0000908695-14-000011.txt : 20140131
0000908695-14-000011.hdr.sgml : 20140131
20140131105058
ACCESSION NUMBER: 0000908695-14-000011
CONFORMED SUBMISSION TYPE: N-CSRS
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20131130
FILED AS OF DATE: 20140131
DATE AS OF CHANGE: 20140131
EFFECTIVENESS DATE: 20140131
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: USAA MUTUAL FUNDS TRUST
CENTRAL INDEX KEY: 0000908695
IRS NUMBER: 000000000
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: N-CSRS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-07852
FILM NUMBER: 14563248
BUSINESS ADDRESS:
STREET 1: 9800 FREDERICKSBURG ROAD
STREET 2: A-3-W
CITY: SAN ANTONIO
STATE: TX
ZIP: 78288-0227
BUSINESS PHONE: 210-498-0226
MAIL ADDRESS:
STREET 1: 9800 FREDERICKSBURG ROAD
STREET 2: A-3-W
CITY: SAN ANTONIO
STATE: TX
ZIP: 78288-0227
FORMER COMPANY:
FORMER CONFORMED NAME: USAA STATE TAX FREE TRUST
DATE OF NAME CHANGE: 19940325
FORMER COMPANY:
FORMER CONFORMED NAME: USAA STATE TAX EXEMPT TRUST
DATE OF NAME CHANGE: 19930707
0000908695
S000037224
Cornerstone Conservative Fund
C000114650
Cornerstone Conservative Fund
USCCX
N-CSRS
1
ncrsccf113013.txt
USAA CORNERSTONE CONSERVATIVE FUND
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/S
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-7852
Exact name of registrant as specified in charter: USAA MUTUAL FUNDS TRUST
Address of principal executive offices and zip code: 9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Name and address of agent for service: DANIEL J. MAVICO
USAA MUTUAL FUNDS TRUST
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Registrant's telephone number, including area code: (210) 498-0226
Date of fiscal year end: MAY 31
Date of reporting period: NOVEMBER 30, 2013
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED NOVEMBER 30, 2013
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA CORNERSTONE CONSERVATIVE FUND]
===============================================
SEMIANNUAL REPORT
USAA CORNERSTONE CONSERVATIVE FUND
NOVEMBER 30, 2013
===============================================
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PRESIDENT'S MESSAGE
"IT IS IMPORTANT TO OWN A VARIETY OF
INVESTMENTS THAT TEND TO PERFORM [PHOTO OF DANIEL S. McNAMARA]
DIFFERENTLY IN DIFFERENT ENVIRONMENTS."
--------------------------------------------------------------------------------
DECEMBER 2013
As experienced investors know, major moves in an asset class can happen quickly.
This was the case during the reporting period for both stocks and bonds. For
stocks, it was essentially a tale of two markets. In the first half of the
period, global stocks retreated on hints from Federal Reserve (the Fed) Chairman
Ben Bernanke that the Fed might begin tapering (or reducing) its quantitative
easing (QE) asset purchases. (Through QE, the Fed was buying $85 billion in U.S.
Treasury securities and mortgage-backed securities every month in order to push
down long-term interest rates and stimulate economic growth and it recently
signaled that it will reduce this amount to $75 billion every month.) Overall,
for the period between May 31, 2013, and September 5, 2013, international stocks
(which exclude the United States and Europe) and European stocks gained about
3%, while U.S. stocks returned approximately 2%. Emerging market stocks
declined.
Global stocks reversed direction in the second half of the reporting period,
rallying strongly after the Fed delayed the inevitable taper. Between September
6, 2013, and November 29, 2013, European stocks gained more than 10%,
outperforming U.S. and international stocks -- both of which advanced nearly a
still-respectable 10% -- and emerging markets stocks, which recorded a return of
about 8%. Varied performance, such as this, is an important reminder of the
benefits of diversification: it is important to own a variety of investments
that tend to perform differently in different environments.
In the bond market, longer-term interest rates rose on expectations of a
reduction in the Fed's asset purchases. Bond prices, which move in the opposite
direction of interest rates, declined. The increase in rates was most pronounced
in the longer end of the yield curve -- in five-year, 10-year and 30-year
maturities. For fixed-income investors, it was a mixed blessing. Higher rates
meant a decrease in principal value. On the other hand, lower prices mean
investors have the opportunity to reinvest at higher rates and earn more on any
new investments. Meanwhile, short-term interest rates remained anchored near
zero. The Fed has said it will keep the targeted federal funds rate between 0%
and 0.25% as long as unemployment is above 6.5% and inflation remains below
2.5%.
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Looking ahead, I expect the Fed to continue its asset purchases for the
foreseeable future. Janet Yellen, who has been nominated to succeed Bernanke,
said this past November that she supports the continuation of the Fed's
accommodative monetary policies. Yellen also told the Senate Banking Committee
that the Fed would eventually have to begin tapering (which it subsequently
stated it will do). However, I believe that the Fed will continue asset
purchases, as the U.S. economy remains fragile.
As the Fed starts to taper its asset purchases, longer-term interest rates will
probably increase. Though gradually rising rates can be a headwind for
investors, fixed-income investing is not an all-or-none scenario. I believe that
bonds continue to have a place in a diversified portfolio, in part because of
the income they provide. Furthermore, the bond market is not one market but is
actually a market of many different types of bonds, including U.S. Treasuries,
mortgage-backed securities, investment-grade bonds, high-yield bonds, municipal
securities, and more. Many of these fixed-income asset classes performed
differently (some better and some worse than U.S. Treasuries) during the
reporting period.
Meanwhile, equity valuations have risen faster than fundamentals. I believe
valuations will continue to rise if economic growth accelerates and profit
margins can maintain their current levels. If growth stalls or decelerates and
profit margins decrease, earnings may disappoint and stocks may trim their
gains.
