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: DECEMBER 31,
Date of reporting period: JUNE 30, 2010
ITEM 1. SEMIANNUAL REPORT TO STOCKHOLDERS.
USAA GLOBAL OPPORTUNITIES FUND - SEMIANNUAL REPORT FOR PERIOD ENDED
JUNE 30, 2010
[LOGO OF USAA]
USAA(R)
[GRAPHIC OF USAA GLOBAL OPPORTUNITIES FUND]
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SEMIANNUAL REPORT
USAA GLOBAL OPPORTUNITIES FUND
JUNE 30, 2010
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FUND OBJECTIVE
SEEK AN AVERAGE ANNUAL RETURN THAT IS GREATER THAN THE 1-YEAR U.S. TREASURY
BOND, BEFORE FEES AND EXPENSES, OVER A FULL MARKET CYCLE, WHILE SEEKING TO LIMIT
THE FUND'S EXPOSURE TO LARGE NEGATIVE RETURNS.
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TYPES OF INVESTMENTS
The Fund's principal strategy is to combine a portfolio of domestic and foreign
equity and debt securities with the use of alternative investment strategies to
provide growth with greater downside risk controls. It may invest in multiple
asset classes including U.S. stocks, non-U.S. stocks in developed and emerging
markets, global real estate securities, and fixed-income securities.*
IRA DISTRIBUTION WITHHOLDING DISCLOSURE
We generally must withhold federal income tax at a rate of 10% of the taxable
portion of your distribution and, if you live in a state that requires state
income tax withholding, at your state's set rate. However, you may elect not to
have withholding apply or to have income tax withheld at a higher rate. If you
wish to make such an election, please call USAA Investment Management Company at
(800) 531-USAA (8722).
If you must pay estimated taxes, you may be subject to estimated tax penalties
if your estimated tax payments are not sufficient and sufficient tax is not
withheld from your distribution.
For more specific information, please consult your tax adviser.
* The Fund is not offered for sale directly to the general public and is
available currently for investment through a USAA managed account program, or
other persons or legal entities that the Fund may approve from time to time.
AN INVESTOR WILL INDIRECTLY BEAR FEES AND EXPENSES CHARGED BY THE UNDERLYING
FUNDS IN ADDITION TO DIRECT FEES AND EXPENSES CHARGED BY THE PORTFOLIO AS
APPLICABLE.
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TABLE OF CONTENTS
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PRESIDENT'S MESSAGE 2
MANAGERS' COMMENTARY 4
INVESTMENT OVERVIEW 9
FINANCIAL INFORMATION
Portfolio of Investments 13
Notes to Portfolio of Investments 38
Financial Statements 42
Notes to Financial Statements 45
EXPENSE EXAMPLE 63
ADVISORY AGREEMENTS 65
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
". . . INVESTORS MAY WANT TO REVIEW THEIR
LONG-TERM INVESTMENT STRATEGY. IT'S VITAL TO [PHOTO OF DANIEL S. McNAMARA]
CONTINUE -- AND EVEN INCREASE -- INVESTING
IF YOU WANT TO LIVE THE RETIREMENT LIFESTYLE
YOU ENVISION."
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JULY 2010
At the beginning of 2010, optimism permeated the financial markets. Stocks had
just finished a strong year (the S&P 500 Index was up 26.5% in 2009). Supported
by stimulus spending by the federal government, the U.S. economy was showing
signs of improvement. The housing market was stabilizing after several years of
falling prices. At the same time, corporate earnings, driven by surprisingly
strong top-line growth, were better than expected. Unemployment remained high,
but renewed job growth was widely expected at any moment.
During the spring, however, the markets were rattled by the European debt crisis
and its potential impact on European banks. There was growing investor
uncertainty about regulatory changes pending in Washington (related to the
health care, financial, and energy industries). Sentiment was further eroded by
the still-unexplained April "flash crash" in the U.S. stock market and BP's oil
spill in the Gulf of Mexico.
As a result, the outlook for the U.S. economy grew more uncertain as 2010
progressed. The federal government is winding down its stimulus spending and
many observers have questioned whether the nation's economic recovery will be
self-sustaining. The housing market has suffered more setbacks. In May, just a
month after the federal tax subsidy ended, sales of new single-family homes
dropped 33% to the lowest seasonally adjusted rate since records began in 1963.
Meanwhile, unemployment remains stubbornly high with most of the job growth
coming from government hiring of census workers.
Bonds generally provided positive results during the six-month period, but the
performance of the stock market was disappointing (the S&P 500 Index returned
-6.7% between January 1 and June 30, 2010). Many investors continue to stay on
the sidelines, primarily in low-yielding money market funds. But while there is
reason for caution, long-term investors should also take into account the
improvement in U.S. corporate balance sheets and the favorable outlook for U.S.
corporate earnings.
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2 | USAA GLOBAL OPPORTUNITIES FUND
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While I find investors' lack of engagement understandable, I grow more concerned
about it with every passing day. Americans are not saving enough for their
retirements. Two-thirds have less than $50,000 in retirement savings (excluding
the value of their home and any traditional pension).
Fortunately, many people still have time to grow their retirement nest egg.
Furthermore, a number of catch-up provisions allow those over the age of 50 to
increase their contributions to individual retirement accounts (IRAs). Under
the circumstances, investors may want to review their long-term investment
strategy. It's vital to continue -- and even increase -- investing if you want
to live the retirement lifestyle you envision. However, this is based upon what
is most suitable for your needs. For assistance, please feel free to call one of
our USAA service representatives at 1-800-531-8722. They are available to help
you free of charge.
At USAA Investment Management Company, we are proud of the investment team that
manages our family of no-load mutual funds. Seasoned professionals all, they
understand the markets and are skilled at making the tactical decisions
necessary to pursue opportunities during market declines and to help reduce
exposure when valuations are rich. This ability can be especially valuable
during periods of market turmoil. I would argue that given the economic
headwinds it may be more important than ever. Certainly, it makes sense to have
some of the industry's top investment talent managing your hard-earned money.
Rest assured that in the months ahead, we will continue working hard on your
behalf. From all of us, thank you for your continued confidence in us. We
appreciate the opportunity to help you with your investment needs.
Sincerely,
/S/ DANIEL S. MCNAMARA
Daniel S. McNamara
President
USAA Investment Management Company
INVESTING IN SECURITIES PRODUCTS INVOLVES RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
As interest rates rise, bond prices fall. o Past performance is no guarantee of
future results. o Mutual fund operating expenses apply and continue throughout
the life of the fund.
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 $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND.
Financial advice provided by USAA Financial Planning Services Insurance Agency,
Inc. (known as USAA Financial Insurance Agency in California, License #
0E36312), and USAA Financial Advisors, Inc., a registered broker dealer.
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PRESIDENT'S MESSAGE | 3
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MANAGERS' COMMENTARY ON THE FUND
USAA Investment Management Company Quantitative Management Associates LLC
U.S. and International Stocks International Stocks
(Exchange-Traded Funds (ETFs))
MARGARET S. STUMPP, Ph.D.
JOHN P. TOOHEY, CFA TED LOCKWOOD
WASIF A. LATIF JOHN VAN BELLE, Ph.D.
Bonds and Money Market Instruments
R. MATTHEW FREUND, CFA The Boston Company Asset Management, LLC
ARNOLD J. ESPE, CFA Emerging Market Stocks
JULIANNE BASS, CFA
Global Real Estate Securities and ETFs
MARK W. JOHNSON, CFA D. KIRK HENRY, CFA
DAN DENBOW, CFA CAROLYN M. KEDERSHA, CFA, CPA
WARREN SKILLMAN
Deutsche Investment Management Credit Suisse Securities (USA) LLC's
Americas Inc. Volaris Volatility Management Group
U.S. Stocks Index Options
ROBERT WANG YIRONG LI, CFA
JAMES B. FRANCIS, CFA DEFINA MALUKI, CFA
Credit Suisse Asset Management, LLC*
U.S. Stocks
MIKA TOIKKA
*Effective May 3, 2010, Jordan Low no longer is a co-manager of the Fund.
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o HOW DID THE USAA GLOBAL OPPORTUNITIES FUND (THE FUND) PERFORM?
For the six months ended June 30, 2010, the Fund had a total return of
-5.63%. This compares to a return of -6.65% for the S&P 500
Past performance is no guarantee of future results.
Refer to page 10 for benchmark definitions.
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4 | USAA GLOBAL OPPORTUNITIES FUND
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Index (the Index) and 5.33% for the Barclays Capital U.S. Aggregate Bond
Index.
o PLEASE DESCRIBE THE MARKET ENVIRONMENT DURING THE SIX-MONTH REPORTING PERIOD.
When the period began, the worst of the financial crisis and the recession
appeared to be over. The U.S. economy was improving, supported by ongoing
monetary stimulus from the Federal Reserve Board, a strong rebound in
manufacturing, robust corporate earnings, strengthening corporate balance
sheets, and increased consumer confidence. The equity markets continued a
rally that began in March 2009, and credit markets continued to heal as
corporate bond spreads narrowed towards pre-crisis levels.
In mid-April, however, volatility returned as the Greek debt crisis shone a
light on the massive levels of sovereign debt in a number of developed
countries. Markets began pricing in the financial system risk posed by highly
leveraged European banks. Signs of a slowdown in China's economic growth
become more apparent. In the United States, financial regulatory legislation
renewed uncertainty about the future of the financial sector. The massive oil
spill in the Gulf of Mexico also focused more attention on the potential for
increased regulation of businesses.
As a result, risk aversion returned to the markets. Yields fell and prices
rose on U.S. Treasuries as investors flocked to what they perceived to be the
safest securities. Volatility spiked as stock markets declined and most
commodity prices fell.
o HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE IN SUCH A VOLATILE PERIOD?
The purpose of the Fund is to seek exposure to the long-term upside of global
stock markets while attempting to lower the risk of big
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MANAGER'S COMMENTARY ON THE FUND | 5
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losses. During the six months, the Fund provided most of the Index's return
with significantly less volatility.
The Fund uses a number of different strategies to maximize performance in the
U.S. stock market, in international developed stock markets and in emerging
stock markets. We have established a basic strategic allocation to each of
these markets, which we tactically adjust based on market conditions. At the
beginning of the six months, we had an overweight position in the emerging
markets and a slightly underweight position in international developed
markets. However, the sell-off during the reporting period made large-cap
stocks more attractive on a relative valuation basis. Because of their
stronger balance sheets, we increased exposure to U.S. large-cap stocks and
underweighted non-U.S. developed stock markets. Europe and Japan share many
of the same problems as the United States but have less positive demographics
and less-flexible labor markets. The European banking system also is more
highly leveraged than the U.S. banking system, and holds significant amounts
of sovereign debt of the economically weak and highly-indebted countries.
We maintained an overweight position in the emerging markets, which in our
view are selling at a discount relative to other markets and based on their
historical averages. We are confident that emerging markets will do better
than developed markets in terms of both profitability and performance.
Longer-term trends in the global economy remain intact, fiscal and private
debt is lower relative to developed markets, and consumption should expand
along with rising disposable incomes. Overall, our tactical asset allocation
decisions had a positive impact on performance.
In addition to tactical asset allocation, we attempted to control risk using
an equity hedging strategy that's managed by Credit Suisse Securities (USA)
LLC's Volaris Volatility Management Group (Volaris Group). The strategy
involves purchasing index put or corresponding exchange-traded fund (ETF)
options or put spread options and selling index call or corresponding ETF
options against a highly correlated
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6 | USAA GLOBAL OPPORTUNITIES FUND
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stock portfolio. This carefully managed equity hedging strategy allows us to
create collars on our global stock markets exposures that effectively limit
downside (and upside) potential. This equity hedging strategy helped the Fund
avoid the worst of the losses when market volatility spiked toward the end of
the period. We work closely with Volaris Group to actively manage the equity
hedging strategy based on market conditions.
The final element of the Fund's overall strategy is to have allocations to
other markets and investment vehicles on an opportunistic basis as well as to
provide additional diversification and excess returns uncorrelated to the
Index. During the period we maintained an opportunistic position in the U.S.
bond market as credit markets continued to heal. We also maintained our
investment in Deutsche iGAP Investment Trust "B" (iGAP). Managed by Deutsche
Investment Management Americas Inc., iGAP is a global tactical asset
allocation strategy hedge fund that invests only in liquid instruments,
taking long or short positions using futures on stock, currency, commodity,
and bond markets around the world. The iGAP allocation had a slightly
negative return for the six months.
o WHAT IS YOUR OUTLOOK FOR THE ECONOMY?
The broadest measure of U.S. economic activity, real gross domestic product,
grew at a 3.7% annual rate in the first quarter and a 2.4% annual rate in the
second quarter of 2010, driven by unprecedented monetary and fiscal stimulus.
We think that the lingering effects of the financial crisis will make this
recovery muted by historical standards.
Exchange Traded Funds (ETF's) are subject to risks similar to those of
stocks. o Investment returns may fluctuate and are subject to market
volatility, so that an investor's shares, when redeemed or sold, may be worth
more or less than their original cost. o Options are considered speculative
investment strategies. o Index collars are generally employed to protect
unrealized profits from the portfolio being protected, and the index option
class chosen will generally have an underlying index that most closely tracks
the performance of the portfolio. While losses may be limited so are
potential gains. o As interest rates rise, existing bond prices fall. o
Diversification does not guarantee a profit or prevent a loss.
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MANAGER'S COMMENTARY ON THE FUND | 7
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Corporations took advantage of a period of extremely cheap and easy credit to
prepare their balance sheets for an uncertain future. However, banks are
still working to heal their balance sheets, suggesting that lending may
continue to contract. We expect consumer spending to remain subdued compared
to previous recoveries as households continue rebuilding their balance
sheets. Unemployment is likely to remain high. We anticipate higher taxes and
increased business regulation.
Like investors everywhere, we are deeply concerned about the news from the
eurozone, where the sovereign debt crisis could lead to a new period of
austerity which may weigh on the global recovery. We also are concerned
about the U.S. real estate market. In addition, until consumers prove more
willing to open their wallets, corporations may not have the confidence to
hire.
We remain vigilant for any signs of inflationary pressure. Longer term, we
believe that the unprecedented government spending is likely to be
inflationary. However, there is currently little evidence of inflation. In
fact, the risk of deflation grew during the six months because of the
eurozone debt crisis and its potential to slow the global economic recovery.
Thank you for your investment in the fund.
There are additional risks associated with the Fund including alternative and
foreign risks.
Alternative investments carry specific investor qualifications which can
include high income and networth requirements as well as relatively high
investment minimums. They are complex investment vehicles, generally carry
high costs, substantial risks, and may be highly volatile. There is often
limited (or even non-existent) liquidity and a lack of transparency regarding
the underlying assets. They are there not suitable for all investors. Please
carefully review the offering documents for complete information regarding
terms, including all applicable fees, as well as other factors you should
consider before investing.
Foreign investing is subject to additional risks, such as currency
fluctuations, market illiquidity, and political instability.
Investing in small-cap companies involves the greater risk of investing in
smaller, less well-known companies, especially those which have a narrow
product line or are traded infrequently, compared to investing in established
companies with proven track records.
