Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Message from the Managers 5
Shareholder Voting Results 8
Financial Information:
Statement of Assets and Liabilities 10
Portfolio of Investments in Securities 11
Notes to Portfolio of Investments in Securities 25
Statement of Operations 26
Statements of Changes in Net Assets 27
Notes to Financial Statements 28
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)1996, USAA. All rights reserved.
<TABLE>
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 32 funds by investment objective as of December 31,
1995. 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.
Average Annual Total Return*
<CAPTION> Yield
Investment Inception Since 7-Day 30-Day(1)
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 50.42 20.44 12.02 - - -
Emerging Markets(2) 11/7/94 3.65 - - (4.26) - -
Gold(2) 8/15/84 4.04 5.60 5.46 - - -
Growth 4/5/71 32.06 15.56 12.47 - - -
Growth & Income 6/1/93 31.57 - - 13.74 - -
International(2) 7/11/88 8.29 11.98 - 9.51 - -
World Growth(2) 10/1/92 12.85 - - 12.06 - -
Asset Allocation
Balanced Strategy 9/1/95 - - - 3.24 - -
Cornerstone Strategy(2)# 8/15/84 18.40 12.37 12.68 - - -
Growth and Tax Strategy(3)**# 1/11/89 22.70 10.33 - 9.81 - 3.61
Growth Strategy(2) 9/1/95 - - - 6.50 - -
Income Strategy 9/1/95 - - - 9.94 - 4.47
Income - Taxable
GNMA 2/1/91 16.76 - - 8.64 - 6.64
Income 3/4/74 24.47 10.91 10.43 - - 6.25
Income Stock 5/4/87 28.62 14.35 - 12.12 - -
Short-Term Bond 6/1/93 11.18 - - 5.33 - 6.43
Income - Tax Exempt
Long-Term(3)** 3/19/82 18.58 8.44 8.62 - - 5.40
Intermediate-Term(3)** 3/19/82 15.07 8.22 7.95 - - 4.93
Short-Term(3)** 3/19/82 8.11 5.59 5.87 - - 4.36
California Bond(3)** 8/1/89 21.85 8.39 - 8.01 - 5.23
Florida Tax-Free Income(3)** 10/1/93 18.90 - - 3.39 - 5.35
New York Bond(3)** 10/15/90 18.07 8.60 - 9.25 - 5.31
Texas Tax-Free Income(3)** 8/1/94 22.22 - - 12.43 - 5.18
Virginia Bond(3)** 10/15/90 17.08 8.42 - 8.79 - 5.22
Money Market
Money Market(4) 2/2/81 5.80 4.54 5.97 - 5.48 -
Tax Exempt Money Market(3),(4)** 2/6/84 3.70 3.32 4.36 - 4.33 -
Treasury Money Market Trust(4) 2/1/91 5.59 - - 4.17 5.26 -
California Money Market(3),(4)** 8/1/89 3.64 3.15 - 3.70 4.14 -
Florida Tax-Free Money
Market(3),(4)** 10/1/93 3.57 - - 2.90 4.28 -
New York Money Market(3),(4)** 10/15/90 3.59 2.98 - 3.04 4.27 -
Texas Tax-Free Money Market(3),(4)** 8/1/94 3.56 - - 3.36 4.08 -
Virginia Money Market(3),(4)** 10/15/90 3.52 3.13 - 3.21 4.07 -
(1) Calculated as prescribed by the Securities and Exchange Commission.
(2) Foreign investing is subject to additional risks, which are discussed
in the funds' prospectuses.
(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.
* 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.
** 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, New York, Virginia,
Florida, and Texas funds available to residents only.
# Formerly known as Cornerstone Fund and Balanced Portfolio Fund,
respectively.
</TABLE>
Message from the President
[A photo of Michael J.C. Roth, President appears here]
We regularly get letters and phone calls from our customers commenting
on the things we do and the services we provide. We value all of these
communications, whatever their tone. They let us know what we have done
wrong and what we have done right.
There have been two events in the past couple of years that generated
lots of letters. When I say "lots," I really mean dozens, which is small
in relation to our base of over 450,000 shareholders. But, those dozens are
meaningful to us as a signal that a chord has been struck, and we pay
attention. The first event was the changes we made to our statements,
consolidating information on multiple fund accounts into a single mailing.
Some of you were uncomfortable with the fact that each fund's activity was
no longer on an individual piece of paper in the statement. We hope that by
now all of you have noted that the annual statement we sent you in January for
the previous year does have separate pages that record all of the transactions
for each fund owned. These records can easily be filed by fund.
This time last year when we held some meetings with shareholders in ten cities
around the country, we addressed the statement ourselves just to get your
feedback. At every meeting there was invariably one person who stood up and
said, "I like the new statement." However, there will be some format changes
to our statements beginning in April, which I hope all of you will enjoy.
The second event occurred recently. In rushing to meet a deadline, we
managed to send out a piece that incorrectly described dollar-cost
averaging. In a way, it was good to know how many of you read our pieces
carefully because we sure did hear from several of you. It was terribly
embarrassing for us, but not altogether bad because we learned from it.
