SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. __)
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14a-6(e)(2))
[ ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
USAA Investment Trust
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________
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if other than the Registrant)
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PRELIMINARY COPY
IMPORTANT INFORMATION FOR SHAREHOLDERS IN THE BALANCED STRATEGY FUND,
CORNERSTONE STRATEGY FUND, EMERGING MARKETS FUND, GNMA TRUST, GOLD FUND, GROWTH
AND TAX STRATEGY FUND, GROWTH STRATEGY FUND, INCOME STRATEGY FUND,
INTERNATIONAL FUND, TREASURY MONEY MARKET TRUST, AND WORLD GROWTH FUND
AUGUST 19, 1999
USAA EAGLE LOGO
USAA Investment Trust
9800 Fredericksburg Road
San Antonio, Texas 78288
This document contains your proxy statement and proxy card. This proxy card is,
in essence, a ballot to vote the shares you own in one or more of the
above-listed mutual funds. When you complete, sign, and mail to us your proxy
card, it tells us how to vote on your behalf on important issues relating to
your funds, and we'll vote it exactly as you tell us. If you simply sign the
proxy, we'll vote it in accordance with the Board of Trustees' recommendations
found on page 5.
If you prefer, instead of mailing the enclosed proxy card, you can cast your
vote through the Internet by going to www.proxyvote.com. You may also cast your
vote by calling 1-800-690-6903 or in person at the shareholder meeting. We
encourage you to vote by Internet or telephone, using the 12-digit "control
number" that appears on your proxy card. Voting by these methods minimizes the
Funds' costs of solicitation (no return-mail postage).
We urge you to spend some time reviewing this proxy statement. Please promptly
cast your vote with us, whether by mail, Internet, telephone, or attending the
shareholder meeting in person. When shareholders don't vote in sufficient
numbers, the funds must incur the additional expense of follow-up solicitation,
which hurts your funds' performance. If you have any questions on these
materials, please contact us at 1-800-563-4957.
TABLE OF CONTENTS
A Message from the President............................. 3
Notice of Shareholder Meeting............................ 4
Proxy Statement.......................................... 5
Board of Trustees' Recommendations....................... 5
Further Information About Voting
and Shareholder Meeting............................. 16
Further Information About Your Funds..................... 18
EXHIBIT A: Proposed Amendment to Trust's First Amended
and Restated Master Trust Agreement................. 20
PROXY CARD ENCLOSED
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PRELIMINARY COPY
A MESSAGE FROM THE PRESIDENT
Dear Shareholder:
I am writing to you to ask for your vote on important questions that affect
your investment in your funds. While you are, of course, welcome to join us at
your funds' meeting, most shareholders cast their vote by filling out and
signing the enclosed proxy card, through the Internet by going to the web site
(www.proxyvote.com), or by calling our special toll-free number,
1-800-690-6903. We are asking for your vote on the following matters:
I. Election of Board of Trustees of USAA Investment Trust (Trust);
II. Approval of an amendment to the Trust's First Amended and Restated
Master Trust Agreement to permit the Trust to redeem shareholder
accounts under terms and conditions established by the Board of
Trustees; and
III. Ratification of the selection of KPMG LLP by the Board of Trustees to
serve as the independent auditors of the Funds.
Although we would like very much to have each shareholder attend the
shareholder meeting, we realize this is not always possible. Whether or not you
plan to be present, we need your vote. For your convenience you may also cast
your vote on the Internet, by calling a toll-free number, or by mailing the
completed and signed enclosed proxy card (a postage-paid envelope has been
enclosed for this purpose).
However you choose to cast your vote, we urge you to do so in a timely manner.
Please do not set this proxy aside for another time. When shareholders don't
promptly cast their votes, their funds may have to incur the additional expense
of follow-up communications. All shareholders benefit from timely voting.
Your vote is important to us. We appreciate the time and consideration that I'm
confident you will give this matter. If you have any comments or questions
about any of the proposals, please contact us at 1-800-563-4957.
Sincerely yours,
/s/Michael J. C. Roth
---------------------
Michael J. C. Roth, CFA
President and
Vice Chairman of the Board
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PRELIMINARY COPY
USAA INVESTMENT TRUST
9800 Fredericksburg Road
San Antonio, Texas 78288
Notice of Meeting of Shareholders
TO BE HELD OCTOBER 15, 1999
This is the formal agenda for the shareholder meeting (Shareholder Meeting) of
the following eleven mutual funds: Balanced Strategy Fund, Cornerstone Strategy
Fund, Emerging Markets Fund, GNMA Trust, Gold Fund, Growth and Tax Strategy
Fund, Growth Strategy Fund, Income Strategy Fund, International Fund, Treasury
Money Market Trust, and World Growth Fund (collectively, the Funds or Fund).
USAA Investment Trust (Trust) is a Massachusetts business trust that offers
shares in these eleven no-load mutual funds.
This Notice of Meeting tells you what matters will be voted on and the time and
place of the Shareholder Meeting, if you plan to attend in person.
A Shareholder Meeting of the Trust will be held 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, Texas 78288, to consider the
following matters:
I. Election of the Trust's Board of Trustees. See page 6.
II. Approval of an amendment to the Trust's First Amended and Restated
Master Trust Agreement (Master Trust Agreement) to permit the Trust to
redeem shareholder accounts under terms and conditions established by
the Board of Trustees. See page 12.
