Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Managers 5
Financial Information:
Distributions to Shareholders 8
Independent Auditors' Report 9
Statement of Assets and Liabilities 10
Portfolio of Investments in Securities 11
Notes to Portfolio of Investments 23
Statement of Operations 24
Statements of Changes in Net Assets 25
Notes to Financial Statements 26
Important Information:
Through our ongoing efforts to reduce expenses and respond to shareholder
requests, your annual and semiannual report mailings are now "streamlined."
One copy of each report will be sent to each address, instead of our
previous practice of sending one report to every registered owner. For many
shareholders and their families, this eliminates duplicate copies, saving
paper and postage costs to the Fund.
If you are the primary shareholder on at least one account, prefer not to
participate in streamlining, and would like to continue receiving one
report per registered account owner, you may request this in writing to:
USAA Investment Management Company
Attn: Report Mail
9800 Fredericksburg Road
San Antonio, TX 78284-8916
or phone a Mutual Fund Representative at 1-800-531-8448 during business
hours.
This report is for the information of the shareholders and others who have
received a copy of the currently effective prospectus of the USAA World
Growth Fund, managed by USAA Investment Management Company (IMCO). It may
be used as sales literature only when preceded or accompanied by a current
prospectus which gives further details about the fund.
USAA with the eagle is registered in the U.S. Patent & Trademark Office.
c1995, USAA. All rights reserved.
USAA Family of Funds Performance Summary
If you own only one or two USAA funds, you may not be aware of the
performance of our other funds. This summary is a snapshot of the
performance of all 29 funds by investment objective as of June 30, 1995. If
you're interested in more information, please call us at 1-800-531-1087 for
a prospectus. Please read the prospectus carefully before investing.
<TABLE>
<CAPTION>
Average Annual Total Return**
Investment Inception Since 7-Day 30-Day***
Objective Date 1 yr 5 yrs 10 yrs Inception Simple SEC
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation % % % % % %
Aggressive Growth 10/19/81 39.72 11.12 9.78 - - -
Emerging Markets 11/7/94 - - - (0.50) - -
Gold 8/15/84 6.88 4.66 2.86 - - -
Growth 4/5/71 26.34 12.37 11.75 - - -
Growth & Income 6/1/93 21.19 - - 10.49 - -
International 7/11/88 4.23 7.89 - 9.33 - -
World Growth 10/1/92 7.88 - - 11.71 - -
Diversified/Balanced
Balanced Portfolio 1/11/89 11.09 8.59 - 8.93 - 4.06
Cornerstone 8/15/84 9.25 9.24 12.00 - - -
Income - Taxable
GNMA 2/1/91 11.00 - - 8.08 - 6.79
Income 3/4/74 15.07 10.00 10.04 - - 6.87
Income Stock 5/4/87 19.52 12.26 - 11.44 - -
Short-Term Bond 6/1/93 8.40 - - 4.83 - 6.77
Income - Tax Exempt
Long-Term 3/19/82 7.28 7.66 8.60 - - 5.79
Intermediate-Term 3/19/82 7.60 7.71 7.82 - - 5.22
Short-Term 3/19/82 5.23 5.52 5.76 - - 4.36
California Bond* 8/1/89 8.96 7.66 - 7.23 - 5.79
Florida Tax-Free Income* 10/1/93 7.82 - - 0.09 - 5.71
New York Bond* 10/15/90 7.36 - - 8.65 - 5.60
Texas Tax-Free Income* 8/1/94 - - - 8.40 - 5.63
Virginia Bond* 10/15/90 8.79 - - 8.31 - 5.78
Money Market
Money Market 2/2/81 5.33 4.76 6.06 - 5.75 -
Tax Exempt Money Market 2/6/84 3.34 3.57 4.45 - 3.82 -
Treasury Money Market Trust 2/1/91 5.06 - - 4.01 5.69 -
California Money Market* 8/1/89 3.31 3.36 - 3.71 3.74 -
Florida Tax-Free Money
Market* 10/1/93 3.23 - - 2.72 3.74 -
New York Money Market* 10/15/90 3.15 - - 2.98 3.69 -
Texas Tax-Free Money
Market* 8/1/94 - - - 3.06 3.72 -
Virginia Money Market* 10/15/90 3.25 - - 3.18 3.61 -
-
* Shares of the state funds are authorized for sale only to residents of
the states listed above.
** Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No adjustment
has been made for taxes payable by shareholders on their reinvested
dividends and capital gain distributions. The performance data quoted
represents past performance and is not an indication of future results.
Investment return and principal value of an investment will fluctuate, and
an investor's shares, when redeemed, may be worth more or less than their
original cost.
An investment in any money market fund is neither insured nor guaranteed by
the U.S. government and there is no assurance that any of the funds will
maintain a stable net asset value of $1 per share.
Some tax-exempt income may be subject to state or local taxes or the
federal alternative minimum tax.
Foreign investing is subject to additional risks, which are discussed in
the funds' prospectuses.
***Calculated as prescribed by the Securities and Exchange Commission.
</TABLE>
Message from the President
[Photo of Michael J. C. Roth, President and Vice chairman of the Board,
appears here.]
Most of these messages look back at events. This one looks forward.
On January 29, 1995, my wife and I became grandparents. Karl Joseph Marbach
was born to Alexandra, my wife's daughter, and her husband Keith Marbach.