Precious metals, like fixed-income securities, underperformed during the
reporting period. The underperformance, in my view, was driven by concern that
Fed tapering would be stronger than expected, which could lead to a rally in the
U.S. dollar and reduce the need for inflation protection. Precious metals are
typically used as a long-term inflation hedge. Exposure to gold and other
precious metals and minerals may enhance overall portfolio diversification.
In the months ahead, rest assured that we will continue to monitor the financial
markets as well as Congressional budget negotiations, Fed policy, economic
trends, corporate earnings, and other factors that potentially could affect the
performance of your investments. On behalf of everyone at USAA Asset Management
Company, thank for your continued investment in our family of no-load mutual
funds.
Sincerely,
/S/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
Past performance is no guarantee of future results. o As interest rates rise,
bond prices fall o Diversification is a technique to help reduce risk and does
not guarantee a profit or prevent a loss. o Emerging market countries are less
diverse and mature than other countries and tend to be politically less stable.
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 6
FINANCIAL INFORMATION
Portfolio of Investments 9
Notes to Portfolio of Investments 11
Financial Statements 12
Notes to Financial Statements 15
EXPENSE EXAMPLE 25
THIS REPORT IS FOR THE INFORMATION OF THE SHAREHOLDERS AND OTHERS WHO HAVE
RECEIVED A COPY OF THE CURRENTLY EFFECTIVE PROSPECTUS OF THE FUND, MANAGED BY
USAA ASSET MANAGEMENT COMPANY. IT MAY BE USED AS SALES LITERATURE ONLY WHEN
PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS, WHICH PROVIDES FURTHER DETAILS
ABOUT THE FUND.
(C)2014, USAA. All rights reserved.
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FUND OBJECTIVE
THE USAA CORNERSTONE CONSERVATIVE FUND (THE FUND) SEEKS CURRENT INCOME. THE FUND
ALSO CONSIDERS THE POTENTIAL FOR CAPITAL APPRECIATION.
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TYPES OF INVESTMENTS
The Fund invests in a selection of USAA mutual funds (underlying USAA Funds)
consisting of a target asset class allocation of approximately 20% equity
securities and 80% fixed-income securities. This is often referred to as a
fund-of-funds investment strategy. The actual asset class allocation can deviate
from time to time from these targets as market conditions warrant. The Fund may
invest in investment-grade and below-investment-grade securities.
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
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[PHOTO OF JOHN P. TOOHEY] [PHOTO OF WASIF A. LATIF]
JOHN P. TOOHEY, CFA WASIF A. LATIF
USAA Asset USAA Asset
Management Company Management Company
--------------------------------------------------------------------------------
o HOW DID THE USAA CORNERSTONE CONSERVATIVE FUND (THE FUND) PERFORM DURING THE
REPORTING PERIOD?
The Fund returned 1.22% during the reporting period ended November 30, 2013.
This compares to returns of -0.56% for the Barclays U.S. Aggregate Bond
Index and 10.50% for the MSCI All-Country World Index.
o HOW DID THE FUND'S BOND ALLOCATION AFFECT PERFORMANCE?
The Fund's emphasis on bonds is consistent with our goal of income and
long-term capital preservation. In the short term, however, the U.S.
investment-grade bond market experienced poor performance. During the
reporting period, investors reacted negatively to the prospect of the U.S.
Federal Reserve (the Fed) "tapering" (or reducing) the bond-buying program
known as "quantitative easing." While the Fed kept the policy intact through
the close of the reporting period, the potential for a withdrawal of support
led to a sell-off in intermediate- and long-term investment-grade bonds.
Shortly after the reporting period ended, the Fed signaled that it will
begin tapering its bond-buying program from $85 billion per month to $75
billion per month.
Refer to page 7 for benchmark definitions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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2 | USAA CORNERSTONE CONSERVATIVE FUND
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Although the three investment-grade bond funds held in the Fund were
affected by these headwinds, the funds performed well compared to their
respective benchmarks. The managers of the underlying funds positioned their
portfolios with below-average sensitivity to rising interest rates, and they
maintained their emphasis on fundamental research and individual security
selection -- two traits that aided performance in the reporting period.
The Fund also held a large position in the USAA Short-Term Bond Fund.
Short-term bonds held up well in the challenging environment, supplying an
element of stability at a time of above-average volatility for the bond
market.
The Fund has a modest allocation to the USAA High Income Fund. This asset
class tends to have a lower sensitivity to interest-rate risk than the
investment-grade segment of the market, which was positive for its six-month
results. High-yield bonds also were helped by stronger economic growth and
investors' continued preference for income-producing securities.
o HOW DID THE FUND'S STOCK ALLOCATION AFFECT PERFORMANCE?
Our domestic equity allocation made a positive contribution to performance.
The U.S. equity market delivered very strong returns as growing optimism
about the economic outlook helped fuel investors' appetite for risk.
In order to maximize diversification, we divide the domestic equity
portfolio among funds that invest in large- and small-cap stocks,
income-producing equities, and the growth, aggressive growth, and value
styles. All six funds in this allocation delivered a gain during the
reporting period, led by our allocations to small-cap and aggressive growth
stocks.
The non-U.S. equity portion of the Fund also registered a healthy return.
Our holdings in funds that invest in the developed overseas
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MANAGERS' COMMENTARY ON THE FUND | 3
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markets performed particularly well due in part to the signs of recovery in
Europe's economy and the aggressive policies of Japan's central bank. Our
allocation to the emerging markets also produced a gain, albeit a more
modest one than our positions in the developed markets. Emerging markets
stocks lagged due to concerns about Fed tapering and weaker-than-expected
growth in key markets such as Brazil, China, and India.
