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: JULY 31
Date of reporting period: JANUARY 31, 2015
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED JANUARY 31, 2015
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA AGGRESSIVE GROWTH FUND]
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SEMIANNUAL REPORT
USAA AGGRESSIVE GROWTH FUND
FUND SHARES o INSTITUTIONAL SHARES
JANUARY 31, 2015
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PRESIDENT'S MESSAGE
"...WE BELIEVE THAT IT IS IMPORTANT FOR
INVESTORS TO FOCUS LESS ON WHAT'S HAPPENING [PHOTO OF BROOKS ENGLEHARDT]
DAY-TO-DAY IN THE FINANCIAL MARKETS AND MORE
ON THEIR OWN FINANCIAL WELL-BEING."
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MARCH 2015
The United States was the place to be during the six-month reporting period
ended January 31, 2015. Those investors who concentrated their investments in
U.S. stocks and/or longer-term U.S. Treasury securities were fortuitously
positioned, as these asset classes generally outperformed all other market
segments. U.S. equities recorded strong gains, surpassing developed equities
markets and emerging markets equities, both of which declined during the
reporting period. Among U.S. stocks, growth-oriented names outperformed their
value counterparts, while mid-cap stocks outpaced small-cap and large-cap
stocks. Meanwhile, yields on longer-term U.S. Treasuries trended down, driving
up bond prices. (Bond prices move in the opposite direction of interest rates.)
Though yields were near historic lows during the period, they still remained the
highest among developed nations. U.S. Treasuries also benefited from their
perceived status as high-quality, safe-haven investments.
What circumstances produced these results? At USAA Investments, we believe a
series of interconnected factors were at work, all of which were still in place
at the end of the reporting period. These factors include:
o SLOWING INTERNATIONAL GROWTH. U.S. economic conditions improved during the
reporting period, but most other countries struggled with economic weakness.
The economy of continental Europe was stagnant, with some countries falling
into recession, while Japan's government continued to attempt to jumpstart its
sluggish economy. China's economy weakened, growing at its slowest pace in
more than 24 years. At the same time, a sharp drop in commodities and energy
prices weighed on emerging markets economies. Although economic divergence is
likely to continue for a time, we do not believe it is likely to endure over
the long term. We believe that eventually, either the global economy will
rebound or else global economic weakness will dampen U.S. economic growth.
o DIVERGENT MONETARY POLICIES. Reflecting the disparity between international
and U.S. economic growth, the monetary policies of the world's central banks
diverged. In the United States, the Federal Reserve ended its quantitative
easing asset purchases and signaled its willingness--should the data support
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it--to raise short-term interest rates. Elsewhere, central banks continued to
cut rates and increase monetary stimulus to support their faltering economies.
o STRONGER U.S. DOLLAR. The divergence in monetary policies, along with
differing expectations about U.S. and international economic growth, had a
major impact on currencies. During the reporting period, the U.S. dollar
strengthened, appreciating significantly compared to most other global
currencies. In response, some countries devalued their currencies as an
attempt to make their exports cheaper to foreign buyers, and therefore to
boost economic growth.
o DECREASING INFLATION. Slowing international growth, divergent global
monetary policies, and currency movements combined to reduce inflation
expectations. The drop in energy prices was a prime example. Oil prices fell
nearly 50% during 2014. Lower oil prices do have some advantages--automobile
owners have more money to spend on other things--but extended periods of low
inflation can lead to economic stagnation, cause consumers to postpone
spending, and put pressure on corporate profit margins.
In this economic environment we believe that it is important for investors to
focus less on what's happening day-to-day in the financial markets and more on
their own financial well-being. As I write to you, tax season is upon us. You
may be preparing to make contributions to your IRA. You may also consider
setting near term goals, such as reviewing your investment strategy to make sure
it still suits your objectives, time horizon, and tolerance for risk. If you'd
like assistance, please call one of our financial advisors. They would be happy
to help.
Looking ahead, it is too soon to identify a dominant market trend for 2015.
However, we believe investors are likely to focus on higher asset quality as
long as the financial markets continue to grapple with the implications of
slowing global growth, divergent monetary policy, a stronger U.S. dollar, and
lower oil prices. On behalf of everyone here at USAA Investments, thank you for
your continued investment in our family of mutual funds.
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 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 18
Financial Statements 19
Notes to Financial Statements 22
EXPENSE EXAMPLE 37
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.
202720-0315
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FUND OBJECTIVE
THE USAA AGGRESSIVE GROWTH FUND (THE FUND) SEEKS CAPITAL APPRECIATION.
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TYPES OF INVESTMENTS
The Fund invests primarily in equity securities of large companies that are
selected for their growth potential. Although the Fund will invest primarily in
U.S. securities, it may invest up to 20% of its total assets in foreign
securities including securities issued in emerging markets.
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
Wellington Management Company, LLP Winslow Capital Management, LLC
PAUL E. MARRKAND, CFA CLARK J. WINSLOW
JUSTIN H. KELLY, CFA
PATRICK M. BURTON, CFA
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o HOW DID THE OVERALL MARKET PERFORM DURING THE REPORTING PERIOD?
Domestic equity markets were strong over the six-month reporting period
ended January 31, 2015, led by the resurgent U.S. consumer. Gross domestic
product growth rebounded from the weather-related weak first quarter of
2014. In spite of the improving U.S. economy, inflation remained well
contained and developed market interest rates declined. Nonetheless,
developed markets outside the United States continued to struggle, despite
accommodative monetary polices by central banks in Europe, Japan, and China
attempting to boost growth. For the six-month reporting period, eight of the
ten sectors within the Russell 1000(R) Growth Index (the Index) posted
positive returns. Health care, utilities, and consumer staples were the
top-performing sectors, while energy and telecommunication services sectors
lagged.
o HOW DID THE USAA AGGRESSIVE GROWTH FUND (THE FUND) PERFORM DURING THE
REPORTING PERIOD?
The Fund has two share classes: Fund Shares and Institutional Shares. For
the six-month reporting period ended January 31, 2015, the Fund
Refer to page 6 for benchmark definitions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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2 | USAA AGGRESSIVE GROWTH FUND
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Shares and Institutional Shares had total returns of 6.29% and 6.39%,
respectively. This compares to returns of 6.34% for the Index and 5.25% for
the Lipper Large-Cap Growth Funds 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
subadvisers. Wellington Management Company, LLP (Wellington Management) and
Winslow Capital Management, LLC (Winslow Capital) are subadvisers to the
Fund. The subadvisers each provide day-to-day discretionary management for a
portion of the Fund's assets.
o HOW DID WELLINGTON MANAGEMENT'S PORTION OF THE FUND PERFORM OVER THE
REPORTING PERIOD?
The portion of the Fund managed by Wellington Management underperformed the
Index during the reporting period. Stock selections represented the primary
detractor from relative performance, as selection in financials, health
care, and information technology subtracted from performance results.
Partially offsetting these negative results was stock selection in the
materials, consumer staples, and consumer discretionary sectors. Sector
allocation also contributed to relative performance during the reporting
period. An overweight allocation to the strong-performing health care
segment, combined with an underweight allocation to energy and materials,
contributed to returns. Individual detractors during the period included
holdings in Apache Corp.*, Devon Energy Corp., and National Oilwell Varco*,
Inc. A lack of holdings in IBM Corp.* and Schlumberger Ltd.*, index
constituents, along with a position in Monster Beverage Corp., contributed
the most to relative return during the reporting period.
*Apache Corp., National Oilwell Varco, Inc., IBM Corp., and Schlumberger
Ltd. were sold out of the Fund prior to January 31, 2015.
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MANAGERS' COMMENTARY ON THE FUND | 3
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o HOW DID WINSLOW CAPITAL'S PORTION OF THE PORTFOLIO PERFORM OVER THE
REPORTING PERIOD?
The portion of the Fund managed by Winslow Capital outperformed the Index
during the reporting period, with positions in information technology and
health care proving the top performers. Within the information technology
sector, stock selection drove positive relative return, with Visa, Inc. "A"
the credit card company and Alibaba Group Holding Ltd. ADR the Chinese
Internet service provider as the standouts. Within health care, Winslow
Capital's longstanding overweight position represented the main driver of
relative performance, while stock selection also made a positive
contribution. The biopharmaceutical company Celgene Corp. and the health
insurance provider UnitedHealth Group, Inc. led the sector. Conversely,
stock selection in consumer discretionary and financials sectors detracted
from returns. Within the consumer discretionary sector, Winslow Capital's
position in the online travel company Priceline Group Inc. underperformed
primarily due to currency headwinds. Within financials, the credit card
company American Express Co. underperformed.
