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: | 811-04024 |
Dryden California Municipal Fund
| Exact name of registrant as specified in charter: |
Gateway Center 3, 100 Mulberry Street, Newark, New Jersey 07102 |
| Address of principal executive offices: |
Deborah A. Docs
Gateway Center 3,
100 Mulberry Street,
Newark, New Jersey 07102
| Name and address of agent for service: |
Registrant’s telephone number, including area code: 800-225-1852
Date of fiscal year end: 8/31/2009
Date of reporting period: 2/28/2009
Item 1 – Reports to Stockholders
FEBRUARY 28, 2009 | SEMIANNUAL REPORT |
Dryden California Municipal Fund/California Income Series
FUND TYPE
Municipal bond
OBJECTIVE
Maximize current income that is exempt from California state 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 Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2009, were not audited and, accordingly, no auditor’s opinion is expressed on them.
JennisonDryden, Dryden, Prudential Financial and the Rock Prudential logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.
April 15, 2009
Dear Shareholder:
On the following pages, you’ll find your Fund’s semiannual report, including a table showing fund performance over the first half of the fiscal year and for longer periods. The report also contains a listing of the Fund’s holdings at period-end. The semiannual report is an interim statement furnished between the Fund’s annual reports, which include an analysis of Fund performance over the fiscal year in addition to other data.
Mutual fund prices and returns will rise or fall over time, and asset managers tend to have periods when they perform better or worse than their long-term average. The best measures of a mutual fund’s quality are its return compared to that of similar investments and the variability of its return over the long term. We recommend that you review your portfolio regularly with your financial professional.
Thank you for choosing JennisonDryden Mutual Funds.
Sincerely,
Judy A. Rice, President
Dryden California Municipal Fund/California Income Series
| Dryden California Municipal Fund/California Income Series | 1 |
Your Fund’s Performance
Fund objective
The investment objective of the Dryden California Municipal Fund/California Income Series is to maximize current income that is exempt from California state and federal income taxes, consistent with the preservation of capital. There can be no assurance that the Fund 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). Gross operating expenses: Class A, 0.94%; Class B, 1.14%; Class C, 1.64%; Class Z, 0.64%. Net operating expenses apply to: Class A, 0.89%; Class B, 1.14%; Class C, 1.39%; Class Z, 0.64%, after contractual reduction through 12/31/2009.
| Cumulative Total Returns as of 2/28/09 | ||||||||||||
| Six Months | One Year | Five Years | Ten Years | |||||||||
Class A | –2.90 | % | 1.56 | % | 11.63 | % | 43.94 | % | ||||
Class B | –3.01 | 1.31 | 10.24 | 40.40 | ||||||||
Class C | –3.13 | 1.08 | 8.91 | 36.98 | ||||||||
Class Z | –2.77 | 1.83 | 13.07 | 47.61 | ||||||||
Barclays Capital Municipal Bond Index1 | 0.05 | 5.18 | 16.67 | 56.92 | ||||||||
Lipper California (CA) Muni Debt Funds Avg.2 | –6.03 | –1.50 | 5.56 | 34.68 | ||||||||
| Average Annual Total Returns3 as of 3/31/09 | ||||||||||||
| One Year | Five Years | Ten Years | ||||||||||
Class A | –5.79 | % | 1.40 | % | 3.21 | % | ||||||
Class B | –6.77 | 1.81 | 3.37 | |||||||||
Class C | –3.26 | 1.73 | 3.12 | |||||||||
Class Z | –1.61 | 2.49 | 3.89 | |||||||||
Barclays Capital Municipal Bond Index1 | 2.27 | 3.21 | 4.60 | |||||||||
Lipper California (CA) Muni Debt Funds Avg.2 | –5.26 | 0.97 | 2.87 | |||||||||
| 2 | Visit our website at www.jennisondryden.com |
| Distributions and Yields as of 2/28/09 | ||||||||||||
| Total Distributions Paid for Six Months | 30-Day SEC Yield | Taxable Equivalent 30-Day Yield4 at Federal Tax Rates of | ||||||||||
| 33% | 35% | |||||||||||
Class A | $ | 0.27 | 3.82 | % | 6.29 | % | 6.48 | % | ||||
Class B | 0.26 | 3.73 | 6.14 | 6.33 | ||||||||
Class C | 0.25 | 3.48 | 5.73 | 5.90 | ||||||||
Class Z | 0.29 | 4.23 | 6.96 | 7.17 | ||||||||
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.
Source: Prudential Investments LLC and Lipper Inc. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.
1The Barclays Capital 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.
2The Lipper CA Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper CA 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 California.
3The average annual total returns take into account applicable sales charges. 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. 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.
4Taxable equivalent yields reflect federal and applicable state tax rates.
Investors cannot invest directly in an index. The returns for the Barclays Capital 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.
| Dryden California Municipal Fund/California Income Series | 3 |
Your Fund’s Performance (continued)
| Five Largest Issues expressed as a percentage of net assets as of 2/28/09 | |||
So. California Pub. Pwr. Auth., Palo Verde Proj., Ser. C, 7/01/16, 3.12% | 6.5 | % | |
Orange Cnty. Loc. Trans. Auth., Sales Tax Rev., 2/14/11, 6.20% | 4.6 | ||
California St. Pub. Wks. Brd., Mental Hlth. Coalinga, Ser. A, 6/01/18, 5.50% | 3.1 | ||
So. California Pub. Pwr. Auth., PNC GIC Pwr. Proj., 7/01/10, 6.75% | 2.8 | ||
California Hsg. Fin. Agy. Rev., Home Mtge. –83, Ser. A, 2/01/15, 7.79% | 2.0 |
Issues are subject to change.