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8 | USAA GLOBAL OPPORTUNITIES FUND
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INVESTMENT OVERVIEW
USAA GLOBAL OPPORTUNITIES FUND (Ticker Symbol: UGOFX)
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6/30/10 12/31/09
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Net Assets $448.1 Million $318.1 Million
Net Asset Value Per Share $9.38 $9.94
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AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/10
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12/31/09 to 6/30/10* 1 Year Since Inception 7/31/08
-5.63% 8.91% -1.42%
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EXPENSE RATIO**
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Before Reimbursement 1.11% After Reimbursement 1.11%
*Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
DATA QUOTED. THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE, SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
**THE BEFORE REIMBURSEMENT EXPENSE RATIO REPRESENTS THE TOTAL ANNUAL OPERATING
EXPENSES, BEFORE REDUCTIONS OF ANY EXPENSES PAID AND INCLUDING ANY ACQUIRED FUND
FEES AND EXPENSES, AND IS CALCULATED AS A PERCENTAGE OF AVERAGE NET ASSETS. THE
AFTER REIMBURSEMENT EXPENSE RATIO REPRESENTS THE TOTAL ANNUAL OPERATING
EXPENSES, BEFORE REDUCTIONS OF ANY EXPENSES PAID INDIRECTLY AND INCLUDING ANY
ACQUIRED FUND FEES AND EXPENSES, AFTER REIMBURSEMENT FROM USAA INVESTMENT
MANAGEMENT COMPANY (IMCO). BEFORE AND AFTER REIMBURSEMENT EXPENSE RATIOS ARE
REPORTED IN THE FUND'S PROSPECTUS DATED MAY 1, 2010. IMCO HAS AGREED, THROUGH
MAY 1, 2011, TO MAKE PAYMENTS OR WAIVE MANAGEMENT, ADMINISTRATION, AND OTHER
FEES TO LIMIT THE EXPENSES OF THE FUND SO THAT THE TOTAL ANNUAL OPERATING
EXPENSES (EXCLUSIVE OF COMMISSION RECAPTURE, EXPENSE OFFSET ARRANGEMENTS,
ACQUIRED FUND FEES AND EXPENSES, AND EXTRAORDINARY EXPENSES) DO NOT EXCEED AN
ANNUAL RATE OF 1.00% OF THE FUND'S AVERAGE DAILY NET ASSETS. THIS REIMBURSEMENT
ARRANGEMENT MAY NOT BE CHANGED OR TERMINATED DURING THIS TIME WITHOUT APPROVAL
OF THE FUND'S BOARD OF TRUSTEES AND MAY BE CHANGED OR TERMINATED BY IMCO AT ANY
TIME AFTER MAY 1, 2011. IF THE FUND'S TOTAL ANNUAL OPERATING EXPENSE RATIO IS
LOWER THAN 1.00%, THE FUND WILL OPERATE AT THE LOWER EXPENSE RATIO. THESE
EXPENSE RATIOS MAY DIFFER FROM THE EXPENSE RATIOS DISCLOSED IN THE FINANCIAL
HIGHLIGHTS, WHICH EXCLUDE AFFE.
Total return measures the price change in a share assuming the reinvestment of
all net investment income and realized capital gain distributions. The total
returns quoted do not reflect adjustments made to the enclosed financial
statements in accordance with U.S. generally accepted accounting principles or
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.
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INVESTMENT OVERVIEW | 9
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o CUMULATIVE PERFORMANCE COMPARISON o
[CHART OF CUMULATIVE PERFORMANCE COMPARISON]
BARCLAYS CAPITAL U.S. USAA GLOBAL
AGGREGATE BOND INDEX OPPORTUNITIES FUND S&P 500 INDEX
7/31/2008 $10,000.00 $10,000.00 $10,000.00
8/31/2008 10,094.91 10,100.00 10,144.65
9/30/2008 9,959.32 9,260.00 9,240.68
10/31/2008 9,724.23 8,820.00 7,688.73
11/30/2008 10,040.76 8,450.00 7,137.03
12/31/2008 10,415.37 8,671.84 7,212.97
1/31/2009 10,323.47 8,097.07 6,605.01
2/28/2009 10,284.50 7,542.48 5,901.73
3/31/2009 10,427.47 7,865.15 6,418.69
4/30/2009 10,477.33 8,389.50 7,033.02
5/31/2009 10,553.32 8,853.34 7,426.40
6/30/2009 10,613.35 8,934.01 7,441.13
7/31/2009 10,784.54 9,407.94 8,003.95
8/31/2009 10,896.20 9,599.52 8,292.93
9/30/2009 11,010.66 9,932.28 8,602.38
10/31/2009 11,065.03 9,821.36 8,442.58
11/30/2009 11,208.28 10,133.95 8,948.99
12/31/2009 11,033.08 10,310.56 9,121.85
1/31/2010 11,201.62 10,020.12 8,793.70
2/28/2010 11,243.45 10,175.71 9,066.10
3/31/2010 11,229.63 10,528.38 9,613.20
4/30/2010 11,346.52 10,600.99 9,764.97
5/31/2010 11,442.00 10,123.84 8,985.23
6/30/2010 11,621.43 9,729.68 8,514.87
[END CHART]
Data since Fund inception 7/31/08 to 6/30/10.
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Global Opportunities Fund to the following benchmarks:
o The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. It once was known as the Lehman Brothers U.S.
Aggregate Bond Index.
o The unmanaged S&P 500 Index represents the weighted average performance of a
group of 500 widely held, publicly traded stocks.
Past performance is no guarantee of future results, and the cumulative
performance quoted does not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
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10 | USAA GLOBAL OPPORTUNITIES FUND
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TOP 10 EQUITY HOLDINGS
AS OF 6/30/10
(% of Net Assets)
iShares MSCI Emerging Markets Index Fund* ..................... 8.2%
iShares MSCI EAFE Index Fund* ................................. 5.6%
Deutsche iGAP Investment Trust "B" ............................ 3.5%
International Business Machines Corp. ......................... 1.5%
Microsoft Corp. ............................................... 1.5%
AT&T, Inc. .................................................... 1.3%
Chevron Corp. ................................................. 1.3%
Apple, Inc. ................................................... 1.0%
Johnson & Johnson ............................................. 0.9%
ConocoPhillips ................................................ 0.9%
* Pursuant to a Securities and Exchange Commission (SEC) exemptive order and a
related agreement with iShares Trust (iShares), the Fund may invest in iShares
in amounts exceeding limits set forth in the Investment Company Act of 1940
that would otherwise be applicable.
You will find a complete list of securities that the Fund owns on pages
13-37.
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INVESTMENT OVERVIEW | 11
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ASSET ALLOCATION
AS OF 6/30/10
(% of Net Assets)
Common Stocks ................................................. 72.1%
Exchange-Traded Funds* ........................................ 14.3%
Options Purchased ............................................. 5.3%
Hedge Funds ................................................... 3.5%
Money Market Instruments ...................................... 2.7%
Corporate Obligations ......................................... 1.7%
Eurodollar and Yankee Obligations ............................. 0.3%
Commercial Mortgage Securities ................................ 0.3%
Preferred Securities .......................................... 0.1%
* Exchange-traded funds (ETFs) are baskets of securities and are traded, like
individual stocks, on an exchange. These particular ETFs represent multiple
sectors. The Fund relies on an exemptive order that allows investments in ETFs
above the level permitted under the Investment Company Act of 1940.
Percentages are of net assets of the Fund and may not equal 100%.
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12 | USAA GLOBAL OPPORTUNITIES FUND
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PORTFOLIO OF INVESTMENTS
June 30, 2010 (unaudited)
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
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EQUITY SECURITIES (90.0%)
COMMON STOCKS (72.1%)
CONSUMER DISCRETIONARY (7.5%)
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ADVERTISING (0.1%)
16,100 Clear Channel Outdoor Holdings, Inc. "A"* $ 140
600 JC Decaux S.A.*(a) 14
7,900 Omnicom Group, Inc. 271
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425
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APPAREL & ACCESSORIES & LUXURY GOODS (0.4%)
3,246 Adidas - Salomon AG(a) 157
587 Christian Dior SA(a) 56
9,000 Coach, Inc.(b) 329
16,200 Jones Apparel Group, Inc.(b) 257
2,050 LVMH Moet Hennessy - Louis Vuitton S.A.(a) 223
3,233 Swatch Group Ltd.(a),(b) 165
7,100 VF Corp. 505
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1,692
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APPAREL RETAIL (0.7%)
500 ABC-MART, Inc.(a),(b) 20
31,800 Brown Shoe Co., Inc. 483
2,900 DSW, Inc. "A"* 65
24,700 Finish Line, Inc. "A"(b) 344
34,800 Gap, Inc.(b) 677
5,035 Hennes & Mauritz AB "B"(a),(b) 138
1,815 Industria de Diseno Textil S.A.(a) 103
10,400 Limited Brands, Inc.(b) 230
18,900 Ross Stores, Inc.(b) 1,007
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3,067
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AUTO PARTS & EQUIPMENT (0.4%)
5,200 Aisin Seiki Co. Ltd.(a),(b) 140
8,000 Denso Corp.(a),(b) 221
42,300 Johnson Controls, Inc.(b) 1,137
19,000 NHK Spring Co.(a) 174
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PORTFOLIO OF INVESTMENTS | 13
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MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
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3,000 NOK Corp.(a),(b) $ 48
5,800 Toyota Industries Corp.(a),(b) 147
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1,867
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AUTOMOBILE MANUFACTURERS (0.3%)
1,095 Bayerische Motoren Werke AG(a) 53
9,308 Daimler AG*(a) 471
900 Honda Motor Co. Ltd.(a),(b) 26
44,000 Isuzu Motors Ltd.(a) 132
6,116 Renault S.A.*(a),(b) 225
9,300 Toyota Motor Corp.(a),(b) 320
205 Volkswagen AG(a),(b) 17
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1,244
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BROADCASTING (0.2%)
13,191 Austereo Group Ltd.(a),(b) 18
31,800 Discovery Communications, Inc. "C"* 984
3,804 Mediaset S.p.A.(a) 22
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1,024
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CABLE & SATELLITE (0.5%)
127,500 Comcast Corp. "A"(b) 2,215
--------
CASINOS & GAMING (0.1%)
244,000 Genting International plc*(a) 202
4,728 OPAP S.A.(a),(b) 59
221,600 Sands China Ltd.*(a) 325
18,179 TABCORP Holdings Ltd.(a),(b) 96
--------
682
--------
CATALOG RETAIL (0.2%)
92,100 Liberty Media Corp. Interactive "A"* 967
--------
COMPUTER & ELECTRONICS RETAIL (0.1%)
29,600 Conn's, Inc.* 174
5,000 Rent-A-Center, Inc.* 102
1,350 Yamada Denki Co. Ltd.(a),(b) 88
--------
364
--------
DEPARTMENT STORES (0.7%)
66,700 Dillard's, Inc. "A" 1,434
6,900 Kohl's Corp.*(b) 328
14,308 Next plc(a),(b) 423
1,287 PPR(a),(b) 159
13,200 Sears Holdings Corp.* 853
--------
3,197
--------
================================================================================
14 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
DISTRIBUTORS (0.1%)
10,700 Core-Mark Holding Co., Inc.* $ 293
--------
EDUCATION SERVICES (0.1%)
18,700 Career Education Corp.* 431
--------
GENERAL MERCHANDISE STORES (0.5%)
3,500 Big Lots, Inc.*(b) 112
38,900 Target Corp. 1,913
71,900 Tuesday Morning Corp.* 287
--------
2,312
--------
HOME IMPROVEMENT RETAIL (0.6%)
33,300 Home Depot, Inc.(b) 935
50,240 Kingfisher plc(a),(b) 156
86,500 Lowe's Companies, Inc. 1,766
--------
2,857
--------
HOMEBUILDING (0.0%)
17,000 Sekisui House Ltd.(a) 146
--------
HOMEFURNISHING RETAIL (0.1%)
16,300 Kirklands, Inc.* 275
1,300 Nitori Co.(a),(b) 112
--------
387
--------
HOTELS, RESORTS, & CRUISE LINES (0.0%)
1,965 Accor SA*(a) 90
--------
HOUSEHOLD APPLIANCES (0.4%)
1,100 Rinnai Corp.(a) 57
18,700 Whirlpool Corp. 1,642
--------
1,699
--------
HOUSEWARES & SPECIALTIES (0.1%)
10,800 Blyth, Inc. 368
2,600 Fortune Brands, Inc. 102
--------
470
--------
INTERNET RETAIL (0.3%)
9,300 Amazon.com, Inc.*(b) 1,016
7,900 Dena Co. Ltd.(a) 208
--------
1,224
--------
LEISURE PRODUCTS (0.3%)
53,500 Mattel, Inc.(b) 1,132
--------
MOVIES & ENTERTAINMENT (0.3%)
46,700 News Corp. "A"(b) 558
================================================================================
PORTFOLIO OF INVESTMENTS | 15
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
17,666 Time Warner, Inc.(b) $ 511
23,331 Vivendi S.A.(a),(b) 472
--------
1,541
--------
PUBLISHING (0.1%)
183,613 Fairfax Media Ltd.(a),(b) 201
1,068 Pearson plc(a),(b) 14
12,100 Scholastic Corp.(b) 292
--------
507
--------
RESTAURANTS (0.7%)
17,264 Compass Group plc(a) 131
8,300 Dominos Pizza, Inc.* 94
29,200 McDonald's Corp.(b) 1,923
44,400 Starbucks Corp.(b) 1,079
--------
3,227
--------
SPECIALTY STORES (0.1%)
10,600 Build-A-Bear Workshop, Inc.* 72
11,200 Signet Jewelers Ltd.*(b) 308
--------
380
--------
TEXTILES (0.0%)
1,000 Nisshinbo Industries, Inc.(a) 10
--------
TIRES & RUBBER (0.1%)
13,400 Cooper Tire & Rubber Co.(b) 261
--------
Total Consumer Discretionary 33,711
--------
CONSUMER STAPLES (5.9%)
-----------------------
AGRICULTURAL PRODUCTS (0.6%)
97,400 Archer-Daniels-Midland Co.(b) 2,515
--------
BREWERS (0.1%)
2,377 Carlsberg A/S(a) 181
639 Heineken Holding N.V.(a),(b) 23
1,786 Heineken N.V.(a),(b) 76
--------
280
--------
