KPMG
112 East Pecan, Suite 2400 Telephone 210 227 9272
San Antonio, TX 78205-1585 Fax 210 224 0126
210 227 4707
INDEPENDENT AUDITORS' REPORT
The Shareholders and the Board of Directors
USAA Mutual Fund, Inc.:
In planning and performing our audits of the financial statements of the USAA
Growth Fund, USAA First Start Growth Fund, USAA Aggressive Growth Fund, USAA
Science & Technology Fund, USAA Income Stock Fund, USAA Growth & Income Fund,
USAA Income Fund, USAA Short-Term Bond Fund, USAA Intermediate-Term Bond Fund,
USAA Small Cap Stock Fund, USAA High-Yield Opportunities Fund, and USAA Money
Market Fund, separate funds of USAA Mutual Fund, Inc., for the year ended July
31, 2000, we considered internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinions on the financial statements and to comply
with the requirements of Form N-SAR, not to provide assurance on internal
control.
The management of USAA Mutual Fund, Inc. is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, error or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weaknesses is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in amounts that would
be material in relation to the financial statements being audited may occur and
not be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including controls for safeguarding
securities, that we consider to be material weaknesses, as defined above, as of
July 31, 2000.
This report is intended solely for the information and use of management, the
Board of Directors of USAA Mutual Fund, Inc., and the Securities and Exchange
Commission and is not intended to be and should not be used by anyone other than
these specific parties.
KPMG LLP
September 1, 2000