Thank you for your continued 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.
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4 | USAA AGGRESSIVE GROWTH FUND
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INVESTMENT OVERVIEW
USAA AGGRESSIVE GROWTH FUND SHARES (FUND SHARES) (Ticker Symbol: USAUX)
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1/31/15 7/31/14
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Net Assets $1.1 Billion $1.1 Billion
Net Asset Value Per Share $38.67 $40.90
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AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/15
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7/31/14 - 1/31/15* 1 YEAR 5 YEARS 10 YEARS
6.29% 11.16% 14.48% 6.66%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR 5 YEARS 10 YEARS
10.71% 13.91% 6.47%
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EXPENSE RATIO AS OF 7/31/14**
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0.93%
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 December 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]
RUSSELL 1000 GROWTH LIPPER LARGE-CAP USAA AGGRESSIVE GROWTH
INDEX GROWTH FUNDS INDEX FUND SHARES
01/31/2005 $10,000.00 $10,000.00 $10,000.00
02/28/2005 10,106.42 10,065.45 10,056.84
03/31/2005 9,922.29 9,882.09 9,907.64
04/30/2005 9,733.34 9,667.27 9,822.38
05/31/2005 10,204.26 10,203.85 10,255.77
06/30/2005 10,166.64 10,224.21 10,373.00
07/31/2005 10,663.54 10,738.32 10,749.56
08/31/2005 10,526.21 10,623.73 10,564.83
09/30/2005 10,574.68 10,750.91 10,714.03
10/31/2005 10,471.89 10,681.28 10,593.25
11/30/2005 10,923.71 11,170.18 11,072.82
12/31/2005 10,889.46 11,141.57 11,137.74
01/31/2006 11,080.63 11,445.37 11,429.16
02/28/2006 11,063.03 11,290.98 11,372.30
03/31/2006 11,226.38 11,399.85 11,468.25
04/30/2006 11,211.11 11,381.94 11,464.70
05/31/2006 10,831.11 10,850.96 10,974.27
06/30/2006 10,788.37 10,815.30 10,963.60
07/31/2006 10,582.89 10,538.40 10,618.88
08/31/2006 10,913.07 10,782.40 10,689.96
09/30/2006 11,212.94 11,014.89 10,928.07
10/31/2006 11,607.12 11,346.28 11,258.57
11/30/2006 11,837.45 11,605.51 11,528.67
12/31/2006 11,877.54 11,666.91 11,731.23
01/31/2007 12,182.86 11,968.03 12,278.53
02/28/2007 11,953.87 11,697.88 11,841.40
03/31/2007 12,018.70 11,785.91 11,798.76
04/30/2007 12,584.54 12,264.40 12,139.93
05/31/2007 13,037.27 12,679.72 12,609.03
06/30/2007 12,842.66 12,560.13 12,484.65
07/31/2007 12,643.56 12,400.76 12,338.94
08/31/2007 12,845.03 12,605.11 12,594.82
09/30/2007 13,383.11 13,374.03 13,476.17
10/31/2007 13,838.59 13,971.68 14,275.79
11/30/2007 13,328.82 13,402.07 13,550.80
12/31/2007 13,280.62 13,413.77 13,477.08
01/31/2008 12,245.04 12,265.94 12,326.38
02/29/2008 12,001.84 12,010.41 11,895.31
03/31/2008 11,928.77 11,908.21 11,653.06
04/30/2008 12,555.03 12,642.04 12,390.51
05/31/2008 13,015.22 12,987.21 12,590.01
06/30/2008 12,077.84 12,031.74 11,653.06
07/31/2008 11,848.21 11,794.33 11,535.50
08/31/2008 11,975.78 11,825.82 11,435.75
09/30/2008 10,588.93 10,309.99 10,181.73
10/31/2008 8,724.65 8,509.38 8,674.78
11/30/2008 8,030.79 7,655.76 7,755.64
12/31/2008 8,175.93 7,861.40 7,884.83
01/31/2009 7,782.63 7,455.02 7,256.77
02/28/2009 7,197.15 6,968.75 6,772.27
03/31/2009 7,839.11 7,567.61 7,228.06
04/30/2009 8,591.71 8,369.42 7,949.43
05/31/2009 9,017.62 8,827.62 8,494.94
06/30/2009 9,118.50 8,831.09 8,297.55
07/31/2009 9,766.15 9,496.54 8,911.26
08/31/2009 9,968.69 9,683.88 9,162.48
09/30/2009 10,392.72 10,148.94 9,560.85
10/31/2009 10,251.95 9,948.14 9,388.58
11/30/2009 10,881.75 10,548.18 10,084.83
12/31/2009 11,218.09 10,887.98 10,140.07
01/31/2010 10,728.58 10,317.54 9,696.69
02/28/2010 11,097.28 10,683.54 9,974.25
03/31/2010 11,739.17 11,354.58 10,677.17
04/30/2010 11,870.35 11,471.37 10,835.78
05/31/2010 10,964.15 10,549.83 10,049.95
06/30/2010 10,360.40 9,942.66 9,365.05
07/31/2010 11,099.43 10,617.03 9,934.60
08/31/2010 10,581.20 10,095.82 9,422.73
09/30/2010 11,707.57 11,178.02 10,565.42
10/31/2010 12,266.72 11,765.05 11,066.48
11/30/2010 12,409.18 11,882.79 11,199.85
12/31/2010 13,092.70 12,534.79 11,895.42
01/31/2011 13,425.89 12,782.13 12,162.25
02/28/2011 13,865.28 13,127.99 12,558.88
03/31/2011 13,882.21 13,134.60 12,641.81
04/30/2011 14,347.11 13,532.87 13,045.66
05/31/2011 14,190.92 13,368.17 12,829.31
06/30/2011 13,987.38 13,191.20 12,634.60
07/31/2011 13,847.18 13,120.62 12,465.13
08/31/2011 13,116.41 12,238.48 11,610.57
09/30/2011 12,149.93 11,170.44 10,600.95
10/31/2011 13,483.25 12,511.14 11,985.57
11/30/2011 13,481.95 12,357.17 11,819.70
12/31/2011 13,438.60 12,170.73 11,599.75
01/31/2012 14,240.78 13,004.99 12,461.53
02/29/2012 14,921.84 13,770.91 13,103.35
03/31/2012 15,412.64 14,257.53 13,604.55
04/30/2012 15,388.84 14,152.72 13,417.05
05/31/2012 14,401.70 13,067.63 12,299.27
06/30/2012 14,792.75 13,357.06 12,634.60
07/31/2012 14,991.05 13,377.72 12,652.63
08/31/2012 15,394.37 13,880.13 13,103.35
09/30/2012 15,696.27 14,220.95 13,370.18
10/31/2012 15,238.15 13,726.55 12,775.23
11/30/2012 15,493.32 14,031.96 13,092.54
12/31/2012 15,489.04 14,108.07 13,064.04
01/31/2013 16,152.89 14,717.03 13,655.14
02/28/2013 16,353.89 14,795.66 13,747.00
03/31/2013 16,967.38 15,260.89 14,226.26
04/30/2013 17,327.53 15,458.70 14,398.00
05/31/2013 17,649.43 15,866.08 14,845.32
06/30/2013 17,317.31 15,544.62 14,585.71
07/31/2013 18,235.50 16,516.53 15,352.54
08/31/2013 17,922.97 16,317.99 15,068.98
09/30/2013 18,721.68 17,250.94 15,875.74
10/31/2013 19,549.84 17,974.43 16,534.74
11/30/2013 20,101.33 18,511.67 17,053.94
12/31/2013 20,675.52 19,103.79 17,561.45
01/31/2014 20,086.10 18,647.76 17,149.27
02/28/2014 21,119.98 19,717.32 18,043.78
03/31/2014 20,906.99 19,082.54 17,504.44
04/30/2014 20,907.83 18,750.71 17,122.96
05/31/2014 21,559.42 19,431.48 17,802.61
06/30/2014 21,979.58 19,907.44 18,157.79
07/31/2014 21,643.13 19,701.23 17,934.16
08/31/2014 22,634.77 20,518.85 18,705.90
09/30/2014 22,306.42 20,161.02 18,482.27
10/31/2014 22,894.23 20,750.42 19,039.15
11/30/2014 23,619.71 21,273.10 19,674.96
12/31/2014 23,373.64 21,078.55 19,442.66
01/31/2015 23,015.72 20,735.48 19,063.08
[END CHART]
Data from 1/31/05 to 1/31/15.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Aggressive Growth Fund Shares to the following benchmarks:
o The unmanaged Russell 1000 Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
o The unmanaged Lipper Large-Cap Growth Funds Index tracks the total return
performance of the 30 largest funds within the Lipper Large-Cap Growth Funds
category.
