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
(USAA LOGO)
ANNUAL REPORT
USAA GLOBAL OPPORTUNITIES FUND
DECEMBER 31, 2009
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FUND OBJECTIVE
Seek an average annual return that is greater than the 1-year U.S. Treasury
Bond, before fees and expenses, over a full market cycle, while seeking to limit
the Fund's exposure to large negative returns.
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TYPES OF INVESTMENTS
The Fund's principal strategy is to combine a portfolio of domestic and foreign
equity and debt securities with the use of alternative investment strategies to
provide growth with greater downside risk controls. It may invest in multiple
asset classes including U.S. stocks, non-U.S. stocks in developed and emerging
markets, global real estate securities, and fixed-income securities.(*)
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA 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.
(*) The Fund is not offered for sale directly to the general public and is
available currently for investment through a USAA managed account program,
or other persons or legal entities that the Fund may approve from time to
time. AN INVESTOR WILL INDIRECTLY BEAR FEES AND EXPENSES CHARGED BY THE
UNDERLYING FUNDS IN ADDITION TO DIRECT FEES AND EXPENSES CHARGED BY THE
PORTFOLIO AS APPLICABLE.
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TABLE OF CONTENTS
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President's Message 2
Managers' Commentary 4
Investment Overview 8
Financial Information
Distributions to Shareholders 12
Report of Independent Registered
Public Accounting Firm 13
Portfolio of Investments 14
Notes to Portfolio of Investments 43
Financial Statements 47
Notes to Financial Statements 50
Expense Example 70
Trustees' and Officers' Information 72
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 positioned
relative to their risk
tolerance."
(MCNAMARA
PHOTO)
------------------------------------
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 GLOBAL OPPORTUNITIES 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 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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MANAGERS' COMMENTARY
ON THE FUND
USAA Investment Management Quantitative Management
Company* Associates LLC
U.S. and International International Stocks
Stocks
(Exchange-Traded Funds MARGARET S. STUMPP, Ph.D.
(ETFs)) TED LOCKWOOD
JOHN VAN BELLE, Ph.D.
JOHN P. TOOHEY, CFA
WASIF A. LATIF The Boston Company Asset
Bonds and Money Market Management, LLC
Instruments Emerging Market Stocks
R. MATTHEW FREUND, CFA D. KIRK HENRY, CFA
ARNOLD J. ESPE, CFA CAROLYN M. KEDERSHA, CFA,
JULIANNE BASS, CFA CPA
Global Real Estate WARREN SKILLMAN
Securities and ETFs
Credit Suisse Securities
MARK W. JOHNSON, CFA (USA) LLC's
DAN DENBOW, CFA Volaris Volatility
Management Group***
Deutsche Investment Index Options
Management Americas Inc.**
U.S. Stocks YIRONG LI, CFA
DEFINA MALUKI, CFA
ROBERT WANG
JAMES B. FRANCIS, CFA
Credit Suisse Asset
Management, LLC
U.S. Stocks
JORDAN LOW
*Effective July 17, 2009, Ron Sweet no longer is a co-manager of the Fund.
**Effective August 1, 2009, Julie Abbett no longer is a co-manager of the Fund.
***Effective June 30, 2009, Laura B. Friedman no longer is a co-manager of the
Fund.
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- HOW DID THE USAA GLOBAL OPPORTUNITIES FUND (THE FUND) PERFORM?
For the year ended December 31, 2009, the Fund had a total return of 18.90%.
This compares to a return of 26.46% for the S&P(R) 500
Past performance is no guarantee of future results.
Refer to page 9 for benchmark definitions.
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4 USAA GLOBAL OPPORTUNITIES FUND
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Index (the Index) and 5.93% for the Barclays Capital U.S. Aggregate Bond
Index.
- PLEASE DESCRIBE THE MARKET ENVIRONMENT DURING THE REPORTING YEAR.
Risk assets traded modestly higher as the year began, but then sold off
dramatically through early March 2009 as fears of a global economic meltdown
dominated the equity and credit markets. The U.S. stock market bottomed in the
second week of March 2009 as massive U.S. government stimulus programs began
to gain traction. Economic data slowly but steadily stabilized and the markets
began pricing in an economic recovery. The stock market rally was initially
concentrated in the lowest-quality stocks, but started to broaden as the year
progressed, with strong returns across global equity markets being led by the
emerging markets. In the credit markets, the spreads between yields on U.S.
Treasury securities and bonds with credit risk narrowed dramatically, from
historically wide levels in March 2009 closer to historical norms at the end
of the year.
- HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE IN SUCH A VOLATILE YEAR?
The purpose of the Fund is to seek exposure to the long-term upside of global
stock markets while attempting to lower the risk of big losses. In a year when
big gains followed substantial losses, the Fund did its job well, providing
about 70% of the Index's return with significantly less volatility.
The Fund uses a number of different strategies to maximize performance in the
U.S. stock market, in international developed stock markets and in emerging
stock markets. We have established a basic strategic allocation to each of
these markets, which we tactically adjust based on market conditions. Ahead of
the market rebound in March 2009, we were tactically overweight in emerging
markets stocks and were underweight in U.S. small-cap and international
developed market stocks. As the rally progressed, we maintained an overweight
position in the emerging markets and remained slightly underweight in
international developed markets throughout the reporting period. Overall, our
tactical asset allocation decisions had a positive impact on performance.
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MANAGERS' COMMENTARY ON THE FUND 5
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In addition to tactical asset allocation, we attempted to control risk using
an equity hedging strategy that's managed by Credit Suisse Securities (USA)
LLC's Volaris Volatility Management Group (Volaris Group). The strategy
involves selling index call or corresponding exchange-traded fund (ETF)
options and purchasing index put or corresponding ETF options or put spread
options against a highly correlated stock portfolio. This carefully managed
equity hedging strategy allows us to create collars on our global stock
markets exposures that effectively limit downside (and upside) potential.
This equity hedging strategy helped the Fund avoid the worst of the losses
when the market bottomed out on March 9, 2009, and then kept us from
participating in all of the gains of the strong stock market that occurred
after that date. We work closely with Volaris Group to actively manage the
equity hedging strategy based on market conditions.
The final element of the Fund's overall strategy is to have allocations to
other markets and investment vehicles on an opportunistic basis as well as to
provide additional diversification and excess returns uncorrelated to the
Index. During the reporting year we took an opportunistic position in the U.S.
bond market when conditions were grim and subsequently benefited as credit
markets healed. We also maintained our investment in Deutsche iGAP Investment
Trust "B" (iGAP). Managed by Deutsche Investment Management Americas Inc. iGAP
is a global tactical asset allocation strategy hedge fund that invests only in
liquid instruments, taking long or short positions using futures on stock,
currency, commodity, and bond markets around the world. The iGAP allocation
had a slightly positive return for the year.
Exchange Traded Funds (ETF's) are subject to risks similar to those of stocks. -
Investment returns may fluctuate and are subject to market volatility, so that
an investor's shares, when redeemed or sold, may be worth more or less than
their original cost. - Options are considered speculative investment strategies.
- Index collars are generally employed to protect unrealized profits from the
portfolio being protected, and the index option class chosen will generally have
an underlying index that most closely tracks the performance of the portfolio.
While losses may be limited so are potential gains. - As interest rates rise,
existing bond prices fall. - Diversification does not guarantee a profit or
prevent a loss.
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6 USAA GLOBAL OPPORTUNITIES FUND
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- WHAT'S USAA'S MARKET OUTLOOK?
At current valuation levels, the Index appears to be anticipating a strong
cyclical recovery in the economy. Meeting these expectations will require
significant revenue growth, not just more of the cost cutting that drove much
of the earnings improvement in 2009. We are cautious, with our expectations
being closer to more modest top-down earnings forecasts in the 8% to 15%
range. Within the United States, we favor large-cap stocks over small-cap
stocks because large-cap stocks are more exposed to growth in the global
economy. As of the date of this writing, we continue to maintain a higher
equity exposure in emerging stock markets, and remain slightly underweight in
international developed markets. We are still finding some opportunities in
the bond market, but expect that income -- not capital appreciation -- will be
the primary driver of total return from bonds in 2010.
Thank you for your investment in the Fund.
There are additional risks associated with the Fund including alternative and
foreign risks.
Alternative investments carry specific investor qualifications which can include
high income and net-worth requirements as well as relatively high investment
minimums. They are complex investment vehicles, generally carry high costs,
substantial risks, and may be highly volatile. There is often limited (or even
non-existent) liquidity and a lack of transparency regarding the underlying
assets. They are there not suitable for all investors. Please carefully review
the offering documents for complete information regarding terms, including all
applicable fees, as well as other factors you should consider before investing.
Foreign investing is subject to additional risks, such as currency fluctuations,
market illiquidity, and political instability.
Investing in small-cap companies involves the greater risk of investing in
smaller, less well-known companies, especially those which have a narrow product
line or are traded infrequently, compared to investing in established companies
with proven track records.
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MANAGERS' COMMENTARY ON THE FUND 7
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INVESTMENT OVERVIEW
USAA GLOBAL OPPORTUNITIES FUND (Ticker Symbol: UGOFX)
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12/31/09 12/31/08
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Net Assets $318.1 Million $73.6 Million
Net Asset Value Per Share $9.94 $8.61
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AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/09
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1 Year Since Inception 7/31/08
18.90% 2.17%
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EXPENSE RATIO*
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Before Reimbursement 1.34% After Reimbursement 1.00%
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.
*The before reimbursement expense ratio represents the total annual operating
expenses, before reductions of any expenses paid and including any acquired fund
fees and expenses, 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 the total annual operating expenses, before reductions
of any expenses paid indirectly and excluding any acquired fund fees and
expenses, 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 1.00%, before reductions
of any expenses paid indirectly and excluding any acquired fund fees and
expenses, 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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8 USAA GLOBAL OPPORTUNITIES FUND
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- CUMULATIVE PERFORMANCE COMPARISON -
BARCLAYS CAPITAL U.S. USAA GLOBAL
AGGREGATE BOND INDEX OPPORTUNITIES FUND S&P 500 INDEX
-------------------- ------------------ -------------
07/31/2008 10,000.00 10,000.00 10,000.00
08/31/2008 10,094.91 10,100.00 10,144.65
09/30/2008 9,959.32 9,260.00 9,240.68
10/31/2008 9,724.23 8,820.00 7,688.73
11/30/2008 10,040.76 8,450.00 7,137.03
12/31/2008 10,415.37 8,671.84 7,212.97
01/31/2009 10,323.47 8,097.07 6,605.01
02/28/2009 10,284.50 7,542.48 5,901.73
03/31/2009 10,427.47 7,865.15 6,418.69
04/30/2009 10,477.33 8,389.50 7,033.02
05/31/2009 10,553.32 8,853.34 7,426.40
06/30/2009 10,613.35 8,934.01 7,441.13
07/31/2009 10,784.54 9,407.94 8,003.96
08/31/2009 10,896.20 9,599.52 8,292.93
09/30/2009 11,010.66 9,932.28 8,602.38
10/31/2009 11,065.03 9,821.36 8,442.58
11/30/2009 11,208.28 10,133.95 8,948.99
12/31/2009 11,033.08 10,310.56 9,121.85
Data since Fund inception 7/31/08 to 12/31/09.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Global Opportunities Fund to the following benchmarks:
- The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. It once was known as the Lehman Brothers U.S.
Aggregate Bond Index.
- The unmanaged S&P 500 Index represents the weighted average performance of a
group of 500 widely held, publicly traded stocks.
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.
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INVESTMENT OVERVIEW 9
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TOP 10 EQUITY HOLDINGS
AS OF 12/31/09
(% of Net Assets)
iShares MSCI Emerging Markets Index
Fund*............................. 6.4%
Deutsche iGAP Investment Trust "B".. 2.7%
Microsoft Corp...................... 1.4%
Exxon Mobil Corp.................... 1.2%
International Business Machines
Corp.............................. 1.1%
Apple, Inc.......................... 1.1%
Johnson & Johnson................... 1.1%
AT&T, Inc........................... 1.0%
Google, Inc. "A".................... 0.8%
JPMorgan Chase & Co................. 0.8%
* Pursuant to a Securities and Exchange Commission
(SEC) exemptive order and a related agreement with
iShares Trust (iShares), the Fund may invest in
iShares in amounts exceeding limits set forth in
the Investment Company Act of 1940 that would
otherwise be applicable.
You will find a complete list of securities that
the Fund owns on pages 14-42.
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10 USAA GLOBAL OPPORTUNITIES FUND
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ASSET ALLOCATION
AS OF 12/31/09
(% of Net Assets)
Common Stocks...................... 85.1%
Exchange-Traded Funds*............. 7.1%
Money Market Instruments........... 3.0%
Hedge Funds........................ 2.7%
Corporate Obligations.............. 2.2%
Eurodollar And Yankee Obligations.. 0.5%
Purchased Options.................. 0.4%
Commercial Mortgage Securities..... 0.3%
* Exchange-traded funds (ETFs) are baskets of
securities and are traded, like individual stocks,
on an exchange. These particular ETFs represent
multiple sectors. The Fund participates in
exemptive orders held by certain ETFs that allow
the Fund to invest in these ETFs above the level
permitted under the Investment Company Act of
1940.
