We are pleased to present this semiannual report for Dreyfus New Jersey Municipal Bond Fund, Inc., covering the six-month period from January 1, 2016 through June 30, 2016. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Financial markets experienced heightened turbulence over the first half of 2016 when global economic challenges fueled dramatic swings in market sentiment. At the start of the year, investors reacted cautiously to an economic slowdown in China, sluggish growth in Europe, plummeting commodity prices, and rising short-term interest rates in the United States. These worries sparked sharp declines in U.S. and global equity markets, while high-quality bonds gained value as investors flocked to traditional safe havens.
Investor sentiment subsequently rebounded when U.S. monetary policymakers refrained from additional rate hikes, major central banks eased their monetary policies further, and commodity prices improved. Stocks rallied strongly during the spring, recouping earlier losses, and bonds continued to benefit from robust investor demand. Still, by June, uncertainty continued to dominate the capital markets amid worries about Great Britain’s exit from the European Union and disappointing job growth in the United States.
We remain encouraged by the resilience of the stock and bond markets, but we expect volatility to persist until global economic uncertainty abates. In addition, wide differences in underlying fundamental and technical influences across various asset classes, economic sectors, and regional markets suggest that selectivity may be an important determinant of investment success over the second half of 2016. As always, we encourage you to discuss the implications of our observations with your financial advisor.
Thank you for your continued confidence and support.
DISCUSSION OF FUND PERFORMANCE
For the period of January 1, 2016 through June 30, 2016, as provided by Daniel Barton and Jeffrey Burger, Portfolio Managers
Fund and Market Performance Overview
For the six-month period ended June 30, 2016, Dreyfus New Jersey Municipal Bond Fund’s Class A shares produced a total return of 4.67%, Class C shares returned 4.21%, Class I shares returned 4.72%, Class Y shares returned 4.81%, and Class Z shares returned 4.77%.1 In comparison, the Barclays Municipal Bond Index (the “Index”), the fund’s benchmark index, which is composed of bonds issued nationally and not solely within New Jersey, achieved a total return of 4.33% for the same period.2
Municipal bonds produced solidly positive returns over the reporting period amid robust demand for competitive levels of after-tax income. Favorable results from our sector allocation and security selection strategies enabled most of the fund’s share classes to outperform the benchmark.
The Fund’s Investment Approach
The fund seeks as high a level of current income exempt from federal and New Jersey state income taxes as is consistent with the preservation of capital. To pursue its goal, the fund normally invests at least 80% of its assets in municipal bonds that provide income exempt from federal and New Jersey state income taxes. The fund invests at least 80% of its assets in investment-grade municipal bonds or the unrated equivalent as determined by Dreyfus. The fund may invest up to 20% of its assets in municipal bonds rated below investment grade (“high yield” or “junk” bonds) or the unrated equivalent as determined by Dreyfus. The dollar-weighted average maturity of the fund’s portfolio normally exceeds 10 years.
We focus on identifying undervalued sectors and securities and minimizing the use of interest rate forecasting. We select municipal bonds for the fund’s portfolio by using fundamental credit analysis to estimate the relative value and attractiveness of various sectors and securities, and to exploit pricing inefficiencies in the municipal bond market. We actively trade among various sectors, such as pre-refunded, general obligation, and revenue, based on their apparent relative values. Although the fund seeks to provide income exempt from federal and New Jersey state income taxes, interest from some of the fund’s holdings may be subject to the federal alternative minimum tax.
Flight to Safety Supported Municipal Bonds
The U.S. economy continued to grow at a slow and choppy pace over the first half of 2016, but global economic instability and declining commodity prices early in the reporting period caused investors to turn away from riskier assets and toward high-quality securities. Commodity prices rebounded in the spring when global economic conditions seemed to stabilize, but disappointing U.S. employment data and the United Kingdom’s vote to leave the European Union kept investors cautious. Consequently, investors continued to flock to U.S. Treasury securities and other high-quality bonds, keeping interest rates low.
Meanwhile, the after-tax yields of municipal bonds generally compared favorably with those of taxable U.S. Treasury securities throughout the reporting period, further supporting investor demand. Supply dynamics also generally proved favorable as new issuance volumes moderated over the first six months of 2016.
3
DISCUSSION OF FUND PERFORMANCE (continued)
In this environment, municipal bonds with longer-term maturities benefited more than their shorter-dated counterparts from falling long-term interest rates. Investors seeking competitive levels of current income reached for the higher yields offered by some of the municipal bond market’s lower-rated credits, including securities backed by the states’ settlement of litigation with U.S. tobacco companies.
The U.S. economic recovery has continued to support better credit conditions for most municipal issuers. However, New Jersey’s fiscal condition has lagged most other states due to a subpar local recovery, a heavy debt load, and pension shortfalls.
Longer-Term Maturities Bolstered Relative Results
The fund’s performance compared to its benchmark was supported by its overweighted positions in higher-yielding revenue bonds and underweighted exposure to general obligation bonds. Results were especially robust among securities backed by hospitals, industrial development projects, and New Jersey’s tobacco litigation settlement.
Although disappointments during the reporting period were relatively mild, lower-yielding municipal bonds—including those backed by essential municipal services such as sewer systems, waterworks, and public utilities—trailed market averages. The fund also did not participate in gains posted by uninsured bonds from Puerto Rico, which rallied from depressed levels after passage of a debt restructuring bill. While the fund’s market-neutral duration posture had little impact on relative performance, underweighted exposure to 30-year bonds and an emphasis on 10-year maturities prevented it from participating more fully in the rally at the longer end of the market’s maturity spectrum.
A More Constructive Approach
We remain optimistic regarding the prospects for the municipal bond market as the U.S. economy has continued to grow and supply-and-demand dynamics have remained positive. However, we also are aware of the potential risks posed by political uncertainty and narrower yield differences along the market’s credit-quality spectrum. Therefore, we are prepared to adopt a somewhat more constructive investment posture, including adding to the fund’s holdings with longer-term maturities, but we have generally retained a focus on higher-quality securities.
July 15, 2016
Bonds are subject generally to interest-rate, credit, liquidity, and market risks, to varying degrees, all of which are more fully described in the fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can cause price declines.
High yield bonds are subject to increased credit risk and are considered speculative in terms of the issuer’s perceived ability to continue making interest payments on a timely basis and to repay principal upon maturity.
1 Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares or the applicable contingent deferred sales charge imposed on redemptions in the case of Class C shares. Had these charges been reflected, returns would have been lower. Class I, Class Y, and Class Z shares are not subject to any initial or deferred sales charge. Past performance is no guarantee of future results. Share price, yield, and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. Income may be subject to state and local taxes for non-New Jersey residents, and some income may be subject to the federal alternative minimum tax (AMT) for certain investors. Capital gains, if any, are fully taxable. Return figures reflect the absorption of certain fund expenses pursuant to an agreement by The Dreyfus Corporation which may be terminated after May 1, 2017. Had these expenses not been absorbed, the returns would have been lower.
2 SOURCE: Lipper Inc. — Reflects reinvestment of dividends and, where applicable, capital gain distributions. The Barclays Municipal Bond Index is a widely accepted, unmanaged total return performance benchmark for the long-term, investment-grade, tax-exempt bond market. Index returns do not reflect fees and expenses associated with operating a mutual fund. Investors cannot invest directly in any index.
