-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BhnL5zGA9/qWwjrWG5nleY+Kk+R1kAQ16AZU00h9gxoxAueiLHddIHIDfcDiDzVh 7IFF4qD2QYK+5R6jlyAFVA== 0001193125-04-111989.txt : 20040630 0001193125-04-111989.hdr.sgml : 20040630 20040630132503 ACCESSION NUMBER: 0001193125-04-111989 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040630 EFFECTIVENESS DATE: 20040630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRYDEN MUNICIPAL BOND FUND CENTRAL INDEX KEY: 0000807394 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04930 FILM NUMBER: 04890818 BUSINESS ADDRESS: STREET 1: 100 MULBERRY STREET CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: 9733677473 MAIL ADDRESS: STREET 1: 100 MULBERRY STREET CITY: NEWARK STATE: NJ ZIP: 07102 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL MUNICIPAL BOND FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL BACHE MUNICIPAL BOND FUND DATE OF NAME CHANGE: 19910527 N-CSR 1 dncsr.htm DRYDEN MUNICIPAL BOND FUND/HIGH INCOME SERIES AND INSURED SERIES DRYDEN MUNICIPAL BOND FUND/HIGH INCOME SERIES AND INSURED SERIES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

 

Investment Company Act file number:    811-04930
Exact name of registrant as specified in charter:    Dryden Municipal Bond Fund
Address of principal executive offices:   

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

Name and address of agent for service:   

Jonathan D. Shain

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

Registrant’s telephone number, including area code:    973-802-6469
Date of fiscal year end:    4/30/2004
Date of reporting period:    4/30/2004


Item 1 - Reports to Stockholders - [ INSERT REPORT ]


 

LOGO

Dryden Municipal Bond Fund/

High Income Series & Insured Series

 

Formerly known as Prudential Municipal Bond Fund/High Income Series & Insured Series

 

April 30, 2004   ANNUAL REPORT

 

LOGO

FUND TYPE

Municipal Bond

 

OBJECTIVE

High Income Series: Maximum amount of income that is eligible for exclusion from federal income taxes.

 

Insured Series: Maximum amount of income that is eligible for exclusion from federal income taxes, consistent with the preservation of capital.

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The views expressed in this report and information about the Series’ portfolio holdings are for the period covered by this report and are subject to change thereafter.

 

JennisonDryden is a registered trademark of The Prudential Insurance Company of America.

 

LOGO


 

Dear Shareholder,

June 18, 2004

 

As the U.S. stock market slowed in 2004 following its particularly strong performance in 2003, some investors still seemed to be watching developments from the sidelines. Though the economy appears sound, given the unsettled global political climate and the potential for rising interest rates in the United States, we can understand why some investors may want to remain cautious. For those with long-term goals, a broadly diversified asset allocation can increase your chances of participating in economic growth.

 

We recommend that you develop a diversified asset allocation strategy in consultation with a financial professional who knows you and 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.

 

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 managers that can make a difference for you. JennisonDryden equity funds are managed by Jennison Associates and Quantitative Management (QM). Prudential Fixed Income manages the JennisonDryden fixed income and money market funds. Jennison Associates, QM, and Prudential Fixed Income are part of Prudential Investment Management.

 

Thank you for your confidence in JennisonDryden mutual funds.

 

Sincerely,

 

LOGO

 

Judy A. Rice, President

Dryden Municipal Bond Fund/High Income Series & Insured Series

 

Dryden Municipal Bond Fund   1


Your Series’ Performance

 

High Income Series

 

Series objective

The investment objective of the Dryden Municipal Bond Fund/High Income Series (the Series) is to seek the maximum amount of income that is eligible for exclusion from federal income taxes. There can be no assurance that the Series will achieve its investment objective.

 

Performance data quoted represents past performance and is not indicative of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain current performance data to the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852.

 

Cumulative Total Returns1 as of 4/30/04
    One Year     Five Years     Ten Years   Since Inception2

Class A

  4.13 %   18.35 %   69.34% (68.67)   132.66% (131.03)

Class B

  3.95     16.97     64.16    (63.50)   185.40    (178.84)

Class C

  3.69     15.53     N/A   56.82        (56.19)

Class Z

  4.41     19.85     N/A   45.80        (45.51)

LB Muni Bond Index3

  2.68     30.35     87.06   ***

LB Non-Investment-Grade Muni Bond Index4

  14.51     25.74     N/A5   ****

Lipper HY Muni Debt Funds Avg.6

  5.75     17.38     64.62   *****
                     
Average Annual Total Returns1 as of 3/31/04
    One Year     Five Years     Ten Years   Since Inception2

Class A

  2.91 %   3.03 %   5.21% (5.18)   5.96% (5.91)

Class B

  1.91     3.45     5.29    (5.26)   6.65    (6.51)

Class C

  5.65     3.35     N/A   4.95    (4.92)

Class Z

  7.50     4.13     N/A   5.37    (5.34)

LB Muni Bond Index3

  5.86     6.00     6.81   ***

LB Non-Investment-Grade Muni Bond Index4

  18.51     5.02     N/A   ****

Lipper HY Muni Debt Funds Avg.6

  8.47     3.59     5.24   *****
                     
Distribution and Yields1 as of 4/30/04
    Total Distributions
Paid for 12 Months
    30-Day
SEC Yield
    Taxable Equivalent Yield7
at Tax Rates of
        35%   38.60%

Class A

  $0.53     4.08 %   6.28%   6.64%

Class B

  $0.50     3.99     6.14   6.50

Class C

  $0.48     3.74     5.75   6.09

Class Z

  $0.56     4.50     6.92   7.33

 

1Source: Prudential Investments LLC, Lehman Brothers, and Lipper Inc. The cumulative total returns do not take into account applicable sales charges. The average annual total returns do take into account applicable sales

 

2   Visit our website at www.jennisondryden.com


Your Series Performance (continued)

 

 

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. Through March 14, 2004, the Series charged a maximum front-end sales charge of 3% for Class A shares and a 12b-1 fee of up to 0.30% annually. Effective March 15, 2004, Class A shares are subject to a maximum front-end sales charge of 4.00% and a 12b-1 fee of up to 0.30% annually. Investors who purchase Class A shares in an amount of $1 million or more do not pay a front-end sales charge, but are subject to a contingent deferred sales charge (CDSC) of 1% for shares sold within 12 months of purchase. Class B shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1% respectively for the first six years 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. Through February 1, 2004, Class C shares were 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 C shares purchased on or after February 2, 2004 are not subject to a front-end sales charge, the CDSC of 1% for Class C shares purchased on or after that date will apply for 12 months from the date of purchase, and the annual 12b-1 fee will remain 1%. Class Z shares are not subject to a sales charge or 12b-1 fee. Without waiver of fees and/or expense subsidization, the Series’ returns would have been lower, as indicated in parentheses. The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares.

2Inception dates: Class A, 1/22/90; Class B, 9/17/87; Class C, 8/1/94; and Class Z, 9/16/96.

3The Lehman Brothers (LB) Municipal (Muni) Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.

4The Lehman Brothers (LB) Non-Investment-Grade Municipal (Muni) Bond Index is an unmanaged index of non-rated or Ba1 below-rated municipal bonds. It gives a broad look at how non-investment-grade municipal bonds have performed. The bonds in this index must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $20 million. The bonds must also have a dated date after December 31, 1990, and must be at least one year from their maturity date.

5The inception date of the LB Non-Investment-Grade Muni Bond Index is October 1995.

6The Lipper High Yield (HY) Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper High Yield Muni Debt Funds category for the periods noted. Funds in the Lipper Average invest at least 50% of their assets in lower-rated municipal debt issues.

7Some investors may be subject to the federal alternative minimum tax and/or state and local taxes. Taxable equivalent yields reflect federal taxes only. Investors cannot invest directly in an index. The returns for the Lehman Brothers Indexes and the Lipper Average would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.

***LB Muni Bond Index Closest Month-End to Inception cumulative total returns as of 4/30/04 are 163.34% for Class A, 234.17% for Class B, 83.23% for Class C, and 57.19% for Class Z. LB Muni Bond Index Closest Month-End to Inception average annual total returns as of 3/31/04 are 7.26% for Class A, 7.74% for Class B, 6.73% for Class C, and 6.56% for Class Z.

****LB Non-Investment-Grade Muni Bond Index Closest Month-End to Inception cumulative total return as of 4/30/04 is 55.60% for Class Z. LB Non-Investment-Grade Muni Bond Index Closest Month-End to Inception average annual total return as of 3/31/04 is 6.22% for Class Z.

*****Lipper Average Closest Month-End to Inception cumulative total returns as of 4/30/04 are 131.38% for Class A, 189.68% for Class B, 61.18% for Class C, and 40.62% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/04 are 6.17% for Class A, 6.71% for Class B, 5.17% for Class C, and 4.81% for Class Z.

 

Dryden Municipal Bond Fund   3


 

 

Five Largest Issues expressed as a percentage of net assets as of 4/30/04  

Memphis (TN) Ctr. City Rev. Fin. Corp.

   3.8 %

New Jersey (NJ) St. Econ. Dev. Auth. Rev.

   1.8  

New York (NY) City Mun. Wtr. Fin. Auth.

   1.5  

City of Cedar (IA) Rapids Rev.

   1.5  

Providence (RI) Redev. Agcy.

   1.4  

Issues are subject to change.

 

Portfolio Composition expressed as a percentage of net assets as of 4/30/04  

Healthcare

   22.3 %

Corporate-Backed IDB & PCR

   14.1  

Prerefunded

   11.4  

Special Tax/Assessment District

   11.1  

Other

   7.2  

Water & Sewer

   6.7  

General Obligation

   5.8  

Tobacco

   4.7  

Housing

   4.6  

Lease-Backed Certificate of Participation

   3.2  

Transportation

   3.1  

Power

   2.9  

Education

   2.8  

Solid Waste/Resource Recovery


   2.2

 

Total Investments

   102.1  

Liabilities in excess of other assets


   –2.1

 

Total Net Assets

   100.0  
    

Portfolio composition is subject to change.

 

Credit Quality expressed as a percentage of net assets as of 4/30/04  

Aaa

   25.6 %

Aa

   4.3  

A

   8.5  

Baa

   16.4  

Ba

   7.1  

B

   3.1  

Caa

   2.2  

NR


   34.9

 

Total Investments

   102.1  

Liabilities in excess of other assets


   –2.1

 

Total Net Assets

   100.0  
    

Source: Moody’s rating, defaulting to S&P when not rated.

Credit quality is subject to change.

 

4   Visit our website at www.jennisondryden.com


 

 

 

This Page Intentionally Left Blank


Investment Adviser’s Report—High Income Series

 

Prudential Investment Management, Inc.

 

A favorable year for lower-quality municipal bonds

Conditions in the municipal bond market were volatile during the Series’ fiscal year that began May 1, 2003. Municipal bond prices rallied strongly early in the reporting period then sold off sharply during the summer of 2003. They gradually worked their way higher over many months only to sell off again as the fiscal year drew to a close in April 2004. The wide swings in municipal bond prices largely reflected changes in the outlook for short-term interest rates that were driven by changing economic conditions in the United States. (Bond prices move inversely to interest rates.)

 

In this challenging market environment, municipal bonds of below-investment-grade quality performed very well as investors sought them for their attractive yields and some bond prices rose with the economic recovery. The Series owns bonds of investment-grade and below-investment-grade quality in an approximate 60/40 mix. Consequently, the Series’ returns for the fiscal year ended April 30, 2004, exceeded the Lehman Brothers Municipal Bond Index, which is composed entirely of investment-grade bonds. However, the Series’ returns substantially underperformed the Lehman Brothers Non-Investment-Grade Municipal Bond Index, which includes bonds that are either non-rated or rated below investment grade. The Series’ returns also lagged the Lipper High Yield Municipal Debt Funds Average.

 

Working to preserve interest income amid low interest rates

The Federal Reserve Board (the Fed) cut its target for the federal funds rate—the interest rate banks charge each other for overnight loans—by a quarter of a percentage point to 1% in late June 2003. By reducing the key short-term rate to a 45-year low, the Fed hoped to stimulate growth in what was then a sluggish economy. Considering the low level of interest rates, we tried to retain interest income in the Series by using a credit-quality barbell strategy in which one side focused largely on non-rated bonds of below-investment-grade quality. Typically these bonds have higher coupon rates relative to investment-grade bonds. On the other side of our credit-quality barbell, we took profits on some of the AAA-rated insured zero coupon bonds held by the Series and purchased AAA-rated insured bonds with above-market coupon rates that enhanced the Series’ income stream. We believed they offered a better risk/reward profile in the volatile market environment because they are less sensitive to changes in interest rates than zero coupon bonds.

 

A limited exposure to airline-related municipal bonds

As for allocation to specific sectors of the tax-exempt bond market, we made a strategic shift in the Series’ holdings of airline-related municipal bonds. We

 

6   Visit our website at www.jennisondryden.com


 

exchanged some of Continental Airlines municipal bonds held by the Series for AMR Corp. municipal bonds as we believed AMR debt securities were undervalued. This move worked well as AMR’s financial position improved. Nevertheless, the Series’ performance was hampered by the fact that the Series had a smaller exposure to airline-related municipal bonds than the Lehman Brothers Non-Investment-Grade Municipal Bond Index. As economic conditions improved, airline passenger traffic picked up and profitability increased. This helped airline-related municipal bonds perform well even though rising fuel costs pressured their prices late in the reporting period. We limited the Series’ exposure to this sector because it is among the most volatile in the tax-exempt market.

 

Moving in and out of tobacco-related municipal bonds

We continued to participate in the tobacco-related sector of the municipal bond market on an opportunistic basis. This means we purchased bonds when we believed their yields adequately compensated the Series for the risk of owning them, with the intention of selling them when they were no longer attractive on a relative basis. For example, in late 2003 we took profits on bonds backed solely by payments of tobacco companies to state governments under the Master Settlement Agreement. The bonds were purchased in early 2003 when their prices were depressed. The tobacco-related sector remains volatile because of the risk of further judgments against tobacco companies.

 

Maintaining the Series’ focus on the municipal bond hospital sector

The Series has a considerable exposure to municipal bonds of hospitals that generally benefited its performance for the reporting period. While some hospital bonds held by the Series are rated investment grade, others are of below-investment-grade quality, such as the defaulted municipal bonds of the Vista Hospital System located in California. During the reporting period, these bonds gained in value after Vista Hospital System was sold for a greater-than-expected amount to Universal Health Services, Inc. in January 2004. In contrast, the Series holds municipal bonds of the Somerset County Hospital Authority that performed poorly. The bonds are backed by revenues of the Meadow View Nursing Center, a facility located in Pennsylvania that has suffered from a volatile occupancy rate and reduced revenues from Medicaid and Medicare.

 

A shift in our investment discipline

Late in the reporting period, we initiated a shift in the Series’ investment discipline that affected its duration, a measure of its sensitivity to changes in interest rates. In managing the Series’ duration, we previously focused more on the durations of funds

 

Dryden Municipal Bond Fund   7


Investment Adviser’s Report—High Income Series

 

Prudential Investment Management, Inc. (continued)

 

in its Lipper peer group. However, in the volatile trading environment of the last few months, our efforts to match the changes in the peer group durations contributed to the Series’ underperformance versus its Lipper peer group average. In late March 2004, we began implementing a strategy that positions the Series’ duration and other investment characteristics closer to the average of the Lehman Brothers Municipal Bond Index and the Lehman Brothers Non-Investment Grade Municipal Bond Index. This is in keeping with our approach of managing the Series as an “all-weather” comparatively higher-quality high yield municipal bond fund. To that end, we lengthened the Series’ duration in late March 2004.

 

Shortly afterwards, government figures released in early April 2004 showed that the job market had finally begun to improve along with the rest of the economy. This data caused the financial markets to speculate that the Fed would hike short-term rates in 2004. Anticipation of tighter monetary policy pushed bond yields higher, which caused bond prices to fall. Having a longer duration at that time detracted from the Series returns. However, we believe this strategy of focusing on benchmarks will enhance the risk profile of the Series and improve the predictability of its performance over the longer term.

 

8   Visit our website at www.jennisondryden.com


Your Series’ Performance

 

Insured Series

 

Series objective

The investment objective of the Dryden Municipal Bond Fund/Insured Series (the Series) is to seek the maximum amount of income that is eligible for exclusion from federal income taxes, consistent with the preservation of capital. There can be no assurance that the Series will achieve its investment objective.

 

Performance data quoted represents past performance and is not indicative of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain current performance data to the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852.

 

Cumulative Total Returns1 as of 4/30/04
    One Year     Five Years     Ten Years   Since Inception2

Class A

  0.13 %   24.77 %   74.12% (73.64)   139.06% (137.08)

Class B

  –0.14     23.21     68.76    (68.30)   185.09    (171.49)

Class C

  –0.39     21.70     N/A   61.38        (60.93)

Class Z

  0.40     26.24     N/A   51.06        (50.92)

LB Muni Bond Index3

  2.68     30.35     87.06   ***

Lipper Insured Muni Debt Funds Avg.4

  1.05     23.50     71.60   ****
                     
Average Annual Total Returns1 as of 3/31/04
    One Year     Five Years     Ten Years   Since Inception2

Class A

  –0.11 %   4.35 %   5.63% (5.60)   6.25% (6.19)

Class B

  –1.03     4.80     5.73    (5.70)   6.74    (6.44)

Class C

  2.62     4.70     N/A   5.41    (5.38)

Class Z

  4.33     5.48     N/A   6.04    (6.03)

LB Muni Bond Index3

  5.86     6.00     6.81         ***

Lipper Insured Muni Debt Funds Avg.4

  4.75     4.93     5.86         ****
                     
Distribution and Yields1 as of 4/30/04
    Total Distributions     30-Day     Taxable Equivalent Yield5
at Tax Rates of
    Paid for 12 Months     SEC Yield     35%   38.60%

Class A

  $0.72     2.09%     3.22%   3.40%

Class B

  $0.69     1.93        2.97      3.14   

Class C

  $0.66     1.67        2.57      2.72   

Class Z

  $0.75     2.43        3.74      3.96   

 

1Source: Prudential Investments LLC, Lehman Brothers, and Lipper Inc. The cumulative total returns do not take into account applicable sales charges. 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

 

Dryden Municipal Bond Fund   9


Your Series’ Performance (continued)

 

respectively, the returns for these classes would have been lower. Through March 14, 2004, the Series charged a maximum front-end sales charge of 3% for Class A shares and a 12b-1 fee of up to 0.30% annually. Effective March 15, 2004, Class A shares are subject to a maximum front-end sales charge of 4.00% and a 12b-1 fee of up to 0.30% annually. Investors who purchase Class A shares in an amount of $1 million or more do not pay a front-end sales charge, but are subject to a contingent deferred sales charge (CDSC) of 1% for shares sold within 12 months of purchase. Class B shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1% respectively for the first six years 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. Through February 1, 2004, Class C shares were 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 C shares purchased on or after February 2, 2004 are not subject to a front-end sales charge, the CDSC of 1% for Class C shares purchased on or after that date will apply for 12 months from the date of purchase, and the annual 12b-1 fee will remain 1%. Class Z shares are not subject to a sales charge or 12b-1 fee. Without waiver of fees and/or expense subsidization, the Series’ returns would have been lower, as indicated in parentheses. The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares.

2Inception dates: Class A, 1/22/90; Class B, 9/17/87; Class C, 8/1/94; and Class Z, 9/16/96.

3The Lehman Brothers (LB) Municipal (Muni) Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.

4The Lipper Insured Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper Insured Muni Debt Funds category for the periods noted. Funds in the Lipper Average invest primarily in municipal debt issues insured as to timely payment.

5Some investors may be subject to the federal alternative minimum tax and/or state and local taxes. Taxable equivalent yields reflect federal taxes only. Investors cannot invest directly in an index. The returns for the LB Muni Bond Index and the Lipper Average would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.

***LB Muni Bond Index Closest Month-End to Inception cumulative total returns as of 4/30/04 are 163.34% for Class A, 234.17% for Class B, 83.23% for Class C, and 57.19% for Class Z. LB Muni Bond Index Closest Month-End to Inception average annual total returns as of 3/31/04 are 7.26% for Class A, 7.74% for Class B, 6.73% for Class C, and 6.56% for Class Z.

****Lipper Average Closest Month-End to Inception cumulative total returns as of 4/30/04 are 136.90% for Class A, 202.25% for Class B, 67.57% for Class C, and 45.25% for Class Z. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/04 are 6.47% for Class A, 7.10% for Class B, 5.77% for Class C, and 5.47% for Class Z.

 

Five Largest Issues expressed as a percentage of net assets as of 4/30/04  

Hawaii Dept. Budget & Fin.

   2.7 %

Metro. Trans. Auth. NY Svc. Contract

   2.4  

Detroit Wtr. Sup. Sys.

   2.4  

Washington St. Pub. Pwr. Supply

   2.4  

California St.

   2.2  

Issues are subject to change.

 

10   Visit our website at www.jennisondryden.com


 

 

Portfolio Composition expressed as a percentage of net assets as of 4/30/04  

General Obligation

   23.8 %

Transportation

   18.1  

Water & Sewer

   16.7  

Lease-Backed Certificate of Participation

   7.3  

Healthcare

   5.7  

Power

   5.7  

Special Tax/Assessment District

   5.3  

Prerefunded

   5.3  

Corporate-Backed IDB & PCR

   3.8  

Education

   3.0  

Housing

   2.9  

Other

   2.2  

Tobacco

   1.8  

Other Muni

   1.7  

Solid Waste/Resource Recovery


   0.7

 

Total Investments

   104.0  

Liabilities in excess of other assets


   –4.0

 

Total Net Assets

   100.0  
    

Portfolio composition is subject to change.

 

Credit Quality expressed as a percentage of net assets as of 4/30/04  

Aaa

   95.1 %

Aa

   2.6  

A


   6.3

 

Total Investments

   104.0  

Liabilities in excess of other assets


   –4.0

 

Total Net Assets

   100.0  
    

Source: Moody’s rating, defaulting to S&P when not rated.

Credit quality is subject to change.

 

Dryden Municipal Bond Fund   11


Investment Adviser’s Report—Insured Series

 

Prudential Investment Management, Inc.

 

A challenging year for insured municipal bonds

The Series’ fiscal year that began May 1, 2003 proved to be a challenging time in the tax-exempt bond market, particularly for insured municipal bonds. Municipal bond prices fluctuated sharply as changing economic conditions in the United States led to changes in the outlook for short-term interest rates. (Bond prices move in the opposite direction of interest rates.) Because insured municipal bonds tend to be more interest-rate sensitive than uninsured municipal bonds, insured municipal bond prices were among the most volatile in the tax-exempt market. For the reporting period, the insured municipal bond sector underperformed the broader municipal bond market.

