UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/S
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: EILEEN M. SMILEY
USAA INVESTMENT TRUST
9800 FREDERICKSBURG ROAD
SAN ANTONIO, TX 78288
Registrant's telephone number, including area code: (210) 498-4103
Date of fiscal year end: MAY 31
Date of reporting period: NOVEMBER 30, 2005
ITEM 1. REPORT TO STOCKHOLDERS.
USAA TREASURY MONEY MARKET TRUST - SEMIANNUAL REPORT FOR PERIOD ENDING
NOVEMBER 30, 2005
[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, 2005
Table of CONTENTS
- --------------------------------------------------------------------------------
MESSAGE FROM THE PRESIDENT 2
MANAGER'S COMMENTARY 4
INVESTMENT OVERVIEW 6
FINANCIAL INFORMATION
Portfolio of Investments 9
Notes to Portfolio of Investments 11
Financial Statements 13
Notes to Financial Statements 16
EXPENSE EXAMPLE 22
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)2006, USAA. All rights reserved.
2
M E S S A G E
==============------------------------------------------------------------------
from the PRESIDENT
"
WE WILL CONTINUE TO LOOK FOR VALUE
[PHOTO OF CHRISTOPHER W. CLAUS] IN OUR INVESTMENTS, EXAMINE THE RISKS,
AND MAINTAIN OUR INVESTMENT DISCIPLINE.
"
December 2005
- --------------------------------------------------------------------------------
As I write to you during the final weeks of 2005, I am watching
some interesting dynamics that could affect all of us in the
new year.
In 2006, we expect the Federal Reserve Board (the Fed) to stop
tightening short-term interest rates. After raising rates to
4.25% in December 2005, Fed governors, we believe, are likely
to hike rates at least one more time on January 31, 2006. If
the Fed keeps tightening, there is the possibility that
short-term interest rates could eventually be higher than
long-term rates, resulting in what is called an inverted yield
curve. In some cases, an inverted yield curve has been the
precursor of an economic downturn.
For the moment, however, the U.S. economy appears to be on
solid footing, with estimates for gross domestic product (GDP)
growth of about 3% for 2006. While the country is not
experiencing an economic boom, we can expect moderate growth in
the months ahead, which should translate into gains in
corporate earnings in the mid-single digits. Whether earnings
will be robust enough to support current stock market
valuations, however, remains uncertain. Beyond our shores,
international stocks outperformed U.S. equities during 2005. We
believe we could see a repeat of this in 2006.
In the gold market, prices have continued to rise, fueled by
high oil prices, strong investor demand, and an increase in
consumer purchases of jewelry. We expect these conditions to
persist during 2006.
I believe the housing market is at or near the peak in the
number of units sold. Inventory has grown, mortgage rates are
inching
3
. . . C O N T I N U E D
========================--------------------------------------------------------
upward, and some institutions have tightened their lending
standards. If housing prices fall, the first to feel the pain
could be investors who are "flipping" properties using
interest-only or adjustable-rate mortgages (ARMs). The dramatic
increase in short-term rates would be particularly painful for
housing investors also, especially those with ARMs and
interest-only mortgages.
Among the biggest stories of 2005 was the resiliency of
long-term interest rates. Instead of spiking higher, they were
range bound most of the year. In 2006, both short- and
long-term rates will continue to be a key market indicator. If
rates rise, bond prices will fall - hurting the bond market.
Going forward, two factors will have great influence on
long-term rates. One is inflation, which appears to be under
control at present. The second is the purchase of U.S. debt by
foreign investors, which helps us support our budget deficit.
With interest rates in other countries significantly lower, it
seems likely that foreign demand will remain strong, buoying
U.S. bonds. We believe that long-term rates will not spike
dramatically but continue to drift upward in a manageable
fashion.
In this environment, our central concern is that we are paid
for the risk we take in all our portfolios. It makes sense to
be cautious; there is some risk in the market, but risk
premiums are very low.