| Credit Quality* expressed as a percentage of net assets as of 2/28/09 | |||
Aaa | 7.3 | % | |
Aa | 34.3 | ||
A | 28.5 | ||
Baa | 21.4 | ||
Not Rated | 8.9 | ||
Total Investments | 100.4 | ||
Liabilities in excess of other assets | (0.4 | ) | |
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 Fund, 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 Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2008, at the beginning of the period, and held through the six-month period ended February 28, 2009. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
The Fund’s 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 funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund 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
| Dryden California Municipal Fund/California Income Series | 5 |
Fees and Expenses (continued)
the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses should 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 Fund 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 California Municipal Fund/ California Income Series | Beginning Account Value September 1, 2008 | Ending Account Value February 28, 2009 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||
| Class A | Actual | $ | 1,000.00 | $ | 971.00 | 0.89 | % | $ | 4.35 | |||||
| Hypothetical | $ | 1,000.00 | $ | 1,020.38 | 0.89 | % | $ | 4.46 | ||||||
| Class B | Actual | $ | 1,000.00 | $ | 969.90 | 1.14 | % | $ | 5.57 | |||||
| Hypothetical | $ | 1,000.00 | $ | 1,019.14 | 1.14 | % | $ | 5.71 | ||||||
| Class C | Actual | $ | 1,000.00 | $ | 968.70 | 1.39 | % | $ | 6.79 | |||||
| Hypothetical | $ | 1,000.00 | $ | 1,017.90 | 1.39 | % | $ | 6.95 | ||||||
| Class Z | Actual | $ | 1,000.00 | $ | 972.30 | 0.64 | % | $ | 3.13 | |||||
| Hypothetical | $ | 1,000.00 | $ | 1,021.62 | 0.64 | % | $ | 3.21 | ||||||
* Fund 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, 2009, and divided by the 365 days in the Fund’s fiscal year ending August 31, 2009 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
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Portfolio of Investments
as of February 28, 2009 (Unaudited)
| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
LONG-TERM INVESTMENTS 100.2% | ||||||||||||
Municipal Bonds | ||||||||||||
Abag Fin. Auth. For Nonprofit Corp. Rev., San Diego Hosp. Assoc., Ser. C | A3 | 5.375% | 3/01/21 | $ | 1,665 | $ | 1,461,154 | |||||
California County Tobacco Securitization Agcy. Rev., Convertible, C.A.B.S. (Converts to 5.25% on 12/01/10) | Baa3 | 3.81(h) | 6/01/21 | 1,000 | 632,380 | |||||||
California Ed. Facs. Auth. Rev., | Aaa | 5.00 | 11/01/21 | 3,700 | 3,840,526 | |||||||
Univ. Southern CA, Ser. A | Aa1 | 5.00 | 10/01/38 | 2,000 | 1,993,780 | |||||||
Rfdg., Claremont McKenna College | Aa2 | 5.00 | 1/01/39 | 2,000 | 1,942,520 | |||||||
Univ. Southern CA, Ser. A. | Aa1 | 5.25 | 10/01/38 | 1,500 | 1,528,230 | |||||||
California Health Facs. Fin. Auth. Rev., Rfdg. Cedars Sinai Med. Ctr. | A2 | 5.00 | 11/15/21 | 2,000 | 1,925,140 | |||||||
Scripps Hlth., Ser. A | A1 | 5.00 | 10/01/22 | 500 | 451,360 | |||||||
Providence Health, Ser. C | Aa2 | 6.50 | 10/01/38 | 1,000 | 1,047,140 | |||||||
California Hsg. Fin. Agy. Rev., Home Mtge.-83, Ser. A, C.A.B.S. | Aa2 | 7.79(h) | 2/01/15 | 6,115 | 3,888,895 | |||||||
California Infrastructure & Econ. Dev. Rev., Scripps Research Inst., Ser. A | Aa3 | 5.75 | 7/01/30 | 1,500 | 1,500,450 | |||||||
California Infrastructure & Econ. Dev. Bk. Rev. & Econ. Dev. Walt. Dis. Fam. Musm., Walt & Lilly Disney | A1 | 5.25 | 2/01/38 | 2,000 | 1,765,300 | |||||||
California Municipal Fin. Auth. Ed. Rev. Amern. Heritage Ed. Foundation Proj., Ser. A | BBB-(c) | 5.25 | 6/01/26 | 1,100 | 777,678 | |||||||
California Poll. Ctrl. Fin. Auth. Sld. Pacific Gas-D-Rmkt. Rfdg., A.M.T., F.G.I.C. | A3 | 4.75 | 12/01/23 | 2,500 | 2,070,000 | |||||||
Wste. Disp. Rev., Wste. Mgmt., Inc. Proj., Ser. B, A.M.T. | BBB(c) | 5.00 | 7/01/27 | 500 | 393,190 | |||||||
California Rural Home Mtge. Fin. Auth., Sngl. Fam. Mtge. Rev., Mtge. Bkd. Secs., Ser. D, F.N.M.A., G.N.M.A., A.M.T. | AAA(c) | 6.00 | 12/01/31 | 65 | 63,172 | |||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 7 |
Portfolio of Investments
as of February 28, 2009 (Unaudited) continued
| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
California St. Dept. Wtr. Res. Pwr. Rev., Ser. A | Aa3 | 5.00% | 5/01/17 | $ | 3,320 | $ | 3,485,934 | |||||
Central VY Proj., Ser. A | Aa2 | 5.00 | 12/01/29 | 2,000 | 2,017,560 | |||||||
California St. G.O. Unrefunded Balance | A1 | 5.50 | 4/01/30 | 5 | 5,020 | |||||||
California St. Pub. Wks. Brd., Lease Rev., Dept. General Service, Ser. J | A2 | 5.25 | 6/01/28 | 750 | 704,940 | |||||||
Mental Hlth. Coalinga, Ser. A | A2 | 5.50 | 6/01/18 | 5,970 | 6,197,217 | |||||||
California Statewide Cmntys. Dev. Auth. Rev. Irvine LLC, UCI East Rfdg. | Baa2 | 5.00 | 5/15/32 | 2,000 | 1,446,880 | |||||||
St. Joseph, Ser. F Rmkt. F.S.A. | Aa3 | 5.25 | 7/01/21 | 2,500 | 2,582,800 | |||||||
Kaiser, Ser. C | A+(c) | 5.25 | 8/01/31 | 1,000 | 861,880 | |||||||
Drew Sch. | NR | 5.30 | 10/01/37 | 1,000 | 567,520 | |||||||
Windrush Sch. | NR | 5.50 | 7/01/37 | 1,000 | 587,170 | |||||||
California Statewide Cmntys. Dev. Auth. Spl. Tax No. 97-1, C.A.B.S. | NR | 9.17(h) | 9/01/22 | 4,440 | 1,322,143 | |||||||
Chico Redev. Agcy. Tax Alloc., Chico Amended & Merged Redev., A.M.B.A.C. | Baa1 | 5.00 | 4/01/30 | 1,445 | 1,273,291 | |||||||
Chula Vista Dev. Agcy. Rev., Rfdg. Tax Alloc. Sub. Bayfront, Ser. B | NR | 5.25 | 10/01/27 | 1,540 | 1,132,424 | |||||||
Chula Vista Ind. Dev. Rev., San Diego Gas, A.M.T. | A1 | 5.00 | 12/01/27 | 1,000 | 865,920 | |||||||
Colton Joint Unified School Dist. G.O., F.G.I.C. | A2 | 5.25 | 2/01/21 | 1,830 | 1,938,208 | |||||||
Coronado Cmnty. Dev. Agcy. Tax Alloc., Dev. Proj., A.M.B.A.C. | A(c) | 5.00 | 9/01/24 | 2,000 | 1,764,840 | |||||||
Corona-Norco Uni. Sch. Dist. Spec. Tax, Cmnty. Facs. Dist. No. 98-1, M.B.I.A. | Baa1 | 5.00 | 9/01/22 | 1,060 | 1,081,285 | |||||||
El Dorado Irr. Dist. Partn., Ser. A, C.O.P. | Aa2 | 5.75 | 8/01/39 | 1,000 | 1,004,710 | |||||||
El Dorado Cnty., Spec. Tax, Cmnty. Facs., | NR | 6.125 | 9/01/16 | 1,000 | 906,640 | |||||||
Dist. No. 92-1 | NR | 6.25 | 9/01/29 | 475 | 354,417 | |||||||
Elsinore Valley Municipal Water Dist. C.O.P., B.H.A.C. | Aaa | 5.00 | 7/01/29 | 2,500 | 2,509,100 | |||||||
Folsom Spec. Tax, Cmnty. Facs., Dist. No. 7, Broadstone | NR | 6.00 | 9/01/24 | 2,450 | 1,996,432 | |||||||
See Notes to Financial Statements.
