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 in Securities 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 "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 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)1997, 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 33
funds by investment objective as of June 30, 1997.
<CAPTION>
Average Annual Total Return(%)*
Investment Inception Since
Objective Date 1 yr 5 yrs 10 yrs Inception
<S> <C> <C> <C> <C> <C>
Capital Appreciation
==========================================================================================================
Aggressive Growth 10/19/81 -1.72 18.38 10.88 -
Emerging Markets(1) 11/7/94 15.35 - - 10.25
Gold(1) 8/15/84 -22.26 3.54 -4.75 -
Growth 4/5/71 21.60 16.94 11.97 -
Growth & Income 6/1/93 31.29 - - 18.53
International(1) 7/11/88 21.81 15.39 - 11.77
S&P 500 Index(4)+ 5/1/96 34.59 - - 33.24
World Growth(1) 10/1/92 21.85 - - 15.50
Asset Allocation
=========================================================================================================
Balanced Strategy(1) 9/1/95 22.38 - - 15.48
Cornerstone Strategy(1) 8/15/84 20.45 14.33 9.22 -
Growth and Tax Strategy(2)* 1/11/89 15.72 11.23 - 10.45
Growth Strategy(1) 9/1/95 15.37 - - 21.37
Income Strategy 9/1/95 14.48 - - 10.36
Income - Taxable
=========================================================================================================
GNMA 2/1/91 9.37 6.85 - 7.67
Income 3/4/74 8.21 7.44 9.45 -
Income Stock 5/4/87 20.77 14.21 12.89 -
Short-Term Bond 6/1/93 7.71 - - 5.69
Income - Tax Exempt
=========================================================================================================
Long-Term(2)** 3/19/82 9.22 6.71 8.09 -
Intermediate-Term(2)** 3/19/82 8.20 6.76 7.54 -
Short-Term(2)** 3/19/82 5.50 4.80 5.59 -
California Bond(2)** 8/1/89 8.90 7.13 - 7.58
Florida Tax-Free Income(2)** 10/1/93 9.79 - - 4.29
New York Bond(2)** 10/15/90 8.86 6.46 - 8.31
Texas Tax-Free Income(2)** 8/1/94 10.37 - - 9.24
Virginia Bond(2)** 10/15/90 8.50 6.93 - 8.08
Money Market
=========================================================================================================
Money Market(3) 2/2/81 5.28 4.48 5.80 -
Tax Exempt Money Market(2),(3)** 2/6/84 3.36 3.04 4.15 -
Treasury Money Market Trust(3) 2/1/91 5.13 4.28 - 4.38
California Money Market(2),(3)** 8/1/89 3.29 2.94 - 3.62
Florida Tax-Free Money Market(2),(3)** 10/1/93 3.26 - - 3.04
New York Money Market(2),(3)** 10/15/90 3.21 2.82 - 3.08
Texas Tax-Free Money Market(2),(3)** 8/1/94 3.31 - - 3.33
Virginia Money Market(2),(3)** 10/15/90 3.22 2.87 - 3.20
</TABLE>
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,
including possible loss of the principal amount invested.
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.
(1) Foreign investing is subject to additional risks, which are discussed
in the funds' prospectuses.
(2) Some income may be subject to state or local taxes or the federal
alternative minimum tax.
(3) 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.
(4) 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.
* Total return equals income return 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 represent past performance and are 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, Florida, New York,
Texas, and Virginia funds available to residents only.
+ Includes the $10 annual account maintenance fee through December 31, 1996.
MESSAGE FROM THE PRESIDENT
[PHOTOGRAPH OF PRESIDENT, MICHAEL J.C. ROTH APPEARS HERE]
The last two and one-half
years have been a remarkable
time in the stock market.
These 30 months have witnessed an over 100%(1) rise in the value of equity
indices which has translated into greatly increased wealth for many
investors.(2) But now it is easy to sense that investors are looking over their
shoulders.
This rise in the prices of stocks has had solid underpinnings. The economy has
grown, and continues to grow at a robust, but not excessive rate. Inflation has
remained well in check, even as employment has risen strongly. Interest rates
have remained below the levels they reached in 1994, and, compared to the rate
of inflation are probably still a bit high. Perhaps most surprising of all is
the fact that we are coming quite close to balancing the federal budget.
Many commentators look at these factors and conclude that the stock market looks
reasonable. But others note simply that the market is at or near all-time record
levels and is therefore "too high."
The numbers which define the level of the Dow Jones Industrial Average or the
S&P 500 Stock Index are not particularly meaningful by themselves. What is
meaningful is the relationship of those numbers to numbers which describe the
companies in those averages; such as earnings, dividends and growth rates. These
relationships are the things that help investors decide whether a stock is cheap
or expensive. Only one thing can make the price of a stock go up. The next buyer
must make a decision that paying more for a share of that company than did the
previous buyer makes sense. Such a decision can be made if a buyer believes that
the relationship of price to earnings or growth rate is reasonable. That next
buyer is not obligated either. He or she has options. The money could go to
bonds, to the money markets, to real estate or to pay off debt.
Invariably, investors will begin to make those alternative decisions. We can be
very certain that the stock market will not rise 100% in the next 30 months.
That does not mean it will crash. It does mean that the market will find a way
to return closer to its historic valuation. It last did that in 1994 when it was
essentially flat for a year while corporate earnings grew substantially.
I have been telling investors not to extrapolate 100% every 30 months. Enjoy
it, but remember your risk tolerance and your asset allocation. Those are the
things that will guide you well through all kinds of markets.
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
(1) Source: Lipper Analytical Services, Inc.
(2) Past performance is no guarantee of future results. Yields and returns will
fluctuate.
INVESTMENT REVIEW
AGGRESSIVE GROWTH FUND
OBJECTIVE: Appreciation of capital.
TYPES OF INVESTMENTS: Common stock of companies with prospects of rapidly
growing earnings.