Our small allocation to the USAA Precious Metals and Minerals Fund was the
weakest segment of the portfolio. The price of gold weakened in an
environment of low inflation and positive investor sentiment, and gold
stocks lagged even more significantly due to their contracting profit
margins and weak earnings results.
Although our precious metals allocation lagged considerably in the past six
months, it's important to keep in mind that we construct the portfolio to
deliver strong risk-adjusted returns over the ups and downs of the markets
rather than trying to maximize short-term performance. We believe it's
essential to maintain this diversified approach rather than overreacting
when some elements of the portfolio aren't working.
o WHAT IS YOUR OUTLOOK FOR THE FINANCIAL MARKETS AS WE MOVE INTO 2014?
As we look ahead to 2014, we foresee an environment in which
financial-market performance may be somewhat more muted. Developed-market
stocks are more richly valued, and yields on long-term bonds are likely to
trend higher over time. What's more, we anticipate a high level of market
uncertainty stemming from shifting expectations for the country's fiscal and
monetary policies.
Our approach to this potentially challenging backdrop is to emphasize
fundamentals and valuations as the basis for determining the Fund's optimal
asset allocation. We seek to construct a portfolio that is truly diversified
in that it is positioned to capitalize on a wide range of
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4 | USAA CORNERSTONE CONSERVATIVE FUND
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potential outcomes regarding global growth, central bank policy, and
inflation. We believe this nimble approach -- and not one that simply seeks
to "ride the wave" of accommodative central bank policies -- will be
critical to generating outperformance in the year ahead.
Thank you for your investment in the Fund.
Non-investment-grade securities are considered speculative and are subject
to significant credit risk. They are sometimes referred to as junk bonds
since they represent a greater risk of default than more creditworthy
investment-grade securities. o Diversification does not guarantee a profit
or prevent a loss. 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.
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MANAGERS' COMMENTARY ON THE FUND | 5
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INVESTMENT OVERVIEW
USAA CORNERSTONE CONSERVATIVE FUND (THE FUND)
(Ticker Symbol: USCCX)
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11/30/13 5/31/13
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Net Assets $82.4 Million $68.6 Million
Net Asset Value Per Share $10.58 $10.60
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AVERAGE ANNUAL TOTAL RETURNS AS OF 11/30/13
--------------------------------------------------------------------------------
5/31/13-11/30/13* 1 Year Since Inception 6/8/12
1.22% 3.95% 6.26%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/13
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1 Year Since Inception 6/8/12
3.47% 5.94%
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EXPENSE RATIOS AS OF 5/31/13**
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Before Reimbursement 1.08% After Reimbursement 0.66%
(Includes acquired fund fees and expenses of 0.56%)
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
*Total returns for periods of less than one year are not annualized. This return
is cumulative.
**The expense 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 Funds' prospectus dated October 1, 2013, and
are calculated as a percentage of average net assets. USAA Asset Management
Company (the Manager) has agreed, through October 1, 2014, to make payments or
waive management, administration, and other fees so that the total expenses of
the Fund (exclusive of commission recapture, expense offset arrangements,
acquired fund fees and expenses, and extraordinary expenses) do not exceed an
annual rate of 0.10% of the Fund's average net assets. This reimbursement
arrangement may not be changed or terminated during this time period without
approval of the Trust's Board of Trustees and may be changed or terminated by
the Manager at any time after October 1, 2014. These expense ratios may differ
from the expense ratios disclosed in the Financial Highlights, which excludes
acquired fund fees and expenses.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. 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 or the
redemption of shares.
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6 | USAA CORNERSTONE CONSERVATIVE FUND
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
MSCI ALL-COUNTRY USAA CORNERSTONE BARCLAYS U.S.
WORLD INDEX CONSERVATIVE FUND AGGREGATE BOND INDEX
05/31/12 $10,000.00 $10,000.00 $10,000.00
06/30/12 10,493.89 10,095.03 10,003.92
07/31/12 10,637.55 10,205.08 10,141.91
08/31/12 10,868.84 10,305.13 10,148.53
09/30/12 11,211.17 10,426.24 10,162.50
10/31/12 11,136.45 10,476.52 10,182.49
11/30/12 11,278.85 10,526.79 10,198.56
12/31/12 11,534.33 10,580.01 10,184.04
01/31/13 12,065.70 10,661.23 10,112.81
02/28/13 12,063.82 10,712.00 10,163.50
03/31/13 12,281.81 10,780.03 10,171.61
04/30/13 12,635.33 10,882.02 10,274.54
05/31/13 12,600.66 10,810.63 10,091.22
06/30/13 12,232.36 10,587.24 9,935.12
07/31/13 12,817.95 10,710.47 9,948.70
08/31/13 12,550.90 10,648.85 9,897.85
09/30/13 13,199.17 10,766.55 9,991.55
10/31/13 13,729.68 10,921.69 10,072.33
11/30/13 13,924.12 10,942.37 10,034.62
[END CHART]
Data from 5/31/12 to 11/30/13.*
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Cornerstone Conservative Fund to the following benchmarks:
o The unmanaged MSCI All-Country Index is a free float-adjusted market
capitalization weighted index that is designed to measure the equity market
performance of developed and emerging markets.
o The unmanaged Barclays U.S. Aggregate Bond Index covers the U.S.
investment-grade fixed-rate bond market, including government and credit
securities, agency mortgage pass-through securities, asset-backed securities,
and commercial mortgage-backed securities that have remaining maturities of
more than one year.
Past performance is no guarantee of future results, and the cumulative
performance quoted does not reflect the deduction of taxes that a shareholder
would pay on distributions or the redemption of shares. Indexes are unmanaged
and you cannot invest directly in an index.
*The performance of the MSCI All-Country World Index and the Barclays U.S.
