UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21197
811-21300
Name of Fund: WCMA Government Securities Fund
Master Government Securities Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, WCMA Government Securities Fund and Master Government Securities
Trust, 800 Scudders Mill Road, Plainsboro, NJ 08536. Mailing address:
P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 03/31/06
Date of reporting period: 04/01/05 - 03/31/06
Item 1 - Report to Stockholders
Annual Report
March 31, 2006
WCMA Government
Securities Fund
WCMA Government Securities Fund
Announcement to Shareholders
On February 15, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch & Co.,
Inc. ("Merrill Lynch") entered into an agreement to contribute Merrill Lynch's
investment management business, Merrill Lynch Investment Managers, L.P. and
certain affiliates (including Fund Asset Management, L.P. and Merrill Lynch
Investment Managers International Limited), to BlackRock to create a new
independent company that will be one of the world's largest asset management
firms with over $1 trillion in assets under management (based on combined assets
under management as of March 31, 2006). The transaction is expected to close in
the third quarter of 2006, at which time the new company will operate under the
BlackRock name. If approved by the Fund's/Trust's Board of Trustees and
Fund/Trust shareholders, the combined company that results from the transaction
is expected to become the investment adviser of the Fund/Trust.
Important Tax Information
Of the ordinary income distributions paid by WCMA Government Securities Fund
during the taxable year ended March 31, 2006, 24.15% was attributable to federal
obligations. In calculating the foregoing percentage, Fund expenses have been
allocated on a pro rata basis.
The law varies in each state as to whether and what percentage of dividend
income attributable to federal obligations is exempt from state income tax. We
recommend that you consult your tax adviser to determine if any portion of the
dividends you received is exempt from state income taxes.
The following information is provided with respect to the ordinary income
distributions paid by WCMA Government Securities Fund for the fiscal year ended
March 31, 2006:
- --------------------------------------------------------------------------------
Interest-Related Dividends for Non-U.S. Residents
- --------------------------------------------------------------------------------
Month Paid: April 2005 - December 2005 ................... 99.50%*
January 2006 - March 2006 .................... 99.56%*
- --------------------------------------------------------------------------------
Short-Term Capital Gain Dividends for Non-U.S. Residents
- --------------------------------------------------------------------------------
Month Paid: April 2005 - March 2006 ...................... 0.02%*
- --------------------------------------------------------------------------------
* Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
2 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
A Letter From the President
Dear Shareholder
You may be aware that changes are on the horizon at Merrill Lynch Investment
Managers ("MLIM"). On February 15, 2006, Merrill Lynch announced plans to
combine the firm's investment advisory business, including MLIM, with another
highly regarded investment manager -- BlackRock, Inc. ("BlackRock").
We believe this merger of asset management strength will benefit our investors.
MLIM is a leading investment management organization with over $576 billion in
assets under management globally and 2,757 employees in 17 countries. It offers
over 100 investment strategies in vehicles ranging from mutual funds to
institutional portfolios. BlackRock is one of the largest publicly traded
investment management firms in the United States with $463.1 billion in assets
under management and 1,839 employees. It manages assets on behalf of
institutional and individual investors worldwide through a variety of equity,
fixed income, liquidity and alternative investment products.
At the completion of the transaction, which is expected in the third quarter of
this year, the resultant firm will be a top-10 investment manager worldwide with
over $1 trillion in assets under management.* The combined company will provide
a wider selection of high-quality investment solutions across a range of asset
classes and investment styles. MLIM and BlackRock possess complementary
capabilities that together create a well-rounded organization uniting some of
the finest money managers in the industry. At the same time, the firms share
similar values and beliefs -- they are focused on delivering excellence on
behalf of clients, and both make investment performance their single most
important mission. In short, the merger only reinforces our commitment to
shareholders.
Most of MLIM's investment products -- including mutual funds, separately managed
accounts, annuities and variable insurance funds -- eventually will carry the
"BlackRock" name. As a shareholder in one or more MLIM-advised mutual funds, you
will receive a proxy package in the coming weeks in connection with this
transaction. After you receive this information, should you have any questions
or concerns, do not hesitate to contact your financial advisor.
As always, we thank you for entrusting us with your investment assets, and we
look forward to continuing to serve your investment needs with even greater
strength and scale as the new BlackRock.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Chief Investment Officer
Merrill Lynch Investment Managers
* $1.039 trillion in assets under management as of March 31, 2006.
Data, including assets under management, are as of March 31, 2006.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 3
A Discussion With Your Fund's Portfolio Manager
We maintained a relatively conservative approach as the Federal Reserve
Board continued raising interest rates and the supply of short-term Treasury
issues declined.
How did the Fund perform during the fiscal year in light of the existing market
conditions?
For the 12-month period ended March 31, 2006, WCMA Government Securities Fund's
Class 1, Class 2, Class 3 and Class 4 Shares paid shareholders net annualized
dividends of 1.99%, 2.59%, 2.92% and 2.92%, respectively. For the six-month
period ended March 31, 2006, the Fund's Class 1, Class 2, Class 3 and Class 4
Shares paid shareholders net annualized dividends of 2.47%, 3.12%, 3.46% and
3.46%, respectively. The Fund's seven-day yields as of March 31, 2006, were
2.89% for Class 1, 3.44% for Class 2, 3.76% for Class 3 and 3.76% for Class 4.
The Fund's weighted average maturity at March 31, 2006 was 27 days. This
compared to 44 days at September 30, 2005 and 41 days at March 31, 2005. During
the course of the 12-month period, the weighted average maturity reached a high
of 53 days and a low of 26 days.
We maintained the portfolio's barbell structure throughout the year, but
generally with greater emphasis on the very front end of the market (overnight
and term financing). Our appetite for longer-dated securities waned as it became
apparent that the Federal Reserve Board (the Fed) was not through with its
interest rate-hiking campaign. As a result, we endeavored to remain competitive
while maintaining an average life within a relatively conservative range.
The Fed advanced its monetary tightening campaign with eight quarter-point
interest rate hikes during the 12-month period. This brought the federal funds
rate to 4.75% by period-end. The central bank -- focused on combating
inflationary fears as energy prices moved higher -- continued to raise interest
rates despite the untold economic damage wrought by the summer hurricanes. In
October, Dr. Ben Bernanke was named as the future replacement of longtime Fed
Chairman Alan Greenspan, and investors began to anticipate that perhaps the
measured interest rate-hiking campaign would soon come to an end. Although the
Fed did remove the critical word "measured" from the description of its monetary
tightening program, Bernanke's official induction in January was accompanied by
a quarter-point interest rate hike, followed by another on March 28. Many
observers predict that the Fed will tighten its monetary program again at its
meeting in May.
