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 8
Independent Auditors' Report 9
Portfolio of Investments 10
Notes to Portfolio of Investments 18
Statement of Assets and Liabilities 19
Statement of Operations 20
Statements of Changes in Net Assets 21
Notes to Financial Statements 22
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 BALANCED
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)2000, 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(Registered
Trademark) 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
Small Cap Stock 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(Registered Trademark) Low to moderate $3,000
High-Yield Opportunities High 3,000
Income Moderate 3,000
Income Stock Moderate 3,000
Intermediate-Term Bond Low to 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(Registered
Trademark) Very low 3,000
State Money Market Very low 3,000
-------------------------------------------------------------------------------
FOREIGN INVESTING IS SUBJECT TO ADDITIONAL RISKS, WHICH ARE DISCUSSED IN THE
FUNDS' PROSPECTUSES.
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.
NONDEPOSIT 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]
--------------------------------------------------------------------------------
THE FIRST FIVE MONTHS OF 2000 WERE AS FASCINATING AND CHALLENGING A PERIOD AS
INVESTORS HAVE SEEN IN A LONG TIME. IT WAS FRAMED BY TWO EVENTS THAT WERE
STUNNINGLY OPPOSITE TO ONE ANOTHER.
--------------------------------------------------------------------------------
The more notable of the two was the precipitous drop of the NASDAQ Index. This
market gauge is dominated by the tech stocks which created the stupendous
returns of 1999. Many mutual funds could boast triple-digit returns for 12-month
periods, and the valuation of tech stocks in general reached undreamt-of levels.
More traditional investors struggled with the triple-digit price/earnings ratios
of the techs, and the retort was that this was the new economy. Then, about
three months into 2000, the trend cracked. The NASDAQ began falling, and it fell
hard. There were numerous drops of 5% or more in a day, very severe for an
entire index.
The second event was at the opposite end of the investment spectrum. Most people
were highly aware that the Federal Reserve (the Fed) was getting serious about
inflation and was raising interest rates. Therefore, bonds were a bad
investment? Wrong!
The Fed indeed raised short-term rates more than once. But something else was
happening. The federal government continued to run a budget surplus, and that
surplus has begun to be applied to the national debt. The Treasury began to
retire its 30-year bond. The effect was that by early June the six-month
Treasury bill yielded over 6.30%, but the 30-year bond, which had long been the
benchmark for the entire bond market, had a yield of 5.91%. Not only could you
get a higher rate of interest investing for 180 days instead of 30 years, but if
you happened to already own the 30-year bond, you received the benefit of a
run-up in its price.
In May THE WALL STREET JOURNAL reported that one of the world's foremost hedge
funds had suspected that tech stocks would drop, but missed the opportunity to
get out ahead of the event.
And there was no forewarning of what happened in the bond market. Once again, at
a pair of major market turns most investors were surprised. And that is why we
continue to believe that a well-allocated portfolio, set up before the fact, is
an excellent way to approach investing.
Sincerely,
Michael J.C. Roth, CFA
PRESIDENT AND
VICE CHAIRMAN OF THE BOARD
FOR MORE COMPLETE INFORMATION ABOUT THE MUTUAL FUNDS MANAGED AND DISTRIBUTED BY
USAA INVESTMENT MANAGEMENT COMPANY, INCLUDING CHARGES AND OPERATING EXPENSES,
PLEASE CALL FOR A PROSPECTUS. READ IT CAREFULLY BEFORE INVESTING.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INVESTMENT REVIEW
USAA BALANCED STRATEGY FUND
OBJECTIVE: High total return, with reduced risk over time, through an asset
allocation strategy that seeks a combination of long-term growth of capital and
current income.
TYPES OF INVESTMENTS: Invests principally in stocks, bonds, and money market
instruments.
