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 18
Statement of Operations 19
Statements of Changes in Net Assets 20
Notes to Financial Statements 21
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 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.
</TABLE>
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
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
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 principally
outside the United States. The remainder of the Fund's assets may be
invested in U.S. government securities that mature in less than one year
and in repurchase agreements collateralized by such securities.
5/31/95 11/30/95
Net Assets $346.0 Million $341.4 Million
Net Asset Value Per Share $15.78 $16.18
Average Annual Total Returns as of 11/30/95
May 31, 1995 to November 30, 1995 3.52% *
1 Year 3.78%
5 Years 11.47%
Since inception on July 11, 1988 9.17%
*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 7/11/88 to 11/30/95, with dividends
and capital gains reinvested. The ending value of each item graphed is as
follows: USAA International Fund - $19,187 and the Morgan Stanley Capital
Index (MSCI- EAFE) - $14,913.]
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.
Message from the Manager
(Photo of David G. Peebles, Portfolio Manager, appears here)
International Markets
Political, economic and other problems in places as disparate as Japan,
Italy, Mexico and China have given international markets a rough ride this
year. Much of Europe has performed well, but most of the emerging markets
have performed poorly. Japan's gains since the end of May have been offset
by the weakness of the yen versus the dollar. While the U.S. market has
outperformed nearly all international markets, we are confident that over a
longer investment horizon, international markets should provide competitive
returns and diversification benefits.
Europe
Europe continued to provide the most attractive returns for the first
six months of this fiscal year. We have emphasized the countries of northern
Europe, with the United Kingdom followed by the Netherlands having the
largest country weightings. We overweighted telecommunications, consumer
non-durables, and interest-rate sensitive stocks while underweighting
consumer and industrial cyclicals.
Japan
While we have marginally raised our position in Japan, we continue to
remain underweighted. Our concern revolves around a lack of commitment
to corporate restructuring, problems within the banking system, and lack
of strong political leadership. We are seeing early signs of recognition
of what is needed to resolve these problems.
[A pie chart is shown here depicting the Asset Allocation as of
November 30, 1995 of the USAA International Fund to be: Japan
18.3%, United Kingdom - 8.5%, France - 4.7%, Netherlands - 6.3%,
Sweden - 4.7%, Denmark - 3.4%, Hong Kong - 4.2%, Canada - 3.3%,
Germany - 4.0%, Switzerland - 3.6%, Australia - 4.4% and Other -
36.0.%]
Emerging Markets
Our overweighted position in emerging markets has hurt us over the last
six months. Economic and political problems in major Latin American
markets (excluding Brazil), political turmoil surrounding China, plus
concerns about financing Asia's ongoing economic growth are the major
concerns. While we recognize these concerns and lowered our weightings,
the potential for economic growth will cause us to maintain a full to
overweighted position in these markets.
Outlook
Moderate, yet stable, economic growth should result in favorable
corporate profit gains. This positive corporate outlook, coupled with
continued low inflation and low interest rates, could provide a
favorable investment climate.
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.
See page 9 for a complete listing of the Portfolio of Investments in
Securities.
Top 10 Equity Holdings
(% of Net Assets)
Heineken N.V. 1.7
Ciba Geigy AG 1.6
Essilor International 1.6
Verenigd Bezit Vnu 1.5
Tele Danmark A/S ADS 1.5
Autoliv AB 1.4
Nomura Securities 1.4
Volvo AB 1.4
WPP Group 1.3
Canon 1.3
Top 10 Industries
(% of Net Assets)
Retail 7.3
Healthcare 6.9
Telecommunications 6.9
Banks 6.2
Oil 5.0
Electronics 4.0
Electrical Equipment 3.5
Electric Power 3.4
Steel 3.4
Auto Parts 2.8
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 International 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:
Number of Shares Voting
For Against Abstain
----- ------- ---------
Proposal to amend the 5% and 10% issuer 13,147,515 593,025 280,477
diversification restrictions to apply to
75% of a Fund's total assets rather than
100%.
Proposal to amend the restriction 12,838,846 877,905 304,266
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 relating 12,902,299 791,972 326,747
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.
