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Usaa Investment Trust · N-30D · For 11/30/97

Filed On 1/26/98   ·   SEC File 811-04019   ·   Accession Number 745903-98-6

  in   Show  and 
  As Of               Filer                 Filing     On/For/As Docs:Pgs

 1/26/98  Usaa Investment Trust             N-30D      11/30/97    1:43

Annual or Semi-Annual Report Mailed to Shareholders   ·   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Usaa Growth Strategy Fund                             43±   159K 


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 TABLE OF CONTENTS

USAA Family of Funds                                            1         
Message from the President                                      2         
Investment Review                                               4         
Message from the Managers                                       5         
Financial Information:                                                    
Statement of Assets and Liabilities                          9      
Portfolio of Investments in Securities                      10      
Notes to Portfolio of Investments in Securities             26      
Statement of Operations                                     27      
Statements of Changes in Net Assets                         28      
Notes to Financial Statements                               29      
================================================================================

IMPORTANT INFORMATION     

Through  our  ongoing  efforts to reduce  expenses  and  respond to  shareholder
requests, your annual and semiannual report mailings are "streamlined." One copy
of each report is sent to each address,  rather than to every registered  owner.
For many  shareholders  and their families,  this eliminates  duplicate  copies,
saving paper and postage costs to the Fund.                                     

If you are the  primary  shareholder  on at least  one  account,  prefer  not to
participate in streamlining, and would like to continue receiving one report per
registered account owner, you may request this in writing to:                   

USAA Investment Management Company          
Attn: Report Mail                           
9800 Fredericksburg Road                    
San Antonio, TX 78284-8916                  

or phone a Mutual Fund Representative at 1-800-531-8448 during business hours.  

This  report is for the  information  of the  shareholders  and  others who have
received  a copy  of the  currently  effective  prospectus  of the  USAA  Growth
Strategy Fund,  managed by USAA Investment  Management Company (IMCO). It may be
used as  sales  literature  only  when  preceded  or  accompanied  by a  current
prospectus which gives further details about the Fund.                          

USAA with the eagle is registered in the U.S. Patent & Trademark Office.        
(Copyright)1998, USAA. All rights reserved.                                     

USAA FAMILY OF FUNDS SUMMARY                  

Fund                                       Minimum            
Type/Name              Volatility          Investment*            

CAPITAL APPRECIATION                                                            
Aggressive Growth           Very high            $3,000                     
Emerging Markets(1)         Very high            $3,000                     
First Start Growth          Moderate to high     $3,000                     
Gold(1)                     Very high            $3,000                     
Growth                      Moderate to high     $3,000                     
Growth & Income             Moderate             $3,000                     
International(1)            Moderate to high     $3,000                     
S&P 500 Index(2)            Moderate             $3,000                     
Science                                                                     
& Technology(5)             Very high            $3,000                     
World Growth(1)             Moderate to high     $3,000                     

ASSET ALLOCATION                                                                
Balanced Strategy(1)        Moderate             $3,000                     
Cornerstone Strategy(1)     Moderate             $3,000                     
Growth and Tax                                                              
Strategy(3)                 Moderate             $3,000                     
Growth Strategy(1)          Moderate to high     $3,000                     
Income Strategy             Low to moderate      $3,000                     

INCOME -- TAXABLE                                                               
GNMA                        Low to moderate      $3,000                     
Income                      Moderate             $3,000                     
Income Stock                Moderate             $3,000                     
Short-Term Bond             Low                  $3,000                     

INCOME -- TAX EXEMPT                                                            
Long-Term(3)                Moderate             $3,000                     
Intermediate-Term(3)        Low to moderate      $3,000                     
Short-Term(3)               Low                  $3,000                     
State Bond Income(3)**      Moderate             $3,000                     

MONEY MARKET                                                                    
Money Market(4)             Very low             $3,000                     
Tax Exempt                                                                  
Money Market(3),(4)         Very low             $3,000                     
Treasury Money                                                              
Market Trust(4)             Very low             $3,000                     
State Money Market(3),(4)** Very low             $3,000                     

(1)Foreign  investing is subject to additional  risks,  which are discussed in  
the funds' prospectuses.                                                  

(2)S&P 500(Registered Trademark) is a trademark of The  McGraw-Hill  Companies, 
  Inc. and has been licensed for use.  The product is  not sponsored,  sold or
  promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding  the advisability of investing in the product.                  

(3)Some income may be subject to state or local taxes or the federal alternative
minimum tax.                                                              

(4)An investment in a money market fund is neither insured nor guaranteed by the
   U.S. government, and there is no assurance that any of the funds will be able
to maintain a stable net asset value of $1 per share.                     

(5)This Fund may be more  volatile  than a fund  that  diversifies  across  many
industries.                                                               

* The InveStart(Registered Trademark) program is available for investors without
the $3,000 initial investment  required to open an IMCO  mutual fund account.  A
mutual fund account can be opened with no  initial  investment  if you  elect to
have monthly automatic  investments   of  at  least  $50  from  a  bank account.
InveStart is not available on tax-exempt  funds  or  the  S&P  500  Index  Fund.
The  minimum initial investment for IRAs is $250, except for  the $2,000 minimum
required for the S&P 500 Index Fund. IRAs  are  not  available  for   tax-exempt
funds. The Growth and Tax Strategy Fund is not available  as  an  investment for
your IRA because the majority of its income is tax exempt.                      

** California,  Florida,  New York,  Texas,  and  Virginia  funds  available to 
residents only.                                                                 

Non-deposit  investment  products offered by USAA Investment  Management Company
are not  insured  by the FDIC,  are not  deposits  or other  obligations  of, or
guaranteed by, USAA Federal  Savings Bank, and are subject to investment  risks,
and may lose value.                                                             

For more complete  information about the mutual funds managed and distributed by
USAA IMCO, including charges  and  expenses,  please  call  1-800-531-8181 for a
prospectus. Read it carefully before you invest.                                

MESSAGE FROM THE PRESIDENT    

Every  week  I get a report which summarizes all of the feedback we have gotten,
by mail and phone, from  our  shareholders  and  brokerage  customers.   We  get
suggestions,  complaints and also some compliments each week. We look for trends
which point out problems and we are always sure to respond to every one of these
contacts. One in particular caught my eye on the report for the week of December
11, 1997. It said,  "Shareholder  notes that Mr. Roth  established  Income Stock
Fund for  grandchild  born in 1995; in 1997 another  grandchild was born and Mr.
Roth established a Cornerstone Strategy Fund; why was investment not made in the
same fund?" Fair question.                                                      

The best  answer is that I think  both of these  funds are  great  vehicles  for
investing for a child's future, and I like variety.                             

The Income Stock Fund and the Cornerstone Strategy Fund both offer  an  investor
an equity product with less  volatility than the stock market alone. In the case
of the Income Stock Fund,  the decreased  volatility comes from a heavy emphasis
on companies  that pay high dividends or whose  dividends tend to grow.  For the
Cornerstone Strategy Fund, the decrease in volatility comes  from  a combination
of domestic value stocks, real estate stocks, foreign stocks and U.S. government
bonds. In any  given year either  of these funds could be more volatile than the
S&P 500 Index,(1) but both have long-term records(2) which indicate  those  will
be  unusual occurrences.                                                        

This  combination  of risk and reward  appeals to me. I have  friends  who argue
pursuasively  that a more  aggressive  fund  would  be  better  for a  long-term
investment like this. If you only consider  return,  I suspect they are correct,
but I am doing what I advise our customers to do. I am asking myself,  "What are
you comfortable with?" My answer is either of these two funds is appropriate. So
far, Karl Joseph Marbach and Katharine Sophia Broyles are doing just fine. Maybe
their  parents  will  only have to worry  about  the last two or three  years of
college.                                                                        

Sincerely,                                                                      

Michael J.C. Roth, CFA                                                          
PRESIDENT AND                                                                   
VICE CHAIRMAN OF THE BOARD                                                      

(Photograph of the President, Michael J. C. Roth, CFA, appears here.)           

(1)The S&P 500 Index is an unmanaged index representing the average performance 
  of a group of 500 widely held, publicly  traded  stocks.  It is not possible
to invest directly in the S&P 500 Index.                                  

(2)Past performance is  no  guarantee  of future  results and the value of your 
investment may vary according to the Fund's performance.                  

For more complete  information about the mutual funds managed and distributed by
USAA IMCO, including charges and expenses please call for a prospectus.  Read it
carefully before you invest.                                                    

 INVESTMENT REVIEW

GROWTH STRATEGY FUND                                                            

OBJECTIVE:  To seek a high total return, with reduced risk over time, through an
asset allocation strategy that emphasizes capital appreciation and, secondarily,
income.                                                                         

                                                    5/31/97         11/30/97
        Net Assets.............................  $193.9 MILLION   $229.4 MILLION
     Net Asset Value Per Share..............       $13.10           $13.62

AVERAGE ANNUAL TOTAL RETURNS AS OF 11/30/97                     
        May 31, 1997 to November 30, 1997..............................   4.49%+
       1 Year.........................................................  10.63%
       Since inception on September 1, 1995...........................  17.40%

     + Total returns for periods of less than one year are not annualized.
This six-month return is cumulative.                            

Total  return   equals   income  yield  plus  share  price  change  and  assumes
reinvestment of all dividends and capital gain distributions.  No adjustment has
been made for taxes payable by shareholders on their reinvested income dividends
and  capital   gain distributions.  The performance  data quoted  represent past
performance and are not an indication of future results.  Investment return  and
principal value of aninvestment will fluctuate, and an  investor's  shares, when
redeemed, may be worth more or less than their original cost.                   

 CUMULATIVE PERFORMANCE COMPARISON

A chart in the form of a line graph appears here, illustrating the comparison   
of a $10,000 hypothetical investment in the USAA Growth  Strategy Fund to the   
S&P 500 Index for the period of 9/1/95 through 11/30/97.  The    data  points   
from the graph are as follows:                                                  

Year              USAA Growth              S&P 500                              
Strategy Fund             Index             
-------------             -----             

9/01/95              10,000                10,000                               
12/95                10,650                11,049                               
06/96                12,385                12,163                               
12/96                13,007                13,584                               
06/97                14,289                16,382                               
11/97                14,381                17,809                               

The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Growth Strategy Fund to the S&P 500 Index, an unmanaged index  representing
the average performance of a group of 500 widely held,  publicly  traded stocks.
It is not possible to invest directly in the  S&P  500  Index.                  

