<PAGE>
1
- -------------------------------------------------------------------------------
Reich & Tang
Government Securities Trust
ANNUAL REPORT
FEBRUARY 28, 1995
- -------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Trust. It is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus, which includes
information regarding the Trust's objectives and policies, experience of its
management, marketability of shares, and other information.
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
600 Fifth Avenue
New York, New York 10020
MANAGER
Reich & Tang Asset Management, L.P.
600 Fifth Avenue
New York, New York 10020
CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
TRANSFER AND DIVIDEND DISBURSING AGENT
Supervised Service Company
811 Main Street
Kansas City, Missouri 64105
- -------------------------------------------------------------------------------
<PAGE>
2
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
STATEMENT OF NET ASSETS
FEBRUARY 28, 1995
===============================================================================
<TABLE>
<CAPTION>
Face Maturity Value
Amount Date (Note 1)
------ ---- --------
U.S. Government Obligations (69.64%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 1,000,000 U.S. Treasury Bills, 4.050% 03/09/1995 $ 998,685
425,000 U.S. Treasury Note, 4.625 08/15/1995 422,012
500,000 U.S. Treasury Note, 4.625 08/15/1995 496,485
525,000 U.S. Treasury Note, 4.625 08/15/1995 521,309
1,700,000 U.S. Treasury Note, 4.625 08/15/1995 1,688,047
2,200,000 U.S. Treasury Note, 4.375 08/15/1996 2,131,938
1,800,000 U.S. Treasury Note, 6.500 04/30/1999 1,766,250
--------------- -------------
8,150,000 Total U.S. Government Obligations (Cost $8,123,211) 8,024,726
--------------- -------------
<CAPTION>
Repurchase Agreements (9.10%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,048,000 Fuji Securities, Inc., 6.02%, (Collateralized by
$1,040,000 U.S Treasury Notes, 7.375%, due 5/15/96) 03/01/1995 $ 1,048,000
--------------- --------------
1,048,000 Total Repurchase Agreements (Cost $1,048,000) 1,048,000
--------------- --------------
Total Investments (78.74%) (Cost $9,171,211+) 9,072,726
Cash and Other Assets in Excess of Liabilities (21.26%) 2,450,553
--------------
Net Assets (100.00%), 1,185,131 shares outstanding (Note 4) $ 11,523,279
==============
Net asset value, offering and redemption price per share $ 9.72
==============
+ Aggregate cost for federal income tax purposes is identical.
Aggregate unrealized appreciation and depreciation of investments are $0
and 98,485, respectively.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
3
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
Income:
<S> <C>
Interest....................................................................... $ 1,012,640
---------------
Expenses: (Note 2)
Management fees................................................................ 13,141
Custodian, shareholder servicing and related shareholder expenses.............. 32,933
Audit and accounting........................................................... 41,708
Legal, compliance and filing fees.............................................. 9,325
Trustees' fees................................................................. 6,000
Miscellaneous.................................................................. 879
---------------
Total expenses............................................................ 103,986
Less: Reimbursement of expenses from Manager (Note 2).......................... ( 837)
---------------
Net expenses.............................................................. 103,149
---------------
Net investment income............................................................. 909,491
---------------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments........................................... ( 502,521)
Change in unrealized appreciation (depreciation) of investments................... ( 166,365)
---------------
Net gain (loss) on investments................................................. ( 668,886)
---------------
Increase in net assets from operations............................................ $ 240,605
==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
4
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
February 28, 1995 February 28, 1994
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income........................................ $ 909,491 $ 904,850
Net realized gain (loss) on investments...................... ( 502,521) 1,255,659
Change in unrealized appreciation
(depreciation) of investments............................ ( 166,365) ( 1,097,898)
--------------- ---------------
Increase (decrease) in net assets from operations............ 240,605 1,062,611
Distributions from:
Net investment income........................................ ( 909,489) ( 904,850)
Net realized gains on investments............................ ( 520,431) ( 1,011,899)
Transactions in shares of beneficial interest (Note 4)............ ( 6,603,335) 4,203
--------------- ---------------
Total increase (decrease).................................... ( 7,792,650) ( 849,935)
Net assets:
Beginning of year............................................ 19,315,929 20,165,864
---------------- ---------------
End of year.................................................. $ 11,523,279 $ 19,315,929
================ ===============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
5
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. Summary of Accounting Policies.
Reich & Tang Government Securities Trust is a no-load, diversified, open-end
management investment company registered under the Investment Company Act of
1940. Its financial statements are prepared in accordance with generally
accepted accounting principles for investment companies as follows:
a) Valuation of Securities -
Debt securities are normally valued at the last quoted bid price for those
debt securities for which the over-the-counter market is the primary
market. Short-term obligations having remaining maturities of less than 60
days are valued at amortized cost, which approximates market value. As
authorized by the Board of Trustees, debt securities (other than short-term
obligations) may be valued on the basis of valuations furnished by a
pricing service which determines valuations based upon market transactions
for normal, institutional-size trading units of such securities.
b) Federal Income Taxes -
It is the Trust's policy to comply with 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 provision for
federal income tax is required.
c) General -
Securities transactions are recorded on the trade date basis. Interest
income is accrued as earned. Discount and premium on securities purchased
are amortized over the life of the respective securities. Realized gains
and losses from securities transactions are recorded on the identified cost
basis. Dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date. It is the Trust's policy to take
possession of securities as collateral under repurchase agreements and to
determine on a daily basis that the value of such securities are sufficient
to cover the value of the repurchase agreements.