We will continue to look for value in our investments, examine
the risks, and maintain our investment discipline. From all of
us at USAA Investment Management Company, thank you for your
business and the opportunity to serve your investment needs.
Sincerely,
/s/ CHRISTOPHER W. CLAUS
Christopher W. Claus
President and Vice Chairman of the Board
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
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
1.53% for the six months ended November 30, 2005. This compares
to an average return of 1.35% for similar Treasury and
repurchase agreement (repo) money market funds ranked by
iMoneyNet.
HOW DID THE CONTINUING TIGHTENING CAMPAIGN BY THE FEDERAL RESERVE BOARD (THE
FED) AFFECT THE FUND?
The Fed raised the federal funds rate from 3% to 4% by 0.25% at
each of the four meetings during the reporting period. As a
result of the Fed's actions and our strategies, the Fund's
seven-day yield rose from 2.57% on May 31, 2005, to 3.53% on
November 30, 2005. Money market funds can be an ideal
fixed-income investment in a rising-rate environment.
WHAT STRATEGIES DID YOU PURSUE?
Our goal in this rising-rate environment is to pass along
higher interest rates to our shareholders as quickly as
possible. By investing in repurchase agreements that usually
mature on a daily basis, along with a ladder of Treasury bills
and notes, we found an effective balance for today's
environment. The Fund's asset mix ended the six months close to
where it began, with approximately 80% of net assets invested
in repurchase agreements and 22% in Treasury bills and other
government securities.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
REFER TO PAGE 7 FOR BENCHMARK DEFINITIONS.
5
. . . C O N T I N U E D
========================--------------------------------------------------------
HOW MANY MORE FED INTEREST-RATE INCREASES DO YOU EXPECT?
We expect a few more rate increases, but just how many will be
highly dependent on the economic data. There tends to be a lag
between the increased federal funds rate and the desired
cooling effect on the economy, so to the extent we see moderate
economic growth and low inflation in early 2006, the Fed should
have room to pause. However, the Fed controls only short-term
interest rates, while a larger part of the U.S. economy is
influenced by longer-term rates, which remain historically low.
We will be watching the economic data very closely to determine
the impact on growth, and will adjust our strategy as needed.
In addition, the new Fed chairman, Benjamin Bernanke, takes
over on February 1, 2006, adding a new dimension to the
interest-rate forecast.
HOW DO YOU EXPECT TO MANAGE THE FUND GOING FORWARD?
In the early months of 2006, we expect interest rates to
continue to rise, so our current mix of repurchase agreements
and Treasury securities will likely remain in place. If we
anticipate that the rise in short-term rates is coming to an
end, we would expect to find more value buying Treasury bills
and notes, effectively extending the average maturity of the
portfolio.
We thank you, our shareholders, for the confidence you've
placed in us, and for allowing us to help you attain your
short-term financial goals.
6
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.
- --------------------------------------------------------------------------------
11/30/05 5/31/05
- --------------------------------------------------------------------------------
Net Assets $186.3 Million $174.0 Million
Net Asset Value Per Share $1.00 $1.00
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AND 7-DAY YIELD AS OF 11/30/05
- --------------------------------------------------------------------------------
5/31/05 TO 11/30/05* 1 YEAR 5 YEARS 10 YEARS 7-DAY YIELD
1.53% 2.56% 1.93% 3.54% 3.53%
*TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THIS SIX-
MONTH RETURN IS CUMULATIVE.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS
NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE
HIGHER OR LOWER THAN THE PERFORMANCE DATA QUOTED. FOR
PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, VISIT
USAA.COM.
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.
TOTAL RETURN EQUALS INCOME RETURN AND ASSUMES REINVESTMENT OF
ALL NET INVESTMENT INCOME DIVIDEND AND REALIZED CAPITAL GAIN
DISTRIBUTIONS. THE TOTAL RETURNS QUOTED DO NOT REFLECT THE
DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. YIELDS AND
RETURNS FLUCTUATE. THE SEVEN-DAY YIELD QUOTATION MORE CLOSELY
REFLECTS CURRENT EARNINGS OF THE FUND THAN THE TOTAL RETURN
QUOTATION.
