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Reich & Tang
GOVERNMENT SECURITIES TRUST
ANNUAL REPORT
FEBRUARY 29, 1996
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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.
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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, TRANSFER AND
DIVIDEND DISBURSING AGENT
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
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<PAGE>
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REICH & TANG GOVERNMENT SECURITIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
===============================================================================
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Cash.............................................................................. $ 192,646
--------------------
Total assets................................................................ 192,646
--------------------
<CAPTION>
LIABILITIES:
<S> <C>
Accrued expenses payable.......................................................... 20,375
--------------------
Total liabilities........................................................... 20,375
--------------------
<CAPTION>
NET ASSETS:....................................................................... $ 172,271
====================
<S> <C>
Shares outstanding (Note 3)....................................................... 17,446
Net asset value per share................................................... $ 9.87
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG GOVERNMENT SECURITIES TRUST
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest....................................................................... $ 102,185
--------------------
Expenses: (Note 2)
Management fees................................................................ 8,149
Administration fees............................................................ 4,665
Shareholder servicing fees..................................................... 5,821
Custodian expenses............................................................. 677
Shareholder servicing and related shareholder expenses......................... 33,346
Audit and accounting........................................................... 37,549
Legal, compliance and filing fees.............................................. 6,713
Trustees' fees................................................................. 6,780
Miscellaneous.................................................................. 1,422
--------------------
Total expenses............................................................ 105,122
Less: Reimbursement of expenses from Manager (Note 2)............................. ( 70,347)
Expenses paid indirectly................................................... ( 2,142)
Fees waived................................................................ ( 18,006)
--------------------
Net expenses............................................................... 14,627
--------------------
Net investment income............................................................. 87,558
--------------------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments........................................... ( 66,206)
Change in unrealized appreciation (depreciation) of investments................... 98,485
--------------------
Net gain (loss) on investments................................................. 32,279
--------------------
Increase in net assets from operations............................................ $ 119,837
====================
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG GOVERNMENT SECURITIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
Year Ended Year Ended
February 29, 1996 February 28, 1995
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income........................................ $ 87,558 $ 909,491
Net realized gain (loss) on investments...................... ( 66,206) ( 502,521)
Change in unrealized appreciation
(depreciation) of investments............................. 98,485 ( 166,365)
---------------- ----------------
Increase (decrease) in net assets from operations............ 119,837 240,605
Distributions from:
Net investment income....................................... ( 87,688) ( 909,489)
Net realized gains on investments........................... ( -0- ) ( 520,431)
Transactions in shares of beneficial interest (Note 4)............ ( 11,383,157) ( 6,603,335)
---------------- ----------------
Total increase (decrease)................................... ( 11,351,008) ( 7,792,650)
Net assets:
Beginning of year........................................... 11,523,279 19,315,929
---------------- ----------------
End of year................................................. $ 172,271 $ 11,523,279
================ ================
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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REICH & TANG GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
1. Summary of Accounting Policies.
Reich & Tang Government Securities Trust ("the Trust") is a no-load,
diversified, open-end management investment company registered under the
Investment Company Act of 1940. The Trust's investment objective is to seek as
high level of current income as is consistent with prudent investment risk by
investing solely in securities that are issued or guaranteed by the United
States Government or its agencies and instrumentalities and backed by the full
faith and credit of the Untied States and in repurchase agreements pertaining to
such U.S. Government securities. 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) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
d) 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 Trust 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 Trust 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 Trust pays to the Manager
an annual fee of .21% of the Trust's average daily net assets. Prior to December
1, 1995, the administration fee was .20%.
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Trust of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
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.
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<PAGE>
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REICH & TANG GOVERMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
2. Investment Advisory Fees and Other Transactions with Affiliates. (Continued)
During the year ended February 29, 1996, the Manager waived investment
management fees and administration fees of $7,520, and $4,665 and the
Distributor waived shareholder servicing fees of $5,821 respectively.
Included in the Statement of Operations under the captions "Custodian expenses"
and "Shareholder servicing and related shareholder expenses" are expense offsets
of $2,142.
3. Investment Transactions.
Purchases and sales of investment securities, other than short-term investments,
totaled $0 and $7,054,516, respectively. Accumulated undistributed realized
losses at February 29, 1996 amounted to $568,727.
4. Transactions in Shares of Beneficial Interest.
At February 29, 1996, an unlimited number of shares of beneficial interest ($.01
par value) were authorized and capital paid in amounted to $741,126.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
February 29, 1996 February 28, 1995
----------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold.................................... 30,611 $ 298,498 378,277 $ 3,810,651
Issued on reinvestment of dividends..... 8,051 78,651 141,342 1,376,763
Redeemed................................ ( 1,206,347) ( 11,760,306) ( 1,196,489) ( 11,790,749)
--------------- ----------------- --------------- ----------------
Net increase (decrease)................. ( 1,167,685) ($ 11,383,157) ( 676,870) ($ 6,603,335)
=============== ================= =============== ================
</TABLE>
5. Subsequent Event.
Effective March 28, 1996, the Trust was liquidated and all operations ceased.
6. Selected Financial Information.
<TABLE>
<CAPTION>
Year Ended
Year Ended February 28, Year Ended
----------------------------
February 29, 1996 1995 1994 1993 February 29,1992
----------------- ------- ------- -------- ----------------
Per Share Operating Performance:
(for a share outstanding throughout the year)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 9.72 $ 10.37 $ 10.83 $ 10.27 $ 9.89
-------- ------- ------- -------- --------
Income from investment operations:
Net investment income................... 0.29 .48 0.49 0.68 0.75
Net realized and unrealized
gain(loss) on investments........... 0.16 ( .37) 0.09 0.66 0.38
-------- ------- ------- -------- --------
Total from investment operations........ 0.45 .11 0.58 1.34 1.13
Less distributions:
Dividends from net investment income.... ( 0.30) ( .48) ( 0.49) ( 0.68) ( 0.75)
Dividends from net realized gain
on investments.................... -0- ( .28) ( 0.55) ( 0.10) --
-------- -------- -------- -------- -------
Total distributions................. ( 0.30) ( .76) ( 1.04) ( 0.78) ( 0.75)
-------- -------- -------- -------- -------
Net asset value, end of year............ $ 9.87 $ 9.72 $ 10.37 $ 10.83 $ 10.27
======== ======== ======== ======== =======
Total Return............................ 4.13% 1.23% 5.33% 13.60% 11.22%
Ratios/Supplemental Data
Net assets, end of year (000)........... $ 172 $11,523 $19,316 $ 20,166 $ 14,576
Ratios to average net assets:
Expenses.............................. .72%+* .55%+ 0.55%+ 0.55%+ 0.55%+
Net investment income................. 3.76%+ 4.86%+ 4.47%+ 6.48%+ 7.49%+
Portfolio turnover rate................. 0.00% 25.43% 83.55% 66.47% 19.86%
+ Net of investment management, administration and shareholder servicing fees
waived equivalent to .77% and .73% of average net assets for the years
ended February 29, 1996 and February 28, 1995, respectively and .80% of
average net assets for each of the three years in the period ending
February 28, 1994, plus expenses reimbursed equivalent to 3.02%, .01%,
.002%, .05%, and .20%, of average net assets, respectively.
* Includes expenses paid indirectly.
</TABLE>
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<PAGE>
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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 assets and liabilities of Reich &
Tang Government Securities Trust as of February 29, 1996, 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 29, 1996, by correspondence with the custodian. 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 29, 1996,
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 29, 1996
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