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: JULY 31
Date of Reporting Period: APRIL 30, 2010
ITEM 1. SCHEDULE OF INVESTMENTS.
USAA MUTUAL FUNDS TRUST - 3RD QUARTER REPORT - PERIOD ENDED APRIL 30, 2010
[LOGO OF USAA]
USAA(R)
PORTFOLIO OF INVESTMENTS
3(RD) QUARTER
USAA INCOME FUND
APRIL 30, 2010
(Form N-Q)
48484-0610 (C)2010, USAA. All rights reserved.
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PORTFOLIO OF INVESTMENTS
USAA INCOME FUND
April 30, 2010 (unaudited)
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (34.5%)
CONSUMER DISCRETIONARY (2.3%)
-----------------------------
AUTOMOBILE MANUFACTURERS (1.0%)
$ 15,000 Daimler Finance N.A., LLC 8.00% 6/15/2010 $ 15,110
10,000 Toyota Motor Credit Corp. 4.85 2/27/2015 10,099
-----------
25,209
-----------
BROADCASTING (0.4%)
10,000 NBC Universal Inc. (a) 5.15 4/30/2020 10,136
-----------
CABLE & SATELLITE (0.4%)
10,000 Time Warner Cable, Inc. 6.75 7/01/2018 11,356
-----------
CASINOS & GAMING (0.1%)
3,000 International Game Technology 7.50 6/15/2019 3,499
-----------
SPECIALTY STORES (0.4%)
5,000 Staples, Inc. 7.75 4/01/2011 5,282
5,000 Staples, Inc. 9.75 1/15/2014 6,129
-----------
11,411
-----------
Total Consumer Discretionary 61,611
-----------
CONSUMER STAPLES (2.9%)
-----------------------
AGRICULTURAL PRODUCTS (0.2%)
4,000 Bunge Ltd. Finance Co. 8.50 6/15/2019 4,759
-----------
DRUG RETAIL (0.5%)
9,192 CVS Caremark Corp. 6.04 12/10/2028 9,261
4,983 CVS Pass-Through Trust (a) 7.51 1/10/2032 5,659
-----------
14,920
-----------
FOOD RETAIL (0.2%)
5,000 Kroger Co. 5.50 2/01/2013 5,433
-----------
HOUSEHOLD PRODUCTS (0.7%)
17,000 Clorox Co. 6.13 2/01/2011 17,642
-----------
HYPERMARKETS & SUPER CENTERS (0.2%)
5,000 Costco Wholesale Corp. 5.30 3/15/2012 5,370
-----------
PACKAGED FOODS & MEAT (0.6%)
15,000 Kellogg Co. 6.60 4/01/2011 15,756
-----------
SOFT DRINKS (0.5%)
2,000 PepsiAmericas, Inc. 4.50 3/15/2013 2,120
5,000 PepsiCo, Inc. 0.33 (b) 7/15/2011 5,003
5,000 PepsiCo, Inc. 7.90 11/01/2018 6,317
-----------
13,440
-----------
Total Consumer Staples 77,320
-----------
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1 | USAA Income Fund
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
ENERGY (4.7%)
-------------
INTEGRATED OIL & GAS (1.0%)
$ 21,000 ConocoPhillips 8.75% 5/25/2010 $ 21,100
5,000 Hess Corp. 8.13 2/15/2019 6,226
-----------
27,326
-----------
OIL & GAS DRILLING (0.5%)
3,000 Nabors Industries, Inc. 9.25 1/15/2019 3,801
5,000 Rowan Companies, Inc. 7.88 8/01/2019 5,809
5,000 Transocean, Inc. 5.25 3/15/2013 5,410
-----------
15,020
-----------
OIL & GAS EQUIPMENT & SERVICES (0.7%)
5,000 Baker Hughes, Inc. 7.50 11/15/2018 6,098
5,000 Smith International, Inc. 8.63 3/15/2014 5,999
5,000 Weatherford International Ltd. 9.63 3/01/2019 6,477
-----------
18,574
-----------
OIL & GAS EXPLORATION & PRODUCTION (0.2%)
5,000 Noble Energy, Inc. 8.25 3/01/2019 6,165
-----------
OIL & GAS REFINING & MARKETING (0.6%)
5,000 Plains All American Pipeline, LP 6.50 5/01/2018 5,539
3,000 Plains All American Pipeline, LP 8.75 5/01/2019 3,736
5,000 Valero Energy Corp. 9.38 3/15/2019 6,144
-----------
15,419
-----------
OIL & GAS STORAGE & TRANSPORTATION (1.7%)
5,000 DCP Midstream, LLC (a) 9.70 12/01/2013 6,096
5,000 Enbridge Energy Partners, LP 5.35 12/15/2014 5,376
4,000 Enbridge Energy Partners, LP 8.05 10/01/2037 4,069
3,000 Energy Transfer Partners, LP 9.00 4/15/2019 3,754
10,000 Enterprise Products Operating, LLC 6.30 9/15/2017 11,231
5,000 Nustar Logistics, LP 7.65 4/15/2018 5,686
5,000 Sunoco Logistics Partners Operations, LP 8.75 2/15/2014 5,832
3,000 Transcontinental Gas Pipeline Corp. 8.88 7/15/2012 3,420
-----------
45,464
-----------
Total Energy 127,968
-----------
FINANCIALS (10.5%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (0.2%)
5,000 State Street Capital Trust III 8.25 -(c) 5,137
-----------
CONSUMER FINANCE (1.5%)
10,000 American Honda Finance Corp. (a) 7.63 10/01/2018 11,794
3,000 ERAC USA Finance Co. (a) 6.38 10/15/2017 3,356
25,200 Household Finance Corp. 6.38 10/15/2011 26,733
-----------
41,883
-----------
DIVERSIFIED BANKS (0.4%)
5,000 Wells Fargo Capital XIII 7.70 -(c) 5,225
5,000 Wells Fargo Capital XV 9.75 -(c) 5,625
-----------
10,850
-----------
LIFE & HEALTH INSURANCE (0.9%)
5,000 Great-West Life & Annuity Insurance Co. (a) 7.15 5/16/2046 4,850
5,000 MetLife Global Funding I (a) 0.70 (b) 7/13/2011 4,995
5,000 MetLife Global Funding I (a) 0.80 (b) 4/10/2012 5,000
10,000 New York Life Global Funding 0.38 (b) 6/16/2011 10,009
-----------
24,854
-----------
MULTI-LINE INSURANCE (0.5%)
5,000 AIG Sunamerica Global Financing (a) 6.30 5/10/2011 5,135
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Portfolio of Investments | 2
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
$ 5,000 HCC Insurance Holdings, Inc. 6.30% 11/15/2019 $ 5,310
3,000 Oil Insurance Ltd. (a) 7.56 -(c) 2,627
-----------
13,072
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES (1.4%)
6,000 Bank of America Corp. 8.00 -(c) 6,049
10,000 Bank One Corp. 7.88 8/01/2010 10,177
5,000 Countrywide Financial Corp. 5.80 6/07/2012 5,323
3,000 JPMorgan Chase & Co. 7.90 -(c) 3,161
4,000 Ohio National Financial Services, Inc. (a) 6.38 4/30/2020 4,113
10,000 Societe Generale NY 0.60 (b) 2/03/2012 10,002
-----------
38,825
-----------
PROPERTY & CASUALTY INSURANCE (1.4%)
1,000 Assured Guaranty U.S. Holdings, Inc. 6.40 12/15/2066 772
15,000 Berkshire Hathaway Finance Corp. 4.85 1/15/2015 16,365
10,000 Berkshire Hathaway, Inc. 0.43 (b) 2/10/2012 10,035
5,000 Progressive Corp. 6.70 6/15/2037 4,962
5,000 Travelers Companies, Inc. 6.25 3/15/2037 4,924
-----------
37,058
-----------
REGIONAL BANKS (0.5%)
5,000 Chittenden Corp. 5.80 2/14/2017 4,973
8,000 Hudson United Bank 7.00 5/15/2012 8,533
