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USAA LIFE
INVESTMENT TRUST
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SEMIANNUAL REPORT
June 30, 1999
[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, 1999
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
USAA LIFE IBC/DONOGHUE'S
MONEY MARKET MONEY FUND
DATE FUND 4.72% AVERAGES (TM)/FIRST TIER 4.26%
==== ============ ==============================
01/05/1995
01/31/1995 5.77% 5.24%
02/28/1995 5.70% 5.46%
03/30/1995 5.84% 5.49%
04/25/1995 5.76% 5.47%
05/30/1995 5.74% 5.45%
06/27/1995 5.79% 5.41%
07/26/1995 5.51% 5.29%
08/29/1995 5.45% 5.22%
09/26/1995 5.42% 5.18%
10/31/1995 5.50% 5.18%
11/28/1995 5.68% 5.19%
12/26/1995 5.52% 5.14%
01/30/1996 4.99% 4.97%
02/27/1996 5.00% 4.74%
03/26/1996 5.03% 4.68%
04/30/1996 5.00% 4.68%
05/28/1996 5.04% 4.67%
06/25/1996 5.06% 4.71%
07/30/1996 5.08% 4.74%
08/27/1996 5.05% 4.73%
09/24/1996 5.10% 4.75%
10/29/1996 4.97% 4.75%
11/26/1996 5.03% 4.75%
12/31/1996 5.23% 4.82%
01/28/1997 5.12% 4.75%
02/25/1997 5.01% 4.73%
03/25/1997 5.05% 4.74%
04/29/1997 5.26% 4.89%
05/27/1997 5.32% 4.93%
06/24/1997 5.25% 4.94%
07/29/1997 5.21% 4.93%
08/26/1997 5.26% 4.93%
09/30/1997 5.24% 4.95%
10/28/1997 5.29% 4.93%
11/25/1997 5.30% 4.96%
12/30/1997 5.54% 5.07%
01/27/1998 5.24% 4.99%
02/24/1998 5.18% 4.94%
03/31/1998 5.28% 4.93%
04/28/1998 5.28% 4.90%
05/26/1998 5.19% 4.90%
06/30/1998 5.30% 4.94%
07/28/1998 5.29% 4.92%
08/25/1998 5.29% 4.91%
09/29/1998 5.29% 4.87%
10/27/1998 4.84% 4.64%
11/24/1998 4.91% 4.55%
12/29/1998 4.98% 4.52%
01/26/1999 4.62% 4.37%
02/23/1999 4.55% 4.26%
03/30/1999 4.60% 4.22%
04/27/1999 4.56% 4.19%
05/25/1999 4.60% 4.18%
06/29/1999 4.72% 4.26%
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
MARKET CONDITIONS
As expected by the marketplace, the Federal Reserve (Fed) increased the Federal
Funds rate by .25% on June 30, 1999, citing the need to be pre-emptive against
any inflationary pressures that could result from the domestic economy growing
too quickly. Over the course of the last few months, numerous economic
statistics have been released indicating the strength of the U.S. economy. As
represented by statistics such as job growth, wages, and manufacturing strength,
the U.S. economy appears to be going full steam ahead. This rate increase sought
to balance actions implemented by the Fed during October and November of 1998,
which lowered the Federal Funds rate by .75%. At that time, the Fed sought to
offset a slowdown in the U.S. economy that could have been caused by reduced
trade with other countries.
PORTFOLIO STRATEGY
Strong indicators of the robust growth in the U.S. economy have caused market
interest rates to rise over the past few weeks. One-third of the portfolio is in
variable rate demand notes and this portion of the portfolio resets at the
higher rate on a weekly basis. The balance of the portfolio was comprised of
short-term commercial paper and government agency discount notes with maturities
spread out over 44 days. The weighted average maturity of the portfolio on June
30, 1999, was 15.1 days reflecting the utilization of the money market for the
free-look period available to the variable insurance products.
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: 4.72%*
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: 2.29%**
One Year: 4.95%
Three Year: 5.20%
Since Inception
January 5, 1995: 5.31%
* The 7-day yield quotation more closely reflects the current earnings of the
Fund than the total return quotation.
** 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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. These NAV total return calculations
represent past performance which is no guarantee of future returns.
1999 SEMIANNUAL REPORT B-3
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE MONEY MARKET FUND
AN OVERVIEW (Continued) JUNE 30, 1999
PERFORMANCE
The above investment strategy continues to perform well. According to Lipper
Analytical Services, Inc.,/1/ for the six-month period ending June 30, 1999, the
USAA Life Money Market Fund ranked 27 out of 109 variable insurance products
money market funds based on the six-month NAV total return. The total return of
the USAA Life Money Market Fund for the six-month period ended June 30, 1999,
was 2.29% compared to an average of 2.21% for all variable insurance products
money market funds. While past performance is no guarantee of future results, I
will strive to continue the history of good performance.
/1/ Lipper Analytical Services, Inc. is an independent organization that
monitors fund performance of variable insurance products. Rankings are
based on total returns.
An investment in the USAA Life Money Market Fund is not insured or
guaranteed by the F. D. I. C. or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1, it is possible
to lose money by investing in the Fund.
PORTFOLIO MIX AS A PERCENTAGE OF NET ASSETS*
as of June 30, 1999
- --------------------------------------------
Commercial Paper U.S. Agency
30.3% [GRAPH APPEARS HERE] Discount Notes
34.6%
Variable Rate
Demand Notes
37.9%
* Pecentages are of Net Assets and may or may not be equal to 100%.
B-4 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE INCOME FUND
AN OVERVIEW JUNE 30, 1999
COMPARISON OF FUND TO BENCHMARKS
[GRAPH APPEARS HERE]
USAA INCOME LEHMAN BROTHERS AGGREGATE LIPPER A RATED BOND
DATE FUND $14,673 BOND INDEX $14,429 FUND INDEX* $14,131
==== ============ ========================= ===================
Jan-1-1995 $10,000.00 $10,000.00 $10,000.00
Jan-1995 10,290.00 10,198.00 10,172.00
Feb-1995 10,520.00 10,440.71 10,401.89
Mar-1995 10,530.00 10,504.40 10,468.46
Apr-1995 10,700.00 10,651.46 10,610.83
May-1995 11,210.00 11,063.67 11,067.10
Jun-1995 11,220.00 11,144.44 11,143.46
Jul-1995 11,200.00 11,119.92 11,091.08
Aug-1995 11,400.00 11,254.47 11,246.36
Sep-1995 11,650.00 11,363.64 11,368.95
Oct-1995 11,870.00 11,511.37 11,542.89
Nov-1995 12,100.00 11,684.04 11,728.73
Dec-1995 12,388.65 11,847.61 11,912.87
Jan-1996 12,454.32 11,925.81 11,971.24
Feb-1996 12,027.50 11,718.30 11,711.47
Mar-1996 11,863.34 11,636.27 11,616.61
Apr-1996 11,688.23 11,571.11 11,530.64
May-1996 11,666.35 11,547.97 11,501.82
Jun-1996 11,863.34 11,702.71 11,645.59
Jul-1996 11,830.51 11,734.31 11,668.88
Aug-1996 11,786.73 11,714.36 11,644.38
Sep-1996 12,005.61 11,918.19 11,849.32
Oct-1996 12,333.93 12,182.77 12,111.19
Nov-1996 12,585.65 12,391.10 12,331.61
Dec-1996 12,472.26 12,275.86 12,210.76
Jan-1997 12,519.73 12,313.92 12,237.62
Feb-1997 12,567.20 12,344.70 12,274.34
Mar-1997 12,329.85 12,207.67 12,123.36
Apr-1997 12,495.99 12,390.79 12,288.24
May-1997 12,642.11 12,508.50 12,401.29
Jun-1997 12,844.48 12,657.35 12,558.79
Jul-1997 13,225.41 12,999.10 12,926.76
Aug-1997 13,106.37 12,888.61 12,785.86
Sep-1997 13,380.16 13,078.07 12,990.43
Oct-1997 13,570.63 13,267.70 13,156.71
Nov-1997 13,725.38 13,328.73 13,214.60
Dec-1997 13,919.15 13,463.36 13,353.35
Jan-1998 14,109.64 13,635.69 12,526.95
Feb-1998 14,084.24 13,624.78 13,513.42
Mar-1998 14,122.34 13,671.10 13,560.72
Apr-1998 14,173.14 13,742.19 13,625.81
May-1998 14,377.21 13,872.74 13,766.88
Jun-1998 14,568.22 13,990.66 13,888.67
Jul-1998 14,606.43 14,020.04 13,905.34
Aug-1998 14,810.18 14,248.57 14,076.37
Sep-1998 15,039.40 14,581.98 14,402.94
Oct-1998 15,064.87 14,504.70 14,277.64
Nov-1998 15,141.27 14,587.38 14,391.86
Dec-1998 15,195.78 14,631.14 14,445.11
Jan-1999 15,279.51 14,735.02 14,540.45
Feb-1999 15,000.43 14,477.16 14,229.28
Mar-1999 15,000.43 14,556.78 14,326.04
Apr-1999 15,014.39 14,603.36 14,370.45
May-1999 14,812.55 14,474.85 14,200.88
Jun-1999 14,672.67 14,428.53 14,131.29
Data represent the last business day of each month.
*Total Returns may change over time due to funds being added and deleted from
the category.
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
Following a stable period in January 1999, interest rates began a steady upward
trend that depressed bond prices, which move inversely.
Economic strength in the first quarter of 1999, which is the fourth year in a
row for first quarter strength, has renewed inflation fears and the specter of
higher interest rates. A sharp increase in the Consumer Price Index (CPI) in
April, due primarily to increased oil prices, reinforced the inflation thesis
and May's CPI showed no change. However, the Federal Reserve (Fed) announced a
bias toward raising rates in mid-June as a preemptive move to thwart inflation,
and on June 30, 1999, did raise the Federal Funds lending rate to 5%, up 0.25%
from 4.75%. Yields on the 30-year Treasury bond have moved from 5.09% on January
1, 1999, to 6.05% on June 30, 1999, as shown in the following chart on page B-6.
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 RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: -3.44%*
One Year: .72%
Three Year: 7.34%
Since Inception
January 5, 1995: 8.89%
*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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. These NAV total return calculations
represent past performance which is no guarantee of future returns.
1999 SEMIANNUAL REPORT B-5
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE INCOME FUND
AN OVERVIEW (Continued) JUNE 30, 1999
30-YEAR U.S. TREASURY BOND YIELD
[GRAPH APPEARS HERE]
Beginning Yield: 5.09%
Low Yield: 5.06%
Ending Yield: 6.05%
DATE YIELD DATE YIELD DATE YIELD
==== ===== ==== ===== ==== =====
6/11 6.267 5/21 5.860
6/10 6.171 5/20 5.940
6/30 6.054 6/ 9 6.134 5/19 5.913
6/29 6.169 6/ 8 6.103 5/18 5.991
6/28 6.199 6/ 7 6.072 5/17 5.992
6/25 6.264 6/ 4 6.070 5/14 6.018
6/24 6.282 6/ 3 6.067 5/13 5.850
6/23 6.270 6/ 2 6.041 5/12 5.945
6/22 6.186 6/ 1 6.034 5/11 5.949
6/21 6.143 5/31 5.940 5/10 5.906
6/18 6.098 5/28 5.930 5/ 7 5.931
6/17 6.073 5/27 5.950 5/ 6 5.913
6/16 6.171 5/26 5.913 5/ 5 5.819
6/15 6.214 5/25 5.858 5/ 4 5.831
6/14 6.206 5/24 5.867 5/ 3 5.768
4/30 5.770 4/ 9 5.559 3/19 5.622
4/29 5.644 4/ 8 5.536 3/18 5.552
4/28 5.694 4/ 7 5.597 3/17 5.578
4/27 5.649 4/ 6 5.610 3/16 5.532
4/26 5.683 4/ 5 5.680 3/15 5.575
4/23 5.703 4/ 2 5.687 3/12 5.590
4/22 5.709 4/ 1 5.762 3/11 5.624
4/21 5.628 3/31 5.720 3/10 5.622
4/20 5.606 3/30 5.671 3/ 9 5.593
4/19 5.613 3/29 5.726 3/ 8 5.660
4/16 5.668 3/26 5.672 3/ 5 5.668
4/15 5.625 3/25 5.662 3/ 4 5.757
4/14 5.603 3/24 5.606 3/ 3 5.753
4/13 5.588 3/23 5.617 3/ 2 5.667
4/12 5.555 3/22 5.640 3/ 1 5.728
2/26 5.635 2/ 5 5.349 1/15 5.107
2/25 5.712 2/ 4 5.288 1/14 5.057
2/24 5.572 2/ 3 5.254 1/13 5.132
2/23 5.492 2/ 2 5.239 1/12 5.220
2/22 5.427 2/ 1 5.183 1/11 5.306
2/19 5.462 1/29 5.086 1/ 8 5.272
2/18 5.452 1/28 5.107 1/ 7 5.224
2/17 5.388 1/27 5.127 1/ 6 5.163
2/16 5.419 1/26 5.129 1/ 5 5.208
2/15 5.499 1/25 5.116 1/ 4 5.151
2/12 5.493 1/22 5.082 1/ 1 5.095
2/11 5.366 1/21 5.131 12/31 5.095
2/10 5.366 1/20 5.168
2/ 9 5.302 1/19 5.149
2/ 8 5.341 1/18 5.115
In this rising interest rate environment, the Fund underperformed in its peer
group for this six-month period because of the portfolio's longer average
maturity. The Fund's high-income orientation tends to keep average maturity
longer. The Fund's average annual NAV total return for the six-month period
ended June 30, 1999, was -3.44% versus an average of -2.20% for all funds in the
Lipper Variable Insurance Products/1/ A Rated Bond Fund category for the same
period.
PORTFOLIO
As of June 30, 1999, the Fund's portfolio mix as percentages of net assets was
24.5% U. S. Treasury bonds, 48.7% agency mortgage pass-through securities, 15.5%
corporate bonds, and 10.2% preferred stocks.
OUTLOOK
The bond market has been unsettled for some time over the anticipated raising of
interest rates by the Federal Reserve. A heavy corporate calendar for new issue
bonds to be sold to reluctant buyers has created a one way path to the bond
market downside. Now that the Fed has raised rates, some of the conjecture is
over. In addition, the Fed has returned its bias for future interest rate action
to neutral. With yields on the long Treasury bond above 6%, this rise in
interest rates may be over for the time being. However, stability through the
summer may lead to new worries that the Federal Reserve Board will raise rates
again in the fall. This would unsettle the bond market again. The key is whether
the economic strength continues and/or the Consumer Price Index picks up, in
which case, the Federal Reserve will be more eager to tighten interest rates.
/1/ Lipper Analytical Services is an independent organization that monitors fund
performance of variable insurance products.
Top 10 Securities
as of June 30, 1999
Coupon % of
Rate Net Assets
U.S. Treasury Bond 5.25% 24.5%
GNMA 6.00 21.3
GNMA 6.00 6.5
GNMA 6.00 6.5
GNMA 7.00 4.7
GNMA 6.00 4.3
FNMA 7.00 2.7
FNMA 7.00 2.7
First Union Corp.,
Subordinated Notes 7.50 2.4
Household Finance
Corp., Notes 7.25 2.4
B-6 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
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USAA LIFE GROWTH AND INCOME FUND
AN OVERVIEW JUNE 30, 1999
COMPARISON OF FUND TO BENCHMARK
USAA LIFE GROWTH AND
S&P 500 INDEX INCOME FUND
DATE $32,570 $25,780
==== ============= =====================
01/01/95 $10,000.00 $10,000.00
01/95 10,259.00 10,150.00
02/95 10,658.08 10,480.00
03/95 10,972.49 10,720.00
04/95 11,295.08 11,080.00
05/95 11,745.75 11,410.00
06/95 12,018.25 11,650.00
07/95 12,416.06 11,990.00
08/95 12,447.10 12,190.00
09/95 12,972.37 12,530.00
10/95 12,925.67 12,230.00
11/95 13,491.81 12,900.00
12/95 13,752.20 13,172.27
01/96 14,219.78 13,475.44
02/96 14,352.02 13,632.25
03/96 14,489.80 14,123.60
04/96 14,702.80 14,301.32
05/96 15,080.66 14,489.49
06/96 15,137.97 14,499.95
07/96 14,468.87 13,841.33
08/96 14,744.16 14,343.13
09/96 15,604.47 15,033.11
10/96 16,035.16 15,357.19
11/96 17,245.81 16,339.88
12/96 16,904.34 16,350.51
01/97 17,959.17 17,023.63
02/97 18,101.05 17,164.77
03/97 17,358.91 16,676.21
04/97 18,393.50 17,175.63
05/97 19,517.34 18,401.46
06/97 20,385.86 19,111.31
07/97 22,006.54 20,378.12
08/97 20,774.17 19,766.56
09/97 21,910.52 20,640.22
10/97 21,178.71 19,810.24
11/97 22,159.28 20,399.96
12/97 22,540.42 20,671.28
01/98 22,788.37 20,510.33
02/98 24,431.41 21,993.42
03/98 25,682.30 23,131.60
04/98 25,944.26 23,269.56
05/98 25,498.02 22,688.80
06/98 26,533.23 22,700.43
07/98 26,251.98 21,525.27
08/98 22,458.57 18,244.12
09/98 23,898.17 18,837.52
10/98 25,838.70 20,315.20
11/98 27,404.52 21,536.90
12/98 28,983.02 22,102.73
01/99 30,194.512 22,711.64
02/99 29,255.463 22,139.28
03/99 30,425.681 23,223.11
04/99 31,603.155 24,903.65
05/99 30,857.321 24,606.78
06/99 32,589.902 25,780.28
Data represent the last business 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. The S&P 500 Index
is an unmanaged index representing the weighted average performance of a group
of 500 widely held, publicly traded stocks. It is not possible to invest
directly in the S&P 500 Index.
