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Preliminary Copy
TORCHMARK INSURED TAX-FREE FUND, INC.
TORCHMARK GOVERNMENT SECURITIES FUND, INC.
6300 Lamar Avenue, P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
April 3, 1995
To Shareholders:
Notice is hereby given that Special Meetings of the shareholders of Torchmark
Insured Tax-Free Fund, Inc. and Torchmark Government Securities Fund, Inc.
(each, a "Fund" and collectively, the "Funds"), respectively, will be held
jointly at 6300 Lamar Avenue, Overland Park, Kansas on the 3rd day of April,
1995 at 10:00 a.m. local time, or any adjournment(s) thereof, for the following
purpose:
To approve the Fund's proposed Plan of
Liquidation and Dissolution.
The Board of Directors of each Fund has fixed the close of business on
February 23, 1995 as the record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting. You are entitled to
vote at the meeting and any adjournment(s) thereof if you owned shares of the
Funds at the close of business on February 23, 1995. If you attend the meeting,
you may vote your shares in person. If you do not expect to attend the meeting,
please complete, date, sign and properly return the enclosed proxy card in the
enclosed postage-paid envelope. If you do not sign and return all proxy cards
you receive, the Funds may incur the additional expense of subsequent mailings
in order to have a sufficient number of cards signed and returned.
You should retain this Notice and Proxy Statement. This is a combined
Notice and Proxy Statement for the above-named Funds. The shares you own in a
particular Fund may only be voted with respect to that Fund. If you own shares
in more than one of the Funds listed, please vote with respect to each Fund on
all proxy cards provided to you with respect to each Fund. Please sign, date
and return any and all proxy cards that are mailed to you.
March 1, 1995
By Order of the Board of Directors
Sharon K. Pappas, Secretary
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TORCHMARK INSURED TAX-FREE FUND, INC.
TORCHMARK GOVERNMENT SECURITIES FUND, INC.
6300 Lamar Avenue, P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
PROXY STATEMENT
INTRODUCTION
This document is a proxy statement with respect to each Fund listed above
furnished in connection with the solicitation of proxies by the Board of
Directors of each Fund to be used at the Funds' joint special meeting of
shareholders ("Meeting") or any adjournment(s) thereof. (Torchmark Insured Tax-
Free Fund, Inc. and Torchmark Government Securities Fund, Inc. are referred to
in this Proxy Statement collectively as the "Funds" and individually as a
"Fund"). The Meetings will be held on April 3, 1995, 10:00 a.m. local time, at
6300 Lamar Avenue, Overland Park, Kansas, for the purpose set forth in the
attached Notice of the Meeting.
One third of the shares outstanding on the record date, February 23, 1995,
represented in person or by proxy, of a Fund must be present for the transaction
of business at that Fund's Meeting. In the event that a quorum is present at
the Meeting but sufficient votes to approve the Proposal are not received, the
persons named as proxies (or their substitutes) may propose one or more
adjournments of the Meeting to permit the further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. The persons named as proxies
will vote those proxies that they are entitled to vote for the Proposal in favor
of an adjournment and will vote those proxies required to be voted against such
Proposal against such adjournment. The favorable vote of the holders of a
majority of the outstanding shares of a Fund entitled to vote, either in person
or by proxy at the Meeting, provided a quorum is present, is required for
approval of the Proposal as to that Fund.
The individuals named as proxies (or their substitutes) in the enclosed
proxy card (or cards if you own shares of more than one Fund or have multiple
accounts) will vote in accordance with your directions as indicated thereon if
your proxy is received properly executed. You may direct the proxy holders to
vote your shares on the Proposal by checking the appropriate box "For," or
"Against," or instruct them not to vote those shares on the Proposal by checking
the "Abstain" box. Alternatively, you may simply sign, date and return your
proxy card(s) with no specific instructions as to the Proposal. If you properly
execute your proxy and give no voting instructions with respect to the Proposal,
your shares will be voted FOR the Proposal.
The duly appointed proxies may, in their discretion, vote upon such other
matters as may properly come before the Meeting. Each full share issued and
outstanding on the record date is entitled to one vote and each fractional share
issued and outstanding on the record date is entitled to a proportionate share
of one vote. The shareholders of each Fund vote separately with respect to the
Proposal.
Abstentions and "broker non-votes" (as defined below) are counted for
purposes of determining whether a quorum is present, but do not represent votes
cast with respect to the Proposal. "Broker non-votes" are shares held by a
broker or nominee for which an executed proxy is received by a Fund, but are not
voted as to the Proposal because instructions have not been received from the
beneficial owner or person entitled to vote and the broker or nominee does not
have discretionary voting power.