---------------------------------------------------------------------------
5/31/00 5/31/99
---------------------------------------------------------------------------
Net Assets $148.2 Million $95.8 Million
Net Asset Value Per Share $15.26 $14.02
---------------------------------------------------------------------------
Average Annual Total Returns as of 5/31/00
---------------------------------------------------------------------------
1 YEAR SINCE INCEPTION ON 9/1/95
10.65% 12.70%
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 Balanced Strategy Fund, the S&P
500 Index, the Lipper Balanced Funds Average, and the Lehman Brothers Aggregate
Bond Index for the period of 9/01/95 through 5/31/00. The data points from the
graph are as follows:
USAA Balanced S&P 500 Lipper Lehman
Strategy Fund Index Average Index
------------- ------- -------- ------
09/01/95 $10,000 $10,000 $10,000 $10,000
11/30/95 10,060 10,840 10,519 10,382
05/31/96 10,637 12,117 11,189 10,262
11/30/96 11,734 13,858 12,263 11,012
05/31/97 12,686 15,684 13,034 11,115
11/30/97 13,823 17,809 14,366 11,844
05/31/98 14,820 20,493 15,648 12,328
11/30/98 14,548 22,026 16,102 12,963
05/31/99 15,950 24,803 17,152 12,865
11/30/99 17,222 26,628 17,543 12,958
05/31/00 17,649 27,399 17,977 13,136
DATA SINCE INCEPTION ON 9/01/95 THROUGH 5/31/00.
THE GRAPH ILLUSTRATES THE COMPARISON OF A $10,000 HYPOTHETICAL INVESTMENT IN THE
USAA BALANCED STRATEGY FUND TO THE S&P 500 INDEX, THE LIPPER BALANCED FUNDS
AVERAGE, AND THE LEHMAN BROTHERS AGGREGATE BOND INDEX. 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 DIRECTLY IN
THE S&P 500 INDEX. THE LIPPER BALANCED FUNDS AVERAGE IS THE AVERAGE OF ALL
BALANCED FUNDS, AS REPORTED BY LIPPER ANALYTICAL SERVICES, INC., AN INDEPENDENT
ORGANIZATION THAT MONITORS THE PERFORMANCE OF MUTUAL FUNDS. THE LEHMAN BROHTERS
AGGREGATE BOND INDEX IS AN UNMANAGED INDEX MADE UP OF THE GOVERNMENT/CORPORATE
INDEX, THE MORTGAGE-BACKED SECURITIES INDEX, AND THE ASSET-BACKED SECURITIES
INDEX.
MESSAGE FROM THE MANAGERS
[PHOTOGRAPH OF PORTFOLIO MANAGERS FROM LEFT TO RIGHT: PAMELA BLEDSOE NOBLE, CFA
(MONEY MARKET INSTRUMENTS); DAVID PARSONS, CFA (ALLOCATION MANAGER AND STOCKS);
AND PAUL H. LUNDMARK, CFA (BONDS) APPEARS HERE.]
FUND PERFORMANCE AND OUTLOOK
The USAA Balanced Strategy Fund's total return for the 12 months ending May 31,
2000, was 10.65%. The Fund performed well against the Lipper Balanced Fund
category average which returned 5.39%, and against the S&P 500 Index with a
return of 10.47%. Despite the many rate hikes by the Federal Reserve (the Fed)
over the past year, both the stock and bond portions of the Fund posted solid
returns.
In the fourth quarter of the fiscal year, March through May of 2000, the Fund's
returns weakened, along with the overall stock market, as the Fed's rate hikes
finally began to hurt the growth sectors of the economy. In light of recent
reports indicating a slowing economy, we believe the Fed will become
increasingly unlikely to raise rates, which would bode well for both stocks and
bonds.
STOCKS
The equity portion of the Fund had a good fiscal year. The main driver of this
performance was technology. Our holdings in Nortel, Dell, Hewlett-Packard,
Cisco, Texas Instruments, Intel, Oracle, and Applied Materials far outperformed
the market. Our weak performers in the group were Lucent, Microsoft, and America
Online. Overall, health care was also a positive contributor to Fund
performance. Pfizer, Pharmacia, Amgen, Medtronic, and Merck each had a strong
year, while Bristol-Myers, Guidant, and American Home were weak. A further area
of strength was the financial sector. Bank of New York, Northern Trust, State
Street, Wells & Fargo, American Express, Morgan Stanley Dean Witter, Lehman,
AIG, and Marsh & McLennan performed well. In contrast, our weak stocks in this
sector were Bank One, First Union, National City, J.P. Morgan, Freddie Mac,
Schwab, E-Trade, and Franklin Resources.
The two sectors that did not do well were basic materials and telephones. Dow,
DuPont, International Paper, AT&T, SBC Communications, and WorldCom were all
down for the year.
As usual, the two main factors driving the stock market up and down are the
direction of interest rates and the strength of the economy. The intention of
the Fed, at present, is to raise interest rates to that point which slows the
economy to a sustainable, noninflationary rate of growth. The danger is that the
Fed will raise interest rates so high that the economy is not only slowed but
put into reverse. So far, the present chairman of the Fed has proven himself to
be a nimble manager of inflation and the economy. We believe he will probably
pull off a soft landing again.