International Fund
Statement of Assets and Liabilities
(In Thousands)
November 30, 1995
(Unaudited)
Assets
Investments in securities, at market value (identified cost
of $320,407) $ 346,189
Cash 72
Cash denominated in foreign currencies (identified cost of $426) 426
Receivables:
Capital shares sold 80
Dividends and interest 733
Securities sold 2,921
Foreign currency contracts held, at value 4,621
--------
Total assets 355,042
--------
Liabilities
Securities purchased 8,241
Foreign currency contracts held, at value 4,634
Capital shares redeemed 383
USAA Investment Management Company 208
USAA Transfer Agency Company 64
Accounts payable and accrued expenses 84
--------
Total liabilities 13,614
--------
Net assets applicable to capital shares outstanding $341,428
========
Represented by:
Paid-in capital $316,329
Accumulated undistributed net investment income 146
Accumulated net realized loss on investments (830)
Net unrealized appreciation of investments 25,782
Net unrealized appreciation on foreign currency translations 1
---------
Net assets applicable to capital shares outstanding $ 341,428
=========
Capital shares outstanding, unlimited number of shares
authorized, no par value 21,101
=========
Net asset value, redemption price, and offering price per share $ 16.18
=========
See accompanying notes to financial statements.
International Fund
Portfolio of Investments in Securities
November 30, 1995
(Unaudited)
Market
Number Value
of Shares Security (000)
--------- -------- -------
Common Stocks (90.2%)
Argentina (1.3%)
313,333 Compania Interamericana de Automobiles S.A. * $ 1,348
62,194 IRSA Inversiones y Representaciones S.A. GDS 1,352
96,300 YPF Sociedad Anonima S.A. ADS "D" 1,878
---------
4,578
---------
Australia (3.4%)
1,406,700 CSL Ltd. 3,748
2,800,000 David Jones Ltd. 4,156
388,400 Rothmans Holdings Ltd. 1,470
418,600 Seven Network Ltd. 1,119
40,000 TABCORP Holdings Ltd. ADS 1,142(a)
-------
11,635
-------
Austria (1.2%)
36,000 VA Technologie AG 4,154
-------
Belgium (1.3%)
16,700 Colruyt S.A. 4,297
-------
Brazil (0.2%)
74,000 Rhodia-Ster S.A. GDS 731
-------
Canada (3.3%)
142,000 Alliance Forest Products, Inc. * 2,796
1,000,000 Beau Canada Exploration Ltd. * 1,023
80,700 Canadian National Railway Co. * 1,210
97,800 Canadian Occidental Petroleum Ltd. 3,420
95,000 Suncor, Inc. 2,911
--------
11,360
--------
Chile (0.8%)
88,000 Banco Osorno y La Union S.A. ADR 1,089
34,600 Madeco S.A. ADS 817
50,400 Maderas y Sinteticos S.A. ADS 838
-------
2,744
-------
Colombia (0.5%)
306,000 Banco de Colombia GDS 1,568
-------
Denmark (3.4%)
1,000 Nordtank Energy Group A/S * 65
32,670 Novo Nordisk A/S "B" 4,111
178,500 Tele Danmark A/S ADS 4,976
50,000 Unidanmark A/S 2,446
-------
11,598
-------
France (4.7%)
120,000 Coflexip ADS 1,845
10,000 Ecco SA 1,521
94,000 Elf Aquitaine ADS 3,290
59,450 Eramet Group 3,930
28,770 Essilor International 5,419
-------
16,005
-------
Germany (4.0%)
69,000 Adidas AG * 3,678
8,000 BASF AG 1,754
8,220 Siemens AG 4,294
96,960 Veba AG 3,955
-------
13,681
--------
Hong Kong (4.2%)
1,798,500 Amoy Properties Ltd. 1,721
134,600 China Yuchai International Ltd. 1,144
2,264,000 Florens Group Ltd. 1,302
390,000 Hutchison Whampoa Ltd. 2,203
840,000 New World Infrastructure Ltd. * 1,461
10,000,000 Regal Hotels International Holdings 2,211
6,750,000 Singamas Container Holdings Ltd. 986
1,350,000 Singamas Container Holdings Ltd. Warrants * 23
1,702,000 Varitronix International Ltd. 3,190
-------
14,241
-------
Hungary (0.5%)
180,000 Mol Magyar Olay Es Gazipari GDS * 1,508
-------
India (1.2%)
40,000 Hindalco Industries Ltd. GDR 1,110
56,000 Indian Rayon & Industries Ltd. GDR 644
148,000 Larsen & Toubro Ltd. GDR 2,316
------
4,070
------
