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: MAY 31,
Date of reporting period: NOVEMBER 30, 2009
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED NOVEMBER 30, 2009
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA TREASURY MONEY MARKET TRUST]
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SEMIANNUAL REPORT
USAA TREASURY MONEY MARKET TRUST(R)
NOVEMBER 30, 2009
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FUND OBJECTIVE
MAXIMUM CURRENT INCOME WHILE MAINTAINING THE HIGHEST DEGREE OF SAFETY AND
LIQUIDITY.
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TYPES OF INVESTMENTS
Invests principally in U.S. government securities with maturities of 397 days or
less; normally at least 80% of the Fund's investments will be in U.S. Treasury
bills, notes, and bonds, and repurchase agreements collateralized by these
instruments.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Investment Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
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TABLE OF CONTENTS
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PRESIDENT'S MESSAGE 2
MANAGER'S COMMENTARY 4
INVESTMENT OVERVIEW 6
FINANCIAL INFORMATION
Portfolio of Investments 10
Notes to Portfolio of Investments 12
Financial Statements 13
Notes to Financial Statements 16
EXPENSE EXAMPLE 23
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)2010, USAA. All rights reserved.
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PRESIDENT'S MESSAGE
"IN MY OPINION, THOSE WHO WERE DIVERSIFIED
WEATHERED THE STORM BETTER THAN THOSE [PHOTO OF DANIEL S. McNAMARA]
WHO WERE AGGRESSIVELY POSITIONED."
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DECEMBER 2009
As we head into 2010, I wish you a healthy and prosperous new year. I am honored
to be the new president of the USAA Investment Management Company, an
organization with a rich history of service and accomplishment.
At the time of this writing, the financial markets appear to be back on track --
an excellent time, in my opinion, to take stock of the past year. At the
beginning of 2009, stocks seemed priced for extinction. In the fixed income
market, credit spreads (or, the difference in bond yields) had widened to record
levels as investors fled to the safety of U.S. Treasury securities. The U.S.
economy was in a deep recession. Home prices continued to fall and unemployment
steadily increased, leading to a sharp decline in consumer spending.
In March 2009, however, world stock prices reversed course. For example, the S&P
500 Index rose 64% between the market bottom on March 6, 2009, and November 30,
2009. The fixed income market experienced record price appreciation, and the
prices of oil and other commodities such as gold and precious metals increased.
The dollar weakened, making U.S. goods and services less expensive to buyers
around the world. Meanwhile, the federal government's fiscal stimulus spending,
including its "cash for clunkers" program, seemed to help stabilize the economy.
In the third quarter, the U.S. gross domestic product grew at 2.2%.
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2 | USAA TREASURY MONEY MARKET TRUST
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I believe the worst of the crisis appears to be over. Nevertheless, risk
remains. And no one knows exactly what will happen next. This makes it an
opportune time for all of us to take stock of our investment portfolios. Looking
back at the market decline, many investors were not appropriately positioned
relative to their risk tolerance. In my opinion, those who were diversified
weathered the storm better than those who were aggressively positioned.
With this in mind, I have undertaken a review of my own investment portfolio.
Like a medical exam helps me to take care of my physical health, a portfolio
checkup helps me to monitor my financial health. The process gives me the
opportunity to reflect on my goals, re-evaluate my risk tolerance, consider
changes in my investment strategy, and reposition my portfolio accordingly. I
urge you to do the same. Our trained service representatives are standing ready
to assist you -- free of charge.
At USAA Investment Management Company, we stand ready to help you with your
investment needs. We continue to offer what we consider an excellent value --
some of the industry's top investment talent, first-class service, and no-load
mutual funds. On behalf of all us, thank you for your business and the trust you
have placed in us.
Sincerely,
/s/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
Diversification does not guarantee a profit or prevent a loss. o Mutual fund
operating expenses apply and continue throughout the life of the Fund. o Past
performance is no guarantee of future results.
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PRESIDENT'S MESSAGE | 3
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MANAGER'S COMMENTARY ON THE FUND
TONY ERA [PHOTO OF TONY ERA]
USAA Investment Management Company
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o HOW DID THE USAA TREASURY MONEY MARKET TRUST (THE FUND) PERFORM?