III. Ratification of the selection of KPMG LLP by the Board of Trustees to
serve as the independent auditors of the Funds. See page 15.
By Order of the Board of Trustees
Michael D. Wagner
Secretary
San Antonio, Texas
August 19, 1999
- -------------------------------------------------------------------------------
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE, OR VOTE ON THE INTERNET AT WWW.PROXYVOTE.COM, OR CALL
OUR SPECIAL TOLL-FREE NUMBER, 1-800-690-6903 SO YOU WILL BE REPRESENTED AT
THE MEETING.
- -------------------------------------------------------------------------------
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PRELIMINARY COPY
PROXY STATEMENT
This document will give you the information you need to vote on the matters
listed on the previous page. Much of the information in this Proxy Statement is
required under the rules and regulations of the Securities and Exchange
Commission (SEC) and, is, therefore, quite detailed. If there is anything you
don't understand, please contact us at 1-800-563-4957.
* WHO IS ASKING FOR MY VOTE?
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST
ISSUING SHARES OF THE FOLLOWING FUNDS: BALANCED STRATEGY FUND, CORNERSTONE
STRATEGY FUND, EMERGING MARKETS FUND, GNMA TRUST, GOLD FUND, GROWTH AND
TAX STRATEGY FUND, GROWTH STRATEGY FUND, INCOME STRATEGY FUND,
INTERNATIONAL FUND, TREASURY MONEY MARKET TRUST, AND WORLD GROWTH FUND
(EACH, A FUND OR COLLECTIVELY, THE FUNDS). How you vote, whether by mail,
Internet, telephone, or in person, will be used at the Shareholder
Meeting, and if the Shareholder Meeting is adjourned, at any later
meetings, for the purposes stated in the Notice of Meeting (see previous
page).
* WHAT ARE THE DIFFERENT WAYS I CAN CAST MY VOTE?
As a shareholder, you may vote in one of four ways. First, you may vote in
person by attending the Shareholder Meeting. Second, you may vote by
sending us a completed and executed proxy card. The proxy card has been
included with this Proxy Statement, along with a postage-paid envelope for
your convenience in mailing us your proxy card. Third, you may cast your
vote through the Internet by going to the web site, www.proxyvote.com.
Finally, you may also cast your vote by calling our special toll-free
number, 1-800-690-6903. 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.
* HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THESE
PROPOSALS?
The Board of Trustees recommends that you vote:
I. FOR the election of all nominees for election to the Trust's Board
of Trustees;
II. FOR approval of an amendment to the Trust's Master Trust
Agreement to permit the Trust to redeem shareholder accounts
under terms and conditions established by the Board of Trustees;
and
III. FOR the selection of KPMG LLP to serve as the independent auditors
of the Funds.
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* WHO IS ELIGIBLE TO VOTE?
All shareholders of the Funds as of the Record Date (close of business on
August 19, 1999) are entitled to vote on the proposals listed above at the
Shareholder Meeting, or any adjournment thereof. As of August 4, 1999,
there were ____ shares of the Balanced Strategy Fund, ____ shares of the
Cornerstone Strategy Fund, _____ shares of the Emerging Markets Fund, ____
shares of the GNMA Trust, ____ shares of the Gold Fund, _____ shares of
the Growth and Tax Strategy Fund, ____ shares of the Growth Strategy Fund,
_____ shares of the Income Strategy Fund, _____ shares of the
International Fund, _____ shares of the Treasury Money Market Trust, and
____ shares of the World Growth Fund issued and outstanding. The Notice of
Meeting, the proxy card, and the Proxy Statement have been mailed to
shareholders of record on or about August 19, 1999.
Each share is entitled to one vote (with proportionate voting for
fractional shares). Shares represented by duly-executed proxies will be
voted in accordance with shareholders' instructions. If you sign the
proxy, but don't fill in a vote, your shares will be voted "FOR" each of
the proposals. If any other business is brought before the Shareholder
Meeting, your shares will be voted as determined by the discretion of the
proxies.
PROPOSAL I
ELECTION OF BOARD OF TRUSTEES
* WHO ARE THE NOMINEES FOR THE BOARD OF TRUSTEES?
- - Robert G. Davis*
9800 Fredericksburg Road
San Antonio, Texas 78288
Mr. Davis, age 52, is President and Chief Operating Officer of United
Services Automobile Association (USAA) (6/99-present); Deputy Chief
Executive Officer for Capital Management of USAA (6/98-5/99); President,
Chief Executive Officer, Director, and Vice Chairman of the Board of
Directors of USAA Capital Corporation and several of its subsidiaries and
affiliates (1/97-present); President, Chief Executive Officer, Director,
and Chairman of the Board of Directors of USAA Financial Planning Network,
Inc. (1/97-present); Executive Vice President, Chief Operating Officer,
Director, and Vice Chairman of the Board of Directors of USAA Financial
Planning Network, Inc. (6/96-12-96); Special Assistant to Chairman, USAA
(6/96-12/96); President and Chief Executive Officer, Banc One Credit
Corporation (12/95-6/96); and President and Chief Executive Officer, Banc
One Columbus (8/91-12/95). Mr. Davis serves as a Trustee/Director and
Chairman of the Boards of Trustees/Directors of each of the remaining
funds within the USAA Family of Funds; Director and Chairman of the Boards
of Directors of USAA Investment Management Company (IMCO), USAA
Shareholder Account Services, USAA Federal Savings Bank, and USAA Real
Estate Company.
