-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R1AuCHf52kQaFXMtZBZoOMS7Bzf9yXc1G3B7bIpMIcY/msMXtWfFdIT+KFffomkV fKHVaafMWGsAcoEYnc0WmQ== 0000745903-04-000039.txt : 20041029 0000745903-04-000039.hdr.sgml : 20041029 20041029125339 ACCESSION NUMBER: 0000745903-04-000039 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040831 FILED AS OF DATE: 20041029 DATE AS OF CHANGE: 20041029 EFFECTIVENESS DATE: 20041029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USAA INVESTMENT TRUST CENTRAL INDEX KEY: 0000745903 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-04019 FILM NUMBER: 041105248 BUSINESS ADDRESS: STREET 1: 9800 FREDERICKSBURG ROAD STREET 2: A-3-W CITY: SAN ANTONIO STATE: TX ZIP: 78288-0227 BUSINESS PHONE: 2104988696 MAIL ADDRESS: STREET 1: 9800 FREDERICKSBURG ROAD STREET 2: A-3-W CITY: SAN ANTONIO STATE: TX ZIP: 78288-0227 N-Q 1 nqcnst83104.txt FORM N-Q - USAA CORNERSTONE STRATEGY FUND - 08/31/2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY 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: AUGUST 31, 2004 ITEM 1. SCHEDULE OF INVESTMENTS. USAA CORNERSTONE STRATEGY FUND - 1ST QUARTER REPORT - PERIOD ENDED AUGUST 31, 2004 [LOGO OF USAA] USAA(R) USAA CORNERSTONE STRATEGY Fund [GRAPHIC OF CORNERSTONE STRATEGY FUND] Quarterly Portfolio of Investments - -------------------------------------------------------------------------------- AUGUST 31, 2004 (Form N-Q) 1 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- U.S. STOCKS (51.1%) ADVERTISING (0.4%) 137,200 Lamar Advertising Co.* $ 5,994 -------- AEROSPACE & DEFENSE (2.1%) 51,900 Engineered Support Systems, Inc. 2,243 50,100 General Dynamics Corp. 4,892 119,300 Precision Castparts Corp. 6,572 135,400 Rockwell Collins, Inc. 4,656 107,400 United Technologies Corp. 10,086 -------- 28,449 -------- AIR FREIGHT & LOGISTICS (0.5%) 77,900 FedEx Corp. 6,387 -------- ALUMINUM (0.5%) 200,400 Alcoa, Inc. 6,489 -------- APPAREL, ACCESSORIES, & LUXURY GOODS (0.7%) 40,000 Coach, Inc.* 1,686 76,700 Columbia Sportswear Co.* 4,183 76,000 Liz Claiborne, Inc. 2,894 -------- 8,763 -------- APPAREL RETAIL (0.7%) 55,700 Chico's FAS, Inc.* 2,278 248,000 Gap, Inc. 4,648 160,500 Pacific Sunwear of California, Inc.* 3,075 -------- 10,001 -------- APPLICATION SOFTWARE (0.2%) 141,550 Cadence Design Systems, Inc.* 1,760 54,300 Manhattan Associates, Inc.* 1,267 -------- 3,027 -------- ASSET MANAGEMENT & CUSTODY BANKS (0.3%) 148,300 Federated Investors, Inc. "B" 4,278 -------- AUTO PARTS & EQUIPMENT (0.2%) 49,300 Lear Corp. 2,656 -------- BIOTECHNOLOGY (0.3%) 81,200 Genzyme Corp.* 4,385 -------- COMMUNICATIONS EQUIPMENT (1.8%) 523,900 Cisco Systems, Inc.* 9,828 404,900 Corning, Inc.* 4,098 250,200 Motorola, Inc. 4,041 316,900 Polycom, Inc.* 6,189 -------- 24,156 -------- COMPUTER HARDWARE (0.8%) 225,200 Dell, Inc.* 7,846 41,500 IBM Corp. 3,515 -------- 11,361 --------
2 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- COMPUTER STORAGE & PERIPHERALS (0.1%) 60,300 SanDisk Corp.* $ 1,408 -------- CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS (0.2%) 33,600 Caterpillar, Inc. 2,443 -------- CONSUMER FINANCE (0.3%) 74,200 American Express Co. 3,711 -------- DATA PROCESSING & OUTSOURCED SERVICES (1.0%) 38,000 DST Systems, Inc.* 1,719 241,100 First Data Corp. 10,186 49,900 SunGard Data Systems, Inc.* 1,148 -------- 13,053 -------- DISTILLERS & VINTNERS (0.1%) 21,200 Constellation Brands, Inc. "A"* 780 -------- DIVERSIFIED BANKS (1.6%) 473,800 Bank of America Corp. 21,312 -------- DIVERSIFIED CHEMICALS (0.6%) 196,100 Du Pont (E.I.) De Nemours & Co. 8,287 -------- DIVERSIFIED COMMERCIAL SERVICES (1.0%) 259,700 ARAMARK Corp. "B" 6,573 72,800 ChoicePoint, Inc.* 3,076 117,400 ITT Educational Services, Inc.* 4,058 -------- 13,707 -------- ELECTRIC UTILITIES (0.2%) 82,800 Southern Co. 2,513 -------- EXCHANGE-TRADED FUNDS (1.0%) 131,400 iShares Russell 2000 Growth Index Fund(h) 7,306 54,600 MidCap SPDR Trust Series 1(h) 5,786 -------- 13,092 -------- GAS UTILITIES (0.1%) 97,300 NiSource, Inc. 2,024 -------- HEALTH CARE EQUIPMENT (1.5%) 106,900 Diagnostic Products Corp. 4,321 69,800 Fisher Scientific International, Inc.(h)* 3,976 209,100 Medtronic, Inc. 10,403 77,400 Viasys Healthcare, Inc.* 1,126 21,500 Waters Corp.* 931 -------- 20,757 -------- HEALTH CARE FACILITIES (0.5%) 218,300 Odyssey Healthcare, Inc.(h)* 3,868 75,500 Triad Hospitals, Inc.* 2,400 -------- 6,268 -------- HEALTH CARE SERVICES (0.3%) 120,800 Medco Health Solutions, Inc.* 3,773 --------
3 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- HEALTH CARE SUPPLIES (0.3%) 32,900 Cooper Companies, Inc. $ 1,907 47,300 Edwards Lifesciences Corp.* 1,670 -------- 3,577 -------- HOME ENTERTAINMENT SOFTWARE (0.3%) 48,600 Electronic Arts, Inc.* 2,420 56,200 THQ, Inc.* 1,067 -------- 3,487 -------- HOME IMPROVEMENT RETAIL (0.8%) 209,200 Lowe's Companies, Inc. 10,397 -------- HOMEBUILDING (0.3%) 133,050 D.R. Horton, Inc. 4,117 -------- HOUSEHOLD PRODUCTS (0.5%) 115,200 Procter & Gamble Co. 6,448 -------- HYPERMARKETS & SUPER CENTERS (0.7%) 177,700 Wal-Mart Stores, Inc. 9,359 -------- INDUSTRIAL CONGLOMERATES (2.7%) 77,300 3M Co. 6,367 578,600 General Electric Co. 18,972 365,900 Tyco International Ltd. 11,460 -------- 36,799 -------- INSURANCE BROKERS (0.4%) 154,200 Arthur J. Gallagher & Co. 4,913 -------- INTEGRATED OIL & GAS (1.9%) 92,830 ChevronTexaco Corp. 9,051 344,800 Exxon Mobil Corp. 15,895 -------- 24,946 -------- INTEGRATED TELECOMMUNICATION SERVICES (0.5%) 361,200 Sprint Corp. - FON Group 7,108 -------- INTERNET SOFTWARE & SERVICES (0.7%) 269,600 VeriSign, Inc.* 4,680 153,200 Yahoo!, Inc.* 4,368 -------- 9,048 -------- INVESTMENT BANKING & BROKERAGE (1.1%) 383,100 E-Trade Group, Inc.* 4,513 205,100 Merrill Lynch & Co., Inc. 10,474 -------- 14,987 -------- MANAGED HEALTH CARE (0.4%) 38,100 Coventry Health Care, Inc.* 1,935 91,000 Health Net, Inc.* 2,361 51,100 Pacificare Health Systems, Inc. "A"* 1,666 -------- 5,962 -------- METAL & GLASS CONTAINERS (0.8%) 444,800 Pactiv Corp.* 10,519 --------