For the six-month period ended November 30, 2009, the Fund had a total return
of 0.00%. This compares to an average return of 0.01% for similar Treasury and
repurchase agreement (repo) money market funds tracked by iMoneyNet, Inc. As
of November 30, 2009, the Fund's seven-day yield was 0.00%.
o WHY DID THE FUND AND ITS PEER GROUP PROVIDE NEAR-ZERO RETURNS FOR THE SIX
MONTHS?
The Fund primarily invests its assets in securities with maturities of 397
days or less that are backed by the full faith and credit of the U.S.
government, as well as repurchase agreements collateralized by such
securities.
The Federal Reserve Board (the Fed) has been pumping massive liquidity into
the financial system through a variety of programs and policies in an effort
to stabilize credit markets and stimulate the economy. Despite the fact that,
for the entire reporting period, the federal funds
Refer to page 7 for the iMoneyNet, Inc. definition.
Past performance is no guarantee of future results.
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4 | USAA TREASURY MONEY MARKET TRUST
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target rate was 0% to 0.25%, there remained strong demand for short-term debt
backed by the U.S. Treasury. A substantial number of investors continue to
prefer the security of government backing, even at near zero yields, as their
risk tolerance remains substantially diminished.
o HOW DID YOU INVEST THE FUND'S ASSETS IN SUCH A LOW-RATE ENVIRONMENT?
There has been little incentive in terms of extra yield, and at times no
incentive, to extend the Fund's weighted average maturity by investing in
longer-term securities. A longer weighted average maturity makes the Fund more
vulnerable to rising rates.
During the period, we primarily invested the Fund's assets in repurchase
agreements, while purchasing U.S. Treasury securities to help minimize the
effect of sustained near-zero rates in the U.S. Treasury bill market. We also
purchased Treasuries of various near-term maturities as we approached year-end
to avoid technical issues such as lack of supply over year-end in the
marketplace. Our fixed-rate holdings were laddered to sequentially mature over
the coming few months.
o WHAT'S YOUR OUTLOOK?
We do not expect the Fed to raise short-term rates anytime soon, but prefer to
maintain maximum flexibility to capture the potential for higher yields when
the economy begins a sustainable recovery, which could cause yields to rise.
Currently, there exists little incentive to extend the weighted average
maturity of the Fund given the lack of yield differential in the short-term
U.S. Treasury market. The Fund has an investment objective of providing
investors maximum current income while maintaining the highest degree of
safety and liquidity.
We are pleased to have provided a stable investment during this challenging
economic period. Thank you for your faith and trust in us.
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MANAGER'S COMMENTARY ON THE FUND | 5
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INVESTMENT OVERVIEW
USAA TREASURY MONEY MARKET TRUST (Ticker Symbol: UATXX)
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11/30/09 5/31/09
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Net Assets $200.7 Million $227.2 Million
Net Asset Value Per Share $1.00 $1.00
Dollar-Weighted Average
Portfolio Maturity 31 Days 3 Days
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AVERAGE ANNUAL TOTAL RETURNS AND 7-DAY YIELD AS OF 11/30/09
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5/31/09 to 11/30/09* 1 Year 5 Years 10 Years 7-Day Yield
0.00% 0.00% 2.63% 2.60% 0.00%
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
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. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND.
Total return equals income return and assumes reinvestment of all net investment
income and realized capital gain distributions. The total returns quoted do not
reflect adjustments made to the enclosed financial statements in accordance with
generally accepted accounting principles or the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Yields and returns fluctuate. The seven-day yield quotation more closely
reflects current earnings of the Fund than the total return quotation.
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6 | USAA TREASURY MONEY MARKET TRUST
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o 7-DAY YIELD COMPARISON o
[CHART OF 7-DAY YIELD COMPARISON]
USAA TREASURY
MONEY MARKET TRUST iMONEYNET AVERAGE
11/25/2008 0.21% 0.18%
12/30/2008 0.00 0.11
1/27/2009 0.00 0.06
2/24/2009 0.00 0.04
3/31/2009 0.00 0.03
4/28/2009 0.00 0.03
5/26/2009 0.00 0.03
6/30/2009 0.00 0.02
7/28/2009 0.00 0.02
8/25/2009 0.00 0.02
9/29/2009 0.00 0.02
10/27/2009 0.00 0.02
11/24/2009 0.00 0.01
[END CHART]
Data represent the last Tuesday of each month. Ending date 11/24/09.