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| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Folsom Spec. Tax, Unrefunded Balance | NR | 6.875% | 9/01/19 | $ | 1,230 | $ | 1,188,586 | |||||
Foothill/Eastern Trans. Corr. Agcy. Rev., Toll Rd., Convertible C.A.B.S. (converts to 5.875% on 7/15/09) | Baa3 | 6.96(h) | 1/15/28 | 2,890 | 2,516,525 | |||||||
Ser. A (Pre-refunded Date 1/01/10)(e)(f) | Aaa | 7.15 | 1/01/13 | 2,750 | 2,954,408 | |||||||
Fresno CA Sewer Rev., A.G.C. | Aa2 | 5.00 | 9/01/33 | 2,000 | 1,942,220 | |||||||
Glendale Redev. Agcy. Tax Alloc., Central Glendale Redev. Proj., M.B.I.A. | Baa1 | 5.25 | 12/01/19 | 3,275 | 3,097,888 | |||||||
Golden St. Tobacco Securitization Corp. California Tobbaco | Baa3 | 5.75 | 6/01/47 | 2,000 | 1,200,640 | |||||||
Settlement Rev., Asset-Bkd., Ser. A, Convertible C.A.B.S., A.M.B.A.C. (converts to 4.60% on 6/01/10) | A2 | 6.02(h) | 6/01/23 | 3,000 | 2,442,570 | |||||||
Ser. 2003-A-1 (Pre-refunded date 6/1/13)(e) | AAA(c) | 6.75 | 6/01/39 | 2,700 | 3,178,062 | |||||||
Golden West Sch. Fin. Auth., Rev., Rfdg. Ser. A., C.A.B.S., M.B.I.A. | Baa1 | 4.97(h) | 2/01/19 | 2,110 | 1,303,706 | |||||||
La Mesa-Spring Valley Sch. Dist., G.O., Election of 2002, Ser. B, C.A.B.S., F.G.I.C. | A1 | 5.65(h) | 8/01/23 | 2,000 | 895,560 | |||||||
La Quinta Redev. Agcy. Tax Alloc., M.B.I.A. Rfdg. Proj. Area No. 1 | Baa1 | 7.30 | 9/01/11 | 1,000 | 1,049,960 | |||||||
Lincoln Impvt. Bond Act of 1915, Pub. Rev., Fin. Auth., Twelve Bridges | NR | 6.20 | 9/02/25 | 2,535 | 2,155,688 | |||||||
Long Beach Hbr. Rev., Rfdg., Ser. A, A.M.T., F.G.I.C. | Aa2 | 6.00 | 5/15/19 | 3,000 | 3,126,720 | |||||||
Long Beach Redev. Agcy., Dist. No. 3, Spec. Tax Rev. Pine Ave. | NR | 6.375 | 9/01/23 | 3,000 | 2,630,070 | |||||||
Los Angeles Comm. College Dist., | Aa2 | 5.00 | 8/01/33 | 3,000 | 2,925,510 | |||||||
Los Angeles Dept. of Wtr & Pwr Rev., Ser. A | Aa3 | 5.00 | 7/01/39 | 1,000 | 969,570 | |||||||
Los Angeles Dept. of Wtr & Pwr Rev | Aa3 | 5.25 | 7/01/38 | 2,000 | 2,007,180 | |||||||
Los Angeles Dept. of Wtr & Pwr. Wtrwks. Rev., Ser. A | Aa3 | 5.375 | 7/01/38 | 1,530 | 1,547,962 | |||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 9 |
Portfolio of Investments
as of February 28, 2009 (Unaudited) continued
| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Metro. Wtr. Dist. of Southern California Waterworks Rev., Linked, S.A.V.R.S., R.I.B.S. | Aa2 | 5.75% | 8/10/18 | $ | 2,000 | $ | 2,195,860 | |||||
Unrefunded Balance, Ser. A | Aa2 | 5.75 | 7/01/21 | 2,240 | 2,609,309 | |||||||
Ontario Special Assessment Impvt. Bond Act of 1915, Assmt. Dist. 100C, Cmnty. Ctr. III | NR | 8.00 | 9/02/11 | 305 | 316,535 | |||||||
Orange Cnty. Loc. Trans. Auth., Sales Tax Rev., Linked, S.A.V.R.S. & R.I.B.S., A.M.B.A.C., T.C.R.S. | Aa2 | 6.20 | 2/14/11 | 9,000 | 9,108,989 | |||||||
Orange Cnty. Loc. Trans. Auth., Sales Tax Rev., Linked, S.A.V.R.S., R.I.B.S.(g) | Aa2 | 9.738(d) | 2/14/11 | 1,500 | 1,536,330 | |||||||
Perris Cmnty. Facs. Dist., Spec. Tax No. 01-2 Avalon, Ser. A | NR | 6.25 | 9/01/23 | 2,000 | 1,695,040 | |||||||
Pico Rivera Wtr. Auth. Rev., Wtr. Sys. Proj., Ser. A, M.B.I.A. | Baa1 | 5.50 | 5/01/29 | 1,500 | 1,561,950 | |||||||
Pittsburg Redev. Agcy. Tax Alloc., Los Medanos Cmnty. | Aa3 | 5.80 | 8/01/34 | 2,700 | 3,219,399 | |||||||
Dev. Proj., A.M.B.A.C., C.A.B.S. | Baa1 | 6.73(h) | 8/01/26 | 1,375 | 441,939 | |||||||
Port Oakland Rfdg, Inter. Lien, Ser. A, M.B.I.A., A.M.T. | A2 | 5.00 | 11/01/29 | 3,000 | 2,343,720 | |||||||
Ser. F, F.G.I.C., A.M.T. | A1 | 5.75 | 11/01/16 | 3,300 | 3,324,915 | |||||||
Poway Cmnty., Facs., Dist. No. 88-1, | NR | 6.75 | 8/15/15 | 1,000 | 1,014,270 | |||||||
Puerto Rico Comnwlth. Govt. Dev. Bk., | Baa3 | 5.25 | 1/01/15 | 1,000 | 968,180 | |||||||
Hwy. & Trans. Auth. Rev., Ser. G, F.G.I.C. | Baa3 | 5.25 | 7/01/17 | 1,260 | 1,198,562 | |||||||
Puerto Rico Electric Pwr. Auth. Pwr. Ser. TT | A3 | 5.00 | 7/01/22 | 750 | 692,108 | |||||||
Puerto Rico Pub. Bldgs. Auth. Rev. Gtd. Govt. Facs., Ser. N, Rfdg., Comwlth. Gtd. | Baa3 | 5.50 | 7/01/19 | 2,500 | 2,353,950 | |||||||
Rancho Mirage Jt. Pwrs. Fing. Auth. Rev., Eisenhower Med. Ctr., Ser. A | A3 | 5.00 | 7/01/47 | 2,500 | 1,952,750 | |||||||
See Notes to Financial Statements.
