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 MUTUAL FUNDS TRUST - SEMIANNUAL REPORT FOR PERIOD ENDED JANUARY 31, 2010
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA MONEY MARKET FUND]
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SEMIANNUAL REPORT
USAA MONEY MARKET FUND
JANUARY 31, 2010
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FUND OBJECTIVE
HIGHEST INCOME CONSISTENT WITH PRESERVATION OF CAPITAL AND THE MAINTENANCE OF
LIQUIDITY.
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TYPES OF INVESTMENTS
Invests in high-quality, U.S. dollar-denominated, short-term debt instruments
that present minimal credit risk and comply with strict Securities and Exchange
Commission (SEC) guidelines applicable to money market funds.
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Investment Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
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TABLE OF CONTENTS
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PRESIDENT'S MESSAGE 2
MANAGER'S COMMENTARY 4
INVESTMENT OVERVIEW 7
FINANCIAL INFORMATION
Portfolio of Investments 11
Notes to Portfolio of Investments 32
Financial Statements 36
Notes to Financial Statements 39
EXPENSE EXAMPLE 47
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
"I EXPECT THIS RECOVERY TO PROCEED AT
A SLOWER PACE THAN THOSE IN RECENT [PHOTO OF DANIEL S. McNAMARA]
MEMORY."
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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,
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2 | USAA MONEY MARKET FUND
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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.
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PRESIDENT'S MESSAGE | 3
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MANAGER'S COMMENTARY ON THE FUND
TONY ERA [PHOTO OF TONY ERA]
USAA Investment Management Company
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o HOW DID THE USAA MONEY MARKET FUND (THE FUND) PERFORM DURING THE REPORTING
PERIOD?
For the six-month period ended January 31, 2010, the seven-day yield on the
Fund decreased from 0.82% on July 31, 2009, to 0.01% on January 31, 2010. The
total return for the same period was 0.15%, compared to an average of 0.02%
for all money market funds ranked by iMoneyNet, Inc. For the reporting period,
the Fund was ranked in the top 3% of similar retail money market funds as
compiled by iMoneyNet (ranked 10 out of 313 funds). Rankings are based on net
compound unannualized returns. In addition, the Fund was recognized by Crane
Data LLC for providing the best return in 2009 as compared to similar retail
money market funds (ranked 1 out of 236 funds).
o WHAT WERE MARKET CONDITIONS DURING THE PERIOD?
The Federal Reserve (the Fed) continued to hold short-term interest rates in a
range of 0% to 0.25% during the reporting period. As a result of the Fed's
prolonged accommodative interest rate policy, money market yields remained at
record lows. The Fed and the U.S.
Refer to page 8 for benchmark definitions.
Past performance is no guarantee of future results.
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4 | USAA MONEY MARKET FUND
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Treasury also extended a variety of programs, now scheduled to expire in early
2010, which were aimed at stabilizing the credit markets and bolstering the
economy.
Although creditworthy borrowers were able to access funding in the money
markets, short-term supply was constrained as many chose longer-term financing
for their borrowing needs. The government's programs to improve access to
short-term credit and lend directly to borrowers and investors were also a
competing source of funding.
o WHAT WERE YOUR STRATEGIES IN THIS ENVIRONMENT?
In keeping with our investment approach, we were selective about the
securities we chose for the portfolio. Relying on our experienced research
team, we focused on credit surveillance, carefully evaluating the credit or
structural risk posed by certain issuers and securities. In general, we
sought high-quality securities offering a higher relative value and that, in
our opinion, had been overlooked by investors.
We laddered the portfolio, concentrating our purchases in a variety of
instruments, primarily with shorter maturities. Typically, when interest rates
are low, we find attractive yields in longer-term securities. This was not
the case during the reporting period. Consequently, the portfolio's weighted
average maturity (WAM) decreased slightly during the reporting period, while
ending at its beginning point of 12 days. Our shorter WAM also provided the
Fund with ample liquidity as the financial industry awaited new Securities and
Exchange Commission rules governing the operation of money market funds. The
new rules, which were adopted at the end of the reporting period, mandate that
money market funds maintain a minimum amount of liquidity.
During the reporting period, we also held a significant portion of the
portfolio in variable-rate demand notes (VRDNs). When interest rates rise,
VRDNs allow us to capture higher yields quickly. The VRDNs that the Fund owns
have interest rates that generally reset daily or weekly and can also be sold
back to issuers at par value
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MANAGER'S COMMENTARY ON THE FUND | 5
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(100% face value) with a notice of seven days or less. The demand feature is
often backed by liquidity provided by a financial institution.
o WHAT IS THE OUTLOOK?
We believe the U.S. economy is in a subdued recovery. Although economic
conditions have improved, we don't expect the Fed to raise interest rates in
the short term. A decision on rates is likely to be contingent on inflationary
trends. However, if prices rise, short-term rates could move higher as
investors anticipate a rate increase. We also believe the Fed will be
unwilling to act until employment improves and real estate -- residential and
commercial -- shows signs of stabilization.
We plan to continue our focus on short maturities to maintain liquidity and
the Fund's yield advantage. When interest rates begin to rise, we will look
for attractive opportunities to extend the Fund's WAM.
As always, we will continue to manage the Fund to preserve your principal
while maximizing the income you receive.
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6 | USAA MONEY MARKET FUND
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INVESTMENT OVERVIEW
USAA MONEY MARKET FUND (Symbol: USAXX)
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1/31/10 7/31/09
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Net Assets $5,865.8 Million $6,112.3 Million
Net Asset Value Per Share $1.00 $1.00
Dollar-Weighted Average
Portfolio Maturity(+) 12 Days 12 Days
(+)Obtained by multiplying the dollar value of each investment by the number of
days left to its maturity, adding those figures together, and dividing them by
the total dollar value of the Fund's portfolio.
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AVERAGE ANNUAL TOTAL RETURNS AND 7-DAY YIELD AS OF 1/31/10
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7/31/09 to 1/31/10* 1 Year 5 Years 10 Years 7-Day Yield
0.15% 0.72% 3.16% 2.87% 0.01%
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND.
Total return equals income return and assumes reinvestment of all net investment
income and realized capital gain distributions. The total returns quoted do not
reflect adjustments made to the enclosed financial statements in accordance with
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.
Yields and returns fluctuate. The seven-day yield quotation more closely
reflects current earnings of the Fund than the total return quotation.
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INVESTMENT OVERVIEW | 7
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o 7-DAY YIELD COMPARISON o
[CHART OF 7-DAY YIELD COMPARISON]
USAA MONEY iMONEYNET
MARKET FUND AVERAGE
1/27/2009 1.39% 0.51%
2/24/2009 1.30 0.32
3/31/2009 1.21 0.21
4/28/2009 1.11 0.18
5/26/2009 1.26 0.13
6/30/2009 1.08 0.09
7/28/2009 0.83 0.07
8/25/2009 0.63 0.05
9/29/2009 0.42 0.04
10/27/2009 0.24 0.03
11/24/2009 0.16 0.03
12/29/2009 0.29 0.02
1/26/2010 0.01 0.02
[END CHART]
Data represent the last Tuesday of each month. Ending date 1/26/10.
The graph tracks the USAA Money Market Fund's seven-day yield against iMoneyNet,
Inc. Money Fund Averages(TM)/First Tier, an average of first-tier major money
market fund yields. iMoneyNet, Inc. is an organization that tracks the
performance of money market funds.
Past performance is no guarantee of future results.
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8 | USAA MONEY MARKET FUND
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o CUMULATIVE PERFORMANCE OF $10,000 o
[CHART OF CUMULATIVE PERFORMANCE]
USAA MONEY MARKET FUND
1/31/2000 $10,000.00
2/29/2000 10,043.97
3/31/2000 10,091.68
4/30/2000 10,135.94
5/31/2000 10,190.05
6/30/2000 10,241.79
7/31/2000 10,296.05
8/31/2000 10,350.72
9/30/2000 10,402.07
10/31/2000 10,459.00
11/30/2000 10,512.92
12/31/2000 10,565.75
1/31/2001 10,623.05
2/28/2001 10,668.66
3/31/2001 10,713.97
4/30/2001 10,757.97
5/31/2001 10,797.62
6/30/2001 10,831.56
7/31/2001 10,866.29
8/31/2001 10,896.87
9/30/2001 10,922.43
10/31/2001 10,946.67
11/30/2001 10,966.64
12/31/2001 10,983.68
1/31/2002 10,999.30
2/28/2002 11,012.90
3/31/2002 11,027.80
4/30/2002 11,042.49
5/31/2002 11,058.13
6/30/2002 11,071.30
7/31/2002 11,085.42
8/31/2002 11,100.39
9/30/2002 11,113.22
10/31/2002 11,127.42
11/30/2002 11,139.97
12/31/2002 11,151.14
1/31/2003 11,162.35
2/28/2003 11,171.79
3/31/2003 11,180.54
4/30/2003 11,189.54
5/31/2003 11,198.99
6/30/2003 11,206.48
7/31/2003 11,212.97
8/31/2003 11,219.67
9/30/2003 11,225.76
10/31/2003 11,232.38
11/30/2003 11,237.90
12/31/2003 11,244.21
1/31/2004 11,249.94
2/29/2004 11,255.46
3/31/2004 11,261.19
4/30/2004 11,267.31
5/31/2004 11,272.76
6/30/2004 11,279.16
7/31/2004 11,287.17
8/31/2004 11,296.45
9/30/2004 11,307.36
10/31/2004 11,319.80
11/30/2004 11,333.53
12/31/2004 11,351.11
1/31/2005 11,367.67
2/28/2005 11,385.29
3/31/2005 11,406.41
4/30/2005 11,429.20
5/31/2005 11,452.63
6/30/2005 11,477.68
7/31/2005 11,505.01
8/31/2005 11,534.01
9/30/2005 11,566.08
10/31/2005 11,597.09
11/30/2005 11,631.13
12/31/2005 11,671.06
1/31/2006 11,706.42
2/28/2006 11,742.85
3/31/2006 11,787.18
4/30/2006 11,826.19
5/31/2006 11,871.01
6/30/2006 11,918.81
7/31/2006 11,963.78
8/31/2006 12,012.83
9/30/2006 12,062.05
10/31/2006 12,109.85
11/30/2006 12,157.86
12/31/2006 12,211.02
1/31/2007 12,257.85
2/28/2007 12,303.09
3/31/2007 12,354.85
4/30/2007 12,401.83
5/31/2007 12,452.30
6/30/2007 12,502.69
7/31/2007 12,551.69
8/31/2007 12,608.34
9/30/2007 12,653.82
10/31/2007 12,703.10
11/30/2007 12,751.43
12/31/2007 12,797.76
1/31/2008 12,839.46
2/29/2008 12,873.54
3/31/2008 12,903.58
4/30/2008 12,933.37
5/31/2008 12,963.84
6/30/2008 12,989.64
7/31/2008 13,015.58
8/31/2008 13,042.50
9/30/2008 13,075.90
10/31/2008 13,120.81
11/30/2008 13,144.89
12/31/2008 13,166.67
1/31/2009 13,182.88
2/28/2009 13,195.83
3/31/2009 13,209.48
4/30/2009 13,221.78
5/31/2009 13,235.26
6/30/2009 13,247.30
7/31/2009 13,257.89
8/31/2009 13,264.82
9/30/2009 13,269.52
10/31/2009 13,272.80
11/30/2009 13,274.49
12/31/2009 13,277.60
1/31/2010 13,277.80
[END CHART]
Data from 1/31/00 through 1/31/10.
