<PAGE>
SEMIANNUAL REPORT MAY 31, 2000
Prudential Government Securities Trust/
Money Market Series, Short-Intermediate Term Series, &
U.S. Treasury Money Market Series
FUND TYPE Money Market (Government Securities for Short-
Intermediate Term Series)
OBJECTIVE Money Market Series: High current income,
preservation of capital, and
maintenance of liquidity. Short-Intermediate Term Series:
High level of income consistent with providing reasonable
safety. U.S. Treasury Money Market Series: High current
income consistent with the preservation of principal and liquidity.
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
The views expressed in this report and information about
the Trust's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
The Money Market Series seeks high current income,
preservation of capital, and maintenance of liquidity.
The Series invests in a diversified portfolio of money
market securities maturing in 13 months or less that were
issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. There can be no assurance
that the Series will achieve its investment objective.
The U.S. Treasury Money Market Series seeks high current
income consistent with the preservation of capital and
liquidity. The Series invests in a portfolio of U.S.
Treasury obligations with maturities of 13 months or
less. The U.S. government guarantee applies only to the
underlying securities of these Series, and not to the
value of the Series' shares. There can be no assurance
that the Series will achieve its investment objective.
Performance As of 5/31/00
Money Market
Series 7-Day Net Asset Weighted Avg. Net Assets
Current Yld.* Value (NAV) Mat. (WAM) (Millions)
Class A 5.42% $1.00 55 Days $542
Class Z 5.54% $1.00 55 Days $ 30
iMoneyNet, Inc.
MFR's U.S.
Gov't & Agencies
Avg.** 5.66% $1.00 46 Days N/A
U.S. Treasury
Money Market
Series
Class A 5.01% $1.00 58 Days $303
Class Z 5.13% $1.00 58 Days $ 3
iMoneyNet, Inc. 100%
U.S. Treasuries Avg.** 5.23% $1.00 61 Days N/A
* Yields will fluctuate from time to time, and past
performance is not indicative of future results.
An investment in the Series is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency. Although the Series seeks to preserve
the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Series.
** iMoneyNet, Inc. reports a seven-day current yield,
NAV, and WAM on Tuesdays. This is the data of all funds
in the iMoneyNet, Inc. MFR's U.S. Government & Agencies
and 100% U.S. Treasuries Average categories as of May 30,
2000.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
The Short-Intermediate Term Series seeks a high level of
income consistent with providing reasonable safety. The
Series invests at least 65% of its total assets in U.S.
government securities, including U.S. Treasury bills,
notes, bonds, and other debt securities issued or
guaranteed by the U.S. government, its agencies,
or instrumentalities. It is anticipated that the
dollar-weighted average maturity of this Series will be
more than two years, but less than five. There can be no
assurance that the Series will achieve its investment
objective.
Cumulative Total Returns1 As of 5/31/00
Short-Int.
Term Series Six One Five Ten Since
Months Year Years Years Inception2
Class A 1.13% 2.56% 25.87% 82.40% 271.66%
Class Z 1.22 2.74 N/A N/A 15.40
Lipper Short-
Intermediate
U.S. Gov't
Fund Avg.3 1.04 2.11 26.46 86.26 ***
Average Annual Total Returns1 As of 6/30/00
Short-Int.
Term Series One Five Ten Since
Year Years Years Inception2
Class A 4.91% 4.81% 4.58% 6.15%
Class Z 5.04 N/A N/A 4.95
Distributions and Yields1 As of 5/31/00
Short-Int.
Term Series Total Distributions 30-Day
Paid for Six Months SEC Yield2
Class A $0.23 5.77%
Class Z $0.24 5.95
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or
less than their original cost.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. Shares of this Series are sold without an
initial or contingent deferred sales charge. Class Z
shares are not subject to distribution and service (12b-1) fees.
2 Inception dates: Class A, 9/22/82; Class Z, 2/26/97.
3 These are the average returns for all funds in each
share class in the Lipper Short-Intermediate U.S. Gov't
Fund category for the six-month, one-, five-, and ten-
year periods. The Lipper average is unmanaged. Short-
Intermediate U.S. Government funds invest at least 65% of
their assets in securities issued
or guaranteed by the U.S. government, its agencies, or
instrumentalities, with dollar-weighted average
maturities of one to five years.
*** Lipper Since Inception returns are 275.30% for Class
A and 15.19% for Class Z, based on all funds in each
share class.
1
<PAGE>
(LOGO) July 17, 2000
Dear Shareholder,
Prudential Government Securities Trust offers three
investment choices-two money market portfolios and a
portfolio designed to provide higher yields by investing
in short- and intermediate-term securities. The Money
Market Series and the U.S. Treasury Money Market Series
maintained net asset values of $1 per share while taking
advantage of attractive investment opportunities that
emerged as the Federal Reserve increased short-term
interest rates during our six-month review period ended
May 31, 2000.
The rise in short-term rates generally pushed yields on
short- and intermediate-term bonds higher, which caused
their prices to fall. As a result, the Short-Intermediate
Term Series posted very modest positive returns for our
review period, as did its benchmark Lipper Average.
High-quality investments can help reduce risk
Having a conservative, high-quality investment
alternative such as a money market fund generally made
good sense for investors who were concerned about
volatile conditions in the financial markets.
Indeed, investors may do well to consider allocating some
of their assets to a money market fund as part of their
overall investment strategy. For any of life's unexpected
events, it is reassuring to have access to your money and
an investment vehicle that may provide relative safety of
principal and liquidity.
Thank you for your continued confidence in Prudential
mutual funds.
Sincerely,
John R. Strangfeld, President
Prudential Government Securities Trust/Money Market Series
Prudential Government Securities Trust/U.S. Treasury
Money Market Series
Prudential Government Securities Trust/Short-Intermediate
Term Series
2
<PAGE>
Prudential Government Securities Trust Money Market Series
Semiannual Report May 31, 2000
INVESTMENT ADVISER'S REPORT
MONEY MARKET SERIES
The six months ended May 31, 2000, were ripe with
attractive opportunities to invest in money market
securities. The Federal Reserve increased short-term
interest rates three times, which pushed some money
market yields to their highest levels in roughly five
years. Our investment strategy enabled the Series to take
advantage of this trend.
We increased the Series' exposure to federal agency securities whose
interest rates adjusted either daily, weekly, or monthly.
As rates on these securities reset to higher levels, the
Series' yields increased. Adjustable-rate securities
accounted for more than 50% of the Series' total
investments as of May 31, 2000.