4
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus New Jersey Municipal Bond Fund, Inc. from January 1, 2016 to June 30, 2016. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| | | | | | | | | | | | | |
EXPENSES AND VALUE OF A $1,000 INVESTMENT | |
assuming actual returns for the six months ended June 30, 2016 | |
| | | Class A | Class C | Class I | Class Y | Class Z |
Expenses paid per $1,000† | | $ 4.33 | | $ 8.12 | | $ 3.05 | | $ 3.07 | | $ 3.36 |
Ending value (after expenses) | | $ 1,046.70 | | $ 1,042.10 | | $ 1,047.20 | | $ 1,048.10 | | $ 1,047.70 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| | | | | | | | | | | | | | |
EXPENSES AND VALUE OF A $1,000 INVESTMENT | |
assuming a hypothetical 5% annualized return for the six months ended June 30, 2016 |
| | | Class A | Class C | Class I | Class Y | Class Z |
Expenses paid per $1,000† | | $ 4.27 | | $ 8.02 | | $ 3.02 | | $ 3.02 | | $ 3.32 |
Ending value (after expenses) | | $ 1,020.64 | | $ 1,016.91 | | $ 1,021.88 | | $ 1,021.88 | | $ 1,021.58 |
† Expenses are equal to the fund’s annualized expense ratio of .85% for Class A, 1.60% for Class C, .60% for Class I, .60% for Class Y and .66% for Class Z, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
5
STATEMENT OF INVESTMENTS
June 30, 2016 (Unaudited)
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% | | | | | |
Bayonne,
General Improvement GO (Insured; Build America Mutual Assurance Company) | | 5.00 | | 7/1/39 | | 1,000,000 | | 1,219,060 | |
Camden County Improvement Authority,
Health Care Redevelopment Project Revenue (The Cooper Health System Obligated Group Issue) | | 5.00 | | 2/15/34 | | 1,000,000 | | 1,173,690 | |
Camden County Improvement Authority,
Health Care Redevelopment Project Revenue (The Cooper Health System Obligated Group Issue) | | 5.75 | | 2/15/42 | | 5,000,000 | | 6,052,950 | |
Delaware River Port Authority,
Revenue | | 5.00 | | 1/1/30 | | 3,500,000 | | 3,947,160 | |
East Orange Board of Education,
COP, LR (Insured; Assured Guaranty Municipal Corp.) | | 0.00 | | 2/1/21 | | 685,000 | a | 629,755 | |
East Orange Board of Education,
COP, LR (Insured; Assured Guaranty Municipal Corp.) | | 0.00 | | 2/1/26 | | 745,000 | a | 593,109 | |
East Orange Board of Education,
COP, LR (Insured; Assured Guaranty Municipal Corp.) | | 0.00 | | 2/1/28 | | 2,345,000 | a | 1,693,958 | |
Essex County,
General Improvement GO (Prerefunded) | | 5.00 | | 8/1/20 | | 5,500,000 | b | 6,413,440 | |
Essex County Improvement Authority,
SWDR (Covanta Project) | | 5.25 | | 7/1/45 | | 2,500,000 | c | 2,624,425 | |
Garden State Preservation Trust,
Revenue (Open Space and Farmland Preservation Bonds) (Insured; Assured Guaranty Municipal Corp.) | | 5.75 | | 11/1/28 | | 10,000,000 | | 13,218,200 | |
Gloucester County Improvement Authority,
County Guaranteed Loan Revenue (County Capital Program) | | 5.00 | | 4/1/38 | | 7,000,000 | | 7,501,410 | |
Gloucester County Pollution Control Financing Authority,
PCR (Logan Project) | | 5.00 | | 12/1/24 | | 1,000,000 | | 1,162,920 | |
Gloucester Township Municipal Utilities Authority,
Sewer Revenue (Insured; AMBAC) | | 5.65 | | 3/1/18 | | 675,000 | | 705,598 | |
Hudson County Improvement Authority,
County Secured LR (Hudson County Vocational-Technical Schools Project) | | 5.00 | | 5/1/46 | | 2,500,000 | | 3,061,475 | |
Hudson County Improvement Authority,
Harrison Stadium Land Acquisition Special Obligation Revenue (Harrison Redevelopment Project) (Insured; National Public Finance Guarantee Corp.) | | 0.00 | | 12/15/34 | | 3,000,000 | a | 1,820,340 | |
6
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
Irvington Township,
GO (Fiscal Year Adjustment Bonds and General Improvement Bonds) (Insured; Assured Guaranty Municipal Corp.) | | 5.00 | | 7/15/32 | | 2,000,000 | | 2,415,580 | |
Mercer County Improvement Authority,
County Secured Open Space Revenue (Insured; National Public Finance Guarantee Corp.) | | 5.00 | | 8/1/40 | | 3,290,000 | | 3,301,647 | |
Middletown Township Board of Education,
GO | | 5.00 | | 8/1/25 | | 1,000,000 | | 1,169,090 | |
Middletown Township Board of Education,
GO | | 5.00 | | 8/1/26 | | 2,935,000 | | 3,426,671 | |
Monroe Township Board of Education,
School District GO | | 5.00 | | 3/1/34 | | 1,250,000 | | 1,531,475 | |
New Brunswick Parking Authority,
City Guaranteed Parking Revenue (Insured; Build America Mutual Assurance Company) | | 5.00 | | 9/1/35 | | 2,000,000 | | 2,493,280 | |
New Jersey Economic Development Authority,
Cigarette Tax Revenue | | 5.00 | | 6/15/24 | | 3,000,000 | | 3,389,550 | |
New Jersey Economic Development Authority,
Cigarette Tax Revenue | | 5.00 | | 6/15/28 | | 3,625,000 | | 4,035,133 | |
New Jersey Economic Development Authority,
Department of Human Services Composite Revenue (Division of Developmental Disabilities) | | 6.25 | | 7/1/24 | | 900,000 | | 919,044 | |
New Jersey Economic Development Authority,
Department of Human Services Composite Revenue (Division of Mental Health Services) | | 6.10 | | 7/1/17 | | 235,000 | | 235,038 | |
New Jersey Economic Development Authority,
Motor Vehicle Surcharge Revenue (Insured; National Public Finance Guarantee Corp.) | | 0.00 | | 7/1/20 | | 3,350,000 | a | 3,092,285 | |
New Jersey Economic Development Authority,
Motor Vehicle Surcharge Revenue (Insured; National Public Finance Guarantee Corp.) | | 0.00 | | 7/1/21 | | 2,620,000 | a | 2,362,323 | |
New Jersey Economic Development Authority,
Private Activity Revenue (The Goethals Bridge Replacement Project) | | 5.38 | | 1/1/43 | | 3,500,000 | | 4,098,325 | |
New Jersey Economic Development Authority,
Revenue (Hillcrest Health Service System Project) (Insured; AMBAC) | | 0.00 | | 1/1/17 | | 5,000,000 | a | 4,966,400 | |
New Jersey Economic Development Authority,
Revenue (Hillcrest Health Service System Project) (Insured; AMBAC) | | 0.00 | | 1/1/18 | | 2,500,000 | a | 2,442,850 | |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
New Jersey Economic Development Authority,
Revenue (Hillcrest Health Service System Project) (Insured; AMBAC) | | 0.00 | | 1/1/20 | | 6,500,000 | a | 6,090,760 | |
New Jersey Economic Development Authority,
Revenue (Hillcrest Health Service System Project) (Insured; AMBAC) | | 0.00 | | 1/1/22 | | 6,000,000 | a | 5,358,660 | |
New Jersey Economic Development Authority,
Revenue (Provident Group - Rowan Properties L.L.C. - Rowan University Student Housing Project) | | 5.00 | | 1/1/35 | | 1,000,000 | | 1,142,790 | |
New Jersey Economic Development Authority,
School Facilities Construction Revenue | | 5.75 | | 9/1/23 | | 385,000 | | 437,137 | |
New Jersey Economic Development Authority,
School Facilities Construction Revenue (Insured; AMBAC) | | 5.50 | | 9/1/24 | | 10,000,000 | | 11,812,100 | |
New Jersey Economic Development Authority,
School Facilities Construction Revenue (Insured; National Public Finance Guarantee Corp.) | | 5.50 | | 9/1/27 | | 10,000,000 | | 12,654,500 | |
New Jersey Economic Development Authority,
School Facilities Construction Revenue (Prerefunded) | | 5.75 | | 3/1/21 | | 1,380,000 | b | 1,678,673 | |
