<PAGE>
USAA Life
Investment Trust
================================================================================
Annual Report
December 31, 1999
[USAA LOGO]
<PAGE>
this page left blank intentionally
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Money Market Fund
- --------------------------------------------------------------------------------
An Overview December 31, 1999
- --------------------------------------------------------------------------------
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
USAA LIFE IBC/DONOGHUE'S
MONEY MARKET MONEY FUND
DATE FUND AVERAGES(TM)/FIRST TIER
==== ============ =======================
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%
07/25/1995 5.51% 5.29%
08/29/1995 5.45% 5.22%
09/26/1995 5.42% 5.18%
10/31/1995 5.60% 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%
05/26/1996 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%
08/30/1997 5.24% 4.95%
10/26/1997 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%
04/26/1998 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 4.59% 4.37%
02/23/1999 4.54% 4.26%
03/30/1999 4.60% 4.22%
04/27/1999 4.58% 4.19%
05/25/1999 4.64% 4.18%
06/29/1999 4.71% 4.26%
07/26/1999 4.80% 4.38%
08/30/1999 4.83% 4.55%
09/27/1999 4.99% 4.65%
10/25/1999 4.96% 4.78%
11/29/1999 5.15% 4.97%
12/27/1999 5.79% 5.15%
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 Noble
MARKET CONDITIONS
A year ago, we were experiencing a decline in interest rates as the Federal
Reserve responded to concerns about the impact of financial instability in
Russia, Asia, and Latin America. These concerns have now taken a back seat
to efforts to guard against inflationary pressures in the U.S. economy. As a
result, the Federal Reserve has now reversed all of its rate reductions made
in 1998 by increasing the Federal Funds rate by three-quarters of a percent
since June 30, 1999. The impact of these rate increases has been to boost
the yield on a one-year Treasury bill from 4.52% on December 31, 1998, to
5.96% at the close of trading on December 31, 1999. The outlook for the
economy in the year 2000 is very much like 1999: healthy economic growth and
moderate inflation. If the economy continues to show signs of solid growth,
most Wall Street economists are forecasting for interest rates to continue to
rise.
PORTFOLIO STRATEGY
Regardless of the interest rate environment, the USAA Life Money Market Fund
is invested to provide the maximum current income while maintaining the
highest level of safety and liquidity. Furthermore, we aim to match the
average maturity of the Fund with the "free look" period available on the
variable insurance products. This objective is pursued by balancing the mix
between U.S. government agency discount notes, variable rate demand notes,
and commercial paper notes.
INVESTMENT PROGRAM:
This fund invests in a diversified portfolio of high-quality U.S. dollar-
denominated debt instruments that present minimal credit risk with remaining
maturities of 397 days or less.
SIMPLE 7-DAY YIELD: 5.81%*
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURNS
AS OF
DECEMBER 31, 1999
One Year: 4.93%
Three Year: 5.19%
Since Inception
January 5, 1995: 5.30%
* The 7-day yield quotation more closely reflects the current earnings
of the Fund than the total return quotation.
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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 ANNUAL REPORT B-3
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Money Market Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
PERFORMANCE
According to Lipper Analytical Services, Inc.1 the USAA Life Money Market
Fund was ranked 22 out of 101 variable insurance products money market funds
for the 12 months ended December 31, 1999. The total return for the USAA Life
Money Market Fund was 4.93% compared to an average of 4.75% 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 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 December 31, 1999
- --------------------------------------------
Commercial Paper 51.7%
Variable Rate Demand Notes 31.3%
U.S. Agency Discount Notes 18.2%
*Percentages are of Net Assets and may or may not be equal to 100%.
B-4 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE INCOME FUND
- --------------------------------------------------------------------------------
AN OVERVIEW DECEMBER 31, 1999
- --------------------------------------------------------------------------------
COMPARISON OF FUND TO BENCHMARKS
[GRAPH APPEARS HERE]
USAA LIFE LEHMAN BROTHERS LIPPER A RATED
INCOME FUND AGG BOND INDEX BOND FUND INDEX*
=========== =============== ================
01/01/1995 $10,000.00 $10,000.00 $10,000.00
01/95 10,290.00 10,198.00 10,163.00
02/95 10,520.00 10,440.71 10,388.62
03/95 10,530.00 10,504.40 10,451.99
04/95 10,700.00 10,651.46 10,593.09
05/95 11,210.00 11,063.67 11,035.88
06/95 11,220.00 11,144.44 11,108.72
07/95 11,200.00 11,119.92 11,049.84
08/95 11,400.00 11,254.47 11,194.60
09/95 11,650.00 11,363.64 11,311.02
10/95 11,870.00 11,511.37 11,473.90
11/95 12,100.00 11,684.04 11,649.45
12/95 12,388.66 11,847.61 11,821.86
01/96 12,454.32 11,925.81 11,875.06
02/96 12,027.50 11,718.30 11,616.18
03/96 11,863.34 11,636.27 11,524.41
04/96 11,688.24 11,571.11 11,437.98
05/96 11,666.35 11,547.97 11,410.53
06/96 11,863.34 11,702.71 11,538.33
07/96 11,830.51 11,734.31 11,559.10
08/96 11,786.73 11,714.36 11,535.98
09/96 12,005.61 11,918.19 11,732.09
10/96 12,333.94 12,182.77 11,989.02
11/96 12,585.65 12,391.10 12,203.63
12/96 12,472.26 12,275.86 12,079.15
01/97 12,519.73 12,313.92 12,094.85
02/97 12,567.20 12,344.70 12,129.93
03/97 12,329.86 12,207.67 11,967.39
04/97 12,496.00 12,390.79 12,124.16
05/97 12,642.12 12,508.50 12,230.85
06/97 12,844.48 12,567.35 12,386.18
07/97 13,225.41 12,999.10 12,770.16
08/97 13,106.37 12,888.61 12,607.98
09/97 13,380.17 13,078.07 12,810.96
10/97 13,570.63 13,267.70 12,962.13
11/97 13,725.39 13,328.73 13,016.57
12/97 13,919.15 13,463.36 13,149.34
01/98 14,109.65 13,635.69 13,307.14
02/98 14,084.25 13,624.78 13,287.17
03/98 14,122.35 13,671.10 13,328.36
04/98 14,173.15 13,742.19 13,384.34
05/98 14,377.22 13,872.74 13,520.66
06/98 14,568.23 13,990.66 13,629.03
07/98 14,606.44 14,020.04 13,630.39
08/98 14,810.19 14,248.57 13,759.88
09/98 15,039.41 14,581.98 14,070.86
10/98 15,064.88 14,504.70 13,913.26
11/98 15,141.28 14,587.38 14,039.87
12/98 15,195.79 14,631.14 14,077.78
01/99 15,279.51 14,735.02 14,183.36
02/99 15,000.43 14,477.16 13,859.96
03/99 15,000.43 14,556.78 13,947.30
04/99 15,014.39 14,603.36 13,982.17
05/99 14,812.55 14,474.85 13,800.40
06/99 14,672.67 14,428.53 13,723.12
07/99 14,560.78 14,366.49 13,657.25
08/99 14,504.83 14,359.31 13,610.81
09/99 14,658.69 14,525.88 13,748.28
10/99 14,686.66 14,579.62 13,760.66
11/99 14,630.71 14,578.16 13,763.41
12/99 14,411.84 14,508.19 13,694.59
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 in an inverse relationship.
Economic strength in the first quarter of 1999, which is the fourth year in a
row for first quarter strength, 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.
May and June's CPI showed no change, then mild increases for the balance of the
year. Economic strength continued through all of 1999, reinforcing inflation
fears and the specter of higher interest rates. This fear continues even though
the Federal Reserve raised interest rates by one-quarter percent three times in
the year: June, August, and November. The yield on the 30-year Treasury bond has
moved from 5.09% on December 31, 1998, to 6.48% on December 31, 1999, as shown
on the chart on the next page.
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
December 31, 1999
One Year: -5.17%
Three Year: 4.93%
Since Inception
January 5, 1995: 7.58%
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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 ANNUAL REPORT B-5
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Income Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
US 30 YEAR
DATE TREASURY BOND YIELD
==== ===================
12/31/1998 5.094
01/01/1999 5.094
01/04/1999 5.15
01/05/1999 5.207
01/06/1999 5.162
01/07/1999 5.223
01/08/1999 5.271
01/11/1999 5.305
01/12/1999 5.219
01/13/1999 5.131
01/14/1999 5.056
01/15/1999 5.106
01/18/1999 5.114
01/19/1999 5.148
01/20/1999 5.167
01/21/1999 5.13
01/22/1999 5.081
01/25/1999 5.115
01/26/1999 5.128
01/27/1999 5.126
01/28/1999 5.106
01/29/1999 5.085
02/01/1999 5.182
02/02/1999 5.238
02/03/1999 5.253
02/04/1999 5.287
02/05/1999 5.348
02/08/1999 5.34
02/09/1999 5.301
02/10/1999 5.365
02/11/1999 5.365
02/12/1999 5.421
02/15/1999 5.426
02/16/1999 5.34
02/17/1999 5.306
02/18/1999 5.377
02/19/1999 5.386
02/22/1999 5.354
02/23/1999 5.429
02/24/1999 5.507
02/25/1999 5.651
02/26/1999 5.575
03/01/1999 5.668
03/02/1999 5.613
03/03/1999 5.695
03/04/1999 5.699
03/05/1999 5.595
03/08/1999 5.587
03/09/1999 5.53
03/10/1999 5.553
03/11/1999 5.562
03/12/1999 5.524
03/15/1999 5.52
03/16/1999 5.475
03/17/1999 5.506
03/18/1999 5.487
03/19/1999 5.559
03/22/1999 5.567
03/23/1999 5.54
03/24/1999 5.53
03/25/1999 5.584
03/26/1999 5.588
03/29/1999 5.639
03/30/1999 5.579
03/31/1999 5.624
04/01/1999 5.67
04/02/1999 5.595
04/05/1999 5.587
04/06/1999 5.518
04/07/1999 5.501
04/08/1999 5.442
04/09/1999 5.459
04/12/1999 5.451
04/13/1999 5.489
04/14/1999 5.506
04/15/1999 5.526
04/16/1999 5.571
04/19/1999 5.517
04/20/1999 5.506
04/21/1999 5.522
04/22/1999 5.602
04/23/1999 5.596
04/26/1999 5.574
04/27/1999 5.537
04/28/1999 5.582
04/29/1999 5.529
04/30/1999 5.661
05/03/1999 5.654
05/04/1999 5.711
05/05/1999 5.705
05/06/1999 5.79
05/07/1999 5.812
05/10/1999 5.788
05/11/1999 5.833
05/12/1999 5.826
05/13/1999 5.749
05/14/1999 5.921
05/17/1999 5.891
05/18/1999 5.888
05/19/1999 5.802
05/20/1999 5.825
05/21/1999 5.75
05/24/1999 5.756
05/25/1999 5.747
05/26/1999 5.803
05/27/1999 5.85
05/28/1999 5.827
05/31/1999 5.827
06/01/1999 5.923
06/02/1999 5.932
06/03/1999 5.962
06/04/1999 5.962
06/07/1999 5.964
06/08/1999 5.992
06/09/1999 6.024
06/10/1999 6.062
06/11/1999 6.158
06/14/1999 6.098
06/15/1999 6.11
06/16/1999 6.064
06/17/1999 5.962
06/18/1999 5.971
06/21/1999 6.017
06/22/1999 6.056
06/23/1999 6.145
06/24/1999 6.159
06/25/1999 6.148
06/28/1999 6.093
06/29/1999 6.066
06/30/1999 5.961
07/01/1999 6.009
07/02/1999 5.997
07/05/1999 5.995
07/06/1999 6.035
07/07/1999 6.047
07/08/1999 5.99
07/09/1999 5.997
07/12/1999 5.906
07/13/1999 5.908
07/14/1999 5.913
07/15/1999 5.917
07/16/1999 5.883
07/19/1999 5.9
07/20/1999 5.884
07/21/1999 5.902
07/22/1999 5.969
07/23/1999 6.024
07/26/1999 6.026
07/27/1999 6.009
07/28/1999 6.008
07/29/1999 6.07
07/30/1999 6.102
08/02/1999 6.119
08/03/1999 6.163
08/04/1999 6.105
08/05/1999 6.038
08/06/1999 6.174
08/09/1999 6.231
08/10/1999 6.24
08/11/1999 6.205
08/12/1999 6.276
08/13/1999 6.103
08/16/1999 6.086
08/17/1999 6.005
08/18/1999 5.994
08/19/1999 6.03
08/20/1999 5.984
08/23/1999 5.982
08/24/1999 5.93
08/25/1999 5.856
08/26/1999 5.9
08/27/1999 5.975
08/30/1999 6.059
08/31/1999 6.058
09/01/1999 6.077
09/02/1999 6.133
09/03/1999 6.107
09/06/1999 6.023
09/07/1999 6.072
09/08/1999 6.067
09/09/1999 6.091
09/10/1999 6.039
09/13/1999 6.051
09/14/1999 6.118
09/15/1999 6.103
09/16/1999 6.074
09/17/1999 6.055
09/20/1999 6.07
09/21/1999 6.088
09/22/1999 6.083
09/23/1999 5.988
09/24/1999 5.972
09/27/1999 6.01
09/28/1999 6.084
09/29/1999 6.123
09/30/1999 6.049
10/01/1999 6.132
10/04/1999 6.086
10/05/1999 6.176
10/06/1999 6.178
10/07/1999 6.182
10/08/1999 6.194
10/11/1999 6.196
10/12/1999 6.223
10/13/1999 6.277
10/14/1999 6.323
10/15/1999 6.256
10/18/1999 6.318
10/19/1999 6.35
10/20/1999 6.334
10/21/1999 6.354
10/22/1999 6.35
10/25/1999 6.348
10/26/1999 6.382
10/27/1999 6.329
10/28/1999 6.251
10/29/1999 6.162
11/01/1999 6.177
11/02/1999 6.138
11/03/1999 6.131
11/04/1999 6.101
11/05/1999 6.055
11/08/1999 6.051
11/09/1999 6.069
11/10/1999 6.089
11/11/1999 6.086
11/12/1999 6.034
11/15/1999 6.023
11/16/1999 6.061
11/17/1999 6.131
11/18/1999 6.167
11/19/1999 6.161
11/22/1999 6.189
11/23/1999 6.195
11/24/1999 6.21
11/25/1999 6.21
11/26/1999 6.231
11/29/1999 6.307
11/30/1999 6.291
12/01/1999 6.292
12/02/1999 6.32
12/03/1999 6.251
12/06/1999 6.237
12/07/1999 6.198
12/08/1999 6.228
12/09/1999 6.213
12/10/1999 6.165
12/13/1999 6.201
12/14/1999 6.304
12/15/1999 6.324
12/16/1999 6.39
12/17/1999 6.373
12/20/1999 6.441
12/21/1999 6.46
12/22/1999 6.45
12/23/1999 6.487
12/24/1999 6.485
12/27/1999 6.464
12/28/1999 6.472
12/29/1999 6.442
12/30/1999 6.417
12/31/1999 6.482
Beginning Yield 5.09%
Low Yield 5.06%
Ending Yield 6.48%
In this rising interest rate environment, the Fund underperformed in its peer
group all year 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 past 12 months was -5.17%
versus an average of -1.94% for all funds in the Lipper Variable Insurance
Products1 A Rated Bond Fund category for the same period.
TOP 10 SECURITIES
- ------------------------
as of December 31, 1999
Coupon % of
Rate Net Assets
GNMA 6.00% 26.2%
U.S. Treasury Bond 5.25 8.5
GNMA 6.00 8.1
GNMA 6.00 8.0
GNMA 7.00 5.8
GNMA 6.00 5.3
FNMA 7.00 3.3
FNMA 7.00 3.2
First Union Corp.,
Subordinated Notes 7.50 3.1
Household Finance
Corp., Notes 7.25 3.0
- --------------------------------------------------
PORTFOLIO
As of December 31, 1999, the Fund's portfolio mix as percentages of net
assets was 8.5% U. S. Treasury bonds, 59.9% agency mortgage pass-through
securities, 19.9% corporate bonds, and 10.9% preferred stocks. Long-term
Treasury bonds were sold during the last half of the year to reduce the price
volatility.
OUTLOOK
The Bond Market continues to be unsettled. Many market participants expect the
Federal Reserve to raise short-term interest rates again in February. After
that, further Fed action will be dependent on the outlook for inflation and
continued economic strength.
1 Lipper Analytical Services, Inc. is an independent organization that monitors
fund performance of variable insurance products.
B-6 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Growth and Income Fund
- --------------------------------------------------------------------------------
An Overview December 31, 1999
- --------------------------------------------------------------------------------
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
USAA LIFE S&P 500
GROWTH AND
DATE INCOME FUND INDEX
==== =========== ==========
01/01/1995 $10,000.00 $10,000.00
01/95 10,150.00 10,259.00
02/95 10,480.00 10,658.08
03/95 10,720.00 10,972.49
04/95 11,080.00 11,295.08
05/95 11,410.00 11,745.75
06/95 11,650.00 12,018.25
07/95 11,990.00 12,416.06
08/95 12,190.00 12,447.10
09/95 12,530.00 12,972.37
10/95 12,230.00 12,925.67
11/95 12,900.00 13,491.81
12/95 13,172.27 13,752.20
01/96 13,475.44 14,219.78
02/96 13,632.26 14,362.02
03/96 14,123.60 14,489.80
04/96 14,301.32 14,702.80
05/96 14,489.50 15,080.66
06/96 14,499.95 15,137.97
07/96 13,841.34 14,468.87
08/96 14,343.14 14,774.16
09/96 15,033.12 15,604.47
10/96 15,357.20 16,035.16
11/96 16,339.89 17,245.81
12/96 16,350.51 16,904.34
01/97 17,023.64 17,959.17
02/97 17,164.78 18,101.05
03/97 16,676.22 17,358.91
04/97 17,175.64 18,393.50
05/97 18,401.48 19,517.34
06/97 19,111.32 20,385.86
07/97 20,378.13 22,006.54
08/97 19,766.57 20,774.17
09/97 20,640.23 21,910.52
10/97 19,810.25 21,178.71
11/97 20,399.97 22,159.28
12/97 20,671.30 22,540.42
01/98 20,510.34 22,788.37
02/98 21,993.43 24,431.41
03/98 23,131.62 25,682.30
04/98 23,269.58 25,944.26
05/98 22,688.82 25,498.02
06/98 22,700.45 26,533.23
07/98 21,525.29 26,251.98
08/98 18,244.14 22,458.57
09/98 18,837.54 23,898.17
10/98 20,315.22 25,838.70
11/98 21,536.93 27,404.52
12/98 22,102.75 28,983.02
01/99 22,711.64 30,194.51
02/99 22,139.28 29,255.46
03/99 23,223.11 30,425.68
04/99 24,903.65 31,603.16
05/99 24,606.78 30,857.32
06/99 25,780.28 32,569.90
07/99 24,973.50 31,553.72
08/99 24,374.62 31,395.95
09/99 23,543.30 30,535.70
10/99 24,508.99 32,468.61
11/99 24,570.11 33,127.73
12/99 25,345.60 35,075.64
Data represents the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life Growth and Income Fund to the S&P 500(R) Index. 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
Performance for the year 1999 was marked by a reversal in market favorites in
the second half versus the first half of the year. As you may recall in our
Semiannual Report, the market rewarded many cyclical/commodity-oriented stocks
in the first half (particularly in the April/May timeframe). However, during the
second half of 1999, the market showed a strong preference for companies
associated with technology or telecommunications. Although the USAA Life Growth
and Income Fund bested the S&P 500 through June 30, the performance for the year
came in at 14.67%, which is lower than the 21.03% return of the S&P 500.
