UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/S
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-7852
Exact name of registrant as specified in charter: USAA MUTUAL FUNDS TRUST
Address of principal executive offices and zip code: 9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Name and address of agent for service: CHRISTOPHER P. LAIA
USAA MUTUAL FUNDS TRUST
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Registrant's telephone number, including area code: (210) 498-0226
Date of fiscal year end: JULY 31,
Date of reporting period: JANUARY 31, 2010
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA CAPITAL GROWTH FUND - SEMIANNUAL REPORT FOR PERIOD ENDED JANUARY 31, 2010
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA CAPITAL GROWTH FUND]
===============================================
SEMIANNUAL REPORT
USAA CAPITAL GROWTH FUND
JANUARY 31, 2010
===============================================
================================================================================
<PAGE>
================================================================================
FUND OBJECTIVE
CAPITAL APPRECIATION.
--------------------------------------------------------------------------------
TYPES OF INVESTMENTS
Invests primarily in equity securities. The Fund may invest up to 100% of its
assets in foreign 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.
================================================================================
<PAGE>
================================================================================
TABLE OF CONTENTS
--------------------------------------------------------------------------------
PRESIDENT'S MESSAGE 2
MANAGERS' COMMENTARY 4
INVESTMENT OVERVIEW 7
FINANCIAL INFORMATION
Portfolio of Investments 12
Notes to Portfolio of Investments 22
Financial Statements 24
Notes to Financial Statements 27
EXPENSE EXAMPLE 40
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.
================================================================================
<PAGE>
================================================================================
PRESIDENT'S MESSAGE
"I EXPECT THIS RECOVERY TO PROCEED AT
A SLOWER PACE THAN THOSE IN RECENT [PHOTO OF DANIEL S. McNAMARA]
MEMORY."
--------------------------------------------------------------------------------
FEBRUARY 2010
The U.S. economy appears to be on the mend. As the reporting period ended, the
federal government announced that the U.S. gross domestic product grew 5.9%
during the fourth quarter of 2009. The strong showing followed a 2.2% expansion
in the third quarter. While these numbers are encouraging, it is still too early
to declare that a long-term sustainable recovery has begun. Much of the growth
has been the result of inventory reduction, driven largely by the government's
"cash for clunkers" auto rebate program and its first-time homebuyer tax credit.
Consumers took advantage of the incentives to make purchases they might have put
off for a few years, but when the programs ended so did most of the spending.
There are also other obstacles to a sustained recovery. Although housing prices
have stabilized, the residential real estate market is fragile. Unemployment
remains high. Companies are making do with less, delaying hiring, and continuing
to lay off workers. While this may increase productivity and the financial
bottom line of individual businesses, it also acts as a drag on consumer
spending and on the speed at which the economy will return to more historically
normal levels of growth. As a result, I expect this recovery to proceed at a
slower pace than those in recent memory.
Nevertheless, I am cautiously optimistic. Improved economic conditions may give
the Federal Reserve Board (the Fed) the flexibility to pull back at least some
of the stimulus money it pumped into the financial system. Caution is
essential. If the Fed governors unwind the stimulus too soon,
================================================================================
2 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
they could stall the recovery. An inordinate delay could unleash inflation. At
the very least, the Fed is likely to keep short-term interest rates low until
the recovery is well underway. As I write to you, inflation does not appear to
be an immediate threat because employment remains weak and excess capacity
remains high. As a result, most businesses lack pricing power. However, I am
concerned about the projections for continued deficit spending, which could feed
inflation as the decade progresses.
So, how do we invest in this challenging environment? Money market yields are at
record lows. Bonds have experienced a remarkable rally, but their prices have
moved close to historic norms. Equities, which rebounded from their March 2009
lows, gave back some of their gains toward the end of the reporting period.
Under the circumstances, I plan to keep my guard up and stay focused on my
investment plan. During the market decline, many investors were not
appropriately positioned relative to their time horizon or risk tolerance. With
this in mind, I recently took some time to reflect on my own goals, reconsider
my risk tolerance, make a few changes to my investment strategy, and reposition
my portfolio. I encourage you to do the same. If you would like assistance,
please call one of our trained service representatives. They are available to
help you -- free of charge.
At USAA Investment Management Company, we are proud to provide you with what we
consider an exceptional value -- outstanding service, world-class investment
talent, and a broad array of no-load mutual funds. Thank you for the
opportunity to help you with your investment needs.
Sincerely,
/S/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
Mutual fund operating expenses apply and continue throughout the life of the
fund. o As interest rates rise, bond prices fall.
================================================================================
PRESIDENT'S MESSAGE | 3
<PAGE>
================================================================================
MANAGERS' COMMENTARY ON THE FUND
--------------------------------------------------------------------------------
[PHOTO OF MICHAEL P. McELROY] [PHOTO OF ADAM J. PETRYK]
MICHAEL P. McELROY, CFA ADAM J. PETRYK, CFA
Batterymarch Financial Batterymarch Financial
Management, Inc. Management, Inc.
--------------------------------------------------------------------------------
o HOW DID THE USAA CAPITAL GROWTH FUND (THE FUND) PERFORM?
For the six-month period ended January 31, 2010, the Fund had a total return
of 6.54%. This compares to returns of 8.29% for the Lipper Global Funds Index
and 8.03% for the MSCI World Index (the Index).
o PLEASE DISCUSS THE FUND'S PERFORMANCE DURING THE SIX-MONTH REPORTING PERIOD.
Batterymarch uses a disciplined framework to compare global stocks across
multiple perspectives based on proven fundamentals. These include measures of
growth and value as well as other dimensions such as cash flow, earnings
growth, and analyst expectations. For much of the financial crisis, our
process struggled in a market that was more driven by government intervention
and investor sentiment than it was by individual company fundamentals. The
good news is that situation began to change during the reporting period, with
market participants re-focusing on fundamentals.
Refer to page 9 for benchmark definitions.
Past performance is no guarantee of future results.
Foreign investing is subject to additional risk, such as currency
fluctuations, market illiquidity, and political instability.
================================================================================
4 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
Because we maintain broad industry sector neutrality as a risk control
measure, stock selection is the primary driver of our performance relative to
the Index. During the six months, stock selection in energy was quite
positive, led by U.S.-based Alpha Natural Resources, Inc. and Norwegian
energy services company Acergy S.A. In materials, global mining companies BHP
Billiton plc and Rio Tinto plc were strong contributors. Both mining companies
(whose merger talks broke off last year) benefited from the general upswing in
commodities prices. In health care, the area where stock selection was
strongest, standout names included Merck & Co. Inc., Mylan, Inc., and Novartis
AG.
Stock selection detracted from Index-relative performance in banks and
consumer staples. Within the banks, Banco Santander S.A., Banco Bilbao Vizcaya
Argentaria S.A., National Bank of Greece, and Alpha Bank S.A. were hurt by
debt problems in these peripheral eurozone economies. We sold the last two
Greek bank holdings out of the Fund. In consumer staples, Sara Lee Corp.
detracted, as did Kraft Foods, Inc., which had to raise the cash component of
its ultimately successful bid to acquire Cadbury.
o HOW IS THE FUND POSITIONED REGIONALLY GOING INTO THE SECOND HALF OF THE
REPORTING YEAR?
Regional weighting is largely a by-product of individual stock ranking. It's
also important to note that in this global economy, where a company is
domiciled is becoming less relevant. We believe where it earns its revenues is
what counts in many cases.
At the end of January 2010, we had a roughly 9% weighting in emerging markets,
which are virtually unrepresented in the Index. We were overweight in the
United Kingdom (U.K.), with much of our exposure in global mining and energy
stocks that are not highly
You will find a complete list of securities that the Fund owns on pages 12-21.
Alpha Bank S.A., Alpha Natural Resources, Inc., National Bank of Greece, and
Sara Lee Corp. were sold out of the Fund prior to January 31, 2010.
================================================================================
MANAGERS' COMMENTARY ON THE FUND | 5
<PAGE>
================================================================================
dependent on U.K. economic activity. While we were most underweight in Japan,
we did increase holdings there over the reporting period, putting money to
work in industrial companies and trading companies in particular. We reduced
our U.S. position to slightly underweight.
O WHAT'S YOUR OUTLOOK?
It's largely positive, given that the global stimulus seems to have taken
hold. However, we're also cautious because of the overhangs of commercial real
estate and private equity, both of which will require new financing in 2010.
