UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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: DECEMBER 31
Date of reporting period: DECEMBER 31, 2009
ITEM 1. REPORT TO STOCKHOLDERS.
USAA MUTUAL FUNDS TRUST - ANNUAL REPORT FOR PERIOD ENDING DECEMBER 31, 2009
LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA NASDAQ-100 INDEX FUND]
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ANNUAL REPORT
USAA NASDAQ-100 INDEX FUND
DECEMBER 31, 2009
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FUND OBJECTIVE
SEEKS TO MATCH, BEFORE FEES AND EXPENSES, THE PERFORMANCE OF THE STOCKS
COMPOSING THE NASDAQ-100 INDEX.
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TYPES OF INVESTMENTS
Under normal market conditions, at least 80% of the Fund's assets will be
invested in the common stocks of companies composing the Nasdaq-100 Index.
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
FUND RECOGNITION 6
INVESTMENT OVERVIEW 7
FINANCIAL INFORMATION
Report of Independent Registered Public Accounting Firm 11
Portfolio of Investments 12
Notes to Portfolio of Investments 18
Financial Statements 19
Notes to Financial Statements 22
EXPENSE EXAMPLE 36
TRUSTEES' AND OFFICERS' INFORMATION 38
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
"LOOKING BACK AT THE MARKET DECLINE,
MANY INVESTORS WERE NOT APPROPRIATELY [PHOTO OF DANIEL S. McNAMARA]
POSITIONED RELATIVE TO THEIR RISK
TOLERANCE."
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JANUARY 2010
Equities had a remarkable run during 2009. Between March 9, 2009, when the
market reached a bottom and the end of the year, stock prices steadily climbed.
Although the rally did not completely erase the declines of 2008, the market has
established a beachhead and is moving in the right direction. Likewise, the
worst of the Great Recession appears to be over. After three quarters of
negative growth, the gross domestic product (GDP) -- the broadest measure of
U.S. economic activity -- rose by 2.2% in the third quarter of 2009. Other
important measures of economic activity have also trended higher, including
industrial production, retail sales, and residential real estate sales.
Will the recovery be swift? Or will there be a "double dip?" I say "no" to both
questions. Significant assets -- including vast amounts of U.S. government
stimulus -- have been thrown into the breach. As a result, I don't expect the
economy to fall back into a recession. But I don't expect a quick recovery
either. Instead, I anticipate a slow and steady slog with lower economic growth
than the United States has enjoyed in recent decades. Access to credit is likely
to remain tight until the securitization markets heal and banks relax lending
standards. Most consumers and businesses will continue rebuilding their balance
sheets by increasing their savings rate and reducing their spending and
borrowing. While the outlook for job growth has improved, unemployment is likely
to persist at an uncomfortably high level for most of 2010.
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2 | USAA NASDAQ-100 INDEX FUND
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I also think the equity market is expecting a strong cyclical recovery.
Although many stocks seemed to trade at appropriate levels at the end of 2009,
we see support for some growth in prices over the near term. Meanwhile,
consensus forecasts (which are based on individual company estimates) call for
corporate earnings growth of 30% or more during 2010. Meeting these expectations
will require significant top-line revenue growth, not just more cost cutting.
USAA's expectations are more in line with top-down earnings forecasts in the 8%
to 15% range.
Of course, no one really knows what will happen. That's why it is important to
revisit your investment plan. A new year is an opportune time to stop and take
stock. Looking back at the market decline, many investors were not appropriately
positioned relative to their risk tolerance. With this in mind, I have
undertaken a review of my own investment portfolio. 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 appreciate the trust you have placed
in us. We will 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. Thank you for the opportunity to help you with your investment needs.
Sincerely,
/S/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
Mutual fund operating expenses apply and continue throughout the life of the
fund.
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PRESIDENT'S MESSAGE | 3
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MANAGER'S COMMENTARY ON THE FUND
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o HOW DID THE USAA NASDAQ-100 INDEX FUND (THE FUND) PERFORM DURING 2009?
The Fund closely tracked its benchmark, the Nasdaq-100 Index (the Index),
for the year ended December 31, 2009. The Fund produced a return of 53.48%
for the period, as compared to 54.63% for the benchmark. The broad-based
Index is a group of large-company stocks and is not available for direct
investment.
o WHAT WERE MARKET CONDITIONS DURING THE PERIOD?
The beginning of the first quarter in 2009 continued to be marked by
extreme volatility in equity markets around the world as grim economic news
persisted, including the announcement that the United States officially
slid into a recession. Increasing unemployment, decreases in manufacturing,
and continued weakness in consumer spending plagued the first quarter. In
the face of a rapidly crumbling economy, President Barack Obama's new
administration passed a $787 billion stimulus plan on February 17, 2009.
The U.S stock market hit a low for the year on March 9, 2009. International
markets staged a rally in late March 2009 when U.S. Treasury Secretary
Timothy Geithner provided additional details on the government's plan to
relieve banks of their toxic assets and improve the flow of credit.
The stock market rally that began in March 2009 displayed no signs of a
slowdown during the third quarter of the year. By the end of September
2009, the Index had climbed 58.25% from its low on March 9, 2009. This
recovery was supported in part by an improvement in economic data such as
second-quarter GDP growth numbers that
Past performance is no guarantee of future results.
Refer to page 8 for benchmark definitions.
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4 | USAA NASDAQ-100 INDEX FUND
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came in at a revised -0.7%, a substantial improvement from the first
quarter GDP results. Third-quarter market performance also was boosted by a
number of corporate earnings reports that beat expectations.
The fourth quarter began on a weak note following substandard macroeconomic
data and questions about the quality of company earnings. The indexes
improved in November and December benefiting from stronger macroeconomic
data and earnings announcements and as more banks repaid their Troubled
Asset Relief Program (also known as "TARP") loans in full following large
equity offerings. Positive news in December included an unexpected increase
in U.S. pending home sales, the Federal Reserve Board pledged to keep rates
low, and a report of better-than-expected sales forecast from auto makers.
o PLEASE DESCRIBE SECTOR PERFORMANCE.
Information Technology, the largest weight in the Index at 62.32%, returned
44.01% for the period. Consumer Discretionary (which holds a weight of
12.95% in the Index) returned 7.84% for the period.
o WHAT INVESTMENT STRATEGIES WILL YOU PURSUE FOR THE FUND IN 2010?
We don't manage the Fund according to a given outlook for the equity
markets or the economy in general, because we're managing an index fund
that seeks to replicate as closely as possible (before deduction of
expenses) the broad diversification and returns of the Index. Nevertheless,
we will monitor economic conditions and their effect on the financial
markets as we seek to track closely the Index's performance.
Thank you for your investment in the Fund.
The Nasdaq-100 Index is a capitalization-weighted index composed of 100 of
the largest nonfinancial securities listed on the Nasdaq Stock Market.
Sector funds are non-diversified and may be more volatile than other funds.
A non-diversified fund may invest a greater percentage of its assets in a
single issuer or a limited number of issuers. Such a focused investment
strategy may increase the volatility of the fund's investment results
because this fund may be more susceptible to the risks associated with a
single issuer, or economic, political, or regulatory event than a
diversified fund.
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MANAGER'S COMMENTARY ON THE FUND | 5
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FUND RECOGNITION
USAA NASDAQ-100 INDEX FUND
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LIPPER LEADERS (OVERALL)
[5] [5] [5] [5]
RETURN CONSISTENT RETURN EXPENSE TAX EFFICIENCY
The Fund is listed as a Lipper Leader for Total Return, Consistent Return,
Expense, and Tax Efficiency among 698, 692, 237, and 702 funds, respectively,
within the Lipper Large-Cap Growth Funds category for the overall period ended
December 31, 2009. The Fund received a Lipper Leader rating for Total Return,
Expense, and Tax Efficiency among 698, 237, and 702 funds for the three-year
period, respectively, for the period ended December 31, 2009. The Fund received
a Lipper Leader rating for Total Return, Consistent Return, and Expense among
579, 573, and 206 funds for the five-year period, respectively, and a score of 4
among 582 funds for Tax Efficiency for the period ended December 31, 2009.
Lipper ratings for Total Return reflect funds' historical total return
performance relative to peers as of December 31, 2009. Lipper ratings for
Consistent Return reflect funds' historical risk-adjusted returns, adjusted for
volatility, relative to peers as of December 31, 2009. Lipper ratings for
Expense reflect funds' expense minimization relative to peers with similar load
structures as of December 31, 2009. Lipper ratings for Tax Efficiency reflect
funds' historical success in postponing taxable distributions relative to peers
as of December 31, 2009. Tax efficiency offers no benefits to investors in
tax-sheltered accounts such as 401(k) plans.
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Ratings are subject to change every month and are based on an equal-weighted
average of percentile ranks for the Total Return, Consistent Return, Expense,
and Tax Efficiency 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 2010, Reuters, All Rights Reserved.
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6 | USAA NASDAQ-100 INDEX FUND
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INVESTMENT OVERVIEW
USAA NASDAQ-100 INDEX FUND (Ticker Symbol: USNQX)
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12/31/09 12/31/08
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Net Assets $159.3 Million $94.0 Million
Net Asset Value Per Share $5.74 $3.74
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/09
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1 Year 5 Years Since Inception 10/27/00
53.48% 2.51% -5.82%
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EXPENSE RATIO*
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Before Reimbursement 1.08% After Reimbursement 0.78%
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.
