Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Manager 5
Financial Information:
Independent Auditors' Report 7
Portfolio of Investments 8
Notes to Portfolio of Investments 10
Statement of Assets and Liabilities 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 "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)1999, 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 Very high $3,000
First Start Growth Moderate to high $3,000
Gold Very high $3,000
Growth Moderate to high $3,000
Growth & Income Moderate $3,000
International Moderate to high $3,000
S&P 500 (Registered
Trademark) Index Moderate $3,000
Science & Technology Very high $3,000
World Growth Moderate to high $3,000
ASSET ALLOCATION
===============================================================================
Balanced Strategy Moderate $3,000
Cornerstone Strategy Moderate $3,000
Growth and Tax
Strategy Moderate $3,000
Growth Strategy 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 Moderate $3,000
Intermediate-Term Low to moderate $3,000
Short-Term Low $3,000
State Bond Income Moderate $3,000
MONEY MARKET
===============================================================================
Money Market Very low $3,000
Tax Exempt
Money Market Very low $3,000
Treasury Money
Market Trust Very low $3,000
State Money Market Very low $3,000
Foreign investing is subject to additional risks, such as currency fluctuations,
market illiquidity, and political instability.
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.
Some income may be subject to state or local taxes or the federal alternative
minimum tax.
An investment in a money market fund is not insured or guaranteed by the FDIC or
any other government agency. Although the fund seeks to preserve the value of
your investment at $1 per share, it is possible to lose money by investing in
the fund.
The Science & Technology 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 are not insured by the FDIC, are not deposits or
other obligations of, or guaranteed by, USAA Federal Savings Bank, are subject
to investment risks, and may lose value.
For more complete information about the mutual funds managed and distributed by
USAA Investment Management Company, including charges and operating expenses,
please call 1-800-531-8181 for a prospectus. Read it carefully before you
invest.
Message from the President
[PHOTOGRAPH OF PRESIDENT AND VICE CHAIRMAN OF THE BOARD, MICHAEL J.C. ROTH, CFA,
APPEARS HERE]
When I was a second lieutenant in pilot training at Williams AFB, I read the
book THIS KIND OF WAR by T. R. Fehrenbach. More than 30 years later I met Ted
Fehrenbach here in San Antonio where he resides and had a chance to tell him
that I think he is a brilliant man. I recall reading that LBJ declared THIS KIND
OF WAR required reading for people in his administration. Ted writes a regular
Sunday column for the San Antonio Express News, and he continues to delight me.
Last year he wrote a piece around Columbus Day, which included this observation:
"Spain was clearly disappointed with her admiral. While he had spent much
money charting islands with mosquitoes and a miserable climate (from the
Euro standpoint)...the Portuguese had reached the real India and returned
with fabulous profits. Of course, Columbus had opened up to Spain a vast
empire, filled with treasures of every kind, but then few investors take the
long view."
As I read this passage, I thought that Ted's understanding of markets is as
sharp as his grasp of history. At the beginning of 1999, there indeed seemed to
be few investors with the long view. There were many people declaring the
absolute superiority of the S&P 500 and growth stocks, especially tech stocks,
while proclaiming that strategies such as value investing and asset allocation
were no longer relevant.
The S&P 500 and its index funds have had a wondrous four years, but here we are
five-and-a-half months into 1999, and what a difference we're seeing: The Dow
Jones Industrial Average is up more than twice as much as the S&P 500 so far
this year.
The S&P 500 Index is heavily influenced by companies like America Online, Cisco
Systems, Intel, IBM, Lucent, MCI, and Microsoft. The Dow also includes IBM, but
its impetus is coming from companies such as J.P. Morgan, Alcoa, Caterpillar,
Disney, General Motors, and Union Carbide. The upshot of this is that you can
afford to take the long view. Value investing or asset allocation are just
different from a growth philosophy. My view, throughout the last 27 years, is
that these methods go through cycles of in-favor and out-of-favor. But they do
cycle. And just about the time you begin to read that one of them is no longer
viable, you can bet the market will change. A good discipline practiced well
will give you a very good chance of prospering in the long run.