Aggregate Bond Index is calculated from the end of the month, May 31, 2012,
while the Cornerstone Conservative Fund's inception date is June 8, 2012. There
may be a slight variation of the performance numbers because of this difference.
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INVESTMENT OVERVIEW | 7
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o ASSET ALLOCATION -- 11/30/2013 o
INVESTMENT ALLOCATION
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USAA FUND:
Aggressive Growth ..................................................... 1.2%
Emerging Markets ...................................................... 2.0%
Growth ................................................................ 1.2%
Income Stock .......................................................... 1.9%
International ......................................................... 3.8%
Precious Metals and Minerals .......................................... 0.9%
S&P 500 Index ......................................................... 1.2%
Small Cap Stock ....................................................... 1.4%
Value ................................................................. 1.2%
Total Equity ....................................................... 14.8%
High Income ........................................................... 5.9%
Income ................................................................ 32.2%
Intermediate.Term Bond ................................................ 22.9%
Short-Term Bond ....................................................... 22.8%
Total Fixed-Income ................................................. 83.8%
CASH:
Money Market Instruments .............................................. 1.2%
Percentages are of the net assets of the Fund and may not equal 100%.
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8 | USAA CORNERSTONE CONSERVATIVE FUND
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PORTFOLIO OF INVESTMENTS
November 30, 2013 (unaudited)
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
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EQUITY MUTUAL FUNDS (14.8%)
22,537 USAA Aggressive Growth Fund $ 969
90,824 USAA Emerging Markets Fund 1,610
45,143 USAA Growth Fund 994
92,846 USAA Income Stock Fund 1,596
102,760 USAA International Fund 3,108
54,342 USAA Precious Metals and Minerals Fund 744
38,526 USAA S&P 500 Index Fund 996
58,206 USAA Small Cap Stock Fund 1,184
48,015 USAA Value Fund 953
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Total Equity Mutual Funds (cost: $10,537) 12,154
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FIXED-INCOME MUTUAL FUNDS (83.8%)
552,204 USAA High Income Fund 4,887
2,028,024 USAA Income Fund 26,547
1,751,485 USAA Intermediate-Term Bond Fund 18,811
2,038,149 USAA Short-Term Bond Fund 18,791
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Total Fixed-Income Mutual Funds (cost: $69,922) 69,036
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MONEY MARKET INSTRUMENTS (1.2%)
MONEY MARKET FUNDS (1.2%)
1,029,961 State Street Institutional Liquid Reserve Fund, 0.07%(a) (cost: $1,030) 1,030
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TOTAL INVESTMENTS (COST: $81,489) $82,220
=======
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PORTFOLIO OF INVESTMENTS | 9
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($ IN 000s) VALUATION HIERARCHY
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(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
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Equity Mutual Funds $12,154 $- $- $12,154
Fixed-Income Mutual Funds 69,036 - - 69,036
Money Market Instruments:
Money Market Funds 1,030 - - 1,030
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Total $82,220 $- $- $82,220
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For the period of June 1, 2013, through November 30, 2013, there were no
transfers of securities between levels. The Fund's policy is to recognize any
transfers into and out of the levels as of the beginning of the period in which
the event or circumstance that caused the transfer occurred.
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10 | USAA CORNERSTONE CONSERVATIVE FUND
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NOTES TO PORTFOLIO OF INVESTMENTS
November 30, 2013 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
o SPECIFIC NOTES
(a) Rate represents the money market fund annualized seven-day yield at
November 30, 2013.
See accompanying notes to financial statements.
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NOTES TO PORTFOLIO OF INVESTMENTS | 11
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STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
November 30, 2013 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in affiliated underlying funds, at value (cost of $80,459) $81,190
Investments in other securities, at value (cost of $1,030) 1,030
Receivables:
Capital shares sold 228
USAA Asset Management Company (Note 5C) 13
Dividends from affiliated underlying funds 105
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Total assets 82,566
-------
LIABILITIES
Payables:
Securities purchased 105
Capital shares redeemed 56
Other accrued expenses and payables 32
-------
Total liabilities 193
-------
Net assets applicable to capital shares outstanding $82,373
=======
NET ASSETS CONSIST OF:
Paid-in capital $81,018
Accumulated undistributed net investment income 515
Accumulated net realized gain on investments 109
Net unrealized appreciation of investments 731
-------
Net assets applicable to capital shares outstanding $82,373
=======
Capital shares outstanding, unlimited number of shares authorized,
no par value 7,784
=======
Net asset value, redemption price, and offering price per share $ 10.58
=======
See accompanying notes to financial statements.
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12 | USAA CORNERSTONE CONSERVATIVE FUND
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STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended November 30, 2013 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income distributions from affiliated underlying funds $1,156
------
EXPENSES
Custody and accounting fees 18
Postage 4
Shareholder reporting fees 10
Trustees' fees 7
Registration fees 21
Professional fees 23
Other 4
------
Total expenses 87
Expenses reimbursed (50)
------
Net expenses 37
------
NET INVESTMENT INCOME 1,119
------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on sales of affiliated underlying funds (31)
Change in net unrealized appreciation/depreciation of affiliated
underlying funds (51)
------
Net realized and unrealized loss (82)
------
Increase in net assets resulting from operations $1,037
======
See accompanying notes to financial statements.
