SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
USAA Mutual Fund, Inc.
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
___________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
5) Total fees paid:
___________________________________________________________________________
<PAGE>
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
PROXY VOTING MADE SIMPLE
The enclosed proxy statement provides details on important issues relating to
your USAA mutual funds. The board of your fund(s) recommends that you vote FOR
all proposals. A separate proxy card and vote is required for each fund you
own.
We offer a variety of ways to vote. You may vote using the traditional method
of mailing back your proxy card. Or you may choose one of our most
cost-effective and more convenient methods. The choice is yours. Use whichever
method works best for you!
YOUR PROXY VOTE IS IMPORTANT!
PLEASE VOTE TODAY
WAYS TO VOTE YOUR PROXY
BY MAIL
[ENVELOPE GRAPHIC]
Return your executed proxy card(s) in the enclosed, postage-paid envelope.
Please ensure that you sign the card(s).
BY PHONE
[PHONE GRAPHIC]
Use an automated touch-tone telephone system 24 hours a day. Simply call toll
free 1-800-690-6903. Then enter your 12-digit control number(s) from your proxy
card(s), and follow the voice prompts to record your vote.
BY INTERNET
[COMPUTER GRAPHIC]
Visit the web site at WWW.PROXYVOTE.COM. Enter your 12-digit control number(s)
located on your proxy card(s), and register your vote.
IN PERSON
[GRAPHIC]
Attend the Shareholder Meeting on Friday, October 15, 1999, at 2 p.m. Central
Standard Time, at the McDermott Auditorium in the USAA Building, 9800
Fredericksburg Road, San Antonio, TX 78288, and cast your vote.
USAA USAA
EAGLE INVESTMENT
LOGO MANAGEMENT
COMPANY
34588-0899
GENERIC REGISTERED TELEPHONE PROXY VOTING SERVICE DIALOGUE 1-800-690-6903
DIALOGUE TYPE OF
NUMBER DIALOGUE DIALOGUE
- -------- -------- --------
1) Greeting 1 Hello. Thank you for calling the Telephone Proxy Voting
Service.
- Go to dialogue #2.
2) Greeting 2 Press one if you are calling from a touch-tone phone and
have your Proxy Form in front of you.
Enter '1'
- Go to dialogue #3.
Enter INVALID response. "Please call back when you have
your Proxy Form. Thank you for calling the Telephone Proxy
Voting Service. This concludes your transaction."
- Disconnect.
*When an INVALID RESPONSE of more than 1 digit is entered,
the caller is disconnected without a message.
Enter NOTHING. "Please call back when you have your Proxy
Form. Thank you for calling the Proxy Voting Service. This
concludes your transaction."
- Disconnect.
3) Let's Begin Let's Begin.
- Go to dialogue #4.
1
<PAGE>
4) Enter CN Please enter the twelve digit Control Number located on the
Proxy Ballot.
Enter 12 VALID Control Number digits during or after
dialogue #'s 3 & 4.
- Go to dialogue #5.
Enter 12 INVALID Control Number digits during or after
dialogue #s 3 & 4. "Sorry, your Control Number is invalid."
- Go to dialogue #4.
-A third INVALID attempt triggers the 'Sorry Problems'
message and disconnects-.
Enter 1 to 11 INVALID digits/characters during or after
dialogue #s 3 & 4. "Sorry, your input was invalid."
- Go to dialogue #4.
-A third attempt triggers the 'Sorry Problems'
message and disconnects-.
Enter NOTHING. "I have not received your response". OR
"Sorry, your input was invalid."
- Go to dialogue #4
-A third NO RESPONSE triggers the 'Sorry Problems'
message and disconnects-.
5) Thank You Thank You.
When vote is in advance of the meeting date...
- Go to dialogue #6.
or
When vote is on the day of or passed the meeting date...
"Your vote cannot be accepted. It is the day of the meeting
or the vote is late."
- Go to dialogue #4.
2
<PAGE>
6) Accept If you elect to vote as the Board of Directors recommends,
Default press one. If you elect to vote on directors and proposals
individually, press two.
Enter '1'.
- Go to dialogue #24.
Enter '2'.
- Go to dialogue #7.
Enter NOTHING or an INVALID response. "I have not received
your response." OR "Sorry, your input was invalid."
- Go to dialogue #6.
-A third NO RESPONSE or INVALID RESPONSE triggers the
'Sorry Problems' message and disconnects-.
3
<PAGE>
DIALOGUES NUMBERED 7 THROUGH 15 AND 19 ARE ONLY REACHED WHEN THERE ARE NOMINEES
TO VOTE ON-AND CALLER ELECTS TO VOTE ON DIRECTORS AND PROPOSALS INDIVIDUALLY.
