UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-4019
Exact name of registrant as specified in charter: USAA INVESTMENT TRUST
Address of principal executive offices and zip code: 9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Name and address of agent for service: MARK S. HOWARD
USAA INVESTMENT TRUST
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Registrant's telephone number, including area code: (210) 498-0226
Date of fiscal year end: MAY 31
Date of reporting period: NOVEMBER 30, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
USAA TREASURY MONEY MARKET TRUST - SEMIANNUAL REPORT FOR PERIOD ENDING
NOVEMBER 30, 2003
[LOGO OF USAA]
USAA(R)
USAA TREASURY MONEY
MARKET Trust(R)
[GRAPHIC OF USAA TREASURY MONEY MARKET TRUST]
S e m i a n n u a l R e p o r t
- --------------------------------------------------------------------------------
NOVEMBER 30, 2003
(C)2004, USAA. All rights reserved.
Table of CONTENTS
- --------------------------------------------------------------------------------
MESSAGE FROM THE PRESIDENT 2
INVESTMENT OVERVIEW & MANAGER'S COMMENTARY 5
FINANCIAL INFORMATION
Portfolio of Investments 10
Notes to Portfolio of Investments 12
Financial Statements 13
Notes to Financial Statements 16
THIS REPORT IS FOR THE INFORMATION OF THE SHAREHOLDERS AND OTHERS WHO HAVE
RECEIVED A COPY OF THE CURRENTLY EFFECTIVE PROSPECTUS OF THE FUND, MANAGED BY
USAA INVESTMENT MANAGEMENT COMPANY. IT MAY BE USED AS SALES LITERATURE ONLY WHEN
PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS, WHICH PROVIDES FURTHER DETAILS
ABOUT THE FUND.
(C)2004, USAA. All rights reserved.
2
M E S S A G E
==============------------------------------------------------------------------
from the PRESIDENT
"
WE MAY NOT HAVE REACHED THE PEAK
OF THE CURRENT CYCLICAL BULL MARKET,
[PHOTO OF CHRISTOPHER W. CLAUS] BUT WE HAVE SEEN A REMARKABLE
RUN-UP IN STOCK PRICES.
"
- --------------------------------------------------------------------------------
Economic reports confirm that the U.S. and global economies
began a robust expansion early in the autumn of 2003. We are
finally seeing the results of the fiscal and monetary policies
that were implemented to stimulate economic growth. The economy
is benefiting from the lowest short-term interest rates in
decades, reduced marginal tax rates, and increased government
spending. Productivity has increased to its highest level in 20
years, and corporate America is starting once again to invest
in capital goods and to add employees to its payrolls. Finally,
American goods and services are more competitive in global
markets because foreign currencies have gained strength over
the U.S. dollar.
All of these positive developments have translated into the
growth of the gross domestic product (GDP) and improved
corporate profitability, both of which have significantly
driven up stock prices. So we're left with the obvious
question: Can the economy keep growing fast enough and long
enough to support existing equity valuations and to provide for
higher stock prices?
While no one can predict what will happen, we do believe that
market volatility will remain the norm rather than the
exception. We may not have reached the peak of the current
cyclical bull market, but we have seen a remarkable run-up in
stock prices. Consequently, we would not be surprised to see
some form of
3
. . . C O N T I N U E D
========================--------------------------------------------------------
consolidation before stocks try to break through resistance
levels - assuming, of course, that the economy keeps growing,
more new jobs are created, corporate profitability continues to
improve, and short-term rates (which are expected to increase
in 2004) do not spike dramatically.
Whatever happens, the most effective strategy in any market
cycle is a well-thought-out investment plan that incorporates
asset allocation, diversification, and a true understanding of
your personal tolerance for risk - all matched to your
investment goals.
At USAA, we remain committed to helping you with your goals. We
will continue to provide you with outstanding resources - a
market-tested portfolio management team, world-class service,
and no-load mutual funds without excessive fees, sales loads,
or contractual plans.
For all of us here at USAA, I would like to thank you for your
business.
