PRUDENTIAL GOVERNMENT SECURITIES TRUST, 497, 1994-04-06

PRUDENTIAL GOVERNMENT SECURITIES TRUST
497, 1994-04-06

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PRUDENTIAL GOVERNMENT SECURITIES TRUST
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292

April 5, 1994

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Prudential Government Securities Trust
(File No. 2-74139)

Ladies and Gentlemen:

In accordance with Rule 497(c) under the Securities Act of
1933, enclosed for filing are the Prospectuses and Statement of
Additional Information dated April 1, 1994 for the above referenced
Fund.

In addition, pursuant to Rule 497(g), the enclosed
Prospectuses and Statement of Additional Information have been
marked to indicate in the upper righthand corner the Rule and
subparagraph under which the filing is made and the registration
number.

Very truly yours,

/s/ Ronald Amblard
Ronald Amblard
Assistant Secretary

RA/cm
Enclosures

<PAGE>
Rule 497(c)
File # 2-74139

Prudential Government Securities Trust

(U.S. Treasury Money Market Series)
_________________________________________________________________________

Prospectus dated April 1, 1994

_________________________________________________________________________

Prudential Government Securities Trust (the Trust) is a diversified, open-
end management investment company whose shares of beneficial interest are
offered in three series. Each series operates as a separate fund with its
own investment objectives and policies designed to meet its specific
investment goals.

The investment objective of the U.S. Treasury Money Market Series (the
Series) is high current income consistent with the preservation of
principal and liquidity. The Series seeks to achieve its objective by
investing exclusively in U.S. Treasury obligations which have maturities of
thirteen months or less. Interest on U.S. Treasury obligations is
specifically exempted from state and local income taxes under federal law.
All states allow the character of the Series' income to pass through to the
dividends distributed to its shareholders. Interest on U.S. Treasury
obligations is not exempt from federal income tax. See "How the Trust
Invests-Investment Objective and Policies" and "Taxes, Dividends and
Distributions."

An investment in the Series is neither insured nor guaranteed by the U.S
Government and there can be no assurance that the Series will be able to
maintain a stable net asset value of $1.00 per share. See "How the Trust
Values its Shares."

The Trust's address is One Seaport Plaza, New York, New York 10292, and its
telephone number is (800) 225-1852.
_________________________________________________________________________

Information, dated April 1, 1994, which information is incorporated herein
by reference (is legally considered a part of this Prospectus) and is
available without charge upon request to the Trust at the address or
telephone number noted above.

_________________________________________________________________________

Investors are advised to read this Prospectus and retain it for future
reference.
_________________________________________________________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

TRUST HIGHLIGHTS

The following summary is intended to highlight certain information
contained in this prospectus and is qualified in its entirety by the more
detailed information appearing elsewhere herein.

What is Prudential Government Securities Trust?

Prudential Government Securities Trust is a mutual fund whose shares
are offered in three series, each of which operates as a separate fund. A
mutual fund pools the resources of investors by selling its shares to the
public and investing the proceeds of such sale in a portfolio of securities
designed to achieve its investment objective. Technically, the Trust is an
open-end, diversified management investment company. Only the U.S. Treasury
Money Market Series is offered through this Prospectus.

What is the Series' Investment Objective?

The Series' investment objective is high current income consistent with
the preservation of principal and liquidity. The Series invests exclusively
in U.S. Treasury obligations which have effective maturities of thirteen
months or less. See "How the Trust Invests-Investment Objective and
Policies" at page 6.

What are the Series' Special Characteristics and Risks?

It is anticipated that the net asset value of the Series will remain
constant at $1.00 per share, although this cannot be assured. In order to
maintain such constant net asset value, the Series will value its portfolio
securities at amortized cost. While this method provides certainty in
valuation, it may result in periods during which the value of a security in
the Series' portfolio , as determined by amortized cost, is higher or lower
than the price the Series would receive if it sold such security. See "How
the Trust Values its Shares" at page 9.

Who Manages the Trust?

Prudential Mutual Fund Management, Inc. (PMF or the Manager) is the
Manager of the Trust and is compensated for its services at an annual rate
of .40 of 1% of the Series' average daily net assets. As of February 28,
1994, PMF served as manager or administrator to 66 investment companies,
including 37 mutual funds, with aggregate assets of approximately $51
billion. The Prudential Investment Corporation (PIC or the Subadviser)
furnishes investment advisory services in connection with the management of
the Trust under a Subadvisory Agreement with PMF. See "How the Trust is
Managed-Manager" at page 8.

<PAGE>

Who Distributes the Series' Shares?

Prudential Mutual Fund Distributors, Inc. (PMFD or the Distributor)
acts as the Distributor of the Series' shares. The Trust reimburses PMFD
for expenses related to the distribution of the Series' shares at an annual
rate of up to .125 of 1% of the average daily net assets of the Series. See
"How the Trust is Managed-Distributor" at page 8.

What is the Minimum Investment?

The minimum initial investment is $2,500. The subsequent minimum
investment is $100. There is no minimum investment requirement for the
Command Account Program (if the Series is designated as your primary fund)
and certain retirement and employee savings plans or custodial accounts for
the benefit of minors. For purchases made through the Automatic Savings
Accumulation Plan, the minimum initial and subsequent investment is $50.
See "Shareholder Guide-How to Buy Shares of the Trust" at page 11 and
"Shareholder Guide-Shareholder Services" at page 18.

How Do I Purchase Shares?

You may purchase shares of the Series through Prudential Securities,
Pruco Securities Corporation (Prusec) or directly from the Trust, through
its transfer agent, Prudential Mutual Fund Services, Inc. (PMFS or the
Transfer Agent) at the net asset value per share (NAV) next determined
after receipt of your purchase order by the Transfer Agent or Prudential
Securities. See "How the Trust Values its Shares" at page 9 and "Shareholder
Guide-How to Buy Shares of the Trust" at page 11.

How Do I Sell My Shares?

You may redeem shares of the Series at any time at the NAV next
determined after Prudential Securities or the Transfer Agent receives your
sell order. See "Shareholder Guide-How to Sell Your Shares" at page 15.

How Are Dividends and Distributions Paid?

The Series expects to declare daily and pay monthly dividends of net
investment income and short-term capital gains, if any. Dividends and
distributions will be automatically reinvested in additional shares of the
Series at NAV unless you request that they be paid to you in cash. See
"Taxes, Dividends and Distributions" at page 10.

3
<PAGE>

TRUST EXPENSES-U.S. TREASURY MONEY MARKET SERIES

Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases ......................... None
Maximum Sales Load Imposed on Reinvested Dividends .............. None
Deferred Sales Load ............................................. None
Redemption Fees ................................................. None
Exchange Fee .................................................... None

Annual Series Operating Expenses
(as a percentage of average net assets)
Management Fees ............................................... 0.400%
12b-1 Fees .................................................... 0.125%
Other Expenses ................................................ 0.135%
-----

Total Series Operating Expenses ................................. 0.660%
=====

Example 1 Year 3 Years 5 Years 10 Years
------- ------ ------- ------- --------

You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: $7 $21 $37 $82

- -------------

The above example is based on data for the Series' fiscal year ended
November 30, 1993. The example should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.

The purpose of this table is to assist investors in understanding the
various costs and expenses that an investor in the Series will bear,
whether directly or indirectly. For more complete descriptions of the
various costs and expenses, see "How the Trust is Managed." "Other
Expenses" include an estimate of operating expenses of the Series, such as
trustees' and professional fees, registration fees, reports to shareholders
and transfer agency and custodian fees.

<PAGE>

FINANCIAL HIGHLIGHTS
(for a share of beneficial interest outstanding throughout theperiod indicated)

The following financial highlights for the Series have been audited by
Price Waterhouse, independent accountants, whose report thereon was
unqualified. This information should be read in conjunction with the
financial statements and notes thereto, which appear in the Statement of
Additional Information. The following financial highlights contain selected
data for a share of beneficial interest outstanding, total return, ratios
to average net assets and other supplemental data for each of the periods
indicated. The information is based on data contained in the financial
statements.

U.S. Treasury Money Market Series
---------------------------------

December 3, 1990*
Year ended November 30, through
----------------------- November 30,
1993 1992 1991
---- ---- ----

PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of period $ 1.00 $ 1.00 $1.00
------ ------ ------
Net investment income .025 .034 .057\D

Dividends from net investment income (.025) (.034) (.057)
----- ----- -----
Net asset value, end of period 1.00 1.00 1.00
==== ==== ====
TOTAL RETURN\D\D 2.54% 3.46% 5.84%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of period (000) $284,978 $233,600 $288,922

Average net assets (000) $273,313 $263,459 $273,203

Ratio to average net assets:

Expenses, including distribution fees .66% .66% .50%\D /**

Expenses, excluding distribution fees .53% .54% .38%\D /**

Net investment income 2.49% 3.29% 5.74%\D /**

- -------------
* Commencement of investment operations.

** Annualized.

\D Net of expense subsidy and management fee waiver.

\D \D Total return is calculated assuming a purchase of shares on the first
day and a sale on the last day of each year reported and includes
reinvestment of dividends and distributions.

<PAGE>

CALCULATION OF YIELD

The Series calculates its "current yield" based on the net change,
exclusive of realized and unrealized gains or losses, in the value of a
hypothetical account over a seven calendar day base period. The Series also
calculates its "effective annual yield" assuming weekly compounding and its
"tax-equivalent yield." Tax-equivalent yield shows the taxable yield an
investor would have to earn from a fully taxable investment in order to
equal an after-tax yield equivalent to the Series' tax-free yield and is
calculated by dividing the Series' current or effective yield by the result
of one minus a certain state tax rate. The following is an example of the
yield calculations as of November 30, 1993:

Value of hypothetical account at end of period .......... $1.000475559
Value of hypothetical account at beginning of period .... 1.000000000
-----------

Base period return ...................................... $0.000475559
============

Current yield (.000475559 x (365/7)) .................... 2.48%
Effective annual yield, assuming weekly compounding ..... 2.51%

The yield will fluctuate from time to time and is not necessarily
representative of future performance.

The weighted average maturity of the portfolio of the Series on
November 30, 1993 was 67 days.

Yield is computed in accordance with a standardized formula described
in the Statement of Additional Information. In addition, comparative
performance information may be used from time to time in advertising or
marketing the Series' shares, including data from Lipper Analytical
Services, Inc., Donoghue's Money Fund Report, other industry publications,
business periodicals, and market indices.

HOW THE TRUST INVESTS

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Series is high current income
consistent with the preservation of principal and liquidity. The Series
invests exclusively in U.S. Treasury obligations which have effective
maturities of thirteen months or less. There can be no assurance that this
objective will be achieved.

The Series' investment objective is a fundamental policy and,
therefore, may not be changed without the approval of the holders of a
majority of the Series' outstanding voting securities, as defined in the
Investment Company Act of 1940, as amended (the Investment Company Act).
Policies that are not fundamental may be modified by the Trustees.

The Series will invest in the following instruments:

U.S. Treasury Securities. The Series will invest in U.S. Treasury
securities, including bills, notes and bonds. These instruments are direct
obligations of the U.S. Government and, as such, are backed by the "full
faith and credit" of the United States. They differ primarily in their
interest rates and the lengths of their maturities.

Components of U.S. Treasury Securities. The Series may also invest in
component parts of U.S. Treasury notes or bonds, namely, either the corpus
(principal) of such Treasury obligations or one of the interest payments
scheduled to be paid on such obligations. These obligations may take the
form of (i) Treasury obligations from which the interest coupons have been
stripped, (ii) the interest coupons that are stripped, or (iii) book-
entries at a Federal Reserve member bank representing ownership of Treasury
obligation components.

<PAGE>

Interest on U.S. Treasury obligations is specifically exempted from
state and local taxes under federal law. While shareholders in the Series
do not directly receive interest on U.S. Treasury obligations,
substantially all of the dividends from the Series will be derived
primarily from such interest. All states allow the character of the Series'
income to pass through to its shareholders so that distributions from the
Series derived from interest on U.S. Treasury obligations will also be
exempt from state and local income taxes when earned by an individual
shareholder through a distribution from the Trust. See "Taxes, Dividends
and Distributions."

The Series does not engage in repurchase agreements or lend its
portfolio securities because the income from such activities is generally
not exempt from state and local income taxes.

Interest income on U.S. Treasury obligations is not, however, exempt
from federal income tax. In addition, capital gains, if any, realized by
the Series upon the sale of U.S. Treasury obligations are not exempt from
federal taxes or, generally, from state and local taxes. See "Taxes,
Dividends and Distributions."

The Series seeks to maintain a $1.00 share price at all times. To
achieve this, the Series purchases only securities with remaining
maturities of thirteen months or less and limits the dollar-weighted
average maturity of its portfolio to 90 days or less. There is no assurance
that the Series will be able to maintain a stable net asset value. See "How
the Trust Values its Shares."

OTHER INVESTMENTS AND POLICIES

When-Issued and Delayed Delivery Securities

The Series may purchase or sell securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Series with payment and delivery
taking place as much as a month or more into the future in order to secure
what is considered to be an advantageous price and yield to the Series at
the time of entering into the transaction. The Trust's Custodian will
maintain, in a segregated account of the Series, cash or U.S. Treasury
obligations having a value equal to or greater than the Series' purchase
commitments. The Custodian will likewise segregate securities sold on a
delayed delivery basis. The securities so purchased are subject to market
fluctuation and no interest accrues to the purchaser during the period
between purchase and settlement. At the time of delivery of the securities
the value may be more or less than the purchase price and an increase in
the percentage of the Series' assets committed to the purchase of
securities on a when-issued or delayed delivery basis may increase the
volatility of the Series' net asset value.

Borrowing

The Series may borrow an amount equal to no more than 20% of the value
of its total assets (calculated when the loan is made) for temporary,
extraordinary or emergency purposes. Such borrowings shall be made only
from banks, unless the Trust receives an order from the Securities and
Exchange Commission (SEC) to permit borrowing from entities other than
banks. The Series may pledge up to 20% of its total assets to secure these
borrowings. The Series will not purchase portfolio securities if its
borrowings exceed 5% of its assets.

INVESTMENT RESTRICTIONS

The Series is subject to certain investment restrictions which, like
its investment objective, constitute fundamental policies. Fundamental
policies cannot be changed without the approval of the holders of a
majority of the Series' outstanding voting securities, as defined in the
Investment Company Act. See "Investment Restrictions" in the Statement of
Additional Information.

<PAGE>

HOW THE TRUST IS MANAGED

The Trust has Trustees who, in addition to overseeing the actions of
the Trust's Manager, Subadviser and Distributor, as set forth below, decide
upon matters of general policy. The Trust's Manager conducts and supervises
the daily business operations of the Trust. The Trust's Subadviser
furnishes daily investment advisory services.

For the fiscal year ended November 30, 1993, total expenses of the
Series as a percentage of its average net assets were .66%. See "Financial
Highlights."

MANAGER

Prudential Mutual Fund Management, Inc. (PMF or the Manager), One
Seaport Plaza, New York, New York 10292, is the Manager of the Trust and is
compensated for its services at an annual rate of .40 of 1% of the Series'
average daily net assets. It was incorporated in May 1987 under the laws of
the State of Delaware. For the fiscal year ended November 30, 1993, the
Trust paid management fees to PMF of .40% of the average net assets of the
Series. See "Manager" in the Statement of Additional Information.

As of February 28, 1994, PMF served as the manager to 37 open-end
investment companies, constituting all of the Prudential Mutual Funds, and
as manager or administrator to 29 closed-end investment companies with
aggregate assets of approximately $51 billion.

Under the Management Agreement with the Trust, PMF manages the
investment operations of the Trust and also administers the Trust's
business affairs. See "Manager" in the Statement of Additional Information.

Under a Subadvisory Agreement between PMF and The Prudential Investment
Corporation (PIC or the Subadviser), PIC furnishes investment advisory
services in connection with the management of the Trust and is reimbursed
by PMF for its reasonable costs and expenses incurred in providing such
services. Under the Management Agreement, PMF continues to have
responsibility for all investment advisory services and supervises PIC's
performance of such services.

PMF and PIC are indirect, wholly-owned subsidiaries of The Prudential
Insurance Company of America (Prudential), a major diversified insurance
and financial services company.

DISTRIBUTOR

Prudential Mutual Fund Distributors, Inc. (PMFD or the Distributor),
One Seaport Plaza, New York, New York 10292, is a corporation organized
under the laws of the State of Delaware and serves as the Distributor of
the Series. It is a wholly-owned subsidiary of PMF.

Under a Distribution and Service Plan (the Plan) adopted by the Series
under Rule 12b-1 under the Investment Company Act and a distribution and
service agreement (the Distribution Agreement), the Distributor incurs the
expenses of distributing the shares of the Series. These expenses include
account servicing fees paid to, or on account of, financial advisers of
Prudential Securities Incorporated (Prudential Securities) and Pruco
Securities Corporation (Prusec), affiliated broker-dealers, account
servicing fees paid to, or on account of, other broker-dealers or financial
institutions (other than national banks) which have entered into agreements
with the Distributor, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and indirect and overhead costs
of Prudential Securities and Prusec associated with the sale of the Series'
shares, including lease, utility, communications and sales promotion
expenses. There are no carry forward amounts under the Plan and interest
expenses are not incurred under the Plan. The State of Texas requires that
shares of the Series may be sold in that State only by dealers or other
financial institutions which are registered there as broker-dealers.

Under the Plan, the Trust reimburses the Distributor for its
distribution-related expenses with respect to the Series at an annual rate
of up to .125 of 1% of the Series' average daily net assets. Account
servicing fees are paid

<PAGE>

based on the average balance of Series' shares held in the accounts of
customers of financial advisers. The entire distribution fee may be used to
pay account servicing fees.

The Plan provides that it shall continue in effect from year to year
provided that each such continuance is approved annually by a majority vote
of the Trustees, including a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related
to the Plan. The Trustees are provided with and review quarterly reports of
expenditures under the Plan.

For the fiscal year ended November 30, 1993, PMFD incurred distribution
expenses in the aggregate of $341,641, all of which was recovered through
the distribution fee paid by the Series to PMFD. The Trust records all
payments made under the Plan as expenses in the calculation of its net
investment income.

In addition to distribution and service fees paid by the Series under
the Plan, the Manager (or one of its affiliates) may make payments to
dealers and other persons which distribute shares of the Series. Such
payments may be calculated by reference to the net asset value of shares
sold by such persons or otherwise.

PORTFOLIO TRANSACTIONS

Prudential Securities may act as a broker for the Trust, provided that
the commissions, fees or other remuneration it receives are fair and
reasonable. See "Portfolio Transactions and Brokerage" in the Statement of
Additional Information.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Trust's portfolio
securities and cash and, in that capacity, maintains certain financial and
accounting books and records pursuant to an agreement with the Trust. Its
mailing address is P.O. Box 1713, Boston, Massachusetts 02105.

Prudential Mutual Fund Services, Inc. Raritan Plaza One,
Edison, New Jersey 08837, serves as Transfer Agent and Dividend Disbursing
Agent and, in those capacities, maintains certain books and records for the
Trust. PMFS is a wholly-owned subsidiary of PMF. Its mailing address is
P.O. Box 15005, New Brunswick, New Jersey 08906-5005.

HOW THE TRUST VALUES ITS SHARES

The Series' net asset value per share or NAV is determined by
subtracting its liabilities from the value of its assets and dividing the
remainder by the number of outstanding shares. The Trustees have fixed the
specific time of day for the computation of the Series' NAV to be as of
4:30 P.M., New York time, immediately after the declaration of dividends.

The Series will compute its NAV once daily on days that the New York
Stock Exchange is open for trading except on days on which no orders to
purchase, sell or redeem Series shares have been received or days on which
changes in the value of the Series' portfolio securities do not materially
affect the net asset value. The New York Stock Exchange is closed on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

The Series determines the value of its portfolio securities by the
amortized cost method. This method involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium regardless of the impact of fluctuating interest rates
on the market value of the instrument. While this method provides certainty
in valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Series would receive
if it sold the instrument. During these periods, the yield to a shareholder
may differ somewhat from that which could be obtained from a similar fund
which marks its portfolio securities to the

<PAGE>

market each day. For example, during periods of declining interest rates,
if the use of the amortized cost method resulted in a lower value of the
Series' portfolio on a given day, a prospective investor in the Series
would be able to obtain a somewhat higher yield and existing shareholders
would receive correspondingly less income. The converse would apply during
periods of rising interest rates. The Trustees have established procedures
designed to stabilize, to the extent reasonably possible, the NAV of the
shares of the Series at $1.00 per share. See "Net Asset Value" in the
Statement of Additional Information.

TAXES, DIVIDENDS AND DISTRIBUTIONS

Taxation of the Series

Each series of the Trust is treated as a separate entity for federal
income tax purposes and each has elected to qualify and intends to remain
qualified as a regulated investment company under the Internal Revenue
Code. Accordingly, the Series will not be subject to federal income taxes
on its net investment income and capital gains, if any, that it distributes
to its shareholders. To the extent not distributed by the Series, taxable
net investment income and net capital gains are taxable to the Series. The
performance and tax qualification of one series will have no effect on the
federal income tax liability of shareholders of the other series. See
"Taxes" in the Statement of Additional Information.

Taxation of Shareholders

Distributions of net investment income and realized net short-term
capital gains, if any, are taxable to shareholders of the Series for U.S.
federal income tax purposes as ordinary income, whether or not reinvested.
The Series does not expect to realize long-term capital gains or losses.
Because none of the income of the Series will consist of dividends from
domestic corporations, dividends of net investment income and distributions
of net short-term capital gains will not be eligible for the
dividends-received deduction for corporate shareholders. Tax-exempt
shareholders generally will not be required to pay taxes on amounts
distributed to them.

The Series will invest exclusively in U.S. Treasury obligations whose
interest is specifically exempted from state and local income taxes under
federal law. See "How the Trust Invests-Investment Objective and Policies"
for a discussion of the treatment of dividends from the Fund for state and
local income tax purposes. Investors should recognize that the state and
local income tax rules that apply to the Series and its shareholders may be
subject to change in the future and that such changes could have an adverse
impact on the Series and its shareholders.

Shareholders are advised to consult their own tax advisers regarding
specific questions as to federal, state or local taxes.

Witholding Taxes

Under U.S. Treasury Regulations, the Trust is required to withhold and
remit to the U.S. Treasury 31% of dividend, capital gain distributions and
redemption proceeds on the accounts of those shareholders who fail to
furnish their tax identification numbers on IRS Form W-9 (or IRS Form W-8
in the case of certain foreign shareholders) or who are otherwise subject
to backup withholding. Dividends from net investment income and short-term
capital gains paid to a foreign shareholder will generally be subject to
U.S. withholding tax at the rate of 30% (or lower treaty rate).

Dividends and Distributions

The Series expects to declare daily and pay monthly dividends of net
investment income and short-term capital gains, if any. A shareholder
begins to earn dividends on the first business day after the settlement
date of his or her order and continues to earn dividends through the day on
which his or her shares are redeemed.

<PAGE>

Dividends and distributions will be paid in additional shares of the
Series based on the net asset value of the Series' shares on the payment
date, unless the shareholder elects in writing not less than five business
days prior to the payment date to receive such dividends and distributions
in cash. Such election should be submitted to Prudential Mutual Fund
Services, Inc., Att: Account Maintenance, P.O. Box 15015, New Brunswick,
New Jersey 08906-5015. If you hold shares through Prudential Securities,
you should contact your financial adviser to elect to receive dividends and
distributions in cash. The Trust will notify each shareholder after the
close of the Trust's taxable year of both the dollar amount and taxable
status of that year's dividends and distributions on a per share basis.
Distributions may be subject to state and local taxes. See "Taxation of
Shareholders" above.

GENERAL INFORMATION

DESCRIPTION OF SHARES

The Trust, organized as an unincorporated business trust under the laws
of Massachusetts, is a trust fund of the type commonly known as a
"Massachusetts business trust." The Trust's activities are supervised by
its Trustees. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares in separate series.

The shareholders of the U.S. Treasury Money Market Series, the Money
Market Series and the Intermediate Term Series are each entitled to a full
vote for each full share of beneficial interest (par value $.01 per share)
held (and fractional votes for fractional shares). Shares of each series
are entitled to vote as a class only to the extent required by the
provisions of the Investment Company Act or as otherwise permitted by the
Trustees in their sole discretion. Under the Investment Company Act,
shareholders of each series have to approve the adoption of any investment
advisory agreement relating to such series and of any changes in the
investment policies related thereto.

It is the intention of the Trust not to hold Annual Meetings of
Shareholders. The Trustees may call Special Meetings of Shareholders for
action by shareholder vote as may be required by the Investment Company Act
or the Declaration of Trust. Shareholders have certain rights, including
the right to call a meeting upon a vote of 10% of the Trust's outstanding
shares for the purpose of voting on the removal of one or more Trustees.

ADDITIONAL INFORMATION

This Prospectus, including the Statement of Additional Information
which has been incorporated by reference herein, does not contain all the
information set forth in the Registration Statement filed by the Trust with
the SEC under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the SEC or may be
examined, without charge, at the office of the SEC in Washington, D.C.

SHAREHOLDER GUIDE

HOW TO BUY SHARES OF THE TRUST

You may purchase shares of the Series through Prudential Securities or
Prusec or directly from the Trust through its Transfer Agent, Prudential
Mutual Fund Services, Inc. (PMFS or the Transfer Agent), Attention:
Investment Services, P.O. Box 15020, New Brunswick, New Jersey 08906-5020.
The minimum initial investment is $2,500. The minimum subsequent investment
is $100. All minimum investment requirements are waived for the Command
Account Program (if the Series is designated as your primary fund) and
certain retirement and employee savings plans or custodial accounts for the
benefit of minors. For purchases made through the Automatic Savings
Accumulation Plan, the minimum initial and subsequent investment is $50.
See "Shareholder Services."

<PAGE>

and Trust Company (State Street)]. See "How the Trust Values its Shares."
When payment is received by PMFS prior to 4:30 P.M., New York time, in
proper form, a share purchase order will be entered at the price determined
as of 4:30 P.M., New York time, on that day, and dividends on the shares
purchased will begin on the business day following such investment. See
"Taxes, Dividends and Distributions."

Application forms can be obtained from PMFS. Prudential Securities or
Prusec. If a stock certificate is desired, it must be requested in writing
for each transaction. Certificates are issued only for full shares.
Shareholders who hold their shares through Prudential Securities will not
receive stock certificates. Shareholders cannot utilize Expedited
Redemption or Check Redemption or have a Systematic Withdrawal Plan if they
have been issued share certificates.

The Trust reserves the right to reject any purchase order (including an
exchange) or to suspend or modify the continuous offering of its shares.
See "How to Sell Your Shares" below.

Your dealer is responsible for forwarding payment promptly to the
Trust. The Distributor reserves the right to cancel any purchase order for
which payment has not been received by the fifth business day following the
investment.

Transactions in Trust shares made through dealers other than Prudential
Securities or Prusec may be subject to postage and other charges imposed by
the dealer. You may avoid such charges by placing orders directly with
Prudential Mutual Fund Services, Inc., Attention: Investment Services, P.O.
Box 15020, New Brunswick, New Jersey 08906-5020.

Purchases through Prudential Securities

If you have an account with Prudential Securities (or open such an
account), you may ask Prudential Securities to purchase shares of the
Series on your behalf. On the business day following confirmation that a
free credit balance (i.e., immediately available funds) exists in your
account, Prudential Securities will effect a purchase order for shares of
the Series in an amount up to the balance at the NAV determined on that
day. Funds held by Prudential Securities on behalf of its clients in the
form of free credit balances are delivered to the Trust by Prudential
Securities and begin earning dividends the second business day after
receipt of the order by Prudential Securities. Accordingly, Prudential
Securities will have the use of such free credit balances during this
period.

Shares of the Series purchased by Prudential Securities on behalf of
its clients will be held by Prudential Securities as record holder.
Prudential Securities will therefore receive statements and dividends
directly from the Trust and will in turn provide investors with Prudential
Securities account statements reflecting purchases, redemptions and
dividend payments. Although Prudential Securities clients who purchase
shares of the Series through Prudential Securities may not redeem shares of
the Series by check, Prudential Securities provides its clients with
alternative forms of immediate access to monies invested in shares of the
Series.

Prudential Securities clients wishing additional information concerning
investment in Series shares made through Prudential Securities should call
their Prudential Securities financial adviser.

Automatic Investment. Prudential Securities has advised the Series that
it has instituted procedures pursuant to which, upon enrollment by a
Prudential Securities client, Prudential Securities will make automatic
investments of free credit balances of $2,500 or more for initial purchases
and $1,000 or more ($1.00 for IRAs) thereafter (Eligible Credit Balances)
held in such client's account in shares of the Series (Autosweep). To
effect the automatic investment of Eligible Credit Balances representing
the proceeds from the sale of securities, Prudential Securities will enter
orders for the purchase of Series shares at the opening of business on the
day following the settlement of such securities transaction; to effect the
automatic investment of Eligible Credit Balances representing non-trade
related credits, Prudential Securities will enter orders for the purchase
of Series shares at the opening of business semi-monthly. All shares
purchased pursuant to such procedures will be issued at the NAV determined
on the date the order is entered and will receive the next dividend
declared after such shares are issued.

Self-Directed Investment. Prudential Securities clients not electing
the automatic investment of Eligible Credit Balances may continue to place
orders for the purchase of Series shares through Prudential Securities,
subject to minimum initial and subsequent investment requirements as
described above.

