<Page>
As filed with the Securities and Exchange Commission
on April 28, 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
/X/ Pre-Effective Amendment No. 1 / / 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
-------------------------------
May , 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 August 24, 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
August 24, 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 August 23, 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 August 23, 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.
<Page>
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 may also 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 experienced as shareholders of Treasury Series.
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>
ARE THE RISKS OF INVESTING IN TREASURY SERIES AND MONEY MARKET SERIES SIMILAR?
Yes. The risks associated with an investment in Treasury Series are similar
to that associated with an investment in Money Market Series. As discussed
above, Treasury Series invests exclusively in U.S. Treasury obligations and
Money Market Series invests at least 80% of its investable assets in U.S.
Government securities. However, whereas U.S. Treasury obligations are backed by
the full faith and credit of the United States (which means that payment of
interest and principal is guaranteed, but yield and market value are not), U.S.
Government securities include a variety of securities which are issued or
guaranteed by various agencies of the U.S. Government or by various
instrumentalities which have been established or sponsored by the U.S.
Government which may not be guaranteed by the full faith and credit of the
United States. The credit risk is therefore greater for the Money Market Series
to the extent it invests in U.S. Government securities that are not insured or
guaranteed by the U.S. Government, but rather are subject to default like the
obligations of private issuers, which depend entirely on their own resources to
repay their debt.
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............................................ .34% .34%
= TOTAL ANNUAL SERIES OPERATING EXPENSES.................... .87% .74%
</Table>
<Page>
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
- ------------- ------------- --------------
2003 Treasury .50%
Money Market .42%
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>
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 (August 24, 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.
<Page>
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 May 21, 2004.
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.
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
August 24, 2004, at 11:00 a.m. Eastern Daylight 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 May 21, 2004, 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: May , 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
PROXY STATEMENT
AND
MONEY MARKET SERIES
A SERIES OF DRYDEN GOVERNMENT SECURITIES TRUST
PROSPECTUS
GATEWAY CENTER THREE
100 MULBERRY STREET, 4TH FLOOR
NEWARK, NEW JERSEY 07102-4077
(800) 225-1852
------------------------
MAY , 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 August 24, 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, which will be distributed to shareholders of Treasury
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 May , 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 February 19, 2004, which offers shares
of Money Market Series. The Statement of Additional Information for Money Market
Series, dated February 19, 2004, is available upon request. Enclosed with this
Proxy Statement is the Annual Report of Money Market Series, dated November 30,
2003, which is incorporated into this Proxy Statement by reference. The
Prospectus and Statement of Additional Information and supplements
1
<Page>
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 February 19, 2004, and
the Annual Report of Treasury Series dated November 30, 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.
VOTING INFORMATION
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 May , 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 $74,300.
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 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
2
<Page>
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 May 21, 2004 (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 May 21, 2004:
<Table>
<Caption>
NAME ADDRESS CLASS SHARES/%
---- ------- -------- ----------------
</Table>
3
<Page>
<Table>
<Caption>
NAME ADDRESS CLASS SHARES/%
---- ------- -------- ----------------
</Table>
The following shareholders held 5% or more of any class of shares of Money
Market Series on May 21, 2004:
<Table>
<Caption>
NAME ADDRESS CLASS SHARES/%
---- ------- -------- -----------------
</Table>
As of May 21, 2004, 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.
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.
4
<Page>
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 receive shares of Money Market
Series and 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. Whereas
U.S. Treasury obligations are backed by the full faith and credit of the United
States (which means that payment of interest and principal is guaranteed, but
yield and market value are not), U.S. Government securities include a variety of
securities which are issued or guaranteed by various agencies of the U.S.
Government or by various instrumentalities which have been established or
sponsored by the U.S. Government which may not be guaranteed by the full faith
and credit of the United States. The credit risk is therefore greater for Money
Market Series to the extent it invests in U.S. Government securities that are
not insured or guaranteed by the U.S. Government, but rather are subject to
default like the obligations of private issuers, which depend entirely upon
their own resources to repay their debt. 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, an index used in the "cash" investment
industry, 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.
5
<Page>
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
March 31, 2004, 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 $107.4 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 from 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.
6
<Page>
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.
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. Shareholders of Treasury Series will receive shares of Money
Market Series and will become shareholders of Money Market Series. 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
7
<Page>
Series' annualized total operating expense ratios for Class A shares was 0.87%,
and for Class Z shares was 0.74%.
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 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.
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 and the expected
impact of the redemption of sweep assets by Wachovia Securities (the "Combined
Money Market Series").
8
<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 and the
expected impact of the redemption of sweep assets by Wachovia Securities as of
September 30, 2004.
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% .34% .27%
= TOTAL ANNUAL SERIES OPERATING EXPENSES... .63% .87% .80%
</Table>
CLASS Z SHARES
<Table>
<Caption>
PRO FORMA
COMBINED
TREASURY SERIES MONEY MARKET SERIES MONEY MARKET SERIES
CLASS Z SHARES CLASS Z SHARES CLASS Z SHARES*
--------------- ------------------- -------------------
Management Fees............................ .40% .40% .40%
+ Distribution and service (12b-1) fees.... None None None
+ Other expenses........................... .10% .34% .27%
= TOTAL ANNUAL SERIES OPERATING EXPENSES... .50% .74% .67%
</Table>
- ------------------------
* The following assumptions have been made in determining the pro forma
combined amounts:
1. In estimating the average net assets to be used to calculate the pro forma
expense ratios and expense table amounts, the respective Series' existing
average net assets as of November 30, 2003 were reduced to reflect the
anticipated reduction in assets resulting from the redemptions of sweep
assets by Wachovia Securities (i.e., 82% for Treasury Series and 29% for
Money Market Series).
2. In estimating the reduction in expenses pursuant to the reduction in assets,
the following assumptions have been made:
(a) Transfer agency expenses and shareholder reporting expenses have been
adjusted assuming a lower number of accounts correlating to the reduction
in assets.
(b) Custody fees have been adjusted to reflect the custody fees incurred by
comparably sized mutual funds.
(c) No significant reductions in audit, legal and other expenses are
estimated as a result of the reduction in asset size of the Series.
9
<Page>
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 and the expected impact of the redemption of
sweep assets by Wachovia Securities as of September 30, 2004 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.......................................... $82 $255 $444 $ 990
</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.......................................... $68 $214 $375 $835
</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.
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 and the
redemption of sweep assets by Wachovia Securities had occurred.
<Table>
<Caption>
PRO FORMA
COMBINED
TREASURY SERIES MONEY MARKET SERIES MONEY MARKET SERIES
--------------- ------------------- -------------------
Net Assets (000s)
Class A.................................. $343,477 $504,806 $408,633
Class Z.................................. $ 5,846 $ 22,486 $ 28,332
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.................................. 343,477 504,806 408,633
Class Z.................................. 5,846 22,486 28,332
</Table>
10
<Page>
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 12-31-03)
<Table>
<Caption>
1 YR 5 YRS 10 YRS SINCE INCEPTION
Class A Shares 0.50% 2.97% 3.78% 3.81% (since 12-3-90)
Class Z Shares 0.62% 3.10% N/A 3.66% (since 2-21-97)
Lipper Average(2) 0.42% 2.91% 3.78% **(2)
</Table>
MONEY MARKET SERIES
AVERAGE ANNUAL TOTAL RETURNS(1) (AS OF 12-31-03)
<Table>
<Caption>
1 YR 5 YRS 10 YRS SINCE INCEPTION
Class A shares 0.42% 2.98% 3.83% 5.53% (since 1-12-82)
Class Z shares 0.54% 3.11% N/A 3.81% (since 3-1-96)
Lipper Average(2) 0.46% 3.04% 3.92% **(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 5.53% FOR CLASS A AND 4.07% 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.
TREASURY SERIES
ANNUAL RETURNS (CLASS A SHARES)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
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%
2003 0.50%
</Table>
BEST QUARTER: 1.49% (4th quarter of 2000) WORST QUARTER: 0.09% (4th quarter of
2003)
MONEY MARKET SERIES
ANNUAL RETURNS (CLASS A SHARES)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
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%
2003 0.42%
</Table>
BEST QUARTER: 1.49% (4th quarter of 2000) WORST QUARTER: 0.05% (3rd quarter of
2003)
11
<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.
12
<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.
13
<Page>
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.
14
<Page>
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 all of the assets of Treasury
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, followed by the distribution of the Money Market
Series shares received 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 all 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
Class A and Class Z 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 therefor, 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.
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 February 27, 2004, 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, 2003,
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, 2003, which is also enclosed with this Proxy
Statement.
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
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LLP, independent auditors, whose reports thereon are included in the Annual
Reports to Shareholders for the fiscal year ended November 30, 2003. 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
May , 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 $0.01 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
the Acquired Fund's books (hereinafter "Net Assets"). The Acquired 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 financial statements appearing in the Trust's Annual Report to
Shareholders for the fiscal year ended November 30, 2003, audited by
PricewaterhouseCoopers LLP, 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.
(c) The Trust has the necessary power and authority to conduct the Acquired
Fund's business as such business is now being conducted.
(d) 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
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obligation, and is not subject to any order or decree, that would be violated by
its execution of or performance under this Plan.
(e) The Acquired Fund does not have any unamortized or unpaid
organizational fees or expenses.