We're also concerned about how the markets will react to the possibility of
some governments defaulting on their debt.
In a market where fundamentals increasingly count, we are confident in our
ability to outperform the Index going forward. We've made some minor
adjustments to our process, building in some "early warning" signals to help
us identify and respond to abnormal market conditions such as those in 2008
and 2009. However, our process remains focused on quality companies with good
growth prospects that are reasonably priced and score well across our multiple
dimensions.
On behalf of our colleagues at USAA, we thank you for your investment in the
Fund.
================================================================================
6 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
INVESTMENT OVERVIEW
USAA CAPITAL GROWTH FUND (Symbol: USCGX)
--------------------------------------------------------------------------------
1/31/10 7/31/09
--------------------------------------------------------------------------------
Net Assets $626.4 Million $590.3 Million
Net Asset Value Per Share $5.76 $5.47
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/10
--------------------------------------------------------------------------------
7/31/09 to 1/31/10* 1 Year 5 Years Since Inception 10/27/00
6.54% 28.08% 0.39% -3.12%
--------------------------------------------------------------------------------
EXPENSE RATIO**
--------------------------------------------------------------------------------
Before Reimbursement 1.63% After Reimbursement 1.30%
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
**THE BEFORE REIMBURSEMENT EXPENSE RATIO REPRESENTS THE TOTAL ANNUAL OPERATING
EXPENSES, BEFORE REDUCTIONS OF ANY EXPENSES PAID INDIRECTLY AND INCLUDING ANY
ACQUIRED FUND FEES AND EXPENSES, AS REPORTED IN THE FUND'S PROSPECTUS DATED
DECEMBER 1, 2009, AND IS CALCULATED AS A PERCENTAGE OF AVERAGE NET ASSETS. THE
AFTER REIMBURSEMENT EXPENSE RATIO REPRESENTS TOTAL ANNUAL OPERATING EXPENSES,
BEFORE REDUCTIONS OF ANY EXPENSES PAID INDIRECTLY AND EXCLUDING ANY ACQUIRED
FUND FEES AND EXPENSES, AFTER REIMBURSEMENT FROM USAA INVESTMENT MANAGEMENT
COMPANY (IMCO) AS REPORTED IN THE FUND'S PROSPECTUS DATED DECEMBER 1, 2009. IMCO
HAS AGREED, THROUGH DECEMBER 1, 2010, TO MAKE PAYMENTS OR WAIVE MANAGEMENT,
ADMINISTRATION, AND OTHER FEES TO LIMIT THE EXPENSES OF THE FUND SO THAT THE
TOTAL ANNUAL OPERATING EXPENSES OF THE FUND (EXCLUSIVE OF COMMISSION RECAPTURE,
EXPENSE OFFSET ARRANGEMENTS, ACQUIRED FUND FEES AND EXPENSES, AND EXTRAORDINARY
EXPENSES) DO NOT EXCEED AN ANNUAL RATE OF 1.30% OF THE FUND'S AVERAGE DAILY NET
ASSETS. THIS REIMBURSEMENT ARRANGEMENT MAY NOT BE CHANGED OR TERMINATED DURING
THIS TIME PERIOD WITHOUT APPROVAL OF THE FUND'S BOARD OF TRUSTEES AND MAY BE
CHANGED OR TERMINATED BY IMCO AT ANY TIME AFTER DECEMBER 1, 2010. 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.
================================================================================
INVESTMENT OVERVIEW | 7
<PAGE>
================================================================================
o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
LIPPER GLOBAL MSCI WORLD LIPPER SMALL-CAP USAA CAPITAL
FUNDS INDEX INDEX GROWTH FUNDS INDEX GROWTH FUND
10/31/2000 $10,000.00 $10,000.00 $10,000.00 $10,000.00
11/30/2000 9,417.18 9,391.60 8,297.02 7,850.00
12/31/2000 9,693.42 9,542.29 9,030.89 8,360.00
1/31/2001 9,853.94 9,726.04 9,306.06 8,470.00
2/28/2001 9,131.87 8,903.00 8,114.67 6,710.00
3/31/2001 8,497.56 8,316.72 7,326.55 5,860.00
4/30/2001 9,079.95 8,929.79 8,117.54 6,600.00
5/31/2001 9,024.63 8,813.42 8,337.49 6,680.00
6/30/2001 8,770.96 8,536.05 8,547.72 6,740.00
7/31/2001 8,553.50 8,421.95 8,071.24 6,300.00
8/31/2001 8,213.79 8,016.46 7,593.41 5,860.00
9/30/2001 7,446.48 7,309.02 6,408.30 4,860.00
10/31/2001 7,631.93 7,448.58 6,877.89 5,120.00
11/30/2001 8,048.17 7,888.11 7,410.86 5,570.00
12/31/2001 8,165.26 7,936.90 7,859.79 5,750.00
1/31/2002 7,917.84 7,695.64 7,622.13 5,480.00
2/28/2002 7,871.08 7,627.95 7,160.87 5,210.00
3/31/2002 8,243.96 7,979.24 7,746.32 5,480.00
4/30/2002 8,044.01 7,693.27 7,541.94 5,400.00
5/31/2002 8,062.23 7,706.10 7,239.39 5,140.00
6/30/2002 7,594.02 7,237.21 6,701.46 4,740.00
7/31/2002 6,922.45 6,626.55 5,751.05 4,260.00
8/31/2002 6,954.30 6,637.86 5,742.70 4,350.00
9/30/2002 6,263.04 5,907.03 5,394.42 4,090.00
10/31/2002 6,620.84 6,342.29 5,624.60 4,250.00
11/30/2002 6,944.92 6,683.27 6,095.71 4,420.00
12/31/2002 6,642.22 6,358.56 5,688.47 4,160.00
1/31/2003 6,429.28 6,164.79 5,538.25 4,100.00
2/28/2003 6,271.07 6,056.90 5,365.67 4,050.00
3/31/2003 6,201.77 6,036.90 5,476.32 4,180.00
4/30/2003 6,734.18 6,571.88 5,928.93 4,530.00
5/31/2003 7,148.92 6,946.05 6,533.51 4,970.00
6/30/2003 7,286.19 7,065.39 6,754.92 5,050.00
7/31/2003 7,440.20 7,208.04 7,149.91 5,420.00
8/31/2003 7,637.16 7,362.88 7,529.05 5,730.00
9/30/2003 7,678.90 7,407.19 7,344.13 5,660.00
10/31/2003 8,115.64 7,846.01 8,010.43 6,230.00
11/30/2003 8,266.29 7,964.60 8,223.73 6,500.00
12/31/2003 8,764.96 8,463.66 8,235.44 6,460.00
1/31/2004 8,948.86 8,599.47 8,620.75 6,700.00
2/29/2004 9,139.95 8,743.47 8,588.35 6,700.00
3/31/2004 9,100.90 8,685.45 8,528.99 6,710.00
4/30/2004 8,865.63 8,507.56 8,112.22 6,460.00
5/31/2004 8,895.64 8,578.55 8,281.43 6,540.00
6/30/2004 9,045.34 8,761.32 8,517.53 6,770.00
7/31/2004 8,707.33 8,475.26 7,766.10 6,270.00
8/31/2004 8,712.34 8,512.51 7,514.51 6,120.00
9/30/2004 8,945.22 8,673.55 7,943.80 6,550.00
10/31/2004 9,158.99 8,885.79 8,166.53 6,640.00
11/30/2004 9,669.76 9,352.57 8,738.38 7,230.00
12/31/2004 10,024.92 9,709.59 9,124.08 7,510.00
1/31/2005 9,834.34 9,490.98 8,778.75 7,310.00
2/28/2005 10,148.12 9,791.64 8,952.18 7,550.00
3/31/2005 9,936.88 9,602.39 8,651.37 7,230.00
4/30/2005 9,714.30 9,392.36 8,168.04 6,780.00
5/31/2005 9,879.30 9,559.24 8,709.38 7,190.00
6/30/2005 9,984.89 9,641.95 9,013.73 7,490.00
7/31/2005 10,379.47 9,978.76 9,563.75 7,810.00
8/31/2005 10,507.50 10,053.95 9,398.57 7,660.00
9/30/2005 10,787.58 10,315.09 9,449.65 7,780.00
10/31/2005 10,543.95 10,064.83 9,129.59 7,490.00