DISTILLERS & VINTNERS (0.1%)
34,373 Diageo plc(a),(b) 539
--------
DRUG RETAIL (0.1%)
13,700 CVS Caremark Corp. 402
--------
FOOD DISTRIBUTORS (0.1%)
14,000 Andersons, Inc. 456
--------
================================================================================
16 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
FOOD RETAIL (0.5%)
1,355 Casino Guichard-Perrachon S.A.(a),(b) $ 102
1,250 Delhaize Group(a),(b) 91
24,973 Jeronimo Martins SGPS S.A.(a),(b) 228
19,604 Koninklijke Ahold N.V.(a),(b) 243
16,697 Tesco plc(a),(b) 94
34,800 Whole Foods Market, Inc.* 1,253
24,500 Winn Dixie Stores, Inc.* 236
3,206 Woolworths Ltd.(a),(b) 73
--------
2,320
--------
HOUSEHOLD PRODUCTS (0.8%)
18,600 Central Garden & Pet Co. "A"* 167
18,500 Colgate-Palmolive Co.(b) 1,457
1,361 Henkel AG & Co.(a),(b) 56
25,400 Procter & Gamble Co.(b) 1,523
4,678 Reckitt Benckiser Group plc(a),(b) 216
400 Unicharm Corp.(a),(b) 45
--------
3,464
--------
HYPERMARKETS & SUPER CENTERS (0.5%)
11,100 Aeon Co. Ltd.(a),(b) 118
38,700 Wal-Mart Stores, Inc.(b) 1,860
5,454 Wesfarmers Ltd.(a),(b) 131
--------
2,109
--------
PACKAGED FOODS & MEAT (2.2%)
11,500 American Italian Pasta Co. "A"* 608
82,040 Goodman Fielder Ltd.(a),(b) 93
57,600 Hershey Co.(b) 2,761
6,400 J.M. Smucker Co.(b) 385
22,015 Nestle S.A.(a),(b) 1,062
3,000 Nissin Food Products Co. Ltd.(a) 110
29,400 Sanderson Farms, Inc.(b) 1,492
163,500 Tyson Foods, Inc. "A"(b) 2,680
14,102 Unilever N.V.(a),(b) 384
18,337 Unilever plc(a),(b) 489
--------
10,064
--------
PERSONAL PRODUCTS (0.3%)
10,900 China Sky One Medical, Inc.* 122
18,800 Elizabeth Arden, Inc.* 273
9,700 Estee Lauder Companies, Inc. "A"(b) 541
9,600 Inter Parfums, Inc. 137
857 L'Oreal S.A.(a),(b) 84
================================================================================
PORTFOLIO OF INVESTMENTS | 17
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
25,500 Prestige Brands Holdings, Inc.* $ 180
--------
1,337
--------
SOFT DRINKS (0.3%)
1,600 Coca Cola West Holdings Co.(a) 26
26,750 Coca-Cola Amatil Ltd.(a),(b) 268
4,000 Coca-Cola Co.(b) 201
23,600 Dr. Pepper Snapple Group, Inc. 882
--------
1,377
--------
TOBACCO (0.3%)
19,286 British America Tobacco plc(a),(b) 611
6,147 Imperial Tobacco Group plc(a),(b) 171
2,600 Lorillard, Inc. 187
9,600 Reynolds American, Inc.(b) 500
--------
1,469
--------
Total Consumer Staples 26,332
--------
ENERGY (6.5%)
-------------
INTEGRATED OIL & GAS (4.4%)
5,038 BG Group plc(a),(b) 75
116,560 BP plc(a),(b) 560
84,300 Chevron Corp.(b) 5,721
83,400 ConocoPhillips(b) 4,094
21,034 ENI S.p.A.(a),(b) 386
71,600 Exxon Mobil Corp.(b) 4,086
74,400 Marathon Oil Corp. 2,313
4,500 Murphy Oil Corp. 223
6,491 Repsol YPF S.A.(a),(b) 131
30,631 Royal Dutch Shell plc "A"(a),(b) 773
25,675 Royal Dutch Shell plc "B"(a),(b) 622
11,415 Statoil ASA(a),(b) 220
16,018 Total S.A.(a),(b) 713
--------
19,917
--------
OIL & GAS DRILLING (0.3%)
23,900 Patterson-UTI Energy, Inc. 307
40,600 Rowan Companies, Inc.*(b) 891
--------
1,198
--------
OIL & GAS EQUIPMENT & SERVICES (1.1%)
19,200 Complete Production Services, Inc.* 275
44,200 National-Oilwell Varco, Inc.(b) 1,462
41,100 Oil States International, Inc.*(b) 1,627
22,200 Schlumberger Ltd.(b) 1,228
================================================================================
18 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
6,500 Seacor Holdings, Inc.*(b) $ 459
--------
5,051
--------
OIL & GAS EXPLORATION & PRODUCTION (0.6%)
39,300 Anadarko Petroleum Corp.(b) 1,418
17,300 Cimarex Energy Co.(b) 1,238
34 INPEX Holdings, Inc.(a),(b) 189
--------
2,845
--------
OIL & GAS REFINING & MARKETING (0.1%)
25,204 Caltex Australia(a) 197
69,000 Cosmo Oil Co. Ltd.(a) 166
--------
363
--------
Total Energy 29,374
--------
FINANCIALS (12.9%)
------------------
ASSET MANAGEMENT & CUSTODY BANKS (0.1%)
91,075 3i Group plc(a),(b) 359
7,700 Legg Mason, Inc. 216
--------
575
--------
CONSUMER FINANCE (1.3%)
8,500 American Express Co.(b) 337
18,000 AmeriCredit Corp.*(b) 328
76,800 Capital One Financial Corp.(b) 3,095
117,100 Discover Financial Services(b) 1,637
2,740 ORIX Corp.(a) 199
11,000 Student Loan Corp. 265
--------
5,861
--------
DIVERSIFIED BANKS (2.6%)
95,000 Aozora Bank Ltd.(a) 123
18,534 Australia and New Zealand Banking Group Ltd.(a),(b) 333
29,002 Banco Bilbao Vizcaya Argentaria S.A.(a),(b) 299
38,444 Banco Santander S.A.(a),(b) 404
4,924 Bank Hapoalim Ltd.*(a) 18
39,453 Barclays plc(a),(b) 156
8,706 BNP Paribas S.A.(a),(b) 465
47,200 Comerica, Inc.(b) 1,738
6,210 Commonwealth Bank of Australia(a),(b) 252
183 Dexia*(a) 1
8,800 DnB NOR ASA(a),(b) 85
92,832 HSBC Holdings plc(a),(b) 847
6,486 KBC Groep N.V.*(a),(b) 249
739,007 Lloyds TSB Group plc*(a),(b) 586
================================================================================
PORTFOLIO OF INVESTMENTS | 19
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
19,900 Mitsubishi UFJ Financial Group, Inc.(a) $ 90
218,700 Mizuho Trust & Banking Co., Ltd.(a),(b) 359
8,339 National Australia Bank Ltd.(a),(b) 161
80,457 Natixis*(a),(b) 346
18,336 Nordea Bank AB(a),(b) 151
14,000 Overseas Chinese Town Asia Holdings Ltd.(a),(b) 88
5,471 Societe Generale(a) 222
1,961 Standard Chartered plc(a),(b) 48
21,100 Sumitomo Mitsui Financial Group, Inc.(a),(b) 596
8,338 Svenska Handelsbanken AB "A"(a),(b) 204
13,000 United Overseas Bank Ltd.(a),(b) 181
128,400 Wells Fargo & Co.(b) 3,287
13,367 Westpac Banking Corp.(a),(b) 236
--------
11,525
--------
DIVERSIFIED CAPITAL MARKETS (0.3%)
7,231 Credit Suisse Group(a),(b) 272
6,205 Deutsche Bank AG(a),(b) 351
47,548 Investec plc(a) 320
28,921 UBS AG*(a) 383
--------
1,326
--------
DIVERSIFIED REAL ESTATE ACTIVITIES (0.2%)
17,000 Hopewell Holdings Ltd.(a),(b) 48
20,000 New World Development Ltd.(a) 32
5,000 Sun Hung Kai Properties Ltd.(a),(b) 68
106,000 UOL Group Ltd.(a),(b) 286
42,000 Wharf (Holdings) Ltd.(a),(b) 205
50,000 Wheelock & Co. Ltd.(a),(b) 141
--------
780
--------
INVESTMENT BANKING & BROKERAGE (0.9%)
31,700 BGC Partners, Inc. "A" 162
15,400 Goldman Sachs Group, Inc.(b) 2,022
68,100 Morgan Stanley 1,581
4,900 Oppenheimer Holdings, Inc. 117
--------
3,882
--------
LIFE & HEALTH INSURANCE (0.2%)
211,976 Legal & General Group plc(a),(b) 247
32,409 Old Mutual plc(a),(b) 49
8,100 Prudential Financial, Inc.(b) 435
13,850 Prudential plc(a),(b) 104
--------
835
--------
================================================================================
20 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
MULTI-LINE INSURANCE (0.7%)
4,867 Allianz Holding AG(a),(b) $ 483
1,500 American National Insurance Co. 122
52,900 Assurant, Inc. 1,836
33,593 Aviva plc(a),(b) 156
3,569 Sampo OYJ "A"(a),(b) 75
1,478 Zurich Financial Services AG(a),(b) 324
--------
2,996
--------
MULTI-SECTOR HOLDINGS (0.0%)
19,685 Criteria Caixacorp S.A.(a) 80
4,500 Investor AB(a),(b) 73
--------
153
--------
OTHER DIVERSIFIED FINANCIAL SERVICES (2.2%)
265,200 Bank of America Corp.(b) 3,811
603,100 Citigroup, Inc.*(b) 2,268
47,311 ING Groep N.V.*(a),(b) 351
94,800 JPMorgan Chase & Co.(b) 3,470
2,028 OKO Bank plc "A"(a),(b) 21
--------
9,921
--------
PROPERTY & CASUALTY INSURANCE (1.1%)
7,100 Allied World Assurance Co. Holdings Ltd.(b) 322
4,300 American Safety Insurance Holdings Ltd.* 68
24,800 Chubb Corp.(b) 1,240
24,600 CNA Financial Corp.* 629
4,700 CNA Surety Corp.* 75
7,700 Hallmark Financial Services, Inc.* 77
106,200 Old Republic International Corp. 1,288
9,100 PMA Capital Corp. "A"* 60
18,700 Progressive Corp.(b) 350
58,335 Suncorp Metway(a) 391
7,700 Travelers Companies, Inc. 379
11,600 XL Capital Ltd. 186
--------
5,065
--------
REAL ESTATE OPERATING COMPANIES (0.0%)
58,210 Immofinanz AG*(a) 150
--------
REGIONAL BANKS (1.7%)
11,880 Bendigo Bank Ltd.(a) 81
2,000 Chiba Bank Ltd.(a),(b) 12
158,400 Fifth Third Bancorp(b) 1,947
4,000 Gunma Bank Ltd.(a),(b) 21
167,700 Huntington Bancshares, Inc.(b) 929
================================================================================
PORTFOLIO OF INVESTMENTS | 21
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
68,000 Nishi Nippon City Bank Ltd.(a),(b) $ 196
47,600 PNC Financial Services Group, Inc.(b) 2,689
33,500 Sapporo Hokuyo Holdings, Inc.(a),(b) 148
339,000 Shinsei Bank Ltd.*(a) 286
7,000 Southwest Bancorp, Inc. 93
22,600 SunTrust Banks, Inc. 527
7,000 Yamaguchi Financial Group, Inc.(a) 67
20,700 Zions Bancorp. 446
--------
7,442
--------
REINSURANCE (0.3%)
10,300 Arch Capital Group Ltd.*(b) 767
4,561 Hannover Rueckversicherungs(a),(b) 197
19,700 Maiden Holdings Ltd. 129
--------
1,093
--------
REITs - DIVERSIFIED (0.2%)
37,000 BGP Holdings plc, acquired 8/06/2009; cost: 0*(a),(c) -
1,364 Gecina S.A.(a),(b) 122
8,100 PS Business Parks, Inc. 452
91,741 Stockland(a),(b) 285
11,000 Winthrop Realty Trust, Inc. 141
--------
1,000
--------
REITs - MORTGAGE (0.0%)
26,900 Resource Capital Corp. 153
--------
REITs - OFFICE (0.2%)
114,700 HRPT Properties Trust 712
--------
REITs - RETAIL (0.1%)
4,900 Agree Realty Corp. 114
21,200 Getty Realty Corp. 475
--------
589
--------
REITs - SPECIALIZED (0.5%)
52,600 Ashford Hospitality Trust, Inc.* 386
24,200 FelCor Lodging Trust, Inc.* 121
1,300 Public Storage(b) 114
35,200 Rayonier, Inc. 1,549
--------
2,170
--------
SPECIALIZED FINANCE (0.3%)
500 CME Group, Inc.(b) 141
7,400 Encore Capital Group, Inc.* 153
20,800 NewStar Financial, Inc.* 132
46,800 PHH Corp.* 891
--------
1,317
--------
================================================================================
22 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.0%)
2,700 WSFS Financial Corp. $ 97
--------
Total Financials 57,642
--------
HEALTH CARE (9.6%)
------------------
BIOTECHNOLOGY (0.8%)
45,300 Amgen, Inc.*(b) 2,383
5,400 Cephalon, Inc.* 306
13,500 Emergent BioSolutions, Inc.* 220
6,700 Gilead Sciences, Inc.*(b) 230
15,300 Martek Biosciences Corp.* 363
--------
3,502
--------
HEALTH CARE DISTRIBUTORS (1.6%)
1,900 Alfresa Holdings Corp.(a),(b) 92
95,900 AmerisourceBergen Corp.(b) 3,045
81,600 Cardinal Health, Inc.(b) 2,742
19,800 McKesson Corp.(b) 1,330
--------
7,209
--------
HEALTH CARE EQUIPMENT (0.2%)
5,000 CareFusion Corp.*(b) 113
9,900 Hospira, Inc.*(b) 569
946 Synthes, Inc.(a),(b) 109
--------
791
--------
HEALTH CARE FACILITIES (0.1%)
25,800 Kindred Healthcare, Inc.* 331
2,700 National Healthcare Corp. 93
--------
424
--------
HEALTH CARE SERVICES (0.0%)
19,700 Continucare Corp.* 66
16,200 ResCare, Inc.* 157
--------
223
--------
HEALTH CARE SUPPLIES (0.0%)
1,174 Coloplast A/S "B"(a),(b) 117
--------
LIFE SCIENCES TOOLS & SERVICES (0.3%)
29,000 Life Technologies Corp.* 1,370
--------
MANAGED HEALTH CARE (2.8%)
35,400 Aetna, Inc.(b) 934
85,700 Coventry Health Care, Inc.*(b) 1,515
32,000 Health Net, Inc.* 780
32,700 HealthSpring, Inc.* 507
================================================================================
PORTFOLIO OF INVESTMENTS | 23
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
36,500 Humana, Inc.*(b) $ 1,667
10,400 Molina Healthcare, Inc.* 299
4,700 Triple-S Management Corp. "B"* 87
119,000 UnitedHealth Group, Inc.(b) 3,380
16,600 Universal American Financial Corp.* 239
61,900 WellPoint, Inc.*(b) 3,029
--------
12,437
--------
PHARMACEUTICALS (3.8%)
5,900 Allergan, Inc.(b) 344
14,882 AstraZeneca plc(a),(b) 699
3,297 Bayer AG(a),(b) 184
6,100 Bristol-Myers Squibb Co. 152
60,000 Endo Pharmaceuticals Holdings, Inc.* 1,309
55,000 Forest Laboratories, Inc.* 1,509
46,986 GlaxoSmithKline plc(a),(b) 796
70,000 Johnson & Johnson(b) 4,134
65,900 Medicis Pharmaceutical Corp. "A" 1,442
17,388 Novartis AG(a),(b) 844
4,097 Novo Nordisk A/S(a),(b) 331
11,608 Orion Oyj "B"(a) 217
38,500 Par Pharmaceutical Companies, Inc.* 1,000
23,900 Perrigo Co.(b) 1,412
9,800 Pfizer, Inc.(b) 140
25,600 Questcor Pharmaceuticals, Inc.* 261
5,763 Roche Holdings AG(a),(b) 791
11,364 Sanofi-Aventis S.A.(a),(b) 685
1,770 Teva Pharmaceutical Industries Ltd.(a) 92
45,300 ViroPharma, Inc.* 508
--------
16,850
--------
Total Health Care 42,923
--------
INDUSTRIALS (7.2%)
------------------
AEROSPACE & DEFENSE (1.4%)
24,895 BAE Systems plc(a),(b) 115
18,000 Ceradyne, Inc.* 385
4,500 L-3 Communications Holdings, Inc.(b) 319
9,300 LMI Aerospace, Inc.* 147
47,400 Northrop Grumman Corp.(b) 2,580
35,400 Raytheon Co.(b) 1,713
5,958 Safran S.A.(a),(b) 165
14,400 United Technologies Corp.(b) 935
--------
6,359
--------
================================================================================
24 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.7%)
6,481 Deutsche Post AG(a) $ 94
3,300 FedEx Corp.(b) 231
46,000 United Parcel Service, Inc. "B"(b) 2,617
--------
2,942
--------
AIRLINES (0.1%)
4,100 Alaska Air Group, Inc.*(b) 185
24,800 Hawaiian Holdings, Inc.*(b) 128
6,000 Singapore Airlines Ltd.(a),(b) 62
13,900 SkyWest, Inc. 170
--------
545
--------