 

When the reporting period began, financial markets expected the Federal Reserve Board (the Fed) to cut short-term rates aggressively in an effort to stimulate growth in what was then a sluggish economy. Anticipation of easier monetary policy led investors to accept lower yields on municipal bonds, which drove municipal bond prices higher. The long-awaited rate cut occurred in late June 2003. The Fed reduced its target for the federal funds rate—the interest rates banks charge each other for overnight loans—by a quarter of a percentage point to 1%, its lowest level in 45 years. However, disappointment over the modest size of the rate cut (some investors had expected a reduction of half a percentage point) sparked a sharp sell-off in the municipal bond market during the summer of 2003.

 

Long-term municipal bond exposure too small during key period

Over many months, municipal bond prices gradually worked their way higher as the Fed left short-term rates at low levels to support the economy. We took profits on some AAA-rated insured zero coupon bonds held by the Series and reinvested the proceeds in AAA-rated insured bonds with above-market coupon rates in order to enhance the Series’ income stream. In addition, we sold municipal bonds in the 10-year maturity sector and purchased municipal bonds in the 30-year maturity sector because we believed long-term bonds were attractively priced compared to intermediate-term debt securities. However, we held on to a considerable amount of tax-exempt bonds in the 10-year maturity sector to avoid creating large capital gains that would have lessened the advantage of the Series’ tax-exempt coupon payments. Consequently, the Series did not have a large enough exposure to municipal bonds in the 30-year maturity category during the months when the tax-exempt market rallied. This detracted from the Series’ performance relative to its Lipper Average and its benchmark, the Lehman Brothers Municipal Bond Index (the Index).

 

Selective exposure to tobacco-related bonds and California bonds

The Series is allowed to invest in a limited amount of municipal bonds that are not insured. During the reporting period, we purchased municipal bonds backed by

 

12   Visit our website at www.jennisondryden.com


 

 

payments of tobacco companies to state governments under the Master Settlement Agreement (MSA). Additionally, these bonds are also obligations of the state of New York. Consequently, in the event that the MSA revenues are insufficient to pay debt service on the bonds in the first instance, bondholders would be paid from funds of the state of New York. The bonds performed relatively well because they are supported by two sources of revenue rather than just the MSA payments. On the whole, the tobacco-related sector of the municipal bond market remains volatile due to the risk of further judgments against tobacco companies.

 

California is among the largest issuers of municipal bonds. From time to time, the California bond sector came under pressure as the tax-exempt market struggled to absorb a large supply of new bonds from issuers in the Golden State. Therefore we limited the Series’ exposure to insured California bonds, which benefited its performance during its 12-month reporting period.

 

A shift in our investment discipline

 

Late in the reporting period, we initiated a shift in the Series’ investment discipline that affected its duration, a measure of its sensitivity to changes in interest rates. In managing the Series’ duration, we previously focused more on the durations of the funds in its Lipper peer group. However, in the volatile trading environment of the last few months, our efforts to match the changes in the peer group durations contributed to the Series’ underperformance versus its Lipper peer group average. In late March 2004, we began implementing a strategy that positions the Series’ duration and other investment characteristics more in line with those of the Index. To that end, we lengthened the Series’ duration in late March 2004.

 

Shortly afterwards, government figures released in early April 2004 showed that the job market had finally begun to improve along with the rest of the economy. This data caused the financial markets to speculate that the Fed would hike short-term rates in 2004. Anticipation of tighter monetary policy pushed bond yields higher, which caused bond prices to fall. The decline was sharper among insured municipal bonds because, as mentioned earlier, they tend to be more sensitive to changes in interest rates than uninsured bonds. Having a longer duration at the time detracted from the Series return. However, we believe that this strategy of focusing on the Index will enhance the risk profile of the Series and improve the predictability of its performance over the longer term.

 

Dryden Municipal Bond Fund   13


Portfolio of Investments

 

as of April 30, 2004

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                          

LONG-TERM INVESTMENTS    99.4%

                

Alabama    0.3%

                        

Camden Ind. Dev. Brd. Facs. Rev., Rfdg. Weyerhaeuser,
Ser. A

  BBB(b)   6.125%   12/01/24   $ 1,000    $ 1,049,830

Ser. B, A.M.T.

  BBB(b)   6.375   12/01/24     1,000      1,053,040
                      

                         2,102,870

Alaska    0.5%

                        

Northern Tobacco Secur. Corp., Asset Bkd. Bonds

  Baa3   6.50   6/01/31     3,500      3,190,250

Arizona    2.3%

                        

Coconino Cnty. Poll. Ctrl. Corp. Rev. Tuscon Elec. Pwr., Navajo,

                        

Ser. A, A.M.T.

  Ba3   7.125   10/01/32     5,000      5,140,450

Ser. B

  Ba3   7.00   10/01/32     1,700      1,749,878

Pima Cnty. Ind. Dev. Auth. Multi-Fam. Mtge. Rev., La Cholla Proj., A.M.T.

  NR   8.50   7/01/20     8,785      8,867,755
                      

                         15,758,083

California    11.2%

                        

Abag Fin. Auth. Nonprofit Corps., C.O.P. Amer. Baptist Homes, Ser. A

  BB+(b)   6.20   10/01/27     3,200      3,139,776

California St., G.O.

  Aaa   5.25   2/01/27     4,905      4,997,655

California St. Pub. Wks. Brd. Lease Rev.,

                        

Dept. Mental Hlth., Coalinga, Ser. A

  Baa2   5.50   6/01/19     2,000      2,086,420

Dept. Mental Hlth., Coalinga, Ser. A

  Baa2   5.50   6/01/20     2,000      2,075,160

Dept. Mental Hlth., Coalinga, Ser. A

  Baa2   5.50   6/01/22     2,000      2,052,860

California Statewide Cmntys. Dev. Auth. Rev., Kaiser Permanente, Ser. G

  A(b)   2.30   4/01/34     3,400      3,333,666

 

See Notes to Financial Statements.

 

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Description (a)  

Moody’s
Rating

(Unaudited)

   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                           

Capistrano Uni. Sch. Dist. Cmnty. Facs., Talega

  NR    6.00%   9/01/33   $ 1,000    $ 1,001,530

Central California Joint Pwr. Hlth. Fin. Auth., C.O.P., Cmnty. Hosps. of Central California

  Baa2    6.00   2/01/30     2,550      2,587,562

Foothill/Eastern Trans. Corridor Agcy. Toll Rd. Rev., C.A.B.S.

  Baa3    Zero   1/15/28     11,700      8,535,267

Golden St. Securitization Corp. Tobacco Settlement Rev., Asset Bkd., Ser. B

  Baa2    5.50   6/01/43     3,500      3,422,825

Asset Bkd., Ser. B

  Baa2    5.75   6/01/23     3,940      4,058,042

Lincoln Impvt. Bond Act 1915, Pub. Fin. Auth., Twelve Bridges

  NR    6.20   9/02/25     3,615      3,687,119

Los Angeles Cmnty. Redev. Agcy. Cmnty. Redev. Fin. Auth. Rev., Bunker Hill Proj., Ser. A, F.S.A.

  Aaa    5.00   12/01/22     4,500      4,558,905

Los Angeles Wtr. & Pwr. Rev. Pwr. Sys.,

                         

Ser. B, F.S.A.

  Aaa    5.125   7/01/15     1,000      1,072,100

Ser. B, F.S.A.

  Aaa    5.125   7/01/16     1,000      1,065,820

Ser. B, F.S.A.

  Aaa    5.125   7/01/17     2,100      2,223,480

Ser. B, F.S.A.

  Aaa    5.125   7/01/18     1,555      1,638,022

Orange Cnty. Cmnty. Loc. Trans. Auth., Reg. Linked, S.A.V.R.S., R.I.B.S.

  Aa2    6.20   2/14/11     7,000      8,055,670

Perris California Cmnty. Facs. Dist., Spec. Tax, No. 01-2,
Ser. A

  NR    6.25   9/01/23     3,000      2,989,680

Rancho Cordova Cmnty. Facs. Dist.,

                         

Spec. Tax No. 2003-1, Sunridge Anatolia

  NR    6.00   9/01/33     1,000      962,970

Spec. Tax No. 2003-1, Sunridge Anatolia

  NR    6.10   9/01/37     2,000      1,928,180

Roseville Joint Union H.S. Dist., Ser. B, F.G.I.C.

  Aaa    Zero   8/01/11     1,440      1,076,400

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   15


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Saugus Uni. Sch. Dist. Cmnty. Facs.

  NR   6.00%   9/01/33   $ 1,800     $ 1,756,890

Stockton Redev. Agcy. Rev., Stockton Events Ctr., Arena Proj., F.G.I.C.

  Aaa   5.00   9/01/36     1,250       1,232,550

University Revs.,

                         

Hosp. UCLA Med. Ctr., Ser. A, A.M.B.A.C.

  Aaa   5.50   5/15/23     1,330       1,419,722

Res. Facs., Ser. E, A.M.B.A.C.

  Aaa   5.00   9/01/18     2,115       2,189,363

Vallejo, Touro Univ., C.O.P.

  Ba3   7.375   6/01/29     3,500       3,615,360
                       

                          76,762,994

Colorado    3.6%

                         

Black Hawk Bus. Impvt. Dist.

  NR   7.75   12/01/19     5,285 (d)     6,560,852

Colorado Springs Hosp. Rev.

  A3   6.375   12/15/30     2,500       2,658,525

Denver Urban Ren. Auth. Tax, Inc.,

                         

Rev.

  NR   7.50   9/01/04     330       330,505

Rev.

  NR   7.75   9/01/16     4,000       4,234,840

Lake Creek Affordable Hsg. Corp. Multi-Fam. Rev.,

                         

Ser. A

  NR   6.25   12/01/23     4,935       4,366,340

Ser. B

  NR   7.00   12/01/23     960       857,923

Superior Metro. Dist. No. 1, Wtr. & Swr. Rev.

  NR   8.50   12/01/13     5,340 (d)     5,647,584
                       

                          24,656,569

Connecticut    0.8%

                         

Connecticut St., 1060 R, G.O., R.I.T.E.S.

  AAA(b)   8.721   11/15/09     5,000       5,303,700

Florida    6.0%

                         

Arbor Greene Cmnty. Dev. Dist., Spec. Assmt. Rev.

  NR   6.50   5/01/07     390       391,346

Bayside Impvt. Comnty. Dev. Dist., Ser. B

  NR   6.375   5/01/18     1,370       1,398,332

Broward Cnty. Res. Recov. Rev., Rfdg. Wheelabrator, Ser. A

  A3   5.50   12/01/08     4,000       4,383,320

Escambia Cnty. Hlth. Fac. Rev., Hlthcare. Fac., A.M.B.A.C.

  Aaa   5.95   7/01/20     500       521,515

 

See Notes to Financial Statements.

 

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Description (a)  

Moody’s
Rating

(Unaudited)

   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                            

Florida Hsg. Fin. Corp. Rev., Westchase Apts., Ser. B, A.M.T.

  NR    6.61%   7/01/38   $ 3,895     $ 3,401,270

Florida St. Corr. Privatization Cmnty. Cert. Partner,

                          

Ser. A, A.M.B.A.C.

  Aaa    5.00   8/01/16     3,825       4,028,643

Ser. A, A.M.B.A.C.

  Aaa    5.00   8/01/17     1,660       1,737,173

Ser. B, C.O.P., A.M.B.A.C.

  Aaa    5.00   8/01/14     2,020       2,156,855

Hillsborough Cnty. Ind. Dev. Auth. Hosp. Rev., Tampa Gen. Hosp. Proj., Ser. B

  Baa1    5.25   10/01/28     1,000       973,130

Hillsborough Cnty. Ind. Dev. Auth. Rev., Lakeshore Villas Proj., Ser. A

  NR    6.75   7/01/29     4,000       3,389,360

North Springs Impvt. Dist. Wtr. Mgmt.,

                          

Ser. A

  NR    8.20   5/01/24     1,798 (d)     1,832,755

Ser. B

  NR    8.30   5/01/24     1,580       1,614,302

Oakstead Cmnty. Dev. Dist., Cap. Impvt., Ser. B

  NR    6.50   5/01/07     1,250       1,253,362

Orlando Util. Cmnty. Wtr. & Elec. Rev., Ser. D, E.T.M.

  Aa1    6.75   10/01/17     2,000       2,431,300

Palm Beach Cnty. Hsg. Auth. Rev., Ser. A

  NR    7.75   3/01/23     4,020       4,122,269

Palm Beach Cnty. Pub. Impvt. Rev., Convention Ctr. Proj., F.G.I.C.

  Aaa    5.00   11/01/30     3,500       3,805,270

Stoneybrook West Cmnty. Dev. Dist. Spec. Assmt. Rev., Ser. B

  NR    6.45   5/01/10     1,090       1,098,066

Vista Lakes Cmnty. Dev. Dist. Cap. Impvt. Rev., Ser. B

  NR    6.35   5/01/05     185       185,024

Volusia Cnty. Sch. Brd. Sales Tax Rev., F.S.A.

  Aaa    5.00   10/01/10     2,500       2,734,150
                        

                           41,457,442

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   17


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Georgia    0.5%

                         

Atlanta Arpt. Facs. Rev., Rfdg. M.B.I.A., A.M.T., C.A.B.S.

  Aaa   Zero   1/01/10   $ 1,650     $ 1,236,609

Fulton Cnty. Residential Care Facs., Canterbury Court Proj., Ser. A

  NR   6.125%   2/15/34     1,200       1,162,392

Henry Cnty. Wtr. & Swr. Auth. Rev., A.M.B.A.C.

  Aaa   6.15   2/01/20     1,000       1,176,470
                       

                          3,575,471

Hawaii    0.3%

                         

Hawaii St., Ser. DD, G.O., M.B.I.A.

  Aaa   5.25   5/01/24     2,000       2,070,840

Illinois    5.6%

                         

Cary Illinois Spec. Tax Spec. Svcs.,

                         

Area No. 1, Cambridge, Ser. A

  NR   7.625   3/01/30     3,968       4,284,289

Area No. 2, Foxford Hill

  NR   7.50   3/01/30     4,950       5,302,143

Chicago Illinios Proj. & Rfdg., F.G.I.C.

  Aaa   5.25   1/03/28     4,375       4,427,500

Gilberts Illinois Spec. Svcs. Area No. 9, Spec. Tax, Big Timber Proj.

  NR   7.75   3/01/27     5,000       5,407,350

Illinois Edl. Facs. Auth. Student Hsg. Rev., Edl. Advnmt. Fdg. Univ. Ctr. Proj.

  Baa2   6.25   5/01/30     2,000       2,035,780

Illinois Hlth. Facs. Auth. Rev.,

                         

Midwest Physician Grp. Ltd. Proj.

  BB+(b)   8.10   11/15/14     2,550 (d)     2,683,161

Proj.

  BB+(b)   8.125   11/15/19     3,285 (d)     3,469,289

Kane & De Kalb Cntys. Sch. Dist., No. 301, C.A.B.S., A.M.B.A.C.

  Aaa   Zero   12/01/11     3,360       2,474,573

McLean & Woodford Cntys. Cmnty. Unit Sch.
Dist. No. 005, G.O., F.S.A.

  Aaa   5.625   12/01/17     4,535       4,976,482

Robbins Illinois Res. Recov. Rev. Restruct. Proj.,

                         

Ser. A, A.M.T.

  NR   8.375   10/15/16     5,031 (c)     11,069

Ser. B, A.M.T.

  NR   8.375   10/15/16     1,969 (c)     4,331

 

See Notes to Financial Statements.

 

18   Visit our website at www.jennisondryden.com


 

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Round Lake Rev.

  NR   6.70%   3/01/33   $ 1,000     $ 1,023,860

Winnebago Cnty. Hsg. Auth. Park Tower Assoc., Sec. 8

  NR   8.125   1/02/11     2,586       2,590,893
                       

                          38,690,720

Indiana    0.4%

                         

Indiana Hlth. Fac. Fin. Auth. Hosp. Rev., Cmnty. Foundation Northwest Ind., Ser. A

  BBB-(b)   6.00   3/01/34     3,000       2,878,890

Iowa    3.0%

                         

City of Cedar Rapids Rev., First Mtge.,

                         

Cottage Grove Place Proj.

  AAA(b)   9.00   7/01/18     9,090 (d)     10,036,360

Cottage Grove Place Proj.

  AAA(b)   9.00   7/01/25     4,435 (d)     4,907,283

Iowa St. Fin. Auth. Hlthcare., Facs. Rev., Mercy Hlth. Initiatives Proj.

  NR   9.25   7/01/25     4,895       5,751,870
                       

                          20,695,513

Louisiana    1.3%

                         

Calcasieu Parish, Inc., Ind. Dev. Brd. Rev., Rfdg. Olin Corp. Proj.

  Baa3   6.625   2/01/16     3,500       3,697,120

West Feliciana Parish Poll. Ctrl. Rev., Gulf St. Util.

  Ba1   7.70   12/01/14     5,000       5,070,800
                       

                          8,767,920

Maine    0.6%

                         

Maine Hlth. & Higher Edl. Facs. Auth. Rev., Piper Shores,

                         

Ser. A

  NR   7.50   1/03/19     1,000       1,035,930

Ser. A

  NR   7.55   1/04/29     3,000       3,095,550
                       

                          4,131,480

Maryland    2.0%

                         

Anne Arundel Cnty. Spec. Oblig., Arundel Mills Proj.

  NR   7.10   7/01/29     3,000 (d)     3,623,340

Maryland St. Hlth. & Higher Edl. Facs. Auth. Rev.

  A3   6.75   7/01/30     5,000       5,640,650

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   19


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                            

Northeast Wste. Disp. Auth. Rev.,

                          

Sludge Corp. Facs.

  NR    7.25%   7/01/07   $ 1,969     $ 2,103,148

Sludge Corp. Facs., A.M.T.

  NR    8.50   7/01/07     2,260       2,500,532
                        

                           13,867,670

Massachusetts    2.3%

                          

Massachusetts St., Cons. Ln., G.O., Ser. C

  Aa2    5.25   11/01/30     1,495 (d)     1,646,458

Massachusetts St. Coll. Bldg., Proj. & Rfdg. Bonds, Ser. A

  Aa2    7.50   5/01/14     1,750       2,207,853

Massachusetts St. Dev. Fin. Agcy. Rev., Hlthcare. Fac., Alliance, Ser. A

  NR    7.10   7/01/32     4,100       3,973,474

Massachusetts St. Hlth. & Edl. Facs. Auth. Rev. Caritas Christi Oblig. Grp., Rfdg.,
Ser. A

  Baa3    5.75   7/01/28     2,000       1,859,520

Ser. B

  Baa3    6.75   7/01/16     3,595       3,888,064

Massachusetts St. Wtr. Poll. Abatement Trust, Pool Proj., Ser. 9

  Aaa    5.25   8/01/33     2,500       2,558,675
                        

                           16,134,044

Michigan    3.3%

                          

Detroit Wtr. Sup. Sys., Ser. B, M.B.I.A.

  Aaa    5.25   7/01/32     7,500       7,660,950

Kalamazoo Michigan Hosp. Fin. Auth. Hosp. Fac. Rev., E.T.M.

  Aaa    9.258(f)   6/01/11     2,000       2,091,600

Michigan Mun. Bond Auth. Rev.,

                          

Clean Wtr. St. Revolving Fd.

  Aaa    5.00   10/01/11     3,115       3,394,540

Clean Wtr. St. Revolving Fd.

  Aaa    5.00   10/01/12     2,465       2,668,412

Drinking Wtr. St. Revolving Fd.

  Aaa    5.25   10/01/12     2,950       3,246,062

Michigan St. Hosp. Fin. Auth. Rev., Pontiac Osteopathic, Ser. A

  Baa3    6.00   2/01/14     3,045       3,057,697

 

See Notes to Financial Statements.

 

20   Visit our website at www.jennisondryden.com


 

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Michigan St. Strategic Fd. Res. Recov. Ltd. Oblig. Rev. Central Wayne Engy. Rec.,

                         

Ser. A, A.M.T.

  NR   6.90%   7/01/19   $ 1,500 (c)(h)   $ 75,000

Ser. A, A.M.T.

  NR   7.00   7/01/27     6,500 (c)(h)     325,000
                       

                          22,519,261

Minnesota    0.4%

                         

St Paul Hsg. & Redev. Auth. Hosp. Rev., Hltheast Proj.,
Ser. A

  Ba2   6.625   11/01/17     2,500       2,527,725

Nevada    1.8%

                         

Clark Cnty. Impvt. Dist.,

                         

No. 121, Southern Highlands Area

  NR   7.50   12/01/19     4,815       5,189,029

Spec. Impvt. Dist. No. 142, Loc. Impvt.

  NR   6.10   8/01/18     2,000       2,015,580

North Las Vegas Local Impvt.,

                         

Spec. Impvt. Dist. No. 60 Aliante

  NR   5.60   12/01/12     1,525       1,539,396

Spec. Impvt. Dist. No. 60 Aliante

  NR   6.40   12/01/22     1,250       1,248,563

Washoe Cnty. Wtr. Fac. Rev.,

                         

Sierra Pac. Pwr. Co., A.M.T.

  BB(b)   5.00   3/01/36     2,500       2,500,900
                       

                          12,493,468

New Hampshire    0.7%

                         

New Hampshire Higher Edl. & Hlth. Facs. Auth. Rev., Antioch Coll.

  NR   7.875   12/01/22     4,790       4,892,698

New Jersey    8.6%

                         

Camden Cnty. Auth. Rev., Hlthcare. Redev. Cooper Proj.

  Ba2   6.00   2/15/27     2,250       2,073,150

Jersey City, Gen. Impvt., Ser. B, F.S.A.

  Aaa   5.00   9/01/18     2,955       3,087,059

New Jersey Econ. Dev. Auth. Rev.,

                         

Continental Airlines, Inc. Proj., A.M.T.

  Caa2   6.25   9/15/29     2,500       1,954,150

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   21


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Kapkowski Rd., Ser. A

  Aaa   6.375%   4/01/31   $ 7,000 (d)   $ 8,382,920

Kapkowski Rd., Ser. A, C.A.B.S., E.T.M.

  Aaa   Zero   4/01/12     1,115       803,068

Rfdg. First Mtge. Franciscan Oaks Proj.

  NR   5.70   10/01/17     165       150,437

New Jersey Hlthcare. Facs. Fin. Auth. Rev.,

                         

Cherry Hill Proj.

  NR   8.00   7/01/27     5,000       5,115,400

Pascack Valley Hosp. Assoc.

  BB+(b)   6.625   7/01/36     2,000       2,071,140

Raritan Bay Med. Ctr.

  NR   7.25   7/01/14     3,700       3,810,297

Raritan Bay Med. Ctr.

  NR   7.25   7/01/27     4,000       4,088,440

Somerset Med. Ctr.