In terms of supply, issuance of short-dated Treasury bills during the period was
lower than one year ago. Recently, the U.S. Treasury's focus has been on the
issuance of longer-dated securities, particularly with the reissuance of the
30-year Treasury bond in February. The Treasury had stopped issuing the long
bond in 2001. The limited supply on the short end gave us little incentive to
participate in the bill market, as yields have been below financing levels and
have not taken into consideration future Fed tightenings.
Finally, it is worth commenting on the shape of the Treasury yield curve. After
flattening dramatically during the course of the Fed's interest rate-hiking
campaign, the curve toyed with intermittent bouts of inversion throughout the
early months of 2006. At March 31, 2006, the curve was relatively flat, with the
six-month Treasury bill yielding 4.81%, while the two-year Treasury note, the
10-year Treasury note and the 30-year Treasury bond yielded 4.82%, 4.86% and
4.90%, respectively.
How did you manage the portfolio during the fiscal year?
We maintained a fairly conservative approach throughout the past 12 months.
There was a period of time, toward the end of 2005, when we believed the Fed
might get closer to its desired "neutral" interest rate target. The housing
market was showing some initial signs of decline given the higher interest rate
environment and consumers' mounting debt. This, and the appointment of Bernanke
as Fed chairman, lent to market expectations that the Fed might be closing in on
the end of its tightening cycle. This prompted us to extend the portfolio's
weighted average maturity slightly through the use of some longer-dated
securities. However, as alluded to earlier, we subsequently shifted our outlook
as it became apparent that the Fed was inclined to continue raising interest
rates, perhaps into the summer.
In terms of specific portfolio make-up, we remained highly liquid while looking
selectively to six-month to one-year issues for opportunities to enhance the
Fund's performance. There were periods of time (particularly at the end of each
calendar quarter) when financing levels were extremely expensive due to foreign
buying of U.S. Treasury assets and the aforementioned reduction in supply. This
gave us little incentive to reduce our liquidity profile. As a result, we chose
to maintain our holdings in repurchase agreements (nearly 77% of port-
4 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
folio assets) and used the balance of the portfolio to enhance performance.
While we initially used the six-month sector for yield pick-up, our focus
shifted to one-year Treasury notes. As we approached the end of 2005, we
targeted notes maturing in May 2006 (whose yields exceeded the Fed's target
rate) to limit the effect of the widening of spreads between the Fed's target
and repurchase agreement rates. Strong investor demand, coupled with diminished
issuance, drove financing rates as much as 50 basis points lower than normal
financing levels. A tremendous flattening of the yield curve narrowed spreads
between the federal funds rate and two-year Treasury note yields to less than 10
basis points. Under these conditions, we saw little reason to extend the
portfolio's weighted average maturity.
How would you characterize the portfolio's position at the close of the period?
As was the case six months ago, we would characterize our period-end position as
cautiously optimistic based on our belief that the end of the Fed's tightening
cycle is within sight, perhaps toward summer.
Overall, the housing market still shows signs of decline, fears of increasing
gasoline prices still loom for summer travelers, and the market has yet to see
the type of explosive employment growth that would accompany projected 5% gross
domestic product growth in the first quarter. All of these variables have been
reflected in a decline in consumer confidence.
On the supply side, record U.S. deficits are expected to translate into
increased debt issuance, although we believe most of the supply will continue to
be skewed toward the long end. We anticipate that some of the Treasury's needs
will be met by higher tax receipts both on the corporate and individual levels.
However, if the economy slows, resulting in a downturn in tax receipts, we would
expect front-end issuance to increase.
Under these conditions, we intend to maintain our relatively conservative
approach with ample liquidity in the immediate term. We will continue to monitor
the economic data and the yield curve for signs that a Fed pause is imminent,
which would give us greater reason to become more aggressive and extend the
portfolio's maturity.
The Trust's portfolio composition, as a percent of net assets, at the end of
March and as of our last report to shareholders is detailed below:
- --------------------------------------------------------------------------------
3/31/06 9/30/05
- --------------------------------------------------------------------------------
Repurchase Agreements ....................... 77.0% 76.0%
U.S. Government Obligations ................. 22.5 23.6
Other Assets Less Liabilities ............... 0.5 0.4
------------------------
Total ....................................... 100.0% 100.0%
========================
John Ng
Vice President and Portfolio Manager
April 4, 2006
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 5
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12b-1 fees, and other Fund expenses. The following example (which is based on a
hypothetical investment of $1,000 invested on October 1, 2005 and held through
March 31, 2006) is intended to assist shareholders both in calculating expenses
based on an investment in the Fund and in comparing these expenses with similar
costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value October 1, 2005 to
October 1, 2005 March 31, 2006 March 31, 2006
=============================================================================================================
Actual
=============================================================================================================
Class 1 $1,000 $1,012.20 $8.08
- -------------------------------------------------------------------------------------------------------------
Class 2 $1,000 $1,015.50 $4.87
- -------------------------------------------------------------------------------------------------------------
Class 3 $1,000 $1,017.10 $3.32
- -------------------------------------------------------------------------------------------------------------
Class 4 $1,000 $1,017.10 $3.32
=============================================================================================================
Hypothetical (5% annual return before expenses)**
=============================================================================================================
Class 1 $1,000 $1,016.87 $8.10
- -------------------------------------------------------------------------------------------------------------
Class 2 $1,000 $1,020.06 $4.89
- -------------------------------------------------------------------------------------------------------------
Class 3 $1,000 $1,021.61 $3.33
- -------------------------------------------------------------------------------------------------------------
Class 4 $1,000 $1,021.61 $3.33
- -------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.61% for Class 1, .97% for Class 2, .66% for Class 3
and .66% for Class 4), multiplied by the average account value over the
period, multiplied by 182/365 (to reflect the one-half year period shown).