New Jersey Economic Development Authority,
Special Facility Revenue (Continental Airlines, Inc. Project) | | 5.25 | | 9/15/29 | | 8,050,000 | | 9,062,690 | |
New Jersey Economic Development Authority,
Water Facilities Revenue (New Jersey - American Water Company, Inc. Project) | | 5.10 | | 6/1/23 | | 3,000,000 | | 3,380,580 | |
New Jersey Economic Development Authority,
Water Facilities Revenue (New Jersey - American Water Company, Inc. Project) | | 5.60 | | 11/1/34 | | 6,600,000 | | 7,492,056 | |
New Jersey Economic Development Authority,
Water Facilities Revenue (New Jersey - American Water Company, Inc. Project) | | 5.70 | | 10/1/39 | | 5,000,000 | | 5,677,850 | |
New Jersey Educational Facilities Authority,
Revenue (Kean University Issue) | | 5.00 | | 9/1/21 | | 1,500,000 | | 1,664,670 | |
New Jersey Educational Facilities Authority,
Revenue (Montclair State University Issue) (Prerefunded) | | 5.25 | | 7/1/18 | | 2,000,000 | b | 2,182,560 | |
8
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
New Jersey Educational Facilities Authority,
Revenue (New Jersey City University Issue) (Insured; Assured Guaranty Corp.) (Prerefunded) | | 5.00 | | 7/1/18 | | 12,165,000 | b | 13,204,743 | |
New Jersey Educational Facilities Authority,
Revenue (New Jersey Institute of Technology Issue) | | 5.00 | | 7/1/31 | | 2,000,000 | | 2,269,720 | |
New Jersey Educational Facilities Authority,
Revenue (Princeton Theological Seminary Issue) | | 5.00 | | 7/1/29 | | 5,000,000 | | 5,780,700 | |
New Jersey Educational Facilities Authority,
Revenue (Public Library Project Grant Program Issue) (Insured; AMBAC) | | 5.50 | | 9/1/17 | | 1,500,000 | | 1,505,940 | |
New Jersey Educational Facilities Authority,
Revenue (Ramapo College of New Jersey Issue) | | 5.00 | | 7/1/42 | | 3,000,000 | | 3,459,930 | |
New Jersey Educational Facilities Authority,
Revenue (Seton Hall University Issue) (Prerefunded) | | 6.25 | | 7/1/19 | | 5,000,000 | b | 5,810,950 | |
New Jersey Educational Facilities Authority,
Revenue (Stevens Institute of Technology Issue) | | 5.00 | | 7/1/27 | | 5,000,000 | | 5,157,550 | |
New Jersey Educational Facilities Authority,
Revenue (Stevens Institute of Technology Issue) | | 5.00 | | 7/1/34 | | 7,455,000 | | 7,717,938 | |
New Jersey Educational Facilities Authority,
Revenue (Stockton University Issue) (Insured; Assured Guaranty Municipal Corp.) | | 5.00 | | 7/1/35 | | 1,600,000 | | 1,938,368 | |
New Jersey Educational Facilities Authority,
Revenue (The College of New Jersey Issue) (Insured; Assured Guaranty Municipal Corp.) | | 5.00 | | 7/1/35 | | 3,700,000 | | 3,991,597 | |
New Jersey Educational Facilities Authority,
Revenue (The William Paterson University of New Jersey Issue) | | 5.00 | | 7/1/22 | | 2,165,000 | | 2,578,602 | |
New Jersey Educational Facilities Authority,
Revenue (The William Paterson University of New Jersey Issue) | | 5.00 | | 7/1/29 | | 2,130,000 | | 2,558,812 | |
New Jersey Educational Facilities Authority,
Revenue (The William Paterson University of New Jersey Issue) | | 5.00 | | 7/1/30 | | 2,255,000 | | 2,700,926 | |
9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
New Jersey Educational Facilities Authority,
Revenue (The William Paterson University of New Jersey Issue) (Insured; Assured Guaranty Corp.) | | 5.00 | | 7/1/38 | | 3,745,000 | | 4,030,818 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (AHS Hospital Corporation Issue) | | 5.00 | | 7/1/27 | | 5,400,000 | | 5,842,962 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Barnabas Health Issue) | | 5.63 | | 7/1/32 | | 3,000,000 | | 3,580,710 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (General Hospital Center at Passaic, Inc. Obligated Group Issue) (Insured; Assured Guaranty Municipal Corp.) (Escrowed to Maturity) | | 6.75 | | 7/1/19 | | 410,000 | | 445,969 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Hackensack University Medical Center Issue) | | 5.00 | | 1/1/28 | | 2,780,000 | | 3,095,196 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Hackensack University Medical Center Issue) (Insured; Assured Guaranty Corp.) | | 5.25 | | 1/1/36 | | 2,900,000 | | 3,077,973 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Inspira Health Obligated Group Issue) | | 5.00 | | 7/1/46 | | 3,000,000 | | 3,640,890 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Kennedy Health System Obligated Group Issue) | | 5.00 | | 7/1/31 | | 1,525,000 | | 1,753,247 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Meridian Health System Obligated Group Issue) | | 5.00 | | 7/1/23 | | 2,500,000 | | 3,029,300 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Meridian Health System Obligated Group Issue) | | 5.00 | | 7/1/26 | | 1,000,000 | | 1,194,190 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Meridian Health System Obligated Group Issue) (Insured; Assured Guaranty Corp.) | | 5.00 | | 7/1/38 | | 4,720,000 | | 5,089,529 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Princeton HealthCare System Issue) | | 5.00 | | 7/1/39 | | 2,000,000 | | 2,421,360 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Robert Wood Johnson University Hospital Issue) | | 5.00 | | 7/1/31 | | 4,950,000 | | 5,569,740 | |
10
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Saint Barnabas Health Care System Issue) (Insured; National Public Finance Guarantee Corp.) (Escrowed to Maturity) | | 0.00 | | 7/1/23 | | 2,280,000 | a | 2,057,768 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (University Hospital Issue) (Insured; Assured Guaranty Municipal Corp.) | | 5.00 | | 7/1/46 | | 2,000,000 | | 2,371,600 | |
New Jersey Health Care Facilities Financing Authority,
Revenue (Virtua Health Issue) (Insured; Assured Guaranty Corp.) | | 5.50 | | 7/1/38 | | 5,000,000 | | 5,662,350 | |
New Jersey Health Care Facilities Financing Authority,
State Contract Revenue (Hospital Asset Transformation Program) | | 5.25 | | 10/1/38 | | 13,595,000 | | 14,641,135 | |
New Jersey Higher Education Student Assistance Authority,
Senior Student Loan Revenue | | 5.00 | | 12/1/21 | | 1,800,000 | | 2,059,902 | |
New Jersey Higher Education Student Assistance Authority,
Student Loan Revenue | | 5.00 | | 12/1/25 | | 660,000 | | 694,848 | |
New Jersey Higher Education Student Assistance Authority,
Student Loan Revenue | | 5.00 | | 12/1/26 | | 1,640,000 | | 1,723,050 | |
New Jersey Housing and Mortgage Finance Agency,
Multi-Family Revenue | | 4.95 | | 5/1/41 | | 7,000,000 | | 7,480,550 | |
New Jersey Housing and Mortgage Finance Agency,
SFHR | | 5.20 | | 10/1/25 | | 4,005,000 | | 4,295,763 | |
New Jersey Housing and Mortgage Finance Agency,
SFHR | | 6.38 | | 10/1/28 | | 880,000 | | 911,750 | |
New Jersey Housing and Mortgage Finance Agency,
SFHR | | 5.25 | | 10/1/37 | | 145,000 | | 146,225 | |
New Jersey Institute of Technology,
GO | | 5.00 | | 7/1/31 | | 3,385,000 | | 4,180,170 | |
New Jersey Institute of Technology,
GO | | 5.00 | | 7/1/32 | | 1,000,000 | | 1,203,380 | |
New Jersey Transportation Trust Fund Authority,
(Transportation System) | | 5.50 | | 12/15/23 | | 7,000,000 | | 8,190,000 | |