11/30/2005 10,878.56 10,400.19 9,619.04 7,790.00
12/31/2005 11,216.84 10,630.60 9,610.94 8,148.56
1/31/2006 11,793.32 11,105.29 10,394.27 8,618.28
2/28/2006 11,710.84 11,088.76 10,353.63 8,608.07
3/31/2006 12,010.57 11,332.59 10,785.12 8,853.14
4/30/2006 12,338.99 11,676.66 10,821.41 9,179.90
5/31/2006 11,882.45 11,277.79 10,148.05 8,659.13
6/30/2006 11,856.54 11,274.49 10,063.57 8,679.55
7/31/2006 11,858.49 11,344.85 9,514.77 8,740.82
8/31/2006 12,170.15 11,639.33 9,706.39 8,985.89
9/30/2006 12,336.80 11,778.11 9,833.21 9,016.52
10/31/2006 12,731.38 12,210.40 10,277.38 9,373.91
11/30/2006 13,095.44 12,509.41 10,623.96 9,690.46
12/31/2006 13,381.29 12,763.74 10,634.91 9,975.92
1/31/2007 13,587.60 12,914.42 10,902.96 10,127.07
2/28/2007 13,450.59 12,847.22 10,882.21 10,068.94
3/31/2007 13,721.22 13,082.39 10,996.34 10,347.99
4/30/2007 14,245.93 13,659.35 11,313.64 10,673.54
5/31/2007 14,685.90 14,042.08 11,832.82 11,092.11
6/30/2007 14,664.54 13,933.76 11,802.16 10,999.09
7/31/2007 14,367.87 13,625.18 11,371.52 10,859.57
8/31/2007 14,343.69 13,614.85 11,523.10 10,836.32
9/30/2007 14,928.50 14,262.30 11,971.92 11,603.70
10/31/2007 15,437.32 14,699.75 12,491.03 12,150.16
11/30/2007 14,757.91 14,098.89 11,668.30 11,394.41
12/31/2007 14,622.47 13,916.99 11,663.94 11,245.05
1/31/2008 13,591.22 12,853.47 10,510.81 10,292.30
2/29/2008 13,469.94 12,779.07 10,088.93 10,304.83
3/31/2008 13,385.75 12,656.58 9,948.57 10,104.25
4/30/2008 13,971.78 13,321.79 10,518.00 10,655.85
5/31/2008 14,164.96 13,524.92 10,952.93 10,956.72
6/30/2008 12,993.54 12,446.21 10,196.88 10,217.08
7/31/2008 12,690.66 12,142.10 10,098.29 9,903.67
8/31/2008 12,551.13 11,971.54 10,290.34 9,515.05
9/30/2008 11,224.17 10,547.67 9,117.09 8,424.39
10/31/2008 9,207.32 8,547.82 7,177.25 6,769.60
11/30/2008 8,590.18 7,994.53 6,379.58 6,218.00
12/31/2008 8,952.57 8,251.03 6,693.22 6,355.48
1/31/2009 8,282.04 7,528.19 6,235.89 5,818.40
2/28/2009 7,576.63 6,757.61 5,755.92 5,268.53
3/31/2009 8,079.46 7,267.19 6,279.48 5,601.01
4/30/2009 8,840.95 8,082.42 7,103.59 5,984.64
5/31/2009 9,639.64 8,814.74 7,369.41 6,457.78
6/30/2009 9,620.59 8,774.97 7,572.72 6,406.63
7/31/2009 10,423.94 9,518.18 8,097.57 6,994.87
8/31/2009 10,838.32 9,910.86 8,196.22 7,199.47
9/30/2009 11,233.98 10,305.89 8,775.02 7,480.80
10/31/2009 11,002.72 10,122.53 8,301.40 7,327.35
11/30/2009 11,430.84 10,536.17 8,597.07 7,647.04
12/31/2009 11,733.43 10,725.37 9,238.94 7,827.19
1/31/2010 11,288.13 10,282.08 8,818.61 7,452.00
[END CHART]
*Data from 10/31/00 to 1/31/10.
*The performance of the Lipper Global Funds Index, the MSCI World Index, and the
Lipper Small-Cap Growth Funds Index is calculated from the end of the month,
October 31, 2000, while the Fund's inception date is October 27, 2000. There may
be a slight variation of the performance numbers because of this difference.
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.
================================================================================
8 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
The graph on page 8 illustrates the comparison of a $10,000 hypothetical
investment in the USAA Capital Growth Fund to the following benchmarks:
o The unmanaged Lipper Global Funds Index tracks the total return performance of
the 30 largest funds within this category. This category includes funds that
invest at least 25% of their portfolio in securities traded outside of the
United States and that may own U.S. securities as well.
o The unmanaged Morgan Stanley Capital International (MSCI) World Index reflects
the movements of world stock markets by representing a broad selection of
domestically listed companies within each market.
o The unmanaged Lipper Small-Cap Growth Funds Index tracks the total return
performance of the 30 largest funds in the Lipper Small-Cap Growth Funds
category.
Indexes are unmanaged and you cannot invest directly in an Index.
================================================================================
INVESTMENT OVERVIEW | 9
<PAGE>
================================================================================
TOP 10 EQUITY HOLDINGS
AS OF 1/31/2010
(% of Net Assets)
Microsoft Corp. ........................................................... 2.5%
International Business Machines Corp. ..................................... 2.2%
Merck & Co., Inc. ......................................................... 2.0%
BNP Paribas S.A. ......................................................... 1.7%
Banco Santander S.A. ...................................................... 1.7%
BP plc ................................................................... 1.6%
America Movil S.A.B. de C.V. ADR "L" ...................................... 1.5%
Banco Bilbao Vizcaya Argentaria S.A. ...................................... 1.5%
Novartis AG ............................................................... 1.5%
BHP Billiton plc .......................................................... 1.4%
o ASSET ALLOCATION* -- 1/31/2010 o
[PIE CHART OF ASSET ALLOCATION]
UNITED STATES 45.0%
UNITED KINGDOM 12.3%
JAPAN 5.5%
GERMANY 4.8%
CANADA 3.6%
SPAIN 3.4%
OTHER** 23.2%
[END CHART]
* Excludes short-term investments purchased with cash collateral from
securities loaned.
** Includes countries with less than 3% of portfolio and money market
instruments (2.6%).
Foreign investing is subject to additional risk, such as currency
fluctuations, market illiquidity, and political instability.
You will find a complete list of securities that the Fund owns on pages
12-21.
================================================================================
10 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
o SECTOR ASSET ALLOCATION* -- 1/31/2010 o
[PIE CHART OF SECTOR ASSET ALLOCATION]
FINANCIALS 19.3%
INFORMATION TECHNOLOGY 13.4%
ENERGY 10.8%
CONSUMER STAPLES 9.6%
HEALTH CARE 9.5%
INDUSTRIALS 9.3%
CONSUMER DISCRETIONARY 8.4%
MATERIALS 7.6%
TELECOMMUNICATION SERVICES 5.5%
UTILITIES 4.4%
MONEY MARKET INSTRUMENTS 2.6%
[END CHART]
*Excludes short-term investments purchased with cash collateral from securities
loaned.
Percentages are of the net assets of the Fund and may not equal 100%.
