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USAA LIFE
INVESTMENT TRUST
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SEMIANNUAL REPORT
June 30, 1998
[USAA LOGO APPEARS HERE]
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USAA LIFE INVESTMENT TRUST
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USAA LIFE MONEY MARKET FUND
AN OVERVIEW JUNE 30, 1998
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
USAA IBC/DONOGHUE'S
LIFE MONEY MONEY FUND
DATE MARKET FUND AVERAGES(TM)/FIRST TIER
==== =========== =======================
01/31/95 5.77% 5.24%
02/28/95 5.70% 5.46%
03/30/95 5.84% 5.49%
04/25/95 5.76% 5.47%
05/30/95 5.74% 5.45%
06/27/95 5.79% 5.41%
07/25/95 5.51% 5.29%
08/29/95 5.45% 5.22%
09/26/95 5.42% 5.18%
10/31/95 5.50% 5.18%
11/28/95 5.68% 5.19%
12/26/95 5.52% 5.14%
01/30/96 4.99% 4.97%
02/27/96 5.00% 4.74%
03/26/96 5.03% 4.68%
04/30/96 5.00% 4.68%
05/28/96 5.04% 4.67%
06/25/96 5.06% 4.71%
07/30/96 5.08% 4.74%
08/27/96 5.05% 4.73%
09/24/96 5.10% 4.75%
10/29/96 4.97% 4.75%
11/26/96 5.03% 4.75%
12/31/96 5.23% 4.82%
01/28/97 5.12% 4.75%
02/25/97 5.01% 4.73%
03/25/97 5.05% 4.74%
04/29/97 5.26% 4.89%
05/27/97 5.32% 4.93%
06/24/97 5.25% 4.94%
07/29/97 5.21% 4.93%
08/26/97 5.26% 4.93%
09/30/97 5.24% 4.95%
10/28/97 5.29% 4.93%
11/25/97 5.30% 4.96%
12/30/97 5.54% 5.07%
01/27/98 5.24% 4.99%
02/24/98 5.18% 4.94%
03/31/98 5.28% 4.93%
04/28/98 5.28% 4.90%
05/26/98 5.19% 4.90%
06/30/98 5.30% 4.94%
Data represent the last Tuesday of each month.
The graph above tracks the USAA Life Money Market Fund's 7-day yield compared to
a benchmark- IBC/Donoghue's Money Fund Averages(TM)/First Tier, an average of
all major money market fund 7-day yields. Information for the benchmark is based
on a full calendar year in 1995, whereas the Money Market Fund yields are based
on a starting date of January 5, 1995 - the inception date of this Fund. This
comparison is for illustrative purposes only.
GENERAL DISCUSSION
by Portfolio Manager Pam Bledsoe
CURRENT MARKET CONDITIONS
Political and economic unrest in countries around the world is impacting the
U.S. market. Investors continue to prefer the quality and stability offered
by the U.S. market. As Asia, Russia, and Indonesia continue to make headline
news, more money is being invested in U.S. debt obligations which is helping
to keep U.S. interest rates low.
STRATEGY
The USAA Life Money Market Fund is managed to maximize current income while
maintaining a stable net asset value of $1. This strategy utilizes three
types of money market instruments: Variable Rate Demand Notes, U.S.
Government Agency Discount Notes, and Commercial Paper. For the period
ending June 30, 1998, the portfolio mix as a percentage of net assets was:
41.8% U.S. Agency Discount Notes, 25.1% Variable Rate Demand Notes, and 34.0%
Commercial Paper.
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there is no assurance that the Fund will maintain a stable net
asset value of $1.
INVESTMENT PROGRAM:
This Fund invests in a diversified portfolio of high-quality U.S. dollar-
denominated debt instruments that present minimal credit risk with remaining
maturities of 397 days or less.
SIMPLE 7-DAY YIELD: 5.30%
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURN
AS OF
JUNE 30, 1998
December 31, 1997
to June 30, 1998: 2.63%*
One Year: 5.40%
Three Year: 5.36%
Since Inception 5.41%
January 5, 1995:
* Total returns for periods of less than one year are not annualized. This six-
month return is cumulative. The 7-DAY yield quotation more closely reflects
the current earnings of the Fund than the total return quotation.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
1998 SEMIANNUAL REPORT B-19
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE MONEY MARKET FUND
AN OVERVIEW (Continued) June 30, 1998
PERFORMANCE
Although past performance is no guarantee of future results, for the
six-month period ended June 30, 1998, the Fund ranked 19 out of 108 variable
annuity money market funds for average annual NAV total return according to
Lipper Analytical Services/1/. The total return for the USAA Life Money Market
Fund was 2.63% compared to an average of 2.54% for all variable annuity money
market funds.
/1/ Lipper Analytical Services is an independent organization that monitors the
performance of variable annuity funds. Rankings are based on total returns.
PORTFOLIO MIX AS A PERCENTAGE OF NET ASSETS*
as of June 30, 1998
- --------------------------------------------
U.S. Agency Commercial Paper
Discount Notes [GRAPH APPEARS HERE] 34.0%
41.8%
Variable Rate
Demand Notes
25.1%
* Percentages are of Net Assets and may or may not be equal to 100%.
B-20 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE INCOME FUND
AN OVERVIEW June 30, 1998
COMPARISON OF FUND TO BENCHMARKS
[GRAPH APPEARS HERE]
USAA LIFE INCOME FUND
01/05/95 $10,000.00
01/31/95 $10,290.00
02/28/95 $10,520.00
03/31/95 $10,530.00
04/30/95 $10,700.00
05/31/95 $11,210.00
06/30/95 $11,220.00
07/31/95 $11,200.00
08/31/95 $11,400.00
09/30/95 $11,650.00
10/31/95 $11,870.00
11/30/95 $12,100.00
12/31/95 $12,388.65
01/31/96 $12,454.32
02/29/96 $12,027.50
03/31/96 $11,863.34
04/30/96 $11,688.23
05/31/96 $11,666.35
06/30/96 $11,863.34
07/31/96 $11,830.51
08/31/96 $11,786.73
09/30/96 $12,005.61
10/31/96 $12,333.93
11/30/96 $12,585.65
12/31/96 $12,472.26
01/31/97 $12,519.73
02/28/97 $12,567.20
03/29/97 $12,329.85
04/30/97 $12,495.99
05/31/97 $12,642.11
06/30/97 $12,844.48
07/31/97 $13,225.41
08/31/97 $13,106.37
09/30/97 $13,380.16
10/31/97 $13,570.63
11/30/97 $13,725.38
12/31/97 $13,919.15
01/31/98 $14,109.64
02/28/98 $14,084.24
03/31/98 $14,122.34
04/30/98 $14,173.14
05/31/98 $14,377.21
06/30/98 $14,568.00
LEHMAN BROTHERS AGGREGATE
BOND INDEX
01/05/95 $10,000.00
01/31/95 $10,198.00
02/28/95 $10,440.71
03/31/95 $10,504.40
04/30/95 $10,651.46
05/31/95 $11,063.67
06/30/95 $11,144.44
07/31/95 $11,119.92
08/31/95 $11,254.47
09/30/95 $11,363.64
10/31/95 $11,511.37
11/30/95 $11,684.04
12/31/95 $11,847.61
01/31/96 $11,925.81
02/29/96 $11,718.30
03/31/96 $11,636.27
04/30/96 $11,571.11
05/31/96 $11,547.97
06/30/96 $11,702.71
07/31/96 $11,734.31
08/31/96 $11,714.36
09/30/96 $11,918.19
10/31/96 $12,182.77
11/30/96 $12,391.10
12/31/96 $12,275.86
01/31/97 $12,313.92
02/28/97 $12,344.70
03/31/97 $12,207.67
04/30/97 $12,390.79
05/31/97 $12,508.50
06/30/97 $12,657.35
07/31/97 $12,999.10
08/31/97 $12,888.61
09/30/97 $13,078.07
10/31/97 $13,267.70
11/30/97 $13,328.73
12/31/97 $13,463.36
01/31/98 $13,635.69
02/28/98 $13,624.78
03/31/98 $13,671.10
04/30/98 $13,742.19
05/31/98 $13,872.74
06/30/98 $13,991.00
LIPPER A RATED BOND
FUND INDEX
01/05/95 $10,000.00
01/31/95 $10,178.00
02/28/95 $10,424.31
03/31/95 $10,500.41
04/30/95 $10,650.56
05/31/95 $11,127.71
06/30/95 $11,206.71
07/31/95 $11,151.80
08/31/95 $11,306.81
09/30/95 $11,428.92
10/31/95 $11,601.50
11/30/95 $11,791.76
12/31/95 $11,981.61
01/31/96 $12,037.93
02/29/96 $11,765.87
03/31/96 $11,670.57
04/30/96 $11,580.70
05/31/96 $11,555.22
06/30/96 $11,699.66
07/31/96 $11,724.23
08/31/96 $11,691.41
09/30/96 $11,913.54
10/31/96 $12,205.42
11/30/96 $12,454.42
12/31/96 $12,313.68
01/31/97 $12,332.15
02/28/97 $12,374.08
03/31/97 $12,203.32
04/30/97 $12,375.38
05/31/97 $12,490.48
06/30/97 $12,659.10
07/31/97 $13,066.72
08/31/97 $12,900.77
09/30/97 $13,121.38
10/31/97 $13,290.64
11/30/97 $13,353.11
12/31/97 $13,494.65
01/31/98 $13,655.24
02/28/98 $13,632.02
03/31/98 $13,682.46
04/30/98 $13,745.40
05/31/98 $13,893.85
06/30/98 $14,018.00
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life Income Fund to two industry indexes which most closely resemble
the holdings of this Fund. The Lehman Brothers 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. The Lipper A Rated Bond
Fund Index is an unmanaged index made up of funds investing in corporate debt
issues rated A or better or government issues.
The calculations for the Lehman Brothers and Lipper Indexes are based on a full
calendar year in 1995, whereas the Income Fund calculations are based on a
starting date of January 5, 1995 -the inception date of this Fund. This
comparison is for illustrative purposes only.
GENERAL DISCUSSION
By Portfolio Manager J. W. Saunders, Jr.
MARKET CONDITIONS AND PERFORMANCE
The best bond market in two years (which we reported for the six months
ending December 31, 1997, in our Annual Report) peaked on January 12, 1998,
at 5.69% yield for the 30-year U.S. Treasury bond. From there the 30-year
U.S. Treasury bond traded in a relatively tight range of one-half percent,
reaching a high yield of 6.07% on April 29, 1998, and a new low yield of
5.57% on June 15, 1998, as shown on the chart below. For this six-month
reporting period, we have seen the lowest volatility in bond prices (most
stable interest rates) since 1979.
30-YEAR U.S. TREASURY BOND YIELD
GRAPH APPEARS HERE
12/31/97 5.92
1/1/98 5.92
1/2/98 5.84
1/5/98 5.74
1/6/98 5.72
1/7/98 5.79
1/8/98 5.75
1/9/98 5.73
1/12/98 5.69
1/13/98 5.74
1/14/98 5.73
1/15/98 5.74
1/16/98 5.81
1/19/98 5.81
1/20/98 5.84
1/21/98 5.81
1/22/98 5.87
1/23/98 5.97
1/26/98 5.9
1/27/98 5.94
1/28/98 5.94
1/29/98 5.84
1/30/98 5.8
2/2/98 5.88
2/3/98 5.86
2/4/98 5.86
2/5/98 5.93
2/6/98 5.92
2/9/98 5.94
2/10/98 5.92
2/11/98 5.85
2/12/98 5.87
2/13/98 5.85
2/16/98 5.85
2/17/98 5.8
2/18/98 5.84
2/19/98 5.85
2/20/98 5.87
2/23/98 5.9
2/24/98 5.96
2/25/98 5.92
2/26/98 5.95
2/27/98 5.92
3/2/98 6.01
3/3/98 6.07
3/4/98 6.02
3/5/98 6.06
3/6/98 6.02
3/9/98 5.96
3/10/98 5.96
3/11/98 5.94
3/12/98 5.87
3/13/98 5.89
3/16/98 5.86
3/17/98 5.89
3/18/98 5.91
3/19/98 5.9
3/20/98 5.88
3/23/98 5.88
3/24/98 5.88
3/25/98 5.94
3/26/98 5.97
3/27/98 5.96
3/30/98 5.98
3/31/98 5.93
4/1/98 5.88
4/2/98 5.84
4/3/98 5.79
4/6/98 5.82
4/7/98 5.84
4/8/98 5.9
4/9/98 5.88
4/10/98 5.88
4/13/98 5.93
4/14/98 5.9
4/15/98 5.88
4/16/98 5.87
4/17/98 5.88
4/20/98 5.92
4/21/98 5.95
4/22/98 5.96
4/23/98 5.98
4/24/98 5.95
4/27/98 6.05
4/28/98 6.07
4/29/98 6.07
4/30/98 5.95
5/1/98 5.93
5/4/98 5.94
5/5/98 5.99
5/6/98 5.94
5/7/98 5.95
5/8/98 5.98
5/11/98 6.03
5/12/98 5.97
5/13/98 5.94
5/14/98 5.98
5/15/98 5.97
5/18/98 5.92
5/19/98 5.93
5/20/98 5.89
5/21/98 5.92
5/22/98 5.9
5/25/98 5.9
5/26/98 5.84
5/27/98 5.85
5/28/98 5.83
5/29/98 5.8
6/1/98 5.78
6/2/98 5.79
6/3/98 5.78
6/4/98 5.82
6/5/98 5.79
6/8/98 5.78
6/9/98 5.79
6/10/98 5.7
6/11/98 5.65
6/12/98 5.66
6/15/98 5.57
6/16/98 5.65
6/17/98 5.75
6/18/98 5.7
6/19/98 5.67
6/22/98 5.67
6/23/98 5.64
6/24/98 5.66
6/25/98 5.66
6/26/98 5.63
6/29/98 5.64
6/30/98 5.63
INVESTMENT PROGRAM:
This Fund invests in a diversified portfolio of U.S. dollar-denominated debt and
income-producing equity securities selected for their high yields relative to
the risk involved.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURN
AS OF
JUNE 30, 1998
December 30, 1997
to June 30, 1998: 4.66%*
One Year: 13.42%
Three Year: 9.09%
Since Inception
January 5, 1995: 11.35%
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
1998 SEMIANNUAL REPORT B-21
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE INCOME FUND
AN OVERVIEW (Continued) JUNE 30, 1998
The USAA Life Income Fund continued to perform well in this environment and
received high rankings in the Lipper/1/ Variable Annuity A Rated Bond Fund
category. Lipper ranked the Fund number 2 of 33 funds for the 12 months
ending June 30, 1998. The Fund's average annual NAV total return for the
period was 13.42% versus an average of 10.58% for all variable annuity funds
in Lipper's category.
PORTFOLIO
As of June 30, 1998, the Fund's portfolio mix as percentages of net assets
was 18.4% U. S. Treasury bonds, 13.2% U. S. Government Agency bonds, 32.5%
agency mortgage pass-through securities, 24.5% corporate bonds, and 10.5%
preferred stocks.
OUTLOOK
The Federal Reserve continues a steady course of no change in the "Fed
Funds," or interbank lending rate, which is its main signal for monetary
policy. In addition, deepening economic problems in Asia (especially Japan),
a firm U.S. dollar, and a continual downtrend in inflation all support low
U.S. interest rates. However, interest rates may be at a low level which
cannot be sustained. The deepening problems in Asia could cause some selling
of U.S. securities (bonds and stocks) by holders in that region to repatriate
funds needed at home. Also, the U. S. economy continues to do well with only
faint signs of potential slowing. In the current bond market, there is very
little pick-up in yield as bond maturities extend from two years out to 30
years. This is referred to as a "flat yield curve." In this environment, we
are not being paid to invest in long-term bonds. Therefore, we have recently
shifted some of the long-term U. S. Treasury bonds into two to three year
maturity corporate and U. S. Government Agency bonds to take advantage of
their high relative yields with very low price volatility. We continue to
seek a high level of income in this portfolio to enhance the compounding of
returns, which accrue through reinvestment of income.
/1/ Lipper Analytical Services is an independent organization that monitors the
performance of variable annuity funds. Rankings are based on total returns.
Top 10 Securities
as of June 30, 1998
Coupon % of
Rate Net Assets
U.S. Treasury Bond 7.88% 18.4%
FNMA Notes 5.65 7.3
Federal Home
Loan Bank Bonds 5.58 5.9
FNMA 7.00 3.4
GNMA 7.00 3.2
GNMA 8.00 3.2
GNMA 8.50 3.0
Chrysler Financial 6.05 2.9
General Electric
Credit 5.73 2.9
Wal-Mart Stores 5.85 2.9
B-22 SEMIANNUAL REPORT 1998
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USAA LIFE INVESTMENT TRUST
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USAA LIFE GROWTH AND INCOME FUND
AN OVERVIEW JUNE 30, 1998
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
S&P 500 INDEX
01/95 $10,259.00
02/95 $10,658.08
03/95 $10,972.49
04/95 $11,295.08
05/95 $11,745.75
06/95 $12,018.25
07/95 $12,416.06
08/95 $12,447.10
09/95 $12,972.37
10/95 $12,925.67
11/95 $13,491.81
12/95 $13,752.20
01/96 $14,219.78
02/96 $14,352.02
03/96 $14,489.80
04/96 $14,702.80
05/96 $15,080.66
06/96 $15,137.97
07/96 $14,468.87
08/96 $14,774.16
09/96 $15,604.47
10/96 $16,035.16
11/96 $17,245.81
12/96 $16,904.34
1/97 $17,959.17
2/97 $18,101.05
3/97 $17,358.91
4/97 $18,393.50
5/97 $19,517.34
6/97 $20,385.86
7/97 $22,006.54
8/97 $20,774.17
9/97 $21,910.52
10/97 $21,178.71
11/97 $22,159.28
12/97 $22,540.42
1/98 $22,788.37
2/98 $24,431.41
3/98 $25,682.30
4/98 $25,944.26
5/98 $25,498.02
6/98 $26,533.00
LIFE GROWTH AND
INCOME FUND
01/05/95 $10,000.00
01/31/95 $10,150.00
02/28/95 $10,480.00
03/31/95 $10,720.00
04/30/95 $11,080.00
05/31/95 $11,410.00
06/30/95 $11,650.00
07/31/95 $11,990.00
08/31/95 $12,190.00
09/30/95 $12,530.00
10/31/95 $12,230.00
11/30/95 $12,900.00
12/31/95 $13,172.27
01/31/96 $13,475.44
02/29/96 $13,632.25
03/31/96 $14,123.60
04/30/96 $14,301.32
05/31/96 $14,489.49
06/30/96 $14,499.95
07/31/96 $13,841.33
08/31/96 $14,343.13
09/30/96 $15,033.11
10/31/96 $15,357.19
11/30/96 $16,339.88
12/31/96 $16,350.51
01/31/97 $17,023.63
02/28/97 $17,164.77
03/29/97 $16,676.21
04/30/97 $17,175.63
05/31/97 $18,401.46
06/30/97 $19,111.31
07/31/97 $20,378.12
08/31/97 $19,766.56
09/30/97 $20,640.22
10/31/97 $19,810.24
11/30/97 $20,399.96
12/31/97 $20,671.28
1/31/98 $20,510.33
2/28/98 $21,993.42
3/31/98 $23,131.60
4/30/98 $23,269.56
5/31/98 $22,688.80
6/30/98 $22,700.00
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life Growth and Income Fund to the S&P 500(R) Index/1/. The S&P 500
Index is an unmanaged index representing the average performance of a group of
500 widely held, publicly traded stocks. it is not possible to invest directly
in the S&P 500 Index.
