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: CHRISTOPHER P. LAIA
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: MARCH 31,
|
Date of reporting period: SEPTEMBER 30, 2009
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA TAX-EXEMPT INTERMEDIATE-TERM FUND - SEMIANNUAL REPORT FOR PERIOD ENDED
SEPTEMBER 30, 2009
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA TAX EXEMPT INTERMEDIATE-TERM FUND]
SEMIANNUAL REPORT
USAA TAX EXEMPT
INTERMEDIATE-TERM FUND
SEPTEMBER 30, 2009
FUND OBJECTIVE
INTEREST INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX.
TYPES OF INVESTMENTS
Invests primarily in investment-grade tax-exempt securities. The dollar-
weighted average portfolio maturity for the Fund is between three and 10 years.
TABLE OF CONTENTS
PRESIDENT'S MESSAGE 2
MANAGERS' COMMENTARY 4
FUND RECOGNITION 7
INVESTMENT OVERVIEW 9
FINANCIAL INFORMATION
Portfolio of Investments 15
Notes to Portfolio of Investments 35
Financial Statements 37
Notes to Financial Statements 40
EXPENSE EXAMPLE 50
ADVISORY AGREEMENT 52
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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 INVESTMENT 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)2009, USAA. All rights reserved.
PRESIDENT'S MESSAGE
"WHEN SELECTING A SPECIFIC SECURITY, WE
STRIVE TO FIND A GOLDEN MEAN BETWEEN THE [PHOTO OF CHRISTOPHER W. CLAUS]
LEVEL OF INCOME, THE CREDIT RISK OF THE ISSUER,
AND THE PRICE VOLATILITY OF THE BOND."
OCTOBER 2009
The reversal in investor sentiment -- from the extreme pessimism of late 2008 to
the optimism of 2009 -- has been remarkable.
During 2008, the municipal bond market suffered one of its worst selloffs in
history. "Credit spreads," the risk premium between the yield of an
investment-grade tax-exempt bond and a comparable U.S. Treasury, widened
dramatically amid poor liquidity conditions and distressed selling. Economic
conditions deteriorated and unemployment increased. Accordingly, tax revenues
declined; however, most municipalities had the political will to address their
budgetary challenges and protect their credit standing.
Investors rediscovered the value of municipal securities -- attractive after-tax
yields -- beginning in January 2009. The result was strong demand: prices
rebounded and yields dropped as credit spreads contracted toward historical
norms. (A bond's yield moves in the opposite direction of its price.)
Yields on tax-exempt money markets also declined as the Federal Reserve (the
Fed), in an effort to stimulate the economy, cut short-term interest rates
nearly to zero. I expect Fed governors to keep rates at these levels until they
see evidence of a sustained economic recovery. Consequently, money market yields
are unlikely to increase until at least the second half of next year.
At the time of this writing, the economy appears to have stabilized. Housing
prices and manufacturing have both shown signs of improvement.
2 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
Corporate earnings have generally exceeded expectations, but much of the
earnings were achieved by cost cutting and inventory reduction. For an economic
recovery to take hold, companies must see top line revenue growth, and that
depends on the consumer. Unfortunately, the unemployment rate appears to be
weighing down consumer confidence. As a result, I expect the economy to
experience an extended period of slow growth before it regains its full health.
In the meantime, the after-tax yields on municipal bonds remain attractive.
Their tax-exempt status may become even more appealing if the federal and state
governments raise taxes.
At USAA, we remain confident in our approach to managing your municipal bond and
money market investments. Our primary objective is to distribute a high level of
tax-free interest without undue risk of principal. When selecting a specific
security, we strive to find a golden mean between the level of income, the
credit risk of the issuer, and the price volatility of the bond. Our portfolio
managers are supported by a fixed-income research team of experienced analysts.
As always, we continue to avoid bonds that are subject to the alternative
minimum tax for individuals.
During this uncertain period, like in any other, we encourage our members to be
diversified. You also should have an investment plan that meets your individual
goals, risk tolerance, and time horizon. Municipal bond prices may have risen,
but it is important to remember that the driver of long-term fixed-income
performance is the compounding interest of the bonds we hold.
Thank you for your trust in us. We appreciate the opportunity to serve your
investment needs.
Sincerely,
/S/ CHRISTOPHER W. CLAUS
Christopher W. Claus
President and Vice Chairman of the Board
USAA Mutual Funds Trust
|
Diversification does not guarantee a profit or prevent a loss.
PRESIDENT'S MESSAGE | 3
MANAGERS' COMMENTARY ON THE FUND
--------------------------------------------------------------------------------
[PHOTO OF CLIFF GLADSON] [PHOTO OF REGINA SHAFER]
CLIFF GLADSON, CFA REGINA SHAFER, CFA
USAA Investment USAA Investment
Management Company Management Company
--------------------------------------------------------------------------------
|
o HOW DID THE USAA TAX EXEMPT INTERMEDIATE-TERM FUND (THE FUND) PERFORM FROM
APRIL 1, 2009, TO SEPTEMBER 30, 2009?
The Fund provided a total return of 12.02% versus an average return of 7.75%
for the 161 funds in the Lipper Intermediate Municipal Debt Funds Average.
This compares to returns of 7.82% for the Lipper Intermediate Municipal Debt
Funds Index and 9.38% for the Barclays Capital Municipal Bond Index*. The
Fund's tax-exempt distributions over the prior 12 months produced a dividend
yield of 4.53%, compared to the Lipper category average of 3.77%.
o WHAT WERE THE MARKET CONDITIONS?
The Federal Reserve (the Fed) held the federal funds target rate at a range
between 0% and 0.25% throughout the reporting period. As the reporting period
progressed, the economy showed signs of improvement in housing and
manufacturing suggesting that the worst of the recession might be over.
Refer to pages 12 and 13 for benchmark definitions.
Past performance is no guarantee of future results.
*Effective November 3, 2008, Barclays Capital combined the existing Lehman
Brothers and Barclays Capital indices into a single platform. Thus, the
Fund's benchmark, once known as the Lehman Brothers Municipal Bond Index, now
is called the Barclays Capital Municipal Bond Index.
4 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
The tax-exempt bond market enjoyed a powerful rally. Strong demand from
individual and institutional investors caused yields to decline and prices to
increase. (Bond yields move in the opposite direction of prices.) Although
10-year Treasury yields rose, the yield on a 10-year AAA general obligation
bond dropped from 3.16% on April 1, 2009, to 2.57% on September 30, 2009. At
the end of the reporting period, the relationship between 10-year AAA
tax-exempt bonds and Treasuries was closer to historical norms.
Municipal credit quality remained remarkably stable as state and local
governments continued to exercise fiscal restraint in response declining tax
revenues.
o WHAT STRATEGIES DID YOU EMPLOY?
We were well positioned for the rally in the tax-exempt market. During the
flight to safety in late 2008, we were selective in choosing issues, focusing
only on those we considered creditworthy, including utilities, general
obligation, and special tax bonds. We also locked in higher yields while
interest rates were high and A- and BBB-rated investment grade municipal
bonds were selling at a discount. These higher yielding bonds helped to
enhance the Fund's returns.
As of the date of this commentary, your portfolio continues to be widely
diversified geographically and by economic sector among more than 300
issuers. We do not rely on credit agencies or bond insurers to do our credit
work. Our experienced research team continues to analyze and monitor every
bond in your Fund, selecting those with coupons and structures that can
contribute to the Fund's dividend yield through an entire interest-rate
cycle.
To make the Fund as tax efficient as possible, we continue to avoid issues
subject to the alternative minimum tax for individuals.
MANAGERS' COMMENTARY ON THE FUND | 5
o WHAT IS YOUR OUTLOOK?
The performance of the municipal bond market -- and your Fund -- has been
impressive during the last six months and we feel tax-exempt bonds continue
to offer relatively attractive yields. In fact, if federal income tax rates
rise, the tax-free income provided by your Fund should become even more
valuable.
Because we do not believe inflation is an immediate threat, we expect the Fed
to keep rates between 0% and 0.25% until an economic recovery takes hold.
Once rate increases begin, we believe they will be gradual. In the meantime,
we plan to take advantage of opportunities to increase the Fund's tax-exempt
dividend return, which is the largest contributor to its long-term total
return (see page 10).
Thank you for your continued confidence in us.
6 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
FUND RECOGNITION
USAA TAX EXEMPT INTERMEDIATE-TERM FUND
OVERALL MORNINGSTAR RATING(TM)
out of 231 municipal national intermediate-term bond funds
for the period ended September 30, 2009:
OVERALL RATING
* * * *
3-YEAR
* * *
out of 231 funds
5-YEAR
* * * *
out of 209 funds
10-YEAR
* * * *
out of 128 funds
The Overall Morningstar Rating for a fund is derived from a weighted average of
the performance figures associated with its three-, five-, and 10-year (if
applicable) Morningstar Rating metrics. Ratings are based on risk-adjusted
returns.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. For each fund with at least
a three-year history, Morningstar calculates a Morningstar Rating(TM) based on a
Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's
monthly performance (including the effects of sales charges, loads, and
redemption fees), placing more emphasis on downward variations and rewarding
consistent performance. The top 10% of the funds in each broad asset class
receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars,
the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.
FUND RECOGNITION | 7
LIPPER LEADER (OVERALL)
[5]
EXPENSE
The Fund is listed as a Lipper Leader for Expense among 60 funds within the
Lipper Intermediate Municipal Debt Funds category for the overall period ended
September 30, 2009. The Fund received a Lipper Leader rating for Expense among
60, 55, and 37 funds for the three-, five-, and 10-year periods, respectively.
Lipper ratings for Expense reflect funds' expense minimization relative to peers
with similar load structures as of September 30, 2009.
Ratings are subject to change every month and are based on an equal-weighted
average of percentile ranks for the Expense metrics over three-, five-, and
10-year periods (if applicable). The highest 20% of funds in each peer group are
named Lipper Leaders, the next 20% receive a score of 4, the middle 20% are
scored 3, the next 20% are scored 2, and the lowest 20% are scored 1. Lipper
ratings are not intended to predict future results, and Lipper does not
guarantee the accuracy of this information. More information is available at
WWW.LIPPERLEADERS.COM. Lipper Leader Copyright 2009, Reuters, All Rights
Reserved.
8 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
INVESTMENT OVERVIEW
USAA TAX EXEMPT INTERMEDIATE-TERM FUND
(Ticker Symbol: USATX)
--------------------------------------------------------------------------------
9/30/09 3/31/09
--------------------------------------------------------------------------------
Net Assets $2,765.6 Million $2,419.3 Million
Net Asset Value Per Share $13.00 $11.88
LAST 12 MONTHS
Tax-Exempt Dividends Per Share $0.590 $0.586
Capital Gain Distributions Per Share $0.015 $0.015
Dollar-Weighted Average
Portfolio Maturity 9.6 Years 9.4 Years
|
Dollar-weighted average portfolio maturity is obtained by multiplying the dollar
value of each investment by the number of days left to its maturity, then adding
those figures together and dividing them by the total dollar value of the Fund's
portfolio.
--------------------------------------------------------------------------------
SIX-MONTH TOTAL RETURN 30-DAY SEC YIELD* EXPENSE RATIO(+)
--------------------------------------------------------------------------------
3/31/09 TO 9/30/09 AS OF 9/30/09 0.45%
12.02%** 3.99%
|
*Calculated as prescribed by the Securities and Exchange Commission.
**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, AS REPORTED IN THE FUND'S PROSPECTUS
DATED AUGUST 1, 2009, AND IS CALCULATED AS A PERCENTAGE OF AVERAGE NET ASSETS.
THIS EXPENSE RATIO MAY DIFFER FROM THE EXPENSE RATIO DISCLOSED IN THE FINANCIAL
HIGHLIGHTS.
Past performance is no guarantee of future results.
No adjustment has been made for taxes payable by shareholders on their
reinvested net investment income and realized capital gain distributions.
INVESTMENT OVERVIEW | 9
AVERAGE ANNUAL COMPOUNDED RETURNS WITH REINVESTMENT OF DIVIDENDS -- PERIODS
ENDED SEPTEMBER 30, 2009
--------------------------------------------------------------------------------
TOTAL RETURN = DIVIDEND RETURN + PRICE CHANGE
--------------------------------------------------------------------------------
10 Years 5.07% = 4.80% + 0.27%
5 Years 4.05% = 4.48% + (0.43)%
1 Year 13.72% = 5.44% + 8.28%
|
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
ANNUAL TOTAL RETURNS AND COMPOUNDED DIVIDEND RETURNS FOR THE ONE-YEAR PERIODS
ENDED SEPTEMBER 30, 2000-SEPTEMBER 30, 2009
[CHART OF ANNUAL TOTAL RETURNS AND COMPOUNDED DIVIDEND RETURNS]
TOTAL RETURN DIVIDEND RETURN CHANGE IN SHARE PRICE
------------ --------------- ---------------------
9/30/2000 5.14% 5.61% -0.47%
9/30/2001 9.67% 5.57% 4.10%
9/30/2002 7.13% 5.16% 1.97%
9/30/2003 3.93% 4.82% -0.89%
9/30/2004 4.73% 4.51% 0.22%
9/30/2005 3.33% 4.22% -0.89%
9/30/2006 4.37% 4.28% 0.09%
9/30/2007 2.43% 4.21% -1.78%
9/30/2008 -2.92% 4.29% -7.21%
9/30/2009 13.72% 5.44% 8.28%
|
[END CHART]
NOTE THE ROLE THAT DIVIDEND RETURNS PLAY IN THE FUND'S TOTAL RETURN OVER TIME.