When my wife learned of the name Alexandra and Keith had chosen,
she smiled. She noted that my middle names are Joseph Carl, and she said,
"I think this kid's college education is secure."
"Secure" may be an exaggeration, but I did decide to practice one thing I
have preached for many years. I told Alexandra to get the little fellow
a social security number, and as soon as she furnished that to me,
(well, almost as soon), I opened an InveStart (registered trademark)
account for Karl Joseph. This account, in the USAA Income Stock Fund,
was opened for $100, and will have $50 per month added to it by an
electronic funds transfer from my checking account.
InveStart is a program that we have offered for many years. For now
it is available for use with the Income Stock Fund, Cornerstone Fund
and Money Market Fund.(1) That lineup will soon expand. We originally
intended it for young USAA members as a good way to start investing.
We found, however, that many grandparents were using it as I just did.
The effect for Karl Joseph can be quite powerful. It is well documented
that the stock market, as measured by the S&P 500 stock index has produced
a total return of 10% for the last 18 years ended May 31, 1995
(Source: Lipper Analytical Services, Inc.).
The chart on the next page shows the growth of an account with a $100
initial investment and $50 subsequent monthly investments for 18 years at
an 8% return - a hypothetical figure based upon and more conservative than
historical results. It is for illustrative purposes only and should not be
considered an indication of fund performance by any of the USAA Family
of Funds.
[A graph is shown here which shows the growth of an account with a $100
initial investment and $50 subsequent monthly investments for 18 years at an
8% return - a hypothetical figure based upon and more conservative than
historical results. The horizontal axis shows the years, and the vertical
axis shows the dollar amount. The beginning value is $100 and the ending
is $24,209.]
" . . . I did decide to practice one thing
I have preached for many years."
A systematic plan like this doesn't assure a profit or protect
against loss in declining markets. Since such a plan involves continuous
investment in securities regardless of fluctuating price levels of such
securities, you should consider your financial ability to continue
purchases through periods of low and high price levels.
In 18 years, college will cost more than it does now. This sum today would
go a long way toward an education in an in-state public university. In
18 years it will not buy as much education as it does today, but it will
be quite meaningful. If we add to the cash flow on birthdays, or if other
relatives kick in, it will be even more meaningful. And it is relatively
painless.
I promise to keep you posted on the progress of Karl Joseph's education
fund. This is not theoretical; it is real.
Sincerely,
Michael Joseph Carl Roth
President and
Vice Chairman of the Board
(1)An investment in a money market fund is neither insured nor guaranteed
by the U.S. government, and there can be no assurance that the fund can
maintain a stable net asset value of $1 per share.
Investment Review
World Growth Fund
OBJECTIVE: Capital appreciation.
TYPES OF INVESTMENTS: At least 65 percent of the Fund's assets are invested
in common stocks and other equity securities of both foreign and domestic
issuers, including securities which are convertible into common stocks. The
remainder of the Fund's assets are invested in U.S. government guaranteed
securities which mature in less than one year.
5/31/95
Net Assets $200.7 Million
Net Asset Value Per Share $12.96
Average Annual Total Return as of 5/31/95
1 Year 4.26%
Since inception on October 1, 1992 11.27%
[A graph is shown here which is a comparison of the change in value of a
$10,000 investment, for the period of 10/1/92 to 5/31/95, with dividends
and capital gains reinvested. The ending value of each item graphed is as
follows: USAA World Growth Fund - $13,317 and the Morgan Stanley Capital
Index - World - $14,211.]
The graph illustrates how the USAA World Growth Fund compares to its
benchmark, the Morgan Stanley Capital Index (MSCI)-World, an unmanaged
index which reflects the movements of world stock markets by representing a
broad selection of domestically listed companies within each market. The
chart compares a $10,000 hypothetical investment in the USAA World Growth
Fund to the Index.
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No adjustment
has been made for taxes payable by shareholders on their reinvested income
dividends and capital gain distributions. The performance data quoted
represents past performance and is not an indication of future results.
Investment return and principal value of an investment will fluctuate,
and an investor's shares, when redeemed, may be worth more or less than
their original cost.
Message from the Managers
[Photo of David Peebles (Foreign Stocks) and David Ullom (Domestic Stocks)
appears here]
Fund Performance
While past performance is no guarantee of future results, the Fund's total
return was 4.26% for the one-year period ending May 31, 1995. The Fund
compared favorably to the Lipper Global Fund Index average of 3.44% for the
same time period, according to Lipper Analytical Services.(1)
Europe
Europe provided the most attractive returns over the last six months due to
a combination of local economies and European currencies. We slightly
increased our weighting in Europe, and have made no significant changes in
the country weighting in Europe. We have made our investments based on the
merits of the companies rather than selecting stocks based on countries.
This is a defensive approach to reduce our exposure to the possibility of
poor economic recovery within certain countries or industries.
Japan
A number of factors have led us to continue our reduction of weightings in
Japan: a lack of economic recovery, Japan's bad debt within their banking
system, a lack of competitiveness within certain Japanese industries and
trade disputes arising from closed markets have led us to lower the
weighting from 17.6% of the portfolio at November 30, 1994, to 10.8%. When
we see signs of the long-awaited recovery, we will view this market more
positively.
Emerging Markets
Concerns over the Mexican peso devaluation affected all emerging markets,
both inside and outside Latin America. While these markets have shown some
recovery in the last few months, the mature markets provided better returns.