-----------
13,506
-----------
REITs - DIVERSIFIED (0.2%)
5,000 Liberty Property, LP 6.63 10/01/2017 5,232
-----------
REITs - INDUSTRIAL (0.4%)
5,000 AMB Property, LP 6.30 6/01/2013 5,369
5,000 ProLogis 7.38 10/30/2019 5,206
-----------
10,575
-----------
REITs - OFFICE (0.8%)
5,000 BioMed Realty, LP (a) 6.13 4/15/2020 5,071
10,000 Boston Properties, Inc. 5.88 10/15/2019 10,624
1,681 Mack-Cali Realty, LP 5.80 1/15/2016 1,773
3,000 Mack-Cali Realty, LP 7.75 8/15/2019 3,524
-----------
20,992
-----------
REITs - RESIDENTIAL (0.2%)
4,860 AvalonBay Communities, Inc. 5.50 1/15/2012 5,125
-----------
REITs - RETAIL (1.9%)
2,500 Developers Diversified Realty Corp. 7.50 7/15/2018 2,507
10,000 Equity One, Inc. 6.25 12/15/2014 10,482
3,000 Federal Realty Investment Trust 5.90 4/01/2020 3,051
5,000 National Retail Properties, Inc. 6.88 10/15/2017 5,202
15,000 Pan Pacific Retail Properties, Inc. 7.95 4/15/2011 15,428
3,000 Regency Centers, LP 8.45 9/01/2010 3,044
6,185 Regency Centers, LP 7.95 1/15/2011 6,423
5,000 Weingarten Realty Investors 4.86 1/15/2014 5,045
-----------
51,182
-----------
REITs - SPECIALIZED (0.2%)
5,000 Nationwide Health Properties, Inc. 6.25 2/01/2013 5,339
1,289 Ventas Realty, LP 7.13 6/01/2015 1,337
-----------
6,676
-----------
Total Financials 284,967
-----------
HEALTH CARE (1.1%)
------------------
BIOTECHNOLOGY (0.4%)
10,000 Genentech, Inc. 4.75 7/15/2015 10,775
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3 | USAA Income Fund
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT (0.2%)
$ 4,000 Hospira, Inc. 6.40% 5/15/2015 $ 4,505
-----------
LIFE SCIENCES TOOLS & SERVICES (0.1%)
2,500 Thermo Fisher Scientific, Inc. 5.00 6/01/2015 2,689
-----------
MANAGED HEALTH CARE (0.2%)
5,000 Highmark, Inc. (a) 6.80 8/15/2013 5,397
-----------
PHARMACEUTICALS (0.2%)
5,000 Roche Holdings, Inc. (a) 6.00 3/01/2019 5,616
-----------
Total Health Care 28,982
-----------
INDUSTRIALS (3.2%)
------------------
AIRLINES (0.3%)
2,483 American Airlines Pass-Through Trust 10.38 7/02/2019 2,874
4,899 Continental Airlines, Inc. Pass-Through Trust 9.00 7/08/2016 5,389
233 United Airlines Pass-Through Trust 7.73 7/01/2010 234
-----------
8,497
-----------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (1.0%)
10,000 Caterpillar Financial Services Corp. 0.51 (b) 12/16/2011 10,035
10,000 John Deere Capital Corp. 5.10 1/15/2013 10,876
5,000 Paccar, Inc. 6.88 2/15/2014 5,747
-----------
26,658
-----------
ENVIRONMENTAL & FACILITIES SERVICES (0.4%)
10,000 Waste Management, Inc. 7.38 8/01/2010 10,155
-----------
INDUSTRIAL MACHINERY (0.6%)
10,000 Danaher Corp. 5.63 1/15/2018 11,040
1,500 Ingersoll Rand Co. 9.00 8/15/2021 1,895
3,000 Ingersoll-Rand GL Holding Co. 9.50 4/15/2014 3,681
-----------
16,616
-----------
RAILROADS (0.9%)
2,058 CSX Transportation, Inc. 9.75 6/15/2020 2,732
2,842 Norfolk Southern Railway Co. 9.75 6/15/2020 3,893
10,000 TTX Co. (a) 5.40 2/15/2016 10,721
5,000 Union Pacific Corp. 7.88 1/15/2019 6,128
-----------
23,474
-----------
Total Industrials 85,400
-----------
INFORMATION TECHNOLOGY (0.6%)
-----------------------------
COMMUNICATIONS EQUIPMENT (0.2%)
5,000 Harris Corp. 5.95 12/01/2017 5,472
-----------
COMPUTER HARDWARE (0.4%)
5,000 IBM Corp. 0.29 (b) 11/04/2011 5,004
5,000 IBM Corp. 7.63 10/15/2018 6,274
-----------
11,278
-----------
Total Information Technology 16,750
-----------
MATERIALS (1.7%)
----------------
DIVERSIFIED CHEMICALS (0.4%)
5,000 Chevron Phillips Chemical Co., LP (a) 7.00 6/15/2014 5,661
5,000 Dow Chemical Co. 7.60 5/15/2014 5,812
-----------
11,473
-----------
PAPER PRODUCTS (0.4%)
10,000 International Paper Co. 7.40 6/15/2014 11,372
-----------
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Portfolio of Investments | 4
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
SPECIALTY CHEMICALS (0.7%)
$ 5,000 Cytec Industries, Inc. 8.95% 7/01/2017 $ 6,121
5,000 Lubrizol Corp. 8.88 2/01/2019 6,262
5,000 RPM International, Inc. 6.13 10/15/2019 5,271
-----------
17,654
-----------
STEEL (0.2%)
5,000 Allegheny Technologies, Inc. 9.38 6/01/2019 5,979
-----------
Total Materials 46,478
-----------
TELECOMMUNICATION SERVICES (0.5%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (0.2%)
5,000 Qwest Communications International, Inc. (a) 7.13 4/01/2018 5,188
-----------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
3,000 AT&T Wireless Services, Inc. 7.88 3/01/2011 3,174
5,000 Verizon Wireless Capital, LLC 8.50 11/15/2018 6,336
-----------
9,510
-----------
Total Telecommunication Services 14,698
-----------
UTILITIES (7.0%)
----------------
ELECTRIC UTILITIES (4.1%)
5,000 Cleveland Electric Illuminating Co. 8.88 11/15/2018 6,377
1,500 FPL Energy American Wind (a) 6.64 6/20/2023 1,551
5,000 FPL Group Capital, Inc. 0.65 (b) 11/09/2012 4,998
5,000 FPL Group Capital, Inc. 7.30 9/01/2067 5,132
5,000 Gulf Power Co. 4.90 10/01/2014 5,312
5,000 Illinois Power Co. 9.75 11/15/2018 6,577
5,000 Nevada Power Co. 7.13 3/15/2019 5,797
10,000 Northern States Power Co. 8.00 8/28/2012 11,463
5,000 Oglethorpe Power Corp. 6.10 3/15/2019 5,565
5,000 Otter Tail Corp. 9.00 12/15/2016 5,525
5,000 PPL Energy Supply, LLC 6.20 5/15/2016 5,468
8,690 Southern Co. 0.71 (b) 10/21/2011 8,734
6,896 Tristate General & Transport Association (a) 6.04 1/31/2018 7,096
9,000 Union Electric Co. 6.70 2/01/2019 10,252
8,667 UtiliCorp Canada Finance Corp. 7.75 6/15/2011 9,144
10,000 West Penn Power Co. 6.63 4/15/2012 10,842
-----------
109,833
-----------
GAS UTILITIES (1.6%)
8,000 AGL Capital Corp. 6.38 7/15/2016 8,753
4,000 Atmos Energy Corp. 8.50 3/15/2019 5,029
4,000 EQT Corp. 8.13 6/01/2019 4,858
8,000 Gulfstream Natural Gas Systems, LLC (a) 5.56 11/01/2015 8,665
5,000 Oneok Partners, LP 8.63 3/01/2019 6,285