4 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- MOVIES & ENTERTAINMENT (1.2%) 980,400 Time Warner, Inc.* $ 16,030 -------- MULTI-LINE INSURANCE (1.2%) 217,600 American International Group, Inc. 15,502 -------- OIL & GAS DRILLING (0.2%) 89,600 Ensco International, Inc. 2,613 -------- OIL & GAS EQUIPMENT & SERVICES (0.6%) 137,600 Schlumberger Ltd. 8,504 -------- OIL & GAS EXPLORATION & PRODUCTION (1.0%) 174,400 Apache Corp. 7,794 346,800 Chesapeake Energy Corp. 4,900 34,700 XTO Energy, Inc. 973 -------- 13,667 -------- OTHER DIVERSIFIED FINANCIAL SERVICES (2.0%) 453,843 Citigroup, Inc. 21,140 157,600 Principal Financial Group, Inc. 5,470 -------- 26,610 -------- PACKAGED FOODS & MEAT (0.2%) 171,900 Hain Celestial Group, Inc.* 3,017 -------- PAPER PRODUCTS (0.4%) 131,900 International Paper Co. 5,279 -------- PERSONAL PRODUCTS (0.7%) 222,100 Gillette Co. 9,439 -------- PHARMACEUTICALS (4.2%) 239,300 Abbott Laboratories 9,976 128,600 Eli Lilly & Co. 8,160 135,100 King Pharmaceuticals, Inc.* 1,683 554,900 Pfizer, Inc. 18,129 439,600 Schering-Plough Corp. 8,115 64,500 Watson Pharmaceuticals, Inc.* 1,776 235,100 Wyeth 8,598 -------- 56,437 -------- PROPERTY & CASUALTY INSURANCE (0.9%) 57,400 Ambac Financial Group, Inc. 4,333 204,923 St. Paul Travelers Companies, Inc. 7,109 -------- 11,442 -------- RAILROADS (0.6%) 167,800 CSX Corp. 5,299 121,100 Norfolk Southern Corp. 3,439 -------- 8,738 --------
5 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- REGIONAL BANKS (0.3%) 66,400 Zions Bancorp $ 4,135 -------- SEMICONDUCTOR EQUIPMENT (0.9%) 296,200 Applied Materials, Inc.* 4,707 63,900 KLA-Tencor Corp.* 2,387 53,000 Novellus Systems, Inc.* 1,295 120,900 Varian Semiconductor Equipment Associates, Inc.* 3,385 -------- 11,774 -------- SEMICONDUCTORS (1.4%) 123,900 Analog Devices, Inc. 4,302 117,800 Fairchild Semiconductor International, Inc. "A"* 1,452 348,500 Intel Corp. 7,420 46,400 International Rectifier Corp.* 1,525 210,200 Texas Instruments, Inc. 4,107 -------- 18,806 -------- SOFT DRINKS (0.9%) 232,900 PepsiCo, Inc. 11,645 -------- SPECIALTY STORES (1.6%) 128,200 Michaels Stores, Inc. 7,350 100,700 O'Reilly Automotive, Inc.* 3,968 107,000 Petco Animal Supplies, Inc.* 3,544 64,100 PETsMART, Inc. 1,799 164,300 Staples, Inc. 4,712 -------- 21,373 -------- SYSTEMS SOFTWARE (1.9%) 921,700 Microsoft Corp. 25,162 -------- TECHNOLOGY DISTRIBUTORS (0.4%) 53,400 CDW Corp. 3,124 115,700 Ingram Micro, Inc. "A"* 1,715 -------- 4,839 -------- THRIFTS & MORTGAGE FINANCE (0.7%) 173,798 Countrywide Financial Corp. 6,179 49,700 Fannie Mae 3,700 -------- 9,879 -------- TOBACCO (0.6%) 170,700 Altria Group, Inc. 8,356 -------- TRADING COMPANIES & DISTRIBUTORS (0.1%) 27,500 Fastenal Co. 1,726 -------- TRUCKING (0.2%) 70,600 Yellow Roadway Corp.* 2,897 -------- WIRELESS TELECOMMUNICATION SERVICES (0.5%) 279,100 Nextel Communications, Inc. "A"* 6,472 -------- Total U.S. stocks (cost: $606,032) 685,083 --------
6 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- INTERNATIONAL STOCKS (28.3%) AUSTRALIA (0.9%) 915,115 News Corp. Ltd. (Movies & Entertainment) $ 7,166 603,343 QBE Insurance Group Ltd. (Property & Casualty Insurance) 5,402 -------- 12,568 -------- AUSTRIA (0.5%) 169,700 Erste Bank der oesterreichischen Sparkassen AG (Regional Banks) 6,484 -------- BRAZIL (0.6%) 63,900 Brasil Telecom Participacoes S.A. ADR (Preferred) (Integrated Telecommunication Services) 2,085 95,300 Companhia Vale Do Rio Doce ADR (Diversified Metals & Mining) 5,506 -------- 7,591 -------- CANADA (0.9%) 110,900 BCE, Inc. (Integrated Telecommunication Services) 2,303 111,210 Canadian National Railway Co. (Railroads) 5,068 114,130 Encana Corp. (Oil & Gas Exploration & Production) 4,651 -------- 12,022 -------- FRANCE (4.3%) 477,300 AXA S.A. (Multi-Line Insurance) 9,831 100,100 Business Objects S.A. (Application Software)* 1,860 235,581 Credit Agricole S.A. (Regional Banks) 5,967 58,970 L'Air Liquide S.A. (Industrial Gases) 9,275 86,570 Sanofi-Synthelabo S.A. (Pharmaceuticals)(h) 6,171 120,954 Schneider Electric S.A. (Electrical Components & Equipment) 7,610 63,816 Societe Television Francaise 1 (Broadcasting & Cable TV) 1,804 48,780 Total S.A. (Integrated Oil & Gas) 9,549 238,400 Veolia Environnement S.A. (Multi- Utilities & Unregulated Power) 6,181 -------- 58,248 -------- GERMANY (0.8%) 139,920 Bayerische Motoren Werke AG (Automobile Manufacturers) 5,795 81,500 Schering AG (Pharmaceuticals) 4,541 -------- 10,336 -------- HONG KONG (0.5%) 6,172,500 CNOOC Ltd. (Oil & Gas Exploration & Production) 2,904 740,000 Esprit Holdings Ltd. (Apparel Retail) 3,575 -------- 6,479 -------- HUNGARY (0.4%) 133,500 OTP Bank Ltd. GDR (Regional Banks) 5,794 -------- IRELAND (0.5%) 285,600 DEPFA BANK plc (Specialized Finance) 3,784 186,720 Irish Life & Permanent plc (Other Diversified Financial Services) 2,853 -------- 6,637 -------- ITALY (0.4%) 299,900 RAS S.p.A. (Multi-Line Insurance) 5,313 -------- JAPAN (4.6%) 244,000 Bridgestone Corp. (Tires & Rubber) 4,649 170,000 Canon, Inc. (Electronic Equipment Manufacturers) 8,172
