<Page>
As filed with the Securities and Exchange Commission
on January , 2004
Registration No. 811-3981
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
/ / Pre-Effective Amendment No. / / Post-Effective Amendment No. __
DRYDEN GOVERNMENT SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (800) 225-1852
Gateway Center Three
100 Mulberry Street, 4th Floor
Newark, New Jersey 07102-4077
--------------------------
(Address of Principal Executive Offices)
(Zip Code)
[ ]
Gateway Center Three
100 Mulberry Street, 4th Floor
Newark, New Jersey 07102-4077
(Name and Address of Agent for Service)
Approximate date of public offering: As soon as practicable following
effectiveness of the Registration Statement.
Titles of Securities Being Registered: Class A, Class B, Class C and Class Z
Common Stock, $.01 par value per share.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith in reliance upon Section 24(f).
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<Page>
DRYDEN GOVERNMENT SECURITIES TRUST
U.S. TREASURY MONEY MARKET SERIES
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
-------------------------------
IMPORTANT PROXY MATERIALS
-------------------------------
PLEASE VOTE NOW
-------------------------------
February , 2004
Dear Shareholder
I am writing to ask you to vote on an important proposal whereby the assets
of U.S. Treasury Money Market Series (Treasury Series) would be acquired by
Money Market Series. Treasury Series and Money Market Series are both series of
Dryden Government Securities Trust (Government Securities Trust). A shareholder
meeting for Treasury Series is scheduled for March 19, 2004. Only shareholders
of Treasury Series will vote on the acquisition of Treasury Series' assets by
Money Market Series.
This package contains information about the proposal and includes materials
you will need to vote. The Board of Trustees of Government Securities Trust has
reviewed the proposal and recommended that it be presented to shareholders of
Treasury Series for their consideration. Although the Trustees have determined
that the proposal is in the best interests of shareholders, the final decision
is up to you.
If approved, the proposed transaction would give you the opportunity to
participate in a fund with similar investment policies. In addition, approval of
the proposed transaction will reduce the amount of an expected increase in the
expenses borne by shareholders of Treasury Series caused by the large-scale
redemption of shares of Treasury Series held by Wachovia Securities LLC
(Wachovia) for brokerage customers.
To help you understand the proposal, we are including a "Q and A" section
that answers common questions about the proposed transaction. The accompanying
proxy statement and prospectus includes a detailed description of the proposal.
Please read the enclosed materials carefully and cast your vote. Remember, your
vote is extremely important, no matter how large or small your holdings. By
voting now, you can help avoid additional costs that would be incurred with
follow-up letters and calls.
To vote, you may use any of the following methods:
- BY MAIL. Please complete, date and sign your proxy card and mail it in
the enclosed postage paid envelope. Votes must be received prior to
March 19, 2004.
- BY INTERNET. Have your proxy card available. Go to the web site:
www.proxyvote.com. Enter your 12-digit control number from your proxy
card. Follow the instructions found on the web site. Votes must be entered
prior to 4 p.m. on March 18, 2004.
- BY TELEPHONE. Call (800) 690-6903 toll free. Enter your 12-digit control
number from your proxy card. Follow the instructions given. Votes must be
entered prior to 4 p.m. on March 18, 2004.
SPECIAL NOTE FOR SYSTEMATIC INVESTMENT PLANS AND THOSE WITH OUTSTANDING
CERTIFICATES (E.G., AUTOMATIC INVESTMENT PLAN, SYSTEMATIC EXCHANGE, ETC.).
Shareholders on systematic investment plans must contact their financial advisor
or call our customer service division, toll-free, at (800) 225-1852 to change
their options. Otherwise, starting on the day following the closing of the
proposed transaction (which is expected to occur shortly after the shareholder
meeting), future purchases shall be made in shares of Money Market Series if the
proposed transaction is approved.
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Shareholders with outstanding certificates are also urged to return their
certificates via Certified or Registered Mail to the address below:
Prudential Mutual Fund Services LLC
Attn: Account Services
2101 Welsh Road
Dresher, PA 19025
If you have any questions before you vote, please call us at 1-866-253-3961.
We are glad to help you understand the proposal and assist you in voting. Thank
you for your participation.
/s/ Judy A. Rice
Judy A. Rice
PRESIDENT
<Page>
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE PROPOSAL
Please read the enclosed proxy statement and prospectus for a complete
description of the proposal. As a quick reference, the following provides a
brief overview of the proposal.
Q&A: QUESTIONS AND ANSWERS
WHAT PROPOSAL AM I BEING ASKED TO VOTE ON?
Shareholders of Treasury Series are being asked to approve a transaction
between Treasury Series and Money Market Series. When we refer to the
"transaction," we mean the transfer of all of the assets of Treasury Series to,
and the assumption of all of its liabilities by, Money Market Series, in
exchange for shares of Money Market Series, and the subsequent cancellation of
shares of Treasury Series.
WHAT IS THE REASON FOR THIS TRANSACTION?
Historically, most assets invested in Treasury Series and some assets
invested in Money Market Series were "sweep" cash assets maintained in customer
brokerage accounts offered by Prudential Securities Incorporated (PSI). Last
year, PSI was effectively acquired by Wachovia Securities LLC (Wachovia), and
PSI became a division of Wachovia. Effective as of November 10, 2003, Wachovia
decided that it would no longer offer Treasury Series and Money Market Series as
investment options for sweep cash assets maintained in former PSI customer
brokerage accounts, and instead sweep assets would be deposited into bank
accounts offered through Wachovia. Pursuant to this process, all new cash assets
that are deposited into Wachovia brokerage accounts will be deposited into the
bank accounts. Existing cash assets maintained in the brokerage accounts that
are presently invested in Treasury Series and Money Market Series will be
transferred and deposited in the bank accounts in a gradual process over the
next several months, as Wachovia brokerage customers redeem Treasury Series and
Money Market Series shares.
Because the majority of the assets invested in Treasury Series are sweep
assets, the decision by Wachovia to discontinue offering Treasury Series as an
investment option is expected to result in a significant increase in the
expenses of Treasury Series, due to the anticipated decrease in the assets of
Treasury Series. The decision by Wachovia to discontinue offering Money Market
Series as an investment option is also expected to result in an increase in the
expenses of Money Market Series; however, because the amount of sweep assets
invested in Money Market Series relative to total assets is considerably smaller
than the amount of sweep assets invested in Treasury Series, the increase in
operating expenses resulting from the redemption of sweep assets from Money
Market Series is not expected to be as great as the increase in operating
expenses resulting from the redemption of sweep assets from Treasury Series.
If approved, the transaction will reduce the amount of the anticipated
increase in fund expenses resulting from Wachovia's discontinuance of its
offering of Treasury Series as a sweep option, but even if the transaction is
approved, the expenses borne by the remaining shareholders of Treasury Series as
shareholders of Money Market Series will still be higher than current fund
expense levels.
DO TREASURY SERIES AND MONEY MARKET SERIES HAVE SIMILAR INVESTMENT POLICIES?
Yes. The investment objectives and policies of Treasury Series and Money
Market Series (each, a Series) are similar. Both Treasury Series and Money
Market Series are money market funds. Money market funds hold high-quality
short-term debt obligations. The investment objectives of Treasury Series and
Money Market Series are substantially identical. The investment objective of
Treasury Series is high current income consistent with the preservation of
principal and liquidity. The investment objective of Money Market Series is high
current income, preservation of capital and maintenance of liquidity. To achieve
its objective, Treasury Series invests exclusively in U.S. Treasury obligations
that mature in 13 months or less. To achieve its objective, Money Market Series
invests, under normal circumstances, at least 80% of its investable assets in
U.S. Government securities.
<Page>
After the proposed transaction is consummated, it is expected that the
combined fund will be managed according to the investment objective and policies
of Money Market Series.
WHO ARE THE MANAGERS FOR THESE SERIES?
Prudential Investments LLC (PI) currently provides investment advisory
services for each of the Series. Prudential Investment Management, Inc. (PIM) is
the subadviser for each Series. PIM is an affiliate of PI.
The Money Markets Team of PIM, headed by Joseph Tully, is responsible for
overseeing the day-to-day management of each Series.
HOW DO THE EXPENSE STRUCTURES OF THE SERIES COMPARE?
Treasury Series has two classes of stock outstanding: Class A shares and
Class Z shares (Treasury Series is also authorized to issue Class S shares, but
no Class S shares are outstanding). Money Market Series has two classes of stock
outstanding: Class A shares and Class Z shares. The following table compares the
expenses incurred by Class A shares and Class Z shares of stock for each of the
two Series.
TREASURY SERIES
ANNUAL SERIES OPERATING EXPENSES (DEDUCTED FROM SERIES ASSETS)
AS OF NOVEMBER 30, 2003
<Table>
<Caption>
CLASS A CLASS Z
-------- --------
Management fees............................................. .40% .40%
+ Distribution and service (12b-1) fees..................... .125% None
+ Other expenses............................................ .10% .10%
= TOTAL ANNUAL SERIES OPERATING EXPENSES.................... .63% .50%
</Table>
MONEY MARKET SERIES
ANNUAL SERIES OPERATING EXPENSES (DEDUCTED FROM SERIES ASSETS)
AS OF NOVEMBER 30, 2003
<Table>
<Caption>
CLASS A CLASS Z
-------- --------
Management fees............................................. .40% .40%
+ Distribution and service (12b-1) fees..................... .125% None
+ Other expenses............................................ .335% .34%
= TOTAL ANNUAL SERIES OPERATING EXPENSES.................... .86% .74%
</Table>
HOW DOES THE PERFORMANCE OF EACH SERIES COMPARE?
Each Series has experienced substantially similar performance over the past
five years. The table below compares the annual returns of the Class A shares of
each Series over the past five calendar years:
<Table>
<Caption>
CALENDAR YEAR SERIES ANNUAL RETURNS
- ------------- ------------- --------------
2002 Treasury 1.25%
Money Market 1.13%
2001 Treasury 3.57%
Money Market 3.58%
2000 Treasury 5.38%
Money Market 5.53%
1999 Treasury 4.25%
Money Market 4.36%
1998 Treasury 4.61%
Money Market 4.82%
</Table>
<Page>
For more performance information, please see pages 11 and 12 of the proxy
statement and prospectus.
IS THE TRANSACTION A TAXABLE EVENT FOR FEDERAL INCOME TAX PURPOSES?
We expect that the exchange of shares pursuant to the transaction will not
result in taxable gain or loss for U.S. federal income tax purposes. For more
information, see the proxy statement and prospectus.
WHAT WILL BE THE ANTICIPATED SIZE OF MONEY MARKET SERIES AFTER THE TRANSACTION?
If the proposal is approved, based on information available as of November
30, 2003, Money Market Series is anticipated to have approximately $441 million
in assets, which includes the anticipated redemption of customer brokerage
"sweep" assets by Wachovia.
HOW WILL YOU DETERMINE THE NUMBER OF SHARES OF MONEY MARKET SERIES THAT I WILL
RECEIVE?
As of the close of business of the New York Stock Exchange on the date the
transaction is consummated, shareholders will receive the number of full and
fractional Class A and Class Z shares of Money Market Series that is equal in
value to the net asset value of their Class A or Class Z shares of Treasury
Series, as applicable, on that date. The transaction is anticipated to occur as
soon as practicable following shareholder approval.
WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH QUORUM BY THE SCHEDULED SHAREHOLDER
MEETING DATE?
If we do not receive sufficient votes to hold the Meeting, we or Georgeson
Shareholder Communications Inc., a proxy solicitation firm, may contact you by
mail or telephone to encourage you to vote. Shareholders should review the proxy
materials and cast their vote to avoid additional mailings or telephone calls.
If there are not sufficient votes to approve the proposal by the time of the
Meeting (March 19, 2004), the Meeting may be adjourned to permit further
solicitation of proxy votes.
HAS THE BOARD OF TRUSTEES APPROVED THE PROPOSAL?
Yes. The Board of Trustees of Government Securities Trust has approved the
proposal and recommends that you vote for the proposal.
WHAT HAPPENS IF THE PROPOSAL IS NOT APPROVED?
If shareholders of Treasury Series do not approve the proposal, or if the
transaction is not completed, they will continue to be shareholders of Treasury
Series and the Board of Trustees will consider other possible courses of action,
including resubmitting the proposal to shareholders, or liquidating Treasury
Series.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each share you own of
Treasury Series on the record date. The record date is December 19, 2003.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy card,
and mailing it in the enclosed postage paid envelope. If you need any
assistance, or have any questions regarding the proposal or how to vote your
shares, please call Prudential at 1-866-253-3961.
You may also vote via the Internet. To do so, have your proxy card available
and go to the web site: www.proxyvote.com. Enter your 12-digit control number
from your proxy card and follow the instructions found on the web site.
<Page>
Finally, you can vote by telephone by calling (800) 690-6903 toll-free.
Enter your 12-digit control number from your proxy card and follow the
instructions given.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names appear
on the account registration shown on the card.
JOINT ACCOUNTS: Both owners must sign and the signatures should conform
exactly to the names shown on the account registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her capacity.
For example, a trustee for a trust should include his or her title when he or
she signs, such as "Jane Doe, Trustee"; or an authorized officer of a company
should indicate his or her position with the company, such as "John Smith,
President."
<Page>
DRYDEN GOVERNMENT SECURITIES TRUST
U.S. TREASURY MONEY MARKET SERIES
100 Mulberry Street
Gateway Center Three, 4th Floor
Newark, New Jersey 07102-4077
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------
To our shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the Meeting)
of U.S. Treasury Money Market Series (Treasury Series), a series of Dryden
Government Securities Trust (Government Securities Trust), will be held at 100
Mulberry Street, Gateway Center Three, 14th Floor, Newark, New Jersey 07102, on
March 19, 2004, at 11:00 a.m. Eastern Standard Time, for the following purposes:
1. To approve a Plan of Reorganization under which Treasury Series will
transfer all of its assets to, and all of its liabilities will be assumed by,
Money Market Series, which is also a series of Government Securities Trust. In
connection with this proposed transfer, each whole and fractional share of each
class of Treasury Series shall be exchanged for whole and fractional shares of
equal net asset value of the same class of Money Market Series and outstanding
shares of Treasury Series will be cancelled.
2. To transact such other business as may properly come before the Meeting
or any adjournments of the Meeting.
The Board of Trustees of Government Securities Trust, on behalf of Treasury
Series, has fixed the close of business on December 19, 2003 as the record date
for the determination of the shareholders of Treasury Series entitled to notice
of, and to vote at, the Meeting and any adjournments of the Meeting.
[SIGNATURE]
Jonathan D. Shain
SECRETARY
Dated: February , 2004
A PROXY CARD IS ENCLOSED ALONG WITH THE PROXY STATEMENT. PLEASE VOTE YOUR
SHARES TODAY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD IN THE POSTAGE
PREPAID ENVELOPE PROVIDED. YOU ALSO MAY VOTE BY TELEPHONE OR VIA THE INTERNET
AS DESCRIBED IN THE ENCLOSED MATERIALS. THE BOARD OF TRUSTEES OF RECOMMENDS
THAT YOU VOTE "FOR" THE PROPOSAL.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
<Page>
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER WHO
DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO COMPLETE THE ENCLOSED PROXY
CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE,
WE ASK FOR YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW
LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING YOUR PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and may help avoid the time and expense involved in validating your vote
if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
on the account registration shown on the proxy card.
2. JOINT ACCOUNTS: Both owners must sign and the signatures should conform
exactly to the names shown on the account registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of account registration or by the
individual executing the proxy card. For example:
<Table>
<Caption>
REGISTRATION VALID SIGNATURE
- ------------------------------------------------ ------------------------
A. 1. XYZ Corporation John Smith, President
2. XYZ Corporation John Smith, President
c/o John Smith, President
B. 1. ABC Company Profit Sharing Plan Jane Doe, Trustee
2. Jones Family Trust Charles Jones, Trustee
3. Sarah Clark, Trustee Sarah Clark, Trustee
u/t/d 7/1/85
C. 1. Thomas Wilson, Custodian Thomas Wilson, Custodian
f/b/o Jessica Wilson UTMA
New Jersey
</Table>
<Page>
U.S. TREASURY MONEY MARKET SERIES
A SERIES OF DRYDEN GOVERNMENT SECURITIES TRUST
PROSPECTUS
AND
MONEY MARKET SERIES
A SERIES OF DRYDEN GOVERNMENT SECURITIES TRUST
PROXY STATEMENT
GATEWAY CENTER THREE
100 MULBERRY STREET, 4TH FLOOR
NEWARK, NEW JERSEY 07102-4077
(800) 225-1852
------------------------
FEBRUARY , 2004
------------------------
This Proxy Statement and Prospectus (Proxy Statement) is being furnished to
shareholders of U.S. Treasury Money Market Series (Treasury Series), a series of
Dryden Government Securities Trust (Government Securities Trust), in connection
with the solicitation of proxies by the Board of Trustees of Government
Securities Trust for use at the Special Meeting of Shareholders of Treasury
Series, and at any adjournments of the meeting (the Meeting). The Meeting will
be held on March 19, 2004 at 11:00 a.m. Eastern Standard Time at 100 Mulberry
Street, Gateway Center Three, 14th Floor, Newark, New Jersey 07102.
The purpose of the Meeting is for shareholders of Treasury Series to vote on
a Plan of Reorganization under which Treasury Series will transfer all of its
assets to, and all of its liabilities will be assumed by, Money Market Series,
which is also a series of Government Securities Trust, in exchange for shares of
Money Market Series, and the subsequent cancellation of shares of Treasury
Series. The Plan of Reorganization is referred to as the Plan. If the
transaction is approved, each whole and fractional share of each class of
Treasury Series shall be exchanged for whole and fractional shares of equal net
asset value of the same class of Money Market Series as soon as practicable
following the Meeting (the Effective Time) and Treasury Series will be
liquidated and Money Market Series will be the surviving fund.
Treasury Series is a diversified series of Dryden Government Securities
Trust, which is a diversified fund registered as an open-end management
investment company and formed as a Massachusetts business trust. Treasury
Series' investment objective is high current income consistent with the
preservation of principal and liquidity. Money Market Series is also a
diversified series of Dryden Government Securities Trust. The investment
objective of Money Market Series is high current income, preservation of capital
and maintenance of liquidity.
IF THE SHAREHOLDERS OF TREASURY SERIES APPROVE THE TRANSACTION, THE
SHAREHOLDERS OF TREASURY SERIES WILL BECOME SHAREHOLDERS OF MONEY MARKET SERIES.
This Proxy Statement should be retained for your future reference. It sets
forth concisely the information about the transaction and Money Market Series
that shareholders of Treasury Series should know before voting on the proposed
transaction. A Statement of Additional Information dated February , 2004,
which relates to this Proxy Statement, has been filed with the Securities and
Exchange Commission (the Commission) and is incorporated into this Proxy
Statement by reference and is available upon request and without charge. This
Proxy Statement is accompanied by the Prospectus, dated January 31, 2003, as
supplemented to date, which offers shares of Money Market Series. The Statement
of Additional Information for Money Market Series, dated January 31, 2003, as
supplemented to date, is available upon request. Enclosed with this Proxy
Statement is the Annual Report of Money Market Series, dated November 30, 2002,
and the Semi-Annual Report, dated May 31, 2003, which are incorporated into
1
<Page>
this Proxy Statement by reference. The Prospectus and Statement of Additional
Information and supplements thereto for Money Market Series have been filed with
the Commission and are incorporated into this Proxy Statement by reference. A
Prospectus and Statement of Additional Information for Treasury Series, both
dated January 31, 2003, the Annual Report of Treasury Series dated November 30,
2002 and the Semi-Annual Report of Treasury Series dated May 31, 2003, have been
filed with the Commission and are incorporated into this Proxy Statement by
reference. Copies of the documents referred to above may be obtained without
charge by contacting Prudential Mutual Fund Services LLC at Post Office Box
8098, Philadelphia, PA 19101, or by calling (800) 225-1852.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED MONEY
MARKET SERIES' SHARES, NOR HAS THE COMMISSION DETERMINED THAT THIS PROXY
STATEMENT AND PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL OFFENSE TO
STATE OTHERWISE.
2
<Page>
SPECIAL MEETING OF SHAREHOLDERS OF
DRYDEN GOVERNMENT SECURITIES TRUST -- U.S. TREASURY MONEY MARKET SERIES
TO BE HELD ON MARCH 19, 2004 AT 11:00 A.M.
100 MULBERRY STREET
GATEWAY CENTER THREE, 14TH FLOOR
NEWARK, NEW JERSEY 07102-4077
------------------------
PROXY STATEMENT AND PROSPECTUS
------------------------
VOTING INFORMATION
This Proxy Statement and Prospectus (Proxy Statement) is furnished in
connection with a solicitation of proxies made by, and on behalf of, the Board
of Trustees of Dryden Government Securities Trust (Government Securities Trust)
on behalf of U.S. Treasury Money Market Series (Treasury Series) to be used at a
Special Meeting (the Meeting) of the shareholders of Treasury Series, to be held
on March 19, 2004, at 11:00 a.m. Eastern Standard Time at 100 Mulberry Street,
Gateway Center Three, 14th Floor, Newark, New Jersey 07102.
The purpose of the Meeting is described in the accompanying Notice of
Special Meeting of Shareholders (Notice). The solicitation is made primarily by
the mailing of the Notice, this Proxy Statement and the accompanying proxy card
on or about February , 2004. Supplementary solicitations may be made by mail,
telephone, facsimile, electronic means or by personal interview by
representatives of Treasury Series. In addition, Georgeson Shareholder
Communications Inc., a proxy solicitation firm, may be retained to solicit
shareholders on behalf of Treasury Series. The costs of retaining Georgeson
Shareholder Communications Inc. and the expenses in connection with preparing
this Proxy Statement and its enclosures will be borne pro rata by each Series.
The anticipated cost of the solicitation, including the expenses incurred in
connection with preparing this Proxy Statement and its enclosures, is
approximately $ .
Even if you sign and return the enclosed proxy card, you may revoke your
proxy at any time prior to its use by written notification received by Treasury
Series, by submitting a later-dated proxy card, or by attending the Meeting and
voting in person.
All proxy cards solicited by the Board of Trustees that are properly
completed and received by Treasury Series prior to the Meeting, and that are not
revoked, will be voted at the Meeting. Shares represented by proxies will be
voted in accordance with the instructions you provide. If no instruction is made
on a properly completed proxy card, it will be voted FOR the proposal.
If a proxy that is properly signed and returned is accompanied by
instructions to withhold authority to vote (an abstention) or represents a
broker "non-vote" (that is, a proxy from a broker or nominee indicating that
they have not received instructions from the beneficial owner or other person
entitled to vote shares on this matter for which the broker or nominee does not
have discretionary power), the shares represented thereby will be considered
present for purposes of determining the existence of a quorum for the
transaction of business but, because the proposal requires approval by a
majority of the outstanding voting securities (as defined by the Investment
Company Act of 1940, as amended) of Treasury Series, will have the effect of a
vote AGAINST the proposal.
Treasury Series also may arrange to have votes recorded by telephone. If
Treasury Series takes votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that their
3
<Page>
instructions have been properly recorded. Proxies given by telephone may be
revoked at any time before they are voted in the same manner that proxies voted
by mail may be revoked.
Shareholders may also cast their vote via the internet. The internet voting
procedures have been designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that shareholders' instructions have been recorded
properly. We have been advised that the internet voting procedures are
consistent with the requirements of applicable law. Shareholders voting via the
internet should understand that there may be costs associated with electronic
access, such as usage charges from an Internet access provider and telephone
companies, that must be borne by the shareholder. To vote via the Internet,
shareholders should have their proxy card available and go to the web site:
www.proxyvote.com and enter the 12-digit control number appearing on the proxy
card. Shareholders should then follow the instructions found on the web site.
Proxies given by internet may be revoked at any time before they are voted in
the same manner that proxies voted by mail may be revoked.
If a quorum is not present at the Meeting, or if a quorum is present at the
Meeting but sufficient votes to approve the proposal are not received, or if
other matters arise requiring shareholder attention, the persons named as proxy
agents may propose one or more adjournments of the Meeting to permit the further
solicitation of proxies. The presence in person or by proxy of 40% or more of
the shares entitled to vote on matters for Treasury Series constitutes a quorum
for Treasury Series. An adjournment of the Meeting will require the affirmative
vote of a majority of shares of Treasury Series present in person at the Meeting
or represented by proxy. When voting on a proposed adjournment, the persons
named as proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to the proposal, unless directed to vote
AGAINST the proposal, in which case such shares will be voted against the
proposed adjournment. Shares represented by abstentions or broker "non-votes"
will not be voted for or against an adjournment. Because an adjournment requires
an affirmative vote of a majority of shares present, abstentions and broker
"non-votes" will have the effect of a vote against adjournment. A shareholder
vote may be taken on the proposal described in this Proxy Statement or on any
other business properly presented at the Meeting prior to adjournment if
sufficient votes have been received.
Shareholders of record at the close of business on December 19, 2003 (the
Record Date) of Treasury Series will be entitled to vote at the Meeting. Each
such shareholder will be entitled to one vote for each share of Treasury Series
held on that date (fractional shares will be entitled to a proportionate
fractional vote). On the Record Date, there were shares issued and
outstanding, including Class A shares and Class Z shares of Treasury
Series.
