<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholder:
In 1993, most interest rates fell until September, when the
long-term Treasury bond began to retrace some of its course.
Although the decline in rates was not as pronounced for shorter
maturity securities, the five-year Treasury note's yield fell
to 5.2% on November 30, 1993 from 6.2% on November 30, 1992.
Low inflation, modest growth and the new budget deficit program have
been the primary forces behind this shift in rates.
The economy's variable growth and minimal inflation have
recently kept the Federal Reserve on the sidelines. Although
the Fed seems intent to increase rates at the slightest sign of
renewed inflation, those signals have not yet materialized. On
the contrary, most forecasting services have revised their
1993 growth estimates downward, to between 2.5% and 3.0%.
In 1993, two short-term benchmarks, the Fed funds rate (the
interbank lending rate) and the discount rate (the cost of funds
borrowed from the Fed) remained steady at 3.0%.
MONEY MARKET SERIES
The Money Market Series seeks high current income, preservation
of capital and maintenance of liquidity from a portfolio of
money market instruments issued by the U.S. government,
its agencies and instrumentalities. Although the rates of
money market instruments are as low as investors have seen
in about three decades, the Prudential Government Securities
Trust Money Market Series has produced competitive yields in
this environment.
<TABLE>
<CAPTION>
Money Market Series Update
As of November 30, 1993
7-Day Weighted Net Asset Total
Yield Avg Mat (WAM) Value (NAV) Net Assets
<S> <C> <C> <C> <C>
Money Market Series 2.60% 64 days $1.00 $919.5 mil.
Donoghue's Money Fund
Averages (Gov't)* 2.56% 59 days $1.00 N/A
</TABLE>
Past performance is no guarantee of future results
*This is the average 7-day yield, WAM and NAV of 201 funds in
Donoghue's Money Fund Average/U.S. Government category.
Please note that an investment in the Series is neither insured
nor guaranteed by the U.S. government and there can be no assurance
that the Fund will be able to maintain a stable net asset value of
$1.00 per share.
<PAGE>
Managing Maturity and Diversifying
Given the low rate environment, we have concentrated on two factors that
we hope will obtain optimal yields: The management of the Fund's weighted
average maturity and portfolio diversification. During the second and third
quarters of 1993, the average maturity of the portfolio was adjusted on
an ongoing basis to take advantage of the slight fluctuations in
short-term interest rates. This helped us prepare for the possibilities
of accelerated economic growth and higher interest rates.
We have also maintained a diversified portfolio. On November 30, 1993,
46% of the Series' assets were held in Treasury and other government
obligations and 41% were in repurchase agreements. We have shifted
15% of the portfolio to adjustable rate securities, which should respond
to increases in short-term interest rates.
INTERMEDIATE TERM SERIES
The Intermediate Term Series seeks high income consistent with
providing reasonable safety by investing primarily in a diversified
portfolio of short- to intermediate-term (up to 10 years) securities
issued by the U.S. government, its agencies or instrumentalities.
Currently, roughly 91% of assets are in U.S. Treasury securities.
In the past year, U.S. government bond prices reached historical
highs, driven by low interest rates, modest U.S. economic
growth and stable inflation. As you can see in the historical
performance chart below, the Intermediate Term Series provided
above-average returns in this environment.
<TABLE>
<CAPTION>
Cumulative Historical Investment Results1
As of November 30, 1993
Since
One Year Five Year Ten Year 9/22/82
<S> <C> <C> <C> <C>
Intermediate-Term Series 8.3% 54.7% 158.6% 180.2%
Lipper Intermediate U.S.
Gov't Bond Fund Avg.* 9.1% 57.2% 155.6% 177.4%
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns2
As of December 31, 1993
Since
One Year Five Year Ten Year 9/22/82
<S> <C> <C> <C> <C>
Intermediate-Term Series 7.4% 9.1% 9.9% 9.6%
</TABLE>
1Source: Prudential Mutual Fund Management, Inc. Past performance is no
guarantee of future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Shares of this Series are sold without
a sales charge.
2Source: Prudential Mutual Fund Management, Inc.
*These are the average returns of 62 funds
in the Intermediate U.S. Government Bond Fund category, as determined
by Lipper Analytical Services, Inc.
