File No. 2-86008
811-3828
As filed with the Securities and Exchange Commission on February 1, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. __ |_|
Post-Effective Amendment No. 28 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 27 |X|
SELIGMAN TAX-EXEMPT FUND SERIES, INC.
(Exact name of registrant as specified in charter)
100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
Registrant's Telephone Number: 212-850-1864 or
Toll-Free 800-221-2450
THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
It is proposed that this filing will become effective (check the
appropriate box).
|_| immediately upon filing pursuant to paragraph (b) of rule 485
|X| on February 1, 1995 pursuant to paragraph (b) of rule 485
|_| 60 days after filing pursuant to paragraph (a)(i) of rule 485
|_| on (date) pursuant to paragraph (a)(i) of rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485
|_| on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice was
filed by Registrant on November 29, 1994.
<PAGE>
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 28
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
--------------------------- ----------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Series' Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Organization and Capitalization
5. Management of the Fund Management Services
6. Capital Stock and Other Securities Cover Page; Organization and Capitalization
7. Purchase of Securities Being Offered Alternative Distribution System; Purchase of Shares; Administration,
Shareholder Services and Distribution Plan
8. Redemption or Repurchase Telephone Transactions; Redemption of Shares; Exchange Privilege; Further
Information About Transactions In The Funds
9. Pending Legal Proceedings Not Applicable
<CAPTION>
Item in Part B of Form N-1A Location in Statement of Additional Information
- --------------------------- -----------------------------------------------
<S> <C>
10. Cover Page Cover Page
11. Table Of Contents Table Of Contents
12. General Information and History General Information; Organization and Capitalization (Prospectus)
13. Investment Objectives and Policies Investment Objectives, Policies And Risks; Investment Limitations
14. Management of the Fund Management And Expenses
15. Control Persons and Principal Directors and Officers; General Information
Holders of Securities
16. Investment Advisory and Other Services Management And Expenses; Distribution Services
17. Brokerage Allocations Portfolio Transactions; Administration, Shareholder Services and Distribution
Plan
18. Capital Stock and Other Securities General Information; Organization and Capitalization (Prospectus)
19. Purchase, Redemption and Pricing of Purchase and Redemption of Fund Shares; Valuation
Securities
20. Tax Status More About Taxes; Appendix B
21. Underwriters Distribution Services
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
SELIGMAN NEW JERSEY TAX-EXEMPT FUND, INC.
SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES
SELIGMAN TAX-EXEMPT FUND SERIES, INC.
National Tax-Exempt Series, Colorado Tax-Exempt Series, Georgia Tax-Exempt
Series, Louisiana Tax-Exempt Series, Maryland Tax-Exempt Series, Massachusetts
Tax-Exempt Series, Michigan Tax-Exempt Series, Minnesota Tax-Exempt Series,
Missouri Tax-Exempt Series, New York Tax-Exempt Series, Ohio Tax-Exempt Series,
Oregon Tax-Exempt Series and South Carolina Tax-Exempt Series
SELIGMAN TAX-EXEMPT SERIES TRUST
California Tax-Exempt High-Yield Series, California Tax-Exempt Quality Series,
Florida Tax-Exempt Series and North Carolina Tax-Exempt Series
100 Park Avenue o New York, N.Y. 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450--all continental United States
February 1, 1995
This prospectus offers shares of nineteen different series (the "Series")
which include Seligman New Jersey Tax-Exempt Fund, Inc. (the "New Jersey Fund"),
Seligman Pennsylvania Tax-Exempt Fund Series (the "Pennsylvania Fund"), National
Tax-Exempt Series (the "National Series") and twelve individual state Series of
Seligman Tax-Exempt Fund Series, Inc. (the "Tax-Exempt Fund"), and four
individual state Series of Seligman Tax-Exempt Series Trust (the "Tax-Exempt
Trust" and collectively with the New Jersey Fund, the Pennsylvania Fund and the
Tax-Exempt Fund, the "Funds"). Each of the Funds is a non-diversified, open-end
management investment company.
The Tax-Exempt Fund offers the following state Series: Colorado Tax-Exempt
Series, Georgia Tax-Exempt Series, Louisiana Tax-Exempt Series, Maryland
Tax-Exempt Series, Massachusetts Tax-Exempt Series, Michigan Tax-Exempt Series,
Minnesota Tax-Exempt Series, Missouri Tax-Exempt Series, New York Tax-Exempt
Series, Ohio Tax-Exempt Series, Oregon Tax-Exempt Series and South Carolina
Tax-Exempt Series (collectively, the "Tax-Exempt Fund State Series"). The
Tax-Exempt Trust offers the following state Series: California Tax-Exempt
Quality Series, California Tax-Exempt High-Yield Series, Florida Tax-Exempt
Series and the North Carolina Tax-Exempt Series (collectively, the "Tax-Exempt
Trust State Series", and together with the Tax-Exempt Fund State Series, the New
Jersey Fund and the Pennsylvania Fund, the "State Series").
The New Jersey Fund seeks to maximize income exempt from federal income tax
and New Jersey personal income tax consistent with preservation of capital and
with consideration given to opportunities for capital gain by investing in
investment grade New Jersey tax-exempt securities. Throughout this Prospectus,
the New Jersey Gross Income Tax is referred to as the New Jersey personal income
tax.
(continued on following page)
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
The Pennsylvania Fund seeks to provide a high level of income exempt from
federal and Pennsylvania income taxes consistent with preservation of capital by
investing primarily in Pennsylvania tax-exempt securities rated within the four
highest rating categories of Moody's Investors Service ("Moody's") and/or
Standard & Poor's Corporation ("S&P"). Capital appreciation is not a
consideration in the selection of investments. The Fund may also invest in
Pennsylvania tax-exempt securities that are unrated but are believed by the
Manager (as defined below) to be of comparable quality to securities rated
within the four highest rating categories.
The Tax-Exempt Fund's National Tax-Exempt Series seeks to provide to its
shareholders maximum income exempt from federal income taxes to the extent
consistent with preservation of capital and with consideration given to
opportunities for capital gain by investing in investment grade securities the
interest on which is exempt from federal income taxes. The investment objective
of each of the individual Tax-Exempt Fund State Series is to maximize income
exempt from federal income taxes and from personal income taxes in that state,
consistent with the preservation of capital and with consideration given to
opportunities for capital gain by investing in investment grade tax-exempt
securities of the designated state, its political subdivisions, municipalities
and public authorities.
The Tax-Exempt Trust State Series, except for the California Tax-Exempt
High-Yield Series, each seek high income exempt from federal income taxes and
from personal income taxes in their respective state (other than Florida which
does not incur an individual income tax) consistent with preservation of capital
and with consideration given to capital gain, by investing in the four highest
credit rating categories (or three highest with respect to the California
Tax-Exempt Quality Series) of Moody's and/or S&P.
The California Tax-Exempt High-Yield Series seeks the maximum amount of
tax-exempt income consistent with preservation of capital and with consideration
given to capital gain by investing primarily in California tax-exempt securities
that are rated in the medium and lower rating categories of Moody's and/or S&P
or which are unrated. Such securities generally offer a higher current yield
than those in the higher rating categories but also involve greater price
volatility and risk of loss of principal and income. The California Tax-Exempt
High-Yield Series invests primarily in high-yield, high risk securities and
therefore may not be suitable for all investors.
There can be no assurance that a Series will achieve its objective.
Investment advisory and management services are provided to the Funds by J.
& W. Seligman & Co. Incorporated (the "Manager") and each Fund's distributor is
Seligman Financial Services, Inc., an affiliate of the Manager. Each Series
offers two classes of shares. Class A shares are sold subject to an initial
sales load of up to 4.75% and an annual service fee currently charged at a rate
of up to .25 of 1% of the average daily net asset value of the Class A shares.
Class D shares are sold without an initial sales load but are subject to
contingent deferred sales loads of 1% imposed on certain redemptions within one
year of purchase, an annual distribution fee of up to .75 of 1% and an annual
service fee of up to .25 of 1% of the average daily net asset value of the Class
D shares. See "Alternative Distribution System." Shares of the Series may be
purchased through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Funds and each individual Series before investing. Please
read it carefully before you invest and keep it for future reference. Additional
information about the Funds, including a Statement of Additional Information,
has been filed with the Securities and Exchange Commission. A Statement of
Additional Information for each Series is available upon request and without
charge by calling or writing the Funds at the telephone numbers or the address
set forth above. Each Statement of Additional Information is dated the same date
as this Prospectus and is incorporated herein by reference in its entirety.
2
<PAGE>
SUMMARY OF FUND EXPENSES
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of a Series bear directly or
indirectly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in sales loads are available in certain
circumstances. The CDSL on Class D shares is a one-time charge paid only if
shares are redeemed within one year of purchase. For more information concerning
reduction in sales loads and for more complete descriptions of the various costs
and expenses see "Purchase Of Shares," "Redemption Of Shares" and "Management
Services" herein. Each Series' Administration, Shareholder Services and
Distribution Plan to which the caption "12b-1 Fees" relates is discussed under
"Administration, Shareholder Services And Distribution Plan" herein.
<TABLE>
<CAPTION>
NJ FUND PA FUND
-------------------------- --------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................ 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower) None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................ None None None None
Exchange Fees.................. None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating Expenses
for Fiscal Year Ended September 30,
1994 (as percentage of average net
assets)
Management Fees.............. .33%+ .38%+ .50% .50%
12b-1 Fees................... .23 1.00** .22 1.00**
Other Expenses............... .34 .37 .44 .50
--- ---- ---- ----
Total Series Operating Expenses .90% 1.75% 1.16% 2.00%
=== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
NAT'L SERIES CO SERIES
-------------------------- --------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................ 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower) None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................ None None None None
Exchange Fees.................. None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating Expenses
for Fiscal Year Ended September 30,
1994 (as percentage of average net
assets)
Management Fees.............. .50% .50% .50% .50%
12b-1 Fees................... .08 1.00** .09 1.00**
Other Expenses............... .27 .26 .27 .28
--- ---- --- ----
Total Series Operating Expenses .85% 1.76% .86% 1.78%
=== ==== === ====
</TABLE>
In fiscal 1994, the Manager, in its discretion, waived a portion of its fee
from the New Jersey Fund. The management fee listed in the table for the New
Jersey Fund is net of voluntary fee waiver for the Series. Absent such waiver,
the management fee would have been .50% of the Fund's average daily net assets
and total operating expenses for Class A shares of the New Jersey Fund would
have been 1.07%. Annualized total operating expenses for Class D shares of the
New Jersey Fund would have been 1.87%. There can be no assurance that the
Manager will agree to waive any of its fee in future periods.
The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown and the
5% used in this example is a hypothetical rate.
<TABLE>
<CAPTION>
NJ FUND PA FUND NAT'L SERIES CO SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 56 $ 28++ $ 59 $ 30++ $ 56 $ 28++ $ 56 $ 28++
3 years ........... 75 55 83 63 73 55 74 56
5 years ........... 95 95 108 108 92 95 93 96
10 years ........... 153 206 182 233 147 207 149 209
</TABLE>
- ------------
* Annualized. Based on actual expenses incurred by the Series' Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.
** Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1% (collectively, "distribution fee"). Pursuant to Rules of the
National Association of Securities Dealers, Inc., the aggregate deferred
sales loads and annual distribution fees on Class D shares of each Series
may not exceed 6.25% of total gross sales, subject to certain exclusions.
The 6.25% limitation is imposed on the Series rather than on a per
shareholder basis. Therefore, a long-term Class D shareholder of a Series
may pay more in total sales loads (including distribution fees) than the
economic equivalent of 6.25% of such shareholder's investment in the shares.
+ Net of fees waived.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: NJ--$18; PA--$20; NATL --$18;
CO--$18.
3
<PAGE>
SUMMARY OF FUND EXPENSES--(continued)
<TABLE>
<CAPTION>
GA SERIES LA SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average net assets)
Management Fees ............... .30%+ .36%+ .50% .50%
12b-1 Fees .................... .10 1.00** .10 1.00**
Other Expenses ................ .33 .40 .27 .28
--- ---- --- ----
Total Series Operating
Expenses .................... .73% 1.76% .87% 1.78%
=== ==== === ====
</TABLE>
<TABLE>
<CAPTION>
MD SERIES MA SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average net assets)
Management Fees ............... .50% .50% .50% .50%
12b-1 Fees .................... .09 1.00** .09 1.00**
Other Expenses ................ .33 .30 .26 .28
--- ---- --- ----
Total Series Operating
Expenses .................... .92% 1.80% .85% 1.78%
=== ==== === ====
</TABLE>
In fiscal 1994, the Manager, in its discretion, waived a portion of its fee
from the Georgia Series. The management fee listed in the table for the Georgia
Series is net of voluntary fee waiver for the Series. Absent such waiver, the
management fee would have been .50% of the Series' average daily net assets and
total operating expenses for Class A shares of the Georgia Series would have
been .93%. Annualized total operating expenses for Class D shares of the Georgia
Series would have been 1.90%. There can be no assurance that the Manager will
agree to waive any of its fee in future periods.
The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown and the
5% used in this example is a hypothetical rate.
<TABLE>
<CAPTION>
GA FUND LA FUND MD SERIES MA SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 55 $ 28++ $ 56 $ 28++ $ 56 $ 28++ $ 56 $ 28++
3 years ........... 70 55 74 56 75 57 73 56
5 years ........... 86 95 93 96 96 97 92 96
10 years ........... 134 207 150 209 155 212 147 209
</TABLE>
- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.
** Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1% (collectively, "distribution fee"). Pursuant to Rules of the
National Association of Securities Dealers, Inc., the aggregate deferred
sales loads and annual distribution fees on Class D shares of each Series
may not exceed 6.25% of total gross sales, subject to certain exclusions.
The 6.25% limitation is imposed on the Series rather than on a per
shareholder basis. Therefore, a long-term Class D shareholder of a Series
may pay more in total sales loads (including distribution fees) than the
economic equivalent of 6.25% of such shareholder's investment in the shares.
+ Net of fees waived.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: GA--$18; LA--$18; MD --$18;
MA--$18.
4
<PAGE>
SUMMARY OF FUND EXPENSES--(continued)
<TABLE>
<CAPTION>
MI SERIES MN SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)
Management Fees ............... .50% .50% .50% .50%
12b-1 Fees .................... .10 1.00** .10 1.00**
Other Expenses ................ .24 .25 .25 .24
--- ---- --- ----
Total Series Operating
Expenses .................... .84% 1.75% .85% 1.74%
=== ==== === ====
</TABLE>
<TABLE>
<CAPTION>
MO SERIES NY SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)
Management Fees ............... .36%+ .40%+ .50% .50%
12b-1 Fees .................... .09 1.00** .08 1.00**
Other Expenses ................ .29 .30 .29 .31
--- ---- --- ----
Total Series Operating
Expenses .................... .74% 1.70% .87% 1.81%
=== ==== === ====
</TABLE>
In fiscal 1994, the Manager, in its discretion, waived a portion of its fee
from the Missouri Series. The management fee listed in the table for the
Missouri Series is net of voluntary fee waiver for the Series. Absent such
waiver, the management fee would have been .50% of the Series' average daily net
assets and total operating expenses for Class A shares of the Missouri Series
would have been .88%. Annualized total operating expenses for Class D shares of
the Missouri Series would have been 1.80%. There can be no assurance that the
Manager will agree to waive any of its fee in future periods.
The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown and the
5% used in this example is a hypothetical rate.
<TABLE>
<CAPTION>
MI FUND MN FUND MO SERIES NY SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 56 $ 28++ $ 56 $ 28++ $ 55 $ 27++ $ 56 $ 28++
3 years ........... 73 55 73 55 70 54 74 57
5 years ........... 92 95 92 94 87 92 93 98
10 years ........... 146 206 147 205 135 201 150 213
</TABLE>
- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.
** Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1% (collectively, "distribution fee"). Pursuant to Rules of the
National Association of Securities Dealers, Inc., the aggregate deferred
sales loads and annual distribution fees on Class D shares of each Series
may not exceed 6.25% of total gross sales, subject to certain exclusions.
The 6.25% limitation is imposed on the Series rather than on a per
shareholder basis. Therefore, a long-term Class D shareholder of a Series
may pay more in total sales loads (including distribution fees) than the
economic equivalent of 6.25% of such shareholder's investment in the shares.
+ Net of fees waived.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: MI--$18; MN--$18; MO--$17;
NY--$18
5
<PAGE>
SUMMARY OF FUND EXPENSES--(continued)
<TABLE>
<CAPTION>
OH SERIES OR SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average net assets)
Management Fees ............... .50% .50% .39%+ .40%+
12b-1 Fees .................... .10 1.00** .10 1.00**
Other Expenses ................ .24 .28 .29 .32
--- ---- --- ----
Total Series Operating
Expenses .................... .84% 1.78% .78% 1.72%
=== ==== === ====
</TABLE>
<TABLE>
<CAPTION>
CA
SC SERIES HIGH-YIELD SERIES
----------------------------- -----------------------------
Class A Class D Class A Class D
Shares Shares Shares Shares
------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during
the first year, the first year,
None None
thereafter thereafter
Redemption Fees................. None None None None
Exchange Fees................... None None None None
Class A Class D* Class A Class D*
------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)
Management Fees ............... .50% .50% .50% .50%
12b-1 Fees .................... .10 1.00** .09 1.00**
Other Expenses ................ .23 .24 .26 .24
--- ---- --- ----
Total Series Operating
Expenses .................... .83% 1.74% .85% 1.74%
=== ==== === ====
</TABLE>
In fiscal 1994, the Manager, in its discretion, waived a portion of its
fees from the Oregon Series. The management fee listed in the table for the
Oregon Series is net of voluntary fee waiver for the Series. Absent such waiver,
the management fee would have been .50% of the Series' average daily net assets
and total operating expenses for Class A shares of the Oregon Series would have
been .89%. Annualized total operating expenses for Class D shares of the Oregon
Series would have been 1.82%. There can be no assurance that the Manager will
agree to waive any of its fee in future periods.
The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown and the
5% used in this example is a hypothetical rate.
<TABLE>
<CAPTION>
CA
OH FUND OR FUND SC SERIES HIGH-YIELD SERIES
------------------ ------------------ ------------------ ------------------
Example Class A Class D* Class A Class D* Class A Class D* Class A Class D*
- ------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 year ............ $ 56 $ 28++ $ 55 $ 27++ $ 56 $ 28++ $ 56 $ 28++
3 years ........... 73 56 71 54 73 55 73 55
5 years ........... 92 96 89 93 91 94 92 94
10 years ........... 146 209 140 203 145 205 147 205
</TABLE>
- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.
** Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1% (collectively, "distribution fee"). Pursuant to Rules of the
National Association of Securities Dealers, Inc., the aggregate deferred
sales loads and annual distribution fees on Class D shares of each Series
may not exceed 6.25% of total gross sales, subject to certain exclusions.
The 6.25% limitation is imposed on the Series rather than on a per
shareholder basis. Therefore, a long-term Class D shareholder of a Series
may pay more in total sales loads (including distribution fees) than the
economic equivalent of 6.25% of such shareholder's investment in the shares.
+ Net of fees waived.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: OH--$18; OR--$17; SC--$18;
CA: High-Yield--$18
6
<PAGE>
SUMMARY OF FUND EXPENSES--(continued)
<TABLE>
<CAPTION>
CA QUALITY SERIES FL SERIES NC SERIES
----------------------------- ----------------------------- -----------------------------
Class A Class D Class A Class D Class A Class D
Shares Shares Shares Shares Shares Shares
------------ ------------ ------------ ------------ ------------ ------------
(Initial (Deferred (Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................. 4.75% None 4.75% None 4.75% None
Sales Load on Reinvested Dividends None None None None None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower). None 1% during None 1% during None 1% during
the first year, the first year, the first year,
None None None
thereafter thereafter thereafter
Redemption Fees................. None None None None None None
Exchange Fees................... None None None None None None
Class A Class D* Class A Class D* Class A Class D*
------------ ------------ ------------ ------------ ------------ ------------
Annual Series Operating
Expenses for Fiscal Year
Ended September 30, 1994
(as percentage of average
net assets)
Management Fees ............... .50% .50% .16%+ .16%+ .12%+ .12%+
12b-1 Fees .................... .09 1.00** .23 1.00** .24 1.00**
Other Expenses ................ .22 .27 .27 .34 .39 .45
--- ---- --- ---- --- ----
Total Series Operating
Expenses .................... .81% 1.77% .66% 1.50% .75% 1.57%
=== ==== === ==== === ====
</TABLE>
In fiscal 1994, the Manager, in its discretion, waived all or a portion of
its fees and reimbursed certain expenses of the North Carolina Series and the
Florida Series. In fiscal 1995, the Manager expects to waive a portion of its
fees for each of these Series, and as such, the expense information in the table
has been restated to reflect such waivers and the elimination of the
reimbursement of other expenses. Absent such waivers in fiscal 1995, the
management fee would be .50% of each Series' average daily net assets and
estimated total operating expenses for Class A shares and Class D shares of the
North Carolina Series will be 1.13% and 1.95%, respectively. Estimated total
operating expenses for Class A shares and Class D shares of the Florida Series
would be 1.00% and 1.84%, respectively. There can be no assurance that the
Manager will agree to waive any of its fee in future periods.
The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown and the
5% used in this example is a hypothetical rate.
<TABLE>
<CAPTION>
CA QUALITY SERIES FL SERIES NC SERIES
----------------------------- ----------------------------- -----------------------------
Example Class A Class D* Class A Class D* Class A Class D*
- ------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of
each time period:
1 yr ............. $ 55 $ 28++ $ 54 $ 25++ $ 55 $ 26++
3 yrs ............ 72 56 68 47 70 50
5 yrs ............ 90 96 83 82 87 86
10 yrs ............ 143 208 126 179 136 187
</TABLE>
- ------------
* Annualized. Based on actual expenses incurred by the Fund's Class D shares
for the period February 1, 1994 (commencement of offering of Class D shares)
through September 30, 1994.
** Includes an annual distribution fee of .75 of 1% and an annual service fee
of .25 of 1% (collectively, "distribution fee"). Pursuant to Rules of the
National Association of Securities Dealers, Inc., the aggregate deferred
sales loads and annual distribution fees on Class D shares of each Series
may not exceed 6.25% of total gross sales, subject to certain exclusions.
The 6.25% limitation is imposed on the Series rather than on a per
shareholder basis. Therefore, a long-term Class D shareholder of a Series
may pay more in total sales loads (including distribution fees) than the
economic equivalent of 6.25% of such shareholder's investment in the shares.
+ Net of fees waived.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be: CA: Quality--$18; FL--$15;
NC--$16.
7
<PAGE>
FINANCIAL HIGHLIGHTS
Each Fund's financial highlights for Class A and Class D shares for the
periods presented below have been audited by Deloitte & Touche LLP, independent
auditors. This information, which is derived from the financial and accounting
records of the Funds, should be read in conjunction with the fiscal 1994
financial statements and notes contained in the fiscal 1994 Annual Report of
each Fund which may be obtained by calling or writing the Funds at the telephone
numbers or address provided on the cover page of this Prospectus.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from a Series' beginning
net asset value to the ending net asset value so that they may understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, the per share amounts are derived by
converting the actual dollar amounts incurred for each item, as disclosed in the
financial statements, to their equivalent per share amounts. The total return
based on net asset value measures performance assuming investors purchased
shares at the net asset value as of the beginning of the period, invested
dividends and capital gains paid at net asset value and then sold their shares
at net asset value per share on the last day of the period. The total return
computations do not reflect any sales charges investors may incur in purchasing
or selling shares. Total returns for periods of less than one year are not
annualized.
<TABLE>
<CAPTION>
Increase
Net Realized (Decrease)
Net Asset Value Net & Unrealized from Dividends
Per Share Operating at Beginning Investment Investment Investment Paid or
Performance: of Period Income(1) Gain (Loss) Operations Declared
- ------------------- --------------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
New Jersey--Class A
Year ended 9/30/94 ...... $8.24 $0.41 $(0.74) $(0.33) ($0.41)
Year ended 9/30/93 ...... 7.74 0.42 0.61 1.03 (0.42)
Year ended 9/30/92 ...... 7.49 0.44 0.27 0.71 (0.44)
Year ended 9/30/91 ...... 7.01 0.44 0.51 0.95 (0.44)
Year ended 9/30/90 ...... 7.17 0.45 (0.10) 0.35 (0.45)
Year ended 9/30/89 ...... 6.98 0.48 0.19 0.67 (0.48)
2/16/88*-9/30/88 ........ 7.14 0.30 (0.16) 0.14 (0.30)
New Jersey--Class D
2/1/94**-9/30/94......... 8.14 0.23 (0.66) (0.43) (0.23)
Pennsylvania--Class A
Year ended 9/30/94....... 8.61 0.39 (0.80) (0.41) (0.39)
Year ended 9/30/93....... 8.02 0.42 0.71 1.13 (0.42)
Year ended 9/30/92....... 7.74 0.46 0.30 0.76 (0.46)
Year ended 9/30/91....... 7.34 0.47 0.49 0.96 (0.47)
Year ended 9/30/90....... 7.50 0.47 (0.16) 0.31 (0.47)
Year ended 9/30/89....... 7.31 0.49 0.19 0.68 (0.49)
Year ended 9/30/88....... 6.76 0.50 0.56 1.06 (0.50)
Year ended 9/30/87....... 7.58 0.51 (0.81) (0.30) (0.51)
7/15/86*-9/30/86......... 7.14 0.10 0.44 0.54 (0.10)
Pennsylvania--Class D
2/1/94**-9/30/94......... 8.37 0.22 (0.83) (0.61) (0.22)
National Series--Class A
Year ended 9/30/94....... 8.72 0.41 (1.04) (0.63) (0.41)
Year ended 9/30/93....... 8.07 0.45 0.78 1.23 (0.45)
Year ended 9/30/92....... 7.90 0.48 0.20 0.68 (0.48)
Year ended 9/30/91....... 7.44 0.49 0.54 1.03 (0.49)
Year ended 9/30/90....... 7.73 0.51 (0.19) 0.32 (0.51)
Year ended 9/30/89....... 7.64 0.53 0.11 0.64 (0.53)
Year ended 9/30/88....... 7.41 0.54 0.55 1.09 (0.54)
Year ended 9/30/87....... 8.48 0.59 (0.74) (0.15) (0.59)
Year ended 9/30/86....... 7.47 0.64 1.20 1.84 (0.64)
Year ended 9/30/85....... 6.84 0.67 0.63 1.30 (0.67)
National Series--Class D
2/1/94** - 9/30/94 ...... 8.20 0.22 (1.02) (0.80) (0.22)
Colorado Series--Class A
Year ended 9/30/94....... 7.76 0.37 (0.59) (0.22) (0.37)
Year ended 9/30/93....... 7.34 0.39 0.49 0.88 (0.39)
Year ended 9/30/92....... 7.22 0.42 0.12 0.54 (0.42)
Year ended 9/30/91....... 6.91 0.44 0.31 0.75 (0.44)
Year ended 9/30/90....... 7.06 0.46 (0.15) 0.31 (0.46)
Year ended 9/30/89....... 6.87 0.46 0.19 0.65 (0.46)
Year ended 9/30/88....... 6.38 0.46 0.53 0.99 (0.46)
Year ended 9/30/87....... 7.07 0.47 (0.66) (0.19) (0.47)
5/1/86*-9/30/86.......... 7.14 0.19 (0.07) 0.12 (0.19)
Colorado Series--Class D
2/1/94** - 9/30/94....... 7.72 0.20 (0.63) (0.43) (0.20)
</TABLE>
<TABLE>
<CAPTION>
Total Return Ratio of
Distributions Net Increase Net Asset Based on Expenses
Per Share Operating from Net (Decrease) in Value at Net Asset to Average
Performance: Gain Realized Net Asset Value End of Period Value Net Assets(1)
___________________ ------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
New Jersey--Class A
Year ended 9/30/94 ...... $(0.10) $(0.84) $7.40 (4.25)% 0.90%
Year ended 9/30/93 ...... (0.11) 0.50 8.24 14.02 0.86
Year ended 9/30/92 ...... (0.02) 0.25 7.74 9.70 0.85
Year ended 9/30/91 ...... (0.03) 0.48 7.49 13.97 0.81
Year ended 9/30/90 ...... (0.06) (0.16) 7.01 5.04 0.81
Year ended 9/30/89 ...... -- 0.19 7.17 9.91 0.57
2/16/88*-9/30/88 ........ -- (0.16) 6.98 1.96 0.40+
New Jersey--Class D
2/1/94**-9/30/94......... -- (0.66) 7.48 (5.47) 1.75+
Pennsylvania--Class A
Year ended 9/30/94....... (0.26) (1.06) 7.55 (5.00) 1.16
Year ended 9/30/93....... (0.12) 0.59 8.61 14.71 1.19
Year ended 9/30/92....... (0.02) 0.28 8.02 10.04 1.01
Year ended 9/30/91....... (0.09) 0.40 7.74 13.40 0.98
Year ended 9/30/90....... -- (0.16) 7.34 4.13 0.06
Year ended 9/30/89....... -- 0.19 7.50 9.53 0.92
Year ended 9/30/88....... (0.01) 0.55 7.31 16.20 0.83
Year ended 9/30/87....... (0.01) (0.82) 6.76 (4.21) 0.58
7/15/86*-9/30/86......... -- 0.44 7.58 7.19 --+
Pennsylvania--Class D
2/1/94**-9/30/94......... -- (0.83) 7.54 (7.50) 2.00+
National Series--Class A
Year ended 9/30/94....... (0.50) (1.54) 7.18 (7.83) 0.85
Year ended 9/30/93....... (0.13) 0.65 8.72 16.00 0.86
Year ended 9/30/92....... (0.03) 0.17 8.07 8.84 0.77
Year ended 9/30/91....... (0.08) 0.46 7.90 14.24 0.80
Year ended 9/30/90....... (0.10) (0.29) 7.44 4.10 0.78
Year ended 9/30/89....... (0.02) 0.09 7.73 8.62 0.78
Year ended 9/30/88....... (0.32) 0.23 7.64 16.43 0.83
Year ended 9/30/87....... (0.33) (1.07) 7.41 (2.37) 0.74
Year ended 9/30/86....... (0.19) 1.01 8.48 26.17 0.76
Year ended 9/30/85....... -- 0.63 7.47 19.18 0.88
National Series--Class D
2/1/94** - 9/30/94 ...... -- (1.02) 7.18 (9.96) 1.76+
Colorado Series--Class A
Year ended 9/30/94....... (0.08) (0.67) 7.09 (2.92) 0.86
Year ended 9/30/93....... (0.07) 0.42 7.76 12.54 0.90
Year ended 9/30/92....... -- 0.12 7.34 7.74 0.81
Year ended 9/30/91....... -- 0.31 7.22 11.15 0.84
Year ended 9/30/90....... -- (0.15) 6.91 4.38 0.85
Year ended 9/30/89....... -- 0.19 7.06 9.70 0.86
Year ended 9/30/88....... (0.04) 0.49 6.87 16.19 0.88
Year ended 9/30/87....... (0.03) (0.69) 6.38 (3.18) 0.77
5/1/86*-9/30/86.......... -- (0.07) 7.07 1.53 0.55+
Colorado Series--Class D
2/1/94** - 9/30/94....... -- (0.63) 7.09 (5.73) 1.78+
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Investment Adjusted Net
Income Net Assets at Investment
Per Share Operating to Average Portfolio End of Period Income
Performance: Net Assets(1) Turnover (000's omitted) Per Share(1)
- ------------------- ------------- --------- --------------- ------------
<S> <C> <C> <C> <C>
New Jersey--Class A
Year ended 9/30/94 ...... 5.24% 12.13% $73,942 $0.40
Year ended 9/30/93 ...... 5.37 15.90 82,447 0.40
Year ended 9/30/92 ...... 5.74 27.13 74,256 0.42
Year ended 9/30/91 ...... 6.02 14.64 65,044 0.42
Year ended 9/30/90 ...... 6.32 37.26 54,287 0.43
Year ended 9/30/89 ...... 6.70 16.10 51,015 0.44
2/16/88*-9/30/88 ........ 6.92+ 8.20 35,563 0.26
New Jersey--Class D
2/1/94**-9/30/94......... 4.37+ 12.13++ 986 0.22
Pennsylvania--Class A
Year ended 9/30/94....... 4.91 7.71 34,943
Year ended 9/30/93....... 5.14 40.74 41,296
Year ended 9/30/92....... 5.79 32.87 39,431 0.45
Year ended 9/30/91....... 6.16 25.24 37,853 0.45
Year ended 9/30/90....... 6.24 40.64 35,572 0.45
Year ended 9/30/89....... 6.56 9.05 41,856 0.47
Year ended 9/30/88....... 6.96 4.14 30,796 0.48
Year ended 9/30/87....... 6.78 9.19 30,014 0.47
7/15/86*-9/30/86......... 5.92+ -- 19,306 0.07
Pennsylvania--Class D
2/1/94**-9/30/94......... 4.20+ 7.71++ 43
National Series--Class A
Year ended 9/30/94....... 5.30 24.86 111,374
Year ended 9/30/93....... 5.49 72.68 136,394
Year ended 9/30/92....... 6.02 63.99 132,130
Year ended 9/30/91....... 6.35 71.67 136,326
Year ended 9/30/90....... 6.64 55.01 133,412
Year ended 9/30/89....... 6.86 71.90 140,376
Year ended 9/30/88....... 7.35 40.58 135,667
Year ended 9/30/87....... 7.15 64.79 133,341
Year ended 9/30/86....... 7.81 62.28 110,428
Year ended 9/30/85....... 9.07 87.94 48,818 0.67
National Series--Class D
2/1/94** - 9/30/94 ...... 4.37+ 24.86++ 446
Colorado Series--Class A
Year ended 9/30/94....... 5.06 10.07 58,197
Year ended 9/30/93....... 5.21 14.09 67,912
Year ended 9/30/92....... 5.81 23.22 64,900
Year ended 9/30/91....... 6.19 14.60 64,310
Year ended 9/30/90....... 6.47 31.89 63,173
Year ended 9/30/89....... 6.56 -- 62,515
Year ended 9/30/88....... 6.89 12.95 66,257
Year ended 9/30/87....... 6.61 16.70 79,961 0.46
5/1/86*-9/30/86.......... 6.31+ 12.11 63,796 0.18
Colorado Series--Class D
2/1/94** - 9/30/94....... 4.05+ 10.07++ 96
</TABLE>
<TABLE>
<CAPTION>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Per Share Operating Average Net to Average
Performance: Assets(1) Net Assets(1)
- ------------------- ----------- --------------
<S> <C> <C>
New Jersey--Class A
Year ended 9/30/94 ...... 1.07% 5.07%
Year ended 9/30/93 ...... 1.11 5.12
Year ended 9/30/92 ...... 1.10 5.49
Year ended 9/30/91 ...... 1.11 5.72
Year ended 9/30/90 ...... 1.12 6.01
Year ended 9/30/89 ...... 1.17 6.10
2/16/88*-9/30/88 ........ 1.36+ 5.96+
New Jersey--Class D
2/1/94**-9/30/94......... 1.87+ 4.25+
Pennsylvania--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92....... 1.16 5.64
Year ended 9/30/91....... 1.23 5.91
Year ended 9/30/90....... 1.31 5.99
Year ended 9/30/89....... 1.17 6.30
Year ended 9/30/88....... 1.08 6.71
Year ended 9/30/87....... 1.12 6.24
7/15/86*-9/30/86......... 1.80+ 4.17+
Pennsylvania--Class D
2/1/94**-9/30/94.........
National Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.91 9.05
National Series--Class D
2/1/94** - 9/30/94 ......
Colorado Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87....... 0.85 6.53
5/1/86*-9/30/86.......... 0.68+ 6.20+
Colorado Series--Class D
2/1/94** - 9/30/94.......
</TABLE>
- ------------
(1)During the periods stated, the Manager, at its discretion, reimbursed certain
expenses and/or waived all or portions of its fees. The adjusted net
investment income per share and adjusted ratios reflect what the results
would have been had the Manager not reimbursed certain expenses and/or not
waived its fees.
* Commencement of offering of Class A shares.
** Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended 9/30/94.
8 & 9
<PAGE>
<TABLE>
<CAPTION>
Increase
Net Realized (Decrease)
Net Asset Value Net & Unrealized from Dividends
Per Share Operating at Beginning Investment Investment Investment Paid or
Performance: of Period Income(1) Gain (Loss) Operations Declared
- ------------------- --------------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
Georgia Series--Class A
Year ended 9/30/94....... $8.43 $0.41 $(0.86) $(0.45) $(0.41)
Year ended 9/30/93....... 7.85 0.43 0.62 1.05 (0.43)
Year ended 9/30/92....... 7.63 0.46 0.25 0.71 (0.46)
Year ended 9/30/91....... 7.18 0.47 0.46 0.93 (0.47)
Year ended 9/30/90....... 7.30 0.48 (0.10) 0.38 (0.48)
Year ended 9/30/89....... 7.09 0.48 0.22 0.70 (0.48)
Year ended 9/30/88....... 6.49 0.49 0.60 1.09 (0.49)
6/15/87*-9/30/87......... 7.14 0.13 (0.65) (0.52) (0.13)
Georgia Series--Class D
2/1/94** - 9/30/94....... 8.33 0.22 (0.84) (0.62) (0.22)
Louisiana Series--Class A
Year ended 9/30/94....... 8.79 0.44 (0.77) (0.33) (0.44)
Year ended 9/30/93....... 8.38 0.46 0.51 0.97 (0.46)
Year ended 9/30/92....... 8.18 0.49 0.24 0.73 (0.49)
Year ended 9/30/91....... 7.70 0.50 0.50 1.00 (0.50)
Year ended 9/30/90....... 7.88 0.52 (0.12) 0.40 (0.52)
Year ended 9/30/89....... 7.79 0.53 0.15 0.68 (0.53)
Year ended 9/30/88....... 7.36 0.55 0.49 1.04 (0.55)
Year ended 9/30/87....... 7.93 0.55 (0.49) 0.06 (0.55)
10/1/85*-9/30/86......... 7.14 0.58 0.79 1.37 (0.58)
Louisiana Series--Class D
2/1/94** - 9/30/94....... 8.73 0.24 (0.79) (0.55) (0.24)
Maryland Series--Class A
Year ended 9/30/94....... 8.64 0.42 (0.76) (0.34) (0.42)
Year ended 9/30/93....... 8.15 0.44 0.59 1.03 (0.44)
Year ended 9/30/92....... 7.94 0.46 0.24 0.70 (0.46)
Year ended 9/30/91....... 7.45 0.47 0.49 0.96 (0.47)
Year ended 9/30/90....... 7.59 0.48 (0.14) 0.34 (0.48)
Year ended 9/30/89....... 7.39 0.48 0.20 0.68 (0.48)
Year ended 9/30/88....... 6.87 0.47 0.56 1.03 (0.47)
Year ended 9/30/87....... 7.59 0.48 (0.72) (0.24) (0.48)
10/1/85*-9/30/86......... 7.14 0.54 0.45 0.99 (0.54)
Maryland Series--Class D
2/1/94** - 9/30/94 ...... 8.46 0.23 (0.74) (0.51) (0.23)
Massachusetts Series--Class A
Year ended 9/30/94....... 8.54 0.44 (0.67) (0.23) (0.44)
Year ended 9/30/93....... 8.06 0.47 0.55 1.02 (0.47)
Year ended 9/30/92....... 7.86 0.49 0.24 0.73 (0.49)
Year ended 9/30/91....... 7.26 0.50 0.62 1.12 (0.50)
Year ended 9/30/90....... 7.65 0.50 (0.31) 0.19 (0.50)
Year ended 9/30/89....... 7.62 0.52 0.08 0.60 (0.52)
Year ended 9/30/88....... 7.20 0.53 0.51 1.04 (0.53)
Year ended 9/30/87....... 8.07 0.55 (0.69) (0.14) (0.55)
Year ended 9/30/86....... 7.30 0.60 0.78 1.38 (0.60)
Year ended 9/30/85....... 6.89 0.63 0.41 1.04 (0.63)
Massachusetts Series--Class D
2/1/94** - 9/30/94 ...... 8.33 0.24 (0.67) (0.43) (0.24)
Michigan Series--Class A
Year ended 9/30/94....... 9.08 0.46 (0.71) (0.25) (0.46)
Year ended 9/30/93....... 8.68 0.47 0.59 1.06 (0.47)
Year ended 9/30/92....... 8.38 0.50 0.35 0.85 (0.50)
Year ended 9/30/91....... 7.89 0.51 0.51 1.02 (0.51)
Year ended 9/30/90....... 8.14 0.52 (0.16) 0.36 (0.52)
Year ended 9/30/89....... 7.94 0.54 0.23 0.77 (0.54)
Year ended 9/30/88....... 7.48 0.54 0.58 1.12 (0.54)
Year ended 9/30/87....... 8.54 0.56 (0.77) (0.21) (0.56)
Year ended 9/30/86....... 7.55 0.62 1.09 1.71 (0.62)
Year ended 9/30/85....... 7.07 0.64 0.48 1.12 (0.64)
Michigan Series--Class D
2/1/94** - 9/30/94....... 9.01 0.25 (0.73) (0.48) (0.25)
</TABLE>
<TABLE>
<CAPTION>
Total Return Ratio of
Distributions Net Increase Net Asset Based on Expenses
Per Share Operating from Net (Decrease) in Value at Net Asset to Average
Performance: Gain Realized Net Asset Value End of Period Value Net Assets(1)
___________________ ------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Georgia Series--Class A
Year ended 9/30/94....... $(0.09) $(0.95) $7.48 (5.52)% 0.73%
Year ended 9/30/93....... (0.04) 0.58 8.43 13.96 0.63
Year ended 9/30/92....... (0.03) 0.22 7.85 9.64 0.47
Year ended 9/30/91....... (0.01) 0.45 7.63 13.30 0.59
Year ended 9/30/90....... (0.02) (0.12) 7.18 5.19 0.53
Year ended 9/30/89....... (0.01) 0.21 7.30 10.15 0.64
Year ended 9/30/88....... -- 0.60 7.09 17.51 0.36
6/15/87*-9/30/87......... -- (0.65) 6.49 (7.61) 0.17+
Georgia Series--Class D
2/1/94** - 9/30/94....... -- (0.84) 7.49 (7.57) 1.76+
Louisiana Series--Class A
Year ended 9/30/94....... (0.08) (0.85) 7.94 (3.83) 0.87
Year ended 9/30/93....... (0.10) 0.41 8.79 12.10 0.87
Year ended 9/30/92....... (0.04) 0.20 8.38 9.13 0.80
Year ended 9/30/91....... (0.02) 0.48 8.18 13.49 0.83
Year ended 9/30/90....... (0.06) (0.18) 7.70 5.20 0.81
Year ended 9/30/89....... (0.06) 0.09 7.88 9.04 0.84
Year ended 9/30/88....... (0.06) 0.43 7.79 14.69 0.85
Year ended 9/30/87....... (0.08) (0.57) 7.36 0.62 0.73
10/1/85*-9/30/86......... -- 0.79 7.93 19.47 0.62+
Louisiana Series--Class D
2/1/94** - 9/30/94....... -- (0.79) 7.94 (6.45) 1.78+
Maryland Series--Class A
Year ended 9/30/94....... (0.17) (0.93) 7.71 (4.08) 0.92
Year ended 9/30/93....... (0.10) 0.49 8.64 13.23 0.97
Year ended 9/30/92....... (0.03) 0.21 8.15 9.15 0.86
Year ended 9/30/91....... -- 0.49 7.94 13.26 0.88
Year ended 9/30/90....... -- (0.14) 7.45 4.47 0.87
Year ended 9/30/89....... -- 0.20 7.59 9.43 0.87
Year ended 9/30/88....... (0.04) 0.52 7.39 15.73 0.91
Year ended 9/30/87....... -- (0.72) 6.87 (3.41) 0.87
10/1/85*-9/30/86......... -- 0.45 7.59 14.11 0.59+
Maryland Series--Class D
2/1/94** - 9/30/94 ...... -- (0.74) 7.72 (6.21) 1.80+
Massachusetts Series--Class A
Year ended 9/30/94....... (0.21) (0.88) 7.66 (2.94) 0.85
Year ended 9/30/93....... (0.07) 0.48 8.54 13.18 0.88
Year ended 9/30/92....... (0.04) 0.20 8.06 9.75 0.77
Year ended 9/30/91....... (0.02) 0.60 7.86 15.84 0.83
Year ended 9/30/90....... (0.08) (0.39) 7.26 2.48 0.79
Year ended 9/30/89....... (0.05) 0.03 7.65 8.18 0.79
Year ended 9/30/88....... (0.09) 0.42 7.62 15.15 0.84
Year ended 9/30/87....... (0.18) (0.87) 7.20 (2.16) 0.79
Year ended 9/30/86....... (0.01) 0.77 8.07 19.49 0.78
Year ended 9/30/85....... -- 0.41 7.30 15.32 0.83
Massachusetts Series--Class D
2/1/94** - 9/30/94 ...... -- (0.67) 7.66 (5.34) 1.78+
Michigan Series--Class A
Year ended 9/30/94....... (0.09) (0.80) 8.28 (2.90) 0.84
Year ended 9/30/93....... (0.19) 0.40 9.08 12.97 0.83
Year ended 9/30/92....... (0.05) 0.30 8.68 10.55 0.76
Year ended 9/30/91....... (0.02) 0.49 8.38 13.34 0.80
Year ended 9/30/90....... (0.09) (0.25) 7.89 4.57 0.80
Year ended 9/30/89....... (0.03) 0.20 8.14 9.91 0.81
Year ended 9/30/88....... (0.12) 0.46 7.94 15.98 0.88
Year ended 9/30/87....... (0.29) (1.06) 7.48 (2.87) 0.79
Year ended 9/30/86....... (0.10) 0.99 8.54 23.73 0.82
Year ended 9/30/85....... -- 0.48 7.55 16.19 0.89
Michigan Series--Class D
2/1/94** - 9/30/94....... -- (0.73) 8.28 (5.47) 1.75+
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Investment Adjusted Net
Income Net Assets at Investment
Per Share Operating to Average Portfolio End of Period Income
Performance: Net Assets(1) Turnover (000's omitted) Per Share(1)
- ------------------- ------------- --------- --------------- ------------
<S> <C> <C> <C> <C>
Georgia Series--Class A
Year ended 9/30/94....... 5.21% 19.34% $61,466 $0.40
Year ended 9/30/93....... 5.34 12.45 64,650 0.40
Year ended 9/30/92....... 5.95 10.24 44,585 0.43
Year ended 9/30/91....... 6.30 6.07 28,317 0.43
Year ended 9/30/90....... 6.53 5.83 19,002 0.44
Year ended 9/30/89....... 6.59 -- 14,452 0.44
Year ended 9/30/88....... 7.15 6.32 9,752 0.43
6/15/87*-9/30/87......... 6.64+ 21.71 6,382 0.07
Georgia Series--Class D
2/1/94** - 9/30/94....... 4.28+ 19.34++ 849 0.21
Louisiana Series--Class A
Year ended 9/30/94....... 5.31 17.16 61,441
Year ended 9/30/93....... 5.40 9.21 67,529
Year ended 9/30/92....... 5.89 25.45 57,931
Year ended 9/30/91....... 6.31 20.85 50,089
Year ended 9/30/90....... 6.62 31.54 43,475
Year ended 9/30/89....... 6.82 12.94 43,908
Year ended 9/30/88....... 7.19 36.01 42,521
Year ended 9/30/87....... 7.02 10.20 49,661
10/1/85*-9/30/86......... 7.44+ 31.18 45,338 0.57
Louisiana Series--Class D
2/1/94** - 9/30/94....... 4.33+ 17.16++ 704
Maryland Series--Class A
Year ended 9/30/94....... 5.17 17.68 57,263
Year ended 9/30/93....... 5.28 14.10 64,472
Year ended 9/30/92....... 5.76 29.57 57,208
Year ended 9/30/91....... 6.09 18.84 54,068
Year ended 9/30/90....... 6.26 16.50 47,283
Year ended 9/30/89....... 6.38 2.19 46,643
Year ended 9/30/88....... 6.63 17.42 45,939
Year ended 9/30/87....... 6.45 21.48 50,580
10/1/85*-9/30/86......... 6.90+ 4.60 46,478 0.53
Maryland Series--Class D
2/1/94** - 9/30/94 ...... 4.26+ 17.68++ 424
Massachusetts Series--Class A
Year ended 9/30/94....... 5.46 12.44 120,149
Year ended 9/30/93....... 5.65 20.66 139,504
Year ended 9/30/92....... 6.27 27.92 128,334
Year ended 9/30/91....... 6.64 14.37 118,022
Year ended 9/30/90....... 6.66 19.26 110,246
Year ended 9/30/89....... 6.81 7.51 122,515
Year ended 9/30/88....... 7.02 21.77 126,150
Year ended 9/30/87....... 6.95 16.14 131,404
Year ended 9/30/86....... 7.50 27.39 131,732
Year ended 9/30/85....... 8.50 12.38 65,563 0.62
Massachusetts Series--Class D
2/1/94** - 9/30/94 ...... 4.52+ 12.44++ 1,099
Michigan Series--Class A
Year ended 9/30/94....... 5.32 10.06 151,095
Year ended 9/30/93....... 5.41 6.33 164,638
Year ended 9/30/92....... 5.93 32.12 144,524
Year ended 9/30/91....... 6.28 22.81 129,004
Year ended 9/30/90....... 6.47 26.36 112,689
Year ended 9/30/89....... 6.67 8.24 111,180
Year ended 9/30/88....... 7.06 34.00 104,904
Year ended 9/30/87....... 6.89 15.40 104,053
Year ended 9/30/86....... 7.41 40.68 99,013
Year ended 9/30/85....... 8.40 37.63 42,987 0.64
Michigan Series--Class D
2/1/94** - 9/30/94....... 4.40+ 10.06++ 671
</TABLE>
<TABLE>
<CAPTION>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Per Share Operating Average Net to Average
Performance: Assets(1) Net Assets(1)
- ------------------- ----------- --------------
<S> <C> <C>
Georgia Series--Class A
Year ended 9/30/94....... 0.93% 5.01%
Year ended 9/30/93....... 0.93 5.04
Year ended 9/30/92....... 0.87 5.55
Year ended 9/30/91....... 1.09 5.80
Year ended 9/30/90....... 1.03 6.03
Year ended 9/30/89....... 1.19 6.04
Year ended 9/30/88....... 1.35 6.17
6/15/87*-9/30/87......... 2.87+ 3.94+
Georgia Series--Class D
2/1/94** - 9/30/94....... 1.90+ 4.15+
Louisiana Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
10/1/85*-9/30/86......... 0.71+ 7.35+
Louisiana Series--Class D
2/1/94** - 9/30/94.......