The following shareholders held 5% or more of any class of shares of
Treasury Series on December 19, 2003:
<Table>
<Caption>
NAME ADDRESS CLASS SHARES/%
---- ------- -------- ----------------
James W Gill Jr and P O Box 1331 A 39,565/8.1%
Joanne G Gill JT WROS Keystone Heights FL 32656
Wilson C Swigart, 1860 Saddle Hill Rd S A 56,937/11.6%
Stephen B Swigart & Dunedin FL 34698
Betty C Hornbrook
CO-TTEES M J Swigart Trust UA DTD
06/28/85
Wachovia Securities 4 Salt Meadow Court A 33,655/6.9%
Vera Esposito Bayport NY 11705
IRA DTD 09/09/86
Prudential Trust Company 216 Windsor Dr A 52,354/10.7%
C/F The IRA Of Gerald G Martin Warner Robins GA 31088
</Table>
4
<Page>
<Table>
<Caption>
NAME ADDRESS CLASS SHARES/%
---- ------- -------- ----------------
Gail D Sturgeon Trust 5657 Colton Blvd A 65,034/13.2%
Gail D Sturgeon TTEE Oakland CA 94611
DTD 09/18/90
Prudential Trust Company Attn: PMFS Coordinator Z 7,535,219/99.9%
FBO Pru-DC Trust Accounts 30 Scranton Office Park
Moosic PA 18507
American Life & Accident Attn: Dinwiddie Lampton Jr AX 13,906,942/16.0%
Insurance Co Of Kentucky 3 Riverfront Plaza
Louisville KY 40202
Hardscuffle Inc Attn: Dinwiddie Lampton Jr AX 5,964,547/6.8%
3 Riverfront Plaza
Louisville KY 40202
</Table>
The following shareholders held 5% or more of any class of shares of Money
Market Series on December 19, 2003:
<Table>
<Caption>
NAME ADDRESS CLASS SHARES/%
---- ------- -------- -----------------
Pru Defined Contribution Svs Attn: PMFS Coordinator Direct 63,525,156/15.8%
FBO Pru-Non-Trust Accounts 30 Scranton Office Park
Moosic PA 18507
Prudential Trust Company Attn: PMFS Coordinator Direct 147,681,983/36.6%
FB Pru-DC Trust Accounts 30 Scranton Office Park
Moosic PA 18507
Pru Defined Contribution Svs Attn: PMFS Coordinator A 8,039,421/27.0%
FBO Pru-Non-Trust Accounts 30 Scranton Office Park
Moosic PA 18507
Prudential Trust Company Attn: PMFS Coordinator A 14,253,848/47.9%
FBO Pru-DC Trust Accounts 30 Scranton Office Park
Moosic PA 18507
Mr Paul Rossi 454 Hasbrouck Blvd B 74,314/13.3%
Oradell NJ 07649
Delaware Charter T/F PO Box 691 B 36,340/6.5%
Mr Michael S Lebowitz PS Plan Carmel CA 93921
DTD 09/27/83
Robert Wilson 130-15 224 St B 47,787/8.6%
Laurelton NY 11413
Pru Defined Contributions Svcs Attn: PMFS Coordinator Z 8,632,176/39.3%
FBO Pro-Non-Trust Accounts 30 Scranton Office Park
Moosic PA 18507
Prudential Trust Company Attn: PMFS Coordinator Z 13,313,684/60.1%
FB Pru-DC Trust Accounts 30 Scranton Office Park
Moosic PA 18507
</Table>
As of December 19, 2003, the Trustees and officers of Treasury Series and
Money Market Series owned, in the aggregate, less than 1% of each class of each
Series' total outstanding shares.
5
<Page>
VOTE REQUIRED
APPROVAL OF THE TRANSACTION REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF
THE OUTSTANDING VOTING SECURITIES OF TREASURY SERIES, WHICH MEANS THE LESSER OF
(I) 67% OF SUCH SHARES PRESENT AT THE MEETING IF THE OWNERS OF MORE THAN 50% OF
THE SHARES OF TREASURY SERIES THEN OUTSTANDING ARE PRESENT IN PERSON OR BY
PROXY, OR (II) MORE THAN 50% OF THE OUTSTANDING SHARES OF TREASURY SERIES,
WITHOUT REGARD TO CLASS.
APPROVAL OF THE TRANSACTION
SYNOPSIS
The following is a summary of information contained elsewhere in this Proxy
Statement, the Plan (the form of which is attached as Attachment A), and in the
Prospectuses and Statements of Additional Information, as supplemented to date,
of Treasury Series and Money Market Series which are incorporated into this
Proxy Statement by this reference, and is qualified in its entirety by reference
to these documents. Shareholders should read this Proxy Statement and the
Prospectuses and Statements of Additional Information, as supplemented to date,
of both Series for more complete information.
Under the Plan, Treasury Series will transfer all of its assets to, and all
of its liabilities will be assumed by, Money Market Series, a mutual fund also
managed by Prudential Investments LLC (PI), in exchange for shares of Money
Market Series. The outstanding shares of Treasury Series will be cancelled and
current shareholders of Treasury Series will become shareholders of Money Market
Series.
INVESTMENT OBJECTIVES AND POLICIES
Treasury Series and Money Market Series each have similar investment
objectives and policies. The investment objective of Treasury Series is high
current income consistent with the preservation of principal and liquidity. The
investment objective of Money Market Series is high current income, preservation
of capital and maintenance of liquidity.
Treasury Series seeks to achieve its investment objective by investing
exclusively in U.S. Treasury obligations that mature in 13 months or less. Money
Market Series seeks to achieve its investment objective by investing, under
normal circumstances, at least 80% of its investable assets (net assets plus any
borrowings for investment purposes) in U.S. Government securities, including
repurchase agreements with respect to such securities.
The principal type of security in which both Treasury Series and Money
Market Series invest are short-term money market instruments. While Treasury
Series may only invest in U.S. Treasury obligations that mature in 13 months or
less, Money Market Series may also invest in debt obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. Both
Treasury Series and Money Market Series may also invest in floating rate debt
securities, variable rate debt securities, as well as when-issued and delayed
delivery securities. In addition, Money Market Series may also invest in
asset-backed securities and liquidity puts and calls.
After the transaction is completed it is expected that the combined fund
will be managed according to the investment objective and policies of Money
Market Series.
The benchmark index for both Treasury Series and Money Market Series is the
iMoneyNet Money Fund Report Average, which for Treasury Series is an average
based upon the average yield of all mutual funds in the iMoneyNet MFR
Average/U.S. Treasury retail fund category, and for Money Market Series is an
average based upon the average yield of all mutual funds in the iMoneyNet MFR
Average/All Taxable money market fund category.
Treasury Series and Money Market Series are each managed by Prudential
Investments LLC (PI). The address of PI is Gateway Center Three, 100 Mulberry
Street, 14th Floor, Newark, New Jersey 07102-4077. PI and its predecessors have
served as manager or administrator to investment companies since 1987. As of
6
<Page>
September 30, 2003, PI served as manager to all of the JennisonDryden and
Strategic Partners Mutual Funds, and as manager or administrator to closed-end
investment companies, with aggregate assets of approximately $ billion.
Treasury Series and Money Market Series typically distribute all or
substantially all of their ordinary income and net realized capital gains
annually.
INVESTMENT ADVISORY SERVICES
Under a management agreement with Government Securities Trust, PI currently
provides investment advisory services for Treasury Series and Money Market
Series. Each Series has the same subadviser, Prudential Investment Management,
Inc. (PIM). The PIM Fixed Income Group, headed by Joseph Tully, manages the
portfolios of Treasury Series and Money Market Series. For more information
about the subadvisers or portfolio managers, see the Prospectuses of the
relevant Series. The other service providers to the Series are not expected to
change as a result of the proposed transaction.
EXPENSE STRUCTURES
Government Securities Trust, on behalf of Treasury Series and Money Market
Series pays monthly management fees to PI for managing each Series. PI, in turn,
pays out of its management fee a fee to PIM for providing advisory services to
the Series. Government Securities Trust, on behalf of Treasury Series, has
agreed to pay PI a management fee at an annual rate of .40 of 1% of average
daily net assets. Government Securities Trust, on behalf of Money Market Series,
has agreed to pay PI a management fee at an annual rate of .40 of 1% of average
daily net assets up to $1 billion; .375 of 1% on assets between $1 billion and
$1.5 billion and .35 of 1% on assets in excess of $1.5 billion. For the fiscal
year ended November 30, 2003, Treasury Series and Money Market Series each paid
PI a management fee of .40 of 1% of average daily net assets. The management fee
paid by Money Market Series is not expected to change if the transaction is
approved by shareholders.
The management fee paid by each Series covers PI's oversight of each Series'
investment portfolios. PI also administers each Series' corporate affairs and,
in connection therewith, furnishes Government Securities Trust and its Series
with office facilities, together with those ordinary clerical and bookkeeping
services that are not furnished by Government Securities Trust's custodian or
transfer and dividend disbursing agent. Officers and employees of PI serve as
officers and Trustees of Government Securities Trust without compensation.
PURCHASES, REDEMPTIONS, EXCHANGES AND DISTRIBUTIONS
Each Series currently has the same policies with respect to purchasing
shares, redeeming or exchanging shares, and distributions. For more information
regarding the Series' policies, see "Purchases, Redemptions, Exchanges and
Distributions" below.
TAX CONSIDERATIONS
For federal income tax purposes, in the opinion of counsel, no gain or loss
will be recognized by the shareholders of Treasury Series as a result of the
transaction. For a more detailed discussion of the federal income tax
consequences, see "U.S. Federal Income Tax Considerations" below.
APPRAISAL RIGHTS
Shareholders of Treasury Series do not have appraisal rights under
Massachusetts law in connection with the transaction.
Shareholders of Treasury Series may, however, redeem their shares at net
asset value prior to the date of the proposed transaction.
7
<Page>
POTENTIAL BENEFITS FROM TRANSACTION
Overall, the proposed transaction would provide shareholders of Treasury
Series with the following potential benefits:
- investment in a fund with an investment objective and policies similar to
the investment objectives and policies of Treasury Series; and
- a reduction in the amount of the anticipated increase in expenses that
will be borne by remaining Treasury Series shareholders following the
redemption of sweep assets from Treasury Series by Wachovia Securities LLC
(Wachovia Securities) during 2004.
THE BOARD OF TRUSTEES OF GOVERNMENT SECURITIES TRUST BELIEVES THAT THE
TRANSACTION WILL BENEFIT SHAREHOLDERS OF TREASURY SERIES, AND RECOMMENDS THAT
SHAREHOLDERS VOTE IN FAVOR OF THE TRANSACTION.
THE PROPOSED TRANSACTION
Shareholders of Treasury Series will be asked at the Meeting to vote upon
and approve the Plan under which Treasury Series will transfer all of its assets
to, and all of its liabilities will be assumed by, Money Market Series,
whereupon Money Market Series will be the surviving mutual fund. Each whole and
fractional share of each class of Treasury Series will be exchanged for whole
and fractional shares of equal net asset value of the same class of Money Market
Series, and outstanding shares of Treasury Series will be cancelled, on or about
the Effective Time. Approval of the transaction will be determined by approval
of the shareholders of Treasury Series. No vote by shareholders of Money Market
Series is required.
The Plan provides that it is a condition to complete the transaction that
Government Securities Trust will have received an opinion of counsel to the
effect that the transaction will not result in any taxable gain or loss for U.S.
federal income tax purposes to Treasury Series or Money Market Series or to the
shareholders of any of the Series.
SERIES OPERATING EXPENSES
Each Series pays a management fee to PI for managing its investments and
business affairs which is calculated and paid to PI every month. Government
Securities Trust, on behalf of Treasury Series, has agreed to pay PI a
management fee at an annual rate of .40 of 1% of average daily net assets.
Government Securities Trust, on behalf of Money Market Series, has agreed to pay
PI a management fee at an annual rate of .40 of 1% of average daily net assets
up to $1 billion; .375 of 1% on assets between $1 billion and $1.5 billion and
..35 of 1% on assets in excess of $1.5 billion. For the fiscal year ended
November 30, 2003, Treasury Series and Money Market Series each paid PI a
management fee of .40 of 1% of average daily net assets. The management fee paid
by Money Market Series is not expected to change if the transaction is approved
by shareholders.
In addition to the management fee, each Series incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and financial reports. For the fiscal year ended November 30, 2003,
Treasury Series' annualized total operating expense ratio for Class A shares was
0.63%, and for Class Z shares was 0.50%. For the fiscal year ended November 30,
2003, Money Market Series' annualized total operating expense ratios for
Class A shares was 0.77%, and for Class Z shares was 0.64%.
If shareholders of Treasury Series approve the transaction, Money Market
Series' expense structure will apply. However, as further discussed below, due
to the anticipated redemption of all sweep assets from Treasury Series and Money
Market Series by Wachovia Securities, it is expected that the annualized total
operating expense ratios for each share class of Treasury Series and each share
class of Money Market Series will significantly increase from current levels,
even if shareholders of Treasury Series approve the proposed transaction. If
shareholders of Treasury Series approve the transaction, it is expected that the
shareholders of Treasury Series will experience a lesser expense increase than
would otherwise occur as a result of the redemptions by Wachovia.
8
<Page>
See "-- Operating Expense Tables" below for estimates of expenses if the
transaction is approved.
SHAREHOLDER FEES
The following table shows the shareholder fees that are imposed on new
purchases or redemptions of shares of Money Market Series that are the same as
the shareholder fees imposed on new purchases of Treasury Series. These fees
will not be imposed on new shares of Money Market Series that are acquired
pursuant to the transaction.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS A CLASS Z
Maximum sales charge (load) imposed on
purchases (as a percentage of
offering price) None None
Maximum deferred sales charge (load)
imposed on sales (as a percentage of
the lower of original purchase price
or sale proceeds) None None
Maximum sales charge (load) imposed on
reinvested dividends and other
distributions None None
Redemption fees None None
Exchange Fee None None
</Table>
OPERATING EXPENSE TABLES
The following tables show the operating fees and expenses of Class A and
Class Z shares of Treasury Series and Money Market Series, and pro forma fees
for the combined fund after giving effect to the transaction (the "Combined
Money Market Series"). THE PRO FORMA FEES AND EXPENSES SHOWN IN THE FOLLOWING
TABLES ASSUME THAT SHAREHOLDERS OF TREASURY SERIES APPROVE THE TRANSACTION. THE
PRO FORMA FEES AND EXPENSES SHOWN IN THE FOLLOWING TABLES DO NOT REFLECT THE
IMPACT OF THE ANTICIPATED REDEMPTION OF SWEEP ASSETS BY WACHOVIA SECURITIES. IF
THE PRO FORMA FEES AND EXPENSES SHOWN IN THE FOLLOWING TABLES REFLECTED THE
IMPACT OF THE REDEMPTION OF SWEEP ASSETS BY WACHOVIA SECURITIES, THE PRO FORMA
FEES AND EXPENSES WOULD BE HIGHER. SEE "ANTICIPATED IMPACT OF THE WACHOVIA
REDEMPTIONS" BELOW FOR ADDITIONAL INFORMATION.
9
<Page>
Series operating expenses are paid out of each Series' assets. Expenses are
factored into each Series' share price or dividends and are not charged directly
to shareholder accounts. The following figures are based on historical expenses
of Treasury Series and Money Market Series as of November 30, 2003.
CLASS A SHARES
<Table>
<Caption>
PRO FORMA
COMBINED
TREASURY SERIES MONEY MARKET SERIES MONEY MARKET SERIES
CLASS A SHARES CLASS A SHARES CLASS A SHARES
--------------- ------------------- -------------------
Management Fees............................ .40% .40% .40%
+ Distribution and service (12b-1) fees.... .125% .125% .125%
+ Other expenses........................... .10% .335% .335%
= TOTAL ANNUAL SERIES OPERATING EXPENSES... .63% .86% .86%
</Table>
CLASS Z SHARES
<Table>
<Caption>
PRO FORMA
COMBINED
TREASURY SERIES MONEY MARKET SERIES MONEY MARKET SERIES
CLASS Z SHARES CLASS Z SHARES CLASS A SHARES
--------------- ------------------- -------------------
Management Fees............................ .40% .40% .40%
+ Distribution and service (12b-1) fees.... None None None
+ Other expenses........................... .10% .34% .34%
= TOTAL ANNUAL SERIES OPERATING EXPENSES... .50% .74% .74%
</Table>
EXAMPLES OF THE EFFECT OF SERIES EXPENSES
The following table illustrates the expenses on a hypothetical $10,000
investment in each Series under the current and pro forma (combined fund)
expenses as of November 30, 2003 calculated at the rates stated above for the
first year, and thereafter using gross expenses with no fee waivers or expense
reimbursements, assuming a 5% annual return, and assuming that you sell your
shares at the end of each period.
CLASS A SHARES
<Table>
<Caption>
THREE FIVE TEN
ONE YEAR YEARS YEARS YEARS
-------- -------- -------- --------
Treasury Series.......................................... $64 $202 $351 $ 786
Money Market Series...................................... $88 $274 $477 $1,061
Combined Series.......................................... $88 $274 $477 $1,061
</Table>
CLASS Z SHARES
<Table>
<Caption>
THREE FIVE TEN
ONE YEAR YEARS YEARS YEARS
-------- -------- -------- --------
Treasury Series.......................................... $51 $160 $280 $628
Money Market Series...................................... $76 $237 $411 $918
Combined Series.......................................... $76 $237 $411 $918
</Table>
These examples assume that all dividends and other distributions are
reinvested and that the percentage amounts listed under "Total annual operating
expenses" remain the same in the years shown. These examples illustrate the
effect of expenses, but are not meant to suggest actual or expected expenses,
which may vary. The assumed return of 5% is not a prediction of, and does not
represent, actual or expected performance of either Series.
10
<Page>
PRO FORMA CAPITALIZATION
The following table shows the capitalization of Treasury Series and Money
Market Series as of November 30, 2003 and the pro forma Combined Money Market
Series capitalization as if the transaction had occurred on that date.
<Table>
<Caption>
PRO FORMA
COMBINED
TREASURY SERIES MONEY MARKET SERIES MONEY MARKET SERIES
--------------- ------------------- -------------------
Net Assets (000s)
Class A.................................. $343,477 $504,806 $504,806
Class Z.................................. $ 5,846 $ 22,486 $ 22,486
Net Asset Value Per Share
Class A.................................. $ 1.00 $ 1.00 $ 1.00
Class Z.................................. $ 1.00 $ 1.00 $ 1.00
Shares Outstanding (000s)
Class A.................................. 343,477 504,806 504,806
Class Z.................................. 5,846 22,486 22,486
</Table>
ANTICIPATED IMPACT OF THE WACHOVIA REDEMPTIONS
Currently, approximately 82% of the assets invested in Treasury Series are
"sweep" assets invested by brokerage customers of Wachovia Securities through
their brokerage accounts. "Sweep" assets represent cash balances held in
customer brokerage accounts that are "swept" out of each customer's brokerage
account and invested in a designated investment option. Historically, Treasury
Series was one of the designated investment options available to brokerage
customers for investment of their sweep assets.
Effective as of November 10, 2003, Wachovia Securities discontinued offering
Treasury Series and Money Market Series as available investment options for the
investment of sweep assets by their brokerage customers. Instead, Wachovia
Securities has elected to direct all sweep assets into bank accounts offered
through Wachovia. Due to Wachovia's decision to discontinue Treasury Series and
Money Market Series as investment options, it is expected that by early 2004,
virtually all sweep assets which are currently invested in each Series will have
been redeemed. Because sweep assets comprise the majority of the overall assets
of Treasury Series, it is anticipated that the operating expenses of Treasury
Series after all sweep assets are redeemed will be significantly higher than the
current operating expenses of Treasury Series.
Although Wachovia Securities has also discontinued Money Market Series as an
available investment option for the investment of sweep assets by their
brokerage customers, because the amount of sweep assets invested in Money Market
Series relative to total assets (currently, approximately 29%) is considerably
smaller than the amount of sweep assets invested in Treasury Series, the
increase in operating expenses resulting from the redemption of sweep assets
from Money Market Series is not expected to be as great as the increase in
operating expenses resulting from the redemption of sweep assets from Treasury
Series.
The proposed transaction WILL NOT RESULT IN A REDUCTION OF CURRENT EXPENSES
FOR SHAREHOLDERS OF TREASURY SERIES, because the expected expense increase
resulting from the Wachovia redemptions is expected to be greater than the
expected expense reduction derived from combining the assets of Treasury Series
and Money Market Series. However, because the proposed transaction, if approved,
will combine the remaining non-sweep assets of Treasury Series and Money Market
Series, it is expected that shareholders of Treasury Series will experience a
lesser expense increase than would otherwise result from the Wachovia
redemptions. Due to the impact of the Wachovia redemptions, it is expected that
by early 2004, virtually all Wachovia sweep assets will have been redeemed, and
the operating expenses borne by shareholders of Treasury Series will increase,
even if the proposed transaction is approved.
11
<Page>
The table below illustrates the expected impact on the operating expenses of
Class A shares of Treasury Series resulting from the Wachovia redemptions if the
transaction is approved:
<Table>
<Caption>
ANTICIPATED TREASURY
SERIES OPERATING ANTICIPATED MONEY
EXPENSES AFTER MARKET SERIES
REMOVAL OF "SWEEP" OPERATING EXPENSES BENEFIT IN EXPENSES TO
CURRENT TREASURY ASSETS (DOES NOT AFTER REMOVAL OF TREASURY SERIES
SERIES OPERATING REFLECT IMPACT OF CHANGE IN EXPENSES TO "SWEEP" ASSETS AND SHAREHOLDERS IF
EXPENSES (AS OF CONSUMMATION OF TREASURY SERIES CONSUMMATION OF TRANSACTION IS
OCT. 31, 2003) TRANSACTION) SHAREHOLDERS TRANSACTION CONSUMMATED
- --------------------- -------------------- --------------------- -------------------- ----------------------
0.61% 0.91% +0.30% 0.85% -0.06%
</Table>
The table below illustrates the expected impact on the operating expenses of
Class A shares of Money Market Series resulting from the Wachovia redemptions if
the transaction is approved:
<Table>
<Caption>
ANTICIPATED MONEY
MARKET SERIES ANTICIPATED MONEY
OPERATING EXPENSES MARKET SERIES
AFTER REMOVAL OF OPERATING EXPENSES BENEFIT IN EXPENSES TO
"SWEEP" ASSETS (DOES AFTER REMOVAL OF MONEY MARKET SERIES
NOT REFLECT IMPACT OF "SWEEP" ASSETS AND SHAREHOLDERS IF
CONSUMMATION OF CONSUMMATION OF TRANSACTION IF
TRANSACTION) TRANSACTION CONSUMMATED
- ---------------------- -------------------- ----------------------
0.87% 0.85% -0.02%
</Table>
PERFORMANCE COMPARISONS OF THE SERIES
The following tables compare each Series' average annual total returns and
annual returns for the periods set forth below. Average annual total returns and
annual returns include the deduction of sales charges, are based on past results
and are not an indication of future performance.
TREASURY SERIES
AVERAGE ANNUAL TOTAL RETURNS(1) (AS OF 12-31-02)
<Table>
<Caption>
1 YR 5 YRS 10 YRS SINCE INCEPTION
Class A Shares 1.25% 3.80% 3.99% 4.09% (since 12-3-90)
Class Z Shares 1.38% 3.99% N/A 4.18% (since 2-21-97)
Lipper Average(2) 1.03% 3.76% 4.01% **(2)
</Table>
MONEY MARKET SERIES
AVERAGE ANNUAL TOTAL RETURNS(1) (AS OF 12-31-02)
<Table>
<Caption>
1 YR 5 YRS 10 YRS SINCE INCEPTION
Class A shares 1.13% 3.87% 4.05% 5.78% (since 1-12-82)
Class Z shares 1.25% 4.00% N/A 4.30% (since 3-1-96)
Lipper Average(2) 1.08% 3.97% 4.13% **(2)
</Table>
(1) THE SERIES' RETURNS AND YIELD ARE AFTER DEDUCTION OF EXPENSES.
(2) THE LIPPER AVERAGE IS BASED ON THE AVERAGE RETURN OF ALL MUTUAL FUNDS IN
THE LIPPER U.S. GOVERNMENT MONEY MARKET FUNDS CATEGORY. LIPPER RETURNS
SINCE THE INCEPTION OF EACH CLASS ARE 5.77% FOR CLASS A AND 4.23% FOR
CLASS Z SHARES. SOURCE: LIPPER INC.
(3) THE IMONEYNET, INC. MONEY FUND REPORT AVERAGE-TM- (IMONEYNET MFR AVERAGE)
IS BASED UPON THE AVERAGE YIELD OF ALL MUTUAL FUNDS IN THE IMONEYNET MFR
AVERAGE/ALL TAXABLE MONEY MARKET FUND CATEGORY.
12
<Page>
TREASURY SERIES
ANNUAL RETURNS* (CLASS A SHARES)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
1993 2.55%
1994 3.61%
1995 5.25%
1996 4.74%
1997 4.81%
1998 4.61%
1999 4.25%
2000 5.38%
2001 3.57%
2002 1.25%
</Table>
BEST QUARTER: 1.49% (4th quarter of 2000) WORST QUARTER: 0.28% (4th quarter of
2002)
* THE CLASS A SHARES' RETURN FROM 1-1-02 TO 12-31-02 WAS 1.25%.
MONEY MARKET SERIES
ANNUAL RETURNS* (CLASS A SHARES)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
1993 2.58%
1994 3.57%
1995 5.30%
1996 4.77%
1997 4.93%
1998 4.82%
1999 4.36%
2000 5.53%
2001 3.58%
2002 1.13%
</Table>
BEST QUARTER: 1.49% (4th quarter of 2000) WORST QUARTER: 0.25% (4th quarter of
2002)
* THE SERIES' RETURN FROM 1-1-02 TO 12-31-02 WAS 1.13%.
13
<Page>
INVESTMENT OBJECTIVES AND POLICIES
If the transaction is approved, the shareholders of Treasury Series will
become shareholders of Money Market Series. The following information compares
the investment objectives and policies of the Series.
INVESTMENT OBJECTIVES
Treasury Series' investment objective is high current income consistent with
the preservation of principal and liquidity. Money Market Series' investment
objective is high current income, preservation of capital and maintenance of
liquidity. The investment objective of each Series is a fundamental policy. This
means that the objective cannot be changed without the approval of shareholders
of the relevant Series. There can be no assurance that either Series achieve its
objective. With the exception of fundamental policies, investment policies
(other than specified investment restrictions) of the Series can be changed
without shareholder approval.
PRINCIPAL INVESTMENT STRATEGIES
Both Treasury Series and Money Market Series are money market funds with
substantially identical investment objectives, and they seek to achieve their
investment objectives through similar, but not identical investment strategies.
Treasury Series seeks to achieve its investment objective by investing
exclusively in U.S. Treasury obligations that mature in 13 months or less. Money
Market Series seeks to achieve its investment objective by investing, under
normal circumstances, at least 80% of its investable assets in short-term money
market instruments issued or guaranteed by the U.S. government or its agencies
or instrumentalities.
Each of the Series may also use certain investment strategies to increase
the Series' returns or protect its assets. Treasury Series may invest in
floating rate debt securities and variable rate debt securities, as well as
when-issued and delayed delivery securities. Money Market Series may invest in
asset-backed securities, floating rate debt securities, variable rate debt
securities, when-issued and delayed delivery securities and liquidity puts and
calls.