5,000 Questar Pipeline Co. 5.83 2/01/2018 5,441
5,000 Southern Star Central Gas Pipeline, Inc. (a) 6.00 6/01/2016 5,125
-----------
44,156
-----------
MULTI-UTILITIES (1.1%)
5,000 Black Hills Corp. 9.00 5/15/2014 5,797
5,000 CenterPoint Energy Houston Electric, LLC 7.00 3/01/2014 5,704
5,000 NiSource, Inc. 10.75 3/15/2016 6,459
5,000 Northwestern Corp. 6.34 4/01/2019 5,425
5,000 South Carolina Electric & Gas Co. 5.30 5/15/2033 4,868
-----------
28,253
-----------
WATER UTILITIES (0.2%)
5,475 American Water Capital Corp. 6.09 10/15/2017 5,983
-----------
Total Utilities 188,225
-----------
Total Corporate Obligations (cost: $849,660) 932,399
-----------
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5 | USAA Income Fund
<PAGE>
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
EURODOLLAR AND YANKEE OBLIGATIONS (14.1%)
ENERGY (1.4%)
-------------
INTEGRATED OIL & GAS (0.1%)
$ 4,000 Husky Energy, Inc. 7.25% 12/15/2019 $ 4,728
-----------
OIL & GAS DRILLING (0.1%)
1,953 Delek & Avner-Yam Tethys Ltd. (a) 1.35 (b) 8/01/2013 1,953
-----------
OIL & GAS EXPLORATION & PRODUCTION (0.8%)
5,000 Canadian Natural Resources Ltd. 5.70 5/15/2017 5,492
3,500 Talisman Energy, Inc. 7.75 6/01/2019 4,276
10,000 Woodside Finance Ltd. (a) 8.75 3/01/2019 12,472
-----------
22,240
-----------
OIL & GAS REFINING & MARKETING (0.4%)
5,000 GS Caltex Corp. 7.25 7/02/2013 5,549
5,000 GS Caltex Corp. (a) 5.50 10/15/2015 5,303
-----------
10,852
-----------
Total Energy 39,773
-----------
FINANCIALS (5.9%)
-----------------
DIVERSIFIED BANKS (4.6%)
6,000 Banco Santander (a) 5.38 12/09/2014 6,421
5,180 Barclays Bank plc (a) 7.38 -(c) 5,076
5,000 Barclays Bank plc (a) 6.05 12/04/2017 5,218
10,000 BBVA US Senior SA Uniper (a) 0.43 (b) 5/24/2011 9,980
5,000 BNP Paribas (a) 7.20 -(c) 4,750
5,000 Canadian Imperial Bank Corp. (a) 7.26 4/10/2032 5,322
10,000 Commonwealth Bank Australia (a) 0.55 (b) 11/04/2011 10,001
20,000 Landesbank Baden-Wuerttemberg 6.35 4/01/2012 21,705
10,000 LBG Capital No.1 plc 8.00 -(c) 8,700
10,000 Lloyds TSB Bank plc 0.46 (b) 6/17/2011 9,986
5,000 Mizuho Capital Investment 1 Ltd. (a) 6.69 -(c) 4,688
15,000 Nordea Bank AB (a) 5.25 11/30/2012 16,167
5,000 Standard Chartered Bank (a) 6.40 9/26/2017 5,416
10,000 Westpac Banking Corp. (a) 0.61 (b) 10/21/2011 9,996
-----------
123,426
-----------
INVESTMENT BANKING & BROKERAGE (0.2%)
5,000 Credit Suisse Group, AG 5.50 5/01/2014 5,484
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES (0.2%)
5,000 ZFS Finance USA Trust II (a) 6.45 12/15/2065 4,875
-----------
PROPERTY & CASUALTY INSURANCE (0.2%)
5,000 Catlin Insurance Co. Ltd. (a) 7.25 -(c) 4,525
-----------
REGIONAL BANKS (0.2%)
5,000 Canadian Imperial Bank (a) 2.00 2/04/2013 5,052
5,000 Glitnir Banki hf, acquired 9/20/2007; cost
$4,989(a),(d),(e) 6.38 9/25/2012 1,587
5,000 Kaupthing Bank hf, acquired 6/22/2006; cost
$4,942(a),(d),(e) 7.13 5/19/2016 13
-----------
6,652
-----------
REITs - RETAIL (0.4%)
10,000 Westfield Capital Corp. (a) 5.13 11/15/2014 10,497
-----------
SPECIALIZED FINANCE (0.1%)
5,000 XL Capital Ltd. 6.50 -(c) 4,150
-----------
Total Financials 159,609
-----------
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Portfolio of Investments | 6
<PAGE>
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PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
GOVERNMENT (2.7%)
-----------------
FOREIGN GOVERNMENT (2.7%)
$ 10,000 Danske Bank A/S 0.60%(b) 5/24/2012 $ 9,976
10,000 Dexia Credit Local 0.93 (b) 9/23/2011 10,071
7,000 Finance For Danish Industry A/S (a) 0.50 (b) 8/17/2012 7,061
25,000 Region of Lombardy 5.80 10/25/2032 24,844
10,000 Republic of Poland 5.25 1/15/2014 10,775
10,000 Royal Bank of Scotland Group plc (a) 0.51 (b) 3/30/2012 10,012
-----------
72,739
-----------
Total Government 72,739
-----------
INDUSTRIALS (1.2%)
------------------
AEROSPACE & DEFENSE (0.4%)
10,000 BAE Systems Holdings, Inc. (a) 4.75 8/15/2010 10,105
-----------
BUILDING PRODUCTS (0.8%)
10,000 CRH America, Inc. 6.00 9/30/2016 10,959
10,000 Holcim US Finance 6.00 12/30/2019 10,785
-----------
21,744
-----------
Total Industrials 31,849
-----------
MATERIALS (2.1%)
----------------
DIVERSIFIED METALS & MINING (0.7%)
5,000 Glencore Funding, LLC (a) 6.00 4/15/2014 5,264
3,000 Noranda, Inc. 6.00 10/15/2015 3,258
5,000 Rio Tinto Finance (USA) Ltd. 9.00 5/01/2019 6,452
2,034 Xstrata Canada Corp. 5.38 6/01/2015 2,160
-----------
17,134
-----------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.8%)
10,000 Agrium, Inc. 8.25 2/15/2011 10,550
8,000 Yara International ASA (a) 5.25 12/15/2014 8,515
2,000 Yara International ASA (a) 7.88 6/11/2019 2,385
-----------
21,450
-----------
GOLD (0.4%)
10,000 Barrick NA Finance, LLC 6.80 9/15/2018 11,566
-----------
STEEL (0.2%)
5,000 ArcelorMittal 9.00 2/15/2015 6,020
-----------
Total Materials 56,170
-----------
TELECOMMUNICATION SERVICES (0.2%)
---------------------------------
INTEGRATED TELECOMMUNICATION SERVICES (0.2%)
5,416 Deutsche Telekom International Finance 8.50 6/15/2010 5,461
-----------
UTILITIES (0.6%)
----------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.4%)
10,200 Transalta Corp. 6.65 5/15/2018 11,383
-----------
MULTI-UTILITIES (0.2%)
5,000 Veolia Environment 6.00 6/01/2018 5,420
-----------
Total Utilities 16,803
-----------
Total Eurodollar and Yankee Obligations (cost: $371,439) 382,404
-----------
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7 | USAA Income Fund
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES (5.4%)
FINANCIALS (5.4%)
-----------------
ASSET-BACKED FINANCING (5.4%)
$ 6,000 AESOP Funding II, LLC 5.68% 2/20/2013 $ 6,368
10,000 AESOP Funding II, LLC (a) 9.31 10/20/2013 11,255
215 AmeriCredit Automobile Receivables Trust 2.00 (b) 1/12/2012 215
