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TABLE OF CONTENTS
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Manager 5
Financial Information:
Statement of Assets and Liabilities 7
Portfolio of Investments in Securities 8
Notes to Portfolio of Investments in Securities 9
Statement of Operations 10
Statements of Changes in Net Assets 11
Notes to Financial Statements 12
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IMPORTANT INFORMATION
Through our ongoing efforts to reduce expenses and respond to shareholder
requests, your annual and semiannual report mailings are "streamlined." One copy
of each report is sent to each address, rather than 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 Treasury Money
Market Trust, 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)1998, USAA. All rights reserved.
USAA FAMILY OF FUNDS SUMMARY
Fund Minimum
Type/Name Volatility Investment*
CAPITAL APPRECIATION
Aggressive Growth Very high $3,000
Emerging Markets(1) Very high $3,000
First Start Growth Moderate to high $3,000
Gold(1) Very high $3,000
Growth Moderate to high $3,000
Growth & Income Moderate $3,000
International(1) Moderate to high $3,000
S&P 500 Index(2) Moderate $3,000
Science
& Technology(5) Very high $3,000
World Growth(1) Moderate to high $3,000
ASSET ALLOCATION
Balanced Strategy(1) Moderate $3,000
Cornerstone Strategy(1) Moderate $3,000
Growth and Tax
Strategy(3) Moderate $3,000
Growth Strategy(1) Moderate to high $3,000
Income Strategy Low to moderate $3,000
INCOME -- TAXABLE
GNMA Low to moderate $3,000
Income Moderate $3,000
Income Stock Moderate $3,000
Short-Term Bond Low $3,000
INCOME -- TAX EXEMPT
Long-Term(3) Moderate $3,000
Intermediate-Term(3) Low to moderate $3,000
Short-Term(3) Low $3,000
State Bond Income(3)** Moderate $3,000
MONEY MARKET
Money Market(4) Very low $3,000
Tax Exempt
Money Market(3),(4) Very low $3,000
Treasury Money
Market Trust(4) Very low $3,000
State Money Market(3),(4)** Very low $3,000
(1)Foreign investing is subject to additional risks, which are discussed in
the funds' prospectuses.
(2)S&P 500(Registered Trademark) is a trademark of The McGraw-Hill Companies,
Inc. and has been licensed for use. The product is not sponsored, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding the advisability of investing in the product.
(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.
(5)This Fund may be more volatile than a fund that diversifies across many
industries.
* The InveStart(Registered Trademark) program is available for investors without
the $3,000 initial investment required to open an IMCO mutual fund account. A
mutual fund account can be opened with no initial investment if you elect to
have monthly automatic investments of at least $50 from a bank account.
InveStart is not available on tax-exempt funds or the S&P 500 Index Fund.
The minimum initial investment for IRAs is $250, except for the $2,000 minimum
required for the S&P 500 Index Fund. 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, Florida, New York, Texas, and Virginia funds available to
residents only.
Non-deposit investment products offered by USAA Investment Management Company
are not insured by the FDIC, are not deposits or other obligations of, or
guaranteed by, USAA Federal Savings Bank, and are subject to investment risks,
and may lose value.
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.
MESSAGE FROM THE PRESIDENT
Every week I get a report which summarizes all of the feedback we have gotten,
by mail and phone, from our shareholders and brokerage customers. We get
suggestions, complaints and also some compliments each week. We look for trends
which point out problems and we are always sure to respond to every one of these
contacts. One in particular caught my eye on the report for the week of December
11, 1997. It said, "Shareholder notes that Mr. Roth established Income Stock
Fund for grandchild born in 1995; in 1997 another grandchild was born and Mr.
Roth established a Cornerstone Strategy Fund; why was investment not made in the
same fund?" Fair question.
The best answer is that I think both of these funds are great vehicles for
investing for a child's future, and I like variety.
The Income Stock Fund and the Cornerstone Strategy Fund both offer
an investor an equity product with less volatility than the stock market alone.