The 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
PERFORMANCE
For the six months ended June 30, 1999, the performance of the USAA Life Growth
and Income Fund showed considerable improvement on both an absolute basis and
relative to the S&P 500 Index. For this six-month period, the NAV total return
for the Fund was 16.64% versus a total return of 12.38% for the S&P 500 Index.
Performance for the first half of this year can be viewed in terms of two
distinctly different time frames. The first quarter of the year (through March
31) saw a continuation of the trends of 1998. In general, large capitalization
growth stocks continued to dominate the performance of the major indices.
However, beginning in April, many cyclical and/or commodity-oriented stocks
became top performers in the Fund. The stocks of companies, such as Alcoa, Deere
& Co., Weyerhaeuser, Millennium Chemicals, Boeing, B.F. Goodrich, and Lear,
appreciated in the range of 20% to 50% in the month of April. This compares to a
rise of 3.87% for the S&P 500 Index. During this same period, the stocks of many
high-growth companies, such as Merck & Co, Intel, Microsoft, and Oracle, fell.
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 RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: 16.64%*
One Year: 13.57%
Three Year: 21.15%
Since Inception
January 5, 1995: 23.42%
*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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. These NAV total return calculations
represent past performance which is no guarantee of future returns.
1999 SEMIANNUAL REPORT B-7
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE GROWTH AND INCOME FUND
AN OVERVIEW (Continued) JUNE 30, 1999
During the latter part of 1998 and into the first quarter of 1999, we undertook
and completed some changes in the portfolio investment strategy, which should
improve performance over the long term. Specifically, such alterations included
a more balanced weighting among the various economic sectors. We did this while
adhering to our stock selection parameters of focusing on companies with solid
earnings and earnings growth, and whose valuations appear attractive.
MARKET CONDITIONS AND OUTLOOK
Although the equity market has broadened in that a greater number of stocks have
risen this year, the volatility of the market is still a source of concern.
There remains a significant segment of investors who focus on short-term events
and news and, in turn, make investment decisions based on that information. A
second source of worry relates to the Federal Reserve (Fed) and interest rates.
By itself, the recent increase in interest rates is not a serious source of
concern. However, we doubt that equity markets will continue their rise should
the Fed decide to further increase interest rates.
STRATEGY
Our strategy continues to focus on quality companies that sell for compelling
valuations. As an example, we expect to continue favoring health care securities
(particularly pharmaceuticals), as they are reasonably priced and offer the
potential for earnings growth, even in a rising interest rate environment.
TOP 10 EQUITY HOLDINGS
as of June 30, 1999
% of
Net Assets
Microsoft Corp. 2.4%
Morgan Stanley, Dean Witter,
Discover & Co. 2.3
Alcoa, Inc. 2.2
Bell Atlantic Corp. 2.2
Cisco Systems, Inc. 2.1
IBM Corp. 2.1
Lear Corp. 2.1
Pharmacia & Upjohn, Inc. 2.0
GTE Corp. 1.9
Kimberly-Clark Corp. 1.8
TOP 10 INDUSTRIES
as of June 30, 1999
% of
Net Assets
Finance - Diversified 5.4%
Health Care - Diversified 4.9
Drugs 4.6
Telephones 4.4
Computer Software & Service 3.3
Oil - International Integrated 3.1
Retail - General Merchandising 3.1
Telecommunications -
Long Distance 3.0
Banks - Money Center 2.9
Household Products 2.8
B-8 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
AN OVERVIEW JUNE 30, 1999
COMPARISON OF FUND TO BENCHMARK
MORGAN STANLEY USAA LIFE WORLD
CAPITAL INDEX WORLD GROWTH FUND
DATE $21,383 $20,344
==== =================== ===============
01/01/95 $10,000.00 $10,000.00
01/95 9,847.00 9,710.00
02/95 9,987.81 9,790.00
03/95 10,467.23 10,160.00
04/95 10,829.39 10,490.00
05/95 10,919.28 10,920.00
06/95 10,913.82 11,150.00
07/95 11,457.33 11,710.00
08/95 11,199.54 11,620.00
09/95 11,523.20 11,770.00
10/95 11,338.83 11,480.00
11/95 11,730.02 11,650.00
12/95 12,070.19 11,955.58
01/96 12,286.25 12,321.78
02/96 12,358.74 12,558.74
03/96 12,561.42 12,849.55
04/96 12,854.10 13,463.49
05/96 12,853.10 13,592.74
06/96 12,926.13 13,614.28
07/96 12,467.25 12,935.72
08/96 12,608.13 13,334.24
09/96 13,098.59 13,668.13
10/96 13,187.66 13,625.05
11/96 13,923.53 14,379.00
12/96 13,697.97 14,481.01
01/97 13,860.97 15,036.67
02/97 14,017.60 15,013.99
03/97 13,737.25 14,866.57
04/97 14,183.71 15,059.35
05/97 15,056.01 15,931.94
06/97 15,804.29 16,666.03
07/97 16,529.71 17,480.40
08/97 15,420.57 16,666.03
09/97 16,256.36 17,652.45
10/97 15,398.02 16,631.61
11/97 15,667.49 16,356.33
12/97 15,855.50 16,520.54
01/98 16,294.70 16,557.69
02/98 17,394.59 17,808.49
03/98 18,126.90 18,836.38
04/98 18,300.92 19,145.99
05/98 18,068.50 18,815.02
06/98 18,494.91 18,765.28
07/98 18,461.62 18,504.13
08/98 15,997.00 15,407.67
09/98 16,276.94 15,320.62
10/98 17,745.13 16,564.18
11/98 18,797.41 17,297.88
12/98 19,712.84 18,414.39
01/99 20,142.58 18,882.91
02/99 19,604.78 18,247.82
03/99 20,418.38 19,067.95
04/99 21,220.82 19,747.11
05/99 20,442.01 19,228.01
06/99 21,392.57 20,343.98
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 (MSCI)-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 David G. Peebles, Curt Rohrman, Albert Sebastian, and W.
Travis Selmier, II
MARKET CONDITIONS
For the six month period ended June 30, 1999, the Fund's NAV total return was
10.48% as compared with the MSCI World Index return of 8.51% and the Lipper
Global Funds Average/1/ return of 11.33%.The Fund's performance did improve over
the last six months.
INTERNATIONAL
Europe-Most European equity markets rebounded from last year's declines, but
returns were negatively impacted in 1999 by weak European currencies despite the
introduction of the Euro. Central banks in Europe cut interest rates as economic
growth forecasts were revised downward, primarily because of weakness in the
German and Italian economies. After last year's sell off, cyclical and resource
stocks rebounded, based on stronger global economic forecasts and higher energy
prices. In general, the larger European equity market (e.g., United Kingdom)
outperformed the smaller ones (e.g., Portugal, Belgium) throughout the period.
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 RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: 10.48%*
One Year: 8.41%
Three Year: 14.33%
Since Inception
January 5, 1995: 17.10%
*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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. These NAV total return calculations
represent past performance which is no guarantee of future returns.
1999 SEMIANNUAL REPORT B-9
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
AN OVERVIEW (Continued) JUNE 30, 1999
Emerging Markets - Emerging markets have recovered from last year. Asian
equities' strong recovery has been driven by good export growth, the reversal of
deflation (reflation) in many economies, and capital flows into the stock market
and into acquisitions of Asian companies. Although Russia's economic and
political problems and the conflict in Kosovo will influence central European
and many Mediterranean markets, these markets look more to the European
community for their political and economic cues. Greece was the best performer
in the region. Israel's and South Africa's economic recovery, export strength,
and improving political prospects have validated our overweight position in
those markets. With the exception of a strong Mexican market, our lower
weighting in Latin markets throughout the last six months was validated by
Brazil's forced devaluation of its currency, the Real, in January.
Japan - Since the election last summer, Japanese politics have solidified, more
progress has been seen on Japan's banking crisis, and a raft of corporate
restructuring announcements has pushed the market up over the last eight months.
However, we will need to see follow-through on the corporate restructuring
coupled with stimulatory economic policy to push the market higher. Our
technology, telecommunications, and financial equity holdings helped us
outperform the Japanese equity market throughout the period.
COUNTRY WEIGHTINGS AS A PERCENTAGE OF NET ASSETS
as of June 30, 1999
- -------------------------------------------------
Other* 18.1%
Germany 2.4% USA 38.4%
Italy 2.9%
Switzerland 3.1%
[GRAPH APPEARS HERE]
Finland 3.2%
Canada 4.7%
France 5.5%
Japan 5.9% United Kingdom 9.8%
Netherlands 6.0%
* Countries representing less than 2% of the portfolio and U.S. Government and
Agency Issues.
B-10 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
AN OVERVIEW (Continued) JUNE 30, 1999
Canada and Australia - Although we have preferred Canadian to Australian
equities, both markets have rebounded from last year's declines. Our positions
in Canada benefited from higher energy prices, a swing back to cyclical stocks,
and a stronger Canadian dollar. The reverse trends for these same factors had
negatively impacted the performance of the Fund in the second half of 1998.
UNITED STATES
U.S. stocks performed strongly through the period. A combination of healthy
domestic economic growth, continued low inflation, and recovering overseas
economies provided an exceptional environment for accelerating earnings growth.
The fund benefited from its overweight position in technology and consumer
cyclicals. Technology stocks posted the best returns of any sector during the
period, driven by demand for products and services related to the Internet and
preparation for Y2K. The strong domestic economy was particularly important to
consumer cyclicals, including retailers.
OUTLOOK
U.S. based corporations may experience rising profits through 1999, as worldwide
economies recover. However, valuations are unlikely to expand materially because
the best inflation news is probably behind us. We continue to view Europe
positively but have slightly reduced our over-weight position in favor of other
markets. European valuations still look attractive, and Europe could continue to
benefit from merger and acquisition activity. Canada should benefit from higher
commodity prices and strong U.S. economic growth. The Japanese market will
likely be a mixed bag with some sectors doing well. Given a reflating global
economy, emerging markets should continue to perform well.
/1/ The Lipper Global Funds Average is the average performance level of all
global funds, as reported by Lipper Analytical Services, an independent
organization that monitors the performance of mutual funds.
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, 1999
- ----------------------
% of
Net Assets
Microsoft Corp. (United States) 1.9%
Texas Instruments, Inc.
(United States) 1.7
Nokia Corp. ADR (Finland) 1.6
America Online, Inc.
(United States) 1.5
Cisco Systems, Inc. (United States) 1.5
Avon Products, Inc.
(United States) 1.3
Clear Channel
Communications, Inc.
(United States) 1.3
Elf Aquitaine ADR (France) 1.3
Gap, Inc. (United States) 1.3
Hewlett-Packard Co.
(United States) 1.3
TOP 10 INDUSTRIES
OF EQUITY HOLDINGS
as of June 30, 1999
- -------------------
% of
Net Assets
Telephones 6.4%
Banks - Major Regional 5.8
Drugs 4.8
Electronics-Semiconductors 4.8
Computer Software & Service 4.0
Communications Equipment 3.4
Insurance - Multi-Line Companies 3.4
Oil-International Integrated 2.7
Beverages - Nonalcoholic 2.6
Electrical Equipment 2.4
1999 SEMIANNUAL REPORT B-11
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE DIVERSIFIED ASSETS FUND
AN OVERVIEW JUNE 30, 1999
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, 1999, the portfolio mix was 64.7%
common stocks and 35.0% fixed-income securities, as a percentage of net assets.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: 10.55%*
One Year: 11.69%
Three Year: 16.55%
Since Inception
January 5, 1995: 18.08%
*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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. These NAV total return calculations
represent past performance which is no guarantee of future returns.
COMPARISON OF FUND TO BENCHMARKS
[GRAPH APPEARS HERE]
USAA LIFE LIPPER BALANCED LEHMAN BROTHERS
S&P 500 DIVERSIFIED FUND AGGREGATE BOND
DATE INDEX $32,570 ASSETS FUND $21,124 AVERAGE $20,283 INDEX $14,429
==== ============= =================== =============== ==============
01/01/95 $10,000.00 $10,000.00 $10,000.00 $10,000.00
01/95 10,259.00 10,120.00 10,122.00 10,198.00
02/95 10,658.08 10,330.00 10,399.34 10,440.71
03/95 10,972.49 10,550.00 10,580.29 10,504.40
04/95 11,295.08 10,860.00 10,759.10 10,651.46
05/95 11,745.75 11,240.00 11,113.07 11,063.67
06/95 12,018.25 11,300.00 11,310.89 11,144.44
07/95 12,416.06 11,450.00 11,563.12 11,119.92
08/95 12,447.10 11,640.00 11,666.03 11,254.47
09/95 12,972.37 11,970.00 11,915.68 11,363.64
10/95 12,925.67 11,890.00 11,869.21 11,511.37
11/95 13,491.81 12,270.00 12,237.16 11,684.04
12/95 13,752.20 12,633.12 12,402.36 11,847.61
01/96 14,219.78 12,833.81 12,623.12 11,925.81
02/96 14,352.02 12,844.38 12,624.38 11,718.30
03/96 14,489.80 13,108.45 12,677.41 11,636.27
04/96 14,702.80 13,002.82 12,771.22 11,571.11
05/96 15,080.66 13,150.70 12,920.64 11,547.97
06/96 15,137.97 13,340.83 12,950.36 11,702.71
07/96 14,468.87 13,002.82 12,607.17 11,734.31
08/96 14,744.16 13,192.95 12,825.28 11,714.36
09/96 15,604.47 13,678.84 13,320.33 11,918.19
10/96 16,035.16 14,059.10 13,594.73 12,182.77
11/96 17,245.81 14,650.62 14,190.18 12,391.10
12/96 16,904.34 14,440.16 14,011.39 12,275.86
01/97 17,959.17 14,808.13 14,437.33 12,313.92
02/97 18,101.05 14,964.24 14,421.45 12,344.70
03/97 17,358.91 14,573.96 13,997.46 12,207.67
04/97 18,393.50 14,941.94 14,406.19 12,390.79
05/97 19,517.34 15,616.43 15,029.97 12,508.50
06/97 20,385.86 16,051.18 15,473.36 12,657.35
07/97 22,006.54 16,863.46 16,330.58 12,999.10
08/97 20,774.17 16,337.19 15,855.36 12,888.61
09/97 21,910.52 16,966.42 16,445.18 13,078.07
10/97 21,178.71 16,783.37 16,182.06 13,267.70
11/97 22,159.28 17,183.80 16,411.84 13,328.73
12/97 22,540.42 17,428.85 16,641.61 13,463.36
01/98 22,788.37 17,609.40 16,764.76 13,635.69
02/98 24,431.41 18,319.55 17,401.82 13,624.78
03/98 25,682.30 18,813.05 17,913.43 13,671.10
04/98 25,944.26 18,849.16 18,035.24 13,742.19
05/98 25,498.02 18,817.01 17,887.36 13,872.74
06/98 26,533.23 18,913.38 18,193.23 13,990.66
07/98 26,251.98 18,503.79 17,985.83 14,020.04
08/98 22,458.57 16,973.86 16,482.21 14,248.57
09/98 23,898.17 17,576.19 17,161.28 14,581.98
10/98 25,838.70 18,142.39 17,758.49 14,504.70
11/98 27,404.52 18,865.19 18,390.69 14,587.38
12/98 28,983.02 19,107.81 19,054.60 14,631.14
01/99 30,194.512 19,171.21 19,391.86 14,735.02
02/99 29,255.463 18,981.02 18,889.61 14,477.16
03/99 30,425.681 19,488.19 19,386.41 14,556.78
04/99 31,603.155 20,730.77 20,039.73 14,603.36
05/99 30,857.321 20,608.25 19,753.16 14,474.85
06/99 32,589.902 21,123.79 20,282.55 14,428.53
Data represent the last business 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 weighted average
performance of a group of 500 widely held, publicly traded stocks. It is not
possible to invest directly in the S&P 500 Index. The 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 R. David Ullom (Common Stocks) and Paul Lundmark (Debt
Securities)
PERFORMANCE
For the six months ended June 30, 1999, the USAA Life Diversified Assets Fund's
NAV total return was 10.55%. A performance discussion of the Fund's two sectors
is found below.
Common Stocks - Performance of the common stock sector of the USAA Life
Diversified Assets Fund improved relative to the S&P 500 Index. The sector's
performance can be virtually divided into two equal time periods, with the first
quarter favoring large capitalization growth stocks and the second quarter
(beginning in April) favoring commodity and cyclical stocks. As a result,
performance for the first half of the period was helped by the Fund's exposure
to basic materials (Alcoa), capital goods (Boeing, B.F. Goodrich, Deere & Co.,
and Caterpiller), and energy (Occidental Petroleum, Chevron, and Texaco).
However, during the same period, the Fund's weighting in health care (more
specifically, drugs) hindered performance. Also, although underweighted relative
to the S&P 500 Index, our positions in technology generally hurt performance.
B-12 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE DIVERSIFIED ASSETS FUND
AN OVERVIEW (Continued) JUNE 30, 1999
Debt Securities - Within the Fund's bond portion, the best performing holdings
were the Collateralized Mortgage Obligations (CMOs). These instruments are
defensive in nature and will outperform most other debt securities in a rising
interest rate environment. The debt securities of Real Estate Investment Trusts
(REITs) also performed relatively well. REITs have rebounded since the last
quarter of 1998 as investors saw that the negative market sentiment towards this
asset class had become overdone.
MARKET CONDITIONS
Common Stocks - As mentioned in the previous discussion above, beginning in
April of this year, the equity markets began to broaden and favor the stocks of
more economically sensitive companies. This change in sentiment appears to have
resulted from signs that the economies of Southeast Asia are recovering and that
the Brazilian economy has stabilized. However, given the recent rise in interest
rates and uncertainties as to further rate increases, we do expect continued
market volatility.