4,000 AmeriCredit Automobile Receivables Trust 3.72 11/17/2014 4,034
4,000 Banc of America Securities Auto Trust 5.51 2/19/2013 4,010
2,500 Bank of America Securities Auto Trust (a) 2.13 9/15/2013 2,535
5,000 Bank One Issuance Trust 1.05 (b) 2/15/2017 4,877
3,715 Capital One Auto Finance Trust 0.28 (b) 5/15/2013 3,690
8,275 Capital One Multi-Asset Execution Trust 0.54 4/15/2013 8,268
5,000 Capital One Multi-Asset Execution Trust 6.00 8/15/2013 5,100
4,906 Centre Point Funding, LLC (a) 5.43 7/20/2015 4,946
5,000 Chase Issuance Trust 5.12 10/15/2014 5,425
6,722 CIT Equipment Collateral 2.20 6/15/2011 6,740
5,000 CIT Equipment Collateral 3.07 8/15/2016 5,066
3,000 Citibank Credit Card Issuance Trust 5.70 5/15/2013 3,104
5,000 Citibank Credit Card Issuance Trust 5.10 11/20/2017 5,527
2,000 Citibank Credit Card Issuance Trust 5.35 2/07/2020 2,209
5,000 CPS Auto Receivables Trust (INS) 6.48 7/15/2013 5,151
5,000 Credit Acceptance Auto Loan Trust (a) 5.68 5/15/2017 5,177
3,000 Ford Credit Auto Owner Trust 2.00 (b) 4/15/2013 3,066
5,000 Hertz Vehicle Financing, LLC (a) 5.08 11/25/2011 5,066
5,000 Huntington Auto Trust (a) 5.64 2/15/2013 5,134
10,000 MBNA Master Credit Card Note Trust 0.66 10/15/2012 9,996
6,642 Prestige Auto Receivables Trust "A" (a) 5.67 4/15/2017 6,646
10,000 Rental Car Finance Corp. (a) 0.40 7/25/2013 9,257
4,542 SLM Student Loan Trust 0.87 (b) 10/25/2038 3,955
5,250 SLM Student Loan Trust 0.55 (b) 1/25/2041 4,214
543 USXL Funding, LLC (INS)(a) 5.38 4/15/2014 544
5,000 Volkswagen Auto Loan Enhanced Trust 6.24 7/20/2015 5,541
-----------
Total Financials 147,116
-----------
Total Asset-Backed Securities (cost: $136,232) 147,116
-----------
COMMERCIAL MORTGAGE SECURITIES (13.2%)
FINANCIALS (13.2%)
------------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (13.2%)
8,704 Banc of America Commercial Mortgage, Inc. 5.79 5/11/2035 9,012
2,800 Banc of America Commercial Mortgage, Inc. 6.33 5/11/2035 2,851
10,000 Banc of America Commercial Mortgage, Inc. 4.65 9/11/2036 10,244
5,125 Banc of America Commercial Mortgage, Inc. 5.16 11/10/2042 4,820
4,182 Banc of America Commercial Mortgage, Inc. 4.16 12/10/2042 4,172
10,000 Banc of America Commercial Mortgage, Inc. 5.72 5/10/2045 10,624
11,000 Banc of America Commercial Mortgage, Inc. 5.18 9/10/2047 11,463
5,008 Bear Stearns Commercial Mortgage Securities,
Inc. (a) 6.00 6/16/2030 4,783
11,545 Bear Stearns Commercial Mortgage Securities,
Inc. 5.46 3/11/2039 12,258
5,000 Citigroup Commercial Mortgage Trust (a) 4.83 9/20/2051 4,324
12,000 Commercial Mortgage Trust 5.12 6/10/2044 12,366
8,000 Credit Suisse First Boston Mortgage Capital 5.55 2/15/2039 8,321
6,514 Credit Suisse First Boston Mortgage
Securities Corp. 6.38 12/18/2035 6,624
9,786 Credit Suisse First Boston Mortgage
Securities Corp. 4.81 2/15/2038 9,999
================================================================================
Portfolio of Investments | 8
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
$ 5,000 Credit Suisse First Boston Mortgage Securities
Corp. 5.10% 8/15/2038 $ 4,282
11,100 Credit Suisse First Boston Mortgage Securities
Corp. 5.23 12/15/2040 11,457
10,000 GE Commercial Mortgage Corp. 5.33 3/10/2044 10,611
3,000 GE Commercial Mortgage Corp. 4.86 7/10/2045 2,998
2,956 Greenwich Capital Commercial Funding Corp. 4.31 8/10/2042 2,997
12,215 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 4.82 9/12/2037 12,347
10,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 4.99 9/12/2037 8,824
10,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.49 4/15/2043 10,591
3,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.81 6/12/2043 3,155
10,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.18 12/15/2044 10,445
10,000 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 5.87 4/15/2045 10,701
2,110 J.P. Morgan Chase Commercial Mortgage
Securities Corp. 4.63 3/15/2046 2,188
7,000 LB-UBS Commercial Mortgage Trust 4.58 8/15/2029 7,136
2,000 LB-UBS Commercial Mortgage Trust 4.51 12/15/2029 1,994
10,000 LB-UBS Commercial Mortgage Trust 4.95 9/15/2030 10,364
7,000 LB-UBS Commercial Mortgage Trust 5.34 9/15/2039 7,413
7,000 Merrill Lynch Mortgage Trust 5.62 7/12/2034 7,415
10,000 Merrill Lynch Mortgage Trust 5.02 7/12/2038 10,574
12,550 Morgan Stanley Capital I, Inc. 4.59 4/14/2040 12,654
7,000 Morgan Stanley Capital I, Inc. 5.80 8/12/2041 7,586
5,350 Morgan Stanley Capital I, Inc. 5.17 1/14/2042 5,619
10,000 Morgan Stanley Capital I, Inc. 5.69 7/12/2044 10,671
7,000 Morgan Stanley Capital I, Inc. 4.85 6/12/2047 7,298
11,425 Morgan Stanley Capital I, Inc. 5.17 10/12/2052 11,977
5,000 Morgan Stanley Capital I, Inc. 4.66 7/15/2056 4,926
5,000 Timberstar Trust (a) 5.88 10/15/2036 4,983
10,000 Wachovia Bank Commercial Mortgage Trust 5.08 3/15/2042 10,450
1,988 Wachovia Bank Commercial Mortgage Trust 4.66 4/15/2042 1,991
10,500 Wachovia Bank Commercial Mortgage Trust 4.81 4/15/2042 11,020
10,000 Wachovia Bank Commercial Mortgage Trust 4.61 5/15/2044 10,064
10,350 Wachovia Bank Commercial Mortgage Trust 5.17 10/15/2044 10,722
-----------
357,314
-----------
INTEREST-ONLY COMMERCIAL MORTGAGE-BACKED SECURITIES (0.0%)
20,539 Wachovia Bank Commercial Mortgage Trust,
acquired 8/06/2003; cost $1,038(a),(d) 1.21 4/15/2035 211
-----------
Total Financials 357,525
-----------
Total Commercial Mortgage Securities (cost: $341,865) 357,525
-----------
U.S. GOVERNMENT AGENCY ISSUES (11.4%)(f)
MORTGAGE-BACKED PASS-THROUGH SECURITIES (10.5%)
17,860 Fannie Mae (+) 5.00 6/01/2033 18,574
7,633 Fannie Mae (+) 5.50 7/01/2021 8,184
14,241 Fannie Mae (+) 5.50 9/01/2035 15,056
7,391 Fannie Mae (+) 5.50 10/01/2035 7,814
8,557 Fannie Mae (+) 5.50 1/01/2036 9,046
13,665 Fannie Mae (+) 5.50 4/01/2036 14,446
12,288 Fannie Mae (+) 5.50 2/01/2037 12,972