(f) The Acquired Fund has elected to be treated as a regulated investment
company (a "RIC") for federal income tax purposes under 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 so
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.
(g) 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, 2003, audited by
PricewaterhouseCoopers LLP, 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.
(g) The Acquiring Fund has elected to be treated as a RIC for federal
income tax purposes under Part I of Subchapter M of the Code and the Acquiring
Fund has qualified as a RIC for each taxable year since its inception, and will
so 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.
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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 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
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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 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;
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(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.
(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
A-6
<Page>
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.
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.
A-7
<Page>
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>
2 VOTING INFORMATION
4 Vote Required
5 APPROVAL OF THE TRANSACTION SYNOPSIS
5 Investment Objectives and Policies
6 Investment Advisory Services
6 Expense Structures
6 Purchases, Redemptions, Exchanges and Distributions
6 Tax Considerations
6 Appraisal Rights
7 Potential Benefits from Transaction
7 THE PROPOSED TRANSACTION
7 Series Operating Expenses
8 Shareholder Fees
8 Operating Expense Tables
10 Examples of the Effect of Series Expenses
10 Pro Forma Capitalization
11 Performance Comparisons of the Series
12 INVESTMENT OBJECTIVES AND POLICIES
12 Investment Objectives
12 Principal Investment Strategies
12 COMPARISON OF OTHER POLICIES OF THE SERIES
12 Investment Restrictions
12 COMPARISON OF PRINCIPAL RISK FACTORS
13 OPERATIONS OF MONEY MARKET SERIES FOLLOWING THE TRANSACTION
13 PURCHASES, REDEMPTIONS, EXCHANGES AND DISTRIBUTIONS
13 Purchasing Shares
13 Redeeming Shares
13 Minimum Investment Requirements
13 Purchases and Redemptions of Treasury Series
14 Exchanges of Series Shares
14 Dividends and Other Distributions
14 THE PROPOSED TRANSACTION
14 Plan of Reorganization
15 Reasons for the Transaction
15 Description of the Securities to be Issued
16 U.S. Federal Income Tax Considerations
17 Conclusion
17 ADDITIONAL INFORMATION ABOUT MONEY MARKET SERIES
17 MISCELLANEOUS
17 Legal Matters
17 Independent Auditors
18 Available Information
18 Notice to Banks, Broker-Dealers and Voting Trustees and
Their Nominees
18 SHAREHOLDER PROPOSALS
19 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, 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 MAY , 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 August 24, 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,
2003.
3. Annual Report of Money Market Series for the fiscal year ended November
30, 2003.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Prospectus and Proxy Statement dated May ,
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,
2003 and the Annual Report of Money Market Series for the fiscal year ended
November 30, 2003, each including audited financial statements, the notes
thereto and the report of their independent auditors thereon, are 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
------------------------------------ PRO FORMA COMBINED
MONEY U.S. TREASURY PRO FORMA WITH ANTICIPATED
MARKET SERIES MONEY MARKET SERIES ADJUSTMENTS REDEMPTIONS
------------- ------------------- ------------- ------------------
ASSETS
Investments, at amortized cost $529,344,555 $348,315,339 ($439,128,499) $438,531,395
Cash 69,362 26,377 (41,744) 53,995
Receivable for Series shares sold 2,418,249 5,259,068 (5,013,728) 2,663,589
Interest receivable 744,692 251,595 (422,269) 574,018
Other assets 14,428 10,663 0 25,091
------------- ------------------- ------------- ------------------
TOTAL ASSETS 532,591,286 353,863,042 (444,606,240) 441,848,088
------------- ------------------- ------------- ------------------
LIABILITIES
Payable for Series shares reaquired 4,500,644 4,172,065 (4,726,280) 3,946,429
Accrued expenses and other liabilities 526,293 180,696 (10,100) 696,889
Management fee payable 177,803 120,462 (150,342) 147,923
Distribution fee payable 53,228 37,034 (45,804) 44,458
Dividends payable 30,399 17,656 (23,293) 24,762
Deferred Trustee's fees 10,514 12,279 0 22,793
------------- ------------------- ------------- ------------------
TOTAL LIABILITIES 5,298,881 4,540,192 (4,955,819) 4,883,254
NET ASSETS $527,292,405 $349,322,850 $436,964,834
============= =================== =================
Net Assets were comprised of:
Shares of beneficial interest, at par
($.01 per share) $5,272,924 $3,493,229 $4,369,648
Paid-in capital in excess of par 522,019,481 345,829,621 432,595,187
------------- ------------------- ------------------
NET ASSETS NOVEMBER 30, 2003 $527,292,405 $349,322,850 $436,964,834
============= =================== =================
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 $(7,276,981) $6,682,130
------------- ------------------- ----------- ----------
Expenses
Management fee 2,375,892 2,052,872 (2,372,364)(b) 2,056,400
Distribution fee - Class A 714,954 634,029 (727,240)(b) 621,743
Transfer agent's fees and expenses 1,535,000 200,000 (897,663)(b) 837,337
Custodian's fees and expenses 112,000 101,000 (121,193)(a) 91,807
Registration fees 100,000 73,000 (35,000)(b) 138,000
Reports to shareholders 142,000 52,000 - 194,000
Audit fee and expenses 26,000 26,000 (26,000)(b) 26,000
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 31,350 9,636 (6,000)(b) 34,986
------------- ------------------- ----------- ----------
Total Expenses 5,084,196 3,200,537 (4,223,460) 4,061,273
------------- ------------------- ----------
Net investment income 2,782,767 2,891,611 2,620,857
------------- ------------------- ----------
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 $2,734,028
============= =================== ==========
</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. In addition, the
pro-forma adjustments reflect the estimated impact of the reduction in
assets of the respective funds pursuant to their move to Wachovia. Based on
the estimated outflow of 29% of the assets from the Money Market Series and
82% from the U.S. Treasury Series, adjustments by way of proportionate
reductions have been made to the following asset and liability balances in
the Statement of Assets and Liabilities:
(a) Portfolio of Investments: The par amount and the value of each of the
securities of the respective funds were reduced in proportion to the
respective Series' anticipated reduction in assets.
(b) Statement of Assets and Liabilities: (Assets other than Investments):
(i) Interest Receivable: The amounts of interest receivable were
reduced in proportion to which the investments have been adjusted
as stated in (a) above.
(ii) Receivables for securities sold and Receivable for fund shares
sold and Payable for investment purchases have been reduced in
the same proportion as the anticipated reduction in net assets.
As the amounts of prepaid expenses and other assets are not material, no
adjustments were made to those amounts.
(c) Composition of Net assets: Paid in capital has been reduced to reflect
the outflow of assets. Since all income and gains are distributed and
the NAV per share is $1 there are no adjustments to reflect for
undistributed income or accumulated gains.
<Page>
2. 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 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.
3. 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 62,878,113* $349,322,850* $1.00
* Note, shares issued are lower in
Order to reflect the outflow of
82% of the assets to Wachovia
</Table>
4. 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 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
- ---------------------------------------------------------------------------------- --------------------------------------------
Money U.S. Treasury Anticipated redemption Pro-Forma
Market Series Money Market Series of sweep assets Combined
- ----------------- -------------------- --------------------------------------
Federal Farm Credit Bank --.08%
$500 - ($145) $355 5.10%, 4/26/04
Federal Home Loan Bank --19.4%
5,160 - (1,496) 3,664 5.25%, 2/13/04, M.T.N.
6,000 - (1,740) 4,260 1.30%, 12/4/03, F.R.N.
5,000 - (1,450) 3,550 1.25%, 12/11/03, F.R.N.
30,000 - (8,700) 21,300 1.015%, 12/24/03, F.R.N.
20,000 - (5,800) 14,200 1.05%, 1/7/04, F.R.N.
33,000 - (9,570) 23,430 1.01%, 1/14/04, F.R.N.
300 - (87) 213 5.35%, 12/1/03
100 - (29) 71 5.53%, 12/8/03
100 - (29) 71 5.85%, 12/15/03
500 - (145) 355 3.26%, 12/19/03
500 - (145) 355 Zero Coupon, 2/25/04
1,000 - (290) 710 1.25%, 4/15/04
10,000 - (2,900) 7,100 4.875%, 4/16/04
250 - (73) 178 1.125%, 5/19/04
7,000 - (2,030) 4,970 2.25%, 8/13/04
Federal Home Loan Mortgage Corporation --5.0%
15,000 - (4,350) 10,650 1.01%, 12/15/03
12,500 - (3,625) 8,875 0.99%, 12/31/03
758 - (220) 538 5.25%, 2/15/04
750 - (218) 532 5.625%, 3/12/04
2,000 - (580) 1,420 3.25%, 5/20/04
Federal National Mortgage Association --15.0%
3,817 - (1,107) 2,710 5.125%, 2/13/04, M.T.N.
6,340 - (1,839) 4,501 1.003%, 12/10/03, F.R.N.
25,000 - (7,250) 17,750 1.06%, 12/18/03, F.R.N.
10,500 - (3,045) 7,455 1.01%, 1/22/04, F.R.N.
19,000 - (5,510) 13,490 1.00%, 1/28/04, F.R.N.
8,000 - (2,320) 5,680 1.35%, 3/23/04, F.R.N.