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| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Redding Elec. Sys. Rev., C.O.P., Linked S.A.V.R.S.& R.I.B.S., M.B.I.A., Partial E.T.M.(e) | Baa1 | 6.368% | 7/01/22 | $ | 100 | $ | 113,657 | |||||
M.B.I.A., Partial E.T.M.(e)(g) | Baa1 | 11.298(d) | 7/01/22 | 2,790 | 3,552,061 | |||||||
Redondo Beach Unified School Dist., | AA-(c) | 4.75 | 8/01/33 | 2,500 | 2,351,875 | |||||||
Rocklin Uni. Sch. Dist., Ser. C, G.O., C.A.B.S., M.B.I.A. | Baa1 | 4.18(h) | 8/01/16 | 1,400 | 1,033,074 | |||||||
Sacramento City Fin. Auth., Ser. B, C.A.B.S., M.B.I.A. | Baa1 | 6.26(h) | 11/01/17 | 5,695 | 3,363,353 | |||||||
Sacramento City Fin. Auth., Tax Alloc. Comb. Proj., Ser. B, M.B.I.A., C.A.B.S. | Baa1 | 6.02(h) | 11/01/16 | 5,700 | 3,614,427 | |||||||
Sacramento Cnty. Santn. Dist. Fing. Auth. Rev., Var.-Regl., Ser. B, F.G.I.C., Fltg. | Aa3 | 2.006 | 12/01/35 | 1,000 | 416,250 | |||||||
San Bernardino Cmnty College Dist., Election 2002, Ser. A, G.O. | Aa3 | 6.25 | 8/01/33 | 1,750 | 1,905,908 | |||||||
San Diego Regl. Bldg. Auth. Lease Rev., Ctny. Operations Ctr. & Annex A | A1 | 5.375 | 2/01/36 | 1,000 | 979,750 | |||||||
San Diego Redev., Agcy., Tax Alloc., North Bay Redev. | Baa1 | 5.875 | 9/01/29 | 3,000 | 2,565,870 | |||||||
San Diego Uni. Sch. Dist., Election of 1998, Ser. B, G.O., M.B.I.A. | Aa2 | 6.00 | 7/01/19 | 1,000 | 1,205,220 | |||||||
San Diego. Cnty. Calif. Wtr. Auth. Wtr. Rev. C.O.P., Ser. 2008 A, F.S.A. | Aa3 | 5.00 | 5/01/38 | 2,500 | 2,421,525 | |||||||
San Francisco City & Cnty Arpts. Commn. (Mandatory put date 5/01/11), A.M.T. | A1 | 6.75 | 5/01/19 | 1,500 | 1,554,765 | |||||||
San Francisco City & Cnty. Arpts. Commn. Intl. Arpt. Second. Ser. 34E, Rfdg., F.S.A., A.M.T. | Aa3 | 5.75 | 5/01/21 | 1,500 | 1,529,535 | |||||||
San Joaquin Hills Trans. Corridor Agcy., Toll Rd. Rev., Jr. Lien, C.A.B.S., E.T.M.(e)(f) | Aaa | 1.70(h) | 1/01/11 | 2,000 | 1,938,880 | |||||||
San Jose Evergreen Cmnty. College Dist. Election 2004, Ser. B, C.A.B.S., F.S.A., G.O. | Aa2 | 4.10(h) | 9/01/17 | 1,000 | 710,520 | |||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 11 |
Portfolio of Investments
as of February 28, 2009 (Unaudited) continued
| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
San Jose CA, Library & Parks Proj., | Aa1 | 5.00% | 9/01/33 | $ | 2,200 | $ | 2,160,334 | |||||
San Leandro Cmnty. Facs., Spec. Tax, Dist. No. 1 | NR | 6.50 | 9/01/25 | 2,160 | 1,851,811 | |||||||
San Mateo Cnty CA Jt. Pwrs. Fin. Auth. | Aa3 | 5.00 | 7/15/33 | 1,000 | 960,470 | |||||||
Santa Margarita, Dana Point Auth., Impv. Rev., Dists., 3-3A-4 & 4A, Ser. B, M.B.I.A. | Baa1 | 7.25 | 8/01/14 | 2,000 | 2,258,160 | |||||||
Santa Maria Joint Union H.S. Dist., Election of 2004, C.A.B.S., G.O., F.G.I.C. | A2 | 6.40(h) | 8/01/29 | 1,250 | 345,438 | |||||||
Santa Monica Cmnty. College Dist. Election 2002, Ser. A, F.G.I.C., G.O., C.A.B.S. | Aa2 | 5.96(h) | 8/01/28 | 1,055 | 342,981 | |||||||
So. California Pub. Pwr. Auth., | A2 | 6.75 | 7/01/10 | 5,265 | 5,642,394 | |||||||
PNC GIC Proj. Rev. | A2 | 6.75 | 7/01/13 | 1,000 | 1,179,770 | |||||||
Palo Verde Proj., Ser. C, A.M.B.A.C., E.T.M., Rfdg., C.A.B.S.(e) | A1 | 3.12(h) | 7/01/16 | 16,325 | 13,009,555 | |||||||
Sulphur Springs Uni. Sch. Dist., | Baa1 | 2.72(h) | 9/01/11 | 3,000 | 2,804,610 | |||||||
Tobacco Securization Auth. Northn. Calif. Rev., Asset-backed Tobacco Settlement, Ser. A | Baa3 | 5.50 | 6/01/45 | 2,000 | 1,154,280 | |||||||
Torrance Hosp. Rev., Torrance Mem. Med. Ctr., Ser. A | A1 | 6.00 | 6/01/22 | 2,000 | 2,025,120 | |||||||
University of CA Rev., Unrefunded, Bal.-UCLA Med., Ctr., Ser. A, A.M.B.A.C. | Baa1 | 5.25 | 5/15/30 | 1,000 | 883,260 | |||||||
Valley Hlth. Sys., Hosp. Rev., Impvt. Proj., Ser. A(g) | C(c) | 6.50 | 5/15/25 | 130 | 82,940 | |||||||
Ventura Cnty Cmnty. College | Aa3 | 5.50 | 8/01/33 | 2,000 | 2,023,380 | |||||||
Total long-term investments | $ | 199,535,050 | ||||||||||
See Notes to Financial Statements.
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| Description (a) | Moody’s Rating+* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
SHORT-TERM INVESTMENTS 0.2% | |||||||||||||
Sacramento Cnty. Santn. Dist. Auth. Rev., F.R.D.D.(b) | VMIG1 | .45% | 3/02/09 | $ | 300 | $ | 300,000 | ||||||
Sacramento Cnty. Santn. Dist. Auth. Rev., F.R.D.D.(b) | VMIG1 | .45 | 3/02/09 | 100 | 100,000 | ||||||||
Total short-term investments | 400,000 | ||||||||||||
Total Investments 100.4% | 199,935,050 | ||||||||||||
Liabilities in excess of other assets(i) (0.4)% | (826,565 | ) | |||||||||||
Net Assets 100.0% | $ | 199,108,485 | |||||||||||
| * | The ratings reflected are as of February 28, 2009. Ratings of certain bonds may have changed subsequent to that date. |
| + | The Fund’s current Statement of Additional Information contains a description of Moody’s and Standard & Poor’s ratings. |
| a) | The following abbreviations are used in the portfolio descriptions: |
A.G.C.—Assorted Guarantee Corp.
A.M.B.A.C.—American Municipal Bond Assurance Corporation.
A.M.T.—Alternative Minimum Tax.
B.H.A.C.—Berkshire Hathaway Assurance Corp.
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.N.M.A.—Federal National Mortgage Association.
F.R.D.D.—Floating Rate (Daily) Demand Note(b)
F.S.A.—Financial Security Assurance.
G.N.M.A.—Government National Mortgage Association.
G.O.—General Obligation.
IDB—Industrial Development Bond.
M.B.I.A.—Municipal Bond Insurance Corporation.
PCR—Pollution Control Revenue.
R.I.B.S.—Residual Interest Bearing Securities.
S.A.V.R.S.—Select Auction Variable Rate Securities.
T.C.R.S.—Transferable Custodial Receipts.
NR—Not Rated by Moody’s or Standard & Poor’s.
| (b) | 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. |
| (c) | Standard & Poor’s rating. |
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 13 |
Portfolio of Investments
as of February 28, 2009 (Unaudited) continued
| (d) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate at February 28, 2009. |
| (e) | All or partial escrowed to maturity and pre-refunded securities are secured by escrowed cash and/or U.S. guaranteed obligations. |
| (f) | All or portion of security segregated as collateral for financial futures contracts. |
| (g) | Indicates a security that has been deemed illiquid. |
| (h) | Represents a zero coupon bond or step bond. Rate shown reflects the effective yield at the time of purchase. |
| (i) | Liabilities in excess of other assets include net unrealized depreciation on financial futures contracts as follows: |
Open futures contracts outstanding at February 28, 2009:
| Number of Contracts | Type | Expiration Date | Value at Trade Date | Value at February 28, 2009 | Unrealized Appreciation (Depreciation) | |||||||||
| Long Position: | ||||||||||||||
| 57 | U.S. Treasury 5 Yr. Notes | Jun. 2009 | $ | 6,699,774 | $ | 6,645,398 | $ | (54,376 | ) | |||||
| Short Position: | ||||||||||||||
| 39 | U.S. Treasury 10 Yr. Notes | Jun. 2009 | 4,700,461 | 4,681,219 | 19,242 | |||||||||
| $ | (35,134 | ) | ||||||||||||
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical securities
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
See Notes to Financial Statements.