15,761 Fannie Mae (+) 5.50 3/01/2037 16,624
9,816 Fannie Mae (+) 5.50 11/01/2037 10,353
18,656 Fannie Mae (+) 5.50 5/01/2038 19,679
15,193 Fannie Mae (+) 6.00 5/01/2036 16,222
13,114 Fannie Mae (+) 6.00 6/01/2036 14,003
================================================================================
9 | USAA Income Fund
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
$ 16,050 Fannie Mae (+) 6.00% 8/01/2037 $ 17,096
1,467 Fannie Mae (+) 6.50 4/01/2031 1,616
22 Fannie Mae (+) 6.50 7/01/2031 25
2,584 Fannie Mae (+) 6.50 3/01/2032 2,848
64 Fannie Mae (+) 7.00 10/01/2022 71
47 Fannie Mae (+) 7.00 3/01/2023 52
287 Fannie Mae (+) 7.00 4/01/2023 319
3,654 Freddie Mac (+) 5.00 6/01/2020 3,897
9,629 Freddie Mac (+) 5.00 1/01/2021 10,270
9,187 Freddie Mac (+) 5.50 11/01/2020 9,892
4,471 Freddie Mac (+) 5.50 12/01/2020 4,814
6,843 Freddie Mac (+) 5.50 12/01/2035 7,255
11,275 Freddie Mac (+) 5.50 4/01/2036 11,936
10,465 Government National Mortgage Assn. I 5.00 8/15/2033 11,011
563 Government National Mortgage Assn. I 6.00 8/15/2028 613
667 Government National Mortgage Assn. I 6.00 9/15/2028 726
1,021 Government National Mortgage Assn. I 6.00 9/15/2028 1,112
6,218 Government National Mortgage Assn. I 6.00 9/15/2028 6,767
1,557 Government National Mortgage Assn. I 6.00 10/15/2028 1,696
862 Government National Mortgage Assn. I 6.00 1/15/2029 939
887 Government National Mortgage Assn. I 6.00 1/15/2029 966
148 Government National Mortgage Assn. I 6.00 1/15/2029 161
1,106 Government National Mortgage Assn. I 6.00 1/15/2033 1,202
29 Government National Mortgage Assn. I 6.50 6/15/2023 31
67 Government National Mortgage Assn. I 6.50 7/15/2023 72
371 Government National Mortgage Assn. I 6.50 7/15/2023 402
212 Government National Mortgage Assn. I 6.50 9/15/2023 230
417 Government National Mortgage Assn. I 6.50 10/15/2023 451
311 Government National Mortgage Assn. I 6.50 10/15/2023 337
55 Government National Mortgage Assn. I 6.50 10/15/2023 59
924 Government National Mortgage Assn. I 6.50 12/15/2023 1,001
476 Government National Mortgage Assn. I 6.50 12/15/2023 516
189 Government National Mortgage Assn. I 6.50 1/15/2024 206
390 Government National Mortgage Assn. I 6.50 2/15/2024 426
189 Government National Mortgage Assn. I 6.50 4/15/2026 207
1,076 Government National Mortgage Assn. I 6.50 5/15/2028 1,187
2,301 Government National Mortgage Assn. I 6.50 10/15/2031 2,543
95 Government National Mortgage Assn. I 7.00 5/15/2023 106
128 Government National Mortgage Assn. I 7.00 5/15/2023 143
102 Government National Mortgage Assn. I 7.00 5/15/2023 114
140 Government National Mortgage Assn. I 7.00 5/15/2023 157
211 Government National Mortgage Assn. I 7.00 6/15/2023 236
207 Government National Mortgage Assn. I 7.00 6/15/2023 231
74 Government National Mortgage Assn. I 7.00 6/15/2023 82
636 Government National Mortgage Assn. I 7.00 8/15/2023 711
106 Government National Mortgage Assn. I 7.00 8/15/2023 119
394 Government National Mortgage Assn. I 7.00 8/15/2023 440
64 Government National Mortgage Assn. I 7.00 8/15/2023 72
177 Government National Mortgage Assn. I 7.00 9/15/2023 198
95 Government National Mortgage Assn. I 7.00 1/15/2026 107
28 Government National Mortgage Assn. I 7.00 3/15/2026 32
37 Government National Mortgage Assn. I 7.00 3/15/2026 42
652 Government National Mortgage Assn. I 7.00 10/15/2027 732
340 Government National Mortgage Assn. I 7.00 6/15/2029 382
580 Government National Mortgage Assn. I 7.00 6/15/2029 651
307 Government National Mortgage Assn. I 7.00 7/15/2029 344
499 Government National Mortgage Assn. I 7.00 8/15/2031 561
364 Government National Mortgage Assn. I 7.00 7/15/2032 409
534 Government National Mortgage Assn. I 7.50 7/15/2023 603
180 Government National Mortgage Assn. I 7.50 6/15/2026 204
445 Government National Mortgage Assn. I 7.50 6/15/2026 502
344 Government National Mortgage Assn. I 7.50 7/15/2026 388
264 Government National Mortgage Assn. I 7.50 5/15/2027 298
448 Government National Mortgage Assn. I 7.50 2/15/2028 506
418 Government National Mortgage Assn. I 7.50 12/15/2028 472
================================================================================
Portfolio of Investments | 10
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
$ 365 Government National Mortgage Assn. I 7.50% 8/15/2029 $ 413
2,655 Government National Mortgage Assn. II 5.50 4/20/2033 2,840
2,619 Government National Mortgage Assn. II 6.00 8/20/2032 2,860
1,771 Government National Mortgage Assn. II 6.00 9/20/2032 1,934
714 Government National Mortgage Assn. II 6.50 8/20/2031 792
-----------
283,606
-----------
OTHER U.S. GOVERNMENT GUARANTEED SECURITIES (0.9%)
5,000 Bank of America Corp., FDIC TLGP 0.65 6/22/2012 5,044
2,400 Perforadora Centrale S.A. de C.V. "A,"
Title XI 5.24 12/15/2018 2,603
5,000 SunTrust Banks, Inc., FDIC TLGP 0.91 12/16/2010 5,022
10,000 Totem Ocean Trailer Express, Inc., Title XI 6.37 4/15/2028 11,489
-----------
24,158
-----------
Total U.S. Government Agency Issues (cost: $287,200) 307,764
-----------
U.S. TREASURY SECURITIES (7.5%)
INFLATION-INDEXED NOTES (3.4%)
51,750 2.38%, 1/15/2025 56,443
36,215 1.75%, 1/15/2028 36,029
-----------
92,472
-----------
NOTES (4.1%)
25,000 3.38%, 11/15/2019 24,482
85,000 3.63%, 2/15/2020 84,761
-----------
109,243
-----------
Total U.S. Treasury Securities (cost: $195,960) 201,715
-----------
MUNICIPAL BONDS (2.2%)
APPROPRIATED DEBT (0.1%)
2,305 New Jersey EDA 5.18 11/01/2015 2,383
-----------
CASINOS & GAMING (0.1%)
5,000 Mashantucket (Western) Pequot Tribe, acquired
10/05/2009; cost $1,410(a),(d),(e) 5.91 9/01/2021 2,668
-----------
ELECTRIC UTILITIES (0.4%)
5,000 Air Quality Dev. Auth. 4.75 8/01/2029 5,296
5,000 Maricopa County 5.50 5/01/2029 5,205
-----------
Total Electric Utilities 10,501