Percentages are of net assets of the Fund and may
not equal 100%.
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INVESTMENT OVERVIEW 11
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DISTRIBUTIONS TO SHAREHOLDERS
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The following federal tax information related to the Fund's fiscal year ended
December 31, 2009, is provided for information purposes only and should not be
used for reporting to federal or state revenue agencies. Federal tax information
for the calendar year will be reported to you on Form 1099-DIV in January 2010.
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $6,529,000 as long-term capital gains for the fiscal year
ended December 31, 2009.
68.45% of ordinary income distributions qualify for the dividends-received
deductions eligible to corporations.
For the fiscal year ended December 31, 2009, the Fund hereby designates 100%, or
the maximum amount allowable, of its net taxable income as dividends taxed at
individual net capital gains rates.
For the fiscal year ended December 31, 2009, certain dividends paid by the Fund
qualify as interest-related dividends. The Fund designates $429,000 as
qualifying interest income.
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12 USAA GLOBAL OPPORTUNITIES FUND
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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The Shareholders and Board of Trustees of USAA Global Opportunities Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the USAA Global Opportunities 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
statement of changes in net assets and the financial highlights for each of the
two periods 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 Global Opportunities Fund at December 31, 2009, the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for the each of the two periods 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 13
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PORTFOLIO OF INVESTMENTS
December 31, 2009
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
EQUITY SECURITIES (95.0%)
COMMON STOCKS (85.1%)
CONSUMER DISCRETIONARY (10.5%)
ADVERTISING (0.1%)
10,500 National Cinemedia, Inc.(a) $ 174
--------
APPAREL & ACCESSORIES & LUXURY GOODS (0.5%)
39,000 Carter's, Inc.*(a) 1,024
8,600 Coach, Inc.(a) 314
3,233 Swatch Group Ltd.(a),(b) 154
4,900 Warnaco Group, Inc.*(a) 207
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1,699
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APPAREL RETAIL (1.1%)
500 ABC-MART, Inc.(a),(b) 14
9,800 Collective Brands, Inc.*(a) 223
1,700 Fast Retailing Co.(a),(b) 317
34,300 Gap, Inc.(a) 719
3,666 Hennes & Mauritz AB "B"(a),(b) 203
13,300 J. Crew Group, Inc.*(a) 595
10,100 Limited Brands, Inc.(a) 194
7,500 Men's Wearhouse, Inc.(a) 158
22,400 Ross Stores, Inc.(a) 957
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3,380
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AUTO PARTS & EQUIPMENT (0.2%)
6,200 Denso Corp.(a),(b) 186
9,600 Gentex Corp. 171
470 Plastic Omnium S.A.(a),(b) 13
3,200 Toyota Industries Corp.(a),(b) 95
9,200 WABCO Holdings, Inc. 237
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702
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AUTOMOBILE MANUFACTURERS (0.7%)
5,000 Daihatsu Motor Co., Ltd.(b) 50
618 Daimler AG(a),(b) 33
19,300 Honda Motor Co. Ltd.(a),(b) 653
51,400 Nissan Motor Co. Ltd.*(a),(b) 449
2,515 Renault S.A.*(a),(b) 128
6,800 Thor Industries, Inc. 213
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14 USAA GLOBAL OPPORTUNITIES FUND
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-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
14,300 Toyota Motor Corp.(a),(b) $ 601
272 Volkswagen AG(a),(b) 30
--------
2,157
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AUTOMOTIVE RETAIL (0.3%)
14,200 Advance Auto Parts, Inc.(a) 575
9,500 CarMax, Inc.* 230
21,600 Lithia Motors, Inc. "A"*(a) 178
2,200 Penske Automotive Group, Inc.* 33
--------
1,016
--------
BROADCASTING (0.0%)
18,946 Austereo Group Ltd.(a),(b) 29
2,241 Societe Television Francaise 1(a),(b) 42
--------
71
--------
CABLE & SATELLITE (1.0%)
10,500 Cablevision Systems Corp. "A"(a) 271
47,900 Comcast Corp. "A"(a) 808
5,100 DISH Network Corp. "A"(a) 106
5,627 Promotora de Informaciones S.A.*(a),(b) 28
24,500 Scripps Networks Interactive "A"(a) 1,017
26,677 Time Warner Cable, Inc.(a) 1,104
--------
3,334
--------
CASINOS & GAMING (0.1%)
4,900 Bally Technologies, Inc.*(a) 202
24,000 Genting International plc*(a),(b) 22
2,492 OPAP S.A.(a),(b) 54
20,904 Tabcorp Holdings Ltd.(a),(b) 130
27,945 Tatts Group Ltd.(a),(b) 61
--------
469
--------
CATALOG RETAIL (0.2%)
18,200 HSN, Inc.*(a) 368
30,300 Liberty Media Corp. Interactive "A"*(a) 328
--------
696
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COMPUTER & ELECTRONICS RETAIL (0.0%)
3,451 JB Hi-Fi Ltd.(a),(b) 69
--------
CONSUMER ELECTRONICS (0.5%)
29,700 Garmin Ltd.(a) 912
13,000 Matsushita Electric Industrial Co. Ltd.(a),(b) 186
24,000 Sharp Corp.(a),(b) 302
5,300 Sony Corp.(a),(b) 153
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1,553
--------
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PORTFOLIO OF INVESTMENTS 15
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-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
DEPARTMENT STORES (0.4%)
6,800 Kohl's Corp.* $ 367
6,000 Lifestyle International Holdings, Ltd.(a),(b) 11
10,100 Macy's, Inc.(a) 169
5,472 Next plc(a),(b) 182
7,200 Nordstrom, Inc. 271
2,829 PPR(a),(b) 339
--------
1,339
--------
DISTRIBUTORS (0.2%)
7,900 Genuine Parts Co.(a) 300
1,000 Jardine Cycle & Carriage Ltd.(a),(b) 19
46,000 Li & Fung Ltd.(a),(b) 188
15,781 Pacific Brands Ltd.*(b) 16
--------
523
--------
EDUCATION SERVICES (0.6%)
29,200 Career Education Corp.*(a) 680
65,700 Corinthian Colleges, Inc.*(a) 905
3,700 DeVry, Inc.(a) 210
--------
1,795
--------
GENERAL MERCHANDISE STORES (0.1%)
1,600 Big Lots, Inc.* 46
1,400 Dollar Tree, Inc.*(a) 68
7,800 Family Dollar Stores, Inc.(a) 217
18,687 Harvey Norman Holding Ltd.(a),(b) 70
--------
401
--------
HOME FURNISHINGS (0.3%)
34,500 Tempur-Pedic International, Inc.* 815
--------
HOME IMPROVEMENT RETAIL (0.3%)
23,800 Home Depot, Inc.(a) 689
63,631 Kingfisher plc(a),(b) 233
--------
922
--------
HOMEBUILDING (0.1%)
200 NVR, Inc.*(a) 142
8,100 Ryland Group, Inc.(a) 160
--------
302
--------
HOMEFURNISHING RETAIL (0.3%)
13,800 Kirklands, Inc.*(a) 240
1,300 Nitori Co.(a),(b) 97
23,600 Williams-Sonoma, Inc. 490
--------
827
--------
--------------------------------------------------------------------------------
16 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
HOTELS, RESORTS, & CRUISE LINES (0.1%)
5,186 Carnival plc*(a),(b) $ 177
--------
HOUSEHOLD APPLIANCES (0.0%)
4,208 Electrolux AB "B"*(a),(b) 99
--------
HOUSEWARES & SPECIALTIES (0.8%)
45,200 American Greetings Corp. "A"(a) 985
32,700 Tupperware Brands Corp.(a) 1,523
--------
2,508
--------
INTERNET RETAIL (0.5%)
7,800 Amazon.com, Inc.*(a) 1,049
4,300 Expedia, Inc.* 111
2,000 Priceline.com, Inc.*(a) 437
--------
1,597
--------
LEISURE FACILITIES (0.1%)
5,700 Vail Resorts, Inc.*(a) 216
--------
LEISURE PRODUCTS (0.1%)
4,200 Polaris Industries, Inc.(a) 183
--------
MOVIES & ENTERTAINMENT (0.5%)
1,506 AOL, Inc.* 35
38,700 News Corp. "A" 530
17,366 Time Warner, Inc.(a) 506
10,900 Viacom, Inc. "B"* 324
7,500 Vivendi S.A.(a),(b) 221
2,000 Walt Disney Co. 65
--------
1,681
--------
PHOTOGRAPHIC PRODUCTS (0.0%)
5,600 Nikon Corp.(a),(b) 111
--------
PUBLISHING (0.2%)
36,349 Fairfax Media Ltd.(a),(b) 56
21,800 Gannett Co., Inc.(a) 324
3,700 McGraw-Hill Companies, Inc. 124
2,227 Pearson plc(a),(b) 32
3,051 Reed Elsevier N.V.(a),(b) 37
--------
573
--------
RESTAURANTS (0.8%)
6,800 CEC Entertainment, Inc.*(a) 217
21,600 McDonald's Corp.(a) 1,349
41,100 Starbucks Corp.*(a) 948
--------
2,514
--------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 17
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
SPECIALIZED CONSUMER SERVICES (0.1%)
7,400 Brinks Home Security Holdings, Inc.*(a) $ 242
5,000 H&R Block, Inc. 113
--------
355
--------
SPECIALTY STORES (0.3%)
22,700 Barnes & Noble, Inc.(a) 433
2,800 PetSmart, Inc.(a) 75
11,100 Signet Jewelers Ltd.* 296
4,000 Tractor Supply Co.*(a) 212
--------
1,016
--------
TIRES & RUBBER (0.0%)
866 Compagnie Generale des Establissements
Michelin(a),(b) 66
--------
Total Consumer Discretionary 33,340
--------
CONSUMER STAPLES (8.2%)
AGRICULTURAL PRODUCTS (0.3%)
22,900 Archer-Daniels-Midland Co.(a) 717
57,200 Golden Agri-Resources Ltd.*(a),(b) 20
3,834 Suedzucker AG(a),(b) 80
67,000 Wilmar International Ltd.(a),(b) 304
--------
1,121
--------
BREWERS (0.2%)
6,029 Heineken N.V.(a),(b) 286
8,458 InBev N.V.(a),(b) 437
5,000 Kirin Holdings Co. Ltd.(a),(b) 80
--------
803
--------
DISTILLERS & VINTNERS (0.1%)
23,405 Diageo plc(a),(b) 408
--------
DRUG RETAIL (0.5%)
27,500 CVS Caremark Corp. 886
15,700 Walgreen Co.(a) 576
--------
1,462
--------
FOOD DISTRIBUTORS (0.1%)
8,100 Andersons, Inc.(a) 209
--------
FOOD RETAIL (0.5%)
1,657 Casino Guichard-Perrachon S.A.(a),(b) 148
900 Ingles Markets, Inc. "A"(a) 14
14,670 Jeronimo Martins SGPS S.A.(b) 146
4,868 Koninklijke Ahold N.V.(a),(b) 65
11,300 Kroger Co.(a) 232
1,127 Rallye S.A.(a),(b) 39
--------------------------------------------------------------------------------
18 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
16,697 Tesco plc(a),(b) $ 115
15,500 Whole Foods Market, Inc.* 425
6,538 William Morrison Supermarket plc(a),(b) 29
9,905 Woolworths Ltd.(a),(b) 248
--------
1,461
--------
HOUSEHOLD PRODUCTS (1.6%)
18,300 Colgate-Palmolive Co.(a) 1,503
1,361 Henkel AG & Co. KGaA(a),(b) 61
33,600 Kimberly-Clark Corp.(a) 2,141
16,900 Procter & Gamble Co.(a) 1,025
4,678 Reckitt Benckiser Group plc(a),(b) 253
--------
4,983
--------
HYPERMARKETS & SUPER CENTERS (0.7%)
38,000 Wal-Mart Stores, Inc.(a) 2,031
7,671 Wesfarmers Ltd.(a),(b) 214
