<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
<Table>
Investment Company Act file number: 811-2992
Exact name of registrant as specified in charter: Dryden National Municipals Fund,
Inc.
Address of principal executive offices: Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
Name and address of agent for service: Deborah 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: December 31, 2003
Date of reporting period: June 30, 2003
</Table>
<Page>
Item 1 -- Reports to Stockholders
Dryden
National Municipals Fund, Inc.
Formerly known as Prudential National Municipals Fund, Inc.
JUNE 30, 2003 SEMIANNUAL REPORT
(GRAPHIC)
FUND TYPE OBJECTIVE
Municipal bond High level of current income exempt from
federal income taxes
---------------------------------------------
This report is not authorized for
distribution to prospective investors unless
preceded or accompanied by
a current prospectus.
The views expressed in this report
and information about the Fund's
portfolio holdings are for the period covered
by this report and are subject
to change thereafter.
JennisonDryden is a service mark of
The Prudential Insurance Company
of America.
JennisonDrydenMutualFunds
Dear Shareholder, August 15, 2003
Stocks and bonds often move in opposite
directions. However, for a period during
the spring of 2003, both markets in the United
States rallied in tandem. Recently, signs of
stronger economic growth have helped sustain
the rise in equities but weighed heavily on
bonds. Regardless of the direction of financial
markets, it is important to remember that a
wise investor plans today for tomorrow's needs.
Current market activity should have little
impact on planning for your long-term
investment goals.
Whether you are investing for your retirement,
your children's education, or some other
purpose, JennisonDryden mutual funds offer the
experience, resources, and professional
discipline of three leading asset management
firms that can make a difference for you.
JennisonDryden equity funds are managed by
Jennison Associates and Quantitative
Management. Prudential Fixed Income manages the
JennisonDryden fixed income and money market
funds.
A diversified asset allocation strategy is a
disciplined approach to investing that
may help you make more consistent progress
toward your goals. We recommend
that you develop a personal asset allocation
strategy in consultation with a financial
professional who knows you, who understands
your reasons for investing, the time you have
to reach your goals, and the amount of risk you
are comfortable assuming. JennisonDryden mutual
funds offer a wide range of investment choices,
and your financial professional can help you
choose the appropriate funds to implement
your strategy.
I was named president of the Dryden National
Municipals Fund, Inc. in March 2003. Thank you
for your confidence in JennisonDryden mutual
funds. We look forward to serving your future
investment needs.
Sincerely,
Judy A. Rice, President
Dryden National Municipals Fund, Inc.
Dryden National Municipals Fund, Inc. 1
Your Fund's Performance
Fund Objective
The Dryden National Municipals Fund, Inc. (the
Fund) seeks a high level of current income
exempt from federal income taxes. There can be
no assurance that the Fund will achieve its
investment objective.
Cumulative Total Returns1 as of 6/30/03
Six Months One Year Five Years Ten Years Since Inception2
Class A 3.21% 8.33% 29.77% 71.51% (71.30) 143.02% (142.72)
Class B 3.08 8.05 28.06 66.02 (65.81) 477.95 (477.22)
Class C 2.95 7.78 26.49 N/A 62.27 (62.07)
Class Z 3.34 8.53 N/A N/A 26.23
Lehman Brothers Municipal Bond Index3 3.81 8.74 35.67 85.50 ***
Lipper General Muni Debt Funds Avg.4 3.38 7.50 26.82 67.97 ****
Average Annual Total Returns1 as of 6/30/03
One Year Five Years Ten Years Since Inception2
Class A 5.08% 4.71% 5.22% (5.54) 6.59% (6.83)
Class B 3.05 4.91 5.20 7.86
Class C 5.71 4.60 N/A 5.46 (5.58)
Class Z 8.53 N/A N/A 5.39
Lehman Brothers Municipal Bond Index3 8.74 6.29 6.37 ***
Lipper General Muni Debt Funds Avg.4 7.50 4.85 5.31 ****
Distributions and Yields1 as of 6/30/03
Taxable Equivalent 30-Day Yield5
Total Distributions 30-Day at Tax Rates of
Paid for Six Months SEC Yield 35% 38.60%
Class A $0.42 3.23% 4.97% 5.26%
Class B $0.40 3.09 4.75 5.03
Class C $0.38 2.81 4.32 4.58
Class Z $0.44 3.58 5.51 5.83
Past performance is not indicative of future
results. Principal value and investment return
will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than
their original cost. 1Source: Prudential
Investments LLC and Lipper Inc. The cumulative
total returns do not take into account
applicable sales charges. If reflected, the
applicable sales charges would reduce the
cumulative total return performance quoted. The
average annual total returns do take into
account applicable sales charges. Without the
distribution and service (12b-1) fee waiver of
0.05% and 0.25% for Class A and Class C shares
respectively, the returns for these classes
would have been lower. The Fund charges a
maximum front-end sales charge of 3% for Class
A shares and a 12b-1 fee of up to 0.30%
annually. In some circumstances, Class A shares
may not be subject to a front-end sales charge,
but may be subject to a 1% contingent deferred
sales charge (CDSC) for the first year. Class B
shares are subject to a declining CDSC of 5%,
4%, 3%, 2%, 1%, and 1% for the first six years
respectively after purchase and a 12b-1 fee of
0.50% annually. Approximately seven years after
purchase, Class B shares will automatically
convert to Class A shares on a quarterly basis.
Class C shares are subject to a front-end sales
charge of 1%, a CDSC of 1% for shares redeemed
within 18 months of purchase, and a 12b-1 fee
of 1% annually. Class Z shares are not subject
to a sales charge or 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. Without waiver of fees and/or
expense subsidization, the Fund's returns would
have been lower, as indicated in parentheses.
2Inception dates: Class A, 1/22/90; Class B,
4/25/80; Class C, 8/1/94; and Class Z 1/22/99.
3The Lehman Brothers Municipal Bond Index is an
unmanaged index of over 39,000 long-term
investment-grade municipal bonds. It gives a
broad look at how long-term investment-grade
municipal bonds have performed. 4The Lipper
General Municipal (Muni) Debt Funds Average
(Lipper Average) represents returns based on an
average return of all funds in the Lipper
General Muni Debt Funds category for the
periods noted. Funds in the Lipper Average
invest primarily in municipal debt
2 Visit our website at www.jennisondryden.com
issues in the top four credit ratings.
Investors cannot invest directly in an index.
The returns for the Lehman Brothers Municipal
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. 5Some investors
may be subject to the federal alternative
minimum tax (AMT) and/or state and local taxes.
Taxable equivalent yields reflect federal taxes
only. ***Lehman Brothers Municipal Bond Index
Closest Month-End to Inception cumulative total
returns as of 6/30/03 are 161.36% for Class A,
548.68% for Class B, 81.66% for Class C, and
29.31% for Class Z. Lehman Brothers Municipal
Bond Index Closest Month-End to Inception
average annual total returns as of 6/30/03 are
7.42% for Class A, 8.41% for Class B, 6.94% for
Class C, and 5.99% for Class Z. ****Lipper
Average Closest Month-End to Inception
cumulative total returns as of 6/30/03 are
139.56% for Class A, 531.67% for Class B,
66.05% for Class C, and 21.70% for Class Z.
Lipper Average Closest Month-End to Inception
average annual total returns as of 6/30/03 are
6.71% for Class A, 8.24% for Class B, 5.84% for
Class C, and 4.54% for Class Z.
Five Largest Issuers expressed as a percentage
of total investments as of 6/30/03
Chicago IL Metro Pier & Expo. Auth. 2.8%
Port Authority NY & NJ 1.9
King County, WA 1.9
OH Water Dev. Auth. Pollution Ctrl. 1.8
San Benito TX Cons, Indpt. Schl. Dist. 1.8
Issuers are subject to change.
Portfolio Composition expressed as a percentage
of net assets as of 6/30/03
Healthcare 14.5%
General Obligation 14.4
Transportation 12.4
Special Tax/Assessment District 8.7
Corporate-Backed IDB & PCR 4.9
Housing 4.6
Lease-Backed Certificate of Participation 4.3
Education 4.1
Power 4.0
Water & Sewer 3.9
Solid Waste/Resource Recovery 3.7
Tobacco 3.7
Other 3.4
Other Municipal 15.1
Cash & Equivalents -1.7
Portfolio Composition is subject to change.
Credit Quality* expressed as a percentage of
net assets as of 6/30/03
Aaa 56.9%
Aa 17.4
A 9.7
Baa 12.7
Ba 0.4
B 0.4
Caa 0.4
Not Rated 3.8
Cash & Equivalents -1.7
*Source: Moody's rating, defaulting to S&P when
not rated. Credit Quality is subject to change.
Dryden National Municipals Fund, Inc. 3
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited)
<Table>
<Caption>
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PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
LONG-TERM INVESTMENTS 99.2%
ALASKA 0.6%
-----------------------------------------------------------------------------------
Alaska St. Hsg. Fin.
Corp. Rev., First Ser.
Veterans Mtge. Prog.,
G.N.M.A., F.N.M.A Aaa 5.875% 12/01/35 $ 1,095 $ 1,113,681
Northern Tobacco
Securitization Corp.
Rev., Asset Bkd. Bonds Baa2 6.50 6/01/31 3,000 2,662,050
---------------
3,775,731
ARIZONA 1.7%
-----------------------------------------------------------------------------------
Arizona St. Mun. Fin.
Proj., C.O.P., Ser. 25,
B.I.G.I.C. Aaa 7.875 8/01/14 2,250 3,089,633
Pima Cnty. Ind. Dev.
Auth. Rev., F.S.A. Aaa 7.25 7/15/10 1,365 1,445,330
Pima Cnty. Uni. Sch.
Dist., G.O., F.G.I.C. Aaa 7.50 7/01/10 3,000(f) 3,867,810
Tucson Cnty., G.O.,
Ser. A Aa2 7.375 7/01/11 1,000 1,296,810
Ser. A Aa2 7.375 7/01/12 1,100 1,450,702
---------------
11,150,285
CALIFORNIA 6.2%
-----------------------------------------------------------------------------------
Anaheim Pub. Fin. Auth.
Lease Rev.,
Ser. 641A, F.S.A.,
R.I.T.E.S.
(cost $2,607,093;
purchased 3/29/00) NR 15.665 9/01/16 2,210(g) 3,774,459
Ser. 641B, F.S.A.,
R.I.T.E.S.