5,138 - (1,490) 3,648 1.005%, 1/15/04
4,000 - (1,160) 2,840 1.14%, 2/18/04
10,000 - (2,900) 7,100 6.50%, 8/15/04
United States Treasury Bills --12.4%
- $1,495 (1,226) 269 0.825%, 12/18/03
- 30,000 (24,600) 5,400 0.92%, 12/18/03
- 2,705 (2,218) 487 0.902%, 12/26/03
- 64,900 (53,218) 11,682 0.938572%, 12/26/03
- 75,000 (61,500) 13,500 0.945%, 12/26/03
- 19,784 (16,223) 3,561 0.90%, 1/2/04
- 5,198 (4,262) 936 0.9025%, 1/2/04
- 20,465 (16,781) 3,684 0.91%, 1/2/04
- 10,571 (8,668) 1,903 0.915%, 1/2/04
- 878 (720) 158 0.925%, 1/2/04
- 6,931 (5,683) 1,248 0.92%, 1/8/04
- 6,702 (5,496) 1,206 0.94%, 1/8/04
- 33,225 (27,245) 5,980 0.905%, 1/15/04
- 1,000 (820) 180 0.94%, 1/15/04
- 12,000 (9,840) 2,160 0.97%, 1/15/04
- 10,000 (8,200) 1,800 0.96%, 1/29/04
- 213 (175) 38 1.01%, 2/5/04
- 31 (25) 6 1.035%, 2/26/04
</Table>
<Table>
Value
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Anticipated redemption Pro-Forma
Money Market Series Money Market Series of sweep assets Combined
- ---------------------------- ------------------------------ --------------------------------------- --------------------
$507,649 - ($147,218) $360,431
- ---------------------------- ------------------------------ --------------------------------------- --------------------
5,202,560 - (1,508,742) 3,693,818
6,000,000 - (1,740,000) 4,260,000
5,000,000 - (1,450,000) 3,550,000
29,992,899 - (8,697,941) 21,294,958
19,997,293 - (5,799,215) 14,198,078
32,990,932 - (9,567,370) 23,423,562
300,000 - (87,000) 213,000
100,081 - (29,023) 71,058
100,174 - (29,050) 71,124
500,512 - (145,148) 355,364
497,514 - (144,279) 353,235
1,000,598 - (290,173) 710,425
10,134,232 - (2,938,927) 7,195,305
249,886 - (72,467) 177,419
7,054,429 - (2,045,784) 5,008,645
- ---------------------------- ------------------------------ --------------------------------------- --------------------
119,121,110 - (34,545,119) 84,575,991
- ---------------------------- ------------------------------ --------------------------------------- --------------------
14,994,108 - (4,348,291) 10,645,817
12,489,688 - (3,622,010) 8,867,678
764,254 - (221,634) 542,620
759,203 - (220,169) 539,034
2,016,962 - (584,919) 1,432,043
- ---------------------------- ------------------------------ --------------------------------------- --------------------
31,024,215 - (8,997,023) 22,027,192
- ---------------------------- ------------------------------ --------------------------------------- --------------------
3,847,397 - (1,115,745) 2,731,652
6,338,637 - (1,838,205) 4,500,432
24,995,416 - (7,248,671) 17,746,745
10,499,226 - (3,044,776) 7,454,450
18,995,214 - (5,508,612) 13,486,602
8,000,000 - (2,320,000) 5,680,000
5,131,544 - (1,488,148) 3,643,396
3,989,993 - (1,157,098) 2,832,895
10,370,154 - (3,007,345) 7,362,809
- ---------------------------- ------------------------------ --------------------------------------- --------------------
92,167,581 - (26,728,600) 65,438,981
- ---------------------------- ------------------------------ --------------------------------------- --------------------
- $1,494,417 (1,225,422) 268,995
- 29,986,967 (24,589,313) 5,397,654
- 2,703,306 (2,216,711) 486,595
- 64,857,699 (53,183,313) 11,674,386
- 74,950,781 (61,459,640) 13,491,141
- 19,768,173 (16,209,902) 3,558,271
- 5,193,830 (4,258,941) 934,889
- 20,448,446 (16,767,726) 3,680,720
- 10,562,402 (8,661,170) 1,901,232
- 877,278 (719,368) 157,910
- 6,924,269 (5,677,901) 1,246,368
- 6,695,350 (5,490,187) 1,205,163
- 33,187,414 (27,213,679) 5,973,735
- 998,825 (819,037) 179,788
- 11,985,450 (9,828,069) 2,157,381
- 9,984,267 (8,187,099) 1,797,168
- 212,606 (174,337) 38,269
- 30,923 (25,357) 5,566
- ---------------------------- ------------------------------ --------------------------------------- --------------------
- 300,862,403 (246,707,172) 54,155,231
- ---------------------------- ------------------------------ --------------------------------------- --------------------
</Table>
<Page>
<Table>
<Caption>
Principal Amount (000) Description
- ---------------------------------------------------------------------------------- --------------------------------------------
Money U.S. Treasury Anticipated redemption Pro-Forma
Market Series Money Market Series of sweep assets Combined
- ----------------- -------------------- --------------------------------------
United States Treasury Notes --2.0%
- 14,465 (11,861) 2,604 2.125%, 8/31/04
- 25,000 (20,500) 4,500 3.625%, 3/31/04
- 5,000 (4,100) 900 3.375%, 4/30/04
- 2,607 (2,138) 469 5.25%, 5/15/04
Repurchase Agreements (a) --46.5%
20,000 - (5,800) 14,200 Bear Stearns, 1.06%, dated 11/24/03, due in
the amount of $20,004,122 (cost
$20,000,000; the value of the collateral
including interest was $20,400,244)
50,000 - (14,500) 35,500 Deutsche Bank Securities, Inc., 1.06%, dated
11/26/03, due in the amount of $50,010,306
(cost $50,000,000; the value of the
collateral including interest was
$51,000,000)
50,000 - (14,500) 35,500 Greenwich Capital Markets, 1.05%, dated
11/26/03, due 12/01/03 in the amount of
$50,007,292 (cost $50,000,000; the value of
the collateral including interest was
$51,001,080)
50,000 - (14,500) 35,500 JP Morgan Chase Securities, Inc., 1.05%,
dated 11/26/03, due 12/01/03 in the amount
of $50,007,192 (cost $50,000,000; the
valueof the collateral including interest
was $51,000,496)
66,524 - (19,292) 47,232 Joint Repurchase Agreement, 1.07%, dated
11/28/03, due 12/01/03 in the amount of
$66,529,932 (cost $66,524,000; the value of
the collateral including interest was
$67,528,442)
50,000 - (14,500) 35,500 Merrill Lynch & Co., Inc., 1.04%, dated
11/28/03, due 12/02/03 in the amount of
$50,005,778 (cost $50,000,000; the value of
the collateral including interest was
$51,002,651)
Total Investments --100.4%
(amortized cost is $529,344,555;
$348,315,339; $438,531,393) respectively
Liabilities in excess of other assets (0.4)%
Net Assets --100%
</Table>
<Table>
<Caption>
Value
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Anticipated redemption Pro-Forma
Money Market Series Money Market Series of sweep assets Combined
- --------------------------- ------------------------- --------------------------- ---------------
- 14,553,637 (11,933,982) 2,619,655
- 25,202,620 (20,666,148) 4,536,472
- 5,043,080 (4,135,326) 907,754
- 2,653,599 (2,175,951) 477,648
- --------------------------- ------------------------- --------------------------- ---------------
- 47,452,936 (38,911,407) 8,541,529
- --------------------------- ------------------------- --------------------------- ---------------
20,000,000 - (5,800,000) 14,200,000
50,000,000 - (14,500,000) 35,500,000
50,000,000 - (14,500,000) 35,500,000
50,000,000 - (14,500,000) 35,500,000
66,524,000 - (19,291,960) 47,232,040
50,000,000 - (14,500,000) 35,500,000
- --------------------------- ------------------------- --------------------------- ---------------
286,524,000 - (83,091,960) 203,432,040
- --------------------------- ------------------------- --------------------------- ---------------
$529,344,555 348,315,339 ($439,128,499) $438,531,395
- --------------------------- ------------------------- --------------------------- ---------------
($2,052,150) 1,007,511 (1,516,562)
- --------------------------- ------------------------- ---------------
$527,292,405 $349,322,850 $436,964,834
=========================== ========================= ===============
</Table>
(a) Repurchase Agreements are collateralized by U.S. Treasury or Federal agency
obligations.
F.R.N. -- Floating Rate Note.
M.T.N. -- Medium Term Note.
<Page>
DRYDEN GOVERNMENT SECURITIES TRUST/
MONEY MARKET SERIES &
U.S. TREASURY MONEY MARKET SERIES
FORMERLY KNOWN AS PRUDENTIAL GOVERNMENT SECURITIES TRUST
NOVEMBER 30, 2003 ANNUAL REPORT
[GRAPHIC]
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.
[JENNISONDRYDEN MUTUAL FUNDS LOGO]
<Page>
Dear Shareholder,
January 14, 2004
As you may know, the mutual fund industry recently has been the subject of much
media attention. There has been press coverage of Prudential, and recently,
administrative complaints were filed against Prudential Securities* and several
of its former brokers and branch managers in Massachusetts. As president of your
Trust, I'd like to provide you with an update on the issues as they pertain to
JennisonDryden mutual funds.