Performance was most hindered by weightings in Consumer Cyclicals (Automobiles,
Retailing, Auto Parts), Consumer Staples (Coca-Cola, Walt Disney, Nabisco, and
Phillip Morris), selected Financials (Banks, Consumer Finance, Insurance), and
Health Care (Pharmaceuticals and HMOs). A wide variety of factors contributed to
the poor relative performance of these sectors. However, a major contributor is
related to the fact that investors showed a preference for shares in the
Technology sector, where revenue and earnings growth are thought to be more
assured.
In addition to the Technology sector, the telecommunications area aided
performance of the Fund over the last year. Although transmission of voice has
proven to be a competitive market, growth in data transmission for most
telecommunications companies is more than offsetting the competitive pressures.
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
DECEMBER 31, 1999
One Year: 14.67%
Three Year: 15.73%
Since Inception
January 5, 1995: 20.44%
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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 ANNUAL REPORT B-7
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Growth and Income Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Also, selected fund holdings in Basic Materials (Alcoa) and Capital Goods
(Boeing, General Electric, Deere & Co., and Avery Dennison) helped the Fund's
performance. Finally, the significant rise in energy prices was responsible for
the positive relative performance of the Fund's Energy sector.
PORTFOLIO STRATEGY AND OUTLOOK
Our strategy for the Life Growth and Income Fund continues to be one of
maintaining a diversified portfolio of stocks. Thus we will continue to have
exposure to all the major sectors of the market. Although we are concerned with
the valuations in the Technology sector, we have been able to uncover several
issues that allow us to maintain a reasonable weighting. Finally, although we do
foresee a high probability of further interest rate increases by the Federal
Reserve Board, the valuations of many financial service issues are becoming
increasingly attractive.
The year 1999 for the major market indices was one of strong performance, but
also one of extreme volatility. In fact, if you define volatility as the number
of days the S&P 500 moved greater than 1%, then 1999 was the most volatile year
of the 90's. Also, as was true in 1998, performance this year was dominated by
the Technology sector, as spending on software and hardware continued to grow.
Our primary source of concern for the market in the year 2000 is the direction
of interest rates. The Federal Reserve Board seems intent on slowing economic
growth and preempting any increase in inflation. Thus we do expect further rate
increases. In turn, the market could experience corrections, particularly in
more highly valued sectors.
TOP 10 EQUITY HOLDINGS
- -----------------------
as of December 31, 1999
% of
Net Assets
Cisco Systems, Inc. 3.1%
Microsoft Corp. 2.9
Morgan Stanley,
Dean Witter & Co. 2.9
Alcoa, Inc. 2.7
Oracle Corp. 2.4
General Electric Co. 2.3
Intel Corp. 2.2
WalMart Stores 2.1
American International Group 2.1
Avery Dennison Corp. 2.1
TOP 10 INDUSTRIES
- -----------------------
as of December 31, 1999
% of
Net Assets
Computer Software & Service 6.5%
Financial - Diversified 5.5
Telephones 4.9
Drugs 4.3
Health Care - Diversified 3.7
Telecommunications -
Long Distance 3.6
Retail - General Merchandising 3.1
Computer - Networking 3.1
Computer - Hardware 2.9
Household Products 2.9
B-8 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
An Overview December 31, 1999
- --------------------------------------------------------------------------------
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
USAA LIFE MORGAN STANLEY
WORLD CAPITAL INDEX
DATE GROWTH FUND WORLD
==== =========== ==============
01/01/1995 $10,000.00 $10,000.00
01/95 9,710.00 9,847.00
02/95 9,790.00 9,987.81
03/95 10,160.00 10,467.23
04/95 10,490.00 10,829.39
05/95 10,920.00 10,919.28
06/95 11,150.00 10,913.82
07/95 11,710.00 11,457.33
08/95 11,620.00 11,199.54
09/95 11,770.00 11,523.20
10/95 11,480.00 11,338.83
11/95 11,650.00 11,730.02
12/95 11,955.58 12,070.19
01/96 12,321.79 12,286.25
02/96 12,558.74 12,358.74
03/96 12,849.56 12,561.42
04/96 13,463.49 12,854.10
05/96 13,592.74 12,863.10
06/96 13,614.28 12,926.13
07/96 12,935.72 12,467.25
08/96 13,334.24 12,608.13
09/96 13,668.14 13,098.59
10/96 13,625.05 13,187.66
11/96 14,379.01 13,923.53
12/96 14,481.02 13,697.97
01/97 15,036.68 13,860.97
02/97 15,014.00 14,017.60
03/97 14,866.58 13,737.25
04/97 15,059.36 14,183.71
05/97 15,931.95 15,056.01
06/97 16,666.03 15,804.29
07/97 17,480.41 16,529.71
08/97 16,666.03 15,420.57
09/97 17,652.46 16,256.36
10/97 16,631.62 15,398.02
11/97 16,356.34 15,667.49
12/97 16,520.55 15,855.50
01/98 16,557.70 16,294.70
02/98 17,808.50 17,394.59
03/98 18,836.39 18,126.90
04/98 19,146.00 18,300.92
05/98 18,815.03 18,068.50
06/98 18,765.29 18,494.91
07/98 18,504.14 18,461.62
08/98 15,407.68 15,997.00
09/98 15,320.63 16,276.94
10/98 16,564.19 17,745.13
11/98 17,297.89 18,797.41
12/98 18,414.41 19,712.84
01/99 18,862.91 20,142.58
02/99 18,247.82 19,604.78
03/99 19,067.95 20,418.38
04/99 19,747.11 21,220.82
05/99 19,228.01 20,442.01
06/99 20,343.98 21,392.57
07/99 20,549.22 21,326.25
08/99 20,728.80 21,285.73
09/99 20,420.94 21,077.13
10/99 21,062.31 19,985.34
11/99 22,191.10 20,544.93
12/99 24,109.10 22,204.96
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
Kevin P. Moore
MARKET CONDITIONS
For the year ended December 31, 1999, the Fund's total return was 30.93%
compared with the Lipper Global Funds Average1 return of 44.18% and the Morgan
Stanley Capital Index (MSCI)-World return of 24.93%. The Fund's performance was
negatively impacted by its underweighted position in Japan and other Asian
markets, while holdings in telecommunications and technology benefited
performance for the period.
INTERNATIONAL
Europe - In Europe, rising interest rates as well as weak currencies negatively
impacted equity returns. An improved profit outlook and stronger economic growth
positively impacted equity returns. Telecommunications and technology stocks
were the best-performing issues, with media and mining stocks also performing
well. However, auto-related and interest-rate-sensitive stocks performed poorly
for the period. Our strategy of overweighting cyclical stocks worked well for
the first nine months, but in the fourth quarter technology and
telecommunication stocks significantly outperformed other equity sectors.
Canada - Our strategy of overweighting Canada proved correct as Canadian equity
returns exceeded the broad international stock averages. Telecommunication and
technology stocks performed well throughout the year while energy stocks had
strong relative performance in the first half.
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
DECEMBER 31, 1999
One Year: 30.93%
Three Year: 18.52%
Since Inception
January 5, 1995: 19.24%
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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 ANNUAL REPORT B-9
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Japan - The market continued to be very strong during the last six months due
mainly to global popularity of telecommunications and technology stocks. Growth
stocks continued to outperform value stocks due to the secular transformation of
the Japanese economy - from manufacturing to service. The other focus of the
market in 1999 was corporate restructuring, which we expect to continue next
year. Consolidation of the banking sector should continue which would, in turn,
bring more efficient credit usage. The yen turned around after the middle of the
year with expectation of a stronger Japanese economic recovery. The Organization
for Economic Cooperation and Development (OECD) recently revised its growth
projection for the gross domestic product (GDP) from -0.9% to +1.4% for the year
2000. The current Obuchi administration appears to be very solid, and we expect
no political turmoil to take place in the next six months. Our overweighing in
the technology and telecommunications sectors positively impacted our
performance.
Emerging Markets - Most of the regional markets suffered a pullback in the
midsummer months and all, except for some Eastern European markets, experienced
strong rallies beginning in late September. Over the past six months, emerging
markets have retained or added to most of the gains they experienced since the
lows during the Russian and Asian crises of late 1998. Expectations for the
Asian economies continued to rise during the last six months while concerns
lingered regarding Eastern European economies. Commodity price increases and
interest rate declines continue to support a rebound in the South African
economy. The Latin markets have also rebounded as concerns about presidential
elections in Mexico and economic concerns in Brazil have receded.
UNITED STATES
U.S. stocks performed well through the period despite rising interest rates.
A combination of strong domestic economic growth, continued low inflation,
and recovering overseas economies provided a healthy environment for
accelerating earnings growth. Technology stocks were exceptional, driven by
spending on Internet infrastructure and services, wireless equipment, and
year 2000 preparations. In fact, of the 11 sectors comprising the S&P 500
Index,2 only the technology sector and communications services sector
outperformed the index. Seven of the eleven sectors experienced negative
absolute returns during the period. Domestic holdings benefited from an
overweighed position in technology. Stocks providing particularly good
performance include Oracle, Applied Materials, Texas Instruments, Cisco
Systems, Analog
COUNTRY WEIGHTINGS AS A PERCENTAGE OF NET ASSETS
- ------------------------------------------------
as of December 31, 1999
Other* 15.2%
Italy 2.8%
Spain 2.7%
Finland 3.7%
Canada 4.4%
France 4.7%
Japan 9.3%
Netherlands 6.2%
United Kingdom 10.8%
USA 40.5%
* Countries representing less than 2% of the portfolio and U.S. Government
and Agency Issues.
B-10 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Devices, and Intel. In other areas, Amgen, Morgan Stanley Dean Witter & Co., and
General Electric helped returns. Several consumer-oriented holdings posted
significant declines during the period: Avon Products, Mattel, Pepsi Bottling
Group, Keebler Foods, Freddie Mac, and CVS.
OUTLOOK
We continue to be encouraged by the strength of the global economy and continue
to view Europe positively. European valuations still look relatively attractive,
and interest rates in Europe have the potential to decline based on a benign
inflation outlook. The value of the Eurodollar could stabilize -- or possibly
move higher -- as the economic growth patterns in the U.S. and Europe converge
next year. We are comfortable with our energy exposure, as the fundamental
values of the stocks do not reflect current energy prices. In Japan, the market
will continue to be led by telecommunications and technology sectors as well as
by large-capitalization growth stocks.
Next year a combination of falling interest rates and increased global growth
provides the potential for a positive backdrop for emerging markets. In the
United States, we believe the prospects for lower interest rates are minimal and
the best inflation news is probably behind us. Evidence includes persistent
economic growth, early signs of labor shortages, and a weakening U.S. dollar. In
such an environment, U.S. valuations are unlikely to increase, while earnings
expectations for year 2000 may prove to be somewhat optimistic. We currently
favor international markets to the U.S. market.
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.
2 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.
TOP 10 EQUITY HOLDINGS
as of December 31, 1999
- ------------------------------------------
% of
Net Assets
Nokia Corp. ADR (Finland) 2.3%
Microsoft Corp. (U. S.) 1.6
Oracle Corp. (U. S.) 1.6
Cisco Systems, Inc. (U. S.) 1.5
America Online, Inc. (U. S.) 1.4
Clear Channel
Communications, Inc. (U. S.) 1.4
General Electric Co. (U. S.) 1.4
Nortel Networks Co. (Canada) 1.3
Telefonica de Espana
S.A. ADR (Spain) 1.3
Total Fina S.A. (France) 1.3
TOP 10 INDUSTRIES
OF EQUITY HOLDINGS
as of December 31, 1999
- ------------------------------------------
% of
Net Assets
Telephones 7.8%
U.S. Government 6.3
Computer Software & Service 5.6
Drugs 5.4
Banks - Major Regional 4.9
Communications Equipment 4.7
Insurance - Multi-Line Companies 3.9
Electronics-Semiconductors 3.7
Electrical Equipment 2.7
Oil-International Integrated 2.7
Foreign investing is subject to additional risks such as currency fluctuations,
market illiquidity, and political instability. Since return on any investment is
generally commensurate with risk, investors should be aware of the potential
volatility associated with foreign markets.
1999 ANNUAL REPORT B-11
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA LIFE DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
AN OVERVIEW DECEMBER 31, 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 December 31, 1999, the portfolio
mix was 65.5% common stocks and 33.9% fixed-income securities, as a
percentage of net assets.
NET ASSET VALUE (NAV)
AVERAGE ANNUAL
TOTAL RETURNS
AS OF
DECEMBER 31, 1999
One Year: 7.58%
Three Year: 12.49%
Since Inception
January 5, 1995: 15.50%
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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
DIVERSIFIED LIPPER BALANCED LEHMAN BROS.
DATE ASSETS FUND S&P 500 INDEX FUND AVERAGE AGG. BOND INDEX
==== =========== ============= =============== ===============
01/01/1995 $10,000.00 $10,000.00 $10,000.00 $10,000.00
01/95 10,120.00 10,259.00 10,103.00 10,198.00
02/95 10,330.00 10,658.08 10,385.88 10,440.71
03/95 10,550.00 10,972.49 10,559.33 10,504.40
04/95 10,860.00 11,295.08 10,734.61 10,651.46
05/95 11,240.00 11,745.75 11,071.68 11,063.67
06/95 11,300.00 12,018.25 11,267.65 11,144.44
07/95 11,450.00 12,416.06 11,509.90 11,119.92
08/95 11,640.00 12,447.10 11,597.38 11,254.47
09/95 11,970.00 12,972.37 11,828.17 11,363.64
10/95 11,890.00 12,925.67 11,772.57 11,511.37
11/95 12,270.00 13,491.81 12,108.09 11,684.04
12/95 12,633.12 13,752.20 12,265.50 11,847.61
01/96 12,833.81 14,219.78 12,483.82 11,925.81
02/96 12,844.38 14,352.02 12,501.30 11,718.30
03/96 13,108.45 14,489.80 12,536.30 11,636.27
04/96 13,002.82 14,702.80 12,627.82 11,571.11
05/96 13,150.70 15,080.66 12,755.36 11,547.97
06/96 13,340.83 15,137.97 12,765.56 11,702.71
07/96 13,002.82 14,468.87 12,443.87 11,734.31
08/96 13,192.95 14,774.16 12,660.40 11,714.36
09/96 13,678.84 15,604.47 13,136.43 11,918.19
10/96 14,059.10 16,035.16 13,371.57 12,182.77
11/96 14,650.62 17,245.81 13,931.84 12,391.10
12/96 14,440.15 16,904.34 13,746.54 12,275.86
01/97 14,808.13 17,959.17 14,135.57 12,313.92
02/97 14,964.24 18,101.05 14,114.37 12,344.70
03/97 14,573.96 17,358.91 13,710.70 12,207.67
04/97 14,941.93 18,393.50 14,093.23 12,390.79
05/97 15,616.42 19,517.34 14,683.73 12,508.50
06/97 16,051.17 20,385.86 15,118.37 12.657.35
07/97 16,863.45 22,006.54 15,931.74 12,999.10
08/97 16,337.18 20,774.17 15,456.97 12,888.61
09/97 16,966.41 21,910.51 16,031.97 13,078.07
10/97 16,783.36 21,178.71 15,769.05 13,267.70
11/97 17,183.79 22,159.28 15,978.78 13,328.73
12/97 17,428.84 22,540.42 16,183.30 13,463.36
01/98 17,609.39 22,788.37 16,299.82 13,635.69
02/98 18,319.54 24,431.41 16,922.48 13,634.78
03/98 18,813.04 25,682.30 17,414.92 13,671.10
04/98 18,849.15 25,944.26 17,531.60 13,742.19
05/98 18,817.00 25,498.02 17,377.32 13,872.74
06/98 18,913.38 26,533.23 17,752.67 13,990.66
07/98 18,503.79 26,251.98 17,575.15 14,020.04
08/98 16,973.85 22,458.57 16,051.38 14,248.57
09/98 17,576.19 23,898.17 16,720.72 14,581.98
10/98 18,142.38 25,838.70 17,259.13 14,504.70
11/98 18,865.19 27,404,52 17,875.28 14,587.38
12/98 19,107.81 28,983.02 18,599.23 14,631.14
01/99 19,171.21 30,194.51 18,934.02 14,735.02
02/99 18,981.02 29,255.46 18,439.84 14,477.16
03/99 19,488.19 30,425.68 18,930.34 14,556.78
04/99 20,730.77 31,603.16 19,494.46 14,603.36
05/99 20,608.25 30,857.32 19,163.06 14,474.85
06/99 21,123.79 32,569.90 19,672.79 14,428.53
07/99 20,608.25 31,563.72 19,316.72 14,366.49
08/99 20,309.78 31,395.95 19,088.78 14,359.31
09/99 19,848.50 30,535.70 18,873.08 14,525.88
10/99 20,255.51 32,468.61 19,444.93 14,579.62
11/99 20,214.81 33,127.73 19,602.43 14,578.16
12/99 20,555.48 35,075.64 20,194.43 14,508.19
Data represent the last business day of each month.
The graph above compares the performance of a $10,000 hypothetical investment in
the USAA Life Diversified Assets Fund to the Lipper Balanced Fund Average and
two industry indexes 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 Stock) and Paul Lundmark
(Debt Securities)
PERFORMANCE
For the year ended December 31, 1999, the USAA Life Diversified Assets Fund's
total return was 7.58% versus 8.58% for similar variable insurance product
funds as reported by Lipper Analytical Services, Inc.1 During the year,
approximately 65% of the Fund was invested in equities, while the remainder
was invested in corporate bonds.
