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 GROWTH & INCOME FUND]
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SEMIANNUAL REPORT
USAA GROWTH & INCOME FUND
FUND SHARES o ADVISER 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.
202739-0315
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FUND OBJECTIVE
THE USAA GROWTH & INCOME FUND (THE FUND) SEEKS CAPITAL GROWTH WITH A SECONDARY
INVESTMENT OBJECTIVE OF CURRENT INCOME.
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TYPES OF INVESTMENTS
The Fund invests its assets primarily in equity securities that show the best
potential for total return through a combination of capital growth and income.
Although the Fund invests 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
USAA Asset Management Company* Barrow, Hanley, Mewhinney & Strauss,
LLC**
JOHN B. JARES, CFA MARK GIAMBRONE
JOHN P. TOOHEY, CFA MICHAEL B. NAYFA, CFA
TERRY L. PELZEL, CFA
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o PLEASE DISCUSS THE MARKET BACKDROP DURING THE REPORTING PERIOD.
During the six-month reporting period ended January 31, 2015, stocks
finished moderately higher but with considerable volatility along the way.
As the reporting period opened, fears of outright deflation in major
regions, most notably Europe and Japan, were added to concerns over the
impact on global growth of China's efforts to reform and restructure its
economy. The United States stood as the principal bright spot globally, as
incoming data confirmed that the previous winter's lull in economic activity
had been largely weather-driven. Market jitters over increasing signs of
possible deflation globally and speculation over the impact of an improving
U.S. employment rate on Federal Reserve (the Fed) policy caused stocks to
dip in October 2014, before resuming their upward trend. The biggest story
late in the reporting period was the collapse in oil prices, based on the
outlook for weakened global demand and continued strong supply. Against this
backdrop, energy-related stocks suffered significant declines, while other
areas of the market benefited from the anticipated positive impact of lower
energy prices on U.S. consumers.
* Effective December 1, 2014, Wasif A. Latif no longer is a co-manager of
the Fund.
** Effective December 1, 2014, James P. Barrow, Ray Nixon, Jr, Timothy J.
Culler and Lewis Ropp are no longer co-managers of the Fund.
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2 | USAA GROWTH & INCOME FUND
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o HOW DID THE USAA GROWTH & INCOME FUND (THE FUND) PERFORM DURING THE
REPORTING PERIOD?
The Fund has two share classes: Fund Shares and Adviser Shares. For the
six-month reporting period ended January 31, 2015, the Fund Shares and
Adviser Shares had total returns of 2.61% and 2.39%, respectively. This
compares to returns of 4.38% for the Russell 3000(R) Index (the Index) and
2.94% for the Lipper Multi-Cap Core 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
subadviser. Barrow, Hanley, Mewhinney & Strauss (BHMS) is the subadviser to
the Fund. The investment adviser and the subadviser each provide day-to-day
discretionary management for a portion of the Fund's assets.
o HOW DID BHMS' PORTION OF THE FUND PERFORM DURING THE REPORTING PERIOD?
For the six-month reporting period, stock selection within the consumer
discretionary and materials sectors added to the Fund's return relative to
the Index, as did an underweight in energy. Selection within the financial
sector, where the Fund focused on lenders who seemed well positioned to
benefit from a rise in interest rate levels, and an underweight position in
REITs based on valuation concerns, detracted from the Fund's performance. A
significant contributor to relative performance was a position in retailer
Target Corp. in the consumer discretionary sector. Within consumer staples,
holdings of tobacco company Altria Group, Inc. outperformed, as investors
were attracted to the company's high dividend payout. While the Fund's
performance benefited from an underweight position in the energy sector, the
most significant individual detractors for the period also came from energy.
Specifically,
Refer to page 6 for benchmark definitions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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MANAGERS' COMMENTARY ON THE FUND | 3
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positions in offshore driller SeaDrill Ltd. and integrated oil and gas
company BP plc ADR experienced especially significant declines, as the
dramatic drop in oil prices negatively impacted the outlook for the energy
sector.
o HOW DID USAA ASSET MANAGEMENT COMPANY'S PORTION OF THE FUND PERFORM DURING
THE REPORTING PERIOD?
For the six-month reporting period, our portion of the Fund's portfolio
modestly underperformed the Index. Holdings in the technology and
industrials sectors as well as an underweight position in the energy sector
added to the Fund's performance. Conversely, holdings in the consumer
discretionary and health care sectors subtracted from its returns. In
addition, the Fund's position in financials represented a drag on
performance as the financial companies within that position typically
benefited from rising short-term interest rates. As interest rates remained
low, and actually declined over the period, these holdings were a headwind
to performance. In contrast, strong stock selection in the technology and
industrial sectors boosted the Fund's returns.
Thank you for your continued investment in the Fund.
As interest rates rise, bond prices generally fall; given the historically
low interest rate environment, risks associated with rising interest rates
may be heightened. o Foreign investing is subject to additional risks, such
as currency fluctuations, market illiquidity, and political instability.
Emerging market countries are most volatile. Emerging market countries are
less diverse and mature than other countries and tend to be politically less
stable. o Investing in REITs has some of the same risks associated with the
direct ownership of real estate.
