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: | 811-04023 | |
Exact name of registrant as specified in charter: | Dryden Municipal Series Fund | |
Address of principal executive offices: | Gateway Center 3, | |
100 Mulberry Street, | ||
Newark, New Jersey 07102 | ||
Name and address of agent for service: | Deborah A. Docs | |
Gateway Center 3, | ||
100 Mulberry Street, | ||
Newark, New Jersey 07102 | ||
Registrant’s telephone number, including area code: | 973-367-7521 | |
Date of fiscal year end: | 8/31/2006 | |
Date of reporting period: | 2/28/2006 |
Item 1 – Reports to Stockholders –
Dryden Municipal Series Fund/
New Jersey Series
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
FUND TYPE
Municipal bond
OBJECTIVE
Maximize current income that is exempt from New Jersey state income tax and federal income tax, consistent with the preservation of capital
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Series’ portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2006, were not audited, and accordingly, no auditor’s opinion is expressed on them.
JennisonDryden is a registered trademark of The Prudential Insurance Company of America.
April 14, 2006
Dear Shareholder:
We hope you find the semiannual report for the New Jersey Series informative and useful. As a JennisonDryden mutual fund shareholder, you may be thinking about where you can find additional growth opportunities. You could invest in last year’s top-performing asset class and hope history repeats itself or you could stay in cash while waiting for the “right moment” to invest.
Instead, we believe it is better to take advantage of developing domestic and global investment opportunities through a diversified portfolio of stock and bond mutual funds. A diversified asset allocation offers two potential advantages. It helps you manage downside risk by not being overly exposed to any particular asset class, plus it gives you a better opportunity to have at least some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and tolerance for risk.
JennisonDryden Mutual Funds gives you a wide range of choices that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of three leading asset managers. They are recognized and respected in the institutional market and by discerning investors for excellence in their respective strategies. JennisonDryden equity funds are advised by Jennison Associates LLC or Quantitative Management Associates LLC (QMA). Prudential Investment Management, Inc. (PIM) advises the JennisonDryden fixed income and money market funds. Jennison Associates, QMA, and PIM are registered investment advisors and Prudential Financial companies.
Thank you for choosing JennisonDryden Mutual Funds.
Sincerely,
Judy A. Rice, President
Dryden Municipal Series Fund/New Jersey Series
Dryden Municipal Series Fund/New Jersey Series | 1 |
Your Series’ Performance
Series objective
The investment objective of the Dryden Municipal Series Fund/New Jersey Series (the Series) is to maximize current income that is exempt from New Jersey state income tax and federal income tax, consistent with the preservation of capital. There can be no assurance that the Series will achieve its investment objective.
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The maximum initial sales charge is 4.00% (Class A shares).
Cumulative Total Returns1 as of 2/28/06 | |||||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception2 | |||||||||||
Class A | 0.70 | % | 2.98 | % | 25.21 | % | 61.76 | % | 162.05 | % | |||||
Class B | 0.66 | 2.82 | 23.78 | 57.12 | 193.49 | ||||||||||
Class C | 0.54 | 2.57 | 22.26 | 53.28 | 71.69 | ||||||||||
Class Z | 0.81 | 3.21 | 26.85 | N/A | 60.94 | ||||||||||
Lehman Brothers Municipal | 0.99 | 3.87 | 30.76 | 75.81 | *** | ||||||||||
Lipper New Jersey (NJ) Muni | 0.79 | 3.33 | 25.97 | 61.11 | **** | ||||||||||
Average Annual Total Returns1 as of 3/31/06 | |||||||||||||||
One Year | Five Years | Ten Years | Since Inception2 | ||||||||||||
Class A | –1.06 | % | 3.37 | % | 4.59 | % | 5.80% | ||||||||
Class B | –2.12 | 3.79 | 4.72 | 6.08 | |||||||||||
Class C | 1.57 | 3.70 | 4.46 | 4.66 | |||||||||||
Class Z | 3.29 | 4.47 | N/A | 5.14 | |||||||||||
Lehman Brothers Municipal | 3.81 | 5.18 | 5.87 | *** | |||||||||||
Lipper New Jersey (NJ) Muni | 3.41 | 4.41 | 4.97 | **** |
Distributions and Yields1 as of 2/28/06 | ||||||||||||
Total Distributions | 30-Day | Taxable Equivalent 30-Day Yield5 at Tax Rates of | ||||||||||
33% | 35% | |||||||||||
Class A | $ | 0.28 | 2.58 | % | 3.85 | % | 3.97 | % | ||||
Class B | $ | 0.27 | 2.43 | 3.63 | 3.74 | |||||||
Class C | $ | 0.25 | 2.19 | 3.27 | 3.37 | |||||||
Class Z | $ | 0.29 | 2.99 | 4.46 | 4.60 |
2 | Visit our website at www.jennisondryden.com |
The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. Class A shares are subject to a maximum front-end sales charge of 4.00%. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class C shares are subject to a maximum CDSC of 5% and 1% respectively. Class Z shares are not subject to a sales charge.
1Source: Prudential Investments LLC and Lipper Inc. The average annual total returns take into account applicable sales charges. During certain periods shown, fee waivers and/or expense reimbursements were in effect. Without such fee waivers and expense reimbursements, the returns for the share classes would have been lower. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.3%, 0.5%, and 1.0% respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class Z shares are not subject to a 12b-1 fee. Except where noted, the returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. Without waiver of fees and/or expense subsidization, the Series’ returns would have been lower.
2Inception dates: Class A, 1/22/90; Class B, 3/4/88; Class C, 8/1/94; and Class Z, 12/6/96.
3The Lehman Brothers Municipal Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.
4The Lipper NJ Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper NJ Muni Debt Funds category for the periods noted. Funds in the Lipper Average limit their assets to those securities that are exempt from taxation in New Jersey.
5Taxable equivalent yields reflect federal and applicable state tax rates.
Investors cannot invest directly in an index. The returns for the Lehman Brothers Municipal Bond Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
***Lehman Brothers Municipal Bond Index Closest Month-End to Inception cumulative total returns as of 2/28/06 are 189.45% for Class A, 235.95% for Class B, 101.41% for Class C, and 67.77% for Class Z. Lehman Brothers Municipal Bond Index Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.75% for Class A, 6.89% for Class B, 6.12% for Class C, and 5.62% for Class Z.
****Lipper Average Closest Month-End to Inception cumulative total returns as of 2/28/06 are 166.88% for Class A, 212.04% for Class B, 83.25% for Class C, and 54.37% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.21% for Class A, 6.44% for Class B, 5.27% for Class C, and 4.69% for Class Z.
Dryden Municipal Series Fund/New Jersey Series | 3 |
Your Series’ Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 2/28/06 | |||
Delaware River Port Auth., 1/01/26, 5.625% | 3.9 | % | |
New Jersey Econ. Dev. Auth., Wtr. Facs. Rev., 11/01/29, 9.15% | 3.9 | ||
New Jersey St. Ed. Facs., Auth. Rev., 7/01/25, 5.00% | 3.0 | ||
New Jersey St. Tpke. Auth., 1/01/10, 5.75% | 2.8 | ||
New Jersey St. Ed. Facs., Auth. Rev., 7/01/28, 5.00% | 2.7 |
Issues are subject to change.
Credit Quality expressed as a percentage of net assets as of 2/28/06 | |||
Aaa | 58.4 | % | |
Aa | 2.5 | ||
A | 15.3 | ||
Baa | 14.2 | ||
Ba | 0.4 | ||
Not Rated | 8.7 | ||
Total Investments | 99.5 | ||
Other assets in excess of liabilities | 0.5 | ||
Net Assets | 100.0 | % | |
Source: Moody’s rating, defaulting to S&P when not rated by Moody’s. Credit quality is subject to change.
4 | Visit our website at www.jennisondryden.com |
Fees and Expenses (Unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Series expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2005, at the beginning of the period, and held through the six-month period ended February 28, 2006.
The Series’ transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to Individual Retirement Accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of JennisonDryden or Strategic Partners Funds, including the Series, that you own. You should consider the additional fees that were charged to your Series account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and
Dryden Municipal Series Fund/New Jersey Series | 5 |
Fees and Expenses (continued)
expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Dryden Municipal Series Fund/ New Jersey Series | Beginning Account Value September 1, 2005 | Ending Account Value February 28, 2006 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six- Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,007.00 | 1.03 | % | $ | 5.13 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.69 | 1.03 | % | $ | 5.16 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,006.60 | 1.28 | % | $ | 6.37 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,018.45 | 1.28 | % | $ | 6.41 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 1,005.40 | 1.53 | % | $ | 7.61 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,017.21 | 1.53 | % | $ | 7.65 | ||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,008.10 | 0.78 | % | $ | 3.88 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,020.93 | 0.78 | % | $ | 3.91 |
* Series expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2006, and divided by the 365 days in the Series’ fiscal year ending August 31, 2006 (to reflect the six-month period).
6 | Visit our website at www.jennisondryden.com |
Portfolio of Investments
as of February 28, 2006 (Unaudited)
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
LONG-TERM INVESTMENTS 99.1% | |||||||||||||
Municipal Bonds | |||||||||||||
Camden Cnty. NJ Impt. Auth. Rev. Cooper Health | Baa3 | 5.00% | 2/15/35 | $ | 2,750 | $ | 2,766,528 | ||||||
Cape May Cnty. Ind. Poll. Ctrl., Fin. Auth. Rev., Atlantic City Elec. Co., Ser. A, M.B.I.A. | Aaa | 6.80 | 3/01/21 | 2,615 | 3,410,222 | ||||||||
Casino Reinvestment Dev. Auth. New Jersey Hotel Room Fee Rev., A.M.B.A.C. | Aaa | 5.00 | 1/01/25 | 500 | 531,830 | ||||||||
Clearview Reg. High Sch. Dist., G.O., F.G.I.C. | Aaa | 5.375 | 8/01/15 | 1,205 | (e) | 1,328,272 | |||||||
Delaware River Port Auth., Rev. Penn. & NJ Port Dist. Proj., Ser. B, F.S.A. | Aaa | 5.625 | 1/01/26 | 5,000 | 5,341,449 | ||||||||
Essex Cnty. Impvt. Auth. Proj. Rev., F.S.A. | Aaa | 5.125 | 12/15/18 | 3,000 | 3,240,660 | ||||||||
Essex Cnty. Impvt. Auth., Lease-Cogen Facs. Proj. Rev., F.G.I.C. | Aaa | 5.25 | 1/01/19 | 1,110 | 1,189,343 | ||||||||
Gloucester Cnty. Impvt. Auth., Solid Wste. Recov. Rev. Wste. Mgmt. Proj., Ser. A | BBB(d) | 6.85 | 12/01/09 | 3,000 | 3,273,060 | ||||||||
Guam Govt. Wtrwks. Auth. Rev. | Ba2 | 6.00 | 7/01/25 | 500 | 539,240 | ||||||||
Jackson Twnshp. Sch. Dist., G.O., F.G.I.C. | Aaa | 6.60 | 6/01/10 | 1,600 | 1,797,232 | ||||||||
G.O., F.G.I.C. | Aaa | 6.60 | 6/01/11 | 1,600 | 1,834,736 | ||||||||
Middlesex Cnty. Impvt. Auth. Rev., Rfdg., Cnty. Gtd., Golf Course Projs. | Aa1 | 5.25 | 6/01/18 | 1,080 | 1,182,028 | ||||||||
New Jersey Econ. Dev. Auth. Rev., Cigarette Tax | Baa2 | 5.625 | 6/15/19 | 500 | (c) | 531,350 | |||||||
Cigarette Tax | Baa2 | 5.75 | 6/15/34 | 1,000 | 1,062,900 | ||||||||
First Mtge.—Franciscan Oaks | NR | 5.70 | 10/01/17 | 2,040 | 2,075,557 | ||||||||
First Mtge.—Keswick Pines | NR | 5.75 | 1/01/24 | 1,750 | 1,782,165 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 7 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
First Mtge.—The Evergreens | NR | 5.875% | 10/01/12 | $ | 1,200 | $ | 1,219,920 | ||||||
First Mtge.—The Evergreens | NR | 6.00 | 10/01/22 | 1,400 | 1,429,722 | ||||||||
Kapkowski Rd. Landfill, Ser. A, C.A.B.S., E.T.M. | Baa3 | Zero | 4/01/08 | 1,020 | 949,569 | ||||||||
Masonic Charity Fdn. Proj. | A+(d) | 5.875 | 6/01/18 | 250 | 274,445 | ||||||||
Masonic Charity Fdn. Proj. Natural Gas Facs. Rev., NUI Corp. | A+(d) | 6.00 | 6/01/25 | 1,150 | 1,276,109 | ||||||||
Proj., Ser. A, M.B.I.A., A.M.T. | Aaa | 5.70 | 6/01/32 | 1,500 | 1,557,525 | ||||||||
Sch. Facs. Constrs., Ser. A, A.M.B.A.C. | Aaa | 5.25 | 6/15/11 | 2,000 | (c) | 2,159,960 | |||||||
Sch. Facs. Constrs., Ser. O | A1 | 5.25 | 3/01/26 | 2,000 | 2,154,600 | ||||||||
St. Lease Rev., Liberty St. Pk. Proj., Ser. C, F.S.A. | Aaa | 5.00 | 3/01/20 | 1,400 | 1,498,462 | ||||||||
Wtr. Facs., R.I.T.E.S., PA-98, F.G.I.C., A.M.T. (Cost $5,091,200; purchased 6/12/95) | AAA(d) | 9.15(g) | 11/01/29 | 5,000 | (f) | 5,239,099 | |||||||
New Jersey Hlth. Care Facs. Fin. Auth. Rev., Atlantic City Med. Ctr. | A2 | 6.25 | 7/01/17 | 1,750 | 1,959,160 | ||||||||
Dept. Human Svcs., Greystone Pk. Psychiatric Hosp., A.M.B.A.C. | Aaa | 5.00 | 9/15/26 | 3,000 | 3,177,420 | ||||||||
Hunterdon Med. Ctr., Ser. A | NR | 5.25 | 7/01/25 | 500 | 528,165 | ||||||||
Saint Peter’s Univ. Hosp., Ser. A | Baa1 | 6.875 | 7/01/30 | 1,750 | 1,913,205 | ||||||||
South Jersey Hosp. | Baa1 | 6.00 | 7/01/26 | 1,000 | 1,073,910 | ||||||||
South Jersey Hosp. | Baa1 | 6.00 | 7/01/32 | 1,000 | 1,068,810 | ||||||||
St. Joseph’s Hosp. & Med. Ctr., Ser. A, CONNIE LEE, | AAA(d) | 5.70 | 7/01/11 | 2,375 | 2,437,843 | ||||||||
New Jersey St., Equipment Lease Purchase, Ser. A, C.O.P. | A1 | 5.00 | 6/15/09 | 1,000 | 1,039,070 |
See Notes to Financial Statements.
8 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
New Jersey St. Ed. Facs. Auth. Rev., Coll. of New Jersey, Ser. C, F.G.I.C. | Aaa | 5.375% | 7/01/17 | $ | 1,000 | $ | 1,085,030 | ||||||
Felician College of Lodi., Ser. D. | NR | 7.375 | 11/01/22 | 1,140 | 1,197,992 | ||||||||
Kean Univ. M.B.I.A. | Aaa | 5.00 | 7/01/30 | 1,000 | 1,059,600 | ||||||||
Montclair St. Univ., Ser. F, F.G.I.C. | Aaa | 5.00 | 7/01/25 | 3,850 | 4,098,016 | ||||||||
William Patterson Univ., Ser. A, F.G.I.C. | Aaa | 5.00 | 7/01/28 | 3,445 | 3,629,617 | ||||||||
New Jersey St. Hwy. Auth. Garden St. Pkwy., Gen. Rev.(c) | A1 | 5.75 | 1/01/14 | 2,500 | 2,727,025 | ||||||||
Gen. Rev.(c) | A1 | 5.625 | 1/01/30 | 1,650 | 1,792,478 | ||||||||
Gen. Rev., E.T.M.(c) | A1 | 6.20 | 1/01/10 | 3,035 | 3,252,276 | ||||||||
New Jersey St. Tpke. Auth., Tpke. Rev., Growth & Income Secs., Ser. B, A.M.B.A.C., C.A.B.S. | Aaa | Zero | 1/01/35 | 1,500 | 1,005,285 | ||||||||
Ser. A, F.S.A. | Aaa | 5.00 | 1/01/20 | 2,500 | 2,682,600 | ||||||||
Ser. A, M.B.I.A.(c) | Aaa | 5.75 | 1/01/10 | 3,535 | 3,822,359 | ||||||||
Ser. A, F.S.A. | Aaa | 5.00 | 1/01/23 | 3,000 | 3,198,390 | ||||||||
Ser. C, M.B.I.A., E.T.M.(c) | Aaa | 6.50 | 1/01/09 | 1,000 | 1,082,670 | ||||||||
Unrfdg., Ser. A, M.B.I.A. | Aaa | 5.75 | 1/01/18 | 1,465 | 1,573,718 | ||||||||
New Jersey St. Trans. Trust Fund Auth. Rev., R.I.T.E.S., PA-646, M.B.I.A. (cost $2,919,980; purchased 4/5/00) | NR | 14.35(g) | 12/15/08 | 2,475 | (f) | 3,484,428 | |||||||
Trans. Sys., Ser. D | A1 | 5.00 | 6/15/20 | 3,000 | 3,187,710 | ||||||||
New Jersey Wtr. Supply Auth. Rev., Manasquan Reservoir Wtr. Supply, M.B.I.A. | Aaa | 5.00 | 8/01/20 | 1,250 | 1,347,313 | ||||||||
Newark Hsg. Auth. Rev., Port Auth., Newark Marine Terminal, M.B.I.A. | Aaa | 5.00 | 1/01/34 | 3,000 | 3,138,360 | ||||||||
Newark New Jersey, G.O., F.S.A. | Aaa | 5.00 | 10/01/22 | 2,000 | 2,148,060 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 9 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
North Bergen Twnship. Mun. Util. Auth. Swr. Rev., M.B.I.A. | Aaa | 5.25% | 12/15/17 | $ | 1,800 | $ | 1,964,448 | |||||
Port Auth. of New York & New Jersey Rev., Cons. Ser. 127, A.M.B.A.C., A.M.T. | Aaa | 5.50 | 12/15/15 | 3,000 | 3,264,510 | |||||||
Cons., Ser. 135 | A1 | 5.00 | 3/15/39 | 2,380 | 2,494,097 | |||||||
Puerto Rico Comnwlth. Hwy. & Trans. Auth. Trans. Rev., Ser. J(c) | Baa2 | 5.50 | 7/01/14 | 1,320 | 1,476,064 | |||||||
Puerto Rico Pub. Fin. Corp., Comnwlth. Approp. Rev., Ser. A, M.B.I.A.(c) | Aaa | 5.50 | 8/01/14 | 1,500 | 1,638,270 | |||||||
Rutgers—The St. Univ. of New Jersey, Rev. Ser. A | Aa3 | 6.40 | 5/01/13 | 2,000 | 2,239,920 | |||||||
Tobacco Settlement Fin. Corp. Rev., | Baa3 | 5.75 | 6/01/32 | 2,000 | 2,088,320 | |||||||
Asset Bkd. | Baa3 | 6.125 | 6/01/42 | 2,000 | 2,134,940 | |||||||
Virgin Islands Pub. Fin. Auth. Rev., Ser. A | BBB(d) | 6.50 | 10/01/24 | 750 | 832,725 | |||||||
Washington Twnshp. New Jersey Brd. of Ed., Mercer Cnty., G.O., F.S.A. | Aaa | 5.00 | 1/01/21 | 2,710 | 2,912,573 | |||||||
West Morris Reg. High Sch., G.O., M.B.I.A. | Aaa | 5.00 | 5/01/23 | 2,145 | 2,285,498 | |||||||
G.O., M.B.I.A. | Aaa | 5.00 | 5/01/24 | 2,246 | 2,386,689 | |||||||
Total long-term investments | 134,074,547 | |||||||||||
See Notes to Financial Statements.
10 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
SHORT-TERM INVESTMENTS 0.4% | ||||||||||||
Municipal Bond | ||||||||||||
Port Auth. of New York & New Jersey, Versatile Structure Spl. Oblig. Rev., Ser. 6, A.M.T., F.R.D.D. | VMIG1 | 2.99%(b) | 3/01/06 | $ | 500 | $ | 500,000 | |||||
Total short-term investments | 500,000 | |||||||||||
Total Investments 99.5% | 134,574,547 | |||||||||||
Other assets in excess of liabilities 0.5%(h) | 741,490 | |||||||||||
Net Assets 100% | $ | 135,316,037 | ||||||||||
(a) | The following abbreviations are used in the portfolio descriptions: |
A.M.B.A.C.—American Municipal Bond Assurance Corporation.
A.M.T.—Alternative Minimum Tax.
C.A.B.S.—Capital Appreciation Bonds.
CONNIE LEE—College Construction Loan Insurance Association.
C.O.P.—Certificates of Participation.
E.T.M.—Escrowed to Maturity.
F.G.I.C.—Financial Guaranty Insurance Company.
F.R.D.D.—Floating Rate (Daily) Demand Note(b).
F.S.A.—Financial Security Assurance.
G.O.—General Obligation.
M.B.I.A.—Municipal Bond Insurance Corporation.
NR—Not Rated by Moody’s or Standard & Poor’s.
The Fund’s current Statement of Additional Information contains a description of Moody’s and Standard & Poor’s ratings.
R.I.T.E.S.—Residual Interest Tax Exempt Securities Receipts.
(b) | For purposes of amortized cost valuation, the maturity date of Floating Rate Demand Notes are considered to be the later of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. The rate in effect is the rate at February 28, 2006. |
(c) | Prerefunded issues are secured by escrowed cash and/or direct U.S. guaranteed obligations. |
(d) | Standard & Poor’s rating. |
(e) | Partial principal amount pledged as collateral for financial futures contracts. |
(f) | Indicates a security that has been deemed illiquid. The aggregate cost of the illiquid securities is $8,016,182. The aggregate value of $8,723,527 represents 6.4% of net assets. |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 11 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
(g) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate at February 28, 2006. |
(h) | Other assets in excess of liabilities include net unrealized appreciation (depreciation) on open financial futures contracts and interest rate swap as follows: |
Open futures contracts outstanding at February 28, 2006:
Number of Contracts | Type | Expiration Date | Value at Trade Date | Value at February 28, 2006 | Unrealized Appreciation (Depreciation) | |||||||||
Long Positions: | ||||||||||||||
1 | U.S. Treasury 30 yr. Bonds | June 2006 | $ | 112,792 | $ | 113,093 | $ | 301 | ||||||
44 | U.S. Treasury 10 yr. Notes | June 2006 | 4,751,083 | 4,747,875 | (3,208 | ) | ||||||||
Short Positions: | ||||||||||||||
8 | U.S. Treasury 2 yr. Notes | June 2006 | 1,633,292 | 1,635,000 | (1,708 | ) | ||||||||
57 | U.S. Treasury 5 yr. Notes | June 2006 | 5,999,278 | 5,995,688 | 3,590 | |||||||||
$ | (1,025 | ) | ||||||||||||
Interest rate swap agreement outstanding at February 28, 2006:
Counterparty | Termination Date | Notional Amount | Fixed Rate | Floating Rate | Unrealized Depreciation | |||||||||
Morgan Stanley Capital Services, Inc. (i) | 3/17/2021 | $ | 850,000 | 3.865 | % | BMA Municipal Swap Index | $ | (6,359 | ) |
(i) | Portfolio pays the floating rate and receives the fixed rate. |
See Notes to Financial Statements.
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The industry classification of portfolio holdings and other assets in excess of liabilities shown as a percentage of net assets as of February 28, 2006 were as follows:
Transportation | 27.2 | % | |
Healthcare | 14.6 | ||
Lease-Backed Certificate of Participation | 12.1 | ||
General Obligation | 10.9 | ||
Education | 9.8 | ||
Water & Sewer | 6.7 | ||
Corporate-Backed IDB & PCR | 6.1 | ||
Special Tax/Assessment District | 4.9 | ||
Other | 3.7 | ||
Tobacco | 3.1 | ||
Short-Term investments | 0.4 | ||
Total Investments | 99.5 | ||
Other assets in excess of liabilities | 0.5 | ||
Total | 100.0 | % | |
Industry classification is subject to change.