Debt Securities - We manage the bond sector so that income is the primary
component of total return. Since the beginning of the year, interest rates have
risen dramatically and investors no longer expect a deflation scenario. Instead,
the fear is that a continuing strong economy will eventually cause inflation to
rise. In fact, the Federal Reserve Board recently increased overnight rates in
order to "cool down" the economy. Because of our income orientation, we have
favored investments in higher yielding instruments such as corporate bonds,
mortgage and asset-backed securities rather than Treasuries. This investment
style hurt us in the fall of 1998 but has now resulted in the bond sector
outperforming Treasuries this year.
TOP 10 EQUITY HOLDINGS
as of June 30, 1999
% of
Net Assets
Bristol-Meyers Squibb Co. 2.4%
Meritor Automotive, Inc. 2.2
American Home Products Corp. 2.1
Bausch & Lomb, Inc. 1.8
GTE Corp. 1.8
PMI Group, Inc. 1.8
Chase Manhattan Corp. 1.7
Intel Corp. 1.7
Sears Roebuck & Co. 1.7
B.F. Goodrich Co. 1.6
TOP 5 DEBT HOLDINGS
as of June 30, 1999
Coupon % of
Rate Net Assets
Giddings and Lewis,
Inc., Notes 7.50% 2.4%
Merry Land &
Investment Co., Notes 7.25 2.4
Newcourt Credit
Group, Inc., Notes 7.13 2.4
Great Atlantic
& Pacific 7.70 2.4
Corporation Andina
de Fomento, Bonds 6.75 2.3
1999 SEMIANNUAL REPORT B-13
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE DIVERSIFIED ASSETS FUND
AN OVERVIEW (Continued) JUNE 30, 1999
PORTFOLIO STRATEGY AND OUTLOOK
Common Stocks - Within the common stock allocation of the USAA Life Diversified
Assets Fund, we have continued to focus on quality companies where earnings
and/or earnings growth potential do not appear to be appropriately valued. Also
within the common stock allocation, we have undertaken a strategy of broadening
our diversification among the various economic sectors. For example, in the
technology sector, we have added some stocks that meet our purchase criteria.
Debt Securities - Since interest rates have increased dramatically, we
purchased a Treasury bond because it became an attractive investment. We also
purchased it for diversification purposes. However, the majority of the assets
in the bond sector will continue to be in corporates, mortgages and asset-backed
securities.
Looking to the future, we feel that the economy will remain strong, which will
result in corporates, mortgages and asset-backed securities increasing in
relative value. We also believe that trying to guess where interest rates are
going is a losing bet. We will continue to invest in securities that have good
risk/reward characteristics.
TOP 10 INDUSTRIES
as of June 30, 1999
% of
Net Assets
Real Estate Investment Trusts 9.2%
Banks - Major Regional 5.9
Health Care - Diversified 4.5
Telephones 4.4
Telecommunications -
Long Distance 3.6
Finance - Diversified 3.5
Manufacturing - Specialized 3.4
Aerospace/Defense 3.0
Machinery - Diversified 2.7
Oil - International Integrated 2.7
B-14 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE AGGRESSIVE GROWTH FUND
AN OVERVIEW JUNE 30, 1999
COMPARISON OF FUND TO BENCHMARK
USAA LIFE AGGRESSIVE RUSSELL 2000(R)
GROWTH FUND INDEX
DATE $17,981 $13,701
==== ==================== ===============
5/1/97 $10,000.00 $10,000.00
May-1997 10,670.00 11,112,00
Jun-1997 11,160.00 11,588.70
Jul-1997 12,060.00 12,127.58
Aug-1997 12,330.00 12,405.30
Sep-1997 13,530.00 13,313.37
Oct-1997 12,640.00 12,728.91
Nov-1997 12,120.00 12,646.17
Dec-1997 11,825.53 12,867.48
Jan-1998 11,855.85 12,664.18
Feb-1998 13,169.80 13,600.06
Mar-1998 13,624.63 14,160.38
Apr-1998 13,877.31 14,238.26
May-1998 12,947.15 13,470.82
Jun-1998 13,531.00 13,499.11
Jul-1998 12,598.89 12,405.68
Aug-1998 9,566.96 9,996.50
Sep-1998 10,652.72 10,779.22
Oct-1998 11,472.16 11,219.02
Nov-1998 12,629.62 11,806.89
Dec-1998 14,207.04 12,537.74
Jan-1999 15,743.49 12,704.49
Feb-1999 14,319.71 11,675.43
Mar-1999 15,477.17 11,857.56
Apr-1999 16,368.31 12,920.00
May-1999 16,063.13 13,108.63
Jun-1999 17,980.81 13,701.14
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
The stock market environment during the six-month period ended June 30, 1999,
did not vary meaningfully from the standard pattern of the past several years.
For the most part, corporate earnings were good. Additionally, the outlook for
economies around the world continued to be satisfactory in the aggregate, with
the U.S. and Europe strong, but possibly decelerating some. Also, Asia showed
initial signs of a gradual recovery from its recent economic and financial
crises. Prospects for an Asian recovery prompted some concern in the investment
community about rising inflation and interest rates, particularly in June, and
helped revive interest in cyclical stocks.
Although this blend of positives and negatives led to day-to-day volatility in
stock prices, the pluses ultimately prevailed, with all major indices higher at
the end of the period than in the beginning. The S&P 500 Index/1/, the Dow Jones
Industrial Average/2/, and the NASDAQ/3/-all of which are large cap centric-were
up by 12.38%, 20.48%, 22.50%, respectively for the six-month period ended June
30, 1999. Once again, small cap benchmarks such as the Russell 2000 Index and
the S&P Small Cap 600 Index/4/ brought up the rear, generating more modest
returns of 5.0% and 1.2%, respectively. This shows investors' continuing
preference for the liquidity and perceived safety of large cap stocks over the
better growth prospects and lower valuations of small cap equities.
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 RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: 26.56%*
One Year: 32.89%
Since Inception
May 1, 1997: 31.10%
* 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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. These NAV total return calculations
represent past performance which is no guarantee of future returns.
1999 SEMIANNUAL REPORT B-15
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE AGGRESSIVE GROWTH FUND
AN OVERVIEW (Continued) JUNE 30, 1999
PERFORMANCE
For the six-month period ended June 30, 1999, the Fund, which was invested
primarily in small to mid cap growth companies, had a total return of 26.56%.
The Fund outperformed all the major market indices mentioned above.
PORTFOLIO STRATEGY
We believe that change is inevitable and central to existence whether it be life
forms, civilizations, governments, social institutions, economic systems, or
businesses. Those entities that embrace change are likely to succeed and thrive
whereas those that resist it are doomed to failure at worst and to extremely
limited prospects at best. With this in mind, we try to identify long-term
social and economic trends that are in their early stages and are potentially
powerful and pervasive. We then aggregate these trends into six overriding
themes - the telecommunications revolution, new computing, new products and
services, the drive for efficiency, changing lifestyles, and consolidation - and
look to invest in companies that are in a good position to benefit from the
changes that lie ahead.
In addition, we focus our investments on companies that are either growing
rapidly or have the potential to do so. We believe that rapid growth is one of
the best ways to build value over the long term. We are willing to pay premium
valuations for the companies in which we invest because we are confident that
the premiums will be paid off handsomely over time. We are firm believers of the
old adage that "you get what you pay for."
Our investments tend to focus on small to mid cap companies because this is
where most of the rapid growth and innovation that we desire is to be found.
Nevertheless, we will also invest in larger companies - Microsoft, Intel, Cisco,
Dell Computers, Clear Channel Communications, Infinity Broadcasting, and Home
Depot, for example - that possess the attributes we seek. We wish to stress that
the USAA Life Aggressive Growth Fund is not synonymous with small to mid cap;
instead, it transcends market capitalization categories.
We have overweighed our investments in the technology and communications areas.
The Internet (Network Solutions, Concentric Network, and STAR
Telecommunications) is rapidly transforming how we communicate, do business, and
live. At the same time, old telecommunications monopolies worldwide are
crumbling in the face of deregulation and competition, as new companies (Global
TeleSytems Group, Global Crossing, Qwest Communications International, Level 3
Communications) rise to provide the internet and other new services that
customers demand. Almost as rapidly as these new companies are being
established, companies within the industry are acquiring one another (Metromedia
Fiber Network/AboveNet Communications, VoiceStream Wireless/ Omnipoint) in order
to position themselves for dominance in the new telecommunications age. All of
this is stimulating huge demand for the networking and data communications
equipment (Cisco Systems, CIENA, Harmonic Lightwaves) that goes into the
telecommunications infrastructure and for the semiconduc-
TOP 10 EQUITY HOLDINGS
as of June 30, 1999
% of
Net Assets
Metromedia Fiber Network,
Inc. "A" 2.5%
IDEC Pharmaceuticals Corp. 2.4
TranSwitch Corp. 2.4
Williams-Sonoma, Inc. 2.2
Knight/Trimark Group, Inc. 1.9
Abercrombie & Fitch Co. "A" 1.5
Network Solutions, Inc. "A" 1.5
Cost Plus, Inc. 1.4
Harmonic Lightwaves, Inc. 1.4
Macrovision Corp. 1.3
B-16 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE AGGRESSIVE GROWTH FUND
AN OVERVIEW (Continued) June 30, 1999
tors (Vitesse Semiconductor, Applied Micro Circuits, Triquint Semiconductor, MMC
Networks) and other components (JDS Fitel) that go into the equipment.
All the companies mentioned here are holdings or recent sales in the Fund and
fit within the six major themes mentioned above. Taken together with our other
positions in the technology and communications areas, they contributed
significantly to our strong relative performance during the six-month period
ended June 30. It is very tempting to further overweight our investments in
these areas, but we refrain from doing so in order to limit risk. We also want
to take advantage of opportunities in other promising industries such as
retailing (Abercrombie & Fitch, 99 Cents Only Stores, Williams-Sonoma),
biotechnology (IDEC Pharmaceuticals, Immunex), health care (Express Scripts),
and financial services (Knight/Trimark Group).
OUTLOOK
Conditions continue to look positive for investors. Worldwide economies,
depending on locale, appear to be good or improving, but not at an explosive
pace. In addition, the outlook for corporate earnings is encouraging. There are
some concerns about inflation and interest rates, but they do not appear strong
enough to offset the positives.
At the same time, stock valuations are very high by many conventional standards,
and are subject to sharp downdrafts in the face of any negative news. Moreover,
from a geopolitical perspective, the world is not a pleasant place. Problems
abound, such as the deepening political partisanship and disenchantment in the
U.S., chronic instability in Russia, the Yugoslav/Kosovo situation, the ongoing
tensions between India and Pakistan over Kashmir, and North Korea's continuing
quarrels with its neighbors. The potential for the eruption of crises that could
undermine investor confidence is substantial.
As always, we counsel investors to expect volatility and to take it in stride.
In the event of a stock market correction, this Fund may be more volatile than
many others due to its large concentration of high valuation and low market
capitalization holdings. However, the long-term fundamentals underlying our
investments appear to be very sound, and, in our opinion, should support
meaningful price appreciation potential for patient, risk-tolerant investors.
/1/ The S&P 500 Index is an unmanaged index representing the weighted average
performance of a group of 500 widely held, publicly traded stocks.
/2/ The Dow Jones Industrial Average is a widely used indicator of the overall
condition of the stock market, a price-weighted average of 30 actively
traded bluechip NYSE stocks, primarily industrials.
/3/ The NASDAQ Composite Index is a market-value weighted index of all common
stocks listed on the NASDAQ system.
/4/ The S&P Small Cap 600 Index is an unmanaged index representing the
weighted average performance of a group of 600 publicly traded small
capitalization stocks.
TOP 10 INDUSTRIES
as of June 30, 1999
% of
Net Assets
Electronics - Semiconductors 9.5%
Telephones 8.7
Internet Services 7.6
Retail - Specialty 6.7
Biotechnology 6.6
Communication Equipment 4.8
Computer Software & Service 4.5
Health Care - Specialized Services 3.6
Telecommunications -
Long Distance 3.5
Equipment - Semiconductors 2.9
1999 SEMIANNUAL REPORT B-17
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
AN OVERVIEW (Continued) June 30, 1999
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 RETURNS
AS OF
JUNE 30, 1999
December 31, 1998
to June 30, 1999: 6.10%*
One Year: -0.78%
Since Inception
May 1, 1997: 5.47%
* 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. It does
not include other associated insurance contract costs. If it did, the
performance quoted above would be lower. More specific information regarding the
Fund expenses and insurance contract costs can be found in the Variable Annuity
and Variable Universal Life prospectuses. 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 USAA LIFE INTERNATIONAL
INDEX - EAFE $12,827 FUND $11,223
====================== =======================
5/1/97 $10,000.00 $10,000.00
05/97 10,651.00 10,300.00
06/97 11,237.87 10,710.00
07/97 11,419.92 11,080.00
08/97 10,566.86 10,470.00
09/97 11,158.60 11,180.00
10/97 10,300.50 10,440.00
11/97 10,195.44 10,110.00
12/97 10,284.14 10,191.92
01/98 10,754.12 10,171.63
02/98 11,444.54 10,830.81
03/98 11,797.03 11,530.56
04/98 11,890.23 11,773.94
05/98 11,831.96 11,585.69
06/98 11,921.89 11,311.78
07/98 12,042.30 11,261.05
08/98 10,550.26 9,404.50
09/98 10,226.36 9,079.86
10/98 11,291.95 9,911.75
11/98 11,870.10 10,175.53
12/98 12,337.78 10,577.39
01/99 12,300.77 10,731.13
02/99 12,008.01 10,351.90
03/99 12,508,74 10,577.39
04/99 13,015.35 11,110.36
05/99 12,345.06 10,823.37
06/99 12,826.51 11,223.10
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 W. Travis Selmier II, Albert Sebastian,
and David G. Peebles
MARKET CONDITIONS
For the six-month period ended June 30, 1999, the Fund's total NAV return was
6.10% as compared to the Lipper Global Funds Average/1/ return of 8.12% and the
Morgan Stanley Capital Index (MSCI)-EAFE return of 3.97%.
EUROPE
Most European equity markets rebounded from last year's declines, but returns
were negatively impacted in 1999 by weak European currencies despite the
introduction of the Euro. Central banks in Europe cut interest rates as economic
growth forecasts were revised downward, primarily because of weakness in the
German and Italian economies. After last year's sell off, cyclical and resource
stocks rebounded based on stronger global economic forecasts and higher energy
prices. In general, the larger European equity market (e.g., United Kingdom)
out-performed the smaller ones (e.g., Portugal, Belgium) throughout the period.
B-18 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
AN OVERVIEW (Continued) June 30, 1999
CANADA AND AUSTRALIA
While we have preferred Canadian to Australian equities, both markets have
rebounded from last year's declines. Our positions in Canada benefited from
higher energy prices, a swing back to cyclical stocks, and a stronger Canadian
dollar. These same factors had negatively impacted the performance of the Fund
in the second half of 1998.
EMERGING MARKETS
Emerging markets have recovered from last year. Asian equities' strong recovery
has been driven by good export growth, the reversal of deflation (reflation) in
many economies, and capital flows into the stock market and acquisitions of
Asian companies. Although Russia's economic and political problems and the
conflict in Kosovo will influence central European and many Mediterranean
markets, these markets look more to the European community for their political
and economic cues. Greece is the best performer in the region. Israel's and
South Africa's economic recovery, export strength, and improving political
prospects have validated our overweight position in those markets. With the
exception of a strong Mexican market, our lower weighting in Latin markets
throughout the last six months was validated by Brazil's forced devaluation of
its currency, the Real, in January.
JAPAN
Since the election last summer, the Japanese political situation has solidified,
more progress has been seen on Japan's banking crisis, and a raft of corporate
restructuring announcements has pushed the market up over the last eight months.
However, we will need to see follow-through on the corporate restructuring
coupled with stimulatory economic policy to push the market higher. Our
technology, telecommunications, and financial equity holdings helped us
outperform the Japanese equity market throughout the period.
TOP 10 EQUITY HOLDINGS
as of June 30, 1999
% of
Net Assets
Nokia Corp. ADR (Finland) 2.4%
Elf Aquitaine ADR (France) 1.9
Novartis AG (Switzerland) 1.7
Canadian National
Railway Co. (Canada) 1.6
Azko Nobel N.V. (Netherlands) 1.5
Telefonica de Espana
S.A. ADR (Spain) 1.5
ING Group N.V. (Netherlands) 1.4
Merita plc "A" (Finland) 1.4
Veba AG (Germany) 1.4
Cookson Group plc
(United Kingdom) 1.3
TOP 10 INDUSTRIES
OF EQUITY HOLDINGS
as of June 30, 1999
% of
Net Assets
Telephones 10.0%
Banks - Major Regional 8.7
Drugs 5.9
Insurance - Multi-Line
Companies 3.9
Oil - International Integrated 3.8
Auto Parts 3.7
Communication Equipment 3.7
Retail - Specialty 3.1
Railroads/Shipping 2.6
Oil & Gas - Exploration &
Production 2.3
1999 SEMIANNUAL REPORT B-19
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
AN OVERVIEW (Continued) June 30, 1999
OUTLOOK
We continue to view Europe positively but have slightly reduced our overweight
position there in favor of other markets. European valuations still look
attractive, and Europe should continue to benefit from merger and acquisition
activity as well as economic recovery in the second half of 1999. Canada should
benefit from higher commodity prices and strong U.S. economic growth. The
Japanese market is likely to be a mixed bag with some sectors doing well. Given
a reflating global economy, emerging markets should continue to perform well.
/1/ The Lipper Global Funds Average is the average performance level of all
global funds, as reported by Lipper Analytical Services, an independent
organization that monitors the performance of mutual funds.
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.