-----------
ELECTRIC/GAS UTILITIES (0.1%)
2,795 North Carolina Eastern Municipal Power Agency 5.55 1/01/2013 2,997
-----------
ENVIRONMENTAL & FACILITIES SERVICES (0.6%)
10,000 California Statewide Communities Dev. Auth. 1.88 4/01/2011 9,920
3,000 Miami Dade County 1.80 9/01/2027 2,999
4,500 Mission EDC 2.00 12/01/2018 4,501
-----------
Total Environmental & Facilities Services 17,420
-----------
ESCROWED BONDS (0.0%)
1,000 New Jersey Turnpike Auth. (INS)(PRE) 4.25 1/01/2016 1,058
-----------
================================================================================
11 | USAA Income Fund
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
GENERAL OBLIGATION (0.1%)
$ 2,200 Marin County (INS) 4.89% 8/01/2016 $ 2,302
-----------
SPECIAL ASSESSMENT/TAX/FEE (0.1%)
2,000 New York Housing Finance Agency 5.18 9/15/2010 2,036
-----------
TOLL ROADS (0.7%)
19,000 New Jersey Turnpike Auth. (INS) 4.25 1/01/2016 19,336
-----------
Total Municipal Bonds (cost: $61,800) 60,701
-----------
PRINCIPAL
AMOUNT
$(000)/
SHARES
---------------------------------------------------------------------------------------------------
PREFERRED SECURITIES (4.2%)
CONSUMER STAPLES (0.2%)
-----------------------
AGRICULTURAL PRODUCTS (0.2%)
70,000 Dairy Farmers of America, Inc., 7.88%, cumulative redeemable,
perpetual (a) 5,657
-----------
FINANCIALS (4.0%)
-----------------
REINSURANCE (0.2%)
5,000,000 Swiss Re Capital I LP, 6.85%, perpetual (a) 4,646
-----------
REITs - INDUSTRIAL (0.7%)
120,000 AMB Property Corp., Series C, 7.00%, cumulative redeemable,
perpetual 2,936
18,000 AMB Property Corp., Series P, 6.85%, cumulative redeemable,
perpetual 425
344,500 Prologis Trust, Inc., Series C, 8.54%, cumulative redeemable,
perpetual 17,021
-----------
20,382
-----------
REITs - OFFICE (0.7%)
51,050 Duke Realty Corp. depositary shares, Series N, 7.25%, cumulative
redeemable, perpetual 1,231
614,000 Duke Realty Corp., Series M, 6.95%, cumulative redeemable,
perpetual 14,140
200,000 HRPT Properties Trust, Series C, 7.13%, cumulative redeemable,
perpetual (g) 4,700
-----------
20,071
-----------
REITs - RESIDENTIAL (1.0%)
203,000 BRE Properties, Inc., Series C, 6.75%, cumulative redeemable,
perpetual 4,643
142,500 Equity Residential Properties Trust, depositary shares,
Series K, 8.29%, cumulative redeemable, perpetual 8,755
250,000 Post Properties, Inc., Series A, 8.50%, cumulative redeemable,
perpetual 12,685
-----------
26,083
-----------
REITs - RETAIL (1.1%)
200,000 Developers Diversified Realty Corp., Series I, 7.50%, cumulative
redeemable, perpetual 4,531
415,000 Kimco Realty Corp., depositary shares, Series F, 6.65%, cumulative
redeemable, perpetual 9,683
400,000 Realty Income Corp., Class D, 7.38%, cumulative redeemable,
perpetual 10,245
201,500 Weingarten Realty Investors, depositary shares, Series D, 6.75%,
cumulative redeemable, perpetual 4,583
-----------
29,042
-----------
REITs - SPECIALIZED (0.3%)
350,000 Public Storage, Inc., Series Z, 6.25%, cumulative redeemable, perpetual 8,229
-----------
Total Financials 108,453
-----------
================================================================================
Portfolio of Investments | 12
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT (0.0%)
----------------------
80,000 Fannie Mae, 8.25%, perpetual * 8.25% 12/31/2010 $ 110
-----------
Total Preferred Securities (cost: $117,912) 114,220
-----------
MONEY MARKET INSTRUMENTS (6.5%)
COMMERCIAL PAPER (1.9%)
CONSUMER DISCRETIONARY (1.2%)
-----------------------------
AUTOMOBILE MANUFACTURERS (0.7%)
$ 17,038 BMW US Capital, LLC (a),(h) 0.30 5/03/2010 17,038
-----------
HOUSEHOLD APPLIANCES (0.5%)
14,006 Stanley Black & Decker, Inc. (a),(h) 0.32 5/03/2010 14,006
-----------
Total Consumer Discretionary 31,044
-----------
UTILITIES (0.7%)
----------------
ELECTRIC UTILITIES (0.7%)
7,685 Pacific Gas & Electric Co. (a),(h) 0.31 5/06/2010 7,685
11,537 Pacific Gas & Electric Co. (a),(h) 0.30 5/07/2010 11,536
-----------
Total Utilities 19,221
-----------
Total Commercial Paper 50,265
-----------
VARIABLE-RATE DEMAND NOTES (4.6%)
CONSUMER STAPLES (0.2%)
-----------------------
PACKAGED FOODS & MEAT (0.2%)
5,155 South Carolina Jobs EDA (LOC - Regions
Bank) 0.95 2/01/2016 5,155
-----------
MATERIALS (1.8%)
----------------
DIVERSIFIED CHEMICALS (0.7%)
8,000 West Baton Rouge Parish (a) 0.75 11/01/2025 8,000
10,000 West Baton Rouge Parish (a) 0.85 11/01/2025 10,000
-----------
18,000
-----------
INDUSTRIAL GASES (1.1%)
20,000 Louisiana Public Facilities Auth. 0.50 12/01/2043 20,000
10,000 Louisiana Public Facilities Auth. 0.50 12/01/2043 10,000
-----------
30,000
-----------
Total Materials 48,000
-----------
MUNICIPAL BONDS (2.6%)
----------------------
BUILDINGS (0.4%)
11,100 Aquarium Parking Deck, LLC (LOC - Federal
Home Loan Bank of Atlanta) 0.30 4/01/2020 11,100
-----------
EDUCATION (0.4%)
10,300 Ohio State Higher Educational Facility (LOC -
Allied Irish Banks plc) 0.40 12/01/2044 10,300
-----------
GENERAL OBLIGATION (0.4%)
10,000 Southern Ute Indian Tribe (a) 0.33 1/01/2027 10,000
-----------
================================================================================
13 | USAA Income Fund
<PAGE>
================================================================================
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
---------------------------------------------------------------------------------------------------
HOSPITAL (0.7%)
$ 17,900 Johnson City Health and Educational Facilities
Board (LOC - Regions Bank) 2.00% 7/01/2033 $ 17,900
2,300 Russell County IDA (LOC - Regions Bank) 0.68 7/01/2038 2,300
-----------
20,200
-----------
MULTIFAMILY HOUSING (0.4%)
9,445 Independence Place Fort Campbell Patriots,
LLC (LOC - Bank of America, N.A.) 0.30 1/01/2040 9,445