*THE BEFORE REIMBURSEMENT EXPENSE RATIO REPRESENTS THE TOTAL ANNUAL OPERATING
EXPENSES, BEFORE REDUCTIONS OF ANY EXPENSES PAID INDIRECTLY, AS REPORTED IN THE
FUND'S PROSPECTUS DATED MAY 1, 2009, AND IS CALCULATED AS A PERCENTAGE OF
AVERAGE NET ASSETS. THE AFTER REIMBURSEMENT EXPENSE RATIO REPRESENTS TOTAL
ANNUAL OPERATING EXPENSES, BEFORE REDUCTIONS OF ANY EXPENSES PAID INDIRECTLY,
AFTER REIMBURSEMENT FROM USAA INVESTMENT MANAGEMENT COMPANY (IMCO) AS REPORTED
IN THE FUND'S PROSPECTUS DATED MAY 1, 2009. IMCO HAS VOLUNTARILY AGREED TO LIMIT
THE FUND'S TOTAL ANNUAL OPERATING EXPENSES TO 0.78%, BEFORE REDUCTIONS OF ANY
EXPENSES PAID INDIRECTLY, AND TO REIMBURSE THE FUND FOR EXPENSES IN EXCESS OF
THIS AMOUNT. IMCO CAN MODIFY OR TERMINATE THIS ARRANGEMENT AT ANY TIME. THESE
EXPENSE RATIOS MAY DIFFER FROM THE EXPENSE RATIOS DISCLOSED IN THE FINANCIAL
HIGHLIGHTS.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. The total
returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.
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INVESTMENT OVERVIEW | 7
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
NASDAQ-100 INDEX USAA NASDAQ-100 INDEX FUND
10/31/00 $10,000.00 $10,000.00
11/30/00 7,636.90 7,683.62
12/31/00 7,134.71 7,137.48
01/31/01 7,900.80 7,900.19
02/28/01 5,814.91 5,800.38
03/31/01 4,794.16 4,783.43
04/30/01 5,653.41 5,630.89
05/31/01 5,485.34 5,461.39
06/30/01 5,577.71 5,546.14
07/31/01 5,131.28 5,094.16
08/31/01 4,479.71 4,444.44
09/30/01 3,561.28 3,531.07
10/31/01 4,160.20 4,124.29
11/30/01 4,865.50 4,811.68
12/31/01 4,807.60 4,747.88
01/31/02 4,725.89 4,672.51
02/28/02 4,144.28 4,097.87
03/31/02 4,429.65 4,371.06
04/30/02 3,894.07 3,843.52
05/31/02 3,684.80 3,626.85
06/30/02 3,206.25 3,155.83
07/31/02 2,934.34 2,892.06
08/31/02 2,874.49 2,826.12
09/30/02 2,539.41 2,496.40
10/31/02 3,018.62 2,967.42
11/30/02 3,405.08 3,344.24
12/31/02 3,003.59 2,948.58
01/31/03 2,999.84 2,939.16
02/28/03 3,083.11 3,023.94
03/31/03 3,110.60 3,042.79
04/30/03 3,377.74 3,306.56
05/31/03 3,658.86 3,579.75
06/30/03 3,670.54 3,579.75
07/31/03 3,900.85 3,805.84
08/31/03 4,098.03 3,994.24
09/30/03 3,983.65 3,881.20
10/31/03 4,330.64 4,210.91
11/30/03 4,355.59 4,239.18
12/31/03 4,489.81 4,361.64
01/31/04 4,567.15 4,437.00
02/29/04 4,499.09 4,361.64
03/31/04 4,401.34 4,267.44
04/30/04 4,288.61 4,154.39
05/31/04 4,488.56 4,342.80
06/30/04 4,643.13 4,493.53
07/31/04 4,287.97 4,144.97
08/31/04 4,193.57 4,050.77
09/30/04 4,328.65 4,182.65
10/31/04 4,555.73 4,399.32
11/30/04 4,817.99 4,644.25
12/31/04 4,972.24 4,794.98
01/31/05 4,661.33 4,491.48
02/28/05 4,638.85 4,463.11
03/31/05 4,551.79 4,378.01
04/30/05 4,362.95 4,188.90
05/31/05 4,740.49 4,548.22
06/30/05 4,589.87 4,406.38
07/31/05 4,933.46 4,727.88
08/31/05 4,865.17 4,661.68
09/30/05 4,926.62 4,718.42
10/31/05 4,857.93 4,652.23
11/30/05 5,148.42 4,926.45
12/31/05 5,066.48 4,841.34
01/31/06 5,268.98 5,039.91
02/28/06 5,149.13 4,916.99
03/31/06 5,251.81 5,011.55
04/30/06 5,243.49 5,002.09
05/31/06 4,874.25 4,642.77
06/30/06 4,861.22 4,623.86
07/31/06 4,658.94 4,434.75
08/31/06 4,880.36 4,642.77
09/30/06 5,110.43 4,850.80
10/31/06 5,353.27 5,087.19
11/30/06 5,538.52 5,257.40
12/31/06 5,435.57 5,153.38
01/31/07 5,545.66 5,257.40
02/28/07 5,455.60 5,172.30
03/31/07 5,489.54 5,200.66
04/30/07 5,786.06 5,474.88
05/31/07 5,977.94 5,654.54
06/30/07 5,996.67 5,663.99
07/31/07 5,990.97 5,654.54
08/31/07 6,172.31 5,824.74
09/30/07 6,490.36 6,117.87
10/31/07 6,949.89 6,552.83
11/30/07 6,491.23 6,117.87
12/31/07 6,481.31 6,098.96
01/31/08 5,724.81 5,389.78
02/29/08 5,431.33 5,106.11
03/31/08 5,546.67 5,210.12
04/30/08 5,969.79 5,607.26
05/31/08 6,332.98 5,947.67
06/30/08 5,724.33 5,370.87
07/31/08 5,762.73 5,399.23
08/31/08 5,840.89 5,474.88
09/30/08 4,974.45 4,652.23
10/31/08 4,164.66 3,895.77
11/30/08 3,704.55 3,460.80
12/31/08 3,787.12 3,536.45
01/31/09 3,689.67 3,441.89
02/28/09 3,497.97 3,262.23
03/31/09 3,875.02 3,612.10
04/30/09 4,368.91 4,075.43
05/31/09 4,503.84 4,198.35
06/30/09 4,635.64 4,311.82
07/31/09 5,032.50 4,680.60
08/31/09 5,106.63 4,746.79
09/30/09 5,402.61 5,021.00
10/31/09 5,240.91 4,860.26
11/30/09 5,562.24 5,162.84
12/31/09 5,855.89 5,427.60
[END CHART]
Data from 10/31/00* to 12/31/09.
The graph illustrates how a $10,000 hypothetical investment in the USAA
Nasdaq-100 Index Fund closely tracks the Nasdaq-100 Index, an unmanaged modified
capitalization-weighted index composed of 100 of the largest nonfinancial
domestic and international companies listed on The Nasdaq Stock Market(R) based
on market capitalization.
Nasdaq-100(R), "Nasdaq-100 Index(R)," and "Nasdaq(R)" are trademarks or service
marks of The Nasdaq Stock Market, Inc. (which with its affiliates are the
"Corporations") and have been licensed for our use. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE USAA NASDAQ-100 INDEX FUND.
The Fund is not sponsored, sold, or promoted by The Nasdaq Stock Market, Inc.,
and The Nasdaq Stock Market, Inc. makes no representation regarding the
advisability of investing in the Fund. Index products incur fees and expenses
and may not always be invested in all securities of the index the Fund attempts
to mirror. It is not possible to invest directly in an index.
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.
*The performance of the Nasdaq-100 Index is calculated from the end of the
month, October 31, 2000, while the date the Fund initially invested in
securities represented by the index is October 30, 2000. There may be a slight
variation of the performance numbers because of this difference.
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8 | USAA NASDAQ-100 INDEX FUND
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TOP 10 EQUITY HOLDINGS
AS OF 12/31/09
(% of Net Assets)
Apple, Inc. ............................................................. 15.1%
Google, Inc. "A" ........................................................ 5.3%
Microsoft Corp. ......................................................... 5.3%
QUALCOMM, Inc. .......................................................... 5.3%
Oracle Corp. ............................................................ 2.9%
Cisco Systems, Inc. ..................................................... 2.8%
Teva Pharmaceutical Industries Ltd. ADR ................................. 2.4%
Intel Corp. ............................................................. 2.3%
Amazon.com, Inc. ........................................................ 2.2%
Research In Motion Ltd. ................................................. 2.2%
You will find a complete list of securities that the Fund owns on pages 12-17.
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INVESTMENT OVERVIEW | 9
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o SECTOR ALLOCATION* -- 12/31/2009 o
[PIE CHART OF SECTOR ALLOCATION]
INFORMATION TECHNOLOGY 61.7%
HEALTH CARE 15.2%
CONSUMER DISCRETIONARY 14.1%
INDUSTRIALS 4.0%
TELECOMMUNICATION SERVICES 1.5%
CONSUMER STAPLES 0.8%
MATERIALS 0.4%
[END CHART]
* Excludes money market instruments.
Percentages are of the net assets of the Fund and may not equal 100%.