(cost $2,060,354;
purchased 3/29/00) NR 15.665 9/01/24 1,815(g) 2,942,296
Bay Area Toll Auth., Toll
Brdg. Rev., San
Francisco Bay Area, Ser.
D Aa3 5.00 4/01/16 3,705 4,003,512
California Poll. Ctrl.
Fin. Auth. Solid Wste.
Disp. Rev., Keller
Canyon Landfill Co.
Proj., A.M.T. B1 6.875 11/01/27 2,500 2,411,150
California St., G.O. Aaa 5.00 2/01/33 5,500 5,720,770
Central California Joint
Pwrs. Hlth. Fin. Auth.,
C.O.P.,
Cmnty. Hosps. of Central
California Baa2 4.75 2/01/08 1,115 1,177,618
Cmnty. Hosps. of Central
Calfornia Baa2 4.75 2/01/09 1,165 1,227,817
</Table>
See Notes to Financial Statements.
4 Visit our website at www.jennisondryden.com
<Page>
<Table>
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PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Cmnty. Hosps. of Central
Calfornia Baa2 4.75% 2/01/10 $ 1,210 $ 1,269,835
Folsom Cordova Uni. Sch.
Dist. Sch. Facs. Impvt.
Dist. No. 2,
C.A.B.S., Ser. A,
M.B.I.A. Aaa Zero 10/01/20 2,920 1,283,836
C.A.B.S., Ser. A,
M.B.I.A. Aaa Zero 10/01/21 2,980 1,227,224
Foothill / Eastern
Corridor Agcy., Toll Rd.
Rev., Cap. Apprec.,
Ser. A, E.T.M. AAA(d) Zero 1/01/20 8,000 3,770,880
Golden St. Tobacco
Securitization Corp.,
Tobacco Settlement Rev.,
Asset Bkd., Ser. A-5 Baa2 7.875 6/01/42 2,000 2,008,240
Los Angeles Harbor Dept.
Rev., Ser B, A.M.T. Aa3 5.375 11/01/23 2,000 2,066,400
Los Angeles Uni. Sch.
Dist.,
Ser. A, F.G.I.C. Aaa 6.00 7/01/15 1,000 1,235,540
Pittsburg Redev. Agcy.
Tax Alloc., Los Medanos
Cmnty. Dev. Proj.,
A.M.B.A.C. Aaa Zero 8/01/25 2,000 651,420
Santa Margarita Dana
Point Auth. Rev., Impvt.
Dists. 3, 4, Ser. B,
M.B.I.A. Aaa 7.25 8/01/14 2,000 2,694,040
West Contra Costa Sch.
Dist., C.O.P., Rfdg. Baa3 7.125 1/01/24 1,600 1,668,272
---------------
39,133,309
COLORADO 4.8%
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Adams & Arapahoe Cntys.
Joint Sch. Dist. No. 28J
Aurora,
Ser. A, G.O., F.S.A. Aaa 5.25 12/01/20 2,000 2,198,720
Arapahoe Cnty., Cap.
Impvt. Trust Fund, Hwy.
Rev., Ser. E-470 Aaa 7.00 8/31/26 3,000(b) 3,454,650
Arapahoe Cnty., Sch.
Dist.,
No. 005, Cherry Creek Aa1 5.50 12/15/19 1,885 2,097,798
Boulder Cnty. Sales & Use
Tax Rev., Ser. A,
F.G.I.C. AAA(d) 6.00 12/15/17 3,970 4,676,859
Colorado Hsg. Fin. Auth.
Sngl. Fam. Proj.,
Ser. A, A.M.T. Aa2 8.00 6/01/25 595 605,044
Ser. A-2, A.M.T. Aa2 7.25 5/01/27 544 556,234
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 5
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Ser. A-2, A.M.T. Aa2 6.875% 11/01/28 $ 1,200 $ 1,216,704
Ser. B-1, A.M.T. Aa2 7.90 12/01/25 335 337,804
Ser. C-1, A.M.T.,
M.B.I.A. Aaa 7.65 12/01/25 905 930,892
Ser. C-2, A.M.T., F.H.A. Aa2 5.90 8/01/23 2,125 2,259,385
Ser. C-2, A.M.T., F.H.A. Aa2 7.05 4/01/31 2,145 2,243,284
Denver Hlth. & Hosp.
Auth., Hlth. Care Rev.,
Ser. A Baa2 6.00 12/01/31 2,180 2,242,195
E-470 Hwy. Auth. Rev.,
C.A.B.S., Ser. B,
M.B.I.A. Aaa Zero 9/01/28 12,000 2,622,720
Silver Dollar Metro.
Dist., G.O. NR 7.05 12/01/30 5,000 5,128,800
---------------
30,571,089
CONNECTICUT 1.7%
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Connecticut St. Spec. Tax
Oblig. Rev., Trans.
Infrastructure,
Ser. A Aaa 7.125 6/01/10 1,000(b) 1,252,140
Connecticut St.,
Revolving Fd., Ser. A Aaa 5.00 10/01/18 5,500 5,992,360
Connecticut St., G.O.,
Rite-1060 R AAA(d) 8.836 11/15/09 2,855 3,272,344
---------------
10,516,844
DISTRICT OF COLUMBIA 0.9%
-----------------------------------------------------------------------------------
Washington DC Convention
Ctr. Auth. Dedicated Tax
Rev.,
Sr. Lien, A.M.B.A.C. Aaa 5.25 10/01/15 4,940 5,452,476
FLORIDA 6.5%
-----------------------------------------------------------------------------------
Broward Cnty. Res. Recov.
Rev. Rfdg.,
Wheelabrator, Ser. A A3 5.50 12/01/08 9,600 10,771,584
Florida St. Brd. of Ed.,
G.O. Aa2 9.125 6/01/14 1,260 1,794,593
Florida St. Dept.
Environ. Protection
Preservation Rev.,
Rfdg., Ser. A, F.S.A. Aaa 5.00 7/01/07 5,900 6,596,908
Hillsborough Cnty. Ind.
Dev. Auth. Hosp. Rev.,
Tampa Gen. Hosp. Proj.,
Ser. B Baa1 5.25 10/01/28 1,000 972,650
Tampa Gen. Hosp. Proj.,
Ser. B Baa1 5.25 10/01/34 1,000 971,220
</Table>
See Notes to Financial Statements.
6 Visit our website at www.jennisondryden.com
<Page>
<Table>
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PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Jea Wtr. & Swr. Sys.
Rev.,
Ser. C Aa3 5.25% 10/01/37 $ 6,000 $ 6,123,780
Orange Cnty. Hlth. Facs.
Auth. Rev., Adventist
Hlth. Sys. A3 6.375 11/15/20 2,000 2,193,700
Osceola Cnty.
Infrastructure Sales
Surtax,
A.M.B.A.C. Aaa 5.375 10/01/15 2,695 3,073,000
A.M.B.A.C. Aaa 5.375 10/01/16 2,840 3,204,940
Palm Beach Cnty. Solid
Wste. Auth. Rev., Impvt.
Ser. B, A.M.B.A.C. Aaa Zero 10/01/15 8,000 4,767,200
Tallahasse Hlth. Facs.
Rev., Tallahasse Mem.
Hlth. Care Proj. Baa1 6.25 12/01/20 1,000 1,023,260
---------------
41,492,835
GEORGIA 1.6%
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Clayton Cnty., Wtr. &
Swr. Auth. Rev. Aa3 5.00 5/01/18 2,000 2,194,920
Forsyth Cnty. Sch. Dist.
Dev. Rev. Aa2 6.75 7/01/16 500 641,525
Fulton Cnty. Sch. Dist.
Rev. Aa2 6.375 5/01/17 750 955,815
Georgia Mun. Elec. Auth.
Pwr. Rev., Ser. B,
M.B.I.A. Aaa 6.375 1/01/16 5,000 6,317,650
Green Cnty. Dev. Auth.
Ind. Park Rev. NR 6.875 2/01/04 85 87,296
---------------
10,197,206
GUAM 0.5%
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Guam Pwr. Auth. Rev.,
Ser. A AAA(d) 6.625 10/01/14 1,000(b) 1,089,850
Ser. A AAA(d) 6.75 10/01/24 2,000(b) 2,182,800
---------------
3,272,650
HAWAII 0.1%
-----------------------------------------------------------------------------------
Hawaii St. Harbor Cap.
Impvt. Rev., A.M.T.,
F.G.I.C. Aaa 6.25 7/01/15 500 529,240
ILLINOIS 6.9%
Chicago Brd. of Ed.,
C.A.B.S., G.O., Ser.
B-1, F.G.I.C. Aaa Zero 12/01/19 2,000 925,280
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 7
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Sch. Reform, Ser. A,
G.O., A.M.B.A.C. Aaa 5.25% 12/01/30 $ 8,000 $ 8,296,400
Chicago Sngl. Fam. Mtge.
Rev., Ser. A, A.M.T.,
F.N.M.A., G.N.M.A. AAA(d) 7.15 9/01/31 1,415 1,483,543
Cook & Du Page Cntys.,
H.S. Dist. No. 210,
G.O., F.S.A. Aaa Zero 12/01/11 3,035 2,258,647
Gilberts Spec. Svc. Area
No. 9 Spec. Tax, Big
Timber Proj. NR 7.75 3/01/27 2,000 2,179,680
Illinois Edl. Facs. Auth.
Student Hsg. Rev., Edl.
Advancement Fd., Univ.
Ctr. Proj. Baa2 6.00 5/01/22 1,500 1,540,200
Illinois Hlth. Facs.
Auth. Rev., Reg. YCNS,
M.B.I.A. Aaa 10.12(c) 8/15/14 5,000 5,241,000
McHenry & Kane Cntys.
Cmnty. Cosntr. Sch.
Dist. No. 158, G.O.,
C.A.B.S.,
F.G.I.C. Aaa Zero 1/01/17 4,480 2,433,894
F.G.I.C. Aaa Zero 1/01/18 3,770 1,927,375
Metro. Pier & Expo. Auth.