7 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER VALUE OF SHARES SECURITY (000) - -------------------------------------------------------------------------------- 324,100 Chugai Pharmaceutical Co. Ltd. (Pharmaceuticals) $ 4,795 864 KDDI Corp. (Integrated Telecommunication Services) 4,192 42,300 Kyocera Corp. (Electronic Equipment Manufacturers) 3,137 73,600 Murata Manufacturing Co. Ltd. (Electrical Components & Equipment) 3,680 94,000 NOK Corp. (Auto Parts & Equipment) 2,987 99,700 Nitto Denko Corp. (Specialty Chemicals) 4,421 137,300 Seiko Epson Corp. (Office Electronics) 5,676 469,000 Sekisui Chemical Co. Ltd. (Homebuilding) 3,550 345,000 Shinsei Bank Ltd. (Diversified Banks) 2,093 100,700 Tokyo Broadcasting System, Inc. (Broadcasting & Cable TV) 1,610 1,627,000 Tokyo Gas Co. Ltd. (Gas Utilities) 6,007 755,000 Toray Industries, Inc. (Textiles) 3,603 92,400 Toyota Motor Corp. (Automobile Manufacturers) 3,666 -------- 62,238 -------- KOREA (0.7%) 12,030 Samsung Electronics Co. Ltd. (Semiconductors) 4,747 39,220 Samsung SDI Co. Ltd. (Computer Storage & Peripherals) 4,053 -------- 8,800 -------- MEXICO (0.4%) 45,200 America Movil S.A. de C.V. ADR "L" (Wireless Telecommunication Services) 1,548 88,300 Grupo Televisa S.A. de C.V. ADR (Broadcasting & Cable TV) 4,250 -------- 5,798 -------- NETHERLANDS (0.3%) 318,030 Reed Elsevier N.V. (Publishing) 4,089 -------- SINGAPORE (0.8%) 369,000 DBS Group Holdings Ltd. (Diversified Banks) 3,373 3,597,000 Singapore Telecommunications Ltd. (Integrated Telecommunication Services) 4,820 270,000 United Overseas Bank Ltd. (Diversified Banks) 2,103 -------- 10,296 -------- SPAIN (1.3%) 439,800 Banco Bilbao Vizcaya Argentaria S.A. (Diversified Banks)(h) 5,882 203,550 Iberdrola S.A. (Electric Utilities) 4,175 520,898 Telefonica S.A. (Integrated Telecommunication Services) 7,448 -------- 17,505 -------- SWEDEN (1.9%) 169,000 Atlas Copco AB "A" (Industrial Machinery) 6,017 2,388,300 Ericsson LM "B" (Communications Equipment)* 6,463 225,900 Hennes & Mauritz AB "B" (Apparel Retail) 5,912 202,600 Sandvik AB (Industrial Machinery) 6,956 -------- 25,348 -------- SWITZERLAND (2.7%) 98,700 Credit Suisse Group (Diversified Banks) 3,101 15,210 Nestle S.A. (Packaged Foods & Meat) 3,612 104,610 Novartis AG (Pharmaceuticals) 4,856 88,700 Roche Holdings AG (Pharmaceuticals) 8,641 9,740 Straumann AG (Health Care Supplies) 1,915 34,842 Syngenta AG (Specialty Chemicals) 3,138 28,800 Synthes, Inc. (Health Care Equipment) 3,092 117,769 UBS AG (Diversified Banks) 7,937 -------- 36,292 --------
8 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
MARKET NUMBER COUPON VALUE OF SHARES SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- TAIWAN (0.1%) 1,270,636 Compal Electronics, Inc. (Computer Hardware) $ 1,206 ---------- UNITED KINGDOM (5.7%) 972,500 Amvescap plc (Investment Banking & Brokerage) 5,127 209,090 AstraZeneca plc (Pharmaceuticals) 9,662 259,300 BG Group plc (Oil & Gas Exploration & Production) 1,604 170,870 BOC Group plc (Diversified Chemicals) 2,764 233,400 Bunzl plc (Diversified Commercial Services) 1,789 472,160 Diageo plc (Distillers & Vintners) 5,830 1,525,240 Kingfisher plc (Home Improvement Retail) 7,647 160,810 Next plc (Apparel Retail) 4,325 497,920 Reckitt Benckiser plc (Household Products) 13,135 192,144 Royal Bank Scotland Group plc (Diversified Banks) 5,376 4,391,630 Vodafone Group plc (Wireless Telecommunication Services) 10,028 707,200 William Hill plc (Casinos & Gaming) 6,944 325,900 Yell Group plc (Publishing) 2,010 ---------- 76,241 ---------- Total international stocks (cost: $320,930) 379,285 ---------- PRINCIPAL AMOUNT (000) - ----------- BONDS (18.5%) CORPORATE OBLIGATIONS (6.1%) APPAREL, ACCESSORIES, & LUXURY GOODS (0.1%) $ 1,000 Kellwood Co., Senior Notes 7.88% 7/15/2009 1,122 ---------- BROADCASTING & CABLE TV (0.3%) 2,000 Comcast Cable Communications, Inc., Senior Notes 6.88 6/15/2009 2,229 2,000 Cox Communications, Inc., Notes(h) 4.63 6/01/2013 1,833 ---------- 4,062 ---------- CONSUMER FINANCE (0.6%) 2,000 American Honda Finance Corp., MTN(b) 1.77(c) 5/11/2007 2,000 2,000 General Motors Acceptance Corp., Notes 2.88(c) 10/20/2005 2,016 2,000 Household Finance Corp., Notes 6.38 10/15/2011 2,208 2,000 SLM Corp., MTN, CPI Floating-Rate Note 4.43(c) 6/01/2009 2,022 ---------- 8,246 ---------- DIVERSIFIED BANKS (0.1%) 2,000 U.S. Central Credit Union, Senior Notes 2.70 9/30/2009 1,964 ---------- DIVERSIFIED METALS & MINING (0.1%) 1,000 Glencore Funding LLC, Notes (b) 6.00 4/15/2014 965 ---------- ELECTRIC UTILITIES (1.2%) 1,954 Oglethorpe Power Corp., Secured Series Facility Bonds 6.97 6/30/2011 2,111 2,000 Pinnacle West Capital Corp., Senior Notes 2.49(c) 11/01/2005 2,003 2,000 Power Contract Financing, Senior Notes(b) 6.26 2/01/2010 2,065 2,000 PPL Capital Funding, Inc., Guaranteed Notes, Series A 4.33 3/01/2009 1,982 2,000 Public Service Electric & Gas Co., First Mortgage Bond, Series A 1.70(c) 6/23/2006 2,000 2,000 Sempra Energy ESOP (NBGA-Sempra Energy)(b) 4.21 11/01/2014(e) 2,041 2,000 Tampa Electric Co., Notes 6.38 8/15/2012 2,178 2,000 Tristate General & Transport Assoc., Notes(b) 6.04 1/31/2018 2,075 ---------- 16,455 ----------