These events are part of a relationship with you that we enjoy. We enjoy
it, in large part, because you do not write or call only when something
is amiss. You also let us know when we have done well and helped you.
For many years, we have preserved your letters which compliment one of our
people, and present that letter to the person you have noted. We call this a
"Laurel," and it has been one of the most successful means of recognition for
individuals we have ever seen.
We look forward to hearing from you. It helps us serve you better.
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
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 1/31/96
Net Assets $363.4 Million $451.2 Million
Net Asset Value Per Share $24.49 $25.87
Average Annual Total Returns as of 1/31/96
July 31, 1995 to January 31, 1996 12.42%*
1 Year 53.90%
5 Years 17.40%
10 Years 11.62%
* Total returns for periods of less than one year are not annualized.
This six-month return is cumulative.
[A graph is shown here which is a comparison of the change in value of a
$10,000 investment, for the period of 1/31/86 to 1/31/96, with dividends
and capital gains reinvested. The ending value of each item graphed is as
follows: the Russell 2000 Index - $28,757 and the USAA Aggressive Growth
Fund - $30,024.]
The Russell 2000 (registered trademark) Index is an unmanaged index which
consists of the 2,000 smallest companies within 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
[A photo of Eric Efron and John Cabell, Portfolio Managers Appears here]
Eric Efron and John Cabell
Investment Philosophy
The USAA Aggressive Growth Fund invests in revolution.
The companies underlying the equities in which we invest are agents of
change. They are either initiating, or taking early advantage of, a
wide range of sweeping changes that are rapidly transforming our
social, political, economic and technological landscapes.
Change, which is one of the few constants in life, appears to be ever
accelerating. Companies that embrace change appear to have much better
prospects for survival and growth than those that resist it.
Small to midsize, youthful companies appear to be better equipped to
cope with rapid change than many of their larger, more mature
competitors. Unencumbered by legacy products to defend in the market
place, smaller companies can be more agile, flexible and responsive to
change. They are in a superior position to challenge convention and to
innovate.
In this dynamic environment, smaller companies have the potential to
achieve rapid growth in sales and earnings. Over time, this growth has
the potential to be recognized in sharply appreciating equity prices and
superior investment returns. These are the opportunities that we strive to
capitalize on with this fund.
Fund Performance
Despite some weakness in small capitalization and technology stocks in
December 1995 and early January 1996, the overall climate continued to
be favorable for the Fund during the six months ending January 31,
1996. In addition, the market for initial public offerings1 (IPOs), in
which the Fund actively invests, remained robust. While past
performance is not a guarantee of future results, these factors helped the
Fund generate a cumulative total return for the six-month period ending
January 31, 1996, of 12.42% versus 6.03% for the Russell 2000 - a
widely recognized, unmanaged small cap index consisting of the 2,000
smallest companies within the Russell 3000 Index.
Outlook
As the Fund enters 1996, we remain optimistic about the future.
Admittedly, there are concerns that the economy could soften in the
short term. But we think small to midsize growth equities, which
account for the bulk of our investments, are equipped to fare
relatively well in such an environment. If the economy does soften,
interest rates are likely to decline, which, in turn, would provide
support to securities' prices in general. And because smaller growth
companies are better able to expand independently of overall economic
trends, investor comfort levels may be higher than with larger, more
cyclical equities.
We continue to focus on industries we think will expand most rapidly
in the years to come - computer software, communications, healthcare,
biotechnology, and specialty retailing, for example. Our eyes are not
closed to opportunities in other areas, so we have diversified our
investments across a broad spectrum of other industries. The companies
in which we invest are on the leading edge of their respective
industries and possess superior earnings growth potential.
The IPO market remains a fertile ground for new investment
opportunities. New issues allow the Fund to get in on the ground floor
of what we consider to be some of the most exciting and potentially
rewarding growth situations both in the U.S. and abroad.
1 A company's first public stock offering.
No discussion of the Fund would be complete without a discussion of
risk. Because the individual holdings in the Fund are extremely
volatile, the Fund itself is volatile. We try to mitigate this
volatility by holding a large number of positions across a diverse spread
of industries addressing different segments of the economy.
Nevertheless, volatility remains a fact of life that cannot be avoided
- - or predicted - with any degree of precision. In this context, we
think it is best to keep a long-term perspective and to maintain our
investment philosophy and style on a consistent basis.
See page 11 for a complete listing of the Portfolio of Investments in
Securities.
Top 10
Equity Holdings
(% of Net Assets)
HBO 1.9
Amgen 1.7
HCIA 1.6
St. Jude Medical 1.4
St. John Knits 1.2
Just For Feet 1.2
Tommy Hilfiger 1.2
Express Scripts, "A" 1.1
Genzyme Corp. 1.0
ValuJet Airlines 1.0
Top 10 Industries
(% of Net Assets)
Computer Software & Service 14.3
Healthcare - Miscellaneous 9.8
Medical Products & Supplies 7.7
Communication - Equipment Manufacturers 7.6
Retail - Speciality 7.1
Biotechnology 5.0
Specialized Services 4.8
Broadcasters 4.1
Textiles - Apparel Manufacturers 3.0
Electronics - Instrumentation 2.7
Shareholder Voting Results
On October 13, 1995, a special meeting of shareholders was held to
vote on the following proposals. All proposals were approved by the
shareholders. All shareholders of record on August 17, 1995 were
entitled to vote on each proposal. The number of votes shown below are
shown for the Aggressive Growth Fund only for proposal (2) and in the
aggregate for the entire USAA Mutual Fund, Inc. (the Company) for
proposals (1) and (3).