You may revoke your proxy with respect to a Fund: (a) at any time prior to
its exercise by written notice of its revocation to the Secretary of the Fund at
the above address prior to the Meeting; (b) by the subsequent execution and
return of another proxy prior to the Meeting; (c) by being present and voting in
person at the Meeting and giving oral notice of revocation to the Chairman of
the Meeting. Attendance at the Meeting will not in and of itself constitute
revocation of your proxy.
As discussed below, Waddell & Reed, Inc. ("Waddell & Reed"), which is the
parent company of Torchmark Distributors, Inc. ("Torchmark Distributors"), the
principal underwriter of each Fund, and United Investors Life Insurance Company
("United Investors Life"), an affiliate of Torchmark Distributors, own a
substantial percentage of the outstanding shares of each Fund. Waddell & Reed
and United Investors Life will vote their shares FOR or AGAINST the Proposal,
with respect to each Fund, in the same proportions as the Secretary of the Fund
is directed to vote the shares as to which instructions are received.
The principal solicitation of proxies will be by the mailing of this Proxy
Statement on or about March 1, 1995. Proxies may also be solicited by
telephone, telegraph, telecopier and personal interviews by representatives of
each Fund, regular employees and representatives of Torchmark Distributors,
affiliates of Torchmark Distributors, certain broker-dealers (who may be
specifically compensated for such services), and/or representatives of any
independent proxy solicitation service retained for the Meetings. Brokerage
firms, banks and others may be requested or required to forward the Notice and
this Proxy Statement to beneficial owners of shares so that the owners may
authorize the voting of these shares. Each Fund will pay these firms for its
share of the out-of-pocket expenses for doing so. Each Fund will pay a portion
of the costs of the Meeting, including the costs of solicitation, allocated on
the basis of the number of shareholder accounts of each Fund.
As of February 23, 1995, the Funds had the number of shares outstanding
$0.01 par value, listed below.
Shares
Fund Outstanding
Torchmark Insured Tax-Free Fund, Inc. . . . ________
Torchmark Government Securities Fund, Inc. . ________
THE BOARD OF DIRECTORS OF EACH FUND
UNANIMOUSLY APPROVES THE FOLLOWING PROPOSAL
AND RECOMMENDS THAT YOU VOTE IN FAVOR OF IT.
THE PROPOSAL: APPROVAL OF THE PLAN OF LIQUIDATION AND
DISSOLUTION OF THE FUND
Background
Prior to the initial offering of the shares of the Funds to the public,
Waddell & Reed and United Investors Life purchased a substantial number of
shares of each Fund in order to provide the Funds' initial capital. Since that
initial offering on February 26, 1993, each Fund has grown more slowly than
anticipated. As of December 31, 1994, the assets of Torchmark Insured Tax-Free
Fund, Inc. were $2,157,587, and the shares owned by Waddell & Reed and United
Investors Life comprised, in the aggregate, 96.12% of the then-outstanding
shares of that Fund. Similarly, as of December 31, 1994, the assets of
Torchmark Government Securities Fund, Inc. were $1,331,351, and the shares owned
by Waddell & Reed and United Investors comprised, in the aggregate, 82.15% of
the then-outstanding shares of that Fund.
At these asset levels, the Funds have not been able to operate without the
benefit of the guarantee from Torchmark Corporation, the indirect corporate
parent of both Waddell & Reed and United Investors Life. Torchmark Corporation
has guaranteed that for at least three years, commencing on February 26, 1993,
the total expenses paid by each Fund, excluding brokerage commissions and
extraordinary expenses, will not exceed 1.0%, on an annualized basis, of the
Fund's daily net asset value. To ensure that the Fund's daily expenses do not
exceed this limit, Waddell & Reed Investment Management Company, the investment
manager for each Fund ("Manager"), Torchmark Distributors, and the Torchmark
Division of Waddell & Reed Services Company ("WARSCO"), the transfer agent for
the Funds, agreed to waive or refund fees payable to them. To the extent such
reductions or refunds are inadequate to reduce the daily expenses below the 1.0%
annualized limit, Torchmark Corporation has agreed to pay to each Fund the
amount by which the Fund's expenses computed daily exceed the 1.0% limit.