9 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
PRINCIPAL MARKET AMOUNT COUPON VALUE (000) SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- FOOD RETAIL (0.2%) $ 2,000 Safeway Inc., Notes(h) 5.80% 8/15/2012 $ 2,094 ---------- FOREST PRODUCTS (0.1%) 1,000 Weyerhaeuser Co., Notes 6.75 3/15/2012 1,121 ---------- GAS UTILITIES (0.2%) 2,000 Noram Energy Corp., Debentures 6.50 2/01/2008 2,164 1,000 Valero Logistics Operations, LP, Senior Notes 6.05 3/15/2013 1,057 ---------- 3,221 ---------- HEALTH CARE FACILITIES (0.2%) 2,000 HCA, Inc., Notes 5.25 11/06/2008 2,042 ---------- HOUSEWARES & SPECIALTIES (0.2%) 2,000 Newell Rubbermaid, Inc., MTN, Series A 6.35 7/15/2008 2,153 ---------- INTEGRATED TELECOMMUNICATION SERVICES (0.1%) 1,000 Citizens Communications Co., Notes 8.50 5/15/2006 1,077 ---------- INVESTMENT BANKING & BROKERAGE (0.1%) 2,000 Morgan Stanley, Subordinated Notes 4.75 4/01/2014 1,938 ---------- LIFE & HEALTH INSURANCE (0.2%) 2,000 Phoenix Home Life Mutual Insurance, Notes(b) 6.95 12/01/2006 2,129 ---------- MOVIES & ENTERTAINMENT (0.3%) 2,000 AOL Time Warner, Inc., Notes 5.63 5/01/2005 2,045 2,000 AOL Time Warner, Inc., Notes 6.88 5/01/2012 2,229 ---------- 4,274 ---------- MULTI-UTILITIES & UNREGULATED POWER (0.1%) 2,000 Duke Capital Corp., Senior Notes 5.50 3/01/2014 2,000 ---------- OIL & GAS EQUIPMENT & SERVICES (0.3%) 2,000 Cooper Cameron Corp., Senior Notes 2.65 4/15/2007 1,967 2,000 Halliburton Co., Senior Notes 3.12(c) 10/17/2005 2,019 ---------- 3,986 ---------- OIL & GAS EXPLORATION & PRODUCTION (0.2%) 1,000 Nexen, Inc., Notes 5.05 11/20/2013 996 1,000 Southwestern Energy Co., MTN 7.63 5/01/2027(e) 1,101 ---------- 2,097 ---------- OIL & GAS REFINING & MARKETING & TRANSPORTATION (0.2%) 2,000 Magellan Midstream Partners LP, Notes 6.45 6/01/2014 2,105 ---------- OTHER DIVERSIFIED FINANCIAL SERVICES (0.1%) 2,000 Citigroup, Inc., Global Notes 4.25 7/29/2009 2,041 ---------- PACKAGED FOODS & MEAT (0.2%) 2,000 Kraft Foods, Inc., Notes 4.63 11/01/2006 2,066 ---------- PAPER PRODUCTS (0.1%) 2,000 MeadWestVaco Corp., Notes 1.89(c) 12/01/2005 2,003 ----------
10 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
PRINCIPAL MARKET AMOUNT COUPON VALUE (000) SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY INSURANCE (0.2%) $ 2,000 21st Century Insurance Group, Senior Notes 5.90% 12/15/2013 $ 2,070 1,000 Ohio Casualty Corp., Notes 7.30 6/15/2014 1,038 ---------- 3,108 ---------- REAL ESTATE INVESTMENT TRUSTS (0.4%) 2,000 Duke Realty LP, Notes 5.40 8/15/2014 2,026 1,000 iStar Financial, Inc., Senior Notes, Series B 5.13 4/01/2011 994 2,000 Liberty Property LP, Senior Notes 5.65 8/15/2014 2,022 ---------- 5,042 ---------- REINSURANCE (0.2%) 2,000 Montpelier Re Holdings Ltd., Senior Notes 6.13 8/15/2013 2,075 ---------- THRIFTS & MORTGAGE FINANCE (0.1%) 2,000 Independence Community Bank Corp., Notes(m) 3.50 6/20/2013 1,942 ---------- Total corporate obligations (cost: $80,892) 81,328 ---------- EURODOLLAR AND YANKEE OBLIGATIONS (0.5%) FOREIGN GOVERNMENT (0.2%) 2,000 Republic of Poland, Notes (Poland) 5.25 1/15/2014 2,075 ---------- INTEGRATED OIL & GAS (0.1%) 2,000 BP Capital plc, Company Guaranty Notes (United Kingdom) 2.75 12/29/2006 2,002 ---------- INTEGRATED TELECOMMUNICATION SERVICES (0.1%) 1,000 Telecom Italia Capital, Guaranteed Senior Notes, Series A (Luxembourg)(b) 4.00 11/15/2008 1,005 ---------- OIL & GAS EXPLORATION & PRODUCTION (0.1%) 2,000 Canadian Oil Sands Ltd., Notes (Canada)(b) 5.80 8/15/2013 2,071 ---------- Total eurodollar and yankee obligations (cost: $7,034) 7,153 ---------- ASSET-BACKED SECURITIES (1.2%) AIRLINES (0.3%) 1,329 America West Airlines, Inc., Pass-Through Certificates, Series 1996-1, Class A, EETC 6.85 7/02/2009 1,341 1,732 Northwest Airlines Corp., Pass-Through Certificates, Series 1999-2A, EETC 7.58 3/01/2019 1,736 ---------- 3,077 ---------- ASSET-BACKED FINANCING (0.9%) 2,000 Chase Credit Card Owner Trust, Series 2002-5, Class A 1.70(c) 10/15/2009 2,005 2,000 DaimlerChrysler Auto Trust, Series 2003-B, Class A2(b) 1.61 7/08/2006 1,999 2,000 Ford Credit Auto Owner Trust, Series 2004-A, Class A2 2.13 10/15/2006 2,000 1,196 Harley-Davidson Motorcycle Trust, Series 2003-4, Class A1 1.47 4/15/2008 1,192 2,000 Honda Auto Receivables Owner Trust, Series 2004-2, Class A2 2.52 2/15/2007 2,006 3,000 SLM Student Loan Trust, Series 2004-8, Class A2(f) 1.71(c) 7/25/2013 3,000 ---------- 12,202 ---------- Total asset-backed securities (cost: $15,372) 15,279 ----------
11 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