Dedicated St. Tax Rev.,
McCormick Pl. Conv.,
E.T.M. Aaa 7.00 7/01/26 12,910 17,665,915
---------------
43,951,934
INDIANA 0.3%
-----------------------------------------------------------------------------------
Gary Mtge. Rev.,
Lakeshore Dunes Apts.,
Ser. A, G.N.M.A. AAA(d) 6.00 8/20/34 2,000 2,090,120
KANSAS 1.0%
-----------------------------------------------------------------------------------
Kansas St. Dev. Fin.
Auth. Rev., Wtr. Poll.
Ctrl. Aa1 6.00 11/01/14 3,000(b) 3,646,950
Univ. Kansas Hosp. Auth.,
Hlth. Facs. Rev.,
Ku Hlth. Sys. A-(d) 5.50 9/01/22 1,150 1,206,718
Ku Hlth. Sys. A-(d) 5.625 9/01/27 1,350 1,420,483
---------------
6,274,151
</Table>
See Notes to Financial Statements.
8 Visit our website at www.jennisondryden.com
<Page>
<Table>
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PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
KENTUCKY 1.0%
-----------------------------------------------------------------------------------
Henderson Cnty. Solid
Wste. Disp. Rev.,
Macmillan Bloedel Proj.,
A.M.T. Baa2 7.00% 3/01/25 $ 6,000 $ 6,269,820
LOUISIANA 1.1%
-----------------------------------------------------------------------------------
Orleans Parish Sch. Brd.,
E.T.M., M.B.I.A. Aaa 8.90 2/01/07 5,780 7,195,638
MARYLAND 1.8%
-----------------------------------------------------------------------------------
Baltimore, Econ. Dev.
Lease Rev., Armistead
Partnership, Ser. A A(d) 7.00 8/01/11 1,000 1,021,670
Maryland St. Hlth. &
Higher Edl. Facs. Auth.
Rev., Univ. Maryland
Med. Sys. Baa1 6.75 7/01/30 5,000 5,578,400
Northeast Wste. Disp.
Auth. Rev.,
Baltimore City Sludge
Corp. Proj. NR 7.25 7/01/07 2,625 2,714,906
Montgomery Cnty. Res.
Rec. Proj., Ser. A A2 6.00 7/01/07 1,000 1,115,560
Takoma Park Hosp. Facs.
Rev., Washington
Adventist Hosp., F.S.A. Aaa 6.50 9/01/12 1,000 1,237,330
---------------
11,667,866
MASSACHUSETTS 4.3%
-----------------------------------------------------------------------------------
Boston Ind. Dev. Fin.
Auth. Swr. Fac. Rev.,
Harbor Elec. Engy. Co.
Proj., A.M.T. Aa3 7.375 5/15/15 1,395 1,400,482
Mass. St. Ser. C, G. O.,
F.G.I.C. Aaa 6.00 8/01/09 1,250 1,483,525
Mass. St. Coll. Bldg.
Auth. Proj. Rev., Ser.
A, E.T.M., M.B.I.A. Aaa Zero 5/01/22 2,250 939,623
Mass. St. Dev. Fin. Agcy.
Rev., Concord Assabet
Fam. Svcs. Caa3 6.00 11/01/28 640 458,259
Mass. St. Hlth. & Edl.
Facs. Auth. Rev.,
Beth Israel Hosp.,
A.M.B.A.C. Aaa 10.732(c) 7/01/25 1,500 1,538,730
Caritas Christi Oblig.,
Ser. B Baa3 6.75 7/01/16 3,590 3,749,145
Caritas Christi Oblig.,
Ser. B Baa3 6.25 7/01/22 1,750 1,674,732
Faulkner Hosp., Ser. C Baa1 6.00 7/01/23 1,500(b) 1,530,195
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 9
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Harvard Univ., Ser. W Aaa 6.00% 7/01/35 $ 500(b) $ 610,035
Simmons Coll., Ser. D.,
A.M.B.A.C. Aaa 6.05 10/01/20 1,000(b) 1,228,760
Univ. Mass. Pro., Ser.
A, F.G.I.C. Aaa 5.875 10/01/29 500 569,915
Valley Reg. Hlth. Sys.,
Ser. C AAA(d) 7.00 7/01/10 825 1,020,286
Winchester Hosp., Ser. D AAA(d) 5.75 7/01/24 1,000 1,050,880
Youville Hosp., Ser. B,
F.H.A. Aa2 6.00 2/15/34 4,195(b) 4,411,714
Mass. St. Ind. Fin. Agcy.
Bradford Coll. NR 5.625 11/01/28 1,000(i) 280,000
Mass. St. Wtr. Poll.,
Abatement Trust Rev.,
Ser. A Aaa 6.375 2/01/15 80 83,852
Pool Program Bonds, Ser.
6 Aaa 5.625 8/01/17 2,870 3,268,528
Mass. St. Wtr. Res. Auth.
Rev.,
Ser. B, M.B.I.A. Aaa 6.25 12/01/11 500 611,015
Ser. D, M.B.I.A. Aaa 6.00 8/01/13 500 612,595
Rail Connections Inc.
Rev., Rte. 128, Ser. B,
A.C.A. Aaa Zero 7/01/21 2,500(b) 988,125
---------------
27,510,396
MICHIGAN 2.2%
-----------------------------------------------------------------------------------
Detroit Swge. Disp. Rev.,
Inflos, F.G.I.C. Aaa 10.052(c) 7/01/23 800(b) 835,424
Inflos, F.G.I.C. Aaa 10.052(c) 7/01/23 200 208,856
Dickinson Cnty. Mem.
Hosp. Sys. Rev. Baa3 8.00 11/01/14 1,000(b) 1,108,230
Harper Creek Cmnty. Sch.
Dist., G.O. Aaa 5.50 5/01/17 1,500 1,686,150
Michigan St. Bldg. Auth.
Rev., Rfdg. Facs. Prog.,
Ser III Aa1 5.375 10/15/22 3,750 4,100,962
Michigan St. Hosp. Fin.
Auth. Rev.,
Genesys Hlth. Sys., Ser.
A AAA(d) 8.125 10/01/21 1,000(b) 1,170,310
Genesys Hlth. Sys., Ser.
A AAA(d) 7.50 10/01/27 500(b) 568,710
Okemos Pub. Sch. Dist.,
M.B.I.A. Aaa Zero 5/01/12 1,100 797,687
M.B.I.A. Aaa Zero 5/01/13 1,000 688,550
Sturgis Pub. Sch. Dist.,
Sch. Bldg. & Site, G.O. Aaa 5.50 5/01/14 670 759,519
Wyandotte Elec. Rev.,
G.O., M.B.I.A. Aaa 6.25 10/01/08 2,000 2,284,460
---------------
14,208,858
</Table>
See Notes to Financial Statements.
10 Visit our website at www.jennisondryden.com
<Page>
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
MINNESOTA 2.6%
-----------------------------------------------------------------------------------
Minneapolis Spec. Sch.
Dist.
No. 1, C.O.P., Ser A,
M.B.I.A. Aaa 5.90% 2/01/17 $ 5,000(b) $ 5,565,400
Minnesota Agric. & Econ.
Dev. Brd. Rev., Fairview
Hlth. Care Sys., Ser. A A2 6.375 11/15/22 5,000 5,483,600
Minnesota Hsg. Fin. Agcy.
Rev., Sngl. Fam. Mtge.,
Ser. I, A.M.T. Aa1 5.80 1/01/19 5,400 5,705,964
---------------
16,754,964
MISSOURI 0.8%
-----------------------------------------------------------------------------------
Missouri St. Hsg. Dev.
Comm. Mtge. Rev., Sngl.
Fam. Homeowner Ln., Ser.
A, A.M.T., G.N.M.A. AAA(d) 7.20 9/01/26 1,375 1,399,929
St. Louis Arpt. Rev.,
Arpt. Dev. Prog., Ser.
A, M.B.I.A. Aaa 5.625 7/01/19 3,500 3,949,995
---------------
5,349,924
NEW HAMPSHIRE 1.1%
-----------------------------------------------------------------------------------
Manchester Hsg. & Redev.
Auth. Rev., C.A.B.S.,
Ser. B, A.C.A. Baa3 Zero 1/01/24 4,740 1,402,140
Ser. B, A.C.A. Baa3 Zero 1/01/27 4,140 1,010,781
Ser. B, A.C.A. Baa3 Zero 1/01/30 4,640 934,171
New Hampshire Higher Ed.
& Hlth. Facs. Auth.
Rev., New Hampshire
Coll. BBB-(d) 6.30 1/01/16 500 513,765
New Hampshire Hlth. & Ed.
Facs. Auth. Rev., Coll.
Issue BBB-(d) 7.50 1/01/31 3,000 3,286,020
---------------
7,146,877
NEW JERSEY 3.6%
-----------------------------------------------------------------------------------
New Jersey Economic Dev
Auth Aaa 5.00 4/01/28 4,000 4,200,720
New Jersey Hlth. Care
Facs. Fin. Auth. Rev.
Rfdg.,
Atlantic City Med. Ctr. A3 6.25 7/01/17 2,175 2,432,020
St. Peter's Univ. Hosp.,
Ser. A Baa1 6.875 7/01/30 2,000 2,161,060
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 11
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
New Jersey Hlth. Care
Facs. Fin. Auth. Rev.,
Raritan Bay Med. Ctr.
Issue NR 7.25% 7/01/27 $ 2,000 $ 2,084,120
South Jersey Hosp. Baa1 6.00 7/01/26 1,565 1,630,119
South Jersey Hosp. Baa1 6.00 7/01/32 1,000 1,038,000
New Jersey St. Tpke.
Auth. Rev., G.O., Ser.
A, A.M.B.A.C. Aaa 5.00 1/01/30 5,000 5,261,350
Tobacco Settlement Fin.
Corp., Asset Bkd. Baa2 6.00 6/01/37 4,900 4,028,290
---------------
22,835,679
NEW MEXICO 1.0%
-----------------------------------------------------------------------------------
New Mexico Mtge. Fin.
Auth. Rev., Sngl. Fam.
Mtge., Ser. C-2,
G.N.M.A., F.N.M.A.,
A.M.T. AAA(d) 6.15 3/01/32 3,880 4,091,654
New Mexico St. Hosp.
Equipment Ln., Council
Hosp. Rev., Mem. Med.
