<TABLE>
Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Manager 5
Shareholder Voting Results 7
Financial Information:
Statement of Assets and Liabilities 8
Portfolio of Investments in Securities 9
Notes to Portfolio of Investments in Securities 11
Statement of Operations 12
Statements of Changes in Net Assets 13
Notes to Financial Statements 14
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
Gold 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 32 funds by investment objective as of December 31,
1995. For more complete information about the mutual funds managed and
distributed by USAA IMCO, including charges and expenses, please call
1-800-531-8181 for a prospectus. Read it carefully before you invest.
Average Annual Total Return*
<CAPTION> Yield
Investment Inception Since 7-Day 30-Day(1)
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 50.42 20.44 12.02 - - -
Emerging Markets(2) 11/7/94 3.65 - - (4.26) - -
Gold(2) 8/15/84 4.04 5.60 5.46 - - -
Growth 4/5/71 32.06 15.56 12.47 - - -
Growth & Income 6/1/93 31.57 - - 13.74 - -
International(2) 7/11/88 8.29 11.98 - 9.51 - -
World Growth(2) 10/1/92 12.85 - - 12.06 - -
Asset Allocation
Balanced Strategy 9/1/95 - - - 3.24 - -
Cornerstone Strategy(2)# 8/15/84 18.40 12.37 12.68 - - -
Growth and Tax Strategy(3)**# 1/11/89 22.70 10.33 - 9.81 - 3.61
Growth Strategy(2) 9/1/95 - - - 6.50 - -
Income Strategy 9/1/95 - - - 9.94 - 4.47
Income - Taxable
GNMA 2/1/91 16.76 - - 8.64 - 6.64
Income 3/4/74 24.47 10.91 10.43 - - 6.25
Income Stock 5/4/87 28.62 14.35 - 12.12 - -
Short-Term Bond 6/1/93 11.18 - - 5.33 - 6.43
Income - Tax Exempt
Long-Term(3)** 3/19/82 18.58 8.44 8.62 - - 5.40
Intermediate-Term(3)** 3/19/82 15.07 8.22 7.95 - - 4.93
Short-Term(3)** 3/19/82 8.11 5.59 5.87 - - 4.36
California Bond(3)** 8/1/89 21.85 8.39 - 8.01 - 5.23
Florida Tax-Free Income(3)** 10/1/93 18.90 - - 3.39 - 5.35
New York Bond(3)** 10/15/90 18.07 8.60 - 9.25 - 5.31
Texas Tax-Free Income(3)** 8/1/94 22.22 - - 12.43 - 5.18
Virginia Bond(3)** 10/15/90 17.08 8.42 - 8.79 - 5.22
Money Market
Money Market(4) 2/2/81 5.80 4.54 5.97 - 5.48 -
Tax Exempt Money Market(3),(4)** 2/6/84 3.70 3.32 4.36 - 4.33 -
Treasury Money Market Trust(4) 2/1/91 5.59 - - 4.17 5.26 -
California Money Market(3),(4)** 8/1/89 3.64 3.15 - 3.70 4.14 -
Florida Tax-Free Money
Market(3),(4)** 10/1/93 3.57 - - 2.90 4.28 -
New York Money Market(3),(4)** 10/15/90 3.59 2.98 - 3.04 4.27 -
Texas Tax-Free Money Market(3),(4)** 8/1/94 3.56 - - 3.36 4.08 -
Virginia Money Market(3),(4)** 10/15/90 3.52 3.13 - 3.21 4.07 -
(1) Calculated as prescribed by the Securities and Exchange Commission.
(2) Foreign investing is subject to additional risks, which are discussed
in the funds' prospectuses.
(3) Some income may be subject to state or local taxes or the federal
alternative minimum tax.
(4) An investment in a money market fund is neither insured nor guaranteed
by the U.S. government and there is no assurance that any of the funds
will be able to maintain a stable net asset value of $1 per share.
* 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.