In the case of the Income Stock Fund, the decreased volatility comes from a
heavy emphasis on companies that pay high dividends or whose dividends tend to
grow. For the Cornerstone Strategy Fund, the decrease in volatility comes from a
combination of domestic value stocks, real estate stocks, foreign stocks and
U.S. government bonds. In any given year either of these funds could be more
volatile than the S&P 500 Index,(1) but both have long-term records(2) which
indicate those will be unusual occurrences.
This combination of risk and reward appeals to me. I have friends who argue
pursuasively that a more aggressive fund would be better for a long-term
investment like this. If you only consider return, I suspect they are correct,
but I am doing what I advise our customers to do. I am asking myself, "What are
you comfortable with?" My answer is either of these two funds is appropriate. So
far, Karl Joseph Marbach and Katharine Sophia Broyles are doing just fine. Maybe
their parents will only have to worry about the last two or three years of
college.
Sincerely,
Michael J.C. Roth, CFA
PRESIDENT AND
VICE CHAIRMAN OF THE BOARD
(Photograph of the President, Michael J. C. Roth, CFA, appears here.)
(1)The S&P 500 Index 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.
(2)Past performance is no guarantee of future results and the value of your
investment may vary according to the Fund's performance.
For more complete information about the mutual funds managed and distributed by
USAA IMCO, including charges and expenses please call for a prospectus. Read it
carefully before you invest.
INVESTMENT REVIEW
TREASURY MONEY MARKET TRUST
OBJECTIVE: Provide investors with maximum current income while maintaining the
highest degree of safety and liquidity.
TYPES OF INVESTMENTS: Securities with maturities of 397 days or less that are
backed by the full faith and credit of the U.S. government and repurchase
agreements collateralized by such securities.
5/31/97 11/30/97
Net Assets................................ $88.6 Million $96.4 Million
Net Asset Value Per Share................ $1.00 $1.00
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 11/30/97
May 31, 1997 to November 30, 1997........................... 2.59% **
1 Year...................................................... 5.18%
5 Years..................................................... 4.45%
Since Inception on February 1, 1991......................... 4.44%
** Total returns for periods of less than one year are not annualized.
This six-month return is cumulative.
- ------------------------------------------------------------------------------
The Fund's simple yield was 5.17% for the 7-day period ended November 30, 1997,
and the weighted average maturity was 67 days.
Total returns 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. Past performance is no guarantee of future results. Yields and
returns fluctuate. An investment in this Fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that the
Fund will be able to maintain a stable net asset value of $1.00 per share.
- -----------------------------------------------
7-DAY YIELD COMPARISON GRAPH INFORMATION
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A chart in the form of a line graph appears here illustrating the comparison
of the 7-day yield of the USAA Treasury Money Market Trust to the 7 day yield
of the IBC/Donoghue's State Specific SB & GP Money Funds from 11/96 to 11/97.
USAA Treasury Money
Market Trust IBC/Donoghue
------------ -----------------
11/26/96 4.94% 4.64%
12/31/96 5.02% 4.78%
1/28/97 4.94% 4.61%
2/25/97 4.93% 4.59%
3/25/97 4.97% 4.65%
4/29/97 5.03% 4.71%
5/27/97 5.08% 4.73%
6/24/97 5.11% 4.77%
7/29/97 5.16% 4.82%
8/26/97 5.10% 4.82%
9/30/97 5.17% 4.87%
10/28/97 5.16% 4.86%
11/25/97 5.14% 4.83%
The graph tracks the Fund's 7-day yield against IBC/Donoghue's
Money Fund Averages/U.S. Treasury & Repo, an average of all major
treasury money market fund yields.
Data represent the last Tuesday of each month.
MESSAGE FROM THE MANAGER
(A photo of the portfolio manager, Pamela K. Bledsoe, CFA, appears here)
Fund Overview
From an investor viewpoint, the primary concern of money fund investing
should be yield. In comparison to certificates of deposits,(1) one gives
up very little yield in exchange for liquidity. Treasury money market
funds also offer the highest quality investments. When choosing among the
numerous money fund offerings, investors should compare expenses which can
vary greatly among mutual fund families. The USAA Treasury Money Market Trust
offers one of the lowest expense ratios among Treasury money market funds.