7) Nominee (1)There are zero nominees for this proxy vote.
Vote Go to dialogue #16.
**Dialogue
(1) or (2)
depending OR
on whether
there are
Nominees (2)If you wish to vote for all nominees, press one.
for this To withhold all nominees, press two.
proxy vote To withhold specific nominees, press three.
Enter '1'
- Go to dialogue #8.
Enter '2'
- Go to dialogue #9.
Enter '3'
- Go to dialogue #10.
Enter NOTHING or an INVALID response. "I have not received
your response." OR "Sorry, your input was invalid."
- Go to dialogue #7.
-A third NO RESPONSE or INVALID RESPONSE triggers the
'Sorry Problems' message and disconnects-.
4
<PAGE>
8) For All You have voted for all nominees. If this is correct, press
Nominees one. If this is not correct, press two.
Enter '1'
- Go to dialogue #16.
Enter '2'
- Go to dialogue #7.
Enter NOTHING or an INVALID response. "I have not received
your response." OR "Sorry, your input was invalid."
- Go to dialogue #8.
-A third NO RESPONSE or INVALID RESPONSE triggers the
'Sorry Problems' message and disconnects-.
9) Withhold You have voted to withhold all nominees. If this is correct,
All Nominees press one. If this is not correct, press two.
Enter '1'
- Go to dialogue #16.
Enter '2'
- Go to dialogue #7.
Enter NOTHING or an INVALID response. "I have not received
your response." OR "Sorry, your input was invalid."
- Go to dialogue #9.
-A third NO RESPONSE or INVALID RESPONSE triggers the
'Sorry Problems' message and disconnects-.
5
<PAGE>
10) Specific You have chosen to withhold Specific Nominees.
Nominee - Go to dialogue #11.
11) Enter Enter the two digit number that is in front of the name of
Nominee the nominee you wish to withhold. If you are finished,
enter zero zero.
Enter VALID two digit number between 1 and 10.
- Go to dialogue #12.
Enter VALID two digit number between 1 and 10 THAT WAS
PREVIOUSLY ENTERED-THEREFORE A DUPLICATE NOMINEE NUMBER.
- Go to dialogue #13.
Enter '00'.
- Go to dialogue #16.
Enter INVALID digit(s).
- Go to dialogue #14.
Enter NOTHING.
- Go to dialogue #16.
12 Verify You have entered Nominee Number.. If this is correct, press
Nominee one. If this is not correct, press two.
Enter '1'.
- Go to dialogue #15.
Enter '2'.
- Go to dialogue #15.
Enter NOTHING or an INVALID RESPONSE. "I have not received
your response." OR "Sorry, your input was invalid."
- Go to dialogue #12. --(Only "if ...correct, press one
- if...not correct, press two" is repeated.)
-A third NO RESPONSE or INVALID RESPONSE triggers
'Sorry Problems' message and disconnects-.
6
<PAGE>
13) Dup You have already selected Nominee Number...
Nominee - Go to dialogue #15.
14) Invalid Your entry was invalid. The Nominee Number must be between
Nominee one and ten.
- Go to dialogue #15.
15) Another If you wish to withhold another nominee, enter the two digit
Nominee number that is in front of the name of the nominee you wish
to withhold. If you are finished, enter zero zero.
Enter VALID two digit number between 1 and 10 to withhold
another nominee.
- Go to dialogue #12.
Enter VALID two digit number between 1 and 10 THAT WAS
PREVIOUSLY ENTERED - THEREFORE A DUPLICATE NOMINEE NUMBER.
- Go to dialogue #13.
Enter '00'.
- Go to dialogue #16.
Enter VALID nominee number.
- Go to dialogue #14.
Enter NOTHING.
- Go to dialogue #16.
16) Proposal Proxy Voting continues with Proposal Voting.
Voting - Go to dialogue #17.
17) Proposal We are ready to accept your vote for Proposal...
Name - Go to dialogue #18.
7
<PAGE>
18) Proposal If you are voting for this proposal, press one. If you are
Vote voting against this proposal, press two. If you wish to
abstain, press three.
Enter '1', '2', '3', etc. (proposal numbers may vary) to
vote on a specific proposal.
- Go to dialogue #17 TO VOTE ON ANOTHER PROPOSAL.
- Go to dialogue #19 AFTER ALL THE PROPOSALS ARE VOTED.
Enter NOTHING or INVALID RESPONSE. "I have not received your
response." OR "Sorry, your input was invalid."
- Go to dialogue #17.
-A third NO RESPONSE or INVALID RESPONSE triggers
'Sorry Problems' message and disconnects-.