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10 | USAA NASDAQ-100 INDEX FUND
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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THE SHAREHOLDERS AND BOARD OF TRUSTEES OF USAA NASDAQ-100 INDEX FUND:
We have audited the accompanying statements of assets and liabilities, including
the portfolio of investments, of the USAA Nasdaq-100 Index Fund (one of the
portfolios constituting USAA Mutual Funds Trust) (the "Fund") as of December 31,
2009, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatements. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2009, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
USAA Nasdaq-100 Index Fund at December 31, 2009, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & young LLP
San Antonio, Texas
February 17, 2010
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 11
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PORTFOLIO OF INVESTMENTS
December 31, 2009
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
COMMON STOCKS (97.7%)
CONSUMER DISCRETIONARY (14.1%)
------------------------------
APPAREL RETAIL (0.6%)
11,519 Ross Stores, Inc. $ 492
15,150 Urban Outfitters, Inc.* 530
--------
1,022
--------
AUTOMOTIVE RETAIL (0.3%)
12,476 O'Reilly Automotive, Inc.* 476
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CABLE & SATELLITE (3.3%)
131,236 Comcast Corp. "A" 2,213
63,456 DIRECTV "A"* 2,116
19,562 DISH Network Corp. "A" 406
30,705 Virgin Media, Inc. 517
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5,252
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CASINOS & GAMING (0.5%)
12,200 Wynn Resorts Ltd. 710
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CATALOG RETAIL (0.3%)
49,795 Liberty Media Corp. Interactive "A"* 540
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CONSUMER ELECTRONICS (0.3%)
16,946 Garmin Ltd. 520
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DEPARTMENT STORES (0.6%)
10,990 Sears Holdings Corp.* 917
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EDUCATION SERVICES (0.5%)
14,217 Apollo Group, Inc. "A"* 861
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HOMEFURNISHING RETAIL (0.8%)
32,188 Bed Bath & Beyond, Inc.* 1,244
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INTERNET RETAIL (3.2%)
26,172 Amazon.com, Inc.* 3,521
25,872 Expedia, Inc.* 665
4,240 Priceline.com, Inc.* 926
--------
5,112
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12 | USAA NASDAQ-100 INDEX FUND
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
LEISURE PRODUCTS (0.5%)
37,667 Mattel, Inc. $ 753
--------
MOVIES & ENTERTAINMENT (1.1%)
129,508 News Corp. "A" 1,773
--------
RESTAURANTS (1.4%)
93,633 Starbucks Corp.* 2,159
--------
SPECIALTY STORES (0.7%)
44,211 Staples, Inc. 1,087
--------
Total Consumer Discretionary 22,426
--------
CONSUMER STAPLES (0.8%)
-----------------------
HYPERMARKETS & SUPER CENTERS (0.8%)
20,915 Costco Wholesale Corp. 1,238
--------
HEALTH CARE (15.2%)
-------------------
BIOTECHNOLOGY (7.8%)
42,912 Amgen, Inc.* 2,428
28,577 Biogen Idec, Inc.* 1,529
41,493 Celgene Corp.* 2,310
6,572 Cephalon, Inc.* 410
30,218 Genzyme Corp.* 1,481
80,691 Gilead Sciences, Inc.* 3,492
18,846 Vertex Pharmaceuticals, Inc.* 808
--------
12,458
--------
HEALTH CARE DISTRIBUTORS (0.5%)
8,210 Henry Schein, Inc.* 432
10,626 Patterson Companies, Inc.* 297
--------
729
--------
HEALTH CARE EQUIPMENT (0.9%)
24,562 Hologic, Inc.* 356
3,477 Intuitive Surgical, Inc.* 1,055
--------
1,411
--------
HEALTH CARE SERVICES (1.2%)
22,325 Express Scripts, Inc.* 1,930
--------
HEALTH CARE SUPPLIES (0.3%)
13,270 DENTSPLY International, Inc. 467
--------
HEALTH CARE TECHNOLOGY (0.4%)
7,429 Cerner Corp.* 612
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 13
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (1.0%)
11,194 Illumina, Inc.* $ 343
16,457 Life Technologies Corp.* 859
21,222 Qiagen NV* 474
--------
1,676
--------
PHARMACEUTICALS (3.1%)
28,239 Mylan, Inc.* 520
67,247 Teva Pharmaceutical Industries Ltd. ADR 3,778
22,794 Warner Chilcott plc "A"* 649
--------
4,947
--------
Total Health Care 24,230
--------
INDUSTRIALS (4.0%)
------------------
AIR FREIGHT & LOGISTICS (1.0%)
15,102 C.H. Robinson Worldwide, Inc. 887
18,895 Expeditors International of Washington, Inc. 656
--------
1,543
--------
CONSTRUCTION & ENGINEERING (0.2%)
12,041 Foster Wheeler AG* 355
--------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (1.1%)
9,142 Joy Global, Inc. 472
37,094 PACCAR, Inc. 1,345
--------
1,817
--------
DIVERSIFIED SUPPORT SERVICES (0.3%)
16,626 Cintas Corp. 433
--------
ELECTRICAL COMPONENTS & EQUIPMENT (0.6%)
6,785 First Solar, Inc.* 919
--------
ENVIRONMENTAL & FACILITIES SERVICES (0.3%)
8,078 Stericycle, Inc.* 446
--------
TRADING COMPANIES & DISTRIBUTORS (0.3%)
12,883 Fastenal Co. 536
--------
TRUCKING (0.2%)
11,534 JB Hunt Transport Services, Inc. 372
--------
Total Industrials 6,421
--------
INFORMATION TECHNOLOGY (61.7%)
------------------------------
APPLICATION SOFTWARE (2.6%)
46,706 Adobe Systems, Inc.* 1,718
21,727 Autodesk, Inc.* 552
================================================================================
14 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
19,789 Citrix Systems, Inc.* $ 823
36,323 Intuit, Inc.* 1,116
--------
4,209
--------
COMMUNICATIONS EQUIPMENT (10.3%)
187,106 Cisco Systems, Inc.* 4,479
183,217 QUALCOMM, Inc.(a) 8,476
51,744 Research In Motion Ltd.* 3,495
--------
16,450
--------
COMPUTER HARDWARE (15.7%)
113,989 Apple, Inc.(a)* 24,036
65,673 Dell, Inc.* 943
--------
24,979
--------
COMPUTER STORAGE & PERIPHERALS (1.8%)
15,755 Logitech International S.A.* 269
32,088 NetApp, Inc.* 1,104
21,221 SanDisk Corp.* 615
45,347 Seagate Technology 825
--------
2,813
--------
DATA PROCESSING & OUTSOURCED SERVICES (2.0%)
32,492 Automatic Data Processing, Inc. 1,391
17,522 Fiserv, Inc.* 850
31,177 Paychex, Inc. 955
--------
3,196
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.3%)
14,493 FLIR Systems, Inc.* 474
--------
ELECTRONIC MANUFACTURING SERVICES (0.4%)
80,344 Flextronics International Ltd.* 587
--------
HOME ENTERTAINMENT SOFTWARE (1.0%)
102,982 Activision Blizzard, Inc.* 1,144
29,739 Electronic Arts, Inc.* 528
--------
1,672
--------
INTERNET SOFTWARE & SERVICES (8.1%)
2,462 Baidu, Inc. ADR* 1,012
87,735 eBay, Inc.* 2,065
13,475 Google, Inc. "A"* 8,354
16,440 VeriSign, Inc.* 399
61,212 Yahoo!, Inc.* 1,027
--------
12,857
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
---------------------------------------------------------------------------------------------------
IT CONSULTING & OTHER SERVICES (1.1%)
26,174 Cognizant Technology Solutions Corp. "A"* $ 1,186
9,945 Infosys Technologies Ltd. ADR 549
--------
1,735
--------
SEMICONDUCTOR EQUIPMENT (1.3%)
62,711 Applied Materials, Inc. 874
18,847 KLA-Tencor Corp. 682
11,971 Lam Research Corp.* 469
--------
2,025
--------
SEMICONDUCTORS (6.4%)
37,821 Altera Corp. 856
36,278 Broadcom Corp. "A"* 1,141
176,073 Intel Corp. 3,592
27,196 Linear Technology Corp. 831
54,076 Marvell Technology Group Ltd.* 1,122
27,248 Maxim Integrated Products, Inc. 553
13,940 Microchip Technology, Inc. 405
49,606 NVIDIA Corp.* 927
33,422 Xilinx, Inc. 837
--------
10,264
--------
SYSTEMS SOFTWARE (10.7%)
19,477 BMC Software, Inc.* 781
45,546 CA, Inc. 1,023
18,740 Check Point Software Technologies Ltd.* 635
278,889 Microsoft Corp.(a) 8,503
190,301 Oracle Corp. 4,670
77,111 Symantec Corp.* 1,380
--------
16,992
--------
Total Information Technology 98,253
--------
MATERIALS (0.4%)
----------------
SPECIALTY CHEMICALS (0.4%)
10,644 Sigma-Aldrich Corp. 538
--------
TELECOMMUNICATION SERVICES (1.5%)
---------------------------------
WIRELESS TELECOMMUNICATION SERVICES (1.5%)
9,564 Millicom International Cellular S.A. 706
14,667 NII Holdings, Inc. "B"* 492
53,400 Vodafone Group plc 1,233
--------
Total Telecommunication Services 2,431
--------
Total Common Stocks (cost: $118,427) 155,537
--------
================================================================================
16 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY (000)
---------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS (2.3%)
U.S.TREASURY BILLS (0.3%)
$ 565 1.01%, 5/06/2010(b),(c) $ 565
--------
REPURCHASE AGREEMENTS (2.0%)
3,166 State Street Bank & Trust Co., 0.00%, acquired on 12/31/2009 and
due 1/04/2010 at $3,166 (collateralized by $3,265 of
U.S. Treasury, 0.11%(b), due 7/01/2010; market value $3,262) 3,166
--------
Total Money Market Instruments (cost: $3,731) 3,731
--------
TOTAL INVESTMENTS (COST: $122,158) $159,268
========
---------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF CONTRACT APPRECIATION/
CONTRACTS EXPIRATION VALUE (DEPRECIATION)
LONG/(SHORT) SECURITY DATE (000) (000)
---------------------------------------------------------------------------------------------------
FUTURES (0.1%)
97 NASDAQ-100 Mini Index Futures 3/19/2010 $3,606 $ 126
------ --------
TOTAL FUTURES $3,606 $ 126
====== ========
---------------------------------------------------------------------------------------------------
($ 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
---------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $155,537 $ - $- $155,537
Money Market Instruments:
U.S. Treasury Bills - 565 - 565
Repurchase Agreements - 3,166 - 3,166
Futures* 126 - - 126
---------------------------------------------------------------------------------------------------
Total $155,663 $ 3,731 $- $159,394
---------------------------------------------------------------------------------------------------
* Futures are valued at the unrealized appreciation/depreciation on the
investment.
