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: | 811-04930 | |
Exact name of registrant as specified in charter: | Dryden Municipal Bond 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: | 4/30/2006 | |
Date of reporting period: | 10/31/2005 |
Item 1 – Reports to Stockholders – [ INSERT REPORT ]
Dryden Municipal Bond Fund/
High Income Series & Insured Series
OCTOBER 31, 2005 | SEMIANNUAL REPORT |
FUND TYPE
Municipal Bond
OBJECTIVE
High Income Series: Maximum amount of income that is eligible for exclusion from federal income taxes.
Insured Series: Maximum amount of income that is eligible for exclusion from 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 October 31, 2005, 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.
December 15, 2005
Dear Shareholder:
We hope you find the semiannual report for the Dryden Municipal Bond Fund/High Income Series and Insured 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 advisers and Prudential Financial companies.
Thank you for choosing JennisonDryden Mutual Funds.
Sincerely,
Judy A. Rice, President
Dryden Municipal Bond Fund/High Income Series and Insured Series
Dryden Municipal Bond Fund | 1 |
Your Series’ Performance
High Income Series
Series objective
The investment objective of the Dryden Municipal Bond Fund/High Income Series (the Series) is to seek the maximum amount of income that is eligible for exclusion from federal income taxes. 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 10/31/05 | |||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception2 | |||||||||
Class A | 2.18 | % | 6.07 | % | 32.90 | % | 66.71% (66.23) | 158.69% (156.68) | |||||
Class B | 1.96 | 5.70 | 31.23 | 61.81 (61.34) | 215.83 (204.80) | ||||||||
Class C | 1.84 | 5.44 | 29.62 | 57.86 (57.40) | 72.90 (72.23) | ||||||||
Class Z | 2.30 | 6.32 | 34.59 | N/A | 62.72 (62.24) | ||||||||
LB Muni Bond Index3 | 0.59 | 2.54 | 33.70 | 76.52 | *** | ||||||||
LB Non-Investment-Grade Muni Bond Index4, 5 | 2.12 | 9.41 | 42.05 | 85.55 | **** | ||||||||
Lipper HY Muni Debt Funds Avg.6 | 1.89 | 5.92 | 33.91 | 64.72 | ***** | ||||||||
Average Annual Total Returns1 as of 9/30/05 | |||||||||||||
One Year | Five Years | Ten Years | Since Inception2 | ||||||||||
Class A | 2.93 | % | 5.10 | % | 5.00% (4.97) | 5.99% (5.94) | |||||||
Class B | 1.94 | 5.53 | 5.12 (5.08) | 6.61 (6.40) | |||||||||
Class C | 5.68 | 5.43 | 4.85 (4.82) | 5.06 (5.03) | |||||||||
Class Z | 7.48 | 6.23 | N/A | 5.58 (5.54) | |||||||||
LB Muni Bond Index3 | 4.05 | 6.34 | 6.06 | *** | |||||||||
LB Non-Investment-Grade Muni Bond Index4, 5 | 10.75 | 7.36 | 6.51 | **** | |||||||||
Lipper HY Muni Debt Funds Avg.6 | 7.23 | 6.14 | 5.27 | ***** |
Distribution and Yields1 as of 10/31/05 | ||||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | Taxable Equivalent Yield7 at Tax Rates of | ||||||||||
33% | 35% | |||||||||||
Class A | $ | 0.25 | 3.89 | % | 5.81 | % | 5.98 | % | ||||
Class B | $ | 0.24 | 3.80 | 5.67 | 5.85 | |||||||
Class C | $ | 0.22 | 3.54 | 5.28 | 5.45 | |||||||
Class Z | $ | 0.26 | 4.32 | 6.45 | 6.65 |
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, as indicated in parentheses. 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.
2Inception dates: Class A, 1/22/90; Class B, 9/17/87; Class C, 8/1/94; and Class Z, 9/16/96.
3The Lehman Brothers (LB) Municipal (Muni) 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 Lehman Brothers (LB) Non-Investment-Grade Municipal (Muni) Bond Index is an unmanaged index of non-rated or Ba1 below-rated municipal bonds. It gives a broad look at how non-investment-grade municipal bonds have performed. The bonds in this index must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $20 million. The bonds must also have a dated date after December 31, 1990, and must be at least one year from their maturity date.
5The inception date of the LB Non-Investment-Grade Muni Bond Index is October 1995.
6The Lipper High Yield (HY) Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper HY Muni Debt Funds category for the periods noted. Funds in the Lipper Average invest at least 50% of their assets in lower-rated municipal debt issues.
7Some investors may be subject to the federal alternative minimum tax and/or state and local taxes. Taxable equivalent yields reflect federal taxes only.
Investors cannot invest directly in an index. The returns for the Lehman Brothers Indexes and the Lipper Average 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.
***LB Muni Bond Index Closest Month-End to Inception cumulative total returns as of 10/31/05 are 182.94% for Class A, 259.05% for Class B, 96.88% for Class C, and 68.89% for Class Z. LB Muni Bond Index Closest Month-End to Inception average annual total returns as of 9/30/05 are 6.91% for Class A, 7.40% for Class B, 6.31% for Class C, and 6.07% for Class Z.
****LB Non-Investment-Grade Muni Bond Index Closest Month-End to Inception cumulative total return as of 10/31/05 is 78.90% for Class Z. LB Non-Investment-Grade Muni Bond Index Closest Month-End to Inception average annual total return as of 9/30/05 is 6.69% for Class Z.
*****Lipper Average Closest Month-End to Inception cumulative total returns as of 10/31/05 are 155.08% for Class A, 219.12% for Class B, 81.28% for Class C, and 57.06% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 9/30/05 are 6.15% for Class A, 6.64% for Class B, 5.48% for Class C, and 5.16% for Class Z.
Dryden Municipal Bond Fund | 3 |
Your Series’ Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 10/31/05 | |||
Memphis (TN) Ctr. City Rev., Fin. Corp., 6.50%, 09/01/28 | 4.4 | % | |
Austin (TX) Hsg. Fin. Corp., 7.75%, 11/01/29 | 1.5 | ||
Tobacco Settlement Corp., (NY) 5.50%, 06/01/14 | 1.4 | ||
New Jersey (NJ) Econ. Dev. Auth. Rev., 6.375%, 04/01/31 | 1.4 | ||
West Virginia (WV) St. Hosp. Fin., 6.75%, 09/01/30 | 1.3 |
Issues are subject to change.
Credit Quality expressed as a percentage of net assets as of 10/31/05 | |||
Aaa | 23.8 | % | |
Aa | 4.9 | ||
A | 10.5 | ||
Baa | 19.5 | ||
Ba | 6.3 | ||
B | 3.8 | ||
Caa | 1.4 | ||
NR | 27.9 | ||
Total Investments | 98.1 | ||
Other assets in excess of other liabilities | 1.9 | ||
Net Assets | 100.0 | % | |
Source: Moody’s rating, defaulting to S&P when not rated.
Credit quality is subject to change.
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Your Series’ Performance
Insured Series
Series objective
The investment objective of the Dryden Municipal Bond Fund/Insured Series (the Series) is to seek the maximum amount of income that is eligible for exclusion from 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 10/31/05 | |||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception2 | |||||||||
Class A | 0.22 | % | 1.34 | % | 28.18 | % | 63.09% (62.79) | 153.32% (150.74) | |||||
Class B | 0.19 | 1.07 | 26.66 | 58.40 (58.11) | 201.18 (181.14) | ||||||||
Class C | –0.03 | 0.72 | 24.99 | 54.39 (54.10) | 69.69 (69.22) | ||||||||
Class Z | 0.34 | 1.53 | 29.61 | N/A | 60.58 (60.43) | ||||||||
LB Muni Bond Index3 | 0.59 | 2.54 | 33.70 | 76.52 | *** | ||||||||
Lipper Insured Muni Debt Funds Avg.4 | 0.08 | 1.36 | 27.99 | 60.49 | **** | ||||||||
Average Annual Total Returns1 as of 9/30/05 | |||||||||||||
One Year | Five Years | Ten Years | Since Inception2 | ||||||||||
Class A | –1.30 | % | 4.64 | % | 4.84% (4.82) | 5.88% (5.81) | |||||||
Class B | –2.36 | 5.07 | 4.95 (4.93) | 6.34 (5.96) | |||||||||
Class C | 1.30 | 4.97 | 4.69 (4.67) | 4.93 (4.90) | |||||||||
Class Z | 3.01 | 5.74 | N/A | 5.47 (5.46) | |||||||||
LB Muni Bond Index3 | 4.05 | 6.34 | 6.06 | *** | |||||||||
Lipper Insured Muni Debt Funds Avg.4 | 2.91 | 5.45 | 5.09 | **** |
Distribution and Yields1 as of 10/31/05 | ||||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | Taxable Equivalent Yield5 at Tax Rates of | ||||||||||
33% | 35% | |||||||||||
Class A | $ | 0.21 | 3.01 | % | 4.49 | % | 4.63 | % | ||||
Class B | $ | 0.19 | 2.87 | 4.28 | 4.42 | |||||||
Class C | $ | 0.18 | 2.63 | 3.93 | 4.05 | |||||||
Class Z | $ | 0.22 | 3.39 | 5.06 | 5.22 |
Dryden Municipal Bond Fund | 5 |
Your Series’ Performance (continued)
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, as indicated in parentheses. 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.
2Inception dates: Class A, 1/22/90; Class B, 9/17/87; Class C, 8/1/94; and Class Z, 9/16/96.
3The Lehman Brothers (LB) Municipal (Muni) 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 Insured Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper Insured Muni Debt Funds category for the periods noted. Funds in the Lipper Average invest primarily in municipal debt issues insured as to timely payment.
5Some investors may be subject to the federal alternative minimum tax and/or state and local taxes. Taxable equivalent yields reflect federal taxes only.
Investors cannot invest directly in an index. The returns for the LB Muni Bond Index and the Lipper Average 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.
***LB Muni Bond Index Closest Month-End to Inception cumulative total returns as of 10/31/05 are 182.94% for Class A, 259.05% for Class B, 96.88% for Class C, and 68.89% for Class Z. LB Muni Bond Index Closest Month-End to Inception average annual total returns as of 9/30/05 are 6.91% for Class A, 7.40% for Class B, 6.31% for Class C, and 6.07% for Class Z.
****Lipper Average Closest Month-End to Inception cumulative total returns as of 10/31/05 are 152.72% for Class A, 222.54% for Class B, 78.47% for Class C, and 54.45% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 9/30/05 are 6.14% for Class A, 6.75% for Class B, 5.38% for Class C, and 5.03% for Class Z.
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Five Largest Issues expressed as a percentage of net assets as of 10/31/05 | |||
Hawaii (HI) Dept. Budget & Fin., 6.20%, 11/01/29 | 3.2 | % | |
Metro. (NY) Trans. Auth. N.Y. Svc. Contract, 5.50%, 07/01/23 | 2.9 | ||
California (CA) St., 5.25%, 02/01/27 | 2.7 | ||
Brevard Cnty. (FL) Hlth. Facs., 5.60%, 10/01/10 | 2.2 | ||
San Diego (CA) Wtr. Rev., 8.41%, 4/26/06 | 2.2 |
Issues are subject to change.
Credit Quality expressed as a percentage of net assets as of 10/31/05 | |||
Aaa | 98.6 | % | |
Aa | 0.9 | ||
A | 1.9 | ||
Total Investments | 101.4 | ||
Liabilities in excess of other assets | –1.4 | ||
Net Assets | 100.0 | % | |
Source: Moody’s rating, defaulting to S&P when not rated.
Credit quality is subject to change.
Dryden Municipal Bond Fund | 7 |
Fees and Expenses (Unaudited)
As a shareholder of a 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 each 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 May 1, 2005, at the beginning of the period, and held through the six-month period ended October 31, 2005.
Each 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
8 | Visit our website at www.jennisondryden.com |
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 Bond Fund/High Income Series | Beginning Account Value May 1, 2005 | Ending Account October 31, 2005 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,021.78 | 0.87 | % | $ | 4.43 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,020.82 | 0.87 | % | $ | 4.43 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,019.61 | 1.12 | % | $ | 5.70 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.56 | 1.12 | % | $ | 5.70 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 1,018.40 | 1.37 | % | $ | 6.97 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,018.30 | 1.37 | % | $ | 6.97 | ||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,022.99 | 0.62 | % | $ | 3.16 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,022.08 | 0.62 | % | $ | 3.16 |
Dryden Municipal Bond Fund | 9 |
Fees and Expenses (continued)
Dryden Municipal Bond Fund/ Insured Series | Beginning Account Value May 1, 2005 | Ending Account October 31, 2005 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,002.22 | 0.92 | % | $ | 4.64 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,020.57 | 0.92 | % | $ | 4.69 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,001.92 | 1.17 | % | $ | 5.90 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.31 | 1.17 | % | $ | 5.96 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 999.70 | 1.42 | % | $ | 7.16 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,018.05 | 1.42 | % | $ | 7.22 | ||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,003.38 | 0.67 | % | $ | 3.38 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,021.83 | 0.67 | % | $ | 3.41 |
* 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 184 days in the six-month period ended October 31, 2005, and divided by the 365 days in the Series’ fiscal year ending April 30, 2006 (to reflect the six-month period).
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Portfolio of Investments
as of October 31, 2005 (Unaudited)
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
LONG-TERM INVESTMENTS 98.0% | ||||||||||||
Alabama 0.5% | ||||||||||||
Butler Ind. Dev. Brd. Solid Wste. Disp. Rev., GA-Pacific Corp. Proj., A.M.T | BB+(b) | 5.75% | 9/01/28 | $ | 1,000 | $ | 1,007,620 | |||||
Camden Ind. Dev. Brd. Facs. Rev., Refdg. Weyerhaeuser, | ||||||||||||
Ser. A | BBB(b) | 6.125 | 12/01/24 | 1,000 | 1,101,370 | |||||||
Ser. B, A.M.T | BBB(b) | 6.375 | 12/01/24 | 1,000 | 1,088,030 | |||||||
3,197,020 | ||||||||||||
Alaska 0.6% | ||||||||||||
Northern Tobacco Secur. Corp., Asset Bkd. Bonds | Baa3 | 6.50 | 6/01/31 | 3,500 | 3,683,260 | |||||||
Arizona 1.2% | ||||||||||||
Coconino Cnty. Poll. Ctrl. Corp. Rev.Tuscon Elec. Pwr., Navajo, | ||||||||||||
Ser. A, A.M.T. | Ba1 | 7.125 | 10/01/32 | 5,000 | 5,250,350 | |||||||
Ser. B | Ba1 | 7.00 | 10/01/32 | 1,700 | 1,767,014 | |||||||
�� | ||||||||||||
7,017,364 | ||||||||||||
California 12.8% | ||||||||||||
Antelope Valley California Hlthcare. Dis Rfdg., Ser. A, F.S.A. | Aaa | 5.20 | 1/01/17 | 1,005 | 1,059,813 | |||||||
California Poll. Ctrl. Fin. Auth. Solid Wste. Disp. Rev. Wste. Mgmt., Inc. PJ-Ser. B, A.M.T. | BBB(b) | 5.00 | 7/01/27 | 1,000 | 981,760 | |||||||
California St., G.O., M.B.I.A. | Aaa | 5.25 | 2/01/27 | 4,905 | 5,157,951 | |||||||
California St. Pub. Wks. Brd. Lease Rev., | ||||||||||||
Dept. Mental Hlth., Coalinga, Ser. A | A3 | 5.50 | 6/01/19 | 2,000 | 2,175,159 | |||||||
Dept. Mental Hlth., Coalinga, Ser. A | A3 | 5.50 | 6/01/20 | 2,000 | 2,173,660 | |||||||
Dept. Mental Hlth., Coalinga, Ser. A | A3 | 5.50 | 6/01/22 | 2,000 | 2,164,700 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 11 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
California Statewide Cmntys Dev. Auth. Rev. Kaiser Permanente, Ser. C | A3 | 3.85% | 11/01/29 | $ | 2,000 | $ | 1,965,120 | ||||||
Capistrano Uni. Sch. Dist. Cmnty. Facs., Talega | NR | 6.00 | 9/01/33 | 1,000 | 1,048,230 | ||||||||
Central California Joint Pwr. Hlth. Fin. Auth., Cmnty. Hosps. of Central California, C.O.P. | Baa2 | 6.00 | 2/01/30 | 2,550 | 2,653,097 | ||||||||
Foothill/Eastern Trans. Corridor Agcy. Toll Rd. Rev., C.A.B.S. | Baa3 | Zero | 1/15/28 | 6,700 | 5,651,249 | ||||||||
Golden St. Securitization Corp. Tobacco Settlement Rev., | |||||||||||||
Asset Bkd., Ser. B | Aaa | 5.75 | 6/01/23 | 3,940 | (e) | 4,181,364 | |||||||
Asset Bkd., Ser. B | Aaa | 5.50 | 6/01/43 | 3,500 | (e) | 3,868,550 | |||||||
La Quinta Fin. Auth. Local Agcy. Rev., Ser. A, A.M.B.A.C. | Aaa | 5.25 | 9/01/24 | 3,500 | 3,742,025 | ||||||||
Lincoln Impvt. Bond Act 1915, Pub. Fin. Auth., Twelve Bridges | NR | 6.20 | 9/02/25 | 3,460 | 3,618,503 | ||||||||
Los Angeles Wtr. & Pwr. Rev. Pwr. Sys., | |||||||||||||
Ser. A, F.G.I.C. | Aaa | 5.125 | 7/01/40 | 3,660 | 3,749,999 | ||||||||
Ser. B, F.S.A. | Aaa | 5.125 | 7/01/15 | 1,000 | 1,074,280 | ||||||||
Ser. B, F.S.A. | Aaa | 5.125 | 7/01/16 | 1,000 | 1,071,550 | ||||||||
Ser. B, F.S.A. | Aaa | 5.125 | 7/01/17 | 2,100 | 2,247,399 | ||||||||
Ser. B, F.S.A. | Aaa | 5.125 | 7/01/18 | 1,555 | 1,662,559 | ||||||||
Murrieta Cmnty. Facs. Dist. Spl. Tax, No. 2, The Oaks Impt. Area, Ser. A | NR | 5.90 | 9/01/27 | 1,000 | 1,047,550 | ||||||||
Orange Cnty, Cmnty. Loc. Trans. Auth., Reg. Linked, S.A.V.R.S., R.I.B.S. | Aa2 | 6.20 | 2/14/11 | 7,000 | 7,839,580 | ||||||||
Perris California Cmnty. Facs. Dist., Spec. Tax, No. 01-2, Ser. A | NR | 6.25 | 9/01/23 | 3,000 | 3,246,480 | ||||||||
Rancho Cordova Cmnty. Facs. Dist., | |||||||||||||
Spec. Tax No. 2003-1, Sunridge Anatolia | NR | 6.00 | 9/01/33 | 1,000 | 1,025,670 | ||||||||
Spec. Tax No. 2003-1, Sunridge Anatolia | NR | 6.10 | 9/01/37 | 2,000 | 2,054,520 |
See Notes to Financial Statements.