<PAGE>

A Prudential Securities client who has not elected Autosweep (see
"Automatic Investment") and who does not place a purchase order promptly
after funds are credited to his or her Prudential Securities account will
have a free credit balance with Prudential Securities and will not begin
earning dividends on shares of the Fund until the second business day after
receipt of the order by Prudential Securities. Accordingly, Prudential
Securities will have the use of such free credit balances during this
period.

Purchases through Prusec

You may purchase shares of the Series by placing an order with your
Prusec registered representative accompanied by payment for the purchase
price of such shares and, in the case of a new account, a completed
Application Form. You should also submit an IRS Form W-9. The Prusec
registered representative will then forward these items to the Transfer
Agent. See "Purchase By Mail" below.

Purchase by Wire

For an initial purchase of shares of the Series by wire, you must first
telephone PMFS at (800) 225-1852 (toll-free) to receive an account number.
The following information will be requested: your name, address, tax
identification number, dividend distribution election, amount being wired
and wiring bank. Instructions should then be given by you or your bank to
transfer funds by wire to State Street Bank and Trust Company, Boston,
Massachusetts, Custody and Shareholder Services Division, Attention:
Prudential Government Securities Trust, U.S. Treasury Money Market Series,
specifying on the wire the account number assigned by PMFS and your name.

If you arrange for receipt by State Street of Federal Funds prior to
4:30 P.M., New York time, on a business day, you may purchase shares of the
Series as of that day and receive dividends commencing on the next business
day.

In making a subsequent purchase order by wire, you should wire State
Street directly and should be sure that the wire specifies Prudential
Government Securities Trust (U.S. Treasury Money Market Series) and your
name and individual account number. It is not necessary to call PMFS to
make subsequent purchase orders by wire. The minimum amount which may be
invested by wire is $1,000.

Purchase by Mail

Purchase orders for which remittance is to be made by check or money
order may be submitted directly by mail to Prudential Mutual Fund Services,
Inc., Attention: Investment Services, P.O. Box 15020, New Brunswick, New
Jersey 08906-5020, together with payment of the purchase price of such
shares and, in the case of a new account, a completed Application Form. You
should also submit an IRS Form W-9. If PMFS receives an order to purchase
shares of the Series and payment in proper form prior to 4:30 P.M., New
York time, the purchase order will be effective on that day and you will
begin earning dividends on the following business day. See "Taxes,
Dividends and Distributions." Checks should be made payable to Prudential
Government Securities Trust, U.S. Treasury Money Market Series. Certified
checks are not necessary, but checks must be drawn on a bank located in the
United States. There are restrictions on the redemption of shares purchased
by check while the funds are being collected. See "How to Sell Your
Shares."

The Prudential Advantage Account Program

Shares of the Series are offered to participants in the Prudential
Advantage Account Program (the Advantage Account Program), a financial
services program available to clients of Pruco Securities Corporation.
Investors

<PAGE>

participating in the Advantage Account Program may select the Series as
their primary investment vehicle. Such investors will have the free credit
cash balances in their Securities Account (a component of the Advantage
Account Program carried through Prudential Securities) automatically
invested in shares of the Series. For free credit cash balances of $1,000
or more, an order to purchase shares of the Series will be placed on the
business day following confirmation that a free credit cash balance exists.
For free credit cash balances of less than $1,000, an order will be placed
on Monday of each week or on the next business day if Monday is a holiday.
Prudential Securities will have the use of such free credit cash balances
during this period.

Participation in the Advantage Account Program will allow you to
utilize checkwriting and VISA debit card privileges. Redemptions will be
automatically effected to satisfy debit balances arising under the
Advantage Account Program, such as those incurred by use of the VISA
Account, i.e., VISA card charges, or checks. Each Advantage Account Program
Securities Account will be automatically scanned for debits each business
day, as of the close of business, and a sufficient number of shares of the
Series (if selected as the primary fund) will be redeemed as of that day to
satisfy such debits. Advantage Account participants will not be entitled to
dividends declared on the date of redemption.

Advantage Account Program charges and expenses are not reflected in the
table of Trust expenses. See "Trust Expenses."

For information on participation in the Advantage Account Program, you
should telephone (800) 235-7637 (toll-free).

Command AccountTM Program

Shares of the Series are offered to participants in the Prudential
Securities Command AccountTM program, an integrated financial services
program of Prudential Securities. Investors having a Command Account may
select the Series as their primary fund. Such investors will have the free
credit cash balances of $1.00 or more in their Securities Account
(Available Cash) (a component of the Command Account program) automatically
invested in shares of the Series as described below. Specifically, an order
to purchase shares of the Series is placed (i) in the case of Available
Cash resulting from the proceeds of securities sales, on the settlement
date of the securities sale, and (ii) in the case of Available Cash
resulting from non-trade related credits (i.e., receipt of dividends and
interest payments, or a cash payment by the participant into his or her
Securities Account), on the business day after receipt by Prudential
Securities of the non-trade related credit.

The automatic purchase procedures described above are also applicable
for Corporate Command Accounts except that Available Cash of $1,000 or more
will be invested on the next business day, and Available Cash of less than
$1,000 will be invested weekly (on Monday of each week or on the next
business day if Monday is a holiday), in shares of the Series. Prudential
Securities may determine to make the automatic purchase procedures
described above available to Corporate Command Accounts with Available Cash
of $1.00 or more in the future.

All shares purchased pursuant to these automatic purchase procedures
will begin earning dividends on the business day after the order is placed.
Prudential Securities will arrange for investment in shares of the Series
at 4:00 P.M. on the day the order is placed and cause payment to be made in
federal funds for the shares prior to 4:00 P.M. on the next business day.
Prudential Securities will have the use of free credit cash balances until
delivery to the Fund. There are no minimum investment requirements for
participants in the Command Account program.

Redemptions will be automatically effected by Prudential Securities to
satisfy debit balances in a Securities Account created by activity therein
or arising under the Command program, such as those incurred by use of the
Visa Gold Account, including Visa purchases, cash advances and Visa Account
checks. Each Command program Securities Account will be automatically
scanned for debits each business day as of the close of business on that
day and after application of any free credit cash balances in the account
to such debits, a sufficient number of shares of the Series and, if
necessary, shares of other Command funds owned by the Command program
participant which have not been selected as his or her primary fund or
shares of a participant's money market funds managed by PMF which are not
primary Command funds will be redeemed as of that business day to satisfy
any remaining debits in the Securities

<PAGE>

Account. Margin loans will be utilized to satisfy debits remaining after
the liquidation of all shares of the Series in a Securities Account, and
shares may not be purchased until all debits, margin loans and other
requirements in the Securities Account are satisfied. Command Account
participants will not be entitled to dividends declared on the date of
redemption.

For information on participation in the Command Account program, you
should telephone (800) 222-4321 (toll-free).

HOW TO SELL YOUR SHARES

You can redeem your shares at any time for cash at the NAV next
determined after the redemption request is received in proper form by the
Transfer Agent or Prudential Securities. See "How the Trust Values its
Shares."

Shares for which a redemption request is received by PMFS prior to 4:30
P.M., New York time, are entitled to a dividend on the day on which the
request is received. By pre-authorizing Expedited Redemption, you may
arrange to have payment for redeemed shares made in Federal Funds wired to
your bank, normally on the next bank business day following the date of
receipt of the redemption instructions. Should you redeem all of your
shares, you will receive the amount of all dividends declared for the
month-to-date on those shares. See "Taxes, Dividends and Distributions."

If redemption is requested by a corporation, partnership, trust or
fiduciary, written evidence of authority acceptable to the Transfer Agent
must be submitted before such request will be accepted. All correspondence
and documents concerning redemptions should be sent to the Trust in care of
its Transfer Agent, Prudential Mutual Fund Services, Inc., Attention:
Redemption Services, P.O. Box 15010, New Brunswick, New Jersey 08906- 5010.

If the proceeds of the redemption (a) exceed $50,000, (b) are to be
paid to a person other than the record owner, (c) are to be sent to an
address other than the address on the Transfer Agent's records or (d) are
to be paid to a corporation, partnership, trust or fiduciary, the
signature(s) on the redemption request and on the certificates, if any, or
stock power, must be guaranteed by an "eligible guarantor institution." An
"eligible guarantor institution" includes any bank, broker, dealer or
credit union. The Transfer Agent reserves the right to request additional
information from and make reasonable inquiries of, any eligible guarantor
institution. For clients of Prusec, a signature guarantee may be obtained
from the agency or office manager of most Prudential Insurance and
Financial Services or Preferred Financial Services offices.

Normally, the Trust makes payment on the next business day for all
shares of the Series redeemed, but in any event, payment will be made
within seven days after receipt by PMFS of share certificates and/or of a
redemption request in proper form. However, the Trust may suspend the right
of redemption or postpone the date of payment (a) for any periods during
which the New York Stock Exchange is closed (other than for customary
weekend or holiday closings), (b) for any periods when trading in the
markets which the Trust normally utilizes is closed or restricted or an
emergency exists as determined by the SEC so that disposal of the Series'
investments or determination of its NAV is not reasonably practicable or
(c) for such other periods as the SEC may permit for protection of the
Series' shareholders.

Payment for redemption of recently purchased shares will be delayed
until the Trust or its Transfer Agent has been advised that the purchase
check has been honored, up to 10 calendar days from the time of receipt of
the purchase check by the Transfer Agent. Such delay may be avoided by
purchasing shares by wire or by certified or official bank check.

Redemption of Shares Purchased through Prudential Securities

Prudential Securities clients for whom Prudential Securities has
purchased shares of the Series may have these shares redeemed only by
instructing their Prudential Securities financial adviser orally or in
writing.

Prudential Securities has advised the Trust that it has established
procedures pursuant to which shares of the Series held by a Prudential
Securities client having a deficiency in his or her Prudential Securities
account will be redeemed automatically to the extent of that deficiency to
the nearest highest dollar, unless the client notifies Prudential
Securities to the contrary. The amount of the redemption will be the lesser
of (a) the total NAV of the Series held in the

<PAGE>

client's Prudential Securities account or (b) the deficiency in the
client's Prudential Securities account at the close of business on the date
such deficiency is due. Accordingly, a Prudential Securities client
utilizing this automatic redemption procedure and who wishes to pay for a
securities transaction or meet any market action related deficiency in his
or her account other than through such automatic redemption procedure must
do so not later than the day of settlement for such securities transaction
or the date such market action related deficiency is incurred. Prudential
Securities clients who have elected to utilize Autosweep will not be
entitled to dividends declared on the date of redemption.

Redemption of Shares Purchased through PMFS

If you purchase shares of the Series through PMFS, you may use Check
Redemption, Expedited Redemption or Regular Redemption. Prudential
Securities clients for whom Prudential Securities has purchased shares may
not use such services.

Regular Redemption. You may redeem your shares by sending a written
request, accompanied by duly endorsed share certificates, if issued, to
PMFS, Attention: Redemption Services, P.O. Box 15010, New Brunswick, New
Jersey 08906-5010. In this case, all share certificates must be endorsed by
you with signature guaranteed, as described above. PMFS may request further
documentation from corporations, executors, administrators, trustees or
guardians. Regular redemption is made by check sent to the shareholder's
address.

Expedited Redemption. By pre-authorizing Expedited Redemption, you may
arrange to have payment for redeemed shares made in Federal Funds wired to
your bank, normally on the next business day following redemption. In order
to use Expedited Redemption, you may so designate at the time the initial
Application Form is filed or at a later date. Once the Expedited Redemption
authorization form has been completed, the signature on the authorization
form guaranteed as set forth above and the form returned to PMFS, requests
for redemption may be made by telegraph, letter or telephone. To request
Expedited Redemption by telephone, you should call PMFS at (800) 255-1852.
Calls must be received by PMFS before 4:30 P.M., New York time to permit
redemption as of such date. Requests by letter should be addressed to
Prudential Mutual Fund Services, Inc., Att: Redemption Services, P.O. Box
15010, New Brunswick, New Jersey 08906- 5010.

A signature guarantee is not required under Expedited Redemption once
the authorization form is properly completed and returned. The Expedited
Redemption privilege may be used only to redeem shares in an amount of $200
or more, except that, if an account for which Expedited Redemption is
requested has a net asset value of less than $200, the entire account must
be redeemed. The proceeds of redeemed shares in the amount of $1,000 or
more are transmitted by wire to your account at a domestic commercial bank
which is a member of the Federal Reserve System. Proceeds of less than
$1,000 are forwarded by check to your designated bank account.

During periods of severe market or economic conditions, Expedited
Redemption may be difficult to implement and you should redeem your shares
by mail as described above.

Check Redemption. At your request, State Street will establish a
personal checking account for you. Checks drawn on this account can be made
payable to the order of any person in any amount greater than $500. When
such check is presented to State Street for payment, State Street presents
the check to the Trust as authority to redeem a sufficient number of shares
of the Series in your account to cover the amount of the check. If
insufficient shares are in the account, or if the purchase was made by
check within 10 calendar days, the check will be returned marked
"insufficient funds." Checks in an amount less than $500 will not be
honored. Shares for which certificates have been issued cannot be redeemed
by check. PMFS reserves the right to impose a service charge to establish a
checking account and order checks.

Involuntary Redemption

Because of the relatively high cost of maintaining an account, the
Trust reserves the right to redeem, upon 60 days' written notice, an
account which is reduced by a shareholder to an NAV of $500 or less due to
redemption. You may avoid such redemption by increasing the NAV of your
account to an amount in excess of $500.

<PAGE>

Redemption in Kind

If the Trustees determine that it would be detrimental to the best
interests of the remaining shareholders of the Series to make payment
wholly or partly in cash, the Trust may pay the redemption price in whole
or in part by a distribution in kind of securities from the portfolio of
the Series, in lieu of cash in conformity with applicable rules of the
Securities and Exchange Commission. Securities will be readily marketable
and will be valued in the same manner as in a regular redemption. See "How
the Trust Values its Shares." If your shares are redeemed in kind, you
would incur transaction costs in converting the assets into cash. The
Trust, however, has elected to be governed by Rule 18f-1 under the
Investment Company Act pursuant to which the Trust is obligated to redeem
shares solely in cash up to the lesser of $250,000 or one percent of the
net asset value of the Series during any 90-day period for any one
shareholder.

30-Day Repurchase Privilege

If you redeem your shares and have not previously exercised the
repurchase privilege, you may reinvest any portion or all of the proceeds
of such redemption in shares of the Series at the NAV next determined after
the order is received, which must be within 30 days after the date of the
redemption. Exercise of the repurchase privilege will not affect the
federal income tax treatment of any gain realized upon the redemption. If
the redemption resulted in a loss, some or all of the loss, depending on
the amount reinvested, will not be allowed for federal income tax purposes.

Class B Purchase Privilege

You may direct that the proceeds of the redemption of your shares be
invested in Class B shares of any Prudential Mutual Fund by calling your
Prudential Securities financial adviser or the Transfer Agent at (800) 225-
1852. The transaction will be effected on the basis of the relative NAV.

HOW TO EXCHANGE YOUR SHARES

As a shareholder of the Series you may exchange your shares for shares
of other series of the Trust and certain other Prudential Mutual Funds,
including money market funds and funds sold with an initial sales charge,
subject to the minimum investment requirements of such funds on the basis
of the relative NAV. You may exchange your shares for Class A shares of the
Prudential Mutual Funds on the basis of the relative NAV, plus the
applicable sales charge. No additional sales charge is imposed in
connection with subsequent exchanges. You may not exchange your shares for
Class B shares of the Prudential Mutual Funds, except that shares acquired
prior to January 22, 1990 subject to a contingent deferred sales charge can
be exchanged for Class B shares. See "How to Sell Your Shares-Class B
Purchase Privilege" above and "Shareholder Investment Account-Exchange
Privilege" in the Statement of Additional Information. An exchange will be
treated as a redemption and purchase for tax purposes.

In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the
Transfer Agent and hold shares in non-certificate form. Thereafter, you may
call the Trust at (800) 225-1852 to execute a telephone exchange of shares,
on weekdays, except holidays, between the hours of 8:00 A.M. and 6:00 P.M.,
New York time. For your protection and to prevent fraudulent exchanges,
your telephone call will be recorded and you will be asked to provide your
personal identification number. A written confirmation of the exchange
transaction will be sent to you. Neither the Trust nor its agents will be
liable for any loss, liability or cost which results from acting upon
instructions reasonably believed to be genuine under the foregoing
procedures. All exchanges will be made on the basis of the relative NAV of
the two funds (or series) next determined after the request is received in
good order. The Exchange Privilege is available only in states where the
exchange may legally be made.

If you hold shares through Prudential Securities, you must exchange
your shares by contacting your Prudential Securities financial adviser. If
you hold certificates, the certificates, signed in the name(s) shown on the
face of the certificates, must be returned in order for the shares to be
exchanged. See "How to Sell Your Shares" above.

You may also exchange shares by mail by writing to Prudential Mutual
Fund Services, Inc., Attention: Exchange Processing, P.O. Box 15010, New
Brunswick, New Jersey 08906-5010.

<PAGE>

In periods of severe market or economic conditions the telephone
exchange of shares may be difficult to implement and you should make
exchanges by mail in writing to Prudential Mutual Fund Services, Inc., at
the address noted above.

The Exchange Privilege may be modified or terminated at any time on
sixty days' notice to shareholders.

SHAREHOLDER SERVICES

In addition to the exchange privilege, as a shareholder in the Series,
you can take advantage of the following additional services and privileges:

*Automatic Reinvestment of Dividends and/or Distributions. For your
convenience, all dividends and distributions are automatically reinvested
in full and fractional shares of the Series at NAV. You may direct the
Transfer Agent in writing not less than 5 full business days prior to the
record date to have subsequent dividends and/or distributions sent in cash
rather than reinvested. If you hold shares through Prudential Securities,
you should contact your financial adviser.

*Automatic Savings Accumulation Plan (ASAP). Under ASAP you may make
regular purchases of Series shares in amounts as little as $50 via an
automatic charge to a bank account or Prudential Securities account
(including a Command Account). For additional information about this
service, you may contact your Prudential Securities financial adviser,
Prusec registered representative or the Transfer Agent directly.

*Tax-Deferred Retirement Plans. Various tax-deferred retirement plans,
including a 401(k) plan, self-directed individual retirement accounts and
"tax-sheltered accounts" under Section 403(b)(7) of the Internal Revenue
Code are available through the Distributor. These plans are for use by both
self-employed individuals and corporate employers. These plans permit
either self-direction of accounts by participants, or a pooled account
arrangement. Information regarding the establishment of these plans, the
administration, custodial fees and other details is available from
Prudential Securities or the Transfer Agent. If you are considering
adopting such a plan, you should consult with your own legal or tax adviser
with respect to the establishment and maintenance of such a plan.

*Systematic Withdrawal Plan. A systematic withdrawal plan is available
for shareholders having shares of the Series which provides for monthly or
quarterly checks. If you hold your shares through Prudential Securities,
you should contact your financial adviser.

*Multiple Accounts. Special procedures have been designed for banks and
other institutions that wish to open multiple accounts. An institution may
open a single master account by filing an Application Form with Prudential
Mutual Fund Services, Inc. (PMFS or the Transfer Agent), Attention:
Customer Service, P.O. Box 15005, New Brunswick, New Jersey 08906, signed
by personnel authorized to act for the institution. Individual sub-accounts
may be opened at the time the master account is opened by listing them, or
they may be added at a later date by written advice or by filing forms
supplied by the Trust. Procedures are available to identify sub-accounts by
name and number within the master account name. The investment minimums set
forth above are applicable to the aggregate amounts invested by a group and
not to the amount credited to each sub-account.

*Reports to Shareholders. The Trust will send you annual and semi-
annual reports. The financial statements appearing in annual reports are
audited by independent accountants. In order to reduce duplicate mailing
and printing expenses the Trust will provide one annual report and semi-
annual shareholder report and annual prospectus per household. You may
request additional copies of such reports by calling (800) 225-1852 or by
writing to the Trust at One Seaport Plaza, New York, NY 10292.

*Shareholder Inquiries. Inquiries should be addressed to the Trust at
One Seaport Plaza, New York, New York 10292, or by telephone, at (800) 225-
1852 (toll free) or, from outside the U.S.A., at (908) 417-7555 (collect).

For additional information regarding the services and privileges
described above, see "Shareholder Investment Account" in the Statement of
Additional Information.

<PAGE>

THE PRUDENTIAL MUTUAL FUND FAMILY

Prudential Mutual Fund Management offers a broad range of mutual funds
designed to meet your individual needs. We welcome you to review the
investment options available through our family of funds. For more
information on the Prudential Mutual Funds, including charges and expenses,
contact your Prudential Securities financial adviser or Prusec registered
representative or telephone the Fund at (800) 225-1852 for a free
prospectus. Read the prospectus carefully before you invest or send money.

Taxable Bond Funds

Prudential Adjustable Rate Securities Fund, Inc.
Prudential GNMA Fund
Prudential Government Plus Fund
Prudential Government Securities Trust
Intermediate Term Series
Prudential High Yield Fund
Prudential Structured Maturity Fund
Income Portfolio
Prudential U.S. Government Fund
The BlackRock Government Income Trust

Tax-Exempt Bond Funds

Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Yield Series
Insured Series
Modified Term Series
Prudential Municipal Series Fund
Arizona Series
Florida Series
Georgia Series
Maryland Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund

Global Funds

Prudential Global Fund, Inc.
Prudential Global Genesis Fund
Prudential Global Natural Resources Fund
Prudential Intermediate Global Income Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential Short-Term Global Income Fund, Inc.
Global Assets Portfolio
Short-Term Global Income Portfolio
Global Utility Fund, Inc.

Equity Funds

Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential FlexiFund
Conservatively Managed Portfolio
Strategy Portfolio
Prudential Growth Fund, Inc.
Prudential Growth Opportunity Fund
Prudential IncomeVertible(R) Fund, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Utility Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund

Money Market Funds

* Taxable Money Market Funds
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund
Money Market Series
Prudential MoneyMart Assets

* Tax-Free Money Market Funds
Prudential Tax-Free Money Fund
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series

* Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
* Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series

A-1

<PAGE>

No dealer, sales representative or any other person has
been authorized to give any information or to make any
representations, other than those contained in this
Prospectus, in connection with the offer contained
herein, and, if given or made, such other information or
representations must not be relied upon as having been
authorized by the Fund or the Distributor. This
Prospectus does not constitute and offer by the Fund or
by the Distributor to sell or a solicitation of an offer to
buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make
such offer in such jurisdiction.

___________________________________________________________

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TRUST HIGHLIGHTS............................. 2
TRUST EXPENSES............................... 4
FINANCIAL HIGHLIGHTS......................... 5
CALCULATION OF YIELD......................... 6
HOW THE TRUST INVESTS........................ 6
Investment Objective and Policies.......... 6
Other Investments and Policies............. 7
Investment Restrictions.................... 7
HOW THE TRUST IS MANAGED..................... 8
Manager.................................... 8
Distributor................................ 8
Portfolio Transactions..................... 9
Custodian and Transfer and
Dividend Disbursing Agent................ 9
HOW THE TRUST VALUES ITS SHARES.............. 9
TAXES, DIVIDENDS AND DISTRIBUTIONS........... 10
GENERAL INFORMATION.......................... 11
Description of Common Stock................ 11
Additional Information..................... 11
SHAREHOLDER GUIDE............................ 11
How to Buy Shares of the Trust............. 11
How to Sell Your Shares.................... 15
How to Exchange Your Shares................ 17
Shareholder Services....................... 18
THE PRUDENTIAL MUTUAL FUND FAMILY............A-1
________________________________________________
MF145A 4441280

________________________________________________

CUSIP No.: 744342 30 4
________________________________________________

Prudential
Government
Securities
Trust
(U.S. Treasury Money Market Series)

PROSPECTUS
APRIL 1, 1994

Prudential Mutual Funds (LOGO)
BUILDING YOUR FUTURE
ON OUR STRENGTH SM

<PAGE>

Rule 497(c)
File # 2-74139

Prudential Government Securities Trust

(Money Market Series)
_________________________________________________________________________

Prospectus dated April 1, 1994

________________________________________________________________________

The investment objectives of the Money Market Series (the Series) are to
obtain high current income, preservation of capital and maintenance of
liquidity by investing principally in a diversified portfolio of short-
term money-market instruments issued or guaranteed by the United States
Government or its agencies or instrumentalities. See "How the Trust
Invests-Investment Objectives and Policies."

An investment in the Series is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Series will be able to
maintain a stable net asset value of $1.00 per share. See "How the Trust
Values its Shares."

The Trust's address is One Seaport Plaza, New York, New York 10292, and its
telephone number is (800) 225-1852.

_________________________________________________________________________

This Prospectus sets forth concisely the information about the Trust and
the Series that a prospective investor ought to know before investing.
Additional information about the Trust has been filed with the Securities
and Exchange Commission in a Statement of Additional Information, dated
April 1, 1994, which information is incorporated herein by reference (is
legally considered a part of this Prospectus) and is available without
charge upon request to the Trust at the address or telephone number noted
above.

_________________________________________________________________________

Investors are advised to read this Prospectus and retain it for future
reference.
_________________________________________________________________________

<PAGE>
TRUST HIGHLIGHTS

The following summary is intended to highlight certain information
contained in this prospectus and is qualified in its entirety by the more
detailed information appearing elsewhere herein.

What is Prudential Government Securities Trust?

Prudential Government Securities Trust is a mutual fund whose shares
are offered in three series, each of which operates as a separate fund. A
mutual fund pools the resources of investors by selling its shares to the
public and investing the proceeds of such sale in a portfolio of securities
designed to achieve its investment objective. Technically, the Trust is an
open-end, diversified management investment company. Only the Money Market
Series is offered through this Prospectus.

What are the Series' Investment Objectives?

The Series' investment objectives are to obtain high current income,
preservation of capital and maintenance of liquidity by investing
principally in a diversified portfolio of short-term money-market
instruments issued or guaranteed by the United States Government or its
agencies or instrumentalities. See "How the Trust invests-Investment
Objectives and Policies" at page 6.

What are the Series' Special Characteristics and Risks?

It is anticipated that the net asset value of the Series will remain
constant at $1.00 per share, although this cannot be assured. In order to
maintain such constant net asset value, the Series will value its portfolio
securities at amortized cost. While this method provides certainty in
valuation, it may result in periods during which the value of a security in
its portfolio, as determined by amortized cost, is higher or lower than the
price the Series would receive if it sold such security. See "How the Trust
Values its Shares" at page 9.

Who Manages the Trust?

Prudential Mutual Fund Management, Inc. (PMF or the Manager) is the
Manager of the Trust and is compensated for its services at an annual rate
of .40 of 1% of the Series' average daily net assets up to $1 billion, .375
of 1% of the Series' average daily net assets between $1 billion and $1.5
billion and .35 of 1% in excess of $1.5 billion. As of February 28, 1994,
PMF served as manager or administrator to 66 investment companies,
including 37 mutual funds, with aggregate assets of approximately $51
billion. The Prudential Investment Corporation (PIC or the Subadviser)
furnishes investment advisory services in connection with the management of
the Trust under a Subadvisory Agreement with PMF. See "How the Trust is
Managed-Manager" at page 8.

2
<PAGE>

Who Distributes the Series' Shares?

What is the Minimum Investment?

The minimum initial investment is $1,000. The subsequent minimum
investment is $100. There is no minimum investment requirement for certain
retirement and employee savings plans or custodial accounts for the benefit
of minors. For purchases made through the Automatic Savings Accumulation
Plan, the minimum initial and subsequent investment is $50. See
"Shareholder Guide-How to Buy Shares of the Trust" at page 11 and
"Shareholder Guide-Shareholder Services" at page 16.

How Do I Purchase Shares?

How Do I Sell My Shares?

How Are Dividends and Distributions Paid?

3
<PAGE>

TRUST EXPENSES-MONEY MARKET SERIES

Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases ..................... None
Maximum Sales Load Imposed on Reinvested Dividends .......... None
Deferred Sales Load ......................................... None
Redemption Fees ............................................. None
Exchange Fee ................................................ None

Annual Series Operating Expenses
(as a percentage of average net assets)
Management Fees ............................................. 0.400%
12b-1 Fees .................................................. 0.125%
Other Expenses .............................................. 0.195%
-----

Total Series Operating Expenses ............................. 0.720%
=====

Example 1 Year 3 Years 5 Years 10 Years
------- ------ ------- ------- --------

You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period: $7 $23 $40 $89

- --------------

The purpose of this table is to assist an investor in understanding the
various costs and expenses that an investor in the Series will bear,
whether directly or indirectly. For more complete descriptions of the
various costs and expenses, see "How the Trust is Managed." "Other
Expenses" include operating expenses of the Series, such as Trustees' and
professional fees, registration fees, reports to shareholders and transfer
agent and custodian fees.

4
<PAGE>

FINANCIAL HIGHLIGHTS

(for a share of beneficial interest outstanding
throughout each period indicated)

The following financial highlights with respect to the five-year period
ended November 30, 1993 for the Series have been audited by Price
Waterhouse, independent accountants, whose report thereon was unqualified.
This information should be read in conjunction with the financial
statements and notes thereto, which appear in the Statement of Additional
Information. The following financial highlights contain selected data for a
share of beneficial interest outstanding, total return, ratios to average
net assets and other supplemental data for each of the periods indicated.
The information is based on data contained in the financial statements.

