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 MANAGED ALLOCATION FUND]
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SEMIANNUAL REPORT
USAA MANAGED ALLOCATION 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 8
Notes to Portfolio of Investments 11
Financial Statements 13
Notes to Financial Statements 16
EXPENSE EXAMPLE 25
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 MANAGED ALLOCATION FUND (THE FUND) SEEKS TO MAXIMIZE TOTAL RETURN,
CONSISTING PRIMARILY OF CAPITAL APPRECIATION.
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TYPES OF INVESTMENTS
The Fund invests primarily in U.S. and/or foreign (to include emerging markets)
equity securities and fixed-income securities through investments in shares of
other investment companies, including exchange-traded funds (ETFs) and real
estate securities, including real estate investment trusts (REITs). Consistent
with this investment strategy, the Fund may at times invest directly in U.S.
and/or foreign equity securities and fixed-income securities as well as
derivatives, including futures contracts and hedge funds.*
*The Fund is not offered for sale directly to the general public and currently
is available for investment through a USAA discretionary managed account
program. The Fund may be offered to other persons and legal entities that USAA
Asset Management Company may approve from time to time. There are no minimum
initial or subsequent purchase payment amounts for investments in the Fund.
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
JOHN P. TOOHEY, CFA DAN DENBOW, CFA*
WASIF A. LATIF ARNOLD J. ESPE, CFA
R. MATTHEW FREUND, CFA
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o HOW DID THE GLOBAL FINANCIAL MARKETS PERFORM DURING THE REPORTING PERIOD?
The U.S. stock market performed very well during the period, with large-cap
companies leading the way. The United States is one of the fastest-growing
developed world economies, and large-cap companies generally feature strong
balance sheets, above-average dividend yields and stable business lines.
Large-cap stocks were, therefore, seen as being a relatively safer option
at a time of slower growth overseas, helping the S&P 500(R) Index to finish
the period close to its all-time high. Small-cap stocks, while positive,
lagged large-cap stocks somewhat due to their weak showing during September
and the first half of October. In contrast to the U.S. market,
international equities as a group closed the period with a negative return.
While a large portion of the decline resulted from the falling value of
overseas currencies relative to the U.S. dollar, the asset class was also
hurt by signs of weak growth in both Europe and Japan. Emerging market
equities also lost ground, reflecting concerns about the outlook for the
world economy and the potential impact of falling commodity prices.
The U.S. investment-grade bond market was helped by modest economic
growth, low inflation, and the growing expectation that the Federal Reserve
will not be compelled to raise interest rates until late in 2015. Yields on
U.S. Treasury bonds fell, as prices rose, and these gains carried through
to the rest of the market. While investment-grade bonds performed well,
high-yield bonds as a group experienced negative returns during the
six-month
*Effective October 1, 2014, Dan Denbow no longer manages the Fund.
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2 | USAA MANAGED ALLOCATION FUND
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period. The asset class was hurt by the unfavorable combination of investors
exiting the asset class generally and an elevated supply of high-yield bond
issues in the early autumn. Later in the period, the sharp downturn in the
price of oil weighed on the performance of bonds issued by energy companies,
which are heavily represented in the high-yield market.
o HOW DID THE USAA MANAGED ALLOCATION FUND (THE FUND) PERFORM DURING THE
REPORTING PERIOD?
For the six-month reporting period ended November 30, 2014, the Fund had a
total return of -0.58%. This compares to returns of 8.58% for the S&P 500
Index and 1.91% for the Barclays U.S. Aggregate Bond Index.
USAA Asset Management Company is the Fund's investment adviser. The
investment adviser provides day-to-day discretionary management for the
Fund's assets.
o PLEASE DISCUSS THE FACTORS THAT HELPED AND HURT PERFORMANCE.
This Fund is designed to provide more flexibility in implementing tactical
asset allocation shifts within USAA's Managed Portfolios. Within the Fund,
we use exchange-traded funds (ETFs) to implement our target allocations.
During the past six months, this approach led us to hold a substantial
weighting in international equities. On the developed market side, we held
ETFs designed to track the MSCI EAFE Index and the European equity markets.
Since the overseas markets trailed the United States, this aspect of our
positioning detracted from performance. European stocks, in particular,
lagged as it became apparent that economic growth was falling well below
expectations. Nevertheless, we believe the international markets represent
a compelling opportunity at a time in which U.S. equities are trading above
longer-term averages based on many valuation metrics.