12 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Roseville Joint Union H.S. Dist., Ser. B, G.O., F.G.I.C., C.A.B.S. | Aaa | Zero | 8/01/11 | $ | 1,440 | $ | 1,151,453 | ||||||
Saugus Uni. Sch. Dist. Cmnty. Facs. | NR | 6.00% | 9/01/33 | 1,800 | 1,875,078 | ||||||||
University Revs., | |||||||||||||
Hosp. UCLA Med. Ctr., Ser. A, A.M.B.A.C. | Aaa | 5.50 | 5/15/23 | 1330 | 1,453,225 | ||||||||
Res. Facs., Ser. E, A.M.B.A.C. | Aaa | 5.00 | 9/01/18 | 2,115 | 2,227,687 | ||||||||
Vallejo, Touro Univ., C.O.P. | Ba2 | 7.375 | 6/01/29 | 3,500 | 3,722,320 | ||||||||
Valley Hlth. Sys. California Hosp. Rev., Rfdg. & Impvt. Proj., Ser. A | B+(b) | 6.50 | 5/15/25 | 1,000 | 1,000,650 | ||||||||
76,891,181 | |||||||||||||
Colorado 3.2% | |||||||||||||
Black Hawk Bus. Impvt. Dist. | NR | 7.75 | 12/01/19 | 5,285 | (e) | 6,182,869 | |||||||
Colorado Hlth. Facs. Auth. Rev., Rfdg Hosp. Poudre Valley Hlthcare. | Baa2 | 5.00 | 3/01/25 | 5,560 | 5,592,581 | ||||||||
Colorado Springs Hosp. Rev. | A3 | 6.375 | 12/15/30 | 1,240 | (e) | 1,403,953 | |||||||
Colorado Springs Hosp. Rev., Unrfdg. | A3 | 6.375 | 12/15/30 | 1,260 | 1,365,538 | ||||||||
Denver Urban Ren. Auth. Tax, Inc., Inc., Rev., A.M.T. | NR | 7.75 | 9/01/16 | 3,680 | 3,834,082 | ||||||||
Lake Creek Affordable Hsg. Corp. Multi-Fam. Rev., Ser. B | NR | 7.00 | 12/01/23 | 935 | 905,183 | ||||||||
19,284,206 | |||||||||||||
Connecticut 1.0% | |||||||||||||
Connecticut St. 1060 R, G.O., R.I.T.E.S. (cost $5,379,971; Purchased 09/18/02) | AA(b) | 6.59397(c) | 11/15/09 | 5,000 | (h) | 5,728,400 | |||||||
Delaware 0.2% | |||||||||||||
Delaware St. Health Facs. Auth. Rev. Beebe Med. Ctr. Proj., Ser. A | Baa1 | 5.00 | 6/01/30 | 1,000 | 1,000,710 | ||||||||
District of Columbia 0.5% | |||||||||||||
Dist. of Columbia Rev., Univ., George Washington Univ., Ser. A, M.B.I.A. | Aaa | 5.125 | 9/15/31 | 3,000 | 3,073,110 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 13 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Florida 5.0% | |||||||||||||
Broward Cnty. Res. Recov. Rev., Rfdg. Wheelabrator, Ser. A | A3 | 5.50% | 12/01/08 | $ | 4,000 | $ | 4,228,520 | ||||||
Florida St. Corr. Privateization Cmnty. Cert. Partner, | |||||||||||||
Ser. A, A.M.B.A.C., C.O.P. | Aaa | 5.00 | 8/01/17 | 1,660 | 1,750,072 | ||||||||
Ser. B, C.O.P., A.M.B.A.C. | Aaa | 5.00 | 8/01/14 | 2,020 | 2,165,763 | ||||||||
Highlands Cnty. Fla. Health Facs. Auth. Rev. Hosp-Adventist Hlth., Ser. D | A2 | 5.00 | 11/15/35 | 1,500 | 1,505,250 | ||||||||
Highlands Fla Cmnty. Dev. Dist. Spl. Assmt. | NR | 5.55 | 5/01/36 | 500 | 500,365 | ||||||||
Hillsborough Cnty. Ind. Dev. Auth. Rev., Lakeshore Villas Proj., Ser. A | NR | 6.75 | 7/01/29 | 3,000 | 3,038,970 | ||||||||
Indigo Cmnty. Dev. Dist. Florida Cap. Impvt. Rev. | NR | 5.75 | 5/01/36 | 2,000 | 2,022,760 | ||||||||
Miami Beach Hlth. Facs. Auth. Hosp. Rev., Mount Sinai Med. Ctr., Ser. A | Ba2 | 6.70 | 11/15/19 | 1,000 | 1,088,370 | ||||||||
North Springs Impvt. Dist. Wtr. Mgmt., Ser. B | NR | 8.30 | 5/01/24 | 1,520 | 1,538,316 | ||||||||
Orlando Util. Cmnty. Wtr. & Elec. Rev., Ser. D, E.T.M. | Aa1 | 6.75 | 10/01/17 | 2,000 | (e) | 2,391,680 | |||||||
Palm Beach Cnty. Pub. Impvt. Rev., Rev., Convention Ctr. Proj., F.G.I.C. | Aaa | 5.00 | 11/01/30 | 3,500 | 3,683,155 | ||||||||
Paseo Cmnty Dev. Dist. Florida Cap. Impvt. Rev., Series A | NR | 5.40 | 5/01/36 | 1,400 | 1,381,450 | ||||||||
Reunion West Cmnty. Dev. Dist. Spec. Assmt. | NR | 6.25 | 5/01/36 | 1,500 | 1,572,135 | ||||||||
Stoneybrook West Cmnty. Dev. Dist. Spec. Assmt., Ser. B | NR | 6.45 | 5/01/10 | 435 | 435,587 | ||||||||
Volusia Cnty. Sch. Brd. Sales Tax Rev., F.S.A. | Aaa | 5.00 | 10/01/10 | 2,500 | 2,666,225 | ||||||||
29,968,618 |
See Notes to Financial Statements.
14 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Georgia 0.7% | |||||||||||||
Cobb Cnty. Georgia Dev. Auth. Solid Wste. Disp. Rev., Georgia Wste. Mgmt.Proj. Ser. A, A.M.T. | BBB(b) | 3.65% | 4/01/33 | $ | 2,000 | $ | 1,999,740 | ||||||
Fulton Conty. Residential Care Facs., Canterbury Corut Proj., Ser. A | NR | 6.125 | 2/15/34 | 1,200 | 1,221,396 | ||||||||
Henry Cnty. Wtr. & Swr. Auth. Rev., A.M.B.A.C. | Aaa | 6.15 | 2/01/20 | 1,000 | 1,192,430 | ||||||||
4,413,566 | |||||||||||||
Hawaii 0.4% | |||||||||||||
Hawaii St., Ser. DD, G.O., M.B.I.A. | Aaa | 5.25 | 5/01/24 | 2,000 | 2,134,080 | ||||||||
Illinois 7.9% | |||||||||||||
Cary Illinois Spec. Tax Spec. Svcs., | |||||||||||||
Area No. 1, Cambridge, Ser. A | NR | 7.625 | 3/01/30 | 3,800 | 4,265,880 | ||||||||
Area No. 2, Foxford Hill | NR | 7.50 | 3/01/30 | 4,782 | 5,345,176 | ||||||||
Chicago Illinois Proj. & Rfdg., G.O., F.G.I.C. | Aaa | 5.25 | 1/01/28 | 4,375 | 4,574,281 | ||||||||
Gilberts Illinois Spec. Svcs. Area No. 9, Spec. Tax, Big Timber Proj. | AAA(b) | 7.75 | 3/01/27 | 5,000 | (e) | 6,001,750 | |||||||
Illinois Edl. Facs. Auth. Student Hsg. Rev., Edl. Advnmt. Fdg. Univ. Ctr. Proj. | Baa2 | 6.25 | 5/01/30 | 2,000 | 2,125,220 | ||||||||
Illinois Fin. Auth. Rev., | |||||||||||||
Friendship Vlg. Schaumburg, Ser. A | NR | 5.625 | 2/15/37 | 1,000 | 990,600 | ||||||||
Northwestern Mem. Hosp., Ser. A | Aa2 | 5.25 | 8/15/34 | 5,000 | 5,175,350 | ||||||||
Illinois Hlth Facs. Auth. Rev., Lake Forest Hosp., Ser. A | A3 | 6.25 | 7/01/22 | 4,200 | 4,561,074 | ||||||||
Kane & De Kalb Cntys. Sch. Dist., No. 301, A.M.B.A.C., C.A.B.S., G.O. | Aaa | Zero | 12/01/11 | 3,360 | 2,632,291 | ||||||||
McLean & Woodford Cntys. Cmnty. Unif. Sch. Dist. No. 005, G.O., F.S.A. | Aaa | 5.625 | 12/01/17 | 4,535 | (e) | 4,967,729 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 15 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Metro. Peir & Expo. Auth. Dedicated St. Tax Rev., McCormick Place Expansion, Ser. A, M.B.I.A. | Aaa | 5.25% | 6/15/42 | $ | 6,000 | $ | 6,177,600 | ||||||
Robbins Illinois Res. Recov. Rev. Restruct. Proj., | |||||||||||||
Ser. A, A.M.T. (cost $5,031,250; Purchased 02/03/00) | NR | Zero | 10/15/16 | 5,031 | (d)(h)(i) | 10,062 | |||||||
Ser. B, A.M.T. (cost $1,968,750; Purchased 02/03/00) | NR | Zero | 10/15/16 | 1,969 | (d)(h)(i) | 3,938 | |||||||
Round Lake Rev. | NR | 6.70 | 3/01/33 | 1,000 | 1,044,280 | ||||||||
47,875,231 | |||||||||||||
Indiana 0.8% | |||||||||||||
Indiana Hlth. Fac. Fin. Auth. Hosp. Rev., Cmnty. Foundation Northwest Ind., Ser. A | BBB-(b) | 6.00 | 3/01/34 | 3,000 | 3,144,660 | ||||||||
Indiana St. Hsg. Fin. Auth. Sngl. Fam. Mtge. Rev., Ser. B2, A.M.T., G.N.M.A./F.N.M.A. | Aaa | 4.00 | 1/01/34 | 1,895 | 1,881,564 | ||||||||
5,026,224 | |||||||||||||
Iowa 1.0% | |||||||||||||
Iowa St. Fin. Auth. Hlthcare, Facs. Rev., Mercy Hlth. Initiatives Proj. | NR | 9.25 | 7/01/25 | 4,780 | 5,815,683 | ||||||||
Kentucky 0.2% | |||||||||||||
Boone Cnty. KY Pollutn. Ctl. Rev. Ref-Coll-Dayton Pwr. & Lt. Co., Ser. A, F.G.I.C. | Aaa | 4.70 | 1/01/28 | 1,000 | 988,540 | ||||||||
Louisiana 1.0% | |||||||||||||
Calcasieu Parish Inc., Ind. Dev. Brd. Rev., Rfdg. Olin Corp. Proj. | Baa3 | 6.625 | 2/01/16 | 3,500 | 3,729,425 | ||||||||
De Soto Parish Lousisiana Environ. Impvt. Rev., Rfdg. Int’l. Paper, Ser. A, A.M.T. | Baa2 | 4.75 | 3/01/19 | 2,500 | 2,392,600 | ||||||||
6,122,025 |
See Notes to Financial Statements.
16 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Maine 0.7% | |||||||||||||
Maine Hlth. & Higher Edl. Facs. Auth Rev. Piper Shores, | |||||||||||||
Ser. A | NR | 7.50% | 1/01/19 | $ | 1,000 | (e) | $ | 1,110,920 | |||||
Ser. A | NR | 7.55 | 1/01/29 | 3,000 | (e) | 3,337,200 | |||||||
4,448,120 | |||||||||||||
Maryland 2.0% | |||||||||||||
Anne Arundel Cnty. Spec. Oblig., Arundel Mills Proj. | �� | AAA(b) | 7.10 | 7/01/29 | 3,000 | (e) | 3,424,560 | ||||||
Maryland St. Hlth. & Higher Edl. Facs. Auth. Rev. | A3 | 6.75 | 7/01/30 | 5,000 | (e) | 5,720,000 | |||||||
Northeast Wste. Disp. Auth. Rev., | |||||||||||||
Sludge Corp. Facs. (cost $1,054,000; Purchased 06/30/93) | NR | 7.25 | 7/01/07 | 1,054 | (h)(i) | 1,097,109 | |||||||
Sludge Corp. Facs., A.M.T. (cost $1,865,000; Purchased 06/30/93) | NR | 8.50 | 7/01/07 | 1,865 | (h)(i) | 1,980,089 | |||||||
12,221,758 | |||||||||||||
Massachusetts 3.1% | |||||||||||||
Massachusetts St., Cons. Ln., G.O., Ser. C | Aa2 | 5.25 | 11/01/30 | 1,495 | (e) | 1,620,460 | |||||||
Massachusetts St. Coll. Bldg., Proj. & Rfdg. Bonds, Ser. A | Aa2 | 7.50 | 5/01/14 | 1,750 | 2,149,805 | ||||||||
Massachusetts St. Dev. Fin. Agcy. Rev., Hlthcare. Fac., Alliance, Ser. A | NR | 7.10 | 7/01/32 | 4,010 | 4,088,797 | ||||||||
Masachusetts St. Hlth. & Edl. Facs. Auth. Rev. Caritas Christi Oblig. Group, | |||||||||||||
Rfdg., Ser. A | Baa3 | 5.75 | 7/01/28 | 2,000 | 2,028,320 | ||||||||
Rfdg., Ser. B | Baa3 | 6.75 | 7/01/16 | 3,595 | 3,989,695 | ||||||||
Massachusetts St. Wtr. Poll. Abatement Trust, Pool Proj., Ser. 9 | Aaa | 5.25 | 8/01/33 | 2,500 | 2,634,725 | ||||||||
Nantucket, MA | |||||||||||||
G.O., M.B.I.A. | Aaa | 3.375 | 10/01/15 | 1,205 | 1,120,831 | ||||||||
G.O., M.B.I.A. | Aaa | 3.50 | 10/01/16 | 1,200 | 1,115,436 | ||||||||
18,748,069 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 17 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Michigan 1.3% | |||||||||||||
Kalamazoo Michigan Hosp. Fin. Auth. Hosp. Fac. Rev., E.T.M., F.G.I.C. (cost $2,042,552; Purchased 02/02/01) | Aaa | 7.558%(c) | 6/01/11 | $ | 2,000 | (e)(h) | $ | 2,038,960 | |||||
Kent Hosp. Fin. Auth. Michigan Rev., Metro. Hosp. Proj., Ser. A | BBB(b) | 6.25 | 7/01/40 | 3,000 | 3,228,420 | ||||||||
Michigan St. Hosp. Fin. Auth. Rev., Ascension Hlth. Sub Credit, Ser. A | Aa3 | 5.00 | 11/01/12 | 1,250 | 1,321,213 | ||||||||
Summit Academy North Mich. Pub. Sch., Academy Rev. Ref. | BB+(b) | 5.50 | 11/01/30 | 1,500 | 1,464,180 | ||||||||
8,052,773 | |||||||||||||
Minnesota 0.6% | |||||||||||||
St. Paul Hsg. & Redev. Auth. Hosp. Rev., Hltheast Proj., Ser. A | Baa3 | 6.625 | 11/01/17 | 2,385 | 2,385,000 | ||||||||
St. Paul Minn. Hsg. & Redev. Auth. Hosp. Rev., Healtheast Proj. | Baa3 | 6.00 | 11/15/35 | 1,000 | 1,066,360 | ||||||||
3,451,360 | |||||||||||||
Nevada 3.7% | |||||||||||||
Clark Cnty. Impvt. Dist., | |||||||||||||
No. 121, Southern Highlands Area | NR | 7.50 | 12/01/19 | 4,695 | 5,060,882 | ||||||||
Spec. Impvt. Dist. No. 142, Loc. Impvt. | NR | 6.10 | 8/01/18 | 2,000 | 2,068,560 | ||||||||
Clark Cnty. Ind. Dev. Rev., | |||||||||||||
Nevada Pwr. Co. Proj., Ser. A, A.M.T. | B-(b) | 5.60 | 10/01/30 | 2,500 | 2,470,750 | ||||||||
Rfdg. Nevada Pwr. Co. Proj., Ser. C | B-(b) | 5.50 | 10/01/30 | 4,500 | 4,413,645 | ||||||||
Director St. Nevada Dept. Bus. & Ind., | |||||||||||||
Las Ventanas Ret., Proj. A | NR | 7.00 | 11/15/34 | 1,500 | 1,544,415 | ||||||||
Las Ventanas Ret., Proj. B | NR | 6.75 | 11/15/23 | 1,315 | 1,347,073 | ||||||||
North Las Vegas Local Impvt., | |||||||||||||
Spec. Impvt. Dist. No. 60, Aliante | NR | 5.60 | 12/01/12 | 1,510 | 1,557,308 |
See Notes to Financial Statements.