Because the Fund is a feeder fund, the expense table example reflects the
expenses of both the feeder fund and the master trust in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
6 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Statement of Assets and Liabilities WCMA Government Securities Fund
As of March 31, 2006
=================================================================================================================================
Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Investment in Master Government Securities Trust (the "Trust"), at value
(identified cost--$501,568,099) .................................................. $ 501,126,579
Prepaid expenses .................................................................. 49,328
-------------
Total assets ...................................................................... 501,175,907
-------------
=================================================================================================================================
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------------
Payables:
Administrator .................................................................. $ 94,209
Distributor .................................................................... 87,085
Other affiliates ............................................................... 3,316 184,610
-------------
Accrued expenses and other liabilities ............................................ 4,574
-------------
Total liabilities ................................................................. 189,184
-------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets ........................................................................ $ 500,986,723
=============
=================================================================================================================================
Net Assets Consist of
- ---------------------------------------------------------------------------------------------------------------------------------
Class 1 Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................ $ 1,885,444
Class 2 Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................ 11,598,728
Class 3 Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................ 15,870,353
Class 4 Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................ 20,788,299
Paid-in capital in excess of par .................................................. 451,285,419
Unrealized depreciation allocated from the Trust--net ............................. (441,520)
-------------
Net Assets ........................................................................ $ 500,986,723
=============
=================================================================================================================================
Net Asset Value
- ---------------------------------------------------------------------------------------------------------------------------------
Class 1--Based on net assets of $18,836,547 and 18,854,441 shares of
beneficial interest outstanding .................................................. $ 1.00
=============
Class 2--Based on net assets of $115,872,064 and 115,987,282 shares of
beneficial interest outstanding .................................................. $ 1.00
=============
Class 3--Based on net assets of $158,500,076 and 158,703,534 shares of
beneficial interest outstanding .................................................. $ 1.00
=============
Class 4--Based on net assets of $207,778,036 and 207,882,988 shares of
beneficial interest outstanding .................................................. $ 1.00
=============
See Notes to Financial Statements.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 7
Statement of Operations WCMA Government Securities Fund
For the Year Ended March 31, 2006
=================================================================================================================================
Investment Income
- ---------------------------------------------------------------------------------------------------------------------------------
Interest from affiliates .......................................................... $ 70,177
Net investment income allocated from the Trust:
Interest and amortization of premium and discount earned ....................... 15,405,960
Expenses ....................................................................... (1,126,569)
-------------
Total income ...................................................................... 14,349,568
-------------
=================================================================================================================================
Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
Administration fees ............................................................... $ 1,070,125
Account maintenance and distribution fees--Class 3 ................................ 718,727
Account maintenance and distribution fees--Class 2 ................................ 694,945
Account maintenance and distribution fees--Class 4 ................................ 424,463
Registration fees ................................................................. 296,406
Account maintenance and distribution fees--Class 1 ................................ 164,404
Printing and shareholder reports .................................................. 36,997
Professional fees ................................................................. 19,474
Transfer agent fees--Class 3 ...................................................... 9,533
Transfer agent fees--Class 4 ...................................................... 5,943
Transfer agent fees--Class 2 ...................................................... 5,116
Transfer agent fees--Class 1 ...................................................... 822
Other ............................................................................. 10,283
-------------
Total expenses before waiver ...................................................... 3,457,238
Waiver of expenses ................................................................ (1,234,755)
-------------
Total expenses after waiver ....................................................... 2,222,483
-------------
Investment income--net ............................................................ 12,127,085
-------------
=================================================================================================================================
Realized & Unrealized Gain Allocated from the Trust--Net
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net ................................................. 2,296
Change in unrealized depreciation on investments--net ............................. 67,316
-------------
Total realized and unrealized gain--net ........................................... 69,612
-------------
Net Increase in Net Assets Resulting from Operations .............................. $ 12,196,697
=============
See Notes to Financial Statements.
8 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Statements of Changes in Net Assets WCMA Government Securities Fund
For the Year Ended
March 31,
-------------------------------
Increase (Decrease) in Net Assets: 2006 2005
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................................ $ 12,127,085 $ 4,010,111
Realized gain--net ................................................................ 2,296 523
Change in unrealized appreciation/depreciation--net ............................... 67,316 (458,656)
-------------------------------
Net increase in net assets resulting from operations .............................. 12,196,697 3,551,978
-------------------------------
=================================================================================================================================
Dividends & Distributions to Shareholders
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class 1 ........................................................................ (329,350) (45,741)
Class 2 ........................................................................ (2,663,391) (802,254)
Class 3 ........................................................................ (5,571,023) (2,069,332)
Class 4 ........................................................................ (3,563,321) (1,092,784)
Realized gain--net:
Class 1 ........................................................................ (94) (21)
Class 2 ........................................................................ (642) (124)
Class 3 ........................................................................ (1,150) (231)
Class 4 ........................................................................ (410) (147)
-------------------------------
Net decrease in net assets resulting from dividends and distributions to
shareholders ..................................................................... (12,129,381) (4,010,634)
-------------------------------
=================================================================================================================================
Beneficial Interest Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from beneficial interest transactions 89,944,441 (129,873,585)
-------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ........................................... 90,011,757 (130,332,241)
Beginning of year ................................................................. 410,974,966 541,307,207
-------------------------------
End of year ....................................................................... $ 500,986,723 $ 410,974,966
===============================
See Notes to Financial Statements.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 9
Financial Highlights WCMA Government Securities Fund
Class 1
------------------------------------------------------------------
For the Year Ended For the Period
March 31, March 20, 2003+
The following per share data and ratios have been derived --------------------------------------------- to March 31,
from information provided in the financial statements. 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Investment income--net ........................... .0199 .0027 .0004 .0003
Realized and unrealized gain (loss)--net ......... .0001 (.0012) (.0002) .0002
------------------------------------------------------------------
Total from investment operations ................. .0200 .0015 .0002 .0005
------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........................ (.0199) (.0027) (.0004) (.0003)
Realized gain--net ............................ --** --** (.0001) --
------------------------------------------------------------------
Total dividends and distributions ................ (.0199) (.0027) (.0005) (.0003)
------------------------------------------------------------------
Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================
Total investment return .......................... 2.01% .27% .05% .05%
==================================================================
==================================================================================================================================
Ratios to Average Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and/or reimbursement 1.59% 1.41% 1.09% .02%
==================================================================
Total expenses ................................... 1.59% 1.60% 1.58% .02%
==================================================================
Total investment income and realized gain ........ 1.99% .24% .04% .03%
==================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 18,837 $ 16,718 $ 22,260 $ 25
==================================================================
* Includes the Fund's share of the Trust's allocated expenses and/or
investment income and realized gain.
** Amount is less than $(.0001) per share.
+ Effective date of the Fund's registration.
See Notes to Financial Statements.
10 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Financial Highlights (continued) WCMA Government Securities Fund
Class 2
------------------------------------------------------------------
For the Year Ended For the Period
March 31, March 20, 2003+
The following per share data and ratios have been derived --------------------------------------------- to March 31,
from information provided in the financial statements. 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Investment income--net ........................... .0259 .0070 .0015 .0003
Realized and unrealized gain (loss)--net ......... .0001 (.0011) (.0001) .0002
------------------------------------------------------------------
Total from investment operations ................. .0260 .0059 .0014 .0005
------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........................ (.0259) (.0070) (.0015) (.0003)
Realized gain--net ............................ --** --** (.0001) --
------------------------------------------------------------------
Total dividends and distributions ................ (.0259) (.0070) (.0016) (.0003)
------------------------------------------------------------------
Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================
Total investment return .......................... 2.63% .70% .16% .05%
==================================================================
==================================================================================================================================
Ratios to Average Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and/or reimbursement .99% .98% .97% .02%
==================================================================
Total expenses ................................... 1.27% 1.28% 1.26% .02%
==================================================================
Total investment income and realized gain ........ 2.58% .68% .15% .03%
==================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 115,872 $ 119,718 $ 137,566 $ 25
==================================================================
* Includes the Fund's share of the Trust's allocated expenses and/or
investment income and realized gain.