Ctr. Inc. Proj. Ba2 5.50 6/01/28 3,000 2,312,610
---------------
6,404,264
NEW YORK 9.9%
-----------------------------------------------------------------------------------
Metro. Trans. Auth. Rev.,
Ser. A, F.G.I.C. Aaa 5.00 11/15/17 3,395 3,720,105
New York City Mun. Wtr.
Fin. Auth., Wtr. & Swr.
Sys. Rev., Reg. IRS Aaa 9.22(c) 6/15/09 5,500 6,017,110
New York City
Transitional Fin. Auth.
Rev., Ser. C Aa2 5.50 2/15/16 2,500 2,823,675
New York City
Transitional Future Tax,
Ser. A Aa2 5.75 2/15/17 5,000 5,697,000
New York City, G.O.,
Ser. A A2 7.75 8/15/04 15 15,113
Ser. B A2 8.25 6/01/06 1,500 1,751,070
Ser. B A2 7.25 8/15/07 3,500 4,131,050
Ser. D A2 8.00 8/01/03 70 70,375
Ser. D A2 8.00 8/01/04 30 30,160
Ser. D A2 7.65 2/01/07 45 45,554
New York St. Dorm. Auth.
Rev.,
Mem. Sloan-Kettering
Ctr.,
Ser. 1, M.B.I.A. Aaa 5.00 7/01/21 2,700 2,863,620
</Table>
See Notes to Financial Statements.
12 Visit our website at www.jennisondryden.com
<Page>
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Mem. Sloan-Kettering
Ctr.,
Ser. 1, M.B.I.A. Aaa 5.00% 7/01/22 $ 1,100 $ 1,160,236
Mem. Sloan-Kettering
Ctr.,
Ser. 1, M.B.I.A. Aaa 5.00 7/01/23 1,800 1,888,128
Mem. Sloan-Kettering
Ctr.,
Ser. 1, M.B.I.A. Aaa 5.00 7/01/24 1,080 1,130,198
New York St. Environ.
Facs. Corp., Poll. Crtl.
Rev., Ser. C Aaa 5.80 1/15/14 1,280 1,415,604
New York St. Urban Dev.
Corp. Rev. Rfdg., Corr.
Facs., F.S.A. Aaa 6.50 1/01/09 3,000 3,586,080
Port Authority New York &
New Jersey,
Ser. 122, A.M.T. A1 5.50 7/15/11 2,000 2,193,260
Ser. 127, A.M.T. Aaa 5.50 12/15/15 8,790 9,885,498
Tobacco Settlement Fin.
Corp.
Asset Bkd., Ser. A-1 AA-(d) 5.50 6/01/18 3,000 3,235,200
Asset Bkd., Ser. A-1 AA-(d) 5.50 6/01/19 5,000 5,392,200
Triborough Bridge &
Tunnel. Auth. Rev., Sub.
Ser. A, M.B.I.A. Aaa 5.25 11/15/30 5,200 5,600,660
---------------
62,651,896
NORTH CAROLINA 2.3%
-----------------------------------------------------------------------------------
Charlotte Arpt. Rev.,
Ser. B, A.M.T., M.B.I.A. Aaa 6.00 7/01/24 1,000 1,105,580
Charlotte Storm Wtr. Fee
Rev. Aa2 6.00 6/01/25 500(b) 606,870
No. Carolina Eastern Mun.
Pwr. Agcy.,
Pwr. Sys. Rev.,
A.M.B.A.C. Aaa 6.00 1/01/18 1,000 1,220,950
Pwr. Sys. Rev., Ser. A Aaa 6.00 1/01/26 650(b) 798,518
Pwr. Sys. Rev., Ser. A,
E.T.M. Aaa 6.50 1/01/18 2,635 3,405,474
Pwr. Sys. Rev., Ser. A,
E.T.M. Baa3 6.40 1/01/21 1,000 1,268,570
Pwr. Sys. Rev., Ser. A,
M.B.I.A. Aaa 6.50 1/01/18 1,005 1,280,742
No. Carolina Hsg. Fin.
Agcy., Home Ownership,
Ser. 6 A, A.M.T. Aa2 6.20 1/01/29 960 1,012,694
No. Carolina Mun. Pwr.
Agcy., No. 1 Catawba
Elec. Rev., M.B.I.A. Aaa 6.00 1/01/10 1,250 1,478,963
Piedmont Triad Arpt.
Auth. Rev., Ser. B,
A.M.T., F.S.A. Aaa 6.00 7/01/21 1,000 1,103,950
Pitt Cnty. Rev., Mem.
Hosp., E.T.M. Aaa 5.25 12/01/21 1,000 1,089,250
---------------
14,371,561
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 13
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
NORTH DAKOTA 1.8%
-----------------------------------------------------------------------------------
Mercer Cnty. Poll. Ctrl.
Rev., Antelope Valley
Station, A.M.B.A.C. Aaa 7.20% 6/30/13 $ 9,000 $ 11,374,830
OHIO 10.5%
-----------------------------------------------------------------------------------
Akron, G.O. A1 10.50 12/01/04 200 225,904
Brecksville Broadview
Heights City Sch. Dist.,
F.G.I.C. Aaa 6.50 12/01/16 1,000 1,169,230
Butler Cnty. Trans.
Impvt. Dist., Ser. A,
F.S.A. Aaa 5.125 4/01/17 8,950 9,671,280
Cleveland Arpt. Sys.
Rev., Ser. A, A.M.T,
F.G.I.C. Aaa 6.25 1/01/20 3,500 3,637,025
Cleveland,
G.O., M.B.I.A. Aaa 5.75 8/01/14 1,000 1,213,450
G.O., M.B.I.A. Aaa 5.75 8/01/15 1,000 1,214,650
Columbus Citation Hsg.
Dev. Corp., Mtge. Rev.,
F.H.A. AA(d) 7.625 1/01/22 1,735(b) 2,306,405
Cuyahoga Cnty. Hosp.
Facs. Rev., Canton Inc.
Proj. Baa2 7.50 1/01/30 5,000 5,576,550
Cuyahoga Cnty. Hosp.
Rev., Meridia Hlth. Sys. A1 6.25 8/15/24 1,500(b) 1,685,640
Cuyahoga Cnty. Rev.,
Rfdg.,
Ser. A A1 6.00 1/01/32 2,500 2,692,850
Dayton, G.O., M.B.I.A. Aaa 7.00 12/01/07 480 580,502
Dover Mun. Elec. Sys.
Rev., F.G.I.C. Aaa 5.95 12/01/14 1,000 1,107,880
Greene Cnty. Wtr. Sys.
Rev., Ser. A, F.G.I.C. Aaa 6.125 12/01/21 1,000 1,161,800
Hamilton Cnty. Sales Tax
Sub. C.A.B.S., Ser. B,
A.M.B.A.C. Aaa Zero 12/01/20 2,000 882,840
Hilliard Sch. Dist.
C.A.B.S. Sch. Impvt.,
F.G.I.C. Aaa Zero 12/01/18 1,720 879,178
F.G.I.C. Aaa Zero 12/01/19 1,720 828,318
Lorain Cnty. Hosp. Rev.,
Rfdg. Mtge., Ser. C BBB+(d) 6.875 6/01/22 2,000 2,083,040
Lucas Cnty. Hlth. Care
Fac. Rev.,
Ref. Presbyterian Svcs.,
Ser. A NR 6.625 7/01/14 1,750 1,861,352
</Table>
See Notes to Financial Statements.
14 Visit our website at www.jennisondryden.com
<Page>
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Rfdg. Impvt., Sunset
Ret.,
Ser. A NR 6.625% 8/15/30 $ 1,000 $ 1,065,420
Montgomery Cnty. Swr.
Sys. Rev., Greater
Moraine, Beaver Creek,
F.G.I.C. Aaa Zero 9/01/05 1,000 967,680
Mount Vernon City Sch.
Dist., G.O., F.G.I.C. Aaa 7.50 12/01/14 500 547,235
Newark, Ltd. Tax, G.O.,
A.M.B.A.C. Aaa Zero 12/01/06 805 756,797
Ohio Hsg. Fin. Agcy.
Mtge. Rev.,
Res. Con. Opt., Ser.
C-1, A.M.T., G.N.M.A. Aaa 6.05 3/01/32 695 737,041
Ser. A-1, A.M.T.,
G.N.M.A. Aaa 6.35 9/01/31 745 795,809
Ohio St. Bldg. Auth., St.
Corr. Facs., Ser. A Aa2 6.00 10/01/08 615 725,626
Ohio St. Higher Cap.
Facs.,
Ser. II-A Aa2 5.00 6/01/08 6,500 7,325,630
Ohio St. Higher Edl. Fac.
Comn. Rev., Case Western
Resv. Univ., Ser. B Aa2 6.50 10/01/20 750 970,995
Ohio St. Solid Wste.
Rev., CSC Ltd. Proj.,
A.M.T. NR 8.50 8/01/22 500(h) 0
Ohio St. Univ. Gen.
Rcpts.,
Ser. A Aa2 6.00 12/01/16 1,000 1,183,180
Ohio St. Wtr. Dev. Auth.
Poll. Ctrl. Facs. Rev.,
Buckeye Pwr. Inc. Proj.,
A.M.B.A.C. Aaa 7.80 11/01/14 10,435 11,513,040
Richland Cnty Hosp. Facs.
Rev., Medcentral Hlth.
Sys., Ser. B A-(d) 6.375 11/15/22 1,000 1,071,710
---------------
66,438,057
OKLAHOMA 2.8%
-----------------------------------------------------------------------------------
Oklahoma St. Tpke. Auth.
Tpke. Rev., Second Sr.,
Ser. A, A.M.B.A.C. Aaa 5.25 1/01/17 10,000 11,137,400
Ser. B, F.G.I.C. Aaa 5.00 1/01/16 5,900 6,427,460
---------------
17,564,860
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 15
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
PENNSYLVANIA 1.5%
-----------------------------------------------------------------------------------
Carbon Cnty. Ind. Dev.
Auth. Rev., Panther
Creek Partners Proj.,
A.M.T. BBB-(d) 6.65% 5/01/10 $ 1,920 $ 2,057,299
Clarion Cnty. Hosp. Auth.
Rev., Clarion Hosp.
Proj. BBB-(d) 5.60 7/01/10 685 682,452
Philadelphia Hosp. &
Higher Edl. Facs. Auth.