Common Stocks - Performance for the year 1999 was marked by a reversal in
market favorites in the second half versus the first half of the year. As
you may recall in our Semiannual Report, the market rewarded many
cyclical/commodity-oriented stocks in the first half (particularly in the
April/May timeframe). However, during the second half of 1999 the market
showed a strong preference for companies associated with technology or
telecommunications.
Performance was most hindered by weightings in Consumer Cyclicals
(Automobiles, Retailing, Auto Parts), Consumer Staples (Coca-Cola, Walt
Disney, Nabisco, and Phillip Morris), selected Financials
B-12 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
- --------------------------------------------------------------------------------
An Overview (Overview) December 31, 1999
- --------------------------------------------------------------------------------
(Banks, Consumer Finance, Insurance), and Health Care (Pharmaceuticals and
HMOs). A wide variety of factors contributed to the poor relative performance of
these sectors. However, a major contributor is related to the fact that
investors showed a preference for shares in the Technology sector, where revenue
and earnings growth are thought to be more assured. Also, the market paid less
heed to the valuation in determining sectors to invest in.
In addition to the Technology sector, the telecommunications area aided
performance of the Fund over the last year. Although transmission of voice has
proven to be a competitive market, growth in data transmission for most
telecommunication companies is more than offsetting the competitive pressures.
Also, selected fund holdings in Basic Materials (Alcoa) and Capital Goods
(Boeing, General Electric, Deere & Co., and Avery Dennison) helped the Fund's
performance. Finally, the significant rise in energy prices was responsible for
the positive relative performance of the Fund's Energy sector.
Debt Securities - Since the beginning of the year, interest rates have risen
dramatically. Investors fear that the economy is growing too fast to contain
inflation. The Federal Reserve Board has raised the Fed funds rate by 0.75%
since May, trying to slow the economy. However, investors feel that more
increases may be necessary.
Within the Fund's bond portion, the best performing holdings were AT&T
Capital Corporation and Glenborough Properties. AT&T Capital was acquired by
CIT (a higher-rated entity) and the price of Glenborough debt was bid up due
to the desire of Glenborough to buy back their debt in the open market. The
Collateral Mortgage Obligations also performed well. These instruments are
defensive in nature and will outperform most other debt securities in a
rising interest rate environment. Our Treasury position underperformed but we
continue to hold it for diversification purposes.
TOP 10 EQUITY HOLDINGS
as of December 31, 1999
- -----------------------------------------
% of
Net Assets
Intel Corp. 2.5%
Oracle Corp. 2.4
Microsoft Corp. 1.9
Alcoa, Inc. 1.9
Bristol-Meyers Squibb Co. 1.8
Chase Manhattan Corp. 1.6
General Electric Co. 1.5
Avery Dennison Corp. 1.5
MCI WorldCom, Inc. 1.4
Sprint Corp. 1.4
TOP 5 DEBT HOLDINGS
as of December 31, 1999
- ------------------------------------------------
Coupon % of
Rate Net Assets
Newcourt Credit
Group, Inc. 7.13% 2.5%
Nationwide Health
Properties, Inc. 8.61 2.5
Empire District
Electric Co. 7.70 2.5
Firstplus Home Loan
Owner Trust, Series
1998-1, Class A-5 6.25 2.5
Giddings and Lewis, Inc. 7.50 2.4
1999 ANNUAL REPORT B-13
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
- --------------------------------------------------------------------------------
An Overview (Overview) December 31, 1999
- --------------------------------------------------------------------------------
STRATEGY
Our strategy for the common stock sector of the Life Diversified Assets Fund
continues to be one of maintaining a diversified portfolio of stocks. Thus we
will continue to have exposure to all the major sectors of the market.
Although we are concerned with the valuations in the Technology sector, we
have been able to uncover several issues that allow us to maintain a
reasonable weighting. Finally, although we do foresee a high probability of
further interest rate increases by the Federal Reserve Board, the valuations
of many financial service issues are becoming increasingly attractive.
We manage the bond sector so that income is the primary component of total
return. Because of our income orientation, we have favored investments in
higher yielding instruments, such as corporate bonds and mortgage- and
asset-backed securities rather than Treasuries. This investment style
resulted in the bond sector outperforming most of its peers this year.
OUTLOOK
Common Stocks - The year 1999 for the major market indices was one of strong
performance, but also one of extreme volatility. In fact, if you define
volatility as the number of days the S&P 500 moved greater than 1%, then 1999
was the most volatile year of the decade of the 90s. Also, as was true in
1998, performance in 1999 was dominated by the technology sector, as spending
on software and hardware continued to grow.
Our primary source of concern for the market in the year 2000 is the direction
of interest rates. The Federal Reserve Board seems intent on slowing economic
growth and preempting any increase in inflation. Thus, we do expect further rate
increases. In turn, the market could experience corrections, particularly in
more highly valued sectors.
Debt Securities - Looking to the future, we feel that the economy will continue
to be strong, which will result in corporate bonds and mortgage- and asset-
backed securities increasing in relative value. Our continued emphasis on
finding securities that represent good risk/reward characteristics should result
in outperformance over the long term.
Top 10 Industries
as of December 31, 1999
- ------------------------------------------
% of
Net Assets
Real Estate Investment Trusts 9.5%
Banks - Major Regional 7.4
Computer Software & Service 5.1
Finance - Diversified 3.9
Manufacturing - Specialized 3.9
Telephones 3.7
Health Care - Diversified 2.9
Electric Utilities 2.8
Telecommunications -
Long Distance 2.8
Machinery - Diversified 2.5
1 Lipper Analytical Services, Inc. is an independent organization that monitors
fund performance of variable insurance products. Rankings are based on total
returns.
B-14 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
An Overview December 31, 1999
- --------------------------------------------------------------------------------
COMPARISON OF FUND TO BENCHMARK
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
USAA LIFE AGG. RUSSELL 2000(R)
DATE GROWTH FUND INDEX S&P 500 INDEX
========== =========== =============== =============
<S> <C> <C> <C>
05/01/1997 $10,000.00 $10,000.00 $10,000.00
05/97 10,670.00 11,112.00 10,610.99
06/97 11,160.00 11,588.70 11,083.18
07/97 12,060.00 12,127.58 11,964.30
08/97 12,330.00 12,405.30 11,294.29
09/97 13,530.00 13,313.37 11,912.09
10/97 12,640.00 12,728.91 11,514.23
11/97 12,120.00 12,646.17 12,047.34
12/97 11,825.53 12,867.48 12,254.55
01/98 11,855.86 12,664.18 12,389.35
02/98 13,169.80 13,600.06 13,282.62
03/98 13,624,63 14,160.38 13,962.69
04/98 13,877.32 14,238.26 14,105.11
05/98 12,947.15 13,470.82 13,862.51
06/98 13,531.00 13,499.11 14,425.32
07/98 12,598,89 12,405.68 14,272.42
08/98 9,566.96 9,996.50 12,210.05
09/98 10,652.72 10,779.22 12,992.72
10/98 11,472.16 11,219.02 14,047.72
11/98 12,629.62 11,806.89 14,899.02
12/98 14,207.04 12,537.74 15,757.20
01/99 15,743.49 12,704.49 16,415.85
02/99 14,319.71 11,675.43 15,905.32
03/99 15,477.17 11,857.56 16,541.53
04/99 16,368.31 12,920.00 17,181.69
05/99 16,063.13 13,108.63 16,776.20
06/99 17,980.81 13,701.14 17,707.28
07/99 18,176.70 13,325.73 17,154.81
08/99 18,156,08 12,832.68 17,069.04
09/99 18,238.56 12,835.25 16,601.35
10/99 19,465.46 12,886.59 17,652.21
11/99 22,187.33 13,655.92 18,010.55
12/99 27,609.83 15,201.77 19,069.57
</TABLE>
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 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. 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
MARKET CONDITIONS
The environment was favorable for U.S. equity investments in 1999. Aided by
increased productivity and low inflation, the domestic economy continued to
grow at a healthy pace. Overseas economies, boosted by early signs of
recovery from a severe downturn in Asia, advanced in the aggregate as well.
Earnings, for the most part, advanced sharply both in the U.S. and abroad.
On a less positive note, interest rates increased slightly amidst concerns
that inflation would heat up, but in the end, this was not enough to offset
the good news on the earnings front.
Under these conditions, U.S. stock markets flourished, with all the major
indices advancing. Against this backdrop, several trends were prominent, in
our analysis:
. The multi-year performance edge of large cap stocks versus small narrowed.
Investors finally appear to have become more willing to forego some of the
liquidity of large cap equities in order to take advantage of the attractive
valuations and growth prospects of smaller ones. Thus the Russell 2000 Index,
a leading benchmark of small cap stock performance advanced 21.26%, virtually
matching that of the S&P 500, a major large cap indicator, which was up by
21.03%.
. Technology equities reigned supreme. Helped by an extremely strong
initial public offerings (IPO)
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
DECEMBER 31, 1999
One Year: 94.34%
Since Inception
May 1, 1997: 46.35%
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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 ANNUAL REPORT B-15
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
cycle, the tech-heavy NASDAQ Composite1 soared 85.59%, outstripping all the
other major stock indices by a wide margin.
. Largely influenced by the technology boom, growth stocks enjoyed very
strong performance, while value stocks languished. A breakdown of the
Russell 2000 Index makes this readily apparent. Russell 2000 Growth was
up by 43.09% for the year, whereas Russell 2000 Value declined -1.49%.
PERFORMANCE
The USAA Life Aggressive Growth Fund was well positioned to take advantage of
the conditions listed above. Helped by its emphasis on growth over value, by its
sizeable investments in technology as well as in other well-performing areas
such as communications services and biotech, and by its active participation in
the IPO market, the Fund had a very strong year, providing a total return of
94.34%.
PORTFOLIO STRATEGY
There have been no major adjustments to our strategy over the past six months.
We believe that change is central to existence and is inevitable. 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
"aggressive growth" is not synonymous with small cap; instead, it transcends
market capitalization categories.
We have overweighted our investments in the technology and communications areas.
The Internet (Network Solutions, Concentric Networks) 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 Telesystems, Global
Crossing, Level 3 Communications) arise to provide the Internet and other new
services that customers demand.
TOP 10 EQUITY HOLDINGS
as of December 31, 1999
- -------------------------------------------
% of
Net Assets
IDEC Pharmaceuticals Corp. 4.3%
Home Depot, Inc. 3.5
Genetech, Inc. 2.9
Harmonic Lightwaves, Inc. 2.5
Network Solutions, Inc. "A" 2.2
TranSwitch Corp. 2.0
Williams-Sonoma, Inc. 2.0
JDS Uniphase Corp. 1.8
Metromedia Fiber Network, Inc. "A" 1.8
VoiceStream Wireless, Corp. "A" 1.7
B-16 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Almost as rapidly as these new companies are being established, companies within
the industry are acquiring one another (Metromedia Fiber Networks/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 Corp., Harmonic Inc.) that goes into the telecommunications infrastructure
and for the semiconductors (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 12 months ended
December 31. We are also taking advantage of opportunities in other promising
industries such as retailing (Abercrombie & Fitch, 99 Cents Only Stores,
Williams-Sonoma), biotechnology (Idec Pharmaceuticals, Immunex Corp.), health
care (Express Scripts), and financial services (Knight Trimark).
OUTLOOK
Without a doubt, the Fund had a great year in 1999. The positive conditions
that contributed so strongly to performance during the past year remain in
place. Most signs point to moderation in terms of economic growth, corporate
earnings, inflation, and interest rates. This makes us optimistic about
future equity investment prospects.
Nevertheless, we would be remiss not to point out that past performance is
not a guarantee of future results. As good as the fundamental outlooks of
our individual holdings might be, stocks in general, and technology issues in
particular, are selling at valuations that defy conventional investment
wisdom. This could leave them exposed to any possible negative news
including, political and social disruptions, earnings disappointments,
residual Y2K issues, and rising inflation and interest rates. Volatility has
always been a central characteristic of aggressive growth investing, and in
our opinion, this will continue to be the case.
In the event of a stock market correction, this Fund may be more vulnerable
than many others due to its large concentration of high valuation and low
market capitalization holdings. Should this occur, we urge aggressive growth
investors to maintain their long-term perspective. No matter how painful
stock market corrections and bear markets may be, they have proved to be
nothing more than temporary disruptions to an immutable trend of increasing
values for well-managed and correctly positioned growth companies. We believe
that the companies such as the ones comprising our portfolio meet these
standards.
1 The NASDAQ Composite Index is a market-value weighted index of all common
stocks listed on the NASDAQ System.
The performance of the Aggressive Growth Fund will reflect the volatility of
investment in small cap stock and initial public offerings.
TOP 10 INDUSTRIES
as of December 31, 1999
- ------------------------------------------
% of
Net Assets
Biotechnology 16.1
Internet Services 10.4
Communications Equipment 8.3
Telephones 7.8
Electronics - Semiconductors 6.9
Computer Software & Service 5.3
Retail - Building Supplies 3.9
Telecommunications -
Cellular/Wireless 3.7
Retail - Specialty 3.5
Drugs 2.9
1999 ANNUAL REPORT B-17
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
- --------------------------------------------------------------------------------
An Overview December 31, 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
DECEMBER 31, 1999
One Year: 28.33%
Since Inception
May 1, 1997: 12.14%
The total return calculations found in this section are calculated at the Fund's
level and reflect the change in the net asset value (NAV), the reinvestment of
income dividends, and the deductions of Fund expenses. They do not reflect
insurance contract charges at the Separate Account level, such as the mortality
and expense charge. If they did, the performance quoted above would be lower.
More specific information regarding the Fund expenses and insurance contract
charges 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]
LIFE MORGAN STANLEY
DATE INTERNATIONAL FUND CAPITAL INDEX-EAFE
==== =================== ==================
05/01/1997 $10,000.00 $10,000.00
05/97 10,300.00 10,651.00
06/97 10,710.00 11,237.87
07/97 11,080.00 11,419.92
08/97 10,470.00 10,566.86
09/97 11,180.00 11,158.60
10/97 10,440.00 10,300.50
11/97 10,110.00 10,195.44
12/97 10,191.91 10,284.14
01/98 10,171.63 10,754.12
02/98 10,830.81 11,444.54
03/98 11,530.55 11,797.03
04/98 11,773.94 11,890.23
05/98 11,585.69 11,831.96
06/98 11,311.77 11,921.89
07/98 11,261.05 12,042.30
08/98 9,404.50 10,550.26
09/98 9,079.85 10,226.36
10/98 9,911.75 11,291.95
11/98 10,175.52 11,870.10
12/98 10,577.39 12,337.78
01/99 10,731.13 12,300.77
02/99 10,351.90 12,008.01
03/99 10,577.39 12,508.74
04/99 11,110.36 13,015.35
05/99 10,823.37 12,345.06
06/99 11,223.10 12,826.51
07/99 11,622.83 13,207.46
08/99 11,756.07 13,256.33
09/99 11,776.57 13,390.22
10/99 11,889.31 13,892.35
11/99 12,565.77 14,374.42
12/99 13,573.50 15,665.24
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 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 Mangers Albert Sebastian, David G. Peebles, and Kevin P. Moore
MARKET CONDITIONS
For the year ended December 31, 1999, the Fund's total return was 28.33%
compared with the Lipper International Funds Average1 return of 42.88% and the
Morgan Stanley Capital Index (MSCI)-EAFE return of 26.96%. The Fund's
performance was negatively impacted by its underweighted position in Japan and
other Asian markets, while holdings in telecommunications and technology
benefited performance for the period.
Europe - In Europe, rising interest rates as well as weak currencies negatively
impacted equity returns. An improved profit outlook and stronger economic growth
positively impacted equity returns. Telecommunications and technology stocks
were the best-performing issues, with media and mining stocks also performing
well. However, auto-related and interest-rate-sensitive stocks performed poorly
for the period.
Canada - Our strategy of overweighting Canada proved correct as Canadian equity
returns exceeded the broad international stock averages. Telecommunication and
technology stocks performed well throughout the year while energy stocks had
strong relative performance in the first half.
B-18 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Japan - The market continued to be very strong during the last six months due
mainly to global popularity of telecommunications and technology stocks. Growth
stocks continued to outperform value stocks due to the secular transformation of
the Japanese economy -- from manufacturing to service. The other focus of the
market in 1999 was corporate restructuring, which we expect to continue next
year. Consolidation of the banking sector should continue which would, in turn,
bring more efficient credit usage. The yen turned around after the middle of
the year with expectation of a stronger Japanese economic recovery. The
Organization for Economic Cooperation and Development (OECD) recently revised
its growth projection for the gross domestic product (GDP) from -0.9% to +1.4%
for the year 2000. The current Obuchi administration appears to be very solid,
and we expect no political turmoil to take place in the next six months. Our
overweighing in the technology and telecommunications sectors positively
impacted our performance.
Emerging Markets - Most of the regional markets suffered a pullback in the
midsummer months, and all, except for some Eastern European markets, experienced
strong rallies beginning in late September. Over the past six months, emerging
markets have retained or added to most of the gains they experienced since the
lows during the Russian and Asian crises of late 1998. Expectations for the
Asian economies continued to rise during the last six months while concerns
lingered regarding Eastern European economies. Commodity price increases and
interest rate declines continue to support a rebound in the South African
economy. The Latin markets have also rebounded as concerns about presidential
elections in Mexico and economic concerns in Brazil have receded.
OUTLOOK
We continue to be encouraged by the strength of the global economy and
continue to view Europe positively. European valuations still look relatively
TOP 10 EQUITY HOLDINGS
as of December 31, 1999
- -------------------------------------------
% of
Net Assets
Nokia Corp. SPON ADR (Finland) 3.6%
Nortel Networks Corp. (Canada) 2.1
Telefonica de Espana
S.A. ADR (Spain) 2.0
Total Fina SA-SPON ADR (France) 2.0
Sony Corp. (Japan) 1.8
Kloninklijke Philips Electronics
N.V. ADR (Netherlands) 1.7
WPP Group plc (U.K.) 1.7
Akzo Nobel, N.V. (Netherlands) 1.6
Aventis S.A. (France) 1.6
Cookson Group plc (U.K.) 1.5
TOP 10 INDUSTRIES
OF EQUITY HOLDINGS
as of December 31, 1999
- ------------------------------------------
% of
Net Assets
Telephones 12.5%
Banks - Major Regional 7.4
Drugs 5.8
Communication Equipment 5.8
Insurance - Multi-Line Companies 4.5
Oil - International Integrated 3.9
Auto Parts 2.5
Chemicals - Specialty 2.4
Retail - Specialty 2.3
Electrical Equipment 2.2
1999 ANNUAL REPORT B-19
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
- --------------------------------------------------------------------------------
An Overview (Continued) December 31, 1999
- --------------------------------------------------------------------------------
attractive, and interest rates in Europe have the potential to decline based
on a benign inflation outlook. The value of the Eurodollar could stabilize--
or possibly move higher -- as economic growth patterns in the United States
and Europe converge next year. We are comfortable with our energy exposure,
as the fundamental values of the stocks do not reflect current energy prices.