** IRAs are not available for tax-exempt funds. The Growth and Tax
Strategy Fund is not available as an investment for your IRA because the
majority of its income is tax exempt. California, New York, Virginia,
Florida, and Texas funds available to residents only.
# Formerly known as Cornerstone Fund and Balanced Portfolio Fund,
respectively.
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Message from the President
A few weeks ago I attended a meeting of past presidents of one of San
Antonio's distinguished institutions. We discussed a variety of subjects
that evening, including the investment performance of the organization's
endowment. In such organizations, I usually become chairman of
the investment committee, so I reported that through twelve months our
fund had a total return of about 24%.(1) One of my fellow past presidents
observed about another fund with which he is involved, "Well - we are up
over 35%!" He stopped short of asking, "What's your problem?" This was
not that uncommon an exchange.
I attempted to expand on the subject a bit. The investment committee
which I chair set down a strategy back in 1993. We concurred that the
investment goals and the risk tolerance of our board of trustees could
be accommodated with a portfolio that was 50% in growth stocks and 50%
in long-term fixed-income vehicles. This being a committee and
my having but one vote, I am pleased to say that the USAA Income Fund
was chosen as the fixed income investment. The 50/50 balance
is re-established at the end of each fiscal year so that the risk
profile is maintained.
My colleague referred to a very different kind of investment.
His was a family affair, and their investment decision was 100%
in an aggressive growth stock fund.(2) So, which did better? There is
not a simple answer, so what I'll give is my opinion.
[Photograph of Michael J. C. Roth, CFA, President and Vice Chairman of
the Board, appears here]
I think both of us did just fine. No matter what kind of market we have
been through, you will always be able to find someone who had a higher and
a lower return than you. Is it worthwhile to shift all of your investments
to that higher return? I think not. Investment decisions are, by
necessity, forward looking. In the case of mutual funds you must rely on
two things; the company with which you have chosen to invest and on
yourself. The latter means you have invested in a way with which you are
comfortable. Then you should bear in mind that in any market someone
else is going to have a higher return.
The board of the institution whose investment committee I chair
is delighted with their investment performance, both return and
volatility. I am sure that my colleague's family is also delighted with
theirs. I do not expect that either of us will change our strategy any
time soon.
"No matter what kind of market we have been through, you
will always be able to find someone who had a higher and
a lower return than you."
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
(1) For the 12 months ending December 31, 1995.
Average Annual Total Return: 1 Year 5 Years 10 Years
--------------------------- ------ ------- --------
USAA Income Fund 24.47% 10.91% 10.43%
(2) An aggressive growth fund seeks maximum capital gains as its
investment objective. Current income is not a significant factor.
Some may invest in stocks of businesses that are somewhat out of
the mainstream, such as fledgling companies, new industries,
companies fallen on hard times, or industries temporarily
out of favor. USAA IMCO manages this type of fund.
Total return equals income yield plus share price change and
assumes reinvestment of all dividends and capital gain distributions.
The performance data quoted represents past performance; the
investment 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.
For more complete information about any mutual fund managed by USAA
Investment Management Company, including charges and expenses, please
call for a prospectus. Please read the prospectus carefully before you
invest or send money.
Investment Review
Gold Fund
OBJECTIVE: Long-term capital appreciation for the purpose of protecting
the purchasing power of capital from inflation. Current income is a
secondary objective.
TYPES OF INVESTMENTS: At least 80 percent of the Fund's assets are
invested in gold stocks. The remainder may be invested in common stocks of
companies engaged in other precious metal and mineral mining.
5/31/95 11/30/95
Net Assets $160.2 Million $147.6 Million
Net Asset Value Per Share $9.00 $8.74
Average Annual Total Returns as of 11/30/95
May 31, 1995 to November 30, 1995 -2.89%*
1 Year 6.46%
5 Years 6.67%
10 Years 4.83%
* Total returns for periods of less than one year are not annualized.
This six-month return is cumulative.