Indonesia (1.2%)
31,000 PT Bank Dagang Nasional Indonesia 26
510,000 PT Darya-Varia Laboratoria 837
130,000 PT HM Sampoerna 1,304
749,500 PT Jaya Real Property 1,838
------
4,005
------
Israel (0.3%)
63,000 Koor Industries Ltd. ADS * 1,142
------
Italy (2.6%)
335,000 Arnoldo Mondadori Editore 2,625
45,700 Gucci Group N. V. * 1,576
912,500 Olivetti and C., S.p.A. 605
912,500 Olivetti and C., S.p.A. Rights * 52
1,984,000 STET 3,902
-----
8,760
-----
Japan (17.3%)
150,000 77 Bank Ltd. 1,359
116,000 Bridgestone Corp. 1,710
260,000 Canon, Inc. 4,574
136,000 Daibiru Corp. 1,497
200,000 Higo Bank 1,502
315,000 Hitachi Ltd. 3,189
190,000 Honda Motor Co. Ltd. 3,436
99,000 Hoya Corp. 2,948
76,000 Ito-Yokado Co. Ltd. 4,198
59,000 Kissei Pharmaceutical Co., Ltd. 1,618
50,000 Kyocera Corp. 3,956
170,000 Laox Co. Ltd. 3,559
20,000 Mabuchi Motor Co. 1,238
420,000 Minebea Co. Ltd. 3,492
481,000 Mitsubishi Heavy Industries Ltd. 3,834
390,000 Mitsubishi Paper Mills, Ltd. 2,403
1,297,000 NKK Corp. 3,569
242,000 Nomura Securities Co. Ltd. 4,757
84,000 Shimamura Co. Ltd. 3,178
102,000 Tostem Corp. 3,107
------
59,124
------
Korea (2.3%)
52,820 Korea Electric Power Corp. ADS 2,307
87,000 LG Chemical Ltd. * 1,813
10,730 Pohang Iron & Steel Co., Ltd. 928
6,000 Samsung Electronics Co., Ltd. * 1,129
21,500 Samsung Electronics Co., Ltd. GDR * 1,279
6,827 Samsung Electronics Co., Ltd. GDR (New) * 366
------
7,822
------
Malaysia (1.5%)
472,500 Malaysian Assurance Alliance BHD 1,862
286,000 Tanjong plc 823
800,000 Technology Resources Industries BHD * 2,239
------
4,924
------
Mexico (2.5%)
56,500 Bufete Industrial, S.A. de C.V. ADS 826
136,300 Desc, Soceidad de Fomento Industrial,
S.A. de C.V. ADS* 1,806
168,500 Grupo Simec, S.A. de C.V. ADS * 1,137
124,000 Grupo Televisa, S.A. de C.V. ADS 2,682
66,000 Panamerican Beverages, Inc. "A" 2,129
-----
8,580
-----
Netherlands (6.3%)
19,800 DSM N.V. 1,577
74,060 EVC International N.V. 1,999
32,240 Heineken N.V. 5,650
64,481 Internationale Nederlanden Groep N.V. 4,221
102,450 Vendex International N.V. 2,967
35,870 Verenigd Bezit VNU 5,062
--------
21,476
--------
Norway (0.4%)
600,000 Christiania Bank og Kreditkasse 1,347
-------
Philippines (1.4%)
8,129,500 Filinvest Land, Inc. * 2,173
2,662,500 Petron Corp. GDS 1,220
167,300 Philippine Commercial International Bank 1,406
------
4,799
------
Portugal (1.0%)
25,070 Portugal Telecom, S.A. * 458
152,100 Portugal Telecom, S.A. ADS * 2,852
-------
3,310
-------
Singapore (0.8%)
195,000 Keppel Corp. Ltd. 1,604
199,500 Overseas Union Bank Ltd. 1,266
-------
2,870
-------
South Africa (1.4%)
982,429 Iscor Ltd. S.A. 881
106,885 Murray and Roberts Holdings Ltd. 707
180,000 Nedcor Ltd. GDR * 2,925
45,000 Nedcor Ltd. Warrants * 220
-------
4,733
-------
Spain (1.9%)
43,500 Corporacion Mapfre 2,450
99,500 Telefonica de Espana, S.A. ADR 4,129
-------
6,579
-------
Sweden (4.7%)
26,450 Asea AB 2,566
82,140 Autoliv AB 4,862
58,000 Getinge Industrier AB "B" 2,389
100,000 Nordbanken AB * 1,708
223,100 Volvo AB 4,628
-------
16,153
-------
Switzerland (3.6%)
2,250 BBC Brown, Boveri & Co. Ltd. "A" 2,584
6,144 Ciba Geigy AG 5,478
900 SGS Group 1,692
4,550 Sulzer AG P.C. 2,516
-------
12,270
-------
Taiwan (0.9%)
106,000 Acer, Inc. * 1,378
56,000 China Steel Corp. ADS 910 (a)
48,600 China Steel Corp. GDS 789
------
3,077
------
Thailand (0.8%)
94,700 Finance One Public Co. 591
1,000,000 Sahaviriya Steel Industries Public Co., Ltd. * 1,222
154,500 Sri Thai Superware Co. Ltd. 1,026
-------
2,839
-------
Turkey (0.1%)
203,000 Olmuksa Mukavva Sanayi Ve Ticaret A.S. 50
223,000 Sarkuysan Elektrolitik Bakir S.A. 34
------
84
------
United Kingdom (8.5%)
496,000 Amstrad plc 2,009
554,000 Argyll Group plc 2,638