In Japan, the market will continue to be led by telecommunications and
technology sectors as well as by large-capitalization growth stocks. We
believe that a combination of falling interest rates in emerging markets and
increased global growth provides the potential for a positive backdrop in
2000.
1 The Lipper International Funds Average is the average performance level of
all international 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. 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 December 31, 1999
- -------------------------------------------------
Other* 14.6
Portugal 2.3%
Spain 4.3%
Norway 2.4%
Sweden 2.2%
Denmark 3.0%
Germany 2.6%
Italy 4.3%
Switzerland 2.7%
Finland 5.8%
Canada 7.1%
France 7.6%
Netherlands 9.9%
Japan 14.4%
United Kingdom 17.2%
* Countries representing less than 2% of the portfolio and U.S. Government
and Agency Issues.
B-20 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
THE SHAREHOLDERS AND BOARD OF TRUSTEES
USAA LIFE INVESTMENT TRUST:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments of the USAA Life Money Market Fund, USAA Life
Income Fund, USAA Life Growth and Income Fund, USAA Life World Growth Fund, USAA
Life Diversified Assets Fund, USAA Life Aggressive Growth Fund, and USAA Life
International Fund, all funds of the USAA Life Investment Trust, as of December
31, 1999, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended, and financial highlights, presented in note 8 to the financial
statements, for each of the years or periods in the five-year period then ended.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
USAA Life Money Market Fund, USAA Life Income Fund, USAA Life Growth and
Income Fund, USAA Life World Growth Fund, USAA Life Diversified Assets Fund,
USAA Life Aggressive Growth Fund, and USAA Life International Fund as of
December 31, 1999, the results of their operations for the year then ended,
the changes in their net assets for each of the years in the two-year period
then ended, and the financial highlights for the each of the years or periods
in the five-year period then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
------------------------
KPMG LLP
San Antonio, Texas
February 4, 2000
1999 ANNUAL REPORT B-21
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Money Market Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Coupon or
Amount Discount Value
(000) Security Rate Maturity (000)
- ---------- -------- ---------- --------- --------
<S> <C> <C> <C> <C>
FIXED-RATE INSTRUMENTS (69.9%)
ALUMINUM
$ 1,094 Aluminum Company of America, CP 6.15% 2/03/2000 $ 1,088
--------
ELECTRIC UTILITIES
1,000 Northern States Power Minnesota, CP 6.00 1/13/2000 998
--------
ELECTRICAL EQUIPMENT
1,184 Emerson Electric Co., CP 6.05 1/31/2000 1,178
--------
FINANCE - CONSUMER
999 Associates Corp. of North America, CP 4.00 1/03/2000 999
1,433 Ford Credit Europe plc, CP 6.06 1/14/2000 1,430
1,250 Ford Motor Credit, CP 6.35 1/05/2000 1,249
1,282 General Motors Acceptance Corp., CP 6.40 1/26/2000 1,276
1,099 Household Finance Corp., CP 6.00 2/01/2000 1,093
1,291 Toyota Motor Credit Corp., CP 5.91 1/12/2000 1,289
500 Yamaha Motor Finance Corp., CP, (LOC) 5.80 2/28/2000 496
--------
7,832
FOODS
971 H.J. Heinz Co., CP 5.95 1/20/2000 968
1,429 Sara Lee Corp., CP 5.85 1/06/2000 1,428
--------
2,396
--------
OIL & GAS - REFINING/MANUFACTURING
1,247 Motiva Enterprises, CP 5.85 1/10/2000 1,245
--------
TELEPHONES
1,532 Bellsouth Telecommunications Inc., CP 6.10 1/19/2000 1,527
--------
U.S. GOVERNMENT
821 Federal Farm Credit Bank, DN 5.58 1/18/2000 819
374 Federal Farm Credit Bank, DN 5.64 1/28/2000 372
906 Federal Home Loan Mortgage, DN 5.60 1/11/2000 904
1,000 Federal Home Loan Mortgage, DN 5.63 1/21/2000 997
929 Federal Home Loan Mortgage, DN 5.78 1/25/2000 925
681 Federal Home Loan Mortgage, DN 5.63 1/27/2000 678
359 Federal Home Loan Mortgage, DN 5.60 1/28/2000 358
687 Federal National Mortgage Assn., DN 5.60 1/18/2000 685
--------
5,738
--------
Total fixed-rate instruments (cost: $22,002) 22,002
VARIABLE-RATE DEMAND NOTES (31.3%)
ASSET BACKED SECURITIES
610 Capital One Funding Corp., Notes,
Series 1995C, (LOC) 6.60 10/01/2015 610
678 Capital One Funding Corp., Notes,
Series 1996E, (LOC) 6.60 7/02/2018 678
--------
1,288
--------
AUTO PARTS
600 Alabama IDA RB (Rehau Project), (LOC) 6.55 10/01/2019 600
985 Bardstown, KY, RB, Series 1994, (LOC) 6.55 6/01/2024 985
--------
1,585
Principal Coupon or
Amount Discount Value
(000) Security Rate Maturity (000)
- ---------- -------- ---------- --------- --------
HEALTH CARE - DIVERSIFIED
$ 300 GMS Associates II Project Health Care
RB, Series 1995 (LOC) 6.60% 8/15/2025 $ 300
--------
HEALTH CARE - SPECIALIZED SERVICES
800 Mason City Clinic, P.C., IA, Bonds,
Series 1992, (LOC) 6.50 9/01/2022 800
--------
HOSPITALS
700 Dome Corp., Bonds, Series 1991, (LOC) 6.65 8/31/2016 700
--------
LEISURE TIME
960 Fox Valley Ice Arena, IL, RB,
Series 1997, (LOC) 5.90 7/01/2027 960
--------
NURSING/CONTINUING CARE CENTERS
965 Lincolnwood Funding Corp. RB,
Series 1995A, (LOC) 6.65 8/01/2015 965
--------
PAPER & FOREST PRODUCTS
963 Bancroft Bag, Inc. Notes,
Series 1998, (LOC) 6.60 11/01/2008 963
--------
REAL ESTATE - OTHER
100 MMR Funding I, Note, Series A (LOC) 6.60 9/01/2010 100
900 Shepherd Capital, L.L.C., Notes,
Series 1997, (LOC) 6.53 7/15/2047 900
--------
1,000
--------
RETAIL - DEPARTMENT STORES
1,300 Belk Inc. RB, Series 1998, (LOC) 6.75 7/01/2008 1,300
--------
Total variable-rate demand notes (cost: $9,861) 9,861
--------
Total investments (cost: $31,863) $ 31,863
========
</TABLE>
B-22 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Money Market Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY BY CONCENTRATION
Finance - Consumer 24.9%
U.S. Government 18.2
Foods 7.6
Auto Parts 5.0
Telephones 4.8
Retail - Department Stores 4.1
Asset Backed Securities 4.1
Oil & Gas - Refining/Manufacturing 4.0
Electrical Equipment 3.7
Aluminum 3.5
Real Estate - Other 3.2
Electric Utilities 3.2
Nursing/Continuing Care Centers 3.1
Paper & Forest Products 3.1
Leisure Time 3.0
Health Care - Specialized Services 2.5
Hospitals 2.2
Health Care - Diversified 1.0
--------
Total 101.2%
========
See accompanying Notes to Portfolio of Investments page B-41.
1999 ANNUAL REPORT B-23
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Income Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
PREFERRED STOCKS (10.9%)
15,000 Avalon Bay Communities, Inc., "F", 9.00%
cumulative redeemable $ 302
12,000 Duke Realty Investments, Inc. depository
shares "A", 9.10% cumulative redeemable 240
12,000 Equity Residential Properties Trust depository
shares "C", 9.125% cumulative redeemable 261
6,000 Post Properties, Inc. "A", 8.50% cumulative
redeemable 231
6,000 Prologis Trust, Inc. "C", 8.54% cumulative
redeemable 251
12,000 Shurgard Storage Centers, Inc. "B", 8.80%
cumulative redeemable 246
12,000 United Dominion Realty Trust, Inc. depository
shares "A", 9.25% cumulative redeemable 234
------
Total preferred stocks (cost: $2,199) 1,765
------
Principal Coupon or
Amount Discount Value
(000) Security Rate Maturity (000)
- ------- -------- --------- -------- -----
CORPORATE OBLIGATIONS (19.9%)
$ 300 Caliber Systems, Inc., Notes 7.80% 8/01/2006 $ 293
500 Chase Manhattan Corp.,
Subordinated Notes 7.13 2/01/2007 489
500 Finova Capital Corp., MTN 6.00 1/07/2004 472
500 First Union Corp., Subordinated Notes 7.50 7/15/2006 498
500 Household Finance Corp., Notes 7.25 5/15/2006 493
500 Province of Quebec, Global Debentures 7.00 1/30/2007 490
500 Wells Fargo & Co., Subordinated Notes 6.88 4/01/2006 485
-------
Total corporate obligations (cost: $3,254) 3,220
-------
U.S. GOVERNMENT & AGENCY ISSUES (68.4%)
FEDERAL NATIONAL MORTGAGE ASSN. (6.5%)
1,088 7.00%, 6/01/2024 - 10/01/2026 1,058
-------
GOVERNMENT NATIONAL MORTGAGE ASSN. (53.4%)
8,475 6.00%, 4/15/2028 - 9/15/2028 7,724
978 7.00%, 6/15/2029 945
-------
8,669
-------
U.S. TREASURY BONDS (8.5%)
1,664 5.25%, 11/15/2028 1,372
-------
Total U.S. government & agency issues (cost: $11,904) 11,099
-------
Total investments (cost: $17,357) $16,084
=======
PORTFOLIO SUMMARY BY CONCENTRATION
U.S. Government 68.4%
Real Estate Investment Trusts 10.9
Banks - Money Center 6.1
Finance - Consumer 3.1
Foreign Government 3.0
Banks - Major Regional 3.0
Finance - Diversified 2.9
Truckers 1.8
-------
Total 99.2%
=======
See accompanying Notes to Portfolio of Investments page B-41.
B-24 Annual Report 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Growth and Income Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
COMMON STOCKS (96.4%)
AEROSPACE/DEFENSE (2.2%)
34,000 B.F. Goodrich Co. $ 935
23,000 Boeing Co. 956
-------
1,891
-------
ALUMINUM (2.7%)
27,000 Alcoa, Inc. 2,241
-------
AUTOMOBILES (1.3%)
21,000 Ford Motor Co. 1,122
-------
AUTO PARTS (1.3%)
35,000 Lear Corp.* 1,120
-------
BANKS - MAJOR REGIONAL (1.7%)
22,634 Fleet Financial Group, Inc. 788
18,000 SouthTrust Corp. 681
-------
1,469
-------
BANKS - MONEY CENTER (2.4%)
18,368 Bank of America Corp. 922
14,000 Chase Manhattan Corp. 1,088
-------
2,010
-------
BEVERAGES - ALCOHOLIC (0.8%)
9,000 Anheuser-Busch Companies, Inc. 638
-------
BEVERAGES - NONALCOHOLIC (1.8%)
15,500 Coca-Cola Co. 903
-------
38,000 Pepsi Bottling Group, Inc. 629
-------
1,532
-------
CHEMICALS (1.0%)
40,000 Lyondell Petrochemical Co. 510
19,000 Millennium Chemicals, Inc. 375
-------
885
-------
COMMUNICATION EQUIPMENT (2.0%)
22,672 Lucent Technologies, Inc. 1,696
-------
COMPUTER - HARDWARE (2.9%)
10,500 Hewlett-Packard Co. 1,196
11,600 IBM Corp. 1,253
-------
2,449
-------
COMPUTER - NETWORKING (3.1%)
24,000 Cisco Systems, Inc.* 2,571
-------
COMPUTER SOFTWARE & SERVICE (6.5%)
21,000 Microsoft Corp.* 2,452
18,300 Oracle Corp.* 2,051
12,000 Parametric Technology Corp.* 325
19,900 Unisys Corp.* 636
-------
5,464
-------
CONSUMER JEWELRY AND NOVELTIES - MISCELLANEOUS (0.8%)
27,000 American Greetings Corp. "A" 638
-------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
CONTAINERS - METALS & GLASS (0.6%)
13,500 Ball Corp. $ 532
-------
DRUGS (4.3%)
22,000 Merck & Co., Inc. 1,475
11,000 Pfizer, Inc. 357
31,000 Pharmacia & Upjohn, Inc. 1,395
12,000 Watson Pharmaceuticals, Inc.* 430
-------
3,657
-------
ELECTRIC UTILITIES (1.1%)
40,000 Reliant Energy, Inc. 915
-------
ELECTRICAL EQUIPMENT (2.3%)
12,500 General Electric Co. 1,934
-------
ELECTRONICS - SEMICONDUCTORS (2.2%)
23,000 Intel Corp. 1,893
-------
ENTERTAINMENT (0.9%)
25,000 Walt Disney Co. 731
-------
EQUIPMENT - SEMICONDUCTORS (1.7%)
11,000 Applied Materials, Inc.* 1,394
-------
FINANCE - CONSUMER (1.1%)
19,000 PMI Group, Inc. 927
-------
FINANCE - DIVERSIFIED (5.5%)
25,966 Associates First Capital Corp. "A" 712
27,000 Citigroup, Inc. 1,500
17,000 Morgan Stanley, Dean Witter & Co. 2,427
-------
4,639
-------
FOODS (2.4%)
23,000 Bestfoods 1,209
24,000 Nabisco Group Holding Corp. 255
18,000 Nabisco Holdings Corp. "A" 569
-------
2,033
-------
HEALTH CARE - DIVERSIFIED (3.7%)
22,000 American Home Products Corp. 868
17,300 Bristol-Myers Squibb Co. 1,110
12,000 Johnson & Johnson, Inc. 1,118
-------
3,096
-------
HEALTH CARE - HMOs (1.1%)
17,000 Aetna, Inc. 949
-------
HOTELS (0.6%)
20,000 Starwood Hotels & Resorts Worldwide, Inc. 470
-------
HOUSEHOLD PRODUCTS (2.9%)
22,000 Kimberly-Clark Corp. 1,436
9,000 Procter & Gamble Co. 986
-------
2,422
-------
1999 ANNUAL REPORT B-25
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Growth and Income Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
INSURANCE - LIFE/HEALTH (0.3%)
11,000 Stancorp Financial Group, Inc. $ 277
-------
INSURANCE - MULTI-LINE COMPANIES (2.1%)
16,375 American International Group, Inc. 1,771
-------
INSURANCE - PROPERTY/CASUALTY (0.6%)
23,000 Everest Reinsurance Holdings, Inc. 513
-------
LEISURE TIME (1.1%)
41,000 Brunswick Corp. 912
-------
MACHINERY - DIVERSIFIED (1.3%)
25,000 Deere & Co. 1,084
-------
MANUFACTURING - DIVERSIFIED INDUSTRIES (1.3%)
14,600 Eaton Corp. 1,060
-------
MANUFACTURING - SPECIALIZED (2.1%)
24,000 Avery Dennison Corp. 1,749
-------
MEDICAL PRODUCTS & SUPPLIES (1.7%)
21,000 Bausch & Lomb, Inc. 1,437
-------
OIL - DOMESTIC INTEGRATED (2.0%)
28,000 Conoco, Inc. "A" 693
45,000 Occidental Petroleum Corp. 973
-------
1,666
-------
OIL - INTERNATIONAL INTEGRATED (2.6%)
17,000 Royal Dutch Petroleum Co. 1,027
22,000 Texaco, Inc. 1,195
-------
2,222
-------
OIL & GAS - DRILLING/EQUIPMENT (0.8%)
32,400 Helmerich & Payne, Inc. 707
-------
OIL & GAS - EXPLORATION & PRODUCTION (1.1%)
21,000 Apache Corp. 776
12,000 Union Pacific Resources, Inc. 153
-------
929
-------
PAPER & FOREST PRODUCTS (1.2%)
10,000 Jefferson Smurfit Group plc 290
10,400 Weyerhaeuser Co. 747
-------
1,037
-------
PHOTOGRAPHY - IMAGING (0.8%)
28,500 Xerox Corp. 647
-------
RAILROADS/SHIPPING (1.1%)
44,000 Norfolk Southern Corp. 902
-------
RETAIL - DEPARTMENT STORES (0.3%)
11,000 J.C. Penney Company, Inc. 219
-------
RETAIL - GENERAL MERCHANDISING (3.1%)
27,000 Sears, Roebuck & Co. 822
26,000 Wal-Mart Stores, Inc. 1,797
-------
2,619
-------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
SAVINGS & LOAN HOLDING CO. (0.9%)
30,000 Washington Mutual, Inc. $ 780
-------
SERVICES - COMMERCIAL & CONSUMER (1.1%)
18,000 Hertz Corp. "A" 902
-------
SERVICES - DATA PROCESSING (1.5%)
25,000 First Data Corp. 1,233
-------
TELECOMMUNICATIONS - LONG DISTANCE (3.6%)
15,750 AT&T Corp. 799
13,500 MCI WorldCom, Inc.* 716
22,200 Sprint Corp. 1,494
-------
3,009
-------
TELEPHONES (4.9%)
28,000 Bell Atlantic Corp. 1,724
21,000 GTE Corp. 1,482
18,000 SBC Communications Inc. 877
-------
4,083
-------
Total common stocks (cost: $55,839) 81,076
-------
Principal
Amount
(000)
- ---------
SHORT-TERM (3.4%)
U.S. GOVERNMENT AGENCY ISSUE
$ 2,858 Federal Home Loan Bank, 1.28%,
1/03/2000 (cost: $2,858) 2,858
-------
Total investments (cost: $58,697) $83,934
=======
See accompanying Notes to Portfolio of Investments page B-41.