--------
2,245
--------
PACKAGED FOODS & MEAT (1.8%)
8,060 Cadbury plc(b) 104
37,800 Campbell Soup Co.(a) 1,278
16,000 General Mills, Inc. 1,133
82,040 Goodman Fielder Ltd.(a),(b) 119
17,600 Hershey Co.(a) 630
6,300 J.M. Smucker Co. 389
8,500 Kraft Foods, Inc. "A"(a) 231
2,800 Lancaster Colony Corp.(a) 139
47 Lindt & Spruengli(a),(b) 101
11,511 Nestle S.A.(a),(b) 559
1,000 Nisshin Seifun Group, Inc.(a),(b) 13
3,200 Nissin Food Products Co. Ltd.(a),(b) 104
28,800 Sara Lee Corp.(a) 351
4,802 Unilever N.V.(a),(b) 157
9,464 Unilever plc(a),(b) 303
1,400 Yakult Honsha Co. Ltd.(a),(b) 42
--------
5,653
--------
PERSONAL PRODUCTS (0.3%)
8,300 Herbalife Ltd. 337
13,300 Mead Johnson Nutrition Co.(a) 581
3,300 Shiseido Co.(a),(b) 63
--------
981
--------
SOFT DRINKS (1.0%)
17,171 Coca-Cola Amatil Ltd.(a),(b) 177
19,000 Coca-Cola Co. 1,083
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 19
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
45,300 Coca-Cola Enterprises, Inc.(a) $ 960
14,800 PepsiCo, Inc.(a) 900
--------
3,120
--------
TOBACCO (1.1%)
18,096 British America Tobacco plc(a),(b) 587
16,465 Imperial Tobacco Group plc(a),(b) 519
5,700 Lorillard, Inc.(a) 457
30,800 Philip Morris International, Inc.(a) 1,484
9,400 Reynolds American, Inc.(a) 498
1,122 Swedish Match(a),(b) 25
--------
3,570
--------
Total Consumer Staples 26,016
--------
ENERGY (7.8%)
COAL & CONSUMABLE FUELS (0.0%)
1,200 Peabody Energy Corp.(a) 54
--------
INTEGRATED OIL & GAS (3.9%)
6,872 BG Group plc(a),(b) 123
124,842 BP plc(a),(b) 1,207
20,600 Chevron Corp.(a) 1,586
40,600 ConocoPhillips(a) 2,073
10,784 ENI S.p.A.(a),(b) 275
58,100 Exxon Mobil Corp.(a) 3,962
5,500 Occidental Petroleum Corp.(a) 447
6,168 OMV AG(a),(b) 270
8,098 Repsol YPF S.A.(a),(b) 216
21,582 Royal Dutch Shell plc "A"(a),(b) 652
21,679 Royal Dutch Shell plc "B"(a),(b) 632
10,100 Statoil ASA(a),(b) 252
9,892 Total S.A.(a),(b) 634
--------
12,329
--------
OIL & GAS DRILLING (0.7%)
17,600 ENSCO International plc ADR 703
3,400 Helmerich & Payne, Inc. 136
23,800 Patterson-UTI Energy, Inc.(a) 365
46,900 Rowan Companies, Inc.*(a) 1,062
--------
2,266
--------
OIL & GAS EQUIPMENT & SERVICES (0.8%)
5,003 Cameron International Corp.*(a) 209
16,700 Helix Energy Solutions Group, Inc.*(a) 196
11,400 National-Oilwell Varco, Inc.(a) 503
4,900 Oceaneering International, Inc.*(a) 287
--------------------------------------------------------------------------------
20 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
17,900 Oil States International, Inc.*(a) $ 703
8,100 Schlumberger Ltd.(a) 527
308 Technip S.A.(a),(b) 22
6,595 Tenaris S.A.(a),(b) 141
--------
2,588
--------
OIL & GAS EXPLORATION & PRODUCTION (1.9%)
16,500 Anadarko Petroleum Corp.(a) 1,030
4,900 Arena Resources, Inc.*(a) 211
7,000 Cimarex Energy Co.(a) 371
18,800 Devon Energy Corp.(a) 1,382
12,400 EXCO Resources, Inc.(a) 263
39,600 Gran Tierra Energy, Inc.*(a) 227
20 INPEX Holdings, Inc.(b) 150
21,300 Mariner Energy, Inc.*(a) 247
19,700 Newfield Exploration Co.*(a) 950
26,800 Quicksilver Resources, Inc.*(a) 402
18,600 Rosetta Resources, Inc.*(a) 371
3,500 Whiting Petroleum Corp.* 250
--------
5,854
--------
OIL & GAS REFINING & MARKETING (0.1%)
8,664 Hellenic Petroleum S.A.(a),(b) 96
32,000 Nippon Oil Corp.(a),(b) 148
7,300 World Fuel Services Corp.(a) 196
--------
440
--------
OIL & GAS STORAGE & TRANSPORTATION (0.4%)
20,200 El Paso Corp.(a) 199
12,300 Teekay Corp. 285
43,500 Williams Companies, Inc.(a) 917
--------
1,401
--------
Total Energy 24,932
--------
FINANCIALS (14.6%)
ASSET MANAGEMENT & CUSTODY BANKS (0.9%)
57,138 3i Group plc(b) 258
23,800 Apollo Investment Corp.(a) 227
32,200 Ares Capital Corp.(a) 401
19,200 Bank of New York Mellon Corp.(a) 537
1,600 BlackRock, Inc. "A"(a) 372
6,800 Franklin Resources, Inc.(a) 716
21,300 Invesco Ltd. ADR(a) 500
--------
3,011
--------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 21
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
CONSUMER FINANCE (1.2%)
35,600 American Express Co. $ 1,443
40,200 Capital One Financial Corp.(a) 1,541
56,100 Discover Financial Services(a) 825
--------
3,809
--------
DIVERSIFIED BANKS (3.2%)
13,007 Australia and New Zealand Banking Group
Ltd.(a),(b) 265
82,367 Banca Intesa S.p.A.*(a),(b) 369
31,264 Banco Bilbao Vizcaya Argentaria S.A.(a),(b) 566
37,426 Banco Espirito Santo S.A.(a),(b) 243
12,093 Banco Popular Espanol S.A.(a),(b) 88
56,855 Banco Santander S.A.(a),(b) 934
3,418 Bank of Cyprus(a),(b) 24
95,271 Barclays plc(a),(b) 420
8,344 BNP Paribas S.A.(a),(b) 658
45,500 BOC Hong Kong Holdings Ltd.(a),(b) 103
9,373 Commonwealth Bank of Australia(a),(b) 457
21,877 Credit Agricole S.A.(a),(b) 381
21,700 DBS Group Holdings Ltd.(a),(b) 236
23,476 Dexia*(a),(b) 148
8,800 DnB NOR ASA*(a),(b) 96
4,430 Erste Bank der Oesterreichischen Sparkassen
AG(a),(b) 164
4,900 Hang Seng Bank(a),(b) 72
82,166 HSBC Holdings plc(a),(b) 938
41,872 Intesa Sanpaolo(a),(b) 140
7,818 KBC Groep N.V.*(a),(b) 339
44,478 Lloyds TSB Group plc*(a),(b) 36
14,600 Mitsubishi UFJ Financial Group, Inc.(a),(b) 71
8,400 Mizuho Financial Group, Inc.(b) 15
9,987 National Australia Bank Ltd.(a),(b) 243
6,468 National Bank of Greece S.A.*(a),(b) 165
67,823 Natixis*(b) 338
8,000 Overseas Chinese Town Asia Holdings Ltd.(a),(b) 51
3,357 Standard Chartered plc(a),(b) 84
6,000 Sumitomo Mitsui Financial Group, Inc.(a),(b) 171
4,903 Svenska Handelsbanken AB "A"(a),(b) 140
67,614 UniCredito Italiano S.p.A.*(a),(b) 225
6,000 United Overseas Bank Ltd.(a),(b) 83
62,100 Wells Fargo & Co.(a) 1,676
11,096 Westpac Banking Corp.(a),(b) 250
--------
10,189
--------
DIVERSIFIED CAPITAL MARKETS (0.5%)
12,978 Credit Suisse Group(a),(b) 639
7,956 Deutsche Bank AG(a),(b) 561
--------------------------------------------------------------------------------
22 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
16,930 UBS AG*(a),(b) $ 260
--------
1,460
--------
DIVERSIFIED REAL ESTATE ACTIVITIES (0.3%)
49,000 Hang Lung Properties Ltd.(a),(b) 191
2,000 Henderson Land Development Co. Ltd.(a),(b) 15
13,000 Sun Hung Kai Properties Ltd.(a),(b) 193
13,000 Swire Pacific Ltd.(a),(b) 157
11,000 UOL Group Ltd.(a),(b) 32
19,000 Wharf (Holdings) Ltd.(a),(b) 109
49,000 Wheelock & Co. Ltd.(a),(b) 150
--------
847
--------
INSURANCE BROKERS (0.0%)
3,800 Aon Corp.(a) 146
--------
INVESTMENT BANKING & BROKERAGE (1.2%)
17,000 Daiwa Securities Group, Inc.(a),(b) 85
13,300 Goldman Sachs Group, Inc.(a) 2,246
63,000 Knight Capital Group, Inc. "A"*(a) 970
7,300 Piper Jaffray Co., Inc.*(a) 369
--------
3,670
--------
LIFE & HEALTH INSURANCE (0.6%)
13,621 AMP Ltd.(a),(b) 82
2,491 CNP Assurances(a),(b) 241
9,100 Delphi Financial Group, Inc. "A"(a) 204
203,533 Legal & General Group plc(a),(b) 262
12,300 MetLife, Inc.(a) 435
144,774 Old Mutual plc*(a),(b) 253
8,000 Prudential Financial, Inc.(a) 398
13,273 Prudential plc(a),(b) 135
--------
2,010
--------
MULTI-LINE INSURANCE (0.5%)
2,253 Allianz Holding AG(a),(b) 280
4,200 Assurant, Inc.(a) 124
38,811 Aviva plc(a),(b) 246
7,922 AXA S.A.(a),(b) 187
398 Generali Deutschland Holding AG(a),(b) 42
14,300 Horace Mann Educators Corp.(a) 179
17,139 Mapfre S.A.(b) 72
409 Topdanmark A/S*(a),(b) 55
1,804 Zurich Financial Services AG(a),(b) 392
--------
1,577
--------
MULTI-SECTOR HOLDINGS (0.1%)
1,017 Groupe Bruxelles Lambert S.A.(a),(b) 96
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 23
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
1,041 Pargesa Holding S.A.(b) $ 91
--------
187
--------
OTHER DIVERSIFIED FINANCIAL SERVICES (1.9%)
157,300 Bank of America Corp.(a) 2,369
237,500 Citigroup, Inc.*(a) 786
43,696 ING Groep N.V.*(a),(b) 423
60,600 JPMorgan Chase & Co.(a) 2,525
2,028 OKO Bank plc "A"(a),(b) 22
--------
6,125
--------
PROPERTY & CASUALTY INSURANCE (0.9%)
7,000 Allied World Assurance Co. Holdings Ltd. 323
24,100 Allstate Corp.(a) 724
6,600 Argo Group International Holdings Ltd.*(a) 192
13,200 Chubb Corp.(a) 649
20,146 Insurance Australia Group Ltd.(a),(b) 72
17,900 Progressive Corp.(a) 322
31,472 Suncorp Metway(a),(b) 243
200 White Mountains Insurance Group Ltd.(a) 67
7,500 XL Capital Ltd. "A" 137
--------
2,729
--------
REAL ESTATE DEVELOPMENT (0.0%)
11,000 Cheung Kong Holdings Ltd.(a),(b) 142
--------
REAL ESTATE OPERATING COMPANIES (0.0%)
2,807 Sponda Oyj*(a),(b) 11
--------
REGIONAL BANKS (1.0%)
11,005 Bendigo Bank Ltd.(a),(b) 96
1,800 Capital City Bank Group, Inc.(a) 25
2,000 Chiba Bank Ltd.(a),(b) 12
25,180 Commerce Bancshares, Inc.(a) 975
1,900 Community Trust Bancorp, Inc.(a) 46
11,100 Fifth Third Bancorp(a) 108
57,000 Fukuoka Financial Group, Inc.(a),(b) 198
16,400 Fulton Financial Corp.(a) 143
14,000 Gunma Bank Ltd.(a),(b) 71
39,000 Hokuhoku Financial Group, Inc.(a),(b) 79
15,200 KeyCorp(a) 84
19,800 Marshall & Ilsley Corp.(a) 108
7,800 PNC Financial Services Group, Inc.(a) 412
19,400 Regions Financial Corp.(a) 103
1,100 Resona Holdings, Inc.(a),(b) 11
48,300 Sapporo Hokuyo Holdings, Inc.(a),(b) 175
11,300 StellarOne Corp.(a) 113
--------------------------------------------------------------------------------
24 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
5,600 SunTrust Banks, Inc.(a) $ 114
20,600 Umpqua Holdings Corp.(a) 276
17,000 Yamaguchi Financial Group, Inc.(b) 157
--------
3,306
--------
REINSURANCE (0.5%)
3,600 Endurance Specialty Holdings Ltd.(a) 134
2,400 Everest Reinsurance Group Ltd. 206
5,249 Hannover Rueckversicherungs*(a),(b) 246
11,900 Montpelier Re Holdings Ltd.(a) 206
2,100 PartnerRe Ltd. 157
14,300 Platinum Underwriters Holdings Ltd. 547
1,000 Reinsurance Group of America, Inc. "A"(a) 48
3,700 RenaissanceRe Holdings Ltd. 197
--------
1,741
--------
REITS - DIVERSIFIED (0.2%)
37,000 BGP Holdings plc, acquired 8/06/2009; cost:
$0*(b),(c) --
7,800 CapLease, Inc.(a) 34
30,001 Dexus Property Group(b) 23
603 Gecina S.A.(a),(b) 65
133,362 GPT Group(a),(b) 71
51,447 Stockland(a),(b) 181
4,359 Vornado Realty Trust(a) 305
--------
679
--------
REITS - INDUSTRIAL (0.2%)
200 AMB Property Corp.(a) 5