Rev., Chestnut Hill
Hosp. Baa2 6.50 11/15/22 2,685 2,691,900
Reading Sch. Dist., G.O.,
Ser. B, F.G.I.C. AAA(d) Zero 1/15/27 6,000 1,790,160
Westmoreland Cnty. Ind.
Dev. Auth. Rev., Valley
Landfill Proj. BBB(d) 5.10 5/01/18 2,000 2,096,940
---------------
9,318,751
PUERTO RICO 2.0%
-----------------------------------------------------------------------------------
Puerto Rico Comnwlth.,
G.O., F.G.I.C. Aaa 5.50 7/01/13 5,000 5,968,300
PA625, R.I.T.E.S.,
A.M.B.A.C. NR 12.806 7/01/10 500(g) 765,400
PA642B, R.I.T.E.S.,
M.B.I.A. NR 10.326 7/01/12 1,000(g) 1,408,340
Puerto Rico Comnwlth.,
Hwy. & Trans. Auth.
Rev., Pub. Impvt.,
M.B.I.A. Aaa Zero 7/01/19 2,000 999,800
Puerto Rico Comwlth. Hwy.
& Trans. Auth. Trans.
Rev.,
Ser. G, F.G.I.C. Aaa 5.25 7/01/18 2,250 2,521,373
Ser. G, F.G.I.C. Aaa 5.00 7/01/22 1,000 1,068,160
Puerto Rico Pub. Bldgs.
Auth., Gtd. Pub. Ed. &
Hlth. Facs. Rev., Ser.
J, C.A.B.S., E.T.M. Baa1 Zero 7/01/06 275 261,995
---------------
12,993,368
RHODE ISLAND 0.3%
-----------------------------------------------------------------------------------
Tobacco Settlement Fin.
Corp., Asset Bkd., Ser.
A Baa2 6.125 6/01/32 2,000 1,717,360
SOUTH CAROLINA 2.8%
-----------------------------------------------------------------------------------
Berkeley Cnty. Wtr. &
Swr. Rev. Sys.,
M.B.I.A. Aaa 5.00 6/01/14 1,250 1,408,200
M.B.I.A. Aaa 5.25 6/01/16 1,000 1,123,270
</Table>
See Notes to Financial Statements.
16 Visit our website at www.jennisondryden.com
<Page>
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Charleston Waterworks &
Swr. Rev., E.T.M. Aaa 10.375% 1/01/10 $ 6,755 $ 8,763,396
Greenville Cnty. Sch.
Dist. Installment Pur.
Ref., Bldg. Equity
Sooner Tomorrow A1 5.875 12/01/16 5,500 6,242,995
---------------
17,537,861
TENNESSEE 1.2%
-----------------------------------------------------------------------------------
Bristol Hlth. & Edl. Fac.
Rev., Bristol Mem.
Hosp., F.G.I.C. Aaa 6.75 9/01/10 5,000(f) 6,086,950
Shelby Cnty. Hlth. Edl. &
Hsg. Fac. Brd. Hosp.
Rev., Methodist Hlth.
Care Baa1 6.50 9/01/26 1,500 1,652,145
---------------
7,739,095
TEXAS 5.6%
-----------------------------------------------------------------------------------
Brazos River Auth. Rev.,
Houston Inds. Inc. Proj.
B Aaa 5.125 11/01/20 3,500 3,695,615
Dallas Ft. Worth, Reg.
Arpt. Rev., F.G.I.C.,
Ser. A Aaa 7.375 11/01/08 3,500 3,747,030
Ser. A Aaa 7.375 11/01/09 3,500 3,747,030
Harris Cnty. Ind. Dev.
Corp. Arpt. Facs. Rev.,
Continental Airlines,
Inc. Proj. Caa2 5.375 7/01/19 2,795 1,856,187
Panhandle Reg. Hsg. Fin.
Corp. Rev., Multi-Family
Hsg., Ser. A A3 6.75 3/01/31 3,000 3,082,740
San Benito Cons. Indpt.
Sch. Dist. Aaa 6.00 2/15/25 10,000 11,485,300
San Patricio Mun. Wtr.
Dist., F.S.A. Aaa 5.20 7/10/28 4,000 4,155,440
Texas St. Pub. Fin. Auth.
Rev., Southern Univ.
Fin. Sys., M.B.I.A. Aaa 5.50 11/01/18 2,240 2,512,698
Texas St. Tpke. Auth.
Cent. Tpke. Sys. Rev.,
First Tier, Ser. A,
C.A.B.S., A.M.B.A.C. Aaa Zero 8/15/24 3,275 1,118,674
---------------
35,400,714
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 17
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
U.S. VIRGIN ISLANDS 0.3%
-----------------------------------------------------------------------------------
Virgin Islands Pub. Fin.
Auth. Rev., Gross
Rcpts., Tax Ln. Note,
Ser. A BBB-(d) 6.50% 10/01/24 $ 1,500 $ 1,721,715
VIRGINIA 0.8%
-----------------------------------------------------------------------------------
Henrico Cnty. Econ. Dev.
Auth. Rev., Bon Secours
Hlth. Sys. Inc., Ser. A A3 5.60 11/15/30 2,500 2,618,650
Virginia Coll. Bldg.
Auth. Edl. Fasc. Rev.,
21st Century Coll. Prog. Aa1 5.25 8/01/16 2,000 2,213,940
---------------
4,832,590
WASHINGTON 3.7%
-----------------------------------------------------------------------------------
King Cnty., Ser. B Aa1 5.85 12/01/13 10,000(b) 11,847,300
Washington St., Ser. B Aa1 6.00 1/01/25 10,000 11,423,200
---------------
23,270,500
WEST VIRGINIA 0.4%
-----------------------------------------------------------------------------------
West Virginia St. Hosp.
Fin. Auth., Oak Hill
Hosp. Rev., Ser. B A2 6.75 9/01/30 2,000(b) 2,529,200
WISCONSIN 1.0%
-----------------------------------------------------------------------------------
Badger Tobacco Asset
Securitization Corp.,
Asset Bkd. Baa2 6.375 6/01/32 5,000 4,367,800
Wisconsin St. Hlth. &
Edl. Facs. Auth. Rev.,
Marshfield Clinic, Ser.
B BBB+(d) 6.00 2/15/25 2,000 2,047,120
---------------
6,414,920
---------------
Total long-term
investments
(cost $585,331,583) 629,629,434
---------------
</Table>
See Notes to Financial Statements.
18 Visit our website at www.jennisondryden.com
<Page>
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
SHORT-TERM INVESTMENTS 1.5%
ALABAMA 0.3%
-----------------------------------------------------------------------------------
Mobile Ind. Dev. Brd.
Rev., Alabama Pwr. Co.
Barry Plant Proj., Ser.
B, A.M.T., F.R.D.D. VMIG1 1.03% 7/01/03 $ 2,000 $ 2,000,000
INDIANA 0.1%
-----------------------------------------------------------------------------------
Indiana St., Dev. Fin.
Auth. Ind. Rev., Rep.
Svcs. Inc. Proj.,
A.M.T., F.R.D.D. VMIG1 1.05 7/01/03 500 500,000
IOWA 0.2%
-----------------------------------------------------------------------------------
Iowa Higher Ed. Ln. Auth.
Rev., Private Coll. Des
Moines, F.R.D.D. VMIG1 1.05 7/01/03 1,000 1,000,000
NEVADA 0.2%
-----------------------------------------------------------------------------------
Clark Cnty. Arpt. Rev.,
Ser. A, A.M.T.,
F.G.I.C., F.R.D.D. VMIG1 1.06 7/01/03 1,500 1,500,000
OREGON 0.3%
-----------------------------------------------------------------------------------
Oregon St. Econ. Dev.
Rev.,
A.M.T., F.R.D.D. VMIG1 1.05 7/01/03 1,800 1,800,000
Spec. Newsprint Co.
Proj., Ser. 203, A.M.T.,
F.R.D.D. VMIG1 1.05 7/01/03 200 200,000
---------------
2,000,000
TENNESSEE 0.0%
-----------------------------------------------------------------------------------
Montgomery Cnty. Pub.
Bldg. Auth. VMIG1 1.00 7/01/03 40 40,000
TEXAS 0.2%
-----------------------------------------------------------------------------------
Dallas Ft. Worth, Reg.
Arpt. Rev., Mun. Secs.
Trust Rcpts. SGA 49,
A.M.T., M.B.I.A.,
F.R.D.D. A-1+(d) 1.05 7/01/03 1,000 1,000,000
WISCONSIN 0.2%
-----------------------------------------------------------------------------------
Wisconsin St. Hlth. &
Edl. Facs. Auth. Rev.,
Gundersen Lutheran, Ser.
B, F.R.D.D. A-1+(d) 1.05 7/01/03 1,400 1,400,000
---------------
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 19
<Page>
Portfolio of Investments
as of June 30, 2003 (Unaudited) Cont'd.
<Table>
-----------------------------------------------------------------------------------
PRINCIPAL
MOODY'S INTEREST MATURITY AMOUNT
DESCRIPTION (A) RATING RATE DATE (000) VALUE (NOTE 1)
Total short-term
investments
(cost $9,831,026) $ 9,440,000
---------------
TOTAL INVESTMENTS 100.7%
(COST $595,162,609; NOTE
5) 639,069,434
Liabilities in excess of
other assets (0.7)% (4,299,311)
---------------
NET ASSETS 100% $ 634,770,123
---------------
---------------
</Table>
- ------------------------------
(a) The following abbreviations are used in portfolio descriptions:
A.C.A.--American Capital Access.
A.M.B.A.C.--American Municipal Bond Assurance Corporation.
A.M.T.--Alternative Minimum Tax.
B.I.G.I.C.--Bond Investors Guaranty Insurance Company.
C.A.B.S.--Capital Appreciation Bonds.
C.O.P.--Certificate of Participation.
E.T.M.--Escrowed to Maturity.
F.G.I.C.--Financial Guaranty Insurance Company.
F.H.A.--Federal Housing Administration.
F.N.M.A.--Federal National Mortgage Association.
F.R.D.D.--Floating Rate (Daily) Demand Note(e).
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.
R.I.T.E.S.--Residual Interest Tax Exempt Securities Receipts.
<Table>
(b) Prerefunded issues are secured by escrowed cash and/or direct U.S. guaranteed
obligations.
(c) Inverse floating rate bond. The coupon is inversely indexed to a floating
interest rate. The rate shown is the rate at period end.