BUILDING PRODUCTS (0.1%)
39,000 Asahi Glass Co. Ltd.(a),(b) 364
7,863 Compagnie De Saint Gobain(a),(b) 290
--------
654
--------
COMMERCIAL PRINTING (0.1%)
6,000 Consolidated Graphics, Inc.* 259
14,200 M & F Worldwide Corp.* 385
--------
644
--------
CONSTRUCTION & ENGINEERING (0.2%)
1,092 Bouygues S.A.(a),(b) 42
8,200 Dycom Industries, Inc.* 70
9,900 Jacobs Engineering Group, Inc.* 361
12,000 Layne Christensen Co.* 291
8,600 Northwest Pipe Co.* 163
--------
927
--------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.6%)
16,600 Alamo Group, Inc. 360
9,200 Deere & Co. 513
2,400 Joy Global, Inc. 120
3,000 Komatsu Ltd.(a) 54
1,907 MAN AG(a) 157
4,400 NACCO Industries "A" 391
26,700 Oshkosh Corp.*(b) 832
1,000 Scania AB(a) 15
60,000 SembCorp Marine Ltd.(a),(b) 164
8,352 Volvo AB "B"*(a) 92
131,000 Yangzijiang Shipbuilding Holdings Ltd.(a) 125
--------
2,823
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 25
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT (0.2%)
32,000 Fuji Electric Holdings Co. Ltd.(a),(b) $ 92
400 Mabuchi Motor Co.(a),(b) 18
3,300 Nidec Corp.(a),(b) 276
3,800 Powell Industries, Inc.* 104
3,457 Schneider Electric S.A.(a),(b) 350
23,700 Sumitomo Electric Industries Ltd.(a),(b) 277
--------
1,117
--------
HEAVY ELECTRICAL EQUIPMENT (0.1%)
32,000 Mitsubishi Electric Corp.(a),(b) 249
--------
HUMAN RESOURCE & EMPLOYMENT SERVICES (0.1%)
18,900 SFN Group, Inc.* 103
19,200 Volt Information Sciences, Inc.* 162
--------
265
--------
INDUSTRIAL CONGLOMERATES (1.8%)
50,700 3M Co.(b) 4,005
9,600 Carlisle Companies, Inc.(b) 347
36,000 Fraser & Neave Ltd.(a),(b) 132
155,700 General Electric Co.(b) 2,245
14,531 Koninklijke Philips Electronics N.V.(a),(b) 433
12,000 NWS Holdings Ltd.(a),(b) 22
95 Seaboard Corp. 143
19,000 SembCorp Industries(a),(b) 55
6,406 Siemens AG(a),(b) 573
6,800 Standex International Corp. 172
--------
8,127
--------
INDUSTRIAL MACHINERY (1.1%)
2,431 Alfa Laval AB(a),(b) 31
18,279 Atlas Copco AB(a),(b) 268
12,100 Eaton Corp. 792
3,100 FANUC Ltd.(a) 348
11,700 Illinois Tool Works, Inc.(b) 483
2,860 Kone Oyj "B"(a),(b) 114
12,000 NSK Ltd.(a) 83
24,600 Parker-Hannifin Corp.(b) 1,364
2,808 SKF AB "B"(a) 50
1,000 SMC Corp.(a) 134
11,000 Sumitomo Heavy Industries Ltd.(a),(b) 65
26,400 Timken Co.(b) 686
1,082 Wartsila Corp. OYJ "B"(a),(b) 49
13,500 Watts Water Technologies, Inc. "A"(b) 387
--------
4,854
--------
================================================================================
26 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
MARINE (0.0%)
3 A.P. Moeller-Maersk A/S(a),(b) $ 23
5,500 Orient Overseas International Ltd.*(a),(b) 39
--------
62
--------
MARINE PORTS & SERVICES (0.1%)
12,500 Teekay Corp.(b) 327
--------
TRADING COMPANIES & DISTRIBUTORS (0.4%)
112,100 Aircastle Ltd. 880
6,500 Itochu Corp.(a),(b) 51
34,000 Marubeni Corp.(a),(b) 174
11,500 Mitsubishi Corp.(a),(b) 240
13,200 Mitsui & Co. Ltd.(a),(b) 155
25,200 Sumitomo Corp.(a),(b) 251
--------
1,751
--------
TRUCKING (0.2%)
17,925 FirstGroup plc(a),(b) 97
11,000 Fukuyama Transporting Co., Ltd.(a) 51
13,900 Ryder System, Inc. 559
--------
707
--------
Total Industrials 32,353
--------
INFORMATION TECHNOLOGY (12.1%)
------------------------------
APPLICATION SOFTWARE (0.0%)
4,268 SAP AG(a),(b) 190
--------
COMMUNICATIONS EQUIPMENT (0.6%)
29,400 Cisco Systems, Inc.*(b) 627
20,600 EchoStar Corp. "A"* 393
5,800 EMS Technologies, Inc.* 87
162,100 Motorola, Inc.* 1,057
6,621 Nokia Oyj(a),(b) 54
60,800 Tellabs, Inc. 388
--------
2,606
--------
COMPUTER HARDWARE (1.9%)
17,500 Apple, Inc.*(b) 4,402
20,500 Dell, Inc.*(b) 247
26,000 Fujitsu Ltd.(a),(b) 163
80,500 Hewlett-Packard Co.(b) 3,484
5,000 Teradata Corp.*(b) 153
--------
8,449
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 27
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
COMPUTER STORAGE & PERIPHERALS (1.0%)
26,300 Lexmark International, Inc. "A"* $ 869
7,700 SanDisk Corp.* 324
55,900 Seagate Technology*(b) 729
82,900 Western Digital Corp.*(b) 2,500
--------
4,422
--------
DATA PROCESSING & OUTSOURCED SERVICES (0.9%)
61,200 Computer Sciences Corp.(b) 2,769
3,800 CSG Systems International, Inc.* 70
27,700 First American Corp. 489
12,900 Visa, Inc. "A" 913
--------
4,241
--------
ELECTRONIC COMPONENTS (0.3%)
4,700 Kyocera Corp.(a),(b) 380
2,000 Murata Manufacturing Co., Ltd.(a),(b) 95
16,000 Nippon Electric Glass Co. Ltd.(a) 182
1,200 TDK Corp.(a) 66
85,300 Vishay Intertechnology, Inc.*(b) 660
--------
1,383
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.1%)
86,000 Hitachi Ltd.*(a),(b) 312
100 Keyence Corp.(a) 23
--------
335
--------
ELECTRONIC MANUFACTURING SERVICES (0.1%)
10,000 CTS Corp. 92
7,200 Multi-Fineline Electronix, Inc.* 180
--------
272
--------
HOME ENTERTAINMENT SOFTWARE (0.1%)
57,100 Activision Blizzard, Inc. 599
--------
INTERNET SOFTWARE & SERVICES (1.4%)
49,300 AOL, Inc.* 1,025
8,300 Google, Inc. "A"*(b) 3,693
60,300 IAC/InterActiveCorp.* 1,325
32,800 ModusLink Global Solutions, Inc.* 198
261 Yahoo Japan Corp.(a),(b) 103
--------
6,344
--------
IT CONSULTING & OTHER SERVICES (1.6%)
1,129 Cap Gemini S.A.(a) 49
2,500 Cognizant Technology Solutions Corp. "A"*(b) 125
53,200 International Business Machines Corp.(b) 6,569
================================================================================
28 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
22,700 Ness Technologies, Inc.* $ 98
390 OBIC Co., Ltd.(a),(b) 75
8,900 Unisys Corp.* 165
--------
7,081
--------
OFFICE ELECTRONICS (0.1%)
9,300 Canon, Inc.(a),(b) 347
1,790 Neopost S.A.(a),(b) 129
--------
476
--------
SEMICONDUCTOR EQUIPMENT (0.2%)
9,000 ASM Pacific Technology Ltd.(a),(b) 70
7,939 ASML Holding N.V.(a),(b) 218
92,600 Photronics, Inc.* 418
4,000 Tokyo Electron Ltd.(a),(b) 216
--------
922
--------
SEMICONDUCTORS (1.1%)
39,600 Analog Devices, Inc. 1,103
7,976 Infineon Technologies AG*(a),(b) 46
153,700 Intel Corp.(b) 2,990
90,600 Lattice Semiconductor Corp.* 393
40,000 Micron Technology, Inc.*(b) 340
14,016 STMicroelectronics N.V.(a),(b) 111
--------
4,983
--------
SYSTEMS SOFTWARE (1.5%)
282,200 Microsoft Corp.(b) 6,493
--------
TECHNOLOGY DISTRIBUTORS (1.2%)
90,900 Arrow Electronics, Inc.*(b) 2,032
33,500 Avnet, Inc.*(b) 808
37,000 Ingram Micro, Inc. "A"*(b) 562
59,500 Tech Data Corp.*(b) 2,119
--------
5,521
--------
Total Information Technology 54,317
--------
MATERIALS (4.1%)
----------------
COMMODITY CHEMICALS (0.2%)
30,000 Asahi Kasei Corp.(a),(b) 157
22,000 Denki Kagaku Kogyo Kabushiki Kaisha(a),(b) 103
21,500 Kuraray Co.(a),(b) 251
124,000 Mitsui Chemicals, Inc.(a),(b) 344
--------
855
--------
CONSTRUCTION MATERIALS (0.0%)
554 RHI AG*(a) 13
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 29
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
DIVERSIFIED CHEMICALS (0.6%)
10,700 Ashland, Inc.(b) $ 497
8,529 BASF AG(a),(b) 465
10,800 Cabot Corp.(b) 260
42,000 E.I. du Pont de Nemours & Co.(b) 1,453
13,500 Mitsubishi Chemical Holdings Corp.(a) 62
--------
2,737
--------
DIVERSIFIED METALS & MINING (0.9%)
9,582 Anglo American Capital plc*(a),(b) 333
19,880 BHP Billiton Ltd.(a),(b) 618
9,869 BHP Billiton plc(a),(b) 255
22,200 Freeport-McMoRan Copper & Gold, Inc.(b) 1,313
23,000 Mitsui Mining & Smelting Co. Ltd.(a) 61
8,455 Rio Tinto Ltd.(a),(b) 468
13,554 Rio Tinto plc(a),(b) 593
14,000 Sumitomo Metal Mining Co. Ltd.(a),(b) 176
6,322 Vedanta Resources plc(a),(b) 199
10,187 Xstrata plc(a),(b) 134
--------
4,150
--------
FERTILIZERS & AGRICULTURAL CHEMICALS (0.3%)
22,300 CF Industries Holdings, Inc. 1,415
--------
INDUSTRIAL GASES (0.0%)
1,674 Linde AG(a),(b) 176
--------
METAL & GLASS CONTAINERS (0.0%)
4,360 Rexam plc(a),(b) 19
--------
PAPER PACKAGING (0.2%)
148,100 Boise, Inc.* 813
--------
PAPER PRODUCTS (0.6%)
6,800 Clearwater Paper Corp.* 372
56,500 International Paper Co.(b) 1,279
17,900 KapStone Paper & Packaging Corp.* 199
27,400 MeadWestvaco Corp.(b) 608
23,711 Stora Enso Oyj(a),(b) 170
--------
2,628
--------
SPECIALTY CHEMICALS (1.1%)
29,700 Cytec Industries, Inc.(b) 1,188
3,000 Daicel Chemical Industries, Ltd.(a),(b) 20
17,000 JSR Corp.(a),(b) 285
12,400 Lubrizol Corp.(b) 996
3,000 Nitto Denko Corp.(a) 98
================================================================================
30 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
7,600 OM Group, Inc.* $ 181
35,500 PolyOne Corp.* 299
18,800 Sherwin-Williams Co.(b) 1,301
49 Sika AG(a) 87
7,400 Stepan Co. 506
293 Umicore(a),(b) 8
--------
4,969
--------
STEEL (0.2%)
7,700 JFE Holdings, Inc.(a),(b) 238
16,000 Kobe Steel Ltd.(a),(b) 30
5,700 Maruichi Steel Tube Ltd.(a),(b) 109
67,000 Nippon Steel Corp.(a),(b) 222
48,283 Onesteel Ltd.(a),(b) 120
--------
719
--------
Total Materials 18,494
--------
TELECOMMUNICATION SERVICES (2.7%)
---------------------------------
ALTERNATIVE CARRIERS (0.1%)
223,921 Cable & Wireless Worldwide(a) 287
--------
INTEGRATED TELECOMMUNICATION SERVICES (1.8%)
248,400 AT&T, Inc.(b) 6,009
11,034 Deutsche Telekom AG(a),(b) 130
5,745 France Telecom S.A.(a),(b) 99
11,755 Koninklijke (Royal) KPN N.V.(a),(b) 150
9,300 Nippon Telegraph & Telephone Corp.(a),(b) 380
503,289 Telecom Italia S.p.A.(a),(b) 506
33,169 Telefonica S.A.(a),(b) 612
29,570 TeliaSonera AB(a),(b) 190
--------
8,076
--------
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
14,300 SoftBank Corp.(a) 378
72,000 Telephone & Data Systems, Inc.(b) 2,188
4,100 U.S. Cellular Corp.* 169
10,000 USA Mobility, Inc. 129
364,330 Vodafone Group plc(a),(b) 755
--------
3,619
--------
Total Telecommunication Services 11,982
--------
UTILITIES (3.6%)
----------------
ELECTRIC UTILITIES (1.4%)
119,000 Duke Energy Corp. 1,904
13,786 E.ON AG(a),(b) 371
================================================================================
PORTFOLIO OF INVESTMENTS | 31
<PAGE>
================================================================================
--------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------------
118,478 EDP-Energias de Portugal(a),(b) $ 350
105,144 Enel S.p.A.(a),(b) 445
8,800 Exelon Corp.(b) 334
19,200 FirstEnergy Corp.(b) 676
13,319 Fortum Oyj(a),(b) 293
11,400 PNM Resources, Inc. 128
28,200 Progress Energy, Inc. 1,106
5,806 Public Power Corp.*(a),(b) 83
20,600 Southern Co. 686
--------
6,376
--------
GAS UTILITIES (0.1%)
4,878 Enagas S.A.(a),(b) 73
11,542 Gas Natural SDG S.A.(a),(b) 166
13,200 Hong Kong and China Gas Co., Ltd.(a),(b) 33
36,469 Snam Rete Gas S.p.A.(a),(b) 145
49,000 Tokyo Gas Co. Ltd.(a),(b) 224
--------
641
--------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.9%)
83,400 Constellation Energy Group, Inc.(b) 2,690
56,500 NRG Energy, Inc.*(b) 1,198
--------
3,888
--------
MULTI-UTILITIES (1.2%)
98,300 Ameren Corp. 2,337
38,000 DTE Energy Co. 1,733
4,029 Gaz de France S.A.(a),(b) 114
3,743 National Grid plc(a),(b) 27
18,700 Public Service Enterprise Group, Inc.(b) 586
5,660 RWE AG(a),(b) 369
--------
5,166
--------
Total Utilities 16,071
--------
Total Common Stocks (cost: $340,533) 323,199
--------
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
$(000)/SHARES
--------------------------------------------------------------------------------
PREFERRED SECURITIES (0.1%)
CONSUMER DISCRETIONARY (0.1%)
-----------------------------
AUTOMOBILE MANUFACTURERS (0.1%)
1,776 Volkswagen AG(a),(b) 155
--------
================================================================================
32 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
--------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
$(000)/SHARES SECURITY (000)
--------------------------------------------------------------------------------
CONSUMER STAPLES (0.0%)
-----------------------
HOUSEHOLD PRODUCTS (0.0%)
1,044 Henkel AG & Co. KGaA(a),(b) $ 51
--------
FINANCIALS (0.0%)
-----------------
DIVERSIFIED BANKS (0.0%)
200 US Bancorp, 7.19%, perpetual 147
--------
GOVERNMENT (0.0%)
-----------------
U.S. GOVERNMENT (0.0%)
6,000 Fannie Mae, 8.25%, perpetual*(b) 2
6,000 Freddie Mac, 8.38%, perpetual*(b) 2
--------
Total Government 4
--------
Total Preferred Securities (cost: $545) 357
--------
--------------------------------------------------------------------------------
NUMBER
OF SHARES
--------------------------------------------------------------------------------
EXCHANGE-TRADED FUNDS (14.3%)
535,356 iShares MSCI EAFE Index Fund 24,899
984,315 iShares MSCI Emerging Markets Index Fund(b) 36,735
38,323 Ishares Russell 2000 Index Fund 2,341
--------
Total Exchange-Traded Funds (cost: $65,575) 63,975
--------
HEDGE FUNDS (3.5%)
990,908 Deutsche iGAP Investment Trust "B", acquired
8/01/2008 - 1/11/2010; cost $16,750*(c),(d) 15,528
--------
RIGHTS (0.0%)
UTILITIES (0.0%)
----------------
ELECTRIC UTILITIES (0.0%)
21,908 Iberdrola S.A.(a),(b) (cost: $159) 123
--------
Total Equity Securities (cost: $423,562) 403,182