MESSAGE FROM THE MANAGERS         

[Photograph of the Portfolio Managers appears here:   David  G.  Peebles,   CFA 
(International Stocks), W. Travis Selmier, II, CFA (International Stocks), David
G. Parsons, CFA (Allocation Manager, Large Cap Stocks), John K. Cabell, Jr., CFA
(Small Cap Stocks), Paul H. Lundmark, CFA (Bonds), Pamela K. Bledsoe, CFA (Money
Market  Instruments), Eric M. Efron,  CFA  (Small  Cap  Stocks),  and  Albert C.
Sebastian, CFA (International Stocks).]                                         

Fund  Overview                                                                  
Through an asset allocation  strategy encompassing  domestic  and  international
stocks as well as bonds,  the Growth Strategy  Fund  seeks  to remove the growth
investor's asset allocation burden.                                             

Large Capitalization Stocks                                                     
The  large  capitalization  sector of  the Fund generally purchases out-of-favor
growth stocks.  The Fund is heavily overweighted in technology, healthcare,  oil
services, and trucking. Within healthcare,  the Fund has large concentrations in
biotechnology,  pharmaceuticals, and medical products. In the technology sector,
the  Fund  has  large  positions  in  semiconductor,  networking,  semiconductor
equipment,  and disc drive  manufacturers.  For the six-month  reporting period,
trucking and oil services  performed  very well;  however,  both  healthcare and
technology  were down.  Our  technology  companies had performed  extremely well
through  August,  but the  ramifications  of the currency crisis in the Far East
wreaked havoc upon them in the Fall.  Nevertheless,  in both the  healthcare and
technology areas we are invested in the companies of the future that, over time,
may have the potential to generate  strong revenue  growth rates.  The fact that
they are down makes them even more  attractive to us. Indeed,  if we did not own
them, we would begin buying these  companies  now. Large  capitalization  stocks
comprised 29% of the Fund's net assets on November 30, 1997.                    

Small Capitalization Stocks                                                     
The small  capitalization  sector of the Fund  focuses on  investing  in rapidly
growing companies, that are innovative and are on the leading edge of change. We
are buying  companies that are in position to take advantage of long-term social
and economic trends.  To qualify for purchase for the Fund, these companies must
have market capitalizations of less than $1 billion.                            

Small capitalization equities are a high-risk, high-return investment. Investors
who are able to accept the  short-term  volatility of these stocks are likely to
be  rewarded  over  the long term because of potential superior earnings growth.
While rapid growth,   small capitalization  opportunities exist in many industry
sectors,  the   Fund   has   made   its  largest   investments   in  technology,
communications,  energy,  and healthcare.                                       

During  the   six-month   period  that  ended  on  November  30,   1997,   small
capitalization  stocks returned to favor and provided good  investment  returns.
Following this trend, the small capitalization sector of the Fund generated very
good  returns  versus the S&P 500 Index.(1) At the end of the investment period,
small capitalization stocks accounted for 27.8% of the Fund's net assets.       

International Stocks                                                            
The  international  sector  of the Fund  again  produced  a good  return  versus
international  indices,  but below that of the S&P 500 Index.  Over the past six
months,  European markets provided favorable returns because of earnings growth,
falling interest rates, and corporate restructuring.  However, beginning in July
of this year, a series of currency  devaluations in Asia pushed many Far Eastern
markets  to record  lows.  Globally,  this had  negative  implications  in other
emerging markets. Further, Asia's currency crisis, combined with problems within
the banking system, negatively affected the Japanese stock market.              

We continue to favor  European  markets  because of their economic and political
stability,   favorable   valuations,   and  more  predictable  earnings  growth.
Divergence in emerging markets should continue as most Asian markets remain weak
while many  Latin,  Eastern  European,  and other  markets are likely to recover
sooner.  We remain  negative  on Japan and feel  that it offers  only  selective
opportunities.  At the end of the reporting period, international stocks made up
19.8% of the Fund's net assets.                                                 

Bonds                                                                           
The bond  component  of the Fund is  included  to lower  volatility  and provide
current income.  Our philosophy is that no one can consistently  predict whether
interest  rates are heading up or down over time. As a result,  there will be no
dramatic  change  in the  maturity  of the  portfolio  in an  effort to time the
market.  The emphasis remains on bonds that represent value in terms of risk and
total return.                                                                   

Since the last report, we  have  been  reducing   our  exposure  in  lower-rated
corporates and mortgage pass-through securities that carry high coupons. We have
replaced those  securities  with  instruments  that are AAA-rated and are not as
interest rate sensitive as mortgage pass-throughs.                              

Within the Fund's bond portion, the best performing holdings were: Comcast Cable
Communications,  Time  Warner,  and  Kmart.  Our  investments  in higher  coupon
pass-throughs  underperformed  because of fears of large prepayments.  At of the
end of the reporting period, bonds comprised 19.3% of the Fund's net assets.    

Money Market Instruments                                                        
With the Fund's  emphasis on growth,  this  investment  category is used for the
temporary  investment  of  cash  prior  to  transitioning  into  more  permanent
investments in stocks and bonds.  It can also serve as a liquidity  reserve when
needed.  Investments are made in the highest  quality money market  instruments,
usually  U.S.  Government  Agencies'   obligations.   Money  market  instruments
constituted less than 4% of the Fund's net assets on November 30, 1997.         

Performance                                                                     
During the six months ended November 30, 1997, the Fund returned 4.49%.(2)  This
was below the  performance  of the S&P 500 Index.  The main problems were in the
large  capitalization  sector which was down and the international  sector which
was up only marginally. Small capitalization stocks had outstanding returns. The
managers  continue  to  believe  that  over the  course of a market  cycle  this
compilation of management styles and assets may provide competitive returns with
less volatility than the average growth fund.                                   

(1) The S&P 500 Index is an unmanaged index representing the average performance
of a group of 500 widely held, publicly traded stocks.  It is  not  possible  to
invest directly in the S&P 500 Index.                                           

(2) Past performance  is no  guarantee  of future  results and the value of your
investment may vary according to the Fund's performance.                        

TOP 10 EQUITY HOLDINGS                                                      
(% OF NET ASSETS)                                                     

Pharmacia & Upjohn        2.1                                                   
Cisco Systems             1.2                                                   
CNF Transportation        1.1                                                   
Transocean Offshore       1.0                                                   
American Home Products     .9                                                   
Amgen                      .9                                                   
Halliburton                .9                                                   
Motorola                   .9                                                   
Ascend Communications      .8                                                   
Caliber System             .8                                                   

TOP 10 INDUSTRIES                                         
(% OF NET ASSETS)                                         

Oil & Gas - Drilling/Equipment           7.1                                    
Drugs                                    3.8                                    
Computer Software & Service              3.7                                    
Biotechnology                            3.6                                    
Banks - Major Regional                   3.5                                    
Computer - Networking                    3.4                                    
Electronics - Semiconductors             3.4                                    
Medical Products & Supplies              3.0                                    
Communication - Equipment Manufacturers  2.9                                    
Real Estate Investments Trusts           2.9                                    

A pie chart is shown here depicting the Asset Allocation as of November 30, 1997
of the USAA Growth  Strategy  Fund to be:  Large Cap Stocks - 29.0%*,  Small Cap
Stocks - 27.8%*, Money Market Instruments - 3.8%*, Bonds - 19.3%*, International
Stocks - 19.8%*.                                                                

* Percentages are of the Net Assets in the Portfolio and may or may not equal   
100%.                                                                       

Foreign  investing  is subject to  additional  risks which are  discussed in the
Fund's prospectus. Since return on any investment is generally commensurate with
risk,  investors  should be aware of the potential  volatility  associated  with
foreign markets.                                                                

See  page  10  for a  complete  listing  of  the  Portfolio  of  Investments  in
Securities.                                                                     

Growth Strategy Fund                                                            
Statement of Assets and Liabilities                                             
(In Thousands)                                                                  

November 30, 1997                                                               
(Unaudited)                                                                     

                                                        · Enlarge/Download Table

                                                                                        
Assets                                                                                  
   Investments in securities, at market value (identified cost of $206,414)  $  228,627 
   Cash                                                                              82 
   Cash denominated in foreign currencies (identified cost of $382)                 339 
   Receivables:                                                                         
      Capital shares sold                                                           169 
      Dividends and interest                                                        824 
      Securities sold                                                               908 
   Unrealized appreciation on foreign currency contracts held, at value               1 
                                                                             ---------- 
         Total assets                                                           230,950 
                                                                             ---------- 
Liabilities                                                                             
   Securities purchased                                                           1,268 
   Capital shares redeemed                                                           77 
   USAA Investment Management Company                                               144 
   USAA Transfer Agency Company                                                      26 
   Accounts payable and accrued expenses                                             30 
                                                                             ---------- 
         Total liabilities                                                        1,545 
                                                                             ---------- 
            Net assets applicable to capital shares outstanding              $  229,405 
                                                                             ========== 
Represented by:                                                                         
   Paid-in capital                                                           $  201,824 
   Accumulated undistributed net investment income                                  856 
   Accumulated net realized gain on investments                                   4,555 
   Net unrealized appreciation of investments                                    22,213 
   Net unrealized depreciation on foreign currency translations                     (43)
                                                                             ---------- 
            Net assets applicable to capital shares outstanding              $  229,405 
                                                                             ========== 
   Capital shares outstanding, unlimited number of shares authorized,                   
      no par value                                                               16,845 
                                                                             ========== 
   Net asset value, redemption price, and offering price per share           $    13.62 
                                                                             ========== 


See accompanying notes to financial statements.                                 