Another source of underperformance was the Fund's allocation to emerging
markets. We have favored this asset class on the basis of its compelling
valuations and strong growth relative to the developed markets. However,
concerns about global growth trends caused investors to rein in
Refer to page 6 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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their appetite for risk during the second half of the reporting period - a
trend that adversely impacted the performance of emerging-market equities.
The Fund's allocation to domestic equities helped performance at a
time in which the U.S. market finished with a positive return. Our tilt
toward the value stocks over growth stocks prevented the Fund from
fully participating in the rally due to the strong outperformance of
growth stocks during the past six months.
Our allocation to investment-grade bonds also aided performance. We held a
position in an ETF linked to intermediate-term debt, which enabled the Fund
to capitalize on the decline in interest rates that occurred during the
period. We also held an allocation to an ETF linked to U.S. corporate
bonds, which helped performance given that the asset class finished with a
modest gain and slightly outperformed the broader fixed-income market.
The Fund also holds an allocation to high-yield bonds. This position was a
strong, positive contributor to performance through the first half of 2014,
and it has made a favorable contribution over the trailing one-, three-,
and five-year periods as well. In contrast, the more recent weakness in
high-yield bonds caused this allocation to detract from performance during
the reporting period. From a longer-term standpoint, however, we believe
the asset class remains supported by moderate economic growth, low
defaults, and the steady credit outlook for high-yield companies.
We continue to use our diversified, global approach to identify asset
classes that offer the combination of strong fundamentals and attractive
valuations, while tilting away from those that no longer offer a compelling
risk-return profile. We expect this long-term, value-driven methodology
will be critical to generating outperformance if the investment backdrop
becomes more challenging in the year ahead.
Thank you for your investment in the Fund.
Foreign investing is subject to additional risks, such as currency
fluctuations, market illiquidity, and political instability. Emerging
market countries are less diverse and mature than other countries and tend
to be politically less stable. o 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 Exchange-traded
Funds (ETFs) are subject to risks similar to those of stocks. Investment
returns may fluctuate and are subject to market volatility, so that an
investor's shares, when redeemed or sold, may be worth more or less than
their original cost. o Non-investment grade securities are considered
speculative and are subject to significant credit risk. They are sometimes
referred to as "junk" bonds since they represent a greater risk of default
than more creditworthy investment-grade securities. o Diversification is a
technique intended to help reduce risk and does not guarantee a profit or
prevent a loss.
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4 | USAA MANAGED ALLOCATION FUND
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INVESTMENT OVERVIEW
USAA MANAGED ALLOCATION FUND (THE FUND)
(Ticker Symbol: UMAFX)
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11/30/14 5/31/14
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Net Assets $1.3 Billion $1.2 Billion
Net Asset Value Per Share $11.92 $11.99
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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 SINCE INCEPTION 2/01/10
-0.58% 3.81% 7.53%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR SINCE INCEPTION 2/01/10
1.36% 7.04%
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EXPENSE RATIO AS OF 5/31/14**
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1.01%
(includes acquired fund fees and expenses of 0.28%)
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
**The expense ratio represents the total annual operating expenses, before
reductions of any expenses paid indirectly and including any acquired fund fees
and expenses, as reported in the Fund's prospectus dated 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), the 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]
BARCLAYS U.S.