The Fed boosted short-term rates in order to reduce U.S.
economic growth and rein in inflation. Increased rates
led to higher lending rates for consumers and businesses,
which the Fed hoped would cool off the economy. The
central bank raised the federal funds rate (the rate U.S.
banks charge each other for overnight loans) by a quarter
of a percentage point in February and March, and by half
of a percentage point in May. These moves lifted the key
rate to 6.50%. The central bank also boosted the discount
rate that member banks pay to borrow from the Federal Reserve
system to 6.00%.
The changes in monetary policy had the greatest impact on
shorter-term money market instruments. Securities
maturing in six months often yielded nearly as much (and
for a brief time, more) than securities due in one year.
Therefore, among fixed-rate money market securities, we
primarily purchased three- to six-month securities because they
offered the most attractive yields on a relative basis.
3
<PAGE>
Prudential Government Securities Trust U.S. Treasury
Money Market Series
Semiannual Report May 31, 2000
INVESTMENT ADVISER'S REPORT
U.S. TREASURY MONEY MARKET SERIES
Cash flows in and out of U.S. Treasury money funds were
volatile during the six-month period ended May 31, 2000,
as is typical for this time of year. Shortly after the
period began in December, cash flooded into this class of
money funds as some investors carried out their year-end
strategies for managing taxes. Other investors sought the safety of
Treasuries amid concern that computers might malfunction
when switching their internal dates from December 31,
1999, to January 1, 2000.
Accordingly, we purchased very short-term Treasuries as
money flowed into the Series. Treasuries were very
expensive during this time because there was strong
demand for a limited supply of these securities. However,
after the largely uneventful transition to Y2K, demand
for Treasury bills faded, while the Series' assets
declined to more normal levels as shareholders
withdrew money because Y2K concerns proved to be
unfounded. We raised money through our maturing
Treasuries and by selling some of our existing holdings
in early January 2000 to satisfy shareholder redemptions.
Investors' attention turned to the Federal Reserve as the
central bank increased short-term rates in February,
March, and May 2000 to slow U.S. economic growth and head
off higher inflation. As the Fed pushed short-term rates
higher, yields on Treasury bills also climbed (and their
prices fell). Yet they remained expensive compared to
other types of money
market securities. Among Treasury bills, those maturing
in six months offered the most attractive yields on a
relative basis. However, we limited our purchases of six-
month Treasuries in order to minimize the Series'
exposure to interest rate volatility.
4
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
INVESTMENT ADVISER'S REPORT
SHORT-INTERMEDIATE TERM SERIES
The Federal Reserve raised short-term interest rates on
three separate occasions during our six-month review
period ended May 31, 2000. In total, these moves
increased the federal funds rate (the rate U.S. banks
charge each other for overnight loans) by one percentage
point to 6.50%. The central bank also increased the
discount rate that member banks pay to borrow from the
Federal Reserve system by the same amount, which lifted
that rate to 6.00%.
The Fed repeatedly tightened monetary policy in order to
slow strong U.S. economic growth, which threatened to
boost inflationary pressures if left unchecked. The three
rate hikes also forced yields on short- and intermediate-
term bonds higher (and their prices lower), leading to
modest returns for the Series during our review period.
For the six months, the Series' Class A shares slightly
outperformed their benchmark Lipper Average.
Buyback plan stirred U.S. Treasury market
Besides the changes in monetary policy, the U.S. Treasury
market was also affected by two important developments.
The U.S. Treasury Department announced that it planned to
buy back up to $30 billion in Treasury securities by the
end of 2000. This program was prompted by the growing
federal budget surpluses that have reduced the need for
government borrowing. The department also said it would
cut back issuance of new five- and 10-year Treasury notes
and 30-year Treasury bonds. The prospect of a decreased
supply and an increased demand for Treasuries drove
yields lower (and prices higher), especially among long-
term Treasuries.
5
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Semiannual Report May 31, 2000
The combined effect of the Fed's rate hikes (pushing yields on short-
and intermediate-term bonds higher) and the Treasury's
buyback program (driving yields on long-term bonds lower)
caused an inversion of the Treasury yield curve, which is
a graph that depicts bond yields from the shortest to the
longest maturities. Normally, investments with longer
maturities provide higher yields in order to compensate
for the greater risk associated with investing for a
longer period of time. But on May 31, 2000, the two-year
Treasury yield stood at 6.67% compared to 6.00% on the
30-year Treasury bond yield.
We sold Treasuries and bought
mortgage-related securities
The declining supply of Treasuries helped that market to
perform better than other U.S. fixed-income markets for
the six months that ended on May 31, 2000. Prices of both
mortgage-backed securities and federal agency securities
lagged gains in the prices of Treasuries, which caused
the difference between their yields and yields on
Treasuries to increase significantly. We took advantage
of this trend by selling Treasuries to buy mortgage-
related investments. Specifically, we purchased
collateralized mortgage obligations (CMOs) that were
structured so that their cash flows would be less likely
to be affected by prepayments on the underlying
mortgages.
We also maintained a considerable exposure to 15-year
Fannie Mae mortgage pass-through securities. Together with our CMO
holdings, mortgage-related investments accounted for 45%
of the Series' total investments as of May 31, 2000-up
from 27% at the beginning of our review period.
By contrast, Treasury holdings fell to 9% from 23%.
6
<PAGE>
www.prudential.com (800) 225-1852
LOOKING AHEAD
While some signs of slower U.S. economic growth have
emerged, we believe that more increases in short-term
rates may be necessary later in the year to keep the
resilient economy from overheating. However, the Fed may
have less flexibility in timing any further moves this
year due to the upcoming elections in November.
The potential for further rate hikes, combined with
continued buybacks of longer-term Treasuries, may mean
that the Treasury yield curve will remain inverted.
Meanwhile, we continue to find mortgage-backed securities
and federal agency securities attractive because their
yields are unusually high relative to yields on
comparable Treasuries.