For 1993 and 1994, each Fund's expenses exceeded the 1.0% limit and
accordingly fees were waived or reimbursed to each Fund pursuant to Torchmark
Corporation's guarantee. Absent these waivers and reimbursements, the total
expenses of Torchmark Insured Tax-Free Fund, Inc. would have been ___% and ____%
of its net assets for 1993 and 1994, respectively, and the total expenses of
Torchmark Government Securities Fund, Inc. would have been ___% and ___% of its
net assets for 1993 and 1994, respectively.
Based upon its latest analysis of market conditions, the performance of
each Fund, and opportunities for growth, Fund management determined that it is
unlikely that the assets of either Fund will increase to enable the Fund to
achieve, on an annualized basis, an expense level at or below 1.0%. Thus, Fund
management anticipates that upon the expiration of the Torchmark Corporation
guarantee, the total return for each Fund will likely decline substantially.
Accordingly, Fund management considered a number of alternatives, including a
merger or sale of the assets of each of the Funds, and determined to present the
proposed Plan of Liquidation and Dissolution ("Plan") to each Fund's Board of
Directors. In presenting the Plan, management recognized the likelihood that at
the time of liquidation certain shareholders will have experienced a
depreciation in the value of their investments. Therefore, Waddell & Reed
advised the Board of Directors of each Fund that Waddell & Reed would provide to
each shareholder not affiliated with Waddell & Reed an additional payment that,
when added to the amount received by that shareholder upon the liquidation of
the Fund's shares, would approximate the shareholder's investment in those
shares (without taking into account dividends and capital gain distributions),
provided the Plan is approved by Fund shareholders.
After careful consideration, the Board of Directors concluded that it would
be in the best interests of each Fund and its shareholders for the Fund to
liquidate its assets and dissolve, particularly in light of the payments
anticipated to be made by Waddell & Reed. Accordingly, the Board of Directors
of each Fund, including a majority of the Directors who are not "interested
persons," as defined in the Investment Company Act of 1940, of the Manager or
Waddell & Reed, approved the proposed Plan and directed that the Plan be
submitted to shareholders for approval.
Liquidation and Dissolution Pursuant to the Plan
If the Plan is approved by the shareholders of a Fund, that Fund will
proceed to sell all its portfolio securities and other assets for cash at one or
more public or private sales and at such prices and on such terms and conditions
as the officers of the Fund determine to be reasonable and in the best interests
of the Fund and its shareholders. The Fund will also give at least twenty days'
notice to all known creditors of the Fund and to any employees that dissolution
of the Fund has been approved. Upon expiration of such notice period the Fund
will file articles of dissolution with the State Department of Assessments and
Taxation of Maryland in accordance with Maryland law. Upon such filing, the
Fund will be statutorily dissolved, and the Fund will apply its assets to the
payment, satisfaction and discharge of all of its existing debts and
obligations, including necessary expenses of liquidation, and distribute in one
or more payments the remaining assets among its shareholders, with each
shareholder receiving his or her proportionate share of each liquidation
distribution in cash. Simultaneously with the liquidating distribution, Waddell
& Reed will make an individual payment to each nonaffiliated shareholder that,
when added to the amount received upon the liquidation of the Fund's shares,
would approximate the shareholder's investment in the Fund (without taking into
account dividends and capital gain distributions). Shareholders who have
redeemed prior to the date of the liquidation distribution from the Fund and
shareholders whose liquidation distributions from the Fund equal or exceed their
respective investments in their Fund shares will not receive any payments from
Waddell & Reed. Thereafter, the Fund will cease to exist and no shareholder
will have any interest whatsoever in the Fund.
If the Plan is adopted, the Funds currently estimate that the liquidation
distributions and additional payments by Waddell & Reed will be paid to
shareholders during July of 1995. However, the exact date of the liquidation
distributions will depend on the time required to liquidate the assets of each
Fund. To the extent that certain of the securities owned by a Fund are thinly
traded, they may be difficult to dispose of at an acceptable price at any given
time. Thus, while the Funds will be liquidated as expeditiously as possible if
the Plan is approved, consistent with preservation of value for the benefit of
the respective shareholders of the Funds, there can be no assurance that the
liquidation will in fact be completed by July of 1995.