================================================================================
PORTFOLIO OF INVESTMENTS | 17
<PAGE>
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
December 31, 2009
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net
assets. Investments in foreign securities were 9.2% of net assets at
December 31, 2009.
ADR American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in U.S.
dollars.
o SPECIFIC NOTES
(a) Security, or a portion thereof, is segregated to cover the value of
open futures contracts at December 31, 2009.
(b) Rate represents an annualized yield at time of purchase, not coupon
rate.
(c) Security with a value of $565,000 is segregated as collateral for
initial margin requirements on open futures contracts.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
18 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
December 31, 2009
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $122,158) $159,268
Receivables:
Capital shares sold 308
USAA Investment Management Company (Note 5D) 87
USAA Transfer Agency Company (Note 5E) 3
Dividends and interest 29
--------
Total assets 159,695
--------
LIABILITIES
Payables:
Securities purchased 68
Capital shares redeemed 251
Variation margin on futures contracts 35
Accrued management fees 26
Accrued transfer agent's fees 8
Other accrued expenses and payables 53
--------
Total liabilities 441
--------
Net assets applicable to capital shares outstanding $159,254
========
NET ASSETS CONSIST OF:
Paid-in capital $143,777
Accumulated net realized loss on investments and futures transactions (21,759)
Net unrealized appreciation of investments and futures contracts 37,236
--------
Net assets applicable to capital shares outstanding $159,254
========
Capital shares outstanding, unlimited number of shares
authorized, no par value 27,748
========
Net asset value, redemption price, and offering price per share $ 5.74
========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 19
<PAGE>
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Year ended December 31, 2009
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $10) $ 901
Interest 2
-------
Total income 903
-------
EXPENSES
Management fees 245
Administration and servicing fees 429
Transfer agent's fees 459
Custody and accounting fees 35
Postage 17
Shareholder reporting fees 20
Trustees' fees 10
Registration fees 37
Professional fees 58
Other 54
-------
Total expenses 1,364
Expenses reimbursed (408)
-------
Net expenses 956
-------
NET INVESTMENT LOSS (53)
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS
Net realized gain (loss) on:
Investments (2,482)
Futures transactions 1,291
Change in net unrealized appreciation/depreciation of:
Investments 54,382
Futures contracts 129
-------
Net realized and unrealized gain 53,320
-------
Increase in net assets resulting from operations $53,267
=======
See accompanying notes to financial statements.
================================================================================
20 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Years ended December 31,
--------------------------------------------------------------------------------
2009 2008
-----------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss $ (53) $ (330)
Net realized loss on investments (2,482) (11,095)
Net realized gain (loss) on futures transactions 1,291 (1,595)
Change in net unrealized appreciation/depreciation of:
Investments 54,382 (52,522)
Futures contracts 129 (30)
------------------------
Increase (decrease) in net assets resulting
from operations 53,267 (65,572)
------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 40,094 46,417
Cost of shares redeemed (28,134) (36,179)
------------------------
Increase in net assets from capital
share transactions 11,960 10,238
------------------------
Capital contribution from USAA Transfer Agency
Company (Note 5E) 3 -
------------------------
Net increase (decrease) in net assets 65,230 (55,334)
NET ASSETS
Beginning of year 94,024 149,358
------------------------
End of year $159,254 $ 94,024
========================
CHANGE IN SHARES OUTSTANDING
Shares sold 8,693 9,024
Shares redeemed (6,066) (7,055)
------------------------
Increase in shares outstanding 2,627 1,969
========================
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 21
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
--------------------------------------------------------------------------------
(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 annual report pertains only to the USAA Nasdaq-100
Index Fund (the Fund), which is classified as nondiversified under the 1940 Act.
The Fund seeks to match, before fees and expenses, the performance of the stocks
composing the Nasdaq-100 Index. The Nasdaq-100 Index represents 100 of the
largest nonfinancial stocks traded on The Nasdaq Stock Market. USAA Investment
Management Company (the Manager), an affiliate of the Fund, has retained
Northern Trust Investments, N.A. (NTI) to serve as subadviser for the Fund. NTI
is responsible for investing the Fund's assets. Under normal market conditions,
NTI attempts to achieve the Fund's objective by investing at least 80% of the
Fund's assets in the stocks of companies composing the Nasdaq-100 Index.
As a nondiversified fund, the Fund may invest a greater percentage of its assets
in a single issuer. Because a relatively high percentage of the Fund's total
assets may be invested in the securities of a single issuer or a limited number
of issuers, the securities of the Fund may be more sensitive to changes in the
market value of a single issuer, a limited number of issuers, or large companies
generally. Such a focused investment strategy may increase the volatility of the
Fund's investment results because this Fund may be more susceptible to risk
associated with a single economic, political, or regulatory event than a
diversified fund.
================================================================================
22 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
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. Equity securities, including exchange-traded funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities exchange or
the Nasdaq over-the-counter markets are valued at the last sales price
or official closing price on the exchange or primary market on which
they trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according
to local market convention, available at the time the Fund is valued.
If no last sale or official closing price is reported or available,
the average of the bid and asked prices generally is used.
2. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates
market value.
3. 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 securities of comparable quality,
coupon, maturity, and type; indications as to values from dealers in
securities; and general market conditions.
4. Repurchase agreements are valued at cost, which approximates market
value.
5. Futures are valued based upon the last sale price at the close of
market on the principal exchange on which they are traded.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 23
<PAGE>
================================================================================
6. Securities for which market quotations are not readily available or
are considered unreliable, or whose values have been materially
affected by events occurring after the close of their primary markets
but before the pricing of the Fund, are valued in good faith at fair
value, using methods determined by the Manager in consultation with
the Fund's subadviser, if applicable, 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.
================================================================================
24 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
Level 3 -- inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
C. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -- On January 1, 2009, the
Fund adopted 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, if any.
The Fund may buy, sell, and enter into certain types of derivatives,
including, but not limited to futures contracts and options on futures
contracts under circumstances in which such instruments are expected by the
portfolio manager to aid in achieving the Fund's investment objective. The
Fund also may use derivatives in circumstances where the portfolio manager
believes they offer an economical means of gaining exposure to a particular
securities market, or to keep cash on hand to meet shareholder redemptions
or other needs while maintaining exposure to the market. With exchange
listed futures contracts and options, counterparty credit risk to the Fund
is limited to the exchange's clearinghouse which, as counterparty to all
exchange traded futures contracts and options, guarantees the transactions
against default from the actual counterparty to the trade.
FUTURES CONTRACTS -- The Fund is subject to cash flow and tracking error
risk in the normal course of pursuing its investment objectives. The Fund
may use stock index futures contracts in an attempt to reduce any
performance discrepancies between the Fund and the Nasdaq-100 Index. A
futures contract represents a commitment for the future purchase or sale of
an asset at a specified price on a specified date. Upon entering into such
contracts, the Fund is required to deposit with the broker in either cash
or securities an initial margin in an amount equal to a certain percentage
of the contract amount. Subsequent
================================================================================
NOTES TO FINANCIAL STATEMENTS | 25
<PAGE>
================================================================================
payments (variation margin) are made or received by the Fund each day,
depending on the daily fluctuations in the value of the contract, and are
recorded for financial statement purposes as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Upon entering into such
contracts, the Fund bears the risk of interest or exchange rates or
securities prices moving unexpectedly in an unfavorable direction, in which
case, the Fund may not achieve the anticipated benefits of the futures
contracts.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AS OF DECEMBER 31, 2009*
(IN THOUSANDS)
ASSET DERIVATIVES LIABILITY DERIVATIVES
--------------------------------------------------------------------------------------------
STATEMENT OF STATEMENT OF
DERIVATIVES NOT ACCOUNTED ASSETS AND ASSETS AND
FOR AS HEDGING INSTRUMENTS LIABILITIES LIABILITIES
UNDER STATEMENT 133 LOCATION FAIR VALUE LOCATION FAIR VALUE
--------------------------------------------------------------------------------------------
Equity contracts Net unrealized $126** - $-
depreciation of
investments and
futures contracts
--------------------------------------------------------------------------------------------
*For open derivative instruments as of December 31, 2009, see the portfolio
of investments, which is also indicative of activity for the year ended
December 31, 2009.