[A graph is shown here which is a comparison of the change in value of a
$10,000 investment, for the period of 11/30/85 to 11/30/95, with dividends
and capital gains reinvested. The ending value of each item graphed is as
follows: S&P 500 - $41,096, Philadelphia Gold & Silver Index (XAU) - $14,299,
USAA Gold Fund - $16,027 and Gold Bullion - London Gold - $11,921.]
The graph illustrates a hypothetical $10,000 investment in the USAA Gold
Fund; the S&P 500 Index, which is an unmanaged index representing
the average performance of a group of 500 widely held, publicly traded stocks
(it is not possible to invest directly in the S&P 500 Index); the Philadelphia
Gold & Silver Index, representing nine holdings in the gold & silver sector,
typically referred to as the XAU; and London Gold, a traditional Gold Bullion
index that is readily available.
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 Manager
[A photo of Portfolio Manager, Mark W. Johnson, appears here]
The Gold Market
Gold traded in a narrow range of $379.40 to $391.30 during the six-month
period ended November 30, 1995. This continues the trend of the past two
years during which the price has been stuck at about $383 plus
or minus $13. We remain optimistic that eventually there will be a
sustained move above $400. This optimism is based on the fact that end user
demand continues to outstrip new supply.
To date supply shortfalls have been met with selling by private holders,
central banks, and hedgers and speculators who sell borrowed gold. However, the
willingness of these entities to continue selling in the face of a widening
demand gap is questionable. This is especially true in the current environment
where high levels of producer selling in 1995 for hedging purposes not only
failed to drive down gold prices, but are estimated to have raised total levels
of gold borrowing from the market to about a full year's worth of western mine
production. This constitutes a massive short position which at some point
must be covered. Moreover, some traditional central bank lenders of gold are
understood to be at their prescribed lending limits and gold lease rates have
risen recently, both of which may curtail further selling of borrowed gold. We
believe that we may be close to a turning point in sentiment that could drive
gold higher.
Fund Performance
The USAA Gold Fund declined 2.9% during the six-month period ended
November 30, 1995. The top performing stock for the period was Delta
Gold, up 41.6%. Delta benefited from the successful commencement of a new
processing facility at its main mine, encouraging exploration in the vicinity
of the same mine, the general recovery of the Australian market, and improved
market sentiment towards the company's important Hartley platinum development
project in Zimbabwe. Recently we visited Hartley and have concluded that there
is a fairly high probability that the mine will not achieve its scheduled
production targets in the early years of operation. Subsequent to the
end of the reporting period, we have sold the Delta Gold position.
The second best performer was Freeport-McMoRan Copper and Gold which was up
28.6% for the six-month period. The company's expansion program has been
successful and is running ahead of budget. Also, a further expansion has been
announced, exploration results remain encouraging, and the spin-out of all
stock held by its former parent corporation has been completed. An agreement
was signed with RTZ, a highly regarded British mining conglomerate, wherein RTZ
will finance much of Freeport's future exploration and capital spending
budgets.
The third best performer was Newcrest Mining which was up 14.1%. It
benefited from the general recovery of the Australian market, early
indications of exploration success at an Indonesian prospect, and reduced
concerns about the financing of a major new mine in Australia.
The worst performer was Viceroy Resources, down 31.1% for the six-month
period. Viceroy is embroiled in a legal dispute and now appears to have
significant questions regarding mine life and operating costs. The
second worst performer was Rayrock Yellowknife, down 28.6% as a consequence
of disappointing exploration results. The third worst performer was Stillwater
Mining, down 23.9%. Earnings came in below target because of a production
shortfall related to insufficient working faces and grade dilution. We are
monitoring this mine's performance closely and it now seems to be getting back
on track with both tonnage and grades on the uptrend.
USAA IMCO remains committed to improving the performance of the Fund. To that
end, we have hired a new senior securities analyst, Lindsey Falconer, who will
devote most of her time to the Gold Fund. Lindsey comes to us with degrees in
geology (University of Western Australia) and energy and mineral resources
management (University of Texas) and eight years experience analyzing gold
mining stocks for three London-based investment banking firms.