Money Market Series

-------------------------------------------------------------------------------------------

Year Ended November 30,

-------------------------------------------------------------------------------------------

1993 1992 1991 1990 1989 1988\D 1987 1986 1985 1984
---- ---- ---- ---- ---- ---- ---- ---- ---- ----

<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
year ........................ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Net investment income ......... .026 .035 .058 .076 .084 .067 .058 .061 .075 .095

Dividends from net investment
income ...................... (.026) (.035) (.058) (.076) (.084) (.067) (.058) (.061) (.075) (.095)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Net asset value, end of year .. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------

TOTAL RETURN\D \D 2.62% 3.57% 5.96% 7.83% 8.77% 6.99% 6.01% 6.30% 7.73% 9.87%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of year (000) . $919,503 $1,026,187 $1,212,836$1,355,058 $667,571 $470,727 $445,761 $329,789 $268,046 $244,979

Average net assets (000) $950,988 $1,113,759 $1,255,014 $857,385 $528,820 $480,598 $368,100 $315,520 $257,977 $202,021

Ratio to average net assets:

Expenses, including
distribution fees ........... .72% .72% .65% .66% .68% .65% .68% .70% .73% .65%

Expenses, excluding
distribution fees ........... .59% .60% .53% .53% .56% .52% .55% .57% .60% .64%

Net investment income ......... 2.56% 3.42% 5.78% 7.52% 8.30% 6.69% 5.78% 6.13% 7.39% 9.48%

<FN>

\DOn August 9, 1988, Prudential Mutual Fund Management, Inc. succeeded
The Prudential Insurance Company of America as investment adviser and
since then has acted as manager of the Trust. See "Manager" in the
Statement of Additional Information.

\D\DTotal return is calculated assuming a purchase of shares on the first
day and a sale on the last day of each year reported and includes
reinvestment of dividends and distributions.

</TABLE>

5
<PAGE>

CALCULATION OF YIELD

Value of hypothetical account at end of period .............. $1.000497911
Value of hypothetical account at beginning of period ........ 1.000000000
-----------

Base period return .......................................... $0.000497911
============

Current yield (.000497911 x (365/7)) ........................ 2.60%
Effective annual yield, assuming weekly compounding ......... 2.63%

The yield will fluctuate from time to time and is not necessarily
representative of future performance.

The weighted average life to maturity of the portfolio of the Series on
November 30, 1993 was 64 days.

Yield is computed in accordance with a standardized formula described
in the Statement of Additional Information. In addition, comparative
performance information may be used from time to time in advertising or
marketing the Trust's shares, including data from Lipper Analytical
Services, Inc., Donoghue's Money Fund Report, The Bank Rate Monitor, other
industry publications, business periodicals, and market indices.

HOW THE TRUST INVESTS

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the Series are to obtain high current
income, preserve capital and maintain liquidity. There is no assurance that
these objectives will be achieved.

The Series will invest at least 80% of its total assets in United
States Government securities. These securities may include securities
issued or guaranteed by the United States Treasury, by various agencies of
the United States Government or by various instrumentalities which have
been established or sponsored by the United States Government including
repurchase agreements with respect to such securities. The Series may also
invest in fully insured certificates of deposit issued by banks or savings
and loan associations subject to certain restrictions and obligations of
the International Bank for Reconstruction and Development (the World Bank).
Obligations of the World Bank are supported by appropriated but unpaid
commitments of its member countries, including the United States, and there
is no assurance these commitments will be undertaken or met in the future.
See "Investment Restrictions" in the Statement of Additional Information.

The Series may also purchase instruments of the types described above
together with the right to resell the instruments at an agreed-upon price
or yield within a specified period prior to the maturity date of the
instrument, commonly known as a "put." The aggregate price that the Series
pays for instruments with a put may be higher than the price that otherwise
would be paid for the instruments. See "Investment Objectives and Policies"
in the Statement of Additional Information.

The Series' investment objectives and policies described above are
fundamental policies, and, therefore, may not be changed without the
approval of the holders of a majority of the outstanding voting securities
of the Money Market Series, as defined in the Investment Company Act of
1940, as amended (the Investment Company Act). Policies that are not
fundamental may be modified by the Trustees.

<PAGE>

The Series may not invest in securities other than the types of
securities listed above and is subject to other specific investment
restrictions as detailed under "Investment Restrictions" in the Statement
of Additional Information.

OTHER INVESTMENTS AND POLICIES

Repurchase Agreements

The Series may enter into repurchase agreements, whereby the seller of
a security agrees to repurchase that security from the Series at a mutually
agreed-upon time and price. The period of maturity is usually quite short,
possibly overnight or a few days, although it may extend over a number of
months. The resale price is in excess of the purchase price, reflecting an
agreed-upon rate of return effective for the period of time the Series'
money is invested in the security. The Series' repurchase agreements will
at all times be fully collateralized in an amount at least equal to the
purchase price including accrued interest earned on the underlying
securities. The instruments held as collateral are valued daily, and if the
value of such instruments declines, the Series will require additional
collateral. If the seller defaults and the value of the collateral securing
the repurchase agreement declines, the Series may incur a loss. The Series
participates in a joint repurchase account with other investment companies
managed by Prudential Mutual Fund Management, Inc. pursuant to an order of
the Securities and Exchange Commission (SEC).

When-Issued and Delayed Delivery Securities

The Series may purchase or sell securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Series with payment and delivery
taking place as much as a month or more into the future in order to secure
what is considered to be an advantageous price and yield to the Series at
the time of entering into the transaction. The Trust's Custodian will
maintain, in a segregated account of the Series, cash, U.S. Government
securities or other liquid high-grade debt obligations having a value equal
to or greater than the Series' purchase commitments; the Custodian will
likewise segregate securities sold on a delayed delivery basis. The
securities so purchased are subject to market fluctuation and no interest
accrues to the purchaser during the period between purchase and settlement.
At the time of delivery of the securities the value may be more or less
than the purchase price and an increase in the purcentage of the Series'
assets commited to the purchase of securities on a when-issued or delayed
delivery basis may increase the volatility of the Series' net asset value.

Borrowing

The Series may borrow an amount equal to no more than 20% of the value
of its total assets (calculated when the loan is made) from banks for
temporary, extraordinary or emergency purposes. The Series may pledge up to
20% of its total assets to secure these borrowings. Borrowing for purposes
other than meeting redemptions may not exceed 5% of the value of the
Series' total assets. Investment securities will not be purchased while
borrowings are outstanding.

INVESTMENT RESTRICTIONS

The Series is subject to certain investment restrictions which, like
its investment objective, constitute fundamental policies. Fundamental
policies cannot be changed without the approval of the holders of a
majority of the Series' outstanding securities, as defined in the
Investment Company Act. See "Investment Restrictions" in the Statement of
Additional Information.

7
<PAGE>

HOW THE TRUST IS MANAGED

For the fiscal year ended November 30, 1993, total expenses of the
Series as a percentage of its average net assets were .72%. See "Financial
Highlights."

MANAGER

Prudential Mutual Fund Management, Inc. (PMF or the Manager), One
Seaport Plaza, New York, New York 10292, is the Manager of the Trust and is
compensated for its services at an annual rate of .40 of 1% of the Series'
average daily net assets up to $1 billion, .375 of 1% of the Series'
average daily net assets between $1 billion and $1.5 billion and .35 of 1%
in excess of $1.5 billion. It was incorporated in May 1987 under the laws
of the State of Delaware. For the fiscal year ended November 30, 1993, the
Trust paid management fees to PMF of .40% of the average net assets of the
Series. See "Manager" in the Statement of Additional Information.

Under the Management Agreement with the Trust, PMF manages the
investment operations of the Trust and also administers the Trust's
corporate affairs. See "Manager" in the Statement of Additional
Information.

PMF and PIC are indirect, wholly-owned subsidiaries of The Prudential
Insurance Company of America (Prudential), a major diversified insurance
and financial services company.

DISTRIBUTOR

Prudential Mutual Fund Distributors, Inc. (PMFD or the Distributor),
One Seaport Plaza, New York, New York 10292, is a corporation organized
under the laws of the State of Delaware and serves as the Distributor for
the Series. It is a wholly-owned subsidiary of PMF.

Under a Distribution and Service Plan (the Plan) adopted by the Series
under Rule 12b-1 under the Investment Company Act and a distribution and
service agreement (the Distribution Agreement), the Distributor incurs the
expenses of distributing shares of the Series. These expenses include
account servicing fees paid to, or on account of, financial advisers of
Prudential Securities Incorporated (Prudential Securities) and Pruco
Securities Corporation (Prusec), an affiliated broker-dealer, account
servicing fees paid to, or on account of, other broker-dealers or financial
institutions (other than national banks) which have entered into agreements
with the Distributor, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and indirect and overhead costs
of Prudential Securities and Prusec associated with the sale of the Series'
shares, including lease, utility, communications and sales promotion
expenses. There are no carryforward amounts under the Plan and interest
expenses are not incurred under the Plan. The State of Texas requires that
shares of the Trust may be sold in that state only by dealers or other
financial institutions which are registered there as broker-dealers.

<PAGE>

based on the average balance of Series shares held in accounts of customers
of financial advisers. The entire distribution fee may be used to pay
account servicing fees.

The Plan provides that it shall continue in effect from year to year
provided that each such continuance is approved annually by a majority vote
of the Trustees, including a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related
to the Plan. The Trustees are provided with and review quarterly reports of
expenditures under the Plan.

For the fiscal year ended November 30, 1993, PMFD incurred distribution
expenses in the aggregate of $1,188,735, all of which was recovered through
the distribution fee paid by the Series to PMFD. The Trust records all
payments made under the Plan as expenses in the calculation of its net
investment income.

PORTFOLIO TRANSACTIONS

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian of the Trust's portfolio
securities and, in that capacity, maintains certain financial and
accounting books and records pursuant to an agreement with the Trust. Its
mailing address is P.O. Box 1713, Boston, Massachusetts 02105.

Prudential Mutual Fund Services, Inc., Raritan Plaza One,
Edison, New Jersey 08837, serves as Transfer and Dividend Disbursing Agent
and, in those capacities, maintains certain books and records for the
Trust. PMFS is a wholly-owned subsidiary of PMF. Its mailing address is
P.O. Box 15005, New Brunswick, New Jersey 08906-5005.

HOW THE TRUST VALUES ITS SHARES

The Series will compute its NAV once daily on the days that the New
York Stock Exchange is open for trading, except on days on which no orders
to purchase, sell or redeem Series shares have been received or days on
which changes in the value of the Series portfolio securities do not
materially affect the NAV. The New York Stock Exchange is closed on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

The Series determines the value of its portfolio securities by the
amortized cost method. This method involves valuing a security at its cost
at the time of purchase and thereafter assuming a constant amortization to
maturity of any discount or premium regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price
the Series would receive if it sold the instrument. During these periods,
the yield to a shareholder may differ somewhat from that which could be
obtained from a similar fund which marks its portfolio securities to the
market each day. For example, during periods of declining interest rates,
if the use of the amortized cost

<PAGE>

method resulted in a lower value of the Series' portfolio on a given day, a
prospective investor in the Series would be able to obtain a somewhat
higher yield and existing shareholders would receive correspondingly less
income. The converse would apply during periods of rising interest rates.
The Trustees have established procedures designed to stabilize, to the
extent reasonably possible, the NAV of the Series' shares at $1.00 per
share. See "Net Asset Value" in the Statement of Additional Information.

TAXES, DIVIDENDS AND DISTRIBUTIONS

Taxation of The Series

Each series of the Trust is treated as a separate entity for federal
income tax purposes and each has elected to qualify and intends to remain
qualified as a regulated investment company under the Internal Revenue
Code. Accordingly, the Series will not be subject to federal income taxes
on its net investment income and capital gain, if any, it distributes to
shareholders. To the extent not distributed by the Series, taxable net
investment income and net capital gains are taxable to the Series. The
performance and tax qualification of one series will have no effect on the
federal income tax liability of shareholders of the other series. See
"Taxes" in the Statement of Additional Information.

Taxation of Shareholders

Distributions of net investment income and short-term capital gains, if
any, will be taxable to shareholders of the Series as ordinary income,
whether or not reinvested. The Series does not expect to realize long-term
capital gains or losses. Because none of the income of the Series will
consist of dividends from domestic corporations, dividends of net
investment income and distributions of net short-term capital gains will
not be eligible for the dividends-received deduction for corporate
shareholders. Tax-exempt shareholders will generally not be required to pay
taxes on amounts distributed to them.

Shareholders are advised to consult their own tax advisers regarding
specific questions as to federal, state or local taxes.

Withholding Taxes

Under Treasury Regulations, the Trust is required to withhold and remit
to the U.S. Treasury 31% of dividends, capital gain distributions and
redemption proceeds on the accounts of those shareholders who fail to
furnish their tax identification numbers on IRS Form W-9 (or IRS Form W-8
in the case of certain foreign shareholders) or who are otherwise subject
to backup withholding. Dividends from net investment income and short-term
capital gains paid to a foreign shareholder will generally be subject to
U.S. withholding tax at the rate of 30% (or lower treaty rate).

Dividends and Distributions

<PAGE>

GENERAL INFORMATION

DESCRIPTION OF SHARES

The shareholders of the Money Market Series, the Intermediate Term
Series and the U.S. Treasury Money Market Series are each entitled to a
full vote for each full share of beneficial interest (par value $.01 per
share) held (and fractional votes for fractional shares). Shares of each
series are entitled to vote as a class only to the extent required by the
provisions of the Investment Company Act or as otherwise permitted by the
Trustees in their sole discretion. Under the Investment Company Act,
shareholders of each series have to approve the adoption of any investment
advisory agreement relating to such series and of any changes in the
investment policies related thereto.

It is the intention of the Trust not to hold Annual Meetings of
Shareholders. The Trustees may call Special Meetings of Shareholders for
action by shareholder vote as may be required by the Investment Company Act
or the Declaration of Trust. Shareholders have certain rights, including
the right to call a meeting upon vote of 10% of the Trust's outstanding
shares for the purpose of voting on the removal of one or more Trustees.

ADDITIONAL INFORMATION

SHAREHOLDER GUIDE

HOW TO BUY SHARES OF THE TRUST

You may purchase shares of the Series through Prudential Securities or
through Prusec, or directly from the Trust through its Transfer Agent,
Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent),
Attention: Investment Services, P.O. Box 15020, New Brunswick, New Jersey
08906-5020. The minimum initial investment is $1,000. The minimum
subsequent investment is $100. All minimum investment requirements are
waived for certain retirement and employee savings plans and for custodial
accounts for the benefit of minors. For purchases through the Automatic
Savings Accumulation Plan, the minimum initial and subsequent investment is
$50. See "Shareholder Services" below.

Shares of the Series are sold, without a sales charge, at the NAV next
determined after receipt and acceptance by PMFS of a purchase order and
payment in proper form [i.e., a check or Federal Funds wired to State
Street Bank and Trust Company (State Street), the Trust's custodian]. See
"How the Trust Values its Shares." When payment is received by PMFS prior to
4:30 P.M., New York time, in proper form, a share purchase order will be
entered at the price determined as of 4:30 P.M., New York time, on that
day, and dividends on the shares purchased will begin on the business day
following such investment. See "Taxes, Dividends and Distributions."

<PAGE>

Application forms can be obtained from PMFS, Prudential Securities or
Prusec. If a stock certificate is desired, it must be requested in writing
for each transaction. Certificates are issued only for full shares.
Shareholders who hold their shares through Prudential Securities will not
receive stock certificates. Shareholders cannot utilize Expedited
Redemption or Check Redemption or have a Systematic Withdrawal Plan if they
have been issued share certificates.

The Trust reserves the right to reject any purchase order (including an
exchange) or to suspend or modify the continuous offering of its shares.
See "How to Sell Your Shares" below.

Transactions in Trust shares made through dealers other than Prudential
Securities or Prusec may be subject to postage and handling charges imposed
by the dealer; however, you may avoid such charges by placing orders
directly with the Trust's Transfer Agent, Prudential Mutual Fund Services,
Inc., Attention: Investment Services, P.O. Box 15020, New Brunswick, New
Jersey 08906-5020.

Purchase through Prudential Securities

Shares of the Series purchased by Prudential Securities on behalf of
its clients will be held by Prudential Securities as record holder.
Prudential Securities will thereafter receive statements and dividends
directly from the Series and will in turn provide investors with Prudential
Securities account statements reflecting purchases, redemptions and
dividend payments. Although Prudential Securities clients who purchase
shares of the Series through Prudential Securities may not redeem shares of
the Series by check, Prudential Securities may provide its clients with
alternative forms of immediate access to monies invested in shares of the
Series.

Prudential Securities clients wishing additional information concerning
investment in Series shares made through Prudential Securities should call
their Prudential Securities financial adviser.

Automatic Investment. Prudential Securities has advised the Series that
it has instituted procedures pursuant to which, upon enrollment by a
Prudential Securities client, Prudential Securities will make automatic
investments of free credit balances of $1,000 or more (Eligible Credit
Balances) held in such client's account in shares of the Money Market
Series (Autosweep). To effect the automatic investment of Eligible Credit
Balances representing the proceeds from the sale of securities, Prudential
Securities will enter orders for the purchase of Series shares at the
opening of business on the day following the settlement of such securities
transaction; to effect the automatic investment of Eligible Credit Balances
representing non-trade related credits, Prudential Securities will enter
orders for the purchase of Series shares at the opening of business
semi-monthly. All shares purchased pursuant to such procedures will be
issued at the NAV determined on the date the order is entered and will
receive the next dividend declared after such shares are issued.

Self-directed Investment. Prudential Securities clients not electing
the automatic investment of Eligible Credit Balances may continue to place
orders for the purchase of Series shares through Prudential Securities,
subject to minimum initial and subsequent investment requirements as
described above.

12
<PAGE>

balance with Prudential Securities and will not begin earning dividends
until the business day after Prudential Securities has placed the client's
purchase order with the Trust to purchase shares of the Series.
Accordingly, Prudential Securities will have the use of such free credit
balances during this period.

Purchases through Prusec

Purchase by Wire

For an initial purchase of shares of the Series by wire, you must first
telephone PMFS at (800) 225-1852 (toll free) to receive an account number.
The following information will be requested: your name, address, tax
identification number, dividend distribution election, amount being wired
and wiring bank. Instructions should then be given by you to your bank to
transfer funds by wire to State Street Bank and Trust Company, Boston,
Massachusetts 02205, Services Division, Attention: Prudential Government
Securities Trust (Money Market Series), specifying on the wire the account
number assigned by PMFS and your name.

If you arrange for receipt by State Street of Federal Funds prior to
4:30 P.M., New York time, on a business day, you may purchase Series shares
as of that day and receive dividends commencing on the next business day.

In making a subsequent purchase order by wire, you should wire State
Street directly, and should be sure that the wire specifies Prudential
Government Securities Trust (Money Market Series) and your name and
individual account number. It is not necessary to call PMFS to make
subsequent purchase orders by wire. The minimum amount which may be
invested by wire is $1,000.

Purchase by Mail

Purchase orders for which remittance is to be made by check or money
order may be submitted directly by mail to Prudential Mutual Fund Services,
Inc., Attention: Investment Services, P.O. Box 15020, New Brunswick, New
Jersey 08906-5020, together with payment of the purchase price of such
shares and, in the case of a new account, a completed Application Form. You
should also submit an IRS Form W-9. If PMFS receives your order to purchase
shares of the Trust and payment in proper form prior to 4:30 P.M., New York
time, the purchase order will be effective on that day and you will begin
earning dividends on the following business day. See "Taxes, Dividends and
Distributions." Checks should be made payable to Prudential Government
Securities Trust (Money Market Series). Certified checks are not necessary,
but checks are accepted subject to collection at full face value in United
States funds and must be drawn on a bank located in the United States.
There are restrictions on the redemption of shares purchased by check while
the funds are being collected. See "How to Sell Your Shares."

HOW TO SELL YOUR SHARES

Shares for which a redemption request is received prior to 4:30 P.M.,
New York time, are entitled to a dividend on the day the request is
received. By pre-authorizing Expedited Redemption, you may arrange to have
payment for redeemed shares made in Federal Funds wired to your bank,
normally on the next bank business day following the date of receipt of the
redemption instructions. Should you redeem all of your shares, you will
receive the amount of all dividends declared for the month-to-date on those
shares. See "Taxes, Dividends and Distributions."

<PAGE>

concerning redemptions should be sent to the Trust in care of its Transfer
Agent, Prudential Mutual Fund Services, Inc., Attention: Redemption
Services, P.O. Box 15010, New Brunswick, New Jersey 08906-5010.

If the proceeds of the redemption (a) exceed $50,000, (b) are to be
paid to a person other than the record owner, (c) are to be sent to an
address other than the address on the Transfer Agent's records or (d) are
to be paid to a corporation, partnership, trust or fiduciary, the
signature(s) on the redemption request and on the certificates, if any, or
stock power, must be guaranteed by an "eligible guarantor institution." An
"eligible guarantor institution" includes any bank, broker, dealer or
credit union. The Transfer Agent reserves the right to request additional
information from and make reasonable inquiries of, any eligible guarantor
institution. For clients of Prusec a signature guarantee may be obtained
from the agency or office manager of most Prudential Insurance and
Financial Services or Preferred Financial Services offices.

Normally, the Trust makes payment on the next business day for all
shares of the Series redeemed, but in any event, payment will be made
within seven days after receipt by PMFS of share certificates and/or of a
redemption request in proper form. However, the Trust may suspend the right
of redemption or postpone the date of payment (a) for any periods during
which the New York Stock Exchange is closed (other than for customary
weekend or holiday closings), (b) for any periods when trading in the
markets the Series normally utilizes is closed or restricted or an
emergency exists as determined by the SEC so that disposal of the
investments of the Series or determination of its NAV is not reasonably
practicable, or (c) for such other periods as the SEC may permit for
protection of the shareholders of the Money Market Series.

Payment for redemption of recently purchased shares will be delayed
until the Trust or its Transfer Agent has been advised that the purchase
check has been honored, up to 10 calendar days from the time of receipt of
the purchase check by the Transfer Agent. Such delay may be avoided if
shares are purchased by wire or by certified or official bank check.

Redemption of Shares Purchased Through Prudential Securities

Prudential Securities clients for whom Prudential Securities has
purchased shares of the Series may have such shares redeemed only by
instructing their Prudential Securities financial adviser orally or in
writing.

Prudential Securities has advised the Series that it has established
procedures pursuant to which shares of the Series held by a Prudential
Securities client having a deficiency in his or her Prudential Securities
account will be redeemed automatically to the extent of that deficiency to
the nearest highest dollar, unless the client notifies Prudential
Securities to the contrary. The amount of the redemption will be the lesser
of (a) the total NAV of Series shares held in the client's Prudential
Securities account or (b) the deficiency in the client's Prudential
Securities account at the close of business on the date such deficiency is
due. Accordingly, a Prudential Securities client utilizing this automatic
redemption procedure and who wishes to pay for a securities transaction or
meet any market action related deficiency in his or her account must do so
not later than the day of settlement for such securities transaction or the
date such market action related deficiency is incurred. Prudential
Securities clients who have elected to utilize Autosweep will not be
entitled to dividends declared on the date of redemption.

Redemption of Shares Purchased Through PMFS

Regular Redemption. You may redeem your shares of the Trust by sending
a written request to PMFS, Attention: Redemption Services, P.O. Box 15010,
New Brunswick, New Jersey 08906-5010. In this case, all share certificates
must be endorsed by you with signature guaranteed, as described above. PMFS
may request further documentation from corporations, executors,
administrators, trustees or guardians. Regular redemption is made by check
mailed to the shareholder's address.

<PAGE>

Expedited Redemption. By pre-authorizing Expedited Redemption, you may
arrange to have payment for redeemed shares made in Federal Funds wired to
your bank, normally on the next business day following redemption. In order
to use Expedited Redemption, you may so designate at the time the initial
investment is made or at a later date. Once an Expedited Redemption
authorization form has been completed, the signature on the authorization
form guaranteed as set forth above and the form returned to PMFS, requests
for redemption may be made by telegraph, letter or telephone. To request
Expedited Redemption by telephone, you should call PMFS at (800) 225-1852.
Calls must be received by PMFS before 4:30 P.M., New York time, to permit
redemption as of such date. Requests by letter should be addressed to
Prudential Mutual Fund Services, Inc., Att: Redemption Services, P.O. Box
15010, New Brunswick, New Jersey 08906- 5010.

A signature guarantee is not required under Expedited Redemption once
the authorization form is properly completed and returned. The Expedited
Redemption privilege may be used to redeem shares in an amount of $200 or
more, except that if an account for which Expedited Redemption is requested
has a net asset value of less than $200, the entire account must be
redeemed. The proceeds of redeemed shares in the amount of $1,000 or more
are transmitted by wire to your account at a domestic commercial bank which
is a member of the Federal Reserve System. Proceeds of less than $1,000 are
forwarded by check to your designated bank account.

During periods of severe market or economic conditions, Expedited
Redemption may be difficult to implement and you should redeem your shares
by mail as described above.

Check Redemption. At your request, State Street Bank & Trust Company
(State Street) will establish a personal checking account for you. Checks
drawn on this account can be made payable to the order of any person in any
amount greater than $500. When such check is presented to State Street for
payment, State Street presents the check to the Trust as authority to
redeem a sufficient number of shares of the Trust in your account to cover
the amount of the check. If insufficient shares are in the account or, if
the purchase was made by check within 10 calendar days, the check will be
returned marked "insufficient funds." Checks in an amount less than $500
will not be honored. Shares for which certificates have been issued cannot
be redeemed by check. PMFS reserves the right to impose a service charge to
establish a checking account and order checks.

Involuntary Redemption

Because of the relatively high cost of maintaining an account, the
Trust reserves the right to redeem, upon 60 days' written notice, an
account which is reduced to an NAV of $500 or less due to a redemption. You
may avoid such redemption by increasing the NAV of your account to an
amount in excess of $500.

Redemption in Kind

If the Trustees determine that it would be detrimental to the best
interests of the remaining shareholders of the Series to make payment
wholly or partly in cash, the Trust may pay the redemption price in whole
or in part by a distribution in kind of securities from the investment
portfolio of the Series in lieu of cash, in conformity with applicable
rules of the SEC. Securities will be readily marketable and will be valued
in the same manner as in a regular redemption. See "How the Trust Values
its Shares." If your shares are redeemed in kind, you would incur
transaction costs in converting the assets into cash. The Trust, however,
has elected to be governed by Rule 18f-1 under the Investment Company Act,
under which the Trust is obligated to redeem shares solely in cash up to
the lesser of $250,000 or one percent of the net asset value of the Trust
during any 90-day period for any one shareholder.

30-Day Repurchase Privilege

If you redeem your shares and have not previously exercised the
repurchase privilege, you may reinvest any portion or all of the proceeds
of such redemption in shares of the Trust at the NAV next determined after
the order is received,

<PAGE>

which must be within 30 days after the date of the redemption. Exercise of
the repurchase privilege will not affect the federal income tax treatment
of any gain realized upon the redemption. If the redemption resulted in a
loss, some or all of the loss, depending on the amount reinvested, will not
be allowed for federal income tax purposes.

Class B Purchase Privilege

HOW TO EXCHANGE YOUR SHARES

In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the
Transfer Agent and hold shares in non-certificate form. Thereafter, you may
call the Trust at (800) 225-1852 to execute a telephone exchange of shares,
on weekdays, except holidays, between the hours of 8:00 A.M. and 6:00 P.M.,
New York time. For your protection and to prevent fradulent exchanges, your
telephone call will be recorded and you will be asked to provide your
personal identification number. A written confirmation of the exchange
transaction will be sent to you. Neither the Trust nor its agents will be
liable for any loss, liability or cost which results from acting upon
instructions reasonably believed to be genuine under the foregoing
procedures. All exchanges will be made on the basis of the relative NAV of
the two funds (or series) next determined after the request is received in
good order. The Exchange Privilege is available only in states where the
exchange may legally be made.

You may also exchange shares by mail by writing to Prudential Mutual
Fund Services, Inc., Attention: Exchange Processing, P.O. Box 15010, New
Brunswick, New Jersey 08906-5010.

In periods of severe market or economic conditions the telephone
exchange of shares may be difficult to implement and you should make
exchanges by mail by writing to Prudential Mutual Fund Services, Inc., at
the address noted above.

The Exchange Privilege may be modified or terminated at any time on
sixty days' notice to shareholders.

SHAREHOLDER SERVICES

In addition to the exchange privilege, as a shareholder in the Series,
you can take advantage of the following additional services and privileges:

16
<PAGE>

Agent in writing not less than 5 full business days prior to the record
date to have subsequent dividends and/or distributions sent in cash rather
than reinvested. If you hold your shares through Prudential Securities,
you should contact your financial adviser.

* Automatic Savings Accumulation Plan (ASAP). Under ASAP you may make
regular purchases of Series shares in amounts as little as $50 via an
automatic charge to a bank account or Prudential Securities account
(incuding a Command Account). For additional information about this
service, you may contact your Prudential Securities financial adviser,
Prusec registered representative or the Transfer Agent directly.