7/31/96 7/31/97
Net Assets............................... $607.4 MILLION $754.0 MILLION
Net Asset Value Per Share................ $27.88 $32.82
Average Annual Total Returns as of 7/31/97
1 Year.................................................... 20.00%
5 Years................................................... 18.53%
10 Years.................................................. 11.29%
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 an investment 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 growth of a
$10,000 Investment. The data points from the graph are as follows:
USAA Aggressive Growth Fund
Year Amount
- ----------------------------
7/31/87 $10,000
7/31/88 8,775
7/31/89 10,346
7/31/90 10,080
7/31/91 12,150
7/31/92 12,465
7/31/93 13,513
7/31/94 13,371
7/31/95 20,054
7/31/96 24,297
7/31/97 29,157
Russell 2000 Index
Year Amount
- ----------------------------
7/31/87 $10,000
7/31/88 9,019
7/31/89 10,669
7/31/90 10,111
7/31/91 11,092
7/31/92 12,702
7/31/93 15,681
7/31/94 16,404
7/31/95 20,501
7/31/96 21,917
7/31/97 29,236
The graph illustrates the comparison of a $10,000 hypothetical investment in the
USAA Aggressive Growth Fund and the broad-based Russell 2000(Registered
Trademark) Index, a widely recognized small cap index. It is an unmanaged
index consisting of the 2,000 smallest companies within the Russell 3000
(Registered Trademark) Index.
MESSAGE FROM THE MANAGERS
[PHOTOGRAPH OF PORTFOLIO MANAGERS APPEARS HERE: ERIC M. EFRON, CFA
JOHN K. CABELL, JR., CFA]
Investment Philosophy
Volatility is a basic characteristic of aggressive growth investing,
particularly in the small cap arena. Investors belong in aggressive growth
funds, such as ours, only if they are comfortable with frequent, rapid, and wide
fluctuations in net asset value. They must also be risk-tolerant and accept the
fact that not all segments of the stock market move in lockstep.
We seek to moderate this risk and increase the long-term comfort level of our
investors by increasing the holdings of larger capitalization equities in the
portfolio. As a result, the inclusion of more of these stocks should:
- - reduce, but not eliminate, overall volatility due to greater market liquidity
and diversification.
- - increase the average position size and, therefore, reduce the number of
positions.
As of July 31, stocks with market capitalizations in excess of $1 billion
accounted for 25% of total equity positions and 37% of the total market value of
the combined equity assets in the portfolio. Our recent large cap additions
include Cisco Systems, 3Com, CVS Corp., Dell Computer, Household International,
and Santa Fe International.
Fund Performance
Looking at the graph on page 4, you will notice that the Aggressive Growth Fund
appreciated sharply in August and September 1996, outperforming the Russell
2000(Registered Trademark) Index(1) by a wide margin. Yet between October and
April of this year, investors turned fearful that interest rates would rise and
that corporate earnings growth would slow. They fled small cap stocks for the
relative safety and liquidity of larger market capitalization equities. Then
from May through July their sentiment towards small stocks improved, and the
Fund rebounded both on an absolute basis and relative to the Russell 2000(R).
However, this was not enough to offset all the damage that it sustained in the
middle months. For the year as a whole, the Fund had a total return of 20%,
lagging the Russell 2000(Registered Trademark) by 11.2%.
Outlook
We look toward a promising environment for stock investing in general. The
economy remains healthy, inflation appears to remain under check, there seem to
be no pressing reasons for interest rates to rise, and corporate earnings
prospects are encouraging.
At the same time, U.S. stocks in general have soared to all-time highs, and are
richly priced, according to many valuation measures. In addition, investors have
unprecedented access to data in terms of both quantity and speed of delivery.
Because investors have become increasingly short-term oriented, they tend more
than ever before to exaggerate the significance of minor events. Combine all
these factors together, and you have a recipe for continued volatility.
Nevertheless, we remain optimistic about the future of the Fund. It stands ready
to benefit from the ongoing changes in our society and economy as well as from a
continued improvement in market sentiment toward high-growth, small company
investing.
(1) The broad-based Russell 2000(Registered Trademark) Index is an unmanaged,
widely recognized small cap index consisting of the 2,000 smallest
companies within the Russell 3000(Registered Trademark) Index.
Top 10
Equity Holdings
(%of Net Assets)
HBO 1.7
St. John Knits 1.3
Ascend Communications 1.2
Papa John's International .9
Amgen .8
Clear Channel
Communications .8
Stewart Enterprises .8
Etec Systems .7
Fastenal .7
FIRSTPLUS Financial Group .7
Top 10 Industries
(% of Net Assets)
Healthcare Related 18.9
Telecommunications Related 11.5
Specialized Services 7.7
Computer Software & Service 7.6
Retail Related 7.5
Electronics Related 7.3
Oil Related 5.9
Broadcasters 3.2
Textiles 3.2
Computer Systems 2.9
See page 11 for a complete listing of the Portfolio of Investments in
Securities.
DISTRIBUTIONS TO SHAREHOLDERS
The following per share information describes the federal tax treatment of
distributions made during the fiscal year ended July 31, 1997. These figures are
provided for information purposes only and should not be used for reporting to
federal or state revenue agencies. Distributions for the calendar year will be
reported to you on form 1099-DIV in January 1998.
Long-term capital gains $ .5723
=======
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
USAA Mutual Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments in securities of the Aggressive Growth Fund, a
portfolio of USAA Mutual Fund, Inc. as of July 31, 1997, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights presented in note 7 to the financial statements for each of
the years or periods in the ten-year period then ended. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights 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 financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of July 31, 1997, 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 financial highlights referred to
above present fairly, in all material respects, the financial position of the
Aggressive Growth Fund, a portfolio of USAA Mutual Fund, Inc. as of July 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or periods in the ten-year period
then ended, in conformity with generally accepted accounting principles.
KPMG Peat Marwick, LLP
San Antonio, Texas
September 3, 1997
<TABLE>
Aggressive Growth Fund
Statement of Assets and Liabilities
(In Thousands)
July 31, 1997
<S> <C>
Assets
Investments in securities, at market value (identified cost of $498,679) $ 756,499
Cash 168
Receivables:
Capital shares sold 226
Dividends 73
Securities sold 11,497
----------
Total assets 768,463
----------
Liabilities
Securities purchased 13,137
Capital shares redeemed 886
USAA Investment Management Company 243
USAA Transfer Agency Company 62
Accounts payable and accrued expenses 151
----------
Total liabilities 14,479
----------
Net assets applicable to capital shares outstanding $ 753,984
==========
Represented by:
Paid-in capital $ 472,892
Accumulated net investment loss (5)
Accumulated net realized gain on investments 23,277
Net unrealized appreciation of investments 257,820
----------
Net assets applicable to capital shares outstanding $ 753,984
==========
Capital shares outstanding 22,974
==========
Net asset value, redemption price, and offering price per share $ 32.82
==========
See accompanying notes to financial statements.