19) Nominee When there are NO NOMINEES....
Vote - Go to dialogue #20
Confirmation
When there ARE NOMINEES...
You have voted for all Nominees.
OR
You have voted to withhold all Nominees.
OR
You have voted to withhold Nominee...
- Go to dialogue #20.
20) For You have voted FOR Proposal...
Proposal
21) Against You have voted AGAINST Proposal...
Proposal
8
<PAGE>
22) Abstain You have voted to ABSTAIN from Proposal...
Proposal
Dialogues 20, 21, and 22 are repeated until all proposal
votes are verified
- Go to dialogue #23.
23) Confirm If this is correct, press one. If this is not correct,
press two. If you would like your vote repeated to you,
press three.
Enter '1'. "A vote has been recorded for Control
Number......"
- Go to dialogue #26
Enter '2'.
- Go to dialogue #6.
-A third entry of this response triggers the 'Too
Many Incorrect' message, followed by the 'Sorry
Problems' message and disconnects-.
Enter '3'.
- Go to dialogue #19.
Enter NOTHING or INVALID RESPONSE. "I have not receive
your response." OR "Sorry, your input was invalid."
- Go to dialogue #19, 20, 21, 22.
-A third NO RESPONSE or INVALID RESPONSE triggers
"Sorry, Problems' message and disconnects-.
24) Vote You have elected to vote as the Board of Directors
Recommend has recommended.
- Go to dialogue #25.
9
<PAGE>
25) Board Recommended elections include a vote to approve all
Recommends proposed nominees and a vote for proposals zero one, zero
two, zero four. If this is correct, press one. If this is
not correct, press two. If you would like your vote repeated
to you, press three.
Enter '1'. "A vote has been recorded for Control
Number...."
- Go to dialogue #26.
Enter '2'.
- Go to dialogue #6.
-A third entry of this response triggers the 'Too
Many Incorrects' message, followed by the 'Sorry
Problems' message and disconnects-.
Enter '3'.
- Go to dialogue #24.
Enter NOTHING or an INVALID RESPONSE. "I have not received
your response." OR "Sorry, your input was invalid."
- Go to dialogue #24.
-A third NO RESPONSE or INVALID RESPONSE triggers
'Sorry Problems' message and disconnects-.
10
<PAGE>
26) Conclude If this concludes your business, press one. If you would
Business like to vote for another Proxy Election, press two.
Enter '1'.
- Go to dialogue #27.
Enter '2'.
- Go to dialogue #27.
Enter NOTHING or INVALID response. "I have not received your
response." OR "Sorry, your input was invalid."
- Go to dialogue #26.
-A third NO RESPONSE or INVALID RESPONSE triggers
'Sorry Problems' message and disconnects-.
27) Record All of your votes have been recorded by the Telephone
Votes Proxy Voting Service. Do not mail in your proxy card.
Keep it as a record of your vote.
- Go to dialogue #4 - IF VOTING FOR ANOTHER PROXY ELECTION
based on voter's response to dialogue #26.
- Go to dialogue #28 - IF NOT VOTING FOR ANOTHER PROXY
ELECTION based on voter's response to dialogue #26.
28) Thank Thank you for calling the Telephone Proxy Voting Service.
You This concludes your transaction.
- Disconnects
11
<PAGE>
STANDARD DIALOGUES REPEATED UNDER VARIOUS CONDITIONS
The dialogue below are spoken under various circumstances. Generally, the
"Sorry Problems" dialogue is repeated on the third attempt to get valid
information.
TYPE OF
INSTRUCTION DIALOGUE
- ----------- --------
Sorry Problems We are sorry you are experiencing problems entering your
vote. Please call later and try again.
-NOTE
The "Sorry Problems" dialogue is generally repeated after
any combination of three INVALID RESPONSES OR NON RESPONSES
to a set of dialogues. This is followed by a disconnection.
Too Many You have made too many incorrect entries. Please call back
Incorrects when you have the correct information.
-NOTE
The "Too Many Incorrects" dialogue is generally repeated
when there are several changes and inconsistencies
responding to a set of dialogues. This is followed by the
"Sorry Problems" dialogue and a disconnection.
Invalid Input Sorry, your input was invalid.
Pause .5 [500 ms of silence] (Amount of pause time permitted between
caller's vote and continuation of telephone dialogue.
YOU CAN SUBMIT YOUR PROXY VOTING INSTRUCTIONS RIGHT OVER THE INTERNET
It's fast, convenient, and your voting instructions are immediately posted.
IF YOU RECEIVED NOTIFICATION BY POSTAL MAIL:
1. Read the Proxy Statement. The accompanying Voting Instruction Form or
Proxy Card contains your Control Number.