Sincerely,
/s/ Christopher W. Claus
Christopher W. Claus
President and Vice Chairman of the Board
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
FOR MORE COMPLETE INFORMATION ABOUT USAA MUTUAL FUNDS,
INCLUDING CHARGES AND OPERATING EXPENSES, REQUEST A PROSPECTUS
FROM USAA INVESTMENT MANAGEMENT COMPANY (USAA). READ IT
CAREFULLY BEFORE YOU INVEST.
MUTUAL FUND OPERATING EXPENSES APPLY AND CONTINUE THROUGHOUT
THE LIFE OF THE FUND.
5
I N V E S T M E N T
====================------------------------------------------------------------
OVERVIEW
USAA TREASURY MONEY MARKET TRUST
OBJECTIVE
- --------------------------------------------------------------------------------
Maximum current income while maintaining the highest degree of
safety and liquidity.
TYPES OF INVESTMENTS
- --------------------------------------------------------------------------------
Invests principally in U.S. government securities with
maturities of 397 days or less; normally at least 80% of the
Fund's assets will be in U.S. Treasury bills, notes, and bonds,
and repurchase agreements collateralized by these instruments.
- --------------------------------------------------------------------------------
11/30/03 5/31/03
- --------------------------------------------------------------------------------
Net Assets $191.8 Million $205.6 Million
Net Asset Value Per Share $1.00 $1.00
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AND 7-DAY YIELD AS OF 11/30/03
- --------------------------------------------------------------------------------
5/31/03 TO 11/30/03* 1 YEAR 5 YEARS 10 YEARS 7-DAY YIELD
0.33% 0.80% 3.33% 4.12% 0.65%
* TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THIS
SIX-MONTH RETURN IS CUMULATIVE.
TOTAL RETURN EQUALS INCOME RETURN AND ASSUMES REINVESTMENT OF
ALL NET INVESTMENT INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. NO ADJUSTMENT HAS BEEN MADE FOR TAXES PAYABLE
BY SHAREHOLDERS ON THEIR REINVESTED NET INVESTMENT INCOME
DIVIDENDS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
YIELDS AND RETURNS FLUCTUATE. THE SEVEN-DAY YIELD QUOTATION
MORE CLOSELY REFLECTS CURRENT EARNINGS OF THE FUND THAN THE
TOTAL RETURN QUOTATION. AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE
VALUE OF YOUR INVESTMENT AT $1 PER SHARE, IT IS POSSIBLE TO
LOSE MONEY BY INVESTING IN THE FUND.
6
. . . C O N T I N U E D
========================--------------------------------------------------------
OVERVIEW
- --------------------------------------------------------------------------------
7-DAY YIELD COMPARISON
- --------------------------------------------------------------------------------
[CHART OF 7-DAY YIELD COMPARISON]
USAA TREASURY
MONEY MARKET IMONEYNET
FUND AVERAGE
------------- -------------
11/26/2002 1.00% 0.70%
12/31/2002 0.97 0.65
01/28/2003 0.96 0.60
02/25/2003 0.93 0.56
03/25/2003 0.90 0.52
04/29/2003 0.90 0.50
05/27/2003 0.87 0.47
06/24/2003 0.79 0.43
07/29/2003 0.65 0.32
08/26/2003 0.59 0.29
09/30/2003 0.64 0.33
10/28/2003 0.65 0.30
11/25/2003 0.64 0.31
[END CHART]
DATA REPRESENT THE LAST TUESDAY OF EACH MONTH. ENDING DATE
11/25/03.
The graph tracks the Fund's Seven-day yield against IMoneyNet,
Inc. (Formerly IBC Financial Data, Inc.) U.S. Treasury & Repo,
an average of all major Treasury money market fund yields.
7
M A N A G E R ' S
==================--------------------------------------------------------------
COMMENTARY on the Fund
[PHOTO OF PAMELA BLEDSOE NOBLE] PAMELA BLEDSOE NOBLE, CFA
USAA Investment Management Company
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The USAA Treasury Money Market Trust had a total return of
0.33% for the six-month period ended November 30, 2003. This
compares to an average return of 0.17% for similar Treasury
and repurchase agreement (repo) money market funds ranked by
iMoneyNet, Inc. This performance placed the Fund in the top 6%
of its peer group as ranked by iMoneyNet.