18 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Spec. Impvt. Dist. No. 60, Aliante | NR | 6.40% | 12/01/22 | $ | 1,235 | $ | 1,274,520 | ||||||
Washoe Cnty. Wtr. Fac. Rev., Sierra Pac. Pwr. Co., A.M.T. | Ba1 | 5.00 | 3/01/36 | 2,500 | 2,521,875 | ||||||||
22,259,028 | |||||||||||||
New Jersey 6.5% | |||||||||||||
Camden Cnty. Auth. Rev., Hlthcare. Redev. Cooper Proj. | Baa3 | 6.00 | 2/15/27 | 2,250 | 2,315,205 | ||||||||
New Jersey Econ. Dev. Auth. Rev., | |||||||||||||
Cigarette Tax | Baa2 | 5.625 | 6/15/19 | 1,250 | 1,324,062 | ||||||||
Cigarette Tax | Baa2 | 5.75 | 6/15/34 | 750 | 784,148 | ||||||||
Kapkowski Rd., Ser. A | Baa3 | 6.375 | 4/01/31 | 7,000 | (e) | 8,153,880 | |||||||
Kapkowski Rd., Ser. A, C.A.B.S., E.T.M. | Baa3 | Zero | 4/01/12 | 1,115 | (e) | 860,981 | |||||||
Rfdg. First Mtge. Franciscan Oaks Proj. | NR | 5.70 | 10/01/17 | 165 | 167,107 | ||||||||
Spec. Facs. Rev., Continental Airlines, Inc. Proj., A.M.T. | Caa2 | 6.25 | 9/15/29 | 3,500 | 2,829,645 | ||||||||
New Jersey Hlthcare. Facs. Fin. Auth. Rev., | |||||||||||||
Cherry Hill Proj. | NR | 8.00 | 7/01/27 | 2,000 | 2,083,640 | ||||||||
Raritan Bay Med. Ctr. | NR | 7.25 | 7/01/27 | 4,000 | 4,111,200 | ||||||||
St. Peters Univ. Hosp., Ser. A | Baa1 | 6.875 | 7/01/30 | 2,250 | 2,448,315 | ||||||||
New Jersey St. Edl. Facs. Auth. Rev., Felician Coll. of Lodi, Ser. D | NR | 7.375 | 11/01/22 | 3,615 | 3,756,997 | ||||||||
New Jersey St. Tpke. Auth. Tpke. Rev., Growth & Income Secs., Ser. B, A.M.B.A.C. | Aaa | Zero | 1/01/35 | 4,000 | 2,559,120 | ||||||||
Tobacco Settlement Fin. Corp., | |||||||||||||
Asset Bkd. | Baa3 | 6.75 | 6/01/39 | 1,000 | 1,139,720 | ||||||||
Asset Bkd. | Baa3 | 6.125 | 6/01/42 | 1,000 | 1,048,690 | ||||||||
Asset Bkd. | Baa3 | 6.25 | 6/01/43 | 5,250 | 5,799,045 | ||||||||
39,381,755 | |||||||||||||
New Mexico 1.1% | |||||||||||||
Farmington Poll. Ctrl. Rev. Rfdt., El Paso Elec. Co. Proj., Ser. A, F.G.I.C. | Aaa | 4.00 | 6/01/32 | 2,000 | 1,992,520 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 19 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
New Mexico Mtge. Fin. Auth. Sngl. Sngl. Fam. Mtge., | |||||||||||||
Ser. A, A.M.T., G.N.M.A., F.N.M.A., F.H.L.M.C. | Aaa | 3.50% | 7/01/36 | $ | 2,000 | $ | 2,099,100 | ||||||
Ser. E, A.M.T., G.N.M.A., F.N.M.A., F.H.L.M.C. | AAA(b) | 5.50 | 7/01/35 | 2,490 | 2,620,999 | ||||||||
6,712,619 | |||||||||||||
New York 6.9% | |||||||||||||
Brookhaven New York Ind. Dev. Agcy. Civic Facs. Rev., Mem. Hosp. Med. Ctr., Inc., Ser. A | NR | 8.25 | 11/15/30 | 2,000 | (f) | 2,157,400 | |||||||
Erie Cnty. NY Tob. Asset Securitization Corp. Cap. Apprec., | |||||||||||||
Asset Bkd-2nd Sub., Ser. C, C.A.B.S. | NR | Zero | 6/01/50 | 4,000 | 220,240 | ||||||||
Asset Bkd.-1st Sub., Ser. B, C.A.B.S. | NR | Zero | 6/01/47 | 5,000 | 401,150 | ||||||||
Liberty NY Dev. Corp. Rev., Goldman Sachs Headquarters | Aa3 | 5.25 | 10/01/35 | 2,500 | 2,736,650 | ||||||||
Metro. Trans. Auth. N.Y. Svc. Contract, Rfdg., M.B.I.A. Ser. B | Aaa | 5.50 | 7/01/19 | 3,050 | 3,339,506 | ||||||||
Metro. Trans. Auth. Rev., Ser. A, A.M.B.A.C. | Aaa | 5.50 | 11/15/18 | 4,045 | 4,447,801 | ||||||||
New York City Ind. Dev. Agcy. Civic Fac. Rev., Staten Island Univ. Hosp. Proj., Ser. B | B2 | 6.375 | 7/01/31 | 995 | 1,006,443 | ||||||||
New York City Transitional Fin. Auth. Rev., Future Tax Sec’d., | |||||||||||||
Ser. C | Aa1 | 5.50 | 2/15/16 | 2,500 | 2,723,925 | ||||||||
Ser. C | Aa1 | 5.50 | 11/01/20 | 475 | (e) | 513,760 | |||||||
New York St. Dorm Auth. Revs., Non St. Supported Debt, Mt. Sinai | |||||||||||||
NYU Hlth., RMKT 7/1/05 | Ba1 | 5.50 | 7/01/26 | 2,000 | 2,021,040 | ||||||||
NYU Hlth.-C-RMKT 7/1/05 | Ba1 | 5.50 | 7/01/26 | 2,000 | 2,021,040 |
See Notes to Financial Statements.
20 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
New York St. Environ. Facs. Rev. Corp., Revolving Funds, Ser. B | Aaa | 5.00% | 6/15/27 | $ | 780 | $ | 805,693 | |||||
New York, NY, | ||||||||||||
Ser. G, G.O. | A1 | 5.00 | 12/01/25 | 1,000 | 1,024,910 | |||||||
Ser. J, G.O., F.S.A. | Aaa | 5.00 | 3/01/18 | 2,740 | 2,894,646 | |||||||
Tobacco Settlement Fin. Corp., | ||||||||||||
Asset-Bkd., Ser. A-1 | A2 | 5.50 | 6/01/14 | 8,000 | 8,473,360 | |||||||
Asset Bkd., Ser. C-1 | A2 | 5.50 | 6/01/14 | 3,500 | 3,701,075 | |||||||
Asset-Bkd., Ser. C-1 | A2 | 5.50 | 6/01/15 | 3,000 | 3,202,170 | |||||||
41,690,809 | ||||||||||||
North Carolina 0.3% | ||||||||||||
North Carolina Mun. Pwr. Agcy. Pwr. Sys. Rev., Rfdg., Ser. D | Baa2 | 5.125 | 1/01/26 | 2,000 | 2,024,380 | |||||||
North Dakota 0.7% | ||||||||||||
Ward Cnty. Hthcare. Facs. Rev., Rfdg. Trinity Oblig, | ||||||||||||
Group A | BBB+(b) | 6.25 | 7/01/26 | 2,110 | 2,197,966 | |||||||
Group B | BBB+(b) | 6.25 | 7/01/21 | 2,000 | 2,085,020 | |||||||
4,282,986 | ||||||||||||
Ohio 0.9% | ||||||||||||
Cuyahoga Cnty. Hosp. Facs. Rev., Rev.,Canton, Inc. Proj. | Baa2 | 7.50 | 1/01/30 | 3,000 | 3,334,920 | |||||||
Ohio St. Wtr. Dev. Auth. Solid Wste. Disp. Rev., Wste. Mgmt. Proj., A.M.T. | BBB(b) | 4.50 | 7/01/21 | 1,000 | 1,013,780 | |||||||
Richland Cnty. Hosp. Facs. Rev., Rfdg. Medcentral Hlth. Sys., Ser. A | A-(b) | 6.125 | 11/15/16 | 1,000 | 1,083,040 | |||||||
5,431,740 | ||||||||||||
Oklahoma 0.5% | ||||||||||||
Oklahoma Hsg. Fin. Agcy. Sngl. Fam. Rev., Mtge. Homeownership In. Prog., Ser. B, A.M.T., G.N.M.A./F.N.M.A. | Aaa | 4.875 | 9/01/33 | 3,065 | 3,123,817 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 21 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Pennsylvania 4.2% | |||||||||||||
Allegheny Cnty. Hosp. Dev. Auth. Rev., Ohio Valley Gen Hosp. Proj., Ser. A | Baa2 | 5.125% | 4/01/35 | $ | 1,335 | $ | 1,312,826 | ||||||
Auth. Rev. Hlth. Sys., | |||||||||||||
Ser. B | B1 | 9.25 | 11/15/15 | 1,000 | 1,195,430 | ||||||||
Ser. B | B1 | 9.25 | 11/15/22 | 1,825 | 2,178,685 | ||||||||
Cumberland Cnty. Mun. Auth. Ret. Cmnty. Rev., Wesley Affiliated Svcs., Ser. A | NR | 7.25 | 1/01/35 | 4,000 | 4,354,440 | ||||||||
Lancaster Cnty. Hosp. Auth. Rev., Gen. Hosp. Proj. | A(b) | 5.50 | 3/15/26 | 780 | 810,217 | ||||||||
Langhorne Manor Boro. Higher Ed. & Hlth. Auth. Rev., Hosp. Lower Bucks Hosp. | B2 | 7.35 | 7/01/22 | 4,650 | 4,650,046 | ||||||||
Montgomery Cnty. Pennsylvania Ind. Dev. Auth. Rev., MTG- Whitemarsh Cont. Care | NR | 6.25 | 2/01/35 | 2,450 | 2,549,152 | ||||||||
Pennsylvania Econ. Dev. Fin. Auth. Exempt Facs. Rev. Shippingport PJ-A-Rmkt. 6/1/05, A.M.T. | Baa3 | 4.35 | 6/01/28 | 1,000 | 994,300 | ||||||||
Auth. Res. Recov. Rev. Ref., Sub, Colver Proj., Ser. G, A.M.T. | NR | 5.125 | 12/01/15 | 1,000 | 997,620 | ||||||||
Philadelphia Hosp. & Higher Ed. Facs. Auth. Rev., | |||||||||||||
Grad. Hlth. Sys. (cost $1,664,031; Purchased 01/22/98) | Ca | Zero | 7/11/05 | 1,651 | (d)(h)(i) | 17 | |||||||
Grad. Hlth. Sys. (cost $2,298,709; Purchased 01/22/98) | Ca | Zero | 7/01/18 | 2,269 | (d)(h)(i) | 23 | |||||||
Grad. Hlth. Sys., Ser. A (cost $1,890,059; Purchased 01/21/98) | Ca | Zero | 7/01/13 | 2,015 | (d)(h)(i) | 20 | |||||||
Somerset Cnty. Hosp. Auth Rev., | |||||||||||||
Hlthcare. First Mtge. (cost $1,106,647; Purchased 02/10/97) | NR | 4.20 | 6/01/09 | 1,095 | (h)(i) | 762,711 |
See Notes to Financial Statements.
22 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Hlthcare. First Mtge. (cost $8,898,687; Purchased 02/10/97) | NR | 4.25% | 6/01/24 | $ | 8,805 | (h)(i) | $ | 5,593,727 | |||||
25,399,214 | |||||||||||||
Puerto Rico 0.2% | |||||||||||||
Puerto Rico Comwlth. Hwy. & Auth. Rev. Ser. K | Baa2 | 5.00 | 7/01/35 | 1,500 | 1,505,610 | ||||||||
South Carolina 1.0% | |||||||||||||
South Carolina Jobs Econ. Dev. Auth. Hosp. Facs. Rev., Rfdg. Palmetto Hlth., Ser. C | Baa1 | 6.875 | 8/01/27 | 5,000 | 5,776,350 | ||||||||
South Dakota 0.7% | |||||||||||||
South Dakota Econ. Dev. Fin. Auth., Dakota Park, A.M.T. (cost $4,220,000; Purchased 01/18/89) | NR | 10.25 | 1/01/19 | 4,220 | (h)(i) | 4,258,275 | |||||||
Tennessee 6.8% | |||||||||||||
Bradley Cnty. Ind. Dev. Brd., Rfdg. Olin Corp. Proj., Ser. C | Baa3 | 6.625 | 11/01/17 | 2,000 | 2,160,820 | ||||||||
Chattanooga Tenn. Hlth. Edl. & Hsg. Fac. Brd. Rev. Ref, CDFI Phase I LLC PJ-Sub-B | NR | 6.00 | 10/01/35 | 1,000 | 1,007,590 | ||||||||
Johnson City Hlth. & Edl. Facs. Brd. Hosp. Rev., Rfdg. First Mtge., Ser. A, M.B.I.A. | Aaa | 6.75 | 7/01/17 | 2,000 | 2,404,820 | ||||||||
Memphis Ctr. City Rev., Fin. Corp., Ser. B (cost $26,000,000; Purchased 12/30/98) | NR | 6.50 | 9/01/28 | 26,000 | (h) | 26,329,679 | |||||||
Rutherford Cnty. Hlth. & Edl. Facs. Brd., First Mtge. Rev. | NR | 9.50 | 12/01/19 | 5,100 | 5,203,631 | ||||||||
Shelby Cnty. Hlth. Edl. & Hsg. Fac. Brd. Hosp. Rev., | |||||||||||||
Methodist Hlthcare. | A3 | 6.50 | 9/01/26 | 2,195 | (e) | 2,554,760 | |||||||
Methodist Hlthcare. | A3 | 6.50 | 9/01/26 | 1,305 | (e) | 1,518,890 | |||||||
41,180,190 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 23 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Texas 8.4% | ||||||||||||
Austin Hsg. Fin. Corp. Multi- Fam. Hsg. Rev., Stony Creek, Ser. A | Ba3 | 7.75% | 11/01/29 | $ | 9,315 | $ | 8,767,092 | |||||
Brazos River Auth. Poll. Ctrl. Rev., TXU Entergy Co. LLC | ||||||||||||
Proj., Ser. C, A.M.T. | Baa2 | 6.75 | 10/01/38 | 1,255 | 1,386,499 | |||||||
Ser. D | Baa2 | 5.40 | 10/01/29 | 1,000 | 1,057,930 | |||||||
Dallas-Fort Worth Int’l. Arpt. Fac. Impvt. Corp. Rev., | ||||||||||||
American Airlines Inc. | Caa2 | 6.00 | 11/01/14 | 1,050 | 796,803 | |||||||
American Airlines Inc., A.M.T. | Caa2 | 6.375 | 5/01/35 | 2,000 | 1,294,960 | |||||||
American Airlines Inc. Ser. C, A.M.T. | Caa2 | 6.15 | 5/01/29 | 1,950 | 1,805,544 | |||||||
Decatur Hosp. Auth. Rev., Wise Reg. Hlth. Sys., Ser. A | NR | 7.125 | 9/01/34 | 3,000 | 3,227,190 | |||||||
Houston Arpt. Sys. Rev., Spec. Facs., Continental Airlines, Ser. E, A.M.T. | Caa2 | 6.75 | 7/01/29 | 2,000 | 1,721,940 | |||||||
Houston Hlth. Facs. Dev. Corp. Ret. Fac. Rev., Buckingham Sr. Living Cmnty., Ser. A | NR | 7.125 | 2/15/34 | 1,250 | 1,364,888 | |||||||
Houston Util. Sys. Rev., Ref., Comb., First Lien, Ser. A, F.S.A. | Aaa | 5.25 | 5/15/21 | 7,000 | 7,470,961 | |||||||
Katy Texas Dev. Auth. Rev., Tax Increment Contract, Ser. B | NR | 6.00 | 6/01/18 | 4,000 | 4,146,800 | |||||||
Kerrville Tex. Health Facs. Dev. Corp. Hosp. Rev., Sid Peterson Mem. Hosp. Proj. | BBB-(b) | 5.375 | 8/15/35 | 4,050 | 4,064,256 | |||||||
Lower Colo River Auth., Rfdg., Trans. Svcs. Corp. Proj., Ser. C, A.M.B.A.C. | Aaa | 5.25 | 5/15/24 | 4,515 | 4,785,358 | |||||||
Matagorda Cnty. Nav. Dist. No. 1 Rev., Coll. Centerpoint Engy. Proj. | Baa2 | 5.60 | 3/01/27 | 2,000 | 2,079,700 | |||||||
North Central Texas Hlth. Fac. Dev. Corp. Rev., Ret. Fac. Sr. Hsg., Ser. A | NR | 7.50 | 11/15/29 | 2,000 | 2,150,300 | |||||||
Sabine River Auth. Poll. Ctrl. Rev., Rev., TXU Energy Co. LLC Proj., Ser. B | Baa2 | 6.15 | 8/01/22 | 1,000 | 1,089,420 |
See Notes to Financial Statements.