</TABLE>
Aggressive Growth Fund
Portfolio of Investments in Securities
July 31, 1997
Market
Number Value
of Shares Security (000)
- --------- -------- -----
Common Stocks (98.6%)
Aerospace/Defense (0.7%)
60,000 AAR Corp. $ 2,145
52,700 Aviation Sales Co.* 1,166
13,200 First Aviation Services,
Inc.* 134
30,000 Kellstrom Industries, Inc.* 461
35,000 Triumph Group, Inc.* 1,041
- --------------------------------------------------
4,947
- --------------------------------------------------
Air Freight (0.7%)
42,500 AirNet Systems, Inc.* 887
33,500 Atlas Air, Inc.* 888
100,000 Eagle USA Airfreight, Inc. 2,725
30,000 Kitty Hawk, Inc.* 540
- --------------------------------------------------
5,040
- --------------------------------------------------
Airlines (0.3%)
54,000 Midwest Express Holdings,
Inc.* 1,347
35,000 Southwest Airlines Co. 1,021
- --------------------------------------------------
2,368
- --------------------------------------------------
Auto Parts (0.6%)
81,900 Aftermarket Technology Corp.* 1,617
54,400 Dura Automotive Systems, Inc.* 1,476
86,700 Keystone Automotive
Industries, Inc.* 1,691
- --------------------------------------------------
4,784
- --------------------------------------------------
Bank Holding Companies -
Major Regional (0.6%)
38,200 Bank of the Ozarks, Inc.* 697
20,000 Bank United Corp. 755
51,975 Columbia Banking Systems,
Inc.* 1,274
30,000 First Security Corp. 806
50,000 Hamilton Bancorp, Inc.* 1,225
- --------------------------------------------------
4,757
- --------------------------------------------------
Beverages - Alcoholic (0.3%)
50,000 The Robert Mondavi Corp.* 2,338
- --------------------------------------------------
Beverages - Soft Drinks (0.2%)
40,000 Starbucks Corp.* 1,638
- --------------------------------------------------
Biotechnology (3.8%)
30,200 Affymetrix, Inc.* 985
30,000 Agouron Pharmaceuticals, Inc.* 2,873
100,000 Amgen, Inc.* 5,881
40,000 Arqule, Inc.* 660
90,000 BioChem Pharmaceuticals, Inc.* 2,599
15,800 Centocor, Inc.* 608
20,000 Chiron Corp.* 420
37,100 CN Biosciences, Inc.* 705
30,000 DepoTech Corp.* 398
120,000 Genzyme Corp.* 3,270
40,000 Gilead Sciences, Inc.* 1,130
40,000 Human Genome Sciences, Inc.* 1,295
33,300 ILEX Oncology, Inc.* 624
35,000 Med Immune, Inc.* 831
16,200 Pharmacopeia, Inc.* 229
50,000 Protein Design Labs, Inc.* 1,406
53,000 SangStat Medical Corp.* 1,299
127,500 Techne Corp.* 3,538
- --------------------------------------------------
28,751
- --------------------------------------------------
Broadcasters (3.2%)
150,000 @Entertainment, Inc.* 3,150
60,000 Argyle Television, Inc.* 1,560
45,000 Central European Media
Enterprises Ltd. "A"* 1,069
100,000 Clear Channel
Communications, Inc.* 6,225
40,000 Emmis Broadcasting Corp.* 1,705
55,400 Gray Communications
Systems, Inc. 1,108
68,000 Heftel Broadcasting Corp.* 3,978
120,662 Outdoor Systems, Inc.* 3,197
42,900 Univision Communications,
Inc.* 1,845
- --------------------------------------------------
23,837
- --------------------------------------------------
Brokerage Firms (0.5%)
70,000 Charles Schwab Corp. 3,277
28,100 Hambrecht & Quist Group* 838
- --------------------------------------------------
4,115
- --------------------------------------------------
Building Materials (0.7%)
61,500 Barnett, Inc.* 1,353
43,400 Comfort Systems USA, Inc.* 776
19,400 Diamond Home Services, Inc.* 148
40,200 Service Experts, Inc.* 1,211
28,600 Watsco, Inc. 862
35,000 Wilmar Industries, Inc.* 892
- --------------------------------------------------
5,242
- --------------------------------------------------
Chemicals (0.2%)
108,200 NuCo2, Inc.* 1,894
- --------------------------------------------------
Chemicals - Specialty (0.1%)
23,100 Zoltek Companies, Inc.* 831
- --------------------------------------------------
Communication - Equipment
Manufacturers (8.2%)
66,250 3Com Corp.* 3,623
200,000 8X8, Inc.* 1,875
49,800 Advanced Fibre
Communications, Inc.* 3,480
170,500 Ascend Communications, Inc.* 9,271
45,000 Aware, Inc.* 475
55,000 Cabletron Systems, Inc.* 1,863
36,000 CIENA Corp.* 2,020
50,000 Cisco Systems, Inc.* 3,978
13,100 Corsair Communications, Inc.* 260
80,000 Datum, Inc.* 2,640
100,000 FORE Systems, Inc.* 1,606
95,000 Harmonic Lightwaves, Inc.* 1,757
120,000 MAS Technology Ltd.* 2,430
50,000 ODS Networks, Inc.* 569
31,700 Orckit Communications Ltd.* 460
95,000 Ortel Corp.* 1,805
110,000 P-Com, Inc.* 4,049
90,000 Pairgain Technologies, Inc.* 1,935
27,000 Peerless Systems Corp.* 375
50,000 QualComm, Inc.* 2,312
101,250 REMEC, Inc.* 3,056
31,600 Sawtek, Inc.* 1,205
60,000 Shiva Corp.* 653
60,000 Spectrian Corp.* 2,730
70,000 Tellabs, Inc.* 4,191
45,000 ViaSat, Inc.* 833
74,000 Xylan Corp.* 1,203
89,500 Yurie Systems, Inc.* 1,589
- --------------------------------------------------
62,243
- --------------------------------------------------
Computer Software & Service (7.6%)
90,000 Alternative Resources Corp.* 2,002
40,000 Arbor Software Corp.* 1,720
21,600 ARIS Corp.* 583
62,600 Aspect Development, Inc.* 2,058
74,439 Avant Corp.* 2,224
45,000 Award Software
International, Inc.* 461
135,000 Axiom, Inc.* 1,687
74,000 Broderbund Software, Inc.* 1,605