2,055 Pulaski County Public Facilities Board (LOC -
Regions Bank) 0.95 6/01/2042 2,055
-----------
11,500
-----------
NURSING/CCRC (0.3%)
8,300 Langhorne Manor (LOC - Citizens Bank of
Pennsylvania) 0.38 10/01/2032 8,300
-----------
Total Municipal Bonds 71,400
-----------
Total Variable-Rate Demand Notes 124,555
-----------
Total Money Market Instruments
(cost: $174,819) 174,820
-----------
NUMBER OF
SHARES
---------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM
SECURITIES LOANED (0.0%)
MONEY MARKET FUNDS (0.0%)
9,569 BlackRock Liquidity Funds TempFund
Portfolio, 0.14%(i) (cost: $10) 10
-----------
TOTAL INVESTMENTS (COST: $2,536,897) $ 2,678,674
===========
================================================================================
Portfolio of Investments | 14
<PAGE>
================================================================================
VALUATION HIERARCHY
($ IN 000s) -------------------
(LEVEL 1)
QUOTED PRICES (LEVEL 2) (LEVEL 3)
IN ACTIVE OTHER SIGNIFICANT
MARKETS SIGNIFICANT UNOBSERVABLE
FOR IDENTICAL OBSERVABLE INPUTS
ASSETS ASSETS INPUTS TOTAL
--------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS $ -- $ 932,399 $ -- $ 932,399
EURODOLLAR AND YANKEE
OBLIGATIONS -- 382,404 -- 382,404
ASSET-BACKED SECURITIES -- 147,116 -- 147,116
COMMERCIAL MORTGAGE SECURITIES -- 357,525 -- 357,525
U.S. GOVERNMENT AGENCY ISSUES -- 307,764 -- 307,764
U.S. TREASURY SECURITIES 201,715 -- -- 201,715
MUNICIPAL BONDS -- 60,701 -- 60,701
EQUITY SECURITIES:
PREFERRED SECURITIES 18,840 95,380 -- 114,220
MONEY MARKET INSTRUMENTS:
COMMERCIAL PAPER -- 50,265 -- 50,265
VARIABLE-RATE DEMAND NOTES -- 124,555 -- 124,555
SHORT-TERM INVESTMENTS PURCHASED
WITH CASH COLLATERAL FROM
SECURITIES LOANED:
MONEY MARKET FUNDS 10 -- -- 10
--------------------------------------------------------------------------------------------------------
Total $ 220,565 $ 2,458,109 $ -- $ 2,678,674
--------------------------------------------------------------------------------------------------------
Reconciliation of investments in which significant unobservable inputs (Level 3)
were used in determining value:
Asset-Backed Securities
---------------------------------------------------------------------------------
Balance as of July 31, 2009 $10,075
Net realized gain (loss) -
Change in net unrealized appreciation/depreciation 1,180
Net purchases (sales) -
Transfers in and/or out of Level 3 (11,255)
---------------------------------------------------------------------------------
Balance as of April 30, 2010 $-
---------------------------------------------------------------------------------
================================================================================
15 | USAA Income Fund
<PAGE>
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
April 30, 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 Income
Fund (the Fund), which is classified as diversified under the 1940 Act.
The Fund has two classes of shares: Income Fund Shares and Income Fund
Institutional Shares. Each class of shares has equal rights to assets and
earnings, except that each class bears certain class-related expenses specific
to the particular class. These expenses include administration and servicing
fees, transfer agent fees, postage, shareholder reporting fees, and certain
registration and custodian fees. Expenses not attributable to a specific class,
income, and realized gains or losses on investments are allocated to each class
of shares based on each class's relative net assets. Each class has exclusive
voting rights on matters related solely to that class and separate voting rights
on matters that relate to both classes. The Institutional Shares are currently
only offered for sale to the USAA Target Retirement Funds (Target Funds) and not
to the general public. The Target Funds are managed by USAA Investment
Management Company (the Manager), an affiliate of the Fund.
A. SECURITY VALUATION - The value of each security is determined (as of the
close of trading on the New York Stock Exchange (NYSE) on each business day the
NYSE is open) as set forth below:
1. Debt securities with maturities greater than 60 days are valued each business
day by a pricing service (the Service) approved by the Trust's Board of
Trustees. The Service uses an evaluated mean between quoted bid and asked prices
or the last sales price to price securities when, in the Service's judgment,
these prices are readily available and are representative of the securities'
market values. For many securities, such prices are not readily available. The
Service generally prices these securities based on methods that include
consideration of yields or prices of securities of comparable quality, coupon,
maturity, and type; indications as to values from dealers in securities; and
general market conditions.
2. 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.
================================================================================
Notes to Portfolio of Investments | 16
<PAGE>
================================================================================
3. Investments in open-end investment companies, hedge, or other funds, other
than exchange-traded funds, are valued at their net asset value (NAV) at the end
of each business day.
4. Debt securities purchased with original or remaining maturities of 60 days or
less may be valued at amortized cost, which approximates market value.
5. Repurchase agreements are valued at cost, which approximates market value.
6. Futures are valued based upon the last sale price at the close of market on
the principal exchange on which they are traded.
7. 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 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.