24 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
San Antonio Elec. & Gas Rev., Rfdg., Ser. A | Aa1 | 5.00% | 2/01/18 | $ | 3,000 | $ | 3,111,210 | ||||||
Texas Mun. Pwr. Agcy. Rev., M.B.I.A., E.T.M., C.A.B.S. | Aaa | Zero | 9/01/15 | 50 | (e) | 32,601 | |||||||
50,353,452 | |||||||||||||
Trust Territories 0.4% | |||||||||||||
Norther Mariana Islands Comnwlth., Ser. A, G.O. | Ba3 | 6.75 | 10/01/33 | 2,000 | 2,167,940 | ||||||||
Utah | |||||||||||||
Tooele Cnty. Poll. Ctrl. Rev., Rfdg. Laidlaw Environ., Ser. A, A.M.T. (cost $3,718,462; Purchased 07/03/97) | NR | Zero | 7/01/27 | 3,718 | (d)(h) | 9,296 | |||||||
Virginia 4.3% | |||||||||||||
Chesapeake Hosp. Auth. Fac. Rev., Rfdg. Chesapeake Gen. Hosp., Ser. A | A3 | 5.25 | 7/01/17 | 3,445 | 3,591,964 | ||||||||
Chesterfield Cnty. Ind. Dev. Auth. Poll. Ctrl. Rev., Virginia Elec. & Pwr., Ser. A | A3 | 5.875 | 6/01/17 | 2,000 | 2,145,080 | ||||||||
Gloucester Cnty. Ind. Dev. Auth. Solid Wste Disp. Rev., Wste. Mgmt. Svcs., Ser. A Rmkt. 5/3/04, A.M.T. | BBB(b) | 5.125 | 9/01/38 | 2,700 | 2,778,327 | ||||||||
Norfolk Redev. & Hsg. Auth. Multi-fam.Rental Hsg. Fac. Rev., A.M.T. (cost $5,670,000; Purchased 03/21/97) | NR | 8.00 | 9/01/26 | 5,670 | (h) | 5,930,083 | |||||||
Pocahontas Pkwy. Assoc. Toll Rd. Rev., C.A.B.S., | |||||||||||||
Ser. B | Ba3 | Zero | 8/15/16 | 7,000 | 3,875,970 | ||||||||
Ser. C | B3 | Zero | 8/15/25 | 5,000 | 1,490,700 | ||||||||
Ser. C | B3 | Zero | 8/15/32 | 6,200 | 1,194,492 | ||||||||
Ser. C | B3 | Zero | 8/15/33 | 6,200 | 1,123,192 | ||||||||
Ser. C | B3 | Zero | 8/15/34 | 6,200 | 1,056,170 | ||||||||
Ser. C | B3 | Zero | 8/15/35 | 5,800 | 929,044 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 25 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Sussex Cnty. Ind. Dev. Auth. Solid Wste. Disp. Rev., Atlantic Wste., Ser. A,Rmkt. 5/3/04, A.M.T. | BBB(b) | 5.125% | 6/01/28 | $ | 1,600 | $ | 1,646,416 | ||||||
25,761,438 | |||||||||||||
Washington 2.9% | |||||||||||||
Bellevue Conv. Ctr. Auth., King City, Oblig. Rev., M.B.I.A., C.A.B.S. | Aaa | Zero | 2/01/10 | 870 | 739,309 | ||||||||
Energy Northwest Elec. Rev., | |||||||||||||
Columbia Generating, Ser. B, A.M.B.A.C. | Aaa | 6.00 | 7/01/18 | 5,050 | 5,673,271 | ||||||||
Proj. No. 1, Ser. B, M.B.I.A. | Aaa | 6.00 | 7/01/17 | 4,300 | 4,844,165 | ||||||||
Skagit Cnty. Washington Pub. Hosp. Dist. No. 001 Rev. | |||||||||||||
Skagit Valley Hosp. | Baa3 | 5.375 | 12/01/22 | 1,190 | 1,220,214 | ||||||||
Skagit Valley Hosp. | Baa3 | 5.50 | 12/01/30 | 1,250 | 1,269,275 | ||||||||
Tobacco Settlement Auth. Tobacco Settlement Rev., Asset Bkd. | Baa3 | 6.50 | 6/01/26 | 2,570 | 2,783,721 | ||||||||
Washington St. Pub. Pwr. Sup. Sys. Rev., Nuclear Proj. No. 1, Ser. B, E.T.M. | Aaa | 7.25 | 7/01/09 | 755 | (e) | 814,003 | |||||||
17,343,958 | |||||||||||||
West Virginia 1.3% | |||||||||||||
West Virginia St. Hosp. Fin. Auth. Hosp. Rev., Oak Hil Hosp., Ser. B (cost $6,833,407; Purchased 06/09/00) | A2 | 6.75 | 9/01/30 | 7,000 | (e)(h) | 8,034,390 | |||||||
Wisconsin 2.0% | |||||||||||||
Badger Tobacco Asset Secur. Corp., Asset Bkd | Baa3 | 6.125 | 6/01/27 | 2,840 | 3,009,037 | ||||||||
Oconto Falls Cmnty. Dev. Auth. Dev.Rev., A.M.T. | NR | 8.125 | 12/01/22 | 1,395 | 1,043,014 | ||||||||
Oconto Falls Tissue, Inc. Proj., A.M.T. | NR | 7.75 | 12/01/22 | 7,800 | 5,661,786 | ||||||||
Wisconsin Hlth. & Edl. Facs. Auth. Rev., Eastcastle Place, Inc. Proj. | NR | 6.125 | 12/01/34 | 1,000 | 1,014,360 |
See Notes to Financial Statements.
26 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Wisoncisn St. Hlth. & Edl. Fac. Auth. Rev., Beaver Dam Cmnty. Hosp. Inc., Ser. A | NR | 6.75% | 8/15/34 | $ | 1,250 | $ | 1,346,775 | ||||||
12,074,972 | |||||||||||||
Wyoming 0.5% | |||||||||||||
Weston Cnty. Wyoming Poll. Ctrl. Rev., Rfdg., Black Hills Pwr. Inc. Proj. | Baa2 | 4.80 | 10/01/14 | 2,850 | 2,874,282 | ||||||||
Total long-term investments (cost $582,655,806) | 590,787,799 | ||||||||||||
SHORT-TERM INVESTMENTS 0.1% | |||||||||||||
Alabama 0.1% | |||||||||||||
McIntosh Ala. Indl. Dev. Brd. Environmental Impt. Rev. Daily-Ref-CIBC Specialty, Ser. E A.M.T., F.R.D.D. | P-2 | 2.99(j) | 11/1/05 | (g) | 300 | 300,000 | |||||||
Delaware | |||||||||||||
Delaware St. Econ. Dev. Auth. Rev.,Delmarva Pwr. & Lt. Co. Proj., A.M.T., F.R.D.D. | VMIG2 | 3.10(j) | 11/1/05 | (g) | 100 | 100,000 | |||||||
Total short-term investments | 400,000 | ||||||||||||
Total Investments 98.1% (cost $583,055,806; Note 5) | 591,187,799 | ||||||||||||
Other assets in excess of other liabilities (k) 1.9% | 11,328,474 | ||||||||||||
Net Assets 100% | $ | 602,516,273 | |||||||||||
(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.
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 27 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
F.H.L.M.C.—Federal Home Loan Mortgage Corporation.
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.
LLC—Limited Liability Corporation.
M.B.I.A.—Municipal Bond Insurance Corporation.
R.I.B.S—Residential Interest Bonds.
R.I.T.E.S—Residual Interest Tax Exempt Securities Receipts.
S.A.V.R.S.—Select Auction Variable Rate Securities.
(b) | Standard & Poor’s rating. |
(c) | Inverse floating rate bond. The coupon is inversely indexed to a floating rate. The rate shown is the rate at October 31, 2005. |
(d) | Represents issuer in default of interest payments; non-income producing security. |
(e) | Prerefunded issues are secured by escrowed cash and/or U.S. government guaranteed obligations. |
(f) | All or partial principal amount segregated as initial margin for financial futures contracts. |
(g) | The maturity date presented for these instruments is the latter 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. |
(h) | Indicates illiquid securities. The aggregate cost of such securities is $79,641,525. The aggregate value of $61,776,779 is approximately 10.3% of net assets. |
(i) | Indicates a security restricted to resale. The aggregate cost of such securities was $29,997,133. The aggregate value of $13,705,971 is approximately 2.3% of net assets. |
(j) | Indicates variable rate security. The interest rate shown reflects the rate in effect at October 31, 2005. |
(k) | Other assets in excess of other liabilities include net unrealized appreciation (depreciation) on financial futures as follows: |
Open future contracts outstanding at October 31, 2005
Number of Contracts | Type | Expiration Date | Value at October 31, 2005 | Value at Trade Date | Unrealized Appreciation (Depreciation) | |||||||||
Long Positions: | ||||||||||||||
123 | U.S. Treasury Bonds | Dec. 05 | $ | 13,772,157 | $ | 14,288,130 | $ | (515,973 | ) | |||||
20 | U.S. Treasury 2 Yr. Notes | Dec. 05 | 4,104,062 | 4,126,927 | (22,865 | ) | ||||||||
(538,838 | ) | |||||||||||||
Short Positions: | ||||||||||||||
114 | U.S. Treasury 5 Yr. Notes | Dec. 05 | 12,071,531 | 12,218,334 | 146,803 | |||||||||
316 | U.S. Treasury 10 Yr. Notes | Dec. 05 | 34,271,188 | 34,942,712 | 671,524 | |||||||||
818,327 | ||||||||||||||
$ | 279,489 | |||||||||||||
See Notes to Financial Statements.
28 | Visit our website at www.jennisondryden.com |
The industry classification of long-term portfolio holdings, short-term investments and other assets in excess of liabilities shown as a percentage of net assets as of October 31, 2005 was as follows:
Portfolio Composition* expressed as a percentage of net assets as of 10/31/05 | |||
Healthcare | 27.7 | % | |
Special Tax/Assessment District | 14.6 | ||
Corporate Backed IDB & PCR | 12.0 | ||
Other | 7.9 | ||
General Obligation | 6.2 | ||
Power | 4.6 | ||
Transportation | 4.5 | ||
Housing | 4.2 | ||
Tobacco Appropriated | 3.9 | ||
Education | 3.2 | ||
Tobacco | 3.0 | ||
Water & Sewer | 2.7 | ||
Lease Backed Certificate of Participation | 1.7 | ||
Solid Waste/Resource Recovery | 1.4 | ||
Pooled Financing | 0.4 | ||
Short-Term Investments | 0.1 | ||
Total Investments | 98.1 | ||
Other assets in excess of other liabilities | 1.9 | ||
Net Assets | 100.0 | % | |
* | Portfolio composition is subject to change. |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 29 |
Statement of Assets and Liabilities
as of October 31, 2005 (Unaudited)
Assets | ||||
Unaffiliated investments, at value (cost $583,055,806) | $ | 591,187,799 | ||
Interest receivable | 11,127,032 | |||
Receivable for investments sold | 5,955,000 | |||
Receivable for Series shares sold | 2,435,889 | |||
Prepaid expenses | 6,837 | |||
Total assets | 610,712,557 | |||
Liabilities | ||||
Dividends payable | 2,969,581 | |||
Payable to custodian | 2,502,832 | |||
Payable for Series shares reacquired | 1,941,163 | |||
Accrued expenses | 302,341 | |||
Management fee payable | 258,313 | |||
Distribution fee payable | 162,056 | |||
Transfer agent fee payable | 32,491 | |||
Deferred trustees’ fees | 17,941 | |||
Due to broker—variation margin | 9,566 | |||
Total liabilities | 8,196,284 | |||
Net Assets | $ | 602,516,273 | ||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 584,429 | ||
Paid-in capital in excess of par | 649,129,247 | |||
649,713,676 | ||||
Undistributed net investment income | 3,633,588 | |||
Accumulated net realized loss on investment transactions | (59,242,534 | ) | ||
Net unrealized appreciation on investments and financial future contracts | 8,411,543 | |||
Net assets, October 31, 2005 | $ | 602,516,273 | ||
See Notes to Financial Statements.
30 | Visit our website at www.jennisondryden.com |
Class A | |||
Net asset value and redemption price per share | |||
($455,270,826 ÷ 44,164,122 shares of beneficial interest issued and outstanding) | $ | 10.31 | |
Maximum sales charge (4.00% of offering price) | .43 | ||
Maximum offering price to public | $ | 10.74 | |
Class B | |||
Net asset value, offering price and redemption price per share | |||
($110,986,068 ÷ 10,761,738 shares of beneficial interest issued and outstanding) | $ | 10.31 | |
Class C | |||
Net asset value, offering price and redemption price per share | |||
($26,731,993 ÷ 2,592,035 shares of beneficial interest issued and outstanding) | $ | 10.31 | |
Class Z | |||
Net asset value, offering price and redemption price per share | |||
($9,527,386 ÷ 925,027 shares of beneficial interest issued and outstanding) | $ | 10.30 | |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 31 |
Statement of Operations
Six Months Ended October 31, 2005 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest | $ | 19,445,292 | ||
Expenses | ||||
Management fee | 1,569,627 | |||
Distribution fee—Class A | 579,581 | |||
Distribution fee—Class B | 320,112 | |||
Distribution fee—Class C | 89,411 | |||
Transfer agent’s fees and expenses (including affiliated expense of $135,132) | 150,000 | |||
Custodian’s fees and expenses | 73,000 | |||
Reports to shareholders | 65,000 | |||
Registration fees | 30,000 | |||
Legal fees and expenses | 13,000 | |||
Audit fee | 12,000 | |||
Trustees’ fees | 11,000 | |||
Insurance | 11,000 | |||
Miscellaneous | 7,895 | |||
Total expenses | 2,931,626 | |||
Net investment income | 16,513,666 | |||
Realized And Unrealized Gain (Loss) On Investment Transactions | ||||
Net realized loss on: | ||||
Investment transactions | (8,757,524 | ) | ||
Financial futures transactions | (328,205 | ) | ||
(9,085,729 | ) | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 5,441,855 | |||
Financial futures contracts | 645,582 | |||
6,087,437 | ||||
Net loss on investment transactions | (2,998,292 | ) | ||
Net Increase In Net Assets Resulting From Operations | $ | 13,515,374 | ||
See Notes to Financial Statements.
32 | Visit our website at www.jennisondryden.com |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended October 31, 2005 | Year Ended April 30, 2004 | |||||||
Decrease In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 16,513,666 | $ | 32,646,831 | ||||
Net realized gain (loss) on investment transactions | (9,085,729 | ) | 1,074,702 | |||||
Net change in unrealized appreciation (depreciation) on investments | 6,087,437 | 21,104,583 | ||||||
Net increase in net assets resulting from operations | 13,515,374 | 54,826,116 | ||||||
Dividends from net investment income (Note 1) | ||||||||
Class A | (10,997,477 | ) | (23,408,983 | ) | ||||
Class B | (2,879,609 | ) | (8,039,534 | ) | ||||
Class C | (506,623 | ) | (1,059,656 | ) | ||||
Class Z | (306,500 | ) | (614,345 | ) | ||||
(14,690,209 | ) | (33,122,518 | ) | |||||
Series share transactions (net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 16,172,204 | 26,586,733 | ||||||
Net asset value of shares issued in reinvestment of dividends | 6,909,220 | 15,439,660 | ||||||
Cost of shares reacquired | (55,232,101 | ) | (116,275,299 | ) | ||||
Net decrease in net assets from Series share transactions | (32,150,677 | ) | (74,248,906 | ) | ||||
Total decrease | (33,325,512 | ) | (52,545,308 | ) | ||||
Net Assets | ||||||||
Beginning of period | 635,841,785 | 688,387,093 | ||||||
End of period(a) | $ | 602,516,273 | $ | 635,841,785 | ||||
(a) Includes undistributed net investment income of: | $ | 3,633,588 | $ | 1,810,131 | ||||
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 33 |
Portfolio of Investments
as of October 31, 2005 (Unaudited)
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
LONG-TERM INVESTMENTS 98.4% | |||||||||||||
California 10.3% | |||||||||||||
California Hlth. Facs. Fin., | |||||||||||||
Cedar-Sinai Med. Ctr. | A3 | 5.00% | 11/15/21 | $ | 1,000 | $ | 1,026,990 | ||||||
California St., G.O., M.B.I.A. | Aaa | 5.25 | 2/01/27 | 7,000 | 7,360,989 | ||||||||
Golden St. Securitization Corp. Tobacco Settlement Rev., Asset Bkd., Ser. B C.A.B.S., A.M.B.A.C. | Aaa | Zero | 6/01/23 | 1,500 | 1,185,435 | ||||||||
Los Angeles Cmnty Redev. Agcy. Lease Rev. Manchester Social Svcs. Proj. A.M.B.A.C. | Aaa | 5.00 | 9/01/25 | 1,910 | 1,972,820 | ||||||||
Los Angeles Unif. Sch. Dist. Cert. Part., Admin. Bldg. Proj., Ser. B., C.O.P., A.M.B.A.C. | Aaa | 5.00 | 10/01/31 | 3,000 | 3,055,200 | ||||||||
San Diego Cnty. Wtr. Rev., C.O.P., F.G.I.C., R.I.T.E.S. | Aaa | 8.4058(e) | 4/26/06 | 5,800 | (g) | 5,949,060 | |||||||
San Joaquin Hills Trans. Corridor Agcy. Toll Rd. Rev., C.A.B.S., Ser. A, M.B.I.A | Aaa | Zero | 1/15/36 | 10,000 | 2,148,200 | ||||||||
University of California Rev., Ser. B, F.S.A. | Aaa | 5.00 | 5/15/24 | 2,500 | 2,602,150 | ||||||||
University Rev., Hosp., UCLA Med. Ctr., Ser. A, A.M.B.A.C. | Aaa | 5.25 | 5/15/30 | 3,000 | 3,144,390 | ||||||||
28,445,234 | |||||||||||||
Colorado 1.1% | |||||||||||||
Denver City & Cnty. Arpt. Rev., Ser. C, A.M.T., M.B.I.A. | Aaa | 5.60 | 11/15/11 | 3,000 | 3,096,660 | ||||||||
Delaware 0.6% | |||||||||||||
Delaware River & Bay Auth. Dev. Rev., M.B.I.A. | Aaa | 5.00 | 1/01/24 | 1,500 | 1,575,285 | ||||||||
District of Columbia 3.2% | |||||||||||||
Dist. of Columbia Rev., George Washington Univ., Ser. A, M.B.I.A. | Aaa | 5.125 | 9/15/31 | 2,000 | 2,048,740 |
See Notes to Financial Statements.