Maryland Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
10/1/85*-9/30/86......... 0.76+ 6.73+
Maryland Series--Class D
2/1/94** - 9/30/94 ......
Massachusetts Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85.......
0.88 8.45
Massachusetts Series--Class D
2/1/94** - 9/30/94 ......
Michigan Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.96 8.33
Michigan Series--Class D
2/1/94** - 9/30/94.......
</TABLE>
- ------------
(1)During the periods stated, the Manager, at its discretion, reimbursed certain
expenses and/or waived all or portions of its fees. The adjusted net
investment income per share and adjusted ratios reflect what the results
would have been had the Manager not reimbursed certain expenses and/or not
waived its fees.
* Commencement of offering of Class A shares.
** Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended 9/30/94.
10 & 11
<PAGE>
<TABLE>
<CAPTION>
Increase
Net Realized (Decrease)
Net Asset Value Net & Unrealized from Dividends
Per Share Operating at Beginning Investment Investment Investment Paid or
Performance: of Period Income(1) Gain (Loss) Operations Declared
- ------------------- --------------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
Minnesota Series--Class A
Year ended 9/30/94....... $8.28 $0.45 $(0.44) $(0.01) $(0.45)
Year ended 9/30/93....... 7.89 0.47 0.51 0.98 (0.47)
Year ended 9/30/92....... 7.81 0.49 0.09 0.58 (0.49)
Year ended 9/30/91....... 7.49 0.49 0.32 0.81 (0.49)
Year ended 9/30/90....... 7.60 0.49 (0.06) 0.43 (0.49)
Year ended 9/30/89....... 7.52 0.51 0.11 0.62 (0.51)
Year ended 9/30/88....... 7.12 0.51 0.48 0.99 (0.51)
Year ended 9/30/87....... 7.99 0.53 (0.66) (0.13) (0.53)
Year ended 9/30/86....... 7.15 0.58 0.88 1.46 (0.58)
Year ended 9/30/85....... 6.76 0.62 0.39 1.01 (0.62)
Minnesota Series--Class D
2/1/94** - 9/30/94 ...... 8.22 0.25 (0.49) (0.24) (0.25)
Missouri Series--Class A
Year ended 9/30/94....... 8.31 0.40 (0.79) (0.39) (0.40)
Year ended 9/30/93....... 7.80 0.42 0.57 0.99 (0.42)
Year ended 9/30/92....... 7.72 0.44 0.15 0.59 (0.44)
Year ended 9/30/91....... 7.22 0.46 0.50 0.96 (0.46)
Year ended 9/30/90....... 7.28 0.45 (0.06) 0.39 (0.45)
Year ended 9/30/89....... 7.10 0.47 0.18 0.65 (0.47)
Year ended 9/30/88....... 6.57 0.48 0.58 1.06 (0.48)
Year ended 9/30/87....... 7.32 0.47 (0.75) (0.28) (0.47)
7/1/86*-9/30/86.......... 7.14 0.11 0.18 0.29 (0.11)
Missouri Series--Class D
2/1/94** - 9/30/94 ...... 8.20 0.22 (0.79) (0.57) (0.22)
New York Series--Class A
Year ended 9/30/94....... 8.75 0.43 (0.88) (0.45) (0.43)
Year ended 9/30/93....... 8.13 0.45 0.74 1.19 (0.45)
Year ended 9/30/92....... 7.94 0.49 0.26 0.75 (0.49)
Year ended 9/30/91....... 7.40 0.50 0.54 1.04 (0.50)
Year ended 9/30/90....... 7.71 0.51 (0.26) 0.25 (0.51)
Year ended 9/30/89....... 7.57 0.52 0.17 0.69 (0.52)
Year ended 9/30/88....... 7.28 0.52 0.48 1.00 (0.52)
Year ended 9/30/87....... 8.24 0.55 (0.71) (0.16) (0.55)
Year ended 9/30/86....... 7.40 0.60 0.94 1.54 (0.60)
Year ended 9/30/85....... 6.97 0.63 0.43 1.06 (0.63)
New York Series--Class D
2/1/94** - 9/30/94 ...... 8.55 0.23 (0.88) (0.65) (0.23)
Ohio Series--Class A
Year ended 9/30/94....... 8.77 0.44 (0.70) (0.26) (0.44)
Year ended 9/30/93....... 8.28 0.46 0.56 1.02 (0.46)
Year ended 9/30/92....... 8.06 0.49 0.26 0.75 (0.49)
Year ended 9/30/91....... 7.62 0.51 0.45 0.96 (0.51)
Year ended 9/30/90....... 7.80 0.52 (0.08) 0.44 (0.52)
Year ended 9/30/89....... 7.71 0.54 0.11 0.65 (0.54)
Year ended 9/30/88....... 7.38 0.54 0.53 1.07 (0.54)
Year ended 9/30/87....... 8.09 0.57 (0.59) (0.02) (0.57)
Year ended 9/30/86....... 7.27 0.61 0.87 1.48 (0.61)
Year ended 9/30/85....... 6.83 0.63 0.44 1.07 (0.63)
Ohio Series--Class D
2/1/94** - 9/30/94 ...... 8.61 0.24 (0.69) (0.45) (0.24)
Oregon Series--Class A
Year ended 9/30/94....... 8.08 0.40 (0.59) (0.19) (0.40)
Year ended 9/30/93....... 7.60 0.42 0.48 0.90 (0.42)
Year ended 9/30/92....... 7.42 0.42 0.18 0.60 (0.42)
Year ended 9/30/91....... 6.96 0.44 0.46 0.90 (0.44)
Year ended 9/30/90....... 7.05 0.44 (0.09) 0.35 (0.44)
Year ended 9/30/89....... 6.83 0.44 0.22 0.66 (0.44)
Year ended 9/30/88....... 6.21 0.45 0.62 1.07 (0.45)
10/15/86*-9/30/87........ 7.14 0.43 (0.93) (0.50) (0.43)
Oregon Series--Class D
2/1/94**-9/30/94 ........ 8.02 0.22 (0.59) (0.37) (0.22)
</TABLE>
<TABLE>
<CAPTION>
Total Return Ratio of
Distributions Net Increase Net Asset Based on Expenses
Per Share Operating from Net (Decrease) in Value at Net Asset to Average
Performance: Gain Realized Net Asset Value End of Period Value Net Assets(1)
___________________ ------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Minnesota Series--Class A
Year ended 9/30/94....... $(0.12) $(0.56) $7.72 0.12% 0.85%
Year ended 9/30/93....... (0.12) 0.39 8.28 13.06 0.90
Year ended 9/30/92....... (0.01) 0.08 7.89 7.71 0.80
Year ended 9/30/91....... -- 0.32 7.81 11.10 0.80
Year ended 9/30/90....... (0.05) (0.11) 7.49 5.79 0.81
Year ended 9/30/89....... (0.03) 0.08 7.60 8.34 0.83
Year ended 9/30/88....... (0.08) 0.40 7.52 14.76 0.87
Year ended 9/30/87....... (0.21) (0.87) 7.12 (1.94) 0.89
Year ended 9/30/86....... (0.04) 0.84 7.99 21.25 0.90
Year ended 9/30/85....... -- 0.39 7.15 15.04 0.89
Minnesota Series--Class D
2/1/94** - 9/30/94 ...... -- (0.49) 7.73 (3.08) 1.74+
Missouri Series--Class A
Year ended 9/30/94....... (0.11) (0.90) 7.41 (4.85) 0.74
Year ended 9/30/93....... (0.06) 0.51 8.31 13.17 0.71
Year ended 9/30/92....... (0.07) 0.08 7.80 7.87 0.83
Year ended 9/30/91....... -- 0.50 7.72 13.61 0.88
Year ended 9/30/90....... -- (0.06) 7.22 5.47 0.84
Year ended 9/30/89....... -- 0.18 7.28 9.33 0.96
Year ended 9/30/88....... (0.05) 0.53 7.10 16.74 0.86
Year ended 9/30/87....... -- (0.75) 6.57 (4.20) 0.82
7/1/86*-9/30/86.......... -- 0.18 7.32 3.87 0.86+
Missouri Series--Class D
2/1/94** - 9/30/94 ...... -- (0.79) 7.41 (7.16) 1.70+
New York Series--Class A
Year ended 9/30/94....... (0.20) (1.08) 7.67 (5.37) 0.87
Year ended 9/30/93....... (0.12) 0.62 8.75 15.26 0.94
Year ended 9/30/92....... (0.07) 0.19 8.13 9.80 0.79
Year ended 9/30/91....... -- 0.54 7.94 14.56 0.80
Year ended 9/30/90....... (0.05) (0.31) 7.40 3.19 0.79
Year ended 9/30/89....... (0.03) 0.14 7.71 9.35 0.80
Year ended 9/30/88....... (0.19) 0.29 7.57 14.74 0.86
Year ended 9/30/87....... (0.25) (0.96) 7.28 (2.42) 0.77
Year ended 9/30/86....... (0.10) 0.84 8.24 21.75 0.79
Year ended 9/30/85....... -- 0.43 7.40 15.42 0.77
New York Series--Class D
2/1/94** - 9/30/94 ...... -- (0.88) 7.67 (7.73) 1.81+
Ohio Series--Class A
Year ended 9/30/94....... (0.17) (0.87) 7.90 (3.08) 0.84
Year ended 9/30/93....... (0.07) 0.49 8.77 12.81 0.85
Year ended 9/30/92....... (0.04) 0.22 8.28 9.68 0.75
Year ended 9/30/91....... (0.01) 0.44 8.06 12.96 0.77
Year ended 9/30/90....... (0.10) (0.18) 7.62 5.70 0.77
Year ended 9/30/89....... (0.02) 0.09 7.80 8.74 0.79
Year ended 9/30/88....... (0.20) 0.33 7.71 15.76 0.83
Year ended 9/30/87....... (0.12) (0.71) 7.38 (0.66) 0.78
Year ended 9/30/86....... (0.05) 0.82 8.09 21.17 0.80
Year ended 9/30/85....... -- 0.44 7.27 15.92 0.85
Ohio Series--Class D
2/1/94** - 9/30/94 ...... -- (0.69) 7.92 (5.36) 1.78+
Oregon Series--Class A
Year ended 9/30/94....... (0.06) (0.65) 7.43 (2.38) 0.78
Year ended 9/30/93....... -- 0.48 8.08 12.21 0.78
Year ended 9/30/92....... -- 0.18 7.60 8.35 0.68
Year ended 9/30/91....... -- 0.46 7.42 13.25 0.71
Year ended 9/30/90....... -- (0.09) 6.96 4.99 0.72
Year ended 9/30/89....... -- 0.22 7.05 9.95 0.64
Year ended 9/30/88....... -- 0.62 6.83 17.89 0.54
10/15/86*-9/30/87........ -- (0.93) 6.21 (7.68) 0.52+
Oregon Series--Class D
2/1/94**-9/30/94 ........ -- (0.59) 7.43 (4.76) 1.72+
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Investment Adjusted Net
Income Net Assets at Investment
Per Share Operating to Average Portfolio End of Period Income
Performance: Net Assets(1) Turnover (000's omitted) Per Share(1)
- ------------------- ------------- --------- --------------- ------------
<S> <C> <C> <C> <C>
Minnesota Series--Class A
Year ended 9/30/94....... 5.70% 3.30% $134,990
Year ended 9/30/93....... 5.89 5.73 144,600
Year ended 9/30/92....... 6.29 12.08 151,922
Year ended 9/30/91....... 6.28 2.61 182,979
Year ended 9/30/90....... 6.40 12.10 160,930
Year ended 9/30/89....... 6.61 7.55 148,425
Year ended 9/30/88....... 6.95 35.37 132,541
Year ended 9/30/87....... 6.85 16.76 118,093
Year ended 9/30/86....... 7.41 24.98 108,016
Year ended 9/30/85....... 8.49 20.79 53,139 $0.61
Minnesota Series--Class D
2/1/94** - 9/30/94 ...... 4.68+ 3.30++ 1,649
Missouri Series--Class A
Year ended 9/30/94....... 5.18 14.33 52,621 0.39
Year ended 9/30/93....... 5.29 17.03 56,861 0.41
Year ended 9/30/92....... 5.71 18.80 49,459
Year ended 9/30/91....... 6.10 16.30 47,659
Year ended 9/30/90....... 6.20 30.46 50,875
Year ended 9/30/89....... 6.43 32.81 49,162
Year ended 9/30/88....... 6.88 12.32 58,457
Year ended 9/30/87....... 6.51 11.53 59,122 0.47
7/1/86*-9/30/86.......... 5.21+ 0.18 45,107 0.10
Missouri Series--Class D
2/1/94** - 9/30/94 ...... 4.27+ 14.33++ 350 0.22
New York Series--Class A
Year ended 9/30/94....... 5.31 28.19 90,914
Year ended 9/30/93....... 5.37 27.90 104,685
Year ended 9/30/92....... 6.09 42.90 92,681
Year ended 9/30/91....... 6.57 44.57 83,684
Year ended 9/30/90....... 6.65 32.14 77,766
Year ended 9/30/89....... 6.78 47.69 75,471
Year ended 9/30/88....... 6.96 62.42 74,238
Year ended 9/30/87....... 6.90 20.42 72,782
Year ended 9/30/86....... 7.44 35.89 64,562
Year ended 9/30/85....... 8.47 58.56 35,897 0.62
New York Series--Class D
2/1/94** - 9/30/94 ...... 4.39+ 28.19++ 476
Ohio Series--Class A
Year ended 9/30/94....... 5.34 9.37 171,469
Year ended 9/30/93....... 5.44 30.68 190,083
Year ended 9/30/92....... 6.02 7.15 170,427
Year ended 9/30/91....... 6.42 13.95 156,179
Year ended 9/30/90....... 6.63 16.05 136,251
Year ended 9/30/89....... 6.91 12.72 131,900
Year ended 9/30/88....... 7.20 26.71 122,386
Year ended 9/30/87....... 7.05 15.00 119,703
Year ended 9/30/86....... 7.62 17.21 114,023
Year ended 9/30/85....... 8.61 25.95 50,712 0.62
Ohio Series--Class D
2/1/94** - 9/30/94 ...... 4.41+ 9.37++ 324
Oregon Series--Class A
Year ended 9/30/94....... 5.20 9.43 59,884 0.39
Year ended 9/30/93....... 5.35 8.08 62,095 0.41
Year ended 9/30/92....... 5.63 0.21 48,797 0.42
Year ended 9/30/91....... 6.06 7.60 39,350 0.42
Year ended 9/30/90....... 6.17 4.09 32,221 0.42
Year ended 9/30/89....... 6.34 0.19 30,510 0.42
Year ended 9/30/88....... 6.86 3.94 26,609 0.42
10/15/86*-9/30/87........ 6.44+ 20.16 24,434 0.39
Oregon Series--Class D
2/1/94**-9/30/94 ........ 4.32+ 9.43++ 843 0.22
</TABLE>
<TABLE>
<CAPTION>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Per Share Operating Average Net to Average
Performance: Assets(1) Net Assets(1)
- ------------------- ----------- --------------
<S> <C> <C>
Minnesota Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.99% 8.40%
Minnesota Series--Class D
2/1/94** - 9/30/94 ......