COMPARISON OF OTHER POLICIES OF THE SERIES
INVESTMENT RESTRICTIONS
Treasury Series and Money Market Series have substantially similar
fundamental investment restrictions.
COMPARISON OF PRINCIPAL RISK FACTORS
Both Series are money market funds, which are intended to provide investors
with a lower risk, highly liquid investment option. Although each Series
attempts to maintain a net asset value of $1 per share, there can be no
guarantee that either Series will always be able to do so. It is possible that a
shareholder investing in either Series could lose money.
The money market securities in which Treasury Series invests are generally
subject to the risk that the obligations could lose value if interest rates rise
or there is a lack of investor confidence in the borrower. In addition, certain
securities in which Treasury Series may invest may be subject to the risk that
the issuer may be unable to make principal and interest payments when they are
due.
The money market securities in which Money Market Series may invest are also
subject to the risk that the obligations could lose value if interest rates rise
or there is a lack of investor confidence in the borrower. In addition, certain
securities in which Money Market Series may invest may be subject to the risk
that the issuer may be unable to make principal and interest payments when they
are due.
14
<Page>
As described above, each Fund has similar investment objectives, policies
and permissible investments.
Like any mutual fund, an investment in either Treasury Series or Money
Market Series could lose value. For a more complete discussion of the risks
associated with any of these Series, please refer to the "Risk/Return Summary"
or the section entitled "Investment Risks" in each Series' Prospectus.
OPERATIONS OF MONEY MARKET SERIES
FOLLOWING THE TRANSACTION
Neither PI nor PIM expects Money Market Series to revise its investment
policies as a result of the transaction. Neither PI nor PIM anticipate any
significant changes to Money Market Series' management or general investment
approach. The agents that provide Money Market Series with services, such as its
Custodian and Transfer Agent, which also provide these services to Treasury
Series, are not expected to change.
All of the current investments of Treasury Series are permissible
investments for Money Market Series. Nevertheless, PI may sell securities held
by Treasury Series or PIM may sell securities held by Money Market Series
between shareholder approval and the Effective Time of the transaction as may be
necessary or desirable in the ongoing management of each Series and the
adjustment of each Series' portfolio in anticipation of the merger. Transaction
costs associated with such adjustments will be borne by the Series that incurred
them. Transaction costs associated with such adjustments that occur after the
Effective Time will be borne by Money Market Series.
PURCHASES, REDEMPTIONS, EXCHANGES AND DISTRIBUTIONS
PURCHASING SHARES
The price to buy one share of a class of each Series is that class's net
asset value, or NAV. Each Series offers Class A and Class Z shares.
Shares in the Series are purchased at the next NAV calculated after your
investment is received and accepted, plus any applicable sales charge. Each
Series' NAV is normally calculated once each business day as of the close of
regular trading on the New York Stock Exchange (usually, 4:00 p.m., New York
time). Refer to each Series' Prospectus for more information regarding how to
buy shares.
REDEEMING SHARES
Your shares will be sold at the next NAV determined after your order to sell
is received. Refer to each Series' Prospectus for more information regarding how
to sell shares.
MINIMUM INVESTMENT REQUIREMENTS
For each Series, the minimum initial investment amount is $1,000 for Class A
shares. There is no minimum initial investment amount for Class Z shares,
although Class Z shares are available only to a limited group of investors.
Refer to each Series' Prospectus for more information regarding eligibility to
purchase Class Z shares.
PURCHASES AND REDEMPTIONS OF TREASURY SERIES
At the close of business on November 19, 2003, Treasury Series closed to new
accounts pending the transaction with Money Market Series. Shareholders of
Treasury Series may redeem shares through the Effective Time of the transaction.
If the transaction is approved, the purchase and redemption policies will be the
same as the applicable policies of Money Market Series.
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EXCHANGES OF SERIES SHARES
The exchange privilege currently offered by Treasury Series is the same as
for Money Market Series and is not expected to change after the transaction.
Shareholders of the Series may exchange their shares for shares of any other
JennisonDryden or Strategic Partners Mutual Funds. Refer to each Series'
Prospectus for restrictions governing exchanges.
DIVIDENDS AND OTHER DISTRIBUTIONS
Both Series distribute substantially all of their net investment income and
net capital gains to shareholders each year. Both Series declare dividends, if
any, annually. At or before the Effective Time, Treasury Series shall declare
additional dividends or other distributions in order to distribute substantially
all of its investment income and realized capital gains for its taxable year
ending upon completion of the transaction.
THE PROPOSED TRANSACTION
PLAN OF REORGANIZATION
The Plan describes the terms and conditions under which the proposed
transaction may be completed. Significant provisions of the Plan are summarized
below; however, this summary is qualified in its entirety by reference to the
Plan, the form of which is attached as Attachment A to this Proxy Statement.
The Plan contemplates that Treasury Series will transfer all of its assets
to, and all of its liabilities will be assumed by, Money Market Series at the
Effective Time and Money Market Series will be the surviving Series. Each whole
and fractional Class A share of Treasury Series will be exchanged for whole and
fractional Class A shares of equal net asset value of Money Market Series. Each
whole and fractional Class Z share of Treasury Series will be exchanged for
whole and fractional Class Z shares of equal net asset value of Money Market
Series. If requested, Money Market Series will issue certificates representing
its shares, but only upon surrender of certificates for shares of Treasury
Series.
Immediately after the closing of the transaction, each former Treasury
Series shareholder will own shares of Money Market Series equal to the aggregate
net asset value of that shareholder's shares of Treasury Series immediately
prior to the closing of the transaction. The net asset value per share of Money
Market Series will not be affected by the transaction. Thus, the transaction
will not result in a dilution of the pecuniary interests of shareholders of
either Series. However, the transaction will reduce the percentage ownership of
each Series' shareholders below such shareholder's current percentage of
ownership in either Series.
All assets, rights, privileges, powers and franchises of Treasury Series,
and all debts due on whatever account to it, shall be taken and deemed to be
transferred to and vested in Money Market Series without further act or deed,
and all such assets, rights, privileges, powers and franchises, and all and
every other interest of Treasury Series, shall be thereafter effectively the
property of Money Market Series as they were of Treasury Series. Money Market
Series generally will be responsible for all of the liabilities and obligations
of Treasury Series. The value of the assets and liabilities of Treasury Series
will be determined at the Effective Time, using the valuation procedures set
forth in the Prospectus and Statement of Additional Information for Treasury
Series. The net asset value of a share of Money Market Series will be determined
as of the same time using the valuation procedures set forth in its Prospectus
and Statement of Additional Information.
Any transfer taxes payable upon issuance of shares of Money Market Series in
a name other than that of the registered holder of the shares on the books of
Treasury Series, as of that time, will be payable by the person to whom such
shares are to be issued as a condition of such transfer.
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The completion of the transaction is subject to a number of conditions set
forth in the Plan. In addition, the Plan may be amended, except that no
amendment that may have a materially adverse effect on the shareholders'
interests may be made subsequent to the Meeting.
REASONS FOR THE TRANSACTION
The Board of Trustees (the Board) of Government Securities Trust has
determined that the transaction is in the best interests of the shareholders of
Treasury Series and that the transaction will not result in a dilution of the
pecuniary interests of shareholders of Treasury Series.
In considering the transaction, the Board considered a number of factors
that it believes benefits the shareholders of Treasury Series. The Board
considered that, following the transaction, the shareholders of Treasury Series
will remain invested in a money market mutual fund which has the same, or
similar investment objective, policies and restrictions, and similar investment
techniques. The Board also considered the fact that the performance histories of
Treasury Series and Money Market Series are substantially similar.
The Board also considered that, because of the expected increase in expenses
to shareholders resulting from the redemption of sweep assets by Wachovia, the
proposed transaction would benefit shareholders of Treasury Series by reducing
the amount of the expected increase in operating expenses to be borne by the
remaining shareholders of Treasury Series. The Board considered that the
exchange of shares pursuant to the transaction will not result in taxable gain
or loss for U.S. federal income tax purposes for its shareholders. The Board
also considered the fact that the Series have similar policies with respect to
purchases, redemptions, exchanges and distributions.
The Board of Trustees of Government Securities Trust has also determined
that the transaction is in the best interests of shareholders of Money Market
Series and that the transaction will not result in a dilution of the pecuniary
interests of shareholders of Money Market Series.
PI recommended the transaction to the Board of each Series at meetings held
on November 18, 2003. In recommending the transaction, PI advised the Board that
the Series have similar investment objectives, policies and investment
portfolios.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
Government Securities Trust, which has two series (Treasury Series and Money
Market Series), was organized under the laws of Massachusetts on September 22,
1981 as an unincorporated business trust, commonly referred to as a
Massachusetts business trust. Government Securities Trust is registered with the
United States Securities and Exchange Commission as an open-end management
investment company.
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares in separated series and classes within such
securities. Treasury Series and Money Market Series are each authorized to issue
an unlimited number of shares. The shares of Treasury Series are currently
divided into three classes, designated as Class A, Class S and Class Z. The
shares of Money Market Series are currently divided into two classes, designated
as Class A and Class Z. Each class of common stock represents an interest in the
same assets of Money Market Series and is identical in all respects except that:
- each class is subject to different expenses which may affect performance;
- each class has exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement and has separate
voting rights on any matter submitted to shareholders in which the
interests of that class differ from the interests of any other class;
- each class has a different exchange privilege; and
- Class Z shares are offered exclusively for sale to a limited group of
investors.
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Shares of Money Market Series, when issued and paid for are fully paid and
nonassessable. The voting and dividend rights, the right of redemption and the
privilege of exchange are described in Money Market Series' Prospectus.
Government Securities Trust does not intend to hold annual meetings of
shareholders. There will normally be no meetings of shareholders for the purpose
of electing Trustees unless less than a majority of the Trustees holding office
have been elected by shareholders, at which time the Trustees then in office
will call a shareholder meeting for the election of Trustees. Shareholders of
record of two-thirds of the outstanding shares of Government Securities Trust
entitled to vote in the election of Trustees may remove a Trustee by votes cast
in person or by proxy at a meeting called for that purpose. The Trustees are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee, or to transact any other business, when
requested in writing to do so by the shareholders of record holding at least a
majority of shares entitled to vote at the meeting.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The transaction is intended to qualify for U.S. federal income tax purposes
as a reorganization under the Code. Treasury Series will receive an opinion from
Shearman & Sterling LLP, counsel to Treasury Series, substantially to the effect
that:
1. The acquisition by Money Market Series of the assets of Treasury Series
in exchange solely for voting shares of Money Market Series and the
assumption by Money Market Series of the liabilities of Treasury Series,
if any, followed by the distribution of the Money Market Series shares
acquired by Treasury Series pro rata to its shareholders, will constitute
a "reorganization" within the meaning of Section 368(a)(1) of the Code,
and Treasury Series and Money Market Series each will be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
2. The shareholders of Treasury Series will not recognize gain or loss upon
the exchange of all of their shares of Treasury Series solely for shares
of Money Market Series, as described above and in the Agreement;
3. No gain or loss will be recognized by Treasury Series upon the transfer
of its assets to Money Market Series in exchange solely for Class A and
Class Z shares of Money Market Series and the assumption by Money Market
Series of the liabilities of Treasury Series, if any. In addition, no
gain or loss will be recognized by Treasury Series on the distribution of
such shares to the shareholders of Treasury Series;
4. No gain or loss will be recognized by Money Market Series upon the
acquisition of the assets of Treasury Series in exchange solely for
shares of Money Market Series and the assumption of the liabilities of
Treasury Series, if any;
5. Money Market Series' tax basis for the assets acquired from Treasury
Series will be the same as the tax basis of these assets when held by
Treasury Series immediately before the transfer, and the holding period
of such assets acquired by Money Market Series will include the holding
period of these assets when held by Treasury Series;
6. Treasury Series' shareholders' tax basis for the shares of Money Market
Series to be received by them pursuant to the reorganization will be the
same as their tax basis in Treasury Series shares exchanged therefor; and
7. The holding period of Money Market Series shares to be received by the
shareholders of Treasury Series will include the holding period of their
Treasury Series shares exchanged provided such Treasury Series shares
were held as capital assets on the date of the exchange.
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An opinion of counsel does not have the effect of a private letter ruling
from the Internal Revenue Service (the "IRS") and is not binding on the IRS or
any court. If the transaction is consummated but fails to qualify as a
"reorganization" within the meaning of section 368 of the Code, the transaction
would be treated as a taxable sale of assets by the Treasury Series to the Money
Market Series followed by a taxable liquidation of the Treasury Series, and the
shareholders of the Treasury Series would recognize a taxable gain or tax loss
equal to the difference between their adjusted tax basis in the shares of the
Treasury Series and the fair market value of the shares of the Money Market
Series received in exchange therefor.
The shareholders of the Treasury Series that receive the shares of the Money
Market Series pursuant to the transaction may incur taxable gain attributable to
unrealized gains of the Money Market Series in the year that the Money Market
Series realizes and distributes such gains. This will be true notwithstanding
that the value of the shares of the Money Market Series received by such
shareholders pursuant to the transaction reflected the appreciation in value
attributable to such unrealized gains at the time of the transaction.
To the extent that the Treasury Series has loss carryforwards at the time of
the transaction, the shareholders of the Treasury Series may not be able to
benefit from such loss carryforwards after the transaction.
Shareholders of Treasury Series should consult their tax advisers regarding
the tax consequences to them of the transaction in light of their individual
circumstances. In addition, because the foregoing discussion relates only to the
U.S. federal income tax consequences of the transaction, shareholders also
should consult their tax advisers as to state, local and foreign tax
consequences to them, if any, of the transaction.
CONCLUSION
The Plan was approved by the Board of Trustees of Government Securities
Trust on behalf Treasury Series and Money Market Series, at meetings held on
November 18, 2003. The Board determined that the transaction is in the best
interests of shareholders of each Series and that the interests of existing
shareholders of Treasury Series and Money Market Series, as the case may be,
would not be diluted as a result of the transaction. If the shareholders of
Treasury Series do not approve the transaction, or if the transaction is not
completed, Treasury Series will continue to engage in business as a registered
investment company and the Board of Trustees of Government Securities Trust will
consider other proposals for Treasury Series, including proposals for the
reorganization or liquidation of the Series.
ADDITIONAL INFORMATION ABOUT MONEY MARKET SERIES
Money Market Series' Prospectus dated January 31, 2003, as supplemented to
date, is enclosed with this Proxy Statement and is incorporated into this Proxy
Statement by reference. The Prospectus contains additional information about
Money Market Series, including its investment objective and policies, manager,
investment adviser, advisory fees and expenses, organization and procedures for
purchasing and redeeming shares. The Prospectus also contains Money Market
Series' financial highlights for the fiscal period ended November 30, 2002,
which are incorporated into this Proxy Statement by reference. The audited
financial statements of Money Market Series are included in the Series' Annual
Report dated November 30, 2002, which is also enclosed with this Proxy
Statement. The unaudited financial highlights of Money Market Series for the
six-month period ended May 31, 2003 are incorporated by reference to the Series'
Semi-Annual Report dated May 31, 2003. The Semi-Annual Report also includes the
unaudited financial statements of Money Market Series and is also enclosed with
this Proxy Statement.
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MISCELLANEOUS
LEGAL MATTERS
The validity of shares of Money Market Series to be issued pursuant to the
Plan will be passed upon by Sullivan and Worcester, Massachusetts counsel to
Dryden Government Securities Trust.
INDEPENDENT AUDITORS
The audited financial statements of Treasury Series and Money Market Series,
incorporated by reference into the Statement of Additional Information, have
been audited by PricewaterhouseCoopers LLP, independent auditors, whose reports
thereon are included in the Annual Reports to Shareholders for the fiscal year
ended November 30, 2002. The financial statements audited by
PricewaterhouseCoopers LLP have been incorporated by reference in reliance on
their reports given on their authority as experts in auditing and accounting.
AVAILABLE INFORMATION
Treasury Series and Money Market Series are each subject to the Investment
Company Act of 1940, as amended (the 1940 Act), and in accordance with these
laws, they each file reports, proxy material and other information with the
Commission. Such reports, proxy and information statements, proxy material and
other information can be inspected and copied at the Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling the Commission at 1-202-942-8090. Reports and other
information about the Funds are available on the EDGAR Database on the
Commission's Internet site at http: //www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing to
the Commission's Public Reference Section, Washington, D.C. 20549-0102.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise Treasury Series, care of Prudential Investment Management
Services LLC, Gateway Center Three, 100 Mulberry Street, 14th Floor, Newark, New
Jersey 07102, whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of this Proxy
Statement you wish to receive in order to supply copies to the beneficial owners
of the shares.
SHAREHOLDER PROPOSALS
Government Securities Trust is not required to hold regular annual meetings
and, in order to minimize costs, does not intend to hold meetings of
shareholders unless so required by applicable law, regulatory policy or if
otherwise deemed advisable by its Board. Therefore, it is not practicable to
specify a date by which shareholder proposals must be received in order to be
incorporated in an upcoming proxy statement for an annual meeting. If the
proposal is approved at the Meeting, there will likely not be any future
shareholder meetings of Treasury Series.
It is the present intention of the Board of Trustees of Government
Securities Trust not to hold annual meetings of shareholders unless required to
do so by the 1940 Act.
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OTHER BUSINESS
Management of Treasury Series knows of no business to be presented at the
Meeting other than the proposal described in this Proxy Statement. However, if
any other matter requiring a shareholder vote should be properly brought before
the meeting, the proxies will vote according to their best judgment in the
interest of Treasury Series, taking into account all relevant circumstances.
By order of the Board of Trustees of
Government Securities Trust
/s/ Jonathan D. Shain
JONATHAN D. SHAIN
SECRETARY
February , 2004
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN YOUR PROXY PROMPTLY.
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ATTACHMENT A
FORM OF PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan") is made as of this th day of
, 2004, by Dryden Government Securities Trust (the "Trust"), a business
trust organized under the laws of the Commonwealth of Massachusetts with its
principal place of business at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102, on behalf of the Money Market Series (the "Acquiring
Fund") and the U.S. Treasury Money Market Series (the "Acquired Fund"), both
series of the Trust. Together, the Acquiring Fund and Acquired Fund are referred
to as the "Funds."
The reorganization (hereinafter referred to as the "Reorganization") will
consist of (i) the acquisition by the Acquiring Fund, of substantially all of
the property, assets and goodwill of the Acquired Fund and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund in exchange solely
for full and fractional shares of beneficial interest, par value $0.001 each, of
the Acquiring Fund ("Acquiring Fund Shares"); (ii) the distribution of Acquiring
Fund Shares to the shareholders of the Acquired Fund according to their
respective interests in complete liquidation of the Acquired Fund; and
(iii) the dissolution of the Acquired Fund as soon as practicable after the
closing (as defined in Section 3, hereinafter called the "Closing"), all upon
and subject to the terms and conditions of this Plan hereinafter set forth.
In order to consummate the Plan, the following actions shall be taken by the
Trust on behalf of the Acquiring Fund and the Acquired Fund:
1. SALE AND TRANSFER OF ASSETS, LIQUIDATION AND DISSOLUTION OF ACQUIRED
FUND.
(a) Subject to the terms and conditions of this Plan, the Trust on behalf
of the Acquired Fund shall convey, transfer and deliver to the Acquiring Fund at
the Closing all of the Acquired Fund's then existing assets, free and clear of
all liens, encumbrances, and claims whatsoever (other than shareholders' rights
of redemption), except for cash, bank deposits, or cash equivalent securities in
an estimated amount necessary to (i) pay the costs and expenses in carrying out
this Plan (including, but not limited to, fees of counsel and accountants, and
expenses of its liquidation and dissolution contemplated hereunder).
(ii) discharge its unpaid liabilities on its books at the closing date (as
defined in section 3, hereinafter the "Closing Date"), including, but not
limited to, its income dividends and capital gains distributions, if any,
payable for the period prior to, and through, the Closing Date; and (iii) pay
such contingent liabilities as the Board of Trustees shall reasonably deem to
exist against the Acquired Fund, if any, at the Closing Date, for which
contingent and other appropriate liabilities reserves shall be established on
theAcquired Fund's books (hereinafter "Net Assets"). TheAcquired Fund shall also
retain any and all rights that it may have over and against any person that may
have accrued up to and including the close of business on the Closing Date.
(b) Subject to the terms and conditions of this Plan, the Trust on behalf
of the Acquiring Fund shall at the Closing deliver to the Acquired Fund the
number of Acquiring Fund Shares, determined by dividing the net asset value per
share of the shares of the Acquired Fund ("Acquired Fund Shares") on the Closing
Date by the net asset value per share of the Acquiring Fund Shares, and
multiplying the result thereof by the number of outstanding Acquired Fund Shares
as of the close of regular trading on the New York Stock Exchange (the "NYSE")
on the Closing Date. All such values shall be determined in the manner and as of
the time set forth in Section 2 hereof.
(c) Immediately following the Closing, the Acquired Fund shall distribute
pro rata to its shareholders of record as of the close of business on the
Closing Date, the Acquiring Fund Shares received by the Acquired Fund pursuant
to this Section 1 and then shall terminate and dissolve. Such liquidation and
distribution shall be accomplished by the establishment of accounts on the share
records of the Trust relating to the Acquiring Fund and noting in such accounts
the type and amounts of Acquiring Fund
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Shares that former Acquired Fund shareholders are due based on their respective
holdings of the Acquired Fund as of the close of business on the Closing Date.
Fractional Acquiring Fund Shares shall be carried to the third decimal place.
The Acquiring Fund shall not issue certificates representing the Acquiring Fund
shares in connection with such exchange.
2. VALUATION.
(a) The value of the Acquired Fund's Net Assets to be transferred to the
Acquiring Fund hereunder shall be computed as of the close of regular trading on
the NYSE on the Closing Date (the "Valuation Time") using the valuation
procedures set forth in Trust's currently effective prospectus.
(b) The net asset value of a share of the Acquiring Fund shall be
determined to the third decimal point as of the Valuation Time using the
valuation procedures set forth in the Trust's currently effective prospectus.
(c) The net asset value of a share of the Acquired Fund shall be determined
to the third decimal point as of the Valuation Time using the valuation
procedures set forth in the Trust's currently effective prospectus.
3. CLOSING AND CLOSING DATE.
The consummation of the transactions contemplated hereby shall take place at
the Closing (the "Closing"). The date of the Closing (the "Closing Date") shall
be May 1, 2004, or such earlier or later date as determined by the Trust's
officers. The Closing shall take place at the principal office of the Trust at
5:00 P.M. Eastern time on the Closing Date. The Trust on behalf of the Acquired
Fund shall have provided for delivery as of the Closing of the Acquired Fund's
Net Assets to be transferred to the account of the Acquiring Fund at the
Acquiring Fund's Custodian, State Street Bank and Trust Company. Also, the Trust
on behalf of the Acquired Fund shall produce at the Closing a list of names and
addresses of the shareholders of record of the Acquired Fund Shares and the
number of full and fractional shares owned by each such shareholder, all as of
the Valuation Time, certified by its transfer agent or by its President or
Vice-President to the best of its or his or her knowledge and belief. The Trust
on behalf of the Acquiring Fund shall issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited to the Acquired Fund's
account on the Closing Date to the Secretary of the Trust, or shall provide
evidence satisfactory to the Acquired Fund that the Acquiring Fund Shares have
been registered in an account on the books of the Acquiring Fund in such manner
as the Trust on behalf of Acquired Fund may request.
4. REPRESENTATIONS AND WARRANTIES BY THE TRUST ON BEHALF OF THE ACQUIRED
FUND.
The Trust makes the following representations and warranties about the
Acquired Fund:
(a) The Acquired Fund is a series of the Trust, a corporation organized
under the laws of the Commonwealth of Massachusetts and validly existing and in
good standing under the laws of that jurisdiction. The Trust is duly registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment Trust and all of the Acquired Fund Shares sold
were sold pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended (the "1933 Act").
(b) The Trust on behalf of the Acquired Fund is authorized to issue an
unlimited number of shares of beneficial interest's acquired Fund shares, par
value $0.001 each, each outstanding share of which is fully paid,
non-assessable, freely transferable and has full voting rights.
(c) The financial statements appearing in the Trust's Annual Report to
Shareholders for the fiscal year ended November 30, 2002, audited by
PricewaterhouseCoopers LLP and the financial statements appearing in the Trust's
Semi-Annual Report to Shareholders for the period ended May 31, 2003, fairly
present the financial position of the Acquired Fund as of such dates and the
results of its operations for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent basis.
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(d) The Trust has the necessary power and authority to conduct the Acquired
Fund's business as such business is now being conducted.
(e) The Trust on behalf of the Acquired Fund is not a party to or obligated
under any provision of the Trust's Amended and Restated Charter or By-laws, or
any contract or any other commitment or obligation, and is not subject to any
order or decree, that would be violated by its execution of or performance under
this Plan.
(f) The Acquired Fund does not have any unamortized or unpaid
organizational fees or expenses.
(g) The Acquired Fund has elected to be treated as a regulated investment
Trust (a "RIC") for federal income tax purposes under Part I of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") and the Acquired Fund
has qualified as a RIC for each taxable year since its inception, and will
qualify as of the Closing Date. The consummation of the transactions
contemplated by this Plan will not cause the Acquired Fund to fail to satisfy
the requirements of subchapter M of the Code.
(h) The Acquired Fund, or its agents, (i) holds a valid Form W-8BEN,
Certificate of Foreign Status of Beneficial Owner for United States Withholding
(or other appropriate series of Form W-8, as the case may be), or Form W-9,
Request for Taxpayer Identification Number and Certification, for each Acquired
Fund shareholder of record, which Form W-8 or Form W-9 can be associated with
reportable payments made by the Acquired Fund to such shareholder, and/or
(ii) has otherwise timely instituted the appropriate backup withholding
procedures with respect to such shareholder as provided by Section 3406 of the
Code.
5. REPRESENTATIONS AND WARRANTIES BY THE TRUST ON BEHALF OF THE ACQUIRING
FUND.
The Trust makes the following representations and warranties about the
Acquiring Fund:
(a) The Acquiring Fund is a series of the Trust, organized under the laws
of the State of Massachusetts and validly existing and in good standing under
the laws of that jurisdiction. The Trust is duly registered under the 1940 Act
as an open-end, management investment Trust and all of the Acquiring Fund Shares
sold have been sold pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended (the "1933 Act").
