corp."A" 907
2,989 DIRECTV* 262
1,719 Time Warner Cable, Inc. 257
-------
1,437
-------
CASINOS & GAMING (0.0%)
300 Wynn Resorts Ltd. 54
-------
COMPUTER & ELECTRONICS RETAIL (0.0%)
1,678 Best Buy Co., Inc. 66
713 GameStop Corp."A" 27
-------
93
-------
CONSUMER ELECTRONICS (0.0%)
680 Garmin Ltd. 39
497 Harman International Industries, Inc. 54
-------
93
-------
DEPARTMENT STORES (0.1%)
960 Kohl's Corp. 57
2,500 Macy's, Inc. 163
1,300 Nordstrom, Inc. 99
-------
319
-------
DISTRIBUTORS (0.1%)
1,110 Genuine Parts Co. 114
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
FOOTWEAR (0.2%)
4,500 NIKE, Inc."B" $ 447
-------
GENERAL MERCHANDISE STORES (0.2%)
1,620 Dollar General Corp.* 108
940 Dollar Tree, Inc.* 65
850 Family Dollar Stores, Inc. 67
3,690 Target Corp. 273
-------
513
-------
HOME FURNISHINGS (0.0%)
859 Leggett & Platt, Inc. 36
385 Mohawk Industries, Inc.* 59
-------
95
-------
HOME IMPROVEMENT RETAIL (0.5%)
8,900 Home Depot, Inc. 885
6,390 Lowe's Companies, Inc. 408
-------
1,293
-------
HOMEBUILDING (0.1%)
2,180 D.R. Horton, Inc. 56
1,089 Lennar Corp."A" 51
2,360 PulteGroup, Inc. 51
662 Tri Pointe Homes, Inc. 10
-------
168
-------
HOMEFURNISHING RETAIL (0.1%)
1,480 Bed Bath & Beyond, Inc.* 109
-------
HOTELS, RESORTS & CRUISE LINES (0.2%)
2,567 Carnival Corp. 113
1,695 Marriott International, Inc."A" 134
1,440 Starwood Hotels & Resorts Worldwide, Inc. 114
1,010 Wyndham Worldwide Corp. 84
-------
445
-------
HOUSEHOLD APPLIANCES (0.0%)
520 Whirlpool Corp. 97
-------
HOUSEWARES & SPECIALTIES (0.0%)
2,180 Newell Rubbermaid, Inc. 79
-------
INTERNET RETAIL (0.6%)
2,317 Amazon.com, Inc.* 785
575 Expedia, Inc. 50
340 Netflix, Inc.* 118
================================================================================
16 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
320 Priceline Group, Inc.* $ 371
735 TripAdvisor, Inc.* 54
-------
1,378
-------
LEISURE PRODUCTS (0.1%)
1,020 Hasbro, Inc. 60
1,650 Mattel, Inc. 52
-------
112
-------
MOTORCYCLE MANUFACTURERS (0.1%)
1,600 Harley-Davidson, Inc. 111
-------
MOVIES & ENTERTAINMENT (0.8%)
5,703 Time Warner, Inc. 485
12,180 Twenty-First Century Fox, Inc."A" 448
2,750 Viacom, Inc."B" 208
10,105 Walt Disney Co. 935
-------
2,076
-------
PUBLISHING (0.1%)
1,870 Gannett Co., Inc. 61
3,045 News Corp."A"* 47
-------
108
-------
RESTAURANTS (0.5%)
160 Chipotle Mexican Grill, Inc.* 106
223 Darden Restaurants, Inc. 13
6,070 McDonald's Corp. 588
5,130 Starbucks Corp. 416
2,600 Yum! Brands, Inc. 201
-------
1,324
-------
SPECIALIZED CONSUMER SERVICES (0.0%)
1,670 H&R Block, Inc. 56
-------
SPECIALTY STORES (0.1%)
304 PetSmart, Inc. 24
4,004 Staples, Inc. 56
720 Tiffany & Co. 78
840 Tractor Supply Co. 65
-------
223
-------
TIRES & RUBBER (0.0%)
1,400 Goodyear Tire & Rubber Co. 38
-------
Total Consumer Discretionary 13,795
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 17
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
CONSUMER STAPLES (4.5%)
-----------------------
AGRICULTURAL PRODUCTS (0.1%)
3,750 Archer-Daniels-Midland Co. $ 198
-------
BREWERS (0.0%)
1,068 Molson Coors Brewing Co."B" 83
-------
DISTILLERS & VINTNERS (0.1%)
930 Brown-Forman Corp."B" 90
980 Constellation Brands, Inc."A"* 95
-------
185
-------
DRUG RETAIL (0.4%)
7,252 CVS Health Corp. 663
5,210 Walgreen Co. 357
-------
1,020
-------
FOOD DISTRIBUTORS (0.1%)
3,290 Sysco Corp. 133
-------
FOOD RETAIL (0.1%)
2,974 Kroger Co. 178
1,460 Safeway, Inc. 51
2,143 Whole Foods Market, Inc. 105
-------
334
-------
HOUSEHOLD PRODUCTS (0.9%)
690 Clorox Co. 70
5,970 Colgate-Palmolive Co. 415
2,120 Kimberly-Clark Corp. 247
16,460 Procter & Gamble Co. 1,489
-------
2,221
-------
HYPERMARKETS & SUPER CENTERS (0.5%)
2,550 Costco Wholesale Corp. 362
9,890 Wal-Mart Stores, Inc. 866
-------
1,228
-------
PACKAGED FOODS & MEAT (0.6%)
665 Campbell Soup Co. 30
2,630 ConAgra Foods, Inc. 96
4,550 General Mills, Inc. 240
910 Hershey Co. 91
418 Hormel Foods Corp. 22
828 J.M. Smucker Co. 85
1,536 Kellogg Co. 102
791 Keurig Green Mountain, Inc. 112
================================================================================
18 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
3,520 Kraft Foods Group, Inc. $ 212
1,040 McCormick & Co., Inc. 77
1,371 Mead Johnson Nutrition Co. 142
10,370 Mondelez International, Inc."A" 407
1,740 Tyson Foods, Inc."A" 74
-------
1,690
-------
PERSONAL PRODUCTS (0.1%)
2,701 Avon Products, Inc. 26
1,480 Estee Lauder Companies, Inc."A" 110
-------
136
-------
SOFT DRINKS (0.9%)
24,238 Coca-Cola Co. 1,087
1,630 Coca-Cola Enterprises, Inc. 72
1,290 Dr. Pepper Snapple Group, Inc. 95
820 Monster Beverage Corp.* 92