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The following is a summary of the inputs used as of February 28, 2009 in valuing the Fund’s assets carried at fair value:
Valuation inputs | Investments in Securities | Other Financial Instruments* | |||||
Level 1—Quoted Prices | $ | — | $ | (35,134 | ) | ||
Level 2—Other Significant Observable Inputs | 199,935,050 | — | |||||
Level 3—Significant Unobservable Inputs | — | — | |||||
Total | $ | 199,935,050 | $ | (35,134 | ) | ||
| * | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument. |
As of August 31, 2008 and February 28, 2009, the Fund did not use any significant unobservable inputs in (Level 3) in determining the valuation of investments.
The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of February 28, 2009 was as follows:
Special Tax/Assessment District | 25.5 | % | |
Power | 15.4 | ||
General Obligation | 10.4 | ||
Transportation | 10.3 | ||
Water & Sewer | 9.2 | ||
Healthcare | 6.7 | ||
Lease Backed Certificates of Participation | 6.3 | ||
Education | 6.3 | ||
Tobacco | 3.1 | ||
Other | 2.1 | ||
Housing | 2.0 | ||
Corporate Backed IDB & PCR | 1.7 | ||
Tobacco Appropriated | 1.2 | ||
Short-Term Investments | 0.2 | ||
| 100.4 | |||
Liabilities in excess of other assets | (0.4 | ) | |
Net Assets | 100.0 | % | |
Industry classification is subject to change.
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 15 |
Statement of Assets and Liabilities
as of February 28, 2009 (Unaudited)
Assets | ||||
Unaffiliated investments, at value (cost $203,566,522) | $ | 199,935,050 | ||
Interest receivable | 2,259,077 | |||
Receivable for Fund shares sold | 157,763 | |||
Cash | 89,618 | |||
Due from broker—variation margin | 13,406 | |||
Prepaid expenses | 3,158 | |||
Total assets | 202,458,072 | |||
Liabilities | ||||
Payable for Fund shares reacquired | 2,993,436 | |||
Accrued expenses | 122,474 | |||
Management fee payable | 78,113 | |||
Dividends payable | 77,682 | |||
Distribution fee payable | 44,681 | |||
Deferred trustees’ fees | 26,743 | |||
Affiliated transfer agent fee payable | 6,458 | |||
Total liabilities | 3,349,587 | |||
Net Assets | $ | 199,108,485 | ||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 203,403 | ||
Paid-in capital in excess of par | 201,166,382 | |||
| 201,369,785 | ||||
Undistributed net investment income | 132,689 | |||
Accumulated net realized gain on investment and financial futures transactions | 1,272,617 | |||
Net unrealized depreciation on investments and financial futures | (3,666,606 | ) | ||
Net assets, February 28, 2009 | $ | 199,108,485 | ||
See Notes to Financial Statements.
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Class A | |||
Net asset value and redemption price per share | $ | 9.79 | |
Maximum sales charge (4.00% of offering price) | 0.41 | ||
Maximum offering price to public | $ | 10.20 | |
Class B | |||
Net asset value, offering price and redemption price per share ($9,989,639 ÷ 1,020,599 shares of beneficial interest issued and outstanding) | $ | 9.79 | |
Class C | |||
Net asset value, offering price and redemption price per share ($13,489,752 ÷ 1,378,066 shares of beneficial interest issued and outstanding) | $ | 9.79 | |
Class Z | |||
Net asset value, offering price and redemption price per share ($7,991,682 ÷ 816,005 shares of beneficial interest issued and outstanding) | $ | 9.79 | |
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 17 |
Statement of Operations
Six Months Ended February 28, 2009 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated interest | $ | 5,812,721 | ||
Expenses | ||||
Management fee | 505,230 | |||
Distribution fee—Class A | 213,516 | |||
Distribution fee—Class B | 26,517 | |||
Distribution fee—Class C | 46,075 | |||
Custodian’s fees and expenses | 36,000 | |||
Registration fees | 27,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $19,400) (Note 3) | 27,000 | |||
Audit fee | 14,000 | |||
Reports to shareholders | 12,000 | |||
Legal fees and expenses | 8,000 | |||
Trustees’ fees | 7,000 | |||
Insurance expense | 1,000 | |||
Miscellaneous | 4,654 | |||
Total expenses | 927,992 | |||
Less: Custodian fee credit (Note 1) | (205 | ) | ||
Net expenses | 927,787 | |||
Net investment income | 4,884,934 | |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain on: | ||||
Investment transactions | 424,958 | |||
Financial futures transactions | 863,192 | |||
| 1,288,150 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (12,983,274 | ) | ||
Financial futures contracts | (232,252 | ) | ||
| (13,215,526 | ) | |||
Net loss on investments | (11,927,376 | ) | ||
Net Decrease In Net Assets Resulting From Operations | $ | (7,042,442 | ) | |
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
| Six Months Ended February 28, 2009 | Year Ended August 31, 2008 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 4,884,934 | $ | 9,448,127 | ||||
Net realized gain on investment and financial futures transactions | 1,288,150 | 958,852 | ||||||
Net change in unrealized (depreciation) on investments and financial futures | (13,215,526 | ) | (3,187,296 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (7,042,442 | ) | 7,219,683 | |||||
Dividends and distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (4,073,923 | ) | (8,573,551 | ) | ||||
Class B | (239,287 | ) | (644,735 | ) | ||||
Class C | (262,948 | ) | (378,234 | ) | ||||
Class Z | (210,402 | ) | (321,228 | ) | ||||
| (4,786,560 | ) | (9,917,748 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | (735,441 | ) | (1,094,036 | ) | ||||
Class B | (47,423 | ) | (94,528 | ) | ||||
Class C | (51,917 | ) | (52,362 | ) | ||||
Class Z | (35,930 | ) | (32,343 | ) | ||||
| (870,711 | ) | (1,273,269 | ) | |||||
Fund share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 9,620,278 | 26,679,751 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 3,281,654 | 6,366,686 | ||||||
Cost of shares reacquired | (26,395,858 | ) | (32,805,170 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | (13,493,926 | ) | 241,267 | |||||
Total increase (decrease) | (26,193,639 | ) | (3,730,067 | ) | ||||
Net Assets | ||||||||
Beginning of period | 225,302,124 | 229,032,191 | ||||||
End of period(a) | $ | 199,108,485 | $ | 225,302,124 | ||||
(a) Includes undistributed net investment income of: | $ | 132,689 | $ | 34,315 | ||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 19 |
Notes to Financial Statements
(Unaudited)
Dryden California Municipal Fund—California Income Series (the “Fund”), is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund was organized as a Massachusetts business trust on May 18, 1984. The Fund commenced investment operations on December 3, 1990. The Fund is diversified and seeks to achieve its investment objective of obtaining the maximum amount of income exempt from federal and California state income taxes with the minimum of risk consistent with the preservation of capital. The Fund will invest primarily in investment grade municipal obligations but may also invest a portion of its assets in lower-quality municipal obligations or in non-rated securities which are of comparable quality. The ability of the issuers of the securities held by the Fund 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 in 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. Certain fixed income securities for which daily market quotations are not readily available may be valued with reference to fixed income securities whose prices are more readily available, pursuant to guidelines established by Board of Trustees. 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 methodology, or does not present fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures. Options on securities and indices traded on an exchange are valued at their last sales price as of the close of trading on an applicable exchange, or if there was no sale, at the mean between the most recently quoted bit and asked prices on such exchanges. Futures contracts and options thereon traded on an 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
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sale on the applicable 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.