WHAT WERE THE MAJOR DRIVERS OF THE FUND'S YIELD DURING THE SIX-MONTH PERIOD?
The interest-rate policy of the Federal Reserve Board (the
Fed), as well as the market's pricing of potential Fed moves,
had the greatest impact. The Fed adjusted rates one time
during the period, on June 25, 2003, cutting the federal funds
rate from 1.25% to 1%. This move was widely anticipated, so
the impact on the market was rather muted. The Fund's yield
reflects the fact that the federal funds rate is currently at
a 45-year low.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
IMONEYNET, INC. RANKED THE FUND 5 OUT OF 90 TREASURY RETAIL
MONEY MARKET FUNDS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2003.
8
. . . C O N T I N U E D
=========================-------------------------------------------------------
COMMENTARY on the Fund
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
The Fund continued to pursue a dual strategy to maximize yield
while maintaining flexibility to respond to changing market
conditions. To stabilize the yield in the low-rate environment,
we invested in a portfolio of U.S. Treasury securities with
maturities from one month to one year. The remaining assets
were invested in repos (backed by Treasury securities). To
provide the highest possible yield for shareholders, we
continually looked for opportunities to buy Treasuries and
lengthen the Fund's maturity when market conditions warranted.
Looking forward, we think the economic recovery will continue
to strengthen, which will eventually lead to higher interest
rates. This should be reflected in the Fund's yield.
HOW DOES THE FUND MANAGE TO OUTPERFORM ITS PEER GROUP WHEN INTEREST RATES ARE SO
LOW?
We are generally able to seize opportunities in the Treasury
market, and our low expense ratio provides more income to pass
on to you, our shareholders. We're doing all we can as
managers to support the Fund's yield, while keeping in mind
that the primary purpose of money market funds is to provide
liquidity and stability. We thank you for the confidence
you've placed in us. We're working hard every day to continue
to earn your trust.
YOU WILL FIND A COMPLETE LIST OF SECURITIES THAT THE FUND OWNS
ON PAGES 10-11.
9
. . . C O N T I N U E D
========================--------------------------------------------------------
- --------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE OF $10,000
- --------------------------------------------------------------------------------
[CHART OF CUMULATIVE PERFORMANCE OF $10,000]
USAA TREASURY
MONEY MARKET
FUND
-------------
11/30/1993 $10,000.00
12/31/1993 10,023.88
01/31/1994 10,048.06
02/28/1994 10,070.29
03/31/1994 10,095.49
04/30/1994 10,119.93
05/31/1994 10,148.88
06/30/1994 10,178.96
07/31/1994 10,209.46
08/31/1994 10,246.60
09/30/1994 10,282.48
10/31/1994 10,320.61
11/30/1994 10,360.62
12/31/1994 10,403.67
01/31/1995 10,450.82
02/28/1995 10,494.78
03/31/1995 10,544.77
04/30/1995 10,590.28
05/31/1995 10,644.15
06/30/1995 10,694.20
07/31/1995 10,744.27
08/31/1995 10,793.58
09/30/1995 10,839.45
10/31/1995 10,890.28
11/30/1995 10,938.51
12/31/1995 10,984.74
01/31/1996 11,036.01
02/29/1996 11,079.42
03/31/1996 11,122.90
04/30/1996 11,170.28
05/31/1996 11,216.40
06/30/1996 11,258.30
07/31/1996 11,308.19
08/31/1996 11,353.99
09/30/1996 11,401.36
10/31/1996 11,449.11
11/30/1996 11,494.53
12/31/1996 11,544.82
01/31/1997 11,593.48
02/28/1997 11,637.45
03/31/1997 11,686.72
04/30/1997 11,735.22
05/31/1997 11,784.21
06/30/1997 11,835.49
07/31/1997 11,887.15
08/31/1997 11,935.79
09/30/1997 11,989.41
10/31/1997 12,041.67
11/30/1997 12,089.36
12/31/1997 12,145.90
01/31/1998 12,197.18
02/28/1998 12,244.94
03/31/1998 12,299.83
04/30/1998 12,351.44