WHILE SHARE PRICES TEND TO VARY, DIVIDEND RETURNS GENERALLY ARE A RELATIVELY
STABLE COMPONENT OF TOTAL RETURNS.
Total return equals dividend return plus share price change and assumes
reinvestment of all net investment income and realized capital gain
distributions. Dividend return is the net investment income dividends received
over the period, assuming reinvestment of all dividends. Share price change is
the change in net asset value over the period adjusted for 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
fund distributions or the redemption of fund shares.
10 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
TAXABLE EQUIVALENT ILLUSTRATION
To match the Fund's dividend return for the periods ended 9/30/09, and assuming
marginal federal tax rates of: 25.00% 28.00% 33.00% 35.00%
A FULLY TAXABLE INVESTMENT MUST PAY THE FOLLOWING:
PERIOD DIVIDEND RETURN
--------------------------------------------------------------------------------
10 Years 4.80% 6.40% 6.67% 7.16% 7.38%
5 Years 4.48% 5.97% 6.22% 6.69% 6.89%
1 Year 5.44% 7.25% 7.56% 8.12% 8.37%
|
To match the Fund's closing 30-day SEC yield of 3.99% on 9/30/09,
A FULLY TAXABLE INVESTMENT MUST PAY: 5.32% 5.54% 5.96% 6.14%
This table is based on a hypothetical investment calculated for illustrative
purposes only. It is not an indication of performance for any of the USAA family
of funds. Taxable equivalent returns or yields will vary depending on applicable
tax rates.
Some income may be subject to federal, state, or local taxes, or the federal
alternative minimum tax. Based on 2008 tax rates.
INVESTMENT OVERVIEW | 11
o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
BARCLAYS CAPITAL USAA TAX EXEMPT LIPPER INTERMEDIATE
MUNICIPAL BOND INDEX INTERMEDIATE-TERM FUND MUNICIPAL DEBT FUNDS INDEX
-------------------- ---------------------- --------------------------
09/30/99 $10,000.00 $10,000.00 $10,000.00
10/31/99 9,891.66 9,893.17 9,929.90
11/30/99 9,996.87 9,988.73 10,014.11
12/31/99 9,922.34 9,923.45 9,968.82
01/31/00 9,879.13 9,858.30 9,924.95
02/29/00 9,993.95 9,976.10 10,001.37
03/31/00 10,212.30 10,150.66 10,144.60
04/30/00 10,151.97 10,105.28 10,101.73
05/31/00 10,099.16 10,066.25 10,059.82
06/30/00 10,366.77 10,292.20 10,267.37
07/31/00 10,511.02 10,412.99 10,383.95
08/31/00 10,673.01 10,542.61 10,512.97
09/30/00 10,617.48 10,514.22 10,481.95
10/31/00 10,733.34 10,605.09 10,569.30
11/30/00 10,814.54 10,669.82 10,619.57
12/31/00 11,081.75 10,899.10 10,833.44
01/31/01 11,191.55 11,001.06 10,958.43
02/28/01 11,227.04 11,057.39 10,993.96
03/31/01 11,327.65 11,146.56 11,078.12
04/30/01 11,204.91 11,035.15 10,978.45
05/31/01 11,325.57 11,152.30 11,091.16
06/30/01 11,401.34 11,233.88 11,160.12
07/31/01 11,570.22 11,387.71 11,294.60
08/31/01 11,760.81 11,539.18 11,465.26
09/30/01 11,721.36 11,531.43 11,449.72
10/31/01 11,861.01 11,634.85 11,559.43
11/30/01 11,761.02 11,562.90 11,439.20
12/31/01 11,649.76 11,503.97 11,353.20
01/31/02 11,851.83 11,648.19 11,518.01
02/28/02 11,994.61 11,767.15 11,647.19
03/31/02 11,759.56 11,582.96 11,435.35
04/30/02 11,989.40 11,774.41 11,657.90
05/31/02 12,062.25 11,835.39 11,720.79
06/30/02 12,189.80 11,926.41 11,840.15
07/31/02 12,346.57 12,057.35 11,977.32
08/31/02 12,494.99 12,155.00 12,087.46
09/30/02 12,768.66 12,356.79 12,298.09
10/31/02 12,556.99 12,195.50 12,111.72
11/30/02 12,504.80 12,172.67 12,062.40
12/31/02 12,768.66 12,388.46 12,301.08
01/31/03 12,736.31 12,364.80 12,256.40
02/28/03 12,914.37 12,534.88 12,426.09
03/31/03 12,922.09 12,543.54 12,422.67
04/30/03 13,007.47 12,630.24 12,501.88
05/31/03 13,312.04 12,869.91 12,756.10
06/30/03 13,255.47 12,794.18 12,696.31
07/31/03 12,791.62 12,443.73 12,312.82
08/31/03 12,887.02 12,545.38 12,404.48
09/30/03 13,265.91 12,841.91 12,722.22
10/31/03 13,199.11 12,798.00 12,661.13
11/30/03 13,336.67 12,920.74 12,762.30
12/31/03 13,447.10 13,029.61 12,837.60
01/31/04 13,524.13 13,078.52 12,885.89
02/29/04 13,727.66 13,281.19 13,066.94
03/31/04 13,679.86 13,210.40 12,986.38
04/30/04 13,355.88 12,966.61 12,715.32
05/31/04 13,307.45 12,941.97 12,699.08
06/30/04 13,355.88 13,009.29 12,730.50
07/31/04 13,531.65 13,147.41 12,857.93
08/31/04 13,802.81 13,382.69 13,070.02
09/30/04 13,876.09 13,449.97 13,110.87
10/31/04 13,995.49 13,547.65 13,181.67
11/30/04 13,880.05 13,423.45 13,075.59
12/31/04 14,049.56 13,586.14 13,203.46
01/31/05 14,180.86 13,702.18 13,260.67
02/28/05 14,133.68 13,658.49 13,203.89
03/31/05 14,044.55 13,541.95 13,106.31
04/30/05 14,266.03 13,755.79 13,278.40
05/31/05 14,366.86 13,853.53 13,354.06
06/30/05 14,455.99 13,922.15 13,419.95
07/31/05 14,390.66 13,844.90 13,348.40
08/31/05 14,535.95 13,986.24 13,462.76
09/30/05 14,438.04 13,901.05 13,393.64
10/31/05 14,350.37 13,819.76 13,323.84
11/30/05 14,419.25 13,888.85 13,377.20
12/31/05 14,543.25 14,006.08 13,469.20
01/31/06 14,582.50 14,040.61 13,503.91
02/28/06 14,680.40 14,143.08 13,562.35
03/31/06 14,579.16 14,045.48 13,482.55
04/30/06 14,574.15 14,016.42 13,478.09
05/31/06 14,639.07 14,087.42 13,541.49
06/30/06 14,583.96 14,032.13 13,488.40
07/31/06 14,757.43 14,198.14 13,628.80
08/31/06 14,976.41 14,400.73 13,806.05
09/30/06 15,080.58 14,507.36 13,887.67
10/31/06 15,175.14 14,578.13 13,952.60
11/30/06 15,301.64 14,694.93 14,038.78
12/31/06 15,247.58 14,643.03 13,990.15
01/31/07 15,208.54 14,623.86 13,960.43
02/28/07 15,408.94 14,808.51 14,109.34
03/31/07 15,370.95 14,760.63 14,095.46
04/30/07 15,416.46 14,810.26 14,131.48
05/31/07 15,348.20 14,737.96 14,076.55
06/30/07 15,268.66 14,655.98 14,023.45
07/31/07 15,387.02 14,740.22 14,113.30
08/31/07 15,320.64 14,627.69 14,103.39
09/30/07 15,547.34 14,858.30 14,273.89
10/31/07 15,616.65 14,911.72 14,314.27
11/30/07 15,716.22 14,957.49 14,411.33
12/31/07 15,759.85 14,922.93 14,438.65
01/31/08 15,958.58 15,127.52 14,674.32
02/29/08 15,227.96 14,407.88 14,148.68
03/31/08 15,663.20 14,824.53 14,451.34
04/30/08 15,846.48 14,975.08 14,532.73
05/31/08 15,942.30 15,092.63 14,619.31
06/30/08 15,762.36 14,946.52 14,474.42
07/31/08 15,822.27 14,943.91 14,539.55
08/31/08 16,007.43 15,109.92 14,696.85
09/30/08 15,256.76 14,423.99 14,146.17
10/31/08 15,101.03 14,054.59 13,985.94
11/30/08 15,149.05 14,001.62 14,011.15
12/31/08 15,369.90 13,829.33 14,110.23
01/31/09 15,932.49 14,560.27 14,682.64
02/28/09 16,016.20 14,620.96 14,622.88
03/31/09 16,019.12 14,643.26 14,613.46
04/30/09 16,339.13 14,999.82 14,861.57
05/31/09 16,511.98 15,344.50 15,030.06
06/30/09 16,357.29 15,218.09 14,910.68
07/31/09 16,630.97 15,507.19 15,157.80
08/31/09 16,915.29 15,751.67 15,317.29
09/30/09 17,522.33 16,403.02 15,756.62
|
[END CHART]
Data from 9/30/99 through 9/30/09.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Tax Exempt Intermediate-Term Fund to the following benchmarks:
o The unmanaged, broad-based Barclays Capital Municipal Bond Index (the Index)
tracks total return performance for the long-term, investment-grade,
tax-exempt bond market. Before November 3, 2008, it was referred to as the
Lehman Brothers Municipal Bond Index. All tax-exempt bond funds will find it
difficult to outperform the Index because the Index does not reflect any
deduction for fees, expenses, or taxes.
o The unmanaged Lipper Intermediate Municipal Debt Funds Index tracks the total
return performance of the 30 largest funds within the Lipper Intermediate
Municipal Debt 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 fund distributions or the redemption of fund shares.
Indexes are unmanaged and you cannot invest directly in an index.
12 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
o 12-MONTH DIVIDEND YIELD COMPARISON o
[CHART OF 12-MONTH DIVIDEND YIELD COMPARISON]
LIPPER INTERMEDIATE
USAA TAX EXEMPT MUNICIPAL DEBT
INTERMEDIATE-TERM FUND FUNDS AVERAGE
---------------------- -------------------
09/30/2000 5.45% 4.41%
09/30/2001 5.16 4.10
09/30/2002 4.83 3.66
09/30/2003 4.74 3.36
09/30/2004 4.38 3.30
09/30/2005 4.21 3.33
09/30/2006 4.16 3.40
09/30/2007 4.25 3.48
09/30/2008 4.78 3.62
09/30/2009 4.53 3.77
|
[END CHART]
The 12-month dividend yield is computed by dividing net investment income
dividends paid during the previous 12 months by the latest adjusted month-end
net asset value. The net asset value is adjusted for a portion of the capital
gains distributed during the previous nine months. The graph represents data for
periods ending 9/30/00 to 9/30/09.
The Lipper Intermediate Municipal Debt Funds Average is an average performance
level of all intermediate-term municipal debt funds, reported by Lipper Inc., an
independent organization that monitors the performance of mutual funds.
TOP 10 INDUSTRIES AS OF 9/30/09
(% of Net Assets)
Hospital ......................................................... 16.6%
General Obligation ............................................... 12.2%
Electric Utilities ............................................... 10.2%
Special Assessment/Tax/Fee ....................................... 10.2%
Appropriated Debt ................................................ 6.3%
Education ........................................................ 5.5%
Electric/Gas Utilities ........................................... 5.2%
Escrowed Bonds ................................................... 4.2%
Real Estate Tax/Fee .............................................. 3.6%
Nursing/CCRC ..................................................... 2.5%
|
You will find a complete list of securities that the Fund owns on pages 15-34.
INVESTMENT OVERVIEW | 13
o PORTFOLIO RATINGS MIX -- 9/30/2009 o
[PIE CHART OF PORTFOLIO RATINGS MIX]
AAA 16%
AA 18%
A 29%
BBB 32%
BELOW INVESTMENT-GRADE 3%
SECURITIES WITH SHORT-TERM INVESTMENT-GRADE RATINGS 2%
[END CHART]
The four highest long-term credit ratings, in descending order of credit
quality, are AAA, AA, A, and BBB. These categories represent investment-grade
quality. This chart reflects the highest rating of either Moody's Investors
Service, Standard & Poor's Rating Services, Fitch Ratings Ltd., Dominion Bond
Rating Service Ltd., or A.M. Best Co., Inc., and includes any related credit
enhancements. If any of the Fund's securities are unrated by these agencies,
USAA Investment Management Company must determine the equivalent investment
quality.
Percentages are of the total market value of the Fund's investments.
|
14 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
PORTFOLIO OF INVESTMENTS
September 30, 2009 (unaudited)
o CATEGORIES AND DEFINITIONS
FIXED-RATE INSTRUMENTS -- consist of municipal bonds, notes, and commercial
paper. The interest rate is constant to maturity. Prior to maturity, the
market price of a fixed-rate instrument generally varies inversely to the
movement of interest rates.