The calculations for the S&P 500 Index are based on a full calendar year in
1995, whereas the calculations for the Growth and Income Fund are based on a
starting date of January 5, 1995-the inception date of this Fund.
This comparison is for illustrative purposes only.
GENERAL DISCUSSION
By Portfolio Manager R. David Ullom
MARKET CONDITIONS
This year the major theme constantly discussed in the popular press has been
the economic crisis in Southeast Asia. It seems that for every step forward
these countries (including Japan) take in terms of improving their economies,
they take two steps back. The perception of "on again off again" economic
recovery has directed investors toward emphasizing stocks with limited or no
exposure to Southeast Asia and to companies with relatively certain earnings
growth. As a result, we have seen a divergence in the performance of what
can be termed "cyclical stocks" and "growth stocks". Investors have
emphasized the latter group while abandoning the former, particularly in the
months of May and June.
PERFORMANCE
Performance for the first half of 1998 was most positively impacted by Fund
holdings in sectors such as healthcare, retailing, autos, and selected
technology names. With the exception of technology, these sectors all share
a commonality in that they have minimal revenue and earnings exposure to
Southeast Asia. Investments in commodity/cyclical sectors of the economy
have had the greatest negative impact on the performance of the USAA Life
Growth and Income Fund. Such sectors include basic materials (metals,
chemicals, and paper), capital goods (aerospace, machinery, and diversified
manufacturing) and energy. Energy stocks in particular have declined due to
the fall in crude oil prices over the last six months.
/1/ The S&P 500 is an unmanaged index representing the average performance of a
group of 500 widely held, publicly traded stocks.
INVESTMENT PROGRAM:
Not less than 65% of its assets are invested in a diversified portfolio of
dividend-paying common stocks and convertible securities of companies that offer
the prospect for growth of earnings.
Net Asset Value (NAV)
Average Annual
Total Return
AS OF
JUNE 30, 1998
December 31, 1997
to June 30, 1998: 9.82%*
One Year: 18.78%
Three Year: 24.90%
Since Inception
January 5, 1995: 26.39%
* Total returns for periods of less than one year are not annualized.This
six-month return is cumulative.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
1998 SEMIANNUAL REPORT B-23
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE GROWTH AND INCOME FUND
AN OVERVIEW (Continued) June 30, 1998
However, with continued global growth in demand for oil combined with some oil
production curtailment from OPEC, crude prices and energy stocks should stage a
recovery.
PORTFOLIO STRATEGY
We continue to add to our holdings in the pharmaceutical related area (American
Home Products, Pharmacia Upjohn, and Merck) as the long-term trend in
demographics in the U.S. bodes well for these companies. Continued economic
growth and consumer spending growth favor such retailers as Sears, J.C. Penney,
and May stores. As for the Fund's investments in aerospace (Boeing), chemicals -
diversified (B.F. Goodrich), machinery (Deere and Flowserve), chemicals (Dow
Chemical and Millennium), and papers (Unisource and Weyerhaeuser), we feel that
current valuations reflect cyclical downturns. Therefore, we will continue to
hold these investments until we experience a significant improvement in
valuations.
OUTLOOK
Our outlook for the economy in general and the equity market in particular
continues to be one of cautious optimism. Most of the economies of Southeast
Asia appear to be bottoming, albeit with significant aid from the International
Monetary Fund. The current key to recovery in Southeast Asia now appears to lie
with Japan. More specifically, do the Japanese leaders hav e the political and
economic will to undergo some of the reforms necessary to set their economy back
on a reasonable growth track?
TOP 10 EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
Morgan Stanley,
Dean Witter, Discover & Co. 2.7%
Sears, Roebuck & Co. 2.5
Boeing Co. 2.3
B.F. Goodrich Co. 2.2
American Home Products Corp. 2.1
Lear Corp. 2.1
Pharmacia & Upjohn 2.1
Cisco Systems 2.0
Lucent Technologies 2.0
Fluor Corp. 1.8
TOP 10 INDUSTRIES
as of June 30, 1998
% of
Net Assets
Finance - Diversified 3.8%
Drugs 3.3
Auto Parts 3.1
Chemicals - Diversified 3.1
Insurance - Property/Casualty 3.1
Chemicals 3.0
Healthcare - HMOs 3.0
Telephones 3.0
Banks - Money Center 2.9
Telecommunications -
Long Distance 2.8
B-24 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
---------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
AN OVERVIEW June 30, 1998
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
USAA LIFE WORLD GROWTH FUND
01/05/95 $10,000.00
01/31/95 $9,710.00
02/28/95 $9,790.00
03/31/95 $10,160.00
04/30/95 $10,490.00
05/31/95 $10,920.00
06/30/95 $11,150.00
07/31/95 $11,710.00
08/31/95 $11,620.00
09/30/95 $11,770.00
10/31/95 $11,480.00
11/30/95 $11,650.00
12/31/95 $11,955.58
01/31/96 $12,321.78
02/29/96 $12,558.74
03/31/96 $12,849.55
04/30/96 $13,463.49
05/31/96 $13,592.74
06/30/96 $13,614.28
07/31/96 $12,935.72
08/31/96 $13,334.24
09/30/96 $13,668.13
10/31/96 $13,625.05
11/30/96 $14,379.00
12/31/96 $14,481.01
01/31/97 $15,036.67
02/28/97 $15,013.99
03/29/97 $14,866.57
04/30/97 $15,059.35
05/31/97 $15,931.94
06/30/97 $16,666.03
07/31/97 $17,480.40
08/31/97 $16,666.03
09/30/97 $17,652.45
10/31/97 $16,631.62
11/30/97 $16,356.33
12/31/97 $16,520.54
1/31/98 $16,557.69
2/28/98 $17,808.49
3/31/98 $18,836.38
4/30/98 $19,145.99
5/31/98 $18,815.02
6/30/98 $18,765.00
MORGAN STANLEY CAPITAL INDEX WORLD
01/95 $ 9,847.00
02/95 $ 9,987.81
03/95 $10,467.23
04/95 $10,829.39
05/95 $10,919.28
06/95 $10,913.82
07/95 $11,457.33
08/95 $11,199.54
09/95 $11,523.20
10/95 $11,338.83
11/95 $11,730.02
12/95 $12,070.19
01/96 $12,286.25
02/96 $12,358.74
03/96 $12,561.42
04/96 $12,854.10
05/96 $12,863.10
06/96 $12,926.13
07/96 $12,467.25
08/96 $12,608.13
09/96 $13,098.59
10/96 $13,187.66
11/96 $13,923.53
12/96 $13,697.97
1/97 $13,860.97
2/97 $14,017.60
3/97 $13,737.25
4/97 $14,183.71
5/97 $15,056.01
6/97 $15,804.29
7/97 $16,529.71
8/97 $15,420.57
9/97 $16,256.36
10/97 $15,398.02
11/97 $15,667.49
12/97 $15,855.50
1/98 $16,294.70
2/98 $17,394.59
3/98 $18,126.90
4/98 $18,300.92
5/98 $18,068.50
6/98 $18,495.00
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life World Growth Fund to its benchmark, the Morgan Stanley Capital
Index-World, an unmanaged index which reflects the movement of world stock
markets by representing a broad selection of domestically listed companies
within each market.
Calculations for the Morgan Stanley Index are based on a full calendar year in
1995, whereas the World Growth Fund calculations are based on a starting date of
January 5, 1995-the inception date of this Fund. This comparison is for
illustrative purposes only.
General Discussion
By Portfolio Managers R. David Ullom, David G. Peebles, Albert Sebastian, and
W. Travis Selmier, II
Market Conditions
The European and United States markets have produced excellent returns over
the last 12 months and significantly outperformed both the emerging markets
and Japan.
International
Europe-European markets provided favorable returns over this reporting period
because of an improved outlook for economic growth and continued corporate
mergers and acquisitions. In particular, the performance of the banking and
insurance sectors benefited from acquisitions. The European markets also
appreciated on news that the European monetary union remained on track.
Emerging Markets-Asia's economic problems have continued to cast a shadow
over most emerging markets, with early 1998 recoveries fading by March.
Weaknesses in commodity prices - from which many emerging markets' countries
derive significant export earnings - have also taken a toll. Higher interest
rates on emerging markets' debt have raised companies' financing costs.
Strength in Mediterranean, selected Central European, and South African
markets has not been enough to offset these factors; therefore, we have
lowered our emerging markets' weighting.
Japan-Asia's currency crisis, combined with problems within the banking
system, has continued to affect the Japanese economy and stock market. We
have begun to selectively buy quality financial companies while holding
export-related stocks. We have not changed our underweighted position
awaiting more progress on the restructuring of Japan's tax and financial
system.
INVESTMENT PROGRAM:
Not less than 65% of the Fund's assets are invested in a diversified portfolio
of common stocks and other equity securities of both foreign and domestic
issuers representing at least three countries, one of which may include the
United States. The remainder of the Fund's assets may be invested in marketable
debt securities having remaining maturities of less than one year which are
issued or guaranteed as to both principal and interest by the U.S. government or
by its agencies.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURN
AS OF
JUNE 30, 1998
December 31, 1997
to June 30, 1998: 13.59%*
One Year: 12.60%
Three Year: 18.95%
Since Inception
January 5, 1995: 19.70%
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
1998 SEMIANNUAL REPORT B-25
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
AN OVERVIEW (Continued) June 30, 1998
UNITED STATES
Over the last six months the Fund's allocation to U.S. equities as a
percentage of net assets has risen from 30.2% as of December 31, 1997, to
33.0% as of June 30, 1998. A wide variety of our domestic company stock
holdings have outperformed the major U.S. averages, because they have only
minor exposure to the economic problems of Southeast Asia. Such industries
include retailing, financials, and healthcare. Surprisingly, several of our
technology holdings have also outperformed the major averages. Performance in
domestic equities was hampered by investments in household products, energy
and oil services, and semiconductors.
COUNTRY WEIGHTINGS AS A PECENTAGE OF NET ASSETS
as of June 30, 1998
Other* 15.9%
Spain 2.0%
USA 33.0%
Austria 2.0%
Sweden 2.3%
Italy 2.8%
Finland 2.9% [CHART APPEARS HERE]
Switzerland 3.3%
Denmark 3.3%
Germany 3.9%
United Kingdom 8.3%
Canada 4.1%
France 5.9%
Netherlands 5.7%
Japan 5.7%
* Each of the remaining countries' investments represented less than 2% of
the portfolio's assets.
B-26 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
An Overview (Continued) June 30, 1998
OUTLOOK
In the international markets we continue to favor European markets because of
their economic and political stability as well as the relatively strong earnings
growth. European equities will also benefit from further economic integration
and more shareholder-oriented management. We remain cautious on Japan pending
further progress on structuring and implementing policies, which would stimulate
economic recovery. Currency volatility and weakness in Asian economies will mean
continued turbulence in emerging markets with select opportunities. Although we
are concerned about a slowdown in earnings growth in the United States, the
fundamentals of the economy are positive and the U.S. market is viewed as a safe
haven.
Foreign investing is subject to additional risks such as currency fluctuations,
market illiquidity, and political instability, which are discussed in the
prospectus. Since return on any investment is generally commensurate with risk,
investors should be aware of the potential volatility associated with foreign
markets.
TOP 10 EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
Elf Aquitaine ADR (France) 1.3%
Akzo Nobel N.V. (Netherlands) 1.2
Nokia Corp. ADR (Finland) 1.2
Continental AG (Germany) 1.1
Microsoft Corp. (United States) 1.1
Telefonica de Espana
S.A. ADR (Spain) 1.1
Autoliv, Inc. SDR (Sweden) 1.0
Morgan Stanley, Dean Witter,
Discover & Co. (United States) 1.0
Novartis AG (Switzerland) 1.0
Telecom Italia S.p.A. (Italy) 0.9
TOP 10 INDUSTRIES
OF EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
Banks - Major Regional 5.8%
Auto Parts 5.5
Telephones 5.1
Computer Software & Service 4.1
Oil - International Integrated 2.8
Communication Equipment 2.4
Insurance - Multi-Line
Companies 2.4
Banks - Money Center 2.1
Household Products 2.1
Medical Products & Supplies 2.0
1998 SEMIANNUAL REPORT B-27
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
An Overview June 30, 1998
INVESTMENT PROGRAM:
Approximately 60% of the Fund's assets are invested in equity securities
selected for total return potential and approximately 40% are invested in debt
securities of varying maturities. On June 30, 1998 the portfolio mix was 61.3%
common stocks and 35.6% fixed-income securities, as a percentage of net assets.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURN
AS OF
JUNE 30, 1998
December 31, 1997
to June 30, 1998: 8.52%*
One Year: 17.83%
Three Year: 18.73%
Since Inception
January 5, 1995: 19.97%
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
COMPARISON OF FUND TO BENCHMARKS
[CHART APPEARS HERE]
USAA LIFE DIVERSIFIED ASSETS FUND
01/05/95 $10,000.00
01/31/95 $10,120.00
02/28/95 $10,330.00
03/31/95 $10,550.00
04/30/95 $10,860.00
05/31/95 $11,240.00
06/30/95 $11,300.00
07/31/95 $11,450.00
08/31/95 $11,640.00
09/30/95 $11,970.00
10/31/95 $11,890.00
11/30/95 $12,270.00
12/31/95 $12,633.12
01/31/96 $12,833.81
02/29/96 $12,844.38
03/31/96 $13,108.45
04/30/96 $13,002.82
05/31/96 $13,150.70
06/30/96 $13,340.83
07/31/96 $13,002.82
08/31/96 $13,192.95
09/30/96 $13,678.84
10/31/96 $14,059.10
11/30/96 $14,650.62
12/31/96 $14,440.16
01/31/97 $14,808.13
02/28/97 $14,964.24
03/29/97 $14,573.96
04/30/97 $14,941.94
05/31/97 $15,616.43
06/30/97 $16,051.18
07/31/97 $16,863.46
08/31/97 $16,337.19
09/30/97 $16,966.42
10/31/97 $16,783.37
11/30/97 $17,183.80
12/31/97 $17,428.85
1/31/98 $17,609.40
2/28/98 $18,319.55
3/31/98 $18,813.05
4/30/98 $18,849.16
5/31/98 $18,817.01
6/30/98 $18,913.00
LIPPER BALANCED FUND AVERAGE
01/05/95 $10,000.00
01/31/95 $10,121.00
02/28/95 $10,396.29
03/31/95 $10,575.11
04/30/95 $10,751.71
05/31/95 $11,103.29
06/30/95 $11,298.71
07/31/95 $11,550.67
08/31/95 $11,656.94
09/30/95 $11,905.23
10/31/95 $11,855.23
11/30/95 $12,223.93
12/31/95 $12,390.17
01/31/96 $12,607.00
02/29/96 $12,604.48
03/31/96 $12,657.42
04/30/96 $12,749.82
05/31/96 $12,896.44
06/30/96 $12,924.81
07/31/96 $12,581.01
08/31/96 $12,797.40
09/30/96 $13,287.55
10/31/96 $13,559.94
11/30/96 $14,151.15
12/31/96 $13,974.26
01/31/97 $14,396.29
02/28/97 $14,384.77
03/31/97 $13,964.73
04/30/97 $14,368.32
05/31/97 $14,989.03
06/30/97 $15,431.20
07/31/97 $16,283.01
08/31/97 $15,812.43
09/30/97 $16,399.07
10/31/97 $16,141.60
11/30/97 $16,367.58
12/31/97 $16,600.00
01/31/98 $16,721.18
02/28/98 $17,358.26
03/31/98 $17,870.33
04/30/98 $17,993.64
05/31/98 $17,979.24
06/30/98 $18,301.00
LEHMAN BROTHERS AGGREGATE BOND INDEX
01/05/95 $10,000.00
01/31/95 $10,198.00
02/28/95 $10,440.71
03/31/95 $10,504.40
04/30/95 $10,651.46
05/31/95 $11,063.67
06/30/95 $11,144.44
07/31/95 $11,119.92
08/31/95 $11,254.47
09/30/95 $11,363.64
10/31/95 $11,511.37
11/30/95 $11,684.04
12/31/95 $11,847.61
01/31/96 $11,925.81
02/29/96 $11,718.30
03/31/96 $11,636.27
04/30/96 $11,571.11
05/31/96 $11,547.97
06/30/96 $11,702.71
07/31/96 $11,734.31
08/31/96 $11,714.36
09/30/96 $11,918.19
10/31/96 $12,182.77
11/30/96 $12,391.10
12/31/96 $12,275.86
01/31/97 $12,313.92
02/28/97 $12,344.70
03/31/97 $12,207.67
04/30/97 $12,390.79
05/31/97 $12,508.50
06/30/97 $12,657.35
07/31/97 $12,999.10
08/31/97 $12,888.61
09/30/97 $13,078.07
10/31/97 $13,267.70
11/30/97 $13,328.73
12/31/97 $13,463.36
01/31/98 $13,635.69
02/28/98 $13,624.78
03/31/98 $13,671.10
04/30/98 $13,742.19
05/31/98 $13,872.74
06/30/98 $13,991.00
S&P 500 INDEX
New
$ amount
--------
01/95 $10,259.00
02/95 $10,658.08
03/95 $10,972.49
04/95 $11,295.08
05/95 $11,745.75
06/95 $12,018.25
07/95 $12,416.06
08/95 $12,447.10
09/95 $12,972.37
10/95 $12,925.67
11/95 $13,491.81
12/95 $13,752.20
01/96 $14,219.78
02/96 $14,352.02
03/96 $14,489.80
04/96 $14,702.80
05/96 $15,080.66
06/96 $15,137.97
07/96 $14,468.87
08/96 $14,774.16
09/96 $15,604.47
10/96 $16,035.16
11/96 $17,245.81
12/96 $16,904.34
1/97 $17,959.17
2/97 $18,101.05
3/97 $17,358.91
4/97 $18,393.50
5/97 $19,517.34
6/97 $20,385.86
7/97 $22,006.54
8/97 $20,774.17
9/97 $21,910.52
10/97 $21,178.71
11/97 $22,159.28
12/97 $22,540.42
1/98 $22,788.37
2/98 $24,431.41
3/98 $25,682.30
4/98 $25,944.26
5/98 $25,498.02
6/98 $26,533.00
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment
in the USAA Life Diversified Assets Fund to two industry indexes and an
independent rating agency's average which most closely resemble the holdings
of this Fund.
The S&P 500 Index is an unmanaged index representing the average performance of
a group of 500 widely held, publicly traded stocks. It is not possible to invest
directly in the S&P 500 index. The Lehman Brothers 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. The Lipper Balanced
Fund average is the average performance level of all variable annuity balanced
funds as reported by Lipper Analytical Services, an independent organization
that monitors the performance of variable annuity funds and mutual funds.
The calculations for all indexes and averages are based on a full calendar
year in 1995, whereas the Diversified Assets Fund calculations are based on a
starting date of January 5, 1995 - the inception date of this Fund. This
comparison is for illustrative purposes only.