2. Enter the 12 digit Control Number to access an electronic ballot.
3. Complete the electronic ballot and submit your voting instructions.
4. Provide your E-Mail address if you want confirmation of your voting
instructions.
IF YOU RECEIVED NOTIFICATION BY E-MAIL:
1. To access an electronic ballot, enter the 12 digit Control Number contained
in your E-Mail message and the PIN you used when you enrolled for
electronic ballot.
2. The ballot displayed contains Internet Links to the Proxy Statement and the
Annual Report; read them carefully.
3. Complete the ballot and submit your voting instructions.
______________
Enter your CONTROL NUMBER |______________| ( Please skip any spaces)
_______
Enter your PIN NUMBER |_______| (last 4 digits of your SS#): (Required for the
E-Mail option only)
________________________
| Click to Continue |
|________________________|
<PAGE>
USAA MUTUAL FUND, INC. SPECIAL MEETING
TO BE HELD ON 10/15/1999 FOR HOLDERS AS OF 08/19/1999
CUSIP [ ]
YOUR CONTROL NUMBER: [ ]
===============================================================================
MANAGEMENT RECOMMENDATIONS:
Choose this if you would like to vote your shares following management's
recommendations. See below for the detailed recommendations. Please read it
carefully.
__________________________________________________
| Vote my shares per management's recommendations|
|__________________________________________________|
===============================================================================
PROXY BALLOT:
DIRECTORS:
Directors Recommended: A vote for election of the following nominees
( ) For All Nominees ( ) Withhold All Nominees
( ) For All EXCEPT Those Selected Below:
[ ]Davis
[ ]Roth
[ ]Peebles
[ ]Reimherr
[ ]Zucker
[ ]Dr. Mason
[ ]Mrs. Dreeben
===============================================================================
PROPOSALS:
Please indicate your proposals selections by clicking on the fields below.
02. RATIFICATION OF THE SELECTION OF KPMG LLP AS THE INDEPENDENT AUDITORS OF
THE FUNDS.
Directors Recommend: FOR
[ ]FOR [ ]Against [ ]Abstain
______________________________________________
| Vote my shares per the above selections |
|______________________________________________|
===============================================================================
Click to see: "LETTER TO OUR CLIENTS REGARDING VOTING AUTORITY"
-------------------------------------------------
<PAGE>
VOTING INSTRUCTIONS
Dear Shareholder,
We have been requested to forward to you the displayed proxy material relative
to shares registered in your name. These shares will be voted in accordance
with your wishes, if you execute the displayed ballot and submit it as per the
instructions provided with the proxy. It is understood that if you submit the
ballot without otherwise marking it, the proposals will be voted as recommended
by the board of directors/trustees on all matters to be considered at the
meeting.
In order for your shares to be represented at the meeting, it will be necessary
for us to have your vote. Please complete and submit the displayed ballot.
===============================================================================
YOU CAN SUBMIT YOUR PROXY VOTING INSTRUCTIONS RIGHT OVER THE INTERNET
It's fast, convenient, and your voting instructions are immediately posted.
IF YOU RECEIVED NOTIFICATION BY POSTAL MAIL:
1. Read the Proxy Statement. The accompanying Voting Instruction Form or
Proxy Card contains your Control Number.
2. Enter the 12 digit Control Number to access an electronic ballot.
3. Complete the electronic ballot and submit your voting instructions.
4. Provide your E-Mail address if you want confirmation of your voting
instructions.
IF YOU RECEIVED NOTIFICATION BY E-MAIL:
1. To access an electronic ballot, enter the 12 digit Control Number contained
in your E-Mail message and the PIN you used when you enrolled for
electronic ballot.
2. The ballot displayed contains Internet Links to the Proxy Statement and the
Annual Report; read them carefully.
3. Complete the ballot and submit your voting instructions.
______________
Enter your CONTROL NUMBER |______________| ( Please skip any spaces)
_______
Enter your PIN NUMBER |_______| (last 4 digits of your SS#): (Required for the
E-Mail option only)
________________________
| Click to Continue |
|________________________|
<PAGE>
USAA S&P 500 INDEX FUND SPECIAL MEETING
TO BE HELD ON 10/15/1999 FOR HOLDERS AS OF 08/19/1999
CUSIP [ ]
YOUR CONTROL NUMBER: [ ]
===============================================================================
MANAGEMENT RECOMMENDATIONS:
Choose this if you would like to vote your shares following management's
recommendations. See below for the detailed recommendations. Please read it
carefully.