05/31/1998 12,401.35
06/30/1998 12,457.07
07/31/1998 12,511.39
08/31/1998 12,565.96
09/30/1998 12,618.55
10/31/1998 12,667.35
11/30/1998 12,717.19
12/31/1998 12,766.12
01/31/1999 12,811.45
02/28/1999 12,855.35
03/31/1999 12,907.56
04/30/1999 12,955.18
05/31/1999 12,999.24
06/30/1999 13,051.05
07/31/1999 13,099.85
08/31/1999 13,152.73
09/30/1999 13,203.95
10/31/1999 13,253.99
11/30/1999 13,311.21
12/31/1999 13,366.66
01/31/2000 13,422.46
02/29/2000 13,477.66
03/31/2000 13,538.41
04/30/2000 13,594.84
05/31/2000 13,662.32
06/30/2000 13,727.52
07/31/2000 13,796.33
08/31/2000 13,865.96
09/30/2000 13,932.11
10/31/2000 14,005.53
11/30/2000 14,075.38
12/31/2000 14,142.73
01/31/2001 14,215.35
02/28/2001 14,273.22
03/31/2001 14,333.07
04/30/2001 14,390.31
05/31/2001 14,441.45
06/30/2001 14,486.43
07/31/2001 14,533.11
08/31/2001 14,575.15
09/30/2001 14,606.61
10/31/2001 14,637.04
11/30/2001 14,660.96
12/31/2001 14,679.76
01/31/2002 14,697.44
02/28/2002 14,714.06
03/31/2002 14,731.16
04/30/2002 14,748.08
05/31/2002 14,764.57
06/30/2002 14,780.48
07/31/2002 14,798.00
08/31/2002 14,816.40
09/30/2002 14,831.85
10/31/2002 14,848.92
11/30/2002 14,862.57
12/31/2002 14,875.04
01/31/2003 14,887.61
02/28/2003 14,898.38
03/31/2003 14,909.30
04/30/2003 14,920.45
05/31/2003 14,931.97
06/30/2003 14,941.37
07/31/2003 14,949.49
08/31/2003 14,957.75
09/30/2003 14,965.07
10/31/2003 14,973.80
11/30/2003 14,981.16
[END CHART]
DATA FROM 11/30/93 THROUGH 11/30/03.
The graph illustrates a hypothetical $10,000 investment in the
USAA Treasury Money Market Trust.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THE
VALUE OF YOUR INVESTMENT MAY VARY ACCORDING TO THE FUND'S
PERFORMANCE. NO ADJUSTMENT HAS BEEN MADE FOR TAXES PAYABLE BY
SHAREHOLDERS ON THEIR REINVESTED INCOME DIVIDENDS. INCOME MAY
BE SUBJECT TO FEDERAL, STATE, OR LOCAL TAXES, OR TO THE
ALTERNATIVE MINIMUM TAX. FOR SEVEN-DAY YIELD INFORMATION,
PLEASE REFER TO THE FUND'S INVESTMENT OVERVIEW PAGE.
AN INVESTMENT IN THIS FUND IS NOT INSURED OR GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS
TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
10
P O R T F O L I O
==================--------------------------------------------------------------
of INVESTMENTS
(in thousands)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT SECURITY VALUE
- -------------------------------------------------------------------------------------------
U.S. TREASURY BILLS (11.7%)(a)
$ 5,000 0.93%, 12/04/2003 $ 5,000
5,000 0.93%, 12/04/2003 4,999
3,327 0.93%, 12/26/2003 3,325
3,060 1.03%, 2/19/2004 3,053
1,000 0.99%, 3/25/2004 997
5,000 0.99%, 4/15/2004 4,981
-------
Total U.S. Treasury bills (cost: $22,355) 22,355
-------
U.S. TREASURY NOTES (23.7%)(b)
5,000 3.25%, 12/31/2003 5,007
5,000 3.00%, 1/31/2004 5,014
5,000 3.63%, 3/31/2004 5,039
5,000 3.25%, 5/31/2004 5,054
5,000 2.88%, 6/30/2004 5,053
5,000 2.25%, 7/31/2004 5,033
5,000 6.00%, 8/15/2004 5,169
10,000 2.13%, 8/31/2004 10,073
-------
Total U.S. Treasury notes (cost: $45,442) 45,442
-------
U.S. GOVERNMENT GUARANTEED SECURITY (1.0%)
2,000 Overseas Private Investment Corp. Certificates of Participation,
1.12%, 4/02/2007(c) (cost: $2,000) 2,000
-------
Total investment in securities (cost: $69,797) 69,797
-------
REPURCHASE AGREEMENTS (63.5%)
9,500 Bank One Capital Markets, Inc., 1.02%, acquired on 11/28/2003 and
due 12/01/2003 at $9,500 (collateralized by $9,923 of U.S. Treasury
bills, due between 5/06/2004 and 5/20/2004 and U.S. Treasury
notes, 1.625%-3.625% due between 3/31/2004 and 5/15/2013;
market value $9,787)(d) 9,500
9,500 Credit Suisse First Boston Corp., 1.03%, acquired on 11/28/2003
and due 12/01/2003 at $9,500 (collateralized by a $9,575 U.S.