* Tax-Deferred Retirement Plans. Various tax-deferred retirement plans,
including a 401(k) plan, self-directed individual retirement accounts and
"tax-sheltered accounts" under Section 403(b)(7) of the Internal Revenue
Code are available through the Distributor. These plans are for use by both
self-employed individuals and corporate employers. These plans permit
either self-direction of accounts by participants, or a pooled account
arrangement. Information regarding the establishment of these plans, the
administration, custodial fees and other details is available from
Prudential Securities or the Transfer Agent. If you are considering
adopting such a plan, you should consult with your own legal or tax adviser
with respect to the establishment and maintenance of such a plan.

* Systematic Withdrawal Plan. A systematic withdrawal plan is available
for shareholders having shares of the Series which provides for monthly or
quarterly checks. If you hold your shares through Prudential Securities,
you should contact your financial adviser.

* Multiple Accounts. Special procedures have been designed for banks
and other institutions that wish to open multiple accounts. An institution
may open a single master account by filing an Application Form with
Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent),
Attention: Customer Service, P.O. Box 15005, New Brunswick, New Jersey
08906, signed by personnel authorized to act for the institution.
Individual sub-accounts may be opened at the time the master account is
opened by listing them, or they may be added at a later date by written
advice or by filing forms supplied by the Trust. Procedures are available
to identify sub-accounts by name and number within the master account name.
The investment minimums set forth above are applicable to the aggregate
amounts invested by a group and not to the amount credited to each
sub-account.

* Reports to Shareholders. The Trust will send you annual and semi-
annual reports. The financial statements appearing in annual reports are
audited by independent accountants. In order to reduce duplicate mailing
and printing expenses the Trust will provide one annual report and semi-
annual shareholder report and annual prospectus per household. You may
request additional copies of such reports by calling (800) 225-1852 or by
writing to the Trust at One Seaport Plaza, New York, NY 10292.

* Shareholder Inquiries. Inquiries should be addressed to the Trust at
One Seaport Plaza, New York, New York 10292, or by telephone, at (800) 225-
1852 (toll free) or, from outside the U.S.A., at (908) 417-7555 (collect).

For additional information regarding the services and privileges
described above, see "Shareholder Investment Account" in the Statement of
Additional Information.

<PAGE>

THE PRUDENTIAL MUTUAL FUND FAMILY

Taxable Bond Funds

Tax-Exempt Bond Funds

Global Funds

Equity Funds

Money Market Funds

* Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund

* Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series

A-1

<PAGE>

___________________________________________________________

TABLE OF CONTENTS
Page
----

TRUST HIGHLIGHTS............................. 2
TRUST EXPENSES............................... 4
FINANCIAL HIGHLIGHTS......................... 5
CALCULATION OF YIELD......................... 6
HOW THE TRUST INVESTS........................ 6
Investment Objective and Policies.......... 6
Other Investments and Policies............. 7
Investment Restrictions.................... 7
HOW THE TRUST IS MANAGED..................... 8
Manager.................................... 8
Distributor................................ 8
Portfolio Transactions..................... 9
Custodian and Transfer and
Dividend Disbursing Agent................ 9
HOW THE TRUST VALUES ITS SHARES.............. 9
TAXES, DIVIDENDS AND DISTRIBUTIONS........... 10
GENERAL INFORMATION.......................... 11
Description of Common Stock................ 11
Additional Information..................... 11
SHAREHOLDER GUIDE............................ 11
How to Buy Shares of the Trust............. 11
How to Sell Your Shares.................... 13
How to Exchange Your Shares................ 16
Shareholder Services....................... 16
THE PRUDENTIAL MUTUAL FUND FAMILY............A-1
________________________________________________
100A 430144C

________________________________________________

CUSIP No.: 744342 20 5
________________________________________________

Prudential
Government
Securities
Trust
(Money Market Series)

PROSPECTUS
APRIL 1, 1994

Prudential Mutual Funds (LOGO)
BUILDING YOUR FUTURE
ON OUR STRENGTH SM

<PAGE>

Rule 497(c)
File # 2-74139

Prudential Government Securities Trust

(Intermediate Term Series)

- --------------------------------------------------------------------------

Prospectus dated April 1, 1994

- --------------------------------------------------------------------------

Prudential Government Securities Trust (the Trust) is a diversified, open-
end management investment company whose shares of beneficial interest are
presently offered in three series. Each series operates as a separate fund
with its own investment objectives and policies designed to meet its
specific investment goals.

The investment objective of the Intermediate Term Series (the Series) is to
achieve a high level of income consistent with providing reasonable safety
by investing principally in a diversified portfolio of intermediate term
securities issued or guaranteed by the United States Government or its
agencies or instrumentalities. See "How the Trust Invests-Investment
Objective and Policies."

The Trust's address is One Seaport Plaza, New York, New York 10292, and its
telephone number is (800) 225-1852.

- -------------------------------------------------------------------------

Investors are advised to read this Prospectus and retain it for future
reference.

- -------------------------------------------------------------------------

<PAGE>

TRUST HIGHLIGHTS

The following summary is intended to highlight certain information
contained in this prospectus and is qualified in its entirety by the more
detailed information appearing elsewhere herein.

What is Prudential Government Securities Trust?

Prudential Government Securities Trust is a mutual fund whose shares
are offered in three series, each of which operates as a separate fund. A
mutual fund pools the resources of investors by selling its shares to the
public and investing the proceeds of such sale in a portfolio of securities
designed to achieve its investment objective. Technically, the Trust is an
open-end, diversified management investment company. Only the Intermediate
Term Series is offered through this Prospectus.

What is the Series' Investment Objective?

The Series' investment objective is to achieve a high level of income
consistent with providing reasonable safety by investing principally in a
diversified portfolio of securities issued or guaranteed by the United
States Government or its agencies or instrumentalities with maturities of
10 years or less. See "How the Trust Invests-Investment Objective and
Policies" at page 6.

What are the Series' Special Characteristics and Risks?

United States Government securities, including those which are
guaranteed by Federal agencies or instrumentalities, may or may not be
backed by the "full faith and credit" of the United States. In the case of
securities not backed by the full faith and credit of the United States,
the Trust must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality
does not meet its commitments. See "How the Trust Invests- Investment
Objective and Policies" at page 6.

Who Manages the Trust?

<PAGE>

Who Distributes the Series' Shares?

Prudential Mutual Fund Distributors, Inc. (PMFD or the Distributor)
acts as the Distributor of the Series' shares. The Trust reimburses PMFD
for expenses related to the distribution of the Series' shares at an annual
rate of up to .25 of 1% of the average daily net assets of the Series. See
"How the Trust is Managed-Distributor" at page 8.

What is the Minimum Investment?

The minimum initial investment is $1,000. The subsequent minimum
investment is $100. There is no minimum investment requirement for certain
retirement and employee savings plans or custodial accounts for the benefit
of minors. For purchases made through the Automatic Savings Accumulation
Plan the minimum initial and subsequent investment is $50. See "Shareholder
Guide-How to Buy Shares of the Trust" at page 12 and "Shareholder
Guide-Shareholder Services" at page 16.

How Do I Purchase Shares?

You may purchase shares of the Series through Prudential Securities,
Pruco Securities Corporation (Prusec) or directly from the Trust, through
its transfer agent, Prudential Mutual Fund Services, Inc. (PMFS or the
Transfer Agent) at the net asset value per share (NAV) next determined
after receipt of your purchase order by the Transfer Agent or Prudential
Securities. See "How the Trust Values its Shares" at page 10 and
"Shareholder Guide-How to Buy Shares of the Trust" at page 12.

How Do I Sell My Shares?

How Are Dividends and Distributions Paid?

The Series expects to declare daily and pay monthly dividends of net
investment income and make distributions annually of any net capital gains.
Dividends and distributions will be automatically reinvested in additional
shares of the Series at NAV unless you request that they be paid to you in
cash. See "Taxes, Dividends and Distributions" at page 11.

<PAGE>

TRUST EXPENSES-INTERMEDIATE TERM SERIES

Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases ............. None
Maximum Sales Load Imposed on Reinvested Dividends .. None
Deferred Sales Load ................................. None
Redemption Fees ..................................... None
Exchange Fee ........................................ None

Annual Series Operating Expenses
(as a percentage of average net assets)
Management Fees .................................... 0.40%
12b-1 Fees ......................................... 0.21%
Other Expenses ..................................... 0.19%
----
Total Series Operating Expenses .................... 0.80%
====

Example 1 Year 3 Years 5 Years 10 Years
------- ------ ------- ------- --------

You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period: $8 $25 $44 $98

- -----------------
The above example is based on data for the Series' fiscal year ended
November 30, 1993. The example should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.

<PAGE>

FINANCIAL HIGHLIGHTS
(for a share of beneficial interest outstanding throughout each period
indicated)

The following financial highlights with respect to the five-year period
ended November 30, 1993, for the Series have been audited by Price
Waterhouse, independent accountants, whose report thereon was unqualified.
This information should be read in conjunction with the financial
statements and notes thereto, which appear in the Statement of Additional
Information. The following financial highlights contain selected data for a
share of beneficial interest outstanding, total return, ratios to average
net assets and other supplemental data for each of the periods indicated.
The information is based on data contained in the financial statements.

Intermediate Term Series

----------------------------------------------------------------------------------------------

Year Ended November 30,

----------------------------------------------------------------------------------------------

1993 1992 1991 1990 1989 1988\D\D 1987 1986 1985 1984
---- ---- ---- ---- ---- ---- ---- ---- ---- ----

PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of year $ 9.97 $10.00 $ 9.71 $9.96 $ 9.92 $10.24 $10.97 $10.48 $10.01 $ 9.81
------ ------ ------ ----- ------ ------ ------ ------ ------ ------
Income from investment operations:
- ----------------------------------
Net investment income .......... .69 .75 .82 .84 .92 .92 .92 .96 .95 1.08\D
Net realized and unrealized gain
(loss) on investment
transactions .................. .11 (.03) .31 (.21) .12 (.29) (.71) .68 .54 .14
------ ------ ------ ----- ------ ------ ------ ------ ------ ------
Total from investment
operations ................... .80 .72 1.13 .63 1.04 .63 .21 1.64 1.49 1.22
------ ------ ------ ----- ------ ------ ------ ------ ------ ------
Less distributions:
- -------------------
Dividends from net investment
income ........................ (.69) (.75) (.84) (.88) (1.00) (.95) (.78) (.99) (1.02) (1.02)
Tax return of capital distribution (.02) - - - - - - - - -
Distributions of net realized gains - - - - - - (.16) (.16) - -
------ ------ ------ ----- ------ ------ ------ ------ ------ ------
Total distributions ............ (.71) (.75) (.84) (.88) (1.00) (.95) (.94) (1.15) (1.02) (1.02)
------ ------ ------ ----- ------ ------ ------ ------ ------ ------
Net asset value, end of year ... $10.06 $ 9.97 $10.00 $9.71 $ 9.96 $ 9.92 $10.24 $10.97 $10.48 $10.01
====== ====== ====== ===== ====== ====== ====== ====== ====== ======

TOTAL RETURN\D\D\D ............. 8.26% 7.40% 12.19% 6.73% 11.12% 6.47% 1.87% 16.48% 15.67% 13.39%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) .. $347,944 $303,451 $298,086 $328,458 $396,519 $473,982 $633,652 $866,218 $414,835 $35,290
Average net assets (000) ....... $321,538 $294,388 $301,643 $354,064 $424,386 $537,422 $903,473 $637,637 $121,991 $42,318

Ratio to average net assets:

Expenses, including distribution
fees ......................... .80% .79% .79% .88% .86% .83% .72% .75% .67% .48%\D
Expenses, excluding distribution
fees ......................... .59% .58% .63% .63% .63% .59% .55% .52% .50% .48%\D
Net investment income ......... 6.80% 7.47% 8.36% 8.60% 9.16% 9.39% 8.30% 8.51% 8.04% 11.19%\D
Portfolio turnover rate ........ 44% 60% 151% 68% 186% 28% 59% 139% 191% 59%

<FN>
- --------------------
\D Net of expense subsidy.

\D\D On August 9, 1988, Prudential Mutual Fund Management, Inc.
succeeded The Prudential Insurance Company of America as investment
adviser and since then has acted as manager of the Trust. See
"Manager" in the Statement of Additional Information.

\D\D\D Total return is calculated assuming a purchase of shares
on the first day and a sale on the last day of each year reported
and includes reinvestment of dividends and distributions.

</TABLE>

<PAGE>

HOW THE TRUST INVESTS

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Series is to achieve a high level of
income consistent with providing reasonable safety. There is no assurance
that this objective will be achieved.

United States Government Securities

The Series seeks to achieve its objective by investing in United States
Government securities that have maturities of ten years or less, including
a variety of securities which are issued or guaranteed by the United States
Treasury, by various agencies of the United States Government or by various
instrumentalities which have been established or sponsored by the United
States Government. (In the case of securities with put features, when the
put is at the option of the Trust as holder of the security, maturity will
be defined as the lesser of stated final maturity or put date.) These
obligations, including those which are guaranteed by Federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit"
of the United States. In the case of securities not backed by the full
faith and credit of the United States, the Trust must look principally to
the agency issuing or guaranteeing the obligation for ultimate repayment
and may not be able to assert a claim against the United States itself in
the event the agency or instrumentality does not meet its commitments.
Securities in which the Series may invest which are not backed by the full
faith and credit of the United States include obligations of the Tennessee
Valley Authority, the Federal National Mortgage Association and the United
States Postal Service, each of which has the right to borrow from the
United States Treasury to meet its obligations, and obligations of the
Federal Farm Credit System and the Federal Home Loan Banks, whose
obligations may only be satisfied by the individual credits of each issuing
agency. Treasury securities include Treasury bills, Treasury notes and
Treasury bonds, all of which are backed by the full faith and credit of the
United States, as are obligations of the Government National Mortgage
Association, the Farmers Home Administration and the Export-Import Bank.
The Intermediate Term Series will limit its investments to those which are
eligible for federal credit unions.

Certain United States Government securities, such as those issued by
the Government National Mortgage Association and the Federal National
Mortgage Association, are mortgage-backed "pass-through" securities. The
U.S. Government or the issuing agency guarantees the payment of principal
and interest of these securities. However, the guarantees do not extend to
the securities' yield or value, which is likely to vary inversely with
fluctuations in interest rates, nor do the guarantees extend to the yield
or value of the Trust's shares. Such mortgage-backed securities are subject
to more rapid repayment than their stated maturity date as a result of the
pass-through of prepayments of principal on the underlying mortgage
obligations. Accordingly, the Series' ability to maintain positions in
high-yielding mortgage-backed securities will be affected by reductions in
the principal amount of such securities resulting from such prepayments,
and its ability to reinvest the returns of principal at comparable yields
is subject to interest rates prevailing generally at that time. In
addition, during periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities tends to accelerate. For
purposes of the Trust's maturity limitation, the maturity of a
mortgage-backed security will be deemed to be equal to its remaining
maturity (i.e., the average maturity of the mortgages underlying such
security determined by the investment adviser on the basis of assumed
prepayment rates with respect to such mortgages).

The Series will invest at least 80% of its total assets in the types of
government securities described above, including repurchase agreements with
respect to such securities.

The Series' investment objective and policies described above are
fundamental policies and, therefore, may not be changed without the
approval of the holders of a majority of the outstanding voting securities
of the Series, as defined in the Investment Company Act of 1940, as amended
(the Investment Company Act). Policies that are not fundamental may be
modified by the Trustees.

The Series' net asset value will vary with changes in the values of the
Series' portfolio securities. Such values will vary with changes in market
interest rates generally and the differentials in yields among various
kinds of United States Government securities.

<PAGE>

It is currently anticipated that the Series will invest primarily in
securities with maturities ranging from 2 to 5 years, but depending on
market conditions and changing economic conditions the Series may invest in
securities of any maturity of 10 years or less. Certain securities with
maturities of ten years or less which are purchased at auction or on a
when-issued basis may mature later than ten years from date of purchase and
are eligible for purchase by the series. The average weighted maturity of
the Series' investments will be from 3 to 10 years.

OTHER INVESTMENTS AND POLICIES

Repurchase Agreements

When-Issued and Delayed Delivery Securities

The Series may purchase or sell securities on a when-issued or delayed
delivery basis, provided that delivery takes place within 120 days of the
transaction. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Series with payment and delivery
taking place as much as a month or more into the future in order to secure
what is considered to be an advantageous price and yield to the Series at
the time of entering into the transaction. The Trust's Custodian will
maintain, in a segregated account of the Series, cash, U.S. Government
securities or other liquid high-grade debt obligations having a value equal
to or greater than the Series' purchase commitments; the Custodian will
likewise segregate securities sold on a delayed delivery basis. The
securities so purchased are subject to market fluctuation and no interest
accrues to the purchaser during the period between purchase and settlement.
At the time of delivery of the securities the value may be more or less
than the purchase price and an increase in the percentage of the Series'
assets committed to the purchase of securities on a when- issued or delayed
delivery basis may increase the volatility of the Series' net asset value.

Securities Lending

The Series may lend its portfolio securities to brokers or dealers,
banks or other recognized institutional borrowers of securities, provided
that the borrower at all times maintains cash or equivalent collateral or
secures a letter of credit in favor of the Series in an amount equal to at
least 100% of the market value of the securities loaned. During the time
portfolio securities are on loan, the borrower will pay the Series an
amount equivalent to any dividend or interest paid on such securities and
the Series may invest the cash collateral and earn additional income, or it
may receive an agreed-upon amount of interest income from the borrower. As
a matter of fundamental policy, the Series may not lend more than 30% of
the value of its total assets.

Borrowing

<PAGE>

INVESTMENT RESTRICTIONS

The Series is subject to certain investment restrictions which, like
its investment objective, constitute fundamental policies. Fundamental
policies cannot be changed without the approval of the holders of a
majority of the Series' outstanding securities, as defined in the
Investment Company Act. See "Investment Restrictions" in the Statement of
Additional Information.

HOW THE TRUST IS MANAGED

For the fiscal year ended November 30, 1993, total expenses of the
Series as a percentage of its average net assets were .80%. See "Financial
Highlights."

MANAGER

The current portfolio manager of the Series is David Graham, a Vice
President of Prudential Investment Advisors, a unit of PIC. Mr. Graham has
responsibility for the day-to-day management of the Series' portfolio. Mr.
Graham was previously employed by Alliance Capital Management L.P.
(February 1993-October 1993) as a fixed-income portfolio manager in the
mortgage-backed securities group, by Equitable Capital Management
Corporation (May 1989-February 1993) where he served as a Vice President
and was responsible for managing total return accounts with mortgage
securities, and prior thereto, by Metropolitan Life Insurance Company (June
1986-April 1989) where he served as a portfolio manager. Mr. Graham joined
PIC on November 15, 1993.

PMF and PIC are indirect, wholly-owned subsidiaries of The Prudential
Insurance Company of America (Prudential), a major diversified insurance
and financial services company.

DISTRIBUTOR

Prudential Securities Incorporated (Prudential Securities or the
Distributor), One Seaport Plaza, New York, New York 10292, is a corporation
organized under the laws of the State of Delaware and serves as the
Distributor for the Series. It is an indirect, wholly-owned subsidiary of
Prudential.

<PAGE>

Under a Distribution and Service Plan (the Plan) adopted by the Series
under Rule 12b-1 under the Investment Company Act and a distribution and
service agreement (the Distribution Agreement), the Distributor incurs the
expenses of distributing shares of the Series. These expenses include
commission credits to Prudential Securities branch offices for payments of
commissions and account servicing fees to financial advisers and an
allocation of overhead and other branch office distribution-related
expenses. Such account servicing fees are paid based on the average balance
of Series' shares held in the account of the customers of financial
advisers. The Distributor also pays the cost of printing and mailing
prospectuses to potential investors and advertising expenses. In addition,
the Distributor pays other broker-dealers, including Pruco Securities
Corporation (Prusec), an affiliated broker-dealer, for commissions and
other expenses incurred by such broker-dealers in distributing the Series'
shares. The State of Texas requires that shares of the Trust may be sold in
that state only by dealers or other financial institutions which are
registered there as broker-dealers.

Under the Plan, the Trust reimburses the Distributor for its
distribution-related expenses with respect to the Series at the annual rate
of the lesser of (a) .25 of 1% per annum of the aggregate sales of the
Series' shares, not including shares issued in connection with reinvestment
of dividends and capital gains distributions, issued on or after July 1,
1985 (the effective date of the Plan) less the aggregate net asset value of
any such shares redeemed, or (b) .25 of 1% per annum of the average daily
net asset value of the shares issued after the effective date of the Plan.
Such amounts are accrued daily and paid monthly and average daily net
assets are calculated on the basis of the Series' fiscal year.

Actual distribution expenses for any given year may exceed the fees
received pursuant to the Plan and will be carried forward and paid by the
Trust in future years so long as the Plan is in effect. See "Distributor"
in the Statement of Additional Information.

For the fiscal year ended November 30, 1993, the Distributor received
$676,731 from the Series under the Plan. It is estimated that the
Distributor spent approximately $799,600 on behalf of the Series. At
November 30, 1993, the aggregate amount of distribution expenses incurred
by the Distributor and not yet reimbursed by the Series was approximately
$11,441,000, which represented 3.3% of the Series' net assets. These
unreimbursed amounts may be recovered by the Distributor through future
payments under the Plan.

For the fiscal year ended November 30, 1993, the Series paid
distribution expenses under the Plan of .21 of 1% of its average net
assets. The Trust records all payments made under the Plan as expenses in
the calculation of its net investment income.

The Plan provides that it shall continue in effect from year to year
provided that a majority of the Trustees, including a majority of the
Trustees who are not interested persons of the Trust (as defined in the
Investment Company Act) and who have no direct or indirect financial
interest in the operation of the Plan or any agreement related to the Plan
(the Rule 12b-1 Trustees), vote annually to continue the Plan. The Plan may
be terminated at any time by vote of a majority of the Rule 12b-1 Trustees
or of a majority of the outstanding shares of the Series. In the event of
termination or noncontinuation of the Plan, the Series would not be legally
obligated to pay the Distributor for any expenses not previously
reimbursed, including carry-over amounts.

PORTFOLIO TRANSACTIONS

Prudential Securities may act as a broker for the Trust provided that
the commissions, fees or other remuneration it receives are fair and
reasonable. See "Portfolio Transactions and Brokerage" in the Statement of
Additional Information.

<PAGE>

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Prudential Mutual Fund Services, Inc., Raritan Plaza One, Edison, New
Jersey 08837, serves as Transfer and Dividend Disbursing Agent and, in
those capacities, maintains certain books and records for the Trust. PMFS
is a wholly-owned subsidiary of PMF. Its mailing address is P.O. Box 15005,
New Brunswick, New Jersey 08906-5005.

HOW THE TRUST VALUES ITS SHARES

The Series' net asset value per share or NAV is determined by
subtracting its liabilities from the value of its assets and dividing the
remainder by the number of outstanding shares. The Trustees have fixed the
specific time of day for the computation of the NAV of the Series to be as
of 4:15 P.M., New York time.

Portfolio securities are valued based on market quotations or, if not
readily available, at fair value as determined in good faith under
procedures established by the Trustees. See "Net Asset Value" in the
Statement of Additional Information.

The Series will compute its NAV once daily on days that the New York
Stock Exchange is open for trading except on days on which no orders to
purchase, sell or redeem Intermediate Term Series shares have been received
or days on which changes in the value of the Series' portfolio securities
do not materially affect the NAV. The New York Stock Exchange is closed on
the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. See "Net Asset Value" in the Statement of Additional Information.

HOW THE TRUST CALCULATES PERFORMANCE

The Series may from time to time advertise its "yield" and its total
return (including "average annual" total return and "aggregate" total
return) in advertisements or sales literature. These figures are based on
historical earnings and are not intended to indicate future performance.
The "yield" refers to the income generated by an investment in the Series
over a 30-day period. This income is then "annualized"; that is, the amount
of income generated by the investment during that 30-day period is assumed
to be generated each 30-day period for twelve periods and is shown as a
percentage of the investment. The income earned on the investment is also
assumed to be reinvested at the end of the sixth 30-day period. The "total
return" shows how much an investment in the Series would have increased
(decreased) over a specified period of time (i.e., one, five or ten years
or since inception of the Trust) assuming that all distributions and
dividends by the Series were reinvested on the reinvestment dates during
the period and less all recurring fees. The "aggregate" total return
reflects actual performance over a stated period of time. "Average annual"
total return is a hypothetical rate of return that, if achieved annually,
would have produced the same aggregate total return if performance had been
constant over the entire period. "Average annual" total return smooths out
variations in performance. Neither "average annual" nor "aggregate" total
return takes into account any federal or state income taxes which may be
payable upon redemption. The Series may include comparative performance
information in advertising or marketing its shares. Such performance
information may include data from Lipper Analytical Services, Inc., other
industry publications, business periodicals, and market indices. See
"Performance Information" in the Statement of Additional Information.
Further performance information is contained in the Trust's annual report
to shareholders, which may be obtained without charge. See "Shareholder
Guide-Shareholder Services- Reports to Shareholders."

<PAGE>

TAXES, DIVIDENDS AND DISTRIBUTIONS

Taxation of the Series

Each series of the Trust is treated as a separate entity for federal
income tax purposes and each has elected to qualify and intends to remain
qualified as a regulated investment company under the Internal Revenue
Code. Accordingly, the Series will not be subject to federal income taxes
on the taxable income it distributes to shareholders. The performance and
tax qualification of one series will have no effect on the federal income
tax liability of shareholders of the other series. See "Taxes" in the
Statement of Additional Information.

Gains or losses on sales of securities by the Series are treated as
long-term capital gains or losses if the securities have been held by it
for more than one year and otherwise as short-term capital gains or losses.

Taxation of Shareholders

Distributions of net investment income and realized net short-term
capital gains of the Series, if any, are taxable to shareholders of the
Series as ordinary income, whether such distributions are received in cash
or reinvested in additional shares. Distributions of net long-term capital
gains, if any, are taxable as long-term capital gains, whether paid in cash
or reinvested in additional shares, regardless of how long the shareholder
has held the Series' shares. Because none of the income of the Series will
consist of dividends from domestic corporations, dividends of net
investment income and distributions of net short-term or long-term capital
gains will not be eligible for the dividends-received deduction for
corporate shareholders. Tax-exempt shareholders will not be required to pay
taxes on amounts distributed to them.

Any gain or loss realized upon a sale, redemption or exchange of shares
of the Series by a shareholder who is not a dealer in securities will
generally be treated as long-term capital gain or loss if the shares have
been held for more than one year, and otherwise as short-term capital gain
or loss. Any loss realized by a shareholder upon the sale, redemption or
exchange of Series shares held six months or less will be treated as a
long-term capital loss, however, to the extent of any net long-term capital
gain distributions received by the shareholder with respect to those
shares. Any loss realized on a sale, redemption or exchange will be
disallowed to the extent the shares disposed of are replaced (including by
reinvestment of dividends) within the 61-day period ending 30 days after
the shares are disposed of.

Shareholders are advised to consult their own tax advisers regarding
specific questions as to federal, state or local taxes.

Witholding Taxes

Under Treasury Regulations, the Series is required to withhold and
remit to the U.S. Treasury 31% of dividends, capital gain distributions and
redemption proceeds on the accounts of those shareholders who fail to
furnish their tax identification numbers on IRS Form W-9 (or IRS Form W-8
in the case of certain foreign shareholders) or who are otherwise subject
to backup withholding. Dividends from net investment income and short-term
capital gains paid to a foreign shareholder will generally be subject to
U.S. withholding tax at the rate of 30% (or lower treaty rate).

Dividends and Distributions

The Series declares dividends on a daily basis payable monthly in an
amount based on actual and projected net investment income determined in
accordance with generally accepted accounting principles.

Dividends and distributions will be paid in additional shares of the
Series, based on the NAV on the payment date, unless the shareholder elects
in writing not less than five business days prior to the payment date to
receive such dividends and distributions in cash. Such election should be
submitted to Prudential Mutual Fund Services, Inc.,

<PAGE>

Attention: Account Maintenance, P.O. Box 15015, New Brunswick, New Jersey
08906-5015. If you hold shares through Prudential Securities, you should
contact your financial adviser to elect to receive dividends and
distributions in cash. The Trust will notify each shareholder after the
close of the Trust's taxable year of both the dollar amount and taxable
status of that year's dividends and distributions on a per share basis.
Distributions may be subject to state and local taxes. See "Taxation of
Shareholders" above.

As of November 30, 1993, the Series had a capital loss carryforward for
federal income tax purposes of approximately $67,624,000. Accordingly, no
capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of such carryforward.

GENERAL INFORMATION

DESCRIPTION OF SHARES

ADDITIONAL INFORMATION

SHAREHOLDER GUIDE

HOW TO BUY SHARES OF THE TRUST

You may purchase shares of the Series through Prudential Securities or
through Prusec or directly from the Trust through its Transfer Agent,
Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent),
Attention: Investment Services, P.O. Box 15020, New Brunswick, New Jersey
08906-5020. The minimum initial investment is $1,000. The minimum
subsequent investment is $100. All minimum investment requirements are
waived for certain retirement and employee savings plans and for custodial
accounts for the benefit of minors. For purchases through the Automatic
Savings Accumulation Plan, the minimum initial and subsequent investment is
$50. See "Shareholder Services" below.

<PAGE>

Shares of the Series are sold, without a sales charge, at the NAV next
determined after receipt of an order by PMFS of a purchase order and
payment in proper form [i.e., a check or Federal Funds wired to State
Street Bank & Trust Company (State Street)]. See "How the Trust Values its
Shares." When payment is received by PMFS prior to 4:15 P.M., New York time,
in proper form, a share purchase order will be entered at the price
determined as of 4:15 P.M., New York time, on that day, and dividends on
the shares purchased will begin on the business day following such
investment. See "Taxes, Dividends and Distributions."