__________________________________________________
| Vote my shares per management's recommendations|
|__________________________________________________|
===============================================================================
PROXY BALLOT:
DIRECTORS:
Directors Recommended: A vote for election of the following nominees
( ) For All Nominees ( ) Withhold All Nominees
( ) For All EXCEPT Those Selected Below:
[ ]Davis
[ ]Roth
[ ]Peebles
[ ]Reimherr
[ ]Zucker
[ ]Dr. Mason
[ ]Mrs. Dreeben
===============================================================================
PROPOSALS:
Please indicate your proposals selections by clicking on the fields below.
02. RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT ACCOUNTANTS OF THE FUNDS.
Directors Recommend: FOR
[ ]FOR [ ]Against [ ]Abstain
3A. EQUITY 500 INDEX PORTFOLIO MATTER: THE APPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE EQUITY 500 INDEX PORTFOLIO (PORTFOLIO) AND
BANKERS TRUST COMPANY.
Directors Recommend: FOR
[ ]FOR [ ]Against [ ]Abstain
3B. EQUITY 500 INDEX PORTFOLIO MATTER: THE ELECTION OF TRUSTEES OF THE
PORTFOLIO.
Directors Recommend: FOR
[ ]FOR [ ]Against [ ]Abstain
3C. EQUITY 500 INDEX PORTFOLIO MATTER: THE RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE PORTFOLIO.
Directors Recommend: FOR
[ ]FOR [ ]Against [ ]Abstain
______________________________________________
| Vote my shares per the above selections |
|______________________________________________|
===============================================================================
Click to see: "LETTER TO OUR CLIENTS REGARDING VOTING AUTORITY"
-------------------------------------------------
<PAGE>
VOTING INSTRUCTIONS
Dear Shareholder,
We have been requested to forward to you the displayed proxy material relative
to shares registered in your name. These shares will be voted in accordance
with your wishes, if you execute the displayed ballot and submit it as per the
instructions provided with the proxy. It is understood that if you submit the
ballot without otherwise marking it, the proposals will be voted as recommended
by the board of directors/trustees on all matters to be considered at the
meeting.
In order for your shares to be represented at the meeting, it will be necessary
for us to have your vote. Please complete and submit the displayed ballot.
===============================================================================
---------------------------
Q & A
1999 SHAREHOLDER PROXIES
FOR
USAA MUTUAL FUND, INC.,
USAA TAX EXEMPT FUND, INC.,
USAA INVESTMENT TRUST, AND
USAA STATE TAX-FREE TRUST
---------------------------
There will be a shareholder meeting on October 15, 1999 affecting all 38 USAA
mutual funds. The meeting will be held in the McDermott Auditorium in the USAA
Building at 2:00 p.m., CST. August 19, 1999, is both the Record Date and the
approximate date on which the proxies will be sent to shareholders.
THE FOLLOWING LISTS THE PROPOSALS ON WHICH SHAREHOLDERS ARE BEING ASKED TO
VOTE:
- -------------------------------------------------------------------------------
Mutual Mutual Fund,
Fund, Inc. Inc. (all Tax State Tax
(Index funds except Exempt Investment Free
Proposals: Fund only) Index Fund) Fund, Inc. Trust Trust
- -------------------------------------------------------------------------------
Election of Board of
Directors (or Board of
Trustees, as applicable) X X X X X
- -------------------------------------------------------------------------------
Selection of KPMG to serve
as independent auditors X X X X
- -------------------------------------------------------------------------------
Selection of
PricewaterhouseCoopers to
serve as independent
accountants X
- -------------------------------------------------------------------------------
Approval of a new investment
advisory agreement between
the Equity 500 Index
Portfolio (the "Portfolio") X
and Bankers Trust Company
- -------------------------------------------------------------------------------
Election of trustees of
the Portfolio X
- -------------------------------------------------------------------------------
Selection of
PricewaterhouesCoopers
to serve as independent
accountants for the X
Portfolio
- -------------------------------------------------------------------------------
ADP FINANCIAL INFORMATION SERVICES, INC., has been hired to mail the proxies
and tabulate the results. Shareholders will return their ballots directly to
ADP for tabulation. Mailings to the shareholders will contain a proxy
statement, proxy card, return envelope and a card briefly setting out the four
ways in which a shareholder can vote.
D.F. KING, a proxy solicitation firm, has also been retained, if needed, to
assist the funds in obtaining sufficient votes for a quorum at the shareholder
meeting and will call and encourage those shareholders who have not returned
their proxies to do so.
<PAGE>
----------------------
IN GENERAL (ALL FUNDS)
----------------------
* WHY IS IT IMPORTANT FOR ME TO VOTE?
