TABLE OF CONTENTS
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Manager 5
Financial Information:
Distributions to Shareholders 7
Independent Auditors' Report 8
Statement of Assets and Liabilities 9
Portfolio of Investments in Securities 10
Notes to Portfolio of Investments 19
Statements of Operations 20
Statements of Changes in Net Assets 21
Notes to Financial Statements 22
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
International 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.
(copyright)1995, USAA. All rights reserved.
<TABLE>
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.
Average Annual Total Return**
<CAPTION>
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
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.
"...I did decide to practice one thing
I have preached for many years."
[A graph in 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 value is
$24,209.]
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
International Fund
OBJECTIVE: Primary objective is capital appreciation. Current income is
a secondary objective.
TYPES OF INVESTMENTS: At least 80 percent of the Fund's assets are
invested in common stocks of companies organized and operating outside the
United States. The remainder of the Fund's assets are invested in U.S.
government securities that mature in less than one year.
5/31/95
Net Assets $346.0 Million
Net Asset Value Per Share $15.78
Average Annual Total Return as of 5/31/95
1 Year 2.49%
5 Years 8.11%
Since inception on July 11, 1988 9.32%
[A graph is shown here which is a comparison of the change in
value of a $10,000 investment, for the period of 7/11/88 to
5/31/95, with dividends and capital gains reinvested. The
ending value of each item graphed is as follows: USAA International
Fund - $18,534 and the Morgan Stanley Capital Index (EAFE) - $14,547.]
The graph illustrates how the USAA International Fund outperformed its
benchmark, the Morgan Stanley Capital Index (MSCI)-EAFE, an unmanaged
index which reflects the movements of stock markets in Europe, Australia,
and the Far East by representing a broad selection of domestically listed
companies within each market. The chart compares a $10,000 hypothetical
investment in the USAA International 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.
(Photo of David G. Peebles, Portfolio Manager, appears here)
FUND PERFORMANCE
As we began to see a slowdown in many of the foreign economies, we took
a more defensive approach to our stock selection for the Fund. We
diversified the portfolio across several companies instead of concentrating
holdings in countries or industries, thereby lowering our concentration in
any specific country or industry. This defensive strategy is designed to
reduce exposure to any negative economic or industrial impacts , while
still meeting the objective of the Fund - providing capital appreciation.
While past performance is no guarantee of future results, the Fund's
total return of 2.49% for the one- year period ending May 31, 1995,
compared favorably to the Lipper International Fund Index average of
0.01% for the same time period, according to Lipper Analytical
Services.(1)
[A pie chart is shown here depicting the Portfolio Mix as of May 31,
1995 of the USAA International Fund to be: Japan 16.1%, United Kingdom -
8.3%, France - 6.4%, Netherlands - 6.3%, Sweden - 4.8%, Denmark - 3.7%,
Hong Kong - 3.5, Malaysia - 3.0, Mexico - 2.9%, Canada - 2.9%, Germany -
2.9% and Other - 39.5%.]
Europe
Europe provided the most attractive returns over the last six months of
the fiscal year, partly due to the local markets and partly due to
European currencies. We increased our weighting in Europe from 36.8% to
40.6%. We have made no significant changes in the country weighting in
Europe.
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 22.7% of the portfolio at November 30, 1994, to
16.1%. 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.
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 10 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.