20,200 CCC Information Services
Group, Inc.* 323
100,000 Checkfree Corp.* 1,800
37,500 Claremont Technology
Group, Inc.* 520
50,400 Complete Business
Solutions, Inc.* 1,386
133,500 Credit Management
Solutions, Inc.* 1,569
66,000 Crystal Systems Solutions
Ltd.* 1,914
40,000 DBT Online, Inc.* 1,995
35,000 ENVOY Corp.* 1,046
116,400 Geotel Communications
Corp. "A"* 1,768
130,000 H. T. E., Inc.* 1,674
60,000 Harbinger Corp.* 1,942
31,400 HNC Software, Inc.* 1,103
31,600 Indus Group, Inc.* 525
100,000 Industri-Matematik
International Corp.* 1,513
48,800 Intelligroup, Inc.* 549
83,800 IONA Technologies PLC* 1,681
120,000 Macrovision Corp.* 1,545
143,000 Mapics, Inc.* 1,394
50,000 Mercury Interactive Corp.* 891
51,500 Network General Corp.* 837
65,000 New Era of Networks, Inc.* 902
36,000 Pegasystems, Inc.* 1,161
36,000 Phoenix International Ltd.,
Inc.* 864
100,000 PLATINUM Technology, Inc.* 1,550
169,000 Rational Software Corp.* 3,253
7,600 RWD Technologies, Inc.* 160
55,000 Security Dynamics
Technologies, Inc.* 2,296
45,000 Simulation Sciences, Inc.* 681
50,000 Smallworld plc ADR* 900
52,500 Sterling Commerce, Inc.* 1,979
28,200 Technology Modeling
Associates, Inc.* 338
63,000 TriTeal Corp.* 614
81,400 TSI International Software
Ltd.* 1,160
30,000 Wind River Systems, Inc.* 1,253
48,000 Wonderware Corp.* 771
120,000 XcelleNet, Inc.* 1,035
- --------------------------------------------------
57,232
- --------------------------------------------------
Computer Systems (2.9%)
85,000 AlphaNet Solutions, Inc.* 1,307
70,500 CHS Electronics, Inc.* 2,692
15,000 Dell Computer Corp.* 1,283
22,650 Genesys Telecommunications
Laboratory, Inc.* 668
74,500 Ingram Micro, Inc.* 2,147
80,000 Iomega Corp.* 1,795
150,000 JetFax, Inc.* 1,481
100,000 Komag, Inc.* 2,081
160,000 Melita International Corp.* 1,520
70,000 Micron Electronics, Inc.* 1,321
54,000 NICE-Systems Ltd. ADS* 2,059
24,000 Pomeroy Computer
Resources, Inc.* 768
60,000 Read-Rite Corp.* 1,552
50,000 Sandisk Corp.* 1,100
- --------------------------------------------------
21,774
- --------------------------------------------------
Cosmetics (1.0%)
47,500 ESC Medical Systems Ltd.* 1,591
50,000 Revlon, Inc. "A"* 2,681
75,000 The Estee Lauder
Companies, Inc. 3,455
- --------------------------------------------------
7,727
- --------------------------------------------------
Drugs (1.0%)
70,000 Elan Corp. plc ADR* 3,325
8,000 Incyte Pharmaceuticals, Inc.* 543
50,000 Jones Medical Industries, Inc. 1,481
15,000 Kos Pharmaceuticals, Inc.* 585
25,000 Teva Pharmaceutical
Industries Ltd. 1,402
- --------------------------------------------------
7,336
- --------------------------------------------------
Electrical Equipment (0.8%)
68,000 Advanced Lighting
Technologies, Inc.* 1,717
70,000 Chicago Miniature Lamp, Inc.* 1,960
100,000 Westinghouse Electric Corp. 2,406
- --------------------------------------------------
6,083
- --------------------------------------------------
Electronics - Instrumentation (4.0%)
50,000 Brooks Automation, Inc.* 1,375
50,000 CFM Technologies, Inc.* 1,300
50,000 Cymer, Inc.* 3,650
60,000 Electroglas, Inc.* 1,897
52,000 EMCORE Corp.* 1,287
100,000 Etec Systems, Inc.* 5,425
140,000 HMT Technology Corp.* 2,065
45,000 IKOS Systems, Inc.* 709
44,000 Integrated Measurement
Systems, Inc.* 682
100,000 Integrated Process
Equipment Corp.* 2,612
60,000 LeCroy Corp.* 2,040
50,000 Photronics, Inc.* 2,750
75,000 Speedfam International, Inc.* 3,525
39,000 Thermo Optek Corp.* 561
- --------------------------------------------------
29,878
- --------------------------------------------------
Electronics - Semiconductors (3.3%)
39,000 3DFX Interactive, Inc.* 424
82,100 Actel Corp.* 1,580
40,000 Benchmarq Microelectronics,
Inc.* 900
45,000 ESS Technology, Inc.* 650
9,800 Galileo Technology Ltd.* 239
30,000 Lattice Semiconductors Corp.* 2,021
40,000 LSI Logic Corp.* 1,263
50,000 MEMC Electronic Materials,
Inc.* 1,450
60,000 Microchip Technology, Inc.* 2,235
120,000 Peak International Ltd.* 1,935
100,000 PMC Sierra, Inc.* 3,275
78,700 RF Micro Devices, Inc.* 1,328
31,050 SDL, Inc.* 644
165,000 TranSwitch Corp.* 1,753
40,000 Triquint Semiconductor, Inc.* 1,400
30,000 Vitesse Semiconductor Corp.* 1,451
30,000 VLSI Technology, Inc.* 889
90,000 Zoran Corp.* 1,755
- --------------------------------------------------
25,192
- --------------------------------------------------
Entertainment (0.3%)
100,000 Ballantyne of Omaha, Inc.* 2,138
- --------------------------------------------------
Finance -
Business/Commercial (0.8%)
- --------------------------------------------------
60,000 Amerin Corp.* 1,477
81,700 Medallion Financial Corp. 1,542
75,000 Sirrom Capital Corp. 2,869
- --------------------------------------------------
5,888
- --------------------------------------------------
Finance - Consumer (2.4%)
131,250 Aames Financial Corp. 2,814
34,200 ACC Consumer Finance Corp.* 586
29,500 Associates First Capital Corp. 1,945
80,000 Cityscape Financial Corp. 1,150
21,700 Conti Financial Corp.* 875
120,000 FIRSTPLUS Financial
Group, Inc.* 5,475
15,000 Household International, Inc. 1,942
58,000 NCO Group, Inc.* 2,052