================================================================================
INVESTMENT OVERVIEW | 11
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
EQUITY SECURITIES (97.8%)
COMMON STOCKS (96.8%)
CONSUMER DISCRETIONARY (8.4%)
-----------------------------
ADVERTISING (0.6%)
91,533 Publicis Groupe S.A.(a) $ 3,733
--------
APPAREL & ACCESSORIES & LUXURY GOODS (0.7%)
121,200 Coach, Inc. 4,227
--------
APPAREL RETAIL (1.7%)
50,000 Aeropostale, Inc.* 1,644
89,000 Gap, Inc. 1,698
85,100 Ross Stores, Inc. 3,909
83,500 TJX Companies, Inc. 3,174
--------
10,425
--------
AUTO PARTS & EQUIPMENT (0.8%)
1,553,540 GKN plc*(a) 2,825
19,439 Hyundai Mobis*(a) 2,472
--------
5,297
--------
AUTOMOBILE MANUFACTURERS (2.0%)
84,799 Bayerische Motoren Werke AG(a) 3,619
2,214,000 Dongfeng Motor Group Co. Ltd.(a) 2,880
398,700 Ford Motor Co.* 4,322
224,800 Nissan Motor Co. Ltd.* 1,818
--------
12,639
--------
CASINOS & GAMING (0.4%)
122,248 OPAP S.A.(a) 2,677
--------
DEPARTMENT STORES (0.5%)
23,800 Kohl's Corp.* 1,199
100,200 Macy's, Inc. 1,596
--------
2,795
--------
DISTRIBUTORS (0.2%)
3,490,957 Inchcape plc*(a) 1,486
--------
================================================================================
12 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
GENERAL MERCHANDISE STORES (0.8%)
54,600 Family Dollar Stores, Inc. $ 1,686
65,300 Target Corp. 3,348
--------
5,034
--------
HOME IMPROVEMENT RETAIL (0.5%)
939,766 Kingfisher plc(a) 3,181
--------
HOUSEWARES & SPECIALTIES (0.2%)
43,800 Jarden Corp. 1,335
--------
Total Consumer Discretionary 52,829
--------
CONSUMER STAPLES (9.6%)
-----------------------
DRUG RETAIL (0.7%)
37,300 CVS Caremark Corp. 1,207
80,800 Walgreen Co. 2,913
--------
4,120
--------
FOOD DISTRIBUTORS (0.6%)
125,800 Sysco Corp. 3,521
--------
FOOD RETAIL (1.0%)
163,200 Alimentation Couche-Tard, Inc. 3,074
61,700 Loblaw Companies Ltd. 2,025
36,500 Metro, Inc. 1,334
--------
6,433
--------
HOUSEHOLD PRODUCTS (1.3%)
57,851 Clorox Co. 3,423
80,300 Kimberly-Clark Corp. 4,769
--------
8,192
--------
HYPERMARKETS & SUPER CENTERS (0.4%)
45,176 Wal-Mart Stores, Inc. 2,414
--------
PACKAGED FOODS & MEAT (2.6%)
221,200 ConAgra Foods, Inc. 5,030
268,900 Dean Foods Co.* 4,741
301,450 Del Monte Foods Co. 3,430
119,300 Kraft Foods, Inc. "A" 3,300
--------
16,501
--------
PERSONAL PRODUCTS (0.4%)
62,400 Herbalife Ltd. 2,424
--------
SOFT DRINKS (1.0%)
305,600 Coca-Cola Enterprises, Inc. 6,170
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 13
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
TOBACCO (1.6%)
218,530 Altria Group, Inc. $ 4,340
45,900 Lorillard, Inc. 3,475
50,100 Philip Morris International, Inc. 2,280
--------
10,095
--------
Total Consumer Staples 59,870
--------
ENERGY (10.8%)
--------------
COAL & CONSUMABLE FUELS (0.8%)
556,000 China Shenhua Energy Co. Ltd. "H"(a) 2,342
1,280,000 Yanzhou Coal Mining Co. Ltd. "H"(a) 2,492
--------
4,834
--------
INTEGRATED OIL & GAS (7.7%)
1,097,908 BP plc(a) 10,275
103,400 Cenovus Energy, Inc.(b) 2,389
118,000 Chevron Corp. 8,510
100,600 ConocoPhillips 4,829
129,212 ENI S.p.A.(a) 3,010
46,400 Exxon Mobil Corp. 2,989
29,300 Occidental Petroleum Corp. 2,295
174,900 Petroleo Brasileiro S.A. ADR 7,096
240,627 Royal Dutch Shell plc "A"(c) 6,738
--------
48,131
--------
OIL & GAS DRILLING (0.6%)
101,131 Noble Corp. 4,078
--------
OIL & GAS EQUIPMENT & SERVICES (1.4%)
320,200 Acergy S.A(a) 4,869
53,645 Technip S.A.(a) 3,628
--------
8,497
--------
OIL & GAS STORAGE & TRANSPORTATION (0.3%)
104,800 Williams Companies, Inc. 2,184
--------
Total Energy 67,724
--------
FINANCIALS (18.3%)
------------------
CONSUMER FINANCE (0.3%)
125,700 Discover Financial Services 1,720
--------
DIVERSIFIED BANKS (9.4%)
99,790 Australia and New Zealand Banking Group Ltd.(a) 1,909
628,209 Banco Bilbao Vizcaya Argentaria S.A.(a) 9,544
749,455 Banco Santander S.A.(a),(c) 10,559
================================================================================
14 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
4,820,000 Bank of China Ltd. "H"(a) $ 2,313
280,582 Bank of Cyprus(a) 1,770
50,300 Bank of Nova Scotia 2,109
877,718 Barclays plc(a) 3,759
152,842 BNP Paribas S.A.(a) 10,885
190,000 DBS Group Holdings Ltd.(a) 1,915
29,600 National Bank of Canada 1,564
5,666,000 PT Bank Mandiri Tbk(a) 2,806
21,189 Raiffeisen International Bank-Holding AG(a),(c) 1,047
256,320 Standard Chartered plc(a) 5,860
256,570 Woori Finance Holdings Co. Ltd.*(a) 2,953
--------
58,993
--------
DIVERSIFIED CAPITAL MARKETS (1.2%)
160,460 Credit Suisse Group(a) 6,955
68,704 Investec plc(a) 463
--------
7,418
--------
DIVERSIFIED REAL ESTATE ACTIVITIES (0.5%)
593,000 Capitaland Ltd. 1,628
853,000 New World Development Ltd.(a) 1,400
--------
3,028
--------
INVESTMENT BANKING & BROKERAGE (0.5%)
10,400 Goldman Sachs Group, Inc. 1,547
57,500 Morgan Stanley 1,540
--------
3,087
--------
LIFE & HEALTH INSURANCE (2.8%)
89,000 AFLAC, Inc. 4,310
306,509 AMP Ltd.(a) 1,690
97,000 MetLife, Inc. 3,426
57,000 Principal Financial Group, Inc. 1,314
91,700 Prudential Financial, Inc. 4,584
869 Sony Financial Holdings, Inc.(a) 2,394
--------
17,718
--------
MULTI-LINE INSURANCE (1.6%)
25,998 Allianz Holding AG(a) 2,878
87,200 Assurant, Inc. 2,741
742,029 Aviva plc(a) 4,584
--------
10,203
--------
PROPERTY & CASUALTY INSURANCE (0.3%)
73,400 Assured Guaranty Ltd. 1,663
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
REINSURANCE (1.5%)
76,384 Hannover Rueckversicherungs*(a) $ 3,531
12,876 Muenchener Rueckversicherungs-Gesellschaft AG(a) 1,932
35,632 Reinsurance Group of America, Inc. "A" 1,736
47,000 Transatlantic Holdings, Inc. 2,335
--------
9,534
--------
SPECIALIZED FINANCE (0.2%)
222,612 IG Group Holdings plc(a) 1,430
--------
Total Financials 114,794
--------
HEALTH CARE (9.5%)
------------------
HEALTH CARE DISTRIBUTORS (0.4%)
82,400 AmerisourceBergen Corp. 2,247
--------
HEALTH CARE EQUIPMENT (0.6%)
23,800 C.R. Bard, Inc. 1,973
49,100 Kinetic Concepts, Inc.* 2,027
--------
4,000
--------
HEALTH CARE FACILITIES (0.7%)
51,900 Community Health Systems, Inc.* 1,693
88,000 Universal Health Services, Inc. "B" 2,566
--------
4,259
--------
HEALTH CARE SERVICES (0.3%)
28,400 DaVita, Inc.* 1,697
--------
MANAGED HEALTH CARE (1.1%)
214,400 UnitedHealth Group, Inc. 7,075
--------
PHARMACEUTICALS (6.4%)
166,343 AstraZeneca plc(a) 7,734
326,000 Merck & Co., Inc. 12,447
18,464 Merck KGaA(a) 1,646
168,400 Mylan, Inc.* 3,070
171,401 Novartis AG(a) 9,180
76,350 Valeant Pharmaceuticals International* 2,555
132,400 Warner Chilcott plc "A"* 3,619
--------
40,251
--------
Total Health Care 59,529
--------
INDUSTRIALS (9.3%)
------------------
AEROSPACE & DEFENSE (1.0%)
27,000 Alliant Techsystems, Inc.* 2,132
19,700 L-3 Communications Holdings, Inc. 1,642
================================================================================
16 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
51,115 MTU Aero Engines Holding AG(a) $ 2,657
--------
6,431
--------
AIRLINES (0.8%)
1,554,000 Cathay Pacific Airways*(a) 2,541