B-26 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
FOREIGN SECURITIES (59.8%)
FOREIGN STOCKS (59.7%)
ARGENTINA (0.1%)
1,519 IRSA Inversiones y Representaciones S.A. GDR $ 49
-------
AUSTRIA (0.9%)
900 Bank Austria AG 51
2,500 Boehler Uddeholm AG 115
2,750 VA Flughafen Wien AG 96
650 VA Technologie AG 43
-------
305
-------
BRAZIL (0.6%)
1,900 Companhia Brasileira de Distribuicao Grupo Pao
de Acucar ADR 61
2,900 Panamerican Beverages, Inc. "A" 60
267,000 Petroleo Brasileiro S.A. (Preferred) 68
-------
189
-------
CANADA (4.4%)
12,100 Anderson Exploration Ltd.* 145
3,200 Canadian Imperial Bank of Commerce 76
8,000 Canadian National Railway Co. 211
8,900 Canadian Occidental Petroleum Ltd. 176
7,900 Manulife Financial Corp.* 100
4,300 Nortel Networks Corp. 434
4,800 Suncor Energy, Inc. 200
5,400 Toronto-Dominion Bank 145
-------
1,487
-------
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" 28
-------
30
-------
CHINA (0.2%)
55,000 Cosco Pacific Ltd. 46
25,000 New World Infrastructure Ltd.* 32
-------
78
-------
DENMARK (1.8%)
1,400 ISS International Service System A/S "B"* 94
6,000 SAS Danmark A/S 63
3,600 Tele Danmark A/S "B" 267
2,600 Unidanmark A/S 183
-------
607
-------
EGYPT (0.1%)
2,300 Suez Cement Co. S.A.E. GDR 38
-------
FINLAND (3.7%)
40,800 Merita plc "A" 241
7,561 Metso OYJ* 98
4,100 Nokia Corp. ADR 779
3,700 Sampo Insurance Co. "A" 129
-------
1,247
-------
FRANCE (4.7%)
2,500 Accor S.A. 121
5,575 Aventis S.A. 324
Market
Number Value
of Shares Security (000)
- --------- -------- -------
2,678 CNP Assurances $ 99
3,800 Coflexip ADR 144
1,900 Eramet Group 109
1,040 ISIS S.A. 62
2,700 Renault S.A. 130
2,800 Rhodia S.A. 63
6,207 Total Fina S.A. 430
1,500 Valeo S.A. 116
-------
1,598
-------
GERMANY (1.6%)
4,700 Continental AG 94
4,600 Merck KGaA 143
120 SAP AG 59
5,300 Veba AG 257
-------
553
-------
GREECE (0.3%)
2,700 Hellenic Telecommunications Organization S.A. (OTE) 64
2,770 National Bank of Greece S.A. GDR 39
-------
103
-------
HONG KONG (0.2%)
5,000 Hutchison Whampoa Ltd. 73
-------
HUNGARY (0.1%)
1,100 Magyar Tavkozlesi RT. (MATAV) ADR 40
-------
INDIA (0.4%)
4,000 Videsh Sanchar Nigam Ltd. GDR 99
1,000 Videsh Sanchar Nigam Ltd. GDR 25
-------
124
-------
ISRAEL (0.2%)
12,293 Bank Hapoalim Ltd. 38
1,800 Blue Square - Israel Ltd. ADR 23
-------
61
-------
ITALY (2.8%)
3,300 ENI S.p.A. ADR 182
2,400 Gucci Group N.V. 275
36,000 Italgas S.p.A. 136
7,400 Telecom Italia S.p.A. 104
42,400 Telecom Italia S.p.A. Savings 259
-------
956
-------
JAPAN (9.2%)
5,000 Daibiru Corp. 31
15 East Japan Railway Co. 81
300 Internet Initiative Japan, Inc. ADR * 29
2,000 Ito-Yokado Co. Ltd. 217
10,000 Kikkoman Corp. 66
5,000 Kirin Brewery Co. Ltd. 53
600 Nichii Gakkan Co. 114
13,000 Nikko Securities Co. Ltd. 165
42,000 Nippon Steel Corp. 98
12 Nippon Telegraph & Telephone Corp. 206
5 NTT Mobile Communication Network, Inc. 192
3,000 Paris Miki, Inc. 216
1999 ANNUAL REPORT B-27
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
1,000 Pasona Softbank, Inc. $ 79
2,000 Sailor Pen Co. Ltd. 41
1,400 Sanix Inc. 153
13,000 Sharp Corp. 333
200 Softbank Corp. 191
1,300 Sony Corp. 386
10,000 Sumitomo Electric Industries, Ltd. 116
2,000 Takeda Chemical Industries 99
18,000 Toshiba Corp. 137
1,100 Toyota Motor Corp. 107
-------
3,110
-------
KOREA (0.6%)
1,599 Korea Telecom Corp. ADR 119
2,000 Samsung Corp.* 30
255 Samsung Electronics Co. Ltd. 60
-------
209
-------
MALAYSIA (0.4%)
27,200 Genting Bhd 97
27,000 Malaysia International Shipping Corp. Bhd 44
-------
141
-------
MEXICO (0.4%)
600 Telefonos de Mexico, S.A. de C.V. ADR 68
4,000 Tubos de Acero de Mexico, S.A. ADR 54
-------
122
-------
NETHERLANDS (6.2%)
6,700 Akzo Nobel N.V. 336
1,400 EVC International N.V.* 19
4,100 Fortis NL N.V. 148
1,200 Getronics N.V. 96
5,000 ING Group N.V. 302
3,200 Koninklijke KPN N.V. 312
2,600 Koninklijke Philips Electronics N.V. ADR 351
4,100 Oce-van der Grinten N.V. 69
4,600 Versatel Telecom* 162
3,300 VNU N.V. 174
5,800 Vopak Kon* 138
-------
2,107
-------
NORWAY (1.5%)
51,600 Christiania Bank og Kreditkasse 254
2,600 Schibsted ASA 48
21,600 Storebrand ASA* 165
14,100 Tandberg Data ASA* 39
-------
506
-------
PORTUGAL (1.4%)
7,996 Banco Pinto & Sotto Mayor S.A. 171
12,000 Brisa-Auto Estrada de Portugal S.A. 92
19,000 Portugal Telecom S.A. ADR 207
-------
470
-------
RUSSIA (0.1%)
1,000 LUKoil ADR 50
-------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
SINGAPORE (0.2%)
5,000 DBS Group Holdings, Ltd. $ 82
-------
SOUTH AFRICA (0.2%)
2,889 South African Breweries plc 29
13,000 Standard Bank Investment Corp. Ltd. 54
-------
83
-------
SPAIN (2.7%)
8,265 Altadis S.A. 118
8,876 Argentaria, Caja Postal y Banco
Hipotecario de Espana, S.A. 209
7,150 Repsol S.A. 166
5,498 Telefonica de Espana S.A. ADR* 433
-------
926
-------
SWEDEN (1.4%)
6,700 Autoliv, Inc. GDR 196
600 Ericsson LM Tel Co. ADR 39
1,180 Skandinaviska Enskilda Banken 12
5,900 Skandinaviska Enskilda Banken "A" 60
43,200 Swedish Match AB 151
-------
458
-------
SWITZERLAND (1.8%)
168 Novartis AG 247
450 Selecta Group AG 141
173 Sulzer AG P.C.* 113
290 Swisscom AG 117
-------
618
-------
TAIWAN (0.2%)
3,923 China Steel Corp. GDR 59
-------
TURKEY (0.4%)
380,952 Enka Holding Yatrim A.S. 76
1,396,544 Yapi Ve Kredi Bankasi A.S. 43
-------
119
-------
UNITED KINGDOM (10.8%)
4,500 AstraZeneca Group plc 187
14,800 Bank of Scotland 172
52,300 Billiton plc 310
4,200 BOC Group plc 91
6,900 British Telecommunications plc 167
17,000 British-Borneo Oil & Gas plc* 37
9,700 Cable & Wireless plc 166
33,700 Cadbury Schweppes 203
14,000 CGU plc 226
78,700 Cookson Group plc 318
57,100 Corporate Services Group plc* 93
1,900 Glaxo Wellcome plc ADR 106
10,000 Laporte plc 88
49,100 Medeva plc 138
12,000 National Westminster Bank plc 258
35,000 Old Mutual plc* 96
3,200 Powergen plc 23
21,500 Reckitt Benckiser plc 204
15,040 Reuters Group plc 209
22,600 Safeway plc 78
B-28 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
43,300 Tomkins plc $ 141
22,864 WPP Group plc 358
-------
3,669
-------
Total foreign stocks (cost: $13,238) 20,267
-------
Principal
Amount
(000)
- ---------
FOREIGN BONDS (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: $13,258) 20,289
-------
Number
of Shares
- ---------
DOMESTIC STOCKS (34.2%)
AEROSPACE/DEFENSE (0.3%)
2,600 Boeing Co. 108
-------
ALUMINUM (0.9%)
3,600 Alcoa, Inc. 299
-------
BANKS - MAJOR REGIONAL (0.4%)
4,000 Mellon Financial Corp. 136
-------
BEVERAGES - NONALCOHOLIC (1.3%)
12,800 Pepsi Bottling Group, Inc. 212
6,600 PepsiCo, Inc. 233
-------
445
-------
BIOTECHNOLOGY (0.6%)
3,300 Amgen, Inc.* 198
-------
BROADCASTING - RADIO & TV (1.4%)
5,300 Clear Channel Communications, Inc.* 473
-------
COMMUNICATION EQUIPMENT (1.0%)
4,600 Lucent Technologies, Inc. 344
-------
COMPUTER - HARDWARE (1.6%)
4,000 Dell Computer Corp.* 204
3,100 Hewlett-Packard Co. 353
-------
557
-------
COMPUTER - NETWORKING (1.5%)
4,600 Cisco Systems, Inc.* 493
-------
COMPUTER SOFTWARE & SERVICE (5.4%)
6,300 America Online, Inc.* 475
3,400 BMC Software, Inc.* 272
4,700 Microsoft Corp.* 549
4,800 Oracle Corp.* 538
-------
1,834
-------
DRUGS (1.7%)
500 Eli Lilly & Co. 33
2,800 Merck & Co., Inc. 188
6,000 Pfizer, Inc. 194
Market
Number Value
of Shares Security (000)
- --------- -------- -------
4,000 Schering-Plough Corp. $ 169
-------
584
-------
ELECTRICAL EQUIPMENT (1.4%)
3,000 General Electric Co. 464
-------
ELECTRONICS - SEMICONDUCTORS (3.1%)
4,200 Analog Devices, Inc.* 391
4,000 Intel Corp. 329
3,400 Texas Instruments, Inc. 329
-------
1,049
-------
ENTERTAINMENT (0.6%)
7,100 Walt Disney Co. 208
-------
EQUIPMENT - SEMICONDUCTORS (1.1%)
3,000 Applied Materials, Inc.* 380
-------
FINANCE - DIVERSIFIED (1.2%)
1,600 Freddie Mac 75
2,400 Morgan Stanley, Dean Witter & Co. 343
-------
418
-------
FOODS (1.1%)
3,100 Hershey Foods Corp. 147
7,700 Keebler Foods Co.* 217
-------
364
-------
HEALTH CARE - DIVERSIFIED (1.4%)
500 American Home Products Corp. 20
2,700 Bristol-Myers Squibb Co. 173
2,700 Johnson & Johnson, Inc. 251
300 Warner-Lambert Co. 25
-------
469
-------
HOSPITALS (0.1%)
3,500 Health Management Associates* 47
-------
HOUSEHOLD PRODUCTS (0.9%)
2,900 Procter & Gamble Co. 318
-------
INSURANCE - MULTI-LINE COMPANIES (0.9%)
2,968 American International Group, Inc. 321
-------
MANUFACTURING - SPECIALIZED (0.8%)
3,600 Avery Dennison Corp. 262
-------
MEDICAL PRODUCTS & SUPPLIES (0.9%)
1,200 Guidant Corp.* 57
6,400 Medtronic, Inc. 233
-------
290
-------
OIL & GAS - DRILLING/EQUIPMENT (0.4%)
3,300 Halliburton Co. 133
-------
PERSONAL CARE (0.8%)
8,700 Avon Products, Inc. 287
-------
RETAIL - DRUGS (0.3%)
3,600 Duane Reade, Inc.* 99
-------
1999 ANNUAL REPORT B-29
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
RETAIL - GENERAL MERCHANDISING (1.2%)
5,300 Dayton Hudson Corp. $ 389
-------
RETAIL - SPECIALTY APPAREL (1.0%)
7,200 Gap, Inc. 331
-------
SERVICES - COMPUTER SYSTEMS (0.1%)
900 Keane, Inc.* 28
-------
TELECOMMUNICATIONS - LONG DISTANCE (0.8%)
4,950 MCI WorldCom, Inc.* 263
-------
Total domestic stocks (cost: $5,513) 11,591
-------
Principal
Amount
(000)
- ---------
SHORT TERM (6.3%)
U. S. GOVERNMENT AGENCY ISSUE
$ 2,130 Federal Home Loan Bank, 1.28%, 1/03/2000
(cost: $2,130) 2,130
-------
Total investments (cost: $20,901) $34,010
=======
B-30 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life World Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Portfolio Summary By Concentration
Telephones 7.8%
U.S. Government 6.3
Computer Software & Service 5.6
Drugs 5.4
Banks - Major Regional 4.9
Communication Equipment 4.7
Insurance - Multi-Line Companies 3.9
Electronics - Semiconductors 3.7
Electrical Equipment 2.7
Oil - International Integrated 2.7
Beverages - Nonalcoholic 2.1
Manufacturing - Specialized 1.8
Retail - Specialty 1.7
Finance - Diversified 1.7
Computer - Hardware 1.6
Auto Parts 1.6
Household Products 1.5
Computer - Networking 1.5
Chemicals - Specialty 1.4
Railroads/Shipping 1.4
Broadcasting - Radio & TV 1.4
Health Care - Diversified 1.4
Telecommunications - Long Distance 1.3
Metals/Mining 1.3
Foods 1.3
Manufacturing - Diversified Industries 1.3
Banks - Money Center 1.2
Retail - General Merchandising 1.1
Leisure Time 1.1
Equipment - Semiconductors 1.1
Advertising/Marketing 1.1
Oil & Gas - Exploration & Production 1.1
Oil & Gas - Drilling/Equipment 1.0
Retail - Specialty Apparel 1.0
Iron & Steel 1.0
Other 18.6
-----
Total 100.3%
=====
See accompanying Notes to Portfolio of Investments page B-41.
1999 ANNUAL REPORT B-31
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
COMMON STOCKS (65.5%)
AEROSPACE/DEFENSE (1.9%)
16,000 B.F. Goodrich Co. $ 440
7,440 Boeing Co. 309
-------
749
-------
ALUMINUM (1.9%)
9,000 Alcoa, Inc. 747
-------
AUTOMOBILES (0.8%)
6,000 Ford Motor Co. 321
-------
AUTO PARTS (1.1%)
23,000 Meritor Automotive, Inc. 446
-------
BANKS - MAJOR REGIONAL (2.7%)
11,000 Fleet Financial Group, Inc. 383
7,000 PNC Bank Corp. 312
10,000 SouthTrust Corp. 378
-------
1,073
-------
BANKS - MONEY CENTER (1.6%)
8,000 Chase Manhattan Corp. 621
-------
BEVERAGES - NONALCOHOLIC (1.2%)
5,000 Coca-Cola Co. 291
11,000 Pepsi Bottling Group, Inc. 182
-------
473
-------
CHEMICALS (0.8%)
15,000 Lyondell Petrochemical Co. 191
7,000 Millennium Chemicals, Inc. 138
-------
329
-------
COMMUNICATION EQUIPMENT (1.3%)
7,000 Lucent Technologies, Inc. 524
-------
COMPUTER - HARDWARE (1.4%)
3,500 Hewlett-Packard Co. 399
1,500 IBM Corp. 162
-------
561
-------
COMPUTER - NETWORKING (0.7%)
2,500 Cisco Systems, Inc.* 268
-------
COMPUTER SOFTWARE & SERVICE (5.1%)
6,500 Microsoft Corp.* 759
8,400 Oracle Corp.* 941
5,000 Parametric Technology Corp.* 135
6,900 Unisys Corp.* 221
-------
2,056
-------
CONSUMER JEWELRY AND NOVELTIES
- MISCELLANEOUS (0.5%)
9,000 American Greetings Corp. "A" 213
DRUGS (2.1%)
4,000 Merck & Co., Inc. 268
10,000 Pharmacia & Upjohn, Inc. 450
3,500 Watson Pharmaceuticals, Inc.* 126
-------
844
-------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
ELECTRIC UTILITIES (0.3%)
6,000 Reliant Energy, Inc. $ 137
-------
ELECTRICAL EQUIPMENT (1.5%)
4,000 General Electric Co. 619
-------
ELECTRONICS - SEMICONDUCTORS (2.5%)
12,000 Intel Corp. 988
-------
ENTERTAINMENT (0.7%)
10,000 Walt Disney Co. 292
-------
EQUIPMENT - SEMICONDUCTORS (1.1%)
3,500 Applied Materials, Inc.* 443
-------
FINANCE - CONSUMER (1.0%)
8,000 PMI Group, Inc. 390
-------
FINANCE - DIVERSIFIED (1.4%)
10,406 Associates First Capital Corp. "A" 286
2,000 Morgan Stanley, Dean Witter & Co. 285
-------
571
-------
FOODS (1.7%)
6,000 Nabisco Group Holding Corp. 64
6,500 Nabisco Holdings Corp. "A" 205
15,000 Ralston Purina Group 418
-------
687
-------
HEALTH CARE - DIVERSIFIED (2.9%)
11,000 American Home Products Corp. 434
11,000 Bristol-Myers Squibb Co. 706
-------
1,140
-------
HEALTH CARE - HMOS (0.1%)
500 Aetna, Inc. 28
-------
HOUSEHOLD PRODUCTS (2.2%)
7,000 Kimberly-Clark Corp. 457
4,000 Procter & Gamble Co. 438
-------
895
-------
INSURANCE - LIFE/HEALTH (0.3%)
4,000 Stancorp Financial Group, Inc. 101
-------
INSURANCE - MULTI-LINE COMPANIES (2.1%)
4,000 American International Group, Inc. 432
5,000 CIGNA Corp. 403
-------
835
-------
INSURANCE - PROPERTY/CASUALTY (0.5%)
9,000 Allstate Corp. 216
-------
LEISURE TIME (0.6%)
10,000 Brunswick Corp. 222
-------
LODGING/HOTEL (0.4%)
7,000 Starwood Hotels & Resorts Worldwide, Inc. 164
-------
MACHINERY - DIVERSIFIED (2.5%)
7,000 Caterpillar, Inc. 329
9,000 Deere & Co. 390
4,000 Eaton Corp. 291
-------
1,010
-------
B-32 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Diversified Assets Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
MANUFACTURING - SPECIALIZED (1.5%)
8,000 Avery Dennison Corp. $ 583
-------
MEDICAL PRODUCTS & SUPPLIES (1.4%)
8,000 Bausch & Lomb, Inc. 547
-------
NATURAL GAS UTILITIES (0.6%)
7,000 NICOR, Inc. 227
-------
OIL - DOMESTIC INTEGRATED (0.9%)
17,000 Occidental Petroleum Corp. 368
-------
OIL - INTERNATIONAL INTEGRATED (1.8%)
4,000 Chevron Corp. 347
7,000 Texaco, Inc. 380
-------
727
-------
OIL & GAS - DRILLING/EQUIPMENT (0.6%)
10,100 Helmerich & Payne, Inc. 220
-------
OIL & GAS - EXPLORATION & PRODUCTION (1.3%)
10,500 Union Pacific Resources, Inc. 134
12,000 Unocal Corp. 403
-------
537
-------
PAPER & FOREST PRODUCTS (0.3%)
3,500 Jefferson Smurfit Group plc 102
-------
PHOTOGRAPHY - IMAGING (0.5%)
9,500 Xerox Corp. 216
-------
RAILROADS/SHIPPING (0.9%)
18,000 Norfolk Southern Corp. 369
-------
RETAIL - DEPARTMENT STORES (0.3%)
6,000 J.C. Penney Company, Inc. 120
-------
RETAIL - GENERAL MERCHANDISING (2.1%)
14,000 Sears, Roebuck & Co. 426
6,000 Wal-Mart Stores, Inc. 415
-------
841
-------
SAVINGS & LOAN HOLDING CO. (0.6%)
9,000 Washington Mutual, Inc. 234
-------
SERVICES - COMMERCIAL & CONSUMER (0.2%)
2,000 Hertz Corp. "A" 100
-------
SERVICES - DATA PROCESSING (1.1%)
9,000 First Data Corp. 444
-------
TELECOMMUNICATIONS - LONG DISTANCE (2.8%)
10,500 MCI WorldCom, Inc.* 557
8,200 Sprint Corp. 552
-------
1,109
TELEPHONES (3.7%)
8,576 Bell Atlantic Corp. 528
7,000 GTE Corp. 494
9,000 SBC Communications Inc. 439
-------
1,461
-------
Total common stocks (cost: $20,150) 26,168
-------
Principal Market
Amount Coupon Value
(000) Security Rate Maturity (000)
- --------- -------- ------ -------- -------
U.S. GOVERNMENT & AGENCY ISSUES (6.9%)
$ 720 Federal Home Loan Mortgage Corp.,
Series 1998-7 H 9.00% 3/18/2025 $ 751
-------
484 Federal National Mortgage Assn.,
Series 1997-72 CA 9.50 9/18/2023 505
-------
559 Federal National Mortgage Assn.,
Series 1997-79 U 9.00 11/18/2024 583
-------
1,000 U.S. Treasury Bonds 6.25 8/15/2023 943
-------
Total U.S. government & agency issues (cost: $2,896) 2,782
-------
CORPORATE OBLIGATIONS (26.5%)
ASSET BACKED SECURITIES (2.5%)
1,000 Firstplus Home Loan Owner Trust,
Series 1998-1, Class A-5 6.25 11/10/2016 988
-------
BANKS - MAJOR REGIONAL (4.7%)
1,000 Corporacion Andina de Fomento,
Bonds 6.75 3/15/2005 947
1,000 Imperial Bank, Subordinate Notes 8.50 4/01/2009 932
-------
1,879
-------
ELECTRIC UTILITIES (2.5%)
1,000 Empire District Electric Co.,
Senior Notes 7.70 11/15/2004 989
-------
FINANCE - DIVERSIFIED (2.5%)
1,000 Newcourt Credit Group, Inc., Notes 7.13 12/17/2003 995
-------
MANUFACTURING - SPECIALIZED (2.4%)
1,000 Giddings and Lewis, Inc., Notes 7.50 10/01/2005 976
-------
REAL ESTATE INVESTMENT TRUSTS (9.5%)
1,000 Glenborough Properties LP,
Senior Notes 7.63 3/15/2005 923
1,000 HRPT Property Trust, Senior Notes 6.70 2/23/2005 917
1,000 Merry Land and Investment Co., Notes 7.25 6/15/2005 972
1,000 Nationwide Health Properties, Inc., MTN 8.61 3/01/2002 993
-------
3,805
-------
RETAIL - FOOD (2.4%)
1,000 Great Atlantic & Pacific Tea, Inc.,
Senior Notes 7.70 1/15/2004 955
-------
Total corporate obligations (cost: $10,940) 10,587
-------
SHORT TERM (0.5%)
COMMERCIAL PAPER
207 Avnet, Inc. (cost: $207) 5.30 1/03/2000 207
-------
Total investments (cost: $34,193) $39,744
=======
See accompanying Notes to Portfolio of Investments on page B-41.
