USAA Provides Investment Commentary on Market Trends.

SAN ANTONIO -- USAA Investment Management Company (IMCO):

--September Market Insights(R) Newsletter Offers Insight Into Impact of Decelerating Earnings on U.S. Stocks; Quality Leadership in the Large Cap Market; Unexpected Economic Strength in Mexico; and the Strong Recovery in Municipal Finance

Today USAA Investment Management Company (IMCO) released the following market commentary for September, through the inaugural issue of the company's Market Insights(R) newsletter, which provides expert market analysis from USAA IMCO fund managers and analysts:

--  Earnings Should Be Positive Influence: One major issue
        weighing on stocks is the expected deceleration in corporate
        earnings over the next 12 months. To be sure, corporate
        earnings growth is set to slow from the strong recent pace.
        Coming out of a recession, profit growth typically spikes
        upward off a lower base and drives stock prices dramatically
        higher. Sustaining the momentum of earnings growth can be
        difficult as the recovery matures and the comparison is off a
        higher base. While decelerating earnings make investors
        nervous, remember that the stock market is always looking
        ahead. As long as solid earnings are expected, versus a rapid
        decline indicative of recession, earnings should be a positive
        influence on the market. (Source: Stuart Wester, CFA, vice
        president, Equity Investments, USAA Investment Management
        Company.)

    --  Take Stock In Quality: Following the complete domination by
        lower-quality stocks during the market rally of 2003,
        high-quality stocks are seriously undervalued within the U.S.
        large cap universe. Going back to 1980, we've found four
        instances where high-quality stocks were as undervalued as
        they are today, and as they subsequently reverted to the mean,
        their average return over the following two years was 17%
        higher than the S&P 500 Index.

        We define quality as stocks with low leverage (less than 50%),
        high profitability (return on equity above 10%), and stable
        profitability (less than 30% volatility). Of the 1,000 stocks
        that GMO screens today, roughly one third have high-quality
        characteristics. In addition to offering attractive relative
        performance potential moving forward, high-quality stocks may
        represent an important place to consider should the overall
        market head lower. The last time we saw a similar disparity
        was in late 1999. (Source: Robert Soucy, portfolio manager,
        USAA Income Stock Fund.)

    --  Mexico -- Competing With China, and Thriving: With so much
        being reported about problems Mexican companies have in
        competing on price with Asian firms, some have chosen to
        ignore the many positive economic and business trends in
        Mexico. These include a young population and pent-up consumer
        demand that have made local consumption contribute measurably
        to GDP growth. Further, moderate inflation and affordable
        mortgage financing have spurred residential construction
        activity, and foreign direct investment and portfolio flows
        have risen in response to the turnaround in local demand.
        There is good news on the export side as well. Although Mexico
        is competing with low-cost manufacturing in Asia, industrial
        production surged 4% year-over-year in April, driven mostly by
        the "maquiladora" sector on the U.S. border. The Mexican stock
        market has recently rebounded, and we expect good relative
        performance as the global economic recovery continues. We
        recently captured profits in the retail and cement industries
        when business activity exceeded consensus expectations.
        (Source: Carolyn Kedersha, portfolio manager, USAA Emerging
        Markets Fund.)

    --  State Governments Pass the Test: Less than a year ago, the
        business press was reporting on a crisis in municipal finance,
        using California as the leading example. But instead of
        heading toward catastrophe, state and local governments
        addressed their budget problems through cost cutting and some
        tax hikes. The recovering U.S. economy also boosted tax
        revenues. As a result, the projected $78.4 billion in
        collective state deficits when lawmakers began writing fiscal
        2004 budgets turned into an estimated $5 billion surplus near
        the end of the fiscal year. Those who fanned the fears
        overlooked balanced budget requirements, the ability to raise
        taxes or fees, and the near-zero default rate on essential
        service municipal bonds.

        Over the past five years, through July 30, 2004, the
        tax-equivalent annualized total return of the Lehman Municipal
        Bond Index is 9.74%, making it the best-performing asset class
        in Lehman's monthly survey of various stock and bond indexes.
        (Source: Bob Pariseau, portfolio manager, USAA Tax Exempt Long
        Term Fund.)

USAA is a highly competitive financial services company known for its financial strength and outstanding service to its members. USAA owns or manages assets of $79 billion, and provides insurance, banking, and investment products to more than 5 million members of the U.S. military and their families. Founded in 1922, USAA has 21,000 employees in its San Antonio headquarters and regional offices, and is widely recognized as one of the best places to work in America. USAA means United Services Automobile Association and its subsidiaries and affiliates.

Past performance is no guarantee of future results.

The S&P 500 Index is a well-known stock market index that includes common stocks of 500 companies from several industrial sectors representing a significant portion of the market value of all stocks publicly traded in the United States. Most of these stocks are listed on the New York Stock Exchange.

The broad-based Lehman Brothers Municipal Bond Index is an unmanaged index that tracks total return performance for the investment-grade, tax-exempt bond market.

This material is provided for informational purposes and is not intended to provide investment advice, nor is it an indicator of future performance. It should not be used as a primary basis for making investment decisions. You should always consider your own financial circumstances and goals carefully before investing. The information is not a solicitation, an offer to buy or sell, or a recommendation for any security.