Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Managers 5
Financial Information:
Distributions to Shareholders 9
Independent Auditors' Report 10
Portfolio of Investments 11
Notes to Portfolio of Investments 33
Statement of Assets and Liabilities 34
Statement of Operations 35
Statements of Changes in Net Assets 36
Notes to Financial Statements 37
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 Growth
Strategy 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)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 GROWTH STRATEGY FUND
OBJECTIVE: High total return, with reduced risk over time, through an asset
allocation strategy which emphasizes capital appreciation and gives secondary
emphasis to income.
- --------------------------------------------------------------------------------
5/31/99 5/31/98
- --------------------------------------------------------------------------------
Net Assets $258.8 Million $249.4 Million
Net Asset Value Per Share $14.70 $14.30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 5/31/99
- --------------------------------------------------------------------------------
1 Year Since Inception on 9/1/95
8.46% 14.72%
- --------------------------------------------------------------------------------
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 represent past
performance and are 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.
CUMULATIVE PERFORMANCE COMPARISON
A chart in the form of a line graph appears here, illustrating the comparison of
a $10,000 hypothetical investment in the USAA Growth Strategy Fund to the S&P
500 Index for the period of 09/01/95 through 5/31/99. The data points from the
graph are as follows:
USAA Growth S&P 500
Strategy Fund Index
------------- -------
09/01/95 $10,000 $10,000
11/30/95 10,330 10,840
05/31/96 12,776 12,117
11/30/96 12,999 13,858
05/31/97 13,764 15,684
11/30/97 14,381 17,809
05/31/98 15,432 20,493
11/30/98 15,349 22,026
05/31/99 16,738 24,803
Data since inception on 9/1/95 through 5/31/99
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Growth Strategy Fund to the S&P 500 Index, an unmanaged index representing
the weighted 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.
Message from the Managers
[PHOTOGRAPH OF PORTFOLIO MANAGERS APPEARS HERE: Standing L to R: John K. Cabell,
Jr., CFA (Small Cap Stocks), David G. Parsons, CFA (Allocation Manager, Large
Cap Stocks), W. Travis Selmier, II, CFA (International Stocks), Paul H.
Lundmark, CFA (Bonds), Eric M. Efron, CFA (Small Cap Stocks), Pamela K. Bledsoe,
CFA (Money Market Instruments), and Albert C. Sebastian, CFA (International
Stocks); Seated: David G. Peebles, CFA (International Stocks).]
FUND OVERVIEW
Through an asset allocation strategy encompassing domestic and international
stocks and bonds, the Growth Strategy Fund seeks to remove the individual
investor's asset allocation burden.
LARGE CAPITALIZATION STOCKS
The large cap stock sector of the Fund outperformed the S&P 500 Index.
Throughout the course of the past fiscal year, our strongest areas were
technology, consumer cyclicals, and health care. Our weakest areas were consumer
staples and financials.
Our investment strategy is to concentrate our purchases in undervalued growth
stocks within the context of a broadly diversified portfolio. Following this
strategy, we recently purchased three out-of-favor health care related
companies: the drug distributors McKesson HBOC, Bergen Brunswig, and the
drugstore Rite Aid. Each was selling at compelling valuations and has excellent
growth prospects. In mid-April of this year, we purchased several out-of-favor
growth cyclical companies as well, including Emerson Electric, Caterpillar, and
Illinois Tool Works. We made these purchases because we believe that the severe
problems in the emerging markets are diminishing. As the developing economies
begin growing again, the demand for the products of these three companies may
also rise.
As of May 31, 1999, 32.4% of the Fund's net assets were in large capitalization
stocks.
SMALL CAPITALIZATION STOCKS
The small capitalization category of the Fund invests in companies with market
capitalizations less than $1 billion. These companies have rapid earnings growth
potential, are innovative, and are well positioned to take advantage of
long-term social and economic trends.
During the year ended May 31, 1999, the small capitalization category benefited
from strong returns in its technology holdings, particularly in the Internet and
semiconductor industries. Other areas of strength were telecommunications
services, biotech, and retail. These factors enabled the small capitalization
category to outperform the Russell 2000 Index.(1) On the other hand, weakness in
energy and apparel companies had a mildly negative effect on overall results.
The small capitalization category accounted for 26.7% of the Fund's net assets
as of May 31, 1999.
INTERNATIONAL STOCKS
This section of the Fund did not perform well throughout the past 12 months. The
problem was twofold. First, we were overweighted in Europe, which was generally
weak compared to the rest of the world. Further, our European portfolio had a
relatively high exposure to energy and cyclical stocks, which underperformed
despite their strong recovery late in the year. Second, although Japan posted
strong returns for the year, we were underweighted in this market. Nevertheless,
our individual stock picks (mainly in technology, telecommunications, and
financials) did well versus the overall Japanese market.
We have recently slightly reduced our exposure to Europe and raised our stakes
in Japan and the emerging markets. At the same time, we remain committed to
Europe because of the very attractive valuations (relative to both the United
States and Japan) and our continuing belief in the future economic benefits of
the European Monetary Union.
International stocks accounted for 19.7% of the Fund's assets on May 31, 1999.
BONDS
We manage the bond sector so that income is the primary component of total
return. There have been significant shifts in investor sentiment over the past
year. During the second half of 1998, investors fled to the safety of Treasury
securities and sold off other debt securities because of the fear of a financial
meltdown. This hurt our performance during that time because we were
underweighted in Treasuries. However, with the Federal Reserve Board lowering
overnight rates .75%, the markets settled down and investors became more
comfortable purchasing other debt classes besides Treasuries.
Since the beginning of the year, interest rates have risen dramatically. The
economy is performing much more strongly than anticipated, and the fear is that
inflation will rise as a consequence. The Federal Reserve Board recently changed
its bias toward increasing overnight rates.
Within the Fund's bond portion, the best performing holdings were the Collateral
Mortgage Obligations. These instruments are defensive in nature and will
outperform most other debt securities in a rising-interest-rate environment.
MacSaver Financial bonds have underperformed over the past year but we continue
to hold these bonds because their financial condition has begun to improve.
Looking to the future, we feel that the economy will continue to be strong,
resulting in corporate bonds and mortgage-backed and asset-backed securities
increasing in relative value. As of May 31, 1999, bonds made up 16.8% of the
Fund's net assets.
PERFORMANCE
For the 12 months ended May 31, 1999, the Fund returned 8.46%, slightly below
the 8.54% return of the Flexible Portfolio(2) average according to Lipper
Analytical Services, Inc.(3) The Fund's slightly unfavorable performance
compared to its peer group was caused primarily by the international sector,
which was down, and to a lesser degree by the bond and small cap sectors. Large
cap stocks performed well.
(1) The Russell 2000 (Registered Trademark) Index is a widely recognized,
unmanaged small cap index consisting of the 2,000 smallest companies within the
Russell 3000(Registered Trademark) Index.
(2) In May 1999, Lipper moved the Growth Strategy Fund from the Growth category
to the Flexible Portfolio category.
(3) Lipper Analytical Services, Inc. is an independent organization that
monitors the performance of mutual funds.
ASSET ALLOCATION
A pie chart is shown here depicting the Asset Allocation as of May 31, 1999 of
the USAA Growth Strategy Fund to be:
Large Cap Stocks - 32.4%*; Small Cap Stocks - 26.7%*; International Stocks -
19.7%*; Bonds - 16.8%*; and Money Market Instruments - 1.3%*.
* Percentages are of the Net Assets in the Portfolio and may or may not equal
100%.