MONEY MARKET INSTRUMENTS
Money market instruments are used to provide liquidity for withdrawals or to
provide a temporary investment until stock or bond purchases are made.
Commercial paper or U.S. government agency discount notes are the most common
investments used for these purposes.
BONDS
The economy is still performing much stronger than anticipated, but the fear is
that inflation will rise. As mentioned earlier, the Fed has raised the federal
funds rate six times over the past year in an effort to slow down the economy.
At the same time, investors are demanding higher yields on non-Treasury
securities, concerned that more interest rate increases by the Fed could halt
the record economic expansion. Based on our assessment of where the value is in
the marketplace, we have invested in higher-yielding instruments such as
corporate bonds and mortgage- and asset-backed securities. While we feel that
this strategy has the potential to outperform in the long run, over the past
year the bond sector underperformed the Lipper average for its peer group.
Within the Fund's bond portion, the best performing holdings as a sector were
one type of collateral mortgage obligations (CMOs). The type of CMO we own is
defensive in nature and will outperform most other debt securities in a
rising-interest-rate environment. Another good performer was Glenborough
Property. Our investments in Kmart, Waste Management, MacSaver Financial, and
Finova underperformed. We continue to hold these securities because they are
turning around their operations and have a potentially good outlook.
Looking to the future, we feel that the economy will slow to a manageable pace,
which may result in corporates and mortgage- and asset-backed securities
increasing in relative value. Our continued emphasis is on finding securities
that represent good risk/reward characteristics.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
REFER TO THE BOTTOM OF PAGE 4 FOR THE LIPPER AVERAGE AND S&P 500 INDEX
DEFINITIONS.
----------------------------------
Top 10 Equity Holdings
(% of Net Assets)
----------------------------------
General Electric Co. 2.8
Intel Corp. 2.2
Pfizer, Inc. 1.9
Lucent Technologies, Inc. 1.7
Microsoft Corp. 1.7
Exxon Mobil Corp. 1.6
Cisco Systems, Inc. 1.3
Citigroup, Inc. 1.3
Wal-Mart Stores, Inc. 1.3
Oracle Corp. 1.2
----------------------------------
ASSET ALLOCATION
A pie chart is shown here depicting the Asset Allocation as of May 31, 2000 of
the USAA Balanced Strategy Fund to be:
Stocks - 63.2%; Bonds - 33.9%; and Money Market Instruments - 2.2%.
PERCENTAGES ARE OF THE NET ASSETS OF THE FUND AND MAY OR MAY NOT EQUAL 100%.
SEE PAGE 10 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, 2000. 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 2001.
Ordinary income * $ .25
=====
20.2% 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 BALANCED STRATEGY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the USAA Balanced Strategy Fund, a series of
the USAA Investment Trust, as of May 31, 2000, 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 the financial
highlights, presented in note 7 to the financial statements, for each of the
years or periods in the five-year period then ended. These financial statements
and financial highlights are the responsibility of the Trust'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 auditing standards generally accepted
in the United States of America. 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, 2000, 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 Balanced Strategy Fund as of May 31, 2000, 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 five-year period then ended, in conformity with
accounting principles generally accepted in the United States of America.