The Funds estimate that the expenses of the liquidation (not including
brokerage commissions and taxes, if any) will be approximately $________. The
Funds may, if deemed appropriate, hold back sufficient assets to deal with the
costs of dissolution, including their costs of deregistration as investment
companies under the Investment Company Act of 1940 ("1940 Act"), their required
tax filings, and any disputed claims or other contingent liabilities which may
then exist against either Fund. Neither Fund is currently aware of any such
claim or liability which could require assets to be held back. Any amount that
is held back will be deducted pro rata from the net assets distributable to
shareholders and held until the claim is settled or otherwise determined and
discharged. In the event a Fund determines to hold back assets to offset the
costs of dissolution, the liquidating distribution paid to its shareholders
would be reduced. However, if the liquidation distribution is less than the
shareholder's investment in the Fund, the additional payment to be made by
Waddell & Reed would be increased so that the aggregate amount to be received by
the shareholder would be unaffected.
The Funds do not currently intend to create a trust to administer
liquidation distributions; however, in the event a Fund is unable to distribute
all its assets pursuant to the Plan because of its inability to locate
shareholders to whom liquidation distributions are payable, the Fund may create
a liquidation trust with a financial institution and deposit any of its
remaining assets in such trust for the benefit of shareholders that cannot be
located. The expenses of any such trust will be charged against the liquidation
distributions held therein.
As soon as practicable after the distribution of all the assets of the Fund
in complete liquidation, the officers of the Fund will close the books of the
Fund and cause to be prepared and filed, in a timely manner, any and all
required income tax returns and other documents and instruments. Each Fund will
also file the necessary documents with the Securities and Exchange Commission
("SEC") when it has distributed substantially all of its assets to shareholders
and has effected, or is in the process of effecting, a winding up of its affairs
in order to deregister the Fund under the Investment Company Act of 1940, and
file or cause to be filed any and all other documents and instruments necessary
to terminate the regulation of the Fund and its business and affairs by the SEC.
Under Maryland law, none of the shareholders of either Fund are entitled to
exercise any dissenter's rights or appraisal rights with respect to the
liquidation of the Fund.
Tax Consequences to the Shareholders of Approval of the Plan
PAYMENT BY A FUND OF LIQUIDATION DISTRIBUTIONS TO ITS SHAREHOLDERS WILL BE
A TAXABLE EVENT. BECAUSE THE INCOME TAX CONSEQUENCES FOR A PARTICULAR
SHAREHOLDER MAY VARY DEPENDING UPON INDIVIDUAL CIRCUMSTANCES, EACH SHAREHOLDER
IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE FEDERAL, STATE,
AND LOCAL TAX CONSEQUENCES OF RECEIPT OF A LIQUIDATING DISTRIBUTION.
Each Fund currently qualifies, and intends to continue to qualify through
the end of the liquidation period, for treatment as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended ("Code"), so that
it will be relieved of Federal income tax on any investment company taxable
income or net capital gain (the excess of net long-term capital gain over net
short-term capital loss) from the sale of its assets. Prior to the completion
of the liquidation, each Fund intends to declare a distribution equal to any
undistributed investment company taxable income and net capital gain ("Final
Income Distribution") and to include this amount with the final liquidation
distribution. Shareholders will report the Final Income Distribution as
ordinary income to the extent it is paid out of a Fund's investment company
taxable income and as long-term capital gain to the extent it is paid out of a
Fund's net capital gain.
The payment of liquidation distributions and supplemental monies by Waddell
& Reed will be a taxable event to shareholders. Each shareholder will be viewed
as having sold his or her Fund shares for an amount equal to the liquidation
distribution(s) and additional Waddell & Reed payment, if any, exclusive of the
portion thereof attributable to any Final Income Distribution. Each shareholder
will recognize capital gain or loss in an amount equal to the difference between
(1) the shareholder's adjusted basis in the Fund shares and (2) the total amount
of the liquidation distributions (exclusive of any Final Income Distribution)
and additional Waddell & Reed payment, if any. The gain or loss will be capital
and generally will be long-term if the Fund shares were held for more than one
year before the liquidation distribution is received.
Each Fund generally will be required to withhold tax at the rate of 31%
with respect to any liquidation distribution paid to individuals and certain
other non-corporate shareholders if (1) the shareholder fails to provide his or
her correct federal taxpayer identification number or to certify to the Fund
that he or she is either an "exempt recipient" or "exempt foreign person," (2)
the shareholder fails to make other required certifications, or (3) the Internal
Revenue Service requires the Fund to impose backup withholding. A foreign
shareholder generally will be able to certify that he or she is an "exempt
foreign person" only if the shareholder (a) is neither a citizen nor a resident
of the United States, (b) in the case of an individual, has not been and
reasonably does not expect to be present in the United States for a period
aggregating 183 days or more during the calendar year, and (c) reasonably
expects not to be engaged in a trade or business within the United States to
which the gain on the liquidation distribution would be effectively connected.