The 1-year Treasury bill is yielding nearly the same as it was at the beginning
of 1997 even though the Federal Reserve increased short-term interest rates by
.25% in March 1997. This rate increase is not reflected in the yields on
treasury bills because of the strong demand for U.S. Treasury bills. Since
treasury bills and notes comprise 45-55% of the Fund, investors are not
benefitting from the Fed action. I have increased the holdings of repurchase
agreements since these yields have exceeded those of the treasury bills for most
of the year. This structure, along with an expense ratio of only .375%, has kept
the Fund among the top ranked of all Treasury money market funds. For the six
months ending November 30, 1997, the Treasury Money Market Trust ranked 5 out of
109 treasury money market funds according to IBC/Donoghue's Money Fund Vision
Report for yield and return.
(1) Certificates of deposits are FDIC insured and offer a fixed return for a
fixed period of time.
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CUMULATIVE PERFORMANCE OF $10,000
============================================================
A chart in the form of a line graph appears here, illustrating the cumulative
performance of a $10,000 investment in the USAA Treasury Money Market Trust
for the period of 2/1/91 to 11/30/97. The data points from the graph are as
follows:
2/1/91 10,000
6/91 10,213
12/91 10,478
6/92 10,683
12/92 10,848
6/93 11,000
12/93 11,155
6/94 11,327
12/94 11,577
6/95 11,901
12/95 12,224
6/96 12,528
12/96 12,847
6/97 13,171
11/97 13,453
Past performance is no guarantee of future results and the value of your
investment may vary according to the Fund's performance. Income may be
subject to federal, state or local taxes, or to the alternative minimum tax.
An investment in this Fund is neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the Fund will be able to
maintain a stable net asset value of $1 per share.
See page 8 for a complete listing of the Portfolio of Investments in Securities.
Treasury Money Market Trust
Statement of Assets and Liabilities
(In Thousands)
November 30, 1997
(Unaudited)
Assets
Investments in securities $ 44,126
Repurchase agreements 51,539
Cash 138
Receivables:
Capital shares sold 117
Interest 508
Securities sold 3,000
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Total assets 99,428
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Liabilities
Securities purchased 2,917
Capital shares redeemed 55
USAA Investment Management Company 17
USAA Transfer Agency Company 9
Accounts payable and accrued expenses 28
Dividends on capital shares 20
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Total liabilities 3,046
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Net assets applicable to capital shares outstanding $ 96,382
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Represented by:
Paid-in capital $ 96,382
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Capital shares outstanding, unlimited number of shares authorized,
no par value 96,382
==========
Net asset value, redemption price, and offering price per share $ 1.00
==========
See accompanying notes to financial statements.
Treasury Money Market Trust
Portfolio of Investments in Securities
(In Thousands)
November 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Security Value
----------- -------- -----
U.S. Treasury Bills (16.4%)
<C> <C> <C> <C>
$ 2,000 5.08%, 12/04/97 $ 1,999
1,000 5.16%, 12/11/97 998
2,000 5.30%, 1/08/98 1,988
3,000 5.11%, 1/22/98 2,977
2,000 5.14%, 2/05/98 1,981
2,000 5.18%, 2/12/98 1,978
1,500 5.17%, 4/02/98 1,474
1,000 5.16%, 7/23/98 966
1,500 5.22%, 8/20/98 1,443
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Total U.S. treasury bills (cost: $15,804) 15,804
- ---------------------------------------------------------------------------------------------------
U.S. Treasury Notes (29.4%)
2,000 5.25%, 12/31/97 1,999
2,250 7.88%, 1/15/98 2,256
2,000 5.63%, 1/31/98 2,000
1,250 5.13%, 2/28/98 1,248
1,000 5.13%, 3/31/98 998
2,000 7.88%, 4/15/98 2,016
2,000 5.13%, 4/30/98 1,994
2,500 6.13%, 5/15/98 2,505
1,500 6.25%, 6/30/98 1,506
1,250 8.25%, 7/15/98 1,271
2,000 5.25%, 7/31/98 1,994
2,000 5.88%, 8/15/98 2,004
2,000 6.13%, 8/31/98 2,007
1,250 4.75%, 9/30/98 1,241
1,000 6.00%, 9/30/98 1,004
2,250 7.13%, 10/15/98 2,279
- ------------------------------------------------------------------------------------------------