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- - Michael J. C. Roth*
9800 Fredericksburg Road
San Antonio, Texas 78288
Mr. Roth, age 57, is Chief Executive Officer, IMCO (10/93-present);
President, Director and Vice Chairman of the Board of Directors, IMCO
(1/90-present). Mr. Roth serves as President, Trustee/Director, and Vice
Chairman of the Boards of Trustees/Directors of each of the remaining
Funds within the USAA Family of Funds and USAA Shareholder Account
Services; Director of USAA Life Insurance Company; Trustee and Vice
Chairman of USAA Life Investment Trust.
- - David G. Peebles*
9800 Fredericksburg Road
San Antonio, Texas 78288
Mr. Peebles, age 59, is Senior Vice President, Equity Investments, IMCO
(11/98-present); Vice President, Equity Investments, IMCO (2/88-11/98).
- - Barbara B. Dreeben
200 Patterson, #1008
San Antonio, Texas 78209
Mrs. Dreeben, age 54, is President, Postal Addvantage (7/92-present);
Consultant, Nancy Harkins Stationer (8/91-12/95). Mrs. Dreeben serves as a
Trustee/Director of each of the remaining Funds within the USAA Family of
Funds.
- - Robert L. Mason, Ph.D.
12823 Queens Forest
San Antonio, Texas 78230
Dr. Mason, age 53, is Staff Analyst, Southwest Research Institute
(9/98-present); Manager, Statistical Analysis Section, Southwest Research
Institute (2/79-9/98). Dr. Mason serves as a Trustee/Director of each of
the remaining Funds within the USAA Family of Funds.
- - Michael F. Reimherr
128 East Arrowhead
San Antonio, Texas 78228
Mr. Reimherr, age 53, is President of Reimherr Business Consulting
(5/95-present). Mr. Reimherr previously served as President of Twang Candy
Trust (5/91-5/94).
- - Richard A. Zucker
407 Arch Bluff
San Antonio, Texas 78216
Mr. Zucker, age 56, is Vice President, Beldon Roofing and Remodeling
(1985-present). Mr. Zucker serves as a Trustee/Director of each of the
remaining Funds within the USAA Family of Funds.
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______________
* indicates individual who is deemed to be an "interested person" of the
Trust under the Investment Company Act of 1940 (1940Act) because of his
affiliation with IMCO and its affiliates.
Except as indicated above, the principal occupations and business
experience of the nominees for the Board of Trustees for the last five
years have been with the employers indicated, although in some cases they
have held different positions with those employers. Mr. Roth, Mrs.
Dreeben, and Mr. Zucker were elected by the shareholders in October 1995.
Dr. Mason and Mr. Davis were appointed by the Trust's Board of Trustees on
September 6, 1996, and November 20, 1996, respectively. Neither Mr.
Peebles nor Mr. Reimherr are currently members of the Board of Trustees.
Each trustee serves until his or her successor is elected and qualified.
Each of the nominees has agreed to serve on the Board of Trustees if
elected. If any of the nominees is unavailable for election at the time of
the Shareholder Meeting, which is not anticipated, the Board of Trustees
may vote for other nominees at their discretion.
* WHAT ARE THE RESPONSIBILITIES OF THE BOARD OF TRUSTEES?
The Board of Trustees is responsible for the general oversight of the
Funds' business and for assuring that your Funds are managed in the best
interests of each Fund's respective shareholders. The Board of Trustees
periodically reviews your Funds' investment performance as well as the
quality of other services provided to your Funds and their shareholders by
each of the Funds' service providers, including USAA Investment Management
Trust (IMCO) and its affiliates. IMCO acts as the investment adviser to
the Funds. IMCO's address is 9800 Fredericksburg Road, San Antonio, Texas
78288. At least annually, the Board of Trustees reviews the fees paid by
the Trust for these services and the overall level of your Funds'
operating expenses.
* WHY ARE WE NOW ELECTING NEW MEMBERS OF THE BOARD OF TRUSTEES?
Under the 1940 Act, the Board of Trustees may fill vacancies on the Board
of Trustees or appoint new trustees only if, immediately thereafter, at
least two-thirds of the trustees will have been elected by shareholders.
Currently, two of the Trust's seven trustees have not previously been
elected by shareholders. Furthermore, Howard L. Freeman, Jr. and John W.
Saunders, Jr., each of whom had previously been elected by shareholders,
have announced their intention to resign as trustees effective as of
December 31, 1999.
The Board of Trustees believes it would be in the best interests of
shareholders to fill both vacancies resulting from these resignations and,
therefore, has nominated Mr. Peebles and Mr. Reimherr to become trustees
effective as of January 1, 2000. In light of the fact that only three of
the Trust's Trustees will have been elected by shareholders as of such
date, it follows that a meeting of shareholders needs to be held to elect
trustees.
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Under the 1940 Act, the Trust is also required to call a meeting of
shareholders promptly to elect trustees if at any time less than a
majority of the trustees have been elected by shareholders. By holding a
meeting to elect trustees at this time, the Trust may be able to delay the
time at which another shareholder meeting is required for the election of
trustees, which will result in a savings of the costs associated with
holding such a meeting.
* HOW LONG CAN TRUSTEES SERVE ON THE BOARD OF TRUSTEES?