** Amount is less than $(.0001) per share.
+ Effective date of the Fund's registration.
See Notes to Financial Statements.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 11
Financial Highlights (continued) WCMA Government Securities Fund
Class 3
------------------------------------------------------------------
For the Year Ended For the Period
March 31, March 20, 2003+
The following per share data and ratios have been derived --------------------------------------------- to March 31,
from information provided in the financial statements. 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Investment income--net ........................... .0291 .0102 .0047 .0003
Realized and unrealized gain (loss)--net ......... .0001 (.0010) (.0001) .0002
------------------------------------------------------------------
Total from investment operations ................. .0292 .0092 .0046 .0005
------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........................ (.0291) (.0102) (.0047) (.0003)
Realized gain--net ............................ --** --** (.0001) --
------------------------------------------------------------------
Total dividends and distributions ................ (.0291) (.0102) (.0048) (.0003)
------------------------------------------------------------------
Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================
Total investment return .......................... 2.96% 1.03% .48% .05%
==================================================================
==================================================================================================================================
Ratios to Average Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and/or reimbursement .67% .66% .65% .02%
==================================================================
Total expenses ................................... .97% .98% .96% .02%
==================================================================
Total investment income and realized gain ........ 2.88% 1.01% .48% .03%
==================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 158,500 $ 193,195 $ 224,278 $ 25
==================================================================
* Includes the Fund's share of the Trust's allocated expenses and/or
investment income and realized gain.
** Amount is less than $(.0001) per share.
+ Effective date of the Fund's registration.
See Notes to Financial Statements.
12 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Financial Highlights (concluded) WCMA Government Securities Fund
Class 4
------------------------------------------------------------------
For the Year Ended For the Period
March 31, March 20, 2003+
The following per share data and ratios have been derived --------------------------------------------- to March 31,
from information provided in the financial statements. 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------
Investment income--net ........................... .0291 .0102 .0047 .0003
Realized and unrealized gain (loss)--net ......... .0002 (.0012) --++ .0002
------------------------------------------------------------------
Total from investment operations ................. .0293 .0090 .0047 .0005
------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........................ (.0291) (.0102) (.0047) (.0003)
Realized gain--net ............................ --** --** --** --
------------------------------------------------------------------
Total dividends and distributions ................ (.0291) (.0102) (.0047) (.0003)
------------------------------------------------------------------
Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================================
Total investment return .......................... 2.96% 1.03% .47% .05%
==================================================================
==================================================================================================================================
Ratios to Average Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and/or reimbursement .67% .66% .65% .02%
==================================================================
Total expenses ................................... .98% .97% .96% .02%
==================================================================
Total investment income and realized gain ........ 3.10% .91% .48% .03%
==================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 207,778 $ 81,344 $ 157,203 $ 25
==================================================================
* Includes the Fund's share of the Trust's allocated expenses and/or
investment income and realized gain.
** Amount is less than $(.0001) per share.
+ Effective date of the Fund's registration.
++ Amount is less than $.0001 per share.
See Notes to Financial Statements.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 13
Notes to Financial Statements WCMA Government Securities Fund
1. Significant Accounting Policies:
WCMA Government Securities Fund (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as a no load, diversified, open-end management
investment company. The Fund seeks to achieve its investment objective by
investing all of its assets in the Master Government Securities Trust (the
"Trust"), which has the same investment objective and strategies as the Fund.
The value of the Fund's investment in the Trust reflects the Fund's
proportionate interest in the net assets of the Trust. The performance of the
Fund is directly affected by the performance of the Trust. The financial
statements of the Trust, including the Schedule of Investments, are included
elsewhere in this report and should be read in conjunction with the Fund's
financial statements. The Fund's financial statements are prepared in conformity
with U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. The percentage of the Trust owned by the Fund at March 31, 2006 was
51.7%. The Fund is divided into four classes, designated Class 1, Class 2, Class
3 and Class 4. Each Class 1, Class 2, Class 3 and Class 4 share represents
interests in the same assets of the Fund and has identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that each
class bears certain expenses related to account maintenance and the distribution
of such shares and the additional incremental transfer agency costs resulting
from the conversion of shares and has exclusive voting with respect to matters
relating to such account maintenance and distribution expenditures. Income,
expenses (other than expenses attributed to a specific class) and realized and
unrealized gains and losses on investments are allocated daily to each class
based on its relative net assets. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments -- The Fund records its investments in the Trust at
fair value. Valuation of securities held by the Trust is discussed in Note 1(a)
of the Trust's Notes to Financial Statements, which are included elsewhere in
this report.
(b) Investment income and expenses -- The Fund records daily its proportionate
share of the Trust's income, expenses and realized and unrealized gains and
losses. In addition, the Fund accrues its own income and expenses.
(c) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions to shareholders -- The Fund declares dividends
daily and reinvests daily such dividends (net of non-resident alien tax and
backup withholding tax withheld) in additional fund shares at net asset value.
Dividends and distributions are declared from the total of net investment income
and net realized gain or loss on investments.
(f) Investment transactions -- Investment transactions in the Trust are
accounted for on a trade date basis.
2. Transactions with Affiliates:
The Fund has entered into an Administration Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), a wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."),
which is the limited partner. The Fund pays a monthly fee at an annual rate of
..25% of the Fund's average daily net assets for the performance of
administrative services (other than investment advice and related portfolio
activities) necessary for the operation of the Fund.
The Fund has adopted a Distribution Plan in compliance with Rule 12b-1 under the
Investment Company Act of 1940, pursuant to which Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), an affiliate of FAM, receives account
maintenance and distribution fees from the Fund. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net assets of the
shares of the Fund as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class 1 ...................................... .25% .75%
Class 2 ...................................... .25% .425%
Class 3 ...................................... .25% .125%
Class 4 ...................................... .25% .125%
- --------------------------------------------------------------------------------
The ongoing account maintenance fee compensates MLPF&S for providing account
maintenance services to shareholders. The ongoing distribution fee compensates
MLPF&S for providing shareholder and distribution related services to
shareholders. The Fund has entered into a contractual arrangement with FAM and
MLPF&S to waive and/or reimburse a portion of the Fund's fees and expenses to
ensure that the net expenses for the Fund's Class 2 Shares is .32% higher than
14 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Notes to Financial Statements (continued) WCMA Government Securities Fund
that of CMA Government Securities Fund, and Class 3 and Class 4 Shares is equal
to that of CMA Government Securities Fund. The fee/expense waiver or
reimbursement includes account maintenance and distribution fees. This
arrangement has a one-year term and is renewable. The Distributor has
voluntarily agreed to waive a portion of its distribution fees in order to
ensure that each class of shareholders receives a positive yield on each daily
dividend. For the year ended March 31, 2006, MLPF&S has earned $2,002,539, of
which $1,234,755 was waived.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent. Interest is earned by the Fund from FDS based on the
difference, if any, between estimated and actual daily beneficial share
activity, which results in uninvested net proceeds from sales of Fund shares.
Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
contribute ML & Co.'s investment management business, including FAM, to the
investment management business of BlackRock, Inc. The transaction is expected to
close in the third quarter of 2006.
3. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $89,944,441 and $(129,873,585) for the years ended March 31,
2006 and March 31, 2005, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Class 1 Shares for the Year Dollar
Ended March 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 182,059,852 $ 182,059,852
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 329,450 329,450
------------------------------------
Total issued ......................... 182,389,302 182,389,302
Shares redeemed ...................... (180,272,683) (180,272,683)
------------------------------------
Net increase ......................... 2,116,619 $ 2,116,619
====================================
- -------------------------------------------------------------------------------
Class 1 Shares for the Year Dollar
Ended March 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 166,331,085 $ 166,331,085
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 45,759 45,759
------------------------------------
Total issued ......................... 166,376,844 166,376,844
Shares redeemed ...................... (171,902,807) (171,902,807)
------------------------------------
Net decrease ......................... (5,525,963) $ (5,525,963)
====================================
- -------------------------------------------------------------------------------
Class 2 Shares for the Year Dollar
Ended March 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 588,622,879 $ 588,622,879
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 2,664,034 2,664,034
------------------------------------
Total issued ......................... 591,286,913 591,286,913
Shares redeemed ...................... (595,145,880) (595,145,880)
------------------------------------
Net decrease ......................... (3,858,967) $ (3,858,967)
====================================
- -------------------------------------------------------------------------------
Class 2 Shares for the Year Dollar
Ended March 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 674,997,471 $ 674,997,471
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 802,382 802,382
------------------------------------
Total issued ......................... 675,799,853 675,799,853
Shares redeemed ...................... (693,537,095) (693,537,095)
------------------------------------
Net decrease ......................... (17,737,242) $ (17,737,242)
====================================
- -------------------------------------------------------------------------------
Class 3 Shares for the Year Dollar
Ended March 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 1,389,779,817 $ 1,389,779,817
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 5,572,173 5,572,173
------------------------------------
Total issued ......................... 1,395,351,990 1,395,351,990
Shares redeemed ...................... (1,430,071,226) (1,430,071,226)
------------------------------------
Net decrease ......................... (34,719,236) $ (34,719,236)
====================================
- -------------------------------------------------------------------------------
Class 3 Shares for the Year Dollar
Ended March 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 1,265,546,454 $ 1,265,546,454
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 2,069,563 2,069,563
------------------------------------
Total issued ......................... 1,267,616,017 1,267,616,017
Shares redeemed ...................... (1,298,496,734) (1,298,496,734)
------------------------------------
Net decrease ......................... (30,880,717) $ (30,880,717)
====================================
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 15
Notes to Financial Statements (concluded) WCMA Government Securities Fund
- -------------------------------------------------------------------------------
Class 4 Shares for the Year Dollar
Ended March 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 1,016,806,849 $ 1,016,806,849
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 3,563,731 3,563,731
------------------------------------
Total issued ......................... 1,020,370,580 1,020,370,580
Shares redeemed ...................... (893,964,555) (893,964,555)
------------------------------------
Net increase ......................... 126,406,025 $ 126,406,025
====================================
- -------------------------------------------------------------------------------
Class 4 Shares for the Year Dollar
Ended March 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .......................... 1,007,657,082 $ 1,007,657,082
Shares issued to shareholders
in reinvestment of dividends
and distributions .................. 1,092,931 1,092,931
------------------------------------
Total issued ......................... 1,008,750,013 1,008,750,013
Shares redeemed ...................... (1,084,479,676) (1,084,479,676)
------------------------------------
Net decrease ......................... (75,729,663) $ (75,729,663)
====================================
4. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended March 31,
2006 and March 31, 2005 was as follows:
- -------------------------------------------------------------------------------
3/31/2006 3/31/2005
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary income .................... $ 12,129,381 $ 4,010,634
------------------------------------
Total taxable distributions .......... $ 12,129,381 $ 4,010,634
====================================
As of March 31, 2006, there were no significant differences between the book and
tax components of net assets.