9,204 PepsiCo, Inc. 921
-------
2,267
-------
TOBACCO (0.7%)
12,149 Altria Group, Inc. 611
2,241 Lorillard, Inc. 141
10,080 Philip Morris International, Inc. 876
1,851 Reynolds American, Inc. 122
-------
1,750
-------
Total Consumer Staples 11,245
-------
ENERGY (3.8%)
-------------
COAL & CONSUMABLE FUELS (0.0%)
1,180 CONSOL Energy, Inc. 46
-------
INTEGRATED OIL & GAS (1.7%)
11,750 Chevron Corp. 1,279
26,563 Exxon Mobil Corp. 2,405
1,830 Hess Corp. 134
5,190 Occidental Petroleum Corp. 414
-------
4,232
-------
OIL & GAS DRILLING (0.1%)
459 Diamond Offshore Drilling, Inc. 14
1,597 Ensco plc"A" 54
640 Helmerich & Payne, Inc. 45
1,710 Nabors Industries Ltd. 22
1,738 Noble Corp. plc 31
1,157 Transocean Ltd. 24
-------
190
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
OIL & GAS EQUIPMENT & SERVICES (0.6%)
2,707 Baker Hughes, Inc. $ 154
1,400 Cameron International Corp.* 72
1,380 FMC Technologies, Inc.* 66
5,260 Halliburton Co. 222
2,619 National Oilwell Varco, Inc. 176
8,042 Schlumberger Ltd. 691
1 Seventy Seven Energy, Inc. -
-------
1,381
-------
OIL & GAS EXPLORATION & PRODUCTION (0.9%)
3,144 Anadarko Petroleum Corp. 249
2,386 Apache Corp. 153
2,532 Cabot Oil & Gas Corp. 84
3,505 Chesapeake Energy Corp. 71
524 Cimarex Energy Co. 55
7,710 ConocoPhillips 509
1,240 Denbury Resources, Inc. 10
2,304 Devon Energy Corp. 136
3,319 EOG Resources, Inc. 288
880 EQT Corp. 80
4,260 Marathon Oil Corp. 123
1,120 Murphy Oil Corp. 54
811 Newfield Exploration Co.* 22
1,940 Noble Energy, Inc. 95
847 Pioneer Natural Resources Co. 121
630 QEP Resources, Inc. 13
1,049 Range Resources Corp. 69
2,106 Southwestern Energy Co.* 68
-------
2,200
-------
OIL & GAS REFINING & MARKETING (0.3%)
1,895 Marathon Petroleum Corp. 171
3,875 Phillips 66 283
790 Tesoro Corp. 61
3,220 Valero Energy Corp. 156
-------
671
-------
OIL & GAS STORAGE & TRANSPORTATION (0.2%)
3,905 Kinder Morgan, Inc. 161
1,260 ONEOK, Inc. 68
4,060 Spectra Energy Corp. 154
4,150 Williams Companies, Inc. 215
-------
598
-------
Total Energy 9,318
-------
================================================================================
20 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
FINANCIALS (7.6%)
-----------------
ASSET MANAGEMENT & CUSTODY BANKS (0.6%)
244 Affiliated Managers Group, Inc.* $ 50
1,115 Ameriprise Financial, Inc. 147
7,227 Bank of New York Mellon Corp. 289
743 BlackRock, Inc. 267
2,480 Franklin Resources, Inc. 141
3,240 Invesco Ltd. 131
750 Legg Mason, Inc. 43
1,216 Northern Trust Corp.(c) 82
2,710 State Street Corp. 208
1,970 T. Rowe Price Group, Inc. 164
-------
1,522
-------
CONSUMER FINANCE (0.4%)
5,600 American Express Co. 518
3,510 Capital One Financial Corp. 292
3,510 Discover Financial Services 230
2,650 Navient Corp. 55
-------
1,095
-------
DIVERSIFIED BANKS (2.3%)
65,285 Bank of America Corp. 1,112
18,789 Citigroup, Inc. 1,014
1,300 Comerica, Inc. 61
23,383 JPMorgan Chase & Co. 1,407
11,380 U.S. Bancorp 503
29,516 Wells Fargo & Co. 1,608
-------
5,705
-------
INSURANCE BROKERS (0.1%)
1,590 Aon plc 147
2,820 Marsh & McLennan Companies, Inc. 160
-------
307
-------
INVESTMENT BANKING & BROKERAGE (0.4%)
6,686 Charles Schwab Corp. 189
1,942 E*Trade Financial Corp.* 44
2,584 Goldman Sachs Group, Inc. 487
9,251 Morgan Stanley 326
-------
1,046
-------
LIFE & HEALTH INSURANCE (0.4%)
2,770 AFLAC, Inc. 165
1,769 Lincoln National Corp. 100
6,431 MetLife, Inc. 358
================================================================================
PORTFOLIO OF INVESTMENTS | 21
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
1,820 Principal Financial Group, Inc. $ 97
2,825 Prudential Financial, Inc. 240
1,113 Torchmark Corp. 60
1,250 Unum Group 42
-------
1,062
-------
MULTI-LINE INSURANCE (0.3%)
8,990 American International Group, Inc. 493
700 Assurant, Inc. 47
3,680 Genworth Financial, Inc."A"* 33
2,900 Hartford Financial Services Group, Inc. 120
2,116 Loews Corp. 88
-------
781
-------
MULTI-SECTOR HOLDINGS (0.7%)
10,846 Berkshire Hathaway, Inc."B"* 1,613
1,466 Leucadia National Corp. 34
-------
1,647
-------
PROPERTY & CASUALTY INSURANCE (0.4%)
1,679 ACE Ltd. 192
3,040 Allstate Corp. 207
1,560 Chubb Corp. 161
970 Cincinnati Financial Corp. 49
2,220 Progressive Corp. 61
2,350 Travelers Companies, Inc. 245
2,680 XL Group plc 95
-------
1,010
-------
REAL ESTATE SERVICES (0.0%)
1,990 CBRE Group, Inc."A"* 67
-------
REGIONAL BANKS (0.4%)
4,130 BB&T Corp. 155
5,810 Fifth Third Bancorp 117
5,110 Huntington Bancshares, Inc. 52
6,620 KeyCorp 89
660 M&T Bank Corp. 83
2,935 PNC Financial Services Group, Inc. 257
9,790 Regions Financial Corp. 98
3,200 SunTrust Banks, Inc. 126
1,310 Zions Bancorp 37