(1) Proposal to elect a Board of Directors as follows:
Votes Votes
Director For Withheld
Hansford T. Johnson* 958,654,342 22,342,020
Michael J.C. Roth 959,226,525 21,769,837
John W. Saunders, Jr. 958,343,963 22,652,399
George E. Brown 953,414,718 27,581,644
Howard L. Freeman, Jr. 959,776,745 21,219,617
Richard A. Zucker 947,484,789 33,511,573
Barbara B. Dreeben 945,379,515 35,616,847
Mr. C. Dale Briscoe did not stand for re-election to the Board. His
term of office terminated on December 31, 1995.
* On December 4, 1995, Hansford T. Johnson announced his departure
from the Board effective December 31, 1995. The Board elected M.
Staser Holcomb to succeed Mr. Johnson.
(2) Proposals to amend certain investment restrictions as follows:
NUMBER OF SHARES VOTING
FOR AGAINST ABSTAIN
Proposal to amend the 5% and 7,827,926 352,502 185,805
10% issuer diversification
restrictions to apply to 75%
of a Fund's total assets rather
than 100%.
Proposal to amend the restriction 7,525,679 610,266 230,289
relating to borrowing to allow a
Fund to borrow an amount not
exceeding 33 1/3% of its total assets
(including the amount borrowed) less
liabilities (other than borrowings)
for temporary or emergency purposes.
Proposal to amend the restriction 7,521,566 596,540 248,157
relating to lending portfolio
securities to permit a Fund to lend
up to 33 1/3% of its total assets to
other parties.
Proposal to reclassify the investment 7,612,670 490,716 262,847
restriction on illiquid securities
from fundamental to non-fundamental
and amend the restriction to permit
investments in illiquid securities,
including repurchase agreements
maturing in more than seven days,
to no more than 15% of the value
of a Fund's net assets.
Proposal to reclassify the 75% 7,649,805 456,681 259,747
restriction on investment in new
issuers from fundamental to non-
fundamental.
Proposal to reclassify the joint 7,681,633 432,643 251,957
trading account restriction from
fundamental to non-fundamental.
(3) Proposal to ratify or reject 919,046,882 22,848,992 39,100,482
the selection by the Board of
Directors of KPMG Peat Marwick LLP
as auditors for the Company for the
fiscal year ending July 31, 1995.
Aggressive Growth Fund
Statement of Assets and Liabilities
(In Thousands)
<TABLE>
<CAPTION>
January 31, 1996
(Unaudited)
<S> <C>
Assets
Investments in securities, at market value (identified cost of $316,018) $454,442
Cash 396
Receivables:
Capital shares sold 411
Dividends 28
Securities sold 675
---------
Total assets 455,952
---------
Liabilities
Securities purchased 3,958
Capital shares redeemed 456
USAA Investment Management Company 154
USAA Transfer Agency Company 90
Accounts payable and accrued expenses 54
---------
Total liabilities 4,712
---------
Net assets applicable to capital shares outstanding $451,240
=========
Represented by:
Paid-in capital $307,593
Accumulated net investment loss (810)
Accumulated net realized gain on investments 6,033
Net unrealized appreciation of investments 138,424
---------
Net assets applicable to capital shares outstanding $451,240
=========
Capital shares outstanding 17,445
=========
Net asset value, redemption price, and offering price per share $ 25.87
=========
See accompanying notes to financial statements.