37,500 DCT Industrial Trust, Inc.(a) 188
6,400 First Potomac Realty Trust(a) 80
23,900 Monmouth Real Estate Investment Corp. "A"(a) 178
1,800 ProLogis(a) 25
--------
476
--------
REITS - MORTGAGE (0.1%)
13,700 Annaly Capital Management, Inc.(a) 238
--------
REITS - OFFICE (0.2%)
2,600 Boston Properties, Inc.(a) 175
4,300 Digital Realty Trust, Inc.(a) 216
12,500 Parkway Properties, Inc.(a) 260
792 Societe de la Tour Eiffel(a),(b) 60
--------
711
--------
REITS - RESIDENTIAL (0.2%)
1,315 AvalonBay Communities, Inc.(a) 108
800 Camden Property Trust(a) 34
4,600 Equity Residential Properties Trust(a) 155
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 25
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
11,900 Sun Communities, Inc.(a) $ 235
--------
532
--------
REITS - RETAIL (0.4%)
200 Federal Realty Investment Trust(a) 14
2,400 Kimco Realty Corp.(a) 32
5,900 Regency Centers Corp.(a) 207
7,416 Simon Property Group, Inc.(a) 592
796 Unibail-Rodamco(a),(b) 175
4,900 Urstadt Biddle Properties, Inc. "A"(a) 75
8,648 Westfield Group(a),(b) 96
--------
1,191
--------
REITS - SPECIALIZED (0.3%)
21,500 DiamondRock Hospitality Co.*(a) 182
16,600 Extra Space Storage, Inc.(a) 192
1,800 HCP, Inc.(a) 55
5,093 Host Hotels & Resorts, Inc.*(a) 59
21,800 Medical Properties Trust, Inc.(a) 218
1,300 Public Storage(a) 106
2,400 Rayonier, Inc.(a) 101
900 Universal Health Realty Income Trust(a) 29
--------
942
--------
SPECIALIZED FINANCE (0.1%)
500 CME Group, Inc. 168
1,800 Hong Kong Exchanges & Clearing Ltd.(a),(b) 32
2,850 Mitsubishi UFJ Lease & Finance Co., Ltd.(a),(b) 86
--------
286
--------
THRIFTS & MORTGAGE FINANCE (0.1%)
15,900 Provident Financial Services, Inc.(a) 169
21,300 Provident New York Bancorp(a) 180
--------
349
--------
Total Financials 46,364
--------
HEALTH CARE (9.7%)
BIOTECHNOLOGY (1.2%)
20,100 Amgen, Inc.*(a) 1,137
27,600 Enzon Pharmaceuticals, Inc.*(a) 291
34,200 Gilead Sciences, Inc.*(a) 1,480
142,400 PDL BioPharma, Inc.(a) 977
--------
3,885
--------
HEALTH CARE DISTRIBUTORS (0.9%)
44,400 AmerisourceBergen Corp.(a) 1,158
17,600 Cardinal Health, Inc.(a) 567
--------------------------------------------------------------------------------
26 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
5,000 CareFusion Corp.* $ 125
15,800 McKesson Corp.(a) 987
32 Ship Healthcare Holdings, Inc.(b) 18
--------
2,855
--------
HEALTH CARE EQUIPMENT (0.7%)
5,200 Baxter International, Inc.(a) 305
1,400 Becton, Dickinson and Co. 110
9,400 Hill-Rom Holdings, Inc.(a) 225
6,500 Hospira, Inc.* 331
200 Intuitive Surgical, Inc.* 61
7,300 Kinetic Concepts, Inc.* 275
7,600 Medtronic, Inc. 334
898 Sonova Holding AG(a),(b) 109
2,000 Stryker Corp. 101
946 Synthes, Inc.(a),(b) 124
1,900 Terumo Corp.(a),(b) 114
977 William Demant Holding A/S*(a),(b) 74
--------
2,163
--------
HEALTH CARE FACILITIES (0.1%)
6,900 Psychiatric Solutions, Inc.*(a) 146
--------
HEALTH CARE SERVICES (0.6%)
10,200 Emergency Medical Services Corp. "A"*(a) 553
21,000 Medco Health Solutions, Inc.*(a) 1,342
--------
1,895
--------
HEALTH CARE SUPPLIES (0.1%)
613 Coloplast A/S "B"(b) 56
7,600 Cooper Companies, Inc. 289
--------
345
--------
MANAGED HEALTH CARE (1.1%)
27,500 Aetna, Inc.(a) 872
32,800 Coventry Health Care, Inc.*(a) 797
13,000 Humana, Inc.*(a) 570
39,700 UnitedHealth Group, Inc.(a) 1,210
--------
3,449
--------
PHARMACEUTICALS (5.0%)
27,600 Abbott Laboratories(a) 1,490
2,800 Allergan, Inc.(a) 176
1,100 Astellas Pharma, Inc.(a),(b) 41
15,517 AstraZeneca plc(a),(b) 729
5,141 Bayer AG(a),(b) 411
1,800 Dainippon Sumitomo Pharma Co., Ltd.(b) 19
28,800 Eli Lilly and Co.(a) 1,029
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 27
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
8,900 Forest Laboratories, Inc.*(a) $ 286
29,717 GlaxoSmithKline plc(a),(b) 630
18,700 Impax Laboratories, Inc.*(a) 254
52,700 Johnson & Johnson(a) 3,394
22,900 Medicis Pharmaceutical Corp. "A"(a) 619
21,000 Merck & Co., Inc.(a) 767
14,706 Novartis AG(a),(b) 801
3,244 Novo Nordisk A/S(a),(b) 208
2,800 Ono Pharmaceutical Co., Ltd.(a),(b) 120
15,300 Par Pharmaceutical Companies, Inc.*(a) 414
137,000 Pfizer, Inc.(a) 2,492
4,470 Roche Holdings AG(a),(b) 760
8,997 Sanofi-Aventis S.A.(a),(b) 705
300 Santen Pharm Co.(a),(b) 10
7,800 Takeda Pharmaceutical Co. Ltd.(a),(b) 320
7,900 Watson Pharmaceuticals, Inc.* 313
--------
15,988
--------
Total Health Care 30,726
--------
INDUSTRIALS (8.9%)
AEROSPACE & DEFENSE (1.6%)
7,491 BAE Systems plc(a),(b) 43
2,500 Cubic Corp.(a) 93
14,300 ITT Corp.(a) 711
16,500 Lockheed Martin Corp.(a) 1,243
28,500 Northrop Grumman Corp.(a) 1,592
9,600 Raytheon Co.(a) 495
1,514 Safran S.A.(a),(b) 29
14,100 United Technologies Corp.(a) 979
--------
5,185
--------
AIR FREIGHT & LOGISTICS (0.8%)
16,127 Deutsche Post AG(a),(b) 310
7,200 FedEx Corp.(a) 601
5,975 TNT N.V.(a),(b) 183
25,800 United Parcel Service, Inc. "B"(a) 1,480
--------
2,574
--------
AIRLINES (0.3%)
25,100 Alaska Air Group, Inc.*(a) 867
800 Copa Holdings S.A. "A" 44
14,014 Qantas Airways Ltd.(a),(b) 37
--------
948
--------
BUILDING PRODUCTS (0.4%)
1,700 Armstrong World Industries, Inc.*(a) 66
--------------------------------------------------------------------------------
28 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
38,000 Asahi Glass Co. Ltd.(a),(b) $ 356
2,300 Daikin Industries, Ltd.(b) 90
14,600 Insteel Industries, Inc.(a) 190
3,700 Owens Corning, Inc.*(a) 95
22,200 Quanex Building Products Corp.(a) 376
--------
1,173
--------
COMMERCIAL PRINTING (0.3%)
6,000 Dai Nippon Printing Co. Ltd.(a),(b) 76
39,300 R.R. Donnelley & Sons Co.(a) 875
--------
951
--------
CONSTRUCTION & ENGINEERING (0.3%)
56,570 Balfour Beatty plc(a),(b) 235
4,229 Bouygues S.A.(a),(b) 221
2,185 Kier Group plc(a),(b) 36
13,500 Shaw Group, Inc.*(a) 388
1,700 URS Corp.*(a) 76
210 Vinci S.A.(b) 12
--------
968
--------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.5%)
4,900 Bucyrus International, Inc. 276
5,000 Daihatsu Diesel Manufacturing Co., Ltd.(a),(b) 18
2,400 Hitachi Construction Machinery Co. Ltd.(a),(b) 63
4,400 Komatsu Ltd.(a),(b) 92
4,000 Kubota Corp.(a),(b) 37
80,000 Mitsui Engineering & Shipbuilding Co.,
Ltd.(a),(b) 191
13,400 Oshkosh Corp.(a) 496
31,000 Trinity Industries, Inc.(a) 541
--------
1,714
--------
DIVERSIFIED SUPPORT SERVICES (0.0%)
19,346 Cape plc*(a),(b) 70
--------
ELECTRICAL COMPONENTS & EQUIPMENT (0.8%)
1,800 A123 Systems, Inc.* 40
6,100 Baldor Electric Co.(a) 171
12,400 GrafTech International Ltd.*(a) 193
14,200 Hubbell, Inc. "B"(a) 672
17,100 Regal-Beloit Corp.(a) 888
2,414 Schneider Electric S.A.(a),(b) 280
17,100 Sumitomo Electric Industries Ltd.(a),(b) 212
--------
2,456
--------
HEAVY ELECTRICAL EQUIPMENT (0.1%)
3,911 ABB Ltd.*(a),(b) 75
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 29
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
4,146 Alstom S.A.(a),(b) $ 288
--------
363
--------
HIGHWAYS & RAILTRACKS (0.2%)
5,359 Atlantia S.p.A.(a),(b) 139
208,985 Macquarie Infrastructure Group(a),(b) 249
2,269 Societe des Autoroutes Paris-Rhin-Rhone*(a),(b) 174
--------
562
--------
INDUSTRIAL CONGLOMERATES (1.9%)
21,200 3M Co.(a) 1,753
42,000 Carlisle Companies, Inc.(a) 1,439
36,000 Fraser & Neave Ltd.(a),(b) 107
134,000 General Electric Co.(a) 2,027
11,000 Hutchison Whampoa Ltd.(a),(b) 75
4,000 Jardine Matheson Holdings Ltd.(a),(b) 120
14,305 Koninklijke Philips Electronics N.V.(a),(b) 424
28,000 SembCorp Industries(b) 73
1,546 Siemens AG(a),(b) 142
--------
6,160
--------
INDUSTRIAL MACHINERY (1.0%)
4,468 Atlas Copco AB(a),(b) 65
6,100 CIRCOR International, Inc.(a) 154
1,900 Donaldson Co., Inc.(a) 81
23,500 Illinois Tool Works, Inc. 1,128
7,938 Kone Oyj "B"(a),(b) 339
1,600 Lincoln Electric Holdings, Inc.(a) 85
14,000 Minebea Co. Ltd.(a),(b) 76
7,200 Mueller Industries, Inc.(a) 179
6,200 Nordson Corp.(a) 379
26,000 Timken Co.(a) 616
1,216 Wartsila Corp. OYJ "B"(a),(b) 49
--------
3,151
--------
MARINE (0.0%)
2,400 Kirby Corp.*(a) 84
--------
MARINE PORTS & SERVICES (0.0%)
7,000 Kamigumi Co. Ltd.(a),(b) 51
184 Koninklijke Vopak N.V.*(b) 14
--------
65
--------
RAILROADS (0.2%)
6 Central Japan Railway Co.(a),(b) 40
1,100 East Japan Railway Co.(b) 69
--------------------------------------------------------------------------------
30 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
11,500 Kansas City Southern* $ 383
--------
492
--------
RESEARCH & CONSULTING SERVICES (0.0%)
7,838 Experian plc(a),(b) 78
--------
TRADING COMPANIES & DISTRIBUTORS (0.4%)
39,000 Itochu Corp.(a),(b) 287
44,000 Marubeni Corp.(a),(b) 240
11,500 Mitsubishi Corp.(a),(b) 286
4,600 Mitsui & Co. Ltd.(a),(b) 65
12,000 Noble Group Ltd.(b) 27
2,600 Rush Enterprises, Inc. "A"*(a) 31
22,600 Sumitomo Corp.(a),(b) 227
--------
1,163
--------
TRUCKING (0.1%)
6,000 ComfortDelGro Corp. Ltd.(a),(b) 7
17,925 FirstGroup plc(a),(b) 122
38,000 Nippon Express Co.(a),(b) 156
--------
285
--------
Total Industrials 28,442
--------
INFORMATION TECHNOLOGY (13.8%)
APPLICATION SOFTWARE (0.4%)
8,400 Informatica Corp.*(a) 217
37,900 Lawson Software, Inc.*(a) 252
12,400 Parametric Technology Corp.*(a) 203
6,600 Solera Holdings, Inc.(a) 238
21,600 TIBCO Software, Inc.*(a) 208
--------
1,118
--------
COMMUNICATIONS EQUIPMENT (1.7%)
174,400 3Com Corp.*(a) 1,308
56,100 Cisco Systems, Inc.*(a) 1,343
19,800 Harris Corp.(a) 942
5,000 Hitachi Kokusai Electric Inc.(a),(b) 43
5,369 Nokia Oyj(a),(b) 69
7,900 Polycom, Inc.*(a) 197
27,100 QUALCOMM, Inc.(a) 1,254
11,000 Tekelec*(a) 168
--------
5,324
--------
COMPUTER HARDWARE (2.6%)
16,600 Apple, Inc.*(a) 3,500
10,600 Dell, Inc.* 152
42,000 Fujitsu Ltd.(a),(b) 270
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 31
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
12,000 Hewlett-Packard Co. $ 618
27,000 International Business Machines Corp.(a) 3,535
7,200 Teradata Corp.*(a) 226
9,000 Toshiba Corp.*(a),(b) 50
--------
8,351
--------
COMPUTER STORAGE & PERIPHERALS (0.4%)
7,900 NetApp, Inc.* 272