-------
1,014
-------
REITs - DIVERSIFIED (0.1%)
1,238 Vornado Realty Trust 138
-------
================================================================================
22 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
REITs - HEALTH CARE (0.2%)
2,770 HCP, Inc. $ 124
2,212 Health Care REIT, Inc. 163
2,009 Ventas, Inc. 144
-------
431
-------
REITs - HOTEL & RESORT (0.0%)
4,346 Host Hotels & Resorts, Inc. 101
-------
REITs - INDUSTRIAL (0.1%)
3,345 ProLogis, Inc. 141
-------
REITs - OFFICE (0.1%)
1,050 Boston Properties, Inc. 136
-------
REITs - RESIDENTIAL (0.2%)
998 Apartment Investment & Management Co."A" 37
740 AvalonBay Communities, Inc. 119
2,215 Equity Residential 157
290 Essex Property Trust, Inc. 59
-------
372
-------
REITs - RETAIL (0.3%)
4,284 General Growth Properties 115
2,670 Kimco Realty Corp. 68
850 Macerich Co. 67
2,004 Simon Property Group, Inc. 362
1 Washington Prime Group, Inc. -
-------
612
-------
REITs - SPECIALIZED (0.3%)
2,420 American Tower Corp. 254
2,085 Crown Castle International Corp. 173
1,246 Iron Mountain, Inc. 47
1,209 Plum Creek Timber Co., Inc. 51
645 Public Storage 121
3,008 Weyerhaeuser Co. 106
-------
752
-------
SPECIALIZED FINANCE (0.3%)
2,053 CME Group, Inc. 174
605 Intercontinental Exchange, Inc. 137
1,907 McGraw Hill Financial, Inc. 178
1,370 Moody's Corp. 138
840 NASDAQ OMX Group, Inc. 38
-------
665
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 23
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.0%)
3,630 Hudson City Bancorp, Inc. $ 36
1,860 People's United Financial, Inc. 27
-------
63
-------
Total Financials 18,667
-------
HEALTH CARE (6.6%)
------------------
BIOTECHNOLOGY (1.4%)
1,190 Alexion Pharmaceuticals, Inc.* 232
4,740 Amgen, Inc. 784
1,466 Biogen Idec, Inc.* 451
5,000 Celgene Corp.* 568
9,388 Gilead Sciences, Inc.* 942
465 Regeneron Pharmaceuticals, Inc.* 193
1,605 Vertex Pharmaceuticals, Inc.* 189
-------
3,359
-------
HEALTH CARE DISTRIBUTORS (0.3%)
1,410 AmerisourceBergen Corp. 128
2,310 Cardinal Health, Inc. 190
1,450 McKesson Corp. 305
720 Patterson Companies, Inc. 35
-------
658
-------
HEALTH CARE EQUIPMENT (1.0%)
9,330 Abbott Laboratories 415
3,470 Baxter International, Inc. 253
1,310 Becton, Dickinson & Co. 184
8,610 Boston Scientific Corp.* 111
470 C.R. Bard, Inc. 79
1,315 CareFusion Corp.* 78
2,600 Covidien plc 263
459 Edwards Lifesciences Corp.* 59
230 Intuitive Surgical, Inc.* 119
6,050 Medtronic, Inc. 447
1,630 St. Jude Medical, Inc. 111
1,770 Stryker Corp. 164
810 Varian Medical Systems, Inc.* 72
1,130 Zimmer Holdings, Inc. 127
-------
2,482
-------
HEALTH CARE FACILITIES (0.0%)
817 Tenet Healthcare Corp.* 39
225 Universal Health Services, Inc."B" 24
-------
63
-------
================================================================================
24 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
HEALTH CARE SERVICES (0.2%)
1,140 DaVita HealthCare Partners, Inc.* $ 87
4,819 Express Scripts Holdings Co.* 401
522 Laboratory Corp. of America Holdings* 55
600 Quest Diagnostics, Inc. 39
-------
582
-------
HEALTH CARE SUPPLIES (0.0%)
1,150 DENTSPLY International, Inc. 63
265 Halyard Health, Inc. 11
-------
74
-------
HEALTH CARE TECHNOLOGY (0.1%)
1,720 Cerner Corp.* 111
-------
LIFE SCIENCES TOOLS & SERVICES (0.2%)
2,000 Agilent Technologies, Inc. 86
680 PerkinElmer, Inc. 31
2,200 Thermo Fisher Scientific, Inc. 284
690 Waters Corp.* 80
-------
481
-------
MANAGED HEALTH CARE (0.5%)
2,124 Aetna, Inc. 185
1,490 Cigna Corp. 154
1,000 Humana, Inc. 138
6,400 UnitedHealth Group, Inc. 631
1,729 WellPoint, Inc. 221
-------
1,329
-------
PHARMACEUTICALS (2.9%)
9,889 AbbVie, Inc. 684
1,611 Actavis plc* 436
1,800 Allergan, Inc. 385
10,239 Bristol-Myers Squibb Co. 605
6,046 Eli Lilly and Co. 412
910 Hospira, Inc.* 54
17,277 Johnson & Johnson 1,870
606 Mallinckrodt plc* 56
17,943 Merck & Co., Inc. 1,084
2,340 Mylan, Inc.* 137
758 Perrigo Co. plc 121
39,397 Pfizer, Inc. 1,227
2,981 Zoetis, Inc. 134
-------
7,205
-------
Total Health Care 16,344
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 25
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
INDUSTRIALS (4.8%)
------------------
AEROSPACE & DEFENSE (1.2%)
4,340 Boeing Co. $ 583
2,040 General Dynamics Corp. 297
4,610 Honeywell International, Inc. 457
108 L-3 Communications Holdings, Inc. 13
1,690 Lockheed Martin Corp. 324
1,200 Northrop Grumman Corp. 169
1,010 Precision Castparts Corp. 240
1,635 Raytheon Co. 174
1,090 Rockwell Collins, Inc. 93
2,070 Textron, Inc. 90
5,410 United Technologies Corp. 596
-------
3,036
-------
AGRICULTURAL & FARM MACHINERY (0.1%)
2,480 Deere & Co. 215
-------
AIR FREIGHT & LOGISTICS (0.3%)