Regulators and government authorities have requested information regarding
trading practices from many mutual fund companies across the nation. Our fund
family has been cooperating with inquiries it has received, and at the same
time, Prudential Financial, Inc. has been conducting its own internal review.
This review encompasses the policies, systems, and procedures of our fund
family, Prudential Financial's investment units and its proprietary distribution
channels, including the former Prudential Securities. The review also includes
mutual fund trading activity by investment professionals who manage our funds.
MARKET TIMING
Prudential Investments LLC, the Trust's investment manager, has actively
discouraged disruptive market timing, and for years our mutual fund prospectuses
have identified and addressed this issue. Prudential Investments has established
operating policies and procedures that are designed to detect and deter frequent
trading activities that would be disruptive to the management of our mutual fund
portfolios, and has rejected numerous orders placed by market timers in the
past.
* Prudential Investments LLC, the manager of JennisonDryden mutual funds, and
Prudential Investment Management Services LLC, the distributor of the funds, are
part of the Investment Management segment of Prudential Financial, Inc. and are
separate legal entities from the entity formerly known as Prudential Securities
Incorporated, a retail brokerage firm. In February 2003, Prudential Financial
and Wachovia Corporation announced they were combining their retail brokerage
forces. The transaction was completed in July 2003. Wachovia Corporation has a
62% interest in the new firm, which is now known as Wachovia Securities LLC, and
Prudential Financial owns the remaining 38%.
LATE TRADING
The Securities and Exchange Commission requires that orders to purchase or
redeem mutual fund shares be received either by the fund or by an intermediary
(such as a broker, financial adviser, or 401(k) record keeper) before the time
at which the fund calculates its net asset value (normally 4:00 p.m., Eastern
time) if they are to receive that day's price. The policies of our mutual funds
do not make and have not made allowances for the practice known as "late
trading".
For more than 40 years we have offered investors quality investment products,
financial guidance, and responsive customer service. Today we remain committed
to this heritage and to the highest ethical principles in our investment
practices.
Sincerely,
/s/ Judy A. Rice
Judy A. Rice, President
Dryden Government Securities Trust/Money Market Series
Dryden Government Securities Trust/U.S. Treasury Money Market Series
Dryden Government Securities Trust 1
<Page>
YOUR TRUST'S PERFORMANCE
FUND OBJECTIVES--MONEY MARKET SERIES
The investment objectives of the MONEY MARKET SERIES are high current income,
preservation of capital, and maintenance of liquidity. There can be no assurance
that the Money Market Series will achieve its investment objectives.
FUND FACTS as of 11/30/03
<Table>
<Caption>
7-DAY NET ASSET WEIGHTED AVG. NET ASSETS
CURRENT YIELD* VALUE (NAV) MATURITY (WAM) (MILLIONS)
Class A 0.29% $ 1.00 32 Days $ 504.8
Class Z 0.42% $ 1.00 32 Days $ 22.5
iMoneyNet, Inc. Government & Agency Avg.** 0.38% N/A 56 Days N/A
</Table>
* 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 25, 2003, the closest date to the end of our
reporting period.
FUND OBJECTIVE--U.S. TREASURY MONEY MARKET SERIES
The investment objective of the U.S. TREASURY MONEY MARKET SERIES is high
current income consistent with the preservation of principal and liquidity.
There can be no assurance that the U.S. Treasury Money Market Series will
achieve its investment objective.
FUND FACTS as of 11/30/03
<Table>
<Caption>
7-DAY NET ASSET WEIGHTED AVG. NET ASSETS
CURRENT YIELD* VALUE (NAV) MATURITY (WAM) (MILLIONS)
Class A 0.26% $ 1.00 51 Days $ 343.5
Class Z 0.39% $ 1.00 51 Days $ 5.8
iMoneyNet, Inc. Treasury Retail Avg.** 0.34% N/A 70 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. Treasury
Retail Average as of November 25, 2003, the closest date to the end of our
reporting period.
2 Visit our website at www.jennisondryden.com
<Page>
INVESTMENT ADVISER'S REPORT
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
MONEY MARKET SERIES
FACING THE CHALLENGE OF LOW INTEREST RATES
During the 12-month period that began December 1, 2002, investors searching for
high-quality money market securities with attractive yields had to contend with
interest rates that hovered at their lowest levels in decades. Therefore our
investment strategy aimed to enhance the Series' yield and to provide its
shareholders with easy access to their money. The Series' NAV remained at $1.00
per share throughout its fiscal year.
We typically invested in two maturity categories. Our short-term investments,
securities maturing in three months or less, were federal agency notes and
repurchase agreements with various U.S. financial institutions. Our longer-term
investments were federal agency notes maturing in nine months to one year.
From time to time, we emphasized one maturity category more than the other,
reflecting changing market conditions or the liquidity needs of the Series'
shareholders. For example, the threat of war with Iraq, among other things,
undermined economic vitality in the United States during the early months of our
reporting period. As 2003 continued, there was growing speculation in the
financial markets that the Federal Reserve (the Fed) would reduce short-term
interest rates to encourage sustainable economic growth. This outlook for a more
accommodative monetary policy meant that money market yields could decline even
further.
We believed we found particularly good value in federal agency notes scheduled
to mature in one year that could be retired early (or called) by their
respective issuers in three or six months. These callable notes featured
relatively attractive yields to compensate investors for this early maturity
option. During the reporting period, some federal agency notes held by the
Series were called while others were not. Those issues that were called still
benefited the Series by providing incremental yield during the time that they
were held in the portfolio.
OVERNIGHT BANK LENDING RATE REDUCED TO 1%
The change in monetary policy finally occurred in late June 2003. The rate banks
charge each other for overnight loans was reduced a quarter of a percentage
point to 1%. (Some investors had expected the benchmark rate to be cut by half a
percentage point.) Disappointment over this modest change in monetary policy and
signs of faster-than-expected economic growth put upward pressure on money
market yields in the summer. Yields rose amid concern that the Fed might begin
to consider increasing short-term rates.
3
<Page>
During the summer of 2003, we took advantage of what we believed to be an
attractive investment opportunity. The Federal Home Loan Mortgage Corporation
(Freddie Mac), a U.S. government-sponsored enterprise, buys mortgages and
packages them into mortgage-backed securities that are sold to investors.
Freddie Mac had to restate its earnings higher because of accounting
irregularities. As a result of this news, yield spreads on Freddie Mac notes
became tighter relative to corporate debt securities with comparable maturities.
This partly reflected uncertainty about how Freddie Mac and the Federal National
Mortgage Association (Fannie Mae) would be regulated in the future to prevent
such problems from reoccurring. We capitalized on this window of opportunity by
purchasing Freddie Mac and Fannie Mae notes, which provided incremental yield
that benefited the Series.
In the autumn of 2003, we adjusted our strategy by selling federal agency notes
maturing in six months to a year and buying those maturing in two months or
less. This prepared the Series to accommodate an anticipated outflow of assets
in late 2003 associated with a joint venture between Prudential Securities
Incorporated and Wachovia Securities LLC.
U.S. TREASURY MONEY MARKET SERIES
INVESTING AMID LOW INTEREST RATES
Money market funds that invest exclusively in U.S. Treasury securities offer a
lower-risk alternative amid volatile financial markets. However, the average
seven-day current yield on money market funds declined significantly during our
12-month reporting period that began December 1, 2002. This trend occurred as
the Federal Reserve (the Fed) reduced short-term interest rates to their lowest
level in decades with a goal of stimulating sustainable economic growth in the
United States.
Confronted with the challenge posed by the low-interest-rate environment, we
employed an investment strategy aimed at enhancing the Series' yield while
providing its shareholders with quick access to their money. The Series' NAV
remained at $1.00 per share throughout its fiscal year.
ADJUSTING OUR TWO-PRONGED INVESTMENT STRATEGY
We typically invested in two maturity categories of Treasurys--those that came
due in one month or less and those that had one year left to maturity. From time
to time, we adjusted our approach so that our purchases focused more on one of
these maturity categories than the other. Our adjustment depended on the flow of
assets in the Series and changing conditions in the money markets. For example,
the liquidity needs of the Series' shareholders typically increase early in the
calendar year. In order to
4
<Page>
provide the Series with the flexibility to accommodate this development, we
emphasized Treasurys maturing in one month or less. Moreover, one-month
Treasurys offered relatively higher yields because of the burgeoning supply of
these debt securities. The U.S. Department of the Treasury has greatly increased
the amount of securities it issues (some maturities more than others) to finance
the ballooning federal budget deficit.
As 2003 continued, there was growing speculation in the financial markets that
the Fed would cut short-term interest rates because, among other things, the
threat of war with Iraq had hurt economic conditions in the United States.
Therefore we began to emphasize Treasurys maturing in one year to lock in their
yields before the general level of money market yields declined even further.
OVERNIGHT BANK LENDING RATE REDUCED TO 1%
The long-awaited change in monetary policy occurred in late June 2003. The rate
banks charge each other for overnight loans was reduced a quarter of a
percentage point to 1%. (Some investors had expected the benchmark rate to be
cut by half a percentage point.) Disappointment over this modest change in
monetary policy and signs that the economy might be expanding at a brisk pace
put upward pressure on money market yields in the summer of 2003. Yields rose
amid concern that the Fed might begin to consider increasing short-term rates.