Prudential Government Securities Trust Fund Management Team
7
<PAGE>
Prudential Government Securities Trust Money Market Series
Portfolio of Investments as of May 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
Federal Farm Credit Bank 0.9%
$ 5,000 5.85%, 12/1/00 $ 4,994,025
-------------------------------------------------------------------------------------
Federal Home Loan Bank 47.3%
5,000 5.35%, 6/8/00 4,999,931
4,500 5.66%, 7/6/00 4,500,575
12,000 6.325%, 7/12/00, F.R.N. 11,999,328
2,650 5.48%, 7/13/00, F.R.N. 2,647,919
7,000 5.875%, 9/7/00 6,999,194
4,500 Zero Coupon, 9/15/00 4,426,303
28,500 6.13%, 10/4/00, F.R.N. 28,493,306
24,000 6.205%, 10/4/00, F.R.N. 23,996,369
5,000 5.705%, 10/6/00 4,996,761
15,000 6.593%, 10/6/00, F.R.N. 15,009,866
7,000 5.915%, 10/13/00 6,997,745
24,000 6.61%, 10/20/00, F.R.N. 23,993,528
9,000 6.04%, 10/25/00 8,959,103
1,500 5.965%, 12/1/00 1,498,853
4,000 5.99%, 12/6/00 3,996,856
23,000 6.36%, 3/16/01 22,991,241
7,000 6.52%, 3/28/01 6,995,628
7,000 6.625%, 4/6/01 6,994,607
17,000 6.37%, 4/12/01, F.R.N. 17,000,000
48,000 6.238%, 4/19/01, F.R.N. 47,979,251
14,000 6.293%, 5/10/01, F.R.N. 13,993,422
---------------
269,469,786
-------------------------------------------------------------------------------------
Federal National Mortgage Association 23.5%
6,500 5.33%, 6/9/00 6,499,871
1,700 8.90%, 6/12/00 1,701,405
5,000 5.46%, 6/21/00 4,997,783
3,000 6.03875%, 6/22/00, F.R.N. 2,999,764
5,000 5.90%, 7/6/00 4,998,706
14,500 6.485%, 8/9/00, F.R.N. 14,497,403
7,000 5.80%, 8/17/00 6,998,597
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust Money Market Series
Portfolio of Investments as of May 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,000 5.93125%, 9/6/00, F.R.N. $ 2,999,666
24,000 6.84%, 9/18/00, F.R.N. 23,998,574
3,000 5.97%, 10/2/00 3,000,558
7,000 6.515%, 11/17/00, F.R.N. 6,996,477
12,000 6.795%, 11/6/00, F.R.N. 11,995,351
12,500 5.90%, 12/1/00 12,485,351
26,300 6.47%, 2/16/01 26,249,155
4,000 6.52%, 3/16/01 3,995,086
---------------
134,413,747
-------------------------------------------------------------------------------------
Student Loan Marketing Association 7.9%
4,000 5.129%, 6/30/00, F.R.N. 3,996,085
24,000 6.68%, 10/04/00, F.R.N. 23,993,592
12,000 6.845%, 10/27/00 11,998,787
5,000 6.505%, 2/7/01 4,999,314
---------------
44,987,778
-------------------------------------------------------------------------------------
Repurchase Agreements(a) 19.9%
14,754 Joint Repurchase Agreement Account,
6.31%, 5/31/00
(cost $14,754,000; Note 5) 14,754,000
20,374 Morgan Stanley Dean Witter & Co., 6.40% dated
5/25/00, due 6/1/00 in the amount of $20,402,976
(cost $20,374,000; the value of the collateral
including accrued interest was $20,924,664) 20,374,000
24,993 Morgan Stanley Dean Witter & Co., 6.41% dated
5/26/00, due 6/1/00 in the amount of $25,024,151
(cost $24,993,000; the value of the collateral
including accrued interest was $25,668,506) 24,993,000
3,071 Morgan Stanley Dean Witter & Co., 6.48% dated
5/30/00, due 6/1/00 in the amount of $3,072,106
(cost $3,071,000; the value of the collateral
including accrued interest was $3,154,002) 3,071,000
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Government Securities Trust Money Market Series
Portfolio of Investments as of May 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 50,000 Salomon Smith Barney Inc., 6.48% dated 5/31/00, due
6/1/00 in the amount of $50,063,000 (cost
$50,000,000; the value of the collateral including
accrued interest was $51,000,001) $ 50,000,000
---------------
113,192,000
---------------
Total Investments 99.5%
(amortized cost $567,057,336(b)) 567,057,336
Other assets in excess of liabilities 0.5% 3,123,213
---------------
Net Assets 100% $ 570,180,549
---------------
---------------
</TABLE>
------------------------------
F.R.N.--Floating Rate Note. The interest rate reflected is the rate in effect at
May 31, 2000.
(a) Repurchase Agreements are collateralized by U.S. Treasury or Federal agency
obligations.
(b) Federal income tax basis of portfolio securities is the same as for
financial reporting purposes.
10 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Portfolio of Investments as of May 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 97.3%
-------------------------------------------------------------------------------------
Asset-Backed 6.3%
Capital One Master Trust
$ 5,000(a)(b) 5.43%, Ser. 98-4 A, 1/15/07 $ 4,671,875
Premier Auto Trust
2,865(a)(b) 5.77%, Ser. 98-2 A3, 1/6/02 2,858,276
---------------
7,530,151
-------------------------------------------------------------------------------------
U.S. Government Agency Mortgage Pass-Through Obligations 17.6%
Federal Home Loan Mortgage Association
19,000 6.50%, 12/1/99 I/O 18,038,030
598(a)(b) 9.00%, 9/01/05 - 11/01/05 603,487
51 7.375%, 3/01/06 50,158
2,281(a)(b) 7.50%, 4/01/10 - 12/01/10 2,257,772
---------------
20,949,447
-------------------------------------------------------------------------------------
U.S. Government Agency Obligation 37.2%
Federal Home Loan Bank
15,000(a)(b) 5.375%, 3/2/01 14,817,150
Federal National Mortgage Association
10,000(b) 5.50%, 10/12/01 I/O 9,770,300
15,600(b) 5.625%, 5/14/04 14,649,336
5,000(a)(b) 6.30%, 9/25/02 4,883,600
---------------
44,120,386
-------------------------------------------------------------------------------------
U.S. Treasury Notes 8.8%
8,480 6.75%, 5/15/05 8,554,200
1,850(a)(b) 6.875%, 5/15/06 1,876,881
---------------
10,431,081
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Portfolio of Investments as of May 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Collateralized Mortgage Obligations 27.4%
Federal Home Loan Mortgage Corp.,
$ 13,846(b) 5.75%, 4/15/10 $ 13,391,344
5,500 6.50%, 7/15/10 5,257,615
Federal National Mortgage Association
2,104 6.00%, 6/25/08 1,947,243
12,162 7.00%, 1/18/24 11,929,743
---------------
32,525,945
---------------
Total long-term investments
(cost $117,607,285) 115,557,010
---------------
SHORT-TERM INVESTMENTS 17.7%
-------------------------------------------------------------------------------------
Commercial Paper 4.0%
Walmart Stores, Inc.