34 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Dist. of Columbia, G.O., | |||||||||||||
Ser. A, E.T.M., M.B.I.A. | Aaa | 6.50% | 6/01/10 | $ | 2,905 | (c) | $ | 3,273,209 | |||||
Ser. A, M.B.I.A. | Aaa | 6.50 | 6/01/10 | 3,095 | (d) | 3,465,874 | |||||||
8,787,823 | |||||||||||||
Florida 7.2% | |||||||||||||
Brevard Cnty. Hlth. Facs. Auth., Holmes Reg. Med. Ctr. Proj., M.B.I.A. | Aaa | 5.60 | 10/01/10 | 6,000 | 6,181,620 | ||||||||
Duval Cnty. Sch. Brd. C.O.P., F.G.I.C. | Aaa | 5.00 | 7/01/21 | 5,300 | 5,547,881 | ||||||||
Florida St. Corr. Privatization Comn. Cert. Partner, A.M.B.A.C., C.O.P., Ser. B | Aaa | 5.00 | 8/01/15 | 2,125 | 2,263,975 | ||||||||
Indian River Cnty. Wtr. & Swr. Rev., Ser. A, F.G.I.C. | Aaa | 5.25 | 9/01/18 | 2,600 | 2,770,170 | ||||||||
Polk Cnty. Sch. Dist. Sales Tax Rev., | |||||||||||||
F.S.A. | Aaa | 5.25 | 10/01/17 | 1,580 | 1,712,625 | ||||||||
F.S.A. | Aaa | 5.25 | 10/01/18 | 1,325 | 1,435,015 | ||||||||
19,911,286 | |||||||||||||
Georgia 2.1% | |||||||||||||
Atlanta Arpt. Facs. Rev., Ser. A, A.M.B.A.C., E.T.M. | Aaa | 6.50 | 1/01/10 | 2,000 | (c) | 2,235,560 | |||||||
Newnan Hosp. Auth. Rev., M.B.I.A. | Aaa | 5.50 | 1/01/21 | 3,185 | 3,426,519 | ||||||||
5,662,079 | |||||||||||||
Hawaii 3.2% | |||||||||||||
Hawaii Dept. Budget & Fin., Hawaiian Elec. Co. Projs., Ser. C, A.M.B.A.C., A.M.T. | Aaa | 6.20 | 11/01/29 | 8,000 | 8,740,800 | ||||||||
Illinois 9.6% | |||||||||||||
Chicago Illinois Proj. & Rfdg., G.O., F.G.I.C. | Aaa | 5.25 | 1/01/28 | 2,000 | 2,091,100 | ||||||||
Chicago Midway Arpt. Rev., Ser. B., M.B.I.A., A.M.T. | Aaa | 5.75 | 1/01/22 | 5,000 | 5,152,550 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 35 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Chicago O’Hare Int’l. Arpt. Pass. Facs. Chrg., Ser. A, A.M.B.A.C. | Aaa | 5.625% | 1/01/15 | $ | 2,000 | $ | 2,047,000 | ||||||
Illinois St. Civic Ctr., Spec. St. Oblig., F.S.A. | Aaa | 5.50 | 12/15/15 | 2,710 | 2,931,651 | ||||||||
Illinois St. Toll Hwy. Auth. Rev., Ser. A, F.S.A. | Aaa | 5.00 | 1/01/22 | 3,000 | 3,142,710 | ||||||||
Illinois St., G.O., F.S.A | Aaa | 5.25 | 4/01/22 | 2,500 | 2,670,800 | ||||||||
McLean & Woodford Cntys. Cmnty. Unif. Sch. Dist. No. 005, G.O., F.S.A. | Aaa | 5.625 | 12/01/17 | 4,000 | (c) | 4,381,680 | |||||||
Metro. Pier & Exposition Auth. Dedicated St. Tax Rev., C.A.B.S., McCormick, | |||||||||||||
Ser. A, M.B.I.A. | Aaa | Zero | 12/15/34 | 10,000 | 2,333,400 | ||||||||
C.A.B.S., McCormick, Ser. A, M.B.I.A. | Aaa | Zero | 6/15/37 | 7,500 | 1,537,425 | ||||||||
26,288,316 | |||||||||||||
Indiana 1.7% | |||||||||||||
Anderson Ind. Sch. Bldg. Corp. First Mtg., A.M.B.A.C. | AAA(b) | 5.00 | 7/15/27 | 2,000 | 2,072,700 | ||||||||
Indiana St. Office Bldg. Commn. Rev., Southest Regl. Treatment Ctr. | |||||||||||||
Ser. E, A.M.B.A.C. | Aaa | 5.00 | 7/01/26 | 2,605 | 2,686,146 | ||||||||
4,758,846 | |||||||||||||
Kansas 0.6% | |||||||||||||
Saline Cnty. Unif. Sch. Dist. No. 305, G.O., F.S.A. | Aaa | 5.50 | 9/01/17 | 1,525 | (c) | 1,657,507 | |||||||
Louisiana 0.6% | |||||||||||||
New Orleans LA, G.O., M.B.I.A. | Aaa | 5.25 | 12/01/22 | 1,540 | 1,631,461 | ||||||||
Massachusetts 2.9% | |||||||||||||
Boston Convention Ctr. Act of 1997, Spec. Oblig., Ser. A, A.M.B.A.C. | Aaa | 5.00 | 5/01/19 | 2,000 | 2,092,100 |
See Notes to Financial Statements.
36 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Massachusetts St. Spec. Bldg., Auth. Rev., Sales Tax Rev., Ser. A, F.S.A. | Aaa | 5.00% | 8/15/24 | $ | 2,000 | $ | 2,089,620 | ||||||
Massachusetts St. Spec. Oblig. Dedicated Tax Rev., F.G.I.C. | Aaa | 5.25 | 1/01/21 | 2,500 | 2,756,575 | ||||||||
Massachusetts St. Spec. Oblig. Rev., Sales Tax Rev., | |||||||||||||
Ser. A, F.S.A. | Aaa | 5.50 | 6/01/21 | 1,000 | 1,132,780 | ||||||||
8,071,075 | |||||||||||||
Michigan 2.1% | |||||||||||||
Detroit Wtr. Sup. Sys., Ser. B, M.B.I.A. | Aaa | 5.25 | 7/01/32 | 5,500 | 5,782,809 | ||||||||
Minnesota 2.5% | |||||||||||||
Becker Indpt. Sch. Dist. No. 726, F.S.A, G.O. | |||||||||||||
Ser. A | Aaa | 6.00 | 2/01/15 | 1,610 | 1,763,771 | ||||||||
Ser. A | Aaa | 6.00 | 2/01/16 | 1,750 | 1,917,143 | ||||||||
Minneapolis & St. Paul Metro. Arpts., F.G.I.C., | |||||||||||||
Ser. C | Aaa | 5.50 | 1/01/19 | 3,000 | 3,226,830 | ||||||||
6,907,744 | |||||||||||||
Missouri 1.2% | |||||||||||||
St. Louis Arpt. Rev., Arpt. Dev. Proj., Ser. A, M.B.I.A. | Aaa | 5.625 | 7/01/19 | 3,000 | (c) | 3,303,900 | |||||||
Nevada 1.2% | |||||||||||||
Clark Cnty. Nevada Sch. Dist. Refdg., Ser. B, G.O., F.S.A. | Aaa | 5.00 | 6/15/18 | 3,000 | 3,180,840 | ||||||||
New Jersey 6.3% | |||||||||||||
Jersey City Swr. Auth., | |||||||||||||
Rev., A.M.B.A.C. | Aaa | 6.00 | 1/01/10 | 2,585 | 2,832,333 | ||||||||
Rev., A.M.B.A.C. | Aaa | 6.25 | 1/01/14 | 4,255 | 4,851,126 | ||||||||
New Jersey Healthcare Greystone Pk. Psychiatric Hosp., A.M.B.A.C. | Aaa | 5.00 | 9/15/26 | 2,000 | 2,069,220 | ||||||||
New Jersey St. Edl. Facs. Auth. Montclair St. Univ., Ser. F, F.G.I.C. | Aaa | 5.00 | 7/01/24 | 3,650 | 3,835,384 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 37 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
New Jersey St. Tpke. Auth. Rev., Growth & Inc. Secs., | ||||||||||||
Ser. A, F.S.A. | Aaa | 5.00% | 1/01/20 | $ | 2,500 | $ | 2,637,100 | |||||
Ser. B, A.M.B.A.C. | Aaa | Zero | 1/01/35 | 1,500 | 959,670 | |||||||
17,184,833 | ||||||||||||
New York 14.7% | ||||||||||||
Erie Cnty. Ind. Dev. Agcy. Sch. Facs. Rev., City of Buffalo Proj., F.S.A. | Aaa | 5.75 | 5/01/21 | 2,750 | 3,041,280 | |||||||
Islip Res. Rec. Facs., Ser. B, A.M.B.A.C., A.M.T. | Aaa | 7.20 | 7/01/10 | 1,750 | 2,004,538 | |||||||
Metro. Trans. Auth. N.Y. Svc. Contract, Rfdg., M.B.I.A., | ||||||||||||
Ser. B | Aaa | 5.50 | 7/01/19 | 5,000 | 5,474,600 | |||||||
Ser. B | Aaa | 5.50 | 7/01/23 | 7,285 | 7,940,722 | |||||||
New York St. Twy. Auth. Hwy. & Bridg. Tr. Fd. Ser. B, A.M.B.A.C. | Aaa | 5.00 | 4/01/21 | 3,000 | 3,160,560 | |||||||
New York St. Dorm. Auth. Rev., Sch. Dist. Fin. Proj., Ser. A, M.B.I.A. | Aaa | 5.75 | 10/01/17 | 3,000 | 3,345,060 | |||||||
New York, NY, | Aaa | 5.00 | 3/01/18 | 2,500 | 2,641,100 | |||||||
Suffolk Cnty. Judicial Facs., John P. Cohalan Complex, A.M.B.A.C. | Aaa | 5.75 | 10/15/12 | 3,000 | 3,256,950 | |||||||
Tobacco Settlement Fin. Corp., Asset-Bkd., | ||||||||||||
Ser. A-1 | A2 | 5.50 | 6/01/14 | 3,000 | 3,177,510 | |||||||
Ser. C-1 | A2 | 5.50 | 6/01/15 | 1,000 | 1,067,390 | |||||||
Yonkers, Ser. B, G.O., M.B.I.A. | Aaa | 5.00 | 8/01/21 | 2,425 | 2,543,098 | |||||||
Yonkers, G.O., M.B.I.A. | Aaa | 5.00 | 8/01/22 | 2,545 | 2,660,721 | |||||||
40,313,529 | ||||||||||||
Oklahoma 4.2% | ||||||||||||
Edmond Pub. Wks. Auth. Util. Rev., A.M.B.A.C. | Aaa | 5.625 | 7/01/24 | 4,440 | 4,739,744 | |||||||
Norman Reg. Hosp. Auth., Rev., Ser. A, M.B.I.A. | Aaa | 5.50 | 9/01/11 | 4,110 | 4,263,755 |
See Notes to Financial Statements.
38 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Oklahoma City Arpt. Trust, Jr. Lien, Ser. 24, A.M.B.A.C., A.M.T. | Aaa | 5.75% | 2/01/18 | $ | 2,620 | $ | 2,678,819 | ||||||
11,682,318 | |||||||||||||
Pennsylvania 4.5% | |||||||||||||
Pennsylvania Econ. Dev. Fin. Auth. Res. Recov. Rev., Ser. F, A.M.B.A.C., A.M.T. | Aaa | 5.00 | 12/01/15 | 2,500 | 2,631,425 | ||||||||
Pennsylvania St. Ind. Dev. Auth. Rev., Econ. Dev., A.M.B.A.C. | Aaa | 5.50 | 7/01/17 | 5,000 | 5,497,350 | ||||||||
Pennsylvania St. Tpk. Commn. Ser. A, F.S.A. | Aaa | 5.25 | 7/15/21 | 2,000 | 2,215,200 | ||||||||
Philadelphia Wtr. & Swr. Rev., Wrt. Util. Impvt. Ser. A, F.S.A. | Aaa | 5.25 | 7/01/20 | 2,000 | 2,158,720 | ||||||||
12,502,695 | |||||||||||||
Puerto Rico 2.5% | |||||||||||||
Puerto Rico Comnwlth. Hwy. & Transit Auth. Trans. Rev., | |||||||||||||
Ser. I, F.G.I.C. | Aaa | 5.00 | 7/01/25 | 3,000 | 3,139,380 | ||||||||
Ser. I, F.G.I.C. | Aaa | 5.00 | 7/01/26 | 3,465 | 3,625,984 | ||||||||
6,765,364 | |||||||||||||
South Carolina 2.3% | |||||||||||||
Lexington Wtr. & Swr., Rev., Ser. A., M.B.I.A. | Aaa | 5.75 | 4/01/20 | 4,180 | 4,558,583 | ||||||||
Univ. of South Carolina, Rev., Ser. A, F.G.I.C. | Aaa | 5.75 | 6/01/30 | 1,615 | (c) | 1,768,813 | |||||||
6,327,396 | |||||||||||||
Texas 7.2% | |||||||||||||
Corpus Christi Util. Sys. Rev., | |||||||||||||
Ser. A, F.S.A. | Aaa | 6.00 | 7/15/19 | 3,255 | (c) | 3,598,630 | |||||||
Ser. A, F.S.A. | Aaa | 6.00 | 7/15/20 | 3,450 | (c) | 3,814,217 | |||||||
Houston Arpt. Sys. Rev., E.T.M. | Aaa | 7.20 | 7/01/13 | 2,925 | (c) | 3,339,473 | |||||||
Houston, Rfdg., Pub. Impvt., Ser. A., G.O., M.B.I.A. | Aaa | 5.375 | 3/01/15 | 5,000 | 5,486,549 | ||||||||
Northwest Indpt. Sch. Dist., P.S.F.G., | |||||||||||||
Sch. Bldg. & Rfdg., G.O. | Aaa | 5.50 | 8/15/17 | 1,080 | 1,180,051 | ||||||||
Sch. Bldg. & Rfdg., G.O. | Aaa | 5.50 | 8/15/18 | 1,000 | 1,090,660 |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 39 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | ||||||||
Van Alstyne Indpt. Sch. Dist. Rfdg., G.O., P.S.F.G. | Aaa | 5.95% | 8/15/29 | $ | 1,105 | $ | 1,154,206 | ||||||
19,663,786 | |||||||||||||
Washington 4.5% | |||||||||||||
Clark Cnty. Sch. Dist. No. 114, G.O., F.S.A. | Aaa | 5.25 | 12/01/18 | 3,800 | 4,076,944 | ||||||||
Cowlitz Cnty. Sch. Dist. No. 122 Longview, G.O., F.S.A. | Aaa | 5.50 | 12/01/19 | 1,725 | 1,877,990 | ||||||||
Ocean Shores, G.O., F.G.I.C. | Aaa | 5.50 | 12/01/20 | 1,570 | 1,705,067 | ||||||||
Snohomish Cnty. Ltd. Tax, G.O., M.B.I.A. | Aaa | 5.375 | 12/01/19 | 2,000 | 2,160,580 | ||||||||
Washington St. Hsg. Fin. Comn., Sngl. Fam. Pg., Ser. 2A, A.M.T., G.N.M.A./F.N.M.A. | Aaa | 5.375 | 12/01/18 | 2,505 | 2,569,328 | ||||||||
12,389,909 | |||||||||||||
West Virginia 1.2% | |||||||||||||
Clarksburg Wtr. Rev., F.G.I.C. | Aaa | 5.25 | 9/01/19 | 2,000 | 2,146,680 | ||||||||
West Virginia St. Wtr. Dev. Auth., Ser. B, A.M.B.A.C., A.M.T. | Aaa | 5.875 | 7/01/20 | 1,015 | 1,096,900 | ||||||||
3,243,580 | |||||||||||||
Wisconsin 0.9% | |||||||||||||
Manitowoc Elec. Rev., Pwr. Sys., F.G.I.C. | Aaa | 5.25 | 10/01/34 | 2,500 | 2,598,825 | ||||||||
Total long-term investments (cost $261,230,503) | 270,473,900 | ||||||||||||
SHORT-TERM INVESTMENTS 3.0% | |||||||||||||
California 2.6% | |||||||||||||
California Hsg. Fin. Agcy. Rev., A.M.T., F.R.D.D. | |||||||||||||
Mtg., Ser. F, A.M.B.A.C. | VMIG1 | 2.73 | 11/01/05 | (f) | 3,500 | 3,500,000 | |||||||
Mtg., Ser. M | VMIG1 | 2.71 | 11/01/05 | (f) | 1,900 | 1,900,000 | |||||||
Mtg., Ser. U, M.B.I.A. | VMIG1 | 2.80 | 11/01/05 | (f) | 1,800 | 1,800,000 | |||||||
7,200,000 |
See Notes to Financial Statements.