Pursuant to a policy adopted by the Board of Trustees, each duly-elected
or appointed trustee will continue to serve as a trustee until the trustee
either reaches age 70 or has served 10 years in such capacity. A trustee
of the Trust may resign or be removed by a vote of the holders of a
majority of the outstanding shares of the Funds at any time.
* DOES USAA OWN SHARES IN ANY OF THE FUNDS?
As of June 30, 1999, USAA, a Texas reciprocal inter-insurance exchange,
beneficially owned directly or indirectly through one or more of its
affiliates 25,544,232 shares (79.3%) of the Emerging Markets Fund; 303,025
shares (5.2%) of the Income Strategy Fund; 2,456,824 shares (9.7%) of the
International Fund; and no shares of the Balanced Strategy Fund,
Cornerstone Strategy Fund, GNMA Trust, Gold Fund, Growth and Tax Strategy
Fund, Growth Strategy Fund, Treasury Money Market Trust; and World Growth
Fund. It is anticipated that shares owned by USAA and its affiliates, as
well as any related employee benefit plan(s), will be voted in favor of
each of the proposals. The address of USAA and its affiliates is 9800
Fredericksburg Road, San Antonio, Texas 78288.
As far as is known to the Board of Trustees, as of June 30, 1999, no other
person held of record or owned beneficially more than 5% of the voting
stock of any of the Funds.
* WHAT ARE SOME OF THE WAYS IN WHICH THE BOARD OF TRUSTEES REPRESENTS
SHAREHOLDER INTERESTS?
The Board of Trustees seeks to represent shareholder interests by:
- reviewing your Funds' investment performance on an individual basis
with your Funds' respective managers;
- reviewing the quality of the various other services provided to the
Funds and their shareholders by each of the Funds' service providers,
including IMCO and its affiliates;
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- discussing with senior management of IMCO steps being taken to address
any performance deficiencies;
- reviewing the fees paid to IMCO and its affiliates to ensure that such
fees remain reasonable and competitive with those of the other
mutual funds, while at the same time providing sufficient resources to
continue to provide high-quality services in the future;
- monitoring potential conflicts between the Funds and IMCO and its
affiliates to ensure that the Funds continue to be managed in the best
interests of their shareholders; and
- monitoring potential conflicts among Funds to ensure that shareholders
continue to realize the benefits of participation in a large and
diverse family of funds.
* HOW OFTEN DOES THE BOARD OF TRUSTEES MEET?
The Board of Trustees typically conducts regular meetings five or six
times a year to review the operations of your Funds and of the other funds
in the USAA Family of Funds. A portion of these meetings is devoted to
meetings of various committees of the Board of Trustees, which focus on
particular matters. In addition, the Board of Trustees may hold special
meetings by telephone or in person to discuss specific matters that may
require action prior to the next regular meeting.
Between the meetings of the Board of Trustees and while the Board of
Trustees is not in session, the Executive Committee of the Board of
Trustees has all the powers and may exercise all the duties of the Board
of Trustees in the management of the business of the Trust that may be
delegated to it by the Board of Trustees. The Pricing and Investment
Committee of the Board of Trustees acts upon various investment-related
issues and other matters that have been delegated to it by the Board of
Trustees. The Audit Committee of the Board of Trustees reviews summaries
of financial results and the auditors' reports and undertakes certain
studies and analyses as directed by the Board of Trustees. The Corporate
Governance Committee of the Board of Trustees maintains oversight of the
organization, performance, and effectiveness of the Board and independent
trustees. See FURTHER INFORMATION ABOUT YOUR FUND -- COMMITTEES OF THE
BOARD OF TRUSTEES.
During the fiscal year ended May 31, 1999, the Board of Trustees met six
times, the Executive Committee met once, the Audit Committee met four
times, the Pricing and Investment Committee met three times, and the
Corporate Governance Committee met four times. Each trustee attended at
least 75% of the total number of meetings of the Board of Trustees and any
committee on which he or she served.
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* WHAT ARE THE MEMBERS OF THE BOARD OF TRUSTEES PAID FOR THEIR SERVICES?
The Trust pays each independent trustee a fee for his or her services.
Trustees affiliated with IMCO and its affiliates are not compensated by
the Trust for their service on the Board of Trustees. Each independent
trustee also receives fees for serving as a trustee/director of the other
funds in the USAA Family of Funds. Trustees and committee members are
compensated on the basis of an annual retainer of $5,250 for the Trust
plus reimbursement for reasonable expenses incurred in attending any
meetings of the Board of Trustees or a committee. The fee for attending a
regular or special meeting of the Board of Trustees is $1,500. All funds
in the USAA Family of Funds meet on a combined basis for regular meetings,
and one meeting fee is allocated evenly among the total number of funds
represented at the meeting. The fee for serving on one or more committees
is $500 per committee. All compensation paid to trustees is be used to
acquire shares of one or more funds in the USAA Family of Funds under an
automatic investment program for trustees. The trustees periodically
review their fees to assure that such fees continue to be appropriate in
light of their responsibilities as well as in relation to fees paid to
trustees/directors of other mutual fund companies.