4,700 6.52%, 6/13/00
(cost $4,689,785) 4,689,785
-------------------------------------------------------------------------------------
Repurchase Agreement 13.7%
16,294 Joint Repurchase Agreement Account
6.31%, 6/1/00
(cost $16,294,000; Note 5) 16,294,000
---------------
Total short-term investments
(cost $20,983,785) 20,983,785
---------------
-------------------------------------------------------------------------------------
Total Investments 115.0%
(amortized cost $138,591,071; Note 4) 136,540,795
Liabilities in excess of other assets (15.0%) (17,786,617)
---------------
Net Assets 100% $ 118,754,178
---------------
---------------
</TABLE>
------------------------------
I/O--Interest only.
(a) All or portion of securities segregated as collateral for dollar rolls.
(b) Mortgage dollar roll, see Note 1 and Note 4.
12 See Notes to Financial Statements
<PAGE>
Prudential Government Securities
Trust U.S. Treasury Money Market Series
Portfolio of Investments as of May 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
United States Treasury Bills 30.1%
$ 14,027 5.25%, 6/1/00 $ 14,027,000
54,085 5.35%, 6/8/00 54,027,360
18,130 5.37%, 6/22/00 18,073,207
5,726 5.41%, 6/22/00 5,707,930
---------------
91,835,497
-------------------------------------------------------------------------------------
United States Treasury Notes 41.6%
3,485 5.375%, 6/30/00 3,484,047
7,395 6.00%, 8/15/00 7,404,085
4,571 6.25%, 8/31/00 4,579,508
1,020 4.50%, 9/30/00 1,016,374
6,325 6.125%, 9/30/00 6,337,514
23,025 4.00%, 10/31/00 22,847,026
13,815 5.75%, 11/15/00 13,772,600
22,792 4.625%, 11/30/00 22,647,631
24,533 4.625%, 12/31/00 24,267,588
15,000 5.50%, 12/31/00 14,901,311
1,000 4.875%, 3/31/01 988,265
5,000 5.00%, 4/30/01 4,942,766
---------------
127,188,715
---------------
Total Investments 71.7%
(amortized cost $219,024,212(a)) 219,024,212
Other assets in excess of liabilities 28.3% 86,415,658
---------------
Net Assets 100% $ 305,439,870
---------------
---------------
------------------------------
(a) Federal income tax basis of Portfolio securities is the same as for financial
reporting purposes.
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Government Securities Trust As of May 31, 2000 (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Short- U.S. Treasury
Money Intermediate Money
Market Series Term Series Market Series
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost
$453,865,336, $138,591,071 and
$219,024,212, respectively) $ 453,865,336 $120,246,795 $ 219,024,212
Repurchase agreements, at value (cost
$113,192,000, $16,294,000 and $0,
respectively) 113,192,000 16,294,000 --
Cash 142,937 131,288 --
Receivable for investments sold -- 9,280,000 99,905,399
Interest receivable 5,600,472 705,335 1,328,124
Receivable for Series shares sold 3,256,396 130,409 2,790,395
Deferred expenses and other assets 11,692 3,384 5,514
Securities lending income receivable -- 1,119 --
------------- ------------ --------------
Total assets 576,068,833 146,792,330 323,053,644
------------- ------------ --------------
LIABILITIES
Payable for investments purchased -- 27,327,531 10,165,166
Payable for Series shares reacquired 4,889,315 276,896 6,742,418
Dividends payable 679,412 155,100 344,501
Management fee payable 196,158 40,407 108,642
Distribution fee payable 31,809 9,347 18,389
Accrued expenses and other liabilities 91,590 217,933 234,658
Due to broker - variation margin -- 10,938 --
------------- ------------ --------------
Total liabilities 5,888,284 28,038,152 17,613,774
------------- ------------ --------------
NET ASSETS $ 570,180,549 $118,754,178 $ 305,439,870
------------- ------------ --------------
------------- ------------ --------------
Net assets were comprised of:
Shares of beneficial interest, at
par ($.01 per share) $ 5,701,805 $ 127,773 $ 3,054,399
Paid-in capital in excess of par 564,478,744 153,466,600 302,385,471
------------- ------------ --------------
570,180,549 153,594,373 305,439,870
Undistributed net investment income 273,708 --
Accumulated net realized losses -- (33,083,940) --
Net unrealized depreciation on
investments -- (2,029,963) --
------------- ------------ --------------
Net assets, May 31, 2000 $ 570,180,549 $118,754,178 $ 305,439,870
------------- ------------ --------------
------------- ------------ --------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust As of May 31, 2000 (Unaudited)
Statement of Assets and Liabilities Cont'd.
<TABLE>
<CAPTION>
Short- U.S. Treasury
Money Intermediate Money
Market Series Term Series Market Series
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
Class A:
Net asset value, offering price and
redemption price per share
($540,042,825 / 540,042,825
shares of beneficial interest
issued and outstanding) $1.00
-------------
-------------
($111,596,668 / 12,010,223
shares of beneficial interest
issued and outstanding) $9.29
------------
------------
($302,803,819 / 302,803,819
shares of beneficial interest
issued and outstanding) $1.00
--------------
--------------
Class Z:
Net asset value, offering price and
redemption price per share
($30,137,724 / 30,137,724 shares
of beneficial interest issued
and outstanding) $1.00
-------------
-------------
($7,157,510 / 767,031 shares of
beneficial interest issued and
outstanding) $9.33
------------
------------
($2,636,051 / 2,636,051 shares
of beneficial interest issued
and outstanding) $1.00
--------------
--------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Government Securities Trust Six Months Ended May 31, 2000
(Unaudited)
Statement of Operations
<TABLE>
<CAPTION>
Short- U.S. Treasury
Money Intermediate Money
Market Series Term Series Market Series
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
Net Investment Income
Income
Interest $17,688,264 $ 3,917,919 $ 12,887,963
Income from securities loaned, net -- 1,111 --
------------- ------------ --------------
17,688,264 3,919,030 12,887,963
Expenses
Management fee 1,193,984 251,828 952,173
Distribution fee--Class A 352,495 110,771 296,171
Transfer agent's fees and expenses 946,000 100,000 102,000
Custodian's fees and expenses 37,000 32,000 6,000
Reports to shareholders 35,000 31,000 10,000
Audit fee and expenses 12,000 17,000 13,000
Legal fees and expenses 15,000 17,000 7,000
Registration fees 63,000 10,000 3,000
Trustees' fees and expenses 10,000 6,000 6,800
Insurance expenses 6,000 1,000 2,000
Miscellaneous 2,507 2,744 1,486
------------- ------------ --------------
Total expenses 2,672,986 579,343 1,399,630
------------- ------------ --------------
Net investment income 15,015,278 3,339,687 11,488,333
------------- ------------ --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on:
Investment transactions 16,963 (2,415,076) 27,431
Financial futures contracts -- 15,638 --
------------- ------------ --------------
16,963 (2,399,438) 27,431
------------- ------------ --------------
Net change in unrealized
appreciation/depreciation on:
Investments -- 470,715 --
Financial futures contracts -- 8,610 --
------------- ------------ --------------
-- 479,325 --
------------- ------------ --------------
Net gain (loss) on investments 16,963 (1,920,113) 27,431
------------- ------------ --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $15,032,241 $ 1,419,574 $ 11,515,764
------------- ------------ --------------
------------- ------------ --------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust Money Market Series
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, November 30,
2000 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 15,015,278 $ 26,611,013
Net realized gain on investment
transactions 16,963 22,795
---------------- ---------------
Net increase in net assets resulting
from operations 15,032,241 26,633,808
---------------- ---------------
Dividends from net investment income (Note
1):
Class A (14,187,892) (25,186,601)
Class Z (844,349) (1,447,207)
---------------- ---------------
(15,032,241) (26,633,808)
---------------- ---------------
Series share transactions(a) (Note 6):
Net proceeds from shares subscribed 649,256,700 1,745,594,547
Net asset value of shares issued to
shareholders in reinvestment of
dividends 14,346,186 25,608,555
Cost of shares reacquired (711,836,618) (1,769,693,659)
---------------- ---------------
Net increase (decrease) in net assets
from Series share transactions (48,233,732) 1,509,443
---------------- ---------------
Total increase (decrease) (48,233,732) 1,509,443
NET ASSETS
Beginning of period 618,414,281 616,904,838
---------------- ---------------
End of period $ 570,180,549 $ 618,414,281
---------------- ---------------
---------------- ---------------
------------------------------
(a) At $1.00 per share.