The graph illustrates the performance of a hypothetical $10,000 investment in
the USAA Money Market Fund.
Past performance is no guarantee of future results. The cumulative performance
quoted assumes reinvestment of all net investment income and realized capital
gain distributions and does not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
For seven-day yield information, please refer to the Fund's investment overview
page.
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INVESTMENT OVERVIEW | 9
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o PORTFOLIO MIX -- 1/31/2010 o
[PIE CHART OF PORTFOLIO MIX]
VARIABLE-RATE DEMAND NOTES 87.8%
COMMERCIAL PAPER 9.3%
FIXED-RATE INSTRUMENTS 1.9%
PUT BONDS 1.0%
[END CHART]
Percentages are of the net assets of the Fund and may not equal 100%.
You will find a complete list of securities that the Fund owns on pages 11-31.
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10 | USAA MONEY MARKET FUND
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PORTFOLIO OF INVESTMENTS
January 31, 2010 (unaudited)
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PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
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FIXED-RATE INSTRUMENTS (1.9%)
DIVERSIFIED BANKS (1.5%)
$30,000 Bank of Nova Scotia 0.19% 2/02/2010 $ 30,000
25,000 Bank of Nova Scotia 0.18 4/05/2010 25,000
30,000 Canadian Imperial Bank of Commerce 0.16 4/06/2010 30,000
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85,000
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REGIONAL BANKS (0.4%)
25,000 Norinchukin Bank 0.22 2/08/2010 25,000
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Total Fixed-Rate Instruments (cost: $110,000) 110,000
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COMMERCIAL PAPER (9.3%)
AIRPORT/PORT (0.2%)
14,000 San Diego County Regional Airport
(LOC - Lloyds TSB Bank plc) 0.35 3/02/2010 14,000
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ASSET-BACKED FINANCING (0.4%)
25,000 Manhattan Asset Funding Co.(a),(b) 0.21 3/05/2010 24,995
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DIVERSIFIED BANKS (0.8%)
25,000 Variable Funding Capital Co., LLC, ABS(a),(b) 0.17 2/03/2010 25,000
20,000 Variable Funding Capital Co., LLC, ABS(a),(b) 0.17 3/11/2010 19,996
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44,996
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EDUCATION (1.7%)
20,000 Board of Trustees of Michigan State Univ. 0.27 2/03/2010 20,000
16,600 Cornell Univ. 0.25 2/04/2010 16,600
10,600 Cornell Univ. 0.23 3/24/2010 10,596
19,000 Ohio State Univ. 0.16 2/01/2010 19,000
15,000 Ohio State Univ. 0.16 2/01/2010 15,000
20,000 Yale Univ. 0.29 3/05/2010 19,995
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101,191
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ELECTRIC/GAS UTILITIES (1.4%)
31,290 Nebraska Public Power District 0.20 3/04/2010 31,284
10,001 Nebraska Public Power District 0.22 4/09/2010 9,997
10,000 South Carolina Public Service Auth. 0.45 2/12/2010 9,999
15,000 South Carolina Public Service Auth. 0.45 3/12/2010 14,993
15,000 South Carolina Public Service Auth. 0.35 4/05/2010 14,991
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81,264
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PORTFOLIO OF INVESTMENTS | 11
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PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
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HOSPITAL (3.1%)
$42,100 Catholic Health Initiatives 0.35% 3/10/2010 $ 42,100
45,000 Catholic Health Initiatives 0.35 5/05/2010 45,000
36,650 Catholic Health Initiatives 0.33 6/04/2010 36,650
55,849 Catholic Health Initiatives 0.25 6/09/2010 55,849
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179,599
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INTEGRATED OIL & GAS (0.4%)
10,000 ConocoPhillips Qatar Funding Ltd.(a),(b) 0.10 2/11/2010 10,000
10,000 ConocoPhillips Qatar Funding Ltd.(a),(b) 0.16 2/18/2010 9,999
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19,999
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REAL ESTATE OPERATING COMPANIES (0.4%)
22,900 Medical Building Funding IV, LLC
(LOC - KBC Bank, N.V.) 0.60 2/04/2010 22,899
----------
SALES TAX (0.9%)
20,000 Dallas Area Rapid Transit 0.55 2/10/2010 20,000
20,000 Dallas Area Rapid Transit 0.55 2/25/2010 20,000
15,000 Dallas Area Rapid Transit 0.37 3/03/2010 15,000
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55,000
----------
Total Commercial Paper (cost: $543,943) 543,943
----------
PUT BONDS (1.0%)
EDUCATION SERVICES (0.0%)
1,900 Kent County (LOC - PNC Bank, N.A.) 0.67 12/01/2038 1,900
----------
OIL & GAS REFINING & MARKETING (1.0%)
60,000 IDB of the Parish of Calcasieu, Inc.
(LOC - BNP Paribas) 0.25 7/01/2026 60,000
----------
Total Put Bonds (cost: $61,900) 61,900
----------
VARIABLE-RATE DEMAND NOTES (87.8%)
AGRICULTURAL PRODUCTS (0.1%)
3,960 Bybee Foods, LLC (LOC - Key Bank, N.A.) 0.95 11/01/2026 3,960
4,415 Yakima County Public Corp. (LOC - Key Bank, N.A.) 0.64 4/01/2018 4,415
----------
8,375
----------
AIRLINES (0.6%)
35,000 Chicago-O'Hare International Airport
(LOC - Bayerische Landesbank) 0.25 5/01/2035 35,000
----------
AIRPORT SERVICES (1.1%)
4,500 Broward County (LOC - Citibank, N.A.) 0.28 4/01/2035 4,500
23,350 Holland-Sheltair Aviation Funding, LLC
(LOC - Federal Home Loan Bank of Atlanta) 0.22 5/01/2035 23,350
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12 | USAA MONEY MARKET FUND
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PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$14,135 Holland-Sheltair Aviation Funding, LLC
(LOC - Federal Home Loan Bank of Atlanta) 0.22% 5/01/2048 $ 14,135
9,020 Jacksonville Economic Dev. Commission
(LOC - Federal Home Loan Bank of Atlanta) 0.17 5/01/2035 9,020
2,790 Jacksonville Economic Dev. Commission
(LOC - Federal Home Loan Bank of Atlanta) 0.17 5/01/2039 2,790
8,655 Metropolitan Nashville Airport Auth.
(LOC - Regions Bank) 2.84 4/01/2030 8,655
----------
62,450
----------
AIRPORT/PORT (0.8%)
12,700 Clark County Passenger Facility
(LOC - Bayerische Landesbank) 0.30 7/01/2022 12,700
4,505 Cleveland (LOC - U.S. Bank, N.A.) 0.25 1/01/2020 4,505
26,000 Cleveland (LOC - UBS A.G.) 0.25 1/01/2033 26,000
6,145 Gadsden Airport Auth. (LOC - Wachovia Bank, N.A.) 0.28 8/01/2024 6,145
----------
49,350
----------
ALUMINUM (0.1%)
3,500 Tennessee Aluminum Processors, Inc.
(LOC - SunTrust Bank) 0.40 5/01/2014 3,500
----------
APPROPRIATED DEBT (7.4%)
60,240 Allegheny County (INS)(LIQ) 0.36 11/01/2039 60,240
24,100 Arlington County IDA (LOC - Bank of America, N.A.) 0.26 8/01/2031 24,100
10,620 Auburn IDB (LOC - Allied Irish Banks plc) 1.70 5/01/2024 10,620
5,640 Auburn IDB (LOC - Allied Irish Banks plc) 1.70 7/01/2026 5,640
27,135 Cleveland Economic & Community Dev.
(LOC - RBS Citizens, N.A.) 0.40 12/01/2033 27,135
51,000 County & City of Denver (INS)(LIQ) 0.33 12/15/2037 51,000
50,000 County & City of Denver (INS)(LIQ) 0.35 12/15/2037 50,000
50,000 County & City of Denver (INS)(LIQ) 0.42 12/15/2037 50,000
9,595 Downtown Renaissance, Inc.
(LOC - RBC Bank (USA)) 0.90 2/01/2025 9,595
17,500 Emmaus General Auth. (INS)(LIQ) 0.28 12/01/2028 17,500
60,000 New Jersey EDA (LOC - Dexia Credit Local) 0.25 3/01/2024 60,000
4,685 Opelika IDB (LOC - Regions Bank) 1.75 6/01/2023 4,685
12,000 Raleigh (LOC - Wachovia Bank, N.A.) 0.23 8/01/2034 12,000
45,680 San Jose Financing Auth.
(LOC - Bank of Nova Scotia)(NBGA) 0.17 6/01/2025 45,680
3,800 West Covina Public Financing Auth.
(LOC - Allied Irish Banks plc) 2.00 11/01/2029 3,800
----------
431,995
----------
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PORTFOLIO OF INVESTMENTS | 13
<PAGE>
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PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
ASSET-BACKED FINANCING (4.5%)
$ 4,390 Capital Markets Access Co., LC
(LOC - SunTrust Bank) 0.40% 8/01/2020 $ 4,390
14,805 Capital Markets Access Co., LC
(LOC - SunTrust Bank) 0.35 4/01/2033 14,805
8,225 Capital Markets Access Co., LC
(LOC - RBC Bank (USA)) 0.90 5/01/2034 8,225
11,700 Capital Markets Access Co., LC
(LOC - SunTrust Bank) 0.35 6/27/2036 11,700
43,680 Corporate Finance Managers, Inc.
(LOC - Wells Fargo Bank, N.A.) 0.23 2/02/2043 43,680
10,000 Midwestern Univ. (LOC - Royal Bank of Canada) 0.26 4/01/2044 10,000
15,000 Minnesota Higher Education Facilities Auth.
(LOC - U.S. Bank, N.A.) 0.30 12/01/2043 15,000
14,000 New Mexico Educational Assistance Foundation
(LOC - Royal Bank of Canada) 0.25 4/01/2036 14,000
74,000 North Texas Higher Education Auth., Inc.
(LOC - Bank of America, N.A.)
(LOC - Lloyds TSB Bank plc) 0.25 6/01/2045 74,000
39,300 North Texas Higher Education Auth., Inc.
(LOC - Bank of America, N.A.)
(LOC - Lloyds TSB Bank plc) 0.25 12/01/2046 39,300
30,000 Rhode Island Student Loan
(LOC - Dexia Credit Local) 0.37 7/01/2019 30,000
----------
265,100
----------
AUTO PARTS & EQUIPMENT (0.2%)
2,605 Dayton Wheel Concepts, Inc.
(LOC - PNC Bank, N.A.) 0.28 5/01/2024 2,605
5,765 Illinois Finance Auth. (LOC - Federal Home
Loan Bank of Chicago) 0.43 7/01/2040 5,765
3,305 Metal Forming & Coining Corp.