(b) The Trust on behalf of the Acquiring Fund is authorized to issue an
unlimited number of shares of beneficial interest's Acquiring Fund shares, par
value $0.001 each, each outstanding share of which is freely paid,
non-assessable, fully transferable and has full voting rights.
(c) At the Closing, Acquiring Fund Shares will be eligible for offering to
the public in those states of the United States and jurisdictions in which the
shares of the Acquired Fund are presently eligible for offering to the public,
and there are a sufficient number of Acquiring Fund Shares registered under the
1933 Act to permit the transfers contemplated by this Plan to be consummated.
(d) The financial statements appearing in the Trust's Annual Report to
Shareholders for the fiscal year ended November 30, 2002, audited by
PricewaterhouseCoopers LLP and the financial statements appearing in the Trust's
Semi-Annual Report to Shareholders for the period ended May 31, 2003, fairly
present the financial position of the Acquired Fund as of such dates and the
results of its operations for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent basis.
(e) The Trust has the necessary power and authority to conduct the
Acquiring Fund's business as such business is now being conducted.
(f) The Trust on behalf of the Acquiring Fund is not a party to or
obligated under any provision of the Trust's Amended and Restated Charter or
By-laws, or any contract or any other commitment or obligation, and is not
subject to any order or decree, that would be violated by its execution of or
performance under this Plan.
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(g) The Acquiring Fund has to be treated as a RIC for federal income tax
purposes under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and the Acquiring Fund has qualified as a RIC for each
taxable year since its inception, and will qualify as of the Closing Date. The
consummation of the transactions contemplated by this Plan will not cause the
Acquiring Fund to fail to satisfy the requirements of subchapter M of the Code.
6. REPRESENTATIONS AND WARRANTIES BY THE TRUST ON BEHALF OF THE FUNDS.
The Trust makes the following representations and warranties about the
Funds:
(a) The statement of assets and liabilities to be created by the Trust for
each of the Funds as of the Valuation Time for the purpose of determining the
number of Acquiring Fund Shares to be issued pursuant to Section 1 of this Plan
will accurately reflect the Net Assets in the case of the Acquired Fund and the
net assets in the case of the Acquiring Fund, and outstanding shares, as of such
date, in conformity with generally accepted accounting principles applied on a
consistent basis.
(b) At the Closing, the Funds will have good and marketable title to all of
the securities and other assets shown on the statement of assets and liabilities
referred to in '(a)' above, free and clear of all liens or encumbrances of any
nature whatsoever, except such imperfections of title or encumbrances as do not
materially detract from the value or use of the assets subject thereto, or
materially affect title thereto.
(c) Except as may be disclosed in the Trust's current effective prospectus,
there is no material suit, judicial action, or legal or administrative
proceeding pending or threatened against either of the Funds.
(d) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by either of the Funds.
(e) The execution, delivery, and performance of this Plan have been duly
authorized by all necessary action of the Trust's Board of Trustees, and this
Plan constitutes a valid and binding obligation enforceable in accordance with
its terms.
(f) The Trust anticipates that consummation of this Plan will not cause
either of the Funds to fail to conform to the requirements of Subchapter M of
the Code for Federal income taxation as a RIC at the end of each fiscal year.
(g) The Trust has the necessary power and authority to conduct the business
of the Funds, as such business is now being conducted.
7. INTENTIONS OF THE TRUST ON BEHALF OF THE FUNDS.
(a) The Trust intends to operate each Fund's respective business as
presently conducted between the date hereof and the Closing.
(b) The Trust intends that the Acquired Fund will not acquire the Acquiring
Fund Shares for the purpose of making distributions thereof to anyone other than
the Acquired Fund's shareholders.
(c) The Trust on behalf of the Acquired Fund intends, if this Plan is
consummated, to liquidate and dissolve the Acquired Fund.
(d) The Trust intends that, by the Closing, each of the Fund's Federal and
other tax returns and reports required by law to be filed on or before such date
shall have been filed, and all Federal and other taxes shown as due on said
returns shall have either been paid or adequate liability reserves shall have
been provided for the payment of such taxes.
(e) At the Closing, the Trust on behalf of the Acquired Fund intends to
have available a copy of the shareholder ledger accounts, certified by the
Trust's transfer agent or its President or a Vice-President to the best of its
or his or her knowledge and belief, for all the shareholders of record of
Acquired Fund
A-4
<Page>
Shares as of the Valuation Time who are to become shareholders of the Acquiring
Fund as a result of the transfer of assets that is the subject of this Plan.
(f) The Trust intends to mail to each shareholder of record of the Acquired
Fund entitled to vote at the meeting of its shareholders at which action on this
Plan is to be considered, in sufficient time to comply with requirements as to
notice thereof, a Combined Proxy Statement and Prospectus that complies in all
material respects with the applicable provisions of Section 14(a) of the
Securities Exchange Act of 1934, as amended, and Section 20(a) of the 1940 Act,
and the rules and regulations, respectively, thereunder.
(g) The Trust intends to file with the U.S. Securities and Exchange
Commission a registration statement on Form N-14 under the 1933 Act relating to
the Acquiring Fund Shares issuable hereunder ("Registration Statements"), and
will use its best efforts to provide that the Registration Statement becomes
effective as promptly as practicable. At the time the Registration Statement
becomes effective, it will: (i) comply in all material respects with the
applicable provisions of the 1933 Act, and the rules and regulations promulgated
thereunder; and (ii) not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the time the Registration Statement
becomes effective, at the time of the shareholders' meeting of the Acquired
Fund, and at the Closing Date, the prospectus and statement of additional
information included in the Registration Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY TRUST ON BEHALF OF THE FUNDS.
The consummation of the Plan with respect to the Acquiring Fund and the
Acquired Fund shall be subject to the following conditions:
(a) That: (i) all the representations and warranties contained herein
concerning the Funds shall be true and correct as of the Closing with the same
effect as though made as of and at such date; (ii) performance of all
obligations required by this Plan to be performed by the Trust on behalf of the
Funds shall occur prior to the Closing; and (iii) the Trust shall execute a
certificate signed by the President or a Vice President and by the Secretary or
equivalent officer to the foregoing effect.
(b) That the form of this Plan shall have been adopted and approved by the
appropriate action of the Board of Trustees of the Trust on behalf of the Funds.
(c) That the U.S. Securities and Exchange Commission shall not have issued
an unfavorable management report under Section 25(b) of the 1940 Act or
instituted or threatened to institute any proceeding seeking to enjoin
consummation of the Plan under Section 25(c) of the 1940 Act. And, further, no
other legal, administrative or other proceeding shall have been instituted or
threatened that would materially affect the financial condition of a Fund or
would prohibit the transactions contemplated hereby.
(d) That the Plan contemplated hereby shall have been adopted and approved
by the appropriate action of the shareholders of the Acquired Fund at an annual
or special meeting or any adjournment thereof.
(e) That a distribution or distributions shall have been declared for each
Fund, prior to the Closing Date that, together with all previous distributions,
shall have the effect of distributing to shareholders of each Fund (i) all of
its ordinary income and all of its capital gain net income, if any, for the
period from the close of its last fiscal year to the Valuation Time and
(ii) any undistributed ordinary income and capital gain net income from any
prior period. Capital gain net income has the meaning assigned to such term by
Section 1222(9) of the Code.
(f) That there shall be delivered to the Trust on behalf of the Funds an
opinion in form and substance satisfactory to it from Shearman & Sterling LLP,
counsel to the Trust, to the effect that, subject
A-5
<Page>
in all respects to the effects of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other laws now or hereafter affecting
generally the enforcement of creditors' rights:
(1) Acquiring Fund Shares to be issued pursuant to the terms of this
Plan have been duly authorized and, when issued and delivered as provided in
this Plan, will have been validly issued and fully paid and will be
non-assessable by the Trust, on behalf of the Acquiring Fund;
(2) All actions required to be taken by the Trust and/or Funds to
authorize and effect the Plan contemplated hereby have been duly authorized
by all necessary action on the part of the Trust and the Funds;
(3) Neither the execution, delivery nor performance of this Plan by
the Trust violates any provision of the Trust's Amended and Restated Charter
or By-laws, or the provisions of any agreement or other instrument known to
such counsel to which the Trust is a party or by which the Funds are
otherwise bound; this Plan is the legal, valid and binding obligation of the
Trust and each Fund and is enforceable against the Trust and/or each Fund in
accordance with its terms; and
(4) The Trust's registration statement, of which the prospectus dated
January 31, 2003 relating to each Fund (the "Prospectus") is a part, is, at
the time of the signing of this Plan, effective under the 1933 Act, and, to
the best knowledge of such counsel, no stop order suspending the
effectiveness of such registration statement has been issued, and no
proceedings for such purpose have been instituted or are pending before or
threatened by the U.S. Securities and Exchange Commission under the 1933
Act, and nothing has come to counsel's attention that causes it to believe
that, at the time the Prospectus became effective, or at the time of the
signing of this Plan, or at the Closing, such Prospectus (except for the
financial statements and other financial and statistical data included
therein, as to which counsel need not express an opinion), contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and such counsel knows of no legal or government proceedings
required to be described in the Prospectus, or of any contract or document
of a character required to be described in the Prospectus that is not
described as required.
In giving the opinions set forth above, counsel may state that it is relying
on certificates of the officers of the Trust with regard to matters of fact, and
certain certifications and written statements of governmental officials with
respect to the good standing of the Trust.
(g) That the Trust's Registration Statement with respect to the Acquiring
Fund Shares to be delivered to the Acquired Fund's shareholders in accordance
with this Plan shall have become effective, and no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto, shall have been issued prior to the Closing Date or shall be in effect
at Closing, and no proceedings for the issuance of such an order shall be
pending or threatened on that date.
(h) That the Acquiring Fund Shares to be delivered hereunder shall be
eligible for sale by the Acquiring Fund with each state commission or agency
with which such eligibility is required in order to permit the Acquiring Fund
Shares lawfully to be delivered to each shareholder of the Acquired Fund.
(i) That, at the Closing, there shall be transferred to the Acquiring Fund
aggregate Net Assets of the Acquired Fund comprising at least 90% in fair market
value of the total net assets and 70% of the fair market value of the total
gross assets recorded on the books of Acquired Fund on the Closing Date.
9. EXPENSES.
(a) The Trust represents and warrants that there are no broker or finders'
fees payable by it in connection with the transactions provided for herein.
A-6
<Page>
(b) The expenses of entering into and carrying out the provisions of this
Plan shall be borne by the Funds on a pro rata basis in proportion to the
Acquiring Fund's and Acquired Fund's net assets as of the Closing.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
(a) Anything contained in this Plan to the contrary notwithstanding, this
Plan may be terminated and abandoned at any time (whether before or after
approval thereof by the shareholders of an Acquired Fund) prior to the Closing
or the Closing may be postponed by the Trust on behalf of a Fund by resolution
of the Board of Trustees, if circumstances develop that, in the opinion of the
Board, make proceeding with the Plan inadvisable.
(b) If the transactions contemplated by this Plan have not been consummated
by August 31, 2004, the Plan shall automatically terminate on that date, unless
a later date is agreed to by the Trust on behalf of the relevant Funds.
(c) In the event of termination of this Plan pursuant to the provisions
hereof, the same shall become void and have no further effect with respect to
the Acquiring Fund or Acquired Fund, and neither the Trust, the Acquiring Fund
nor the Acquired Fund, nor the directors, officers, agents or shareholders shall
have any liability in respect of this Plan.
(d) At any time prior to the Closing, any of the terms or conditions of
this Plan may be waived by the party who is entitled to the benefit thereof by
action taken by the Trust's Board of Trustees if, in the judgment of such Board
of Trustees, such action or waiver will not have a material adverse affect on
the benefits intended under this Plan to its shareholders, on behalf of whom
such action is taken.
(e) The respective representations and warranties contained in Sections 4
to 6 hereof shall expire with and be terminated by the Plan of Reorganization,
and neither the Trust nor any of its officers, directors, agents or shareholders
nor the Funds nor any of their shareholders shall have any liability with
respect to such representations or warranties after the Closing. This provision
shall not protect any officer, director, agent or shareholder of any of the
Funds or the Trust against any liability to the entity for which that officer,
director, agent or shareholder so acts or to any of the Trust's shareholders to
which that officer, director, agent or shareholder would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties in the conduct of such office.
(f) If any order or orders of the U.S. Securities and Exchange Commission
with respect to this Plan shall be issued prior to the Closing and shall impose
any terms or conditions that are determined by action of the Board of Trustees
of the Trust on behalf of the Funds to be acceptable, such terms and conditions
shall be binding as if a part of this Plan without further vote or approval of
the shareholders of the Acquired Fund, unless such terms and conditions shall
result in a change in the method of computing the number of Acquiring Fund
Shares to be issued to the Acquired Fund in which event, unless such terms and
conditions shall have been included in the proxy solicitation material furnished
to the shareholders of the Acquired Fund prior to the meeting at which the
transactions contemplated by this Plan shall have been approved, this Plan shall
not be consummated and shall terminate unless the Trust on behalf of the
Acquired Fund shall promptly call a special meeting of shareholders at which
such conditions so imposed shall be submitted for approval.
11. ENTIRE PLAN AND AMENDMENTS.
This Plan embodies the entire plan of the Trust on behalf of the Funds and
there are no agreements, understandings, restrictions, or warranties between the
parties other than those set forth herein or herein provided for. This Plan may
be amended only by the Trust on behalf of a Fund in writing. Neither this Plan
nor any interest herein may be assigned without the prior written consent of the
Trust on behalf of the Fund corresponding to the Fund making the assignment.
A-7
<Page>
12. NOTICES.
Any notice, report, or demand required or permitted by any provision of this
Plan shall be in writing and shall be deemed to have been given if delivered or
mailed, first class postage prepaid, addressed to the Trust at Gateway Center
Three, 100 Mulberry Street, Newark, New Jersey 07102, Attention: Secretary.
13. GOVERNING LAW.
This Plan shall be governed by and carried out in accordance with the laws
of the State of Massachusetts.
IN WITNESS WHEREOF, Dryden Government Securities Trust, on behalf of U.S.
Treasury Money Market Series and Money Market Series, has executed this Plan by
its duly authorized officer, all as of the date and year first-above written.
<Table>
Dryden Government Securities Trust
on behalf of U.S. Treasury Money Market Series
and Money Market Series
-------------------------------------- --------------------------------------
Attest: By:
--------------------------------------
Title:
</Table>
A-8
<Page>
TABLE OF CONTENTS TO THE PROXY STATEMENT AND PROSPECTUS
<Table>
3 VOTING INFORMATION
5 Vote Required
5 APPROVAL OF THE TRANSACTION SYNOPSIS
5 Investment Objectives and Policies
6 Investment Advisory Services
6 Expense Structures
7 Purchases, Redemptions, Exchanges and Distributions
7 Tax Considerations
7 Appraisal Rights
7 Potential Benefits from Transaction
7 THE PROPOSED TRANSACTION
7 Series Operating Expenses
8 Shareholder Fees
8 Operating Expense Tables
9 Examples of the Effect of Series Expenses
10 Pro Forma Capitalization
10 Anticipated Impact of the Wachovia Redemptions
12 Performance Comparisons of the Series
13 INVESTMENT OBJECTIVES AND POLICIES
13 Investment Objectives
13 Principal Investment Strategies
13 COMPARISON OF OTHER POLICIES OF THE SERIES
13 Investment Restrictions
13 COMPARISON OF PRINCIPAL RISK FACTORS
14 OPERATIONS OF MONEY MARKET SERIES FOLLOWING THE TRANSACTION
14 PURCHASES, REDEMPTIONS, EXCHANGES AND DISTRIBUTIONS
14 Purchasing Shares
14 Redeeming Shares
14 Minimum Investment Requirements
14 Purchases and Redemptions of Treasury Series
15 Exchanges of Series Shares
15 Dividends and Other Distributions
15 THE PROPOSED TRANSACTION
15 Plan of Reorganization
16 Reasons for the Transaction
16 Description of the Securities to be Issued
17 U.S. Federal Income Tax Considerations
18 Conclusion
18 ADDITIONAL INFORMATION ABOUT MONEY MARKET SERIES
19 MISCELLANEOUS
19 Legal Matters
19 Independent Auditors
19 Available Information
19 Notice to Banks, Broker-Dealers and Voting Trustees and
Their Nominees
19 SHAREHOLDER PROPOSALS
20 OTHER BUSINESS
A-1 ATTACHMENT A: Plan of Reorganization
ENCLOSURES: Annual Report of Treasury Series and Money
Market Series for the fiscal year ended November 30, 2002.
Semi-Annual Report of Treasury Series and Money Market
Series dated May 31, 2003. Prospectus of Money Market Series
</Table>
<Page>
MONEY MARKET SERIES,
A SERIES OF
DRYDEN GOVERNMENT SECURITIES TRUST
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
(800) 225-1852
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY , 2004
U.S. TREASURY MONEY MARKET SERIES,
A SERIES OF
DRYDEN GOVERNMENT SECURITIES TRUST
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
(800) 225-1852
This Statement of Additional Information specifically relates to the
proposed transaction (Transaction) between U.S. Treasury Money Market Series
(Treasury Series) and Money Market Series (Money Market Series), each of which
are series of Dryden Government Securities Trust (Government Securities Trust)
under which Treasury Series will transfer all of its assets to, and all of its
liabilities will be assumed by, Money Market Series. Money Market Series will be
the surviving series, and each whole and fractional share of Treasury Series
shall be exchanged for whole and fractional shares of equal net asset value of
Money Market Series to occur on March 19, 2004, or such later date. This
Statement of Additional Information consists of this cover page and the
following described documents, each of which are included herein unless noted
otherwise:
1. Statement of Additional Information of Government Securities Trust dated
January 31, 2003 (incorporated by reference).
2. Annual Report of Treasury Series for the fiscal year ended November 30,
2002.
3. Annual Report of Money Market Series for the fiscal year ended November
30, 2002.
4. Semi-Annual Report of Money Market Series for the six-month period ended
May 31, 2003. The Semi-Annual Report is unaudited, and reflects all
adjustments which, in the opinion of management of Government Securities
Trust, are necessary to a fair statement of the results for the
six-month period ended May 31, 2003.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Prospectus and Proxy Statement dated February
, 2004, relating to the above-referenced mater. A copy of the Prospectus and
Proxy Statement may be obtained from Money Market Series without charge by
writing or calling Money Market Series at the address or phone number listed
above.
FINANCIAL STATEMENTS
The Annual Report of Treasury Series for the fiscal year ended November 30,
2002 and the Annual Report of Money Market Series for the fiscal year ended
November 30, 2002, each including audited financial statements, the notes
thereto and the report of their independent auditors thereon, are included
herein. The Semi-Annual Report of Money Market Series, for the six-month period
ended May 31, 2003 and the notes thereto, is also included herein.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) -- U.S. TREASURY MONEY MARKET
SERIES AND MONEY MARKET SERIES
The following tables set forth the unaudited pro forma condensed Statement
of Assets and Liabilities and Portfolio of Investments as of November 30, 2003
and the unaudited pro forma condensed Statement of Operations for the period
ended November 30, 2003 for U.S. Treasury Money Market Series and Money Market
Series, as adjusted, giving effect to the Transaction.
<Page>
PRO FORMA FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2003
<Table>
<Caption>
DRYDEN GOVERNMENT SECURITIES TRUST
----------------------------------
MONEY U.S. TREASURY PRO FORMA
MARKET SERIES MONEY MARKET SERIES COMBINED
------------- ------------------- ------------
ASSETS
Investments, at amortized cost $529,344,555 $348,315,339 $877,659,894
Cash 69,362 26,377
Receivable for Series shares sold 2,418,249 5,259,068
Interest receivable 744,692 251,595 996,287
Other assets 14,428 10,663 25,091
------------- ------------------ -------------
TOTAL ASSETS 532,591,286 353,863,042 886,454,328
------------- ------------------- ------------
LIABILITIES
Payable for Series shares reaquired 4,500,644 4,172,065 8,672,709
Accrued expenses and other liabilities 526,293 180,696 706,989
Management fee payable 177,803 120,462 298,265
Distribution fee payable 53,228 37,034 90,262
Dividends payable 30,399 17,656 48,055
Deferred Trustee's fees 10,514 12,279 22,793
------------- ------------------- ------------
TOTAL LIABILITIES 5,298,881 4,540,192 9,839,073
NET ASSETS $527,292,405 $349,322,850 $876,615,255
============= =================== ============
Net Assets were comprised of:
Shares of beneficial interest, at par ($.01 per share) $5,272,924 $3,493,229 $8,766,153
Paid-in capital in excess of par 522,019,481 345,829,621 867,849,102
------------- ------------------- ------------
NET ASSETS NOVEMBER 30, 2003 $527,292,405 $349,322,850 $876,615,255
============= =================== ============
Class A
- --------------------------------------------------------------
Net asset value, offering price and redemption price per share. 1.00 1.00 1.00
============= =================== ============
Class Z
- --------------------------------------------------------------
Net asset value, offering price and redemption price per share. 1.00 1.00 1.00
============= =================== =============
</Table>
See Notes to Pro Forma Financial Statements
<Page>
PRO FORMA FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2003
<Table>
<Caption>
DRYDEN GOVERNMENT SECURITIES TRUST
-----------------------------------
MONEY U.S. TREASURY PRO FORMA PRO FORMA
MARKET SERIES MONEY MARKET SERIES ADJUSTMENTS COMBINED
------------- ------------------- ------------- ------------
NET INVESTMENT INCOME
Income
Interest $7,866,963 $6,092,148 $13,959,111
------------- ------------------- -----------
Expenses
Management fee 2,375,892 2,052,872 4,428,764
Distribution fee - Class A 714,954 634,029 1,348,983
Transfer agent's fees and expenses 1,535,000 196,000 $(52,284)(b) 1,678,716
Custodian's fees and expenses 112,000 101,000 (45,835)(a) 167,165
Registration fees 100,000 73,000 (35,000)(b) 138,000
Reports to shareholders 142,000 52,000 -- 194,000
Audit fee and expenses 27,000 27,000 (27,000)(b) 27,000
Legal fees and expenses 32,000 29,000 (15,000)(b) 46,000
Trustees' fees 15,000 23,000 (23,000)(b) 15,000
Miscellaneous 30,350 12,636 (6,000)(b) 36,986
------------- ------------------- ------------- ------------
Total Expenses 5,084,196 3,200,537 (204,119) 8,080,614
------------- ------------------- ------------
Net investment income 2,782,767 2,891,611 5,878,497.20
------------- ------------------- ------------
NET REALIZED GAINS (LOSSES) ON INVESTMENT TRANSACTIONS 17,514 95,657 113,171
------------- ------------------- -------------
NET INCREASE IN
NET ASSETS RESULTING FROM OPERATIONS $2,800,281 $2,987,268 $5,991,668
============= =================== =============
</Table>
- ----------------------------------------------------------------------
(a) Adjustment to reflect economies of scale
(b) Adjustment to reflect elimination of duplicative expenses.
See Notes to Pro Forma Financial Statements
<Page>
DRYDEN GOVERNMENT SECURITIES TRUST: MONEY MARKET SERIES
NOTES TO PRO-FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION - The Pro-Forma Statement of Assets and Liabilities,
including the Schedule of Investments at November 30, 2003 and the related
Statement of Operations ("Pro Forma Statements") for the year ended
November 30, 2003, reflect the accounts of Dryden Government Securities
Trust: U.S. Treasury Money Market Series, Inc. and Dryden Government
Securities Trust: Money Market Series, Inc., each a "Fund."
The Pro Forma Statements give effect to the proposed transfer of all assets
and liabilities of Dryden Government Securities Trust: U.S. Treasury Money
Market Series, Inc. in exchange for shares in Dryden Government Securities
Trust: Money Market Series, Inc. The Pro Forma Statements should be read in
conjunction with the historical financial statements of each Fund included
in their respective Statement of Additional Information.
2. SHARES OF BENEFICIAL INTEREST - The pro-forma net asset value per share
assumes the issuance of additional Class A, and Z shares of Dryden
Government Securities Trust: Money Market Series, Inc., which would have
been issued on November 30, 2003 in connection with the proposed
reorganization. Shareholders of Dryden Government Securities Trust: U.S.
Treasury Money Market Series, Inc. would become shareholders of Dryden
Government Securities Trust: Money Market Series, Inc., receiving shares of
Dryden Government Securities Trust: Money Market Series, Inc equal to the
value of their holdings in Dryden Government Securities Trust: U.S.
Treasury Money Market Series, Inc. The amount of additional shares assumed
to be issued has been calculated based on the November 30, 2003 net assets
of Dryden Government Securities Trust: U.S. Treasury Money Market Series,
Inc. and Dryden Government Securities Trust: Money Market Series, Inc. the
net asset value per share of as follows:
<Table>
<Caption>
NET ASSET VALUE
DRYDEN GOVERNMENT SECURITIES TRUST: NET ASSETS PER SHARE
MONEY MARKET SERIES
ADDITIONAL SHARES ISSUED 11/30/03 11/30/03
------------------------ -------- --------
Class A & Z 349,322,850 $349,322,850 $1.00
</Table>
3. PRO FORMA OPERATIONS - The Pro Forma Statement of Operations assumes
similar rates of gross investment income for the investments of each Fund.
Accordingly, the combined gross investment income is equal to the sum of
each Fund's gross investment income. Certain expenses have been adjusted to
reflect the expected expenses of the combined entity. The pro-forma
investment management fees and plan of distribution fees of the combined
Fund are based on the fee schedule in effect for Dryden Government
Securities Trust: Money
<Page>
Market Series, Inc. at the combined level of average net assets for the
twelve months ended November 30, 2003. The Pro Forma Statement of
Operations does not include the effect of any realized gains or losses, or
transaction fees incurred in connection with the realignment of the
portfolio.
<Page>
PRO-FORMA PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2003
UNAUDITED
<Table>
<Caption>
PRINCIPAL AMOUNT (000) DESCRIPTION VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. U.S.