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FINANCIAL STATEMENTS | 13
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STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended November 30, 2013 (unaudited), and period ended
May 31, 2013
--------------------------------------------------------------------------------
11/30/2013 5/31/2013*
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FROM OPERATIONS
Net investment income $ 1,119 $ 1,116
Net realized gain (loss) on sales of affilitated
underlying funds (31) 19
Net realized gain on capital gain distributions from
affiliated underlying funds - 126
Change in net unrealized appreciation/depreciation of
affiliated underlying funds (51) 782
---------------------------
Increase in net assets resulting from operations 1,037 2,043
---------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,013) (707)
Net realized gains - (5)
---------------------------
Distributions to shareholders (1,013) (712)
---------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 30,639 80,006
Reinvested dividends 936 607
Cost of shares redeemed (17,797) (13,373)
---------------------------
Increase in net assets from capital share transactions 13,778 67,240
---------------------------
Net increase in net assets 13,802 68,571
NET ASSETS
Beginning of period 68,571 -
---------------------------
End of period $ 82,373 $ 68,571
===========================
Accumulated undistributed net investment income:
End of period $ 515 $ 409
===========================
CHANGE IN SHARES OUTSTANDING
Shares sold 2,933 7,678
Shares issued for dividends reinvested 91 58
Shares redeemed (1,706) (1,270)
---------------------------
Increase in shares outstanding 1,318 6,466
===========================
*Fund commenced operations on June 8, 2012.
See accompanying notes to financial statements.
================================================================================
14 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
NOTES TO FINANCIAL STATEMENTS
November 30, 2013 (unaudited)
--------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USAA MUTUAL FUNDS TRUST (the Trust), registered under the Investment Company Act
of 1940, as amended (the 1940 Act), is an open-end management investment company
organized as a Delaware statutory trust consisting of 52 separate funds. The
information presented in this semiannual report pertains only to the USAA
Cornerstone Conservative Fund (the Fund), which is classified as diversified
under the 1940 Act. The Fund's investment objective is to seek current income
with the potential for capital appreciation.
The Fund is a "fund of funds" in that it invests in a portfolio of underlying
USAA equity and fixed-income mutual funds (underlying USAA Funds) managed by
USAA Asset Management Company (the Manager), an affiliate of the Fund.
A. SECURITY VALUATION -- The Trust's Board of Trustees (the Board) has
established the Valuation Committee (the Committee), and subject to Board
oversight, the Committee administers and oversees the Fund's valuation
policies and procedures, which are approved by the Board. Among other
things, these policies and procedures allow the Fund to utilize independent
pricing services, quotations from securities dealers, and a wide variety of
sources and information to establish and adjust the fair value of securities
as events occur and circumstances warrant.
The Committee reports to the Board on a quarterly basis and makes
recommendations to the Board as to pricing methodologies and services used
by the Fund and presents additional information to the Board regarding
application of the pricing and fair valuation policies and procedures during
the preceding quarter.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 15
================================================================================
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 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. Investments in the underlying USAA Funds and other open-end investment
companies, other than exchange-traded funds (ETFs) are valued at their
net asset value (NAV) at the end of each business day.
2. The underlying USAA Funds have specific valuation procedures.
Securities held by an underlying USAA Fund 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 a fund, are valued in
good faith at fair value, using methods determined by the Manager in
consultation with a fund's subadvisers, 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 a
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
================================================================================
16 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
any restrictions on disposition of the securities, and an evaluation of
the forces that influenced the market in which the securities are
purchased and sold.
B. FAIR VALUE MEASUREMENTS -- Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments is
based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 -- inputs to the valuation methodology are quoted prices
(unadjusted) in active markets for identical securities.
Level 2 -- inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices.
Level 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 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 and capital gain
================================================================================
NOTES TO FINANCIAL STATEMENTS | 17
================================================================================
distributions from the underlying USAA Funds are recorded on the ex-dividend
date. 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. EXPENSES PAID INDIRECTLY -- Through arrangements with the Fund's custodian
and other banks utilized by the Fund for cash management purposes, realized
credits, if any, generated from cash balances in the Fund's bank accounts
may be used to directly reduce the Fund's expenses. For the six-month period
ended November 30, 2013, there were no custodian and other bank credits.
F. INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, in the normal course
of business, the Trust enters into contracts that contain a variety of
representations and warranties that provide general indemnifications. The
Trust's maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust expects the risk of loss to be remote.
G. USE OF ESTIMATES -- The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $500 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at an interest rate based on
the London Interbank Offered Rate (LIBOR).
================================================================================
18 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
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 fee rate remains unchanged from September 30, 2012, to
September 30, 2013. The facility fees are allocated among the Funds based on
their respective average net assets for the period.
For the six-month period ended November 30, 2013, the Fund paid CAPCO facility
fees of less than $500, which represents 0.1% of the total fees paid to CAPCO by
the USAA Funds. The Fund had no borrowings under this agreement during the
six-month period ended November 30, 2013.
(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 May 31, 2014, in
accordance with applicable tax law.
Distributions of net investment income are made quarterly or as otherwise
required to avoid the payment of federal taxes. Distributions of realized gains
from security transactions not offset by capital losses are made annually in the
succeeding fiscal year or as otherwise required to avoid the payment of federal
taxes.
Under the Regulated Investment Company Modernization Act of 2010 (the Act), a
fund is permitted to carry forward net capital losses indefinitely.
Additionally, such capital losses that are carried forward will retain their
character as short-term and/or long-term capital losses. Post-enactment capital
loss carryforwards must be used before pre-enactment capital loss carryforwards.
As a result, pre-enactment capital loss carryforwards may be more likely to
expire unused.
At May 31, 2013, the Fund had no post-enactment capital loss carryforwards, for
federal income tax purposes.
For the six-month period ended November 30, 2013, 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
================================================================================
NOTES TO FINANCIAL STATEMENTS | 19
================================================================================
tax positions. On an ongoing basis the Manager will monitor its tax positions to
determine if adjustments to this conclusion are necessary. The statute of
limitations on the Fund's tax return filings generally remain open for the three
preceding fiscal reporting year-ends and remain subject to examination by the
Internal Revenue Service and state taxing authorities.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended November 30, 2013, were
$14,634,000 and $850,000, respectively.