Application forms can be obtained from PMFS, Prudential Securities or
Prusec. If a stock certificate is desired, it must be requested in writing
for each transaction. Certificates are issued only for full shares.
Shareholders who hold their shares through Prudential Securities will not
receive stock certificates. Shareholders cannot utilize Expedited
Redemption or have a Systematic Withdrawal Plan if they have been issued
share certificates.

The Trust reserves the right to reject any purchase order (including an
exchange) or to suspend or modify the continuous offering of its shares.
See "How to Sell Your Shares" below.

Purchases through Prudential Securities. If you have an account with
Prudential Securities (or open such an account), you may ask Prudential
Securities to purchase shares of the Series on your behalf. On the business
day following confirmation that a free credit balance (i.e., immediately
available funds) exists in your account, Prudential Securities will effect
a purchase order for shares of the Series in an amount up to the balance at
the NAV determined that day. Funds held by Prudential Securities on behalf
of its clients in the form of free credit balances are delivered to State
Street by Prudential Securities and begin earning dividends the second
business day after receipt of the order by Prudential Securities.
Accordingly, Prudential Securities will have the use of such free credit
balances during this period.

Prudential Securities clients wishing additional information concerning
investment in Series shares made through Prudential Securities should call
their Prudential Securities financial adviser.

Purchases through Prusec. You may purchase shares of the Series by
placing an order with your Prusec registered representative accompanied by
payment for the purchase price of such shares and, in the case of a new
account, a completed Application Form. You should also submit an IRS Form
W-9. The Prusec registered representative will then forward these items to
the Transfer Agent. See "Purchase By Mail" below.

Purchase by Wire. For an initial purchase of shares of the Series by
wire, you must first telephone PMFS at (800) 225-1852 to receive an account
number. The following information will be requested: your name, address,
tax identification number, dividend and distribution elections, amount
being wired and wiring bank. Instructions should then be given by you to
your bank to transfer funds by wire to State Street Bank and Trust Company,
Boston, Massachusetts, Custody and Shareholder Services Division,
Attention: Prudential Government Securities Trust, Intermediate Term
Series, specifying on the wire the account number assigned and your name.

<PAGE>

If you arrange for receipt by State Street of Federal Funds prior to
4:15 P.M., New York time, on a business day, you may purchase Series shares
as of that day and receive dividends commencing on the next business day.

In making a subsequent purchase utilizing Federal Funds, you should
wire State Street directly and should be sure that the wire specifies
Prudential Government Securities Trust (Intermediate Term Series) and your
name and individual account number. It is not necessary to call PMFS to
make subsequent purchase orders utilizing Federal Funds. The minimum amount
which may be subsequently invested by wire is $1,000.

Purchase by Mail. Purchase orders for which remittance is to be made by
check must be submitted directly by mail to Prudential Mutual Fund
Services, Inc., Attention: Investment Services, P.O. Box 15020, New
Brunswick, New Jersey 08906-5020, together with payment for the purchase
price of such shares and, in the case of a new account, a completed
Application Form. You should also submit an IRS Form W-9. If PMFS receives
your order to purchase shares of the Trust and payment in proper form prior
to 4:15 P.M., New York time, the purchase order will be effective on that
day and you will begin earning dividends on the following business day. See
"Taxes, Dividends and Distributions." Checks should be made payable to
"Prudential Government Securities Trust, Intermediate Term Series."
Certified checks are not necessary, but checks are accepted subject to
collection at full face value in United States funds and must be drawn on a
bank located in the United States. There are restrictions on the redemption
of shares purchased by check while the funds are being collected. See "How
to Sell Your Shares."

HOW TO SELL YOUR SHARES

Shares for which a redemption request is received by PMFS prior to 4:15
P.M., New York time, are entitled to a dividend on the day on which the
request is received. By pre-authorizing Expedited Redemption, a shareholder
may arrange to have payment for redeemed shares made in Federal Funds wired
to the shareholder's bank, normally on the next bank business day following
the date of receipt of the redemption instructions. Should a shareholder
redeem all of his or her shares, he or she will receive the amount of all
dividends declared for the month-to-date on those shares. Any capital gain
or loss realized by a shareholder upon any redemption of Trust shares must
be recognized for federal income tax purposes. See "Taxes, Dividends and
Distributions."

Prudential Securities clients for whom Prudential Securities has
purchased shares of the Trust may have their shares redeemed by calling
their Prudential Securities financial adviser.

If the proceeds of the redemption (a) exceed $50,000, (b) are to be
paid to a person other than the record owner, (c) are to be sent to an
address other than the address on the Transfer Agent's records or (d) are
to be paid to a corporation, partnership, trust or fiduciary, the
signature(s) on the redemption request and on the certificates, if any, or
stock, power must be guaranteed by an "eligible guarantor institution." An
"eligible guarantor institution" includes any bank, broker, dealer or
credit union. The Transfer Agent reserves the right to request additional
information from, and make reasonable inquiries of, any eligible guarantor
institution. For clients of Prusec, a signature guarantee may be obtained
from the agency or office manager of most Prudential Insurance and
Financial Services or Preferred Financial Services offices.

Payment for shares presented for redemption will ordinarily be made by
check mailed to the shareholder's address within seven days after receipt
of the redemption request in proper order. Such payment may be postponed

<PAGE>

or the right of redemption suspended at times (a) when the New York Stock
Exchange is closed, for other than customary weekends and holidays, (b)
when trading on such Exchange is restricted, (c) when an emergency exists
as a result of which disposal by the Trust of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust
fairly to determine the value of its net assets or (d) during any other
period when the Securities and Exchange Commission, by order, so permits;
provided that applicable rules and regulations of the Securities and
Exchange Commission shall govern as to whether the conditions prescribed in
(b), (c) or (d) exist.

Payment for redemption of recently purchased shares will be delayed
until the Trust or its Transfer Agent has been advised that the purchase
check has been honored, up to 10 calendar days from the time of receipt of
the purchase check by the Transfer Agent. Such delay may be avoided if
shares are purchased by wire or by certified or official bank check.

Expedited Redemption. By pre-authorizing Expedited Redemption, you may
arrange to have payment for redeemed shares made in Federal Funds wired to
your bank, normally on the next business day following redemption. In order
to use Expedited Redemption, you may so designate at the time the initial
investment is made or at a later date. Once an Expedited Redemption
authorization form has been completed, the signature on the authorization
form guaranteed as set forth above and the form returned to PMFS, requests
for redemption may be made by telegraph, letter or telephone. To request
Expedited Redemption by telephone, you should call PMFS at (800) 225-1852.
Calls must be received by PMFS before 4:15 P.M., New York time, to permit
redemption as of such date. Requests by letter should be addressed to
Prudential Mutual Fund Services, Inc., Att: Redemption Services, P.O. Box
15010, New Brunswick, New Jersey 08906- 5010.

A signature guarantee is not required under Expedited Redemption once
the authorization form is properly completed and returned. The Expedited
Redemption privilege may be used to redeem shares in an amount of $200 or
more, except that if an account for which Expedited Redemption is requested
has a net asset value of less than $200, the entire account must be
redeemed. The proceeds of redeemed shares in the amount of $1,000 or more
are transmitted by wire to your account at a domestic commercial bank which
is a member of the Federal Reserve System. Proceeds of less than $1,000 are
forwarded by check to your designated bank account.

During periods of severe market or economic conditions, Expedited
Redemptions may be difficult to implement and you should redeem your shares
by mail as described above.

Redemption in Kind. If the Trustees determine that it would be
detrimental to the best interests of the remaining shareholders of the
Series to make payment wholly or partly in cash, the Trust may pay the
redemption price in whole or in part by a distribution in kind of
securities from the portfolio of the Series, in lieu of cash in conformity
with applicable rules of the Securities and Exchange Commission. Securities
will be readily marketable and will be valued in the same manner as in a
regular redemption. See "How the Trust Values its Shares." If your shares
are redeemed in kind, you would incur transaction costs in converting the
assets into cash. The Trust, however, has elected to be governed by Rule
18f-1 under the Investment Company Act pursuant to which the Trust is
obligated to redeem shares solely in cash up to the lesser of $250,000 or
one percent of the net asset value of the Series during any 90- day period
for any one shareholder.

Involuntary Redemption. In order to reduce the expenses of the Trust,
the Trustees may redeem all of the shares of any shareholder whose account
has a net asset value of less than $500 due to a redemption. The Trust
would give shareholders whose shares were being redeemed 60 days' prior
written notice in which to purchase sufficient additional shares to avoid
such redemption.

30-Day Repurchase Privilege. If you redeem your shares and have not
previously exercised the repurchase privilege, you may reinvest any portion
or all of the proceeds of such redemption in shares of the Trust at the NAV
next determined after the order is received, which must be within 30 days
after the date of the redemption. Exercise of the repurchase privilege will
not affect the federal income tax treatment of any gain realized upon the
redemption. If the

<PAGE>

redemption resulted in a loss, some or all of the loss, depending on the
amount reinvested, will not be allowed for federal income tax purposes.

Class B Purchase Privilege. You may direct that the proceeds of the
redemption of Fund shares be invested in Class B shares of any Prudential
Mutual Fund by calling your Prudential Securities financial adviser or the
Transfer Agent at (800) 225-1852. The transaction will be effected on the
basis of the relative NAV.

HOW TO EXCHANGE YOUR SHARES

As a shareholder of the Series, you may exchange your shares for shares
of other series of the Trust and certain other Prudential Mutual Funds,
including money market funds and funds sold with an initial sales charge,
subject to the minimum investment requirements of such funds on the basis
of relative NAV. You may exchange your shares for Class A shares of the
Prudential Mutual Funds on the basis of the relative NAV plus the
applicable sales charge. No additional sales charge is imposed in
connection with subsequent exchanges. You may not exchange your shares for
Class B shares of the Prudential Mutual Funds, except that shares acquired
prior to January 22, 1990 subject to a contingent deferred sales charge can
be exchanged for Class B shares. See "How to Sell Your Shares-Class B
Purchase Privilege" above and "Shareholder Investment Account-Exchange
Privilege" in the Statement of Additional Information. An exchange will be
treated as a redemption and purchase for tax purposes.

In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the
Transfer Agent and hold shares in non-certificate form. Thereafter, you may
call the Trust at (800) 225-1852 to execute a telephone exchange of shares,
on weekdays, except holidays, between the hours of 8:00 A.M. and 6:00 P.M.,
New York time. For your protection and to prevent fradulent exchanges, your
telephone call will be recorded and you will be asked to provide your
personal identification number. A written confirmation of the exchange
transaction will be sent to you. Neither the Trust nor its agents will be
liable for any loss, liability or cost which results from acting upon
instructions reasonably believed to be genuine under the foregoing
procedures. All exchanges will be made on the basis of the relative NAV of
the two funds (or series) next determined after the request is received in
good order. The Exchange Privilege is available only in states where the
exchange may legally be made.

You may also exchange shares by mail by writing to Prudential Mutual
Fund Services, Inc., Attention: Exchange Processing, P.O. Box 15010, New
Brunswick, New Jersey 08906-5010.

In periods of severe market or economic conditions, the telephone
exchange of shares may be difficult to implement and you should make
exchanges by mail by writing to Prudential Mutual Fund Services, Inc., at
the address noted above.

The Exchange Privilege may be modified or terminated at any time on
sixty days' notice to shareholders.

SHAREHOLDER SERVICES

In addition to the exchange privilege, as a shareholder in the Trust,
you can take advantage of the following additional services and privileges:

<PAGE>

For additional information regarding the services and privileges
described above, see "Shareholder Investment Account" in the Statement of
Additional Information.

<PAGE>

THE PRUDENTIAL MUTUAL FUND FAMILY

Taxable Bond Funds

Tax-Exempt Bond Funds

Global Funds

Equity Funds

Money Market Funds

* Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund

* Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series

A-1

<PAGE>

___________________________________________________________

TABLE OF CONTENTS
Page
TRUST HIGHLIGHTS............................. 2
TRUST EXPENSES............................... 4
FINANCIAL HIGHLIGHTS......................... 5
HOW THE TRUST INVESTS........................ 6
Investment Objective and Policies.......... 6
Other Investments and Policies............. 7
Investment Restrictions.................... 8
HOW THE TRUST IS MANAGED..................... 8
Manager.................................... 8
Distributor................................ 8
Portfolio Transactions..................... 9
Custodian and Transfer and
Dividend Disbursing Agent................ 9
HOW THE TRUST VALUES ITS SHARES.............. 10
TAXES, DIVIDENDS AND DISTRIBUTIONS........... 10
GENERAL INFORMATION.......................... 12
Description of Shares...................... 12
Additional Information..................... 12
SHAREHOLDER GUIDE............................ 12
How to Buy Shares of the Trust............. 12
How to Sell Your Shares.................... 14
How to Exchange Your Shares................ 16
Shareholder Services....................... 16
THE PRUDENTIAL MUTUAL FUND FAMILY............ 18
________________________________________________
111A 4440381

________________________________________________

CUSIP No.: 744342 10 6
________________________________________________

Prudential
Government
Securities
Trust
(Intermediate Term Series)

PROSPECTUS
APRIL 1, 1994

Prudential Mutual Funds (LOGO)
BUILDING YOUR FUTURE
ON OUR STRENGTH SM

<PAGE>

Rule 497(c)
File # 2-74139

Prudential Government Securities Trust

Statement of Additional Information
dated April 1, 1994

Prudential Government Securities Trust (the Trust) is offered in three
series: the Money Market Series, the U.S. Treasury Money Market Series and
the Intermediate Term Series. Each series operates as a separate fund with
its own investment objectives and policies designed to meet its specific
investment goals. Information about each series is set forth in separate
prospectuses, each dated April 1, 1994, copies of which may be obtained
from the Trust upon request.

This Statement of Additional Information sets forth information about
each of the series. This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Trust's Money Market
Series Prospectus, U.S. Treasury Money Market Series Prospectus or
Intermediate Term Series Prospectus, each dated April 1, 1994.

TABLE OF CONTENTS

Cross-reference
Cross-reference to page in U.S. Cross-reference
to page in Treasury Money to page in
Money Market Market Series Intermediate Term
Page Series Prospectus Prospectus Series Prospectus
---- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>

General Information...................... B-2 11 11 12
Investment Objective(s) and Policies..... B-3 --
Money Market Series................. B-3 6 --
U.S. Treasury Money Market Series... B-4 -- 6 --
Intermediate Term Series............ B-5 -- -- 6
Portfolio Turnover....................... B-5 -- -- --
Investment Restrictions.................. B-5 7 7 8
Trustees and Officers.................... B-7 8 8 8
Manager.................................. B-9 8 8 8
Distributor.............................. B-10 8 8 8
Portfolio Transactions and Brokerage..... B-12 9 9 9
Shareholder Investment Account........... B-12 16 18 16
Net Asset Value.......................... B-14 9 9 10
Performance Information.................. B-15
Money Market Series and U.S.
Treasury
Money Market Series--Calculation
of Yield.......................... B-15 6 6 --
Intermediate Term
Series--Calculation of Yield and
Total Return...................... B-16 -- -- 10
Taxes.................................... B-16 10 10 11
Custodian and Transfer and Dividend
Disbursing Agent and Independent
Accountants............................ B-17 9 9 10
Financial Statements..................... B-18 -- -- --
Report of Independent Accountants........ B-33 -- -- --
</TABLE>

- --------------------------------------------------------------------------------
111B 430145A

<PAGE>

GENERAL INFORMATION

The Trust is a trust fund of the type commonly known as a
"Massachusetts business trust." The Declaration of Trust and the By-Laws
of the Trust are designed to make the Trust similar in most respects to a
Massachusetts business corporation. The principal distinction between the
two forms relates to shareholder liability: under Massachusetts law,
shareholders of a business trust may, in certain circumstances, be held
personally liable as partners for the obligations of the Trust, which is
not the case with a corporation. The Declaration of Trust of the Trust
provides that shareholders shall not be subject to any personal liability
for the acts or obligations of the Trust and that every written obligation,
contract, instrument or undertaking made by the Trust shall contain a
provision to the effect that the shareholders are not individually bound
thereunder.

Massachusetts counsel for the Trust are of the opinion that no personal
liability will attach to the shareholders under any undertaking containing
such provision when adequate notice of such provision is given, except
possibly in a few jurisdictions. With respect to all types of claims in the
latter jurisdictions and with respect to tort claims, contract claims where
the provision referred to is omitted from the undertaking, claims for taxes
and certain statutory liabilities in other jurisdictions, a shareholder may
be held personally liable to the extent that claims are not satisfied by
the Trust. However, upon payment of any such liability the shareholder will
be entitled to reimbursement from the general assets of the Trust. The
Trustees intend to conduct the operations of the Trust, with the advice of
counsel, in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Trust.

The Declaration of Trust further provides that no trustee, officer,
employee or agent of the Trust is liable to the Trust or to a shareholder,
nor is any trustee, officer, employee or agent liable to any third persons
in connection with the affairs of the Trust, except as such liability may
arise from his or its own bad faith, wilful misfeasance, gross negligence,
or reckless disregard of his or its duties. It also provides that all third
persons shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the exceptions
stated, the Declaration of Trust permits the Trustees to provide for the
indemnification of trustees, officers, employees or agents of the Trust
against all liability in connection with the affairs of the Trust.

Other distinctions between a corporation and a Massachusetts business
trust include the absence of a requirement that business trusts issue share
certificates.

The Trust shall continue without limitation of time subject to the
provisions in the Declaration of Trust concerning termination by action of
the shareholders or by the Trustees by written notice to the shareholders.

Pursuant to the Declaration of Trust, the Trustees initially authorized
the issuance of an unlimited number of full and fractional shares of a
single class. In connection with the establishment of the Intermediate Term
Series on July 1, 1982, the Trustees designated the outstanding shares and
shares that may thereafter be issued under previous authority as the shares
of the Money Market Series. On November 1, 1991, the Trustees established
the U.S. Treasury Money Market Series by designating it out of the unissued
shares of beneficial interest of the Trust. In so designating, the Trustees
did not change any of the existing shareholders' preferences, privileges,
limitations or voting rights. Each share of the Money Market Series, the
U.S. Treasury Money Market Series and the Intermediate Term Series
represents an equal proportionate interest in the assets of the Trust
attributable to the respective series with each other share of the
respective series. The Declaration of Trust permits the Trustees to divide
or combine the shares of either series into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests of
the shares of either series in the assets of the Trust attributable to such
series. If the assets attributable to one series of shares are insufficient
to satisfy its liabilities, the assets of other series could be subjected
to such liabilities. Upon liquidation of the Trust, shareholders are
entitled to share pro rata in the net assets of the Trust attributable to
the series of which shares are held and available for distribution to
shareholders. Shares have no preemptive, appraisal or conversion rights
and, except as may be otherwise indicated hereby, no preference rights.
Shares are fully paid and nonassessable by the Trust.

Pursuant to the Declaration of Trust, the Trustees may authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios with distinct
investment objectives and policies and share purchase, redemption and net
asset valuation procedures) and additional classes of shares within any
series (which would be used to distinguish among the rights of different
categories of shareholders, as might be required by future regulations or
other unforeseen circumstances) with such preferences, privileges,
limitations and voting and dividend rights as the Trustees may determine.
All consideration received by the Trust for shares of any additional series
or class, and all assets in which such consideration is invested, would
belong to that series or class (subject only to the rights of creditors of
the Trust) and would be subject to the liabilities related thereto.
Pursuant to the Investment Company Act of 1940, as amended (the Investment
Company Act), shareholders of any additional series or class of shares
would normally have to approve the adoption of any management contract
relating to such series or class and of any changes in the investment
policies related thereto.

The Trustees themselves have the power to alter the number and the
terms of office of the Trustees, and they may at any time lengthen their
own terms or make their terms of unlimited duration (subject to certain
removal procedures) and appoint their own successors, provided that always
at least a majority of the Trustees have been elected by the shareholders
of the Trust. The voting rights

B-2

<PAGE>

of shareholders are not cumulative, so that holders of more than 50
percent of the shares voting can, if they choose, elect all trustees being
selected, while the holders of the remaining shares would be unable to
elect any trustees.

On April 22, 1983, the Trustees at a meeting of the Board of Trustees
approved an amendment to the Declaration of Trust to effect a name change
from Chancellor Government Securities Trust to Prudential-Bache Government
Securities Trust. On February 28, 1991, the Trustees approved an amendment
to the Fund's Declaration of Trust to change the Trust's name from
Prudential-Bache Government Securities Trust to Prudential Government
Securities Trust.

INVESTMENT OBJECTIVES AND POLICIES

The Money Market Series, the U.S. Treasury Money Market Series and the
Intermediate Term Series operate as separate funds with their own
investment objectives and policies. The investment objectives of the Money
Market Series and the U.S. Treasury Money Market Series are to obtain high
current income, preserve capital and maintain liquidity. The investment
objective of the Intermediate Term Series is to achieve a high level of
income consistent with providing reasonable safety. For a further
description of the investment objectives and policies for each series see
"Investment Objective(s) and Policies" in their respective Prospectuses.

In order to achieve such objectives, the Money Market Series, the U.S.
Treasury Money Market Series and the Intermediate Term Series (collectively
referred to as the Series), each acting independently of the other, may,
when appropriate, invest in the types of instruments and use certain
strategies described below:

Repurchase Agreements. The Trust's repurchase agreements will be
collateralized by U.S. Government obligations. The Trust will enter into
repurchase transactions only with parties meeting creditworthiness
standards approved by the Trustees. The Trust's investment adviser will
monitor the creditworthiness of such parties, under the general supervision
of the Trustees. In the event of a default or bankruptcy by a seller, the
Trust will promptly seek to liquidate the collateral. To the extent that
the proceeds from any sale of such collateral upon a default in the
obligation to repurchase are less than the repurchase price, the Trust will
suffer a loss.

The Trust participates in a joint repurchase account with other
investment companies managed by Prudential Mutual Fund Mangement, Inc. (PMF
or the Manager) pursuant to an order of the Securities and Exchange
Commission (SEC). On a daily basis, any uninvested cash balances of the
Trust may be aggregated with those of such investment companies and
invested in one or more repurchase agreements. Each fund participates in
the income earned or accrued in the joint account based on the percentage
of its investment.

Money Market Series

The Money Market Series seeks to achieve its objectives by investing in
United States Government securities that mature within thirteen months from
date of purchase, including a variety of securities which are issued or
guaranteed by the United States Treasury, by various agencies of the United
States Government or by various instrumentalities which have been
established or sponsored by the United States Government. These
obligations, including those which are guaranteed by Federal agencies or
instrumentalities, may or may not be backed by the "full faith and
credit" of the United States. In the case of securities not backed by the
full faith and credit of the United States, the Trust must look principally
to the agency issuing or guaranteeing the obligation for ultimate repayment
and may not be able to assert a claim against the United States itself in
the event the agency or instrumentality does not meet its commitments.
Securities in which the Money Market Series may invest which are not backed
by the full faith and credit of the United States include, but are not
limited to, obligations of the Tennessee Valley Authority, the Federal
National Mortgage Association and the United States Postal Service, each of
which has the right to borrow from the United States Treasury to meet its
obligations, and obligations of the Federal Farm Credit System and the
Federal Home Loan Banks, whose obligations may only be satisfied by the
individual credits of each issuing agency. Treasury securities include
Treasury bills, Treasury notes and Treasury bonds, all of which are backed
by the full faith and credit of the United States, as are obligations of
the Government National Mortgage Association, the Farmers Home
Administration and the Export-Import Bank. The Money Market Series will
invest at least 80% of its assets in such types of government securities.

The Series may also invest in component parts of U.S. Treasury notes or
bonds, namely, either the corpus (principal) of such Treasury obligations
or one of the interest payments scheduled to be paid on such obligations.
These obligations may take the form of (i) Treasury obligations from which
the interest coupons have been stripped, (ii) the interest coupons that are
stripped, (iii) book-entries at a Federal Reserve member bank representing
ownership of Treasury obligation components, or (iv) receipts evidencing
the component parts (corpus or coupons) of Treasury obligations that have
not actually been stripped. Such receipts evidence ownership of component
parts of Treasury obligations (corpus or coupons) purchased by a third
party (typically an investment banking firm) and held on behalf of the
third party in physical or book-entry form by a major commercial bank or
trust company pursuant to a custody agreement with the third party.
Treasury obligations, including those underlying such receipts, are backed
by the full faith and credit of the U.S. Government.

The Money Market Series may also invest in fully insured certificates
of deposit. The Federal Deposit Insurance Corporation and the Federal
Savings and Loan Insurance Corporation, which are agencies of the United
States Government, insure the deposits of insured banks and savings and
loan associations, respectively, up to $100,000 per depositor. Current
federal regulations also permit such

B-3

<PAGE>

institutions to issue insured negotiable certificates of deposit (CDs)
in amounts of $100,000 or more without regard to the interest rate ceilings
on other deposits. To remain fully insured as to principal, such CDs must
currently be limited to $100,000 per bank or savings and loan association.
Interest on such CDs is not insured. The Money Market Series may invest in
such CDs, limited to the insured amount of principal ($100,000) in each
case and to 10% or less of the gross assets of the Money Market Series in
all such CDs in the aggregate. Such CDs may or may not have a readily
available market, and the investment of the Money Market Series in CDs
which do not have a readily available market is further limited by the
restriction on investment by the Money Market Series of not more than 10%
of assets in securities for which there is no readily available market. See
"Investment Restrictions."

The Money Market Series will attempt to balance its objectives of high
income, capital preservation and liquidity by investing in securities of
varying maturities and risks. As a result, the Money Market Series may not
necessarily invest in securities with the highest available yield. The
Money Market Series will not, however, invest in securities with remaining
maturities of more than thirteen months or maintain a dollar-weighted
average maturity which exceeds 90 days. The amounts invested in obligations
of various maturities of thirteen months or less will depend on
management's evaluation of the risks involved. Longer-term issues, while
frequently paying higher interest rates, are subject to greater
fluctuations in value resulting from general changes in interest rates than
are shorter-term issues. Thus, when rates on new securities increase, the
value of outstanding longer-term securities may decline and vice versa.
Such changes may also occur, but to a lesser degree, with short-term
issues. These changes, if realized, may cause fluctuations in the amount of
daily dividends and, in extreme cases, could cause the net asset value per
share to decline. See "Net Asset Value." In the event of unusually large
redemption demands, securities may have to be sold at a loss prior to
maturity or the Money Market Series may have to borrow money and incur
interest expense. Either occurrence would adversely affect the amount of
daily dividends and could result in a decline in daily net asset value per
share or the reduction by the Money Market Series of the number of shares
held in a shareholder's account. The Money Market Series will attempt to
minimize these risks by investing in longer-term securities, subject to the
foregoing limitations, when it appears to management that yields on such
securities are not likely to increase substantially during the period of
expected holding, and then only in securities which are readily marketable.
However, there can be no assurance that the Money Market Series will be
successful in achieving this objective.

Liquidity Puts. The Money Market Series may also purchase instruments
of the types described in this section together with the right to resell
the instruments at an agreed-upon price or yield within a specified period
prior to the maturity date of the instruments. Such a right to resell is
commonly known as a "put," and the aggregate price which the Money Market
Series pays for instruments with puts may be higher than the price which
otherwise would be paid for the instruments. Consistent with the Money
Market Series' investment objective and applicable rules issued by the SEC
and subject to the supervision of the Trustees, the purpose of this
practice is to permit the Money Market Series to be fully invested while
preserving the necessary liquidity to meet unusually large redemptions and
to purchase at a later date securities other than those subject to the put.
The Money Market Series may choose to exercise puts during periods in which
proceeds from sales of its shares and from recent sales of portfolio
securities are insufficient to meet redemption requests or when the funds
available are otherwise allocated for investment. In determining whether to
exercise puts prior to their expiration date and in selecting which puts to
exercise in such circumstances, the Money Market Series' investment adviser
considers, among other things, the amount of cash available to the Money
Market Series, the expiration dates of the available puts, any future
commitments for securities purchases, the yield, quality and maturity dates
of the underlying securities, alternative investment opportunities and the
desirability of retaining the underlying securities in the Money Market
Series' portfolio.

Since the value of the put is dependent on the ability of the put
writer to meet its obligation to repurchase, the Money Market Series'
policy is to enter into put transactions only with such brokers, dealers or
financial institutions which present minimal credit risks. There is a
credit risk associated with the purchase of puts in that the broker, dealer
or financial institution might default on its obligation to repurchase an
underlying security. In the event such a default should occur, the Money
Market Series is unable to predict whether all or any portion of any loss
sustained could subsequently be recovered from the broker, dealer or
financial institution.

The Money Market Series values instruments which are subject to puts at
amortized cost; no value is assigned to the put. The cost of the put, if
any, is carried as an unrealized loss from the time of purchase until it is
exercised or expires.

U.S. Treasury Money Market Series

The U.S. Treasury Money Market Series seeks to achieve its objective by
investing in U.S. Treasury securities, including bills,notes and bonds.
These instruments are direct obligations of the U.S. Government and, as
such, are backed by the "full faith and credit" of the United States.
They differ primarily in their interest rates and the lengths of their
maturities.