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 AGGRESSIVE GROWTH FUND
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USAA AGGRESSIVE GROWTH FUND INSTITUTIONAL SHARES (INSTITUTIONAL SHARES)
(Ticker Symbol: UIAGX)
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1/31/15 7/31/14
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Net Assets $150.9 Million $119.1 Million
Net Asset Value Per Share $38.96 $41.22
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AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/15
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7/31/14 - 1/31/15* 1 YEAR 5 YEARS SINCE INCEPTION 8/01/08
6.39% 11.42% 14.88% 8.58%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR 5 YEARS SINCE INCEPTION 8/01/08
10.97% 14.32% 9.04%
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EXPENSE RATIO AS OF 7/31/14**
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0.68%
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 December 1, 2014, and
is calculated as a percentage of average net assets. This expense ratio may
differ from the expense ratio disclosed in the Financial Highlights, which
excludes acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions, if any. The
total returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on distributions (including
capital gains distributions), redemption of shares, or reinvested net investment
income.
The Institutional Shares are available for investment through a USAA
discretionary managed account program, and certain advisory programs sponsored
by financial intermediaries, such as brokerage firms, investment advisors,
financial planners, third-party administrators, and insurance companies.
Institutional Shares also are available to institutional investors, which
include retirement plans, endowments, foundations, and bank trusts, as well as
other persons or legal entities that the Fund may approve from time to time, or
for purchase by a USAA fund participating in a fund-of-funds investment strategy
(USAA fund-of-funds).
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INVESTMENT OVERVIEW | 7
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
USAA AGGRESSIVE GROWTH
RUSSELL 1000 GROWTH LIPPER LARGE-CAP FUND INSTITUTIONAL
INDEX GROWTH FUNDS INDEX SHARES
07/31/2008 $10,000.00 $10,000.00 $10,000.00
08/31/2008 10,107.67 10,026.70 10,012.48
09/30/2008 8,937.16 8,741.47 8,914.54
10/31/2008 7,363.69 7,214.80 7,595.13
11/30/2008 6,778.06 6,491.05 6,790.39
12/31/2008 6,900.56 6,665.41 6,909.17
01/31/2009 6,568.61 6,320.85 6,357.57
02/28/2009 6,074.46 5,908.55 5,938.36
03/31/2009 6,616.28 6,416.31 6,341.81
04/30/2009 7,251.48 7,096.14 6,978.52
05/31/2009 7,610.95 7,484.63 7,460.77
06/30/2009 7,696.10 7,487.57 7,290.56
07/31/2009 8,242.73 8,051.78 7,832.71
08/31/2009 8,413.67 8,210.62 8,056.50
09/30/2009 8,771.55 8,604.93 8,409.52
10/31/2009 8,652.74 8,434.67 8,261.38
11/30/2009 9,184.30 8,943.43 8,879.17
12/31/2009 9,468.18 9,231.53 8,926.20
01/31/2010 9,055.02 8,747.88 8,538.24
02/28/2010 9,366.21 9,058.20 8,789.46
03/31/2010 9,907.97 9,627.15 9,412.73
04/30/2010 10,018.69 9,726.17 9,552.65
05/31/2010 9,253.84 8,944.83 8,865.78
06/30/2010 8,744.28 8,430.03 8,264.76
07/31/2010 9,368.02 9,001.80 8,770.38
08/31/2010 8,930.63 8,559.89 8,318.82
09/30/2010 9,881.30 9,477.45 9,330.05
10/31/2010 10,353.23 9,975.17 9,778.43
11/30/2010 10,473.47 10,075.00 9,899.27
12/31/2010 11,050.36 10,627.81 10,517.15
01/31/2011 11,331.58 10,837.52 10,759.87
02/28/2011 11,702.43 11,130.76 11,114.38
03/31/2011 11,716.72 11,136.36 11,191.03
04/30/2011 12,109.10 11,474.04 11,548.74
05/31/2011 11,977.27 11,334.40 11,363.50
06/30/2011 11,805.49 11,184.35 11,194.23
07/31/2011 11,687.16 11,124.51 11,050.51
08/31/2011 11,070.37 10,376.57 10,296.77
09/30/2011 10,254.66 9,471.02 9,405.71
10/31/2011 11,380.00 10,607.76 10,635.32
11/30/2011 11,378.90 10,477.21 10,491.60
12/31/2011 11,342.31 10,319.13 10,299.97
01/31/2012 12,019.35 11,026.47 11,066.48
02/29/2012 12,594.17 11,675.87 11,641.36
03/31/2012 13,008.42 12,088.46 12,091.68
04/30/2012 12,988.33 11,999.59 11,928.80
05/31/2012 12,155.17 11,079.58 10,938.73
06/30/2012 12,485.22 11,324.98 11,238.94
07/31/2012 12,652.59 11,342.50 11,261.30
08/31/2012 12,992.99 11,768.47 11,666.91
09/30/2012 13,247.80 12,057.45 11,909.64
10/31/2012 12,861.15 11,638.25 11,382.66
11/30/2012 13,076.51 11,897.21 11,670.10
12/31/2012 13,072.90 11,961.73 11,647.13
01/31/2013 13,633.19 12,478.05 12,179.13
02/28/2013 13,802.84 12,544.72 12,264.25
03/31/2013 14,320.63 12,939.17 12,696.94
04/30/2013 14,624.61 13,106.88 12,852.99
05/31/2013 14,896.29 13,452.29 13,257.30
06/30/2013 14,615.98 13,179.73 13,026.77
07/31/2013 15,390.94 14,003.78 13,714.82
08/31/2013 15,127.16 13,835.45 13,466.56
09/30/2013 15,801.28 14,626.46 14,190.07
10/31/2013 16,500.26 15,239.89 14,782.36
11/30/2013 16,965.71 15,695.40 15,246.97
12/31/2013 17,450.34 16,197.44 15,704.57
01/31/2014 16,952.86 15,810.78 15,334.46
02/28/2014 17,825.47 16,717.63 16,137.02
03/31/2014 17,645.70 16,179.41 15,657.82
04/30/2014 17,646.42 15,898.07 15,318.88
05/31/2014 18,196.36 16,475.27 15,930.54
06/30/2014 18,550.98 16,878.82 16,253.90
07/31/2014 18,267.01 16,703.98 16,059.10
08/31/2014 19,103.97 17,397.21 16,756.48
09/30/2014 18,826.84 17,093.82 16,553.89
10/31/2014 19,322.96 17,593.55 17,060.36
11/30/2014 19,935.27 18,036.71 17,633.07
12/31/2014 19,727.58 17,871.76 17,427.74
01/31/2015 19,425.49 17,580.88 17,085.66
[END CHART]
Data from 7/31/08 to 1/31/15.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Aggressive Growth Fund Institutional Shares to the Fund's benchmarks listed
above (see page 6 for benchmark definitions).
*The performance of the Russell 1000 Growth Index and the Lipper Large-Cap
Growth Funds Index is calculated from the end of the month, July 31, 2008, while
the inception date of the Institutional Shares is August 1, 2008. There may be a
slight variation of performance numbers because of this difference.
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.