GENERAL DISCUSSION
By Portfolio Managers Harry Miller (Common Stocks) and Paul Lundmark (Debt
Securities)
THE MARKET
Common Stocks-On June 30, 1998 the Standard and Poor's 500 Index closed at
1133.84 a gain of 16.8% over the 970.43 close of our last reporting period on
December 31, 1997. Interest rates and inflation remain low - this is good
for the stock market. Earnings per share are coming through but at a lower
degree of increases. The market in the last quarter has been rather static
and most of the first six months' gains were accomplished in the first
quarter.
Debt Securities-Interest rates have come down since the last report. Investors
are optimistic that the Asian economic downturn will slow U.S. economic growth.
This slowdown would lessen the perceived threat of inflation caused by currently
tight labor markets. However, if the U.S. economy continues to "hum along",
labor costs could increase causing inflation to rise. Investors would then
demand higher interest rates to compensate for the increase in inflation.
B-28 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
An Overview (Continued) June 30,1998
Portfolio Strategy
Common Stocks-This Fund holds large, well-established companies, which we
believe are undervalued. Diversification in 27 industries and 40 companies is
broad.
The industries with the highest percentage of assets are automobiles, healthcare
(drugs, diversified and medical products), retail (department stores and general
merchandise), oil (domestic and international), banks (regional and money
centered), and telephones.
The following stocks were up more than 20% during the period: Monsanto
(chemicals), Chrysler, Ford Motor (automobiles), May Department Stores (retail
department stores), Sears, Roebuck (retail general merchandise), Chase Manhattan
(banks-money center), Pharmacia & UpJohn (drugs), American Home Products,
Bristol Myers Squibb (healthcare-diversified), Bausch & Lomb (medical products &
supplies) and Sprint (telecommunications-long distance). Company stocks with
negative returns for the period include the following: Boeing
(aerospace/defense), Rockwell International (electrical equipment), Deere
(machinery-diversified), Kimberly-Clark (house-hold products), Atlantic
Richfield, Unocal (oil-domestic integrated), PNC Bank (banks-major regional)
and NICOR (natural gas).
In the last six months, we added J.C. Penney (retail - department stores),
Unisource Worldwide (paper and forest products), Occidental Petroleum (oil-
domestic integrated), Applied Materials (semiconductor equipment) and Associates
First Capital (consumer finance), a spin-off from Ford Motor. The following
holdings were eliminated: Philip Morris, RJR Nabisco Holdings (tobacco),
Minnesota Mining & Manufacturing (manufacturing-diversified industries), and
Xerox Corp (photography-imaging).
TOP 10 EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
Bristol-Myers Squibb Co. 2.9%
American Home Products Corp. 2.6
Allstate Corp. 2.3
SBC Communications 2.2
SouthTrust Corp. 2.2
Ford Motor Co. 2.1
Pharmacia & Upjohn 2.1
B.F. Goodrich Co. 2.0
Texaco 2.0
Chrysler Corp. 1.9
TOP 5 DEBT HOLDINGS
as of June 30, 1998
Coupon % of
Rate Net Assets
HUBCO, Subordinated
Debentures 8.20% 1.9%
Giddings and Lewis,
Notes 7.50 1.8
Nationwide Health
Properties, MTN 8.61 1.8
Tele-Communications,
Senior Notes 8.25 1.8
WorldCom,
Senior Notes 7.55 1.8
1998 SEMIANNUAL REPORT B-29
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
An Overview (Continued) June 30, 1998
Debt Securities - Given the concern about where interest rates could go, we want
to stress that we are not relying on an interest rate forecast. No one has been
successful in predicting the course of interest rates over time. As a result,
there will be no dramatic change in the maturity and duration (measures of
interest rate sensitivity) of the portfolio in an effort to time the market. In
addition, we balance the portfolio with different types of securities so that we
are not making a one directional bet on the course of rates. Our emphasis
continues to be looking for bonds that represent value in terms of risk and
total return. The other side of that search is selling securities from the
portfolio that no longer represent value.
We have increased the percentage of mortgage backed securities that will perform
well if interest rates remain unchanged or rise. These instruments are defensive
in nature and balance the other bonds in the portfolio that do well in a
decreasing interest rate environment.
Within the Fund's bond portion, the best performing holdings were Giddings &
Lewis (manufacturing - specialized) and Kmart (retail - general merchandising).
A financially stronger German conglomerate acquired Giddings & Lewis, and Kmart
continues to improve its business and financial position. The investment Great
Atlantic & Pacific (retail - food) underperformed due to weakness in their
operations. We continue to hold this bond because the company is addressing
their problems and should ultimately be in better financial shape than before.
OUTLOOK
Common Stocks-In our opinion, the Asian situation will have more of a negative
impact in the next six months. Because of this we have limited such exposure in
the Fund. Exports to this area have decreased greatly - while they are sending
us more imports, the dollar continues to strengthen and may get stronger.
We intend to remain overweighted to the market in automobiles, banks,
healthcare, telephones, and retailing.
Debt Securities-There are a vast number of factors that could cause interest
rates to rise or fall. Given that, our focus will remain on finding securities
that will provide attractive yields and offer value in terms of risk and reward.
TOP 10 INDUSTRIES
as of June 30, 1998
% of
Net Assets
Real Estate Investment Trusts 10.5%
Banks - Major Regional 8.4
Telephones 5.8
Healthcare - Diversified 5.5
Asset Backed Financings 5.2
Oil - International Integrated 4.1
Automobiles 4.0
Telecommunications -
Long Distance 3.5
Retail - General Merchandising 3.5
Oil - Domestic Integrated 3.2
B-30 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
An Overview June 30, 1998
Comparison of Fund to Benchmark
[CHART APPEARS HERE]
RUSSELL 2000 INDEX
05/01/97 $10,000.00
05/31/97 $11,112.00
06/30/97 $11,588.70
07/31/97 $12,127.58
08/31/97 $12,405.30
09/30/97 $13,313.37
10/31/97 $12,728.91
11/30/97 $12,646.17
12/31/97 $12,867.48
1/31/98 $12,664.18
2/28/98 $13,600.06
3/31/98 $14,160.38
4/30/98 $14,238.26
5/31/98 $13,470.82
6/30/98 $13,499.00
USAA LIFE AGGRESSIVE GROWTH FUND
05/97 $10,670.00
06/97 $11,160.00
07/97 $12,060.00
08/97 $12,330.00
09/97 $13,530.00
10/97 $12,640.00
11/97 $12,120.00
12/97 $11,825.53
1/31/98 $11,855.85
2/28/98 $ 13169.8
3/31/98 $ 13624.63
4/30/98 $ 13877.31
5/31/98 $ 12947.15
6/30/98 $ 13531
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life Aggressive Growth Fund to the broad-based Russell 2000/(R)/ Index,
a widely recognized small-cap index which most closely resembles the holdings of
this Fund. The Russell 2000 Index is an unmanaged index consisting of the 2,000
smallest companies within the Russell 3000 Index.
The calculations for the Russell 2000 are based on a starting date of May 1,
1997, whereas the calculations for the Aggressive Growth Fund are based on a
starting date of May 5, 1997. This comparison is for illustrative purposes
only.
GENERAL DISCUSSION
By Portfolio Managers John K. Cabell and Eric M. Efron
THE MARKET
Two patterns that have emerged in recent years continued to prevail in the
stock market during the first half of 1998. First, volatility remained the
order of the day. During the period, a turbulent mixture of opposing forces
influenced investor sentiment, and depending on which influences were most
powerful, the market moved accordingly on a short-term basis. Among the
positive crosscurrents were a good economy, favorable interest rates, low
inflation, and reasonably good earnings releases. Countering these were
concerns of an impending economic slowdown, fears of rising interest rates,
high valuations, apprehension that economic difficulties in Asia and Russia
might impact U.S. corporate earnings, and the release of a number of
disappointing earnings reports - most notably in the highly visible
technology sector.
The second prevailing pattern was the continuing outperformance of large
capitalization (cap) equities versus their smaller counterparts. In general,
investors continued to favor the liquidity of large capitalization stocks
over the better earnings prospects and lower valuations offered by small cap
equities. For the six months ended June 30, 1998, the large cap-oriented S&P
500/(R)//1/ Index generated a total return of 17.8% (reinvested)
versus 5.3% by the small-cap based Russell 2000/(R)//2/ Index.
Against this backdrop, the
/1/ The S&P 500 Index is an unmangaged index representing the average
performance of a group of 500 widely held, publicly traded stocks.
/2/ The Russell 2000 Index is an unmanaged index which consists of
approximately 2,000 of the smallest companies within the Russell 3000 Index
and is a widely recognized small cap index.
INVESTMENT PROGRAM:
Invests in equity securities. The Fund will invest in companies that have the
prospect of rapidly growing earnings.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURN
AS OF
JUNE 30, 1998
December 31, 1997
to June 30, 1998: 14.42%*
One Year: 21.25%
Since Inception
May 1, 1997: 29.59%
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
1998 SEMIANNUAL REPORT B-31
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
An Overview (Continued) June 30, 1998
USAA Life Aggressive Growth Fund, which consists primarily of smaller growth
stocks with market capitalizations below $3 billion, returned 14.4%, surpassing
the Russell 2000 by a wide margin, but falling short of the S&P 500.
THE PORTFOLIO STRATEGY
Our basic strategy remains unchanged. Because this is an aggressive growth fund,
our primary focus is on growth, not value. We invest in companies with rapid
earnings growth potential. Because we believe that earnings are the basic
building blocks of value, we feel there is a positive correlation between
earnings growth, value accretion, and ultimately stock price movement. We are
not uncomfortable with the fact that many of our holdings sell at premium
valuations. We feel that these premiums are justified by superior growth
prospects and that they will be more than made up for over the longer term.
We prefer to invest in companies that are well positioned to take advantage of
prolonged social and economic trends. In our opinion, companies that embrace
change have a much better chance to thrive than those that resist it. Many of
our investments center on such themes as the telecommunications revolution, new
computing, the drive for productivity, changing lifestyles, and consolidation.
As is typical of aggressive growth funds in general, we invest primarily in
smaller market capitalization companies. We feel that smaller companies are
innovative, flexible, and receptive to change. They are also capable of very
rapid growth from their small bases. Nevertheless, small cap stocks have been
known to underperform their large cap competitors for prolonged periods of time,
and this can be very frustrating for investors and portfolio managers. We are in
one of those phases right now.
TOP 10 EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
AAR Corp. 2.8%
Dell Computer Corp. 2.8
Cisco Systems 2.2
Microsoft Corp. 2.1
Sirrom Capital Corp. 2.1
Pixar 2.0
Dominick's Supermarkets 1.8
Four Seasons Hotels 1.7
99 Cents Only Stores 1.4
3Com Corp. 1.3
TOP 10 INDUSTRIES
as of June 30, 1998
% of
Net Assets
Computer Software & Service 7.8%
Computers - Networking 5.3
Electronics - Semiconductors 5.2
Telephones 4.9
Oil & Gas - Drilling/Equipment 4.8
Aerospace/Defense 4.5
Retail - Specialty 4.4
Internet Services 4.0
Communication Equipment 3.9
Biotechnology 3.8
B-32 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
An Overview (Continued) June 30,1998
To alleviate this disparity in performance, we invest approximately 20% of our
assets in large capitalization stocks. This could potentially enhance
performance, reduce volatility, and provide investors with more exposure to
companies that they recognize.
We continue to invest heavily in the technology and telecommunications sectors
in order to take advantage of productivity enhancement and telecom deregulation,
two of the most powerful and pervasive trends in the business environment today.
In the technology sector, we have increased our exposure in the semiconductor
capital equipment and disk drive industries both of which are currently
encountering cyclical downturns, but are expected to start staging strong
recoveries in the near future. We have reduced our exposure in the energy
services area, which has been hurt by declining energy prices. In addition, we
have increased our holdings in retail stocks in order to capitalize on the
strong domestic consumer economy.
OUTLOOK
We are encouraged about the future. The stocks in which we have invested have
rapid earnings growth potential which, if realized, should pave the way for
meaningful price appreciation. On the other hand, experience has conditioned us
to temper this optimism with caution. In our opinion the mix of positive and
negative factors described above is likely to persist. Thus, we expect the stock
market to remain volatile. The performance gap between large cap and small cap
equities appears to have started to narrow in recent trading sessions. If this
develops into a sustained trend, we think the USAA Life Aggressive Growth Fund
will be well positioned to take advantage of the situation. If small cap
equities revert to their typical underperformance of recent years, the Fund, in
all likelihood, will be impacted. Nevertheless, we believe the inclusion of
large cap equities in the portfolio will reduce volatility and enhance
performance.
1998 SEMIANNUAL REPORT B-33
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
An Overview June 30, 1998
INVESTMENT PROGRAM:
At least 80% of the Fund's assets will be invested in equity securities of
foreign companies.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURN
AS OF
JUNE 30, 1998
December 31, 1997
to June 30, 1998: 10.99%*
One Year: 5.62%
Since Inception
May 1, 1997: 11.14%
* Total returns for periods of less than one year are not annualized. This
six-month return is cumulative.
The total return calculations found in this section are calculated at the Fund's
investment level and reflect the change in the net asset value (NAV), the
reinvestment of income dividends, and the deductions of Fund expenses. More
specific information regarding the Fund expenses can be found in the Variable
Annuity prospectus. These NAV total return calculations represent past
performance which is no guarantee of future returns.
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
MORGAN STANLEY CAPITAL INDEX - EAFE
05/01/97 $10,000.00
05/31/97 $10,651.00
06/30/97 $11,237.87
07/31/97 $11,419.92
08/31/97 $10,566.86
09/30/97 $11,158.60
10/31/97 $10,300.50
11/30/97 $10,195.44
12/31/97 $10,284.14
1/31/98 $10,754.12
2/28/98 $11,444.54
3/31/98 $11,797.03
4/30/98 $11,890.23
5/31/98 $11,831.96
6/30/98 $11,922.00
USAA LIFE INTERNATIONAL FUND
05/97 $10,300.00
06/97 $10,710.00
07/97 $11,080.00
08/97 $10,470.00
09/97 $11,180.00
10/97 $10,440.00
11/97 $10,110.00
12/97 $10,191.92
1/31/98 $10,171.63
2/28/98 $10,830.81
3/31/98 $11,530.56
4/30/98 $11,773.94
5/31/98 $11,585.69
6/30/98 $11,312.00
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life International Fund to the Morgan Stanley Capital Index (MSCI)-
EAFE. The MSCI EAFE is an unmanaged index which reflects the movements of stock
markets in Europe, Australia, and the Far East (EAFE) by representing a broad
selection of domestically listed companies within each market.
The calculations for the (MSCI)-EAFE are based on a starting date of May 1,
1997, whereas the calculations for the International Fund are based on a
starting date of May 5, 1997. This comparison is for illustrative purposes only.
GENERAL DISCUSSION
By Portfolio Managers David G. Peebles, W. Travis Selmier II, and Albert
Sebastian
MARKET CONDITIONS
European markets continued to significantly outperform both the emerging
markets and Japan.
Europe-European markets provided favorable returns over the period because of
an improved outlook for economic growth and continued corporate mergers and
acquisitions. In particular, the performance of the banking and insurance
sectors benefited from acquisitions. The European markets also appreciated on
news that the European monetary union remained on track.
Emerging Markets-Asia's economic problems have continued to cast a shadow
over most emerging markets, with early 1998 recoveries fading by March.
Weaknesses in commodity prices - from which many emerging markets' countries
derive significant export earnings - have also taken a toll. Higher interest
rates on emerging markets' debt have raised companies' financing costs.
Strength in Mediterranean, selected Central European, and South African
markets has not been enough to offset these factors; therefore, we have
lowered our emerging markets' weighting.
Japan-Asia's currency crisis, combined with problems within the banking
system, has continued to affect the Japanese economy and stock market. We
have begun to selectively buy quality financial companies while holding
export-related stocks. We have not changed our underweighted position,
awaiting more progress on the restructuring of Japan's tax and financial
system.
B-34 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
An Overview (Continued) June 30, 1998
OUTLOOK
We continue to favor European markets because of their economic and political
stability as well as their relatively strong earnings growth. European equities
will also benefit from further economic integration and more shareholder-
oriented management. We remain cautious on Japan pending further progress on
structuring and implementing policies, which would stimulate economic recovery.
Currency volatility and weakness in Asian economies will mean continued
turbulence in emerging markets with select opportunities.
Foreign investing is subject to additional risks such as currency fluctuations,
market illiquidity, and political instability, which are discussed in the
prospectus. Since return on any investment is generally commensurate with risk,
investors should be aware of the potential volatility associated with foreign
markets.
TOP 10 EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
Akzo Nobel (Netherlands) 1.9%
Elf Aquitaine ADR (France) 1.9
Nokia Corp. ADR (Finland) 1.9
Autoliv, Inc. SDR (Sweden) 1.6
Continental AG (Germany) 1.6
Tele Danmark A/S
ADR (Denmark) 1.6
Telecom Italia S.p.A. (Italy) 1.5
Veba AG (Germany) 1.5
ING Group N.V. (Netherlands) 1.4
National Bank of Canada
(Canada) 1.3
TOP 10 INDUSTRIES OF EQUITY HOLDINGS
as of June 30, 1998
% of
Net Assets
Banks - Major Regional 7.7%
Telephones 7.5
Auto Parts 7.2
Oil - International Integrated 4.0
Computer Software & Service 3.5
Insurance - Multi/Lines 2.9
Manufacturing -
Diversified Industries 2.9
Services - Commercial
& Consumer 2.8
Chemicals - Specialty 2.7
Drugs 2.4
1998 SEMIANNUAL REPORT B-35
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
An Overview (Continued) June 30, 1998
COUNTRY WEIGHTINGS AS A PERCENTAGE OF NET ASSETS
as of June 30, 1998
Other* 17.9
United Kingdom 12.7%
France 9.2%
Norway 2.2%
Portugal 2.4%
Austria 3.0%
Netherlands 9.0% [CHART APPEARS HERE]
Spain 3.1%
Italy 4.0%
Japan 8.4%
Finland 4.2%
Sweden 3.6%
Canada 6.2%
Switzerland 4.9%
Denmark 5.5%
Germany 5.8%
* Each of the remaining countries' investments represented less than 3% of
the portfolio's assets.