  Baa2   5.50   7/01/33     2,750       2,672,010

St. Peters Univ. Hosp., Ser. A

  Baa1   6.875   7/01/30     2,250       2,459,542

New Jersey St. Econ. Dev. Auth. Rev., First Mtge. Fellowship Vlge. Proj., Ser. A

  Aaa   9.25   1/01/25     11,500 (d)     12,325,930

New Jersey St. Edl. Facs. Auth. Rev., Felician Coll. of Lodi, Ser. D

  NR   7.375   11/01/22     3,700       3,707,400

Tobacco Settlement Fin. Corp.

  A3   6.25   6/01/43     7,250       6,311,270
                       

                          59,012,213

New Mexico    0.9%

                         

New Mexico St. Hosp. Equip. Ln. Council Rev., Mem. Med. Ctr., Inc. Proj.

  B1   5.375   6/01/18     1,000       974,420

New Mexico St. Hosp. Rev., Mem. Med. Ctr., Inc. Proj.

  B1   5.50   6/01/28     5,370       5,182,963
                       

                          6,157,383

New York    9.3%

                         

Brookhaven New York Ind. Dev. Agcy. Civic Facs. Rev., Mem. Hosp. Med. Ctr., Inc., Ser. A

  NR   8.25   11/15/30     4,000 (e)     4,173,160

Metro. Trans. Auth. Rev., Ser. A, A.M.B.A.C.

  Aaa   5.50   11/15/18     4,045       4,391,940

Metro. Trans. Auth. Svc. Contract, Ser. B, M.B.I.A.

  Aaa   5.50   7/01/19     3,050       3,298,544

New York City Mun. Wtr. Auth. Rev., Ser. F

  Aa2   5.00   6/15/29     8,440       8,379,823

 

See Notes to Financial Statements.

 

22   Visit our website at www.jennisondryden.com


 

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

New York City Mun. Wtr. Fin. Auth. Wtr. & Swr. Sys. Rev.

  Aaa   9.17(f)%   6/15/09   $ 10,000 (d)(e)   $ 10,287,800

New York City Transitional Fin. Auth. Rev., Ser. C

  Aa2   5.50   2/15/16     2,500       2,707,000

New York St. Engy. Res. & Dev. Auth. Poll. Ctrl. Rev., Cent. Hudson Gas & Elec., Ser. A, A.M.T.

  Aaa   3.00   12/01/28     3,300       3,243,504

New York St. Environ. Facs. Rev. Corp., Revolving Funds, Ser. B

  Aaa   5.00   6/15/27     780       784,610

New York St. Urban Dev. Corp. Corr. & Youth Facs. Svcs.,
Ser. A

  A3   5.00   1/01/09     3,000       3,241,830

Suffolk Cnty. Ind. Dev. Agcy. Civic Facs. Rev., South Hampton Hosp. Assoc., Ser. B

  NR   7.625   1/01/30     5,000       5,032,300

Tobacco Settlement Fin. Corp.,

                         

Asset Bkd., Ser. A-1

  A3   5.50   6/01/14     8,000       8,577,440

Ser. C-1

  A3   5.50   6/01/14     3,500       3,752,630

Ser. C-1

  A3   5.50   6/01/15     6,000       6,398,280
                       

                          64,268,861

North Carolina    0.3%

                         

North Carolina Mun. Pwr. Agcy. Pwr. Sys. Rev., Rfdg., Ser. D

  Baa3   5.125   1/02/26     2,000       1,927,620

North Dakota    0.9%

                         

Ward Cnty. Hlthcare. Facs. Rev., Rfdg. Trinity Oblig.,

                         

Group A

  BBB+(b)   6.25   7/01/26     4,110       4,165,567

Group B

  BBB+(b)   6.25   7/01/21     2,000       2,048,460
                       

                          6,214,027

Ohio    0.6%

                         

Cuyahoga Cnty. Hosp. Facs. Rev., Canton, Inc. Proj.

  Baa2   7.50   1/01/30     3,000       3,300,090

Ohio St. Solid Wste. Rev.,

                         

CSC Ltd. Proj., A.M.T.

  NR   8.50   8/01/22     7,000 (c)     0

Rep. Eng. Steels, Inc., A.M.T.

  NR   9.00   6/01/21     2,250 (c)     225

Richland Cnty. Hosp. Facs. Rev., Rfdg. Medcentral Hlth. Sys., Ser. A

  A-(b)   6.125   11/15/16     1,000       1,071,640
                       

                          4,371,955

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   23


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Oklahoma    0.6%

                         

Tulsa Mun. Arpt. Trust Rev., Rfdg, AMR Corp., Ser. A, A.M.T.

  Caa2   5.80%   6/01/35   $ 4,350     $ 4,260,694

Oregon    0.8%

                         

Oregon St. Dept. Administrative Svcs. Lottery Rev., Ser. A, F.S.A.

  Aaa   5.00   4/01/11     5,000       5,470,100

Pennsylvania    4.7%

                         

Allegheny Cnty. Hosp. Dev. Auth. Rev. Hlth. Sys.,

                         

Ser. B

  B2   9.25   11/15/15     1,000       1,117,440

Ser. B

  B2   9.25   11/15/22     1,825       2,039,328

Ser. B

  B2   9.25   11/15/30     2,500       2,790,825

Allentown Area Hosp. Auth. Rev., Sacred Heart Hosp. of Allentown, Ser. B

  Baa3   6.75   11/15/15     2,900       2,913,427

Cumberland Cnty. Mun. Auth. Ret. Cmnty. Rev., Wesley Affiliated Svcs., Ser. A

  NR   7.25   1/01/35     4,000       3,950,920

Delaware Cnty. Ind. Dev. Auth. Rev., Rfdg. Res. Recov. Facs., Ser. A

  Baa3   6.00   1/01/09     6,500       6,971,055

Lancaster Cnty. Hosp. Auth. Rev., Gen. Hosp. Proj.

  A-(b)   5.50   3/15/26     780       785,055

Langhorne Manor Boro. Higher Ed. & Hlth. Auth. Rev., Hosp. Lower Bucks Hosp.

  B2   7.35   7/01/22     5,650       5,468,070

Philadelphia Hosps. & Higher Ed. Facs. Auth. Rev.,

                         

Grad. Hlth. Sys.

  Ca   7.00   7/01/05     1,651 (c)     16

Grad. Hlth. Sys.

  Ca   7.25   7/01/18     2,269 (c)     23

Grad. Hlth. Sys., Ser. A

  Ca   6.25   7/01/13     2,015 (c)     20

Somerset Cnty. Hosp. Auth. Rev.,

                         

Hlthcare. First Mtge.

  NR   8.40   6/01/09     1,425       879,795

Hlthcare. First Mtge.

  NR   8.50   6/01/24     8,805       5,436,207
                       

                          32,352,181

 

See Notes to Financial Statements.

 

24   Visit our website at www.jennisondryden.com


 

 

Description (a)  

Moody’s
Rating

(Unaudited)

   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                            

Rhode Island    1.4%

                          

Providence Redev. Agcy., C.O.P., Ser. A

  NR    8.00%   9/01/24   $ 9,270 (d)   $ 9,646,177

South Carolina    0.8%

                          

South Carolina Jobs Econ. Dev. Auth. Hosp. Facs. Rev., Rfdg. & Palmetto Hlth., Ser. C

  Baa2    6.875   8/01/27     5,000       5,378,250

South Dakota    0.6%

                          

South Dakota Econ. Dev. Fin. Auth., Dakota Park, A.M.T.

  NR    10.25   1/02/19     4,355       4,404,952

Tennessee    5.9%

                          

Bradley Cnty. Ind. Dev. Brd., Rfdg. Olin Corp. Proj., Ser. C

  Baa3    6.625   11/01/17     2,000       2,122,520

Johnson City Hlth. & Edl. Facs. Brd. Hosp. Rev., Rfdg. First Mtge., Ser. A, M.B.I.A.

  Aaa    6.75   7/01/17     2,000       2,410,000

Memphis Ctr. City Rev., Fin. Corp., Ser. B

  NR    6.50   9/01/28     26,000       26,130,780

Rutherford Cnty. Hlth. & Edl. Facs. Brd., First Mtge. Rev.

  NR    9.50   12/01/19     6,300       6,483,897

Shelby Cnty. Hlth. Edl. & Hsg. Fac. Brd. Hosp. Rev., Methodist Hlthcare.

  Baa1    6.50   9/01/26     3,500       3,772,405
                        

                           40,919,602

Texas    8.1%

                          

Abilene Texas Hlth. Facs. Dev. Corp. Ret. Facs. Rev., Sears Methodist Ret., Ser. A

  NR    7.00   11/15/33     1,500       1,553,295

Austin Hsg. Fin. Corp. Multi-Fam. Hsg. Rev., Stony Creek, Ser. A

  Ba2    7.75   11/01/29     9,345       9,252,765

Brazos River Auth. Poll. Ctrl. Rev., TXU Energy Co. LLC Proj.,

                          

Ser. C, A.M.T.

  Baa2    6.75   10/01/38     1,750       1,849,225

Ser. D

  Baa2    5.40   10/01/29     1,000       1,031,310

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   25


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                           

Dallas-Fort Worth Int’l. Arpt. Fac. Impvt. Corp. Rev.,

                         

American Airlines, Inc.

  Caa2   6.00%   11/01/14   $ 3,050     $ 2,105,079

American Airlines, Inc.

  Caa2   6.375   5/01/35     2,000       1,308,880

American Airlines, Ser. B, A.M.T.

  Caa2   6.05   5/01/29     4,500       4,263,975

American Airlines, Ser. C

  Caa2   6.15   5/01/29     3,600       3,149,352

Harris Cnty., Toll Rd., Sr. Lien, Ser. B-1, F.G.I.C.

  Aaa   5.00   8/15/16     2,500       2,642,000

Houston Hlth. Facs. Dev. Corp. Ret. Fac. Rev., Buckingham Sr. Living Cmnty., Ser. A

  NR   7.125   2/15/34     1,250       1,240,650

Katy Texas Dev. Auth. Rev., Tax Increment Contract, Ser. B

  NR   6.00   6/01/18     4,000       3,921,640

Lower Colo River Auth., Rfdg., Trans. Svcs. Corp. Proj.,
Ser. C

  Aaa   5.25   5/15/24     4,515       4,642,504

Matagorda Cnty. Nav.
Dist. No. 1 Poll. Ctrl. Rev.,

                         

Rfdg. Central Pwr., Ser. A

  Baa2   2.15   5/01/30     5,000       4,995,700

Rfdg. Central Pwr., Ser. B, A.M.T.

  Baa2   2.35   5/01/30     2,500       2,497,875

Matagorda Cnty. Nav.
Dist. No. 1 Rev., Coll. Centerpoint Engy. Proj.

  Ba2   5.60   3/01/27     2,000       1,990,380

North Central Texas Hlth. Fac. Dev. Corp. Rev., Ret. Fac. Sr. Hsg., Ser. A

  NR   7.50   11/15/29     5,000       5,161,750

Royse City Indpt. Sch. Dist., Sch. Bldg., G.O., P.S.F.G.

  AAA(b)   5.00   8/15/28     2,800       2,786,532

Sabine River Auth. Poll. Ctl. Rev., TXU Energy Co. LLC Proj., Ser. B

  Baa2   6.15   8/01/22     1,000       1,038,400

Texas Mun. Pwr. Agcy. Rev., M.B.I.A., E.T.M.

  Aaa   Zero   9/01/15     50       29,464
                       

                          55,460,776

Utah    0.2%

                         

Carbon Cnty. Solid Wste. Disp. Rev., Rfdg. Laidlaw Environ., Ser. A, A.M.T.

  NR   7.45   7/01/17     1,000       1,032,400

Tooele Cnty. Poll. Ctrl. Rev., Rfdg. Laidlaw Environ.,
Ser. A, A.M.T.

  NR   7.55   7/01/27     4,000 (c)     168,000
                       

                          1,200,400

 

See Notes to Financial Statements.

 

26   Visit our website at www.jennisondryden.com


 

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                          

Virginia    3.4%

                        

Chesterfield Cnty. Ind. Dev. Auth. Poll. Ctrl. Rev., Virginia Elec. & Pwr., Ser. A

  A3   5.875%   6/01/17   $ 2,000    $ 2,132,260

Gloucester Cnty. Ind. Dev. Auth. Solid Wste. Disp. Rev., Wste. Mgmt. Svcs., Ser. A Rmkt. 5/3/04, A.M.T.

  BBB(b)   5.125   9/01/38     2,700      2,697,732

Norfolk Redev. & Hsg. Auth., Multi-Fam. Rental Hsg. Facs. Rev., A.M.T.

  NR   8.00   9/01/26     5,825      5,849,756

Pittsylvania Cnty. Ind. Dev. Auth. Rev., Multitrade, Ser. A, A.M.T.

  NR   7.55   1/02/19     2,500      2,426,050

Pocahontas Pkwy. Assoc. Toll Rd. Rev., C.A.B.S.,

                        

Ser. B

  BB(b)   Zero   8/15/16     7,000      2,688,070

Ser. C

  B1   Zero   8/15/16     3,300      830,049

Ser. C

  B1   Zero   8/15/32     6,200      410,502

Ser. C

  B1   Zero   8/15/33     6,200      393,266

Ser. C

  B1   Zero   8/15/35     5,500      289,025

Roanoke Cnty. Ind. Dev. Auth. Residential Care Fac. Rev., Ser. A

  NR   4.40   7/01/08     4,000      3,992,240

Sussex Cnty. Ind. Dev. Auth. Solid Wste. Disp. Rev., Atlantic Wste., Ser. A, Rmkt. 5/3/04, A.M.T.

  BBB(b)   5.125   6/01/28     1,600      1,599,376
                      

                         23,308,326

Washington    1.9%

                        

Bellevue Conv. Ctr. Auth., King City, Oblig. Rev., M.B.I.A.

  Aaa   Zero   2/01/10     870      701,037

Energy Northwest Elec. Rev.,

                        

Columbia Generating, Ser. B, A.M.B.A.C.

  Aaa   6.00   7/01/18     5,050      5,667,413

Proj. No. 1, Ser. B, M.B.I.A.

  Aaa   6.00   7/01/17     4,300      4,830,405

Port Seattle Spec. Facs. Rev., Northwest Airlines Proj., A.M.T.

  NR   7.125   4/01/20     600      534,408

Washington St. Pub. Pwr. Sup. Sys. Rev., Nuclear Proj. No.1, Ser. B, E.T.M.

  Aaa   7.25   7/01/09     920      1,047,236
                      

                         12,780,499

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   27


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
    Principal
Amount (000)
    Value (Note 1)
                             

West Virginia    1.2%

                           

West Virginia St. Hosp. Fin. Auth. Hosp. Rev., Oak Hill Hosp., Ser. B

  A2   6.75%   9/01/30     $ 7,000 (d)   $ 8,397,340

Wisconsin    1.9%

                           

Manitowoc Elec. Rev., Power Sys., F.G.I.C.

  Aaa   5.25   10/01/34       5,000       5,075,800

Oconto Falls Cmnty. Dev. Auth. Dev. Rev., A.M.T.

  NR   8.125   12/01/22       1,395 (h)     1,224,656

Oconto Falls Tissue, Inc. Proj., A.M.T.

  NR   7.75   12/01/22       8,000 (h)     6,756,960
                         

                            13,057,416

Trust Territories    0.4%

                           

Northern Mariana Islands Comnwlth., Ser. A, G.O.

  Ba3   6.75   10/01/33       3,000       3,022,200
                         

Total long-term investments
(cost $702,687,568)

                          684,088,580
                         

SHORT-TERM INVESTMENTS    2.7%

                   

Alabama    0.1%

                           

Mobile Ind. Dev. Brd. Rev., Alabama Pwr. Co. Barry Plant Proj., Ser. B, A.M.T., F.R.D.D.

  VMIG1   1.15   5/03/04 (g)     300       300,000

Delaware    0.5%

                           

Delaware St. Econ. Dev. Auth. Rev.,

                           

Delmarva Pwr. & Lt. Co. Proj., A.M.T., F.R.D.D.

  VMIG2   1.28   5/03/04 (g)     3,100       3,100,000

Delmarva Pwr. & Lt. Co. Proj., Ser. A, A.M.T., F.R.D.D.

  VMIG2   1.28   5/03/04 (g)     200       200,000
                         

                            3,300,000

Florida    0.4%

                           

Miami Dade Cnty. Ind. Dev. Auth. Ind. Dev. Rev., Tarmac America Proj., A.M.T., F.R.W.D.

  A-1+(b)   1.20   5/06/04 (g)     3,000       3,000,000

 

See Notes to Financial Statements.

 

28   Visit our website at www.jennisondryden.com


 

 

Description (a)  

Moody’s
Rating

(Unaudited)

  Interest
Rate
  Maturity
Date
    Principal
Amount (000)
   Value (Note 1)
                            

Louisiana    0.5%

                          

St. Charles Parish Poll. Ctrl. Rev., Shell Oil Co. Proj., Ser. A, A.M.T., F.R.D.D.

  VMIG1   1.13%   5/03/04 (g)   $ 1,800    $ 1,800,000

West Baton Rouge Parish Ind. Dist. No. 3 Rev.,

                          

Dow Chemical Co. Proj., Ser. A, A.M.T., F.R.D.D.

  P-2   1.23   5/03/04 (g)     1,700      1,700,000

Dow Chemical Co. Proj., Ser. B, F.R.D.D.

  P-2   1.20   5/03/04 (g)     200      200,000
                        

                           3,700,000

North Carolina    0.6%

                          

Halifax Cnty. Ind. Facs. & Poll. Ctrl. Fin. Auth. Rev., Westmoreland, A.M.T.

  Aa2   1.16   5/03/04 (g)     1,300      1,300,000

Municipal Secs. Trust Cert., Ser. 2001-125, Tr. Cert. Cl. A, F.R.D.D., G.O.

  A-1(b)   1.12   5/03/04 (g)     2,900      2,900,000
                        

                           4,200,000

Rhode Island    0.2%

                          

Providence Hsg. Auth.
Multi-Fam. Rev., Hsg. Cathedral Square, Ser. B

  A-1+(b)   1.17   5/03/04 (g)     1,300      1,300,000

South Carolina    

                          

Berkeley Cnty. Exempt Fac. Ind. Rev., Amoco Chemical Co. Proj., A.M.T., F.R.D.D.

  VMIG1   1.13   5/03/04 (g)     200      200,000

Texas    0.3%

                          

Gulf Coast Ind. Dev. Auth. Environ. Facs. Rev., Citgo Petroleum Corp. Proj., A.M.T., F.R.D.D.

  VMIG1   1.14   5/03/04 (g)     200      200,000

Gulf Coast Waste Disp. Auth. Environ. Facs. Rev., Amoco Oil Co. Proj., A.M.T., F.R.D.D.

  VMIG1   1.13   5/03/04 (g)     1,700      1,700,000
                        

                           1,900,000

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   29


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)  

Moody’s
Rating

(Unaudited)

   Interest
Rate
  Maturity
Date
    Principal
Amount (000)
   Value (Note 1)  
                               

Washington    0.1%

                             

Port Bellingham Ind. Dev. Corp. Environ. Facs. Ind., BP West Coast Prods. LLC Proj., A.M.T., F.R.D.D.

  VMIG1    1.13%   5/03/04 (g)   $ 800    $ 800,000  
                         


Total short-term investments
(cost $18,700,000)

                          18,700,000  
                         


Total Investments    102.1%
(cost $721,387,568; Note 5)

                          702,788,580  

Liabilities in excess of other assets    (2.1)%

                          (14,401,487 )
                         


Net Assets    100.0%

                        $ 688,387,093  
                         



(a) The following abbreviations are used in portfolio descriptions:

A.M.B.A.C.—American Municipal Bond Assurance Corporation.

A.M.T.—Alternative Minimum Tax.

C.A.B.S.—Capital Appreciation Bonds.

C.O.P.—Certificates of Participation.

E.T.M.—Escrowed to Maturity.

F.G.I.C.—Financial Guaranty Insurance Company.

F.R.D.D.—Floating Rate Daily Demand Note(g).

F.R.W.D.—Floating Rate Weekly Demand Note(g).

F.S.A.—Financial Security Assurance.

G.O.—General Obligation.

M.B.I.A.—Municipal Bond Insurance Corporation.

P.S.F.G.—Public School Fund Guaranty.

R.I.B.S.—Residential Interest Bonds.

R.I.T.E.S—Residual Interest Tax Exempt Securities Receipts.

S.A.V.R.S.—Select Auction Variable Rate Securities.

(b) Standard & Poor’s rating.
(c) Represents issuer in default of interest payments; non-income producing security.
(d) Prerefunded issues are secured by escrowed cash and/or direct U.S. government guaranteed obligations.
(e) All or partial principal amount segregated as initial margin on financial futures contracts.
(f) Inverse floating rate bond. The coupon is inversely indexed to a floating rate. The rate shown is the rate at year end.
(g) The maturity date shown is the later of the next date on which the security can be redeemed at par or the next date on which the rate of interest is adjusted.

(h) Fair valued security—value is determined under procedures approved by the Board of Trustees.

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.

 

30   Visit our website at www.jennisondryden.com


 

 

 

This Page Intentionally Left Blank


Statement of Assets and Liabilities

 

as of April 30, 2004

 

Assets

 

Investments, at value (cost $721,387,568)

   $ 702,788,580  

Cash

     39,044  

Receivable for investments sold

     40,323,400  

Interest receivable

     13,810,028  

Receivable for Series shares sold

     230,895  

Due from broker-variation margin

     166,332  

Unrealized appreciation on interest rate swaps

     97,411  

Prepaid expenses

     16,812  
    


Total assets

     757,472,502  
    


Liabilities

        

Payable for investments purchased

     65,797,207  

Payable for Series shares reacquired

     1,588,474  

Dividends payable

     1,002,199  

Management fee payable

     285,749  

Accrued expenses

     204,926  

Distribution fee payable

     190,665  

Deferred trustees’ fees

     16,189  
    


Total liabilities

     69,085,409  
    


Net Assets

   $ 688,387,093  
    


          

Net assets were comprised of:

        

Shares of beneficial interest, at par

   $ 688,711  

Paid-in capital in excess of par

     756,474,096  
    


       757,162,807  

Undistributed net investment income

     1,701,509  

Accumulated net realized loss on investments

     (51,696,746 )

Net unrealized depreciation on investments, financial futures contracts and interest rate swap

     (18,780,477 )
    


Net assets, April 30, 2004

   $ 688,387,093  
    


 

See Notes to Financial Statements.