================================================================================
8 | USAA AGGRESSIVE GROWTH FUND
================================================================================
o TOP 10 HOLDINGS - 1/31/15 o
(% of Net Assets)
Apple, Inc. ............................................ 6.6%
Visa, Inc. "A" ......................................... 2.8%
Gilead Sciences, Inc. .................................. 2.4%
Celgene Corp. .......................................... 2.3%
Union Pacific Corp. .................................... 2.1%
Microsoft Corp. ........................................ 2.0%
Facebook, Inc. "A" ..................................... 1.9%
Google, Inc. "C" ....................................... 1.9%
Biogen Idec, Inc. ...................................... 1.8%
Oracle Corp. ........................................... 1.7%
o ASSET ALLOCATION - 1/31/15 o
[PIE CHART OF ASSET ALLOCATION]
Information Technology ................................... 36.9%
Health Care .............................................. 20.6%
Consumer Discretionary ................................... 17.9%
Industrials .............................................. 8.1%
Consumer Staples ......................................... 5.4%
Financials ............................................... 4.4%
Materials ................................................ 2.9%
Telecommunication Services ............................... 2.1%
Energy ................................................... 0.8%
Money Market Instruments ................................. 1.1%
[END CHART]
Percentages are of the net assets of the Fund and may not equal 100%.
You will find a complete list of securities that the Fund owns on pages 10-17.
================================================================================
INVESTMENT OVERVIEW | 9
================================================================================
PORTFOLIO OF INVESTMENTS
January 31, 2015 (unaudited)
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
COMMON STOCKS (99.1%)
CONSUMER DISCRETIONARY (17.9%)
------------------------------
APPAREL RETAIL (0.5%)
99,003 TJX Companies, Inc. $ 6,528
----------
APPAREL, ACCESSORIES & LUXURY GOODS (0.3%)
57,800 Under Armour, Inc. "A"* 4,166
----------
AUTOMOBILE MANUFACTURERS (0.4%)
25,700 Tesla Motors, Inc.* 5,233
----------
AUTOMOTIVE RETAIL (1.0%)
43,431 Advance Auto Parts, Inc. 6,905
35,619 O'Reilly Automotive, Inc.* 6,674
----------
13,579
----------
BROADCASTING (0.3%)
33,252 Discovery Communications, Inc. "A"* 964
37,458 Scripps Networks Interactive "A" 2,663
----------
3,627
----------
CABLE & SATELLITE (2.4%)
336,035 Comcast Corp. "A" 17,858
48,542 DIRECTV* 4,140
210,700 Liberty Global plc "C"* 9,606
----------
31,604
----------
CASINOS & GAMING (0.3%)
100,900 MGM Resorts International* 1,965
14,801 Wynn Resorts Ltd. 2,190
----------
4,155
----------
FOOTWEAR (1.0%)
143,500 NIKE, Inc. "B" 13,238
----------
GENERAL MERCHANDISE STORES (0.6%)
124,600 Dollar General Corp.* 8,356
----------
HOME IMPROVEMENT RETAIL (1.9%)
167,362 Home Depot, Inc. 17,476
102,297 Lowe's Companies, Inc. 6,932
----------
24,408
----------
================================================================================
10 | USAA AGGRESSIVE GROWTH FUND
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
HOMEBUILDING (0.4%)
225,810 PulteGroup, Inc. $ 4,649
----------
HOTELS, RESORTS & CRUISE LINES (1.4%)
450,500 Hilton Worldwide Holdings, Inc.* 11,700
71,166 Wyndham Worldwide Corp. 5,963
----------
17,663
----------
INTERNET RETAIL (2.9%)
55,768 Amazon.com, Inc.* 19,771
37,529 Expedia, Inc. 3,225
14,562 Priceline Group, Inc.* 14,700
----------
37,696
----------
MOVIES & ENTERTAINMENT (1.8%)
408,520 Twenty-First Century Fox, Inc. "A" 13,546
100,900 Walt Disney Co. 9,178
----------
22,724
----------
RESTAURANTS (2.0%)
16,682 Chipotle Mexican Grill, Inc.* 11,841
160,400 Starbucks Corp. 14,040
----------
25,881
----------
SPECIALTY STORES (0.7%)
65,200 Ulta Salon, Cosmetics & Fragrance, Inc.* 8,603
----------
Total Consumer Discretionary 232,110
----------
CONSUMER STAPLES (5.4%)
-----------------------
BREWERS (0.6%)
58,598 Anheuser-Busch InBev N.V. ADR 7,153
----------
DRUG RETAIL (1.3%)
175,629 CVS Health Corp. 17,240
----------
FOOD DISTRIBUTORS (0.1%)
27,385 Sysco Corp. 1,073
----------
FOOD RETAIL (0.6%)
147,900 Whole Foods Market, Inc. 7,705
----------
HOUSEHOLD PRODUCTS (0.1%)
23,424 Colgate-Palmolive Co. 1,582
----------
HYPERMARKETS & SUPER CENTERS (1.2%)
105,458 Costco Wholesale Corp. 15,079
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
PACKAGED FOODS & MEAT (0.6%)
12,272 Keurig Green Mountain, Inc. $ 1,504
186,894 Mondelez International, Inc. "A" 6,586
----------
8,090
----------
SOFT DRINKS (0.4%)
47,654 Monster Beverage Corp.* 5,573
----------
TOBACCO (0.5%)
74,754 Philip Morris International, Inc. 5,998
----------
Total Consumer Staples 69,493
----------
ENERGY (0.8%)
-------------
OIL & GAS EQUIPMENT & SERVICES (0.3%)
63,622 Baker Hughes, Inc. 3,689
----------
OIL & GAS EXPLORATION & PRODUCTION (0.5%)
97,866 Cabot Oil & Gas Corp. 2,593
58,429 Devon Energy Corp. 3,522
----------
6,115
----------
Total Energy 9,804
----------
FINANCIALS (4.4%)
-----------------
ASSET MANAGEMENT & CUSTODY BANKS (0.7%)
21,160 BlackRock, Inc. 7,205
39,834 Waddell & Reed Financial, Inc. "A" 1,781
----------
8,986
----------
CONSUMER FINANCE (1.1%)
174,984 American Express Co. 14,119
----------
DIVERSIFIED BANKS (0.5%)
332,295 Bank of America Corp. 5,034
23,080 JPMorgan Chase & Co. 1,255
----------
6,289
----------
INVESTMENT BANKING & BROKERAGE (0.6%)
225,900 Morgan Stanley 7,638
----------
MULTI-LINE INSURANCE (0.1%)
13,343 American International Group, Inc. 652
----------
REITs - SPECIALIZED (1.2%)
121,500 American Tower Corp. 11,780
21,506 Public Storage 4,319
----------
16,099
----------
================================================================================
12 | USAA AGGRESSIVE GROWTH FUND
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
SPECIALIZED FINANCE (0.2%)
16,381 Intercontinental Exchange, Inc. $ 3,370
-----------
Total Financials 57,153
-----------
HEALTH CARE (20.6%)
-------------------
BIOTECHNOLOGY (10.0%)
47,180 Alexion Pharmaceuticals, Inc.* 8,645
138,517 Amgen, Inc. 21,091
60,080 Biogen Idec, Inc.* 23,381
252,268 Celgene Corp.* 30,060
290,137 Gilead Sciences, Inc.* 30,415
141,838 Vertex Pharmaceuticals, Inc.* 15,622
-----------
129,214
-----------
HEALTH CARE DISTRIBUTORS (1.3%)
78,430 McKesson Corp. 16,678
-----------
HEALTH CARE EQUIPMENT (2.0%)
44,709 Becton, Dickinson & Co. 6,173
45,211 C.R. Bard, Inc. 7,732
104,605 Medtronic plc 7,469
46,625 Zimmer Holdings, Inc. 5,227
-----------
26,601
-----------
HEALTH CARE FACILITIES (0.2%)
30,091 HCA Holdings, Inc.* 2,130
-----------
HEALTH CARE SERVICES (0.5%)
174,900 Envision Healthcare Holdings, Inc.* 6,013
-----------
HEALTH CARE TECHNOLOGY (0.6%)
127,700 Cerner Corp.* 8,473
-----------
LIFE SCIENCES TOOLS & SERVICES (0.2%)
56,777 Agilent Technologies, Inc. 2,145
-----------
MANAGED HEALTH CARE (1.7%)
82,856 Aetna, Inc. 7,608
17,056 Anthem, Inc. 2,302
119,200 UnitedHealth Group, Inc. 12,665
-----------
22,575
-----------
PHARMACEUTICALS (4.1%)
105,600 AbbVie, Inc. 6,373
7,278 Actavis plc* 1,940
54,355 AstraZeneca plc ADR 3,861
106,923 Bristol-Myers Squibb Co. 6,444
134,818 Eli Lilly and Co. 9,707
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
71,556 Johnson & Johnson $ 7,166
112,687 Merck & Co., Inc. 6,793
17,121 Salix Pharmaceuticals Ltd.* 2,306
19,100 Valeant Pharmaceuticals International, Inc.* 3,055
143,900 Zoetis, Inc. 6,149
----------
53,794
----------
Total Health Care 267,623
----------
INDUSTRIALS (8.1%)
------------------
AEROSPACE & DEFENSE (2.1%)
52,375 Boeing Co. 7,614