Treasury note, 3.25% due 8/15/2008; market value $9,691)(d) 9,500
11
P O R T F O L I O
==================--------------------------------------------------------------
of INVESTMENTS (continued)
(in thousands)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------------
$47,900 Deutsche Bank Securities, 1.02%, acquired on 11/26/2003 and due
12/01/2003 at $47,900 (collateralized by a $48,765 U.S. Treasury
note, 4.25% due 11/15/2013; market value $48,858)(d) $ 47,900
7,000 State Street Bank & Trust Co., 0.95%, acquired on 11/28/2003 and
due 12/01/2003 at $7,000 (collateralized by a $7,125 U.S.
Treasury note, 3.375% due 4/30/2004; market value $7,285)(d) 7,000
47,800 Wachovia Securities, Inc., 1.04%, acquired on 11/28/2003 and due
12/01/2003 at $47,800 (collateralized by a $47,474 U.S. Treasury
note, 3.25% due 5/31/2004; market value $48,756)(d) 47,800
--------
Total repurchase agreements (cost: $121,700) 121,700
--------
TOTAL INVESTMENTS (COST: $191,497) $191,497
========
12
N O T E S
==========----------------------------------------------------------------------
to Portfolio of INVESTMENTS
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
GENERAL NOTES
- --------------------------------------------------------------------------------
Market values of securities are determined by procedures and practices
discussed in Note 1 to the financial statements.
The cost of securities at November 30, 2003, for federal income tax
purposes, was approximately the same as that reported in the financial
statements.
The percentages shown represent the percentages of the investments to
net assets and, in total, may not equal 100%.
SPECIFIC NOTES
- --------------------------------------------------------------------------------
(a) Rates for U.S. Treasury bills represent the discount rate at
purchase date.
(b) Rates for U.S. Treasury notes represent the stated coupon payment
rate at time of issuance.
(c) Variable-rate demand note (VRDN) - provides the right, on any
business day, to sell the security at face value on either that day
or within the rate-reset period. The interest rate is adjusted at a
stipulated weekly or quarterly interval to a rate that reflects
current market conditions. The effective maturity for this
instrument is deemed to be less than 397 days in accordance with
detailed regulatory requirements. This security is shown at its
current rate as of November 30, 2003.