The U.S. Treasury Money Market Series may also invest in component
parts of U.S. Treasury notes or bonds, namely, either the corpus
(principal) of such Treasury obligations or one of the interest payments
scheduled to be paid on such obligations. These obligations may take the
form of (i) Treasury obligations from which the interest coupons have been
stripped, (ii) the interest coupons that are stripped, or (iii)
book-entries at a Federal Reserve member bank representing ownership of
Treasury obligation components.

B-4

<PAGE>

The U.S. Treasury Money Market Series does not engage in repurchase
agreements or lend its portfolio securities because the income from such
activities is generally not exempt from state and local income taxes, but
may purchase or sell securities on a when-issued or delayed delivery basis.
When-issued or delayed delivery transactions arise when securities are
purchased or sold by the Series with payment and delivery taking place in
the future in order to secure what is considered to be an advantageous
price and yield to the Series at the time of entering into the transaction.
The Trust's Custodian will maintain, in a segregated account of the Series,
cash or U.S. Treasury obligations having a value equal to or greater than
the Series' purchase commitments. The Custodian will likewise segregate
securities sold on a delayed delivery basis.

Intermediate Term Series

The Intermediate Term Series seeks to achieve its objective by
investing in United States Government securities that have maturities of
ten years or less, including a variety of securities which are issued or
guaranteed by the United States Treasury, by various agencies of the United
States Government or by various instrumentalities which have been
established or sponsored by the United States Government. Such obligations
are more fully described under "Investment Objective and Policies" in the
Prospectus.

The Intermediate Term Series will make purchases and sales of portfolio
securities with the issuer or a government securities dealer on a net price
basis; brokerage commissions are not normally charged on the purchase or
sale of securities such as United States Government obligations. See
"Portfolio Transactions and Brokerage."

The Intermediate Term Series intends to vary the proportion of its
holdings of long-and short-term debt securities in order to reflect its
assessment of prospective changes in interest rates even if such action may
adversely affect current income. For example, if, in the opinion of the
Intermediate Term Series' investment adviser, interest rates generally are
expected to decline, the Intermediate Term Series may sell its shorter-term
securities and purchase longer-term securities in order to benefit from
greater expected relative price appreciation; the securities sold may have
a higher current yield than those being purchased. The success of this
strategy will depend on the investment adviser's ability to forecast
changes in interest rates. Moreover, the Intermediate Term Series intends
to manage its portfolio actively by taking advantage of trading
opportunities such as sales of portfolio securities and purchases of higher
yielding securities of similar quality due to distortions in normal yield
differentials. In addition, if in the opinion of the investment adviser
market conditions warrant, the Intermediate Term Series may purchase U. S.
Government securities at a discount or trade securities in response to
fluctuations in interest rates to provide for the prospect of modest
capital appreciation at maturity.

The Intermediate Term Series' investment adviser currently anticipates
that investments will primarily be made in securities with maturities
ranging from 2 to 5 years, but depending on market conditions and changing
economic conditions the Intermediate Term Series may invest in securities
of any maturity 10 years or less. Certain securities with maturities of ten
years or less which are purchased at auction or on a when-issued basis may
mature later than ten years from date of purchase and are eligible for
purchase by the Series.

PORTFOLIO TURNOVER

The Money Market Series and the U.S. Treasury Money Market Series
intend normally to hold their portfolio securities to maturity. The Money
Market Series and the U.S. Treasury Money Market Series do not normally
expect to trade portfolio securities although they may do so to take
advantage of short-term market movements. The Money Market Series and the
U.S. Treasury Money Market Series will make purchases and sales of
portfolio securities with a government securities dealer on a net price
basis; brokerage commissions are not normally charged on the purchase or
sale of U.S. Treasury Securities. See "Portfolio Transactions and
Brokerage."

Although the Intermediate Term Series does not intend to engage in
substantial short-term trading, it may sell portfolio securities without
regard to the length of time that they have been held in order to take
advantage of new investment opportunities or yield differentials, or
because the Intermediate Term Series desires to preserve gains or limit
losses due to changing economic conditions. Accordingly, it is possible
that the portfolio turnover rate of the Intermediate Term Series may reach,
or even exceed, 150%. A portfolio turnover rate of 150% may exceed that of
other investment companies with similar objectives. The portfolio turnover
rate is computed by dividing the lesser of the amount of the securities
purchased or securities sold (excluding all securities whose maturities at
acquisition were one year or less) by the average monthly value of such
securities owned during the year. A 100% turnover rate would occur, for
example, if all of the securities held in the portfolio of the Intermediate
Term Series were sold and replaced within one year. However, when portfolio
changes are deemed appropriate due to market or other conditions, such
turnover rate may be greater than anticipated. A higher rate of turnover
results in increased transaction costs to the Intermediate Term Series. The
portfolio turnover rate for the Intermediate Term Series for the fiscal
years ended November 30, 1992 and 1993 was 60% and 44%, respectively.

INVESTMENT RESTRICTIONS

The Trust's fundamental policies as they affect a particular Series
cannot be changed without the approval of the outstanding shares of such
Series by a vote which is the lesser of (i) 67% or more of the voting
securities of such Series represented at a meeting at which more than 50%
of the outstanding voting securities of such Series are present in person
or represented by proxy or (ii) more than

B-5

<PAGE>

50% of the outstanding voting securities of such Series. With respect
to the submission of a change in fundamental policy or investment objective
to a particular Series, such matters shall be deemed to have been
effectively acted upon with respect to all Series of the Trust if a
majority of the outstanding voting securities of the particular Series
votes for the approval of such matters as provided above, notwithstanding
(1) that such matter has not been approved by a majority of the outstanding
voting securities of any other Series affected by such matter and (2) that
such matter has not been approved by a majority of the outstanding voting
securities of the Trust.

Money Market Series and Intermediate Term Series

The following investment restrictions are fundamental policies of the
Trust with respect to the Money Market Series and the Intermediate Term
Series of the Trust and may not be changed except as described above.

The Trust may not:

1. As to any Series, invest in any securities other than the types of
securities listed under the "Investment Objectives and Policies" relating
to such Series;

2. Borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might otherwise require
the untimely disposition of securities; borrowing in the aggregate may not
exceed 20%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the value of the Trust's total assets (including the
amount borrowed), less liabilities (not including the amount borrowed) at
the time the borrowing is made; investment securities will not be purchased
while borrowings are outstanding;

3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 10% of the value of its net assets but only to
secure permitted borrowings of money;

4. Make loans to others, except through the purchase of the debt
obligations and the repurchase agreements covering government securities
and the lending of portfolio securities (limited to thirty percent of the
Trust's total assets);

5. Purchase or sell real estate or real estate mortgage loans;

6. Purchase securities on margin or sell short;

7. Purchase or sell commodities or commodity futures contracts, or oil,
gas, or mineral exploration or development programs;

8. Purchase securities for which there are legal or contractual
restrictions on resale (i.e. restricted securities) or invest more than 10%
of its assets in securities for which there is no readily available market,
except for repurchase agreements for seven days or less;

9. Underwrite securities of other issuers;

10. Purchase warrants, or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof except that the Money Market
Series may purchase instruments together with the right to resell such
instruments;

11. Purchase the securities of any other investment company, except in
connection with a merger, consolidation, reorganization or acquisition of
assets;

12. Issue senior securities as defined in the Investment Company Act
except insofar as the Trust may be deemed to have issued a senior security
by reason of: (a) entering into any repurchase agreement; (b) permitted
borrowings of money; or (c) purchasing securities on a when-issued or
delayed delivery basis; and

13. Purchase securities on a when-issued basis if, as a result, more
than 15% of the Trust's net assets would be committed.

If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values
of portfolio securities or amount of total or net assets will not be
considered a violation of any of the foregoing restrictions. However, in
the event that either Series' asset coverage for borrowings falls below
300%, that Series will take prompt action to reduce its borrowings, as
required by applicable law.

In addition, although not as fundamental policies of the Trust, the
Trust will apply the percentage limitations set forth in Investment
Restrictions Nos. 2, 8 and 13 separately to investments made by each of the
Money Market Series and the Intermediate Term Series.

U.S. Treasury Money Market Series

In connection with its investment objective and policies as set forth
in the Prospectus, the U.S. Treasury Money Market Series has adopted the
following investment restrictions.

B-6

<PAGE>

The U.S. Treasury Money Market Series may not:

1. Invest in any securities other than U.S. Treasury obligations.

2. Purchase securities on margin (but the Series may obtain such
short-term credits as may be necessary for the clearance of transactions).

3. Make short sales of securities or maintain a short position.

4. Issue senior securities, borrow money or pledge its assets, except
that the Series may borrow up to 20% of the value of its total assets
(calulated when the loan is made) from banks and from entities other than
banks if so permitted pursuant to an order of the Securities and Exchange
Commission for temporary, extraordinary or emergency purposes. The Series
may pledge up to 20% of the value of its total assets to secure such
borrowings.

5. Buy or sell real estate or interests in real estate.

6. Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal laws.

7. Make investments for the purpose of exercising control or
management.

8. Invest in interests in oil, gas or other mineral exploration or
development programs.

9. Buy or sell commodities or commodity contracts (including futures
contracts and options thereon).

10. Purchase securities for which there are legal or contractual
restrictions on resale (i.e. restricted securities) or invest more than 10%
of its assets in securities for which there is no readily available market,
except for repurchase agreements for seven days or less.

Whenever any fundamental investment policy or investment restriction
states a maximum percentage of the U.S. Treasury Money Market Series'
assets, it is intended that if the percentage limitation is met at the time
the investment is made, a later change in percentage resulting from
changing total or net asset values will not be considered a violation of
such policy. However, in the event that the U.S. Treasury Money Market
Series' asset coverage for borrowings falls below 300%, the Series will
take prompt action to reduce its borrowings, as required by applicable law.

TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
Position with Principal Occupations
Name and Address Trust During Past 5 Years
- ---------------------- -------------- ----------------------------------------------------------
<S> <C> <C>

Delayne Dedrick Gold Trustee Marketing and Management Consultant.
c/o Prudential Mutual
Fund
Management, Inc.
One Seaport Plaza
New York, NY

Arthur Hauspurg Trustee Trustee and former President, Chief Executive Officer and
c/o Prudential Mutual Chairman of the Board of Consolidated Edison Company of
Fund New York, Inc.;
Director of COMSAT Corp.
Management, Inc.
One Seaport Plaza
New York, NY

Thomas J. McCormack Trustee Chairman, Chief Executive Officer and Editorial Director
175 Fifth Avenue (since 1987) and President (1970-1987) of St. Martin's
New York, NY Press, Inc.; Director of Macmillan Publishers Limited
(London) and Pan Books, Limited (London).

*Lawrence C. McQuade President Vice Chairman of PMF (since 1988); Managing Director,
One Seaport Plaza and Trustee Investment Banking, Prudential Securities Incorporated
New York, NY (Prudential Securities) (1988-1991); Director of Quixote
Corporation (since February 1992) and BUNZL, P.L.C.
(since June 1991); formerly, Director of Crazy Eddie
Inc. (1987-1990) Kaiser Tech, Ltd. and Kaiser Aluminum
and Chemical Corp. (March 1987-November 1988); formerly
Executive Vice President and Director of WR Grace &
Company; President and Director of The Global Government
Plus Fund, Inc., The Global Yield Fund, Inc. and The
High Yield Income Fund, Inc.
</TABLE>

B-7

<PAGE>

Stephen P. Munn Trustee Chairman (since January 1994), Director and President
101 South Salina (since 1988) and Chief Executive Officer (1988-December
Street 1993) of Carlisle Companies Incorporated.
Syracuse, NY

*Edwin F. Payne Trustee Senior Vice President and former Director (until July
One Seaport Plaza 1991) of Prudential Securities; Director of
New York, NY Mortgage-Backed Securities Clearing Corporation, Liberty
Brokerage Corporation and Government Securities Price
Dissemination Service; Member of the Primary Dealers
Committee of the Public Securities Association and of
the District Committee of the National Association of
Securities Dealers, Inc.; former Member of the Executive
Committee and Board of Directors and former Chairman of
the Mortgage Securities Division of the Public
Securities Association.

Louis A. Weil, III Trustee Publisher and Chief Executive Officer, Phoenix Newpapers,
Phoenix Newspapers, Inc. (since August 1991); Director of Central
Inc. Newspapers, Inc. (since September 1991); prior thereto,
120 E. Van Buren Publisher of Time Magazine (May 1989-March 1991);
Phoenix, AZ formerly President, Publisher and Chief Executive
Officer of The Detroit News (February 1986-August 1989);
formerly member of the Advisory Board, Chase Manhattan
Bank-Westchester; Director of The Global Government Plus
Fund, Inc.

Robert F. Gunia Vice President Chief Administrative Officer (since July 1990), Director
One Seaport Plaza (since January 1989), Executive Vice President,
New York, NY Treasurer and Chief Financial Officer (since June 1987)
of PMF; Senior Vice President (since March 1987) of
Prudential Securities; Vice President and Director of
The Asia Pacific Fund, Inc. (since May 1989) and Vice
President and Director (since February 1992) of
Nicholas-Applegate Fund, Inc.

Susan C. Cote Treasurer Senior Vice President (since January 1989) and First Vice
One Seaport Plaza President (June 1987-December 1988) of PMF; Senior Vice
New York, NY President (since January 1992) and Vice President
(January 1986-December 1991) of Prudential Securities.

S. Jane Rose Secretary Senior Vice President (since January 1991), Senior Counsel
One Seaport Plaza (since June 1987) and First Vice President (June
New York, NY 1987-December 1990) of PMF; Senior Vice President and
Senior Counsel of Prudential Securities (since July
1992); formerly Vice President and Associate General
Counsel of Prudential Securities.

Ronald Amblard Assistant First Vice President (since January 1994), and Associate
One Seaport Plaza Secretary General Counsel (since January 1992) of PMF; Vice
New York, NY President and Associate General Counsel of Prudential
Securities (since January 1992); Assistant General
Counsel (August 1988-December 1991), Associate Vice
President (January 1989-December 1990) and Vice
President (January 1991-December 1993) of PMF.
</TABLE>

- ------------------
* "Interested" Trustee, as defined in the Investment Company Act.

Trustees of the Trust are elected by the holders of the shares of all
Series of the Trust, and not separately by holders of each Series voting as
a class.

Trustees and officers of the Trust are also trustees, directors and
officers of some or all of the other investment companies distributed by
Prudential Securities or Prudential Mutual Fund Distributors, Inc.

The officers conduct and supervise the daily business operations of the
Trust, while the Trustees, in addition to their functions set forth under
"Manager," and "Distributor," review such actions and decide on general
policy.

The Trust pays each of its directors who is not an affiliated person of
PMF or The Prudential Investment Corporation (PIC) annual compensation of
$9,000, in addition to certain out-of-pocket expenses. The Chairman of the
Audit Committee receives an additional $200 per year.

B-8

<PAGE>

Trustees may receive their Trustee's fee pursuant to a deferred fee
agreement with the Trust. Under the terms of the agreement, the Trust
accrues daily the amount of such Trustee's fee which accrues interest at a
rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury
bills at the beginning of each calendar quarter or, pursuant to an SEC
exemptive order, at the daily rate of return of the Trust (the Trust Rate).
Payment of the interest so accrued is also deferred and accruals become
payable at the option of the Trustee. The Trust's obligation to make
payments of deferred Trustees' fees, together with interest thereon, is a
general obligation of the Trust.

Pursuant to the terms of the Management Agreement with the Trust, the
Manager pays all compensation of officers and employees of the Trust as
well as the fees and expenses of all Trustees of the Trust who are
affiliated persons of the Manager.

As of January 7, 1994, the Trustees and officers of the Trust, as a
group, owned less than 1% of the outstanding shares of beneficial interest
of each of the Money Market Series, U.S. Treasury Money Market Series and
the Intermediate Term Series of the Trust.

As of January 7, 1994, Prudential Securities was the record holder for
other beneficial owners of 21,557,846 Intermediate Term Series Shares (or
63% of such shares outstanding), 734,812,744 Money Market Series Shares (or
87% of such shares outstanding) and 394,841,218 U.S. Treasury Money Market
Series Shares (or 99% of such shares outstanding). In the event of any
meetings of shareholders, Prudential Securities will forward, or cause the
forwarding of, proxy materials to the beneficial owners for which it is the
record holder.

MANAGER

The Manager of the Trust is Prudential Mutual Fund Management, Inc.
(PMF or the Manager), One Seaport Plaza, New York, New York 10292. PMF
serves as manager of all of the investment companies that, together with
the Trust, comprise the Prudential Mutual Funds. See "How the Trust is
Managed--Manager" in the Prospectus of each Series. As of February 28,
1994, PMF managed and/or administered open-end and closed-end management
investment companies with assets of approximately $51 billion. According to
the Investment Company Institute, as of December 31, 1993, the Prudential
Mutual Funds were the 12th largest family of mutual funds in the United
States.

Pursuant to a management agreement with the Trust (the Management
Agreement), PMF, subject to the supervision of the Trustees and in
conformity with the stated policies of the Trust, manages both the
investment operations of the Trust and the composition of the Trust's
portfolio, including the purchase, retention, disposition and loan of
securities and other investments. PMF is obligated to keep certain books
and records of the Trust in connection therewith. PMF is also obligated to
provide research and statistical analysis and to pay costs of certain
clerical and administrative services involved in the portfolio management.
The management services of PMF to the Trust are not exclusive under the
terms of the Management Agreement and PMF is free to, and does, render
management services to others.

PMF has authorized any of its directors, officers and employees who
have been elected as trustees or officers of the Trust to serve in the
capacities in which they have been elected. Services furnished by PMF under
the Management Agreement may be furnished by any such directors, officers
or employees of PMF. In connection with the services it renders, PMF bears
the following expenses:

(a) the salaries and expenses of all personnel of the Trust and the
Manager, except the fees and expenses of Trustees who are not affiliated
persons of the Manager;

(b) all expenses incurred by the Manager or by the Trust in connection
with managing the ordinary course of the Trust's business, other than those
assumed by the Trust, as described below; and

(c) the costs and expenses payable to The Prudential Investment
Coporation (PIC) pursuant to a subadvisory agreement between PMF and PIC
(the Subadvisory Agreement.)

Under the terms of the Management Agreement, the Trust is responsible
for the payment of the following expenses, including (a) the fee payable to
the Manager, (b) the fees and expenses of Trustees who are not affiliated
with PMF or PIC, (c) the fees and certain expenses of the Trust's Custodian
and Transfer and Dividend Disbursing Agent, including the cost of providing
records to the Manager in connection with its obligation of maintaining
required records of the Trust and of pricing the Trust's shares, (d) the
fees and expenses of the Trust's legal counsel and independent accountants,
(e) brokerage commissions and any issue or transfer taxes chargeable to the
Trust in connection with its securities transactions, (f) all taxes and
corporate fees payable by the Trust to governmental agencies, (g) the fees
of any trade association of which the Trust is a member, (h) the cost of
share certificates representing shares of the Trust, (i) the cost of
fidelity, directors and officers and errors and omissions insurance, (j)
the fees and expenses involved in registering and maintaining registration
of the Trust and of its shares with the SEC and registering the Trust as a
broker or dealer and qualifying its shares under state securities laws,
including the preparation and printing of the Trust's registration
statements and prospectuses for such purposes, (k) allocable communications
expenses with respect to investor services and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
reports to shareholders, (l) litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the
Trust's business and (m) distribution fees.

B-9

<PAGE>

The Trust pays a fee to PMF for the services performed and the
facilities furnished by PMF, computed daily and payable monthly, at an
annual rate of .40 of 1% of the Intermediate Term Series' and the U.S.
Treasury Money Market Series' average daily net assets and at an annual
rate of .40 of 1% of the average daily net assets up to $1 billion, .375 of
1% on assets between $1 billion and $1.5 billion and .35 of 1% on assets in
excess of $1.5 billion of the average daily net assets of the Money Market
Series. The Management Agreement also provides that in the event the
expenses of the Series (including the fees of the Manager but excluding
interest, taxes, brokerage commissions, distribution fees, litigation and
indemnification expenses and other extraordinary expenses) for any fiscal
year exceed the lowest applicable annual expense limitation established and
enforced pursuant to the statute or regulations of any jurisdictions in
which shares of the Series are then qualified for offer and sale, PMF will
reduce its fee by the amount of such excess. Reductions in excess of the
total compensation payable to PMF will be paid by PMF to the Series. Any
such reductions are subject to readjustment during the year. Currently, the
Trust believes that the most restrictive expense limitation of state
securities commissions is 2 1/2% of the average daily net assets of each
Series up to $30 million, 2% of the average daily net assets of each Series
from $30 million to $100 million and 1 1/2% of any excess over $100
million. The Management Agreement provides that the Manager shall not be
liable to the Trust for any error of judgment by the Manager or for any
loss sustained by the Trust except in the case of a breach of fiduciary
duty with respect to the receipt of compensation for services (in which
case any award of damages will be limited as provided in the Investment
Company Act) or of wilful misfeasance, bad faith, gross negligence or
reckless disregard of duty.

The Management Agreement provides that it shall terminate automatically
if assigned, and that it may be terminated without penalty by either party
upon not more than 60 days', nor less than 30 days', written notice. The
Management Agreement was last approved by the Trustees, including all of
the Trustees who are not interested persons as defined in the Investment
Company Act, on May 3, 1993 and by a majority of the outstanding shares of
the Money Market Series and the Intermediate Term Series on April 28, 1988
and a majority of the outstanding shares of the U.S. Treasury Money Market
Series on November 26, 1991.

For the fiscal year ended November 30, 1993, the Trust paid management
fees to PMF of $3,803,950, $1,286,150 and $1,093,251 relating to the Money
Market Series, Intermediate Term Series and U.S. Treasury Money Market
Series, respectively. For the fiscal year ended November 30, 1992, the
Trust paid management fees to PMF of $4,455,034, $1,177,548 and $1,053,834
relating to the Money Market Series, Intermediate Term Series and U.S.
Treasury Money Market Series respectively. For the fiscal year ended
November 30, 1991, the Trust paid management fees to PMF of $5,020,055 and
$1,206,574 relating to the Money Market Series and the Intermediate Term
Series, respectively, and $599,267 (net of management fees waived of
$484,562) relating to the U.S. Treasury Money Market Series for the period
December 3, 1990 (commencement of investment operations) through November
30, 1991.

PMF has entered into the Subadvisory Agreement with PIC (the
Subadviser). The Subadvisory Agreement provides that PIC furnish investment
advisory services in connection with the management of the Trust. In
connection therewith, PIC is obligated to keep certain books and records of
the Trust. PMF continues to have responsibility for all investment advisory
services pursuant to the Management Agreement and supervises PIC's
performance of those services. PIC is reimbursed by PMF for the reasonable
costs and expenses incurred by PIC in furnishing those services.

The Subadvisory Agreement was last approved by the Trustees, including
all of the Trustees who are not interested persons as defined in the
Investment Company Act, on May 3, 1993, and by the shareholders of each of
the Money Market Series and the Intermediate Term Series on April 28, 1988
and the shareholders of the U.S. Treasury Money Market Series on November
26, 1991.

The Subadvisory Agreement provides that it will terminate in the event
of its assignment or upon the termination of the Management Agreement. The
Subadvisory Agreement may be terminated by the Trust, PMF or PIC upon not
less than 30 days' nor more than 60 days' written notice. The Subadvisory
Agreement provides that it will continue in effect for a period of more
than two years only so long as such continuance is specifically approved at
least annually in accordance with the requirements of the Investment
Company Act applicable to continuance of investment advisory contracts.

The Manager and the Subadviser are subsidiaries of The Prudential
Insurance Company of America (The Prudential) which, as of December 31,
1991, was the largest insurance company in the United States and the second
largest insurance company in the world. The Prudential has been engaged in
the insurance business since 1875. In July 1993, Institutional Investor
ranked The Prudential the third largest institutional money manager of the
300 largest money management organizations in the United States as of
December 31, 1992.

DISTRIBUTOR

Prudential Securities Incorporated (Prudential Securities), One Seaport
Plaza, New York, New York 10292, has entered into an agreement with the
Trust under which Prudential Securities acts as distributor for the
Intermediate Term Series. Prudential Securities is engaged in the
securities underwriting and securities and commodities brokerage business
and is a member of the New York Stock Exchange, other major securities and
commodities exchanges and the National Association of Securities Dealers.
Prudential Securities is also engaged in the investment advisory business.
Prudential Securities is a wholly-owned subsidiary of Prudential Securities
Group

B-10

<PAGE>

Inc., which is an indirect, wholly-owned subsidiary of Prudential. The
services it provides to the Trust are discussed in the Intermediate Term
Series' Prospectus. See "How the Trust is Managed--Distributor."

Prudential Mutual Fund Distributors, Inc. (PMFD), One Seaport Plaza,
New York, New York 10292, has entered into an agreement with the Trust
pursuant to which PMFD serves as distributor for the Money Market Series
and the U.S. Treasury Money Market Series. PMFD is a wholly-owned
subsidiary of PMF. The services it provides to the Trust are described in
the Money Market Series and the U.S. Treasury Money Market Series
Prospectuses. See "How the Trust is Managed--Distributor."

Distribution and Service Plans. See "How the Trust is
Managed--Distributor" in the prospectus of each Series.

During the fiscal year ended November 30, 1993, PMFD incurred
distribution expenses in the aggregate of $1,188,735 and $341,641 with
respect to the Money Market Series and the U.S. Treasury Money Market
Series, respectively, all of which was recovered through the distribution
fee paid by each Series to PMFD. It is estimated that of these amounts
approximately $933,200 (78.5%) and $289,000 (84.6%) was spent on payment of
account servicing fees to financial advisers for the Money Market Series
and U.S. Treasury Money Market Series, respectively, and $255,500 (21.5%)
and $52,600 (15.4%) on allocation of overhead and other branch office
distribution-related expenses for the Money Market Series and U.S. Treasury
Money Market Series, respectively.

For the fiscal year ended November 30, 1993, Prudential Securities
received $676,731 from the Intermediate Term Series under the Plan and
spent approximately $800,000 on behalf of the Intermediate Term Series.

It is estimated that of the expenses incurred by Prudential Securities
under the Plan of the Intermediate Term Series approximately $5,700 (0.7%)
was spent on compensation to Pruco Securities Corporation (Prusec), an
affiliated broker-dealer, for commissions to its financial advisers and
other expenses, including an allocation on account of overhead and other
branch office distribution-related expenses, incurred by it for
distribution of Intermediate Term Series shares; and $794,300 (99.3%) was
spent on commission credits to Prudential Securities branch offices for
payments of account servicing fees (trailer commissions) to financial
advisers including an allocation on account of overhead and other branch
office distribution-related expenses. The term "overhead and other branch
office distribution-related expenses" represents (a) the expenses of
operating Prudential Securities' branch offices in connection with the sale
of shares of the Intermediate Term Series, including lease costs, the
salaries and employee benefits of operations and sales support personnel,
utility costs, communications costs and the costs of stationery and
supplies, (b) the costs of client sales seminars, (c) travel expenses of
mutual fund sales coordinators to promote the sale of shares of the
Intermediate Term Series, and (d) other incidental expenses relating to
branch promotion of sales of the Intermediate Term Series. Reimbursable
distribution expenses do not include any direct interest or carrying
charges.

Pursuant to Rule 12b-1, the Distribution and Service Plan of the Money
Market Series and Plan of Distribution of the Intermediate Term Series were
approved by the vote of a majority of their outstanding voting securities
on April 28, 1988 and June 26, 1985, respectively, and the Plan of
Distribution of the U.S. Treasury Money Market Series was approved by a
majority of its outstanding voting securities on November 26, 1991
(collectively referred to as the Plans). The Plans were last approved by
the Trustees, including a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
(the Rule 12b-1 Trustees), cast in person at a meeting called for the
purpose of voting on such Plans on May 3, 1993.

In each Distribution and Service Agreement, the Trust has agreed to
indemnify Prudential Securities or PMFD to the extent permitted by
applicable law against certain liabilities under the Securities Act of
1933, as amended.

Pursuant to the Plans, the Trustees are provided at least quarterly
with written reports of the amounts expended under the Plans and the
purposes for which such expenditures were made. The Trustees review such
reports on a quarterly basis.

The Plans provide that they will continue in effect from year to year,
provided each such continuance is approved annually by a vote of the
Trustees in the manner described above. The Plans may not be amended to
increase materially the amount to be spent for the services described
therein without approval of the shareholders of the applicable Series, and
all material amendments of the Plans must also be approved by the Trustees
in the manner described above. Each Plan may be terminated at any time,
without payment of any penalty, by vote of a majority of the Rule 12b-1
Trustees, or by a vote of a majority of the outstanding voting securities
of the applicable Series (as defined in the Investment Company Act). Each
Plan will automatically terminate in the event of its assignment (as
defined in the Investment Company Act). The Trustees have determined that,
in their judgment, there is a reasonable likelihood that the Plans will
benefit the Trust and its shareholders.

So long as the Plans are in effect, the selection and nomination of
Trustees who are not interested persons of the Trust shall be committed to
the discretion of the Trustees who are not interested persons. The Trustees
have determined that, in their judgment, there is a reasonable likelihood
that the Plans will benefit the Trust and its shareholders. In the
Trustees' quarterly review of the Plans, they consider the continued
appropriateness and the level of payments provided therein.

B-11

<PAGE>

The Distribution Agreements provide that each shall terminate
automatically if assigned and that each may be terminated without penalty
by either party upon not more than 60 days' nor less than 30 days' written
notice.