40 | Visit our website at www.jennisondryden.com |
Description (a) | Moody’s Rating | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||||
Illinois 0.1% | ||||||||||||||
Municipal Secs. Trust Ctfs., Ser. 2000-93, (Class A), A.M.T., A.M.B.A.C., F.R.D.D. | A-1(b) | 2.75% | 11/05/05 | (f) | $ | 300 | $ | 300,000 | ||||||
Texas 0.3% | ||||||||||||||
Dallas-Fort Worth Texas Regl. Arpt. Rev., F.R.D.D., M.B.I.A., A.M.T. | A-1+(b) | 2.75 | 11/01/05 | (f) | 700 | 700,000 | ||||||||
Total short-term investments | 8,200,000 | |||||||||||||
Total Investments 101.4% | 278,673,900 | |||||||||||||
Liabilities in excess of other assets (1.4%)(g) | (3,818,305 | ) | ||||||||||||
Net Assets 100.0% | $ | 274,855,595 | ||||||||||||
(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.
F.N.M.A.—Federal National Mortgage Association.
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.
P.S.F.G.—Public School Fund Guaranty.
R.I.T.E.S—Residual Interest Tax Exempt Securities Receipts.
(b) | Standard & Poor’s rating. |
(c) | Prerefunded issues are secured by escrow cash or direct U.S. government guaranteed obligations. |
(d) | All or partial amount segregated as initial margin on financial futures contracts and collateral for interest rate swap. |
(e) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate as of 10/31/05. |
(f) | The maturity date shown is 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) | Indicates an illiquid security. The aggregate cost of such security is $5,805,076. The aggregate value of $5,949,060 is approximately 2.2% of net assets. |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 41 |
Portfolio of Investments
as of October 31, 2005 (Unaudited) Cont’d.
(h) | Liabilities in excess of other assets include net unrealized appreciation (depreciation) on financial futures and interest rate swap as follows: |
Open future contracts outstanding at October 31, 2005:
Number of Contracts | Type | Expiration Date | Value at 2005 | Value at Trade Date | Unrealized Appreciation | ||||||||
Long Positions: | |||||||||||||
7 | U.S. Treasury Bonds | Dec. 05 | $ | 783,781 | $ | 782,039 | $ | 1,742 | |||||
Short Positions: | |||||||||||||
63 | U.S. Treasury 5 Yr. Notes | Dec. 05 | 6,671,109 | 6,721,414 | 50,305 | ||||||||
57 | U.S. Treasury 2 Yr. Notes | Dec. 05 | 11,696,578 | 11,762,336 | 65,758 | ||||||||
$ | 117,805 | ||||||||||||
Interest rate swap agreement outstanding at October 31, 2005:
Counterparty | Termination Date | Notional Amount (000) | Fixed Rate | Floating Rate | Unrealized Depreciation | ||||||||||
Morgan Stanley Capital Services, Inc. | * | 3/17/2021 | $ | 1,700 | 3.865 | % | BMA Municipal Swap Index | $ | (52,185 | ) |
* | Portfolio pays the floating rate and receives the fixed rate. |
See Notes to Financial Statements.
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The industry classification of long-term portfolio holdings, short-term investments and liabilities in excess of other assets shown as a percentage of net assets as of October 31, 2005 was as follows:
Portfolio Composition* expressed as a percentage of net assets as of 10/31/05 | |||
Transportation | 22.2 | % | |
General Obligation | 20.4 | ||
Water & Sewer | 16.1 | ||
Education | 9.1 | ||
Healthcare | 6.6 | ||
Special Tax/Assessment District | 5.9 | ||
Lease Backed Certificate of Participation | 5.6 | ||
Corporate Backed IDB & PCR | 3.2 | ||
Short-Term Investments | 3.0 | ||
Pooled Financing | 2.0 | ||
Tobacco Appropriated | 2.0 | ||
Other | 1.8 | ||
Solid Waste/Resource Recovery | 1.7 | ||
Housing | 0.9 | ||
Power | 0.9 | ||
Total Investments | 101.4 | ||
Liabilities in excess of other assets | –1.4 | ||
Net Assets | 100.0 | % | |
* | Portfolio composition is subject to change. |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 43 |
Statement of Assets and Liabilities
as of October 31, 2005 (Unaudited)
Assets | |||
Unaffiliated investments, at value (cost $269,430,503) | $ | 278,673,900 | |
Interest receivable | 3,901,476 | ||
Receivable for Series shares sold | 1,374,223 | ||
Due from broker—variation margin | 28,814 | ||
Prepaid expenses | 5,900 | ||
Total assets | 283,984,313 | ||
Liabilities | |||
Payable for investments purchased | 5,786,225 | ||
Dividends payable | 1,978,417 | ||
Payable to custodian | 744,606 | ||
Payable for Series shares reacquired | 188,854 | ||
Accrued expenses | 163,447 | ||
Management fee payable | 118,445 | ||
Distribution fee payable | 68,931 | ||
Unrealized depreciation on interest rate swaps | 52,185 | ||
Deferred trustees’ fees | 14,029 | ||
Transfer agent fee payable | 13,579 | ||
Total liabilities | 9,128,718 | ||
Net Assets | $ | 274,855,595 | |
Net assets were comprised of: | |||
Shares of beneficial interest, at par | $ | 254,507 | |
Paid-in capital in excess of par | 262,530,308 | ||
262,784,815 | |||
Undistributed net investment income | 296,194 | ||
Accumulated net realized gain on investment transactions | 2,465,569 | ||
Net unrealized appreciation on investments | 9,309,017 | ||
Net assets, October 31, 2005 | $ | 274,855,595 | |
See Notes to Financial Statements.
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Class A | |||
Net asset value and redemption price per share | |||
($229,066,919 ÷ 21,215,482 shares of beneficial interest issued and outstanding) | $ | 10.80 | |
Maximum sales charge (4.00% of offering price) | .45 | ||
Maximum offering price to public | $ | 11.25 | |
Class B | |||
Net asset value, offering price and redemption price per share | |||
($35,439,048 ÷ 3,277,131 shares of beneficial interest issued and outstanding) | $ | 10.81 | |
Class C | |||
Net asset value, offering price and redemption price per share | |||
($6,513,546 ÷ 602,336 shares of beneficial interest issued and outstanding) | $ | 10.81 | |
Class Z | |||
Net asset value, offering price and redemption price per share | |||
($3,836,082 ÷ 355,777 shares of beneficial interest issued and outstanding) | $ | 10.78 | |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 45 |
Statement of Operations
Six Months Ended October 31, 2005 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest | $ | 6,758,671 | ||
Expenses | ||||
Management fee | 727,420 | |||
Distribution fee—Class A | 299,345 | |||
Distribution fee—Class B | 99,941 | |||
Distribution fee—Class C | 26,981 | |||
Transfer agent’s fees and expenses (including affiliated expense of $58,300) | 80,000 | |||
Custodian’s fees and expenses | 62,000 | |||
Reports to shareholders | 30,000 | |||
Registration fees | 27,000 | |||
Legal fees and expenses | 13,000 | |||
Audit fee | 12,000 | |||
Trustees’ fees | 8,000 | |||
Insurance | 5,000 | |||
Miscellaneous | 4,847 | |||
Total expenses | 1,395,534 | |||
Net investment income | 5,363,137 | |||
Realized And Unrealized Gain (Loss) On Investment Transactions | ||||
Net realized gain on: | ||||
Investment transactions | 1,771,673 | |||
Financial futures transactions | 397,065 | |||
Interest rate swap | 14,757 | |||
2,183,495 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (6,708,400 | ) | ||
Financial futures contracts | (37,132 | ) | ||
Interest rate swap | (32,131 | ) | ||
(6,777,663 | ) | |||
Net loss on investment transactions | (4,594,168 | ) | ||
Net Increase In Net Assets Resulting From Operations | $ | 768,969 | ||
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
Six Months Ended October 31, 2005 | Year Ended April 30, 2005 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 5,363,137 | $ | 11,383,142 | ||||
Net realized gain on investment transactions | 2,183,495 | 1,220,666 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (6,777,663 | ) | 4,189,868 | |||||
Net increase in net assets resulting from operations | 768,969 | 16,793,676 | ||||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (4,463,814 | ) | (9,275,030 | ) | ||||
Class B | (694,566 | ) | (1,664,406 | ) | ||||
Class C | (116,000 | ) | (246,667 | ) | ||||
Class Z | (85,849 | ) | (210,938 | ) | ||||
(5,360,229 | ) | (11,397,041 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | — | (2,585,711 | ) | |||||
Class B | — | (509,925 | ) | |||||
Class C | — | (83,023 | ) | |||||
Class Z | — | (52,719 | ) | |||||
— | (3,231,378 | ) | ||||||
Series share transactions (net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 2,851,544 | 13,443,993 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 3,325,558 | 9,115,454 | ||||||
Cost of shares reacquired | (23,520,458 | ) | (51,064,171 | ) | ||||
Net decrease in net assets from Series share transactions | (17,343,356 | ) | (28,504,724 | ) | ||||
Total decrease | (21,934,616 | ) | (26,339,467 | ) | ||||
Net Assets | ||||||||
Beginning of period | 296,790,211 | 323,129,678 | ||||||
End of period(a) | $ | 274,855,595 | $ | 296,790,211 | ||||
(a) Includes undistributed net investment income of: | $ | 296,194 | $ | 293,286 | ||||
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 47 |
Notes to Financial Statements
Dryden Municipal Bond Fund (the “Fund”) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund was organized as an unincorporated business trust in Massachusetts on November 3, 1986 and consists of two series: the “High Income Series” and the “Insured Series”. Investment operations for Class A, Class B, Class C and Class Z shares of each Series commenced on January 22, 1990, September 17, 1987, August 1, 1994 and September 16, 1996, respectively.
The investment objectives of the Series are as follows: (i) the objective of the High Income Series is to provide the maximum amount of income that is eligible for exclusion from federal income taxes, (ii) the objective of the Insured Series is to provide the maximum amount of income that is eligible for exclusion from federal income taxes consistent with the preservation of capital. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific state, region or industry.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
Securities Valuation: 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 reliable market quotations are not readily available or for which the pricing service
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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 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 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.
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”. 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 contracts.
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 or market conditions. 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.
Dryden Municipal Bond Fund | 49 |
Notes to Financial Statements
Cont’d
Options: The Fund 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 Fund currently owns or intends to purchase. The Fund’s 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 Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund 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 Fund 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 an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Fund 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 Fund, as writer of an option, has no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. The Fund, as purchaser of an option that is traded in the over-the counter market, bears the risk of the potential inability of the counterparties to meet the terms of their contracts.
Interest Rate Swap: The Fund may enter into interest rate swaps. In a simple interest rate swap, one investor pays a floating rate of interest on a notional 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. Interest rate swaps were developed as asset/liability management tools. In more complex swaps, the notional principal may decline (or amortize) over time.
During the term of the swap, changes in the value of the swap are recorded as unrealized gains or losses by “marking-to-market” to reflect the market value of the swap. When the swap is terminated, the Fund will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the fund’s basis in the contract, if any.
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The Fund is exposed to credit loss in the event of non-performance by the other party to the interest rate swap. However, the Fund 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 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 market 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.
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 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 as an adjustment to interest income.
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 dividends from the net investment income daily and distributions of net realized capital and currency gains, if any, 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.
Dryden Municipal Bond Fund | 51 |
Notes to Financial Statements
Cont’d
Federal Income Taxes: For federal income tax purposes, each Series in the Fund is treated as a separate taxpaying entity. It is the Fund’s 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.
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 (“PIM”). The Subadvisory Agreement provides that PIM will furnish investment advisory services in connection with the management of the Fund. PI pays for the services of PIM, the cost of compensation of officers for the Fund, occupancy and certain clerical and bookkeeping cost of the Fund. The Fund bears all other costs and expenses.
The management fee paid PI is computed daily and payable monthly at an annual rate of .50 of 1% of the average daily net assets of each series up to $1 billion and .45 of 1% of the average daily net assets of each series in excess of $1 billion. The effective management fee rate was .50 of 1% of the average daily net assets of the High Income and Insured Series for the six months ended October 31, 2005.
The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor 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 it. 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 Fund.
Pursuant to the Class A, B and 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
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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% average daily net assets of the Class A shares and Class C shares, respectively.
PIMS has advised the High Income Series and Insured Series that it received approximately $91,600 and $45,900 for Class A shares, respectively, in front-end sales charges during the six months ended October 31, 2005. 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 High Income Series and Insured Series that for the six months ended October 31, 2005, it received approximately $79,100 ($78,400-Class B; $700-Class C) and $47,900 ($47,800-Class B; $100-Class C), respectively, in contingent deferred sales charges imposed upon certain redemptions by Class B and 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 commitment under the SCA is $500 million. 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 Funds pay 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 expiration date of the renewed SCA is October 28, 2006. The Fund did not borrow any amounts pursuant to the SCA during the six months ended October 31, 2005.
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 Fund pays networking fees to affiliated and unaffiliated broker/dealers, including fees relating 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
Dryden Municipal Bond Fund | 53 |
Notes to Financial Statements
Cont’d
system. For the six months ended October 31, 2005, the Fund incurred approximately $46,700 ($36,900 High Income Series; $9,800 Insured Series) in total networking fees. These amounts are included in transfer agent’s fees and expenses in the Statement of Operations.
For the six months ended October 31, 2005, the Fund did not pay brokerage commissions to Wachovia or First Clearing.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, other than short-term investments, for the six months ended October 31, 2005, were as follows:
Series | Purchases | Sales | ||
High Income | $41,600,474 | $60,990,140 | ||
Insured | $47,026,416 | $61,494,502 |
Note 5. Distributions and Tax Information
For federal income tax purposes, the High Income Series has a capital loss carryforward as of April 30, 2005 of approximately $47,661,000, of which $554,000 expires in 2006, $3,137,000 expires in 2007, $5,906,000 expires in 2008, $20,095,000 expires in 2009, $13,512,000 expires in 2010 and $4,457,000 expires in 2011. Accordingly, no capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such carryforwards. The tax basis differs from the amount on the Statement of Assets and Liabilities primarily due to differences in the treatment of discount and premium amortization for book and tax purposes.
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation (depreciation) as of October 31, 2005 were as follows:
Series | Tax Basis | Appreciation | Depreciation | Net Unrealized | ||||
High Income | $581,439,733 | $34,264,434 | $24,516,368 | $9,748,066 | ||||
Insured | $269,052,534 | $10,701,022 | $1,079,656 | $9,621,366 |
The difference between book basis and tax basis was primarily attributable to deferred losses on wash sales and the differences in the treatment of premium amortization for book and tax purposes.