In August 2003, we took advantage of this temporary rise in yields by purchasing
Treasurys maturing in one year.
During the autumn of 2003, we adjusted our investment strategy by selling
Treasurys maturing in nine months to one year and buying those maturing in three
months or less. This prepared the Series to accommodate an anticipated outflow
of assets in late 2003 associated with a joint venture between Prudential
Securities Incorporated and Wachovia Securities LLC.
5
<Page>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<Page>
Financial Statements
November 30, 2003 ANNUAL REPORT
DRYDEN GOVERNMENT SECURITIES TRUST
MONEY MARKET SERIES
U.S. TREASURY MONEY MARKET SERIES
Portfolio Of Investments
as of November 30, 2003
Money Market Series
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION VALUE (NOTE 1)
FEDERAL FARM CREDIT BANK 0.1%
$ 500 5.10%, 4/26/04 $ 507,649
FEDERAL HOME LOAN BANK 22.6%
5,160 5.25%, 2/13/04, M.T.N. 5,202,560
6,000 1.30%, 12/4/03, F.R.N. 6,000,000
5,000 1.25%, 12/11/03, F.R.N. 5,000,000
30,000 1.015%, 12/24/03, F.R.N. 29,992,899
20,000 1.05%, 1/7/04, F.R.N. 19,997,293
33,000 1.01%, 1/14/04, F.R.N. 32,990,932
300 5.35%, 12/1/03 300,000
100 5.53%, 12/8/03 100,081
100 5.85%, 12/15/03 100,174
500 3.26%, 12/19/03 500,512
500 Zero Coupon, 2/25/04 497,514
1,000 1.25%, 4/15/04 1,000,598
10,000 4.875%, 4/16/04 10,134,232
250 1.125%, 5/19/04 249,886
7,000 2.25%, 8/13/04 7,054,429
-----------------------
119,121,110
FEDERAL HOME LOAN MORTGAGE CORPORATION 5.9%
15,000 1.01%, 12/15/03 14,994,108
12,500 0.99%, 12/31/03 12,489,688
758 5.25%, 2/15/04 764,254
750 5.625%, 3/12/04 759,203
2,000 3.25%, 5/20/04 2,016,962
-----------------------
31,024,215
FEDERAL NATIONAL MORTGAGE ASSOCIATION 17.5%
3,817 5.125%, 2/13/04, M.T.N. 3,847,397
6,340 1.003%, 12/10/03, F.R.N. 6,338,637
25,000 1.06%, 12/18/03, F.R.N. 24,995,416
10,500 1.01%, 1/22/04, F.R.N. 10,499,226
19,000 1.00%, 1/28/04, F.R.N. 18,995,214
8,000 1.35%, 3/23/04, F.R.N. 8,000,000
5,138 1.005%, 1/15/04 5,131,544
4,000 1.14%, 2/18/04 3,989,993
10,000 6.50%, 8/15/04 10,370,154
-----------------------
92,167,581
</Table>
See Notes to Financial Statements.
8
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION VALUE (NOTE 1)
REPURCHASE AGREEMENTS(a) 54.3%
Bear Stearns & Co., Inc.
1.06%, dated 11/24/03, due 12/1/03 in the
amount of $20,004,122 (cost $20,000,000;
the value of the collateral including
$ 20,000 interest was $20,400,244) $ 20,000,000
Deutsche Bank Securities, Inc.,
1.06%, dated 11/26/03, due 12/03/03 in the
amount of $50,010,306 (cost $50,000,000;
the value of the collateral including
50,000 interest was $51,000,000) 50,000,000
Greenwich Capital Markets,
1.05%, dated 11/26/03, due 12/01/03 in the
amount of $50,007,292 (cost $50,000,000;
the value of the collateral including
50,000 interest was $51,001,080) 50,000,000
JP Morgan Chase Securities, Inc.,
1.05%, dated 11/26/03, due 12/01/03 in the
amount of $50,007,292 (cost $50,000,000;
the value of the collateral including
50,000 interest was $51,000,496) 50,000,000
Joint Repurchase Agreement (Note 4),
66,524 1.07%, dated 11/28/03, due 12/01/03 in the
amount of $66,529,932 (cost $66,524,000 the
value of the collateral including interest
was $67,528,442) 66,524,000
Merrill Lynch & Co., Inc.,
1.04%, dated 11/28/03, due 12/02/03 in the
amount of $50,005,778 (cost $50,000,000;
the value of the collateral including
50,000 interest was $51,002,651) 50,000,000
-----------------------
286,524,000
TOTAL INVESTMENTS 100.4%
(AMORTIZED COST $529,344,555(b)) 529,344,555
Liabilities in excess of other assets (0.4%) (2,052,150)
-----------------------
NET ASSETS 100% $ 527,292,405
=======================
</Table>
- ----------
F.R.N.--Floating Rate Note. The interest rate reflected is the rate in effect at
November 30, 2003.
M.T.N.--Medium Term Note.
(a) Repurchase Agreements are collateralized by U.S. Treasury or Federal agency
obligations.
(b) The cost of securities for federal income tax purposes is substantially the
same as for financial reporting purposes.
See Notes to Financial Statements.
9
<Page>
Portfolio Of Investments
as of November 30, 2003
U.S. Treasury Money Market Series
<Table>
<Caption>
PRINCIPAL
AMOUNT (000) DESCRIPTION VALUE (NOTE 1)
UNITED STATES TREASURY BILLS 86.1%
$ 1,495 0.825%, 12/18/03 $ 1,494,417
30,000 0.92%, 12/18/03 29,986,967
2,705 0.902%, 12/26/03 2,703,306
64,900 0.938572%, 12/26/03 64,857,699
75,000 0.945%, 12/26/03 74,950,781
19,784 0.90%, 1/2/04 19,768,173
5,198 0.9025%, 1/2/04 5,193,830
20,465 0.91%, 1/2/04 20,448,446
10,571 0.915%, 1/2/04 10,562,402
878 0.925%, 1/2/04 877,278
6,931 0.92%, 1/8/04 6,924,269
6,702 0.94%, 1/8/04 6,695,350
33,225 0.905%, 1/15/04 33,187,414
1,000 0.94%, 1/15/04 998,825
12,000 0.97%, 1/15/04 11,985,450
10,000 0.96%, 1/29/04 9,984,267
213 1.01%, 2/5/04 212,606
31 1.035%, 2/26/04 30,923
-----------------------
300,862,403
UNITED STATES TREASURY NOTES 13.6%
14,465 2.125%, 8/31/04 14,553,637
25,000 3.625%, 3/31/04 25,202,620
5,000 3.375%, 4/30/04 5,043,080
2,607 5.25%, 5/15/04 2,653,599
-----------------------
47,452,936
-----------------------
TOTAL INVESTMENTS 99.7%
(AMORTIZED COST $348,315,339(a)) 348,315,339
Other assets in excess of liabilities 0.3% 1,007,511
-----------------------
NET ASSETS 100% $ 349,322,850
=======================
</Table>
- ----------
(a) The cost of securities for federal income tax purposes is substantially the
same as for financial reporting purposes.
See Notes to Financial Statements.
10
<Page>
STATEMENT OF ASSETS AND LIABILITIES
as of November 30, 2003
<Table>
<Caption>
U.S. TREASURY
MONEY MONEY
MARKET SERIES MARKET SERIES
ASSETS
Investments, at amortized cost $ 242,820,555 $ 348,315,339
Repurchase Agreements 286,524,000 --
Cash 69,362 26,377
Receivable for Series shares sold 2,418,249 5,259,068
Interest receivable 744,692 251,595
Prepaid expenses and other assets 14,428 10,663
------------------------- -----------------------
TOTAL ASSETS 532,591,286 353,863,042
========================= =======================
LIABILITIES
Payable for Series shares
reacquired 4,500,644 4,172,065
Accrued expenses and other
liabilities 526,293 180,696
Management fee payable 177,803 120,462
Distribution fee payable 53,228 37,034
Dividends payable 30,399 17,656
Deferred trustee's fees 10,514 12,279
------------------------- -----------------------
TOTAL LIABILITIES 5,298,881 4,540,192
------------------------- -----------------------
NET ASSETS $ 527,292,405 $ 349,322,850
========================= =======================
Net assets were comprised of:
Shares of beneficial interest,
at par ($.01 per share) $ 5,272,924 $ 3,493,229
Paid-in capital in excess of par 522,019,481 345,829,621
------------------------- -----------------------
NET ASSETS, NOVEMBER 30, 2003 $ 527,292,405 $ 349,322,850
========================= =======================
CLASS A
Net asset value, offering price and
redemption price per share
($504,806,153 DIVIDED BY 504,806,153
shares of beneficial interest issued
and outstanding) $ 1.00
-------------------------
($343,476,543 DIVIDED BY 343,476,543
shares of beneficial interest issued
and outstanding) $ 1.00
-----------------------
CLASS Z
Net asset value, offering price and
redemption price per share
($22,486,252 DIVIDED BY 22,486,252
shares of beneficial interest issued
and outstanding) $ 1.00
-------------------------
($5,846,307 DIVIDED BY 5,846,307
shares of beneficial interest issued
and outstanding) $ 1.00
-----------------------
</Table>
See Notes to Financial Statements.