50,000 British Gas plc 1,863
481,200 Cadbury Schweppes plc 4,103
20,000 M. A. I. D. plc, ADS * 73
518,500 Northern Ireland Electricity plc 3,548
520,000 Refuge Group plc 3,686
1,089,500 Tomkins plc 4,403
245,833 Welsh Water plc 2,591
1,886,000 WPP Group plc 4,576
-------
29,490
-------
Other Holdings (0.7%)
3,950,000 Central European Growth Fund plc 2,358
793,000 Central European Growth Fund plc Warrants * 73
-------
2,431
-------
Total common stocks (cost: $284,080) 307,985
--------
Preferred Stocks (3.5%)
Australia (1.0%)
1,064,600 Village Roadshow Ltd. 3,374
--------
Brazil (2.1%)
67,190,973 Bradesco PN 581
84,610,000 Companhia Energetica de Minas Gerais (Cemig) 1,874
58,000,000 Telebras PN 2,858
2,300,000,000 Usinas Siderurgicas de Minas Gerais S.A. 2,047
--------
7,360
--------
Finland (0.4%)
24,430 Nokia Corp. ADS 1,325
--------
Total preferred stocks (cost: $10,502) 12,059
--------
<TABLE>
<CAPTION>
Principal
Amount Market
(000) Security Coupon Value
- ------- -------- Rate Maturity 000
Bonds (2.0%) ----- -------- -------
Japan (1.0%)
<C> <S> <C> <C> <C>
$ 3,250 MBL International Finance (Bermuda) Trust,
Convertible Notes 3.00% 11/30/02 $ 3,608
-------
Taiwan (1.0%)
1,000 U-Ming Marine Transport Corp., Convertible Notes 1.50 2/07/01 887
2,182 Yangming Marine Transport Corp., Convertible Notes 2.00 10/06/01 2,395
--------
3,282
-------
Total bonds (cost: $6,570) 6,890
-------
U.S. Government & Agency Issues (5.7%)
Discount Note
19,255 Federal Home Loan Mortgage Corp. (cost: $19,255) 5.80 12/01/95 19,255
-------
Total investments (cost: $320,407) $ 346,189
========
*Non-income producing.
</TABLE>
Portfolio Summary By Industry
-----------------------------
Retail 7.3 %
Healthcare 6.9
Telecommunications 6.9
Banks 6.2
U.S. Government & Agency Issues 5.7
Oil 5.0
Electronics 4.0
Electrical Equipment 3.5
Electric Power 3.4
Steel 3.4
Auto Parts 2.8
Engineering & Construction 2.8
Automobiles 2.8
Real Estate 2.5
Conglomerates 2.5
Chemicals 2.3
Publishing 2.3
Manufacturing - Diversified Industries 2.0
Insurance - Multi/Line Companies 2.0
Beverages - Soft Drinks 1.8
Transportation - Miscellaneous 1.8
Beverages - Alcoholic 1.7
Brokerage Firms 1.6
Textiles 1.5
Paper & Forest Products 1.5
Office Equipment & Supplies 1.3
Computer Systems 1.3
Building Materials Group 1.2
Metals - Miscellaneous 1.2
Broadcasters 1.1
Insurance - Life 1.1
Machinery - Diversified 1.0
Entertainment 1.0
Other 8.0
------
101.4%
======
International Fund
Notes to Portfolio of Investments in Securities
November 30, 1995
(Unaudited)
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 may occur in an exempt transaction in the
United States to a qualified institutional buyer as defined by the Rule.
See accompanying notes to financial statements.
International Fund
Statement of Operations
(In Thousands)
Six-month period ended November 30, 1995
(Unaudited)
Net investment income:
Income (net of foreign taxes withheld of $357):
Dividends $ 2,641
Interest 487
--------
Total income 3,128
--------
Expenses:
Management fees 1,311
Transfer agent's fees 379
Custodian's fees 243
Postage 31
Shareholder reporting fees 16
Trustees' fees 1
Registration fees 30
Audit fees 14
Legal fees 3
Other 14
-------
Total expenses 2,042
-------
Net investment income 1,086
-------
Net realized and unrealized gain on investments and foreign currency:
Net realized gain (loss) on:
Investments 5,980
Foreign currency transactions (10)
Change in net unrealized appreciation/depreciation on:
Investments 5,151
Translation of assets and liabilities in foreign currencies (17)
------
Net realized and unrealized gain 11,104
---------
Increase in net assets resulting from operations $ 12,190
=========
See accompanying notes to financial statements.