(LOC - PNC Bank, N.A.) 0.28 7/01/2018 3,305
----------
11,675
----------
AUTOMOBILE MANUFACTURERS (0.2%)
11,445 Franklin IDB (LOC - Fifth Third Bank) 0.81 4/01/2030 11,445
----------
AUTOMOTIVE RETAIL (0.1%)
6,674 Kenwood Lincoln-Mercury, Inc.
(LOC - PNC Bank, N.A.) 0.28 5/01/2015 6,674
----------
BIOTECHNOLOGY (0.2%)
10,925 Westgate Investment Fund, LLC
(LOC - Wells Fargo Bank, N.A.) 0.23 2/01/2012 10,925
----------
================================================================================
14 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
BROADCASTING (0.1%)
$ 3,200 New Jersey EDA (LOC - JPMorgan Chase Bank, N.A.) 0.40% 10/01/2021 $ 3,200
----------
BUILDING PRODUCTS (1.3%)
4,170 Cornell Iron Works, Inc. (LOC - Bank of America, N.A.) 0.28 4/01/2019 4,170
2,020 Haas Door Co., Inc. (LOC - PNC Bank, N.A.) 0.38 6/01/2030 2,020
13,660 Janus Investment, LLC (LOC - Regions Bank) 1.40 8/01/2032 13,660
4,000 Manhattan IDB (LOC - Harris, N.A.) 0.36 4/01/2028 4,000
7,985 Moondance Enterprises, LP (LOC - PNC Bank, N.A.) 0.28 11/01/2020 7,985
3,200 Pinellas County IDA (LOC - RBC Bank (USA)) 0.50 5/01/2027 3,200
990 Schmitz Ready Mix, Inc. (LOC - U.S. Bank, N.A.) 0.38 4/01/2046 990
27,150 Union County (LOC - SunTrust Bank) 0.35 10/01/2027 27,150
4,865 Volusia County IDA (LOC - RBC Bank (USA)) 0.50 4/01/2024 4,865
10,000 Warren County (LOC - JPMorgan Chase Bank, N.A.) 0.32 12/01/2031 10,000
----------
78,040
----------
BUILDINGS (0.6%)
19,400 Aquarium Parking Deck, LLC
(LOC - Federal Home Loan Bank of Atlanta) 0.22 4/01/2020 19,400
8,390 Baltimore (LOC - Bank of America, N.A.) 0.21 7/01/2032 8,390
3,095 Irondale Public Building Auth.
(LOC - Allied Irish Banks plc) 1.70 10/01/2035 3,095
3,865 Security Partners, LP (LOC - Wells Fargo Bank, N.A.) 0.28 3/15/2012 3,865
----------
34,750
----------
CASINOS & GAMING (1.3%)
65,700 Santa Rosa Rancheria Tachi Yokut Tribe
(LOC - JPMorgan Chase Bank, N.A.) 0.25 9/01/2019 65,700
9,000 Strategic Fund (LOC - Deutsche Bank Trust Co.) 0.27 3/01/2039 9,000
----------
74,700
----------
COMMERCIAL PRINTING (0.2%)
3,477 Fairway, LLC (LOC - U.S. Bank, N.A.) 1.00 12/01/2023 3,477
2,575 John E. Staten Properties, Inc.
(LOC - PNC Bank, N.A.) 0.38 10/01/2021 2,575
4,050 South Carolina Jobs EDA
(LOC - Wachovia Bank, N.A.) 0.38 4/01/2033 4,050
----------
10,102
----------
COMMODITY CHEMICALS (0.1%)
3,580 BleachTech, LLC (LOC - PNC Bank, N.A.) 0.28 11/01/2035 3,580
----------
COMMUNICATIONS EQUIPMENT (0.6%)
35,500 Utah Telecommunication Open Infrastructure Agency
(LOC - Federal Home Loan Bank of Cincinnati) 0.33 6/01/2040 35,500
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 15
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
COMMUNITY SERVICE (0.5%)
$15,950 Alexandria IDA (LOC - SunTrust Bank) 0.35% 10/01/2023 $ 15,950
6,530 Miami-Dade County IDA (LOC - Federal Home
Loan Bank of Atlanta) 0.22 5/01/2028 6,530
7,320 Toledo Lucas County Port Auth.
(LOC - Fifth Third Bank) 0.51 9/01/2019 7,320
----------
29,800
----------
CONSTRUCTION & ENGINEERING (0.4%)
15,980 Boland Holdings, LLC (LOC - PNC Bank, N.A.) 0.28 12/01/2039 15,980
8,100 Liliha Parking Co., LP (LOC - First Hawaiian Bank) 1.00 8/01/2024 8,100
----------
24,080
----------
CONSTRUCTION MATERIALS (0.1%)
3,215 DiGeronimo Aggregates, LLC (LOC - PNC Bank, N.A.) 0.28 1/01/2015 3,215
2,700 Lee County IDA (LOC - SunTrust Bank) 0.91 4/01/2017 2,700
----------
5,915
----------
DIVERSIFIED METALS & MINING (0.1%)
1,850 Lancaster IDA (LOC - Fulton Bank) 2.30 1/01/2015 1,850
1,730 Lancaster IDA (LOC - Fulton Bank) 2.30 1/01/2027 1,730
----------
3,580
----------
DIVERSIFIED REAL ESTATE ACTIVITIES (5.1%)
9,270 2880 Stevens Creek, LLC (LOC - Bank of the West) 0.30 11/01/2033 9,270
6,925 A & M Associates (LOC - Wells Fargo Bank, N.A.) 0.28 3/01/2017 6,925
26,505 CHF-Elon, LLC (LOC - Regions Bank) 1.50 6/01/2035 26,505
5,275 Colonial Interstate Investments, LLC
(LOC - Regions Bank) 1.50 6/01/2032 5,275
6,929 Cornerstone Funding Corp. I (LOC - SunTrust Bank) 3.89 1/01/2012 6,929
8,856 Cornerstone Funding Corp. I
(LOC - RBS Citizens, N.A.) 3.94 8/01/2031 8,856
5,195 Dennis E. Eash and Florida O. Eash
(LOC - Hancock Bank) 1.75 4/01/2025 5,195
4,200 Douglas County Dev. Auth.
(LOC - Wells Fargo Bank, N.A.) 0.28 12/01/2014 4,200
6,150 Fiore Capital, LLC (LOC - Federal Home
Loan Bank of Chicago) 0.28 8/01/2045 6,150
7,000 Fiore Capital, LLC (LOC - Federal Home Loan
Bank of Chicago) 0.28 8/01/2045 7,000
2,300 Houston County IDA (LOC - Wachovia Bank, N.A.) 0.28 8/01/2012 2,300
955 JCM Properties, LP (LOC - PNC Bank, N.A.) 0.43 4/01/2013 955
3,200 Los Lunas (LOC - Wells Fargo Bank, N.A.) 0.28 2/01/2025 3,200
4,130 New Plaza Management, LLC
(LOC - U.S. Bank, N.A.) 0.28 2/01/2024 4,130
================================================================================
16 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$90,485 New York City Housing Dev. Corp.
(LOC - Landesbank Hessen-Thuringen) 0.35% 6/01/2039 $ 90,485
18,105 NPJ Properties, LP (LOC - Manufacturers &
Traders Trust Co.) 0.91 2/01/2027 18,105
31,095 Paca-Pratt Associates, Inc.
(LOC - Manufacturers & Traders Trust Co.) 0.91 1/01/2038 31,095
4,900 Rio Bravo, LLC (LOC - Wells Fargo Bank, N.A.) 0.28 12/01/2033 4,900
19,165 SF Tarns, LLC (LOC - Bank of America, N.A.) 0.25 12/01/2025 19,165
5,600 Stice-Hill Holding, LC (LOC - Hancock
Bank of Louisiana) 0.43 12/01/2023 5,600
19,630 Stobro Co., LP (LOC - Fulton Bank) 2.30 1/01/2032 19,630
16,300 Woerner Holdings, Inc.
(LOC - Wachovia Bank, N.A.) 0.23 7/01/2033 16,300
----------
302,170
----------
EDUCATION (3.4%)
3,870 Allegheny County Higher Education Building Auth.
(LOC - PNC Bank, N.A.) 0.25 3/01/2038 3,870
8,815 Calvin College (LOC - JPMorgan Chase Bank, N.A.) 0.25 10/01/2037 8,815
13,435 Indiana Finance Auth. (LOC - Key Bank, N.A.) 0.34 7/01/2036 13,435
9,530 Iowa Higher Education Loan Auth.
(LOC - Allied Irish Banks plc) 0.33 10/01/2033 9,530
1,245 Massachusetts Dev. Finance Agency
(LOC - JPMorgan Chase Bank, N.A.) 0.23 10/01/2012 1,245
9,000 Massachusetts Dev. Finance Agency
(LOC - Sovereign Bank) 0.23 1/01/2037 9,000
16,100 Massachusetts Dev. Finance Agency
(LOC - RBS Citizens, N.A.) 0.22 7/01/2043 16,100
10,000 Massachusetts Dev. Finance Agency
(LOC - RBS Citizens, N.A.) 0.55 7/01/2043 10,000
16,705 Michigan Higher Education Facilities Auth.
(LOC - PNC Bank, N.A.) 0.19 4/01/2032 16,705
4,695 Minnesota Higher Education Facilities Auth.
(LOC - U.S. Bank, N.A.) 0.28 4/01/2027 4,695
8,135 Oklahoma City Industrial & Cultural Facilities Trust
(LOC - Bank of America, N.A.) 0.25 9/15/2016 8,135
6,225 Pittsburgh Technical Institute, Inc.
(LOC - Wells Fargo Bank, N.A.) 0.28 10/01/2015 6,225
3,960 Rockland County IDA (LOC - TD Bank, N.A.) 0.23 5/01/2034 3,960
6,225 San Diego County (LOC - Comerica Bank, N.A.) 0.20 1/01/2023 6,225
1,700 Shelby County Health, Educational, and
Housing Facility Board (LOC - SunTrust Bank) 0.27 7/01/2026 1,700
3,410 Summit School (LOC - RBS Citizens, N.A.) 1.00 7/01/2027 3,410
================================================================================
PORTFOLIO OF INVESTMENTS | 17
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$40,290 Tompkins County IDA (LOC - HSBC Bank USA) 0.19% 7/01/2026 $ 40,290
11,915 Univ. of Cincinnati (LOC - Bayerische Landesbank) 0.52 6/01/2034 11,915
15,695 Washington State Housing Finance Commission
(LOC - Bank of America, N.A.) 0.21 7/01/2036 15,695
6,200 Wisconsin Health and Educational Facilities Auth.
(LOC - Allied Irish Banks plc) 0.33 11/01/2017 6,200
----------
197,150
----------
EDUCATION SERVICES (4.1%)
6,690 Berkeley Realty Co., LLC
(LOC - Wachovia Bank, N.A.) 0.28 9/01/2021 6,690
5,700 California Educational Facilities Auth.