COUNTRY WEIGHTINGS AS A PERCENTAGE OF NET ASSETS
as of June 30, 1999
United Kingdom 15.7%
Japan 9.5%
Netherlands 9.5%
France 8.7%
Canada 7.7%
Finland 5.1%
Switzerland 5.1%
Italy 4.5%
Germany 3.9%
Denmark 3.1%
Sweden 3.1%
Norway 2.6%
Spain 2.6%
Austria 2.4%
Portugal 2.1%
Other* 13.9%
* Countries representing less than 2% of the portfolio and U.S. Government and
Agency Issues.
B-20 SEMIANNUAL REPORT 1999
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Principal Coupon or
Amount Discount Value
(000) Security Rate Maturity (000)
- --------- -------- --------- -------- -------
FIXED RATE INSTRUMENTS (64.9%)
ALUMINUM
$1,000 Aluminum Company of America, CP 5.00% 7/27/1999 $ 996
-------
COMMUNICATION EQUIPMENT
687 Motorola, Inc., CP 4.98 7/30/1999 684
-------
FINANCE - CONSUMER
1,200 American Honda Finance Corp., CP 4.88 7/07/1999 1,199
331 Ford Motor Credit, CP 4.92 7/09/1999 331
900 Ford Motor Credit, CP 5.13 7/15/1999 898
1,206 General Motors Acceptance Corp., CP 4.89 7/20/1999 1,203
1,000 Toyota Motor Credit Corp., CP 4.82 7/01/1999 1,000
-------
4,631
-------
OIL - DOMESTIC INTEGRATED
1,034 Shell Oil Co., CP 4.82 7/12/1999 1,033
-------
TELEPHONES
1,016 Bellsouth Telecommunications Inc., CP 4.82 7/16/1999 1,014
-------
U.S. GOVERNMENT
674 Federal Farm Credit Bank, DN 4.94 8/13/1999 670
1,495 Federal Home Loan Bank, DN 4.91 7/21/1999 1,491
1,059 Federal Home Loan Bank, DN 4.99 7/23/1999 1,056
599 Federal Home Loan Mortgage, DN 4.78 7/08/1999 599
660 Federal Home Loan Mortgage, DN 4.85 7/09/1999 659
501 Federal Home Loan Mortgage, DN 4.76 7/13/1999 500
677 Federal Home Loan Mortgage, DN 4.81 7/14/1999 676
957 Federal Home Loan Mortgage, DN 4.80 7/22/1999 954
758 Federal Home Loan Mortgage, DN 4.93 8/05/1999 754
871 Federal National Mortgage Assn., DN 4.84 7/19/1999 869
1,320 Federal National Mortgage Assn., DN 4.94 8/09/1999 1,313
-------
9,541
-------
Total fixed rate instruments (cost: $17,899) 17,899
-------
VARIABLE RATE DEMAND NOTES (37.9%)
ASSET BACKED SECURITIES
630 Capital One Funding Corp., Notes,
Series 1995C (LOC) 5.18 10/01/2015 630
800 Capital One Funding Corp., Notes,
Series 1996E (LOC) 5.18 7/02/2018 800
-------
1,430
-------
AUTO PARTS
600 Alabama IDA RB (Rehau Project) (LOC) 5.33 10/01/2019 600
750 Bardstown, KY, RB, Series 1994 (LOC) 5.15 6/01/2024 750
-------
1,350
-------
HEALTH CARE - DIVERSIFIED
300 GMS Associates II Project Health Care
RB, Series 1995 (LOC) 5.20 8/15/2025 300
-------
HEALTH CARE - SPECIALIZED SERVICES
900 Mason City Clinic, P.C., Bonds,
Series 1992 (LOC) 5.35% 9/01/2022 900
-------
HOSPITALS
700 Dome Corp., Bonds, Series 1991 (LOC) 5.35 8/31/2016 700
-------
LEISURE TIME
1,000 Fox Valley Ice Arena, RB,
Series 1997 (LOC) 5.27 7/01/2027 1,000
-------
NURSING/CONTINUING CARE CENTERS
800 Assisted Living Funding LLC, Bonds,
Series 1997 (LOC) 5.05 10/01/2017 800
985 Lincolnwood Funding Corp. RB,
Series 1995A (LOC) 5.17 8/01/2015 985
-------
1,785
-------
PAPER & FOREST PRODUCTS
1,000 Bancroft Bag, Inc. Notes,
Series 1998 (LOC) 5.18 11/01/2008 1,000
-------
REAL ESTATE - OTHER
975 H/M Partners, LLC, Bonds (LOC) 5.30 10/01/2020 975
100 MMR Funding I, Notes, Series A (LOC) 5.18 9/01/2010 100
900 Shepherd Capital, LLC, Notes,
Series 1997 (LOC) 5.13 7/15/2047 900
-------
1,975
-------
Total variable rate demand notes (cost: $10,440) 10,440
-------
Total investments (cost: $28,339) $28,339
=======
B-22 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government 34.6%
Finance - Consumer 16.8
Real Estate - Other 7.2
Nursing/Continuing Care
Centers 6.5
Asset Backed Securities 5.2
Auto Parts 4.9
Oil - Domestic Integrated 3.7
Telephones 3.7
Aluminum 3.6
Leisure Time 3.6
Paper & Forest Products 3.6
Health Care - Specialized
Services 3.3
Communication Equipment 2.5
Hospitals 2.5
Health Care - Diversified 1.1
-----
Total 102.8%
=====
See accompanying Notes to Portfolios of Investments on page B-40.
1999 SEMIANNUAL REPORT B-23
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
PREFERRED STOCKS (10.2%)
15,000 Avalon Bay Communities, Inc., "F", 9.00%
cumulative redeemable $ 378
12,000 Duke Realty Investments, Inc. depositary
shares "A", 9.10% cumulative redeemable 307
12,000 Equity Residential Properties Trust depositary
shares "C", 9.125% cumulative redeemable 306
6,000 Post Properties, Inc. "A", 8.50% cumulative
redeemable 295
6,000 Prologis Trust, Inc. "C", 8.54% cumulative
redeemable 266
12,000 Shurgard Storage Centers, Inc. "B", 8.80%
cumulative redeemable 308
12,000 United Dominion Realty Trust, Inc. depositary
shares "A", 9.25% cumulative redeemable 296
-------
Total preferred stocks (cost: $2,198) 2,156
-------
Principal Market
Amount Value
(000) Security (000)
- --------- -------- -------
CORPORATE OBLIGATIONS (15.5%)
$ 300 Caliber Systems, Inc., Notes,
7.80%, 8/01/2006 $ 298
500 Chase Manhattan Corp., Subordinated Notes,
7.13%, 2/01/2007 501
500 Finova Capital Corp., MTN,
6.00%, 1/07/2004 483
500 First Union Corp., Subordinated Notes,
7.50%, 7/15/2006 513
500 Household Finance Corp., Notes,
7.25%, 5/15/2006 501
500 Province of Quebec, Global Debentures,
7.00%, 1/30/2007 499
500 Wells Fargo & Co., Subordinated Notes,
6.88%, 4/01/2006 500
-------
Total corporate obligations (cost: $3,252) 3,295
-------
U.S. GOVERNMENT & AGENCY ISSUES (73.2%)
FEDERAL NATIONAL MORTGAGE ASSN. (5.4%)
1,154 7.00%, 6/01/2024 - 10/01/2026 1,145
-------
GOVERNMENT NATIONAL MORTGAGE ASSN. (43.3%)
8,727 6.00%, 4/15/2028 - 9/15/2028 8,195
1,000 7.00%, 6/15/2029 992
-------
9,187
-------
U.S. TREASURY BONDS (24.5%)
5,877 5.25%, 11/15/2028 5,203
-------
Total U.S. government & agency issues
(cost: $16,373) 15,535
-------
Total investments (cost: $21,823) $20,986
=======
PORTFOLIO SUMMARY BY INDUSTRY
U.S. Government 73.2%
Real Estate Investment Trusts 10.1
Banks - Money Center 4.8
Banks - Major Regional 2.4
Finance - Consumer 2.4
Finance - Diversified 2.3
Foreign Government 2.3
Truckers 1.4
----
Total 98.9%
====
See accompanying Notes to Portfolios of Investments on page B-40.
B-24 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
COMMON STOCKS (98.3%)
AEROSPACE/DEFENSE (2.6%)
31,000 B.F. Goodrich Co. $1,317
20,500 Boeing Co. 906
------
2,223
------
ALUMINUM (2.2%)
30,000 Alcoa, Inc. 1,856
------
AUTOMOBILES (1.4%)
21,000 Ford Motor Co. 1,185
------
AUTO PARTS (2.4%)
16,000 Intermet Corp. 242
35,000 Lear Corp.* 1,741
------
1,983
------
BANKS - MAJOR REGIONAL (1.7%)
15,000 Bank of Boston Corp. 767
18,000 SouthTrust Corp. 691
------
1,458
------
BANKS - MONEY CENTER (2.9%)
16,368 Bank of America Corp. 1,200
14,000 Chase Manhattan Corp. 1,213
------
2,413
------
BEVERAGES - ALCOHOLIC (1.3%)
15,000 Anheuser-Busch Companies, Inc. 1,064
------
BEVERAGES - NONALCOHOLIC (1.5%)
15,500 Coca-Cola Co. 969
12,100 Pepsi Bottling Group, Inc. 279
------
1,248
------
CHEMICALS (1.1%)
9,700 Lyondell Petrochemical Co. 200
30,000 Millennium Chemicals, Inc. 707
------
907
------
CHEMICALS - DIVERSIFIED (0.6%)
7,000 FMC Corp. 478
------
COMMUNICATION EQUIPMENT (1.8%)
22,672 Lucent Technologies, Inc. 1,529
------
COMPUTER - HARDWARE (2.7%)
5,000 Hewlett-Packard Co. 502
13,600 IBM Corp. 1,758
------
2,260
------
COMPUTER - NETWORKING (2.1%)
27,000 Cisco Systems, Inc.* 1,736
------
COMPUTER SOFTWARE & SERVICE (3.3%)
22,000 Microsoft Corp.* 1,984
21,300 Oracle Corp.* 791
------
2,775
------
CONTAINERS - METALS & GLASS (1.3%)
25,500 Ball Corp. 1,077
------
DRUGS (4.6%)
20,000 Merck & Co., Inc. 1,480
6,500 Pfizer, Inc. 713
29,000 Pharmacia & Upjohn, Inc. 1,648
------
3,841
------
ELECTRIC UTILITIES (1.8%)
13,600 PG & E Corp. 442
40,000 Reliant Energy, Inc. 1,105
------
1,547
------
ELECTRICAL EQUIPMENT (2.5%)
12,500 General Electric Co. 1,412
11,900 Rockwell International Corp. 723
------
2,135
------
ELECTRONICS - SEMICONDUCTORS (1.6%)
23,000 Intel Corp. 1,369
------
ENTERTAINMENT (0.8%)
23,000 Walt Disney Co. 709
------
EQUIPMENT - SEMICONDUCTORS (1.5%)
17,000 Applied Materials, Inc.* 1,256
------
FINANCE - CONSUMER (1.3%)
17,000 PMI Group, Inc. 1,068
------
FINANCE - DIVERSIFIED (5.4%)
25,966 Associates First Capital Corp. "A" 1,151
30,000 Citigroup, Inc. 1,425
19,000 Morgan Stanley, Dean Witter, Discover & Co. 1,947
------
4,523
------
FOODS (1.9%)
23,000 Bestfoods 1,138
24,000 Nabisco Group Holding Corp. 470
------
1,608
------
HEALTH CARE - DIVERSIFIED (4.9%)
24,000 American Home Products Corp. 1,380
19,300 Bristol-Myers Squibb Co. 1,360
14,000 Johnson & Johnson, Inc. 1,372
------
4,112
------
HEALTH CARE - HMOS (2.3%)
15,000 Aetna, Inc. 1,342
8,000 Pacificare Health Systems, Inc.* 575
------
1,917
------
HOUSEHOLD PRODUCTS (2.8%)
27,000 Kimberly-Clark Corp. 1,539
9,000 Procter & Gamble Co. 803
------
2,342
------
1999 SEMIANNUAL REPORT B-25
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
INSURANCE - LIFE/HEALTH (0.4%)
11,000 Stancorp Financial Group, Inc.* $ 330
-------
INSURANCE - MULTI-LINE COMPANIES (1.8%)
13,100 American International Group, Inc. 1,534
-------
INSURANCE - PROPERTY/CASUALTY (0.9%)
23,000 Everest Reinsurance Holdings, Inc. 750
-------
LEISURE TIME (1.7%)
51,000 Brunswick Corp. 1,422
-------
MACHINERY - DIVERSIFIED (1.2%)
25,000 Deere & Co. 991
-------
MANUFACTURING - DIVERSIFIED INDUSTRIES (2.3%)
9,000 Eaton Corp. 828
25,500 Hillenbrand Industries, Inc. 1,103
-------
1,931
-------
MANUFACTURING - SPECIALIZED (1.7%)
24,000 Avery Dennison Corp. 1,449
-------
MEDICAL PRODUCTS & SUPPLIES (1.8%)
20,000 Bausch & Lomb, Inc. 1,530
-------
OIL - DOMESTIC INTEGRATED (1.1%)
45,000 Occidental Petroleum Corp. 951
-------
OIL - INTERNATIONAL INTEGRATED (3.1%)
20,000 Royal Dutch Petroleum Co. 1,205
22,000 Texaco, Inc. 1,375
-------
2,580
-------
OIL & GAS - DRILLING/EQUIPMENT (0.9%)
32,000 Helmerich & Payne, Inc. 762
-------
OIL & GAS - EXPLORATION & PRODUCTION (1.8%)
39,000 Apache Corp. 1,521
-------
PAPER & FOREST PRODUCTS (1.5%)
11,000 Jefferson Smurfit Group plc 259
15,000 Weyerhaeuser Co. 1,031
-------
1,290
-------
PHOTOGRAPHY - IMAGING (1.4%)
20,000 Xerox Corp. 1,181
-------
RAILROADS/SHIPPING (1.6%)
44,000 Norfolk Southern Corp. 1,326
-------
RETAIL - DEPARTMENT STORES (1.4%)
25,000 J.C. Penney Company, Inc. 1,214
-------
RETAIL - GENERAL MERCHANDISING (3.1%)
30,000 Sears, Roebuck & Co. 1,337
26,000 Wal-Mart Stores, Inc. 1,254
-------
2,591
-------
SAVINGS & LOAN HOLDING CO. (0.6%)
15,200 Washington Mutual, Inc. 538
-------
SERVICES - DATA PROCESSING (1.5%)
25,000 First Data Corp. 1,223
-------
TELECOMMUNICATIONS - LONG DISTANCE (3.0%)
15,750 AT&T Corp. 879
5,000 MCI Worldcom, Inc.* 430
22,200 Sprint Corp. 1,173
-------
2,482
-------
TELEPHONES (4.4%)
28,000 Bell Atlantic Corp. 1,830
21,000 GTE Corp. 1,591
5,000 SBC Communications Corp. 290
-------
3,711
-------
TOBACCO (0.8%)
16,000 Philip Morris Cos., Inc. 643
-------
Total common stocks (cost: $53,945) 82,569
-------
Principal
Amount
(000)
- ---------
SHORT-TERM (2.0%)
U.S. GOVERNMENT & AGENCY ISSUE
$ 1,682 Federal Home Loan Bank, 4.49%,
7/01/1999 (cost: $1,682) 1,682
-------
Total investments (cost: $55,627) $84,251
=======
See accompanying Notes to Portfolios of Investments on page B-40.