40,000 The Money Store, Inc. 1,435
- --------------------------------------------------
18,274
- --------------------------------------------------
Finance - Real Estate (0.7%)
72,000 IMC Mortgage Co.* 1,296
50,000 PMI Group, Inc. 2,950
48,000 Southern Pacific Funding
Corp.* 822
- --------------------------------------------------
5,068
- --------------------------------------------------
Foods (0.3%)
50,000 Suiza Foods Corp.* 2,181
- --------------------------------------------------
Gaming Companies (0.2%)
30,000 MGM Grand, Inc.* 1,035
40,000 Penn National Gaming, Inc.* 650
- --------------------------------------------------
1,685
- --------------------------------------------------
Healthcare - Diversified (0.6%)
80,000 PhyCor, Inc.* 2,680
52,000 PhyMatrix Corp.* 676
50,000 Physician Sales & Service,
Inc.* 925
- --------------------------------------------------
4,281
- --------------------------------------------------
Healthcare - HMOs (0.2%)
45,000 CompDent Corp.* 976
55,000 United Dental Care, Inc.* 887
- --------------------------------------------------
1,863
- --------------------------------------------------
Healthcare - Miscellaneous (7.1%)
45,000 Advance Paradigm, Inc.* 973
15,500 Applied Analytical Industries,
Inc.* 376
30,000 COHR, Inc.* 593
15,600 Cole National Corp. "A"* 674
65,000 CRA Managed Care, Inc.* 3,356
112,500 Express Scripts, Inc. "A"* 5,034
170,000 HBO & Co. 13,154
60,000 HCIA, Inc.* 1,005
25,700 IDX Systems Corp.* 917
22,500 Impath, Inc.* 593
54,500 Medquist, Inc.* 1,805
10,100 Monarch Dental Corp.* 177
36,000 Nu Skin Asia Pacific, Inc.* 864
251,600 Orthodontic Centers of
America, Inc.* 4,655
131,200 PAREXEL International Corp.* 5,051
68,000 Pediatrix Medical Group, Inc.* 2,945
100,000 Physician Reliance Network,
Inc.* 937
52,500 Renal Care Group, Inc.* 1,522
150,000 Renal Treatment Centers, Inc.* 4,425
60,000 Rural/Metro Corp.* 1,882
51,000 Sunquest Information
Systems, Inc.* 587
55,000 Total Renal Care Holdings,
Inc.* 2,269
- --------------------------------------------------
53,794
- --------------------------------------------------
Home Furnishings
& Appliances (0.2%)
20,000 Ethan Allen Interiors, Inc. 1,060
25,000 Industrie Natuzzi SPA ADR 689
- --------------------------------------------------
1,749
- --------------------------------------------------
Homebuilding (0.3%)
- --------------------------------------------------
37,500 American Homestar Corp.* 783
62,500 Palm Harbor Homes, Inc.* 1,680
- --------------------------------------------------
2,463
- --------------------------------------------------
Hospitals (1.1%)
200,000 HEALTHSOUTH
Rehabilitation Corp.* 5,300
90,000 National Surgery Centers,
Inc.* 2,869
- --------------------------------------------------
8,169
- --------------------------------------------------
Hotel/Motel (1.3%)
54,000 Bristol Hotel Co.* 1,448
52,500 Doubletree Corp.* 2,205
142,040 Extended Stay America, Inc.* 2,290
30,000 Four Seasons Hotels, Inc. 1,003
30,000 Suburban Lodges of
America, Inc.* 619
65,000 Sun International Hotels Ltd.* 2,283
- --------------------------------------------------
9,848
- --------------------------------------------------
Household Products (0.2%)
90,000 USA Detergents, Inc.* 1,226
- --------------------------------------------------
Insurance - Life (0.1%)
25,900 Hartford Life, Inc.* 1,065
- --------------------------------------------------
Insurance - Property/Casualty (0.6%)
100,000 HCC Insurance Holdings, Inc. 3,156
20,000 Nationwide Financial
Services, Inc. 605
35,600 Penn-America Group, Inc. 645
- --------------------------------------------------
4,406
- --------------------------------------------------
Leisure Time (0.5%)
60,000 Action Performance
Companies, Inc.* 1,834
100,000 West Marine, Inc.* 2,212
- --------------------------------------------------
4,046
- --------------------------------------------------
Machinery - Diversified (0.6%)
18,000 JLK Direct Distribution, Inc.* 462
86,000 RDO Equipment Co.* 1,962
64,200 U. S. Rentals, Inc.* 1,878
- --------------------------------------------------
4,302
- --------------------------------------------------
Manufacturing - Diversified
Industries (0.8%)
50,000 Culligan Water
Technologies, Inc.* 2,112
126,500 United States Filter Corp.* 3,819
- --------------------------------------------------
5,931
- --------------------------------------------------
Medical Products & Supplies (4.4%)
55,000 AmeriSource Health Corp.* 2,585
24,500 Arrow International, Inc. 729
50,000 ArthroCare Corp.* 500
25,000 Bionx Implants, Inc.* 528
50,000 Capstone Pharmacy
Services, Inc.* 581
45,300 CryoLife, Inc.* 563
98,000 Gulf South Medical Supply* 2,426
27,000 Heartport, Inc.* 543
65,000 Henry Schein, Inc.* 2,405
60,000 IDEXX Laboratories, Inc.* 956
17,900 Marquette Medical Systems,
Inc.* 461
50,000 NCS HealthCare, Inc.* 1,406
120,000 Omnicare, Inc. 3,532
50,000 Perclose, Inc.* 1,169
30,000 Rochester Medical Corp.* 435
26,100 Seamed Corp.* 463
158,700 Serologicals Corp.* 3,353
30,000 SONUS Pharmaceuticals, Inc.* 960
50,000 Spine-Tech, Inc.* 2,963
67,400 St. Jude Medical, Inc.* 2,751
47,700 Suburban Ostomy Supply, Inc.* 489