However, we will continue to maintain an overweighted position as we feel
these economies will continue to grow at a rapid rate.
United States
Over the course of the last six months, we increased the Fund's weighting
in U.S. equities from 24.7% to 33.4% at the end of the current fiscal year.
The increased weighting in U.S. equities resulted from additions to our
holdings of stocks in such categories as household products, foods,
pollution control, energy, banks, telephones, computer software, and autos.
We continue to believe that the U.S. economy will experience reasonable
economic growth, and we will emphasize investments in areas such as
intermediate goods & services (commodity chemicals and metals) and consumer
cyclicals (retailing and autos).
Outlook
While we think economic growth will continue to be modest in many markets,
low inflation and low interest rates coupled with continued gains in
corporate profits could provide attractive returns.
(1)Lipper Analytical Services is an independent organization that monitors
the performance of mutual funds.
See page 11 for a complete listing of the Portfolio of Investments in
Securities.
Foreign investing is subject to additional risks, which are discussed in
the Fund's prospectus. Since return on any investment is generally
commensurate with risk, investors should be aware of the potential
volatility associated with foreign markets.
[A pie chart is shown here depicting the Portfolio Mix as of May 31, 1995
of the USAA World Growth Fund to be: Japan 10.8%, United Kingdom - 5.1%,
France - 3.8%, Netherlands - 4.2%, Sweden - 2.9%, Denmark - 2.4%,
Canada - 2.0%, Hong Kong - 2.4%, United States - 39.9% and Other - 27.2%]
Top 10 Equity Holdings
(% of Net Assets)
Microsoft Corp. 1.1
Novo Nordisk A/S "B" 1.0
Boeing Co. 1.0
Philip Morris Cos Inc. .9
Heineken N.V. .9
Rockwell International .9
Tele Danmark A/S Ads .9
Corporacion Mapfre .9
Ito-Yokado Co., Ltd. .9
British Sky Broadcasting .9
Top 10 Industries
(% of Net Assets)
Retail 6.2
Banking 5.7
Oil 5.3
Telephones 5.1
Automobiles & Auto Parts 4.6
Electronics 4.1
Chemicals 3.5
Drugs 3.2
Insurance 3.2
Healthcare 3.0
Distributions to Shareholders
USAA World Growth Fund completed its fiscal year on May 31, 1995. As
required by Federal Law (Internal Revenue Code of 1986, as amended, and the
Regulations thereunder), the following sets forth per share data concerning
the portions of the dividend distributions which represent domestic
dividend income qualifying for the dividends received deduction, foreign
investment income, and long-term capital gains for the year ended
May 31, 1995.
The per share data on this schedule reflects distributions related to
earnings for the fiscal year ended May 31, 1995, including any
distributions subsequent to year end which relate to those earnings.
Therefore, the per share data on this table may not agree with other
disclosures concerning distributions which occurred during the fiscal year.
The World Growth Fund has made the election under Section 853 of the Code
to pass through to its shareholders the right to take a credit or deduction
for foreign taxes paid by the Fund.
Investment Income - Domestic:
Dividends - Qualifying $ .0230
Investment Income - Foreign:
Gross Income .0448
Foreign Tax Paid .0178
-----
Net Foreign .0270
Capital Gain Income:
Long-term .0600
-----
TOTAL DISTRIBUTIONS $ .1100
=====
Independent Auditors' Report
The Shareholders and Board of Trustees
USAA Investment Trust:
We have audited the accompanying statement of assets and liabilities and
portfolio of investments in securities of the World Growth Fund of USAA
Investment Trust as of May 31, 1995, the related statement of operations
for the year ended May 31, 1995, the statements of changes in net assets
for the year ended May 31, 1995, and the eight-month period ended
May 31, 1994, and the financial highlights information presented in
note 8 to the financial statements for each of the periods in the
three-year period ended May 31, 1995. These financial statements and
the financial highlights information are the responsibility of the
Trust's management. Our responsibility is to express an opinion on
these financial statements and the financial highlights information
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights information are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of May 31, 1995, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
information referred to above present fairly, in all material respects,
the financial position of the World Growth Fund of USAA Investment
Trust as of May 31, 1995, the results of its operations for the year
ended May 31, 1995, the changes in its net assets for the year
ended May 31, 1995, and the eight-month period ended May 31, 1994,
and the financial highlights information for each of the periods in
the three-year period ended May 31, 1995, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
San Antonio, Texas
July 7, 1995
World Growth Fund
Statement of Assets and Liabilities
(In Thousands)
May 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments in securities, at market value (identified cost of
$185,000) $ 202,247
Cash 63
Cash denominated in foreign currencies (identified cost of $105) 105
Receivables:
Capital shares sold 318
Dividends and interest 511
Securities sold 1,511
Foreign currency contracts held, at value 1,968
-------
Total assets 206,723
-------
Liabilities
Securities purchased 3,080
Foreign currency contracts held, at value 1,982
Capital shares redeemed 653
USAA Investment Management Company 126
USAA Transfer Agency Company 53
Accounts payable and accrued expenses 84
-------
Total liabilities 5,978
-------
Net assets applicable to capital shares outstanding $ 200,745
=======
Represented by:
Paid-in capital $ 184,850
Accumulated undistributed net investment income 573
Accumulated net realized loss on investments (1,934)
Net unrealized appreciation of investments 17,247
Net unrealized appreciation on foreign currency translations 9
-------
Net assets applicable to capital shares outstanding $ 200,745
=======
Capital shares outstanding, unlimited number of shares authorized,
no par value 15,486
=======
Net asset value, redemption price, and offering price per share
$ 12.96
=======
See accompanying notes to financial statements.