<PAGE>
The Series' net asset value (NAV) rose to $10.06 on November 30,
1993 from $9.97 a year ago. The Series' 30-day SEC yield as of
November 30, 1993 was 3.93%. The Series also paid monthly dividends
totaling $0.71 per share during the fiscal year ended November 30,
1993. Since interest rates have fallen to such lows, effective with
the November 1993 payment, the Series' monthly dividend
was reduced to $0.0575 from $0.060 per share to reflect the Series'
current earnings.
Shorter Maturity
On November 30, 1993, the portfolio had a short-term effective
maturity of 3.6 years. The Series' maturity will likely remain in
this range for the foreseeable future, as we expect interest rates
to continue their fairly flat course, or even begin to creep up.
If rates begin to rise, the Intermediate Term Series should be well
positioned as compared to longer duration funds.
Portfolio Activity
The Series' gains for the fiscal year reflect the returns generated
by the short- to intermediate-term Treasury securities in the portfolio,
which appreciated in price as rates fell. Then, uncertainty about the health
of the stock market and inflation worries caused the bond market and the
Series to experience volatility at the end of September.
Our goal is to offer competitive income in this environment, while
positioning the Series to withstand price
fluctuations as much as possible if rates start to rise. Of course,
there can be no assurance that we will achieve such goal.
U.S. TREASURY MONEY MARKET SERIES
The U.S. Treasury Money Market Series seeks high current income,
consistent with preservation of capital and maintenance of liquidity
from a portfolio of U.S. Treasury obligations with maturities of 13
months or less. While market interest rates are the lowest they have
been in almost 30 years, the U.S. Treasury Money Market
Series has produced competitive returns.
<TABLE>
<CAPTION>
U.S. Treasury Money Market Series Update
As of November 30, 1993
7-Day Weighted Net Asset Total
Yield Avg Mat (WAM) Value (NAV) Net Assets
<S> <C> <C> <C> <C>
U.S. Treasury Series 2.48% 67 days $1.00 $285.0 mil.
Donoghue's Money Fund
Averages (Gov't.)* 2.56% 59 days $1.00 N/A
</TABLE>
Past performance is no guarantee of future results
*This is the average 7-day yield, WAM and NAV of
201 funds in Donoghue's Money Fund Averages/U.S. Government category.
SHAREHOLDER UPDATE
We are pleased to announce that David Graham recently joined Prudential
Investment Advisors as portfolio manager of the Intermediate-Term Series.
David has experience in the government and mortgage-backed securities market
after managing over $2.0 billion at Equitable Capital Management and Alliance
Capital Management Group. David began his career with both an M.B.A. and a
B.S. in Finance from Indiana University.
<PAGE>
Please note that 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.
Reacting to the Market
For most of 1993, the economic recovery's strength was uncertain,
and we maintained a longer average maturity than most of our competitors.
This decision helped us capture higher yields available in longer
maturities. With short-term rates near decade lows in the third
quarter, however, the economy began to show renewed signs of life.
In addition, the U.S. Treasury's decision to shift more borrowing to
the short-term part of the yield curve caused some supply pressures in the
money markets. These factors could lead to higher rates in the coming
months, so we reduced the Series' average maturity to a more neutral
position. This should benefit the Series if rates continue to creep
up, and we plan to maintain this
position until the economic outlook for 1994 becomes clearer.
LOOKING AHEAD
Looking to 1994, we anticipate interest rates will continue to
fluctuate as economic data are being released, and volatility could
last until the next Treasury auction of long-term bonds, scheduled
for February. Barring any extreme rise in inflation, rates should
settle down once supply has been absorbed and the markets adjust to
the new auction schedule, which is heavy on short-term debt and limits
long-term issues to only twice per year. If economic growth in 1994
picks up|as it appears to be in the final quarter of 1993|the Federal
Reserve may raise short-term rates next year to counteract the threat
of inflation.
Sincerely,
Lawrence C. McQuade Bernard Whitsett
President Portfolio Manager
Money Market
David Graham John H. Anderson Jr.
Portfolio Manager Portfolio Manager
Intermediate-Term Series U.S. Treasury Money Market Series
<PAGE>
<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>
--5-- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>
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>
--6-- See Notes to Financial Statements.
<PAGE>
<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.
--7-- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>
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.
--8-- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>
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
------------
------------
- ---------------
* Federal income tax basis of portfolio securities is
the same as for financial reporting purposes.