Missouri Series--Class A
Year ended 9/30/94....... 0.88 5.04
Year ended 9/30/93....... 0.91 5.09
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87....... 0.89 6.43
7/1/86*-9/30/86.......... 1.07+ 5.42+
Missouri Series--Class D
2/1/94** - 9/30/94 ...... 1.80+ 4.17+
New York Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.90 8.33
New York Series--Class D
2/1/94** - 9/30/94 ......
Ohio Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86.......
Year ended 9/30/85....... 0.91 8.56
Ohio Series--Class D
2/1/94** - 9/30/94 ......
Oregon Series--Class A
Year ended 9/30/94....... 0.89 5.09
Year ended 9/30/93....... 0.93 5.20
Year ended 9/30/92....... 0.83 5.48
Year ended 9/30/91....... 0.91 5.86
Year ended 9/30/90....... 0.93 5.96
Year ended 9/30/89....... 0.96 6.03
Year ended 9/30/88....... 1.01 6.39
10/15/86*-9/30/87........ 1.11+ 5.85+
Oregon Series--Class D
2/1/94**-9/30/94 ........ 1.82+ 4.22+
</TABLE>
- ------------
(1)During the periods stated, the Manager, at its discretion, reimbursed certain
expenses and/or waived all or portions of its fees. The adjusted net
investment income per share and adjusted ratios reflect what the results
would have been had the Manager not reimbursed certain expenses and/or not
waived its fees.
* Commencement of offering of Class A shares.
** Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended 9/30/94.
12 & 13
<PAGE>
<TABLE>
<CAPTION>
Increase
Net Realized (Decrease)
Net Asset Value Net & Unrealized from Dividends
Per Share Operating at Beginning Investment Investment Investment Paid or
Performance: of Period Income(1) Gain (Loss) Operations Declared
- ------------------- --------------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
South Carolina Series--Class A
Year ended 9/30/94....... $8.52 $0.41 $(0.79) $(0.38) $(0.41)
Year ended 9/30/93....... 8.00 0.43 0.54 0.97 (0.43)
Year ended 9/30/92....... 7.71 0.45 0.31 0.76 (0.45)
Year ended 9/30/91....... 7.23 0.46 0.52 0.98 (0.46)
Year ended 9/30/90....... 7.37 0.48 (0.14) 0.34 (0.48)
Year ended 9/30/89....... 7.21 0.48 0.17 0.65 (0.48)
Year ended 9/30/88....... 6.67 0.50 0.54 1.04 (0.50)
6/30/87*-9/30/87......... 7.14 0.11 (0.47) (0.36) (0.11)
South Carolina Series--Class D
2/1/94** - 9/30/94 ...... 8.42 0.22 (0.81) (0.59) (0.22)
California High-Yield Series--Class A
Year ended 9/30/94....... 6.73 0.37 (0.34) 0.03 (0.37)
Year ended 9/30/93....... 6.65 0.39 0.28 0.67 (0.39)
Year ended 9/30/92....... 6.50 0.41 0.16 0.57 (0.41)
Year ended 9/30/91....... 6.18 0.42 0.33 0.75 (0.42)
Year ended 9/30/90....... 6.36 0.42 (0.07) 0.35 (0.42)
Year ended 9/30/89....... 6.27 0.44 0.15 0.59 (0.44)
Year ended 9/30/88....... 5.94 0.44 0.39 0.83 (0.44)
Year ended 9/30/87....... 6.73 0.46 (0.53) (0.07) (0.46)
Year ended 9/30/86....... 5.96 0.51 0.89 1.40 (0.51)
11/20/84*- 9/30/85....... 5.73 0.47 0.23 0.70 (0.47)
California High-Yield Series--Class D
2/1/94**-9/30/94......... 6.67 0.21 (0.36) (0.15) (0.21)
California Quality Series--Class A
Year ended 9/30/94....... 7.28 0.35 (0.73) (0.38) (0.35)
Year ended 9/30/93....... 6.85 0.37 0.54 0.91 (0.37)
Year ended 9/30/92....... 6.65 0.40 0.22 0.62 (0.40)
Year ended 9/30/91....... 6.22 0.40 0.46 0.86 (0.40)
Year ended 9/30/90....... 6.47 0.40 (0.13) 0.27 (0.40)
Year ended 9/30/89....... 6.29 0.42 0.19 0.61 (0.42)
Year ended 9/30/88....... 6.01 0.42 0.39 0.81 (0.42)
Year ended 9/30/87....... 6.73 0.45 (0.59) (0.14) (0.45)
Year ended 9/30/86....... 5.98 0.49 0.83 1.32 (0.49)
11/20/84*- 9/30/85....... 5.73 0.44 0.25 0.69 (0.44)
California Quality Series--Class D
2/1/94**-9/30/94 ........ 7.13 0.19 (0.75) (0.56) (0.19)
Florida Series--Class A
Year ended 9/30/94....... 8.20 0.42 (0.74) (0.32) (0.42)
Year ended 9/30/93....... 7.56 0.46 0.65 1.11 (0.46)
Year ended 9/30/92....... 7.37 0.47 0.19 0.66 (0.47)
Year ended 9/30/91....... 6.90 0.43 0.47 0.90 (0.43)
Year ended 9/30/90....... 6.99 0.45 (0.09) 0.36 (0.45)
Year ended 9/30/89....... 6.71 0.46 0.28 0.74 (0.46)
Year ended 9/30/88....... 6.02 0.47 0.69 1.16 (0.47)
11/17/86*-9/30/87........ 7.14 0.40 (1.12) (0.72) (0.40)
Florida Series--Class D
2/1/94**-9/30/94 ........ 8.10 0.24 (0.76) (0.52) (0.24)
North Carolina Series--Class A
Year ended 9/30/94....... 8.22 0.41 (0.87) (0.46) (0.41)
Year ended 9/30/93....... 7.61 0.43 0.63 1.06 (0.43)
Year ended 9/30/92....... 7.39 0.44 0.22 0.66 (0.44)
Year ended 9/30/91....... 7.04 0.45 0.35 0.80 (0.45)
8/27/90*-9/30/90......... 7.14 0.03 (0.10) (0.07) (0.03)
North Carolina Series--Class D
2/1/94**-9/30/94 ........ 8.17 0.23 (0.88) (0.65) (0.23)
</TABLE>
<TABLE>
<CAPTION>
Total Return Ratio of
Distributions Net Increase Net Asset Based on Expenses
Per Share Operating from Net (Decrease) in Value at Net Asset to Average
Performance: Gain Realized Net Asset Value End of Period Value Net Assets(1)
___________________ ------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
South Carolina Series--Class A
Year ended 9/30/94....... $(0.12) $(0.91) $7.61 (4.61)% 0.83%
Year ended 9/30/93....... (0.02) 0.52 8.52 12.52 0.85
Year ended 9/30/92....... (0.02) 0.29 8.00 10.08 0.81
Year ended 9/30/91....... (0.04) 0.48 7.71 13.95 0.81
Year ended 9/30/90....... -- (0.14) 7.23 4.48 0.73
Year ended 9/30/89....... (0.01) 0.16 7.37 9.41 0.68
Year ended 9/30/88....... -- 0.54 7.21 16.18 0.33
6/30/87*-9/30/87......... -- (0.47) 6.67 (5.37) 0.02+
South Carolina Series--Class D
2/1/94** - 9/30/94 ...... -- (0.81) 7.61 (7.14) 1.74+
California High-Yield Series--Class A
Year ended 9/30/94....... (0.09) (0.43) 6.30 0.41 0.85
Year ended 9/30/93....... (0.20) 0.08 6.73 10.66 0.88
Year ended 9/30/92....... (0.01) 0.15 6.65 9.00 0.82
Year ended 9/30/91....... (0.01) 0.32 6.50 12.53 0.83
Year ended 9/30/90....... (0.11) (0.18) 6.18 5.57 0.89
Year ended 9/30/89....... (0.06) 0.09 6.36 9.61 0.89
Year ended 9/30/88....... (0.06) 0.33 6.27 14.72 0.91
Year ended 9/30/87....... (0.26) (0.79) 5.94 (1.46) 0.83
Year ended 9/30/86....... (0.12) 0.77 6.73 24.79 0.66
11/20/84*- 9/30/85....... -- 0.23 5.96 12.22 0.41+
California High-Yield Series--Class D
2/1/94**-9/30/94......... -- (0.36) 6.31 (2.47) 1.74+
California Quality Series--Class A
Year ended 9/30/94....... (0.16) (0.89) 6.39 (5.46) 0.81
Year ended 9/30/93....... (0.11) 0.43 7.28 13.92 0.82
Year ended 9/30/92....... (0.02) 0.20 6.85 9.56 0.78
Year ended 9/30/91....... (0.03) 0.43 6.65 14.35 0.78
Year ended 9/30/90....... (0.12) (0.25) 6.22 4.22 0.83
Year ended 9/30/89....... (0.01) 0.18 6.47 9.86 0.85
Year ended 9/30/88....... (0.11) 0.28 6.29 14.37 0.86
Year ended 9/30/87....... (0.13) (0.72) 6.01 (2.59) 0.77
Year ended 9/30/86....... (0.08) 0.75 6.73 23.06 0.67
11/20/84*- 9/30/85....... -- 0.25 5.98 11.95 0.48+
California Quality Series--Class D
2/1/94**-9/30/94 ........ -- (0.75) 6.38 (8.01) 1.77+
Florida Series--Class A
Year ended 9/30/94....... (0.12) (0.86) 7.34 (3.99) 0.42
Year ended 9/30/93....... (0.01) 0.64 8.20 15.21 0.23
Year ended 9/30/92....... -- 0.19 7.56 9.24 0.17
Year ended 9/30/91....... -- 0.47 7.37 13.41 0.90
Year ended 9/30/90....... -- (0.09) 6.90 5.23 0.65
Year ended 9/30/89....... -- 0.28 6.99 11.28 0.69
Year ended 9/30/88....... -- 0.69 6.71 19.82 0.67
11/17/86*-9/30/87........ -- (1.12) 6.02 (10.74) 0.50+
Florida Series--Class D
2/1/94**-9/30/94 ........ -- (0.76) 7.34 (6.64) 1.29+
North Carolina Series--Class A
Year ended 9/30/94....... (0.05) (0.92) 7.30 (5.80) 0.44
Year ended 9/30/93....... (0.02) 0.61 8.22 14.46 0.23
Year ended 9/30/92....... -- 0.22 7.61 9.23 0.14
Year ended 9/30/91....... -- 0.35 7.39 11.97 0.07
8/27/90*-9/30/90......... -- (0.10) 7.04 (1.40) 0.94+
North Carolina Series--Class D
2/1/94**-9/30/94 ........ -- (0.88) 7.29 (8.15) 1.27+
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Investment Adjusted Net
Income Net Assets at Investment
Per Share Operating to Average Portfolio End of Period Income
Performance: Net Assets(1) Turnover (000's omitted) Per Share(1)
- ------------------- ------------- --------- --------------- ------------
<S> <C> <C> <C> <C>
South Carolina Series--Class A
Year ended 9/30/94....... 5.12% 1.81% $115,133
Year ended 9/30/93....... 5.19 17.69 120,589
Year ended 9/30/92....... 5.71 3.37 82,882
Year ended 9/30/91....... 6.14 9.05 63,863 $0.45
Year ended 9/30/90....... 6.47 15.26 49,234 0.47
Year ended 9/30/89....... 6.48 0.03 46,487 0.46
Year ended 9/30/88....... 7.03 12.36 26,385 0.45
6/30/87*-9/30/87......... 6.34+ -- 12,033 0.08
South Carolina Series--Class D
2/1/94** - 9/30/94 ...... 4.29+ 1.81++ 1,478
California High-Yield Series--Class A
Year ended 9/30/94....... 5.74 8.36 48,007
Year ended 9/30/93....... 5.94 7.70 51,218
Year ended 9/30/92....... 6.20 45.50 49,448
Year ended 9/30/91....... 6.67 5.13 49,172
Year ended 9/30/90....... 6.68 17.66 49,312
Year ended 9/30/89....... 6.85 14.70 51,079
Year ended 9/30/88....... 7.17 20.79 53,037
Year ended 9/30/87....... 7.07 16.89 56,598
Year ended 9/30/86....... 7.88 54.08 51,046 0.50
11/20/84*- 9/30/85....... 7.67+ 88.69 29,649 0.44
California High-Yield Series--Class D
2/1/94**-9/30/94......... 4.73+ 8.36++ 650
California Quality Series--Class A
Year ended 9/30/94....... 5.20 22.16 99,020
Year ended 9/30/93....... 5.30 15.67 111,732
Year ended 9/30/92....... 5.86 34.25 93,557
Year ended 9/30/91....... 6.19 20.11 77,884
Year ended 9/30/90....... 6.31 28.61 61,854
Year ended 9/30/89....... 6.53 57.85 59,258
Year ended 9/30/88....... 6.74 46.47 58,608
Year ended 9/30/87....... 6.76 15.17 58,872
Year ended 9/30/86....... 7.36 28.66 53,388 0.48
11/20/84*- 9/30/85....... 7.10+ 57.28 24,957 0.41
California Quality Series--Class D
2/1/94**-9/30/94 ........ 4.39+ 22.16++ 812
Florida Series--Class A
Year ended 9/30/94....... 5.49 6.17 49,897 0.38
Year ended 9/30/93....... 5.82 16.42 52,855 0.40
Year ended 9/30/92....... 6.32 12.62 37,957 0.41
Year ended 9/30/91....... 6.00 -- 28,173 0.42
Year ended 9/30/90....... 6.44 13.08 24,025 0.44
Year ended 9/30/89....... 6.61 2.41 23,062 0.44
Year ended 9/30/88....... 7.18 1.07 20,457 0.45
11/17/86*-9/30/87........ 6.85+ 28.52 22,228 0.37
Florida Series--Class D
2/1/94**-9/30/94 ........ 4.61+ 6.17++ 244 0.21
North Carolina Series--Class A
Year ended 9/30/94....... 5.29 15.61 38,920 0.35
Year ended 9/30/93....... 5.44 3.13 38,828 0.35
Year ended 9/30/92....... 5.83 12.51 21,836 0.34
Year ended 9/30/91....... 6.10 -- 9,255 0.22
8/27/90*-9/30/90......... 4.48+ -- 1,377 0.01
North Carolina Series--Class D
2/1/94**-9/30/94 ........ 4.49+ 15.61++ 1,282 0.20
</TABLE>
<TABLE>
<CAPTION>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Per Share Operating Average Net to Average
Performance: Assets(1) Net Assets(1)
- ------------------- ----------- --------------
<S> <C> <C>
South Carolina Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91....... 0.91% 6.04%
Year ended 9/30/90....... 0.84 6.35
Year ended 9/30/89....... 0.88 6.28
Year ended 9/30/88....... 1.00 6.36
6/30/87*-9/30/87......... 2.08+ 4.28+
South Carolina Series--Class D
2/1/94** - 9/30/94 ......