Growth Strategy Fund                                                            
Portfolio of Investments in Securities                                          

November 30, 1997                                                               
(Unaudited)                                                                     
        Market
Number                                Value                             
of Shares           Security           (000)                              
---------           --------            ---                               

International Stocks (19.8%)                          
Argentina (0.2%)                                    
7,900  Banco Rio de La Plata                                      
S.A. ADR *              $      99                 
3,800  Disco S.A. ADS *               136                         
2,160  IRSA Inversiones y                                         
Representaciones                                  
S.A. GDS                       66                 
2,500  Telefonica de Argentina                                    
S.A. ADR                       83                 
------------------------------------------------                                
             384
------------------------------------------------                                

Australia (0.5%)                                    
35,000  Broken Hill Proprietary                                     
Co. Ltd.                      321                 
30,000  CSL Ltd.                       197                          
40,000  Pasminco Ltd.                   41                          
145,000  Telstra Corp. Ltd. *           272                           
46,578  Woodside Petroleum Ltd.        334                          
------------------------------------------------                                
           1,165
------------------------------------------------                                

Austria (0.5%)                                      
2,307  Austria Mikro Systeme                                      
International AG              139                 
4,087  Boehler Uddeholm AG            276                         
9,757  VA Stahl AG                    361                         
2,750  VA Technologie AG              414                         
------------------------------------------------                                
           1,190
------------------------------------------------                                

Belgium (0.2%)                                      
310  Colruyt S.A.                   159                       
4,500  Union Miniere S.A. *           324                         
------------------------------------------------                                
             483
------------------------------------------------                                

Brazil (0.7%)                                       
4,130,000  Companhia Energetica                                           
de Minas Gerais (Cemig)                           
(Preferred)                   201                 
11,000  Multicanal Participacoes                                    
S.A ADS (Preferred) *          52                 
12,500  Panamerican Beverages,                                      
Inc. "A"                      428                 
1,200,000  Petroleo Brasileiro S.A.                                       
(Preferred)                   262                 
2,600,000  Telebras PN S.A.                                               
(Preferred)                   271                 
8,000  Uniao de Bancos Brasileiros                                
S.A. (Unibanco) GDR *         230                 
11,000  Usinas Siderurgicas                                         
de Minas Gerais S.A.                              
(Preferred)                    71                 
------------------------------------------------                                
           1,515
------------------------------------------------                                

Canada (1.1%)                                       
15,500  Alliance Forest                                             
Products, Inc. *              249                 
26,000  Anderson                                                    
Exploration Ltd. *            241                 
5,200  Cadillac Fairview Corp. *      123                         
5,600  Canadian National                                          
Railway Co.                   289                 
21,100  Canadian Occidental                                         
Petroleum Ltd.                471                 
41,200  National Bank of Canada        605                          
12,000  OSF, Inc. *                     84                          
3,000  St. Laurent                                                
Paperboard, Inc. *             38                 
18,600  Suncor, Inc.                   613                          
------------------------------------------------                                
           2,713
------------------------------------------------                                

Chile (0.2%)                                        
3,290  Compania de Telefonos                                      
de Chile ADR                   89                 
5,900  Distribucion y Servicio                                    
D & S S.A. ADS                103                 
3,000  Sociedad Quimica y                                         
Minera de Chile                                   
S.A. ADS                      138                 
------------------------------------------------                                
             330
------------------------------------------------                                

China (0.1%)                                        
85,000  Cosco Pacific Ltd.              59                          
354,000  Jiangsu Expressway                                           
Co. Ltd. *                     69                 
55,000  New World                                                   
Infrastructure Ltd. *         109                 
------------------------------------------------                                
             237
------------------------------------------------                                

Czech Republic (0.1%)                               
2,800  Komercni Banka A.S. GDR         35                         
900  SPT Telecom A.S. *              95                       
------------------------------------------------                                
             130
------------------------------------------------                                

Denmark (0.9%)                                      
6,800  Carli Gry International A/S    385                         
8,400  ISS International Service                                  
System A/S "B" *              282                 
18,200  SAS Danmark A/S                276                          
3,000  Tele Danmark A/S "B"           179                         
16,400  Tele Danmark A/S ADS           490                          
6,100  Unidanmark A/S                 431                         
------------------------------------------------                                
           2,043
------------------------------------------------                                

Egypt (0.1%)                                        
4,400  Suez Cement Co.                                            
S.A.E. GDS                     89                 
------------------------------------------------                                

Finland (0.3%)                                      
7,000  Nokia Corp. ADS                582                         
1,220  Raision Tehtaat *              140                         
3,500  Rauma OY                        61                         
------------------------------------------------                                
             783
------------------------------------------------                                

France (1.5%)                                       
1,300  Accor S.A.                     246                         
10,700  Bouygues Offshore                                           
S.A. ADR                      241                 
10,800  Coflexip ADS                   537                          
13,600  Elf Aquitaine ADS              779                          
3,800  Eramet Group                   151                         
1,550  Essilor International          432                         
2,000  ISIS S.A. *                    225                         
4,400  Louis Dreyfus Citrus           129                         
8,200  Renault S.A. *                 230                         
3,000  Simco S.A.                     213                         
6,600  Valeo S.A.                     436                         
------------------------------------------------                                
           3,619
------------------------------------------------                                

Germany (0.8%)                                      
6,500  Bayer AG                       241                         
5,900  Leica Camera AG                133                         
16,000  Rofin-Sinar                                                 
Technologies, Inc. *          236                 
1,200  SAP AG                         349                         
550  SAP AG (Preferred)             169                       
500  Singulus Technologies AG *      22                       
9,340  Veba AG                        555                         
------------------------------------------------                                
           1,705
------------------------------------------------                                

Hong Kong (0.2%)                                    
205,000  Amoy Properties Ltd.           176                           
7,000  Asia Satellite                                             
Telecommunications                                
Holdings Ltd. ADR             148                 
30,000  CITIC Pacific Ltd.             120                          
17,000  Hutchison Whampoa Ltd.         113                          
------------------------------------------------                                
             557
------------------------------------------------                                

Hungary (0.2%)                                      
7,000 Magyar Tavkozlesi RT.                                       
(MATAV) ADS *                 142                 
10,000  Mol Magyar Olaj-Es                                          
Gazipari GDS                  210                 
2,000  OTP Bank GDR *                  62                         
------------------------------------------------                                
             414
------------------------------------------------                                

India (0.2%)                                        
10,000  Arvind Mills Ltd. GDS *         23                          
7,250  Hindalco Industries                                        
Ltd. GDR                      163                 
5,500  Larsen & Toubro Ltd. GDR        54                         
9,300  Videsh Sanchar Nigam                                       
Ltd. GDR                      123                 
------------------------------------------------                                
             363
------------------------------------------------                                

Indonesia (0.1%)                                    
118,000  PT Astra                                                     
International, Inc.            62                 
60,000  PT HM Sampoerna                 80                          
10,000  PT Jaya Real Property            1                          
------------------------------------------------                                
             143
------------------------------------------------                                

Israel (0.3%)                                       
5,100  Blue Square - Israel Ltd. ADS * 50                         
10,400  ECI Telecommunications  Ltd.   283                          
6,900  Teva Pharmaceutical                                        
Industries Ltd. ADR           341                 
------------------------------------------------                                
             674
------------------------------------------------                                

Italy (0.9%)                                        
8,300  ENI S.p.A. ADS                 482                         
33,000  Erg S.p.A. *                   125                          
9,300  Gucci Group N. V. *            378                         
10,300  Instrumentation                                             
Laboratory S.p.A. ADS *        21                 
68,000  Italgas S.p.A.                 262                          
6,400  SAES Getters S.p.A. ADR         66                         
582,000  SEAT S.p.A. *                  231                           
452,000  SEAT S.p.A. Savings *          117                           
110,000  Telecom Italia S.p.A. *        434                           
------------------------------------------------                                
           2,116
------------------------------------------------                                

Japan (2.5%)                                        
13,000  Bridgestone Corp.              282                          
19,000  Canon, Inc.                    459                          
16,000  Daibiru Corp.                  157                          
40,000  Hitachi Ltd.                   284                          
5,000  Hoya Corp.                     153                         
7,000  Ito-Yokado Co. Ltd.            316                         
6,000  Justsystem Corp.                66                         
12,900  Laox Co. Ltd.                  101                          
40,000  Minebea Co. Ltd.               445                          
40,000  Mitsubishi Heavy                                            
Industries Ltd.               157                 
13,000  Namco                          416                          
2,300  Nichiei Co. Ltd.               252                         
800  Nippon Television Network      258                       
65,000  NKK Corp.                       66                          
26,000  Nomura Securities Co. Ltd.     322                          
9  NTT Data Communications                                
Systems Corp.                 437                 
34,000  Sekisui Chemical Co. Ltd.      248                          
27,000  Shiseido Co. Ltd.              366                          
6,000  Sony Corp.                     512                         
26,000  Terumo Corp.                   407                          
13,000  Yamada Denki Co.               122                          
MBL International                                   
Finance (Bermuda)                                 
Trust, Convertible                                
Notes, $200,000 par,                              
3.00%, 11/30/02               212                 
------------------------------------------------                                
           6,038
------------------------------------------------                                

Malaysia (0.1%)                                     
14,000  Edaran Otomobil                                             
Nasional Bhd                   32                 
------------------------------------------------                                

Mexico (0.4%)                                       
89,000  Controladora Comercial                                      
Mexicana, S.A. de C.V.         97                 
11,599  Desc, Sociedad de                                           
Fomento Industrial,                               
S.A. de C.V. ADS              436                 
8,700  Empresas Ica Sociedad                                      
Controladora, S.A.                                
de C.V. ADR                   135                 
12,000  Tubos de Acero                                              
de Mexico, S.A. ADS *         265                 
------------------------------------------------                                
             933
------------------------------------------------                                

Netherlands (1.0%)                                  
4,700  Akzo Nobel N.V.                827                         
5,200  Benckiser N.V. "B" ADR *       181                         
700  Brunel International N.V. *     13                       
3,940  EVC International N.V.          92                         
9,500  ING Group N.V.                 386                         
2,550  Oce-van der Grinten N.V.       291                         
5,000  Philips Electronics N.V.       335                         
1,360  Simac Techniek N.V. *          155                         
14,000  Verenigd Besit VNU             335                          
------------------------------------------------                                
           2,615
------------------------------------------------                                

Norway (0.5%)                                       
86,000  Christiania Bank og                                         
Kreditkasse                   310                 
19,000  Nycomed ASA, Series A          493                          
7,300  Nycomed ASA, Series B          183                         
14,700  Schibsted ASA                  249                          
------------------------------------------------                                
           1,235
------------------------------------------------                                

Peru (0.1%)                                         
4,700  Telefonica del Peru S.A.                                   
"B" ADS                        99                 
------------------------------------------------                                

Philippines (0.1%)                                  
300,000  SM Prime Holdings, Inc.         47                           
------------------------------------------------                                

Poland (0.1%)                                       
17,000  Elektrim S.A.                  163                          
13,000  Polifarb Cieszyn-Wroclaw                                    
S.A.                           53                 
4,333  Polifarb Cieszyn-Wroclaw                                   
S.A. "D" *                     18                 
------------------------------------------------                                
             234
------------------------------------------------                                

Portugal (0.5%)                                     
10,000  Banco Totta E Acores S.A.      189                          
1,200  Brisa-Auto Estradas de                                     
Portugal S.A. *                37                 
16,300  Cimentos de Portugal S.A.      413                          
12,500  Portugal Telecom S.A. ADS *    573                          
------------------------------------------------                                
           1,212
------------------------------------------------                                

Russia (0.3%)                                       
3,800  LUKoil ADR                     306                         
5,500  Mosenergo ADR *                197(a)                      
691,000  Unified Energy Systems *       156                           
------------------------------------------------                                
             659
------------------------------------------------                                

Singapore (0.2%)                                    
35,000  DBS Land Ltd.                   60                          
200,000  Kay Hian James Capel                                         
Holdings Ltd.                  88                 
53,600  Overseas Union Bank Ltd.       210                          
30,000  Singapore Land Ltd.             88                          
------------------------------------------------                                
             446
------------------------------------------------                                
South Africa (0.1%)                                 
4,600  South African                                              
Breweries Ltd.                113                 
------------------------------------------------                                

Spain (0.5%)                                        
5,700  Corporacion Bancaria                                       
de Espana S.A. *              353                 
5,200  Corporacion Mapfre, S.A.       254                         
6,000  Telefonica de Espana                                       
S.A. ADR                      519                 
------------------------------------------------                                
           1,126
------------------------------------------------                                

Sweden (0.7%)                                       
17,620  Autoliv, Inc. SDR              673                          
1,400  Munters AB *                    14                         
21,900  NK Cityfastigheter AB *        160                          
3,600  Nordbanken AB                  128                         
21,900  Swedish Match AB *              74                          
18,000  Volvo AB                       480                          
------------------------------------------------                                
           1,529
------------------------------------------------                                

Switzerland (0.8%)                                  
346  Novartis AG                    553                       
1,800  Selecta Group AG *             241                         
220  SGS Group AG                   411                       
809  Sulzer AG P.C.                 535                       
1,300  Tag Heuer                                                  
International S.A. *          126                 
24,200  Tag Heuer International                                     
S.A. ADR *                    239                 
------------------------------------------------                                
           2,105
------------------------------------------------                                

Taiwan (0.1%)                                       
205,000  China Steel Corp.              150                           
161,000  Far Eastern Department                                       
Store, Ltd.                   157                 
13,000  Microtek                                                    
International, Inc. *          15                 
------------------------------------------------                                
             322
------------------------------------------------                                

Turkey (0.1%)                                       
2,031,527  Yapi Ve Kredi                                                  
Bankasi A.S.                   63                 
------------------------------------------------                                

United Kingdom (2.4%)                               
102,000  Avis Europe plc                265                           
41,900  Billiton plc *                 103                          
20,500  British Borneo                                              
Petroleum plc                 153                 
33,000  Cadbury Schweppes plc          343                          
190,000  Cookson Group plc              658                           
97,700  Corporate Services                                          
Group plc                     342                 
11,300  DFS Furniture Co. plc          111                          
4,000  Doncasters plc ADS *           104                         
41,400  EMI Group plc                  312                          
17,000  Harvey Nichols plc              66                          
40,200  Ionica Group plc *              81                          
140,000  LucasVarity plc                449                           
119,000  Medeva plc                     402                           
36,000  National Westminster                                        
Bank plc                      546                 
31,900  Reuters Holdings plc           360                          
81,000  Safeway plc                    443                          
105,000  Tomkins plc                    534                           
85,000  WPP Group plc                  379                          
------------------------------------------------                                
           5,651
------------------------------------------------                                

Venezuela (0.1%)                                    
4,700  Compania Anonima                                           
Nacional Telefonos                                
de Venezuela ADS              186                 
------------------------------------------------                                

Other Holdings (0.1%)                               
90,000  Central European                                            
Growth Fund plc  *             91                 
------------------------------------------------                                

Total international stocks                          
(cost: $41,719)            45,389                 
------------------------------------------------                                

Small Cap Stocks (27.8%)                                
Advertising / Marketing (0.3%)                      
15,950  Lamar Advertising Co. "A" *    490                          
24,860  Obie Media Corp. *             230                          
------------------------------------------------                                
             720
------------------------------------------------                                

Aerospace/Defense (0.6%)                            
15,000  AAR Corp.                      578                          
12,500  Aviation Sales Co. *           446                          
10,000  Kellstrom Industries, Inc. *   262                          
8,800  Triumph Group, Inc. *          286                         
------------------------------------------------                                
           1,572
------------------------------------------------                                

Air Freight (0.1%)                                  
5,000  Kitty Hawk, Inc. *              88                         
------------------------------------------------                                

Asset Backed Financings (0.4%)                      
12,000  IMC Mortgage Co. *             161                          
10,000  Sirrom Capital Corp.           440                          
16,500  Southern Pacific                                            
Funding Corp. *               204                 
------------------------------------------------                                
             805
------------------------------------------------                                

Auto Parts (0.4%)                                   
20,100  Aftermarket                                                 
Technology Corp. *            412                 
11,600  Dura Automotive                                             
Systems, Inc. *               306                 
12,300  Stoneridge, Inc. *             207                          
------------------------------------------------                                
             925
------------------------------------------------                                

Banks - Major Regional (0.5%)                       
8,400  Bank of the Ozarks, Inc. *     179                         
5,000  Bank United Corp.              210                         
5,775  Columbia Banking                                           
Systems, Inc. *               156                 
10,000  First International                                         
Bancorp, Inc. *               136                 
15,000  Hamilton Bancorp, Inc. *       422                          
------------------------------------------------                                
           1,103
------------------------------------------------                                

Beverages - Alcoholic (0.3%)                        
4,700  Beringer Wine                                              
Estates Holdings *            153                 
10,000  The Robert                                                  
Mondavi Corp. *               474                 
------------------------------------------------                                
             627
------------------------------------------------                                

Biotechnology (1.0%)                                
5,600  Affymetrix, Inc. *             192                         
10,000  Arqule, Inc. *                 206                          
6,300  CN Biosciences, Inc. *         151                         
5,000  Gilead Sciences, Inc. *        173                         
10,000  Human Genome                                                
Sciences, Inc. *              410                 
5,000  IDEC Pharmaceuticals                                       
Corp. *                       175                 
5,900  Med Immune, Inc. *             226                         
10,000  Protein Design Labs, Inc. *    420                          
7,000  SangStat Medical Corp. *       244                         
------------------------------------------------                                
           2,197
------------------------------------------------                                

Broadcasting                                        
Radio & TV (0.9%)                               
7,000  Emmis Broadcasting Corp. *     315                         
9,100  Gray Communications                                        
Systems, Inc. *               233                 
2,974  Hearst - Argyle Television *    87                         
15,000  Heftel Broadcasting Corp. *  1,108                          
4,800  Univision Communications,                                  
Inc. *                        320                 
------------------------------------------------                                
           2,063
------------------------------------------------                                

Building Material Group (0.2%)                      
5,500  Barnett, Inc. *                112                         
4,300  Comfort Systems USA, Inc. *     73                         
6,000  Service Experts, Inc. *        163                         
------------------------------------------------                                
             348
------------------------------------------------                                

Chemicals - Specialty (0.2%)                        
20,300  NuCo2, Inc. *                  235                          
5,600  Zoltek Companies, Inc. *       208                         
------------------------------------------------                                
             443
------------------------------------------------                                

Communication - Equipment                           
Manufacturers (1.2%)                            
2,200  Advanced Fibre                                             
Communications, Inc. *         57                 
16,874  Brightpoint, Inc. *            271                          
20,000  Datum, Inc. *                  377                          
9,500  Harmonic Lightwaves, Inc. *    124                         
5,000  Innova Corp. *                  88                         
30,000  Macrovision Corp. *            420                          
5,100  Network General Corp. *         96                         
9,500  Ortel Corp. *                  170                         
6,000  REMEC, Inc. *                  140                         
3,400  Sawtek, Inc. *                  99                         
6,500  Spectrian Corp. *              133                         
16,600  ViaSat, Inc. *                 255                          
22,300  Yurie Systems, Inc. *          555                          
------------------------------------------------                                
           2,785
------------------------------------------------                                

Computer - Hardware (0.3%)                          
12,200  JetFax, Inc. *                  85                          
16,300  Melita International Corp. *   151                          
10,000  Sandisk Corp. *                245                          
5,200  SCM Microsystems, Inc. *       135                         
------------------------------------------------                                
             616
------------------------------------------------                                

Computer - Networking (0.1%)                        
18,500  International                                               
Network Services *            333                 
------------------------------------------------                                

Computer - Peripherals (0.1%)                       
6,900  Box Hill Systems Corp. *        81                         
10,000  Komag, Inc. *                  200                          
------------------------------------------------                                
             281
------------------------------------------------                                

Computer Software                                   
& Service (2.6%)                                
16,200  Aspect Development, Inc. *     691                          
3,482  Avant Corp. *                   83                         
13,500  Axiom, Inc. *                   81                          
15,300  Best Software, Inc. *          159                          
7,400  Broderbund Software, Inc. *    215                         
10,900  CCC Information Services                                    
Group, Inc. *                 207                 
16,300  Complete Business                                           
Solutions, Inc. *             554                 
5,000  ENVOY Corp. *                  154                         
32,500  Geotel Communications                                       
Corp. "A" *                   589                 
13,000  H. T. E., Inc. *               237                          
1,000  HNC Software, Inc. *            32                         
6,500  Intelligroup, Inc. *           120                         
23,000  International                                               
Telecommunication Data                            
Systems, Inc. *               600                 
5,700  Logility, Inc. *                79                         
14,500  Mapics, Inc. *                 161                          
1,700  New Era of Networks, Inc. *     22                         
16,400  Omega Research, Inc. *          84                          
18,800  Omtool, Ltd. *                 198                          
19,700  Pervasive Software, Inc. *     158                          
4,000  Phoenix International                                      
Ltd., Inc. *                   78                 
10,000  Pixar, Inc. *                  232                          
12,500  PLATINUM                                                    
Technology, Inc. *            325                 
11,700  QAD, Inc. *                    184                          
13,000  Rational Software Corp. *      132                          
2,000  Security Dynamics                                          
Technologies, Inc. *           68                 
5,000  Simulation Sciences, Inc. *     90                         
30,000  XcelleNet, Inc. *              377                          
------------------------------------------------                                
           5,910
------------------------------------------------                                

Containers - Paper (0.1%)                           
10,000  Ivex Packaging Corp. *         200                          
------------------------------------------------                                

Drugs (0.2%)                                        
10,000  Jones Medical                                               
Industries, Inc.              330                 
2,300  Kendle International, Inc. *    35                         
------------------------------------------------                                
             365
------------------------------------------------                                

Electrical Equipment (0.1%)                         
10,800  Advanced Lighting                                           
Technologies, Inc. *          227                 
4,500  Power-One, Inc. *               74                         
------------------------------------------------                                
             301
------------------------------------------------                                

Electronics -                                       
Instrumentation (1.0%)                          
13,100  Brooks Automation, Inc. *      278                          
12,500  CFM Technologies, Inc. *       231                          
20,000  Cymer, Inc. *                  384                          
11,500  Etec Systems, Inc. *           526                          
33,500  HMT Technology Corp. *         440                          
10,000  Photronics, Inc. *             477                          
2,400  Speedfam                                                   
International, Inc. *          62                 
6,000  Thermo Optek Corp. *           103                         
------------------------------------------------                                
           2,501
------------------------------------------------                                

Electronics -                                       
Semiconductors (0.8%)                           
5,200  3DFX Interactive, Inc. *        85                         
8,200  Applied Micro                                              
Circuits Corporation *         90                 
8,500  Benchmarq                                                  
Microelectronics, Inc. *      155                 
11,400  Faroudja, Inc. *                80                          
5,000  Lattice Semiconductors Corp. * 282                         
10,900  Pericom Semiconductor Corp. *   87                          
5,900  Qlogic Corp. *                 195                         
13,400  RF Micro Devices, Inc. *       189                          
10,000  TranSwitch Corp. *              94                          
6,000  Triquint Semiconductor,                                    
Inc. *                        120                 
4,500  Vitesse Semiconductor                                      
Corp. *                       201                 
21,000  Zoran Corp. *                  360                          
------------------------------------------------                                
           1,938
------------------------------------------------                                

Engineering &                                       
Construction (0.2%)                             
7,500  Amerilink Corp. *              188                         
9,300  Dycom Industries, Inc. *       209                         
7,600  Willbros Group, Inc. *         133                         
------------------------------------------------                                
             530
------------------------------------------------                                

Entertainment (0.1%)                                
10,000  Ballantyne of Omaha, Inc. *    184                          
7,200  TSI International                                          
Software Ltd. *                73                 
------------------------------------------------                                
             257
------------------------------------------------                                

Equipment -                                         
Semiconductors (0.5%)                           
9,200  Cerprobe Corp. *               164                         
12,700  Electroglas, Inc. *            241                          
16,000  EMCORE Corp. *                 300                          
25,000  Integrated Process                                          
Equipment Corp. *             538                 
------------------------------------------------                                
           1,243
------------------------------------------------                                

Finance - Consumer (0.5%)                           
20,000  FIRSTPLUS Financial                                         
Group, Inc. *                 762                 
10,500  NCO Group, Inc. *              398                          
------------------------------------------------                                
           1,160
------------------------------------------------                                

Finance - Diversified (0.1%)                        
12,700  Medallion Financial Corp.      273                          
------------------------------------------------                                

Foods (0.3%)                                        
15,000  Authentic Specialty                                         
Foods, Inc. *                 148                 
8,500  Suiza Foods Corp. *            495                         
------------------------------------------------                                
             643
------------------------------------------------                                

Healthcare - Diversified (0.5%)                     
19,000  PAREXEL                                                     
International Corp. *         656                 
13,800  Superior Consultant, Inc. *    412                          
------------------------------------------------                                
           1,068
------------------------------------------------                                

Healthcare - HMOs (0.1%)                            
5,000  United Dental Care, Inc. *      64                         
------------------------------------------------                                

Healthcare - Specialized                            
Services (0.5%)                                 
5,000  Advance Paradigm, Inc. *       148                         
5,000  Atria Communities, Inc. *       84                         
6,000  Medquist, Inc. *               156                         
3,000  Pediatrix Medical                                          
Group, Inc. *                 133                 
4,800  PMR Corp. *                    110                         
15,000  Renal Care Group, Inc. *       476                          
------------------------------------------------                                
           1,107
------------------------------------------------                                

Home Furnishings &                                  
Appliances (0.2%)                               
10,000  Ethan Allen Interiors Inc.     385                          
------------------------------------------------                                

Homebuilding (0.1%)                                 
5,000  Crossmann                                                  
Communities, Inc.             114                 
------------------------------------------------                                

Hospital (0.2%)                                     
18,900  National Surgery                                            
Centers, Inc. *               473                 
------------------------------------------------                                

Insurance - Multi-Line                              
Companies (0.1%)                                
8,700  Keystone Automotive                                        
Industries, Inc. *            202                 
------------------------------------------------                                

Insurance -                                         
Property/Casualty (0.4%)                        
5,000  Executive Risk, Inc.           325                         
12,000  Nationwide                                                  
Financial Services, Inc. *    410                 
3,000  Paula Financial, Inc. *         67                         
7,200  Penn-America Group, Inc.       133                         
------------------------------------------------                                
             935
------------------------------------------------                                

Internet Services (0.1%)                            
17,100  Preview Travel, Inc. *         158                          
16,600  Sportsline USA, Inc. *         131                          
------------------------------------------------                                
             289
------------------------------------------------                                

Investment                                          
Banks / Brokerage (0.1%)                        
6,000  Hambrecht &                                                
Quist Group *                 230                 
------------------------------------------------                                

Investment Companies (0.1%)                         
8,000  Affiliated Managers                                        
Group, Inc. *                 200                 
------------------------------------------------                                

Leisure Time (0.3%)                                 
15,000  Action Performance                                          
Companies, Inc. *             435                 
12,100  Penn National                                               
Gaming, Inc. *                139                 
------------------------------------------------                                
             574
------------------------------------------------                                

Lodging/Hotel (0.3%)                                
5,000  Doubletree Corp. *             220                         
15,000  Signature Resorts, Inc. *      401                          
5,000  Suburban Lodges of                                         
America, Inc. *               122                 
------------------------------------------------                                
             743
------------------------------------------------                                

Machinery - Diversified (0.1%)                      
1,800  JLK Direct                                                 
Distribution, Inc. *           51                 
4,400  RDO Equipment Co. *             77                         
------------------------------------------------                                
             128
------------------------------------------------                                

Manufacturing -                                     
Specialized (0.1%)                              
6,900  United States Filter Corp.*    216                         
------------------------------------------------                                

Medical Products                                    
& Supplies (0.5%)                               
7,000  Gulf South Medical                                         
Supply, Inc. *                228                 
6,000  Henry Schein, Inc. *           212                         
5,000  Marquette Medical                                          
Systems, Inc. *               113                 
10,000  NCS HealthCare, Inc. *         266                          
13,400  Ocular Sciences, Inc. *        338                          
800  Perclose, Inc. *                16                       
5,700  Seamed Corp. *                  95                         
4,500  Urologix, Inc. *                90                         
------------------------------------------------                                
           1,358
------------------------------------------------                                

Nursing Care (0.1%)                                 
10,000  Centennial                                                  
HealthCare Corp. *            212                 
------------------------------------------------                                

Office Equipment                                    
& Supplies (0.1%)                               
8,000  Daisytek International                                     
Corp. *                       314                 
------------------------------------------------                                

Oil & Gas - Drilling/                               
Equipment (3.4%)                                
7,000  Bayard Drilling Tech, Inc. *   129                         
3,500  Carbo Ceramics, Inc. *         116                         
10,000  Cliffs Drilling Co. *          555                          
6,000  Dril - Quip, Inc. *            180                         
12,000  Falcon Drilling Co., Inc. *    387                          
24,800  Friede Goldman                                              
International, Inc. *         738                 
14,800  Gulf Islands                                                
Fabrication Inc. *            327                 
5,900  Gulfmark Offshore, Inc. *      206                         
22,800  Halter Marine Group, Inc. *    636                          
6,600  Hanover Compressor Co. *       139                         
9,600  IRI International Corp. *      155                         
18,600  National-Oilwell, Inc. *       589                          
11,100  NS Group, Inc. *               208                          
26,800  Patterson Energy, Inc. *       985                          
4,600  Superior Energy                                            
Services, Inc. *               49                 
3,500  Transcoastal Marine                                        
Services, Inc. *               68                 
16,000  Trico Marine Services, Inc. *  445                          
13,300  UNIFAB International, Inc. *   269                          
10,000  UTI Energy Corp. *             280                          
18,000  Varco International, Inc. *    921                          
9,000  Veritas DGC, Inc. *            360                         
------------------------------------------------                                
           7,742
------------------------------------------------                                

Oil & Gas - Exploration                             
& Production (0.2%)                             
15,000  Hvide Marine, Inc. "A" *       424                          
5,000  Stone Energy Corp. *           144                         
------------------------------------------------                                
             568
------------------------------------------------                                

Railroads / Shipping (0.1%)                         
10,000  MotivePower                                                 
Industries, Inc. *            265                 
------------------------------------------------                                

Real Estate Investment                              
Trusts (0.3%)                                   
10,000  Alexandria Real Estate                                      
Equities, Inc.                311                 
1,600  LaSalle Partners, Inc. *        55                         
7,500  Prentiss Properties Trust      194                         
9,200  Vistana, Inc. *                204                         
------------------------------------------------                                
             764
------------------------------------------------                                

Restaurants (0.4%)                                  
15,000  Landry's Seafood                                            
Restaurants, Inc. *           422                 
3,500  Logan's Roadhouse, Inc. *       62                         
6,300  Papa John's                                                
International, Inc. *         210                 
12,100  PJ America, Inc. *             166                          
------------------------------------------------                                
             860
------------------------------------------------                                

Retail - Food (0.1%)                                
5,000  Dominick's                                                 
Supermarkets, Inc. *          194                 
------------------------------------------------                                

Retail - General                                    
Merchandising (0.1%)                            
7,500  Dollar Tree Stores, Inc. *     312                         
------------------------------------------------                                

Retail - Specialty (1.0%)                           
13,000  99 Cents Only Stores *         469                          
4,500  Abercrombie & Fitch Co. *      135                         
3,000  Alrenco, Inc. *                 48                         
10,000  Cost Plus World Market *       331                          
18,000  Garden Ridge Corp. *           274                          
7,000  Guitar Center, Inc. *          152                         
9,800  Hibbett Sporting                                           
Goods, Inc. *                 270                 
2,100  N2K, Inc. *                     41                         
8,700  Party City Corp. *             248                         
3,500  Petco Animal                                               
Supplies, Inc. *              103                 
10,300  Rental Service Corp. *         259                          
------------------------------------------------                                
           2,330
------------------------------------------------                                

Retail - Specialty Apparel (0.6%)                   
10,000  Coldwater Creek, Inc. *        310                          
19,200  Delia's, Inc. *                453                          
6,300  Gadzooks, Inc. *               176                         
7,000  Just For Feet, Inc. *          118                         
5,400  K&G Men's Center, Inc. *       103                         
8,000  Paul Harris Stores, Inc. *     169                         
------------------------------------------------                                
           1,329
------------------------------------------------                                