**Includes cumulative appreciation (depreciation) of futures contracts as
reported in the portfolio of investments. Only current day's variation
margin is reported within the statement of assets and liabilities.
THE EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 2009 (IN THOUSANDS)
CHANGE IN
UNREALIZED
DERIVATIVES NOT ACCOUNTED REALIZED APPRECIATION
FOR AS HEDGING INSTRUMENTS STATEMENT OF GAIN (LOSS) (DEPRECIATION)
UNDER STATEMENT 133 OPERATIONS LOCATION ON DERIVATIVES ON DERIVATIVES
-------------------------------------------------------------------------------------------
Equity contracts Net realized gain (loss) $1,291 $129
on futures transactions/
change in net unrealized
appreciation/depreciation
of futures contracts
-------------------------------------------------------------------------------------------
================================================================================
26 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
D. 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 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.
E. 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.
F. INVESTMENTS IN SECURITIES -- Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses
from sales of investment securities are computed on the identified cost
basis. Dividend income, less foreign taxes, if any, is recorded on the
ex-dividend date. If the ex-dividend date has passed, certain dividends
from foreign securities are recorded upon notification. Interest income is
recorded daily on the accrual basis. Discounts and premiums on short-term
securities are amortized on a straight-line basis over the life of the
respective securities.
G. FOREIGN CURRENCY TRANSLATIONS -- The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency. Since
the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the exchange
rate obtained from an independent pricing service on the respective
dates of such transactions.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 27
<PAGE>
================================================================================
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Separately, net realized foreign currency gains/losses may arise from sales
of foreign currency, currency gains/losses realized between the trade and
settlement dates on security transactions, and from the difference between
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts received. At
the end of the Fund's fiscal year, these net realized foreign currency
gains/losses are reclassified from accumulated net realized gain/loss to
accumulated undistributed net investment income on the statement of assets
and liabilities as such amounts are treated as ordinary income/loss for tax
purposes. Net unrealized foreign currency exchange gains/losses arise from
changes in the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rate.
H. 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 year ended
December 31, 2009, these custodian and other bank credits reduced the
Fund's expenses by less than $500.
I. 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
================================================================================
28 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
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.
J. USE OF ESTIMATES -- The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $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 year ended December 31, 2009, the Fund paid CAPCO facility fees of
$1,000, which represents 0.3% of the total fees paid to CAPCO by the USAA funds.
The Fund had no borrowings under this agreement during the year ended December
31, 2009.
(3) DISTRIBUTIONS
The character of any distributions made during the year from net investment
income or net realized gains is determined in accordance with federal tax
================================================================================
NOTES TO FINANCIAL STATEMENTS | 29
<PAGE>
================================================================================
regulations and may differ from those determined in accordance with U.S.
generally accepted accounting principles. Also, due to the timing of
distributions, the fiscal year in which amounts are distributed may differ from
the year that the income or realized gains were recorded by the Fund.
During the current fiscal year, permanent differences between book-basis and
tax-basis accounting for net operating losses resulted in reclassifications made
to the statement of assets and liabilities to decrease paid-in capital and
decrease accumulated net investment loss by $53,000. These reclassifications had
no effect on net assets.
The Fund did not pay any distributions during the years ended December 31, 2009,
and 2008.
As of December 31, 2009, the components of net assets representing distributable
earnings on a tax basis were as follows:
Accumulated capital and other losses $(19,831,000)
Unrealized appreciation of investments 35,308,000
The difference between book-basis and tax-basis unrealized appreciation of
investments is attributable to the tax deferral of losses on wash sales.
Distributions of net investment income and 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. At
December 31, 2009, the Fund had a current post-October loss of $149,000 and
capital loss carryovers of $19,681,000, for federal income tax purposes. The
post-October loss will be recognized on the first day of the following fiscal
year. If not offset by subsequent capital gains, the capital loss carryovers
will expire between 2010 and 2017, as shown on the next page. It is unlikely
that the Trust's Board of Trustees will authorize a distribution of capital
gains realized in the future until the capital loss carryovers have been used or
expire.
================================================================================
30 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
CAPITAL LOSS CARRYOVERS
-----------------------------------------
EXPIRES BALANCE
----------- -----------
2010 $ 1,447,000
2011 4,733,000
2016 4,632,000
2017 8,869,000
-----------
Total $19,681,000
===========
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 statement of operations if the tax positions were
deemed to not meet the more-likely-than-not threshold. For the year ended
December 31, 2009, the Fund did not incur any income tax, interest, or
penalties. As of December 31, 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 December 31, 2006, through December 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 year ended December 31, 2009, were $16,997,000
and $4,767,000, respectively.
As of December 31, 2009, the cost of securities, including short-term
securities, for federal income tax purposes, was $123,960,000.
Gross unrealized appreciation and depreciation of investments as of December 31,
2009, for federal income tax purposes, were $47,480,000 and $12,172,000,
respectively, resulting in net unrealized appreciation of $35,308,000.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 31
<PAGE>
================================================================================
(5) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and affairs of the Fund,
subject to the authority of and supervision by the Trust's Board of
Trustees. The Manager is authorized to select (with approval of the Trust's
Board of Trustees and without shareholder approval) one or more subadvisers
to manage the actual day-to-day investment of the Fund's assets. The
Manager monitors each subadviser's performance through quantitative and
qualitative analysis, and periodically recommends to the Trust's Board of
Trustees as to whether each subadviser's agreement should be renewed,
terminated, or modified. The Manager also is responsible for allocating
assets to the subadvisers. The allocation for each subadviser can range
from 0% to 100% of the Fund's assets, and the Manager can change the
allocations without shareholder approval.
The Fund's management fees are accrued daily and paid monthly at an
annualized rate of 0.20% of the Fund's average net assets for the fiscal
year. For the year ended December 31, 2009, the Fund incurred management
fees, paid or payable to the Manager, of $245,000.
B. SUBADVISORY ARRANGEMENTS -- The Manager has entered into an investment
subadvisory agreement with NTI under which NTI directs the investment and
reinvestment of the Fund's assets (as allocated from time to time by the
Manager). The Manager (not the Fund) pays NTI a subadvisory fee equal to
the greater of a minimum annual fee of $50,000 or a fee at an annual rate
equal to 0.06% of the Fund's average daily net assets on amounts up to $100
million; 0.04% of daily net assets for amounts over $100 million and up to
$250 million; and 0.03% of daily net assets for amounts over $250 million.
For the year ended December 31, 2009, the Manager incurred subadvisory
fees, paid or payable to NTI, of $68,000.
================================================================================
32 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
C. 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 0.35% of the Fund's average net assets for the fiscal
year. For the year ended December 31, 2009, the Fund incurred
administration and servicing fees, paid or payable to the Manager, of
$429,000.
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 year ended December 31, 2009, the Fund reimbursed the
Manager $5,000 for these compliance and legal services. These expenses are
included in the professional fees on the Fund's statement of operations.
D. EXPENSE LIMITATION -- The Manager has voluntarily agreed to limit the
annual expenses of the Fund to 0.78% of its average annual net assets,
excluding extraordinary expenses and before reductions of any expenses paid
indirectly, and will reimburse the Fund for all expenses in excess of that
amount. The Manager may modify or terminate this voluntary agreement at any
time. For the year ended December 31, 2009, the Fund incurred reimbursable
expenses of $408,000, of which $87,000 was receivable from the Manager.
E. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund based on an annual charge of $26 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 year ended December 31, 2009, the
Fund incurred transfer agent's fees, paid or payable to SAS, of $459,000.
Additionally, for the year ended December 31, 2009, the Fund recorded a
receivable from SAS for a capital contribution of $3,000 for adjustments
related to corrections to shareholder accounts.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 33
<PAGE>
================================================================================
F. 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) 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 February 17, 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.
================================================================================
34 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
(8) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2009 2008 2007 2006 2005
---------------------------------------------------------------------
Net asset value at
beginning of period $ 3.74 $ 6.45 $ 5.45 $ 5.12 $ 5.09
---------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment loss (.00)(a)(d) (.01)(a) (.02)(a) (.01) (.01)(a)
Net realized and unrealized
gain (loss) 2.00(a) (2.70)(a) 1.02(a) .34 .06(a)
---------------------------------------------------------------------
Total from investment operations 2.00(a) (2.71)(a) 1.00(a) .33 .05(a)
---------------------------------------------------------------------
Less distributions from:
Net investment income - - - - (.02)
---------------------------------------------------------------------
Net asset value at end of period $ 5.74 $ 3.74 $ 6.45 $ 5.45 $ 5.12
=====================================================================
Total return (%)* 53.48 (42.02) 18.35 6.45 .97
Net assets at end of period (000) $159,254 $94,024 $149,358 $127,286 $130,390
Ratios to average net assets:**
Expenses (%)(b),(c) .78 .78 .78 .80 .80
Expenses, excluding
reimbursements (%)(b) 1.11 1.08 1.01 1.11 1.03
Net investment loss (%) (.04) (.26) (.27) (.25) (.24)
Portfolio turnover (%) 4 7 14 8 15
* 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 year ended December 31, 2009, average net assets were $122,905,000.
