UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-7852
Exact Name of Registrant as Specified in Charter: USAA MUTUAL FUNDS TRUST
Address of Principal Executive Offices and Zip Code:
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Name and Address of Agent for Service:
CHRISTOPHER P. LAIA
USAA MUTUAL FUNDS TRUST
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Registrant's Telephone Number, Including Area Code: (210) 498-0226
Date of Fiscal Year End: MAY 31
Date of Reporting Period: FEBRUARY 28, 2010
ITEM 1. SCHEDULE OF INVESTMENTS.
USAA MUTUAL FUNDS TRUST - 3RD QUARTER REPORT - PERIOD ENDED FEBRUARY 28, 2010
[USAA Logo]
USAA (R)
PORTFOLIO OF INVESTMENTS
3
RD
QUARTER
USAA MANAGED ALLOCATION FUND
FEBRUARY 28, 2010
(Form N-Q)
93926-0410
©2010, USAA. All rights reserved.
PORTFOLIO OF INVESTMENTS
USAA Managed Allocation Fund
February 28, 2010 (unaudited)
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Number
of Shares
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Security
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Market
Value
(000)
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EXCHANGE-TRADED FUNDS (98.3%)
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|
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18,785
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iShares Barclays Aggregate Bond Fund
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$
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1,964
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18,388
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SPDR Trust Series 1
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2,037
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Total Exchange-Traded Funds (cost: $3,922)
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4,001
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MONEY MARKET INSTRUMENTS (2.0%)
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MONEY MARKET FUNDS (2.0%)
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80,422
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State Street Institutional Liquid Reserve Fund, 0.12% (a)(cost: $80)
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80
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Total Investments (cost: $4,002)
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$
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4,081
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($ in 000s)
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VALUATION HIERARCHY
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Assets
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(LEVEL 1)
Quoted Prices in Active Markets
for Identical Assets
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(LEVEL 2)
Other Significant
Observable Inputs
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(LEVEL 3)
Significant
Unobservable Inputs
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Total
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EQUITY SECURITIES:
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EXCHANGE-TRADED FUNDS
|
$
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4,001
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$
|
—
|
$
|
—
|
$
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4,001
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MONEY MARKET INSTRUMENTS:
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MONEY MARKET FUNDS
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80
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—
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—
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|
80
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Total
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$
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4,081
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$
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—
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$
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—
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$
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4,081
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1 | USAA Managed Allocation Fund
NOTES TO PORTFOLIO
OF INVESTMENTS
February 28, 2010 (unaudited)
GENERAL NOTES
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 quarterly report pertains only to the USAA Managed Allocation Fund (the Fund), which is classified as nondiversified under the 1940 Act.
The Fund is not offered for sale directly to the general public and is available currently for investment through a USAA managed account program or other persons or legal entities that the Fund may approve from time to time.
A.
Security valuation
– The value of each security is determined (as of the close of trading on the New York Stock Exchange (NYSE) on each business day the NYSE is open) as set forth below:
1. Equity securities, including exchange-traded funds (ETFs), except as otherwise noted, traded primarily on a domestic securities exchange or the Nasdaq over-the-counter markets are valued at the last sales price or official closing price on the exchange or primary market on which they trade. Equity securities traded primarily on foreign securities exchanges or markets are valued at the last quoted sales price, or the most recently determined official closing price calculated according to local market convention, available at the time the Fund is valued. If no last sale or official closing price is reported or available, the average of the bid and asked prices is generally used.
2. Equity securities trading in various foreign markets may take place on days when the NYSE is closed. Further, when the NYSE is open, the foreign markets may be closed. Therefore, the calculation of the Fund’s net asset value (NAV) may not take place at the same time the prices of certain foreign securities held by the Fund are determined. In most cases, events affecting the values of foreign securities that occur between the time of their last quoted sales or official closing prices and the close of normal trading on the NYSE on a day the Fund’s NAV is calculated will not be reflected in the value of the Fund’s foreign securities. However, USAA Investment Management Company (the Manager), an affiliate of the Fund, and the Fund’s subadvisers, if applicable, will monitor for events that would materially affect the value of the Fund’s foreign securities. The Fund’s subadvisers have agreed to notify the Manager of significant events they identify that would materially affect the value of the Fund’s foreign securities. If the Manager determines that a particular event would materially affect the value of the Fund’s foreign securities, then the Manager, under valuation procedures approved by the Trust’s Board of Trustees, will consider such available information that it deems relevant to determine a fair value for the affected foreign securities.