Backup withholding is not an additional tax, and any amounts so withheld may be
credited against a shareholder's U.S. Federal income tax liability.
Shareholders, particularly foreign shareholders, are urged to consult their
own tax advisers to determine the extent of the Federal income tax liability
they would incur as a result of receiving a liquidation distribution and a
supplemental payment from Waddell & Reed, as well as any tax consequences under
any applicable state, local or foreign laws.
Required Vote and Board Recommendation to Approve the Plan
The Board of Directors of each of the Funds has approved the Plan. The
Maryland General Corporation law and the Articles of Incorporation, pursuant to
which each Fund was organized, require the affirmative vote of a majority of the
shares entitled to vote in connection with the dissolution of a Fund.
Therefore, your consent to the Plan of Liquidation and Dissolution is being
solicited.
THE BOARD OF DIRECTORS OF EACH FUND
RECOMMENDS THAT YOU VOTE FOR THE PLAN
INFORMATION REGARDING THE FUNDS
The Funds, which are located at 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217, telephone number 913/236-2000 are open-end
management investment companies incorporated under the laws of the State of
Maryland.
The investment objective of Torchmark Insured Tax-Free Fund, Inc. is to
provide current income exempt from Federal income tax by investing in a
portfolio of insured municipal obligations. In this context, "municipal
obligations" include debt obligations issued by states, cities and local
authorities and by certain U.S. possessions or territories to obtain funds for
various public purposes, such as the construction of public facilities, the
payment of general operating expenses and the refunding of outstanding debt.
Under ordinary circumstances, the Fund invests at least 65% of its total assets
in municipal obligations which are covered by insurance guaranteeing the timely
payment of principal and interest. As a fundamental policy, under ordinary
circumstances, the Fund invests at least 80% of its net assets in obligations
the interest on which is not subject to Federal income tax and is not an item of
tax preference for purposes of the Federal alternative minimum tax.
The investment objective of Torchmark Government Securities Fund, Inc. is
to provide current income by investing primarily in securities issued or
guaranteed as to the timely payment of principal and interest by the U.S.
Government. Under ordinary circumstances the Fund invests at least 65% of the
value of its total assets in U.S. Government securities. The Fund invests
principally in U.S. Treasury Bills, Notes, and Bonds and other securities issued
or backed by the full faith and credit of the U.S. Government. These include
Government National Mortgage Association (GNMA) securities. The guarantee
granted to GNMA securities by GNMA represents the full faith and credit of the
U.S. Government. The value of the U.S. Government securities in which the Fund
invests fluctuates depending in large part on prevailing interest rates.
Changes in value and yield based on changes in prevailing rates have different
effects on long-term and short-term obligations. Although there is no policy
limiting the maturity of the securities in which the Fund invests, the Fund
seeks to reduce price fluctuations by generally maintaining the dollar-weighted
average maturity of its portfolio at no more than ten years, and at times it may
have most of its assets in short-term and intermediate-term U.S. Government
securities as a means of attempting to reduce fluctuation in the value of its
shares.
INVESTMENT MANAGEMENT, UNDERWRITING AND ADMINISTRATIVE SERVICES
Investment Management
Each Fund has an Investment Management Agreement with the Manager. Under
the Management Agreement, the Manager is employed to supervise the investments
of the Fund and provide investment advice to the Fund.
Shareholder and Accounting Services
Under a Shareholder Servicing Agreement entered into between each Fund and
WARSCO, WARSCO performs shareholder servicing functions, including the
maintenance of shareholder accounts, the issuance, transfer and redemption of
shares, distribution of dividends and payment of redemptions, the furnishing of
related information to each Fund and the handling of shareholder transactions.
Under an Accounting Services Agreement entered into between each Fund and
WARSCO, WARSCO provides the Fund with bookkeeping and accounting services and
assistance, including maintenance of the Fund's records, pricing of the Fund's
shares, and preparation of prospectuses for existing shareholders, proxy
statements and certain reports.
Under a Service Plan adopted by each Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund may pay a fee to WARSCO and Torchmark
Distributors to reimburse them for amounts expended in preparing, printing and
distributing informational material to investors and Fund shareholders,
providing yield and performance information and in answering telephone or
written inquiries of investors or shareholders concerning their accounts.