(a) Calculated using average shares. For the year ended December 31, 2009,
average shares were 26,516,000.
(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) Effective April 13, 2007, the Manager voluntarily agreed to reimburse the
Fund for expenses in excess of 0.78% of its annual average net assets. Prior
to April 13, 2007, the Manager voluntarily agreed to reimburse the Fund for
expenses in excess of 0.80% of its annual average net assets.
(d) Represents less than $0.01 per share.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
<PAGE>
================================================================================
EXPENSE EXAMPLE
December 31, 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 July 1, 2009, through
December 31, 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 information to compare the
================================================================================
36 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
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 JULY 1, 2009 -
JULY 1, 2009 DECEMBER 31, 2009 DECEMBER 31, 2009
-------------------------------------------------------------
Actual $1,000.00 $1,258.80 $4.44
Hypothetical
(5% return before expenses) 1,000.00 1,021.27 3.97
* Expenses are equal to the Fund's annualized expense ratio of 0.78%, which is
net of any reimbursements and expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 184 days/365 days (to
reflect the one-half-year period). The Fund's ending account value on the
first line in the table is based on its actual total return of 25.88% for the
six-month period of July 1, 2009, through December 31, 2009.
================================================================================
EXPENSE EXAMPLE | 37
<PAGE>
================================================================================
TRUSTEES' AND OFFICERS' INFORMATION
TRUSTEES AND OFFICERS OF THE TRUST
--------------------------------------------------------------------------------
The Board of Trustees of the Trust consists of six Trustees. These Trustees and
the Trust's Officers supervise the business affairs of the USAA family of funds.
The Board of Trustees is responsible for the general oversight of the funds'
business and for assuring that the funds are managed in the best interests of
each fund's respective shareholders. The Board of Trustees periodically reviews
the funds' investment performance as well as the quality of other services
provided to the funds and their shareholders by each of the fund's service
providers, including USAA Investment Management Company (IMCO) and its
affiliates. The term of office for each Trustee shall be 20 years or until the
Trustee reaches age 70. All members of the Board of Trustees shall be presented
to shareholders for election or re-election, as the case may be, at least once
every five years. Vacancies on the Board of Trustees can be filled by the action
of a majority of the Trustees, provided that at least two-thirds of the Trustees
have been elected by the shareholders.
Set forth below are the Trustees and Officers of the Trust, their respective
offices and principal occupations during the last five years, length of time
served, and information relating to any other directorships held. Each serves on
the Board of Trustees of the USAA family of funds consisting of one registered
investment company offering 46 individual funds as of December 31, 2009. Unless
otherwise indicated, the business address of each is 9800 Fredericksburg Road,
San Antonio, TX 78288.
If you would like more information about the funds' Trustees, you may call (800)
531-USAA (8722) to request a free copy of the funds' statement of additional
information (SAI).
================================================================================
38 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
INTERESTED TRUSTEE(1)
--------------------------------------------------------------------------------
CHRISTOPHER W. CLAUS(2, 4)
Trustee
Born: December 1960
Year of Election or Appointment: 2001
Chair of the Board of Directors, IMCO (11/04-present); President, IMCO
(2/01-10/09); Chief Investment Officer, IMCO (2/07-2/08); Chief Executive
Officer, IMCO (2/01-2/07); Chair of the Board of Directors, USAA Financial
Advisors, Inc. (FAI) (1/07-present); President, FAI (12/07-10/09); President,
Financial Advice and Solutions Group (FASG) USAA (9/09-present); President,
Financial Services Group, USAA (1/07-9/09). Mr. Claus serves as Chair of the
Board of Directors of USAA Investment Corporation, USAA Shareholder Account
Services (SAS), USAA Financial Planning Services Insurance Agency, Inc. (FPS),
and FAI. He also is Vice Chair for USAA Life Insurance Company (USAA Life).
NON-INTERESTED (INDEPENDENT) TRUSTEES
--------------------------------------------------------------------------------
BARBARA B. DREEBEN(3, 4, 5, 6)
Trustee
Born: June 1945
Year of Election or Appointment: 1994
President, Postal Advantage (7/92-present), a postal mail list management
service. Mrs. Dreeben holds no other directorships of any publicly held
corporations or other investment companies outside the USAA family of funds.
================================================================================
TRUSTEES' AND OFFICERS' INFORMATION | 39
<PAGE>
================================================================================
ROBERT L. MASON, PH.D.(3, 4, 5, 6)
Trustee
Born: June 1946
Year of Election or Appointment: 1997
Institute Analyst, Southwest Research Institute (3/02-present), which focuses in
the fields of technological research. Dr. Mason holds no other directorships of
any publicly held corporations or other investment companies outside the USAA
family of funds.
BARBARA B. OSTDIEK, PH.D.(3, 4, 5, 6, 7)
Trustee
Born: March 1964
Year of Election or Appointment: 2007
Academic Director of the El Paso Corporation Finance Center at Jesse H. Jones
Graduate School of Management at Rice University (7/02-present); Associate
Professor of Finance at Jesse H. Jones Graduate School of Management at Rice
University (7/01-present). Dr. Ostdiek holds no other directorships of any
publicly held corporations or other investment companies outside the USAA family
of funds.
MICHAEL F. REIMHERR(3, 4, 5, 6)
Trustee
Born: August 1945
Year of Election or Appointment: 2000
President of Reimherr Business Consulting (5/95-present), an organization that
performs business valuations of large companies to include the development of
annual business plans, budgets, and internal financial reporting. Mr. Reimherr
holds no other directorships of any publicly held corporations or other
investment companies outside the USAA family of funds.
================================================================================
40 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
RICHARD A. ZUCKER(2, 3, 4, 5, 6)
Trustee and Chair of the Board of Trustees
Born: July 1943
Year of Election or Appointment: 1992(+)
Vice President, Beldon Roofing Company (7/85-present). Mr. Zucker holds no other
directorships of any publicly held corporations or other investment companies
outside the USAA family of funds.
(1) Indicates the Trustee is an employee of IMCO or affiliated companies and
is considered an "interested person" under the Investment Company Act of
1940.
(2) Member of Executive Committee
(3) Member of Audit Committee
(4) Member of Pricing and Investment Committee
(5) Member of Corporate Governance Committee
(6) The address for all non-interested trustees is that of the USAA Funds,
P.O. Box 659430, San Antonio, TX 78265-9430.
(7) Dr. Ostdiek was appointed the Audit Committee Financial Expert for the
Funds' Board in November 2008.
(+) Mr. Zucker was elected as Chair of the Board in 2005.
================================================================================
TRUSTEES' AND OFFICERS' INFORMATION | 41
<PAGE>
================================================================================
INTERESTED OFFICERS(1)
--------------------------------------------------------------------------------
DANIEL S. McNAMARA
Vice President
Born: June 1966
Year of Appointment: 2009
President and Director, IMCO, FAI, FPS, and SAS (10/09-present); President, Banc
of America Investment Advisors (9/07-9/09); Managing Director, Planning and
Financial Products Group, Bank of America (9/01-9/09).
CLIFFORD A. GLADSON
Vice President
Born: November 1950
Year of Appointment: 2002
Senior Vice President, Fixed Income Investments, IMCO (9/02-present). Mr.
Gladson also serves as a Director for SAS.
JOHN P. TOOHEY
Vice President
Born: March 1968
Year of Appointment: 2009
Vice President, Equity Investments, IMCO (2/09-present); Managing Director, AIG
Investments (12/00-1/09).
MARK S. HOWARD
Secretary
Born: October 1963
Year of Appointment: 2002
Senior Vice President and Deputy General Counsel, Business & Regulatory
Services, USAA (10/08-present); Senior Vice President, USAA Life/IMCO/ FPS
General Counsel, USAA (10/03-10/08). Mr. Howard also holds the Officer positions
of Senior Vice President, Secretary, and Counsel for USAA Life, FAI, and FPS,
and is an Assistant Secretary of USAA, IMCO, and SAS.
================================================================================
42 | USAA NASDAQ-100 INDEX FUND
<PAGE>
================================================================================
ROBERTO GALINDO, JR.
Treasurer
Born: November 1960
Year of Appointment: 2000
Assistant Vice President, Portfolio Accounting/Financial Administration, USAA
(12/02-present); Assistant Treasurer, USAA family of funds (7/00-2/08).
CHRISTOPHER P. LAIA
Assistant Secretary
Born: January 1960
Year of Appointment: 2008
Vice President, FASG General Counsel, USAA (10/08-present); Vice President,
Securities Counsel, USAA (6/07-10/08); General Counsel, Secretary, and Partner,
Brown Advisory (6/02-6/07). Mr. Laia also holds the Officer positions of Vice
President and Secretary, IMCO and SAS, and Vice President and Assistant
Secretary, FAI and FPS.
WILLIAM A. SMITH
Assistant Treasurer
Born: June 1948
Year of Appointment: 2009
Vice President, Senior Financial Officer, and Treasurer, FASG, FAI, and SAS
(2/09-present); Senior Financial Officer, USAA Life (2/07-present); consultant,
Robert Half/Accounttemps (8/06-1/07); Chief Financial Officer, California State
Automobile Association (8/04-12/05).
JEFFREY D. HILL
Chief Compliance Officer
Born: December 1967
Year of Appointment: 2004
Assistant Vice President, Mutual Funds Compliance, USAA (9/04-present).