24,900 Western Digital Corp.*(a) 1,099
--------
1,371
--------
DATA PROCESSING & OUTSOURCED SERVICES (0.8%)
11,200 Broadridge Financial Solutions, Inc.(a) 253
10,300 Computer Sciences Corp.*(a) 592
6,542 Computershare Ltd.(a),(b) 67
14,100 Convergys Corp.*(a) 152
12,900 CSG Systems International, Inc.*(a) 246
7,300 Euronet Worldwide, Inc.*(a) 160
17,600 Global Payments, Inc.(a) 948
2,700 NeuStar, Inc. "A"*(a) 62
--------
2,480
--------
ELECTRONIC COMPONENTS (0.5%)
4,000 AVX Corp.(a) 51
5,900 HOYA Corp.(a),(b) 156
1,600 Kyocera Corp.(a),(b) 141
400 Mabuchi Motor Co.(b) 20
2,700 Murata Manufacturing Co., Ltd.(a),(b) 133
3,900 Nidec Corp.(a),(b) 359
18,000 Nippon Electric Glass Co. Ltd.(a),(b) 245
45,500 Vishay Intertechnology, Inc.*(a) 380
--------
1,485
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.1%)
11,800 Electro Scientific Industries, Inc.*(a) 128
4,300 FUJIFILM Holdings Corp.(a),(b) 128
--------
256
--------
ELECTRONIC MANUFACTURING SERVICES (0.5%)
80,200 Jabil Circuit, Inc.(a) 1,393
6,200 Plexus Corp.*(a) 177
--------
1,570
--------
HOME ENTERTAINMENT SOFTWARE (0.0%)
200 Nintendo Co. Ltd.(a),(b) 47
--------
INTERNET SOFTWARE & SERVICES (1.2%)
9,100 Dealertrack Holdings, Inc.*(a) 171
--------------------------------------------------------------------------------
32 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
58,200 EarthLink, Inc.(a) $ 484
4,200 Google, Inc. "A"*(a) 2,604
15,526 United Internet AG*(a),(b) 205
12,300 ValueClick, Inc.*(a) 124
3,900 VistaPrint N.V.* 221
--------
3,809
--------
IT CONSULTING & OTHER SERVICES (0.8%)
9,300 Cognizant Technology Solutions Corp. "A"*(a) 421
10,400 Gartner, Inc.*(a) 188
15,700 MPS Group, Inc.*(a) 216
800 OBIC Co., Ltd.(a),(b) 130
50,100 SAIC, Inc.*(a) 949
15,000 Unisys Corp.* 578
--------
2,482
--------
OFFICE ELECTRONICS (0.1%)
10,100 Brother Industries Ltd.(a),(b) 115
3,400 Canon, Inc.(a),(b) 144
--------
259
--------
SEMICONDUCTOR EQUIPMENT (0.1%)
9,000 ASM Pacific Technology Ltd.(a),(b) 85
885 ASML Holding N.V.(a),(b) 30
9,900 MKS Instruments, Inc.*(a) 172
2,400 Tokyo Electron Ltd.(a),(b) 154
--------
441
--------
SEMICONDUCTORS (1.5%)
8,100 Atheros Communications, Inc.*(a) 277
13,500 Elpida Memory, Inc.*(b) 220
11,000 Exar Corp.*(a) 78
11,291 Infineon Technologies AG*(a),(b) 62
36,000 Intel Corp.(a) 735
36,200 Micron Technology, Inc.* 382
273,500 RF Micro Devices, Inc.*(a) 1,305
80,500 Skyworks Solutions, Inc.*(a) 1,142
19,000 Texas Instruments, Inc.(a) 495
11,800 Volterra Semiconductor Corp.* 226
--------
4,922
--------
SYSTEMS SOFTWARE (1.8%)
14,000 Ariba, Inc.*(a) 175
147,200 Microsoft Corp.(a) 4,488
24,100 Oracle Corp.(a) 592
1,900 Red Hat, Inc.*(a) 59
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 33
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
30,800 Symantec Corp.*(a) $ 551
--------
5,865
--------
TECHNOLOGY DISTRIBUTORS (1.3%)
51,200 Arrow Electronics, Inc.*(a) 1,516
52,600 Avnet, Inc.*(a) 1,586
36,300 Ingram Micro, Inc. "A"*(a) 634
5,200 Tech Data Corp.*(a) 243
--------
3,979
--------
Total Information Technology 43,759
--------
MATERIALS (5.2%)
COMMODITY CHEMICALS (0.1%)
17,000 Denki Kagaku Kogyo Kabushiki Kaisha(a),(b) 76
10,000 Kaneka Corp.(a),(b) 64
9,500 Kuraray Co.(a),(b) 111
--------
251
--------
CONSTRUCTION MATERIALS (0.2%)
5,353 HeidelbergCement AG(a),(b) 368
1,336 Holcim Ltd.*(a),(b) 104
1,963 Lafarge S.A.(a),(b) 161
--------
633
--------
DIVERSIFIED CHEMICALS (0.6%)
3,079 AkzoNobel N.V.(a),(b) 203
13,300 Ashland, Inc.(a) 527
5,310 BASF AG(a),(b) 329
10,300 Cabot Corp.(a) 270
1,700 Eastman Chemical Co.(a) 103
42,600 Huntsman Corp.(a) 481
1,885 Orica Ltd.(a),(b) 44
--------
1,957
--------
DIVERSIFIED METALS & MINING (1.3%)
7,000 AMCOL International Corp.(a) 199
4,140 Anglo American Capital plc*(a),(b) 179
1,471 Antofagasta plc(a),(b) 23
19,745 BHP Billiton Ltd.(a),(b) 756
4,701 BHP Billiton plc(a),(b) 150
975 Eurasian Natural Resources Corp. plc(b) 14
15,000 Freeport-McMoRan Copper & Gold, Inc.(a) 1,204
12,531 Kazakhmys plc*(a),(b) 262
8,855 Oxiana Ltd.*(a),(b) 9
714 Rio Tinto Ltd.(a),(b) 47
6,985 Rio Tinto plc(a),(b) 377
--------------------------------------------------------------------------------
34 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
86,509 Straits Resources Ltd.(a),(b) $ 133
17,000 Sumitomo Metal Mining Co. Ltd.(a),(b) 251
1,400 Walter Industries, Inc. 106
26,904 Xstrata plc*(a),(b) 474
--------
4,184
--------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.0%)
74 Syngenta AG(a),(b) 21
2,150 Yara International ASA(b) 97
--------
118
--------
GOLD (0.0%)
2,200 Newmont Mining Corp.(a) 104
--------
INDUSTRIAL GASES (0.1%)
260 Air Liquide S.A.(a),(b) 31
2,132 Linde AG(a),(b) 256
--------
287
--------
METAL & GLASS CONTAINERS (0.2%)
5,200 Ball Corp.(a) 269
7,000 Crown Holdings, Inc.*(a) 179
4,360 Rexam plc(a),(b) 20
--------
468
--------
PAPER PACKAGING (0.3%)
6,200 Bemis Co., Inc.(a) 184
55,300 Boise, Inc.*(a) 293
11,500 Rock-Tenn Co. "A"(a) 580
--------
1,057
--------
PAPER PRODUCTS (0.9%)
38,900 International Paper Co.(a) 1,042
23,300 MeadWestvaco Corp. 667
2,100 Nippon Paper Group, Inc.(a),(b) 54
11,600 Schweitzer-Mauduit International, Inc.(a) 816
26,586 Svenska Cellulosa AB(a),(b) 355
--------
2,934
--------
PRECIOUS METALS & MINERALS (0.1%)
19,702 Fresnillo plc(a),(b) 249
--------
SPECIALTY CHEMICALS (1.0%)
9,000 Cytec Industries, Inc.(a) 328
3,000 Daicel Chemical Industries, Ltd.(a),(b) 18
16,600 H.B. Fuller Co.(a) 378
3,500 JSR Corp.(a),(b) 71
13,000 Lubrizol Corp.(a) 948
3,900 Minerals Technologies, Inc.(a) 212
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 35
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
6,800 Newmarket Corp.(a) $ 780
1,100 Nitto Denko Corp.(a),(b) 39
14,300 PolyOne Corp.*(a) 107
3,000 RPM International, Inc.(a) 61
7,000 Sumitomo Seika Chemicals Co., Ltd.(a),(b) 26
768 Wacker Chemie AG(b) 134
--------
3,102
--------
STEEL (0.4%)
5,620 ArcelorMittal ADR(a),(b) 255
6,800 JFE Holdings, Inc.(a),(b) 268
5,700 Maruichi Steel Tube Ltd.(a),(b) 114
15,000 Nippon Steel Corp.(a),(b) 61
2,961 Onesteel Ltd.(a),(b) 9
8,500 Reliance Steel & Aluminum Co.(a) 367
7,400 SSAB Svenskt Stal AB "A"(b) 125
5,200 Yamato Kogyo Co.(a),(b) 168
--------
1,367
--------
Total Materials 16,711
--------
TELECOMMUNICATION SERVICES (3.0%)
INTEGRATED TELECOMMUNICATION SERVICES (2.4%)
115,500 AT&T, Inc.(a) 3,237
412 Belgacom S.A.(a),(b) 15
151,815 BT Group plc(a),(b) 329
1,880 Deutsche Telekom AG(a),(b) 28
12,870 France Telecom S.A.(a),(b) 321
18,835 Koninklijke (Royal) KPN N.V.(a),(b) 319
6,300 Nippon Telegraph & Telephone Corp.(a),(b) 248
2,410 Portugal Telecom SGPS S.A.(a),(b) 29
39,100 Qwest Communications International, Inc.(a) 165
781 Swisscom AG(a),(b) 298
139,836 Telecom Italia S.p.A.(a),(b) 199
22,093 Telefonica S.A.(a),(b) 616
7,400 Telenor ASA*(a),(b) 104
27,389 Teliasonera AB(a),(b) 198
34,379 Telstra Corp. Ltd.(a),(b) 105
39,300 Verizon Communications, Inc.(a) 1,302
18,200 Windstream Corp. 200
--------
7,713
--------
WIRELESS TELECOMMUNICATION SERVICES (0.6%)
23 KDDI Corp.(a),(b) 121
1,500 Shenandoah Telecommunications Co.(a) 30
116,000 Starhub Ltd.(b) 177
--------------------------------------------------------------------------------
36 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
14,100 Telephone & Data Systems, Inc. $ 478
439,921 Vodafone Group plc(a),(b) 1,019
--------
1,825
--------
Total Telecommunication Services 9,538
--------
UTILITIES (3.4%)
ELECTRIC UTILITIES (1.6%)
9,200 Central Vermont Public Service Corp.(a) 191
17,000 Cheung Kong Infrastructure Holdings, Ltd.(a),(b) 65
4,200 Chubu Electric Power Co., Inc.(a),(b) 100
12,506 E.ON AG(a),(b) 522
52,498 EDP-Energias de Portugal(a),(b) 232
13,600 Empire District Electric Co.(a) 255
94,499 Enel S.p.A.(a),(b) 549
27,200 Exelon Corp.(a) 1,329
23,300 FirstEnergy Corp.(a) 1,082
3,152 Fortum Oyj(a),(b) 85
12,753 Iberdrola S.A.(a),(b) 122
17,295 Iride S.p.A.(a),(b) 33
2,900 Kansai Electric Power Co., Inc.(a),(b) 65
2,400 Okinawa Electric Power Co., Inc.(a),(b) 128
11,789 Public Power Corp.*(a),(b) 218
3,587 Scottish & Southern Energy plc(a),(b) 67
--------
5,043
--------
GAS UTILITIES (0.2%)
16,071 Gas Natural SDG S.A.(a),(b) 346
12,000 Hong Kong and China Gas Co., Ltd.(a),(b) 30
7,000 National Fuel Gas Co.(a) 350
16,358 Snam Rete Gas S.p.A.(a),(b) 81
--------
807
--------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.3%)
8,900 Constellation Energy Group, Inc.(a) 313
1,800 Electric Power Development Co. Ltd.(b) 51
32,268 International Power plc(a),(b) 160
13,600 NRG Energy, Inc.*(a) 321
--------
845
--------
MULTI-UTILITIES (1.1%)
2,409 AGL Energy Ltd.(a),(b) 30
10,600 Dominion Resources, Inc.(a) 412
4,029 Gaz de France S.A.(a),(b) 175
21,300 MDU Resources Group, Inc.(a) 503
36,465 National Grid plc(a),(b) 398
19,400 NSTAR 714
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 37
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
18,400 Public Service Enterprise Group, Inc.(a) $ 612
5,721 RWE AG(a),(b) 544
--------
3,388
--------
WATER UTILITIES (0.2%)
7,400 Connecticut Water Service, Inc.(a) 183
15,100 Middlesex Water Co.(a) 266
6,626 Severn Trent plc(a),(b) 116
11,800 Southwest Water Co.(a) 70
--------
635
--------
Total Utilities 10,718
--------
Total Common Stocks (cost: $244,102) 270,546
--------
-------------------------------------------------------------------------
PRINCIPAL
AMOUNT
$(000)/SHARES
-------------------------------------------------------------------------
PREFERRED SECURITIES (0.1%)
CONSUMER DISCRETIONARY (0.0%)
AUTOMOBILE MANUFACTURERS (0.0%)
1,543 Porsche AG(a),(b) 97
--------
FINANCIALS (0.1%)
PROPERTY & CASUALTY INSURANCE (0.1%)
$ 200 White Mountains Re Group, 7.51%,
perpetual(a),(d) 162
--------
GOVERNMENT (0.0%)
U.S. GOVERNMENT (0.0%)
6,000 Fannie Mae, 8.25%, perpetual*(a) 7
6,000 Freddie Mac, 8.38%, perpetual*(a) 6
--------
Total Government 13
--------
Total Preferred Securities (cost: $483) 272
--------