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
The S&P 500 Index is an unmanaged index representing the weighted average
performance of a group of 500 widely held, publicly traded stocks. It is not
possible to invest in the S&P 500 Index.
The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30
actively traded blue chip stocks.
Past performance is no guarantee of future results.
Investment Review
USAA TREASURY MONEY MARKET TRUST
OBJECTIVE: Maximum current income while maintaining the highest degree of safety
and liquidity.
TYPES OF INVESTMENTS: U.S. government securities with maturities of 397 days or
less; mostly U.S. Treasury bills, notes and bonds, and repurchase agreements
collateralized by these instruments.
- --------------------------------------------------------------------------------
5/31/99 5/31/98
- --------------------------------------------------------------------------------
Net Assets $144.0 Million $106.7 Million
Net Asset Value Per Share $1.00 $1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AND CURRENT YIELD AS OF 5/31/99
- --------------------------------------------------------------------------------
1 Year 5 Years Since Inception on 2/1/91 7-day Yield
4.83% 5.08% 4.53% 4.42%
- --------------------------------------------------------------------------------
Total return equals income yield and assumes reinvestment of all dividends. 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. The 7-day yield quotation more closely reflects current
earnings of the Fund than the total return quotation.
7-DAY YIELD COMPARISON
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 IBC Financial
Data, Inc./U.S. Treasury & Repo Average for the period of 5/26/98 through
5/25/99:
USAA Treasury
Money Market Trust IBC Average
----------------- -----------
05/26/98 5.04% 4.73%
06/30/98 5.16% 4.80%
07/28/98 5.14% 4.78%
08/25/98 5.11% 4.75%
09/29/98 4.96% 4.64%
10/27/98 4.47% 4.17%
11/24/98 4.43% 4.05%
12/29/98 4.54% 4.14%
01/26/99 4.39% 4.04%
02/23/99 4.47% 4.09%
03/30/99 4.52% 4.18%
04/27/99 4.40% 4.05%
05/25/99 4.38%* 4.04%*
Data represent the last Tuesday of each month.
* Ending date 05/25/99
The graph tracks the Fund's 7-day yield against IBC Financial Data, Inc./U.S.
Treasury & Repo, an average of all major treasury money market fund yields.
Message from the Manager
[PHOTOGRAPH OF PORTFOLIO MANAGER, PAMELA K. BLEDSOE, CFA, APPEARS HERE]
FULL STEAM AHEAD
Last year, the Federal Reserve (Fed) sought to offset a slowdown in the U.S.
economy that could have been caused by reduced trade with other countries.
Actions were implemented by the Fed during October and November of 1998 which
lowered the Federal Funds rate by 0.75%. It worked. Over the course of the last
few months, numerous economic statistics have been released indicating the
strength of the U.S. economy. As represented by statistics such as job growth,
wages, and manufacturing strength, the U.S. economy appears to be going full
steam ahead. Many economists are currently expecting the Fed to increase the
Federal Funds rate in order to prevent inflationary pressures that could result
from the domestic economy growing too quickly.
Strong indicators of the robust growth in the U.S economy have caused market
interest rates to rise over the last few weeks. At the end of November 1998,
Treasury bills were yielding 4.49%. With the rise in market rates, Treasury
bills were yielding 4.97% at the end of May 1999. With the Federal Funds rate
target currently at 4.75%, Treasury securities have become more attractive. In
response to this trend, I have begun to shift more of the Fund's assets into
Treasury bills and notes. As of May 31, 1999, the USAA Treasury Money Market
Trust had 59.3% in repurchase agreements and 37.2% in Treasury bills and notes.
As long as Treasuries continue to provide value over repurchase agreements, we
will continue to purchase more Treasury securities.
The above strategy continues to perform well. According to IBC Financial Data,
the Treasury Money Market Trust continues to be ranked among the top money
market funds. For the 12 months ended May 31, 1999, your Fund ranked 4th out of
95 Treasury money market funds with a yield of 4.83%. Past performance is no
guarantee of future results.