PUT BONDS -- provide the right to sell the bond at face value at specific
tender dates prior to final maturity. The put feature shortens the effective
maturity of the security.
PERIODIC AUCTION RESET BONDS -- interest rates are reset periodically through
an auction mechanism. The bonds have the option to be sold at face value at
each interest rate reset date to the extent that there are sufficient bids in
the auction.
VARIABLE-RATE DEMAND NOTES (VRDNs) -- provide the right to sell the security
at face value on either that day or within the rate-reset period. The
interest rate is adjusted at a stipulated daily, weekly, monthly, quarterly,
or other specified time interval to reflect current market conditions. VRDNs
will normally trade as if the maturity is the earlier put date, even though
stated maturity is longer.
CREDIT ENHANCEMENTS -- add the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal and
interest payments when due. The enhancement may be provided by a high-quality
bank, insurance company or other corporation, or a collateral trust. The
enhancements do not guarantee the market values of the securities.
(INS) Principal and interest payments are insured by one of the following:
ACA Financial Guaranty Corp., AMBAC Assurance
================================================================================
PORTFOLIO OF INVESTMENTS | 15
|
Corp., Assured Guaranty Corp., CIFG Assurance, N.A., Financial
Guaranty Insurance Co., Financial Security Assurance, Inc., National
Public Finance Guarantee Corp., Radian Asset Assurance, Inc., or XL
Capital Assurance. Although bond insurance reduces the risk of loss
due to default by an issuer, such bonds remain subject to the risk
that value may fluctuate for other reasons, and there is no
assurance that the insurance company will meet its obligations.
(LIQ) Liquidity enhancement that may, under certain circumstances, provide
for repayment of principal and interest upon demand from Bayerische
Landesbank, JP Morgan Chase Bank, N.A., or Landesbank
Hessen-Thuringen.
(LOC) Principal and interest payments are guaranteed by a bank letter of
credit or other bank credit agreement.
(NBGA) Principal and interest payments or, under certain circumstances,
underlying mortgages are guaranteed by a nonbank guarantee agreement
from one of the following: Fannie Mae, Federal Housing Association
Insured Mortgage Nursing Home, Government National Mortgage
Association, Monumental Life Insurance Co., or Texas Permanent
School Fund.
|
o PORTFOLIO ABBREVIATIONS AND DESCRIPTIONS
EDA Economic Development Authority
EDC Economic Development Corp.
ETM Escrowed to final maturity
IDA Industrial Development Authority/Agency
IDB Industrial Development Board
IDC Industrial Development Corp.
ISD Independent School District
PRE Prerefunded to a date prior to maturity
USD Unified School District
16 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
INVESTMENTS
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
FIXED-RATE INSTRUMENTS (88.7%)
ALABAMA (1.0%)
$ 345 Montgomery BMC Special Care Facilities
Financing Auth. (INS) 4.88% 11/15/2018 $ 346
16,340 Montgomery Medical Clinic Board 4.75 3/01/2026 14,011
5,000 Prattville IDB 5.15 9/01/2013 5,127
5,000 Private Colleges and Universities Facilities
Auth. (INS) 4.75 9/01/2026 5,050
2,000 Univ. of Alabama at Birmingham (INS)(PRE) 5.75 9/01/2020 2,116
----------
26,650
----------
ALASKA (0.8%)
7,650 Four Dam Pool Power Agency (LOC - Dexia
Credit Local)(PRE) 5.00 7/01/2021 8,680
165 Housing Finance Corp. 5.50 12/01/2017 165
3,750 North Slope Borough (INS) 4.36(a) 6/30/2011 3,671
2,000 State (INS) 4.75 4/01/2021 2,022
2,520 State (INS) 4.75 4/01/2022 2,544
2,000 State (INS) 4.75 4/01/2023 2,016
4,110 State (INS) 4.75 4/01/2024 4,138
----------
23,236
----------
ARIZONA (1.5%)
1,170 Health Facilities Auth. 4.50 4/01/2016 1,198
425 Health Facilities Auth. 5.00 4/01/2017 442
1,150 Health Facilities Auth. 4.75 4/01/2025 1,151
2,500 Maricopa County Union High School
District No. 210 4.50 7/01/2024 2,629
15,000 Mohave County IDA 7.50 5/01/2019 16,877
3,270 Phoenix Civic Improvement Corp.,
5.50%, 7/01/2013 (INS) 4.50(b) 7/01/2024 3,091
2,115 Phoenix Civic Improvement Corp.,
5.50%, 7/01/2013 (INS) 4.54(b) 7/01/2025 1,994
2,000 Pinal County IDA (INS) 5.25 10/01/2020 1,988
1,250 Pinal County IDA (INS) 5.25 10/01/2022 1,222
2,000 Pinal County IDA (INS) 4.50 10/01/2025 1,711
1,535 State Univ. (INS) 5.00 9/01/2024 1,612
7,180 Univ. Medical Center Corp. 5.00 7/01/2022 7,255
----------
41,170
----------
|
PORTFOLIO OF INVESTMENTS | 17
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
ARKANSAS (0.7%)
$ 3,125 Baxter County 5.00% 9/01/2026 $ 2,905
6,230 Independence County 5.00 1/01/2021 6,234
4,000 Independence County (INS) 4.90 7/01/2022 4,086
4,905 Jefferson County 4.60 10/01/2017 4,979
----------
18,204
----------
CALIFORNIA (7.8%)
10,000 Chabot-Las Positas Community College District (INS) 4.85(a) 8/01/2022 5,336
5,000 Chabot-Las Positas Community College District (INS) 4.88(a) 8/01/2023 2,483
2,000 Coronado Community Dev. Agency (INS) 5.00 9/01/2024 2,022
7,000 Health Facilities Financing Auth. 5.13 7/01/2022 7,040
6,745 Kern County Board of Education (INS) 5.00 6/01/2026 6,984
20,000 Los Angeles Department of Water and Power (INS) 4.75 7/01/2025 21,334
3,320 Modesto Irrigation District (INS) 5.64(a) 7/01/2017 2,272
3,325 Modesto Irrigation District (INS) 5.69(a) 7/01/2018 2,144
5,000 Public Works Board 5.50 6/01/2019 5,266
6,400 Public Works Board 5.50 4/01/2021 6,960
6,755 Public Works Board 5.60 4/01/2022 7,303
3,130 Public Works Board 5.75 4/01/2023 3,398
1,430 Sacramento Financing Auth. (INS) 5.00 12/01/2024 1,441
15,265 Sacramento Municipal Utility District Financing
Auth. (INS) 4.75 7/01/2024 15,449
4,720 Salinas Union High School District (INS) 4.37(a) 6/01/2016 3,705
2,000 Salinas Union High School District (INS) 4.37(a) 10/01/2016 1,546
3,525 San Bernardino County Redevelopment Agency (INS) 5.00 9/01/2025 3,494
2,395 San Diego USD (INS) 4.50 7/01/2025 2,515
4,080 San Jose 4.95 4/01/2012 4,170
3,000 San Jose USD (INS) 4.50 6/01/2024 3,074
7,065 Santa Clara County Financing Auth. (INS) 4.75 5/15/2023 7,514
7,400 Santa Clara County Financing Auth. (INS) 4.75 5/15/2024 7,827
7,750 Santa Clara County Financing Auth. (INS) 4.75 5/15/2025 8,154
3,500 Santa Rosa Rancheria Tachi Yokut Tribe(c) 5.00 3/01/2020 2,886
2,175 Semitropic Improvement District (INS) 5.25 12/01/2018 2,360
2,500 Solano Community College District (INS) 4.85(a) 8/01/2023 1,239
4,735 Solano Community College District (INS) 4.88(a) 8/01/2024 2,191
4,035 South Orange County Public Financing Auth. (INS) 5.00 8/15/2022 4,102
4,920 South Orange County Public Financing Auth. (INS) 5.00 8/15/2025 4,935
27,445 State 5.75 4/01/2027 30,185
3,120 Statewide Communities Dev. Auth. 5.00 5/15/2021 3,109
3,275 Statewide Communities Dev. Auth. 5.00 5/15/2022 3,230
3,440 Statewide Communities Dev. Auth. 5.00 5/15/2023 3,363
3,610 Statewide Communities Dev. Auth. 5.00 5/15/2024 3,497
|
18 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 3,795 Statewide Communities Dev. Auth. 5.00% 5/15/2025 $ 3,640
1,245 Systemwide Univ. (INS) 5.50 11/01/2015 1,387
16,020 Tobacco Securitization Auth. 4.75 6/01/2025 15,171
3,470 Tuolumne Wind Project Auth. 5.00 1/01/2022 3,717
----------
216,443
----------
COLORADO (2.2%)
4,500 Adams County (INS) 4.38 9/01/2017 4,405
5,000 Adams County (INS) 5.10 1/01/2019 5,097
2,000 Arapahoe County School District No. 6 (INS) 5.25 12/01/2018 2,181
2,585 Arapahoe County School District No. 6 (INS) 5.25 12/01/2019 2,818
2,000 Arapahoe County School District No. 6 (INS) 5.25 12/01/2020 2,181
2,000 Arapahoe County School District No. 6 (INS) 5.25 12/01/2021 2,180
2,400 Denver Health and Hospital Auth. (PRE) 6.25 12/01/2016 2,670
30,955 Denver Health and Hospital Auth. 4.75 12/01/2027 27,205
1,000 Health Facilities Auth. 5.25 6/01/2023 1,024
2,140 Pueblo School District No. 60 (INS) 5.25 12/15/2020 2,344
9,045 State (INS) 5.00 11/01/2023 9,691
----------
61,796
----------
CONNECTICUT (0.6%)
4,000 Health and Educational Facilities Auth. (INS) 5.00 7/01/2025 3,649
4,400 Mashantucket (Western) Pequot Tribe(c) 5.70 9/01/2012 2,693
16,500 Mashantucket (Western) Pequot Tribe(c) 5.75 9/01/2018 9,610
----------
15,952
----------
DELAWARE (0.3%)
1,495 Health Facilities Auth. (INS) 4.80 5/01/2017 1,382
1,830 Health Facilities Auth. (INS) 4.90 5/01/2018 1,665
1,000 Health Facilities Auth. (INS) 5.00 5/01/2019 901
1,515 Health Facilities Auth. (INS) 5.05 5/01/2020 1,349
1,010 Municipal Electric Corp. (INS) 5.25 7/01/2013 1,080
1,460 Municipal Electric Corp. (INS) 5.25 7/01/2017 1,560
1,580 Municipal Electric Corp. (INS) 5.25 7/01/2018 1,662
----------
9,599
----------
DISTRICT OF COLUMBIA (0.4%)
7,000 District of Columbia (INS) 5.00 1/01/2025 7,328
7,930 District of Columbia (INS) 4.75 5/01/2027 4,657
----------
11,985
----------
FLORIDA (5.3%)
5,165 Brevard County School Board (INS) 5.00 7/01/2025 5,330
2,500 Broward County Airport System 5.00 10/01/2024 2,620
6,500 Broward County School Board (INS) 5.00 7/01/2023 6,897
4,000 Broward County School Board (INS) 5.00 7/01/2024 4,225
|
PORTFOLIO OF INVESTMENTS | 19
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 3,710 Broward County School Board (INS) 5.00% 7/01/2025 $ 3,880
7,905 Dade County (INS) 6.00(a) 10/01/2011 7,291
8,610 Dade County (INS) 6.10(a) 10/01/2012 7,462
3,270 Flagler County School Board (INS) 5.00 8/01/2025 3,436
8,000 Hillsborough County IDA 5.65 5/15/2018 8,813
4,250 Indian River County School Board (INS) 5.00 7/01/2024 4,455
5,000 JEA St. Johns River Power Park (INS) 5.00 10/01/2020 5,359
1,585 Miami Beach Health Facilities Auth. 6.13 11/15/2011 1,597
1,670 Miami Dade County (INS) 5.00 4/01/2022 1,752
2,805 Miami Dade County (INS) 5.00 4/01/2023 2,928
8,375 Miami Dade County (INS) 4.75 11/01/2023 8,686
2,345 Miami Dade County, 5.00%, 10/01/2013 (INS) 4.54(b) 10/01/2024 1,829