- ----------------------------------------------
TOP 10 EQUITY HOLDINGS*
(% OF NET ASSETS)
- ----------------------------------------------
AAR Corp. 1.1
IBM Corp. 1.0
General Electric Co. 1.0
TranSwitch Corp. 0.9
Sunrise Assisted Living 0.9
Microsoft Corp. 0.9
Aviation Sales Co. 0.7
Superior Consultant Holdings Corp. 0.7
Intel Corp. 0.7
NCO Group, Inc. 0.7
- ----------------------------------------------
- ----------------------------------------------
TOP 10 INDUSTRIES*
(% OF NET ASSETS)
- ----------------------------------------------
Banks - Major Regional 5.4
Real Estate Investment Trusts 4.2
Telephones 4.2
Drugs 3.5
Electronics - Semiconductors 3.4
Telecommunications - Long Distance 3.3
Aerospace/Defense 2.8
Computer Software & Service 2.8
Retail - Specialty 2.7
Finance - Diversified 2.6
- ----------------------------------------------
* As of May 31, 1999
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 11 for a complete listing of the Portfolio of Investments.
Distributions to Shareholders
The following per share information describes the federal tax treatment of
distributions made during the fiscal year ended May 31, 1999. These figures are
provided for information purposes only and should not be used for reporting to
federal or state revenue agencies. Distributions for the calendar year will be
reported to you on Form 1099-DIV in January 2000.
Ordinary income * $ .35
Long-term capital gains .42
-----
Total $ .77
=====
8.9% of ordinary income distributions qualify for deduction by corporations.
* Includes distribution of short-term capital gains, if any, which are taxable
as ordinary income.
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 Growth Strategy Fund, 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 or
periods in the four-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 Growth Strategy Fund 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
or periods in the four-year period then ended, in conformity with generally
accepted accounting principles.
KPMG LLP
San Antonio, Texas
July 2, 1999
USAA GROWTH STRATEGY FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
Market
Number Value
of Shares Security (000)
- --------------------------------------------------------------------------------
INTERNATIONAL STOCKS (19.7%)
Argentina (0.1%)
3,603 IRSA Inversiones y Representaciones S.A. GDR $ 104
- --------------------------------------------------------------------------------
Australia (0.1%)
29,250 Cable & Wireless Optus Ltd.* 56
19,200 CSL Ltd. 160
- --------------------------------------------------------------------------------
216
- --------------------------------------------------------------------------------
Austria (0.5%)
2,600 Bank Austria AG 133
7,507 Boehler Uddeholm AG 366
10,500 VA Flughafen Wien AG 446
4,800 VA Technologie AG 403
- --------------------------------------------------------------------------------
1,348
- --------------------------------------------------------------------------------
Brazil (0.2%)
5,700 Companhia Brasileira de Distribuicao Grupo Pao
de Acucar ADR 103
10,600 Panamerican Beverages, Inc. "A" 246
750,000 Petroleo Brasileiro S.A. (Preferred) 106
- --------------------------------------------------------------------------------
455
- --------------------------------------------------------------------------------
Canada (1.4%)
38,600 Anderson Exploration Ltd.* 468
8,300 Canadian Imperial Bank of Commerce 203
13,400 Canadian National Railway Co. 858
34,600 Canadian Occidental Petroleum Ltd. 463
23,500 National Bank of Canada 350
7,700 Nortel Networks Corp. 577
16,300 Suncor Energy, Inc. 615
6,000 Toronto-Dominion Bank 317
- --------------------------------------------------------------------------------
3,851
- --------------------------------------------------------------------------------
Chile (0.1%)
173 Sociedad Quimica y Minera de Chile S.A. ADR "A" 6
3,000 Sociedad Quimica y Minera de Chile S.A. ADR "B" 105
- --------------------------------------------------------------------------------
111
- --------------------------------------------------------------------------------
China (0.1%)
175,000 Cosco Pacific Ltd. 103
99,000 New World Infrastructure Ltd.* 159
- --------------------------------------------------------------------------------
262
- --------------------------------------------------------------------------------
Denmark (0.7%)
4,800 ISS International Service System A/S "B"* 241
22,200 SAS Danmark A/S 254
6,700 Tele Danmark A/S "B" 684
9,100 Unidanmark A/S 639
- --------------------------------------------------------------------------------
1,818
- --------------------------------------------------------------------------------
Egypt (0.1%)
4,400 Suez Cement Co. S.A.E. GDR 65
- --------------------------------------------------------------------------------
Finland (1.0%)
132,300 Merita plc "A" 784
15,000 Nokia Corp. ADR 1,065
16,100 Raisio Group plc 176
21,600 Rauma OYJ 239
10,300 Sampo Insurance Co. "A" 311
- --------------------------------------------------------------------------------
2,575
- --------------------------------------------------------------------------------
France (1.7%)
1,900 Accor S.A. 466
7,803 CNP Assurances 196
10,800 Coflexip ADR 443
15,200 Elf Aquitaine ADR 1,079
5,500 Eramet Group 215
1,250 Essilor International 438
3,000 ISIS S.A. 198
4,400 Louis Dreyfus Citrus 92
9,400 Renault S.A. 365
8,600 Rhone Poulenc S.A. 408
8,228 SEITA 499
4,400 Valeo S.A. 359
- --------------------------------------------------------------------------------
4,758
- --------------------------------------------------------------------------------
Germany (0.8%)
13,400 Continental AG 310
13,100 Hoechst AG 583
11,800 Merck KGaA 406
13,540 Veba AG 772
- --------------------------------------------------------------------------------
2,071
- --------------------------------------------------------------------------------
Greece (0.1%)
10,500 Hellenic Telecommunications Organization S.A. (OTE) 228
9,770 National Bank of Greece S.A. GDR* 135
- --------------------------------------------------------------------------------
363
- --------------------------------------------------------------------------------
Hong Kong (0.1%)
5,600 Asia Satellite Telecommunications Holdings Ltd. ADR 116
- --------------------------------------------------------------------------------
Hungary (0.1%)
3,600 Magyar Tavkozlesi RT. (MATAV) ADR 101
9,800 Mol Magyar Olaj-Es Gazipari GDR 237
- --------------------------------------------------------------------------------
338
- --------------------------------------------------------------------------------
India (0.1%)
7,250 Hindalco Industries Ltd. GDR 103
9,300 Videsh Sanchar Nigam Ltd. GDR 106
- --------------------------------------------------------------------------------
209
- --------------------------------------------------------------------------------
Israel (0.1%)
41,997 Bank Hapoalim Ltd. 106
5,100 Blue Square - Israel Ltd. ADR 78
- --------------------------------------------------------------------------------
184
- --------------------------------------------------------------------------------
Italy (1.0%)
9,700 ENI S.p.A. ADR 610
39,000 Erg S.p.A. 118
6,600 Gucci Group N.V. 436
139,000 Italgas S.p.A. 596
24,200 Telecom Italia S.p.A. Ordinary 249
133,500 Telecom Italia S.p.A. Savings 725
- --------------------------------------------------------------------------------
2,734
- --------------------------------------------------------------------------------
Japan (1.7%)
12,000 Bridgestone Corp. 315
16,000 Daibiru Corp. 126
21,000 Fujitsu Ltd. 351
5,000 Ito-Yokado Co. Ltd. 298
40,000 Nikko Securities Co. Ltd. 175
188,000 Nippon Steel Corp. 395
33 Nippon Telegraph & Telephone Corp. (NTT) 322
4 NTT Mobile Communication Network, Inc. 219
9,000 Ono Pharmaceutical Co. Ltd. 324
22,000 Sankyo Co. Ltd. 518