USAA MANAGED AGGREGATE BOND
S&P 500 INDEX ALLOCATION FUND INDEX
01/31/10 10,000.00 10,000.00 10,000.00
02/28/10 10,309.77 10,200.00 10,037.34
03/31/10 10,931.91 10,420.00 10,025.00
04/30/10 11,104.50 10,490.00 10,129.36
05/31/10 10,217.80 10,140.00 10,214.60
06/30/10 9,682.92 9,980.00 10,374.78
07/31/10 10,361.33 10,600.00 10,485.46
08/31/10 9,893.58 10,230.00 10,620.38
09/30/10 10,776.53 11,100.00 10,631.70
10/31/10 11,186.57 11,250.00 10,669.56
11/30/10 11,188.00 11,030.00 10,608.23
12/31/10 11,935.71 11,257.84 10,493.84
01/31/11 12,218.61 11,226.51 10,506.05
02/28/11 12,637.20 11,372.71 10,532.33
03/31/11 12,642.23 11,508.48 10,538.15
04/30/11 13,016.63 11,780.00 10,671.92
05/31/11 12,869.29 11,832.22 10,811.19
06/30/11 12,654.77 11,759.12 10,779.54
07/31/11 12,397.44 11,915.76 10,950.59
08/31/11 11,723.99 12,030.64 11,110.58
09/30/11 10,899.81 11,592.02 11,191.40
10/31/11 12,091.08 12,239.51 11,203.42
11/30/11 12,064.36 11,988.87 11,193.70
12/31/11 12,187.77 12,051.67 11,316.73
01/31/12 12,733.97 12,534.63 11,416.10
02/29/12 13,284.61 12,770.50 11,413.48
03/31/12 13,721.79 12,579.56 11,350.94
04/30/12 13,635.66 12,646.95 11,476.78
05/31/12 12,816.15 11,984.28 11,580.63
06/30/12 13,344.20 12,377.39 11,585.17
07/31/12 13,529.54 12,523.40 11,744.96
08/31/12 13,834.27 12,703.11 11,752.64
09/30/12 14,191.77 12,927.74 11,768.82
10/31/12 13,929.72 12,916.51 11,791.96
11/30/12 14,010.53 12,961.44 11,810.57
12/31/12 14,138.23 13,242.58 11,793.75
01/31/13 14,870.52 13,383.21 11,711.27
02/28/13 15,072.39 13,277.74 11,769.97
03/31/13 15,637.65 13,359.77 11,779.37
04/30/13 15,938.94 13,523.84 11,898.56
05/31/13 16,311.78 13,266.02 11,686.26
06/30/13 16,092.73 12,832.41 11,505.49
07/31/13 16,911.60 13,160.55 11,521.22
08/31/13 16,421.81 12,855.85 11,462.33
09/30/13 16,936.79 13,230.86 11,570.84
10/31/13 17,715.34 13,594.16 11,664.39
11/30/13 18,255.19 13,676.19 11,620.72
12/31/13 18,717.34 13,780.15 11,555.05
01/31/14 18,070.21 13,422.84 11,725.78
02/28/14 18,896.81 13,875.43 11,788.13
03/31/14 19,055.65 13,994.53 11,768.05
04/30/14 19,196.51 14,089.81 11,867.35
05/31/14 19,647.13 14,280.38 12,002.47
06/30/14 20,052.99 14,447.12 12,008.67
07/31/14 19,776.45 14,197.01 11,978.55
08/31/14 20,567.60 14,482.85 12,110.79
09/30/14 20,279.17 14,006.44 12,028.56
10/31/14 20,774.49 14,137.45 12,146.79
11/30/14 21,333.22 14,197.00 12,231.64
[END CHART]
Data from 1/31/10 to 11/30/2014.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Managed Allocation 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 Barclays U.S. Aggregate Bond Index covers the U.S. investment-grade
fixed-rate bond market, including government and credit securities, agency
mortgage pass-through securities, asset-backed securities, and commercial
mortgage-backed securities that have remaining maturities of more than one
year.
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.
*The performance of the S&P 500 Index and the Barclay U.S. Aggregate Bond Index
is calculated from the end of the month, January 31, 2010, while the inception
date of the Fund is February 1, 2010. There may be a slight variation of
performance numbers because of this difference.
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6 | USAA MANAGED ALLOCATION FUND
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o ASSET ALLOCATION - 11/30/14 o
[PIE CHART OF ASSET ALLOCATION]
DOMESTIC EXCHANGE-TRADED FUNDS* 23.0%
FIXED-INCOME EXCHANGE-TRADED FUNDS* 29.4%
INTERNATIONAL EXCHANGE-TRADED FUNDS* 40.9%
MONEY MARKET INSTRUMENTS 6.8%
[END CHART]
*The Fund may rely on certain Securities and Exchange Commission (SEC) exemptive
orders or rules that permit funds meeting various conditions to invest in an
exchange-traded fund (ETF) in amounts exceeding limits set forth in the
Investment Company Act of 1940, as amended, that would otherwise be applicable.
Percentages are of the net assets of the Fund and may not equal 100%.
You will find a complete list of securities that the Fund owns on pages 8-10.