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Note 6. Capital
The High Income Series and Insured Series offer Class A, Class B, Class C and Class Z shares. Class A shares were 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 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 Fund 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:
High Income Series Class A | Insured Series Class A | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Period ended October 31, 2005: | ||||||||||||||
Shares sold | 683,577 | $ | 7,115,268 | 200,210 | $ | 2,196,896 | ||||||||
Shares issued in reinvestment of dividends and distributions | 500,601 | 5,202,449 | 251,713 | 2,760,402 | ||||||||||
Shares reacquired | (3,663,492 | ) | (38,062,106 | ) | (1,559,143 | ) | (17,106,173 | ) | ||||||
Net increase (decrease) in shares outstanding before conversion | (2,479,314 | ) | (25,744,389 | ) | (1,107,220 | ) | (12,148,875 | ) | ||||||
Shares issued upon conversion from Class B | 2,160,251 | 22,542,862 | 246,627 | 2,722,289 | ||||||||||
Net increase (decrease) in shares outstanding | (319,063 | ) | $ | (3,201,527 | ) | (860,593 | ) | $ | (9,426,586 | ) | ||||
Dryden Municipal Bond Fund | 55 |
Notes to Financial Statements
Cont’d
High Income Series Class A | Insured Series Class A | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Year ended April 30, 2005: | ||||||||||||||
Shares sold | 1,385,419 | $ | 14,021,188 | 778,046 | $ | 8,615,005 | ||||||||
Shares issued in reinvestment of dividends and distributions | 1,099,579 | 11,164,001 | 670,895 | 7,366,574 | ||||||||||
Shares reacquired | (7,283,489 | ) | (73,874,672 | ) | (3,456,633 | ) | (37,849,162 | ) | ||||||
Net increase (decrease) in shares outstanding before conversion | (4,798,491 | ) | (48,689,483 | ) | (2,007,692 | ) | (21,867,583 | ) | ||||||
Shares issued upon conversion from Class B | 3,536,976 | 35,857,695 | 431,070 | 4,722,888 | ||||||||||
Net increase (decrease) in shares outstanding | (1,261,515 | ) | $ | (12,831,788 | ) | (1,576,622 | ) | $ | (17,144,695 | ) | ||||
High Income Series Class B | Insured Series Class B | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Period ended October 31, 2005: | ||||||||||||||
Shares sold | 169,124 | $ | 1,760,315 | 36,240 | $ | 398,673 | ||||||||
Shares issued in reinvestment of dividends and distributions | 108,704 | 1,130,076 | 39,082 | 429,400 | ||||||||||
Shares reacquired | (1,079,344 | ) | (11,225,253 | ) | (405,211 | ) | (4,446,042 | ) | ||||||
Net increase (decrease) in shares outstanding before conversion | (801,516 | ) | (8,334,862 | ) | (329,889 | ) | (3,617,969 | ) | ||||||
Shares reacquired upon conversion into Class A | (2,159,225 | ) | (22,542,862 | ) | (246,314 | ) | (2,722,289 | ) | ||||||
Net increase (decrease) in shares outstanding | (2,960,741 | ) | $ | (30,877,724 | ) | (576,203 | ) | $ | (6,340,258 | ) | ||||
High Income Series Class B | Insured Series Class B | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Year ended April 30, 2005: | ||||||||||||||
Shares sold | 550,724 | $ | 5,601,938 | 260,009 | $ | 2,860,840 | ||||||||
Shares issued in reinvestment of dividends and distributions | 315,199 | 3,196,834 | 123,998 | 1,363,624 | ||||||||||
Shares reacquired | (2,865,056 | ) | (28,975,493 | ) | (814,723 | ) | (8,926,398 | ) | ||||||
Net increase (decrease) in shares outstanding before conversion | (1,999,133 | ) | (20,176,721 | ) | (430,716 | ) | (4,701,934 | ) | ||||||
Shares reacquired upon conversion into Class A | (3,533,490 | ) | (35,857,695 | ) | (430,465 | ) | (4,722,888 | ) | ||||||
Net increase (decrease) in shares outstanding | (5,532,623 | ) | $ | (56,034,416 | ) | (861,181 | ) | $ | (9,424,822 | ) | ||||
56 | Visit our website at www.jennisondryden.com |
High Income Series Class C | Insured Series Class C | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Period ended October 31, 2005: | ||||||||||||||
Shares sold | 575,962 | $ | 5,992,864 | 21,902 | $ | 241,093 | ||||||||
Shares issued in reinvestment of dividends and distributions | 27,125 | 281,976 | 5,900 | 64,815 | ||||||||||
Shares reacquired | (142,785 | ) | (1,485,366 | ) | (111,091 | ) | (1,219,388 | ) | ||||||
Net increase (decrease) in shares outstanding | 460,302 | $ | 4,789,474 | (83,289 | ) | $ | (913,480 | ) | ||||||
High Income Series Class C | Insured Series Class C | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Year ended April 30, 2005: | ||||||||||||||
Shares sold | 150,208 | $ | 1,534,352 | 135,601 | $ | 1,502,577 | ||||||||
Shares issued in reinvestment of dividends and distributions | 58,491 | 593,704 | 17,891 | 196,735 | ||||||||||
Shares reacquired | (537,413 | ) | (5,453,703 | ) | (167,243 | ) | (1,834,979 | ) | ||||||
Net increase (decrease) in shares outstanding | (328,714 | ) | $ | (3,325,647 | ) | (13,751 | ) | $ | (135,667 | ) | ||||
High Income Series Class Z | Insured Series Class Z | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Period ended October 31, 2005: | ||||||||||||||
Shares sold | 125,861 | $ | 1,303,757 | 1,353 | $ | 14,882 | ||||||||
Shares issued in reinvestment of dividends and distributions | 28,380 | 294,719 | 6,475 | 70,941 | ||||||||||
Shares reacquired | (428,435 | ) | (4,459,376 | ) | (68,488 | ) | (748,855 | ) | ||||||
Net increase (decrease) in shares outstanding | (274,194 | ) | $ | (2,860,900 | ) | (60,660 | ) | $ | (663,032 | ) | ||||
High Income Series Class Z | Insured Series Class Z | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Year ended April 30, 2005: | ||||||||||||||
Shares sold | 536,589 | $ | 5,429,255 | 42,683 | $ | 465,571 | ||||||||
Shares issued in reinvestment of dividends and distributions | 47,658 | 485,121 | 17,180 | 188,521 | ||||||||||
Shares reacquired | (795,862 | ) | (7,971,431 | ) | (224,936 | ) | (2,453,632 | ) | ||||||
Net increase (decrease) in shares outstanding | (211,615 | ) | $ | (2,057,055 | ) | (165,073 | ) | $ | (1,799,540 | ) | ||||
Dryden Municipal Bond Fund | 57 |
Financial Highlights
(Unaudited)
Class A | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.33 | ||
Income (loss) from investment operations: | ||||
Net investment income | .25 | |||
Net realized and unrealized gain (loss) on investment transactions | (.02 | ) | ||
Total from investment operations | .23 | |||
Less Dividends: | ||||
Dividends from net investment income | (.25 | ) | ||
Net asset value, end of period | $ | 10.31 | ||
Total Return(b): | 2.18 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 455,271 | ||
Average net assets (000) | $ | 459,885 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | .87 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .62 | %(d) | ||
Net investment income | 5.33 | %(d) | ||
For Class A, B, C and Z shares: | ||||
Portfolio turnover rate | 7 | %(e) |
(a) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gain (loss) per share by $.01 and increase the ratio of net investment income from 5.84% to 5.87%. Per share amounts and ratios for the years ended prior to April 30, 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 the Class A shares. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
58 | Visit our website at www.jennisondryden.com |
Class A | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 9.99 | $ | 10.11 | $ | 10.06 | $ | 10.11 | $ | 10.22 | |||||||||
.51 | .53 | .56 | .61 | .61 | ||||||||||||||
.35 | (.12 | ) | .04 | (.06 | ) | (.12 | ) | |||||||||||
.86 | .41 | .60 | .55 | .49 | ||||||||||||||
(.52 | ) | (.53 | ) | (.55 | ) | (.60 | ) | (.60 | ) | |||||||||
$ | 10.33 | $ | 9.99 | $ | 10.11 | $ | 10.06 | $ | 10.11 | |||||||||
8.81 | % | 4.13 | % | 6.15 | % | 5.53 | % | 4.94 | % | |||||||||
$ | 459,598 | $ | 457,184 | $ | 491,218 | $ | 501,501 | $ | 522,556 | |||||||||
$ | 458,739 | $ | 479,691 | $ | 496,597 | $ | 517,930 | $ | 527,117 | |||||||||
.86 | % | .87 | % | .85 | % | .84 | % | .84 | % | |||||||||
.61 | % | .62 | % | .60 | % | .59 | % | .59 | % | |||||||||
5.03 | % | 5.25 | % | 5.53 | % | 5.87 | % | 6.05 | % | |||||||||
29 | % | 89 | % | 88 | % | 58 | % | 46 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 59 |
Financial Highlights
(Unaudited) Cont’d
Class B | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.34 | ||
Income (loss) from investment operations: | ||||
Net investment income | .24 | |||
Net realized and unrealized gain (loss) on investment transactions | (.03 | ) | ||
Total from investment operations | .21 | |||
Less Dividends: | ||||
Dividends from net investment income | (.24 | ) | ||
Net asset value, end of period | $ | 10.31 | ||
Total Return(b): | 1.96 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 110,986 | ||
Average net assets (000) | $ | 127,001 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.12 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .62 | %(c) | ||
Net investment income | 5.05 | %(c) |
(a) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income and decrease net realized and unrealized gain (loss) per share by less than $.005 and increase the ratio of net investment income from 5.59% to 5.62%. Per share amounts and ratios for the years ended prior to April 30, 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.
60 | Visit our website at www.jennisondryden.com |
Class B | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 10.00 | $ | 10.11 | $ | 10.06 | $ | 10.11 | $ | 10.22 | |||||||||
.49 | .51 | .54 | .58 | .59 | ||||||||||||||
.34 | (.12 | ) | .04 | (.06 | ) | (.13 | ) | |||||||||||
.83 | .39 | .58 | .52 | .46 | ||||||||||||||
(.49 | ) | (.50 | ) | (.53 | ) | (.57 | ) | (.57 | ) | |||||||||
$ | 10.34 | $ | 10.00 | $ | 10.11 | $ | 10.06 | $ | 10.11 | |||||||||
8.53 | % | 3.95 | % | 5.88 | % | 5.27 | % | 4.68 | % | |||||||||
$ | 141,832 | $ | 192,517 | $ | 241,311 | $ | 285,581 | $ | 324,299 | |||||||||
$ | 165,596 | $ | 219,376 | $ | 264,067 | $ | 307,192 | $ | 375,632 | |||||||||
1.11 | % | 1.12 | % | 1.10 | % | 1.09 | % | 1.09 | % | |||||||||
.61 | % | .62 | % | .60 | % | .59 | % | .59 | % | |||||||||
4.78 | % | 5.00 | % | 5.31 | % | 5.62 | % | 5.78 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 61 |
Financial Highlights
(Unaudited) Cont’d
Class C | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.34 | ||
Income (loss) from investment operations: | ||||
Net investment income | .22 | |||
Net realized and unrealized gain (loss) on investment transactions | (.03 | ) | ||
Total from investment operations | .19 | |||
Less Dividends: | ||||
Dividends from net investment income | (.22 | ) | ||
Net asset value, end of period | $ | 10.31 | ||
Total Return(b): | 1.84 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 26,732 | ||
Average net assets (000) | $ | 23,649 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.37 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .62 | %(d) | ||
Net investment income | 4.80 | %(d) |
(a) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income and decrease net realized and unrealized gain (loss) per share by less than $.005 and increase the ratio of net investment income from 5.35% to 5.38%. Per share amounts and ratios for the years ended prior to April 30, 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 the Class C shares. |
(d) | Annualized. |
See Notes to Financial Statements.
62 | Visit our website at www.jennisondryden.com |
Class C | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 10.00 | $ | 10.11 | $ | 10.06 | $ | 10.11 | $ | 10.22 | |||||||||
.46 | .48 | .51 | .55 | .56 | ||||||||||||||
.35 | (.11 | ) | .04 | (.05 | ) | (.12 | ) | |||||||||||
.81 | .37 | .55 | .50 | .44 | ||||||||||||||
(.47 | ) | (.48 | ) | (.50 | ) | (.55 | ) | (.55 | ) | |||||||||
$ | 10.34 | $ | 10.00 | $ | 10.11 | $ | 10.06 | $ | 10.11 | |||||||||
8.26 | % | 3.69 | % | 5.62 | % | 5.00 | % | 4.42 | % | |||||||||
$ | 22,033 | $ | 24,599 | $ | 28,313 | $ | 26,619 | $ | 27,263 | |||||||||
$ | 23,042 | $ | 26,968 | $ | 27,121 | $ | 27,814 | $ | 28,028 | |||||||||
1.36 | % | 1.37 | % | 1.35 | % | 1.34 | % | 1.34 | % | |||||||||
.61 | % | .62 | % | .60 | % | .59 | % | .59 | % | |||||||||
4.53 | % | 4.75 | % | 5.04 | % | 5.38 | % | 5.55 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 63 |
Financial Highlights
(Unaudited) Cont’d
Class Z | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.32 | ||
Income (loss) from investment operations: | ||||
Net investment income | .26 | |||
Net realized and unrealized gain (loss) on investment transactions | (.02 | ) | ||
Total from investment operations | .24 | |||
Less Dividends: | ||||
Dividends from net investment income | (.26 | ) | ||
Net asset value, end of period | $ | 10.30 | ||
Total Return(b): | 2.30 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 9,527 | ||
Average net assets (000) | $ | 12,198 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | .62 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .62 | %(c) | ||
Net investment income | 5.58 | %(c) |
(a) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gain (loss) per share by $.01 and increase the ratio of net investment income from 6.11% to 6.14%. Per share amounts and ratios for the years ended prior to April 30, 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.
64 | Visit our website at www.jennisondryden.com |
Class Z | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(a) | 2001 | ||||||||||||||
$ | 9.98 | $ | 10.10 | $ | 10.05 | $ | 10.10 | $ | 10.21 | |||||||||
.54 | .56 | .59 | .63 | .64 | ||||||||||||||
.34 | (.12 | ) | .04 | (.06 | ) | (.13 | ) | |||||||||||
.88 | .44 | .63 | .57 | .51 | ||||||||||||||
(.54 | ) | (.56 | ) | (.58 | ) | (.62 | ) | (.62 | ) | |||||||||
$ | 10.32 | $ | 9.98 | $ | 10.10 | $ | 10.05 | $ | 10.10 | |||||||||
9.09 | % | 4.41 | % | 6.41 | % | 5.79 | % | 5.19 | % | |||||||||
$ | 12,379 | $ | 14,087 | $ | 15,361 | $ | 7,000 | $ | 5,966 | |||||||||
$ | 11,451 | $ | 15,572 | $ | 10,813 | $ | 6,368 | $ | 7,182 | |||||||||
.61 | % | .62 | % | .60 | % | .59 | % | .59 | % | |||||||||
.61 | % | .62 | % | .60 | % | .59 | % | .59 | % | |||||||||
5.29 | % | 5.51 | % | 5.78 | % | 6.14 | % | 6.32 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/High Income Series | 65 |
Financial Highlights
(Unaudited) Cont’d
Class A | ||||
Six Months Ended October 31, 2005 | ||||
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 gain (loss) on investment transactions | (.18 | ) | ||
Total from investment operations | .03 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.21 | ) | ||
Distributions from net realized capital gains | — | |||
Total dividends and distributions | (.21 | ) | ||
Net asset value, end of period | $ | 10.80 | ||
Total Return(b): | .22 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 229,067 | ||
Average net assets (000) | $ | 237,524 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | .92 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .67 | %(d) | ||
Net investment income | 3.73 | %(d) | ||
For Class A, B, C and Z shares: | ||||
Portfolio turnover rate | 16 | %(e) |
(a) | 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. |
(b) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income and decrease net realized and unrealized gain (loss) per share by $.005 and increase the ratio of net investment income from 4.62% to 4.64%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation. |
(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 the Class A shares. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
66 | Visit our website at www.jennisondryden.com |
Class A | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(b) | 2001 | ||||||||||||||
$ | 10.90 | $ | 11.59 | $ | 11.08 | $ | 10.91 | $ | 10.40 | |||||||||
.41 | .42 | .49 | .52 | .51 | ||||||||||||||
.20 | (.39 | ) | .51 | .17 | .51 | |||||||||||||
.61 | .03 | 1.00 | .69 | 1.02 | ||||||||||||||
(.41 | ) | (.42 | ) | (.49 | ) | (.52 | ) | (.51 | ) | |||||||||
(.12 | ) | (.30 | ) | — | — | — | ||||||||||||
(.53 | ) | (.72 | ) | (.49 | ) | (.52 | ) | (.51 | ) | |||||||||
$ | 10.98 | $ | 10.90 | $ | 11.59 | $ | 11.08 | $ | 10.91 | |||||||||
5.74 | % | .13 | % | 9.17 | % | 6.38 | % | 9.90 | % | |||||||||
$ | 242,325 | $ | 257,738 | $ | 281,077 | $ | 261,227 | $ | 265,718 | |||||||||
$ | 249,074 | $ | 271,328 | $ | 272,608 | $ | 269,146 | $ | 254,718 | |||||||||
.91 | % | .90 | % | .88 | % | .87 | % | .89 | % | |||||||||
.66 | % | .65 | % | .63 | % | .62 | % | .64 | % | |||||||||
3.72 | % | 3.72 | % | 4.35 | % | 4.64 | % | 4.72 | % | |||||||||
15 | % | 71 | % | 59 | % | 22 | % | 38 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 67 |
Financial Highlights
(Unaudited) Cont’d
Class B | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.99 | ||
Income (loss) from investment operations: | ||||
Net investment income | .19 | |||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | ||
Total from investment operations | .01 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.19 | ) | ||
Distributions from net realized capital gains | — | |||
Total dividends and distributions | (.19 | ) | ||
Net asset value, end of period | $ | 10.81 | ||
Total Return(b): | .19 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 35,439 | ||
Average net assets (000) | $ | 39,650 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.17 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .67 | %(c) | ||
Net investment income | 3.48 | %(c) |
(a) | 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. |
(b) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income and decrease net realized and unrealized gain (loss) per share by less than $.005 and increase the ratio of net investment income from 4.38% to 4.40%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation. |
(c) | Annualized. |
See Notes to Financial Statements.
68 | Visit our website at www.jennisondryden.com |
Class B | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(b) | 2001 | ||||||||||||||
$ | 10.91 | $ | 11.60 | $ | 11.09 | $ | 10.92 | $ | 10.41 | |||||||||
.38 | .40 | .47 | .49 | .48 | ||||||||||||||
.20 | (.40 | ) | .50 | .17 | .51 | |||||||||||||
.58 | — | .97 | .66 | .99 | ||||||||||||||
(.38 | ) | (.39 | ) | (.46 | ) | (.49 | ) | (.48 | ) | |||||||||
(.12 | ) | (.30 | ) | — | — | — | ||||||||||||
(.50 | ) | (.69 | ) | (.46 | ) | (.49 | ) | (.48 | ) | |||||||||
$ | 10.99 | $ | 10.91 | $ | 11.60 | $ | 11.09 | $ | 10.92 | |||||||||
5.45 | % | (.14 | )% | 8.90 | % | 6.12 | % | 9.63 | % | |||||||||
$ | 42,363 | $ | 51,432 | $ | 60,724 | $ | 55,145 | $ | 55,459 | |||||||||
$ | 48,258 | $ | 56,466 | $ | 58,003 | $ | 54,136 | $ | 70,084 | |||||||||
1.16 | % | 1.15 | % | 1.13 | % | 1.12 | % | 1.14 | % | |||||||||
.66 | % | .65 | % | .63 | % | .62 | % | .64 | % | |||||||||
3.46 | % | 3.47 | % | 4.10 | % | 4.40 | % | 4.48 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 69 |
Financial Highlights
(Unaudited) Cont’d
Class C | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.99 | ||
Income (loss) from investment operations: | ||||
Net investment income | .18 | |||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | ||
Total from investment operations | — | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.18 | ) | ||
Distributions from net realized capital gains | — | |||
Total dividends and distributions | (.18 | ) | ||
Net asset value, end of period | $ | 10.81 | ||
Total Return(b): | (.03 | )% | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 6,514 | ||
Average net assets (000) | $ | 7,136 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(c) | 1.42 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .67 | %(d) | ||
Net investment income | 3.23 | %(d) |
(a) | 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. |
(b) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gain (loss) per share by $.01 and increase the ratio of net investment income from 4.14% to 4.17%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation. |
(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 the Class C shares. |
(d) | Annualized. |
See Notes to Financial Statements.