49,000 Sharp Corp. 544
2,600 Sony Corp. 244
31,000 Sumitomo Electric Industries, Ltd. 347
55,000 Toshiba Corp. 340
MBL International Finance (Bermuda) Trust, Convertible
Notes, $60,000 par, 3.00%, 11/30/2002 66
- --------------------------------------------------------------------------------
4,584
- --------------------------------------------------------------------------------
Korea (0.2%)
6,820 Dongwon Securities Co. 148
5,025 Korea Telecom Corp. ADR* 160
2,500 Samsung Electronics Co. Ltd. 174
204 Samsung Electronics Co. Ltd. Rights* 2
- --------------------------------------------------------------------------------
484
- --------------------------------------------------------------------------------
Malaysia (0.2%)
64,400 Genting Bhd (a) 183
198,000 Malaysia International Shipping Corp. Bhd (a) 277
- --------------------------------------------------------------------------------
460
- --------------------------------------------------------------------------------
Mexico (0.2%)
8,599 Desc, Sociedad de Fomento Industrial, S.A. de C.V. ADR 192
8,700 Empresas ICA Sociedad Controladora, S.A. de C.V. ADR 54
17,100 Tubos de Acero de Mexico, S.A. ADR 158
- --------------------------------------------------------------------------------
404
- --------------------------------------------------------------------------------
Netherlands (2.0%)
20,800 Akzo Nobel N.V. 863
12,300 Benckiser N.V. "B" 664
3,940 EVC International N.V. 29
10,000 Fortis NL N.V. 325
14,500 ING Group N.V. 775
16,200 Koninklijke KPN N.V. 782
16,800 Koninklijke Pakhoed N.V. (Certificates) 387
8,400 Koninklijke Philips Electronics N.V. 722
11,700 Oce-van der Grinten N.V. 322
12,000 VNU N.V. 509
- --------------------------------------------------------------------------------
5,378
- --------------------------------------------------------------------------------
Norway (0.6%)
158,700 Christiania Bank og Kreditkasse 641
17,700 Schibsted ASA 204
62,700 Storebrand ASA* 420
36,600 Tandberg Data ASA* 185
- --------------------------------------------------------------------------------
1,450
- --------------------------------------------------------------------------------
Philippines (0.1%)
600,000 SM Prime Holdings, Inc. 131
- --------------------------------------------------------------------------------
Poland (0.1%)
16,500 Elektrim S.A. 193
- --------------------------------------------------------------------------------
Portugal (0.5%)
23,900 Banco Pinto & Sotto Mayor S.A. 473
6,200 Brisa-Auto Estradas de Portugal S.A. 281
12,500 Portugal Telecom S.A. ADR 566
- --------------------------------------------------------------------------------
1,320
- --------------------------------------------------------------------------------
Russia (0.1%)
2,200 LUKoil ADR 80
- --------------------------------------------------------------------------------
Singapore (0.1%)
30,000 Overseas Union Bank Ltd. 154
- --------------------------------------------------------------------------------
South Africa (0.1%)
111,700 Sanlam Ltd.* 108
9,492 South African Breweries plc 76
41,000 Standard Bank Investment Corp. Ltd. 126
- --------------------------------------------------------------------------------
310
- --------------------------------------------------------------------------------
Spain (0.5%)
23,612 Argentaria, Caja Postal y Banco Hipotecario de Espana, S.A. 529
5,722 Telefonica de Espana S.A. ADR* 825
- --------------------------------------------------------------------------------
1,354
- --------------------------------------------------------------------------------
Sweden (0.7%)
23,020 Autoliv, Inc. GDR 730
10,500 Skandinaviska Enskilda Banken "A" 127
158,000 Swedish Match AB 575
12,700 Volvo AB 322
- --------------------------------------------------------------------------------
1,754
- --------------------------------------------------------------------------------
Switzerland (1.0%)
660 Novartis AG 957
1,300 Selecta Group AG 515
559 Sulzer AG P.C.* 327
1,510 Swisscom AG 543
3,220 Tag Heuer International S.A. 298
- --------------------------------------------------------------------------------
2,640
- --------------------------------------------------------------------------------
Taiwan (0.1%)
236,775 China Steel Corp. 162
56,700 Compal Electronics, Inc. 152
- --------------------------------------------------------------------------------
314
- --------------------------------------------------------------------------------
Turkey (0.1%)
1,612,539 Yapi Ve Kredi Bankasi A.S. 20
2,250,030 Yapi Ve Kredi Bankasi A.S. Receipts*,(a) 29
- --------------------------------------------------------------------------------
49
- --------------------------------------------------------------------------------
United Kingdom (3.1%)
10,200 AstraZeneca Group plc 405
43,500 Bank of Scotland 604
176,600 Billiton plc 552
18,000 BOC Group plc 308
21,600 British Telecommunications plc 358
31,200 Cable & Wireless plc 384
58,200 Cadbury Schweppes 396
36,900 CGU plc 539
220,000 Cookson Group plc 637
144,700 Corporate Services Group plc 173
6,400 Glaxo Wellcome plc ADR 360
30,000 Laporte plc 353
154,000 Medeva plc 269
31,800 National Westminster Bank plc 722
8,800 Powergen plc 95
41,760 Reuters Group plc 574
89,000 Safeway plc 369
150,800 Tomkins plc 542
85,641 WPP Group plc 693
- --------------------------------------------------------------------------------
8,333
- --------------------------------------------------------------------------------
Total international stocks (cost: $44,478) 50,970
- --------------------------------------------------------------------------------
SMALL CAP STOCKS (26.7%)
Aerospace/Defense (2.4%)
150,000 AAR Corp. 2,962
50,000 Aviation Sales Co.* 1,925
20,000 HEICO Corp. 470
15,000 TriStar Aerospace Co.* 139
35,000 Triumph Group, Inc.* 1,072
- --------------------------------------------------------------------------------
6,568
- --------------------------------------------------------------------------------
Air Freight (0.4%)
21,000 Eagle USA Airfreight, Inc.* 990
- --------------------------------------------------------------------------------
Airlines (0.4%)
17,500 Atlantic Coast Airlines, Inc.* 306
25,000 Midwest Express Holdings, Inc.* 749
- --------------------------------------------------------------------------------
1,055
- --------------------------------------------------------------------------------
Banks - Major Regional (0.8%)
63,000 Columbia Banking Systems, Inc.* 1,036
43,100 Hamilton Bancorp, Inc.* 983
- --------------------------------------------------------------------------------
2,019
- --------------------------------------------------------------------------------
Beverages - Alcoholic (0.7%)
25,000 Beringer Wine Estates Holdings, Inc. "B"* 1,015
10,000 Golden State Vintners, Inc.* 67
20,000 Robert Mondavi Corp. "A"* 675
- --------------------------------------------------------------------------------
1,757
- --------------------------------------------------------------------------------
Biotechnology (0.3%)
6,500 Inhale Therapeutic Systems 172
7,000 SangStat Medical Corp.* 96
20,000 Techne Corp.* 503
- --------------------------------------------------------------------------------
771
- --------------------------------------------------------------------------------
Broadcasting - Radio & TV (0.2%)
14,500 Entercom Communications Corp.* 473
13,650 Gray Communications Systems, Inc. "B" 186
- --------------------------------------------------------------------------------
659
- --------------------------------------------------------------------------------
Communication Equipment (1.2%)
37,900 Brightpoint, Inc.* 215
54,395 Digital Microwave Corp.* 687
24,000 Harmonic Lightwaves, Inc.* 1,185
7,800 Inet Technologies Incorporated 133
11,600 P-Com, Inc.* 51
19,300 REMEC, Inc.* 251
18,000 Spectrian Corp.* 225