As of November 30, 2013, the cost of securities, including short-term
securities, for federal income tax purposes, was approximately the same as that
reported in the financial statements.
Gross unrealized appreciation and depreciation of investments as of November 30,
2013, were $2,046,000 and $1,315,000, respectively, resulting in net unrealized
appreciation of $731,000.
(5) AGREEMENTS WITH MANAGER
A. ADVISORY AGREEMENT -- The Manager carries out the Fund's investment policies
and manages the Fund's portfolios pursuant to an Advisory Agreement. The
Manager does not receive any management fees from the Fund for these
services.
B. ADMINISTRATION AND SERVICING FEES -- The Manager provides certain
administration and servicing functions for the Fund. The Manager does not
receive any fees from the Fund for these services.
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
billing of these expenses to the Fund. These expenses are included in the
professional fees on the Fund's
================================================================================
20 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
statement of operations and, for the six-month period ended November 30,
2013, were $1,000 for the Fund.
C. EXPENSE LIMITATION -- The Manager has agreed, through October 1, 2014, to
limit the annual expenses of the Fund to 0.10% of its average net assets,
excluding extraordinary expenses and before reductions of any expenses paid
indirectly, and will reimburse the Fund for all expenses in excess of that
amount. This expense limitation arrangement may not be changed or terminated
through October 1, 2014, without approval of the Board, and may be changed
or terminated by the Manager at any time after that date. For the six-month
period ended November 30, 2013, the Fund incurred reimbursable expenses of
$50,000, of which $13,000 was receivable from the Manager.
D. TRANSFER AGENCY AGREEMENT -- USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund. SAS does not receive any fees from the
Fund for these services.
E. UNDERWRITING SERVICES -- USAA Investment Management Company provides
exclusive underwriting and distribution of the Fund's shares on a continuing
best-efforts basis and receives no commissions or fees for this service.
(6) TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At November 30,
2013, USAA and its affiliates owned 500,000 shares, which represents 6.4% of the
Fund.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 21
================================================================================
(7) TRANSACTIONS WITH AFFILIATED FUNDS
A. SHARE OWNERSHIP -- The Fund does not invest in the underlying USAA Funds for
the purpose of exercising management or control; however, investments by the
Fund may represent a significant portion of the underlying USAA Funds' net
assets. At November 30, 2013, the Fund owned the following percentages of
the total outstanding shares of each of the underlying USAA Funds:
AFFILIATED USAA FUND OWNERSHIP %
--------------------------------------------------------------------------------
Aggressive Growth 0.1
Emerging Markets 0.1
Growth 0.1
High Income 0.2
Income 0.6
Income Stock 0.1
Intermediate-Term Bond 0.6
International 0.1
Precious Metals and Minerals 0.1
S&P 500 Index 0.0*
Short-Term Bond 0.6
Small Cap Stock 0.1
Value 0.1
* Represents less than 0.1%.
================================================================================
22 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
B. TRANSACTIONS WITH AFFILIATED FUNDS -- The following table provides details
related to the Fund's investment in the underlying USAA Funds for the
six-month period ended November 30, 2013 (in thousands):
REALIZED
PURCHASE SALES DIVIDEND GAIN MARKET VALUE
AFFILIATED USAA FUND COST(a) PROCEEDS INCOME (LOSS)(b) 05/31/2013 11/30/2013
-------------------------------------------------------------------------------------------------
Aggressive Growth $ 68 $ - $ - $ - $ 776 $ 969
Emerging Markets 248 - - - 1,326 1,610
Growth 77 - - - 797 994
High Income 847 - 136 - 4,083 4,887
Income 5,389 450 451 (24) 22,141 26,547
Income Stock 172 - 12 - 1,293 1,596
Intermediate-Term
Bond 3,542 - 373 - 15,680 18,811
International 278 - - - 2,523 3,108
Precious Metals and
Minerals 210 - - - 665 744
S&P 500 Index 97 - 8 - 803 996
Short-Term Bond 3,587 400 176 (7) 15,663 18,791
Small Cap Stock 54 - - - 960 1,184
Value 65 - - - 778 953
(a) Includes reinvestment of distributions from dividend income and realized
gains.
(b) Includes capital gain distributions received, if any.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 23
================================================================================
(8) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED PERIOD ENDED
NOVEMBER 30, MAY 31,
-------------------------------
2013 2013***
-------------------------------
Net asset value at beginning of period $ 10.60 $ 10.00
---------------------------
Income (loss) from investment operations:
Net investment income .15 .35(a)
Net realized and unrealized gain (loss) (.02) .46(a)
---------------------------
Total from investment operations .13 .81(a)
---------------------------
Less distributions from:
Net investment income (.15) (.21)
Realized capital gains - (.00)(d)
---------------------------
Total distributions (.15) (.21)
---------------------------
Net asset value at end of period $ 10.58 $ 10.60
===========================
Total return (%)* 1.22 8.11
Net assets at end of period (000) $82,373 $68,571
Ratios to average net assets:**
Expenses (%)(b),(c) .10 .10
Expenses, excluding reimbursements (%)(b),(c) .23 .52
Net investment income (%)(b) 2.99 3.27
Portfolio turnover (%) 1 4
* Assumes reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. generally accepted accounting principles and could differ from the
Lipper reported return. Total returns for periods of less than one year are
not annualized.
** For the six-month period ended November 30, 2013, average net assets were
$74,560,000.
*** Fund commenced operations on June 8, 2012.
(a) Calculated using average shares.
(b) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(c) Reflects total operating expenses of the Fund before reductions of any
expenses paid indirectly. The Fund's expenses paid indirectly decreased the
expense ratios by less than 0.01%.