</TABLE>
World Growth Fund
Portfolio of Investments in Securities
May 31, 1995
<TABLE>
<CAPTION>
Foreign Securities (60.8%)
Foreign Common Stocks (58.6%)
Market
Number Value
of Shares Security (000)
<S> <C> <C>
Argentina (1.1%)
57,837 Banco Frances Del Rio de la Plata S.A. $ 382
125,000 Compania Interamericana de Automobiles S.A. * 650
35,000 IRSA Inversiones y Representaciones S.A. GDS * 836
21,000 YPF Sociedad Anonima S.A. ADS "D" 425
--------
2,293
--------
Australia (1.0%)
541,600 CSL Ltd. 1,167
39,000 TABCORP Holdings Ltd. ADS * 848(a)
--------
2,015
--------
Austria (0.8%)
14,800 VA Technologie AG 1,701
--------
Belgium (0.8%)
6,000 Colruyt S.A. 1,610
--------
Brazil (0.7%)
26,000 Rhodia-Ster S.A. GDS * 396
95,000 Usinas Siderurgicas de Minas Gerais S.A.-USIMINAS ADS 1,069(a)
--------
1,465
--------
Canada (2.0%)
75,000 Alliance Forest Products, Inc. * 1,424
38,400 Canadian Occidental Petroleum Ltd. 1,213
49,000 Suncor, Inc. 1,395
--------
4,032
--------
Chile (0.9%)
10,200 Compania de Telefonos de Chile S.A. 903
11,800 Madeco S.A. ADS 342
26,600 Maderas y Sinteticos S.A. ADS 492
--------
1,737
--------
Colombia (0.4%)
122,000 Banco de Colombia GDS 860
--------
Denmark (2.4%)
19,000 Novo Nordisk A/S "B" 2,018
64,000 Tele Danmark A/S ADS 1,824
20,000 Unidanmark A/S 971
--------
4,813
--------
France (3.8%)
54,200 Coflexip ADS 1,558
4,400 Credit Foncier de France 566
40,000 Elf Aquitaine ADS 1,570
20,000 Eramet Group * 1,419
8,500 Essilor International 1,501
6,425 Peugeot Citroen S.A. * 970
1,150 Ugine S.A. 80
--------
7,664
--------
Germany (1.9%)
6,000 BASF AG 1,284
2,600 Deutsche Bank AG 1,273
3,225 Veba AG 1,226
--------
3,783
--------
Hong Kong (2.4%)
451,600 Hong Kong Telecommunications Ltd. 954
175,000 Hutchison Whampoa Ltd. 885
4,000,000 Regal Hotels International Holdings 838
202,000 Shun Tak Holdings Ltd. 136
2,950,000 Singamas Container Holdings Ltd. 705
838,000 Varitronix International Ltd. 1,387
--------
4,905
--------
India (1.3%)
31,000 Hindalco Industries Ltd. GDR 919
35,000 Indian Rayon & Industries Ltd. GDR 564
56,000 Larsen & Toubro Ltd. GDR * 1,106
--------
2,589
--------
Indonesia (1.2%)
240,000 PT Astra International, Inc. 431
95,000 PT HM Sampoerna 681
7,000 PT Indonesian Satellite ADS 276
255,000 PT Jaya Real Property 733
198,400 PT Sinar Mas Agro Resources and Technology Corp. 223
--------
2,344
--------
Italy (1.2%)
135,000 Arnoldo Mondadori Editore 905
650,000 STET 1,489
--------
2,394
--------
Japan (10.8%)
58,000 77 Bank Ltd. 631
45,000 Bridgestone Corp. 659
82,000 Canon, Inc. 1,279
54,000 Daibiru Corp. 638
70,000 Higo Bank 683
37,000 Hoya Corp. 1,054
33,000 Ito-Yokado Co., Ltd. 1,747
33,000 Kissei Pharmaceutical Co., Ltd. 1,057
18,000 Kyocera Corp. 1,368
67,000 Laox Co., Ltd. 1,013
19,000 Mabuchi Motor Co. 1,237
164,000 Minebea Co., Ltd. 1,066
165,000 Mitsubishi Heavy Industries, Ltd. 1,133
166,000 Mitsubishi Paper Mills, Ltd. 985
68,000 Nomura Securities Co., Ltd. 1,221
42,000 Sanwa Bank Ltd. 898
29,000 Shimamura Co., Ltd. 1,021
63,000 Takashimaya Co., Ltd. 856
14,000 Tochigi Fuji Industrial Co., Ltd. 126
39,000 Tostem Corp. 1,318
33,000 Toyo Communication 725
32,000 Toyo Seikan Kaisha, Ltd. 1,059
--------
21,774
--------
Korea (0.9%)
53,000 Korea Electric Power Corp. ADS 1,186
8,900 Samsung Electronics Co., Ltd. GDR * 469
2,780 Samsung Electronics Co., Ltd. GDR (New) * 132
--------
1,787
--------
Malaysia (1.7%)
145,000 Aokam Perdana BHD 391
200,000 Malaysian Assurance Alliance BHD 710
183,000 Tanjong plc 676
320,000 Technology Resources Industries BHD * 1,045
65,000 Telekom Malaysia BHD 499
--------
3,321
--------
Mexico (1.8%)
37,200 Bufete Industrial, S.A. de C.V. ADS 367
41,700 Desc, Soceidad de Fomento Industrial, S.A. de C.V. ADS* 526
61,400 Grupo Simec, S.A. de C.V. ADS * 591
70,000 Grupo Televisa, S.A. de C.V. ADS 1,138