 

32   Visit our website at www.jennisondryden.com


 

 

Class A

      

Net asset value and redemption price per share
($457,183,566 ÷ 45,744,700 shares of beneficial interest issued and outstanding)

   $ 9.99

Maximum sales charge (4% of offering price)

     0.42
    

Maximum offering price to public

   $ 10.41
    

Class B

      

Net asset value, offering price and redemption price per share
($192,516,976 ÷ 19,255,103 shares of beneficial interest issued and outstanding)

   $ 10.00
    

Class C

      

Net asset value, offering price and redemption price per share
($24,599,486 ÷ 2,460,447 shares of beneficial interest issued and outstanding)

   $ 10.00
    

Class Z

      

Net asset value, offering price and redemption price per share
($14,087,065 ÷ 1,410,836 shares of beneficial interest issued and outstanding)

   $ 9.98
    

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   33


Statement of Operations

 

Year Ended April 30, 2004

 

Net Investment Income

        

Income

        

Interest

   $ 45,384,436  
    


Expenses

        

Management fee

     3,708,037  

Distribution fee—Class A

     1,199,229  

Distribution fee—Class B

     1,096,880  

Distribution fee—Class C

     202,259  

Transfer agent’s fees and expenses

     299,000  

Reports to shareholders

     255,000  

Custodian’s fees and expenses

     170,000  

Registration fees

     52,000  

Legal fees and expenses

     43,000  

Audit fee

     25,000  

Trustees’ fees

     17,000  

Miscellaneous

     29,067  
    


Total expenses

     7,096,472  
    


Net investment income

     38,287,964  
    


Realized And Unrealized Gain (Loss) On Investments

        

Net realized gain (loss) on:

        

Investment transactions

     10,504,919  

Financial futures transactions

     (5,080,773 )

Interest rate swap

     (210,146 )

Options written

     128,223  
    


       5,342,223  
    


Net change in unrealized appreciation (depreciation) on:

        

Investments transactions

     (13,011,052 )

Financial futures contracts

     (210,210 )

Interest rate swap

     97,411  
    


       (13,123,851 )
    


Net loss on investments

     (7,781,628 )
    


Net Increase In Net Assets Resulting From Operations

   $ 30,506,336  
    


 

See Notes to Financial Statements.

 

34   Visit our website at www.jennisondryden.com


Statement of Changes in Net Assets

 

(Unaudited)

 

    Year Ended April 30,

 
    2004        2003  

Increase (Decrease) In Net Assets

                  

Operations

                  

Net investment income

  $ 38,287,964        $ 43,500,365  

Net realized gain (loss) on investments transactions

    5,342,223          (2,719,955 )

Net change in unrealized appreciation (depreciation) on investments

    (13,123,851 )        6,197,152  
   


    


Net increase in net assets resulting from operations

    30,506,336          46,977,562  
   


    


Dividends

                  

Dividends from net investment income

                  

Class A

    (25,207,520 )        (27,212,576 )

Class B

    (10,929,151 )        (13,811,235 )

Class C

    (1,276,742 )        (1,351,027 )

Class Z

    (863,578 )        (621,063 )
   


    


      (38,276,991 )        (42,995,901 )
   


    


Series share transactions (Net of share conversions) (Note 6)

                  

Net proceeds from shares sold

    53,315,667          72,704,604  

Net asset value of shares issued in reinvestment of dividends

    17,099,105          19,333,005  

Cost of shares reacquired

    (150,460,389 )        (140,516,971 )
   


    


Net decrease in net assets from Series share transactions

    (80,045,617 )        (48,479,362 )
   


    


Total decrease

    (87,816,272 )        (44,497,701 )

Net Assets

                  

Beginning of year

    776,203,365          820,701,066  
   


    


End of year(a)

  $ 688,387,093        $ 776,203,365  
   


    


(a) Includes undistributed net investment income of

  $ 1,701,509        $ 1,534,048  
   


    


 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   35


Portfolio of Investments

 

as of April 30, 2004

 

Description (a)   Moody’s
Rating
(Unaudited)
   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                            

LONG-TERM INVESTMENTS    98.9%

                      

Alabama    1.3%

                          

Alabama St. Pub. Sch. & Coll. Auth., Cap. Impvt., Ser. D

  Aa3    5.25%   8/01/05   $ 4,000     $ 4,185,840

California    9.1%

                          

California St., G.O., M.B.I.A.

  Aaa    5.25   2/01/27     7,000       7,132,230

Inland Empire Solid Wste. Landfill Impvt., Proj. B, F.S.A., A.M.T.

  Aaa    6.00   8/01/16     2,000 (d)     2,212,120

Los Angeles Unif. Sch. Dist. Cert. Part., Admin. Bldg. Proj., Ser. B, C.O.P.

  Aaa    5.00   10/01/31     6,525       6,476,584

San Diego Cnty. Wtr. Rev., G.O., F.G.I.C.

  Aaa    10.028(c)   4/26/06     5,800       6,610,144

San Joaquin Hills Trans. Corridor Agcy. Toll Rd. Rev., Ser. A, C.A.B.S., M.B.I.A.

  Aaa    Zero   1/15/36     10,000       1,677,700

South Orange Cnty. Pub. Fin., Foothill Area Proj., Ser. C, F.G.I.C.

  Aaa    8.00   8/15/08     2,000       2,420,480

Stockton Redev. Agcy. Rev., Stockton Events Ctr., Arena Proj., F.G.I.C.

  Aaa    5.00   9/01/36     2,750       2,858,598
                        

                           29,387,856

Colorado    4.0%

                          

Colorado Dept. Trans. Rev., Trans. Rev. Antic Nts.,
Ser. A, F.G.I.C.

  Aaa    5.00   12/15/16     7,000       7,438,620

Denver City & Cnty. Arpt. Rev., Ser. C, A.M.T., M.B.I.A.

  Aaa    5.60   11/15/11     5,000       5,393,450
                        

                           12,832,070

District of Columbia    2.2%

                          

Dist. of Columbia, G.O.,

                          

Ser. A, M.B.I.A.

  Aaa    6.50   6/01/10     3,095 (e)     3,602,085

Ser. A, E.T.M., M.B.I.A.

  Aaa    6.50   6/01/10     2,905       3,416,483
                        

                           7,018,568

 

See Notes to Financial Statements.

 

36   Visit our website at www.jennisondryden.com


 

 

Description (a)   Moody’s
Rating
(Unaudited)
   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                           

Florida    6.4%

                         

Brevard Cnty. Hlth. Facs. Auth., Holmes Reg. Med. Ctr. Proj., M.B.I.A.

  Aaa    5.60%   10/01/10   $ 6,000    $ 6,491,880

Florida St. Corr. Privatization Comn. Cert. Partner, A.M.B.A.C., C.O.P.,

                         

Ser. B

  Aaa    5.00   8/03/15     2,125      2,252,585

Ser. B

  Aaa    5.00   8/01/16     2,235      2,353,991

Indian River Cnty. Wtr. & Swr. Rev., Ser. A, F.G.I.C.

  Aaa    5.25   9/04/18     2,600      2,756,130

Orange Cnty. Tourist Dev. Tax Rev.

  Aaa    5.00   10/01/17     2,000      2,075,300

Palm Beach Cnty. Pub. Impvt. Rev., Convention Ctr. Proj., F.G.I.C.

  Aaa    5.00   11/01/30     2,000      2,174,440

Volusia Cnty. Sch. Brd. Sales Tax Rev., F.S.A.

  Aaa    5.00   10/01/09     2,330      2,549,230
                       

                          20,653,556

Georgia    3.0%

                         

Atlanta Arpt. Facs. Rev.,
Ser. A, A.M.B.A.C., E.T.M.

  Aaa    6.50   1/04/10     2,000      2,338,480

Georgia Mun. Elec. Auth., Pwr. Rev., Ser. B, M.B.I.A.

  Aaa    6.20   1/04/10     3,495      3,998,280

Newnan Hosp. Auth. Rev.

  Aaa    5.50   1/04/21     3,185      3,408,969
                       

                          9,745,729

Hawaii    2.7%

                         

Hawaii Dept. Budget & Fin., Hawaiian Elec. Co. Projs., Ser. C, A.M.B.A.C., A.M.T.

  Aaa    6.20   11/01/29     8,000      8,774,640

Idaho    0.3%

                         

Idaho Hsg. & Fin. Assoc., Sngl. Fam. Mtge., Ser. E, A.M.T.

  Aaa    5.55   7/01/31     955      971,932

Illinois    7.5%

                         

Chicago Midway Arpt. Rev., Ser. B, M.B.I.A., A.M.T.

  Aaa    5.75   1/03/22     5,000      5,243,900

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   37


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)   Moody’s
Rating
(Unaudited)
  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                          

Chicago O’Hare Int’l. Arpt. Pass. Facs. Chrg., Ser. A, A.M.B.A.C.

  Aaa   5.625%   1/02/15   $ 2,000    $ 2,136,440

Chicago Proj. & Rfdg., G.O., F.G.I.C.

  Aaa   5.25   1/03/28     2,000      2,024,000

Illinois St.,

                        

G.O.

  Aaa   5.625   4/01/15     3,250      3,565,510

G.O., F.S.A.

  Aaa   5.25   4/01/22     2,500      2,594,375

Illinois St. Civic Ctr., Spec. St. Oblig., F.S.A.

  Aaa   5.50   12/15/15     2,710      2,955,634

Mclean & Woodford Cntys. Cmnty. Unif. Sch.
Dist. No. 005, F.S.A., G.O.

  Aaa   5.625   12/01/17     4,000      4,389,400

Onterie Ctr. Hsg. Fin. Corp., Mtge. Rev., Ser. A, M.B.I.A.

  Aaa   7.00   7/02/12     1,410      1,433,618
                      

                         24,342,877

Kansas    0.7%

                        

Saline Cnty. Unif. Sch. Dist., G.O., F.S.A.

  Aaa   5.50   9/01/17     2,000      2,179,900

Louisiana    1.4%

                        

New Orleans Fin. Auth., Sngl. Fam. Mtge., Ser. B-2,
A.M.T., G.N.M.A./F.N.M.A.,

  Aaa   6.00   12/01/21     1,105      1,147,863

New Orleans, G.O., A.M.B.A.C. C.A.B.S.

  Aaa   Zero   9/01/09     4,000      3,311,040
                      

                         4,458,903

Maryland    0.1%

                        

Prince Georges Cnty. Hsg., Sngl. Fam. Mtge., Ser. A, A.M.T., G.N.M.A./F.N.M.A.

  AAA(b)   6.15   8/01/19     210      219,238

Massachusetts    2.0%

                        

Boston Convention Ctr. Act of 1997, Spec. Oblig., Ser. A, A.M.B.A.C.

  Aaa   5.00   5/01/19     2,000      2,074,740

Massachusetts St., Cons. Ln., Ser. C, G.O.

  Aaa   5.50   11/01/10     4,000      4,479,680
                      

                         6,554,420

 

See Notes to Financial Statements.

 

38   Visit our website at www.jennisondryden.com


 

 

Description (a)   Moody’s
Rating
(Unaudited)
   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                           

Michigan    6.3%

                         

Detroit Wtr. Sup. Sys., Ser. B, M.B.I.A.

  Aaa    5.25%   7/01/32   $ 7,500    $ 7,660,950

Michigan Mun. Bond Auth. Rev., Clean Wtr.,
St. Revolving Fd.

  Aaa    5.00   10/01/15     4,000      4,278,120

Saginaw Hosp. Fin. Auth., Hosp. Rev., Ser. C, M.B.I.A.

  Aaa    6.50   7/01/11     4,000      4,004,160

Western Twnshp. Util., G.O., M.B.I.A.

  Aaa    5.25   1/02/07     4,000      4,303,680
                       

                          20,246,910

Minnesota    4.1%

                         

Bass Brook Poll. Ctrl. Rev., M.B.I.A.

  Aaa    6.00   7/01/22     1,600      1,610,768

Becker Indpt. Sch.
Dist. No. 726., F.S.A.,

                         

Ser. A

  Aaa    6.00   2/01/15     1,610      1,831,552

Ser. A

  Aaa    6.00   2/01/16     1,750      1,990,818

Minneapolis & St. Paul Metro. Arpts., F.G.I.C.,

                         

Ser. A

  Aaa    5.75   1/02/32     4,285      4,628,357

Ser. C

  Aaa    5.50   1/02/19     3,000      3,248,790
                       

                          13,310,285

Missouri    1.0%

                         

St. Louis Arpt. Rev., Arpt. Dev. Proj., Ser. A, M.B.I.A.

  Aaa    5.625   7/01/19     3,000      3,257,550

Nevada    1.3%

                         

Washoe Cnty. Arpt. Auth. Arpt. Sys. Impvt. Rev., F.S.A.

  Aaa    5.00   7/01/11     4,005      4,303,933

New Jersey    2.4%

                         

Jersey City Swr. Auth.,

                         

Rev., A.M.B.A.C.

  Aaa    6.00   1/04/10     2,585      2,948,813

Rev., A.M.B.A.C.

  Aaa    6.25   1/02/14     4,255      4,975,244
                       

                          7,924,057

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   39


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)   Moody’s
Rating
(Unaudited)
   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                            

New York    13.7%

                          

Erie Cnty. Ind. Dev. Agcy. Sch. Facs. Rev., City of Buffalo Proj., F.S.A.

  Aaa    5.75%   5/03/21   $ 2,750     $ 3,017,575

Islip Res. Rec. Facs., Ser. B, A.M.B.A.C., A.M.T.

  Aaa    7.20   7/01/10     1,750       2,086,893

Metro. Trans. Auth., N.Y. Svc. Contract, Rfdg., M.B.I.A.

                          

Ser. B

  Aaa    5.50   7/01/19     5,000       5,407,450

Ser. B

  Aaa    5.50   7/01/23     7,285       7,684,072

Metro. Trans. Auth., N.Y. Trans. Facs. Rev., Ser. A, F.S.A.

  Aaa    5.75   7/01/11     5,000 (d)     5,603,650

Nassau Cnty. Interim Fin. Auth., Sales Tax Secured, Ser. A, A.M.B.A.C.

  Aaa    5.00   11/15/12     2,500       2,695,100

New York, NY, Ser. G, M.B.I.A.

  Aaa    5.75   2/03/14     3,000       3,220,080

New York St. Dorm. Auth. Rev., Sch. Dist. Fin. Proj., Ser. A, M.B.I.A.

  Aaa    5.75   10/02/17     3,000       3,336,120

New York St. Engy. Res. & Dev. Auth. Poll. Ctrl. Rev., Cent. Hudson Gas & Elec., Ser. A, A.M.T.

  Aaa    3.00   12/01/28     2,000       1,965,760

New York St. Environ. Facs. Poll. Ctrl. Rev.,

                          

Ser. C

  Aaa    5.70   7/16/12     25       26,921

Ser. C

  Aaa    5.75   7/15/13     10       10,777

Ser. C

  Aaa    5.80   7/15/14     35       37,778

Suffolk Cnty. Judicial Facs., John P. Cohalan Complex, A.M.B.A.C.

  Aaa    5.75   10/15/12     3,000       3,322,020

Tobacco Settlement Fin. Corp.,

                          

Asset-Bkd, Ser. A-1

  A3    5.50   6/02/14     3,000       3,216,540

Ser. C-1

  A3    5.50   6/02/14     1,500       1,608,270

Ser. C-1

  A3    5.50   6/01/15     1,000       1,066,380
                        

                           44,305,386

Ohio    1.6%

                          

Bowling Green St. Univ., F.G.I.C.

  Aaa    5.75   6/01/16     2,815       3,131,800

Ohio St. Wtr. Dev. Auth. Rev., Wtr. Dev., Fresh Wtr. Ser. A

  Aa3    5.125   12/01/18     2,000       2,086,780
                        

                           5,218,580

 

See Notes to Financial Statements.

 

40   Visit our website at www.jennisondryden.com


 

 

Description (a)   Moody’s
Rating
(Unaudited)
  Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)
                          

Oklahoma    3.7%

                        

Edmond Pub. Wks. Auth. Util. Rev., A.M.B.A.C.

  Aaa   5.625%   7/01/24   $ 4,440    $ 4,736,992

Norman Reg. Hosp. Auth., Rev., Ser. A, M.B.I.A.

  Aaa   5.50   9/01/11     4,110      4,468,474

Oklahoma City Arpt. Trust,
Jr. Lien, Ser. 24, A.M.B.A.C., A.M.T.

  Aaa   5.75   2/01/18     2,620      2,769,104
                      

                         11,974,570

Pennsylvania    1.7%

                        

Pennsylvania St. Ind. Dev. Auth. Rev., Econ. Dev.

  Aaa   5.50   7/03/17     5,000      5,466,350

South Carolina    2.0%

                        

Lexington Wtr. & Swr., Rev., Ser. A, M.B.I.A.

  Aaa   5.75   4/01/20     4,180      4,610,247

Univ. of South Carolina, Rev., Ser. A, F.G.I.C.

  Aaa   5.75   6/01/30     1,615      1,733,719
                      

                         6,343,966

Texas    6.6%

                        

Corpus Christi Util. Sys. Rev., F.S.A.,

                        

Ser. A

  Aaa   6.00   7/15/19     3,255      3,680,722

Ser. A

  Aaa   6.00   7/15/20     3,450      3,891,531

Fort-Worth Indpt. Sch. Dist., Ser. A, G.O., P.S.F.G.

  Aaa   5.00   2/15/07     3,345      3,579,284

Houston Arpt. Sys. Rev., E.T.M.

  Aaa   7.20   7/01/13     3,265      3,846,170

Mission Cons. Indpt. Sch. Dist., G.O., P.S.F.G.

  Aaa   5.75   2/15/19     1,360      1,500,175

Northwest Indpt. Sch. Dist., P.S.F.G.,

                        

Sch. Bldg. & Rfdg., G.O.,

  Aaa   5.50   8/15/17     1,080      1,173,150

Sch. Bldg. & Rfdg., G.O.,

  Aaa   5.50   8/15/18     1,000      1,082,440

Royse City Indpt. Sch. Dist., Sch. Bldg., G.O., P.S.F.G.

  AAA(b)   5.00   8/15/28     1,370      1,363,410

Van Alstyne Indpt. Sch. Dist. Rfdg., G.O., P.S.F.G.

  Aaa   5.95   8/15/29     1,105      1,196,218
                      

                         21,313,100

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   41


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)   Moody’s
Rating
(Unaudited)
   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
    Value (Note 1)
                            

Utah    1.0%

                          

Utah St., Ser. B, G.O.

  Aaa    4.50%   7/01/08   $ 3,000     $ 3,215,160

Vermont    0.9%

                          

Vermont Hsg. Fin. Agcy., Sngl. Fam. Mtge., Ser. 13A, A.M.T., F.S.A.

  Aaa    5.45   5/01/26     2,920       3,025,675

Virginia    0.7%

                          

Chesapeake Bay Brdg. & Tunnel Dist. Rev., Gen. Resolution, F.G.I.C.

  Aaa    5.75   7/01/08     2,000 (d)     2,139,620

Washington    9.4%

                          

Clark Cnty. Sch. Dist. No. 114, G.O., F.S.A.

  Aaa    5.25   12/03/18     3,800       4,020,286

Cowlitz Cnty. Sch. Dist. No. 122 Longview, F.S.A., G.O.

  Aaa    5.50   12/01/19     1,725       1,860,309

King Cnty. Sch. Dist. No 411, G.O., F.S.A.

  Aaa    6.25   12/01/15     1,900       2,173,923

Ocean Shores, G.O., F.G.I.C.

  Aaa    5.50   12/01/20     1,570       1,687,169

Port. Seattle Rev., Rfdg., Ser. A

  Aaa    5.375   6/03/13     2,000       2,170,100

Skagit Cnty. Cons. Sch.
Dist. No. 320 Mount Vernon, G.O., M.B.I.A.

  Aaa    5.50   12/03/18     2,000       2,163,060

Snohomish Cnty. Ltd. Tax, G.O., M.B.I.A.

  Aaa    5.375   12/02/19     2,000       2,131,900

Washington St. Hsg. Fin. Comn., Sngl. Fam. Pg.,
Ser. 2A, A.M.T., G.N.M.A./F.N.M.A.

  Aaa    5.375   12/03/18     2,505       2,578,873

Washington St. Pub. Pwr. Supply,

                          

M.B.I.A.

  Aaa    5.75   7/01/10     7,000       7,652,190

Ref., Ser. B, C.A.B.S., F.G.I.C., T.C.R.S.

  Aaa    Zero   7/01/08     4,500       3,940,470
                        

                           30,378,280

West Virginia    1.0%

                          

Clarksburg Wtr. Rev., F.G.I.C.

  Aaa    5.25   9/03/19     2,000       2,129,920

West Virginia St. Wtr. Dev. Auth., Ser. B, A.M.B.A.C., A.M.T.

  Aaa    5.875   7/01/20     1,015       1,095,012
                        

                           3,224,932

 

See Notes to Financial Statements.

 

42   Visit our website at www.jennisondryden.com


 

 

Description (a)   Moody’s
Rating
(Unaudited)
  Interest
Rate
  Maturity
Date
    Principal
Amount (000)
   Value (Note 1)
                            

Wisconsin    0.8%

                          

Manitowoc Elec. Rev., Pwr. Sys., F.G.I.C.

  Aaa   5.25%   10/02/34     $ 2,500    $ 2,537,900
                        

Total long-term investments
(cost $307,160,018)

                         319,511,783
                        

SHORT-TERM INVESTMENTS    5.1%

                      

California    0.3%

                          

Mun. Secs. Trust Cert., Ser. 2001-136 Trust Cert., Cl. A, F.G.I.C., F.R.D.D.

  A-1+(b)   1.12   5/03/04 (f)     900      900,000

Illinois    0.5%

                          

Mun. Secs. Trust Cert., Chicago O’Hare Arpt. Ser. 2000-93, Cl. A, A.M.B.A.C., F.R.D.D.

  A-1+(b)   1.15   5/03/04 (f)     1,600      1,600,000

Michigan    0.8%

                          

Detroit Swr. Disp. Rev., Sr. Lien, Ser. B, F.R.D.D.

  VMIG1   1.10   5/03/04 (f)     2,500      2,500,000

Eastern Michigan Univ. Rev., Ref. Gen., F.R.D.D.

  Aaa   1.10   5/03/04 (f)     200      200,000
                        

                           2,700,000

Nevada    2.9%

                          

Clark Cnty. Arpt. Rev., Sub. Lien, Ser. A, F.G.I.C., A.M.T., F.R.D.D.

  VMIG1   1.12   5/03/04 (f)     9,500      9,500,000

Texas    0.5%

                          

Dallas-Fort Worth Reg. Arpt. Rev., Mun. Secs. Trust Rcpts., SGA 49, F.R.D.D., M.B.I.A., A.M.T.

  A-1+(b)   1.15   5/03/04 (f)     1,755      1,755,000

Washington    0.1%

                          

Clark Cnty. Pub. Util.
Dist. No. 001 Generating Sys. Rev., Mun. Secs. Trust Rcpts., Ser. SGA 118, F.S.A., F.R.D.D.

  A-1+(b)   1.13   5/03/04 (f)     200      200,000
                        

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   43


Portfolio of Investments

 

as of April 30, 2004 Cont’d.