B-36 SEMIANNUAL REPORT 1998
<PAGE>
this page left blank intentionally
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Money Market Fund
Portfolio of Investments June 30, 1998 (Unaudited)
Principal Market
Amount Coupon Value
(000) Security Rate Maturity (000)
- --------- -------- ------ -------- ------
FIXED RATE INSTRUMENTS (75.8%)
AGRICULTURAL PRODUCTS
$ 857 Cargill, Inc., CP 5.48% 7/16/98 $ 855
--------
CHEMICALS
841 Akzo Nobel, Inc., CP 5.58 7/13/98 840
800 E.I. DuPont De Nemours and Co., CP 5.52 7/15/98 798
--------
1,638
--------
FINANCE - CONSUMER
443 Associates Corp. of North America, CP 6.20 7/01/98 443
655 Ford Motor Credit Co., CP 5.54 7/10/98 654
684 General Motors Acceptance Corp., CP 5.51 7/10/98 683
700 Transamerica Finance Corp., CP 5.53 7/07/98 699
--------
2,479
--------
FOODS
910 H.J. Heinz Co., CP 5.50 7/07/98 909
--------
U.S. GOVERNMENT
545 Federal Farm Credit Bank, DN 5.40 7/24/98 543
716 Federal Home Loan Mortgage, DN 5.44 7/02/98 716
530 Federal Home Loan Mortgage, DN 5.44 7/06/98 530
580 Federal Home Loan Mortgage, DN 5.45 7/14/98 579
618 Federal Home Loan Mortgage, DN 5.45 7/17/98 616
906 Federal Home Loan Mortgage, DN 5.46 7/20/98 903
984 Federal Home Loan Mortgage, DN 5.44 7/23/98 981
577 Federal National Mortgage Assn., DN 5.45 7/08/98 577
809 Federal National Mortgage Assn., DN 5.42 7/09/98 808
969 Federal National Mortgage Assn., DN 5.47 7/21/98 966
--------
7,219
--------
Total fixed rate instruments (cost: $13,100) 13,100
--------
VARIABLE RATE DEMAND NOTES (25.1%)
ASSET BACKED SECURITIES
150 Capital One Funding Corp., Notes,
Series 1993A (CRE) 5.63 6/02/08 150
187 Capital One Funding Corp., Notes,
Series 1995C (CRE) 5.63 10/01/15 187
--------
337
--------
AUTO PARTS
200 Alabama IDA RB (Rehau Project) (CRE) 5.67 10/01/19 200
540 Bardstown, KY, RB, Series 1994 (CRE) 5.69 6/01/24 540
--------
740
--------
CHEMICALS
440 Wyckoff Chemical Company, Inc.,
Note, Series 1997 (CRE) 5.66 2/01/27 440
--------
GENERAL OBLIGATIONS
500 Syracuse, NY, GO, Series 1997A (CRE) 5.85 10/15/14 500
-------
Principal Market
Amount Coupon Value
(000) Security Rate Maturity (000)
- --------- -------- ------ -------- ------
HEALTHCARE - DIVERSIFIED
$ 300 GMS Associates II Project Health Care
RB, Series 1995 (CRE) 5.70 8/15/25 $ 300
--------
HEALTHCARE - SPECIALIZED SERVICES
500 Mason City Clinic, P.C., IA, Bonds,
Series 1992 (CRE) 5.75 9/01/22 500
--------
HOSPITALS
200 Dome Corp., Bonds,
Series 1991 (CRE) 5.70 8/31/16 200
--------
LEISURE TIME
500 Fox Valley Ice Arena IL, RB,
Series 1997 (CRE) 5.70 7/01/27 500
--------
MULTI-FAMILY HOUSING
420 Arbor Properties, Inc., Notes (CRE) 5.70 11/01/21 420
--------
NURSING/CONTINUING CARE CENTERS
200 Lincolnwood Funding Corp. RB,
Series 1995A (CRE) 5.70 8/01/15 200
--------
REAL ESTATE - OTHER
100 H/M Partners, LLC, Bond (CRE) 5.70 10/01/20 100
100 MMR Funding I, Note, Series A (CRE) 5.63 9/01/10 100
--------
200
--------
Total variable rate demand notes (cost: $4,337) 4,337
--------
Total investments (cost: $17,437) $ 17,437
========
B-38 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Money Market Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government 41.8 %
Finance - Consumer 14.3
Chemicals 12.0
Foods 5.3
Agricultural Products 4.9
Auto Parts 4.3
General Obligations 2.9
Healthcare - Specialized Services 2.9
Leisure Time 2.9
Multi-Family Housing 2.4
Asset Backed Securities 2.0
Healthcare - Diversified 1.7
Hospitals 1.2
Nursing/Continuing Care Centers 1.2
Real Estate - Other 1.1
------
Total 100.9%
======
See accompanying "Notes to Portfolios of Investments" on page B-58.
1998 SEMIANNUAL REPORT B-39
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Income Fund
PORTFOLIO OF INVESTMENTS June 30,1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
PREFERRED STOCKS (10.5%)
15,000 Avalon Bay Communities, Inc. "A", 9%
cumulative redeemable $ 386
12,000 Duke Realty Investments, Inc. depositary
shares "A", 9.10% cumulative redeemable 314
10,000 Equity Residential Properties Trust depositary
shares "B", 9.125% cumulative redeemable 262
12,000 Equity Residential Properties Trust depositary
shares "C", 9.125% cumulative redeemable 317
22,000 First Industrial Realty Trust, Inc. depositary
shares "B", 8.75% cumulative redeemable 555
20,000 Gables Residential Trust "A", 8.3% cumulative
redeemable 493
6,000 Post Properties, Inc. "A", 8.5% cumulative
redeemable 327
6,000 Security Capital Industrial Trust "C", 8.54%
cumulative redeemable 330
12,000 Shurgard Storage Centers, Inc. "B", 8.8%
cumulative redeemable 312
12,000 United Dominion Realty Trust, Inc. depositary
shares "A", 9.25% cumulative redeemable 309
--------
Total preferred stocks (cost: $3,546) 3,605
--------
Principal
Amount Coupon
(000) Rate Maturity
- --------- ------- --------
CORPORATE OBLIGATIONS (24.5%)
$ 300 Caliber Systems, Inc., Notes 7.80% 8/01/06 326
1,000 Caterpillar Financial Services
Corp., MTN 5.83 10/16/00 999
500 Chase Manhattan Corp.,
Subordinated Notes 7.13 2/01/07 529
1,000 Chrysler Financial Corp., MTN 6.05 3/06/01 1,002
500 First Union Corp., Subordinated Notes 7.50 7/15/06 540
1,000 General Electric Credit Corp., MTN 5.73 6/19/00 1,000
440 General Motors Acceptance
Corp., Notes 5.95 4/20/01 439
500 Household Finance Corp., Notes 7.25 5/15/06 528
1,000 Kroger Co., Notes, 7/01/00
mandatory put 6.00 7/01/10 999
500 Province of Quebec, Global Debentures 7.00 1/30/07 526
1,000 Wal-Mart Stores, Inc. Notes, 6/01/00
mandatory put 5.85 6/01/18 1,001
500 Wells Fargo & Co., Subordinated Notes 6.88 4/01/06 521
--------
Total corporate obligations (cost: $8,181) 8,410
--------
U.S. GOVERNMENT & AGENCY ISSUES (64.1%)
FEDERAL HOME LOAN BANK BOND (5.9%)
2,000 5.575%, 6/22/00 1,998
--------
Market
Principal Value
Amount Security (000)
------ -------- -----
FEDERAL NATIONAL MORTGAGE ASSN. (13.5%)
$ 2,044 7.00%, 6/01/24 - 10/01/26 $ 2,077
1,572 7.50%, 1/01/25 - 10/01/26 1,615
321 8.00%, 1/01/25 333
581 8.50%, 12/01/24 608
--------
4,633
--------
FEDERAL NATIONAL MORTGAGE ASSN., MTN (7.3%)
2,500 5.65%, 6/12/00 2,500
--------
GOVERNMENT NATIONAL MORTGAGE ASSN. (19.0%)
1,789 7.00%, 8/15/23 - 4/15/26 1,823
2,523 7.50%, 8/15/23 - 8/15/26 2,598
1,043 8.00%, 5/15/24 1,083
966 8.50%, 12/15/24 1,021
--------
6,525
--------
U.S. TREASURY BOND (18.4%)
4,978 7.875%, 2/15/21 6,319
--------
Total U.S. government & agency issues (cost: $20,097) 21,975
--------
Total investments (cost: $31,824) $ 33,990
========
B-40 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Income Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government 64.1%
Real Estate Investment Trusts 10.5
Finance - Consumer 5.8
Banks - Money Center 3.1
Electrical Equipment 2.9
Machinery - Diversified 2.9
Retail - Food 2.9
Retail - General Merchandising 2.9
Banks - Major Regional 1.5
Foreign Government 1.5
Truckers 1.0
------
Total 99.1%
======
See accompanying "Notes to Portfolios of Investments" on page B-58.
1998 SEMIANNUAL REPORT B-41
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Growth and Income Fund
PORTFOLIO OF INVESTMENTS June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
COMMON STOCKS (98.5%)
AEROSPACE/DEFENSE (2.3%)
54,000 Boeing Co. $ 2,406
--------
AIRLINES (1.3%)
17,000 AMR Corp.* 1,415
--------
ALUMINUM (1.3%)
21,000 Aluminum Co. of America 1,385
--------
AUTOMOBILES (1.6%)
28,000 Ford Motor Co. 1,652
--------
AUTO PARTS (3.1%)
60,000 Intermet Corporation 1,087
42,500 Lear Corp.* 2,181
--------
3,268
--------
BANKS - MAJOR REGIONAL (1.2%)
24,000 PNC Bank Corp. 1,291
--------
BANKS - MONEY CENTER (2.9%)
18,000 BankAmerica Corp. 1,556
13,000 Bankers Trust Corp. 1,509
--------
3,065
--------
BEVERAGES - ALCOHOLIC (1.2%)
28,000 Anheuser-Busch Companies, Inc. 1,321
--------
CHEMICALS (3.0%)
15,000 Dow Chemical Co. 1,450
50,000 Millennium Chemicals, Inc. 1,694
--------
3,144
--------
CHEMICALS - DIVERSIFIED (3.1%)
47,000 B.F. Goodrich Co. 2,332
14,000 FMC Corp. 955
--------
3,287
--------
COMMUNICATION EQUIPMENT (2.0%)
25,336 Lucent Technologies, Inc. 2,108
--------
COMPUTER - NETWORKING (2.0%)
22,500 Cisco Systems, Inc.* 2,071
--------
CONSUMER JEWELRY AND NOVELTIES -
MISCELLANEOUS (1.5%)
32,100 American Greetings Corp. "A" 1,635
--------
CONTAINERS - METALS & GLASS (1.5%)
39,000 Ball Corp. 1,567
--------
DRUGS (3.3%)
9,000 Merck & Co., Inc. 1,204
49,000 Pharmacia & Upjohn, Inc. 2,260
--------
3,464
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
ELECTRIC UTILITIES (2.4%)
37,000 Houston Industries, Inc. $ 1,143
43,000 Pacific Gas & Electric Co. 1,357
--------
2,500
--------
ELECTRICAL EQUIPMENT (1.1%)
25,000 Rockwell International Corp. 1,202
--------
ELECTRONICS - SEMICONDUCTORS (1.5%)
20,000 Intel Corp. 1,482
5,600 National Semiconductor Corp.* 74
--------
1,556
--------
ENGINEERING & CONSTRUCTION (1.8%)
37,000 Fluor Corp. 1,887
--------
EQUIPMENT - SEMICONDUCTORS (1.1%)
39,000 Applied Materials, Inc.* 1,151
--------
FINANCE - CONSUMER (1.5%)
20,983 Associates First Capital Corp. "A" 1,613
--------
FINANCE - DIVERSIFIED (3.8%)
31,000 Morgan Stanley, Dean Witter,
Discover & Co. 2,833
17,000 PMI Group, Inc. 1,247
--------
4,080
--------
FOODS (1.6%)
28,000 Bestfoods 1,626
2,500 Corn Products International, Inc. * 84
--------
1,710
--------
HEALTHCARE - DIVERSIFIED (2.1%)
44,000 American Home Products Corp. 2,277
--------
HEALTHCARE - HMO's (3.0%)
57,000 Humana, Inc. * 1,778
17,000 Pacificare Health Systems, Inc, "A" * 1,436
--------
3,214
--------
HEAVY DUTY TRUCKS & PARTS (1.4%)
25,500 Aeroquip-Vickers, Inc. 1,489
--------
HOMEBUILDING (1.1%)
59,500 Walter Industries, Inc. * 1,127
--------
HOUSEHOLD PRODUCTS (1.6%)
37,000 Kimberly-Clark Corp. 1,697
--------
INSURANCE - LIFE/HEALTH (1.2%)
17,000 Aetna, Inc. 1,294
--------
B-42 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Growth and Income Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
INSURANCE - MULTI-LINE COMPANIES (1.6%)
11,400 American International Group, Inc. $ 1,664
--------
INSURANCE - PROPERTY/CASUALTY (3.1%)
10,000 Allstate Corp. 916
23,000 Everest Reinsurance Holdings, Inc. 884
30,000 Highlands Insurance Group, Inc. * 555
22,000 Travelers Property Casualty Corp. 943
--------
3,298
--------
LEISURE TIME (1.0%)
44,000 Brunswick Corp. 1,089
--------
MACHINERY - DIVERSIFIED (2.2%)
25,000 Deere & Co. 1,322
40,159 Flowserve Corp. 989
--------
2,311
--------
MANUFACTURING - DIVERSIFIED INDUSTRIES (1.4%)
25,500 Hillenbrand Industries, Inc. 1,530
--------
MANUFACTURING - SPECIALIZED (1.7%)
33,000 Avery Dennison Corp. 1,774
--------
MEDICAL PRODUCTS & SUPPLIES (2.2%)
33,000 Bausch & Lomb, Inc. 1,654
12,000 Baxter International, Inc. 646
--------
2,300
--------
METALS/MINING (0.5%)
37,000 Inco Ltd. 504
2,300 Titanium Metals Corp. 51
--------
555
--------
NATURAL GAS UTILITIES (1.1%)
31,000 Sonat, Inc. 1,197
--------
OIL - DOMESTIC INTEGRATED (2.8%)
61,000 Occidental Petroleum Corp. 1,647
36,000 Unocal Corp. 1,287
--------
2,934
--------
OIL - INTERNATIONAL INTEGRATED (1.4%)
24,000 Texaco, Inc. 1,432
--------
OIL & GAS - DRILLING/EQUIPMENT (1.3%)
42,000 Helmerich & Payne, Inc. 934
6,000 Schlumberger Ltd. 410
--------
1,344
--------
OIL & GAS - EXPLORATION & PRODUCTION (1.2%)
39,000 Apache Corp. 1,229
--------
PAPER & FOREST PRODUCTS (1.7%)
45,000 Unisource Worldwide, Inc. 487
28,000 Weyerhaeuser Co. 1,293
--------
1,780
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
PHOTOGRAPHY - IMAGING (1.2%)
13,000 Xerox Corp. $ 1,321
--------
PUBLISHING (1.1%)
38,000 Houghton Mifflin Co. 1,207
--------
RAILROADS/SHIPPING (1.5%)
53,000 Norfolk Southern Corp. 1,580
--------
REAL ESTATE INVESTMENT TRUSTS (1.2%)
26,000 Felcor Suite Hotels, Inc. 816
15,000 Highwoods Properties, Inc. 484
--------
1,300
--------
RETAIL - DEPARTMENT STORES (2.1%)
25,000 J.C. Penney Company, Inc. 1,808
6,000 May Department Stores Co. 393
--------
2,201
--------
RETAIL - GENERAL MERCHANDISING (2.5%)
44,000 Sears, Roebuck & Co. 2,687
--------
SERVICES - COMMERCIAL & CONSUMER (1.4%)
41,000 Dun & Bradstreet Corp. 1,481
--------
TELECOMMUNICATIONS - LONG DISTANCE (2.8%)
19,500 AT&T Corp. 1,114
26,000 Sprint Corp. 1,833
--------
2,947
--------
TELEPHONES (3.0%)
38,000 Bell Atlantic Corp. 1,734
27,000 GTE Corp. 1,502
--------
3,236
--------
TOBACCO (2.0%)
39,000 Philip Morris Companies, Inc. 1,536
17,100 Universal Corp. 639
--------
2,175
--------
Total common stocks (cost: $77,301) 104,448
--------
Principal
Amount
(000)
SHORT-TERM (1.6%)
U.S. GOVERNMENT & AGENCY ISSUE
$ 1,750 Federal Home Loan Bank, 5.40%,
7/01/98, (cost: $1,750) 1,750
--------
Total investments (cost: $79,051) $106,198
========
See accompanying "Notes to Portfolios of Investments" on page B-58.