Total U.S. treasury notes (cost: $28,322) 28,322
- ------------------------------------------------------------------------------------------------
Total U.S. treasury bills and notes (cost: $44,126) 44,126
- ------------------------------------------------------------------------------------------------
Repurchase Agreements (53.5%)
23,539 Bankers Trust Securities Corp., 5.68%, acquired on 11/28/97 and
due 12/01/97 at $23,550 (collateralized by a $25,090 U.S. Treasury
Bill, due 9/17/98; market value $24,012) 23,539
4,500 Chase Securities, Inc., 5.63%, acquired on 11/28/97 and due on
12/01/97 at $4,502 (collateralized by a $4,525 U.S. Treasury
Note, 5.00%, due 1/31/98; market value of $4,593) 4,500
23,500 First Chicago Corp., 5.65%, acquired on 11/28/97 and due 12/01/97
at $23,511 (collateralized by a $23,855 U.S. Treasury Note, 5.88%,
due 4/30/98; market value of $23,997) 23,500
- ------------------------------------------------------------------------------------------------
Total repurchase agreements (cost: $51,539) 51,539
- ------------------------------------------------------------------------------------------------
Total investments (cost: $95,665) $ 95,665
================================================================================================
</TABLE>
Notes To Portfolio of Investments in Securities
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.
Treasury Money Market Trust
Statement of Operations
(In Thousands)
Six-month period ended November 30, 1997
(Unaudited)
Net investment income:
Interest income $ 2,492
---------
Expenses:
Management fees 57
Transfer agent's fees 48
Custodian's fees 24
Postage 8
Shareholder reporting fees 3
Trustees' fees 2
Registration fees 21
Professional fees 14
Other 4
-----------
Total expenses before reimbursement 181
Expenses reimbursed (11)
-----------
Total expenses after reimbursement 170
-----------
Net investment income $ 2,322
===========
See accompanying notes to financial statements.
Treasury Money Market Trust
Statements of Changes in Net Assets
(In Thousands)
Six-month period ended November 30, 1997
and Year ended May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
11/30/97 5/31/97
-------- --------
<S> <C> <C>
From operations:
Net investment income $ 2,322 $ 4,175
-------- ---------
Distributions to shareholders from:
Net investment income (2,322) (4,175)
-------- --------
From capital share transactions:
Proceeds from shares sold 45,283 83,247
Shares issued for dividends reinvested 2,172 3,896
Cost of shares redeemed (39,685) (75,308)
--------- ---------
Increase in net assets from capital share transactions 7,770 11,835
--------- ---------
Net increase in net assets 7,770 11,835
Net assets:
Beginning of period 88,612 76,777
--------- --------
End of period $ 96,382 $ 88,612
========= ========
Change in shares outstanding:
Shares sold 45,283 83,247
Shares issued for dividends reinvested 2,172 3,896
Shares redeemed (39,685) (75,308)
---------- ---------
Increase in shares outstanding 7,770 11,835
========== =========
See accompanying notes to financial statements.
</TABLE>
Treasury Money Market Trust
Notes to Financial Statements
November 30, 1997
(Unaudited)
(1) Summary of Significant Accounting Policies
USAA INVESTMENT TRUST (the Trust), registered under the Investment Company Act
of 1940, as amended, 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
Treasury Money Market Trust (the Fund). The Fund's investment objective is to
provide maximum current income while maintaining the highest degree of safety
and liquidity.
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. Pursuant to Rule 2a-7 of the Investment Company Act of 1940, as amended,
securities in the Fund are stated at amortized cost which approximates market
value. Repurchase agreements are valued at cost.
2. 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 -- Security transactions are accounted for on the
date the securities are purchased or sold (trade date). Interest income is
recorded on the accrual basis. Discounts and premiums on securities are
amortized over the life of the respective securities. Gain or loss from sales of
investment securities is computed on the identified cost basis.
D. Use of estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that may affect the reported amounts in the financial
statements.