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 of the USAA Treasury Money Market Trust. The
data is from 2/01/91 through 05/31/99. The data points from the graph are as
follows:
USAA Treasury Money Market Trust
Amount
------
02/01/91 $10,000
05/31/91 10,172
11/30/91 10,436
05/31/92 10,649
11/30/92 10,822
05/31/93 10,973
11/30/93 11,128
05/31/94 11,294
11/30/94 11,530
05/31/95 11,845
11/30/95 12,173
05/31/96 12,482
11/30/96 12,791
05/31/97 13,114
11/30/97 13,453
05/31/98 13,800
11/30/98 14,152
05/31/99 14,466
Data since inception on 2/01/91 through 05/31/99
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. For 7-day
yield information, please refer to the Fund's Investment Review Page.
An investment in this Fund is not insured or guaranteed by the FDIC or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund.
See page 8 for a complete listing of the Portfolio of Investments.
Independent Auditors' Report
KPMG
The Shareholders and Board of Trustees
USAA INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of the USAA Treasury Money Market Trust, a series
of the USAA Investment Trust, as of May 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period then ended, and financial highlights,
presented in note 9 to the financial statements, for each of the years in the
five-year period then ended. These financial statements and financial highlights
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
USAA Treasury Money Market Trust as of May 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG LLP
San Antonio, Texas
July 2, 1999
USAA TREASURY MONEY MARKET TRUST
PORTFOLIO OF INVESTMENTS
(IN THOUSANDS)
May 31, 1999
Principal
Amount Security Value
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS (7.4%)
$ 1,000 4.37%, 6/17/1999 $ 998
1,000 4.47%, 8/19/1999 990
1,800 4.38%, 9/09/1999 1,777
3,000 4.57%, 9/16/1999 2,958
2,000 4.30%, 10/07/1999 1,969
2,000 4.43%, 11/12/1999 1,959
- --------------------------------------------------------------------------------
Total U.S. treasury bills (cost: $10,651) 10,651
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES (29.8%)
2,000 6.75%, 5/31/1999 2,000
2,000 6.75%, 6/30/1999 2,002
2,000 6.38%, 7/15/1999 2,002
2,000 5.88%, 7/31/1999 2,002
2,000 6.00%, 8/15/1999 2,007
2,000 6.88%, 8/31/1999 2,011
2,000 7.13%, 9/30/1999 2,017
2,000 6.00%, 10/15/1999 2,010
2,000 5.63%, 10/31/1999 2,007
2,000 5.88%, 11/15/1999 2,011
2,000 7.75%, 11/30/1999 2,030
2,000 7.75%, 12/31/1999 2,034
2,000 5.38%, 1/31/2000 2,008
1,000 5.88%, 2/15/2000 1,007
2,000 8.50%, 2/15/2000 2,051
3,000 5.50%, 2/29/2000 3,011
3,000 6.88%, 3/31/2000 3,048
2,500 6.75%, 4/30/2000 2,542
3,000 6.38%, 5/15/2000 3,037
2,000 6.25%, 5/31/2000 2,021
- --------------------------------------------------------------------------------
Total U.S. treasury notes (cost: $42,858) 42,858
- --------------------------------------------------------------------------------
Total U.S. treasury bills and notes (cost: $53,509) 53,509
- --------------------------------------------------------------------------------
U.S. GOVERNMENT GUARANTEED NOTES (4.2%)
1,000 9.10%, 8/01/1999 1,007
5,000 4.85%, 4/02/2007 (COP) (a) 5,000
- --------------------------------------------------------------------------------
Total U.S. government guaranteed notes (cost: $6,007) 6,007
- --------------------------------------------------------------------------------
Total investment in securities (cost: $59,516) 59,516
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (59.3%)
35,700 ABN AMRO, Inc., 4.70%, acquired on 5/28/99 and due
6/1/99 at $35,719 (collateralized by a $25,000 U.S.
Treasury Note, 5.875%, due 11/15/99 and a $11,056
U.S. Treasury Note, 6.0%, due 8/15/99; total market
value of $36,433) 35,700
7,042 BT Alex Brown, Inc., 4.78%, acquired on 5/28/99 and
due 6/1/99 at $7,046 (collateralized by a $7,037 U.S.