9,830 Miami Dade County (INS) 4.75 11/01/2024 10,140
3,670 Miami Dade County, 5.00%, 10/01/2013 (INS) 4.57(b) 10/01/2025 2,830
2,500 Miami Dade County (INS) 5.00 10/01/2026 2,657
10,000 Miami Dade County School Board (INS) 5.00 2/01/2024 10,780
12,000 Miami Dade County School Board (INS) 5.25 5/01/2025 13,017
7,450 Palm Beach County Health Facilities Auth. (INS) 5.00 12/01/2021 6,885
1,500 Palm Beach County School Board (INS) 5.25 8/01/2018 1,635
650 Palm Beach County School Board (INS) 5.00 8/01/2022 691
6,000 Seminole Tribe(c) 5.75 10/01/2022 5,919
14,815 Seminole Tribe(c) 5.50 10/01/2024 14,230
----------
145,344
----------
GEORGIA (1.0%)
10,000 Burke County Dev. Auth. 7.00 1/01/2023 12,082
5,000 Coweta County Dev. Auth. (INS) 4.35 9/01/2018 5,011
4,000 Glynn-Brunswick Memorial Hospital Auth. 5.25 8/01/2023 4,259
5,000 Savannah Hospital Auth. (INS) 5.00 7/01/2018 5,053
----------
26,405
----------
GUAM (0.2%)
6,000 Education Financing Foundation (INS) 4.50 10/01/2026 4,915
----------
HAWAII (0.2%)
5,000 Housing Finance and Dev. Corp. 5.45 7/01/2017 5,007
----------
IDAHO (0.0%)
1,000 Univ. of Idaho (INS) 4.75 4/01/2022 1,040
----------
ILLINOIS (5.8%)
2,475 Annawan Village 5.63 1/01/2018 1,739
1,000 Bedford Park Village 4.60 12/01/2017 1,000
3,240 Bedford Park Village 4.80 12/01/2020 3,182
3,085 Bedford Park Village 4.90 12/01/2023 2,977
405 Channahon 6.25 1/01/2010 407
|
20 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 6,040 Channahon 6.88% 1/01/2020 $ 6,111
2,000 Chicago (PRE) 5.00 11/01/2019 2,174
5,000 Chicago 6.63 12/01/2022 4,729
29,925 Chicago School Board (INS) 4.82(a) 12/01/2013 26,649
2,170 Chicago-O'Hare International Airport (INS) 5.50 1/01/2014 2,276
7,000 Chicago-O'Hare International Airport (INS) 5.00 1/01/2021 7,520
10,000 Chicago-O'Hare International Airport (INS) 5.00 1/01/2022 10,679
2,000 Finance Auth. 5.00 8/15/2017 1,782
750 Finance Auth. 5.25 4/01/2022 773
2,000 Finance Auth. 5.00 4/01/2023 1,913
3,400 Finance Auth. (INS) 5.00 11/01/2023 3,485
10,500 Finance Auth. (INS) 5.00 11/15/2023 10,565
4,165 Finance Auth. 5.00 4/01/2025 3,908
8,000 Finance Auth. 4.50 11/15/2026 7,193
1,750 Finance Auth. 5.40 4/01/2027 1,780
1,000 Health Facilities Auth. 5.25 9/01/2013 1,006
2,000 Health Facilities Auth. 5.25 9/01/2014 2,012
2,500 Health Facilities Auth. 5.25 9/01/2018 2,512
3,000 Health Facilities Auth. (INS) 5.00 2/15/2020 3,060
4,250 Health Facilities Auth. (PRE) 6.80 11/15/2020 4,590
825 Housing Dev. Auth. 4.55 7/01/2021 843
650 Housing Dev. Auth. 4.60 7/01/2023 660
8,050 Lake County Community Unit School District (INS) 5.13(a) 12/01/2016 6,466
2,500 Metropolitan Pier and Exposition Auth.,
5.20%, 6/15/2012 (INS) 5.20(b) 6/15/2017 2,520
2,500 Metropolitan Pier and Exposition Auth.,
5.30%, 6/15/2012 (INS) 5.30(b) 6/15/2018 2,519
4,000 Metropolitan Pier and Exposition Auth.,
5.40%, 6/15/2012 (INS) 5.40(b) 6/15/2019 4,009
2,000 Northeastern Illinois Univ. 4.75 10/01/2025 2,059
4,735 Northern Illinois Univ. (INS) 4.88 4/01/2018 4,841
7,815 Univ. of Illinois (INS)(PRE) 5.00 8/15/2020 8,391
3,700 Volo Village, Lake County 5.00 3/01/2016 3,270
14,070 Will County Forest Preserve District (INS) 5.40(a) 12/01/2017 10,785
----------
160,385
----------
INDIANA (2.9%)
7,465 Bond Bank (PRE) 5.50 8/01/2016 7,857
20,000 Finance Auth. (INS) 4.55 12/01/2024 19,655
1,900 Finance Auth. 5.00 10/01/2027 1,979
6,725 Health and Educational Facilities Financing Auth. 5.00 2/15/2022 6,883
1,400 Health Facility Financing Auth. 5.25 2/15/2018 1,404
6,000 Indianapolis 6.05 1/15/2010 5,769
3,000 Jasper County (INS) 5.85 4/01/2019 3,344
|
PORTFOLIO OF INVESTMENTS | 21
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 4,950 Municipal Power Agency (INS) 5.25% 1/01/2017 $ 5,264
2,100 Municipal Power Agency (INS) 5.25 1/01/2018 2,223
6,000 Rockport (INS) 4.63 6/01/2025 5,885
965 St. Joseph County 5.45 2/15/2017 965
7,260 St. Joseph County 5.75 2/15/2019 6,926
11,000 Univ. of Southern Indiana (INS) 5.00 10/01/2018 11,381
1,500 Vanderburgh County Redevelopment District 5.00 2/01/2026 1,504
----------
81,039
----------
IOWA (0.7%)
9,190 Finance Auth. (INS) 5.00 7/01/2014 9,876
1,325 Finance Auth. (INS) 5.00 12/01/2021 1,313
1,390 Finance Auth. (INS) 5.00 12/01/2022 1,371
1,460 Finance Auth. (INS) 5.00 12/01/2023 1,425
1,535 Finance Auth. (INS) 5.00 12/01/2024 1,481
1,610 Finance Auth. (INS) 5.00 12/01/2025 1,541
1,690 Finance Auth. (INS) 5.00 12/01/2026 1,608
----------
18,615
----------
KANSAS (0.8%)
1,665 Wyandotte County 4.75 12/01/2016 1,742
19,000 Wyandotte County 5.00 12/01/2020 19,609
----------
21,351
----------
KENTUCKY (0.3%)
7,500 Economic Dev. Finance Auth. (INS) 5.75 12/01/2028 8,302
----------
LOUISIANA (2.5%)
2,150 Local Government Environmental Facilities and
Community Dev. Auth. (INS) 5.25 12/01/2015 2,324
2,260 Local Government Environmental Facilities and
Community Dev. Auth. (INS) 5.25 12/01/2016 2,429
2,355 Local Government Environmental Facilities and
Community Dev. Auth. (INS) 5.25 12/01/2017 2,516
7,000 New Orleans (INS) 5.13 9/01/2021 7,182
6,825 Office Facilities Corp. (INS) 5.38 5/01/2018 7,152
2,000 Office Facilities Corp. (INS) 5.25 11/01/2018 2,140
5,175 Offshore Terminal Auth. 5.20 10/01/2018 5,179
4,845 Orleans Levee District (INS) 5.95 11/01/2010 4,866
3,795 Orleans Levee District (INS) 5.95 11/01/2014 3,807
4,095 Orleans Levee District (INS) 5.95 11/01/2015 4,107
4,450 St. Martin Parish 4.35 10/01/2012 4,716
3,955 St.Tammany Parish Hospital Service
District No. 1 (INS) 5.00 7/01/2018 3,913
9,000 Transportation Auth. (INS) 4.38 12/01/2023 9,038
9,000 Transportation Auth. (INS) 4.38 12/01/2024 9,029
----------
68,398
----------
|
22 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
MAINE (0.1%)
$ 1,715 Housing Auth. 5.35% 11/15/2021 $ 1,735
1,500 Jay 4.85 5/01/2019 1,472
----------
3,207
----------
MARYLAND (0.4%)
2,915 Community Dev. Administration 5.88 7/01/2016 2,919
2,500 EDC 6.20 9/01/2022 2,844
5,000 Health and Higher Educational Facilities Auth. 6.00 1/01/2028 5,245
----------
11,008
----------
MASSACHUSETTS (1.2%)
5,105 Commonwealth (INS) 5.75 6/15/2015 5,385
4,500 Commonwealth (INS)(PRE) 5.50 3/01/2018 4,964
7,775 Commonwealth (PRE) 5.38 8/01/2021 8,676
4,000 Health and Educational Facilities Auth. 5.00 7/15/2027 3,506
5,545 Massachusetts Bay Transportation Auth. 4.60(a) 7/01/2022 3,274
7,790 Massachusetts Bay Transportation Auth. 4.65(a) 7/01/2023 4,321
5,000 Massachusetts Bay Transportation Auth. 4.70(a) 7/01/2024 2,600
1,600 Massachusetts Bay Transportation Auth. 4.73(a) 7/01/2025 787
110 Water Pollution Abatement Trust 4.75 8/01/2025 119
----------
33,632
----------
MICHIGAN (1.8%)
18,000 Building Auth. (INS) 4.81(a) 10/15/2022 8,884
2,585 Detroit Building Auth. (LOC - Comerica Bank, N.A.) 6.15 2/01/2011 2,592
4,000 Detroit Downtown Dev. Auth. (INS) 5.00 7/01/2018 3,882
25,000 Dickinson County EDC 4.80 11/01/2018 24,586
2,060 Hospital Finance Auth. 6.25 10/01/2016 2,062
2,675 Hospital Finance Auth. 5.00 11/15/2019 2,726
3,400 Hospital Finance Auth. 5.00 11/15/2022 3,428
2,000 Kent Hospital Finance Auth. 5.50 7/01/2020 1,763
----------
49,923
----------
MINNESOTA (1.9%)
1,080 Chippewa County 5.38 3/01/2022 1,044
5,120 Chippewa County 5.50 3/01/2027 4,819
18,015 Cohasset 4.95 7/01/2022 18,393
2,500 Higher Education Facilities Auth. 4.50 10/01/2027 2,544
15 Housing Finance Agency 6.00 1/01/2018 15
3,000 Municipal Power Agency 4.38 10/01/2025 3,038
5,315 St. Paul Housing and Redevelopment Auth. 5.70 11/01/2015 5,269
1,500 St. Paul Housing and Redevelopment Auth. 5.85 11/01/2017 1,473
7,680 St. Paul Housing and Redevelopment Auth. 5.15 11/15/2020 6,967
3,500 St. Paul Housing and Redevelopment Auth. 5.25 5/15/2026 3,435
|
PORTFOLIO OF INVESTMENTS | 23
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 5,260 Washington County Hospital and Redevelopment Auth. 5.38% 11/15/2018 $ 4,926
----------
51,923
----------
MISSISSIPPI (0.1%)
1,650 Hospital Equipment and Facilities Auth. 5.00 12/01/2016 1,660
1,000 Hospital Equipment and Facilities Auth. 5.25 12/01/2021 995
1,385 Lincoln County (INS) 5.50 4/01/2018 1,389
----------
4,044
----------
MISSOURI (1.1%)
17,545 Cape Girardeau County Health Care Facilities IDA 5.00 6/01/2027 16,560
1,000 Cass County 5.00 5/01/2022 969
3,315 Cass County 5.38 5/01/2022 3,322
2,000 Cass County 5.50 5/01/2027 1,849
2,000 Dev. Finance Board 4.75 6/01/2025 1,863
2,440 Fenton City 4.50 4/01/2021 2,428
1,760 Riverside IDA (INS) 5.00 5/01/2020 1,799
1,330 St. Joseph IDA 5.00 4/01/2027 1,358
----------
30,148
----------
MONTANA (0.3%)
6,500 Forsyth (INS) 4.65 8/01/2023 6,370
2,300 Health Facilities Auth. 6.38 6/01/2018 2,301
----------
8,671
----------
NEBRASKA (0.2%)
500 Platte County Hospital Auth. No. 1 (INS) 5.50 5/01/2010 507
500 Platte County Hospital Auth. No. 1 (INS) 5.55 5/01/2011 511
500 Platte County Hospital Auth. No. 1 (INS) 5.65 5/01/2012 510
500 Platte County Hospital Auth. No. 1 (INS) 5.75 5/01/2013 509
500 Platte County Hospital Auth. No. 1 (INS) 5.90 5/01/2015 509
3,500 Platte County Hospital Auth. No. 1 (INS) 6.05 5/01/2020 3,548
560 Scotts Bluff County Hospital Auth. 5.13 11/15/2019 564
----------
6,658
----------
NEVADA (1.1%)
1,000 Clark County (INS) 4.50 11/01/2016 1,002
5,000 Clark County (INS)(PRE) 5.25 7/01/2019 5,395
2,865 Clark County 5.00 5/15/2020 3,011
6,040 Department of Business and Industry (INS) 5.76(a) 1/01/2017 919
18,000 Humboldt County 5.15 12/01/2024 19,028
2,000 Reno (INS)(PRE) 5.00 5/15/2018 2,058
----------
31,413
----------
NEW HAMPSHIRE (0.2%)
5,000 Business Finance Auth. 5.85 12/01/2022 5,078
----------
|
24 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
NEW JERSEY (1.3%)
$ 2,000 EDA 5.75% 12/01/2016 $ 1,919
5,000 EDA (INS) 5.00 7/01/2022 5,246
8,830 EDA 5.25 9/01/2023 9,566
13,500 EDA 5.50 6/15/2024 13,405
5,000 Tobacco Settlement Financing Corp. 5.00 6/01/2017 5,134
----------
35,270
----------
NEW MEXICO (1.2%)