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 other mutual funds to calculate their net asset values.
Investments in mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.
Short-term debt 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 debt securities which mature in more than sixty days are valued at current market quotations.
Restricted Securities: The Fund 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”). Certain issues of restricted securities held by the Fund at the end of the fiscal period include registration rights under which the Fund may demand registration by the issuers, of which the Fund may bear the cost of such registration. 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 Fund 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.”
| Dryden California Municipal Fund/California Income Series | 21 |
Notes to Financial Statements
(Unaudited) continued
Subsequent payments, known as “variation margin,” are made or received by the Fund 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 transactions.
The Fund invests in financial futures contracts in order to hedge its existing portfolio securities or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates. Should interest rates move unexpectedly, the Fund 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.
Financial future contracts, involve element of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities.
Inverse Floaters: The Fund 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.
Floating-Rate Notes Issued in Conjunction with Securities Held: The Fund may invest in inverse floating rate securities (“inverse floaters”) that pay interest at a rate that varies inversely with short-term interest rates. Certain of these securities may be leveraged, whereby the interest rate varies inversely at a multiple of the change in short-term rates. As interest rates rise, inverse floaters produce less current income. The price of such securities is more volatile than comparable fixed rate securities.
When the Fund enters into agreements to create inverse floaters and floater note securities (also known as Tender Option Bond Transactions), the Fund transfers a
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fixed rate bond to a broker for cash. At the same time the Fund buys (receives) a residual interest in a trust (the “trust”) set up by the broker, often referred to as an inverse floating rate obligation (inverse floaters). Generally, the broker deposits a fixed rate bond (the “fixed rate bond”) into the trust with the same CUSIP number as the fixed rate bond sold to the broker by the Fund. The “trust” also issues floating rate notes (“floating rate notes”), which are sold to third parties. The floating rate notes have interest rates that reset weekly. The inverse floater held by the Fund gives the Fund the right (1) to cause the holders of the floating rate notes to tender their notes at par, and (2) to have the broker transfer the fixed rate bond held by the trust to the Fund thereby collapsing the trust. In accordance with FAS Statement No. 140, the Fund accounts for the transaction described above as funded leverage by including the fixed rate bond in its Portfolio of Investments, and accounts for the floating rate notes as a liability under the caption “payable for floating rate notes issued” in the Fund’s “Statement of Assets and Liabilities.” Interest expense related to the Fund’s liability in connection with the floating rate notes held by third parties is recorded as incurred. The interest expense is under the caption “interest expenses related to inverse floaters” in the Fund’s “Statement of Operations” and is also included in the Fund’s expense ratio.
The Fund’s investment policies and restrictions permit investments in inverse floating rate securities. Inverse floaters held by the Fund are securities exempt from registration under Rule 144A of the Securities Act of 1933.
The Fund may also invest in inverse floaters without transferring a fixed rate bond into a trust, which is not accounted for as funded leverage.
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 trade date; interest income is not accrued until settlement date. At the time a Fund 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, which may require the use of certain estimates by management. The Fund amortizes premiums and accretes discounts on purchases of debt securities as adjustments to interest income.
| Dryden California Municipal Fund/California Income Series | 23 |
Notes to Financial Statements
(Unaudited) continued
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.
Dividends and Distributions: The Fund declares daily dividends from net investment income and pay monthly. Distributions of net capital gains, if any, are made at least annually.
Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulation 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 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.
Taxes: For federal income tax purposes, it is the Fund’s policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required.
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 Prudential Investments LLC (“PI”). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with The Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM furnishes investment advisory services
| 24 | Visit our website at www.jennisondryden.com |
in connection with the management of the Fund. In connection therewith, PIM is obligated to keep certain books and records of the Fund. PI pays for the services of PIM, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PI is accrued daily and payable monthly, at an annual rate of .50 of 1% of the Fund’s average daily net assets up to and including $1 billion and .45% of the Fund’s 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, 2009.
The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C and Class Z shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s 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. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Fund.
Pursuant to the Class A, Class B and Class C Plans, the Fund compensates PIMS for distribution-related activities at an annual rate of up to .30 of 1%, .50 of 1% and 1% of the 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 Class A and Class C shares, respectively for the six months ended February 28, 2009.
PIMS has advised the Fund that it received approximately $46,800 in front-end sales charges resulting from sales of Class A shares, during the six months ended February 28, 2009. From these fees, PIMS paid a substantial part of such sales charges to affiliated broker-dealers which in turn paid commissions to sales persons and incurred other distribution costs.
PIMS has advised the Fund that, for the six months ended February 28, 2009, it received approximately $28,500, $15,100 and $2,800 in contingent deferred sales charges imposed upon redemptions by certain Class A, 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
| Dryden California Municipal Fund/California Income Series | 25 |
Notes to Financial Statements
(Unaudited) continued
provides for a commitment of $500 million. Interest on any borrowings under the SCA is incurred at contracted market rates and a commitment fee for the unused amount is accrued daily and paid quarterly. Effective October 24, 2008, the Funds renewed the SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Funds pay a commitment fee of .13 of 1% of the unused portion of the SCA. The expiration date of the SCA is October 23, 2009. For the period October 26, 2007 through October 23, 2008, the Funds paid a commitment fee of .06 of 1% of the unused portion of the agreement. The purpose of the SCA is to provide as an alternative source of temporary funding for capital share redemptions. The Fund did not utilize the line of credit during the six months ended February 28, 2009.
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.
The Fund pays networking fees to affiliated and unaffiliated broker/dealers, including fees related to the services of Wachovia Securities, LLC (“Wachovia”) and First Clearing, LLC (“First Clearing”) affiliates of PI. 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, 2009, the Fund incurred approximately $15,000 in total networking fees, of which approximately $4,600 was paid to First Clearing. The Fund did not pay any amounts to Wachovia during the six months ended February 28, 2009. 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 Fund excluding short-term investments, for the six months ended February 28, 2009 were $24,861,314 and $36,969,196, respectively.
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Note 5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of February 28, 2009 were as follows:
Tax Basis | Appreciation | Depreciation | Net Unrealized | |||
| $202,968,142 | $9,900,139 | $(12,933,231) | $(3,033,092) |
The difference between book basis and tax basis was primarily attributable to the difference in the treatment of accreting market discount.