(LOC - Allied Irish Banks plc) 1.90 12/01/2028 5,700
24,060 Catholic Univ. of America (LOC - Federal
Home Loan Bank of Atlanta) 0.38 4/01/2034 24,060
4,245 Clinic Building BG, LLC (LOC - U.S. Bank, N.A.) 0.28 2/01/2033 4,245
3,829 Cornerstone Funding Corp. I
(LOC - Comerica Bank, N.A.) 3.64 11/01/2023 3,829
8,753 Cornerstone Funding Corp. I
(LOC - TD Bank, N.A.) 2.14 1/01/2025 8,753
26,120 Dominican Sisters (LOC - Fifth Third Bank) 0.69 10/01/2023 26,120
3,155 Educational Management Corp.
(LOC - Wells Fargo Bank, N.A.) 0.28 5/01/2023 3,155
11,915 Frisch School (LOC - Banco Santander) 0.25 5/01/2036 11,915
1,645 Glendale IDA (LOC - Bank of New York Mellon) 0.15 7/01/2035 1,645
2,015 Grove City Church of the Nazarene
(LOC - PNC Bank, N.A.) 0.38 2/01/2024 2,015
15,955 Indiana Educational Facilities Auth.
(LOC - RBS Citizens, N.A.) 0.75 10/01/2029 15,955
9,765 Loganville Christian Academy, Inc.
(LOC - Key Bank, N.A.) 0.55 6/01/2038 9,765
5,750 Massachusetts Dev. Finance Agency
(LOC - TD Bank, N.A.) 0.25 3/01/2039 5,750
27,000 Mesivta Yeshiva Rabbi Chaim Berlin
(LOC - Allied Irish Banks plc) 1.23 11/01/2035 27,000
3,075 Praise Tabernacle Outreach & Family Worship Center
(LOC - Comerica Bank, N.A.) 0.38 6/03/2024 3,075
6,300 Rhode Island EDC (LOC - RBS Citizens, N.A.) 0.55 3/01/2038 6,300
9,425 Roman Catholic Diocese of Charlotte
(LOC - Wachovia Bank, N.A.) 0.28 5/01/2014 9,425
3,240 Roman Catholic Diocese of Houma-Thibodaux
(LOC - Allied Irish Banks plc) 2.13 12/01/2037 3,240
10,590 Sabri Arac (LOC - Wells Fargo Bank, N.A.) 0.23 10/01/2035 10,590
================================================================================
18 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$11,180 Saddleback Valley Community Church
(LOC - Federal Home Loan Bank of San Francisco) 0.22% 11/01/2038 $ 11,180
10,895 St. James United Methodist Church
(LOC - Regions Bank) 1.40 5/01/2037 10,895
2,950 St. Louis County IDA (LOC - Fifth Third Bank) 0.39 9/01/2038 2,950
4,910 Summit School (LOC - U.S. Bank, N.A.) 0.70 2/01/2019 4,910
5,025 Wilmington (LOC - Allied Irish Banks plc) 0.45 7/01/2031 5,025
12,520 World Wildlife Fund, Inc.
(LOC - JPMorgan Chase Bank, N.A.) 0.26 7/01/2030 12,520
5,625 Yamhill County (LOC - Bank of America, N.A.) 0.25 10/01/2020 5,625
----------
242,332
----------
ELECTRIC UTILITIES (3.1%)
55,000 Brazos River Auth. (LOC - Citibank, N.A.) 0.27 12/01/2036 55,000
5,985 Converse County 2.00 12/01/2020 5,985
37,300 Garfield County Industrial Auth. 0.40 1/01/2025 37,300
7,700 Indiana Dev. Finance Auth. 0.35 12/01/2038 7,700
13,300 Indiana Dev. Finance Auth. 0.45 12/01/2038 13,300
30,400 Jacksonville 0.18 5/01/2029 30,400
30,000 West Jefferson IDB 0.27 6/01/2028 30,000
----------
179,685
----------
ELECTRIC/GAS UTILITIES (0.2%)
5,885 Anaheim Public Financing Auth. (INS)(LIQ)(b) 0.19 4/01/2013 5,885
5,000 M-S-R Public Power Agency
(LOC - Dexia Credit Local) 0.30 7/01/2020 5,000
----------
10,885
----------
ELECTRICAL COMPONENTS & EQUIPMENT (0.1%)
5,180 Albuquerque (LOC - Wells Fargo Bank, N.A.) 0.28 8/01/2025 5,180
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.0%)
2,885 Putnam County IDA (LOC - RBS Citizens, N.A.) 0.80 7/01/2032 2,885
----------
ENVIRONMENTAL & FACILITIES SERVICES (0.2%)
13,600 Miami-Dade County IDA
(LOC - JPMorgan Chase Bank, N.A.) 0.20 9/01/2027 13,600
----------
ESCROWED BONDS (0.2%)
5,000 California State (LIQ)(b) 0.21 12/01/2030 5,000
8,500 California State (LIQ)(b) 0.21 12/01/2030 8,500
----------
13,500
----------
FOOD DISTRIBUTORS (0.2%)
7,613 KFDT, LP (LOC - Fifth Third Bank) 0.81 3/01/2035 7,613
3,515 REG Properties, LLC (LOC - PNC Bank, N.A.) 0.28 4/01/2035 3,515
----------
11,128
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 19
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
FOOD RETAIL (0.2%)
$ 3,415 Food Supply, Inc. (LOC - SunTrust Bank) 0.35% 5/01/2024 $ 3,415
9,000 Saubels Market, Inc. (LOC - Fulton Bank) 2.30 5/01/2034 9,000
----------
12,415
----------
FOREST PRODUCTS (0.1%)
951 Chenango County IDA (LOC - Citizens
Bank of Pennsylvania) 2.50 12/01/2020 951
6,320 Rex Lumber, LLC (LOC - Federal
Home Loan Bank of Dallas) 0.30 2/01/2022 6,320
----------
7,271
----------
GAS UTILITIES (0.6%)
36,000 Summit Utilities, Inc.
(LOC - JPMorgan Chase Bank, N.A.) 0.63 4/01/2038 36,000
----------
GENERAL MERCHANDISE STORES (0.2%)
11,850 Marion EDA (LOC - Key Bank, N.A.) 0.95 2/01/2035 11,850
----------
GENERAL OBLIGATION (3.9%)
7,500 Bridgeview (LOC - Northern Trust Co.) 0.23 12/01/2038 7,500
7,500 Bridgeview (LOC - Harris, N.A.) 0.33 12/01/2038 7,500
9,100 Butler County (INS)(LIQ) 0.28 10/01/2017 9,100
14,700 California State (LIQ)(LOC - Dexia Credit Local)(b) 0.23 8/01/2032 14,700
12,750 Covington (LOC - U.S. Bank, N.A.) 0.70 12/01/2029 12,750
13,865 Fiddler's Business Improvement District
(LOC - Key Bank, N.A.) 0.60 12/01/2037 13,865
25,000 Fiddler's Business Improvement District
(LOC - Key Bank, N.A.) 0.34 12/01/2038 25,000
35,045 Michigan Charter Township of Commerce
(LOC - RBS Citizens, N.A.) 3.00 10/01/2034 35,045
12,025 Oakland County Charter Township of
Commerce (LIQ) 2.00 10/01/2018 12,025
93,700 Southern Ute Indian Tribe(b) 0.55 1/01/2027 93,700
----------
231,185
----------
HEALTH CARE EQUIPMENT (0.1%)
3,365 Rawcar Group, LLC (LOC - PNC Bank, N.A.) 0.28 4/01/2036 3,365
----------
HEALTH CARE FACILITIES (8.9%)
8,550 Baptist Medical Plaza Associates
(LOC - KBC Bank, N.V.) 1.00 6/01/2017 8,550
4,000 Bayfront Regional Dev. Auth.
(LOC - PNC Bank, N.A.) 0.23 11/01/2027 4,000
13,815 Bronson Lifestyle Improvement &
Research Center (LOC - Fifth Third Bank) 1.00 9/01/2030 13,815
================================================================================
20 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$ 7,925 California Statewide Communities Dev. Auth.
(LOC - Allied Irish Banks plc) 3.00% 11/15/2042 $ 7,925
14,585 Chestnut Hill Benevolent Association
(LOC - TD Bank, N.A.) 0.31 2/01/2035 14,585
3,350 Christopher Place Management, LLC
(LOC - Fifth Third Bank) 1.99 5/01/2030 3,350
19,450 Cleveland-Cuyahoga County (LOC - Key Bank, N.A.) 0.60 1/01/2037 19,450
10,810 Clinic Investment, LP (LOC - PNC Bank, N.A.) 0.28 6/01/2015 10,810
3,010 Columbia County IDA (LOC - Key Bank, N.A.) 1.00 7/01/2027 3,010
3,340 Community Behavioral Healthcare Cooperative
of Pennsylvania (LOC - Fulton Bank) 2.30 9/01/2027 3,340
1,875 District of Columbia (LOC - Manufacturers &
Traders Trust Co.) 0.91 7/01/2032 1,875
2,430 Doctors Park, LLP (LOC - U.S. Bank, N.A.) 0.36 8/01/2047 2,430
8,300 Dome Corp. (LOC - Wachovia Bank, N.A.) 0.28 8/31/2016 8,300
4,665 Duchesne County (LOC - JPMorgan Chase
Bank, N.A.) 0.31 8/01/2024 4,665
5,005 Dunn Nursing Home, Inc. (LOC - Federal
Home Loan Bank of Atlanta) 0.30 2/01/2024 5,005
3,145 Genoa Medical Dev., LLC (LOC - Fifth Third Bank) 0.69 12/01/2045 3,145
5,100 Guilford Capital, LLC (LOC - Regions Bank) 1.50 8/01/2022 5,100
5,570 Hamot Surgery Center, LLC (LOC - PNC Bank, N.A.) 0.28 7/01/2030 5,570
15,320 Healthcare Network Properties, LLC
(LOC - PNC Bank, N.A.) 0.25 1/01/2029 15,320
22,175 Healthcare Property Group, LLC
(LOC - SunTrust Bank) 0.35 12/01/2030 22,175
7,895 Heart Center Cascades (LOC - Key Bank, N.A.) 0.95 12/01/2036 7,895
5,810 Heart Property, LLC (LOC - PNC Bank, N.A.) 0.28 7/01/2026 5,810
5,545 IHA Capital Dev., LLC (LOC - Fifth Third Bank) 0.69 6/01/2053 5,545
16,560 Illinois Finance Auth. (LOC - Bank of America, N.A.) 0.25 12/01/2034 16,560
6,940 Indiana Health and Educational Facility
Financing Auth. (LOC - Fifth Third Bank) 0.69 9/01/2036 6,940
8,005 Jackson 2000, LLC (LOC - Key Bank, N.A.) 0.95 6/01/2049 8,005
2,500 Labcon North America (LOC - Bank of the West) 0.40 1/01/2040 2,500
6,075 Louisiana Public Facilities Auth.
(LOC - Capital One, N.A.) 1.48 7/01/2028 6,075
14,785 Massachusetts Dev. Finance Agency
(LOC - Sovereign Bank) 0.15 11/01/2042 14,785
3,710 MCE MOB IV, LP (LOC - PNC Bank, N.A.) 0.25 8/01/2022 3,710
7,770 Medical Properties Investment Co. - Walker, LLC
(LOC - Fifth Third Bank) 0.69 11/01/2035 7,770
6,100 MediLucent MOB I, LP (LOC - PNC Bank, N.A.) 0.25 8/01/2030 6,100
7,240 Medina County (LOC - PNC Bank, N.A.) 0.25 8/01/2037 7,240
================================================================================
PORTFOLIO OF INVESTMENTS | 21
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$13,570 MMC Corp. (LOC - JPMorgan Chase Bank, N.A.) 1.75% 11/01/2035 $ 13,570
3,405 New Hampshire Health and Education Facilities Auth.