TREASURY TREASURY
MONEY MONEY PRO-FORMA MONEY MONEY PRO-FORMA
MARKET SERIES MARKET SERIES COMBINED MARKET SERIES MARKET SERIES COMBINED
- -----------------------------------------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK --.01%
$500 - $500 5.10%, 4/26/04 $507,649 - $507,649
------------ ------------- ------------
FEDERAL HOME LOAN BANK --13.6%
5,160 - 5,160 5.25%, 2/13/04, M.T.N. 5,202,560 - 5,202,560
6,000 - 6,000 1.30%, 12/4/03, F.R.N. 6,000,000 - 6,000,000
5,000 - 5,000 1.25%, 12/11/03, F.R.N. 5,000,000 - 5,000,000
30,000 - 30,000 1.015%, 12/24/03, F.R.N. 29,992,899 - 29,992,899
20,000 - 20,000 1.05%, 1/7/04, F.R.N. 19,997,293 - 19,997,293
33,000 - 33,000 1.01%, 1/14/04, F.R.N. 32,990,932 - 32,990,932
300 - 300 5.35%, 12/1/03 300,000 - 300,000
100 - 100 5.53%, 12/8/03 100,081 - 100,081
100 - 100 5.85%, 12/15/03 100,174 - 100,174
500 - 500 3.26%, 12/19/03 500,512 - 500,512
500 - 500 Zero Coupon, 2/25/04 497,514 - 497,514
1,000 - 1,000 1.25%, 4/15/04 1,000,598 - 1,000,598
10,000 - 10,000 4.875%, 4/16/04 10,134,232 - 10,134,232
250 - 250 1.125%, 5/19/04 249,886 - 249,886
7,000 - 7,000 2.25%, 8/13/04 7,054,429 - 7,054,429
------------ ------------- ------------
119,121,110 - 119,121,110
------------ ------------- ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION --3.5%
15,000 - 15,000 1.01%, 12/15/03 14,994,108 - 14,994,108
12,500 - 12,500 0.99%, 12/31/03 12,489,688 - 12,489,688
758 - 758 5.25%, 2/15/04 764,254 - 764,254
750 - 750 5.625%, 3/12/04 759,203 - 759,203
2,000 - 2,000 3.25%, 5/20/04 2,016,962 - 2,016,962
------------ ------------- ------------
31,024,215 - 31,024,215
------------ ------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION --10.5%
3,817 - 3,817 5.125%, 2/13/04, M.T.N. 3,847,397 - 3,847,397
6,340 - 6,340 1.0025%, 12/10/03, F.R.N. 6,338,637 - 6,338,637
25,000 - 25,000 1.06%, 12/18/03, F.R.N. 24,995,416 - 24,995,416
10,500 - 10,500 1.01%, 1/22/04, F.R.N. 10,499,226 - 10,499,226
19,000 - 19,000 1.00%, 1/28/04, F.R.N. 18,995,214 - 18,995,214
8,000 - 8,000 1.35%, 3/23/04, F.R.N. 8,000,000 - 8,000,000
5,138 - 5,138 1.005283%, 1/15/04 5,131,544 - 5,131,544
4,000 - 4,000 1.14%, 2/18/04 3,989,993 - 3,989,993
10,000 - 10,000 6.50%, 8/15/04 10,370,154 - 10,370,154
------------ ------------- ------------
92,167,581 - 92,167,581
------------ ------------- ------------
UNITED STATES TREASURY BILLS --34.3%
- $1,495 1,495 0.825%, 12/18/03 - $1,494,417 1,494,417
- 30,000 30,000 0.92%, 12/18/03 - 29,986,967 29,986,967
- 2,705 2,705 0.902%, 12/26/03 - 2,703,306 2,703,306
- 64,900 64,900 0.938572%, 12/26/03 - 64,857,699 64,857,699
- 75,000 75,000 0.945%, 12/26/03 - 74,950,781 74,950,781
- 19,784 19,784 0.90%, 1/2/04 - 19,768,173 19,768,173
- 5,198 5,198 0.9025%, 1/2/04 - 5,193,830 5,193,830
- 20,465 20,465 0.91%, 1/2/04 - 20,448,446 20,448,446
- 10,571 10,571 0.915%, 1/2/04 - 10,562,402 10,562,402
- 878 878 0.925%, 1/2/04 - 877,278 877,278
- 6,931 6,931 0.92%, 1/8/04 - 6,924,269 6,924,269
- 6,702 6,702 0.94%, 1/8/04 - 6,695,350 6,695,350
- 33,225 33,225 0.905%, 1/15/04 - 33,187,414 33,187,414
- 1,000 1,000 0.94%, 1/15/04 - 998,825 998,825
- 12,000 12,000 0.97%, 1/15/04 - 11,985,450 11,985,450
- 10,000 10,000 0.96%, 1/29/04 - 9,984,267 9,984,267
- 213 213 1.01%, 2/5/04 - 212,606 212,606
- 31 31 1.035%, 2/26/04 - 30,923 30,923
------------ ------------- ------------
- 300,862,403 300,862,403
------------ ------------- ------------
UNITED STATES TREASURY NOTES --5.4%
- 14,465 14,465 2.125%, 2/29/04 - 14,553,637 14,553,637
- 25,000 25,000 3.625%, 3/31/04 - 25,202,620 25,202,620
- 5,000 5,000 3.375%, 4/30/04 - 5,043,080 5,043,080
- 2,607 2,607 5.25%, 5/15/04 - 2,653,599 2,653,599
------------ ------------- ------------
- 47,452,936 47,452,936
------------ ------------- ------------
REPURCHASE AGREEMENTS --37.2%
20,000 - 20,000 Bear Stearns, 1.06%, dated 11/24/03,
(cost $20,000,000) 20,000,000 - 20,000,000
50,000 - 50,000 Deutsche Bank Securities, Inc., 1.06%, dated
11/26/03, (cost $50,000,000) 50,000,000 - 50,000,000
50,000 - 50,000 Greenwich Capital Markets, 1.05%, dated
11/26/03, (cost $50,000,000) 50,000,000 - 50,000,000
50,000 - 50,000 JP Morgan Chase Securities, Inc., 1.05%,
dated 11/26/03, (cost $50,000,000) 50,000,000 - 50,000,000
66,524 - 66,524 Joint Repurchase Agreement (Note 4), 1.07%,
dated 11/28/03, (cost $66,524,000) 66,524,000 - 66,524,000
50,000 - 50,000 Merrill Lynch & Co., Inc., 1.04%, dated
11/28/03, (cost $50,000,000) 50,000,000 - 50,000,000
------------ ------------- ------------
286,524,000 - 286,524,000
------------ ------------- ------------
TOTAL INVESTMENTS --100.1%
(AMORTISED COST $877,659,894) $529,344,555 348,315,339 $877,659,894
------------ ------------- ------------
Liabilities in excess of other assets (0.1)% ($2,052,150) 1,007,511 ($1,044,639)
------------ ------------- ------------
NET ASSETS --100% $527,292,405 $349,322,850 $876,615,255
============ ============= ============
</Table>
- ------------------------------
F.R.N. -- Floating Rate Note.
M.T.N. -- Medium Term Note.
<Page>
ANNUAL REPORT
NOVEMBER 30, 2002
PRUDENTIAL
GOVERNMENT SECURITIES TRUST/
MONEY MARKET SERIES &
U.S. TREASURY MONEY MARKET SERIES
FUND TYPE
Money market
OBJECTIVES
Money Market Series: High current income,
preservation of capital, and
maintenance of liquidity.
U.S. Treasury Money Market Series:
High current income consistent with the
preservation of principal and liquidity.
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.
Prudential Financial is a service mark of
The Prudential Insurance Company of America,
Newark, NJ, and its affiliates. (LOGO)
Prudential Government Securities Trust
Performance at a Glance
INVESTMENT GOALS AND STYLE
The investment objectives of the Money Market
Series (the Series) are high current income,
preservation of capital, and maintenance of
liquidity. The Series invests in a diversified
portfolio of short-term money market
instruments issued or guaranteed by the U.S.
government, its agencies, or instrumentalities.
The U.S. government's guarantee applies only to
the underlying securities of this Series, and
not to the value of the Series' shares. There
can be no assurance that the Series will
achieve its investment objectives.
The investment objective of the U.S. Treasury
Money Market Series (the Series) is high
current income consistent with the preservation
of principal and liquidity. The Series invests
exclusively in U.S. Treasury obligations with
effective remaining maturities of 13 months or
less. The U.S. government's guarantee applies
only to the underlying securities of this
Series, and not to the value of the Series'
shares. There can be no assurance that the
Series will achieve its investment objective.
www.prudential.com (800) 225-1852
Annual Report November 30, 2002
Fund Facts As of 11/30/02
7-Day Net Asset Weighted Avg. Net Assets
Money Market Series Current Yld.* Value (NAV) Mat. (WAM) (Millions)
Class A 0.82% $1.00 75 Days $608
Class Z 0.94% $1.00 75 Days $ 23
iMoneyNet, Inc.
Govt Agency Avg.** 0.79% $1.00 57 Days N/A
* Yields will fluctuate from time to time, and
past performance is not indicative of future
results. An investment in the Money Market
Series is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any
other government agency. Although the Money
Market Series seeks to preserve the value of
your investment at $1.00 per share, it is
possible to lose money by investing in the
Money Market 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.
Government Agency Average as of November 26,
2002, the closest date to the end of our
reporting period.
Fund Facts As of 11/30/02
U.S. Treasury 7-Day Net Asset Weighted Avg. Net Assets
Money Market Series Current Yld.* Value (NAV) Mat. (WAM) (Millions)
Class A 0.97% $1.00 63 Days $382
Class Z 1.09% $1.00 63 Days $ 6
iMoneyNet, Inc.
100% U.S. Treasuries
Avg.** 0.88% $1.00 65 Days N/A
* Yields will fluctuate from time to time, and
past performance is not indicative of future
results. An investment in the U.S. Treasury
Money Market Series is not insured or
guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Although the U.S. Treasury Money Market Series
seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose
money by investing in the U.S. Treasury Money
Market 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. 100%
U.S. Treasuries Average as of November 26,
2002, the closest date to the end of our
reporting period.
1
(LOGO) January 15, 2003
DEAR SHAREHOLDER,
The fiscal year of the Money Market Series and
the U.S. Treasury Money Market Series ended
November 30, 2002. This was a time of
dwindling confidence in riskier financial
assets and growing interest in investment
alternatives that provide relative safety of
principal and liquidity. The conservative shift
in market sentiment is not surprising in light
of doubts about the resilience of the U.S.
economic recovery, the rash of corporate
governance scandals at major U.S. companies,
and the growing threat of war between the
United States and Iraq.
Concern about the staying power of the economic
recovery encouraged a trend toward lower market
interest rates. Declining market interest rates
naturally reduced the level of income earned in
money funds, including each Series. Nevertheless,
the Government Securities Trust management team's
interest-rate strategy and its analysis of the
supply/demand dynamics of money market securities
helped each Series provide competitive yields
during our fiscal year.
On the following pages, the team discusses its
investment choices in light of developments in
the money markets that had a significant impact
on the performance of each Series. Thank you for
your continued confidence in Prudential mutual
funds. We look forward to serving your future
investment needs.
Sincerely,
David R. Odenath, Jr., President
Prudential Government Securities Trust
2
Prudential Government Securities Trust Money Market Series
Annual Report November 30, 2002
INVESTMENT ADVISER'S REPORT
MONEY MARKET SERIES
During our fiscal year that began December 1,
2001, we strove to have a mix of short-term
debt securities that enhanced the Series'
income stream and allowed the Series to respond
promptly to changing conditions in the money
markets. It was important to have an investment
strategy that afforded much flexibility as
historically low interest rates and growing
demand for conservative assets made the search
for attractively priced money market securities
more challenging.
The Series initially held a large exposure to
securities whose rates adjusted daily based on
the federal funds rate--the rate that banks
charge each other for overnight loans. It also
held a sizable amount of federal agency
securities due in six months to one year. We
reasoned that if an economic recovery in 2002
prompted the Federal Reserve (the Fed) to
increase short-term interest rates, our daily
adjustable-rate securities would reset to
higher levels and boost the Series' income stream.
However, if deteriorating economic conditions in 2002
led the Fed to continue its campaign to lower
short-term rates, the Series would benefit from
the fact that we had locked in yields on six-
month and one-year securities before rates
moved even lower.
Economic conditions improved in early 2002,
aided by repeated reductions in short-term
rates during 2001. There was speculation that
the Fed would soon begin to increase short-term
rates to prevent the economy from growing too
rapidly and boosting inflation. Anticipation of
tighter monetary policy led investors to
require higher yields (and lower prices) on
money market securities. In early February
2002, we locked in higher yields on federal
agency issues maturing in six months to one
year. Money market yields continued to rise
until mid-March 2002.
3
Prudential Government Securities Trust Money Market Series
Annual Report November 30, 2002
Concerns about weak corporate profits and
doubts about the quality of corporate
financial reporting caused some investors
who traditionally buy corporate obligations
to purchase federal agency securities that
are considered to be safer. This growing
demand for more conservative assets made
federal agency securities relatively expensive
compared to lower-quality money market issues
in which this Series does not invest.
LESS EXPOSURE TO ADjUSTABLE-RATE SECURITIES
The trend toward lower market interest rates
resumed in the spring of 2002, reflecting a
shift in the outlook for monetary policy. The
Fed no longer needed to increase short-term
rates because economic growth slowed
dramatically in the spring due to less vigorous
consumer spending and a continued weakness in
business investment. This data encouraged
belief the Fed could afford to wait until the
second half of 2002 to boost short-term rates.
In the summer of 2002, the outlook for monetary
policy changed again. Concern that the economy
might lapse into a so-called "double-dip"
recession and a sell-off in stocks aggravated
by the deepening corporate governance scandals
encouraged belief that the Fed would soon lower
short-term rates to stimulate growth.
Consequently, money market yields continued to
decline during the summer. We reinvested
proceeds from our maturing adjustable-rate
securities into repurchase agreements, an
alternative short-term investment vehicle. We
also bought debt issues due in two to three
months and federal agency securities scheduled
to mature in 13 months that could be retired
early (or called) by their issuers in three
months. Purchasing callable securities enhanced
the Series' income stream as they were priced
attractively compared to noncallable federal
agency issues.
4
www.prudential.com (800) 225-1852
Anticipation of easier monetary policy drove
money market yields even lower in the autumn of
2002. The long-anticipated move finally occurred
in early November 2002 as Fed policymakers
voted to reduce short-term rates by another
half of a percentage point. This lowered the
target for the federal funds rate to 1.25%. In
explaining their actions, the central bankers
noted that geopolitical risks and other factors
hurt spending, production, and employment.
LOOKING AHEAD
The economic outlook still remains uncertain,
particularly in light of the possibility of war
between the United States and Iraq and a
continued reluctance of businesses to make
significant new investments. Until economic
growth is on a firm foundation, the Fed will be
disinclined to increase the target for the federal
funds rate. In that case, the current low-interest-rate
environment could persist for most of 2003.
5
Prudential Government Securities Trust U.S. Treasury Money Market Series
Annual Report November 30, 2002
INVESTMENT ADVISER'S REPORT
U.S. TREASURY MONEY MARKET SERIES
In shaping our investment strategy for our
fiscal year that began December 1, 2001, we
considered several key developments. Among
these were the liquidity needs of our shareholders
that typically shift at certain times of the year,
as well as the changing outlook for monetary
policy in the United States. In addition, there
was a growing preference for U.S. Treasury
money market securities as accounting scandals
at major firms caused even greater concern
about the quality of corporate financial
reporting. There was also a considerable rise
in the issuance of some U.S. Treasury bills,
which are sold by the federal government at a
discount to their face value.
We began our fiscal year by investing primarily
in Treasury securities scheduled to mature
throughout January and February 2002. Our
laddered maturity approach prepares the Series
to meet the greater liquidity needs of its
shareholders at the start of each calendar
year.
The economy had also begun to recover in early
2002, helped by repeated reductions in short-
term interest rates during 2001. Improving
economic conditions led to speculation that the
Federal Reserve (the Fed) would soon begin to
take back some of its rate cuts to prevent the
economy from expanding too fast and boosting
inflation. Consequently, investors required
higher yields (and lower prices) on Treasuries
in the one-year sector. We took advantage of
this development by locking in attractive
yields on one-year Treasuries during the first
quarter of 2002. Purchasing them helped the
Series even more than we expected as their
prices rallied later in our reporting period,
reflecting a shift in the outlook for monetary
policy.
SAFE HAVEN SOUGHT IN U.S. TREASURIES
Although the economy expanded rapidly in the
first three months of 2002, growth slowed
dramatically in the second quarter, hurt by
less vigorous consumer spending and a continued
weakness in business investment. This data
6
www.prudential.com (800) 225-1852
encouraged belief that the Fed could afford to
wait until the second half of 2002 to boost
short-term rates. With monetary policy now
expected to remain on hold in the spring of
2002, investors were willing to accept lower
yields on Treasuries due in one year. We
invested primarily in Treasuries maturing in
six months because at that time we believed
their yields compared favorably with yields on
one-year Treasuries.
In addition to the struggling economic
recovery, market participants had to contend in
the summer of 2002 with another round of
corporate governance scandals that focused
primarily on WorldCom, a telecommunications
firm. This turn of events further undermined
investor confidence in corporate accounting and
reporting practices. Not surprisingly, the
flight-to-quality trend that was evident
earlier in our reporting period continued as
many traditional buyers of commercial paper
(corporate debt obligations that mature in 270
days or less) sought refuge in Treasuries for
their relative safety.
FOCUS ON U.S. TREASURY BILLS HELPED THE SERIES
We primarily invested in Treasury bills
maturing in one, three, or six months as
opposed to Treasury notes and bonds due in six
months or less. The Department of the Treasury
has greatly increased its issuance of bills to
help finance the nation's first federal budget
deficit in several years. The federal deficit
increased due to a combination of tax cuts, the
economic downturn in 2001, and increased
government spending on security measures
following the terrorist attacks on the United
States on September 11, 2001.
Because of their greater supply, Treasury bills
yielded more than Treasury notes and bonds with
the same time left to maturity. Indeed, we took
profits on some of the Series' Treasury notes
and bonds and bought more attractively priced
bills. We continued to emphasize Treasury bills
throughout the
7
Prudential Government Securities Trust U.S. Treasury Money Market Series
Annual Report November 30, 2002
remainder of our reporting period as money
market yields declined even further because the
Fed was expected to resume cutting short-term
rates to support the faltering economic
recovery.
The widely anticipated move came in early
November 2002 when Fed policymakers voted to
reduce short-term rates by another half of a
percentage point. This lowered the target for
the federal funds rate (what banks charge each
other to borrow money overnight) to 1.25%. In
explaining their actions, the central bankers
noted that geopolitical risks and other factors
hurt spending, production, and employment.
LOOKING AHEAD
The economic outlook still remains uncertain,
particularly in light of the possibility of war
between the United States and Iraq and a
continued reluctance of businesses to make
significant new investments. Until economic
growth is on a firm foundation, the Fed will be
disinclined to increase the target for the
federal funds rate. In that case, the current
low-interest-rate environment could persist for
most of 2003.
Thank you for investing in Prudential money market funds.
Prudential Government Securities Trust Management Team
8
<Page>
Prudential Government Securities Trust Money Market Series
Portfolio of Investments as of November 30, 2002
<Table>
<Caption>
Principal
Amount
(000) Description Value (Note 1)
- - -----------------------------------------------------------------------------------------
Federal Farm Credit Bank 10.3%
$ 65,000 1.514%, 12/9/02, F.R.N. $ 64,958,162
- - -------------------------------------------------------------------------------------
Federal Home Loan Bank 28.0%
20,000 1.547%, 12/4/02, F.R.N. 20,012,250
17,000 1.621%, 12/11/02, F.R.N. 16,999,779
7,000 1.66%, 12/15/02, F.R.N. 6,999,991
250 6.21%, 12/30/02 250,762
54,550 5.125%, 1/13/03 54,762,129
1,700 5.61%, 1/21/03 1,709,085
500 6.20%, 1/21/03 502,621
27,000 2.81%, 4/11/03 27,000,000
8,500 4.50%, 5/15/03 8,565,414
1,500 7.25%, 5/15/03 1,530,058
250 5.91%, 7/2/03 255,079
1,000 4.50%, 7/7/03 1,012,641
25,000 1.86%, 11/3/03 25,000,000
12,000 1.60%, 12/16/03 12,000,000
--------------
176,599,809
- - -------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation 11.5%
35,000 1.75%, 12/5/03, M.T.N. 35,000,000
24,500 7.375%, 5/15/03 25,005,670
12,500 4.50%, 6/15/03 12,623,057
--------------
72,628,727
- - -------------------------------------------------------------------------------------
Federal National Mortgage Association 19.8%
4,000 6.30%, 12/13/02, M.T.N. 4,005,824
18,000 1.26%, 12/2/02, F.R.N. 17,999,924
59,000 1.288%, 12/2/02, F.R.N. 58,999,508
5,000 1.586%, 1/10/03, F.R.N. 5,001,444
1,420 6.80%, 1/10/03 1,427,105
30,245 5.25%, 1/15/03 30,373,271
1,000 5.75%, 4/15/03 1,010,650
6,000 3.125%, 11/15/03 6,064,312
--------------
124,882,038
</Table>
See Notes to Financial Statements 9
<Page>
Prudential Government Securities Trust Money Market Series
Portfolio of Investments as of November 30, 2002 Cont'd.
<Table>
<Caption>
Principal
Amount
(000) Description Value (Note 1)
- - -----------------------------------------------------------------------------------------
Student Loan Marketing Association 1.8%
$ 8,000 2.25%, 7/2/03, M.T.N. $ 7,999,162
3,000 1.258%, 12/3/02, F.R.N. 2,999,750
--------------
10,998,912
- - -------------------------------------------------------------------------------------
Repurchase Agreements(a) 29.3%
16,620 Credit Suisse First Boston, Inc., 1.31%, dated
11/25/02, due 12/2/02 in the amount of $16,624,233
(cost $16,620,000; the value of the collateral
including interest was $16,955,095) 16,620,000
22,000 Deutsche Bank, 1.28%, dated 11/20/02, due 12/31/02 in
the amount of $22,032,071 (cost $22,000,000; the
value of the collateral including interest was
$22,440,000) 22,000,000
58,489 Greenwich Capital Markets, 1.35%, dated 11/29/02, due
12/4/02 in the amount of $58,499,967 (cost
$58,489,000; the value of the collateral including
interest was $59,659,252) 58,489,000
32,972 JP Morgan Chase Securities, Inc., 1.36%, dated
11/27/02, due 12/2/02 in the amount of $32,978,228
(cost $32,972,000; the value of the collateral
including interest was $33,632,326) 32,972,000
54,792 Merrill Lynch & Co., Inc., 1.35%, dated 11/26/02, due
12/3/02 in the amount of $54,806,383 (cost
$54,792,000; the value of the collateral including
interest was $55,892,696) 54,792,000
--------------
184,873,000
--------------
Total Investments 100.7%
(amortized cost $634,940,648(b)) 634,940,648
Liabilities in excess of other assets (0.7%) (4,354,089)
--------------
Net Assets 100% $ 630,586,559
--------------
--------------
</Table>
- - ------------------------------
F.R.N.--Floating Rate Note. The interest rate reflected is the rate in effect
at November 30, 2002.
M.T.N.--Medium Term Note.
(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 U.S. Treasury Money Market
Series
Portfolio of Investments as of November 30, 2002
<Table>
<Caption>
Principal
Amount
(000) Description Value (Note 1)
- - -----------------------------------------------------------------------------------------
United States Treasury Bills 70.8%
$ 45,451 1.20%, 12/5/02 $ 45,444,940
5,396 1.615%, 12/12/02 5,393,337
25,000 1.641%, 12/12/02 24,987,465
75,000 1.196%, 12/19/02 74,955,161
3,660 1.20%, 12/19/02 3,657,804
603 1.55%, 12/19/02 602,532
2,157 1.20%, 1/2/03 2,154,699
792 1.535%, 1/9/03 790,683
54,846 1.63%, 1/9/03 54,749,151
34,870 1.61%, 1/16/03 34,798,265
10,607 1.688%, 1/16/03 10,584,128
3,404 1.66%, 1/23/03 3,395,681
7,672 1.648%, 3/6/03 7,638,646
5,108 1.47%, 3/27/03 5,083,805
--------------
274,236,297
- - -------------------------------------------------------------------------------------
United States Treasury Notes 28.6%
15,000 4.75%, 1/31/03 15,063,010
20,000 5.50%, 1/31/03 20,125,393
11,818 6.25%, 2/15/03 11,929,997
28,752 4.25%, 3/31/03 28,914,351
10,000 5.75%, 4/30/03 10,129,164
1,855 4.25%, 5/31/03 1,872,454
22,397 3.00%, 11/30/03 22,740,361
--------------
110,774,730
--------------
Total Investments 99.4%
(amortized cost $385,011,027(a)) 385,011,027
Other assets in excess of liabilities 0.6% 2,257,459
--------------
Net Assets 100% $ 387,268,486
--------------
--------------
</Table>
- - ------------------------------
(a) Federal income tax basis of Portfolio securities is the same as for
financial reporting purposes.