The fees paid to each trustee by the Trust and by all the funds in the
USAA Family of Funds for the year ended May 31, 1999, are shown below:
COMPENSATION TABLE
PENSION OR
RETIREMENT
BENEFITS AGGREGATE ESTIMATED TOTAL ANNUAL
ACCRUED AS A ANNUAL ANNUAL COMPENSATION
PART OF FUND COMPENSATION BENEFITS UPON FROM THE USAA
EXPENSES FROM THE FUNDS RETIREMENT FAMILY OF FUNDS(c)
- -------------------------------------------------------------------------------
Robert G. Davis None (a) None (b) None (b) None (b)
Michael J. C. Roth None (a) None (b) None (b) None (b)
John W. Saunders, Jr. None (a) None (b) None (b) None (b)
Barbara B. Dreeben None (a) $8,461 None $30,500
Howard L. Freeman, Jr. None (a) $8,461 None $30,500
Robert L. Mason, Ph.D. None (a) $8,461 None $30,500
Richard A. Zucker None (a) $8,461 None $30,500
____________
(a) No pension or retirement benefits are accrued as part of fund expenses.
(b) Robert G. Davis, Michael J. C. Roth, and John W. Saunders, Jr. are
affiliated with the Trust's investment adviser, IMCO, and, accordingly,
receive no remuneration from the Trust or any other fund in the USAA
Family of Funds.
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(c) At May 31, 1999, the USAA Family of Funds consisted of four registered
investment companies offering 35 individual mutual funds. Each trustee
presently serves as a trustee or director of each investment company in
the USAA Family of Funds. In addition, Michael J. C. Roth presently serves
as a trustee of USAA Life Investment Trust, a registered investment
company advised by IMCO, consisting of seven funds available to the public
only through the purchase of certain variable annuity contracts and
variable life insurance policies offered by USAA Life Insurance Company.
Mr. Roth receives no compensation as trustee of USAA Life Investment
Trust.
All of the above trustees are also trustees/directors of all other funds in the
USAA Family of Funds. No compensation is paid by any fund to any
Trustee/Director who is a director, officer or employee of IMCO or its
affiliates. As of June 30, 1999, the trustees and their families as a group
owned beneficially or of record less than 1% of the outstanding shares of all
funds within the USAA Family of Funds.
* HOW DOES THE BOARD OF TRUSTEES RECOMMEND I VOTE ON THIS PROPOSAL?
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF ALL NOMINEES FOR ELECTION TO THE BOARD OF TRUSTEES OF THE
TRUST.
* WHAT PERCENTAGE OF SHAREHOLDERS' VOTES ARE REQUIRED TO ELECT THE NOMINEES
TO THE BOARD OF TRUSTEES?
The nominees for trustees of the Trust receiving the vote of a plurality
of the votes cast at a meeting at which a quorum is present shall be
elected. Shareholders of all Funds will vote as a single class on the
election of trustees.
PROPOSAL II
AMENDMENT TO TRUST'S
MASTER TRUST AGREEMENT
* WHAT IS THE PURPOSE OF THE PROPOSED AMENDMENT TO THE TRUST'S MASTER TRUST
AGREEMENT?
The proposed amendment to the Trust's Master Trust Agreement will permit
the Trust, at its election, to buy back shares of a fund from shareholders
at the fund's per share net asset value. Under the amendment, the Board of
Trustees will have the authority to determine the circumstances under
which the Trust may redeem shareholder accounts. If shareholders approve
the amendment, the Board of Trustees intends to adopt a policy authorizing
the Trust to redeem and close accounts
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- with a value that falls below the Trust's minimum investment
requirement; or
- that are held by shareholders that the Trust believes are engaging
in "market timing" or similar short-term trading practices.
Although the amendment would provide the Board of Trustees with the
flexibility to establish other circumstances under which the Trust may
redeem shareholder accounts, the Board of Trustees currently intends to
limit the Trust's authority to redeem to the circumstances described
above. Attached as EXHIBIT A to the Proxy Statement is a copy of the
proposed amendment.
* HOW WILL THE PROPOSED AMENDMENT AFFECT THE TRUST'S AUTHORITY TO CLOSE SMALL
ACCOUNTS?
The amendment will not affect the Trust's authority to close small
accounts. The Trust is organized as a Massachusetts business trust. Under
the Trust's Master Trust Agreement, the Board of Trustees already has the
authority to establish conditions as set forth in the fund's prospectus
under which the Trust may redeem shares based on the minimum size of an
account.
Although the Trust's minimum investment requirement is $3,000 (other than
for certain accounts, such as InveStart(R) accounts, that are exempt from
the minimum investment requirement), the Trust's current policy only
permits the redemption of shareholder accounts that have a balance of less
than $900. Currently, there are approximately ____ shareholder accounts
that have a balance between $900 and $3,000. For each of these small
accounts, the Trust is required to pay the transfer agent a per account
fee of approximately $26 to $28.50 plus out-of-pocket expenses. The effect
of these small accounts is to increase the overall costs of operating the
Funds and decrease returns for shareholders generally.
The Board of Trustees intends to adopt a policy authorizing the Trust to
redeem any account of a fund that falls below the Trust's minimum
investment requirement for reasons other than market action. Those
accounts exempt from the minimum investment requirement will also be
exempt from the small account redemption policy. In all cases, a
shareholder will be sent prior notice of a planned redemption of the
shareholder's account.
* HOW WILL THE PROPOSED AMENDMENT BE USED TO STOP EXCESSIVE SHORT-TERM
TRADING BY MARKET TIMERS?