The graph tracks the Fund's seven-day yield against the iMoneyNet, Inc. Average
for all retail money market funds that hold U.S. Treasuries and repos backed by
the U.S. Treasury and all retail money funds that hold 100% in U.S. Treasuries.
iMoneyNet, Inc. is an organization that tracks the performance of money market
funds.
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INVESTMENT OVERVIEW | 7
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o CUMULATIVE PERFORMANCE OF $10,000 o
[CHART OF CUMULATIVE PERFORMANCE]
USAA TREASURY
MONEY MARKET TRUST
11/30/1999 $10,000.00
12/31/1999 10,041.65
1/31/2000 10,083.58
2/29/2000 10,125.04
3/31/2000 10,170.68
4/30/2000 10,213.07
5/31/2000 10,263.77
6/30/2000 10,312.75
7/31/2000 10,364.44
8/31/2000 10,416.75
9/30/2000 10,466.45
10/31/2000 10,521.60
11/30/2000 10,574.08
12/31/2000 10,624.67
1/31/2001 10,679.23
2/28/2001 10,722.70
3/31/2001 10,767.67
4/30/2001 10,810.67
5/31/2001 10,849.08
6/30/2001 10,882.88
7/31/2001 10,917.95
8/31/2001 10,949.53
9/30/2001 10,973.16
10/31/2001 10,996.02
11/30/2001 11,013.99
12/31/2001 11,028.12
1/31/2002 11,041.40
2/28/2002 11,053.88
3/31/2002 11,066.73
4/30/2002 11,079.44
5/31/2002 11,091.83
6/30/2002 11,103.78
7/31/2002 11,116.94
8/31/2002 11,130.77
9/30/2002 11,142.38
10/31/2002 11,155.20
11/30/2002 11,165.45
12/31/2002 11,174.82
1/31/2003 11,184.26
2/28/2003 11,192.35
3/31/2003 11,200.55
4/30/2003 11,208.93
5/31/2003 11,217.58
6/30/2003 11,224.65
7/31/2003 11,230.75
8/31/2003 11,236.95
9/30/2003 11,242.45
10/31/2003 11,249.01
11/30/2003 11,254.54
12/31/2003 11,260.83
1/31/2004 11,266.78
2/29/2004 11,271.94
3/31/2004 11,277.55
4/30/2004 11,283.36
5/31/2004 11,288.34
6/30/2004 11,293.94
7/31/2004 11,301.99
8/31/2004 11,310.81
9/30/2004 11,320.98
10/31/2004 11,333.51
11/30/2004 11,346.83
12/31/2004 11,362.87
1/31/2005 11,378.49
2/28/2005 11,395.43
3/31/2005 11,415.56
4/30/2005 11,437.56
5/31/2005 11,461.44
6/30/2005 11,485.41
7/31/2005 11,512.49
8/31/2005 11,541.72
9/30/2005 11,573.15
10/31/2005 11,603.41
11/30/2005 11,636.83
12/31/2005 11,674.96
1/31/2006 11,709.85
2/28/2006 11,745.70
3/31/2006 11,788.67
4/30/2006 11,826.66
5/31/2006 11,870.19
6/30/2006 11,916.50
7/31/2006 11,960.93
8/31/2006 12,009.03
9/30/2006 12,057.50
10/31/2006 12,104.69
11/30/2006 12,152.05
12/31/2006 12,204.06
1/31/2007 12,250.17
2/28/2007 12,294.82
3/31/2007 12,346.33
4/30/2007 12,393.25
5/31/2007 12,443.22
6/30/2007 12,492.48
7/31/2007 12,541.26
8/31/2007 12,591.50
9/30/2007 12,631.79
10/31/2007 12,676.70
11/30/2007 12,717.76
12/31/2007 12,749.51
1/31/2008 12,779.45
2/29/2008 12,802.48
3/31/2008 12,819.87
4/30/2008 12,838.08
5/31/2008 12,856.33
6/30/2008 12,871.96
7/31/2008 12,888.39
8/31/2008 12,905.78
9/30/2008 12,916.75
10/31/2008 12,918.70
11/30/2008 12,919.94
12/31/2008 12,920.08
1/31/2009 12,920.09
2/28/2009 12,920.09
3/31/2009 12,920.10
4/30/2009 12,920.10
5/31/2009 12,920.11
6/30/2009 12,920.11
7/31/2009 12,920.12
8/31/2009 12,920.13
9/30/2009 12,920.13
10/31/2009 12,920.14
11/30/2009 12,920.15
[END CHART]
Data from 11/30/99 through 11/30/09.