15,000 Farmington 5.70 12/01/2016 15,005
2,000 Farmington 6.30 12/01/2016 2,001
4,150 Farmington 6.30 12/01/2016 4,152
4,890 Jicarilla Apache Nation(c) 5.00 9/01/2018 5,162
3,250 Jicarilla Apache Nation(c) 5.50 9/01/2023 3,449
4,000 Sandoval County 4.38 6/01/2020 4,170
----------
33,939
----------
NEW YORK (11.4%)
2,500 Albany IDA 5.75 11/15/2022 2,648
5,500 Dormitory Auth. 5.75 7/01/2013 5,882
5,000 Dormitory Auth. 5.20 2/15/2015 5,048
1,500 Dormitory Auth. 5.25 7/01/2015 1,663
4,000 Dormitory Auth. 5.20 2/15/2016 4,035
5,420 Dormitory Auth. (LOC - Allied Irish Banks plc) 4.40 7/01/2016 5,717
2,005 Dormitory Auth. 5.25 7/01/2016 2,196
4,760 Dormitory Auth. 5.30 2/15/2017 4,799
2,000 Dormitory Auth. 5.25 7/01/2017 2,168
12,560 Dormitory Auth. (ETM) 5.30 2/15/2019 14,652
1,915 Dormitory Auth. 5.00 7/01/2019 1,937
5,000 Dormitory Auth. 5.00 7/01/2020 5,037
3,590 Dormitory Auth. (PRE) 5.05 2/01/2022 3,956
24,935 Dormitory Auth. 5.00 7/01/2022 25,013
2,500 Dutchess County IDA 4.50 8/01/2026 2,465
2,300 East Rochester Housing Auth. (NBGA) 4.05 2/15/2012 2,353
2,000 East Rochester Housing Auth. (NBGA) 4.63 2/15/2017 2,104
20 Housing Finance Agency (PRE) 6.00 9/15/2016 20
3,000 Long Island Power Auth. 5.25 6/01/2014 3,366
17,075 Long Island Power Auth. 5.00 4/01/2023 18,540
10,000 Metropolitan Transportation Auth. 6.25 11/15/2023 11,794
6,800 Metropolitan Transportation Auth. 5.00 11/15/2024 7,316
16,565 Metropolitan Transportation Auth. 5.00 11/15/2024 17,827
2,500 Metropolitan Transportation Auth. (INS) 5.00 11/15/2024 2,713
21,625 New York City 5.50 8/01/2015 24,099
4,455 New York City 5.63 8/01/2015 4,886
6,865 New York City 5.75 8/01/2016 7,541
|
PORTFOLIO OF INVESTMENTS | 25
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 5,000 New York City 5.25% 10/15/2019 $ 5,398
5,000 New York City 5.13 11/15/2022 5,659
4,330 New York City 5.13 12/01/2022 4,849
6,000 New York City 5.13 12/01/2023 6,669
10,000 New York City 5.00 4/01/2024 10,799
5,240 New York City 5.00 8/01/2024 5,733
5,000 New York City 5.25 11/15/2024 5,632
5,000 New York City 5.00 2/01/2025 5,477
2,175 New York City IDA (INS) 4.15 7/01/2014 2,085
1,050 New York City IDA (INS) 4.75 7/01/2019 966
10,000 New York City Municipal Water Finance Auth. 5.38 6/15/2017 10,954
4,795 New York City Transitional Finance Auth. (INS) 5.25 8/01/2019 5,210
3,500 New York City Transitional Finance Auth. 5.00 1/15/2022 3,975
25,000 New York City Transitional Finance Auth. 5.00 5/01/2026 28,118
6,000 Seneca Nation Indians Capital Improvements Auth.(c) 5.00 12/01/2023 5,040
775 Suffolk County IDA 5.00 11/01/2013 806
1,880 Suffolk County IDA 5.00 11/01/2014 1,938
1,000 Suffolk County IDA 5.00 11/01/2015 1,026
3,180 Suffolk County IDA (INS) 4.75 6/01/2026 2,472
11,000 Tobacco Settlement Financing Corp. 5.50 6/01/2018 11,703
----------
314,284
----------
NORTH CAROLINA (1.5%)
6,000 Eastern Municipal Power Agency 5.50 1/01/2012 6,448
4,885 Eastern Municipal Power Agency 5.50 1/01/2015 5,243
1,830 Eastern Municipal Power Agency 5.50 1/01/2016 1,952
1,000 Eastern Municipal Power Agency 5.50 1/01/2017 1,060
3,000 Eastern Municipal Power Agency 5.00 1/01/2024 3,157
5,500 Medical Care Commission 5.00 7/01/2027 4,937
5,000 Municipal Power Agency No. 1 5.50 1/01/2013 5,553
2,000 Municipal Power Agency No. 1 5.25 1/01/2020 2,251
3,600 Turnpike Auth. (INS) 5.00 1/01/2022 3,937
3,330 Turnpike Auth. (INS) 5.13 1/01/2024 3,623
4,000 Wake County Industrial Facilities and Pollution
Control Financing Auth. 5.38 2/01/2017 4,174
----------
42,335
----------
NORTH DAKOTA (0.1%)
1,000 Grand Forks (INS) 5.00 12/15/2022 1,092
2,055 Williams County 5.00 11/01/2021 2,000
----------
3,092
----------
OHIO (2.0%)
9,000 Air Quality Dev. Auth. 5.70 8/01/2020 9,789
22,395 Buckeye Tobacco Settlement Financing Auth. 5.13 6/01/2024 21,231
|
26 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 2,400 Fairview Park (INS) 4.13% 12/01/2020 $ 2,485
4,000 Franklin County 5.80 10/01/2014 4,049
2,650 Franklin County 5.50 7/01/2017 2,470
10,000 Hamilton (INS) 4.65 10/15/2022 10,737
855 Housing Finance Agency (NBGA) 5.10 9/01/2017 888
1,750 Miami County 5.25 5/15/2021 1,787
2,000 Miami County 5.25 5/15/2026 1,991
----------
55,427
----------
OKLAHOMA (1.6%)
5,360 Cherokee Nation (INS)(c) 4.60 12/01/2021 5,195
11,270 Chickasaw Nation(c) 5.38 12/01/2017 12,124
5,000 Chickasaw Nation(c) 6.00 12/01/2025 5,247
3,895 Comanche County Hospital Auth. (INS) 5.25 7/01/2022 3,933
3,000 Comanche County Hospital Auth. (INS) 5.25 7/01/2023 3,013
1,400 Norman Regional Hospital Auth. 5.50 9/01/2024 1,254
13,100 Norman Regional Hospital Auth. 5.00 9/01/2027 10,725
1,295 Valley View Hospital Auth. 6.00 8/15/2014 1,297
----------
42,788
----------
OREGON (0.1%)
1,000 Washington, Yamhill and Multnomah Counties
Hillsboro School District No. 1J (INS) 4.58(a) 6/15/2025 488
5,900 Washington, Yamhill and Multnomah Counties
Hillsboro School District No. 1J (INS) 4.59(a) 6/15/2026 2,706
----------
3,194
----------
PENNSYLVANIA (1.0%)
1,000 Allegheny County IDA 5.00 9/01/2021 969
1,220 Allegheny County IDA 5.10 9/01/2026 1,139
17,300 Allegheny County IDA 4.75 12/01/2032 18,245
5,500 Higher Educational Facility Auth. (INS) 5.25 8/01/2014 5,572
1,615 Lancaster County Hospital Auth. 5.00 11/01/2026 1,621
----------
27,546
----------
RHODE ISLAND (0.6%)
340 Health and Educational Building Corp. (INS) 5.50 5/15/2012 341
4,345 Health and Educational Building Corp.
(LOC - Allied Irish Banks plc) 5.88 11/15/2014 4,403
765 Health and Educational Building Corp. (INS) 5.50 5/15/2016 766
5,500 Health and Educational Building Corp. (INS) 5.00 5/15/2026 5,781
5,915 Housing and Mortgage Finance Corp. 4.65 10/01/2026 5,969
----------
17,260
----------
|
PORTFOLIO OF INVESTMENTS | 27
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
SOUTH CAROLINA (2.3%)
$ 4,250 Georgetown County 5.95% 3/15/2014 $ 4,488
5,000 Georgetown County 5.70 4/01/2014 5,265
5,000 Lexington County Health Services District, Inc. 5.00 11/01/2024 5,076
7,335 Lexington County Health Services District, Inc. 5.00 11/01/2026 7,393
5,870 SCAGO Educational Facilities Corp. (INS) 4.75 12/01/2026 5,409
6,325 SCAGO Educational Facilities Corp. (INS) 4.75 12/01/2026 5,963
29,015 Tobacco Settlement Revenue Management Auth. 5.00 6/01/2018 29,025
----------
62,619
----------
SOUTH DAKOTA (0.3%)
1,700 Health and Educational Facilities Auth. 5.00 11/01/2024 1,764
6,065 Housing Dev. Auth. (INS) 5.15 11/01/2020 6,255
----------
8,019
----------
TENNESSEE (1.0%)
7,000 Jackson 5.25 4/01/2023 7,403
2,125 Johnson City Health and Educational Facilities Board 5.25 7/01/2026 2,148
1,000 Nashville and Davidson County Health and
Educational Facilities Board (INS) 5.10 8/01/2019 957
745 Shelby County Health, Educational and Housing
Facility Board (PRE) 6.00 9/01/2016 849
1,255 Shelby County Health, Educational and Housing
Facility Board (PRE) 6.00 9/01/2016 1,430
935 Shelby County Health, Educational and Housing
Facility Board (PRE) 6.25 9/01/2018 1,072
1,565 Shelby County Health, Educational and Housing
Facility Board (PRE) 6.25 9/01/2018 1,795
14,750 Sullivan County Health, Educational and Housing
Facilities Board 5.25 9/01/2026 12,998
----------
28,652
----------
TEXAS (16.5%)
1,050 Alamo Community College District (INS) 5.00 11/01/2020 1,116
910 Alamo Community College District (INS)(PRE) 5.00 11/01/2020 991
2,300 Austin (INS) 5.00 11/15/2024 2,442
5,610 Austin Utility Systems (INS) 5.15(a) 5/15/2017 4,397
1,855 Bastrop ISD (NBGA) 5.55(a) 2/15/2014 1,706
3,030 Bastrop ISD (NBGA) 5.55(a) 2/15/2015 2,692
3,055 Bastrop ISD (NBGA) 5.60(a) 2/15/2016 2,607
3,155 Bastrop ISD (NBGA) 5.60(a) 2/15/2017 2,573
4,540 Bexar County Health Facilities Dev. Corp. 5.00 7/01/2027 3,998
32,925 Brazos River Auth. 5.38 4/01/2019 33,273
5,365 Cass County IDC 5.35 4/01/2012 5,523
|
28 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 2,680 Central Regional Mobility Auth.,
4.55%, 1/01/2014 (INS) 4.55%(b) 1/01/2020 $ 1,993
3,445 Central Regional Mobility Auth.,
4.60%, 1/01/2014 (INS) 4.60(b) 1/01/2021 2,520
2,600 Conroe ISD (NBGA) 5.00 2/15/2023 2,840
3,100 Conroe ISD (NBGA) 5.00 2/15/2024 3,371
13,745 Denton ISD (NBGA) 5.03(a) 8/15/2023 7,353
16,500 Denton ISD (NBGA) 5.06(a) 8/15/2024 8,312
2,905 Eagle Mountain-Saginaw ISD (NBGA) 4.38 8/15/2026 3,038
1,520 Edgewood ISD (NBGA) 4.88 8/15/2019 1,578
1,595 Edgewood ISD (NBGA) 5.00 8/15/2020 1,693
1,675 Edgewood ISD (NBGA) 5.00 8/15/2021 1,778
2,245 Ennis ISD (NBGA) 4.56(a) 8/15/2024 1,162
3,715 Ennis ISD (NBGA) 4.58(a) 8/15/2025 1,820
3,720 Ennis ISD (NBGA) 4.60(a) 8/15/2026 1,729
6,580 Fort Worth ISD (NBGA)(PRE) 5.00 2/15/2018 6,979
1,895 Hidalgo County Health Services Corp. 4.75 8/15/2017 1,867
350 Hidalgo County Health Services Corp. 5.00 8/15/2019 346
3,805 Hidalgo County Health Services Corp. 5.00 8/15/2022 3,692
1,785 Hidalgo County Health Services Corp. 5.00 8/15/2026 1,660
3,000 Houston (INS) 5.00 3/01/2019 3,247
4,000 Houston Airport System 5.00 7/01/2024 4,323
7,000 Houston Airport System 5.00 7/01/2025 7,518
3,635 Houston ISD Public Facility Corp. (INS) 5.35(a) 9/15/2015 3,131
4,955 Houston ISD Public Facility Corp. (INS) 5.35(a) 9/15/2015 4,268
2,635 Houston ISD Public Facility Corp. (INS) 5.38(a) 9/15/2016 2,164
6,955 Houston ISD Public Facility Corp. (INS) 5.38(a) 9/15/2016 5,711
3,885 Houston ISD Public Facility Corp. (INS) 5.40(a) 9/15/2017 3,037
5,000 Irving ISD (NBGA) 5.31(a) 2/15/2025 2,379
2,200 Judson ISD (INS) 5.00 2/01/2023 2,345
1,500 Judson ISD (INS) 5.00 2/01/2024 1,593
1,595 La Porte ISD (INS) 5.00 2/15/2022 1,738
3,535 La Porte ISD (INS) 5.00 2/15/2024 3,817
3,830 Lewisville (INS) 5.38 9/01/2015 3,927
4,555 Lower Colorado River Auth. (INS) 4.38 5/15/2025 4,633
4,555 Lower Colorado River Auth. (INS) 4.38 5/15/2026 4,612
2,560 Marlin ISD Public Facility Corp., acquired
7/22/1998; cost $2,602(d) 5.85 2/15/2018 2,573
3,425 Mesquite Health Facilities Dev. Corp. 5.50 2/15/2025 3,135