9,800 Terayon Communication Systems, Inc.* 315
- --------------------------------------------------------------------------------
3,062
- --------------------------------------------------------------------------------
Computer - Hardware (0.4%)
34,000 Sandisk Corp.* 1,054
- --------------------------------------------------------------------------------
Computer - Peripherals (0.2%)
33,500 HMT Technology Corp.* 135
51,500 Read-Rite Corp.* 340
- --------------------------------------------------------------------------------
475
- --------------------------------------------------------------------------------
Computer Software & Service (0.8%)
22,400 Condor Technology Solutions, Inc.* 239
8,600 HNC Software, Inc.* 233
30,000 Macrovision Corp.* 1,365
5,400 Sagent Technology, Inc.* 41
10,300 Softworks, Inc.* 99
3,400 Tenfold Corp.* 92
- --------------------------------------------------------------------------------
2,069
- --------------------------------------------------------------------------------
Distributions - Food/Health (0.3%)
30,000 United Natural Foods, Inc.* 802
- --------------------------------------------------------------------------------
Drugs (0.4%)
16,450 Jones Pharma, Inc. 585
20,000 Roberts Pharmaceutical Corp.* 380
- --------------------------------------------------------------------------------
965
- --------------------------------------------------------------------------------
Electronics - Semiconductors (2.0%)
11,000 Lattice Semiconductor Corp.* 540
1,600 Maker Communications, Inc. 37
13,600 MIPS Technologies, Inc.* 407
16,200 MMC Networks, Inc.* 452
8,800 PLX Technology, Inc. 161
13,000 Rambus, Inc.* 1,007
51,600 TranSwitch Corp.* 2,386
12,000 Triquint Semiconductor, Inc.* 422
- --------------------------------------------------------------------------------
5,412
- --------------------------------------------------------------------------------
Engineering & Construction (0.1%)
5,000 Quanta Services, Inc.* 170
- --------------------------------------------------------------------------------
Equipment - Semiconductors (1.9%)
16,000 Brooks Automation, Inc.* 296
37,800 Cerprobe Corp.* 350
66,500 CFM Technologies, Inc.* 613
52,700 Cymer, Inc.* 965
32,400 Electroglas, Inc.* 470
16,500 Etec Systems, Inc.* 442
16,000 MKS Instruments, Inc.* 244
22,000 Photronics, Inc.* 435
13,200 PRI Automation, Inc.* 323
54,380 SpeedFam-IPEC, Inc.* 714
- --------------------------------------------------------------------------------
4,852
- --------------------------------------------------------------------------------
Finance - Consumer (0.7%)
55,750 NCO Group, Inc.* 1,700
2,300 Nextcard, Inc.* 69
- --------------------------------------------------------------------------------
1,769
- --------------------------------------------------------------------------------
Foods (0.3%)
20,000 American Italian Pasta Co. "A"* 550
15,000 Horizon Organic Holding Corp.* 226
2,000 Suiza Foods Corp.* 73
- --------------------------------------------------------------------------------
849
- --------------------------------------------------------------------------------
Health Care - Diversified (0.5%)
5,000 Accredo Health Inc.* 136
19,000 PAREXEL International Corp.* 455
24,000 Professional Detailing, Inc.* 654
- --------------------------------------------------------------------------------
1,245
- --------------------------------------------------------------------------------
Health Care - Specialized Services (2.1%)
10,800 Advance Paradigm, Inc.* 522
5,000 Mede America Corp.* 154
25,000 MedQuist, Inc.* 919
27,275 Pediatrix Medical Group, Inc.* 615
45,000 Renal Care Group, Inc.* 1,249
50,000 Superior Consultant Holdings Corp.* 1,878
6,000 Total Renal Care Holdings, Inc.* 92
- --------------------------------------------------------------------------------
5,429
- --------------------------------------------------------------------------------
Hospitals (0.2%)
25,000 Province Healthcare Co.* 541
- --------------------------------------------------------------------------------
Internet Services (1.7%)
8,300 24/7 Media, Inc.* 236
6,900 Cais Internet, Inc.* 90
2,000 Cheap Tickets, Inc.* 63
41,600 Concentric Network Corp.* 1,344
26,100 Digital River, Inc.* 629
17,300 Edgar Online Inc.* 158
8,800 Entrust Technologies, Inc.* 186
3,000 iTurf, Inc.* 59
3,900 Juno Online Services, Inc.* 48
1,600 Media Metrix, Inc.* 76
7,900 NetGravity, Inc.* 167
18,000 Preview Travel, Inc.* 313
37,400 USWeb Corp.* 949
9,400 Ziplink, Inc.* 113
- --------------------------------------------------------------------------------
4,431
- --------------------------------------------------------------------------------
Lodging/Hotel (0.1%)
31,000 ResortQuest International, Inc.* 269
- --------------------------------------------------------------------------------
Medical Products & Supplies (0.5%)
3,000 Henry Schein, Inc.* 90
41,500 Ocular Sciences, Inc.* 1,266
- --------------------------------------------------------------------------------
1,356
- --------------------------------------------------------------------------------
Nursing Care (0.9%)
60,000 Sunrise Assisted Living, Inc.* 2,220
- --------------------------------------------------------------------------------
Oil & Gas - Drilling/Equipment (0.3%)
15,000 Carbo Ceramics, Inc. 334
5,000 Dril-Quip, Inc.* 129
15,000 Tuboscope Vetco International Corp.* 200
- --------------------------------------------------------------------------------
663
- --------------------------------------------------------------------------------
Personal Care (0.1%)
11,000 Chattem, Inc. 396
- --------------------------------------------------------------------------------
Railroads/Shipping (0.2%)
28,500 MotivePower Industries, Inc.* 483
- --------------------------------------------------------------------------------
Restaurants (0.3%)
9,600 Dave & Buster's, Inc.* 259
10,000 P. F. Chang's China Bistro, Inc.* 253
5,600 Papa John's International, Inc.* 221
- --------------------------------------------------------------------------------
733
- --------------------------------------------------------------------------------
Retail - Food (0.3%)
27,000 Wild Oats Markets, Inc.* 791
- --------------------------------------------------------------------------------
Retail - Specialty (1.6%)
10,000 99 Cents Only Stores* 471
10,000 Barnesandnoble.Com, Inc.* 232
45,000 Cost Plus, Inc.* 1,682
15,000 CSK Auto Corp.* 420
50,000 Hibbett Sporting Goods, Inc.* 1,231
5,000 Tuesday Morning Corp.* 103
- --------------------------------------------------------------------------------
4,139
- --------------------------------------------------------------------------------
Retail - Specialty Apparel (0.2%)
40,000 Delia's, Inc.* 530
- --------------------------------------------------------------------------------
Services - Commercial & Consumer (0.5%)
25,000 Barra, Inc.* 600
4,300 Corporate Executive Board Co.* 126
15,500 Heidrick & Struggles International, Inc.* 216
6,300 Korn/Ferry International* 84
18,300 Nextera Enterprises, Inc.* 154
- --------------------------------------------------------------------------------
1,180
- --------------------------------------------------------------------------------
Services - Facilities & Environment (0.1%)
2,000 Tetra Tech, Inc. 43
- --------------------------------------------------------------------------------
Telecommunications - Cellular/Wireless (0.5%)
11,800 Omnipoint Corp.* 206
10,400 Pinnacle Holdings, Inc.* 189
38,500 Powertel, Inc.* 962
- --------------------------------------------------------------------------------
1,357
- --------------------------------------------------------------------------------
Telecommunications - Long Distance (1.3%)
12,700 CapRock Communications Corp.* 284
30,300 IDT Corp.* 670
51,000 ITC DeltaCom, Inc.* 1,218
19,000 Pacific Gateway Exchange, Inc.* 748