The graph illustrates the performance of a hypothetical $10,000 investment in
the USAA Treasury Money Market Trust.
Past performance is no guarantee of future results. 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. Income may be subject to
federal, state, or local taxes, or to the federal alternative minimum tax. For
seven-day yield information, please refer to the Fund's Investment Overview
page.
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8 | USAA TREASURY MONEY MARKET TRUST
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o ASSET ALLOCATION -- 11/30/2009 o
[PIE CHART OF ASSET ALLOCATION]
REPURCHASE AGREEMENTS 60.1%
U.S. TREASURY BILLS 39.9%
[END CHART]
Percentages are of the net assets of the Fund and may not equal 100%.
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INVESTMENT OVERVIEW | 9
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PORTFOLIO OF INVESTMENTS
November 30, 2009 (unaudited)
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PRINCIPAL
AMOUNT VALUE
(000) SECURITY (000)
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U.S. TREASURY BILLS (39.9%)(b)
$20,000 0.16%, 12/17/2009 $ 19,998
10,000 0.23%, 1/14/2010 9,997
10,000 0.26%, 1/28/2010 9,996
10,000 0.26%, 2/11/2010 9,995
10,000 0.05%, 3/18/2010 9,999
10,000 0.07%, 4/08/2010 9,997
10,000 0.12%, 5/13/2010 9,995
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Total U.S. Treasury Bills (cost: $79,977) 79,977
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REPURCHASE AGREEMENTS (60.1%)
25,000 Barclays Bank plc, 0.14%, acquired 11/30/2009 and due on
12/01/2009 at $25,000 (collateralized by $24,417 of
U.S. Treasury, 3.63%(a), due 8/15/2019; market value $25,500) 25,000
15,000 Credit Suisse First Boston, LLC, 0.15%, acquired 11/30/2009
and due 12/01/2009 at $15,000 (collateralized by $15,305 of
U.S. Treasury, 0.08%(b), due 4/15/2010; market value $15,301) 15,000
35,000 Credit Suisse First Boston, LLC, 0.16%, acquired 11/30/2009
and due 12/01/2009 at $35,000 (collateralized by $33,496 of
Government National Mortgage Assn. I(c), 4.50% - 5.00%,
due 6/15/2018 - 6/15/2033; market value $35,701) 35,000
20,645 Deutsche Bank Securities, 0.15%, acquired 11/30/2009 and due
12/01/2009 at $20,646 (collateralized by $19,947 of U.S. Treasury,
2.00% - 4.50%(a), due 2/28/2010 - 9/30/2011; market value $21,059) 20,645
25,000 JP Morgan Chase Securities, 0.13%, acquired 11/30/2009 and
due 12/01/2009 at $25,000 (collateralized by $25,480 of
U.S. Treasury, 1.50%(a), due 12/31/2013; market value $25,502) 25,000
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Total Repurchase Agreements (cost: $120,645) 120,645
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TOTAL INVESTMENTS (COST: $200,622) $200,622
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10 | USAA TREASURY MONEY MARKET TRUST
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($ IN 000s) VALUATION HIERARCHY
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(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
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U.S. Treasury Bills $- $ 79,977 $- $ 79,977
Repurchase Agreements - 120,645 - 120,645
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Total $- $200,622 $- $200,622
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PORTFOLIO OF INVESTMENTS | 11
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NOTES TO PORTFOLIO OF INVESTMENTS
November 30, 2009 (unaudited)
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o GENERAL NOTES
Values of securities are determined by procedures and practices discussed in
Note 1 to the financial statements.