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years and has concluded that as of February 28, 2009, no provision for income tax would be required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Fund 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%. All investors who purchase Class A shares in an amount of $1 million or more are not subject to an initial sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%, if they sell these shares within 12 months of purchase, including investors who purchase their shares through broker-dealers affiliated with Prudential Financial, Inc. 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 sold within 12 months of purchase are subject to a CDSC of 1%. 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 Fund has authorized an unlimited number of shares of beneficial interest for each class at $.01 par value per share.
| Dryden California Municipal Fund/California Income Series | 27 |
Notes to Financial Statements
(Unaudited) continued
Transactions in shares of beneficial interest for the six months ended February 28, 2009 and fiscal year ended August 31, 2008 were as follows:
Class A | Shares | Amount | |||||
Six months ended February 28, 2009: | |||||||
Shares sold | 406,105 | $ | 3,912,074 | ||||
Shares issued in reinvestment of dividends and distributions | 282,503 | 2,720,632 | |||||
Shares reacquired | (2,182,012 | ) | (21,113,317 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (1,493,404 | ) | (14,480,611 | ) | |||
Shares issued upon conversion from Class B | 230,414 | 2,242,526 | |||||
Net increase (decrease) in shares outstanding | (1,262,990 | ) | $ | (12,238,085 | ) | ||
Year ended August 31, 2008: | |||||||
Shares sold | 1,311,526 | $ | 13,772,760 | ||||
Shares issued in reinvestment of dividends and distributions | 510,263 | 5,354,226 | |||||
Shares reacquired | (2,401,709 | ) | (25,225,218 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (579,920 | ) | (6,098,232 | ) | |||
Shares issued upon conversion from Class B | 432,623 | 4,537,729 | |||||
Net increase (decrease) in shares outstanding | (147,297 | ) | $ | (1,560,503 | ) | ||
Class B | |||||||
Six months ended February 28, 2009: | |||||||
Shares sold | 91,900 | $ | 902,734 | ||||
Shares issued in reinvestment of dividends and distributions | 17,994 | 173,251 | |||||
Shares reacquired | (140,333 | ) | (1,355,171 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (30,439 | ) | (279,186 | ) | |||
Shares reacquired upon conversion into Class A | (230,306 | ) | (2,242,526 | ) | |||
Net increase (decrease) in shares outstanding | (260,745 | ) | $ | (2,521,712 | ) | ||
Year ended August 31, 2008: | |||||||
Shares sold | �� | 198,220 | $ | 2,061,908 | |||
Shares issued in reinvestment of dividends and distributions | 39,905 | 419,330 | |||||
Shares reacquired | (352,306 | ) | (3,707,999 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (114,181 | ) | (1,226,761 | ) | |||
Shares reacquired upon conversion into Class A | (432,320 | ) | (4,537,729 | ) | |||
Net increase (decrease) in shares outstanding | (546,501 | ) | $ | (5,764,490 | ) | ||
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Class C | Shares | Amount | |||||
Six months ended February 28, 2009: | |||||||
Shares sold | 294,103 | $ | 2,836,038 | ||||
Shares issued in reinvestment of dividends and distributions | 22,048 | 212,297 | |||||
Shares reacquired | (104,795 | ) | (1,000,721 | ) | |||
Net increase (decrease) in shares outstanding | 211,356 | $ | 2,047,614 | ||||
Year ended August 31, 2008: | |||||||
Shares sold | 504,439 | $ | 5,261,343 | ||||
Shares issued in reinvestment of dividends and distributions | 27,786 | 291,449 | |||||
Shares reacquired | (169,783 | ) | (1,786,383 | ) | |||
Net increase (decrease) in shares outstanding | 362,442 | $ | 3,766,409 | ||||
Class Z | |||||||
Six months ended February 28, 2009: | |||||||
Shares sold | 202,584 | $ | 1,969,432 | ||||
Shares issued in reinvestment of dividends and distributions | 18,202 | 175,474 | |||||
Shares reacquired | (302,659 | ) | (2,926,649 | ) | |||
Net increase (decrease) in shares outstanding | (81,873 | ) | $ | (781,743 | ) | ||
Year ended August 31, 2008: | |||||||
Shares sold | 533,408 | $ | 5,583,740 | ||||
Shares issued in reinvestment of dividends and distributions | 28,792 | 301,681 | |||||
Shares reacquired | (198,103 | ) | (2,085,570 | ) | |||
Net increase (decrease) in shares outstanding | 364,097 | $ | 3,799,851 | ||||
Note 7. New Accounting Pronouncements
In March 2008 the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for any reporting period beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements has not yet been determined.
| Dryden California Municipal Fund/California Income Series | 29 |
Financial Highlights
(Unaudited)
| Class A | ||||
| Six Months Ended February 28, 2009 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.37 | ||
Income (loss) from investment operations: | ||||
Net investment income | .24 | |||
Net realized and unrealized gain (loss) on investments and financial futures | (.55 | ) | ||
Total from investment operations | (.31 | ) | ||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.23 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total dividends and distributions | (.27 | ) | ||
Net asset value, end of period | $ | 9.79 | ||
Total Return(a): | (2.90 | )% | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 167,637 | ||
Average net assets (000) | $ | 172,230 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(b) | .89 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .64 | %(d) | ||
Net investment income | 4.87 | %(d) | ||
For Class A, B, C, and Z shares: | ||||
Portfolio turnover | 12 | %(e)(f) | ||
| (a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
| (b) | The distributor of the Fund 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. |
| (c) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is .87% and .89% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
| (d) | Annualized. |
| (e) | Not annualized. |
| (f) | The portfolio turnover rate including variable rate demand notes was 17% for the period ended February 28, 2009. |
See Notes to Financial Statements.
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| Class A | ||||||||||||||||||
| Year Ended August 31, | ||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||
| $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | $ | 10.86 | |||||||||
| .45 | .47 | .48 | .46 | .45 | ||||||||||||||
| (.10 | ) | (.30 | ) | (.14 | ) | .19 | .25 | |||||||||||
| .35 | .17 | .34 | .65 | .70 | ||||||||||||||
| (.47 | ) | (.46 | ) | (.47 | ) | (.46 | ) | (.45 | ) | |||||||||
| (.06 | ) | (.10 | ) | (.07 | ) | — | (.16 | ) | ||||||||||
| (.53 | ) | (.56 | ) | (.54 | ) | (.46 | ) | (.61 | ) | |||||||||
| $ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | |||||||||
| 3.31 | % | 1.55 | % | 3.18 | % | 6.02 | % | 6.55 | % | |||||||||
| $ | 190,613 | $ | 195,617 | $ | 136,509 | $ | 141,564 | $ | 143,120 | |||||||||
| $ | 192,969 | $ | 183,767 | $ | 140,306 | $ | 141,287 | $ | 151,980 | |||||||||
| .87 | %(c) | .92 | %(c) | .94 | % | .93 | % | .92 | % | |||||||||
| .62 | %(c) | .67 | %(c) | .69 | % | .68 | % | .67 | % | |||||||||
| 4.23 | % | 4.40 | % | 4.33 | % | 4.15 | % | 4.12 | % | |||||||||
| 41 | % | 43 | % | 40 | % | 11 | % | 38 | % | |||||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 31 |
Financial Highlights
(Unaudited) continued
| Class B | ||||
| Six Months Ended February 28, 2009 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.37 | ||
Income (loss) from investment operations: | ||||
Net investment income | .23 | |||
Net realized and unrealized gain (loss) on investments and financial futures | (.55 | ) | ||
Total from investment operations | (.32 | ) | ||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.22 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total dividends and distributions | (.26 | ) | ||
Net asset value, end of period | $ | 9.79 | ||
Total Return(a): | (3.01 | )% | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 9,990 | ||
Average net assets (000) | $ | 10,695 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.14 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .64 | %(c) | ||
Net investment income | 4.61 | %(c) | ||
| (a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
| (b) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is 1.12% and 1.14% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
| (c) | Annualized. |
See Notes to Financial Statements.