 

Description (a)   Moody’s
Rating
(Unaudited)
   Interest
Rate
  Maturity
Date
  Principal
Amount (000)
   Value (Note 1)  
                           

Total short-term investments
(cost $16,655,000)

                    $ 16,655,000  
                     


Total Investments    104.0% (cost $323,815,018; Note 5)

                      336,166,783  

Liabilities in excess of other assets    (4.0)%

                      (13,037,105 )
                     


Net Assets    100.0%

                    $ 323,129,678  
                     



(a) The following abbreviations are used in portfolio descriptions:

A.M.B.A.C.—American Municipal Bond Assurance Corporation.

A.M.T.—Alternative Minimum Tax.

C.A.B.S.—Capital Appreciation Bonds.

C.O.P.—Certificates of Participation.

E.T.M.—Escrowed to Maturity.

F.G.I.C.—Financial Guaranty Insurance Company.

F.N.M.A.—Federal National Mortgage Association.

F.R.D.D.—Floating Rate Daily Demand Note(f).

F.S.A.—Financial Security Assurance.

G.N.M.A.—Government National Mortgage Association.

G.O.—General Obligation.

M.B.I.A.—Municipal Bond Insurance Corporation.

P.S.F.G.—Public School Fund Guaranty.

T.C.R.S.—Transferable Custodial Receipts.

(b) Standard & Poor’s rating.
(c) Inverse floating rate bond. The coupon is inversely indexed to a floating rate. The rate shown is the rate at year end.
(d) Prerefunded issues are secured by escrowed cash or direct U.S. government guaranteed obligations.
(e) Pledged as initial margin for financial futures contracts.
(f) The maturity date shown is the later of the next date on which the security can be redeemed at par or the next date on which the rate of interest is adjusted.

The Fund’s current prospectus contains a description of Moody’s and Standard & Poor’s ratings.

 

See Notes to Financial Statements.

 

44   Visit our website at www.jennisondryden.com


 

 

 

This Page Intentionally Left Blank


Statement of Assets and Liabilities

 

as of April 30, 2004

 

Assets

      

Investments, at value (cost $323,815,018)

   $ 336,166,783

Cash

     86,790

Receivable for investments sold

     19,011,700

Interest receivable

     4,699,987

Due from broker-variation margin

     146,500

Receivable for Series shares sold

     68,625

Unrealized appreciation on interest rate swaps

     45,395

Prepaid expenses

     9,131
    

Total assets

     360,234,911
    

Liabilities

      

Payable for investments purchased

     34,968,449

Payable for Series shares reacquired

     1,491,438

Dividends payable

     320,630

Management fee payable

     135,446

Accrued expenses

     95,846

Distribution fee payable

     80,433

Deferred trustees’ fees

     12,991
    

Total liabilities

     37,105,233
    

Net Assets

   $ 323,129,678
    

        

Net assets were comprised of:

      

Shares of beneficial interest, at par

   $ 296,481

Paid-in capital in excess of par

     308,356,468
    

       308,652,949

Undistributed net investment income

     332,410

Accumulated net realized gain on investments

     2,247,507

Net unrealized appreciation on investments, financial futures contracts and interest rate swap

     11,896,812
    

Net assets, April 30, 2004

   $ 323,129,678
    

 

See Notes to Financial Statements.

 

46   Visit our website at www.jennisondryden.com


 

 

Class A

      

Net asset value and redemption price per share
($257,738,436 ÷ 23,652,697 shares of beneficial interest issued and outstanding)

   $ 10.90

Maximum sales charge (4% of offering price)

     0.45
    

Maximum offering price to public

   $ 11.35
    

Class B

      

Net asset value, offering price and redemption price per share
($51,431,649 ÷ 4,714,515 shares of beneficial interest issued and outstanding)

   $ 10.91
    

Class C

      

Net asset value, offering price and redemption price per share
($7,629,376 ÷ 699,376 shares of beneficial interest issued and outstanding)

   $ 10.91
    

Class Z

      

Net asset value, offering price and redemption price per share
($6,330,217 ÷ 581,510 shares of beneficial interest issued and outstanding)

   $ 10.89
    

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   47


Statement of Operations

 

Year Ended April 30, 2004

 

Net Investment Income

        

Income

        

Interest

   $ 15,871,148  
    


Expenses

        

Management fee

     1,717,443  

Distribution fee—Class A

     678,321  

Distribution fee—Class B

     282,330  

Distribution fee—Class C

     62,468  

Transfer agent’s fees and expenses

     162,000  

Custodian’s fees and expenses

     145,000  

Reports to shareholders

     78,000  

Registration fees

     42,000  

Legal fees and expenses

     37,000  

Audit fee

     24,000  

Trustees’ fees

     16,000  

Miscellaneous

     17,234  
    


Total expenses

     3,261,796  
    


Net investment income

     12,609,352  
    


Realized And Unrealized Gain (Loss) On Investments

        

Net realized gain (loss) on:

        

Investment transactions

     7,868,873  

Financial futures transactions

     (3,001,887 )

Interest rate swap

     62,108  

Options written

     53,274  
    


       4,982,368  
    


Net change in unrealized appreciation (depreciation) on:

        

Investments transactions

     (16,556,017 )

Financial futures contracts

     (469,411 )

Interest rate swap

     45,395  
    


       (16,980,033 )
    


Net loss on investments

     (11,997,665 )
    


Net Increase In Net Assets Resulting From Operations

   $ 611,687  
    


 

See Notes to Financial Statements.

 

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Statement of Changes in Net Assets

 

(Unaudited)

 

     Year Ended April 30,

 
     2004        2003  

Increase (Decrease) In Net Assets

                   

Operations

                   

Net investment income

   $ 12,609,352        $ 14,843,441  

Net realized gain on investments

     4,982,368          7,450,868  

Net change in unrealized appreciation (depreciation) on investments

     (16,980,033 )        7,510,833  
    


    


Net increase in net assets resulting from operations

     611,687          29,805,142  
    


    


Dividends and distributions (Note 1)

                   

Dividends from net investment income

                   

Class A

     (10,094,835 )        (11,672,945 )

Class B

     (1,949,647 )        (2,338,618 )

Class C

     (266,136 )        (285,559 )

Class Z

     (295,156 )        (298,062 )
    


    


       (12,605,774 )        (14,595,184 )
    


    


Distributions from net realized gains

                   

Class A

     (7,002,039 )         

Class B

     (1,457,020 )         

Class C

     (211,875 )         

Class Z

     (186,705 )         
    


    


       (8,857,639 )         
    


    


Series share transactions (Net of share conversions) (Note 6)

                   

Net proceeds from shares sold

     39,399,592          64,183,997  

Net asset value of shares issued in reinvestment of dividends and distributions

     13,517,012          8,444,955  

Cost of shares reacquired

     (68,371,805 )        (55,468,023 )
    


    


Net increase (decrease) in net assets from Series share transactions

     (15,455,201 )        17,160,929  
    


    


Total increase (decrease)

     (36,306,927 )        32,370,887  

Net Assets

                   

Beginning of year

     359,436,605          327,065,718  
    


    


End of year(a)

   $ 323,129,678        $ 359,436,605  
    


    


(a) Includes undistributed net investment income of

   $ 332,410        $ 313,244  
    


    


 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   49


 

Notes to Financial Statements

 

Dryden Municipal Bond Fund (the “Fund”) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund was organized as an unincorporated business trust in Massachusetts on November 3, 1986 and consists of two series: the “High Income Series” and the “Insured Series”. Investment operations for Class A, Class B, Class C and Class Z shares of each Series commenced on January 22, 1990, September 17, 1987, August 1, 1994 and September 16, 1996, respectively.

 

The investment objectives of the Series are as follows: (i) the objective of the High Income Series is to provide the maximum amount of income that is eligible for exclusion from federal income taxes, (ii) the objective of the Insured Series is to provide the maximum amount of income that is eligible for exclusion from federal income taxes consistent with the preservation of capital. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific state, region or industry.

 

Note 1. Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

 

Securities Valuation: The Fund values municipal securities (including commitments to purchase such securities on a “when-issued” basis) as of the close of trading on the New York Stock Exchange, on the basis of prices provided by a pricing service which uses information with respect to transactions in comparable securities and various relationships between securities in determining values. Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”) in consultation with the subadvisor, to be over-the-counter, are valued at market value using prices provided, by an independent pricing agent or principal market maker. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which

 

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reliable market quotations are not readily available or for which the pricing service does not provide a valuation methodology, or does not present fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures.

 

Short-term securities which mature in sixty days or less are valued at amortized cost, which approximates market value. Short-term securities which mature in more than sixty days are valued at current market quotations. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost.

 

Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin”. Subsequent payments, known as “variation margin”, are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed, the gain or loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures contracts.

 

The Fund invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.

 

Options: The Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates with respect to securities which the Fund currently owns or intends to purchase. The Fund’s principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option.

 

Dryden Municipal Bond Fund   51


Notes to Financial Statements

 

Cont’d

 

 

If an option expires unexercised, the Fund realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Fund has realized a gain or loss. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in net realized gain or loss on investment transactions. Gain or loss on written options is presented separately as net realized gain or loss on written options.

 

The Fund, as writer of an option, has no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. The Fund, as purchaser of an option that is traded in the over-the-counter market, bears the risk of the potential inability of the counterparties to meet the terms of their contracts.

 

Interest Rate Swaps: The Fund may enter into interest rate swaps. In a simple interest rate swap, one investor pays a floating rate of interest on a notional amount and receives a fixed rate of interest on the same notional principal amount for a specified period of time. Alternatively, an investor may pay a fixed rate and receive a floating rate. Interest rate swaps were developed as asset/liability management tools. In more complex swaps, the notional principal may decline (or amortize) over time.

 

During the term of the swap, changes in the value of the swap are recorded as unrealized gains or losses by “marking-to-market” to reflect market value of the swap. When the swap is terminated, the Fund will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the fund’s basis in the contract, if any.

 

The Fund is exposed to credit loss in the event of non-performance by the other party to the interest rate swap. However, the Fund does not anticipate non-performance by any counterparty.

 

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Written options, future contracts and swap contracts involve elements of both market and credit risk in excess of the amounts reflected in the Statement of Assets and Liabilities.

 

Inverse Floaters: The Fund invests in variable rate securities commonly called “inverse floaters”. The interest rates on these securities have an inverse relationship to market interest rate of other securities or the value of an index. Changes in interest rates on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater’s price will be more volatile than that of a fixed-rate bond. Additionally, some of these securities contain a “leverage factor” whereby the interest rate moves inversely by a “factor” to the benchmark rate. Certain interest rate movements and other market factors can substantially affect the liquidity of inverse floating rate notes.

 

When-Issued/Delayed Delivery Securities: Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after trade date; interest income is not accrued until settlement date. At the time a Fund enters into such transactions, it instructs the custodian to segregate assets with a current value at least equal to the amount of its when-issued or delayed-delivery purchase commitments.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses on sales of investments are calculated on the identified cost basis. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis as an adjustment to interest income.

 

Net investment income or loss (other than distribution fees, which are charged directly to the respective Class) and unrealized and realized gains or losses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.

 

Dividends and Distributions: The Fund declares dividends from the net investment income daily and distributions of net realized capital and currency gains, if any, annually.

 

Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net

 

Dryden Municipal Bond Fund   53


Notes to Financial Statements

 

Cont’d

 

 

investment income, accumulated net realized gain or loss and paid in capital in excess of par, as appropriate.

 

Federal Income Taxes: For federal income tax purposes, each Series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.

 

Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

Note 2. Agreements

 

The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM furnishes investment advisory services in connection with the management of the Fund. PI pays for the services of PIM, the cost of compensation of officers for the Fund, occupancy and certain clerical and bookkeeping cost of the Fund. The Fund bears all other costs and expenses.

 

The management fee paid PI is computed daily and payable monthly at an annual rate of .50 of 1% of the average daily net assets of each series up to $1 billion and .45 of 1% of the average daily net assets of each series in excess of $1 billion.

 

The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B and Class C shares, pursuant to plans of distribution (the “Class A, B and C Plans”), regardless of expenses actually incurred by it. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Fund.

 

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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. PIMS has contractually agreed to limit such fees to .25 of 1% and .75 of 1% of the average daily net assets of the Class A shares and Class C shares, respectively.

 

PIMS has advised the High Income Series and Insured Series that it received approximately $142,600 ($128,800—Class A; $13,800—Class C) and $114,900 ($102,800—Class A; $12,100—Class C), respectively, in front-end sales charges during the year ended April 30, 2004. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to sales persons and incurred other distribution costs.

 

PIMS has advised the High Income Series and Insured Series that for the year ended April 30, 2004, it received approximately $279,900 ($264,800—Class B; $15,100—Class C) and $135,900 ($131,000—Class B; $4,900—Class C) in contingent deferred sales charges imposed upon certain redemptions by Class B and C shareholders, respectively.

 

PI, PIMS and PIM are indirect wholly owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with a group of banks. For the year ended April 30, 2004, 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 under the SCA will be incurred 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 daily and paid quarterly and is allocated to the Funds pro rata based on net assets. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date of the SCA is April 30, 2004. Effective May 1, 2004, the commitment will be reduced to $500 million. All other terms and conditions will remain the same. The expiration of the renewed SCA will be October 29, 2004. The Fund did not borrow any amounts pursuant to the SCA during the year ended 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

 

Dryden Municipal Bond Fund   55


Notes to Financial Statements

 

Cont’d

 

 

year ended April 30, 2004, the Fund incurred approximately $353,000 ($229,900—High Income Series; $123,100—Insured Series) for the services of PMFS. As of April 30, 2004, approximately $28,100 ($18,300—High Income Series; $9,800—Insured Series) of such fees were due to PMFS. Transfer agent fees and expenses in the Statement of Operations also include certain out-of-pocket expenses paid to non-affiliates.

 

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 $46,700 ($36,400—High Income Series; $10,300—Insured Series) in total networking fees, of which the amount relating to the services of Wachovia Securities, LLC (“Wachovia”), and Prudential Securities, Inc. (“PSI”), an affiliate of PI. As of April 30, 2004, approximately $3,600 ($2,800—High Income Series; $800—Insured Series) of such fees were due to Wachovia. Effective July 1, 2003, PSI and Wachovia Corp. formed a joint venture (“Wachovia Securities, LLC”) whereby PSI and Wachovia Corp. combined their brokerage business with Prudential holding a minor interest. Prior to July 1, 2003 PSI was an indirect wholly-owned subsidiary of Prudential. These amounts are included in transfer agent’s fees and expenses on the Statements of Operations.

 

For the fiscal year ended April 30, 2004, the Fund did not pay brokerage commissions to Wachovia.

 

Note 4. Portfolio Securities

 

Purchases and sales of portfolio securities, other than short-term investments, for the year ended April 30, 2004, were as follows:

 

Series


  

Purchases


  

Sales


High Income

   $634,759,981    $683,502,818

Insured

   $230,505,673    $240,005,406

 

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Transactions in call options written during the year ended April 30, 2004, were as follows:

 

     Contracts

    Premiums

 

High Income

              

Balance as of April 30, 2003

       $  

Options written

   281       140,695  

Options expired

   (207 )     (87,744 )

Options Terminated in closing purchase transactions

   (74 )     (52,951 )
    

 


Balance as of April 30, 2004

       $  
    

 


Insured

              

Balance as of April 30, 2003

       $  

Options written

   119       57,151  

Options expired

   (96 )     (40,693 )

Options Terminated in closing purchase transactions

   (23 )     (16,458 )
    

 


Balance as of April 30, 2004

       $  
    

 


 

During the year ended April 30, 2004, the High Income Series and Insured Series entered into financial futures contracts. Details of open contracts at April 30, 2004 are as follows:

 

Series

  Number of
Contracts


  Type

  Expiration
Date


  Value at
April 30,
2004


 

Value at
Trade

Date


  Unrealized
Appreciation/
(Depreciation)


 
High Income       Long Positions:                        
    236   U.S. Treasury
Bonds
  June 04   $ 25,274,125   $ 25,528,566   $ (254,441 )
    93   U.S. Treasury
10 yr. Notes
  June 04     10,276,500     10,301,020     (24,520 )
                           


                            $ (278,961 )
                           


Series

  Number of
Contracts


  Type

  Expiration
Date


  Value at
April 30,
2004


 

Value at
Trade

Date


  Unrealized
Appreciation
(Depreciation)


 
Insured       Long Positions:                        
    121   U.S. Treasury
Bonds
  June 04   $ 12,958,344   $ 13,272,509   $ (314,165 )
    173   U.S. Treasury
10 yr. Notes
  June 04     19,116,500     19,302,683     (186,183 )
                           


                            $ (500,348 )
                           


 

Dryden Municipal Bond Fund   57


Notes to Financial Statements

 

Cont’d

 

 

During the year ended April 30, 2004, the Series entered into interest rate swap agreements. Details of the swap agreements outstanding as of April 30, 2004 are as follows:

 

Series

 

Counterparty


 

Termination

Date


 

Notional

Amount (000)


 

Fixed

Rate


   

Floating

Rate


 

Unrealized

Appreciation


High Income
  Morgan Stanley
Capital Services (a)
  07/29/2014   $ 20,600   3.8825 %   BMA Municipal
Swap Index
  $ 97,411
Insured   Morgan Stanley
Capital Services (a)
  07/29/2014   $ 9,600   3.8825 %   BMA Municipal
Swap Index
  $ 45,395

(a) Portfolio pays the fixed rate and receives the floating rate.

 

Note 5. Tax Information

 

In order to present undistributed net investment income or loss and accumulated net realized gains or losses on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in-capital in excess of par, undistributed net investment income or loss and accumulated net realized gain or loss on investments.

 

For the year ended April 30, 2004, the adjustments were as follows:

 

Series


  

Paid in Capital in
Excess of Par


  

Undistributed
Net Investment

Income


  

Accumulated
Net Realized

Gain (Loss)


High Income

   $(540,793)    $156,488    $384,305

Insured

      $15,588    $(15,588)

 

These adjustments were primarily due to the sale of securities purchased with market discount, expired capital loss carryforward and certain other differences between financial and tax reporting. Net investment income, net realized losses and net assets were not affected by this change.

 

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The tax character of total dividends paid for the years ended are as follows:

 

     High Income
Series


   Insured
Series


April 30, 2004

             

Tax-Exempt

   $ 38,169,475    $ 12,548,980

Ordinary Income

     107,516      56,794

Long-term Capital Gains

          8,857,639
    

  

Total Dividends

   $ 38,276,991    $ 21,463,413
    

  

April 30, 2003

             

Tax-Exempt

   $ 42,995,901    $ 14,595,184
    

  

 

As of April 30, 2004, the components of distributable earnings on a tax basis were as follows:

 

Series


  

Tax-Exempt


  

Ordinary

Income


  

Long-Term

Capital

Gains


High Income

   $2,458,152    $245,556   

Insured

   $593,862    $59,178    $1,478,371

 

These amounts include a dividends payable timing difference of $1,002,199 and $320,630 as of April 30, 2003 to the High Income Series and Insured Series, respectively.

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation(depreciation) as of April 30, 2004 were as follows:

 

Series


 

Tax Basis


 

Appreciation


 

(Depreciation)


 

Net

Unrealized

Appreciation

(Depreciation)


 

Other

Tax basis

Adjustments


 

Adjusted

Net

Unrealized

Appreciation

(Depreciation)


High Income

  $721,615,183   $27,083,049   $(45,909,652)   $(18,826,603)   $97,471   $(18,729,132)

Insured

  $323,546,232   $14,378,722   $(1,758,171)   $12,620,551   $45,395   $12,665,946 

 

The difference between book basis and tax basis was primarily attributable to deferred losses on wash sales and the differences in the treatment of discount amortization for book and tax purposes.

 

For federal income tax purposes, The High Income Series has a capital loss carryforward as of April 30, 2004 of approximately $50,885,000, of which $3,225,000 expires in 2005, $554,000 expires in 2006, $3,137,000 expires in 2007, $5,906,000 expires in 2008, $20,095,000 expires in 2009, $13,512,000 expires in 2010 and $4,456,000 expires in 2011. As of April 30, 2004, the Series utilized approximately $5,842,000 of its capital loss carryforward and approximately

 

Dryden Municipal Bond Fund   59


Notes to Financial Statements

 

Cont’d

 

 

$541,000 expired. Accordingly, no capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such carryforwards. The tax basis differs from the amount on the Statement of Assets and Liabilities primarily due to differences in the treatment of discount and premium amortization for book and tax purposes.