In addition to the cost of maintaining small accounts, a fund may be
adversely affected by excessive short-term trading by shareholders.
Short-term trading may take the form of frequent exchanges between funds
or frequent redemptions followed by purchases of shares of the same fund.
Often, this short-term trading activity is part of a "market-timing"
strategy in which an investor tries to outperform the market by buying and
selling
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large fund positions in anticipation of an imminent change in interest
rates or stock prices. This type of trading is disruptive to a portfolio
because it forces a manager to maintain high cash balances to satisfy the
frequent trades by shareholders. In addition, short-term trading tends to
increase the portfolio turnover rate of a fund, which in turn increases
the fund's expenses and decreases returns for long-term investors. For
these reasons, management feels strongly that the Funds should not be used
as short-term trading vehicles by shareholders and that every effort
should be made to protect the Funds from the harmful effects of
market-timers.
The Trust's Master Trust Agreement already permits the Trust, at its
election, to redeem shares from a shareholder at a fund's net asset value
at any time if the Trustees determine that it would have material adverse
consequences for shareholders of a fund if the shares were not redeemed.
Under the proposed amendment, the Board of Trustees would have added
flexibility to determine the circumstances under which shares of a fund
held by market- timers could be redeemed. If the proposed amendment is
approved by shareholders, the Board of Trustees intends to adopt a policy
authorizing the Trust to redeem accounts of any shareholder that the Trust
believes is engaging in market-timing or similar short-term trading
practices using the Funds. In addition, the Trust will continue its policy
of refusing to sell shares to known market-timers.
* WILL THE AMENDMENT AFFECT MY RIGHT TO REDEEM SHARES?
No. Every shareholder will continue to have the right to redeem shares of
a Fund at the Fund's per share net asset value on any day that the Fund is
open for business, as explained more fully in the Fund's prospectus.
* HOW DOES THE BOARD OF TRUSTEES RECOMMEND I VOTE ON THIS PROPOSAL?
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE TRUST'S MASTER TRUST AGREEMENT.
* WHAT PERCENTAGE OF SHAREHOLDERS' VOTES IS REQUIRED TO APPROVE THE
AMENDMENT TO THE MASTER TRUST AGREEMENT?
A majority of all shares of the Trust outstanding as of the Record Date
for the Shareholder Meeting must vote in favor of the proposal for the
amendment to be approved. Shareholders of all Funds will vote as a single
class on this proposal.
14
PROPOSAL III
RATIFICATION OF SELECTION OF KPMG LLP
AS INDEPENDENT AUDITORS FOR THE FUNDS
* WHY HAS KPMG LLP BEEN SELECTED AS THE INDEPENDENT AUDITORS?
KPMG LLP, independent auditors (KPMG), has been selected by the Board of
Trustees as the auditors of the Funds. KPMG 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. KPMG also serves as the auditor for IMCO, the other investment
companies for which IMCO serves as investment adviser, USAA and its
subsidiaries and affiliated companies, and all the other mutual funds in
the USAA Family of Funds. KPMG has served as auditors for the Funds since
1984.
* HOW DOES THE BOARD OF TRUSTEES RECOMMEND I VOTE ON THIS PROPOSAL?
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
SELECTION OF KPMG LLP AS THE INDEPENDENT AUDITORS OF THE FUNDS.
* WHAT PERCENTAGE OF SHAREHOLDERS' VOTES ARE REQUIRED TO RATIFY THE
SELECTION OF INDEPENDENT AUDITORS FOR THE FUNDS?
A majority of the votes cast at a meeting at which a quorum is present is
needed to ratify the selection of the auditors. All shares of the Funds
will be voted as a single class of shares.
* WILL A REPRESENTATIVE FROM KPMG BE AVAILABLE AT THE SHAREHOLDER MEETING
FOR QUESTIONS?
Yes. A representative of KPMG is expected to be present at the Shareholder
Meeting and will be available to make statements and respond to
appropriate questions presented by shareholders.
15
Further Information About Voting and the Shareholder Meeting
QUORUM AND METHODS OF TABULATION. With respect to each proposal, a majority of
the shares of the Trust entitled to vote, represented in person or by proxy, is
required to constitute a quorum at the Shareholder Meeting. Under Massachusetts
law, abstentions do not constitute a vote "for" or "against" a matter but will
be included in determining the number of shares outstanding and the number of
shares present for purposes of the proposals described herein. Proposals I and
III require a vote based on the total votes cast. Approval of Proposal II
requires approval by a majority of all shares of the Trust outstanding as of
the Record Date. As a result, abstentions will assist the Trust in obtaining a
quorum, but will have no effect on the outcome of the proposals. Broker
"non-votes" (I.E., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated the same
as abstentions.
In the event a quorum is not present at the Shareholder Meeting or in the event
a quorum is present at the Shareholder Meeting but sufficient votes to approve
the proposal are not received, the persons named as proxies may propose one or
more adjournments of the Shareholder Meeting to permit further solicitation of
proxies, provided that such persons determine such an adjournment and
additional solicitation is reasonable and in the interest of shareholders after
consideration of all relevant factors, including the nature of the relevant
proposals, the percentage of votes then cast, the percentage of negative votes
then cast, the nature of the proposed solicitation activities, and the nature
of the reasons for such further solicitation. One or more of the proposals in
this proxy statement may be voted on prior to any adjournment if sufficient
votes have been received for a proposal and such vote is otherwise appropriate.