-------------------------------------------------------------------------
NUMBER
OF SHARES
-------------------------------------------------------------------------
EXCHANGE-TRADED FUNDS (7.1%)
41,886 iShares MSCI EAFE Index Fund(a) 2,317
492,095 iShares MSCI Emerging Markets Index Fund(a) 20,422
--------
Total Exchange-Traded Funds (cost: $18,884) 22,739
--------
--------------------------------------------------------------------------------
38 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
-------------------------------------------------------------------------
HEDGE FUNDS (2.7%)
527,677 Deutsche iGAP Investment Trust "B", acquired
8/01/2008 - 8/07/2009; cost $8,750*(c),(e) $ 8,601
--------
RIGHTS (0.0%)
FINANCIALS (0.0%)
DIVERSIFIED BANKS (0.0%)
3,922 Fortis, acquired 10/13/2008; cost $0*(b),(c) --
--------
Total Equity Securities (cost: $272,219) 302,158
--------
-------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON
(000) RATE MATURITY
-------------------------------------------------------------------------
BONDS (3.0%)
CORPORATE OBLIGATIONS (2.2%)
ENERGY (0.2%)
OIL & GAS STORAGE & TRANSPORTATION (0.2%)
$ 200 Enbridge Energy Partners,
LP(a) 8.05% 10/01/2037 186
200 Enterprise Products
Operating, LP(a) 7.00 6/01/2067 178
200 Enterprise Products
Operating, LP(a) 7.03 1/15/2068 184
--------
Total Energy 548
--------
FINANCIALS (1.5%)
CONSUMER FINANCE (0.1%)
200 General Motors Acceptance
Corp.(a) 6.75 12/01/2014 190
--------
DIVERSIFIED BANKS (0.1%)
200 USB Capital IX(a) 6.19 -(f) 163
200 Wells Fargo Capital XV(a) 9.75 -(f) 215
--------
378
--------
LIFE & HEALTH INSURANCE (0.2%)
1,000 StanCorp Financial Group,
Inc.(a) 6.90 6/01/2067 756
--------
MULTI-LINE INSURANCE (0.7%)
200 American International
Group, Inc.(g) 8.18 5/15/2058 134
1,000 Genworth Financial, Inc.(g) 6.15 11/15/2066 715
500 Glen Meadow(a),(d) 6.51 2/12/2067 371
1,000 ILFC E-Capital Trust
II(a),(d) 6.25 12/21/2065 530
600 Oil Insurance Ltd.(a),(d) 7.56 -(f) 477
--------
2,227
--------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 39
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
-------------------------------------------------------------------------
REGIONAL BANKS (0.2%)
$ 500 Webster Capital Trust IV(a) 7.65% 6/15/2037 $ 320
308 Zions Bancorp(a) 5.50 11/16/2015 218
--------
538
--------
REITS - RETAIL (0.2%)
1,000 New Plan Excel Realty Trust,
Inc.(a) 5.13 9/15/2012 715
--------
Total Financials 4,804
--------
INDUSTRIALS (0.2%)
INDUSTRIAL CONGLOMERATES (0.2%)
1,000 Textron Financial
Corp.(a),(d) 6.00 2/15/2067 716
--------
UTILITIES (0.3%)
ELECTRIC UTILITIES (0.3%)
1,000 Texas Competitive Electric
Holding Co., LLC(h),(i) 8.40 10/10/2014 815
--------
Total Corporate Obligations(cost: $5,049) 6,883
--------
EURODOLLAR AND YANKEE OBLIGATIONS (0.5%)
FINANCIALS (0.5%)
DIVERSIFIED BANKS (0.0%)
200 Credit Agricole S.A.(a),(d) 6.64 -(f) 165
200 LBG Capital No.1 plc 8.00 -(f) 155
--------
320
--------
DIVERSIFIED CAPITAL MARKETS (0.1%)
500 UBS Preferred Funding Trust
I(a) 8.62 -(f) 465
MULTI-LINE INSURANCE (0.3%)
1,000 ING Capital Funding Trust
III(a) 8.44 -(f) 865
--------
Total Eurodollar and Yankee Obligations(cost:
$1,284) 1,650
--------
ASSET-BACKED SECURITIES (0.0%)
FINANCIALS (0.0%)
ASSET-BACKED FINANCING (0.0%)
136 GE Equipment Midticket,
LLC(a) 0.55(j) 9/15/2017 117
--------
COMMERCIAL MORTGAGE SECURITIES (0.3%)
FINANCIALS (0.3%)
785 Banc of America Commercial
Mortgage, Inc. 6.01(j) 7/10/2044 600
590 Citigroup Commercial
Mortgage Trust(a) 6.10(j) 12/10/2049 449
--------
Total Commercial Mortgage Securities (cost:
$941) 1,049
--------
Total Bonds (cost: $7,370) 9,699
--------
--------------------------------------------------------------------------------
40 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
-------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS (3.0%)
U.S. TREASURY BILLS (0.2%)
$ 454 1.16%, 3/18/2010(k),(l) $ 454
110 1.17%, 6/17/2010(k),(l) 110
--------
Total U.S. Treasury Bills (cost: $564) 564
--------
-------------------------------------------------------------------------
NUMBER
OF SHARES
-------------------------------------------------------------------------
MONEY MARKET FUNDS (2.8%)
8,835,080 State Street Institutional Liquid Reserve Fund,
0.15%(m),(n) 8,835
--------
Total Money Market Instruments (cost: $9,399) 9,399
--------
TOTAL INVESTMENTS (COST: $288,988) $321,256
========
-------------------------------------------------------------------------
NUMBER
OF CONTRACTS
-------------------------------------------------------------------------
PURCHASED OPTIONS (0.4%)
2,120 Put - iShares MSCI Emerging Markets Index
expiring February 20, 2010 at 36 89
2,800 Put - iShares MSCI Emerging Markets Index
expiring January 16, 2010 at 37 31
95 Put - S&P 500 Index expiring February 20, 2010
at 1,040 114
10 Put - S&P 500 Index expiring January 16, 2010 at
1,000 1
184 Put - S&P 500 Index expiring January 16, 2010 at
1,015 35
419 Put - S&P 500 Index expiring January 16, 2010 at
1,020 84
104 Put - S&P 500 Index expiring January 16, 2010 at
1,025 22
713 Put - S&P 500 Index expiring January 16, 2010 at
1,040 189
5,685 Put - iShares MSCI EAFE Index expiring February
20, 2010 at 51 350
5,910 Put - iShares MSCI EAFE Index expiring January
16, 2010 at 51 77
610 Put - Russell 2000 Index expiring February 20,
2010 at 540 274
--------
TOTAL PURCHASED OPTIONS (COST: $3,327) $ 1,266
========
WRITTEN OPTIONS (0.7%)
(2,000) Call - iShares MSCI Emerging Markets Index
expiring January 16, 2010 at 42 (130)
(1,000) Call - iShares MSCI Emerging Markets Index
expiring January 16, 2010 at 43 (28)
(1,280) Call - iShares MSCI Emerging Markets Index
expiring January 16, 2010 at 44 (15)
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 41
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF CONTRACTS SECURITY (000)
-------------------------------------------------------------------------
(240) Call - iShares MSCI Emerging Markets Index
expiring January 16, 2010 at 45 $ (1)
(375) Call - iShares MSCI EAFE Index expiring February
20, 2010 at 58 (22)
(5,000) Call - iShares MSCI EAFE Index expiring January
16, 2010 at 56 (242)
(2,000) Call - iShares MSCI EAFE Index expiring January
16, 2010 at 58 (12)
(1,400) Call - iShares MSCI EAFE Index expiring January
16, 2010 at 59 (3)
(270) Call - On Russell 2000 Index expiring February
20, 2010 at 640 (443)
(250) Call - Russell 2000 Index expiring January 16,
2010 at 630 (248)
(90) Call - S&P 500 Index expiring February 20, 2010
at 1,160 (96)
(400) Call - S&P 500 Index expiring January 16, 2010
at 1,130 (324)
(850) Call - S&P 500 Index expiring January 16, 2010
at 1,135 (540)
(95) Call - S&P 500 Index expiring January 16, 2010
at 1,150 (27)
--------
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED:
$2,536) $ (2,131)
========
---------------------------------------------------------------------------------
UNREALIZED
NUMBER OF APPRECIATION/
CONTRACTS EXPIRATION CONTRACT (DEPRECIATION)
LONG/(SHORT) SECURITY DATE VALUE (000) (000)
---------------------------------------------------------------------------------
FUTURES (1.3%)
1 SPI 200 Index Futures 03/18/2010 $ 110 $ 5
3 FTSE 100 Index Futures 03/19/2010 260 6
12 DJ Euro Stoxx 50 Index
Futures 03/19/2010 511 15
44 Russell 2000 Mini Index
Futures 03/19/2010 2,745 (30)
7 Nikkei 225 Index Futures 03/11/2010 373 15
------ ----
TOTAL FUTURES $3,999 $ 11
====== ====
--------------------------------------------------------------------------------
42 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
December 31, 2009
--------------------------------------------------------------------------------
- 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 27.9% of net assets at December 31,
2009.
The Fund may rely on certain Securities and Exchange Commission (SEC)
exemptive orders or rules that permit funds meeting various conditions to
invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth
in the Investment Company Act of 1940 that would otherwise be applicable.
- CATEGORIES AND DEFINITIONS
HEDGE FUNDS -- private investment funds open to a limited range of investors
and exempt from certain regulations. Deutsche iGAP Investment Trust, managed
by Deutsche Bank Trust Company Americas, invests primarily in a diversified
portfolio of short-term money market investments, and long and short positions
in exchange-traded equity index and government bond index futures, currency
forward contracts, and other derivative instruments.
The Fund may reedeem all or part of its investment upon 10
days' prior written notice.
EURODOLLAR AND YANKEE OBLIGATIONS -- Eurodollar obligations are dollar-
denominated instruments that are issued outside the
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS 43
--------------------------------------------------------------------------------
U.S. capital markets by foreign corporations and financial institutions and by
foreign branches of U.S. corporations and financial institutions. Yankee
obligations are dollar-denominated instruments that are issued by foreign
issuers in the U.S. capital markets.
RIGHTS -- enable the holder to buy a specified number of shares of new issues
of a common stock before it is offered to the public.
- PORTFOLIO ABBREVIATIONS AND DESCRIPTIONS
ADR American depositary receipts are receipts
issued by a U.S. bank evidencing ownership
of foreign shares. Dividends are paid in
U.S. dollars.
iShares Exchange-traded funds, managed by Barclays
Global Fund Advisors, that represent a
portfolio of stocks designed to closely
track a specific market index. iShares
funds are traded on securities exchanges.
REIT Real estate investment trust
- SPECIFIC NOTES
(a) At December 31, 2009, the security, or a portion thereof, is segregated to
cover the notional value of outstanding written call options.
(b) Security was fair valued at December 31, 2009, by USAA Investment
Management Company (the Manager) in accordance with valuation procedures
approved by the Board of Trustees.