779 C.H. Robinson Worldwide, Inc. 57
1,153 Expeditors International of Washington, Inc. 54
1,690 FedEx Corp. 301
4,190 United Parcel Service, Inc."B" 461
-------
873
-------
AIRLINES (0.2%)
5,192 Delta Air Lines, Inc. 242
4,458 Southwest Airlines Co. 187
-------
429
-------
BUILDING PRODUCTS (0.0%)
613 Allegion plc 33
2,100 Masco Corp. 51
-------
84
-------
CONSTRUCTION & ENGINEERING (0.1%)
1,020 Fluor Corp. 63
640 Jacobs Engineering Group, Inc.* 30
1,140 Quanta Services, Inc.* 35
-------
128
-------
CONSTRUCTION MACHINERY & HEAVY TRUCKS (0.3%)
3,795 Caterpillar, Inc. 382
960 Cummins, Inc. 140
319 Joy Global, Inc. 15
2,302 PACCAR, Inc. 154
-------
691
-------
================================================================================
26 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
DIVERSIFIED SUPPORT SERVICES (0.0%)
670 Cintas Corp. $ 49
-------
ELECTRICAL COMPONENTS & EQUIPMENT (0.2%)
544 AMETEK, Inc. 28
2,887 Eaton Corp. plc 196
4,350 Emerson Electric Co. 277
980 Rockwell Automation, Inc. 113
-------
614
-------
ENVIRONMENTAL & FACILITIES SERVICES (0.1%)
2,236 Republic Services, Inc. 89
480 Stericycle, Inc.* 62
2,205 Waste Management, Inc. 107
-------
258
-------
HUMAN RESOURCE & EMPLOYMENT SERVICES (0.0%)
750 Robert Half International, Inc. 42
-------
INDUSTRIAL CONGLOMERATES (1.1%)
3,890 3M Co. 623
3,670 Danaher Corp. 307
61,570 General Electric Co. 1,631
510 Roper Industries, Inc. 80
-------
2,641
-------
INDUSTRIAL MACHINERY (0.4%)
1,320 Dover Corp. 102
1,285 Flowserve Corp. 76
2,480 Illinois Tool Works, Inc. 235
1,600 Ingersoll-Rand plc 101
850 Pall Corp. 82
940 Parker Hannifin Corp. 121
1,164 Pentair plc 75
983 Stanley Black & Decker, Inc. 93
1,040 Xylem, Inc. 40
-------
925
-------
OFFICE SERVICES & SUPPLIES (0.0%)
1,260 Pitney Bowes, Inc. 31
-------
RAILROADS (0.5%)
7,340 CSX Corp. 268
411 Kansas City Southern 49
1,610 Norfolk Southern Corp. 180
6,102 Union Pacific Corp. 712
-------
1,209
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 27
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
RESEARCH & CONSULTING SERVICES (0.1%)
230 Dun & Bradstreet Corp. $ 29
720 Equifax, Inc. 58
1,368 Nielsen N.V. 57
-------
144
-------
SECURITY & ALARM SERVICES (0.1%)
1,083 ADT Corp. 38
2,756 Tyco International plc 118
-------
156
-------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
1,860 Fastenal Co. 84
595 United Rentals, Inc.* 67
480 W.W. Grainger, Inc. 118
-------
269
-------
TRUCKING (0.0%)
360 Ryder System, Inc. 34
-------
Total Industrials 11,828
-------
INFORMATION TECHNOLOGY (9.3%)
-----------------------------
APPLICATION SOFTWARE (0.3%)
2,900 Adobe Systems, Inc.* 214
1,380 Autodesk, Inc.* 86
460 CDK Global, Inc. 17
1,240 Citrix Systems, Inc.* 82
1,640 Intuit, Inc. 154
3,320 Salesforce.com, Inc.* 199
-------
752
-------
COMMUNICATIONS EQUIPMENT (0.8%)
31,545 Cisco Systems, Inc. 872
360 F5 Networks, Inc.* 46
790 Harris Corp. 57
2,492 Juniper Networks, Inc. 55
1,775 Motorola Solutions, Inc. 117
10,100 QUALCOMM, Inc. 736
-------
1,883
-------
DATA PROCESSING & OUTSOURCED SERVICES (0.9%)
289 Alliance Data Systems Corp.* 83
2,960 Automatic Data Processing, Inc. 253
900 Computer Sciences Corp. 57
1,230 Fidelity National Information Services, Inc. 75
1,700 Fiserv, Inc.* 122
6,100 MasterCard, Inc."A" 532
================================================================================
28 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
1,630 Paychex, Inc. $ 77
967 Total System Services, Inc. 32
3,105 Visa, Inc."A" 802
2,845 Western Union Co. 53
7,033 Xerox Corp. 98
-------
2,184
-------
ELECTRONIC COMPONENTS (0.1%)
2,540 Amphenol Corp."A" 136
7,670 Corning, Inc. 161
-------
297
-------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.0%)
730 FLIR Systems, Inc. 23
1,000 Keysight Technologies, Inc. 35
-------
58
-------
ELECTRONIC MANUFACTURING SERVICES (0.1%)
1,520 Jabil Circuit, Inc. 31
2,563 TE Connectivity Ltd. 165
-------
196
-------
HOME ENTERTAINMENT SOFTWARE (0.0%)
1,990 Electronic Arts, Inc.* 87
-------
INTERNET SOFTWARE & SERVICES (1.5%)
1,250 Akamai Technologies, Inc.* 81
6,960 eBay, Inc.* 382
12,945 Facebook, Inc."A"* 1,006
1,736 Google, Inc."A"* 953
1,728 Google, Inc."C"* 936
760 VeriSign, Inc.* 46
5,760 Yahoo! Inc.* 298
-------
3,702
-------
IT CONSULTING & OTHER SERVICES (0.7%)
3,816 Accenture plc"A" 329
4,220 Cognizant Technology Solutions Corp."A"* 228
6,200 International Business Machines Corp. 1,006
1,005 Teradata Corp.* 45
-------
1,608
-------
SEMICONDUCTOR EQUIPMENT (0.1%)
7,048 Applied Materials, Inc. 170
990 KLA-Tencor Corp. 69
1,034 Lam Research Corp. 85
-------
324