With respect to each matter, any such adjournment will require the affirmative
vote of a majority of those shares of the Trust present at the Shareholder
Meeting in person or by proxy and entitled to vote thereon.
OTHER BUSINESS. The Board of Trustees knows of no other business to be brought
before the Shareholder Meeting. However, if any other matters properly come
before the Shareholder Meeting, it is their intention that proxies that do not
contain specific restrictions to the contrary will be voted on such matters in
accordance with the judgment of the persons named as proxies on the enclosed
proxy card.
SOLICITATION OF PROXIES. In addition to soliciting proxies by mail, employees
of IMCO and/or an outside proxy solicitation service may solicit proxies by
telephone. Your Funds may also arrange to have votes recorded by telephone. The
telephone voting procedure is designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares in
accordance with their instructions, and to confirm that their instructions have
been properly recorded. Shareholders would be called at the phone number IMCO
has in its records for their accounts, and would be asked for their Social
Security number or other identifying information. The shareholders would then
be given
16
an opportunity to authorize proxies to vote their shares at the meeting in
accordance with their instructions. To ensure that the shareholders'
instructions have been recorded correctly, they will also receive a
confirmation of their instructions in the mail. A special toll-free number will
be available in case the information contained in the confirmation is
incorrect. In addition, shareholders may cast their vote through the Internet
by going to www.proxyvote.com.
The Board of Trustees has adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this policy, your
Funds may solicit proxies from shareholders who have not voted their shares or
who have abstained from voting.
Persons holding shares as nominees will upon request be reimbursed for their
reasonable expenses in soliciting instructions from their principals. [Your
Funds have retained at SAS expense __________ (name, address) to aid in the
solicitation instructions for nominee accounts, for a fee not to exceed $_____
plus reasonable out-of-pocket expenses for mailing and phone costs. Your Funds
have also retained _____________________ (name, address) to aid in the
solicitation instructions for registered accounts for a fee not to exceed
$_____ plus reasonable out-of-pocket expenses.
REVOCATION OF PROXIES. Proxies, including proxies given on our web site or by
telephone, may be revoked at any time before they are voted by a written
revocation received by your Funds, by properly executing a later-dated proxy,
or by attending the Shareholder Meeting and voting in person.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT SHAREHOLDER
MEETINGS. Under the provisions of a Master Trust Agreement of the Trust, no
annual meeting of shareholders is required, and your Funds do not currently
intend to hold such a meeting. Ordinarily, there will be no shareholder meeting
unless required by the 1940 Act or otherwise. Shareholder proposals for
inclusion in the proxy statement for any subsequent meeting must be received by
your Funds within a reasonable period of time prior to any such shareholder
meeting. Shareholders collectively holding at least 10% of the outstanding
shares of the Trust may request a shareholder meeting at any time for the
purpose of voting to remove one or more of the trustees. The Trust will assist
in communicating to other shareholders about such meeting.
FINANCIAL INFORMATION. YOUR FUNDS WILL FURNISH, WITHOUT CHARGE, TO YOU UPON
REQUEST A COPY OF THE FUNDS' ANNUAL REPORTS FOR ITS MOST RECENT FISCAL YEAR,
AND A COPY OF THEIR SEMIANNUAL REPORTS FOR ANY SUBSEQUENT SEMIANNUAL PERIOD.
SUCH REQUEST MAY BE DIRECTED TO USAA INVESTMENT TRUST, 9800 FREDERICKSBURG
ROAD, SAN ANTONIO, TEXAS 78288 OR 1-800-531-8181.
17
Further Information About Your Funds
COMMITTEES OF THE BOARD OF TRUSTEES. The Board of Trustees has four committees:
an Executive Committee, an Audit Committee, a Pricing and Investment Committee
and a Corporate Governance Committee. Between the meetings of the Board of
Trustees and while it is not in session, the Executive Committee may exercise
all of the powers of the Board of Trustees in the management of the business of
the Trust, which may be delegated to it by the Board of Trustees. The Executive
Committee consists of four trustees, currently Messrs. Davis, Roth, Saunders,
and Freeman.
The Audit Committee consists of four trustees, currently Messrs. Freeman,
Mason, and Zucker, and Mrs. Dreeben, none of whom is an "interested person" of
the Trust. The Audit Committee (a) selects an external auditor; (b) reviews and
approves and annual audit plan; (c) reviews summaries of financial results; (d)
reviews the reports of the auditors; and (e) undertakes such studies and
analyses of various matters as shall from time to time be deemed necessary by
the Board of Trustees, and makes appropriate recommendations to the Board of
Trustees on such matters.
The Pricing and Investment Committee consists of five Trustees, currently
Messrs. Saunders, Freeman, Mason, and Zucker, and Mrs. Dreeben. The Pricing and
Investment Committee (a) acts upon and deals with certain questions, issues,
and matters that may arise under Rule 2a-7 and the "Procedures to Stabilize Net
Asset Value" adopted by the Trust as it impacts money market funds; and (b)
considers and acts upon such investment issues and matters as may be presented
relevant to the Funds.
