https://www.sec.gov/Archives/edgar/data/908695/000168386320007766/f5097d1.htm(see link to see table of affected funds)
The Board of Trustees of USAA Mutual Funds Trust has approved redesignating each Fund's current Adviser Shares as "Class A" shares ("Redesignation"). This change is expected to be effective on or about June 29, 2020 ("Redesignation Date").
The total annual operating expense ratio of the Class A shares of each Fund will be no greater than that of the Adviser Shares on a net basis as a result of the same expense limitation agreement currently in place with respect to the Adviser Shares through at least June 30, 2021. Like Adviser Shares, Class A shares will be available for purchase through financial intermediaries and each Fund will pay ongoing distribution and/or service (12b-1) fees at annual rate of up to 0.25% of the average daily net assets of its Class A shares.
However, Class A shares will be offered and sold at their public offering price, which is the net asset value per share plus any applicable initial sales charge, also referred to as a "front-end sales load." For purchases on or after the Redesignation Date, Class A Shares will be offered and sold with the imposition of a maximum initial sales charge of up to (i) 5.75% of the offering price for equity funds and (ii) 2.00% of the offering price for fixed income funds. The sales charge may be waived or reduced under certain circumstances to be described in a revised prospectus to be furnished to shareholders upon the Redesignation. In addition, a contingent deferred sales charge of up to 0.75% may be imposed on redemptions of Class A shares purchased without an initial sales charge if shares are redeemed within 18 months of purchase.
The Redesignation will be made without the imposition of any sales loads, fees, or other charges to Adviser Shares held in shareholder accounts on the Redesignation Date. Any future purchases of Class A shares of the Fund will be subject to a front-end sales load unless such purchase qualifies for a sales charge waiver or reduction to be described in the revised prospectus. The Redesignation will not be considered a taxable event for federal income tax purposes.
PLEASE RETAIN THIS SUPPLEMENT FOR YOUR FUTURE REFERENCE.
Victory Capital means Victory Capital Management Inc., the investment manager of the USAA Mutual Funds. USAA Mutual Funds are distributed by Victory Capital Advisers, Inc., a broker dealer registered with FINRA and an affiliate of Victory Capital. Victory Capital and its affiliates are not affiliated with United Services Automobile Association or its affiliates. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.
Here is the link for the new prospectus:
https://www.sec.gov/Archives/edgar/data/908695/000168386320007758/f4863d2.htm
Comments
The current (August 1, 2019) prospectus starts by saying that "The Adviser Shares listed in this prospectus are available for purchase generally through financial intermediaries by investors who seek advice from them." This is the share class that's being changed, not the retail, noload "Fund Shares" class of shares.
The Fund Shares are cheaper because they don't have a 12b-1 fee, unlike the Adviser Shares. They are currently available NTF at Schwab. For example, here's Schwab's page for USTEX.
Best guess is that this change is to better align the USAA funds with Victory's share classes. Victory Class A shares are also available NTF at Schwab, though they carry that 12b-1 fee. Here's Schwab's page for the Victory fund SRVEX.
As near as I can tell, just move along, nothing here to see.
FWIW, here's the new (June 29, 2020[sic]) prospectus. It adds the new class of Institutional Shares.
USAA recently "sold" their Investment division to Charles Schwab for $1.8 Billion. That's $1,800,000,000 in cash. USAA will transfer $90 Billion in assets to Schwab sometime in May 2020. I asked how individual investors (there are 1 million) will benefit from this sale. I am still waiting for that answer. This latest move may not mean anything for the orphan investors who are leaving USAA for Schwab. Doesn't look like individual account holders will receive any of this $1.8B as a "bonus" for this asset transfer.
The 1 million investors seem due some it not all of this windfall.
Schwab bought USAA management for its client base, both 1.5 million current and 10 million potential. It wouldn't make any sense for Schwab to dissuade its larger potential audience by taking advantage of the USAA members already signed up.
It's more likely that these clients would be sold the new Institutional class shares. From the new prospectus: From the April 23, 2020 Schwab Managed Account Services™ Disclosure Brochure: We've seen this sturm und drang before. When PIMCO did away with its D class shares, there was much handwringing about how investors would have to pay loads for PIMCO's A shares.
Help me out. I have never heard anything good about this company - for 50 years. Did I miss something or should they still be avoided like the plague?
thanks,
rono
With loads. In 2020. Boggles the mind.
- Noload retail: USAA "Fund Share" (e.g. USTEX) and American Century "Investor" (e.g. TWCUX).
- Class A adds load, 12b-1 fee; often load waived w/ fee-based advisor, e.g. UTELX and TWUAX
- Institutional shares; these are new for the USAA funds. Examples ULTIX and TWUIX.
American Century does offer a whole slew of additional classes: C, R, R5, R6. Victory funds (other than the USAA funds) may also offer classes C, R, R6, and Y.The line between noload and load funds got blurred a quarter century ago. ISTM what matters is what you actually pay, not what the fund is allowed to charge.
Important Notice: Victory Capital and USAA are updating the final technology transition date for USAA Mutual Funds and USAA 529 College Savings Plan accounts. The full technology transition to vcm.com will occur in the third quarter of 2020.
While your accounts will transition automatically at no cost to you, there are some actions you may need to take to ease the technology transition. You will have continued access to your accounts through usaa.com until the technology transition occurs. For more information, see Review Important Transition Dates found in the To Do List.