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 29
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
SEMICONDUCTORS (1.0%)
2,050 Altera Corp. $ 77
2,280 Analog Devices, Inc. 125
1,454 Avago Technologies Ltd. 136
3,387 Broadcom Corp."A" 146
370 First Solar, Inc.* 18
30,438 Intel Corp. 1,134
1,440 Linear Technology Corp. 66
1,370 Microchip Technology, Inc. 62
6,337 Micron Technology, Inc.* 228
3,530 NVIDIA Corp. 74
6,890 Texas Instruments, Inc. 375
1,570 Xilinx, Inc. 71
-------
2,512
-------
SYSTEMS SOFTWARE (1.4%)
2,000 CA, Inc. 62
49,601 Microsoft Corp. 2,372
21,713 Oracle Corp. 921
1,133 Red Hat, Inc.* 70
3,470 Symantec Corp. 91
-------
3,516
-------
TECHNOLOGY HARDWARE, STORAGE, & PERIPHERALS (2.4%)
37,736 Apple, Inc. 4,488
12,490 EMC Corp. 379
11,604 Hewlett-Packard Co. 453
2,010 NetApp, Inc. 86
1,570 SanDisk Corp. 162
1,910 Seagate Technology plc 126
1,370 Western Digital Corp. 142
-------
5,836
-------
Total Information Technology 22,955
-------
MATERIALS (1.5%)
----------------
ALUMINUM (0.1%)
7,455 Alcoa, Inc. 129
-------
COMMODITY CHEMICALS (0.1%)
2,431 LyondellBasell Industries N.V."A" 192
-------
CONSTRUCTION MATERIALS (0.0%)
159 Martin Marietta Materials, Inc. 19
829 Vulcan Materials Co. 55
-------
74
-------
================================================================================
30 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
DIVERSIFIED CHEMICALS (0.3%)
7,240 Dow Chemical Co. $ 352
5,510 E.I. du Pont de Nemours & Co. 394
940 Eastman Chemical Co. 78
386 FMC Corp. 21
-------
845
-------
DIVERSIFIED METALS & MINING (0.1%)
6,346 Freeport-McMoRan Copper & Gold, Inc. 170
-------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.2%)
410 CF Industries Holdings, Inc. 110
3,150 Monsanto Co. 378
1,979 Mosaic Co. 90
-------
578
-------
GOLD (0.0%)
3,037 Newmont Mining Corp. 56
-------
INDUSTRIAL GASES (0.2%)
1,235 Air Products & Chemicals, Inc. 178
170 Airgas, Inc. 20
2,028 Praxair, Inc. 260
-------
458
-------
METAL & GLASS CONTAINERS (0.0%)
1,380 Ball Corp. 93
950 Owens-Illinois, Inc.* 24
-------
117
-------
PAPER PACKAGING (0.1%)
660 Avery Dennison Corp. 33
140 Bemis Co., Inc. 5
1,340 MeadWestvaco Corp. 60
1,340 Sealed Air Corp. 53
-------
151
-------
PAPER PRODUCTS (0.1%)
3,430 International Paper Co. 184
-------
SPECIALTY CHEMICALS (0.3%)
1,660 Ecolab, Inc. 181
570 International Flavors & Fragrances, Inc. 58
820 PPG Industries, Inc. 179
520 Sherwin-Williams Co. 127
950 Sigma-Aldrich Corp. 130
-------
675
-------
================================================================================
PORTFOLIO OF INVESTMENTS | 31
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
STEEL (0.0%)
659 Allegheny Technologies, Inc. $ 22
1,860 Nucor Corp. 100
-------
122
-------
Total Materials 3,751
-------
TELECOMMUNICATION SERVICES (1.1%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (1.1%)
32,280 AT&T, Inc. 1,142
3,724 CenturyLink, Inc. 152
6,812 Frontier Communications Corp. 48
25,099 Verizon Communications, Inc. 1,270
4,113 Windstream Holdings, Inc. 41
-------
2,653
-------
Total Telecommunication Services 2,653
-------
UTILITIES (1.4%)
----------------
ELECTRIC UTILITIES (0.8%)
2,820 American Electric Power Co., Inc. 162
4,432 Duke Energy Corp. 359
1,730 Edison International 110
1,096 Entergy Corp. 92
5,208 Exelon Corp. 188
2,600 FirstEnergy Corp. 96
3,140 NextEra Energy, Inc. 328
1,920 Northeast Utilities 97
1,750 Pepco Holdings, Inc. 48
850 Pinnacle West Capital Corp. 54
3,725 PPL Corp. 132
5,565 Southern Co. 264
3,136 Xcel Energy, Inc. 107
-------
2,037
-------
GAS UTILITIES (0.0%)
650 AGL Resources, Inc. 34
-------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
3,900 AES Corp. 54
2,270 NRG Energy, Inc. 71
-------
125
-------
MULTI-UTILITIES (0.5%)
1,840 Ameren Corp. 79
2,760 CenterPoint Energy, Inc. 66
1,560 CMS Energy Corp. 52
================================================================================
32 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
1,808 Consolidated Edison, Inc. $ 114
3,370 Dominion Resources, Inc. 244
920 DTE Energy Co. 75
601 Integrys Energy Group, Inc. 44
2,170 NiSource, Inc. 91
2,807 PG&E Corp. 142
3,040 Public Service Enterprise Group, Inc. 127
880 SCANA Corp. 50
1,410 Sempra Energy 158
1,670 TECO Energy, Inc. 33
1,740 Wisconsin Energy Corp. 86
--------
1,361
--------
Total Utilities 3,557
--------
Total Blue Chip Stocks (cost: $48,528) 114,113
--------
TOTAL INVESTMENTS (COST: $174,645) $246,486
========
--------------------------------------------------------------------------------------------------------
($ 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