11
<Page>
STATEMENT OF OPERATIONS
Year Ended November 30, 2003
<Table>
<Caption>
U.S. TREASURY
MONEY MONEY
MARKET SERIES MARKET SERIES
NET INVESTMENT INCOME
Interest $ 7,866,963 $ 6,092,148
------------------------- -----------------------
Expenses
Management fee 2,375,892 2,052,872
Distribution fee--Class A 714,954 634,029
Transfer agent's fees and expenses 1,535,000 200,000
Reports to shareholders 142,000 52,000
Custodian's fees and expenses 112,000 101,000
Registration fees 100,000 73,000
Legal fees and expenses 32,000 29,000
Audit fee 26,000 26,000
Trustees' fees 15,000 23,000
Miscellaneous 31,350 9,636
------------------------- -----------------------
TOTAL EXPENSES 5,084,196 3,200,537
------------------------- -----------------------
Net investment income 2,782,767 2,891,611
------------------------- -----------------------
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment
transactions 17,514 95,657
------------------------- -----------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,800,281 $ 2,987,268
========================= =======================
</Table>
See Notes to Financial Statements.
12
<Page>
STATEMENT OF CHANGES IN NET ASSETS
Money Market Series
<Table>
<Caption>
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------
2003 2002
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income $ 2,782,767 $ 7,353,632
Net realized gain on investment
transactions 17,514 108,891
------------------------- -----------------------
Net increase in net assets resulting
from operations 2,800,281 7,462,523
------------------------- -----------------------
DIVIDENDS AND DISTRIBUTIONS
(NOTE 1)
Class A (2,675,669) (7,104,781)
Class Z (124,612) (357,742)
------------------------- -----------------------
(2,800,281) (7,462,523)
------------------------- -----------------------
SERIES SHARE TRANSACTIONS(a)
(NOTE 5)
Net proceeds from shares
subscribed 855,912,790 898,494,487
Net asset value of shares issued in
reinvestment of dividends and
distributions 2,790,554 7,518,194
Cost of shares reacquired (961,997,498) (914,652,030)
------------------------- -----------------------
Net decrease in net assets from
Series share transactions (103,294,154) (8,639,349)
------------------------- -----------------------
Total decrease (103,294,154) (8,639,349)
NET ASSETS
- --------------------------------------------------------------------------------------------------
Beginning of year 630,586,559 639,225,908
------------------------- -----------------------
End of year $ 527,292,405 $ 630,586,559
========================= =======================
</Table>
- ----------
(a) At $1.00 per share for the Money Market Series.
See Notes to Financial Statements.
13
<Page>
STATEMENT OF CHANGES IN NET ASSETS
U.S. Treasury Money Market Series
<Table>
<Caption>
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------
2003 2002
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income $ 2,891,611 $ 6,213,512
Net realized gain on
investment transactions 95,657 327,216
------------------------- -----------------------
Net increase in net assets
resulting from operations 2,987,268 6,540,728
------------------------- -----------------------
DIVIDENDS AND DISTRIBUTIONS
(NOTE 1)
Class A (2,947,679) (6,462,685)
Class Z (39,589) (78,043)
------------------------- -----------------------
(2,987,268) (6,540,728)
------------------------- -----------------------
SERIES SHARE TRANSACTIONS(a)
(NOTE 5)
Net proceeds from shares
subscribed 4,022,332,273 2,921,203,514
Net asset value of shares
issued in reinvestment of
dividends and distributions 2,634,240 6,027,099
Cost of shares reacquired (4,062,912,149) (3,049,069,855)
------------------------- -----------------------
Net decrease in net assets from
Series share transactions (37,945,636) (121,839,242)
------------------------- -----------------------
Total decrease (37,945,636) (121,839,242)
NET ASSETS
Beginning of year 387,268,486 509,107,728
------------------------- -----------------------
End of year $ 349,322,850 $ 387,268,486
========================= =======================
</Table>
- ----------
(a) At $1.00 per share for the U.S. Treasury Money Market Series.
See Notes to Financial Statements.
14
<Page>
NOTES TO FINANCIAL STATEMENTS
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 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. If the
amortized cost method is determined not to represent fair value, the fair value
shall be determined by or under the direction of the Board of Trustees.
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
15
<Page>
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.
DIVIDENDS AND DISTRIBUTIONS: The Series declare daily dividends from net
investment income and net realized short-term capital gains. 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. In connection therewith, PIM is obligated to keep
certain books and records 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.
16
<Page>
Each Series 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 each Series. Each Series compensates PIMS for distributing and
servicing the Class A shares, pursuant to a plan of distribution (the "Class A
Plan"), regardless of expenses actually incurred by PIMS. 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 each Series.
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.
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, 2003, the Fund incurred fees of
approximately $818,800 and $198,300, respectively, for the Money Market Series
and U.S. Treasury Money Market Series. As of November 30, 2003, approximately
$60,600 and $12,700 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
and sub-transfer agent fees 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
November 30, 2003, the Money Market Series had a 23.3% undivided interest in the
joint account. The undivided interest for the Money Market Series represents
$66,524,000 in principal amount. As of such date, each repurchase agreement in
the joint account and the collateral therefore were as follows:
Bank of America, 1.07%, in the principal amount of $95,303,000, repurchase price
$95,311,498, due 12/01/03. The value of the collateral including accrued
interest was $97,209,060.
17
<Page>
SBC Warburg Asia Limited, 1.07%, in the principal amount of $95,303,000,
repurchase price $95,311,498 due 12/01/03. The value of the collateral including
accrued interest was $95,400,000.
Barclays Securities, Inc., 1.07%, in the principal amount of $95,304,000,
repurchase price $95,312,498, due 12/01/03. The value of the collateral
including accrued interest was $97,212,581.
NOTE 5. 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 paid-in capital, undistributed net investment income and accumulated net
realized gains on investments. For the year ended November 30, 2003, the
adjustments were to decrease accumulated net realized gains and increase
undistributed net investment income by $17,514 for the Money Market Series. For
the year ended November 30, 2003, the adjustments were to decrease accumulated
net realized gains and increase undistributed net investment income by $95,657
for the U.S. Treasury Money Market Series. Net investment income, net realized
gains and net assets were not affected by this change.
For the years ended November 30, 2002 and November 30, 2003, the tax character
of the dividends paid, as reflected in the Statement of Changes for the Money
Market Series and the U.S. Treasury Money Market Series was ordinary income. The
dividends were as follows:
<Table>
<Caption>
NOVEMBER 30, 2002 NOVEMBER 30, 2003
----------------- -----------------
Money Market Series $ 7,462,523 $ 2,800,281
U.S. Treasury Money Market Series $ 6,540,728 $ 2,987,268
</Table>
Both the Money Market Series and the U.S. Treasury Money Market Series had no
distributable earnings as of November 30, 2003.
NOTE 6. CAPITAL
The Fund offers Class A and Class Z shares. Neither Class A nor Class Z shares
are subject to any sales or redemption charge. Class Z shares are offered
exclusively for sale to a limited group of investors. The Money Market Series
may also offer Class S shares. There are no Class S shares currently issued and
outstanding. Each Series has authorized an unlimited number of shares of
beneficial interest at $.01 par value.
Transactions in shares of beneficial interest at $1 net asset value per share,
for the Money Market Series were as follows:
18
<Page>
<Table>
<Caption>
YEAR ENDED NOVEMBER 30,
------------------------------------
2003 2002
---------------- -----------------
CLASS A
Shares sold 844,459,956 860,460,410
Shares issued in reinvestment of dividends and distributions 2,662,762 7,153,338
Shares reacquired (949,900,975) (868,067,278)
---------------- -----------------
Net increase (decrease) in shares outstanding (102,778,257) (453,530)
================ =================
CLASS Z
Shares sold 11,452,834 38,034,077
Shares issued in reinvestment of dividends and distributions 127,792 364,856
Shares reacquired (12,096,523) (46,584,752)
---------------- -----------------
Net increase (decrease) in shares outstanding (515,897) (8,185,819)
================ =================
</Table>
Transactions in shares of beneficial interest at $1 net asset value per share,
for the U.S. Treasury Money Market Series were as follows:
<Table>
<Caption>
YEAR ENDED NOVEMBER 30,
------------------------------------
2003 2002
---------------- -----------------
CLASS A
Shares sold 4,017,929,839 2,917,283,152
Shares issued in reinvestment of dividends and distributions 2,594,099 5,947,387
Shares reacquired (4,058,788,613) (3,043,851,561)
---------------- -----------------
Net increase (decrease) in shares outstanding (38,264,675) (120,621,022)
================ =================
CLASS Z
Shares sold 4,402,434 3,920,362
Shares issued in reinvestment of dividends and distributions 40,141 79,712
Shares reacquired (4,123,536) (5,218,294)
---------------- -----------------
Net increase (decrease) in shares outstanding 319,039 (1,218,220)
================ =================
</Table>
NOTE 7. REORGANIZATION
The U.S. Treasury Series historically has served as a sweep vehicle of an
affiliated broker/dealer. During fiscal 2003 the U.S. Treasury Series was
notified that it would no longer be utilized in such a manner. Consequently,
U.S. Treasury Series assets will likely decline over time.
On November 18, 2003, the Board of Trustees of the Fund approved an Agreement
and Plan of Reorganization which provided for the transfer of all assets and
assumption of all liabilities of Class A and Z shares of the U.S. Treasury Money
Market Series for Class A and Z shares of the Money Market Series, respectively.