</TABLE>
--9-- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Statement of Assets and Liabilities
November 30, 1993
<TABLE>
<CAPTION>
US TREASURY
MONEY MONEY
MARKET INTERMEDIATE MARKET
Assets SERIES TERM SERIES SERIES
------------ ------------ -----------
<S> <C> <C> <C>
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.
--10--
<PAGE>
<PAGE>
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Statement of Operations
Year Ended November 30, 1993
<TABLE>
<CAPTION>
US TREASURY
MONEY MONEY
MARKET INTERMEDIATE MARKET
Net Investment Income SERIES TERM SERIES SERIES
----------- ------------ -----------
<S> <C> <C> <C>
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.
--11--
<PAGE>
<PAGE>
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
US TREASURY
MONEY MARKET INTERMEDIATE MONEY MARKET
SERIES TERM SERIES SERIES
--------------------------------- --------------------------- ---------------------------------
Year Ended November 30,
Increase (Decrease) ---------------------------------------------------------------------------------------------------
in Net Assets 1993 1992 1993 1992 1993 1992
--------------- --------------- ------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Operations
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
--------------- --------------- ------------ ------------ --------------- ---------------
--------------- --------------- ------------ ------------ --------------- ---------------
- ---------------
*At $1.00 per share for the Money Market Series and the U.S. Treasury Money Market Series.
</TABLE>
See Notes to Financial Statements.
--12--
<PAGE>
<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
--13--
<PAGE>
<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,
--14--
<PAGE>
<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.
--15--
<PAGE>
<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>
--16--
<PAGE>
<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%
</TABLE>
<TABLE>
<C> <S>
- ---------------
# 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.
--17--
<PAGE>
<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%
</TABLE>
- ---------------
<TABLE>
<C> <S>
# 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.
--18--
<PAGE>
<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++
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%
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
Ratios to average net assets:
Expenses, including distribution fees................................... 0.66% 0.66% 0.50%+/++
Expenses, excluding distribution fees................................... 0.53% 0.54% 0.38%+/++
Net investment income................................................... 2.49% 3.29% 5.74%+/++
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Commencement of investment operations.
+ Annualized.
++ 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.
--19--
<PAGE>
<PAGE>
Past performance is not predictive of future performance and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in Prudential Government Securities Trust:
Intermediate Term Series with a similar investment in the Lehman Brothers
Intermediate Government Bond Index (LBGI) by portraying the initial account
value on the December 1, 1983 and subsequent account value at the end of each
fiscal year (November 30), as measured on a quarterly basis. For purposes of the
graph and, unless otherwise indicated, the accompanying table, it has been
assumed that all recurring fees (including management fees) were deducted and
all dividends and distributions were reinvested.
The LBGI is a weighted index comprised of securities issued or backed by the
U.S. government, its agencies and instrumentalities with a remaining maturity of
one to ten years. The LBGI is an unmanaged index and includes the reinvestment
of all dividends, but does not reflect the payment of transaction costs and
advisory fees associated with an investment in the Fund. The securities that
comprise the LBGI may differ substantially from the securities in the Fund's
portfolio. The LBGI is not the only index that may be used to characterize
performance of income funds and other indices may portray different comparative
performance.
--20--
<PAGE>
<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
Prudential 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
IMPORTANT NOTICE FOR
CERTAIN SHAREHOLDERS
We are required by New York, California, Massachussets and Oregon to inform
you that dividends which have been derived from interest on federal obligations
are not taxable to shareholders providing the mutual fund meets certain
requirements mandated by the respective state's taxing authorities. We are
pleased to report that 46.8% of the dividends paid by the Money Market Series,
93.8% of the dividends paid by the Intermediate Term Series and 100% of the
dividends paid by the U.S. Treasury Money Market Series qualify for such
deduction.
Shortly after the close of the calendar year ended December 31, 1993, you
will be advised as to the federal tax status of the dividends you received in
calendar 1993. In addition, you will also be advised at that time as to the
portion of your dividends which might be exempt for other state's tax purposes.
For more detailed information regarding your state and local taxes, you
should contact your tax adviser or the state/local taxing authorities.
--21--
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Trustees
Delayne D. Gold
Arthur Hauspurg
Thomas J. McCormack
Lawrence C. McQuade
Stephen P. Munn
Edwin F. Payne
Louis A. Weil, III
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote', Treasurer
S. Jane Rose, Secretary
Ronald Amblard, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852
Collect (908) 417-7555
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by
a current prospectus.
744342205 MF100E-3
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