--------
================================================================================
PORTFOLIO OF INVESTMENTS | 33
<PAGE>
================================================================================
----------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
----------------------------------------------------------------------------------------------
BONDS (2.3%)
CORPORATE OBLIGATIONS (1.7%)
ENERGY (0.1%)
-------------
OIL & GAS STORAGE & TRANSPORTATION (0.1%)
$ 200 Enbridge Energy Partners, LP(b) 8.05% 10/01/2037 $ 197
200 Enterprise Products Operating, LP(b) 7.00 6/01/2067 177
200 Enterprise Products Operating, LP(b) 7.03 1/15/2068 184
--------
Total Energy 558
--------
FINANCIALS (1.2%)
-----------------
LIFE & HEALTH INSURANCE (0.4%)
1,000 Nationwide Mutual Insurance Co.(b),(e) 5.81 12/15/2024 851
1,000 StanCorp Financial Group, Inc.(b) 6.90 6/01/2067 844
--------
1,695
--------
MULTI-LINE INSURANCE (0.4%)
200 American International Group, Inc.(b) 8.18 5/15/2058 160
1,000 Genworth Financial, Inc.(b) 6.15 11/15/2066 690
500 Glen Meadow(b),(e) 6.51 2/12/2067 363
600 Oil Insurance Ltd.(b),(e) 7.56 -(f) 524
--------
1,737
--------
OTHER DIVERSIFIED FINANCIAL SERVICES (0.1%)
1,000 ILFC E-Capital Trust II(b),(e) 6.25 12/21/2065 646
--------
REGIONAL BANKS (0.1%)
500 Webster Capital Trust IV(b) 7.65 6/15/2037 356
--------
REITs - RETAIL (0.2%)
1,000 New Plan Excel Realty Trust, Inc.(b) 5.13 9/15/2012 895
--------
Total Financials 5,329
--------
INDUSTRIALS (0.2%)
------------------
INDUSTRIAL CONGLOMERATES (0.2%)
1,000 Textron Financial Corp.(b),(e) 6.00 2/15/2067 769
--------
UTILITIES (0.2%)
----------------
ELECTRIC UTILITIES (0.2%)
995 Texas Competitive Electric Holdings Co., LLC(g) 3.99 10/10/2014 737
--------
Total Corporate Obligations (cost: $5,315) 7,393
--------
================================================================================
34 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
----------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
----------------------------------------------------------------------------------------------
EURODOLLAR AND YANKEE OBLIGATIONS (0.3%)
FINANCIALS (0.3%)
-----------------
DIVERSIFIED BANKS (0.0%)
$ 200 LBG Capital No.1 plc(b) 8.00% -(f) $ 157
--------
DIVERSIFIED CAPITAL MARKETS (0.1%)
500 UBS Preferred Funding Trust I(b) 8.62 -(f) 488
--------
MULTI-LINE INSURANCE (0.2%)
1,000 ING Capital Funding Trust III(b) 8.44 -(f) 875
--------
Total Eurodollar and Yankee Obligations
(cost: $1,124) 1,520
--------
ASSET-BACKED SECURITIES (0.0%)
FINANCIALS (0.0%)
-----------------
ASSET-BACKED FINANCING (0.0%)
136 GE Equipment Midticket, LLC(b) (cost: $116) 0.67(h) 9/15/2017 132
--------
COMMERCIAL MORTGAGE SECURITIES (0.3%)
FINANCIALS (0.3%)
-----------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (0.3%)
785 Banc of America Commercial Mortgage, Inc.(b) 5.81 7/10/2044 679
590 Citigroup Commercial Mortgage Trust(b) 6.09 12/10/2049 513
--------
Total Commercial Mortgage Securities (cost: $963) 1,192
--------
Total Bonds (cost: $7,518) 10,237
--------
MONEY MARKET INSTRUMENTS (2.7%)
U.S.TREASURY BILLS (0.2%)
180 0.28%, 12/16/2010(i),(k),(l) 180
754 0.06%, 9/16/2010(i),(k),(l) 754
--------
Total U.S. Treasury Bills (cost: $934) 934
--------
----------------------------------------------------------------------------------------------
NUMBER
OF SHARES
----------------------------------------------------------------------------------------------
MONEY MARKET FUNDS (2.5%)
11,171,087 State Street Institutional Liquid Reserve Fund,
0.21%(j),(l) 11,171
--------
Total Money Market Instruments (cost: $12,105) 12,105
--------
TOTAL INVESTMENTS (COST: $443,185) $425,524
========
================================================================================
PORTFOLIO OF INVESTMENTS | 35
<PAGE>
================================================================================
--------------------------------------------------------------------------------------------------
MARKET
NUMBER OF VALUE
CONTRACTS SECURITY (000)
--------------------------------------------------------------------------------------------------
PURCHASED OPTIONS (5.3%)
2,750 Put - iShares MSCI EAFE Index expiring July 17, 2010 at 46 $ 355
5,725 Put - iShares MSCI EAFE Index expiring September 18, 2010 at 46 1,675
8,780 Put - iShares MSCI EAFE Index expiring September 18, 2010 at 47 2,919
1,020 Put - iShares MSCI Emerging Market Index expiring August 21, 2010 at 36 172
3,900 Put - iShares MSCI Emerging Market Index expiring September 18, 2010 at 36 844
4,903 Put - iShares MSCI Emerging Market Index expiring September 18, 2010 at 37 1,250
495 Put - Russell 2000 Index expiring August 21, 2010 at 620 1,950
1,246 Put - S&P 500 Index expiring August 21, 2010 at 1050 6,953
584 Put - S&P 500 Index expiring August 21, 2010 at 1075 4,047
570 Put - S&P 500 Index expiring September 18, 2010 at 1050 3,819
-------
TOTAL PURCHASED OPTIONS (COST: $20,001) $23,984
=======
WRITTEN OPTIONS (0.3%)
(140) Call - iShares MSCI EAFE Index expiring August 21, 2010 at 52 (6)
(2,500) Call - iShares MSCI EAFE Index expiring July 17, 2010 at 52 (8)
(2,300) Call - iShares MSCI Emerging Market Index expiring July 17, 2010 at 41 (29)
(200) Call - Russell 2000 Index expiring July 17, 2010 at 700 (6)
(500) Call - S&P 500 Index expiring July 17, 2010 at 1150 (11)
(18) Call - S&P 500 Index expiring July 17, 2010 at 1160 -
(2,900) Put - iShares MSCI EAFE Index expiring August 21, 2010 at 40 (242)
(137) Put - Russell 2000 Index expiring August 21, 2010 at 520 (137)
(100) Put - Russell 2000 Index expiring July 17, 2010 at 520 (19)
(550) Put - S&P 500 Index expiring July 17, 2010 at 875 (100)
(250) Put - S&P 500 Index expiring July 17, 2010 at 930 (124)
(623) Put - S&P 500 Index expiring July 17, 2010 at 950 (439)
-------
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED: $1,989) $(1,121)
=======
--------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF CONTRACT APPRECIATION/
CONTRACTS EXPIRATION VALUE (DEPRECIATION)
LONG/(SHORT) SECURITY DATE (000) (000)
--------------------------------------------------------------------------------------------------
FUTURES (1.6%)
6 DJ Euro Stoxx 50 Index Futures 09/17/2010 $ 188 (8)
2 FTSE 100 Index Futures 09/17/2010 146 (8)
3 Nikkei 225 Index Futures 09/9/2010 138 (11)
10 Russell 2000 Mini Index Futures 09/17/2010 608 (47)
118 S&P 500 E-Mini Index Futures 09/17/2010 6,057 (399)
1 SPI 200 Index Futures 09/16/2010 90 (5)
------ ------
TOTAL FUTURES $7,227 $ (479)
====== ======
================================================================================
36 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
----------------------------------------------------------------------------------------------------
($ 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
----------------------------------------------------------------------------------------------------
Equity Securities:
Common Stocks $268,512 $54,687 $- $323,199
Preferred Securities - 357 - 357
Exchange-Traded Funds 63,975 - - 63,975
Hedge Funds - 15,528 - 15,528
Rights - 123 - 123
Bonds:
Corporate Obligations - 7,393 - 7,393
Eurodollar and Yankee Obligations - 1,520 - 1,520
Asset-Backed Securities - 132 - 132
Commercial Mortgage Securities - 1,192 - 1,192
Money Market Instruments:
U.S. Treasury Bills - 934 - 934
Money Market Funds 11,171 - - 11,171
Purchased Options 23,984 - - 23,984
Futures* (479) - - (479)
----------------------------------------------------------------------------------------------------
Total $367,163 $81,866 $- $449,029
----------------------------------------------------------------------------------------------------
* Futures are valued at the unrealized appreciation/depreciation on the
investment.
(LEVEL 1) (LEVEL 2) (LEVEL 3)
QUOTED PRICES OTHER SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OBSERVABLE UNOBSERVABLE
LIABILITIES FOR IDENTICAL ASSETS INPUTS INPUTS TOTAL
----------------------------------------------------------------------------------------------------
Written Options $(1,121) $- $- $(1,121)
----------------------------------------------------------------------------------------------------
For the six-month period ended June 30, 2010, there were no significant
transfers of securities between levels 1, 2, or 3. Transfers into and out of the
levels are recognized based on the securities' placements as of the beginning of
the period in which the event or circumstance that caused the transfer occurred.
================================================================================
PORTFOLIO OF INVESTMENTS | 37
<PAGE>
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS
June 30, 2010 (unaudited)
--------------------------------------------------------------------------------
o GENERAL NOTES
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets, and, in total, may not equal
100%. A category percentage of 0.0% represents less than 0.1% of net assets.
Investments in foreign securities were 26.6% of net assets at June 30, 2010.
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.
o 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.
================================================================================
38 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
HEDGE FUNDS -- private investment funds open to a limited range of investors
and exempt from certain regulations. Deutsche iGAP Investment Trust, managed
by Deutsche Bank Trust Company Americas, invests primarily in a diversified
portfolio of short-term money market investments, and long and short
positions in exchange-traded equity index and government bond index futures,
currency forward contracts, and other derivative instruments. As of June 30,
2010, the Fund owns approximately 13.9% of the Class "B" shares of the iGAP
fund and may redeem all or part of its investment upon 10 days' prior written
notice. The Fund does not invest in the iGAP fund for the purpose of
exercising management or control.
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.
RIGHTS -- enable the holder to buy a specified number of shares of new issues
of a common stock before it is offered to the public.
o PORTFOLIO ABBREVIATIONS AND DESCRIPTIONS
iShares Exchange-traded funds, managed by BlackRock, Inc., that represent a
portfolio of stocks designed to closely track a specific market
index. iShares are traded on securities exchanges.
REIT Real estate investment trust
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 39
<PAGE>
================================================================================
o SPECIFIC NOTES
(a) Security was fair valued at June 30, 2010, by USAA Investment Management
Company (the Manager) in accordance with valuation procedures approved by
the Board of Trustees.
(b) At June 30, 2010, the security, or a portion thereof, is segregated
to cover the notional value of outstanding written call options.
(c) Security deemed illiquid by the Manager, under liquidity guidelines
approved by the Board of Trustees. The aggregate market value of these
securities at June 30, 2010, was $15,528,000, which represented 3.5% of
the Fund's net assets.
(d) Restricted security that is not registered under the Securities Act of
1933.
(e) 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.
(f) Security is perpetual and has no final maturity date but may be subject
to calls at various dates in the future.
(g) Senior loan (loan) -- is not registered under the Securities Act of 1933.
The loan contains certain restrictions on resale and cannot be sold
publicly. The interest rate is adjusted periodically, and the rate
disclosed represents the current rate at June 30, 2010. The weighted
average life of the loan is likely to be substantially shorter than the
stated final maturity date due to mandatory or optional prepayments.
Security deemed liquid by the Manager, under liquidity guidelines
approved by the Board of Trustees, unless otherwise noted as illiquid.
(h) Variable-rate or floating-rate security -- interest rate is adjusted
periodically. The interest rate disclosed represents the current rate at
June 30, 2010.
================================================================================
40 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
(i) Zero-coupon security. Rate represents the effective yield at the date of
purchase.
(j) Rate represents the money market fund annualized seven-day yield at June
30, 2010.
(k) Securities with a total value of $934,000 are segregated as collateral
for initial margin requirements on open futures contracts.
(l) Security, or a portion thereof, is segregated to cover the value of open
futures contracts at June 30, 2010.
* Non-income-producing security.