25,000 Sybron Corp.* 1,023
10,000 United States Surgical Corp. 371
45,500 Urologix, Inc.* 808
15,000 Vertex Pharmaceuticals, Inc.* 527
33,500 Xomed Surgical Products, Inc.* 754
- --------------------------------------------------
33,281
- --------------------------------------------------
Metals - Miscellaneous (0.2%)
122,700 Metals USA, Inc.* 1,227
- --------------------------------------------------
Nursing Care (0.7%)
61,950 American Homepatient, Inc.* 1,239
35,000 Centennial HealthCare Corp.* 628
50,000 Home Health Corp. of
America, Inc.* 625
62,000 Pediatric Services of
America, Inc.* 1,395
30,000 Sunrise Assisted Living,
Inc.* 1,084
- --------------------------------------------------
4,971
- --------------------------------------------------
Office Equipment & Supplies (0.2%)
100,000 Corporate Express, Inc.* 1,500
- --------------------------------------------------
Oil - Exploration
& Production (0.7%)
50,000 Chesapeake Energy Corp. 394
50,200 Edge Petroleum Corp.* 634
27,100 Nuevo Energy Co.* 1,160
42,900 Rutherford-Moran Oil Corp.* 997
45,000 Stone Energy Corp.* 1,308
35,000 Swift Energy Co.* 847
- --------------------------------------------------
5,340
- --------------------------------------------------
Oil & Gas Drilling (2.6%)
50,000 Cliffs Drilling Co.* 2,619
35,100 Diamond Offshore Drilling,
Inc.* 3,273
160,000 Falcon Drilling Co., Inc.* 4,620
66,600 Patterson Energy, Inc.* 2,056
95,900 Santa Fe International Corp.* 3,956
40,000 Transocean Offshore, Inc. 3,267
- --------------------------------------------------
19,791
- --------------------------------------------------
Oil Well Equipment & Service (2.6%)
50,000 Carbo Ceramics, Inc. 1,428
62,000 EVI, Inc.* 3,030
63,200 Friede Goldman
International, Inc.* 1,817
50,000 Global Industries, Ltd.* 1,403
28,800 Halter Marine Group, Inc.* 882
40,000 Hvide Marine, Inc. "A"* 1,120
100,000 Input/Output, Inc.* 2,163
24,100 National-Oilwell, Inc.* 1,496
25,000 Petroleum Geo-Services ADR* 1,361
61,800 Trico Marine Services, Inc.* 1,684
44,700 Varco International, Inc.* 1,729
48,500 Veritas DGC, Inc.* 1,219
- --------------------------------------------------
19,332
- --------------------------------------------------
Pollution Control (0.6%)
40,000 American Disposal
Services, Inc.* 1,160
46,200 Eastern Environmental
Services, Inc.* 875
29,300 Superior Services, Inc.* 769
10,000 Waste Industries, Inc.* 182
120,100 Waterlink, Inc.* 1,801
- --------------------------------------------------
4,787
- --------------------------------------------------
Publishing (0.3%)
27,000 C/NET, Inc.* 719
55,600 World Color Press, Inc.* 1,591
- --------------------------------------------------
2,310
- --------------------------------------------------
Real Estate (0.3%)
16,000 LaSalle Partners, Inc.* 478
40,000 Signature Resorts, Inc.* 1,540
30,800 Vistana, Inc.* 527
- --------------------------------------------------
2,545
- --------------------------------------------------
Real Estate Investment Trusts (1.1%)
50,000 Alexandria Real Estate
Equities, Inc. 1,234
20,000 American General
Hospitality Corp. 540
7,800 CCA Prison Realty Trust 242
32,500 Crescent Real Estate Equitie
Co. 1,016
30,000 Equity Office Properties
Trust 870
30,000 Felcor Suite Hotels, Inc. 1,170
22,000 Golf Trust of America, Inc. 621
50,000 Great Lakes REIT, Inc. 844
30,000 Prentiss Properties Trust 780
15,000 Starwood Lodging Trust 699
- --------------------------------------------------
8,016
- --------------------------------------------------
Restaurants (1.8%)
50,000 Einstein/Noah Bagel Corp.* 716
20,300 Landry's Seafood
Restaurants, Inc.* 518
114,550 Logan's Roadhouse, Inc.* 3,136
25,000 Lone Star Steakhouse
& Saloon, Inc.* 592
211,950 Papa John's International,
Inc.* 6,994
71,600 PJ America, Inc.* 1,244
28,000 Total Entertainment
Restaurant Corp.* 290
- --------------------------------------------------
13,490
- --------------------------------------------------
Retail - Department Stores (0.1%)
43,200 Saks Holdings, Inc.* 1,053
- --------------------------------------------------
Retail - Drug Stores (0.1%)
12,000 CVS Corp. 683
- --------------------------------------------------
Retail - Food Chains (0.2%)
17,400 Disco S.A. ADS* 848
30,000 Dominick's Supermarkets, Inc.* 870
- --------------------------------------------------
1,718
- --------------------------------------------------
Retail - General
Merchandising (0.5%)
82,500 Dollar Tree Stores, Inc.* 3,444
- --------------------------------------------------
Retail - Specialty (6.6%)
90,700 99 Cents Only Stores* 2,948
53,700 Abercrombie & Fitch Co.* 1,067
25,000 Barnes & Noble, Inc.* 1,250
80,600 Borders Group, Inc.* 2,055
50,000 Coldwater Creek, Inc.* 1,337
25,000 CompUSA, Inc.* 672
85,000 Concepts Direct, Inc.* 1,711
46,400 Cost Plus World Market* 1,183
15,400 Cross Continent Auto
Retailers, Inc.* 123
26,000 Daisytek International Corp.* 1,124
46,400 Delia's, Inc.* 847
45,000 Eagle Hardware & Garden, Inc.* 951
100,000 Fastenal Co. 5,594
60,000 Finish Line, Inc. "A"* 810
76,200 Gadzooks, Inc.* 1,305
170,000 Garden Ridge Corp.* 2,167
60,500 Global DirectMail Corp.* 1,581