</TABLE>
Aggressive Growth Fund
Portfolio of Investments in Securities
January 31, 1996
(Unaudited)
Market
Number Value
of Shares Security (000)
Common Stocks (95.0%)
Air Freight (0.7%)
80,000 Fritz Companies, Inc.* $ 2,805
20,300 World Airways, Inc.* 193
-----------
2,998
-----------
Airlines (1.3%)
36,000 Midwest Express Holdings, Inc.* 954
200,000 ValuJet Airlines, Inc.* 4,450
47,100 Western Pacific Airlines, Inc.* 606
-----------
6,010
-----------
Airports (0.2%)
30,000 Eagle USA Airfreight, Inc.* 923
-----------
Auto Parts (0.5%)
30,000 Autoliv AB 1,451
65,000 Special Devices, Inc.* 959
-----------
2,410
-----------
Beverages - Alcoholic (0.6%)
29,300 Boston Beer Co., Inc.* 623
16,700 Hart Brewing, Inc.* 248
10,000 Petes Brewing Co.* 185
25,000 Redhook Ale Brewery, Inc.* 656
35,000 Robert Mondavi Corp.* 1,050
-----------
2,762
-----------
Biotechnology (5.0%)
25,000 Agouron Pharmaceuticals, Inc.* 1,050
130,000 Amgen, Inc.* 7,816
20,000 Biochem Pharmaceuticals Inc.* 880
30,000 DepoTech Corp.* 578
24,000 Ergo Science Corp.* 456
60,000 Genzyme Corp.* 4,552
42,500 Genzyme Tissue Repair Division* 1,147
25,000 Integra LifeSciences Corp.* 281
25,000 Myriad Genetics, Inc.* 838
40,000 Neurogen Corp.* 1,210
30,000 Pharmacopeia, Inc.* 900
15,000 Regeneron Pharmaceuticals, Inc.* 229
30,000 Synaptic Pharmaceutical Corp.* 533
127,500 Techne Corp.* 2,311
-----------
22,781
-----------
Broadcasters (4.1%)
40,000 American Radio Systems Corp.* 1,120
50,000 Argyle Television, Inc.* 962
45,000 Central European Media Enterprises Ltd.* 1,080
80,000 Clear Channel Communications, Inc.* 3,680
80,000 EchoStar Communications Corp.* 2,980
100,000 Evergreen Media Corp.* 3,062
48,000 Infinity Broadcasting Corp.* 1,908
50,000 PanAmSat Corp.* 1,250
70,000 Sinclair Broadcast Group, Inc.* 1,260
45,000 Source Media, Inc.* 383
30,700 Young Broadcasting, Inc.* 856
-----------
18,541
-----------
Brokerage Firms (0.4%)
70,000 Charles Schwab Corp. 1,750
-----------
Building Materials Group (0.1%)
35,000 Wilmar Industries, Inc.* 586
-----------
Chemicals - Specialty (0.2%)
35,900 Zoltek Companies, Inc.* 817
-----------
Communication - Equipment Manufacturers (7.6%)
27,000 AML Communications, Inc.* 290
100,000 Ascend Communications, Inc.* 3,887
50,000 BroadBand Technologies, Inc.* 950
25,000 Cascade Communications Corp.* 1,956
90,000 Cidco, Inc.* 2,700
50,000 FORE Systems, Inc.* 2,737
75,000 Glenayre Technologies, Inc.* 3,000
70,000 Global Village Communication, Inc.* 1,120
55,000 Microcom, Inc.* 1,368
40,000 Microwave Power Devices, Inc. Delaware* 440
50,000 NICE-Systems Ltd.* 519
110,000 P-Com, Inc.* 1,540
77,300 Performance Technologies, Inc.* 638
20,000 Premisys Communications, Inc.* 880
50,000 QualComm, Inc.* 2,238
10,000 Secure Computing Corp.* 389
30,000 Shiva Corp.* 2,153
40,000 Spectrian Corp.* 980
50,000 Stratacom, Inc.* 3,750
7,200 Sync Research, Inc.* 203
40,000 Tellabs, Inc.* 1,760
22,800 Tollgrade Communications, Inc.* 365
15,000 VideoServer, Inc.* 360
7,700 Westell Technologies, Inc.* 182
-------------
34,405
-------------
Computer Software & Service (14.3%)
50,000 7th Level, Inc.* 562
22,500 Advent Software, Inc.* 433
40,000 Affiliated Computer Services, Inc.* 1,560
70,000 Alternative Resources Corp.* 2,012
60,000 America Online, Inc.* 2,685
30,200 Applied Microsystems Corp.* 302
15,000 Astea International Inc.* 371
70,100 Avant Corp.* 1,244
45,000 Carnegie Group, Inc.* 371
45,000 Catalyst International, Inc.* 551
10,000 CBT Group ADR* 543
50,000 Checkfree Corp.* 1,250
12,500 Citrix Systems, Inc.* 397
14,800 Clarify, Inc.* 437
30,000 Computron Software, Inc.* 465
45,000 Cooper & Chyan Technology, Inc.* 613
25,000 DataWorks Corp.* 277
40,000 Dendrite International, Inc.* 710
15,000 Desktop Data, Inc.* 405
30,000 Edmark Corp.* 1,072
60,000 Elcom International, Inc.* 540
40,000 Expert Software, Inc.* 440
45,000 Fractal Design Corp.* 591
50,000 FTP Software, Inc.* 575
85,000 Gemstar International Group Ltd.* 2,784