New Jersey Transportation Trust Fund Authority,
(Transportation System) | | 5.50 | | 6/15/31 | | 2,500,000 | | 2,828,975 | |
New Jersey Transportation Trust Fund Authority,
(Transportation System) | | 6.00 | | 12/15/38 | | 6,565,000 | | 7,292,205 | |
11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
New Jersey Transportation Trust Fund Authority,
(Transportation System) (Insured; AMBAC) | | 5.25 | | 12/15/22 | | 5,000,000 | | 5,730,150 | |
New Jersey Transportation Trust Fund Authority,
(Transportation System) (Insured; AMBAC) | | 0.00 | | 12/15/24 | | 1,000,000 | a | 757,390 | |
New Jersey Transportation Trust Fund Authority,
(Transportation System) (Insured; AMBAC) | | 5.00 | | 12/15/32 | | 3,000,000 | | 3,142,440 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.00 | | 1/1/23 | | 2,000,000 | | 2,451,600 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.00 | | 1/1/25 | | 3,000,000 | | 3,829,770 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.00 | | 1/1/26 | | 2,000,000 | | 2,433,540 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.00 | | 1/1/34 | | 2,000,000 | | 2,448,300 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.00 | | 1/1/35 | | 3,000,000 | | 3,502,530 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.25 | | 1/1/40 | | 5,420,000 | | 5,941,296 | |
New Jersey Turnpike Authority,
Turnpike Revenue | | 5.00 | | 1/1/45 | | 4,000,000 | | 4,799,000 | |
New Jersey Turnpike Authority,
Turnpike Revenue (Insured; Assured Guaranty Municipal Corp.) | | 5.25 | | 1/1/27 | | 3,000,000 | | 4,006,770 | |
New Jersey Turnpike Authority,
Turnpike Revenue (Insured; National Public Finance Guarantee Corp.) | | 0.75 | | 1/1/30 | | 5,500,000 | d | 5,011,875 | |
North Hudson Sewerage Authority,
Gross Revenue Senior Lien Lease Certificates (Master Lease Agreement) | | 5.00 | | 6/1/24 | | 1,000,000 | | 1,193,310 | |
North Hudson Sewerage Authority,
Gross Revenue Senior Lien Lease Certificates (Master Lease Agreement) | | 5.00 | | 6/1/42 | | 10,320,000 | | 11,965,111 | |
North Jersey District Water Supply Commission,
Sewer Revenue (Wanaque South Project) (Insured; National Public Finance Guarantee Corp.) (Escrowed to Maturity) | | 6.00 | | 7/1/19 | | 945,000 | | 1,020,458 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 167th Series) | | 5.00 | | 9/15/24 | | 2,400,000 | | 2,781,528 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 167th Series) | | 5.50 | | 9/15/26 | | 7,600,000 | | 8,919,816 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 172nd Series) | | 5.00 | | 10/1/33 | | 5,000,000 | | 5,808,200 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 178th Series) | | 5.00 | | 12/1/24 | | 2,000,000 | | 2,465,760 | |
12
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
New Jersey - 95.2% (continued) | | | | | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 185th Series) | | 5.00 | | 9/1/31 | | 2,270,000 | | 2,757,959 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 186th Series) | | 5.00 | | 10/15/21 | | 2,555,000 | | 3,037,384 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 186th Series) | | 5.00 | | 10/15/44 | | 9,730,000 | | 11,661,989 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 195th Series) | | 5.00 | | 10/1/35 | | 4,295,000 | | 5,330,911 | |
Port Authority of New York and New Jersey,
(Consolidated Bonds, 93rd Series) | | 6.13 | | 6/1/94 | | 3,000,000 | | 3,945,900 | |
Port Authority of New York and New Jersey,
Special Project Revenue (JFK International Air Terminal LLC Project) | | 5.00 | | 12/1/20 | | 2,500,000 | | 2,872,200 | |
Rahway Valley Sewerage Authority,
Sewer Revenue (Insured; National Public Finance Guarantee Corp.) | | 0.00 | | 9/1/30 | | 7,550,000 | a | 5,254,120 | |
Rutgers, The State University,
GO | | 5.00 | | 5/1/26 | | 5,000,000 | | 6,154,900 | |
Rutgers, The State University,
GO | | 5.00 | | 5/1/34 | | 1,600,000 | | 2,008,736 | |
Rutgers, The State University,
GO (Prerefunded) | | 5.00 | | 5/1/19 | | 1,450,000 | b | 1,623,116 | |
Salem County Pollution Control Financing Authority,
PCR (Chambers Project) | | 5.00 | | 12/1/23 | | 1,000,000 | | 1,148,770 | |
South Jersey Port Corporation,
Marine Terminal Revenue | | 5.75 | | 1/1/23 | | 4,000,000 | | 4,515,120 | |
South Jersey Port Corporation,
Marine Terminal Revenue (Insured; Assured Guaranty Corp.) | | 5.75 | | 1/1/34 | | 2,900,000 | | 3,179,096 | |
South Jersey Port Corporation,
Marine Terminal Revenue (Insured; Assured Guaranty Corp.) | | 5.88 | | 1/1/39 | | 6,000,000 | | 6,563,280 | |
South Jersey Transportation Authority,
Transportation System Revenue | | 5.00 | | 11/1/23 | | 4,250,000 | | 4,956,902 | |
Tobacco Settlement Financing Corporation of New Jersey,
Tobacco Settlement Asset-Backed Bonds | | 4.63 | | 6/1/26 | | 4,000,000 | | 4,044,600 | |
Tobacco Settlement Financing Corporation of New Jersey,
Tobacco Settlement Asset-Backed Bonds | | 4.75 | | 6/1/34 | | 2,800,000 | | 2,764,636 | |
Tobacco Settlement Financing Corporation of New Jersey,
Tobacco Settlement Asset-Backed Bonds | | 5.00 | | 6/1/41 | | 13,050,000 | | 12,846,550 | |
| | 490,393,551 | |
13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | | | | | | |
| |
Long-Term Municipal Investments - 98.5% (continued) | | Coupon Rate (%) | | Maturity
Date | | Principal
Amount ($) | | Value ($) | |
U.S. Related - 3.3% | | | | | |
Guam,
Business Privilege Tax Revenue | | 5.00 | | 11/15/34 | | 3,660,000 | | 4,393,281 | |
Guam,
Business Privilege Tax Revenue | | 5.00 | | 1/1/42 | | 2,000,000 | | 2,259,960 | |
Guam Waterworks Authority,
Water and Wastewater System Revenue | | 5.00 | | 1/1/46 | | 2,000,000 | | 2,395,060 | |
Virgin Islands Public Finance Authority,
Revenue (Virgin Islands Matching Fund Loan Note) | | 5.00 | | 10/1/25 | | 5,000,000 | | 5,528,800 | |
Virgin Islands Public Finance Authority,
Revenue (Virgin Islands Matching Fund Loan Notes) | | 5.00 | | 10/1/25 | | 2,000,000 | | 2,183,360 | |
| | 16,760,461 | |
Total Investments (cost $454,433,000) | | 98.5% | 507,154,012 | |
Cash and Receivables (Net) | | 1.5% | 7,767,953 | |
Net Assets | | 100.0% | 514,921,965 | |
a Security issued with a zero coupon. Income is recognized through the accretion of discount.
b These securities are prerefunded; the date shown represents the prerefunded date. Bonds which are prerefunded are collateralized by U.S. Government securities which are held in escrow and are used to pay principal and interest on the municipal issue and to retire the bonds in full at the earliest refunding date.
c Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2016, this security was valued at $2,624,425 or .51% of net assets.
d Variable rate security—rate shown is the interest rate in effect at period end.
| | |
Portfolio Summary (Unaudited) † | Value (%) |
Transportation Services | 28.0 |
Education | 17.5 |
Health Care | 17.0 |
Prerefunded | 6.8 |
Utility-Water and Sewer | 4.9 |
Asset-Backed | 3.8 |
Lease | 3.8 |
Housing | 2.7 |
County | 2.6 |
Special Tax | 2.4 |
Industrial | 1.0 |
City | .2 |
Resource Recovery | .2 |
Utility-Electric | .1 |
Other | 7.5 |
| | 98.5 |
† Based on net assets.