250,000 Singapore Airlines 2,457
--------
4,998
--------
CONSTRUCTION & ENGINEERING (1.4%)
48,000 Daelim Industrial Co. Ltd.*(a) 3,164
38,573 Fomento de Construcciones y Contratas S.A.(a) 1,475
218,700 KBR, Inc. 4,096
--------
8,735
--------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.6%)
42,000 Joy Global, Inc. 1,921
659,000 SembCorp Marine Ltd.(a) 1,542
--------
3,463
--------
DIVERSIFIED SUPPORT SERVICES (0.2%)
187,625 Downer Group(a) 1,375
--------
INDUSTRIAL CONGLOMERATES (0.7%)
370,000 Keppel Corp. Ltd.(a) 2,189
44,240 LG Corp.*(a) 2,386
--------
4,575
--------
INDUSTRIAL MACHINERY (0.9%)
264,414 IMI plc(a) 2,293
66,915 Wartsila Corp. OYJ "B"(a) 3,125
--------
5,418
--------
OFFICE SERVICES & SUPPLIES (0.3%)
51,400 Avery Dennison Corp. 1,671
--------
RAILROADS (0.7%)
43,600 East Japan Railway Co.(a) 2,927
514 West Japan Railway(a) 1,773
--------
4,700
--------
RESEARCH & CONSULTING SERVICES (0.7%)
99,700 FTI Consulting, Inc.* 4,132
--------
TRADING COMPANIES & DISTRIBUTORS (2.0%)
301,000 Itochu Corp.(a) 2,344
118,800 Mitsubishi Corp.(a) 2,856
242,300 Mitsui & Co. Ltd.(a) 3,541
================================================================================
PORTFOLIO OF INVESTMENTS | 17
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
342,100 Sumitomo Corp.(a) $ 3,843
--------
12,584
--------
Total Industrials 58,082
--------
INFORMATION TECHNOLOGY (13.4%)
------------------------------
COMMUNICATIONS EQUIPMENT (1.2%)
538,600 Motorola, Inc.* 3,312
61,800 Research In Motion Ltd.* 3,900
--------
7,212
--------
COMPUTER HARDWARE (2.5%)
284,000 Fujitsu Ltd.(a) 1,735
114,900 International Business Machines Corp. 14,063
--------
15,798
--------
DATA PROCESSING & OUTSOURCED SERVICES (0.7%)
57,600 Computer Sciences Corp.* 2,955
39,400 Hewitt Associates, Inc. "A"* 1,555
--------
4,510
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.5%)
950,000 Hitachi Ltd.*(a) 3,256
--------
ELECTRONIC MANUFACTURING SERVICES (0.5%)
205,600 Jabil Circuit, Inc. 2,977
--------
INTERNET SOFTWARE & SERVICES (1.1%)
8,300 Google, Inc. "A"* 4,394
125,400 Tencent Holdings Ltd.(a) 2,325
--------
6,719
--------
IT CONSULTING & OTHER SERVICES (0.8%)
38,700 Cognizant Technology Solutions Corp. "A"* 1,689
123,100 Nomura Research, Inc.(a) 2,756
28,100 SAIC, Inc.* 515
--------
4,960
--------
SEMICONDUCTORS (1.9%)
809,287 Infineon Technologies AG*(a) 4,464
333,125 Micron Technology, Inc.* 2,905
288,964 Siliconware Precision Industries Co. ADR 1,950
689,100 United Microelectronics Corp. ADR*(c) 2,419
--------
11,738
--------
SYSTEMS SOFTWARE (3.3%)
548,591 Microsoft Corp. 15,459
229,300 Oracle Corp. 5,288
--------
20,747
--------
================================================================================
18 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
TECHNOLOGY DISTRIBUTORS (0.9%)
138,500 Arrow Electronics, Inc.* $ 3,638
84,400 Avnet, Inc.* 2,232
--------
5,870
--------
Total Information Technology 83,787
--------
MATERIALS (7.6%)
----------------
CONSTRUCTION MATERIALS (0.4%)
44,550 HeidelbergCement AG(a) 2,684
--------
DIVERSIFIED CHEMICALS (0.8%)
54,600 Eastman Chemical Co. 3,087
969,000 Showa Denko K.K.(a) 1,972
--------
5,059
--------
DIVERSIFIED METALS & MINING (4.3%)
52,422 Anglo American Capital plc*(a) 1,902
306,255 BHP Billiton plc(a) 8,995
44,700 First Quantum Minerals Ltd. 3,242
58,874 KGHM Polska Miedz S.A.(a) 1,932
164,918 Rio Tinto plc(a) 7,913
94,600 Teck Cominco Ltd.* 3,097
--------
27,081
--------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.4%)
25,300 CF Industries Holdings, Inc. 2,349
--------
GOLD (0.3%)
34,600 Newmont Mining Corp. 1,483
--------
METAL & GLASS CONTAINERS (0.4%)
108,400 Pactiv Corp.* 2,445
--------
PAPER PRODUCTS (1.0%)
196,800 International Paper Co. 4,509
75,800 MeadWestvaco Corp. 1,824
--------
6,333
--------
Total Materials 47,434
--------
TELECOMMUNICATION SERVICES (5.5%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (2.4%)
353,950 AT&T, Inc. 8,976
653,929 BT Group plc(a) 1,435
138,598 Koninklijke (Royal) KPN N.V.(a) 2,299
244,670 Portugal Telecom SGPS S.A.(a) 2,534
--------
15,244
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (3.1%)
216,000 America Movil S.A.B. de C.V. ADR "L" $ 9,428
55,700 Mobile TeleSystems ADR 2,661
3,448,995 Vodafone Group plc(a) 7,410
--------
19,499
--------
Total Telecommunication Services 34,743
--------
UTILITIES (4.4%)
----------------
ELECTRIC UTILITIES (1.1%)
807,727 EDP-Energias de Portugal(a) 3,196
159,300 Kansai Electric Power Co., Inc.(a) 3,632
--------
6,828
--------
GAS UTILITIES (0.9%)
792,935 Snam Rete Gas S.p.A.(a) 3,726
88,000 UGI Corp. 2,157
--------
5,883
--------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.4%)
196,500 AES Corp.* 2,482
--------
MULTI-UTILITIES (2.0%)
93,200 Integrys Energy Group, Inc. 3,900
59,400 PG&E Corp. 2,509
45,300 Public Service Enterprise Group, Inc. 1,386
53,057 RWE AG(a) 4,702
--------
12,497
--------
Total Utilities 27,690
--------
Total Common Stocks (cost: $570,423) 606,482
--------
PREFERRED SECURITIES (1.0%)
FINANCIALS (1.0%)
-----------------
DIVERSIFIED BANKS (1.0%)
343,300 Banco Itau Holding Financeira S.A. (cost: $7,188) 6,580
--------
Total Equity Securities (cost: $577,611) 613,062
--------
MONEY MARKET INSTRUMENTS (2.6%)
MONEY MARKET FUNDS (2.6%)
16,237,133 State Street Institutional Liquid Reserve Fund, 0.13%(d)
(cost: $16,237) 16,237
--------
================================================================================
20 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED (3.5%)
MONEY MARKET FUNDS (1.4%)
8,766,944 BlackRock Liquidity Funds TempFund Portfolio, 0.11%(d) $ 8,767
--------
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (2.1%)
$13,000 Credit Suisse First Boston LLC, 0.11%, acquired
on 1/29/2010 and due 2/01/2010 at $13,000
(collateralized by $13,070 of U.S. Treasury,
3.63%, due 8/15/2019; market value $13,265) 13,000
--------
Total Short-Term Investments Purchased With Cash
Collateral From Securities Loaned (cost: $21,767) 21,767
--------
TOTAL INVESTMENTS (COST: $615,615) $651,066
========
--------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
--------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
--------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $334,319 $272,163 $- $606,482
Preferred Securities - 6,580 - 6,580
Money Market Instruments:
Money Market Funds 16,237 - - 16,237
Short-Term Investments Purchased
with Cash Collateral from
Securities Loaned:
Money Market Funds 8,767 - - 8,767
Repurchase Agreements - 13,000 - 13,000
--------------------------------------------------------------------------------------------------
Total $359,323 $291,743 $- $651,066
--------------------------------------------------------------------------------------------------
================================================================================
PORTFOLIO OF INVESTMENTS | 21
<PAGE>
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
Investments in foreign securities were 52.8% of net assets at January 31,
2010.