At the close of business on November 19, 2003, the U.S. Treasury Series has been
closed to new accounts pending the merger with the Money Market Series.
Shareholders of the U.S. Treasury Series may redeem shares through the effective
time of the merger.
19
<Page>
Financial Highlights
Money Market Series
<Table>
<Caption>
CLASS A
--------------------------
YEAR ENDED
NOVEMBER 30, 2003
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000
--------------------------
Net investment income and net realized gain on investment
transactions 0.005
Dividends and distributions (0.005)
--------------------------
Net asset value, end of year $ 1.000
==========================
TOTAL RETURN(a): 0.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 504,806
Average net assets (000) $ 571,964
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.87%
Expenses, excluding distribution and service (12b-1) fees 0.74%
Net investment income 0.46%
</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.
See Notes to Financial Statements.
20
<Page>
<Table>
<Caption>
CLASS A
-----------------------------------------------------------
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------------
2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------- ------------ ----------- -------------
Net investment income and net realized gain on investment
transactions 0.012 0.039 0.053 0.042
Dividends and distributions (0.012) (0.039) (0.053) (0.042)
------------- ------------ ----------- -------------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000
============= ============ =========== =============
TOTAL RETURN(a): 1.19% 4.04% 5.43% 4.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 607,585 $ 608,038 $ 558,307 $ 576,868
Average net assets (000) $ 612,109 $ 589,136 $ 559,103 $ 594,266
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.77% 0.83% 0.91% 0.90%
Expenses, excluding distribution and service (12b-1) fees 0.64% 0.70% 0.79% 0.77%
Net investment income 1.14% 3.82% 5.35% 4.23%
</Table>
See Notes to Financial Statements.
21
<Page>
<Table>
<Caption>
CLASS Z
--------------------------
YEAR ENDED
NOVEMBER 30, 2003
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000
--------------------------
Net investment income and net realized gain on investment
transactions 0.006
Dividends and distributions (0.006)
--------------------------
Net asset value, end of year $ 1.000
==========================
TOTAL RETURN(a): 0.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 22,486
Average net assets (000) $ 22,010
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.74%
Expenses, excluding distribution and service (12b-1) fees 0.74%
Net investment income 0.56%
</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.
See Notes to Financial Statements.
22
<Page>
<Table>
<Caption>
CLASS Z
-----------------------------------------------------------
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------------
2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------- ------------ ----------- -------------
Net investment income and net realized gain on investment
transactions 0.013 0.04 0.054 0.044
Dividends and distributions (0.013) (0.040) (0.054) (0.044)
------------- ------------ ----------- -------------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000
============= ============ =========== =============
TOTAL RETURN(a): 1.32% 4.16% 5.56% 4.44%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 23,002 $ 31,188 $ 38,534 $ 41,546
Average net assets (000) $ 27,790 $ 37,641 $ 34,243 $ 32,984
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.64% 0.70% 0.79% 0.77%
Expenses, excluding distribution and service (12b-1) fees 0.64% 0.70% 0.79% 0.77%
Net investment income 1.27% 4.03% 5.48% 4.38%
</Table>
See Notes to Financial Statements.
23
<Page>
Financial Highlights
U.S. Treasury Money Market Series
<Table>
<Caption>
CLASS A
--------------------------
YEAR ENDED
NOVEMBER 30, 2003
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000
Net investment income and net realized gain on investment
transactions 0.006
Dividends and distributions (0.006)
--------------------------
Net asset value, end of year $ 1.000
==========================
TOTAL RETURN(a) 0.55%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 343,477
Average net assets (000) $ 507,223
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 0.56%
</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.
See Notes to Financial Statements.
24
<Page>
<Table>
<Caption>
CLASS A
----------------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------
2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gain on investment
transactions 0.013 0.038 0.052 0.041
Dividends and distributions (0.013) (0.038) (0.052) (0.041)
------------ ------------ ---------- -------------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000
============ ============ ========== =============
TOTAL RETURN(a) 1.32% 4.01% 5.27% 4.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 381,741 $ 502,362 $ 365,154 $ 321,641
Average net assets (000) $ 492,503 $ 444,533 $ 396,454 $ 383,772
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.63% 0.62%(b) 0.61% 0.63%
Expenses, excluding distribution and service (12b-1) fees 0.50% 0.49%(b) 0.48% 0.51%
Net investment income 1.25% 3.92%(b) 5.09% 4.08%
</Table>
See Notes to Financial Statements.
25
<Page>
<Table>
<Caption>
CLASS Z
--------------------------
YEAR ENDED
NOVEMBER 30, 2003
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000
Net investment income and net realized gain on investment
transactions 0.007
Dividends and distributions (0.007)
--------------------------
Net asset value, end of year $ 1.000
==========================
TOTAL RETURN(a) 0.68%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 5,846
Average net assets (000) $ 5,995
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 0.64%
</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.
See Notes to Financial Statements.
26
<Page>
<Table>
<Caption>
CLASS Z
-----------------------------------------------------------
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------------
2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gain on investment
transactions 0.014 0.040 0.053 0.043
Dividends and distributions (0.014) (0.040) (0.053) (0.043)
------------- ------------ ---------- -------------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000
============= ============ ========== =============
TOTAL RETURN(a) 1.45% 4.14% 5.40% 4.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 5,527 $ 6,746 $ 5,510 $ 2,013
Average net assets (000) $ 5,514 $ 5,870 $ 2,191 $ 1,942
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 0.50% 0.49%(b) 0.48% 0.51%
Expenses, excluding distribution and service (12b-1) fees 0.50% 0.49%(b) 0.48% 0.51%
Net investment income 1.37% 4.04%(b) 5.31% 4.19%
</Table>
See Notes to Financial Statements.
27
<Page>
Report of Independent Auditors
To the Shareholders and Board of Trustees of
Dryden Government Securities Trust
In our opinion, the accompanying statement 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 Dryden Government Securities Trust,
formerly Prudential Government Securities Trust, hereafter referred to as the
"Fund") at November 30, 2003, 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, 2003 by correspondence with the custodian, provide a reasonable
basis for our opinion.
As described in Note 7, the Board of Trustees has approved a reorganization plan
whereby the U.S. Treasury Money Market Series would be merged into the Money
Market Series subject to the U.S. Treasury Money Market Series' shareholders
approval.
PricewaterhouseCoopers LLP
New York, New York
January 20, 2004
28
<Page>
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 provided the mutual fund meets
certain requirements mandated by the respective states' taxing authorities. We
are pleased to report that 34.75% of the dividends paid by the Money Market
Series* and 98.45% 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, 2003, you will
be advised as to the federal tax status of the dividends you received in
calendar year 2003.
For more detailed information regarding your federal, state and local taxes, you
should contact your tax adviser.
* 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>
Management of the Fund
(Unaudited)
Information pertaining to the Trustees of the Fund is set forth below. Trustees
who are not deemed to be "interested persons" of the Fund, as defined in the
1940 Act are referred to as "Independent Trustees." Trustees who are deemed to
be "interested persons" of the Fund are referred to as "Interested Trustees."
"Fund Complex"+ consists of the Fund and any other investment companies managed
by Prudential Investments LLC (PI).
INDEPENDENT TRUSTEES(2)
DELAYNE DEDRICK GOLD (65), Trustee since 1981(3) Oversees 86 portfolios in Fund
complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Marketing Consultant (1982-present);
formerly Senior Vice President and Member of the Board of Directors, Prudential
Bache Securities, Inc.
OTHER DIRECTORSHIPS HELD:(4) None.
ROBERT E. LA BLANC (69), Trustee since 2003(3) Oversees 106 portfolios in Fund
complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): President (since 1981) of Robert E. La
Blanc Associates, Inc. (telecommunications); formerly General Partner at Salomon
Brothers and Vice-Chairman of Continental Telecom; Trustee of Manhattan College.
OTHER DIRECTORSHIPS HELD:(4) Trustee of Storage Technology Corporation (since
1979) (technology), Chartered Semiconductor Manufacturing, Ltd. (since 1998);
Titan Corporation (electronics) (since 1995), Computer Associates International,
Inc. (since 2002) (software company); FiberNet Telecom Group, Inc. (since 2003)
(telecom company); Director (since April 1999) of the High Yield Plus Fund, Inc.
THOMAS T. MOONEY (62), Trustee since 1996(3) Oversees 82 portfolios in Fund
complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Chief Executive Officer, the Rochester
Business Alliance, formerly President of the Greater Rochester Metro Chamber of
Commerce, Rochester City Manager; formerly Deputy Monroe County Executive;
Director of Blue Cross of Rochester and Executive Service Corps of Rochester;
Director of the Rochester Individual Practice Association; Director of Rural
Metro Ambulance Rochester (since 2003).
OTHER DIRECTORSHIPS HELD:(4) Director (since 1988) of the High Yield Plus Fund,
Inc.
RICHARD A. REDEKER (60), Trustee since 1995(3) Oversees 100 portfolios in Fund
complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Management Consultant; formerly employee
of Prudential Investments (October 1996-December 1998); Director of Invesmart,
Inc. (since 2001) and Director of Penn Tank Lines, Inc. (since 1999).
OTHER DIRECTORSHIPS HELD:(4) None.