(c) Security deemed illiquid by the Manager, under liquidity guidelines
approved by the Board of Trustees. The aggregate market value of these
securities at December 31, 2009, was $8,601,000, which represented 2.7% of
the Fund's net assets.
(d) Restricted security that is not registered under the Securities Act of
1933. A resale of this security in the
--------------------------------------------------------------------------------
44 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
United States may occur in an exempt transaction to a qualified
institutional buyer as defined by Rule 144A, and as such has been deemed
liquid by the Manager under liquidity guidelines approved by the Board of
Trustees, unless otherwise noted as illiquid.
(e) Restricted security that is not registered under the Securities Act of
1933.
(f) Security is perpetual and has no final maturity date but may be subject to
calls at various dates in the future.
(g) At December 31, 2009, portions of these securities were segregated to cover
delayed-delivery and/or when-issued purchases.
(h) At December 31, 2009, the aggregate market value of securities purchased on
a delayed-delivery basis was $815,000.
(i) Senior loan (loan) - is not registered under the Securities Act of 1933.
The loan contains certain restrictions on resale and cannot be sold
publicly. The interest rate is adjusted periodically, and the rate
disclosed represents the current rate at December 31, 2009. The weighted
average life of the loan is likely to be substantially shorter than the
stated final maturity date due to mandatory or optional prepayments.
Security deemed liquid by the Manager, under liquidity guidelines approved
by the Board of Trustees, unless otherwise noted as illiquid.
(j) Variable-rate or floating-rate security - interest rate is adjusted
periodically. The interest rate disclosed represents the current rate at
December 31, 2009.
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS 45
--------------------------------------------------------------------------------
(k) Zero-coupon security. Rate represents the effective yield at the date of
purchase.
(l) Securities with a value of $564,000 are segregated as collateral for
initial margin requirements on open futures contracts.
(m) Security, or a portion thereof, is segregated to cover the value of open
futures contracts at December 31, 2009.
(n) Rate represents the money market fund annualized seven-day yield at
December 31, 2009.
* Non-income-producing security.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
46 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
December 31, 2009
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value
(cost of $288,988) $321,256
Purchased options, at market value (cost
of $3,327) 1,266
Cash 34
Cash denominated in foreign currencies
(identified cost of $606) 594
Receivables:
Capital shares sold 1,181
Dividends and interest 433
Securities sold 24,137
--------
Total assets 348,901
--------
LIABILITIES
Payables:
Securities purchased 28,387
Capital shares redeemed 29
Written options, at market value (premiums
received of $2,536) 2,131
Variation margin on futures contracts 32
Accrued management fees 155
Other accrued expenses and payables 93
--------
Total liabilities 30,827
--------
Net assets applicable to capital
shares outstanding $318,074
========
NET ASSETS CONSIST OF:
Paid-in capital $300,316
Accumulated undistributed net investment
income 735
Accumulated net realized loss on
investments, options, and futures
transactions (13,588)
Net unrealized appreciation of
investments, options, and futures
contracts 30,623
Net unrealized depreciation of foreign
currency translations (12)
--------
Net assets applicable to capital
shares outstanding $318,074
========
Capital shares outstanding, unlimited
number of shares authorized, no par
value 31,984
========
Net asset value, redemption price, and
offering price per share $ 9.94
========
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS 47
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
(IN THOUSANDS)
Year ended December 31, 2009
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $75) $ 3,552
Interest 689
--------
Total income 4,241
--------
EXPENSES
Management fees 983
Administration and servicing fees 82
Transfer agent's fees 82
Custody and accounting fees 284
Postage 1
Shareholder reporting fees 12
Trustees' fees 10
Registration fees 19
Professional fees 70
Other 9
--------
Total expenses 1,552
--------
NET INVESTMENT INCOME 2,689
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCY, OPTIONS, AND
FUTURES CONTRACTS
Net realized gain (loss) on:
Investments (731)
Foreign currency transactions 34
Options (16,014)
Futures transactions 1,058
Change in net unrealized
appreciation/depreciation of:
Investments 48,226
Foreign currency translations (12)
Options 1,539
Futures contracts (45)
--------
Net realized and unrealized gain 34,055
--------
Increase in net assets resulting from
operations $ 36,744
========
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
48 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Year ended December 31, 2009, and period ended December 31, 2008
--------------------------------------------------------------------------------
2009 2008*
-----------------------------------------------------------
FROM OPERATIONS
Net investment income $ 2,689 $ 498
Net realized loss on investments (731) (7,179)
Payment from USAA Investment
Management Company for loss
realized on disposal of
investments in violation of
restrictions - 30
Net realized gain on foreign currency
transactions 34 60
Net realized gain (loss) on options (16,014) 16,120
Net realized gain (loss) on futures
transactions 1,058 (296)
Change in net unrealized
appreciation/depreciation of:
Investments 48,226 (15,958)
Foreign currency translations (12) -
Options 1,539 (3,195)
Futures contracts (45) 56
------------------
Increase (decrease) in net assets
resulting from operations 36,744 (9,864)
------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,000) (593)
Net realized gains (6,529) -
------------------
Distributions to shareholders (8,529) (593)
------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 219,051 84,085
Reinvested dividends 6,401 69
Cost of shares redeemed (9,156) (134)
------------------
Increase in net assets from
capital share transactions 216,296 84,020
------------------
Net increase in net assets 244,511 73,563
------------------
NET ASSETS
Beginning of year 73,563 -
------------------
End of year $318,074 $ 73,563
==================
Accumulated undistributed net
investment income:
End of year $ 735 $ -
==================
CHANGE IN SHARES OUTSTANDING
Shares sold 23,778 8,556
Shares issued for dividends
reinvested 644 8
Shares redeemed (987) (15)
------------------
Increase in shares outstanding 23,435 8,549
==================
* Fund commenced operations on July 31, 2008.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS 49
--------------------------------------------------------------------------------
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 Global
Opportunities Fund (the Fund), which is classified as nondiversified under the
1940 Act. The Fund's investment objective is to seek an average annual return
that is greater than the 1-year U.S. Treasury bond, before fees and expenses,
over a full market cycle while seeking to limit the Fund's exposure to large
negative returns. The Fund is not offered for sale directly to the general
public and is available currently for investment through a USAA managed account
program or other persons or legal entities that the Fund may approve from time
to time.
As a nondiversified fund, the Fund may invest a greater percentage of its assets
in a single issuer, such as a single stock-based or bond-based exchange-traded
fund (ETF), stock, corporate bond, or a single money market instrument. 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.
--------------------------------------------------------------------------------
50 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
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 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. Equity securities trading in various foreign markets may take place on
days when the NYSE is closed. Further, when the NYSE is open, the foreign
markets may be closed. Therefore, the calculation of the Fund's net asset
value (NAV) may not take place at the same time the prices of certain
foreign securities held by the Fund are determined. In most cases, events
affecting the values of foreign securities that occur between the time of
their last quoted sales or official closing prices and the close of
normal trading on the NYSE on a day the Fund's NAV is calculated will not
be reflected in the value of the Fund's foreign securities. However, USAA
Investment Management Company (the Manager), an affiliate of the Fund,
and the Fund's subadvisers, if applicable, will monitor for events that
would materially affect the value of the Fund's foreign securities. The
Fund's subadvisers have agreed to notify the Manager of significant
events they identify that would materially affect the value of the Fund's
foreign securities. If the Manager determines that a particular event
would materially affect the value of the Fund's foreign securities, then
the Manager, under valuation procedures approved by the Trust's Board of
Trustees, will consider such available information that it deems relevant
to determine a fair value for the affected foreign securities. In
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 51
--------------------------------------------------------------------------------
addition, the Fund may use information from an external vendor or other
sources to adjust the foreign market closing prices of foreign equity
securities to reflect what the Fund believes to be the fair value of the
securities as of the close of the NYSE. Fair valuation of affected
foreign equity securities may occur frequently based on an assessment
that events that occur on a fairly regular basis (such as U.S. market
movements) are significant.
3. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their NAV at the end of each business day.
4. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates market
value.
5. 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.
6. Repurchase agreements are valued at cost, which approximates market
value.
7. Futures are valued based upon the last sale price at the close of market
on the principal exchange on which they are traded.
8. Options are valued by a pricing service at the National Best Bid/Offer
(NBBO) composite price, which is derived from the best available bid and
ask prices in all participating options exchanges
--------------------------------------------------------------------------------
52 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
determined to most closely reflect market value of the options at the
time of computation of the Fund's NAV.
9. 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
subadvisers, 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
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 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,
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 53
--------------------------------------------------------------------------------
inputs that are observable for the securities, either directly or
indirectly, and market-corroborated inputs such as market indices.
Level 3 -- inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
($ IN 000S) VALUATION HIERARCHY
---------------------- -----------------------------------------------------
(LEVEL 1) (LEVEL 2)
QUOTED PRICES OTHER (LEVEL 3)
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
ASSETS* IDENTICAL ASSETS INPUTS INPUTS TOTAL
-----------------------------------------------------------------------------
Equity Securities:
Common Stocks $208,096 $62,450 $- $270,546
Preferred Securities 6 266 - 272
Exchange-Traded Funds 22,739 - - 22,739
Hedge Funds - 8,601 - 8,601
Rights - - - -
Bonds:
Corporate Obligations - 6,883 - 6,883
Eurodollar and Yankee
Obligations - 1,650 - 1,650
Asset-Backed
Securities - 117 - 117
Commercial Mortgage
Securities - 1,049 - 1,049
--------------------------------------------------------------------------------
54 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
($ IN 000S) VALUATION HIERARCHY (CONTINUED)
---------------------- -----------------------------------------------------
(LEVEL 1) (LEVEL 2)
QUOTED PRICES OTHER (LEVEL 3)
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
ASSETS* IDENTICAL ASSETS INPUTS INPUTS TOTAL
-----------------------------------------------------------------------------
Money Market
Instruments:
U.S. Treasury Bills $ - $ 564 $- $ 564
Money Market Funds 8,835 - - 8,835
Purchased Options 1,266 - - 1,266
Futures* 11 - - 11
-----------------------------------------------------------------------------
Total $240,953 $81,580 $- 322,533
-----------------------------------------------------------------------------
* Refer to the Portfolio of Investments for a
detailed list of the Fund's investments. Futures
are valued at the unrealized
appreciation/depreciation on the investment.
QUOTED PRICES OTHER
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
IDENTICAL LIABILITIES INPUTS INPUTS
LIABILITIES (LEVEL 1) (LEVEL 2) (LEVEL 3) TOTAL
----------------------------------------------------------------------------
Written Options $(2,131) $- $- $(2,131)
----------------------------------------------------------------------------
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, options, 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 asset class or
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 55
--------------------------------------------------------------------------------
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 equity price risk, interest rate
risk, and foreign currency exchange rate risk in the normal course of
pursuing its investment objectives. The Fund may use futures contracts to
gain exposure to, or hedge against, changes in the value of equities,
interest rates, or foreign currencies. 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
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.
OPTION TRANSACTIONS -- The Fund is subject to equity price risk in the
normal course of pursuing its investment objectives. The Fund may use
options on underlying instruments, namely, equity securities, ETFs, and
equity indexes, to gain exposure to, or hedge against, changes in the value
of equity securities, ETFs, or equity indexes. A call option gives the
purchaser the right to buy, and the writer the obligation to sell, the
underlying instrument at a specified price during a specified period.
Conversely, a put option gives the purchaser the right to sell, and the
writer the obligation to buy, the
--------------------------------------------------------------------------------
56 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
underlying instrument at a specified price during a specified period. The
purchaser of the option pays a premium to the writer of the option.
Premiums paid for purchased options are included in the Fund's statement of
assets and liabilities as an investment. If a purchased option expires
unexercised, the premium paid is recognized as a realized loss. If a
purchased call option on a security is exercised, the cost of the security
acquired includes the exercise price and the premium paid. If a purchased
put option on a security is exercised, the realized gain or loss on the
security sold is determined from the exercise price, the original cost of
the security, and the premium paid. The risk associated with purchasing a
call or put option is limited to the premium paid.
Premiums received from writing options are included in the Fund's statement
of assets and liabilities as a liability. If a written option expires
unexercised, the premium received is recognized as a realized gain. If a
written call option on a security is exercised, the realized gain or loss on
the security sold is determined from the exercise price, the original cost
of the security, and the premium received. If a written put option on a
security is exercised, the cost of the security acquired is the exercise
price paid less the premium received. The Fund, as a writer of an option,
bears the market risk of an unfavorable change in the price of the security
underlying the written option.
In an attempt to reduce the Fund's volatility over time, the Fund may
implement a strategy that involves writing (selling) index call or
corresponding ETF options and purchasing index put or corresponding ETF
options or index put spread options against a highly correlated stock
portfolio. The combination of the diversified stock portfolio with the index
call and put or corresponding ETF options is designed to provide the Fund
with consistent returns over a wide range of equity market environments.