45,900 GT Interactive Software Corp.* 482
30,000 Harbinger Corp.* 548
10,700 HNC Software, Inc.* 621
67,500 Industrial Training Corp.* 515
12,800 Inference Corp.* 208
70,000 Intersolv, Inc.* 726
50,000 Intuit, Inc.* 3,081
75,000 Learmonth + Burchett Management Systems* 741
40,000 Lernout & Hauspie Speech Products N.V.* 1,120
27,000 Logic Works, Inc.* 412
45,000 M.A.I.D. plc* 518
15,000 Maxis, Inc.* 401
80,000 McAfee Associates, Inc.* 4,000
34,100 Mecon, Inc.* 597
50,000 Mercury Interactive Corp.* 1,037
9,900 Meta-Software, Inc.* 141
17,600 MetaTools, Inc.* 385
23,000 Micro Warehouse, Inc.* 862
75,000 MySoftware Co.* 450
45,000 NETCOM On-Line Communication Services, Inc.* 1,372
100,000 NetManage, Inc.* 1,231
8,000 Netscape Communications Corp.* 1,314
30,000 Novadigm, Inc.* 772
9,500 Objective Systems Integrators, Inc.* 380
15,000 ON Technology Corp.* 227
100,000 Open Environment Corp.* 1,400
4,500 Open Text Corp.* 75
70,000 PeopleSoft, Inc.* 3,325
50,000 PLATINUM Technology, Inc.* 678
59,200 Premenos Technology Corp.* 977
20,000 Project Software & Development, Inc.* 710
10,000 Pure Software Inc.* 258
90,000 Rational Software Corp.* 2,216
7,000 Red Brick Systems, Inc.* 236
10,500 Scopus Technology, Inc.* 242
50,000 Sierra On-Line, Inc.* 1,244
50,000 Simware Inc.* 263
40,000 Smith Micro Software, Inc.* 280
45,000 Software 2000, Inc.* 478
28,000 Spyglass, Inc.* 1,092
14,400 SQA, Inc.* 283
11,100 The Vantive Corp.* 261
80,000 Transaction Network Services, Inc.* 2,160
40,000 Transaction Systems Architects, Inc.* 1,385
50,000 Triple P N.V.* 475
27,000 Verity, Inc.* 1,026
21,200 Visio Corp.* 572
90,000 Wonderware Corp.* 1,440
-------------
64,407
-------------
Computer Systems (1.3%)
50,000 Aavid Thermal Technologies, Inc.* 500
30,000 IMNET Systems, Inc.* 645
50,000 Mylex Corp.* 1,019
50,000 RadiSys Corp.* 562
50,000 Sanmina Corp.* 2,637
15,000 Smartflex Systems, Inc.* 214
9,900 Visioneer, Inc.* 218
-----------
5,795
-----------
Cosmetics (0.5%)
15,200 ESC Medical Systems Ltd.* 385
25,000 The Estee Lauder Companies, Inc.* 922
25,000 ThermoLase Corp.* 747
-------------
2,054
-------------
Distribution & Pipelines (0.5%)
50,000 Sonat Offshore Drilling, Inc. 2,306
-------------
Drugs (0.7%)
20,000 Elan Corp., plc* 1,160
50,000 Mylan Laboratories, Inc. 950
25,000 Teva Pharmaceutical Industrial Ltd. 1,120
-------------
3,230
-------------
Electrical Equipment (0.3%)
50,000 Charter Power Systems, Inc. 1,325
-------------
Electronics - Instrumentation (2.7%)
38,300 3D Systems Corp.* 838
50,000 ADE Corp.* 737
55,000 Asyst Technologies, Inc.* 1,636
37,000 Computational Systems, Inc.* 541
40,000 CyberOptics Corp.* 1,280
45,500 ElectroStar, Inc.* 409
45,000 Etec Systems, Inc.* 484
35,000 Euphonix, Inc.* 376
30,000 General Scanning Inc.* 394
135,000 Intevac, Inc.* 996
25,000 Mackie Designs Inc.* 200
26,000 National Instruments Corp.* 471
25,000 OnTrak Systems, Inc.* 356
22,500 Photon Dynamics, Inc.* 172
50,000 PixTech, Inc.* 594
95,000 Speedfam International, Inc.* 1,235
20,000 ThermoSpectra Corp.* 373
45,000 Zygo Corp.* 1,243
-------------
12,335
-------------
Electronics - Semi-Conductors (2.1%)
50,000 Anadigics, Inc.* 1,075
45,000 ESS Technology, Inc.* 866
40,000 Microchip Technology, Inc.* 1,330
25,000 Oak Technology, Inc.* 1,250
20,700 SDL, Inc.* 518
45,000 Sheldahl, Inc.* 895
27,000 Sierra Semiconductor Corp.* 452
54,000 Silicon Storage Technology, Inc.* 594
45,000 SMART Modular Technologies, Inc.* 495
75,000 TranSwitch Corp.* 806
70,000 VLSI Technology, Inc.* 980
-------------
9,261
-------------
Entertainment (0.4%)
50,000 All American Communications, Inc.* 438
30,000 Hollywood Entertainment Corp.* 236
41,700 Moovies, Inc.* 563
23,000 Movie Gallery, Inc.* 471
-------------
1,708
-------------
Finance - Business/Commercial (0.6%)
60,000 Amerin Corp.* 1,552
50,000 Sirrom Capital Corp. 938
-------------
2,490
-------------
Finance - Consumer (0.9%)
50,000 Aames Financial Corp. 1,837
30,000 Cityscape Financial Corp.* 682