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4 | USAA GROWTH & INCOME FUND
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INVESTMENT OVERVIEW
USAA GROWTH & INCOME FUND SHARES (FUND SHARES) (Ticker Symbol: USGRX)
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1/31/15 7/31/14
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Net Assets $1.5 Billion $1.5 Billion
Net Asset Value Per Share $20.47 $22.62
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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
2.61% 10.89% 14.00% 6.50%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR 5 YEARS 10 YEARS
11.21% 13.95% 6.67%
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EXPENSE RATIO AS OF 7/31/14**
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0.94%
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]
LIPPER MULTI-CAP USAA GROWTH &
RUSSELL 3000 CORE FUNDS INCOME FUND
INDEX INDEX SHARES
1/31/2005 $10,000.00 $10,000.00 $10,000.00
2/28/2005 10,220.13 10,202.18 10,183.03
3/31/2005 10,047.27 10,041.77 10,020.10
4/30/2005 9,828.98 9,768.43 9,809.15
5/31/2005 10,201.41 10,168.42 10,169.98
6/30/2005 10,272.67 10,280.38 10,218.75
7/31/2005 10,694.11 10,716.16 10,646.62
8/31/2005 10,592.16 10,667.36 10,635.50
9/30/2005 10,684.83 10,763.18 10,705.62
10/31/2005 10,484.72 10,540.64 10,449.80
11/30/2005 10,892.57 10,946.32 10,900.27
12/31/2005 10,902.35 11,074.08 10,926.52
1/31/2006 11,266.61 11,485.39 11,305.34
2/28/2006 11,286.64 11,439.73 11,228.39
3/31/2006 11,481.74 11,694.69 11,331.90
4/30/2006 11,606.30 11,839.57 11,480.07
5/31/2006 11,234.71 11,429.45 10,928.88
6/30/2006 11,254.59 11,395.76 10,948.60
7/31/2006 11,244.05 11,259.20 10,776.32
8/31/2006 11,519.11 11,525.67 10,877.31
9/30/2006 11,776.97 11,773.16 11,234.34
10/31/2006 12,200.91 12,211.14 11,585.41
11/30/2006 12,466.38 12,500.34 11,912.68
12/31/2006 12,615.68 12,640.13 11,970.29
1/31/2007 12,855.81 12,915.64 12,321.57
2/28/2007 12,644.92 12,745.40 12,109.48
3/31/2007 12,776.53 12,879.75 12,314.95
4/30/2007 13,286.91 13,380.65 12,719.26
5/31/2007 13,771.12 13,881.62 13,335.67
6/30/2007 13,513.21 13,761.42 13,203.11
7/31/2007 13,052.37 13,321.14 12,765.65
8/31/2007 13,239.73 13,407.15 12,878.33
9/30/2007 13,722.41 13,874.41 13,348.92
10/31/2007 13,974.13 14,154.03 13,779.75
11/30/2007 13,345.04 13,518.01 13,196.48
12/31/2007 13,264.28 13,394.67 13,106.76
1/31/2008 12,460.31 12,642.44 12,195.71
2/29/2008 12,073.30 12,309.32 11,759.33
3/31/2008 12,001.77 12,136.09 11,590.90
4/30/2008 12,601.96 12,746.06 12,256.96
5/31/2008 12,860.13 13,058.46 12,570.85
6/30/2008 11,798.91 12,017.33 11,600.11
7/31/2008 11,704.80 11,841.47 11,392.96
8/31/2008 11,886.59 11,954.50 11,485.03
9/30/2008 10,768.96 10,621.56 10,279.61
10/31/2008 8,858.98 8,615.07 8,334.40
11/30/2008 8,159.66 7,863.25 7,557.86
12/31/2008 8,315.76 8,110.73 7,673.20
1/31/2009 7,617.90 7,537.16 7,101.96
2/28/2009 6,819.88 6,839.93 6,461.24
3/31/2009 7,417.26 7,392.30 7,006.56
4/30/2009 8,197.81 8,349.75 7,796.25
5/31/2009 8,635.22 8,864.68 8,214.32
6/30/2009 8,664.64 8,856.71 8,140.78
7/31/2009 9,339.06 9,591.39 8,799.79
8/31/2009 9,672.76 9,918.34 9,102.17
9/30/2009 10,078.01 10,368.23 9,540.15
10/31/2009 9,818.81 10,065.09 9,322.80
11/30/2009 10,376.75 10,614.23 9,866.18
12/31/2009 10,672.46 10,973.88 10,149.28
1/31/2010 10,287.74 10,570.10 9,752.64
2/28/2010 10,636.51 10,926.12 10,125.95
3/31/2010 11,306.90 11,598.24 10,751.21
4/30/2010 11,550.91 11,823.97 10,938.05
5/31/2010 10,638.42 10,893.51 10,034.98
6/30/2010 10,026.84 10,350.53 9,428.55
7/31/2010 10,722.93 11,020.05 10,185.02
8/31/2010 10,218.17 10,528.21 9,615.72
9/30/2010 11,182.93 11,488.87 10,600.62
10/31/2010 11,619.93 11,974.59 11,014.65
11/30/2010 11,687.01 12,018.57 11,030.27
12/31/2010 12,479.26 12,798.72 11,766.12
1/31/2011 12,751.83 13,105.15 12,016.63
2/28/2011 13,216.10 13,556.54 12,361.08
3/31/2011 13,275.72 13,615.74 12,346.25
4/30/2011 13,670.86 14,013.68 12,769.55
5/31/2011 13,514.88 13,819.65 12,612.77
6/30/2011 13,272.16 13,575.55 12,368.38
7/31/2011 12,968.23 13,256.36 11,967.88
8/31/2011 12,190.20 12,313.76 11,198.30
9/30/2011 11,244.29 11,263.17 10,271.09
10/31/2011 12,538.43 12,508.28 11,530.39
11/30/2011 12,504.54 12,434.75 11,435.94
12/31/2011 12,607.32 12,439.36 11,469.04
1/31/2012 13,243.52 13,120.37 12,139.98
2/29/2012 13,803.76 13,688.03 12,668.83
3/31/2012 14,229.57 14,011.98 12,999.24
4/30/2012 14,136.24 13,877.83 12,777.85
5/31/2012 13,262.35 12,927.07 11,773.65
6/30/2012 13,781.77 13,364.31 12,145.12
7/31/2012 13,918.28 13,486.17 12,240.25
8/31/2012 14,265.66 13,840.06 12,668.34
9/30/2012 14,640.27 14,206.44 12,973.27
10/31/2012 14,387.75 14,032.90 12,727.00
11/30/2012 14,499.17 14,210.13 12,782.61
12/31/2012 14,676.85 14,448.44 12,902.02
1/31/2013 15,482.18 15,269.41 13,603.74
2/28/2013 15,687.36 15,415.41 13,691.45
3/31/2013 16,302.09 15,999.60 14,128.66
4/30/2013 16,568.94 16,195.13 14,344.43
5/31/2013 16,959.81 16,606.37 14,831.90
6/30/2013 16,739.83 16,358.36 14,627.26
7/31/2013 17,657.31 17,272.59 15,532.45
8/31/2013 17,164.39 16,816.10 15,107.89
9/30/2013 17,802.50 17,494.65 15,688.25
10/31/2013 18,558.71 18,170.42 16,450.59
11/30/2013 19,097.30 18,656.81 17,044.42
12/31/2013 19,601.14 19,155.43 17,534.75
1/31/2014 18,981.87 18,558.87 16,931.77
2/28/2014 19,882.29 19,433.88 17,695.54
3/31/2014 19,987.82 19,473.03 17,753.43
4/30/2014 20,012.08 19,408.98 17,713.07
5/31/2014 20,448.76 19,847.57 18,181.32
6/30/2014 20,961.66 20,353.54 18,597.30
7/31/2014 20,548.14 19,926.52 18,297.99
8/31/2014 21,410.23 20,691.68 19,090.74
9/30/2014 20,963.94 20,183.10 18,792.08
10/31/2014 21,540.73 20,652.44 19,051.51
11/30/2014 22,062.74 21,081.15 19,489.29
12/31/2014 22,062.49 21,082.34 19,500.95
1/31/2015 21,448.46 20,511.95 18,776.30
[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 Growth & Income Fund Shares to the following benchmarks:
o The unmanaged Russell 3000 Index measures the performance of the 3,000
largest U.S. companies based on total market capitalization, which
represents approximately 98% of the investable U.S. equity market.