California High-Yield Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86....... 0.80 7.73
11/20/84*- 9/30/85....... 0.91+ 7.17+
California High-Yield Series--Class D
2/1/94**-9/30/94.........
California Quality Series--Class A
Year ended 9/30/94.......
Year ended 9/30/93.......
Year ended 9/30/92.......
Year ended 9/30/91.......
Year ended 9/30/90.......
Year ended 9/30/89.......
Year ended 9/30/88.......
Year ended 9/30/87.......
Year ended 9/30/86....... 0.80 7.23
11/20/84*- 9/30/85....... 0.98+ 6.61+
California Quality Series--Class D
2/1/94**-9/30/94 ........
Florida Series--Class A
Year ended 9/30/94....... 1.00 4.91
Year ended 9/30/93....... 1.03 5.01
Year ended 9/30/92....... 1.02 5.47
Year ended 9/30/91....... 1.15 5.75
Year ended 9/30/90....... 0.90 6.20
Year ended 9/30/89....... 0.94 6.36
Year ended 9/30/88....... 0.91 6.93
11/17/86*-9/30/87........ 1.01+ 6.35+
Florida Series--Class D
2/1/94**-9/30/94 ........ 1.84+ 4.06+
North Carolina Series--Class A
Year ended 9/30/94....... 1.13 4.60
Year ended 9/30/93....... 1.22 4.45
Year ended 9/30/92....... 1.40 4.57
Year ended 9/30/91....... 3.22 2.96
8/27/90*-9/30/90......... 4.48+ 1.04+
North Carolina Series--Class D
2/1/94**-9/30/94 ........ 1.95+ 3.82+
</TABLE>
- ------------
(1)During the periods stated, the Manager, at its discretion, reimbursed certain
expenses and/or waived all or portions of its fees. The adjusted net
investment income per share and adjusted ratios reflect what the results
would have been had the Manager not reimbursed certain expenses and/or not
waived its fees.
* Commencement of offering of Class A shares.
** Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended 9/30/94.
14 & 15
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
Each Series offers two classes of shares. Class A shares are sold to
investors who have concluded that they would prefer to pay an initial sales load
and have the benefit of lower continuing charges. Class D shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and,
with respect to redemptions within one year of purchase, a CDSL. The Alternative
Distribution System allows investors to choose the method of purchasing shares
that is most beneficial in light of the amount of the purchase, the length of
time the shares are expected to be held and other relevant circumstances.
Investors should determine whether under their particular circumstances it is
more advantageous to incur an initial sales load and be subject to lower ongoing
charges, as discussed below, or to have the entire initial purchase price
invested in a Series with the investment thereafter being subject to higher
ongoing charges and, for a one-year period, a CDSL.
Investors who qualify for reduced sales loads, as described under "Purchase
of Shares" below, might choose to purchase Class A shares because Class A shares
would be subject to lower ongoing fees. The amount invested in a Series,
however, is reduced by the initial sales load deducted at the time of purchase.
Investors who do not qualify for reduced initial sales loads but expect to
maintain their investment for an extended period of time might also purchase
Class A shares because over time the accumulated continuing distribution fee of
Class D shares may exceed the initial sales load and lower distribution fee of
Class A shares. This consideration must be weighed against the fact that the
amount invested in a Series will be reduced by the initial sales load deducted
at the time of purchase. Furthermore, the distribution fees will be offset to
the extent any return is realized on the additional funds initially invested
under the Class D alternative.
On the other hand, some investors might determine to have all of their funds
invested initially by purchasing Class D shares although remaining subject to a
higher continuing distribution fee and, for a one-year period, a CDSL as
described below. For example, an investor who does not qualify for reduced sales
loads would have to hold Class A shares for more than 6.33 years for the Class D
distribution fee to exceed the initial sales load plus the distribution fee on
Class A shares. This example does not take into account the time value of money
which further reduces the impact of the Class D shares' 1% distribution fee,
fluctuations in net asset value or the effect of the return on the investment
over this period of time.
The two classes of shares of a Series represent interests in the same
portfolio of investments, have the same rights and are generally identical in
all respects except that each class bears its separate distribution and certain
class expenses and has exclusive voting rights with respect to any matter to
which a separate vote of any class is required by the Investment Company Act of
1940, as amended (the "1940 Act"), or applicable state law. The net income
attributable to each class and dividends payable on the shares of each class
will be reduced by the amount of distribution fee of each class. Class D shares
bear a higher distribution fee which will cause the Class D shares to pay lower
dividends than the Class A shares. The two classes also have separate exchange
privileges.
Directors or Trustees of each Fund believe that no conflict of interest
currently exists between the Class A and Class D shares. On an ongoing basis,
they, in the exercise of their fiduciary duties under the 1940 Act and
applicable state law, will seek to ensure that no such conflict arises. For this
purpose, they will monitor for the existence of any material conflict among the
classes and will take such action as is reasonably necessary to eliminate any
such conflicts that may develop.
Differences Between Classes. The primary distinctions between Class A and
Class D shares are their sales load structures and ongoing expenses as set forth
below. Each class has advantages and disadvantages for different investors, and
investors should choose the class that best suits their circumstances and their
objectives.
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Annual 12b-1 Fees
(as a % of average
Sales Load daily net assets) Other Information
---------- ------------------ -----------------
Class A Maximum initial Service fee of Initial sales load
sales load of 4.75% .25%. waived or reduced
of the public for certain
offering price. purchases.
Class D None Service fee of CDSL of 1% on
.25%; Distribution redemptions within
fee of .75%. one year of
purchase.
INVESTMENT OBJECTIVE AND POLICIES
Tax-Exempt Securities
As used in this Prospectus, tax-exempt securities refers to short-term notes,
commercial paper and intermediate and long-term bonds issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia, and their political subdivisions (such as counties, cities, boroughs,
townships, school districts and authorities), agencies, and instrumentalities,
the interest on which is, in the opinion of counsel to the issuers, exempt from
regular federal income taxes and, in certain instances, applicable state or
local income taxes. Such securities are traded primarily in the over-the-counter
market.
Tax-exempt bonds are issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets, water and sewer works, and gas and electric utilities. Tax-exempt bonds
also may be issued in connection with the refunding of outstanding obligations,
obtaining funds to lend to other public institutions and for general operating
expenses.
The two principal classifications of tax-exempt bonds are "general obligation
bonds" and "revenue bonds." General obligation bonds are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source, but not from the general
taxing power. In addition, certain types of "industrial development bonds"
issued by or on behalf of public authorities to obtain funds for
privately-operated facilities are eligible for purchase, provided that the
interest paid thereon qualifies as exempt from federal income taxes and, in
certain instances, applicable state and/or local taxes. Tax-exempt industrial
development bonds do not generally carry the pledge of the credit of the issuing
municipality. Interest earned from certain tax-exempt securities (including
certain industrial development bonds) that are private activity bonds, as
defined in the Internal Revenue Code of 1986, is treated as a preference item
for purposes of the alternative minimum tax. In the event the Series invest in
tax-exempt securities whose interest is subject to the alternative minimum tax,
no more than 20% of each Series' assets would be invested in such securities,
together with securities the interest on which is subject to federal, state of
local income tax.
Tax-exempt notes generally are issued to provide for short-term capital needs
and generally have maturities of 5 years or less. They include such securities
as Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes
and Construction Loan Notes. Tax-exempt commercial paper are short-term
obligations generally having a maturity of less than nine months.
It should be noted that tax-exempt securities may be adversely affected by
local political and economic conditions and developments within a particular
state. For example, adverse conditions in an industry that is significant to the
state could have a correspondingly adverse effect on specific issuers within the
state or on anticipated revenue of the issuing state; conversely, an improving
economic outlook for a significant industry may have a positive effect on such
issuers or revenue. The value of tax-exempt securities is dependent on a variety
of factors, including general conditions in the money markets or the municipal
bond markets, political and economic factors nationally or within a state, the
size of the particular offering, the supply of tax-exempt bonds, the maturity of
the obligation, the credit quality and rating of the issue and the assistance
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provided to the bond issuing authority by the applicable state. Under normal
market conditions, if general market interest rates are increasing, the prices
of bonds will decrease. In a market of decreasing interest rates, the opposite
will generally be true. In either case, the longer the maturity, the greater the
effect. A more detailed description of the tax-exempt securities in which each
Series may invest and special factors relating to them is set forth in the
Series' Statement of Additional Information.
Seligman New Jersey Tax-Exempt Fund, Inc.
The New Jersey Fund is a non-diversified, open-end management investment
company, as defined in the 1940 Act, or mutual fund, incorporated in Maryland on
March 13, 1987.
The New Jersey Fund seeks to maximize income exempt from federal income tax
and New Jersey personal income tax to the extent consistent with preservation of
capital and with consideration given to opportunities for capital gain by
investing in New Jersey tax-exempt securities that are rated investment grade on
the date of investment. The New Jersey Fund also may invest in New Jersey
tax-exempt securities that, while not rated as investment grade, are not rated
lower than B by S&P or Moody's, or if not rated, are believed, based upon credit
analysis by the Manager, to have at least comparable credit to B rated
securities. There can be no assurance that the Fund will be able to meet its
investment objective.
The Fund will attempt to invest 100% and as a matter of fundamental policy
will invest at least 80% of the value of its net assets in securities the
interest on which is exempt from federal income tax and New Jersey personal
income tax. However, in abnormal market conditions if, in the judgment of the
Manager, tax-exempt securities satisfying the Fund's objective may not be
purchased or for other temporary defensive purposes, the Fund may make
investments in securities the interest on which is exempt only from federal
income tax, such as securities issued by states other than New Jersey, or is
exempt only from New Jersey personal income tax, such as securities issued by
the U.S. Government (such as Treasury bills, notes and bonds), its agencies,
instrumentalities or authorities. Moreover, under such conditions, the Fund may
also make temporary investments in fixed-income securities the interest on which
is not exempt from either federal income tax or New Jersey personal income tax.
Such investments will be substantially in highly-rated corporate debt securities
(rated AA--, or better, by S&P or Aa3, or better, by Moody's) prime commercial
paper (rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
"Acceptable Banking Institutions." Acceptable Banking Institutions are defined
as the 100 largest (based on assets) banks that are subject to regulatory
supervision by the U.S. Government or state governments and the 50 largest
(based on assets) foreign banks with branches or agencies in the United States.
Investments in certificates of deposit of foreign banks and foreign branches of
U.S. banks may involve certain risks, including different regulation, use of
different accounting procedures, political or other economic developments,
exchange controls, or possible seizure or nationalization of foreign deposits.
The Fund is permitted to purchase project notes and standby commitments;
however, the Fund has no present intention of investing in such securities.
Seligman Pennsylvania Tax-Exempt Fund Series
The Pennsylvania Fund is a non-diversified, open-end management investment
company organized as an unincorporated trust under the laws of the Commonwealth
of Pennsylvania by a Declaration of Trust dated May 13, 1986.
The Pennsylvania Fund seeks high tax-exempt income consistent with
preservation of capital by investing in Pennsylvania tax-exempt securities that
are rated investment grade on the date of investment. The Pennsylvania Fund also
may invest in unrated Pennsylvania tax-exempt securities if, based upon credit
analysis by the Manager, it is believed that such securities are of comparable
quality to investment grade securities. The securities which the Pennsylvania
Fund will hold ordinarily will have maturities in excess of one year. There can
be no assurance that the Fund will be able to meet its investment objective.
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The Fund will attempt to invest 100% and as a matter of fundamental policy
will invest at least 80% of the value of its net assets in securities the
interest on which is exempt from federal and Pennsylvania income taxes. However,
in abnormal market conditions if, in the judgment of the Manager, tax-exempt
securities satisfying the Fund's objectives cannot be purchased, the Fund may
make temporary investments in securities the interest on which is exempt only
from federal income tax, such as securities issued by states other than
Pennsylvania , or is exempt only from Pennsylvania income tax, such as
securities issued by the U.S. Government (such as bills, notes and bonds), its
agencies, instrumentalities or authorities. Moreover, under such conditions, the
Fund may make temporary investments in high quality securities the interest on
which is not exempt from either federal or Pennsylvania income taxes. Such
investments will be substantially in highly-rated corporate debt securities
(rated AA--, or better, by S&P or Aa3, or better, by Moody's), prime commercial
paper (rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
Acceptable Banking Institutions, as defined above. Investments in certificates
of deposit of foreign banks and foreign branches of U.S. banks may involve
certain risks, as described above.
Although the underlying value and quality of particular securities will be
considered in selecting investments for the Fund, capital appreciation will not
be a factor. However, the Fund may sell securities held in its portfolio and, as
a result, realize capital gain or loss, in order to eliminate unsafe investments
and investments not consistent with the preservation of the capital or tax
status of the Fund; honor redemption orders; meet anticipated redemption
requirements and negate gains from discount purchases; reinvest the earnings
from portfolio securities in like securities; or defray normal administration
expenses.
The Fund is authorized to purchase standby commitments; however, the Fund has
no present intention of investing in such securities.