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year Ended
Ended November 30,
May 31, 2000 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 3,339,687 $ 7,252,280
Net realized loss on investment
transactions (2,399,438) (1,548,861)
Net change in unrealized appreciation
(depreciation) of investments 479,325 (3,950,179)
---------------- ------------
Net increase in net assets resulting from
operations 1,419,574 1,753,240
---------------- ------------
Dividends from net investment income (Note
1):
Class A (2,880,476) (6,943,757)
Class Z (185,503) (453,682)
---------------- ------------
(3,065,979) (7,397,439)
---------------- ------------
Series share transactions (Note 6):
Net proceeds from shares subscribed 12,182,345 28,989,720
Net asset value of shares issued in
reinvestment of dividends and
distributions 2,165,748 5,237,511
Cost of shares reacquired (29,605,029) (47,069,301)
---------------- ------------
Net decrease in net assets from Series
share transactions (15,256,936) (12,842,070)
---------------- ------------
Total decrease (16,903,341) (18,486,269)
NET ASSETS
Beginning of period 135,657,519 154,143,788
---------------- ------------
End of period(a) $118,754,178 $135,657,519
---------------- ------------
---------------- ------------
------------------------------
(a) Includes undistributed net investment
income of $ 273,708 $ --
---------------- ------------
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Prudential Government Securities
Trust U.S. Treasury Money Market Series
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, November 30,
2000 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------
DECREASE IN NET ASSETS
Operations:
Net investment income $ 11,488,333 $ 15,742,063
Net realized gain on investment
transactions 27,431 92,022
---------------- ---------------
Net increase in net assets resulting
from operations 11,515,764 15,834,085
---------------- ---------------
Dividends from net investment income (Note
1):
Class A (11,460,144) (15,751,617)
Class Z (55,620) (82,468)
---------------- ---------------
(11,515,764) (15,834,085)
---------------- ---------------
Series share transactions(a) (Note 6):
Net proceeds from shares subscribed 2,259,057,975 3,016,500,664
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 9,708,926 13,902,487
Cost of shares reacquired (2,286,981,111) (3,043,734,040)
---------------- ---------------
Net decrease in net assets from Series
share transactions (18,214,210) (13,330,889)
---------------- ---------------
Total decrease (18,214,210) (13,330,889)
NET ASSETS
Beginning of period 323,654,080 336,984,969
---------------- ---------------
End of period $ 305,439,870 $ 323,654,080
---------------- ---------------
---------------- ---------------
------------------------------
(a) At $1.00 per share.
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited)
Prudential Government Securities Trust (the 'Fund') is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Series' investment objectives are high current income,
the preservation of captial and maintenance of liquidity. The Fund consists of
three series--the Money Market Series, the Short-Intermediate Term Series and
the U.S. Treasury Money Market Series (each a 'Series'); the monies of each
series are invested in separate, independently managed portfolios. The Money
Market Series seeks high current income, preservation of capital and maintenance
of liquidity by investing primarily in a diversified portfolio of short-term
money market instruments issued or guaranteed by the U.S. Government or its
agencies or instrumentalities that mature in 13 months or less. The
Short-Intermediate Term Series seeks a high level of income consistent with
providing reasonable safety by investing at least 65% of the Series' total
assets in U.S. Government securities, including U.S. Treasury bills, notes,
bonds and other debt securities, such as mortgage-related and asset-backed
securities, issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The U.S. Treasury Money Market Series seeks high current
income consistent with the preservation of principal and liquidity by investing
exclusively in U.S. Treasury obligations that mature in 13 months or less.
Note 1. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund and each Series 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 Short-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.
Repurchase Agreements: In connection with transactions in repurchase
agreements with U.S. financial institutions, it is the Fund's policy that its
custodian or
20
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
designated subcustodians, as the case may be under triparty repurchase
agreements, takes possession of the underlying collateral securities, the value
of which exceeds the principal amount of the repurchase transaction, including
accrued interest. To the extent that any repurchase agreement exceeds one
business day, the value of the collateral is marked-to-market on a daily basis
to ensure the adequacy of the collateral. 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.
Financial Futures Contracts: The Short-Intermediate Term Series may
enter into financial futures contracts which are agreements to purchase (long)
or sell (short) an agreed amount of securities at a set price for delivery on a
future date. Upon entering into a financial futures contract, the Series is
required to pledge to the broker an amount of cash and/or other assets equal to
a certain percentage of the contract amount. This amount is known as the
'initial margin'. Subsequent payments, known as 'variation margin', are made or
received by the Series each day, depending on the daily fluctuations in the
value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss. When
the contract expires or is closed, the gain or loss is realized and is presented
in the statement of operations as net realized gain (loss) on financial futures
contracts.