(d) Collateral on repurchase agreements is received by the Fund upon
entering into the repurchase agreement. The collateral is marked-
to-market daily to ensure its market value is equal to or in excess
of the resale price of the repurchase agreement.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
S T A T E M E N T
==================--------------------------------------------------------------
of ASSETS and LIABILITIES
(in thousands)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
ASSETS
Investments in securities (valued at amortized cost) $ 69,797
Repurchase agreements 121,700
Cash 247
Receivables:
Capital shares sold 110
Interest 487
--------
Total assets 192,341
--------
LIABILITIES
Payables:
Capital shares redeemed 517
Dividends on capital shares 4
Accrued management fees 20
Accrued transfer agent's fees 18
Other accrued expenses and payables 31
--------
Total liabilities 590
--------
Net assets applicable to capital shares outstanding $191,751
========
NET ASSETS CONSIST OF:
Paid-in capital $191,751
========
Capital shares outstanding, unlimited number of shares authorized,
no par value 191,751
========
Net asset value, redemption price, and offering price per share $ 1.00
========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
S T A T E M E N T
==================--------------------------------------------------------------
of OPERATIONS
(in thousands)
USAA TREASURY MONEY MARKET TRUST
SIX-MONTH PERIOD ENDED NOVEMBER 30, 2003 (UNAUDITED)
INVESTMENT INCOME
Interest income $1,088
------
EXPENSES
Management fees 126
Administrative and servicing fees 100
Transfer agent's fees 103
Custodian's fees 29
Postage 3
Shareholder reporting fees 5
Trustees' fees 3
Registration fees 32
Professional fees 21
Other 3
------
Total expenses 425
Expenses paid indirectly (3)
------
Net expenses 422
------
NET INVESTMENT INCOME $ 666
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
S T A T E M E N T S
====================------------------------------------------------------------
of Changes in NET ASSETS
(in thousands)
USAA TREASURY MONEY MARKET TRUST
SIX-MONTH PERIOD ENDED NOVEMBER 30, 2003 (UNAUDITED),
AND YEAR ENDED MAY 31, 2003
11/30/2003 5/31/2003
------------------------
FROM OPERATIONS
Net investment income $ 666 $ 2,259
------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (666) (2,259)
------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 71,424 151,047
Reinvested dividends 635 2,170
Cost of shares redeemed (85,866) (134,026)
------------------------
Increase (decrease) in net assets from
capital share transactions (13,807) 19,191
------------------------
Net increase (decrease) in net assets (13,807) 19,191
NET ASSETS
Beginning of period 205,558 186,367
------------------------
End of period $ 191,751 $ 205,558
========================
CHANGE IN SHARES OUTSTANDING
Shares sold 71,424 151,047
Shares issued for dividends reinvested 635 2,170
Shares redeemed (85,866) (134,026)
------------------------
Increase (decrease) in shares outstanding (13,807) 19,191
========================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
USAA INVESTMENT TRUST (the Trust), registered under the Investment
Company Act of 1940, as amended, is a diversified, open-end
management investment company organized as a Massachusetts business
trust consisting of nine separate funds. The information presented in
this semiannual report pertains only to the USAA Treasury Money Market
Trust (the Fund). The Fund's investment objective is to provide
maximum current income while maintaining the highest degree of safety
and liquidity.
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. Pursuant to Rule 2a-7 under the Investment Company Act of
1940, securities in the Fund are stated at amortized cost,
which approximates market value. Repurchase agreements are
valued at cost.
2. Securities for which valuations are not readily available or
are considered unreliable are valued in good faith at fair
value, using methods determined by USAA Investment Management
(the Manager), an affiliate of the Fund, under valuation
procedures and procedures to stabilize net asset value
approved by the Trust's Board of Trustees.
B. FEDERAL TAXES - The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
income to its shareholders. Therefore, no federal income tax
provision is required.
C. INVESTMENTS IN SECURITIES - Security transactions are accounted
for on the date the securities are purchased or sold (trade
date). Gain or loss from sales of investment securities is
computed on the identified cost basis. Interest income is
recorded daily on the
17
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
accrual basis. Discounts and premiums on securities are amortized
over the life of the respective securities, using the
straight-line method.
D. REPURCHASE AGREEMENTS - The Fund may enter into repurchase
agreements with commercial banks or recognized security dealers.
These agreements are collateralized by obligations issued or
guaranteed as to both principal and interest by the U.S.
government, its agencies, or its instrumentalities. Obligations
pledged as collateral are required to maintain a value equal to
or in excess of the resale price of the repurchase agreement and
are held by the Fund, either through its regular custodian or
through a special "tri-party" custodian that maintains separate
accounts for both the Fund and its counterparty, until maturity
of the repurchase agreement. The Fund's Manager monitors the
creditworthiness of sellers with which the Fund may enter into
repurchase agreements.
E. EXPENSES PAID INDIRECTLY - Through fee-offset arrangements with
certain of the Fund's service providers, realized credits, if
any, are used to reduce the Fund's expenses. For the six-month
period ended November 30, 2003, these fee-offset arrangements
reduced the Fund's expenses by $3,000.
F. USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that may affect the reported amounts in the financial
statements.