B-26 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
FOREIGN SECURITIES (59.3%)
FOREIGN STOCKS (59.2%)
ARGENTINA (0.2%)
1,502 IRSA Inversiones y Representaciones S.A. GDR $ 46
------
AUSTRALIA (0.1%)
11,000 Cable & Wireless Optus Ltd.* 25
------
AUSTRIA (1.4%)
700 Bank Austria AG 37
2,400 Boehler Uddeholm AG 119
3,250 VA Flughafen Wien AG 136
1,250 VA Technologie AG 113
------
405
------
BRAZIL (0.6%)
1,900 Grupo Pao de Acucar ADR 36
3,400 Panamerican Beverages, Inc. "A" 81
267,000 Petroleo Brasileiro S.A. (Preferred) 41
------
158
------
CANADA (4.7%)
13,900 Anderson Exploration Ltd.* 183
2,500 Canadian Imperial Bank of Commerce 59
4,300 Canadian National Railway Co. 288
11,500 Canadian Occidental Petroleum Ltd. 185
8,300 National Bank of Canada 109
2,400 Nortel Networks Corp. 208
5,300 Suncor Energy, Inc. 218
1,800 Toronto-Dominion Bank 82
------
1,332
------
CHILE (0.1%)
52 Sociedad Quimica y Minera de Chile S.A. ADR "A" 2
900 Sociedad Quimica y Minera de Chile S.A. ADR "B" 32
------
34
------
CHINA (0.3%)
56,000 Cosco Pacific Ltd. 47
25,000 New World Infrastructure Ltd.* 47
------
94
------
DENMARK (1.9%)
1,400 ISS International Service System A/S "B"* 75
7,500 SAS Danmark A/S 78
3,600 Tele Danmark A/S 177
3,000 Unidanmark A/S 199
------
529
------
EGYPT (0.1%)
2,300 Suez Cement Co. S.A.E. GDR 33
------
FINLAND (3.2%)
40,800 Merita plc "A" 232
4,800 Nokia Corp. ADR 439
5,960 Raisio Group plc 55
6,300 Rauma OYJ 75
3,200 Sampo Insurance Co. "A" 93
------
894
------
FRANCE (5.5%)
600 Accor S.A. 151
2,678 CNP Assurances 73
3,800 Coflexip ADR 165
5,100 Elf Aquitaine ADR 375
1,900 Eramet Group 76
315 Essilor International 98
1,040 ISIS S.A. 73
1,600 Louis Dreyfus Citrus 34
2,700 Renault S.A. 118
2,500 Rhone Poulenc S.A. 114
2,614 SEITA 151
1,500 Valeo S.A. 124
------
1,552
------
GERMANY (2.4%)
4,700 Continental AG 111
4,100 Hoechst AG 186
3,700 Merck KGaA 120
4,300 Veba AG 253
------
670
------
GREECE (0.4%)
3,700 Hellenic Telecommunications Organization S.A. (OTE) 79
2,770 National Bank of Greece S.A. GDR 36
------
115
------
HONG KONG (0.1%)
1,500 Asia Satellite Telecommunications Holdings Ltd. ADR 35
------
HUNGARY (0.4%)
1,100 Magyar Tavkozlesi RT. (MATAV) ADR 30
3,900 Mol Magyar Olaj-Es Gazipari GDR 94
------
124
------
INDIA (0.3%)
1,800 Hindalco Industries Ltd. GDR 35
5,000 Videsh Sanchar Nigam Ltd. GDR 64
------
99
------
ISRAEL (0.2%)
12,293 Bank Hapoalim Ltd. 31
1,800 Blue Square - Israel Ltd. ADR 29
------
60
------
ITALY (2.9%)
3,000 ENI S.p.A. ADR 180
2,400 Gucci Group N.V. 168
36,000 Italgas S.p.A. 151
7,400 Telecom Italia S.p.A. Ordinary 77
42,400 Telecom Italia S.p.A. Savings 230
------
806
------
JAPAN (5.8%)
5,000 Daibiru Corp. 37
6,000 Fujitsu Ltd. 121
2,000 Ito-Yokado Co. Ltd. 134
10,000 Kikkoman Corp. 85
5,000 Kirin Brewery Co. Ltd. 60
13,000 Nikko Securities Co. Ltd. 84
46,000 Nippon Steel Corp. 107
14 Nippon Telegraph & Telephone Corp. (NTT) 163
1999 SEMIANNUAL REPORT B-27
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
1 NTT Mobile Communication Network, Inc. $ 13
4 NTT Mobile Communication Network, Inc. (Bonus Shares)* 54
2,000 Paris Miki, Inc. 109
3,000 Sankyo Co. Ltd. 76
19,000 Sharp Corp. 224
1,100 Sony Corp. 119
10,000 Sumitomo Electric Industries, Ltd. 114
18,000 Toshiba Corp. 128
------
1,628
------
KOREA (0.7%)
1,400 Dongwon Securities Co. 26
1,599 Korea Telecom Corp. ADR* 64
865 Samsung Electronics Co. Ltd. 95
------
185
------
MALAYSIA (0.5%)
27,200 Genting Bhd/b/ 93
27,000 Malaysia International Shipping Corp. Bhd/b/ 45
------
138
------
MEXICO (0.5%)
2,891 Desc, Sociedad de Fomento Industrial, S.A. ADR 66
6,000 Tubos de Acero de Mexico, S.A. ADR 65
------
131
------
NETHERLANDS (6.0%)
6,700 Akzo Nobel N.V. 282
4,000 Benckiser N.V. "B" 213
1,400 EVC International N.V. 12
3,800 Fortis NL N.V. 117
5,000 ING Group N.V. 271
4,400 Koninklijke KPN N.V. 206
5,100 Koninklijke Pakhoed N.V. (Certificates) 121
2,300 Koninklijke Philips Electronics N.V. ADR 232
4,100 Oce-van der Grinten N.V. 104
3,500 VNU N.V. 140
------
1,698
------
NORWAY (1.6%)
49,600 Christiania Bank og Kreditkasse 178
5,700 Schibsted ASA 64
21,600 Storebrand ASA* 145
14,100 Tandberg Data ASA* 69
------
456
------
PHILIPPINES (0.2%)
200,000 SM Prime Holdings, Inc. 45
------
POLAND (0.3%)
7,039 Elektrim S.A. 100
------
PORTUGAL (1.4%)
7,996 Banco Pinto & Sotto Mayor S.A. 142
2,100 Brisa-Auto Estradas de Portugal S.A. 87
3,800 Portugal Telecom S.A. ADR 156
------
385
------
RUSSIA (0.1%)
700 LUKoil ADR 29
------
SINGAPORE (0.1%)
8,600 Overseas Union Bank Ltd. 41
------
SOUTH AFRICA (0.4%)
43,000 Sanlam Ltd.* 51
2,889 South African Breweries plc 25
13,000 Standard Bank Investment Corp. Ltd. 43
-------
119
-------
SPAIN (1.7%)
7,976 Argentaria, Caja Postal y Banco Hipotecario de
Espana, S.A. 181
1,997 Telefonica de Espana S.A. ADR* 294
-------
475
-------
SWEDEN (1.9%)
7,000 Autoliv, Inc. GDR 214
3,400 Skandinaviska Enskilda Banken "A" 40
48,200 Swedish Match AB 172
3,800 Volvo AB 110
-------
536
-------
SWITZERLAND (3.1%)
208 Novartis AG 304
400 Selecta Group AG 159
173 Sulzer AG P.C.* 105
460 Swisscom AG 173
1,170 Tag Heuer International S.A. 122
-------
863
-------
TAIWAN (0.2%)
3,923 China Steel Corp. GDR 60
-------
TURKEY (0.1%)
748,080 Yapi Ve Kredi Bankasi A.S. 11
998,464 Yapi Ve Kredi Bankasi A.S. Receipts*,/b/ 14
-------
25
-------
UNITED KINGDOM (9.8%)
2,900 AstraZeneca Group plc 112
11,800 Bank of Scotland 158
57,300 Billiton plc 201
4,200 BOC Group plc 82
6,900 British Telecommunications plc 115
15,000 British-Borneo Oil & Gas plc 46
8,700 Cable & Wireless plc 111
19,200 Cadbury Schweppes 123
10,500 CGU plc 151
78,700 Cookson Group plc 265
57,100 Corporate Services Group plc 76
1,900 Glaxo Wellcome plc ADR 108
10,100 Laporte plc 114
54,100 Medeva plc 88
12,000 National Westminster Bank plc 254
3,200 Powergen plc 34
13,540 Reuters Group plc 178
31,100 Safeway plc 124
45,700 Tomkins plc 198
27,364 WPP Group plc 232
-------
2,770
-------
Total foreign stocks (cost: $12,621) 16,695
-------
B-28 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Principal Market
Amount Value
(000) Security (000)
- --------- -------- -------
FOREIGN BOND (0.1%)
JAPAN (0.1%)
$ 20 MBL International Finance (Bermuda) Trust,
Convertible Notes, 3.00%, 11/30/2002 (cost: $20) $ 22
-------
Total foreign securities (cost: $12,641) 16,717
-------
Number
of Shares
- ---------
DOMESTIC STOCKS (38.4%)
ALUMINUM (0.8%)
3,600 Alcoa, Inc. 223
-------
BANKS - MAJOR REGIONAL (0.5%)
4,000 Mellon Bank Corp. 146
-------
BEVERAGES - NONALCOHOLIC (1.8%)
11,600 Pepsi Bottling Group, Inc. 268
6,000 PepsiCo, Inc. 232
-------
500
-------
BIOTECHNOLOGY (0.6%)
2,600 Amgen, Inc.* 158
-------
BROADCASTING - RADIO & TV (1.3%)
5,300 Clear Channel Communications, Inc.* 365
-------
CHEMICALS - DIVERSIFIED (0.4%)
3,000 Monsanto Co. 118
-------
COMMUNICATION EQUIPMENT (1.2%)
4,792 Lucent Technologies, Inc. 323
-------
COMPUTER - HARDWARE (1.3%)
3,500 Hewlett-Packard Co. 352
-------
COMPUTER - NETWORKING (1.5%)
6,600 Cisco Systems, Inc.* 424
-------
COMPUTER SOFTWARE & SERVICE (4.0%)
3,800 America Online, Inc.* 420
5,800 Microsoft Corp.* 523
5,000 Oracle Corp.* 186
-------
1,129
-------
DRUGS (1.5%)
2,000 Pfizer, Inc. 219
4,000 Schering-Plough Corp. 212
-------
431
-------
ELECTRICAL EQUIPMENT (1.2%)
3,000 General Electric Co. 339
-------
ELECTRONICS - SEMICONDUCTORS (3.6%)
6,000 Analog Devices, Inc.* 301
4,000 Intel Corp. 238
3,300 Texas Instruments, Inc. 479
-------
1,018
-------
ENTERTAINMENT (0.7%)
6,700 Walt Disney Co. 206
-------
EQUIPMENT - SEMICONDUCTORS (1.1%)
4,000 Applied Materials, Inc.* 296
-------
FINANCE - DIVERSIFIED (1.2%)
1,600 Freddie Mac 93
2,400 Morgan Stanley, Dean Witter, Discover & Co. 246
-------
339
-------
FOODS (1.2%)
2,700 Hershey Foods Corp. 161
6,000 Keebler Foods Co.* 182
-------
343
-------
HEALTH CARE - DIVERSIFIED (1.7%)
3,200 Bristol-Myers Squibb Co. 225
2,700 Johnson & Johnson, Inc. 265
-------
490
-------
HOSPITALS (0.1%)
2,200 Lifepoint Hospitals, Inc. 30
-------
HOUSEHOLD PRODUCTS (0.9%)
2,900 Procter & Gamble Co. 259
-------
HOUSEWARES (0.9%)
5,300 Newell Rubbermaid, Inc. 246
-------
INSURANCE - MULTI-LINE COMPANIES (1.0%)
2,375 American International Group, Inc. 278
-------
LEISURE TIME (0.7%)
7,500 Mattel, Inc. 198
-------
MANUFACTURING - SPECIALIZED (0.8%)
3,600 Avery Dennison Corp. 217
-------
MEDICAL PRODUCTS & SUPPLIES (0.9%)
3,200 Medtronic, Inc. 249
-------
OIL & GAS - DRILLING/EQUIPMENT (0.5%)
3,300 Halliburton Co. 149
-------
PERSONAL CARE (1.3%)
6,700 Avon Products, Inc. 372
-------
RETAIL - DRUGS (1.2%)
4,800 CVS Corp. 244
3,400 Duane Reade, Inc.* 104
-------
348
-------
RETAIL - GENERAL MERCHANDISING (1.2%)
5,300 Dayton Hudson Corp. 344
-------
RETAIL - SPECIALTY APPAREL (1.3%)
7,500 Gap, Inc. 378
-------
SERVICES - DATA PROCESSING (1.0%)
5,700 First Data Corp. 279
-------
TELECOMMUNICATIONS - LONG DISTANCE (1.0%)
3,300 MCI Worldcom, Inc.* 284
-------
Total domestic stocks (cost: $5,663) 10,831
-------
Principal
Amount
(000)
- ---------
SHORT-TERM (2.3%)
U.S. GOVERNMENT & AGENCY ISSUE
$ 656 Federal Home Loan Bank, 4.49%,
7/01/1999 (cost: $656) 656
-------
Total investments (cost: $18,960) $28,204
=======
1999 SEMIANNUAL REPORT B-29
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE WORLD GROWTH FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
Telephones 6.4%
Banks - Major Regional 5.8
Drugs 4.8
Electronics - Semiconductors 4.8
Computer Software & Service 4.0
Communication Equipment 3.4
Insurance - Multi-Line Companies 3.4
Oil - International Integrated 2.7
Beverages - Nonalcoholic 2.6
Electrical Equipment 2.4
Auto Parts 2.3
U.S. Government 2.3
Retail - Specialty 1.9
Foods 1.7
Health Care - Diversified 1.7
Household Products 1.7
Finance - Diversified 1.6
Manufacturing - Specialized 1.6
Railroads/Shipping 1.6
Services - Data Processing 1.6
Computer - Networking 1.5
Oil & Gas - Exploration & Production 1.5
Telecommunications - Long Distance 1.5
Chemicals - Specialty 1.4
Oil & Gas - Drilling/Equipment 1.4
Broadcasting - Radio & TV 1.3
Manufacturing - Diversified
Industries 1.3
Personal Care 1.3
Retail - Specialty Apparel 1.3
Computer - Hardware 1.2
Iron & Steel 1.2
Medical Products & Supplies 1.2
Retail - Drugs 1.2
Retail - General Merchandising 1.2
Leisure Time 1.1
Metals/Mining 1.1
Tobacco 1.1
Banks - Money Center 1.0
Electric Utilities 1.0
Equipment - Semiconductors 1.0
Other 16.9
-----
Total 100.0%
=====
See accompanying Notes to Portfolios of Investments on page B-40.
B-30 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE DIVERSIFIED ASSETS FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
BASIC VALUE STOCKS (64.7%)
AEROSPACE/DEFENSE (3.0%)
16,000 B.F. Goodrich Co. $ 680
12,840 Boeing Co. 567
------
1,247
------
ALUMINUM (1.2%)
8,000 Alcoa, Inc. 495
------
AUTOMOBILES (0.8%)
6,000 Ford Motor Co. 339
------
AUTO PARTS (2.2%)
35,000 Meritor Automotive, Inc. 892
------
BANKS - MAJOR REGIONAL (3.6%)
11,000 Fleet Financial Group, Inc. 488
11,000 PNC Bank Corp. 634
10,000 SouthTrust Corp. 384
------
1,506
------
BANKS - MONEY CENTER (1.7%)
8,000 Chase Manhattan Corp. 693
------
BEVERAGES - NONALCOHOLIC (1.1%)
5,000 Coca-Cola Co. 313
7,000 Pepsi Bottling Group, Inc. 161
------
474
------
CHEMICALS (0.7%)
2,500 Lyondell Petrochemical Co. 51
10,000 Millennium Chemicals, Inc. 236
------
287
------
COMPUTER - HARDWARE (1.0%)
4,000 Hewlett-Packard Co. 402
------
COMPUTER SOFTWARE & SERVICE (1.4%)
3,000 Microsoft Corp.* 270
8,400 Oracle Corp.* 312
------
582
------
CONSUMER JEWELRY AND NOVELTIES - MISCELLANEOUS (0.3%)
4,000 American Greetings Corp. "A" 121
------
DRUGS (1.4%)
10,000 Pharmacia & Upjohn, Inc. 568
------
ELECTRIC UTILITIES (0.4%)
6,000 Reliant Energy, Inc. 166
------
ELECTRICAL EQUIPMENT (0.6%)
4,000 Rockwell International Corp. 243
------
ELECTRONICS - SEMICONDUCTORS (1.7%)
12,000 Intel Corp. 714
------
ENTERTAINMENT (0.7%)
10,000 Walt Disney Co. 308
------
EQUIPMENT - SEMICONDUCTORS (1.1%)
6,000 Applied Materials, Inc.* 443
------
FINANCE - CONSUMER (1.8%)
12,000 PMI Group, Inc. 754
------
FINANCE - DIVERSIFIED (1.1%)
10,406 Associates First Capital Corp. "A" 461
------
FOODS (1.7%)
12,000 Nabisco Group Holding Corp. 235
15,000 Ralston Purina Group 456
------
691
------
HEALTH CARE - DIVERSIFIED (4.5%)
15,000 American Home Products Corp. 863
14,000 Bristol-Myers Squibb Co. 986
------
1,849
------
HEALTH CARE - HMOS (0.9%)
4,000 Aetna, Inc. 358
------
HOUSEHOLD PRODUCTS (2.2%)
10,000 Kimberly-Clark Corp. 570
4,000 Procter & Gamble Co. 357
------
927
------
INSURANCE - LIFE/HEALTH (0.3%)
4,000 Stancorp Financial Group, Inc.* 120
------
INSURANCE - MULTI-LINE COMPANIES (0.5%)
2,500 CIGNA Corp. 223
------
INSURANCE - PROPERTY/CASUALTY (0.8%)
9,000 Allstate Corp. 323
------
LEISURE TIME (0.7%)
10,000 Brunswick Corp. 279
------
MACHINERY - DIVERSIFIED (2.7%)
7,000 Caterpillar, Inc. 420
11,000 Deere & Co. 436
3,000 Eaton Corp. 276
------
1,132
------
MANUFACTURING - SPECIALIZED (1.0%)
7,000 Avery Dennison Corp. 423
------
MEDICAL PRODUCTS & SUPPLIES (1.8%)
10,000 Bausch & Lomb, Inc. 765
------
NATURAL GAS UTILITIES (1.3%)
14,000 NICOR, Inc. 533
------
OIL - DOMESTIC INTEGRATED (2.3%)
5,000 Atlantic Richfield Co. 418
26,000 Occidental Petroleum Corp. 549
------
967
------
1999 SEMIANNUAL REPORT B-31
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE DIVERSIFIED ASSETS FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
OIL - INTERNATIONAL INTEGRATED (2.7%)
4,000 Chevron Corp. $ 381
3,000 Mobil Corp. 297
7,000 Texaco, Inc. 437
-------
1,115
-------
OIL & GAS - DRILLING/EQUIPMENT (0.6%)
10,000 Helmerich & Payne, Inc. 238
-------
OIL & GAS - EXPLORATION & PRODUCTION (1.2%)
12,000 Unocal Corp. 476
-------
PAPER & FOREST PRODUCTS (0.2%)
4,000 Jefferson Smurfit Group plc 94
-------
Photography - Imaging (1.0%)
7,000 Xerox Corp. 413
-------
RAILROADS/SHIPPING (1.3%)
18,000 Norfolk Southern Corp. 542
RETAIL - DEPARTMENT STORES (2.1%)
13,000 J.C. Penney Company, Inc. 632
6,000 May Department Stores Co. 245
-------
877
-------
RETAIL - GENERAL MERCHANDISING (1.7%)
16,000 Sears, Roebuck & Co. 713
-------
SAVINGS & LOAN HOLDING CO. (0.4%)
5,200 Washington Mutual, Inc. 184
-------
SERVICES - DATA PROCESSING (1.1%)
9,000 First Data Corp. 440
-------
TELECOMMUNICATIONS - LONG DISTANCE (1.3%)
1,000 MCI Worldcom, Inc.* 86
8,200 Sprint Corp. 433
-------
519
-------
TELEPHONES (4.4%)
8,576 Bell Atlantic Corp. 561
10,000 GTE Corp. 757
9,000 SBC Communications Corp. 522
-------
1,840
-------
TOBACCO (0.2%)
2,500 Philip Morris Cos., Inc. 100
-------
Total basic value stocks (cost: $18,371) 26,836
-------
U.S. GOVERNMENT & AGENCY ISSUES (7.5%)
784 Federal Home Loan Mortgage Corp.,
Series 1998-7 H, 9.00%, 3/18/2025 837
567 Federal National Mortgage Assn.,
Series 1997-72 CA, 9.50%, 9/18/2023 592
629 Federal National Mortgage Assn.,
Series 1997-79 U, 9.00%, 11/18/2024 658
1,000 U.S. Treasury Bonds, 6.25%, 8/15/2023 1,001
-------
Total U.S. government & agency issues (cost: $3,131) 3,088
-------
CORPORATE OBLIGATIONS (23.4%)
ASSET BACKED SECURITIES (2.4%)
1,000 Firstplus Home Loan Owner Trust,
Series 1998-1, Class A-5, 6.25%, 11/10/2016 997
-------
BANKS - MAJOR REGIONAL (2.3%)
1,000 Corporacion Andina de Fomento, Bonds,
6.75%, 3/15/2005 942
-------
FINANCE - DIVERSIFIED (2.4%)
1,000 Newcourt Credit Group, Inc., Bonds,
7.13%, 12/17/2003 993
-------
MANUFACTURING - SPECIALIZED (2.4%)
1,000 Giddings and Lewis, Inc., Notes,
7.50%, 10/01/2005 1,017
-------
REAL ESTATE INVESTMENT TRUSTS (9.2%)
1,000 Glenborough Properties LP, Senior Notes,
7.63%, 3/15/2005 892
1,000 HRPT Property Trust, Senior Notes,
6.70%, 2/23/2005 937
1,000 Merry Land and Investment Co., Notes,
7.25%, 6/15/2005 994
1,000 Nationwide Health Properties, Inc., MTN,
8.61%, 3/01/2002 1,018
-------
3,841
-------
RETAIL - FOOD (2.4%)
1,000 Great Atlantic & Pacific Tea, Inc., Senior Notes,
7.70%, 1/15/2004 986
-------
TELECOMMUNICATIONS - LONG DISTANCE (2.3%)
1,000 AT & T Corp., 6.00%, 3/15/2009 940
-------
Total corporate obligations (cost: $9,986) 9,716
-------
SHORT-TERM (4.1%)
COMMERCIAL PAPER
1,688 MCN Investment Corp., 6.35%,
7/01/1999/a/ (cost: $1,688) 1,688
-------
Total investments (cost: $33,176) $41,328
=======
See accompanying Notes to Portfolios of Investments on page B-40.