Top 10 Equity Holdings
(% of Net Assets)
Tele Danmark A/S Ads 1.5
Essilor International 1.5
Autoliv Ab 1.5
Novo Nordisk A/S "B" 1.5
Heineken N.V. 1.3
Colruyt S.A. 1.3
British Sky Broadcasting 1.3
Ciba Geigy Ag 1.3
Volvo Ab 1.3
Verenigd Bezit Vnu 1.2
Top 10 Industries
(% of Net Assets)
Banking 7.3
Telephones 6.1
Retail 5.5
Oil 5.2
Automobiles & Auto Parts 5.1
Drugs 4.4
Engineering & Construction 3.8
Insurance 3.5
Beverages 3.2
Chemicals 3.1
Distributions to Shareholders
USAA International 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 interest income, foreign dividend income, and short-term 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 International 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:
Interest $ .0086
Investment Income - Foreign:
Gross Income .0890
Foreign Tax Paid .0310
-------
Net Foreign .0580
Capital Gain Income:
Short-term (treated as ordinary income) .0900
Long-term .1000
------
TOTAL DISTRIBUTIONS $ .2566
=======
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 International 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 five-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 International 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 five-year period ended May
31, 1995, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
San Antonio, Texas
July 7, 1995
International Fund
Statement of Assets and Liabilities
(In Thousands)
May 31, 1995
<TABLE>
<S> <C>
Assets
Investments in securities, at market value (identified cost of $326,371) $347,002
Cash 60
Cash denominated in foreign currencies (identified cost of $247) 247
Receivables:
Capital shares sold 104
Dividends and interest 972
Securities sold 3,964
Foreign currency contracts held, at value 2,982
-------
Total assets 355,331
-------
Liabilities
Securities purchased 4,224
Foreign currency contracts held, at value 2,976
Capital shares redeemed 1,668
USAA Investment Management Company 219
USAA Transfer Agency Company 53
Accounts payable and accrued expenses 158
-------
Total liabilities 9,298
---------
Net assets applicable to capital shares outstanding $346,033
=========
Represented by:
Paid-in capital $329,791
Accumulated undistributed net investment income 526
Accumulated net realized loss on investments (4,933)
Net unrealized appreciation of investments 20,631
Net unrealized appreciation on foreign currency translations 18
---------
Net assets applicable to capital shares outstanding $346,033
=========
Capital shares outstanding, unlimited number of shares authorized,
no par value 21,932
=========
Net asset value, redemption price, and offering price per share $ 15.78
=========
See accompanying notes to financial statements.
</TABLE>
International Fund
Portfolio of Investments in Securities
May 31, 1995
Common Stocks (90.2%)
Market
Number Value
of Shares Security (000)
--------- --------- -----------
Argentina (1.6%)
156,958 Banco Frances Del Rio de la Plata S.A. $ 1,036
235,000 Compania Interamericana de Automobiles S.A. * 1,222
60,500 IRSA Inversiones y Representaciones S.A. GDS * 1,444
96,300 YPF Sociedad Anonima S.A. ADS "D" 1,950
--------
5,652
--------
Australia (1.4%)
1,422,700 CSL Ltd. 3,065
80,000 TABCORP Holdings Ltd. ADS * 1,740(a)
--------
4,805
--------
Austria (1.2%)
36,600 VA Technologie AG 4,207
--------
Belgium (1.3%)
16,700 Colruyt S.A. 4,481
--------
Brazil (1.2%)
100,000 Rhodia-Ster S.A. GDS * 1,525
230,000 Usinas Siderurgicas de Minas Gerais S.A.-USIMINAS ADS 2,587(a)
------
4,112
------
Canada (2.9%)
225,000 Alliance Forest Products, Inc. * 4,272
99,000 Canadian Occidental Petroleum Ltd. 3,126
95,000 Suncor, Inc. 2,705
-------
10,103
-------
Chile (1.4%)
40,000 Banco Osorno y La Union S.A. ADR 565
28,100 Compania de Telefonos de Chile S.A. 2,487
34,600 Madeco S.A. ADS 1,004
50,400 Maderas y Sinteticos S.A. ADS 932
-------
4,988
-------
Colombia (0.6%)