Distribution of the Funds' Shares
Each Fund has an Underwriting Agreement with Torchmark Distributors
pursuant to which Torchmark Distributors serves as the principal underwriter and
distributor of the shares of the Funds. This agreement requires Torchmark
Distributors to use its best efforts to sell the shares of the Fund but is not
exclusive and permits and recognizes that Torchmark Distributors may distribute
shares of other investment companies and other securities.
The Manager and Torchmark Distributors are wholly-owned subsidiaries of
Waddell & Reed, a Delaware corporation. Waddell & Reed is a wholly-owned
subsidiary of Waddell & Reed Financial Services, Inc., a holding company which
is a wholly-owned subsidiary of United Investors Management Company. United
Investors Management Company is a wholly-owned subsidiary of Torchmark
Corporation. Torchmark Corporation is a publicly held company. The address of
the Manager, WARSCO, Torchmark Distributors and Waddell & Reed Financial
Services, Inc. is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas
66201-9271. The address of Torchmark Corporation and United Investors
Management Company is 2001 Third Avenue South, Birmingham, Alabama 35233.
SECURITIES OWNERSHIP
The following tables set forth information with respect to each of the
Funds, as of January 31, 1995, regarding the beneficial ownership of the Fund's
shares by shareholders owning more than 5% of the Fund's shares, all directors,
the Fund's chief executive officer, and named executive officers. As of January
31, 1995, no director or officer of Torchmark Insured Tax-Free Fund, Inc. or
Torchmark Government Securities Fund, Inc. owned any of the outstanding shares
of either of the Funds.
Torchmark Insured Tax-Free Fund, Inc.
Name and Address Shares Beneficially Owned
Of Beneficial Owner Number Percent
PRINCIPAL SHAREHOLDERS
Waddell & Reed, Inc.
6300 Lamar Avenue
Overland Park, Kansas 66202
United Investors Life
Insurance Company
2001 Third Avenue South
Birmingham, Alabama 35233
DIRECTORS
Ronald K. Richey
2001 Third Avenue South
Birmingham, Alabama 35233
Keith A. Tucker1
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
Henry L. Bellmon
Route 1
Red Rock, Oklahoma 74651
Dodds I. Buchanan
University of Colorado
Campus Box 419
Boulder, Colorado 80309
Jay B. Dillingham
926 Livestock Exchange Building
Kansas City, Missouri 64102
John F. Hayes
335 N. Washington
P. O. Box 2977
Hutchinson, Kansas 67504-2977
Glendon E. Johnson
7300 Corporate Center Drive
Miami, Florida 33126-1208
William T. Morgan
1799 Westridge Road
Los Angeles, California 90049
Doyle Patterson
1030 West 56th Street
Kansas City, Missouri 64113
Frederick Vogel, III
1805 West Bradley Road
Milwaukee, Wisconsin 53217
Paul S. Wise
P. O. Box 5448
8648 Silver Saddle Drive
Carefree, Arizona 85377
Leslie S. Wright
Samford University
800 Lakeshore Drive
Birmingham, Alabama 35209
NAMED EXECUTIVE OFFICERS
Robert L. Hechler
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
Theodore W. Howard
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
1 As President of the Fund, Mr. Tucker is the Fund's chief executive officer.
Torchmark Government Securities Fund, Inc.
Name and Address Shares Beneficially Owned
of Beneficial Owner Number Percent
PRINCIPAL SHAREHOLDERS
Waddell & Reed, Inc.
6300 Lamar Avenue
Overland Park, Kansas 66202
United Investors Life
Insurance Company
2001 Third Avenue South
Birmingham, Alabama 35233
DIRECTORS
Ronald K. Richey
2001 Third Avenue South
Birmingham, Alabama 35233
Keith A. Tucker2
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
Henry L. Bellmon
Route 1
Red Rock, Oklahoma 74651
Dodds I. Buchanan
University of Colorado
Campus Box 419
Boulder, Colorado 80309
Jay B. Dillingham
926 Livestock Exchange Building
Kansas City, Missouri 64102
John F. Hayes
335 N. Washington
P. O. Box 2977
Hutchinson, Kansas 67504-2977
Glendon E. Johnson
7300 Corporate Center Drive
Miami, Florida 33126-1208
William T. Morgan
1799 Westridge Road
Los Angeles, California 90049
Doyle Patterson
1030 West 56th Street
Kansas City, Missouri 64113
Frederick Vogel, III
1805 West Bradley Road
Milwaukee, Wisconsin 53217
2 As President of the Fund, Mr. Tucker is the Fund's chief executive officer
Paul S. Wise
P. O. Box 5448
8648 Silver Saddle Drive
Carefree, Arizona 85377
Leslie S. Wright
Samford University
800 Lakeshore Drive
Birmingham, Alabama 35209
NAMED EXECUTIVE OFFICERS
Robert L. Hechler
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
Theodore W. Howard
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
Net Asset Value of Shares
The following tables set forth, for each Fund, on a quarterly basis, the
high and low net asset value of its shares from February 26, 1993 through
December 31, 1994.