40,300 Panamerican Beverages, Inc. "A" 1,098
--------
3,720
--------
Netherlands (4.2%)
10,500 DSM N.V. 893
20,000 EVC International N.V. * 905
13,125 Heineken N.V. 1,867
28,100 Internationale Nederlanden Groep N.V. 1,522
28,100 Internationale Nederlanden Groep N.V. Coupons * 38
39,300 Royal PTT Nederland N.V. 1,421
14,400 Verenigd Bezit VNU 1,711
--------
8,357
--------
Philippines (1.0%)
3,020,000 Filinvest Land, Inc. * 1,018
1,125,000 Petron Corp. GDS 927
-------
1,945
-------
Portugal (0.1%)
3,000 Companhia Portuguesa Radio Marconi, S.A. (Bearer) * 125
700 Companhia Portuguesa Radio Marconi, S.A. (Registered) * 29
-------
154
-------
Singapore (1.6%)
95,000 City Developments Ltd. 634
254,000 DBS Land Ltd. 850
99,000 Keppel Corp. Ltd. 902
120,000 Overseas Union Bank Ltd. 767
-------
3,153
-------
South Africa (1.3%)
892,500 Iscor Ltd. S.A. 1,067
76,200 Murray and Roberts Holdings Ltd. 445
22,000 Nedcor Ltd. GDR Units * 1,073
-------
2,585
-------
Spain (1.8%)
38,300 Corporacion Mapfre 1,811
12,500 Repsol S.A. 408
33,000 Telefonica de Espana, S.A. ADR 1,320
-------
3,539
-------
Sweden (2.9%)
66,000 Arjo AB 675
7,000 Asea AB 594
47,425 Astra AB "B" Free 1,361
35,000 Autoliv AB 1,705
85,000 Volvo AB 1,495
-------
5,830
-------
Switzerland (1.3%)
1,175 BBC Brown, Boveri & Co. Ltd. "A" 1,199
1,500 Ciba Geigy AG 1,065
560 Sulzer AG P.C. 360
-------
2,624
-------
Taiwan (0.6%)
28,400 China Steel Corp. ADS 604(a)
25,000 China Steel Corp. GDS 531
-------
1,135
-------
Thailand (1.1%)
86,600 Finance One Public Co. 579
32,400 Pranda Jewelry Co. 86
100,000 Sri Thai Superware Co. Ltd. 774
77,000 Thai Farmers Bank Public Co., Ltd. 730
-------
2,169
-------
United Kingdom (5.1%)
150,000 Argyll Group plc 796
68,000 British Sky Broadcasting plc, ADR * 1,734
179,081 Cadbury Schweppes plc 1,350
60,000 National Power plc, ADS 187
225,000 Northern Ireland Electricity plc 1,254
137,000 Refuge Group plc 747
380,000 Tomkins plc 1,469
145,000 Welsh Water plc 1,478
633,000 WPP Group plc 1,247
-------
10,262
-------
Other Holdings (0.5%)
1,491,000 Central European Growth Fund plc 982
297,000 Central European Growth Fund plc Warrants * 38
-------
1,020
-------
Total foreign common stocks (cost: $109,665) 117,580
-------
Foreign Preferred Stocks (1.4%)
Australia (0.7%)
697,500 Village Roadshow Ltd. 1,478
-------
Brazil (0.2%)
41,241,000 Bradesco PN 354
-------
Finland (0.5%)
20,000 Nokia Corp. ADS 930
-------
Total foreign preferred stocks (cost: $2,112) 2,762
-------
Foreign Bonds (0.8%)
Principal
Amount
(000)
Taiwan
$ 600 U-Ming Marine Transport Corp.,
Convertible Notes, 1.50%, 2/07/01 642
930 Yangming Marine Transport Corp., Convertible Notes, 2.00%,
10/06/01 993
-------
Total foreign bonds (cost: $1,579) 1,635
-------
Total foreign securities (cost: $113,356) 121,977
-------
Domestic Stocks (33.4%)
Aerospace/Defense (2.1%)
10,000 B.F. Goodrich Co. 496
33,000 Boeing Co. 1,943
40,000 Rockwell International Corp. 1,825
-------
4,264
-------
Aluminum (0.5%)
20,000 Aluminum Co. of America 930
-------
Automobiles (1.3%)
26,000 Chrysler Corp. 1,134
50,000 Ford Motor Co. 1,463
-------
2,597
-------
Bank Holding Companies - Money Center (1.1%)
16,800 Bankers Trust New York Corp. 1,054
20,000 Citicorp 1,070
-------
2,124
-------
Biotechnology (0.7%)
20,000 Amgen, Inc. * 1,450
-------
Brokerage Firms (0.5%)
21,000 Dean Witter, Discover & Co. 1,000
-------
Chemicals (1.2%)
20,000 Dow Chemical Co. 1,467
35,000 Union Carbide Corp. 1,024
-------
2,491
-------
Chemicals - Specialty (0.5%)
30,000 Morton International, Inc. 953
-------
Communication - Equipment Manufacturers (0.3%)
26,000 QualComm, Inc. * 666
-------
Computer Software & Service (2.8%)
23,000 First Financial Management Corp. 1,633
25,000 Microsoft Corp. * 2,117
42,000 Novell, Inc. * 811