(LOC - Allied Irish Banks plc) 1.23 7/01/2035 3,405
14,715 New Tristate Ventures, LLC (LOC - Fifth Third Bank) 0.69 5/01/2026 14,715
3,405 Ohio Presbyterian Retirement Services
(LOC - PNC Bank, N.A.) 0.28 7/01/2033 3,405
5,430 Onondaga County IDA (LOC - Key Bank, N.A.) 1.00 1/01/2023 5,430
18,485 OSF Finance Co., LLC (LOC - PNC Bank, N.A.) 0.25 12/01/2037 18,485
21,065 OSS Realty Co. (LOC - Federal Home Loan
Bank of Pittsburgh)(b) 0.30 9/01/2034 21,065
6,100 PCP Investors, LLC (LOC - Wells Fargo Bank, N.A.) 0.28 12/01/2024 6,100
21,800 Polk County IDA (LOC - Bank of America, N.A.) 0.25 12/01/2018 21,800
4,120 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 4,120
3,200 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 3,200
4,950 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 4,950
7,110 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 7,110
24,750 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 24,750
2,300 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 2,300
1,700 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 1,700
2,725 Premier Senior Living, LLC
(LOC - Wachovia Bank, N.A.) 0.33 8/01/2037 2,725
5,180 Rush Medical Foundation (LOC - U.S. Bank, N.A.) 0.26 12/01/2031 5,180
9,805 San Juan Regional Medical Center, Inc.
(LOC - Bank of Nova Scotia) 0.35 6/01/2037 9,805
9,975 Smith of Georgia, LLC (LOC - Fifth Third Bank) 0.81 12/01/2024 9,975
7,000 South Shore Medical Dev. (LOC - Fifth Third Bank) 0.81 10/01/2037 7,000
10,015 St. Johns County lDA (LOC - Allied Irish Banks plc) 2.25 8/01/2034 10,015
8,685 Sumner Medical Plaza, LLC (LOC - Fifth Third Bank) 0.81 10/01/2010 8,685
3,150 Surgery Center Financing Corp.
(LOC - PNC Bank, N.A.) 0.28 4/01/2020 3,150
16,405 Tack Capital Co. (LOC - Wachovia Bank, N.A.) 0.23 6/01/2031 16,405
14,270 Trinitas Hospital (LOC - Wachovia Bank, N.A.) 0.23 7/01/2035 14,270
1,865 United Church Homes, Inc.
(LOC - Allied Irish Banks plc) 3.00 9/01/2027 1,865
13,960 West Park Hospital Medical Facilities Foundation
(LOC - Key Bank, N.A.) 2.00 6/01/2033 13,960
================================================================================
22 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$ 3,400 Woodbury County (LOC - Wells Fargo Bank, N.A.) 0.28% 12/01/2014 $ 3,400
----------
523,895
----------
HEALTH CARE SERVICES (0.3%)
10,045 Central Ohio Medical Textiles (LOC - PNC Bank, N.A.) 0.25 3/01/2023 10,045
8,345 Kaneville Road Joint Venture
(LOC - Federal Home Loan Bank of Chicago) 0.38 11/01/2032 8,345
----------
18,390
----------
HEALTH MISCELLANEOUS (0.5%)
21,535 Everett Clinic P.S. (LOC - Bank of America, N.A.) 0.31 5/01/2027 21,535
5,565 Michigan Strategic Fund Ltd. (LOC - Fifth Third Bank) 0.39 8/01/2023 5,565
----------
27,100
----------
HEAVY ELECTRICAL EQUIPMENT (0.2%)
9,570 Mississippi Business Finance Corp.
(LOC - Regions Bank) 1.75 10/01/2018 9,570
----------
HOME FURNISHINGS (0.1%)
4,940 Caddo Parish IDB (LOC - Capital One, N.A.) 0.40 7/01/2024 4,940
1,970 Maryland EDC (LOC - Manufacturers &
Traders Trust Co.) 0.91 8/01/2016 1,970
----------
6,910
----------
HOME IMPROVEMENT RETAIL (0.3%)
7,905 Brookhaven, IDA (LOC - Capital One, N.A.) 1.23 1/01/2025 7,905
11,750 Savannah EDA (LOC - SunTrust Bank) 0.40 8/01/2025 11,750
----------
19,655
----------
HOSPITAL (7.0%)
4,125 Adventist Health System West
(LOC - Wells Fargo Bank, N.A.) 0.28 9/01/2016 4,125
2,265 Chesterfield County EDA (INS)(LIQ) 0.23 11/01/2042 2,265
3,100 Clarke County IDA (INS)(LIQ) 0.18 1/01/2030 3,100
3,605 Fayette County (LOC - PNC Bank, N.A.) 0.25 8/01/2023 3,605
8,550 Floyd County (LOC - JPMorgan Chase Bank, N.A.) 0.49 12/01/2020 8,550
11,030 Harrison County Health Facilities Dev. Corp.
(LOC - Regions Bank) 0.65 4/01/2026 11,030
14,000 Highlands County Health Facilities Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.16 11/15/2026 14,000
17,390 Highlands County Health Facilities Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.16 11/15/2026 17,390
37,500 Highlands County Health Facilities Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.16 11/15/2034 37,500
25,000 Illinois Finance Auth. (LOC - RBS Citizens, N.A.) 0.50 4/01/2041 25,000
================================================================================
PORTFOLIO OF INVESTMENTS | 23
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$11,300 Indiana Health Facility Financing Auth.
(LOC - Bank of America, N.A.) 0.28% 1/01/2019 $ 11,300
37,525 Indiana Health Facility Financing Auth. (INS)(LIQ) 0.38 3/01/2033 37,525
45,000 Indiana Health Facility Financing Auth. (INS)(LIQ) 0.40 3/01/2033 45,000
95,180 Johnson City Health and Educational Facilities Board
(LOC - Regions Bank) 1.45 7/01/2033 95,180
38,550 Minnesota Agricultural and EDB (INS)(LIQ) 0.22 2/15/2017 38,550
57,000 Montgomery County (INS)(LIQ) 0.21 8/01/2047 57,000
500 Richland County (LOC - Allied Irish Banks plc) 3.23 1/01/2032 500
----------
411,620
----------
HOTELS, RESORTS, & CRUISE LINES (0.6%)
5,100 Albany-Dougherty Inner City EDA
(LOC - SunTrust Bank) 2.00 11/01/2023 5,100
7,065 Alprion, LLC (LOC - Federal Home
Loan Bank of Topeka) 0.26 10/01/2034 7,065
2,645 Connecticut Dev. Auth. (LOC - TD Bank, N.A.) 0.31 12/01/2028 2,645
13,550 Forward Corp. (LOC - Fifth Third Bank) 0.69 12/01/2030 13,550
4,600 Massachusetts Port Auth. (LOC - Royal
Bank of Scotland plc) 0.27 3/01/2018 4,600
----------
32,960
----------
HOUSEHOLD APPLIANCES (0.3%)
14,885 Mississippi Business Finance Corp.
(LOC - Wells Fargo Bank, N.A.) 1.00 6/01/2015 14,885
----------
INDUSTRIAL MACHINERY (0.3%)
6,760 AL-FE Heat Treating, Inc. (LOC - PNC Bank, N.A.) 0.28 5/01/2021 6,760
3,365 Boone County (LOC - Fifth Third Bank) 0.62 7/01/2026 3,365
4,935 Sterling Pipe & Tube, Inc. (LOC - PNC Bank, N.A.) 0.28 11/01/2012 4,935
3,300 Strategic Fund Ltd. (LOC - Fifth Third Bank) 0.62 3/01/2023 3,300
----------
18,360
----------
INTEGRATED TELECOMMUNICATION SERVICES (0.2%)
11,585 South Central Communications Corp.
(LOC - Fifth Third Bank) 0.69 4/01/2018 11,585
----------
LEISURE FACILITIES (1.8%)
6,110 Cattail Creek Country Club, Inc.
(LOC - Manufacturers & Traders Trust Co.) 0.91 3/01/2031 6,110
3,800 Healthtrack Sports & Wellness, LP
(LOC - JPMorgan Chase Bank, N.A.) 0.28 2/15/2027 3,800
6,385 Old South Country Club, Inc.
(LOC - Manufacturers & Traders Trust Co.) 0.91 12/01/2031 6,385
================================================================================
24 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$13,670 TP Racing, LLP (LOC - JPMorgan Chase Bank, N.A.) 0.25% 6/01/2030 $ 13,670
75,000 Twins Ballpark, LLC (INS)(LIQ)(LIQ)(b) 0.95 10/01/2034 75,000
----------
104,965
----------
LEISURE PRODUCTS (0.4%)
9,325 Fun Entertainment, LLC (LOC - Wachovia Bank, N.A.) 0.28 1/01/2025 9,325
6,000 Monroe County IDB (LOC - SunTrust Bank) 0.40 1/01/2021 6,000
3,190 Rhode Island Industrial Facilities Corp.
(LOC - RBS Citizens, N.A.) 0.55 2/01/2021 3,190
6,310 Robert C. Fox Jr. (LOC - Comerica Bank, N.A.) 1.00 6/01/2033 6,310
----------
24,825
----------
LIFE & HEALTH INSURANCE (0.0%)
1,850 Ronald Ray Irrevocable Life Insurance Trust
(LOC - Federal Home Loan Bank of Atlanta) 0.30 8/01/2022 1,850
----------
MARINE (0.1%)
7,120 Washington Economic Dev. Finance Auth.
(LOC - Key Bank, N.A.) 3.00 3/01/2037 7,120
----------
MISCELLANEOUS (0.0%)
2,150 Donaldsonville IDB (LOC - Regions Bank) 4.20 4/01/2023 2,150
----------
MULTI-UTILITIES (0.1%)
6,100 Sempra Energy ESOP & Trust (NBGA)(b) 1.20 11/01/2014 6,100
----------
MULTIFAMILY HOUSING (2.5%)
8,430 Alabama Housing Finance Auth.
(LOC - U.S. Bank, N.A.) 0.24 4/01/2037 8,430
19,975 California Statewide Communities
(LOC - Bank of America, N.A.) 0.25 4/01/2042 19,975
55,330 Housing Finance Commission
(LOC - HSH Nordbank A.G.) 0.30 3/01/2036 55,330
12,500 Independence Place Fort Campbell Patriots, LLC
(LOC - Bank of America, N.A.) 0.25 1/01/2040 12,500
15,746 Massachusetts Housing Finance Agency
(LOC - JPMorgan Chase Bank, N.A.) 0.25 6/01/2037 15,746
26,670 Osprey Property Co., LLC
(LOC - Wells Fargo Bank, N.A.) 0.23 9/01/2033 26,670
3,500 Provence, LLC (LOC - Bank of America, N.A.) 0.50 9/01/2037 3,500
2,530 Pulaski County Public Facilities Board
(LOC - Regions Bank) 0.80 6/01/2042 2,530
----------
144,681
----------
MUNICIPAL FINANCE (0.5%)
29,105 Sunshine State Governmental Financing Commission
(LOC - Dexia Credit Local) 0.23 7/01/2016 29,105
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 25
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
NURSING/CCRC (1.7%)
$ 4,900 Bucks County IDA (LOC - Citizens
Bank of Pennsylvania) 0.35% 1/01/2037 $ 4,900
5,425 Erie County IDA (LOC - Sovereign Bank) 0.40 11/15/2036 5,425
8,090 Illinois Finance Auth. (LOC - Sovereign Bank) 0.18 5/15/2031 8,090
3,480 Indiana Finance Auth. (LOC - Federal Home Loan
Bank of Indiana) 0.60 7/01/2029 3,480
5,305 Lancaster County Hospital Auth.