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 13 |
Statement of Assets and Liabilities
as of February 28, 2006 (Unaudited)
Assets | |||
Unaffiliated investments, at value (cost $127,536,276) | $ | 134,574,547 | |
Cash | 36,473 | ||
Interest receivable | 1,705,248 | ||
Receivable for Series shares sold | 11,212 | ||
Prepaid expenses | 7,179 | ||
Due from broker—variation margin | 2,082 | ||
Total assets | 136,336,741 | ||
Liabilities | |||
Payable for Series shares reacquired | 745,359 | ||
Accrued expenses | 141,950 | ||
Management fee payable | 52,645 | ||
Distribution fee payable | 30,713 | ||
Dividends payable | 29,063 | ||
Deferred trustees’ fees | 10,515 | ||
Unrealized depreciation on interest rate swaps | 6,359 | ||
Transfer agent fee payable | 4,100 | ||
Total liabilities | 1,020,704 | ||
Net Assets | $ | 135,316,037 | |
Net assets were comprised of: | |||
Shares of beneficial interest, at par | $ | 125,569 | |
Paid-in capital in excess of par | 127,424,640 | ||
127,550,209 | |||
Undistributed net investment income | 102,470 | ||
Accumulated net realized gain on investments | 632,471 | ||
Net unrealized appreciation on investments | 7,030,887 | ||
Net assets, February 28, 2006 | $ | 135,316,037 | |
See Notes to Financial Statements.
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Class A | |||
Net asset value and redemption price per share ($113,440,321 ÷ 10,528,237 shares of beneficial interest issued and outstanding) | $ | 10.77 | |
Maximum sales charge (4% of offering price) | .45 | ||
Maximum offering price to public | $ | 11.22 | |
Class B | |||
Net asset value, offering price and redemption price per share ($15,042,046 ÷ 1,395,456 shares of beneficial interest issued and outstanding) | $ | 10.78 | |
Class C | |||
Net asset value, offering price and redemption price per share | $ | 10.78 | |
Class Z | |||
Net asset value, offering price and redemption price per share | $ | 10.85 | |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 15 |
Statement of Operations
Six Months Ended February 28, 2006 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest | $ | 3,554,758 | ||
Expenses | ||||
Management fee | 348,650 | |||
Distribution fee—Class A | 142,863 | |||
Distribution fee—Class B | 40,161 | |||
Distribution fee—Class C | 20,127 | |||
Custodian’s fees and expenses | 57,000 | |||
Transfer agent’s fee and expenses (including affiliated expense of $25,400) | 37,000 | |||
Reports to shareholders | 28,000 | |||
Registration fees | 25,000 | |||
Legal fees and expenses | 20,000 | |||
Audit fee | 11,000 | |||
Trustees’ fees | 7,000 | |||
Miscellaneous | 9,081 | |||
Total expenses | 745,882 | |||
Less: Custodian fee credit (Note 1) | (1,094 | ) | ||
Net expenses | 744,788 | |||
Net investment income | 2,809,970 | |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain on: | ||||
Investment transactions | 634,588 | |||
Financial futures transactions | 8,447 | |||
643,035 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (2,572,213 | ) | ||
Financial futures contracts | 22,093 | |||
Interest rate swaps | (17,951 | ) | ||
(2,568,071 | ) | |||
Net loss on investments | (1,925,036 | ) | ||
Net Increase In Net Assets Resulting From Operations | $ | 884,934 | ||
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
Six Months Ended | Year Ended August 31, 2005 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 2,809,970 | $ | 5,927,603 | ||||
Net realized gain on investment transactions | 643,035 | 1,518,334 | ||||||
Net change in unrealized depreciation on investments | (2,568,071 | ) | (1,122,834 | ) | ||||
Net increase in net assets resulting from operations | 884,934 | 6,323,103 | ||||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (2,217,372 | ) | (4,755,516 | ) | ||||
Class B | (290,916 | ) | (807,361 | ) | ||||
Class C | (90,761 | ) | (195,207 | ) | ||||
Class Z | (75,707 | ) | (164,765 | ) | ||||
(2,674,756 | ) | (5,922,849 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | (769,339 | ) | (855,442 | ) | ||||
Class B | (108,642 | ) | (163,504 | ) | ||||
Class C | (36,438 | ) | (40,158 | ) | ||||
Class Z | (25,490 | ) | (27,913 | ) | ||||
(939,909 | ) | (1,087,017 | ) | |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 1,676,227 | 5,111,278 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 2,271,156 | 4,144,191 | ||||||
Cost of shares reacquired | (12,891,285 | ) | (22,348,182 | ) | ||||
Net decrease in net assets from Series share transactions | (8,943,902 | ) | (13,092,713 | ) | ||||
Total decrease | (11,673,633 | ) | (13,779,476 | ) | ||||
Net Assets | ||||||||
Beginning of period | 146,989,670 | 160,769,146 | ||||||
End of period | $ | 135,316,037 | $ | 146,989,670 | ||||
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 17 |
Notes to Financial Statements
Dryden Municipal Series Fund (the “Fund”), is registered under the Investment Company Act of 1940, as an open-end management investment company. The Fund was organized as a Massachusetts business trust on May 18, 1984, and consists of four series. These financial statements relate only to New Jersey Series (the “Series”). The financial statements of the other series are not presented herein. The assets of each series are invested in separate, independently managed portfolios. The Series commenced investment operations in March 1988.
The Series is diversified and seeks to achieve its investment objective of obtaining the maximum amount of income exempt from federal and New Jersey state income taxes with the minimum of risk by investing in “investment grade” tax-exempt securities whose ratings are within the four highest ratings categories by a nationally recognized statistical rating organization or, if not rated, are of comparable quality. The ability of the issuers of the securities held by the Series to meet their obligations may be affected by economic or political developments in a specific state, industry or region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund, and the Series, in the preparation of its financial statements.
Securities Valuations: The Fund values municipal securities (including commitments to purchase such securities on a “when-issued” basis) as of the close of trading on the New York Stock Exchange, on the basis of prices provided by a pricing service which uses information with respect to transactions in comparable securities and various relationships between securities in determining values. Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”) in consultation with the subadvisor, to be over-the-counter, are valued at market value using prices provided, by an independent pricing agent or principal market maker. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which
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reliable market quotations are not readily available or for which the pricing service does not provide a valuation methodology, or does not represent fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by the other mutual funds to calculate their net asset values.
Short-term securities which mature in sixty days or less are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term securities which mature in more than sixty days are valued at current market quotations.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Series each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed, the gain or loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures contracts.
The Series invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Series intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, the Series may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Dryden Municipal Series Fund/New Jersey Series | 19 |
Notes to Financial Statements
Cont’d
Options: The Series may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates with respect to securities which the Series currently owns or intends to purchase. The Series’ principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option.
If an option expires unexercised, the Series realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Series has realized a gain or loss. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gains or losses on purchased options is included in net realized gain or loss on investment transactions. Gains or losses on written options is presented separately as net realized gain or loss on written option transactions.
The Series, as writer of an option, may have no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Series bears the market risk of an unfavorable change in the price of the security underlying the written option. The Series, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts.
Interest Rate Swaps: The Series may enter into interest rate swaps. In a simple interest rate swap, one investor pays a floating rate of interest on a notional principal amount and receives a fixed rate of interest on the same notional principal amount for a specified period of time. Alternatively, an investor may pay a fixed rate and receive a floating rate. Net interest payments/receipts are included in the interest income in the Statement of Operations. Interest rate swaps were conceived as asset/liability management tools. In more complex swaps, the notional principal amount may decline (or amortize) over time.
During the term of the swap, changes in the value of the swap are recognized as unrealized gains or losses by “marking-to-market” to reflect the market value of the
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swap. When the swap is terminated, the Series will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Series’ basis in the contract, if any.
The Series is exposed to credit loss in the event of non-performance by the other party to the interest rate swap. However, the Series does not anticipate non-performance by any counterparty.
Written options, future contracts and swap contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities.
Inverse Floaters: The Series invests in variable rate securities commonly called “inverse floaters”. The interest rates on these securities have an inverse relationship to the interest rate of other securities or the value of an index. Changes in interest rate on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater’s price will be more volatile than that of a fixed-rate bond. Additionally, some of these securities contain a “leverage factor” whereby the interest rate moves inversely by a “factor” to the benchmark rate. Certain interest rate movements and other market factors can substantially affect the liquidity of inverse floating rate notes.
When-Issued/Delayed Delivery Securities: Securities purchased or sold on a when issued or delayed-delivery basis may be settled a month or more after the trade date; interest income is not accrued until settlement date. At the time the Series enters into such transactions, it instructs the custodian to segregate assets with a current value at least equal to the amount of its when-issued or delayed-delivery purchase commitments.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses on sales of securities are calculated on the identified cost basis. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on the accrual basis.
Net investment income or loss (other than distribution fees, which are charged directly to the respective class) and realized and unrealized gains or losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Federal Income Taxes: For federal income tax purposes, each series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the
Dryden Municipal Series Fund/New Jersey Series | 21 |
Notes to Financial Statements
Cont’d
requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.
Dividends and Distributions: The Series declares dividends from net investment income daily and pays such dividends monthly. Distributions of net capital gains, if any, are paid annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated realized gain or loss and paid-in capital in excess of par, when appropriate.
Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested cash earn credits which reduce the fees charged by the custodian. Such custody fee credits, if any, are presented as a reduction of gross expenses in the accompanying Statement of Operations.
Estimate: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with the management of the Series. In connection therewith, PIM is obligated to keep certain books and records of the Series. PI pays for the services of PIM, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is accrued daily and payable monthly, at an annual rate of .50 of 1% of the average daily net assets up to $1 billion and .45 of 1% of the average daily net assets in excess of $1 billion. The effective management fee rate was .50 of 1% for the six months ended February 28, 2006.
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The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares pursuant to plans of distribution, (the “Class A, B and C Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Series.
Pursuant to the Class A, B and C Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30 of 1%, .50% of 1% and up to 1% of the average daily net assets of the Class A, B and C shares, respectively. For the six months ended February 28, 2006, PIMS contractually agreed to limit such fees to .25 of 1% and .75 of 1% of the Class A and Class C shares, respectively.
PIMS has advised the Series that it has received approximately $17,000 in front-end sales charges resulting from sales of Class A Shares, during the six months ended February 28, 2006. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended February 28, 2006, it received approximately $13,500 and $0 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.
PI, PIMS and PIM are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA would be incurred at market rates. For the period from October 29, 2004 through October 28, 2005, the Fund paid a commitment fee of .075 of 1% of the unused portion of the agreement. Effective October 29, 2005, the Funds renewed the SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Fund pays a commitment fee of .0725 of 1% of the unused portion of the renewed SCA. The commitment fee is accrued daily and paid quarterly and is allocated to the Funds pro-rata based on net assets. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date of the renewed SCA is October 27, 2006. The Fund did not borrow any amounts pursuant to the SCA during the six months ended February 28, 2006.
Dryden Municipal Series Fund/New Jersey Series | 23 |
Notes to Financial Statements
Cont’d
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund pays networking fees to affiliated and unaffiliated broker/dealers. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. For the six months ended February 28, 2006, the Fund incurred approximately $7,300 in total networking fees. These amounts are included in transfer agent’s fees and expenses in the Statement of Operations.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments, for the six months ended February 28, 2006, were $12,981,457 and $18,949,583, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of February 28, 2006 were as follows:
Tax Basis | Appreciation | Depreciation | Net Unrealized Appreciation | |||
$127,361,364 | $7,352,570 | $139,387 | $7,213,183 |
The difference between book and tax basis was primarily attributed to the difference in the treatment of accretion of market discount.
Note 6. Capital
The Series offers Class A, Class B, Class C and Class Z shares. Class A shares are subject to a maximum initial sales charge of 4%. Investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%, including
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investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class C shares are sold with a CDSC of 1% during the first 12 months. Class B shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
The Series has authorized an unlimited number of shares of beneficial interest of each class at $.01 par value per share.
Transactions in shares of beneficial interest were as follows:
Class A | Shares | Amount | |||||
Six Months ended February 28, 2006: | |||||||
Shares sold | 102,829 | $ | 1,106,222 | ||||
Shares issued in reinvestment of dividends and distributions | 171,503 | 1,844,641 | |||||
Shares reacquired | (714,462 | ) | (7,697,822 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (440,130 | ) | (4,746,959 | ) | |||
Shares issued upon conversion from Class B | 231,718 | 2,512,976 | |||||
Net increase (decrease) in shares outstanding | (208,412 | ) | $ | (2,233,983 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 287,410 | $ | 3,147,458 | ||||
Shares issued in reinvestment of dividends and distributions | 301,427 | 3,306,517 | |||||
Shares reacquired | (1,670,602 | ) | (18,335,775 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (1,081,765 | ) | (11,881,800 | ) | |||
Shares issued upon conversion from Class B | 325,370 | 3,572,096 | |||||
Net increase (decrease) in shares outstanding | (756,395 | ) | $ | (8,309,704 | ) | ||
Dryden Municipal Series Fund/New Jersey Series | 25 |
Notes to Financial Statements
Cont’d
Class B | Shares | Amount | |||||
Six Months ended February 28, 2006: | |||||||
Shares sold | 21,214 | $ | 228,886 | ||||
Shares issued in reinvestment of dividends and distributions | 22,114 | 237,946 | |||||
Shares reacquired | (181,193 | ) | (1,958,592 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (137,865 | ) | (1,491,760 | ) | |||
Shares reacquired upon conversion into Class A | (231,718 | ) | (2,512,976 | ) | |||
Net increase (decrease) in shares outstanding | (369,583 | ) | $ | (4,004,736 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 71,713 | $ | 789,209 | ||||
Shares issued in reinvestment of dividends and distributions | 50,589 | 555,094 | |||||
Shares reacquired | (258,302 | ) | (2,829,665 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (136,000 | ) | (1,485,362 | ) | |||
Shares reacquired upon conversion into Class A | (325,340 | ) | (3,572,096 | ) | |||
Net increase (decrease) in shares outstanding | (461,340 | ) | $ | (5,057,458 | ) | ||
Class C | |||||||
Six Months ended February 28, 2006: | |||||||
Shares sold | 26,464 | $ | 285,286 | ||||
Shares issued in reinvestment of dividends and distributions | 7,981 | 85,838 | |||||
Shares reacquired | (32,047 | ) | (346,611 | ) | |||
Net increase (decrease) in shares outstanding | 2,398 | $ | 24,513 | ||||
Year ended August 31, 2005: | |||||||
Shares sold | 24,396 | $ | 267,605 | ||||
Shares issued in reinvestment of dividends and distributions | 14,382 | 157,792 | |||||
Shares reacquired | (69,094 | ) | (756,733 | ) | |||
Net increase (decrease) in shares outstanding | (30,316 | ) | $ | (331,336 | ) | ||
Class Z | |||||||
Six Months ended February 28, 2006: | |||||||
Shares sold | 5,146 | $ | 55,833 | ||||
Shares issued in reinvestment of dividends and distributions | 9,479 | 102,731 | |||||
Shares reacquired | (266,466 | ) | (2,888,260 | ) | |||
Net increase (decrease) in shares outstanding | (251,841 | ) | $ | (2,729,696 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 82,189 | $ | 907,006 | ||||
Shares issued in reinvestment of dividends and distributions | 11,309 | 124,788 | |||||
Shares reacquired | (38,801 | ) | (426,009 | ) | |||
Net increase (decrease) in shares outstanding | 54,697 | $ | 605,785 | ||||
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Financial Highlights
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
Dryden Municipal Series Fund
New Jersey Series
Financial Highlights
(Unaudited)
Class A | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.98 | ||
Income (loss) from investment operations | ||||
Net investment income | .22 | |||
Net realized and unrealized gains (losses) on investments | (.15 | ) | ||
Total from investment operations | .07 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.21 | ) | ||
Distributions from net realized gains | (.07 | ) | ||
Total dividends and distributions | (.28 | ) | ||
Net asset value, end of period | $ | 10.77 | ||
Total Return(b): | .70 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 113,440 | ||
Average net assets (000) | $ | 115,238 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.03 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .78 | %(d) | ||
Net investment income | 4.07 | %(d) | ||
For Class A, B, C, and Z shares: | ||||
Portfolio turnover rate | 9 | %(e) |
(a) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.80% to 4.81%. Per shares amounts and ratios for the years ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | The distributor of the Series contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% on the average daily net assets of the Class A shares. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
28 | Visit our website at www.jennisondryden.com |
Class A | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.03 | $ | 11.02 | $ | 11.25 | $ | 11.23 | $ | 10.65 | |||||||||
.43 | .44 | .47 | .53 | .52 | ||||||||||||||
.03 | .13 | (.18 | ) | .04 | .58 | |||||||||||||
.46 | .57 | .29 | .57 | 1.10 | ||||||||||||||
(.43 | ) | (.44 | ) | (.47 | ) | (.53 | ) | (.52 | ) | |||||||||
(.08 | ) | (.12 | ) | (.05 | ) | (.02 | ) | — | ||||||||||
(.51 | ) | (.56 | ) | (.52 | ) | (.55 | ) | (.52 | ) | |||||||||
$ | 10.98 | $ | 11.03 | $ | 11.02 | $ | 11.25 | $ | 11.23 | |||||||||
4.25 | % | 5.27 | % | 2.57 | % | 5.24 | % | 10.67 | % | |||||||||
$ | 117,880 | $ | 126,714 | $ | 134,271 | $ | 140,190 | $ | 140,608 | |||||||||
$ | 121,326 | $ | 132,308 | $ | 139,372 | $ | 137,516 | $ | 132,389 | |||||||||
1.00 | % | .95 | % | .94 | % | .91 | % | .95 | % | |||||||||
.75 | % | .70 | % | .69 | % | .66 | % | .70 | % | |||||||||
3.92 | % | 4.02 | % | 4.20 | % | 4.81 | % | 4.77 | % | |||||||||
19 | % | 24 | % | 42 | % | 25 | % | 22 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 29 |
Financial Highlights
(Unaudited) Cont’d
Class B | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.98 | ||
Income (loss) from investment operations | ||||
Net investment income | .21 | |||
Net realized and unrealized gains (losses) on investments | (.14 | ) | ||
Total from investment operations | .07 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.20 | ) | ||
Distributions from net realized gains | (.07 | ) | ||
Total dividends and distributions | (.27 | ) | ||
Net asset value, end of period | $ | 10.78 | ||
Total Return(b): | .66 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 15,042 | ||
Average net assets (000) | $ | 16,197 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.28 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .78 | %(c) | ||
Net investment income | 3.82 | %(c) |
(a) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.55% to 4.56%. Per shares amounts and ratios for the years ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
See Notes to Financial Statements.
30 | Visit our website at www.jennisondryden.com |
Class B | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.03 | $ | 11.02 | $ | 11.25 | $ | 11.24 | $ | 10.66 | |||||||||
.40 | .42 | .44 | .50 | .49 | ||||||||||||||
.03 | .13 | (.18 | ) | .03 | .58 | |||||||||||||
.43 | .55 | .26 | .53 | 1.07 | ||||||||||||||
(.40 | ) | (.42 | ) | (.44 | ) | (.50 | ) | (.49 | ) | |||||||||
(.08 | ) | (.12 | ) | (.05 | ) | (.02 | ) | — | ||||||||||
(.48 | ) | (.54 | ) | (.49 | ) | (.52 | ) | (.49 | ) | |||||||||
$ | 10.98 | $ | 11.03 | $ | 11.02 | $ | 11.25 | $ | 11.24 | |||||||||
3.99 | % | 5.01 | % | 2.31 | % | 4.98 | % | 10.29 | % | |||||||||
$ | 19,386 | $ | 24,565 | $ | 33,217 | $ | 37,188 | $ | 37,621 | |||||||||
$ | 21,979 | $ | 29,407 | $ | 35,925 | $ | 35,743 | $ | 40,214 | |||||||||
1.25 | % | 1.20 | % | 1.19 | % | 1.16 | % | 1.20 | % | |||||||||
.75 | % | .70 | % | .69 | % | .66 | % | .70 | % | |||||||||
3.68 | % | 3.77 | % | 3.96 | % | 4.56 | % | 4.52 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 31 |
Financial Highlights
(Unaudited) Cont’d
Class C | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.98 | ||
Income (loss) from investment operations | ||||
Net investment income | .19 | |||
Net realized and unrealized gains (losses) on investments | (.14 | ) | ||
Total from investment operations | .05 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.18 | ) | ||
Distributions from net realized gains | (.07 | ) | ||
Total dividends and distributions | (.25 | ) | ||
Net asset value, end of period | $ | 10.78 | ||
Total Return(b): | .54 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 5,470 | ||
Average net assets (000) | $ | 5,412 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.53 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .78 | %(d) | ||
Net investment income | 3.58 | %(d) |
(a) | Effective September 1, 2001 the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.30% to 4.31%. Per shares amounts and ratios for the years ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | The distributor of the Series contractually agreed to limit its distribution and Service (12b-1) fees to .75 of 1% of the average net assets of Class C shares. |
(d) | Annualized. |
See Notes to Financial Statements.
32 | Visit our website at www.jennisondryden.com |
Class C | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.03 | $ | 11.02 | $ | 11.25 | $ | 11.24 | $ | 10.66 | |||||||||
.37 | .39 | .42 | .47 | .47 | ||||||||||||||
.03 | .13 | (.18 | ) | .03 | .58 | |||||||||||||
.40 | .52 | .24 | .50 | 1.05 | ||||||||||||||
(.37 | ) | (.39 | ) | (.42 | ) | (.47 | ) | (.47 | ) | |||||||||
(.08 | ) | (.12 | ) | (.05 | ) | (.02 | ) | — | ||||||||||
(.45 | ) | (.51 | ) | (.47 | ) | (.49 | ) | (.47 | ) | |||||||||
$ | 10.98 | $ | 11.03 | $ | 11.02 | $ | 11.25 | $ | 11.24 | |||||||||
3.73 | % | 4.75 | % | 2.05 | % | 4.73 | % | 10.02 | % | |||||||||
$ | 5,546 | $ | 5,904 | $ | 5,865 | $ | 5,598 | $ | 2,956 | |||||||||
$ | 5,706 | $ | 6,066 | $ | 6,015 | $ | 4,101 | $ | 2,390 | |||||||||
1.50 | % | 1.45 | % | 1.44 | % | 1.41 | % | 1.45 | % | |||||||||
.75 | % | .70 | % | .69 | % | .66 | % | .70 | % | |||||||||
3.42 | % | 3.52 | % | 3.70 | % | 4.31 | % | 4.27 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 33 |
Financial Highlights
(Unaudited) Cont’d
Class Z | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 11.06 | ||
Income (loss) from investment operations | ||||
Net investment income | .25 | |||
Net realized and unrealized gains (losses) on investments | (.17 | ) | ||
Total from investment operations | .08 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.22 | ) | ||
Distributions from net realized gains | (.07 | ) | ||
Total dividends and distributions | (.29 | ) | ||
Net asset value, end of period | $ | 10.85 | ||
Total Return(b): | .81 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 1,364 | ||
Average net assets (000) | $ | 3,756 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | .78 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .78 | %(c) | ||
Net investment income | 4.26 | %(c) |
(a) | Effective September 1, 2001 the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 5.03% to 5.04%. Per shares amounts and ratios for the years ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
See Notes to Financial Statements.
34 | Visit our website at www.jennisondryden.com |
Class Z | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.11 | $ | 11.10 | $ | 11.33 | $ | 11.31 | $ | 10.73 | |||||||||
.46 | .47 | .50 | .56 | .55 | ||||||||||||||
.03 | .13 | (.18 | ) | .04 | .58 | |||||||||||||
.49 | .60 | .32 | .60 | 1.13 | ||||||||||||||
(.46 | ) | (.47 | ) | (.50 | ) | (.56 | ) | (.55 | ) | |||||||||
(.08 | ) | (.12 | ) | (.05 | ) | (.02 | ) | — | ||||||||||
(.54 | ) | (.59 | ) | (.55 | ) | (.58 | ) | (.55 | ) | |||||||||
$ | 11.06 | $ | 11.11 | $ | 11.10 | $ | 11.33 | $ | 11.31 | |||||||||
4.50 | % | 5.52 | % | 2.84 | % | 5.58 | % | 10.80 | % | |||||||||
$ | 4,176 | $ | 3,587 | $ | 2,998 | $ | 1,147 | $ | 312 | |||||||||
$ | 3,952 | $ | 3,877 | $ | 2,463 | $ | 598 | $ | 194 | |||||||||
.75 | % | .70 | % | .69 | % | .66 | % | .70 | % | |||||||||
.75 | % | .70 | % | .69 | % | .66 | % | .70 | % | |||||||||
4.17 | % | 4.25 | % | 4.41 | % | 5.04 | % | 5.03 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New Jersey Series | 35 |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.jennisondryden.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Series’ investment subadvisor the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Series. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Series voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Series’ website and on the Commission’s website. |
TRUSTEES |
Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Robert E. La Blanc • Douglas H. McCorkindale • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn • Clay T. Whitehead |
OFFICERS |
Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Jack Benintende, Assistant Treasurer • M. Sadiq Peshimam, Assistant Treasurer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Helene Gurian, Acting Anti-Money Laundering Compliance Officer • Lee D. Augsburger, Chief Compliance Officer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
INVESTMENT SUBADVISOR | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
CUSTODIAN | The Bank of New York | One Wall Street New York, NY 10286 | ||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 8098 Philadelphia, PA 19176 | ||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
FUND COUNSEL | Willkie Farr & Gallagher | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Series carefully before investing. The prospectus for the Series contains this and other information about the Series. An investor may obtain a prospectus by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents on-line, go to www.icsdelivery.com/prudential/funds and enroll. Instead of receiving printed documents by mail, you will receive notification via e-mail when new materials are available. You can cancel your enrollment or change your e-mail address at any time by clicking on the change/cancel enrollment option at the icsdelivery website address. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Dryden Municipal Series Fund/New Jersey Series, PO Box 13964, Philadelphia, PA 19176. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Series files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Series’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Series’ Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (800) SEC-0330 (732-0330). The Series’ schedule of portfolio holdings is also available on the Series’ website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
Dryden Municipal Series Fund/New Jersey Series | ||||||||||||
Share Class | A | B | C | Z | ||||||||
NASDAQ | PRNJX | PBNJX | PCNJX | PZNJX | ||||||||
CUSIP | 262468804 | 262468887 | 262468879 | 262468861 | ||||||||
MF138E2 IFS-A117920 Ed. 04/2006
Dryden Municipal Series Fund/ Florida Series
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
FUND TYPE
Municipal bond
OBJECTIVE
Maximize current income that is exempt from federal income taxes consistent with the preservation of capital and invest in securities that will enable its shares to be exempt from the Florida intangibles tax
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Series’ portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2006, were not audited, and accordingly, no auditor’s opinion is expressed on them.