Each Distribution Agreement was last approved by the Trustees,
including all of the Trustees who are not interested persons of the Trust
and have no direct or indirect financial interest in the operation of the
Plans or the Distribution Agreements on May 3, 1993.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Manager and PIC are responsible for decisions to buy and sell
securities for the Money Market Series, Intermediate Term Series and U.S.
Treasury Money Market Series, arranging the execution of portfolio security
transactions on each Series' behalf, and the selection of brokers and
dealers to effect the transactions. Purchases of portfolio securities are
made from dealers, underwriters and issuers; sales, if any, prior to
maturity, are made to dealers and issuers. Each Series does not normally
incur any brokerage commission expense on such transactions. The
instruments purchased by the Series are generally traded on a "net" basis
with dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to
the dealer. Securities purchased in underwritten offerings include a fixed
amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. When securities are purchased or sold
directly from or to an issuer, no commissions or discounts are paid.

The policy of each of the Series regarding purchases and sales of
securities is that primary consideration will be given to obtaining the
most favorable price and efficient execution of transactions.

The Trust paid no brokerage commissions for the fiscal years ended
November 30, 1991, 1992 and 1993.

SHAREHOLDER INVESTMENT ACCOUNT

Upon the initial purchase of shares of the Trust, a Shareholder
Investment Account is established for each investor under which a record of
the shares held is maintained by the Transfer Agent. If a share certificate
is desired, it must be requested in writing for each transaction.
Certificates are issued only for full shares and may be redeposited in the
account at any time. There is no charge to the investor for issuance of a
certificate. Whenever a transaction takes place in the Shareholder
Investment Account, the shareholder will be mailed a statement showing the
transaction and the status of such account.

Procedure for Multiple Accounts

Special procedures have been designed for banks and other institutions
that wish to open multiple accounts. An institution may open a single
master account by filing an Application Form with Prudential Mutual Fund
Services, Inc. (PMFS or the Transfer Agent), Attention: Customer Service,
P.O. Box 15005, New Brunswick, New Jersey 08906, signed by personnel
authorized to act for the institution. Individual sub-accounts may be
opened at the time the master account is opened by listing them, or they
may be added at a later date by written advice or by filing forms supplied
by the Trust. Procedures are available to identify sub-accounts by name and
number within the master account name. The investment minimums set forth
above are applicable to the aggregate amounts invested by a group and not
to the amount credited to each sub-account.

PMFS provides each institution with a written confirmation for each
transaction in sub-accounts. Further, PMFS provides, to each institution on
a monthly basis, a statement which sets forth for each master account its
share balance and income earned for the month. In addition, each
institution receives a statement for each individual account setting forth
transactions in the sub-account for the year-to-date, the total number of
shares owned as of the dividend payment date and the dividends paid for the
current month, as well as for the year-to-date.

Further information on the sub-accounting system and procedures is
available from the Transfer Agent, Prudential Securities or Prusec.

Automatic Reinvestment of Dividends and Distributions

For the convenience of investors, all dividends and distributions are
automatically invested in full and fractional shares of the applicable
Series at net asset value. An investor may direct the Transfer Agent in
writing not less than 5 full business days prior to the payable date to
have subsequent dividends and/or distributions sent in cash rather than
invested. In the case of recently purchased shares for which registration
instructions have not been received on the record date, cash payment will
be made directly to the dealer. Any shareholder who receives a cash payment
representing a dividend or distribution may reinvest such dividend or
distribution at net asset value by returning the check or the proceeds to
the Transfer Agent within 30 days after the payment date. Such investment
will be made at the net asset value per share next determined after receipt
of the check or proceeds by the Transfer Agent.

B-12

<PAGE>

Exchange Privilege

The Trust makes available to its Money Market Series, Intermediate Term
Series and U.S. Treasury Money Market Series shareholders the privilege of
exchanging their shares for shares of either Series and certain other
Prudential Mutual Funds, including one or more specified money market
funds, subect in each case to the minimum investment requirements of such
funds. Class A shares of such other Prudential Mutual Funds may also be
exchanged for Money Market Series, Intermediate Term Series and U.S.
Treasury Money Market Series shares. All exchanges are made on the basis of
relative net asset value next determined after receipt of an order in
proper form. An exchange will be treated as a redemption and purchase for
tax purposes. Shares may be exchanged for shares of another fund only if
shares of such fund may legally be sold under applicable state laws.

It is contemplated that the exchange privilege may be applicable to new
mutual funds whose shares may be distributed by the Distributor.

Shareholders of the Trust may exchange their shares for Class A shares
of the Prudential Mutual Funds, and shares of the money market funds
specified below. No fee or sales load will be imposed upon the exchange.

The following money market funds participate in the Class A Exchange
Privilege:

Prudential California Municipal Fund
(California Money Market Series)

Prudential Government Securities Trust
(Money Market Series)
(U.S. Treasury Money Market Series)

Prudential Municipal Series Fund
(Connecticut Money Market Series)
(Massachusetts Money Market Series)
(New York Money Market Series)
(New Jersey Money Market Series)

Prudential MoneyMart Assets
Prudential Tax-Free Money Fund

Shareholders of The Trust may not exchange their shares for Class B
shares of the Prudential Mutual Funds or shares of Prudential Special Money
Market Fund, a money market fund, except that shares acquired prior to
January 22, 1990 subject to a contingent deferred sales charge can be
exchanged for Class B shares.

Additional details about the Exchange Privilege and prospectuses for
each of the Prudential Mutual Funds are available from the Trust's Transfer
Agent, Prudential Securities or Prusec. The Exchange Privilege may be
modified, terminated or suspended on sixty days notice, and any fund,
including the Trust, or the Distributor, has the right to reject any
exchange application relating to such fund's shares.

Dollar Cost Averaging

Dollar cost averaging is a method of accumulating shares by investing a
fixed amount of dollars in shares at set intervals. An investor buys more
shares when the price is low and fewer shares when the price is high. The
overall cost is lower than it would be if a constant number of shares were
bought at set intervals.

Dollar cost averaging may be used, for example, to plan for retirement,
to save for a major expenditure, such as the purchase of a home, or to
finance a college education. The cost of a year's education at a four-year
college today averages around $14,000 at a private college and around
$4,800 at a public university. Assuming these costs increase at a rate of
7% a year, as has been projected, for the freshman class of 2007, the cost
of four years at a private college could reach $163,000 and over $97,000 at
a public university.1

The following chart shows how much you would need in monthly
investments to achieve specified lump sums to finance your investment
goals.2

Period of
Monthly investments: $100,000 $150,000 $200,000 $250,000
--------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>

25 Years......................... $ 110 $ 165 $ 220 $ 275
20 Years......................... 176 264 352 440
15 Years......................... 296 444 592 740
10 Years......................... 555 833 1,110 1,388
5 Years......................... 1,371 2,057 2,742 3,428
</TABLE>

See "Automatic Savings Accumulation Plan."

B-13

<PAGE>

- ---------------
1 Source information concerning the costs of education at public
universities is available from The College Board Annual Survey of Colleges,
1992. Information about the costs of private colleges is from the Digest of
Education Statistics, 1992; The National Center for Educational Statistics;
and the U.S. Department of Education. Average costs for private
institutions include tuition, fees, room and board.

2 The chart assumes an effective rate of return of 8% (assuming monthly
compounding). This example is for illustrative purposes only and is not
intended to reflect the performance of an investment in shares of the Fund.
The investment return and principal value of an investment will fluctuate
so that an investor's shares when redeemed may be worth more or less than
their original cost.

Automatic Savings Accumulation Plan (ASAP)

Under ASAP, an investor may arrange to have a fixed amount
automatically invested in any Series' shares each month by authorizing his
or her bank account or Prudential Securities Account (including a Command
Account) to be debited to invest specified dollar amounts in shares of that
Series. The investor's bank must be a member of the Automatic Clearing
House System. Stock certificates are not issued to ASAP participants.

Further information about this program and an application form can be
obtained from the Transfer Agent, Prudential Securities or Prusec.

Systematic Withdrawal Plan

A systematic withdrawal plan is available for shareholders having
shares of the Trust held through Prudential Securities or the Transfer
Agent. Such withdrawal plan provides for monthly or quarterly checks in any
amount, except as provided below, up to the value of the shares in the
shareholder's account.

In the case of shares held through the Transfer Agent (i) a $10,000
minimum account value applies, (ii) withdrawals may not be for less than
$100 and (iii) the shareholder must elect to have all dividends and/or
distributions automatically reinvested in additional full and fractional
shares of the applicable series at net asset value on shares held under
this plan. See "Shareholder Investment Account-Automatic Reinvestment of
Dividends and Distributions."

Prudential Securities and the Transfer Agent act as agents for the
shareholder in redeeming sufficient full and fractional shares to provide
the amount of the periodic withdrawal payment. The systematic withdrawal
plan may be terminated at any time, and the Distributor reserves the right
to initiate a fee of up to $5 per withdrawal, upon 30 days' written notice
to the shareholder.

Withdrawal payments should not generally be considered as dividends,
yield or income. If periodic withdrawals continuously exceed reinvested
dividends and distributions, the shareholder's original investment will be
correspondingly reduced and ultimately exhausted. Furthermore, each
withdrawal constitutes a redemption of shares, and any gain or loss
realized must generally be recognized for federal income tax purposes. Each
shareholder should consult his or her own tax adviser with regard to the
tax consequences of the plan, particularly if used in connection with a
retirement plan.

Tax-Deferred Retirement Plans

Various tax-deferred retirement plans, including a 401(k) Plan,
self-directed individual retirement accounts and "tax-sheltered accounts"
under Section 403(b)(7) of the Internal Revenue Code are available through
the Distributor. These plans are for use by both self-employed individuals
and corporate employers. These plans permit either self-direction of
accounts by participants, or a pooled account arrangement. Information
regarding the establishment of these plans, the administration, custodial
fees and other details are available from Prudential Securities or the
Transfer Agent.

Investors who are considering the adoption of such a plan should
consult with their own legal counsel or tax adviser with respect to the
establishment and maintenance of any such plan.

NET ASSET VALUE

Money Market Series and U.S. Treasury Money Market Series

Amortized Cost Valuation. The Money Market Series and the U.S. Treasury
Money Market Series use the amortized cost method to determine the value of
their portfolio securities in accordance with regulations of the Securities
and Exchange Commission. The amortized cost method involves valuing a
security at its cost and amortizing any discount or premium over the period
until maturity. The method does not take into account unrealized capital
gains and losses which may result from the effect of fluctuating interest
rates on the market value of the security.

With respect to the Money Market Series and the U.S. Treasury Money
Market Series, the Trustees have determined to maintain a dollar-weighted
average maturity of 90 days or less, to purchase instruments having
remaining maturities of thirteen months or less and

B-14

<PAGE>

to invest only in securities determined by the investment adviser under
the supervison of the Trustees to present minimal credit risks and to be of
eligible quality in accordance with the provisions of Rule 2a-7 of the
Investment Company Act. The Trustees have adopted procedures designed to
stabilize, to the extent reasonably possible, both Series' price per share
as computed for the purpose of sales and redemptions at $1.00. Such
procedures will include review of the Series' portfolio holdings by the
Trustees, at such intervals as they may deem appropriate, to determine
whether the Series' net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost. The
extent of any deviation will be examined by the Trustees. If such deviation
exceeds 1/2 of 1%, the Trustees will promptly consider what action, if any,
will be initiated. In the event the Trustees determine that a deviation
exists which may result in material dilution or other unfair results to
prospective investors or existing shareholders, the Trustees will take such
corrective action as they consider necessary and appropriate,including the
sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity, the withholding of
dividends, redemptions of shares in kind, or the use of available market
quotations to establish a net asset value per share.

Intermediate Term Series

In determining the value of the assets of the Intermediate Term Series,
the value of each U.S. Government security for which quotations are
available will be based on the valuation provided by an independent pricing
service. Pricing services consider such factors as security prices, yields,
maturities, call features, ratings and developments relating to specific
securities in arriving at securities valuations. Securities for which
market quotations are not readily available are valued by appraisal at
their fair value as determined in good faith by the Manager under
procedures established under the general supervision and responsibility of
the Trustees.

Short-term investments which mature in 60 days or less are valued at
amortized cost, if their term to maturity from date of purchase was 60 days
or less, or by amortizing their value on the 61st day prior to maturity if
their term to maturity when acquired by the Intermediate Series was more
than 60 days, unless this is determined not to represent fair value by the
Trustees.

PERFORMANCE INFORMATION

Money Market Series and U.S. Treasury Money Market Series--Calculation of Yield

The Money Market Series and U.S. Treasury Money Market Series will each
prepare a current quotation of yield from time to time. The yield quoted
will be the simple annualized yield for an identified seven calendar day
period. The yield calculation will be based on a hypothetical account
having a balance of exactly one share at the beginning of the seven-day
period. The base period return will be the change in the value of the
hypothetical account during the seven-day period, including dividends
declared on any shares purchased with dividends on the shares but excluding
any capital changes. The yield will vary as interest rates and other
conditions affecting money market instruments change. Yield also depends on
the quality, length of maturity and type of instruments in the Money Market
Series and U.S. Treasury Money Market Series' portfolios and their
operating expenses. The Money Market Series and U.S. Treasury Money Market
Series may also each prepare an effective annual yield computed by
compounding the unannualized seven-day period return as follows: by adding
1 to the unannualized seven-day period return, raising the sum to a power
equal to 365 divided by 7, and subtracting 1 from the result.

Effective yield (equal) [(base period return + 1)365/7] -1

The U.S. Treasury Money Market Series may also calculate the tax
equivalent yield over a 7-day period. The tax equivalent yield will be
determined by first computing the current yield as discussed above. The
Series will then determine what portion of the yield is attributable to
securities, the income of which is exempt for state and local income tax
purposes. This portion of the yield will then be divided by one minus the
maximum state tax rate of individual taxpayers and then added to the
portion of the yield that is attributable to other securities.

Comparative performance information may be used from time to time in
advertising or marketing the Money Market Series' and U.S. Treasury Money
Market Series' shares, including data from Lipper Analytical Services,
Inc., Donoghue's Money Fund Report, The Bank Rate Monitor, other industry
publications, business perodicals, rating services and market indices.

The Money Market Series' and U.S. Treasury Money Market Series' yields
fluctuate, and annualized yield quotations are not a representation by the
Money Market Series or U.S. Treasury Money Market Series as to what an
investment in the Money Market Series and U.S. Treasury Money Market Series
will actually yield for any given period. Actual yields will depend upon
not only changes in interest rates generally during the period in which the
investment in the Money Market Series and U.S. Treasury Money Market Series
is held, but also on any realized or unrealized gains and losses and
changes in the Money Market Series and U.S. Treasury Money Market Series'
expenses.

B-15

<PAGE>

Intermediate Term Series--Calculation of Yield and Total Return

Yield. The Intermediate Term Series may from time to time advertise its
yield as calculated over a 30-day period. Yield will be computed by
dividing the Intermediate Term Series' net investment income per share
earned during this 30-day period by the net asset value per share on the
last day of this period. Yield is calculated according to the following
formula:

a - b
YIELD (equal) 2 [(----------------+1)6 - 1]
cd

Where: a (equal) dividends and interest earned during the period. b
(equal) expenses accrued for the period (net of reimbursements). c (equal)
the average daily number of shares outstanding during the period that were
entitled to receive dividends. d (equal) the net asset value per share on
the last day of the period.

Yield fluctuates and an annualized yield quotation is not a
representation by the Trust as to what an investment in the Intermediate
Term Series will actually yield for any given period.

The Intermediate Term Series' 30-day yield for the period ended
November 30, 1993 was 3.93%.

Average Annual Total Return. The Intermediate Term Series may from time
to time advertise its average annual total return. See "How the Trust
Calculates Performance" in the Prospectus.

Average annual total return is computed according to the following
formula:

P(1 + T)n (equal) ERV

Where: P (equal) a hypothetical initial payment of $1,000.
T (equal) average annual total return.
n (equal) number of years.
ERV (equal) Ending Redeemable Value at the end of the 1, 5 or 10 year
periods (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the 1, 5 or 10
year periods.

Average annual total return does not take into account any federal or
state income taxes that may be payable upon redemption.

The Intermediate Term Series' average annual total return for the one,
five and ten year periods ended November 30, 1993 was 8.26%, 9.11% and
9.96%, respectively.

Aggregate Total Return. The Intermediate Term Series may also advertise
its aggregate total return. See "How the Trust Calculates Performance" in
the Prospectus.

Aggregate total return represents the cumulative change in the value of
an investment in the Fund and is computed according to the following
formula:

ERV - P
-------
P

Where: P (equal) a hypothetical initial payment of $1,000.
ERV (equal) Ending Redeemable Value at the end of the 1, 5 or 10 year
periods (or fractional portion thereof) of a hypothetical
$1,000 investment made at the beginning of the 1, 5 or 10
year periods .

Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption.

The Intermediate Term Series' aggregate total return for the one, five
and ten year periods ended November 30, 1993 was 8.26%, 54.71% and 158.60%,
respectively.

TAXES

Each series of the Trust is treated as a separate entity for federal
income tax purposes and each has elected to qualify and intends to remain
qualified as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the Internal Revenue Code). If each series qualifies
as a regulated investment company, it will not be subject to federal income
taxes on the taxable income it distributes to shareholders, provided at
least 90% of its net investment income and net short-term capital gains
earned in the taxable year is so distributed. To qualify for this
treatment, each series must, among other things, (a) derive at least 90% of
its gross income (without offset for losses from the sale or other
disposition of securities or foreign currencies) from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of securities or foreign currencies and certain financial
futures, options and forward contracts; (b) derive less than 30% of its
gross income (without offset for losses from the sale or other disposition of

B-16

<PAGE>

securities or foreign currencies) from the gains on the sale or other
disposition of securities held for less than three months; and (c)
diversify its holdings so that, at the end of each quarter of the taxable
year, (i) at least 50% of the value of its assets is represented by cash,
U.S. Government securities and other securities limited in respect of any
one issuer to an amount no greater than 5% of its assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of its assets is invested in the securities of any one issuer
(other than U.S. Government securities). The performance and tax
qualification of one series will have no effect on the federal income tax
liability of shareholders of the other series.

The Internal Revenue Code imposes a 4% nondeductible excise tax to the
extent any series fails to meet certain minimum distribution requirements
by the end of each calendar year. For this purpose, dividends declared in
October, November and December payable to shareholders of record on a
specified date in October, November and December and paid in the following
January will be treated as having been paid by the Trust and received by
shareholders in such prior year. Under this rule, a shareholder may be
taxed in one year on dividends or distributions actually received in
January of the following year.

See "Taxes, Dividends and Distributions" in the Prospectus of each
series.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT AND
INDEPENDENT ACCOUNTANTS

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, has been retained to act as Custodian of the Trust's
investments and in such capacity maintains certain financial and accounting
books and records pursuant to an agreement with the Trust.

Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One,
Edison, New Jersey 08837, serves as Transfer and Dividend Disbursing Agent
and in those capacities maintains certain books and records for the Trust.
PMFS is a wholly-owned subsidiary of PMF. PMFS provides customary transfer
agency services to the Trust, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance
of shareholder account records, payment of dividends and distributions and
related functions. For these services, PMFS receives an annual fee per
shareholder account, a new account set-up fee for each manually established
account and a monthly inactive zero balance account fee per shareholder
account. PMFS is also reimbursed for its out-of-pocket expenses, including
but not limited to postage, stationery, printing, allocable communications
and other costs. For the fiscal year ended November 30, 1993, the
Intermediate Term Series, Money Market Series and U.S. Treasury Money
Market Series incurred fees of $275,000, $1,101,000 and $61,000,
respectively, for the services of PMFS.

Price Waterhouse, 1177 Avenue of the Americas, New York, New York,
serves as the Trust's independent accountants and in that capacity audits
the Trust's annual financial statements.

B-17

<PAGE>

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>

Federal Farm Credit Bank--12.5%
$ 14,250 3.18%, 1/7/94............... $ 14,203,426
5,700 3.185%, 1/10/94............. 5,679,828
700 3.20%, 1/10/94.............. 697,511
5,000 3.18%, 1/12/94.............. 4,981,450
15,000 3.18%, 1/13/94.............. 14,943,025
10,000 3.18%, 1/14/94.............. 9,961,133
1,255 3.18%, 1/19/94.............. 1,249,568
150 3.19%, 1/21/94.............. 149,322
7,000 3.19%, 3/1/94............... 6,999,841
12,000 3.34%, 3/1/94............... 12,002,637
15,000 12.35%, 3/1/94.............. 15,324,805
7,000 3.38%, 4/1/94............... 6,920,476
5,000 3.64%, 8/1/94............... 5,005,535
7,000 8.625%, 9/1/94.............. 7,258,112
9,400 3.49%, 11/1/94.............. 9,094,722
------------
114,471,391
------------
Federal Home Loan Bank--4.7%
21,000 3.07%, 12/23/93, F.R.N...... 21,000,000
6,100 3.14%, 1/26/94.............. 6,070,205
4,775 8.30%, 7/25/94.............. 4,920,726
10,500 8.60%, 8/25/94.............. 10,884,213
------------
42,875,144
------------
Federal Home Loan Mortgage
Corporation--15.5%
15,000 3.03%, 12/3/93, F.R.N....... 14,999,880
10,000 2.89%, 12/15/93, F.R.N...... 9,996,521
180 3.19%, 1/4/94............... 179,458
13,000 3.13%, 1/7/94............... 12,958,180
5,090 3.18%, 1/7/94............... 5,073,364
4,627 3.20%, 1/7/94............... 4,611,782
16,500 3.13%, 1/12/94.............. 16,439,748
12,000 3.18%, 1/14/94.............. 11,953,360
Federal Home Loan Mortgage
Corporation--cont'd.
$ 715 3.18%, 1/18/94.............. $ 711,968
3,810 3.18%, 1/21/94.............. 3,792,836
7,000 3.11%, 1/24/94.............. 6,967,345
11,000 3.13%, 1/24/94.............. 10,948,355
10,000 3.14%, 1/24/94.............. 9,952,900
5,000 3.18%, 1/24/94.............. 4,976,150
11,000 3.12%, 1/28/94.............. 10,944,707
18,000 3.12%, 1/31/94.............. 17,904,840
------------
142,411,394
------------
Federal National Mortgage
Association--8.9%
1,325 3.20%, 1/10/94.............. 1,320,289
22,380 7.55%, 1/10/94.............. 22,463,396
1,350 9.45%, 1/10/94.............. 1,358,885
5,710 13.00%, 1/13/94............. 5,773,974
15,500 3.14%, 1/27/94.............. 15,422,939
12,185 3.12%, 3/22/94.............. 12,067,780
7,100 9.60%, 4/11/94.............. 7,252,494
17,000 3.47%, 10/3/94.............. 16,498,585
------------
82,158,342
------------
Student Loan Marketing
Association--10.3%
29,000 3.20%, 12/7/93, F.R.N....... 29,000,000
20,000 3.37%, 12/7/93, F.R.N....... 20,000,000
10,000 3.41%, 12/7/93, F.R.N....... 10,000,000
6,000 3.34%, 1/19/94, F.R.N....... 6,000,000
24,000 3.83%, 6/30/94, F.R.N....... 24,000,000
6,000 7.50%, 7/11/94.............. 6,141,228
------------
95,141,228
------------
Tennessee Valley Authority--3.2%
25,000 8.25%, 10/1/94.............. 25,952,614
3,500 8.75%, 10/1/94.............. 3,798,148
------------
29,750,762
------------
</TABLE>

See Notes to Financial Statements.

B-18

<PAGE>

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)

United States Treasury Bond--2.0%
$ 18,000 8.75%, 8/15/94.............. $ 18,637,937
------------
United States Treasury Note--2.1%
18,500 8.88%, 2/15/94.............. 18,703,098
------------
Repurchase Agreements--40.8%
139,502 Joint Repurchase Agreement
Account 3.21%, 12/1/93
(Note 5).................. 139,502,000
16,000 Bear Stearns & Co., 3.13%,
dated 11/2/93, due 12/1/93
in the amount of
$16,040,342 (cost
$16,000,000;
collateralized by
$16,670,000 F.N.M.A.,
7.00%, 5/1/08 and $625,000
F.N.M.A., 9.00%, 7/1/98;
approximate
aggregate value including
accrued
interest-$16,325,126)..... 16,000,000
92,570 Morgan Stanley & Co., 3.18%,
dated 11/29/93, due
12/1/93 in the amount of
$92,586,354 (cost
$92,570,000;
collateralized by
$15,426,953 F.N.M.A.,
7.00%, 3/1/08; $23,237,975
F.H.L.M.C., 7.50%, 9/1/13;
$7,916,000 F.N.M.A.,
8.00%, 4/1/23; $9,800,000
F.N.M.A., 6.00%, 10/1/00;
$18,055,000 F.N.M.A.,
7.00%, 11/1/07 and
$33,000,000 F.N.M.A.,
8.00%, 1/1/08; approxi-
mate aggregate value
including accrued
interest-$94,992,452)..... 92,570,000
$ 17,810 Lehman Brothers, 3.10%,
dated 11/29/93, due
12/6/93 in the amount of
$17,820,735 (cost
$17,810,000;
collateralized by
$18,484,363 F.N.M.A.,
6.50%, 9/1/08; approximate
value including accrued
interest-$18,527,344)..... $ 17,810,000
16,500 Bear Stearns & Co., 3.125%,
dated 11/30/93, due
12/6/93 in the amount of
$16,508,594 (cost
$16,500,000;
collateralized by
$17,675,000 F.N.M.A.,
7.50%, 9/1/08; approximate
value including accrued
interest-$17,029,424)..... 16,500,000
9,370 Bear Stearns & Co., 3.15%,
dated 11/29/93, due
12/9/93 in the amount of
$9,378,199 (cost
$9,370,000; collateralized
by $5,575,000 F.N.M.A.,
7.00%, 3/1/08 and
$4,600,000 F.N.M.A.,
6.50%, 9/1/99; approximate
aggregate value including
accrued
interest-$9,670,421)...... 9,370,000
8,440 Bear Stearns & Co., 3.15%,
dated 11/29/93, due
12/15/93 in the amount of
$8,451,816 (cost
$8,440,000; collateralized
by $11,000,000 F.H.L.M.C.,
7.50%, 2/1/99 and
$5,375,000 F.H.L.M.C.,
8.00%, 8/1/03; ap-
proximate aggregate value
including accrued
interest-$8,729,681)...... 8,440,000
</TABLE>
See Notes to Financial Statements.

B-19

<PAGE>

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>

$ 74,760 Lehman Brothers, 3.35%,
$52,500,000 dated 11/10/93
and $22,260,000 dated
11/15/93, aggregate due
1/6/94 in the amount of
$75,146,182 (cost
$74,760,000;
collateralized by
$22,050,899 F.N.M.A.,
8.50%, 6/1/21; $20,000,000
F.N.M.A., 8.00%, 6/1/07;
$63,372,717 F.N.M.A.,
8.00%, 11/1/07 and
$52,561,466 F.H.L.M.C.,
9.50%, 12/1/01;
approximate aggregate
value including accrued
interest-$76,516,063)..... $ 74,760,000
------------
374,952,000
------------
Total Investments--100.0%
(amortized cost
$919,101,296*)............ 919,101,296
Other assets in excess of
liabilities............... 401,302
------------
Net Assets--100%............ $919,502,598
------------
------------
</TABLE>

- ---------------
(a) The following abbreviations are used in portfolio descriptions:
F.H.L.M.C.--Federal Home Loan Mortgage Corporation.
F.N.M.A.--Federal National Mortgage Association.
F.R.N.--Floating Rate Note.
* Federal income tax basis of portfolio securities is the same as for
financial reporting purposes.

See Notes to Financial Statements.

B-20

<PAGE>

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)

LONG-TERM INVESTMENTS--91.2%
Federal National Mortgage
Association--5.1%
$ 16,000 8.45%, 10/21/96............. $ 17,604,960
------------
United States Treasury Bonds--13.6%
10,000 11.75%, 2/15/01............. 13,656,200
25,000 10.75%, 5/15/03............. 33,882,750*
------------
47,538,950
------------
United States Treasury Notes--72.5%
16,000 8.375%, 4/15/95............. 16,937,440
12,000 5.875%, 5/15/95............. 12,320,640
10,000 8.50%, 5/15/95.............. 10,635,900
12,000 8.875%, 7/15/95............. 12,896,280
20,000 7.75%, 3/31/96.............. 21,481,200
40,000 9.375%, 4/15/96............. 44,431,200
30,000 8.50%, 4/15/97.............. 33,482,700
15,000 8.75%, 10/15/97............. 17,010,900
50,000 9.25%, 8/15/98.............. 58,593,500
21,000 8.875%, 2/15/99............. 24,461,640
------------
252,251,400
------------
Total long-term investments
(cost $310,098,228)....... 317,395,310
------------
SHORT-TERM INVESTMENTS--7.3%
United States Treasury Notes--6.6%
$ 22,000 9.50%, 10/15/94............. $ 23,089,660
------------
Joint Repurchase Agreement Account--0.7%
2,333 3.21%, 12/1/93 (Note 5)..... 2,333,000
------------
Total short-term investments
(cost $25,969,250)........ 25,422,660
------------
Total Investments--98.5%
(cost $336,067,478; Note
4)........................ 342,817,970
Other assets in excess of
liabilities--1.5%......... 5,126,177
------------
Net Assets--100%............ $347,944,147
------------
------------
</TABLE>

- ---------------
* Security on loan.
See Notes to Financial Statements.