--------------------------------------------------------------------------------------------------------
Tax-Exempt Bonds $ - $124,692 $- $124,692
Tax-Exempt Money
Market Instruments:
Variable-Rate Demand Notes - 7,480 - 7,480
Money Market Funds 201 - - 201
Blue Chip Stocks 114,113 - - 114,113
--------------------------------------------------------------------------------------------------------
Total $114,314 $132,172 $- $246,486
--------------------------------------------------------------------------------------------------------
For the period of June 1, 2014, through November 30, 2014, there were no
transfers of securities between levels. The Fund's policy is to recognize any
transfers into and out of the levels as of the beginning of the period in which
the event or circumstance that caused the transfer occurred.
================================================================================
PORTFOLIO OF INVESTMENTS | 33
================================================================================
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.
o CATEGORIES AND DEFINITIONS
VARIABLE-RATE DEMAND NOTES (VRDNS) - provide the right to sell the security
at face value on either that day or within the rate-reset period. The
interest rate is adjusted at a stipulated daily, weekly, monthly, quarterly,
or other specified time interval to reflect current market conditions. VRDNs
will normally trade as if the maturity is the earlier put date, even though
stated maturity is longer.
CREDIT ENHANCEMENTS - add the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal and
interest payments when due. The enhancement may be provided by a high-quality
bank, insurance company or other corporation, or a collateral trust. The
enhancements do not guarantee the market values of the securities.
(INS) Principal and interest payments are insured by one of the
following: ACA Financial Guaranty Corp., Assured Guaranty Corp.,
Assured Guaranty Municipal Corp., Build America Mutual Assurance Corp.,
Financial Guaranty Insurance Co.,
================================================================================
34 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
or National Public Finance Guarantee Corp. Although bond insurance
reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that value may fluctuate for other reasons,
and there is no assurance that the insurance company will meet its
obligations.
(LIQ) Liquidity enhancement that may, under certain circumstances,
provide for repayment of principal and interest upon demand by JPMorgan
Chase Bank, N.A.
(LOC) Principal and interest payments are guaranteed by a bank letter of
credit or other bank credit agreement.
(NBGA) Principal and interest payments are guaranteed by a nonbank guarantee
agreement from Texas Permanent School Fund.
o PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
EDA Economic Development Authority
IDA Industrial Development Authority/Agency
ISD Independent School District
MTA Metropolitan Transportation Authority
PRE Prerefunded to a date prior to maturity
REIT Real estate investment trust
USD Unified School District
o SPECIFIC NOTES
(a) Zero-coupon security. Rate represents the effective yield at the date of
purchase.
(b) Pay-in-kind (PIK) - Security in which the issuer will have or has
the option to make all or a portion of the interest or dividend payments
in additional securities.
(c) Northern Trust Corp. is the parent of Northern Trust Investments, Inc.,
which is the subadviser of the Fund.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 35
================================================================================
(d) Security deemed illiquid by USAA Asset Management Company (the
Manager), under liquidity guidelines approved by the USAA Mutual Funds
Trust's Board of Trustees (the Board). The aggregate market value of
these securities at November 30, 2014, was $531,000, which represented
0.2% of the Fund's net assets.
(e) Up to 6.05% of the 7.03% coupon may be PIK.
(f) Restricted security that is not registered under the Securities
Act of 1933. A resale of this security in the United States may occur in
an exempt transaction to a qualified institutional buyer as defined by
Rule 144A, and as such has been deemed liquid by the Manager under
liquidity guidelines approved by the Board, unless otherwise noted as
illiquid.
(g) At November 30, 2014, the aggregate market value of securities
purchased on a delayed delivery basis was $1,107,000, all of which were
when-issued.
(h) At November 30, 2014, the security, or a portion thereof, was segregated
to cover delayed-delivery and/or when-issued purchases.