PRINCIPAL MARKET AMOUNT COUPON VALUE (000) SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- COMMERCIAL MORTGAGE SECURITIES (0.3%) COMMERICAL MORTGAGE-BACKED SECURITIES (0.2%) $ 1,009 LB Commercial Conduit Mortgage Trust, Series 1995-C2, Class C 7.78% 9/25/2025 $ 1,022 2,000 Merrill Lynch Mortgage Investors, Inc., Series 1998-C1, Class A2 6.48 11/15/2026 2,161 ---------- 3,183 ---------- INTEREST-ONLY COMMERCIAL MORTGAGE-BACKED SECURITIES (0.1%)(o) 25,018 Bear Stearns Commercial Mortgage Securities, Inc., Series 2004-ESA, Class X1 (acquired 6/17/2004; cost $1,000)(b,n) 1.24 5/14/2016 990 ---------- Total commercial mortgage securities (cost: $4,151) 4,173 ---------- U.S. GOVERNMENT AGENCY ISSUES (7.6%)(k) ASSET-BACKED FINANCING (0.2%) 2,855 U.S. Small Business Administration, Participation Certificates, Series 2003-20 F 4.07 6/01/2023 2,756 ---------- DEBENTURES (1.0%) Fannie Mae,(+) 5,000 CPI Floating-Rate Note 4.19(c) 2/17/2009 5,054 5,000 Subordinated Note 5.25 8/01/2012 5,206 3,100 Benchmark Note 7.13 6/15/2010 3,604 ---------- 13,864 ---------- MORTGAGE-BACKED PASS-THROUGH SECURITIES (5.0%) Fannie Mae,(+) 8,382 Pool 706349 5.00 5/01/2033 8,346 958 Pool 610989 6.50 10/01/2016 1,019 1,906 Pool 253180 6.50 2/01/2030 2,009 865 Pool 535164 7.00 2/01/2030 925 292 Pool 547483 7.00 8/01/2030 312 Freddie Mac,(+) 6,508 Pool C79394 5.50 4/01/2033 6,631 17,000 Pool C01491 6.00 2/01/2033 17,611 Government National Mortgage Assn. I, 2,743 Pool 780860 6.00 9/15/2028 2,861 2,240 Pool 603869 6.00 1/15/2033 2,329 428 Pool 340945 6.50 5/15/2023 455 610 Pool 352106 6.50 8/15/2023 649 231 Pool 366762 6.50 4/15/2024 245 1,258 Pool 577423 6.50 1/15/2032 1,330 11,945 Pool 781496 6.50 9/15/2032 12,632 1,951 Pool 575469 7.00 12/15/2031 2,087 1,602 Pool 583624 7.00 6/15/2032 1,713 36 Pool 206743 7.50 3/15/2017 40 142 Pool 207904 7.50 3/15/2017 154 18 Pool 207950 7.50 3/15/2017 20 68 Pool 166093 8.00 6/15/2016 75 20 Pool 166108 8.00 6/15/2016 22 22 Pool 177786 8.00 9/15/2016 24 51 Pool 186000 8.00 11/15/2016 56 32 Pool 193968 8.00 12/15/2016 35 38 Pool 203822 8.00 3/15/2017 42 3 Pool 034140 8.50 9/15/2009 4 13 Pool 138007 8.50 6/15/2016 14 7 Pool 164021 8.50 6/15/2016 8
12 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
PRINCIPAL MARKET AMOUNT COUPON VALUE (000) SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- Government National Mortgage Assn. I, $ 33 Pool 159980 8.50% 7/15/2016 $ 36 2 Pool 171477 8.50 9/15/2016 3 5 Pool 176311 8.50 9/15/2016 5 11 Pool 177247 8.50 9/15/2016 12 14 Pool 174005 8.50 12/15/2016 15 28 Pool 197279 8.50 12/15/2016 31 51 Pool 190671 8.50 1/15/2017 57 7 Pool 197400 8.50 1/15/2017 7 32 Pool 201986 8.50 1/15/2017 36 30 Pool 185270 8.50 2/15/2017 33 4 Pool 157116 9.00 6/15/2016 4 1 Pool 162801 9.00 7/15/2016 1 3 Pool 166282 9.00 7/15/2016 4 3 Pool 164502 9.00 8/15/2016 3 7 Pool 172663 9.00 9/15/2016 8 3 Pool 170810 9.00 10/15/2016 3 24 Pool 031433 9.50 6/15/2009 27 3 Pool 032271 9.50 6/15/2009 3 43 Pool 034679 9.50 6/15/2009 47 10 Pool 038310 9.50 6/15/2009 11 7 Pool 035052 9.50 9/15/2009 7 27 Pool 167971 9.50 7/15/2016 30 20 Pool 172771 9.50 9/15/2016 23 3 Pool 185417 9.50 11/15/2016 4 19 Pool 186335 9.50 11/15/2016 22 11 Pool 187909 9.50 11/15/2016 12 1 Pool 184544 9.50 12/15/2016 1 7 Pool 190555 9.50 12/15/2016 8 94 Pool 189802 9.50 4/15/2017 107 28 Pool 214646 9.50 5/15/2017 31 16 Pool 225137 9.50 8/15/2017 18 26 Pool 037733 10.00 11/15/2009 29 9 Pool 037889 10.00 11/15/2009 10 21 Pool 037888 10.00 11/15/2009 23 23 Pool 036897 10.00 12/15/2009 26 8 Pool 059731 11.50 3/15/2013 9 Government National Mortgage Assn. II, 1,982 Pool 781494 6.50 8/20/2031 2,091 1,071 Pool 002934 7.50 6/20/2030 1,153 267 Pool 003070 7.50 4/20/2031 288 957 Pool 002958 8.00 8/20/2030 1,045 ---------- 66,931 ---------- COLLATERALIZED MORTGAGE OBLIGATIONS (0.9%) 5,123 Freddie Mac, Series 2389 VH(+) 6.00 12/01/2031 5,341 Government National Mortgage Assn. I, 5,000 Series 2003-50 PC 5.50 3/16/2032 5,025 535 Series 1999-11VC 6.50 5/20/2014 537 1,000 Series 2001-49 VB 7.00 11/16/2016 1,054 ---------- 11,957 ---------- OTHER U.S. GOVERNMENT GUARANTEED SECURITIES (0.5%) 1,933 Perforadora Centrale S.A. de C.V. "A", Guaranteed Bond, Series A, Title XI 5.24 12/15/2018 2,031 4,524 Rowan Companies, Inc., Guaranteed Bond, Title XI 2.80 10/20/2013 4,320 ---------- 6,351 ---------- Total U.S. government agency issues (cost: $99,934) 101,859 ----------
13 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
PRINCIPAL MARKET AMOUNT COUPON VALUE (000) SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- U.S. TREASURY SECURITIES (2.1%) INFLATION-INDEXED NOTES (1.3%)(A) $ 8,546 3.38%, 1/15/2012(h) $ 9,666 6,539 3.50%, 1/15/2011 7,402 ---------- 17,068 ---------- NOTES (0.8%) 2,000 2.63%, 11/15/2006 2,007 2,000 3.88%, 2/15/2013 1,986 7,000 4.00%, 2/15/2014(h) 6,942 ---------- 10,935 ---------- Total U.S. Treasury securities (cost: $25,954) 28,003 ---------- MUNICIPAL BONDS (0.7%) COMMUNITY SERVICE (0.1%) 2,000 Jicarilla Apache Nation, NM, RB 2.95% 12/01/2006 2,000 ---------- ELECTRIC UTILITIES (0.1%) 1,000 Ohio State Water Development Auth. PCRB, Series 2000A (First Energy) 2.20 4/01/2024(e) 1,000 ---------- ENVIRONMENTAL SERVICES (0.3%) 2,000 California State Financing Auth. PCRB] (Republic Services, Inc.) 2.00 12/01/2033(e) 1,999 2,500 Gulf Coast Waste Disposal Auth., TX, RB, Waste Management of Texas, Series A 2.50 5/01/2028(e) 2,499 ---------- 4,498 ---------- HOSPITAL (0.2%) 2,000 Rhode Island State Health & Education RB, Series C (LOC - Citizens Bank of Rhode Island) 3.60 9/15/2033(e) 2,012 ---------- Total municipal bonds (cost: $9,500) 9,510 ---------- Total bonds(cost:$242,837) 247,305 ---------- NUMBER OF SHARES - ----------- MONEY MARKET INSTRUMENTS (2.0%) MONEY MARKET FUND (1.0%) ------------------------ 13,207,680 SSgA Prime Money Market Fund 1.31(i) - 13,208 ---------- PRINCIPAL AMOUNT (000) - ----------- COMMERCIAL PAPER (0.4%) ----------------------- OTHER DIVERSIFIED FINANCIAL SERVICES $ 5,724 Wheels, Inc.(b,d) 1.62 9/01/2004 5,724 ---------- DISCOUNT NOTE (0.6%) -------------------- 8,282 Federal Home Loan Bank(k,+) 1.42 9/01/2004 8,282 ---------- Total money market instruments (cost: $27,214) 27,214 ----------