o The unmanaged Lipper Multi-Cap Core Funds Index tracks the total return
performance of the 30 largest funds in the Lipper Multi-Cap Core 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 GROWTH & INCOME FUND
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USAA GROWTH & INCOME FUND ADVISER SHARES (ADVISER SHARES) (Ticker Symbol: USGIX)
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1/31/15 7/31/14
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Net Assets $8.4 Million $9.3 Million
Net Asset Value Per Share $20.40 $22.56
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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 SINCE INCEPTION 8/01/10
2.39% 10.52% 13.64%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/14
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1 YEAR SINCE INCEPTION 8/01/10
10.90% 14.93%
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EXPENSE RATIOS AS OF 7/31/14**
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BEFORE REIMBURSEMENT 1.22% AFTER REIMBURSEMENT 1.20%
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 ratios represent 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
are calculated as a percentage of average net assets. USAA Asset Management
Company (the Manager) has agreed, through December 1, 2015, to make payments or
waive management, administration, and other fees so that the total annual
operating expenses of the Adviser Shares (exclusive of commission recapture,
expense offset arrangements, acquired fund fees and expenses, and extraordinary
expenses) do not exceed an annual rate of 1.20% of the Adviser Shares' average
net assets. This reimbursement arrangement may not be changed or terminated
during this time period without approval of the Fund's Board of Trustees and may
be changed or terminated by the Manager at any time after December 1, 2015.
These expense ratios may differ from the expense ratios disclosed in the
Financial Highlights, which excludes acquired fund fees and expenses. Prior to
December 1, 2014, the Adviser Shares' expense limitation was 1.30% of the
average net assets.
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 | 7
================================================================================
o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
LIPPER MULTI-CAP USAA GROWTH &
RUSSELL 3000 CORE FUNDS INCOME FUND
INDEX INDEX ADVISER SHARES
7/31/2010 $10,000.00 $10,000.00 $10,000.00
8/31/2010 9,529.27 9,553.69 9,242.88
9/30/2010 10,429.00 10,425.42 10,181.90
10/31/2010 10,836.53 10,866.19 10,572.36
11/30/2010 10,899.09 10,906.09 10,594.88
12/31/2010 11,637.93 11,614.04 11,294.92
1/31/2011 11,892.12 11,892.10 11,535.56
2/28/2011 12,325.09 12,301.71 11,858.92
3/31/2011 12,380.68 12,355.43 11,843.03
4/30/2011 12,749.19 12,716.53 12,249.34
5/31/2011 12,603.72 12,540.46 12,091.33
6/30/2011 12,377.37 12,318.96 11,856.29
7/31/2011 12,093.93 12,029.32 11,464.60
8/31/2011 11,368.35 11,173.96 10,726.40
9/30/2011 10,486.22 10,220.62 9,836.31
10/31/2011 11,693.10 11,350.48 11,035.68
11/30/2011 11,661.50 11,283.76 10,945.16
12/31/2011 11,757.35 11,287.94 10,972.69
1/31/2012 12,350.66 11,905.91 11,615.47
2/29/2012 12,873.13 12,421.03 12,114.58
3/31/2012 13,270.23 12,714.99 12,431.21
4/30/2012 13,183.19 12,593.26 12,211.66
5/31/2012 12,368.22 11,730.51 11,257.74
6/30/2012 12,852.62 12,127.27 11,605.30
7/31/2012 12,979.93 12,237.85 11,696.32
8/31/2012 13,303.88 12,558.98 12,098.34
9/30/2012 13,653.24 12,891.45 12,389.98
10/31/2012 13,417.75 12,733.97 12,154.49
11/30/2012 13,521.65 12,894.80 12,200.07
12/31/2012 13,687.36 13,111.05 12,299.97
1/31/2013 14,438.39 13,856.03 12,962.98
2/28/2013 14,629.74 13,988.51 13,046.81
3/31/2013 15,203.03 14,518.63 13,461.18
4/30/2013 15,451.88 14,696.06 13,659.59
5/31/2013 15,816.40 15,069.23 14,125.08
6/30/2013 15,611.25 14,844.19 13,925.21
7/31/2013 16,466.88 15,673.79 14,781.20
8/31/2013 16,007.19 15,259.55 14,376.13
9/30/2013 16,602.28 15,875.29 14,917.60
10/31/2013 17,307.51 16,488.51 15,644.36
11/30/2013 17,809.78 16,929.88 16,202.81
12/31/2013 18,279.65 17,382.35 16,664.88
1/31/2014 17,702.13 16,841.00 16,090.50
2/28/2014 18,541.85 17,635.03 16,810.40
3/31/2014 18,640.27 17,670.55 16,868.28
4/30/2014 18,662.89 17,612.44 16,822.15
5/31/2014 19,070.13 18,010.42 17,268.07
6/30/2014 19,548.45 18,469.56 17,661.32
7/31/2014 19,162.81 18,082.06 17,368.75
8/31/2014 19,966.78 18,776.40 18,107.85
9/30/2014 19,550.58 18,314.90 17,831.45
10/31/2014 20,088.48 18,740.79 18,070.43
11/30/2014 20,575.30 19,129.82 18,479.02
12/31/2014 20,575.07 19,130.90 18,481.06
1/31/2015 20,002.43 18,613.30 17,783.67
[END CHART]
Data from 7/31/10 to 1/31/15.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Growth & Income Fund Adviser Shares to the Fund's benchmarks listed above
(see page 6 for benchmark definitions).