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INVESTMENT OVERVIEW | 7
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PORTFOLIO OF INVESTMENTS
November 30, 2014 (unaudited)
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
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EQUITY SECURITIES (93.3%)
EXCHANGE-TRADED FUNDS (93.3%)
DOMESTIC EXCHANGE-TRADED FUNDS (23.0%)
352,600 iShares Core S&P Mid-Cap ETF $ 50,866
260,000 iShares Core S&P Small-Cap ETF 28,938
935,400 iShares Russell 1000 Value ETF 97,703
150,000 iShares Russell 2000 ETF 17,516
1,139,600 iShares S&P 500 Value ETF 106,951
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Total Domestic Exchange-Traded Funds 301,974
----------
FIXED-INCOME EXCHANGE-TRADED FUNDS (29.4%)
1,448,000 iShares 7-10 Year Treasury Bond ETF 153,763
525,000 iShares iBoxx High Yield Corporate Bond Fund 47,843
898,000 iShares iBoxx Investment Grade Corporate Bond Fund 107,841
1,940,600 SPDR Barclays High Yield Bond Fund 76,809
----------
Total Fixed-Income Exchange-Traded Funds 386,256
----------
INTERNATIONAL EXCHANGE-TRADED FUNDS (40.9%)
900,000 iShares Core MSCI EAFE ETF 52,254
900,000 iShares Core MSCI Emerging Markets ETF 44,802
3,169,100 iShares MSCI EAFE ETF 202,791
1,600,000 Vanguard FTSE Emerging Markets ETF 67,472
1,919,200 Vanguard FTSE European ETF 106,112
1,400,000 WisdomTree Emerging Markets SmallCap Dividend Fund 62,930
----------
Total International Exchange-Traded Funds 536,361
----------
Total Equity Exchange-Traded Funds (cost: $1,131,660) 1,224,591
----------
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8 | USAA MANAGED ALLOCATION FUND
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
----------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS (6.8%)
COMMERCIAL PAPER (5.0%)
FINANCIALS (5.0%)
-----------------
ASSET-BACKED FINANCING (5.0%)
$10,000 Alpine Securitzation Corp.(a),(b) 0.13% 12/09/2014 $ 10,000
5,099 Barton Capital, LLC(a),(b) 0.12 12/02/2014 5,099
12,000 Crown Point Capital Co.(a) 0.14 12/03/2014 12,000
11,890 LMA Americas, LLC(a),(b) 0.13 12/19/2014 11,889
8,713 Manhattan Asset Funding Co., LLC(a),(b) 0.16 1/14/2015 8,711
7,651 Victory Receivables Corp.(a),(b) 0.14 12/01/2014 7,651
10,442 Working Capital Management Co.(a),(b) 0.13 12/08/2014 10,442
---------
65,792
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Total Financials 65,792
---------
Total Commercial Paper 65,792
---------
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NUMBER
OF SHARES
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MONEY MARKET FUNDS (1.8%)
22,949,979 State Street Institutional Liquid Reserves Fund
Premier Class, 0.08%(c) 22,950
-----------
Total Money Market Instruments (cost: $88,742) 88,742
-----------
TOTAL INVESTMENTS (COST: $1,220,402) $ 1,313,333
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PORTFOLIO OF INVESTMENTS | 9
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($ IN 000s) VALUATION HIERARCHY
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(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
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Equity Securities:
Exchange-Traded Funds:
Domestic Exchange-
Traded Funds $ 301,974 $ - $- $ 301,974
Fixed-Income Exchange-
Traded Funds 386,256 - - 386,256
International Exchange-
Traded Funds 536,361 - - 536,361
Money Market Instruments:
Commercial Paper - 65,792 - 65,792
Money Market Funds 22,950 - - 22,950
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Total $1,247,541 $65,792 $- $1,313,333
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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.
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10 | USAA MANAGED ALLOCATION FUND
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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%. Investments in foreign securities were 40.9% of net assets at
November 30, 2014. A category percentage of 0.0% represents less than 0.1%
of net assets.
The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set
forth in the Investment Company Act of 1940, as amended, that would
otherwise be applicable.
o SPECIFIC NOTES
(a) Restricted security that is not registered under the Securities
Act of 1933. A resale of this security in the United States may occur
in an exempt transaction to a qualified institutional buyer as defined
by Rule 144A, and as such has been deemed liquid by USAA Asset
Management Company (the Manager) under liquidity guidelines approved by
USAA Mutual Funds Trust's Board of Trustees (the Board), unless
otherwise noted as illiquid.