The Short-Intermediate Term Series invests in financial futures contracts
in order to hedge its existing portfolio securities, or securities the Series
intends to purchase, against fluctuations in value caused by changes in
prevailing interest rates. Should interest rates move unexpectedly, the Series
may not achieve the anticipated benefits of the financial futures contracts and
may realize a loss. The use of futures transactions involves the risk of
imperfect correlation in movements in the price of futures contracts, interest
rates and the underlying hedged assets.
Securities Lending: The Money Market Series and the Short-Intermediate
Term 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 other liquid assets or secures an
irrevocable 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 Series continues to receive any dividend
or interest paid on such securities. Each Series receives compensation net of
rebates for lending securities in the form of fees or it retains a portion of
interest on the investments of any cash received as collateral. In these
transactions, there are risks of delay in recovery and in some cases even loss
of rights in the collateral should the borrower of the securities fail
financially. Loans are subject to termination at the option of the borrower or
the Series. Each Series may pay
21
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
reasonable finders', administrative and custodial fees in connection with a loan
of its securities and may share the interest earned on the collateral with the
borrower. As a matter of fundamental policy each Series may not lend more than
30% of the value of its total assets.
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 Fund amortizes discounts and premiums on
purchases of portfolio securities as adjustments to income. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.
Dollar Rolls: The Short-Intermediate Term Series may enter into dollar
roll transactions in which the Series sells securities for delivery in the
current month, realizing a gain or loss, and simultaneously contracts to
repurchase somewhat similar (same type, coupon and maturity) securities on a
specified future date. During the roll period the Short-Intermediate Term Series
forgoes principal and interest paid on the securities. The Series is compensated
by the interest earned on the cash proceeds of the initial sale and by the lower
repurchase price at the future date. The difference between the sale proceeds
and the lower repurchase price is taken into income. The Short-Intermediate Term
Series maintains a segregated account, the dollar value of which is at least
equal to its obligations in respect of dollar rolls.
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 Short-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.
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 income to
its shareholders. Therefore, no federal income tax provision is required.
22
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM 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. PIFM pays for the services of PIC,
the cost of 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 PIFM is computed daily and payable monthly at
an annual rate of .40 of 1% of the average daily net assets of the
Short-Intermediate Term Series and the U.S. Treasury Money Market Series. With
respect to the Money Market Series, the management fee 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.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Class A
and Class Z shares of the Fund. The Fund compensates PIMS for distributing and
servicing the Fund's Class A shares, pursuant to a plan of distribution (the
'Class A Plan'), regardless of expenses actually incurred by it. The
distribution fees for Class A shares are accrued daily and payable monthly. The
distributor pays various broker-dealers for account servicing fees and for the
expenses incurred by such broker-dealers. No distribution or service fees are
paid to PIMS as distributor of the Class Z shares of the Fund.
Pursuant to the Class A Plan, the Money Market Series and the U.S.
Treasury Money Market Series compensate PIMS at an annual rate of .125 of 1% of
each Series' average daily net assets. The Short-Intermediate Term Series' Class
A Plan compensates PIMS 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.
PIFM, PIC and PIMS are wholly owned subsidiaries of The Prudential
Insurance Company of America ('Prudential').
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an
23
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
alternative source of funding for capital share redemptions. The Funds pay a
commitment fee of .080 of 1% of the unused portion of the credit facility. The
commitment fee is accrued and paid quarterly on a pro rata basis by the Funds.
The expiration date of the SCA is March 9, 2001. Prior to March 9, 2000, the
commitment fee was .065 of 1% of the unused portion of the credit facility. The
Fund did not borrow any amounts pursuant to the SCA during the six months ended
May 31, 2000.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly-owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended May 31, 2000,
the Fund incurred fees of approximately $905,800, $91,400, and $99,300,
respectively, for the Money Market Series, Short-Intermediate Term Series, and
U.S. Treasury Money Market Series. As of May 31, 2000, approximately $153,400,
$14,800, and $11,600 of such fees were due to PMFS, respectively, for the Money
Market Series, Short-Intermediate Term Series, and U.S. Treasury Money Market
Series. Transfer agent fees and expenses in the Statement of Operations includes
certain out-of-pocket expenses paid to non-affiliates.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities other than short-term investments,
for the Short-Intermediate Term Series for the six months ended May 31, 2000
were $271,469,521 and $276,774,126, respectively.
For the Short-Intermediate Term Series, the cost basis of investments for
federal income tax purposes was $138,591,071 and, accordingly, as of May 31,
2000, net unrealized depreciation of investments for federal income tax purposes
was $2,050,276 (gross unrealized appreciation $178,479; gross unrealized
depreciation--$2,228,755).
For federal income tax purposes, the Short-Intermediate Term Series has a
capital loss carryforward as of November 30, 1999 of approximately $30,673,000
of which $3,746,000 expires in 2000, $7,594,000 expires in 2001, $12,125,000
expires in 2002, $448,000 expires in 2003, $1,933,000 expires in 2004,
$3,290,000 expires in 2005 and $1,537,000 expires in 2006. Accordingly, no
capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of such carryforward.
The average balance of dollar rolls outstanding during the six months
ended May 31, 2000 was approximately $40,553,986 for the Short-Intermediate Term
Series.
24
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
The amount of dollar rolls outstanding at May 31, 2000 was $17,788,125
(principal $19,000,000), which was 12% of total assets.
During the six months ended May 31, 2000, the Short-Intermediate Term
Series entered into financial futures contracts. Details of open contracts at
May 31, 2000 are as follows:
<TABLE>
<CAPTION>
Value at Value at
Number of Expiration Trade May 31, Unrealized
Contracts Type Date Date 2000 Appreciation
--------- ---------------- ----------- ---------- ---------- --------------
<C> <C> <S> <C> <C> <C>
Short Position:
U.S. Treasury
20 Note June 2000 $1,959,375 $1,939,062 $ 20,313
--------------
--------------
</TABLE>
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered 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 May 31, 2000, the Money
Market Series and the Short-Intermediate Term Series had a 1.71% and 1.88%
undivided interest in the repurchase agreements in the joint account. This
undivided interest represented $14,754,000 and $16,294,000 in principal amount.
As of such date, the repurchase agreements in the joint account and the value of
the collateral therefor were as follows:
ABN AMRO Incorporated, 6.37%, in the principal amount of $110,000,000,
repurchase price $110,019,464, due 6/1/00. The value of the collateral including
accrued interest was $112,200,491.
Bear, Stearns & Co. Inc., 6.37%, in the principal amount of $130,000,000,
repurchase price $130,023,003, due 6/1/00. The value of the collateral including
accrued interest was $133,856,194.