The Corporate Governance Committee consists of all the trustees who are not
"interested persons" of the Trust, which presently consists of Messrs. Freeman,
Mason, and Zucker, and Mrs. Dreeben. Its purpose is to maintain oversight of
the organization and performance of the Board of Trustees; to evaluate the
effectiveness of the Board of Trustees, and to ensure that the Board of
Trustees conducts itself ethically and in accordance with applicable laws; to
establish a policy on its tenure and term limitations for independent trustees;
to recommend candidates to fill vacancies for independent trusteeship positions
of the Board of Trustees; and to consider and act upon such other issues as may
be presented to it by the Board of Trustees.
OFFICERS AND OTHER INFORMATION. In addition to officers that are trustees, the
officers of the Trust are as follows:
YEAR FIRST
NAME AND AGE OFFICE ELECTED TO OFFICE
- ------------ ------ -----------------
Michael D. Wagner (51) Secretary 1983
Alex M. Ciccone (48) Assistant Secretary 1995
Mark S. Howard (35) Assistant Secretary 1997
Sherron A. Kirk (54) Treasurer 1992
Caryl Swann (51) Assistant Treasurer 1998
18
Due to their affiliation with the Trust's investment adviser, IMCO, the Trust's
officers receive no compensation from the Trust for their services.
In addition to the previously listed trustees and/or officers of the Trust who
also serve as directors and/or officers of IMCO, the following individuals are
directors and/or executive officers of IMCO: Carl W. Shirley, Senior Vice
President, Insurance Trust Portfolios; and John J. Dallahan, Senior Vice
President, Investment Services. There are no family relationships among the
trustees, officers, and managerial level employees of the Trust or IMCO.
19
EXHIBIT A
PROPOSED AMENDMENT TO TRUST'S
FIRST AMENDED AND RESTATED
MASTER TRUST AGREEMENT
Proposed Amendment to Section 4.2(g) of the First
Amended and restated Master Trust Agreement
dated June 2, 1995 of USAA Investment Trust
Delete existing Section 4.2(g) in its entirely and substitute the following:
(g)REDEMPTION BY TRUST. Each Share of each Sub-Trust that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being
redeemed by the Shareholder pursuant to subsection (f) of the Section 4.2(g) in
accordance with such terms and conditions as may be determined from time to
time by the Trustees. Upon such redemption the holders of the Shares so
redeemed shall have no further rights with respect thereto other than to
receive payment of such redemption price.
26858-0899
PRELIMINARY COPY
USAA USAA
EAGLE INVESTMENT
LOGO MANAGEMENT
COMPANY
9800 Fredericksburg Road
San Antonio, TX 78288
USAA INVESTMENT TRUST, INC.
Balanced Strategy Fund, Cornerstone Strategy Fund, Emerging Markets Fund, GNMA
Trust, Gold Fund, Growth and Tax Strategy Fund, Growth Strategy Fund, Income
Strategy Fund, International Fund, Treasury Money Market Trust, and World
Growth Fund
9800 Fredericksburg Road
San Antonio, Texas 78288
PROXY FOR THE SHAREHOLDER MEETING
2 p.m., Central Standard Time, on October 15, 1999
The undersigned hereby appoints Michael J.C. Roth, John W. Saunders, Jr., and
Howard L. Freeman, Jr., and each of them, with full power of substitution, as
proxies of the undersigned to vote all shares of stock that the undersigned is
entitled in any capacity to vote at the above-stated shareholder meeting, and
at any and all adjournments or postponements thereof (the Shareholder Meeting),
on the matters set forth in this Proxy Card, and, in their discretion, upon all
matters incident to the conduct of the Shareholder Meeting and upon such other
matters as may properly be brought before the Shareholder Meeting. This proxy
revokes all prior proxies given by the undersigned.
In lieu of completing, signing and mailing this proxy card, you may cast your
votes by calling toll-free 1-800-690-6903 or accessing the web site at
www.proxyvote.com.
All properly executed proxies will be voted as directed. If no instructions are
indicated on a properly executed proxy, the proxy will be voted FOR approval of
Proposals I, II and III. All ABSTAIN votes will be counted only in determining
the existence of a quorum at the Shareholder Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO THE
FUNDS.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS I, II and III.
PLEASE SIGN AND DATE BELOW AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PAID ENVELOPE.
The appointed proxies will vote on any other business as may properly come
before the Shareholder Meeting or any adjournment thereof.
TO VOTE, MARK BLOCK IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETATCH AND RETURN THIS PORTION ONLY
USAA INVESTMENT TRUST
Vote on Trustees
For Withhold For All
I. Election of Messrs. 01) Davis, 02) Roth, All All Except:
03) Peebles, 04)Reimherr, 05) Zucker,
06) Dr. Mason, and 06) Mrs. Dreeben [ ] [ ] [ ]
to the Board of Trustees of USAA
Investment Trust.
To withhold authority to vote,
mark "For All Except" and write
the nominee's number on the line
below:
________________________________
Vote on Proposals For Against Abstain
II. Approval of an amendment to the Trust's First
Amended and Restated Master Trust Agreement
to permit the Trust to redeem shareholder
accounts under terms and conditions
established by the Board of Trustees. [ ] [ ] [ ]
III. Ratification of the selection of KPMG LLP as
the independent auditors of the Funds. [ ] [ ] [ ]
Receipt of the Notice of Meeting and the Proxy Statement, dated __________,
1999, is hereby acknowledged.
(Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporation officer, please give your FULL title.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL YOUR PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE PAID ENVELOPE.
___________________________________ _________________________________
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date