33,000 Guitar Center, Inc.* 693
26,300 Hibbett Sporting Goods, Inc.* 598
37,500 Home Depot, Inc. 1,870
276,250 Just For Feet, Inc.* 5,335
107,100 K&G Men's Center, Inc.* 2,437
65,000 MSC Industrial Direct Co.* 2,811
80,000 Nine West Group, Inc.* 3,205
30,000 OfficeMax, Inc.* 420
66,300 Party City Corp.* 1,285
40,000 Paul Harris Stores, Inc.* 681
41,500 Petco Animal Supplies, Inc.* 1,100
50,000 Renters Choice, Inc.* 925
53,500 U.S. Office Products Co.* 1,545
- --------------------------------------------------
49,630
- --------------------------------------------------
Shoes (0.1%)
48,800 Vans, Inc.* 573
- --------------------------------------------------
Specialized Services (7.7%)
78,400 Administaff, Inc.* 1,735
100,000 Altron, Inc.* 1,762
18,000 American Residential
Services, Inc.* 414
160,000 Armor Holdings, Inc.* 1,720
18,000 Benchmark Electronics, Inc.* 968
20,000 Concord EFS, Inc.* 589
68,000 Corrections Corp. of America* 3,013
50,000 Danka Business Systems plc ADR 2,453
59,500 EFTC Corp.* 539
85,800 F.Y.I., Inc.* 2,032
64,000 Fine Host Corp.* 1,936
59,000 Flextronics International
Ltd.* 1,851
56,400 Getty Communications plc ADR* 635
17,400 Hagler Bailly, Inc.* 350
35,000 Hanover Compressor Co.* 847
8,900 Hertz Corp.* 309
29,100 Information Management
Resources, Inc.* 917
65,300 IntelliQuest Information
Group, Inc.* 1,371
79,500 International Network
Services* 1,898
107,000 International Telecommunication
Data Systems, Inc.* 2,675
77,000 Lamar Advertising Co. "A"* 2,151
40,600 Mastech Corp.* 1,005
86,600 Maximus, Inc.* 2,003
50,000 Merix Corp.* 875
10,000 Nova Corp.* 243
93,300 Obie Media Corp.* 630
13,000 Pierce Leahy Corp.* 351
135,000 PMT Services, Inc.* 2,211
58,400 Rental Service Corp.* 1,522
80,000 Romac International, Inc.* 2,980
58,500 SCB Computer Technology, Inc.* 1,477
150,000 SITEL Corp.* 2,250
100,000 Staff Leasing, Inc.* 2,037
105,000 StarTek, Inc.* 1,385
45,400 Superior Consultant, Inc.* 1,634
69,675 Sykes Enterprises, Inc.* 1,755
58,100 Universal Outdoor
Holdings, Inc.* 2,113
74,000 Vestcom International, Inc.* 1,230
32,400 Wackenhut Corp. "B" 612
20,000 Wackenhut Corrections Corp.* 568
27,000 Whittman-Hart, Inc.* 695
- --------------------------------------------------
57,741
- --------------------------------------------------
Telecommunications (1.4%)
50,400 ACC Corp.* 1,840
230,000 General Communication, Inc.
"A"* 1,754
45,500 Pacific Gateway Exchange,
Inc.* 1,666
39,300 Premiere Technologies, Inc.* 1,083
14,200 Qwest Communications
International, Inc.* 442
63,000 SmartTalk TeleServices, Inc.* 1,118
73,700 STAR Telecommunications, Inc.* 1,207
90,000 Tel-Save Holdings, Inc.* 1,530
- --------------------------------------------------
10,640
- --------------------------------------------------
Telephones (1.9%)
131,250 Brightpoint, Inc.* 3,921
38,800 Brooks Fiber Properties,
Inc.* 1,460
41,500 Intermedia Communications of
Florida, Inc.* 1,509
63,600 IXC Communications, Inc.* 1,797
13,500 McLeod, Inc.* 464
38,200 Omnipoint Corp.* 585
60,000 Powertel, Inc.* 1,027
34,300 Teleport Communications
Group, Inc.* 1,351
45,000 Western Wireless Corp. "A"* 678
98,000 Winstar Communications, Inc.* 1,648
- --------------------------------------------------
14,440
- --------------------------------------------------
Textiles (3.2%)
70,000 Cutter & Buck, Inc.* 1,286
55,000 Gucci Group N.V.* 3,472
50,000 Nautica Enterprises, Inc.* 1,375
50,000 North Face, Inc.* 1,081
14,300 Novel Denim Holdings Ltd.* 322
50,200 Polo Ralph Lauren Corp.* 1,346
220,000 St. John Knits, Inc. 10,010
120,000 Tommy Hilfiger Corp.* 5,348
- --------------------------------------------------
24,240
- --------------------------------------------------
Tobacco (0.1%)
26,100 800-JR Cigar, Inc.* 643
- --------------------------------------------------
Toys (0.2%)
31,250 Consolidated Stores Corp.* 1,258
- --------------------------------------------------
Transportation -
Miscellaneous (0.6%)
65,200 Coach USA, Inc.* 1,825
50,000 Hub Group, Inc. "A"* 1,675
43,500 MotivePower Industries, Inc.* 892
- --------------------------------------------------
4,392
- --------------------------------------------------
Truckers (0.1%)
25,000 Heartland Express, Inc.* 619
- --------------------------------------------------
Miscellaneous (1.3%)
17,700 Arm Financial Group, Inc.* 367
32,500 Carriage Services, Inc.* 703
85,150 Equity Corp. International* 2,049
60,000 Oakley, Inc.* 712
135,000 Stewart Enterprises, Inc. 5,839
- --------------------------------------------------
9,670
- --------------------------------------------------
Total common stocks (cost: $485,898) 743,718
- --------------------------------------------------
Principal
Amount
(000)
-----
Short-Term (1.7%)
Commercial Paper
$ 12,781 Heller Financial, Inc., 5.87%,
8/01/97 (cost: $12,781) 12,781
- --------------------------------------------------
Total investments (cost: $498,679) $ 756,499
==================================================
- --------------------------
*Non-income producing.
Aggressive Growth Fund
Notes to Portfolio of Investments in Securities
July 31, 1997
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.