204,516 Honeywell International, Inc. 19,993
----------
27,607
----------
AIR FREIGHT & LOGISTICS (0.6%)
78,718 United Parcel Service, Inc. "B" 7,780
----------
AIRLINES (0.9%)
259,900 Delta Air Lines, Inc. 12,296
----------
ELECTRICAL COMPONENTS & EQUIPMENT (0.2%)
24,137 Rockwell Automation, Inc. 2,629
----------
INDUSTRIAL CONGLOMERATES (1.3%)
23,622 3M Co. 3,834
152,404 Danaher Corp. 12,555
----------
16,389
----------
INDUSTRIAL MACHINERY (0.3%)
40,720 Illinois Tool Works, Inc. 3,791
----------
RAILROADS (2.1%)
232,600 Union Pacific Corp. 27,263
----------
RESEARCH & CONSULTING SERVICES (0.6%)
169,300 Nielsen N.V. 7,375
----------
Total Industrials 105,130
----------
INFORMATION TECHNOLOGY (36.9%)
------------------------------
APPLICATION SOFTWARE (2.6%)
137,500 Adobe Systems, Inc.* 9,643
1,710 FactSet Research Systems, Inc. 246
69,686 Intuit, Inc. 6,050
76,600 Mobileye N.V.* 3,017
125,200 Salesforce.com, Inc.* 7,068
58,500 Splunk, Inc.* 3,021
60,300 Workday, Inc. "A"* 4,791
----------
33,836
----------
================================================================================
14 | USAA AGGRESSIVE GROWTH FUND
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (2.5%)
163,030 Brocade Communications Systems, Inc. $ 1,813
468,441 Cisco Systems, Inc. 12,350
70,515 F5 Networks, Inc.* 7,871
173,902 QUALCOMM, Inc. 10,862
----------
32,896
----------
DATA PROCESSING & OUTSOURCED SERVICES (4.4%)
11,111 Alliance Data Systems Corp.* 3,209
149,600 MasterCard, Inc. "A" 12,272
120,253 Paychex, Inc. 5,443
143,738 Visa, Inc. "A" 36,640
----------
57,564
----------
HOME ENTERTAINMENT SOFTWARE (0.3%)
160,790 Activision Blizzard, Inc. 3,360
----------
INTERNET SOFTWARE & SERVICES (8.9%)
138,000 Alibaba Group Holding Ltd. ADR* 12,293
51,340 Baidu, Inc. ADR* 11,188
34,660 CoStar Group, Inc.* 6,395
162,500 eBay, Inc.* 8,613
330,666 Facebook, Inc. "A"* 25,101
24,800 Google, Inc. "A"* 13,331
46,780 Google, Inc. "C"* 25,005
16,184 IAC/InterActiveCorp. 986
57,100 LinkedIn Corp. "A"* 12,833
----------
115,745
----------
IT CONSULTING & OTHER SERVICES (0.7%)
166,600 Cognizant Technology Solutions Corp. "A"* 9,018
----------
SEMICONDUCTOR EQUIPMENT (0.8%)
322,300 Applied Materials, Inc. 7,361
39,249 KLA-Tencor Corp. 2,413
----------
9,774
----------
SEMICONDUCTORS (4.3%)
299,795 Altera Corp. 9,871
157,200 ARM Holdings plc ADR 7,363
152,280 Broadcom Corp. "A" 6,462
112,024 Intel Corp. 3,701
86,032 Linear Technology Corp. 3,866
85,506 Marvell Technology Group Ltd. 1,325
172,378 Maxim Integrated Products, Inc. 5,704
73,779 Microchip Technology, Inc. 3,328
46,903 Skyworks Solutions, Inc. 3,895
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
133,100 Texas Instruments, Inc. $ 7,114
64,577 Xilinx, Inc. 2,491
----------
55,120
----------
SYSTEMS SOFTWARE (4.7%)
89,187 Check Point Software Technologies Ltd.* 6,883
631,106 Microsoft Corp. 25,497
515,957 Oracle Corp. 21,613
96,200 Servicenow, Inc.* 7,013
----------
61,006
----------
TECHNOLOGY HARDWARE, STORAGE, & PERIPHERALS (7.7%)
732,330 Apple, Inc. 85,800
177,254 NetApp, Inc. 6,700
23,068 SanDisk Corp. 1,751
59,771 Western Digital Corp. 5,811
----------
100,062
----------
Total Information Technology 478,381
----------
MATERIALS (2.9%)
----------------
FERTILIZERS & AGRICULTURAL CHEMICALS (1.2%)
134,500 Monsanto Co. 15,868
----------
SPECIALTY CHEMICALS (1.7%)
66,100 Ecolab, Inc. 6,859
32,510 PPG Industries, Inc. 7,246
27,778 Sherwin-Williams Co. 7,536
----------
21,641
----------
Total Materials 37,509
----------
TELECOMMUNICATION SERVICES (2.1%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (1.2%)
350,745 Verizon Communications, Inc. 16,033
----------
WIRELESS TELECOMMUNICATION SERVICES (0.9%)
101,700 SBA Communications Corp. "A"* 11,868
----------
Total Telecommunication Services 27,901
----------
Total Common Stocks (cost: $897,533) 1,285,104
----------
MONEY MARKET INSTRUMENTS (1.1%)
MONEY MARKET FUNDS (1.1%)
14,804,104 State Street Institutional Liquid Reserves Fund Premier Class, 0.09%(a) 14,804
----------
Total Money Market Instruments (cost: $14,804) 14,804
----------
TOTAL INVESTMENTS (COST: $912,337) $1,299,908
==========
================================================================================
16 | USAA AGGRESSIVE GROWTH FUND
================================================================================
---------------------------------------------------------------------------------------------------
($ in 000s) VALUATION HIERARCHY
---------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
---------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $1,285,104 $- $- $1,285,104
Money Market Instruments:
Money Market Funds 14,804 - - 14,804
---------------------------------------------------------------------------------------------------
Total $1,299,908 $- $- $1,299,908
---------------------------------------------------------------------------------------------------
For the period of August 1, 2014, through January 31, 2015, 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 | 17
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
January 31, 2015 (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 PORTFOLIO ABBREVIATION(S) AND DESCRIPTION(S)
ADR - American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in
U.S. dollars.
REIT - Real estate investment trust
o SPECIFIC NOTES
(a) Rate represents the money market fund annualized seven-day yield at
January 31, 2015.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
18 | USAA AGGRESSIVE GROWTH FUND
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
January 31, 2015 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $912,337) $1,299,908
Receivables:
Capital shares sold 938
Dividends and interest 650
Securities sold 19,822
Other 131
----------
Total assets 1,321,449
----------
LIABILITIES
Payables:
Securities purchased 23,269
Capital shares redeemed 517
Accrued management fees 469
Accrued transfer agent's fees 23
Other accrued expenses and payables 67
----------
Total liabilities 24,345
----------
Net assets applicable to capital shares outstanding $1,297,104
==========
NET ASSETS CONSIST OF:
Paid-in capital $ 919,892
Accumulated overdistribution of net investment income (23,630)
Accumulated net realized gain on investments 13,271
Net unrealized appreciation of investments 387,571
----------
Net assets applicable to capital shares outstanding $1,297,104
==========
Net asset value, redemption price, and offering price per share:
Fund Shares (net assets of $1,146,204/29,639 shares outstanding) $ 38.67
==========
Institutional Shares (net assets of $150,900/3,872 shares outstanding) $ 38.97
==========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 19
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended January 31, 2015 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $36) $ 8,129
Interest 4
----------
Total income 8,133
----------
EXPENSES
Management fees 2,722
Administration and servicing fees:
Fund Shares 1,433
Institutional Shares 70
Transfer agent's fees:
Fund Shares 1,005
Institutional Shares 70
Custody and accounting fees:
Fund Shares 92
Institutional Shares 11
Postage:
Fund Shares 63
Shareholder reporting fees:
Fund Shares 30
Trustees' fees 12
Registration fees:
Fund Shares 14
Institutional Shares 11
Professional fees 59
Other 11
----------
Total expenses 5,603
Expenses paid indirectly:
Fund Shares (30)
Institutional Shares (4)
----------
Net expenses 5,569
----------
NET INVESTMENT INCOME 2,564
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain 34,114
Change in net unrealized appreciation/depreciation 40,333
----------
Net realized and unrealized gain 74,447
----------
Increase in net assets resulting from operations $ 77,011
==========
See accompanying notes to financial statements.