7
. . . C O N T I N U E D
========================--------------------------------------------------------
7-DAY YIELD COMPARISON
[CHART OF 7-DAY YIELD COMPARISON]
USAA TREASURY MONEY iMONEYNET
MARKET TRUST AVERAGE
11/30/2004 1.48% 1.16%
12/28/2004 1.65 1.32
1/25/2005 1.71 1.38
2/22/2005 1.93 1.62
3/29/2005 2.17 1.84
4/26/2005 2.25 1.91
5/31/2005 2.57 2.20
6/28/2005 2.59 2.27
7/26/2005 2.77 2.43
8/30/2005 3.08 2.71
9/27/2005 3.21 2.84
10/25/2005 3.27 2.90
11/29/2005 3.53 3.16
[END CHART]
DATA REPRESENT THE LAST TUESDAY OF EACH MONTH. ENDING DATE
11/29/05.
The graph tracks the Fund's seven-day yield against the
iMoneyNet, Inc. average for all U.S. Treasury & Repo money
market funds.
8
. . . C O N T I N U E D
========================--------------------------------------------------------
OVERVIEW
CUMULATIVE PERFORMANCE OF $10,000
[CHART OF CUMULATIVE PERFORMANCE]
USAA TREASURY MONEY
MARKET TRUST
11/30/95 $10,000.00
12/31/95 10,042.26
01/31/96 10,089.13
02/29/96 10,128.82
03/31/96 10,168.57
04/30/96 10,211.88
05/31/96 10,254.04
06/30/96 10,292.35
07/31/96 10,337.96
08/31/96 10,379.83
09/30/96 10,423.14
10/31/96 10,466.79
11/30/96 10,508.32
12/31/96 10,554.29
01/31/97 10,598.77
02/28/97 10,638.97
03/31/97 10,684.01
04/30/97 10,728.35
05/31/97 10,773.14
06/30/97 10,820.02
07/31/97 10,867.25
08/31/97 10,911.71
09/30/97 10,960.73
10/31/97 11,008.51
11/30/97 11,052.11
12/31/97 11,103.80
01/31/98 11,150.68
02/28/98 11,194.34
03/31/98 11,244.51
04/30/98 11,291.70
05/31/98 11,337.33
06/30/98 11,388.27
07/31/98 11,437.93
08/31/98 11,487.81
09/30/98 11,535.90
10/31/98 11,580.51
11/30/98 11,626.07
12/31/98 11,670.81
01/31/99 11,712.24
02/28/99 11,752.37
03/31/99 11,800.11
04/30/99 11,843.64
05/31/99 11,883.92
06/30/99 11,931.29
07/31/99 11,975.90
08/31/99 12,024.24
09/30/99 12,071.06
10/31/99 12,116.81
11/30/99 12,169.13
12/31/99 12,219.82
01/31/00 12,270.83
02/29/00 12,321.29
03/31/00 12,376.83
04/30/00 12,428.41
05/31/00 12,490.11
06/30/00 12,549.71
07/31/00 12,612.62
08/31/00 12,676.27
09/30/00 12,736.75
10/31/00 12,803.87
11/30/00 12,867.73
12/31/00 12,929.30
01/31/01 12,995.69
02/28/01 13,048.59
03/31/01 13,103.31
04/30/01 13,155.64
05/31/01 13,202.39
06/30/01 13,243.51
07/31/01 13,286.19
08/31/01 13,324.62
09/30/01 13,353.38
10/31/01 13,381.20
11/30/01 13,403.07
12/31/01 13,420.25
01/31/02 13,436.42
02/28/02 13,451.61
03/31/02 13,467.25
04/30/02 13,482.72
05/31/02 13,497.78
06/30/02 13,512.33
07/31/02 13,528.35
08/31/02 13,545.17
09/30/02 13,559.30
10/31/02 13,574.90
11/30/02 13,587.38
12/31/02 13,598.78
01/31/03 13,610.27
02/28/03 13,620.12
03/31/03 13,630.10
04/30/03 13,640.29
05/31/03 13,650.82
06/30/03 13,659.42
07/31/03 13,666.84
08/31/03 13,674.39
09/30/03 13,681.08
10/31/03 13,689.06
11/30/03 13,695.79
12/31/03 13,703.45
01/31/04 13,710.69
02/29/04 13,716.97
03/31/04 13,723.79
04/30/04 13,730.87
05/31/04 13,736.92
06/30/04 13,743.75
07/31/04 13,753.54
08/31/04 13,764.26
09/30/04 13,776.64
10/31/04 13,791.90
11/30/04 13,808.10
12/31/04 13,827.62