(2) LINES OF CREDIT
- --------------------------------------------------------------------------------
The Fund participates with other USAA funds in two joint, short-term,
revolving, committed loan agreements totaling $500 million: $400
million with USAA Capital Corporation (CAPCO), an affiliate of the
Manager, and $100 million with Bank of America. The purpose of the
agreements
18
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
is to meet temporary or emergency cash needs, including redemption
requests that might otherwise require the untimely disposition of
securities.
Subject to availability under its agreement with CAPCO, the Fund may
borrow from CAPCO an amount up to 5% of the Fund's total assets at
CAPCO's borrowing rate with no markup. Subject to availability under
its agreement with Bank of America, the Fund may borrow from Bank of
America, at Bank of America's borrowing rate plus a 0.50% markup, an
amount which, when added to outstanding borrowings under the CAPCO
agreement, does not exceed 25% of the Fund's total assets.
The USAA funds that are party to the loan agreements are assessed
facility fees in aggregate by Bank of America in an annual amount
equal to 0.09% of the $100 million loan agreement, whether used or
not, and by CAPCO based on the funds' assessed proportionate share of
CAPCO's operating expenses related to obtaining and maintaining
CAPCO's funding programs in total (in no event to exceed 0.09%
annually of the $400 million loan agreement). The facility fees are
allocated among the funds based on their respective average net assets
for the period. The Fund had no borrowings under either of these
agreements during the six-month period ended November 30, 2003.
(3) DISTRIBUTIONS
- --------------------------------------------------------------------------------
The tax basis of distributions and accumulated undistributed net
investment income will be determined based upon the Fund's tax year-
end of May 31, 2004, in accordance with applicable tax law.
Net investment income is accrued daily as dividends and distributed to
shareholders monthly. Distributions of realized gains from security
transactions not offset by capital losses are made annually in the
succeeding fiscal year or as otherwise required to avoid the payment
of federal taxes.
19
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
(4) TRANSACTIONS WITH MANAGER
- --------------------------------------------------------------------------------
A. MANAGEMENT FEES - The Manager carries out the Fund's investment
policies and manages the Fund's portfolio. The Fund's management
fees are accrued daily and paid monthly at an annualized rate of
0.125% of the Fund's average net assets. For the six-month period
ended November 30, 2003, the Fund incurred management fees, paid
or payable to the Manager, of $126,000.
B. ADMINISTRATIVE AND SERVICING FEES - The Manager provides certain
administrative and shareholder servicing functions for the Fund.
For such services, the Manager receives a fee accrued daily and
paid monthly at an annualized rate of 0.10% of the Fund's average
net assets. For the six-month period ended November 30, 2003, the
Fund incurred administrative and servicing fees, paid or payable
to the Manager, of $100,000.
C. TRANSFER AGENT'S FEES - USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services, an affiliate of the Manager,
provides transfer agent services to the Fund based on an annual
charge of $25.50 per shareholder account plus out-of-pocket
expenses. For the six-month period ended November 30, 2003, the
Fund incurred transfer agent's fees, paid or payable to USAA
Transfer Agency Company, of $103,000.
D. UNDERWRITING SERVICES - The Manager provides exclusive
underwriting and distribution of the Fund's shares on a
continuing best-efforts basis. The Manager receives no
commissions or fees for this service.
(5) TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
Certain trustees and officers of the Fund are also directors,
officers, and/or employees of the Manager. None of the affiliated
trustees or Fund officers received any compensation from the Fund.
20
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2003 (UNAUDITED)
(6) FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Per share operating performance for a share outstanding throughout each period
is as follows:
SIX-MONTH
PERIOD ENDED
NOVEMBER 30, YEAR ENDED MAY 31,
-------------------------------------------------------------------------
2003 2003 2002 2001 2000 1999
-------------------------------------------------------------------------
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income .00(c) .01 .02 .06 .05 .05
Less distributions:
From net investment income (.00)(c) (.01) (.02) (.06) (.05) (.05)
-------------------------------------------------------------------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========================================================================
Total return (%)* .33 1.14 2.24 5.70 5.05 4.83
Net assets at end of period (000) $191,751 $205,558 $186,367 $165,941 $153,400 $143,995
Ratio of expenses to average
net assets (%)** .42(a,b) .43(b) .42(b) .36(b) .35 .36
Ratio of net investment income
to average net assets (%)** .66(a) 1.13 2.17 5.55 5.00 4.69
* Assumes reinvestment of all net investment income distributions during the
period.