See Notes to Financial Statements 11
<Page>
Prudential Government Securities Trust As of November 30, 2002
Statement of Assets and Liabilities
<Table>
<Caption>
U.S. Treasury
Money Money
Market Series Market Series
- - ----------------------------------------------------------------------------------------
ASSETS
Investments, at amortized cost $ 450,067,648 $ 385,011,027
Repurchase agreements 184,873,000 --
Cash 434 14,782
Receivable for Series shares sold 3,119,746 4,431,619
Interest receivable 2,961,956 1,457,392
Other assets 15,052 7,644
------------- -------------
Total assets 641,037,836 390,922,464
------------- -------------
LIABILITIES
Payable for Series shares reacquired 9,523,201 3,232,620
Accrued expenses and other liabilities 544,398 179,644
Management fee payable 209,470 127,021
Dividends payable 100,936 64,034
Distribution fee payable 62,770 39,102
Deferred trustee's fees 10,502 11,557
------------- -------------
Total liabilities 10,451,277 3,653,978
------------- -------------
NET ASSETS $ 630,586,559 $ 387,268,486
------------- -------------
------------- -------------
Net assets were comprised of:
Shares of beneficial interest, at par ($.01
per share) $ 6,305,866 $ 3,872,685
Paid-in capital in excess of par 624,280,693 383,395,801
------------- -------------
Net assets, November 30, 2002 $ 630,586,559 $ 387,268,486
------------- -------------
------------- -------------
Class A:
Net asset value, offering price and redemption
price per share ($607,584,410 / 607,584,410
shares of beneficial interest issued and
outstanding) $1.00
-------------
-------------
($381,741,218 / 381,741,218 shares of
beneficial interest issued and outstanding) $1.00
-------------
-------------
Class Z:
Net asset value, offering price and redemption
price per share ($23,002,149 / 23,002,149
shares of beneficial interest issued and
outstanding) $1.00
-------------
-------------
($5,527,268 / 5,527,268 shares of
beneficial interest issued and outstanding) $1.00
-------------
-------------
</Table>
12 See Notes to Financial Statements
<Page>
Prudential Government Securities Trust Year Ended November 30, 2002
Statement of Operations
<Table>
<Caption>
U.S. Treasury
Money Money
Market Series Market Series
- - ------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $12,243,154 $ 9,318,058
------------- -------------
Expenses
Management fee 2,559,597 1,992,068
Distribution fee--Class A 765,136 615,629
Transfer agent's fees and expenses 1,220,000 180,000
Reports to shareholders 100,000 45,000
Custodian's fees and expenses 80,000 77,000
Registration fees 80,000 96,000
Legal fees and expenses 30,000 30,000
Audit fee 26,000 26,000
Trustees' fees 18,000 38,000
Insurance expense 7,000 4,000
Miscellaneous 3,789 849
------------- -------------
Total expenses 4,889,522 3,104,546
------------- -------------
Net investment income 7,353,632 6,213,512
------------- -------------
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 108,891 327,216
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 7,462,523 $ 6,540,728
------------- -------------
------------- -------------
</Table>
See Notes to Financial Statements 13
<Page>
Prudential Government Securities Trust Money Market Series
Statement of Changes in Net Assets
<Table>
<Caption>
Year Ended November 30,
--------------------------------------
2002 2001
- - -----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 7,353,632 $ 23,518,776
Net realized gain on investment
transactions 108,891 527,197
----------------- -----------------
Net increase in net assets resulting
from operations 7,462,523 24,045,973
----------------- -----------------
Dividends and distributions (Note 1)
Class A (7,104,781) (22,530,088)
Class Z (357,742) (1,515,885)
----------------- -----------------
(7,462,523) (24,045,973)
----------------- -----------------
Series share transactions(a) (Note 5)
Net proceeds from shares subscribed 898,494,487 934,125,110
Net asset value of shares issued in
reinvestment of dividends and
distributions 7,518,194 24,198,242
Cost of shares reacquired (914,652,030) (915,939,192)
----------------- -----------------
Net increase (decrease) in net assets
from Series share transactions (8,639,349) 42,384,160
----------------- -----------------
Total increase (decrease) (8,639,349) 42,384,160
NET ASSETS
Beginning of year 639,225,908 596,841,748
----------------- -----------------
End of year $ 630,586,559 $ 639,225,908
----------------- -----------------
----------------- -----------------
- - ------------------------------
(a) At $1.00 per share for the Money Market Series.
</Table>
14 See Notes to Financial Statements
<Page>
Prudential Government Securities Trust U.S. Treasury Money Market
Series
Statement of Changes in Net Assets
<Table>
<Caption>
Year Ended November 30,
--------------------------------------
2002 2001
- - -----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 6,213,512 $ 17,679,546
Net realized gain on investment
transactions 327,216 622,876
----------------- -----------------
Net increase in net assets resulting
from operations 6,540,728 18,302,422
----------------- -----------------
Dividends and distributions (Note 1)
Class A (6,462,685) (18,074,466)
Class Z (78,043) (227,956)
----------------- -----------------
(6,540,728) (18,302,422)
----------------- -----------------
Series share transactions(a) (Note 5)
Net proceeds from shares subscribed 2,921,203,514 2,860,134,638
Net asset value of shares issued in
reinvestment of dividends and
distributions 6,027,099 16,133,100
Cost of shares reacquired (3,049,069,855) (2,737,823,725)
----------------- -----------------
Net increase (decrease) in net assets
from Series share transactions (121,839,242) 138,444,013
----------------- -----------------
Total increase (decrease) (121,839,242) 138,444,013
NET ASSETS
Beginning of year 509,107,728 370,663,715
----------------- -----------------
End of year $ 387,268,486 $ 509,107,728
----------------- -----------------
----------------- -----------------
</Table>
- - ------------------------------
(a) At $1.00 per share for the U.S. Treasury Money Market Series.
See Notes to Financial Statements 15
<Page>
Prudential Government Securities Trust
Notes to Financial Statements
Prudential Government Securities Trust (the "Fund") is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund consists of two series: the Money Market 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 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: Portfolio securities of the Fund are valued 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.
Repurchase Agreements: In connection with transactions in repurchase
agreements with U.S. financial institutions, it is the Fund's policy that its
custodian or designated subcustodians, as the case may be under triparty
repurchase agreements, take 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.
Securities Transactions and Investment Income: Securities transactions
are recorded on the trade date. Realized gains (losses) on sales of securities
are calculated on the identified cost basis. The Fund amortizes premiums and
accretes discounts on purchases of portfolio securities as adjustments to
interest income. Interest income is recorded on the accrual basis. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management. The Fund's expenses are allocated to the respective Series on the
basis of relative net assets except for Series specific expenses which are
allocated at a Series or class level.
16
<Page>
Prudential Government Securities Trust
Notes to Financial Statements Cont'd.
Dividends and Distributions: The Fund declares daily dividends from net
investment income and net realized short-term capital gains or losses. Payment
of dividends is made monthly. Income distributions and realized 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 net income
and capital gains, if any, to shareholders. Therefore, no federal income tax
provision is required.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments LLC ("PI").
Pursuant to this agreement, PI has responsibility for all investment advisory
services and supervises the subadviser's performance of such services. PI has
entered into a subadvisory agreement with Prudential Investment Management, Inc.
("PIM"). PIM furnishes investment advisory services in connection with the
management of the Fund. PI pays for the services of PIM, the compensation of
officers of the Fund, occupancy and certain clerical and bookkeeping costs of
the Fund. The Fund bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly based
on the average daily net assets of each 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 the average daily net assets between $1
billion and $1.5 billion and .35 of 1% in excess of $1.5 billion. With respect
to the U.S. Treasury Money Market Series, the management fee is payable at an
annual rate of .40 of 1% of the average daily net assets of the Series.
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 PIM. 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' Class A average daily net assets.
17
<Page>
Prudential Government Securities Trust
Notes to Financial Statements Cont'd.
PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential
Financial, Inc. ("Prudential").
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ("PMFS"), an affiliate of PI and an
indirect, wholly-owned subsidiary of Prudential, serves as the Fund's transfer
agent. During the year ended November 30, 2002, the Fund incurred fees of
approximately $956,200 and $177,400, respectively, for the Money Market Series
and U.S. Treasury Money Market Series. As of November 30, 2002, approximately
$75,900 and $11,000 of such fees were due to PMFS, respectively, for the Money
Market Series and U.S. Treasury Money Market Series.
Note 4. Distributions and Tax Information
Distributions to shareholders, which are determined in accordance with federal
income tax regulations and which may differ from generally accepted accounting
principles, are recorded on the ex-dividend date. In order to present
undistributed net investment income, accumulated net realized capital gains
(losses) and paid-in capital on the Statement of Assets and Liabilities that
more closely represent their tax character, certain adjustments have been made
to undistributed net investment income and accumulated net realized gains on
investments. For the year ended November 30, 2002, the adjustments were to
decrease net realized gains on investments and increase net investment income by
$108,891 and $327,216, respectively for the Money Market Series and US Treasury
Money Market Series.
For the year ended November 30, 2002, the tax character of the dividends
paid, as reflected in the Statement of Changes in Net Assets, of $7,462,253 and
$6,540,728 for the Money Market Series and U.S. Treasury Money Market Series
respectively, was ordinary income. As of November 30, 2002, the Fund had no
distributable earnings.
Note 5. 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 of beneficial interest and dollars for the Money
Market Series were as follows:
18
<Page>
Prudential Government Securities Trust
Notes to Financial Statements Cont'd.
<Table>
<Caption>
Year Ended November 30,
-----------------------------------
2002 2001
----------------- --------------
Class A
- - -------------------------------------------------
Shares sold 860,460,410 895,915,040
Shares issued in reinvestment of dividends and
distributions 7,153,338 22,663,664
Shares reacquired (868,067,278) (868,848,233)
----------------- --------------
Net increase (decrease) in shares outstanding (453,530) 49,730,471
----------------- --------------
----------------- --------------
Class Z
- - -------------------------------------------------
Shares sold 38,034,077 38,210,070
Shares issued in reinvestment of dividends and
distributions 364,856 1,534,578
Shares reacquired (46,584,752) (47,090,959)
----------------- --------------
Net increase (decrease) in shares outstanding (8,185,819) (7,346,311)
----------------- --------------
----------------- --------------
</Table>
Transactions in shares of beneficial interest and dollars for the U.S.
Treasury Money Market Series were as follows:
<Table>
<Caption>
Year Ended November 30,
-----------------------------------
2002 2001
----------------- --------------
Class A
- - -------------------------------------------------
Shares sold 2,917,283,152 2,849,735,502
Shares issued in reinvestment of dividends and
distributions 5,947,387 15,905,262
Shares reacquired (3,043,851,561) (2,728,432,735)
----------------- --------------
Net increase (decrease) in shares outstanding (120,621,022) 137,208,029
----------------- --------------
----------------- --------------
Class Z
- - -------------------------------------------------
Shares sold 3,920,362 10,399,136
Shares issued in reinvestment of dividends and
distributions 79,712 227,838
Shares reacquired (5,218,294) (9,390,990)
----------------- --------------
Net increase (decrease) in shares outstanding (1,218,220) 1,235,984
----------------- --------------
----------------- --------------
</Table>
19
<Page>
Prudential Government Securities Trust Money Market Series
Financial Highlights
<Table>
<Caption>
Class A
-----------------
Year Ended
November 30, 2002
- - ---------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.000
-----------------
Net investment income and net realized gain on investment
transactions 0.012
Dividends and distributions (0.012)
-----------------
Net asset value, end of year $ 1.000
-----------------
-----------------
TOTAL RETURN(a): 1.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 607,585
Average net assets (000) $ 612,109
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 0.77%
Expenses, excluding distribution and service (12b-1)
fees 0.64%
Net investment income 1.14%
</Table>
- - ------------------------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
20 See Notes to Financial Statements
<Page>
Prudential Government Securities Trust Money Market Series
Financial Highlights Cont'd.
<Table>
<Caption>
Class A
- - -------------------------------------------------------------------------------------
Year Ended November 30,
- - -------------------------------------------------------------------------------------
2001 2000 1999 1998
- - -------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ----------------
0.039 0.053 0.042 0.048
(0.039) (0.053) (0.042) (0.048)
- - ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ----------------
- - ---------------- ---------------- ---------------- ----------------
4.04% 5.43% 4.31% 4.87%
$608,038 $558,307 $576,868 $590,004
$589,136 $559,103 $594,266 $589,649
0.83% 0.91% 0.90% 0.80%
0.70% 0.79% 0.77% 0.67%
3.82% 5.35% 4.23% 4.77%
</Table>
See Notes to Financial Statements 21
<Page>
Prudential Government Securities Trust Money Market Series
Financial Highlights Cont'd.
<Table>
<Caption>
Class Z
-----------------
Year Ended
November 30, 2002
- - ---------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.000
--------
Net investment income and net realized gain on investment
transactions 0.013
Dividends and distributions (0.013)
--------
Net asset value, end of year $ 1.000
--------
--------
TOTAL RETURN(a): 1.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $23,002
Average net assets (000) $27,790
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 0.64%
Expenses, excluding distribution and service (12b-1)
fees 0.64%
Net investment income 1.27%
</Table>
- - ------------------------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
22 See Notes to Financial Statements
<Page>
Prudential Government Securities Trust Money Market Series
Financial Highlights Cont'd.
<Table>
<Caption>
Class Z
- - -------------------------------------------------------------------------------------
Year Ended November 30,
- - -------------------------------------------------------------------------------------
2001 2000 1999 1998
- - -------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
0.040 0.054 0.044 0.049
(0.040) (0.054) (0.044) (0.049)
-------- -------- -------- --------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
-------- -------- -------- --------
4.16% 5.56% 4.44% 5.00%
$ 31,188 $ 38,534 $ 41,546 $ 26,901
$ 37,641 $ 34,243 $ 32,984 $ 19,236
0.70% 0.79% 0.77% 0.67%
0.70% 0.79% 0.77% 0.67%
4.03% 5.48% 4.38% 4.89%
</Table>
See Notes to Financial Statements 23
<Page>
Prudential Government Securities Trust U.S. Treasury Money Market
Series
Financial Highlights
<Table>
<Caption>
Class A
-----------------
Year Ended
November 30, 2002
- - ---------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.000
Net investment income and net realized gain on investment
transactions 0.013
Dividends and distributions (0.013)
-----------------
Net asset value, end of year $ 1.000
-----------------
-----------------
TOTAL RETURN(a) 1.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 381,741
Average net assets (000) $ 492,503
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 0.63%
Expenses, excluding distribution and service (12b-1)
fees 0.50%
Net investment income 1.25%
</Table>
- - ------------------------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
(b) Reflects overall Series ratio for investment income and non-class specific
expenses.
24 See Notes to Financial Statements
<Page>
Prudential Government Securities Trust U.S. Treasury Money Market
Series
Financial Highlights Cont'd.
<Table>
<Caption>
Class A
- - -------------------------------------------------------------------------------------
Year Ended November 30,
- - -------------------------------------------------------------------------------------
2001 2000 1999 1998
- - -------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
0.038 0.052 0.041 0.046
(0.038) (0.052) (0.041) (0.046)
- - ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ----------------
- - ---------------- ---------------- ---------------- ----------------
4.01% 5.27% 4.19% 4.66%
$502,362 $365,154 $321,641 $336,985
$444,533 $396,454 $383,772 $420,140
0.62%(b) 0.61% 0.63% 0.63%
0.49%(b) 0.48% 0.51% 0.51%
3.92%(b) 5.09% 4.08% 4.57%
</Table>
See Notes to Financial Statements 25
<Page>
Prudential Government Securities Trust U.S. Treasury Money Market
Series
Financial Highlights Cont'd.
<Table>
<Caption>
Class Z
-----------------
Year Ended
November 30, 2002
- - ---------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.000
Net investment income and net realized gain on investment
transactions 0.014
Dividends and distributions (0.014)
-------
Net asset value, end of year $ 1.000
-------
-------
TOTAL RETURN(a) 1.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 5,527
Average net assets (000) $ 5,514
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 0.50%
Expenses, excluding distribution and service (12b-1)
fees 0.50%
Net investment income 1.37%
</Table>
- - ------------------------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
(b) Figure is actual and not rounded to nearest thousand.
(c) Reflects overall Series ratio for investment income and non-class specific
expenses.
26 See Notes to Financial Statements
<Page>
Prudential Government Securities Trust U.S. Treasury Money Market
Series
Financial Highlights Cont'd.
<Table>
<Caption>
Class Z
- - -------------------------------------------------------------------------------------
Year Ended November 30,
- - -------------------------------------------------------------------------------------
2001 2000 1999 1998
- - -------------------------------------------------------------------------------------
$1.000 $1.000 $1.000 $1.000
0.040 0.053 0.043 0.049
(0.040) (0.053) (0.043) (0.049)
------- ------- ------- -------
$1.000 $1.000 $1.000 $1.000
------- ------- ------- -------
------- ------- ------- -------
4.14% 5.40% 4.37% 5.05%
$6,746 $5,510 $2,013 $ 211(b)
$5,870 $2,191 $1,942 $ 209(b)
0.49%(c) 0.48% 0.51% 0.51%
0.49%(c) 0.48% 0.51% 0.51%
4.04%(c) 5.31% 4.19% 4.91%
</Table>
See Notes to Financial Statements 27
<Page>
Prudential Government Securities Trust
Report of Independent Accountants
To the Shareholders and Trustees of
Prudential Government Securities Trust:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Money Market Series and U.S.
Treasury Money Market Series (constituting Prudential Government Securities
Trust, hereafter referred to as the "Fund") at November 30, 2002, the results of
each of their operations for the year then ended, the changes in each of their
net assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 2002 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
January 15, 2003
28
<Page>
Prudential Government Securities Trust
Federal Income Tax Information (Unaudited)
We are required by New York, California, Massachusetts, Missouri and
Oregon to inform you that dividends which have been derived from interest on
federal obligations are not taxable to shareholders providing the mutual fund
meets certain requirements mandated by the respective states' taxing
authorities. We are pleased to report that 34.60% of the dividends paid by the
Money Market Series* and 100% of the dividends paid by the U.S. Treasury Money
Market Series qualify for such deduction.
Shortly after the close of the calendar year ended December 31, 2002, you
will be advised as to the federal tax status of the dividends you received in
calendar year 2002.
For more detailed information regarding your state and local taxes, you
should contact your tax adviser or the state/local taxing authorities.
* Due to certain minimum portfolio holding requirements in California,
Connecticut and New York, residents of those states will not be able to exclude
interest on federal obligations from state and local tax.
29
<Page>
Prudential Government Securities Trust
Management of the Trust (Unaudited)
Information pertaining to the Trustees of the Trust is set forth below.
Trustees who are not deemed to be "interested persons" of the Trust, as
defined in the Investment Company Act of 1940, as amended (the Investment
Company Act or the 1940 Act) are referred to as "Independent Trustees."
Trustees who are deemed to be "interested persons" of the Trust are
referred to as "Interested Trustees." "Fund Complex" consists of the Trust
and any other investment companies managed by Prudential Investments LLC
(PI).
Independent Trustees
<Table>
<Caption>
Term of Office
and Length
Position of Time
Name, Address** and Age With Trust Served***
- --------------------------------------------------------------
Eugene C. Dorsey (75) Trustee Since 1996
Delayne Dedrick Gold (64) Trustee Since 1981
Thomas T. Mooney (61) Trustee Since 1996
Stephen P. Munn (60) Trustee Since 1999
</Table>
30
<Page>
www.prudential.com (800) 225-1852
<Table>
<Caption>
Number of
Portfolios in
Fund Complex Other
Principal Occupations Overseen by Directorships Held
During Past 5 Years Trustee by the Trustee****
- ----------------------------------------------------------------------
Retired President, Chief 80 Director (since 1996)
Executive Officer and Trustee of First Financial
of the Gannett Foundation (now Fund, Inc. and Director
Freedom Forum) (since December (since 1996) of The
1989); formerly Publisher of High Yield Plus Fund,
four Gannett newspapers and Inc.
Vice President of Gannett Co.,
Inc.; Chairman of Independent
Sector, Washington, D.C.
(largest national coalition of
philanthropic organizations);
Chairman of the American
Council for the Arts; Director
of the Advisory Board of Chase
Manhattan Bank of Rochester.
Marketing Consultant. 88
Chief Executive Officer, the 97 Director, President and
Rochester Business Alliance, Treasurer (since 1986)
formerly President of the of First Financial
Greater Rochester Metro Fund, Inc. and Director
Chamber of Commerce; Rochester (since 1988) of The
City Manager; formerly Deputy High Yield Plus Fund,
Monroe County Executive; Inc.
Trustee of Center for
Governmental Research, Inc.;
Director of Blue Cross of
Rochester and Executive
Service Corps of Rochester;
Director of the Rochester
Individual Practice
Association.
Formerly Chief Executive 72 Chairman of the Board
Officer (1988-2001) and (since January 1994)
President of Carlisle and Director (since
Companies Incorporated. 1988) of Carlisle
Companies Incorporated
(manufacturer of
industrial products);
Director of Gannett Co.
Inc. (publishing and
media).
</Table>
31
<Page>
Prudential Government Securities Trust
Management of the Trust (Unaudited) Cont'd.
<Table>
<Caption>
Term of Office
and Length
Position of Time
Name, Address** and Age With Trust Served***
- --------------------------------------------------------------
Richard A. Redeker (59) Trustee Since 1995
Nancy H. Teeters (72) Trustee Since 1996
Louis A. Weil, III (61) Trustee Since 1991
</Table>
32
<Page>
www.prudential.com (800) 225-1852
<Table>
<Caption>
Number of
Portfolios in
Fund Complex Other
Principal Occupations Overseen by Directorships Held
During Past 5 Years Trustee by the Trustee****
- ----------------------------------------------------------------------
Formerly Management Consultant 72
of Invesmart, Inc. (August
2001-October 2001); formerly
employee of PI (October
1996-December 1998)
Economist; formerly Vice 71
President and Chief Economist
of International Business
Machines Corporation; formerly
Director of Inland Steel
Industries (July 1984-1999),
formerly Governor of The
Federal Reserve (September
1978-June 1984).
Formerly Chairman (January 72
1999-July 2000), President and
Chief Executive Officer
(January 1996-July 2000) and
Director (since September
1991) of Central Newspapers,
Inc.; formerly Chairman of the
Board (January 1996-July
2000), Publisher and Chief
Executive Officer (August
1991-December 1995) of Phoenix
Newspapers, Inc.
</Table>
33
<Page>
Prudential Government Securities Trust
Management of the Trust (Unaudited) Cont'd.
Interested Trustees
<Table>
<Caption>
Term of Office
and Length
Position of Time
Name, Address** and Age With Trust Served***
- --------------------------------------------------------------
*Robert F. Gunia (56) Vice Since 1996
President
and Trustee
*David R. Odenath, Jr. (45) President Since 1999
and Trustee
</Table>
34
<Page>
www.prudential.com (800) 225-1852
<Table>
<Caption>
Number of
Portfolios in
Fund Complex Other
Principal Occupations Overseen by Directorships Held
During Past 5 Years Trustee by the Trustee****
- ----------------------------------------------------------------------
Executive Vice President and 112 Vice President and
Chief Administrative Officer Director (since May
(since June 1999) of PI; 1989) of The Asia
Executive Vice President and Pacific Fund, Inc.
Treasurer (since January 1996)
of PI; President (since April
1999) of Prudential Investment
Management Services LLC
(PIMS); Corporate Vice
President (since September
1997) of The Prudential
Insurance Company of America
(Prudential); formerly Senior
Vice President (March 1987-May
1999) of Prudential Securities
Incorporated (Prudential
Securities); formerly Chief
Administrative Officer (July
1989-September 1996), Director
(January 1989-September 1996)
and Executive Vice President,
Treasurer and Chief Financial
Officer (June 1987-December
1996) of PMF; Vice President
and Director (since May 1992)
of Nicholas-Applegate Fund,
Inc.
President, Chief Executive 115
Officer and Chief Operating
Officer (since June 1999) of
PI; Senior Vice President
(since June 1999) of
Prudential; formerly Senior
Vice President (August
1993-May 1999) of PaineWebber
Group, Inc.
</Table>
35
<Page>
Prudential Government Securities Trust
Management of the Trust (Unaudited) Cont'd.
<Table>
<Caption>
Term of Office
and Length
Position of Time
Name, Address** and Age With Trust Served***
- --------------------------------------------------------------
*Judy A. Rice (55) Vice Since 2000
President
and Trustee
</Table>
Information pertaining to the officers of the Trust who are not Trustees
is set forth below.
Officers
<Table>
<Caption>
Term of Office
and Length
Position of Time
Name, Address** and Age With Trust Served***
- --------------------------------------------------------------
Grace C. Torres (43) Treasurer Since 1996
and
Principal
Financial
and
Accounting
Officer
Deborah A. Docs (45) Secretary Since 1996
Marguerite E.H. Morrison (46) Assistant Since 2002
Secretary
</Table>
36
<Page>
www.prudential.com (800) 225-1852
<Table>
<Caption>
Number of
Portfolios in
Fund Complex Other
Principal Occupations Overseen by Directorships Held
During Past 5 Years Trustee by the Trustee****
- ----------------------------------------------------------------------
Executive Vice President 111
(since 1999) of PI; formerly
various positions to Senior
Vice President (1992-1999) of
Prudential Securities; and
various positions to Managing
Director (1975-1992) of
Salomon Smith Barney; Member
of Board of Governors of the
Money Management Institute.
</Table>
<Table>
<Caption>
Principal Occupations
During Past 5 Years
- -----------------------------------------------------------------
Senior Vice President (since
January 2000) of PI; formerly
First Vice President (December
1996-January 2000) of PIFM and
First Vice President (March
1993-1999) of Prudential
Securities.
Vice President and Corporate
Counsel (since January 2001)
of Prudential; Vice President
and Assistant Secretary (since
December 1996) of PI.
Vice President and Chief Legal
Officer - Mutual Funds and
Unit Investment Trusts (since
August 2000) of Prudential;
Senior Vice President and
Assistant Secretary (since
February 2001) of PI; Vice
President and Assistant
Secretary of PIMS (since
October 2001), previously Vice
President and Associate
General Counsel (December 1996
- -February 2001) of PI and Vice
President and Associate
General Counsel (September
1987 - September 1996) of
Prudential Securities.
</Table>
37
<Page>
Prudential Government Securities Trust
Management of the Trust (Unaudited) Cont'd.
<Table>
<Caption>
Term of Office
and Length
Position of Time
Name, Address** and Age With Trust Served***
- - ------------------------------------------------------------
Maryanne Ryan (38) Anti-Money Since 2002
Laundering
Compliance
Officer
</Table>
- - ------------------
<Table>
* "Interested" Trustee, as defined in the 1940 Act, by reason of employment with
the Manager (Prudential Investments LLC), the Subadviser (Prudential Investment
Management, Inc.) or the Distributor (Prudential Investment Management Services
LLC).
** Unless otherwise noted, the address of the Trustees and officers is c/o:
Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, NJ
07102.
*** There is no set term of office for Trustees and officers. The Independent
Trustees have adopted a retirement policy, which calls for the retirement of
Trustees on December 31 of the year in which they reach the age of 75. The table
shows the number of years for which they have served as Trustee and/or officer.
**** This column includes only directorships of companies required to register, or
file reports with the SEC under the Securities and Exchange Act of 1934 (that is,
"public companies") or other investment companies registered under the 1940 Act.
</Table>
Additional information about the Fund's Trustees is included in the Fund's
Statement of Additional Information which is available without charge, upon
request, by calling (800) 225-1852 or (732) 482-7555 (Calling from outside the
U.S.)
38
<Page>
www.prudential.com (800) 225-1852
<Table>
<Caption>
Principal Occupations
During Past 5 Years
- ----------------------------------------------------------------------
Vice President, Prudential
(since November 1998), First
Vice President, Prudential
Securities (March 1997 - May
1998).