01/31/05 13,846.63
02/28/05 13,867.25
03/31/05 13,891.74
04/30/05 13,918.52
05/31/05 13,947.57
06/30/05 13,976.74
07/31/05 14,009.70
08/31/05 14,045.27
09/30/05 14,083.51
10/31/05 14,120.34
11/30/05 14,161.01
[END CHART]
DATA FROM 11/30/95 THROUGH 11/30/05.
The graph illustrates a hypothetical $10,000 investment in the
USAA Treasury Money Market Trust.
ASSET ALLOCATION
11/30/05
[PIE CHART OF ASSET ALLOCATION]
Repurchase Agreements 79.6%
U.S. Treasury Bills 17.6%
U.S. Government Guaranteed Securities 4.2%
[END CHART]
PERCENTAGES ARE OF THE NET ASSETS OF THE FUND AND MAY NOT EQUAL
100%.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE
CUMULATIVE PERFORMANCE QUOTED DOES NOT REFLECT THE DEDUCTION OF
TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE
REDEMPTION OF FUND SHARES. INCOME MAY BE SUBJECT TO FEDERAL,
STATE, OR LOCAL TAXES, OR TO THE ALTERNATIVE MINIMUM TAX. FOR
SEVEN-DAY YIELD INFORMATION, PLEASE REFER TO PAGE 6.
9
P O R T F O L I O
==================--------------------------------------------------------------
of INVESTMENTS
(in thousands)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
PRINCIPAL
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------
U.S. TREASURY BILLS (17.6%)(a)
$ 3,000 3.35%, 12/01/2005 $ 3,000
3,000 3.39%, 12/08/2005 2,998
3,000 3.52%, 1/26/2006 2,984
3,000 3.59%, 1/12/2006 2,987
3,000 3.65%, 2/02/2006 2,981
3,000 3.72%, 2/09/2006 2,978
3,000 3.76%, 1/19/2006 2,985
3,000 3.80%, 2/16/2006 2,976
3,000 3.82%, 2/23/2006 2,973
3,000 3.91%, 3/02/2006 2,970
3,000 3.98%, 12/15/2005 2,995
--------
Total U.S. Treasury bills (cost: $32,827) 32,827
--------
U.S. GOVERNMENT GUARANTEED SECURITIES (4.2%)
3,024 Overseas Private Investment Corp., Series 1995-221/308
Certificates of Participation, 3.85%, 12/14/2007(d) 3,024
800 Overseas Private Investment Corp., Series 1997-553-XXX
Certificates of Participation, 4.00%, 4/02/2007(c) 800
4,065 Private Export Funding Corp., Secured Note Series M,
5.34%, 3/15/2006 4,079
--------
Total U.S. government guaranteed securities (cost: $7,903) 7,903
--------
Total investment in securities (cost: $40,730) 40,730
--------
REPURCHASE AGREEMENTS (79.6%)(e)
25,000 Bear Stearns & Co., Inc., 4.01%, acquired on 11/30/2005 and
due 12/01/2005 at $25,000 (collateralized by $25,728 of
Government National Mortgage Assn.(f), 4.13% - 5.00%,
due 6/20/2024 - 5/15/2034; market value $25,401) 25,000
40,000 Credit Suisse First Boston Corp., 3.96%, acquired on 11/30/2005
and due 12/01/2005 at $40,000 (collateralized by $38,755
of U.S. Treasury Inflation Index bonds(g), 2.00%,
due 7/15/2014; market value $40,496) 40,000
10
P O R T F O L I O
==================--------------------------------------------------------------
of INVESTMENTS (continued)
(in thousands)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
PRINCIPAL
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------
$40,000 Deutsche Bank Securities, 3.96%, acquired on 11/30/2005 and due
12/01/2005 at $40,000 (collateralized by $39,377 of U.S.