** For the six-month period ended November 30, 2003, average net assets were
$200,925,000.
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(b) Reflects total expenses, excluding any fee-offset arrangements, which did
not affect the Fund's expense ratios.
(c) Represents less than $.01 per share.
TRUSTEES Robert G. Davis, CHAIRMAN OF THE BOARD
Christopher W. Claus, VICE CHAIRMAN OF THE BOARD
Barbara B. Dreeben
Robert L. Mason, Ph.D.
Michael F. Reimherr
Laura T. Starks, Ph.D.
Richard A. Zucker
ADMINISTRATOR, USAA Investment Management Company
INVESTMENT ADVISER, P.O. Box 659453
UNDERWRITER, San Antonio, Texas 78265-9825
AND DISTRIBUTOR
TRANSFER AGENT USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
CUSTODIAN State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
INDEPENDENT AUDITOR Ernst & Young LLP
100 West Houston St., Suite 1900
San Antonio, Texas 78205
TELEPHONE Call toll free - Central time
ASSISTANCE HOURS Monday - Friday, 7 a.m. to 10 p.m.
Saturday, 8:30 a.m. to 5 p.m.
Sunday, 10:30 a.m. to 7 p.m.
FOR ADDITIONAL 1-800-531-8181, in San Antonio 456-7200
INFORMATION ABOUT For account servicing, exchanges,
MUTUAL FUNDS or redemptions
1-800-531-8448, in San Antonio 456-7202
RECORDED MUTUAL 24-hour service (from any phone)
FUND PRICE QUOTES 1-800-531-8066, in San Antonio 498-8066
MUTUAL FUND (from touch-tone phones only)
USAA TOUCHLINE For account balance, last transaction, fund
prices, or to exchange or redeem fund shares
1-800-531-8777, in San Antonio 498-8777
INTERNET ACCESS USAA.COM
THROUGH OUR ONGOING EFFORTS TO REDUCE EXPENSES, YOUR REPORT MAILINGS ARE
STREAMLINED. WE DEVELOP MAILING LISTS USING CRITERIA SUCH AS ADDRESS, MEMBER
NUMBER, AND SURNAME TO SEND ONE REPORT TO EACH HOUSEHOLD INSTEAD OF SENDING A
REPORT TO EVERY REGISTERED OWNER. THIS PRACTICE IS DESIGNED TO REDUCE DUPLICATE
COPIES AND SAVE PAPER AND POSTAGE COSTS TO THE FUND. IF YOU PREFER NOT TO
PARTICIPATE IN STREAMLINING AND WOULD LIKE TO CONTINUE RECEIVING ONE REPORT PER
REGISTERED ACCOUNT OWNER, PLEASE CALL US AND WE WILL BEGIN YOUR INDIVIDUAL
DELIVERY WITHIN 30 DAYS OF YOUR REQUEST.
COPIES OF THE MANAGER'S PROXY VOTING POLICIES AND PROCEDURES ARE AVAILABLE
WITHOUT CHARGE (I) BY CALLING 1-800-531-8448; (II) AT USAA.COM; AND (III) ON THE
SEC'S WEB SITE AT HTTP://WWW.SEC.GOV.
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INSURANCE o MEMBER SERVICES
23416-0104 (C)2004, USAA. All rights reserved.
ITEM 2. CODE OF ETHICS.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
NOT APPLICABLE. This item must be disclosed only in annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NOT APPLICABLE. This item must be disclosed only in annual reports with fiscal
years on or after December 15, 2003.
ITEM 5-6. (RESERVED)
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
NOT APPLICABLE.
ITEM 8. (RESERVED)
ITEM 9. CONTROLS AND PROCEDURES
The chief executive officer and chief financial officer of USAA Investment Trust
(Trust) have concluded that the Trust's disclosure controls and procedures are
sufficient to ensure that information required to be disclosed by the Trust in
this Form N-CSR was recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
based upon such officers' evaluation of these controls and procedures as of a
date within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation.