Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Managers 5
Financial Information:
Distributions to Shareholders 8
Independent Auditors' Report 9
Statement of Assets and Liabilities 10
Portfolio of Investments in Securities 11
Notes to Portfolio of Investments 20
Statement of Operations 21
Statements of Changes in Net Assets 22
Notes to Financial Statements 23
Important Information:
Through our ongoing efforts to reduce expenses and respond to
shareholder requests, your annual and semiannual report mailings are now
"streamlined." One copy of each report will be sent to each address,
instead of our previous practice of sending one report 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
Aggressive Growth 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)1995, USAA. All rights reserved.
USAA Family of Funds Performance Summary
If you own only one or two USAA funds, you may not be aware of the performance
of our other funds. This summary is a snapshot of the performance of all 29
funds by investment objective as of June 30, 1995. If you're interested in
more information, please call us at 1-800-531-1087 for a prospectus. Please
read the prospectus carefully before investing.
<TABLE>
Average Annual Total Return**
<CAPTION>
Investment Inception Since 7-Day 30-Day***
Objective Date 1 yr 5 yrs 10 yrs Inception Simple SEC
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation
Aggressive Growth 10/19/81 39.72 11.12 9.78 - - -
Emerging Markets 11/7/94 - - - (.50 ) - -
Gold 8/15/84 6.88 4.66 2.86 - - -
Growth 4/5/71 26.34 12.37 11.75 - - -
Growth & Income 6/1/93 21.19 - - 10.49 - -
International 7/11/88 4.23 7.89 - 9.33 - -
World Growth 10/1/92 7.88 - - 11.71 - -
Asset Allocation
Growth and Tax Strategy++ 1/11/89 11.09 8.59 - 8.93 - 4.06
Cornerstone Strategy++ 8/15/84 9.25 9.24 12.00 - - -
Income - Taxable
GNMA 2/1/91 11.00 - - 8.08 - 6.79
Income 3/4/74 15.07 10.00 10.04 - - 6.87
Income Stock 5/4/87 19.52 12.26 - 11.44 - -
Short-Term Bond 6/1/93 8.40 - - 4.83 - 6.77
Income - Tax Exempt
Long-Term 3/19/82 7.28 7.66 8.60 - - 5.79
Interediate-Term 3/19/82 7.60 7.71 7.82 - - 5.22
Short-Term 3/19/82 5.23 5.52 5.76 - - 4.36
California Bond* 8/1/89 8.96 7.66 - 7.23 - 5.79
Florida Tax-Free Income* 10/1/93 7.82 - - .09 - 5.71
New York Bond* 10/15/90 7.36 - - 8.65 - 5.60
Texas Tax-Free Income* 8/1/94 - - - 8.40 - 5.63
Virginia Bond* 10/15/90 8.79 - - 8.31 - 5.78
Money Market
Money Market 2/2/81 5.33 4.76 6.06 - 5.75 -
Tax Exempt Money Market 2/6/84 3.34 3.57 4.45 - 3.82 -
Treasury Money Market Trust 2/1/91 5.06 - - 4.01 5.69 -
California Money Market* 8/1/89 3.31 3.36 - 3.71 3.74 -
Florida Tax-Free Money Market* 10/1/93 3.23 - - 2.72 3.74 -
New York Money Market* 10/15/90 3.15 - - 2.98 3.69 -
Texas Tax-Free Money Market* 8/1/94 - - - 3.06 3.72 -
Virginia Money Market* 10/15/90 3.25 - - 3.18 3.61 -
* Shares of the state funds are authorized for sale only to residents of the states listed above.
** 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 dividends and capital gain distributions. The performance data quoted represents past
performance and is not an indication of future results. Investment return and principal value of an
investment will fluctuate, and an investor's shares, when redeemed, may be worth more or less than their
original cost.
An investment in any money market fund is neither insured nor guaranteed by the U.S. government and
there is no assurance that any of the funds will maintain a stable net asset value of $1 per share.
Some tax-exempt income may be subject to state or local taxes or the federal alternative minimum tax.
Foreign investing is subject to additional risks, which are discussed in the funds' prospectuses.
***Calculated as prescribed by the Securities and Exchange Commission.
++Formerly known as Balanced Portfolio Fund and Cornerstone Fund, respectively.
</TABLE>
Message from the President
" . . . I did decide to practice one
thing I have preached for many years."
Most of these messages look back at events. This one looks forward.
On January 29, 1995, my wife and I became grandparents. Karl Joseph
Marbach was born to Alexandra, my wife's daughter, and her husband
Keith Marbach. When my wife learned of the name Alexandra and Keith
had chosen, she smiled. She noted that my middle names are Joseph
Carl, and she said, "I think this kid's college education is secure."
"Secure" may be an exaggeration, but I did decide to practice one thing
I have preached for many years. I told Alexandra to get the little fellow a
social security number, and as soon as she furnished that to me (well, almost
as soon), I opened an InveStart((registered trademark)) account for Karl
Joseph. This account, in the USAA Income Stock Fund, was opened for
$100, and will have $50 per month added to it by an electronic funds
transfer from my checking account.
InveStart is a program that we have offered for many years. For now it
is available for use with the Income Stock Fund, Cornerstone Strategy
Fund and Money Market Fund.(1) That lineup will soon expand. We
originally intended it for young USAA members as a good way to start
investing. We found, however, that many grandparents were using it as I
just did.
The effect for Karl Joseph can be quite powerful. It is well documented
that the stock market, as measured by the S&P 500 stock index, has
produced a total return of 10% for the last 18 years ended July 31, 1995
(Source: Lipper Analytical Services, Inc.).(2)
(A photo of Michael J.C. Roth, President and Vice Chairman of the Board
appears here).
The chart on the next page shows the growth of an account with a $100
initial investment and $50 subsequent monthly investments for 18 years
at an 8% return - a hypothetical figure based upon and more conservative
than historical results. It is for illustrative purposes only and should
not be considered an indication of fund performance by any of the USAA
Family of Funds.
A systematic plan like this doesn't assure a profit or protect against loss
in declining markets. Since such a plan involves continuous investment in
securities regardless of fluctuating price levels of such securities, you
should consider your financial ability to continue purchases through periods
of low and high price levels.
[A graph is shown here which shows the growth of an account with a $100
initial investment and $50 subsequent monthly investments for 18 years at
an 8% return - a hypothetical figure based upon and more conservative than
historical results. The horizontal axis shows the years, and the vertical
axis shows the dollar amount. The beginning value is $100 and the ending
value is $24,209.]
In 18 years, college will cost more than it does now. This sum today would
go a long way toward an education in an in-state public university. In 18
years it will not buy as much education as it does today, but it will be
quite meaningful. If we add to the cash flow on birthdays, or if other
relatives kick in, it will be even more meaningful. And it is relatively
painless.
I promise to keep you posted on the progress of Karl Joseph's education
fund. This is not theoretical; it is real.
Sincerely,
Michael Joseph Carl Roth
President and
Vice Chairman of the Board
(1 )An investment in a money market fund is neither insured nor
guaranteed by the U.S. government, and there can be no assurance that
the fund will maintain a stable net asset value of $1 per share. Please
read the prospectus carefully before you invest or send money.
(2 )Past performance is no guarantee of future results.
Investment Review
Aggressive Growth Fund
OBJECTIVE: Appreciation of capital.
Types of investments: Common stock of companies with prospects of
rapidly growing earnings.
7/31/95
Net Assets $363.4 Million
Net Asset Value Per Share $24.49
Average Annual Total Return as of 7/31/95
1 Year 49.98%
5 Years 14.75%
10 Years 10.92%
[A graph is shown here which is a comparison of the change in value of a
$10,000 investment, for the period of 7/31/85 to 7/31/95, with dividends
and capital gains reinvested. The ending value of each item graphed is as
follows: the Russell 2000 Index - $29,752 and the USAA Aggressive Growth
Fund - $28,197.]
The Russell 2000((registered trademark)) Index is an unmanaged index
which consists of the 2,000 smallest companies in the Russell 3000
((registered trademark)) Index. Representing approximately 10%
of the Russell 3000((registered trademark)) total market capitalization, it
is a widely recognized small cap index.
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 represents past performance and is not an
indication of future results. Investment return and principal value of
an investment will fluctuate, and an investor's shares, when redeemed,
may be worth more or less than their original cost.
Message from the Managers
(Photo of Eric Efron and John Cabell, Portfolio Managers, appear here)
Investment Philosophy
When we consider investments for the USAA Aggressive Growth Fund, we are
quite sensitive to a company's ability to change. We believe that change
is an inevitable and central fact of life, especially in the business
world. In our opinion, those companies that accept and welcome change
have a far better chance of thriving than those that deny it and stand
in its way.
One only has to observe the rise to technological and market dominance
of Microsoft and Intel, which have embraced change, and the near eclipse
of IBM, which until recently has resisted it, to appreciate this point.
We believe that smaller companies are best suited to initiate and deal
with change. They tend to be more nimble, less bureaucratic, and less
fixed in their ways.
We also observe that big companies are worth more in the market place
than small ones. However, small companies that grow rapidly to become
big ones tend to see their stock prices appreciate more rapidly. It is
our goal to pursue superior returns by investing extensively in these
rapid growth opportunities.
Fund Performance
This is our first "Message from the Managers" since we assumed
management of the Fund on March 1, 1995. The Fund enjoyed very strong
performance during the six months ended July 31, 1995, and we are very
enthusiastic about the future. Total return for this six-month period
was 36.89% versus 22.55% for the Russell 2000 - an unmanaged index
consisting of the 2,000 smallest companies in the Russell 3000 Index. It
is a widely-recognized small cap index.
While the environment was favorable for equity investments in general
during this period, it was particularly good for technology stocks and
initial public offerings (IPOs). Because the Fund participates actively
in both these areas, it was able to reap significant benefits.
Outlook
We have intensified our focus on smaller, rapidly growing companies that
are likely to initiate, and/or benefit from, profound changes in our
political, economic, and social environments over a prolonged period of
time. Looking forward, we see several significant trends unfolding.
These trends will continue to develop independently of economic cycles.
1) Deregulation of the telecommunications industry is likely to unleash a
wave of increased competition, new services, infrastructure spending,
and acquisitions.
2) Networks of inexpensive, easy-to-use personal computers will continue
to supplant mainframes and other proprietary hardware in both
commercial and industrial settings. Moreover, the personal computer
will continue to become an essential consumer appliance in addition to
its traditional role as a business tool.
3) The business world is becoming increasingly competitive. In order to
survive, companies will have to become more productive and efficient.
They will have to employ new structures, disciplines, and technologies
in order to implement these necessary changes. In addition, companies
will continue to consolidate through acquisitions in order to expand
market share and gain efficiencies of scale.
4) Lifestyles will continue to change. People will continue to demand
higher-quality, easier-to-use products and services to accommodate
their increasingly hectic and complicated lives. The population will
age, and crime will continue to be an intrusive issue.
To capitalize on these opportunities, the Fund has emphasized
investments in healthcare, computer software, telecommunications,
specialty retailers, consumer finance, and broadcasters. Outside of
these clusters, we have diversified our investments over a broad range
of industries.
In light of the fact that stocks in general, and the Fund in particular,
have appreciated significantly in recent months, it is important to
remember that equity markets can be very volatile. Recently, that
volatility has been working in favor of the investor. But
one only has to look at a chart to realize that stock prices, even for
the most successful companies, do not move up in a straight line
forever. Stocks can move down at any time for a good reason, or for no
apparent reason. The Fund, in all likelihood, would not be immune to a
correction in stock market prices.
We believe that each company in which the Fund has invested has the
potential to become a significantly larger entity over the next three to
five years. We are optimistic about this growth potential as we continue
to pursue the Fund's objective of capital appreciation in the
environment of changes that lie ahead.
Top 10 Equity Holdings
(% of Net Assets)
Charles Schwab 1.9
Amgen 1.9
St. John Knits 1.8
HBO 1.5
St. Jude Medical 1.5
Express Scripts "A" 1.4
Papa John's International 1.4
Just For Feet 1.4
Genzyme Corp. 1.4
Tommy Hilfiger 1.3
Percentages of the net assets in the portfolio of the investments
referenced in the Message from the Managers are as follows:
healthcare-related 23.4% (includes biotechnology, drugs, healthcare-HMO,
healthcare-diversified, healthcare-misc, hospitals, medical products &
supplies, and nursing care); computer software 15.2%; telecommunications
14.2% (includes communications-equipment mfg, telephones, and
telecommunications); retailers-specialty 9.9%; finance-consumer 1.6%,
and broadcasters 3.3%.
See page 11 for a complete listing of the Portfolio of Investments in
Securities.
Distributions to Shareholders
USAA Aggressive Growth Fund completed its fiscal year on July 31, 1995.
As required by Federal Law (Internal Revenue Code of 1986, as amended,
and the Regulations thereunder), the following sets forth per share data
concerning the portions of the dividend distributions which represent
short-term and long-term capital gains for the year ended July 31, 1995.
The per share data on this schedule reflects distributions related to
earnings for the fiscal year ended July 31, 1995, including any
distributions subsequent to year end which relate to those earnings and
any undistributed earnings from the previous fiscal year. Therefore, the
per share data on this table may not agree with other disclosures
concerning distributions which occurred during the fiscal year.
Short-term capital gain -
(treated as ordinary income) $ .7952
Long-term capital gain .6536
----------
TOTAL DISTRIBUTIONS $ 1.4488
==========
Independent Auditors' Report
The Shareholders and Board of Directors
USAA Mutual Fund, Inc.:
We have audited the accompanying statement of assets and liabilities and
portfolio of investments in securities of the Aggressive Growth Fund of
USAA Mutual Fund, Inc. as of July 31, 1995, the related statement of
operations for the year ended July 31, 1995, the statements of changes in
net assets for the year ended July 31, 1995 and the ten-month period ended
July 31, 1994, and the financial highlights information presented in note 7
to the financial statements for each of the periods in the five-year
period ended July 31, 1995. These financial statements and the financial
highlights information are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
and the financial highlights information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
the financial highlights information are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of July 31, 1995, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the financial highlights
information referred to above present fairly, in all material respects,
the financial position of the Aggressive Growth Fund of USAA Mutual
Fund, Inc. as of July 31, 1995, the results of its operations for the
year ended July 31, 1995, the changes in its net assets for the year
ended July 31, 1995 and the ten-month period ended July 31, 1994, and
the financial highlights information for each of the periods in the
five-year period ended July 31, 1995, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
San Antonio, Texas
September 5, 1995
Aggressive Growth Fund
Statement of Assets and Liabilities
(In Thousands)
July 31, 1995
Assets
Investments in securities, at market value
(identified cost of $260,820) $ 369,855
Cash 467
Receivables:
Capital shares sold 469
Dividends 23
Securities sold 2,054
---------
Total assets 372,868
---------
Liabilities
Securities purchased 7,139
Capital shares redeemed 2,034
USAA Investment Management Company 132
USAA Transfer Agency Company 65
Accounts payable and accrued expenses 108
---------
Total liabilities 9,478
---------
Net assets applicable to capital shares outstanding $ 363,390
=========
Represented by:
Paid-in capital $ 241,709
Accumulated net investment loss (5)
Accumulated net realized gain on investments 12,651
Net unrealized appreciation of investments 109,035
---------
Net assets applicable to capital shares outstanding $ 363,390
=========
Capital shares outstanding 14,840
=========
Net asset value, redemption price, and offering price per share $ 24.49
=========
See accompanying notes to financial statements.
Aggressive Growth Fund
Portfolio of Investments in Securities
July 31, 1995
Market
Number Value
of Shares Security (000)
--------- -------- ------
Common Stocks (96.2%)
Air Freight (0.8%)
50,000 Fritz Companies, Inc.* $ 3,012
---------
Airlines (1.3%)
150,000 Valujet Airlines, Inc.* 4,631
---------
Auto Parts (1.1%)
40,000 Autoliv AB 2,477
75,000 Special Devices, Inc.* 1,631
---------
4,108
---------
Biotechnology (4.4%)
80,000 Amgen, Inc.* 6,810
150,000 Centocor, Inc.* 1,913
100,000 Genzyme Corp.* 4,925
127,500 Techne Corp.* 2,223
---------
15,871
---------
Broadcasters (3.3%)
40,000 American Radio Systems Corp.* 930
156,000 Century Communications Corp. "A"* 1,384
40,000 Clear Channel Communications, Inc.* 2,675
100,000 EchoStar Communications Corp.* 1,525
100,000 Evergreen Media Corp.* 3,300
45,000 Sinclair Broadcast Group, Inc.* 1,373
30,700 Young Broadcasting, Inc.* 852
---------
12,039
---------
Brokerage Firms (1.9%)
150,000 Charles Schwab Corp. 6,919
---------
Communication - Equipment Manufacturers (10.3%)
33,900 Act Networks, Inc.* 559
50,000 ANTEC Corp.* 931
75,000 Applied Digital Access, Inc.* 1,275
40,000 Ascend Communications, Inc.* 2,900
50,000 BroadBand Technologies, Inc.* 1,275
90,000 Cidco, Inc.* 3,015
30,000 Cisco Systems, Inc.* 1,669
40,000 DSC Communications Corp.* 2,150
65,000 Glenayre Technologies, Inc.* 4,062
90,000 Global Village Communication, Inc.* 1,440
90,000 Harmonic Lightwaves, Inc.* 1,598
72,100 Microcom, Inc.* 1,492
90,000 P-Com, Inc.* 2,362
100,000 Plaintree Systems, Inc.* 638
13,200 Premisys Communications, Inc.* 1,069
50,000 QualComm, Inc.* 2,138
30,000 Shiva Corp.* 1,451
40,000 Spectrian Corp.* 1,750
50,000 Stratacom, Inc.* 2,712
50,000 Tellabs, Inc.* 2,225
16,700 VideoServer, Inc.* 754
--------
37,465
--------
Computer Software & Service (15.2%)
40,000 Affiliated Computer Services, Inc.* 1,200
110,000 Alternative Resources Corp.* 3,300
70,000 America Online, Inc.* 3,859
10,100 ArcSys, Inc.* 492
16,800 Astea International Inc.* 357
11,900 CBT Group ADR* 539
170,000 Cheyenne Software, Inc.* 3,166
20,500 Datalogix International, Inc.* 515
30,000 Davidson & Associates, Inc.* 1,590
41,800 Dendrite International, Inc.* 679
10,000 Eagle Point Software Corp.* 208
40,000 Electronic Arts, Inc.* 1,445
59,000 Expert Software, Inc.* 915
50,000 Firefox Communications Inc.* 1,088
50,000 FTP Software, Inc.* 1,450
10,700 HNC Software, Inc.* 259
12,800 Inference Corp.* 189
40,000 Intuit Inc.* 3,450
20,000 Learning Company* 780
16,900 Maxis, Inc.* 585
80,000 McAfee Associates, Inc.* 3,040
75,000 MySoftware Company* 956
90,000 Netcom On-line Communication Services, Inc.* 3,308
100,000 NetManage, Inc.* 1,913
17,200 Novadigm, Inc.* 357
115,000 Open Environment Corp.* 2,041
50,000 PeopleSoft, Inc.* 3,575
20,000 Project Software & Development, Inc.* 535
100,000 Rational Software Corp.* 1,675
17,000 Seer Technologies, Inc.* 357
60,000 Sierra On-Line, Inc.* 2,190
50,000 Spectrum HoloByte, Inc.* 884
15,700 Spyglass, Inc.* 699
13,400 Tivoli Systems, Inc.* 593
110,000 Transaction Network Services, Inc.* 2,365
40,000 Transaction Systems Architects, Inc.* 1,100
25,000 Unison Software, Inc.* 375
90,000 Wonderware Corp.* 3,397
--------
55,426
--------
Computer Systems (1.2%)
26,700 IMNET Systems, Inc.* 481
50,000 Sanmina Corp.* 2,400
6,000 Smartflex Systems, Inc.* 72
30,000 StorMedia, Inc.* 1,342
--------
4,295
--------
Drugs (0.8%)
60,000 Mylan Laboratories, Inc. 1,808
25,000 Teva Pharmaceutical Industrial Ltd. 992
--------
2,800
--------
Electronics - Instrumentation (2.1%)
38,300 3D Systems Corp.* 752
21,000 AG Associates, Inc.* 773
32,600 Align-Rite International, Inc.* 554
55,000 Asyst Technologies, Inc.* 2,530
15,800 Integrated Measurement Systems, Inc.* 229
40,000 Integrated Silicon Systems, Inc.* 1,770
26,000 National Instruments Corp.* 520
50,000 PixTech, Inc.* 381
--------
7,509
--------
Electronics - Semi-Conductors (3.7%)
60,000 Anadigics, Inc.* 1,680
35,000 Integrated Silicon Solution, Inc.* 2,415
53,100 MEMC Electronic Materials, Inc.* 1,600
40,000 Microchip Technology, Inc.* 1,540
31,100 Oak Technology, Inc. 1,438
12,000 Paradigm Technology, Inc.* 360
20,700 SDL, Inc.* 714
13,400 Telecom Semiconductor, Inc.* 204
75,000 TranSwitch Corp.* 862
90,000 VLSI Technology, Inc.* 2,666
--------
13,479
--------
Entertainment (1.0%)
30,000 Hollywood Entertainment Corp.* 840
23,000 Movie Gallery, Inc.* 880
60,000 Regal Cinemas, Inc.* 1,957
--------
3,677
--------
Finance - Consumer (1.6%)
50,000 Aames Financial Corp. 1,050
63,000 First USA, Inc. 2,874
30,000 General Acceptance Corp.* 885
7,000 Jayhawk Acceptance Corp.* 70
50,000 Mercury Finance Co. 988
--------
5,867
--------
Finance - Real Estate (0.9%)
70,000 PMI Group, Inc. 3,255
--------
Foods (0.6%)
110,000 Odwalla, Inc.* 2,118
--------
Healthcare - Diversified (0.6%)
50,000 PhyCor, Inc.* 2,050
--------
Healthcare - HMO (0.5%)
50,000 APPS Dental, Inc.* 1,038
40,000 RTW, Inc.* 755
--------
1,793
--------
Healthcare - Miscellaneous (9.5%)
50,000 Cerner Corp.* 3,081
65,000 CRA Managed Care, Inc.* 1,479
120,000 Express Scripts, Inc. "A"* 5,220
107,500 GMIS, Inc.* 1,613
100,000 HBO & Co. 5,525
150,000 HCIA, Inc.* 4,462
90,000 Medic Computer Systems, Inc.* 4,005
50,000 Orthodontic Centers of America, Inc.* 1,463
50,000 Pet Practice, Inc.* 750
100,000 Phamis, Inc.* 2,925
50,000 Physician Reliance Network, Inc.* 1,175
30,000 Physicians Resource Group, Inc.* 401
90,000 Renal Treatment Centers, Inc.* 2,317
--------
34,416
--------
Hospitals (1.2%)
64,800 Community Health Systems, Inc.* 2,543
100,000 HEALTHSOUTH Rehabilitation Corp.* 1,925
--------
4,468
--------
Hotel/Motel (1.0%)
30,000 Doubletree Corp.* 682
30,000 Felcor Suite Hotels, Inc. 806
55,000 Red Lion Hotels, Inc.* 1,169
50,000 Studio Plus Hotels, Inc.* 975
--------
3,632
--------
Insurance - Property/Casualty (0.4%)
50,000 HCC Insurance Holdings, Inc.* 1,375
--------
Leisure Time (0.4%)
60,000 West Marine, Inc.* 1,620
--------
Manufacturing - Diversified Industries (0.4%)
70,000 United States Filter Corp.* 1,488
--------
Medical Products & Supplies (6.1%)
55,000 AmeriSource Health Corp.* 1,224
100,000 Apria Healthcare Group, Inc.* 3,250
40,000 Arrow International, Inc. 1,640
25,000 Exogen, Inc.* 275
130,000 Gulf South Medical Supply* 4,127
41,800 InStent, Inc.* 554
100,000 MiniMed, Inc.* 1,125
70,000 Omnicare, Inc. 2,170
15,000 Rotech Medical Corp.* 439
50,000 Serologicals Corp.* 656
40,000 Spine-Tech, Inc.* 480
100,000 St. Jude Medical, Inc. 5,475
100,000 VidaMed, Inc.* 588
--------
22,003
--------
Nursing Care (0.3%)
62,000 Pediatric Services of America, Inc.* 1,132
--------
Office Equipment & Supplies (0.6%)
90,000 Corporate Express, Inc.* 2,284
--------
Oil - Exploration & Production (0.1%)
51,000 Swift Energy Co.* 446
--------
Oil & Gas Drilling (0.6%)
50,000 Falcon Drilling Co., Inc.* 500
50,000 Sonat Offshore Drilling, Inc. 1,675
--------
2,175
--------
Railroads (0.2%)
25,000 Railtex, Inc.* 725
--------
Restaurants (2.7%)
20,000 Applebee's International, Inc. 565
34,200 Logans Roadhouse, Inc.* 607
55,000 Lone Star Steakhouse & Saloon, Inc.* 2,152
125,000 Papa John's International, Inc.* 5,187
50,000 Rock Bottom Restaurants, Inc.* 1,288
--------
9,799
--------
Retail Stores - Specialty (9.9%)
50,000 Baby Superstore, Inc.* 2,387
100,000 Barnes & Noble, Inc.* 3,675
40,300 Borders Group, Inc.* 766
100,000 Creative Computers, Inc.* 2,825
100,000 Fastenal Co. 3,350
60,000 Garden Ridge Corp.* 1,815
60,500 Global DirectMail Corp.* 1,513
100,000 Gymboree Corp.* 3,087
172,500 Just For Feet, Inc.* 5,175
100,000 Nine West Group, Inc.* 4,050
105,000 OfficeMax, Inc.* 2,363
120,000 PETSMART, Inc.* 3,450
40,000 U.S. Office Products Co.* 615
50,000 Williams-Sonoma, Inc.* 1,050
--------
36,121
--------
Shoes (0.3%)
35,000 Kenneth Cole Productions, Inc.* 1,190
--------
Specialized Services (2.6%)
100,000 ACT Manufacturing, Inc.* 1,612
75,000 Business Resource Group* 666
75,000 Computer Learning Centers, Inc.* 638
135,000 Performance Systems International, Inc.* 2,767
50,000 SITEL Corp.* 1,037
100,000 Telescan, Inc.* 775
40,000 US Order, Inc.* 880
23,900 UUNET Technologies, Inc.* 1,013
--------
9,388
--------
Telecommunications (1.3%)
85,000 Equalnet Holding Corp.* 1,424
48,500 HighwayMaster Communications, Inc.* 612
84,300 MIDCOM Communications, Inc.* 1,349
52,200 MobileMedia Corp.* 1,318
--------
4,703
--------
Telephones (2.6%)
90,000 Paging Network, Inc.* 3,555
90,000 ProNet, Inc.* 2,486
100,000 Tele-Matic Corp.* 1,250
110,000 Wholesale Cellular USA, Inc.* 2,296
--------
9,587
--------
Textiles - Apparel Manufacturers (3.2%)
15,000 Fossil, Inc.* 383
133,500 St. John Knits, Inc. 6,391
150,000 Tommy Hilfiger Corp.* 4,744
--------
11,518
--------
Truckers (0.2%)
43,000 Knight Transportation, Inc.* 650
--------
Miscellaneous (1.3%)
40,000 Loewen Group, Inc. 1,415
100,000 Stewart Enterprises, Inc. 3,262
--------
4,677
--------
Total common stocks (cost: $240,676) 349,711
--------
Short-Term (5.6%)
Principal
Amount Coupon
(000) Rate Maturity
Commercial Paper
$ 5,915 Ford Motor Credit Co. 5.77% 8/02/95 5,914
7,032 General Motors Acceptance Corp. 5.70 8/01/95 7,032
5,914 Prudential Funding Corp. 5.68 8/03/95 5,912
1,286 Sears, Roebuck Acceptance Corp. 5.73 8/01/95 1,286
--------
Total short-term (cost: $20,144) 20,144
--------
Total investments (cost: $260,820) $369,855
========
-------------------
*Non-income producing.
Aggressive Growth Fund
Notes to Portfolio of Investments
July 31, 1995
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.
See accompanying notes to financial statements.
Aggressive Growth Fund
Statement of Operations
(In Thousands)
Year ended July 31, 1995
Net investment income:
Income:
Dividends $ 581
Interest 1,075
--------
Total income 1,656
--------
Expenses:
Management fees 1,344
Transfer agent's fees 731
Custodian's fees 135
Postage 102
Shareholder reporting fees 41
Directors' fees 3
Registration fees 38
Audit fees 30
Legal fees 5
Other 27
--------
Total expenses 2,456
--------
Net investment loss (800)
--------
Net realized and unrealized gain on investments:
Net realized gain on:
Investments 21,824
Capital gain distributions of closed-end funds 509
Change in net unrealized appreciation/depreciation of investments 101,239
--------
Net realized and unrealized gain 123,572
--------
Increase in net assets resulting from operations $122,772
========
See accompanying notes to financial statements.
Aggressive Growth Fund
Statements of Changes in Net Assets
(In Thousands)
Year ended July 31, 1995
and Ten-month period ended July 31, 1994
1995 1994
From operations:
Net investment loss $ (800) $ (230)
Net realized gain on investments 21,824 13,447
Net realized gain on capital gain distributions
of closed-end funds 509 -
Change in net unrealized appreciation/depreciation
of investments 101,239 (32,308)
Increase (decrease) in net assets resulting
from operations 122,772 (19,091)
Distributions to shareholders from:
Net investment income - (277)
Net realized gains (22,048) (16,824)
From capital share transactions:
Shares sold 85,382 71,436
Shares issued for dividends reinvested 21,904 16,908
Shares redeemed (93,573) (80,397)
Increase in net assets from capital
share transactions 13,713 7,947
Net increase (decrease) in net assets 114,437 (28,245)
Net assets:
Beginning of period 248,953 277,198
End of period $ 363,390 $ 248,953
Undistributed net investment income (loss)
included in net assets:
Beginning of period $ (5) $ 257
End of period $ (5) $ (5)
Change in shares outstanding:
Shares sold 4,378 3,663
Shares issued for dividends reinvested 1,197 877
Shares redeemed (4,766) (4,100)
Increase in shares outstanding 809 440
Authorized shares of $.01 par value 25,000 25,000
See accompanying notes to financial statements.
Aggressive Growth Fund
Notes to Financial Statements
(In Thousands)
July 31, 1995
(1) Summary of Significant Accounting Policies
USAA MUTUAL FUND, INC. (the Company), registered under the Investment
Company Act of 1940, is a diversified, open-end management investment
company incorporated under the laws of Maryland consisting of seven separate
funds. The information presented in this annual report pertains only to
the Aggressive Growth Fund (the Fund).
On November 8, 1993, the Board of Directors of the Company voted to
change the Fund's fiscal year end from September 30 to July 31. The financial
information for the ten-month period ended July 31, 1994 reflects this change.
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 latest bid
price 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. 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
Directors.
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,
reclassifications have been made on the statement of assets and liabilities
to decrease accumulated net investment loss and accumulated net realized gain
on investments by $800.
C. Investments in securities - As is common in the industry, 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 short-term securities are amortized over the
life of the respective securities.
(2) Line of Credit
The Fund participates with other USAA funds in a joint $150 million
short-term revolving loan agreement (the Agreement) through January 15,
1996, for temporary or emergency purposes, including the meeting of
redemption requests that might otherwise require the untimely
disposition of securities. Subject to availability under this Agreement,
the Fund may borrow up to 5% of the market value of its assets or 10% of
the Fund's assets taken at cost at the time of the borrowing, whichever
amount is less. Borrowings under this Agreement will bear interest at
.125% over the Federal Funds Rate as published by the Federal Reserve
Bank of New York or at .125% over the London Interbank Offered Rate. The
Fund had no borrowings under this Agreement during the year ended July
31, 1995.
(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. Distributions of a short-term capital gain of $.7952 per share and a
long-term capital gain of $.0436 per share, declared and paid in September
1995, are not reflected in the accompanying financial statements.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities, for
the year ended July 31, 1995 were $374,282 and $373,398, respectively.
Gross unrealized appreciation and depreciation of investments as of July
31, 1995 was $112,665 and $3,630, respectively.
(5) Transactions with Manager
A. Management fees - The investment policy of the Fund and the
management of the Fund's portfolio is carried out by USAA Investment
Management Company (the Manager). The Fund's management fees are computed
as a percentage of its annual average net assets, which on an annual
basis is equal to .50% of the first $200,000, .40% of that portion over
$200,000 but not over $300,000, and .33% of the portion over $300,000.
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. Shareholder accounting service fees
are based on an annual charge per shareholder account plus out-of-pocket
expenses.
C. Underwriting agreement - The Company has an agreement with the
Manager for exclusive underwriting and distribution of the Fund's shares
on a continuing best efforts basis. This agreement provides that the
Manager will receive no fee or other remuneration for such services.
(6) Transactions with Affiliates
USAA Investment Management Company is wholly owned by United Services
Automobile Association (the Association), a large diversified financial
services institution. At July 31, 1995, the Association and its
affiliates owned 2,131 shares (14.4%) of the Fund.
(7) Financial Highlights
Per share operating performance for a share outstanding throughout each
period is as follows:
<TABLE>
<CAPTION>
Ten-Month
Year Ended Period Ended
July 31, July 31, Year Ended September 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 17.74 $ 20.40 $ 18.85 $ 20.60 $ 12.34
Net investment income (loss) (.05)(b) (.02)(b) .02 (.01)(b) .03
Net realized and
unrealized gain (loss) 8.35 (1.37) 3.67 (1.73) 8.33
Distributions from net
investment income _ (.02) _ (.01) (.10)
Distributions of realized
capital gains (1.55) (1.25) (2.14) _ _
Net asset value at
end of period $ 24.49 $ 17.74 $ 20.40 $ 18.85 $ 20.60
Total return (%) * 49.98 (7.31) 21.32 (8.45) 68.22
Net assets at
end of period (000) $ 363,390 $248,953 $ 277,198 $234,967 $208,084
Ratio of expenses to
average net assets (%) .86 .83(a) .86 .82 .87
Ratio of net investment
income (loss) to
average net assets (%) (.28) (.10)(a) .10 (.05) .17
Portfolio turnover (%) 138.32 98.99 113.01 74.08 50.12
-------------------
(a) Annualized. The ratio is not necessarily indicative of 12 months
of operations.
(b) Calculated using weighted average shares.
* Assumes reinvestment of all dividend income and capital gain
distributions during the period.
</TABLE>