KPMG LLP
San Antonio, Texas
July 7, 2000
USAA BALANCED STRATEGY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 2000
MARKET
NUMBER VALUE
OF SHARES SECURITY (000)
--------------------------------------------------------------------------
STOCKS (63.2%)
ADVERTISING/MARKETING (0.2%)
3,000 Omnicom Group, Inc. $ 252
--------------------------------------------------------------------------
AEROSPACE/DEFENSE (0.4%)
11,500 Boeing Co. 449
8,400 Lockheed Martin Corp. 206
--------------------------------------------------------------------------
655
--------------------------------------------------------------------------
AIR FREIGHT (0.5%)
11,200 United Parcel Service "B" 671
--------------------------------------------------------------------------
AIRLINES (0.2%)
14,400 Southwest Airlines Co. 276
--------------------------------------------------------------------------
ALUMINUM (0.3%)
8,700 Alcoa, Inc. 508
--------------------------------------------------------------------------
AUTOMOBILES (0.6%)
5,200 DaimlerChrysler AG 281
9,000 Ford Motor Co. 437
2,181 General Motors Corp. 154
--------------------------------------------------------------------------
872
--------------------------------------------------------------------------
BANKS - MAJOR REGIONAL (2.1%)
8,600 Bank of New York Co., Inc. 404
13,400 Bank One Corp. 443
3,800 Fifth Third Bancorp 258
6,800 Fleet Boston Financial Corp. 257
6,000 Mellon Financial Corp. 231
5,600 Northern Trust Corp. 369
2,100 State Street Corp. 234
21,700 Wells & Fargo Co. 982
--------------------------------------------------------------------------
3,178
--------------------------------------------------------------------------
BANKS - MONEY CENTER (1.5%)
16,300 Bank of America Corp. 906
7,100 Chase Manhattan Corp. 530
5,800 J. P. Morgan & Co., Inc. 747
--------------------------------------------------------------------------
2,183
--------------------------------------------------------------------------
BEVERAGES - ALCOHOLIC (0.5%)
9,300 Anheuser-Busch Companies, Inc. 721
--------------------------------------------------------------------------
BEVERAGES - NONALCOHOLIC (1.6%)
34,000 Coca-Cola Co. 1,815
13,500 PepsiCo, Inc. 549
--------------------------------------------------------------------------
2,364
--------------------------------------------------------------------------
BIOTECHNOLOGY (0.4%)
9,200 Amgen, Inc.* 585
--------------------------------------------------------------------------
BROADCASTING - RADIO & TV (0.0%)(b)
765 General Motors Corp. "H" 75
--------------------------------------------------------------------------
CHEMICALS (1.0%)
3,100 Dow Chemical Co. 332
20,100 Du Pont (E. I.) De Nemours & Co. 985
5,600 Rohm & Haas Co. 191
--------------------------------------------------------------------------
1,508
--------------------------------------------------------------------------
COMMUNICATION EQUIPMENT (3.6%)
44,128 Lucent Technologies, Inc. 2,532
7,100 Motorola, Inc. 665
24,800 Nortel Networks Corp. 1,347
12,700 Tellabs, Inc.* 825
--------------------------------------------------------------------------
5,369
--------------------------------------------------------------------------
COMPUTER - HARDWARE (3.4%)
16,800 Compaq Computer Corp. 441
15,400 Dell Computer Corp.* 664
5,300 Gateway 2000, Inc.* 262
8,900 Hewlett-Packard Co. 1,069
15,700 IBM Corp. 1,685
12,300 Sun Microsystems, Inc.* 943
--------------------------------------------------------------------------
5,064
--------------------------------------------------------------------------
COMPUTER - NETWORKING (1.3%)
32,900 Cisco Systems, Inc.* 1,873
--------------------------------------------------------------------------
COMPUTER - PERIPHERALS (0.6%)
7,500 EMC Corp.* 872
--------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICE (4.2%)
21,800 America Online, Inc.* 1,156
3,600 BMC Software, Inc.* 158
12,200 Computer Associates International, Inc. 628
39,500 Microsoft Corp.* 2,471
25,400 Oracle Corp.* 1,826
--------------------------------------------------------------------------
6,239
--------------------------------------------------------------------------
DISTRIBUTIONS - FOOD/HEALTH (0.1%)
5,200 Sysco Corp. 218
--------------------------------------------------------------------------
DRUGS (5.2%)
10,600 Eli Lilly & Co. 807
23,900 Merck & Co., Inc. 1,784
61,700 Pfizer, Inc. 2,749
19,747 Pharmacia Corp. 1,026
28,700 Schering-Plough Corp. 1,388
--------------------------------------------------------------------------
7,754
--------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (3.2%)
78,600 General Electric Co. 4,137
10,500 Honeywell International, Inc. 574
--------------------------------------------------------------------------
4,711
--------------------------------------------------------------------------