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17 | USAA Income Fund
<PAGE>
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C. 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.
D. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS - Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after the
trade date. During the period prior to settlement, these securities do not earn
interest, are subject to market fluctuation, and may increase or decrease in
value prior to their delivery. The Fund maintains segregated assets with a
market value equal to or greater than the amount of its purchase commitments.
The purchase of securities on a delayed-delivery or when-issued basis may
increase the volatility of the Fund's NAV to the extent that the Fund makes such
purchases while remaining substantially fully invested.
E. LENDING OF PORTFOLIO SECURITIES - The Fund, through its third-party
securities-lending agent, Wachovia Global Securities Lending, may lend its
securities to qualified financial institutions, such as certain broker-dealers,
to earn additional income. The borrowers are required to secure their loans
continuously with cash collateral in an amount at least equal to the fair value
of the securities loaned, initially in an amount at least equal to 102% of the
fair value of domestic securities loaned and 105% of the fair value of
international securities loaned. Cash collateral is invested in high-quality
short-term investments. Cash collateral requirements are determined daily based
on the prior business day's ending value of securities loaned. Imbalances in
cash collateral may occur on days where market volatility causes security prices
to change significantly, and are adjusted the next business day. Risks to the
Fund in securities-lending transactions are that the borrower may not provide
additional collateral when required or return the securities when due, and that
the value of the short-term investments will be less than the amount of cash
collateral required to be returned to the borrower. The aggregate fair market
value of the loaned portion of these securities as of April 30, 2010, was
approximately $9,000.
F. SUBSEQUENT EVENTS - Events or transactions that occur after the quarterly
report date, but before the quarterly report is issued are categorized as
recognized or non-recognized for quarterly 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.
G. NEW ACCOUNTING PRONOUNCEMENT - In January 2010, the Financial Accounting
Standards Board issued amended guidance for improving disclosures about fair
value measurements that adds new disclosure requirements about significant
transfers between Level 1, Level 2, and Level 3, 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
================================================================================
Notes to Portfolio of Investments | 18
<PAGE>
================================================================================
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.
H. As of April 30, 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
April 30, 2010, were $163,275,000 and $21,498,000, respectively, resulting in
net unrealized appreciation of $141,777,000.
I. The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, which were $2,706,419,000 at April
30, 2010, and, in total, may not equal 100%. A category percentage of 0.0%
represents less than 0.1% of net assets. Investments in foreign securities were
14.3% of net assets at April 30, 2010.
CATEGORIES AND DEFINITIONS
ASSET-BACKED AND COMMERCIAL MORTGAGE-BACKED SECURITIES - Asset-backed securities
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets. Commercial mortgage-backed securities
reflect an interest in, and are secured by, mortgage loans on commercial real
property. The weighted average life is likely to be substantially shorter than
the stated final maturity as a result of scheduled and unscheduled principal
repayments. Rates on commercial mortgage-backed securities may change slightly
over time as underlying mortgages pay down.
EURODOLLAR AND YANKEE OBLIGATIONS - Eurodollar obligations are dollar-
denominated instruments that are issued outside the U.S. capital markets by
foreign corporations and financial institutions and by foreign branches of U.S.
corporations and financial institutions. Yankee obligations are dollar-
denominated instruments that are issued by foreign issuers in the U.S. capital
markets.
INTEREST-ONLY COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS IOs) - represent the
right to receive only the interest payments on an underlying pool of commercial
mortgage loans. The purchase yield reflects an anticipated yield based upon
interest rates at the time of purchase and the estimated timing and amount of
future cash flows. Coupon rates after purchase vary from period to period. The
principal amount represents the notional amount of the underlying pool on which
current interest is calculated. CMBS IOs are backed by loans that have various
forms of prepayment protection, which include lock-out provisions, yield
maintenance provisions, and prepayment penalties. This serves to moderate their
prepayment risk. CMBS IOs are subject to default-related prepayments that may
have a negative impact on yield.
U.S. TREASURY INFLATION-INDEXED NOTES - designed to provide a real rate of
return after being adjusted over time to reflect the impact of inflation. Their
principal value periodically adjusts to the rate of inflation. They trade at the
prevailing real, or after-inflation, interest rates. The U.S. Treasury
guarantees repayment of these securities of at least their face value in the
event of sustained deflation
================================================================================
19 | USAA Income Fund
<PAGE>
================================================================================
or a drop in prices. Inflation adjustments to the face value of these securities
are included in interest income.
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. VRDNs will
normally trade as if the maturity is the earlier put date, even though stated
maturity is longer.
PORTFOLIO ABBREVIATIONS AND DESCRIPTIONS
EDA Economic Development Authority
EDC Economic Development Corp.
FDIC The FDIC Temporary Liquidity Guarantee Program provides a guarantee of
TLGP payment of principal and interest on certain newly issued senior
unsecured debt through the program's expiration date on December
31, 2012. The guarantee carries the full faith and credit of the U.S.
government.
IDA Industrial Development Authority/Agency
PRE Prerefunded to a date prior to maturity
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 market values of the securities.
(INS) Principal and interest payments are insured by one of the following:
AMBAC Assurance Corp., Assured Guaranty Municipal Corp., Financial
Guaranty Insurance Co., or National Public Finance Guarantee 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.
(LOC) Principal and interest payments are guaranteed by a bank letter of credit
or other bank credit agreement.
SPECIFIC NOTES
(a) 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 Trust's Board of Trustees, unless otherwise noted as
illiquid.
(b) Variable-rate or floating-rate security - interest rate is adjusted
periodically. The interest rate disclosed represents the current rate at
April 30, 2010.
(c) Security is perpetual and has no final maturity date but may be subject to
calls at various dates in the future.
================================================================================
Notes to Portfolio of Investments | 20
<PAGE>
================================================================================
(d) Securities deemed illiquid by the Manager, under liquidity guidelines
approved by the Trust's Board of Trustees. The aggregate market value of
these securities at April 30, 2010, was $4,479,000, which represented 0.2%
of the Fund's net assets.
(e) Currently the issuer is in default with respect to interest and/or
principal payments.
(f) U.S. government agency issues - mortgage-backed securities issued by
Government National Mortgage Association (GNMA) and certain other U.S.
government guaranteed securities are supported by the full faith and
credit of the U.S. government. Securities issued by government-sponsored
enterprises, indicated with "+", are supported only by the right of the
government-sponsored enterprise to borrow from the U.S. Treasury, the
discretionary authority of the U.S. government to purchase the
government-sponsored enterprises' obligations, or by the credit of the
issuing agency, instrumentality, or corporation, and are neither issued
nor guaranteed by the U.S. Treasury.
(g) The security or a portion thereof was out on loan as of April 30, 2010.
(h) 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 dealer who makes a market in
this security, and as such has been deemed liquid by the Manager under
liquidity guidelines approved by the Trust's Board of Trustees, unless
otherwise noted as illiquid.
(i) Rate represents the money market fund annualized seven-day yield at April
30, 2010.
* Non-income-producing security.
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21 | USAA Income Fund
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 April 30, 2010
By:* /s/ CHRISTOPHER P. LAIA
--------------------------------------------------------------
Signature and Title: Christopher P. Laia, Secretary
Date: 06/23/2010
-------------------------------
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: 06/23/2010
------------------------------
By:* /s/ ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 06/23/2010
------------------------------
*PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.
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