JennisonDryden is a registered trademark of The Prudential Insurance Company of America.
April 14, 2006
Dear Shareholder:
We hope you find the semiannual report for the Florida Series informative and useful. As a JennisonDryden mutual fund shareholder, you may be thinking about where you can find additional growth opportunities. You could invest in last year’s top-performing asset class and hope history repeats itself or you could stay in cash while waiting for the “right moment” to invest.
Instead, we believe it is better to take advantage of developing domestic and global investment opportunities through a diversified portfolio of stock and bond mutual funds. A diversified asset allocation offers two potential advantages. It helps you manage downside risk by not being overly exposed to any particular asset class, plus it gives you a better opportunity to have at least some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and tolerance for risk.
JennisonDryden Mutual Funds gives you a wide range of choices that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of three leading asset managers. They are recognized and respected in the institutional market and by discerning investors for excellence in their respective strategies. JennisonDryden equity funds are advised by Jennison Associates LLC or Quantitative Management Associates LLC (QMA). Prudential Investment Management, Inc. (PIM) advises the JennisonDryden fixed income and money market funds. Jennison Associates, QMA, and PIM are registered investment advisors and Prudential Financial companies.
Thank you for choosing JennisonDryden Mutual Funds.
Sincerely,
Judy A. Rice, President
Dryden Municipal Series Fund/Florida Series
Dryden Municipal Series Fund/Florida Series | 1 |
Your Series’ Performance
Series objective
The investment objective of the Dryden Municipal Series Fund/Florida Series (the Series) is to maximize current income that is exempt from federal income taxes consistent with the preservation of capital and to invest in securities that will enable its shares to be exempt from the Florida intangibles tax. There can be no assurance that the Series will achieve its investment objective.
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The maximum initial sales charge is 4.00% (Class A shares).
Cumulative Total Returns1 as of 2/28/06 | |||||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception2 | |||||||||||
Class A | 0.69 | % | 2.85 | % | 23.53 | % | 60.12 | % | 146.95 | % | |||||
Class B | 0.56 | 2.49 | 22.01 | 55.53 | 77.51 | ||||||||||
Class C | 0.44 | 2.24 | 20.51 | 51.71 | 73.70 | ||||||||||
Class Z | 0.82 | 3.00 | 25.08 | N/A | 57.59 | ||||||||||
Lehman Brothers Municipal Bond Index3 | 0.99 | 3.87 | 30.76 | 75.81 | *** | ||||||||||
Lipper Florida (FL) Muni Debt Funds Avg.4 | 1.01 | 3.55 | 25.61 | 60.41 | **** | ||||||||||
Average Annual Total Returns1 as of 3/31/06 | |||||||||||||||
One Year | Five Years | Ten Years | Since Inception2 | ||||||||||||
Class A | –0.99 | % | 3.14 | % | 4.49 | % | 5.76 | % | |||||||
Class B | –2.07 | 3.57 | 4.62 | 4.97 | |||||||||||
Class C | 1.64 | 3.47 | 4.36 | 4.38 | |||||||||||
Class Z | 3.50 | 4.27 | N/A | 4.92 | |||||||||||
Lehman Brothers Municipal Bond Index3 | 3.81 | 5.18 | 5.87 | *** | |||||||||||
Lipper Florida (FL) Muni Debt Funds Avg.4 | 3.65 | 4.37 | 4.93 | **** |
Distributions and Yields1 as of 2/28/06 | ||||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | Taxable Equivalent 30-Day Yield5 at Tax Rates of | ||||||||||
33% | 35% | |||||||||||
Class A | $ | 0.24 | 2.65 | % | 3.96 | % | 4.08 | % | ||||
Class B | $ | 0.23 | 2.50 | 3.73 | 3.85 | |||||||
Class C | $ | 0.22 | 2.26 | 3.37 | 3.48 | |||||||
Class Z | $ | 0.26 | 3.00 | 4.48 | 4.62 |
2 | Visit our website at www.jennisondryden.com |
The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. Class A shares are subject to a maximum front-end sales charge of 4.00%. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class C shares are subject to a maximum CDSC of 5% and 1% respectively. Class Z shares are not subject to a sales charge.
1Source: Prudential Investments LLC and Lipper Inc. The average annual total returns take into account applicable sales charges. During certain periods shown, fee waivers and/or expense reimbursements were in effect. Without such fee waivers and expense reimbursements, the returns for the share classes would have been lower. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.3%, 0.5%, and 1.0% respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class Z shares are not subject to a 12b-1 fee. Except where noted, the returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. Without waiver of fees and/or expenses subsidization, the Series’ returns would be lower.
2Inception dates: Class A, 12/28/90; Class B, 8/1/94; Class C, 7/26/93; and Class Z, 12/6/96.
3The Lehman Brothers Municipal Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.
4The Lipper FL Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper FL Muni Debt Funds category for the periods noted. Funds in the Lipper Average limit their assets to those securities that are exempt from taxation in Florida.
5Taxable equivalent yields reflect federal and applicable state tax rates.
Investors cannot invest directly in an index. The returns for the Lehman Brothers Municipal Bond Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
***Lehman Brothers Municipal Bond Index Closest Month-End to Inception cumulative total returns as of 2/28/06 are 168.52% for Class A, 101.41% for Class B, 105.18% for Class C, and 67.77% for Class Z. Lehman Brothers Municipal Bond Index Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.64% for Class A, 6.12% for Class B, 5.78% for Class C, and 5.62% for Class Z.
****Lipper Average Closest Month-End to Inception cumulative total returns as of 2/28/06 are 143.26% for Class A, 84.52% for Class B, 85.68% for Class C, and 53.78% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/06 are 5.96% for Class A, 5.33% for Class B, 4.95% for Class C, and 4.65% for Class Z.
Dryden Municipal Series Fund/Florida Series | 3 |
Your Series’ Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 2/28/06 | |||
Florida St. Dept. Environ. Prot. Pres. Rev., Florida Forever, Ser. A, M.B.I.A., 7/01/2007, 5.25% | 5.8 | % | |
Palm Beach Cnty., Florida Sch. Brd., C.O.P. Ser. A., F.G.I.C., 8/01/2024, 5.00% | 4.2 | ||
Miami Homeland Defense/Neighborhood, M.B.I.A., G.O., 1/01/2020, 5.50% | 4.0 | ||
Osceola Cnty., Infrastructure Sales Surtax, Rev., A.M.B.A.C., 10/01/2017, 5.375% | 4.0 | ||
Orlando Util. Cmnty., Wtr. & Elec. Rev., Ser. C, 10/01/2021, 5.25% | 4.0 |
Issues are subject to change.
Credit Quality expressed as a percentage of net assets as of 2/28/06 | |||
Aaa | 67.5 | % | |
Aa | 10.3 | ||
A | 14.1 | ||
Baa | 1.0 | ||
Not Rated | 7.3 | ||
Total Investments | 100.2 | ||
Liabilities in excess of other assets | -0.2 | ||
Net Assets | 100.0 | % | |
Source: Moody’s rating, defaulting to S&P when not rated by Moody’s. Credit quality is subject to change.
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Fees and Expenses (Unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Series expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2005, at the beginning of the period, and held through the six-month period ended February 28, 2006.
The Series’ transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to Individual Retirement Accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of JennisonDryden or Strategic Partners Funds, including the Series, that you own. You should consider the additional fees that were charged to your Series account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and
Dryden Municipal Series Fund/Florida Series | 5 |
Fees and Expenses (continued)
expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Dryden Municipal Series Fund/ Florida Series | Beginning Account September 1, 2005 | Ending Account Value February 28, 2006 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six- Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,006.90 | 1.26 | % | $ | 6.27 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,018.55 | 1.26 | % | $ | 6.31 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,005.60 | 1.51 | % | $ | 7.51 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,017.31 | 1.51 | % | $ | 7.55 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 1,004.40 | 1.76 | % | $ | 8.75 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,016.07 | 1.76 | % | $ | 8.80 | ||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,008.20 | 1.01 | % | $ | 5.03 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.79 | 1.01 | % | $ | 5.06 |
* Series expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2006, and divided by the 365 days in the Series’ fiscal year ending August 31, 2006 (to reflect the six-month period).
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Portfolio of Investments
as of February 28, 2006 (Unaudited)
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
LONG-TERM INVESTMENTS 95.1% | |||||||||||||
Alvin, TX Indpt. Sch. Dist., G.O., Schoolhouse, Ser. A, P.S.F.G. | Aaa | 5.00% | 2/15/22 | $ | 1,010 | $ | 1,068,398 | ||||||
Anderson Ind. Sch. Bldg. Corp., Rev. Refi. 1st Mtge. | AA(c) | 5.00 | 7/15/25 | 490 | 526,142 | ||||||||
Arbor Greene Cmnty. Dev. Dist., | |||||||||||||
Assmt. Rev. | NR | 6.30 | 5/01/19 | 275 | 281,683 | ||||||||
Assmt. Rev. | NR | 5.75 | 5/01/06 | 41 | 41,084 | ||||||||
Bayside Impvt. Cmnty. Dev. Dist., Cap. Impvt. Rev., Ser. A | NR | 6.30 | 5/01/18 | 455 | 468,372 | ||||||||
Brevard Cnty. Hlth. Facs. Auth. Hlth. Care Rev., Health First, Inc. Proj. | A2 | 5.00 | 4/01/34 | 500 | 509,065 | ||||||||
Dade Cnty. Hlth. Facs. Auth. Rev., Baptist Hosp. of Miami Proj., Ser. A, E.T.M., M.B.I.A.(b) | Aaa | 6.75 | 5/01/08 | 275 | 284,587 | ||||||||
Florida St. Brd. Ed. Cap. Outlay, Pub. Ed., Ser. C, F.G.I.C., G.O. | Aaa | 5.50 | 6/01/16 | 1,000 | 1,095,940 | ||||||||
Florida St. Brd. Ed. Lottery Rev., Ser. A, F.G.I.C. | Aaa | 5.75 | 7/01/19 | 1,500 | 1,638,165 | ||||||||
Florida St. Dept. Environ. Prot. Pres. Rev., Florida Forever, Ser. A, M.B.I.A. | Aaa | 5.25 | 7/01/17 | 2,950 | 3,179,008 | ||||||||
Florida St., Rfdg. Dept. of Trans., Right of Way, | Aa1 | 5.00 | 7/01/23 | 1,500 | 1,612,785 | ||||||||
Gainesville Utility Sys. Rev. Ser. A, F.S.A. | Aaa | 5.00 | 10/01/23 | 1,000 | 1,070,750 | ||||||||
Golden St. Tobacco Secur. Corp Tobacco Settlement Rev., Asset Bkd., Ser. A, C.A.B.S., A.M.B.A.C. | Aaa | Zero | 6/01/23 | 500 | 415,540 | ||||||||
Greyhawk Landing Cmnty. Dev. Dist. Rev., Spec. Assmt., Ser. B | NR | 6.25 | 5/01/09 | 460 | 466,688 | ||||||||
Highlands Cnty. Hlth. Facs. Auth. Rev., Hosp. | |||||||||||||
Adventist/Sunbelt, Ser. A | A2 | 6.00 | 11/15/31 | 1,000 | 1,078,320 | ||||||||
Adventist Hlth., Ser. D | A2 | 5.00 | 11/15/35 | 500 | 511,595 | ||||||||
Adventist Hlth., Ser. I | A2 | 5.00 | 11/16/09 | 500 | (d) | 517,115 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 7 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Highlands FL. Cmnty. Dev. Distr. Rev. Spec. Assmt. | NR | 5.55% | 5/01/36 | $ | 500 | $ | 505,690 | |||||
Hillsborough Cnty. Aviation Auth. Rev., Tampa Int’l. Arpt., Ser. A, A.M.T., M.B.I.A. | Aaa | 5.50 | 10/01/15 | 1,000 | 1,092,750 | |||||||
Hillsborough Cnty. Ind. Dev. Auth., Cigarette Tax Alloc., H. Lee Moffitt Cancer Proj., Ser. B, A.M.B.A.C. | Aaa | 5.50 | 9/01/16 | 1,840 | 2,022,197 | |||||||
Honolulu City & Cnty. Wste. Wtr. Sys. Rev., Ser. A, F.G.I.C. | Aaa | 5.00 | 7/01/24 | 500 | 531,810 | |||||||
Indigo Cmnty. Dev. Dist. Cap. Impvt. Rev., Ser. B | NR | 6.40 | 5/01/06 | 10 | 10,002 | |||||||
Jacksonville Elec. Auth. Rev. St. Johns Rvr. Pwr. Park Issue 2, Ser. 7, C.A.B.S. | Aa2 | Zero | 10/01/10 | 1,000 | 844,690 | |||||||
Jacksonville Sales Tax Rev., | ||||||||||||
A.M.B.A.C. | Aaa | 5.50 | 10/01/18 | 1,000 | 1,086,450 | |||||||
F.G.I.C. | Aaa | 5.375 | 10/01/18 | 1,000 | 1,088,000 | |||||||
Jacksonville Swr. & Solid Wste. Disp. Facs. Rev., Anheuser Busch Proj., A.M.T. | A1 | 5.875 | 2/01/36 | 1,000 | 1,023,860 | |||||||
Jacksonville Wtr. & Swr. Dev. Rev., United Wtr. Proj., A.M.T., A.M.B.A.C. | Aaa | 6.35 | 8/01/25 | 1,500 | 1,533,510 | |||||||
Leon Cnty. Cap. Impvt. Rev., Rfdg., A.M.B.A.C. | Aaa | 5.00 | 10/01/21 | 1,775 | 1,912,243 | |||||||
Maryland St. Hlth. & Higher Ed. Facs. Auth. Rev., Univ. Maryland Med. Systems(b) | A3 | 6.75 | 7/01/10 | 500 | 568,550 | |||||||
Miami Dade Cnty. Sch. Brd. Rev., Ser. A, F.S.A.(b) | Aaa | 6.00 | 10/01/09 | 1,000 | 1,084,710 | |||||||
Miami Homeland Defense/Neighborhood, M.B.I.A., G.O. | Aaa | 5.50 | 1/01/20 | 2,000 | 2,173,240 | |||||||
Northern Palm Beach Cnty. Rfdg. Wtr. Ctrl. 8 Impvt. Unit | Aaa | 5.00 | 8/01/22 | 1,230 | 1,330,147 | |||||||
Orlando Util. Cmnty., Wtr. & Elec. Rev., Ser. C | Aa1 | 5.25 | 10/01/21 | 2,000 | 2,157,340 | |||||||
Osceola Cnty., Infrastructure Sales Surtax, Rev., A.M.B.A.C. | Aaa | 5.375 | 10/01/17 | 1,995 | 2,170,560 |
See Notes to Financial Statements.
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Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Palm Beach Cnty. Florida Sch. Brd., C.O.P., | ||||||||||||
Ser. A, F.G.I.C. | Aaa | 5.00% | 8/01/24 | $ | 2,150 | $ | 2,269,368 | |||||
Ser. A, F.G.I.C. | Aaa | 5.00 | 8/01/29 | 1,500 | 1,572,420 | |||||||
Palm Beach Cnty. Pub. Impvt. Rev., Conv. Ctr. Proj., F.G.I.C.(b) | Aaa | 5.50 | 11/01/11 | 1,055 | 1,157,398 | |||||||
Paseo Cmnty. Dev. Dist. Cap. Impvt. Rev., Ser. A | NR | 5.40 | 5/01/36 | 350 | 351,603 | |||||||
Pembroke Pines Pub. Impvt. Rev., A.M.B.A.C. | Aaa | 5.50 | 10/01/16 | 1,360 | 1,495,973 | |||||||
Polk Cnty. Sch. Dist. Sales Tax Rev., | ||||||||||||
Sch. Impvt., F.S.A. | Aaa | 5.25 | 10/01/17 | 1,000 | 1,098,480 | |||||||
Sch. Impvt., F.S.A. | Aaa | 5.25 | 10/01/18 | 1,000 | 1,098,480 | |||||||
Puerto Rico Comwlth., G.O., R.I.T.E.S., 642B, M.B.I.A.(h) | NR | 8.89(f) | 7/01/12 | 1,500 | 1,864,440 | |||||||
Puerto Rico Elec. Pwr. Auth. Pwr. Rev., Ser. RR, X.L.C.A. | Aaa | 5.00 | 7/01/25 | 1,000 | 1,065,210 | |||||||
Puerto Rico Municipal Finance Agcy. G.O. | Baa2 | 5.25 | 8/01/25 | 500 | 536,875 | |||||||
Puerto Rico Pub. Fin. Corp., Comnwlth. Approp. Rev., Ser. E(b) | Aaa | 5.70 | 2/01/10 | 500 | 539,940 | |||||||
Utah St. Hsg. Fin. Agcy., Sngl. Fam. Mtge. Rev., Ser. F, Class II, A.M.T. | Aa2 | 6.125 | 1/01/27 | 675 | 706,394 | |||||||
Virgin Islands Pub. Fin. Auth. Rev., Gross Rcpts. Taxes Ln. Nts., F.S.A. | Aaa | 5.25 | 10/01/18 | 1,000 | 1,103,090 | |||||||
West Palm Beach Fla. Cmnty. Redev. Tax Allocation | A(c) | 5.00 | 3/01/35 | 1,000 | 1,019,090 | |||||||
Total long-term investments | 51,779,747 | |||||||||||
SHORT-TERM INVESTMENTS 5.1% | ||||||||||||
Florence Cnty. SC Frn. Sld. Wste. Rev. Roche Carolina, Inc., Ser. 1997 A.M.T., F.R.D.D.(e) | A-1+(c) | 3.05 | 3/01/06 | 200 | 200,000 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 9 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Florida Higher Edl. Facs. Fing, St. Thomas Univ. F.R.D.D.(e) | A-1+(c) | 2.96% | 3/01/06 | $ | 100 | $ | 100,000 | ||||||
Municipal Secs. Trust Ctfs., F.R.D.D., 144A, G.O.(e)(g) | A-1(c) | 3.05 | 3/01/06 | 2,200 | 2,200,000 | ||||||||
Port Bellingham Wash. Indl. Dev. Corp. Rev., F.R.D.D.(e) | VMIG1 | 3.04 | 3/01/06 | 250 | 250,000 | ||||||||
Total short-term investments | 2,750,000 | ||||||||||||
Total Investments 100.2% | 54,529,747 | ||||||||||||
Liabilities in excess of other | (82,454 | ) | |||||||||||
Net Assets 100% | $ | 54,447,293 | |||||||||||
(a) | The following abbreviations are used in portfolio descriptions: |
A.M.B.A.C.—American Municipal Bond Assurance Corporation.
A.M.T.—Alternative Minimum Tax.
C.A.B.S.—Capital Appreciation Bonds.
C.O.P.—Certificates of Participation.
E.T.M.—Escrowed to Maturity.
F.G.I.C.—Financial Guaranty Insurance Company.
F.R.D.D.—Floating Rate (daily) Demand Note(e).
F.S.A.—Financial Security Assurance.
G.O.—General Obligation.
M.B.I.A.—Municipal Bond Insurance Association.
P.S.F.G.—Public School Funding Guaranty.
R.I.T.E.S.—Residual Interest Tax Exempt Securities Receipts.
X.L.C.A.—XL Capital Assurance.
(b) | All or partial pre-refunded issues are secured by escrowed cash and/or direct U.S.guaranteed obligations. |
(c) | Standard & Poor’s Rating. |
(d) | Partial principal amount pledged as collateral for financial futures contracts. |
(e) | For purposes of amortized cost valuation, the maturity date of Floating Rate Demand Notes is considered to be the later of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. |
(f) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate at period end. |
(g) | Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid. |
(h) | Indicates a security that has been deemed illiquid. |
See Notes to Financial Statements.
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(i) | Liabilities in excess of other assets include net unrealized appreciation (depreciation) on financial futures as follows: |
Open futures contracts outstanding at February 28, 2006:
Number of Contracts | Type | Expiration Date | Value at Trade Date | Value at February 28, | Unrealized Appreciation/ (Depreciation) | |||||||||
Long Positions: | ||||||||||||||
10 | U.S. Treasury 5 yr Notes | June 2006 | $ | 1,051,248 | $ | 1,051,875 | $ | 627 | ||||||
Short Positions: | ||||||||||||||
26 | U.S. Treasury 10 yr Notes | June 2006 | 2,796,880 | 2,805,562 | (8,682 | ) | ||||||||
5 | U.S. Treasury 30 yr Bond | June 2006 | 564,852 | 565,469 | (617 | ) | ||||||||
$ | (8,672 | ) | ||||||||||||
The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of February 28, 2006 were as follows:
Special Tax/Assessment District | 38.1 | % | |
General Obligation | 15.3 | ||
Lease Baked Certificate of Participation | 10.0 | ||
Power | 9.4 | ||
Healthcare | 6.4 | ||
Other | 5.1 | ||
Short-Term Investments | 5.1 | ||
Water & Sewer | 3.8 | ||
Transportation | 2.0 | ||
Corporate Backed IDB & PCR | 1.9 | ||
Housing | 1.3 | ||
Education | 1.0 | ||
Tobacco Appropriated | 0.8 | ||
Total Investments | 100.2 | ||
Liabilities in excess of other assets | (0.2 | ) | |
Total | 100 | % | |
Industry classification is subject to change.
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 11 |
Statement of Assets and Liabilities
as of February 28, 2006 (Unaudited)
Assets | |||
Investments, at value (cost $52,467,611) | $ | 54,529,747 | |
Cash | 75,296 | ||
Interest receivable | 685,925 | ||
Receivable for Series shares sold | 24,002 | ||
Prepaid expenses | 3,742 | ||
Total assets | 55,318,712 | ||
Liabilities | |||
Payable for investments purchased | 523,496 | ||
Payable for Series shares reacquired | 151,094 | ||
Accrued expenses | 132,953 | ||
Management fee payable | 20,978 | ||
Distribution fee payable | 12,769 | ||
Dividends payable | 9,918 | ||
Due to broker—variation margin | 9,559 | ||
Deferred Trustees’ fees | 7,593 | ||
Transfer agent fee payable | 3,059 | ||
Total liabilities | 871,419 | ||
Net Assets | $ | 54,447,293 | |
Net assets were comprised of: | |||
Shares of beneficial interest, at par | $ | 53,854 | |
Paid-in capital in excess of par | 52,223,483 | ||
52,277,337 | |||
Undistributed net investment income | 53,947 | ||
Accumulated net realized gain on investments | 62,545 | ||
Net unrealized appreciation on investments | 2,053,464 | ||
Net assets, February 28, 2006 | $ | 54,447,293 | |
See Notes to Financial Statements.