(b) Commercial paper issued in reliance on the "private placement"
exemption from registration afforded by Section 4(2) of the Securities
Act of 1933. Unless this commercial paper is subsequently registered,
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 11
================================================================================
a resale of this commercial paper in the United States must be
effected in a transaction exempt from registration under the Securities
Act of 1933. Section 4(2) commercial paper is normally resold to other
investors through or with the assistance of the issuer or an investment
dealer who makes a market in this security, and as such has been deemed
liquid by the Manager under liquidity guidelines approved by the Board,
unless otherwise noted as illiquid.
(c) Rate represents the money market fund annualized seven-day yield at
November 30, 2014.
See accompanying notes to financial statements.
================================================================================
12 | USAA MANAGED ALLOCATION FUND
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $1,220,402) $1,313,333
Cash 1
Receivables:
Capital shares sold 1,745
Interest 1
----------
Total assets 1,315,080
----------
LIABILITIES
Payables:
Capital shares redeemed 1,708
Accrued management fees 636
Accrued administration and servicing fees 2
Accrued transfer agent's fees 2
Other accrued expenses and payables 58
----------
Total liabilities 2,406
----------
Net assets applicable to capital shares outstanding $1,312,674
==========
NET ASSETS CONSIST OF:
Paid-in capital $1,207,915
Accumulated undistributed net investment income 18,248
Accumulated net realized loss on investments (6,420)
Net unrealized appreciation of investments 92,931
----------
Net assets applicable to capital shares outstanding $1,312,674
==========
Capital shares outstanding, unlimited number of shares
authorized, no par value 110,112
==========
Net asset value, redemption price, and offering price per share $ 11.92
==========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 13
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended November 30, 2014 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 20,216
Interest 35
---------
Total income 20,251
---------
EXPENSES
Management fees 3,772
Administration and servicing fees 314
Transfer agent's fees 314
Custody and accounting fees 64
Postage 55
Shareholder reporting fees 12
Trustees' fees 12
Registration fees 56
Professional fees 48
Other 7
---------
Total expenses 4,654
---------
NET INVESTMENT INCOME 15,597
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain 3,812
Change in net unrealized appreciation/depreciation of:
Investments (25,883)
---------
Net realized and unrealized loss (22,071)
---------
Decrease in net assets resulting from operations $ (6,474)
=========
See accompanying notes to financial statements.
================================================================================
14 | USAA MANAGED ALLOCATION 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 $ 15,597 $ 18,964
Net realized gain (loss) on investments 3,812 (983)
Change in net unrealized appreciation/depreciation
of investments (25,883) 75,788
-------------------------------
Increase (decrease) in net assets resulting
from operations (6,474) 93,769
-------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - (16,984)
Net realized gains - (489)
-------------------------------
Distributions to shareholders - (17,473)
-------------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 182,301 545,984
Reinvested dividends - 17,473
Cost of shares redeemed (82,345) (135,455)
-------------------------------
Increase in net assets from capital share transactions 99,956 428,002
-------------------------------
Net increase in net assets 93,482 504,298
NET ASSETS
Beginning of period 1,219,192 714,894
-------------------------------
End of period $ 1,312,674 $ 1,219,192
===============================
Accumulated undistributed net investment income:
End of period $ 18,248 $ 2,651
===============================
CHANGE IN SHARES OUTSTANDING
Shares sold 15,287 48,889
Shares issued for dividends reinvested - 1,517
Shares redeemed (6,898) (11,814)
-------------------------------
Increase in shares outstanding 8,389 38,592
===============================
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 15
================================================================================
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
Managed Allocation Fund (the Fund), which is classified as diversified under the
1940 Act. The Fund's investment objective is to seek to maximize total return,
consisting primarily of capital appreciation. The Fund is not offered for sale
directly to the general public and is available currently for investment through
a USAA discretionary managed account program or other persons or legal entities
that the Fund may approve from time to time.
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
================================================================================
16 | USAA MANAGED ALLOCATION FUND
================================================================================
meetings to review prior actions taken by the Committee and USAA Asset
Management Company (the Manager). Among other things, these monthly
meetings include a review and analysis of back testing reports, pricing
service quotation comparisons, illiquid securities and fair value
determinations, pricing movements, and daily stale price monitoring.