(d) Represents less than $0.01 per share.
================================================================================
24 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
EXPENSE EXAMPLE
November 30, 2013 (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 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 Fund also indirectly bears its
pro-rata share of the expenses of the underlying USAA Funds in which it invests
(acquired funds). These acquired fund fees and expenses are not included in the
Fund's annualized expense ratios used to calculate the expense estimates in the
table on the next page.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire six-month period of June 1, 2013, through
November 30, 2013.
ACTUAL EXPENSES
The first line of the table on the next page provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested at the beginning of the period, to
estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number in the first 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 second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before
================================================================================
EXPENSE EXAMPLE | 25
================================================================================
expenses, which is not the Fund's actual return. The hypothetical account values
and expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, 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 second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JUNE 1, 2013 -
JUNE 1, 2013 NOVEMBER 30, 2013 NOVEMBER 30, 2013
-----------------------------------------------------------
Actual $1,000.00 $1,012.20 $0.50
Hypothetical
(5% return before expenses) 1,000.00 1,024.57 0.51
* Expenses are equal to the Fund's annualized expense ratio of 0.10%, which is
net of any reimbursements and expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 183 days/365 days (to
reflect the one-half-year period). The Fund's ending account value on the
first line in the table is based on its actual total return of 1.22% for the
six-month period of June 1, 2013, through November 30, 2013.
================================================================================
26 | USAA CORNERSTONE CONSERVATIVE FUND
================================================================================
TRUSTEES Daniel S. McNamara
Robert L. Mason, Ph.D.
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
Paul L. McNamara
Jefferson C. Boyce
--------------------------------------------------------------------------------
ADMINISTRATOR AND USAA Asset Management Company
INVESTMENT ADVISER P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
UNDERWRITER AND USAA Investment Management Company
DISTRIBUTOR P.O. Box 659453
San Antonio, Texas 78265-9825
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
--------------------------------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "My Accounts" on
SELF-SERVICE 24/7 usaa.com select "Investments,"
AT USAA.COM then "Mutual Funds"
OR CALL Under "Investments" view
(800) 531-USAA account balances, or click
(8722) "I want to...," and select
the desired action.
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund, are
available without charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) in summary within the Statement of Additional Information on the SEC's
website at HTTP://WWW.SEC.GOV. Information regarding how the Fund voted proxies
relating to portfolio securities during the most recent 12-month period ended
June 30 is available without charge (i) at USAA.COM; and (ii) on the SEC's
website at HTTP://WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. These Forms N-Q are
available at no charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's website at HTTP://WWW.SEC.GOV. These Forms N-Q also may
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) 732-0330.
================================================================================
USAA
9800 Fredericksburg Road --------------
San Antonio, TX 78288 PRSRT STD
U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
Under MY PROFILE on USAA.COM select MANAGE PREFERENCES
Set your DOCUMENT PREFERENCES to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA WE KNOW WHAT IT MEANS TO SERVE.(R)
=============================================================================
97450-0114 (C)2014, USAA. All rights reserved.
ITEM 2. CODE OF ETHICS.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Filed as part of the report to shareholders.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Corporate Governance Committee selects and nominates candidates for
membership on the Board as independent directors. Currently, there is no
procedure for shareholders to recommend candidates to serve on the Board.
ITEM 11. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of USAA Mutual
Funds Trust (Trust) have concluded that the Trust's disclosure controls and
procedures are sufficient to ensure that information required to be disclosed by
the Trust in this Form N-CSR/S was recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms, based upon such officers' evaluation of these controls and
procedures as of a date within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation. The only change to the
procedures was to document the annual disclosure controls and procedures
established for the new section of the shareholder reports detailing the factors
considered by the Funds' Board in approving the Funds' advisory agreements.
ITEM 12. EXHIBITS.
(a)(1). NOT APPLICABLE. This item must be disclosed only in annual reports.
(a)(2). Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit
99.CERT.
(a)(3). Not Applicable.
(b). Certification pursuant to Rule 30a-2(b) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(b))is filed and attached hereto as Exhibit
99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: USAA MUTUAL FUNDS TRUST, Period Ended November 30, 2013
By:* /S/ DANIEL J. MAVICO
-----------------------------------------------------------
Signature and Title: DANIEL J. MAVICO, Assistant Secretary
Date: 01/27/2014
------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:* /S/ DANIEL S. MCNAMARA
-----------------------------------------------------
Signature and Title: Daniel S. McNamara, President
Date: 01/27/2014
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 01/27/2014
------------------------------
*Print the name and title of each signing officer under his or her signature.
EX-99.CERT
2
ncsrscerts113013.txt
USAA MUTUAL FUNDS TRUST, CERTIFICATIONS, 11/30/13
CERTIFICATIONS
I, DANIEL S. MCNAMARA, certify that:
------------------
1. I have reviewed the reports on Form N-CSR/S for the period ending November
30, 2013 for the following funds of USAA MUTUAL FUNDS TRUST:
Cornerstone Moderate Fund
Cornerstone Moderately Aggressive Fund
Cornerstone Moderately Conservative Fund
Cornerstone Aggressive Fund
Cornerstone Conservative Fund
Cornerstone Equity Fund
Growth & Tax Strategy Fund
Emerging Markets Fund Shares
Emerging Markets Fund Institutional Shares
Emerging Markets Fund Adviser Shares
International Fund Shares
International Fund Institutional Shares
International Fund Adviser Shares
Managed Allocation Fund
Precious Metals & Minerals Fund Shares
Precious Metals & Minerals Fund Institutional Shares
Precious Metals & Minerals Fund Adviser Shares
World Growth Fund Shares
World Growth Fund Adviser Shares
Government Securities Fund Shares
Government Securities Fund Adviser Shares
Treasury Money Market Fund
2. Based on my knowledge, these reports do not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by these reports;
3. Based on my knowledge, the financial statements, and other financial
information included in these reports, fairly present in all material respects
the financial condition, results of operations, changes in net assets, and
cash flows (if the financial statements are required to include a statement of
cash flows) of the Registrant as of, and for, the periods presented in these
reports;
4. The Registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control
over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which these reports are being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in these reports our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date within
90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in these reports any change in the Registrant's internal control
over financial reporting that occurred during the Registrant's most recent
fiscal half-year (the Registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting;
and
5. The Registrant's other certifying officer(s) and I have disclosed to the
Registrant's auditors and the audit committee of the Registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant's ability to record, process,
summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control
over financial reporting.