Treasury notes(b), 2.00% - 4.75%, due 5/15/2006 - 7/15/2009;
$1,438 of U.S. Treasury bills, 3.98%(a), due 12/29/05; and
$325 of U.S. Treasury bonds, 8.50%, due 2/15/2020; combined
market value $40,800) $ 40,000
43,226 UBS Securities LLC, 3.94%, acquired on 11/30/2005 and due
12/01/2005 at $43,226 (collateralized by $46,435 of U.S.
Treasury STRIPS, 4.33%(a), due 2/15/2007; market value
$44,092) 43,226
--------
Total repurchase agreements (cost: $148,226) 148,226
--------
TOTAL INVESTMENTS (COST: $188,956) $188,956
========
11
N O T E S
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to Portfolio of INVESTMENTS
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (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, 2005, for federal income tax
purposes, was approximately the same as that reported in the financial
statements.
The portfolio of investments category percentages shown represent the
percentages of the investments to net assets and, in total, may not
equal 100%.
SPECIFIC NOTES
- --------------------------------------------------------------------------------
(a) Securities offered at a discount to face value rather than at a
stated coupon rate. Rates represent the discount rates 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 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 daily,
weekly, monthly, quarterly, or other specified time 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, 2005.
(d) Put bond - provides the right to sell the bond at face value at
specific tender dates prior to final maturity. The put feature
shortens the effective maturity of the security.
(e) Collateral on repurchase agreements is received by the Fund upon
entering into the repurchase agreement. The collateral is
12
N O T E S
==========----------------------------------------------------------------------
to Portfolio of INVESTMENTS
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
marked-to-market daily to ensure its market value is equal to or
in excess of the repurchase agreement price plus accrued interest.
(f) U.S. government agency issues - mortgage-backed securities issued
by Government National Mortgage Association (GNMA) are supported
by the full faith and credit of the U.S. government.
(g) U.S. Treasury inflation-indexed notes/bonds - designed to provide
a real rate of return after being adjusted over time to reflect
the impact of inflation. Their principal value periodically
adjusts to the rate of inflation. They trade at the prevailing
real, or after-inflation, interest rates. The U.S. Treasury
guarantees repayment of these securities of at least their face
value in the event of sustained deflation or a drop in prices.
Inflation adjustments to the face value of these securities are
included in interest income.