(i) Rate represents the money market fund annualized seven-day yield at
November 30, 2014.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
36 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $174,645) $246,486
Receivables:
Capital shares sold 234
Dividends and interest 1,909
--------
Total assets 248,629
--------
LIABILITIES
Payables:
Securities purchased 1,091
Capital shares redeemed 120
Bank overdraft 213
Accrued management fees 100
Accrued administration and servicing fees 1
Accrued transfer agent's fees 4
Other accrued expenses and payables 51
--------
Total liabilities 1,580
--------
Net assets applicable to capital shares outstanding $247,049
========
NET ASSETS CONSIST OF:
Paid-in capital $189,915
Accumulated undistributed net investment income 1,111
Accumulated net realized loss on investments (15,818)
Net unrealized appreciation of investments 71,841
--------
Net assets applicable to capital shares outstanding $247,049
========
Capital shares outstanding, unlimited number of shares authorized,
no par value 14,171
========
Net asset value, redemption price, and offering price per share $ 17.43
========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 37
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 1,126
Interest 2,732
-------
Total income 3,858
-------
EXPENSES
Management fees 593
Administration and servicing fees 174
Transfer agent's fees 99
Custody and accounting fees 62
Postage 4
Shareholder reporting fees 11
Trustees' fees 12
Registration fees 16
Professional fees 39
Other 5
-------
Total expenses 1,015
-------
NET INVESTMENT INCOME 2,843
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss (318)
Change in net unrealized appreciation/depreciation 8,121
-------
Net realized and unrealized gain 7,803
-------
Increase in net assets resulting from operations $10,646
=======
See accompanying notes to financial statements.
================================================================================
38 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
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 $ 2,843 $ 5,225
Net realized loss on investments (318) (1,160)
Change in net unrealized appreciation/depreciation
of investments 8,121 17,257
------------------------
Increase in net assets resulting from operations 10,646 21,322
------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,716) (5,005)
------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 30,452 35,131
Reinvested dividends 2,541 4,697
Cost of shares redeemed (15,319) (23,161)
------------------------
Increase in net assets from capital share transactions 17,674 16,667
------------------------
Net increase in net assets 25,604 32,984
NET ASSETS
Beginning of period 221,445 188,461
------------------------
End of period $247,049 $221,445
========================
Accumulated undistributed net investment income:
End of period $ 1,111 $ 984
========================
CHANGE IN SHARES OUTSTANDING
Shares sold 1,788 2,204
Shares issued for dividends reinvested 150 298
Shares redeemed (899) (1,458)
------------------------
Increase in shares outstanding 1,039 1,044
========================
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 39
================================================================================
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 Growth
and Tax Strategy Fund (the Fund), which is classified as diversified under the
1940 Act. The Fund's investment objective is to seek a conservative balance for
the investor between income, the majority of which is exempt from federal income
tax, and the potential for long-term growth of capital to preserve purchasing
power.
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
================================================================================
40 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
meetings include a review and analysis of back testing reports, pricing
service quotation comparisons, illiquid securities and fair value
determinations, pricing movements, and daily stale price monitoring.
The value of each security is determined (as of the close of trading on the
New York Stock Exchange (NYSE) on each business day the NYSE is open) as set
forth below:
1. Equity securities, including exchange-traded funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities exchange or
the Nasdaq over-the-counter markets, are valued at the last sales price
or official closing price on the exchange or primary market on which
they trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according to
local market convention, available at the time 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. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their net asset value (NAV) at the end of
each business day.
3. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
4. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the Board.
The Service uses an evaluated mean between quoted bid and asked prices
or the last sales price to price securities when, in the Service's
judgment, these prices are readily available and are representative of
the securities' market values. For many securities, such prices are not
readily available. The Service generally prices these securities based
on methods that include consideration of yields or prices of securities
of comparable quality, coupon, maturity, and type; indications as to
values from dealers in securities; and general market conditions.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 41
================================================================================
5. 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, an affiliate of the Fund, 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
include tax-exempt bonds valued based on methods discussed in Note 1A4 and
variable-rate demand notes, which are valued at amortized cost.
================================================================================
42 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
Level 3 - inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
C. FEDERAL TAXES - The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income to
its shareholders. Therefore, no federal income tax provision is required.
D. INVESTMENTS IN SECURITIES - Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses from
sales of investment securities are computed on the identified cost basis.
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.
E. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS - Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after
the trade date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may increase or
decrease in value prior to their delivery. The Fund maintains segregated
assets with a market value equal to or greater than the amount of its
purchase commitments. 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. As of November 30, 2014, the Fund's outstanding
delayed-delivery commitments, including interest purchased, were $1,088,000;
all of which were when-issued securities.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 43
================================================================================
F. EXPENSES PAID INDIRECTLY - Through arrangements with the Fund's custodian
and other banks utilized by the Fund for cash management purposes, realized
credits, if any, generated from cash balances in the 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.
G. INDEMNIFICATIONS - Under the Trust's organizational documents, its
officers and trustees are indemnified against certain liabilities arising
out of the performance of their duties to the Trust. In addition, in the
normal course of business, the Trust enters into contracts that contain a
variety of representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Trust that have not yet occurred. However, the Trust expects the risk of
loss to be remote.
H. USE OF ESTIMATES - The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $500 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at an interest rate based on
the London Interbank Offered Rate (LIBOR).
The USAA Funds that are party to the loan agreement are assessed facility fees
by CAPCO in the amount of 7.0 basis points of the amount of the committed loan
agreement. The facility fees are allocated among the Funds based on their
respective average net assets for the period.
For the six-month period ended November 30, 2014, the Fund paid CAPCO facility
fees of $1,000, which represents 0.3% of the total fees paid to
================================================================================
44 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
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 are made quarterly. Distributions of
realized gains from security transactions not offset by capital losses are made
annually in the succeeding fiscal year or as otherwise required to avoid the
payment of federal taxes.
The Fund is permitted to carry forward post-enactment capital losses
indefinitely. Additionally, such capital losses that are carried forward will
retain their character as short-term and/or long-term capital losses.
Post-enactment capital loss carryforwards must be used before pre-enactment
capital loss carryforwards. As a result, pre-enactment capital loss
carryforwards may be more likely to expire unused.
At May 31, 2014, the Fund had both pre-enactment capital loss carryforwards and
post-enactment long-term capital loss carryforwards for federal income tax
purposes as shown in the table below. It is unlikely that the Board will
authorize a distribution of capital gains realized in the future until the
capital loss carryforwards have been used or expire.