14 P O R T F O L I O ==================-------------------------------------------------------------- of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED)
PRINCIPAL MARKET AMOUNT COUPON VALUE (000) SECURITY RATE MATURITY (000) - --------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED (3.4%)(g) CORPORATE OBLIGATION (0.8%) --------------------------- LIFE & HEALTH INSURANCE $10,000 Monumental Global Funding II, Notes(b) 1.86%(c) 5/02/2005 $ 10,015 ---------- REPURCHASE AGREEMENTS (1.8%) ---------------------------- 7,000 CS First Boston LLC, 1.58%, acquired on 8/31/2004 and due 9/01/2004 at $7,000 (collateralized by $7,190 of U.S. Treasury Notes, 2.63%, due 5/15/2008; market value of $7,140)(j) 7,000 4,235 Lehman Brothers, Inc., 1.57%, acquired on 8/31/2004 and due 9/01/2004 at $4,235 (collateralized by $8,122 of FICO STRIPS, 4.97% - 5.29%(l), due 6/27/2016 - 6/06/2018; total market value $4,322)(j) 4,235 12,335 Morgan Stanley & Co., Inc., 1.57%, acquired on 8/31/2004 and due 9/01/2004 at $12,335 (collateralized by $12,795 of Fannie Mae Discount Notes(k,+), 1.53%(l), due 10/06/2004; market value $12,775)(j) 12,335 ---------- 23,570 ---------- COMMERCIAL PAPER (0.6%) ----------------------- ASSET-BACKED FINANCING 8,535 Three Crowns Funding 1.51 9/07/2004 8,533 ---------- NUMBER OF SHARE - ----------- MONEY MARKET FUNDS (0.2%) ------------------------- 953,348 AIM Short-Term Investment Co. Liquid Assets Portfolio 1.46(i) - 953 2,317,849 Merrill Lynch Premier Institutional Fund 1.45(i) - 2,318 ---------- 3,271 ---------- Total short-term investments purchased with cash collateral from securities loaned (cost: $45,389) 45,389 ---------- TOTAL INVESTMENTS (COST: $1,242,402) $1,384,276 ==========
15 N O T E S ==========---------------------------------------------------------------------- to Portfolio of INVESTMENTS USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED) GENERAL NOTES - -------------------------------------------------------------------------------- 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 quarterly report pertains only to the USAA Cornerstone Strategy Fund (the Fund). A. The value of each security is determined (as of the close of trading on the New York Stock Exchange (NYSE) on each business day the exchange is open) as set forth below: 1. Equity securities, except as otherwise noted, traded primarily on a domestic securities exchange or the Nasdaq over-the- counter markets are valued at the last sales price or official closing price on the exchange or primary market on which they trade. Equity securities traded primarily on foreign securities exchanges or markets are valued at the last quoted sales price, or the most recently determined official closing price calculated according to local market convention, available at the time the Fund is valued. If no last sale or official closing price is reported or available, the average of the bid and asked prices is generally used. 2. Securities trading in various foreign markets may take place on days when the NYSE is closed. Further, when the NYSE is open, the foreign markets may be closed. Therefore, the calculation of the Fund's net asset value (NAV) may not take place at the same time the prices of certain foreign securities held by the Fund are determined. In most cases, events affecting the values of foreign securities that occur between the time of their last quoted sales or official closing prices and the close of normal trading on the NYSE on a day the Fund's NAV is calculated will not be reflected in the value of the Fund's foreign securities. However, USAA Investment Management Company (the Manager), an affiliate of the Fund, and the Fund's subadvisers, if applicable, will monitor for events that would materially affect the value of the Fund's foreign securities and, if necessary, the Manager will value the foreign securities in good faith, considering such available information that the Manager deems relevant, under valuation procedures approved by the Trust's Board of Trustees. In addition, the Fund may use information from an external vendor or other sources to adjust the foreign market closing prices of foreign equity securities to reflect what the Fund believes to be the fair value of the securities as of the close of the NYSE. Fair valuation of affected foreign equity securities may occur frequently based on an assessment that events that occur on a fairly regular basis (such as U.S. market movements) are significant. 