Services - Commercial                               
& Consumer (1.8%)                               
24,000  Altron, Inc. *                 378                          
11,500  Armor Holdings, Inc. *         129                          
5,000  Carriage Services, Inc. *       97                         
15,600  Checkfree Corp. *              408                          
26,300  Credit Management                                           
Solutions, Inc. *             329                 
10,000  Equity Corp. International *   214                          
14,200  F.Y.I., Inc. *                 337                          
6,000  Fine Host Corp. *              176                         
14,900  Globecomm Systems, Inc. *      190                          
5,200  Industrial Distribution                                    
Group, Inc. *                 100                 
7,700  IntelliQuest Information                                   
Group, Inc. *                 115                 
17,200  International Manufacturing                                 
Services, Inc. "A" *          174                 
9,800  International Total                                        
Services, Inc. *              152                 
7,500  Learning Tree                                              
International, Inc.           187                 
9,200  Market Facts, Inc. *           162                         
1,300  Maximus, Inc. *                 31                         
7,500  Merix Corp. *                  111                         
5,000  MSC Industrial Direct Co. *    194                         
16,600  Novacare Employee                                           
Services, Inc. *              149                 
14,400  OutSource                                                   
International, Inc. *         193                 
14,200  PRT Group, Inc. *              190                          
3,600  Staff Leasing, Inc. *           80                         
------------------------------------------------                                
           4,096
------------------------------------------------                                

Services - Computer                                 
Systems (0.2%)                                  
11,200  EFTC Corp. *                   167                          
9,400  Mastech Corp. *                275                         
------------------------------------------------                                
             442
------------------------------------------------                                

Services - Data                                     
Processing (0.2%)                               
5,400  Computer Horizons Corp. *      178                         
6,300  Network Solutions, Inc. "A" *  103                         
9,100  Pegasus Systems, Inc. *        162                         
4,500  SCB Computer                                               
Technology, Inc. *             83                 
900  Syntel, Inc. *                  10                       
------------------------------------------------                                
             536
------------------------------------------------                                

Services - Facilities &                             
Environment (0.1%)                              
6,500  Cornell Corrections, Inc. *    114                         
5,000  Wackenhut Corp. "B"             99                         
------------------------------------------------                                
             213
------------------------------------------------                                

Telecommunications -                                
Cellular/Wireless (0.2%)                        
20,500  Aerial Communications,                                      
Inc. *                        186                 
11,800  Omnipoint Corp. *              249                          
------------------------------------------------                                
             435
------------------------------------------------                                

Telecommunications -                                
Long Distance (0.6%)                            
15,000  Concentric Network Corp. *     154                          
23,000  General                                                     
Communication, Inc. *         157                 
6,200  ITC DeltaCom, Inc. *            88                         
7,000  IXC Communications, Inc. *     243                         
4,500  Pacific Gateway                                            
Exchange, Inc. *              175                 
9,900  Premiere Technologies,                                     
Inc. *                        236                 
7,000  SmartTalk TeleServices,                                    
Inc. *                        150                 
7,400  STAR Telecommunications,                                   
Inc. *                        213                 
3,400  Startec Global                                             
Communications Corp. *         54                 
10,000  Tel-Save Holdings, Inc. *      216                          
------------------------------------------------                                
           1,686
------------------------------------------------                                

Telephones (0.5%)                                   
4,500  Intermedia Communications                                  
of Florida, Inc. *            223                 
1,500  McLeod, Inc. *                  56                         
4,500  Metromedia Fiber                                           
Network, Inc.                  76                 
4,500  NEXTLINK Communications,                                   
Inc. "A" *                     91                 
8,000  Powertel, Inc. *               155                         
3,800  Teleport Communications                                    
Group, Inc. *                 186                 
9,800  Winstar Communications,                                    
Inc. *                        259                 
------------------------------------------------                                
           1,046
------------------------------------------------                                

Textiles - Apparel (0.2%)                           
5,000  Cutter & Buck, Inc. *           92                         
19,000  North Face, Inc. *             413                          
------------------------------------------------                                
             505
------------------------------------------------                                

Tobacco (0.1%)                                      
2,600  800-JR Cigar, Inc. *            72                         
------------------------------------------------                                

Truckers (0.2%)                                     
1,900  C. H. Robinson                                             
Worldwide, Inc. *              40                 
5,000  Coach USA, Inc. *              139                         
5,000  Heartland Express, Inc. *      118                         
6,000  Jevic Transportation, Inc. *    99                         
------------------------------------------------                                
             396
------------------------------------------------                                

Waste Management (0.5%)                             
12,800  American Disposal                                           
Services, Inc. *              456                 
7,500  Casella Waste                                              
Systems, Inc. *               152                 
7,100  Eastern Environmental                                      
Services, Inc. *              168                 
3,000  Superior Services, Inc. *       71                         
3,000  Waste Industries, Inc. *        60                         
12,000  Waterlink, Inc. *              225                          
------------------------------------------------                                
           1,132
------------------------------------------------                                

Total small cap stocks                              
(cost: $48,901)            63,762                 
------------------------------------------------                                

Large Cap Stocks (29.0%)                                
Airlines (0.4%)                                     
34,650  Southwest Airlines Co.         847                          
------------------------------------------------                                

Biotechnology (2.7%)                                
40,000  Amgen, Inc. *                2,045                          
20,000  Biogen, Inc. *                 700                          
30,000  Centocor, Inc. *             1,305                          
55,000  Chiron Corp. *               1,000                          
40,000  Genzyme Corp. *              1,073                          
1,200  Genzyme Tissue Repair                                      
Division Corp. *                9                 
------------------------------------------------                                
           6,132
------------------------------------------------                                

Communication - Equipment                           
Manufacturers (1.3%)                            
31,500  Motorola, Inc.               1,980                          
40,000  Pairgain                                                    
Technologies, Inc. *          945                 
------------------------------------------------                                
           2,925
------------------------------------------------                                

Computer - Hardware (0.2%)                          
8,400  Gateway 2000, Inc. *           240                         
20,000  Micron Electronics, Inc. *     222                          
------------------------------------------------                                
             462
------------------------------------------------                                

Computer - Networking (3.2%)                        
40,000  3Com Corp. *                 1,450                          
73,000  Ascend                                                      
Communications, Inc. *      1,821                 
55,000  Cabletron Systems, Inc. *    1,265                          
33,000  Cisco Systems, Inc. *        2,846                          
------------------------------------------------                                
           7,382
------------------------------------------------                                

Computer - Peripherals (1.1%)                       
35,000  Quantum Corp. *                932                          
40,000  Seagate Technology, Inc. *     907                          
35,000  Western Digital Corp. *        707                          
------------------------------------------------                                
           2,546
------------------------------------------------                                

Computer Software                                   
& Service (0.4%)                                
30,000  Intuit, Inc. *                 906                          
------------------------------------------------                                

Drugs (2.7%)                                        
15,400  Dura Pharmaceuticals, Inc. *   676                          
15,000  Ivax Corp. *                   106                          
30,000  Mylan Laboratories, Inc.       665                          
140,000  Pharmacia & Upjohn, Inc.     4,725                           
------------------------------------------------                                
           6,172
------------------------------------------------                                

Electronics -                                       
Instrumentation (0.3%)                          
17,000  KLA Instruments Corp. *        659                          
------------------------------------------------                                

Electronics -                                       
Semiconductors (2.3%)                           
70,000  Advanced Micro                                              
Devices, Inc. *             1,527                 
9,066  Analog Devices, Inc. *         284                         
10,000  Intel Corp.                    776                          
24,500  LSI Logic Corp. *              570                          
57,000  Micron Technology, Inc. *    1,418                          
16,200  Texas Instruments, Inc.        798                          
------------------------------------------------                                
           5,373
------------------------------------------------                                

Equipment -                                         
Semiconductors (1.8%)                           
42,000  Applied Materials, Inc. *    1,386                          
40,900  Lam Research Corp. *         1,252                          
21,200  Novellus Systems, Inc. *       798                          
20,200  Teradyne, Inc. *               663                          
------------------------------------------------                                
           4,099
------------------------------------------------                                

Finance - Consumer (0.6%)                           
50,000  Advanta Corp.                1,425                          
------------------------------------------------                                

Gaming Companies (0.3%)                             
27,200  International Game                                          
Technology, Inc.              680                 
------------------------------------------------                                

Healthcare - Diversified (1.3%)                     
30,000  American Home                                               
Products Corp.              2,096                 
7,100  Warner-Lambert Co.             993                         
------------------------------------------------                                
           3,089
------------------------------------------------                                

Healthcare - HMOs (0.7%)                            
20,000  Pacificare Health                                           
Systems, Inc. *             1,030                 
10,000  United HealthCare Corp.        521                          
------------------------------------------------                                
           1,551
------------------------------------------------                                

Insurance - Life/Health (0.5%)                      
15,000  Aetna, Inc.                  1,131                          
------------------------------------------------                                

Manufacturing -                                     
Diversified                                     
Industries (0.4%)                               
18,700  Hillenbrand Industries, Inc.   833                          
------------------------------------------------                                

Medical Products                                    
& Supplies (2.0%)                               
23,100  Bausch & Lomb, Inc.            915                          
36,100  Boston Scientific Corp. *    1,631                          
20,000  St. Jude Medical, Inc. *       593                          
59,000  United States                                               
Surgical Corp.              1,556                 
------------------------------------------------                                
           4,695
------------------------------------------------                                

Oil & Gas - Drilling/                               
Equipment (3.3%)                                
24,800  Baker Hughes, Inc.           1,038                          
40,000  Ensco International, Inc. *  1,430                          
38,600  Halliburton Co.              2,082                          
10,000  Tidewater, Inc.                561                          
50,000  Transocean Offshore, Inc.    2,372                          
------------------------------------------------                                
           7,483
------------------------------------------------                                

Restaurants (0.4%)                                  
20,000  Lone Star Steakhouse                                        
& Saloon, Inc. *              373                 
15,000  Outback Steakhouse, Inc. *     449                          
------------------------------------------------                                
             822
------------------------------------------------                                

Services - Data                                     
Processing (0.2%)                               
20,000  First Data Corp.               566                          
------------------------------------------------                                

Shoes (0.3%)                                        
15,000  Nike, Inc. "B"                 730                          
------------------------------------------------                                

Truckers (2.6%)                                     
33,500  Caliber System, Inc.         1,790                          
59,200  CNF Transportation, Inc.     2,575                          
21,100  Consolidated                                                
Freightways Corp. *           330                 
2,000  Roadway Express, Inc.           54                         
32,400  Ryder System, Inc.           1,177                          
------------------------------------------------                                
           5,926
------------------------------------------------                                

Total large cap stocks                              
(cost: $63,779)            66,434                 
------------------------------------------------                                

Principal                                                             
Amount                                                              
(000)                                                             
---                                                             