(LOC - Allied Irish Banks plc) 0.50 7/01/2030 5,305
1,200 Lynchburg Redevelopment & Housing Auth.
(LOC - Manufacturers & Traders Trust Co.) 0.91 12/01/2034 1,200
34,405 Moon IDA (LOC - Bank of Scotland) 0.21 7/01/2038 34,405
9,480 Multnomah County (LOC - Bank of Scotland) 1.20 10/01/2047 9,480
15,105 Nassau County IDA (LOC - Bank of America, N.A.) 0.17 1/01/2028 15,105
1,465 Roanoke County EDA
(LOC - Branch Banking & Trust Co.) 1.48 10/01/2028 1,465
8,885 Schenectady County IDA (LOC - RBS Citizens, N.A.) 1.00 2/01/2037 8,885
3,800 Washington State Housing Finance Commission
(LOC - Bank of America, N.A.) 0.28 7/01/2041 3,800
----------
101,540
----------
OTHER DIVERSIFIED FINANCIAL SERVICES (0.3%)
15,000 Mortgage Bankers Association of America
(LOC - PNC Bank, N.A.) 0.23 5/01/2038 15,000
----------
PACKAGED FOODS & MEAT (0.6%)
4,485 Brewster Dairy, Inc. (LOC - BMO Bank of Montreal) 0.28 4/03/2023 4,485
3,115 Lancaster IDA (LOC - Fulton Bank) 2.30 6/01/2027 3,115
2,900 Las Cruces IDB (LOC - Wells Fargo Bank, N.A.) 0.23 12/01/2018 2,900
3,040 Laurel County (LOC - Fifth Third Bank) 0.89 3/01/2015 3,040
5,775 Laurel County (LOC - Wells Fargo Bank, N.A.) 0.28 5/01/2033 5,775
5,885 South Carolina Jobs EDA (LOC - Regions Bank) 0.80 2/01/2016 5,885
7,380 St. Tammany Parish (LOC - Federal
Home Loan Bank of Dallas) 0.28 7/01/2022 7,380
2,625 York (LOC - RBS Citizens, N.A.) 0.90 6/01/2019 2,625
----------
35,205
----------
PAPER PACKAGING (0.0%)
2,240 Washington Finance EDA
(LOC - Wells Fargo Bank, N.A.) 0.28 4/01/2033 2,240
----------
PAPER PRODUCTS (0.6%)
16,500 Campbell County IDA (LOC - Bank of America, N.A.) 0.21 12/01/2019 16,500
11,100 Fayette County (LOC - Bank of America, N.A.) 0.26 5/01/2018 11,100
================================================================================
26 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$ 5,600 Willacoochee Dev. Auth. (LOC - Federal
Home Loan Bank of Atlanta) 0.30% 5/01/2021 $ 5,600
----------
33,200
----------
REAL ESTATE OPERATING COMPANIES (9.5%)
13,505 411 Seventh Avenue Associates, LP
(LOC - PNC Bank, N.A.) 0.28 1/01/2027 13,505
49,105 ABAG Finance Auth. for Nonprofit Corp.
(LIQ)(LOC - Citigroup, Inc.)(b) 0.45 4/01/2011 49,105
5,235 AIK Partners, LLC
(LOC - Wachovia Bank, N.A.) 0.25 2/01/2031 5,235
2,265 Beaver Creek Enterprises, Inc.
(LOC - PNC Bank, N.A.) 0.28 3/02/2020 2,265
3,320 Cain Capital Investments, LLC
(LOC - Federal Home Loan Bank of Cincinnati) 0.39 10/01/2046 3,320
2,050 Chicago (LOC - Bank of America, N.A.) 0.29 3/01/2039 2,050
32,670 Cobb County Housing Auth. (LIQ)
(LOC - Citigroup, Inc.)(b) 0.45 6/01/2035 32,670
8,750 Cobb County Housing Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.27 10/01/2035 8,750
9,000 Contra Costa County (LOC - Bank of America, N.A.) 0.28 4/15/2046 9,000
28,710 DeKalb County Housing Auth. (LIQ)
(LOC - Citigroup, Inc.)(b) 0.45 11/07/2012 28,710
10,500 Donegal Crossing Associates, LLC
(LOC - Federal Home Loan Bank of Pittsburgh) 0.38 8/15/2027 10,500
7,520 East Hempfield IDA (LOC - Fulton Bank) 2.10 10/15/2026 7,520
16,690 Fairway Park Properties, LLC (LOC - PNC Bank, N.A.) 0.28 10/15/2026 16,690
17,570 Florida Housing Finance Corp. (LOC - Key Bank, N.A.) 0.65 6/15/2036 17,570
3,175 Fountains Apartments, LLC (LOC - Fifth Third Bank) 0.98 9/01/2036 3,175
3,700 Franklin County (LOC - Fifth Third Bank) 0.62 8/01/2035 3,700
14,320 Ft. Northport, LLC (LOC - Regions Bank) 1.50 12/01/2031 14,320
1,750 Fulton County Housing Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.27 2/01/2041 1,750
4,900 H&P Holdings, LLC (LOC - RBC Bank (USA)) 0.38 7/01/2026 4,900
8,930 Harlan Dev. Co., LLC (LOC - Fifth Third Bank) 0.69 12/01/2023 8,930
9,704 Harlan Dev. Co., LLC (LOC - Fifth Third Bank) 0.69 12/01/2044 9,704
2,355 Hickory Creek Apartments, LLC
(LOC - Fifth Third Bank) 0.98 9/01/2036 2,355
5,545 Illinois Housing Dev. Auth.
(LOC - Bank of America, N.A.) 0.33 1/01/2034 5,545
2,270 Islip IDA (LOC - Citibank, N.A.) 0.60 11/01/2020 2,270
5,750 JJB Properties, LLC (LOC - Federal
Home Loan Bank of Dallas) 1.00 1/01/2036 5,750
================================================================================
PORTFOLIO OF INVESTMENTS | 27
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
$ 4,650 Jungs Station & Timberlane Village Associates
(LOC - Wachovia Bank, N.A.) 0.28% 9/01/2027 $ 4,650
5,680 Lodge Apartments Holdings, LLC
(LOC - Wachovia Bank, N.A.) 0.28 3/01/2026 5,680
15,155 Massachusetts Dev. Finance Agency
(LOC - Bank of America, N.A.)
(LOC - RBS Citizens, N.A.) 0.54 3/01/2034 15,155
37,050 Massachusetts Dev. Finance Agency
(LOC - Bayerische Landesbank) 0.40 12/01/2040 37,050
5,990 MB & B Holdings, LLC (LOC - Harris, N.A.) 0.75 7/31/2034 5,990
10,000 Nashville and Davidson County Health and
Educational Facilities Board (LOC - Fifth Third Bank) 1.00 9/01/2036 10,000
15,200 Net Magan, LLC (LOC - Wachovia Bank, N.A.) 0.23 4/01/2026 15,200
9,300 New York City Housing Dev. Corp.
(LOC - Landesbank Hessen-Thuringen) 0.35 12/01/2036 9,300
36,175 New York City Housing Dev. Corp.
(LOC - RBS Citizens, N.A.) 0.36 3/01/2048 36,175
10,000 New York City Housing Dev. Corp.
(LOC - RBS Citizens, N.A.) 0.39 3/01/2048 10,000
11,970 Nick & Nat Properties, LLC (LOC - Fifth Third Bank) 0.69 5/01/2025 11,970
5,375 Orange County Housing Finance Auth.
(LOC - Compass Bank) 0.64 1/15/2040 5,375
9,050 Orange County Housing Finance Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.27 8/15/2042 9,050
8,660 Orange County Housing Finance Auth.
(LOC - Federal Home Loan Bank of Atlanta) 0.27 8/15/2042 8,660
2,970 Richfield Technology Associates, LLC
(LOC - U.S. Bank, N.A.) 0.28 4/01/2020 2,970
10,690 Sacramento County Housing Auth.
(LIQ)(LOC - Citigroup, Inc.)(b) 0.45 7/05/2017 10,690
5,255 Seattle Housing Auth. (LOC - Key Bank, N.A.) 0.49 3/01/2039 5,255
9,325 Shepherd Capital, LLC (LOC - Wachovia Bank, N.A.) 0.28 11/01/2052 9,325
21,495 South Carolina Jobs EDA (LOC - SunTrust Bank) 0.40 12/01/2035 21,495
2,485 Spiller, LLC (LOC - RBC Bank (USA)) 0.38 6/01/2018 2,485
7,520 Sugar Creek Finance Co., LLC (LOC - PNC Bank, N.A.) 0.28 6/01/2042 7,520
6,962 TKBF, LLC (LOC - Fifth Third Bank) 0.69 3/01/2108 6,962
16,185 Trinity Funding, LLC (LOC - Fifth Third Bank) 0.69 3/01/2036 16,185
2,595 Univ. Ltd. Properties, LLC (LOC - RBC Bank (USA)) 0.38 6/01/2026 2,595
16,130 Willow Interests, LLC (LOC - Fifth Third Bank) 0.81 4/01/2025 16,130
----------
555,156
----------
REAL ESTATE SERVICES (0.1%)
4,500 District of Columbia (LOC - SunTrust Bank) 0.40 4/01/2024 4,500
----------
================================================================================
28 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
REAL ESTATE TAX/FEE (0.1%)
$ 6,000 Jasper, Morgan, Newton, & Walton County
(LOC - Bank of America, N.A.) 0.35% 12/01/2020 $ 6,000
----------
REGIONAL BANKS (0.3%)
16,760 Bhavnani, LLC (LOC - Mellon 1st Business Bank, N.A.) 0.45 5/01/2038 16,760
----------
REITs - DIVERSIFIED (0.1%)
6,780 New York Housing Finance Agency
(LOC - Landesbank Hessen-Thuringen) 0.30 5/01/2042 6,780
----------
RESEARCH & CONSULTING SERVICES (0.5%)
28,925 Fuller Road Management Corp.