2,040 Midlothian Dev. Auth. (INS) 5.00 11/15/2018 2,062
2,235 Midlothian Dev. Auth. (INS) 5.00 11/15/2021 2,195
9,645 Midlothian Dev. Auth. 6.00 11/15/2024 8,745
1,695 Midlothian Dev. Auth. (INS) 5.00 11/15/2026 1,591
|
PORTFOLIO OF INVESTMENTS | 29
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 2,855 Midlothian Dev. Auth. 5.13% 11/15/2026 $ 2,264
2,500 North Texas Tollway Auth. 6.00 1/01/2023 2,802
15,000 North Texas Tollway Auth. 6.00 1/01/2025 16,965
2,500 Northside ISD (NBGA) 5.00 2/15/2017 2,634
2,800 Northside ISD (NBGA)(PRE) 5.00 2/15/2017 2,970
2,555 Northside ISD (NBGA) 5.00 2/15/2018 2,639
2,865 Northside ISD (NBGA)(PRE) 5.00 2/15/2018 3,039
1,220 Nueces River Auth. (INS) 5.00 7/15/2023 1,317
1,530 Nueces River Auth. (INS) 5.00 7/15/2024 1,645
5,945 Plano ISD (NBGA) 5.00 2/15/2019 6,205
2,965 Plano ISD (NBGA) 4.50 2/15/2023 3,172
4,835 Port of Corpus Christi IDA 5.40 4/01/2018 4,836
19,050 Port of Corpus Christi IDC 5.40 4/01/2018 19,055
2,000 Red River Education Finance Corp. 4.38 3/15/2025 2,060
5,255 Red River Education Finance Corp. 4.38 3/15/2026 5,384
8,395 Rockwall ISD (NBGA) 5.14(a) 2/15/2022 4,838
9,205 Sabine River Auth. (INS) 4.95 3/01/2018 9,565
1,965 San Leanna Education Facilities Corp. 5.13 6/01/2023 1,998
1,000 San Leanna Education Facilities Corp. 5.13 6/01/2024 1,011
1,545 San Leanna Education Facilities Corp. 5.13 6/01/2025 1,554
5,200 Schertz-Cibolo-Universal City ISD (NBGA) 4.86(a) 2/01/2023 2,853
3,320 State 5.00 8/01/2016 3,748
3,750 Tarrant County Cultural Education Facilities
Finance Corp. 5.25 11/15/2022 3,799
9,410 Tarrant County Cultural Education Facilities
Finance Corp. 5.50 11/15/2022 9,195
1,100 Tarrant County Cultural Education Facilities
Finance Corp. 6.00 11/15/2026 1,045
8,300 Tarrant County Cultural Education Facilities
Finance Corp. 5.13 5/15/2027 7,773
8,000 Tarrant Regional Water District (INS) 5.25 3/01/2017 8,931
2,000 Tarrant Regional Water District (INS) 5.25 3/01/2019 2,189
2,000 Tarrant Regional Water District (INS) 5.25 3/01/2020 2,189
5,000 Tarrant Regional Water District (INS) 4.38 3/01/2021 5,302
7,000 Transportation Commission 4.38 4/01/2025 7,376
18,000 Transportation Commission 4.50 4/01/2026 19,063
4,000 Transportation Commission 4.75 4/01/2027 4,315
3,895 Tyler Health Facilities Dev. Corp. 5.25 7/01/2011 3,975
2,125 Tyler Health Facilities Dev. Corp. 5.25 7/01/2012 2,183
1,500 Tyler Health Facilities Dev. Corp. 5.25 7/01/2013 1,543
7,170 Tyler Health Facilities Dev. Corp. 5.25 11/01/2019 7,452
7,945 Tyler Health Facilities Dev. Corp. 5.25 11/01/2021 8,187
3,360 Tyler Health Facilities Dev. Corp. 5.25 11/01/2022 3,453
|
30 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 3,800 Tyler Health Facilities Dev. Corp. 5.25% 11/01/2023 $ 3,878
8,745 Tyler Health Facilities Dev. Corp. 5.25 7/01/2026 8,269
4,500 Univ. of Texas Board of Regents (PRE) 5.38 8/15/2017 4,873
7,000 Univ. of Texas Board of Regents (PRE) 5.25 7/01/2018 7,604
12,505 Univ. of Texas Board of Regents 4.25 8/15/2025 13,134
11,900 Univ. of Texas Board of Regents 4.25 8/15/2026 12,408
1,795 Weatherford ISD (NBGA) 4.73(a) 2/15/2023 994
1,795 Weatherford ISD (NBGA) 4.77(a) 2/15/2024 938
5,970 Williamson County (INS) 5.13 2/15/2022 6,708
1,385 Wylie ISD (NBGA) 5.00(a) 8/15/2014 1,258
1,690 Wylie ISD (NBGA) 5.10(a) 8/15/2015 1,479
----------
455,860
----------
UTAH (0.9%)
4,410 Intermountain Power Agency (INS)(ETM) 5.00 7/01/2012 4,424
19,626 Jordanelle Special Service District 12.00 8/01/2030 20,384
----------
24,808
----------
VIRGINIA (2.0%)
1,750 Albemarle County IDA 5.00 1/01/2024 1,559
2,290 College Building Auth. 5.00 6/01/2021 2,298
11,280 College Building Auth. 5.00 6/01/2026 10,799
1,775 Commonwealth Housing Dev. Auth. 4.35 1/01/2017 1,807
1,810 Commonwealth Housing Dev. Auth. 4.35 7/01/2017 1,843
15,342 Farms of New Kent Community Dev. Auth. 5.13 3/01/2036 9,619
3,889 Peninsula Town Center Community Dev. Auth. 5.80 9/01/2017 3,725
6,752 Peninsula Town Center Community Dev. Auth. 6.25 9/01/2024 6,113
5,378 Peninsula Town Center Community Dev. Auth. 6.35 9/01/2028 4,738
5,510 Public School Auth. (PRE) 5.00 8/01/2017 5,782
5,000 Richmond Convention Center Auth. (PRE) 6.13 6/15/2020 5,256
1,000 Small Business Financing Auth. 5.13 9/01/2022 855
----------
54,394
----------
WASHINGTON (0.5%)
1,800 Health Care Facilities Auth. (INS) 5.00 12/01/2023 1,760
2,000 Health Care Facilities Auth. (INS) 5.00 12/01/2024 1,934
2,310 Health Care Facilities Auth. (INS) 5.00 12/01/2025 2,216
1,470 Higher Education Facilities Auth. 5.20 10/01/2017 1,479
2,000 Housing Finance Commission (INS) 5.88 7/01/2019 2,021
5,000 King County Housing Auth. (INS) 5.20 7/01/2018 4,791
----------
14,201
----------
WISCONSIN (1.0%)
4,130 Health and Educational Facilities Auth. (INS) 5.25 8/15/2012 4,136
5,000 Health and Educational Facilities Auth. (INS) 5.13 8/15/2020 5,029
|
PORTFOLIO OF INVESTMENTS | 31
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
$ 8,300 Health and Educational Facilities Auth. 5.13% 2/15/2026 $ 8,151
2,350 Housing and EDA 4.85 9/01/2017 2,415
1,345 Kaukauna Area School District (INS) 4.85 3/01/2017 1,408
6,000 Sheboygan (INS) 5.00 9/01/2015 6,667
----------
27,806
----------
Total Fixed-Rate Instruments (cost: $2,418,480) 2,453,035
----------
PUT BONDS (7.4%)
ALABAMA (0.4%)
10,900 Baptist Health Care Auth. 6.00 11/15/2024 11,506
----------
ARIZONA (0.5%)
12,500 Maricopa County (INS) 6.00 5/01/2029 13,088
----------
CALIFORNIA (0.1%)
3,000 Health Facilities Financing Auth. 4.95 7/01/2026 3,175
----------
FLORIDA (0.6%)
16,000 Putnam County Dev. Auth. (INS) 5.35 3/15/2042 17,391
----------
GEORGIA (0.3%)
8,100 DeKalb County Housing Auth. 4.70 10/01/2031 8,459
----------
ILLINOIS (0.8%)
15,000 Chicago 4.75 3/01/2030 15,252
7,500 Educational Facilities Auth. 4.75 11/01/2036 7,946
----------
23,198
----------
LOUISIANA (0.5%)
14,000 Public Facilities Auth. 7.00 12/01/2038 15,060
----------
MASSACHUSETTS (0.2%)
4,000 Dev. Finance Agency 5.75 12/01/2042 4,320
----------
MICHIGAN (1.6%)
15,000 Hospital Finance Auth. 6.00 12/01/2034 17,663
15,000 Monroe County EDC (INS) 4.65 10/01/2024 15,573
10,550 Strategic Fund Ltd. (INS) 4.85 9/01/2030 10,753
----------
43,989
----------
NEW YORK (0.3%)
8,500 Hempstead 5.00 12/01/2010 8,480
----------
OHIO (0.3%)
8,000 Air Quality Dev. Auth. 5.75 6/01/2033 8,617
----------
TENNESSEE (0.1%)
2,000 Knox County Health, Educational, and Housing
Facilities Board (NBGA) 4.90 6/01/2031 2,109
----------
|
32 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
-----------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON FINAL VALUE
(000) SECURITY RATE MATURITY (000)
-----------------------------------------------------------------------------------------------------
TEXAS (1.3%)
$ 3,505 Beaumont Multifamily Housing Finance
Corp. (NBGA) 4.70% 12/15/2031 $ 3,592
5,250 Gateway Public Facility Corp. (NBGA) 4.55 7/01/2034 5,672
7,500 Matagorda County Navigation District No. 1 5.13 6/01/2030 7,665
3,505 Montgomery County Housing Finance Corp. (NBGA) 4.85 6/01/2031 3,658
15,000 North State Tollway Auth. 6.00 1/01/2038 16,316
----------
36,903
----------
WISCONSIN (0.4%)
9,000 Madison 4.88 10/01/2027 9,670
----------
Total Put Bonds (cost: $193,837) 205,965
----------
PERIODIC AUCTION RESET BONDS (0.1%)
OKLAHOMA (0.1%)
5,900 Tulsa County Industrial Auth., acquired
7/20/2006; cost $5,900(d),(e) 0.62 1/01/2039 2,360
----------
VARIABLE-RATE DEMAND NOTES (2.5%)
CALIFORNIA (0.8%)
5,000 Economic Recovery (LIQ) 1.00 7/01/2023 5,000
18,000 State (LIQ) 1.00 7/01/2023 18,000
----------
23,000
----------
LOUISIANA (0.6%)
6,000 Environmental Facilities and Community Dev. Auth.
(LOC - Regions Bank) 1.60 4/01/2035 6,000
10,000 Public Facilities Auth. (LOC - Regions Bank) 1.60 3/01/2040 10,000
----------
16,000
----------
MARYLAND (0.2%)
5,200 Montgomery County (NBGA)(c) 2.40 11/01/2020 5,200
----------
NORTH CAROLINA (0.4%)
10,000 Charlotte-Mecklenberg Hospital Auth. (LIQ) 2.50 1/15/2037 10,000
----------
TENNESSEE (0.5%)
15,000 Shelby County Health, Educational and Housing
Facility (LOC - Regions Bank) 1.60 5/01/2033 15,000
----------
Total Variable-Rate Demand Notes (cost: $69,200) 69,200
----------
TOTAL INVESTMENTS (COST: $2,687,417) $2,730,560
==========
|
PORTFOLIO OF INVESTMENTS | 33
-------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
-------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
-------------------------------------------------------------------------------------------------
Fixed-Rate Instruments $- $2,453,035 $ - $2,453,035
Put Bonds - 205,965 - 205,965
Periodic Auction Reset Bonds - - 2,360 2,360
Variable-Rate Demand Notes - 69,200 - 69,200
-------------------------------------------------------------------------------------------------
Total $- $2,728,200 $2,360 $2,730,560
-------------------------------------------------------------------------------------------------
|
Reconciliation of investments in which significant unobservable inputs (Level 3)
were used in determining value:
-------------------------------------------------------------------------------------------------
PERIODIC AUCTION
RESET BONDS
-------------------------------------------------------------------------------------------------
Balance as of March 31, 2009 $ -
Net realized gain (loss) -
Change in net unrealized appreciation/depreciation (3,540)
Net purchases (sales) -
Transfers in and/or out of Level 3 5,900
-------------------------------------------------------------------------------------------------
Balance as of September 30, 2009 $ 2,360
-------------------------------------------------------------------------------------------------
|
34 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
NOTES TO PORTFOLIO OF INVESTMENTS
September 30, 2009 (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) Zero-coupon security. Rate represents the effective yield at the date of
purchase.