306,000 Banco de Colombia GDS 2,157
-------
Denmark (3.7%)
48,000 Novo Nordisk A/S "B" 5,097
180,000 Tele Danmark A/S ADS 5,130
50,000 Unidanmark A/S 2,428
------
12,655
-------
France (6.4%)
135,800 Coflexip ADS 3,904
11,000 Credit Foncier de France 1,417
95,000 Elf Aquitaine ADS 3,729
60,000 Eramet Group * 4,257
29,000 Essilor International 5,120
15,950 Peugeot Citroen S.A. * 2,408
10,600 Societe Generale 1,245
3,100 Ugine S.A. 216
-------
22,296
--------
Germany (2.9%)
15,000 BASF AG 3,211
6,600 Deutsche Bank AG 3,232
9,000 Veba AG 3,421
-------
9,864
-------
Hong Kong (3.5%)
1,127,400 Hong Kong Telecommunications Ltd. 2,383
606,000 Hutchison Whampoa Ltd. 3,063
10,000,000 Regal Hotels International Holdings 2,094
349,000 Shun Tak Holdings Ltd. 235
6,750,000 Singamas Container Holdings Ltd. 1,615
1,720,000 Varitronix International Ltd. 2,846
-------
12,236
-------
India (1.8%)
46,000 Hindalco Industries Ltd. GDR 1,363
56,000 Indian Rayon & Industries Ltd. GDR 903
196,000 Larsen & Toubro Ltd. GDR * 3,871
-------
6,137
-------
Indonesia (2.1%)
352,000 PT Darya-Varia Laboratoria * 1,486
528,000 PT Astra International, Inc. 949
250,000 PT HM Sampoerna 1,791
15,400 PT Indonesian Satellite ADS 608
624,500 PT Jaya Real Property 1,795
558,500 PT Sinar Mas Agro Resources and Technology Corp. 627
------
7,256
------
Italy (1.8%)
335,000 Arnoldo Mondadori Editore 2,245
1,700,000 STET 3,894
------
6,139
-------
Japan (16.1%)
150,000 77 Bank Ltd. 1,631
118,000 Bridgestone Corp. 1,729
215,000 Canon, Inc. 3,354
136,000 Daibiru Corp. 1,607
200,000 Higo Bank 1,950
100,000 Hoya Corp. 2,848
77,000 Ito-Yokado Co., Ltd. 4,076
82,500 Kissei Pharmaceutical Co., Ltd. 2,642
50,000 Kyocera Corp. 3,799
172,000 Laox Co., Ltd. 2,602
46,000 Mabuchi Motor Co. 2,995
420,000 Minebea Co., Ltd. 2,730
435,000 Mitsubishi Heavy Industries, Ltd. 2,986
390,000 Mitsubishi Paper Mills, Ltd. 2,313
163,000 Nomura Securities Co., Ltd. 2,928
125,000 Sanwa Bank Ltd. 2,673
84,000 Shimamura Co., Ltd. 2,958
144,000 Takashimaya Co., Ltd. 1,957
34,000 Tochigi Fuji Industrial Co., Ltd. 306
95,000 Tostem Corp. 3,211
84,000 Toyo Communication 1,846
81,000 Toyo Seikan Kaisha, Ltd. 2,680
------
55,821
-------
Korea (1.7%)
100,000 Fidelity Advisor Korea Fund, Inc. * 1,037
147,300 Korea Electric Power Corp. ADS 3,296
21,500 Samsung Electronics Co., Ltd. GDR * 1,134
6,900 Samsung Electronics Co., Ltd. GDR (New) * 328
-------
5,795
-------
Malaysia (3.0%)
375,000 Aokam Perdana BHD 1,012
349,000 Malaysian Assurance Alliance BHD 1,239
525,000 Tanjong plc 1,938
800,000 Technology Resources Industries BHD * 2,613
118,000 Telekom Malaysia BHD 905
420,000 United Engineers BHD 2,778
------
10,485
------
Mexico (2.9%)
93,600 Bufete Industrial, S.A. de C.V. ADS 924
122,800 Desc, Soceidad de Fomento Industrial, S.A.
de C.V. ADS* 1,551
168,500 Grupo Simec, S.A. de C.V. ADS * 1,622
200,000 Grupo Televisa, S.A. de C.V. ADS 3,250
101,700 Panamerican Beverages, Inc. "A" 2,771
-----
10,118
------
Netherlands (6.3%)
31,000 DSM N.V. 2,636
75,000 EVC International N.V. * 3,395
32,500 Heineken N.V. 4,623
66,681 Internationale Nederlanden Groep N.V. 3,613
66,681 Internationale Nederlanden Groep N.V. Coupons * 90
89,000 Royal PTT Nederland N.V. 3,218
36,200 Verenigd Bezit VNU 4,300
------
21,875
------
Philippines (1.2%)
6,650,000 Filinvest Land, Inc. * 2,243
2,130,000 Petron Corp. GDS 1,754
-------
3,997
-------
Portugal (0.1%)
9,200 Companhia Portuguesa Radio Marconi, S.A. (Bearer) * 383
1,600 Companhia Portuguesa Radio Marconi, S.A. (Registered)* 67
-----
450
------
Singapore (2.2%)
285,000 City Developments Ltd. 1,902
732,000 DBS Land Ltd. 2,449
195,000 Keppel Corp. Ltd. 1,778
205,000 Overseas Union Bank Ltd. 1,310
------
7,439
------
South Africa (1.8%)
1,785,000 Iscor Ltd. S.A. 2,134
215,100 Murray and Roberts Holdings Ltd. 1,257
60,000 Nedcor Ltd. GDR Units * 2,925
------
6,316
------
Spain (2.6%)