See accompanying notes to financial statements.
================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS | 41
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (IN THOUSANDS)
June 30, 2010 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at market value (cost of $443,185) $425,524
Purchased options, at market value (cost of $20,001) 23,984
Cash 32
Cash denominated in foreign currencies (identified cost of $415) 412
Receivables:
Capital shares sold 931
Dividends and interest 542
Securities sold 126
--------
Total assets 451,551
--------
LIABILITIES
Payables:
Securities purchased 1,721
Capital shares redeemed 198
Written options, at market value (premiums received of $1,989) 1,121
Variation margin on futures contracts 70
Accrued management fees 222
Other accrued expenses and payables 76
--------
Total liabilities 3,408
--------
Net assets applicable to capital shares outstanding $448,143
========
NET ASSETS CONSIST OF:
Paid-in capital $457,856
Accumulated undistributed net investment income 3,778
Accumulated net realized loss on investments, options, and
futures transactions (198)
Net unrealized depreciation of investments, options, and futures contracts (13,289)
Net unrealized depreciation of foreign currency translations (4)
--------
Net assets applicable to capital shares outstanding $448,143
========
Capital shares outstanding, unlimited number of shares authorized,
no par value 47,766
========
Net asset value, redemption price, and offering price per share $ 9.38
========
See accompanying notes to financial statements.
================================================================================
42 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
STATEMENT OF OPERATIONS (IN THOUSANDS)
Six-month period ended June 30, 2010 (unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $163) $ 4,073
Interest 552
--------
Total income 4,625
--------
EXPENSES
Management fees 1,191
Administration and servicing fees 99
Transfer agent's fees 99
Custody and accounting fees 135
Postage 1
Shareholder reporting fees 5
Trustees' fees 5
Professional fees 39
Other 8
--------
Total expenses 1,582
--------
NET INVESTMENT INCOME 3,043
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY, OPTIONS, AND FUTURES CONTRACTS
Net realized gain (loss) on:
Investments 6,561
Foreign currency transactions (102)
Options 7,005
Futures transactions (74)
Change in net unrealized appreciation/depreciation of:
Investments (49,929)
Foreign currency translations 8
Options 6,507
Futures contracts (490)
--------
Net realized and unrealized loss (30,514)
--------
Decrease in net assets resulting from operations $(27,471)
========
See accompanying notes to financial statements.
================================================================================
FINANCIAL STATEMENTS | 43
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Six-month period ended June 30, 2010 (unaudited), and year ended December 31,
2009
--------------------------------------------------------------------------------
6/30/2010 12/31/2009
--------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 3,043 $ 2,689
Net realized gain (loss) on investments 6,561 (731)
Net realized gain (loss) on foreign currency transactions (102) 34
Net realized gain (loss) on options 7,005 (16,014)
Net realized gain (loss) on futures transactions (74) 1,058
Change in net unrealized appreciation/depreciation of:
Investments (49,929) 48,226
Foreign currency translations 8 (12)
Options 6,506 1,539
Futures contracts (489) (45)
--------------------------
Increase (decrease) in net assets resulting from
operations (27,471) 36,744
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - (2,000)
Net realized gains - (6,529)
--------------------------
Distributions to shareholders - (8,529)
--------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 178,449 219,051
Reinvested dividends - 6,401
Cost of shares redeemed (20,909) (9,156)
--------------------------
Increase in net assets from capital share transactions 157,540 216,296
--------------------------
Net increase in net assets 130,069 244,511
NET ASSETS
Beginning of period 318,074 73,563
--------------------------
End of period $448,143 $318,074
==========================
Accumulated undistributed net investment income:
End of period $ 3,778 $ 735
==========================
CHANGE IN SHARES OUTSTANDING
Shares sold 17,884 23,778
Shares issued for dividends reinvested - 644
Shares redeemed (2,102) (987)
--------------------------
Increase in shares outstanding 15,782 23,435
==========================
See accompanying notes to financial statements.
================================================================================
44 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
June 30, 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 Global
Opportunities Fund (the Fund), which is classified as nondiversified under the
1940 Act. The Fund's investment objective is to seek an average annual return
that is greater than the 1-year U.S. Treasury bond, before fees and expenses,
over a full market cycle while seeking to limit the Fund's exposure to large
negative returns. The Fund is not offered for sale directly to the general
public and is available currently for investment through a USAA managed account
program or other persons or legal entities that the Fund may approve from time
to time.
As a nondiversified fund, the Fund may invest a greater percentage of its assets
in a single issuer, such as a single stock-based or bond-based exchange-traded
fund (ETF), stock, corporate bond, or a single money market instrument. Because
a relatively high percentage of the Fund's total assets may be invested in the
securities of a single issuer or a limited number of issuers, the securities of
the Fund may be more sensitive to changes in the market value of a single
issuer, a limited number of issuers, or large companies generally. Such a
focused investment strategy may increase the volatility of the Fund's investment
results because this Fund may be more susceptible to risk associated with a
single economic, political, or regulatory event than a diversified fund.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 45
<PAGE>
================================================================================
A. SECURITY VALUATION -- The value of each security is determined (as of the
close of trading on the New York Stock Exchange (NYSE) on each business day
the NYSE is open) as set forth below:
1. Equity securities, including ETFs, except as otherwise noted, traded
primarily on a domestic securities exchange or the Nasdaq
over-the-counter markets, are valued at the last sales price or
official closing price on the exchange or primary market on which they
trade. Equity securities traded primarily on foreign securities
exchanges or markets are valued at the last quoted sales price, or the
most recently determined official closing price calculated according
to local market convention, available at the time the Fund is valued.
If no last sale or official closing price is reported or available,
the average of the bid and asked prices 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
================================================================================
46 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
relevant to determine a fair value for the affected foreign
securities. In addition, the Fund may use information from an
external vendor or other sources to adjust the foreign market closing
prices of foreign equity securities to reflect what the Fund believes
to be the fair value of the securities as of the close of the NYSE.
Fair valuation of affected foreign equity securities may occur
frequently based on an assessment that events that occur on a fairly
regular basis (such as U.S. market movements) are significant.
3. Investments in open-end investment companies, hedge, or other funds,
other than ETFs, are valued at their NAV at the end of each business
day.
4. Debt securities purchased with original or remaining maturities of 60
days or less may be valued at amortized cost, which approximates
market value.
5. Debt securities with maturities greater than 60 days are valued each
business day by a pricing service (the Service) approved by the
Trust's Board of Trustees. The Service uses an evaluated mean between
quoted bid and asked prices or the last sales price to price
securities when, in the Service's judgment, these prices are readily
available and are representative of the securities' market values. For
many securities, such prices are not readily available. The Service
generally prices these securities based on methods that include
consideration of yields or prices of securities of comparable quality,
coupon, maturity, and type; indications as to values from dealers in
securities; and general market conditions.
6. Repurchase agreements are valued at cost, which approximates market
value.
7. Futures are valued based upon the last sale price at the close of
market on the principal exchange on which they are traded.
8. Options are valued by a pricing service at the National Best Bid/Offer
(NBBO) composite price, which is derived from the best available bid
and ask prices in all participating options exchanges
================================================================================
NOTES TO FINANCIAL STATEMENTS | 47
<PAGE>
================================================================================
determined to most closely reflect market value of the options at the
time of computation of the Fund's NAV.
9. Securities for which market quotations are not readily available or
are considered unreliable, or whose values have been materially
affected by events occurring after the close of their primary markets
but before the pricing of the Fund, are valued in good faith at fair
value, using methods determined by the Manager in consultation with
the Fund's subadvisers, if applicable, under valuation procedures
approved by the Trust's Board of Trustees. The effect of fair value
pricing is that securities may not be priced on the basis of
quotations from the primary market in which they are traded and the
actual price realized from the sale of a security may differ
materially from the fair value price. Valuing these securities at
fair value is intended to cause the Fund's NAV to be more reliable
than it otherwise would be.
Fair value methods used by the Manager include, but are not limited
to, obtaining market quotations from secondary pricing services,
broker-dealers, or widely used quotation systems. General factors
considered in determining the fair value of securities include
fundamental analytical data, the nature and duration of any
restrictions on disposition of the securities, and an evaluation of
the forces that influenced the market in which the securities are
purchased and sold.
B. FAIR VALUE MEASUREMENTS -- Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
three-level valuation hierarchy 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.
================================================================================
48 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
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. In valuing U.S.
Treasury bills, certain equity preferred securities, and all of the
securities classified as bonds in the portfolio of investments, the Fund
uses a market approach, which is further discussed in Note 1A5.
Additionally the portfolio of investments includes quantitative input
information, such as coupon rates, maturity dates, and credit enhancements.
The Deutsche iGAP Investment Trust "B" hedge fund is valued at its daily
NAV and is classified as level 2 because it is a private investment fund
open to a limited number of investors and is not regularly traded. Equity
securities that trade on foreign exchanges and are classified as common
stocks, preferred securities, and rights were classified as level 2 at June
30, 2010 due to an assessment of events that resulted in price adjustments
to reflect changes that occurred after the close of their foreign markets
and prior to the close of the U.S. securities markets. Those securities
were noted in the portfolio of investments as being fair valued by the
Manager.
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. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -- The Fund may buy, sell,
and enter into certain types of derivatives, including, but not limited to
futures contracts, options, and options on futures contracts under
circumstances in which such instruments are expected by the portfolio
manager to aid in achieving the Fund's investment objective. The Fund also
may use derivatives in circumstances where the portfolio manager believes
they offer an economical means of gaining exposure to a particular asset
class, or to keep cash on hand to meet shareholder redemptions or other
needs while maintaining exposure to the market.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 49
<PAGE>
================================================================================
With exchange listed futures contracts and options, counterparty credit
risk to the Fund is limited to the exchange's clearinghouse which, as
counterparty to all exchange traded futures contracts and options,
guarantees the transactions against default from the actual counterparty to
the trade.
FUTURES CONTRACTS -- The Fund is subject to equity price risk, interest
rate risk, and foreign currency exchange rate risk in the normal course of
pursuing its investment objectives. The Fund may use futures contracts to
gain exposure to, or hedge against, changes in the value of equities,
interest rates, or foreign currencies. A futures contract represents a
commitment for the future purchase or sale of an asset at a specified price
on a specified date. Upon entering into such contracts, the Fund is
required to deposit with the broker in either cash or securities an initial
margin in an amount equal to a certain percentage of the contract amount.
Subsequent payments (variation margin) are made or received by the Fund
each day, depending on the daily fluctuations in the value of the contract,
and are recorded for financial statement purposes as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed. Upon entering into
such contracts, the Fund bears the risk of interest or exchange rates or
securities prices moving unexpectedly in an unfavorable direction, in which
case, the Fund may not achieve the anticipated benefits of the futures
contracts.
OPTION TRANSACTIONS -- The Fund is subject to equity price risk in the
normal course of pursuing its investment objectives. The Fund may use
options on underlying instruments, namely, equity securities, ETFs, and
equity indexes, to gain exposure to, or hedge against, changes in the value
of equity securities, ETFs, or equity indexes. A call option gives the
purchaser the right to buy, and the writer the obligation to sell, the
underlying instrument at a specified price during a specified period.
Conversely, a put option gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying
================================================================================
50 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
instrument at a specified price during a specified period. The purchaser of
the option pays a premium to the writer of the option.
Premiums paid for purchased options are included in the Fund's statement of
assets and liabilities as an investment. If a purchased option expires
unexercised, the premium paid is recognized as a realized loss. If a
purchased call option on a security is exercised, the cost of the security
acquired includes the exercise price and the premium paid. If a purchased
put option on a security is exercised, the realized gain or loss on the
security sold is determined from the exercise price, the original cost of
the security, and the premium paid. The risk associated with purchasing a
call or put option is limited to the premium paid.
Premiums received from writing options are included in the Fund's statement
of assets and liabilities as a liability. If a written option expires
unexercised, the premium received is recognized as a realized gain. If a
written call option on a security is exercised, the realized gain or loss
on the security sold is determined from the exercise price, the original
cost of the security, and the premium received. If a written put option on
a security is exercised, the cost of the security acquired is the exercise
price paid less the premium received. The Fund, as a writer of an option,
bears the market risk of an unfavorable change in the price of the security
underlying the written option.
In an attempt to reduce the Fund's volatility over time, the Fund may
implement a strategy that involves writing (selling) index call or
corresponding ETF options and purchasing index put or corresponding ETF
options or index put spread options against a highly correlated stock
portfolio. The combination of the diversified stock portfolio with the
index call and put or corresponding ETF options is designed to provide the
Fund with consistent returns over a wide range of equity market
environments. This strategy may not fully protect the Fund against declines
in the portfolio's value, and the Fund could experience a loss. Options on
securities indexes or corresponding ETF options are different from options
on individual securities in
================================================================================
NOTES TO FINANCIAL STATEMENTS | 51
<PAGE>
================================================================================
that the holder of the index options contract has the right to receive an
amount of cash equal to the difference between the exercise price and the
closing price of the underlying index on exercise date. If an option on an
index is exercised, the realized gain or loss is determined from the
exercise price, the value of the underlying index, and the amount of the
premium.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AS OF JUNE 30, 2010*
(IN THOUSANDS)
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------------------------------------------------------------------
STATEMENT OF STATEMENT OF
ASSETS AND ASSETS AND
DERIVATIVES NOT ACCOUNTED LIABILITIES LIABILITIES
FOR AS HEDGING INSTRUMENTS LOCATION FAIR VALUE LOCATION FAIR VALUE
---------------------------------------------------------------------------------------------------
Equity contracts Purchased options; $23,505** Written options $1,121
Net unrealized
depreciation of
investments,
options, and
futures contracts
---------------------------------------------------------------------------------------------------
*For open derivative instruments as of June 30, 2010, see the portfolio of
investments, which is also indicative of activity for the six-month period
ended June 30, 2010.
**Includes cumulative appreciation (depreciation) of futures contracts as
reported in the portfolio of investments. Only current day's variation
margin is reported within the statement of assets and liabilities.
THE EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR THE
SIX-MONTH PERIOD ENDED JUNE 30, 2010 (IN THOUSANDS)
CHANGE IN
UNREALIZED
REALIZED APPRECIATION
DERIVATIVES NOT ACCOUNTED STATEMENT OF GAIN (LOSS) (DEPRECIATION)
FOR AS HEDGING INSTRUMENTS OPERATIONS LOCATION ON DERIVATIVES ON DERIVATIVES
-----------------------------------------------------------------------------------------
Equity contracts Net realized gain (loss) $6,931 $6,017
on options and futures
transactions/Change in
net unrealized
appreciation/
depreciation of options
and futures contracts
-----------------------------------------------------------------------------------------
================================================================================
52 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
D. REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
commercial banks or recognized security dealers. These agreements are
collateralized by underlying securities. The collateral obligations are
marked-to-market daily to ensure their value is equal to or in excess of
the repurchase agreement price plus accrued interest and are held by the
Fund, either through its regular custodian or through a special "tri-party"
custodian that maintains separate accounts for both the Fund and its
counterparty, until maturity of the repurchase agreement. Repurchase
agreements are subject to credit risk, and the Fund's Manager monitors the
creditworthiness of sellers with which the Fund may enter into repurchase
agreements.