When you cast your vote, you are telling us how to vote on your behalf on
important issues relating to your fund(s). Your vote is extremely
important to us regardless of how many shares you own. Your vote is
important to achieving a quorum for the meeting in order to avoid further
costs to your funds for additional solicitation. In addition, we value
your feedback in the form of your vote on these proposals.
* WHAT ARE THE DIFFERENT WAYS I CAN VOTE MY SHARES?
As a shareholder, you may vote in one of four ways. FIRST you may cast
your vote by calling our special toll-free number, 1-800-690-6903. SECOND,
you may cast your vote through the Internet by going to the web site,
www.proxyvote.com. THIRD, you may vote by sending to us a completed and
executed proxy card (we have enclosed with the proxy statement a
postage-paid envelope for your convenience). FINALLY, you may vote in
person by attending the Shareholder Meeting. If you do not anticipate
attending the meeting in person, WE ENCOURAGE YOU TO VOTE BY INTERNET OR
TELEPHONE TO MINIMIZE THE COSTS OF SOLICITATION.
* IF I HAVE ALREADY VOTED, CAN I CHANGE MY VOTE?
If you have already voted by mail, Internet or telephone, but wish to
change your vote, you may do so at any time before they are voted by
casting a later-dated vote, whether by Internet, telephone, mail or in
person at the shareholder meeting. Even if you have voted by mail,
telephone or Internet, you may still wish to attend the meeting.
* MUST I SIGN ALL THE PROXIES?
Each shareholder can potentially receive multiple proxies. Each of these
must be signed in order for your vote to count. If there is a signature
and no direction on how to vote, your shares will be voted by the company
in favor of all proposals. If you vote, but do not sign the card, it will
be returned to you for signature if time permits. The same rules apply for
Internet and telephone voting. You must vote each proxy using the
different control numbers assigned to each one.
* HOW DO I OBTAIN A REPLACEMENT PROXY?
We will be glad to mail out another proxy to you, time permitting.
* WHY DID I RECEIVE SO MANY PROXIES?
Each family of funds has its own proxy. If you own a fund in more than one
family, you received a proxy for each. If you owned more than one fund in
the same fund family, then you will have received one proxy statement and
multiple proxy cards (depending upon how many different funds you own
within that same family of funds).
<PAGE>
* WHY ARE THERE TWO DIFFERENT PROXY STATEMENTS FOR USAA MUTUAL FUND, INC.?
Because there are several different proposals on which the Index Fund
shareholders (and not the 12 remaining funds in this particular family of
funds) are being asked to vote, we decided to divide the USAA Mutual Fund,
Inc. proxy statement into two separate proxy statements. For example, if
you own shares in the Aggressive Growth Fund and the Index Fund, even
though they are both offered by USAA Mutual Fund, Inc., you will receive
two separate proxy statements and proxy cards.
* WHO IS D.F. KING AND WHY DID I GET A CALL FROM THEM?
D.F. King is a professional proxy solicitation firm. You may have received
a call from a D.F. King representative. They are calling in order to
encourage you to vote.
* CAN I GET A COPY OF THE FINANCIAL STATEMENTS?
Yes, we can send to you, at no charge, a copy of one or more mutual fund's
annual reports for their most recent fiscal year, and a copy of their
semiannual reports for any subsequent semiannual period.
------------------------------
ELECTION OF BOARD OF DIRECTORS
(OR TRUSTEES) (ALL FUNDS)
------------------------------
* WHO ARE THE CURRENT MEMBERS OF THE BOARD OF DIRECTORS (OR TRUSTEES)?
The Board currently consists of Robert Davis, Mickey Roth, Jack Saunders,
Barbara Dreeben, Howard Freeman, Robert Mason, and Richard Zucker. Jack
Saunders and Howard Freeman are both resigning their position as members
of the Board effective December 31, 1999.
* WHO ARE THE PROPOSED MEMBERS OF THE BOARD OF DIRECTORS (OR TRUSTEES)?
You are being asked to vote on the new Board consisting of Robert Davis,
Mickey Roth, David Peebles, Barbara Dreeben, Robert Mason, Michael
Reimherr, and Richard Zucker. The new members to the Board are proposed to
be David Peebles and Michael Reimherr, effective January 1, 2000.
<PAGE>
------------------------------
SELECTION OF KPMG TO SERVE AS
INDEPENDENT AUDITORS
(ALL FUNDS EXCEPT THE INDEX
------------------------------
* WHY NOW IS MANAGEMENT ASKING SHAREHOLDERS TO APPROVE THE BOARD'S SELECTION
OF KPMG (OR PRICEWATERHOUSECOOPERS FOR THE INDEX FUND) AS THE AUDITORS OF
THE FUNDS?