(d) Standard & Poor's rating.
(e) For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the security
can be redeemed at par or the next date on which the rate of interest is
adjusted.
(f) All or portion of security segregated as collateral for financial futures
contracts.
(g) Private placement restricted as to resale and does not have a readily available
market; the aggregate cost of such securities is $6,348,262. The aggregate value
of $8,890,495 is approximately 1.4% of net assets.
(h) Represent issuer in default on interest payments; non-income producing security.
(i) Fair valued security.
</Table>
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
See Notes to Financial Statements.
20 Visit our website at www.jennisondryden.com
<Page>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<Page>
Statement of Assets and Liabilities
as of June 30, 2003 (Unaudited)
<Table>
ASSETS
-----------------------------------------------------------------------------------
Investments, at value (cost $595,162,609) $639,069,434
Interest receivable 9,733,145
Receivable for investments sold 8,906,658
Receivable for Fund shares sold 53,248
Due from broker-variation margin 29,171
Prepaid expenses 5,613
------------
TOTAL ASSETS 657,797,269
------------
LIABILITIES
-----------------------------------------------------------------------------------
Payable for investments purchased 21,211,407
Payable for Fund shares reacquired 611,578
Dividends payable 371,207
Management fee payable 253,845
Payable for custodian 245,036
Distribution fee payable 143,561
Accrued expenses 150,594
Deferred Director's fees 39,918
------------
TOTAL LIABILITIES 23,027,146
------------
NET ASSETS $634,770,123
------------
------------
-----------------------------------------------------------------------------------
Net assets were comprised of:
Common stock, at par $ 399,236
Paid-in capital in excess of par 581,324,233
------------
581,723,469
Undistributed net investment income 34,401
Accumulated net realized gain on investments 9,047,593
Net unrealized appreciation on investments 43,964,660
------------
NET ASSETS, JUNE 30, 2003 $634,770,123
------------
------------
</Table>
See Notes to Financial Statements.
22 Visit our website at www.jennisondryden.com
<Page>
<Table>
CLASS A
-----------------------------------------------------------------------------------
Net asset value and redemption price per share
($578,375,765 / 36,384,328 shares of common stock issued and outstanding) $15.90
Maximum sales charge (3% of offering price) .49
------
Maximum offering price to public $16.39
------
------
CLASS B
-----------------------------------------------------------------------------------
Net asset value, offering price and redemption price per share
($45,456,910 / 2,852,018 shares of common stock issued and outstanding) $15.94
------
------
CLASS C
-----------------------------------------------------------------------------------
Net asset value and redemption price per share
($6,054,451 / 379,846 shares of common stock issued and outstanding) $15.94
Sales charge (1% of offering price) .16
------
Offering price to public $16.10
------
------
CLASS Z
-----------------------------------------------------------------------------------
Net asset value, offering price and redemption price per share
($4,882,997 / 307,367 shares of common stock issued and outstanding) $15.89
------
------
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 23
<Page>
Statement of Operations
Six Months Ended June 30, 2003 (Unaudited)
<Table>
NET INVESTMENT INCOME
-----------------------------------------------------------------------------------
Income
Interest $16,533,497
-----------------
Expenses
Management fee 1,529,709
Distribution fee--Class A 726,248
Distribution fee--Class B 116,908
Distribution fee--Class C 23,092
Transfer agent's fees and expenses 192,000
Custodian's fees and expenses 72,000
Reports to shareholders 66,000
Registration fees 26,000
Legal fees and expenses 22,000
Audit fee 16,000
Directors' fees 10,000
Miscellaneous 25,068
-----------------
TOTAL EXPENSES 2,825,025
Less: Custodian fee credit (1,595)
-----------------
NET EXPENSES 2,823,430
-----------------
Net investment income 13,710,067
-----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
-----------------------------------------------------------------------------------
Net realized gain (loss) on:
Investment transactions 10,055,546
Financial futures contracts (1,770,825)
-----------------
8,284,721
-----------------
Net change in unrealized appreciation (depreciation) on:
Investments (2,270,514)
Financial futures contracts 367,123
-----------------
(1,903,391)
-----------------
Net gain on investment transactions 6,381,330
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,091,397
-----------------
-----------------
</Table>
See Notes to Financial Statements.
24 Visit our website at www.jennisondryden.com
<Page>
Statement of Changes in Net Assets
For the Six Months and Year Ended Periods (Unaudited)
<Table>
<Caption>
-----------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2003 DECEMBER 31, 2002
INCREASE (DECREASE) IN NET ASSETS
-----------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 13,710,067 $ 29,893,722
Net realized gain on investment transactions 8,284,721 7,176,991
Net change in unrealized appreciation
(depreciation) on investments (1,903,391) 19,476,901
----------------- -----------------
Net increase in net assets resulting from
operations 20,091,397 56,547,614
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS (NOTE 1)
Dividends from net investment income
Class A (12,505,365) (27,224,834)
Class B (947,967) (2,166,302)
Class C (117,254) (237,278)
Class Z (105,080) (162,257)
----------------- -----------------
(13,675,666) (29,790,671)
----------------- -----------------
Distributions from net realized capital gains
Class A (3,021,882) (5,761,473)
Class B (243,553) (485,306)
Class C (31,849) (56,273)
Class Z (26,103) (36,921)
----------------- -----------------
(3,323,387) (6,339,973)
----------------- -----------------
FUND SHARE TRANSACTIONS (NET OF SHARE
CONVERSIONS)
(NOTE 6)
Net proceeds from shares sold 20,080,420 69,671,442
Net asset value of shares issued in
reinvestment of dividends and distributions 10,587,119 22,347,412
Cost of shares reacquired (52,965,125) (93,874,252)
----------------- -----------------
Decrease in net assets from Fund share
transactions (22,297,586) (1,855,398)
----------------- -----------------
Total increase (decrease) (19,205,242) 18,561,572
NET ASSETS
-----------------------------------------------------------------------------------
Beginning of period 653,975,365 635,413,793
----------------- -----------------
End of period(a) $ 634,770,123 $ 653,975,365
----------------- -----------------
----------------- -----------------
(a) Includes undistributed net investment
income $ 34,401 $ --
----------------- -----------------
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 25
<Page>
Notes to Financial Statements
(Unaudited)
Dryden National Municipals Fund, Inc. (the 'Fund'), formerly known as Prudential
National Municipals Fund, Inc. is registered under the Investment Company Act of
1940 as a diversified, open-end management investment company. The investment
objective of the Fund is to seek a high level of current income exempt from
federal income taxes by investing substantially all of its total assets in
carefully selected long-term municipal bonds of medium quality. The ability of
the issuers of debt securities held by the Fund to meet their obligations may be
affected by economic or political developments in a specific state, industry or
region.
NOTE 1. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuations: The Fund values municipal securities (including
commitments to purchase such securities on a 'when-issued' basis) on the basis
of prices provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. If market quotations are not readily available from such
pricing service, a security is valued at its fair value as determined under
procedures established by the Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations by an independent pricing agent or more than one principal
market maker. Short-term securities which mature in 60 days or less are valued
at amortized cost which approximates market value.
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 (loss) on financial futures
contracts.
26 Visit our website at www.jennisondryden.com
<Page>
The Fund invests in financial futures contracts in order to hedge existing
portfolio securities, or securities the Fund intends to purchase, against
fluctuations in value caused by changes in prevailing interest rates. Should
interest rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss. The use of
futures transactions involves the risk of imperfect correlation in movements in
the price of futures contracts, interest rates and the underlying hedged assets.
Written Options, future contracts and swap contracts involve elements of both
market and credit risk in excess of the amounts reflected on the Statement of
Assets and Liabilities.
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains (losses) on sales of securities are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis. The Fund amortizes premiums and accretes original issue discount
on portfolio securities as adjustments to interest income. Expenses are recorded
on the accrual basis which may require the use of certain estimates by
management.
Net investment income (loss) (other than distribution fees) and unrealized and
realized gains (losses) are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.
Federal Income Taxes: 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.
Dividends and Distributions: The Fund expects to pay dividends of net investment
income monthly and distributions of net realized capital gains, if any,
annually. Dividends and distributions are recorded on the ex-dividend date.
Custody Fee Credits: The Fund has an arrangement with its custodian bank,
whereby uninvested monies earn credits which reduce the fees charged by the
custodian.
NOTE 2. AGREEMENTS
The Fund has a management agreement with Prudential Investments LLC ('PI').
Pursuant to this agreement, PI has responsibility for all investment advisory
services and supervises the subadvisor's performance of such services. PI has
entered into a subadvisory agreement with Prudential Investment Management, Inc.
('PIM'). The
Dryden National Municipals Fund, Inc. 27
<Page>
subadvisory agreement provides that the subadvisor will furnish investment
advisory services in connection with the management of the Fund. In connection
therewith, the subadvisor is obligated to keep certain books and records of the
Fund. PI pays for the services of PIM, the cost of compensation of officers of
the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The
Fund bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly at an annual
rate of .50% of the Fund's average daily net assets up to and including $250
million, .475% of the next $250 million, .45% of the next $500 million, .425% of
the next $250 million, .40% of the next $250 million and .375% of the Fund's
average daily net assets in excess of $1.5 billion.
The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'), which acts as the distributor of the Class A, B, C and Z
shares of the Fund. The Fund compensates PIMS for distributing and servicing the
Fund's Class A, Class B and Class C shares, pursuant to plans of distribution
(the 'Class A, B and C Plans'), regardless of expenses actually incurred. 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 average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .25 of 1%, .50 of 1% and .75 of
1% of the average daily net assets of the Class A, B and C shares, respectively,
for the six months ended June 30, 2003.
PIMS has advised the Fund that it received approximately $68,200 and $7,700 in
front-end sales charges resulting from sales of Class A and Class C shares,
respectively, during the six months ended June 30, 2003. From these fees, PIMS
paid a substantial portion of such sales charges to dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended June 30, 2003, it
received approximately $34,200 and $4,800 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PI, PIM and PIMS are indirect, wholly owned subsidiaries of Prudential
Financial, Inc. ('Prudential').