ADR American depositary receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in U.S.
dollars.
o SPECIFIC NOTES
(a) Security was fair valued at January 31, 2010, by USAA Investment
Management Company (the Manager) in accordance with valuation procedures
approved by the Board of Trustees.
(b) Restricted security that is not registered under the Securities Act of
1933. A resale of this security in the United States may occur in an
exempt transaction to a qualified institutional buyer as defined by Rule
144A, and as such has been deemed liquid by the Manager under liquidity
guidelines approved by the Board of Trustees, unless otherwise noted as
illiquid.
(c) The security or a portion thereof was out on loan as of January 31, 2010.
(d) Rate represents the money market fund annualized seven-day yield at
January 31, 2010.
* Non-income-producing security.
================================================================================
22 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (including securities
on loan of $20,413) (cost of $615,615) $ 651,066
Cash 12
Cash denominated in foreign currencies (identified cost of $20) 20
Receivables:
Capital shares sold 684
USAA Investment Management Company (Note 6D) 284
Dividends and interest 606
Securities sold 14,232
Other 9
Unrealized appreciation on foreign currency contracts held, at value 24
---------
Total assets 666,937
---------
LIABILITIES
Payables:
Upon return of securities loaned 21,767
Securities purchased 17,419
Capital shares redeemed 761
Accrued management fees 405
Accrued transfer agent's fees 36
Other accrued expenses and payables 130
---------
Total liabilities 40,518
---------
Net assets applicable to capital shares outstanding $ 626,419
=========
NET ASSETS CONSIST OF:
Paid-in capital $ 923,985
Overdistribution of net investment income (246)
Accumulated net realized loss on investments (332,764)
Net unrealized appreciation of investments 35,451
Net unrealized depreciation of foreign currency translations (7)
---------
Net assets applicable to capital shares outstanding $ 626,419
=========
Capital shares outstanding, unlimited number of shares
authorized, no par value 108,748
=========
Net asset value, redemption price, and offering price per share $ 5.76
=========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 23
<PAGE>
================================================================================
STATEMENT OF OPERATIONS
(IN THOUSANDS)
Six-month period ended January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $237) $ 5,766
Interest 12
Securities lending (net) 56
--------
Total income 5,834
--------
EXPENSES
Management fees 2,305
Administration and servicing fees 484
Transfer agent's fees 1,634
Custody and accounting fees 124
Postage 85
Shareholder reporting fees 32
Trustees' fees 5
Registration fees 29
Professional fees 44
Other 9
--------
Total expenses 4,751
Expenses reimbursed (556)
--------
Net expenses 4,195
--------
NET INVESTMENT INCOME 1,639
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on:
Investments 78,958
Foreign currency transactions (489)
Change in net unrealized appreciation/depreciation of:
Investments (41,542)
Foreign currency translations (14)
--------
Net realized and unrealized gain 36,913
--------
Increase in net assets resulting from operations $ 38,552
========
See accompanying notes to financial statements.
================================================================================
24 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Six-month period ended January 31, 2010 (unaudited), and year ended
July 31, 2009
--------------------------------------------------------------------------------
1/31/2010 7/31/2009
---------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 1,639 $ 10,195
Net realized gain (loss) on investments 78,958 (334,878)
Net realized loss on foreign currency transactions (489) (1,103)
Change in net unrealized appreciation/depreciation of:
Investments (41,542) 82,907
Foreign currency translations (14) 16
------------------------
Increase (decrease) in net assets resulting
from operations 38,552 (242,863)
------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (7,724) (10,218)
------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 79,410 182,638
Reinvested dividends 7,659 10,133
Cost of shares redeemed (81,808) (166,570)
------------------------
Increase in net assets from capital share transactions 5,261 26,201
------------------------
Net increase (decrease) in net assets 36,089 (226,880)
NET ASSETS
Beginning of period 590,330 817,210
------------------------
End of period $626,419 $ 590,330
========================
Accumulated undistributed (overdistribution of)
net investment income:
End of period $ (246) $ 5,839
========================
CHANGE IN SHARES OUTSTANDING
Shares sold 13,385 34,433
Shares issued for dividends reinvested 1,256 2,098
Shares redeemed (13,760) (32,159)
------------------------
Increase in shares outstanding 881 4,372
========================
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 25
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USAA MUTUAL FUNDS TRUST (the Trust), registered under the Investment Company Act
of 1940 (the 1940 Act), as amended, is an open-end management investment company
organized as a Delaware statutory trust consisting of 46 separate funds. The
information presented in this semiannual report pertains only to the USAA
Capital Growth Fund (the Fund), which is classified as diversified under the
1940 Act. The Fund's investment objective is capital appreciation.
A. SECURITY VALUATION -- The value of each security is determined (as of the
close of trading on the New York Stock Exchange (NYSE) on each business day
the NYSE is open) as set forth below:
1. Equity securities, including exchange-traded funds (ETFs), except as
otherwise noted, traded primarily on a domestic securities exchange or
the Nasdaq over-the-counter markets are valued at the last sales price
or official closing price on the exchange or primary market on which
they trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according to
local market convention, available at the time the Fund is valued. If no
last sale or official closing price is reported or available, the
average of the bid and asked prices generally is used.
2. 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
================================================================================
26 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
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
subadviser, if applicable, will monitor for events that would materially
affect the value of the Fund's foreign securities. The Fund's subadviser
has agreed to notify the Manager of significant events it identifies
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 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. Repurchase agreements are valued at cost, which approximates market
value.
6. Securities for which market quotations are not readily available or are
considered unreliable, or whose values have been materially
================================================================================
NOTES TO FINANCIAL STATEMENTS | 27
<PAGE>
================================================================================
affected by events occurring after the close of their primary markets
but before the pricing of the Fund, are valued in good faith at fair
value, using methods determined by the Manager in consultation with the
Fund's subadviser, if applicable, under valuation procedures approved by
the Trust's Board of Trustees. The effect of fair value pricing is that
securities may not be priced on the basis of quotations from the primary
market in which they are traded and the actual price realized from the
sale of a security may differ materially from the fair value price.
Valuing these securities at fair value is intended to cause the Fund's
NAV to be more reliable than it otherwise would be.
Fair value methods used by the Manager include, but are not limited to,
obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any restrictions
on disposition of the securities, and an evaluation of the forces that
influenced the market in which the securities are purchased and sold.
B. FAIR VALUE MEASUREMENTS -- Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy disclosed in the portfolio of investments
is based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. The three levels are defined as
follows:
Level 1 -- inputs to the valuation methodology are quoted prices
(unadjusted) in active markets for identical securities.
Level 2 -- inputs to the valuation methodology are other significant
observable inputs, including quoted prices for similar securities, inputs
that are observable for the securities, either directly or indirectly, and
market-corroborated inputs such as market indices.
================================================================================
28 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
Level 3 -- inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not
necessarily an indication of the risks associated with investing in those
securities.
C. FEDERAL TAXES -- The Fund's policy is to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its income to its shareholders.
Therefore, no federal income tax provision is required.
D. INVESTMENTS IN SECURITIES -- Security transactions are accounted for on
the date the securities are purchased or sold (trade date). Gains or
losses from sales of investment securities are computed on the identified
cost basis. Dividend income, less foreign taxes, if any, is recorded on
the ex-dividend date. If the ex-dividend date has passed, certain
dividends from foreign securities are recorded upon notification.
Interest income is recorded daily on the accrual basis. Discounts and
premiums on short-term securities are amortized on a straight-line basis
over the life of the respective securities.
E. REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements
with commercial banks or recognized security dealers. These agreements
are collateralized by underlying securities. The collateral obligations
are marked-to-market daily to ensure their value is equal to or in excess
of the repurchase agreement price plus accrued interest and are held by
the Fund, either through its regular custodian or through a special
"tri-party" custodian that maintains separate accounts for both the Fund
and its counterparty, until maturity of the repurchase agreement.
Repurchase agreements are subject to credit risk, and the Fund's Manager
monitors the creditworthiness of sellers with which the Fund may enter
into repurchase agreements.
F. 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.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 29
<PAGE>
================================================================================
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.
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.