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Class A | |||
Net asset value and redemption price per share ($44,320,189 ÷ 4,383,767 shares of beneficial interest issued and outstanding) | $ | 10.11 | |
Maximum sales charge (4% of offering price) | .42 | ||
Maximum offering price to public | $ | 10.53 | |
Class B | |||
Net asset value, offering price and redemption price per share ($5,914,860 ÷ 584,983 shares of beneficial interest issued and outstanding) | $ | 10.11 | |
Class C | |||
Net asset value, offering price and redemption price per share ($3,395,897 ÷ 335,889 shares of beneficial interest issued and outstanding) | $ | 10.11 | |
Class Z | |||
Net asset value, offering price and redemption price per share ($816,347 ÷ 80,734 shares of beneficial interest issued and outstanding) | $ | 10.11 | |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 13 |
Statement of Operations
Six Months Ended February 28, 2006 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest | $ | 1,330,025 | ||
Expenses | ||||
Management fee | 142,979 | |||
Distribution fee—Class A | 57,711 | |||
Distribution fee—Class B | 16,729 | |||
Distribution fee—Class C | 13,127 | |||
Custodian’s fees and expenses | 53,000 | |||
Registration fees | 25,000 | |||
Reports to shareholders | 17,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $9,400) | 16,000 | |||
Legal fees and expenses | 12,000 | |||
Audit fee | 11,000 | |||
Trustees’ fees | 6,000 | |||
Miscellaneous | 6,982 | |||
Total expenses | 377,528 | |||
Less Custodian fee credit (Note 1) | (709 | ) | ||
Net expenses | 376,819 | |||
Net investment income | 953,206 | |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain on: | ||||
Investment transactions | 198,661 | |||
Financial futures transactions | 107,436 | |||
306,097 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,003,659 | ) | ||
Financial futures contracts | 76,023 | |||
(927,636 | ) | |||
Net loss on investments | (621,539 | ) | ||
Net Increase In Net Assets Resulting From Operations | $ | 331,667 | ||
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
Six Months Ended February 28, 2006 | Year Ended August 31, 2005 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 953,206 | $ | 2,227,847 | ||||
Net realized gain on investments | 306,097 | 79,118 | ||||||
Net change in unrealized appreciation on investments | (927,636 | ) | (8,365 | ) | ||||
Net increase in net assets resulting from operations | 331,667 | 2,298,600 | ||||||
Dividends and distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (781,455 | ) | (1,808,381 | ) | ||||
Class B | (104,640 | ) | (333,427 | ) | ||||
Class C | (50,489 | ) | (137,043 | ) | ||||
Class Z | (15,104 | ) | (39,306 | ) | ||||
(951,688 | ) | (2,318,157 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | (342,761 | ) | (799,980 | ) | ||||
Class B | (52,474 | ) | (172,852 | ) | ||||
Class C | (25,455 | ) | (75,525 | ) | ||||
Class Z | (6,046 | ) | (17,105 | ) | ||||
(426,736 | ) | (1,065,462 | ) | |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 1,181,337 | 3,401,766 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 717,552 | 1,581,782 | ||||||
Cost of shares reacquired | (7,183,982 | ) | (14,640,480 | ) | ||||
Net decrease in net assets from Series share transactions | (5,285,093 | ) | (9,656,932 | ) | ||||
Total decrease | (6,331,850 | ) | (10,741,951 | ) | ||||
Net Assets | ||||||||
Beginning of period | 60,779,143 | 71,521,094 | ||||||
End of period(a) | $ | 54,447,293 | $ | 60,779,143 | ||||
(a) Includes undistributed net investment income of: | $ | 53,947 | $ | 52,429 | ||||
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 15 |
Notes to Financial Statements
(Unaudited)
Dryden Municipal Series Fund (the “Fund”), is registered under the Investment Company Act of 1940, as an open-end management investment company. The Fund was organized as a Massachusetts business trust on May 18, 1984 and consists of four series. These financial statements relate only to Florida Series (the “Series”). The financial statements of the other series are not presented herein. The assets of each series are invested in separate, independently managed portfolios. The Series commenced investment operations on December 28, 1990. The Series is non-diversified and seeks to achieve its investment objective of providing the maximum amount of income that is exempt from federal income taxes with the minimum of risk, and investing in securities which will enable its shares to be exempt from the Florida intangibles tax by investing in “investment grade” tax-exempt securities whose ratings are within the four highest ratings categories by a nationally recognized statistical rating organization or, if not rated, are of comparable quality. The ability of the issuers of the securities held by the Series to meet their obligations may be affected by economic developments in a specific state, industry or region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Series, in the preparation of its financial statements.
Securities Valuation: The Series values municipal securities (including commitments to purchase such securities on a “when-issued” basis) as of the close of trading on the New York Stock Exchange, on the basis of prices provided by a pricing service which uses information with respect to transactions in comparable securities and various relationships between securities in determining values. Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”) in consultation with the subadvisor, to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker.
Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or
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board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which reliable market quotations are not readily available or for which the pricing service does not provide a valuation methodology, or does not present fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment advisor regarding the issuer or the markets or industry in which it operates.
Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Short-term securities which mature in sixty days or less are valued at amortized cost, which approximates market value. Short-term securities which mature in more than sixty days are valued at current market quotations. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost.
Restricted Securities: The Series may hold up to 10% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities include registration rights under which the Series may demand registration by the issuers. Restricted securities, sometimes referred to as private placements, are valued pursuant to the valuation procedures noted above.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin”. Subsequent payments, known as “variation margin”, are made or received by the Series each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed, the gain or
Dryden Municipal Series Fund/Florida Series | 17 |
Notes to Financial Statements
Cont’d
loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures transactions.
The Series invests in financial futures contracts in order to hedge existing portfolio securities, or securities the Series intends to purchase, against fluctuations in value caused by changes in prevailing interest rates. Should interest rates move unexpectedly, the Series may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Inverse Floaters: The Series invests in variable rate securities commonly called “inverse floaters”. The interest rates on these securities have an inverse relationship to the interest rate of other securities or the value of an index. Changes in interest rates on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater’s price will be more volatile than that of a fixed-rate bond.
Additionally, some of these securities contain a “leverage factor” whereby the interest rate moves inversely by a “factor” to the benchmark rate. Certain interest rate movements and other market factors can substantially affect the liquidity of inverse floating rate notes.
Options: The Series may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates with respect to securities which the Series currently owns or intends to purchase. The Series’ principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option.
If an option expires unexercised, the Series realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Series has realized a gain or loss. The difference between the
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premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in net realized gain or loss on investment transactions. Gain or loss on written options is presented separately as net realized gain or loss on written options.
The Series, as writer of an option, has no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Series bears the market risk of an unfavorable change in the price of the security underlying the written option. The Series, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts.
Written options, financial future contracts and swap contracts involve elements of both market and certain risk in excess of the amounts reflected in the Statement of Assets and Liabilities.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses on sales of investments are calculated on the identified cost basis. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on the accrual basis.
Net investment income or loss (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Federal Income Taxes: For federal income tax purposes, each series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.
Dividends and Distributions: The Series declares daily dividends from net investment income. Payment of dividends is made monthly. Distributions of net capital gains, if any, are made annually.
Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net
Dryden Municipal Series Fund/Florida Series | 19 |
Notes to Financial Statements
Cont’d
investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested assets earn credits which reduce the fees charged by the custodian. Such custody fee credits are presented as reduction of gross expenses in the accompanying Statement of Operations.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that effect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM furnishes investment advisory services in connection with the management of the Series. In connection therewith, PIM is obligated to keep certain books and records of the Series. PI pays for the services of PIM, the compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly, at an annual rate of .50 of 1% of the average daily net assets of the Series.
The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares, pursuant to plans of distribution (the “Class A, B and C Plans”) regardless of expenses actually incurred by it. The distribution fees for Class A, Class B and Class C shares fees are accrued daily and payable monthly. No distribution or service fees were paid to PIMS as distributor of the Class Z shares of the Series.
Pursuant to the Class A, B and C Plans, the Series compensates PIMS for distribution- related activities at an annual rate of up to .30 of 1%, .50 of 1% and 1% of the
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average daily net assets of the Class A, B and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of 1%, and .75 of 1% of the average daily net assets of the Class A and Class C shares, respectively.
PIMS has advised the Series that they have received approximately $8,700 in front-end sales charges resulting from sales of Class A shares during the six months ended February 28, 2006. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended February 28, 2006, they received approximately $8,200 and 0 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively.
PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA would be incurred at market rates. For the period from October 29, 2004 through October 28, 2005, the Fund paid a commitment fee of .075 of 1% of the unused portion of the agreement. Effective October 29, 2005, the Funds renewed the SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Fund pays a commitment fee of .0725 of 1% of the unused portion of the renewed SCA. The commitment fee is accrued daily and paid quarterly and is allocated to the Funds pro-rata based on net assets. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date of the renewed SCA is October 27, 2006. The Fund did not borrow any amounts pursuant to the SCA during the six months ended February 28, 2006.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”) an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Series pays networking fees to affiliated and unaffiliated broker/dealers. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. During the six months ended
Dryden Municipal Series Fund/Florida Series | 21 |
Notes to Financial Statements
Cont’d
February 28, 2006, the Series incurred approximately $10,600 in total networking fees. These amounts are included in transfer agent’s fees and expenses in the Statement of Operations.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Series, excluding short-term investments, for the six months ended February 28, 2006 were $6,820,923 and $14,379,703, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of February 28, 2006 were as follows:
Tax Basis of Investments | Appreciation | Depreciation | Net Unrealized Appreciation | |||
$52,464,348 | $2,066,803 | $1,404 | $2,065,399 |
The difference between book and tax basis was primarily attributable to the difference in the treatment of accreting market discount and premium amortization.
Note 6. Capital
The Series offers Class A, Class B, Class C, and Class Z shares. Class A shares are subject to a maximum front-end sales charge of 4%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are not subject to an initial sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%, including investors who purchase their shares through brokerdealers affiliated with Prudential. Class B shares are subject to a CDSC of 5%, which decreases by 1% annually to 1% in the fifth and sixth years and 0% in the seventh year. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. The CDSC for Class C shares is 1% for shares redeemed within 12 months of purchase. An exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
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The Series has authorized an unlimited number of shares of beneficial interest of each class at $.01 par value per share.
Transactions in shares of beneficial interest for the six months ended February 28, 2006 and for the fiscal year ended August 31, 2005 were as follows:
Class A | Shares | Amount | |||||
Six months ended February 28, 2006: | |||||||
Shares sold | 109,887 | $ | 1,103,458 | ||||
Shares issued in reinvestment of dividends and distributions | 56,319 | 567,494 | |||||
Shares reacquired | (573,104 | ) | (5,785,282 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (406,898 | ) | (4,114,330 | ) | |||
Shares issued upon conversion from Class B | 131,456 | 1,332,981 | |||||
Net increase (decrease) in shares outstanding | (275,442 | ) | $ | (2,781,349 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 219,436 | $ | 2,263,813 | ||||
Shares issued in reinvestment of dividends and distributions | 113,805 | 1,170,316 | |||||
Shares reacquired | (1,001,385 | ) | (10,296,118 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (668,144 | ) | (6,861,989 | ) | |||
Shares issued upon conversion from Class B | 246,685 | 2,536,235 | |||||
Net increase (decrease) in shares outstanding | (421,459 | ) | $ | (4,325,754 | ) | ||
Class B | |||||||
Six months ended February 28, 2006: | |||||||
Shares sold | 5,705 | $ | 58,171 | ||||
Shares issued in reinvestment of dividends and distributions | 8,066 | 81,276 | |||||
Shares reacquired | (81,918 | ) | (825,944 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (68,147 | ) | (686,497 | ) | |||
Shares reacquired upon conversion into Class A | (131,456 | ) | (1,332,981 | ) | |||
Net increase (decrease) in shares outstanding | (199,603 | ) | $ | (2,019,478 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 78,772 | $ | 808,074 | ||||
Shares issued in reinvestment of dividends and distributions | 20,874 | 214,671 | |||||
Shares reacquired | (238,206 | ) | (2,445,818 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (138,560 | ) | (1,423,073 | ) | |||
Shares reacquired upon conversion into Class A | (246,566 | ) | (2,536,235 | ) | |||
Net increase (decrease) in shares outstanding | (385,126 | ) | $ | (3,959,308 | ) | ||
Dryden Municipal Series Fund/Florida Series | 23 |
Notes to Financial Statements
Cont’d
Class C | Shares | Amount | |||||
Six months ended February 28, 2006: | |||||||
Shares sold | 1,748 | $ | 17,571 | ||||
Shares issued in reinvestment of dividends and distributions | 4,788 | 48,241 | |||||
Shares reacquired | (45,336 | ) | (458,317 | ) | |||
Net increase (decrease) in shares outstanding | (38,800 | ) | $ | (392,505 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 12,412 | $ | 127,041 | ||||
Shares issued in reinvestment of dividends and distributions | 13,944 | 143,431 | |||||
Shares reacquired | (135,321 | ) | (1,387,930 | ) | |||
Net increase (decrease) in shares outstanding | (108,965 | ) | $ | (1,117,458 | ) | ||
Class Z | |||||||
Six months ended February 28, 2006: | |||||||
Shares sold | 212 | $ | 2,137 | ||||
Shares issued in reinvestment of dividends and distributions | 2,037 | 20,541 | |||||
Shares reacquired | (11,258 | ) | (114,439 | ) | |||
Net increase (decrease) in shares outstanding | (9,009 | ) | $ | (91,761 | ) | ||
Year ended August 31, 2005: | |||||||
Shares sold | 19,520 | $ | 202,838 | ||||
Shares issued in reinvestment of dividends and distributions | 5,187 | 53,364 | |||||
Shares reacquired | (49,543 | ) | (510,614 | ) | |||
Net increase (decrease) in shares outstanding | (24,836 | ) | $ | (254,412 | ) | ||
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Financial Highlights
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
Dryden Municipal Series Fund
Financial Highlights
(Unaudited)
Class A | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.29 | ||
Income from investment operations | ||||
Net investment income | .17 | |||
Net realized and unrealized gain (loss) on investment transactions | (.11 | ) | ||
Total from investment operations | .06 | |||
Less Distributions | ||||
Dividends from net investment income | (.17 | ) | ||
Distributions in excess of net investment income | — | |||
Distributions from net realized gains | (.07 | ) | ||
Total distributions | (.24 | ) | ||
Net asset value, end of period | $ | 10.11 | ||
Total Investment Return(a): | .69 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 44,320 | ||
Average net assets (000) | $ | 46,552 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(d) | 1.26 | % | ||
Expenses, excluding distribution and service (12b-1) fees | 1.01 | % | ||
Net investment income | 3.39 | % | ||
For Class A, B, C and Z shares: | ||||
Portfolio turnover rate | 12 | % |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. |
(b) | Less than $0.005 per share. |
(c) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and begin accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.69% to 4.71%. Per share amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(d) | The distributor of the Series has contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% of the average daily net assets of the Class A shares. |
See Notes to Financial Statements.
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Class A | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(c) | 2001 | ||||||||||||||
$ | 10.44 | $ | 10.49 | $ | 10.68 | $ | 10.70 | $ | 10.23 | |||||||||
.35 | .36 | .42 | .49 | .51 | ||||||||||||||
.03 | .24 | (.17 | ) | (.02 | ) | .47 | ||||||||||||
.38 | .60 | .25 | .47 | .98 | ||||||||||||||
(.37 | ) | (.37 | ) | (.42 | ) | (.49 | ) | (.51 | ) | |||||||||
— | — | — | — | — | (b) | |||||||||||||
(.16 | ) | (.28 | ) | (.02 | ) | — | — | |||||||||||
(.53 | ) | (.65 | ) | (.44 | ) | (.49 | ) | (.51 | ) | |||||||||
$ | 10.29 | $ | 10.44 | $ | 10.49 | $ | 10.68 | $ | 10.70 | |||||||||
3.71 | % | 5.82 | % | 2.32 | % | 4.49 | % | 9.91 | % | |||||||||
$ | 47,931 | $ | 53,058 | $ | 59,498 | $ | 63,463 | $ | 67,712 | |||||||||
$ | 50,843 | $ | 57,047 | $ | 63,290 | $ | 64,601 | $ | 68,365 | |||||||||
1.20 | % | 1.13 | % | 1.07 | % | 1.01 | % | .98 | % | |||||||||
.95 | % | .88 | % | .82 | % | .76 | % | .73 | % | |||||||||
3.42 | % | 3.48 | % | 3.94 | % | 4.71 | % | 4.89 | % | |||||||||
22 | % | 45 | % | 60 | % | 41 | % | 36 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 27 |
Financial Highlights
(Unaudited) Cont’d
Class B | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.29 | ||
Income from investment operations | ||||
Net investment income | .16 | |||
Net realized and unrealized gain (loss) on investment transactions | (.11 | ) | ||
Total from investment operations | .05 | |||
Less Distributions | ||||
Dividends from net investment income | (.16 | ) | ||
Distributions in excess of net investment income | — | |||
Distributions from net realized gains | (.07 | ) | ||
Total distributions | (.23 | ) | ||
Net asset value, end of period | $ | 10.11 | ||
Total Investment Return(a): | .56 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 5,915 | ||
Average net assets (000) | $ | 6,747 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.51 | % | ||
Expenses, excluding distribution and service (12b-1) fees | 1.01 | % | ||
Net investment income | 3.13 | % |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. |
(b) | Less than $0.005 per share. |
(c) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and begin accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.45% to 4.47%. Per share amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
See Notes to Financial Statements.
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Class B | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(c) | 2001 | ||||||||||||||
$ | 10.44 | $ | 10.50 | $ | 10.68 | $ | 10.71 | $ | 10.23 | |||||||||
.33 | .34 | .40 | .47 | .48 | ||||||||||||||
.02 | .22 | (.17 | ) | (.03 | ) | .48 | ||||||||||||
.35 | .56 | .23 | .44 | .96 | ||||||||||||||
(.34 | ) | (.34 | ) | (.39 | ) | (.47 | ) | (.48 | ) | |||||||||
— | — | — | — | — | (b) | |||||||||||||
(.16 | ) | (.28 | ) | (.02 | ) | — | — | |||||||||||
(.50 | ) | (.62 | ) | (.41 | ) | (.47 | ) | (.48 | ) | |||||||||
$ | 10.29 | $ | 10.44 | $ | 10.50 | $ | 10.68 | $ | 10.71 | |||||||||
3.45 | % | 5.46 | % | 2.16 | % | 4.24 | % | 9.64 | % | |||||||||
$ | 8,070 | $ | 12,215 | $ | 16,635 | $ | 22,996 | $ | 25,551 | |||||||||
$ | 10,030 | $ | 14,296 | $ | 19,636 | $ | 23,430 | $ | 24,655 | |||||||||
1.45 | % | 1.38 | % | 1.32 | % | 1.26 | % | 1.23 | % | |||||||||
.95 | % | .88 | % | .82 | % | .76 | % | .73 | % | |||||||||
3.18 | % | 3.23 | % | 3.70 | % | 4.47 | % | 4.64 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 29 |
Financial Highlights
(Unaudited) Cont’d
Class C | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.29 | ||
Income from investment operations | ||||
Net investment income | .15 | |||
Net realized and unrealized gain (loss) on investment transactions | (.11 | ) | ||
Total from investment operations | .04 | |||
Less Distributions | ||||
Dividends from net investment income | (.15 | ) | ||
Distributions in excess of net investment income | — | |||
Distributions from net realized gains | (.07 | ) | ||
Total distributions | (.22 | ) | ||
Net asset value, end of period | $ | 10.11 | ||
Total Investment Return(a): | .44 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 3,396 | ||
Average net assets (000) | $ | 3,529 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(d) | 1.76 | % | ||
Expenses, excluding distribution and service (12b-1) fees | 1.01 | % | ||
Net investment income | 2.89 | % |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. |
(b) | Less than $0.005 per share. |
(c) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and begin accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.20% to 4.22%. Per share amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(d) | The distributor of the Series has contractually agreed to limit its distribution and service (12b-1) fees to .75 of 1% of the average daily net assets of the Class C shares. |
See Notes to Financial Statements.
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Class C | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(c) | 2001 | ||||||||||||||
$ | 10.44 | $ | 10.50 | $ | 10.68 | $ | 10.70 | $ | 10.23 | |||||||||
.30 | .31 | .38 | .44 | .46 | ||||||||||||||
.02 | .22 | (.17 | ) | (.02 | ) | .47 | ||||||||||||
.32 | .53 | .21 | .42 | .93 | ||||||||||||||
(.31 | ) | (.31 | ) | (.37 | ) | (.44 | ) | (.46 | ) | |||||||||
— | — | — | — | — | (b) | |||||||||||||
(.16 | ) | (.28 | ) | (.02 | ) | — | — | |||||||||||
(.47 | ) | (.59 | ) | (.39 | ) | (.44 | ) | (.46 | ) | |||||||||
$ | 10.29 | $ | 10.44 | $ | 10.50 | $ | 10.68 | $ | 10.70 | |||||||||
3.19 | % | 5.20 | % | 1.91 | % | 3.99 | % | 9.37 | % | |||||||||
$ | 3,854 | $ | 5,051 | $ | 5,693 | $ | 5,848 | $ | 5,857 | |||||||||
$ | 4,461 | $ | 5,443 | $ | 6,045 | $ | 5,806 | $ | 5,756 | |||||||||
1.70 | % | 1.63 | % | 1.57 | % | 1.51 | % | 1.48 | % | |||||||||
.95 | % | .88 | % | .82 | % | .76 | % | .73 | % | |||||||||
2.93 | % | 2.98 | % | 3.44 | % | 4.22 | % | 4.39 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 31 |
Financial Highlights
(Unaudited) Cont’d
Class Z | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.29 | ||
Income from investment operations | ||||
Net investment income | .19 | |||
Net realized and unrealized gain (loss) on investment transactions | (.11 | ) | ||
Total from investment operations | .08 | |||
Less Distributions | ||||
Dividends from net investment income | (.19 | ) | ||
Distributions in excess of net investment income | — | |||
Distributions from net realized gains | (.07 | ) | ||
Total distributions | (.26 | ) | ||
Net asset value, end of period | $ | 10.11 | ||
Total Investment Return(a): | .82 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 816 | ||
Average net assets (000) | $ | 838 | ||
Ratios to average net assets: | ||||
Expenses, including distribution fees | 1.01 | % | ||
Expenses, excluding distribution fees | 1.01 | % | ||
Net investment income | 3.64 | % |
(a) | Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. |
(b) | Less than $0.005 per share. |
(c) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and begin accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.93% to 4.96%. Per share amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
See Notes to Financial Statements.
32 | Visit our website at www.jennisondryden.com |
Class Z | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(c) | 2001 | ||||||||||||||
$ | 10.44 | $ | 10.50 | $ | 10.68 | $ | 10.70 | $ | 10.22 | |||||||||
.38 | .39 | .46 | .52 | .53 | ||||||||||||||
.02 | .22 | (.17 | ) | (.02 | ) | .48 | ||||||||||||
.40 | .61 | .29 | .50 | 1.01 | ||||||||||||||
(.39 | ) | (.39 | ) | (.45 | ) | (.52 | ) | (.53 | ) | |||||||||
— | — | — | — | — | (b) | |||||||||||||
(.16 | ) | (.28 | ) | (.02 | ) | — | — | |||||||||||
(.55 | ) | (.67 | ) | (.47 | ) | (.52 | ) | (.53 | ) | |||||||||
$ | 10.29 | $ | 10.44 | $ | 10.50 | $ | 10.68 | $ | 10.70 | |||||||||
3.97 | % | 5.99 | % | 2.68 | % | 4.85 | % | 10.18 | % | |||||||||
$ | 924 | $ | 1,197 | $ | 1,297 | $ | 1,289 | $ | 788 | |||||||||
$ | 1,029 | $ | 1,203 | $ | 1,567 | $ | 1,012 | $ | 579 | |||||||||
.95 | % | .88 | % | .82 | % | .76 | % | .73 | % | |||||||||
.95 | % | .88 | % | .82 | % | .76 | % | .73 | % | |||||||||
3.68 | % | 3.74 | % | 4.14 | % | 4.96 | % | 5.13 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Florida Series | 33 |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.jennisondryden.com |
PROXY VOTING
The Board of Trustees of the Fund has delegated to the Series’ investment subadvisor the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Series. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Series voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Series’ website and on the Commission’s website.
TRUSTEES
Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Robert E. La Blanc • Douglas H. McCorkindale • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn • Clay T. Whitehead
OFFICERS
Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Jack Benintende, Acting Treasurer • M. Sadiq Peshimam, Assistant Treasurer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Helene Gurian, Acting Anti-Money Laundering Compliance Officer • Lee D. Augsburger, Chief Compliance Officer
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
INVESTMENT SUBADVISOR | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
CUSTODIAN | The Bank of New York | One Wall Street New York, NY 10286 | ||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 8098 Philadelphia, PA 19176 | ||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Series carefully before investing. The prospectus for the Series contains this and other information about the Series. An investor may obtain a prospectus by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents on-line, go to www.icsdelivery.com/prudential/funds and enroll. Instead of receiving printed documents by mail, you will receive notification via e-mail when new materials are available. You can cancel your enrollment or change your e-mail address at any time by clicking on the change/cancel enrollment option at the icsdelivery website address. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Dryden Municipal Series Fund/Florida Series, PO Box 13964, Philadelphia, PA 19176. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Series files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Series’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Series’ Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (800) SEC-0330 (732-0330). The Series’ schedule of portfolio holdings is also available on the Series’ website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
Dryden Municipal Series Fund/Florida Series | ||||||||||||
Share Class | A | B | C | Z | ||||||||
NASDAQ | PFLAX | PFABX | PFLCX | PFLZX | ||||||||
CUSIP | 262468101 | 262468200 | 262468309 | 262468408 | ||||||||
MF148E2 IFS-A117941 Ed. 04/2006
Dryden Municipal Series Fund/
New York Series
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
FUND TYPE
Municipal bond
OBJECTIVE
Maximize current income that is exempt from New York State, New York City, and federal income taxes, consistent with the preservation of capital
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Series’ portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2006, were not audited, and accordingly, no auditor’s opinion is expressed on them.