CAPITAL LOSS CARRYFORWARDS
--------------------------------------------------------------------------------
EXPIRES SHORT-TERM LONG-TERM
------------ ----------- ----------
2017 $ 2,735,000 $ -
2018 11,532,000 $ -
No Expiration 94,000 1,101,000
----------- ----------
Total $14,361,000 $1,101,000
=========== ==========
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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 45
================================================================================
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
$26,441,000 and $6,343,000, 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 $73,768,000 and $1,927,000, respectively, resulting in net unrealized
appreciation of $71,841,000.
(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 authorized to select (with approval of the Board and without
shareholder approval) one or more subadvisers to manage the actual
day-to-day investment of a portion of the Fund's assets.
The Manager monitors each subadviser's performance through quantitative and
qualitative analysis and periodically reports to the Board as to whether
each subadviser's agreement should be renewed, terminated, or modified. The
Manager also is responsible for allocating assets to the subadviser(s). The
allocation for each subadviser could range from 0% to 100% of the Fund's
assets, and the Manager could change the allocations without shareholder
approval.
================================================================================
46 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
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 0.50% of the Fund's average net assets for
the fiscal year.
The performance adjustment is calculated monthly by comparing the Fund's
performance to a composite index comprised of 51% of the Lipper General
Municipal Bond Funds Index, which tracks the total return performance of the
30 largest funds within the Lipper General Municipal Bond Funds category,
and 49% of the Lipper Large-Cap Core Funds Index, which tracks the total
return performance of the 30 largest funds within the Lipper Large-Cap Core
Funds category. 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
RELATIVE TO INDEX (IN BASIS POINTS AS A %
(IN BASIS POINTS)(1) OF THE FUND'S AVERAGE NET ASSETS)(1)
----------------------------------------------------------------------------------
+/-20 to 50 +/-4
+/-51 to 100 +/-5
+/-101 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.
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 composite index over that period, even if the Fund had
overall negative returns during the performance period.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 47
================================================================================
For the six-month period ended November 30, 2014, the Fund incurred total
management fees, paid or payable to the Manager, of $593,000, which included
a 0.01% performance adjustment of $12,000.
B. SUBADVISORY ARRANGEMENT(S) - The Manager has entered into an investment
subadvisory agreement with Northern Trust Investments (NTI), under which NTI
directs the investment and reinvestment of the portion of the Fund's assets
invested in blue chip stocks (as allocated from time to time by the
Manager). The Manager (not the Fund) pays NTI a subadvisory fee equal to the
greater of a minimum annual fee of $100,000 or a fee at an annual amount of
0.25% on the first $40 million of assets and 0.10% on assets over $40
million of the portion of the Fund's average net assets that NTI manages.
For the six-month period ended November 30, 2014, the Manager incurred
subadvisory fees, paid or payable to NTI, of $85,000.
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 $174,000.
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 $4,000 for these compliance and legal 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 $25.50 per shareholder
account plus out-of-pocket expenses. SAS pays a portion of these fees to
certain intermediaries for the administration and servicing of accounts that
are held with such intermediaries. For the six-month period ended November
30, 2014, the Fund incurred transfer agent's fees, paid or payable to SAS,
of $99,000.
================================================================================
48 | USAA GROWTH AND TAX STRATEGY FUND
================================================================================
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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 49
================================================================================
(7) 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 $ 16.86 $ 15.59 $ 14.02 $ 13.44 $ 12.28 $ 11.00
-------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .21 .41 .37 .36 .35 .37
Net realized and
unrealized gain .56 1.26 1.57 .57 1.16 1.28
-------------------------------------------------------------------------------
Total from investment
operations .77 1.67 1.94 .93 1.51 1.65
-------------------------------------------------------------------------------
Less distributions from:
Net investment income (.20) (.40) (.37) (.35) (.35) (.37)
-------------------------------------------------------------------------------
Net asset value at
end of period $ 17.43 $ 16.86 $ 15.59 $ 14.02 $ 13.44 $ 12.28
===============================================================================
Total return (%)* 4.62 10.92 14.07 7.11 12.54 15.17(a)
Net assets at
end of period (000) $247,049 $221,445 $188,461 $162,718 $154,493 $144,251
Ratios to average
net assets:**
Expenses (%)(b) .87(c) .92 .96 .98 .93 .88(a)
Net investment
income (%) 2.45(c) 2.60 2.51 2.65 2.73 3.08
Portfolio turnover (%) 3 5 5 8 19 18
* 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
$231,903,000.
(a) During the year ended May 31, 2010, SAS reimbursed the Fund $21,000 for
corrections in fees paid for the administration and servicing of certain
accounts. The effect of this reimbursement on the Fund's total return was
less than 0.01%. The reimbursement decreased the Fund's expense ratio by
0.01%. This decrease is excluded from the expense ratio in the Financial
Highlights table.
(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) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
50 | USAA GROWTH AND TAX STRATEGY 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 compare the
ongoing costs of investing in the Fund and other funds. To do so,
================================================================================
EXPENSE EXAMPLE | 51
================================================================================
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 $1,046.20 $4.46
Hypothetical
(5% return before expenses) 1,000.00 1,020.71 4.41
* Expenses are equal to the Fund's annualized expense ratio of 0.87%,
which is net of any 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 4.62% for the six-month period of June 1,
2014, through November 30, 2014.
================================================================================
52 | USAA GROWTH AND TAX STRATEGY 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.
200983-0115
================================================================================
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)
=============================================================================
27801-0115 (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
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Signature and Title: Daniel J. Mavico, Assistant Secretary
Date: 01/26/2015
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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
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Signature and Title: Daniel S. McNamara, President
Date: 01/27/2015
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By:* /S/ ROBERTO GALINDO, JR.
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Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 01/27/2015
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*Print the name and title of each signing officer under his or her signature.