87,000 Corporacion Mapfre 4,114
30,000 Repsol S.A. 979
96,500 Telefonica de Espana, S.A. ADR 3,860
------
8,953
------
Sweden (4.8%)
174,000 Arjo AB 1,779
28,000 Asea AB 2,378
105,000 Astra AB "B" Free 3,012
105,000 Autoliv AB 5,116
250,000 Volvo AB 4,395
-------
16,680
-------
Switzerland (2.3%)
2,250 BBC Brown, Boveri & Co. Ltd. "A" 2,297
6,200 Ciba Geigy AG 4,401
1,685 Sulzer AG P.C. 1,083
------
7,781
------
Taiwan (0.7%)
56,000 China Steel Corp. ADS 1,190(a)
50,000 China Steel Corp. GDS 1,062
------
2,252
------
Thailand (1.6%)
217,400 Finance One Public Co. 1,454
58,900 Pranda Jewelry Co. 156
300,000 Sri Thai Superware Co. Ltd. 2,322
175,000 Thai Farmers Bank Public Co., Ltd. 1,659
-----
5,591
-----
United Kingdom (8.3%)
554,000 Argyll Group plc 2,938
175,000 British Sky Broadcasting plc, ADR * 4,463
486,300 Cadbury Schweppes plc 3,664
250,000 National Power plc, ADS 780
525,000 Northern Ireland Electricity plc 2,926
520,000 Refuge Group plc 2,837
1,100,000 Tomkins plc 4,254
295,000 Welsh Water plc 3,008
1,902,000 WPP Group plc 3,745
------
28,615
------
Other Holdings (0.8%)
3,950,000 Central European Growth Fund plc 2,603
793,000 Central European Growth Fund plc Warrants * 101
-----
2,704
-------
Total common stocks (cost: $293,088) 311,960
-------
PREFERRED STOCKS (1.8%)
Australia (0.9%)
1,429,600 Village Roadshow Ltd. 3,029
-------
Brazil (0.3%)
118,727,000 Bradesco PN 1,021
------
Finland (0.6%)
50,000 Nokia Corp. ADS 2,325
------
Total preferred stocks (cost: $4,784) 6,375
------
BONDS (1.2%)
Principal Market
Amount Coupon Value
(000) Security Rate Maturity (000)
------- -------- ------ -------- -----
Taiwan (1.2%)
$ 1,200 U-Ming Marine Transport Corp.,
Convertible Notes 1.50% 2/07/01 $ 1,284
2,682 Yangming Marine Transport Corp.,
Convertible Notes 2.00 10/06/01 2,863
-------
Total bonds (cost: $3,979) 4,147
-------
U.S. GOVERNMENT & AGENCY ISSUES (7.1%)
Discount Note
24,520 Federal Home Loan Mortgage Corp.
(cost: $24,520) 6.10 6/01/95 24,520
---------
Total investments (cost: $326,371) $347,002
=========
*Non-income producing.
PORTFOLIO SUMMARY BY INDUSTRY
Banking 7.3%
U.S. Government & Agency Issues 7.1
Telephones 6.1
Retail 5.5
Oil 5.2
Automobiles & Auto Parts 5.1
Drugs 4.4
Engineering & Construction 3.8
Insurance 3.5
Beverages 3.2
Chemicals 3.1
Electric Power 3.0
Electrical Equipment 2.9
Real Estate 2.8
Steel 2.5
Conglomerates 2.4
Electronics - Semi Conductors 2.3
Broadcasters 2.2
Paper & Forest Products 2.2
Publishing 1.9
Healthcare 1.8
Transportation 1.8
Medical Products & Supplies 1.5
Manufacturing - Diversified Industries 1.4
Brokerage Firms 1.3
Building Materials 1.2
Metals 1.2
Telecommunications 1.2
Gaming Companies 1.1
Mutual Funds 1.1
Office Equipment & Supplies 1.0
Other 9.2
-----
100.3%
=====
International Fund
Notes to Portfolio of Investments
May 31, 1995
General Notes
Market value 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.
International Fund
Statement of Operations
(In Thousands)
Year ended May 31, 1995
Net investment income:
Income (net of foreign taxes withheld of $677):
Dividends $ 4,383
Interest 1,352
--------
Total income 5,735
--------
Expenses:
Management fees 2,171
Transfer agent's fees 539
Custodian's fees 418
Postage 80
Shareholder reporting fees 39
Trustees' fees 3
Registration fees 100
Audit fees 25
Legal fees 6
Other 21
--------
Total expenses 3,402
--------
Net investment income 2,333
--------
Net realized and unrealized loss on investments and foreign currency:
Net realized loss on:
Investments (1,134)
Foreign currency transactions (1,438)
Change in net unrealized appreciation/depreciation on:
Investments 1,844
Translation of assets and liabilities in foreign currencies 488
--------
Net realized and unrealized loss (240)
--------
Increase in net assets resulting from operations $ 2,093
========
See accompanying notes to financial statements.