B-32 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
--------- -------- -------
COMMON STOCKS (97.2%)
AEROSPACE/DEFENSE (2.4%)
5,000 AAR Corp. $ 113
5,000 Aviation Sales Co.* 197
10,000 HEICO Corp. "A" 242
10,000 TriStar Aerospace Co.* 83
5,000 Triumph Group, Inc.* 128
------
763
------
AIRLINES (0.6%)
5,000 Atlantic Coast Airlines, Inc.* 95
3,000 Midwest Express Holdings, Inc.* 102
------
197
------
BANKS - MAJOR REGIONAL (1.3%)
5,000 Bank United Corp. "A" 201
5,250 Columbia Banking Systems, Inc.* 81
5,000 Hamilton Bancorp, Inc.* 120
------
402
------
BEVERAGES - ALCOHOLIC (1.2%)
7,000 Beringer Wine Estates Holdings, Inc. "B"* 292
4,000 Golden State Vintners, Inc.* 25
2,000 Robert Mondavi Corp. "A"* 73
------
390
------
BIOTECHNOLOGY (6.6%)
5,000 Centocor, Inc.* 233
4,100 Genzyme Corp.* 199
733 Genzyme Surgical Products* 3
10,000 IDEC Pharmaceuticals Corp.* 771
3,000 Immunex Corp.* 382
2,200 Inhale Therapeutic Systems 53
5,200 Med Immune, Inc.* 352
5,000 Techne Corp.* 127
------
2,120
------
BROADCASTING - RADIO & TV (2.2%)
3,700 Clear Channel Communications, Inc.* 255
1,900 Entercom Communications Corp. "A"* 81
3,550 Gray Communications Systems, Inc. "B" 50
4,800 Infinity Broadcasting Corp.* 143
2,700 Univision Communications, Inc. "A"* 178
------
707
------
COMMUNICATION EQUIPMENT (4.8%)
1,600 Advanced Fibre Communications, Inc.* 25
10,000 Brightpoint, Inc.* 61
2,800 CIENA Corp.* 84
4,015 Digital Microwave Corp.* 51
3,300 Ditech Communications Corp.* 66
7,600 Harmonic Lightwaves, Inc.* 436
2,700 Inet Technologies, Inc.* 65
6,300 P-Com, Inc.* 33
5,500 Pairgain Technologies, Inc.* 63
1,400 Ramp Networks, Inc.* 20
4,600 REMEC, Inc.* 74
5,000 Spectrian Corp.* 72
2,100 Tekelec, Inc. 26
3,500 Terayon Communication Systems, Inc.* 196
1,678 Uniphase Corp. 279
------
1,551
------
COMPUTER - HARDWARE (1.7%)
5,000 Dell Computer Corp.* 185
8,100 Sandisk Corp.* 364
------
549
------
COMPUTER - NETWORKING (1.6%)
5,000 3Com Corp.* 133
5,400 Cisco Systems, Inc.* 347
300 Juniper Networks, Inc.* 45
------
525
------
COMPUTER - PERIPHERALS (0.2%)
8,700 HMT Technology Corp.* 22
8,900 Read-Rite Corp.* 55
------
77
------
COMPUTER SOFTWARE & SERVICE (4.5%)
4,200 CBT Group Public Ltd. Co. ADR* 69
4,700 Digital Island, Inc.* 84
2,700 HNC Software, Inc.* 83
5,400 Macrovision Corp.* 404
3,300 Microsoft Corp.* 298
1,700 nFront, Inc.* 26
1,000 Persistence Software, Inc.* 14
6,970 Rational Software Corp.* 230
3,600 ShowCase Corp.* 32
1,100 Software.com, Inc.* 26
6,900 Softworks, Inc.* 76
1,300 TenFold Corp.* 41
5,600 US SEARCH.com, Inc.* 45
------
1,428
------
DISTRIBUTIONS - FOOD/HEALTH (0.4%)
5,000 United Natural Foods, Inc.* 124
------
DRUGS (2.3%)
10,000 Alpharma, Inc. "A" 356
4,000 Elan Corp. plc ADR* 111
1,000 Roberts Pharmaceutical Corp.* 24
3,000 Sepracor, Inc.* 244
------
735
------
ELECTRICAL EQUIPMENT (0.3%)
1,545 Sanmina Corp.* 117
------
ELECTRONICS - SEMICONDUCTORS (9.5%)
2,300 Applied Micro Circuits Corp.* 189
6,300 Genesis Microchip, Inc.* 149
5,000 Intel Corp. 298
3,200 Lattice Semiconductor Corp.* 199
500 Maker Communications, Inc.* 16
4,700 MIPS Technologies, Inc.* 225
5,300 MMC Networks, Inc.* 237
3,000 PLX Technology, Inc.* 142
2,300 Rambus, Inc.* 212
16,200 TranSwitch Corp.* 767
3,700 Triquint Semiconductor, Inc.* 210
5,900 Vitesse Semiconductor Corp.* 398
------
3,042
------
1999 SEMIANNUAL REPORT B-33
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
ENGINEERING & CONSTRUCTION (0.4%)
3,000 Quanta Services, Inc.* $ 132
-------
EQUIPMENT - SEMICONDUCTORS (2.9%)
1,800 Brooks Automation, Inc.* 49
2,100 Cerprobe Corp.* 21
3,000 CFM Technologies, Inc.* 30
4,200 Cymer, Inc.* 105
5,000 Electroglas, Inc.* 100
4,400 Etec Systems, Inc.* 146
5,800 MKS Instruments, Inc.* 108
3,700 Photronics, Inc.* 91
3,100 PRI Automation, Inc.* 112
9,996 SpeedFam-IPEC, Inc.* 161
-------
923
-------
FINANCE - CONSUMER (0.7%)
5,000 NCO Group, Inc.* 190
800 NextCard, Inc.* 27
-------
217
-------
FINANCE - DIVERSIFIED (0.3%)
3,400 Heller Financial, Inc. "A" 95
-------
FOODS (1.4%)
5,000 American Italian Pasta Co. "A"* 152
5,000 Horizon Organic Holding Corp.* 73
5,000 Suiza Foods Corp.* 209
-------
434
-------
HEALTH CARE - DIVERSIFIED (1.1%)
2,500 Accredo Health, Inc.* 82
10,000 ICON plc ADR* 196
3,000 Professional Detailing, Inc.* 71
-------
349
-------
HEALTH CARE - HMOS (1.1%)
6,000 Express Scripts, Inc. "A"* 361
-------
HEALTH CARE - SPECIALIZED SERVICES (3.6%)
5,200 Advance Paradigm, Inc.* 317
2,000 MEDE America Corp.* 76
10,000 Omnicare, Inc. 126
5,100 Orthodontic Centers of America, Inc.* 72
3,500 PAREXEL International Corp.* 47
5,000 Pediatrix Medical Group, Inc.* 106
2,000 Priority Healthcare Corp. "B"* 69
5,000 Renal Care Group, Inc.* 129
5,000 Superior Consultant Holdings Corp.* 123
5,000 Total Renal Care Holdings, Inc.* 78
-------
1,143
-------
HOME FURNISHINGS & APPLIANCES (0.9%)
7,500 Ethan Allen Interiors, Inc. 283
-------
HOSPITALS (0.3%)
4,000 Province Healthcare Co.* 78
-------
INSURANCE - LIFE/HEALTH (0.2%)
2,000 MONY Group, Inc.* 65
-------
INTERNET SERVICES (7.6%)
1,400 24 / 7 Media, Inc.* 54
4,200 AppNet Systems, Inc.* 56
3,000 barnesandnoble.com, Inc.* 54
3,100 CAIS Internet, Inc.* 57
3,000 CareInsite, Inc.* 142
1,700 Cheap Tickets, Inc.* 62
8,000 Concentric Network Corp.* 318
3,400 Digital River, Inc.* 113
2,600 drkoop.com, Inc.* 41
3,000 E-LOAN, Inc.* 116
5,900 EDGAR Online, Inc.* 47
3,000 Entrust Technologies, Inc.* 100
600 eToys, Inc.* 24
800 GoTo.com, Inc.* 22
1,400 High Speed Access Corp.* 36
4,000 iTurf, Inc. "A"* 72
500 Media Metrix, Inc.* 27
2,700 NetGravity, Inc.* 61
6,000 Network Solutions, Inc. "A"* 475
6,100 Preview Travel, Inc.* 134
500 Priceline.com, Inc.* 58
1,000 Stamps.com, Inc.* 17
1,500 StarMedia Network, Inc.* 96
6,900 Student Advantage, Inc.* 66
5,800 USWeb Corp.* 129
1,100 Ziff-Davis, Inc.* 29
3,200 ZipLink, Inc.* 40
-------
2,446
-------
INVESTMENT BANKS / BROKERAGE (2.3%)
5,000 DLJdirect, Inc.* 148
10,000 Knight/Trimark Group, Inc.* 603
-------
751
-------
LODGING/HOTEL (0.8%)
5,000 Four Seasons Hotels, Inc. 221
5,000 ResortQuest International, Inc.* 41
-------
262
-------
MEDICAL PRODUCTS & SUPPLIES (0.9%)
4,000 Henry Schein, Inc.* 127
4,000 Serologicals Corp.* 32
5,000 Sybron Corp.* 138
-------
297
-------
NURSING CARE (0.4%)
4,000 Sunrise Assisted Living, Inc.* 139
-------
OIL & GAS - DRILLING/EQUIPMENT (1.1%)
2,000 Cooper Cameron Corp.* 74
5,000 Petroleum Geo-Services ADR* 75
3,000 Smith International Inc.* 130
1,800 Weatherford International, Inc.* 66
-------
345
-------
PERSONAL CARE (1.5%)
6,000 Chattem, Inc.* 191
6,000 Estee Lauder Companies, Inc. "A" 301
-------
492
-------
B-34 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
RAILROADS/SHIPPING (0.3%)
6,000 MotivePower Industries, Inc.* $ 108
-------
RESTAURANTS (1.7%)
10,000 Dave & Buster's, Inc.* 290
1,400 P. F. Chang's China Bistro, Inc.* 30
5,000 Papa John's International, Inc.* 224
-------
544
-------
RETAIL - BUILDING SUPPLIES (0.8%)
3,000 Fastenal Co. 157
1,300 Home Depot, Inc. 84
-------
241
-------
RETAIL - DISCOUNTERS (0.8%)
6,000 Dollar Tree Stores, Inc.* 264
-------
RETAIL - FOOD (0.4%)
4,000 Wild Oats Markets, Inc.* 121
-------
RETAIL - SPECIALTY (6.7%)
7,000 99 Cents Only Stores* 349
10,000 Abercrombie & Fitch Co. "A"* 480
9,600 Cost Plus, Inc.* 437
4,000 Hibbett Sporting Goods, Inc.* 88
1,000 Pantry, Inc.* 16
2,000 Tuesday Morning Corp.* 51
20,000 Williams-Sonoma, Inc.* 696
1,400 Zany Brainy, Inc.* 14
-------
2,131
-------
RETAIL - SPECIALTY APPAREL (0.2%)
5,000 Delia's, Inc.* 68
-------
SERVICES - COMMERCIAL & CONSUMER (1.3%)
5,000 Barra, Inc.* 126
1,900 CyBear, Inc.* 26
5,400 Heidrick & Struggles International, Inc.* 103
5,000 MSC Industrial Direct Co. "A"* 51
6,300 Nextera Enterprises, Inc. "A"* 41
5,000 Stewart Enterprises, Inc. "A" 73
-------
420
-------
SERVICES - COMPUTER SYSTEMS (0.5%)
3,000 Flextronics International Ltd.* 166
-------
SERVICES - DATA PROCESSING (0.4%)
3,000 MedQuist, Inc.* 131
-------
SERVICES - FACILITIES & ENVIRONMENT (0.1%)
375 Tetra Tech, Inc. 6
-------
TELECOMMUNICATIONS - CELLULAR/WIRELESS (2.1%)
2,900 Crown Castle International Corp.* 60
7,600 Microcell Telecommunications, Inc. "B"* 59
3,100 Pinnacle Holdings, Inc.* 76
3,300 Powertel, Inc.* 99
7,000 VoiceStream Wireless Corp.* 199
7,000 Western Wireless Corp. "A"* 189
-------
682
-------
TELECOMMUNICATIONS - LONG DISTANCE (3.5%)
2,900 CapRock Communications Corp.* 117
3,000 Global Crossing Ltd.* 128
5,200 IDT Corp.* 116
7,300 ITC DeltaCom, Inc.* 204
1,900 IXC Communications, Inc.* 75
1,600 Level 3 Communications, Inc.* 96
1,700 Pacific Gateway Exchange, Inc.* 50
5,200 Qwest Communications International, Inc.* 172
4,100 RSL Communications Ltd. "A"* 79
3,995 STAR Telecommunications, Inc.* 31
3,100 Startec Global Communications Corp.* 38
-------
1,106
-------
TELEPHONES (8.7%)
3,900 AT & T Canada, Inc. "B"* 250
1,650 Covad Communications Group, Inc.* 88
4,400 e.spire Communications, Inc.* 46
4,400 Electric Lightwave, Inc. "A"* 57
2,500 Global TeleSystems Group, Inc.* 202
5,000 GST Telecommunications, Inc.* 66
4,700 Hyperion Telecommunications, Inc. "A"* 88
2,200 ICG Communications, Inc.* 47
3,800 Intermedia Communications of Florida, Inc.* 114
1,900 McLeod, Inc.* 105
22,200 Metromedia Fiber Network, Inc. "A"* 798
4,100 Network Access Solutions Corp.* 55
2,800 Network Plus Corp.* 45
3,000 NEXTLINK Communications, Inc. "A"* 223
8,700 Northeast Optic Network, Inc.* 131
1,700 NorthPoint Communications Group, Inc.* 62
1,500 Rhythms NetConnections, Inc.* 88
2,900 Teligent, Inc. "A"* 173
1,500 Time Warner Telecom, Inc. "A"* 44
2,500 Winstar Communications, Inc.* 122
-------
2,804
-------
TEXTILES - APPAREL (0.9%)
5,000 Columbia Sportswear Co.* 77
3,000 Cutter & Buck, Inc.* 51
2,300 Tommy Hilfiger Corp.* 169
-------
297
-------
TRUCKERS (0.4%)
5,000 Forward Air Corp.* 141
-------
WASTE MANAGEMENT (1.3%)
5,000 U. S. Liquids, Inc.* 104
10,000 Waste Connections, Inc.* 305
-------
409
-------
Total common stocks (cost: $18,857) 31,178
-------
Principal
Amount
(000)
- ----------
SHORT-TERM (3.4%)
U.S. GOVERNMENT & AGENCY ISSUE
$ 1,098 Federal Home Loan Bank, 4.49%, 7/01/1999
(cost: $1,098) 1,098
-------
Total investments (cost: $19,955) $32,276
=======
1999 SEMIANNUAL REPORT B-35
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
STOCKS (94.7%)
ARGENTINA (0.2%)
1,864 IRSA Inversiones y Representaciones S.A. GDR $ 58
--------
AUSTRALIA (0.1%)
13,500 Cable & Wireless Optus Ltd. * 31
--------
AUSTRIA (2.4%)
900 Bank Austria AG 48
3,300 Boehler Uddeholm AG 163
4,250 VA Flughafen Wien AG 178
1,850 VA Technologie AG 168
--------
557
--------
BRAZIL (0.6%)
2,400 Grupo Pao de Acucar ADR 45
4,400 Panamerican Beverages, Inc. "A" 105
--------
150
--------
CANADA (7.7%)
19,400 Anderson Exploration Ltd. * 255
3,600 Canadian Imperial Bank of Commerce 86
5,700 Canadian National Railway Co. 382
14,300 Canadian Occidental Petroleum Ltd. 231
11,100 National Bank of Canada 145
3,500 Nortel Networks Corp. 304
7,300 Suncor Energy, Inc. 300
2,500 Toronto-Dominion Bank 113
--------
1,816
--------
CHILE (0.2%)
57 Sociedad Quimica y Minera de Chile S.A. ADR "A" 2
1,000 Sociedad Quimica y Minera de Chile S.A. ADR "B" 35
--------
37
--------
CHINA (0.6%)
75,000 Cosco Pacific Ltd. 62
38,000 New World Infrastructure Ltd. * 72
--------
134
--------
DENMARK (3.1%)
1,900 ISS International Service System A/S "B"* 101
10,000 SAS Danmark A/S 104
5,400 Tele Danmark A/S 265
4,100 Unidanmark A/S 273
--------
743
--------
EGYPT (0.1%)
2,500 Suez Cement Co. S.A.E. GDR 36
--------
FINLAND (5.1%)
57,500 Merita plc "A" 326
6,300 Nokia Corp. ADR 577
5,900 Raisio Group plc 55
8,600 Rauma OYJ 102
4,800 Sampo Insurance Co. "A" 139
--------
1,199
--------
FRANCE (8.7%)
900 Accor S.A. 226
3,640 CNP Assurances 99
5,000 Coflexip ADR 217
6,200 Elf Aquitaine ADR 456
2,500 Eramet Group 100
500 Essilor International 156
1,360 ISIS S.A. 96
2,000 Louis Dreyfus Citrus 43
3,300 Renault S.A. 144
3,400 Rhone Poulenc S.A. 155
3,600 SEITA 208
1,900 Valeo S.A. 157
--------
2,057
--------
GERMANY (3.9%)
6,200 Continental AG 147
5,800 Hoechst AG 263
5,500 Merck KGaA 179
5,500 Veba AG 323
--------
912
--------
GREECE (0.7%)
5,500 Hellenic Telecommunications Organization S.A. (OTE) 118
4,005 National Bank of Greece S.A. GDR 51
--------
169
--------
HONG KONG (0.2%)
1,700 Asia Satellite Telecommunications Holdings Ltd. ADR 39
HUNGARY (0.6%)
1,800 Magyar Tavkozlesi RT. (MATAV) ADR 50
4,100 Mol Magyar Olaj-Es Gazipari GDR 98
--------
148
--------
INDIA (0.5%)
2,400 Hindalco Industries Ltd. GDR 47
5,500 Videsh Sanchar Nigam Ltd. GDR 70
--------
117
--------
ISRAEL (0.4%)
18,000 Bank Hapoalim Ltd. 46
2,400 Blue Square - Israel Ltd. ADR 38
--------
84
--------
B-36 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- -------
ITALY (4.5%)
4,000 ENI S.p.A. ADR $ 240
2,900 Gucci Group N.V. 203
51,000 Italgas S.p.A. 214
9,400 Telecom Italia S.p.A. Ordinary 98
54,700 Telecom Italia S.p.A. Savings 296
--------
1,051
--------
JAPAN (9.5%)
6,000 Daibiru Corp. 44
8,000 Fujitsu Ltd. 161
2,000 Ito-Yokado Co. Ltd. 134
17,000 Kikkoman Corp. 144
7,000 Kirin Brewery Co. Ltd. 84
20,000 Nikko Securities Co. Ltd. 129
62,000 Nippon Steel Corp. 144
13 Nippon Telegraph & Telephone Corp. (NTT) 151
2 NTT Mobile Communication Network, Inc. 27
8 NTT Mobile Communication Network, Inc. (Bonus Shares)* 108
4,000 Ono Pharmaceutical Co. Ltd. 139