================================================================================
20 | USAA AGGRESSIVE GROWTH FUND
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended January 31, 2015 (unaudited), and year ended
July 31, 2014
---------------------------------------------------------------------------------------------------
1/31/2015 7/31/2014
---------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 2,564 $ 2,359
Net realized gain on investments 34,114 163,003
Change in net unrealized appreciation/depreciation
of investments 40,333 20,147
--------------------------
Increase in net assets resulting from operations 77,011 185,509
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Fund Shares (22,980) (24,842)
Institutional Shares (3,308) (2,596)
--------------------------
Total distributions of net investment income (26,288) (27,438)
--------------------------
Net realized gains:
Fund Shares (108,265) (75,792)
Institutional Shares (13,990) (7,525)
--------------------------
Total distributions of net realized gains (122,255) (83,317)
--------------------------
Distributions to shareholders (148,543) (110,755)
--------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 5)
Fund Shares 115,009 16,872
Institutional Shares 40,780 (53,800)
--------------------------
Total net increase (decrease) in net assets from
capital share transactions 155,789 (36,928)
--------------------------
Net increase in net assets 84,257 37,826
NET ASSETS
Beginning of period 1,212,847 1,175,021
--------------------------
End of period $1,297,104 $1,212,847
==========================
Accumulated undistributed (overdistribution of) net
investment income:
End of period $ (23,630) $ 94
==========================
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 21
================================================================================
NOTES TO FINANCIAL STATEMENTS
January 31, 2015 (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.
Additionally, the Fund qualifies as a registered investment company under
Accounting Standards Codification Topic 946. The information presented in this
semiannual report pertains only to the USAA Aggressive Growth Fund (the Fund),
which is classified as diversified under the 1940 Act. The Fund's investment
objective is to seek capital appreciation.
The Fund consists of two classes of shares: Aggressive Growth Fund Shares (Fund
Shares) and Aggressive Growth Fund Institutional Shares (Institutional Shares).
Each class of shares has equal rights to assets and earnings, except that each
class bears certain class-related expenses specific to the particular class.
These expenses include administration and servicing fees, transfer agent fees,
postage, shareholder reporting fees, and certain registration and custodian
fees. Expenses not attributable to a specific class, income, and realized gains
or losses on investments are allocated to each class of shares based on each
class's relative net assets. Each class has exclusive voting rights on matters
related solely to that class and separate voting rights on matters that relate
to both classes. The Institutional Shares are available for investment through a
USAA discretionary managed account program, and certain advisory programs
sponsored by financial intermediaries, such as brokerage firms, investment
advisors, financial planners, third-party administrators, and insurance
companies. Institutional Shares also are available to institutional investors,
which include retirement plans, endowments, foundations, and bank trusts, as
well as other persons or legal entities that the Fund may approve from time to
================================================================================
22 | USAA AGGRESSIVE GROWTH FUND
================================================================================
time, or for purchase by a USAA fund participating in a fund-of-funds investment
strategy (USAA fund-of-funds).
A. SECURITY VALUATION - The Trust's Board of Trustees (the Board) has
established the Valuation Committee (the Committee), and subject to Board
oversight, the Committee administers and oversees the Fund's valuation
policies and procedures which are approved by the Board. Among other
things, these policies and procedures allow the Fund to utilize independent
pricing services, quotations from securities dealers, and a wide variety of
sources and information to establish and adjust the fair value of securities
as events occur and circumstances warrant.
The Committee reports to the Board on a quarterly basis and makes
recommendations to the Board as to pricing methodologies and services used
by the Fund and presents additional information to the Board regarding
application of the pricing and fair valuation policies and procedures during
the preceding quarter.
The Committee meets as often as necessary to make pricing and fair value
determinations. In addition, the Committee holds regular monthly meetings to
review prior actions taken by the Committee and USAA Asset Management
Company (the Manager). Among other things, these monthly meetings include a
review and analysis of back testing reports, pricing service quotation
comparisons, illiquid securities and fair value determinations, pricing
movements, and daily stale price monitoring.
The value of each security is determined (as of the close of trading on
the New York Stock Exchange (NYSE) on each business day the NYSE is open) as
set forth below:
1. Equity securities, including exchange-traded funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities exchange or
the Nasdaq over-the-counter markets, are valued at the last sales price
or official closing price on the exchange or primary market on which
they trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according to
local market convention, available at the time the Fund is valued. If no
================================================================================
NOTES TO FINANCIAL STATEMENTS | 23
================================================================================
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 and the Fund's subadviser(s),
if applicable, will monitor for events that would materially affect the
value of the Fund's foreign securities. The Fund's subadviser(s) have
agreed to notify the Manager of significant events they identify that
would materially affect the value of the Fund's foreign securities. If
the Manager determines that a particular event would materially affect
the value of the Fund's foreign securities, then the Manager, under
valuation procedures approved by the Board, will consider such available
information that it deems relevant to determine a fair value for the
affected foreign securities. In addition, the Fund may use information
from an external vendor or other sources to adjust the foreign market
closing prices of foreign equity securities to reflect what the Fund
believes to be the fair value of the securities as of the close of the
NYSE. Fair valuation of affected foreign equity securities may occur
frequently based on an assessment that events that occur on a fairly
regular basis (such as U.S. market movements) are significant.
3. Investments in open-end investment companies, hedge, or other
funds, other than ETFs, are valued at their NAV at the end of each
business day.
4. Debt securities purchased with original or remaining maturities
of 60 days or less may be valued at amortized cost, which approximates
market value.
================================================================================
24 | USAA AGGRESSIVE GROWTH FUND
================================================================================
5. Repurchase agreements are valued at cost, which approximates market
value.
6. Securities for which market quotations are not readily available
or are considered unreliable, or whose values have been materially
affected by events occurring after the close of their primary markets
but before the pricing of the Fund, are valued in good faith at fair
value, using methods determined by the Manager in consultation with the
Fund's subadviser(s), if applicable, under valuation procedures approved
by the Board. The effect of fair value pricing is that securities may
not be priced on the basis of quotations from the primary market in
which they are traded and the actual price realized from the sale of a
security may differ materially from the fair value price. Valuing these
securities at fair value is intended to cause the Fund's NAV to be more
reliable than it otherwise would be.
Fair value methods used by the Manager include, but are not
limited to, obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any restrictions
on disposition of the securities, and an evaluation of the forces that
influenced the market in which the securities are purchased and sold.
B. FAIR VALUE MEASUREMENTS - Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments is
based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted)
in active markets for identical securities.
Level 2 - inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
================================================================================
NOTES TO FINANCIAL STATEMENTS | 25
================================================================================
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices.
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 on short-term
securities are amortized on a straight-line basis over the life of the
respective securities.
E. FOREIGN CURRENCY TRANSLATIONS - The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency. Since
the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the
exchange rate obtained from an independent pricing service on the
respective dates of such transactions.
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
================================================================================
26 | USAA AGGRESSIVE GROWTH FUND
================================================================================
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Separately, net realized foreign currency gains/losses may arise from
sales of foreign currency, currency gains/losses realized between the trade
and settlement dates on security transactions, and from the difference
between amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the amounts
received. At the end of the Fund's fiscal year, these net realized foreign
currency gains/losses are reclassified from accumulated net realized
gain/loss to accumulated undistributed net investment income on the
statement of assets and liabilities as such amounts are treated as ordinary
income/loss for tax purposes. Net unrealized foreign currency exchange
gains/losses arise from changes in the value of assets and liabilities,
other than investments in securities, resulting from changes in the exchange
rate.