2. Investment Advisory Fees and Other Transactions with Affiliates.
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management, L.P. ("The Manager") equal to .35% of the
Fund's average daily net assets. The Manager is required to reimburse the Fund
for its expenses (exclusive of interest, taxes, brokerage, and extraordinary
expenses) to the extent that such expenses, including the management fee, for
any fiscal year exceed 2 1/2% of the first $30 million of its average net
assets, 2% of the $70 million of its average net assets and 1 1/2% of its
average net assets in excess of $100 million.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .20% of the Fund's average daily net assets.
Pursuant to a Distribution Plan adopted under Securities and Exchange Commission
Rule 12b-1, the Trust and Reich & Tang Distributors L.P. (the Distributor) have
entered into a Distribution Agreement and a Shareholder Servicing Agreement. For
its services under the Shareholder Servicing Agreement, the Distributor receives
from the Trust an annual fee equal to .25% of the Trust's average daily net
assets. There were no additional expenses borne by the Trust pursuant to the
Distribution Plan.
During the year ended February 28, 1995, the Manager waived investment
management fees and administration fees of $52,415, and $37,461 and the
Distributor waived shareholder servicing fees of $46,826 respectively.
3. Investment Transactions.
Purchases and sales of investment securities, other than short-term investments,
totaled $4,248,656 and $14,690,350, respectively. Accumulated undistributed
realized losses at February 28, 1995 amounted to $502,521.
- -------------------------------------------------------------------------------
<PAGE>
6
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
4. Transactions in Shares of Beneficial Interest.
At February 28, 1995, an unlimited number of shares of beneficial interest ($.01
par value) were authorized and capital paid in amounted to $12,124,283.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
February 28, 1995 February 28, 1994
----------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold.................................... 378,277 $ 3,810,651 147,309 $ 1,586,793
Issued on reinvestment of dividends 141,342 1,376,763 175,312 1,874,587
Redeemed................................ ( 1,196,489) ( 11,790,749) ( 322,178) ( 3,457,177)
------------ -------------- ----------- -------------
Net increase (decrease)................. ( 676,870) ($ 6,603,335) 443 $ 4,203
============ ============== =========== =============
</TABLE>
5. Selected Financial Information.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
February 28, February 29, February 28,
--------------------------------------- ------------ ------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the year)
Net asset value, beginning of year.. $ 10.37 $ 10.83 $ 10.27 $ 9.89 $ 9.58
--------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............. .48 0.49 0.68 0.75 0.77
Net realized and unrealized gain/
(loss) on investments.......... ( .37) 0.09 0.66 0.38 0.31
--------- ---------- --------- --------- ----------
Total from investment operations.. .11 0.58 1.34 1.13 1.08
Less Distributions:
Dividends from net investment income ( .48) ( 0.49) ( 0.68) ( 0.75) ( 0.77)
Dividends from net realized gain
on investments................... ( .28) ( 0.55) ( 0.10) -- --
--------- ---------- ----------- ---------- ----------
Total Distributions............... ( .76) ( 1.04) ( 0.78) ( 0.75) ( 0.77)
--------- ---------- ---------- ----------- -----------
Net asset value, end of year........ $ 9.72 $ 10.37 $ 10.83 $ 10.27 $ 9.89
========= ========== ========== =========== ============
Total Return........................ 1.23% 5.33% 13.60% 11.22% 11.78%
Ratios/Supplemental Data
Net assets, end of year (000)....... $ 11,523 $ 19,316 $ 20,166 $ 14,576 $ 13,247
Ratios to average net assets:
Expenses.......................... .55%+ 0.55%+ 0.55%+ 0.55%+ 0.55%+
Net investment income............. 4.86%+ 4.47%+ 6.48%+ 7.49%+ 7.92%+
Portfolio turnover rate............. 25.43% 83.55% 66.47% 19.86% 7.25%
+ Net of investment management, administration and shareholder servicing
fees waived equivalent to .73% of average net assets for the year ended
February 28, 1995 and .80% of average net assets for each of the four years
in the year ending February 28, 1994, plus expenses reimbursed equivalent
to .01%, .002%, .05%, .20%, and .13% of average net assets, respectively.
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
7
- -------------------------------------------------------------------------------
REICH & TANG GOVERNMENT SECURITIES TRUST
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Trustees and Shareholders
Reich & Tang Government Securities Trust
We have audited the accompanying statement of net assets of Reich & Tang
Government Securities Trust as of February 28, 1995, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the selected financial
information for each of the five years in the period then ended. These financial
statements and selected financial information are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 28, 1995, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of Reich & Tang Government Securities Trust as of February 28, 1995,
the results of its operations, the changes in its net assets and the selected
financial information for the periods indicated, in conformity with generally
accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
March 28, 1995
- -------------------------------------------------------------------------------