The rules of the SEC which apply to proxy statements require that whenever
a fund requests its shareholders to elect the fund's directors, it must
also request that the shareholders approve the independent accounting firm
which the Board has chosen to audit the funds' books.
-----------------------------
SELECTION OF
PRICEWATERHOUSECOOPERS TO
SERVE AS INDEPENDENT
ACCOUNTANTS (INDEX FUND ONLY)
-----------------------------
* WHY DO WE HAVE DIFFERENT ACCOUNTANTS FOR THE INDEX FUND
(PRICEWATERHOUSECOOPERS) THAN FOR ALL 37 OF THE OTHER FUNDS (KPMG)?
PricewaterhouseCoopers was selected primarily on the basis of its
expertise as auditors of investment companies, the quality of its audit
services, and the competitiveness of the fees charged for these services.
PricewaterhouseCoopers also was selected because it serves as independent
accountants to the Equity 500 Index Portfolio (the "Portfolio"), the
mutual fund into which the Index Fund invests its investable assets. By
retaining PricewaterhouseCoopers to audit the Index Fund, the Index Fund
reaps the benefit of cost efficiencies resulting from the Index Fund using
the same auditors as the Portfolio. Also, as set forth below, shareholders
of the Index Fund are also being asked to approve the selection of
PricewaterhouseCoopers to serve as independent accountants to the
Portfolio.
<PAGE>
------------------------------------------------------
EQUITY INDEX PORTFOLIO MATTERS (INDEX FUND ONLY):
* APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
BETWEEN THE EQUITY 500 INDEX PORTFOLIO ("PORTFOLIO")
AND BANDKER'S TRUST COMPANY:
* ELECTION OF TRUSTEES OF THE PORTFOLIO; AND
* SELECTION OF PRICEWATERHOUSECOOPERS TO SERVE AS
INDEPENDENT ACCOUNTANTS FOR THE PORTFOLIO
------------------------------------------------------
* HOW IS THE INDEX FUND DIFFERENT FROM THE OTHER 37 FUNDS IN THE USAA FAMILY
OF FUNDS?
The Index Fund is different from any other fund in the USAA Family of
Funds in that it operates as a "feeder fund" in a master-feeder fund
arrangement in which the "master fund" is the Equity 500 Index Portfolio
(the "Portfolio"). The Portfolio is an open-end management investment
company advised by Bankers Trust. All of the Index Fund's assets are
invested in the Portfolio, which operates with the same investment
objectives and policies as the Index Fund. The Index Fund is one of six
shareholders in the Portfolio, just as you are one of many shareholders in
the Index Fund.
* WHY AM I, AS A SHAREHOLDER OF THE INDEX FUND, BEING ASKED TO VOTE ON
MATTERS HAVING TO DO WITH THE PORTFOLIO?
As a shareholder of the Portfolio, the Index Fund has been asked to vote
its shares in the Portfolio on each of the matters identified in Proposals
III (a)-(c) at a meeting of shareholders of the Portfolio to be held
October 15, 1999. Pursuant to the requirements of the 1940 Act applicable
to master-feeder fund arrangements, the Index Fund must vote its Portfolio
shares in accordance with the directions received from the Index Fund's
own shareholders. Consequently, we need your vote on this matter for
direction as to how the Index Fund should vote its Portfolio shares.
* HOW WILL THE INDEX FUND VOTE ITS PORTFOLIO SHARES?
When you, as a shareholder of the Index Fund, cast your vote on this
matter, you are instructing the Index Fund how it should vote its
Portfolio shares. The Index Fund will vote its Portfolio shares in
proportion to how all shareholders of the Index Fund vote. Therefore, it
is very important that you vote on these matters and tell the Index Fund
how you would like it to vote.
<PAGE>
* WHAT ARE THE THREE PORTFOLIO MATTERS ON WHICH I AM BEING ASKED TO VOTE?
FIRST, you are being asked to approve a new investment advisory agreement
between Bankers Trust Company and the Portfolio. SECOND, you are being
asked to elect the members of the Board of Trustees of the Portfolio (the
"Portfolio Board"). FINALLY, you are being asked to ratify the selection
of PricewaterhouseCoopers LLP as the independent accountants for the
Portfolio.
Keep in mind, however, that as of May 31, 1999, the Index Fund only owned
approximately 41% of the Portfolio. Therefore, other funds that are
shareholders of the Portfolio could approve any or all of these three
proposals, regardless of the Index Fund's vote.
* WHAT HAS HAPPENED THAT HAS BROUGHT ABOUT THE NEED TO VOTE ON SOME OF THESE
MATTERS?
On June 4, 1999, Bankers Trust Company ("Bankers Trust") became an
indirect wholly owned subsidiary of Deutsche Bank, A.G. ("Deutsche Bank").