See notes to financial statements.
14
| | | | |
| |
Summary of Abbreviations (Unaudited) |
| |
ABAG | Association of Bay Area
Governments | ACA | American Capital Access |
AGC | ACE Guaranty Corporation | AGIC | Asset Guaranty Insurance Company |
AMBAC | American Municipal Bond
Assurance Corporation | ARRN | Adjustable Rate
Receipt Notes |
BAN | Bond Anticipation Notes | BPA | Bond Purchase Agreement |
CIFG | CDC Ixis Financial Guaranty | COP | Certificate of Participation |
CP | Commercial Paper | DRIVERS | Derivative Inverse
Tax-Exempt Receipts |
EDR | Economic Development
Revenue | EIR | Environmental Improvement
Revenue |
FGIC | Financial Guaranty
Insurance Company | FHA | Federal Housing Administration |
FHLB | Federal Home
Loan Bank | FHLMC | Federal Home Loan Mortgage
Corporation |
FNMA | Federal National
Mortgage Association | GAN | Grant Anticipation Notes |
GIC | Guaranteed Investment
Contract | GNMA | Government National Mortgage
Association |
GO | General Obligation | HR | Hospital Revenue |
IDB | Industrial Development Board | IDC | Industrial Development Corporation |
IDR | Industrial Development
Revenue | LIFERS | Long Inverse Floating
Exempt Receipts |
LOC | Letter of Credit | LOR | Limited Obligation Revenue |
LR | Lease Revenue | MERLOTS | Municipal Exempt Receipts
Liquidity Option Tender |
MFHR | Multi-Family Housing Revenue | MFMR | Multi-Family Mortgage Revenue |
PCR | Pollution Control Revenue | PILOT | Payment in Lieu of Taxes |
P-FLOATS | Puttable Floating Option
Tax-Exempt Receipts | PUTTERS | Puttable Tax-Exempt Receipts |
RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes |
RAW | Revenue Anticipation Warrants | RIB | Residual Interest Bonds |
ROCS | Reset Options Certificates | RRR | Resources Recovery Revenue |
SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement |
SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue |
SONYMA | State of New York
Mortgage Agency | SPEARS | Short Puttable Exempt
Adjustable Receipts |
SWDR | Solid Waste Disposal Revenue | TAN | Tax Anticipation Notes |
TAW | Tax Anticipation Warrants | TRAN | Tax and Revenue Anticipation Notes |
XLCA | XL Capital Assurance | | |
See notes to financial statements.
15
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2016 (Unaudited)
| | | | | | | |
| | | | | | |
| | | Cost | | Value | |
Assets ($): | | | | |
Investments in securities—See Statement of Investments | | 454,433,000 | | 507,154,012 | |
Cash | | | | | 3,364,515 | |
Interest receivable | | | | | 6,527,171 | |
Receivable for shares of Common Stock subscribed | | | | | 328,609 | |
Prepaid expenses | | | | | 39,221 | |
| | | | | 517,413,528 | |
Liabilities ($): | | | | |
Due to The Dreyfus Corporation and affiliates—Note 3(c) | | | | | 356,723 | |
Payable for investment securities purchased | | | | | 1,921,216 | |
Payable for shares of Common Stock redeemed | | | | | 146,512 | |
Accrued expenses | | | | | 67,112 | |
| | | | | 2,491,563 | |
Net Assets ($) | | | 514,921,965 | |
Composition of Net Assets ($): | | | | |
Paid-in capital | | | | | 473,430,147 | |
Accumulated undistributed investment income—net | | | | | 117,764 | |
Accumulated net realized gain (loss) on investments | | | | | (11,346,958) | |
Accumulated net unrealized appreciation (depreciation)
on investments | | | | | 52,721,012 | |
Net Assets ($) | | | 514,921,965 | |
| | | | | | | |
Net Asset Value Per Share | Class A | Class C | Class I | Class Y | Class Z | |
Net Assets ($) | 376,115,008 | 11,714,765 | 10,949,982 | 287,302 | 115,854,908 | |
Shares Outstanding | 28,034,085 | 873,981 | 815,934 | 21,415 | 8,633,680 | |
Net Asset Value Per Share ($) | 13.42 | 13.40 | 13.42 | 13.42 | 13.42 | |
See notes to financial statements.
16
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2016 (Unaudited)
| | | | | | | |
| | | | | | |
| | | | | | |
Investment Income ($): | | | | |
Interest Income | | | 10,382,658 | |
Expenses: | | | | |
Management fee—Note 3(a) | | | 1,497,832 | |
Shareholder servicing costs—Note 3(c) | | | 594,939 | |
Professional fees | | | 55,804 | |
Distribution fees—Note 3(b) | | | 37,215 | |
Registration fees | | | 31,619 | |
Directors’ fees and expenses—Note 3(d) | | | 27,284 | |
Custodian fees—Note 3(c) | | | 17,834 | |
Prospectus and shareholders’ reports | | | 3,343 | |
Loan commitment fees—Note 2 | | | 3,065 | |
Miscellaneous | | | 21,012 | |
Total Expenses | | | 2,289,947 | |
Less—reduction in expenses due to undertaking—Note 3(a) | | | (246,540) | |
Less—reduction in fees due to earnings credits—Note 3(c) | | | (1,658) | |
Net Expenses | | | 2,041,749 | |
Investment Income—Net | | | 8,340,909 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | | |
Net realized gain (loss) on investments | 2,516,930 | |
Net unrealized appreciation (depreciation) on investments | | | 12,012,125 | |
Net Realized and Unrealized Gain (Loss) on Investments | | | 14,529,055 | |
Net Increase in Net Assets Resulting from Operations | | 22,869,964 | |
See notes to financial statements.