Seligman Tax-Exempt Fund Series, Inc.
The Tax-Exempt Fund is a non-diversified, open-end management investment
company, as defined in the 1940 Act, incorporated in Maryland on August 8, 1983.
The Tax-Exempt Fund consists of a National Series and twelve state Series, as
described below. The Tax-Exempt Fund State Series offer investments in the
following states:
Colorado Minnesota
Georgia Missouri
Louisiana New York
Maryland Ohio
Massachusetts Oregon
Michigan South Carolina
Tax-Exempt Fund National Series seeks to maximize income exempt from federal
income taxes to the extent consistent with preservation of capital and with
consideration given to opportunities for capital gain. Under normal market
conditions, the National Series attempts to invest 100%, and as a matter of
fundamental policy will invest at least 80%, of the value of its net assets in
securities of states, territories and possessions of the United States and the
District of Columbia, and their political subdivisions, agencies and
instrumentalities, the interest on which is exempt from federal income taxes.
There can be no assurance that the Series will be able to meet its investment
objective.
Tax-Exempt Fund State Series each seek to maximize income exempt from federal
income taxes and from the personal income taxes of its designated state to the
extent consistent with preservation of capital and with consideration given to
opportunities for capital gain. Each State Series attempts to invest 100%, and
as a matter of fundamental policy invests at least 80%, of the value of its net
assets in securities the interest on which is exempt from federal income taxes
and from the personal income taxes of the designated state. Each State Series
may also invest in tax-exempt securities of issuers outside its designated state
if such securities bear interest that is exempt from federal income taxes and
personal income taxes of the state. If, in abnormal market conditions, in the
judgment of the Manager, tax-exempt securities satisfying the investment
objectives of any of the State Series are not available or for other defensive
purposes, such State Series may temporarily invest up to 20% of the value of its
net assets in instruments the interest on which is exempt from federal income
taxes, but not State personal income taxes. Such securities would
19
<PAGE>
include those set forth under Tax-Exempt Securities above, that would otherwise
meet the Series' objectives. There can be no assurance that a Series will be
able to meet its investment objective.
Each State Series and the National Series are expected to invest principally,
without percentage limitations, in tax-exempt securities that are rated
investment grade on the date of investment. Each Series also may invest in
unrated tax-exempt securities if, based upon credit analysis by the Manager, it
is believed that such securities are of comparable quality to investment grade
securities.
In unusual circumstances, the Tax-Exempt Fund may invest up to 20% of the
value of its net assets on a temporary basis in fixed-income securities, the
interest on which is subject to federal, state or local income tax, pending the
investment or reinvestment in tax-exempt securities of proceeds of sales of
shares or sales of portfolio securities or in order to avoid the necessity of
liquidating portfolio investments to meet redemptions of shares by investors or
where market conditions due to rising interest rates or other adverse factors
warrant temporary investing for defensive purposes. Investments in taxable
securities will be substantially in securities issued or guaranteed by the
United States Government (such as bills, notes and bonds), its agencies,
instrumentalities or authorities, highly-rated corporate debt securities (rated
AA-, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper
(rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
Acceptable Banking Institutions, as defined above. Investments in certificates
of deposit of foreign banks and foreign branches of U.S. banks may involve
certain risks, as described above.
Seligman Tax-Exempt Series Trust
The Tax-Exempt Trust is a non-diversified open-end management investment
company, organized as an unincorporated business trust under the laws of
Massachusetts on July 27, 1984. The Tax-Exempt Trust consists of Seligman North
Carolina Tax-Exempt Series, Seligman Florida Tax-Exempt Series, Seligman
California Tax-Exempt Quality Series and Seligman California Tax-Exempt
High-Yield Series.
Seligman North Carolina Tax-Exempt Series (the "North Carolina Series") and
Seligman Florida Tax-Exempt Series (the "Florida Series") each seek high income
exempt from federal income taxes (and with respect to the North Carolina Series,
North Carolina personal income taxes) consistent with preservation of capital
and with consideration given to capital gain by investing in North Carolina or
Florida tax exempt securities, as applicable, and investment grade commercial
paper rated within the two highest rating categories, on the date of investment.
Each Series also may invest in tax-exempt securities if, based upon credit
analysis by the Manager and under the supervision of the Trustees, it is
believed that such securities are of comparable quality to investment grade
securities.
Each series will attempt to invest 100% and as a matter of fundamental policy
will invest at least 80% of the value of its net assets in North Carolina or
Florida tax-exempt securities, as applicable, the interest on which is exempt
from federal taxes and, if applicable, North Carolina personal taxes. However,
in abnormal market conditions if, in the judgment of the Manager, North Carolina
or Florida tax-exempt securities satisfying the Series objective may not be
purchased, the Tax-Exempt Trust may make temporary investments in securities
issued by states other than North Carolina or Florida. Moreover, under such
conditions and for defensive purposes, a Series may make temporary investments
in high-quality securities, the interest on which is not exempt from federal
income tax or, if applicable, North Carolina personal taxes. Investments in
taxable securities will be substantially in securities issued or guaranteed by
the United States Government (such as bills, notes and bonds), its agencies,
instrumentalities or authorities, highly-rated corporate debt securities (rated
AA--, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper
(rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of
Acceptable Banking Institutions, as defined above. Investments in certificates
of deposit of foreign banks and foreign branches of U.S. banks may involve
certain risks, as described above.
Each Series is permitted to purchase project notes and standby commitments;
however, neither Series has any present intention of investing in such
securities.
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<PAGE>
Seligman California Tax-Exempt Quality Series (the "California Quality
Series") seeks high income exempt from federal income taxes and from the
personal income taxes of California income consistent with preservation of
capital and with consideration given to capital gain by investing in California
tax-exempt securities that on the date of investment are within the three
highest ratings of Moody's (Aaa, Aa, A for bonds; MIG1, MIG2, MIG3, for notes;
P-1 for commercial paper) or S&P (AAA, AA, A for bonds; SP-1, SP-2 for notes;
A-1+, A-1/A-2 for commercial paper). The Series also may invest in unrated
California tax-exempt securities if, based upon credit analysis by the Manager,
it is believed that such securities are of comparable quality to the rated
securities in which the series may invest. The securities held by the Series
ordinarily will have maturities in excess of one year. There can be no assurance
that the Series will be able to meet its investment objective.
Seligman California Tax-Exempt High-Yield Series (the "California High-Yield
Series") seeks the maximum income exempt from federal income taxes and from the
personal income taxes of California consistent with preservation of capital and
with consideration given to capital gain by investing in California tax-exempt
securities that on the date of investment have the following characteristics:
o Maturities ordinarily in excess of one year
o Rated within the medium to lower rating categories by Moody's (Baa or
lower for bonds; MIG3 or lower for notes; P-2 or lower for commercial
paper) or S&P (BBB or lower for bonds; A-2 or lower for commercial paper)
There can be no assurance that the Series will be able to meet its investment
objective.
The Series may invest in unrated California tax-exempt securities if, based
upon credit analysis by the Manager, it is believed that such securities are of
comparable quality to securities with a medium or low credit rating.
The securities in which this Series invests generally involve greater
volatility of price and risk of loss of principal and income than securities in
higher rating categories. Shares of this Series are appropriate for you only if
you can bear the risk inherent in seeking the highest tax-exempt yields.
During the fiscal year ended September 30, 1994 the weighted average ratings
of the California tax-exempt long-term securities held by the California
High-Yield Series were as follows:
Percentage of Total
S&P/Moody's Ratings Investments
------------------- -------------------
AAA/Aaa ................................................... 5%
AA/Aa ..................................................... 7%
A/A ....................................................... 37%
BBB/Baa ................................................... 11%
BB/Ba ..................................................... --
B/B ....................................................... --
CCC/Caa ................................................... --
Unrated ................................................... 36%
California tax-exempt securities in the fourth rating category of Moody's and
S&P, although commonly referred to as investment grade, may have some
speculative characteristics that may affect the issuer's ability to pay interest
and repay principal. California tax-exempt securities rated below the fourth
category are subject to greater risk of loss of principal and interest than
higher-rated securities, as they are predominantly speculative with respect to
the issuer's ability to pay interest and repay principal. California tax-exempt
securities rated below BBB by S&P or Baa by Moody's are also more susceptible to
price volatility due to general economic conditions and changes in interest
rates. Since tax-exempt securities are purchased from and sold to dealers,
prices at which these securities are sold will be affected by the degree of
interest of dealers to bid for them. In certain markets, dealers may be
unwilling to make bids for the securities of certain issuers that the seller
considers reasonable. Furthermore, because the net asset value of the Series'
shares reflects the degree of willingness of dealers to bid for California
tax-exempt securities, the price of the Series' shares may be subject to greater
fluctuation.
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Moody's and S&P's ratings are generally accepted measures of credit risk.
They are, however, subject to certain limitations. The rating of an issuer is
based heavily on past developments and does not necessarily reflect probable
future conditions. Ratings also are not updated continuously. For a detailed
description of the ratings, see Appendix A to the Series' Statement of
Additional Information.
The Manager attempts to minimize the risks to the Series inherent in the
investment in lower-rated California tax-exempt securities through analysis of
the particular issuer and security, trends in interest rates and local and
general economic conditions, diversification and when appropriate by investing a
substantial portion of the Series' assets in California tax-exempt securities
rated in the fourth rating category or higher.
Each of the California Quality and California High-Yield Series will attempt
to invest 100% and as a matter of fundamental policy will invest at least 80% of
the value of its net assets in securities the interest on which is exempt from
federal and California personal income taxes. However, in abnormal market
conditions if, in the judgment of the Trust's Manager, tax-exempt securities
satisfying the Series' objectives may not be purchased, a Series may make
temporary investments in securities the interest on which is exempt only from
federal income tax, such as securities issued by states other than California.
Moreover, under such conditions, a Series may make temporary investments in
high-quality securities the interest on which is not exempt from either federal
or California personal income taxes. Investments in taxable securities will be
substantially in securities issued or guaranteed by the United States Government
(such as bills, notes and bonds), its agencies, instrumentalities or
authorities, highly-rated corporate debt securities (rated AA--, or better, by
S&P or Aa3, or better, by Moody's); prime commercial paper (rated A-1+/A-1 by
S&P or P-1 by Moody's) and certificates of deposit of Acceptable Banking
Institutions. Investments in certificates of deposit of foreign banks and
foreign branches of U.S. banks may involve certain risks, as described above.
Furthermore, when economic or market conditions warrant, the California
High-Yield Series may assume a temporary defensive position and invest up to 25%
of the value of its net assets in California tax-exempt securities rated within
the three highest rating categories of Moody's and/or S&P. The securities which
the Series will hold under this circumstance may have maturities of less than
one year.
Each of the California Quality Series and the California High-Yield Series
may enter into stand-by commitments. Under a stand-by commitment, a Series
obligates a dealer to repurchase at the Series' option specified securities at a
specified price. The exercise of a stand-by commitment is subject to the ability
of the dealer to make payment on demand. A Series would acquire stand-by
commitments solely to facilitate portfolio liquidity and not for trading
purposes. Prior to investing in stand-by commitments the Tax-Exempt Trust, if it
deems necessary based upon the advice of counsel, will apply to the Securities
and Exchange Commission for an exemptive order relating to such commitments and
the valuation thereof. There can be no assurance that the Securities and
Exchange Commission will provide such authorization.
The price which a Series would pay for tax-exempt securities with stand-by
commitments generally would be higher than the price which otherwise would be
paid for the tax-exempt securities alone. A Series will only purchase
obligations with stand-by commitments from sellers the Manager deems
creditworthy.
Stand-by commitments with respect to portfolio securities of a Series with
maturities of less than 60 days which are separate from the underlying portfolio
securities are not assigned a value. The cost of any such stand-by commitment is
carried as an unrealized loss from the time of purchase until it is exercised or
expires. Stand-by commitments with respect to portfolio securities of a Series
with maturities of 60 days or more which are separate from the underlying
portfolio securities and the underlying portfolio securities are valued at fair
value as determined in accordance with procedures established by the Board of
Trustees. The Board of Trustees would, in connection with the determination of
the value of such a stand-by commitment, consider among other factors the
creditworthiness of the writer of the stand-by commitment, the duration of the
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stand-by commitment, the dates on which or the periods during which the stand-by
commitment may be exercised and the applicable rules and regulations of the
Securities and Exchange Commission.
GENERAL
Investment grade bonds and notes are within the four highest credit rating
categories, and investment grade commercial paper is within the two highest
credit rating categories, of Moody's (Aaa, Aa, A, Baa for bonds; MIG 1, MIG 2,
MIG 3, MIG 4 for notes; P-1--P-2 for commercial paper) or S&P (AAA, AA, A, BBB
for bonds; SP-1--SP-2 for notes; A-1+, A-1/A-2 for commercial paper). Although
bonds and notes rated in the fourth credit rating category are commonly referred
to as investment grade they may have speculative characteristics. Such
characteristics may under certain circumstances lead to a greater degree of
market fluctuations in the value of such securities than do higher rated
tax-exempt securities of similar maturities. A detailed discussion of such
characteristics and circumstances and their effect upon each Series appears in
the Statements of Additional Information under the heading "Investment
Objectives, Policies And Risks." A description of the credit ratings is
contained in Appendix A to the Statements of Additional Information.
In addition, each Series may invest up to 15% of the value of its net assets
in illiquid securities including "restricted securities", i.e., securities that
must be registered under the Securities Act of 1933 before they may be offered
or sold to the public or securities that may be sold only in privately
negotiated transactions and certain participation interests in domestic banks.
The Fund may, however, invest without regard to the limitation on illiquid
securities in lease obligations which the Manager, in accordance with guidelines
that have been adopted by the Board of Directors or Trustees, as applicable, and
subject to their supervision, determines to be liquid. The Manager will deem
lease obligations liquid if they are publicly offered and have received an
investment grade rating of Baa or better by Moody's, or BBB or better by S&P.
Unrated lease obligations (or those below investment grade, where applicable)
will be considered liquid if the obligations come to the market through an
underwritten public offering and at least two dealers are willing to give
competitive bids. The Manager must, among other things, also review the
creditworthiness of the municipality obligated to make payment under the unrated
(or below investment grade, where applicable) lease obligation and consider such
factors as the existence of a rating or credit enhancement such as insurance,
the frequency of trades or quotes for the obligation and the willingness of
dealers to make a market in the obligation.
Each Fund, as a non-diversified investment company, is not limited by the
1940 Act as to the proportion of its assets that it may invest in the
obligations of a single issuer. However, each Series will comply with the
diversification requirements of the Internal Revenue Code of 1986, and has
therefore adopted an investment restriction, which may not be changed without
shareholder vote (except for the New Jersey Fund), prohibiting each Series from
purchasing with respect to 50% of the value of the respective Series' total
assets, securities of any issuer if immediately thereafter more than 5% of such
Series' total assets would be invested in the securities of any single issuer.
Furthermore, as a matter of policy, with respect to 75% of each Series' assets,
the respective Series may not purchase any revenue bonds if thereafter more than
5% of such Series' assets would be invested in revenue bonds of a single issuer.
This policy is not fundamental and may be changed by the Directors or Trustees,
as applicable, without shareholder approval. In the view of the Manager, the
above restriction and policy reduce the risk that might otherwise be associated
with an investment in a non-diversified investment company.
As a matter of policy, the Board or Trustees, as applicable, will not change
a Series' investment objectives without a vote of a majority of the outstanding
voting security of that Series. Under the 1940 Act, a "vote of a majority of the
outstanding voting securities" of a Series means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the Series or (2) 67%
or more of the shares of the Series present at a shareholder's meeting if more
than 50% of the outstanding shares of the Series are represented at the meeting
in person or by proxy.