In other developments, we were pleased to learn that in the August 28, 1995
issue of Forbes magazine, the USAA Gold Fund was listed as one of only four
gold-oriented mutual funds to earn its coveted "Best Buy" rating.
Foreign investing is subject to additional risks, which are discussed in
the Fund's prospectus. Gold mining stocks involve additional risk
because of gold's price volatility.
See page 9 for a complete listing of the Portfolio of Investments in
Securities.
Top 10 Holdings
(% of Net Assets)
Barrick Gold 8.8
Placer Dome 8.3
Freeport-McMoRan Cop & Gld 6.3
Gold Fields of S. Africa 5.7
TVX Gold 5.4
Newcrest Mining 5.3
The Pioneer Group 4.9
Santa Fe Pacific Gold 4.8
Hemlo Gold Mines 4.7
Newmont Gold 4.7
Shareholder Voting Results
On October 13, 1995, a special meeting of shareholders was held to vote
on the following proposals. All proposals were approved by the
shareholders. All shareholders of record on August 17, 1995 were
entitled to vote on each proposal. The number of votes shown below
are shown for the Gold Fund only for proposal (2) and in the aggregate
for the entire USAA Investment Trust (the Trust) for proposals (1) and (3).
(1) Proposal to elect a Board of Trustees as follows:
Votes Votes
Trustee For Withheld
Hansford T. Johnson* 112,569,933 2,138,930
Michael J.C. Roth 111,522,559 3,186,304
John W. Saunders, Jr. 112,598,635 2,110,228
George E. Brown 111,259,788 3,449,075
Howard L. Freeman, Jr. 112,481,010 2,227,853
Richard A. Zucker 112,225,587 2,483,276
Barbara B. Dreeben 111,409,531 3,299,332
Mr. C. Dale Briscoe did not stand for re-election to the Board. His term
of office terminated on December 31, 1995.
* On December 4, 1995, Hansford T. Johnson announced his departure from
the Board effective December 31, 1995. The Board elected M. Staser
Holcomb to succeed Mr. Johnson.
(2) Proposals to amend certain investment restrictions as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES VOTING
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposal to amend the 5% and 7,375,257 970,326 489,903
10% issuer diversification
restrictions to apply to 75%
of a Fund's total assets rather
than 100%.
Proposal to amend the restriction 6,974,155 1,328,950 532,381
relating to borrowing to allow a
Fund to borrow an amount not exceeding
33 1/3% of its total assets (including
the amount borrowed) less liabilities
(other than borrowings) for temporary
or emergency purposes.
Proposal to amend the restriction 6,955,415 1,324,507 555,564
relating to lending portfolio securities
to permit a Fund to lend up to 1/3 of
its total assets to other parties.
(3) Proposal to ratify or reject the 107,284,373 2,323,184 5,101,298
selection by the Board of Trustees
of KPMG Peat Marwick LLP as auditors
for the Trust for the fiscal year
ending May 31, 1996.
</TABLE>
Gold Fund
Statement of Assets and Liabilities
(In Thousands)
November 30, 1995
(Unaudited)
Assets
Investments in securities, at market value
(identified cost of $148,770) $151,998
Cash 13
Receivables:
Capital shares sold 48
Dividends and interest 177
Securities sold 27
Foreign currency contracts held, at value 982
---------
Total assets 153,245
---------
Liabilities
Securities purchased 2,726
Foreign currency contracts held, at value 992
Capital shares redeemed 1,687
USAA Investment Management Company 87
USAA Transfer Agency Company 54
Accounts payable and accrued expenses 97
---------
Total liabilities 5,643
---------
Net assets applicable to capital shares outstanding $147,602
=========
Represented by:
Paid-in capital $226,705
Accumulated undistributed net investment income 129
Accumulated net realized loss on investments (82,460)
Net unrealized appreciation of investments 3,228
---------
Net assets applicable to capital shares
outstanding $147,602
=========
Capital shares outstanding, unlimited number of
shares authorized, no par value 16,881
=========
Net asset value, redemption price, and offering
price per share $ 8.74
=========
See accompanying notes to financial statements.