3. Investments in open-end investment companies are valued at their NAV at the end of each business day. 4. Debt securities purchased with original maturities of 60 days or less are stated at amortized cost, which approximates market value. Repurchase agreements are valued at cost. 5. Other debt securities are valued each business day by a pricing service (the Service) approved by the Trust's Board of Trustees. The Service uses the mean between quoted bid and asked prices or the last sales price to price securities when, in the Service's judgment, 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 that 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. 16 N O T E S ==========---------------------------------------------------------------------- to Portfolio of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED) 6. Securities for which market quotations are not readily available or are considered unreliable, or whose values have been materially affected by events occurring after the close of their primary markets but before the pricing of the Fund, are valued in good faith at fair value, using methods determined by the Manager in consultation with the Fund's subadvisers, if applicable, under valuation procedures approved by the Trust's Board of Trustees. Valuing securities at fair value is intended to cause the Fund's NAV to be more reliable than it otherwise would be. B. As of August 31, 2004, the cost of securities, for federal income tax purposes, was approximately the same as that reported in the financial statements. Gross unrealized appreciation and depreciation of investments as of August 31, 2004, were $159,086,000 and $17,212,000, respectively, resulting in net unrealized appreciation of $141,874,000. C. The percentages shown represent the percentages of the investments to net assets, which were $1,340,032,000 at August 31, 2004, and, in total, may not equal 100%. D. ADR - American depositary receipts are receipts issued by a U.S. bank evidencing ownership of foreign shares. Dividends are paid in U.S. dollars. E. GDR - Global depositary receipts are receipts issued by a U.S. or foreign bank evidencing ownership of foreign shares. Dividends are paid in U.S. dollars. F. SPDR - Standard & Poor's depositary receipt, or "Spider" is an exchange-traded fund based on either the S&P 500 Index or the S&P MidCap 400 Index, and is traded on the American Stock Exchange (AMEX). PORTFOLIO DESCRIPTION ABBREVIATIONS CPI Consumer Price Index EETC Enhanced Equipment Trust Certificate ESOP Employee Stock Ownership Plan PCRB Pollution Control Revenue Bond MTN Medium-Term Note RB Revenue Bond CREDIT ENHANCEMENTS - add the financial strength of the provider of the enhancement to support the issuer's ability to repay the principal and interest payments when due. A high-quality bank, insurance company, or other corporation, or a collateral trust may provide the enhancement. (LOC) Principal and interest payments are guaranteed by a bank letter of credit (NBGA) Principal and interest payments are guaranteed by a nonbank guarantee agreement. SPECIFIC NOTES - -------------------------------------------------------------------------------- (a) U.S. Treasury inflation-indexed notes - 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. 17 N O T E S ==========---------------------------------------------------------------------- to Portfolio of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED) (b) Restricted security that is not registered under the Securities Act of 1933. A resale of this security in the United States may occur in an exempt transaction to a qualified institutional buyer as defined by Rule 144A, and as such has been deemed liquid by USAA Investment Management Company (the Manager) under guidelines approved by the Trust's Board of Trustees, unless otherwise noted as illiquid. (c) Variable-rate or floating-rate security - interest rate is adjusted periodically. The interest rate disclosed represents the current rate at August 31, 2004. (d) Commercial paper issued in reliance on the "private placement" exemption from registration afforded by Section 4(2) of the Securities Act of 1933. Unless this commercial paper is subsequently registered, a resale of this commercial paper in the United States must be effected in a transaction exempt from registration under the Securities Act of 1933. Section 4(2)commercial paper is normally resold to other investors through or with the assistance of the issuer or an investment dealer who makes a market in this security, and as such has been deemed liquid by the Manager under guidelines approved by the Trust's Board of Trustees, unless otherwise noted as illiquid. (e) Security has a mandatory put, which shortens its effective maturity date. (f) Security was fair valued at August 31, 2004, by the Manager in accordance with valuation procedures approved by the Trust's Board of Trustees. (g) The Fund, through its securities-lending agent, Metropolitan West Securities LLC (MetWest), may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with cash collateral in an amount at least equal, at all times, to the fair value of the securities loaned. Cash collateral is invested in high-quality short-term investments. Risks to the Fund in securities-lending transactions are that the borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower. (h) The security or a portion thereof was out on loan as of August 31, 2004. The fair market value of these securities was approximately $43,036,000. (i) Rate represents the money market fund annualized seven-day yield at August 31, 2004. (j) 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. 