(1) Indicates those Officers who are employees of IMCO or affiliated companies
and are considered "interested persons" under the Investment Company Act
of 1940.
================================================================================
TRUSTEES' AND OFFICERS' INFORMATION | 43
<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.
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund, are
available without charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's Web site at HTTP://WWW.SEC.GOV. Information regarding
how the Fund voted proxies relating to portfolio securities during the most
recent 12-month period ended June 30 is available (i) at USAA.COM; and (ii) on
the SEC's Web site at HTTP://WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. These Forms N-Q are
available at no charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's 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)
===========================================================================
37732-0210 (C)2010, USAA. All rights reserved.
ITEM 2. CODE OF ETHICS.
On September 24, 2009, the Board of Trustees of USAA Mutual Funds Trust approved
a Code of Ethics (Sarbanes Code) applicable solely to its senior financial
officers, including its principal executive officer (President), as defined
under the Sarbanes-Oxley Act of 2002 and implementing regulations of the
Securities and Exchange Commission. A copy of the Sarbanes Code is attached as
an Exhibit to this Form N-CSR.
No waivers (explicit or implicit) have been granted from a provision of the
Sarbanes Code.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
On November 18, 2008, the Board of Trustees of USAA Mutual Funds Trust
designated Dr. Barbara B. Ostdiek, Ph.D. as the Board's audit committee
financial expert. Dr. Ostdiek has served as an Associate Professor of Management
at Rice University since 2001. Dr. Ostdiek also has served as an Academic
Director at El Paso Corporation Finance Center since 2002. Dr. Ostdiek is an
independent trustee who serves as a member of the Audit Committee, Pricing and
Investment Committee and the Corporate Governance Committee of the Board of
Trustees of USAA Mutual Funds Trust.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES. The Registrant, USAA Mutual Funds Trust, consists of 46 funds in
all. Only 10 funds of the Registrant have a fiscal year-end of December 31 and are
included within this report (the Funds). The aggregate fees accrued or billed by
the Registrant's independent auditor, Ernst & Young LLP, for professional
services rendered for the audit of the Registrant's annual financial statements
and services provided in connection with statutory and regulatory filings by the
Registrant for the Funds for fiscal years ended December 31, 2009 and 2008 were
$262,287 and $244,927, respectively.
(b) AUDIT RELATED FEE. The aggregate fees accrued or paid to Ernst & Young, LLP
by USAA Shareholder Account Services (SAS) for professional services rendered
for audit related services related to the annual study of internal controls of
the transfer agent for fiscal years ended December 31, 2009 and 2008 were $61,513
and $63,500, respectively. All services were preapproved by the Audit Committee.
(c) TAX FEES. No such fees were billed by Ernst & Young LLP for the review of
federal, state and city income and tax returns and excise tax calculations for
fiscal years ended December 31, 2009 and 2008.
(d) ALL OTHER FEES. No such fees were billed by Ernst & Young LLP for fiscal
years ended December 31, 2009 and 2008.
(e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICY. All audit and non-audit services to
be performed for the Registrant by Ernst & Young LLP must be pre-approved by the
Audit Committee. The Audit Committee Charter also permits the Chair of the Audit
Committee to pre-approve any permissible non-audit service that must be
commenced prior to a scheduled meeting of the Audit Committee. All non-audit
services were pre-approved by the Audit Committee or its Chair, consistent with
the Audit Committee's preapproval procedures.
(2) Not applicable.
(f) Not applicable.
(g) The aggregate non-audit fees billed by Ernst & Young LLP for services
rendered to the Registrant and the Registrant's investment adviser, IMCO, and
the Funds' transfer agent, SAS, for December 31, 2009 and 2008 were $104,896 and
$108,000, respectively.
(h) Ernst & Young LLP provided non-audit services to IMCO in 2009 and 2008 that
were not required to be pre-approved by the Registrant's Audit Committee because
the services were not directly related to the operations of the Registrant's
Funds. The Board of Trustees will consider Ernst & Young LLP's independence and
will consider whether the provision of these non-audit services to IMCO is
compatible with maintaining Ernst & Young LLP's independence.
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 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
considering by the Trust's Board in approving the Trust's advisory agreements.
ITEM 12. EXHIBITS.
(a)(1). Code of Ethics pursuant to Item 2 of Form N-CSR is filed hereto exactly
as set forth below:
CODE OF ETHICS
FOR PRINCIPAL EXECUTIVE OFFICER
AND SENIOR FINANCIAL OFFICERS
USAA MUTUAL FUNDS TRUST
I. PURPOSE OF THE CODE OF ETHICS
USAA Mutual Funds Trust (the Trust or the Funds) has adopted this code
of ethics (the Code) to comply with Section 406 of the Sarbanes-Oxley Act of
2002 (the Act) and implementing regulations of the Securities and Exchange
Commission (SEC). The Code applies to the Trust's Principal Executive Officer,
Principal Financial Officer and Principal Accounting Officer (each a Covered
Officer), as detailed in Appendix A.
The purpose of the Code is to promote:
- honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between the Covered
Officers' personal and professional relationships;
- full, fair, accurate, timely and understandable disclosure in
reports and documents that the Trust files with, or submits
to, the SEC and in other public communications made by the
Trust;
- compliance with applicable laws and governmental rules and
regulations;
- prompt internal reporting of violations of the Code to the
Chief Legal Officer of the Trust, the President of the Trust
(if the violation concerns the Treasurer), the CEO of USAA,
and if deemed material to the Funds' financial condition or
reputation, the Chair of the Trust's Board of Trustees; and
- accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business
ethics and should be sensitive to actual and apparent conflicts of interest.
II. CONFLICTS OF INTEREST
A. DEFINITION OF A CONFLICT OF INTEREST.
A conflict of interest exists when a Covered Officer's private interest
influences, or reasonably appears to influence, the Covered Officer's judgment
or ability to act in the best interests of the Funds and their shareholders. For
example, a conflict of interest could arise if a Covered Officer, or an
immediate family member, receives personal benefits as a result of his or her
position with the Funds.
Certain conflicts of interest arise out of relationships between
Covered Officers and the Funds and are already subject to conflict of interest
provisions in the Investment Company Act of 1940 (the 1940 Act) and the
Investment Advisers Act of 1940 (the Advisers Act). For example, Covered
Officers may not individually engage in certain transactions with the Funds
because of their status as "affiliated persons" of the Funds. The USAA Funds'
and USAA Investment Management Company's (IMCO) compliance programs and
procedures are designed to prevent, or identify and correct, violations of these
provisions. This Code does not, and is not intended to, repeat or replace these
programs and procedures, and such conflicts fall outside of the parameters of
this Code.
Although typically not presenting an opportunity for improper personal
benefit, conflicts could arise from, or as a result of, the contractual
relationships between the Funds and IMCO of which the Covered Officers are also
officers or employees. As a result, this Code recognizes that the Covered
Officers will, in the normal course of their duties (whether formally for the
Funds or for IMCO, or for both), be involved in establishing policies and
implementing decisions that will have different effects on IMCO and the Funds.
The participation of Covered Officers in such activities is inherent in the
contractual relationship between the Funds and IMCO and is consistent with the
performance by the Covered Officers of their duties as officers of the Funds.
Thus, if performed in compliance with the provisions of the 1940 Act and the
Advisers Act, such activities will be deemed to have been handled ethically.
B. GENERAL RULE. Covered Officers Should Avoid Actual and Apparent
Conflicts of Interest.
Conflicts of interest, other than the conflicts described in the two
preceding paragraphs, are covered by the Code. The following list provides
examples of conflicts of interest under the Code, but Covered Officers should
keep in mind that these examples are not exhaustive. The overarching principle
is that the personal interest of a Covered Officer should not be placed
improperly before the interest of the Funds and their shareholders.
Each Covered Officer must not engage in conduct that constitutes an
actual conflict of interest between the Covered Officer's personal interest and
the interests of the Funds and their shareholders. Examples of actual conflicts
of interest are listed below but are not exclusive. Each Covered Officer must
not:
- use his personal influence or personal relationships improperly to
influence investment decisions or financial reporting by the Funds
whereby the Covered Officer would benefit personally to the
detriment of the Funds and their shareholders;
- cause the Funds to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the
benefit of the Funds and their shareholders.
- accept gifts, gratuities, entertainment or any other benefit from
any person or entity that does business or is seeking to do
business with the Funds DURING CONTRACT NEGOTIATIONS.
- accept gifts, gratuities, entertainment or any other benefit with
a market value over $100 per person, per year, from or on behalf
of any person or entity that does, or seeks to do, business with
or on behalf of the Funds.
- EXCEPTION. Business-related entertainment such as meals,
and tickets to sporting or theatrical events, which are
infrequent and not lavish are excepted from this
prohibition. Such entertainment must be appropriate as to
time and place, reasonable and customary in nature, modest
in cost and value, incidental to the business, and not so
frequent as to raise any question of impropriety
(Customary Business Entertainment).
Certain situations that could present the appearance of a conflict of
interest should be discussed with, and approved by, or reported to, an
appropriate person. Examples of these include:
- service as a director on the board or an officer of any public or
private company, other than a USAA company or the Trust, must be
approved by the USAA Funds' and Investment Code of Ethics
Committee and reported to the Trust.