70 | Visit our website at www.jennisondryden.com |
Class C | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(b) | 2001 | ||||||||||||||
$ | 10.91 | $ | 11.60 | $ | 11.09 | $ | 10.92 | $ | 10.41 | |||||||||
.35 | .37 | .44 | .47 | .45 | ||||||||||||||
.20 | (.40 | ) | .50 | .16 | .51 | |||||||||||||
.55 | (.03 | ) | .94 | .63 | .96 | |||||||||||||
(.35 | ) | (.36 | ) | (.43 | ) | (.46 | ) | (.45 | ) | |||||||||
(.12 | ) | (.30 | ) | — | — | — | ||||||||||||
(.47 | ) | (.66 | ) | (.43 | ) | (.46 | ) | (.45 | ) | |||||||||
$ | 10.99 | $ | 10.91 | $ | 11.60 | $ | 11.09 | $ | 10.92 | |||||||||
5.18 | % | (.39 | )% | 8.63 | % | 5.86 | % | 9.37 | % | |||||||||
$ | 7,538 | $ | 7,629 | $ | 8,457 | $ | 6,456 | $ | 4,085 | |||||||||
$ | 7,706 | $ | 8,329 | $ | 7,559 | $ | 5,320 | $ | 3,413 | |||||||||
1.41 | % | 1.40 | % | 1.38 | % | 1.37 | % | 1.39 | % | |||||||||
.66 | % | .65 | % | .63 | % | .62 | % | .64 | % | |||||||||
3.22 | % | 3.21 | % | 3.85 | % | 4.17 | % | 4.23 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 71 |
Financial Highlights
(Unaudited) Cont’d
Class Z | ||||
Six Months Ended October 31, 2005 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.96 | ||
Income (loss) from investment operations: | ||||
Net investment income | .22 | |||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | ||
Total from investment operations | .04 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.22 | ) | ||
Distributions from net realized capital gains | — | |||
Total dividends and distributions | (.22 | ) | ||
Net asset value, end of period | $ | 10.78 | ||
Total Return(b): | .34 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 3,836 | ||
Average net assets (000) | $ | 4,285 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | .67 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .67 | %(c) | ||
Net investment income | 3.98 | %(c) |
(a) | Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized. |
(b) | Effective May 1, 2001, the Dryden Municipal Bond Fund/High Income 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 April 30, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gain (loss) per share by $.01 and increase the ratio of net investment income from 4.88% to 4.91%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation. |
(c) | Annualized. |
See Notes to Financial Statements.
72 | Visit our website at www.jennisondryden.com |
Class Z | ||||||||||||||||||
Year Ended April 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002(b) | 2001 | ||||||||||||||
$ | 10.89 | $ | 11.58 | $ | 11.07 | $ | 10.91 | $ | 10.40 | |||||||||
.44 | .45 | .52 | .55 | .53 | ||||||||||||||
.19 | (.39 | ) | .50 | .15 | .51 | |||||||||||||
.63 | .06 | 1.02 | .70 | 1.04 | ||||||||||||||
(.44 | ) | (.45 | ) | (.51 | ) | (.54 | ) | (.53 | ) | |||||||||
(.12 | ) | (.30 | ) | — | — | — | ||||||||||||
(.56 | ) | (.75 | ) | (.51 | ) | (.54 | ) | (.53 | ) | |||||||||
$ | 10.96 | $ | 10.89 | $ | 11.58 | $ | 11.07 | $ | 10.91 | |||||||||
5.94 | % | .40 | % | 9.45 | % | 6.55 | % | 10.17 | % | |||||||||
$ | 4,565 | $ | 6,330 | $ | 9,179 | $ | 4,238 | $ | 2,182 | |||||||||
$ | 5,265 | $ | 7,365 | $ | 6,605 | $ | 3,152 | $ | 1,993 | |||||||||
.66 | % | .65 | % | .63 | % | .62 | % | .64 | % | |||||||||
.66 | % | .65 | % | .63 | % | .62 | % | .64 | % | |||||||||
3.96 | % | 3.98 | % | 4.61 | % | 4.91 | % | 4.99 | % |
See Notes to Financial Statements.
Dryden Municipal Bond Fund/Insured Series | 73 |
Approval of Advisory Agreements
Dryden Municipal Bond Fund/High Income Series
The Board of Trustees (the “Board”) of Dryden Municipal Bond Fund oversees the management of the High Income Series (the “Fund”), and, as required by law, determines annually whether to renew the Fund’s management agreement with Prudential Investments LLC (“PI”) and the Fund’s subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). In considering the renewal of the agreements, the Board, including a majority of the Independent Trustees, met on May 24, 2005 and June 23, 2005 and approved the renewal of the agreements through July 31, 2006, after concluding that renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with their consideration. Among other things, the Board considered performance and expense comparisons with other mutual funds in relevant Peer Universes and Peer Groups. The mutual funds included in each Peer Universe or Peer Group were objectively determined solely by Lipper Inc. (“Lipper”), an independent provider of mutual fund data. Peer Universes and Peer Groups are mutual funds grouped according to investment style. If the quartile refers to performance, then a fund in the first quartile is among the best performers. If the quartile refers to expenses, then a fund in the first quartile has among the lowest expenses.
In approving the agreements, the Board, including the Independent Trustees advised by independent legal counsel, considered the factors they deemed relevant, including the nature, quality and extent of services provided, the performance of the Fund, the profitability of PI and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders. In their deliberations, the Trustees did not identify any single factor that was dispositive and each Trustee attributed different weights to the various factors. In connection with their deliberations, the Board considered information provided by PI throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on May 24, 2005 and June 23, 2005.
The Trustees determined that the overall arrangements between the Fund and PI, which serves as the Fund’s investment manager pursuant to a management agreement, and between PI and PIM, which serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PI, are fair and reasonable in light of the services performed, fees charged, and such other matters as the Trustees considered relevant in the exercise of their business judgment.
Dryden Municipal Bond Fund/High Income Series |
Approval of Advisory Agreements (continued)
Several of the material factors and conclusions that formed the basis for the Trustees reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature and extent of services provided to the Fund by PI and PIM. The Board considered the services provided by PI, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of Fund accounting, recordkeeping, compliance, and other services to the Fund. With respect to PI’s oversight of the subadviser, the Board noted that PI’s Strategic Investment Research Group (“SIRG”), which is a business unit of PI, is responsible for monitoring and reporting to PI’s senior management on the performance and operations of the subadviser. The Board also considered that PI pays the salaries of all of the officers and non-independent Trustees of the Fund. The Board also considered the investment subadvisory services provided by PIM, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures.
The Board reviewed the qualifications, backgrounds and responsibilities of PI’s senior management responsible for the oversight of the Fund and PIM, and also reviewed the qualifications, backgrounds and responsibilities of PIM’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PI’s and PIM’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PI and PIM. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (CCO) as to both PI and PIM. The Board noted that PIM is affiliated with PI.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PI and the subadvisory services provided to the Fund by PIM, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PI and PIM under the management and subadvisory agreements.
Performance of High Income Series
The Board received and considered information about the Fund’s historical performance, noting that the Fund had achieved gross performance that was in the third quartile over one-year, three-year, and five-year time periods ended
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December 31, 2004 in relation to the group of comparable funds in a Peer Universe. Over the same time periods, the Fund achieved net performance that was in the third quartile over a one-year period, performance that was in the second quartile over a three-year period, and performance that was in the third quartile over a five-year period. Gross performance does not reflect the impact of any fee waivers, expense subsidies or similar arrangements. Net performance does reflect the impact of any fee waivers, expense subsidies or similar arrangements.
The Board also noted that the Fund’s underperformance was primarily attributable to the Fund’s “hybrid” composition, pursuant to which the Fund invests in approximately a 50%/50% blend of higher and lower quality debt. Due to contracting credit quality spreads since mid-2003, the Fund experienced underperformance, since most of the other mutual funds in the Peer Universe invested primarily in traditional high yield municipal debt. The Board also noted that PIM’s decision to increase the Fund’s duration, and losses resulting from two defaulted securities, had also contributed to the Fund’s underperformance. The Board noted that PIM had begun to implement certain derivative strategies in order to address the Fund’s underperformance, and that PIM had recently hired a new lead portfolio manager for the Fund.
While noting that the Fund’s historical performance results had been disappointing, the Board concluded that it was reasonable to approve the continuance of the management and subadvisory agreements and to continue to monitor the steps being taken to improve performance.
Fees and Expenses
The Board considered the management fee for the Fund as compared to the management fee charged by PI to other funds and accounts and the fee charged by other advisers to comparable mutual funds as provided by Lipper.
The Fund’s management fee of 0.500% ranked in the first quartile in its Peer Group. The Board concluded that the management and subadvisory fees are reasonable.
Costs of Services and Profits Realized by PI
The Board was provided with information on the profitability of PI and its affiliates in serving as the Fund’s investment manager. The Board discussed with PI the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make
Dryden Municipal Bond Fund/High Income Series |
Approval of Advisory Agreements (continued)
comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. The Board did not separately consider the profitability of the subadviser, an affiliate of PI, as its profitability was reflected in the profitability report for PI. Taking these factors into account, the Board concluded that the profitability of PI and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase, but at the current level of assets the Fund does not realize the effect of those rate reductions. The Board received and discussed information concerning whether PI realizes economies of scale as the Fund’s assets grow beyond current levels. The Board took note that the Fund’s fee structure would result in benefits to Fund shareholders when (and if) assets reach the levels at which the fee rate is reduced. These benefits will accrue whether or not PI is then realizing any economies of scale.
Other Benefits to PI and PIM
The Board considered potential ancillary benefits that might be received by PI and PIM and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PI included transfer agency fees received by the Fund’s transfer agent (which is affiliated with PI), as well as reputational or other intangible benefits resulting from PI’s association with the Fund. The Board concluded that the potential benefits to be derived by PIM included those generally resulting from an increase in assets under management, specifically potential access to additional research resources and reputational benefits. The Board concluded that the benefits derived by PI and PIM were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
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Approval of Advisory Agreements
Dryden Municipal Bond Fund/Insured Series
The Board of Trustees (the “Board”) of Dryden Municipal Bond Fund oversees the management of the Insured Series (the “Fund”), and, as required by law, determines annually whether to renew the Fund’s management agreement with Prudential Investments LLC (“PI”) and the Fund’s subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). In considering the renewal of the agreements, the Board, including a majority of the Independent Trustees, met on May 24, 2005 and June 23, 2005 and approved the renewal of the agreements through July 31, 2006, after concluding that renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with their consideration. Among other things, the Board considered performance and expense comparisons with other mutual funds in relevant Peer Universes and Peer Groups. The mutual funds included in each Peer Universe or Peer Group were objectively determined solely by Lipper Inc. (“Lipper”), an independent provider of mutual fund data. Peer Universes and Peer Groups are mutual funds grouped according to investment style. If the quartile refers to performance, then a fund in the first quartile is among the best performers. If the quartile refers to expenses, then a fund in the first quartile has among the lowest expenses.
In approving the agreements, the Board, including the Independent Trustees advised by independent legal counsel, considered the factors they deemed relevant, including the nature, quality and extent of services provided, the performance of the Fund, the profitability of PI and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders. In their deliberations, the Trustees did not identify any single factor that was dispositive and each Trustee attributed different weights to the various factors. In connection with their deliberations, the Board considered information provided by PI throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on May 24, 2005 and June 23, 2005.
The Trustees determined that the overall arrangements between the Fund and PI, which serves as the Fund’s investment manager pursuant to a management agreement, and between PI and PIM, which serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PI, are fair and reasonable in light of the services performed, fees charged, and such other matters as the Trustees considered relevant in the exercise of their business judgment.
Dryden Municipal Bond Fund/Insured Series |
Approval of Advisory Agreements (continued)
Several of the material factors and conclusions that formed the basis for the Trustees reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature and extent of services provided to the Fund by PI and PIM. The Board considered the services provided by PI, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of, recordkeeping, compliance, and other services to the Fund. With respect to PI’s oversight of the subadviser, the Board noted that PI’s Strategic Investment Research Group (“SIRG”), which is a business unit of PI, is responsible for monitoring and reporting to PI’s senior management on the performance and operations of the subadviser. The Board also considered that PI pays the salaries of all of the officers and non-independent Trustees of the Fund. The Board also considered the investment subadvisory services provided by PIM, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures.
The Board reviewed the qualifications, backgrounds and responsibilities of PI’s senior management responsible for the oversight of the Fund and PIM, and also reviewed the qualifications, backgrounds and responsibilities of PIM’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PI’s and PIM’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PI and PIM. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (CCO) as to both PI and PIM. The Board noted that PIM is affiliated with PI.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PI and the subadvisory services provided to the Fund by PIM, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PI and PIM under the management and subadvisory agreements.
Performance of Insured Series
The Board received and considered information about the Fund’s historical performance, noting that the Fund had achieved gross performance that was in the
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fourth quartile over one-year and three-year periods ended December 31, 2004, and performance that was in the third quartile over five-year and ten-year time periods ended December 31, 2004 in relation to the group of comparable funds in a Peer Universe. Over these same time periods, the Fund achieved net performance that was in the third quartile over a one-year period, and performance that was in the second quartile over three-year, five-year, and ten-year time periods. Gross performance does not reflect the impact of any fee waivers, expense subsidies or similar arrangements. Net performance does reflect the impact of any fee waivers, expense subsidies or similar arrangements. The Board noted that PIM’s decision to increase the Fund’s duration was the primary cause of the Fund’s recent underperformance. The Board noted that PIM had begun to implement certain derivative strategies in order to address the Fund’s underperformance, and that PIM had recently hired a new lead portfolio manager.
Fees and Expenses
The Board considered the management fee for the Fund as compared to the management fee charged by PI to other funds and accounts and the fee charged by other advisers to comparable mutual funds provided by Lipper Inc.
The Fund’s management fee of 0.500% ranked in the second quartile in its Peer Group. The Board concluded that the management and subadvisory fees are reasonable.
Costs of Services and Profits Realized by PI
The Board was provided with information on the profitability of PI and its affiliates in serving as the Fund’s investment manager. The Board discussed with PI the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. The Board did not separately consider the profitability of the subadviser, an affiliate of PI, as its profitability was reflected in the profitability report for PI. Taking these factors into account, the Board concluded that the profitability of PI and its affiliates in relation to the services rendered was not unreasonable.
Dryden Municipal Bond Fund/Insured Series |
Approval of Advisory Agreements (continued)
Economies of Scale
The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase, but at the current level of assets the Fund does not realize the effect of those rate reductions. The Board received and discussed information concerning whether PI realizes economies of scale as the Fund’s assets grow beyond current levels. The Board took note that the Fund’s fee structure would result in benefits to Fund shareholders when (and if) assets reach the levels at which the fee rate is reduced. These benefits will accrue whether or not PI is then realizing any economies of scale.
Other Benefits to PI and PIM
The Board considered potential ancillary benefits that might be received by PI and PIM and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PI included transfer agency fees received by the Fund’s transfer agent (which is affiliated with PI), as well as reputational or other intangible benefits resulting from PI’s association with the Fund. The Board concluded that the potential benefits to be derived by PIM included those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and reputational benefits. The Board concluded that the benefits derived by PI and PIM were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
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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 Series has delegated to the Series’ investment subadviser 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 (the Commission) 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, 2005, is available on the Series’ website at www.jennisondryden.com and on the Commission’s website at www.sec.gov.
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 • Deborah A. Docs, Secretary • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Marina Belaya, Assistant Secretary • Maryanne Ryan, 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 SUBADVISER | 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 | Shearman & Sterling LLP | 599 Lexington Avenue New York, NY 10022 |
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 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 Bond Fund/High Income Series and Insured 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 |
Each Series files its complete schedule of portfolio holdings with the Securities and Exchange Commission (the 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). Each Series will provide a full list of its portfolio holdings on its website (www.jennisondryden.com) as of the end of each month within approximately 30 days after the end of the month. |
The Fund’s Statement of Additional Information contains additional information about the Fund’s Trustees and is available without charge, upon request, by calling (800) 225-1852. |
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 Bond Fund/High Income Series | ||||||||||||
Share Class | A | B | C | Z | ||||||||
NASDAQ | PRHAX | PMHYX | PHICX | PHIZX | ||||||||
CUSIP | 262467103 | 262467202 | 262467301 | 262467400 | ||||||||
Dryden Municipal Bond Fund/Insured Series | ||||||||||||
Share Class | A | B | C | Z | ||||||||
NASDAQ | PMIAX | PMINX | PMICX | PMIZX | ||||||||
CUSIP | 262467509 | 262467608 | 262467707 | 262467806 | ||||||||
MF133E2 IFS-A112577 Ed. 12/2005
Item 2 – Code of Ethics – Not required as this is not an annual filing.
Item 3 – Audit Committee Financial Expert – Not applicable with semi-annual filing
Item 4 – Principal Accountant Fees and Services – Not applicable with semi-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 half-year 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 applicable with semi-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 Bond Fund | |
By (Signature and Title)* | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date | December 22, 2005 |
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 | December 22, 2005 | |
By (Signature and Title)* | /s/ Jack Benintende | |
Jack Benintende | ||
Acting Treasurer and Principal Financial Officer | ||
Date | December 22, 2005 |
* | Print the name and title of each signing officer under his or her signature. |