29,000 Oracle Systems Corp. * 1,008
-------
5,569
-------
Containers - Metals & Glass (0.7%)
43,000 Ball Corp. 1,430
-------
Drugs (0.4%)
19,000 Merck & Co., Inc. 895
Electronics - Instrumentation (0.4%)
24,000 Fisher Scientific International, Inc. 783
-------
Electronics - Semi-Conductors (2.0%)
13,000 Intel Corp. 1,459
25,000 Motorola, Inc. 1,497
44,000 National Semiconductor Corp. * 1,100
-------
4,056
-------
Entertainment (0.7%)
34,000 Time Warner, Inc. 1,347
-------
Foods (0.4%)
31,000 Dean Foods Co. 868
-------
Healthcare - Diversified (0.8%)
25,000 Bristol-Myers Squibb Co. 1,659
-------
Healthcare - Miscellaneous (1.3%)
22,000 Cerner Corp. * 1,254
34,000 United HealthCare Corp. 1,266
-------
2,520
-------
Household Products (0.5%)
12,800 Procter & Gamble Co. 920
-------
Insurance - Property/Casualty (0.7%)
13,000 American International Group, Inc. 1,479
-------
Leisure Time (0.3%)
40,000 Callaway Golf Co. 575
-------
Machinery - Diversified (1.3%)
54,000 BW/IP, Inc. 972
20,000 Deere & Co. 1,730
-------
2,702
-------
Medical Products & Supplies (1.4%)
38,000 C.R. Bard, Inc. 1,121
37,000 St. Jude Medical, Inc. 1,674
-------
2,795
-------
Office Equipment & Supplies (0.6%)
11,500 Xerox Corp. 1,304
-------
Oil - Domestic (0.4%)
28,000 Unocal Corp. 830
-------
Oil - Exploration & Production (0.5%)
36,600 Apache Corp. 1,061
-------
Oil & Gas Drilling (0.6%)
39,000 Sonat Offshore Drilling, Inc. 1,112
-------
Oil Well Equipment & Service (0.6%)
30,000 Halliburton Co. 1,170
-------
Paper & Forest Products (1.2%)
76,000 Fort Howard Corp. * 1,093
32,000 Weyerhaeuser Co. 1,404
-------
2,497
-------
Pollution Control (1.2%)
42,000 Browning-Ferris Industries, Inc. 1,496
35,000 WMX Technologies, Inc. 954
-------
2,450
-------
Real Estate Investment Trusts (0.4%)
9,800 Equity Residential Properties Trust 281
25,000 Liberty Property Trust 484
-------
765
-------
Restaurants (0.3%)
30,000 Brinker International, Inc. * 506
-------
Retail Stores - General Merchandising (0.8%)
56,250 Dollar General Corp. 1,596
-------
Retail Stores - Specialty (1.9%)
30,000 Bed, Bath, & Beyond, Inc. * 698
50,200 Borders, Inc. * 734
60,000 OfficeMax, Inc. * 1,485
60,000 Phillips-Van Heusen Corp. 915
-------
3,832
-------
Telephones (1.1%)
45,000 COMSAT Corp. 878
37,000 Sprint Corp. 1,239
-------
2,117
-------
Tobacco (1.5%)
26,000 Philip Morris Companies, Inc. 1,895
38,000 RJR Nabisco Holdings Corp. 1,083
-------
2,978
-------
Transportation - Miscellaneous (0.4%)
35,000 American President Companies, Ltd. 849
------
Total domestic stocks (cost: $58,514) 67,140
======
U.S. Government & Agency Issues (6.5%)
Principal
Amount Coupon
(000) Rate Maturity
Discount Note
$13,130 Federal Home Loan Mortgage Corp.
(cost: $13,130) 6.10% 6/01/95 13,130
------
Total investments (cost: $185,000) $202,247
========
- ---------------------
* Non-income producing.
</TABLE>
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government & Agency Issues 6.5%
Retail 6.2
Banking 5.7
Oil 5.3
Telephones 5.1
Automobiles & Auto Parts 4.6
Electronics 4.1
Chemicals 3.5
Drugs 3.2
Insurance 3.2
Healthcare 3.0
Computer Software & Service 2.8
Paper & Forest Products 2.6
Aerospace/Defense 2.1
Beverages 2.1
Medical Products & Supplies 2.1
Electrical Equipment 2.0
Real Estate 2.0
Steel 2.0
Electric Power 1.9
Machinery Diversified 1.9
Engineering & Construction 1.8
Tobacco 1.8
Transportation 1.8
Broadcasters 1.4
Brokerage Firms 1.4
Entertainment 1.4
Conglomerates 1.3
Office Equipment & Supplies 1.3
Publishing 1.3
Containers Metals & Glass 1.2
Pollution Control 1.2
Manufacturing Diversified Industries 1.0
Other 11.9
-----
100.7%
=====
World Growth Fund
Notes to Portfolio of Investments
May 31, 1995
General Notes
Market values of securities are determined by procedures and practices
discussed in note 1 to the financial statements.