(b) Stepped-coupon security that is initially issued in zero-coupon form and
converts to coupon form at the specified date and rate shown in the
security's description. The rate presented in the coupon rate column
represents the effective yield at the date of purchase.
(c) Restricted security that is not registered under the Securities Act of
1933. A resale of this security in the United States may occur in an
exempt transaction to a qualified institutional buyer as defined by Rule
144A, and as such has been deemed liquid by USAA Investment Management
Company (the Manager) under liquidity guidelines approved by the Board of
Trustees, unless otherwise noted as illiquid.
NOTES TO PORTFOLIO OF INVESTMENTS | 35
(d) Security deemed illiquid by the Manager, under liquidity guidelines
approved by the Board of Trustees. The aggregate market value of these
securities at September 30, 2009, was $4,933,000, which represented 0.2%
of the Fund's net assets.
(e) Security was fair valued at September 30, 2009, by the Manager in
accordance with valuation procedures approved by the Trust's Board of
Trustees.
See accompanying notes to financial statements.
36 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
September 30, 2009 (unaudited)
ASSETS
Investments in securities, at market value (cost of $2,687,417) $2,730,560
Cash 28
Receivables:
Capital shares sold 2,145
Interest 36,677
----------
Total assets 2,769,410
----------
LIABILITIES
Payables:
Capital shares redeemed 945
Dividends on capital shares 2,148
Accrued management fees 621
Accrued transfer agent's fees 12
Other accrued expenses and payables 85
----------
Total liabilities 3,811
----------
Net assets applicable to capital shares outstanding $2,765,599
==========
NET ASSETS CONSIST OF:
Paid-in capital $2,722,746
Overdistribution of net investment income (129)
Accumulated net realized loss on investments (161)
Net unrealized appreciation of investments 43,143
----------
Net assets applicable to capital shares outstanding $2,765,599
==========
Capital shares outstanding, unlimited number of shares
authorized, no par value 212,745
==========
Net asset value, redemption price, and offering price per share $ 13.00
==========
|
See accompanying notes to financial statements.
FINANCIAL STATEMENTS | 37
STATEMENT OF OPERATIONS
(IN THOUSANDS)
Six-month period ended September 30, 2009 (unaudited)
INVESTMENT INCOME
Interest income $ 65,921
--------
EXPENSES
Management fees 3,016
Administration and servicing fees 1,916
Transfer agent's fees 485
Custody and accounting fees 184
Postage 28
Shareholder reporting fees 18
Trustees' fees 5
Registration fees 21
Professional fees 77
Other 26
--------
Total expenses 5,776
--------
NET INVESTMENT INCOME 60,145
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Unaffiliated transactions (494)
Affiliated transactions (Note 7) 354
Change in net unrealized appreciation/depreciation 233,559
--------
Net realized and unrealized gain 233,419
--------
Increase in net assets resulting from operations $293,564
========
|
See accompanying notes to financial statements.
38 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Six-month period ended September 30, 2009 (unaudited), and year ended
March 31, 2009
9/30/2009 3/31/2009
--------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 60,145 $ 122,006
Net realized gain (loss) on investments (140) 906
Change in net unrealized appreciation/depreciation of
investments 233,559 (160,707)
--------------------------
Increase (decrease) in net assets resulting
from operations 293,564 (37,795)
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (60,176) (122,006)
Net realized gains - (3,121)
--------------------------
Distributions to shareholders (60,176) (125,127)
--------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 190,989 270,947
Reinvested dividends 47,291 97,684
Cost of shares redeemed (125,342) (464,378)
--------------------------
Increase (decrease) in net assets from capital
share transactions 112,938 (95,747)
--------------------------
Capital contribution from USAA Transfer Agency Company - 15
--------------------------
Net increase (decrease) in net assets 346,326 (258,654)
NET ASSETS
Beginning of period 2,419,273 2,677,927
--------------------------
End of period $2,765,599 $2,419,273
==========================
Overdistribution of net investment income:
End of period $ (129) $ (98)
==========================
CHANGE IN SHARES OUTSTANDING
Shares sold 15,414 22,152
Shares issued for dividends reinvested 3,806 8,081
Shares redeemed (10,160) (38,456)
--------------------------
Increase (decrease) in shares outstanding 9,060 (8,223)
==========================
|
See accompanying notes to financial statements.
FINANCIAL STATEMENTS | 39
NOTES TO FINANCIAL STATEMENTS
September 30, 2009 (unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USAA MUTUAL FUNDS TRUST (the Trust), registered under the Investment Company Act
of 1940 (the 1940 Act), as amended, is an open-end management investment company
organized as a Delaware statutory trust consisting of 45 separate funds. The
information presented in this semiannual report pertains only to the USAA Tax
Exempt Intermediate-Term Fund (the Fund), which is classified as diversified
under the 1940 Act. The Fund's investment objective is to provide investors with
interest income that is exempt from federal income tax.
A. SECURITY VALUATION -- 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. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the Trust's
Board of Trustees. The Service uses an evaluated mean between quoted bid
and 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 tax-exempt securities of comparable quality, coupon, maturity,
and type; indications as to values from dealers in securities; and
general market conditions.
2. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
40 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
3. 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 USAA Investment Management Company (the Manager),
an affiliate of the Fund, under valuation procedures approved by the
Trust's Board of Trustees. 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
net asset value (NAV) to be more reliable than it otherwise would be.
Fair value methods used by the Manager include, but are not limited to,
obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any restrictions
on disposition of the securities, and an evaluation of the forces that
influenced the market in which the securities are purchased and sold.
B. FAIR VALUE MEASUREMENTS -- Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments is
based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 -- inputs to the valuation methodology are quoted prices (unadjusted)
in active markets for identical securities.
Level 2 -- inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices.
NOTES TO FINANCIAL STATEMENTS | 41
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.
For the securities valued using significant unobservable inputs, the Manager
determined the market quotations from the pricing services were not
determinative of fair value. As such, the securities were valued in good
faith using methods determined by the Manager, under valuation procedures
approved by the Trust's Board of Trustees. These unobservable inputs included
risk premium adjustments reflecting the amount the Manager assumed market
participants would demand because of the risk (uncertainty) in the cash flows
from the securities and other information related to the securities such as
credit quality and coupon rates. Refer to the portfolio of investments for a
reconciliation of investments in which significant unobservable inputs (Level
3) were used in determining value.
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.
Interest income is recorded daily on the accrual basis. Premiums and
discounts are amortized over the life of the respective securities, using the
effective yield method for long-term securities and the straight-line method
for short-term securities.
E. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS -- Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after
the trade date. During the period prior to settlement,
42 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
these securities do not earn interest, are subject to market fluctuation, and
may increase or decrease in value prior to their delivery. The Fund maintains
segregated assets with a market value equal to or greater than the amount of
its purchase commitments. The purchase of securities on a delayed-delivery or
when-issued basis may increase the volatility of the Fund's NAV to the extent
that the Fund makes such purchases while remaining substantially fully
invested.
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 September 30, 2009, these custodian and other bank credits reduced the
Fund's expenses by less than $500.
G. INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, in the normal course
of business the Trust enters into contracts that contain a variety of
representations and warranties that provide general indemnifications. The
Trust's maximum exposure under these arrangements is unknown, 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.
I. SUBSEQUENT EVENTS -- Subsequent events are events or transactions that occur
after the balance sheet date but before the financial statements are issued
and are categorized as recognized or non-recognized for financial statement
purposes. The Fund has evaluated subsequent events through November 17, 2009,
the date the financial statements were issued, and has determined there were
no events that required recognition or disclosure in the Fund's financial
statements.
NOTES TO FINANCIAL STATEMENTS | 43
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $750 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 a rate per annum equal to
the rate at which CAPCO obtains funding in the capital markets, with no markup.
The USAA funds that are party to the loan agreement are assessed facility fees
by CAPCO based on the funds' assessed proportionate share of CAPCO's operating
expenses related to obtaining and maintaining CAPCO's funding programs in total
(in no event to exceed 0.07% annually 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 September 30, 2009, the Fund paid CAPCO facility
fees of $9,000, which represents 7.0% 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 September 30, 2009.
(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 March 31, 2010,
in accordance with applicable tax law.
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. 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.
The Fund is required to evaluate tax positions taken or expected to be taken in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained
44 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
by the applicable tax authority. Income tax and related interest and penalties
would be recognized by the Fund as tax expense in the statement of operations if
the tax positions were deemed to not meet the more-likely-than-not threshold.
For the six-month period ended September 30, 2009, the Fund did not incur any
income tax, interest, or penalties. As of September 30, 2009, the Manager has
reviewed all open tax years and concluded that there was no impact to the Fund's
net assets or results of operations. Tax years ended March 31, 2006, through
March 31, 2009, remain subject to examination by the Internal Revenue Service
and state taxing authorities. On an ongoing basis, the Manager will monitor its
tax positions to determine if adjustments to this conclusion are necessary.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended September 30, 2009, were
$161,753,000 and $96,182,000, respectively.
As of September 30, 2009, 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 September
30, 2009, were $106,130,000 and $62,987,000, respectively, resulting in net
unrealized appreciation of $43,143,000.
(5) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager carries out the Fund's investment policies and
manages the Fund's portfolio pursuant to an Advisory Agreement. The
investment management fee for the Fund is composed of a base fee and a
performance adjustment. The Fund's base fee is accrued daily and paid monthly
at an annualized rate of 0.28% of the Fund's average net assets for the
fiscal year.
The performance adjustment is calculated monthly by comparing the Fund's
performance to that of the Lipper Intermediate Municipal Debt Funds Index
over the performance period. The Lipper Intermediate
NOTES TO FINANCIAL STATEMENTS | 45
Municipal Debt Funds Index tracks the total return performance of the 30
largest funds in the Lipper Intermediate Municipal Debt Funds category. The
performance period for the Fund consists of the current month plus the
previous 35 months. The following table is utilized to determine the extent
of the performance adjustment:
OVER/UNDER PERFORMANCE ANNUAL ADJUSTMENT RATE
RELATIVE TO INDEX(1) AS A % OF THE FUND'S AVERAGE NET ASSETS(1)
-----------------------------------------------------------------------------
+/- 0.20% to 0.50% +/- 0.04%
+/- 0.51% to 1.00% +/- 0.05%
+/- 1.01% and greater +/- 0.06%
|
(1)Based on the difference between average annual performance of the Fund
and its relevant index, rounded to the nearest 0.01%. Average net assets
are calculated over a rolling 36-month period.
The annual performance adjustment rate is multiplied by the average net
assets of the Fund 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 the performance adjustment; a positive adjustment in the case of
overperformance, or a negative adjustment in the case of underperformance.
Under the performance fee arrangement, the Fund will pay a positive
performance fee adjustment for a performance period whenever the Fund
outperforms the Lipper Intermediate Municipal Debt Funds Index over that
period, even if the Fund had overall negative returns during the performance
period.
For the six-month period ended September 30, 2009, the Fund incurred total
management fees, paid or payable to the Manager, of $3,016,000, which
included a (0.04%) performance adjustment of $(561,000).
B. ADMINISTRATION AND SERVICING FEES -- The Manager provides certain
administration and shareholder 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 the Fund's average net
46 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
assets. For the six-month period ended September 30, 2009, the Fund incurred
administration and servicing fees, paid or payable to the Manager, of
$1,916,000.
In addition to the services provided under its Administration and Servicing
Agreement with the Fund, the Manager also provides certain compliance and
legal services for the benefit of the Fund. The Trust's Board of Trustees
has approved the reimbursement of a portion of these expenses incurred by the
Manager. For the six-month period ended September 30, 2009, the Fund
reimbursed the Manager $60,000 for these compliance and legal services. These
expenses are included in the professional fees on the Fund's statement of
operations.
C. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA Shareholder
Account Services (SAS), an affiliate of the Manager, provides transfer agent
services to the Fund based on an annual charge of $25.50 per shareholder
account plus out-of-pocket expenses. The Fund also pays SAS fees that are
related to the administration and servicing of accounts that are traded on an
omnibus basis. For the six-month period ended September 30, 2009, the Fund
incurred transfer agent's fees, paid or payable to SAS, of $485,000.
D. UNDERWRITING SERVICES -- The Manager provides exclusive underwriting and
distribution of the Fund's shares on a continuing best-efforts basis. The
Manager 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.
(7) SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
During the six-month period ended September 30, 2009, in accordance with
affiliated transaction procedures approved by the Trust's Board of Trustees,
purchases and sales of security transactions were executed
NOTES TO FINANCIAL STATEMENTS | 47
between the Fund and the following affiliated USAA fund at the then-current
market price with no brokerage commissions incurred.
COST TO NET REALIZED
SELLER PURCHASER PURCHASER GAIN TO SELLER
--------------------------------------------------------------------------------
USAA Tax Exempt USAA Tax Exempt
Intermediate-Term Fund Short-Term Fund $11,354,000 $354,000
USAA Tax Exempt USAA Tax Exempt
Short-Term Fund Intermediate-Term Fund 18,473,000 3,000
|
(8) NEW ACCOUNTING PRONOUNCEMENT
DERIVATIVES AND HEDGING -- In March 2008, the Financial Accounting Standards
Board issued an accounting standard that requires qualitative disclosures
about objectives and strategies for using derivatives, quantitative
disclosures about fair value amounts of and gains and losses on derivative
instruments, and disclosures about credit-risk-related contingent features in
derivative agreements. The Fund adopted the accounting standard on April 1,
2009; however, the Fund did not invest in any derivatives during the period
from April 1, 2009, through September 30, 2009. Therefore, no disclosures
have been made.