Torchmark Insured Tax-Free Fund, Inc.
Net Asset Value
Calendar Year High Low
1993
1st Quarter $10.15 $9.75
2nd Quarter 10.13 9.75
3rd Quarter 10.46 10.00
4th Quarter 10.58 10.12
1994
1st Quarter 10.53 9.45
2nd Quarter 9.55 9.19
3rd Quarter 9.60 9.35
4th Quarter 9.35 8.64
Torchmark Government Securities Fund, Inc.
Net Asset Value
Calendar Year High Low
1993
1st Quarter $10.15 $9.91
2nd Quarter 10.20 9.99
3rd Quarter 10.53 10.13
4th Quarter 10.54 10.14
1994
1st Quarter 10.32 9.51
2nd Quarter 9.50 9.15
3rd Quarter 9.30 9.05
4th Quarter 9.07 8.86
DIVIDENDS AND DISTRIBUTORS
In order to qualify for treatment as a regulated investment company ("RIC")
under the Code, a Fund must, among other things, distribute to its shareholders
for each taxable year at least 90% of its investment company taxable income
(consisting generally of net investment income and net short-term capital gain).
In addition, each Fund is subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income and capital gain net income, plus certain other amounts. In
1993 and 1994, the Fund has been able to make all the distributions required to
continue its qualification for treatment as a RIC and to avoid the 4% excise
tax.
In 1993 and 1994, Torchmark Insured Tax Free Fund, Inc. paid monthly
dividends from its net investment income as set forth below. The Fund paid
distributions from net capital gains with respect to its fiscal year ended
December 31, 1993 equal to $0.00 per share and with respect to its fiscal year
ended December 31, 1994 equal to $0.02586169 per share.
Torchmark Insured Tax Free Fund Inc.
Calendar Year Dividend Per Share
1993
February $0.00000000
March 0.03024001
April 0.03946070
May 0.03820825
June 0.03636555
July 0.03997781
August 0.03849016
September 0.03873125
October 0.03706247
November 0.03711311
December 0.04381151
1994
January 0.03341583
February 0.03553183
March 0.03608893
April 0.04324320
May 0.03704983
June 0.03918214
July 0.03830446
August 0.03778582
September 0.04056992
October 0.03838377
November 0.03773054
December 0.04687264
In 1993 and 1994, Torchmark Government Securities Fund, Inc. paid monthly
dividends from its net investment income as set forth below. The Fund paid
distributions from net capital gain with respect to its fiscal year ended
December 31, 1993 equal to $0.03202986 per share, and with respect to its fiscal
year ended December 31, 1994 equal to $0.00 per share.
Torchmark Government Securities Fund, Inc.
Calendar Year Dividend Per Share
1993
February $0.00000000
March 0.04003816
April 0.04683271
May 0.04592688
June 0.04565697
July 0.04963173
August 0.04324040
September 0.04347990
October 0.04368032
November 0.04152706
December 0.04741760
1994
January $0.03799169
February 0.04534319
March 0.04251749
April 0.05222723
May 0.04473890
June 0.04856791
July 0.04608331
August 0.04566942
September 0.05046036
October 0.04618485
November 0.04556450
December 0.05426888
INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP serves as the independent public accountants of each
Fund. Representatives of Price Waterhouse LLP are not expected to be present at
the Meeting but have been given the opportunity to make a statement if they so
desire, and will be available should any matter arise requiring their presence.
SHAREHOLDER PROPOSALS
As a general matter, the Funds do not hold regular annual or other meetings
of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of the Fund's shareholders should send such
proposals to the Fund at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission,
Kansas 66201-9217.
ANNUAL REPORT
Each Fund's annual report for the fiscal year ended December 31, 1994,
which is incorporated herein by reference, has been sent to shareholders of the
Fund. Upon request, each Fund will furnish to shareholders, without charge, a
copy of its annual report for the fiscal year ending December 31, 1994.