Report of Independent Registered Public Accounting Firm
WCMA Government Securities Fund
To the Shareholders and Board of Trustees of WCMA Government Securities Fund:
We have audited the accompanying statement of assets and liabilities of WCMA
Government Securities Fund as of March 31, 2006, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the respective periods then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of WCMA
Government Securities Fund as of March 31, 2006, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for each of the
respective periods then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
May 22, 2006
16 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Schedule of Investments Master Government Securities Trust (in Thousands)
Face Interest Maturity
Issue Amount Rate Date Value
- -------------------------------------------------------------------------------
U.S. Government Obligations* -- 22.5%
- -------------------------------------------------------------------------------
U.S. Treasury Bills $10,000 3.855% 4/06/2006 $ 9,993
29,000 3.906-
4.595 4/13/2006 28,956
- -------------------------------------------------------------------------------
U.S. Treasury Notes 22,400 2.00 5/15/2006 22,328
26,630 4.625 5/15/2006 26,628
22,100 2.50 5/31/2006 22,023
39,700 2.75 7/31/2006 39,447
2,220 2.375 8/15/2006 2,201
27,000 2.375 8/31/2006 26,740
9,000 2.50 10/31/2006 8,880
8,800 2.625 11/15/2006 8,680
13,500 2.875 11/30/2006 13,326
8,800 3.125 1/31/2007 8,676
- -------------------------------------------------------------------------------
Total U.S. Government Obligations --
(Cost -- $218,169) .............................................. 217,878
- -------------------------------------------------------------------------------
Face
Amount Issue
- -------------------------------------------------------------------------------
Repurchase Agreements -- 77.0%
- -------------------------------------------------------------------------------
$45,000 ABN AMRO Bank, N.V. New York Branch,
purchased on 3/31/2006 to yield 4.50% to
4/03/2006, repurchase price $45,017,
collateralized by U.S. Treasury Bill,
due 8/31/2006 ................................. 45,000
- -------------------------------------------------------------------------------
47,500 Banc of America Securities LLC, purchased on
3/29/2006 to yield 4.70% to 4/05/2006,
repurchase price $47,543, collateralized by
GNMA, 5% to 6% due 12/15/2006
to 2/15/2036 .................................. 47,500
- -------------------------------------------------------------------------------
48,000 Barclays Capital Inc., purchased on 3/31/2006
to yield 4.50% to 4/03/2006, repurchase
price $48,018, collateralized by U.S. Treasury
Bill, due 6/01/2006 ........................... 48,000
- -------------------------------------------------------------------------------
47,500 Citigroup Global Markets, Inc., purchased on
3/29/2006 to yield 4.70% to 4/05/2006,
repurchase price $47,543, collateralized by
GNMA, 4.50% to 7% due 2/15/2015
to 3/15/2038 .................................. 47,500
- -------------------------------------------------------------------------------
47,500 Countrywide Securities Corp., purchased on
3/28/2006 to yield 4.73% to 4/04/2006,
repurchase price $47,544, collateralized by
GNMA, 5.50% to 6.50% due 1/15/2036
to 3/15/2036 .................................. 47,500
- -------------------------------------------------------------------------------
47,500 Credit Suisse LLC, purchased on 3/28/2006 to
yield 4.74% to 4/04/2006, repurchase price
$47,544, collateralized by U.S. Treasury Notes,
4.625% due 5/15/2006 and GNMA, 4.375%
to 4.50% due 2/20/2024 to 7/20/2032 ........... 47,500
- -------------------------------------------------------------------------------
47,500 Deutsche Bank Securities, Inc., purchased on
3/29/2006 to yield 4.70% to 4/05/2006,
repurchase price $47,543, collateralized by
GNMA, 4.50% to 6.55% due 7/15/2024
to 2/15/2041 .................................. 47,500
- -------------------------------------------------------------------------------
48,000 Goldman Sachs & Company, purchased on
3/30/2006 to yield 4.71% to 4/06/2006,
repurchase price $48,044, collateralized
by U.S. Treasury Note, 11.25%
due 2/15/2015 ................................. 48,000
- -------------------------------------------------------------------------------
47,500 Greenwich Capital Markets, Inc., purchased on
3/29/2006 to yield 4.73% to 4/05/2006,
repurchase price $47,544, collateralized by
GNMA, 4.50% to 9% due 9/15/2007
to 9/15/2048 .................................. 47,500
- -------------------------------------------------------------------------------
41,760 HSBC Securities (USA), Inc., purchased on
3/31/2006 to yield 4.50% to 4/03/2006,
repurchase price $41,776, collateralized by
U.S. Treasury STRIPS+, due 5/15/2016
to 2/15/2029 .................................. 41,760
- -------------------------------------------------------------------------------
47,500 J.P. Morgan Securities Inc., purchased on
3/28/2006 to yield 4.73% to 4/04/2006,
repurchase price $47,544, collateralized by
GNMA, 5% to 7% due 5/15/2035
to 9/15/2035 .................................. 47,500
- -------------------------------------------------------------------------------
47,500 Lehman Brothers Inc., purchased on
3/29/2006 to yield 4.68% to 4/05/2006,
repurchase price $47,543, collateralized by
GNMA, 6.50% to 8.70% due 6/15/2012
to 10/15/2031 ................................. 47,500
- -------------------------------------------------------------------------------
47,500 Merrill Lynch Government Securities Inc.,
purchased on 3/29/2006 to yield 4.69% to
4/05/2006, repurchase price $47,543,
collateralized by GNMA, 4% to 16%
due 5/15/2006 to 10/15/2036 (a) ............... 47,500
- -------------------------------------------------------------------------------
48,000 Mizuho Securities USA, Inc., purchased on
3/31/2006 to yield 4.50% to 4/03/2006,
repurchase price $48,018, collateralized by
U.S. Treasury Bill, due 6/15/2006 ............. 48,000
- -------------------------------------------------------------------------------
40,000 Morgan Stanley & Co. Inc., purchased on
3/29/2006 to yield 4.65% to 4/05/2006,
repurchase price $40,036 collateralized by
U.S. Treasury STRIPS+ Principal Only,
due 11/15/2021 ................................ 40,000
- -------------------------------------------------------------------------------
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 17
Schedule of Investments (concluded)
Master Government Securities Trust (in Thousands)
Face
Amount Issue Value
- -------------------------------------------------------------------------------
Repurchase Agreements (concluded)
- -------------------------------------------------------------------------------
$47,500 UBS Securities LLC, purchased on 3/29/2006
to yield 4.70% to 4/05/2006, repurchase price
$47,543, collateralized by GNMA, 4% to
13.5% due 7/15/2006 to 12/15/2043 ............. $ 47,500
- -------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost -- $745,760) .............................................. 745,760
- -------------------------------------------------------------------------------
Total Investments
(Cost -- $963,929**) -- 99.5% ................................... 963,638
Other Assets Less Liabilities -- 0.5% ........................... 5,171
--------
Net Assets -- 100.0% ............................................ $968,809
========
- -------------------------------------------------------------------------------
* U.S. Treasury Bills are traded on a discount basis; the interest rates
shown are the range of discount rates paid at the time of purchase. U.S.
Treasury Notes bear interest at the rates shown, payable at fixed dates
until maturity.
** The cost and unrealized appreciation (depreciation) of investments, as of
March 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................ $963,929
========
Gross unrealized appreciation ............................. --
Gross unrealized depreciation ............................. $ (291)
--------
Net unrealized depreciation ............................... $ (291)
========
+ Separately Traded Registered Interest and Principal of Securities.
(a) Investments in companies considered to be an affiliate of the Trust, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Government Securities Inc. $1,500 $1,461
--------------------------------------------------------------------------
See Notes to Financial Statements.