50,000 Mercury Finance Co. 638
46,000 WFS Financial Inc.* 880
-------------
4,037
-------------
Finance - Real Estate (0.6%)
50,000 PMI Group, Inc. 2,506
-------------
Foods (0.4%)
100,000 Odwalla, Inc.* 1,775
-------------
Healthcare - Diversified (1.4%)
75,000 PhyCor, Inc.* 3,600
52,000 PhyMatrix Corp.* 1,118
50,000 Physician Sales & Service, Inc.* 1,425
-------------
6,143
-------------
Healthcare - HMO (1.1%)
45,000 CompDent Corp.* 1,586
14,300 First Commonwealth, Inc.* 365
25,000 Raytel Medical Corp.* 275
40,000 RTW, Inc.* 1,210
35,000 United Dental Care, Inc.* 1,409
-------------
4,845
-------------
Healthcare - Miscellaneous (9.8%)
45,200 AMISYS Managed Care Systems, Inc.* 904
70,000 Cerner Corp.* 1,601
65,000 CRA Managed Care, Inc.* 1,966
10,400 Enterprise Systems, Inc.* 303
87,500 Express Scripts, Inc. "A"* 4,769
100,000 HBO & Co. 8,400
130,000 HCIA, Inc.* 7,247
11,000 HPR Inc.* 385
20,700 IDX Systems Corp.* 678
30,000 InPhyNet Medical Management Inc.* 750
40,200 Neuromedical Systems, Inc.* 960
100,000 Orthodontic Centers of America, Inc.* 2,275
10,000 PAREXEL International Corp.* 353
50,000 Pediatrix Medical Group, Inc.* 1,675
100,000 Phamis, Inc.* 2,613
27,000 Pharmaceutical Product Development, Inc.* 702
60,000 Physician Reliance Network, Inc.* 2,730
30,000 Physicians Resource Group, Inc.* 630
90,000 Renal Treatment Centers, Inc.* 4,117
25,000 Total Renal Care Holdings, Inc.* 694
43,000 Veterinary Centers America, Inc.* 661
-------------
44,413
-------------
Homebuilding (0.1%)
30,000 Palm Harbor Homes, Inc.* 628
-------------
Hospitals (1.4%)
60,000 Community Health Systems, Inc.* 2,310
100,000 HEALTHSOUTH Rehabilitation Corp.* 3,225
27,100 National Surgery Centers, Inc.* 759
-------------
6,294
-------------
Hotel/Motel (1.1%)
25,000 Extended Stay America, Inc.* 775
60,000 Felcor Suite Hotels, Inc. 1,792
43,200 Renaissance Hotel Group N.V.* 1,085
50,000 Studio Plus Hotels, Inc.* 1,488
-------------
5,140
-------------
Household Products (0.3%)
40,000 USA Detergents, Inc.* 1,440
-------------
Housing - Manufactured (0.1%)
24,000 Belmont Homes, Inc.* 411
-------------
Insurance Brokers (0.2%)
40,000 Risk Capital Holdings, Inc.* 815
-------------
Insurance - Property/Casualty (0.7%)
25,000 CapMAC Holdings Inc.* 569
50,000 HCC Insurance Holdings, Inc.* 2,450
25,000 Titan Holdings, Inc. 337
-------------
3,356
-------------
Leisure Time (1.0%)
40,000 Morrow Snowboards, Inc.* 450
100,000 Ride, Inc.* 2,000
60,000 West Marine, Inc.* 2,055
-------------
4,505
-------------
Manufacturing - Diversified Industries (0.5%)
21,500 Culligan Water Technologies, Inc.* 607
70,000 United States Filter Corp.* 1,803
-------------
2,410
-------------
Medical Products & Supplies (7.7%)
55,000 AmeriSource Health Corp.* 1,719
100,000 Apria Healthcare Group, Inc.* 2,625
40,000 Arrow International, Inc. 1,780
30,000 Endosonics Corp.* 413
25,000 Exogen, Inc.* 531
100,000 Gulf South Medical Supply* 2,950
28,600 Heartstream, Inc.* 454
40,000 Henry Schein, Inc.* 1,180
18,700 Hologic, Inc.* 902
25,000 IDEXX Laboratories, Inc.* 1,256
41,800 InStent, Inc.* 826
80,000 Lumisys Inc.* 1,190
70,000 Molecular Devices Corp.* 831
20,000 NeoPath, Inc.* 515
70,000 Omnicare, Inc. 3,255
30,000 OrthoLogic Corp.* 621
50,000 Perclose, Inc.* 1,175
50,000 Possis Medical, Inc.* 762
45,000 Quest Medical, Inc.* 574
50,000 Rochester Medical Corp.* 744
40,000 Serologicals Corp.* 710
30,000 SONUS Pharmaceuticals, Inc.* 379
40,000 Spine-Tech, Inc.* 1,060
140,000 St. Jude Medical, Inc.* 6,177
25,000 Sybron Corp.* 606
49,000 UroMed Corp.* 655
30,000 VidaMed, Inc.* 315
20,000 Vitalink Pharmacy Services, Inc.* 370
-------------
34,575
-------------
Nursing Care (0.3%)
62,000 Pediatric Services of America, Inc.* 1,240
-------------
Office Equipment & Supplies (0.5%)
90,000 Corporate Express, Inc.* 2,374
-------------
Oil - Exploration & Production (0.1%)
30,000 Swift Energy Co.* 360
-------------
Oil & Gas Drilling (0.3%)
80,000 Falcon Drilling Co., Inc.* 1,200