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| Class B | ||||||||||||||||||
| Year Ended August 31, | ||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||
| $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | $ | 10.86 | |||||||||
| .42 | .45 | .45 | .43 | .42 | ||||||||||||||
| (.10 | ) | (.30 | ) | (.14 | ) | .19 | .25 | |||||||||||
| .32 | .15 | .31 | .62 | .67 | ||||||||||||||
| (.44 | ) | (.44 | ) | (.44 | ) | (.43 | ) | (.42 | ) | |||||||||
| (.06 | ) | (.10 | ) | (.07 | ) | — | (.16 | ) | ||||||||||
| (.50 | ) | (.54 | ) | (.51 | ) | (.43 | ) | (.58 | ) | |||||||||
| $ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | |||||||||
| 3.06 | % | 1.29 | % | 2.92 | % | 5.76 | % | 6.29 | % | |||||||||
| $ | 13,283 | $ | 19,291 | $ | 21,264 | $ | 35,061 | $ | 47,536 | |||||||||
| $ | 15,408 | $ | 20,405 | $ | 25,830 | $ | 40,894 | $ | 53,143 | |||||||||
| 1.12 | %(b) | 1.17 | %(b) | 1.19 | % | 1.18 | % | 1.17 | % | |||||||||
| .62 | %(b) | .67 | %(b) | .69 | % | .68 | % | .67 | % | |||||||||
| 3.98 | % | 4.13 | % | 4.08 | % | 3.90 | % | 3.87 | % | |||||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 33 |
Financial Highlights
(Unaudited) continued
| Class C | ||||
| Six Months Ended February 28, 2009 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.37 | ||
Income (loss) from investment operations: | ||||
Net investment income | .21 | |||
Net realized and unrealized gain (loss) on investments and financial futures | (.54 | ) | ||
Total from investment operations | (.33 | ) | ||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.21 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total dividends and distributions | (.25 | ) | ||
Net asset value, end of period | $ | 9.79 | ||
Total Return(a): | (3.13 | )% | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 13,490 | ||
Average net assets (000) | $ | 12,389 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(b) | 1.39 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .64 | %(d) | ||
Net investment income | 4.38 | %(d) | ||
| (a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
| (b) | The distributor of the Fund 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. |
| (c) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is 1.37% and 1.39% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
| (d) | Annualized. |
See Notes to Financial Statements.
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| Class C | ||||||||||||||||||
| Year Ended August 31, | ||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||
| $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | $ | 10.86 | |||||||||
| .40 | .42 | .42 | .40 | .40 | ||||||||||||||
| (.10 | ) | (.30 | ) | (.14 | ) | .19 | .25 | |||||||||||
| .30 | .12 | .28 | .59 | .65 | ||||||||||||||
| (.42 | ) | (.41 | ) | (.41 | ) | (.40 | ) | (.40 | ) | |||||||||
| (.06 | ) | (.10 | ) | (.07 | ) | — | (.16 | ) | ||||||||||
| (.48 | ) | (.51 | ) | (.48 | ) | (.40 | ) | (.56 | ) | |||||||||
| $ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | |||||||||
| 2.82 | % | 1.04 | % | 2.66 | % | 5.50 | % | 6.03 | % | |||||||||
| $ | 12,094 | $ | 8,488 | $ | 8,059 | $ | 8,251 | $ | 8,986 | |||||||||
| $ | 9,567 | $ | 8,497 | $ | 8,182 | $ | 8,726 | $ | 9,164 | |||||||||
| 1.37 | %(c) | 1.42 | %(c) | 1.44 | % | 1.43 | % | 1.42 | % | |||||||||
| .62 | %(c) | .67 | %(c) | .69 | % | .68 | % | .67 | % | |||||||||
| 3.74 | % | 3.90 | % | 3.83 | % | 3.66 | % | 3.62 | % | |||||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 35 |
Financial Highlights
(Unaudited) continued
| Class Z | ||||
| Six Months Ended February 28, 2009 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.37 | ||
Income (loss) from investment operations: | ||||
Net investment income | .25 | |||
Net realized and unrealized gain (loss) on investments and financial futures | (.54 | ) | ||
Total from investment operations | (.29 | ) | ||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.25 | ) | ||
Distributions from net realized gains | (.04 | ) | ||
Total dividends and distributions | (.29 | ) | ||
Net asset value, end of period | $ | 9.79 | ||
Total Return(a): | (2.77 | )% | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 7,992 | ||
Average net assets (000) | $ | 8,455 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | .64 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .64 | %(c) | ||
Net investment income | 5.12 | %(c) | ||
| (a) | Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
| (b) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is .62% and .64% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
| (c) | Annualized. |
See Notes to Financial Statements.
| 36 | Visit our website at www.jennisondryden.com |
| Class Z | ||||||||||||||||||
| Year Ended August 31, | ||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||
| $ | 10.56 | $ | 10.95 | $ | 11.14 | $ | 10.95 | $ | 10.86 | |||||||||
| .48 | .50 | .50 | .48 | .48 | ||||||||||||||
| (.11 | ) | (.30 | ) | (.12 | ) | .19 | .25 | |||||||||||
| .37 | .20 | .38 | .67 | .73 | ||||||||||||||
| (.50 | ) | (.49 | ) | (.50 | ) | (.48 | ) | (.48 | ) | |||||||||
| (.06 | ) | (.10 | ) | (.07 | ) | — | (.16 | ) | ||||||||||
| (.56 | ) | (.59 | ) | (.57 | ) | (.48 | ) | (.64 | ) | |||||||||
| $ | 10.37 | $ | 10.56 | $ | 10.95 | $ | 11.14 | $ | 10.95 | |||||||||
| 3.49 | % | 1.80 | % | 3.53 | % | 6.29 | % | 6.82 | % | |||||||||
| $ | 9,312 | $ | 5,636 | $ | 4,985 | $ | 4,737 | $ | 5,604 | |||||||||
| $ | 6,821 | $ | 5,566 | $ | 4,925 | $ | 5,101 | $ | 6,958 | |||||||||
| .62 | %(b) | .67 | %(b) | .69 | % | .68 | % | .67 | % | |||||||||
| .62 | %(b) | .67 | %(b) | .69 | % | .68 | % | .67 | % | |||||||||
| 4.50 | % | 4.64 | % | 4.58 | % | 4.39 | % | 4.36 | % | |||||||||
See Notes to Financial Statements.
| Dryden California Municipal Fund/California Income Series | 37 |
| 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 Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. 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 Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
| TRUSTEES |
| Kevin J. Bannon • Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Michael S. Hyland • Robert E. La Blanc • Douglas H. McCorkindale • Stephen P. Munn • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn |
| OFFICERS |
| Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Noreen M. Fierro, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer |
| MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
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| INVESTMENT SUBADVISER | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
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| DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street | ||
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| CUSTODIAN | The Bank of New York Mellon | One Wall Street New York, NY 10286 | ||
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| TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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| INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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| 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 Fund carefully before investing. The prospectus for the Fund contains this and other information about the Fund. 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 view/change option at the website address above. |
| SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
| Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Dryden California Municipal Fund/California Income Series, Prudential Investments, Attn: Board of Trustees, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. 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 Fund 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 Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s 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 (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s 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 California Municipal Fund/California Income Series | ||||||||||||
| Share Class | A | B | C | Z | ||||||||
NASDAQ | PBCAX | PCAIX | PCICX | PCIZX | ||||||||
CUSIP | 262433105 | 262433204 | 262433303 | 262433402 | ||||||||
MF146E2 IFS-A163970 Ed. 04/2009
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 applicable.
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 California Municipal Fund | |||||
| By (Signature and Title)* | /s/ Deborah A. Docs | |||||
| Deborah A. Docs | ||||||
| Secretary | ||||||
| Date | April 22, 2009 |
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 22, 2009 |
| By (Signature and Title)* | /s/ Grace C. Torres | |||||
| Grace C. Torres | ||||||
| Treasurer and Principal Financial Officer |
| Date | April 22, 2009 |
* | Print the name and title of each signing officer under his or her signature. |