(2) Lines of Credit
The Fund participates with other USAA funds in two joint short-term revolving
loan agreements totaling $850 million, one with USAA Capital Corporation
(CAPCO), an affiliate of the Manager ($750 million uncommitted), and one with
NationsBank of Texas, N.A. ($100 million committed). The purpose of the
agreements is to meet temporary or emergency cash needs, including redemption
requests that might otherwise require the untimely disposition of securities.
Subject to availability under its agreement with CAPCO, the Fund may borrow from
CAPCO an amount up to 5% of its total assets at CAPCO's borrowing rate with no
markup. Subject to availability under its agreement with NationsBank, the Fund
may borrow from NationsBank an amount which, when added to outstanding
borrowings under the CAPCO agreement, does not exceed 25% of its total assets at
NationsBank's borrowing rate plus a markup. During the six-month period ended
November 30, 1997, the Fund had no borrowings under either of these agreements.
(3) Distributions
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. All net investment income available for distribution was
distributed as of November 30, 1997. Distributions of realized gains from
security transactions not offset by capital losses are made in the succeeding
fiscal year or as otherwise required to avoid the payment of federal taxes.
(4) Investment Transactions
Purchases and sales/maturities of securities for the six-month period ended
November 30, 1997 were $5,638,553,868 and $5,631,103,000, respectively.
(5) Transactions with Manager
A. Management fees -- The investment policies of the Fund and management of the
Fund's portfolio are carried out by USAA Investment Management Company (the
Manager). The Fund's management fees are computed at .125% of its annual average
net assets.
The Manager has voluntarily agreed to limit the annual expenses of the Fund to
.375% of its annual average net assets through October 1, 1998.
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 based on an annual charge of $26 per shareholder account plus
out-of-pocket expenses.
C. Underwriting services -- The Manager provides exclusive underwriting and
distribution of the Fund's shares on a continuing best efforts basis. The
Manager receives no commissions or fees for this service.
(6) Transactions with Affiliates
Certain trustees and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated trustees or Fund officers
received any compensation from the Fund.
(7) Repurchase Agreements
The Fund may enter into repurchase agreements with commercial banks or
recognized security dealers. These agreements are secured by obligations backed
by the full faith and credit of the U.S. Government. Obligations pledged as
collateral are required to maintain a value equal to or in excess of the resale
price of the repurchase agreement and are held by the Fund's custodian until
maturity of the repurchase agreement. The Fund's Manager monitors the
creditworthiness of sellers with which the Fund may enter into repurchase
agreements.
(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 Period Ended Year Ended
November 30, Year Ended May 31, May 31, September 30,
------------------
<C> <C> <C> <C> <C> <C>
1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment
income .03 .05 .05 .05 .02 .03
Distributions from net
investment income (.03) (.05) (.05) (.05) (.02) (.03)
------ ----- ----- ----- ----- -----
Net asset value at
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ===== ===== ===== ===== =====
Total return (%) * 2.59 5.06 5.38 4.88 1.96 2.84
Net assets at end of
period (000) $ 96,382 $ 88,612 $ 76,777 $ 67,876 $ 37,984 $ 30,448
Ratio of expenses to
average net assets (%) .375(a,b) .375(b) .375(b) .375(b) .375(a,b) .375(b)
Ratio of net investment
income to average
net assets (%) 5.11(a,b) 4.95(b) 5.23(b) 4.91(b) 2.94(a,b) 2.81(b)
* Assumes reinvestment of all dividend income distributions during the period.
(a) Annualized. The ratio is not necessarily indicative of 12 months of operations.
(b) The information contained in the preceding table is based on actual expenses
for the period, after giving effect to reimbursements of expenses by the
Manager. Absent such reimbursements the Fund's ratios would have been:
Six-month Eight-month
Period Ended Period Ended Year Ended
November 30, Year Ended May 31, May 31, September 30,
------------------
1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ------
Ratio of expenses to
average net assets (%) .40(a) .39 .40 .49 .62(a) .54
Ratio of net investment
income to average
net assets (%) 5.08(a) 4.94 5.21 4.80 2.69(a) 2.65
</TABLE>