(LOC - Key Bank, N.A.) 0.80 7/01/2037 28,925
----------
SALES TAX (0.1%)
7,620 Arista Metropolitan District (LOC - Compass Bank) 0.70 12/01/2030 7,620
----------
SINGLE FAMILY HOUSING (0.6%)
2,450 Montgomery County (NBGA) 0.25 7/01/2039 2,450
34,750 Wisconsin Housing & EDA (NBGA) 0.27 9/01/2032 34,750
----------
37,200
----------
SOFT DRINKS (0.1%)
4,500 Blackfoot IDC (LOC - Key Bank, N.A.) 0.64 11/01/2027 4,500
----------
SOLID WASTE DISPOSAL (0.8%)
45,000 Pasco County (INS)(LIQ) 0.60 10/01/2020 45,000
----------
SPECIAL ASSESSMENT/TAX/FEE (1.3%)
17,540 Austin (LOC - Dexia Credit Local) 0.20 11/15/2029 17,540
9,995 Denver Urban Renewal Auth. (LOC - Compass Bank) 0.70 9/01/2017 9,995
2,935 Lake Oswego Redevelopment Agency
(LOC - Wells Fargo Bank, N.A.) 0.28 6/01/2020 2,935
13,445 Sheridan Redevelopment Agency (LOC - Citibank, N.A.) 1.30 12/01/2029 13,445
14,660 Timber Ridge Affordable Housing Corp.
(LOC - U.S. Bank, N.A.) 0.23 12/01/2032 14,660
15,750 Township of Derry Commercial IDA
(LOC - PNC Bank, N.A.) 0.23 11/01/2030 15,750
----------
74,325
----------
SPECIALIZED CONSUMER SERVICES (0.6%)
6,555 Chicago Enterprise Zone (LOC - RBS Citizens, N.A.) 1.50 12/01/2032 6,555
5,199 Cornerstone Funding Corp. I (LOC - PNC Bank, N.A.) 1.89 9/01/2025 5,199
24,070 Saber Management, LLC (LOC - RBS Citizens, N.A.) 0.30 8/01/2056 24,070
----------
35,824
----------
================================================================================
PORTFOLIO OF INVESTMENTS | 29
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
SPECIALIZED FINANCE (0.1%)
$ 3,115 Chase Bailey Insurance (LOC - Compass Bank) 0.43% 1/01/2030 $ 3,115
----------
SPECIALTY STORES (1.3%)
30,000 Bass Pro Rossford Development Co., LLC
(LOC - Fifth Third Bank) 0.81 11/01/2027 30,000
14,000 Blair County IDA (LOC - PNC Bank, N.A.) 0.23 10/01/2028 14,000
22,660 Cooperative District of the City of Prattville
(LOC - Regions Bank) 1.75 6/01/2026 22,660
5,900 D&H Enterprises of Ohio, LLC (LOC - PNC Bank, N.A.) 0.28 12/01/2025 5,900
5,360 Spencer Co., Inc. (LOC - Federal Home Loan
Bank of Atlanta) 0.93 2/01/2021 5,360
----------
77,920
----------
STEEL (0.2%)
7,480 Klein Steel Services, Inc.
(LOC - Manufacturers & Traders Trust Co.) 0.91 8/01/2025 7,480
3,355 Metaltec Steel Abrasive Co.
(LOC - Comerica Bank, N.A.) 0.40 11/01/2034 3,355
2,500 Mississippi Business Finance Corp.
(LOC - Federal Home Loan Bank of Dallas) 1.00 7/01/2020 2,500
----------
13,335
----------
TECHNOLOGY DISTRIBUTORS (0.1%)
7,705 Fresno Leasing, LLC (LOC - Manufacturers &
Traders Trust Co.) 0.91 11/17/2030 7,705
----------
TIRES & RUBBER (0.0%)
2,200 West Virginia EDA (LOC - JPMorgan Chase Bank, N.A.) 1.25 12/01/2015 2,200
----------
TOLL ROADS (1.2%)
71,025 Triborough Bridge and Tunnel Auth.
(LOC - Bayerische Landesbank) 0.28 1/01/2032 71,025
----------
TRUCKING (0.2%)
10,130 Dayton Freight Lines, Inc. (LOC - Fifth Third Bank) 0.69 12/01/2045 10,130
----------
WATER UTILITIES (0.6%)
13,600 Basic Water Co., LLC (LOC - U.S. Bank, N.A.) 0.28 8/01/2024 13,600
17,650 Collier County IDA (LOC - SunTrust Bank) 0.40 10/01/2035 17,650
4,500 Union Springs Wastewater Treatment Plant, LLC
(LOC - Regions Bank) 3.80 7/01/2037 4,500
----------
35,750
----------
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30 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON OR VALUE
(000) SECURITY DISCOUNT RATE MATURITY (000)
---------------------------------------------------------------------------------------------------------------------
WATER/SEWER UTILITY (0.4%)
$13,530 Hesperia Public Financing Auth.
(LOC - Bank of America, N.A.) 0.25% 6/01/2026 $ 13,530
2,969 Kern Water Bank Auth. (LOC - Wells
Fargo Bank, N.A.) 0.23 7/01/2028 2,969
7,820 Olivenhain Municipal Water District
(LOC - Bank of America, N.A.) 0.25 6/01/2022 7,820
----------
24,319
----------
Total Variable-Rate Demand Notes (cost: $5,151,337) 5,151,337
----------
TOTAL INVESTMENTS (COST: $5,867,180) $5,867,180
==========
----------------------------------------------------------------------------------------------------
($ IN 000s) VALUATION HIERARCHY
----------------------------------------------------------------------------------------------------
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
ASSETS FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
----------------------------------------------------------------------------------------------------
Money Market Instruments:
Fixed-Rate Instruments $- $ 110,000 $- $ 110,000
Commercial Paper - 543,943 - 543,943
Put Bonds - 61,900 - 61,900
Variable-Rate Demand Notes - 5,151,337 - 5,151,337
----------------------------------------------------------------------------------------------------
Total $- $5,867,180 $- $5,867,180
----------------------------------------------------------------------------------------------------
================================================================================
PORTFOLIO OF INVESTMENTS | 31
<PAGE>
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Values of securities are determined by procedures and practices discussed in
Note 1 to the financial statements.
The cost of securities at January 31, 2010, for federal income tax purposes,
was $5,867,180,000.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
o CATEGORIES AND DEFINITIONS
FIXED-RATE INSTRUMENTS -- consist of municipal bonds, notes, and commercial
paper. The interest rate is constant to maturity. Prior to maturity, the
market price of a fixed-rate instrument generally varies inversely to the
movement of interest rates.
COMMERCIAL PAPER -- unsecured promissory notes with maturities ranging from
two to 270 days, issued mainly by the most creditworthy corporations.
Commercial paper is usually purchased at a discount and matures at par
value; however, it may also be interest-bearing.
PUT BONDS -- provide the right to sell the bond at face value at specific
tender dates prior to final maturity. The put feature shortens the effective
maturity of the security.
================================================================================
32 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
VARIABLE-RATE DEMAND NOTES (VRDNs) -- provide the right to sell the security
at face value on either that day or within the rate-reset period. The
interest rate is adjusted at a stipulated daily, weekly, monthly, quarterly,
or other specified time interval to reflect current market conditions. The
effective maturity of these instruments is deemed to be less than 397 days
in accordance with detailed regulatory requirements.
o PORTFOLIO ABBREVIATIONS AND DESCRIPTIONS
ABS Asset-Backed Financing
EDA Economic Development Authority
EDB Economic Development Board
EDC Economic Development Corp.
ESOP Employee Stock Ownership Plan
IDA Industrial Development Authority/Agency
IDB Industrial Development Board
IDC Industrial Development Corp.
REIT Real Estate Investment Trust
CREDIT ENHANCEMENTS -- add the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal and
interest payments when due. The enhancement may be provided by a
high-quality bank, insurance company or other corporation, or a collateral
trust. The enhancements do not guarantee the values of the securities.
The Fund's investments consist of securities meeting the requirements to
qualify at the time of purchase as "eligible securities" under the
Securities and Exchange Commission (SEC) rules applicable to money market
funds. With respect to quality, eligible securities generally consist of
securities rated in one of the two highest categories for short-term
securities or, if not rated, of comparable quality at the time of purchase.
USAA Investment Management Company (the
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 33
<PAGE>
================================================================================
Manager) also attempts to minimize credit risk in the Fund through rigorous
internal credit research.
(INS) Principal and interest payments are insured by Assured
Guaranty Corp., Assured Guaranty Municipal Corp., or Berkshire
Hathaway Assurance Corp. Although bond insurance reduces the risk of
loss due to default by an issuer, such bonds remain subject to the
risk that value may fluctuate for other reasons, and there is no
assurance that the insurance company will meet its obligations.
(LIQ) Liquidity enhancement that may, under certain circumstances,
provide for repayment of principal and interest upon demand from one
of the following: Branch Banking and Trust Co., Citibank, N.A.,
Comerica Bank, N.A., Dexia Credit Local, JPMorgan Chase Bank, N.A.,
PNC Bank, N.A., Societe Generale, U.S. Bank N.A., Wachovia Bank
N.A., or Wells Fargo Bank, N.A.
(LOC) Principal and interest payments are guaranteed by a bank
letter of credit or other bank credit agreement.
(NBGA) Principal and interest payments or, under certain
circumstances, underlying mortgages are guaranteed by a nonbank
guarantee agreement from one of the following: Freddie Mac, Fannie
Mae, or Sempra Energy.
o SPECIFIC NOTES
(a) Commercial paper issued in reliance on the "private placement"
exemption from registration afforded by Section 4(2) of the Securities
Act of 1933. Unless this commercial paper is subsequently registered, a
resale of this commercial paper in the United States must be effected
in a transaction exempt from registration under the Securities Act of
1933. Section 4(2) commercial paper is normally resold to other
investors through or with the assistance of the issuer or an investment
================================================================================
34 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
dealer who makes a market in this security, and as such has been deemed
liquid by the Manager under liquidity guidelines approved by the Board
of Trustees, unless otherwise noted as illiquid.
(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.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 35
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities (amortized cost approximates
market value) $5,867,180
Cash 2,431
Receivables:
Capital shares sold 15,617
USAA Investment Management Company (Note 4C) 65
Interest 2,792
----------
Total assets 5,888,085
----------
LIABILITIES
Payables:
Securities purchased 4,300
Capital shares redeemed 16,109
Dividends on capital shares 51
Accrued management fees 1,208
Accrued transfer agent's fees 438
Other accrued expenses and payables 227
----------
Total liabilities 22,333
----------
Net assets applicable to capital shares outstanding $5,865,752
==========
NET ASSETS CONSIST OF:
Paid-in capital $5,865,749
Accumulated net realized gain on investments 3
----------
Net assets applicable to capital shares outstanding $5,865,752
==========
Capital shares outstanding, unlimited number of
shares authorized, no par value 5,865,748
==========
Net asset value, redemption price, and offering price per share $ 1.00
==========
See accompanying notes to financial statements.