E. SECURITIES PURCHASED ON A DELAYED-DELIVERY OR WHEN-ISSUED BASIS -- Delivery
and payment for securities that have been purchased by the Fund on a
delayed-delivery or when-issued basis can take place a month or more after
the trade date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may increase or
decrease in value prior to their delivery. The Fund maintains segregated
assets with a market value equal to or greater than the amount of its
purchase commitments. The purchase of securities on a delayed-delivery or
when-issued basis may increase the volatility of the Fund's NAV to the
extent that the Fund makes such purchases while remaining substantially
fully invested.
F. FEDERAL TAXES -- The Fund's policy is to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its income to its shareholders.
Therefore, no federal income tax provision is required.
G. INVESTMENTS IN SECURITIES -- Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Gains or losses
from sales of investment securities are computed on the identified cost
basis. Dividend income, less foreign taxes, if any, is recorded on the
ex-dividend date. If the ex-dividend date has passed, certain dividends
from foreign securities are recorded upon notification. Interest income is
recorded daily on the accrual basis.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 53
<PAGE>
================================================================================
Discounts and premiums are amortized over the life of the respective
securities, using the effective yield method for long-term securities and
the straight-line method for short-term securities.
H. FOREIGN CURRENCY TRANSLATIONS -- The Fund's assets may be invested in the
securities of foreign issuers and may be traded in foreign currency. Since
the Fund's accounting records are maintained in U.S. dollars, foreign
currency amounts are translated into U.S. dollars on the following bases:
1. Purchases and sales of securities, income, and expenses at the exchange
rate obtained from an independent pricing service on the respective
dates of such transactions.
2. Market value of securities, other assets, and liabilities at the
exchange rate obtained from an independent pricing service on a daily
basis.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Separately, net realized foreign currency gains/losses may arise from sales
of foreign currency, currency gains/losses realized between the trade and
settlement dates on security transactions, and from the difference between
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent of the amounts received. At
the end of the Fund's fiscal year, these net realized foreign currency
gains/losses are reclassified from accumulated net realized gain/loss to
accumulated undistributed net investment income on the statement of assets
and liabilities as such amounts are treated as ordinary income/loss for tax
purposes. Net unrealized foreign currency exchange gains/losses arise from
changes in the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rate.
================================================================================
54 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
I. EXPENSES PAID INDIRECTLY -- A portion of the brokerage commissions that the
Fund pays may be recaptured as a credit that is tracked and used by the
custodian to directly reduce expenses paid by the Fund. In addition,
through arrangements with the Fund's custodian and other banks utilized by
the Fund for cash management purposes, realized credits, if any, generated
from cash balances in the Fund's bank accounts may be used to directly
reduce the Fund's expenses. For the six-month period ended June 30, 2010,
custodian and other bank credits reduced the Fund's expenses by less than
$500. For the six-month period ended June 30, 2010, the Fund did not incur
any brokerage commission recapture credits.
J. INDEMNIFICATIONS -- Under the Trust's organizational documents, its
officers and trustees are indemnified against certain liabilities arising
out of the performance of their duties to the Trust. In addition, in the
normal course of business the Trust enters into contracts that contain a
variety of representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Trust that have not yet occurred. However, the Trust expects the risk of
loss to be remote.
K. USE OF ESTIMATES -- The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts in the
financial statements.
(2) LINE OF CREDIT
The Fund participates in a joint, short-term, revolving, committed loan
agreement of $750 million with USAA Capital Corporation (CAPCO), an affiliate of
the Manager. The purpose of the agreement is to meet temporary or emergency cash
needs, including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at a rate per annum equal to
the rate at which CAPCO obtains funding in the capital markets, with no markup.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 55
<PAGE>
================================================================================
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). The facility fees are allocated among the funds based on their
respective average net assets for the period.
For the six-month period ended June 30, 2010, the Fund paid CAPCO facility fees
of $1,000, which represents 0.9% 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 June 30, 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 December 31,
2010, in accordance with applicable tax law.
Distributions of net investment income are made annually. 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. At December 31, 2009, the Fund had capital loss
carryovers of $11,020,000, for federal income tax purposes, which, if not offset
by subsequent capital gains, will expire in 2017.
It is unlikely that the Trust's Board of Trustees will authorize a distribution
of capital gains realized in the future until the capital loss carryovers have
been used or expire.
The Fund is required to evaluate tax positions taken or expected to be taken in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Income tax and related interest and penalties would be recognized by
the Fund as tax expense in the statement of operations if the tax positions were
deemed to not meet the more-likely-than-not threshold. For the six-month period,
ended June 30, 2010, the Fund did not incur any income tax, interest, or
penalties. As of June 30, 2010, the Manager has reviewed all open tax years and
concluded that there was
================================================================================
56 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
no impact to the Fund's net assets or results of operations. Tax years ended
December 31, 2008, through December 31, 2009, remain subject to examination by
the Internal Revenue Service and state taxing authorities. On an ongoing basis,
the Manager will monitor its tax positions to determine if adjustments to this
conclusion are necessary.
(4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities, excluding
short-term securities, for the six-month period ended June 30, 2010, were
$393,482,000 and $248,382,000, respectively.
As of June 30, 2010, the cost of securities, including short-term securities,
for federal income tax purposes, was approximately the same as that reported in
the financial statements.
Gross unrealized appreciation and depreciation of investments as of June 30,
2010, were $15,929,000 and $29,607,000, respectively, resulting in net
unrealized depreciation of $13,678,000.
For the six-month period ended June 30, 2010 transactions in written
call and put options* were as follows:
PREMIUMS
NUMBER OF RECEIVED
CONTRACTS (000's)
-------------------------
Outstanding at December 31, 2009 15,250 $ 2,536
Options written 71,729 22,514
Options terminated in closing
purchase transactions (42,900) (20,070)
Options expired (33,861) (2,991)
-------------------------
Outstanding at June 30, 2010 10,218 $ 1,989
=========================
*Refer to Note 1C for a discussion of derivative instruments and how they are
accounted for in the Fund's financial statements.
(5) TRANSACTIONS WITH MANAGER
A. MANAGEMENT FEES -- The Manager provides investment management services to
the Fund pursuant to an Advisory Agreement. Under this agreement, the
Manager is responsible for managing the business and
================================================================================
NOTES TO FINANCIAL STATEMENTS | 57
<PAGE>
================================================================================
affairs of the Fund and for directly managing the day-to-day investment of
a portion of the Fund's assets, subject to the authority of and supervision
by the Trust's Board of Trustees. The Manager also is authorized to select
(with approval of the Trust's Board of Trustees and without shareholder
approval) one or more subadvisers to manage the actual day-to-day
investment of a portion of the Fund's assets. The Manager monitors each
subadviser's performance through quantitative and qualitative analysis, and
periodically recommends to the Trust's Board of Trustees as to whether each
subadviser's agreement should be renewed, terminated, or modified. The
Manager also is responsible for allocating assets to the subadvisers. The
allocation for each subadviser can range from 0% to 100% of the Fund's
assets, and the Manager can change the allocations without shareholder
approval. The Fund's management fees are accrued daily and paid monthly at
an annualized rate of 0.60% of the Fund's average net assets for the fiscal
year. For the six-month period ended June 30, 2010, the Fund incurred total
management fees, paid or payable to the Manager, of $1,191,000.
B. SUBADVISORY ARRANGEMENTS -- The Manager has entered into investment
subadvisory agreements with Credit Suisse Asset Management, LLC (Credit
Suisse), Credit Suisse Securities (USA) LLC (CSSU) for its Volaris
Volatility Management Group (Volaris Group), Quantitative Management
Associates LLC (QMA), Deutsche Investment Management Americas, Inc. (DIMA),
and The Boston Company Asset Management, LLC (The Boston Company) under
which each subadviser provides day-to-day discretionary management of
certain of the Fund's assets in accordance with the Fund's investment
objectives, policies, and restrictions, subject to the general supervision
of the Trust's Board of Trustees and the Manager.
The Manager (not the Fund) pays Credit Suisse a subadvisory fee in the
annual amount of 0.15% of the portion of the Fund's average daily net
assets that Credit Suisse manages. For the six-month period ended June 30,
2010, Credit Suisse did not manage any of the Fund's assets and did not
receive any subadvisory fees from the Manager for the Fund.
================================================================================
58 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
The Manager (not the Fund) pays CSSU's Volaris Group a subadvisory fee
based on the total notional amount of the options contracts that CSSU's
Volaris Group manages in the USAA Balanced Strategy Fund, the USAA
Cornerstone Strategy Fund, the USAA First Start Growth Fund, the USAA Total
Return Strategy Fund, and the USAA Global Opportunities Fund in an annual
amount of 0.23% on the first $50 million of the total notional amount;
0.20% on the total notional amount over $50 million and up to $250 million;
0.12% on the total notional amount over $250 million and up to $500
million; 0.10% on the total notional amount over $500 million and up to $2
billion; and 0.08% on the total notional amount over $2 billion. The
notional amount is based on the daily closing price of the index that
underlies the written options strategy for the Fund. For the six-month
period ended June 30, 2010, the Manager incurred subadvisory fees for the
Fund, paid or payable to CSSU's Volaris Group of $234,000.
The Manager (not the Fund) pays QMA a subadvisory fee in the annual amount
of 0.25% of the portion of the Fund's average net assets that QMA manages.
For the six-month period ended June 30, 2010, the Manager incurred
subadvisory fees, paid or payable to QMA, of $93,000.
The Manager (not the Fund) pays DIMA a subadvisory fee in an annual amount
of 0.15% of the portion of the Fund's average net assets that DIMA manages.
For the six-month period ended June 30, 2010, the Manager incurred
subadvisory fees, paid or payable to DIMA, of $197,000.
The Manager (not the Fund) pays The Boston Company a subadvisory fee in the
annual amount of 0.69% of the portion of the Fund's average net assets that
The Boston Company manages. For the six-month period ended June 30, 2010,
The Boston Company did not manage any of the Fund's assets and did not
receive any subadvisory fees from the Manager for the Fund.
C. ADMINISTRATION AND SERVICING FEES -- The Manager provides certain
administration and shareholder servicing functions for the Fund. For such
services, the Manager receives a fee accrued daily and paid
================================================================================
NOTES TO FINANCIAL STATEMENTS | 59
<PAGE>
================================================================================
monthly at an annualized rate of 0.05% of the Fund's average net assets for
the fiscal year. For the six-month period ended June 30, 2010, the Fund
incurred administration and servicing fees, paid or payable to the Manager,
of $99,000.
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 June 30, 2010, the Fund
reimbursed the Manager $5,000 for these compliance and legal services.
These expenses are included in the professional fees on the Fund's
statement of operations.
D. EXPENSE LIMITATION -- The Manager has agreed, through May 1, 2011, to limit
the annual expenses of the Fund to 1.00% of its average annual net assets,
excluding extraordinary expenses and before reductions of any expenses paid
indirectly, and will reimburse the Fund for all expenses in excess of that
amount. This expense limitation arrangement may not be changed or
terminated through May 1, 2011, without approval of the Trust's Board of
Trustees, and may be changed or terminated by the Manager at any time after
that date. For the six-month period ended June 30, 2010, the Fund did not
incur any reimbursable expenses.
E. TRANSFER AGENT'S FEES -- USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), an affiliate of the Manager, provides
transfer agent services to the Fund. The Fund's transfer agent's fees are
accrued daily and paid monthly at an annualized rate of 0.05% of the Fund's
average net assets for the fiscal year. For the six-month period ended
June 30, 2010, the Fund incurred transfer agent's fees, paid or payable to
SAS, of $99,000.
F. UNDERWRITING SERVICES -- The Manager provides exclusive underwriting and
distribution of the Fund's shares on a continuing best-efforts basis. The
Manager receives no commissions or fees for this service.
================================================================================
60 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
(6) TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
The Manager is indirectly wholly owned by United Services Automobile Association
(USAA), a large, diversified financial services institution. At June 30, 2010,
USAA and its affiliates owned 7,500,000 shares (15.7%) of the Fund.
(7) SUBSEQUENT EVENTS
Events or transactions that occur after the balance sheet date, but before the
financial statements are issued are categorized as recognized or non-recognized
for financial statement purposes. The Manager has evaluated subsequent events
through the date the financial statements were issued, and has determined there
were no events that require recognition or disclosure in the Fund's financial
statements. The following event will affect the Fund's future financial
statements.
Effective August 1, 2010, QS Investors, LLC will replace DIMA as one of the
subadvisers of the Fund.
On August 12, 2010, USAA affiliates redeemed 3,653,000 of its shares owned in
the Fund.
================================================================================
NOTES TO FINANCIAL STATEMENTS | 61
<PAGE>
================================================================================
(8) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED YEAR ENDED PERIOD ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
2010 2009 2008***
--------------------------------------------------
Net asset value at beginning of period $ 9.94 $ 8.61 $ 10.00
---------------------------------------------
Income (loss) from investment operations:
Net investment income .06 .09 .07(a)
Net realized and unrealized gain (loss) (.62) 1.52 (1.39)(a),(b)
---------------------------------------------
Total from investment operations (.56) 1.61 (1.32)(a)
---------------------------------------------
Less distributions from:
Net investment income - (.06) (.07)
Realized capital gains - (.22) -
---------------------------------------------
Total distributions - (.28) (.07)
---------------------------------------------
Net asset value at end of period $ 9.38 $ 9.94 $ 8.61
=============================================
Total return (%)* (5.63) 18.76 (13.18)(b)
Net assets at end of period (000) $448,143 $318,074 $73,563
Ratios to average net assets:**
Expenses (%)(c) .80(d) .94 1.00(d)
Expenses, excluding reimbursements (%)(c) .80(d) .94 1.12(d)
Net investment income (%) 1.53(d) 1.63 1.73(d)
Portfolio turnover (%) 66 107 60
* Assumes reinvestment of all net investment income and realized capital gain
distributions, if any, during the period. Includes adjustments in accordance
with U.S. generally accepted accounting principles and could differ from the
Lipper reported return.
** For the six-month period ended June 30, 2010, average net assets were
$401,144,000.
*** Fund commenced operations on July 31, 2008.
(a) Calculated using average shares.
(b) For the period ended December 31, 2008, the Manager reimbursed the Fund
$30,000 for a loss incurred from the sale of a security that exceeded the
amount allowed to be held of that type of security under the Fund's
investment restrictions. The effect of this reimbursement on the Fund's net
realized loss per share and total return was less than $0.01/0.01%.
(c) Reflects total operating expenses of the Fund before reductions of any
expenses paid indirectly. The Fund's expenses paid indirectly decreased the
expense ratios by less than 0.01%.
(d) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
================================================================================
62 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
EXPENSE EXAMPLE
June 30, 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 January 1, 2010, through June
30, 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
================================================================================
EXPENSE EXAMPLE | 63
<PAGE>
================================================================================
use this information to compare the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any direct costs, such as wire fees,
redemption fees, or low balance fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these direct
costs were included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JANUARY 1, 2010 -
JANUARY 1, 2010 JUNE 30, 2010 JUNE 30, 2010
--------------------------------------------------------------
Actual $1,000.00 $ 943.70 $3.86
Hypothetical
(5% return before expenses) 1,000.00 1,020.83 4.01
* Expenses are equal to the Fund's annualized expense ratio of 0.80%, which is
net of any reimbursements and expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 181 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 (5.63)% for the
six-month period of January 1, 2010, through June 30, 2010.