- the receipt of any non-nominal (I.E., valued over $25) gifts from
any person or entity with which a Trust has current or prospective
business dealings must be reported to the Chief Legal Officer. For
purposes of this Code, the individual holding the title of
Secretary of the Trust shall be considered the Chief Legal Officer
of the Trust.
- the receipt of any business-related entertainment from any person
or entity with which the Funds have current or prospective
business dealings must be approved in advance by the Chief Legal
Officer unless such entertainment qualifies as Customary Business
Entertainment.
- any ownership interest in, or any consulting or employment
relationship with, any of the Trust's service providers, other
than IMCO or any other USAA company, must be approved by the CEO
of USAA and reported to the Trust's Board.
- any material direct or indirect financial interest in commissions,
transaction charges or spreads paid by the Funds for effecting
portfolio transactions or for selling or redeeming shares other
than an interest arising from the Covered Officer's employment,
such as compensation or equity ownership should be approved by the
CEO of USAA and reported to the Trust's Board.
III. DISCLOSURE AND COMPLIANCE REQUIREMENTS
- Each Covered Officer should familiarize himself with the
disclosure requirements applicable to the Funds, and the
procedures and policies implemented to promote full, fair,
accurate, timely and understandable disclosure by the Trust.
- Each Covered Officer should not knowingly misrepresent, or
cause others to misrepresent, facts about the Funds to others,
whether within or outside the Funds, including to the Funds'
Trustees and auditors, and to government regulators and
self-regulatory organizations.
- Each Covered Officer should, to the extent appropriate within
his area of responsibility, consult with other officers and
employees of the Funds and IMCO with the goal of promoting
full, fair, accurate, timely and understandable disclosure in
the reports and documents filed by the Trust with, or
submitted to, the SEC, and in other public communications made
by the Funds.
- Each Covered Officer is responsible for promoting compliance
with the standards and restrictions imposed by applicable
laws, rules and regulations, and promoting compliance with the
USAA Funds' and IMCO's operating policies and procedures.
- A Covered Officer should not retaliate against any person
who reports a potential violation of this Code in good faith.
- A Covered Officer should notify the Chief Legal Officer
promptly if he knows of any violation of the Code. Failure
to do so itself is a violation of this Code.
IV. REPORTING AND ACCOUNTABILITY
A. INTERPRETATION OF THE CODE. The Chief Legal Officer of the Trust
is responsible for applying this Code to specific situations in
which questions are presented under it and has the authority to
interpret the Code in any particular situation. The Chief Legal
Officer should consult, if appropriate, the USAA Funds' outside
counsel or counsel for the Independent Trustees. However, any
approvals or waivers sought by a Covered Officer will be
reported initially to the CEO of USAA and will be considered by
the Trust's Board of Trustees.
B. REQUIRED REPORTS
- EACH COVERED OFFICER MUST:
- Upon adoption of the Code, affirm in writing to the
Board that he has received, read and understands the
Code.
- Annually thereafter affirm to the Chief Legal Officer
that he has complied with the requirements of the Code.
- THE CHIEF LEGAL OFFICER MUST:
- report to the Board about any matter or situation
submitted by a Covered Officer for interpretation under
the Code, and the advice given by the Chief Legal
Officer;
- report annually to the Board and the Corporate
Governance Committee describing any issues that arose
under the Code, or informing the Board and Corporate
Governance Committee that no reportable issues occurred
during the year.
C. INVESTIGATION PROCEDURES
The Funds will follow these procedures in investigating and enforcing
this Code:
- INITIAL COMPLAINT. All complaints or other inquiries
concerning potential violations of the Code must be reported
to the Chief Legal Officer. The Chief Legal Officer shall be
responsible for documenting any complaint. The Chief Legal
Officer also will report immediately to the President of the
Trust (if the complaint involves the Treasurer), the CEO of
USAA and the Chair of the Trust's Audit Committee (if the
complaint involves the President) any material potential
violations that could have a material effect on the Funds'
financial condition or reputation. For all other complaints,
the Chief Legal Officer will report quarterly to the Board.
- INVESTIGATIONS. The Chief Legal Officer will take all
appropriate action to investigate any potential violation
unless the CEO of USAA directs another person to undertake
such investigation. The Chief Legal Officer may utilize USAA's
Office of Ethics to do a unified investigation under this Code
and USAA's Code of Conduct. The Chief Legal Officer may direct
the Trust's outside counsel or the counsel to the Independent
Trustees (if any) to participate in any investigation under
this Code.
- STATUS REPORTS. The Chief Legal Officer will provide monthly
status reports to the Board about any alleged violation of the
Code that could have a material effect on the Funds' financial
condition or reputation, and quarterly updates regarding all
other alleged violations of the Code.
- VIOLATIONS OF THE CODE. If after investigation, the Chief
Legal Officer, or other investigating person, believes that a
violation of the Code has occurred, he will report immediately
to the CEO of USAA the nature of the violation, and his
recommendation regarding the materiality of the violation. If,
in the opinion of the investigating person, the violation
could materially affect the Funds' financial condition or
reputation, the Chief Legal Officer also will notify the Chair
of the Trust's Audit Committee. The Chief Legal Officer will
inform, and make a recommendation to, the Board, which will
consider what further action is appropriate. Appropriate
action could include: (1) review of, and modifications to, the
Code or other applicable policies or procedures;
(2) notifications to appropriate personnel of IMCO or USAA;
(3) dismissal of the Covered Officer; and/or (4) other
disciplinary actions including reprimands or fines.
- The Board of Trustees understands that Covered
Officers also are subject to USAA's Code of Business
Conduct. If a violation of this Code also violates
USAA's Code of Business Conduct, these procedures do
not limit or restrict USAA's ability to discipline
such Covered Officer under USAA's Code of Business
Conduct. In that event, the Chairman of the Board of
Trustees will report to the Board the action taken by
USAA with respect to a Covered Officer.
V. OTHER POLICIES AND PROCEDURES
This Code shall be the sole code of ethics adopted by the Funds for
purposes of Section 406 of the Act and the implementing regulations adopted by
the SEC applicable to registered investment companies. If other policies and
procedures of the Trust, IMCO, or other service providers govern or purport to
govern the behavior or activities of Covered Officers, they are superseded by
this Code to the extent that they overlap, conflict with, or are more lenient
than the provisions of this Code. The Investment Code of Ethics (designated to
address 1940 Act and Advisers Act requirements) and IMCO's more detailed
compliance policies and procedures (including its Insider Trading Policy) are
separate requirements applying to Covered Officers and other IMCO employees, and
are not part of this Code. Also, USAA's Code of Conduct imposes separate
requirements on Covered Officers and all employees of USAA, and also is not part
of this Code.
VI. AMENDMENTS
Any amendment to this Code, other than amendments to Appendix A, must
be approved or ratified by majority vote of the Board of Trustees.
VII. CONFIDENTIALITY AND DOCUMENT RETENTION
The Chief Legal Officer shall retain material investigation documents
and reports required to be prepared under the Code for six years from the date
of the resolution of any such complaint. All reports and records prepared or
maintained pursuant to this Code will be considered confidential and shall be
maintained and protected accordingly. Except as otherwise required by law or
this Code, such matters shall not be disclosed to anyone other than the Trust's
Board of Trustees and counsel for the Independent Trustees (if any), the Trust
and its counsel, IMCO, and other personnel of USAA as determined by the Trust's
Chief Legal Officer or the Chair of the Trust's Board of Trustees.
Approved and adopted by IMCO's Code of Ethics Committee: June 12, 2003.
Approved and adopted by the Boards of Directors/Trustees of USAA Mutual Fund,
Inc., USAA Tax-Exempt Fund, Inc., USAA Investment Trust & USAA State Tax-Free
Trust: June 25, 2003.
Approved and adopted by the Board of Trustees of USAA Life Investment Trust:
August 20, 2003.
Approved and adopted as amended by IMCO's Code of Ethics Committee: August 15,
2005.
Approved and adopted as amended by the Boards of Directors/Trustees of USAA
Mutual Fund, Inc., USAA Tax-Exempt Fund, Inc., USAA Investment Trust & USAA
State Tax-Free Trust: September 14, 2005.
Approved and adopted as amended by the Board of Trustees of USAA Life Investment
Trust: December 8, 2005.
Approved and adopted as amended by IMCO's Code of Ethics Committee: August 16,
2006.
Approved and adopted by the Board of Trustees of USAA Mutual Funds Trust:
September 13, 2006.
Approved and adopted by IMCO's Code of Ethics Committee: August 28, 2007.
Approved and adopted by the Investment Code of Ethics Committee: August 29,
2008.
Approved and adopted as amended by the Board of Trustees of USAA Mutual Funds
Trust: September 19, 2008.
Approved and adopted by the Investment Code of Ethics Committee: August 17,
2009.
Approved and adopted by the Board of Trustees of USAA Mutual Funds Trust:
September 24, 2009.
<PAGE>
APPENDIX A
COVERED OFFICERS
PRESIDENT
TREASURER
<PAGE>
(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 December 31, 2009
By:* /s/ CHRISTOPHER P. LAIA
--------------------------------------------------------------
Signature and Title: Christopher P. Laia, Assistant Secretary
Date: 02/26/2010
------------------------------
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:* /s/ CHRISTOPHER W. CLAUS
-----------------------------------------------------
Signature and Title: Christopher W. Claus, President
Date: 02/26/2010
------------------------------
By:* /s/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 02/26/2010
------------------------------
*Print the name and title of each signing officer under his or her signature.
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