JennisonDryden is a registered trademark of The Prudential Insurance Company of America.
April 14, 2006
Dear Shareholder:
We hope you find the semiannual report for the New York Series informative and useful. As a JennisonDryden mutual fund shareholder, you may be thinking about where you can find additional growth opportunities. You could invest in last year’s top-performing asset class and hope history repeats itself or you could stay in cash while waiting for the “right moment” to invest.
Instead, we believe it is better to take advantage of developing domestic and global investment opportunities through a diversified portfolio of stock and bond mutual funds. A diversified asset allocation offers two potential advantages. It helps you manage downside risk by not being overly exposed to any particular asset class, plus it gives you a better opportunity to have at least some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and tolerance for risk.
JennisonDryden Mutual Funds gives you a wide range of choices that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of three leading asset managers. They are recognized and respected in the institutional market and by discerning investors for excellence in their respective strategies. JennisonDryden equity funds are advised by Jennison Associates LLC or Quantitative Management Associates LLC (QMA). Prudential Investment Management, Inc. (PIM) advises the JennisonDryden fixed income and money market funds. Jennison Associates, QMA, and PIM are registered investment advisors and Prudential Financial companies.
Thank you for choosing JennisonDryden Mutual Funds.
Sincerely,
Judy A. Rice, President
Dryden Municipal Series Fund/New York Series
Dryden Municipal Series Fund/New York Series | 1 |
Your Series’ Performance
Series objective
The investment objective of the Dryden Municipal Series Fund/New York Series (the Series) is to maximize current income that is exempt from New York State, New York City, and federal income taxes, consistent with the preservation of capital. There can be no assurance that the Series will achieve its investment objective.
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The maximum initial sales charge is 4.00% (Class A shares).
Cumulative Total Returns1 as of 2/28/06 | |||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception2 | |||||||||
Class A | 0.60 | % | 2.71 | % | 23.74 | % | 61.62% | 162.05% | |||||
Class B | 0.47 | 2.45 | 22.21 | 56.97 | 305.27 | ||||||||
Class C | 0.34 | 2.20 | 20.71 | 53.12 | 72.16 | ||||||||
Class Z | 0.81 | 3.05 | 25.39 | N/A | 59.79 | ||||||||
Lehman Brothers Municipal Bond Index3 | 0.99 | 3.87 | 30.76 | 75.81 | *** | ||||||||
Lipper New York (NY) Muni Debt Funds Avg.4 | 0.85 | 3.52 | 26.32 | 62.93 | **** |
Average Annual Total Returns1 as of 3/31/06 | ||||||||||||
One Year | Five Years | Ten Years | Since Inception2 | |||||||||
Class A | –1.17 | % | 3.15 | % | 4.61 | % | 5.81 | % | ||||
Class B | –2.20 | 3.59 | 4.73 | 6.67 | ||||||||
Class C | 1.46 | 3.50 | 4.47 | 4.69 | ||||||||
Class Z | 3.29 | 4.29 | N/A | 5.07 | ||||||||
Lehman Brothers Municipal Bond Index3 | 3.81 | 5.18 | 5.87 | *** | ||||||||
Lipper New York (NY) Muni Debt Funds Avg.4 | 3.53 | 4.44 | 5.09 | **** |
Distributions and Yields1 as of 2/28/06 | ||||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | Taxable Equivalent 30-Day Yield5 at Tax Rates of | ||||||||||
33% | 35% | |||||||||||
Class A | $ | 0.37 | 2.84 | % | 4.55 | % | 4.69 | % | ||||
Class B | $ | 0.36 | 2.71 | 4.34 | 4.48 | |||||||
Class C | $ | 0.35 | 2.46 | 3.94 | 4.06 | |||||||
Class Z | $ | 0.39 | 3.20 | 5.13 | 5.29 |
2 | Visit our website at www.jennisondryden.com |
The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. Class A shares are subject to a maximum front-end sales charge of 4.00%. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class C shares are subject to a maximum CDSC of 5% and 1% respectively. Class Z shares are not subject to a sales charge.
1Source: Prudential Investments LLC and Lipper Inc. The average annual total returns take into account applicable sales charges. During certain periods shown, fee waivers and/or expense reimbursements were in effect. Without such fee waivers and expense reimbursements, the returns for the share classes would have been lower. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.30%, 0.50%, and 1.00% respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class Z shares are not subject to a 12b-1 fee. Except where noted, the returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.
2Inception dates: Class A, 1/22/90; Class B, 9/13/84; Class C, 8/1/94; and Class Z, 12/6/96.
3The Lehman Brothers Municipal Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.
4The Lipper NY Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper NY Muni Debt Funds category for the periods noted. Funds in the Lipper Average limit their assets to those securities that are exempt from taxation in New York.
5Taxable equivalent yields reflect federal and applicable state tax rates.
Investors cannot invest directly in an index. The returns for the Lehman Brothers Municipal Bond Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
***Lehman Brothers Municipal Bond Index Closest Month-End to Inception cumulative total returns as of 2/28/06 are 189.45% for Class A, 431.40% for Class B, 101.41% for Class C, and 67.77% for Class Z. Lehman Brothers Municipal Bond Index Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.75% for Class A, 8.01% for Class B, 6.12% for Class C, and 5.62% for Class Z.
****Lipper Average Closest Month-End to Inception cumulative total returns as of 2/28/06 are 166.00% for Class A, 372.64% for Class B, 85.55% for Class C, and 56.26% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.17% for Class A, 7.41% for Class B, 5.36% for Class C, and 4.81% for Class Z.
Dryden Municipal Series Fund/New York Series | 3 |
Your Series’ Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 2/28/06 | |||
New York St. Urban Dev. Corp. Rev., Correctional Cap. Facs., A.M.B.A.C., 1/01/08, Zero Coupon | 4.5 | % | |
Triborough Bridge & Tunnel Auth. New York Rev., Ser. B, 11/15/19, 5.50% | 3.5 | ||
New York St. Mun. Bond Bank Agcy. Spec. Sch. Purp. Rev. Ser. C, 12/01/13, 5.50% | 3.4 | ||
Metro Trans. Auth., New York Svc. Contract, Ser. B, M.B.I.A., F.S.A., 7/01/23, 5.50% | 3.3 | ||
New York St. Environ. Facs. Corp., Ser. B, 10/15/23, 5.50% | 2.7 |
Issues are subject to change.
Credit Quality expressed as a percentage of net assets as of 2/28/06 | |||
Aaa | 40.5 | % | |
Aa | 25.0 | ||
A | 24.9 | ||
Baa | 4.0 | ||
Ba | 2.0 | ||
NR | 2.8 | ||
Total Investments | 99.2 | ||
Other assets in excess of liabilities | 0.8 | ||
Net Assets | 100.0 | % | |
Source: Moody’s rating, defaulting to S&P when not rated by Moody’s.
Credit quality is subject to change.
4 | Visit our website at www.jennisondryden.com |
Fees and Expenses (Unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Series expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2005, at the beginning of the period, and held through the six-month period ended February 28, 2006.
The Series’ transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to Individual Retirement Accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of JennisonDryden or Strategic Partners Funds, including the Series, that you own. You should consider the additional fees that were charged to your Series account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and
Dryden Municipal Series Fund/New York Series | 5 |
Fees and Expenses (continued)
expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Dryden Municipal Series Fund/ New York Series | Beginning Account Value September 1, 2005 | Ending Account Value February 28, 2006 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six- Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,006.00 | 0.98 | % | $ | 4.87 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.93 | 0.98 | % | $ | 4.91 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,004.70 | 1.23 | % | $ | 6.11 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,018.70 | 1.23 | % | $ | 6.16 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 1,003.40 | 1.48 | % | $ | 7.35 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,017.46 | 1.48 | % | $ | 7.40 | ||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,008.10 | 0.73 | % | $ | 3.63 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,021.17 | 0.73 | % | $ | 3.66 |
* Series expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2006, and divided by the 365 days in the Series’ fiscal year ending August 31, 2006 (to reflect the six-month period).
6 | Visit our website at www.jennisondryden.com |
This Page Intentionally Left Blank
Portfolio of Investments
as of February 28, 2006 (Unaudited)
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
LONG-TERM INVESTMENTS 96.3% | ||||||||||||
Municipal Bonds | ||||||||||||
Brookhaven Ind. Dev. Agcy. | NR | 8.125% | 11/15/20 | $ | 500 | $ | 546,930 | |||||
City of Buffalo, Sch., G.O., Ser. E, F.S.A.(d)(h) | Aaa | 6.00 | 12/01/09 | 1,100 | 1,207,404 | |||||||
Dutchess Cnty. Ind. Dev. Agcy. Civic Fac. Rev., Bard Coll. | A3 | 5.75 | 8/01/30 | 3,500 | 3,770,970 | |||||||
Erie Cnty. Ind. Dev. Agcy., Sch. Fac. Rev., City of Buffalo Proj., F.S.A. | Aaa | 5.75 | 5/01/24 | 3,000 | 3,245,730 | |||||||
Erie Cnty. Tobacco Asset Securitization Corp., Rev., Asset Bkd., Ser. A | BBB(b) | 5.00 | 6/01/45 | 1,000 | 973,110 | |||||||
Islip Res. Rec. Agcy., Rev., Ser. B, A.M.B.A.C., A.M.T. | Aaa | 7.20 | 7/01/10 | 1,745 | 1,984,030 | |||||||
Metro. Trans. Auth., Rev. Svc. Contract, C.A.B.S., Ser. 7, M.B.I.A., E.T.M.(d) | Aaa | Zero | 7/01/08 | 4,500 | 4,159,350 | |||||||
Ser. A, M.B.I.A. | Aaa | 5.50 | 7/01/20 | 3,000 | 3,291,060 | |||||||
Svc. Contract, Ser. B, M.B.I.A. | Aaa | 5.50 | 7/01/23 | 5,000 | 5,462,950 | |||||||
Trans., Ser. F | A2 | 5.00 | 11/15/30 | 3,000 | 3,131,430 | |||||||
Monroe Cnty. Indl. Dev. Agcy. Civic Fac. Rev., Refdg. Highland Hosp. Rochester | Baa1 | 5.00 | 8/01/22 | 2,000 | 2,048,260 | |||||||
New York City Ind. Dev. Agcy. Spec. Fac. Rev., Terminal One Group Assn. Proj., A.M.T. | A3 | 5.50 | 1/01/24 | 1,500 | 1,609,485 | |||||||
New York City Mun. Wtr. Fin. Auth., Rev., Ser. F | Aa2 | 5.00 | 6/15/29 | 1,500 | 1,549,170 | |||||||
Wtr. & Swr. Sys. Rev., Ser. B | Aa2 | 5.00 | 6/15/36 | 3,000 | 3,162,840 | |||||||
Unrfdg. Balance, Ser. B | Aa2 | 6.00 | 6/15/33 | 985 | 1,084,741 | |||||||
New York City Trans. Fin. Auth. Future Tax Sec., | Aa1 | 5.50 | 11/01/26 | 2,650 | 2,882,273 | |||||||
Ser. B | Aa1 | 5.50 | 2/01/17 | 1,920 | 2,088,461 | |||||||
Ser. B | Aa1 | 5.25 | 8/01/20 | 4,000 | 4,341,080 | |||||||
Ser. B | Aa1 | 5.25 | 2/01/29 | 2,500 | 2,669,000 | |||||||
New York City, G.O., Ser. A(d) | A1 | 6.00 | 5/15/10 | 100 | 110,719 | |||||||
Ser. A | A1 | 6.00 | 5/15/30 | 10 | 10,921 | |||||||
Ser. G | A1 | 5.00 | 12/01/20 | 1,500 | 1,588,215 | |||||||
Ser. I(d) | Aaa | 6.10 | 4/15/07 | 85 | 88,375 | |||||||
New York Conven. Ctr. Dev. Corp. Rev., Hotel Unit Fee Sec’d., A.M.B.A.C. | Aaa | 5.00 | 11/15/30 | 3,000 | 3,177,360 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 9 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
New York St. Dorm. Auth. Rev., City Univ. Sys. Cons., Ser. B | A1 | 6.00% | 7/01/14 | $ | 3,000 | $ | 3,345,900 | |||||
City Univ. Sys. Cons., Ser. D, E.T.M.(d) | A1 | 7.00 | 7/01/09 | 1,020 | 1,080,935 | |||||||
Lease Rev., Ser. B | A1 | 5.25 | 5/15/12 | 3,000 | 3,248,280 | |||||||
Mental Hlth. Svcs. Facs Impvt., Ser. B | A1 | 6.50 | 8/15/11 | 3,000 | 3,399,840 | |||||||
Mt. Sinai NYU Hlth. | Ba1 | 5.50 | 7/01/26 | 500 | 508,295 | |||||||
Mt. Sinai NYU Hlth., Ser. C | Ba1 | 5.50 | 7/01/26 | 2,750 | 2,795,623 | |||||||
Ref. Sec’d. Hosp. Catskill F.G.I.C. | Aaa | 5.25 | 2/15/17 | 1,000 | 1,094,870 | |||||||
Ser. B | A1 | 5.25 | 5/15/12 | 3,000 | 3,221,400 | |||||||
St. Personal Income—Tax Ed., Ser. A(d) | Aa3 | 5.375 | 3/15/13 | 2,000 | 2,213,160 | |||||||
St. Personal Income—Tax Rev., Ser. F | Aaa | 5.00 | 3/15/23 | 2,000 | 2,134,880 | |||||||
New York St. Engy. Res. & Dev. Auth. Rev., | ||||||||||||
Bklyn. Union Gas, Keyspan, Ser. A, F.G.I.C.(h) | Aaa | 4.70 | 2/01/24 | 2,000 | 2,021,920 | |||||||
New York St. Environ. Facs. Corp. Rev., Clean Wtr. & Drinking Revolving Fds. Pooled Fin., Ser. B | Aaa | 5.50 | 10/15/23 | 3,750 | 4,430,250 | |||||||
Pooled Fin., Wtr. Proj. | Aaa | 5.00 | 6/15/34 | 2,000 | 2,104,560 | |||||||
Poll. Ctrl., Ser. E | Aaa | 6.50 | 6/15/14 | 35 | 35,091 | |||||||
Wtr. Proj., Ser. K | Aaa | 5.25 | 6/15/22 | 3,000 | 3,238,110 | |||||||
New York St. Hsg. Fin. Agcy. Rev., St. Univ. Constr., Ser. A, E.T.M.(d) | Aaa | 8.00 | 5/01/11 | 3,600 | 4,090,536 | |||||||
New York St. Local Gov’t. Assist. Corp. Rev., C.A.B.S., Ser. C | Aa3 | Zero | 4/01/14 | 5,882 | 4,313,447 | |||||||
Ser. E | Aa3 | 6.00 | 4/01/14 | 3,000 | 3,454,800 | |||||||
New York St. Mun. Bond Bank Agcy. Spec. Sch. Purp. Rev., Ser. C | A+(b) | 5.50 | 12/01/13 | 5,070 | 5,579,180 | |||||||
New York St. Pwr. Auth. Rev., Ser. A | Aa2 | 5.25 | 11/15/16 | 3,000 | 3,265,470 | |||||||
Ser. A | Aa2 | 5.00 | 11/15/19 | 2,500 | 2,674,800 | |||||||
Ser. A, F.G.I.C. | Aaa | 5.00 | 11/15/20 | 2,000 | 2,157,880 | |||||||
New York St. Thrwy. Auth., Hwy. & Bridge Trust Fd. Rev., Gen. Second, Ser. B, A.M.B.A.C. | Aaa | 5.00 | 4/01/21 | 2,000 | 2,153,000 | |||||||
St. Personal Income Tax Rev., Trans., Ser. A(d) | Aa3 | 5.50 | 3/15/12 | 1,000 | 1,104,240 | |||||||
Svc. Contract Rev., Local Hwy. & Bridge | A1 | 5.50 | 4/01/15 | 3,000 | 3,262,170 |
See Notes to Financial Statements.
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Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
New York St. Urban Dev. Corp. Rev., Correctional Cap. Facs., A.M.B.A.C., T.C.R.S., C.A.B.S. | Aaa | Zero% | 1/01/08 | $ | 8,000 | $ | 7,504,800 | |||||
Port Auth. New York & New Jersey Cons. Rev., One Hundred Thirty Fifth | A1 | 5.00 | 3/15/39 | 3,000 | 3,143,820 | |||||||
Puerto Rico Comnwlth., Hwy. & Transit Rev., F.G.I.C. | Aaa | 5.00 | 7/01/26 | 4,000 | 4,251,960 | |||||||
Puerto Rico Comnwlth., G.O., Pub. Impvt. Rfdg., M.B.I.A. | Baa2 | 7.00 | 7/01/10 | 1,250 | 1,424,725 | |||||||
R.I.T.E.S., P.A. 625, A.M.B.A.C., T.C.R.S.(e) | NR | 11.38 | 7/01/10 | 3,250 | 4,158,570 | |||||||
Puerto Rico Elec. Pwr. Auth. Pwr. Rev., Ser. RR, X.L.C.A | Aaa | 5.00 | 7/01/25 | 1,000 | 1,065,210 | |||||||
Puerto Rico Pub. Fin. Corp., Comnwlth. Approp., Ser. E(d) | Aaa | 5.70 | 2/01/10 | 2,000 | 2,159,760 | |||||||
Tobacco Settlement Fin. Corp. Rev., Ser. C-1 | A1 | 5.50 | 6/01/14 | 1,000 | 1,055,340 | |||||||
Ser. C-1 | A1 | 5.50 | 6/01/15 | 2,000 | 2,137,260 | |||||||
Triborough Bridge & Tunnel Auth. New York Rev., Ser. B | Aa2 | 5.00 | 11/15/32 | 3,000 | 3,119,370 | |||||||
Ser. B, M.B.I.A. | Aaa | 5.50 | 11/15/19 | 5,000 | 5,802,700 | |||||||
Virgin Islands Pub. Fin. Auth. Rev. Gross Rcpts. Taxes, Ser. A | BBB(b) | 6.50 | 10/01/24 | 1,000 | 1,110,300 | |||||||
Westchester Tobacco Asset Securization Corp. Rev. | BBB(b) | 5.125 | 6/01/38 | 1,000 | 997,570 | |||||||
Total long-term investments (cost $151,761,847) | $ | 159,043,886 | ||||||||||
SHORT-TERM INVESTMENTS 2.9% | ||||||||||||
Municipal Bonds | ||||||||||||
New York City Hsg. Dev. Corp. Mtg. Rev. E17 St. Proj., F.R.D.D.(f) | A-1+(b) | 2.99 | 3/01/06 | 1,150 | 1,150,000 | |||||||
New York City Mun. Fin.Auth., Wtr. & Swr. Sys Rev., F.R.D.D.(f) | VMIG1 | 2.94 | 3/01/06 | 700 | 700,000 | |||||||
New York St. Local Govt. Assistance Corp. Rev., A.M.B.A.C., F.R.D.D.(f) | A-1+(b) | 3.02 | 3/01/06 | 2,200 | 2,200,000 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 11 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Port Auth. New York & New Jersey Versatile Structure Oblig. Rev. Ser. 6, A.M.T., F.R.D.D.(f) | VMIG1 | 2.99% | 3/01/06 | $ | 700 | $ | 700,000 | |||||
Total short-term investments (cost $4,750,000) | 4,750,000 | |||||||||||
Total Investments 99.2% (cost $156,511,847; Note 5) | 163,793,886 | |||||||||||
Other assets in excess of liabilities (g) 0.8% | 1,394,162 | |||||||||||
Net Assets 100% | $ | 165,188,048 | ||||||||||
(a) | The following abbreviations are used in the portfolio descriptions: |
A.M.B.A.C.—American Municipal Bond Assurance Corporation.
A.M.T.—Alternative Minimum Tax.
C.A.B.S.—Capital Appreciation Bonds.
E.T.M.—Escrowed to Maturity.
F.G.I.C.—Financial Guaranty Insurance Company.
F.R.D.D.—Floating Rate (Daily) Demand Note.
F.S.A.—Financial Security Assurance.
G.O.—General Obligation.
M.B.I.A.—Municipal Bond Insurance Corporation.
NR—Not Rated by Moody’s or Standard & Poor’s.
The Fund’s current Statement of Additional Information contains a description of Moody’s and Standard & Poor’s ratings.
R.I.T.E.S.—Residual Interest Tax Exempt Securities Receipts.
T.C.R.S.—Transferable Custodial Receipts.
X.L.C.A.—XL Capital Assurance.
(b) | Standard & Poor’s rating. |
(c) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate at February 28, 2006. |
(d) | Prerefunded issues are secured by escrowed cash and/or direct U.S. guaranteed obligations. |
(e) | Indicates a security that has been deemed illiquid. |
(f) | For purposes of amortized cost valuation, the maturity date of Floating Rate Demand Notes is considered to be the later of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. |
(g) | Other assets in excess of liabilities include net unrealized appreciation (depreciation) on open financial futures contracts and interest rate swap agreements as follows: |
See Notes to Financial Statements.
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Open future contracts outstanding at February 28, 2006:
Number of Contracts | Type | Expiration Date | Value at February 28, 2006 | Value at Trade Date | Unrealized Appreciation (Depreciation) | |||||||||
3 | Long Positions: U.S. Treasury 2 yr. Note | Jun 2006 | $ | 613,125 | $ | 612,381 | $ | 744 | ||||||
42 | Short Positions: U.S. Treasury 30 Yr. Note | Jun 2006 | 4,749,938 | 4,745,042 | (4,896 | ) | ||||||||
39 | U.S. Treasury 10 Yr. Note | Jun 2006 | 4,208,344 | 4,195,301 | (13,043 | ) | ||||||||
13 | U.S. Treasury 5 Yr. Note | Jun 2006 | 1,367,438 | 1,368,369 | 931 | |||||||||
(17,008 | ) | |||||||||||||
$ | (16,264 | ) | ||||||||||||
Interest rate swap agreement outstanding at February 28, 2006:
Counterparty | Termination Date | Notional Amount | Fixed Rate | Floating | Unrealized Depreciation | |||||||||
Morgan Stanley Capital Services, Inc.(i) | 3/17/21 | $ | 1,000,000 | 3.865 | % | BMA Municipal Swap Index | ($ | 7,481 | ) | |||||
(h) | Partial principal amount pledged as collateral for financial futures contracts. |
(i) | Portfolio pays the floating rate and receives the fixed rate. |
The industry classification of portfolio holdings and other assets in excess of liabilities shown as a percentage of net assets as of February 28, 2006 were as follows:
Transportation | 23.5 | % | |
Special Tax/Assessment District | 17.2 | ||
Lease-Backed Certificate of Participation | 14.5 | ||
Education | 10.1 | ||
Power | 5.5 | ||
General Obligation | 5.2 | ||
Water & Sewer | 4.8 | ||
Pooled Financing | 4.7 | ||
Healthcare | 4.2 | ||
Short-Term Investments | 2.9 | ||
Corporate-Backed IDB & PCR | 2.3 | ||
Tobacco Appropriated | 1.9 | ||
Solid Waste/Resource Recovery | 1.2 | ||
Tobacco | 1.2 | ||
Total Investments | 99.2 | ||
Other assets in excess of liabilities | 0.8 | ||
Total | 100 | % | |
Industry classification is subject to change.
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 13 |
Statement of Assets and Liabilities
as of February 28, 2006 (Unaudited)
Assets | ||||
Unaffiliated investments, at value (cost $156,511,847) | $ | 163,793,886 | ||
Cash | 25,100 | |||
Interest receivable | 1,713,407 | |||
Receivable for Series shares sold | 48,081 | |||
Prepaid expenses | 6,662 | |||
Total assets | 165,587,136 | |||
Liabilities | ||||
Accrued expenses | 120,077 | |||
Payable for Series shares reacquired | 82,316 | |||
Management fee payable | 63,234 | |||
Distribution fee payable | 34,755 | |||
Due to broker—variation margin | 32,760 | |||
Dividends payable | 32,659 | |||
Transfer agent fee payable | 14,816 | |||
Deferred trustees’ fees | 10,990 | |||
Unrealized depreciation on interest rate swaps | 7,481 | |||
Total liabilities | 399,088 | |||
Net Assets | $ | 165,188,048 | ||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 145,500 | ||
Paid-in capital in excess of par | 157,060,829 | |||
157,206,329 | ||||
Overdistributed net investment income | (22,122 | ) | ||
Accumulated net realized gain on investments | 745,547 | |||
Net unrealized appreciation on investments | 7,258,294 | |||
Net assets, February 28, 2006 | $ | 165,188,048 | ||
See Notes to Financial Statements.