================================================================================
36 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
STATEMENT OF OPERATIONS
(IN THOUSANDS)
Six-month period ended January 31, 2010 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income $27,335
-------
EXPENSES
Management fees 7,301
Administration and servicing fees 3,042
Transfer agent's fees 7,111
Custody and accounting fees 406
Postage 278
Shareholder reporting fees 121
Trustees' fees 5
Registration fees 54
Professional fees 181
Guarantee program fee (Note 1G) 302
Other 55
-------
Total expenses 18,856
Expenses paid indirectly (2)
Transfer agent's fees reimbursed (Note 4D) (817)
Expenses reimbursed (65)
-------
Net expenses 17,972
-------
NET INVESTMENT INCOME 9,363
-------
NET REALIZED GAIN ON INVESTMENTS
Net realized gain 3
-------
Increase in net assets resulting from operations $ 9,366
=======
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 37
<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 $ 9,363 $ 108,511
Net realized gain on investments 3 24
-------------------------
Increase in net assets resulting from
operations 9,366 108,535
-------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (9,387) (108,519)
-------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 2,101,489 5,068,465
Reinvested dividends 9,285 107,067
Cost of shares redeemed (2,357,294) (4,896,437)
-------------------------
Increase (decrease) in net assets from
capital share transactions (246,520) 279,095
-------------------------
Net increase (decrease) in net assets (246,541) 279,111
NET ASSETS
Beginning of period 6,112,293 5,833,182
-------------------------
End of period $ 5,865,752 $ 6,112,293
=========================
Accumulated undistributed net investment income: $ - $ 24
=========================
CHANGE IN SHARES OUTSTANDING
Shares sold 2,101,489 5,068,465
Shares issued for dividends reinvested 9,285 107,067
Shares redeemed (2,357,294) (4,896,437)
-------------------------
Increase (decrease) in shares outstanding (246,520) 279,095
=========================
See accompanying notes to financial statements.
================================================================================
38 | USAA MONEY MARKET FUND
<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 Money
Market Fund (the Fund), which is classified as diversified under the 1940 Act.
The Fund's investment objective is the highest income consistent with
preservation of capital and the maintenance of liquidity.
A. SECURITY VALUATION -- The value of each security is determined (as of the
close of trading on the New York Stock Exchange (NYSE) on each business day
the NYSE is open) as set forth below:
1. Pursuant to Rule 2a-7 under the 1940 Act, securities in the Fund are
valued at amortized cost, which approximates market value. This method
values a security at its cost on the date of purchase and, thereafter,
assumes a constant amortization to maturity of any premiums or
discounts.
2. Repurchase agreements are valued at cost, which approximates market
value.
3. Securities for which amortized cost valuations are considered unreliable
or whose values have been materially affected by a significant event are
valued in good faith at fair value, using methods determined by USAA
Investment Management Company (the Manager), an affiliate of the Fund,
under valuation procedures and procedures to stabilize net asset value
(NAV) approved by the Trust's Board of Trustees.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 39
<PAGE>
================================================================================
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.
Level 3 -- inputs to the valuation methodology are unobservable and
significant to the fair value measurement, including the Manager's own
assumptions in determining the fair value.
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risks associated with investing in those securities.
For example, money market securities are valued using amortized cost, in
accordance with rules under the 1940 Act. Generally, amortized cost
approximates the current fair value of a security, but since the value is
not obtained from a quoted price in an active market, such securities are
reflected as Level 2.
C. FEDERAL TAXES -- The Fund's policy is to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its income to its shareholders.
Therefore, no federal income tax provision is required.
D. INVESTMENTS IN SECURITIES -- Security transactions are accounted for on
the date the securities are purchased or sold (trade date). Gains or losses
from sales of investment securities are computed on the identified cost
basis. Interest income is recorded daily on the accrual basis. Premiums and
discounts are amortized over the life of the respective securities using the
straight-line method.
================================================================================
40 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
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. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS -- Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after
the trade date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may increase or
decrease in value prior to their delivery. The Fund maintains segregated
assets with a market value equal to or greater than the amount of its
purchase commitments.
G. GUARANTEE PROGRAM -- Subject to certain terms and conditions, the U.S.
Department of the Treasury's Temporary Guarantee Program for Money Market
Funds (the Program) provided coverage to shareholders for amounts held in
participating money market funds as of the close of business on September
19, 2008, for the term of the Program of September 19, 2008, through
September 18, 2009 (Program Term). The Fund was responsible for payment of
fees required to continue its participation in the Program without regard to
any waivers or expense limitations in effect for the Fund. The participation
fee for the Program Term was 0.04% of the number of shares outstanding of
the Fund as of September 19, 2008. For the six-month period ended January
31, 2010, the Fund recorded $302,000, as guarantee program fee on the
statement of operations. Effective September 18, 2009, the Program has
expired.
H. EXPENSES PAID INDIRECTLY -- Through arrangements with the Fund's
custodian and other banks utilized by the Fund for cash management
================================================================================
NOTES TO FINANCIAL STATEMENTS | 41
<PAGE>
================================================================================
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 $2,000.
I. INDEMNIFICATIONS -- Under the Trust's organizational documents, its
officers and trustees are indemnified against certain liabilities arising
out of the performance of their duties to the Trust. In addition, in the
normal course of business the Trust enters into contracts that contain a
variety of representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Trust that have not yet occurred. However, the Trust expects the risk of
loss to be remote.
J. USE OF ESTIMATES -- The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $750 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at a rate per annum equal to
the rate at which CAPCO obtains funding in the capital markets, with no markup.
The USAA funds that are party to the loan agreement are assessed facility fees
by CAPCO based on the funds' assessed proportionate share of CAPCO's operating
expenses related to obtaining and maintaining CAPCO's funding programs in total
(in no event to exceed 0.13% annually of the amount of the committed loan
agreement). Prior to September 25, 2009, the maximum annual facility fee was
0.07% of the amount of the committed loan agreement. The facility fees are
allocated among the funds based on their respective average net assets for the
period.
================================================================================
42 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
For the six-month period ended January 31, 2010, the Fund paid CAPCO facility
fees of $16,000, which represents 15.0% of the total fees paid to CAPCO by the
USAA funds. The Fund had no borrowings under this agreement during the six-month
period ended January 31, 2010.
(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.
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. Distributions of realized gains from security transactions
not offset by capital losses are made annually in the succeeding fiscal year or
as otherwise required to avoid the payment of federal taxes.
The Fund is required to evaluate tax positions taken or expected to be taken in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Income tax and related interest and penalties would be recognized by
the Fund as tax expense in the 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) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager carries out the Fund's investment policies
and manages the Fund's portfolio pursuant to an Advisory Agreement. The
Fund's management fees are accrued daily and paid monthly at an annualized
rate of 0.24% of the Fund's average net assets for the fiscal year. For the
six-month period ended January 31, 2010,
================================================================================
NOTES TO FINANCIAL STATEMENTS | 43
<PAGE>
================================================================================
the Fund incurred management fees, paid or payable to the Manager, of
$7,301,000.
B. ADMINISTRATION AND SERVICING FEES -- The Manager provides certain
administration and shareholder servicing functions for the Fund. For such
services, the Manager receives a fee accrued daily and paid monthly at an
annualized rate of 0.10% of the Fund's average net assets. For the six-month
period ended January 31, 2010, the Fund incurred administration and
servicing fees, paid or payable to the Manager, of $3,042,000.
In addition to the services provided under its Administration and Servicing
Agreement with the Fund, the Manager also provides certain compliance and
legal services for the benefit of the Fund. The Trust's Board of Trustees
has approved the reimbursement of a portion of these expenses incurred by
the Manager. For the six-month period ended January 31, 2010, the Fund
reimbursed the Manager $149,000 for these compliance and legal services.
These expenses are included in the professional fees on the Fund's statement
of operations.
C. EXPENSE LIMITATION -- The Manager has voluntarily agreed, on a temporary
basis, to reimburse management, administrative, or other fees to limit the
Fund's expenses and attempt to prevent a negative yield. The Manager can
modify or terminate this arrangement at any time. For the six-month period
ended January 31, 2010, the Fund incurred reimbursable expenses of $65,000,
all of which was receivable from the Manager.
D. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund based on an annual charge of $25.50 per
shareholder account plus out-of-pocket expenses. The Fund also pays SAS
fees that are related to the administration and servicing of accounts that
are traded on an omnibus basis. For the six-month period ended January 31,
2010, the Fund incurred transfer agent's fees, paid or payable to SAS, of
$7,111,000.
During the six-month period ended January 31, 2010, SAS reimbursed the Fund
$817,000 for corrections in fees paid for the administration and servicing
of certain accounts.
================================================================================
44 | USAA MONEY MARKET FUND
<PAGE>
================================================================================
E. UNDERWRITING SERVICES -- The Manager provides exclusive underwriting and
distribution of the Fund's shares on a continuing best-efforts basis. The
Manager receives no commissions or fees for this service.
(5) TRANSACTIONS WITH AFFILIATES
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At January 31,
2010, USAA and its affiliates owned 4,000 shares (less than 0.1%) of the Fund.
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
(6) SUBSEQUENT EVENTS
Events or transactions that occur after the balance sheet date but before the
financial statements are issued are categorized as recognized or non-recognized
for financial statement purposes. The Manager has evaluated subsequent events
through 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.
(7) 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 | 45
<PAGE>
================================================================================
(8) 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 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------------------------------------------------
Income from
investment operations:
Net investment income .00(a) .02 .04 .05 .04 .02
Net realized and
unrealized gain .00(a) .00(a) .00(a) .00(a),(b) .00(a) .00(a)
---------------------------------------------------------------------------------------------
Total from investment
operations .00(a) .02 .04 .05 .04 .02
---------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (.00)(a) (.02) (.04) (.05) (.04) (.02)
---------------------------------------------------------------------------------------------
Net asset value at end
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============================================================================================
Total return (%)* .15(e) 1.86 3.70 4.91(b) 3.99 1.93
Net assets at end
of period (000) $5,865,752 $6,112,293 $5,833,182 $5,062,461 $4,393,245 $2,960,026
Ratios to average
net assets:**
Expenses (%)(d) .62(c),(e) .63 .57 .58 .58 .60
Net investment income (%) .31(c) 1.83 3.60 4.81 3.98 1.91
* Assumes reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. generally accepted accounting principles and could differ from the
iMoneyNet reported return.
** For the six-month period ended January 31, 2010, average net assets were
$6,032,745,000.
(a) Represents less than $0.01 per share.
(b) For the year ended July 31, 2007, the Manager reimbursed the Fund $1,000 for
a loss incurred from the sale of a portion of a security that exceeded the
amount allowed to be held of that type of security under the Fund's
investment restrictions. The reimbursement had no effect on the Fund's per
share net realized gain or total return.
(c) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(d) 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% of average net assets.
(e) During the period ended January 31, 2010, SAS reimbursed the Fund $817,000
for corrections in fees paid for the administration and servicing of certain
accounts. The effect of this reimbursement on the Fund's total return was
less than 0.01%. The reimbursement decreased the Fund's expense ratios by
0.03%. This decrease is excluded from the expense ratios in the Financial
Highlights.
================================================================================
46 | USAA MONEY MARKET 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 | 47
<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 $1,001.50 $2.98
Hypothetical
(5% return before expenses) 1,000.00 1,022.23 3.01
* Expenses are equal to the Fund's annualized expense ratio of 0.59%, 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 0.15% for the six-month period of August
1, 2009, through January 31, 2010.
================================================================================
48 | USAA MONEY MARKET 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.
--------------------------------------------------------------------------------
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)
============================================================================
23428-0310 (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:* 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:* CHRISTOPHER W. CLAUS
-----------------------------------------------------
Signature and Title: Christopher W. Claus, President
Date: APRIL 1, 2010
------------------------------
By:* 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.
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