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, 2005 (UNAUDITED)
ASSETS
Investments in securities (valued at amortized cost) $ 40,730
Investments in repurchase agreements (valued at cost) 148,226
Receivables:
Capital shares sold 660
Interest 121
--------
Total assets 189,737
--------
LIABILITIES
Payables:
Securities purchased 2,995
Capital shares redeemed 365
Dividends on capital shares 17
Accrued management fees 19
Other accrued expenses and payables 16
--------
Total liabilities 3,412
--------
Net assets applicable to capital shares outstanding $186,325
========
NET ASSETS CONSIST OF:
Paid-in capital $186,330
Overdistributed net investment income (5)
--------
Net assets applicable to capital shares outstanding 186,325
========
Capital shares outstanding, unlimited number of shares authorized,
no par value 186,330
========
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, 2005 (UNAUDITED)
INVESTMENT INCOME
Interest income $3,140
------
EXPENSES
Management fees 112
Administration and servicing fees 90
Transfer agent's fees 117
Custody and accounting fees 27
Postage 12
Shareholder reporting fees 7
Trustees' fees 4
Registration fees 21
Professional fees 18
Other 4
------
Total expenses 412
Expenses paid indirectly (3)
------
Net expenses 409
------
NET INVESTMENT INCOME $2,731
======
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, 2005 (UNAUDITED),
AND YEAR ENDED MAY 31, 2005
11/30/2005 5/31/2005
------------------------
FROM OPERATIONS
Net investment income $ 2,731 $ 2,733
----------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,736) (2,733)
----------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 81,845 143,220
Reinvested dividends 2,628 2,617
Cost of shares redeemed (72,126) (160,616)
----------------------
Increase (decrease) in net assets from
capital share transactions 12,347 (14,779)
----------------------
Net increase (decrease) in net assets 12,342 (14,779)
NET ASSETS
Beginning of period 173,983 188,762
----------------------
End of period $186,325 $ 173,983
======================
Overdistribution of net investment income:
End of period $ (5) $ -
======================
CHANGE IN SHARES OUTSTANDING
Shares sold 81,845 143,220
Shares issued for dividends reinvested 2,628 2,617
Shares redeemed (72,126) (160,616)
----------------------
Increase (decrease) in shares outstanding 12,347 (14,779)
======================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
USAA INVESTMENT TRUST (the Trust), registered under the Investment
Company Act of 1940 (the 1940 Act), as amended, is an open-end
management investment company organized as a Massachusetts business
trust consisting of 10 separate funds. The information presented in
this semiannual report pertains only to the USAA Treasury Money Market
Trust (the Fund), which is classified as diversified under the 1940
Act. 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 1940 Act, securities in the
Fund are valued at amortized cost, which approximates market
value. This method values a security at its cost on the date
of purchase and, thereafter, assumes a constant amortization
to maturity of any premiums or discounts. 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
Company (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.
17
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
C. INVESTMENTS IN SECURITIES - Security transactions are accounted
for on the date the securities are purchased or sold (trade
date). Gains or losses from sales of investment securities are
computed on the identified cost basis. Interest income is
recorded daily on the 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 repurchase agreement price plus accrued
interest 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. SECURITIES PURCHASED ON A WHEN-ISSUED BASIS - Delivery and
payment for securities that have been purchased by the Fund on a
when-issued basis can take place a month or more after the trade
date. During the period prior to settlement, these securities do
not earn interest, are subject to market fluctuation, and may
increase or decrease in value prior to their delivery. The Fund
maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The Fund
had no when-issued commitments as of November 30, 2005.
F. EXPENSES PAID INDIRECTLY - Through arrangements with the Fund's
custodian and other banks utilized by the Fund for cash
management purposes, realized credits, if any, generated from
cash
18
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
balances in the Fund's bank accounts are used to reduce the
Fund's expenses. For the six-month period ended November 30,
2005, these custodian and other bank credits reduced the Fund's
expenses by $3,000.
G. INDEMNIFICATIONS - Under the Trust's organizational documents,
its officers and trustees are indemnified against certain
liabilities arising out of the performance of their duties to
the Trust. In addition, in the normal course of business the
Trust enters into contracts that contain a variety of
representations and warranties that provide general
indemnifications. The Trust's maximum exposure under these
arrangements is unknown, as this would involve future claims
that may be made against the Trust that have not yet occurred.
However, the Trust expects the risk of loss to be remote.
H. USE OF ESTIMATES - The preparation of financial statements in
conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that may
affect the reported amounts in the financial statements.
(2) LINES OF CREDIT
- --------------------------------------------------------------------------------
The Fund participates in a joint, short-term, revolving, committed
loan agreement of $300 million with USAA Capital Corporation (CAPCO),
an affiliate of the Manager. 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 under the agreement, the Fund may borrow from
CAPCO an amount up to 5% of the Fund's total assets at a rate per
annum equal to the rate at which CAPCO obtains funding in the capital
markets, with no markup.