Bonds (19.3%)                             
$ 2,000  Capital One Financial                                        
Corporation, 7.25%,                               
12/01/03                    2,008                 
1,000  Comcast Cable                                              
Communications, Inc.,                             
8.13%, 5/01/04              1,065                 
1,000  Corporacion Andina                                         
de Fomento, Bonds                                 
(Venezuela), 7.10%,                               
2/01/03                     1,006                 
2,000  Federal National  Mortgage                                 
Association  REMIC,                               
9.00%,  11/18/24            2,152                 
1,993  Federal National Mortgage                                  
Association REMIC,                                
9.50%, 9/18/23              2,167                 
1,000  First Industrial LP,                                       
7.60%, 5/15/07              1,053                 
2,000  First Union Commercial                                     
Mortgage Trust II,                                
6.60%, 11/18/29             2,003                 
2,000  FIRSTPLUS Home Loan                                        
Owner Trust, 7.08%,                               
7/10/17                     2,045                 
$ 2,000  FIRSTPLUS Home Loan                                          
Owner Trust, 6.62%,                               
9/10/15                     1,992                 
1,000  Franchise Finance Corp.                                    
of America, Senior Notes,                         
7.00%, 11/30/00             1,015                 
2,000  Giddings & Lewis, Inc.,                                    
Notes, 7.50%, 10/01/05      2,039                 
2,048  Government National                                        
Mortgage Association,                             
6.50%, 10/20/25             2,010                 
2,390  Government National                                        
Mortgage Association,                             
7.00%, 6/20/26              2,391                 
1,935  Government National                                        
Mortgage Association,                             
7.50%, 10/20/26             1,967                 
1,000  Great Atlantic & Pacific                                   
Tea, Inc., Senior Notes,                          
7.70%, 1/15/04              1,044                 
1,000  Health Care Property                                       
Investors, Inc., Senior                           
Notes, 6.50%, 2/15/06         980                 
2,000  HUBCO, Inc.,                                               
8.20%, 9/15/06              2,148                 
1,000  Kmart Corp., Debentures,                                   
7.95%, 2/01/23                969                 
2,000  MacSaver Financial                                         
Services, Inc., Notes,                            
7.40%, 2/15/02              2,015                 
1,000  Merita Bank Ltd.,                                          
Subordinated Note                                 
(Finland), 6.50%, 1/15/06     987                 
1,000  Pulte Corp., Senior Notes,                                 
7.00%, 12/15/03             1,010                 
1,000  RJR Nabisco, Inc., Notes,                                  
8.00%, 7/15/01              1,029                 
1,000  Security Capital Pacific                                   
Trust, Notes, 7.15%,                              
10/15/03                    1,016                 
2,000  Tele-Communications, Inc.,                                 
Senior Notes, 8.25%,                              
1/15/03                     2,112                 
$ 1,000  Time Warner, Inc., Notes,                                    
7.48%, 1/15/08              1,045                 
1,000  Washington Real Estate                                     
Investment Trust, Senior                          
Notes, 7.25%, 8/13/06       1,035                 
2,000  WMX Technologies, Inc.,                                    
6.38%, 12/01/03             1,956                 
2,000  WorldCom, Inc., Senior                                     
Notes, 7.55%, 4/01/04       2,091                 
------------------------------------------------                                

Total bonds                                         
(cost: $43,323)            44,350                 
------------------------------------------------                                

Money Market Instrument (3.8%)                            
8,695  Federal Home Loan Bank,                                    
5.60%, 12/01/97                                   
(cost: $8,692)              8,692                 
------------------------------------------------                                

Total investments                                   
(cost: $206,414)        $ 228,627                 
================================================                                

---------------------                                                           
*Non-income producing.                                                          

                     Portfolio Summary by Industry
                     -----------------------------

                        U.S. Government & Agency Issue                      8.4%
                       Oil & Gas - Drilling/Equipment                      7.1
                       Drugs                                               3.8
                       Computer Software & Service                         3.7
                       Biotechnology                                       3.6
                       Banks - Major Regional                              3.5
                       Computers - Networking                              3.4
                       Electronics - Semiconductors                        3.4
                       Medical Products & Supplies                         3.0
                       Communication - Equipment Manufacturers             2.9
                       Real Estate Investment Trusts                       2.8
                       Truckers                                            2.8
                       Broadcasting Radio & TV                             2.5
                       Services - Commercial & Consumer                    2.4
                       Equipment - Semiconductors                          2.3
                       Asset Backed Financings                             2.1
                       Finance - Consumer                                  2.0
                       Healthcare - Diversified                            1.8
                       Telecommunications - Long Distance                  1.8
                       Telephones                                          1.8
                       Retail - Specialty                                  1.5
                       Auto Parts                                          1.4
                       Electronics - Instrumentation                       1.4
                       Waste Management                                    1.3
                       Computer - Peripherals                              1.2
                       Manufacturing - Specialized                         1.2
                       Home Furnishings & Appliances                       1.0
                       Retail - Food                                       1.0
                       Other                                              24.6
                                                                          ----
                                                                           99.7%
                                                                          ====

Growth Strategy Fund                                                            
Notes to Portfolio of Investments in Securities                                 

November 30, 1997                                                               
(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 for federal income tax purposes is approximately the same
as that reported in the financial statements.                                   

The percentages shown represent the percentage of the investments to net assets.

The  Large Cap Stocks  category  consists of  investments  in  common stocks  of
companies with market capitalizations of $1 billion  or  more  at  the  time  of
purchase.  Small Cap Stocks have market capitalizations of less than $1  billion
at the time of purchase.                                                        

ADS/ADR -- American Depositary Shares/Receipts are foreign shares held by a U.S.
bank which issues a receipt evidencing ownership.  Dividends  are  paid  in U.S.
dollars.                                                                        

GDS/GDR -- Global Depositary  Shares/Receipts  are  foreign  shares  held  by  a
non-U.S. bank which issues a receipt evidencing ownership. Dividends are paid in
U.S. dollars.                                                                   

Specific Notes                                                                  
(a) Security is exempt from  registration  under the  Securities Act of 1933 and
    has been determined to be liquid by the Manager. Any resale of this security
    may occur in an exempt transaction in  the  United  States  to  a  qualified
institutional  buyer  as defined by Rule 144A.                          

See accompanying notes to financial statements.                                 

Growth Strategy Fund                                                            
Statement of Operations                                                         
(In Thousands)                                                                  

Six-month period ended November 30, 1997                                        
(Unaudited)                                                                     

                                                        · Enlarge/Download Table

                                                                                          

Net investment income:                                                                    
   Income (net of foreign taxes withheld of $37):                                         
      Dividends                                                                   $   727 
      Interest                                                                      1,543 
                                                                                  ------- 
         Total income                                                               2,270 
                                                                                  ------- 
   Expenses:                                                                              
      Management fees                                                                 854 
      Transfer agent's fees                                                           285 
      Custodian's fees                                                                111 
      Postage                                                                          50 
      Shareholder reporting fees                                                       14 
      Trustees' fees                                                                    2 
      Registration fees                                                                73 
      Professional fees                                                                15 
      Other                                                                             1 
                                                                                  ------- 
         Total expenses                                                             1,405 
                                                                                  ------- 
            Net investment income                                                     865 
                                                                                  ------- 
Netrealized  and  unrealized  gain on  investments  and  foreign  currency:  Net          
   realized gain (loss) on:                                                               
      Investments                                                                   6,129 
      Foreign currency transactions                                                    (3)
   Change in net unrealized appreciation/depreciation of:                                 
      Investments                                                                     225 
      Translation of assets and liabilities in foreign currencies                     (41)
                                                                                  ------- 
            Net realized and unrealized gain                                        6,310 
                                                                                  ------- 
Increase in net assets resulting from operations                                  $ 7,175 
                                                                                  ======= 

See accompanying notes to financial statements.                                 

Growth Strategy Fund                                                            
Statements of Changes in Net Assets                                             
(In Thousands)                                                                  

Six-month period ended November 30, 1997                                        
and Year ended May 31, 1997                                                     
(Unaudited)                                                                     

                                                        · Enlarge/Download Table

                                                               11/30/97      5/31/97 
                                                               --------      ------- 
                                                                                     
From operations:                                                                     
   Net investment income                                      $     865   $    1,927 
   Net realized gain on investments                               6,129          955 
   Net realized loss on foreign currency transactions                (3)          (4)
   Change in net unrealized appreciation/depreciation of:                            
      Investments                                                   225       11,018 
      Foreign currency translations                                 (41)          (2)
                                                              ---------    --------- 
      Increase in net assets resulting from operations            7,175       13,894 
                                                              ---------    --------- 
Distributions to shareholders from:                                                  
   Net investment income                                         (1,063)      (1,215)
                                                              ---------    --------- 
   Net realized gains                                                (4)      (3,874)
                                                              ---------    --------- 
From capital share transactions:                                                     
   Proceeds from shares sold                                     45,197      138,121 
   Shares issued for dividends reinvested                         1,061        4,982 
   Cost of shares redeemed                                      (16,882)     (45,175)
                                                              ---------    --------- 
      Increase in net assets from capital share transactions     29,376       97,928 
                                                              ---------    --------- 
Net increase in net assets                                       35,484      106,733 
Net assets:                                                                          
   Beginning of period                                          193,921       87,188 
                                                              ---------    --------- 
   End of period                                              $ 229,405    $ 193,921 
                                                              =========    ========= 
Undistributed net investment income included in net assets:                          
   Beginning of period                                        $   1,057    $     338 
                                                              =========    ========= 
   End of period                                              $     856    $   1,057 
                                                              =========    ========= 
Change in shares outstanding:                                                        
   Shares sold                                                    3,155       11,224 
   Shares issued for dividends reinvested                            75          412 
   Shares redeemed                                               (1,185)      (3,679)
                                                              ---------    --------- 
      Increase in shares outstanding                              2,045        7,957 
                                                              =========    ========= 


See accompanying notes to financial statements.                                 

Growth Strategy Fund                                                            
Notes to Financial Statements                                                   

November 30, 1997                                                               
(Unaudited)                                                                     

(1)   Summary of Significant Accounting Policies                                
USAA INVESTMENT TRUST (the Trust),  registered under the Investment  Company Act
of 1940, as amended, is a diversified,  open-end  management  investment company
organized as a Massachusetts business trust consisting of eleven separate funds.
The information  presented in this semiannual report pertains only to the Growth
Strategy  Fund (the Fund).  The Fund's  investment  objective  is to seek a high
total return,  with reduced risk over time, through an asset allocation strategy
which emphasizes capital appreciation and gives secondary emphasis to income.   

A. Security  valuation -- The value of each  security is  determined  (as of the
close of  trading  on the New  York  Stock  Exchange  on each  business  day the
Exchange is open) as set forth below:                                           

1.  Portfolio  securities,  except as  otherwise  noted,  traded  primarily on a
domestic  securities  exchange  are  valued  at the  last  sales  price  on that
exchange.  Portfolio securities traded primarily on foreign securities exchanges
are generally  valued at the closing  values of such  securities on the exchange
where primarily traded. If no sale is reported, the average of the bid and asked
prices is generally used depending upon local custom or regulation.             

2.  Over-the-counter  securities  are priced at the last sales  price or, if not
available, at the average of the bid and asked prices.                          