Gold Fund
Portfolio of Investments in Securities
November 30, 1995
(Unaudited)
Market
Number Value
of Shares Security (000)
Common Stocks (97.5%)
African Gold Companies (14.5%)
325,000 Ashanti Goldfields Co. Ltd. GDS $ 6,053
300,000 Gold Fields of South Africa Ltd. ADR 8,513
216,000 Western Deep Levels Ltd. ADR 6,804
---------
21,370
---------
Australian Gold Companies (10.4%)
2,000,000 Acacia Resources Ltd. * 3,458
700,000 Delta Gold N.L. * 1,714
1,750,000 Newcrest Mining Ltd. 7,884
500,000 Plutonic Resources Ltd. 2,379
---------
15,435
---------
North American Gold Companies (69.7%)
500,000 Agnico-Eagle Mines Ltd. 6,250
500,000 Barrick Gold Corp. 13,187
700,000 Battle Mountain Gold Co. 6,212
125,000 FirstMiss Gold, Inc. * 2,453
350,000 Freeport-McMoRan Copper & Gold, Inc. "A" 9,450
240,000 Golden Knight Resources, Inc. 1,259
750,000 Hemlo Gold Mines, Inc. 7,039
170,000 Newmont Gold Co. 6,970
160,000 Newmont Mining Corp. 6,900
275,000 Pioneer Group, Inc. 7,287
500,000 Placer Dome, Inc. 12,330
325,000 Prime Resources Group, Inc. * 2,333
325,000 Rayrock Yellowknife Resources, Inc. * 2,392
600,000 Santa Fe Pacific Gold Corp. 7,200
1,200,000 TVX Gold, Inc. * 7,950
450,000 Viceroy Resource Corp. * 1,698
280,000 Wharf Resources Ltd. 1,907
---------
102,817
---------
Market
Number Value
of Shares Security (000)
North American Platinum Companies (2.9%)
250,000 Stillwater Mining Co.* $ 4,281
---------
Total common stocks (cost: $140,675) 143,903
---------
<TABLE>
<CAPTION>
U.S. Government & Agency Issues (5.5%)
Principal
Amount Coupon
(000) Rate Maturity
<C> <S> <C> <C> <C>
Discount Note
$8,095 Federal Home Loan Mortgage Corp. (cost:$8,095) 5.80% 12/01/95 8,095
---------
Total investments (cost: $148,770) $151,998
==========
</TABLE>
*Non-income producing.
Gold Fund
Notes to Portfolio of Investments in Securities
November 30, 1995
(Unaudited)
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.
See accompanying notes to financial statements.
Gold Fund
Statement of Operations
(In Thousands)
Six-month period ended November 30, 1995
(Unaudited)
Net investment income:
Income (net of foreign taxes withheld of $97):
Dividends $ 867
Interest 180
---------
Total income 1,047
---------
Expenses:
Management fees 571
Transfer agent's fees 324
Custodian's fees 38
Postage 25
Shareholder reporting fees 9
Trustees' fees 1
Registration fees 36
Audit fees 14
Legal fees 3
Other 4
---------
Total expenses 1,025
---------
Net investment income 22
---------
Net realized and unrealized loss on investments and foreign currency:
Net realized gain (loss) on:
Investments 4,257
Foreign currency transactions (3)
Change in net unrealized appreciation/depreciation of
investments (8,067)
---------
Net realized and unrealized loss (3,813)
---------
Decrease in net assets resulting from operations $(3,791)
=========
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
Gold Fund
Statements of Changes in Net Assets
(In Thousands)
Six-month period ended November 30, 1995
and Year ended May 31, 1995
(Unaudited)
11/30/95 5/31/95
<S> <C> <C>
From operations:
Net investment income $ 22 $ 158
Net realized gain on investments 4,257 3,626
Net realized loss on foreign currency transactions (3) (4)
Change in net unrealized appreciation/depreciation of investments (8,067) 806
------------ ----------
Increase (decrease) in net assets resulting from operations (3,791) 4,586
------------ -----------
Distributions to shareholders from:
Net investment income _ (197)
------------- ------------
From capital share transactions:
Shares sold 43,360 115,672
Shares issued for dividends reinvested _ 187
Shares redeemed (52,190) (136,552)
------------- -----------
Decrease in net assets from capital share transactions (8,830) (20,693)
------------- -----------
Net decrease in net assets (12,621) (16,304)
Net assets:
Beginning of period 160,223 176,527
------------- ------------
End of period $ 147,602 $ 160,223
============== =============
Undistributed net investment income included in net assets:
Beginning of period $ 110 $ 153
============== =============
End of period $ 129 $ 110
============== =============
Change in shares outstanding:
Shares sold 4,846 13,346
Shares issued for dividends reinvested _ 23
Shares redeemed (5,774) (15,555)
------------- -----------
Decrease in shares outstanding (928) (2,186)
============= ============
See accompanying notes to financial statements.