The value of each security is determined (as of the close of trading on the
New York Stock Exchange (NYSE) on each business day the NYSE is open) as
set forth below:
1. Equity securities, including Exchange-Traded Funds (ETFs), except
as otherwise noted, traded primarily on a domestic securities exchange
or the Nasdaq over-the-counter markets, are valued at the last sales
price or official closing price on the exchange or primary market on
which they trade. Equity securities traded primarily on foreign
securities exchanges or markets are valued at the last quoted sales
price, or the most recently determined official closing price
calculated according to local market convention, available at the time
the Fund is valued. If no last sale or official closing price is
reported or available, the average of the bid and asked prices
generally is used.
2. Equity securities trading in various foreign markets may take place
on days when the NYSE is closed. Further, when the NYSE is open, the
foreign markets may be closed. Therefore, the calculation of the Fund's
net asset value (NAV) may not take place at the same time the prices of
certain foreign securities held by the Fund are determined. In most
cases, events affecting the values of foreign securities that occur
between the time of their last quoted sales or official closing prices
and the close of normal trading on the NYSE on a day the Fund's NAV is
calculated will not be reflected in the value of the Fund's foreign
securities. However, the Manager, an affiliate of the Fund, will
monitor for events that would materially affect the value of the Fund's
foreign securities. If the Manager determines that a particular event
would materially affect the value of the Fund's foreign securities,
then the Manager, under valuation procedures approved by the Board,
will consider such available information that it deems relevant to
determine a fair value for the affected foreign securities.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 17
================================================================================
In addition, the Fund may use information from an external vendor or
other sources to adjust the foreign market closing prices of foreign
equity securities to reflect what the Fund believes to be the fair
value of the securities as of the close of the NYSE. Fair valuation of
affected foreign equity securities may occur frequently based on an
assessment that events that occur on a fairly regular basis (such as
U.S. market movements) are significant.
3. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their NAV at the end of each business
day.
4. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
5. 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 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.
================================================================================
18 | USAA MANAGED ALLOCATION FUND
================================================================================
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 commercial paper, which is valued at amortized cost.
Level 3 - inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 19
================================================================================
for long-term securities and the straight-line method for short-term
securities.
E. 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.
F. 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.
G. 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.
================================================================================
20 | USAA MANAGED ALLOCATION FUND
================================================================================
For the six-month period ended November 30, 2014, the Fund paid CAPCO facility
fees of $3,000, which represents 1.8% of the total fees paid to CAPCO by the
USAA Funds. The Fund had no borrowings under this agreement during the six-month
period ended November 30, 2014.
(3) DISTRIBUTIONS
The tax basis of distributions and any accumulated undistributed net investment
income will be determined based upon the Fund's tax year-end of May 31, 2015, in
accordance with applicable tax law.
Distributions of net investment income and realized gains from security
transactions not offset by capital losses are made annually in the succeeding
fiscal year or as otherwise required to avoid the payment of federal taxes.
The Fund is permitted to carry forward post-enactment capital losses
indefinitely. Additionally, such capital losses that are carried forward will
retain their character as short-term and/or long-term capital losses.
Post-enactment capital loss carryforwards must be used before pre-enactment
capital loss carryforwards. As a result, pre-enactment capital loss
carryforwards may be more likely to expire unused.
At May 31, 2014, the Fund had no pre-enactment capital loss carryforwards and
post-enactment net capital loss carryforwards of $9,593,000, for federal income
tax purposes. 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.
POST-ENACTMENT CAPITAL LOSS CARRYFORWARDS
---------------------------------------------
TAX CHARACTER
---------------------------------------------
(NO EXPIRATION) BALANCE
--------------- ----------
Short-Term $6,428,000
Long-Term 3,165,000
----------
Total $9,593,000
==========
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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 21
================================================================================
ongoing basis, the Manager will monitor its tax positions to determine if
adjustments to this conclusion are necessary. The statute of limitations on the
Fund's tax return filings generally remain open for the three preceding fiscal
reporting year ends and remain subject to examination by the Internal Revenue
Service and state taxing authorities.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended November 30, 2014, were
$161,268,000 and $64,796,000, 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 $104,373,000 and $11,442,000, respectively, resulting in net
unrealized appreciation of $92,931,000.
(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 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. For the six-month period
ended November 30, 2014, there were no subadvisers.