1998 SEMIANNUAL REPORT B-43
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
PORTFOLIO OF INVESTMENTS June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
FOREIGN SECURITIES (62.1%)
FOREIGN STOCKS (61.9%)
ARGENTINA (0.4%)
2,300 Banco Rio de La Plata S.A. ADR $ 24
900 Disco S.A. ADR * 29
2,164 IRSA Inversiones y Representaciones S.A. GDR 63
2,100 Telefonica de Argentina S.A. ADR 68
--------
184
--------
AUSTRALIA (1.0%)
18,700 CSL Ltd. 121
9,900 Smith (Howard) Ltd. 58
44,000 Tab Ltd. * 65
80,000 Telstra Corp. 206
--------
450
--------
AUSTRIA (2.0%)
2,800 Boehler Uddeholm AG 185
507 Creditstalt AG (Preferred)* 55
4,950 VA Flughafen Wien AG 237
5,200 VA Stahl AG 209
1,700 VA Technologie AG 212
--------
898
--------
BRAZIL (1.1%)
2,435,302 Companhia Energetica de Minas
Gerais (Cemig) (Preferred) 76
5,800 Panamerican Beverages, Inc."A" 182
400,000 Petroleo Brasileiro S.A. (Preferred) 74
1,300,000 Telebras PN S.A. (Preferred) 142
--------
474
--------
CANADA (4.1%)
23,800 Anderson Exploration Ltd. * 275
6,400 Canadian National Railway Co. 340
17,300 Canadian Occidental Petroleum Ltd. 372
20,600 National Bank of Canada 402
8,200 OSF, Inc. * 79
10,500 Suncor, Inc. 365
--------
1,833
--------
CHILE (0.1%)
1,300 Sociedad Quimica y Minera de Chile S.A. ADR 44
--------
CHINA (0.1%)
24,000 New World Infrastructure Ltd.* 28
--------
CZECH REPUBLIC (0.1%)
4,000 SPT Telecom A.S. * 55
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
DENMARK (3.3%)
3,100 Carli Gry International A/S $ 250
4,200 ISS International Service System A/S "B" 244
11,300 SAS Danmark A/S 227
1,300 Tele Danmark A/S "B" 125
7,100 Tele Danmark A/S ADR 335
3,100 Unidanmark A/S 279
--------
1,460
--------
EGYPT (0.1%)
3,500 Suez Cement Co. S.A.E. GDR 64
--------
FINLAND (2.9%)
58,000 Merita plc "A" 383
7,600 Nokia Corp. ADR 552
9,160 Raision Tehtaat 165
9,400 Rauma OYJ 193
--------
1,293
--------
FRANCE (5.9%)
900 Accor S.A. 252
3,300 Bouygues Offshore S.A. ADR 70
6,100 Coflexip ADR 373
8,100 Elf Aquitaine ADR 575
2,300 Eramet Group 91
475 Essilor International 201
1,540 ISIS S.A. 189
2,400 Louis Dreyfus Citrus 80
4,100 Renault S.A. * 233
3,914 SEITA 177
2,000 Simco S.A. 164
2,500 Valeo S.A. 256
--------
2,661
--------
GERMANY (3.9%)
15,400 Continental AG 484
7,300 Hoechst AG 367
2,600 Leica Camera AG 31
400 SAP AG 243
400 SAP AG (Preferred) 272
5,300 Veba AG 357
--------
1,754
--------
GREECE (0.1%)
1,300 National Bank of Greece S.A. GDR * 33
--------
HONG KONG (0.3%)
3,200 Asia Satellite Telecommunications Holdings Ltd. ADR 53
15,000 Hutchison Whampoa Ltd. 79
--------
132
--------
HUNGARY (0.8%)
3,900 Magyar Tavkozlesi RT. (MATAV) ADR * 115
6,000 Mol Magyar Olaj-Es Gazipari GDR 162
1,600 OTP Bank GDR 78
--------
355
--------
B-44 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
INDIA (0.4%)
4,000 Hindalco Industries Ltd. GDR $ 56
4,900 Larsen & Toubro Ltd. GDR 45
6,000 Videsh Sanchar Nigam Ltd. GDR 64
--------
165
--------
ISRAEL (0.1%)
2,700 Blue Square - Israel Ltd. ADR 42
700 ECI Telecommunications Ltd. 26
--------
68
--------
ITALY (2.8%)
4,900 ENI S.p.A. ADR 319
22,000 Erg S.p.A. 88
4,400 Gucci Group N.V. 233
45,000 Italgas S.p.A. 183
86,700 Telecom Italia S.p.A. 420
--------
1,243
--------
JAPAN (5.5%)
9,000 Bridgestone Corp. 213
7,000 Daibiru Corp. 45
19,000 Hitachi Ltd. 124
8,000 Hosiden Corp. * 86
3,000 Ito-Yokado Co. Ltd. 142
3,000 Justsystem Corp. 15
8,000 Laox Co. Ltd. 49
26,000 Minebea Co. Ltd. 260
7,000 Namco 164
13,000 Nomura Securities Co. Ltd. 152
8 NTT Data Communications Systems Corp. 290
13,000 Sanwa Bank Ltd. 117
21,000 Sekisui Chemical Co. Ltd. 108
3,000 Sony Corp. 259
12,000 Terumo Corp. 191
31,000 Toko, Inc. 185
4,000 Yamada Denki Co. 59
--------
2,459
--------
MALAYSIA (0.2%)
37,200 Genting Bhd 67
66,100 Technology Resources Industries Bhd 46
--------
113
--------
MEXICO (0.2%)
4,391 Desc, Sociedad de Fomento Industrial, S.A. de C.V. ADR 87
--------
NETHERLANDS (5.7%)
2,500 Akzo Nobel N.V. 556
4,000 Benckiser N.V. "B" 247
2,100 EVC International N.V. 37
5,900 ING Group N.V. 387
2,100 Koninklijke Pakhoed N.V. (Certificates) 68
5,600 Oce-van der Grinten N.V. 238
3,400 Philips Electronics N.V. 289
6,900 Royal PTT Nederland N.V. 266
750 Simac Techniek N.V. 157
3,100 Van Ommeren Cereco N.V. (Certificates) * 130
4,500 Verenigd Besit VNU 164
--------
2,539
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
NORWAY (1.5%)
70,800 Christiania Bank og Kreditkasse $ 297
8,500 Schibsted ASA 143
22,000 Storebrand ASA * 195
10,600 Tandberg Data ASA* 38
--------
673
--------
PHILIPPINES (0.1%)
390,000 SM Prime Holdings, Inc. 62
--------
POLAND (0.4%)
11,539 Elektrim S.A. 141
12,071 Polifarb Cieszyn-Wroclaw S.A. 31
--------
172
--------
PORTUGAL (1.6%)
5,760 Banco Pinto S.A. 143
7,300 Cimentos de Portugal S.A. 256
5,700 Portugal Telecom S.A. ADR 302
--------
701
--------
RUSSIA (0.4%)
2,500 LUKoil ADR 84
4,100 Mosenergo ADR, a 19
479,000 Unified Energy Systems * 62
--------
165
--------
SINGAPORE (0.3%)
32,000 Keppel Corp. Ltd. 48
26,400 Overseas Union Bank Ltd. 58
20,000 Singapore Land Ltd. 42
--------
148
--------
SOUTH AFRICA (0.1%)
2,100 South African Breweries Ltd. 43
--------
SPAIN (2.0%)
11,976 Argentaria Bancaria de Espana S.A. 269
5,000 Corporacion Mapfre 175
3,400 Telefonica de Espana S.A. ADR 473
--------
917
--------
SWEDEN (2.3%)
14,400 Autoliv, Inc. SDR 460
72,300 Swedish Match AB 240
11,000 Volvo AB 328
--------
1,028
--------
SWITZERLAND (3.3%)
273 Novartis AG 455
1,100 Selecta Group AG 236
161 SGS Group AG 273
442 Sulzer AG P.C. 350
350 Tag Heuer International S.A. 33
12,300 Tag Heuer International S.A. ADR * 115
--------
1,462
--------
TAIWAN (0.2%)
5,625 Acer, Inc. GDR * 33
5,637 China Steel Corp. GDR 70
--------
103
--------
1998 SEMIANNUAL REPORT B-45
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
TURKEY (0.3%)
223,000 Akbank T.A.S. $ 7
1,234,500 Akbank T.A.S. Receipts *, b 40
2,575,471 Yapi Ve Kredi Bankasi A.S. 66
1,004,433 Yapi Ve Kredi Bankasi A.S. Receipts *, b 25
--------
138
--------
UNITED KINGDOM (8.3%)
71,100 Billiton plc 144
13,000 Cadbury Schweppes plc 201
118,000 Cookson Group plc 406
63,200 Corporate Services Group plc 252
2,500 Doncasters plc ADR * 70
16,800 EMI Group plc 147
18,000 Laporte plc 215
88,000 LucasVarity plc 350
81,200 Medeva plc 230
18,000 National Westminster Bank plc 322
20,240 Reuters Group plc 231
58,700 Safeway plc 385
12,200 Thomson Travel Group plc * 38
68,600 Tomkins plc 373
56,064 WPP Group plc 368
--------
3,732
--------
Total foreign stocks (cost: $21,256) 27,736
--------
Principal
Amount
(000)
- ---------
FOREIGN BONDS (0.2%)
JAPAN (0.2%)
$ 120 MBL International Finance (Bermuda) Trust,
Convertible Notes, 3.00%, 11/30/02 (cost: $123) 116
--------
Total foreign securities (cost: $21,379) 27,852
--------
Number
of Shares
- ---------
DOMESTIC STOCKS (33.0%)
AEROSPACE/DEFENSE (1.1%)
6,500 Boeing Co. 290
4,000 Precision Castparts Corp. 213
--------
503
--------
ALUMINUM (0.4%)
2,400 Aluminum Co. of America 158
--------
AUTOMOBILES (0.5%)
4,000 Ford Motor Co. 236
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
AUTO PARTS (0.7%)
6,100 Lear Corp. * $ 313
--------
BANKS - MAJOR REGIONAL (0.6%)
6,600 SouthTrust Corp. 287
--------
BANKS - MONEY CENTER (1.2%)
1,900 Bankers Trust Corp. 221
4,000 Chase Manhattan Corp. 302
--------
523
--------
BEVERAGES - ALCOHOLIC (0.3%)
3,200 Anheuser-Busch Companies, Inc. 151
--------
BEVERAGES - NONALCOHOLIC (0.7%)
7,200 PepsiCo, Inc. 297
--------
BIOTECHNOLOGY (0.6%)
4,000 Amgen, Inc. * 261
--------
CHEMICALS (0.6%)
5,000 Monsanto Co. 279
--------
CHEMICALS - DIVERSIFIED (0.8%)
7,000 B.F. Goodrich Co. 347
--------
COMMUNICATION EQUIPMENT (1.1%)
4,796 Lucent Technologies, Inc. 399
1,500 Motorola, Inc. 79
--------
478
--------
COMPUTER - NETWORKING (0.8%)
4,000 Cisco Systems, Inc. * 368
--------
COMPUTER SOFTWARE & SERVICE (1.6%)
4,400 Microsoft Corp. * 477
5,000 Sterling Commerce, Inc. * 242
--------
719
--------
CONSUMER JEWELRY AND NOVELTIES - MISCELLANEOUS (0.8%)
7,300 American Greetings Corp. "A" 372
--------
CONTAINERS - METALS & GLASS (0.8%)
6,000 AptarGroup, Inc. 373
--------
ELECTRIC UTILITIES (0.6%)
8,500 Houston Industries, Inc. 262
--------
ELECTRICAL EQUIPMENT (0.5%)
5,000 Rockwell International Corp. 240
--------
ELECTRONICS - SEMICONDUCTORS (0.6%)
3,500 Intel Corp. 259
1,800 National Semiconductor Corp. * 24
--------
283
--------
ENGINEERING & CONSTRUCTION (0.6%)
5,000 Flour Corp. 255
--------
EQUIPMENT - SEMICONDUCTORS (0.5%)
7,000 Applied Materials, Inc.* 207
--------
B-46 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
FINANCE - CONSUMER (0.7%)
4,048 Associates First Capital Corp. "A" $ 311
--------
FINANCE - DIVERSIFIED (1.4%)
5,000 Morgan Stanley, Dean Witter, Discover & Co. 457
2,500 PMI Group, Inc. 183
--------
640
--------
FOODS (1.0%)
4,000 Best Foods 232
500 Corn Products International, Inc. * 17
7,000 Keebler Foods Co. * 193
--------
442
--------
HEALTHCARE - DIVERSIFIED (1.9%)
6,000 American Home Products Corp. 310
2,400 Bristol-Myers Squibb Co. 276
3,900 Johnson & Johnson, Inc. 288
--------
874
--------
HEALTHCARE - HMOs (1.1%)
2,800 Pacificare Health Systems, Inc. "A" * 237
3,800 United HealthCare Corp. 241
--------
478
--------
HEALTHCARE - SPECIALIZED SERVICES (0.5%)
6,833 Total Renal Care Holdings, Inc. * 236
--------
HOUSEHOLD PRODUCTS (1.5%)
6,000 Kimberly-Clark Corp. 275
4,400 Procter & Gamble Co. 401
--------
676
--------
INSURANCE - MULTI-LINE COMPANIES (0.7%)
2,250 American International Group, Inc. 328
--------
INSURANCE - PROPERTY/CASUALTY (0.4%)
4,000 Travelers Property Casualty Corp. 172
--------
MACHINERY - DIVERSIFIED (1.0%)
4,000 Deere & Co. 211
9,000 Flowserve Corp. 222
--------
433
--------
MANUFACTURING - SPECIALIZED (0.8%)
6,400 Avery Dennison Corp. 344
--------
MEDICAL PRODUCTS & SUPPLIES (1.1%)
4,200 Medtronic, Inc. 268
6,000 St. Jude Medical, Inc. * 221
--------
489
--------
OIL - DOMESTIC INTEGRATED (0.5%)
6,000 Unocal Corp. 215
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
OIL & GAS - DRILLING/EQUIPMENT (0.4%)
900 Halliburton Co. $ 40
3,000 Transocean Offshore, Inc. 134
--------
174
--------
OIL & GAS - EXPLORATION & PRODUCTION (0.5%)
6,500 Apache Corp. 205
--------
PHOTOGRAPHY - IMAGING (0.5%)
2,100 Xerox Corp. 213
--------
RETAIL - DEPARTMENT STORES (0.6%)
4,500 Sears, Roebuck & Co. 275
--------
RETAIL - GENERAL MERCHANDISING (0.7%)
8,416 Dollar General Corp. 333
--------
RETAIL - SPECIALTY (0.4%)
4,000 Abercrombie & Fitch Co. "A" * 176
--------
TELECOMMUNICATIONS - CELLULAR/WIRELESS (0.8%)
10,500 360 Communications Co. * 336
--------
TELECOMMUNICATIONS - LONG DISTANCE (0.6%)
4,000 Sprint Corp. 282
--------
TOBACCO (0.4%)
5,000 Philip Morris Companies, Inc. 197
--------
WASTE MANAGEMENT (0.1%)
1,600 Waste Management, Inc. 56
--------
Total domestic stocks (cost: $9,177) 14,797
--------
Principal
Amount
(000)
- ---------
U.S. GOVERNMENT & AGENCY ISSUE (6.0%)
DISCOUNT NOTE
$ 2,682 Federal Home Loan Bank, 5.40%, 7/01/98 (cost: $2,682) 2,682
--------
Total investments (cost: $33,238) $ 45,331
========
1998 SEMIANNUAL REPORT B-47
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government & Agency Issues 6.0%
Banks - Major Regional 5.8
Auto Parts 5.5
Telephones 5.1
Computer Software & Service 4.1
Oil - International Integrated 2.8
Communication Equipment 2.4
Insurance - Multi-Line Companies 2.4
Banks - Money Center 2.1
Household Products 2.1
Medical Products & Supplies 2.0
Healthcare - Diversified 1.9
Manufacturing - Diversified Industries 1.9
Oil & Gas - Exploration & Production 1.9
Automobiles 1.8
Chemicals 1.8
Drugs 1.8
Oil & Gas - Drilling/Equipment 1.8
Beverages - Nonalcoholic 1.7
Chemicals - Specialty 1.7
Electric Utilities 1.7
Retail - Specialty 1.7
Services - Commercial & Consumer 1.7
Machinery - Diversified 1.6
Finance - Diversified 1.4
Foods 1.4
Tobacco 1.4
Electronics - Semiconductors 1.3
Manufacturing - Specialized 1.3
Electrical Equipment 1.2
Engineering & Construction 1.2
Oil - Domestic Integrated 1.2
Railroads/Shipping 1.2
Telecommunications - Long Distance 1.2
Aerospace/Defense 1.1
Healthcare - HMOs 1.1
Iron & Steel 1.0
Retail - Food 1.0
Telecommunications - Cellular/Wireless 1.0
Other 19.8
------
Total 101.1%
======
See accompanying "Notes to Portfolios of Investments" on page B-58.
B-48 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
PORTFOLIO OF INVESTMENTS June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
BASIC VALUE STOCKS (61.3%)
AEROSPACE/DEFENSE (1.3%)
16,840 Boeing Co. $ 750
--------
AUTOMOBILES (4.0%)
20,000 Chrysler Corp. 1,127
21,000 Ford Motor Co. 1,239
--------
2,366
--------
AUTO PARTS (1.0%)
25,000 Meritor Automotive, Inc. 600
--------
BANKS - MAJOR REGIONAL (4.8%)
8,000 Fleet Financial Group, Inc. 668
16,000 PNC Bank Corp. 861
30,000 SouthTrust Corp. 1,305
--------
2,834
--------
BANKS - MONEY CENTER (2.8%)
5,000 Bankers Trust Corp. 580
14,000 Chase Manhattan Corp. 1,057
--------
1,637
--------
CHEMICALS (1.9%)
20,000 Monsanto Co. 1,117
--------
CHEMICALS - DIVERSIFIED (2.0%)
24,000 B.F. Goodrich Co. 1,191
--------
DRUGS (2.1%)
27,000 Pharmacia & Upjohn, Inc. 1,245
--------
ELECTRICAL EQUIPMENT (0.8%)
10,000 Rockwell International Corp. 481
--------
ELECTRONICS - SEMICONDUCTORS (1.5%)
12,000 Intel Corp. 890
--------
EQUIPMENT - SEMICONDUCTORS (1.9%)
38,000 Applied Materials, Inc. * 1,121
--------
FINANCE - CONSUMER (0.7%)
5,503 Associates First Capital Corp. "A" 423
--------
FINANCE - DIVERSIFIED (1.5%)
12,000 PMI Group, Inc. 881
--------
HEALTHCARE - DIVERSIFIED (5.5%)
30,000 American Home Products Corp. 1,553
15,000 Bristol-Myers Squibb Co. 1,724
--------
3,277
--------
HOUSEHOLD PRODUCTS (1.2%)
15,000 Kimberly-Clark Corp. 688
--------
INSURANCE - PROPERTY/CASUALTY (2.3%)
15,000 Allstate Corp. 1,373
--------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
MACHINERY - DIVERSIFIED (2.2%)
14,000 Caterpillar, Inc. $ 740
11,000 Deere & Co. 582
--------
1,322
--------
MEDICAL PRODUCTS & SUPPLIES (1.7%)
20,000 Bausch & Lomb, Inc. 1,002
--------
NATURAL GAS UTILITIES (1.0%)
14,000 NICOR, Inc. 562
--------
OIL - DOMESTIC INTEGRATED (3.2%)
8,000 Atlantic Richfield Co. 625
26,000 Occidental Petroleum Corp. 702
15,000 Unocal Corp. 536
--------
1,863
--------
OIL - INTERNATIONAL INTEGRATED (4.1%)
7,000 Chevron Corp. 581
8,000 Mobil Corp. 613
20,000 Texaco, Inc. 1,194
--------
2,388
--------
PAPER & FOREST PRODUCTS (0.6%)
30,800 Unisource Worldwide, Inc. 333
--------
RAILROADS/SHIPPING (1.4%)
28,000 Norfolk Southern Corp. 835
--------
RETAIL - DEPARTMENT STORES (2.6%)
13,000 J.C. Penney Company, Inc. 940
9,000 May Department Stores Co. 590
--------
1,530
--------
RETAIL - GENERAL MERCHANDISING (1.7%)
16,000 Sears, Roebuck & Co. 977
--------
TELECOMMUNICATIONS - LONG DISTANCE (1.7%)
14,000 Sprint Corp. 987
--------
TELEPHONES (5.8%)
24,576 Bell Atlantic Corp. 1,122
18,000 GTE Corp. 1,001
32,000 SBC Communications Corp. 1,280
--------
3,403
--------
Total basic value stocks (cost: $23,411) 36,076
========
1998 SEMIANNUAL REPORT B-49
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1998 (Unaudited)
Principal Market
Amount Value
(000) Security (000)
- --------- -------- -------
U.S. GOVERNMENT & AGENCY ISSUES (7.4%)
$ 973 Federal Home Loan Mortgage Corp.,
Series 1998-7 H, 9.00% 3/18/25 $ 1,043
991 Federal National Mortgage Assn.,
Series 1997-72 CA, 9.50%, 9/18/23 1,053
930 Federal National Mortgage Assn.,
Series 1997-79U, 9.00%, 11/18/24 976
317 Government National Mortgage Assn.,
6.50%, 11/20/26 316
984 Government National Mortgage Assn.,
6.50%, 9/20/27 980
--------
Total U.S. government & agency issues (cost: $4,379) 4,368
--------
CORPORATE OBLIGATIONS (28.2%)
ASSET BACKED SECURITIES (5.2%)
1,000 Firstplus Home Loan Owner Trust, Series
1997-3 Class A-6, 7.08%, 7/10/17 1,031
1,000 Firstplus Home Loan Owner Trust, Series
1997-4 Class A-5, 6.62%, 9/10/15 1,014
1,000 Firstplus Home Loan Owner Trust, Series
1998-1 Class A-5, 6.25%, 11/10/16 1,004
--------
3,049
--------
BANKS - MAJOR REGIONAL (3.6%)
1,000 Corporacion Andina de Fomento,
Bonds, 6.75%, 3/15/05 1,012
1,000 HUBCO, Inc., Subordinated Debentures,
8.20%, 9/15/06 1,095
--------
2,107
--------
BROADCASTING RADIO & TV (1.8%)
1,000 Tele-Communications, Inc., Senior Notes,
8.25%, 1/15/03 1,082
--------
MANUFACTURING - SPECIALIZED (1.8%)
1,000 Giddings and Lewis, Inc., Notes,
7.50%, 10/01/05 1,064
--------
Principal Market
Amount Value
(000) Security (000)
- --------- -------- -------
REAL ESTATE INVESTMENT TRUSTS (10.5%)
$ 1,000 Equity Operating L.P.,
Notes, 6.38%, 2/15/02, a $ 1,005
1,000 Glenborough Realty Trust, Inc., Senior
Notes, 7.63%, 3/15/05, a 1,009
1,000 Health & Retirement Properties Trust,
Senior Notes, 6.70%, 2/23/05 997
1,000 Merry Land and Investment Co.,
Notes, 7.25%, 6/15/05 1,034
1,000 Nationwide Health Properties, Inc.