17
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | Six Months Ended
June 30, 2016 (Unaudited) | | | | Year Ended
December 31, 2015 | |
Operations ($): | | | | | | | | |
Investment income—net | | | 8,340,909 | | | | 17,529,279 | |
Net realized gain (loss) on investments | | 2,516,930 | | | | 2,067,409 | |
Net unrealized appreciation (depreciation)
on investments | | 12,012,125 | | | | (2,891,720) | |
Net Increase (Decrease) in Net Assets
Resulting from Operations | 22,869,964 | | | | 16,704,968 | |
Dividends to Shareholders from ($): | | | | | | | | |
Investment income—net: | | | | | | | | |
Class A | | | (5,971,976) | | | | (12,589,993) | |
Class C | | | (123,736) | | | | (279,261) | |
Class I | | | (167,640) | | | | (243,695) | |
Class Y | | | (5,187) | | | | (17,069) | |
Class Z | | | (1,954,606) | | | | (4,155,669) | |
Total Dividends | | | (8,223,145) | | | | (17,285,687) | |
Capital Stock Transactions ($): | | | | | | | | |
Net proceeds from shares sold: | | | | | | | | |
Class A | | | 11,768,811 | | | | 12,986,729 | |
Class C | | | 2,401,203 | | | | 2,281,017 | |
Class I | | | 2,929,002 | | | | 4,157,740 | |
Class Z | | | 1,938,642 | | | | 3,210,767 | |
Dividends reinvested: | | | | | | | | |
Class A | | | 4,517,141 | | | | 9,533,446 | |
Class C | | | 66,697 | | | | 127,601 | |
Class I | | | 145,308 | | | | 201,944 | |
Class Y | | | 201 | | | | 402 | |
Class Z | | | 1,605,240 | | | | 3,393,039 | |
Cost of shares redeemed: | | | | | | | | |
Class A | | | (15,649,060) | | | | (41,015,485) | |
Class C | | | (743,643) | | | | (3,502,831) | |
Class I | | | (487,859) | | | | (1,117,683) | |
Class Y | | | (27,000) | | | | (302,083) | |
Class Z | | | (4,684,303) | | | | (13,147,811) | |
Increase (Decrease) in Net Assets
from Capital Stock Transactions | 3,780,380 | | | | (23,193,208) | |
Total Increase (Decrease) in Net Assets | 18,427,199 | | | | (23,773,927) | |
Net Assets ($): | | | | | | | | |
Beginning of Period | | | 496,494,766 | | | | 520,268,693 | |
End of Period | | | 514,921,965 | | | | 496,494,766 | |
Undistributed investment income—net | 117,764 | | | | - | |
18
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | Six Months Ended
June 30, 2016 (Unaudited) | | | | Year Ended
December 31, 2015 | |
Capital Share Transactions (Shares): | | | | | | | | |
Class Aa | | | | | | | | |
Shares sold | | | 890,215 | | | | 1,004,291 | |
Shares issued for dividends reinvested | | | 341,832 | | | | 736,255 | |
Shares redeemed | | | (1,186,839) | | | | (3,168,212) | |
Net Increase (Decrease) in Shares Outstanding | 45,208 | | | | (1,427,666) | |
Class C | | | | | | | | |
Shares sold | | | 181,108 | | | | 176,096 | |
Shares issued for dividends reinvested | | | 5,051 | | | | 9,865 | |
Shares redeemed | | | (56,442) | | | | (271,101) | |
Net Increase (Decrease) in Shares Outstanding | 129,717 | | | | (85,140) | |
Class Ia | | | | | | | | |
Shares sold | | | 222,069 | | | | 320,116 | |
Shares issued for dividends reinvested | | | 10,990 | | | | 15,613 | |
Shares redeemed | | | (36,972) | | | | (86,622) | |
Net Increase (Decrease) in Shares Outstanding | 196,087 | | | | 249,107 | |
Class Y | | | | | | | | |
Shares issued for dividends reinvested | | | 15 | | | | 31 | |
Shares redeemed | | | (2,050) | | | | (23,637) | |
Net Increase (Decrease) in Shares Outstanding | (2,035) | | | | (23,606) | |
Class Z | | | | | | | | |
Shares sold | | | 146,963 | | | | 248,020 | |
Shares issued for dividends reinvested | | | 121,460 | | | | 262,028 | |
Shares redeemed | | | (354,746) | | | | (1,014,710) | |
Net Increase (Decrease) in Shares Outstanding | (86,323) | | | | (504,662) | |
| | | | | | | | | | |
a | During the period ended December 31, 2015, 2,902 Class A shares representing $38,024, were exchanged for 2,902 Class I shares. | |
See notes to financial statements.
19
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2016 | Year Ended December 31, |
Class A Shares | (Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 13.03 | 13.04 | 12.27 | 13.42 | 13.01 | 12.25 |
Investment Operations: | | | | | | |
Investment income—neta | .22 | .45 | .46 | .47 | .49 | .53 |
Net realized and unrealized
gain (loss) on investments | .38 | (.02) | .76 | (1.15) | .41 | .75 |
Total from Investment Operations | .60 | .43 | 1.22 | (.68) | .90 | 1.28 |
Distributions: | | | | | | |
Dividends from
investment income—net | (.21) | (.44) | (.45) | (.46) | (.49) | (.52) |
Dividends from net realized
gain on investments | - | - | (.00)b | (.01) | - | - |
Total Distributions | (21) | (.44) | (.45) | (.47) | (.49) | (.52) |
Net asset value, end of period | 13.42 | 13.03 | 13.04 | 12.27 | 13.42 | 13.01 |
Total Return (%)c | 4.67d | 3.38 | 10.11 | (5.18) | 6.96 | 10.72 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | .95e | .95 | .95 | .94 | .96 | .96 |
Ratio of net expenses to
average net assets | .85e | .85 | .85 | .85 | .85 | .85 |
Ratio of interest and expense
related to floating rate notes
issued to average net assets | - | - | .00f | .00f | - | - |
Ratio of net investment income
to average net assets | 3.31e | 3.45 | 3.59 | 3.62 | 3.68 | 4.23 |
Portfolio Turnover Rate | 4.33d | 8.41 | 10.18 | 11.31 | 12.10 | 9.58 |
Net Assets, end of period ($ x 1,000) | 376,115 | 364,755 | 383,670 | 377,986 | 457,618 | 443,882 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
d Not annualized.
e Annualized.
f Amount represents less than .01%.
See notes to financial statements.
20
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2016 | Year Ended December 31, |
Class C Shares | (Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 13.02 | 13.03 | 12.26 | 13.40 | 13.00 | 12.24 |
Investment Operations: | | | | | | |
Investment income—neta | .17 | .35 | .36 | .37 | .39 | .43 |
Net realized and unrealized
gain (loss) on investments | .37 | (.02) | .77 | (1.13) | .40 | .76 |
Total from Investment Operations | .54 | .33 | 1.13 | (.76) | .79 | 1.19 |
Distributions: | | | | | | |
Dividends from
investment income—net | (.16) | (.34) | (.36) | (.37) | (.39) | (.43) |
Dividends from net realized
gain on investments | - | - | (.00)b | (.01) | - | - |
Total Distributions | (.16) | (.34) | (.36) | (.38) | (.39) | (.43) |
Net asset value, end of period | 13.40 | 13.02 | 13.03 | 12.26 | 13.40 | 13.00 |
Total Return (%)c | 4.21d | 2.61 | 9.29 | (5.82) | 6.09 | 9.90 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | 1.72e | 1.71 | 1.72 | 1.72 | 1.74 | 1.73 |
Ratio of net expenses to
average net assets | 1.60e | 1.60 | 1.60 | 1.60 | 1.60 | 1.60 |
Ratio of interest and expense
related to floating rate notes
issued to average net assets | - | - | .00f | .00f | - | - |
Ratio of net investment income
to average net assets | 2.54e | 2.71 | 2.82 | 2.87 | 2.92 | 3.48 |
Portfolio Turnover Rate | 4.33d | 8.41 | 10.18 | 11.31 | 12.10 | 9.58 |
Net Assets, end of period ($ x 1,000) | 11,715 | 9,690 | 10,808 | 8,997 | 10,403 | 9,035 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Exclusive of sales charge.
d Not annualized.
e Annualized.
f Amount represents less than .01%.
See notes to financial statements.
21
FINANCIAL HIGHLIGHTS (continued)
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2016 | Year Ended December 31, |
Class I Shares | (Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 13.04 | 13.05 | 12.28 | 13.42 | 13.02 | 12.25 |
Investment Operations: | | | | | | |
Investment income—neta | .23 | .48 | .49 | .50 | .50 | .54 |
Net realized and unrealized
gain (loss) on investments | .38 | (.02) | .77 | (1.14) | .41 | .77 |
Total from Investment Operations | .61 | .46 | 1.26 | (.64) | .91 | 1.31 |
Distributions: | | | | | | |
Dividends from
investment income—net | (.23) | (.47) | (.49) | (.49) | (.51) | (.54) |
Dividends from net realized
gain on investments | - | - | (.00)b | (.01) | - | - |
Total Distributions | (.23) | (.47) | (.49) | (.50) | (.51) | (.54) |
Net asset value, end of period | 13.42 | 13.04 | 13.05 | 12.28 | 13.42 | 13.02 |
Total Return (%) | 4.72c | 3.63 | 10.38 | (4.88) | 7.04 | 10.97 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | .71d | .71 | .72 | .72 | .74 | .76 |
Ratio of net expenses to
average net assets | .60d | .60 | .60 | .62 | .70 | .70 |
Ratio of interest and expense
related to floating rate notes
issued to average net assets | - | - | .00e | .00e | - | - |
Ratio of net investment income
to average net assets | 3.55d | 3.70 | 3.82 | 3.84 | 3.82 | 4.36 |
Portfolio Turnover Rate | 4.33c | 8.41 | 10.18 | 11.31 | 12.10 | 9.58 |
Net Assets, end of period ($ x 1,000) | 10,950 | 8,080 | 4,837 | 3,450 | 4,527 | 2,586 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Not annualized.
d Annualized.
e Amount represents less than .01%.