The Fund's management fee is accrued daily and paid monthly at an
annualized rate of 0.60% of the Fund's average net assets for the fiscal
year. For the six-month period ended November 30, 2014, the Fund
incurred total management fees, paid or payable to the Manager, of
$3,772,000.
================================================================================
22 | USAA MANAGED ALLOCATION FUND
================================================================================
B. ADMINISTRATION AND SERVICING FEES - The Manager provides certain
administration and servicing functions for the Fund. For such services, the
Manager receives a fee accrued daily and paid monthly at an annualized rate
of 0.05% of the Fund's average net assets for the fiscal year. For the
six-month period ended November 30, 2014, the Fund incurred administration
and servicing fees, paid or payable to the Manager, of $314,000.
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 $20,000 for these compliance and legal services. These
expenses are included in the professional fees on the Fund's statement of
operations.
C. TRANSFER AGENT'S FEES - USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund. The Fund's transfer agent's fees are
accrued daily and paid monthly at an annualized rate of 0.05% of the
Fund's average net assets for the fiscal year. For the six-month period
ended November 30, 2014, the Fund incurred transfer agent's fees, paid
or payable to SAS, of $314,000.
D. 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 | 23
================================================================================
(7) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31, MAY 31,
-------------------------------------------------------------------------------------
2014 2014 2013 2012 2011 2010***
-------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 11.99 $ 11.32 $ 10.67 $ 11.33 $ 10.14 $ 10.00
----------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .14 .20 .18 .32(a) .30(a) .05(a)
Net realized and
unrealized gain (loss) (.21) .66 .95 (.18)(a) 1.36(a) .09(a),(b)
----------------------------------------------------------------------------------
Total from investment
operations (.07) .86 1.13 .14(a) 1.66(a) .14(a)
----------------------------------------------------------------------------------
Less distributions from:
Net investment income - (.18) (.23) (.32) (.22) -
Realized capital gains - (.01) (.25) (.48) (.25) -
----------------------------------------------------------------------------------
Total distributions - (.19) (.48) (.80) (.47) -
----------------------------------------------------------------------------------
Net asset value at end
of period $ 11.92 $ 11.99 $ 11.32 $ 10.67 $ 11.33 $ 10.14
==================================================================================
Total return (%)* (.58) 7.65 10.70 1.29 16.69 1.40
Net assets at
end of period (000) $1,312,674 $1,219,192 $714,894 $519,850 $474,503 $281,793
Ratios to average
net assets:**
Expenses (%)(d) .74(c) .73 .74 .74 .75 .83(c)
Net investment
income (%) 2.48(c) 1.80 1.68 2.87 2.80 1.32(c)
Portfolio turnover (%) 5 65 65(f) 125(f) 249(e) 52
* 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 $1,255,227,000.
*** Fund commenced operations on February 1, 2010.
(a) Calculated using average shares.
(b) Reflected a net realized and unrealized gain per share, whereas the statement of operations reflected a net
realized and unrealized loss for the period. The difference in realized and unrealized gains and losses was
due to the timing of sales and repurchases of shares in relation to fluctuating market values for the
portfolio.
(c) Annualized. The ratio is not necessarily indicative of 12 months of operations.
(d) 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.
(e) Reflects increased trading activity due to asset allocation strategies.
(f) Reflects decreased trading activity due to asset allocation strategies.
================================================================================
24 | USAA MANAGED ALLOCATION 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
================================================================================
EXPENSE EXAMPLE | 25
================================================================================
to compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the line labeled "hypothetical"
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* JUNE 1
ACCOUNT VALUE ACCOUNT VALUE NOVEMBER , 2014 -
JUNE 1, 2014 NOVEMBER 30, 2014 30, 2014
----------------------------------------------------------------
Actual $1,000.00 $ 994.20 $3.70
Hypothetical
(5% return before expenses) 1,000.00 1,021.36 3.75
* Expenses are equal to the Fund's annualized expense ratio of 0.74%, 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 (0.58)% for the six-month period of June 1, 2014,
through November 30, 2014.
================================================================================
26 | USAA MANAGED ALLOCATION 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.
201011-0115
================================================================================
USAA --------------
9800 Fredericksburg Road PRSRT STD
San Antonio, TX 78288 U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on USAA.COM select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA we know what it means to serve.(R)
================================================================================
93924-0115 (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.