1999 ANNUAL REPORT B-33
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
COMMON STOCKS (95.7%)
AEROSPACE/DEFENSE (0.9%)
5,000 AAR Corp. $ 90
5,000 Aviation Sales Co.* 82
10,000 HEICO Corp. "A" 211
5,000 Triumph Group, Inc.* 121
------
504
------
AIR FREIGHT (0.6%)
3,000 Eagle USA Airfreight, Inc.* 129
3,000 United Parcel Service "B" 207
------
336
------
AIRLINES (0.4%)
5,000 Atlantic Coast Airlines, Inc.* 119
3,000 Midwest Express Holdings, Inc.* 95
------
214
------
BANKS - MAJOR REGIONAL (0.3%)
3,000 Columbia Banking Systems, Inc.* 39
8,000 Hamilton Bancorp, Inc.* 142
------
181
------
BEVERAGES - ALCOHOLIC (0.6%)
7,000 Beringer Wine Estates Holdings, Inc. "B"* 279
2,000 Robert Mondavi Corp. "A"* 70
------
349
------
BIOTECHNOLOGY (16.1%)
5,000 Affymetrix, Inc.* 848
12,600 Genetech, Inc.* 1,695
4,100 Genzyme Corp.* 185
5,000 Human Genome Sciences, Inc.* 763
26,000 IDEC Pharmaceuticals Corp.* 2,554
7,000 Immunex Corp.* 767
4,000 Inhale Therapeutic Systems, Inc.* 170
2,400 Maxygen, Inc.* 170
6,000 Med Immune, Inc.* 995
5,000 Millennium Pharmaceuticals, Inc.* 610
10,000 Techne Corp.* 551
4,000 Transkaryotic Therapies, Inc.* 154
------
9,462
------
BROADCASTING - RADIO & TV (2.0%)
600 Acme Communications, Inc.* 20
3,700 Clear Channel Communications, Inc.* 330
1,900 Entercom Communications Corp.* 125
4,800 Infinity Broadcasting Corp.* 174
600 Radio Unica Communications* 17
6,300 Salem Communications Corp.* 143
1,500 Spanish Broadcasting Systems, Inc.* 60
2,700 Univision Communications, Inc. "A"* 276
900 Wink Communications, Inc.* 54
------
1,199
------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
CHEMICALS (0.3%)
5,000 Symyx Technologies* $ 150
------
COMMUNICATION EQUIPMENT (8.3%)
6,000 Advanced Fibre Communications, Inc.* 268
600 Airnet Communications Corp.* 22
7,400 Altigen Communications, Inc.* 76
3,100 Ancor Communications, Inc.* 210
2,800 CIENA Corp.* 161
4,015 Digital Microwave Corp.* 94
2,500 Ditech Communications Corp.* 234
1,000 Efficient Networks, Inc.* 68
300 Gadzoox Networks, Inc.* 13
15,200 Harmonic Lightwaves, Inc.* 1,443
2,700 Inet Technologies, Inc.* 189
6,712 JDS Uniphase Corp.* 1,083
2,600 MCK Communications, Inc.* 59
3,600 Netro Corp.* 184
1,400 Next Level Communications, Inc.* 105
5,500 Pairgain Technologies, Inc.* 78
2,200 Paradyne Networks, Inc.* 60
1,300 Sonicwall, Inc.* 52
5,000 Spectrian Corp.* 141
300 Sycamore Networks, Inc.* 92
3,500 Terayon Communication Systems, Inc.* 220
------
4,852
------
COMPUTER - HARDWARE (1.8%)
5,000 Dell Computer Corp.* 255
8,100 Sandisk Corp.* 780
------
1,035
------
COMPUTER - NETWORKING (1.4%)
5,400 Cisco Systems, Inc.* 578
300 Cobalt Networks, Inc.* 33
600 Crossroads Systems, Inc.* 51
600 Finisar Corp.* 54
300 Foundry Networks, Inc.* 90
600 JNI Corp.* 40
------
846
------
COMPUTER SOFTWARE & SERVICE (5.3%)
6,300 ASD Systems, Inc.* 112
3,100 Bluestone Software, Inc.* 357
4,400 Daleen Technologies, Inc.* 96
3,200 Digex, Inc.* 220
300 Digimarc Corp.* 15
4,000 Digital Island, Inc.* 380
900 Ecollege.com, Inc.* 10
3,200 Gric Communications, Inc.* 81
2,700 HNC Software, Inc.* 286
1,000 Intertrust Technologies Corp.* 118
1,700 Liberate Technologies, Inc.* 437
800 Mcafee.com Corp.* 36
800 Metasolv Software, Inc.* 65
B-34 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
3,300 Microsoft Corp.* $385
500 Ondisplay, Inc.* 45
1,000 OpenTV Corp. "A"* 80
600 Optio Software, Inc.* 14
600 Phone.com, Inc.* 70
1,100 Primus Knowledge Solutions, Inc.* 50
4,200 Scientific Learning Corp.* 153
5,700 Telemate Net Software, Inc.* 93
------
3,103
------
DRUGS (2.9%)
10,000 Alpharma, Inc. "A" 308
10,000 Biovail Corp. International* 937
4,000 Elan Corp. plc ADR* 118
3,000 Sepracor, Inc.* 298
3,128 Shire Pharma Group* 31
------
1,692
------
ELECTRICAL EQUIPMENT (0.3%)
1,545 Sanmina Corp.* 154
------
ELECTRONICS - SEMICONDUCTORS (6.9%)
4,600 Applied Micro Circuits Corp.* 585
5,000 Intel Corp. 412
500 Maker Communications, Inc.* 21
500 Metalink Ltd.* 10
5,300 MMC Networks, Inc.* 182
6,600 Netsilicon, Inc.* 132
2,300 Quicklogic Corp.* 38
2,300 Rambus, Inc.* 155
400 Silicon Image, Inc.* 28
16,200 TranSwitch Corp.* 1,176
5,550 Triquint Semiconductor, Inc.* 618
1,800 Virata Corp.* 54
11,800 Vitesse Semiconductor Corp.* 619
------
4,030
------
ENGINEERING & CONSTRUCTION (0.1%)
3,000 Quanta Services, Inc.* 85
------
EQUIPMENT - SEMICONDUCTORS (1.2%)
4,200 Cymer, Inc.* 193
4,400 Etec Systems, Inc.* 198
3,100 PRI Automation, Inc.* 208
9,996 SpeedFam-IPEC, Inc.* 129
------
728
------
FINANCE - CONSUMER (1.0%)
8,000 Metris Companies, Inc. 286
10,000 NCO Group, Inc.* 301
------
587
------
FINANCE - DIVERSIFIED (0.4%)
3,400 Heller Financial, Inc. "A" 68
3,200 Official Payments Corp. * 167
------
235
------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
FOODS (0.6%)
5,000 American Italian Pasta Co. "A"* $ 154
5,000 Suiza Foods Corp.* 198
------
352
------
HEALTH CARE - DIVERSIFIED (0.9%)
8,000 Accredo Health, Inc.* 246
10,000 ICON plc ADR* 170
3,000 Professional Detailing, Inc.* 90
------
506
------
HEALTH CARE - HMOS (0.7%)
6,000 Express Scripts, Inc. "A"* 384
------
HEALTH CARE - SPECIALIZED SERVICES (1.0%)
10,400 Advance Paradigm, Inc.* 224
300 Ebenx, Inc.* 13
600 Media Logic, Inc.* 13
10,000 Omnicare, Inc. 120
5,100 Orthodontic Centers of America, Inc.* 61
2,000 Priority Healthcare Corp. "B"* 58
5,000 Renal Care Group, Inc.* 117
------
606
------
HOME FURNISHINGS & APPLIANCES (0.4%)
7,500 Ethan Allen Interiors, Inc. 240
------
HOSPITALS (0.1%)
4,000 Province Healthcare Co.* 76
------
HOUSEWARES (0.1%)
3,000 Yankee Candle Co., Inc.* 49
------
INTERNET SERVICES (10.4%)
1,400 24/7 Media, Inc.* 79
300 Akamai Technologies, Inc.* 98
3,000 barnesandnoble.com, Inc.* 43
900 Be Free, Inc.* 65
500 C Bridge Internet Solutions, Inc.* 24
6,200 CAIS Internet, Inc.* 220
500 Calico Commerce, Inc.* 26
5,000 CareInsite, Inc.* 402
8,000 Concentric Network Corp.* 246
1,900 Data Return Corp.* 102
900 Digital Impact, Inc.* 45
4,000 drKoop.com, Inc.* 47
3,000 Entrust Technologies, Inc.* 180
1,600 Exactis.com, Inc.* 39
400 Expedia, Inc. "A"* 14
100 Freemarkets, Inc.* 34
3,500 Freeshop.com, Inc.* 168
300 Getthere.com, Inc.* 12
1,400 High Speed Access Corp.* 25
500 Homestore.com, Inc.* 37
3,500 Interliant, Inc.* 91
700 Internap Network Services Corp.* 121
500 Media Metrix, Inc.* 18
1999 ANNUAL REPORT B-35
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
800 Mediaplex, Inc.* $ 50
5,700 Medscape, Inc.* 57
2,200 Mypoints.com, Inc.* 163
5,900 N2H2, Inc.* 139
1,300 National Information Consortium, Inc.* 42
600 Navisite, Inc.* 60
6,700 Netcentives, Inc.* 417
300 Netratings, Inc.* 14
6,000 Network Solutions, Inc. "A"* 1,305
3,300 Purchasepro.com, Inc.* 454
600 Radware Ltd.* 26
1,100 Retek, Inc.* 83
5,600 Tumbleweed Communications Corp.* 475
7,000 Viador, Inc.* 297
8,100 Webstakes.com, Inc.* 160
3,000 Webvan Group, Inc.* 49
1,100 Xpedior, Inc.* 32
3,400 Yesmail.com, Inc.* 115
3,200 ZipLink, Inc.* 40
------
6,114
------
INVESTMENT BANKS / BROKERAGE (1.0%)
5,000 DLJdirect, Inc.* 68
11,000 Knight/Trimark Group, Inc.* 506
------
574
------
LODGING/HOTEL (0.4%)
5,000 Four Seasons Hotels, Inc. 266
------
MANUFACTURING - SPECIALIZED (0.1%)
2,100 Creo Products, Inc.* 81
------
MEDICAL PRODUCTS & SUPPLIES (1.4%)
3,800 Caliper Technologies Corp.* 254
4,000 Henry Schein, Inc.* 53
5,000 Sciquest.com, Inc.* 398
5,000 Sybron Corp.* 123
------
828
------
OIL & GAS - DRILLING/EQUIPMENT (0.9%)
3,000 Cooper Cameron Corp.* 147
4,000 Smith International, Inc.* 199
5,000 Weatherford International, Inc.* 199
------
545
------
PERSONAL CARE (0.5%)
6,000 Estee Lauder Companies, Inc. "A" 303
------
PHOTOGRAPHY - IMAGING (0.1%)
3,400 Interactive Pictures Corp.* 79
------
RESTAURANTS (0.4%)
4,000 P. F. Chang's China Bistro, Inc.* 100
6,000 Papa John's International, Inc.* 156
------
256
------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
RETAIL - BUILDING SUPPLIES (3.9%)
5,000 Fastenal Co. $ 224
30,000 Home Depot, Inc. 2,057
------
2,281
------
RETAIL - DISCOUNTERS (0.9%)
11,000 Dollar Tree Stores, Inc.* 533
------
RETAIL - FOOD (0.2%)
6,000 Wild Oats Markets, Inc.* 133
------
RETAIL - GENERAL MERCHANDISING (0.6%)
4,000 Costco Wholesale Corp.* 365
------
RETAIL - SPECIALTY (3.5%)
7,000 99 Cents Only Stores* 268
16,500 Cost Plus, Inc.* 588
600 Too, Inc.* 10
2,000 Tuesday Morning Corp.* 37
25,000 Williams-Sonoma, Inc.* 1,150
------
2,053
------
RETAIL - SPECIALTY APPAREL (0.8%)
10,000 Abercrombie & Fitch Co. "A"* 267
5,000 Charlotte Russe Holding, Inc.* 105
3,000 Chico's Fas, Inc.* 113
------
485
------
SERVICES - COMMERCIAL & CONSUMER (0.4%)
5,000 Barra, Inc.* 159
5,000 MSC Industrial Direct Co. "A"* 66
------
225
------
SERVICES - COMPUTER SYSTEMS (0.5%)
6,000 Flextronics International Ltd.* 276
------
SERVICES - DATA PROCESSING (0.5%)
1,700 Infonet Services Corp.* 45
3,000 MedQuist, Inc.* 77
9,000 Resourcephoenix.com, Inc.* 178
------
300
------
TELECOMMUNICATIONS - CELLULAR/WIRELESS (3.7%)
800 Aether Systems, Inc.* 57
7,600 Microcell Telecommunications, Inc. "B"* 250
3,300 Powertel, Inc.* 331
700 Telecorp PCS, Inc.* 27
800 Tritel, Inc.* 25
300 Triton PCS Holdings, Inc.* 14
7,000 VoiceStream Wireless Corp.* 996
7,000 Western Wireless Corp. "A"* 467
------
2,167
------
TELECOMMUNICATIONS - LONG DISTANCE (1.8%)
2,900 CapRock Communications Corp.* 94
5,000 Global Crossing Ltd.* 250
1,100 Ibasis, Inc.* 32
5,200 IDT Corp.* 98
7,300 ITC DeltaCom, Inc.* 202
B-36 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life Aggressive Growth Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
1,600 Level 3 Communications, Inc.* $ 131
3,100 Startec Global Communications Corp.* 66
5,000 Williams Communications Group* 145
500 Z-Tel Technologies, Inc.* 20
-------
1,038
-------
TELEPHONES (7.8%)
4,700 Adelphia Business Solutions* 226
5,700 Allied Riser Communications Corp.* 118
1,650 Covad Communications Group, Inc.* 92
4,000 DSL.net, Inc.* 58
1,500 Focal Communications Corp.* 36
8,100 Global TeleSystems Group, Inc.* 280
3,800 Intermedia Communications of Florida, Inc.* 148
6,500 Ixnet, Inc.* 196
3,800 McLeod, Inc.* 224
22,200 Metromedia Fiber Network, Inc. "A"* 1,064
4,100 Network Access Solutions Corp.* 135
4,200 Network Plus Corp.* 88
6,000 NEXTLINK Communications, Inc. "A"* 498
8,700 Northeast Optic Network, Inc.* 544
2,500 NorthPoint Communications Group, Inc.* 60
3,900 Pacific West Telecomm, Inc.* 103
4,500 Rhythms NetConnections, Inc.* 140
2,900 Teligent, Inc. "A"* 179
1,500 Time Warner Telecom, Inc. "A"* 75
4,500 Winstar Communications, Inc.* 339
-------
4,603
-------
TEXTILES - APPAREL (0.5%)
5,000 Columbia Sportswear Co.* 108
4,500 Cutter & Buck, Inc.* 68
4,600 Tommy Hilfiger Corp.* 107
-------
283
-------
TRUCKERS (0.6%)
7,900 Forward Air Corp.* 343
-------
WASTE MANAGEMENT (0.2%)
10,000 Waste Connections, Inc.* 144
-------
Total common stocks (cost: $24,870) 56,230
-------
Principal
Amount
(000) Security
- --------- --------
SHORT-TERM (4.4%)
U.S. GOVERNMENT AGENCY ISSUE
$ 2,580 Federal Home Loan Bank, 1.28%, 1/03/2000
(cost: $2,580) 2,580
-------
Total investments (cost: $27,450) $58,810
=======
See accompanying Notes to Portfolio of Investments on page B-41.