3,000 Paris Miki, Inc. 164
3,000 Sankyo Co. Ltd. 76
23,000 Sharp Corp. 272
1,500 Sony Corp. 162
13,000 Sumitomo Electric Industries, Ltd. 148
23,000 Toshiba Corp. 164
--------
2,251
--------
KOREA (1.1%)
2,000 Dongwon Securities Co. 37
2,512 Korea Telecom Corp. ADR* 100
1,190 Samsung Electronics Co. Ltd. 131
--------
268
--------
MALAYSIA (0.7%)
28,000 Genting Bhd/b/ 96
37,000 Malaysia International Shipping Corp. Bhd/b/ 61
--------
157
--------
MEXICO (0.7%)
3,600 Desc, Sociedad de Fomento Industrial, S.A. ADR 82
7,300 Tubos de Acero de Mexico, S.A. ADR 79
--------
161
--------
NETHERLANDS (9.5%)
8,400 Akzo Nobel N.V. 353
5,500 Benckiser N.V. "B" 293
1,900 EVC International N.V. 16
5,200 Fortis NL N.V. 161
6,100 ING Group N.V. 330
6,400 Koninklijke KPN N.V. 300
7,100 Koninklijke Pakhoed N.V. (Certificates) 168
2,944 Koninklijke Philips Electronics N.V. ADR 297
5,600 Oce-van der Grinten N.V. 143
4,500 VNU N.V. 180
--------
2,241
--------
NORWAY (2.6%)
69,000 Christiania Bank og Kreditkasse 248
7,100 Schibsted ASA 80
28,900 Storebrand ASA* 194
17,400 Tandberg Data ASA* 85
--------
607
--------
PHILIPPINES (0.3%)
280,000 SM Prime Holdings, Inc. 63
--------
POLAND (0.5%)
8,300 Elektrim S.A. 117
--------
PORTUGAL (2.1%)
10,300 Banco Pinto & Sotto Mayor S.A. 183
2,700 Brisa-Auto Estradas de Portugal S.A. 111
5,000 Portugal Telecom S.A. ADR 206
--------
500
--------
RUSSIA (0.1%)
900 LUKoil ADR 37
--------
SINGAPORE (0.2%)
11,900 Overseas Union Bank Ltd. 57
--------
SOUTH AFRICA (0.7%)
64,300 Sanlam Ltd.* 76
3,508 South African Breweries plc 30
18,000 Standard Bank Investment Corp. Ltd. 60
--------
166
--------
SPAIN (2.6%)
11,764 Argentaria, Caja Postal y Banco Hipotecario de Espana, S.A. 268
2,392 Telefonica de Espana S.A. ADR* 352
--------
620
--------
SWEDEN (3.1%)
9,700 Autoliv, Inc. GDR 296
4,700 Skandinaviska Enskilda Banken "A" 55
65,000 Swedish Match AB 232
4,900 Volvo AB 142
--------
725
--------
1999 SEMIANNUAL REPORT B-37
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
Market
Number Value
of Shares Security (000)
- --------- -------- ------
SWITZERLAND (5.1%)
275 Novartis AG $ 401
600 Selecta Group AG 239
213 Sulzer AG P.C. * 130
640 Swisscom AG 241
1,900 Tag Heuer International S.A. 198
------
1,209
------
TAIWAN (0.4%)
5,775 China Steel Corp. GDR 88
------
TURKEY (0.2%)
852,458 Yapi Ve Kredi Bankasi A.S. 12
1,721,966 Yapi Ve Kredi Bankasi A.S. Receipts *,b 25
------
37
------
UNITED KINGDOM (15.7%)
4,100 AstraZeneca Group plc 158
18,400 Bank of Scotland 246
70,700 Billiton plc 247
6,100 BOC Group plc 119
8,700 British Telecommunications plc 146
20,300 British-Borneo Oil & Gas plc 63
12,600 Cable & Wireless plc 161
28,200 Cadbury Schweppes 180
15,900 CGU plc 229
93,000 Cookson Group plc 314
77,500 Corporate Services Group plc 103
2,800 Glaxo Wellcome plc ADR 159
12,500 Laporte plc 141
73,800 Medeva plc 120
14,200 National Westminster Bank plc 301
3,900 Powergen plc 42
17,520 Reuters Group plc 230
41,000 Safeway plc 163
62,200 Tomkins plc 270
35,611 WPP Group plc 301
-------
3,693
-------
Total stocks (cost: $20,294) 22,335
-------
Principal
Amount
(000)
- ---------
SHORT-TERM (4.8%)
U.S. GOVERNMENT & AGENCY ISSUE
$ 1,127 Federal Home Loan Bank, 4.49%, 7/01/99
(cost: $1,127) 1,127
-------
Total investments (cost: $21,421) $23,462
=======
B-38 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1999 (Unaudited)
PORTFOLIO SUMMARY BY INDUSTRY
Telephones 10.0%
Banks - Major Regional 8.7
Drugs 5.9
U.S. Government 4.8
Insurance - Multi-Line Companies 3.9
Oil - International Integrated 3.8
Auto Parts 3.7
Communication Equipment 3.7
Retail - Specialty 3.1
Railroads/Shipping 2.6
Oil & Gas - Exploration & Production 2.3
Chemicals - Specialty 2.1
Iron & Steel 2.0
Electrical Equipment 1.9
Electronics - Semiconductors 1.9
Manufacturing - Diversified Industries 1.9
Tobacco 1.9
Banks - Money Center 1.6
Metals/Mining 1.6
Electric Utilities 1.5
Beverages - Nonalcoholic 1.4
Advertising/Marketing 1.3
Oil & Gas - Drilling/Equipment 1.3
Automobiles 1.2
Chemicals 1.2
Household Products 1.2
Investment Banks / Brokerage 1.2
Manufacturing - Specialized 1.2
Services - Facilities & Environment 1.2
Engineering & Construction 1.0
Lodging/Hotel 1.0
Oil - Domestic Integrated 1.0
Retail - Food 1.0
Services - Data Processing 1.0
Other 14.4
----
Total 99.5%
====
See Accompanying Notes To Portfolios of Investments on page B-40
1999 SEMIANNUAL REPORT B-39
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIOS OF INVESTMENTS
June 30, 1999 (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, 1999, investments in foreign securities were 1.7% of the net assets
of the USAA Life Growth & Income Fund, 1.7% of the net assets of the USAA Life
Diversified Assets Fund, and 5.2% of the net assets of the USAA Life Aggressive
Growth Fund.
ADR - American Depositary Receipts are receipts issued by a U.S. bank evidencing
ownership of foreign shares. Dividends are paid in U.S. dollars.
GDR - Global Depositary Receipts are receipts issued by a U.S. or foreign bank
evidencing ownership of foreign shares. Dividends are paid in U.S. dollars.
SPECIFIC NOTES
(a) 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 Trust's investment
adviser under the general supervision of the Board of Trustees. At June 30,
1999, these securities represented .54% and .77% 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
DN Discount Note
IDA Industrial Development
Authority/Agency
LLC Limited Liability Company
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 yield is constant to maturity. Prior to maturity, the
market price of a fixed-rate instrument generally varies inversely to the
movement of interest rates.
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 of these instruments is deemed to be less than 397 days in
accordance with detailed regulatory requirements.
CREDIT ENHANCEMENT - 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.
The USAA Life Money Market Fund's investments consist of securities meeting the
requirements to qualify as "eligible securities" under the Securities and
Exchange Commission (SEC) rules applicable to money market funds. The Manager
attempts to minimize credit risk in the USAA Life Money Market Fund through
rigorous internal credit research and by investing in securities rated in one of
the two highest categories for short-term securities, or, if not rated, of
comparable quality, at the time of purchase.
(LOC)- Enhanced by a bank letter of credit.
See accompanying Notes to Financial Statements on page B-46.
B-40 SEMIANNUAL REPORT 1999
<PAGE>
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, Except Per Share Data) June 30, 1999 (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
$28,339, $21,823, $55,627,
$18,960, $33,176, $19,955 and
$21,421, respectively) $28,339 $20,986 $84,251 $28,204 $41,328 $32,276 $23,462
Cash 83 79 - 1 - 1 -
Cash denominated in foreign
currencies (identified cost
of $54 and $108, respectively) - - - 51 - - 105
Receivables:
Capital shares sold - - - 11 4 30 -
Dividends and interest 43 188 101 63 255 1 72
Securities sold - - 157 52 49 63 86
------- ------- ------- ------- ------- ------- -------
Total assets 28,465 21,253 84,509 28,382 41,636 32,371 23,725
------- ------- ------- ------- ------- ------- -------
LIABILITIES
Securities purchased - - 332 134 124 226 72
Capital shares redeemed 873 14 100 - - - 1
Accrued advisory fees - - 65 14 11 26 48
Accrued administrative fees 6 3 6 6 6 6 6
Accounts payable and accrued expenses 29 14 24 23 20 22 22
------- ------- ------- ------- ------- ------- -------
Total liabilities 908 31 527 177 161 280 149
------- ------- ------- ------- ------- ------- -------
Net assets applicable to
capital shares outstanding 27,557 $21,222 $83,982 $28,205 $41,475 $32,091 $23,576
======= ======= ======= ======= ======= ======= =======
REPRESENTED BY:
Paid-in capital $27,557 $20,654 $49,116 $15,045 $27,775 $16,359 $22,032
Accumulated undistributed net
investment income (loss) - 857 536 179 691 (61) 194
Accumulated net realized gain
(loss) on investments - 548 5,706 3,741 4,857 3,472 (687)
Net unrealized appreciation/
depreciation of investments - (837) 28,624 9,244 8,152 12,321 2,041
Net unrealized depreciation
on foreign currency translations - - - (4) - - (4)
------- ------- ------- ------- ------- ------- -------
Net assets applicable to
capital shares outstanding $27,557 $21,222 $83,982 $28,205 $41,475 $32,091 $23,576
======= ======= ======= ======= ======= ======= =======
Capital shares outstanding,
unlimited number of shares
authorized, no par value 27,557 2,023 3,982 1,778 2,664 1,840 2,153
======= ======= ======= ======= ======= ======= =======
Net asset value, redemption
price, and offering price
per share $ 1.00 $ 10.49 $ 21.09 $ 15.86 $ 15.57 $ 17.44 $ 10.95
======= ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements on page B-46.
B-42 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(In Thousands) Six-month period ended June 30, 1999 (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>
NET INVESTMENT INCOME (LOSS):
Income:
Dividends (net of foreign taxes
withheld of $0, $0, $3, $33,
$0, $0 and $45, respectively) $ - $ 94 $ 641 $ 257 $ 264 $ 6 $ 294
Interest 672 823 33 22 489 27 26
---- ------- ------- ------- ------- ------- -------
Total income 672 917 674 279 753 33 320
---- ------- ------- ------- ------- ------- -------
Expenses:
Advisory fees 27 27 83 29 40 67 73
Administrative fees 19 19 19 19 19 19 19
Custodian's fees 11 16 25 38 20 29 36
Shareholder reporting fees 1 1 5 1 2 1 -
Trustees' fees 2 2 2 2 2 2 2
Professional fees 17 17 17 17 17 17 17
Other 1 - 1 1 - - 1
---- ------- ------- ------- ------- ------- -------
Total expenses before
reimbursement 78 82 152 107 100 135 148
Expenses reimbursed (30) (35) (6) (13) (29) (41) (25)
---- ------- ------- ------- ------- ------- -------
Total expenses after
reimbursement 48 47 146 94 71 94 123
---- ------- ------- ------- ------- ------- -------
Net investment income (loss) 624 870 528 185 682 (61) 197
---- ------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY:
Net realized gain (loss) on:
Investments - 535 5,755 3,922 4,866 3,513 489
Foreign currency transactions - - - (6) - - (3)
Change in net unrealized
appreciation/depreciation of:
Investments - (2,186) 6,347 (1,316) (1,738) 3,348 667
Foreign currency translations - - - (6) - - (5)
---- ------- ------- ------- ------- ------- -------
Net realized and
unrealized gain (loss) - (1,651) 12,102 2,594 3,128 6,861 1,148
---- ------- ------- ------- ------- ------- -------
Increase (decrease) in net
assets resulting from operations $624 $ (781) $12,630 $ 2,779 $ 3,810 $6,800 $1,345
==== ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements on page B-46
1999 SEMIANNUAL REPORT B-43
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(In Thousands) Six-month period ended June 30, 1999 and
Year ended December 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life
Money Market Fund Income Fund Growth and Income Fund
-------------------- -------------------- --------------------
6/30/99 12/31/98 6/30/99 12/31/98 6/30/99 12/31/98
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 624 $ 943 $ 870 $ 2,263 $ 528 $ 1,504
Net realized gain (loss) on:
Investments - - 535 1,473 5,755 3,229
Foreign currency transactions - - - - - -
Change in net unrealized appreciation/depreciation of:
Investments - - (2,186) (739) 6,347 712
Foreign currency translations - - - - - -
--------- -------- --------- --------- --------- --------
Increase (decrease) in net assets resulting
from operations 624 943 (781) 2,997 12,630 5,445
--------- -------- --------- --------- --------- --------
Distributions to shareholders from:
Net investment income (624) (943) (47) (2,261) (22) (1,504)
--------- -------- --------- --------- --------- --------
Net realized gains - - (5) (1,437) (287) (4,221)
--------- -------- --------- --------- --------- --------
From capital share transactions:
Proceeds from shares sold 25,934 31,712 5,743 13,641 4,072 17,540
Shares issued for dividends reinvested 624 943 51 3,698 309 5,725
Cost of shares redeemed (21,112) (25,675) (24,988) (3,635) (33,158) (8,297)
--------- -------- --------- --------- --------- --------
Increase (decrease) in net assets from
capital share transactions 5,446 6,980 (19,194) 13,704 (28,777) 14,968
--------- -------- --------- --------- --------- --------
Net increase (decrease) in net assets 5,446 6,980 (20,027) 13,003 (16,456) 14.688
Net assets:
Beginning of period 22,111 15,131 41,249 28,246 100,438 85,750
--------- -------- --------- --------- --------- --------
End of period $ 27,557 $ 22,111 $ 21,222 $ 41,249 $ 83,982 $100,438
========= ======== ========= ========= ========= ========
Accumulated undistributed net investment income (loss):
End of period $ - $ - $ 857 $ 34 $ 536 $ 30
========= ======== ========= ========= ========= ========
Change in shares outstanding:
Shares sold 25,934 31,712 532 1,185 208 918
Shares issued for dividends reinvested 624 943 5 339 15 310
Shares redeemed (21,112) (25,675) (2,300) (316) (1,776) (462)
--------- -------- --------- --------- --------- --------
Increase (decrease) in shares outstanding 5,446 6,980 (1,763) 1,208 (1,553) 766
========= ======== ========= ========= ========= ========
</TABLE>
See accompanying Notes to Financial Statements on page B-46.