</Table>
39
Prudential Government Securities Trust
Prudential Mutual Funds
Prudential offers a broad range of mutual funds
designed to meet your individual needs. For
information about these funds, contact your
financial professional or call us at (800) 225-1852.
Read the prospectus carefully before you invest or send money.
PRUDENTIAL MUTUAL FUNDS
- - -----------------------------------------------------------
Stock Funds
Large Capitalization Stock Funds
Prudential 20/20 Focus Fund
Prudential Equity Fund, Inc.
Prudential Index Series Fund
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Small- to Mid-Capitalization Stock Funds
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Prudential Small Company Fund, Inc.
Prudential Tax-Managed Small-Cap Fund, Inc.
Prudential U.S. Emerging Growth Fund, Inc.
The Prudential Investment Portfolios, Inc.
Prudential Jennison Equity Opportunity Fund
Sector Stock Funds
Prudential Natural Resources Fund, Inc.
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Global/International Stock Funds
Prudential Europe Growth Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Balanced/Allocation Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
Bond Funds
Taxable Bond Funds
Prudential Government Income Fund, Inc.
Prudential High Yield Fund, Inc.
Prudential Short-Term Corporate Bond Fund, Inc.
Income Portfolio
Prudential Total Return Bond Fund, Inc.
Municipal Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
www.prudential.com (800) 225-1852
Prudential Municipal Series Fund
Florida Series
New Jersey Series
New York Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
Global/International Bond Fund
Prudential Global Total Return Fund, Inc.
Money Market Funds
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
Prudential MoneyMart Assets, Inc.
Municipal Money Market Funds
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
New Jersey Money Market Series
New York Money Market Series
Tax-Free Money Market Funds
Command Tax-Free Fund
Prudential Tax-Free Money Fund, Inc.
Other Money Market Funds
Command Government Fund
Command Money Fund
Special Money Market Fund, Inc.*
Money Market Series
STRATEGIC PARTNERS
MUTUAL FUNDS**
- - ----------------------------------------------
Strategic Partners Asset Allocation Funds
Strategic Partners Conservative Growth Fund
Strategic Partners Moderate Growth Fund
Strategic Partners High Growth Fund
Strategic Partners Style Specific Funds
Strategic Partners
Large Capitalization Growth Fund
Strategic Partners
Large Capitalization Value Fund
Strategic Partners
Small Capitalization Growth Fund
Strategic Partners
Small Capitalization Value Fund
Strategic Partners
International Equity Fund
Strategic Partners
Total Return Bond Fund
Strategic Partners Opportunity Funds
Strategic Partners Focused Growth Fund
Strategic Partners New Era Growth Fund
Strategic Partners Focused Value Fund
Strategic Partners Mid-Cap Value Fund
Special Money Market Fund, Inc.*
Money Market Series
* This Fund is not a direct purchase money fund
and is only an exchangeable money fund.
**Not exchangeable with Prudential mutual
funds.
Prudential Government Securities Trust
Getting the Most from Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read
this--they don't read annual and semiannual
reports. It's quite understandable. These
annual and semiannual reports are prepared to
comply with federal regulations, and are often
written in language that is difficult to
understand. So when most people run into those
particularly daunting sections of these
reports, they don't read them.
WE THINK THAT'S A MISTAKE
At Prudential, we've made some changes to our
mutual funds report to make it easier to
understand and more pleasant to read. We hope
you'll find it profitable to spend a few minutes
familiarizing yourself with your investment. Here's
what you'll find in the report:
PERFORMANCE AT A GLANCE
Since an investment's performance is often a
shareholder's primary concern, we present
performance information in two different
formats. You'll find it first on the
"Performance at a Glance" page where we compare
the Fund and the comparable average calculated
by Lipper, Inc., a nationally recognized mutual
fund rating agency. We report both the
cumulative total returns and the average annual
total returns. The cumulative total return is
the total amount of income and appreciation the
Fund has achieved in various time periods. The
average annual total return is an annualized
representation of the Fund's performance. It
gives you an idea of how much the Fund has
earned in an average year for a given time
period. Under the performance box, you'll see
legends that explain the performance
information, whether fees and sales charges
have been included in the returns, and the
inception dates for the Fund's share classes.
See the performance comparison charts at the
back of the report for more performance
information. Please keep in mind that past
performance is not indicative of future
results.
www.prudential.com (800) 225-1852
INVESTMENT ADVISER'S REPORT
The portfolio manager, who invests your money for you,
reports on successful--and not-so-successful--strategies
in this section of your report. Look for recent purchases
and sales here, as well as information about the sectors
the portfolio manager favors, and any changes that are on
the drawing board.
PORTFOLIO OF INVESTMENTS
This is where the report begins to appear
technical, but it's really just a listing
of each security held at the end of the
reporting period, along with valuations and
other information. Please note that sometimes
we discuss a security in the "Investment
Adviser's Report" section that doesn't appear
in this listing, because it was sold before the
close of the reporting period.
STATEMENT OF ASSETS AND LIABILITIES
The balance sheet shows the assets (the value
of the Fund's holdings), liabilities (how much
the Fund owes), and net assets (the Fund's
equity or holdings after the Fund pays its
debts) as of the end of the reporting period.
It also shows how we calculate the net asset
value per share for each class of shares. The
net asset value is reduced by payment of your
dividend, capital gain, or other distribution--but
remember that the money or new shares are being paid
or issued to you. The net asset value fluctuates
daily, along with the value of every security
in the portfolio.
STATEMENT OF OPERATIONS
This is the income statement, which details
income (mostly interest and dividends earned)
and expenses (including what you pay us to manage
your money). You'll also see capital gains here--both
realized and unrealized.
Prudential Government Securities Trust
Getting the Most from Your Prudential Mutual Fund
STATEMENT OF CHANGES IN NET ASSETS
This schedule shows how income and expenses
translate into changes in net assets. The Fund
is required to pay out the bulk of its income to
shareholders every year, and this statement
shows you how we do it (through dividends and
distributions) and how that affects the net
assets. This statement also shows how money
from investors flowed into and out of the Fund.
NOTES TO FINANCIAL STATEMENTS
This is the kind of technical material that can
intimidate readers, but it does contain useful
information. The notes provide a brief history
and explanation of your Fund's objectives. In
addition, they outline how Prudential mutual
funds prices securities. The notes also explain
who manages and distributes the Fund's shares and,
more important, how much they are paid for doing so.
Finally, the notes explain how many shares are
outstanding and the number issued and redeemed
over the period.
FINANCIAL HIGHLIGHTS
This information contains many elements from
prior pages, but on a per-share basis. It is
designed to help you understand how the Fund
performed, and to compare this year's
performance and expenses to those of prior
years.
INDEPENDENT ACCOUNTANT'S REPORT
Once a year, an independent accountant looks
over our books and certifies that the financial
statements are fairly presented in accordance
with generally accepted accounting principles.
TAX INFORMATION
This is information that we report annually
about how much of your total return is taxable.
Should you have any questions, you may want to
consult a tax adviser.
www.prudential.com (800) 225-1852
PERFORMANCE COMPARISON
These charts are included in the annual report
and are required by the Securities Exchange
Commission. Performance is presented here as
the return on a hypothetical $10,000 investment
in the Fund since its inception or for 10 years
(whichever is shorter). To help you put that
return in context, we are required to include
the performance of an unmanaged, broad-based
securities index as well. The index does not
reflect the cost of buying the securities it
contains or the cost of managing a mutual fund.
Of course, the index holdings do not mirror
those of the Fund--the index is a broad-based
reference point commonly used by investors to
measure how well they are doing. A definition
of the selected index is also provided.
Investors cannot invest directly in an index.
FOR MORE INFORMATION
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Visit Prudential's website at:
www.prudential.com
TRUSTEES
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Judy A. Rice
Nancy H. Teeters
Louis A. Weil, III
OFFICERS
David R. Odenath, Jr., President
Robert F. Gunia, Vice President
Judy A. Rice, Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Maryanne Ryan, Anti-Money Laundering
Compliance Officer
MANAGER
Prudential Investments LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
INVESTMENT ADVISER
Prudential Investment Management, Inc.
Gateway Center Two
Newark, NJ 07102
DISTRIBUTOR
Prudential Investment
Management Services LLC
Gateway Center Three, 14th Floor
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
PO Box 8098
Philadelphia, PA 19101
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Mutual funds are not bank guaranteed or FDIC
insured, and may lose value.
Series Symbols Nasdaq CUSIP
Money Market Series Class A PBGXX 744342205
Class Z PGZXX 744342403
U.S. Treasury
Money Market Series Class A PUSXX 744342304
Class Z PTZXX 744342502
MF100E IFS-A076924
<Page>
SEMIANNUAL REPORT
MAY 31, 2003
DRYDEN
GOVERNMENT SECURITIES TRUST/
MONEY MARKET SERIES &
U.S. TREASURY MONEY MARKET SERIES
(Formerly known as Prudential Government Securities Trust)
FUND TYPE
Money market
OBJECTIVES
Money Market Series: High current income,
preservation of capital, and
maintenance of liquidity.
U.S. Treasury Money Market Series:
High current income consistent with the
preservation of principal and liquidity.
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.
JennisonDryden is a service mark of
The Prudential Insurance Company of America. (LOGO)
<Page>
Dryden Government Securities Trust
Performance at a Glance
FUND OBJECTIVE--MONEY MARKET SERIES
The investment objective of the Money Market Series
(the Series) is high current income, preservation of
capital, and maintenance of liquidity. There can be
no assurance that the Series will achieve its
investment objective.
Fund Facts As of 5/31/03
Money Market Series
7-Day Net Asset Weighted Avg. Net Assets
Current Yield* Value (NAV) Mat. (WAM) (Millions)
Class A 0.46% $1.00 63 Days $587
Class Z 0.59% $1.00 63 Days $ 25
iMoneyNet, Inc.
Gov't Agency Avg.** 0.54% $1.00 52 Days N/A
*Yields will fluctuate from time to time, and past
performance is not indicative of future results. An
investment in the Money Market Series is not insured
or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although
the Money Market Series seeks to preserve the value
of your investment at $1.00 per share, it is possible
to lose money by investing in the Money Market
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. Government Agency
Average as of May 27, 2003; the closest date to the
end of our reporting period.
<Page>
www.jennisondryden.com (800) 225-1852
Semiannual Report May 31, 2003
FUND OBJECTIVE--U.S. TREASURY MONEY MARKET SERIES
The investment objective of the U.S. Treasury Money
Market Series (the Series) is high current income
consistent with the preservation of principal and
liquidity. There can be no assurance that the Series
will achieve its investment objective.
Fund Facts As of 5/31/03
U.S. Treasury Money Market Series
<Table>
<Caption>
7-Day Net Asset Weighted Avg. Net Assets
Current Yield* Value (NAV) Mat. (WAM) (Millions)
Class A 0.52% $1.00 74 Days $434
Class Z 0.64% $1.00 74 Days $ 6
iMoneyNet, Inc.
100% U.S. Treasuries Avg.** 0.50% $1.00 65 Days N/A
</Table>
*Yields will fluctuate from time to time, and past
performance is not indicative of future results. An
investment in the U.S. Treasury Money Market Series
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Although the U.S. Treasury Money Market Series seeks
to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in
the U. S. Treasury Money Market 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. 100% U.S. Treasuries
Average as of May 27, 2003; the closest date to the
end of our reporting period.
1
<Page>
July 15, 2003
DEAR SHAREHOLDER,
Stock markets in the United States and abroad posted
their best quarterly gains in 4 1/2 years in June 2003
and the U.S. bond market rally continued. This has
encouraged a sense of cautious optimism among
investors. We welcome these developments, but
regardless of the direction of financial markets, it
is important to remember that a wise investor plans
today for tomorrow's needs.
Whether you are investing for your retirement, your
children's education, or some other goal,
JennisonDryden mutual funds offer the experience,
resources, and professional discipline of three
leading asset management firms that can make a
difference for you. JennisonDryden equity funds are
managed by Jennison Associates and Quantitative
Management. Prudential Fixed Income manages the
JennisonDryden fixed income and money market funds.
A diversified asset allocation strategy is a
disciplined approach to investing that may help you
make more consistent progress toward your goals.
We recommend that you develop a personal asset
allocation strategy in consultation with a financial
professional who knows you, who understands your
reasons for investing, the time you have to reach
your goals, and the amount of risk you are
comfortable assuming. JennisonDryden mutual funds
offer a wide range of investment choices, and your
financial professional can help you choose the
appropriate funds to implement your strategy.
I was named president of the Dryden Government
Securities Trust in March 2003. Thank you for your
confidence in JennisonDryden mutual funds. We look
forward to serving your future investment needs.
Sincerely,
Judy A. Rice, President
Dryden Government Securities Trust/Money Market Series
Dryden Government Securities Trust/U.S. Treasury Money Market Series
2
<Page>
Dryden Government Securities Trust Money Market Series
Portfolio of Investments as of May 31, 2003 (Unaudited)
<Table>
<Caption>
Principal
Amount
(000) Description Value (Note 1)
- - -----------------------------------------------------------------------------------------
Federal Farm Credit Bank 10.6%
$ 65,000 1.185%, 4/7/04, F.R.N. $ 64,973,607
- - -------------------------------------------------------------------------------------
Federal Home Loan Bank 22.3%
7,000 1.099%, 9/15/03, F.R.N. 6,999,997
30,000 1.214%, 11/24/04, F.R.N. 29,989,279
250 5.91%, 7/2/03 250,739
1,000 4.50%, 7/7/03 1,002,087
2,000 5.125%, 9/15/03 2,022,105
265 5.19%, 10/20/03 268,975
300 5.35%, 12/1/03 306,068
100 5.53%, 12/8/03 102,194
100 5.85%, 12/15/03 102,446
5,000 1.36%, 4/5/04 5,000,000
15,500 1.35%, 4/6/04 15,500,000
10,000 1.40%, 4/13/04 10,000,000
10,000 4.875%, 4/16/04 10,313,535
6,200 1.40%, 5/10/04 6,200,000
9,000 1.35%, 5/12/04 8,994,945
10,000 1.40%, 5/12/04 10,000,000
3,000 1.40%, 6/2/04 3,000,000
15,000 1.30%, 6/7/04 15,000,000
5,000 1.32%, 6/9/04 5,000,000
6,000 1.30%, 6/28/04 6,000,000
--------------
136,052,370
- - -------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation 2.5%
12,500 4.50%, 6/15/03 12,508,790
1,000 3.50%, 9/15/03 1,006,398
2,000 3.25%, 5/20/04 2,035,113
--------------
15,550,301
- - -------------------------------------------------------------------------------------
Federal National Mortgage Association 27.5%
10,000 1.24%, 7/22/03, F.R.N. 9,999,495
25,000 1.13%, 8/1/03, F.R.N. 24,997,014
10,500 1.169%, 1/22/04, F.R.N. 10,496,501
50,000 1.31%, 1/29/04, F.R.N. 50,000,000
9,175 1.12%, 7/1/03 9,166,437
12,000 1.18%, 7/1/03 11,988,200
30,000 1.19%, 8/1/03 29,940,500
2,485 4.00%, 8/15/03 2,498,755
13,129 1.15%, 9/2/03 13,090,381
6,000 3.125%, 11/15/03 6,030,774
--------------
168,208,057
</Table>
See Notes to Financial Statements 3
<Page>
Dryden Government Securities Trust Money Market Series
Portfolio of Investments as of May 31, 2003 (Unaudited) Cont'd.
<Table>
<Caption>
Principal
Amount
(000) Description Value (Note 1)
- - -----------------------------------------------------------------------------------------
Student Loan Marketing Association 1.3%
$ 8,000 2.25%, 7/2/03, M.T.N. $ 7,999,878
- - -------------------------------------------------------------------------------------
Repurchase Agreements(a) 44.2%
60,000 Bank America, 1.26%, dated 5/27/03, due 6/03/03 in
the amount of $60,014,700 (cost $60,000,000; the
value of the collateral including interest was
$61,200,001) 60,000,000
61,000 Credit Suisse First Boston, Inc., 1.27%, dated
5/27/03, due 6/02/03 in the amount of $61,012,912
(cost $61,000,000; the value of the collateral
including interest was $62,223,354) 61,000,000
25,000 Greenwich Capital Markets, 1.26%, dated 5/29/03, due
6/26/03 in the amount of $25,024,500 (cost
$25,000,000; the value of the collateral including
interest was $25,501,307) 25,000,000
26,000 Joint Repurchase Agreement (Note 4), 1.36%, dated
5/30/03, due 6/02/03 in the amount of $26,002,947
(cost $26,000,000; the value of the collateral
including interest was $26,520,297) 26,000,000
28,773 Merrill Lynch, 1.30%, dated 5/29/03, due 6/02/03 in
the amount of $28,777,156 (cost $28,773,000; the
value of the collateral including interest was
$29,352,212) 28,773,000
11,077 Merrill Lynch, 1.31%, dated 5/30/03, due 6/06/03 in
the amount of $11,079,822 (cost $11,077,000; the
value of the collateral including interest was
$11,300,885) 11,077,000
30,000 Morgan Stanley, 1.30%, dated 5/29/03, due 6/02/03 in
the amount of $30,004,333 (cost $30,000,000; the
value of the collateral including interest was
$30,600,000) 30,000,000
28,481 Morgan Stanley, 1.28%, dated 5/28/03, due 6/04/03 in
the amount of $28,488,089 (cost $28,481,000; the
value of the collateral including interest was
$29,050,621) 28,481,000
--------------
270,331,000
--------------
Total Investments 108.4%
(amortized cost $663,115,213(b)) 663,115,213
Liabilities in excess of other assets (8.4)% (51,454,856)
--------------
Net Assets 100% $ 611,660,357
--------------
--------------
</Table>
- - ------------------------------
F.R.N.-- Floating Rate Note. The interest rate reflected is the rate in effect
at May 31, 2003.
M.T.N.--Medium Term Note.
(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.
4 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust U.S. Treasury Money Market Series
Portfolio of Investments as of May 31, 2003 (Unaudited)
<Table>
<Caption>
Principal
Amount
(000) Description Value (Note 1)
- - -----------------------------------------------------------------------------------------
United States Treasury Bills 82.7%
$ 18,305 1.16%, 6/13/03 $ 18,297,922
50,000 1.0825%, 6/19/03 49,972,937
50,000 1.09285%, 6/19/03 49,972,679
17,745 1.10%, 6/19/03 17,735,240
25,000 1.105%, 6/19/03 24,986,188
137 1.16%, 6/26/03 136,890
38,667 1.15%, 7/3/03 38,627,474
10,000 1.15%, 7/17/03 9,985,306
10,000 1.18%, 7/17/03 9,984,922
20,000 1.1675%, 7/24/03 19,965,623
144 1.17%, 7/24/03 143,752
9,948 1.08%, 7/31/03 9,930,094
15,000 1.16%, 7/31/03 14,971,000
25,000 1.095%, 8/7/03 24,949,052
25,000 1.10%, 8/7/03 24,948,819
468 1.16%, 8/7/03 466,990
25,000 1.07%, 8/14/03 24,945,014
24,325 1.16%, 8/14/03 24,266,998
--------------
364,286,900
- - -------------------------------------------------------------------------------------
United States Treasury Notes 17.2%
42,397 3.00%, 11/30/03 42,745,535
25,000 3.625%, 3/31/04 25,509,062
5,000 3.375%, 4/30/04 5,095,290
2,607 5.25%, 5/15/04 2,704,970
--------------
76,054,857
--------------
Total Investments 99.9%
(amortized cost $440,341,757(a)) 440,341,757
Other assets in excess of liabilities 0.1% 310,124
--------------
Net Assets 100% $ 440,651,881
--------------
--------------
- - ------------------------------
(a) Federal income tax basis of portfolio securities is the same as for financial
reporting purposes.
</Table>
See Notes to Financial Statements 5
<Page>
Dryden Government Securities Trust As of May 31, 2003
Statement of Assets and Liabilities (Unaudited)
<Table>
<Caption>
U.S. Treasury
Money Money
Market Series Market Series
- - ----------------------------------------------------------------------------------------
ASSETS
Investments, at amortized cost $ 663,115,213 $ 440,341,757
Cash -- 1,009
Receivable for Series shares sold 4,720,929 6,663,287
Interest receivable 874,199 813,945
Other assets 9,443 5,676
------------- -------------
Total assets 668,719,784 447,825,674
------------- -------------
LIABILITIES
Payable for investments purchased 49,030,881 --
Payable for Series shares reacquired 7,314,809 6,766,837
Accrued expenses and other liabilities 330,401 136,228
Management fee payable 208,158 153,402
Dividends payable 68,719 57,421
Distribution fee payable 62,511 47,279
Payable to Custodian 33,079 --
Deferred trustee's fees 10,869 12,626
------------- -------------
Total liabilities 57,059,427 7,173,793
------------- -------------
NET ASSETS $ 611,660,357 $ 440,651,881
------------- -------------
------------- -------------
Net assets were comprised of:
Shares of beneficial interest, at par ($.01
per share) $ 6,116,604 $ 4,406,519
Paid-in capital in excess of par 605,543,753 436,245,362
------------- -------------
Net assets, May 31, 2003 $ 611,660,357 $ 440,651,881
------------- -------------
------------- -------------
Class A:
Net asset value, offering price and redemption
price per share ($586,848,833 / 586,848,833
shares of beneficial interest issued and
outstanding) $1.00
-------------
-------------
($434,368,309 / 434,368,309 shares of
beneficial interest issued and outstanding) $1.00
-------------
-------------
Class Z:
Net asset value, offering price and redemption
price per share ($24,811,524 / 24,811,524
shares of beneficial interest issued and
outstanding) $1.00
-------------
-------------
($6,283,572 / 6,283,572 shares of
beneficial interest issued and outstanding) $1.00
-------------
-------------
</Table>
6 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust Six Months Ended May 31, 2003
Statement of Operations (Unaudited)
<Table>
<Caption>
U.S. Treasury
Money Money
Market Series Market Series
- - ------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 4,615,849 $ 3,962,210
------------- -------------
Expenses
Management fee 1,220,557 1,223,486
Distribution fee--Class A 368,847 378,669
Transfer agent's fees and expenses 825,000 112,000
Reports to shareholders 50,000 13,000
Registration fees 45,000 45,000
Custodian's fees and expenses 40,000 39,000
Legal fees and expenses 15,000 15,000
Audit fee 13,000 13,000
Trustees' fees 8,000 9,000
Insurance expense 6,000 3,000
Miscellaneous 3,751 369
------------- -------------
Total expenses 2,595,155 1,851,524
------------- -------------
Net investment income 2,020,694 2,110,686
------------- -------------
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 5,398 54,962
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 2,026,092 $ 2,165,648
------------- -------------
------------- -------------
</Table>
See Notes to Financial Statements 7
<Page>
Dryden Government Securities Trust Money Market Series
Statement of Changes in Net Assets (Unaudited)
<Table>
<Caption>
Six Months Year
Ended Ended
May 31, 2003 November 30, 2002
- - -----------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income $ 2,020,694 $ 7,353,632
Net realized gain on investment
transactions 5,398 108,891
----------------- -----------------
Net increase in net assets resulting
from operations 2,026,092 7,462,523
----------------- -----------------
Dividends and distributions (Note 1)
Class A (1,947,808) (7,104,781)
Class Z (78,284) (357,742)
----------------- -----------------
(2,026,092) (7,462,523)
----------------- -----------------
Series share transactions(a) (Note 5)
Net proceeds from shares subscribed 482,769,885 898,494,487
Net asset value of shares issued in
reinvestment of dividends and
distributions 2,009,200 7,518,194
Cost of shares reacquired (503,705,287) (914,652,030)
----------------- -----------------
Net decrease in net assets from Series
share transactions (18,926,202) (8,639,349)
----------------- -----------------
Total decrease (18,926,202) (8,639,349)
NET ASSETS
Beginning of period 630,586,559 639,225,908
----------------- -----------------
End of period $ 611,660,357 $ 630,586,559
----------------- -----------------
----------------- -----------------
- - ------------------------------
(a) At $1.00 per share for the Money Market Series.
</Table>
8 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust U.S. Treasury Money Market Series
Statement of Changes in Net Assets (Unaudited)
<Table>
<Caption>
Six Months Year
Ended Ended
May 31, 2003 November 30, 2002
- - -----------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income $ 2,110,686 $ 6,213,512
Net realized gain on investment
transactions 54,962 327,216
----------------- -----------------
Net increase in net assets resulting
from operations 2,165,648 6,540,728
----------------- -----------------
Dividends and distributions (Note 1)
Class A (2,141,837) (6,462,685)
Class Z (23,811) (78,043)
----------------- -----------------
(2,165,648) (6,540,728)
----------------- -----------------
Series share transactions(a) (Note 5)
Net proceeds from shares subscribed 3,193,182,816 2,921,203,514
Net asset value of shares issued in
reinvestment of dividends and
distributions 1,821,493 6,027,099
Cost of shares reacquired (3,141,620,914) (3,049,069,855)
----------------- -----------------
Net increase (decrease) in net assets
from Series share transactions 53,383,395 (121,839,242)
----------------- -----------------
Total increase (decrease) 53,383,395 (121,839,242)
NET ASSETS
Beginning of period 387,268,486 509,107,728
----------------- -----------------
End of period $ 440,651,881 $ 387,268,486
----------------- -----------------
----------------- -----------------
- - ------------------------------
(a) At $1.00 per share for the U.S. Treasury Money Market Series.
</Table>
See Notes to Financial Statements 9
<Page>
Dryden Government Securities Trust
Notes to Financial Statements (Unaudited)
Dryden Government Securities Trust (the "Fund"), formerly known as
Prudential Government Securities Trust, is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund consists of two series: the Money Market 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 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: Portfolio securities are valued 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.
Repurchase Agreements: In connection with transactions in repurchase
agreements with U.S. financial institutions, it is the Fund's policy that its
custodian or designated subcustodians, as the case may be under triparty
repurchase agreements, take 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.
Securities Transactions and Investment Income: Securities transactions
are recorded on the trade date. Realized gains (losses) on sales of securities
are calculated on the identified cost basis. Interest income, including
amortization of premium and accretion of discount on debt securities, is
recorded on the accrual basis. Expenses are recorded on the accrual basis, which
may require the use of certain estimates by management. The Fund's expenses are
allocated to the respective Series on the basis of relative net assets except
for Series specific expenses which are allocated at a Series or class level.