ELECTRONICS - SEMICONDUCTORS (3.1%)
26,500 Intel Corp. 3,304
2,200 Micron Technology, Inc.* 154
15,800 Texas Instruments, Inc. 1,142
--------------------------------------------------------------------------
4,600
--------------------------------------------------------------------------
ENTERTAINMENT (1.9%)
8,200 Time Warner, Inc. 647
12,124 Viacom, Inc.* 752
32,000 Walt Disney Co. 1,350
--------------------------------------------------------------------------
2,749
--------------------------------------------------------------------------
EQUIPMENT - SEMICONDUCTORS (0.3%)
5,900 Applied Materials, Inc.* 493
--------------------------------------------------------------------------
FINANCE - CONSUMER (0.1%)
4,000 Household International, Inc. 188
--------------------------------------------------------------------------
FINANCE - DIVERSIFIED (3.4%)
13,500 American Express Co. 726
7,600 Associates First Capital Corp. "A" 209
32,000 Citigroup, Inc. 1,990
27,600 Freddie Mac 1,228
11,300 Morgan Stanley Dean Witter & Co. 813
--------------------------------------------------------------------------
4,966
--------------------------------------------------------------------------
FOODS (1.3%)
4,800 Bestfoods 310
12,900 ConAgra, Inc. 297
6,100 H.J. Heinz Co. 239
3,000 Hershey Foods Corp. 156
2,400 Quaker Oats Co. 176
15,000 Unilever N.V. - New York Shares 762
--------------------------------------------------------------------------
1,940
--------------------------------------------------------------------------
HEALTH CARE - DIVERSIFIED (2.9%)
21,100 American Home Products Corp. 1,137
27,000 Bristol-Myers Squibb Co. 1,486
18,600 Johnson & Johnson, Inc. 1,665
--------------------------------------------------------------------------
4,288
--------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (1.9%)
14,800 Colgate-Palmolive Co. 779
7,900 Kimberly-Clark Corp. 478
23,000 Procter & Gamble Co. 1,529
--------------------------------------------------------------------------
2,786
--------------------------------------------------------------------------
INSURANCE BROKERS (0.2%)
3,000 Marsh & McLennan Cos., Inc. 330
--------------------------------------------------------------------------
INSURANCE - LIFE/HEALTH (0.1%)
2,700 American General Corp. 173
--------------------------------------------------------------------------
INSURANCE - MULTILINE COMPANIES (1.1%)
14,400 American International Group, Inc. 1,621
--------------------------------------------------------------------------
INVESTMENT BANKS/BROKERAGE (0.7%)
9,750 Charles Schwab Corp. 280
6,200 E-Trade Group, Inc.* 96
1,900 Lehman Brothers Holdings, Inc. 147
5,300 Merrill Lynch & Co., Inc. 523
--------------------------------------------------------------------------
1,046
--------------------------------------------------------------------------
INVESTMENT MANAGEMENT (0.2%)
4,800 Franklin Resources, Inc. 144
3,800 T. Rowe Price Associates, Inc. 145
--------------------------------------------------------------------------
289
--------------------------------------------------------------------------
MACHINERY - DIVERSIFIED (0.2%)
6,300 Caterpillar, Inc. 241
2,500 Deere & Co. 104
--------------------------------------------------------------------------
345
--------------------------------------------------------------------------
MANUFACTURING - DIVERSIFIED INDUSTRIES (1.5%)
3,300 Illinois Tool Works, Inc. 192
4,700 Minnesota Mining & Manufacturing Co. 403
25,700 Tyco International Ltd. 1,209
6,800 United Technologies Corp. 411
--------------------------------------------------------------------------
2,215
--------------------------------------------------------------------------
MEDICAL PRODUCTS & SUPPLIES (0.7%)
5,800 Guidant Corp.* 294
13,500 Medtronic, Inc. 697
--------------------------------------------------------------------------
991
--------------------------------------------------------------------------
OIL - INTERNATIONAL INTEGRATED (3.1%)
5,200 Chevron Corp. 481
27,716 Exxon Mobil Corp. 2,309
31,200 Texaco, Inc. 1,792
--------------------------------------------------------------------------
4,582
--------------------------------------------------------------------------
OIL & GAS - DRILLING/EQUIPMENT (0.5%)
10,000 Schlumberger Ltd. 736
--------------------------------------------------------------------------
OIL & GAS - EXPLORATION & PRODUCTION (0.4%)
13,600 Unocal Corp. 523
--------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.4%)
11,600 International Paper Co. 404
5,200 Weyerhaeuser Co. 258
--------------------------------------------------------------------------
662
--------------------------------------------------------------------------
PERSONAL CARE (0.3%)
14,800 Gillette Co. 494
--------------------------------------------------------------------------
PHOTOGRAPHY - IMAGING (0.4%)
23,400 Xerox Corp. 635