30
<Page>
ROBIN B. SMITH (64), Trustee since 2003(3) Oversees 105 portfolios in Fund
complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Chairman of the Board (since January 2003)
of Publishers Clearing House (direct marketing), formerly Chairman and Chief
Executive Officer (August 1996-January 2003) of Publishers Clearing House.
OTHER DIRECTORSHIPS HELD:(4) Director of BellSouth Corporation (since 1992).
LOUIS A. WEIL, III (62), Trustee since 1991(3) Oversees 81 portfolios in Fund
complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Formerly Chairman (January 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.
OTHER DIRECTORSHIPS HELD:(4) None
INTERESTED TRUSTEES
JUDY A. RICE (55), President since 2003 and Trustee since 2000(3) Oversees 108
portfolios in Fund complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): President, Chief Executive Officer, Chief
Operating Officer and Officer-in-Charge (since 2003) of PI; Director,
Officer-in-Charge, President, Chief Executive Officer and Chief Operating
Officer (since May 2003) of American Skandia Advisory Services, Inc. and
American Skandia Investment Services, Inc.; Director, Officer-in-Charge,
President, Chief Executive Officer (since May 2003) of American Skandia Fund
Services, Inc.; Vice President (since February 1999) of Prudential Investment
Management Services LLC; President, Chief Executive Officer and
Officer-In-Charge (since April 2003) of Prudential Mutual Fund Services LLC;
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.
OTHER DIRECTORSHIPS HELD:(4) None
ROBERT F. GUNIA (57), Vice President and Trustee since 1996(3) Oversees 187
portfolios in Fund complex
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Chief Administrative Officer (since June
1999) of PI; Executive Vice President and 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); Director, Executive Vice President
and Chief Administrative Officer (since May 2003) of American Skandia Investment
Services, Inc., American Skandia Advisory Services, Inc. and American Skandia
Fund Services, Inc.; President (since April 1999) of Prudential Investment
Management Services LLC; Executive Vice President (since March 1999) and
Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; formerly
Senior Vice President (March 1987-May 1999) of Prudential Securities.
OTHER DIRECTORSHIPS HELD:(4) Vice President and Director (since May 1989) and
Treasurer (since 1999) of The Asia Pacific Fund, Inc.
31
<Page>
Information pertaining to the Officers of the Fund is set forth below.
OFFICERS(2)
MARGUERITE E.H. MORRISON (47), Chief Legal Officer since 2003 and Assistant
Secretary since 2002(3)
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Vice President and Chief Legal
Officer--Mutual Funds and Unit Investment Trust (since August 2000) of
Prudential; Senior Vice President and Secretary (since April 2003) of PI; Senior
Vice President and Secretary (since May 2003) of American Skandia Investment
Services, Inc., American Skandia Advisory Services, Inc. and American Skandia
Fund Services, Inc.; Vice President and Assistant Secretary of PIMS (since
October 2001), previously Senior Vice President and Assistant Secretary
(February 2001-April 2003) of PI, Vice President and Associate General Counsel
(December 1996-February 2001) of PI.
MARYANNE RYAN (39), Anti-Money Laundering Compliance Officer since 2002(3)
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Vice President, Prudential (since November
1998), First Vice President, Prudential Securities (March 1997-May 1998);
Anti-Money Laundering Compliance Officer (since 2003) of American Skandia
Investment Services, Inc., American Skandia Advisory Services, Inc. and American
Skandia Marketing, Inc.
GRACE C. TORRES (44), Treasurer and Principal Financial and Accounting Officer
since 1998(3)
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Senior Vice President (since January 2000)
of PI, Senior Vice President and Assistant Treasurer (since May 2003) of
American Skandia Investment Services, Inc. and American Skandia Advisory
Services, Inc.; formerly First Vice President (December 1996-January 2000) of PI
and First Vice President (March 1993-1999) of Prudential Securities.
JONATHAN D. SHAIN (45), Secretary since 2001(3)
PRINCIPAL OCCUPATIONS (LAST 5 YEARS): Vice President and Corporate Counsel
(since August 1998) of Prudential; Vice President and Assistant Secretary (since
May 2003) of American Skandia Investment Services, Inc. and American Skandia
Fund Services, Inc.; formerly Attorney with Fleet Bank, N.A. (January 1997-July
1998).
+ The Fund Complex consists of all investment companies managed by PI. The
Funds for which PI serves as manager include JennisonDryden Mutual Funds,
Strategic Partners Funds, American Skandia Advisor Funds, Inc., The
Prudential Variable Contract Accounts 2, 10, 11, The Target Portfolio
Trust, The Prudential Series Fund, Inc., American Skandia Trust, and
Prudential's Gibraltar Fund.
(1) "Interested" Trustee, as defined in the 1940 Act, by reason of employment
with the Manager, (Prudential Investments LLC or PI), the Subadviser
(Jennison Associates LLC or Jennison) or the Distributor (Prudential
Investment Management Services LLC or PIMS).
(2) 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.
(3) 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 individuals length of service as Trustee and/or
Officer.
(4) This includes only directorships of companies requested 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.
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) 521-7466 or (732) 482-7555 (Calling from outside the
U.S.)
32
<Page>
<Table>
- - MAIL - TELEPHONE - WEBSITE
Gateway Center Three (800) 225-1852 www.jennisondryden.com
100 Mulberry Street
Newark, NJ 07102
</Table>
TRUSTEES
Delayne Dedrick Gold - Robert F. Gunia - Robert E. La Blanc - Thomas T. Mooney -
Richard A. Redeker - Judy A. Rice - Robin B. Smith - Louis A. Weil III
OFFICERS
Judy A. Rice, PRESIDENT - Robert F. Gunia, VICE PRESIDENT - Grace C. Torres,
TREASURER AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER - Marguerite E.H.
Morrison, CHIEF LEGAL OFFICER AND ASSISTANT SECRETARY - Jonathan D. Shain,
SECRETARY - Maryanne Ryan, ANTI-MONEY LAUNDERING COMPLIANCE OFFICER
<Table>
MANAGER Prudential Investments LLC Gateway Center Three
100 Mulberry Street
Newark, NJ 07102
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER Prudential Investment Gateway Center Two
Management, Inc. 100 Mulberry Street
Newark, NJ 07102
- ----------------------------------------------------------------------------------------------------------------
DISTRIBUTOR Prudential Investment Gateway Center Three
Management Services LLC 14th Floor
100 Mulberry Street
Newark, NJ 07102
- ----------------------------------------------------------------------------------------------------------------
CUSTODIAN State Street Bank One Heritage Drive
and Trust Company North Quincy, MA 02171
- ----------------------------------------------------------------------------------------------------------------
TRANSFER AGENT Prudential Mutual Fund PO Box 8098
Services LLC Philadelphia, PA 19101
- ----------------------------------------------------------------------------------------------------------------
INDEPENDENT AUDITORS PricewaterhouseCoopers LLP 1177 Avenue of the Americas
New York, NY 10036
- ----------------------------------------------------------------------------------------------------------------
FUND COUNSEL Shearman & Sterling LLP 599 Lexington Avenue
New York, NY 10022
</Table>
<Page>
Dryden Government Securities Trust/Money Market Series
<Table>
<Caption>
SHARE CLASS A Z
Nasdaq PBGXX PGZXX
CUSIP 262434301 262434400
</Table>
Dryden Government Securities Trust/U.S. Treasury Money Market Series
<Table>
<Caption>
SHARE CLASS A Z
Nasdaq PUSXX PTZXX
CUSIP 262434608 262434707
</Table>
MUTUAL FUNDS:
<Table>
ARE NOT INSURED BY THE FDIC OR ANY MAY LOSE VALUE ARE NOT A DEPOSIT OF OR
FEDERAL GOVERNMENT AGENCY GUARANTEED BY ANY BANK OR ANY
BANK AFFILIATE
</Table>
<Page>
[JENNISONDRYDEN MUTUAL FUNDS LOGO]
Dryden Government Securities Trust/Money Market Series
<Table>
<Caption>
SHARE CLASS A Z
Nasdaq PBGXX PGZXX
CUSIP 262434301 262434400
</Table>
Dryden Government Securities Trust/U.S. Treasury Money Market Series
<Table>
<Caption>
SHARE CLASS A Z
Nasdaq PUSXX PTZXX
CUSIP 262434608 262434707
</Table>
MF100E IFS-A087152
<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. Incorporated by
reference to Exhibit No. 1(c) to the Registration Statement on Form N-14
filed via EDGAR on January 7, 2004.
(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. Incorporated by reference
to Exhibit No. 2 to the Registration Statement on Form N-14 filed on
January 7, 2004.
(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 (filed herewith).
(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.
Incorporated by reference to Exhibit No. 16(b) to the Registration
Statement on Form N-14 filed via EDGAR on January 7, 2004.
(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 May, 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
*
- ------------------------------ Treasurer and Principal Financial and
Grace C. Torres Accounting Officer
By: /s/ Jonathan D. Shain
- ------------------------------
Jonathan D. Shain
(Attorney-in-Fact)
</Table>
May , 2004
<Page>
EXHIBIT INDEX
<Table>
<Caption>
Exhibit Description
- ------- -----------
(11) Opinion and Consent of Sullivan & Worcester.
(17)(b) Form of Proxy.
</Table>