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Class A | |||
Net asset value and redemption price per share ($146,574,842 ÷ 12,912,077 shares of beneficial interest issued and outstanding) | $ | 11.35 | |
Maximum sales charge (4% of offering price) | .47 | ||
Maximum offering price to public | $ | 11.82 | |
Class B | |||
Net asset value, offering price and redemption price per share ($13,951,472 ÷ 1,227,852 shares of beneficial interest issued and outstanding) | $ | 11.36 | |
Class C | |||
Net asset value, offering price and redemption price per share ($2,393,655 ÷ 210,670 shares of beneficial interest issued and outstanding) | $ | 11.36 | |
Class Z | |||
Net asset value, offering price and redemption price per share ($2,268,079 ÷ 199,379 shares of beneficial interest issued and outstanding) | $ | 11.38 | |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 15 |
Statement of Operations
Six Months Ended February 28, 2006 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest | $ | 3,959,197 | ||
Expenses | ||||
Management fee | 417,653 | |||
Distribution fee—Class A | 184,285 | |||
Distribution fee—Class B | 36,895 | |||
Distribution fee—Class C | 9,077 | |||
Custodian’s fees and expenses | 56,000 | |||
Transfer agent’s fee and expenses (including affiliated expenses of $32,176) | 43,000 | |||
Reports to shareholders | 34,000 | |||
Registration fees | 25,000 | |||
Audit fee | 12,000 | |||
Legal fees and expenses | 12,000 | |||
Trustees’ fees | 7,000 | |||
Miscellaneous | 5,000 | |||
Total expenses | 841,910 | |||
Less: Custody Fee Credit (Note 1) | (1,830 | ) | ||
Net expenses | 840,080 | |||
Net investment income | 3,119,117 | |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain on: | ||||
Investment transactions | 698,954 | |||
Financial futures transactions | 206,686 | |||
905,640 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (3,234,398 | ) | ||
Financial futures contracts | 102,121 | |||
Interest rate swap | (21,119 | ) | ||
(3,153,396 | ) | |||
Net loss on investments | (2,247,756 | ) | ||
Net Increase In Net Assets Resulting From Operations | $ | 871,361 | ||
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
Six Months Ended February 28, 2006 | Year Ended August 31, 2005 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 3,119,117 | $ | 6,814,542 | ||||
Net realized gain on investments | 905,640 | 2,106,637 | ||||||
Net change in unrealized appreciation/(depreciation) on investments | (3,153,396 | ) | (2,465,749 | ) | ||||
Net increase in net assets resulting from operations | 871,361 | 6,455,430 | ||||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (2,729,450 | ) | (5,877,055 | ) | ||||
Class B | (254,503 | ) | (696,095 | ) | ||||
Class C | (38,756 | ) | (84,094 | ) | ||||
Class Z | (48,434 | ) | (143,294 | ) | ||||
(3,071,143 | ) | (6,800,538 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | (2,089,986 | ) | (1,179,859 | ) | ||||
Class B | (211,129 | ) | (158,499 | ) | ||||
Class C | (34,273 | ) | (20,140 | ) | ||||
Class Z | (35,389 | ) | (27,875 | ) | ||||
(2,370,777 | ) | (1,386,373 | ) | |||||
Series share transactions (Net of share conversions) (Note 6) |
| |||||||
Net proceeds from shares sold | 1,072,392 | 4,667,594 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 3,534,980 | 4,963,823 | ||||||
Cost of shares reacquired | (10,853,741 | ) | (23,021,269 | ) | ||||
Net decrease in net assets from Series share transactions | (6,246,369 | ) | (13,389,852 | ) | ||||
Total decrease | (10,816,928 | ) | (15,121,333 | ) | ||||
Net Assets | ||||||||
Beginning of period | 176,004,976 | 191,126,309 | ||||||
End of period | $ | 165,188,048 | $ | 176,004,976 | ||||
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 17 |
Notes to Financial Statements
(Unaudited)
Dryden Municipal Series Fund (the “Fund”), is registered under the Investment Company Act of 1940 as an open-end management investment company. The Fund was organized as a Massachusetts business trust on May 18, 1984 and consists of four series. These financial statements relate only to New York Series (the “Series”). The financial statements of the other series are not presented herein. The assets of each series are invested in separate, independently managed portfolios. The Series commenced investment operations in September 1984. The Series is diversified and its investment objective is to maximize current income that is exempt from New York State, New York City and federal income taxes consistent with the preservation of capital, and in conjunction therewith, the Series may invest in debt securities with the potential for capital gain. The Series seeks to achieve the objective by investing primarily in New York State, municipal and local government obligations and obligations of other qualifying issuers. The ability of the issuers of the securities held by the Series to meet their obligations may be affected by economic developments in a specific state, industry or region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund, and the Series, in the preparation of its financial statements.
Securities Valuations: The Series values municipal securities (including commitments to purchase such securities on a “when-issued” basis) as of the close of trading on the New York Stock Exchange, on the basis of prices provided by a pricing service which uses information with respect to transactions in comparable securities and various relationships between securities in determining values. Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”) in consultation with the subadviser, to be over-the-counter, are valued at market value using prices provided, by an independent pricing agent or principal market marker. Options on securities and indices traded on an exchange are valued at the last sale price as of the close of trading on the applicable exchange or, if there was no sale, at the mean between the most recently quoted bid and asked prices on such exchange. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at
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the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted bid and asked prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Prices may be obtained from independent pricing services which use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities for which reliable market quotations are not readily available or for which the pricing service does not provide a valuation or methodology, or provides a valuation or methodology that, in the judgment of the subadviser, does not represent fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Short-term securities which mature in sixty days or less are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term securities which mature in more than sixty days are valued at current market quotations.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Series each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed, the gain or loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures contracts.
Dryden Municipal Series Fund/New York Series | 19 |
Notes to Financial Statements
(Unaudited) Cont’d
The Series invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Series intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, the Series may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Options: The Series may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates with respect to securities, which the Series currently owns or intends to purchase. The Series’ principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option.
If an option expires unexercised, the Series realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Series has realized a gain or loss. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in net realized gain or loss on investment transactions. Gain or loss on written options is presented separately as net realized gain or loss on written options.
The Series, as writer of an option, has no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Series bears the market risk of an unfavorable change in the price of the security underlying the written option. The Series, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts.
Swaps: The Series may enter into swap agreements. A swap is an agreement to exchange the return generated by one instrument for the return generated by another instrument. The Series enters into interest rate swap agreements to manage its
20 | Visit our website at www.jennisondryden.com |
exposure to interest rates. Interest rate swap agreements involve the exchange by the Series with another party of their respective commitments to pay or receive interest and may involve payment/receipt of a premium at the time of initiation of the swap agreement. The swaps are valued daily at current market value and any unrealized gain or loss is included in the Statement of Assets and Liabilities. Gain or loss is realized on the termination date of the swap and is equal to the difference between the Series’ cost basis in the swap and the proceeds of the closing transaction, including any fees.
The Series is exposed to credit risk in the event of non-performance by the other party to the interest rate swap. However, the Series does not anticipate non-performance by any counterparty.
Written options, financial futures contracts and interest rate swap contracts may involve elements of both market and credit risk in excess of the amounts reflected in the Statement of Assets and Liabilities.
Inverse Floaters: The Series invests in variable rate securities commonly called “inverse floaters”. The interest rates on these securities have an inverse relationship to the interest rate of other securities or the value of an index. Changes in interest rates on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater’s price will be more volatile than that of a fixed-rate bond. Additionally, some of these securities contain a “leverage factor” whereby the interest rate moves inversely by a “factor” to the benchmark rate. Certain interest rate movements and other market factors can substantially affect the liquidity of inverse floating rate notes.
Restricted Securities: The Series may hold up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities, sometimes referred to as private placements, are valued pursuant to the valuation procedures noted above.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized and unrealized gains or losses on security transactions are calculated on the identified cost basis. Interest income is recorded on the accrual basis. The Series amortize premiums and accrete discounts on debt securities as adjustments to interest income. Expenses are recorded on the accrual basis.
Net investment income (loss) (other than distribution fees, which are charged directly to the respective class) and unrealized and realized gains or losses are allocated daily
Dryden Municipal Series Fund/New York Series | 21 |
Notes to Financial Statements
(Unaudited) Cont’d
to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Federal Income Taxes: For federal income tax purposes, each Series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.
Dividends and Distributions: The Series declares dividends from net investment income daily and pays such dividends monthly. Distributions of net capital gains, if any, are made annually.Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested assets earn credits which reduce the fees charged by the custodian. Such custody fee credits, if any, are presented as a reduction of gross expenses in the accompanying Statement of Operations.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc.(“PIM”). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with the management of the Series. In connection therewith, PIM is obligated to keep certain books and records of the Series. PI pays for the services of PIM, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
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The management fee paid to PI is accrued daily and payable monthly, at an annual rate of .50 of 1% of the average daily net assets up to $1 billion and .45 of 1% of the average daily net assets in excess of $1 billion. The effective management fee rate was .50 of 1% for the six months ended February 28, 2006.
The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares, pursuant to a plan of distribution, (the “Class A, B and C Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Series.
Pursuant to the Class A, B and C Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30 of 1%, .50 of 1% and up to 1% of the average daily net assets of the Class A, B and C shares, respectively. For the six months ended February 28, 2006, PIMS contractually agreed to limit such fees to .25 of 1% and .75 of 1% for the Class A and Class C shares, respectively.
PIMS has advised the Series that it has received approximately $12,000 in front-end sales charges resulting from sales of Class A shares during the six months ended February 28, 2006. From these fees, PIMS paid such sales charges to dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended February 28, 2006, it received approximately $15,700 and $100 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.
PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA would be incurred at market rates. For the period from October 29, 2004 through October 28, 2005, the Fund paid a commitment fee of .075 of 1% of the unused portion of the agreement. Effective October 29, 2005, the Funds renewed the SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Fund pays a commitment fee of .0725 of 1% of the unused portion of the renewed SCA. The commitment fee is accrued daily and paid quarterly and is allocated to the Funds pro-rata based on net assets. The purpose of the SCA is to serve
Dryden Municipal Series Fund/New York Series | 23 |
Notes to Financial Statements
(Unaudited) Cont’d
as an alternative source of funding for capital share redemptions. The expiration date of the renewed SCA is October 27, 2006. The Fund did not borrow any amounts pursuant to the SCA during the six months ended February 28, 2006.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund pays networking fees to affiliated and unaffiliated broker/dealers. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. For the six months ended February 28, 2006, the Series incurred approximately $11,000 in total networking fees. These amounts are included in transfer agent’s fees and expenses in the Statement of Operations.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments and written options, for the six months ended February 28, 2006, were $35,978,656 and $46,011,203 respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of February 28, 2006 were as follows:
Tax Basis of Investments | Appreciation | Depreciation | Net Unrealized | |||
$156,422,481 | $7,476,436 | $105,031 | $7,371,405 |
The difference between book basis and tax basis is primarily attributable to the difference in the treatment of premium amortization for book and tax purposes.
24 | Visit our website at www.jennisondryden.com |
Note 6. Capital
The Series offers Class A, Class B, Class C and Class Z shares. Class A shares are sold with a front-end sales charge of up to 4%. All investors who purchase Class A shares in the amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are sold with a contingent deferred sales charge which declines from 5% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge (CDSC) of 1% during the first 12 months. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
The Series has authorized an unlimited number of shares of beneficial interest of each class at $.01 par value per share.
Transactions in shares of beneficial interest were as follows:
Class A | Shares | Amount | |||||
Six Month ended February 28, 2006: | |||||||
Shares sold | 78,247 | $ | 890,878 | ||||
Shares issued in reinvestment of dividends and distributions | 273,423 | 3,096,851 | |||||
Shares reacquired | (742,063 | ) | (8,455,738 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (390,393 | ) | (4,468,009 | ) | |||
Shares issued upon conversion from Class B | 180,794 | 2,081,655 | |||||
Net increase (decrease) in shares outstanding | (209,599 | ) | $ | (2,386,354 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 255,276 | $ | 2,972,633 | ||||
Shares issued in reinvestment of dividends and distributions | 362,276 | 4,226,911 | |||||
Shares reacquired | (1,539,240 | ) | (17,944,854 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (921,688 | ) | (10,745,310 | ) | |||
Shares issued upon conversion from Class B | 265,793 | 3,099,890 | |||||
Net increase (decrease) in shares outstanding | (655,895 | ) | $ | (7,645,420 | ) | ||
Dryden Municipal Series Fund/New York Series | 25 |
Notes to Financial Statements
(Unaudited) Cont’d
Class B | Shares | Amount | |||||
Six Month ended February 28, 2006: | |||||||
Shares sold | 7,905 | $ | 89,929 | ||||
Shares issued in reinvestment of dividends and distributions | 25,518 | 289,326 | |||||
Shares reacquired | (134,930 | ) | (1,544,857 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (101,507 | ) | (1,165,602 | ) | |||
Shares reacquired upon conversion into Class A | (180,637 | ) | (2,081,655 | ) | |||
Net increase (decrease) in shares outstanding | (282,144 | ) | $ | (3,247,257 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 56,819 | $ | 665,533 | ||||
Shares issued in reinvestment of dividends and distributions | 43,012 | 502,372 | |||||
Shares reacquired | (232,904 | ) | (2,714,057 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (133,073 | ) | (1,546,152 | ) | |||
Shares reacquired upon conversion into Class A | (265,566 | ) | (3,099,890 | ) | |||
Net increase (decrease) in shares outstanding | (398,639 | ) | $ | (4,646,042 | ) | ||
Class C | |||||||
Six Month ended February 28, 2006: | |||||||
Shares sold | 3,679 | $ | 41,989 | ||||
Shares issued in reinvestment of dividends and distributions | 5,708 | 64,703 | |||||
Shares reacquired | (20,677 | ) | (234,987 | ) | |||
Net increase (decrease) in shares outstanding | (11,290 | ) | $ | (128,295 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 32,286 | $ | 373,976 | ||||
Shares issued in reinvestment of dividends and distributions | 6,932 | 80,935 | |||||
Shares reacquired | (53,647 | ) | (627,811 | ) | |||
Net increase (decrease) in shares outstanding | (14,429 | ) | $ | (172,900 | ) | ||
Class Z | |||||||
Six Month ended February 28, 2006: | |||||||
Shares sold | 4,327 | $ | 49,596 | ||||
Shares issued in reinvestment of dividends and distributions | 7,402 | 84,100 | |||||
Shares reacquired | (54,034 | ) | (618,159 | ) | |||
Net increase (decrease) in shares outstanding | (42,305 | ) | $ | (484,463 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 56,399 | $ | 655,452 | ||||
Shares issued in reinvestment of dividends and distributions | 13,154 | 153,605 | |||||
Shares reacquired | (148,089 | ) | (1,734,547 | ) | |||
Net increase (decrease) in shares outstanding | (78,536 | ) | $ | (925,490 | ) | ||
26 | Visit our website at www.jennisondryden.com |
Financial Highlights
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
Dryden Municipal Series Fund/New York Series
Financial Highlights
(Unaudited)
Class A | ||||
Six Month Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning of Period | $ | 11.66 | ||
Income (loss) from investment operations | ||||
Net investment income | .22 | |||
Net realized and unrealized gains (loss) on investments | (.16 | ) | ||
Total from investment operations | .06 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.21 | ) | ||
Distributions from net realized gains | (.16 | ) | ||
Total dividends and distributions | (.37 | ) | ||
Net asset value, end of period | $ | 11.35 | ||
Total Return(b): | .60 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 146,575 | ||
Average net assets (000) | $ | 148,651 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees (c) | .98 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .73 | %(d) | ||
Net investment income | 3.76 | %(d) | ||
For class A, B, C, and Z shares: | ||||
Portfolio turnover rate | 22 | %(e) |
(a) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.38% to 4.39%. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | The distributor of the Series has contractually agreed to limit its distribution and Service (12b-1) fees to .25 of 1% of the average daily net assets of Class A shares. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
28 | Visit our website at www.jennisondryden.com |
Class A | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.77 | $ | 11.90 | $ | 12.22 | $ | 12.24 | $ | 11.60 | |||||||||
.44 | .43 | .48 | .53 | .56 | ||||||||||||||
(.02 | ) | .22 | (.21 | ) | .03 | .64 | ||||||||||||
.42 | .65 | .27 | .56 | 1.20 | ||||||||||||||
(.44 | ) | (.43 | ) | (.47 | ) | (.53 | ) | (.56 | ) | |||||||||
(.09 | ) | (.35 | ) | (.12 | ) | (.05 | ) | — | ||||||||||
(.53 | ) | (.78 | ) | (.59 | ) | (.58 | ) | (.56 | ) | |||||||||
$ | 11.66 | $ | 11.77 | $ | 11.90 | $ | 12.22 | $ | 12.24 | |||||||||
3.60 | % | 5.61 | % | 2.31 | % | 4.76 | % | 10.65 | % | |||||||||
$ | 152,972 | $ | 162,094 | $ | 171,573 | $ | 182,062 | $ | 191,678 | |||||||||
$ | 157,073 | $ | 167,679 | $ | 179,559 | $ | 182,312 | $ | 189,204 | |||||||||
.96 | % | .93 | % | .91 | % | .91 | % | .89 | % | |||||||||
.71 | % | .68 | % | .66 | % | .66 | % | .64 | % | |||||||||
3.75 | % | 3.68 | % | 3.94 | % | 4.39 | % | 4.77 | % | |||||||||
15 | % | 45 | % | 39 | % | 23 | % | 27 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 29 |
Financial Highlights
(Unaudited) Cont’d
Class B | ||||
Six Month Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning of Period | $ | 11.67 | ||
Income (loss) from investment operations | ||||
Net investment income | .20 | |||
Net realized and unrealized gains (loss) on investments | (.15 | ) | ||
Total from investment operations | .05 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.20 | ) | ||
Distributions from net realized gains | (.16 | ) | ||
Total dividends and distributions | (.36 | ) | ||
Net asset value, end of period | $ | 11.36 | ||
Total Return(b): | .47 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 13,951 | ||
Average net assets (000) | $ | 14,881 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.23 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .73 | %(c) | ||
Net investment income | 3.51 | %(c) |
(a) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.13% to 4.15%. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
See Notes to Financial Statements.
30 | Visit our website at www.jennisondryden.com |
Class B | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.78 | $ | 11.91 | $ | 12.23 | $ | 12.24 | $ | 11.61 | |||||||||
.41 | .40 | .45 | .50 | .53 | ||||||||||||||
(.02 | ) | .22 | (.21 | ) | .04 | .63 | ||||||||||||
.39 | .62 | .24 | .54 | 1.16 | ||||||||||||||
(.41 | ) | (.40 | ) | (.44 | ) | (.50 | ) | (.53 | ) | |||||||||
(.09 | ) | (.35 | ) | (.12 | ) | (.05 | ) | — | ||||||||||
(.50 | ) | (.75 | ) | (.56 | ) | (.55 | ) | (.53 | ) | |||||||||
$ | 11.67 | $ | 11.78 | $ | 11.91 | $ | 12.23 | $ | 12.24 | |||||||||
3.34 | % | 5.35 | % | 2.05 | % | 4.59 | % | 10.28 | % | |||||||||
$ | 17,620 | $ | 22,475 | $ | 29,456 | $ | 35,863 | $ | 38,829 | |||||||||
$ | 19,944 | $ | 25,463 | $ | 33,825 | $ | 35,927 | $ | 42,212 | |||||||||
1.21 | % | 1.18 | % | 1.16 | % | 1.16 | % | 1.14 | % | |||||||||
.71 | % | .68 | % | .66 | % | .66 | % | .64 | % | |||||||||
3.50 | % | 3.43 | % | 3.69 | % | 4.15 | % | 4.53 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 31 |
Financial Highlights
(Unaudited) Cont’d
Class C | ||||
Six Month Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning of Period | $ | 11.67 | ||
Income (loss) from investment operations | ||||
Net investment income | .19 | |||
Net realized and unrealized gains (loss) on investments | (.15 | ) | ||
Total from investment operations | .04 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.19 | ) | ||
Distributions from net realized gains | (.16 | ) | ||
Total dividends and distributions | (.35 | ) | ||
Net asset value, end of period | $ | 11.36 | ||
Total Return(b): | .34 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 2,394 | ||
Average net assets (000) | $ | 2,441 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.48 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .73 | %(d) | ||
Net investment income | 3.26 | %(d) |
(a) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 3.88% to 3.89%. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | The distributor of the Series has contractually agreed to limit its distribution and Service 12b-1) fees to .75 of 1% of the average daily net assets of Class C shares. |
(d) | Annualized. |
See Notes to Financial Statements.
32 | Visit our website at www.jennisondryden.com |
Class C | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.78 | $ | 11.91 | $ | 12.23 | $ | 12.24 | $ | 11.61 | |||||||||
.38 | .37 | .42 | .47 | .50 | ||||||||||||||
(.02 | ) | .22 | (.21 | ) | .04 | .63 | ||||||||||||
.36 | .59 | .21 | .51 | 1.13 | ||||||||||||||
(.38 | ) | (.37 | ) | (.41 | ) | (.47 | ) | (.50 | ) | |||||||||
(.09 | ) | (.35 | ) | (.12 | ) | (.05 | ) | — | ||||||||||
(.47 | ) | (.72 | ) | (.53 | ) | (.52 | ) | (.50 | ) | |||||||||
$ | 11.67 | $ | 11.78 | $ | 11.91 | $ | 12.23 | $ | 12.24 | |||||||||
3.09 | % | 5.09 | % | 1.80 | % | 4.34 | % | 10.01 | % | |||||||||
$ | 2,590 | $ | 2,784 | $ | 3,289 | $ | 3,455 | $ | 2,766 | |||||||||
$ | 2,596 | $ | 3,207 | $ | 3,503 | $ | 2,992 | $ | 2,171 | |||||||||
1.46 | % | 1.43 | % | 1.41 | % | 1.41 | % | 1.39 | % | |||||||||
.71 | % | .68 | % | .66 | % | .66 | % | .64 | % | |||||||||
3.25 | % | 3.17 | % | 3.45 | % | 3.89 | % | 4.26 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 33 |
Financial Highlights
(Unaudited) Cont’d
Class Z | ||||
Six Month Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning of Period | $ | 11.68 | ||
Income (loss) from investment operations | ||||
Net investment income | .23 | |||
Net realized and unrealized gains (loss) on investments | (.14 | ) | ||
Total from investment operations | .09 | |||
Less Dividends and Distributions | ||||
Dividends from net investment income | (.23 | ) | ||
Distributions from net realized gains | (.16 | ) | ||
Total dividends and distributions | (.39 | ) | ||
Net asset value, end of period | $ | 11.38 | ||
Total Return(b): | .81 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 2,268 | ||
Average net assets (000) | $ | 2,475 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | .73 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .73 | %(c) | ||
Net investment income | 4.00 | %(c) |
(a) | Effective September 1, 2001, the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005. There was no effect of this change to the ratio net investment income. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(b) | Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
See Notes to Financial Statements.
34 | Visit our website at www.jennisondryden.com |
Class Z | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 11.79 | $ | 11.92 | $ | 12.24 | $ | 12.25 | $ | 11.62 | |||||||||
.47 | .47 | .52 | .56 | .59 | ||||||||||||||
(.02 | ) | .21 | (.21 | ) | .04 | .63 | ||||||||||||
.45 | .68 | .31 | .60 | 1.22 | ||||||||||||||
(.47 | ) | (.46 | ) | (.51 | ) | (.56 | ) | (.59 | ) | |||||||||
(.09 | ) | (.35 | ) | (.12 | ) | (.05 | ) | — | ||||||||||
(.56 | ) | (.81 | ) | (.63 | ) | (.61 | ) | (.59 | ) | |||||||||
$ | 11.68 | $ | 11.79 | $ | 11.92 | $ | 12.24 | $ | 12.25 | |||||||||
3.86 | % | 5.87 | % | 2.56 | % | 5.10 | % | 10.82 | % | |||||||||
$ | 2,823 | $ | 3,774 | $ | 2,595 | $ | 2,984 | $ | 1,775 | |||||||||
$ | 3,592 | $ | 3,177 | $ | 2,828 | $ | 2,385 | $ | 1,008 | |||||||||
.71 | % | .68 | % | .66 | % | .66 | % | .64 | % | |||||||||
.71 | % | .68 | % | .66 | % | .66 | % | .64 | % | |||||||||
4.00 | % | 3.93 | % | 4.19 | % | 4.62 | % | 4.98 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/New York Series | 35 |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.jennisondryden.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Series’ investment subadvisor the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Series. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Series voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Series’ website and on the Commission’s website. |
TRUSTEES |
Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Robert E. La Blanc • Douglas H. McCorkindale • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn • Clay T. Whitehead |
OFFICERS |
Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Jack Benintende, Assistant Treasurer • M. Sadiq Peshimam, Assistant Treasurer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Helene Gurian, Acting Anti-Money Laundering Compliance Officer • Lee D. Augsburger, Chief Compliance Officer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
INVESTMENT SUBADVISOR | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
CUSTODIAN | The Bank of New York | One Wall Street New York, NY 10286 | ||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 8098 Philadelphia, PA 19176 | ||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Series carefully before investing. The prospectus for the Series contains this and other information about the Series. An investor may obtain a prospectus by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents on-line, go to www.icsdelivery.com/prudential/funds and enroll. Instead of receiving printed documents by mail, you will receive notification via e-mail when new materials are available. You can cancel your enrollment or change your e-mail address at any time by clicking on the change/cancel enrollment option at the icsdelivery website address. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Dryden Municipal Series Fund/New York Series, PO Box 13964, Philadelphia, PA 19176. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Series files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Series’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Series’ Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (800) SEC-0330 (732-0330). The Series’ schedule of portfolio holdings is also available on the Series’ website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
Dryden Municipal Series Fund/New York Series | ||||||||||||
Share Class | A | B | C | Z | ||||||||
NASDAQ | PMNYX | PBNYX | PCNYX | PNYZX | ||||||||
CUSIP | 262468812 | 262468796 | 262468788 | 262468770 | ||||||||
MF122E2 IFS-A117921 Ed. 04/2006
Dryden Municipal Series Fund/Pennsylvania Series
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
FUND TYPE
Municipal bond
OBJECTIVE
Maximize current income that is exempt from the Commonwealth of Pennsylvania personal income tax and federal income tax, consistent with the preservation of capital
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Series’ portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2006, were not audited, and accordingly, no auditor’s opinion is expressed on them.