15,170 STAR Telecommunications, Inc.* 135
36,700 Startec Global Communications Corp.* 307
- --------------------------------------------------------------------------------
3,362
- --------------------------------------------------------------------------------
Telephones (1.2%)
31,900 e.spire Communications, Inc.* 365
34,700 Electric Lightwave, Inc. "A"* 408
35,200 GST Telecommunications, Inc.* 431
61,700 Hyperion Telecommunications, Inc. "A"* 1,041
18,000 ICG Communications, Inc.* 343
25,700 Northeast Optic Network, Inc.* 418
- --------------------------------------------------------------------------------
3,006
- --------------------------------------------------------------------------------
Textiles - Apparel (0.2%)
20,000 Columbia Sportswear Co.* 293
5,000 Cutter & Buck, Inc.* 148
- --------------------------------------------------------------------------------
441
- --------------------------------------------------------------------------------
Tobacco (0.1%)
5,000 Universal Corp. 131
- --------------------------------------------------------------------------------
Truckers (0.2%)
20,000 Coach USA, Inc.* 583
2,900 Forward Air Corp.* 79
- --------------------------------------------------------------------------------
662
- --------------------------------------------------------------------------------
Waste Management (0.1%)
5,000 US Liquids, Inc.* 90
10,000 Waste Connections Inc.* 267
- --------------------------------------------------------------------------------
357
- --------------------------------------------------------------------------------
Total small cap stocks (cost: $61,088) 69,063
- --------------------------------------------------------------------------------
LARGE CAP STOCKS (32.4%)
Aerospace/Defense (0.4%)
15,600 Boeing Co. 659
10,700 Lockheed Martin Corp. 433
- --------------------------------------------------------------------------------
1,092
- --------------------------------------------------------------------------------
Agricultural Products (0.1%)
6,000 Pioneer Hi-Bred International, Inc. 225
- --------------------------------------------------------------------------------
Air Freight (0.3%)
12,600 FDX Corp.* 694
- --------------------------------------------------------------------------------
Airlines (0.4%)
29,300 Southwest Airlines Co. 939
- --------------------------------------------------------------------------------
Aluminum (0.2%)
8,000 Alcoa, Inc. 440
- --------------------------------------------------------------------------------
Auto Parts (0.2%)
6,800 Dana Corp. 351
4,000 TRW, Inc. 200
- --------------------------------------------------------------------------------
551
- --------------------------------------------------------------------------------
Banks - Major Regional (1.0%)
6,500 Bank of Boston Corp. 308
4,000 Bank Of New York Co., Inc. 143
11,040 Bank One Corp. 624
7,800 Fleet Financial Group, Inc. 321
3,500 Mellon Bank Corp. 125
6,700 National City Corp. 443
4,500 PNC Bank Corp. 258
4,000 U.S. Bancorp 130
3,100 Wells & Fargo Co. 124
- --------------------------------------------------------------------------------
2,476
- --------------------------------------------------------------------------------
Banks - Money Center (0.5%)
13,860 Bank of America Corp. 897
11,300 First Union Corp. 520
- --------------------------------------------------------------------------------
1,417
- --------------------------------------------------------------------------------
Beverages - Alcoholic (0.3%)
9,100 Anheuser-Busch Companies, Inc. 665
- --------------------------------------------------------------------------------
Beverages - Nonalcoholic (0.6%)
45,000 PepsiCo, Inc. 1,612
- --------------------------------------------------------------------------------
Biotechnology (0.7%)
20,500 Amgen, Inc.* 1,297
2,400 Biogen, Inc.* 262
3,500 Centocor, Inc.* 152
2,700 Genzyme Corp.* 109
- --------------------------------------------------------------------------------
1,820
- --------------------------------------------------------------------------------
Broadcasting - Radio & TV (0.3%)
16,400 CBS Corp. 685
2,000 Clear Channel Communications, Inc.* 132
- --------------------------------------------------------------------------------
817
- --------------------------------------------------------------------------------
Chemicals (0.6%)
6,500 Air Products & Chemicals, Inc. 266
15,000 Du Pont (E. I.) De Nemours & Co. 982
3,500 Praxair, Inc. 171
- --------------------------------------------------------------------------------
1,419
- --------------------------------------------------------------------------------
Chemicals - Diversified (0.2%)
5,000 Monsanto Co. 208
3,000 PPG Industries, Inc. 182
- --------------------------------------------------------------------------------
390
- --------------------------------------------------------------------------------
Chemicals - Specialty (0.2%)
5,000 International Flavors & Fragrances, Inc. 206
5,000 Nalco Chemical Co. 167
5,000 Sigma-Aldrich Corp. 160
- --------------------------------------------------------------------------------
533
- --------------------------------------------------------------------------------
Communication Equipment (0.1%)
3,700 Motorola, Inc. 306
- --------------------------------------------------------------------------------
Computer - Hardware (2.0%)
28,500 Compaq Computer Corp. 675
14,400 Dell Computer Corp.* 496
5,000 Gateway 2000, Inc.* 304
12,200 Hewlett-Packard Co. 1,150
22,000 IBM Corp. 2,559
5,000 Sun Microsystems, Inc.* 299
- --------------------------------------------------------------------------------
5,483
- --------------------------------------------------------------------------------
Computer - Networking (1.1%)
11,200 3Com Corp.* 306
10,500 Ascend Communications, Inc.* 973
14,300 Cisco Systems, Inc.* 1,559
- --------------------------------------------------------------------------------
2,838
- --------------------------------------------------------------------------------
Computer - Peripherals (0.2%)
3,300 EMC Corp.* 329
9,600 Seagate Technology, Inc.* 290
- --------------------------------------------------------------------------------
619
- --------------------------------------------------------------------------------
Computer Software & Service (2.0%)
8,100 America Online, Inc.* 967
11,200 Computer Associates International, Inc. 530
27,500 Microsoft Corp.* 2,219
33,000 Oracle Corp.* 819
10,000 Parametric Technology Corp.* 139
10,000 PeopleSoft, Inc.* 162
7,200 Synopsys, Inc.* 319
- --------------------------------------------------------------------------------
5,155
- --------------------------------------------------------------------------------
Containers - Paper (0.1%)
3,500 Bemis, Inc. 132
- --------------------------------------------------------------------------------
Distributions - Food/Health (0.4%)
7,500 Bergen Brunswig Corp.* 165
20,000 McKesson HBOC, Inc. 681
9,700 Sysco Corp. 288
- --------------------------------------------------------------------------------
1,134
- --------------------------------------------------------------------------------
Drugs (1.6%)
5,000 Eli Lilly & Co.* 357
10,800 Ivax Corp.* 145
25,000 Merck & Co., Inc. 1,687
8,500 Mylan Laboratories, Inc. 216
5,000 Pfizer, Inc. 535
22,600 Pharmacia & Upjohn, Inc. 1,253
- --------------------------------------------------------------------------------
4,193
- --------------------------------------------------------------------------------
Electrical Equipment (1.1%)
5,000 Emerson Electric Co. 319
24,300 General Electric Co. 2,471
- --------------------------------------------------------------------------------
2,790
- --------------------------------------------------------------------------------
Electronics - Semiconductors (1.0%)
3,800 Advanced Micro Devices, Inc.* 70
32,400 Intel Corp. 1,752