G. EXPENSES PAID INDIRECTLY -- Through arrangements with the Fund's custodian
and other banks utilized by the Fund for cash management purposes,
realized credits, if any, generated from cash balances in the Fund's bank
accounts may be used to directly reduce the Fund's expenses. For the
six-month period ended January 31, 2010, these custodian and other bank
credits reduced the Fund's expenses by less than $500.
================================================================================
30 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, its
officers and trustees are indemnified against certain liabilities arising
out of the performance of their duties to the Trust. In addition, in the
normal course of business the Trust enters into contracts that contain a
variety of representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Trust that have not yet occurred. However, the Trust expects the risk of
loss to be remote.
I. USE OF ESTIMATES -- The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $750 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at a rate per annum equal to
the rate at which CAPCO obtains funding in the capital markets, with no markup.
The USAA funds that are party to the loan agreement are assessed facility fees
by CAPCO based on the funds' assessed proportionate share of CAPCO's operating
expenses related to obtaining and maintaining CAPCO's funding programs in total
(in no event to exceed 0.13% annually of the amount of the committed loan
agreement). Prior to September 25, 2009, the maximum annual facility fee was
0.07% of the amount of the committed loan agreement. The facility fees are
allocated among the funds based on their respective average net assets for the
period.
For the six-month period ended January 31, 2010, the Fund paid CAPCO facility
fees of $2,000, which represents 1.5% of the total fees paid to CAPCO by the
USAA funds. The Fund had no borrowings under this agreement during the six-month
period ended January 31, 2010.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 31
<PAGE>
================================================================================
(3) DISTRIBUTIONS
The tax basis of distributions and accumulated undistributed net investment
income will be determined based upon the Fund's tax year-end of July 31, 2010,
in accordance with applicable tax law.
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
July 31, 2009, the Fund had capital loss carryovers of $189,874,000, for federal
income tax purposes, which, if not offset by subsequent capital gains, will
expire in 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 six-month period
ended January 31, 2010, the Fund did not incur any income tax, interest, or
penalties. As of January 31, 2010, 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 July 31, 2006, through July 31, 2009, remain
subject to examination by the Internal Revenue Service and state taxing
authorities. On an ongoing basis, the Manager will monitor its tax positions to
determine if adjustments to this conclusion are necessary.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended January 31, 2010, were
$698,210,000 and $696,883,000, respectively.
As of January 31, 2010, the cost of securities, including short-term securities,
for federal income tax purposes, was approximately the same as that reported in
the financial statements.
================================================================================
32 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
Gross unrealized appreciation and depreciation of investments as of January 31,
2010, were $55,312,000 and $19,861,000, respectively, resulting in net
unrealized appreciation of $35,451,000.
(5) LENDING OF PORTFOLIO SECURITIES
The Fund, through its third-party securities-lending agent, Wachovia Global
Securities Lending (Wachovia), may lend its securities to qualified financial
institutions, such as certain broker-dealers, to earn additional income. The
borrowers are required to secure their loans continuously with cash collateral
in an amount at least equal to the fair value of the securities loaned,
initially in an amount at least equal to 102% of the fair value of domestic
securities loaned and 105% of the fair value of international securities loaned.
Cash collateral is invested in high-quality short-term investments. Cash
collateral requirements are determined daily based on the prior business day's
ending value of securities loaned. Imbalances in cash collateral may occur on
days where market volatility causes security prices to change significantly, and
are adjusted the next business day. The Fund and Wachovia retain 80% and 20%,
respectively, of the income earned from the investment of cash received as
collateral, net of any expenses associated with the lending transaction.
Wachovia receives no other fees from the Fund for its services as
securities-lending agent. Risks to the Fund in securities-lending transactions
are that the borrower may not provide additional collateral when required or
return the securities when due, and that the value of the short-term investments
will be less than the amount of cash collateral required to be returned to the
borrower. Wachovia Bank, N.A., parent company of Wachovia, has agreed to
indemnify the Fund against any losses due to counterparty default in securities-
lending transactions. For the six-month period ended January 31, 2010, the Fund
received securities-lending income of $56,000, which is net of the 20% income
retained by Wachovia. As of January 31, 2010, the Fund loaned securities having
a fair market value of approximately $20,413,000 and received cash collateral of
$21,767,000 for the loans, which was invested in short-term investments, as
noted in the Fund's portfolio of investments.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 33
<PAGE>
================================================================================
(6) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and affairs of the Fund,
subject to the authority of and supervision by the Trust's Board of
Trustees. The Manager is authorized to select (with approval of the
Trust's Board of Trustees and without shareholder approval) one or more
subadvisers to manage the actual day-to-day investment of 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 investment management fee for the Fund is composed of a base fee and a
performance adjustment. The Fund's base fee is accrued daily and paid
monthly at an annualized rate of 0.75% of the Fund's average net assets
for the fiscal year.
The performance adjustment is calculated monthly by comparing the Fund's
performance to that of the Lipper Global Funds Index over the performance
period. The Lipper Global Funds Index tracks the total return performance
of the 30 largest funds in the Lipper Global Funds category. The
performance period for the Fund consists of the current month plus the
previous 35 months. The following table is utilized to determine the
extent of the performance adjustment:
OVER/UNDER PERFORMANCE ANNUAL ADJUSTMENT RATE
RELATIVE TO INDEX(1) AS A % OF THE FUND'S AVERAGE NET ASSETS(1)
---------------------------------------------------------------------------
+/- 1.00% to 4.00% +/- 0.04%
+/- 4.01% to 7.00% +/- 0.05%
+/- 7.01% and greater +/- 0.06%
(1)Based on the difference between average annual performance of the Fund
and its relevant index, rounded to the nearest 0.01%. Average net assets
are calculated over a rolling 36-month period.
================================================================================
34 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
The annual performance adjustment rate is multiplied by the average net
assets of the Fund over the entire performance period, which is then
multiplied by a fraction, the numerator of which is the number of days in
the month and the denominator of which is 365 (366 in leap years). The
resulting amount is the performance adjustment; a positive adjustment in
the case of overperformance, or a negative adjustment in the case of
underperformance.
Under the performance fee arrangement, the Fund will pay a positive
performance fee adjustment for a performance period whenever the
Fund outperforms the applicable Lipper index over that period, even
if the Fund had overall negative returns during the performance period.
For the six-month period ended January 31, 2010, the Fund incurred
total management fees, paid or payable to the Manager, of $2,305,000,
which included a (0.04)% performance adjustment of $(115,000).
B. SUBADVISORY ARRANGEMENTS -- The Manager has entered into an investment
subadvisory agreement with Batterymarch Financial Management, Inc.
(Batterymarch), under which Batterymarch directs the investment and
reinvestment of the Fund's assets (as allocated from time to time by the
Manager). The Manager (not the Fund) pays Batterymarch a subadvisory fee
based on the aggregate net assets that Batterymarch manages in the USAA
Cornerstone Strategy Fund and the USAA Capital Growth Fund combined, in
the annual amount of 0.25% of the first $250 million of assets, 0.21% on
assets over $250 million and up to $500 million, and 0.17% on assets over
$500 million. For the six-month period ended January 31, 2010, the Manager
incurred subadvisory fees for the Fund, paid or payable to Batterymarch,
of $650,000.
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 0.15% of the Fund's average net assets. For the
six-month period ended January 31, 2010, the Fund incurred administration
and servicing fees, paid or payable to the Manager, of $484,000.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 35
<PAGE>
================================================================================
In addition to the services provided under its Administration and
Servicing Agreement with the Fund, the Manager also provides certain
compliance and legal services for the benefit of the Fund. The Trust's
Board of Trustees has approved the reimbursement of a portion of these
expenses incurred by the Manager. For the six-month period ended January
31, 2010, the Fund reimbursed the Manager $15,000 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 agreed, through December 1, 2010, to
limit the annual expenses of the Fund to 1.30% of its average annual net
assets, excluding extraordinary expenses and before reductions of any
expenses paid indirectly, and will reimburse the Fund for all expenses in
excess of that amount. This expense limitation arrangement may not be
changed or terminated through December 1, 2010, without approval of the
Trust's Board of Trustees, and may be changed or terminated by the Manager
at any time after that date. For the six-month period ended January 31,
2010, the Fund incurred reimbursable expenses of $556,000, of which
$284,000 was receivable from the Manager.
E. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund based on an annual charge of $23 per
shareholder account plus out-of-pocket expenses. The Fund also pays SAS
fees that are related to the administration and servicing of accounts that
are traded on an omnibus basis. For the six-month period ended January 31,
2010, the Fund incurred transfer agent's fees, paid or payable to SAS, of
$1,634,000.
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.
(7) 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.
================================================================================
36 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
(8) 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 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.
(9) NEW ACCOUNTING PRONOUNCEMENT
In January 2010, the Financial Accounting Standards Board issued amended
guidance for improving disclosure about fair value measurements that adds new
disclosure requirements about transfers into and out of Levels 1 and 2 and
separate disclosures about purchases, sales, issuances, and settlements in the
reconciliation for fair value measurements using significant unobservable inputs
(Level 3). It also clarifies existing disclosure requirements relating to the
levels of disaggregation for fair value measurement and inputs and valuation
techniques used to measure fair value. The amended guidance is effective for
financial statements for fiscal years and interim periods beginning after
December 15, 2009, except for disclosures about purchases, sales, issuances and
settlements in the rollforward of activity in Level 3 fair value measurements,
which are effective for fiscal years beginning after December 15, 2010 and for
interim periods within those fiscal years. The Manager is in the process of
evaluating the impact of this guidance on the Fund's financial statement
disclosures.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 37
<PAGE>
================================================================================
(10) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
JANUARY 31, YEAR ENDED JULY 31,
--------------------------------------------------------------------------------
2010 2009 2008 2007 2006 2005
--------------------------------------------------------------------------------
Net asset value at
beginning of period $ 5.47 $ 7.90 $ 9.34 $ 8.56 $ 7.81 $ 6.27
--------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) .02 .09 .08 .04 .05 (.04)(a)
Net realized and
unrealized gain (loss) .34 (2.42) (.80) 1.91 .87 1.58(a)
--------------------------------------------------------------------------------
Total from investment operations .36 (2.33) (.72) 1.95 .92 1.54(a)
--------------------------------------------------------------------------------
Less distributions from:
Net investment income (.07) (.10) (.05) (.05) - -
Realized capital gains - - (.67) (1.12) (.17) -
--------------------------------------------------------------------------------
Total distributions (.07) (.10) (.72) (1.17) (.17) -
--------------------------------------------------------------------------------
Net asset value at
end of period $ 5.76 $ 5.47 $ 7.90 $ 9.34 $ 8.56 $ 7.81
================================================================================
Total return (%)* 6.54 (29.37) (8.80) 24.24(b) 11.92 24.56
Net assets at
end of period (000) $626,419 $590,330 $817,210 $540,817 $151,754 $115,515
Ratios to average
net assets:**
Expenses (%)(c),(e) 1.30(d) 1.26 1.20 1.16(b) 1.00 1.00
Expenses, excluding
reimbursements (%)(e) 1.47(d) 1.63 1.41 1.47(b) 1.68 1.68
Net investment
income (loss) (%) .51(d) 1.83 1.26 .83 .56 (.62)
Portfolio turnover (%) 113 285 210 223 240 166
* Assumes reinvestment of all net investment income and realized capital gain distributions, if any, during the
period. Includes adjustments in accordance with U.S. generally accepted accounting principles and could
differ from the Lipper reported return.
** For the six-month period ended January 31, 2010, average net assets were $639,740,000.
(a) Calculated using average shares.
(b) For the year ended July 31, 2007, SAS voluntarily reimbursed the Fund for a portion of the transfer agent's
fees incurred. The reimbursement had no effect on the Fund's total return or ratio of expenses to average net
assets.
(c) Effective December 1, 2008, the Manager voluntarily agreed to limit the annual expenses of the Fund to 1.30%
of the Fund's average net assets. Prior to December 1, 2008, the Manager voluntarily agreed to limit the
annual expenses of the Fund to 1.20% of the Fund's average net assets from December 1, 2006, through
November 30, 2008; and to 1.00% prior to December 1, 2006.
(d) Annualized. The ratio is not necessarily indicative of 12 months of operations.
(e) Reflects total operating expenses of the Fund before reductions of any expenses paid indirectly. The Fund's
expenses paid indirectly decreased the expense ratios as follows:
(.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+) (.00%)(+) (.05%)
(+) Represents less than 0.01% of average net assets.
================================================================================
38 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
EXPENSE EXAMPLE
January 31, 2010 (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 August 1, 2009, through
January 31, 2010.
ACTUAL EXPENSES
The first line of the table on the next page provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested at the beginning of the period, to
estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number in the first line under the heading
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this
================================================================================
EXPENSE EXAMPLE | 39
<PAGE>
================================================================================
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE AUGUST 1, 2009 -
AUGUST 1, 2009 JANUARY 31, 2010 JANUARY 31, 2010
-------------------------------------------------------
Actual $1,000.00 $1,065.40 $6.77
Hypothetical
(5% return before expenses) 1,000.00 1,018.65 6.61
* Expenses are equal to the Fund's annualized expense ratio of 1.30%, which is
net of any reimbursements and expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 184 days/365 days (to
reflect the one-half-year period). The Fund's ending account value on the
first line in the table is based on its actual total return of 6.54% for the
six-month period of August 1, 2009, through January 31, 2010.
================================================================================
40 | USAA CAPITAL GROWTH FUND
<PAGE>
================================================================================
TRUSTEES Christopher W. Claus
Barbara B. Dreeben
Robert L. Mason, Ph.D.
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
Richard A. Zucker
--------------------------------------------------------------------------------
ADMINISTRATOR, USAA Investment Management Company
INVESTMENT ADVISER, P.O. Box 659453
UNDERWRITER, AND San Antonio, Texas 78265-9825
DISTRIBUTOR
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
--------------------------------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "Products & Services"
SELF-SERVICE 24/7 click "Investments," then
AT USAA.COM "Mutual Funds"
OR CALL Under "My Accounts" go to
(800) 531-USAA "Investments." View account balances,
(8722) or click "I want to...," and select
the desired action.
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund, are
available without charge (i) by calling (800) 531-USAA (8722); (ii) at
USAA.COM; and (iii) on the SEC's website 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 without charge (i)
at USAA.COM; and (ii) on the SEC's website 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 website at HTTP://WWW.SEC.GOV. These Forms
N-Q also may be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling (800) 732-0330.
================================================================================
<PAGE>
USAA
9800 Fredericksburg Road --------------
San Antonio, TX 78288 PRSRT STD
U.S. Postage
PAID
USAA
--------------
>> SAVE PAPER AND FUND COSTS
At USAA.COM click: MY DOCUMENTS
Set preferences to USAA DOCUMENTS ONLINE.
[LOGO OF USAA]
USAA WE KNOW WHAT IT MEANS TO SERVE.(R)
=============================================================================
36843-0310 (C)2010, USAA. All rights reserved.
ITEM 2. CODE OF ETHICS.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Filed as part of the report to shareholders.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Corporate Governance Committee selects and nominates candidates for
membership on the Board as independent directors. Currently, there is no
procedure for shareholders to recommend candidates to serve on the Board.
ITEM 11. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of USAA Mutual
Funds Trust (Trust) have concluded that the Trust's disclosure controls and
procedures are sufficient to ensure that information required to be disclosed by
the Trust in this Form N-CSR/S was recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms, based upon such officers' evaluation of these controls and
procedures as of a date within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation. The only change to the
procedures was to document the annual disclosure controls and procedures
established for the new section of the shareholder reports detailing the factors
considered by the Funds' Board in approving the Funds' advisory agreements.
ITEM 12. EXHIBITS.
(a)(1). NOT APPLICABLE. This item must be disclosed only in annual reports.
(a)(2). Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit
99.CERT.
(a)(3). Not Applicable.
(b). Certification pursuant to Rule 30a-2(b) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(b))is filed and attached hereto as Exhibit
99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: USAA MUTUAL FUNDS TRUST, Period Ended January 31, 2010
By:* /S/ CHRISTOPHER P. LAIA
-----------------------------------------------------------
Signature and Title: Christopher P. Laia, Assistant Secretary
Date: March 31, 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: April 1, 2010
------------------------------
By:* /S/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: March 31, 2010
------------------------------
*Print the name and title of each signing officer under his or her signature.
Usaa Treasury Money Market Trust (NASDAQ:UATXX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Usaa Treasury Money Market Trust (NASDAQ:UATXX)
Historical Stock Chart
From Jul 2023 to Jul 2024