--------------------------------------------------------------------------
PUBLISHING/NEWSPAPERS (0.2%)
2,100 Gannett, Inc. 136
4,300 Tribune Co. 165
--------------------------------------------------------------------------
301
--------------------------------------------------------------------------
RETAIL - BUILDING SUPPLIES (0.6%)
17,800 Home Depot, Inc. 869
--------------------------------------------------------------------------
RETAIL - COMPUTERS & ELECTRONICS (0.2%)
3,500 Best Buy Co., Inc.* 224
--------------------------------------------------------------------------
RETAIL - DEPARTMENT STORES (0.2%)
5,600 Kohls Corp.* 290
--------------------------------------------------------------------------
RETAIL - FOOD (0.2%)
7,900 Safeway, Inc.* 364
--------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISING (1.6%)
5,600 Target Corp. 351
34,100 Wal-Mart Stores, Inc. 1,965
--------------------------------------------------------------------------
2,316
--------------------------------------------------------------------------
RETAIL - SPECIALTY APPAREL (0.2%)
6,600 Gap, Inc. 231
--------------------------------------------------------------------------
TELECOMMUNICATIONS - CELLULAR/WIRELESS (0.3%)
8,600 AT&T Wireless Group* 246
2,400 NEXTEL Communications, Inc.* 222
--------------------------------------------------------------------------
468
--------------------------------------------------------------------------
TELECOMMUNICATIONS - LONG DISTANCE (1.7%)
23,000 AT&T Corp. 798
12,900 Qwest Communications International, Inc.* 546
29,650 Worldcom, Inc.* 1,115
--------------------------------------------------------------------------
2,459
--------------------------------------------------------------------------
TELEPHONES (2.4%)
13,000 Bell Atlantic Corp. 687
19,200 BellSouth Corp. 897
12,000 GTE Corp. 759
26,417 SBC Communications, Inc. 1,154
--------------------------------------------------------------------------
3,497
--------------------------------------------------------------------------
Total Stocks (cost: $77,270) 93,619
--------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON VALUE
(000) SECURITY RATE MATURITY (000)
--------------------------------------------------------------------------
BONDS (33.9%)
$ 1,000 American Health Properties Inc. 7.50% 1/15/2007 $ 874
1,000 Capital One Financial Corp. 7.25 5/01/2006 922
1,000 Cummins Engine Co., Inc. 6.45 3/01/2005 910
1,000 Empire District Electric Co. 7.70 11/15/2004 985
2,500 Finova Capital Corp. 7.25 11/08/2004 2,108
2,000 First Union Commercial Mortgage
Trust II 6.60 5/18/2007 1,900
1,000 First Union Corp. 6.82 8/01/2026 959
1,000 FirstPlus Home Loan Owner Trust,
Series 1998-1, Class A-5 6.25 11/10/2016 982
2,000 Ford Motor Credit Co. 7.38 10/28/2009 1,908
1,000 Great Atlantic & Pacific Tea, Inc. 7.70 1/15/2004 933
1,000 Heller Financial, Inc. 6.00 3/19/2004 926
1,000 Heller Financial, Inc.(a) 7.38 11/01/2009 924
1,000 Household Finance Corp. 8.00 5/09/2005 993
1,000 Imperial Bank 8.50 4/01/2009 919
1,000 J. P. Morgan & Co., Inc. 5.75 2/25/2004 935
900 Kmart Corp. 7.95 2/01/2023 734
2,000 Limestone Electron Trust(a) 8.63 3/15/2003 1,999
2,000 Litton Inds, Inc. 8.00 10/15/2009 1,919
1,000 MacSaver Financial Services, Inc. 7.40 2/15/2002 735
1,000 MCI Communications Corp. 6.95 8/15/2006 957
1,000 Merita Bank Ltd. (Finland) 6.50 1/15/2006 926
1,000 Merrill Lynch & Co., Inc. 6.50 7/15/2018 822
1,000 Nationwide Health Property, Inc. 7.25 4/01/2002 954
2,000 Osprey Trust, Osprey I, Inc.(a) 8.31 1/15/2003 1,990
1,000 Phillips Petroleum Co. 8.50 5/25/2005 1,014
1,000 Popular North America, Inc. 6.63 10/27/2002 965
1,000 Reckson Operating Partnership, L.P. 7.75 3/15/2009 909
1,000 Safeway, Inc. 7.50 9/15/2009 953
1,000 Service Master Co. 7.88 8/15/2009 915
2,000 Sovereign Bancorp, Inc. 10.25 5/15/2004 1,980
1,000 Tenneco Packaging Inc. 7.20 12/15/2005 927
2,300 TriNet Corporate Realty Trust, Inc. 6.75 3/01/2003 2,076
1,000 Union Planters Bank National Assn. 6.50 3/15/2018 868
1,000 Washington Real Estate Investment
Trust 7.25 8/13/2006 925
1,000 Waste Management, Inc. 6.13 7/15/2001 958
1,000 Waste Management, Inc. 6.38 12/01/2003 899
1,000 Federal Home Loan Bank 5.43 9/24/2008 872
1,000 Federal National Mortgage Assn. 7.25 1/15/2010 985
439 Federal National Mortgage Assn.,
Series 1997-72 CA 9.50 9/18/2023 456
400 Federal National Mortgage Assn.,
Series 1997-72 CB 9.00 9/18/2023 410
1,047 Federal National Mortgage Assn.,
Series 1997-79 U 9.00 11/18/2024 1,080
533 Federal National Mortgage Assn.,
Series 1997-89 N 9.50 12/20/2022 546
682 Federal National Mortgage Assn.,
Series 1998-7 H 9.00 3/18/2025 708
2,000 Federal National Mortgage Assn.,
Series 1999-25 VB 6.00 4/25/2016 1,708
1,000 Federal National Mortgage Assn.,
Series 1999-56 D 7.00 12/18/2014 917
1,000 Government National Mortgage Assn.,