4,600 Micron Technology, Inc.* 174
4,900 Texas Instruments, Inc. 536
- --------------------------------------------------------------------------------
2,532
- --------------------------------------------------------------------------------
Entertainment (0.5%)
8,400 Time Warner, Inc. 572
22,300 Walt Disney Co. 649
- --------------------------------------------------------------------------------
1,221
- --------------------------------------------------------------------------------
Equipment - Semiconductors (0.3%)
5,900 Applied Materials, Inc.* 325
2,600 KLA-Tencor Corp.* 118
8,300 Lam Research Corp.* 231
700 Novellus Systems, Inc.* 34
3,300 Teradyne, Inc.* 174
- --------------------------------------------------------------------------------
882
- --------------------------------------------------------------------------------
Finance - Consumer (0.3%)
9,600 Associates First Capital Corp. "A" 393
3,700 Countrywide Credit Industries, Inc. 152
3,500 Household International, Inc. 152
7,200 MBNA Corp. 199
- --------------------------------------------------------------------------------
896
- --------------------------------------------------------------------------------
Finance - Diversified (1.6%)
4,600 American Express Co. 557
2,400 American General Corp. 173
24,300 Citigroup, Inc. 1,610
10,100 Fannie Mae 687
5,000 Freddie Mac 292
2,000 MBIA, Inc. 137
2,000 MGIC Investment Corp. 96
6,400 Morgan Stanley, Dean Witter, Discover & Co. 618
6,200 SLM Holding Corp. 257
- --------------------------------------------------------------------------------
4,427
- --------------------------------------------------------------------------------
Foods (1.2%)
3,500 Bestfoods 175
2,900 Campbell Soup Co. 128
11,000 ConAgra, Inc. 287
6,000 General Mills, Inc. 482
5,500 H.J. Heinz Co. 266
15,200 Hershey Foods Corp. 825
12,000 Kellogg Co. 416
5,500 Quaker Oats Co. 363
10,200 Sara Lee Corp. 245
- --------------------------------------------------------------------------------
3,187
- --------------------------------------------------------------------------------
Gaming Companies (0.1%)
5,200 International Game Technology 91
3,500 Mirage Resorts, Inc.* 72
- --------------------------------------------------------------------------------
163
- --------------------------------------------------------------------------------
Health Care - Diversified (1.4%)
6,000 Abbott Laboratories 271
17,500 American Home Products Corp. 1,008
10,000 Bristol-Myers Squibb Co. 686
16,200 Johnson & Johnson, Inc. 1,501
5,400 Warner-Lambert Co. 335
- --------------------------------------------------------------------------------
3,801
- --------------------------------------------------------------------------------
Health Care - HMOs (0.5%)
10,000 Pacificare Health Systems, Inc. "A"* 856
8,300 United Healthcare Corp. 483
- --------------------------------------------------------------------------------
1,339
- --------------------------------------------------------------------------------
Health Care - Specialized Services (0.1%)
4,000 IMS Healthcare, Inc. 99
- --------------------------------------------------------------------------------
Hospitals (0.1%)
5,000 Columbia / HCA Healthcare Corp. 118
3,700 Tenet Healthcare Corp.* 90
- --------------------------------------------------------------------------------
208
- --------------------------------------------------------------------------------
Household Products (1.0%)
3,700 Colgate-Palmolive Co. 370
17,600 Kimberly-Clark Corp. 1,033
12,300 Procter & Gamble Co. 1,148
- --------------------------------------------------------------------------------
2,551
- --------------------------------------------------------------------------------
Housewares (0.1%)
3,100 Newell Rubbermaid, Inc. 126
- --------------------------------------------------------------------------------
Insurance Brokers (0.1%)
2,400 Marsh & McLennan Cos., Inc. 175
- --------------------------------------------------------------------------------
Insurance - Life/Health (0.2%)
5,100 Aetna, Inc. 463
3,000 Conseco, Inc. 92
- --------------------------------------------------------------------------------
555
- --------------------------------------------------------------------------------
Insurance - Multi-Line Companies (0.3%)
7,850 American International Group, Inc. 897
- --------------------------------------------------------------------------------
Insurance - Property/Casualty (0.4%)
6,900 Allstate Corp. 251
5,400 Progressive Corp. 758
- --------------------------------------------------------------------------------
1,009
- --------------------------------------------------------------------------------
Investment Banks/Brokerage (0.1%)
1,500 Goldman Sachs Group, Inc.* 102
3,000 Merrill Lynch & Co., Inc. 252
- --------------------------------------------------------------------------------
354
- --------------------------------------------------------------------------------
Investment Management (0.3%)
10,600 Franklin Resources, Inc. 461
5,400 T. Rowe Price Associates, Inc. 209
- --------------------------------------------------------------------------------
670
- --------------------------------------------------------------------------------
Leisure Time (0.1%)
4,000 Mattel, Inc. 106
- --------------------------------------------------------------------------------
Lodging/Hotel (0.1%)
2,500 Marriott International, Inc. "A" 95
- --------------------------------------------------------------------------------
Machinery - Diversified (0.3%)
1,500 Case Corp. 70
5,100 Caterpillar, Inc. 280
9,500 Deere & Co. 362
3,500 Dover Corp. 132
- --------------------------------------------------------------------------------
844
- --------------------------------------------------------------------------------
Manufacturing - Diversified Industries (1.2%)
9,500 AlliedSignal, Inc. 552
2,000 Eaton Corp. 174
10,200 Hillenbrand Industries, Inc. 428
3,400 Illinois Tool Works, Inc. * 261
6,000 Minnesota Mining & Manufacturing Co. 514
11,917 Tyco International Ltd. 1,041
- --------------------------------------------------------------------------------
2,970
- --------------------------------------------------------------------------------
Manufacturing - Specialized (0.1%)
3,500 Parker Hannifin Corp. 153
- --------------------------------------------------------------------------------
Medical Products & Supplies (0.4%)
6,600 Bausch & Lomb, Inc. 504
5,400 Boston Scientific Corp.* 205
3,500 Medtronic, Inc. 248
5,500 St. Jude Medical, Inc.* 186
- --------------------------------------------------------------------------------
1,143
- --------------------------------------------------------------------------------
Oil & Gas - Drilling/Equipment (0.2%)
5,000 Baker Hughes, Inc. 156
5,000 Halliburton Co. 207
5,000 Transocean Offshore, Inc. 123
- --------------------------------------------------------------------------------
486
- --------------------------------------------------------------------------------
Oil & Gas - Exploration & Production (0.2%)
6,200 Anadarko Petroleum Corp. 232
7,500 Apache Corp. 270
- --------------------------------------------------------------------------------
502
- --------------------------------------------------------------------------------
Personal Care (0.2%)
11,800 Gillette Co. 602
- --------------------------------------------------------------------------------
Photography - Imaging (0.3%)
5,000 Eastman Kodak Co. 338
5,400 Xerox Corp. 304
- --------------------------------------------------------------------------------
642
- --------------------------------------------------------------------------------
Publishing/Newspapers (0.2%)
5,000 Gannett, Inc. 361
2,500 Tribune Co. 198
- --------------------------------------------------------------------------------
559
- --------------------------------------------------------------------------------