 

Note 6. Capital

 

The High Income Series and Insured Series offer Class A, Class B, Class C and Class Z shares. Class A shares were sold with a front-end sales charge of up to 3%. Class A shares purchased on or after March 15, 2004 are subject to a maximum front-end sales charge of 4%. Effective March 15, 2004, all investors who purchase Class A shares in the amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are sold with a contingent deferred sales charge which declines from 5% to zero depending on the period of time the shares are held. Class C shares were sold with a front-end sales charge of 1% and a contingent deferred sales charge of 1% during the first 18 months. Class C shares purchased on or after February 2, 2004 are not subject to a front-end sales charge and the contingent deferred sales charge (CDSC) for Class C shares is 12 months from the date of purchase. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

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The Fund has authorized an unlimited number of shares of beneficial interest of each class at $.01 par value per share. Transactions in shares of beneficial interest for fiscal years ended April 30, 2004 and April 30, 2003, were as follows:

 

    

High Income Series

Class A


   

Insured Series

Class A


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2004

                            

Shares sold

   2,982,186     $ 30,011,088     2,366,060     $ 26,820,648  

Shares issued in reinvestment of dividends and distributions

   1,135,503       11,521,606     947,575       10,712,511  

Shares reacquired

   (9,454,923 )     (95,529,854 )   (4,417,356 )     (50,085,703 )
    

 


 

 


Net increase (decrease) in shares outstanding before conversion

   (5,337,234 )     (53,997,160 )   (1,103,721 )     (12,552,544 )

Shares issued upon conversion from Class B

   2,484,594       25,324,224     504,923       5,847,494  
    

 


 

 


Net increase (decrease) in shares outstanding

   (2,852,640 )   $ (28,672,936 )   (598,798 )   $ (6,705,050 )
    

 


 

 


    

High Income Series

Class A


   

Insured Series

Class A


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2003

                            

Shares sold

   3,121,105     $ 31,490,883     2,622,924     $ 29,810,727  

Shares issued in reinvestment of dividends and distributions

   1,257,285       12,663,001     588,736       6,681,027  

Shares reacquired

   (9,031,671 )     (91,022,647 )   (3,309,260 )     (37,601,848 )
    

 


 

 


Net increase (decrease) in shares outstanding before conversion

   (4,653,281 )     (46,868,763 )   (97,600 )     (1,110,094 )

Shares issued upon conversion from Class B

   3,385,726       34,236,561     782,413       8,923,247  
    

 


 

 


Net increase (decrease) in shares outstanding

   (1,267,555 )   $ (12,632,202 )   684,813     $ 7,813,153  
    

 


 

 


    

High Income Series

Class B


   

Insured Series

Class B


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2004

                            

Shares sold

   890,244     $ 9,045,150     731,337     $ 8,360,381  

Shares issued in reinvestment of dividends and distributions

   430,037       4,363,278     192,647       2,181,194  

Shares reacquired

   (3,450,421 )     (34,941,711 )   (939,519 )     (10,655,967 )
    

 


 

 


Net increase (decrease) in shares outstanding before conversion

   (2,130,140 )     (21,533,283 )   (15,535 )     (114,392 )

Shares issued upon conversion into Class A

   (2,483,978 )     (25,324,224 )   (504,418 )     (5,847,494 )
    

 


 

 


Net increase (decrease) in shares outstanding

   (4,614,118 )   $ (46,857,507 )   (519,953 )   $ (5,961,886 )
    

 


 

 


 

Dryden Municipal Bond Fund   61


Notes to Financial Statements

 

Cont’d

 

 

    

High Income Series

Class B


   

Insured Series

Class B


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2003

                            

Shares sold

   2,018,009     $ 20,355,002     1,694,767     $ 19,296,613  

Shares issued in reinvestment of dividends and distributions

   549,975       5,540,680     122,602       1,392,373  

Shares reacquired

   (3,707,260 )     (37,355,609 )   (771,419 )     (8,779,499 )
    

 


 

 


Net increase (decrease) in shares outstanding before conversion

   (1,139,276 )     (11,459,927 )   1,045,950       11,909,487  

Shares issued upon conversion into Class A

   (3,384,862 )     (34,236,561 )   (781,727 )     (8,923,247 )
    

 


 

 


Net increase (decrease) in shares outstanding

   (4,524,138 )   $ (45,696,488 )   264,223     $ 2,986,240  
    

 


 

 


    

High Income Series

Class C


   

Insured Series

Class C


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2004

                            

Shares sold

   195,467     $ 1,984,234     114,819     $ 1,320,672  

Shares issued in reinvestment of dividends and distributions

   67,249       682,480     29,002       328,359  

Shares reacquired

   (602,755 )     (6,102,370 )   (173,459 )     (1,981,231 )
    

 


 

 


Net increase (decrease) in shares outstanding

   (340,039 )   $ (3,435,656 )   (29,638 )   $ (332,200 )
    

 


 

 


    

High Income Series

Class C


   

Insured Series

Class C


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2003

                            

Shares sold

   692,038     $ 6,980,526     296,896     $ 3,370,356  

Shares issued in reinvestment of dividends and distributions

   71,983       725,088     16,363       185,966  

Shares reacquired

   (610,122 )     (6,161,288 )   (166,089 )     (1,884,519 )
    

 


 

 


Net increase (decrease) in shares outstanding

   153,899     $ 1,544,326     147,170     $ 1,671,803  
    

 


 

 


 

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High Income Series

Class Z


   

Insured Series

Class Z


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2004

                            

Shares sold

   1,212,110     $ 12,275,195     255,063     $ 2,897,891  

Shares issued in reinvestment of dividends and distributions

   52,458       531,741     26,088       294,948  

Shares reacquired

   (1,374,892 )     (13,886,454 )   (492,160 )     (5,648,904 )
    

 


 

 


Net increase (decrease) in shares outstanding

   (110,324 )   $ (1,079,518 )   (211,009 )   $ (2,456,065 )
    

 


 

 


    

High Income Series

Class Z


   

Insured Series

Class Z


 
     Shares

    Amount

    Shares

    Amount

 

Year Ended April 30, 2003

                            

Shares sold

   1,376,787     $ 13,878,193     1,029,651     $ 11,706,301  

Shares issued in reinvestment of dividends and distributions

   40,192       404,236     16,341       185,589  

Shares reacquired

   (592,571 )     (5,977,427 )   (636,436 )     (7,202,157 )
    

 


 

 


Net increase (decrease) in shares outstanding

   824,408     $ 8,305,002     409,556     $ 4,689,733  
    

 


 

 


 

Note 7. Change in Independent Auditors

 

PricewaterhouseCoopers LLP was previously the independent auditors for the Fund. The decision to change the independent auditors was approved by the Audit Committee and by the Board of Directors in a meeting held on September 2, 2003, resulting in KPMG LLP’s appointment as independent auditors of the Series.

 

The reports on the financial statements of the Fund audited by PricewaterhouseCoopers LLP through the year ended April 30, 2003 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. There were no disagreements between the Fund and PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.

 

Dryden Municipal Bond Fund   63


Financial Highlights

 

 

 

     Class A

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 10.11  
    


Income (loss) from investment operations

        

Net investment income

     .53  

Net realized and unrealized gain (loss) on investment transactions

     (.12 )
    


Total from investment operations

     .41  
    


Less Dividends:

        

Dividends from net investment income

     (.53 )
    


Net asset value, end of year

   $ 9.99  
    


Total Return(a):

     4.13 %

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 457,184  

Average net assets (000)

   $ 479,691  

Ratios to average net assets:

        

Expenses, including distribution fees(c)

     .87 %

Expenses, excluding distribution fees

     .62 %

Net investment income

     5.25 %

For Class A, B, C and Z shares:

        

Portfolio turnover rate

     89 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/High Income Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income per share by $.01 and decrease net realized and unrealized gain or loss per share by $.01 and increase the ratio of net investment income from 5.84% to 5.87%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.
(c) The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% on the average daily net assets of the Class A shares.

 

See Notes to Financial Statements.

 

64   Visit our website at www.jennisondryden.com


Class A  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 10.06     $ 10.11     $ 10.22     $ 11.21  



 


 


 


                             
  .56       .61       .61       .63  
  .04       (.06 )     (.12 )     (.99 )



 


 


 


  .60       .55       .49       (.36 )



 


 


 


                             
  (.55 )     (.60 )     (.60 )     (.63 )



 


 


 


$ 10.11     $ 10.06     $ 10.11     $ 10.22  



 


 


 


  6.15 %     5.53 %     4.94 %     (3.31 )%
                             
$ 491,218     $ 501,501     $ 522,556     $ 503,874  
$ 496,597     $ 517,930     $ 527,117     $ 506,888  
                             
  .85 %     .84 %     .84 %     .82 %
  .60 %     .59 %     .59 %     .57 %
  5.53 %     5.87 %     6.05 %     5.86 %
                             
  88 %     58 %     46 %     27 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   65


Financial Highlights

 

Cont’d

 

 

     Class B

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 10.11  
    


Income (loss) from investment operations

        

Net investment income

     .51  

Net realized and unrealized gain (loss) on investment transactions

     (.12 )
    


Total from investment operations

     .39  
    


Less Dividends:

        

Dividends from net investment income

     (.50 )
    


Net asset value, end of year

   $ 10.00  
    


Total Return(a):

     3.95 %

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 192,517  

Average net assets (000)

   $ 219,376  

Ratios to average net assets:

        

Expenses, including distribution fees

     1.12 %

Expenses, excluding distribution fees

     .62 %

Net investment income

     5.00 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/High Income Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 5.59% to 5.62%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.

 

See Notes to Financial Statements.

 

66   Visit our website at www.jennisondryden.com


Class B  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 10.06     $ 10.11     $ 10.22     $ 11.21  



 


 


 


                             
  .54       .58       .59       .60  
  .04       (.06 )     (.13 )     (.99 )



 


 


 


  .58       .52       .46       (.39 )



 


 


 


                             
  (.53 )     (.57 )     (.57 )     (.60 )



 


 


 


$ 10.11     $ 10.06     $ 10.11     $ 10.22  



 


 


 


  5.88 %     5.27 %     4.68 %     (3.55 )%
                             
$ 241,311     $ 285,581     $ 324,299     $ 457,841  
$ 264,067     $ 307,192     $ 375,632     $ 559,879  
                             
  1.10 %     1.09 %     1.09 %     1.07 %
  .60 %     .59 %     .59 %     .57 %
  5.31 %     5.62 %     5.78 %     5.59 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   67


Financial Highlights

 

Cont’d

 

     Class C

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 10.11  
    


Income (loss) from investment operations

        

Net investment income

     .48  

Net realized and unrealized gain (loss) on investment transactions

     (.11 )
    


Total from investment operations

     .37  
    


Less Dividends:

        

Dividends from net investment income

     (.48 )
    


Net asset value, end of year

   $ 10.00  
    


Total Return(a):

     3.69 %

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 24,599  

Average net assets (000)

   $ 26,968  

Ratios to average net assets:

        

Expenses, including distribution fees(c)

     1.37 %

Expenses, excluding distribution fees

     .62 %

Net investment income

     4.75 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/High Income Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 5.35% to 5.38%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.
(c) The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .75 of 1% on the average daily net assets of the Class C shares.

 

See Notes to Financial Statements.

 

68   Visit our website at www.jennisondryden.com


Class C  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 10.06     $ 10.11     $ 10.22     $ 11.21  



 


 


 


                             
  .51       .55       .56       .57  
  .04       (.05 )     (.12 )     (.99 )



 


 


 


  .55       .50       .44       (.42 )



 


 


 


                             
  (.50 )     (.55 )     (.55 )     (.57 )



 


 


 


$ 10.11     $ 10.06     $ 10.11     $ 10.22  



 


 


 


  5.62 %     5.00 %     4.42 %     (3.79 )%
                             
$ 28,313     $ 26,619     $ 27,263     $ 30,061  
$ 27,121     $ 27,814     $ 28,028     $ 32,762  
                             
  1.35 %     1.34 %     1.34 %     1.32 %
  .60 %     .59 %     .59 %     .57 %
  5.04 %     5.38 %     5.55 %     5.36 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   69


Financial Highlights

 

Cont’d

 

 

     Class Z

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 10.10  
    


Income (loss) from investment operations

        

Net investment income

     .56  

Net realized and unrealized gain (loss) on investment transactions

     (.12 )
    


Total from investment operations

     .44  
    


Less Dividends:

        

Dividends from net investment income

     (.56 )
    


Net asset value, end of year

   $ 9.98  
    


Total Return(a):

     4.41 %

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 14,087  

Average net assets (000)

   $ 15,572  

Ratios to average net assets:

        

Expenses, including distribution fees

     .62 %

Expenses, excluding distribution fees

     .62 %

Net investment income

     5.51 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for periods less than one full year are not annualized.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/High Income Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income per share by $.01 and decrease net realized and unrealized gain (loss) per share by $.01 and increase the ratio of net investment income from 6.11% to 6.14%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.

 

See Notes to Financial Statements.

 

70   Visit our website at www.jennisondryden.com


Class Z  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 10.05     $ 10.10     $ 10.21     $ 11.20  



 


 


 


                             
  .59       .63       .64       .65  
  .04       (.06 )     (.13 )     (.99 )



 


 


 


  .63       .57       .51       (.34 )



 


 


 


                             
  (.58 )     (.62 )     (.62 )     (.65 )



 


 


 


$ 10.10     $ 10.05     $ 10.10     $ 10.21  



 


 


 


  6.41 %     5.79 %     5.19 %     (3.07 )%
                             
$ 15,361     $ 7,000     $ 5,966     $ 7,802  
$ 10,813     $ 6,368     $ 7,182     $ 10,493  
                             
  .60 %     .59 %     .59 %     .57 %
  .60 %     .59 %     .59 %     .57 %
  5.78 %     6.14 %     6.32 %     6.07 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/High Income Series   71


Financial Highlights

 

Cont’d

 

     Class A

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 11.59  
    


Income (loss) from investment operations

        

Net investment income

     .42  

Net realized and unrealized gain (loss) on investment transactions

     (.39 )
    


Total from investment operations

     .03  
    


Less dividends and distributions:

        

Dividends from net investment income

     (.42 )

Distributions from net realized capital gains

     (.30 )
    


Total dividends and distributions

     (.72 )
    


Net asset value, end of year

   $ 10.90  
    


Total Return(a):

     .13 %

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 257,738  

Average net assets (000)

   $ 271,328  

Ratios to average net assets:

        

Expenses, including distribution and service (12b-1) fees(b)

     .90 %

Expenses, excluding distribution and service (12b-1) fees

     .65 %

Net investment income

     3.72 %

For Class A, B, C and Z shares:

        

Portfolio turnover rate

     71 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/Insured series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income and to decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.62% to 4.64%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.
(c) The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% on the average daily net assets of the Class A shares.

 

See Notes to Financial Statements.

 

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Class A  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 11.08     $ 10.91     $ 10.40     $ 11.18  



 


 


 


                             
  .49       .52       .51       .51  
  .51       .17       .51       (.78 )



 


 


 


  1.00       .69       1.02       (.27 )



 


 


 


                             
  (.49 )     (.52 )     (.51 )     (.51 )
                     



 


 


 


  (.49 )     (.52 )     (.51 )     (.51 )



 


 


 


$ 11.59     $ 11.08     $ 10.91     $ 10.40  



 


 


 


  9.17 %     6.38 %     9.90 %     (2.38 )%
                             
$ 281,077     $ 261,227     $ 265,718     $ 238,690  
$ 272,608     $ 269,146     $ 254,718     $ 243,756  
                             
  .88 %     .87 %     .89 %     .88 %
  .63 %     .62 %     .64 %     .63 %
  4.35 %     4.64 %     4.72 %     4.78 %
                             
  59 %     22 %     38 %     26 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   73


Financial Highlights

 

Cont’d

 

 

     Class B

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 11.60  
    


Income (loss) from investment operations

        

Net investment income

     .40  

Net realized and unrealized gain (loss) on investment transactions

     (.40 )
    


Total from investment operations

      
    


Less dividends and distributions:

        

Dividends from net investment income

     (.39 )

Distributions from net realized capital gains

     (.30 )
    


Total dividends and distributions

     (.69 )
    


Net asset value, end of year

   $ 10.91  
    


Total Return(a):

     (.14 )%

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 51,432  

Average net assets (000)

   $ 56,466  

Ratios to average net assets:

        

Expenses, including distribution and service (12b-1) fees

     1.15 %

Expenses, excluding distribution and service (12b-1) fees

     .65 %

Net investment income

     3.47 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/Insured Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment. Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income and decrease net realized and unrealized gains per share by less than $.005 and increase the ratio of net investment income from 4.38% to 4.40%. Per share amounts and ratios for the years ended prior April 30, 2002 have not been restated to reflect this change in presentation.

 

See Notes to Financial Statements.

 

74   Visit our website at www.jennisondryden.com


Class B  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 11.09     $ 10.92     $ 10.41     $ 11.19  



 


 


 


                             
  .47       .49       .48       .48  
  .50       .17       .51       (.78 )



 


 


 


  .97       .66       .99       (.30 )



 


 


 


                             
  (.46 )     (.49 )     (.48 )     (.48 )
                     



 


 


 


  (.46 )     (.49 )     (.48 )     (.48 )



 


 


 


$ 11.60     $ 11.09     $ 10.92     $ 10.41  



 


 


 


  8.90 %     6.12 %     9.63 %     (2.62 )%
                             
$ 60,724     $ 55,145     $ 55,459     $ 91,989  
$ 58,003     $ 54,136     $ 70,084     $ 131,052  
                             
  1.13 %     1.12 %     1.14 %     1.13 %
  .63 %     .62 %     .64 %     .63 %
  4.10 %     4.40 %     4.48 %     4.51 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   75


Financial Highlights

 

Cont’d

 

 

     Class C

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 11.60  
    


Income (loss) from investment operations

        

Net investment income

     .37  

Net realized and unrealized gain (loss) on investment transactions

     (.40 )
    


Total from investment operations

     (.03 )
    


Less dividends and distributions:

        

Dividends from net investment income

     (.36 )

Distributions from net realized capital gains

     (.30 )
    


Total dividends and distributions

     (.66 )
    


Net asset value, end of year

   $ 10.91  
    


Total Return(a):

     (.39 )%

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 7,629  

Average net assets (000)

   $ 8,329  

Ratios to average net assets:

        

Expenses, including distribution and service (12b-1) fees(b)

     1.40 %

Expenses, excluding distribution and service (12b-1) fees

     .65 %

Net investment income

     3.21 %

(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/Insured Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gains per share by $.01 and increase the ratio of net investment income from 4.14% to 4.17%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.
(c) The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .75 of 1% on the average daily net assets of the Class C shares.

 

See Notes to Financial Statements.

 

76   Visit our website at www.jennisondryden.com


Class C  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 11.09     $ 10.92     $ 10.41     $ 11.19  



 


 


 


                             
  .44       .47       .45       .46  
  .50       .16       .51       (.78 )



 


 


 


  .94       .63       .96       (.32 )



 


 


 


                             
  (.43 )     (.46 )     (.45 )     (.46 )
                     



 


 


 


  (.43 )     (.46 )     (.45 )     (.46 )



 


 


 


$ 11.60     $ 11.09     $ 10.92     $ 10.41  



 


 


 


  8.63 %     5.86 %     9.37 %     (2.86 )%
                             
$ 8,457     $ 6,456     $ 4,085     $ 2,949  
$ 7,559     $ 5,320     $ 3,413     $ 2,988  
                             
  1.38 %     1.37 %     1.39 %     1.38 %
  .63 %     .62 %     .64 %     .63 %
  3.85 %     4.17 %     4.23 %     4.29 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   77


Financial Highlights

 

Cont’d

 

 

     Class Z

 
     Year Ended
April 30, 2004
 

Per Share Operating Performance:

        

Net Asset Value, Beginning Of Year

   $ 11.58  
    


Income (loss) from investment operations

        

Net investment income

     .45  

Net realized and unrealized gain (loss) on investment transactions

     (.39 )
    


Total from investment operations

     .06  
    


Less dividends and distributions:

        

Dividends from net investment income

     (.45 )

Distributions from net realized capital gains

     (.30 )
    


Total dividends and distributions

     (.75 )
    


Net asset value, end of year

   $ 10.89  
    


Total Return(a):

     .40 %

Ratios/Supplemental Data:

        

Net assets, end of year (000)

   $ 6,330  

Average net assets (000)

   $ 7,365  

Ratios to average net assets:

        

Expenses, including distribution and service (12b-1) fees

     .65 %

Expenses, excluding distribution and service (12b-1) fees

     .65 %

Net investment income

     3.98 %

(a) 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.
(b) Effective May 1, 2001, the Prudential Municipal Bond Fund/Insured Series has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended April 30, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gains per share by $.01 and increase the ratio of net investment income from 4.88% to 4.91%. Per share amounts and ratios for the years ended prior to April 30, 2002 have not been restated to reflect this change in presentation.

 

See Notes to Financial Statements.

 

78   Visit our website at www.jennisondryden.com


Class Z  
Year Ended April 30,  
2003     2002(b)     2001     2000  
                             
$ 11.07     $ 10.91     $ 10.40     $ 11.18  



 


 


 


                             
  .52       .55       .53       .54  
  .50       .15       .51       (.78 )



 


 


 


  1.02       .70       1.04       (.24 )



 


 


 


                             
  (.51 )     (.54 )     (.53 )     (.54 )
                     



 


 


 


  (.51 )     (.54 )     (.53 )     (.54 )



 


 


 


$ 11.58     $ 11.07     $ 10.91     $ 10.40  



 


 


 


  9.45 %     6.55 %     10.17 %     (2.13 )%
                             
$ 9,179     $ 4,238     $ 2,182     $ 1,429  
$ 6,605     $ 3,152     $ 1,993     $ 1,960  
                             
  .63 %     .62 %     .64 %     .63 %
  .63 %     .62 %     .64 %     .63 %
  4.61 %     4.91 %     4.99 %     4.94 %

 

See Notes to Financial Statements.

 

Dryden Municipal Bond Fund/Insured Series   79


 

Report of Independent Registered Public Accounting Firm

 

The Board of Trustees and Shareholders of

Dryden Municipal Bond Fund:

 

We have audited the accompanying statements of assets and liabilities of the High Income Series and Insured Series (constituting the Dryden Municipal Bond Fund, formerly the Prudential Municipal Bond Fund, hereafter referred to as the “Fund”) including the portfolios of investments, as of April 30, 2004, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets for the year ending April 30, 2003 and the financial highlights for all years presented prior to the year ended April 30, 2004, were audited by other auditors, whose report dated, June 23, 2003, expressed an unqualified opinion thereon.

 

We conducted our audit in accordance with auditing standards of the Public Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2004, by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Dryden Municipal Bond Fund as of April 30, 2004 and the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

LOGO

New York, New York

June 24, 2004

 

80   Visit our website at www.jennisondryden.com


 

Tax Information

 

(Unaudited)

 

As required by the Internal Revenue Code, we wish to advise you as to the federal tax status of dividends and distributions paid by the Fund during its fiscal year ended April 30, 2004.

 

During its fiscal year ended April 30, 2004, the Fund paid aggregate dividends and distributions as follows:

 

     Dividends and Distributions per share

Series


   Class A

   Class B

   Class C

   Class Z

High Income

                           

Tax-Exempt Income

   $ 0.530    $ 0.504    $ 0.480    $ 0.555

Ordinary Income

     0.002                0.005

Long-Term Capital Gains

                   
    

  

  

  

     $ 0.532    $ 0.504    $ 0.480    $ 0.560
    

  

  

  

 

     Dividends and Distributions per share

Series


   Class A

   Class B

   Class C

   Class Z

Insured

                           

Tax-Exempt Income

   $ 0.420    $ 0.392    $ 0.364    $ 0.448

Ordinary Income

     0.002                0.005

Long-Term Capital Gains

     0.300      0.300      0.300      0.300
    

  

  

  

     $ 0.722    $ 0.692    $ 0.664    $ 0.753
    

  

  

  

 

Shortly after the close of the calendar year ending December 31, 2004, you will be advised again as to the federal tax status of the dividends and distributions received in calendar 2004. In addition, you will be advised at that time as to the portion of your dividends which may be subject to the Alternative Minimum Tax (AMT) as well as information with respect to state taxability.

 

    Dryden Municipal Bond Fund   81


 

Management of the Fund

 

(Unaudited)

 

Information pertaining to the Trustees of the Fund is set forth below. Trustees who are not deemed to be “interested persons” of the Fund, as defined in the 1940 Act are referred to as “Independent Trustees.” Trustees who are deemed to be “interested persons” of the Fund are referred to as “Interested Trustees.” “Fund Complex” consists of the Fund and any other investment companies managed by PI.

 

Independent Trustees(2)

 

David E.A. Carson (69), Trustee since 2003(3) Oversees 90 portfolios in Fund complex

Principal occupations (last 5 years): Director (January 2000 to May 2000), Chairman (January 1999 to December 1999), Chairman and Chief Executive Officer (January 1998 to December 1998) and President, Chairman and Chief Executive Officer (1983-1997) of People’s Bank.

 

Other Directorships held:(4) Director of United Illuminating and UIL Holdings (utility company), since 1993.

 

Robert E. La Blanc (70), Trustee since 2003(3) Oversees 98 portfolios in Fund complex

Principal occupations (last 5 years): President (since 1981) of Robert E. La Blanc Associates, Inc. (telecommunications); formerly General Partner at Salomon Brothers and Vice-Chairman of Continental Telecom; Trustee of Manhattan College.