Series 1999-14 VD 6.00 3/20/2014 887
--------------------------------------------------------------------------
Total Bonds (cost: $52,858) 50,172
--------------------------------------------------------------------------
MONEY MARKET INSTRUMENT (2.2%)
3,337 Federal Home Loan Bank, Discount Note,
6.30%, 6/01/2000 (cost: $3,337) 3,337
--------------------------------------------------------------------------
Total Investments (cost: $133,465) $147,128
==========================================================================
USAA BALANCED STRATEGY FUND
NOTES TO PORTFOLIO OF INVESTMENTS
MAY 31, 2000
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.
Investments in foreign securities were 2.7% of net assets at May 31, 2000.
SPECIFIC NOTES
(a) Security is exempt from registration under the Securities Act of 1933 and
has been determined to be liquid by the Fund's investment manager. Any resale of
this security in the United States may occur in an exempt transaction to a
qualified institutional buyer as defined by the Rule 144A.
(b) Represents less than 0.1% of net assets.
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
USAA BALANCED STRATEGY FUND
STATEMENT OF ASSETS AND LIABILITIES
(IN THOUSANDS)
MAY 31, 2000
ASSETS
Investments in securities, at market value
(identified cost of $133,465) $147,128
Cash 127
Receivables:
Capital shares sold 290
Dividends and interest 899
--------
Total assets 148,444
--------
LIABILIITES
Capital shares redeemed 119
USAA Investment Management Company 93
USAA Transfer Agency Company 30
Accounts payable and accrued expenses 49
--------
Total liabilities 291
--------
Net assets applicable to capital shares outstanding $148,153
========
REPRESENTED BY:
Paid-in capital $126,537
Accumulated undistributed net investment income 647
Accumulated net realized gain on investments 7,306
Net unrealized appreciation of investments 13,663
--------
Net assets applicable to capital shares outstanding $148,153
========
Capital shares outstanding, unlimited number of shares
authorized, no par value 9,708
========
Net asset value, redemption price, and offering price per share $ 15.26
========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
USAA BALANCED STRATEGY FUND
STATEMENT OF OPERATIONS
(IN THOUSANDS)
YEAR ENDED MAY 31, 2000
Net investment income:
Income:
Dividends (net of foreign taxes withheld of $11) $ 777
Interest 3,065
-------
Total income 3,842
-------
Expenses:
Management fees 909
Transfer agent's fees 368
Custodian's fees 74
Postage 66
Shareholder reporting fees 21
Trustees' fees 2
Registration fees 52
Professional fees 35
Other 3
-------
Total expenses before reimbursement 1,530
Expenses reimbursed (14)
-------
Total expenses after reimbursement 1,516
-------
Net investment income 2,326
-------
Net realized and unrealized gain (loss) on investments:
Net realized gain on investments 8,806
Change in net unrealized appreciation/depreciation of investments (418)
-------
Net realized and unrealized gain 8,388
-------
Increase in net assets resulting from operations $10,714
=======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
USAA BALANCED STRATEGY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
YEARS ENDED MAY 31,
2000 1999
---------------------
From operations:
Net investment income $ 2,326 $ 1,473
Net realized gain (loss) on investments 8,806 (1,495)
Change in net unrealized appreciation/depreciation
of investments (418) 6,006
---------------------
Increase in net assets resulting from operations 10,714 5,984
---------------------
Distributions to shareholders from:
Net investment income (1,959) (1,530)
---------------------
Net realized gains - (905)
---------------------
From capital share transactions:
Proceeds from shares sold 69,531 43,457
Reinvested dividends 1,918 2,383
Cost of shares redeemed (27,806) (23,680)
---------------------
Increase in net assets from capital share
transactions 43,643 22,160
---------------------
Net increase in net assets 52,398 25,709
Net assets:
Beginning of period 95,755 70,046
---------------------
End of period $148,153 $ 95,755
=====================
Accumulated undistributed net investment income:
End of period $ 647 $ 280
=====================
Change in shares outstanding:
Shares sold 4,603 3,261
Shares issued for dividends reinvested 127 182
Shares redeemed (1,850) (1,820)
---------------------
Increase in shares outstanding 2,880 1,623
=====================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
USAA BALANCED STRATEGY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
(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 11 separate funds. The
information presented in this annual report pertains only to the USAA Balanced
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
that seeks a combination of long-term growth of capital and current income.