B-44 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(In Thousands) Six-month period ended June 30, 1999 and
Year ended December 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life USAA Life
World Growth Fund Diversified Assets Fund Aggressive Growth Fund International Fund
- ----------------------- ------------------------ ------------------------ ------------------------
6/30/99 12/31/98 6/30/99 12/31/98 6/30/99 12/31/98 6/30/99 12/31/98
- -------- -------- -------- --------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 185 $ 453 $ 682 $ 2,072 $ (61) $ (175) $ 197 $ 232
3,922 706 4,866 3,572 3,513 150 489 (1,157)
(6) (17) - - - - (3) (14)
(1,316) 3,082 (1,738) (788) 3,348 4,896 667 1,702
(6) 11 - - - - (5) 8
- -------- ------- -------- --------- ------- -------- -------- ---------
2,779 4,235 3,810 4,856 6,800 4,871 1,345 771
- -------- ------- -------- --------- ------- -------- -------- ---------
(27) (453) (14) (2,080) - - - (225)
- -------- ------- -------- --------- ------- -------- -------- ---------
- (973) (2,618) (981) (191) (645) - (10)
- -------- ------- -------- --------- ------- -------- -------- ---------
820 2,169 5,611 10,152 2,328 3,262 401 754
27 1,426 2,632 3,061 191 645 - 235
(17,474) (3,834) (28,516) (2,650) (6,238) (21,477) (396) (881)
- -------- ------- -------- --------- ------- -------- -------- ---------
(16,627) (239) (20,273) 10,563 (3,719) (17,570) 5 108
- -------- ------- -------- --------- ------- -------- -------- ---------
(13,875) 2,570 (19,095) 12,358 2,890 (13,344) 1,350 644
42,080 39,510 60,570 48,212 29,201 42,545 22,226 21,582
- -------- ------- -------- --------- ------- -------- -------- ---------
$ 28,205 $42,080 $ 41,475 $60,570 $32,091 $ 29,201 $23,576 $22,226
======== ======= ======== ========= ======= ======== ======== =========
$ 179 $ 27 $ 691 $ 26 $ (61) $ - $ 194 $ -
======== ======= ======== ========= ======= ======== ======== =========
55 147 363 663 151 271 38 69
2 99 170 203 12 49 - 23
(1,207) (280) (1,889) (175) (428) (1,854) (38) (87)
- -------- ------- -------- --------- ------- -------- -------- ---------
(1,150) (34) (1,356) 691 (265) (1,534) - 5
======== ======= ======== ========= ======= ======== ======== =========
</TABLE>
1999 SEMIANNUAL REPORT B-45
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (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 and have 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 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 equity securities.
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 their potential return, 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 Accounts of USAA
Life Insurance Company (the Separate Accounts) to serve as the funding medium
for certain variable annuity contracts and variable universal life insurance
policies 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 under 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 adviser 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
Accounts and USAA Life. Therefore, no federal income or excise tax provision is
required. As a result of certain permanent differences between book and tax
basis accounting, reclassifications have been made on the statement of assets
and liabilities of the USAA Life Diversified Assets Fund to increase paid-in
capital and decrease accumulated undistributed net investment income by $3,000
and on the statement of assets and liabilities of the USAA Life Aggressive
Growth Fund to increase paid-in capital and to decrease accumulated net realized
gain on investments by $3,000.
B-46 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (Unaudited)
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,
USAA Life Aggressive Growth, and USAA Life International Funds may be invested
in the securities of foreign issuers and may be traded in a foreign currency.
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,
from currency gains/losses realized between the trade and settlement dates on
security transactions, and from the difference between amounts of dividends,
interest, and foreign withholding taxes recorded on the 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 shareholders, the Separate Accounts. All net investment income available for
distribution was distributed at June 30, 1999. 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 Accounts and USAA Life, annually or as otherwise required to avoid the
payment of federal taxes. USAA Life is a shareholder only in the USAA Life
World Growth, USAA Life Aggressive Growth, and USAA Life International Funds.
At June 30, 1999, the USAA Life International Fund had a capital loss carryover
for federal income tax purposes of $687,000 which, if not offset by subsequent
capital gains, will expire in 2006. It is unlikely that the Board of Trustees
of the Fund will authorize a distribution of capital gains realized in the
future until the capital loss carryover has been utilized or expires.
1999 SEMIANNUAL REPORT B-47
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (Unaudited)
3) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities for the six-
month period ended June 30, 1999 were as follows (000):
<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
----------- --------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $131,283 $ 9,444 $ 5,320 $ 3,775 $ 7,226 $7,116 $4,560
Sales/Maturities $125,344 $24,859 $31,097 $19,378 $23,677 $9,620 $4,565
</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, 1999 was as follows
(000):
<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
--------- ------------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Appreciation $ 143 $29,546 $10,066 $9,034 $13,997 $ 3,833
Depreciation (980) (922) (822) (882) (1,676) (1,792)
----- ------- ------- ------ ------- -------
Net $(837) $28,624 $ 9,244 $8,152 $12,321 $ 2,041
===== ======= ======= ====== ======= =======
</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 USAA Life 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, 1999, the terms of open foreign currency contracts were as follows:
USAA LIFE WORLD GROWTH FUND:
Foreign Currency Contracts to Buy (000):
<TABLE>
<CAPTION>
U.S. $ Value at In Exchange Unrealized Unrealized
Exchange Date Contracts to Receive June 30, 1999 for U.S. $ Appreciation Depreciation
- ------------- -------------------- --------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
7/01/99 Japanese Yen $ 8 $ 8 $- $-
7/01/99 Japanese Yen 10 10 - -
7/02/99 Great Britain Pound 13 13 - -
7/07/99 Great Britain Pound 7 7 - -
7/07/99 Great Britain Pound 2 2 - -
7/30/99 Euro Monetary 4 4 - -
7/30/99 Euro Monetary 8 8 - -
--- --- -- --
$52 $52 $- $-
=== === == ==
</TABLE>
Foreign Currency Contracts to Sell (000):
<TABLE>
<CAPTION>
U.S. $ Value at In Exchange Unrealized Unrealized
Exchange Date Contracts to Deliver June 30, 1999 for U.S. $ Appreciation Depreciation
- ------------- -------------------- --------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
7/01/99 Japanese Yen $26 $26 $- $-
=== === == ==
</TABLE>
B-48 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
USAA LIFE INTERNATIONAL FUND:
Foreign Currency Contracts to Buy (000):
(Continued) June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Exchange Contract U.S. $ Value at In Exchange Unrealized Unrealized
Date Deliver June 30, 1999 for U.S. $ Appreciation Depreciation
-------------- ------------------- ----------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
7/01/99 Japanese Yen $15 $15 $ - $ -
7/01/99 Japanese Yen 8 8 - -
7/02/99 Great Britain Pound 13 13 - -
7/07/99 Great Britain Pound 3 3 - -
------ ----- ----- -----
$39 $39 $ - $ -
====== ===== ===== =====
</TABLE>
Foreign Currency Contracts to Sell (000):
<TABLE>
<CAPTION>
Exchange Contracts to U.S. $ Value at In Exchange Unrealized Unrealized
Date Deliver June 30, 1999 for U.S. $ Appreciation Depreciation
-------------- --------------- ----------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
7/01/99 Japanese Yen $52 $52 $ - $ -
7/02/99 Japanese Yen 26 26 - -
----- ----- ---- ----
$78 $78 $ - $ -
===== ===== ==== ====
</TABLE>
1999 SEMIANNUAL REPORT B-49
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (Unaudited)
5) TRANSACTIONS WITH AFFILIATES
A. ADVISORY FEES - USAA Investment Management Company (USAA IMCO) carries out
each Fund's investment policies and manages each Fund's portfolio. 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.
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, 1999 for the USAA Life Growth and Income, and USAA Life
Diversified Assets Funds were $5,000 and $3,000 respectively.
F. SHARE OWNERSHIP - At June 30, 1999, USAA Life owned 600,000 shares (32%) of
the USAA Life World Growth Fund, 1.4 million shares (75%) of the USAA Life
Aggressive Growth Fund, and 2.0 million shares (93%) of the USAA Life
International Fund. All other shares are owned by the Separate Accounts.
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.
6) YEAR 2000
Like other investment companies, the Trust could be adversely affected if the
computer systems used by USAA IMCO, USAA Life, and the Trust's other service
providers are not able to perform their intended functions effectively after
1999 because of the inability of computer software to distinguish the year 2000
from the year 1900. USAA IMCO and USAA Life each have taken steps to address
this potential year 2000 problem with respect to the computer systems that they
use and to obtain satisfactory assurances that the comparable steps are being
taken by the Trust's other major service providers. At this time, however, there
can be no assurance that these steps will be sufficient to avoid any adverse
impact to the Trust from this problem.
B-50 SEMIANNUAL REPORT 1999
<PAGE>
[THIS PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (Unaudited)
7) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
USAA Life Money Market Fund
---------------------------------------------------
Six-month Year ended December 31,
Period Ended ------------------------------------
June 30, 1999 1998 1997 1996 1995*
------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment
income .02 .05 .05 .05 .06(b)
Net realized and
unrealized gain (loss) - - - - -
Distributions from net
investment income (.02) (.05) (.05) (.05) (.06)
Distributions of realized
capital gains - - - - -
------- ------- ------- ------- ------
Net asset value at
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======
Total return (%)** 2.29 5.29 5.35 5.25 5.69
Net assets at
end of period (000) $27,557 $22,111 $15,131 $11,245 $7,802
Ratio of expenses to
average net assets (%) .35(a) .35 .35 .35 .35(a)
Ratio of expenses
to average net
assets, excluding
reimbursements (%) .58(a) .80 .70 1.24 2.29(a)
Ratio of net investment
income to average
net assets (%) 4.60(a) 5.17 5.22 5.10 5.55(a)
Portfolio turnover (%) - - - - -
<CAPTION>
Six-month USAA Life Income Fund
Period Ended -----------------------------------
June 30, 1999 1998 1997 1996 1995*
------------- ------- ------- ------ -------
<C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 10.89 $ 10.96 $ 10.51 $ 11.32 $ 10.00
Net investment
income .44 .66 .75 .92 .78(b)
Net realized and
unrealized gain (loss) (.82) .35 .46 (.84 1.61
Distributions from net
investment income (.02) (.66) (.76) (.89 (.76)
Distributions of realized
capital gains - (.42) - - (.31)
------- ------- ------- ------- -------
Net asset value at
end of period $ 10.49 $ 10.89 $ 10.96 $ 10.51 $ 11.32
======= ======= ======= ======= =======
Total return (%)** (3.44) 9.17 11.60 .67 23.88
Net assets at
end of period (000) $21,222 $41,249 $28,246 $24,049 $25,823
Ratio of expenses to
average net assets (%) .35(a) .35 .35 .35 .35(a)
Ratio of expenses
to average net
assets, excluding
reimbursements (%) .62(a) .55 .52 .65 .65(a)
Ratio of net investment
income to average
net assets (%) 6.44(a) 6.62 7.16 6.99 7.07(a)
Portfolio turnover (%) 43.77 61.79 30.77 97.74 55.08
</TABLE>
* Funds commenced operations January 5, 1995.
** Assumes reinvestment of all dividend income and capital gain 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-52 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (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, 1999 1998 1997 1996 1995* June 30, 1999 1998 1997 1996 1995*
- ------------- -------- --------- -------- -------- ------------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 18.15 $ 17.98 $ 15.06 $ 12.60 $ 10.00 $ 14.37 $ 13.34 $ 12.77 $ 11.10 $ 10.00
.13 .28 .28 .26 .34(b) .10 .16 .17 .18 .17(b)
2.89 .97 3.68 2.79 2.83 1.41 1.37 1.62 2.16 1.79
(.01) (.28) (.27) (.26) (.30) (.02) (.16) (.17) (.16) (.16)
(.07) (.80) (.77) (.33) (.27) - (.34) (1.05) (.51) (.70)
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
$ 21.09 $ 18.15 $ 17.98 $ 15.06 $ 12.60 $ 15.86 $ 14.37 $ 13.34 $ 12.77 $ 11.10
======= ======== ======= ======= ======= ======= ======= ======= ======= =======
16.64 6.93 26.43 24.13 31.72 10.48 11.46 14.08 21.12 19.55
$83,982 $100,438 $85,750 $55,932 $28,761 $28,205 42,080 $39,510 $37,535 $24,706
.35(a) .35 .34 .35 .35(a) .65(a) .65 .59 .65 .65(a)
.36(a) .37 NA .53 .66(a) .74(a) .66 NA .82 .87(a)
1.27(a) 1.55 1.80 2.25 2.82(a) 1.30(a) 1.09 1.20 1.45 1.55(a)
6.40 37.75 20.26 14.55 17.73 13.23 55.47 48.89 57.66 78.86
</TABLE>
1999 SEMIANNUAL REPORT B-53
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
USAA Life Diversified Assets Fund
--------------------------------------------------------------
Six-Month Year ended December 31,
Period Ended ---------------------------------------------
June 30, 1999 1998 1997 1996 1995*
------------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 15.07 $ 14.48 $ 12.95 $ 11.96 $ 10.00
Net investment
income .26 .55 .50 .62 .55(b)
Net realized and
unrealized gain 1.33 .85 2.14 1.10 2.08
Distributions from net
investment income (.01) (.55) (.50) (.62) (.53)
Distributions of realized
capital gains (1.08) (.26) (.61) (.11) (.14)
------- -------- -------- -------- --------
Net asset value at
end of period $ 15.57 $ 15.07 $ 14.48 $ 12.95 $ 11.96
======= ======== ======== ======== ========
Total return (%)*** 10.55 9.63 20.70 14.30 26.33
Net assets at
end of period (000) $41,475 $60,570 $48,212 $30,390 $26,311
Ratio of expenses to
average net assets (%) .35(a) .35 .35 .35 .35(a)
Ratio of expenses
to average net
assets, excluding
reimbursements (%) .50(a) .45 .42 .61 .64(a)
Ratio of net investment
income (loss) to average
net assets (%) 3.38(a) 3.72 4.02 4.46 4.93(a)
Portfolio turnover (%) 18.53 29.67 19.19 43.75 58.87
<CAPTION>
USAA Life Aggressive Growth Fund
------------------------------------------------------
Eight-month
Six-month Year Ended Period Ended
Period Ended December 31, December 31,
June 30, 1999 1998 1997**
------------- ------------- ---------------
<S> <C> <C> <C>
Net asset value at
beginning of period $ 13.87 $ 11.70 $ 10.00
Net investment
income (.03)(b) (.05)(b) (.01)(b)
Net realized and
unrealized gain 3.71 2.39 1.83
Distributions from net
investment income - - -
Distributions of realized
capital gains (.11) (.17) (.12)
------- ------- -------
Net asset value at
end of period $ 17.44 $ 13.87 $ 11.70
======= ======= =======
Total return (%)*** 26.56 20.14 18.26
Net assets at
end of period (000) $32,091 $29,201 $42,545
Ratio of expenses to
average net assets (%) .70(a) .70 .70(a)
Ratio of expenses
to average net
assets, excluding
reimbursements (%) 1.00(a) .84 .85(a)
Ratio of net investment
income (loss) to average
net assets (%) (.45)(a) (.41) (.15)(a)
Portfolio turnover (%) 26.61 50.48 73.77
</TABLE>
* Funds commenced operations January 5, 1995.
** Funds commenced operations May 1, 1997.
*** Assumes reinvestment of all dividend income and capital gain 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-54 SEMIANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued) June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
USAA Life International Fund
- ------------------------------------------------------
Eight-month
Six-month Year Ended Period Ended
Period Ended December 31, December 31,
June 30, 1999 1998 1997**
- ------------- ------------ ---------------
<S> <C> <C>
$ 10.32 $ 10.05 $ 10.00
.09 .11 .05(b)
.54 .27 .15
- (.11) (.05)
- - (.10)
------- ------- -------
$ 10.95 $ 10.32 $ 10.05
======= ======= =======
6.10 3.78 1.92
$23,576 $22,226 $21,582
1.10(a) 1.10 1.10(a)
1.32(a) 1.35 1.24(a)
1.77(a) 1.03 .70(a)
21.22 42.30 30.57
</TABLE>
1999 SEMIANNUAL REPORT B-55
<PAGE>
USAA LIFE INSURANCE COMPANY
To discuss your investment strategy,
the Variable Annuity's features or performance,
call an Account Representative toll free
Monday - Friday 7:15 a.m. to 8:00 p.m.
1-800-531-2923
(282-3460 in San Antonio)
------------------------------
If you wish to discuss your particular contract,
transfer money from one fund account to another or select a payout option
call a Service Representative toll free,
Monday - Friday 8 a.m. to 5 p.m.
1-800-531-4265
(456-9061 in San Antonio)
------------------------------
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