The USAA funds that are party to the loan agreement are assessed
facility fees by CAPCO based on the funds' assessed proportionate
19
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
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 $300 million loan agreement). The facility fees
are allocated among the funds based on their respective average net
assets for the period.
For the six-month period ended November 30, 2005, the Fund paid CAPCO
facility fees of less than $500, which represents 0.6% of total fees
paid to CAPCO by the USAA funds. The Fund had no borrowings under this
agreement during the six-month period ended November 30, 2005.
(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, 2006, 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.
(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 fiscal year. For
the six-month period ended November 30, 2005, the Fund incurred
management fees, paid or payable to the Manager, of $112,000.
B. ADMINISTRATION AND SERVICING FEES - The Manager provides certain
administration and shareholder servicing functions for the Fund.
For such services, the Manager receives a fee accrued
20
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
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, 2005, the Fund incurred administration and
servicing fees, paid or payable to the Manager, of $90,000.
In addition to the services provided under its Administration
and Servicing Agreement with the Fund, the Manager also provides
certain legal and tax services for the benefit of the Fund. The
Trust's Board of Trustees has approved the reimbursement of
these expenses incurred by the Manager. For the six-month period
ended November 30, 2005, the Fund reimbursed the Manager $6,000
for these legal and tax services. These expenses are included in
the professional fees expenses on the Fund's statement of
operations.
C. TRANSFER AGENT'S FEES - USAA Transfer Agency Company, d/b/a USAA
Shareholder Account Services (SAS), 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. The Fund also pays SAS fees that are related to the
administration and servicing of accounts that are traded on an
omnibus basis. For the six-month period ended November 30, 2005,
the Fund incurred transfer agent's fees, paid or payable to SAS,
of $117,000.
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.
21
N O T E S
==========----------------------------------------------------------------------
to FINANCIAL Statements
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (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,
----------------------------------------------------------------------------------------
2005 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------
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 .02 .02 .01 .01 .02 .06
Less distributions:
From net investment income (.02) (.02) (.01) (.01) (.02) (.06)
----------------------------------------------------------------------------------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================================================================================
Total return (%)* 1.53 1.53 .63 1.14 2.24 5.70
Net assets at end of period (000) $186,325 $173,983 $188,762 $205,558 $186,367 $165,941
Ratio of expenses to average
net assets (%)**(b) .46(a) .45 .43 .43 .42 .36
Ratio of net investment income
to average net assets (%)** 3.04(a) 1.50 .63 1.13 2.17 5.55
* Assumes reinvestment of all net investment income distributions during the
period.
** For the six-month period ended November 30, 2005, average net assets were
$179,354,000.
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
(b) Reflects total operating expenses of the Fund before reductions of any
expenses paid indirectly. The Fund's expenses paid indirectly decreased the
expense ratios by less than 0.01%.
22
E X P E N S E
==============------------------------------------------------------------------
EXAMPLE
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
EXAMPLE
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: direct
costs, such as wire fees, redemption fees, and low balance fees; and
indirect costs, including management fees, transfer agency fees, and
other Fund operating expenses. This example is intended to help you
understand your indirect costs, also referred to as "ongoing costs"
(in dollars), of investing in the Fund and to compare these costs with
the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire six-month period of
June 1, 2005, through November 30, 2005.
ACTUAL EXPENSES
- --------------------------------------------------------------------------------
The first line of the table on the next page provides information
about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested at the
beginning of the period, to estimate the expenses that you paid over
the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading "Expenses
Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
- --------------------------------------------------------------------------------
The second line of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may
23
E X P E N S E
==============------------------------------------------------------------------
EXAMPLE
(continued)
USAA TREASURY MONEY MARKET TRUST
NOVEMBER 30, 2005 (UNAUDITED)
use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder
reports of other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any direct costs,
such as wire fees, redemption fees, or low balance fees. Therefore,
the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of
owning different funds. In addition, if these direct costs were
included, your costs would have been higher.