 

Other Directorships held:(4) Director of Storage Technology Corporation (technology) (since 1979), Chartered Semiconductor Manufacturing, Ltd. (since 1998); Titan Corporation (electronics) (since 1995), Computer Associates International, Inc. (software company) (since 2002); FiberNet Telecom Group, Inc. (telecom company) (since 2003); Director (since April 1999) of the High Yield Plus Fund, Inc.

 

Douglas H. McCorkindale (65), Trustee since 2003(3) Oversees 91 portfolios in Fund complex

Principal occupations (last 5 years): Chairman (since February 2001), Chief Executive Officer (since June 2000) and President (since September 1997) of Gannett Co. Inc. (publishing and media); formerly Vice Chairman (March 1984-May 2000) of Gannett Co., Inc.

 

Other Directorships held:(4) Director of Gannett Co. Inc., Director of Continental Airlines, Inc. (since May 1993); Director of Lockheed Martin Corp. (aerospace and defense) (since May 2001); Director of The High Yield Plus Fund, Inc. (since 1996).

 

Richard A. Redeker (60), Trustee since 1993(3) Oversees 92 portfolios in Fund complex

Principal occupations (last 5 years): Management Consultant; Director of Invesmart, Inc. (since 2001) and Director of Penn Tank Lines, Inc. (since 1999).

 

Other Directorships held:(4) None.

 

Robin B. Smith (64), Trustee since 2003(3) Oversees 97 portfolios in Fund complex

Principal occupations (last 5 years): Chairman of the Board (since January 2003) of Publishers Clearing House (direct marketing); formerly Chairman and Chief Executive Officer (August 1996-January 2003) of Publishers Clearing House.

 

Other Directorships held:(4) Director of BellSouth Corporation (since 1992).

 

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Stephen D. Stoneburn (60), Trustee since 2003(3) Oversees 95 portfolios in Fund complex

Principal occupations (last 5 years): President and Chief Executive Officer (since June 1996) of Quadrant Media Corp. (a publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media and Senior Vice President of Fairchild Publications, Inc. (1975-1989).

 

Other Directorships held:(4) None

 

Clay T. Whitehead (65), Trustee since 2003(3) Oversees 96 portfolios in Fund complex

Principal occupations (last 5 years): President (since 1983) of National Exchange Inc. (new business development firm).

 

Other Directorships held:(4) Director (since 2000) of the High Yield Plus Fund, Inc.

 

Interested Trustees(1)

 

Judy A. Rice (56), President since 2003 and Trustee since 2003(3) Oversees 95 portfolios in Fund complex

Principal occupations (last 5 years): President, Chief Executive Officer, Chief Operating Officer and Officer-in-Charge (since 2003) of PI; Director, Officer-in-Charge, President, Chief Executive Officer and Chief Operating Officer (since May 2003) of American Skandia Advisory Services, Inc. and American Skandia Investment Services, Inc.; Director, Officer-in-Charge, President, Chief Executive Officer (since May 2003) of American Skandia Fund Services, Inc.; Vice President (since February 1999) of Prudential Investment Management Services LLC; President, Chief Executive Officer and Officer-in-Charge (since April 2003) of Prudential Mutual Fund Services LLC; formerly various positions to Senior Vice President (1992-1999) of Prudential Securities; and various positions to Managing Director (1975-1992) of Salomon Smith Barney; Member of Board of Governors of the Money Management Institute.

 

Other Directorships held:(4) None

 

Robert F. Gunia (57), Vice President and Trustee since 1996(3) Oversees 178 portfolios in Fund complex

Principal occupations (last 5 years): Chief Administrative Officer (since June 1999) of PI; Executive Vice President and Treasurer (since January 1996) of PI; President (since April 1999) of Prudential Investment Management Services LLC (PIMS); Corporate Vice President (since September 1997) of The Prudential Insurance Company of America (Prudential); Director, Executive Vice President and Chief Administrative Officer (since May 2003) of American Skandia Investment Services, Inc., American Skandia Advisory Services, Inc. and American Skandia Fund Services, Inc.; Executive Vice President (since March 1999) and Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; formerly Senior Vice President (March 1987-May 1999) of Prudential Securities.

 

Other Directorships held:(4) Vice President and Director (since May 1989) and Treasurer (since 1999) of The Asia Pacific Fund, Inc.

 

Information pertaining to the Officers of the Fund who are not also Trustees is set forth below.

 

Officers(2)

 

William V. Healey (50), Chief Legal Officer since 2004(3)

Principal occupations (last 5 years): Vice President and Associate General Counsel (since 1998) of Prudential; Executive Vice President and Chief Legal Officer (since February 1999) of Prudential Investments LLC; Senior Vice President, Chief Legal Officer and Secretary (since December 1998) of Prudential Investment Management

 

Dryden Municipal Bond Fund   83


 

Services LLC; Executive Vice President and Chief Legal Officer (since February 1999) of Prudential Mutual Fund Services LLC; Vice President and Secretary (since October 1998) of Prudential Investment Management, Inc., Executive Vice President and Chief Legal Officer (since May 2003) of American Skandia Investment Services, Inc., American Skandia Fund Services, Inc. and American Skandia Advisory Services, Inc.; Director (June 1999-June 2002 and June 2003-present) of ICI Mutual Insurance Company; prior to August 1998, Associate General Counsel of the Dreyfus Corporation (Dreyfus), a subsidiary of Mellon Bank, N.A. (Mellon Bank), and an officer and/or director of various affiliates of Mellon Bank and Dreyfus.

 

Deborah A. Docs (46), Secretary since 1996

Principal occupations (last 5 years): Vice President and Corporates Counsel (since January 2001) of Prudential; Vice President and Assistant Secretary (since December 1996) of PI; Vice President and Assistant Secretary (since May 2003) of American Skandia Investment Services, Inc.

 

Maryanne Ryan (39), Anti-Money Laundering Compliance Officer since 2002(3)

Principal occupations (last 5 years): Vice President, Prudential (since November 1998); First Vice President, Prudential Securities (March 1997-May 1998); Anti-Money Laundering Compliance Officer (since 2003) of American Skandia Investment Services, Inc., American Skandia Advisory Services, Inc. and American Skandia Marketing, Inc.

 

Lee D. Augsburger (45), Chief Compliance Officer since 2004(3)

Principal occupations (last 5 years): Vice President and Chief Compliance Officer (since May 2003) of PI; Vice President and Chief Compliance Officer (since October 2000) of Prudential Investment Management, Inc.; formerly Vice President and Chief Legal Officer—Annuities (August 1999-October 2000) of Prudential Insurance Company of America; Vice President and Corporate Counsel (November 1997-August 1999) of Prudential Insurance Company of America.

 

Grace C. Torres (45), Treasurer and Principal Financial and Accounting Officer since 1996(3)

Principal occupations (last 5 years): Senior Vice President (since January 2000) of PI; Senior Vice President and Assistant Treasurer (since May 2003) of American Skandia Investment Services, Inc. and American Skandia Advisory Services, Inc.; formerly First Vice President (December 1996-January 2000) of PI and First Vice President (March 1993-1999) of Prudential Securities.

 

Jonathan D. Shain (45), Assistant Secretary since 2003(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2003) of American Skandia Investment Services, Inc. and American Skandia Fund Services, Inc.

 

The Fund Complex consists of all investment companies managed by PI. The Funds for which PI serves as manager include JennisonDryden Mutual Funds, Strategic Partners Funds, The Prudential Variable Contract Accounts 2, 10, 11, The Target Portfolio Trust, The Prudential Series Fund, Inc., American Skandia Trust, and Prudential’s Gibraltar Fund.

 

(1) “Interested” Trustee, as defined in the 1940 Act, by reason of employment with the Manager (Prudential Investments LLC or PI), the Subadviser (Prudential Investment Management, Inc. or “PIM”) or the Distributor (Prudential Investment Management Services LLC or PIMS).

 

(2) Unless otherwise noted, the address of the Trustees and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102.

 

(3) There is no set term of office for Trustees and Officers. The Independent Trustees have adopted a retirement policy, which calls for the retirement of Trustees on December 31 of the year in which they reach the age of 75. The table shows the individuals length of service as Trustee and/or Officer.

 

84   Visit our website at www.jennisondryden.com


 

(4) This includes only directorships of companies requested to register, or file reports with the SEC under the Securities and Exchange Act of 1934 (that is, “public companies”) or other investment companies registered under the 1940 Act.

 

Additional information about the Fund’s Trustees is included in the Fund’s Statement of Additional Information which is available without charge, upon request, by calling (800) 521-7466 or (732) 482-7555 (Calling from outside the U.S.)

 

Dryden Municipal Bond Fund/High Income Series   85


Growth of a $10,000 Investment

 

LOGO

 

Average Annual Total Returns (With Sales Charges) as of 4/30/04
     One Year     Five Years     Ten Years    Since Inception

Class A

   –0.04 %   2.59 %   4.98% (4.94)    5.79% (5.74)

Class B

   –1.00     3.03     5.08    (5.04)    6.51    (6.36)

Class C

   2.70     2.93     N/A    4.72    (4.68)

Class Z

   4.41     3.69     N/A    5.07    (5.04)
                       
Average Annual Total Returns (Without Sales Charges) as of 4/30/04
     One Year     Five Years     Ten Years    Since Inception

Class A

   4.13 %   3.43 %   5.41% (5.37)    6.09% (6.04)

Class B

   3.95     3.19     5.08    (5.04)    6.51    (6.36)

Class C

   3.69     2.93     N/A    4.72    (4.68)

Class Z

   4.41     3.69     N/A    5.07    (5.04)

 

Performance data quoted represents past performance and is not indicative of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain current performance data to the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852.

 

Source: Prudential Investments LLC and Lipper Inc. Inception dates: Class A, 1/22/90; Class B, 9/17/87; Class C, 8/1/94; and Class Z, 9/16/96.

 

The graph compares a $10,000 investment in the Dryden Municipal Bond Fund/High Income Series (Class A shares) with a similar investment in the Lehman Brothers Municipal Bond Index by portraying the initial account

 

    Visit our website at www.jennisondryden.com


 

values at the beginning of the 10-year period for Class A shares (April 30, 1994) and the account values at the end of the current fiscal year (April 30, 2004) as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable front-end sales charge was deducted from the initial $10,000 investment in Class A shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The line graph provides information for Class A shares only. As indicated in the tables provided earlier, performance for Class B, Class C, and Class Z shares will vary due to the differing charges and expenses applicable to each share class (as indicated in the following paragraphs). Without a distribution and service (12b-1) fee waiver of 0.05% for Class A shares through April 30, 2004, the returns shown in the graph and for Class A shares in the tables would have been lower.

 

The 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. The Index’s total returns include the reinvestment of all dividends, but do not include the effects of sales charges, operating expenses of a mutual fund, or taxes. The returns for the Index would be lower if they included the effects of sales charges, operating expenses, or taxes. The securities that comprise the Index may differ substantially from the securities in the Fund. This is not the only index that may be used to characterize performance of municipal bond funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index.

 

Through March 14, 2004, the Fund charged a maximum front-end sales charge of 3.00% for Class A shares and a 12b-1 fee of up to 0.30% annually. Effective March 15, 2004, Class A shares are subject to a maximum front-end sales charge of 4.00% and a 12b-1 fee of up to 0.30% annually. Investors who purchase Class A shares in an amount of $1 million or more do not pay a front-end sales charge, but are subject to a contingent deferred sales charge (CDSC) of 1% for shares sold within 12 months of purchase. Class B shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1% respectively for the first six years after the purchase and a 12b-1 fee of up to 0.50% annually. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Through February 1, 2004, Class C shares were 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 C shares purchased on or after February 2, 2004 are not subject to a front-end sales charge, the CDSC of 1% for Class C shares purchased on or after that date will apply for 12 months from the date of purchase, and the annual 12b-1 fee will remain 1%. Class Z shares are not subject to a sales charge or 12b-1 fee. The returns on investment in the graph and 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.

 

Dryden Municipal Bond Fund    


Growth of a $10,000 Investment

 

LOGO

 

Average Annual Total Returns (With Sales Charges) as of 4/30/04
     One Year     Five Years     Ten Years    Since Inception

Class A

   –3.88 %   3.68 %   5.27% (5.24)    5.99% (5.93)

Class B

   –4.84     4.10     5.37    (5.34)    6.51    (6.19)

Class C

   (1.33 )   4.01     N/A    5.03    (5.00)

Class Z

   0.40     4.77     N/A    5.56    (5.55)
                       
Average Annual Total Returns (Without Sales Charges) as of 4/30/04
     One Year     Five Years     Ten Years    Since Inception

Class A

   0.13 %   4.53 %   5.70% (5.67)    6.30% (6.23)

Class B

   –0.14     4.26     5.37    (5.34)    6.51    (6.19)

Class C

   –0.39     4.01     N/A    5.03    (5.00)

Class Z

   0.40     4.77     N/A    5.56    (5.55)

 

Performance data quoted represents past performance and is not indicative of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain current performance data to the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852.

 

Source: Prudential Investments LLC and Lipper Inc. Inception dates: Class A, 1/22/90; Class B, 9/17/87; Class C, 8/1/94; and Class Z, 9/16/96.

 

The graph compares a $10,000 investment in the Dryden Municipal Bond Fund/Insured Series (Class A shares) with a similar investment in the Lehman Brothers Municipal Bond Index by portraying the initial account values at the beginning of the 10-year period for Class A shares (April 30, 1994) and the account values at the end of the

 

    Visit our website at www.jennisondryden.com


 

current fiscal year (April 30, 2004) as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable front-end sales charge was deducted from the initial $10,000 investment in Class A shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The line graph provides information for Class A shares only. As indicated in the tables provided earlier, performance for Class B, Class C, and Class Z shares will vary due to the differing charges and expenses applicable to each share class (as indicated in the following paragraphs). Without a distribution and service (12b-1) fee waiver of 0.05% for Class A shares through April 30, 2004, the returns shown in the graph and for Class A shares in the tables would have been lower.

 

The 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. The Index’s total returns include the reinvestment of all dividends, but do not include the effects of sales charges, operating expenses of a mutual fund, or taxes. The returns for the Index would be lower if they included the effects of sales charges, operating expenses, or taxes. The securities that comprise the Index may differ substantially from the securities in the Fund. This is not the only index that may be used to characterize performance of municipal bond funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index.

 

Through March 14, 2004, the Fund charged a maximum front-end sales charge of 3.00% for Class A shares and a 12b-1 fee of up to 0.30% annually. Effective March 15, 2004, Class A shares are subject to a maximum front-end sales charge of 4.00% and a 12b-1 fee of up to 0.30% annually. Investors who purchase Class A shares in an amount of $1 million or more do not pay a front-end sales charge, but are subject to a contingent deferred sales charge (CDSC) of 1% for shares sold within 12 months of purchase. Class B shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1% respectively for the first six years after the purchase and a 12b-1 fee of up to 1.00% annually. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Through February 1, 2004, Class C shares were 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 up to 1% annually. Class C shares purchased on or after February 2, 2004 are not subject to a front-end sales charge, the CDSC of 1% for Class C shares purchased on or after that date will apply for 12 months from the date of purchase, and the annual 12b-1 fee will remain up to 1%. Class Z shares are not subject to a sales charge or 12b-1 fee. The returns on investment in the graph and 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.

 

Dryden Municipal Bond Fund    


 

n MAIL   n TELEPHONE   n WEBSITE

Gateway Center Three

100 Mulberry Street

Newark, NJ 07102

  (800) 225-1852   www.jennisondryden.com

 

PROXY VOTING
The Board of Trustees of the Fund has delegated to the Series’ investment adviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Series. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the SEC’s website at http://www.sec.gov.

 

TRUSTEES
David E.A. Carson•Robert F. Gunia•Robert E. La Blanc•Douglas H. McCorkindale• 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 and Principal Financial and Accounting Officer•William V. Healey, Chief Legal Officer•Jonathan D. Shain, Assistant Secretary•Deborah A. Docs, Secretary•Maryanne Ryan, Anti-Money Laundering Compliance Officer•Lee D. Augsburger, Chief Compliance Officer

 

 

MANAGER   Prudential Investments LLC    Gateway Center Three
100 Mulberry Street
Newark, NJ 07102

INVESTMENT ADVISER   Prudential Investment
Management, Inc.
   Gateway Center Two
100 Mulberry Street
Newark, NJ 07102

DISTRIBUTOR   Prudential Investment
Management Services LLC
   Gateway Center Three
14th Floor
100 Mulberry Street
Newark, NJ 07102

CUSTODIAN   State Street Bank
and Trust Company
   One Heritage Drive
North Quincy, MA 02171

TRANSFER AGENT   Prudential Mutual Fund
Services LLC
   PO Box 8098
Philadelphia, PA 19101

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP    757 Third Avenue
New York, NY 10017

FUND COUNSEL   Shearman & Sterling LLP    599 Lexington Avenue
New York, NY 10022

 

Dryden Municipal Bond Fund/High Income Series        
Share Class       A   B   C   Z    

NASDAQ

      PRHAX   PMHYX   PHICX   PHIZX    

CUSIP

      262467103   262467202   262467301   262467400    
                         
Dryden Municipal Bond Fund/Insured Series        
Share Class       A   B   C   Z    

NASDAQ

      PMIAX   PMINX   PMICX   PMIZX    

CUSIP

      262467509   262467608   262467707   262467806    
                         


 

An investor should consider the investment objectives, risks, and charges and expenses of the Series carefully before investing. The prospectus for each Series contains this and other information about the Series. An investor may obtain a prospectus by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing.

 

Quantitative Management and Prudential Fixed Income are business units of Prudential Investment Management, Inc. (PIM), and Jennison Associates LLC is a subsidiary of PIM. Jennison Associates LLC and PIM are registered investment advisers. PIM is a subsidiary of Prudential Financial, Inc.

 

 

E-DELIVERY

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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


LOGO

 

 

 

 

Dryden Municipal Bond Fund/High Income Series        
    Share Class   A   B   C   Z    
   

NASDAQ

  PRHAX   PMHYX   PHICX   PHIZX    
   

CUSIP

  262467103   262467202   262467301   262467400    
                         
Dryden Municipal Bond Fund/Insured Series        
    Share Class   A   B   C   Z    
   

NASDAQ

  PMIAX   PMINX   PMICX   PMIZX    
   

CUSIP

  262467509   262467608   262467707   262467806    
                         

MF133E    IFS-A093040    Ed. 06/2004


Item 2 – Code of Ethics – – See Exhibit (a)

 

As of the end of the period covered by this report, the registrant has adopted a code of ethics (the “Section 406 Standards for Investment Companies – Ethical Standards for Principal Executive and Financial Officers”) that applies to the registrant’s Principal Executive Officer and Principal Financial Officer; the registrant’s Principal Financial Officer also serves as the Principal Accounting Officer.

 

The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant 973-802-6469, and ask for a copy of the Section 406 Standards for Investment Companies—Ethical Standards for Principal Executive and Financial Officers.

 

Item 3 – Audit Committee Financial Expert –

 

The registrant’s Board has determined that Mr. David Carson, member of the Board’s Audit Committee is an “audit committee financial expert,” and that he is “independent,” for purposes of this Item.

 

Item 4 – Principal Accountant Fees and Services –

 

(a) Audit Fees

 

For the fiscal year ended April 30, 2004, KPMG LLP, the Registrant’s principal accountant, billed the Registrant $47,000 for professional services rendered for the audit of the Registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings. KPMG did not serve as the Registrant’s principal accountant during fiscal year ended April 30, 2003, so no information for that fiscal year is provided.

 

(b) Audit-Related Fees

 

None.

 

(c) Tax Fees

 

None.

 

(d) All Other Fees

 

None.

 

(e) (1) Audit Committee Pre-Approval Policies and Procedures

 


THE PRUDENTIAL MUTUAL FUNDS

 

AUDIT COMMITTEE POLICY

 

on

 

Pre-Approval of Services Provided by the Independent Accountants

 

The Audit Committee of each Prudential Mutual Fund is charged with the responsibility to monitor the independence of the Fund’s independent accountants. As part of this responsibility, the Audit Committee must pre-approve any independent accounting firm’s engagement to render audit and/or permissible non-audit services, as required by law. In evaluating a proposed engagement of the independent accountants, the Audit Committee will assess the effect that the engagement might reasonably be expected to have on the accountant’s independence. The Committee’s evaluation will be based on:

 

  a review of the nature of the professional services expected to be provided,

 

  a review of the safeguards put into place by the accounting firm to safeguard independence, and

 

  periodic meetings with the accounting firm.

 

Policy for Audit and Non-Audit Services Provided to the Funds

 

On an annual basis, the scope of audits for each Fund, audit fees and expenses, and audit-related and non-audit services (and fees proposed in respect thereof) proposed to be performed by the Fund’s independent accountants will be presented by the Treasurer and the independent accountants to the Audit Committee for review and, as appropriate, approval prior to the initiation of such services. Such presentation shall be accompanied by confirmation by both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants. Proposed services shall be described in sufficient detail to enable the Audit Committee to assess the appropriateness of such services and fees, and the compatibility of the provision of such services with the auditor’s independence. The Committee shall receive periodic reports on the progress of the audit and other services which are approved by the Committee or by the Committee Chair pursuant to authority delegated in this Policy.

 

The categories of services enumerated under “Audit Services”, “Audit-related Services”, and “Tax Services” are intended to provide guidance to the Treasurer and the independent accountants as to those categories of services which the Committee believes are generally consistent with the independence of the independent accountants and which the Committee (or the Committee Chair) would expect upon the presentation of specific proposals to pre-approve. The enumerated categories are not intended as an exclusive list of audit, audit-related or tax services which the Committee (or the Committee Chair) would consider for pre-approval.


Audit Services

 

The following categories of audit services are considered to be consistent with the role of the Fund’s independent accountants:

 

  Ø Annual Fund financial statement audits

 

  Ø Seed audits (related to new product filings, as required)

 

  Ø SEC and regulatory filings and consents

 

Audit-related Services

 

The following categories of audit-related services are considered to be consistent with the role of the Fund’s independent accountants:

 

  Ø Accounting consultations

 

  Ø Fund merger support services

 

  Ø Agreed Upon Procedure Reports

 

  Ø Attestation Reports

 

  Ø Other Internal Control Reports

 

Individual audit-related services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000.

 

Tax Services

 

The following categories of tax services are considered to be consistent with the role of the Fund’s independent accountants:

 

  Ø Tax compliance services related to the filing or amendment of the following:

 

  n Federal, state and local income tax compliance; and,

 

  n Sales and use tax compliance

 

  Ø Timely RIC qualification reviews

 

  Ø Tax distribution analysis and planning

 

  Ø Tax authority examination services

 

  Ø Tax appeals support services

 

  Ø Accounting methods studies

 

  Ø Fund merger support services

 

  Ø Tax consulting services and related projects

 

Individual tax services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000.