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 repurchase agreement price plus accrued interest and is 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. (k) U.S. government agency issues - mortgage-backed securities issued by Government National Mortgage Association (GNMA) and certain other U.S. government agencies are supported by the full faith and credit of the U.S. government. Securities issued by government-sponsored enterprises (GSEs) indicated with "+" are supported only by the credit of the issuing agency, instrumentality, or corporation, and are neither issued nor guaranteed by the U.S. government. 18 N O T E S ==========---------------------------------------------------------------------- to Portfolio of INVESTMENTS (continued) USAA CORNERSTONE STRATEGY FUND AUGUST 31, 2004 (UNAUDITED) (l) Zero-coupon security. Rate represents the effective yield at August 31, 2004. (m) Callable security expected to be called prior to maturity due to a scheduled change from a fixed to a floating interest rate, which is likely to be uneconomical to the issuer. (n) Security deemed illiquid by the Manager, under liquidity guidelines approved by the Trust's Board of Trustees, and valued using methods determined by a pricing service, under valuation procedures approved by the Trust's Board of Trustees. The market value of this security at August 31, 2004, was $990,000, which represented 0.1% of the Fund's net assets. (o) Interest-only commercial mortgage-backed security (IO CMBS). Represents the right to receive only the interest payments on an underlying pool of commercial mortgage loans. The interest rate disclosed is the purchase yield, which reflects an anticipated yield based upon interest rates at the time of purchase and the estimated timing and amount of future cash flows. The principal amount represents the notional amount of the underlying pool on which the current interest rate is calculated. IO CMBS is backed by loans that have various forms of prepayment protection, which include lock-out provisions, yield maintenance provisions, and prepayment penalties. This serves to moderate their prepayment risk. IO CMBS is subject to recessionary default-related prepayments that may have a negative impact on yield. * Non-income-producing security for the 12 months preceding August 31, 2004. 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 Ernst & Young LLP REGISTERED PUBLIC 100 West Houston St., Suite 1900 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 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, APPROVED BY THE TRUST'S BOARD OF TRUSTEES FOR USE IN VOTING PROXIES ON BEHALF OF THE FUND, 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. INFORMATION REGARDING HOW THE FUND VOTED PROXIES RELATING TO PORTFOLIO SECURITIES DURING THE MOST RECENT 12-MONTH PERIOD ENDED JUNE 30 IS AVAILABLE (I) AT USAA.COM; AND (II) ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. [LOGO OF RECYCLED PAPER] Recycled Paper [LOGO OF USAA] WE KNOW WHAT IT MEANS TO SERVE.(R) USAA ---------------------------------- INSURANCE o MEMBER SERVICES 48047-1004 (C)2004, USAA. All rights reserved. ITEM 2. 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-Q 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. ITEM 3. EXHIBITS. Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached thereto as Exhibit 99.CERT. 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 By:* /s/ EILEEN M. SMILEY ----------------------------------------------------------- Signature and Title: Eileen M. Smiley, Assistant Secretary Date: OCTOBER 28, 2004 ------------------------------ 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: OCTOBER 29, 2004 ------------------------------ By:* /s/ DAVID HOLMES -------------------------------------------- Signature and Title: David Holmes/Treasurer Date: OCTOBER 29, 2004 ------------------------------ *PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE. EX-99.CERT 2 nqitcertification83104.txt N-Q IT CERTIFICATION - 08/31/2004 EXHIBIT 99.CERT. CERTIFICATIONS I, CHRISTOPHER W. CLAUS, certify that: -------------------- 1. I have reviewed this report on Form N-Q for the period ending August 31, 2004 for the Funds of USAA INVESTMENT TRUST; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: OCTOBER 29, 2004 /S/ CHRISTOPHER W. CLAUS ------------------------ Christopher W. Claus President I, DAVID HOLMES, certify that: ------------ 1. I have reviewed this report on Form N-Q for the period ending August 31, 2004 for the Funds of USAA INVESTMENT TRUST; 2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based such evaluation; and (d) disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: OCTOBER 29, 2004 /S/ DAVID HOLMES -------------------- David Holmes Treasurer -----END PRIVACY-ENHANCED MESSAGE-----