F. EXPENSES PAID INDIRECTLY - A portion of the brokerage commissions that
the Fund pays may be recaptured as a credit that is tracked and used by the
custodian to directly reduce expenses paid by the Fund. In addition, through
arrangements with the Fund's custodian and other banks utilized by the Fund
for cash management purposes, realized credits, if any, generated from cash
balances in the Fund's bank accounts may be used to directly reduce the
Fund's expenses. For the six-month period ended January 31, 2015, brokerage
commission recapture credits reduced the expenses of the Fund Shares and
Institutional Shares by $30,000 and $4,000, respectively. For the six-month
period ended January 31, 2015 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,
================================================================================
NOTES TO FINANCIAL STATEMENTS | 27
================================================================================
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 January 31, 2015, the Fund paid CAPCO facility
fees of $3,000, which represents 1.9% of the total fees paid to CAPCO by the
USAA Funds. The Fund had no borrowings under this agreement during the six-month
period ended January 31, 2015.
(3) DISTRIBUTIONS
The tax basis of distributions and accumulated undistributed net investment
income will be determined based upon the Fund's tax year-end of July 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.
================================================================================
28 | USAA AGGRESSIVE GROWTH FUND
================================================================================
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 July 31, 2014, the Fund had no capital loss carryforwards, for federal income
tax purposes.
For the six-month period ended January 31, 2015, the Fund did not incur any
income tax, interest, or penalties, and has recorded no liability for net
unrecognized tax benefits relating to uncertain income tax positions. On an
ongoing basis, the Manager will monitor its tax positions to determine if
adjustments to this conclusion are necessary. The statute of limitations on the
Fund's tax return filings generally remain open for the three preceding fiscal
reporting year ends and remain subject to examination by the Internal Revenue
Service and state taxing authorities.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended January 31, 2015, were
$333,486,000 and $329,687,000, respectively.
As of January 31, 2015, 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 January 31,
2015, were $398,186,000 and $10,615,000, respectively, resulting in net
unrealized appreciation of $387,571,000.
(5) CAPITAL SHARE TRANSACTIONS
At January 31, 2015, there were an unlimited number of shares of capital stock
at no par value authorized for the Fund.
Capital share transactions for the Institutional Shares resulted from purchases
and sales by the affiliated USAA fund-of-funds as well as other persons or
================================================================================
NOTES TO FINANCIAL STATEMENTS | 29
================================================================================
legal entities that the Fund may approve from time to time. Capital share
transactions for all classes were as follows, in thousands:
SIX-MONTH
PERIOD ENDED YEAR ENDED
JANUARY 31, 2015 JULY 31, 2014
---------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------
FUND SHARES:
Shares sold 1,453 $ 59,793 3,180 $ 127,591
Shares issued from
reinvested dividends 3,239 129,499 2,522 99,431
Shares redeemed (1,795) (74,283) (5,234) (210,150)
-----------------------------------------------
Net increase from
capital share transactions 2,897 $115,009 468 $ 16,872
===============================================
INSTITUTIONAL SHARES:
Shares sold 779 $ 32,929 389 $ 15,679
Shares issued from
reinvested dividends 429 17,298 255 10,121
Shares redeemed (224) (9,447) (2,025) (79,600)
-----------------------------------------------
Net increase (decrease) from
capital share transactions 984 $ 40,780 (1,381) $ (53,800)
===============================================
(6) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES - The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and affairs of the Fund.
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.
================================================================================
30 | USAA AGGRESSIVE GROWTH FUND
================================================================================
The investment management fee for the Fund is comprised of a base fee and a
performance adjustment. The Fund's base fee, which is accrued daily and paid
monthly, is computed as a percentage of the Fund's average net assets at
annualized rates of 0.50% of the first $750 million of average net assets,
0.40% of that portion of average net assets over $750 million but not over
$1.5 billion, and 0.33% of that portion of average net assets over $1.5
billion. For the six-month period ended January 31, 2015, the Fund's
effective annualized base fee was 0.46% of the Fund's average net assets for
the same period.
The performance adjustment is calculated separately for each share class on
a monthly basis by comparing each class's performance to that of the Lipper
Large-Cap Growth Funds Index over the performance period. The Lipper
Large-Cap Growth Funds Index tracks the total return performance of the 30
largest funds in the Lipper Large-Cap Growth 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
RELATIVE TO INDEX ANNUAL ADJUSTMENT RATE
(IN BASIS POINTS)(1) (IN BASIS POINTS)(1)
--------------------------------------------------------------------------------
+/- 100 to 400 +/- 4
+/- 401 to 700 +/- 5
+/- 701 and greater +/- 6
(1)Based on the difference between average annual performance of the relevant
share class of the Fund and its relevant index, rounded to the nearest basis
point. Average net assets of the share class are calculated over a rolling
36-month period.
Each class's annual performance adjustment rate is multiplied by the average
net assets of each respective class 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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 31
================================================================================
Under the performance fee arrangement, each class will pay a positive
performance fee adjustment for a performance period whenever the class
outperforms the Lipper Large-Cap Growth Funds Index over that period, even
if the class had overall negative returns during the performance period.
For the six-month period ended January 31, 2015, the Fund incurred total
management fees, paid or payable to the Manager, of $2,722,000, which
included a performance adjustment for the Fund Shares and Institutional
Shares of $(208,000) and $(21,000), respectively. For the Fund Shares and
Institutional Shares, the performance adjustments were (0.04)% and (0.03)%,
respectively.
B. SUBADVISORY ARRANGEMENT(S) - The Manager has entered into investment
subadvisory agreements with Wellington Management Company, LLP (Wellington
Management) and Winslow Capital Management, LLC (Winslow Capital), under
which Wellington Management and Winslow Capital direct the investment and
reinvestment of the Fund's assets (as allocated from time to time by the
Manager).
The Manager (not the Fund) pays Wellington Management a subadvisory fee
in the annual amount of 0.325% on the first $300 million, 0.30% on the next
$700 million, and 0.28% on assets over $1 billion of the portion of the
Fund's average net assets that Wellington Management manages. For the
six-month period ended January 31, 2015, the Manager incurred subadvisory
fees, paid or payable to Wellington Management, of $944,000.
The Manager (not the Fund) pays Winslow Capital a subadvisory fee in the
annual amount of 0.40% on the first $100 million, 0.35% on the next $250
million, 0.30% on the next $250 million, and 0.25% on the next $400 million
of the portion of the Fund's average net assets that Winslow Capital
manages. For the six-month period ended January 31, 2015, the Manager
incurred subadvisory fees, paid or payable to Winslow Capital, of
$1,119,000.
C. ADMINISTRATION AND SERVICING FEES - The Manager provides certain
administration and servicing functions for the Fund. For such services,
================================================================================
32 | USAA AGGRESSIVE GROWTH FUND
================================================================================
the Manager receives a fee accrued daily and paid monthly at an
annualized rate of 0.25% and 0.10% of average net assets of the Fund Shares
and Institutional Shares, respectively. For the six-month period ended
January 31, 2015, the Fund Shares and Institutional Shares incurred
administration and servicing fees, paid or payable to the Manager, of
$1,433,000 and $70,000, respectively.
In addition to the services provided under its Administration and
Servicing Agreement with the Fund, the Manager also provides certain
compliance and legal services for the benefit of the Fund. The Board has
approved the reimbursement of a portion of these expenses incurred by the
Manager. For the six-month period ended January 31, 2015, 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.
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. Transfer agent's fees for Fund Shares
are paid monthly based on an annual charge of $23 per shareholder account
plus out-of-pocket expenses. SAS pays a portion of these fees to certain
intermediaries for the administration and servicing of accounts held with
such intermediaries. Transfer agent's fees for Institutional Shares are paid
monthly based on a fee accrued daily at an annualized rate of 0.10% of the
Institutional Shares' average net assets, plus out-of-pocket expenses. For
the six-month period ended January 31, 2015, the Fund Shares and
Institutional Shares incurred transfer agent's fees, paid or payable to SAS,
of $1,005,000 and $70,000, respectively.
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.