Requests should be directed to Investor Services, 6300 Lamar Avenue, P.O. Box
29217, Shawnee Mission, Kansas 66201-9217, telephone number 800-733-3863.
OTHER BUSINESS
Neither Fund knows of any other business to be presented at the Meeting
other than the matter set forth in this Proxy Statement. If any other matter or
matters are properly presented for action at the Meeting, the proxy holder will
vote the shares which the proxy cards entitle them to vote in accordance with
their judgment on such matter or matters. By signing and returning your proxy
card, you give the proxy holder discretionary authority as to any such matter or
matters.
March 1, 1995 By Order of the Boards of Directors
Sharon K. Pappas, Secretary
<PAGE>
Preliminary Copy
PLEASE NOTE
PLEASE BE SURE TO SIGN AND RETURN ALL PROXIES RECEIVED.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED.
IF NO DIRECTION IS MADE FOR THE PROPOSAL, THE SHARES WILL BE VOTED "FOR" THE
PROPOSAL. Receipt of the Proxy Statement is hereby acknowledged.
_ _ _
Proposal To approve the liquidation and AGAINST /_/ FOR /_/ ABSTAIN /_/
: dissolution of the Fund as
provided in the Plan of
Liquidation and Dissolution.
To avoid the expense of adjourning the meeting to a subsequent date,
please sign, date and return this proxy in
the enclosed post-paid envelope.
NOTE: YOUR PROXY IS NOT VALID UNLESS IT IS SIGNED.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Keith A. Tucker and Sharon K. Pappas, or
either of them (or their substitutes), as attorneys and proxies of the
undersigned, with full power of substitution to represent and vote all of the
shares of Torchmark Government Securities Fund, Inc. in which the undersigned
own shares and which are entitled to be voted at the Special Meeting of
Shareholders of the Fund to be held April 3, 1995 at 10:00 a.m., local time, at
6300 Lamar Avenue, Overland Park, Kansas 66202, and any adjournment(s) thereof,
and revoking all proxies heretofore given, as designated on the reverse side of
this card. As to any other matter, the attorneys and proxies shall be
authorized to vote in accordance with their best judgment. This proxy shall
remain in effect for a period of one year from its date.
SIGN BELOW - Please sign exactly as your name
appears hereon. If shares are registered in
more than one name, all should sign but if
one signs, it binds the others. When signing
as attorney, executor, administrator, agent,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by an authorized person.
If a partnership, please sign in partnership
name by an authorized person.
Dated:_______________________, 1995
Signature:_________________________
Signature:_________________________
<PAGE>
PLEASE NOTE
PLEASE BE SURE TO SIGN AND RETURN ALL PROXIES RECEIVED.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED.
IF NO DIRECTION IS MADE FOR THE PROPOSAL, THE SHARES WILL BE VOTED "FOR" THE
PROPOSAL. Receipt of the Proxy Statement is hereby acknowledged.
_ _ _
Proposal To approve the liquidation and AGAINST /_/ FOR /_/ ABSTAIN /_/
: dissolution of the Fund as
provided in the Plan of
Liquidation and Dissolution.
To avoid the expense of adjourning the meeting to a subsequent date,
please sign, date and return this proxy in
the enclosed post-paid envelope.
NOTE: YOUR PROXY IS NOT VALID UNLESS IT IS SIGNED.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Keith A. Tucker and Sharon K. Pappas, or
either of them (or their substitutes), as attorneys and proxies of the
undersigned, with full power of substitution to represent and vote all of the
shares of Torchmark Insured Tax-Free Fund, Inc. in which the undersigned own
shares and which are entitled to be voted at the Special Meeting of Shareholders
of the Fund to be held April 3, 1995 at 10:00 a.m., local time, at 6300 Lamar
Avenue, Overland Park, Kansas 66202, and any adjournment(s) thereof, and
revoking all proxies heretofore given, as designated on the reverse side of this
card. As to any other matter, the attorneys and proxies shall be authorized to
vote in accordance with their best judgment. This proxy shall remain in effect
for a period of one year from its date.
SIGN BELOW - Please sign exactly as your name
appears hereon. If shares are registered in
more than one name, all should sign but if
one signs, it binds the others. When signing
as attorney, executor, administrator, agent,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by an authorized person.
If a partnership, please sign in partnership
name by an authorized person.
Dated: ____________________________, 1995
Signature: ______________________________
Signature: ______________________________