MTN, 8.61%, 3/01/02 1,078
1,000 Washington Real Estate Investment Trust,
Senior Notes, 7.25%, 8/13/06 1,046
--------
6,169
--------
RETAIL - FOOD (1.7%)
$ 1,000 Great Atlantic & Pacific Tea, Inc.,
Senior Notes, 7.70%, 1/15/04 $ 1,021
--------
RETAIL - GENERAL MERCHANDISING (1.8%)
1,000 Kmart Corp., Notes,
8.13%, 12/01/06 1,044
--------
TELECOMMUNICATIONS - LONG DISTANCE (1.8%)
1,000 WorldCom, Inc., Senior Notes,
7.55%, 4/01/04 1,064
--------
Total corporate obligations (cost: $16,036) 16,600
--------
SHORT-TERM (2.5%)
COMMERICAL PAPER
1,481 Raytheon Co., 6.90%, 7/01/98 1,481
--------
Total investments (cost: $45,307) $ 58,525
========
See accompanying "Notes to Portfolios of Investments" on page B-58.
B-50 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- -------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
PORTFOLIO OF INVESTMENTS June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
COMMON STOCKS (97.9%)
AEROSPACE/DEFENSE (4.5%)
46,650 AAR Corp. $ 1,379
10,000 Aviation Sales Co.* 396
3,000 TriStar Aerospace Co.* 47
10,000 Triumph Group, Inc.* 420
--------
2,242
--------
AIRLINES (0.9%)
9,000 Midwest Express Holdings, Inc.* 326
3,900 Southwest Airlines Co. 115
--------
441
--------
BANKS - MAJOR REGIONAL (2.4%)
10,000 Bank United Corp. "A" 479
22,500 Columbia Banking Systems, Inc.* 447
6,800 Hamilton Bancorp, Inc.* 245
--------
1,171
--------
BEVERAGES - ALCOHOLIC (1.1%)
10,000 Beringer Wine Estates Holdings, Inc. "B"* 441
4,000 Robert Mondavi Corp. "A"* 113
--------
554
--------
BIOTECHNOLOGY (3.8%)
10,000 Centocor, Inc.* 362
10,100 CN Biosciences, Inc.* 252
4,100 Genzyme Corp.* 105
1,000 IDEC Pharmaceuticals Corp.* 24
7,000 Immunex Corp.* 464
3,400 Med Immune, Inc.* 212
5,000 Sepracor, Inc.* 207
12,000 Techne Corp.* 229
--------
1,855
--------
BROADCASTING - RADIO & TV (1.8%)
3,900 Clear Channel Communications, Inc.* 426
7,500 Cumulus Media, Inc. "A"* 109
4,700 Gray Communications Systems, Inc. "B" 145
5,400 Univision Communications, Inc. "A"* 201
--------
881
--------
BUILDING MATERIAL GROUP (0.3%)
3,600 Fastenal Co. 167
--------
COMMUNICATION EQUIPMENT (3.9%)
6,200 Advanced Fibre Communications, Inc.* 248
15,000 Brightpoint, Inc.* 218
2,000 CIENA Corp.* 139
10,400 Datum, Inc.* 167
2,500 First Virtual Corp.* 30
15,200 Harmonic Lightwaves, Inc.* 234
10,300 Innova Corp.* 53
Market
Number Value
of Shares Security (000)
- --------- -------- ------
13,000 Ortel Corp.* $ 202
12,600 P-Com, Inc.* 115
10,900 Pairgain Technologies, Inc.* 190
15,300 Positron Fiber Systems Corp. "A"* 103
5,250 REMEC, Inc.* 60
9,900 Spectrian Corp.* 160
--------
1,919
--------
COMPUTER - HARDWARE (3.3%)
14,800 Dell Computer Corp.* 1,374
7,500 Sandisk Corp.* 104
2,500 SCM Microsystems, Inc.* 156
--------
1,634
--------
COMPUTER - NETWORKING (5.3%)
21,560 3Com Corp.* 664
5,740 Ascend Communications, Inc.* 285
11,700 Cisco Systems, Inc.* 1,077
10,600 FORE Systems, Inc.* 281
10,900 Xylan Corp.* 325
--------
2,632
--------
COMPUTER - PERIPHERALS (0.7%)
17,400 HMT Technology Corp.* 146
11,200 Komag, Inc.* 60
17,700 Read-Rite Corp.* 160
--------
366
--------
COMPUTER SOFTWARE & SERVICE (7.8%)
7,900 Amdocs Ltd.* 119
10,200 CrossKeys Systems Corp.* 91
10,800 DSET Corp.* 163
20,700 Harbinger Corp.* 501
10,800 Macrovision Corp.* 258
9,400 Microsoft Corp.* 1,019
16,700 Pixar, Inc.* 1,008
6,400 PLATINUM Technology, Inc.* 183
13,770 Rational Software Corp.* 210
8,500 SCC Communications Corp.* 104
4,000 Security Dynamics Technologies, Inc.* 74
3,100 Sterling Commerce, Inc.* 150
--------
3,880
--------
DISTRIBUTIONS - FOOD/HEALTH (0.7%)
12,300 United Natural Foods, Inc.* 351
--------
DRUGS (1.3%)
10,000 Dura Pharmaceuticals, Inc. * 224
6,300 Elan Corp. plc ADR * 405
--------
629
--------
1998 SEMIANNUAL REPORT B-51
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
Portfolio of Investments (Continued) June 30,1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
ELECTRONICS - SEMICONDUCTORS (5.2%)
11,600 Amkor Technology, Inc.* $ 108
9,200 Applied Micro Circuits Corp.* 238
8,800 Genesis Microchip, Inc.* 70
7,400 Intel Corp. 548
3,800 Lattice Semiconductor Corp.* 108
9,300 MIPS Technologies, Inc.* 125
4,600 Rambus, Inc.* 281
22,600 TranSwitch Corp.* 311
7,400 Triquint Semiconductor, Inc.* 141
10,200 Vitesse Semiconductor Corp.* 315
12,200 VLSI Technology, Inc.* 205
7,800 Zoran Corp.* 98
--------
2,548
--------
EQUIPMENT - SEMICONDUCTORS (2.8%)
7,200 Brooks Automation, Inc. * 94
8,400 Cerprobe Corp. * 110
12,100 CFM Technologies, Inc. * 175
11,200 Cymer, Inc. * 181
10,000 Electroglas, Inc. * 131
5,500 Etec Systems, Inc. * 193
15,100 Integrated Process Equipment Corp. * 170
7,400 Photronics, Inc. * 163
9,100 Speedfam International, Inc. * 168
--------
1,385
--------
FINANCE - CONSUMER (1.3%)
1,800 Associates First Capital Corp. "A" 138
23,700 NCO Group, Inc. * 522
--------
660
--------
FINANCE - DIVERSIFIED (0.2%)
3,400 Heller Financial, Inc. "A"* 102
--------
FOODS (1.7%)
10,000 American Italian Pasta Co. "A" 373
8,100 Suiza Foods Corp.* 483
--------
856
--------
HEALTHCARE - DIVERSIFIED (1.5%)
5,000 ICON plc ADR* 126
3,500 PAREXEL International Corp.* 127
2,800 Professional Detailing, Inc.* 70
10,000 Superior Consultant Holdings Corp.* 431
--------
754
--------
HEALTHCARE - SPECIALIZED SERVICES (3.1%)
6,072 Concentra Managed Care, Inc. * 158
5,000 Express Scripts, Inc. "A" * 403
6,000 HBO & Co. 212
10,100 Orthodontic Centers of America, Inc.* 211
5,000 Pediatrix Medical Group, Inc.* 186
5,000 Renal Care Group, Inc. * 220
4,166 Total Renal Care Holdings, Inc. * 144
--------
1,534
--------
Market
Number Value
of Shares Security (000)
- --------- -------- ------
HOME FURNISHINGS & APPLIANCES (1.2%)
12,000 Ethan Allen Interiors, Inc. $ 599
--------
INSURANCE - LIFE/HEALTH (0.1%)
1,500 Annuity & Life Re Holdings Ltd.* 33
--------
INTERNET SERVICES (4.0%)
10,600 Concentric Network Corp. * 321
5,300 NetGravity, Inc.* 70
10,600 Network Solutions, Inc. "A" 477
12,100 Preview Travel, Inc.* 416
11,900 Sportsline USA, Inc.* 435
11,500 USWeb Corp.* 272
--------
1,991
--------
INVESTMENT BANKS/BROKERAGE (0.2%)
3,450 Charles Schwab Corp. 112
--------
INVESTMENT COMPANIES (2.1%)
40,000 Sirrom Capital Corp. 1,040
--------
LODGING/HOTEL (1.8%)
23,600 Four Seasons Hotels, Inc. 832
2,000 ResortQuest International, Inc.* 33
--------
865
--------
MEDICAL PRODUCTS & SUPPLIES (2.6%)
2,100 Nanogen, Inc.* 14
15,600 Omnicare, Inc. 595
5,000 Serologicals Corp.* 161
20,000 Sybron Corp.* 505
--------
1,275
--------
NURSING CARE (0.7%)
7,200 HEALTHSOUTH Rehabilitation Corp. * 192
5,000 Sunrise Assisted Living, Inc. * 172
--------
364
--------
OIL & GAS - DRILLING/EQUIPMENT (4.8%)
2,500 Cliffs Drilling Co.* 82
19,900 Friede Goldman International, Inc.* 575
15,000 Halter Marine Group, Inc.* 226
10,000 National-Oilwell, Inc.* 268
20,000 Petroleum Geo-Services ADR* 610
8,200 R & B Falcon Corp.* 186
3,000 Transocean Offshore, Inc. 133
10,100 UNIFAB International, Inc.* 164
7,000 Varco International, Inc.* 139
--------
2,383
--------
PERSONAL CARE (0.8%)
5,000 Estee Lauder Companies, Inc. "A" 348
1,200 Revlon, Inc. "A"* 62
--------
410
--------
B-52 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
Portfolio of Investments (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
RESTAURANTS (0.3%)
3,900 Papa John's International, Inc. * $ 154
--------
RETAIL - BUILDING SUPPLIES (1.2%)
7,250 Home Depot, Inc. 602
--------
RETAIL - DEPARTMENT STORES (0.2%)
3,000 Proffitt's, Inc.* 121
--------
RETAIL - FOOD (1.8%)
20,000 Dominick's Supermarkets, Inc.* 891
--------
RETAIL - GENERAL MERCHANDISING (0.6%)
6,900 Dollar Tree Stores, Inc. * 280
--------
RETAIL - SPECIALTY (4.4%)
17,000 99 Cents Only Stores* 706
5,700 Abercrombie & Fitch Co. "A"* 251
6,400 Cost Plus, Inc.* 190
12,000 Hibbett Sporting Goods, Inc.* 480
7,500 Party City Corp.* 220
3,000 Rental Service Corp.* 101
2,000 Restoration Hardware, Inc.* 50
5,000 Williams-Sonoma, Inc.* 159
--------
2,157
--------
RETAIL - SPECIALTY APPAREL (0.2%)
1,300 bebe stores, inc.* 17
4,400 Delia's, Inc.* 69
--------
86
--------
SERVICES - COMMERCIAL & CONSUMER (3.7%)
13,500 Altron, Inc.* 174
10,000 Barra, Inc.* 245
8,200 Carreker-Antinori, Inc.* 86
3,000 Flextronics International Ltd.* 130
10,000 Hertz Corp. "A"* 443
10,000 International Total Services, Inc.* 70
15,400 MSC Industrial Direct Co. "A"* 439
8,600 Stewart Enterprises, Inc. "A" 229
--------
1,816
--------
SERVICES - DATA PROCESSING (0.5%)
8,600 Checkfree Holdings Corp.* 253
--------
SERVICES - FACILITIES & ENVIRONMENT (0.6%)
11,100 Computer Learning Centers, Inc.* 276
--------
TELECOMMUNICATIONS - CELLULAR/WIRELESS (1.4%)
15,200 Microcell Telecommunications, Inc. "B"* 137
5,900 Omnipoint Corp.* 136
6,500 Powertel, Inc.* 120
14,000 Western Wireless Corp. "A"* 279
--------
672
--------
Market
Number Value
of Shares Security (000)
- --------- -------- ------
TELECOMMUNICATIONS - LONG DISTANCE (3.2%)
7,300 ITC DeltaCom, Inc.* $ 312
3,800 IXC Communications, Inc.* 184
1,600 Level 3 Communications, Inc.* 119
3,300 Pacific Gateway Exchange, Inc.* 132
5,200 Qwest Communications International, Inc.* 182
8,100 RSL Communications Ltd. "A"* 243
6,200 SmarTalk TeleServices, Inc.* 90
7,995 STAR Telecommunications, Inc.* 179
6,200 Startec Global Communications Corp.* 71
6,500 Tel-Save Holdings, Inc.* 96
--------
1,608
--------
TELEPHONES (4.9%)
8,700 Advanced Radio Telecom Corp.* 86
8,800 e.spire Communications, Inc.* 199
8,800 Electric Lightwave, Inc. "A"* 97
9,900 GST Telecommunications, Inc.* 143
9,300 Hyperion Telecommunications, Inc. "A"* 146
4,300 ICG Communications, Inc.* 157
6,000 Intermedia Communications of Florida, Inc.* 252
3,700 McLeod, Inc.* 144
7,400 Metromedia Fiber Network, Inc. "A"* 345
7,800 MetroNet Communications Corp. "B"* 220
3,300 MGC Communications, Inc.* 50
5,900 NEXTLINK Communications, Inc. "A"* 223
5,700 Teligent, Inc. "A"* 168
5,000 Winstar Communications, Inc.* 215
--------
2,445
--------
TEXTILES - APPAREL (1.1%)
5,000 Columbia Sportswear Co.* 95
12,000 North Face, Inc.* 288
2,300 Tommy Hilfiger Corp.* 144
--------
527
--------
TRUCKERS (0.9%)
10,000 Coach USA, Inc. * 456
--------
WASTE MANAGEMENT (1.0%)
10,000 American Disposal Services, Inc. * 469
--------
Total common stocks (cost: $38,629) 48,446
--------
Principal
Amount
(000)
- ---------
SHORT-TERM (3.3%)
U.S. GOVERNMENT & AGENCY ISSUE
$ 1,643 Federal Home Loan Bank, 5.40%,
7/01/98, (cost: $1,643) 1,643
--------
Total investments (cost: $40,272) $ 50,089
========
See accompanying "Notes to Portfolios of Investments" on page B-58.