(7) TRANSACTIONS WITH AFFILIATES
The Fund offers its Institutional Shares for investment by other USAA funds and
is one of 17 USAA mutual funds in which the affiliated USAA fund-of-funds may
invest. The USAA fund-of-funds do not invest in the underlying
================================================================================
NOTES TO FINANCIAL STATEMENTS | 33
================================================================================
funds for the purpose of exercising management or control. As of January 31,
2015, the USAA fund-of-funds owned the following percentages of the total
outstanding shares of the Fund:
AFFILIATED USAA FUND OWNERSHIP %
--------------------------------------------------------------------------------
USAA Cornerstone Conservative Fund 0.1
USAA Cornerstone Equity Fund 0.4
USAA Target Retirement Income Fund 0.5
USAA Target Retirement 2020 Fund 1.2
USAA Target Retirement 2030 Fund 3.1
USAA Target Retirement 2040 Fund 3.9
USAA Target Retirement 2050 Fund 2.2
USAA Target Retirement 2060 Fund 0.1
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution.
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.
================================================================================
34 | USAA AGGRESSIVE GROWTH FUND
================================================================================
(8) FINANCIAL HIGHLIGHTS - FUND SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31,
-----------------------------------------------------------------------------
2015 2014 2013 2012 2011 2010
-----------------------------------------------------------------------------
Net asset value at
beginning of period $ 40.90 $ 38.44 $ 35.09 $ 34.57 $ 27.56 $ 24.83
Income (loss) from investment
operations:
Net investment income (loss) .09 .79 .13 .00(a) (.01) .08
Net realized and
unrealized gain 2.57 5.47 6.73 .52 7.03 2.77
-----------------------------------------------------------------------------
Total from investment
operations 2.66 6.26 6.86 .52 7.02 2.85
-----------------------------------------------------------------------------
Less distributions from:
Net investment income (.79) (.89) (.08) - (.01) (.12)
Realized capital gains (4.10) (2.91) (3.43) - - -
-----------------------------------------------------------------------------
Total distributions (4.89) (3.80) (3.51) - (.01) (.12)
-----------------------------------------------------------------------------
Net asset value at end
of period $ 38.67 $ 40.90 $ 38.44 $ 35.09 $ 34.57 $ 27.56
=============================================================================
Total return (%)* 6.29 16.82 21.34 1.50 25.47 11.48(b)
Net assets at end of
period (000) $1,146,204 $1,093,796 $1,009,963 $878,246 $1,207,205 $997,867
Ratios to average
net assets:**
Expenses (%)(c) .89(d) .93 1.08 1.08 1.02 1.06(b)
Net investment
income (loss) (%) .37(d) .17 .40 (.01) (.12) .27
Portfolio turnover (%) 26 68 67 55 63 156(e)
* 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 January 31, 2015, average net assets were
$1,138,403,000.
(a) Represents less than $0.01 per share.
(b) During the year ended July 31, 2010, SAS reimbursed the Fund Shares
$327,000 for corrections in fees paid for the administration and servicing
of certain accounts. The effect of this reimbursement on the Fund Shares'
total return was less than 0.01%. The reimbursement decreased the Fund
Shares' expense ratios by 0.03%. This decrease is excluded from the expense
ratios in the Financial Highlights table.
(c) Reflects total annual operating expenses of the Fund Shares before
reductions of any expenses paid indirectly. The Fund Share's expenses paid
indirectly decreased the expense ratios as follows:
(.01%) (.00%)(+) (.01%) (.01%) (.00%)(+) (.01%)
(+)Represents less than 0.01% of average net assets.
(d) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(e) Reflects increased trading activity due to changes in subadvisers and
asset allocation strategies.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
================================================================================
(8) FINANCIAL HIGHLIGHTS (CONTINUED) - INSTITUTIONAL SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31,
---------------------------------------------------------------------
2015 2014 2013 2012 2011 2010
---------------------------------------------------------------------
Net asset value at
beginning of period $ 41.22 $ 38.67 $ 35.26 $ 34.60 $ 27.58 $ 24.85
---------------------------------------------------------------------
Income (loss)
from investment operations:
Net investment income .03 1.10 .30 .13 .14 .23
Net realized and
unrealized gain 2.70 5.29 6.73 .53 7.02 2.75
---------------------------------------------------------------------
Total from investment
operations 2.73 6.39 7.03 .66 7.16 2.98
---------------------------------------------------------------------
Less distributions from:
Net investment income (.88) (.93) (.19) - (.14) (.25)
Realized capital gains (4.10) (2.91) (3.43) - - -
---------------------------------------------------------------------
Total distributions (4.98) (3.84) (3.62) - (.14) (.25)
---------------------------------------------------------------------
Net asset value at
end of period $ 38.97 $ 41.22 $ 38.67 $ 35.26 $ 34.60 $ 27.58
=====================================================================
Total return (%)* 6.42 17.09 21.79 1.91 26.00 11.97
Net assets at end of
period (000) $150,900 $119,051 $165,058 $177,320 $136,837 $70,397
Ratios to average net assets:**
Expenses (%)(a) .67(c) .68 .71 .68 .58(b) .60(b)
Expenses, excluding
reimbursements (%)(a) .67(c) .68 .71 .68 .58 .60
Net investment income (%) .60(c) .43 .78 .37 .31 .62
Portfolio turnover (%) 26 68 67 55 63 156(d)
* 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 January 31, 2015, average net assets were
$138,897,000.
(a) Reflects total operating expenses of the Institutional Shares before
reductions of any expenses paid indirectly. The Institutional Shares'
expenses paid indirectly decreased the expense ratios as follows:
(.01%) (.00%)(+) (.00%)(+) (.01%) (.00%)(+) (.01%)
(+)Represents less than 0.01% of average net assets.
(b) Prior to December 1, 2010, the Manager had voluntarily agreed to limit
the annual expenses of the Institutional Shares to .61% of the Institutional
Shares' average net assets.
(c) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(d) Reflects increased trading activity due to changes in subadvisers and
asset allocation strategies.
================================================================================
36 | USAA AGGRESSIVE GROWTH FUND
================================================================================
EXPENSE EXAMPLE
January 31, 2015 (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 August 1, 2014, through
January 31, 2015.
ACTUAL EXPENSES
The line labeled "actual" under each share class 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 for your share
class in the "actual" line under the heading "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The line labeled "hypothetical" under each share class in the table provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratios for each class and an assumed rate of return of
5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the
================================================================================
EXPENSE EXAMPLE | 37
================================================================================
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the line labeled "hypothetical"
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE AUGUST 1, 2014 -
AUGUST 1, 2014 JANUARY 31, 2015 JANUARY 31, 2015
--------------------------------------------------------------
FUND SHARES
Actual $1,000.00 $1,062.90 $4.63
Hypothetical
(5% return before expenses) 1,000.00 1,020.72 4.53
INSTITUTIONAL SHARES
Actual 1,000.00 1,064.20 3.49
Hypothetical
(5% return before expenses) 1,000.00 1,021.83 3.41
* Expenses are equal to the annualized expense ratio of 0.89% for Fund Shares
and 0.67% for Institutional Shares, which are net of any reimbursements and
expenses paid indirectly, multiplied by the average account value over the
period, multiplied by 184 days/365 days (to reflect the one-half-year period).
The Fund's actual ending account values are based on its actual total returns
of 6.29% for Fund Shares and 6.42% for Institutional Shares for the six-month
period of August 1, 2014, through January 31, 2015.
================================================================================
38 | USAA AGGRESSIVE GROWTH 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 One Lincoln Street
Boston, Massachusetts 02111
--------------------------------------------------------------------------------
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.
================================================================================
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)
=============================================================================
23418-0315 (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 trustees. The Corporate Governance
Committee has adopted procedures to consider Board candidates suggested by
shareholders. The procedures are initiated by the receipt of nominations
submitted by a fund shareholder sent to Board member(s) at the address specified
in fund disclosure documents or as received by AMCO or a fund officer. Any
recommendations for a nomination by a shareholder, to be considered by the
Board, must include at least the following information: name; date of birth;
contact information; education; business profession and other expertise;
affiliations; experience relating to serving on the Board; and references. The
Corporate Governance Committee gives shareholder recommendations the same
consideration as any other candidate.
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 January 31, 2015
By:* /S/ DANIEL J. MAVICO
-----------------------------------------------------------
Signature and Title: Daniel J. Mavico, Assistant Secretary
Date: 03/26/2015
------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:* /S/ DANIEL S. MCNAMARA
-----------------------------------------------------
Signature and Title: Daniel S. McNamara, President
Date: 03/30/2015
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 03/30/2015
------------------------------
*Print the name and title of each signing officer under his or her signature.