1999 ANNUAL REPORT B-37
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
- --------------------------------------------------------------------------------
Portfolio of Investments December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
STOCKS (94.4%)
ARGENTINA (0.2%)
1,885 IRSA Inversiones y Representaciones S.A. GDR $ 61
------
AUSTRIA (1.4%)
1,200 Bank Austria AG 68
3,000 Boehler Uddeholm AG 138
3,750 VA Flughafen Wien AG 130
950 VA Technologie AG 63
------
399
------
BRAZIL (0.5%)
2,400 Companhia Brasileira de
Distribuicao Grupo Pao de Acucar ADR 78
3,900 Panamerican Beverages, Inc. "A" 80
------
158
------
CANADA (7.1%)
16,400 Anderson Exploration Ltd.* 196
4,300 Canadian Imperial Bank of Commerce 103
10,700 Canadian National Railway Co. 281
11,500 Canadian Occidental Petroleum Ltd. 227
10,500 Manulife Financial Corp.* 133
5,900 Nortel Networks Corp. 596
6,600 Suncor Energy, Inc. 276
8,000 Toronto-Dominion Bank 215
------
2,027
------
CHILE (0.1%)
57 Sociedad Quimica y Minera de Chile S.A. ADR "A" 2
1,000 Sociedad Quimica y Minera de Chile S.A.
ADR "B" 32
------
34
------
CHINA (0.4%)
72,000 Cosco Pacific Ltd. 60
38,000 New World Infrastructure Ltd.* 49
------
109
------
DENMARK (3.0%)
1,900 ISS International Service System A/S "B"* 128
8,000 SAS Danmark A/S 84
5,400 Tele Danmark A/S "B" 401
3,500 Unidanmark A/S 246
------
859
------
EGYPT (0.1%)
2,500 Suez Cement Co. S.A.E. GDR 41
------
FINLAND (5.8%)
57,500 Merita plc "A" 339
10,366 Metso OYJ* 134
5,400 Nokia Corp. ADR 1,026
4,800 Sampo Insurance Co. "A" 168
------
1,667
------
FRANCE (7.6%)
3,500 Accor S.A. 169
7,676 Aventis S.A. 446
Market
Number Value
of Shares Security (000)
- --------- -------- -------
3,640 CNP Assurances $ 135
6,000 Coflexip ADR 228
2,500 Eramet Group 144
1,360 ISIS S.A. 81
3,300 Renault S.A. 159
5,000 Rhodia S.A. 113
8,170 Total Fina S.A. 566
1,900 Valeo S.A. 147
------
2,188
------
GERMANY (2.6%)
6,200 Continental AG 124
6,000 Merck KGaA 186
150 SAP AG 74
7,200 Veba AG 350
------
734
------
GREECE (0.5%)
4,000 Hellenic Telecommunications
Organization S.A. (OTE) 95
4,005 National Bank of Greece S.A. GDR 56
------
151
------
HONG KONG (0.3%)
7,000 Hutchison Whampoa Ltd. 102
------
HUNGARY (0.2%)
1,800 Magyar Tavkozlesi RT. (MATAV) ADR 65
------
INDIA (0.5%)
5,500 Videsh Sanchar Nigam Ltd. GDR 136
------
ISRAEL (0.3%)
18,000 Bank Hapoalim Ltd. 56
2,400 Blue Square - Israel Ltd. ADR 31
------
87
------
ITALY (4.3%)
4,500 ENI S.p.A. ADR 248
2,900 Gucci Group N.V. 332
51,000 Italgas S.p.A. 193
9,400 Telecom Italia S.p.A. 133
54,700 Telecom Italia S.p.A. Savings 333
------
1,239
------
JAPAN (14.4%)
6,000 Daibiru Corp. 37
18 East Japan Railway Co. 97
400 Internet Initiative Japan, Inc. ADR* 39
2,000 Ito-Yokado Co. Ltd. 217
17,000 Kikkoman Corp. 113
7,000 Kirin Brewery Co. Ltd. 74
750 Nichii Gakkan Co. 143
18,000 Nikko Securities Co. Ltd. 228
55,000 Nippon Steel Corp. 129
13 Nippon Telegraph & Telephone Corp. (NTT) 223
10 NTT Mobile Communication Network, Inc. 385
2,000 Ono Pharmaceutical Co. Ltd. 54
4,000 Paris Miki, Inc. 287
B-38 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
1,000 Pasona Softbank, Inc. $ 79
4,000 Sailor Pen Co. Ltd. 82
2,400 Sanix Inc. 263
16,000 Sharp Corp. 409
200 Softbank Corp. 191
1,700 Sony Corp. 504
13,000 Sumitomo Electric Industries, Ltd. 150
2,000 Takeda Chemical Industries 99
23,000 Toshiba Corp. 176
1,600 Toyota Motor Corp. 156
------
4,135
------
KOREA (1.1%)
2,512 Korea Telecom Corp. ADR 188
3,000 Samsung Corp.* 45
300 Samsung Electronics Co. Ltd. 70
------
303
------
MALAYSIA (0.6%)
28,000 Genting Bhd 99
37,000 Malaysia International Shipping Corp. Bhd 61
------
160
------
MEXICO (0.5%)
600 Telefonos de Mexico, S.A. de C.V. ADR 67
4,900 Tubos de Acero de Mexico, S.A. ADR 66
------
133
------
NETHERLANDS (9.9%)
9,400 Akzo Nobel N.V. 472
1,900 EVC International N.V.* 26
6,500 Fortis NL N.V. 234
1,500 Getronics N.V. 120
6,100 ING Group N.V. 368
4,300 Koninklijke KPN N.V. 420
3,544 Koninklijke Philips Electronics N.V. ADR 478
5,600 Oce-van der Grinten N.V. 95
6,100 Versatel Telecom* 215
4,300 VNU N.V. 226
7,700 Vopak Kon* 183
------
2,837
------
NORWAY (2.4%)
72,000 Christiania Bank og Kreditkasse 355
3,400 Schibsted ASA 63
28,900 Storebrand ASA* 220
21,200 Tandberg Data ASA* 58
------
696
------
PORTUGAL (2.3%)
10,300 Banco Pinto & Sotto Mayor S.A. 221
16,000 Brisa-Auto Estrada de Portugal S.A. 123
30,000 Portugal Telecom S.A. ADR 326
------
670
------
RUSSIA (0.3%)
1,500 LUKoil ADR 76
------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
SINGAPORE (0.3%)
6,000 DBS Group Holdings, Ltd. $ 98
------
SOUTH AFRICA (0.4%)
3,508 South African Breweries plc 36
18,000 Standard Bank Investment Corp. Ltd. 75
------
111
------
SPAIN (4.3%)
11,400 Altadis S.A. 163
11,764 Argentaria, Caja Postal y
Banco Hipotecario de Espana, S.A. 276
8,850 Repsol S.A. 205
7,319 Telefonica de Espana S.A. ADR* 577
------
1,221
------
SWEDEN (2.2%)
9,200 Autoliv, Inc. GDR 269
800 Ericsson LM Tel Co. ADR 52
1,540 Skandinaviska Enskilda Banken 15
7,700 Skandinaviska Enskilda Banken "A" 78
58,000 Swedish Match AB 202
------
616
------
SWITZERLAND (2.7%)
205 Novartis AG 301
540 Selecta Group AG 170
213 Sulzer AG P.C.* 138
440 Swisscom AG 178
------
787
------
TAIWAN (0.3%)
5,775 China Steel Corp. GDR 86
------
TURKEY (0.6%)
486,772 Enka Holding Yatrim A.S. 96
2,074,424 Yapi Ve Kredi Bankasi A.S. 64
------
160
------
UNITED KINGDOM (17.2%)
6,200 AstraZeneca Group plc 258
21,400 Bank of Scotland 249
63,700 Billiton plc 378
6,100 BOC Group plc 132
8,700 British Telecommunications plc 211
23,300 British-Borneo Oil & Gas plc* 51
13,900 Cable & Wireless plc 238
45,600 Cadbury Schweppes 275
18,400 CGU plc 297
104,000 Cookson Group plc 420
77,500 Corporate Services Group plc* 126
2,600 Glaxo Wellcome plc ADR 145
13,400 Laporte plc 117
66,800 Medeva plc 188
17,200 National Westminster Bank plc 370
49,000 Old Mutual plc * 134
3,900 Powergen plc 28
28,500 Reckitt & Colman 270
1999 ANNUAL REPORT B-39
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
USAA Life International Fund
- --------------------------------------------------------------------------------
Portfolio of Investments (Continued) December 31, 1999
- --------------------------------------------------------------------------------
Market
Number Value
of Shares Security (000)
- --------- -------- -------
19,820 Reuters Group plc $ 275
31,500 Safeway plc 109
58,600 Tomkins plc 191
30,311 WPP Group plc 475
-------
4,937
-------
Total common stocks (cost: $20,508) 27,083
-------
Principal
Amount
(000)
- ---------
SHORT TERM (6.0%)
U.S. Government Agency Issue
$ 1,731 Federal Home Loan Bank , 1.28%, 1/03/2000
(cost $1,731) 1,731
-------
Total investments (cost: $22,239) $28,814
=======
PORTFOLIO SUMMARY BY CONCENTRATION
Telephones 12.5%
Banks - Major Regional 7.4
U.S. Government 6.0
Drugs 5.8
Communication Equipment 5.8
Insurance - Multi-Line Companies 4.5
Oil - International Integrated 3.9
Auto Parts 2.5
Electrical Equipment 2.5
Chemicals - Specialty 2.4
Retail - Specialty 2.3
Railroads/Shipping 2.2
Manufacturing - Diversified Industries 1.9
Metals/Mining 1.9
Banks - Money Center 1.9
Leisure Time 1.8
Advertising/Marketing 1.7
Oil & Gas - Exploration & Production 1.7
Investment Banks / Brokerage 1.5
Iron & Steel 1.5
Manufacturing - Specialized 1.4
Telecommunications - Cellular/Wireless 1.3
Electric Utilities 1.3
Tobacco 1.3
Beverages - Nonalcoholic 1.2
Textiles - Apparel 1.2
Automobiles 1.1
Oil & Gas - Drilling/Equipment 1.1
Services - Commercial & Consumer 1.0
Services - Data Processing 1.0
Other 16.8
-----
100.4%
=====
See accompanying Notes to Portfolio of Investments page B-41.
B-40 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Notes to Portfolios of Investments
- --------------------------------------------------------------------------------
December 31, 1999
- --------------------------------------------------------------------------------
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 December 31, 1999, investments in foreign securities were 1.6% of
the net assets of the USAA Life Growth & Income Fund and 4.4% of the net
assets of the USAA Life Aggressive Growth Fund.
ADR American Depository Receipts are receipts issued by a U.S. bank
evidencing ownership of foreign shares. Dividends are paid in U.S. dollars.
GDR Global Depository Receipts are receipts issued by a U.S. or foreign bank
evidencing ownership of foreign shares. Dividends are paid in U.S. dollars.
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
- ---------------------------------------------
*Non-income producing security.
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 within 7 days. The
interest rate is adjusted at the stipulated daily, weekly, or monthly
interval to a rate that reflects current market conditions. 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.
1999 ANNUAL REPORT B-41
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
(In Thousands, Except Per Share Data) December 31, 1999
- --------------------------------------------------------------------------------
<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
------------ --------- ----------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at market
value (identified cost of $31,863,
$17,357, $58,697, $20,901, $34,193,
$27,450 and $22,239, $31,863 $16,084 $83,934 $34,010 $39,744 $58,810 $28,814
respectively)
Cash 1 4 - - 1 - -
Cash denominated in foreign
currencies (identified cost of $13
and $20, respectively) - - - 13 - - 20
Receivables:
Capital shares sold 26 - - 28 27 55 -
Dividends and interest 51 158 108 33 266 1 34
Securities sold - - 386 17 172 1 25
------- ------- ------- ------- ------- ------- -------
Total assets 31,941 16,246 84,428 34,101 40,210 58,867 28,893
------- ------- ------- ------- ------- ------- -------
LIABILITIES
Securities purchased - - 254 141 205 54 131
Capital shares redeemed 412 4 12 - - - 1
Accrued advisory fees - - 16 3 - 22 26
Accrued administrative fees 4 - 3 3 2 4 3
Accounts payable and accrued expenses 30 21 31 36 30 36 39
------- ------- ------- ------- ------- ------- -------
Total liabilities 446 25 316 183 237 116 200
------- ------- ------- ------- ------- ------- -------
Net assets applicable to capital
shares outstanding $31,495 $16,221 $84,112 $33,918 $39,973 $58,751 $28,693
======= ======= ======= ======= ======= ======= =======
Represented by:
Paid-in capital $31,495 $17,790 $58,653 $20,573 $34,649 $27,155 $22,423
Accumulated undistributed net
investment income - 11 35 22 26 - 11
Accumulated net realized gain
(loss) on investments - (307) 187 215 (253) 236 (315)
Net unrealized appreciation/
depreciation of investments - (1,273) 25,237 13,109 5,551 31,360 6,575
Net unrealized depreciation
on foreign currency translations - - - (1) - - (1)
------- ------- ------- ------- ------- ------- -------
Net assets applicable to
capital shares outstanding $31,495 $16,221 $84,112 $33,918 $39,973 $58,751 $28,693
======= ======= ======= ======= ======= ======= =======
Capital shares outstanding, unlimited
number of shares authorized,
no par value 31,495 1,774 4,487 2,124 3,220 2,347 2,184
======= ======= ======= ======== ======= ======= =======
Net asset value, redemption price,
and offering price per share $ 1.00 $ 9.14 $ 18.75 $ 15.97 $ 12.41 $ 25.03 $ 13.14
======= ======= ======= ======== ======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements on page B-46.
B-42 ANNUAL REPORT 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
(In Thousands, Except Per Share Data) Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<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
------------ --------- ----------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Income:
Dividends (net of foreign taxes
withheld of $0, $0, $6, $49,
$0, $0 and $66, respectively) $ - $ 191 $ 1,280 $ 401 $ 502 $ 15 $ 443
Interest 1,518 1,395 93 55 1,008 75 60
------ ------- ------- ------ ------- ------ ------
Total income 1,518 1,586 1,373 456 1,510 90 503
------ ------- ------- ------ ------- ------ ------
Expenses:
Advisory Fees 58 46 165 58 81 166 156
Administrative fees 37 37 37 37 37 37 37
Custodian's fees 22 28 49 77 40 65 72
Shareholder reporting fees 3 3 11 3 5 2 -
Trustees' fees 4 4 4 4 4 4 4
Professional fees 37 35 35 39 32 36 39
Miscellaneous 2 2 3 2 3 2 2
------ ------- ------- ------ ------- ------ ------
Total expenses before reimbursement 163 155 304 220 202 312 310
Expenses reimbursed (61) (75) (14) (29) (60) (80) (47)
------ ------- ------- ------ ------- ------ ------
Total expenses after reimbursement 102 80 290 191 142 232 263
------ ------- ------- ------ ------- ------ ------
Net investment income (loss) 1,416 1,506 1,083 265 1,368 (142) 240
------ ------- ------- ------ ------- ------ ------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments - 35 7,211 5,234 5,652 4,190 861
Foreign currency transactions - - - (9) - - (7)
Change in net unrealized
appreciation/depreciation of:
Investments - (2,622) 2,960 2,549 (4,339) 22,387 5,201
Foreign currency translations - - - (3) - - (2)
------ ------- ------- ------ ------- ------- ------
Net realized and unrealized
gain (loss) - (2,587) 10,171 7,771 1,313 26,577 6,053
------ ------- ------- ------ ------- ------- ------
Increase (decrease) in net assets resulting
from operations $1,416 $(1,081) $11,254 $8,036 $ 2,681 $26,435 $6,293
====== ======= ======= ====== ======= ======= ======
</TABLE>
See accompanying Notes to Financial Statements on page B-46.
1999 ANNUAL REPORT B-43
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
(In Thousands) Years Ended December 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life
Money Market Fund Income Fund Growth and Income Fund
--------------------- ------------------- ----------------------
1999 1998 1999 1998 1999 1998
-------- ---------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 1,416 $ 943 $ 1,506 $ 2,263 $ 1,083 $ 1,504
Net realized gain (loss) on:
Investments - - 36 1,473 7,211 3,229
Foreign currency transactions - - - - - -
Change in net unrealized appreciation/depreciation of:
Investments - - (2,623) (739) 2,960 712
Foreign currency translations - - - - - -
-------- --------- --------- ------- --------- --------
Increase (decrease) in net assets resulting
from operations 1,416 943 (1,081) 2,997 11,254 5,445
-------- --------- --------- ------- --------- --------
Distributions to shareholders from:
Net investment income (1,416) (943) (1,529) (2,261) (1,078) (1,540)
-------- --------- --------- ------- --------- --------
Net realized gains - - (360) (1,437) (7,262) (4,221)
-------- --------- --------- ------- --------- --------
From capital share transactions:
Proceeds from shares sold 45,735 31,712 6,832 13,641 8,632 17,540
Shares issued for dividends reinvested 1,416 943 1,889 3,698 8,340 5,725
Cost of shares redeemed (37,767) (25,675) (30,779) (3,635) (36,212) (8,297)
-------- --------- --------- ------- --------- --------
Increase (decrease) in net assets from
capital share transactions 9,384 6,980 (22,058) 13,704 (19,240) 14,968
-------- --------- --------- ------- --------- --------
Net increase (decrease) in net assets 9,384 6,980 (25,028) 13,003 (16,326) 14,688
Net assets:
Beginning of period 22,111 15,131 41,249 28,246 100,438 85,750
-------- --------- --------- ------- --------- --------
End of period $ 31,495 $ 22,111 $ 16,221 $41,249 $ 84,112 $100,438
======== ========= ========= ======= ========= ========
Accumulated undistributed net investment income:
End of period $ - $ - $ 11 $ 34 $ 35 $ 30
======== ========= ========= ======= ========= ========
Change in shares outstanding:
Shares sold 45,735 31,712 636 1,185 434 918
Shares issued for dividends reinvested 1,416 943 206 339 445 310
Shares redeemed (37,767) (25,675) (2,854) (316) (1,927) (462)
-------- --------- --------- ------- --------- --------
Increase (decrease) in shares outstanding 9,384 6,980 (2,012) 1,208 (1,048) 766
======== ========= ========= ======= ========= ========
</TABLE>
See accompanying Notes to Financial Statements on page B-46.