1998 SEMIANNUAL REPORT B-53
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
Portfolio of Investments June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
STOCKS (94.0%)
ARGENTINA (0.7%)
1,600 Banco Rio de La Plata S.A. ADR $ 17
1,100 Disco S.A. ADR * 35
1,832 IRSA Inversiones y Representaciones S.A. GDR 53
1,900 Telefonica de Argentina S.A. ADR 62
--------
167
--------
AUSTRALIA (1.5%)
15,300 CSL Ltd. 99
8,100 Smith (Howard) Ltd. 48
36,000 Tab Ltd. * 53
59,000 Telstra Corp. 152
--------
352
--------
AUSTRIA (3.0%)
2,400 Boehler Uddeholm AG 159
306 Creditanstalt AG (Preferred) 33
3,850 VA Flughafen Wien AG 185
3,800 VA Stahl AG 152
1,500 VA Technologie AG 187
--------
716
--------
BRAZIL (1.2%)
5,400 Panamerican Beverages, Inc."A" 170
1,200,000 Telebras PN S.A. (Preferred) 130
--------
300
--------
CANADA (6.2%)
19,400 Anderson Exploration Ltd. * 224
5,200 Canadian National Railway Co. 276
14,300 Canadian Occidental Petroleum Ltd. 308
16,500 National Bank of Canada 322
5,800 OSF, Inc. * 56
8,600 Suncor, Inc. 299
--------
1,485
--------
CHILE (0.1%)
1,000 Sociedad Quimica y Minera de Chile S.A. ADR 34
--------
CHINA (0.1%)
22,000 New World Infrastructure Ltd. * 25
--------
DENMARK (5.5%)
3,000 Carli Gry International A/S 242
4,200 ISS International Service System A/S "B" 245
10,000 SAS Danmark A/S 201
8,200 Tele Danmark A/S ADR 386
2,700 Unidanmark A/S 243
--------
1,317
--------
Market
Number Value
of Shares Security (000)
- --------- -------- ------
EGYPT (0.2%)
2,500 Suez Cement Co. S.A.E. GDR $ 45
--------
FINLAND (4.2%)
47,000 Merita plc "A" 311
6,200 Nokia Corp. ADR 450
6,000 Raision Tehtaat 108
7,300 Rauma OYJ 150
--------
1,019
--------
FRANCE (9.2%)
900 Accor S.A. 252
2,700 Bouygues Offshore S.A. ADR 57
4,600 Coflexip ADR 281
6,600 Elf Aquitaine ADR 469
1,800 Eramet Group 71
500 Essilor International 211
1,360 ISIS S.A. 166
2,000 Louis Dreyfus Citrus 67
3,300 Renault S.A. * 188
3,200 SEITA 145
1,500 Simco S.A. 123
1,700 Valeo S.A. 174
--------
2,204
--------
GERMANY (5.8%)
12,600 Continental AG 396
5,900 Hoechst AG 297
2,100 Leica Camera AG 25
200 SAP AG 121
300 SAP AG (Preferred) 204
5,300 Veba AG 357
--------
1,400
--------
GREECE (0.1%)
1,200 National Bank of Greece S.A. GDR * 31
--------
HONG KONG (0.4%)
2,500 Asia Satellite Telecommunications Holdings Ltd. ADR 41
10,000 Hutchison Whampoa Ltd. 53
--------
94
--------
HUNGARY (1.1%)
3,200 Magyar Tavkozlesi RT. (MATAV) ADR * 94
4,200 Mol Magyar Olaj-Es Gazipari GDR 113
1,300 OTP Bank GDR 64
--------
271
--------
INDIA (0.4%)
3,000 Hindalco Industries Ltd. GDR 42
5,500 Videsh Sanchar Nigam Ltd. GDR 59
--------
101
--------
B-54 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
Portfolio of Investments (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
ISRAEL (0.2%)
2,400 Blue Square - Israel Ltd. ADR $ 37
500 ECI Telecommunications Ltd. 19
--------
56
--------
ITALY (4.0%)
3,700 ENI S.p.A. ADR 240
17,000 Erg S.p.A. 68
3,200 Gucci Group N.V. 170
33,000 Italgas S.p.A. 134
72,600 Telecom Italia S.p.A. 352
--------
964
--------
JAPAN (8.4%)
8,000 Bridgestone Corp. 190
6,000 Daibiru Corp. 39
17,000 Hitachi Ltd. 111
6,000 Hosiden Corp. * 65
4,000 Ito-Yokado Co. Ltd. 189
3,000 Justsystem Corp. 15
2,600 Laox Co. Ltd. 16
15,000 Minebea Co. Ltd. 150
5,000 Namco 117
11,000 Nomura Securities Co. Ltd. 128
7 NTT Data Communications Systems Corp. 254
12,000 Sanwa Bank Ltd. 108
16,000 Sekisui Chemical Co. Ltd. 82
2,500 Sony Corp. 216
9,000 Terumo Corp. 143
25,000 Toko, Inc. 149
4,000 Yamada Denki Co. 59
--------
2,031
--------
MALAYSIA (0.4%)
33,000 Genting Bhd 60
55,700 Technology Resources Industries Bhd 38
--------
98
--------
MEXICO (0.3%)
3,600 Desc, Sociedad de Fomento Industrial,
S.A. de C.V. ADR 72
--------
NETHERLANDS (9.0%)
2,100 Akzo Nobel N.V. 467
600 Benckiser N.V. "B" * 37
2,500 Benckiser N.V. "B" ADR * 154
1,900 EVC International N.V. 33
5,100 ING Group N.V. 334
1,600 Koninklijke Pakhoed N.V. (Certificates) 52
4,800 Oce-van der Grinten N.V. 205
3,000 Philips Electronics N.V. 255
5,600 Royal PTT Nederland N.V. 216
630 Simac Techniek N.V. 132
2,700 Van Ommeren Cereco N.V. (Certificates) * 113
4,500 Verenigd Besit VNU 164
--------
2,162
--------
Market
Number Value
of Shares Security (000)
- --------- -------- ------
NORWAY (2.2%)
44,200 Christiania Bank og Kreditkasse $ 185
7,100 Schibsted ASA 119
21,000 Storebrand ASA * 186
8,700 Tandberg Data ASA * 32
--------
522
--------
PHILIPPINES (0.3%)
380,000 SM Prime Holdings, Inc. 60
--------
POLAND (0.6%)
9,000 Elektrim S.A. 110
14,737 Polifarb Cieszyn-Wroclaw S.A. 38
--------
148
--------
PORTUGAL (2.4%)
5,600 Banco Pinto S.A. 139
5,700 Cimentos de Portugal S.A. 201
4,500 Portugal Telecom S.A. ADR 238
--------
578
--------
RUSSIA (0.6%)
2,500 LUKoil ADR 84
3,400 Mosenergo ADR, a 16
419,000 Unified Energy Systems * 54
--------
154
--------
SINGAPORE (0.5%)
26,000 Keppel Corp. Ltd. 39
22,800 Overseas Union Bank Ltd. 50
20,000 Singapore Land Ltd. 42
--------
131
--------
SOUTH AFRICA (0.1%)
1,700 South African Breweries Ltd. 35
--------
Spain (3.1%)
10,764 Argentaria Bancaria de Espana S.A. 242
5,000 Corporacion Mapfre 175
2,300 Telefonica de Espana S.A. ADR 320
--------
737
--------
SWEDEN (3.6%)
11,800 Autoliv, Inc. SDR 377
60,000 Swedish Match AB 199
10,000 Volvo AB 298
--------
874
--------
SWITZERLAND (4.9%)
185 Novartis AG 308
700 Selecta Group AG 150
127 SGS Group AG 216
400 Sulzer AG P.C. 316
600 Tag Heuer International S.A. 57
13,000 Tag Heuer International S.A. ADR 122
--------
1,169
--------
1998 SEMIANNUAL REPORT B-55
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
Portfolio of Investments (Continued) June 30, 1998 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
TAIWAN (0.4%)
5,625 Acer, Inc. GDR * $ 33
5,500 China Steel Corp. GDR 68
--------
101
--------
TURKEY (0.6%)
240,429 Akbank T.A.S. 8
1,110,643 Akbank T.A.S. Receipts *, b 36
2,994,000 Yapi Ve Kredi Bankasi A.S. 76
1,167,660 Yapi Ve Kredi Bankasi Receipts*, b 30
--------
150
--------
UNITED KINGDOM (12.7%)
60,300 Billiton plc 122
10,800 Cadbury Schweppes plc 167
93,000 Cookson Group plc 320
51,500 Corporate Services Group plc 206
2,900 Doncasters plc ADR * 81
14,400 EMI Group plc 126
15,000 Laporte plc 179
75,000 LucasVarity plc 298
63,800 Medeva plc 181
14,200 National Westminster Bank plc 254
16,520 Reuters Group plc 189
45,000 Safeway plc 295
10,000 Thomson Travel Group plc * 31
56,200 Tomkins plc 305
45,611 WPP Group plc 299
--------
3,053
--------
Total stocks (cost: $20,273) 22,656
--------
Principal
Amount
(000)
- ---------
U.S. GOVERNMENT & AGENCY ISSUE (7.9%)
$ 1,892 Federal Home Loan Bank, 5.40%,
7/1/98 (cost: $1,892) 1,892
--------
Total investments (cost: $22,165) $ 24,548
========
B-56 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
Portfolio of Investments (Continued) June 30, 1998 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government & Agency Issues 7.9%
Banks - Major Regional 7.7
Telephones 7.5
Auto Parts 7.2
Oil - International Integrated 4.0
Computer Software & Service 3.5
Insurance - Multi-Line Companies 2.9
Manufacturing - Diversified Industries 2.9
Services - Commercial & Consumer 2.8
Chemicals - Specialty 2.7
Drugs 2.4
Retail - Specialty 2.4
Oil & Gas - Exploration & Production 2.2
Oil & Gas - Drilling/Equipment 2.1
Automobiles 2.0
Communication Equipment 1.9
Electric Utilities 1.8
Railroads/Shipping 1.8
Beverages - Nonalcoholic 1.7
Chemicals 1.7
Iron & Steel 1.6
Medical Products & Supplies 1.5
Retail - Food 1.5
Tobacco 1.4
Advertising/Marketing 1.2
Banks - Money Center 1.2
Building Material Group 1.2
Electrical Equipment 1.1
Electronics - Semiconductors 1.1
Foreign Conglomerate 1.1
Leisure Time 1.0
Lodging/Hotel 1.0
Machinery - Diversified 1.0
Oil - Domestic Integrated 1.0
Retail - Specialty Apparel 1.0
Other 14.9
-----
Total 101.9%
=====
See accompanying "Notes to Portfolios of Investments" on page B-58.
1998 SEMIANNUAL REPORT B-57
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Portfolios of Investments
June 30, 1998 (Unaudited)
GENERAL NOTES
Market values of securities are determined by procedures and practices discussed
in Note 1 to the Trust's 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.
At June 30, 1998, investments in foreign securities were 6.5% of net assets of
the USAA Life Aggressive Growth Fund.
ADR-American Depository Receipts are receipts issued by a U.S. bank evidencing
ownership of foreign shares. Dividends are paid in U.S. dollars.
GDR-Global Depository Receipts are receipts issued by a non-U.S. bank evidencing
ownership of foreign shares. Dividends are paid in U.S. dollars.
SPECIFIC NOTES
(a) Security is exempt from registration under the Securities Act of 1933 and
has been determined to be liquid by USAA Investment Management Company (the
Manager). Any resale of this security may occur in an exempt transaction in the
United States to a qualified institutional buyer as defined by Rule 144A.
(b) Illiquid security valued using methods determined by the Manager under the
general supervision of the Board of Trustees. At June 30, 1998, these securities
represented .15% and .27% of the USAA Life World Growth Fund's and the USAA Life
International Fund's net assets, respectively.
* Non-income producing security.
PORTFOLIO DESCRIPTION ABBREVIATIONS
CP Commercial Paper
CRE Credit Enhanced
DN Discount Note
IDA Industrial Development
Authority/Agency
LP Limited Partnership
MTN Medium-Term Note
RB Revenue Bond
CATEGORIES AND DEFINITIONS
The securities in USAA Life Money Market Fund are divided into two categories,
fixed rate instruments and variable rate demand notes.
Fixed Rate Instruments - consist of corporate and government notes and
commercial paper. The coupon rate is constant to maturity.
Variable Rate Demand Notes (VRDN) - provide the right, on any business day, to
sell the security at face value on either that day or in seven days. The
interest rate is adjusted at the stipulated daily, weekly, or monthly interval
to a rate that reflects current market conditions. In money market funds, the
effective maturity is the date on which the underlying principal amount may be
recovered or the next rate adjustment date consistent with regulatory
requirements. In bond funds, the effective maturity is the next put date. Most
VRDNs possess a credit enhancement.
Credit Enhancement (CRE) - adds the financial strength of the provider of the
enhancement to support the issuer's ability to repay the principal when due. The
enhancement may be provided by either a high quality bank, insurance company, or
other corporation, or a collateral trust. Typically, the rating agencies
evaluate the security based upon the credit standing of the credit enhancement,
rather than the credit standing of the issuer.
See accompanying "Notes to Financial Statements" on page B-64.
B-58 SEMIANNUAL REPORT 1998
<PAGE>
this page left blank intentionally
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
(In Thousands, Except Per Share Data) June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life
Money Market Income Growth and World Growth Diversified Aggressive International
Fund Fund Income Fund Fund Assets Fund Growth Fund Fund
------------ --------- ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments in securities, at
market value (identified cost
of $17,437, $31,824, $79,051
$33,238, $45,307, $40,272 and
$22,165, respectively) $17,437 $33,990 $106,198 $45,331 $58,525 $50,089 $24,548
Cash 1 2 7 - 1 1 -
Cash denominated in foreign
currencies (identified cost
of $30 and $20, respectively) - - - 30 - - 20
Receivables:
Capital shares sold 19 5 30 5 45 - -
Dividends and interest 20 349 163 99 414 2 64
Securities sold - - 266 179 - 257 112
Unrealized appreciation on
foreign currency contracts
held, at value - - - 2 - - 2
------- ------- -------- ------- ------- ------- -------
Total assets 17,477 34,346 106,664 45,646 58,985 50,349 24,746
------- ------- -------- ------- ------- ------- -------
Liabilities
Securities purchased - - 458 740 - 764 576
Unrealized depreciation on
foreign currency contracts
held, at value - - - 1 - - 1
Capital shares redeemed 173 8 58 15 20 2 1
Accrued advisory fees - 4 37 15 31 57 35
Accrued administrative fees - 4 4 4 4 4 4
Accounts payable and accrued
expenses 25 24 27 34 23 30 29
------- ------- -------- ------- ------- ------- -------
Total liabilities 198 40 584 809 78 857 646
------- ------- -------- ------- ------- ------- -------
Net assets applicable to
capital shares outstanding $17,279 $34,306 $106,080 $44,837 $58,907 $49,492 $24,100
======= ======= ======== ======= ======= ======= =======
Represented by:
Paid-in capital $17,279 $30,847 $ 75,843 $32,104 $43,974 $39,174 $22,077
Accumulated undistributed net
investment income (loss) - 1,052 768 340 1,018 (94) 192
Accumulated net realized gain (loss)
on investments - 241 2,322 300 697 595 (552)
Net unrealized appreciation
of investments - 2,166 27,147 12,093 13,218 9,817 2,383
------- ------- -------- ------- ------- ------- -------
Net assets applicable to
capital shares outstanding $17,279 $34,306 $106,080 $44,837 $58,907 $49,492 $24,100
======= ======= ======== ======= ======= ======= =======
Capital shares outstanding,
unlimited number of shares
authorized, no par value 17,279 2,998 5,436 2,971 3,751 3,748 2,161
======= ======= ======== ======= ======= ======= =======
Net asset value, redemption
price, and offering price
per share $ 1.00 $ 11.44 $ 19.51 $ 15.09 $ 15.70 $ 13.21 $ 11.15
======= ======= ======== ======= ======= ======= =======
</TABLE>
See accompanying "Notes to Financial Statements" on page B-64.
B-60 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(In Thousands) Six-month period ended June 30, 1998 (Unaudited)
USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life
Money Market Income Growth and World Growth Diversified Aggressive International
Fund Fund Income Fund Fund Assets Fund Growth Fund Fund
------------ --------- ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Income (net of foreign taxes withheld of $0,
$0, $2, $44, $0, $0 and $37, respectively):
Dividends $ - $ 152 $ 859 $ 422 $ 371 $ 39 $ 298
Interest 500 960 70 55 739 31 41
------ ------- ------- ------- ------- ------- -------
Total income 500 1,112 929 477 1,110 70 339
------ ------- ------- ------- ------- ------- -------
Expenses:
Advisory fees 18 29 100 43 54 117 76
Administrative fees 14 14 14 14 14 12 13
Custodian's fees 9 15 26 48 19 32 35
Shareholder reporting fees 9 2 8 3 3 2 1
Trustees' fees 2 2 2 2 2 2 2
Professional fees 16 16 16 16 16 18 16
Other - - 1 - 1 - -
------ ------- ------- ------- ------- ------- -------
Total expenses before reimbursement 68 78 167 126 109 183 143
Expenses reimbursed (37) (25) - - (15) (19) (14)
------ ------- ------- ------- ------- ------- -------
Total expenses after reimbursement 31 53 167 126 94 164 129
------ ------- ------- ------- ------- ------- -------
Net investment income (loss) 469 1,059 762 351 1,016 (94) 210
------ ------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments - 309 2,322 367 696 592 (535)
Foreign currency transactions - - - (19) - - (15)
Change in net unrealized appreciation/
depreciation of:
Investments - 78 5,582 4,615 2,540 5,740 2,711
Foreign currency translations - - - 9 - - 7
------ ------- ------- ------- ------- ------- -------
Net realized and unrealized gain - 387 7,904 4,972 3,236 6,332 2,168
------ ------- ------- ------- ------- ------- -------
Increase in net assets resulting
from operations $ 469 $ 1,446 $ 8,666 $ 5,323 $ 4,252 $ 6,238 $ 2,378
====== ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying "Notes to Financial Statements" on page B-64.
1998 SEMIANNUAL REPORT B-61
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Statements of Changes In Net Assets
<TABLE>
<CAPTION>
(In Thousands) Six-month period ended June 30, 1998 and Year ended December 31, 1997 (Unaudited)
USAA Life USAA Life USAA Life
Money Market Fund Income Fund Growth and Income Fund
-------------------- -------------------- ----------------------
6/30/98 12/31/97 6/30/98 12/31/97 6/30/98 12/31/97
-------- -------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 469 $ 768 $ 1,059 $ 1,794 $ 762 $ 1,250
Net realized gain (loss) on:
Investments - - 309 462 2,322 4,276
Foreign currency transactions - - - - - -
Change in net unrealized
appreciation/depreciation of:
Investments - - 78 535 5,582 9,783
Foreign currency translations - - - - - -
------- -------- ------- ------- -------- ---------
Increase in net assets
resulting from operations 469 768 1,446 2,791 8,666 15,309
------- -------- ------- ------- -------- ---------
Distributions to shareholders from:
Net investment income (469) (768) (39) (1,835) (24) (1,222)
------- -------- ------- ------- -------- ---------
Net realized gains - - (50) - (1,230) (3,404)
------- -------- ------- ------- -------- ---------
From capital share transactions:
Proceeds from shares sold 15,883 60,217 5,641 3,986 14,527 33,830
Dividend reinvestments 469 768 88 1,835 1,254 4,626
Cost of shares redeemed (14,204) (57,099) (1,026) (2,580) (2,863) (19,321)
------- -------- ------- ------- -------- ---------
Increase in net assets from
capital share transactions 2,148 3,886 4,703 3,241 12,918 19,135
------- -------- ------- ------- -------- ---------
Net increase in net assets 2,148 3,886 6,060 4,197 20,330 29,818
Net assets:
Beginning of period 15,131 11,245 28,246 24,049 85,750 55,932
------- -------- ------- ------- -------- ---------
End of period $17,279 $ 15,131 $34,306 $28,246 $106,080 $ 85,750
======= ======== ======= ======= ======== =========
Undistributed net investment income
included in net assets
End of period $ - $ - $ 1,052 $ 32 $ 768 $ 30
======= ======== ======= ======= ======== =========
Change in shares outstanding:
Shares sold 15,883 60,217 504 362 750 1,986
Shares issued for dividends
reinvested 469 768 8 168 64 260
Shares redeemed (14,204) (57,099) (92) (240) (147) (1,190)
------- -------- ------- ------- -------- ---------
Increase in shares outstanding 2,148 3,886 420 290 667 1,056
======= ======== ======= ======= ======== =========
</TABLE>
* Funds commenced operations May 1, 1997.
See accompanying "Notes to Financial Statements" on page B-64.
B-62 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Statements of Changes In Net Assets
<TABLE>
<CAPTION>
(In Thousands) Six-month period ended June 30, 1998 and Year ended December 31, 1997 (Unaudited)
USAA Life USAA Life USAA Life USAA Life
World Growth Diversified Aggressive International
Fund Assets Fund Growth Fund* Fund*
------------------- ------------------- ------------------ --------------------
6/30/98 12/31/97 6/30/98 12/31/97 6/30/98 12/31/97 6/30/98 12/31/97
------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 351 $ 465 $ 1,016 $ 1,596 $ (94) $ (40) $ 210 $ 99
Net realized gain (loss) on:
Investments 367 2,634 696 834 592 1,134 (535) 197
Foreign currency transactions (19) (11) - - - - (15) (5)
Change in net unrealized
appreciation/depreciation of:
Investments 4,615 1,623 2,540 4,986 5,740 4,077 2,711 (328)
Foreign currency translations 9 (9) - - - - 7 (7)
------- -------- ------- ------- ------- ------- -------- -------
Increase in net assets
resulting from operations 5,323 4,702 4,252 7,416 6,238 5,171 2,378 (44)
------- -------- ------- ------- ------- ------- -------- -------
Distributions to shareholders from:
Net investment income (45) (458) (32) (1,565) - - 0 (97)
------- -------- ------- ------- ------- ------- -------- -------
Net realized gains (144) (2,843) (17) (1,771) (645) (446) (10) (204)
------- -------- ------- ------- ------- ------- -------- -------
From capital share transactions:
Proceeds from shares sold 1,658 9,019 7,176 12,393 1,674 38,066 568 21,912
Dividend reinvestments 190 3,301 49 3,336 645 446 10 301
Cost of shares redeemed (1,655) (11,746) (733) (1,987) (965) (692) (428) (286)
------- -------- ------- ------- ------- ------- -------- -------
Increase in net assets from
capital share transactions 193 574 6,492 13,742 1,354 37,820 150 21,927
------- -------- ------- ------- ------- ------- -------- -------
Net increase in net assets 5,327 1,975 10,695 17,822 6,947 42,545 2,518 21,582
Net assets:
Beginning of period 39,510 37,535 48,212 30,390 42,545 - 21,582 -
------- -------- ------- ------- ------- ------- -------- -------
End of period $44,837 $ 39,510 $58,907 $48,212 $49,492 $42,545 $ 24,100 $21,582
======= ======== ======= ======= ======= ======= ======== =======
Undistributed net investment income
included in net assets
End of period $ 340 $ 44 $ 1,018 $ 34 $ (94) $ - $ 192 $ (3)
======= ======== ======= ======= ======= ======= ======== =======
Change in shares outstanding:
Shares sold 112 644 467 888 133 3,655 51 2,145
Shares issued for dividends
reinvested 12 247 3 236 50 39 1 30
Shares redeemed (115) (869) (48) (142) (74) (55) (39) (27)
------- -------- ------- ------- ------- ------- -------- -------
Increase in shares outstanding 9 22 422 982 109 3,639 13 2,148
======= ======== ======= ======= ======= ======= ======== =======
</TABLE>
1998 SEMIANNUAL REPORT B-63
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES FO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USAA LIFE 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 Delaware business trust consisting of seven separate
funds.