*The performance of the Russell 3000 Index and the Lipper Multi-Cap Core Funds
Index is calculated from the end of the month, July 31, 2010, while the
inception date of the Adviser Shares is August 1, 2010. 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 GROWTH & INCOME FUND
================================================================================
o TOP 10 HOLDINGS - 1/31/15 o
(% of Net Assets)
Canadian Pacific Railway Ltd. ............................................. 2.2%
Capital One Financial Corp. ............................................... 2.0%
Gilead Sciences, Inc. ..................................................... 2.0%
Citigroup, Inc. ........................................................... 1.7%
Occidental Petroleum Corp. ................................................ 1.6%
Applied Materials, Inc. ................................................... 1.6%
Microsoft Corp. ........................................................... 1.6%
Hewlett-Packard Co. ....................................................... 1.5%
Ameriprise Financial, Inc. ................................................ 1.5%
Juniper Networks, Inc. .................................................... 1.4%
o ASSET ALLOCATION - 1/31/15 o
[PIE CHART OF ASSET ALLOCATION]
FINANCIALS 20.3%
INFORMATION TECHNOLOGY 17.8%
CONSUMER DISCRETIONARY 15.2%
HEALTH CARE 13.9%
INDUSTRIALS 13.9%
ENERGY 5.1%
CONSUMER STAPLES 5.1%
MATERIALS 2.7%
TELECOMMUNICATION SERVICES 1.5%
UTILITIES 0.2%
MONEY MARKET INSTRUMENTS 5.0%
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 (95.7%)
CONSUMER DISCRETIONARY (15.2%)
------------------------------
APPAREL, ACCESSORIES & LUXURY GOODS (1.0%)
92,100 Hanesbrands, Inc. $ 10,258
69,500 Michael Kors Holdings Ltd.* 4,920
----------
15,178
----------
AUTO PARTS & EQUIPMENT (2.5%)
254,030 Delphi Automotive plc 17,459
450,500 Johnson Controls, Inc. 20,935
----------
38,394
----------
BROADCASTING (0.3%)
86,100 CBS Corp. "B" 4,719
----------
CABLE & SATELLITE (1.1%)
171,100 Comcast Corp. "A" 9,093
92,300 DIRECTV* 7,872
----------
16,965
----------
CASINOS & GAMING (1.0%)
84,610 Las Vegas Sands Corp. 4,600
548,600 MGM Resorts International* 10,687
----------
15,287
----------
EDUCATION SERVICES (0.3%)
120,000 Grand Canyon Education, Inc.* 5,258
----------
FOOTWEAR (0.3%)
50,950 NIKE, Inc. "B" 4,700
----------
GENERAL MERCHANDISE STORES (1.4%)
72,600 Dollar General Corp.* 4,869
218,190 Target Corp. 16,061
----------
20,930
----------
HOME IMPROVEMENT RETAIL (0.8%)
115,890 Home Depot, Inc. 12,101
----------
HOMEBUILDING (0.7%)
8,155 NVR, Inc.* 10,228
----------
================================================================================
10 | USAA GROWTH & INCOME FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
HOTELS, RESORTS & CRUISE LINES (3.2%)
466,000 Carnival Corp. $ 20,485
350,800 Norwegian Cruise Line Holdings Ltd.* 15,351
110,000 Royal Caribbean Cruises Ltd. 8,311
80,980 Starwood Hotels & Resorts Worldwide, Inc. 5,828
----------
49,975
----------
INTERNET RETAIL (0.8%)
34,810 Amazon.com, Inc.* 12,341
----------
LEISURE FACILITIES (0.5%)
456,600 SeaWorld Entertainment, Inc. 7,995
----------
MOVIES & ENTERTAINMENT (0.9%)
154,600 Walt Disney Co. 14,063
----------
SPECIALTY STORES (0.4%)
73,590 Tiffany & Co. 6,376
----------
Total Consumer Discretionary 234,510
----------
Consumer Staples (5.1%)
-----------------------
DRUG RETAIL (1.9%)
217,775 CVS Health Corp. 21,377
115,860 Walgreens Boots Alliance, Inc. 8,545
----------
29,922
----------
HOUSEHOLD PRODUCTS (0.8%)
138,715 Procter & Gamble Co. 11,692
----------
HYPERMARKETS & SUPER CENTERS (0.7%)
123,900 Wal-Mart Stores, Inc. 10,529
----------
SOFT DRINKS (0.6%)
98,700 PepsiCo, Inc. 9,256
----------
TOBACCO (1.1%)
200,200 Altria Group, Inc. 10,630
86,200 Philip Morris International, Inc. 6,917
----------
17,547
----------
Total Consumer Staples 78,946
----------
ENERGY (5.1%)
-------------
INTEGRATED OIL & GAS (2.5%)
159,800 BP plc ADR 6,205
69,800 Chevron Corp. 7,156
314,000 Occidental Petroleum Corp. 25,120
----------
38,481
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 11
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
OIL & GAS DRILLING (0.1%)
224,400 SeaDrill Ltd. $ 2,410
----------
OIL & GAS EQUIPMENT & SERVICES (1.4%)
201,500 FMSA Holdings, Inc.* 1,046
400,500 Halliburton Co. 16,016
76,300 Oceaneering International, Inc. 3,995
----------
21,057
----------
OIL & GAS EXPLORATION & PRODUCTION (0.8%)
89,495 Anadarko Petroleum Corp. 7,316
88,400 ConocoPhillips 5,568
----------
12,884
----------
OIL & GAS REFINING & MARKETING (0.3%)
66,300 Phillips 66 4,662
----------
Total Energy 79,494
----------
FINANCIALS (20.3%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (2.4%)
183,240 Ameriprise Financial, Inc. 22,894
127,500 Bank of New York Mellon Corp. 4,590
133,900 State Street Corp. 9,575
----------
37,059
----------
CONSUMER FINANCE (4.2%)
89,700 American Express Co. 7,238
435,000 Capital One Financial Corp. 31,846
135,200 Discover Financial Services 7,352
545,320 Navient Corp. 10,765
842,820 SLM Corp. 7,678
----------
64,879
----------
DIVERSIFIED BANKS (5.1%)
1,301,800 Bank of America Corp. 19,722
573,300 Citigroup, Inc. 26,917
358,755 JPMorgan Chase & Co. 19,509
246,335 Wells Fargo & Co. 12,790
----------
78,938
----------
INVESTMENT BANKING & BROKERAGE (1.9%)
397,900 Charles Schwab Corp. 10,337
179,200 E*Trade Financial Corp.* 4,131
430,700 Morgan Stanley 14,562
----------
29,030
----------
================================================================================
12 | USAA GROWTH & INCOME FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
MULTI-LINE INSURANCE (1.2%)
384,415 American International Group, Inc. $ 18,786
----------
REGIONAL BANKS (2.0%)
109,000 CIT Group, Inc. 4,776
391,600 Fifth Third Bancorp 6,775
611,400 First Niagara Financial Group, Inc. 4,965
356,100 KeyCorp 4,626
109,150 PNC Financial Services Group, Inc. 9,227
----------
30,369
----------
SPECIALIZED FINANCE (2.6%)
227,070 CME Group, Inc. 19,369