The Fund, along with other affiliated registered investment companies (the
'Funds'), is a party to a syndicated credit agreement ('SCA') with a group of
banks. For the
28 Visit our website at www.jennisondryden.com
<Page>
six months ended June 30, 2003, the SCA provides for a commitment of $800
million and allows the Funds to increase the commitment to $1 billion, if
necessary. Interest on any borrowings will be at market rates. The Funds pay a
commitment fee of .08 of 1% of the unused portion of the SCA. The commitment fee
is accrued and paid quarterly and is allocated to the Funds pro rata based on
net assets. The purpose of the SCA is to serve as an alternative source of
funding for capital share redemptions. The expiration date of the SCA was May 2,
2003. The Fund did not borrow any amounts pursuant to the SCA during the six
months ended June 30, 2003. On May 2, 2003, the SCA was renewed under the same
terms and conditions ('May 2003 renewal'). The expiration date of the May 2003
renewal is April 30, 2004.
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.
During the six months ended June 30, 2003, the Fund incurred fees of
approximately $151,100 for the services of PMFS. As of June 30, 2003,
approximately $24,800 of such fees were due to PMFS.
The fund pays networking fees to affiliated and unaffiliated broker/dealers.
These networking fees are payments made to broker/dealers that clear mutual fund
transactions through a national clearing system. The Fund incurred approximately
$9,400 in total networking fees, of which the amount relating to the services of
Prudential Securities, Inc. ('PSI'), an affiliate of PI and an indirect,
wholly-owned subsidiary of Prudential was approximately $8,200 for the six
months end June 30, 2003. As of June 30, 2003, approximately $1,400 of such fees
were due to PSI. These amounts are included in transfer agent's fees and expense
in the Statement of Operations.
Effective July 1, 2003, PSI became a division of Wachovia Securities LLC of
which Prudential holds a minority interest.
NOTE 4. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments
for the six months ended June 30, 2003, aggregated $ 466,850,576 and
$484,775,949, respectively.
Dryden National Municipals Fund, Inc. 29
<Page>
During the six months ended June 30, 2003, the Fund entered into financial
futures contracts. Details of open contracts at June 30, 2003 are as follows:
<Table>
<Caption>
VALUE AT VALUE AT UNREALIZED
NUMBER OF EXPIRATION TRADE JUNE 30, APPRECIATION
CONTRACTS TYPE DATE DATE 2002 (DEPRECIATION)
- --------- --------------------------- ----------- ---------- ------------ ---------------
Long Positions:
80 10-yr U.S. Treasury Notes Sep. '03 $9,393,693 $9,395,000 $ 1,307
79 U.S. Treasury Bonds Sep. '03 9,213,628 9,270,156 56,528
------
$57,835
------
------
</Table>
NOTE 5. TAX INFORMATION
For the years ended December 31, 2002 and December 31, 2001, the tax character
of dividends paid as reflected in the Statement of Changes in Net Assets was
$29,652,759 and $31,220,549 of tax-exempt income, $464,332 and $1,335,300 of
ordinary income, and $6,013,553 and $4,062,808 of long-term capital gains,
respectively.
The United States federal income tax basis of the Fund's investments and the
net unrealized depreciation as of June 30, 2003 were as follows:
TOTAL NET
TAX BASIS UNREALIZED
OF INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
- ------------------ ---------------- ---------------- ----------------
$594,771,583 $47,929,447 $3,631,596 $44,297,851
The differences between book and tax basis are primarily attributable to
differences in the treatment of premium amortization for book and tax purposes.
NOTE 6. CAPITAL
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 3%. In some circumstances, Class A
shares may not be subject to a front-end sales charge, but may be subject to a
1% contingent deferred sales charge (CDSC) for the first year. 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 front-end sales charge of 1% and a contingent deferred sales charge of 1%
during the first 18 months. Class B shares will automatically convert to Class A
shares on a quarterly basis approximately seven years after purchase. A special
exchange privilege is also available for shareholders who qualify to purchase
Class A shares at net asset value. Class Z shares are not subject to any sales
or redemption charge and are offered exclusively for sale to a limited group of
investors.
30 Visit our website at www.jennisondryden.com
<Page>
There are 1 billion shares of common stock, $.01 par value per share, authorized
divided into four classes, designated Class A, Class B, Class C and Class Z
common stock, each of which consists of 250 million authorized shares.
Transactions in shares of common stock were as follows:
<Table>
<Caption>
CLASS A SHARES AMOUNT
- ------------------------------------------------------------- ---------- ------------
Six months ended June 30, 2003:
Shares sold 840,610 $ 13,328,213
Shares issued in reinvestment of dividends and distributions 608,723 9,691,615
Shares reacquired (2,951,878) (46,773,206)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion (1,502,545) (23,753,378)
Shares issued upon conversion and/or exchange from Class B 217,673 3,502,335
---------- ------------
Net increase (decrease) in shares outstanding (1,284,872) $(20,251,043)
---------- ------------
---------- ------------
Year ended December 31, 2002:
Shares sold 3,173,549 $ 49,574,748
Shares issued in reinvestment of dividends and distributions 1,316,699 20,490,907
Shares reacquired (5,041,182) (78,572,450)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion (550,934) (8,506,795)
Shares issued upon conversion and/or exchange from Class B 412,885 6,464,965
---------- ------------
Net increase (decrease) in shares outstanding (138,049) $ (2,041,830)
---------- ------------
---------- ------------
<Caption>
CLASS B
- -------------------------------------------------------------
Six months ended June 30, 2003:
Shares sold 212,051 $ 3,368,565
Shares issued in reinvestment of dividends and distributions 43,839 700,009
Shares reacquired (188,786) (3,001,682)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion 67,104 1,066,892
Shares reacquired upon conversion and/or exchange into Class
A (217,062) (3,502,335)
---------- ------------
Net increase (decrease) in shares outstanding (149,958) $ (2,435,443)
---------- ------------
---------- ------------
Year ended December 31, 2002:
Shares sold 517,727 $ 8,103,216
Shares issued in reinvestment of dividends and distributions 96,815 1,510,363
Shares reacquired (388,205) (6,064,878)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion 226,337 3,548,701
Shares reacquired upon conversion and/or exchange into Class
A (411,833) (6,464,965)
---------- ------------
Net increase (decrease) in shares outstanding (185,496) $ (2,916,264)
---------- ------------
---------- ------------
</Table>
Dryden National Municipals Fund, Inc. 31
<Page>
<Table>
<Caption>
CLASS C SHARES AMOUNT
- ------------------------------------------------------------- ---------- ------------
Six months ended June 30, 2003:
Shares sold 75,335 $ 1,187,431
Shares issued in reinvestment of dividends and distributions 6,363 101,628
Shares reacquired (86,886) (1,374,744)
---------- ------------
Net increase (decrease) in shares outstanding (5,188) $ (85,685)
---------- ------------
---------- ------------
Year ended December 31, 2002:
Shares sold 187,624 $ 2,943,968
Shares issued in reinvestment of dividends and distributions 12,697 198,086
Shares reacquired (152,657) (2,395,610)
---------- ------------
Net increase (decrease) in shares outstanding 47,664 $ 746,444
---------- ------------
---------- ------------
<Caption>
CLASS Z
- -------------------------------------------------------------
Six months ended June 30, 2003:
Shares sold 138,967 $ 2,196,211
Shares issued in reinvestment of dividends and distributions 5,896 93,867
Shares reacquired (114,716) (1,815,493)
---------- ------------
Net increase (decrease) in shares outstanding 30,147 $ 474,585
---------- ------------
---------- ------------
Year ended December 31, 2002:
Shares sold 580,177 $ 9,049,510
Shares issued in reinvestment of dividends and distributions 9,507 148,056
Shares reacquired (438,084) (6,841,314)
---------- ------------
Net increase (decrease) in shares outstanding 151,600 $ 2,356,252
---------- ------------
---------- ------------
</Table>
32 Visit our website at www.jennisondryden.com
<Page>
Financial Highlights
JUNE 30, 2003 SEMIANNUAL REPORT
Dryden National Municipals Fund, Inc.
<Page>
Financial Highlights
(Unaudited)
<Table>
<Caption>
CLASS A
-----------------
SIX MONTHS ENDED
JUNE 30, 2003
-----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.82
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .34
Net realized and unrealized gain (loss) on investment
transactions .16
-------
Total from investment operations .50
-------
LESS DISTRIBUTIONS
Dividends from net investment income (.34)
Distributions in excess of net investment income --
Distributions from net realized gains (.08)
-------
Total distributions (.42)
-------
Net asset value, end of period $ 15.90
-------
-------
TOTAL RETURN(A): 3.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 578,376
Average net assets (000) $ 585,813
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees(c) .86%(d)
Expenses, excluding distribution and service (12b-1) fees .61%(d)
Net investment income 4.30%(d)
For Class A, B, C and Z shares:
Portfolio turnover rate 75%
</Table>
- ------------------------------
(a) Total return does not consider the effects of sales load. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than one full year are not
annualized.
(b) Less than $.005 per share.
(c) The distributor of the Fund has contractually agreed to limit its
distribution and service (12b-1) fees to .25 of 1% of the average daily net
assets of the Class A shares.
(d) Annualized.
See Notes to Financial Statements.
34 Visit our website at www.jennisondryden.com
<Page>
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------
$ 15.32 $ 15.59 $ 14.72 $ 16.06 $ 16.12
------- ------- ------- ------- -------
.75 .75 .76 .76 .79
.64 (.13) .88 (1.34) .06
------- ------- ------- ------- -------
1.39 .62 1.64 (.58) .85
------- ------- ------- ------- -------
(.73) (.76) (.76) (.76) (.79)
-- -- (.01) --(b) --(b)
(.16) (.13) -- -- (.12)
------- ------- ------- ------- -------
(.89) (.89) (.77) (.76) (.91)
------- ------- ------- ------- -------
$ 15.82 $ 15.32 $ 15.59 $ 14.72 $ 16.06
------- ------- ------- ------- -------
------- ------- ------- ------- -------
9.27% 3.95% 11.45% (3.69)% 5.41%
$595,874 $579,335 $609,245 $498,428 $481,926
$584,236 $599,337 $487,811 $531,603 $483,759
.87% .89% .88% .86% .73%
.62% .64% .63% .61% .63%
4.68% 4.76% 5.09% 4.88% 4.89%
97% 66% 122% 30% 23%
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 35
<Page>
Financial Highlights
(Unaudited) Cont'd.