JennisonDryden is a registered trademark of The Prudential Insurance Company of America.
April 14, 2006
Dear Shareholder:
We hope you find the semiannual report for the Pennsylvania Series informative and useful. As a JennisonDryden mutual fund shareholder, you may be thinking about where you can find additional growth opportunities. You could invest in last year’s top-performing asset class and hope history repeats itself or you could stay in cash while waiting for the “right moment” to invest.
Instead, we believe it is better to take advantage of developing domestic and global investment opportunities through a diversified portfolio of stock and bond mutual funds. A diversified asset allocation offers two potential advantages. It helps you manage downside risk by not being overly exposed to any particular asset class, plus it gives you a better opportunity to have at least some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and tolerance for risk.
JennisonDryden Mutual Funds gives you a wide range of choices that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of three leading asset managers. They are recognized and respected in the institutional market and by discerning investors for excellence in their respective strategies. JennisonDryden equity funds are advised by Jennison Associates LLC or Quantitative Management Associates LLC (QMA). Prudential Investment Management, Inc. (PIM) advises the JennisonDryden fixed income and money market funds. Jennison Associates, QMA, and PIM are registered investment advisors and Prudential Financial companies.
Thank you for choosing JennisonDryden Mutual Funds.
Sincerely,
Judy A. Rice, President
Dryden Municipal Series Fund/Pennsylvania Series
Dryden Municipal Series Fund/Pennsylvania Series | 1 |
Your Series’ Performance
Series objective
The investment objective of the Dryden Municipal Series Fund/Pennsylvania Series (the Series) is to maximize current income that is exempt from the Commonwealth of Pennsylvania personal income tax and federal income tax, consistent with the preservation of capital. There can be no assurance that the Series will achieve its investment objective.
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The maximum initial sales charge is 4.00% (Class A shares).
Cumulative Total Returns1 as of 2/28/06 | |||||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception2 | |||||||||||
Class A | 0.59 | % | 2.85 | % | 25.72 | % | 60.27 | % | 155.86 | % | |||||
Class B | 0.56 | 2.59 | 24.18 | 55.80 | 188.59 | ||||||||||
Class C | 0.33 | 2.23 | 22.52 | 51.80 | 69.71 | ||||||||||
Lehman Brothers Municipal Bond Index3 | 0.99 | 3.87 | 30.76 | 75.81 | *** | ||||||||||
Lipper Pennsylvania (PA) Muni Debt Funds Avg.4 | 0.81 | 3.37 | 26.63 | 60.25 | **** |
Average Annual Total Returns1 as of 3/31/06 | ||||||||||||
One Year | Five Years | Ten Years | Since Inception2 | |||||||||
Class A | –1.18 | % | 3.48 | % | 4.50 | % | 5.65 | % | ||||
Class B | –2.36 | 3.91 | 4.61 | 5.69 | ||||||||
Class C | 1.34 | 3.81 | 4.35 | 4.56 | ||||||||
Lehman Brothers Municipal Bond Index3 | 3.81 | 5.18 | 5.87 | *** | ||||||||
Lipper Pennsylvania (PA) Muni Debt Funds Avg.4 | 3.40 | 4.52 | 4.91 | **** |
Distributions and Yields1 as of 2/28/06 | ||||||||||||
Taxable Equivalent 30-Day Yield5 at Tax Rates of | ||||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | 33% | 35% | |||||||||
Class A | $ | 0.22 | 2.80 | % | 4.31 | % | 4.44 | % | ||||
Class B | $ | 0.21 | 2.67 | 4.11 | 4.24 | |||||||
Class C | $ | 0.20 | 2.42 | 3.73 | 3.84 |
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The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. Class A shares are subject to a maximum front-end sales charge of 4.00%. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class C shares are subject to a maximum CDSC of 5% and 1% respectively.
1Source: Prudential Investments LLC and Lipper Inc. The average annual total returns take into account applicable sales charges. During certain periods shown, fee waivers and/or expense reimbursements were in effect. Without such fee waivers and expense reimbursements, the returns for the share classes would have been lower. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.3%, 0.5%, and 1.0% respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Except where noted, the returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. Without waiver of fees and/or expense subsidization, the Series’ returns would have been lower.
2Inception dates: Class A, 1/22/90; Class B, 4/3/87; and Class C, 8/1/94.
3The Lehman Brothers Municipal Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.
4The Lipper PA Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper PA Muni Debt Funds category for the periods noted. Funds in the Lipper Average limit their assets to those securities that are exempt from taxation in Pennsylvania.
5Taxable equivalent yields reflect federal and applicable state tax rates.
Investors cannot invest directly in an index. The returns for the Lehman Brothers Municipal Bond Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
***Lehman Brothers Municipal Bond Index Closest Month-End to Inception cumulative total returns as of 2/28/06 are 189.45% for Class A, 248.45% for Class B, and 101.41% for Class C. Lehman Brothers Municipal Bond Index Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.75% for Class A and Class B, and 6.12% for Class C.
****Lipper Average Closest Month-End to Inception cumulative total returns as of 2/28/06 are 165.68% for Class A, 209.03% for Class B, and 82.07% for Class C. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/06 are 6.17% for Class A, 6.06% for Class B, and 5.21% for Class C.
Dryden Municipal Series Fund/Pennsylvania Series | 3 |
Your Series’ Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 2/28/06 | |||
Pittsburgh Wtr. & Swr. Auth., Wtr. & Swr. Sys. Rev., Ser. A, F.G.I.C., 9/01/13, 6.50% | 3.8 | % | |
Pennsylvania St. Ind. Dev. Auth. Rev., Econ. Dev., A.M.B.A.C., 7/01/17, 5.50% | 3.6 | ||
Canon McMillan Sch. Dist., Ser. B, F.G.I.C., G.O., 12/01/29, 5.50% | 2.6 | ||
Montgomery Cnty., G.O., 9/15/16, 5.25% | 2.5 | ||
Pennsylvania St. Ind. Dev. Auth. Rev., Econ. Dev., A.M.B.A.C., 7/01/20, 5.50% | 2.5 |
Issues are subject to change.
Credit Quality expressed as a percentage of net assets as of 2/28/06 | |||
Aaa | 74.7 | % | |
Aa | 3.6 | ||
A | 10.4 | ||
Baa | 5.6 | ||
NR | 6.5 | ||
Total Investments | 100.8 | ||
Liabilities in excess of other assets | -0.8 | ||
Net Assets | 100.0 | % | |
Source: Moody’s rating, defaulting to S&P when not rated by Moody’s.
Credit quality is subject to change.
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Fees and Expenses (Unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Series expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2005, at the beginning of the period, and held through the six-month period ended February 28, 2006.
The Series’ transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to Individual Retirement Accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of JennisonDryden or Strategic Partners Funds, including the Series, that you own. You should consider the additional fees that were charged to your Series account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and
Dryden Municipal Series Fund/Pennsylvania Series | 5 |
Fees and Expenses (continued)
expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Dryden Municipal Pennsylvania Series | Beginning Account Value September 1, 2005 | Ending Account Value February 28, 2006 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six- Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,005.90 | 1.02 | % | $ | 5.07 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.74 | 1.02 | % | $ | 5.11 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,005.60 | 1.27 | % | $ | 6.32 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,018.50 | 1.27 | % | $ | 6.36 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 1,003.30 | 1.52 | % | $ | 7.55 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,017.26 | 1.52 | % | $ | 7.60 |
* Series expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2006, and divided by the 365 days in the Series’ fiscal year ending August 31, 2006 (to reflect the six-month period).
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Portfolio of Investments
as of February 28, 2006 (Unaudited)
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
LONG-TERM INVESTMENTS 96.8% | ||||||||||||
Municipal Bonds | ||||||||||||
Allegheny Cnty. San. Auth. Swr. Rev., M.B.I.A. | Aaa | 5.375% | 12/01/17 | $ | 2,000 | $ | 2,177,520 | |||||
M.B.I.A(b) | Aaa | 5.50 | 12/01/10 | 2,500 | 2.715,875 | |||||||
M.B.I.A(b) | Aaa | 5.50 | 12/01/10 | 2,540 | 2,759,329 | |||||||
Unrefunded Balance, M.B.I.A. | Aaa | 5.50 | 12/01/30 | 460 | 496,561 | |||||||
Allentown, G.O., F.G.I.C. | Aaa | 5.00 | 10/01/22 | 1,350 | 1,434,780 | |||||||
Armstrong Cnty., G.O., M.B.I.A. | Aaa | 5.40 | 6/01/31 | 2,000 | 2,140,860 | |||||||
Bensalem Twnshp. Sch. Dist., G.O., F.G.I.C. | Aaa | 5.00 | 8/15/20 | 1,375 | 1,454,998 | |||||||
Berks Cnty. Mun. Auth. Hosp. Rev., Reading Hosp. Med. Ctr. Proj., M.B.I.A. | Aaa | 5.70 | 10/01/14 | 1,250 | 1,405,975 | |||||||
Bristol Boro Sch. Dist., G.O., F.S.A. | Aaa | 5.25 | 3/01/31 | 1,000 | 1,083,240 | |||||||
Bucks Cnty. Wtr. & Swr. Auth. Rev., Ser. A, A.M.B.A.C. | Aaa | 5.375 | 6/01/16 | 1,080 | 1,175,645 | |||||||
Canon McMillan Sch. Dist., Ser. B, F.G.I.C., G.O.(e) | Aaa | 5.50 | 12/01/29 | 3,000 | 3,213,420 | |||||||
Central Bucks Sch. Dist., G.O., M.B.I.A. | Aaa | 5.00 | 5/15/15 | 2,000 | 2,150,340 | |||||||
M.B.I.A. | Aaa | 5.00 | 5/15/16 | 2,000 | 2,150,340 | |||||||
Chambersburg Area Sch. Dist., G.O., F.S.A. | Aaa | 5.00 | 3/01/24 | 1,000 | 1,051,230 | |||||||
Chartiers Valley Sch. Dist., G.O., Ser. A, F.S.A. | Aaa | 5.00 | 10/15/22 | 2,570 | 2,738,515 | |||||||
Delaware Cnty. Auth. Rev., Dunwoody Vlge. Proj. | A-(c) | 6.25 | 4/01/30 | 1,000 | 1,053,610 | |||||||
Delaware River Port Auth. PA & NJ Rev., F.G.I.C. | Aaa | 5.40 | 1/01/16 | 2,750 | 2,809,400 | |||||||
Port Dist. Proj., Ser. B, F.S.A. | Aaa | 5.70 | 1/01/22 | 1,000 | 1,072,660 | |||||||
Easton Area Sch. Dist., G.O., F.G.I.C. | Aaa | 5.00 | 3/15/15 | 2,360 | 2,535,112 | |||||||
Erie Cnty., Indl. Dev. G.O., Ser. B, F.G.I.C. | Aaa | 5.00 | 9/01/23 | 2,450 | 2,618,193 | |||||||
Erie Parking Auth. Facs. Rev. Gtd., F.S.A. | Aaa | 5.00 | 9/01/26 | 1,000 | 1,051,720 | |||||||
Greater Johnstown Sch. Dist., G.O., Ser. B, M.B.I.A. | Aaa | 5.50 | 8/01/17 | 1,250 | 1,359,675 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 7 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Kennett Cons. Sch. Dist., G.O., Ser. A, F.G.I.C. | Aaa | 5.50% | 2/15/16 | $ | 1,035 | $ | 1,138,811 | |||||
Lancaster Cnty. Hosp Auth. Rev., Gen. Hosp. Proj. | A(c) | 5.50 | 3/15/26 | 1,500 | 1,579,365 | |||||||
Lancaster Ind. Dev. Auth. Rev., Garden Spot Vlge. Proj., Ser. A | NR | 7.625 | 5/01/31 | 1,000 | 1,090,030 | |||||||
Lebanon Cnty. Hlth. Facs. Auth. Rev., Good Samaritan Hosp. Proj. | Baa1 | 6.00 | 11/15/35 | 1,000 | 1,078,410 | |||||||
Lehigh Cnty. Ind. Dev. Auth. Poll. Ctrl. Rev., Rfdg. Elec. Util. Corp. Proj., F.G.I.C. | Aaa | 4.75 | 2/15/27 | 1,000 | 1,021,960 | |||||||
Monroe Cnty. Hosp. Auth. Rev., Pocono Med. Center | BBB+(c) | 6.00 | 1/01/43 | 750 | 802,470 | |||||||
Montgomery Cnty., G.O. | Aaa | 5.25 | 9/15/16 | 2,895 | 3,121,881 | |||||||
Neshaminy Sch. Dist. G.O., A.M.B.A.C. | Aaa | 5.00 | 5/01/24 | 2,000 | 2,139,820 | |||||||
Northampton Cnty. Higher Ed. Auth. Rev., Moravian Coll., A.M.B.A.C. | Aaa | 6.25 | 7/01/11 | 2,195 | 2,422,139 | |||||||
Owen J. Roberts Sch. Dist., G.O., F.S.A. | Aaa | 5.50 | 8/15/19 | 1,520 | 1,681,971 | |||||||
Pennridge Sch. Dist., G.O., M.B.I.A. | Aaa | 5.125 | 2/15/19 | 1,610 | 1,727,208 | |||||||
Pennsylvania Econ. Dev. Fin. Rev., Auth. Res. Recov. Rev. Rfdg. Colver Proj., Ser. F, A.M.B.A.C., A.M.T. | Aaa | 5.00 | 12/01/15 | 500 | 532,960 | |||||||
Rfdg. Sub-Colver Proj., Ser. G, A.M.T. | NR | 5.125 | 12/01/15 | 500 | 497,080 | |||||||
Pennsylvania St. Higher Edl. Facs. Auth. Rev., | ||||||||||||
Drexel Univ.(b) | A2 | 6.00 | 5/01/09 | 2,500 | 2,684,325 | |||||||
Philadelphia Univ. | Baa2 | 6.10 | 6/01/30 | 90 | 97,107 | |||||||
Temple Univ., 1st Ser., M.B.I.A. | Aaa | 5.00 | 4/01/21 | 2,265 | 2,347,899 | |||||||
Thomas Jefferson Univ. | A1 | 5.50 | 1/01/17 | 1,000 | 1,080,870 | |||||||
Trustees Univ., Ser. C | Aa3 | 5.00 | 7/15/21 | 2,290 | 2,449,063 | |||||||
Ursinus Coll., Ser. A(b) | NR | 5.90 | 1/01/07 | 1,925 | 2,001,923 | |||||||
Pennsylvania St. Ind. Dev. Auth. Rev., Econ. Dev., A.M.B.A.C. | Aaa | 5.50 | 7/01/17 | 4,000 | 4,404,160 | |||||||
A.M.B.A.C. | Aaa | 5.50 | 7/01/20 | 2,750 | 3,027,860 |
See Notes to Financial Statements.
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Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Pennsylvania St. Tpke. Comn. Rev., Ser. A, F.S.A. | Aaa | 5.25% | 7/15/21 | $ | 2,045 | $ | 2,328,846 | |||||
Oil Franchise Tax Rev., Ser. A, A.M.B.A.C. | Aaa | 5.25 | 12/01/18 | 1,065 | 1,120,689 | |||||||
Ser. A, A.M.B.A.C., E.T.M.(b) | Aaa | 5.25 | 12/01/18 | 1,435 | 1,512,748 | |||||||
Philadelphia Ind. Dev. Auth. Lease Rev., Ser. B, F.S.A. | Aaa | 5.50 | 10/01/18 | 2,000 | 2,184,900 | |||||||
Philadelphia Hosps. & Higher Ed. Facs. Auth. Hosp. Rev., Grad. Hlth. Sys. (cost $1,820,479; purchased 8/27/96-7/2/98)(d)(f) | Ca | Zero | 7/01/18 | 1,803 | 18 | |||||||
Philadelphia Parking Auth. Rev., Arpt., F.S.A. | Aaa | 5.625 | 9/01/19 | 2,500 | 2,672,725 | |||||||
Philadelphia Wtr. & Wste Wtr. Rev., Ser. A, F.S.A. | Aaa | 5.25 | 7/01/19 | 2,000 | 2,194,800 | |||||||
Philadelphia, G.O., F.G.I.C. | Aaa | 5.125 | 5/15/14 | 1,800 | 1,896,588 | |||||||
Pittsburgh Urban Redev. Auth., Mtge. Rev., F.H.A. Mtgs., G.N.M.A./F.N.M.A., Ser. A, A.M.T. | Aa1 | 6.25 | 10/01/28 | 820 | 821,296 | |||||||
Pittsburgh Wtr. & Swr. Auth., Wtr. & Swr. Sys. Rev., Ser. A, F.G.I.C. | Aaa | 6.50 | 9/01/13 | 4,000 | 4,619,960 | |||||||
Puerto Rico Comnwlth., Pub. Impvt., G.O. Rfdg., M.B.I.A., | Baa2 | 7.00 | 7/01/10 | 720 | 820,642 | |||||||
R.I.T.E.S., PA 625, A.M.B.A.C., G.O. (cost $2,330,875; purchased 3/01/00)(f) | NR | 11.375(g) | 7/01/10 | 2,015 | 2,578,313 | |||||||
R.I.T.E.S., PA 642A, M.B.I.A., G.O. (cost ($1,586,670; purchased 3/29/00)(f) | NR | 8.89(g) | 7/01/10 | 1,500 | 1,775,850 | |||||||
Puerto Rico Comnwlth., Hwy. & Trans. Auth. Rev., Ser. I, F.G.I.C. | Aaa | 5.00 | 7/01/25 | 2,000 | 2,125,980 | |||||||
Puerto Rico Municipal Finance Agcy G.O. | Baa2 | 5.25 | 8/01/25 | 500 | 536,875 | |||||||
Schuylkill Cnty. Ind. Dev. Auth. Rev., Pine Grove Landfill, Inc., A.M.T. | BBB(c) | 5.10 | 4/01/09 | 1,000 | 1,021,710 | |||||||
Springfield Sch. Dist., Delaware Cnty., G.O., F.S.A.(b) | Aaa | 5.50 | 3/15/12 | 2,450 | 2,698,381 |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 9 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Union Cnty. Higher Ed. Facs. Fin. Auth. Univ. Rev., Bucknell Univ., Ser. A | Aa2 | 5.25% | 4/01/20 | $ | 1,080 | $ | 1,170,925 | |||||
Unity Twnshp. Mun. Auth., Gtd. Swr. Rev., A.M.B.A.C., C.A.B.S., E.T.M.(b) | Aaa | Zero | 11/01/12 | 1,035 | 804,350 | |||||||
Upper Darby Sch. Dist., G.O., F.G.I.C. | Aaa | 5.00 | 5/01/20 | 1,265 | 1,358,268 | |||||||
Virgin Islands Pub. Fin. Auth. Rev., Gross Rcpts. Taxes Ln. Nts., F.S.A. | Aaa | 5.00 | 10/01/22 | 1,000 | 1,072,820 | |||||||
Washington Cnty. Hosp. Auth. Rev., Monongahela Valley Hosp. | A3 | 6.25 | 6/01/22 | 2,400 | 2,647,608 | |||||||
Westmoreland Cnty. Industrial Dev. Auth. Rev., Gtd., Valley Landfill Proj., A.M.T. | BBB(c) | 5.10 | 5/01/09 | 1,000 | 1,028,320 | |||||||
York County, | Aaa | 5.00 | 6/01/26 | 1,007 | 1,062,620 | |||||||
G.O. M.B.I.A. | Aaa | 5.00 | 6/01/29 | 1,190 | 1,261,590 | |||||||
Total long-term investments (cost $115,622,882) | 118,893,132 | |||||||||||
SHORT-TERM INVESTMENTS 4.0% | ||||||||||||
Municipal Bonds | ||||||||||||
Delaware River Port Auth. PA & NJ Rev., F.S.A., Mun. Secs. Tr. Rcpts. Ser. SGA 89, F.R.D.D.(h) | A-1+(c) | 3.05 | 3/01/06 | 100 | 100,000 | |||||||
Penn St. G.O., Municipal Secs. Trust Ctfs., 144A, F.R.D.D.(h) | NR | 3.02 | 3/01/06 | 1,100 | 1,100,000 | |||||||
Philadelphia Hosps. & Higher Ed. Var., Children’s Hosp., Ser. H, M.B.I.A., F.R.D.D.(h) | VMIG1 | 2.99 | 3/01/06 | 1,800 | 1,800,000 | |||||||
Ser. A, F.R.D.D.(h) | VMIG1 | 2.99 | 3/01/06 | 1,300 | 1,300,000 | |||||||
South Fork Municipal Auth. Rev., M.B.I.A., F.R.D.D.(h) | A-1(c) | 2.94 | 3/01/06 | 650 | 650,000 | |||||||
Total short-term investments (cost $4,950,000) | 4,950,000 | |||||||||||
See Notes to Financial Statements.
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Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Total Investments 100.8% (cost $120,572,882; Note 5) | $ | 123,843,132 | ||||||||||
Liabilities in excess of other assets(i) (0.8)% | (982,111 | ) | ||||||||||
Net Assets 100% | $ | 122,861,021 | ||||||||||
(a) | The following abbreviations are used in portfolio descriptions: |
A.M.B.A.C.—American Municipal Bond Assurance Corporation.
A.M.T.—Alternative Minimum Tax.
C.A.B.S.—Capital Appreciation Bonds.
E.T.M.—Escrowed to Maturity.
F.G.I.C.—Financial Guaranty Insurance Company.
F.N.M.A.—Federal National Mortgage Association.
F.R.D.D.—Floating Rate (Daily) Demand Note.
F.S.A.—Financial Security Assurance.
G.N.M.A.—Government National Mortgage Association.
G.O.—General Obligation.
M.B.I.A.—Municipal Bond Insurance Corporation.
NR—Not Rated by Moody’s or Standard & Poor’s.
The Fund’s current Statement of Additional Information contains a description of Moody’s and Standard & Poor’s ratings.
R.I.T.E.S.—Residual Interest Tax Exempt Securities Receipts.
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1993 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
(b) | Prerefunded issues are secured by escrowed cash and/or direct U.S. guaranteed obligations. |
(c) | Standard & Poor’s Rating. |
(d) | Issuer in default on interest payments. Non-income producing security. |
(e) | Partial principal amount pledged as collateral for financial futures contracts. |
(f) | Indicates an illiquid security restricted as to resale. |
(g) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate in effect at February 28, 2006. |
(h) | For purposes of amortized cost valuation, the maturity date of Floating Rate Demand Notes is considered to be the later of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. |
(i) | Liabilities in excess of other assets include net unrealized appreciation (depreciation) on financial on financial futures contracts as follows: |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 11 |
Portfolio of Investments
as of February 28, 2006 (Unaudited) Cont’d.
Open futures contracts as of February 28, 2006:
Number of Contracts | Type | Expiration Date | Value at February 28, 2006 | Value at Trade Date | Unrealized Appreciation | ||||||||
Long Positions: | �� | ||||||||||||
3 | U.S. Treasury Bonds | Mar. 2006 | $ | 339,281 | $ | 334,251 | $ | 5,030 | |||||
13 | U.S. Treasury Bonds | June 2006 | 1,470,219 | 1,463,892 | 6,327 | ||||||||
11,357 | |||||||||||||
Short Positions: | |||||||||||||
43 | U.S. Treasury 10 Yr. Notes | June 2006 | 4,605,031 | 4,625,590 | $ | 20,559 | |||||||
12 | U.S. Treasury 5 Yr. Notes | June 2006 | 1,262,250 | 1,262,995 | 745 | ||||||||
2 | U.S. Treasury 2 Yr. Notes | June 2006 | 408,156 | 408,750 | 594 | ||||||||
21,898 | |||||||||||||
$ | 33,255 | ||||||||||||
The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of February 28, 2006 were as follows:
General Obligation | 36.6 | % | |
Education | 13.8 | ||
Water & Sewer | 13.8 | ||
Transportation | 11.1 | ||
Healthcare | 7.9 | ||
Pooled Financing | 6.0 | ||
Corporate Backed IDB & PCR | 4.3 | ||
Short-Term Investments | 4.0 | ||
Other | 0.9 | ||
Special Tax/Assessment District | 0.9 | ||
Solid Waste/Resource Recovery | 0.8 | ||
Housing | 0.7 | ||
Total Investments | 100.8 | ||
Liabilities in excess of other assets | (0.8 | ) | |
Total | 100.0 | % | |
Industry classification is subject to change.