The cost of securities at November 30, 2009, for federal income tax purposes,
was approximately the same as that reported in 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) Rates for U.S. Treasury notes represent the stated coupon payment rate at
time of issuance.
(b) Securities offered at a discount to face value rather than at a stated
coupon rate. Rates represent the discount rates at purchase date.
(c) Mortgage-backed securities issued by Government National Mortgage
Association (GNMA) are supported by the full faith and credit of the
U.S. government.
See accompanying notes to financial statements.
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12 | USAA TREASURY MONEY MARKET TRUST
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STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
November 30, 2009 (unaudited)
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ASSETS
Investments in securities (amortized cost approximates market value) $ 79,977
Investments in repurchase agreements (cost approximates market value) 120,645
Receivables:
Capital shares sold 253
USAA Investment Management Company (Note 4C) 128
Interest 1
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Total assets 201,004
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LIABILITIES
Payables:
Capital shares redeemed 250
Dividends on capital shares 1
Accrued management fees 21
Other accrued expenses and payables 45
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Total liabilities 317
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Net assets applicable to capital shares outstanding $200,687
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NET ASSETS CONSIST OF:
Paid-in capital $200,687
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Capital shares outstanding, unlimited number of shares
authorized, no par value 200,687
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Net asset value, redemption price, and offering price per share $ 1.00
========
See accompanying notes to financial statements.
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FINANCIAL STATEMENTS | 13
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STATEMENT OF OPERATIONS
(IN THOUSANDS)
Six-month period ended November 30, 2009 (unaudited)
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INVESTMENT INCOME
Interest income $ 163
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EXPENSES
Management fees 139
Administration and servicing fees 111
Transfer agent's fees 146
Custody and accounting fees 20
Postage 10
Shareholder reporting fees 10
Trustees' fees 5
Registration fees 28
Professional fees 33
Other 6
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Total expenses 508
Expenses reimbursed (346)
-----
Net expenses 162
-----
NET INVESTMENT INCOME $ 1
=====
See accompanying notes to financial statements.
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14 | USAA TREASURY MONEY MARKET TRUST
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STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Six-month period ended November 30, 2009 (unaudited), and year ended
May 31, 2009
--------------------------------------------------------------------------------
11/30/2009 5/31/2009
-------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 1 $ 1,134
------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1) (1,134)
------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 75,757 305,762
Reinvested dividends - 1,097
Cost of shares redeemed (102,240) (299,156)
------------------------
Increase (decrease) in net assets from capital share
transactions (26,483) 7,703
------------------------
Net increase (decrease) in net assets (26,483) 7,703
NET ASSETS
Beginning of period 227,170 219,467
------------------------
End of period $ 200,687 $ 227,170
========================
CHANGE IN SHARES OUTSTANDING
Shares sold 75,757 305,762
Shares issued for dividends reinvested - 1,097
Shares redeemed (102,240) (299,156)
------------------------
Increase (decrease) in shares outstanding (26,483) 7,703
========================
See accompanying notes to financial statements.
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FINANCIAL STATEMENTS | 15
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NOTES TO FINANCIAL STATEMENTS
November 30, 2009 (unaudited)
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(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 46 separate funds. The
information presented in this semiannual report pertains only to the USAA
Treasury Money Market Trust (the Fund), which is classified as diversified under
the 1940 Act. The Fund's investment objective is to provide maximum current
income while maintaining the highest degree of safety and liquidity.
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. Pursuant to Rule 2a-7 under the 1940 Act, securities in the Fund are
valued at amortized cost, which approximates market value. This method
values a security at its cost on the date of purchase and, thereafter,
assumes a constant amortization to maturity of any premiums or discounts.
2. Repurchase agreements are valued at cost, which approximates market value.
3. Securities for which amortized cost valuations are considered unreliable
or whose values have been materially affected by a significant event 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 and procedures to stabilize net asset value
(NAV) approved by the Trust's Board of Trustees.