International Fund
Statements of Changes in Net Assets
(In Thousands)
Six-month period ended November 30, 1995
and Year ended May 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
11/30/95 5/31/95
<S> <C> <C>
From operations:
Net investment income $ 1,086 $ 2,333
Net realized gain (loss) on investments 5,980 (1,134)
Net realized loss on foreign currency transactions (10) (1,438)
Change in net unrealized appreciation/depreciation on:
Investments 5,151 1,844
Foreign currency translations (17) 488
-------- --------
Increase in net assets resulting from operations 12,190 2,093
-------- ---------
Distributions to shareholders from:
Net investment income (1,456) -
-------- ---------
Net realized gains (1,877) (12,797)
--------- ---------
From capital share transactions:
Shares sold 42,171 258,402
Shares issued for dividends reinvested 2,734 12,577
Shares redeemed (58,367) (99,034)
-------- ---------
Increase (decrease) in net assets from capital share
transactions (13,462) 171,945
-------- ---------
Net increase (decrease) in net assets (4,605) 161,241
Net assets:
Beginning of period 346,033 184,792
--------- ---------
End of period $341,428 $346,033
========= =========
Undistributed net investment income (loss) included in net assets:
Beginning of period $ 526 $ (369)
======== =========
End of period $ 146 $ 526
======== =========
Change in shares outstanding:
Shares sold 2,593 16,275
Shares issued for dividends reinvested 168 801
Shares redeemed (3,592) (6,439)
--------- ---------
Increase (decrease) in shares outstanding (831) 10,637
========= =========
See accompanying notes to financial statements.
</TABLE>
International 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 International Fund (the Fund). The Fund's primary
investment objective is capital appreciation. 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 from the difference
between amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts received. 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.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities, for
the six-month period ended November 30, 1995 were $119,827 and $126,505,
respectively.
Gross unrealized appreciation and depreciation of investments as of
November 30, 1995 was $45,376 and $19,594, 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> <C> <C> <C> <C>
12/01/95 4,169 U.S. Dollar $ 4,169 5,600 Australian Dollar $4,156
12/01/95 35 U.S. Dollar 35 1,907,910 Turkish Lira 35
12/01/95 49 U.S. Dollar 49 2,634,701 Turkish Lira 48
12/01/95 49 British Pound 75 76 U.S. Dollar 76
12/01/95 561,127 Indonesian Rupiah 246 245 U.S. Dollar 245
12/04/95 23 U.S. Dollar 23 52,507 Indonesian Rupiah 23
12/04/95 24 British Pound 37 38 U.S. Dollar 38
------ ----
$ 4,634 $4,621
======= =====
</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.
(7) Transactions with Affiliates
USAA Investment Management Company is indirectly wholly owned by United
Services Automobile Association (the Association), a large, diversified
financial services institution. At November 30, 1995, the Association
and its affiliates owned 5,962 shares (28.3%) of the Fund.
International Fund
Notes to Financial Statements (continued)
(In Thousands)
November 30, 1995
(Unaudited)
(8) Financial Highlights
Per share operating performance for a share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
Six-month Eight-month
Period ended Year 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 $ 15.78 $ 16.36 $ 14.48 $ 12.09 $ 11.57 $ 9.89
Net investment income .05 .10 - .07 .10 .13
Net realized and
unrealized gain .51 .29 2.23 2.45 .51 1.66
Distributions from net
investment income (.07) - - (.13) (.09) (.06)
Distributions of realized
capital gains (.09) (.97) (.35) - - (.05)
-------- --------- --------- ------- -------- -------
Net asset value at
end of period $ 16.18 $ 15.78 $ 16.36 $ 14.48 $ 12.09 $ 11.57
====== ======== ======== ======= ======= =======
Total return (%) * 3.52 2.49 15.67 21.11 5.30 18.21
Net assets at end of
period (000) $341,428 $346,033 $184,792 $88,757 $ 42,868 $ 28,931
Ratio of expenses to
average net assets (%) 1.17 (a) 1.17 1.31 (a) 1.50 1.69 1.82
Ratio of net investment
income to average net
assets (%) .62 (a) .81 .04 (a) .72 1.05 1.26
Portfolio turnover (%) 36.04 64.30 44.39 52.52 34.27 63.56
Average commission
rate paid per share .0026
(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>