B-21

<PAGE>

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)

United States Treasury Bills--95.7%
$ 5,737 2.90%, 12/2/93.............. $ 5,736,538
872 2.98%, 12/2/93.............. 871,928
3,000 3.015%, 12/2/93............. 2,999,749
1,915 2.96%, 12/9/93.............. 1,913,740
5,000 3.135%, 12/9/93............. 4,996,517
11,150 2.915%, 12/16/93............ 11,136,456
7,710 2.92%, 12/16/93............. 7,700,620
2,620 2.925%, 12/16/93............ 2,616,807
4,550 2.98%, 12/16/93............. 4,544,349
5,000 3.02%, 12/16/93............. 4,993,708
5,000 3.025%, 12/16/93............ 4,993,698
15,000 3.01%, 1/13/94.............. 14,946,071
825 3.035%, 1/13/94............. 822,009
15,430 3.04%, 1/13/94.............. 15,373,972
930 3.00%, 1/20/94.............. 926,125
10,000 3.025%, 1/20/94............. 9,957,986
4,830 3.04%, 1/20/94.............. 4,809,607
4,465 3.045%, 1/20/94............. 4,446,117
5,000 3.08%, 1/20/94.............. 4,978,611
20,000 3.10%, 1/20/94.............. 19,913,889
8,445 3.105%, 1/20/94............. 8,408,581
5,000 3.01%, 2/3/94............... 4,973,244
20,000 3.075%, 2/3/94.............. 19,890,667
1,070 3.085%, 2/3/94.............. 1,064,132
1,645 3.09%, 2/3/94............... 1,635,963
9,155 3.10%, 2/3/94............... 9,104,546
5,000 3.21%, 2/3/94............... 4,971,467
5,260 3.03%, 2/10/94.............. 5,228,567
385 3.04%, 2/10/94.............. 382,692
3,770 3.085%, 2/10/94............. 3,747,062
6,145 3.09%, 2/10/94.............. 6,107,551
United States Treasury Bills--cont'd
$ 742 3.095%, 2/10/94............. $ 737,471
3,025 3.115%, 2/10/94............. 3,006,416
11,125 3.12%, 2/10/94.............. 11,056,544
10,000 3.015%, 2/17/94............. 9,934,675
20,000 3.12%, 2/17/94.............. 19,864,800
6,000 3.08%, 4/7/94............... 5,934,807
160 3.095%, 4/7/94.............. 158,253
4,065 3.10%, 4/7/94............... 4,020,545
2,575 3.205%, 5/5/94.............. 2,539,467
10,590 3.225%, 5/5/94.............. 10,442,953
1,490 3.215%, 5/12/94............. 1,468,443
5,000 3.235%, 5/12/94............. 4,927,213
3,680 3.27%, 5/12/94.............. 3,625,849
570 3.32%, 8/25/94.............. 555,965
------------
272,466,370
------------
United States Treasury Bond--0.3%
960 9.00%, 2/15/94.............. 971,155
------------
United States Treasury Strips--4.5%
3,000 3.499%, 2/15/94............. 2,977,837
10,000 3.268%, 5/15/94............. 9,850,205
------------
12,828,042
------------
Total Investments--100.5%
(amortized cost
$286,265,567*)............ 286,265,567
Liabilities in excess of
other
assets--(0.5%).............. (1,287,977)
------------
Net Assets--100%............ $284,977,590
------------
------------
</TABLE>

- ---------------
* Federal income tax basis of portfolio securities is the same as for
financial reporting purposes.

See Notes to Financial Statements.

B-22

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
Statement of Assets and Liabilities
November 30, 1993
<TABLE>
<CAPTION>

US TREASURY
MONEY MONEY
MARKET INTERMEDIATE MARKET
SERIES TERM SERIES SERIES
---------- ------------ -----------
<S> <C> <C> <C>
Assets
Investments, at value (cost $919,101,296, $336,067,478 and
$286,265,567, respectively)................................... $919,101,296 $342,817,970 $286,265,567
Cash............................................................ 30,735 21,338 27,475
Collateral for securities on loan, at value..................... -- 33,749,566 --
Interest receivable............................................. 4,893,900 4,681,249 25,357
Receivable for Series shares sold............................... 19,513,647 1,973,972 8,314,802
Fees receivable on securities loaned............................ -- 7,094 --
Deferred expenses and other assets.............................. 15,445 4,331 22,741
------------ ------------ ------------
Total assets................................................ 943,555,023 383,255,520 294,655,942

------------ ------------ ------------
Liabilities
Payable upon return of securities loaned........................ -- 33,749,566 --
Payable for Series shares reacquired............................ 22,976,389 633,116 9,289,895
Due to Distributor.............................................. 50,602 92,278 15,768
Due to Manager.................................................. 298,507 114,338 94,772
Dividends payable............................................... 361,621 595,098 98,712
Accrued expenses and other liabilities.......................... 365,306 126,977 179,205
------------ ------------ ------------
Total liabilities........................................... 24,052,425 35,311,373 9,678,352
------------ ------------ ------------
Net Assets...................................................... $919,502,598 $347,944,147 $284,977,590
------------ ------------ ------------
------------ ------------ ------------
Net assets are comprised of:
Shares of beneficial interest, $.01 par value................... $ 9,195,026 $ 345,883 $ 2,849,776
Paid-in capital in excess of par................................ 910,307,572 406,573,935 282,127,814
------------ ------------ ------------
919,502,598 406,919,818 284,977,590
Undistributed net investment income............................. -- 1,897,615 --
Accumulated net realized gains (losses)......................... -- (67,623,778) --
Net unrealized appreciation of investments...................... -- 6,750,492 --
------------ ------------ ------------
Net assets, November 30, 1993................................... $919,502,598 $347,944,147 $284,977,590
------------ ------------ ------------
------------ ------------ ------------
Shares of beneficial interest issued and outstanding............ 919,502,598 34,588,263 284,977,590
------------ ------------ ------------
------------ ------------ ------------
Net asset value................................................. $1.00 $10.06 $1.00
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

See Notes to Financial Statements.

B-23

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
Statement of Operations
Year Ended November 30, 1993

US TREASURY
MONEY MONEY
MARKET INTERMEDIATE MARKET
SERIES TERM SERIES SERIES
<S> <C> <C> <C>
----------- ------------ -----------
Net Investment Income
Income
Interest...................................................... $31,185,304 $24,419,666 $8,613,158
Income from securities loaned................................. -- 8,577 --
----------- ------------ -----------
31,185,304 24,428,243 8,613,158
----------- ------------ -----------
Expenses
Management fee................................................ 3,803,950 1,286,150 1,093,251
Distribution fee.............................................. 1,188,735 676,731 341,641
Transfer agent's fees and expenses............................ 1,279,000 352,000 74,000
Custodian's fees and expenses................................. 203,000 99,000 92,000
Registration fees............................................. 110,000 47,000 81,000
Audit fee..................................................... 42,000 36,000 40,000
Reports to shareholders....................................... 110,000 22,000 30,000
Legal fees.................................................... 15,000 20,000 10,000
Trustees' fees................................................ 15,000 15,000 15,000
Insurance expense............................................. 33,000 6,000 8,000
Amortization of deferred organization expenses................ -- -- 7,932
Miscellaneous................................................. 3,730 5,751 7,801
----------- ------------ -----------
Total expenses.............................................. 6,803,415 2,565,632 1,800,625
----------- ------------ -----------
Net investment income........................................... 24,381,889 21,862,611 6,812,533
----------- ------------ -----------
Realized and Unrealized Gain (Loss) on Investment Transactions
Net realized gain (loss) on investment transactions............. 240,813 (234,826) 141,643
Net change in unrealized appreciation of investments............ -- 3,085,195 --
----------- ------------ -----------
Net gain on investments......................................... 240,813 2,850,369 141,643
----------- ------------ -----------
Net Increase in Net Assets Resulting from Operations............ $24,622,702 $24,712,980 $6,954,176
----------- ------------ -----------
----------- ------------ -----------
</TABLE>

See Notes to Financial Statements.

B-24

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
Statement of Changes in Net Assets

US TREASURY
MONEY MARKET INTERMEDIATE MONEY MARKET
SERIES TERM SERIES SERIES
--------------------------------- --------------------------- ---------------------------------

Year Ended November 30,

--------------------------------------------------------------------------------------------------
1993 1992 1993 1992 1993 1992
--------------- --------------- ------------ ------------ --------------- ---------------
Increase (Decrease) in Net
Assets
Operations
<S> <C> <C> <C> <C> <C> <C>

Net investment income... $ 24,381,889 $ 38,085,398 $21,862,611 $ 21,995,422 $ 6,812,533 $ 8,654,811
Net realized gain (loss)
on investment
transactions.......... 240,813 1,287,413 (234,826) 2,971,480 141,643 467,396
Net change in unrealized
appreciation/depreciation
of investments........ -- -- 3,085,195 (4,494,587) -- --
--------------- --------------- ------------ ------------ --------------- ---------------
Net increase in net
assets resulting from
operations............ 24,622,702 39,372,811 24,712,980 20,472,315 6,954,176 9,122,207
--------------- --------------- ------------ ------------ --------------- ---------------
Net equalization
credits................. -- -- 4,795 19,614 -- --
--------------- --------------- ------------ ------------ --------------- ---------------
Dividends and
distributions to
shareholders:
Dividends to
shareholders.......... (24,622,702) (39,372,811) (21,877,946) (22,033,578) (6,954,176) (9,122,207)
Tax return of capital
distribution.......... -- -- (702,835) -- -- --
--------------- --------------- ------------ ------------ --------------- ---------------
Total dividends and
distributions to
shareholders............ (24,622,702) (39,372,811) (22,580,781) (22,033,578) (6,954,176) (9,122,207)
--------------- --------------- ------------ ------------ --------------- ---------------
Series share transactions*
Net proceeds from shares
subscribed............ 2,705,725,541 2,883,150,865 191,340,556 115,976,502 1,255,246,290 985,514,695
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions......... 23,600,594 38,220,623 14,618,822 12,594,240 6,581,355 8,794,444
Cost of shares
reacquired............ (2,836,010,964) (3,108,019,770) (163,603,524) (121,664,086) (1,210,449,881) (1,049,631,002)
--------------- --------------- ------------ ------------ --------------- ---------------
Net increase (decrease)
in net assets from
Series share
transactions.......... (106,684,829) (186,648,282) 42,355,854 6,906,656 51,377,764 (55,321,863)
--------------- --------------- ------------ ------------ --------------- ---------------
Total increase
(decrease)................ (106,684,829) (186,648,282) 44,492,848 5,365,007 51,377,764 (55,321,863)
Net Assets
Beginning of year....... 1,026,187,427 1,212,835,709 303,451,299 298,086,292 233,599,826 288,921,689
--------------- --------------- ------------ ------------ --------------- ---------------
End of year............. $ 919,502,598 $ 1,026,187,427 $347,944,147 $303,451,299 $ 284,977,590 $ 233,599,826
--------------- --------------- ------------ ------------ --------------- ---------------
--------------- --------------- ------------ ------------ --------------- ---------------
<FN>

- ---------------
*At $1.00 per share for the Money Market Series and the U.S. Treasury Money Market Series.
</TABLE>
See Notes to Financial Statements.
B-25

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
Notes to Financial Statements

Prudential Government Securities Trust (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund consists of three series--the Money
Market Series, the Intermediate Term Series and the U.S. Treasury Money
Market Series; the monies of each series are invested in separate,
independently managed portfolios.

Note 1. Significant The following is a summary
Accounting Policies of the significant accounting
policies followed by the Fund in the
preparation of its financial statements.
Securities Valuations: The Money Market Series and U.S. Treasury Money
Market Series value portfolio securities at amortized cost, which
approximates market value. The amortized cost method of valuation involves
valuing a security at its cost on the date of purchase and thereafter
assuming a constant amortization to maturity of any discount or premium.
For the Intermediate Term Series, the Trustees have authorized the use of
an independent pricing service to determine valuations. The pricing service
considers such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific securities in
arriving at securities valuations. When market quotations are not readily
available, a security is valued by appraisal at its fair value as
determined in good faith under procedures established under the general
supervision and responsibility of the Trustees. Short-term securities which
mature in more than 60 days are valued at current market quotations.
Short-term securities which mature in 60 days or less are valued at
amortized cost. In connection with transactions in repurchase agreements,
the Fund's custodian takes possession of the underlying collateral
securities, the value of which exceeds the principal amount of the
repurchase transaction, including accrued interest. If the seller defaults
and the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited. Securities Lending: The
Intermediate Term Series may lend its U.S. Government securities to
broker-dealers or government securities dealers. The Fund's policy is to
receive collateral on each loan at least equal, at all times, to the market
value of the securities loaned. The Series may bear the risk of delay in
recovery of, or even loss of rights in, the collateral should the borrower
of the securities fail financially. The Series receives compensation for
lending its securities in the form of fees or it retains a portion of
interest on the investment of any cash received as collateral. The Series
also continues to receive interest on the securities loaned, and any gain
or loss in the market price of the securities loaned that may occur during
the term of the loan will be for the account of the Series. Securities
Transactions and Investment Income: Securities transactions are recorded on
the trade date. Realized gains and losses on sales of portfolio securities
are calculated on the identified cost basis. Interest income is recorded on
the accrual basis. The Money Market and the U.S. Treasury Money Market
Series' amortize discounts and premiums on purchases of portfolio
securities as adjustments to income. For the Intermediate Term Series,
gains or losses resulting from discounts or premiums on purchased
securities are treated as capital gains or losses when realized upon
disposal. Federal Income Taxes: For federal income tax purposes, each
series of the Fund is treated as a separate taxable entity. It is each
Series' policy to continue to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable net income to its shareholders. Therefore, no federal income
tax provision is required. Equalization: The Intermediate Term Series
follows the accounting practice known as equalization by which a portion of
the proceeds from sales and costs of reacquisitions of its shares,
equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net
investment income per share is unaffected by sales or reacquisitions of the
shares. Reclassification of Capital Accounts: During the fiscal year, the
Fund began accounting for and reporting distributions to shareholders in
accordance with Statement of Position 93-2: Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. For the Intermediate Term
Series, the effect of adopting this statement was to decrease paid-in
capital by $1,972,302, increase accumulated net realized losses by $89,174
and increase undistributed net investment income by $2,061,476 compared to
amounts reported at November

B-26

<PAGE>

30, 1992. Current year net investment income, net realized losses and
net assets were not affected by this change. Deferred Organization
Expenses: Approximately $49,000 of expenses were incurred in connection
with the organization and initial registration of the U.S. Treasury Series
and such amount has been deferred and is being amortized over a period of
60 months ending December, 1995. Dividends and Distributions: The Money
Market Series and U.S. Treasury Money Market Series declare daily dividends
from net investment income and net short-term capital gains and losses.
Dividends are paid monthly. The Intermediate Term Series declares dividends
from net investment income daily; payment of dividends is made monthly.
Distributions of net capital gains, if any, are made annually. Income
distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles.

Note 2. Agreements The Fund has a management agreement
with Prudential Mutual Fund Management,
Inc. ("PMF"). Pursuant to this agreement, PMF has responsibility for
all investment advisory services and supervises the subadviser's
performance of such services. PMF has entered into a subadvisory agreement
with The Prudential Investment Corporation ("PIC"); PIC furnishes
investment advisory services in connection with the management of the Fund.
PMF pays for the cost of the subadviser's services, the compensation of
officers of the Fund, occupancy and certain clerical and bookkeeping costs
of the Fund. The Fund bears all other costs and expenses. The management
fee paid to PMF is computed daily and payable monthly, at an annual rate of
.40 of 1% of the average daily net assets of the Intermediate Term Series
and the U.S. Treasury Money Market Series. With respect to the Money Market
Series, prior to September 1, 1993, the management fee paid PMF was
computed daily and payable monthly, at an annual rate of .40 of 1% of its
average daily net assets. Effective September 1, 1993 the management fee of
the Money Market Series was reduced so that it is payable as follows: .40
of 1% of average daily net assets up to $1 billion, .375 of 1% of average
daily net assets between $1 billion and $1.5 billion and .35 of 1% in
excess of $1.5 billion. To reimburse Prudential Mutual Fund Distributors,
Inc. ("PMFD") as distributor of the shares of the Money Market Series and
the U.S. Treasury Money Market Series, each series has entered into a
distribution agreement pursuant to which each series pays PMFD a
reimbursement, accrued daily and payable monthly, at an annual rate of
.125% of each of the series' average daily net assets. PMFD pays various
broker-dealers, including Prudential Securities Incorporated ("PSI") and
Pruco Securities Corporation ("Pruco"), affiliated broker-dealers, for
account servicing fees and for the expenses incurred by such
broker-dealers. To reimburse PSI for its expenses as distributor of the
Intermediate Term Series, the Intermediate Term Series has entered into a
distribution agreement and a plan of distribution pursuant to which it pays
PSI a fee, accrued daily and payable monthly, at an annual rate of .25 of
1% of the lesser of (a) the aggregate sales of shares issued (not including
reinvestment of dividends and distributions) on or after July 1, 1985 (the
effective date of the plan) less the aggregate net asset value of any such
shares redeemed, or (b) the average net asset value of the shares issued
after the effective date of the plan. Distribution expenses include
commission credits to PSI branch offices for payments of commissions and
account servicing fees to financial advisers and an allocation on account
of overhead and other distribution-related expenses, the cost of printing
and mailing prospectuses to potential investors and of advertising incurred
in connection with the distribution of series shares. In addition, PSI pays
other broker-dealers, including PRUCO, an affiliated broker-dealer, for
account servicing fees and other expenses incurred by such broker-dealers
in distributing these shares. At any given time, the amount of expenses
incurred by PSI in distributing the Intermediate Term Series' shares may
exceed the total payments made pursuant to the plan. PSI, as distributor,
has advised the Intermediate Term Series that at November 30, 1993 the
amount of distribution expenses incurred by PSI and not yet reimbursed
approximated $11,441,000. This amount may be recovered through future
payments under the plan. In the event of termination or noncontinuation of
the plan, the Intermediate Term Series would not be contractually obligated
to pay PSI, as distributor, for any expenses not previously reimbursed
under the plan. PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC
are (indirect) wholly-owned subsidiaries of The Prudential Insurance
Company of America.

Note 3. Other Prudential Mutual Fund
Transactions Services, Inc. ("PMFS"), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the year ended November 30, 1993, the Fund incurred fees of approximately
$1,014,000,
B-27

<PAGE>

$275,000, and $61,000, respectively, for the Money Market Series,
Intermediate Term Series, and U.S. Treasury Money Market Series. As of
November 30, 1993, approximately $88,000, $24,000, and $5,000 of such fees
were due to PMFS from the Money Market Series, Intermediate Term Series and
U.S. Treasury Money Market Series, respectively. Transfer agent fees and
expenses in the Statement of Operations includes certain out-of-pocket
expenses paid to non-affiliates.

Note 4. Portfolio Purchases and sales of
Securities portfolio securities for the
Intermediate Term Series, other than short-term
investments, for the year ended November 30, 1993 were $183,520,156 and
$136,575,157, respectively.

As of November 30, 1993, the Intermediate Term Series had securities on
loan with an aggregate market value of $33,882,750. As of such date, the
collateral held for these securities loaned was as follows: United States
Treasury Notes in the principal amounts of $19,370,000, 6.375%, due 1/15/00
and $12,010,000, 8.50%, due 4/15/97; aggregate value including accrued
interest of $33,749,566. For the Intermediate Term Series, the cost basis
of investments for federal income tax purposes is substantially the same as
for financial reporting purposes and, accordingly, as of November 30, 1993,
net unrealized appreciation of investments for federal income tax purposes
is $6,750,492 (gross unrealized appreciation--$9,171,220; gross unrealized
depreciation--$2,420,728). For federal income tax purposes, the
Intermediate Term Series has a capital loss carryforward as of November 30,
1993 of approximately $67,624,000 of which $25,173,000 expires in 1995,
$11,426,000 expires in 1996, $19,180,000 expires in 1997, $6,864,000
expires in 1998, $4,746,000 expires in 1999, and $235,000 expires in 2001.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such
carryforward.

Note 5. Joint The Fund, along with other
Repurchase affiliated registered
Agreement Account investment companies,
transfers uninvested cash balances into a single
joint account, the daily aggregate balance of which is invested in one
or more repurchase agreements collateralized by U.S. Treasury or federal
agency obligations. As of November 30, 1993, the Money Market Series had an
8.48% undivided interest in the repurchase agreements in the joint account
and the Intermediate Term Series had a .14% undivided interest in the
repurchase agreements in the joint account. These undivided interests
represented $139,502,000 and $2,333,000 in principal amount, respectively,
for the Money Market Series and the Intermediate Term Series. As of such
date, the repurchase agreements in the joint account and the related
collateral were as follows: Bear Stearns & Co., 3.23%, dated 11/30/93, in
the principal amount of $484,000,000, repurchase price $484,043,426, due
12/1/93; collateralized by $190,685,000 U.S. Treasury Notes, 4.25%, due
11/30/95 and $300,000,000 U.S. Treasury Notes, 5.75%, due 8/15/03;
approximate aggregate value including accrued interest--$496,292,534.
Goldman Sachs & Co., 3.18%, dated 11/30/93, in the principal amount of
$287,000,000, repurchase price $287,025,352, due 12/1/93; collateralized by
$213,355,000 U.S. Treasury Bonds, 10.375%, due 11/15/12; approximate value
including accrued interest-- $297,013,953. Smith Barney Shearson, Inc.,
3.22%, dated 11/30/93, in the principal amount of $175,000,000, repurchase
price $175,015,653, due 12/1/93; collateralized by $20,000,000 U.S.
Treasury Bills, 3.22%, due 12/16/93; $20,000,000 U.S. Treasury Notes,
4.875%, due 1/31/94; $50,000,000 U.S. Treasury Bills, 3.22% due 3/24/94;
$560,000 U.S. Treasury Bills, 3.22%, due 3/31/94; $30,000,000 U.S. Treasury
Bonds, 7.50%, due 11/15/16; $19,455,000 U.S. Treasury Bonds, 8.125%, due
8/15/21 and $26,000,000 U.S. Treasury Bonds, 8.00%, due 11/15/21;
approximate aggregate value including accrued interest--$179,435,385. J.P.
Morgan Securities, Inc., 3.20%, dated 11/30/93, in the principal amount of
$325,000,000, repurchase price $325,028,889, due 12/1/93; collateralized by
$50,000,000 U.S. Treasury Notes, 4.25%, due 7/31/95; $23,113,000 U.S.
Treasury Notes, 6.00%, due 11/30/97; $50,000,000 U.S. Treasury Notes,
4.875%, due 1/31/94; $50,000,000 U.S. Treasury Notes, 8.625%, due 8/15/94;
$100,000,000 U.S. Treasury Notes, 5.75%, due 3/31/94 and $50,000,000 U.S.
Treasury Notes, 5.125%, due 2/28/98; approximate aggregate value including
accrued interest--$331,826,945. Kidder Peabody & Co., 3.23%, dated
11/30/93, in the principal amount of $375,000,000, repurchase price
$375,033,646, due 12/1/93; collateralized by $16,765,000 U.S. Treasury
Notes, 9.25%, due 1/15/96 and $298,000,000 U.S. Treasury Bonds, 8.125%, due
8/15/21; approximate aggregate value including accrued
interest--$387,047,017.

B-28

<PAGE>

Note 6. Capital Each series has authorized an
unlimited number of shares of beneficial interest
at $.01 par value. Transactions in shares of beneficial interest for the
Intermediate Term Series for the fiscal years ended November 30, 1993
and 1992 were as follows:

<TABLE>
<CAPTION>
Year Ended November 30,
--------------------------------
1993 1992
-------------- --------------
<S> <C> <C>
Shares sold.............. 18,902,083 11,512,760
Shares issued in
reinvestment of
dividends and
distributions.......... 1,439,530 1,256,381
Shares reacquired........ (16,203,923) (12,120,950)
-------------- --------------
Net increase............. 4,137,690 648,191
-------------- --------------
-------------- --------------
</TABLE>

B-29

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
MONEY MARKET SERIES
Financial Highlights
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
-------- ---------- ---------- ---------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ---------- ---------- ---------- --------
Net investment income..................................... 0.026 0.035 0.058 0.076 0.084
Dividends from net investment income...................... (0.026) (0.035) (0.058) (0.076) (0.084)
-------- ---------- ---------- ---------- --------
Net asset value, end of year.............................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ---------- ---------- ---------- --------
-------- ---------- ---------- ---------- --------
TOTAL RETURN#:............................................ 2.62% 3.57% 5.96% 7.83% 8.77%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of year (000)............................. $919,503 $1,026,187 $1,212,836 $1,355,058 $667,571
Average net assets (000).................................. $950,988 $1,113,759 $1,255,014 $857,385 $528,820
Ratios to average net assets:
Expenses, including distribution fees................... 0.72% 0.72% 0.65% 0.66% 0.68%
Expenses, excluding distribution fees................... 0.59% 0.60% 0.53% 0.53% 0.56%
Net investment income................................... 2.56% 3.42% 5.78% 7.52% 8.30%
<FN>
- ---------------
# Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of
each year reported and includes reinvestment of dividends and distributions.
</TABLE>
See Notes to Financial Statements.
B-30

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
INTERMEDIATE TERM SERIES
Financial Highlights
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
-------- ---------- ---------- ---------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $ 9.97 $ 10.00 $ 9.71 $ 9.96 $ 9.92
-------- ---------- ---------- ---------- --------
Income from investment operations
Net investment income..................................... 0.69 0.75 0.82 0.84 0.92
Net realized and unrealized gain (loss) on investment
transactions............................................ 0.11 (0.03) 0.31 (0.21) 0.12
-------- ---------- ---------- ---------- --------
Total from investment operations........................ 0.80 0.72 1.13 0.63 1.04
-------- ---------- ---------- ---------- --------
Less distributions
Dividends from net investment income...................... (0.69) (0.75) (0.84) (0.88) (1.00)
Tax return of capital distribution........................ (0.02) -- -- -- --
-------- ---------- ---------- ---------- --------
Total distributions....................................... (0.71) (0.75) (0.84) (0.88) (1.00)
-------- ---------- ---------- ---------- --------
Net asset value, end of year.............................. $ 10.06 $ 9.97 $ 10.00 $ 9.71 $ 9.96
-------- ---------- ---------- ---------- --------
-------- ---------- ---------- ---------- --------
TOTAL RETURN#............................................. 8.26% 7.40% 12.19% 6.73% 11.12%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of year (000)............................. $347,944 $303,451 $298,086 $328,458 $396,519
Average net assets (000).................................. $321,538 $294,388 $301,643 $354,064 $424,386
Ratios to average net assets:
Expenses, including distribution fees................... 0.80% 0.79% 0.79% 0.88% 0.86%
Expenses, excluding distribution fees................... 0.59% 0.58% 0.63% 0.63% 0.63%
Net investment income................................... 6.80% 7.47% 8.36% 8.60% 9.16%
Portfolio turnover rate................................... 44% 60% 151% 68% 186%
<FN>
- ---------------
# Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of
each year reported and includes reinvestment of dividends and distributions.
</TABLE>

See Notes to Financial Statements.
B-31

<PAGE>

PRUDENTIAL GOVERNMENT SECURITIES TRUST
U.S. TREASURY MONEY MARKET SERIES
Financial Highlights
<TABLE>
<CAPTION>
December 3,
1990*
Year Ended November 30, through
--------------------------- November 30,
1993 1992 1991
<S> <C> <C> <C>
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................................... $ 1.000 $ 1.000 $ 1.000
------------ ------------ ------------
Net investment income..................................................... 0.025 0.034 0.057(dag)(dag)
Dividends from net investment income...................................... (0.025) (0.034) (0.057)
------------ ------------ ------------
Net asset value, end of period............................................ $ 1.000 $ 1.000 $ 1.000
------------ ------------ ------------
------------ ------------ ------------
TOTAL RETURN#............................................................. 2.54% 3.46% 5.84%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C> <C>
Net assets, end of period (000)........................................... $284,978 $233,600 $288,922
Average net assets (000).................................................. $273,313 $263,459 $273,203
Ratios to average net assets:
Expenses, including distribution fees................................... 0.66% 0.66% 0.50%(dag)/(dag)(dag)
Expenses, excluding distribution fees................................... 0.53% 0.54% 0.38%(dag)/(dag)(dag)
Net investment income................................................... 2.49% 3.29% 5.74%(dag)/(dag)(dag)
<FN>
- ---------------
* Commencement of investment operations.
(dag) Annualized.
(dag)(dag) Net of expense subsidy.
# Total return is calculated assuming a purchase of shares on
the first day and a sale on the last day of
each period reported and includes reinvestment of dividends
and distributions. Total return for a period
of less than one year is not annualized.
</TABLE>

See Notes to Financial Statements.

B-32

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Trustees of
Prudential Government Securities Trust:

In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of the
Money Market Series, the Intermediate Term Series and the U.S. Treasury
Money Market Series (constituting The Government Securities Trust,
hereafter referred to as the "Fund") at November 30, 1993, the results of
each of their operations for the year then ended, the changes in each of
their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at November 30, 1993 by correspondence
with the custodian and brokers provide a reasonable basis for the opinion
expressed above.

PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
January 5, 1994

B-33