Chase Securities Inc., 6.15%, in the principal amount of $114,985,000,
repurchase price $115,004,643, due 6/1/00. The value of the collateral including
accrued interest was $117,289,066.
Credit Suisse First Boston Corp., 6.40%, in the principal amount of
$90,000,000, repurchase price $90,016,000, due 6/1/00. The value of the
collateral including accrued interest was $93,252,694.
Salomon Smith Barney, Inc., 6.38%, in the principal amount of
$220,000,000, repurchase price $220,038,989, due 6/1/00. The value of the
25
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
collateral including accrued interest was $224,578,626.
Warburg Dillon Read LLC, 6.20%, in the principal amount of $200,000,000,
repurchase price $200,034,444, due 6/1/00. The value of the collateral including
accrued interest was $204,004,940.
Note 6. Capital
The Fund offers Class A and Class Z shares. Neither Class A nor Class Z shares
are subject to any sales or redemption charge. Class Z shares are offered
exclusively for sale to a limited group of investors. Each series has authorized
an unlimited number of shares of beneficial interest at $.01 par value.
Transactions in shares and dollars of beneficial interest for the Money
Market Series were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, November 30,
2000 1999
<S> <C> <C>
---------------- --------------
Class A
----------------------------------------------------
Shares sold 617,825,698 1,712,722,383
Shares issued in reinvestment of dividends and
distributions 13,533,598 24,187,413
Shares reacquired (668,184,770) (1,750,045,596)
---------------- --------------
Net decrease in shares outstanding (36,825,474) (13,135,800)
---------------- --------------
---------------- --------------
<CAPTION>
Class Z
----------------------------------------------------
<S> <C> <C>
Shares sold 31,431,002 32,872,164
Shares issued in reinvestment of dividends and
distributions 812,588 1,421,142
Shares reacquired (43,651,848) (19,648,063)
---------------- --------------
Net increase (decrease) in shares outstanding (11,408,258) 14,645,243
---------------- --------------
---------------- --------------
</TABLE>
Transactions in shares of beneficial interest for the Short-Intermediate
Term Series were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
----------------------------------------------------- -------------- --------------
<S> <C> <C>
Six months ended May 31, 2000:
Shares sold 622,426 $ 5,795,342
Shares issued in reinvestment of dividends 212,489 1,980,510
Shares reacquired (2,350,554) (21,929,352)
-------------- --------------
Net decrease in shares outstanding (1,515,639) $ (14,153,500)
-------------- --------------
-------------- --------------
Year Ended November 30, 1999:
Shares sold 1,586,933 $ 15,183,562
Shares issued in reinvestment of dividends 500,676 4,786,911
Shares reacquired (3,863,436) (36,892,313)
-------------- --------------
Net decrease in shares outstanding (1,775,827) $ (16,921,840)
-------------- --------------
-------------- --------------
</TABLE>
26
<PAGE>
Prudential Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z Shares Amount
----------------------------------------------------- -------------- --------------
Six months ended May 31, 2000:
<S> <C> <C>
Shares sold 681,654 $ 6,387,003
Shares issued in reinvestment of dividends 19,789 185,238
Shares reacquired (818,974) (7,675,677)
-------------- --------------
Net decrease in shares outstanding (117,531) $ (1,103,436)
-------------- --------------
-------------- --------------
Year ended November 30, 1999:
Shares sold 1,423,368 $ 13,806,158
Shares issued in reinvestment of dividends 47,015 450,600
Shares reacquired (1,058,235) (10,176,988)
-------------- --------------
Net increase in shares outstanding 412,148 $ 4,079,770
-------------- --------------
-------------- --------------
</TABLE>
Transactions in shares of beneficial interest for the U.S. Treasury Money
Market Series were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, November 30,
2000 1999
<S> <C> <C>
---------------- --------------
<CAPTION>
Class A
----------------------------------------------------
<S> <C> <C>
Shares sold 2,257,112,865 3,013,485,594
Shares issued in reinvestment of dividends and
distributions 9,654,304 13,826,283
Shares reacquired (2,285,604,013) (3,042,655,971)
---------------- --------------
Net decrease in shares outstanding (18,836,844) (15,344,094)
---------------- --------------
---------------- --------------
<CAPTION>
Class Z
----------------------------------------------------
<S> <C> <C>
Shares sold 1,945,110 3,015,070
Shares issued in reinvestment of dividends and
distributions 54,622 76,204
Shares reacquired (1,377,098) (1,078,069)
---------------- --------------
Net increase in shares outstanding 622,634 2,013,205
---------------- --------------
---------------- --------------
</TABLE>
27
<PAGE>
Prudential Government Securities Trust Money Market Series
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
May 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
Net investment income and net realized gains 0.025
Dividends and distributions (0.025)
---------------- ---
Net asset value, end of period $ 1.000
---------------- ---
---------------- ---
TOTAL RETURN(a) 2.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $540,043
Average net assets (000) $563,992
Ratios to average net assets:
Expenses, including distribution fees 0.91%(b)
Expenses, excluding distribution fees 0.78%(b)
Net investment income 5.03%(b)
</TABLE>
------------------------------
(a) 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.
(b) Annualized.
28 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust Money Market Series
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------------------------
Year Ended November 30,
----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
0.042 0.048 0.048 0.046 0.052
(0.042) (0.048) (0.048) (0.046) (0.052)
---------------- ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
4.31% 4.87% 4.87% 4.74% 5.20%
$576,868 $590,004 $591,428 $552,123 $598,194
$594,266 $589,649 $586,513 $589,147 $597,599
0.90% 0.80% 0.77% 0.86% 0.78%
0.77% 0.67% 0.65% 0.73% 0.65%
4.23% 4.77% 4.77% 4.63% 5.15%
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Prudential Government Securities Trust Money Market Series
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------------------
Six Months Year Ended March 1, 1996(b)
Ended November 30, Through
May 31, ------------------------------ November 30,
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $1.000 $1.000
Net investment income
and capital gains 0.026 0.044 0.049 0.048 0.038
Dividends and
distributions (0.026) (0.044) (0.049) (0.048) (0.038)
---------- ------- ------- ------ -------
Net asset value, end of
period $ 1.000 $ 1.000 $ 1.000 $1.000 $1.000
---------- ------- ------- ------ -------
---------- ------- ------- ------ -------
TOTAL RETURN(a) 2.58% 4.44% 5.00% 5.03% 3.87%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000) $ 30,138 $41,546 $26,901 $ 581 $ 204(c)
Average net assets
(000) $ 33,000 $32,984 $19,236 $ 672 $1,962
Ratios to average net
assets:
Expenses 0.78%(d) 0.77% 0.67% 0.65% 0.68%(d)
Net investment
income 5.11%(d) 4.38% 4.89% 4.92% 4.68%(d)
</TABLE>
------------------------------
(a) 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.