-------------
Oil Well Equipment & Service (0.7%)
11,500 Core Laboratories N.V.* 131
26,000 Energy Ventures, Inc.* 627
92,000 Input/Output, Inc.* 2,231
15,000 Smith International Inc.* 353
-------------
3,342
-------------
Pollution Control (0.1%)
25,000 Continental Waste Industries, Inc.* 297
-------------
Publishing (0.2%)
55,600 World Color Press, Inc.* 1,105
-------------
Restaurants (1.5%)
30,000 Boston Chicken, Inc.* 1,020
40,000 Logans Roadhouse, Inc.* 690
90,000 Papa John's International, Inc.* 3,758
25,800 Rainforest Cafe, Inc.* 722
43,800 Schlotzsky's, Inc.* 460
-------------
6,650
-------------
Retail - General Merchandising (0.2%)
30,000 Dollar Tree Stores, Inc.* 1,058
-------------
Retail - Specialty (7.1%)
23,700 Alrenco, Inc.* 332
50,000 Baby Superstore, Inc.* 2,425
50,000 Barnes & Noble, Inc.* 1,344
40,300 Borders Group, Inc.* 851
90,000 Creative Computers, Inc.* 1,103
100,000 Fastenal Co. 3,388
40,000 Gadzooks, Inc.* 995
65,000 Garden Ridge Corp.* 2,145
60,500 Global DirectMail Corp.* 1,686
25,000 Home Depot, Inc. 1,150
172,500 Just For Feet, Inc.* 5,369
20,000 K&G Men's Center, Inc.* 220
40,000 Msc Industrial Direct, Inc.* 1,030
100,000 Nine West Group, Inc.* 3,462
20,000 O' Reilly Automotive, Inc.* 605
80,000 OfficeMax, Inc.* 1,840
70,000 PETSMART, Inc.* 2,135
50,000 Renters Choice, Inc.* 819
40,000 U.S. Office Products Co.* 940
-------------
31,839
-------------
Shoes (0.6%)
50,000 Eastbay, Inc.* 750
70,000 Kenneth Cole Productions, Inc.* 1,181
25,500 Wolverine World Wide, Inc. 647
-------------
2,578
-------------
Specialized Services (4.8%)
40,000 AccuStaff Inc.* 1,840
100,000 ACT Manufacturing, Inc.* 1,050
25,400 APAC TeleServices, Inc.* 1,162
36,000 Apollo Group, Inc.* 1,341
75,000 Business Resource Group* 263
19,400 CKS Group, Inc.* 698
75,000 Computer Learning Centers, Inc.* 656
17,000 COREStaff, Inc.* 638
51,800 DST Systems, Inc.* 1,573
25,000 F.Y.I. Inc.* 475
45,000 Learning Tree International, Inc.* 788
22,500 META Group, Inc.* 630
40,000 NHP Inc.* 725
30,000 Norwood Promotional Products, Inc.* 600
100,000 Personnel Group Of America, Inc.* 1,612
70,000 PSINet Inc.* 928
35,000 Romac International, Inc.* 823
50,000 SITEL Corp.* 1,662
37,000 Sylvan Learning Systems, Inc.* 1,239
90,000 TechForce Corp.* 866
100,000 Telescan, Inc.* 725
40,000 US Order, Inc.* 790
20,000 UUNET Technologies, Inc.* 775
-------------
21,859
-------------
Telecommunications (1.1%)
75,000 Equalnet Holding Corp.* 586
80,000 Metrocall, Inc.* 1,600
80,000 MIDCOM Communications, Inc.* 1,060
50,000 MobileMedia Corp.* 1,056
50,000 Orion Network Systems, Inc.* 706
-------------
5,008
-------------
Telephones (1.9%)
100,000 Brightpoint, Inc.* 1,775
38,200 Omnipoint Corp.* 792
130,000 Paging Network, Inc.* 3,315
70,000 ProNet, Inc.* 1,654
90,000 T Netix Inc.* 990
-------------
8,526
-------------
Textiles - Apparel Manufacturers (3.0%)
70,000 Cutter & Buck, Inc.* 682
30,000 Gucci Group N. V.* 1,219
5,000 Nautica Enterprises, Inc.* 195
25,000 Sirena Apparel Group, Inc.* 147
128,500 St. John Knits, Inc. 5,927
140,000 Tommy Hilfiger Corp.* 5,320
-------------
13,490
-------------
Truckers (0.1%)
33,000 Knight Transportation, Inc.* 495
-------------
Miscellaneous (1.1%)
30,000 Oakley, Inc.* 1,103
100,000 Stewart Enterprises, Inc. 3,800
--------------
4,903
--------------
Total common stocks (cost: $290,088) 428,511
--------------
Short-Term (5.7%)
Principal Market
Amount Coupon Value
(000) Rate Maturity (000)
Commercial Paper
$ 8,338 Ford Motor Credit Co. 5.26% 2/01/96 $ 8,338
12,165 General Motors Acceptance Corp. 5.60 2/05/96 12,158
5,436 Prudential Funding Corp. 5.44 2/02/96 5,435
--------
Total short-term (cost: $25,930) 25,931
--------
Total investments (cost: $316,018) $454,442
========
*Non-income producing.
Aggressive Growth Fund
Notes to Portfolio of Investments in Securities
January 31, 1996
(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.
See accompanying notes to financial statements.