48 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
(9) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
SEPTEMBER 30, YEAR ENDED MARCH 31,
----------------------------------------------------------------------------------
2009 2009 2008 2007 2006 2005
----------------------------------------------------------------------------------
Net asset value at
beginning of period $ 11.88 $ 12.64 $ 13.17 $ 13.07 $ 13.16 $ 13.42
----------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .29 .59 .56 .55 .55 .57
Net realized and
unrealized gain (loss) 1.12 (.74) (.51) .10 (.07) (.24)
----------------------------------------------------------------------------------
Total from investment
operations 1.41 (.15) .05 .65 .48 .33
----------------------------------------------------------------------------------
Less distributions from:
Net investment income (.29) (.59) (.56) (.55) (.55) (.57)
Realized capital gains - (.02) (.02) (.00)(a) (.02) (.02)
----------------------------------------------------------------------------------
Total distributions (.29) (.61) (.58) (.55) (.57) (.59)
----------------------------------------------------------------------------------
Net asset value at end
of period $ 13.00 $ 11.88 $ 12.64 $ 13.17 $ 13.07 $ 13.16
==================================================================================
Total return (%)* 12.02 (1.22) .44 5.10(b) 3.69 2.51
Net assets at end
of period (000) $2,765,599 $2,419,273 $2,677,927 $2,830,190 $2,782,611 $2,696,781
Ratios to average
net assets:**
Expenses (%)(c) .45(d) .45 .51 .56(b) .55 .55
Net investment income (%) 4.70(d) 4.81 4.35 4.19 4.15 4.28
Portfolio turnover (%) 4 13 21 23 22 21
* 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.
** For the six-month period ended September 30, 2009, average net assets were $2,550,801,000.
(a) Represents less than $0.01 per share.
(b) For the year ended March 31, 2007, SAS voluntarily reimbursed the Fund for a portion of the transfer agency
fees incurred. The reimbursement had no effect on the Fund's total return or ratio of expenses to average net
assets.
(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 as follows:
(.00%)(+) (.00%)(+) (.01%) (.00%)(+) (.00%)(+) (.00%)(+)
+ Represents less than 0.01% of average net assets.
(d) Annualized. The ratio is not necessarily indicative of 12 months of operations.
|
NOTES TO FINANCIAL STATEMENTS | 49
EXPENSE EXAMPLE
September 30, 2009 (unaudited)
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: direct costs, such
as wire fees, redemption fees, and low balance fees; and indirect costs,
including management fees, transfer agency fees, and other Fund operating
expenses. This example is intended to help you understand your indirect costs,
also referred to as "ongoing costs" (in dollars), of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire six-month period of April 1, 2009, through
September 30, 2009.
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 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
50 | USAA Tax Exempt Intermediate-Term Fund
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 APRIL 1, 2009 -
APRIL 1, 2009 SEPTEMBER 30, 2009 SEPTEMBER 30, 2009
-----------------------------------------------------------
Actual $1,000.00 $1,120.20 $2.39
Hypothetical
(5% return before expenses) 1,000.00 1,022.81 2.28
|
* Expenses are equal to the Fund's annualized expense ratio of 0.45%, which is
net of any expenses paid indirectly, multiplied by the average account value
over the period, multiplied by 183 days/365 days (to reflect the one-half-year
period). The Fund's ending account value on the first line in the table is
based on its actual total return of 12.02% for the six-month period of April
1, 2009, through September 30, 2009.
EXPENSE EXAMPLE | 51
ADVISORY AGREEMENT
September 30, 2009 (unaudited)
At a meeting of the Board of Trustees (the Board) held on April 16, 2009, the
Board, including the Trustees who are not "interested persons" of the Trust (the
Independent Trustees), approved the continuance of the Advisory Agreement
between the Trust and the Manager with respect to the Fund.
In advance of the meeting, the Trustees received and considered a variety of
information relating to the Advisory Agreement and the Manager and were given
the opportunity to ask questions and request additional information from
management. The information provided to the Board included, among other things:
(i) a separate report prepared by an independent third party, which provided a
statistical analysis comparing the Fund's investment performance, expenses, and
fees to comparable investment companies; (ii) information concerning the
services rendered to the Fund, as well as information regarding the Manager's
revenues and costs of providing services to the Fund and compensation paid to
affiliates of the Manager; and (iii) information about the Manager's operations
and personnel. Prior to voting, the Independent Trustees reviewed the proposed
continuation of the Advisory Agreement with management and with experienced
independent counsel and received materials from such counsel discussing the
legal standards for their consideration of the proposed continuation of the
Advisory Agreement with respect to the Fund. The Independent Trustees also
reviewed the proposed continuation of the Advisory Agreement with respect to the
Fund in private sessions with their counsel at which no representatives of
management were present. At each regularly scheduled meeting of the Board and
its committees, the Board receives and reviews, among other things, information
concerning the Fund's performance and related services provided by the Manager.
At the meeting at which the renewal of the Advisory Agreement is considered,
particular focus is given to information
52 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
concerning Fund performance, comparability of fees and total expenses, and
profitability. However, the Board noted that the evaluation process with respect
to the Manager is an ongoing one. In this regard, the Board's and its
committees' consideration of the Advisory Agreement included information
previously received at such meetings.
ADVISORY AGREEMENT
After full consideration of a variety of factors, the Board, including the
Independent Trustees, voted to approve the Advisory Agreement. In approving the
Advisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee attributed different weights to various factors.
Throughout their deliberations, the Independent Trustees were represented and
assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES -- In considering the nature, extent,
and quality of the services provided by the Manager under the Advisory
Agreement, the Board reviewed information provided by the Manager relating to
its operations and personnel. The Board also took into account its familiarity
with the Manager's management through Board meetings, discussions, and reports
during the preceding year. The Board considered the fees paid to the Manager
and the services provided to the Fund by the Manager under the Advisory
Agreement, as well as other services provided by the Manager and its affiliates
under other agreements, and the personnel who provide these services. In
addition to the investment advisory services provided to the Fund, the Manager
and its affiliates provide administrative services, stockholder services,
oversight of Fund accounting, marketing services, assistance in meeting legal
and regulatory requirements, and other services necessary for the operation of
the Fund and the Trust.
The Board considered the Manager's management style and the performance of its
duties under the Advisory Agreement. The Board considered the level and depth of
knowledge of the Manager, including the professional experience and
qualifications of its senior and investment personnel, as well as current
staffing levels. The allocation of the Fund's brokerage, including the Manager's
process for monitoring "best execution,"
ADVISORY AGREEMENT | 53
also was considered. The Manager's role in coordinating the activities of the
Fund's other service providers also was considered. The Board considered the
Manager's financial condition and that it had the financial wherewithal to
continue to provide the same scope and high quality of services under the
Advisory Agreement. In reviewing the Advisory Agreement, the Board focused on
the experience, resources, and strengths of the Manager and its affiliates in
managing investment companies, including the Fund.
The Board also reviewed the compliance and administrative services provided to
the Fund by the Manager and its affiliates, including the Manager's oversight of
the Fund's day-to-day operations and oversight of Fund accounting. The Trustees,
guided also by information obtained from their experiences as trustees of the
Fund and other investment companies managed by the Manager, also focused on the
quality of the Manager's compliance and administrative staff.
EXPENSES AND PERFORMANCE -- In connection with its consideration of the Advisory
Agreement, the Board evaluated the Fund's advisory fees and total expense ratio
as compared to other open-end investment companies deemed to be comparable to
the Fund as determined by the independent third party in its report. The Fund's
expenses were compared to (i) a group of investment companies chosen by the
independent third party to be comparable to the Fund based upon certain factors,
including fund type, comparability of investment objective and classification,
sales load type (in this case, investment companies with no sales loads), asset
size, and expense components (the "expense group") and (ii) a larger group of
investment companies that includes all no-load retail open-end investment
companies in the same investment classification/objective as the Fund regardless
of asset size, excluding outliers (the "expense universe"). Among other data,
the Board noted that the Fund's management fee rate -- which includes advisory
and administrative services and the effects of any performance adjustment -- was
above the median of its expense group and its expense universe. The data
indicated that the Fund's total expense ratio was below the median of its
expense group and its expense universe. The Board took into account the various
services provided to the Fund by the Manager and its affiliates, including the
high quality of services
54 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
provided by the Manager. The Board also noted the level and method of computing
the management fee, including the performance adjustment to such fee.
In considering the Fund's performance, the Board noted that it reviews at its
regularly scheduled meetings information about the Fund's performance results.
The Trustees also reviewed various comparative data provided to them in
connection with their consideration of the renewal of the Advisory Agreement,
including, among other information, a comparison of the Fund's average annual
total return with its Lipper index and with that of other mutual funds deemed to
be in its peer group by the independent third party in its report (the
"performance universe"). The Fund's performance universe consisted of the Fund
and all retail and institutional open-end investment companies with the same
classification/objective as the Fund regardless of asset size or primary channel
of distribution. This comparison indicated that the Fund's performance was below
the average of its performance universe and its Lipper index for the one-,
three-, and five-year periods ended December 31, 2008. The Board also noted that
the Fund's percentile performance ranking was in the bottom 50% of its
performance universe for the same periods. The Board took into account
management's discussion of the Fund's recent performance, including its improved
more recent performance, and any actions taken with respect to the Fund.
COMPENSATION AND PROFITABILITY -- The Board took into consideration the level
and method of computing the management fee. The information considered by the
Board included operating profit margin information for the Manager's business as
a whole. The Board also received and considered profitability information
related to the management revenues from the Fund. This consideration included a
broad review of the methodology used in the allocation of certain costs to the
Fund. The Trustees reviewed the profitability of the Manager's relationship with
the Fund before tax expenses. In reviewing the overall profitability of the
management fee to the Manager, the Board also considered the fact that
affiliates provide shareholder servicing and administrative services to the Fund
for which they receive compensation. The Board also considered the possible
direct and indirect benefits to the Manager from its relationship with the
Trust,
ADVISORY AGREEMENT | 55
including that the Manager may derive reputational and other benefits from its
association with the Fund. The Board also took into account the high quality of
services received by the Fund from the Manager. The Trustees recognized that
the Manager should be entitled to earn a reasonable level of profits in exchange
for the level of services it provides to the Fund and the entrepreneurial risk
that it assumes as Manager.
ECONOMIES OF SCALE -- The Board considered whether there should be changes in
the management fee rate or structure in order to enable the Fund to participate
in any economies of scale. The Board noted that the Fund's contractual
management fee is below the asset-weighted average of funds up to $2.3 billion
in its peer group as set forth in the report prepared by the independent third
party. The Board also took into account management's discussion of the current
advisory fee structure. The Board determined that the current investment
management fee structure was reasonable.
CONCLUSIONS -- The Board reached the following conclusions regarding the Fund's
Advisory Agreement with the Manager, among others: (i) the Manager has
demonstrated that it possesses the capability and resources to perform the
duties required of it under the Advisory Agreement; (ii) the Manager maintains
an appropriate compliance program; (iii) the performance of the Fund is being
addressed; (iv) the Fund's advisory expenses are reasonable in relation to those
of similar funds and to the services to be provided by the Manager; and (v) the
Manager's level of profitability from its relationship with the Fund is
reasonable in light of the nature and high quality of services provided by the
Manager and the type of fund. Based on its conclusions, the Board determined
that continuation of the Advisory Agreement would be in the best interests of
the Fund and its shareholders.
56 | USAA TAX EXEMPT INTERMEDIATE-TERM FUND
TRUSTEES Christopher W. Claus
Barbara B. Dreeben
Robert L. Mason, Ph.D.
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
Richard A. Zucker
--------------------------------------------------------------------------------
ADMINISTRATOR, USAA Investment Management Company
INVESTMENT ADVISER, P.O. Box 659453
UNDERWRITER, AND San Antonio, Texas 78265-9825
DISTRIBUTOR
--------------------------------------------------------------------------------
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 "Products & Services"
SELF-SERVICE 24/7 click "Investments," then
AT USAA.COM "Mutual Funds"
OR CALL Under "My Accounts" go to
(800) 531-USAA "Investments." View account balances,
(8722) or click "I want to...," and select
the desired action.
--------------------------------------------------------------------------------
|
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 Web site 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
At USAA.COM click: MY DOCUMENTS
Set preferences to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA WE KNOW WHAT IT MEANS TO SERVE.(R)
=============================================================================
39594-1109 (C)2009, 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 September 30, 2009
By:* CHRISTOPHER P. LAIA
-----------------------------------------------------------
Signature and Title: Christopher P. Laia, Assistant Secretary
Date: NOVEMBER 20, 2009
------------------------------
|
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:* CHRISTOPHER W. CLAUS
-----------------------------------------------------
Signature and Title: Christopher W. Claus, President
Date: NOVEMBER 23, 2009
------------------------------
By:* ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: NOVEMBER 23, 2009
------------------------------
|
*Print the name and title of each signing officer under his or her signature.
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