100,020 Intercontinental Exchange, Inc. 20,577
----------
39,946
----------
THRIFTS & MORTGAGE FINANCE (0.9%)
464,900 New York Community Bancorp, Inc. 7,183
518,100 People's United Financial, Inc. 7,290
----------
14,473
----------
Total Financials 313,480
----------
HEALTH CARE (13.9%)
-------------------
BIOTECHNOLOGY (2.6%)
58,280 Amgen, Inc. 8,874
293,600 Gilead Sciences, Inc.* 30,778
----------
39,652
----------
HEALTH CARE DISTRIBUTORS (0.6%)
113,500 Cardinal Health, Inc. 9,442
----------
HEALTH CARE EQUIPMENT (1.7%)
487,300 Hologic, Inc.* 14,797
167,200 Medtronic plc 11,938
----------
26,735
----------
HEALTH CARE FACILITIES (1.0%)
217,648 HCA Holdings, Inc.* 15,409
----------
HEALTH CARE SERVICES (0.8%)
164,900 Omnicare, Inc. 12,364
----------
MANAGED HEALTH CARE (1.5%)
61,928 Anthem, Inc. 8,358
65,860 Cigna Corp. 7,036
75,700 UnitedHealth Group, Inc. 8,043
----------
23,437
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 13
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
PHARMACEUTICALS (5.7%)
248,300 AbbVie, Inc. $ 14,985
35,000 Actavis plc* 9,329
42,400 Allergan, Inc. 9,297
185,700 Johnson & Johnson 18,596
133,775 Merck & Co., Inc. 8,064
339,082 Pfizer, Inc. 10,596
203,700 Sanofi ADR 9,388
137,000 Teva Pharmaceutical Industries Ltd. ADR 7,790
----------
88,045
----------
Total Health Care 215,084
----------
INDUSTRIALS (13.9%)
-------------------
AEROSPACE & DEFENSE (3.8%)
60,800 Boeing Co. 8,839
52,100 General Dynamics Corp. 6,940
63,910 Honeywell International, Inc. 6,248
60,800 Raytheon Co. 6,083
467,000 Spirit AeroSystems Holdings, Inc. "A"* 21,034
85,950 United Technologies Corp. 9,865
----------
59,009
----------
AIR FREIGHT & LOGISTICS (1.0%)
93,055 FedEx Corp. 15,737
----------
AIRLINES (1.3%)
293,380 United Continental Holdings, Inc.* 20,352
----------
BUILDING PRODUCTS (0.7%)
268,000 Owens Corning, Inc. 10,734
----------
CONSTRUCTION & ENGINEERING (0.3%)
317,500 KBR, Inc. 5,248
----------
CONSTRUCTION MACHINERY & HEAVY TRUCKS (0.4%)
146,000 Joy Global, Inc. 6,123
----------
ELECTRICAL COMPONENTS & EQUIPMENT (1.5%)
262,260 Eaton Corp. plc 16,546
119,200 Emerson Electric Co. 6,787
----------
23,333
----------
ENVIRONMENTAL & FACILITIES SERVICES (0.5%)
186,700 Republic Services, Inc. 7,408
----------
INDUSTRIAL CONGLOMERATES (0.6%)
365,900 General Electric Co. 8,741
----------
================================================================================
14 | USAA GROWTH & INCOME FUND
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
INDUSTRIAL MACHINERY (1.0%)
66,200 SPX Corp. $ 5,532
107,600 Stanley Black & Decker, Inc. 10,077
----------
15,609
----------
RAILROADS (2.8%)
193,800 Canadian Pacific Railway Ltd. 33,851
80,790 Kansas City Southern 8,894
----------
42,745
----------
Total Industrials 215,039
----------
INFORMATION TECHNOLOGY (17.8%)
------------------------------
APPLICATION SOFTWARE (0.5%)
122,200 Adobe Systems, Inc.* 8,570
----------
COMMUNICATIONS EQUIPMENT (1.4%)
943,600 Juniper Networks, Inc. 21,448
----------
DATA PROCESSING & OUTSOURCED SERVICES (0.7%)
44,490 Visa, Inc. "A" 11,341
----------
INTERNET SOFTWARE & SERVICES (2.6%)
201,500 AOL, Inc.* 8,715
212,100 Facebook, Inc. "A"* 16,101
28,560 Google, Inc. "A"* 15,352
----------
40,168
----------
SEMICONDUCTOR EQUIPMENT (1.6%)
1,076,600 Applied Materials, Inc. 24,590
----------
SEMICONDUCTORS (5.1%)
367,000 Broadcom Corp. "A" 15,574
478,700 Fairchild Semiconductor International, Inc.* 7,348
533,900 Intel Corp. 17,640
193,300 Microchip Technology, Inc. 8,718
235,345 NXP Semiconductors N.V.* 18,672
196,200 Texas Instruments, Inc. 10,487
----------
78,439
----------
SYSTEMS SOFTWARE (3.0%)
204,100 CA, Inc. 6,184
594,435 Microsoft Corp. 24,015
380,965 Oracle Corp. 15,959
----------
46,158
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
================================================================================
--------------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE, STORAGE, & PERIPHERALS (2.9%)
121,950 Apple, Inc. $ 14,288
656,690 Hewlett-Packard Co. 23,726
94,660 SanDisk Corp. 7,185
----------
45,199
----------
Total Information Technology 275,913
----------
MATERIALS (2.7%)
----------------
CONSTRUCTION MATERIALS (0.6%)
387,000 CRH plc ADR 9,342
----------
DIVERSIFIED CHEMICALS (1.0%)
107,800 FMC Corp. 6,199
462,700 Huntsman Corp. 10,161
----------
16,360
----------
FERTILIZERS & AGRICULTURAL CHEMICALS (1.1%)
56,000 Monsanto Co. 6,607
275,300 Potash Corp. of Saskatchewan, Inc. 10,059
----------
16,666
----------
Total Materials 42,368
----------
TELECOMMUNICATION SERVICES (1.5%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (0.6%)
203,640 Verizon Communications, Inc. 9,308
----------
WIRELESS TELECOMMUNICATION SERVICES (0.9%)
286,500 T-Mobile US, Inc.* 8,647
143,527 Vodafone Group plc ADR 5,042
----------
13,689
----------
Total Telecommunication Services 22,997
----------
UTILITIES (0.2%)
----------------
MULTI-UTILITIES (0.2%)
80,600 Public Service Enterprise Group, Inc. 3,440
----------
Total Common Stocks (cost: $1,211,124) 1,481,271
----------
MONEY MARKET INSTRUMENTS (5.0%)
MONEY MARKET FUNDS (5.0%)
78,045,424 State Street Institutional Liquid Reserves Fund Premier Class, 0.09% (a)
(cost: $78,045) 78,045
----------
TOTAL INVESTMENTS (COST: $1,289,169) $1,559,316
==========
================================================================================
16 | USAA GROWTH & INCOME FUND
================================================================================
--------------------------------------------------------------------------------------------------------
($ 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 $1,481,271 $- $- $1,481,271
Money Market Instruments:
Money Market Funds 78,045 - - 78,045
--------------------------------------------------------------------------------------------------------
Total $1,559,316 $- $- $1,559,316
--------------------------------------------------------------------------------------------------------
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.