Restaurants (0.1%)
4,500 Outback Steakhouse, Inc.* 161
- --------------------------------------------------------------------------------
Retail - Building Supplies (0.3%)
10,500 Home Depot, Inc. 597
7,500 Sherwin-Williams Co. 231
- --------------------------------------------------------------------------------
828
- --------------------------------------------------------------------------------
Retail - Drugs (0.1%)
12,500 Rite Aid Corp. 313
- --------------------------------------------------------------------------------
Retail - General Merchandising (0.7%)
5,700 Dayton Hudson Corp. 359
10,000 Kmart Corp. 154
33,000 Wal-Mart Stores, Inc. 1,406
- --------------------------------------------------------------------------------
1,919
- --------------------------------------------------------------------------------
Retail - Specialty Apparel (0.1%)
6,000 Gap, Inc. 375
- --------------------------------------------------------------------------------
Savings & Loan Holding Co. (0.1%)
7,950 Washington Mutual, Inc. 304
- --------------------------------------------------------------------------------
Services - Commercial & Consumer (0.1%)
6,700 Cendant Corp.* 123
7,500 Service Corp. International 144
- --------------------------------------------------------------------------------
267
- --------------------------------------------------------------------------------
Services - Data Processing (0.4%)
20,600 First Data Corp. 926
- --------------------------------------------------------------------------------
Shoes (0.1%)
5,200 Nike, Inc. "B" 317
- --------------------------------------------------------------------------------
Telecommunications - Cellular/Wireless (0.1%)
2,900 Airtouch Communications, Inc.* 291
- --------------------------------------------------------------------------------
Telecommunications - Long Distance (1.1%)
27,000 AT&T Corp. 1,499
16,700 MCI Worldcom, Inc.* 1,442
- --------------------------------------------------------------------------------
2,941
- --------------------------------------------------------------------------------
Telephones (0.9%)
12,500 Bell Atlantic Corp. 685
15,600 BellSouth Corp. 736
16,300 SBC Communications Corp. 833
- --------------------------------------------------------------------------------
2,254
- --------------------------------------------------------------------------------
Tobacco (0.6%)
27,100 Philip Morris Cos., Inc. 1,045
15,000 RJR Nabisco Holdings Corp. 464
5,000 UST, Inc. 153
- --------------------------------------------------------------------------------
1,662
- --------------------------------------------------------------------------------
Truckers (0.1%)
4,100 CNF Transportation, Inc. 170
- --------------------------------------------------------------------------------
Waste Management (0.1%)
7,500 Allied Waste Industries, Inc.* 140
- --------------------------------------------------------------------------------
Total large cap stocks (cost: $66,240) 83,802
- --------------------------------------------------------------------------------
Principal Market
Amount Coupon Value
(000) Rate Maturity (000)
- --------------------------------------------------------------------------------
BONDS (16.8%)
$ 1,000 AT & T Corp. 6.00% 3/15/2009 954
2,000 AT&T Capital Corp. 6.75 2/04/2002 2,005
2,000 Capital One Financial Corp. (c) 7.25 12/01/2003 1,994
2,000 Corporacion Andina De Fomento
(Venezuela) 7.10 2/01/2003 1,965
2,000 Equity Operating L.P., Notes 6.38 2/15/2002 1,968
1,597 Federal Home Loan Mortgage Corp.,
Series 1998-7 H 9.00 3/18/2025 1,678
1,655 Federal National Mortgage Assn.,
Series 1997-72 CA 9.50 9/18/2023 1,732
1,931 Federal National Mortgage Assn.,
Series 1997-79 U 9.00 11/18/2024 2,022
1,000 First Industrial LP 7.60 5/15/2007 978
2,000 FIRSTPLUS Home Loan Owner Trust,
Series 1998-1, Class A-5 6.25 11/10/2016 1,996
1,000 Franchise Finance Corp. of America,
Senior Notes 7.00 11/30/2000 996
2,000 Giddings & Lewis, Inc.(c) 7.50 10/01/2005 2,048
2,000 Glenborough Property, L.P. 7.63 3/15/2005 1,789
2,000 Government National Mortgage Assn. I,
Construction Loan (b) 6.63 11/15/2000 1,949
1,000 Great Atlantic & Pacific Tea, Inc. 7.70 1/15/2004 1,005
2,000 HRPT Properties Trust 6.75 12/18/2002 1,959
2,000 HUBCO, Inc. 8.20 9/15/2006 2,076
1,000 Kmart Corp. 7.95 2/01/2023 1,005
2,000 MacSaver Financial Services, Inc. 7.40 2/15/2002 1,670
1,000 MCI Communications Corporation 6.95 8/15/2006 1,006
1,000 Merita Bank Ltd., (Finland) 6.50 1/15/2006 973
1,000 Merrill Lynch & Co., Inc. 6.50 7/15/2018 925
1,000 Pulte Corp. 7.00 12/15/2003 967
1,000 Reckson Operating Partnership 7.75 3/15/2009 978
1,000 Security Capital Pacific Trust 7.15 10/15/2003 980
1,000 U.S. Treasury Notes 4.75 11/15/2008 930
2,000 U.S. Treasury Notes 5.50 5/31/2003 1,986
1,000 Washington Real Estate Investment
Trust 7.25 8/13/2006 987
2,000 Waste Management, Inc. 6.38 12/01/2003 1,976
- --------------------------------------------------------------------------------
Total bonds (cost: $44,428) 43,497
- --------------------------------------------------------------------------------
MONEY MARKET INSTRUMENT (1.3%)
3,390 Federal Home Loan Mortgage Corp.,
4.72%, 6/01/1999 (cost: $3,389) 3,389
- --------------------------------------------------------------------------------
Total investments (cost: $219,623) $250,721
================================================================================
PORTFOLIO SUMMARY BY INDUSTRY
-----------------------------
Banks - Major Regional 5.4%
U.S. Government & Agency Issues 5.3
Real Estate Investment Trusts 4.2
Telephones 4.2
Drugs 3.5
Electronics - Semiconductors 3.4
Telecommunications - Long Distance 3.3
Aerospace/Defense 2.8
Computer Software & Service 2.8
Retail - Specialty 2.7
Finance - Diversified 2.6
Computer - Hardware 2.6
Equipment - Semiconductors 2.2
Health Care - Specialized Services 2.1
Health Care - Diversified 2.0
Communication Equipment 1.9
Finance - Consumer 1.7
Internet Services 1.7
Foods 1.6
Manufacturing - Diversified Industries 1.5
Electrical Equipment 1.5
Household Products 1.2
Medical Products & Supplies 1.1
Insurance - Multi-Line Companies 1.1
Retail - General Merchandising 1.1
Tobacco 1.1
Computer - Networking 1.1
Auto Parts 1.1
Manufacturing - Specialized 1.1
Biotechnology 1.0
Beverages - Alcoholic 1.0
Waste Management 1.0
Other 26.0
-----
96.9%
=====
USAA GROWTH STRATEGY FUND
NOTES TO PORTFOLIO OF INVESTMENTS
May 31, 1999
GENERAL NOTES
Market values of securities are determined by procedures and practices discussed
in note 1 to the financial statements.
The cost of securities for federal income tax purposes is approximately the same
as that reported in the financial statements.
The percentages shown represent the percentage of the investments to net assets.
The Large Cap Stocks category consists of investments in common stocks of
companies with market capitalizations of $1 billion or more at the time of
purchase. Small Cap Stocks have market capitalizations of less than $1 billion
at the time of purchase.
ADR - American Depositary Receipts are receipts issued by a U.S. bank evidencing
ownership of foreign shares. Dividends are paid in U.S. dollars.
GDR - Global Depositary Receipts are receipts issued by a U.S. or foreign bank
evidencing ownership of foreign shares. Dividends are paid in U.S. dollars.
SPECIFIC NOTES
(a) Illiquid security valued using methods determined by the Fund's investment
manager under the general supervision of the Board of Trustees. At May 31, 1999,
these securities represented .19% of the Fund's net assets.
(b) At May 31, 1999, the cost of securities purchased on a delayed delivery
basis was $0.4 million.
(c) At May 31, 1999, these securities were segregated to cover delayed delivery
purchases.
* Non-income producing security.
See accompanying notes to financial statements.