_____________________________
B-44 | ANNUAL REPORT | 1999
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
(In Thousands) Years Ended December 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
USAA Life USAA Life USAA Life
World Growth Fund Diversified Assets Fund Aggressive Growth Fund
--------------------- ------------------------ ----------------------
1999 1998 1999 1998 1999 1998
-------- ---------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 265 $ 453 $ 1,368 $ 2,072 $ (142) $ (175)
Net realized gain (loss) on:
Investments 5,234 706 5,652 3,572 4,190 150
Foreign currency transactions (9) (17) - - - -
Change in net unrealized appreciation/depreciation of:
Investments 2,549 3,082 (4,339) (788) 22,387 4,896
Foreign currency translations (3) 11 - - - -
-------- --------- --------- ------- --------- --------
Increase (decrease) in net assets resulting
from operations 8,036 4,235 2,681 4,856 26,435 4,871
-------- --------- --------- ------- --------- --------
Distributions to shareholders from:
Net investment income (237) (453) (1,365) (2,080) - -
-------- --------- --------- ------- --------- --------
Net realized gains (4,862) (973) (8,514) (981) (3,965) (645)
-------- --------- --------- ------- --------- --------
From capital share transactions:
Proceeds from shares sold 1,927 2,169 8,345 10,152 9,842 3,262
Shares issued for dividends reinvested 5,099 1,426 9,879 3,061 3,965 645
Cost of shares redeemed (18,125) (3,834) (31,623) (2,650) (6,727) (21,477)
-------- --------- --------- ------- --------- --------
Increase (decrease) in net assets from
capital share transactions (11,099) (239) (13,399) 10,563 7,080 (17,570)
-------- --------- --------- ------- --------- --------
Net increase (decrease) in net assets (8,162) 2,570 (20,597) 12,358 29,550 (13,344)
Net assets:
Beginning of period 42,080 39,510 60,570 48,212 29,201 42,545
-------- --------- --------- ------- --------- --------
End of period $ 33,918 $ 42,080 $ 39,973 $60,570 $ 58,751 $ 29,201
======== ========= ========= ======= ========= ========
Accumulated undistributed net investment income:
End of period $ 22 $ 27 $ 27 $ 26 $ - $ -
======== ========= ========= ======= ========= ========
Change in shares outstanding:
Shares sold 121 147 542 663 532 271
Shares issued for dividends reinvested 321 99 755 203 165 49
Shares redeemed (1,246) (280) (2,097) (175) (455) (1,854)
-------- --------- --------- ------- --------- --------
Increase (decrease) in shares outstanding (804) (34) (800) 691 242 (1,534)
======== ========= ========= ======= ========= ========
USAA Life
International Fund
---------------------
1999 1998
-------- ----------
<S> <C> <C>
From operations:
Net investment income (loss) $ 240 $ 232
Net realized gain (loss) on:
Investments 861 (1,157)
Foreign currency transactions (7) (14)
Change in net unrealized appreciation/depreciation of:
Investments 5,201 1,702
Foreign currency translations (2) 8
-------- ---------
Increase (decrease) in net assets resulting
from operations 6,293 771
-------- ---------
Distributions to shareholders from:
Net investment income (222) (225)
-------- ---------
Net realized gains - (10)
-------- ---------
From capital share transactions:
Proceeds from shares sold 736 754
Shares issued for dividends reinvested 222 235
Cost of shares redeemed (562) (881)
-------- ---------
Increase (decrease) in net assets from
capital share transactions 396 108
-------- ---------
Net increase (decrease) in net assets 6,467 644
Net assets:
Beginning of period 22,226 21,582
-------- ---------
End of period $ 28,693 $ 22,226
======== =========
Accumulated undistributed net investment income:
End of period $ 11 $ -
======== =========
Change in shares outstanding:
Shares sold 66 69
Shares issued for dividends reinvested 17 23
Shares redeemed (52) (87)
-------- ---------
Increase (decrease) in shares outstanding 31 5
======== =========
</TABLE>
_____________________________
1999 | ANNUAL REPORT | B-45
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
December 31, 1999
- --------------------------------------------------------------------------------
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.
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 contracts offered by USAA Life Insurance Company (USAA Life).
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 income-producing equity securities selected for their high
yields relative to the risk involved.
USAA LIFE GROWTH AND INCOME FUND: Capital growth and current income, through
a diversified portfolio of dividend paying 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 total return potential, and approximately 40% of its assets in
debt securities of varying maturities.
USAA LIFE AGGRESSIVE GROWTH FUND: Appreciation of capital, through a
portfolio of equity securities of companies that have the prospect of rapidly
growing earnings.
USAA LIFE INTERNATIONAL FUND: Capital appreciation with a secondary objective
of current income, through a strategy of investing at least 80% of the Fund's
assets in equity securities of foreign companies.
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 last quoted sales price, or the most
recently determined closing price calculated according to local market
convention, available at the time the Fund is valued. If no sale is
reported, the average of the bid and asked prices is generally used.
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 advisor under the general supervision of the
Board of Trustees.
B. FEDERAL TAXES- The Funds' policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of their income to their shareholders, the
Separate 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 following Funds: the USAA Life
World Growth Fund to decrease accumulated undistributed net investment income
and increase accumulated net realized gain on investments by approximately
$24,000; the USAA Life Diversified Assets Fund to increase paid-in capital
and decrease accumulated undistributed net investment income by approximately
$3,000; and the USAA Life Aggressive Growth Fund to decrease accumulated net
realized gain on investments and decrease accumulated net investment loss by
approximately $142,000.
C. INVESTMENTS IN SECURITIES- Security transactions are accounted for on
the date the securities are purchased or sold (trade date). Gain or loss
from sales of investment securities
_____________________________
B-46 | ANNUAL REPORT | 1999
<PAGE>
USAA LIFE INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Continued) December 31, 1999
- --------------------------------------------------------------------------------
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 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, 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) LINE OF CREDIT
The Funds participate in a joint short-term committed revolving loan agreement
of $13 million with USAA Capital Corporation (CAPCO), an affiliate of USAA Life
and USAA Investment Management Company (IMCO).
The fee for the CAPCO committed line of credit will be an amount up to .04 of
1%. These amounts will be charged to the Funds pro-rata based on each Fund's
average net assets.
The purpose of the agreement is to meet temporary or emergency cash needs,
including redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability, each Fund may borrow from
CAPCO an amount up to 5% of its total assets at CAPCO's borrowing rate with no
markup. The Funds had no borrowings under this agreement during the year ended
December 31, 1999.
3) 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 December 31,
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 December 31, 1999, the following USAA Life Funds had capital loss carryovers
for federal income tax purposes which, if not offset by subsequent capital
gains, will expire in 2008: International Fund for approximately $306,000,
Income Fund for approximately $228,000 and Diversified Assets Fund for
approximately $252,000. 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 | ANNUAL REPORT | B-47
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
(Continued) December 31, 1999
- --------------------------------------------------------------------------------
4) INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales/maturities of securities for the
year ended December 31, 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>
Purchase $ 322,042 $ 9,444 $ 15,797 $ 8,463 $ 15,156 $ 21,222 $ 9,487
Sales/Maturities $ 313,144 $ 28,862 $ 41,135 $ 24,899 $ 29,884 $ 18,390 $ 9,635
</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 December 31,
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 $ 42 $ 28,974 $ 14,049 $ 7,799 $ 32,429 $ 8,111
Depreciation (1,315) (3,737) (940) (2,248) (1,069) (1,536)
Net $ (1,273) $ 25,237 $ 13,109 $ 5,551 $ 31,360 $ 6,575
</TABLE>
5) FOREIGN CURRENCY CONTRACTS
A forward currency contract (currency contract) is a commitment to purchase or
sell a foreign currency at a specified date, at a negotiated price. The 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 December 31, 1999, the terms of open foreign currency contracts were as
follows:
Foreign Currency Contracts to Buy (000):
<TABLE>
<CAPTION>
CONTRACTS U.S. $ VALUE AT | IN EXCHANGE | UNREALIZED | UNREALIZED
FUND | EXCHANGE DATE | TO RECEIVE | DECEMBER 31, 1999| FOR U.S. $ | APPRECIATION | DEPRECIATION
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
World Growth | 01/05/2000 | 63 Euro | $ 63 | $ 63 | - | - |
International | 01/05/2000 | 78 Euro | 79 | 79 | - | - |
Foreign Currency Contracts to Sell (000):
CONTRACTS U.S. $ VALUE AT | IN EXCHANGE | UNREALIZED | UNREALIZED
FUND | EXCHANGE DATE | TO DELIVER | DECEMBER 31, 1999| FOR U.S. $ | APPRECIATION | DEPRECIATION
___________________________________________________________________________________________________________________
World Growth | 01/05/2000 | 148 Swedish Krona | $ 17 | $ 17 | - | - |
International | 01/05/2000 | 207 Swedish Krona | 24 | 24 | - | - |
</TABLE>
_____________________________
B-48 | ANNUAL REPORT | 1999
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
(Continued) December 31, 1999
- --------------------------------------------------------------------------------
6) 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 such 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
year ended December 31, 1999 for the USAA Life Growth and Income, USAA Life
World Growth, USAA Life Diversified Assets, and USAA Life Aggressive Growth
Funds were $5,352; $547; $3,687; and $188; respectively.
F. SHARE OWNERSHIP - At December 31, 1999, USAA Life owned approximately
659,000 shares (31%) of the USAA Life World Growth Fund, 1.5 million shares
(64%) of the USAA Life Aggressive Growth Fund, and 2.0 million shares (92%)
of the USAA Life International Fund. All other shares are owned by the
Separate Accounts.
During 1999, USAA Life has redeemed 2,123,000 shares of the USAA Life Income
Fund, 1,363,000 shares of USAA Life Growth & Income Fund, 1,040,000 shares of
the USAA Life World Growth Fund, 1,819,000 shares of the USAA Life Diversified
Assets Fund, and 412,000 shares of the USAA Life Aggressive Growth Fund. With
these actions, USAA Life no longer owns any shares of the USAA Life Income,
USAA Life Growth & Income, and USAA Life Diversified Assets funds.
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.
7) YEAR 2000 (UNAUDITED)
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.
_____________________________
1999 | ANNUAL REPORT | B-49
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
(Continued) December 31, 1999
- --------------------------------------------------------------------------------
8) FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
USAA Life Money Market Fund USAA Life Income Fund
------------------------------------------------ ------------------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------------------ ------------------------------------------------
1999 1998 1997 1996 1995* 1999 1998 1997 1996 1995*
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 10.89 $ 10.96 $ 10.51 $ 11.32 $ 10.00
Net investment income .05 .05 .05 .05 .06(b) .96 .66 .75 .92 .78(b)
Net realized and
unrealized gain (loss) - - - - - (1.52) .35 .46 (.84) 1.61
Distributions from net
investment income (.05) (.05) (.05) (.05) (.06) (.96) (.66) (.76) (.89) (.76)
Distributions of realized
capital gains - - - - - (.23) (.42) - - (.31)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value at
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 9.14 $ 10.89 $ 10.96 $ 10.51 $ 11.32
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total return (%)*** 4.93 5.29 5.35 5.25 5.69 (5.17) 9.17 11.60 .67 23.88
Net assets at
end of period (000) $ 31,495 $ 22,111 $ 15,131 $ 11,245 $ 7,802 $ 16,221 $ 41,249 $ 28,246 $ 24,049 $ 25,823
Ratio of expenses to
average net assets (%) .35 .35 .35 .35 .35(a) .35 .35 .35 .35 .35(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) .56 .80 .70 1.24 2.29(a) .68 .55 .52 .65 .65(a)
Ratio of net investment
income to average
net assets (%) 4.85 5.17 5.22 5.10 5.55(a) 6.56 6.62 7.16 6.99 7.07(a)
Portfolio turnover (%) - - - - - 41.36 61.79 30.77 97.74 55.08
</TABLE>
<TABLE>
<CAPTION>
USAA Life Aggressive Growth Fund
------------------------------------
USAA Life Diversified Assets Fund Eight Month
------------------------------------------------ Period Ended
Year Ended December 31, Year Ended December 31, December 31,
------------------------------------------------ ------------------------------------
1999 1998 1997 1996 1995* 1999 1998 1997**
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 15.07 $ 14.48 $ 12.95 $ 11.96 $ 10.00 $ 13.87 $ 11.70 $ 10.00
Net investment
income (loss) .52 .55 .50 .62 .55(b) (.07)(b) (.05)(b) (.01)(b)
Net realized and
unrealized gain .64 .85 2.14 1.10 2.08 13.06 2.39 1.83
Distributions from net
investment income (.52) (.55) (.50) (.62) (.53) - - -
Distributions of realized
capital gains (3.30) (.26) (.61) (.11) (.14) (1.83) (.17) (.12)
-------- -------- -------- -------- -------- ------- -------- -------
Net asset value at
end of period $ 12.41 $ 15.07 $ 14.48 $ 12.95 $ 11.96 $ 25.03 $ 13.87 $ 11.70
======== ======== ======== ======== ======== ======= ======== =======
Total return (%)*** 7.58 9.63 20.70 14.30 26.33 94.34 20.14 18.26
Net assets at
end of period (000) $ 39,973 $ 60,570 $ 48,212 $ 30,390 $ 26,311 $58,751 $ 29,201 $42,545
Ratio of expenses to
average net assets (%) .35 .35 .35 .35 .35(a) .70 .70 .70(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) .50 .45 .42 .61 .64(a) .94 .84 .85(a)
Ratio of net investment
income (loss) to average
net assets (%) 3.37 3.72 4.02 4.46 4.93(a) (.43) (.41) (.15)(a)
Portfolio turnover (%) 38.75 29.67 19.19 43.75 58.87 56.63 50.48 73.77
</TABLE>
_____________________________
B-50 | ANNUAL REPORT | 1999
<PAGE>
USAA Life Investment Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued) December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
USAA Life Growth and Income Fund USAA Life World Growth Fund
------------------------------------------------ ------------------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------------------ ------------------------------------------------
1999 1998 1997 1996 1995* 1999 1998 1997 1996 1995*
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 18.15 $ 17.98 $ 15.06 $ 12.60 $ 10.00 $ 14.37 $ 13.34 $ 12.77 $ 11.10 $ 10.00
Net investment income .27 .28 .28 .26 .34(b) .13 .16 .17 .18 .17(b)
Net realized and
unrealized gain (loss) 2.39 .97 3.68 2.79 2.83 4.30 1.37 1.62 2.16 1.79
Distributions from net
investment income (.27) (.28) (.27) (.26) (.30) (.13) (.16) (.17) (.16) (.16)
Distributions of realized
capital gains (1.79) (.80) (.77) (.33) (.27) (2.70) (.34) (1.05) (.51) (.70)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value at
end of period $ 18.75 $ 18.15 $ 17.98 $ 15.06 $ 12.60 $ 15.97 $ 14.37 $ 13.34 $ 12.77 $ 11.10
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total return (%)*** 14.67 6.93 26.43 24.13 31.72 30.93 11.46 14.08 21.12 19.55
Net assets at
end of period (000) $ 84,112 $100,438 $ 85,750 $ 55,932 $ 28,761 $ 33,918 $ 42,080 $ 39,510 $ 37,535 $ 24,706
Ratio of expenses to
average net assets (%) .35 .35 .34 .35 .35(a) .65 .65 .59 .65 .65(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) .37 .37 NA .53 .66(a) .75 .66 NA .82 .87(a)
Ratio of net investment
income to average
net assets (%) 1.31 1.55 1.80 2.25 2.82(a) .91 1.09 1.20 1.45 1.55(a)
Portfolio turnover (%) 19.50 37.75 20.26 14.55 17.73 29.62 55.47 48.89 57.66 78.86
USAA Life International Fund
------------------------------------
Eight Month
Period Ended
Year Ended December 31, December 31,
------------------------------------
1999 1998 1997** * Funds commenced operations January 5, 1995.
-------- -------- --------
Net asset value at ** Funds commenced operations May 1, 1997.
beginning of period $ 10.32 $ 10.05 $ 10.00
Net investment *** Assumes reinvestment of all dividend income and
income (loss) .11 .11 .05(b) capital gains distributions during the period.
Net realized and The total return calculations for each period
unrealized gain 2.81 .27 .15 do not reflect insurance contract charges that
Distributions from net apply at the Separate Account level, such as
investment income (.10) (.11) (.05) the mortality and expense charge. These
Distributions of realized expenses would reduce the total returns for
capital gains - - (.10) the periods shown.
-------- -------- --------
Net asset value at (a) Annualized. The ratio is not necessarily
end of period $ 13.14 $ 10.32 $ 10.05 indicative of 12 months of operations.
======== ======== ========
Total return (%)*** 28.33 3.78 1.92 (b) Calculated using weighted average shares.
Net assets at
end of period (000) $ 28,693 $ 22,226 $ 21,582
Ratio of expenses to
average net assets (%) 1.10 1.10 1.10(a)
Ratio of expenses to average
net assets, excluding
reimbursements (%) 1.29 1.35 1.24(a)
Ratio of net investment
income (loss) to average
net assets (%) 1.00 1.03 .70(a)
Portfolio turnover (%) 41.55 42.30 30.57
</TABLE>
_____________________________
1999 | ANNUAL REPORT | B-51
<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)
--------------------------------
[USAA LOGO]
Copyright Copy Rights 2000, USAA. All rights reserved. 26946-0200