Treasury Note, 6.875%, due 8/31/99; market value $7,187) 7,042
7,000 First Union Capital Markets, 4.73%, acquired on 5/28/99
and due 6/1/99 at $7,004 (collateralized by a $6,995
U.S. Treasury Note, 6.875%, due 8/31/99; market value
of $7,144) 7,000
35,700 State Street Corp., 4.75%, acquired on 5/28/99 and due
6/1/99 at $35,719 (collateralized by a $35,835 U.S.
Treasury Note, 5.625%, due 12/31/99; market value of
$36,776) 35,700
- --------------------------------------------------------------------------------
Total repurchase agreements (cost: $85,442) 85,442
- --------------------------------------------------------------------------------
Total investments (cost: $144,958) $144,958
================================================================================
USAA TREASURY MONEY MARKET TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
May 31, 1999
GENERAL NOTES
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.
PORTFOLIO DESCRIPTION ABBREVIATION
COP - Certificates of Participation.
SPECIFIC NOTES
(a) This security has an optional demand feature on each quarterly reset.
Variable Rate Demand Notes (VRDN) provide the right, on any business day, to
sell the security at face value on either that day or in seven days. The
interest rate is generally adjusted at a stipulated daily, weekly, monthly, or
quarterly interval to a rate that reflects current market conditions. In money
market funds, the effective maturity of these instruments is deemed to be less
than 397 days in accordance with detailed regulatory requirements.
See accompanying notes to financial statements.
USAA TREASURY MONEY MARKET TRUST
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
May 31, 1999
ASSETS
Investments in securities $ 59,516
Repurchase agreements 85,442
Cash 492
Receivables:
Capital shares sold 65
Interest 740
-----------
Total assets 146,255
-----------
LIABILITIES
Securities purchased 2,021
Capital shares redeemed 166
USAA Investment Management Company 15
USAA Transfer Agency Company 12
Accounts payable and accrued expenses 31
Dividends on capital shares 15
-----------
Total liabilities 2,260
-----------
Net assets applicable to capital shares outstanding $143,995
===========
REPRESENTED BY:
Paid-in capital $143,995
===========
Capital shares outstanding, unlimited number of shares
authorized, no par value 143,995
===========
Net asset value, redemption price, and offering price per share $ 1.00
===========
See accompanying notes to financial statements.
USAA TREASURY MONEY MARKET TRUST
STATEMENT OF OPERATIONS
(IN THOUSANDS)
Year ended May 31, 1999
Net investment income:
Interest income $ 6,486
---------
Expenses:
Management fees 160
Transfer agent's fees 127
Custodian's fees 65
Postage 14
Shareholder reporting fees 8
Trustees' fees 4
Registration fees 44
Professional fees 31
Other 6
---------
Total expenses 459
---------
Net investment income $ 6,027
=========
See accompanying notes to financial statements.
USAA TREASURY MONEY MARKET TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Years ended May 31,
1999 1998
-----------------------------
From operations:
Net investment income $ 6,027 $ 4,864
-----------------------------
Distributions to shareholders from:
Net investment income (6,027) (4,864)
-----------------------------
From capital share transactions:
Proceeds from shares sold 149,402 104,327
Shares issued for dividends reinvested 5,709 4,561
Cost of shares redeemed (117,795) (90,821)
-----------------------------
Increase in net assets from capital
share transactions 37,316 18,067
-----------------------------
Net increase in net assets 37,316 18,067
Net assets:
Beginning of period 106,679 88,612
-----------------------------
End of period $143,995 $106,679
=============================
Change in shares outstanding:
Shares sold 149,402 104,327
Shares issued for dividends reinvested 5,709 4,561
Shares redeemed (117,795) (90,821)
-----------------------------
Increase in shares outstanding 37,316 18,067
=============================
See accompanying notes to financial statements.
USAA TREASURY MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
(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 annual report pertains only to the USAA
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. USAA Investment Management Company (the Manager) seeks to achieve
this objective by investing the Fund's assets in U.S. Government securities with
maturities of 397 days or less.