================================================================================
64 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
ADVISORY AGREEMENTS
June 30, 2010 (unaudited)
--------------------------------------------------------------------------------
At a meeting of the Board of Trustees (the Board) held on April 9, 2010, the
Board, including the Trustees who are not "interested persons" of the Trust (the
Independent Trustees), approved the continuance of the Advisory Agreement
between the Trust and the Manager with respect to the Fund and the Subadvisory
Agreements with respect to the Fund.
In advance of the meeting, the Trustees received and considered a variety of
information relating to the Advisory Agreement and Subadvisory Agreements and
the Manager and each Subadviser, and were given the opportunity to ask questions
and request additional information from management. The information provided to
the Board included, among other things: (i) a separate report prepared by an
independent third party, which provided a statistical analysis comparing the
Fund's investment performance, expenses, and fees to comparable investment
companies; (ii) information concerning the services rendered to the Fund, as
well as information regarding the Manager's revenues and costs of providing
services to the Fund and compensation paid to affiliates of the Manager; and
(iii) information about the Manager's and Subadvisers' operations and personnel.
Prior to voting, the Independent Trustees reviewed the proposed continuance of
the Advisory Agreement and Subadvisory Agreements with management and with
experienced independent counsel and received materials from such counsel
discussing the legal standards for their consideration of the proposed
continuation of the Advisory Agreement and Subadvisory Agreements with respect
to the Fund. The Independent Trustees also reviewed the proposed continuation
of the Advisory Agreement and the Subadvisory Agreements with respect to the
Fund in private sessions with their counsel at which no representatives of
management were present.
At each regularly scheduled meeting of the Board and its committees, the Board
receives and reviews, among other things, information concerning
================================================================================
ADVISORY AGREEMENTS | 65
<PAGE>
================================================================================
the Fund's performance and related services provided by the Manager and each
Subadviser. At the meeting at which the renewal of the Advisory Agreement and
Subadvisory Agreements is considered, particular focus is given to information
concerning Fund performance, comparability of fees and total expenses, and
profitability. However, the Board noted that the evaluation process with respect
to the Manager and each Subadvisor is an ongoing one. In this regard, the
Board's and its committees' consideration of the Advisory Agreement and
Subadvisory Agreements included certain information previously received at such
meetings.
ADVISORY AGREEMENT
After full consideration of a variety of factors, the Board, including the
Independent Trustees, voted to approve the Advisory Agreement. In approving the
Advisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee may have attributed different weights to various
factors. Throughout their deliberations, the Independent Trustees were
represented and assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES -- In considering the nature, extent,
and quality of the services provided by the Manager under the Advisory
Agreement, the Board reviewed information provided by the Manager relating to
its operations and personnel. The Board also took into account its familiarity
with the Manager's management through Board meetings, discussions, and reports
during the preceding year. The Board considered the fees paid to the Manager and
the services provided to the Fund by the Manager under the Advisory Agreement,
as well as other services provided by the Manager and its affiliates under other
agreements, and the personnel who provide these services. In addition to the
investment advisory services provided to the Fund, the Manager and its
affiliates provide administrative services, stockholder services, oversight of
Fund accounting, marketing services, assistance in meeting legal and regulatory
requirements, and other services necessary for the operation of the Fund and the
Trust. The Board considered the Manager's management style and the performance
of its duties under the Advisory Agreement.
================================================================================
66 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
The Board considered the level and depth of knowledge of the Manager, including
the professional experience and qualifications of its senior and investment
personnel, as well as current staffing levels. The Board discussed the Manager's
effectiveness in monitoring the performance of each Subadviser and its
timeliness in responding to performance issues. The allocation of the Fund's
brokerage, including the Manager's process for monitoring "best execution," also
was considered. The Manager's role in coordinating the activities of the Fund's
other service providers was also considered. The Board considered the Manager's
financial condition and that it had the financial wherewithal to continue to
provide the same scope and high quality of services under the Advisory
Agreement. In reviewing the Advisory Agreement, the Board focused on the
experience, resources, and strengths of the Manager and its affiliates in
managing investment companies, including the Fund.
The Board also reviewed the compliance and administrative services provided to
the Fund by the Manager and its affiliates, including the Manager's oversight of
the Fund's day-to-day operations and oversight of Fund accounting. The Trustees,
guided also by information obtained from their experiences as trustees of the
Fund and other investment companies managed by the Manager, also focused on the
quality of the Manager's compliance and administrative staff.
EXPENSES AND PERFORMANCE -- In connection with its consideration of the Advisory
Agreement, the Board evaluated the Fund's advisory fees and total expense ratio
as compared to other open-end investment companies deemed to be comparable to
the Fund as determined by the independent third party in its report. The Fund's
expenses were compared to (i) a group of investment companies chosen by the
independent third party to be comparable to the Fund based upon certain factors,
including fund type, comparability of investment objective and classification,
sales load type (in this case, in this case, investment companies with no sales
loads and front-end loads), asset size, and expense components (the "expense
group") and (ii) a larger group of investment companies that includes all
no-load and front-end load retail open-end investment companies in the same
investment classification/objective as the Fund regardless of asset size,
excluding outliers (the "expense universe"). Among other data, the Board
================================================================================
ADVISORY AGREEMENTS | 67
<PAGE>
================================================================================
noted that the Fund's management fee rate - which includes advisory and
administrative services - was below the median of its expense group and its
expense universe. The data indicated that the Fund's total expenses were below
the median of its expense group and its expense universe. The Board took into
account the various services provided to the Fund by the Manager and its
affiliates. The Board also noted the level and method of computing the
management fee.
In considering the Fund's performance, the Board noted that it reviews at its
regularly scheduled meetings information about the Fund's performance results.
The Trustees also reviewed various comparative data provided to them in
connection with their consideration of the renewal of the Advisory Agreement,
including, among other information, a comparison of the Fund's average annual
total return with its Lipper index and with that of other mutual funds deemed to
be in its peer group by the independent third party in its report (the
"performance universe"). The Fund's performance universe consisted of the Fund
and all retail and institutional open-end investment companies with the same
classification/objective as the Fund regardless of asset size or primary channel
of distribution. This comparison indicated that, among other data, the Fund's
performance was lower than the average of its performance universe and its
Lipper index for the one-year period ended December 31, 2009 and was above the
average of its performance universe and its Lipper index for the period from
inception through December 31, 2009. The Board also noted that the Fund's
percentile performance ranking was in the bottom 50% of its performance universe
for the one-year period ended December 31, 2009. The Board took into account
management's discussion of the Fund's performance since its inception date on
July 31, 2009. The Board also took into account the fact that the Fund has a
limited performance history as it only recently commenced operations.
COMPENSATION AND PROFITABILITY -- The Board took into consideration the level
and method of computing the management fee. The information considered by the
Board included operating profit margin information for the Manager's business as
a whole. The Board also received and considered profitability information
related to the management revenues from the Fund. This consideration included a
broad review of the
================================================================================
68 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
methodology used in the allocation of certain costs to the Fund. The Trustees
reviewed the profitability of the Manager's relationship with the Fund before
tax expenses. In considering the profitability data with respect to the Fund,
the Trustees noted that the Manager pays the subadvisory fees. In reviewing the
overall profitability of the management fee to the Manager, the Board also
considered the fact that affiliates provide shareholder servicing and
administrative services to the Fund for which they receive compensation. The
Board also considered the possible direct and indirect benefits to the Manager
from its relationship with the Trust, including that the Manager may derive
reputational and other benefits from its association with the Fund. The Trustees
recognized that the Manager should be entitled to earn a reasonable level of
profits in exchange for the level of services it provides to the Fund and the
entrepreneurial risk that it assumes as Manager.
ECONOMIES OF SCALE -- The Board considered whether there should be changes in
the management fee rate or structure in order to enable the Fund to participate
in any economies of scale. The Board took into account Management's discussion
of the Fund's commentary fee structure. The Board also noted that the Fund's
contractual management fee is below the asset-weighted average of funds at all
asset levels in its peer group as set forth in the report prepared by the
independent third party. The Board took into account management's discussion of
the current advisory fee structure. The Board also noted that as the Fund's
assets increase over time, the Fund may realize other economies of scale if
assets increase proportionally more than some expenses. The Board determined
that the current investment management fee structure was reasonable.
CONCLUSIONS -- The Board reached the following conclusions regarding the Fund's
Advisory Agreement with the Manager, among others: (i) the Manager has
demonstrated that it possesses the capability and resources to perform the
duties required of it under the Advisory Agreement; (ii) the Manager maintains
an appropriate compliance program; (iii) the performance of the Fund is
reasonable in relation to the performance of funds with similar investment
objectives and relative indices; (iv) the Fund's advisory expenses are
reasonable in relation to those of similar funds and to the services to be
provided by the Manager; and (v) the Manager
================================================================================
ADVISORY AGREEMENTS | 69
<PAGE>
================================================================================
and its affiliates' level of profitability from their relationship with the Fund
is reasonable. Based on its conclusions, the Board determined that continuation
of the Advisory Agreement would be in the best interests of the Fund and its
shareholders.
SUBADVISORY AGREEMENTS
In approving each Subadvisory Agreement with respect to the Fund, the Board
considered various factors, among them: (i) the nature, extent, and quality of
services provided to the Fund by the respective Subadviser, including the
personnel providing services; (ii) each Subadviser's compensation and any other
benefits derived from the subadvisory relationship; (iii) comparisons, to the
extent available, of subadvisory fees and performance to comparable investment
companies; and (iv) the terms of each Subadvisory Agreement. The Board's
analysis of these factors is set forth below.
After full consideration of a variety of factors, the Board including the
Independent Trustees, voted to approve each Subadvisory Agreement. In approving
each Subadvisory Agreement, the Trustees did not identify any single factor as
controlling, and each Trustee may have attributed different weights to various
factors. Throughout their deliberations, the Independent Trustees were
represented and assisted by independent counsel.
NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED; INVESTMENT PERSONNEL -- The
Board considered information provided to it regarding the services provided by
each Subadviser. The Board considered each Subadviser's level of knowledge and
investment style. The Board reviewed the experience and credentials of the
investment personnel who would be responsible for managing the investment of
portfolio securities with respect to the Fund and each Subadviser's level of
staffing. The Board noted that the materials provided to it by each Subadviser
indicated that the method of compensating portfolio managers is reasonable and
includes appropriate mechanisms to prevent a manager with underperformance from
taking undue risks. The Board also noted each Subadviser's brokerage practices.
The Board also considered each Subadviser's regulatory and compliance history.
The Board noted that
================================================================================
70 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
the Manager's monitoring processes of the Subadvisers would include: (i) regular
telephonic meetings to discuss, among other matters, investment strategies, and
to review portfolio performance; (ii) monthly portfolio compliance checklists
and quarterly compliance certifications to the Board; and (iii) due diligence
reviews of each Subadviser.
SUBADVISER COMPENSATION -- The Board also took into consideration the financial
condition of each Subadviser. In considering the cost of services to be provided
by each Subadviser and the profitability to each Subadviser of its relationship
with the Fund, the Board noted that the fees under the Subadvisory Agreements
were paid by the Manager. The Board also relied on the ability of the Manager to
negotiate the Subadvisory Agreements and the fees thereunder at arm's length.
The Board also considered information relating to the cost of services to be
provided by each Subadviser, each Subadviser's anticipated profitability with
respect to the Fund, and the potential economies of scale in each Subadviser's
management of the Fund, to the extent available. However, this information was
less significant to the Board's consideration of the Subadvisory Agreements than
the other factors considered for the above reasons.
SUBADVISORY FEES AND FUND PERFORMANCE -- The Board compared the subadvisory fees
for the Fund with the fees each Subadviser charges to comparable clients, as
applicable. The Board considered that the Fund pays a management fee to the
Manager and that, in turn, the Manager pays a subadvisory fee to each
Subadviser. As noted above, the Board considered the Fund's performance during
the one-year period ended December 31, 2009, and since inception through
December 31, 2009, as compared to the Fund's peer group and noted that the Board
reviews at its regularly scheduled meetings information about the Fund's
performance results. The Board noted the Manager's expertise and resources in
monitoring the performance, investment style, and risk-adjusted performance of
each Subadviser. The Board was mindful of the Manager's focus one each
Subadviser's performance and the explanations of management regarding the
performance of the Fund. The Board also noted each Subadviser's long-term
performance record for similar accounts, as applicable.
================================================================================
ADVISORY AGREEMENTS | 71
<PAGE>
================================================================================
CONCLUSIONS -- The Board reached the following conclusions regarding each
Subadvisory Agreement, among others: (i) each Subadviser is qualified to manage
a portion of the Fund's assets in accordance with its investment objectives and
policies; (ii) each Subadviser maintains an appropriate compliance program;
(iii) the performance of the Fund is reasonable in relation to the performance
of funds with similar investment objectives and relative indices; and (iv) the
Fund's advisory expenses are reasonable in relation to those of similar funds
and to the services to be provided by the Manager and each Subadviser. Based on
its conclusions, the Board determined that approval of each Subadvisory
Agreement with respect to the Fund would be in the best interests of the Fund
and its shareholders.
================================================================================
72 | USAA GLOBAL OPPORTUNITIES FUND
<PAGE>
================================================================================
TRUSTEES Christopher W. Claus
Barbara B. Dreeben
Robert L. Mason, Ph.D.
Barbara B. Ostdiek, Ph.D.
Michael F. Reimherr
Richard A. Zucker
--------------------------------------------------------------------------------
ADMINISTRATOR, USAA Investment Management Company
INVESTMENT ADVISER, P.O. Box 659453
UNDERWRITER, AND San Antonio, Texas 78265-9825
DISTRIBUTOR
--------------------------------------------------------------------------------
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
--------------------------------------------------------------------------------
CUSTODIAN AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
--------------------------------------------------------------------------------
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM San Antonio, Texas 78205
--------------------------------------------------------------------------------
MUTUAL FUND Under "Products & Services"
SELF-SERVICE 24/7 click "Investments," then
AT USAA.COM "Mutual Funds"
OR CALL Under "My Accounts" go to
(800) 531-USAA "Investments." View account balances,
(8722) or click "I want to...," and select
the desired action.
--------------------------------------------------------------------------------
Copies of the Manager's proxy voting policies and procedures, approved by the
Trust's Board of Trustees for use in voting proxies on behalf of the Fund, are
available without charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's Web site at HTTP://WWW.SEC.GOV. Information regarding
how the Fund voted proxies relating to portfolio securities during the most
recent 12-month period ended June 30 is available (i) at USAA.COM; and (ii) on
the SEC's Web site at HTTP://WWW.SEC.GOV.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. These Forms N-Q are
available at no charge (i) by calling (800) 531-USAA (8722); (ii) at USAA.COM;
and (iii) on the SEC's Web site at HTTP://WWW.SEC.GOV. These Forms N-Q also may
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) 732-0330.
================================================================================
<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)
=============================================================================
88395-0810 (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 June 30, 2010
By:* CHRISTOPHER P. LAIA
-----------------------------------------------------------
Signature and Title: Christopher P. Laia, Secretary
Date: 08/25/2010
------------------------------
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: 08/25/2010
------------------------------
By:* ROBERTO GALINDO, JR.
-----------------------------------------------------
Signature and Title: Roberto Galindo, Jr., Treasurer
Date: 08/25/2010
------------------------------
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