Aggressive Growth Fund
Statement of Operations
(In Thousands)
Six-month period ended January 31, 1996
(Unaudited)
Net investment income:
Income:
Dividends $ 153
Interest 597
----------
Total income 750
----------
Expenses:
Management fees 872
Transfer agent's fees 481
Custodian's fees 67
Postage 53
Shareholder reporting fees 18
Directors' fees 2
Registration fees 39
Audit fees 15
Legal fees 2
Other 6
------------
Total expenses 1,555
------------
Net investment loss (805)
------------
Net realized and unrealized gain on investments:
Net realized gain 18,407
Change in net unrealized appreciation/depreciation 29,389
-----------
Net realized and unrealized gain 47,796
-----------
Increase in net assets resulting from operations $ 46,991
===========
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
Aggressive Growth Fund
Statements of Changes in Net Assets
(In Thousands)
Six-month period ended January 31, 1996
and Year ended July 31, 1995
(Unaudited)
<S> <C>
1/31/96 7/31/95
From operations:
Net investment loss $ (805) $ (800)
Net realized gain on investments 18,407 21,824
Net realized gain on capital gain distributions of closed-end funds - 509
Change in net unrealized appreciation/depreciation of investments 29,389 101,239
---------- -----------
Increase in net assets resulting from operations 46,991 122,772
---------- ----------
Distributions to shareholders from:
Net realized gains (25,025) (22,048)
----------- -----------
From capital share transactions:
Shares sold 114,673 85,382
Shares issued for dividends reinvested 23,005 21,904
Shares redeemed (71,794) (93,573)
----------- -----------
Increase in net assets from capital share transactions 65,884 13,713
----------- -----------
Net increase in net assets 87,850 114,437
Net assets:
Beginning of period 363,390 248,953
----------- ------------
End of period $ 451,240 $ 363,390
============ ============
Undistributed net investment loss included in net assets:
Beginning of period $ (5) $ (5)
============= ===========
End of period $ (810) $ (5)
============== ===========
Change in shares outstanding:
Shares sold 4,603 4,378
Shares issued for dividends reinvested 902 1,197
Shares redeemed (2,900) (4,766)
------------- -----------
Increase in shares outstanding 2,605 809
============= ===========
Authorized shares of $.01 par value 25,000 25,000
============= ===========
See accompanying notes to financial statements.
</TABLE>
Aggressive Growth Fund
Notes to Financial Statements
(In Thousands)
January 31, 1996
(Unaudited)
(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 semiannual report
pertains only to the Aggressive Growth Fund (the Fund). The Fund's
investment objective is appreciation of capital.
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.
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. Amortization of market discounts on
long-term securities is recognized as interest income upon disposition
of the security to the extent there is a gain on disposition.
(2) Lines of Credit
The Fund participates with other USAA funds in two joint short-term
revolving loan agreements totaling $850 million through January 14,
1997, one with USAA Capital Corporation, an affiliate of the Manager
($750 million uncommitted), and one with an unaffiliated
bank ($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 these agreements, the Fund may borrow up
to a maximum of 25% of its total assets at the lending institution's
borrowing rate plus a markup to cover costs. The Fund had no
borrowings under either of these agreements during the six-month period ended
January 31, 1996.
(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.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities,
for the six-month period ended January 31, 1996 were $151,408 and
$120,389, respectively.
Gross unrealized appreciation and depreciation of investments as of
January 31, 1996 was $152,621 and $14,197, 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 indirectly wholly owned by
United Services Automobile Association (the Association), a large,
diversified financial services institution. At January 31, 1996, the
Association and its affiliates owned 2,119 shares (12.1%) of the Fund.
Aggressive Growth Fund
Notes to Financial Statements (continued)
January 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
(7) Financial Highlights
Per share operating performance for a share outstanding throughout
each period is as follows:
Six-month Year Ten-month
period ended ended period ended
January 31, July 31, July 31, Year ended September 30,
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 24.49 $ 17.74 $ 20.40 $ 18.85 $ 20.60 $ 12.34
Net investment income
(loss) (.05)(b) (.05)(b) (.02)(b) .02 (.01)(b) .03
Net realized and
unrealized gain (loss) 3.04 8.35 (1.37) 3.67 (1.73) 8.33
Distributions from net
investment income - - (.02) - (.01) (.10)
Distributions of realized
capital gains (1.61) (1.55) (1.25) (2.14) - -
------------- -------------- ------------- ----------- ------------ ---------
Net asset value at
end of period $ 25.87 $ 24.49 $ 17.74 $ 20.40 $ 18.85 $ 20.60
============= ============== ============== ============= ============ =========
Total return (%) * 12.42 49.98 (7.31) 21.32 (8.45) 68.22
Net assets at
end of period (000) $451,240 $ 363,390 $248,953 $ 277,198 $234,967 $208,084
Ratio of expenses to
average net assets (%) .77(a) .86 .83(a) .86 .82 .87
Ratio of net investment
income (loss) to
average net assets (%) (.40 )(a) (.28) (.10 )(a) .10 (.05) .17
Portfolio turnover (%) 30.95 138.32 98.99 113.01 74.08 50.12
Average commission
rate paid per share $ .050
</TABLE>
(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.