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
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16 | USAA TREASURY MONEY MARKET TRUST
<PAGE>
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orderly transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments is
based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 -- inputs to the valuation methodology are quoted prices (unadjusted)
in active markets for identical securities.
Level 2 -- inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices.
Level 3 -- inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities. For
example, money market securities are valued using amortized cost, in
accordance with rules under the 1940 Act. Generally, amortized cost
approximates the current fair value of a security, but since the value is not
obtained from a quoted price in an active market, such securities are
reflected as Level 2.
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
straight-line method.
E. REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
commercial banks or recognized security dealers. These agreements are
collateralized by underlying securities. The collateral obligations are
marked-to-market daily to ensure their
================================================================================
NOTES TO FINANCIAL STATEMENTS | 17
<PAGE>
================================================================================
value is equal to or in excess of the repurchase agreement price plus accrued
interest and are held by the Fund, either through its regular custodian or
through a special "tri-party" custodian that maintains separate accounts for
both the Fund and its counterparty, until maturity of the repurchase
agreement. Repurchase agreements are subject to credit risk, and the Fund's
Manager monitors the creditworthiness of sellers with which the Fund may
enter into repurchase agreements.
F. 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, 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.
G. EXPENSES PAID INDIRECTLY -- Through arrangements with the Fund's custodian
and other banks utilized by the Fund for cash management purposes, realized
credits, if any, generated from cash balances in the Fund's bank accounts may
be used to directly reduce the Fund's expenses. For the six-month period
ended November 30, 2009, these custodian and other bank credits reduced the
Fund's expenses by less than $500.
H. 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.
I. 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.
================================================================================
18 | USAA TREASURY MONEY MARKET TRUST
<PAGE>
================================================================================
(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 0.13% annually of the amount of the committed loan
agreement). Prior to September 25, 2009, the maximum annual facility fee was
0.07% 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 November 30, 2009, the Fund paid CAPCO facility
fees of $1,000, which represents 0.6% of the total fees paid to CAPCO by the
USAA funds. The Fund had no borrowings under this agreement during the six-month
period ended November 30, 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 May 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 by the applicable tax
authority. Income tax and related interest and penalties would be recognized by
the Fund as tax expense in the
================================================================================
NOTES TO FINANCIAL STATEMENTS | 19
<PAGE>
================================================================================
statement of operations if the tax positions were deemed to not meet the
more-likely-than-not threshold. For the six-month period ended November 30,
2009, the Fund did not incur any income tax, interest, or penalties. As of
November 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 May 31, 2006, through May 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) 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 Fund's
management fees are accrued daily and paid monthly at an annualized rate of
0.125% of the Fund's average net assets for the fiscal year. For the
six-month period ended November 30, 2009, the Fund incurred management fees,
paid or payable to the Manager, of $139,000.
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 0.10% of the Fund's average net assets. For the six-month
period ended November 30, 2009, the Fund incurred administration and
servicing fees, paid or payable to the Manager, of $111,000.
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 November 30, 2009, the Fund
reimbursed the Manager $6,000 for these compliance and legal services. These
expenses are included in the professional fees on the Fund's statement of
operations.
C. EXPENSE LIMITATION -- The Manager has voluntarily agreed, on a temporary
basis, to reimburse management, administrative, or other
================================================================================
20 | USAA TREASURY MONEY MARKET TRUST
<PAGE>
================================================================================
fees to limit the Fund's expenses and attempt to prevent a negative yield.
The Manager can modify or terminate this arrangement at any time. For the
six-month period ended November 30, 2009, the Fund incurred reimbursable
expenses of $346,000, of which $128,000 was receivable from the Manager.
D. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA Shareholder
Account Services (SAS), an affiliate of the Manager, provides transfer agent
services to the Fund 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 November 30, 2009, the Fund
incurred transfer agent's fees, paid or payable to SAS, of $146,000.
E. 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.
(5) 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.