See notes to financial statements.
22
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2016 | Year Ended December 31, |
Class Y Shares | (Unaudited) | 2015 | 2014 | 2013a |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | | | 13.03 | 13.05 | 12.27 | 12.77 |
Investment Operations: | | | | | | |
Investment income—netb | | | .23 | .48 | .38 | .26 |
Net realized and unrealized
gain (loss) on investments | | | .39 | (.03) | .87 | (.51) |
Total from Investment Operations | | | .62 | .45 | 1.25 | (.25) |
Distributions: | | | | | | |
Dividends from
investment income—net | | | (.23) | (.47) | (.47) | (.25) |
Dividends from net realized
gain on investments | | | - | - | (.00)c | - |
Total Distributions | | | (.23) | (.47) | (.47) | (.25) |
Net asset value, end of period | | | 13.42 | 13.03 | 13.05 | 12.27 |
Total Return (%) | | | 4.81d | 3.56 | 10.37 | (1.96)d |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | | | .72e | .71 | .76 | .68e |
Ratio of net expenses to
average net assets | | | .60e | .60 | .63 | .60e |
Ratio of interest and expense
related to floating rate notes
issued to average net assets | | | - | - | .00f | .00e,f |
Ratio of net investment income
to average net assets | | | 3.56e | 3.71 | 3.59 | 4.11e |
Portfolio Turnover Rate | | | 4.33d | 8.41 | 10.18 | 11.31 |
Net Assets, end of period ($ x 1,000) | | | 287 | 306 | 614 | 1 |
a From July 1, 2013 (commencement of initial offering) to December 31, 2013.
b Based on average shares outstanding.
c Amount represents less than $.01 per share.
d Not annualized.
e Annualized.
f Amount represents less than .01%.
See notes to financial statements.
23
FINANCIAL HIGHLIGHTS (continued)
| | | | | | | |
| | Six Months Ended | |
| | June 30, 2016 | Year Ended December 31, |
Class Z Shares | (Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 13.03 | 13.05 | 12.28 | 13.42 | 13.01 | 12.25 |
Investment Operations: | | | | | | |
Investment income—neta | .23 | .47 | .48 | .49 | .50 | .54 |
Net realized and unrealized
gain (loss) on investments | .39 | (.03) | .77 | (1.13) | .41 | .75 |
Total from Investment Operations | .62 | .44 | 1.25 | (.64) | .91 | 1.29 |
Distributions: | | | | | | |
Dividends from
investment income—net | (.23) | (.46) | (.48) | (.49) | (.50) | (.53) |
Dividends from net realized
gain on investments | - | - | (.00)b | (.01) | - | - |
Total Distributions | (.23) | (.46) | (.48) | (.50) | (.50) | (.53) |
Net asset value, end of period | 13.42 | 13.03 | 13.05 | 12.28 | 13.42 | 13.01 |
Total Return (%) | 4.77c | 3.49 | 10.31 | (4.93) | 7.04 | 10.80 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses to
average net assets | .77d | .77 | .77 | .74 | .78 | .78 |
Ratio of net expenses to
average net assets | .66d | .66 | .66 | .67 | .78 | .78 |
Ratio of interest and expense
related to floating rate notes
issued to average net assets | - | - | .00e | .00e | - | - |
Ratio of net investment income
to average net assets | 3.49d | 3.64 | 3.78 | 3.80 | 3.75 | 4.30 |
Portfolio Turnover Rate | 4.33c | 8.41 | 10.18 | 11.31 | 12.10 | 9.58 |
Net Assets, end of period ($ x 1,000) | 115,855 | 113,663 | 120,340 | 116,050 | 139,334 | 137,552 |
a Based on average shares outstanding.
b Amount represents less than $.01 per share.
c Not annualized.
d Annualized.
e Amount represents less than .01%.
See notes to financial statements.
24
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus New Jersey Municipal Bond Fund, Inc. (the “fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a non-diversified open-end management investment company. The fund’s investment objective is to seek as high a level of current income exempt from federal and New Jersey income taxes as is consistent with the preservation of capital. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares. The fund is authorized to issue 675 million shares of $.001 par value Common Stock. The fund currently offers five classes of shares: Class A (200 million shares authorized), Class C (150 million shares authorized), Class I (150 million shares authorized), Class Y (150 million shares authorized) and Class Z (25 million shares authorized). Class A shares generally are subject to a sales charge imposed at the time of purchase. Class C shares are subject to a contingent deferred sales charge (“CDSC”) imposed on Class C shares redeemed within one year of purchase. Class I and Class Y shares are sold at net asset value per share generally to institutional investors. Class Z shares are sold at net asset value per share generally to certain shareholders of the fund. Class Z shares generally are not available for new accounts. Other differences between the classes include the services offered to and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The
25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in securities are valued each business day by an independent pricing service (the “Service”) approved by the fund’s Board of Directors (the “Board”). Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority
26
of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of the following: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. All of the preceding securities are generally categorized within Level 2 of the fair value hierarchy.
The Service’s procedures are reviewed by Dreyfus under the general supervision of the Board.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board. Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
The following is a summary of the inputs used as of June 30, 2016 in valuing the fund’s investments:
| | | | | |
| | Level 1 - Unadjusted Quoted Prices | Level 2 - Other Significant Observable Inputs | Level 3 -Significant Unobservable Inputs | Total |
Assets ($) | | | | |
Investments in Securities: | | | | |
Municipal Bonds† | — | 507,154,012 | — | 507,154,012 |
† See Statement of Investments for additional detailed categorizations.
At June 30, 2016, there were no transfers between levels of the fair value hierarchy.
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis.
27
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when issued or delayed delivery basis may be settled a month or more after the trade date.
The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
(c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax-exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended June 30, 2016, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended June 30, 2016, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended December 31, 2015 remains subject to examination by the Internal Revenue Service and state taxing authorities.
Under the Regulated Investment Company Modernization Act of 2010 (the “2010 Act”), the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) for an unlimited period. Furthermore, post-enactment capital loss carryovers retain their character as either short-term or long-term capital losses rather than short-term as they were under previous statute. The 2010 Act requires post-enactment losses to be utilized before the utilization of losses incurred in taxable years prior to the effective date
28
of the 2010 Act (“pre-enactment losses”). As a result of this ordering rule, pre-enactment losses may be more likely to expire unused.
The fund has an unused capital loss carryover of $14,819,511 available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to December 31, 2015. If not applied, $1,125,950 of the carryover expires in fiscal year 2016 and $6,969,933 expires in fiscal year 2017. The fund has $835,086 of post-enactment short-term capital losses and $5,888,542 of post-enactment long-term capital losses which can be carried forward for an unlimited period.
The tax character of distributions paid to shareholders during the fiscal year ended December 31, 2015 was as follows: tax-exempt income $17,275,421 and ordinary income $10,266. The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $555 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. Prior to January 11, 2016, the unsecured credit facility with Citibank, N.A. was $480 million. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended June 30, 2016, the fund did not borrow under the Facilities.
NOTE 3—Management Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of .60% of the value of the fund’s average daily net assets and is payable monthly. Dreyfus has contractually agreed, from January 1, 2016 through May 1, 2017, to waive receipt of its fees and/or assume the direct expenses of the fund, so that the expenses of none of the classes (excluding Rule 12b-1 Distribution Plan fees, Shareholder Services Plan fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .60% of the value of the fund’s average daily net assets. The reduction in expenses, pursuant to the undertaking, amounted to $246,540 during the period ended June 30, 2016.
29
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
During the period ended June 30, 2016, the Distributor retained $2,032 from commissions earned on sales of the fund’s Class A shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Class C shares pay the Distributor for distributing its shares at an annual rate of .75% of the value of its average daily net assets. During the period ended June 30, 2016, Class C shares were charged $37,215 pursuant to the Distribution Plan.
(c) Under the Shareholder Services Plan, Class A and Class C shares pay the Distributor at an annual rate of .25% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (securities dealers, financial institutions or other industry professionals) with respect to these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended June 30, 2016, Class A and Class C shares were charged $457,362 and $12,405, respectively, pursuant to the Shareholder Services Plan.