USAA GROWTH STRATEGY FUND
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
May 31, 1999
ASSETS
Investments in securities, at market value
(identified cost of $219,623) $250,721
Cash 40
Cash denominated in foreign currencies (identified cost of $45) 45
Receivables:
Capital shares sold 108
Dividends and interest 1,130
Securities sold 10,436
----------
Total assets 262,480
----------
LIABILITIES
Securities purchased 3,360
Capital shares redeemed 116
USAA Investment Management Company 168
USAA Transfer Agency Company 19
Accounts payable and accrued expenses 64
----------
Total liabilities 3,727
----------
Net assets applicable to capital shares outstanding $258,753
==========
REPRESENTED BY:
Paid-in capital $212,691
Accumulated undistributed net investment income 1,919
Accumulated net realized gain on investments 13,048
Net unrealized appreciation of investments 31,098
Net unrealized depreciation on foreign currency translations (3)
----------
Net assets applicable to capital shares outstanding $258,753
==========
Capital shares outstanding, unlimited number of shares
authorized, no par value 17,598
==========
Net asset value, redemption price, and offering price per share $ 14.70
==========
See accompanying notes to financial statements.
USAA GROWTH STRATEGY FUND
STATEMENT OF OPERATIONS
(IN THOUSANDS)
Year ended May 31, 1999
Net investment income:
Income:
Dividends (net of foreign taxes withheld of $130) $ 1,909
Interest 3,295
----------
Total income 5,204
----------
Expenses:
Management fees 1,844
Transfer agent's fees 842
Custodian's fees 208
Postage 125
Shareholder reporting fees 38
Trustees' fees 4
Registration fees 41
Professional fees 32
Other 5
----------
Total expenses 3,139
----------
Net investment income 2,065
----------
Net realized and unrealized gain (loss) on investments
and foreign currency:
Net realized gain (loss) on:
Investments 13,096
Foreign currency transactions (16)
Change in net unrealized appreciation/depreciation of:
Investments 4,978
Foreign currency translations 24
----------
Net realized and unrealized gain 18,082
----------
Increase in net assets resulting from operations $ 20,147
==========
See accompanying notes to financial statements.
USAA GROWTH STRATEGY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Years ended May 31,
1999 1998
----------------------
From operations:
Net investment income $ 2,065 $ 2,257
Net realized gain on investments 13,096 17,480
Net realized loss on foreign currency transactions (16) (40)
Change in net unrealized appreciation/depreciation of:
Investments 4,978 4,132
Foreign currency translations 24 (25)
----------------------
Increase in net assets
resulting from operations 20,147 23,804
----------------------
Distributions to shareholders from:
Net investment income (1,377) (2,021)
----------------------
Net realized gains (12,119) (3,845)
----------------------
From capital share transactions:
Proceeds from shares sold 72,653 94,367
Shares issued for dividends reinvested 13,447 5,843
Cost of shares redeemed (83,410) (62,657)
----------------------
Increase in net assets from capital
share transactions 2,690 37,553
----------------------
Net increase in net assets 9,341 55,491
Net assets:
Beginning of period 249,412 193,921
----------------------
End of period $258,753 $249,412
======================
Accumulated undistributed net investment income:
End of period $ 1,919 $ 1,347
======================
Change in shares outstanding:
Shares sold 5,267 6,653
Shares issued for dividends reinvested 964 448
Shares redeemed (6,073) (4,461)
----------------------
Increase in shares outstanding 158 2,640
======================
See accompanying notes to financial statements.
USAA GROWTH STRATEGY FUND
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 Growth
Strategy Fund (the Fund). The Fund's investment objective is to seek a high
total return, with reduced risk over time, through an asset allocation strategy
which emphasizes capital appreciation and gives secondary emphasis to income.
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 average of the bid and asked
prices 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. Other debt and government securities are valued each business day by a
pricing service (the Service) approved by the Trust's Board of Trustees. The
Service uses the mean between quoted bid and asked prices or the last sale price
to price securities when, in the Service's judgement, these prices are readily
available and are representative of the securities' market values. For many
securities, such prices are not readily available. The Service generally prices
these securities based on methods which include consideration of yields or
prices of securities of comparable quality, coupon, maturity and type,
indications as to values from dealers in securities, and general market
conditions.
5. 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 USAA Investment Management Company (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. As a result of certain
permanent differences between book and tax basis accounting, reclassifications
were made to the statement of assets and liabilities to decrease accumulated
undistributed net investment income by $100,000 and to increase accumulated net
realized gain on investments by $100,000.
C. Investments in securities - 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, is 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 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 on a daily basis.
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 are 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.
E. 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
Distributions of net investment income and 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, excluding
short-term securities, for the period ended May 31, 1999, were $100.9 million
and $116.1 million, respectively.
Gross unrealized appreciation and depreciation of investments at May 31, 1999,
was $46.1 million and $15.0 million, 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 May 31, 1999, the terms of open foreign currency contracts were as follows
(in thousands):
Foreign Currency Contracts to Buy:
- --------------------------------------------------------------------------------
U.S. Dollar In Exchange
Exchange Contracts to Value as of for U.S. Unrealized Unrealized
Date Receive 5/31/99 Dollars Appreciation Depreciation
- --------------------------------------------------------------------------------
6/01/99 13 $ 2 $ 2 $ - $ -
South African Rand
- --------------------------------------------------------------------------------
6/01/99 58 10 10 - -
South African Rand
- --------------------------------------------------------------------------------
6/02/99 33 52 52 - -
British Pound
- --------------------------------------------------------------------------------
6/02/99 35 56 56 - -
British Pound
- --------------------------------------------------------------------------------
$120 $120 $ - $ -
================================================================================
Foreign Currency Contracts to Sell:
- --------------------------------------------------------------------------------
U.S. Dollar In Exchange
Exchange Contracts to Value as of for U.S. Unrealized Unrealized
Date Deliver 5/31/99 Dollars Appreciation Depreciation
- --------------------------------------------------------------------------------
6/01/99 3 $ 3 $ 3 $ - $ -
Euro Currency
- --------------------------------------------------------------------------------
6/01/99 14 15 15 - -
Euro Currency
- --------------------------------------------------------------------------------
6/02/99 9 9 9 - -
Euro Currency
- --------------------------------------------------------------------------------
$ 27 $ 27 $ - $ -
================================================================================
(6) 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 .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 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.
D. Brokerage services - USAA Brokerage Services, a discount brokerage service
of the Manager, may execute portfolio transactions for the Fund. The amount
of brokerage commissions paid to USAA Brokerage Services during the period ended
May 31, 1999, was $11,000.
(7) 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.
(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) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
Nine-month
Period Ended
Year Ended May 31, May 31,
-------------------------------------------------
1999 1998 1997 1996*
-------------------------------------------------
Net asset value at
beginning of period $ 14.30 $ 13.10 $ 12.74 $ 10.00
Net investment income .12 .13 .15 .11(b)
Net realized and
unrealized gain 1.05 1.43 .77 2.66
Distributions from net
investment income (.08) (.13) (.12) (.03)
Distributions of realized
capital gains (.69) (.23) (.44) -
-------------------------------------------------
Net asset value at
end of period $ 14.70 $ 14.30 $ 13.10 $ 12.74
=================================================
Total return (%) ** 8.46 12.12 7.73 27.76
Net assets at end of
period (000) $258,753 $249,412 $193,921 $ 87,188
Ratio of expenses to
average net assets (%) 1.28 1.25 1.31 1.66(a)
Ratio of net investment
income to average net
assets (%) .84 .97 1.46 1.34(a)
Portfolio turnover (%) 41.65 69.42 62.50 40.21
* Fund commenced operations September 1, 1995.
** Assumes reinvestment of all dividend income and capital gain distributions
during the period.
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(b) Calculated using weighted average shares.
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