 

Other Non-audit Services

 

Certain non-audit services that the independent accountants are legally permitted to render will be subject to pre-approval by the Committee or by one or more Committee members to whom the Committee has delegated this authority and who will report to the full Committee any pre-approval decisions made pursuant to this Policy. Non-audit services presented for pre-approval


pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

 

Proscribed Services

 

The Fund’s independent accountants will not render services in the following categories of non-audit services:

 

  Ø Bookkeeping or other services related to the accounting records or financial statements of the Fund

 

  Ø Financial information systems design and implementation

 

  Ø Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

 

  Ø Actuarial services

 

  Ø Internal audit outsourcing services

 

  Ø Management functions or human resources

 

  Ø Broker or dealer, investment adviser, or investment banking services

 

  Ø Legal services and expert services unrelated to the audit

 

  Ø Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

 

Pre-approval of Non-Audit Services Provided to Other Entities Within the Prudential Fund Complex

 

Certain non-audit services provided to Prudential Investments LLC or any of its affiliates that also provide ongoing services to the Prudential Mutual Funds will be subject to pre-approval by the Audit Committee. The only non-audit services provided to these entities that will require pre-approval are those related directly to the operations and financial reporting of the Funds. Individual projects that are not presented to the Audit Committee as part of the annual pre-approval process, will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000. Services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

 

Although the Audit Committee will not pre-approve all services provided to Prudential Investments LLC and its affiliates, the Committee will receive an annual report from the Fund’s independent accounting firm showing the aggregate fees for all services provided to Prudential Investments and its affiliates.

 

(e)-(2) Percentage of services referred to in 4(b)- (4)(d) that were approved by the audit committee –Not applicable.


(f)  Percentage of hours expended attributable to work performed by other than full time employees of principal accountant if greater than 50%.

 

Not applicable.

 

(g) Non-Audit Fees

 

Not applicable to Registrant and to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant.

 

(h) Principal Accountants Independence

 

Not applicable as KPMG has not provided non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.

 

Item 5 – Audit Committee of Listed Registrants – Not applicable.

 

Item 6 – Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

 

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable.

 

Item 8 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.

 

Item 9 – Submission of Matters to a Vote of Security Holders: None.

 

Item 10 – 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 11 – Exhibits

 

  (a) Code of Ethics – Attached hereto

 

  (b) Certifications pursuant to Section 302 and 906 of the Sarbanes-Oxley Act – Attached hereto


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)   Dryden Municipal Bond Fund
By (Signature and Title)*  

/s/    Jonathan D. Shain        

   

Jonathan D. Shain

Assistant Secretary

Date   June 29, 2004

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*  

/s/    Judy A. Rice        

   

Judy A. Rice

President and Principal Executive Officer

Date   June 29, 2004

 

By (Signature and Title)*  

/s/    Grace C. Torres        

   

Grace C. Torres

Treasurer and Principal Financial Officer

Date   June 29, 2004

 

* Print the name and title of each signing officer under his or her signature.
EX-99.CODE 2 dex99code.htm CODE OF ETHICS CODE OF ETHICS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND

PRINCIPAL FINANCIAL OFFICERS

 

I. Covered Officers/Purpose of the Code

 

This code of ethics (the “Code”) is established for each fund listed on Attachment A hereto (each a Fund” and together the “Funds”) pursuant to Section 406 of the Sarbanes-Oxley Act and the rules adopted thereunder by the Securities and Exchange Commission (“SEC”). The Code applies to each Fund’s Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer or Controller, or senior officers performing similar functions (the “Covered Officers” each of whom are set forth in Exhibit B) for the purpose of promoting:

 

  honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

 

  full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by a Fund;

 

  compliance with applicable governmental laws, rules and regulations;

 

  the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

 

  accountability for adherence to the Code.

 

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

 

II. Conflicts of Interest

 

A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with a Fund.

 

Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the “1940 Act”) and the Investment Advisers Act of 1940, as amended (the “Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as “affiliated persons” of the Fund. A Fund’s and its investment adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

 

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationships between a Fund and the Fund’s investment adviser, principal underwriter, administrator, or other service providers to the Fund (together “Service Providers”), of which the Covered Officers may also be principals or employees. As a


result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Fund or for a Service Provider, or for both), be involved in establishing policies and implementing decisions that will have different effects on such Service Providers and a Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationships between a Fund and its Service Providers and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the 1940 Act and the Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Board of Directors/Trustees (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

 

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the 1940 Act and the Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund.

 

Each Covered Officer must:

 

  not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

 

  not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; and

 

  not retaliate against any other Covered Officer or any employee of a Fund or its affiliated persons for reports of potential violations that are made in good faith.

 

There are some actual or potential conflict of interest situations that should always be brought to the attention of, and discussed with, the Funds’ Chief Legal Officer or other senior legal officer, if material. Examples of these include:

 

  service as a director on the board of any public or private company;

 

  the receipt of any non-nominal gifts;

 

  the receipt of any entertainment from any company with which a Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

 

  any ownership interest in (other than insubstantial interests in publicly traded entities), or any consulting or employment relationship with, any of a Fund’s Service Providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; and

 

  a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

 

2


III. Disclosure and Compliance

 

Each Covered Officer:

 

  should familiarize himself with the disclosure requirements generally applicable to the Funds;

 

  should not knowingly misrepresent, or cause others to misrepresent, facts about a Fund to others, whether within or outside the Fund, including to the Fund’s Board of Directors/Trustees and its auditors, and to governmental regulators and self-regulatory organizations;

 

  should, to the extent appropriate within his area of responsibility, consult with other officers and employees of a Fund and its Service Providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and

 

  is responsible to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

 

IV. Reporting and Accountability

 

Each Covered Officer must:

 

  upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board of Directors/Trustees that he has received, read, and understands the Code;

 

  annually thereafter affirm to the Board of Directors/Trustees that he has complied with the requirements of the Code; and

 

  notify the Funds’ Chief Legal Officer promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code.

 

The Funds’ Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. In such situations, the Chief Legal Officer is authorized to consult, as appropriate, with counsel to the Funds, counsel to the Independent Directors/Trustees, a Board Committee comprised of Independent Directors/Trustees, or the full Board.

 

The Funds will follow the following procedures in investigating and enforcing this Code:

 

  the Funds Chief Legal Officer will take all appropriate action to investigate any potential violations reported to her;

 

  if, after such investigation, the Chief Legal Officer believes that no violation has occurred, the Chief Legal Officer is not required to take any further action;

 

  any matter that the Chief Legal Officer believes is a violation or that the Chief Legal Officer believes should be reviewed by a Fund’s Board or Board

 

3


Committee comprised of Independent Directors/Trustees will be reported to the Fund’s Board or Board Committee comprised of Independent Directors/Trustees;

 

  based upon its review of any matter referred to it, a Fund’s Board or Board Committee comprised of Independent Directors/Trustees shall determine whether or not a violation has occurred, whether a grant of waiver is appropriate or whether some other action should be taken. Based upon its determination, the Fund’s Board or Board Committee comprised of Independent Directors/Trustees may take such action as it deems appropriate, which may include without limitation: modifications of applicable policies and procedures; notification to appropriate personnel of the Fund’s investment adviser, principal underwriter or administrator, or their boards; notification to other Funds for which the Covered Officer serves as a Covered Officer; or recommendation to dismiss the Covered Officer; and

 

  any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

 

V. Other Policies and Procedures

 

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of a Fund or its Service Providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds’ and their investment adviser’s and principal underwriter’s code of ethics under Rule 17j-1 under the 1940 Act are separate requirements applying to the Covered Officers and others, and are not part of this Code.

 

VI. Amendments

 

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of Independent Directors/Trustees.

 

VII. Confidentiality

 

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Fund Board of Directors/Trustees, counsel to the Fund, and counsel to the Fund Independent Directors/Trustees.

 

VIII. Internal Use

 

The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of a Fund, as to any fact, circumstance, or legal conclusion.

 

IX. Recordkeeping

 

A Fund shall keep the information disclosed about waivers and amendments under the Code for the period of time as specified in the rules adopted pursuant to Section 406 of the Sarbanes-Oxley Act, and furnish such information to the SEC or its staff upon request.

 

Adopted and approved as of September 3, 2003.

 

4


EXHIBIT A

 

Funds Covered by this Code of Ethics

 

The Retail Funds:

 

Strategic Partners Asset Allocation Funds - Strategic Partners Moderate Growth Fund

Strategic Partners Asset Allocation Funds - Strategic Partners Conservative Growth Fund

Strategic Partners Style Specific Funds - Strategic Partners International Equity Fund

Strategic Partners Style Specific Funds - Strategic Partners Large Capitalization Growth Fund

Strategic Partners Style Specific Funds - Strategic Partners Small Capitalization Value Fund

Strategic Partners Style Specific Funds - Strategic Partners Large Capitalization Value Fund

Strategic Partners Asset Allocations Funds - Strategic Partners High Growth Fund

Strategic Partners Style Specific Funds - Strategic Partners Total Return Bond Fund

Strategic Partners Style Specific Funds - Strategic Partners Small Capitalization Growth Fund

 

Dryden California Municipal Fund: California Income Series

Dryden California Municipal Fund: California Money Market Series

Dryden California Municipal Fund: California Series

Dryden Municipal Series Fund: Florida Series

Dryden Municipal Series Fund: New Jersey Money Market Series

Dryden Municipal Series Fund: New Jersey Series

Dryden Municipal Series Fund: New York Money Market Series

Dryden Municipal Series Fund: New York Series

Dryden Municipal Series Fund: Pennsylvania Series

 

Cash Accumulation Trust - Liquid Assets Series

Cash Accumulation Trust - National Money Market Fund

Dryden Index Series Fund: Dryden Stock Index Fund

The Prudential Investment Portfolios, Inc., Jennison Equity Opportunity Fund

The Prudential Investment Portfolios, Inc., Jennison Growth Fund

The Prudential Investment Portfolios, Inc., Dryden Active Balanced Fund

Jennison Small Company Fund, Inc.

 

Dryden Tax-Managed Funds, Dryden Tax-Managed Equity Fund

Dryden Tax-Managed Small-Cap Fund, Inc.

Jennison U.S. Emerging Growth Fund, Inc.

Jennison Value Fund

Prudential World Fund, Inc., Jennison Global Growth Fund

Prudential World Fund, Inc., Strategic Partners International Value Fund

Prudential World Fund, Inc., Jennison International Growth Fund

 

A-1


Dryden Government Securities Trust - Money Market Series

Dryden Government Securities Trust - U.S. Treasury Money Market Series

Jennison Sector Funds, Inc. - Jennison Financial Services Fund

Jennison Sector Funds, Inc. - Jennison Health Sciences Fund

Jennison Sector Funds, Inc. - Jennison Technology Fund

Jennison Sector Funds, Inc. - Jennison Utility Fund

 

Strategic Partners Equity Fund, Inc.

Dryden Global Total Return Fund, Inc.

Dryden High Yield Fund, Inc.

MoneyMart Assets, Inc.

Dryden National Municipals Fund, Inc.

Dryden Short-Term Bond Fund, Inc. - Dryden Short-Term Corporate Bond Fund

Dryden Short-Term Bond Fund, Inc. - Dryden Ultra Short Bond Fund

Tax-Free Money Fund, Inc.

Dryden Total Return Bond Fund, Inc.

 

The Target Portfolio Trust - Intermediate-Term Bond Portfolio

The Target Portfolio Trust - International Bond Portfolio

The Target Portfolio Trust - International Equity Portfolio

The Target Portfolio Trust - Large Capitalization Growth Portfolio

The Target Portfolio Trust - Large Capitalization Value Portfolio

The Target Portfolio Trust - Mortgage Backed Securities Portfolio

The Target Portfolio Trust - Small Capitalization Growth Portfolio

The Target Portfolio Trust - Small Capitalization Value Portfolio

The Target Portfolio Trust - Total Return Bond Portfolio

The Target Portfolio Trust - U.S. Government Money Market Portfolio

 

Jennison 20/20 Focus Fund

Dryden Core Investment Fund

 

Dryden Government Income Fund, Inc.

Strategic Partners Opportunity Funds - Strategic Partners Focused Growth Fund

Strategic Partners Opportunity Funds - Strategic Partners Focused Value Fund

Strategic Partners Opportunity Funds - Strategic Partners Mid-Cap Value Fund

Strategic Partners Opportunity Funds - Strategic Partners New Era Growth Fund

 

Prudential Institutional Liquidity Portfolio, Inc. - Institutional Money Market Series

Strategic Partners Real Estate Securities Fund

 

A-2


Dryden Municipal Bond Fund - High Income Series

Dryden Municipal Bond Fund - Insured Series

 

Prudential Europe Growth Fund, Inc.

Prudential Pacific Growth Fund, Inc.

 

Jennison Natural Resources Fund, Inc.

 

COMMAND Government Fund

COMMAND Money Fund

COMMAND Tax-Free Fund

Special Money Market Fund, Inc. - Money Market Series

 

The High Yield Income Fund, Inc.

Nicholas-Applegate Fund, Inc. - Nicholas-Applegate Growth Equity Fund

 

The Prudential Variable Contract Account - 2

The Prudential Variable Contract Account - 10

The Prudential Variable Contract Account - 11

 

American Skandia Advisor Funds, Inc. - ASAF American Century International Growth Fund

American Skandia Advisor Funds, Inc. - ASAF American Century Strategic Balanced Fund

American Skandia Advisor Funds, Inc. - ASAF DeAM International Equity Fund

American Skandia Advisor Funds, Inc. - ASAF Federated High Yield Bond Fund

American Skandia Advisor Funds, Inc. - ASAF Gabelli Small-Cap Value Fund

American Skandia Advisor Funds, Inc. - ASAF INVESCO Capital Income Fund

American Skandia Advisor Funds, Inc. - ASAF Goldman Sachs Concentrated Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Money Market Fund

American Skandia Advisor Funds, Inc. - ASAF PIMCO Total Return Bond Fund

American Skandia Advisor Funds, Inc. - ASAF PBHG Small-Cap Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Alliance Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Alliance Growth and Income Fund

American Skandia Advisor Funds, Inc. - ASAF William Blair International Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Marsico Capital Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Neuberger Berman Mid-Cap Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Neuberger Berman Mid-Cap Value Fund

American Skandia Advisor Funds, Inc. - ASAF MFS Growth with Income Fund

American Skandia Advisor Funds, Inc. - ASAF Sanford Bernstein Managed Index 500 Fund

American Skandia Advisor Funds, Inc. - ASAF Strong International Equity Fund

 

A-3


American Skandia Advisor Funds, Inc. - ASAF DeAM Small-Cap Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Alger All-Cap Growth Fund

American Skandia Advisor Funds, Inc. - ASAF Gabelli All-Cap Value Fund

American Skandia Advisor Funds, Inc. - ASAF INVESCO Technology Fund

American Skandia Advisor Funds, Inc. - ASAF Goldman Sachs Mid-Cap Growth Fund

American Skandia Advisor Funds, Inc. - ASAF ProFund Managed OTC Fund

American Skandia Advisor Funds, Inc. - ASAF Alliance / Bernstein Growth + Value Fund

American Skandia Advisor Funds, Inc. - ASAF INVESCO Health Sciences Fund

American Skandia Advisor Funds, Inc. - ASAF Sanford Bernstein Core Value Fund

American Skandia Advisor Funds, Inc. - ASAF T. Rowe Price Tax Managed Fund

American Skandia Advisor Funds, Inc. - ASAF DeAM Large-Cap Growth Fund

American Skandia Advisor Funds, Inc. - ASAF DeAM Large-Cap Value Fund

 

The Insurance Funds:

 

American Skandia Trust - AST Strong International Equity Portfolio

American Skandia Trust - AST William Blair International Growth Portfolio

American Skandia Trust - AST American Century International Growth Portfolio

American Skandia Trust - AST DeAM International Equity Portfolio

American Skandia Trust - AST MFS Global Equity Portfolio

American Skandia Trust - AST PBHG Small-Cap Growth Portfolio

American Skandia Trust - AST DeAM Small-Cap Growth Portfolio

American Skandia Trust - AST Federated Aggressive Growth Portfolio

American Skandia Trust - AST Goldman Sachs Small-Cap Value Portfolio

American Skandia Trust - AST Gabelli Small-Cap Value Portfolio

American Skandia Trust - AST DeAM Small-Cap Value Portfolio

American Skandia Trust - AST Goldman Sachs Mid-Cap Growth Portfolio

American Skandia Trust - AST Neuberger Berman Mid-Cap Growth Portfolio

American Skandia Trust - AST Neuberger Berman Mid-Cap Value Portfolio

American Skandia Trust - AST Alger All-Cap Growth Portfolio

American Skandia Trust - AST Gabelli All-Cap Value Portfolio

American Skandia Trust - AST T. Rowe Price Natural Resources Portfolio

American Skandia Trust - AST Alliance Growth Portfolio

American Skandia Trust - AST MFS Growth Portfolio

American Skandia Trust - AST Marisco Capital Growth Portfolio

American Skandia Truat - AST Goldman Sachs Concentrated Growth Portfolio

American Skandia Trust - AST DeAM Large-Cap Growth Portfolio

American Skandia Trust - AST DeAM Large-Cap Value Portfolio

American Skandia Trust - AST Alliance/Bernstein Growth + Value Portfolio

American Skandia Trust - AST Sanford Bernstein Core Value Portfolio

American Skandia Trust - AST Cohen & Steers Realty Portfolio

American Skandia Trust - AST Sandford Bernstein Managed Index 500 Portfolio

American Skandia Trust - AST American Century Income & Growth Portfolio

American Skandia Trust - AST Alliance Growth and Income Portfolio

American Skandia Trust - AST MFS Growth with Income Portfolio

 

A-4


American Skandia Trust - AST INVESCO Capital Income Portfolio

American Skandia Trust - AST DeAM Global Allocation Portfolio

American Skandia Trust - AST American Century Strategic Balanced Portfolio

American Skandia Trust - AST T. Rowe Price Asset Allocation Portfolio

American Skandia Trust - AST T. Rowe Price Global Bond Portfolio

American Skandia Trust - AST Federated High Yield Portfolio

American Skandia Trust - AST Lord Abbett Bond-Debenture Portfolio

American Skandia Trust - AST DeAM Bond Portfolio

American Skandia Trust - AST PIMCO Total Return Bond Portfolio

American Skandia Trust - AST PIMCO Limited Maturity Bond Portfolio

American Skandia Trust - AST Money Market Portfolio

 

The Prudential Series Fund, Inc. - SP Aggressive Growth Asset Allocation Portfolio

The Prudential Series Fund, Inc. - SP AIM Aggressive Growth Portfolio

The Prudential Series Fund, Inc. - SP AIM Core Equity Portfolio

The Prudential Series Fund, Inc. - SP Alliance Large Cap Growth Portfolio

The Prudential Series Fund, Inc. - SP Alliance Technology Portfolio

The Prudential Series Fund, Inc. - SP Balanced Asset Allocation Portfolio

The Prudential Series Fund, Inc. - SP Conservative Asset Allocation Portfolio

The Prudential Series Fund, Inc. - SP Davis Value Portfolio

The Prudential Series Fund, Inc. - SP Deutsche International Equity Portfolio

The Prudential Series Fund, Inc. - SP Growth Asset Allocation Portfolio

The Prudential Series Fund, Inc. - SP INVESCO Small Company Growth Portfolio

The Prudential Series Fund, Inc. - SP Jennison International Growth Portfolio

The Prudential Series Fund, Inc. - SP Large Cap Value Portfolio

The Prudential Series Fund, Inc. - SP MFS Capital Opportunites Portfolio

The Prudential Series Fund, Inc. - SP MFS Mid Cap Growth Portfolio

The Prudential Series Fund, Inc. - SP PIMCO High Yield Portfolio

The Prudential Series Fund, Inc. - SP PIMCO Total Return Portfolio

The Prudential Series Fund, Inc. - SP Prudential U.S. Emerging Growth Portfolio

The Prudential Series Fund, Inc. - SP Small/Mid Cap Value Growth Portfolio

The Prudential Series Fund, Inc. - SP Strategic Partners Focused Growth Portfolio

The Prudential Series Fund, Inc. - Stock Index Portfolio

The Prudential Series Fund, Inc. - Jennison 20/20 Focus Portfolio

The Prudential Series Fund, Inc. - Conservative Balanced Portfolio

The Prudential Series Fund, Inc. - Diversified Bond Portfolio

The Prudential Series Fund, Inc. - Diversified Conservative Growth Portfolio

The Prudential Series Fund, Inc. - Equity Portfolio

The Prudential Series Fund, Inc. - Flexible Managed Portfolio

The Prudential Series Fund, Inc. - Global Portfolio

The Prudential Series Fund, Inc. - Government Income Portfolio

The Prudential Series Fund, Inc. - High Yield Bond Portfolio

The Prudential Series Fund, Inc. - Jennison Portfolio

The Prudential Series Fund, Inc. - Money Market Portfolio

The Prudential Series Fund, Inc. - Natural Resources Portfolio

The Prudential Series Fund, Inc. - Small Capitalization Stock Portfolio

The Prudential Series Fund, Inc. - Value Portfolio

The Prudential Series Fund, Inc. - Zero Coupon Bond Portfolio 2005

 

Prudential’s Gibraltar Fund, Inc.

 

A-5


EXHIBIT B

 

Persons Covered by this Code of Ethics

 

Judy A. Rice – President and Chief Executive Officer of the Retail Funds

 

David R. Odenath – President and Chief Executive Officer of the Insurance Funds

 

Grace C. Torres – Treasurer and Chief Financial Officer for the Retail and Insurance Fund

 

B-1

EX-99.CERT 3 dex99cert.htm CERTIFICATION PURSUANT TO RULE 302 CERTIFICATION PURSUANT TO RULE 302

Item 11

Dryden Municipal Bond Fund

Annual period ending 04/30/04

File No. 811-4930

 

CERTIFICATIONS

 

I, Judy A. Rice, certify that:

 

  1. I have reviewed this report on Form N-CSR of Dryden Municipal Bond Fund;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report.

 

  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and;

 

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


  5. The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 29, 2004

 

/s/    Judy A. Rice

Judy A. Rice

President and Principal Executive Officer


Item 11

Dryden Municipal Bond Fund

Annual period ending 04/30/04

File No. 811-4930

 

CERTIFICATIONS

 

I, Grace C. Torres, certify that:

 

  1. I have reviewed this report on Form N-CSR of Dryden Municipal Bond Fund;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report.

 

  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and;

 

  c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


  5. The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 29, 2004

 

/s/    Grace C. Torres

Grace C. Torres

Treasurer and Chief Financial Officer

EX-99.906CT 4 dex99906ct.htm CERTIFICATION PURSUANT TO RULE 906 CERTIFICATION PURSUANT TO RULE 906

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

Name of Issuer: Dryden Municipal Bond Fund

 

In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his or her knowledge, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

 

Date: June 29, 2004

     

/s/    Judy A. Rice        

        Judy A. Rice
        President and Principal Executive Officer

 

Date: June 29, 2004

     

/s/    Grace C. Torres        

        Grace C. Torres
        Treasurer and Principal Financial Officer
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