<Table>
<Caption>
CLASS B
-----------------
SIX MONTHS ENDED
JUNE 30, 2003
-----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.86
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .32
Net realized and unrealized gain (loss) on investment
transactions .16
------
Total from investment operations .48
------
LESS DISTRIBUTIONS
Dividends from net investment income (.32)
Distributions in excess of net investment income --
Distributions from net realized gains (.08)
------
Total distributions (.40)
------
Net asset value, end of period $ 15.94
------
------
TOTAL RETURN(A): 3.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $45,457
Average net assets (000) $47,151
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 1.11%(c)
Expenses, excluding distribution and service (12b-1) fees .61%(c)
Net investment income 4.05%(c)
</Table>
- ------------------------------
(a) Total return does not consider the effects of sales load. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than one full year are not
annualized.
(b) Less than $.005 per share.
(c) Annualized.
See Notes to Financial Statements.
36 Visit our website at www.jennisondryden.com
<Page>
<Table>
<Caption>
CLASS B
----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------
$ 15.36 $ 15.63 $ 14.75 $ 16.10 $ 16.16
------ ------ ------ ------- -------
.71 .71 .73 .73 .73
.64 (.13) .89 (1.35) .06
------ ------ ------ ------- -------
1.35 .58 1.62 (.62) .79
------ ------ ------ ------- -------
(.69) (.72) (.73) (.73) (.73)
-- -- (.01) --(b) --(b)
(.16) (.13) -- -- (.12)
------ ------ ------ ------- -------
(.85) (.85) (.74) (.73) (.85)
------ ------ ------ ------- -------
$ 15.86 $ 15.36 $ 15.63 $ 14.75 $ 16.10
------ ------ ------ ------- -------
------ ------ ------ ------- -------
8.99% 3.70% 11.23% (3.98)% 4.99%
$ 47,612 $ 48,972 $ 59,260 $ 92,265 $119,698
$ 49,097 $ 54,043 $ 73,531 $118,044 $131,195
1.12% 1.14% 1.13% 1.11% 1.13%
.62% .64% .63% .61% .63%
4.43% 4.52% 4.85% 4.62% 4.49%
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 37
<Page>
Financial Highlights
(Unaudited) Cont'd.
<Table>
<Caption>
CLASS C
-----------------
SIX MONTHS ENDED
JUNE 30, 2003
-----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.86
-----
INCOME FROM INVESTMENT OPERATIONS
Net investment income .30
Net realized and unrealized gain (loss) on investment
transactions .16
-----
Total from investment operations .46
-----
LESS DISTRIBUTIONS
Dividends from net investment income (.30)
Distributions in excess of net investment income --
Distributions from net realized gains (.08)
-----
Total distributions (.38)
-----
Net asset value, end of period $ 15.94
-----
-----
TOTAL RETURN(A): 2.95%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 6,054
Average net assets (000) $ 6,209
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees(d) 1.36%(c)
Expenses, excluding distribution and service (12b-1) fees .61%(c)
Net investment income 3.81%(c)
</Table>
- ------------------------------
(a) Total return does not consider the effects of sales load. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than one full year are not
annualized.
(b) Less than $.005 per share.
(c) Annualized.
(d) The distributor of the Fund has contractually agreed to limit its
distribution and service (12b-1) fees to .75 of 1% of the average daily net
assets of Class C shares.
See Notes to Financial Statements.
38 Visit our website at www.jennisondryden.com
<Page>
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------
$15.36 $15.63 $14.75 $16.10 $16.16
----- ----- ----- ----- -----
.67 .67 .69 .69 .69
.64 (.13) .89 (1.35) .06
----- ----- ----- ----- -----
1.31 .54 1.58 (.66) .75
----- ----- ----- ----- -----
(.65) (.68) (.69) (.69) (.69)
-- -- (.01) --(b) --(b)
(.16) (.13) -- -- (.12)
----- ----- ----- ----- -----
(.81) (.81) (.70) (.69) (.81)
----- ----- ----- ----- -----
$15.86 $15.36 $15.63 $14.75 $16.10
----- ----- ----- ----- -----
----- ----- ----- ----- -----
8.71% 3.45% 10.96% (4.22)% 4.73%
$6,107 $5,183 $3,213 $3,060 $2,296
$5,709 $4,032 $2,473 $2,643 $1,555
1.37% 1.39% 1.38% 1.36% 1.38%
.62% .64% .63% .61% .63%
4.17% 4.28% 4.60% 4.39% 4.23%
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 39
<Page>
Financial Highlights
(Unaudited) Cont'd.
<Table>
<Caption>
CLASS Z
-----------------
SIX MONTHS ENDED
JUNE 30, 2003
-----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 15.81
-----
INCOME FROM INVESTMENT OPERATIONS
Net investment income .36
Net realized and unrealized gain (loss) on investment
transactions .16
-----
Total from investment operations .52
-----
LESS DISTRIBUTIONS
Dividends from net investment income (.36)
Distributions in excess of net investment income --
Distributions from net realized gains (.08)
-----
Total distributions (.44)
-----
Net asset value, end of period $ 15.89
-----
-----
TOTAL RETURN(A): 3.34%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 4,883
Average net assets (000) $ 4,665
Ratios to average net assets:
Expenses, including distribution fees .61%(d)
Expenses, excluding distribution fees .61%(d)
Net investment income 4.54%(d)
</Table>
- ------------------------------
(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 of less than one
full year are not annualized.
(b) Less than $.005 per share.
(c) Commencement of offering of Class Z shares.
(d) Annualized.
See Notes to Financial Statements.
40 Visit our website at www.jennisondryden.com
<Page>
<Table>
<Caption>
CLASS Z
-------------------------------------------------------------------------------
JANUARY 22,
1999(C)
YEAR ENDED DECEMBER 31, THROUGH
---------------------------------------------------------- DECEMBER 31,
2002 2001 2000 1999
-----------------------------------------------------------------------------------
$15.32 $15.58 $14.71 $16.11
----- ----- ----- -----
.78 .78 .80 .73
.64 (.12) .88 (1.40)
----- ----- ----- -----
1.42 .66 1.68 (.67)
----- ----- ----- -----
(.77) (.79) (.80) (.73)
-- -- (.01) --(b)
(.16) (.13) -- --
----- ----- ----- -----
(.93) (.92) (.81) (.73)
----- ----- ----- -----
$15.81 $15.32 $15.58 $14.71
----- ----- ----- -----
----- ----- ----- -----
9.47% 4.26% 11.73% (4.22)%
$4,383 $1,924 $1,183 $ 797
$3,314 $1,673 $ 765 $1,391
.62% .64% .63% .64%(d)
.62% .64% .63% .64%(d)
4.91% 5.05% 5.34% 5.45%(d)
</Table>
See Notes to Financial Statements.
Dryden National Municipals Fund, Inc. 41
<Page>
[THIS PAGE INTENTIONALLY LEFT BLANK]
MAIL TELEPHONE WEBSITE
Gateway Center Three (800) 225-1852 www.jennisondryden.com
100 Mulberry Street
Newark, NJ 07102-4077
DIRECTORS
David E.A. Carson - Robert F. Gunia - Robert E.
La Blanc - Douglas H. McCorkindale - Stephen P.
Munn - Richard A. Redeker - Judy A. Rice -
Robin B. Smith - Stephen D. Stoneburn - Clay T. Whitehead
OFFICERS
Judy A. Rice, President - Robert F. Gunia, Vice
President - Grace C. Torres, Treasurer -
Marguerite E.H. Morrison, Chief Legal Officer
and Assistant Secretary - Deborah A. Docs,
Secretary - Maryanne Ryan,
Anti-Money Laundering Compliance Officer
- ---------------------------------------------------------------------------
MANAGER Prudential Investments LLC Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
- ---------------------------------------------------------------------------
INVESTMENT ADVISER Prudential Investment Gateway Center Two
Management, Inc. 100 Mulberry Street
Newark, NJ 07102
- ---------------------------------------------------------------------------
DISTRIBUTOR Prudential Investment Gateway Center Three
Management Services LLC 14th Floor
100 Mulberry Street
Newark, NJ 07102-4077
- ---------------------------------------------------------------------------
CUSTODIAN State Street Bank One Heritage Drive
and Trust Company North Quincy, MA 02171
- ---------------------------------------------------------------------------
TRANSFER AGENT Prudential Mutual Fund PO Box 8098
Services LLC Philadelphia, PA 19101
- ---------------------------------------------------------------------------
INDEPENDENT AUDITORS PricewaterhouseCoopers LLP 1177 Avenue of the
Americas
New York, NY 10036
- ---------------------------------------------------------------------------
LEGAL COUNSEL Shearman & Sterling LLP 599 Lexington Avenue
New York, NY 10022
- ---------------------------------------------------------------------------
Dryden National Municipals Fund, Inc.
Share Class A B C Z
Nasdaq PRNMX PBHMX PNMCX N/A
CUSIP 262470107 262470206 262470305 262470404
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter. The accompanying financial statements as of June 30, 2003 were not
audited and, accordingly, no auditors' opinion is expressed on them.
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
JennisonDrydenMutualFunds
Dryden National Municipals Fund, Inc.
Share Class A B C Z
Nasdaq PRNMX PBHMX PNMCX N/A
CUSIP 262470107 262470206 262470305 262470404
MF104E2 IFS-A083170
<Page>
Item 2 -- Code of Ethics -- Not required in this filing
Item 3 -- Audit Committee Financial Expert -- Not required in this filing
Item 4 -- Principal Accountant Fees and Services -- Not required in this filing
Item 5 -- Reserved
Item 6 -- Reserved
Item 7 -- Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -- Not required in this filing
Item 8 -- Reserved
Item 9 -- 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 have been no significant changes in the registrant's
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Item 10 -- Exhibits
(a) Code of Ethics -- Not required in this filing
(b) Certifications pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act -- Attached hereto
<Page>
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.
Dryden National Municipals Fund, Inc.
By: /s/ Deborah Docs
----------------------------------------------------------
Deborah Docs
Secretary
Date: August 26, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Judy A. Rice
----------------------------------------------------------
Judy A. Rice
President and Principal Executive Officer
Date: August 26, 2003
By: /s/ Grace C. Torres
----------------------------------------------------------
Grace C. Torres
Treasurer and Principal Financial Officer
Date: August 26, 2003