In addition, the Fund may use information from an external vendor or other sources to adjust the foreign market closing prices of foreign equity securities to reflect what the Fund believes to be the fair value of the securities as of the close of the NYSE. Fair valuation of affected foreign equity
2 | USAA Managed Allocation Fund
securities may occur frequently based on an assessment that events that occur on a fairly regular basis (such as U.S. market movements) are significant.
3. Investments in open-end investment companies, hedge, or other funds, other than ETFs, are valued at their NAV at the end of each business day.
4. Debt securities purchased with original or remaining maturities of 60 days or less may be valued at amortized cost, which approximates market value.
5. Securities for which market quotations are not readily available or are considered unreliable, or whose values have been materially affected by events occurring after the close of their primary markets but before the pricing of the Fund, are valued in good faith at fair value, using methods determined by the Manager in consultation with the Fund’s subadvisers, if applicable, under valuation procedures approved by the Trust’s Board of Trustees. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded and the actual price realized from the sale of a security may differ materially from the fair value price. Valuing these securities at fair value is intended to cause the Fund’s NAV to be more reliable than it otherwise would be.
Fair value methods used by the Manager include, but are not limited to, obtaining market quotations from secondary pricing services, broker-dealers, or widely used quotation systems. General factors considered in determining the fair value of securities include fundamental analytical data, the nature and duration of any restrictions on disposition of the securities, and an evaluation of the forces that influenced the market in which the securities are purchased and sold.
B.
Fair value measurements
– Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-level valuation hierarchy 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.
C.
Subsequent events
– Events or transactions that occur after the quarterly report date, but before the quarterly report is issued, and are categorized as recognized or non-recognized for quarterly
3 | USAA Managed Allocation Fund
report purposes. The Manager has evaluated subsequent events through the date the quarterly report was issued, and has determined there were no events that require recognition or disclosure in the Fund's quarterly report.
D.
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.
E. As of February 28, 2010, the cost of securities, for federal income tax purposes, was approximately the same as that reported in the portfolio of investments. Gross unrealized appreciation and depreciation of investments as of February 28, 2010, were $79,000 and $0 respectively, resulting in net unrealized appreciation of $79,000.
F. The portfolio of investments category percentages shown represent the percentages of the investments to net assets, which were $4,070,000 at February 28, 2010, and, in total, may not equal 100%. A category percentage of 0.0% represents less than 0.1% of net assets.
G. The Fund may rely on certain Securities and Exchange Commission (SEC) exemptive orders or rules that permit funds meeting various conditions to invest in an exchange-traded fund (ETF) in amounts exceeding limits set forth in the Investment Company Act of 1940 that would otherwise be applicable.
PORTFOLIO ABBREVIATIONS AND DESCRIPTIONS
|
iShares
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Exchange-traded funds, managed by Barclays Global Fund Advisors, that represent a portfolio of stocks designed to closely track a specific market index. iShares funds are traded on securities exchanges.
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SPDR
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Exchange-traded funds, managed by State Street Global Advisers, that represent a portfolio of stocks designed to closely track a specific market index. SPDR is an acronym for the first member of the fund family, Standard & Poor’s Depositary Receipts, which tracks the S&P 500 Index. SPDRs are traded on securities exchanges.
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SPECIFIC NOTES
|
(a)
|
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Rate represents the money market fund annualized seven-day yield at February 28, 2010.
|
Notes to Portfolio of Investments | 4
ITEM 2. 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-Q 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.
ITEM 3. EXHIBITS.
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.
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 February 28, 2010
By:* /s/ CHRISTOPHER P. LAIA
--------------------------------------------------------------
Signature and Title: Christopher P. Laia, Secretary
Date: 04/29/2010
-------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:* /s/ CHRISTOPHER W. CLAUS
-----------------------------------------------------
Signature and Title: Christopher W. Claus, President
Date: 04/29/2010
------------------------------
By:* /s/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 04/29/2010
------------------------------
*PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.
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