This strategy may not fully protect the Fund against declines in the
portfolio's value, and the Fund could experience a loss. Options on
securities indexes or corresponding ETF options are different from options
on individual
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 57
--------------------------------------------------------------------------------
securities in that the holder of the index options contract has the right to
receive an amount of cash equal to the difference between the exercise price
and the closing price of the underlying index on exercise date. If an option
on an index is exercised, the realized gain or loss is determined from the
exercise price, the value of the underlying index, and the amount of the
premium.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AS OF DECEMBER 31, 2009*
(IN THOUSANDS)
ASSET DERIVATIVES LIABILITY DERIVATIVES
----------------------------------------------------------------------------
DERIVATIVES NOT
ACCOUNTED FOR
AS HEDGING STATEMENT OF STATEMENT OF
INSTRUMENTS ASSETS AND ASSETS AND
UNDER LIABILITES LIABILITES
STATEMENT 133 LOCATION FAIR VALUE LOCATION FAIR VALUE
----------------------------------------------------------------------------
Equity contracts Purchased $1,277** Written options $2,131
options;
Net unrealized
appreciation/
depreciation of
investments,
options, 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.
--------------------------------------------------------------------------------
58 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
THE EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 2009 (IN THOUSANDS)
CHANGE IN
DERIVATIVES NOT UNREALIZED
ACCOUNTED FOR AS REALIZED APPRECIATION
HEDGING INSTRUMENTS STATEMENT OF GAIN (LOSS) (DEPRECIATION)
UNDER STATEMENT 133 OPERATIONS LOCATION ON DERIVATIVES ON DERIVATIVES
------------------------------------------------------------------------
Equity contracts Net realized $(14,956) $1,494
gain(loss) on
options and futures
transactions/
Change in net
unrealized
appreciation/depre-
ciation of options
and futures
contracts
------------------------------------------------------------------------
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. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS -- Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after
the trade date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may increase or
decrease in value prior to their delivery. The Fund maintains segregated
assets with a market value equal to or greater than the amount of its
purchase commitments. The purchase of securities on a delayed-delivery or
when-issued basis may increase the volatility of the Fund's NAV to the
extent that the Fund makes such purchases while remaining
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 59
--------------------------------------------------------------------------------
substantially fully invested. As of December 31, 2009, the Fund's
outstanding delayed-delivery commitments, including interest purchased, were
$790,000; none of which were when-issued securities.
F. 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.
G. 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 are amortized over the life of
the respective securities, using the effective yield method for long-term
securities and the straight-line method for short-term securities.
H. 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.
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.
--------------------------------------------------------------------------------
60 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
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.
I. EXPENSES PAID INDIRECTLY -- A portion of the brokerage commissions that the
Fund pays may be recaptured as a credit that is tracked and used by the
custodian to directly reduce expenses paid by the Fund. In addition, 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, custodian and other
bank credits reduced the Fund's expenses by less than $500. For the year
ended December 31, 2009, the Fund did not incur any brokerage commission
recapture credits.
J. INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, in the normal course
of business the Trust enters into contracts that contain a variety of
representations and warranties that provide general indemnifications. The
Trust's maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust expects the risk of loss to be remote.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 61
--------------------------------------------------------------------------------
K. 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 0.4% 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
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
--------------------------------------------------------------------------------
62 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
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 resulted in reclassifications to the statement of assets
and liabilities to increase accumulated undistributed net investment income and
increase accumulated net realized loss on investments by $46,000. This includes
differences in the accounting for dividend distributions, foreign currency gains
and losses, and passive foreign investment corporation gains and losses. These
reclassifications had no effect on net assets.
The tax character of distributions paid during the period ended December 31,
2009, was as follows:
2009 2008
--------------------
Ordinary income* $2,000,000 $558,000
Long-term realized capital gains 6,529,000 35,000
* Includes distribution of short-term realized
capital gains, if any, which are taxable as
ordinary income.
As of December 31, 2009, the components of net assets representing distributable
earnings on a tax basis were as follows:
Undistributed ordinary income $ 1,538,000
Accumulated capital and other losses (12,633,000)
Unrealized appreciation of investments 24,391,000
Unrealized depreciation of foreign
currency translations (12,000)
The difference between book-basis and tax-basis unrealized depreciation is
attributable to the tax deferral of losses on wash sales and the mark-to-market
adjustments on certain investments, passive foreign investment corporations, and
open options contracts.
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 capital loss of
$1,613,000 and capital loss carryovers of $11,020,000, for federal income tax
purposes. The post-October loss will
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 63
--------------------------------------------------------------------------------
be recognized on the first day of the following fiscal year. If not offset by
subsequent capital gains, the capital loss carryovers will expire 2017. 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.
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, 2008, 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 $369,720,000
and $169,633,000, respectively.
As of December 31, 2009, the cost of securities, including short-term
securities, for federal income tax purposes, was $298,131,000.
Gross unrealized appreciation and depreciation of investments as of December 31,
2009, for federal income tax purposes, were $30,772,000 and $6,381,000,
respectively, resulting in net unrealized appreciation of $24,391,000.
--------------------------------------------------------------------------------
64 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
For the year ended December 31, 2009, transactions in written call and put
options* were as follows:
PREMIUMS
NUMBER OF RECEIVED
CONTRACTS (000'S)
-------------------------
Outstanding at December 31, 2008 - $ -
Options written 106,589 19,825
Options terminated in closing
purchase transactions (61,630) (13,495)
Options expired (29,709) (3,794)
-------------------------
Outstanding at December 31, 2009 15,250 $ 2,536
=========================
* Refer to Note 1C for a discussion of derivative
instruments and how they are accounted for in the
Fund's financial statements.
(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 and
for directly managing the day-to-day investment of a portion of the Fund's
assets, subject to the authority of and supervision by the Trust's Board of
Trustees. The Manager also 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 a portion 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 0.60% of the Fund's
average net assets for the fiscal year. For the
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 65
--------------------------------------------------------------------------------
year ended December 31, 2009, the Fund incurred total management fees, paid
or payable to the Manager, of $983,000.
B. SUBADVISORY ARRANGEMENTS -- The Manager has entered into investment
subadvisory agreements with Credit Suisse Asset Management, LLC (Credit
Suisse), Credit Suisse Securities (USA) LLC (CSSU) for its Volaris
Volatility Management Group (Volaris Group), Quantitative Management
Associates LLC (QMA), Deutsche Investment Management Americas Inc. (DIMA),
and The Boston Company Asset Management, LLC (The Boston Company) under
which each subadviser provides day-to-day discretionary management of
certain of the Fund's assets in accordance with the Fund's investment
objectives, policies, and restrictions, subject to the general supervision
of the Trust's Board of Trustees and the Manager.
The Manager (not the Fund) pays Credit Suisse a subadvisory fee in the
annual amount of 0.15% of the portion of the Fund's average daily net assets
that Credit Suisse manages. For the year ended December 31, 2009, Credit
Suisse did not manage any of the Fund's assets and did not receive any
subadvisory fees from the Manager for the Fund.
The Manager (not the Fund) pays CSSU's Volaris Group a subadvisory fee based
on the total notional amount of the options contracts that CSSU's Volaris
Group manages in the USAA Balanced Strategy Fund, the USAA Cornerstone
Strategy Fund, the USAA First Start Growth Fund, the USAA Total Return
Strategy Fund, and the USAA Global Opportunities Fund in an annual amount of
0.23% on the first $50 million of the total notional amount; 0.20% on the
total notional amount over $50 million and up to $250 million; 0.12% on the
total notional amount over $250 million and up to $500 million; 0.10% on the
total notional amount over $500 million and up to $2 billion; and 0.08% on
the total notional amount over $2 billion. The notional amount is based on
the daily closing price of the index that underlies the written options
strategy for the Fund. For the year ended December 31, 2009, the Manager
incurred subadvisory fees for the Fund, paid or payable to CSSU's Volaris
Group of $204,000.
--------------------------------------------------------------------------------
66 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
The Manager (not the Fund) pays QMA a subadvisory fee in the annual amount
of 0.25% of the portion of the Fund's average net assets that QMA manages.
For the year ended December 31, 2009, the Manager incurred subadvisory fees,
paid or payable to QMA, of $85,000.
The Manager (not the Fund) pays DIMA a subadvisory fee in an annual amount
of 0.15% of the portion of the Fund's average net assets that DIMA manages.
For the year ended December 31, 2009, the Manager incurred subadvisory fees,
paid or payable to DIMA, of $161,000.
The Manager (not the Fund) pays The Boston Company a subadvisory fee in the
annual amount of 0.69% of the portion of the Fund's average net assets that
The Boston Company manages. For the year ended December 31, 2009, The Boston
Company did not manage any of the Fund's assets and did not receive any
subadvisory fees from the Manager for the Fund.
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 0.05% 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 $82,000.
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 $6,000 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 1.00% of its average annual net
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 67
--------------------------------------------------------------------------------
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 did
not incur any reimbursable expenses.
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. The Fund's transfer agent's fees are
accrued daily and paid monthly at an annualized rate of 0.05% of the Fund's
average net assets for the fiscal year. For the year ended December 31,
2009, the Fund incurred transfer agent's fees, paid or payable to SAS, of
$82,000.
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.
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At December 31,
2009, USAA and its affiliates owned 7,500,000 shares (23.4%) of 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.
--------------------------------------------------------------------------------
68 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
(8) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
--------------------------
2009 2008*
--------------------------
Net asset value at beginning of
period $ 8.61 $ 10.00
--------------------------
Income (loss) from investment
operations:
Net investment income .09 .07(a)
Net realized and unrealized gain
(loss) 1.52 (1.39)(a),(b)
--------------------------
Total from investment operations 1.61 (1.32)(a)
--------------------------
Less distributions from:
Net investment income (.06) (.07)
Realized capital gains (.22) -
--------------------------
Total distributions (.28) (.07)
--------------------------
Net asset value at end of period $ 9.94 $ 8.61
==========================
Total return (%)** 18.76 (13.18)(b)
Net assets at end of period (000) $318,074 $73,563
Ratios to average net assets:***
Expenses (%)(c) .94 1.00(d)
Expenses, excluding
reimbursements (%)(c) .94 1.12(d)
Net investment income (%) 1.63 1.73(d)
Portfolio turnover (%) 107 60
* Fund commenced operations on July 31, 2008.
** 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 $164,628,000.
(a) Calculated using average shares.
(b) For the year ended December 31, 2008, the Manager
reimbursed the Fund $30,000 for a loss incurred
from the sale of a security that exceeded the
amount allowed to be held of that type of
security under the Fund's investment
restrictions. The effect of this reimbursement on
the Fund's net realized loss per share and total
return was less than $0.01/0.01%.
(c) Reflects total operating expenses of the Fund
before reductions of any expenses paid
indirectly. The Fund's expenses paid indirectly
decreased the expense ratios by less than 0.01%.
(d) Annualized. The ratio is not necessarily
indicative of 12 months of operations.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 69
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
70 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JULY 1, 2009 -
JULY 1, 2009 DECEMBER 31, 2009 DECEMBER 31, 2009
---------------------------------------------------
Actual $1,000.00 $1,154.10 $5.00
Hypothetical
(5% return before
expenses) 1,000.00 1,020.57 4.69
* Expenses are equal to the Fund's annualized
expense ratio of 0.92%, which is net of any
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 15.41% for the six-month period of
July 1, 2009, through December 31, 2009.
--------------------------------------------------------------------------------
EXPENSE EXAMPLE 71
--------------------------------------------------------------------------------
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).
--------------------------------------------------------------------------------
72 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
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 Addvantage (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 73
--------------------------------------------------------------------------------
ROBERT L. MASON, PH.D.(3, 4, 5, 6)
Trustee
Born: July 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.
--------------------------------------------------------------------------------
74 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
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 and Remodeling (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 75
--------------------------------------------------------------------------------
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 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
--------------------------------------------------------------------------------
76 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
Counsel for USAA Life, FAI, and FPS, and is an Assistant Secretary of USAA, IMCO
and SAS.
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).
--------------------------------------------------------------------------------
TRUSTEES' AND OFFICERS' INFORMATION 77
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
78 USAA GLOBAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
TRUSTEES Christopher W. Claus
Barbara B. Dreeben
Robert L. Mason, Ph.D.
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
Richard A. Zucker
----------------------------------------------------------
ADMINISTRATOR, USAA Investment Management Company
INVESTMENT ADVISER, P.O. Box 659453
UNDERWRITER, AND San Antonio, Texas 78265-9825
DISTRIBUTOR
----------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
----------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
----------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
----------------------------------------------------------
MUTUAL FUND Under "Products & Services"
SELF-SERVICE 24/7 click "Investments," then
AT USAA.COM "Mutual Funds"
OR CALL Under "My Accounts" go to
(800) 531-USAA "Investments." View account
(8722) balances,
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.
--------------------------------------------------------------------------------
USAA PRSRT STD
9800 Fredericksburg Road U.S. Postage
San Antonio, TX 78288 PAID
USAA
SAVE PAPER AND FUND COSTS
At USAA.COM click: MY DOCUMENTS
Set preferences to USAA DOCUMENTS ONLINE.
(USAA LOGO) We know what it means to serve.(R)
--------------------------------------------------------------------------------
88394-0210 (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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