Deutsche Bank, a banking company organized under the laws of the Federal
Republic of Germany, provides, along with its various subsidiaries, a
comprehensive range of global banking and financial services both
domestically and abroad.
As stated before, Bankers Trust currently serves as investment adviser to
the Portfolio. As a result of the transaction discussed above (the
"Merger"), and applicable provisions of the 1940 Act, the investment
advisory agreement between the Portfolio and Bankers Trust could be
considered to have automatically terminated on June 4, 1999. To ensure
that Bankers Trust may continue to serve as investment adviser to the
Portfolio, it is necessary for shareholders of the Portfolio to approve a
new investment advisory agreement with Bankers Trust (the "New Advisory
Agreement").
* WHY AM I BEING ASKED TO VOTE ON THE NEW ADVISORY AGREEMENT?
The 1940 Act, which regulates investment companies in the United States
such as the Index Fund and the Portfolio, requires a shareholder vote to
approve a new advisory agreement following certain types of business
combinations. The Merger could be viewed as requiring shareholder approval
of a new investment advisory agreement with respect to management of the
Portfolio. The New Advisory Agreement became effective immediately upon
consummation of the Merger and will continue in effect only upon approval
of the Portfolio's shareholders (one of which is the Index Fund).
* HOW DID THE MERGER AFFECT ME AS AN INDEX FUND SHAREHOLDER?
The Index Fund and the Portfolio, as well as their investment objectives,
have not changed as a result of the Merger. You still own the same shares
in the Index Fund as you did prior to the Merger. The New Advisory
Agreement contains substantially the same terms and conditions as the
agreement in effect prior to the Merger, except for the dates of
execution, effectiveness and initial term. If the New Advisory Agreement
is approved by you the shareholders, the agreement will continue in effect
as described above.
* DO THE FEES PAID TO BANKERS TRUST INCREASE UNDER THE NEW ADVISORY
AGREEMENT?
No, the advisory fees paid to Bankers Trust remain the same under the New
Advisory Agreement.
<PAGE>
* WHAT ARE THE BENEFITS OF THE MERGER?
There are several potential positive aspects of the Merger you may be
interested in. Most notably, the combined institution will be one of the
largest financial institutions in the world, as well as a leader in a
number of important categories, such as asset management, custody,
securities lending and related businesses. The financial strength of the
combined institution coupled with the increased breadth and depth of its
resources and capabilities are advantages the acquisition brings. Further,
as a truly global institution, the combined entity will be in a unique
position to provide coverage, services and products that other
institutions might not be able to offer.
* CAN YOU PLEASE TELL ME ABOUT THE CRIMINAL SANCTIONS?
On March 11, 1999, Bankers Trust announced that it had reached an
agreement with the United States Attorney's Office in the Southern
District of New York to resolve an investigation concerning inappropriate
transfers of unclaimed funds and related record-keeping problems that
occurred between 1994 and 1996. Pursuant to its agreement with the U.S.
Attorney's Office, Bankers Trust pleaded guilty to misstating entries in
the bank's books and records and agreed to pay $53.5 million fines to
state and federal authorities. On July 26, 1999, the federal criminal
proceedings were concluded with Bankers Trust's formal sentencing.
As a result of the plea, absent an order from the SEC, Bankers Trust would
not be able to continue to provide investment advisory services to the
Portfolio or the Fund. The SEC has granted Bankers Trust a temporary order
under Section 9(c) of the Act to permit Bankers Trust and its affiliates
to continue to provide investment advisory services to registered
investment companies, and Bankers Trust, pursuant to Section 9(c) of the
Act, has filed an application for a permanent order. If the SEC refuses to
grant a permanent order, shareholders will receive supplemental proxy
materials requesting approval to release any amounts held in escrow up to
the time of the refusal and such other action as deemed appropriate by the
Portfolio Boards.
* ARE THE BANKERS TRUST CRIMINAL SANCTIONS RELATED TO THE MUTUAL FUND SIDE
OF THEIR BUSINESS?
No, the events leading up to the guilty pleas did not arise out of the
investment advisory or mutual fund management activities of Bankers Trust
or its affiliates.
* WHY DO I HAVE TO VOTE TWICE FOR PRICEWATERHOUSECOOPERS IN THE SAME PROXY?
PricewaterhouseCoopers is the auditor for both the Index Fund and the
Portfolio (remember, the Index Fund is a shareholder of the Portfolio).
Therefore, we are asking you to approve the selection by the Board of
PricewaterhouseCoopers to serve as independent accountants for both the
Fund and the Portfolio.
82626 V2