Investments in foreign securities were 7.8% of net assets at January 31,
2015.
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.
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 GROWTH & INCOME FUND
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
January 31, 2015 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $1,289,169) $1,559,316
Cash 2
Receivables:
Capital shares sold 944
Dividends and interest 1,121
Securities sold 12,518
Other 123
----------
Total assets 1,574,024
----------
LIABILITIES
Payables:
Securities purchased 23,817
Capital shares redeemed 791
Accrued management fees 805
Accrued transfer agent's fees 50
Other accrued expenses and payables 66
----------
Total liabilities 25,529
----------
Net assets applicable to capital shares outstanding $1,548,495
==========
NET ASSETS CONSIST OF:
Paid-in capital $1,248,036
Accumulated undistributed net investment income 477
Accumulated net realized gain on investments 29,835
Net unrealized appreciation of investments 270,147
----------
Net assets applicable to capital shares outstanding $1,548,495
==========
Net asset value, redemption price, and offering price per share:
Fund Shares (net assets of $1,540,045/75,247 shares outstanding) $ 20.47
==========
Adviser Shares (net assets of $8,450/414 shares outstanding) $ 20.41
==========
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 $58) $ 13,087
Interest 23
----------
Total income 13,110
----------
EXPENSES
Management fees 4,745
Administration and servicing fees:
Fund Shares 1,179
Adviser Shares 7
Transfer agent's fees:
Fund Shares 1,137
Distribution and service fees (Note 6F):
Adviser Shares 12
Custody and accounting fees:
Fund Shares 93
Adviser Shares 1
Postage:
Fund Shares 54
Shareholder reporting fees:
Fund Shares 37
Trustees' fees 11
Registration fees:
Fund Shares 14
Adviser Shares 9
Professional fees 50
Other 14
----------
Total expenses 7,363
----------
NET INVESTMENT INCOME 5,747
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain (loss) on:
Investments 51,973
Foreign currency transactions (4)
Change in net unrealized appreciation/depreciation (18,333)
----------
Net realized and unrealized gain 33,636
----------
Increase in net assets resulting from operations $ 39,383
==========
See accompanying notes to financial statements.
================================================================================
20 | USAA GROWTH & INCOME 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 $ 5,747 $ 14,377
Net realized gain on investments 51,973 232,943
Net realized loss on foreign currency transactions (4) (2)
Change in net unrealized appreciation/depreciation
of investments (18,333) (454)
----------------------------------
Increase in net assets resulting from operations 39,383 246,864
----------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Fund Shares (5,913) (14,544)
Adviser Shares (18) (65)
----------------------------------
Total distributions of net investment income (5,931) (14,609)
----------------------------------
Net realized gains:
Fund Shares (183,949) -
Adviser Shares (1,135) -
----------------------------------
Total distributions of net realized gains (185,084) -
----------------------------------
Distributions to shareholders (191,015) -
----------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 5)
Fund Shares 175,993 (134,434)
Adviser Shares 34 64
----------------------------------
Total net increase (decrease) in net assets from
capital share transactions 176,027 (134,370)
----------------------------------
Net increase in net assets 24,395 97,885
NET ASSETS
Beginning of period 1,524,100 1,426,215
----------------------------------
End of period $1,548,495 $1,524,100
==================================
Accumulated undistributed net investment income:
End of period $ 477 $ 661
==================================
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 Growth & Income Fund (the Fund),
which is classified as diversified under the 1940 Act. The Fund's investment
objectives are to seek capital growth and, secondarily, current income.
The Fund consists of two classes of shares: Growth & Income Fund Shares (Fund
Shares) and Growth & Income Fund Adviser Shares (Adviser 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, distribution and service (12b-1) 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 Adviser Shares permit investors to
purchase shares through financial intermediaries, including banks,
broker-dealers, insurance companies, investment advisers, plan sponsors, and
financial professionals that provide various administrative and distribution
services.
A. SECURITY VALUATION - The Trust's Board of Trustees (the Board) has
established the Valuation Committee (the Committee), and subject to
================================================================================
22 | USAA GROWTH & INCOME FUND
================================================================================
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 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,
================================================================================
NOTES TO FINANCIAL STATEMENTS | 23
================================================================================
the foreign markets may be closed. Therefore, the calculation of the
Fund's net asset value (NAV) may not take place at the same time the
prices of certain foreign securities held by the Fund are determined. In
most cases, events affecting the values of foreign securities that occur
between the time of their last quoted sales or official closing prices and
the close of normal trading on the NYSE on a day the Fund's NAV is
calculated will not be reflected in the value of the Fund's foreign
securities. However, the Manager, an affiliate of the Fund, and the Fund's
subadviser(s), if applicable, will monitor for events that would
materially affect the value of the Fund's foreign securities. The Fund's
subadviser(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.
5. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the Board. The
Service uses an evaluated mean between quoted bid and
================================================================================
24 | USAA GROWTH & INCOME FUND
================================================================================
asked prices or the last sales price to price securities when, in the
Service's judgment, these prices are readily available and are
representative of the securities' market values. For many securities, such
prices are not readily available. The Service generally prices these
securities based on methods that include consideration of yields or prices
of securities of comparable quality, coupon, maturity, and type;
indications as to values from dealers in securities; and general market
conditions.
6. Repurchase agreements are valued at cost, which approximates market value.
7. 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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 25
================================================================================
based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted)
in active markets for identical securities.
Level 2 - inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices.
Level 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:
================================================================================
26 | USAA GROWTH & INCOME FUND
================================================================================
1. Purchases and sales of securities, income, and expenses at the exchange
rate obtained from an independent pricing service on the respective dates
of such transactions.
2. Market value of securities, other assets, and liabilities at the exchange
rate obtained from an independent pricing service on a daily basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Separately, net realized foreign currency gains/losses may arise from sales
of foreign currency, currency gains/losses realized between the trade and
settlement dates on security transactions, and from the difference between
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts received. At
the end of the Fund's fiscal year, these net realized foreign currency
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 - 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, 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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 27
================================================================================
variety of representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Trust that have not yet occurred. However, the Trust expects the risk of
loss to be remote.
H. USE OF ESTIMATES - The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $500 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at an interest rate based on
the London Interbank Offered Rate (LIBOR).
The USAA Funds that are party to the loan agreement are assessed facility fees
by CAPCO in the amount of 7.0 basis points of the amount of the committed loan
agreement. The facility fees are allocated among the Funds based on their
respective average net assets for the period.
For the six-month period ended January 31, 2015, the Fund paid CAPCO facility
fees of $4,000, which represents 2.3% 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 are made quarterly. Distributions of
realized gains from security transactions not offset by capital losses are made
================================================================================
28 | USAA GROWTH & INCOME FUND
===============================================================================-
annually in the succeeding fiscal year or as otherwise required to avoid the
payment of federal taxes.
The Fund is permitted to carry forward post-enactment capital losses
indefinitely. Additionally, such capital losses that are carried forward will
retain their character as short-term and/or long-term capital losses. Post-
enactment capital loss carryforwards must be used before pre-enactment capital
loss carryforwards. As a result, pre-enactment capital loss carryforwards may be
more likely to expire unused.
At 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
$293,147,000 and $310,088,000, 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 $306,751,000 and $36,604,000, respectively, resulting in net
unrealized appreciation of $270,147,000.
(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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 29
================================================================================
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 3,486 $ 77,842 8,281 $ 176,080
Shares issued from
reinvested dividends 8,756 186,826 663 14,292
Shares redeemed (3,947) (88,675) (15,136) (324,806)
-------------------------------------------------
Net increase (decrease) from capital
share transactions 8,295 $175,993 (6,192) $(134,434)
=================================================
ADVISER SHARES:
Shares sold 4 $ 95 6 $ 123
Shares issued from
reinvested dividends 2 37 -* 2
Shares redeemed (4) (98) (3) (61)
-------------------------------------------------
Net increase from capital
share transactions 2 $ 34 3 $ 64
=================================================
*Represents less than 500 shares.
(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, and for
directly managing the day-to-day investment of a portion of the Fund's
assets, subject to the authority of and supervision by the Board. The
Manager is authorized to select (with approval of the Board and without
shareholder approval) one or more subadvisers to manage the actual
day-to-day investment of a portion of the Fund's assets.
The Manager monitors each subadviser's performance through quantitative and
qualitative analysis and periodically reports to the Board as to whether
each subadviser's agreement should be renewed, terminated, or modified. The
Manager also is responsible for allocating assets to the subadviser(s). The
allocation for each subadviser could
================================================================================
30 | USAA GROWTH & INCOME FUND
================================================================================
range from 0% to 100% of the Fund's assets, and the Manager could change the
allocations without shareholder approval.
The investment management fee for the Fund is comprised of a base fee and a
performance adjustment. The Fund's base fee is accrued daily and paid
monthly at an annualized rate of 0.60% of the Fund's average net assets for
the fiscal year.
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
Multi-Cap Core Funds Index over the performance period. The Lipper Multi-Cap
Core Funds Index tracks the total return performance of the 30 largest funds
within the Lipper Multi-Cap Core Funds category. The performance period for
the each class 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.
Under the performance fee arrangement, each class will pay a positive
performance fee adjustment for a performance period whenever the class
outperforms the Lipper Multi-Cap Core Funds Index over that period,
================================================================================
NOTES TO FINANCIAL STATEMENTS | 31
================================================================================
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 $4,745,000.
B. SUBADVISORY ARRANGEMENT(S) - The Manager has entered into an investment
subadvisory agreement with Barrow, Hanley, Mewhinney & Strauss, LLC (BHMS),
under which BHMS directs the investment and reinvestment of portions of the
Fund's assets (as allocated from time to time by the Manager).
The Manager (not the Fund) pays BHMS a subadvisory fee based on the
aggregate net assets that BHMS manages in the USAA Value Fund and the USAA
Growth & Income Fund combined, in an annual amount of 0.75% of the first $15
million of assets, 0.55% on assets over $15 million and up to $25 million,
0.45% on assets over $25 million and up to $100 million, 0.35% on assets
over $100 million and up to $200 million, 0.25% on assets over $200 million
and up to $1 billion, and 0.15% on assets over $1 billion. For the six-month
period ended January 31, 2015, the Manager incurred subadvisory fees, paid
or payable to BHMS, of $689,000.
C. ADMINISTRATION AND SERVICING FEES - The Manager provides certain
administration and servicing functions for the Fund. For such services, the
Manager receives a fee accrued daily and paid monthly at an annualized rate
of 0.15% of average net assets for both the Fund Shares and Adviser Shares.
For the six-month period ended January 31, 2015, the Fund Shares and Adviser
Shares incurred administration and servicing fees, paid or payable to the
Manager, of $1,179,000 and $7,000, 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
$25,000 for these compliance and legal
================================================================================
32 | USAA GROWTH & INCOME FUND
================================================================================
services. These expenses are included in the professional fees on the Fund's
statement of operations.
D. EXPENSE LIMITATION - The Manager agreed, through December 1, 2015, to limit
the total annual operating expenses of the Adviser Shares to 1.20% of its
average net assets, excluding extraordinary expenses and before reductions
of any expenses paid indirectly, and will reimburse the Adviser Shares for
all expenses in excess of that amount. This expense limitation arrangement
may not be changed or terminated through December 1, 2015, without approval
of the Board, and may be changed or terminated by the Manager at any time
after that date. Prior to December 1, 2014, the Adviser Shares' expense
limitation was 1.30% of average net assets.