See Notes to Financial Statements.
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Financial Statements
FEBRUARY 28, 2006 | SEMIANNUAL REPORT |
Dryden Municipal Series Fund
Pennsylvania Series
Statement of Assets and Liabilities
as of February 28, 2006 (Unaudited)
Assets | |||
Investments, at value (cost $120,572,882) | $ | 123,843,132 | |
Cash | 12,872 | ||
Interest receivable | 1,661,193 | ||
Receivable for Series shares sold | 27,496 | ||
Prepaid expenses | 6,233 | ||
Total assets | 125,550,926 | ||
Liabilities | |||
Payable for investments purchased | 2,122,660 | ||
Payable for Series shares reacquired | 330,648 | ||
Accrued expenses | 113,699 | ||
Management fee payable | 47,265 | ||
Distribution fee payable | 28,049 | ||
Dividends payable | 22,655 | ||
Due to broker—variation margin | 8,145 | ||
Deferred trustees’ fees | 7,920 | ||
Transfer agent fee payable | 8,864 | ||
Total liabilities | 2,689,905 | ||
Net Assets | $ | 122,861,021 | |
Net assets were comprised of: | |||
Shares of beneficial interest, at par | $ | 122,026 | |
Paid-in capital in excess of par | 118,911,363 | ||
119,033,389 | |||
Undistributed net investment income | 146,662 | ||
Accumulated net realized gain on investments | 413,424 | ||
Net unrealized appreciation on investments | 3,267,546 | ||
Net assets, February 28, 2006 | $ | 122,861,021 | |
See Notes to Financial Statements.
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Class A | |||
Net asset value and redemption price per share ($101,311,543 ÷ 10,061,663 shares of beneficial interest issued and outstanding) | $ | 10.07 | |
Maximum sales charge (4% of offering price) | 0.42 | ||
Maximum offering price to public | $ | 10.49 | |
Class B | |||
Net asset value, offering price and redemption price per share ($20,243,565 ÷ 2,011,183 shares of beneficial interest issued and outstanding) | $ | 10.07 | |
Class C | |||
Net asset value, offering price and redemption price per share ($1,305,913 ÷ 129,752 shares of beneficial interest issued and outstanding) | $ | 10.06 | |
Dryden Municipal Series Fund/Pennsylvania Series | 15 |
Statement of Operations
Six Months Ended February 28, 2006 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest | $ | 2,949,890 | ||
Expenses | ||||
Management fee | 314,600 | |||
Distribution fee—Class A | 128,589 | |||
Distribution fee—Class B | 54,023 | |||
Distribution fee—Class C | 5,098 | |||
Custodian’s fees and expenses | 45,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $29,156) | 35,000 | |||
Reports to shareholders | 30,000 | |||
Registration fees | 22,000 | |||
Audit fee | 12,000 | |||
Legal fees and expenses | 12,000 | |||
Trustees’ fees | 6,000 | |||
Miscellaneous | 7,103 | |||
Total expenses | 671,413 | |||
Less: Custodian fee credit (Note 1) | (562 | ) | ||
Net expenses | 670,851 | |||
Net investment income | 2,279,039 | |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain on: | ||||
Investment transactions | 531,167 | |||
Financial futures transactions | 13,792 | |||
544,959 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (2,334,495 | ) | ||
Financial futures contracts | 105,839 | |||
(2,228,656 | ) | |||
Net loss on investments | (1,683,697 | ) | ||
Net Increase In Net Assets Resulting From Operations | $ | 595,342 | ||
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
Six Months Ended February 28, 2006 | Year Ended August 31, 2005 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 2,279,039 | $ | 4,886,125 | ||||
Net realized gain on investments | 544,959 | 6,600 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (2,228,656 | ) | 697,557 | |||||
Net increase in net assets resulting from operations | 595,342 | 5,590,282 | ||||||
Dividends and distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (1,857,422 | ) | (3,935,694 | ) | ||||
Class B | (362,884 | ) | (950,827 | ) | ||||
Class C | (21,132 | ) | (47,127 | ) | ||||
(2,241,438 | ) | (4,933,648 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | (450,351 | ) | (348,163 | ) | ||||
Class B | (94,450 | ) | (96,332 | ) | ||||
Class C | (5,769 | ) | (4,920 | ) | ||||
(550,570 | ) | (449,415 | ) | |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 998,055 | 4,208,018 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 1,785,997 | 3,191,558 | ||||||
Cost of shares reacquired | (11,793,575 | ) | (19,808,554 | ) | ||||
Decrease in net assets from Series share transactions | (9,009,523 | ) | (12,408,978 | ) | ||||
Total decrease | (11,206,189 | ) | (12,201,759 | ) | ||||
Net Assets | ||||||||
Beginning of period | 134,067,210 | 146,268,969 | ||||||
End of period(a) | $ | 122,861,021 | $ | 134,067,210 | ||||
(a) Includes undistributed net investment income of: | $ | 146,662 | $ | 109,061 | ||||
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 17 |
Notes to Financial Statements
(Unaudited)
Dryden Municipal Series Fund (the “Fund”), is registered under the Investment Company Act of 1940, as an open-end management investment company. The Fund was organized as a Massachusetts business trust on May 18, 1984 and consists of four series. These financial statements relate only to Pennsylvania Series (the “Series”). The financial statements of the other series are not presented herein. The assets of each Series are invested in separate, independently managed portfolios. The Series commenced investment operations on April 3, 1987. The Series’ investment objective is to maximize current income that is exempt from Commonwealth of Pennsylvania personal income tax and federal income tax, consistent with the preservation of capital. This means the Series invests at least 80% of the Series’ investments in Pennsylvania state and local municipal bonds, which are debt obligations or fixed income securities, including notes, commercial paper and other securities, as well as obligations of other issuer (such as issuers located in Puerto Rico, the Virgin Islands and Guam) that pay interest income that is tax exempt from those taxes. The ability of the issuers of the securities held by the Series to meet their obligations may be affected by economic or political developments in a specific state, industry or region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund and the Series, in the preparation of its financial statements.
Securities Valuations: The Series values municipal securities (including commitments to purchase such securities on a “when-issued” basis) as of the close of trading on the New York Stock Exchange, on the basis of prices provided by a pricing service which uses information with respect to transactions in comparable securities and various relationships between securities in determining values. Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”) in consultation with the subadvisor, to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker.
Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or
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board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which reliable market quotations are not readily available or for which the pricing service does not provide a valuation methodology, or does not present fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Short-term securities which mature in sixty days or less are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term securities which mature in more than sixty days are valued at current market quotations.
Restricted Securities: The Series may hold up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities include registration rights under which the Series may demand registration by the issuers. Restricted securities, sometimes referred to as private placements, are valued pursuant to the valuation procedures noted above.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Series each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed, the gain or
Dryden Municipal Series Fund/Pennsylvania Series | 19 |
Notes to Financial Statements
(Unaudited) Cont’d
loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures transactions.
The Series invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Series intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, the Series may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Future contracts involve elements of both market and credit risk in excess of the amount reflected on the Statement of Assets and Liabilities.
Inverse Floaters: The Series invests in variable rate securities commonly called “inverse floaters”. The interest rates on these securities have an inverse relationship to the interest rate of other securities or the value of an index. Changes in interest rates on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater’s price will be more volatile than that of a fixed-rate bond.
Additionally, some of these securities contain a “leverage factor” whereby the interest rate moves inversely by a “factor” to the benchmark rate. Certain interest rate movements and other market factors can substantially affect the liquidity of inverse floating rate notes.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment on sales of portfolio securities are calculated on the identified cost basis. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on the accrual basis.
Net investment income or loss (other than distribution fees which are charged directly to respective class) and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Federal Income Taxes: For federal income tax purposes, each series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the
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requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.
Dividends and Distributions: The Series declares daily dividends from net investment income. Payment of dividends is made monthly. Distributions of net capital gains, if any, are made annually.
Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested monies earn credits which reduce the fees charged by the custodian. Such custody fee credits are presented as a reduction of gross expenses in the accompanying Statement of Operations.
Estimates: The preparation of the financial Statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM furnishes investment advisory services in connection with the management of the Series. In connection therewith, PIM is obligated to keep certain books and records of the Series. PI pays for the services of PIM, the cost of the compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is accrued daily and payable monthly, at an annual rate of ..50 of 1% of the average daily net assets up to and including $1 billion and .45 of 1% of such average daily net assets in excess of $1 billion of the Series. The effective management fee was .50 of 1% for the six months ended February 28, 2006.
Dryden Municipal Series Fund/Pennsylvania Series | 21 |
Notes to Financial Statements
(Unaudited) Cont’d
The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Series. The Series compensated PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares, pursuant to plans of distribution (the “Class A, B and C Plans”), regardless of expenses actually incurred by PIMS. The distribution fees for Class A, Class B and Class C shares are accrued daily and payable monthly.
Pursuant to the Class A, B and C Plans, the Series compensates PIMS for distribution- related activities at an annual rate of up to .30 of 1%, .50 of 1% and up to 1%, of the average daily net assets of the Class A, B and C shares, respectively. PIMS contractually agreed to limit such fees to .25 of 1% and .75 of 1% of the Class A shares and Class C shares, respectively.
PIMS has advised the Series that it received approximately $11,600 in front-end sales charges resulting from sales of Class A shares, during the six months ended February 28, 2006. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended February 28, 2006, they received approximately $52,500 and $300 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively.
PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
The Series, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA would be incurred at market rates. For the period from October 29, 2004 through October 28, 2005, the Fund paid a commitment fee of .075 of 1% of the unused portion of the agreement. Effective October 29, 2005, the Funds renewed the SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Fund pays a commitment fee of .0725 of 1% of the unused portion of the renewed SCA. The commitment fee is accrued daily and paid quarterly and is allocated to the Funds pro-rata based on net assets. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date
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of the renewed SCA is October 27, 2006. The Series did not borrow any amounts pursuant to the SCA during the six months ended February 28, 2006.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to nonaffiliates, where applicable.
The Series pays networking fees to affiliated and unaffiliated broker/dealers. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. First Clearing Corporation, an affiliate of PI, served as a broker/dealer. During the six months ended February 28, 2006, the Series incurred approximately $4,600 in total networking fees . These amounts are included in transfer agent’s fees and expenses in the Statement of Operations.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Series, excluding short-term investments, for the six months ended February 28, 2006 were $7,463,744 and $18,032,181, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of February 28, 2006 were as follows:
Tax Basis of Investments | Appreciation | Depreciation | Net Unrealized | |||
$120,534,831 | $5,146,652 | $1,838,351 | $3,308,301 |
The difference between book basis and tax basis is attributable to the difference in the treatment of premium amortization and accreting market discount for book and tax purposes.
Note 6. Capital
The Series offers Class A, Class B, and Class C. Class A shares are sold with an initial sales charge of up to 4%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to
Dryden Municipal Series Fund/Pennsylvania Series | 23 |
Notes to Financial Statements
(Unaudited) Cont’d
a contingent deferred sales charge (CDSC) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are sold with a CDSC which declines from 5% to zero depending upon the period of time the shares are held. Class C shares purchased are subject to a CDSC of 1% within 12 months from the date of purchase. Class B shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value.
The Series has authorized an unlimited number of shares of beneficial interest of each class at $.01 par value per share.
Transactions in shares of beneficial interest for the six months ended February 28, 2006 and for the fiscal year ended August 31, 2005 were as follows:
Class A | Shares | Amount | |||||
Six months ended February 28, 2006: | |||||||
Shares sold | 48,660 | $ | 490,865 | ||||
Shares issued in reinvestment of dividends and distributions | 147,139 | 1,479,361 | |||||
Shares reacquired | (774,310 | ) | (7,798,488 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (578,511 | ) | (5,828,262 | ) | |||
Shares issued upon conversion from Class B | 172,076 | 1,740,822 | |||||
Net increase (decrease) in shares outstanding | (406,435 | ) | $ | (4,087,440 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 277,249 | $ | 2,829,005 | ||||
Shares issued in reinvestment of dividends and distributions | 250,019 | 2,554,440 | |||||
Shares reacquired | (1,535,697 | ) | (15,687,243 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (1,008,429 | ) | (10,303,798 | ) | |||
Shares issued upon conversion from Class B | 404,130 | 4,127,863 | |||||
Net increase (decrease) in shares outstanding | (604,299 | ) | $ | (6,175,935 | ) | ||
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Class B | Shares | Amount | |||||
Six months ended February 28, 2006: | |||||||
Shares sold | 48,876 | $ | 491,347 | ||||
Shares issued in reinvestment of dividends and distributions | 28,280 | 284,191 | |||||
Shares reacquired | (373,355 | ) | (3,766,656 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (296,199 | ) | (2,991,118 | ) | |||
Shares reacquired upon conversion into Class A | (172,246 | ) | (1,740,822 | ) | |||
Net increase (decrease) in shares outstanding | (468,445 | ) | $ | (4,731,940 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 116,507 | $ | 1,190,935 | ||||
Shares issued in reinvestment of dividends and distributions | 58,189 | 594,445 | |||||
Shares reacquired | (380,811 | ) | (3,882,792 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (206,115 | ) | (2,097,412 | ) | |||
Shares reacquired upon conversion into Class A | (404,223 | ) | (4,127,863 | ) | |||
Net increase (decrease) in shares outstanding | (610,338 | ) | $ | (6,225,275 | ) | ||
Class C | |||||||
Six months ended February 28, 2006: | |||||||
Shares sold | 1,573 | $ | 15,843 | ||||
Shares issued in reinvestment of dividends and distributions | 2,233 | 22,445 | |||||
Shares reacquired | (22,696 | ) | (228,431 | ) | |||
Net increase (decrease) in shares outstanding | (18,890 | ) | $ | (190,143 | ) | ||
Year ended August 31,2005: | |||||||
Shares sold | 18,416 | $ | 188,078 | ||||
Shares issued in reinvestment of dividends and distributions | 4,178 | 42,673 | |||||
Shares reacquired | (23,378 | ) | (238,519 | ) | |||
Net increase (decrease) in shares outstanding | (784 | ) | $ | (7,768 | ) | ||
Dryden Municipal Series Fund/Pennsylvania Series | 25 |
Financial Highlights
(Unaudited)
Class A | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.24 | ||
Income (loss) from investment operations: | ||||
Net investment income | .19 | |||
Net realized and unrealized gain (loss) on investments | (.14 | ) | ||
Total from investment operations | .05 | |||
Less Distributions: | ||||
Dividends from net investment income | (.18 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total distributions | (0.22 | ) | ||
Net asset value, end of period | $ | 10.07 | ||
Total Return(a): | .59 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 101,312 | ||
Average net assets (000) | $ | 103,724 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.02 | %(e) | ||
Expenses, excluding distribution and service (12b-1) fees | .77 | %(e) | ||
Net investment income | 3.67 | %(e) | ||
For class A, B and C shares: | ||||
Portfolio turnover rate | 6 | %(f) |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. |
(b) | Less than $.005 per share. |
(c) | The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% of the average daily net assets of the Class A shares. |
(d) | Effective September 1, 2001 the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.70% to 4.73%. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
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Class A | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(d) | 2001 | ||||||||||||||
$ | 10.22 | $ | 10.36 | $ | 10.54 | $ | 10.52 | $ | 10.05 | |||||||||
.37 | .37 | .43 | .49 | .51 | ||||||||||||||
.05 | .26 | (.16 | ) | .02 | .47 | |||||||||||||
.42 | .63 | .27 | .51 | .98 | ||||||||||||||
(.37 | ) | (.38 | ) | (.43 | ) | (.49 | ) | (.51 | ) | |||||||||
(.03 | ) | (.39 | ) | (.02 | ) | — | — | (b) | ||||||||||
(0.40 | ) | (0.77 | ) | (0.45 | ) | (.49 | ) | (0.51 | ) | |||||||||
$ | 10.24 | $ | 10.22 | $ | 10.36 | $ | 10.54 | $ | 10.52 | |||||||||
4.18 | % | 6.23 | % | 2.57 | % | 5.03 | % | 10.07 | % | |||||||||
$ | 107,169 | $ | 113,170 | $ | 121,771 | $ | 126,410 | $ | 123,254 | |||||||||
$ | 109,473 | $ | 118,384 | $ | 125,733 | $ | 123,971 | $ | 116,925 | |||||||||
1.01 | % | .99 | % | .97 | % | .96 | % | .93 | % | |||||||||
.76 | % | .74 | % | .72 | % | .71 | % | .68 | % | |||||||||
3.56 | % | 3.57 | % | 4.08 | % | 4.73 | % | 4.97 | % | |||||||||
14 | % | 32 | % | 45 | % | 31 | % | 35 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 27 |
Financial Highlights
(Unaudited) Cont’d
Class B | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.23 | ||
Income (loss) from investment operations: | ||||
Net investment income | .18 | |||
Net realized and unrealized gain (loss) on investments | (.13 | ) | ||
Total from investment operations | .05 | |||
Less Distributions: | ||||
Dividends from net investment income | (.17 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total distributions | (0.21 | ) | ||
Net asset value, end of period | $ | 10.07 | ||
Total Return(a): | .56 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 20,244 | ||
Average net assets (000) | $ | 21,788 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.27 | %(e) | ||
Expenses, excluding distribution and service (12b-1) fees | .77 | %(e) | ||
Net investment income | 3.42 | %(e) |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. |
(b) | Less than $.005 per share. |
(d) | Effective September 1, 2001 the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.46% to 4.49%. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(e) | Annualized. |
See Notes to Financial Statements.
28 | Visit our website at www.jennisondryden.com |
Class B | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(d) | 2001 | ||||||||||||||
$ | 10.22 | $ | 10.35 | $ | 10.53 | $ | 10.52 | $ | 10.05 | |||||||||
.34 | .34 | .40 | .46 | .48 | ||||||||||||||
.04 | .27 | (.16 | ) | .01 | .47 | |||||||||||||
.38 | .61 | .24 | .47 | .95 | ||||||||||||||
(.34 | ) | (.35 | ) | (.40 | ) | (.46 | ) | (.48 | ) | |||||||||
(.03 | ) | (.39 | ) | (.02 | ) | — | — | (b) | ||||||||||
(0.37 | ) | (0.74 | ) | (0.42 | ) | (.46 | ) | (0.48 | ) | |||||||||
$ | 10.23 | $ | 10.22 | $ | 10.35 | $ | 10.53 | $ | 10.52 | |||||||||
3.82 | % | 6.07 | % | 2.32 | % | 4.68 | % | 9.79 | % | |||||||||
$ | 25,377 | $ | 31,572 | $ | 36,607 | $ | 40,653 | $ | 41,638 | |||||||||
$ | 28,402 | $ | 34,324 | $ | 39,012 | $ | 39,674 | $ | 44,507 | |||||||||
1.26 | % | 1.24 | % | 1.22 | % | 1.21 | % | 1.18 | % | |||||||||
.76 | % | .74 | % | .72 | % | .71 | % | .68 | % | |||||||||
3.31 | % | 3.32 | % | 3.84 | % | 4.49 | % | 4.74 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 29 |
Financial Highlights
(Unaudited) Cont’d
Class C | ||||
Six Months Ended February 28, 2006 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.23 | ||
Income (loss) from investment operations: | ||||
Net investment income | .16 | |||
Net realized and unrealized gain (loss) on investments | (.13 | ) | ||
Total from investment operations | .03 | |||
Less Distributions: | ||||
Dividends from net investment income | (.16 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total distributions | (0.20 | ) | ||
Net asset value, end of period | $ | 10.06 | ||
Total Return(a): | .33 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 1,306 | ||
Average net assets (000) | $ | 1,371 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.52 | %(e) | ||
Expenses, excluding distribution and service (12b-1) fees | .77 | %(e) | ||
Net investment income | 3.17 | %(e) |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. |
(b) | Less than $.005 per share. |
(c) | The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .75 of 1% of the average daily net assets of the Class C shares. |
(d) | Effective September 1, 2001 the Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $0.005 and increase the ratio of net investment income from 4.20% to 4.23%. Per shares amounts and ratios for the year ended prior to August 31, 2002 have not been restated to reflect this change in presentation. |
(e) | Annualized. |
See Notes to Financial Statements.
30 | Visit our website at www.jennisondryden.com |
Class C | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(d) | 2001 | ||||||||||||||
$ | 10.22 | $ | 10.35 | $ | 10.54 | $ | 10.52 | $ | 10.05 | |||||||||
.32 | .31 | .38 | .44 | .46 | ||||||||||||||
.04 | .28 | (.17 | ) | .02 | .47 | |||||||||||||
.36 | .59 | .21 | .46 | .93 | ||||||||||||||
(.32 | ) | (.33 | ) | (.38 | ) | (.44 | ) | (.46 | ) | |||||||||
(.03 | ) | (.39 | ) | (.02 | ) | — | — | (b) | ||||||||||
(0.35 | ) | (0.72 | ) | (0.40 | ) | (.44 | ) | (0.46 | ) | |||||||||
$ | 10.23 | $ | 10.22 | $ | 10.35 | $ | 10.54 | $ | 10.52 | |||||||||
3.56 | % | 5.81 | % | 2.06 | % | 4.42 | % | 9.52 | % | |||||||||
$ | 1,521 | $ | 1,527 | $ | 1,105 | $ | 963 | $ | 664 | |||||||||
$ | 1,524 | $ | 1,248 | $ | 1,119 | $ | 885 | $ | 493 | |||||||||
1.51 | % | 1.49 | % | 1.47 | % | 1.46 | % | 1.43 | % | |||||||||
.76 | % | .74 | % | .72 | % | .71 | % | .68 | % | |||||||||
3.06 | % | 3.06 | % | 3.58 | % | 4.23 | % | 4.47 | % |
See Notes to Financial Statements.
Dryden Municipal Series Fund/Pennsylvania Series | 31 |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.jennisondryden.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Series’ investment subadvisor the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Series. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Series voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Series’ website and on the Commission’s website. |
TRUSTEES |
Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Robert E. La Blanc • Douglas H. McCorkindale • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn • Clay T. Whitehead |
OFFICERS |
Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Jack Benintende, Assistant Treasurer • M. Sadiq Peshimam, Assistant Treasurer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Helene Gurian, Acting Anti-Money Laundering Compliance Officer • Lee D. Augsburger, Chief Compliance Officer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
INVESTMENT SUBADVISOR | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
CUSTODIAN | The Bank of New York | One Wall Street New York, NY 10286 | ||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 8098 Philadelphia, PA 19176 | ||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Series carefully before investing. The prospectus for the Series contains this and other information about the Series. An investor may obtain a prospectus by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents on-line, go to www.icsdelivery.com/prudential/funds and enroll. Instead of receiving printed documents by mail, you will receive notification via e-mail when new materials are available. You can cancel your enrollment or change your e-mail address at any time by clicking on the change/cancel enrollment option at the icsdelivery website address. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Dryden Municipal Series Fund/Pennsylvania Series, PO Box 13964, Philadelphia, PA 19176. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Series files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Series’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Series’ Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (800) SEC-0330 (732-0330). The Series’ schedule of portfolio holdings is also available on the Series’ website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
Dryden Municipal Series Fund/Pennsylvania Series | ||||||||||
Share Class | A | B | C | |||||||
NASDAQ | PMPAX | PBPAX | PPNCX | |||||||
CUSIP | 262468762 | 262468754 | 262468747 | |||||||
MF132E2 IFS-A117922 Ed. 04/2006
Item 2 – Code of Ethics – Not required, as this is not an annual filing.
Item 3 – Audit Committee Financial Expert – Not required, as this is not an annual filing.
Item 4 – Principal Accountant Fees and Services – Not required, as this is not an annual filing.
Item 5 – Audit Committee of Listed Registrants – Not required, as this is not an annual filing.
Item 6 – Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.
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
(a) | It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. |
(b) | There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12 – Exhibits
(a) | (1) Code of Ethics – Not required, as this is not an annual filing. |
(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT. |
(3) | Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. |
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT. |
SIGNATURES
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.
(Registrant) Dryden Municipal Series Fund | ||
By (Signature and Title)* | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date April 28, 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 (Signature and Title)* | /s/ Judy A. Rice | |
Judy A. Rice | ||
President and Principal Executive Officer | ||
Date April 28, 2006 | ||
By (Signature and Title)* | /s/ Grace C. Torres | |
Grace C. Torres | ||
Treasurer and Principal Financial Officer | ||
Date April 28, 2006 |
* | Print the name and title of each signing officer under his or her signature. |