The cost of securities for federal income tax purposes is approximately the
same as that reported in the financial statements.
The percentages shown represent the percentage of the investments to net
assets.
Specific Notes
(a) Securities which are exempt from registration by Rule 144A under the
Securities Act of 1933 and when purchased were determined to be liquid.
Any resale of these securities will occur in an exempt transaction in
the United States to a qualified institutional buyer.
See accompanying notes to financial statements.
World Growth Fund
Statement of Operations
(In Thousands)
Year ended May 31, 1995
Net investment income:
Income (net of foreign taxes withheld of $278):
Dividends $ 2,768
Interest 669
--------
Total income 3,437
--------
Expenses:
Management fees 1,311
Transfer agent's fees 459
Custodian's fees 233
Postage 69
Shareholder reporting fees 36
Trustees' fees 3
Registration fees 75
Audit fees 25
Legal fees 5
Other 15
---------
Total expenses 2,231
---------
Net investment income 1,206
---------
Net realized and unrealized gain on investments and foreign currency:
Net realized loss on:
Investments (1,152)
Foreign currency transactions (784)
Change in net unrealized appreciation/depreciation on:
Investments 7,542
Translation of assets and liabilities in foreign currencies 256
---------
Net realized and unrealized gain 5,862
---------
Increase in net assets resulting from operations $ 7,068
=========
See accompanying notes to financial statements.
World Growth Fund
Statements of Changes in Net Assets
(In Thousands)
Year ended May 31, 1995 and Eight-month period ended May 31, 1994
1995 1994
From operations:
Net investment income $ 1,206 $ 305
Net realized gain (loss) on investments (1,152) 2,711
Net realized loss on foreign currency transactions (784) (306)
Change in net unrealized appreciation/depreciation on:
Investments 7,542 3,226
Foreign currency translations 256 3
--------- --------
Increase in net assets resulting from operations 7,068 5,939
--------- --------
Distributions to shareholders from:
Net investment income -- (75)
--------- --------
Net realized gains (3,395) (319)
--------- -------
From capital share transactions:
Shares sold 107,156 98,023
Shares issued for dividends reinvested 3,361 389
Shares redeemed (56,812) (29,408)
--------- -------
Increase in net assets from capital share
transactions 53,705 69,004
--------- -------
Net increase in net assets 57,378 74,549
Net assets:
Beginning of period 143,367 68,818
--------- -------
End of period $ 200,745 $ 143,367
========= ========
Undistributed net investment income included in net assets:
Beginning of period $ 151 $ 227
========= ========
End of period $ 573 $ 151
========= ========
Change in shares outstanding:
Shares sold 8,524 7,730
Shares issued for dividends reinvested 268 32
Shares redeemed (4,584) (2,318)
--------- --------
Increase in shares outstanding 4,208 5,444
========= ========
See accompanying notes to financial statements.
World Growth Fund
Notes to Financial Statements
(In Thousands)
May 31, 1995
(1) Summary of Significant Accounting Policies
USAA INVESTMENT TRUST (the Trust), registered under the Investment Company
Act of 1940, is a diversified, open-end management investment company
organized as a Massachusetts business trust consisting of eight separate
funds. The information presented in this annual report pertains only to
the World Growth Fund (the Fund).
On November 8, 1993, the Board of Trustees of the Trust voted to change the
Fund's fiscal year end from September 30 to May 31. The financial information
for the eight-month period ended May 31, 1994 reflects this change.
A. Security valuation - The value of each security is determined (as of the
close of trading on the New York Stock Exchange on each business day the
Exchange is open) as set forth below:
1. Portfolio securities, except as otherwise noted, traded primarily on a
domestic securities exchange are valued at the last sales price on that
exchange. Portfolio securities traded primarily on foreign securities
exchanges are generally valued at the closing values of such securities on
the exchange where primarily traded. If no sale is reported, the latest bid
price is generally used depending upon local custom or regulation.
2. Over-the-counter securities are priced at the last sales price or, if
not available, at the average of the bid and asked prices.
3. Securities purchased with maturities of 60 days or less are stated at
amortized cost which approximates market value.
4. Securities which cannot be valued by the methods set forth above, and
all other assets, are valued in good faith at fair value, using methods
determined by the Manager under the general supervision of the Board of
Trustees.
B. 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 or excise tax provision is required.
C. Investments in securities - As is common in the industry, security
transactions are accounted for on the date the securities are purchased or
sold (trade date). Gain or loss from sales of investment securities is
computed on the identified cost basis. Dividend income, less foreign taxes,
if any, are 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 on the accrual basis. Discounts
and premiums on short-term securities are amortized over the life of the
respective securities.
D. Foreign currency translations - The assets of the Fund may be invested
in the securities of foreign issuers. Since the accounting records of the
Fund are maintained in U.S. dollars, foreign currency amounts are
translated into U.S. dollars on the following basis:
1. Market value of securities, other assets, and liabilities at the mean
between the bid and asked translation rates of such currencies against U.S.
dollars.
2. Purchases and sales of securities, income, and expenses at the rate of
exchange obtained from an independent pricing service on the respective
dates of such transactions.
Net realized and unrealized foreign currency gains/losses occurring during
the holding period of investments are a component of realized gain/loss on
investments and unrealized appreciation/depreciation on investments,
respectively.