International Fund
Statements of Changes in Net Assets
(In Thousands)
Year ended May 31, 1995
and Eight-month period ended May 31, 1994
<TABLE>
<CAPTION>
1995 1994
----- ------
<S> <C> <C>
From operations:
Net investment income $ 2,333 $ 38
Net realized gain (loss) on investments (1,134) 9,320
Net realized loss on foreign currency transactions (1,438) (626)
Change in net unrealized appreciation/depreciation on:
Investments 1,844 7,258
Foreign currency translations 488 43
--------- --------
Increase in net assets resulting from operations 2,093 16,033
--------- --------
Distributions to shareholders from net realized gains (12,797) (2,392)
--------- --------
From capital share transactions:
Shares sold 258,402 141,845
Shares issued for dividends reinvested 12,577 2,350
Shares redeemed (99,034) (61,801)
--------- --------
Increase in net assets from capital share
transactions 171,945 82,394
--------- --------
Net increase in net assets 161,241 96,035
Net assets:
Beginning of period 184,792 88,757
--------- --------
End of period $ 346,033 $ 184,792
========= ========
Undistributed net investment income (loss) included
in net assets:
Beginning of period $ (369) $ 219
========= ========
End of period $ 526 $ (369)
========= ========
Change in shares outstanding:
Shares sold 16,275 8,860
Shares issued for dividends reinvested 801 160
Shares redeemed (6,439) (3,856)
--------- --------
Increase in shares outstanding 10,637 5,164
========= ========
See accompanying notes to financial statements.
</TABLE>
International 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 International 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 gain/loss to accumulated
undistributed net investment income/loss on the statement of assets
and liabilities as such amounts are treated as ordinary income
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 $.0666
per share, declared and paid in July 1995, is not reflected in the
accompanying financial statements.
At May 31, 1995 the Fund had capital loss carryovers for federal income
tax purposes of approximately $4,933 which, if not offset by subsequent
capital gains will expire in 2003.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities, for
the year ended May 31, 1995 were $320,648 and $170,935, respectively.
Gross unrealized appreciation and depreciation of investments at May 31,
1995 was $38,369 and $17,738, 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 89 U.S. Dollar $ 89 7,394 Japanese Yen $ 87
6/01/95 96 U.S. Dollar 96 236 Malaysian Ringgit 96
6/01/95 282 Hong Kong Dollar 36 36 U.S. Dollar 36
6/01/95 48,006 Japanese Yen 567 578 U.S. Dollar 578
6/02/95 345 U.S. Dollar 345 28,652 Japanese Yen 339
6/02/95 7 U.S. Dollar 7 17 Malaysian Ringgit 7
6/02/95 61,493 Japanese Yen 727 741 U.S. Dollar 741
6/02/95 472 Singapore Dollar 339 339 U.S. Dollar 339
6/05/95 152 Hong Kong Dollar 20 20 U.S. Dollar 20
6/05/95 552 Singapore Dollar 397 397 U.S. Dollar 397
6/30/95 1,753 French Franc 353 342 U.S. Dollar 342
------ -------
$ 2,976 $ 2,982
====== ======
(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.
(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 5,938 shares (27.1%) of the Fund.
<TABLE>
(8) Financial Highlights
Per share operating performance for a share outstanding throughout each period is as
follows:
<CAPTION>
Eight-month
Year ended period ended
May 31, May 31, Year ended September 30,
1995 1994 1993 1992 1991
----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 16.36 $ 14.48 $ 12.09 $ 11.57 $ 9.89
Net investment income .10 - .07 .10 .13
Net realized and
unrealized gain .29 2.23 2.45 .51 1.66
Distributions from net
investment income - - (.13) (.09) (.06)
Distributions of realized
capital gains (.97) (.35) - - (.05)
-------- -------- -------- -------- -------
Net asset value at
end of period $ 15.78 $ 16.36 $ 14.48 $ 12.09 $ 11.57
======== ======== ======== ======== =======
Total return (%) * 2.49 15.67 21.11 5.30 18.21
Net assets at end of
period (000) $346,033 $184,792 $88,757 $42,868 $28,931
Ratio of expenses to
average net assets (%) 1.17 1.31(a) 1.50 1.69 1.82
Ratio of net investment
income to average net
assets (%) .81 .04(a) .72 1.05 1.26
Portfolio turnover (%) 64.30 44.39 52.52 34.27 63.56
(a) Annualized. The ratio is not necessarily indicative of 12 months of operations.
* Assumes reinvestment of all dividend income and capital gain distributions during the period.
</TABLE>