(b) Commencement of offering of Class Z shares.
(c) Figure is actual and not rounded to nearest thousand.
(d) Annualized.
30 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
May 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.41
----------------
Income from investment operations:
Net investment income 0.25
Net realized and unrealized gain (loss) on investment
transactions (0.14)
----------------
Total from investment operations 0.11
----------------
Less distributions:
Dividends from net investment income (0.23)
----------------
Net asset value, end of period $ 9.29
----------------
----------------
TOTAL RETURN(a) 1.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $111,597
Average net assets (000) $118,538
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.93%(b)
Expenses, excluding distribution and service (12b-1) fees 0.74%(b)
Net investment income 5.29%(b)
Portfolio turnover rate 221%
</TABLE>
------------------------------
(a) 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.
(b) Annualized.
See Notes to Financial Statements 31
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------------------------
Year Ended November 30,
----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 9.77 $ 9.74 $ 9.70 $ 9.74 $ 9.17
---------------- ---------------- ---------------- ---------------- ----------------
0.47 0.51 0.56 0.51 0.56
(0.35) 0.06 -- (0.01) 0.55
---------------- ---------------- ---------------- ---------------- ----------------
0.12 0.57 0.56 0.50 1.11
---------------- ---------------- ---------------- ---------------- ----------------
(0.48) (0.54) (0.52) (0.54) (0.54)
---------------- ---------------- ---------------- ---------------- ----------------
$ 9.41 $ 9.77 $ 9.74 $ 9.70 $ 9.74
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
1.26% 6.01% 5.96% 5.34% 12.37%
$127,298 $149,508 $149,162 $185,235 $212,996
$138,847 $155,680 $166,651 $186,567 $209,521
0.92% 0.96% 0.97% 1.01% 0.95%
0.73% 0.78% 0.77% 0.79% 0.75%
4.90% 5.26% 5.76% 5.99% 5.82%
304% 155% 210% 132% 217%
</TABLE>
32 See Notes to Financial Statements
<PAGE>
Prudential Government Securities Trust Short-Intermediate Term Series
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------
February
26,
1997(b)
Six Months Year Ended Through
Ended November 30, November
May 31, ----------------- 30,
2000 1999 1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 9.45 $ 9.81 $ 9.77 $ 9.64
---------- ------ ------ -----------
Income from investment
operations:
Net investment income 0.26 0.51 0.47 0.47
Net realized and unrealized gain
(loss) on investment
transactions (0.14) (0.37) 0.13 0.07
---------- ------ ------ -----------
Total from investment
operations 0.12 0.14 0.60 0.54
---------- ------ ------ -----------
Less distributions:
Dividends from net investment
income (0.24) (0.50) (0.56) (0.41)
---------- ------ ------ -----------
Net asset value, end of period $ 9.33 $ 9.45 $ 9.81 $ 9.77
---------- ------ ------ -----------
---------- ------ ------ -----------
TOTAL RETURN(a) 1.22% 1.46% 6.31% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $7,157 $8,360 $4,635 $ 207(c)
Average net assets (000) $7,376 $8,798 $3,631 $ 202(c)
Ratios to average net assets:
Expenses 0.74%(d) 0.73% 0.78% 0.77%(d)
Net investment income 5.47%(d) 5.09% 5.36% 6.52%(d)
</TABLE>
------------------------------
(a) 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
full year is not annualized.
(b) Commencement of offering of Class Z shares.
(c) Figure is actual and not rounded to nearest thousand.
(d) Annualized.
See Notes to Financial Statements 33
<PAGE>
Prudential Government Securities
Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
May 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
Net investment income and realized capital gains 0.024
Dividends and distributions (0.024)
----------------
Net asset value, end of period $ 1.000
----------------
----------------
TOTAL RETURN(a) 2.44%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $302,804
Average net assets (000) $473,874
Ratios to average net assets:
Expenses, including distribution fees .59%(b)
Expenses, excluding distribution fees .46%(b)
Net investment income 4.83%(b)
</TABLE>
------------------------------
(a) 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.
(b) Annualized.
34 See Notes to Financial Statements
<PAGE>
Prudential Government Securities
Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------------------------
Year Ended November 30,
----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
0.041 0.046 0.047 0.046 0.050
(0.041) (0.046) (0.047) (0.046) (0.050)
---------------- ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
4.19% 4.66% 4.80% 4.75% 5.08%
$321,641 $336,985 $432,784 $305,330 $339,334
$383,772 $420,140 $402,634 $393,060 $345,369
0.63% 0.63% 0.65% 0.63% 0.62%
0.51% 0.51% 0.52% 0.51% 0.50%
4.08% 4.57% 4.66% 4.57% 5.01%
</TABLE>
See Notes to Financial Statements 35
<PAGE>
Prudential Government Securities
Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------
February
21,
1997(b)
Six Months Year Ended Through
Ended November 30, November
May 31, ----------------- 30,
2000 1999 1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $1.000 $1.000 $1.000 $ 1.000
---------- ------ ------ -----------
Net investment income and
realized capital gains 0.025 0.043 0.049 0.039
Dividends and distributions (0.025) (0.043) (0.049) (0.039)
---------- ------ ------ -----------
Net asset value, end of period $1.000 $1.000 $1.000 $ 1.000
---------- ------ ------ -----------
---------- ------ ------ -----------
TOTAL RETURN(a) 2.51% 4.37% 5.05% 3.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $2,636 $2,013 $ 211(c) $ 205(c)
Average net assets (000) $2,213 $1,942 $ 209(c) $ 197(c)
Ratios to average net assets:
Expenses 0.46%(d) 0.51% 0.51% 0.52%(d)
Net investment income 5.02%(d) 4.19% 4.91% 3.89%(d)
</TABLE>
------------------------------
(a) 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.
(b) Commencement of offering of Class Z shares.
(c) Figure is actual and not rounded to nearest thousand.
(d) Annualized.
36 See Notes to Financial Statements
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
William V. Healey, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Fund Symbols
SERIES NASDAQ CUSIP
Money Market Class A PBGXX 744342205
Class Z PGZXX 744342403
Short-Int. Term Class A PBGVX 744342106
Class Z PSHZX 744342601
U.S. Treasury Class A PUSXX 744342304
Class Z PTZXX 744342502
The views expressed in this report and information about
the Trust's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
The accompanying financial statements as
of May 31, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
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Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF100E2 Class A Class Z
744342205 744342403
744342106 744342601
744342304 744342502
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