3.  Securities  purchased  with  maturities  of 60 days or less  are  stated  at
amortized cost which approximates market value.                                 

4. Other  debt and  government  securities  are valued  each  business  day by a
pricing  service (the  Service)  approved by the Fund's  Board of Trustees.  The
Service uses the mean between quoted bid and asked prices or the last sale price
to price securities when, in the Service's  judgement,  these prices are readily
available and are  representative  of the  securities'  market values.  For many
securities,  such prices are not readily available. The Service generally prices
these  securities  based on methods  which  include  consideration  of yields or
prices  of  securities  of  comparable  quality,   coupon,  maturity  and  type,
indications  as to  values  from  dealers  in  securities,  and  general  market
conditions.                                                                     

5.  Securities  which cannot be valued by the methods set forth  above,  and all
other assets,  are valued in good faith at fair value,  using methods determined
by the Manager under the general supervision of the 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 or excise tax provision is required.  As  a  result  of  certain
permanent  differences  between  book and tax basis  accounting for  investments
in passive  foreign  investment  companies, reclassifications  were  made to the
statement of assets and  liabilities  at May 31, 1997  to  increase  accumulated
undistributed  net  investment  income and to decrease  accumulated net realized
gain on investments by $10,776.                                                 

C.  Investments in securities -- Security  transactions are accounted for on the
date the securities are purchased or sold (trade date).  Gain or loss from sales
of investment  securities  is computed on the  identified  cost basis.  Dividend
income,  less foreign taxes, if any, is recorded on the ex-dividend date. If the
ex-dividend  date has passed,  certain  dividends  from foreign  securities  are
recorded upon  notification.  Interest  income is recorded on the accrual basis.
Discounts  and  premiums  on  securities  are  amortized  over  the  life of the
respective securities.                                                          

D. Foreign  currency  translations  -- The assets of the Fund may be invested in
the securities of foreign issuers.  Since the accounting records of the Fund are
maintained in U.S.  dollars,  foreign  currency amounts are translated into U.S.
dollars on the following basis:                                                 

1. Market value of securities, other assets, and liabilities at the mean between
the bid and asked translation rates of such currencies against U.S. dollars.    

2.  Purchases  and sales of  securities,  income,  and  expenses  at the rate of
exchange obtained from an independent pricing service on the respective dates of
such transactions.                                                              

Net realized and unrealized foreign currency  gains/losses  occurring during the
holding  period  of  investments  are  a  component  of  realized  gain/loss  on
investments   and   unrealized    appreciation/depreciation    on   investments,
respectively.                                                                   

Net realized foreign currency gains/losses arise from sales of foreign currency,
currency gains/losses  realized   between  the  trade  and  settlement dates  on
security transactions, and from the  difference between  amounts  of  dividends,
interest, and foreign withholding  taxes  recorded  on  the Fund's books and the
U.S. dollar equivalent of the amounts received.  Net realized  foreign  currency
gains/losses are reclassified  from  accumulated  net  realized   gain/loss   to
accumulated undistributed  net investment  income on the statement of assets and
liabilities  as  such  amounts are  treated  as  ordinary  income/loss  for  tax
purposes.  Net unrealized  foreign  currency  exchange  gains/losses  arise from
changes in the value  of  assets  and  liabilities  other  than  investments  in
securities  resulting from changes in the exchange rate.                        

E. Use of estimates -- The  preparation  of financial  statements  in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates and assumptions  that may affect the reported amounts in the financial
statements.                                                                     

(2)   Lines of Credit                                                           
The Fund  participates  with other USAA funds in two joint short-term  revolving
loan  agreements  totaling  $850  million,  one with  USAA  Capital  Corporation
(CAPCO),  an affiliate of the Manager ($750 million  uncommitted),  and one with
NationsBank  of  Texas,  N.A.  ($100  million  committed).  The  purpose  of the
agreements is to meet  temporary or emergency cash needs,  including  redemption
requests that might  otherwise  require the untimely  disposition of securities.
Subject to availability under its agreement with CAPCO, the Fund may borrow from
CAPCO an amount up to 5% of its total assets at CAPCO's  borrowing  rate with no
markup.  Subject to availability under its agreement with NationsBank,  the Fund
may  borrow  from  NationsBank  an  amount  which,  when  added  to  outstanding
borrowings under the CAPCO agreement, does not exceed 25% of its total assets at
NationsBank's  borrowing rate plus a markup.  During the six-month  period ended
November 30, 1997, the Fund had no borrowings under either of these agreements. 

(3)   Distributions                                                             
Distributions  of  net  investment  income  and  realized  gains  from  security
transactions not offset by capital losses are made in the succeeding fiscal year
or as otherwise required to avoid the payment of federal taxes.                 

(4)   Investment Transactions                                                   
Cost of purchases and proceeds from  sales/maturities  of securities,  excluding
short-term  securities,  for the six-month  period ended  November 30, 1997 were
$73,602,535 and $52,991,596, respectively.                                      

Gross  unrealized  appreciation  and depreciation of investments at November 30,
1997 was $36,709,182 and $14,495,997, respectively.                             

(5)   Foreign Currency Contracts                                                
A forward currency contract  (currency  contract) is a commitment to purchase or
sell a foreign  currency at a specified  date, at a negotiated  price.  The Fund
currently enters into currency contracts only in connection with the purchase or
sale of a security denominated in a foreign currency.  These contracts allow the
Fund to "lock in" the U.S. dollar price of the security.  Currency contracts are
valued on a daily basis using foreign  currency  exchange rates obtained from an
independent  pricing service.  Risks of entering into currency contracts include
the potential  inability of the  counterparty  to meet the terms of the contract
and the Fund giving up the opportunity for potential profit.                    

At November  30,  1997,  the terms of open foreign  currency  contracts  were as
follows (in thousands):                                                         

                                                        · Enlarge/Download Table


                                      U.S. Dollar                        U.S. Dollar     Unrealized  
  Exchange       Currency to be       Value as of    Currency to be       Value as of   Appreciation 
    Date            Delivered          11/30/97         Received           11/30/97    (Depreciation)
    ----            ---------          --------         --------           --------     ------------ 
                                                                                                     
12/01/97       1,302 Belgian Franc      $   36       36 U.S. Dollar          $  36           $ -     
12/01/97    40,664 Indonesian Rupiah        11       11 U.S. Dollar             11             -     
12/01/97    23,229 Indonesian Rupiah         6        6 U.S. Dollar              6             -     
12/01/97     11 Netherlands Guilder          5        5 U.S. Dollar              5             -     
12/01/97         29 U.S. Dollar             29       41 Swiss Franc             29             -     
12/01/97          9 U.S. Dollar              9      46 Finnish Markka            9             -     
12/01/97         41 U.S. Dollar             41   81 Netherlands Guilder         41             -     
12/02/97    28,832 Indonesian Rupiah         8        8 U.S. Dollar              8             -     
12/03/97      7 Netherlands Guilder          4        4 U.S. Dollar              4             -     
12/03/97         49 U.S. Dollar             49    71 Australian Dollar          49             -     
12/03/97         44 U.S. Dollar             44    65 Australian Dollar          44             -     
12/03/97         64 U.S. Dollar             64      38 British Pound            65             1     
12/03/97         15 U.S. Dollar             15       21 Swiss Franc             15             -     
12/03/97         52 U.S. Dollar             52     276 Finnish Markka           52             -     
12/04/97         48 U.S. Dollar             48    70 Australian Dollar          48             -     
12/09/97         68 U.S. Dollar             68   849 Austrian Schilling         68             -     
                                         -----                                ----            --     
                                        $  489                               $ 490           $ 1     
                                         =====                                ====            ==     

(6)   Transactions with Manager                                                 
A. Management fees -- The investment  policies of the Fund and management of the
Fund's  portfolio  are carried out by USAA  Investment  Management  Company (the
Manager).  The Fund's management fees are computed at .75% of its annual average
net assets.                                                                     

B. Transfer agent's fees -- USAA Transfer Agency Company, d/b/a USAA Shareholder
Account Services, an affiliate of the Manager,  provides transfer agent services
to the Fund based on an annual  charge of $23.50 per  shareholder  account  plus
out-of-pocket expenses.                                                         

C.  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.                       

D. Brokerage services - USAA Brokerage Services, a discount brokerage service of
the Manager,  may execute  portfolio  transactions  for the Fund.  The amount of
brokerage  commissions  paid to USAA  Brokerage  Services  during the  six-month
period ended November 30, 1997 was $3,380.                                      

(7)   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.                                        

(8)   Financial Highlights                                                      
Per share operating  performance for a share outstanding  throughout each period
is as follows:                                                                  

                                                                · Download Table

                             Six-month                   Nine-month   
                           Period Ended    Year Ended   Period Ended  
                           November 30,      May 31,       May 31,    
                               1997           1997          1996 *    
                               ----           ----          ----      

                                                                      
Net asset value at                                                    
   beginning of period      $    13.10     $    12.74      $  10.00   
Net investment income              .05            .15           .11(b)
Net realized and                                                      
   unrealized gain                 .54            .77          2.66   
Distributions from net                                                
   investment income              (.07)          (.12)         (.03)  
Distributions of realized                                             
   capital gains                   -             (.44)          -     
                            ----------     ----------      --------   
Net asset value at                                                    
   end of period            $    13.62     $    13.10      $  12.74   
                            ==========     ==========      ========   
Total return (%) **               4.49           7.73         27.76   
Net assets at end                                                     
   of period (000)          $  229,405     $  193,921      $ 87,188   
Ratio of expenses to                                                  
   average net assets (%)         1.24(a)        1.31          1.66(a)
Ratio of net investment                                               
   income to average                                                  
   net assets (%)                  .76(a)        1.46          1.34(a)
Portfolio turnover (%)           24.18          62.50         40.21   
Average commission rate                                               
   paid per share +         $    .0072     $    .0197      $  .0072   


* Fund commenced operations September 1, 1995                               
 ** Assumes  reinvestment of all dividend income and capital gain  distributions
during the period.                                                      
  + Calculated by aggregating all  commissions  paid on the purchase and sale of
    securities and dividing by the actual number of shares purchased or sold for
which commissions were charged.                                         
(a) Annualized.  The  ratio  is not  necessarily  indicative  of 12  months  of 
operations.                                                             
(b) Calculated using weighted average shares.

Dates Referenced Herein   and   Documents Incorporated By Reference

This N-30D Filing   Date   Other Filings
9/1/95497
5/31/97N-30D, NSAR-B, 24F-2NT, NSAR-B/A
For The Period Ended11/30/97NSAR-A, N-30D
12/11/97
Filed On / Filed As Of1/26/98NSAR-A, N-30D
 
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