Net realized foreign currency gains/losses arise from sales of foreign
currency, currency gains/losses realized between the trade and settlement
dates on security transactions, and 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. Net realized
foreign currency gains/losses have been reclassified from accumulated net
realized 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.
(2) Line of Credit
The Fund participates with other USAA funds in a joint $150 million
short-term revolving loan agreement (the Agreement) through January 15,
1996, for temporary or emergency purposes, including the meeting of
redemption requests that otherwise might require the untimely disposition
of securities. Subject to availability under this Agreement, the Fund may
borrow up to 5% of the market value of its assets at the time of the
borrowing, and all borrowings must be repaid before additional investments
are made. Borrowings under this Agreement will bear interest at .125% over
the Federal Funds Rate as published by the Federal Reserve Bank of New York
or at .125% over the London Interbank Offered Rate. The Fund had no
borrowings under this Agreement during the year ended May 31, 1995.
(3) Distributions
Distributions of net investment income and realized gains from security
transactions not offset by capital losses are made in the succeeding fiscal
year. A distribution of net investment income of $.05 per share, declared
and paid in July 1995, is not reflected in the accompanying financial
statements.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities, for the
year ended May 31, 1995 were $147,593 and $95,980, respectively.
Gross unrealized appreciation and depreciation of investments at May 31,
1995 was $25,856 and $8,609, respectively.
(5) Foreign Currency Contracts
A forward currency contract (currency contract) is a commitment to purchase
or sell a foreign currency at a specified date, at a negotiated price. The
Fund currently enters into currency contracts only in connection with the
purchase or sale of a security denominated in a foreign currency. These
contracts allow the Fund to "lock in" the U.S. dollar price of the
security. Currency contracts are valued on a daily basis using foreign
currency exchange rates obtained from an independent pricing service. Risks
of entering into currency contracts include the potential inability of the
counterparty to meet the terms of the contract and the Fund foregoing the
opportunity for potential profit.
At May 31, 1995, the terms of open foreign currency contracts were as
follows:
U.S. Dollar U.S. Dollar
Value Value
Exchange Currency to be as of Currency to be as of
Date Delivered 5/31/95 Received 5/31/95
- --------- -------------- ----------- -------------- ----------
6/01/95 810 U.S. Dollar $ 810 67,078 Japanese Yen $ 793
6/01/95 45 U.S. Dollar 45 3,697 Japanese Yen 44
6/01/95 33 U.S. Dollar 33 81 Malaysian Ringgit 33
6/01/95 162 Hong Kong Dollar 21 21 U.S. Dollar 21
6/01/95 20,574 Japanese Yen 243 248 U.S. Dollar 248
6/02/95 138 U.S. Dollar 138 11,460 Japanese Yen 135
6/02/95 3 U.S. Dollar 3 8 Malaysian Ringgit 3
6/02/95 27,330 Japanese Yen 323 329 U.S. Dollar 329
6/02/95 142 Singapore Dollar 102 102 U.S. Dollar 102
6/05/95 87 Hong Kong Dollar 11 11 U.S. Dollar 11
6/05/95 169 Singapore Dollar 122 122 U.S. Dollar 122
6/30/95 650 French Franc 131 127 U.S. Dollar 127
-------- --------
$ 1,982 $ 1,968
======== ========
(6) Transactions with Manager
A. Management fees - The investment policy of the Fund and the
management of the Fund's portfolio is carried out by USAA Investment
Management Company (the Manager). The Fund's management fees are computed
at .75% of its annual average net assets.
B. Transfer agent's fees - USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services, an affiliate of the Manager, provides
transfer agent services to the Fund. Shareholder accounting service fees
are based on an annual charge per shareholder account plus out-of-pocket
expenses.
C. Underwriting agreement _ The Trust has an agreement with the Manager
for exclusive underwriting and distribution of the Fund's shares on a
continuing best efforts basis. This agreement provides that the Manager
will receive no fee or other remuneration for such services
D. Brokerage services _ USAA Brokerage Services, a discount brokerage
service of the Manager, may execute portfolio transactions for the Fund.
The amount of brokerage commissions paid to USAA Brokerage Services during
the year ended May 31, 1995 was $8.
(7) Transactions with Affiliates
USAA Investment Management Company is wholly owned by United Services
Automobile Association (the Association), a large, diversified financial
services institution. At May 31, 1995, the Association and its affiliates
owned 615 shares (4.0%) of the Fund.
(8) Financial Highlights
Per share operating performance for a share outstanding throughout each
period is as follows:
Eight-month
Year Ended period ended Year ended
May 31, May 31, September 30,
1995 1994 1993
---------- ------------ ------------
Net asset value at
beginning of period $ 12.71 $ 11.80 $ 10.00
Net investment income .07 .04(b) .05
Net realized and
unrealized gain .46 .93 1.75
Distributions from net
investment income _ (.01) _
Distributions of realized
capital gains (.28) (.05) _
-------- --------- -------
Net asset value at
end of period $ 12.96 $ 12.71 $ 11.80
======== ========= ========
Total return (%) * 4.26 8.25 18.00
Net assets at end of
period (000) $200,745 $ 143,367 $ 68,818
Ratio of expenses to
average net assets (%) 1.28 1.28(a) 1.70
Ratio of net investment
income to average net
assets (%) .69 .42(a) .75
Portfolio turnover (%) 58.88 37.64 45.57
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(b) Calculated using weighted average shares.
* Assumes reinvestment of all dividend income and capital gain
distributions during the period.