</TABLE>
Gold Fund
Notes to Financial Statements
(In Thousands)
November 30, 1995
(Unaudited)
(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 eleven
separate funds. The information presented in this semiannual report
pertains only to the Gold Fund (the Fund). The Fund's primary investment
objective is to seek long-term capital appreciation and to protect the
purchasing power of shareholders' capital against inflation. Current
income is a secondary objective.
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 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. 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
six-month period ended November 30, 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. At November 30, 1995, the Fund had capital loss carryovers
for federal income tax purposes of approximately $82,460 which, if not
offset by subsequent capital gains, will expire between 1997-2002. It is
unlikely that the Board of Trustees of the Trust will authorize a
distribution of capital gains realized in the future until the capital
loss carryovers have been utilized or expire.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities, for
the six-month period ended November 30, 1995 were $12,018 and $18,117,
respectively.
Gross unrealized appreciation and depreciation of investments as of
November 30, 1995 was $16,182 and $12,954, 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 giving up the opportunity for potential profit.
At November 30, 1995, the terms of open foreign currency contracts were
as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Value Value
Exchange Currency to be as of Currency to be as of
Date Delivered 11/30/95 Received 11/30/95
<C> <S> <C> <S> <C>
12/06/95 470 U.S. Dollar $470 627 Australian Dollar $465
12/06/95 522 U.S. Dollar 522 697 Australian Dollar 517
------ ------
$992 $982
====== =======
</TABLE>
(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.
Gold Fund
Notes to Financial Statements (continued)
November 30, 1995
(Unaudited)
(7) Financial Highlights
Per share operating performance for a share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
Six-month Year Eight-month
Period ended ended Period ended
November 30, May 31, May 31, Year ended September 30,
1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 9.00 $ 8.83 $ 7.95 $ 6.53 $ 6.40 $ 8.08
Net investment income .01 .01 .01 .02 .07 .10
Net realized and
unrealized gain (loss) (.27) .17 .88 1.44 .14 (1.72)
Distributions from net
investment income _ (.01) (.01) (.04) (.08) (.06)
---------- ---------- ---------- ---------- --------- ----------
Net asset value at
end of period $ 8.74 $ 9.00 $ 8.83 $ 7.95 $ 6.53 $ 6.40
========== ========== ========== ========== ========= ==========
Total return (%) * (2.89) 2.05 11.19 22.53 3.30 (20.10)
Net assets at
end of period (000) $147,602 $160,223 $176,527 $150,793 $114,073 $121,204
Ratio of expenses to
average net assets (%) 1.35(a) 1.28 1.26(a) 1.41 1.43 1.45
Ratio of net investment
income to average net
assets (%) .03(a) .10 .15(a) .25 1.02 1.55
Portfolio turnover (%) 8.31 34.76 34.75 81.08 19.01 13.38
Average commission
rate paid per share .0274
</TABLE>
(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.