Using preset target ranges, USAA Investment Management Company (the Manager)
will invest the Fund's assets in a combination of stocks on the one hand and
bonds and money market instruments on the other.
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 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). Gain or loss from sales
of investment securities is computed on the identified cost basis. Dividend
income is recorded on the ex-dividend date; interest income is recorded on the
accrual basis. Discounts and premiums on securities are amortized over the life
of the respective securities.
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, 2000.
(3) DISTRIBUTIONS
Distributions of net investment income are made quarterly. Distributions of
realized gains from security transactions not offset by capital losses are made
annually 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 year ended May 31, 2000, were $144,030,000 and
$102,483,000, respectively.
Gross unrealized appreciation and depreciation of investments at May 31, 2000,
was $19,804,000 and $6,141,000, 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 .75% of its annual average net assets.
The Manager has voluntarily agreed to limit the annual expenses of the Fund to
1.25% of its annual average net assets through October 1, 2000, and accordingly
has waived a portion of its management fees.
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 year ended May
31, 2000, was $10,000.
(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.
<TABLE>
(7) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
<CAPTION>
NINE-MONTH
PERIOD ENDED
YEAR ENDED MAY 31, MAY 31,
----------------------------------------------------
2000 1999 1998 1997 1996*
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 14.02 $ 13.46 $ 12.11 $ 10.49 $ 10.00
Net investment income .27 .25 .35 .33 .26(b)
Net realized and
unrealized gain 1.22 .74 1.64 1.65 .37
Distributions from net
investment income (.25) (.27) (.35) (.33) (.14)
Distributions of realized
capital gains - (.16) (.29) (.03) -
----------------------------------------------------
Net asset value at
end of period $ 15.26 $ 14.02 $ 13.46 $ 12.11 $ 10.49
====================================================
Total return (%) ** 10.65 7.63 16.82 19.26 6.37
Net assets at end of
period (000) $148,153 $95,755 $70,046 $34,601 $19,258
Ratio of expenses to
average net assets (%) 1.25 1.25 1.25 1.25 1.25(a)
Ratio of expenses to average
net assets excluding
reimbursements (%) 1.26 1.31 1.31 1.39 2.00(a)
Ratio of net investment
income to average net
assets (%) 1.92 1.88 2.85 3.16 3.31(a)
Portfolio turnover (%) 87.11 63.39 22.18 28.06 26.53
* 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.
</TABLE>
TRUSTEES
Robert G. Davis, CHAIRMAN OF THE BOARD
Michael J.C. Roth, VICE CHAIRMAN OF THE BOARD
Barbara B. Dreeben
Robert L. Mason
David G. Peebles
Michael F. Reimherr
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 HOURS
Call toll free - Central Time
Monday - Friday 7:00 a.m. to 9:00 p.m.
Saturdays 8:30 a.m. to 5:00 p.m.
Sundays 11:30 a.m. to 8:00 p.m.
INTERNET ACCESS
USAA.COM(Service Mark)
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 touch-tone phones only)
For account balance, last transaction, fund prices,
or to exchange or redeem fund shares
1-800-531-8777, (in San Antonio) 498-8777