EXPENSES PAID
BEGINNING ENDING DURING PERIOD*
ACCOUNT VALUE ACCOUNT VALUE JUNE 1, 2005-
JUNE 1, 2005 NOVEMBER 30, 2005 NOVEMBER 30, 2005
------------------------------------------------------------
Actual $1,000.00 $1,015.30 $2.30
Hypothetical
(5% return before expenses) 1,000.00 1,022.79 2.30
*Expenses are equal to the Fund's annualized expense ratio of 0.46%,
which is net of any expenses paid indirectly, multiplied by the
average account value over the period, multiplied by 183 days/365
days (to reflect the one-half year period). The Fund's ending account
value on the first line in the table is based on its actual total
return of 1.53% for the six-month period of June 1, 2005, through
November 30, 2005.
24
N O T E S
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TRUSTEES Christopher W. Claus
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 AND State Street Bank and Trust Company
ACCOUNTING AGENT P.O. Box 1713
Boston, Massachusetts 02105
INDEPENDENT Ernst & Young LLP
REGISTERED PUBLIC 100 West Houston St., Suite 1800
ACCOUNTING FIRM 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 (800) 531-8181
INFORMATION ABOUT For account servicing, exchanges,
MUTUAL FUNDS or redemptions (800) 531-8448
RECORDED MUTUAL 24-hour service (from any phone)
FUND PRICE QUOTES (800) 531-8066
MUTUAL FUND (from touch-tone phones only)
USAA TOUCHLINE For account balance, last transaction, fund
prices, or to exchange or redeem fund shares
(800) 531-8777
INTERNET ACCESS USAA.COM
THE FUND FILES ITS COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q. THESE FORMS N-Q ARE
AVAILABLE (I) BY CALLING (800) 531-8448; (II) AT USAA.COM; AND (III) ON THE
SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. THESE FORMS N-Q ALSO MAY BE REVIEWED AND
COPIED AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE
OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING (800)
SEC-0330.
[LOGO OF RECYCLED PAPER]
Recycled
Paper
- --------------------------------------------------------------------------------
[LOGO OF USAA] 9800 Fredericksburg Road -------------
USAA(R) San Antonio, Texas 78288 PRSRT STD
U.S.
Postage
P A I D
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-------------
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and others electronically.
Sign up at USAA.COM.
- --------------------------------------------------------------------------------
[LOGO OF USAA] WE KNOW WHAT IT MEANS TO SERVE.(R)
USAA ----------------------------------
INSURANCE o MEMBER SERVICES
23416-0106 (C)2006, 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.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Filed as part of the report to shareholders.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Corporate Governance Committee selects and nominates candidates for
membership on the Board as independent directors. Currently, there is no
procedure for shareholders to recommend candidates to serve on the Board.
ITEM 10. CONTROLS AND PROCEDURES
The principal executive officer and principal 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. The only material change to
the procedures was to document the annual disclosure controls and procedures
established for the new section of the shareholder reports detailing the factors
considered by the Funds' Board in approving the Funds' advisory agreements.
ITEM 11. EXHIBITS.
(a)(1). NOT APPLICABLE. This item must be disclosed only in annual reports.
(a)(2). Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit
99.CERT.
(a)(3). Not Applicable.
(b). Certification pursuant to Rule 30a-2(b) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(b))is filed and attached hereto as Exhibit
99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: USAA INVESTMENT TRUST (except for the Total Return Strategy Fund)
By:* /s/ EILEEN M. SMILEY
-----------------------------------------------------------
Signature and Title: Eileen M. Smiley, Assistant Secretary
Date: January 18, 2006
------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:* /s/ CHRISTOPHER W. CLAUS
----------------------------------------------------
Signature and Title: Christopher W. Claus/President
Date: January 25, 2006
------------------------------
By:* /s/ DEBRA K. DUNN
---------------------------------------------
Signature and Title: Debra K. Dunn/Treasurer
Date: January 24, 2006
------------------------------
*Print the name and title of each signing officer under his or her signature.