Date: 01/27/2014 /S/ DANIEL S. NCNAMARA
------------------- --------------------------------
Daniel S. McNamara
President
I, ROBERTO GALINDO, JR., certify that:
--------------------
1. I have reviewed the reports on Form N-CSR/S for the period ending November
30, 2013 for the following funds of USAA MUTUAL FUNDS TRUST:
Cornerstone Moderate Fund
Cornerstone Moderately Aggressive Fund
Cornerstone Moderately Conservative Fund
Cornerstone Aggressive Fund
Cornerstone Conservative Fund
Cornerstone Equity Fund
Growth & Tax Strategy Fund
Emerging Markets Fund Shares
Emerging Markets Fund Institutional Shares
Emerging Markets Fund Adviser Shares
International Fund Shares
International Fund Institutional Shares
International Fund Adviser Shares
Managed Allocation Fund
Precious Metals & Minerals Fund Shares
Precious Metals & Minerals Fund Institutional Shares
Precious Metals & Minerals Fund Adviser Shares
World Growth Fund Shares
World Growth Fund Adviser Shares
Government Securities Fund Shares
Government Securities Fund Adviser Shares
Treasury Money Market Fund
2. Based on my knowledge, these reports do not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by these reports;
3. Based on my knowledge, the financial statements, and other financial
information included in these reports, fairly present in all material respects
the financial condition, results of operations, changes in net assets, and
cash flows (if the financial statements are required to include a statement of
cash flows) of the Registrant as of, and for, the periods presented in these
reports;
4. The Registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control
over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which these reports are being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in these reports our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date within
90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in these reports any change in the Registrant's internal control
over financial reporting that occurred during the Registrant's most recent
fiscal half-year (the Registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting;
and
5. The Registrant's other certifying officer(s) and I have disclosed to the
Registrant's auditors and the audit committee of the Registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant's ability to record, process,
summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control
over financial reporting.
Date: 01/27/2014 /S/ ROBERTO GALINDO, JR.
------------------- --------------------------------
Roberto Galindo, Jr.
Treasurer
EX-99.906 CERT
3
ncsrs906certs113013.txt
USAA MUTUAL FUNDS TRUST, CERTIFICATIONS, 11/30/13
SECTION 906 CERTIFICATION
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Name of Issuer: USAA MUTUAL FUNDS TRUST
Cornerstone Moderate Fund
Cornerstone Moderately Aggressive Fund
Cornerstone Moderately Conservative Fund
Cornerstone Aggressive Fund
Cornerstone Conservative Fund
Cornerstone Equity Fund
Growth & Tax Strategy Fund
Emerging Markets Fund Shares
Emerging Markets Fund Institutional Shares
Emerging Markets Fund Adviser Shares
Managed Allocation Fund
Precious Metals & Minerals Fund Shares
Precious Metals & Minerals Fund Institutional Shares
Precious Metals & Minerals Fund Adviser Shares
International Fund Shares
International Fund Institutional Shares
International Fund Adviser Shares
World Growth Fund Shares
World Growth Fund Adviser Shares
Government Securities Fund Shares
Government Securities Fund Adviser Shares
Treasury Money Market Fund
In connection with the Semi Annual Reports on Form N-CSR/S (Reports) of the
above-named issuer for the Funds listed above for the period ended November 30,
2013, the undersigned hereby certifies, that:
1. The Reports fully comply with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Reports fairly present, in all material
respects, the financial condition and results of operations of the issuer.
Date: 01/27/2014 /S/ DANIEL S. MCNAMARA
--------------- --------------------------
Daniel S. McNamara
President
SECTION 906 CERTIFICATION
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Name of Issuer: USAA MUTUAL FUNDS TRUST
Cornerstone Moderate Fund
Cornerstone Moderately Aggressive Fund
Cornerstone Moderately Conservative Fund
Cornerstone Aggressive Fund
Cornerstone Conservative Fund
Cornerstone Equity Fund
Growth & Tax Strategy Fund
Emerging Markets Fund Shares
Emerging Markets Fund Institutional Shares
Emerging Markets Fund Adviser Shares
Managed Allocation Fund
Precious Metals & Minerals Fund Shares
Precious Metals & Minerals Fund Institutional Shares
Precious Metals & Minerals Fund Adviser Shares
International Fund Shares
International Fund Institutional Shares
International Fund Adviser Shares
World Growth Fund Shares
World Growth Fund Adviser Shares
Government Securities Fund Shares
Government Securities Fund Adviser Shares
Treasury Money Market Fund
In connection with the Semi Annual Reports on Form N-CSR/S (Reports) of the
above-named issuer for the Funds listed above for the period ended November 30,
2013, the undersigned hereby certifies, that:
1. The Reports fully comply with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Reports fairly present, in all material
respects, the financial condition and results of operations of the issuer.
Date: 01/27/2014 /S/ ROBERTO GALINDO, JR.
--------------- -------------------------
Roberto Galindo, Jr.
Treasurer