18 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Statement of Assets and Liabilities Master Government Securities Trust
As of March 31, 2006
==============================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost--$916,429,171) $ 916,137,941
Investments in affiliated securities, at value (identified cost--$47,500,000) .. 47,500,000
Cash ........................................................................... 10,642
Receivables:
Contributions ............................................................... $ 3,870,651
Interest (including $12,376 from affiliates) ................................ 1,566,754 5,437,405
-------------
Prepaid expenses ............................................................... 6,013
-------------
Total assets ................................................................... 969,092,001
-------------
==============================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Payables:
Investment adviser .......................................................... 157,119
Other affiliates ............................................................ 9,230 166,349
-------------
Accrued expenses ............................................................... 116,887
-------------
Total liabilities .............................................................. 283,236
-------------
==============================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Net assets ..................................................................... $ 968,808,765
=============
==============================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------
Investors' capital ............................................................. $ 969,099,995
Unrealized depreciation--net ................................................... (291,230)
-------------
Net Assets ..................................................................... $ 968,808,765
=============
See Notes to Financial Statements.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 19
Statement of Operations Master Government Securities Trust
For the Year Ended March 31, 2006
==============================================================================================================================
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Interest (including $1,461,294 from affiliates) and amortization of premium
and discount earned ........................................................... $ 32,126,770
==============================================================================================================================
Expenses
- ------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ....................................................... $ 1,949,335
Accounting services ............................................................ 236,160
Custodian fees ................................................................. 64,034
Professional fees .............................................................. 55,117
Trustees' fees and expenses .................................................... 38,484
Pricing fees ................................................................... 3,721
Printing and shareholder reports ............................................... 281
Other .......................................................................... 20,272
-------------
Total expenses ................................................................. 2,367,404
-------------
Investment income--net ......................................................... 29,759,366
-------------
==============================================================================================================================
Realized & Unrealized Gain--Net
- ------------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net .............................................. 5,304
Change in unrealized depreciation on investments--net .......................... 121,542
-------------
Total realized and unrealized gain--net ........................................ 126,846
-------------
Net Increase in Net Assets Resulting from Operations ........................... $ 29,886,212
=============
See Notes to Financial Statements.
20 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Statements of Changes in Net Assets Master Government Securities Trust
For the Year Ended
March 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2006 2005
============================================================================================================================
Operations
- ----------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................ $ 29,759,366 $ 14,493,634
Realized gain--net .................................................... 5,304 1,170
Change in unrealized appreciation/depreciation--net ................... 121,542 (1,036,662)
-----------------------------------
Net increase in net assets resulting from operations .................. 29,886,212 13,458,142
-----------------------------------
============================================================================================================================
Capital Transactions
- ----------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ........................................... 5,154,701,941 4,985,746,126
Fair value of withdrawals ............................................. (5,152,345,637) (5,256,876,237)
-----------------------------------
Net increase (decrease) in net assets derived from capital transactions 2,356,304 (271,130,111)
-----------------------------------
============================================================================================================================
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ............................... 32,242,516 (257,671,969)
Beginning of year ..................................................... 936,566,249 1,194,238,218
-----------------------------------
End of year ........................................................... $ 968,808,765 $ 936,566,249
===================================
See Notes to Financial Statements.
Financial Highlights Master Government Securities Trust
For the Year Ended For the Period
March 31, February 13, 2003+
The following ratios have been derived from --------------------------------------------- to March 31,
information provided in the financial statements. 2006 2005 2004 2003
===========================================================================================================================
Total Investment Return
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return ................ 3.37% 1.44% .94% .75%*
=================================================================
===========================================================================================================================
Ratios to Average Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
Expenses ............................... .26% .25% .22% .26%*
=================================================================
Investment income and realized gain--net 3.31% 1.39% .94% 1.08%*
=================================================================
===========================================================================================================================
Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 968,809 $ 936,566 $ 1,194,238 $ 1,585,194
=================================================================
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 21
Notes to Financial Statements Master Government Securities Trust
1. Significant Accounting Policies:
Master Government Securities Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, and is organized as a Delaware
statutory trust. The Declaration of Trust permits the Trustees to issue
nontransferable interests in the Trust, subject to certain limitations. The
Trust's financial statements are prepared in conformity with U.S. generally
accepted accounting principles, which may require the use of management accruals
and estimates. Actual results may differ from these estimates. The following is
a summary of significant accounting policies followed by the Trust.
(a) Valuation of investments -- Portfolio securities with remaining maturities
of greater than sixty days, for which market quotations are readily available,
are valued at market value. As securities transition from sixty-one to sixty
days to maturity, the difference between the valuation existing on the
sixty-first day before maturity and maturity value is amortized on a
straight-line basis to maturity. Securities maturing sixty days or less from
their date of acquisition are valued at amortized cost, which approximates
market value. For the purpose of valuation, the maturity of a variable rate
security is deemed to be the next coupon date on which the interest rate is to
be adjusted. Other investments and assets for which market quotations are not
available are valued at fair value as determined in good faith by or under the
direction of the Trust's Board of Trustees.
(b) Repurchase agreements -- The Trust may invest in U.S. government securities
pursuant to repurchase agreements. Under such agreements, the counterparty
agrees to repurchase the security at a mutually agreed upon time and price. The
Trust takes possession of the underlying securities, marks-to-market such
securities and, if necessary, receives additional securities daily to ensure
that the contract is fully collateralized. If the counterparty defaults and the
fair value of the collateral declines, liquidation of the collateral by the
Trust may be delayed or limited.
(c) Income taxes -- The Trust is classified as a partnership for federal income
tax purposes. As such, each investor in the Trust is treated as owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Trust. Therefore, no federal income tax
provision is required. It is intended that the Trust's assets will be managed so
an investor in the Trust can satisfy the requirements of subchapter M of the
Internal Revenue Code.
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Interest income (including amortization of premium and
discount) is recognized on the accrual basis.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of the Trust's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Trust. For such services, the Trust pays a monthly fee
based upon the average daily value of the Trust's net assets, at the following
annual rates: .25% of the Trust's average daily net assets not exceeding $500
million; .175% of the average daily net assets in excess of $500 million but not
exceeding $1 billion; and .125% of the average daily net assets in excess of $1
billion.
For the year ended March 31, 2006, the Trust reimbursed FAM $20,535 for certain
accounting services.
Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
contribute ML & Co.'s investment management business, including FAM, to the
investment management business of BlackRock, Inc. The transaction is expected to
close in the third quarter of 2006.
22 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Report of Independent Registered Public Accounting Firm
Master Government Securities Trust
To the Investors and Board of Trustees of Master Government Securities Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Master Government Securities Trust as of March
31, 2006, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the respective periods then
ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of March 31, 2006, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Master
Government Securities Trust as of March 31, 2006, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for each of the
respective periods then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
May 22, 2006
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 23
Officers and Trustees
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Interested Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to President of the MLIM/FAM-advised funds since 131 Funds None
Doll, Jr.* Princeton, NJ and present 2005; President of MLIM and FAM since 2001; 177 Portfolios
08543-9011 Trustee Co-Head (Americas Region) thereof from 2000 to
Age: 51 2001 and Senior Vice President from 1999 to
2001; President and Director of Princeton
Services, Inc. ("Princeton Services") since
2001; President of Princeton Administrators,
L.P. ("Princeton Administrators") since 2001;
Chief Investment Officer of Oppenheimer-Funds,
Inc. in 1999 and Executive Vice President
thereof from 1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which
MLIM or FAM acts as investment adviser. Mr. Doll is an "interested person," as defined in the Investment Company
Act, of the Fund based on his positions with MLIM, FAM, Princeton Services and Princeton Administrators. Trustees
serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. As Fund
President, Mr. Doll serves at the pleasure of the Board of Trustees.