(6) SUBSEQUENT EVENTS
Events or transactions that occur after the balance sheet date but before the
financial statements are issued are categorized as recognized or non-recognized
for financial statement purposes. The Manager has evaluated subsequent events
through January 19, 2010, 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. Subsequent events that will affect future financial
statements are as follows:
On December 4, 2009, the Fund received a reimbursement from SAS in the amount of
$9,000 related to corrections in fees paid for the administration and servicing
of certain accounts. This amount will be reflected on the statement of
operations as a reduction of expenses.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 21
<PAGE>
================================================================================
(7) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31,
----------------------------------------------------------------------------
2009 2009 2008 2007 2006 2005
----------------------------------------------------------------------------
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------------------------------------------
Income from
investment operations:
Net investment income .00(c) .01 .03 .05 .04 .02
Less distributions from:
Net investment income (.00)(c) (.01) (.03) (.05) (.04) (.02)
----------------------------------------------------------------------------
Net asset value at
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================================
Total return (%)* .00(a),(e) .50(a) 3.32 4.83 3.57 1.53
Net assets at
end of period (000) $200,687 $227,170 $219,467 $190,172 $185,561 $173,983
Ratios to average
net assets:**
Expenses (%)(b) .15(a),(d) .31(a) .43 .48 .46 .45
Expenses, excluding
reimbursements (%)(b) .46(a),(d) .44(a) .43 .48 .46 .45
Net investment income (%) .00(d),(e) .46 3.21 4.72 3.52 1.50
* 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
iMoneyNet reported return.
** For the six-month period ended November 30, 2009, average net assets were
$221,574,000.
(a) Effective December 1, 2008, the Manager has voluntarily agreed, on a
temporary basis, to reimburse management, administrative, or other fees to
limit the Fund's expenses and attempt to prevent a negative yield.
(b) Reflects total operating expenses of the Fund before reductions of any
expenses paid indirectly. The Fund's expenses paid indirectly decreased the
expense ratios by less than 0.01%.
(c) Represents less than $0.01 per share.
(d) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(e) Represents less than 0.01%.
================================================================================
22 | USAA TREASURY MONEY MARKET TRUST
<PAGE>
================================================================================
EXPENSE EXAMPLE
November 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 June 1, 2009, through
November 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
================================================================================
EXPENSE EXAMPLE | 23
<PAGE>
================================================================================
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JUNE 1, 2009 -
JUNE 1, 2009 NOVEMBER 30, 2009 NOVEMBER 30, 2009
---------------------------------------------------------
Actual $1,000.00 $1,000.00 $0.75
Hypothetical
(5% return before expenses) 1,000.00 1,024.32 0.76
* Expenses are equal to the Fund's annualized expense ratio of 0.15%, 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 0.00% for the six-month period of June 1,
2009, through November 30, 2009.
================================================================================
24 | USAA TREASURY MONEY MARKET TRUST
<PAGE>
================================================================================
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.
================================================================================
<PAGE>
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)
===========================================================================
23416-0110 (C)2010, USAA. All rights reserved.
ITEM 2. CODE OF ETHICS.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Filed as part of the report to shareholders.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Corporate Governance Committee selects and nominates candidates for
membership on the Board as independent directors. Currently, there is no
procedure for shareholders to recommend candidates to serve on the Board.
ITEM 11. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of USAA Mutual
Funds Trust (Trust) have concluded that the Trust's disclosure controls and
procedures are sufficient to ensure that information required to be disclosed by
the Trust in this Form N-CSR/S was recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms, based upon such officers' evaluation of these controls and
procedures as of a date within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation. The only change to the
procedures was to document the annual disclosure controls and procedures
established for the new section of the shareholder reports detailing the factors
considered by the Funds' Board in approving the Funds' advisory agreements.
ITEM 12. EXHIBITS.
(a)(1). NOT APPLICABLE. This item must be disclosed only in annual reports.
(a)(2). Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit
99.CERT.
(a)(3). Not Applicable.
(b). Certification pursuant to Rule 30a-2(b) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(b))is filed and attached hereto as Exhibit
99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: USAA MUTUAL FUNDS TRUST, Period Ended November 30, 2009
By:* CHRISTOPHER P. LAIA
-----------------------------------------------------------
Signature and Title: Christopher P. Laia, Assistant Secretary
Date: 01/26/2010
------------------------------
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: 01/27/2010
------------------------------
By:* ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 01/27/2010
------------------------------
*Print the name and title of each signing officer under his or her signature.
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