Investments in foreign securities were 5.2% of net assets at July 31, 1997.
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.
See accompanying notes to financial statements.
<TABLE>
Aggressive Growth Fund
Statement of Operations
(In Thousands)
Year ended July 31, 1997
<S> <C>
Net investment loss:
Income:
Dividends $ 635
Interest 1,235
----------
Total income 1,870
----------
Expenses:
Management fees 2,716
Transfer agent's fees 1,730
Custodian's fees 236
Postage 211
Shareholder reporting fees 81
Directors' fees 4
Registration fees 125
Audit fees 29
Legal fees 3
Other 15
----------
Total expenses 5,150
----------
Net investment loss (3,280)
----------
Net realized and unrealized gain on investments:
Net realized gain 23,305
Change in net unrealized appreciation/depreciation 103,509
----------
Net realized and unrealized gain 126,814
----------
Increase in net assets resulting from operations $ 123,534
==========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Aggressive Growth Fund
Statements of Changes in Net Assets
(In Thousands)
Years ended July 31,
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
From operations:
Net investment loss $ (3,280) $ (2,073)
Net realized gain on investments 23,305 27,284
Change in net unrealized appreciation/depreciation
of investments 103,509 45,276
------------ ------------
Increase in net assets resulting from operations 123,534 70,487
------------ ------------
Distributions to shareholders from:
Net realized gains (12,865) (25,025)
------------ ------------
From capital share transactions:
Proceeds from shares sold 275,675 335,121
Shares issued for dividends reinvested 11,559 23,005
Cost of shares redeemed (251,356) (159,541)
------------ ------------
Increase in net assets from capital share transactions 35,878 198,585
------------ ------------
Net increase in net assets 146,547 244,047
Net assets:
Beginning of period 607,437 363,390
------------ ------------
End of period $ 753,984 $ 607,437
============ ============
Undistributed net investment loss included in net assets:
Beginning of period $ (5) $ (5)
============ ============
End of period $ (5) $ (5)
============ ============
Change in shares outstanding:
Shares sold 9,294 11,908
Shares issued for dividends reinvested 391 901
Shares redeemed (8,495) (5,865)
------------ ------------
Increase in shares outstanding 1,190 6,944
============ ============
Authorized shares of $.01 par value 50,000 50,000
============ ============
See accompanying notes to financial statements.
</TABLE>
Aggressive Growth Fund
Notes to Financial Statements
July 31, 1997
(1) Summary of Significant Accounting Policies
USAA MUTUAL FUND, INC. (the Company), registered under the Investment Company
Act of 1940, as amended, is a diversified, open-end management investment
company incorporated under the laws of Maryland consisting of ten separate
funds. The information presented in this annual 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.
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 decrease paid-in capital by approximately
$3,280,000.
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 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.
D. 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 through January 13, 1998, 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 the Fund's 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 the Fund's total assets at NationsBank's borrowing rate plus a
markup. The Fund had no borrowings under either of these agreements during the
year ended July 31, 1997.
(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 taxes.
(4) Investment Transactions
Purchases and sales of securities, excluding short-term securities, for the year
ended July 31, 1997 were $412,170,074 and $385,048,544, respectively.
Gross unrealized appreciation and depreciation of investments as of July 31,
1997 was $272,040,990 and $14,221,160, respectively.
(5) 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 as a percentage of its annual
average net assets, which on an annual basis is equal to .50% of the first
$200,000,000, .40% of that portion over $200,000,000 but not over $300,000,000,
and .33% of the portion over $300,000,000.
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 based on an annual charge 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 year ended July
31, 1997 was $2,000.
(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 July 31, 1997, the Association and its affiliates owned
1,097,525 shares (4.8%) of the Fund.
Certain directors and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated directors or Fund officers
received any compensation from 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
Year Ended July 31, Period Ended September 30,
------------------------------------------ July 31, -------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 27.88 $ 24.49 $ 17.74 $ 20.40 $ 18.85
Net investment income (loss) (.14)(a) (.12)(a) (.05)(a) (.02)(a) .02
Net realized and
unrealized gain (loss) 5.65 5.12 8.35 (1.37) 3.67
Distributions from net
investment income - - - (.02) -
Distributions of realized
capital gains (.57) (1.61) (1.55) (1.25) (2.14)
--------- ---------- --------- ---------- ---------
Net asset value at
end of period $ 32.82 $ 27.88 $ 24.49 $ 17.74 $ 20.40
========= ========== ========= ========== =========
Total return (%)* 20.00 21.16 49.98 (7.31) 21.32
Net assets at end
of period (000) $ 753,984 $ 607,437 $ 363,390 $ 248,953 $ 277,198
Ratio of expenses to
average net assets (%) .74 .74 .86 .83(b) .86
Ratio of net investment
income (loss) to average
net assets (%) (.47) (.42) (.28) (.10)(b) .10
Portfolio turnover (%) 57.15 43.75 138.32 98.99 113.01
Average commission rate
paid per share + $ .0501 $ .0496
Year Ended September 30,
-------------------------------------------------------------------------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
Net asset value at
beginning of period $ 20.60 $ 12.34 $ 19.78 $ 17.23 $ 21.79
Net investment income (loss) (.01)(a) .03 .11 .14 .13
Net realized and
unrealized gain (loss) (1.73) 8.33 (4.74) 3.02 (2.71)
Distributions from net
investment income (.01) (.10) (.19) (.14) (.12)
Distributions of realized
capital gains - - (2.62) (.47) (1.86)
--------- ---------- -------- ---------- --------
Net asset value at
end of period $ 18.85 $ 20.60 $ 12.34 $ 19.78 $ 17.23
========= ========== ======== ========== ========
Total return (%)* (8.45) 68.22 (27.00) 19.20 (9.73)
Net assets at end
of period (000) $ 234,967 $ 208,084 $114,674 $ 157,467 $139,260
Ratio of expenses to
average net assets (%) .82 .87 .94 .91 1.00
Ratio of net investment
income (loss) to average
net assets (%) (.05) .17 .68 .78 .82
Portfolio turnover (%) 74.08 50.12 77.60 98.15 67.56
Average commission rate
paid per share +
(a) Calculated using weighted average shares.
(b) Annualized. The ratio is not necessarily indicative of 12 months of
operations. * 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.
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