E. 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 both the Fund Shares and
Adviser 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 that are held with such intermediaries. For the six-month period
ended January 31, 2015, the Fund Shares and Adviser Shares incurred transfer
agent's fees, paid or payable to SAS, of $1,137,000 and less than $500,
respectively.
F. DISTRIBUTION AND SERVICE (12B-1) FEES - The Fund has adopted a plan pursuant
to Rule 12b-1 under the 1940 Act with respect to the Adviser Shares. Under
the plan, the Adviser Shares pay fees to USAA Investment Management Company,
the distributor, for distribution and shareholder services. USAA Investment
Management Company pays all or a portion of such fees to intermediaries that
make the Adviser Shares available for investment by their customers. The fee
is accrued daily and paid monthly at an annual rate of 0.25% of the Adviser
Shares' average net assets. Adviser Shares are offered and sold without
imposition of an initial sales charge or a contingent deferred sales charge.
For the six-month period ended January 31, 2015, the Adviser Shares
incurred distribution and service (12b-1) fees of $12,000.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 33
================================================================================
G. 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 Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At January 31,
2015, USAA and its affiliates owned 398,000 shares, which represent 96.0% of the
Adviser Shares and 0.5% of the Fund.
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 GROWTH & INCOME 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 $ 22.63 $ 19.39 $ 15.44 $ 15.24 $ 13.06 $ 11.35
---------------------------------------------------------------------------
Income from investment
operations:
Net investment income .08 .21 .18 .14 .11 .08
Net realized and
unrealized gain .60 3.24 3.95 .20 2.17 1.71
--------------------------------------------------------------------------
Total from investment
operations .68 3.45 4.13 .34 2.28 1.79
---------------------------------------------------------------------------
Less distributions from:
Net investment income (.08) (.21) (.18) (.14) (.10) (.08)
Realized capital gains (2.76) - - - - -
---------------------------------------------------------------------------
Total distributions (2.84) (.21) (.18) (.14) (.10) (.08)
---------------------------------------------------------------------------
Net asset value at end
of period $ 20.47 $ 22.63 $ 19.39 $ 15.44 $ 15.24 $ 13.06
===========================================================================
Total return (%)* 2.57 17.86 26.90 2.28 17.50 15.74(a)
Net assets at end of
period (000) $1,540,045 $1,514,795 $1,418,296 $1,152,540 $1,153,199 $1,031,233
Ratios to average
net assets:**
Expenses (%)(b) .93(e) .94 .96 1.01 .98 1.04(a)
Net investment income (%) .73(e) .97 1.04 .93 .72 .60
Portfolio turnover (%) 19 61(d) 112(c) 51 52 91
* 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
$1,560,120,000.
(a) During the year ended July 31, 2010, SAS reimbursed the Fund Shares $167,000
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
ratio by 0.02%. This decrease is excluded from the expense ratio in the
Financial Highlights table.
(b) Reflects total operating expenses of the Fund Shares before reductions of
any expenses paid indirectly. The Fund Shares' expenses paid indirectly
decreased the expense ratios as follows:
- (.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+)
(+)Represents less than 0.01% of average net assets.
(c) Reflects increased trading activity due to changes in subadviser(s).
(d) Reflects decreased trading activity due to changes in subadviser(s).
(e) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
================================================================================
(8) FINANCIAL HIGHLIGHTS (CONTINUED) - ADVISER SHARES
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31, JULY 31,***
-----------------------------------------------------------------
2015 2014 2013 2012 2011
-----------------------------------------------------------------
Net asset value at beginning
of period $22.56 $19.34 $15.42 $15.22 $13.34
--------------------------------------------------------------
Income from investment
operations:
Net investment income .05 .15 .12 .10 .05
Net realized and
unrealized gain .60 3.23 3.93 .20 1.90
--------------------------------------------------------------
Total from investment
operations .65 3.38 4.05 .30 1.95
--------------------------------------------------------------
Less distributions from:
Net investment income (.04) (.16) (.13) (.10) (.07)
Realized capital gains (2.76) - - - -
--------------------------------------------------------------
Total distributions (2.80) (.16) (.13) (.10) (.07)
--------------------------------------------------------------
Net asset value at end of
period $20.41 $22.56 $19.34 $15.42 $15.22
==============================================================
Total return (%)* 2.44 17.51 26.37 2.02 14.65
Net assets at end of
period (000) $8,450 $9,305 $7,919 $6,223 $6,151
Ratios to average net assets:**
Expenses (%)(a) 1.25(b),(e) 1.22 1.30 1.30 1.30(b)
Expenses, excluding
reimbursements (%)(a) 1.25(b) 1.22 1.39 1.43 1.83(b)
Net investment income (%) .42(b) .70 .70 .64 .35(b)
Portfolio turnover (%) 19 61(d) 112(c) 51 52
* Assumes reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. generally accepted accounting principles and could differ from the
Lipper reported return. Total returns for periods of less than one year are
not annualized.
** For the six-month period ended January 31, 2015, average net assets were
$9,273,000.
*** Adviser Shares were initiated on August 1, 2010.
(a) Reflects total operating expenses of the Adviser Shares before
reductions of any expenses paid indirectly. The Adviser Shares' expenses
paid indirectly decreased the expense ratios as follows:
- (.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+)
(+) Represents less than 0.01% of average net assets.
(b) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(c) Reflects increased trading activity due to changes in subadviser(s).
(d) Reflects decreased trading activity due to changes in subadviser(s).
(e) Prior to December 1, 2014, the Manager had voluntarily agreed to limit the
annual expenses of the Adviser Shares to 1.30% of the Adviser Shares'
average net assets.
================================================================================
36 | USAA GROWTH & INCOME 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, distribution and service
(12b-1) 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 $1,025.70 $4.75
Hypothetical
(5% return before expenses) 1,000.00 1,020.52 4.74
ADVISER SHARES
Actual 1,000.00 1,024.40 6.38
Hypothetical
(5% return before expenses) 1,000.00 1,018.90 6.36
* Expenses are equal to the Fund's annualized expense ratio of 0.93% for Fund
Shares and 1.25% for Adviser Shares, which are net of any 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
2.57% for Fund Shares and 2.44% for Adviser Shares for the six-month period of
August 1, 2014, through January 31, 2015.
================================================================================
38 | USAA GROWTH & INCOME 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
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INDEPENDENT Ernst & Young LLP
INDEPENDENT 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 PRSRT STD
San Antonio, TX 78288 U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on usaa.com select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA] [LOGO OF RECYCLE PAPER]
USAA We know what it means to serve.(R) 10%
================================================================================
23432-0315 (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.