====================================================================================================================================
Independent Trustees*
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald W. P.O. Box 9095 Trustee 2002 to Professor Emeritus of Finance, School of 49 Funds None
Forbes** Princeton, NJ present Business, State University of New York at 50 Portfolios
08543-9095 Albany since 2000 and Professor thereof from
Age: 65 1989 to 2000; International Consultant, Urban
Institute, Washington, D.C. from 1995 to 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
Cynthia A. P.O. Box 9095 Trustee 2002 to Professor, Harvard Business School since 1989; 49 Funds Newell
Montgomery Princeton, NJ present Associate Professor, J.L. Kellogg Graduate 50 Portfolios Rubbermaid, Inc.
08543-9095 School of Management, Northwestern University (manufacturing)
Age: 53 from 1985 to 1989; Associate Professor,
Graduate School of Business Administration,
University of Michigan from 1979 to 1985;
Director, Harvard Business School Publishing
since 2005; Director, McLean Hospital since
2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Jean Margo P.O. Box 9095 Trustee 2004 to Self-employed consultant since 2001; Counsel of 49 Funds None
Reid Princeton, NJ present Alliance Capital Management (investment 50 Portfolios
08543-9095 adviser) in 2000; General Counsel, Director and
Age: 60 Secretary of Sanford C. Bernstein & Co., Inc.
(investment adviser/broker-dealer) from 1997 to
2000; Secretary, Sanford C. Bernstein Fund,
Inc. from 1994 to 2000; Director and Secretary
of SCB, Inc. since 1998; Director and Secretary
of SCB Partners, Inc. since 2000; and Director
of Covenant House from 2001 to 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Roscoe S. P.O. Box 9095 Trustee 2002 to President, Middle East Institute from 1995 to 49 Funds None
Suddarth Princeton, NJ present 2001; Foreign Service Officer, United States 50 Portfolios
08543-9095 Foreign Service, from 1961 to 1995 and Career
Age: 70 Minister from 1989 to 1995; Deputy Inspector
General, U.S. Department of State, from 1991 to
1994; U.S. Ambassador to the Hashemite Kingdom
of Jordan from 1987 to 1990.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard R. P.O. Box 9095 Trustee 2002 to Professor of Finance from 1984 to 1995, Dean 49 Funds Bowne & Co.,
West Princeton, NJ present from 1984 to 1993 and since 1995 Dean Emeritus 50 Portfolios Inc. (financial
08543-9095 of New York University's Leonard N. Stern printers);
Age: 68 School of Business Administration. Vornado Realty
Trust (real
estate company);
Alexander's,
Inc. (real
estate company)
24 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Officers and Trustees (concluded)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Independent Trustees* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Edward D. P.O. Box 9095 Trustee 2002 to Self-employed financial consultant since 1994; 49 Funds None
Zinbarg Princeton, NJ present Executive Vice President of the Prudential 50 Portfolios
08543-9095 Insurance Company of America from 1988 to 1994;
Age: 71 Former Director of Prudential Reinsurance
Company and former Trustee of the Prudential
Foundation.
------------------------------------------------------------------------------------------------------------------------
* Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Chairman of the Board of Trustees and the Audit Committee.
- ------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length of
Held with Time
Name Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 2002 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since
Burke Princeton, NJ President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999 and
08543-9011 and Director since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since
Age: 45 Treasurer 1999 and Director since 2004; Vice President of MLIM and FAM from 1990 to 1997;
Director of Taxation of MLIM from 1990 to 2001; Vice President, Treasurer and
Secretary of the IQ Funds since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
John Ng P.O. Box 9011 Vice 2002 to Director of MLIM since 2000; Vice President of MLIM from 1984 to 2000.
Princeton, NJ President present
08543-9011
Age: 52
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
Hiller Princeton, NJ Compliance present and Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief
08543-9011 Officer Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
Age: 54 Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the
Commission's Securities and Exchange Division of Enforcement in Washington, D.C.
from 1990 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999
Pellegrino Princeton, NJ present to 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD
08543-9011 and Princeton since 2004.
Age: 46
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund/Trust serve at the pleasure of the Board of Trustees.
------------------------------------------------------------------------------------------------------------------------
Further information about the Fund's Officers and Trustees is available in the Fund's Statement of Additional
Information, which can be obtained without charge by calling 1-800-637-3863.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-221-7210*
* For inquiries regarding your WCMA account, call 800-262-4636.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 25
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
26 WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
WCMA GOVERNMENT SECURITIES FUND MARCH 31, 2006 27
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
- --------------------------------------------------------------------------------
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. Past performance
results shown in this report should not be considered a representation of future
performance, which will fluctuate. Refer to www.mlim.ml.com to obtain
performance data current to the most recent month-end. Statements and other
information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-637-3863; (2) at
www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's Web
site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
WCMA Government Securities Fund
Box 9011
Princeton, NJ 08543-9011
#WCMAGS -- 3/06
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the
end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Ronald W.
Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
WCMA Government Securities Fund
(a) Audit Fees - Fiscal Year Ending March 31, 2006 - $6,600
Fiscal Year Ending March 31, 2005 - $6,500
(b) Audit-Related Fees - Fiscal Year Ending March 31, 2006 - $0
Fiscal Year Ending March 31, 2005 - $0
(c) Tax Fees - Fiscal Year Ending March 31, 2006 - $6,000
Fiscal Year Ending March 31, 2005 - $6,300
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending March 31, 2006 - $0
Fiscal Year Ending March 31, 2005 - $0
Master Government Securities Trust
(a) Audit Fees - Fiscal Year Ending March 31, 2006 - $28,500
Fiscal Year Ending March 31, 2005 - $28,000
(b) Audit-Related Fees - Fiscal Year Ending March 31, 2006 - $0
Fiscal Year Ending March 31, 2005 - $0
(c) Tax Fees - Fiscal Year Ending March 31, 2006 - $9,200
Fiscal Year Ending March 31, 2005 - $8,700
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending March 31, 2006 - $0
Fiscal Year Ending March 31, 2005 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending March 31, 2006 - $3,754,550
Fiscal Year Ending March 31, 2005 - $10,018,400
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,227,000, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the second fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WCMA Government Securities Fund and Master Government Securities Trust
By: /s/ Robert C. Doll, Jr.
--------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
WCMA Government Securities Fund and Master Government Securities Trust
Date: May 22, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
--------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
WCMA Government Securities Fund and Master Government Securities Trust
Date: May 22, 2006
By: /s/ Donald C. Burke
--------------------------
Donald C. Burke,
Chief Financial Officer of
WCMA Government Securities Fund and Master Government Securities Trust
Date: May 22, 2006