10
<Page>
Dryden Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
Dividends and Distributions: The Series declare daily dividends from
net investment income and net realized short-term capital gains or losses.
Payment of dividends is made monthly. Income distributions and realized 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 net income
and capital gains, if any, to its shareholders. Therefore, no federal income tax
provision is required.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments LLC ("PI").
Pursuant to this agreement, PI has responsibility for all investment advisory
services and supervises the subadviser's performance of such services. PI has
entered into a subadvisory agreement with Prudential Investment Management, Inc.
("PIM"). PIM furnishes investment advisory services in connection with the
management of the Fund. PI pays for the services of PIM, the compensation of
officers of the Fund, occupancy and certain clerical and bookkeeping costs of
the Fund. The Fund bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly based
on the average daily net assets of each 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 the average daily net assets between $1
billion and $1.5 billion and .35 of 1% in excess of $1.5 billion. With respect
to the U.S. Treasury Money Market Series, the management fee is payable at an
annual rate of .40 of 1% of the average daily net assets of the Series.
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 PIM. 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.
11
<Page>
Dryden Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
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 0.125 of 1% of
each Series' Class A average daily net assets.
PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential
Financial, Inc. ("Prudential").
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ("PMFS"), an affiliate of PI and an
indirect, wholly-owned subsidiary of Prudential, serves as the Fund's transfer
agent. During the six months ended May 31, 2003, the Fund incurred fees of
approximately $420,200 and $111,600, respectively, for the Money Market Series
and U.S. Treasury Money Market Series. As of May 31, 2003, approximately $70,900
and $16,800 of such fees were due to PMFS, respectively, for the Money Market
Series and U.S. Treasury Money Market Series. Transfer agent fees and expenses
in the Statement of Operations include certain out-of-pocket expenses paid to
non-affiliates.
Note 4. Joint Repurchase Agreement Account
The Money Market Series, 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, 2003, the Money Market Series had a 11.70% undivided interest in the
joint account. The undivided interest for the Fund represents $26,000,000 in
principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefore were as follows:
Greenwich Capital Markets, Inc., 1.37%, in the principal amount of
$74,084,000, repurchase price $74,092,458, due 6/2/03. The value of the
collateral including accrued interest was $75,567,236.
SBC Warburg Asia Limited, 1.36%, in the principal amount of $74,084,000,
repurchase price $74,092,396, due 6/2/03. The value of the collateral including
accrued interest was $75,565,882.
J.P. Morgan Chase, 1.35%, in the principal amount of $74,084,000,
repurchase price $74,092,334, due 6/2/03. The value of the collateral including
accrued interest was $75,566,458.
Note 5. 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
12
<Page>
Dryden Government Securities Trust
Notes to Financial Statements (Unaudited) Cont'd.
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 of beneficial interest for the Money Market Series
were as follows:
<Table>
<Caption>
Six Months Ended Year Ended
May 31, November 30,
Class A 2003 2002
- - ------------------------------------------------- ----------------- --------------
Shares sold 474,109,902 860,460,410
Shares issued in reinvestment of dividends and
distributions 1,929,443 7,153,338
Shares reacquired (496,774,922) (868,067,278)
----------------- --------------
Net increase (decrease) in shares outstanding (20,735,577) (453,530)
----------------- --------------
----------------- --------------
<Caption>
Class Z
- - -------------------------------------------------
Shares sold 8,659,983 38,034,077
Shares issued in reinvestment of dividends and
distributions 79,757 364,856
Shares reacquired (6,930,365) (46,584,752)
----------------- --------------
Net increase (decrease) in shares outstanding 1,809,375 (8,185,819)
----------------- --------------
----------------- --------------
</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,
Class A 2003 2002
- - ------------------------------------------------- ----------------- --------------
Shares sold 3,191,639,962 2,917,283,152
Shares issued in reinvestment of dividends and
distributions 1,797,696 5,947,387
Shares reacquired (3,140,810,567) (3,043,851,561)
----------------- --------------
Net increase (decrease) in shares outstanding 52,627,091 (120,621,022)
----------------- --------------
----------------- --------------
<Caption>
Class Z
- - -------------------------------------------------
Shares sold 1,542,854 3,920,362
Shares issued in reinvestment of dividends and
distributions 23,797 79,712
Shares reacquired (810,347) (5,218,294)
----------------- --------------
Net increase (decrease) in shares outstanding 756,304 (1,218,220)
----------------- --------------
----------------- --------------
</Table>
13
<Page>
Dryden Government Securities Trust Money Market Series
Financial Highlights (Unaudited)
<Table>
<Caption>
Class A
----------------
Six Months Ended
May 31, 2003
- - ----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
----------------
Net investment income and net realized gain on investment
transactions 0.003
Dividends and distributions (0.003)
----------------
Net asset value, end of period $ 1.000
----------------
----------------
TOTAL RETURN(a): 0.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $586,849
Average net assets (000) $591,777
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.85%(b)
Expenses, excluding distribution and service (12b-1) fees 0.73%(b)
Net investment income 0.66%(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 year reported and includes reinvestment
of dividends and distributions. Total return for period less than one full
year is not annualized.
(b) Annualized.
14 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust Money Market Series
Financial Highlights (Unaudited) Cont'd.
<Table>
<Caption>
Class A
- - ----------------------------------------------------------------------------------------------------------
Year Ended November 30,
- - ----------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- - ----------------------------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
0.012 0.039 0.053 0.042 0.048
(0.012) (0.039) (0.053) (0.042) (0.048)
- - ---------------- ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
- - ---------------- ---------------- ---------------- ---------------- ----------------
1.19% 4.04% 5.43% 4.31% 4.87%
$607,585 $608,038 $558,307 $576,868 $590,004
$612,109 $589,136 $559,103 $594,266 $589,649
0.77% 0.83% 0.91% 0.90% 0.80%
0.64% 0.70% 0.79% 0.77% 0.67%
1.14% 3.82% 5.35% 4.23% 4.77%
</Table>
See Notes to Financial Statements 15
<Page>
Dryden Government Securities Trust Money Market Series
Financial Highlights (Unaudited) Cont'd.
<Table>
<Caption>
Class Z
----------------
Six Months Ended
May 31, 2003
- - ----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
--------
Net investment income and net realized gain on investment
transactions 0.004
Dividends and distributions (0.004)
--------
Net asset value, end of period $ 1.000
--------
--------
TOTAL RETURN(a): 0.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 24,812
Average net assets (000) $ 20,178
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.73%(b)
Expenses, excluding distribution and service (12b-1) fees 0.73%(b)
Net investment income 0.78%(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 year reported and includes reinvestment
of dividends and distributions. Total return for period less than one full
year is not annualized.
(b) Annualized.
16 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust Money Market Series
Financial Highlights (Unaudited) Cont'd.
<Table>
<Caption>
Class Z
- - ----------------------------------------------------------------------------------------------------------
Year Ended November 30,
- - ----------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- - ----------------------------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
0.013 0.040 0.054 0.044 0.049
(0.013) (0.040) (0.054) (0.044) (0.049)
- - ---------------- ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
- - ---------------- ---------------- ---------------- ---------------- ----------------
1.32% 4.16% 5.56% 4.44% 5.00%
$ 23,002 $ 31,188 $ 38,534 $ 41,546 $ 26,901
$ 27,790 $ 37,641 $ 34,243 $ 32,984 $ 19,236
0.64% 0.70% 0.79% 0.77% 0.67%
0.64% 0.70% 0.79% 0.77% 0.67%
1.27% 4.03% 5.48% 4.38% 4.89%
</Table>
See Notes to Financial Statements 17
<Page>
Dryden Government Securities Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited)
<Table>
<Caption>
Class A
----------------
Six Months Ended
May 31, 2003
- - ----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
----------------
Net investment income and net realized gain on investment
transactions 0.003
Dividends and distributions (0.003)
----------------
Net asset value, end of period $ 1.000
----------------
----------------
TOTAL RETURN(a) 0.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $434,368
Average net assets (000) $607,535
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.61%(c)
Expenses, excluding distribution and service (12b-1) fees 0.48%(c)
Net investment income 0.71%(c)
</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 period less than one full
year is not annualized.
(b) Reflects overall Series ratio for investment income and non-class specific
expenses.
(c) Annualized.
18 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited) Cont'd.
<Table>
<Caption>
Class A
- - ----------------------------------------------------------------------------------------------------------
Year Ended November 30,
- - ----------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- - ----------------------------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
0.013 0.038 0.052 0.041 0.046
(0.013) (0.038) (0.052) (0.041) (0.046)
- - ---------------- ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
- - ---------------- ---------------- ---------------- ---------------- ----------------
1.32% 4.01% 5.27% 4.19% 4.66%
$381,741 $502,362 $365,154 $321,641 $336,985
$492,503 $444,533 $396,454 $383,772 $420,140
0.63% 0.62%(b) 0.61% 0.63% 0.63%
0.50% 0.49%(b) 0.48% 0.51% 0.51%
1.25% 3.92%(b) 5.09% 4.08% 4.57%
</Table>
See Notes to Financial Statements 19
<Page>
Dryden Government Securities Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited) Cont'd.
<Table>
<Caption>
Class Z
----------------
Six Months Ended
May 31, 2003
- - ----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
----------------
Net investment income and net realized gain on investment
transactions 0.004
Dividends and distributions (0.004)
----------------
Net asset value, end of period $ 1.000
----------------
----------------
TOTAL RETURN(a) 0.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 6,284
Average net assets (000) $ 5,889
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.48%(d)
Expenses, excluding distribution and service (12b-1) fees 0.48%(d)
Net investment income 0.84%(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 period less than one full
year is not annualized.
(b) Figure is actual and not rounded to nearest thousand.
(c) Reflects overall Series ratio for investment income and non-class specific
expenses.
(d) Annualized.
20 See Notes to Financial Statements
<Page>
Dryden Government Securities Trust U.S. Treasury Money Market Series
Financial Highlights (Unaudited) Cont'd.
<Table>
<Caption>
Class Z
- - ----------------------------------------------------------------------------------------------------------
Year Ended November 30,
- - ----------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- - ----------------------------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
0.014 0.040 0.053 0.043 0.049
(0.014) (0.040) (0.053) (0.043) (0.049)
- - ---------------- ---------------- ---------------- ---------------- ----------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- - ---------------- ---------------- ---------------- ---------------- ----------------
- - ---------------- ---------------- ---------------- ---------------- ----------------
1.45% 4.14% 5.40% 4.37% 5.05%
$ 5.527 $ 6,746 $ 5,510 $ 2,013 $ 211(b)
$ 5,514 $ 5,870 $ 2,191 $ 1,942 $ 209(b)
0.50% 0.49%(c) 0.48% 0.51% 0.51%
0.50% 0.49%(c) 0.48% 0.51% 0.51%
1.37% 4.04%(c) 5.31% 4.19% 4.91%
</Table>
See Notes to Financial Statements 21
<Page>
www.jennisondryden.com (800) 225-1852
FOR MORE INFORMATION
JennisonDryden Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
David E.A. Carson
Robert F. Gunia
Robert E. La Blanc
Douglas H. McCorkindale
Stephen P. Munn
Richard A. Redeker
Judy A. Rice
Robin B. Smith
Stephen Stoneburn
Clay T. Whitehead
Officers
Judy A. Rice, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Chief Legal Officer
and Assistant Secretary
Deborah A. Docs, Secretary
Maryanne Ryan, Anti-Money Laundering
Compliance Officer
Manager
Prudential Investments LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Prudential Investment Management, Inc.
Gateway Center Two
Newark, NJ 07102
Distributor
Prudential Investment Management Services LLC
Gateway Center Three, 14th Floor
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
PO Box 8098
Philadelphia, PA 19101
Independent Auditors
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022
Series Symbols Nasdaq CUSIP
- - -------------- ------ -----
Money Market Series Class A PBGXX 262434301
Class Z PGZXX 262434400
U.S. Treasury
Money Market Series Class A PUSXX 262434608
Class Z PTZXX 262434707
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, 2003, were not audited and, accordingly,
no auditor's opinion is expressed on them.
MUTUAL FUNDS:
<Table>
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL MAY LOSE VALUE ARE NOT A DEPOSIT OF OR GUARANTEED BY
GOVERNMENT AGENCY ANY BANK OR ANY BANK AFFILIATE
</Table>
<Page>
(LOGO)
Series Symbols Nasdaq CUSIP
- - -------------- ------ -----
Money Market Series Class A PBGXX 262434301
Class Z PGZXX 262434400
U.S. Treasury
Money Market Series Class A PUSXX 262434608
Class Z PTZXX 262434707
MF100E2 IFS-A081649
<Page>
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
Article V, Section 5.3 of the Registrant's Amended and Restated
Declaration of Trust provides that the Trustees shall provide for
indemnification by the Trust of every person who is, or has been, a Trustee
or officer of the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved as a party or otherwise by virtue
of his being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof, in such manner not otherwise
prohibited or limited by law as the Trustees may provide from time to time in
the By-Laws. Section 5.1 also provides that Trustees, officers, employees or
agents of the Trust shall not be subject to any personal liability to any
other person, other than the Trust or its shareholders, in connection with
Trust property or the affairs of the Trust, except liability arising from bad
faith, willful misfeasance, gross negligence or reckless disregard of his or
her duties. Section 5.1 also provides that the Registrant will indemnify and
hold harmless each shareholder from and against all claims and liabilities to
which such shareholder may become subject by reason of his being or having
been a shareholder and shall reimburse such shareholder for all expenses
reasonably related thereto.
As permitted by Sections 17(h) and (i) of the 1940 Act and pursuant to
Article VII of the Fund's By-Laws (Exhibit (b) to the Registration
Statement), in certain cases, an individual who is a present or former
officer, Trustee, employee or agent of the Registrant or who serves or has
served another trust, corporation, partnership, joint venture or other
enterprise in one of such capacities at the request of the Registrant (a
representative of the Trust) may be indemnified by the Registrant against
certain liabilities in connection with the Registrant provided that such
representative acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Registrant,
subject to certain qualifications and exceptions including liabilities to the
Registrant or to its shareholders to which such representative would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of duties. As permitted by Section 17(i) of
the Investment Company Act and pursuant to Section 10 of the Distribution
Agreement (Exhibit 6(e)(1) to the Registration Statement), in certain cases
the Distributor of the Registrant may be indemnified against liabilities
which it may incur except liabilities arising from bad faith, gross
negligence, in the performance of its duties, willful misfeasance or reckless
disregard of duties. Such Article V of the Declaration of Trust, Article VII
of the By-Laws, as amended and Section 10 of the Distribution Agreement are
hereby incorporated by reference in their entirety. The Trust has purchased
an insurance policy insuring its officers and Trustees against certain
liabilities, and certain costs of defending claims against such officers and
Trustees, to the extent such officers and Trustees are not found to have
committed conduct constituting willful misfeasance, bad faith, gross
negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Trust against the cost of indemnification
payments to officers and Trustees under certain circumstances.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, (Securities Act) may be permitted to Trustees,
officers and controlling persons of the Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Investment Company Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a Trustee, officer, or
controlling person of the Registrant and the principal underwriter in
connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such Trustee, officer or controlling
person or the principal underwriter in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Investment Company Act and will be
governed by the final adjudication of such issue. Pursuant and subject to
the provisions of Article XI of the Registrant's By-Laws, the Registrant
shall indemnify each representative of the Trust against, or advance the
expenses of a representative of the Trust for, the amount of any deductible
provided in any liability insurance policy maintained by the Registrant.
Section 9 of the Management Agreement (Exhibit (d)(1) to the Registration
Statement) and Section 4 of the Subadvisory Agreement (Exhibit (d)(2) to the
Registration Statement) limit the liability of Prudential Investments LLC
(PI) and Prudential Investment Management, Inc. (PIM), respectively, to
liabilities arising from willful misfeasance, bad faith or gross negligence
in the performance of their respective duties or from reckless disregard by
them of their respective obligations and duties under the agreements. Section
9 of the Management Agreement also holds PI liable for losses resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its Declaration of Trust, By-Laws and the Distribution
Agreement in a manner consistent with Release No. 11330 of the Securities and
Exchange Commission under the Investment Company Act so long as the
interpretations of Sections 17(h) and 17(i) of such Act remain in effect and
are consistently applied.
C-1
<Page>
ITEM 16. EXHIBITS.
(1) (a) Declaration of Trust as amended and restated on September 6, 1988 of
the Registrant. Incorporated by reference to Exhibit 1(a) to Post-Effective
Amendment No. 27 to the Registration Statement filed on
Form N-1A via EDGAR on February 2, 1998 (File No. 2-74139).
(b) Amendment to Declaration of Trust, dated March 1, 1991. Incorporated
by reference to Exhibit 1(b) to Post-Effective Amendment No. 27 to the
Registration Statement filed on Form N-1A via EDGAR on February 2,
1998 (File No. 2-74139).
(c) Amendment to Declaration of Trust, dated July 7, 2003. (filed
herewith)
(d) Amended Certificate of Designation dated July 27, 1995. Incorporated by
reference to Exhibit No. 1(c) to Post-Effective Amendment No. 25 to the
Registration Statement filed on Form N-1A via EDGAR on January 25, 1996
(File No. 2-74139).
(e) Amended Certificate of Designation dated January 22, 1996. Incorporated
by reference to Exhibit No. 1(d) to Post-Effective Amendment No. 25 to the
Registration Statement filed on Form N-1A via EDGAR on January 25, 1996
(File No. 2-74139).
(f) Amended Certificate of Designation dated February 21, 1997.
Incorporated by reference to Exhibit No. 1(e) to Post-Effective
Amendment No. 26 to the Registration Statement filed on Form N-1A
via EDGAR on February 4, 1997 (File No. 2-74139).
(g) Amended and Restated Certificate of Establishment and Designation of
Series of Shares of Beneficial Interest, $.01 Par Value. Incorporated by
reference to Exhibit (a)(6) to Post-Effective Amendment No. 33 to
the Registration Statement filed on Form N-1A via EDGAR on October 23, 2002
(File No. 2-74139).
(2) Amended and Restated By-Laws of the Registrant. (filed herewith).
(3) Not Applicable.
(4) Plan of Reorganization (filed herewith as Exhibit A to the Proxy
Statement and Prospectus).
(5) (a) Specimen certificate for shares of beneficial interest issued by the
Registrant. Incorporated by reference to Exhibit No. (c)(1) to
Post-Effective Amendment No. 29 to the Registration Statement filed on
Form N-1A via EDGAR on March 29, 1999 (File No. 2-74139).
(b) Specimen certificate for shares of beneficial interest issued by the
Registrant's U.S. Treasury Money Market Series. Incorporated by reference
to Exhibit No. (c)(2) to Post-Effective Amendment No. 29 to the
Registration Statement filed on Form N-1A via EDGAR on March 29, 1999
(File No. 2-74139).
(c) Instruments defining rights of holders of the securities being
offered. Incorporated by reference to Exhibit 4(c) to Post-Effective
Amendment No. 19 to the Registration Statement filed on Form N-1A via
EDGAR on January 27, 1994 (File No. 2-74139).
(6) (a) Management Agreement dated August 9, 1988, as amended on November 19,
1993, between the Registrant and Prudential Mutual Fund Management, Inc.
Incorporated by reference to Exhibit 5(a) to Post-Effective Amendment
No. 19 to the Registration Statement filed on Form N-1A via EDGAR on
January 27, 1994 (File No. 2-74139).
(b) Subadvisory Agreement dated August 9, 1988, between Prudential Mutual
Fund Management, Inc. and The Prudential Investment Corporation.
Incorporated by reference to Exhibit 5(b) to Post-Effective Amendment
No. 27 to the Registration Statement filed on Form N-1A via EDGAR on
February 2, 1998 (File No. 2-74139).
(c) Amendment to Subadvisory Agreement dated November 18, 1999,
between Prudential Investments Fund Management LLC and The Prudential
Investment Corporation. Incorporated by reference to Exhibit d(3) to
Post-Effective Amendment No. 30 to the Registration Statement filed on
Form N-1A via EDGAR on February 2, 2000 (File No. 2-74139).
(7) (a) Distribution Agreement with Prudential Investment Management Services
LLC. Incorporated by reference to Exhibit (e)(i) to Post-Effective
Amendment No. 28 to the Registration Statement filed on Form N-1A via
EDGAR on January 28, 1999.
(b) Dealer Agreement. Incorporated by reference to Exhibit (e)(2) to
Post-Effective Amendment No. 28 to the Registration Statement filed on
Form N-1A via EDGAR on January 28, 1999.
C-2
<Page>
(8) Not Applicable.
(9) (a) Custodian Agreement between the Registrant and State Street
Bank and Trust Company. Incorporated by reference to Exhibit 8 to
Post-Effective Amendment No. 27 to the Registration Statement filed on
Form N-1A via EDGAR on February 2, 1998 (File No. 2-74139).
(b) Amendment to Custodian Agreement dated February 22, 1999 by and
between the Registrant and State Street Bank and Trust Company.
Incorporated by reference to Exhibit d(3) to Post-Effective Amendment
No. 30 to the Registration Statement filed on Form N-1A via EDGAR on
February 2, 2000 (File No. 2-74139).
(c) Amendment to Custodian Contract/Agreement dated as of July 17, 2001
by and between the Registrant and State Street Bank and Trust Company.
Incorporated by reference to Exhibit g(3) to Post-Effective Amendment
No. 32 to the Registration Statement filed on Form N-1A via EDGAR on
January 28, 2002 (File No. 2-74139).
(d) Amendment to Custodian Contract/Agreement dated as of January 17,
2002 by and between the Registrant and State Street Bank and Trust
Company. Incorporated by reference to Exhibit g(4) to Post-Effective
Amendment No. 32 to the Registration Statement filed on Form N-1A via
EDGAR on January 28, 2002 (File No. 2-74139).
(10) (a) Distribution and Service Plan for Class A Shares, dated
December 20, 1990, as amended and restated on July 1, 1993 and August 1,
1995 (Money Market Series and U.S. Treasury Money Market Series).
Incorporated by reference to Exhibit d(3) to Post-Effective Amendment
No. 30 to the Registration Statement filed on Form N-1A via EDGAR on
February 2, 2000 (File No. 2-74139).
(b) Distribution and Service Plan for Class A Shares, dated July 26,
1995, as amended and restated on July 1, 1993 and August 1, 1995
(Short-Intermediate Term Series). Incorporated by reference to
Exhibit d(3) to Post-Effective Amendment No. 30 to the Registration
Statement filed on Form N-1A via EDGAR on February 2, 2000
(File No. 2-74139).
(c) Distribution Plan for Class S shares of U.S. Treasury Money Market
Series. Incorporated by reference to Exhibit (m)(3) to Post-Effective
Amendment No. 33 to the Registration Statement filed on Form N-1A via
EDGAR on October 23, 2002 (File No. 2-74139).
(d) Rule 18f-3 Plan for Money Market Series. Incorporated by reference
to Exhibit 18 to Post-Effective Amendment No. 25 to the Registration
Statement filed on Form N-1A via EDGAR on January 25, 1996.
(e) Rule 18f-3 Plan for Money Market Series, U.S. Treasury Money Market
Series and Short-Intermediate Term Series. Incorporated by reference to
Exhibit No. 18(b) to Post-Effective Amendment No. 26 to Registration
Statement filed on Form N-1A via EDGAR on February 4, 1997
(File No. 2-74139).
(f) Rule 18f-3 Plan for U.S. Treasury Money Market Series dated
August 15, 2002. Incorporated by reference to Exhibit (n)(3) to
Post-Effective Amendment No. 33 to the Registration Statement filed on
Form N-1A via EDGAR on October 23, 2002 (File No. 2-74139).
C-3
<Page>
(11) Opinion and Consent of Sullivan & Worcester to be filed by amendment.
(12) Opinion and Consent of Shearman & Sterling LLP regarding tax matters to
be filed by amendment.
(13) Not Applicable.
(14) Consent of independent accountants to be filed by amendment.
(15) Not Applicable.
(16) (a) Powers of attorney. Incorporated by reference to Exhibit (q) to
Post-Effective Amendment No. 32 to the Registration Statement on Form N1-A
filed via EDGAR on January 28, 2003 (File No. 2-74139).
(b) Powers of attorney for Delayne Dedrick Gold and Thomas T. Mooney
(filed herewith).
(17) (a) Registrant's Rule 24f-2 Notice pursuant to Rule 24f-2 under the
Investment Company Act of 1940, for its fiscal year ended November 30,
2002. Incorporated by reference to Form 24f-2 filed with the Securities
and Exchange Commission on February 26, 2003.
(b) Form of Proxy (filed herewith).
ITEM 17. UNDERTAKINGS
1. The Registrant agrees that prior to any public reoffering of the
securities registered through the use of the prospectus which is a part of
this registration statement on Form N-14 by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c) of the Securities Act
of 1933, the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
2. The undersigned Registrant agrees that every prospectus that is
filed under paragraph 1 above will be filed as part of an amendment to this
registration statement on Form N-14 and will not be used until the amendment
is effective, and that, in determining any liability under the Securities Act
of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.
C-4
<Page>
SIGNATURES
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the Registrant, in the City of Newark and State
of New Jersey, on the ____ day of January, 2004.
DRYDEN GOVERNMENT SECURITIES TRUST
By: *
-----------------------------------------
Judy A. Rice, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below
by the following persons in the capacities and on the dates indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
*
- ------------------------------ Trustee
Delayne Dedrick Gold
*
- ------------------------------ Vice President and Trustee
Robert F. Gunia
*
- ------------------------------ Trustee
Robert E. La Blanc
*
- ------------------------------ Trustee
Thomas T. Mooney
*
- ------------------------------ Trustee
Richard A. Redeker
*
- ------------------------------ President and Trustee
Judy A. Rice
*
- ------------------------------ Trustee
Robin B. Smith
*
- ------------------------------ Trustee
Louis A. Weil, III
*
- ------------------------------ Treasurer and Principal Financial and
Grace C. Torres Accounting Officer
By: /s/ Jonathan D. Shain
- ------------------------------
Jonathan D. Shain
(Attorney-in-Fact)
</Table>
January , 2004
<Page>
EXHIBIT INDEX
<Table>
<Caption>
Exhibit Description
- ------- -----------
(1) (c) Amendment to Declaration of Trust, dated July 7, 2003.
(2) Amended and Restated By-Laws of the Registrant.
(16)(b) Powers of Attorney for Delayne D. Gold and Thomas T. Mooney
(17)(b) Form of Proxy
</Table>