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 three joint short-term revolving
loan agreements totaling $850 million, two with USAA Capital Corporation
(CAPCO), an affiliate of the Manager ($250 million committed and $500 million
uncommitted), and one with Bank of America ($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 both agreements with CAPCO, the Fund
may borrow from CAPCO an amount up to 5% of the Fund's total assets at CAPCO's
borrowing rate with no markup. Subject to availability under its agreement with
Bank of America, the Fund may borrow from Bank of America, at Bank of America's
borrowing rate plus a markup, an amount which, when added to outstanding
borrowings under the CAPCO agreements, does not exceed 25% of the Fund's total
assets. The Fund had no borrowings under either of these agreements during the
year ended May 31, 1999.
(3) DISTRIBUTIONS
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. 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
Cost of purchases and proceeds from sales/maturities of securities for the
period ended May 31, 1999, were $17.2 billion and $17.2 billion, respectively.
(5) TRANSACTIONS WITH MANAGER
A. Management fees - USAA Investment Management Company carries out the Fund's
investment policies and manages the Fund's portfolio. 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, 1999.
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 $28.50 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) YEAR 2000 (UNAUDITED)
Like other mutual funds, the Fund could be adversely affected if the computer
systems used by the Manager and the Fund's other service providers are not able
to perform their intended functions effectively after 1999 because of the
inability of computer software to distinguish the year 2000 from the year 1900.
The Manager is taking steps to address this potential year 2000 problem with
respect to the computer systems that they use and to obtain satisfactory
assurances that the comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact to the Fund from this
problem.
(9) SHAREHOLDER DIVIDENDS (UNAUDITED)
The USAA Treasury Money Market Trust earned 35.5% of its income from investments
in U.S. Treasury securities during the year.
The distributions related to earnings for the fiscal year ended May 31, 1999,
were $.05 per share, which were entirely derived from taxable interest income.
(10) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
Year Ended May 31,
------------------------------------------------------
1999 1998 1997 1996 1995
------------------------------------------------------
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income .05 .05 .05 .05 .05
Distributions from net
investment income (.05) (.05) (.05) (.05) (.05)
------------------------------------------------------
Net asset value at
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================================================
Total return (%) * 4.83 5.24 5.06 5.38 4.88
Net assets at end of
period (000) $143,995 $106,679 $ 88,612 $ 76,777 $ 67,876
Ratio of expenses to
average net assets (%) .36 .375 .375 .375 .375
Ratio of expenses to
average net assets
excluding
reimbursements (%) n/a .392 .394 .403 .488
Ratio of net investment
income to average
net assets (%) 4.69 5.11 4.95 5.23 4.91
* Assumes reinvestment of all dividend income distributions during the period.
TRUSTEES
Robert G. Davis, Chairman of the Board
Michael J.C. Roth, President and Vice Chairman of the Board
John W. Saunders, Jr., Vice President
Barbara B. Dreeben
Howard L. Freeman, Jr.
Robert L. Mason
Richard A. Zucker
INVESTMENT ADVISER, UNDERWRITER AND DISTRIBUTOR
USAA Investment Management Company
9800 Fredericksburg Road
San Antonio, Texas 78288
TRANSFER AGENT
USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
KPMG LLP
112 East Pecan, Suite 2400
San Antonio, Texas 78205
Telephone Assistance
Call toll free - Central Time
Monday - Friday 7:30 a.m. to 8:00 p.m.
Saturdays 8:30 a.m. to 5:00 p.m.
For Additional Information On Mutual Funds
1-800-531-8181, (in San Antonio) 456-7211
For account servicing, exchanges or redemptions
1-800-531-8448, (in San Antonio) 456-7202
Recorded Mutual Fund Price Quotes
24-Hour Service (from any phone)
1-800-531-8066, (in San Antonio) 498-8066
Mutual Fund USAA TouchLine (Registered Trademark)
(from Touchtone phones only)
For account balance, last transaction or fund prices
1-800-531-8777, (in San Antonio) 498-8777