Under the Shareholder Services Plan, Class Z shares reimburse the Distributor at an amount not to exceed an annual rate of .25% of the value of Class Z shares’ average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding Class Z shares and providing reports and other information, and services related to the maintenance of shareholder accounts. During the period ended June 30, 2016, Class Z shares were charged $33,756 pursuant to the Shareholder Services Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency and cash management services for the fund. The majority of transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended June 30, 2016, the fund was charged $61,340 for transfer agency services and $3,558 for cash
30
management services. These fees are included in Shareholder servicing costs in the Statement of Operations. Cash management fees were partially offset by earnings credits of $1,658.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended June 30, 2016, the fund was charged $17,834 pursuant to the custody agreement.
The fund compensates The Bank of New York Mellon under a shareholder redemption draft processing agreement for providing certain services related to the fund’s check writing privilege. During the period ended June 30, 2016, the fund was charged $2,367 pursuant to the agreement, which is included in Shareholder servicing costs in the Statement of Operations.
During the period ended June 30, 2016, the fund was charged $4,812 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $251,209, Distribution Plan fees $6,944, Shareholder Services Plan fees $83,801, custodian fees $12,415, Chief Compliance Officer fees $4,812 and transfer agency fees $22,141, which are offset against an expense reimbursement currently in effect in the amount of $24,599.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended June 30, 2016, amounted to $23,461,237 and $21,498,367, respectively.
At June 30, 2016, accumulated net unrealized appreciation on investments was $52,721,012, consisting of gross unrealized appreciation.
At June 30, 2016, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
31
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited)
At a meeting of the fund’s Board of Directors held on February 17-18, 2016, the Board considered the renewal of the fund’s Management Agreement pursuant to which Dreyfus provides the fund with investment advisory and administrative services (the “Agreement”). The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from Dreyfus representatives. In considering the renewal of the Agreement, the Board considered all factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
Analysis of Nature, Extent, and Quality of Services Provided to the Fund. The Board considered information provided to them at the meeting and in previous presentations from Dreyfus representatives regarding the nature, extent, and quality of the services provided to funds in the Dreyfus fund complex. Dreyfus provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. Dreyfus also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the Dreyfus fund complex (such as retail direct or intermediary, in which intermediaries typically are paid by the fund and/or Dreyfus) and Dreyfus’ corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each intermediary or distribution channel, as applicable to the fund.
The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that Dreyfus also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board also considered Dreyfus’ extensive administrative, accounting and compliance infrastructures.
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed reports prepared by Lipper, Inc. (“Lipper”), an independent provider of investment company data, which included information comparing (1) the fund’s performance with the performance of a group of comparable funds (the “Performance Group”) and with a broader group of funds (the “Performance Universe”), all for various periods ended December 31, 2015, and (2) the fund’s actual and contractual management fees and total expenses with those of a group of comparable funds (the “Expense Group”) and with a broader group of funds (the “Expense Universe”), the information for which was derived in part from fund financial statements available to Lipper as of the date of its analysis. Dreyfus previously had furnished the Board with a description of the
32
methodology Lipper used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
Dreyfus representatives stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations that may be applicable to the fund and comparison funds. The Board discussed the results of the comparisons and noted that the fund’s total return performance was at or above the Performance Group and Performance Universe medians, except for the four-year period ended December 31st when it was below the Performance Universe median. The Board also noted that the fund’s yield performance was at or above the Performance Group for five of the ten one-year periods ended December 31st and was at or above the Performance Universe medians for six of the ten one-year periods ended December 31st. The Board also noted the proximity of the fund’s yield performance to the median during certain periods when yield performance was below the Performance Group and/or Performance Universe median(s). Dreyfus also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s Lipper category average.
The Board also reviewed the range of actual and contractual management fees and total expenses of the Expense Group and Expense Universe funds and discussed the results of the comparisons. The Board noted that the fund’s contractual management fee was above the Expense Group median, the fund’s actual management fee was above the Expense Group and Expense Universe medians and the fund’s total expenses were above the Expense Group median and slightly above the Expense Universe median.
Dreyfus representatives noted that Dreyfus has contractually agreed to waive receipt of its fees and/or assume the direct expenses of the fund, until May 1, 2017, so that annual direct fund operating expenses (excluding Rule 12b-1 fees, shareholder services fees, taxes, interest, brokerage commissions, commitment fees on borrowings and extraordinary expenses) do not exceed 0.60% of the fund’s average daily net assets.
Dreyfus representatives reviewed with the Board the management or investment advisory fees (1) paid by funds advised or administered by Dreyfus that are in the same Lipper category as the fund and (2) paid to Dreyfus or the Dreyfus-affiliated primary employer of the fund’s primary portfolio manager(s) for advising any separate accounts and/or other types of client portfolios that are considered to have similar investment strategies and policies as the fund (the “Similar Clients”), and explained the nature of the Similar Clients. They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors. The Board considered the relevance of the fee information provided for the Similar Clients to evaluate the appropriateness and reasonableness of the fund’s management fee.
33
INFORMATION ABOUT THE RENEWAL OF THE FUND’S MANAGEMENT AGREEMENT (Unaudited) (continued)
Analysis of Profitability and Economies of Scale. Dreyfus representatives reviewed the expenses allocated and profit received by Dreyfus and its affiliates and the resulting profitability percentage for managing the fund and the aggregate profitability percentage to Dreyfus and its affiliates for managing the funds in the Dreyfus fund complex, and the method used to determine the expenses and profit. The Board concluded that the profitability results were not unreasonable, given the services rendered and service levels provided by Dreyfus. The Board also noted the expense limitation arrangement and its effect on the profitability of Dreyfus and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding Dreyfus’ approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
The Board considered, on the advice of its counsel, the profitability analysis (1) as part of its evaluation of whether the fees under the Agreement bear a reasonable relationship to the mix of services provided by Dreyfus, including the nature, extent and quality of such services, and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Dreyfus representatives noted that a discussion of economies of scale is predicated on a fund having achieved a substantial size with increasing assets and that, if a fund’s assets had been stable or decreasing, the possibility that Dreyfus may have realized any economies of scale would be less. Dreyfus representatives also noted that, as a result of shared and allocated costs among funds in the Dreyfus fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to Dreyfus from acting as investment adviser and noted that there were no soft dollar arrangements in effect for trading the fund’s investments.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreement. Based on the discussions and considerations as described above, the Board concluded and determined as follows.
· The Board concluded that the nature, extent and quality of the services provided by Dreyfus are adequate and appropriate.
· The Board was satisfied with the fund’s overall performance.
34
· The Board concluded that the fee paid to Dreyfus was reasonable in light of the considerations described above.
· The Board determined that the economies of scale which may accrue to Dreyfus and its affiliates in connection with the management of the fund had been adequately considered by Dreyfus in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
In evaluating the Agreement, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with Dreyfus and its affiliates, of the fund and the services provided to the fund by Dreyfus. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreement, including information on the investment performance of the fund in comparison to similar mutual funds and benchmark performance indices; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for this fund had the benefit of a number of years of reviews of prior or similar agreements during which lengthy discussions took place between the Board and Dreyfus representatives. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the same or similar arrangements in prior years. The Board determined to renew the Agreement.
35
NOTES
36
NOTES
37
Dreyfus New Jersey Municipal Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
Distributor
MBSC Securities Corporation
200 Park Avenue
New York, NY 10166
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Ticker Symbols: | Class A: DRNJX Class C: DCNJX Class I: DNMIX Class Y: DNJYX Class Z: DZNJX |
Telephone Call your financial representative or 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to info@dreyfus.com
Internet Information can be viewed online or downloaded at www.dreyfus.com
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (phone 1-800-SEC-0330 for information).
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at www.dreyfus.com and on the SEC’s website at www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
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© 2016 MBSC Securities Corporation
0750SA0616 | 
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