The investment objectives of the Funds are as follows:
USAA LIFE MONEY MARKET FUND: Highest level of current income consistent with
preservation of capital and maintenance of liquidity, through a diversified
portfolio of high quality U.S. dollar-denominated debt instruments that present
minimal credit risk with remaining maturities of 397 days or less.
USAA LIFE INCOME FUND: Maximum current income without undue risk to
principal, through a diversified portfolio of U.S. dollar-denominated debt
and income producing equity securities selected for their high yields
relative to the risk involved.
USAA LIFE GROWTH AND INCOME FUND: Capital growth and current income, through
a diversified portfolio of dividend paying common stocks, convertible securiti
es, nonconvertible preferred stock and nonconvertible debt securities of
companies that offer the prospect for growth of earnings.
USAA LIFE WORLD GROWTH FUND: Long term capital appreciation, through a
diversified portfolio of equity securities of both foreign and domestic issuers.
USAA LIFE DIVERSIFIED ASSETS FUND: Long-term capital growth, consistent with
Preservation of capital and balanced by current income, through a strategy of
investing approximately 60% of the Fund's assets in equity securities, selected
for total return potential, and approximately 40% of its assets in debt
securities of varying maturities.
USAA Life Aggressive Growth Fund: Appreciation of capital, through a
portfolio of equity securities of companies that have the prospect of rapidly
growing earnings.
USAA LIFE INTERNATIONAL FUND: Capital appreciation with a secondary objective of
current income, through a strategy of investing at least 80% of the Fund's
assets in equity securities of foreign companies.
Shares of the Funds currently are offered only to the Separate Account of USAA
Life Insurance Company (the Separate Account) to serve as the funding medium for
certain variable annuity contracts offered by USAA Life.
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 and, pursuant to Rule
2a-7 of the Investment Company Act of 1940, as amended, all securities in the
USAA Life Money Market Fund 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 Funds' 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 investment advisor under the general supervision of the Board of
Trustees.
B. FEDERAL TAXES - The Funds' policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of their income to their shareholders, the Separate
Account and USAA Life. 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, 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 short-term and long-term securities are amortized over
the life of the respective securities.
D. FOREIGN CURRENCY TRANSLATIONS - The assets of the USAA Life World Growth,
Aggressive Growth, and International Funds may be invested in the securities
of foreign
B-64 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Financial Statements
(Continued) June 30, 1998 (Unaudited)
issuers. Since the accounting records of the Funds 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 the difference between amounts of dividends,
interest, and foreign withholding taxes recorded on the Funds' books and the
U.S. dollar equivalent of the amounts received. Net realized foreign currency
gains/losses have been reclassified from accumulated net realized gain/loss to
accumulated undistributed net investment income on the statement of assets and
liabilities as such amounts are treated as ordinary income/loss for tax
purposes. Net unrealized foreign currency exchange gains/losses arise from
changes in the value of assets and liabilities other than investments in
securities resulting from changes in the exchange rate.
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) DISTRIBUTIONS
USAA LIFE MONEY MARKET FUND
Net investment income is accrued daily as dividends and distributed monthly to
its shareholder, the Separate Account. All net investment income available for
distribution was distributed at June 30, 1998. Distributions of realized gains
from security transactions not offset by capital losses are made annually or as
otherwise required to avoid the payment of federal taxes.
USAA LIFE INCOME, USAA LIFE GROWTH AND INCOME, USAA LIFE WORLD GROWTH, USAA
LIFE DIVERSIFIED ASSETS, USAA LIFE AGGRESSIVE GROWTH, AND USAA LIFE
INTERNATIONAL FUNDS
Distributions of net investment income and realized gains from security
transactions not offset by capital losses are made to the shareholders, the
Separate Account and USAA Life, annually or as otherwise required to avoid
the payment of federal taxes.
1998 SEMIANNUAL REPORT B-65
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Financial Statements
(Continued) June 30, 1998 (Unaudited)
3) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities for the
six-month period ended June 30, 1998 were
as follows:
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life
Money Income Growth and World Diversified Aggressive International
Market Fund Fund Income Fund Growth Fund Assets Fund Growth Fund Fund
(000) (000) (000) (000) (000) (000) (000)
----------- -------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $105,986 $17,062 $24,620 $8,491 $12,439 $13,422 $5,888
Sales/Maturities $103,831 $11,386 $10,967 $8,391 $ 5,940 $12,775 $5,451
</TABLE>
For all Funds except the USAA Life Money Market Fund, cost of purchases and
proceeds from sales/maturities excludes short-term securities.
Gross unrealized appreciation and depreciation of investments as of June 30,
1998 was as follows:
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life USAA Life USAA Life USAA Life
Income Growth and World Diversified Aggressive International
Fund Income Fund Growth Fund Assets Fund Growth Fund Fund
(000) (000) (000) (000) (000) (000)
--------- ----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Appreciation $2,204 $29,079 $14,128 $13,546 $12,372 $ 4,366
Depreciation (38) (1,932) (2,035) (328) (2,555) (1,983)
------ ------- ------- ------- ------- -------
Net $2,166 $27,147 $12,093 $13,218 $ 9,817 $ 2,383
====== ======= ======= ======= ======= =======
</TABLE>
4) 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 USAA
Life World Growth and International Funds currently enter into currency
contracts only in connection with the purchase or sale of a security denominated
in a foreign currency. These contracts allow the Funds 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 Funds
foregoing the opportunity for potential profit.
At June 30, 1998, the terms of open foreign currency contracts were as
follows:
USAA LIFE WORLD GROWTH FUND:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar Unrealized
Currency to be Value as of Currency to be Value as of Appreciation
Exchange Delivered 6/30/98 Received 6/30/98 (Depreciation)
Date (000) (000) (000) (000) (000)
- -------- ------------------ ----------- ---------------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
7/01/98 2,902 Japanese Yen $ 21 20 U.S. Dollar $ 20 $ (1)
7/01/98 5 U.S. Dollar 5 61 Austrian Schilling 5 -
7/01/98 119 U.S. Dollar 119 216 Deutsche Mark 120 1
7/02/98 6 U.S. Dollar 6 82 Austrian Schilling 6 -
7/02/98 10 U.S. Dollar 10 130 Austrian Schilling 10 -
7/02/98 116 U.S. Dollar 116 210 Deutsche Mark 116 -
7/02/98 12 U.S. Dollar 12 7 British Pound 12 -
7/02/98 30 U.S. Dollar 30 18 British Pound 30 -
7/02/98 44 U.S. Dollar 44 26 British Pound 44 -
</TABLE>
B-66 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Financial Statements
(Continued) June 30, 1998 (Unaudited)
USAA LIFE WORLD GROWTH FUND (Continued):
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar Unrealized
Currency to be Value as of Currency to be Value as of Appreciation
Exchange Delivered 6/30/98 Received 6/30/98 (Depreciation)
Date (000) (000) (000) (000) (000)
- -------- ------------------ ----------- ----------------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
7/02/98 6 U.S. Dollar 6 3 British Pound 6 -
7/02/98 233 U.S. Dollar 233 475 Netherlands Guilder 234 1
7/02/98 67 U.S. Dollar 67 121 Deutsche Mark 67 -
7/02/98 23 U.S. Dollar 23 46 Netherlands Guilder 23 -
7/06/98 2,971 Japanese Yen 21 21 U.S. Dollar 21 -
7/06/98 2 U.S. Dollar 2 1 British Pound 2 -
7/14/98 28 Belgian Franc 1 1 U.S. Dollar 1 -
7/14/98 176 Belgian Franc 5 5 U.S. Dollar 5 -
7/14/98 142 Belgian Franc 4 4 U.S. Dollar 4 -
7/31/98 118 French Franc 19 19 U.S. Dollar 19 -
---- ---- ---
$744 $745 $ 1
==== ==== ===
</TABLE>
USAA LIFE INTERNATIONAL FUND:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar Unrealized
Currency to be Value as of Currency to be Value as of Appreciation
Exchange Delivered 6/30/98 Received 6/30/98 (Depreciation)
Date (000) (000) (000) (000) (000)
- -------- ------------------ ----------- ----------------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
7/1/98 98 U.S. Dollar $ 98 177 Deutsche Mark $ 98 $ -
7/1/98 1,451 Japanese Yen 11 10 U.S. Dollar 10 (1)
7/2/98 10 U.S. Dollar 10 130 Austrian Schilling 10 -
7/2/98 6 U.S. Dollar 6 82 Austrian Schilling 6 -
7/2/98 27 U.S. Dollar 27 16 British Pound 27 -
7/2/98 24 U.S. Dollar 24 14 British Pound 24 -
7/2/98 20 U.S. Dollar 20 12 British Pound 20 -
7/2/98 94 U.S. Dollar 94 171 Deutsche Mark 95 1
7/2/98 33 U.S. Dollar 33 60 Deutsche Mark 33 -
7/2/98 19 U.S. Dollar 19 38 Netherland Guilder 19 -
7/2/98 188 U.S. Dollar 188 385 Netherland Guilder 189 1
7/6/98 2,971 Japanese Yen 21 21 U.S. Dollar 21 -
7/14/98 101 Belgian Franc 3 3 U.S. Dollar 3 -
7/14/98 123 Belgian Franc 3 3 U.S. Dollar 3 -
7/14/98 19 Belgian Franc 1 1 U.S. Dollar 1 -
7/31/98 92 French Franc 15 15 U.S. Dollar 15 -
---- ---- ---
$573 $574 $ 1
==== ==== ===
</TABLE>
5) TRANSACTIONS WITH AFFILIATES
A. ADVISORY FEES - The investment policies of the Funds and management of the
Funds' portfolios are carried out by USAA Investment Management Company (USAA
IMCO). USAA IMCO is indirectly wholly owned by USAA. The Funds' advisory fees
are computed on an annualized rate of .50% of the monthly average net assets of
the USAA Life Aggressive Growth Fund, .65% of the monthly average net assets of
the USAA Life International Fund, and .20% of the monthly average net assets for
each of the other Funds of the Trust for each calendar month.
B. ADMINISTRATIVE FEES - As outlined in the Underwriting and Administrative
Services Agreement by and between USAA Life, the Trust and USAA IMCO, USAA Life
provides certain management, administrative, legal, clerical, accounting, and
record keeping services necessary or appropriate to conduct the Trust's business
and operations. Fees are based on estimated time spent to provide services.
Under a separate arrangement between USAA Life and USAA IMCO, USAA Life
delegates certain mutual fund accounting duties under the Underwriting and
Administrative Services Agreement to USAA IMCO and reimburses USAA IMCO for its
costs in providing these services.
C. EXPENSES REIMBURSED - USAA Life, out of its general account, has agreed to
pay directly or reimburse the Trust for Trust expenses to the extent that such
expenses exceed .65% of the monthly average net assets of the USAA Life World
Growth Fund, .70% of the monthly average net assets of the USAA Life Aggressive
Growth Fund, 1.10% of the monthly average net assets of the USAA Life
International Fund, and .35% of the monthly average net assets of each other
Fund. Expenses include advisory and administrative fees discussed above.
1998 SEMIANNUAL REPORT B-67
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Financial Statements
(Continued) June 30, 1998 (Unaudited)
D. UNDERWRITING AND ADMINISTRATIVE SERVICES AGREEMENT - The Trust has an
agreement with USAA IMCO for exclusive underwriting and distribution of the
Funds' shares on a continuing best efforts basis. USAA IMCO receives no
commissions or fees for this service.
E. BROKERAGE SERVICES - USAA Brokerage Services, a discount brokerage
service of USAA IMCO, may execute portfolio transactions for the Funds. The
amount of brokerage commissions paid to USAA Brokerage Services during the
six-month period ended June 30, 1998 for the USAA Life Growth and Income,
USAA Life Diversified Assets, USAA Life Aggressive Growth were $2,000,
$2,000, and $1,000 respectively.
F. SHARE OWNERSHIP - At June 30, 1998, USAA Life owned 1.9 million shares
(64.6%) of the USAA Life Income Fund, 1.3 million shares (24.0%) of the USAA
Life Growth and Income Fund, 1.6 million shares (52.2%) of the USAA Life
World Growth Fund, 1.7 million shares (46.1%) of the USAA Life Diversified
Assets Fund, 3.5 million shares (93.0%) of the USAA Life Aggressive Growth
Fund, and 2.0 million shares (92.3%) of the USAA Life International Fund. All
other shares are owned by the Separate Account.
Certain trustees and officers of the Funds are also directors, officers,
and/or employees of USAA Life or USAA IMCO. None of the affiliated trustees
or Fund officers received any compensation from the Funds.
B-68 SEMIANNUAL REPORT 1998
<PAGE>
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<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Financial Statements
(Continued) June 30, 1998 (Unaudited)
6) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period
is as follows:
<TABLE>
<CAPTION>
USAA Life Money Market Fund USAA Life Income Fund
--------------------------------------------- -----------------------------------------------
Six-Month Year Ended December 31, Six-Month Year Ended December 31,
Period Ended ----------------------- Period Ended -----------------------
June 30, 1998 1997 1996 1995* June 30, 1998 1997 1996 1995*
------------- ------- ------- ------- ------------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $10.96 $ 10.51 $ 11.32 $ 10.00
Net investment income (loss) $ .03 .05 .05 .06(b) $ .35 .75 .92 .78(b)
Net realized and unrealized
gain (loss) - - - - $ .16 .46 (.84) 1.61
Distributions from net
investment income (.03) (.05) (.05) (.06) (.01) (.76) (.89) (.76)
Distributions of realized
capital gains - - - - (.02) - - (.31)
-------- ------- ------- ------- ------ ------- ------- -------
Net asset value at end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $11.44 $ 10.96 $ 10.51 $ 11.32
======== ======= ======= ======= ====== ======= ======= =======
Total return (%)*** 2.63 5.35 5.25 5.69 4.66 11.60 .67 23.88
Net assets at end of
period (000) $ 17,279 $15,131 $11,245 $ 7,802 $34,306 $28,246 $24,049 $25,823
Ratio of expenses to
average net assets (%) .35(a) .35 .35 .35(a) .35(a) .35 .35 .35(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) .76(a) .70 1.24 2.29(a) .51(a) .52 .65 .65(a)
Ratio of net investment income
to average net assets (%) 5.26(a) 5.22 5.10 5.55(a) 6.92(a) 7.16 6.99 7.07(a)
Portfolio turnover (%) - - - - 37.19 30.77 97.74 55.08
</TABLE>
<TABLE>
<CAPTION>
USAA Life
USAA Life Diversified Assets Fund Aggressive Growth Fund
--------------------------------------------- -----------------------------------------------
Six-Month Year Ended December 31, Six-month Eight-month
Period Ended ----------------------- Period Ended Period Ended
June 30, 1998 1997 1996 1995* June 30, 1998 December 31, 1997**
------------- ------- ------- ------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 14.48 $ 12.95 $ 11.96 $ 10.00 $11.70 $ 10.00
Net investment income (loss) $ .27 .50 .62 .55(b) $ (.03)(b) (.01)(b)
Net realized and unrealized
gain (loss) $ .96 2.14 1.10 2.08 $ 1.71 1.83
Distributions from net
investment income (.01) (.50) (.62) (.53) - -
Distributions of realized
capital gains - (.61) (.11) (.14) (.17) (.12)
-------- ------- ------- ------- ------ --------
Net asset value at end of
period $ 15.70 $ 14.48 $ 12.95 $ 11.96 $13.21 $ 11.70
======== ======= ======= ======= ====== ========
Total return (%)*** 8.52 20.70 14.30 26.33 14.42 18.26
Net assets at end of
period (000) $ 58,907 $48,212 $30,390 $26,311 $49,492 $42,545
Ratio of expenses to
average net assets (%) .35(a) .35 .35 .35(a) .70(a) .70(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) .41(a) .42 .61 .64(a) .78(a) .85(a)
Ratio of net investment income
to average net assets (%) 3.78(a) 4.02 4.46 4.93(a) (.40)(a) (.15)(a)
Portfolio turnover (%) 11.32 19.19 43.75 58.87 27.73 73.77
</TABLE>
* Funds commenced operations January 5, 1995.
** Funds commenced operations May 1, 1997.
*** Assumes reinvestment of all dividend income and capital gains
distributions during the period. Total returns for each period do not
reflect insurance expenses that apply at the Separate Account level, such
as risk and expense charges. These expenses would reduce the total return
for the period shown.
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(b) Calculated using weighted average shares.
B-70 SEMIANNUAL REPORT 1998
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes To Financial Statements
(Continued) June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
USAA Life Growth and Income Fund USAA Life World Growth Fund
--------------------------------------------- -----------------------------------------------
Six-Month Year Ended December 31, Six-Month Year Ended December 31,
Period Ended ----------------------- Period Ended -----------------------
June 30, 1998 1997 1996 1995* June 30, 1998 1997 1996 1995*
------------- ------- ------- ------- ------------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 17.98 $ 15.06 $ 12.60 $ 10.00 $13.34 $ 12.77 $ 11.10 $ 10.00
Net investment income (loss) $ .14 .28 .26 .34(b) $ .12 .17 .18 .17(b)
Net realized and unrealized
gain (loss) $ 1.62 3.68 2.79 2.83 $ 1.70 1.62 2.16 1.79
Distributions from net
investment income - (.27) (.26) (.30) (.02) (.17) (.16) (.16)
Distributions of realized
capital gains (.23) (.77) (.33) (.27) (.05) (1.05) (.51) (.70)
-------- ------- ------- ------- ------ ------- ------- -------
Net asset value at end of
period $ 19.51 $ 17.98 $ 15.06 $ 12.60 $15.09 $ 13.34 $ 12.77 $ 11.10
======== ======= ======= ======= ====== ======= ======= =======
Total return (%)*** 9.82 26.43 24.13 31.72 13.59 14.08 21.12 19.55
Net assets at end of
period (000) $106,080 $85,750 $55,932 $28,761 $44,837 $39,510 $37,535 $24,706
Ratio of expenses to
average net assets (%) .34(a) .34 .35 .35(a) .59(a) .59(a) .65 .65(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) NA NA .53 .66(a) NA NA .82 .87(a)
Ratio of net investment income
to average net assets (%) 1.56(a) 1.80 2.25 2.82(a) 1.64(a) 1.20 1.45 1.55(a)
Portfolio turnover (%) 11.44 20.26 14.55 17.73 20.43 48.89 57.66 78.86
</TABLE>
<TABLE>
<CAPTION>
USAA Life
International Fund
------------------------------------
Six-month Eight-month
Period Ended Period Ended
June 30, 1998 December 31, 1997**
------------- --------------------
<S> <C> <C>
Net asset value at
beginning of period $ 10.05 $ 10.00
Net investment income (loss) $ .10 .05(b)
Net realized and unrealized
gain (loss) 1.01 .15
Distributions from net
investment income - (.05)
Distributions of realized
capital gains (.01) (.10)
-------- -------
Net asset value at end of
period $ 11.15 $ 10.05
======== =======
Total return (%)*** 10.99 1.92
Net assets at end of
period (000) $ 24,100 $21,582
Ratio of expenses to
average net assets (%) 1.10(a) 1.10(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) 1.22(a) 1.24(a)
Ratio of net investment income
to average net assets (%) 1.80(a) .70(a)
Portfolio turnover (%) 24.77 30.57
</TABLE>
1998 SEMIANNUAL REPORT B-71
<PAGE>
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