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A more detailed list of each Series' investment policies, including a list of
those restrictions or investment activities that cannot be changed without a
vote of a majority of the outstanding voting securities of a Series appears in
each Series' Statement of Additional Information.
When Issued Securities
Each Series may purchase tax-exempt securities on a "when issued" basis,
which means that delivery of and payment for such securities normally take place
within 45 days after the date of the buyer's purchase commitment. The payment
obligation and the interest rate on when-issued securities are each fixed at the
time the purchase commitment is made, although no interest accrues to a
purchaser prior to the settlement of the purchase of the securities. As a result
the yields obtained and the market value on such securities may be higher or
lower on the date when the instruments are actually delivered to the buyer. A
Series will generally purchase a tax-exempt security sold on a when issued basis
with the intention of actually acquiring the securities on the settlement date.
Any gain realized from any such sale of securities will be subject to federal
and state taxes.
A separate account consisting of cash or high-grade liquid debt securities
equal to the amount of outstanding purchase commitments is established with the
Fund's Custodian in connection with any purchase of when issued securities. The
account is marked to market daily, with additional cash or liquid high-grade
debt securities added when necessary. A Series meets its respective obligation
to purchase when-issued securities from outstanding cash balances, sale of
securities held in the separate account, sale of other securities or, although
they would not normally expect to do so, from the sale of the when issued
securities themselves (which may have a greater or lesser value than the Series'
payment obligations).
Variable and Floating Rate Obligations
The interest rates payable on certain securities in which a Series may invest
are not fixed and may fluctuate based upon changes in market rates. The interest
rate on variable rate obligations is adjusted at predesignated periods and on
floating rate obligations whenever there is a change in the market rate of
interest on which the floating rate is based.
The interest rate is set as a specific percentage of a designated base rate,
such as the rate on a Treasury Bond or Bill or the prime rate at a major
commercial bank. Such a bond generally provides that a Series can demand payment
of the bond upon seven days' notice at an amount equal to par plus accrued
interest, which amount, in unusual cirumstances, may be more or less than the
amount a Series paid for the bond.
The maturity of floating or variable rate obligations (including
participation interests therein) is deemed to be the longer of (i) the notice
period required before a Series is entitled to receive payment of the obligation
upon demand or (ii) the period remaining until the obligation's next interest
rate adjustment. If not redeemed by a Series through the demand feature, the
obligations mature on a specified date which may range up to thirty years from
the date of issuance.
Participation Interests
From time to time, a Series may purchase from banks participation interest in
all or part of specific holdings of tax-exempt securities. Each participation
interest is backed by an irrevocable letter of credit or guarantee of the
selling bank. Participation interests will be purchased only if, in the opinion
of counsel, interest income on such interests will be tax-exempt when
distributed as dividends to shareholders of a Series.
Borrowings
Each Series may borrow money only from banks and only for temporary purposes
(such as meeting redemption requests or for extraordinary or emergency purposes
but not for the purchase of portfolio securities) in an amount not in excess of
10% of the value of its total assets at the time the borrowing is made (not
including the amount borrowed). Permitted borrowings may be secured or
unsecured. A Series will not purchase additional portfolio securities if such
Series has outstanding borrowings in excess of 5% of the value of its total
assets.
24
<PAGE>
MANAGEMENT SERVICES
The Board of Directors or Trustees, as applicable, provides broad supervision
over the affairs of the Funds. Pursuant to Management Agreements approved by the
Director or Trustees and the shareholders of each Series, the Manager manages
the investment of the assets of each Series and administers its business and
other affairs. The address of the Manager is 100 Park Avenue, New York, New York
10017.
In addition to serving the Funds, the Manager serves as manager of thirteen
other investment companies which, together with the Funds, make up the "Seligman
Group." The thirteen other companies are Seligman Capital Fund, Inc., Seligman
Cash Management Fund, Inc., Seligman Common Stock Fund, Inc., Seligman
Communications and Information Fund, Inc., Seligman Frontier Fund, Inc.,
Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc.,
Seligman High Income Fund Series, Seligman Income Fund, Inc., Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman Select
Municipal Fund, Inc. and Tri-Continental Corporation. The aggregate assets of
the Seligman Group are approximately $6.6 billion. The Manager also provides
investment management or advice to individual and institutional accounts having
a value of approximately $3 billion.
Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of each Fund. Mr. Morris owns a
majority of the outstanding voting securities of the Manager.
The Manager also provides senior management for Seligman Data Corp., a wholly
owned subsidiary of certain investment companies in the Seligman Group, which
performs, at cost, certain recordkeep-ing functions for each Fund, maintains the
records of shareholder investment accounts and provides related services.
The Manager is entitled to receive a management fee for its services,
calculated daily and payable monthly, equal to .50% of the average daily net
assets of the Series on an annual basis. The Manager has from time to time
voluntarily waived a portion of its management fee with respect to one or more
of the Series. Each Fund pays all its expenses other than those assumed by the
Manager; expenses are allocated among the Series of the Tax-Exempt Fund and of
the Tax-Exempt Trust in a manner determined by the Directors or Trustees to be
fair and equitable. The management fee paid by each Series expressed as a
percentage of average daily net assets of that Series is presented in the
following table for the fiscal year ended September 30,1994. Total expenses for
each Series' Class A and D shares, expressed as an annualized percentage of
average daily net assets, are also presented in the following table for the
year/period ended September 30, 1994.
- --------------------------------------------------------------------------------
Annualized Expense
Management Fee Rate Ratios for
for the year ended the year/period ended
Series 9/30/94 9/30/94
------ ------------------- ------------------------
Class A Class D
-------- --------
New Jersey ...................... .33%* .90% 1.75%
Pennsylvania .................... .50% 1.16% 2.00%
National ........................ .50% .85% 1.76%
Colorado ........................ .50% .86% 1.78%
Georgia ......................... .30%* .73% 1.76%
Louisiana ....................... .50% .87% 1.78%
Maryland ........................ .50% .92% 1.80%
Massachusetts ................... .50% .85% 1.78%
Michigan ........................ .50% .84% 1.75%
Minnesota ....................... .50% .85% 1.74%
Missouri ........................ .36%* .74% 1.70%
New York ........................ .50% .87% 1.81%
Ohio ............................ .50% .84% 1.78%
Oregon .......................... .39%* .78% 1.72%
South Carolina .................. .50% .83% 1.74%
California
High-Yield .................... .50% .85% 1.74%
California Quality .............. .50% .81% 1.77%
Florida ......................... .01%* .42%** 1.29%**
North Carolina .................. --%* .44%** 1.27%**
* During the year/period ended September 30, 1994 the Manager, at its
discretion, waived all or a portion of its fees from the Florida, Georgia,
Missouri, New Jersey, North Carolina and Oregon Series.
** The Manager also reimbursed certain expenses for the Florida and North
Carolina Series.
- --------------------------------------------------------------------------------
Portfolio Manager
Thomas G. Moles is a Managing Director of J. & W. Seligman & Co.
Incorporated, as well as President and Senior Portfolio Manager of Seligman
Select Municipal Fund and Seligman Quality Municipal Fund, and Vice President
25
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and Senior Portfolio Manager of each of the Funds. He is responsible for more
than $2 billion in tax-exempt securities. Mr. Moles, with more than 22 years of
experience, has spearheaded Seligman's tax-exempt efforts since joining the
Manager in 1983.
The Manager's discussion of each Fund's performance as well as a line graph
illustrating comparative performance information between each Series of the Fund
and the Lehman Brothers Municipal Bond Index is included in the respective
Fund's fiscal 1994 Annual Report to shareholders. Copies of the Annual Report
may be obtained, without charge, by calling or writing the Funds at the
telephone numbers or address listed on the front page of this Prospectus.
Portfolio Transactions
Fixed income securities are generally traded on the over-the-counter market
on a "net" basis without a stated commission, through dealers acting for their
own account and not as brokers. Prices paid to dealers will generally include a
"spread", i.e., the difference between the prices at which a dealer is willing
to purchase or to sell the security at that time. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter.
The Management Agreements recognize that in the purchase and sale of
portfolio securities, the Manager will seek the most favorable price and
execution, and, consistent with that policy, may give consideration to the
research, statistical and other services furnished by dealers to the Manager for
its use in connection with its services to the Funds as well as other clients.
Consistent with the rules of the National Association of Securities Dealers,
Inc. and subject to seeking the most favorable price and execution available and
such other policies as the Directors may determine, the Manager may consider
sales of shares of the Funds (and, under applicable laws, of the other mutual
funds in the Seligman Group) as a factor in the selection of dealers to execute
portfolio transactions for the Fund.
Portfolio Turnover
A change in securities held by any Series is known as "portfolio turnover"
and may involve the payment by such Series of dealer spreads or underwriting
commissions and other transactions costs on the sale of the securities as well
as on the reinvestment of the proceeds in other securities. While it is the
policy of each Series to hold securities for investment, changes will be made
from time to time when the Manager believes such changes will strengthen the
Series' portfolio. The portfolio turnover of any Series is not expected to
exceed 100%.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager, acts
as general distributor of the Funds' shares. Its address is 100 Park Avenue, New
York, New York 10017.
Each Series issues two classes of shares: Class A shares are sold to
investors choosing the initial sales load alternative; and Class D shares are
sold to investors choosing no initial sales load, a higher distribution fee and
a CDSL on redemptions within one year of purchase. See "Alternative Distribution
System" above.
Shares of the Series may be purchased through any authorized investment
dealer. All orders will be executed at the net asset value per share next
computed after receipt of the purchase order plus, in the case of Class A
shares, a sales load which, except for shares purchased under one of the reduced
sales load plans, will vary with the size of the purchase as shown in the
schedule under "Class A shares-Initial Sales Load" below.
The minimum amount for initial investment is $1,000; subsequent investments
must be in the minimum amount of $50 for each Series (except for investment of
dividends and capital gain distributions). The Funds reserve the right to return
investments that do not satisfy these minimums. Orders received by an authorized
dealer before the close of the New York Stock Exchange ("NYSE") (4:00 p.m. New
York City time) and accepted by SFSI before the close of business (5:00 p.m. New
York City time) on the same day will be executed at the Series' net asset value
determined as of the close of the NYSE on that day plus, in the case of Class A
shares, the applicable sales load. Orders accepted by dealers after the close of
the NYSE, or received by SFSI after the close of business, will be executed at
26
<PAGE>
the Series' net asset value next determined plus, in the case of Class A shares,
the applicable sales load. The authorized dealer through which the shareholder
purchases shares is responsible for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire
payments, dealer orders must first be placed through SFSI's order desk and
assigned a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C (Name of Fund and
Series) (A or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Funds make no charge for this
service, the transmitting bank may impose a wire service fee.
Existing shareholders may purchase additional shares at any time through
their dealers or by sending a check payable to (Name of Fund and Series)
directly to the Fund at P.O. Box 3936, New York, NY 10008-3936. Checks for
investment must be in U.S. dollars drawn on a domestic bank. The check should
include the shareholder's name, address, account number and class of shares.
Orders sent directly to Seligman Data Corp. will be executed at the offering
price next determined after your order is accepted plus, in the case of Class A
shares, the applicable sales load.
Seligman Data Corp. will charge a $10.00 processing fee for checks returned
to it marked "unpaid." This charge may be deducted from the account that
requested the purchase. For the protection of the Funds and their shareholders,
no redemption proceeds will be remitted to a shareholder with respect to shares
purchased by check (unless certified) until the Fund receives notice that the
check has cleared, which may be up to 15 days from the credit of the shares to
the shareholder's account.
Valuation
The net asset value of a Series is determined each day, Monday through
Friday, as of the close of the NYSE (currently 4:00 p.m. New York City time), on
each day that the NYSE is open. Net asset value is calculated separately for
each Series class. Net asset value is determined by dividing the value of the
total assets of the Series, less liabilities, by the number of shares
outstanding. Tax-exempt securities and short-term holdings maturing in more than
60 days are valued based on quotations provided by an independent pricing
service, approved by the Directors or Trustees, or in the absence thereof, at
fair value as determined in accordance with procedures approved by the Directors
or Trustees. Short-term holdings maturing in 60 days or less are generally
valued at amortized cost. Taxable securities are valued at market value, or in
the absence thereof, fair value as determined in accordance with procedures
approved by the Directors.
Class A Shares -- Initial Sales Load. Class A shares are subject to an
initial sales load which varies with the size of the purchase as shown in the
following schedule, and an annual service fee of up to .25% of the average daily
net asset value of Class A shares. See "Administration, Shareholder Services and
Distribution Plan" below.
- --------------------------------------------------------------------------------
Class A Shares -- Sales Load Schedule
Sales Load as a
Percentage of Regular
----------------------- Dealer
Net Amount Discount
Invested as a % of
Offering (Net Asset Offering
Amount of Purchase Price Value) Price
------------------ --------- ---------- ---------
Less than $ 50,000 ........... 4.75% 4.99% 4.25%
$ 50,000- 99,999 ........... 4.00 4.17 3.50
100,000- 249,999 ........... 3.50 3.63 3.00
250,000- 499,999 ........... 2.50 2.56 2.25
500,000- 999,999 ........... 2.00 2.04 1.75
1,000,000- 3,999,999 ........... 1.00 1.01 .90
4,000,000- or more* ........... 0 0 0
* Dealers may receive a fee of .15% on sales made without a sales load.
- --------------------------------------------------------------------------------
Reduced Sales Loads. Reductions in sales loads apply to purchases of Class
A shares by a "single person," including an individual, members of a family unit
comprising husband, wife and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
27
<PAGE>
other fiduciary or individual account.
o Volume Discounts are provided if the total amount being invested in Class A
shares of a Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group that are sold with a sales load reaches levels
indicated in the above sales load schedule.
o The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the other mutual funds in the Seligman Group sold
with a sales load with the total net asset value of shares of those funds
already owned that were sold with a sales load and the total net asset value of
shares of Seligman Cash Management Fund that were acquired by an investor
through an exchange of shares of another mutual fund in the Seligman Group on
which there was a sales load to determine reduced sales loads in accordance with
the sales load schedule. An investor or a dealer must indicate if the investor
has existing accounts when making investments or opening new accounts.
o A Letter of Intent allows an investor to purchase Class A shares over a
13-month period at reduced sales loads, based upon the total amount the investor
intends to purchase plus the total net asset value of shares of the other mutual
funds in the Seligman Group already owned that were sold with a sales load and
the total net asset value of shares of Seligman Cash Management Fund that were
acquired by the investor through an exchange of shares of another mutual fund in
the Seligman Group on which there was a sales load. An investor or a dealer must
indicate if the investor has existing accounts when making investments or
opening new accounts. For more information concerning terms of Letters of
Intent, see "Terms and Conditions" on page 50.
Special Programs. Each Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees (and their spouses
and minor children) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Such sales
also may be made to employee benefit plans and thrift plans for such persons and
to any investment advisory, custodial, trust or other fiduciary account managed
or advised by the Manager or any affiliate.
Class A shares also may be issued without a sales load in connection with the
acquisition of cash and securities owned by other investment companies and
personal holding companies; to any registered unit investment trust which is the
issuer of periodic payment plan certificates, the net proceeds of which are
invested in Fund shares; to separate accounts established and maintained by an
insurance company which are exempt from registration under Section 3(c)(11) of
the 1940 Act; to registered representatives and employees (and their spouses and
minor children) of any dealer that has a sales agreement with SFSI; to
shareholders of mutual funds with objectives similar to a Fund who purchase
shares with redemption proceeds of such funds; to financial institution trust
departments; to registered investment advisers exercising investment
discretionary authority with respect to the purchase of Series shares, or
pursuant to sponsored arrangements with organizations which make recommendations
to or permit group solicitation of, its employees, members or participants in
connection with the purchase of shares of the Series; and to "eligible employee
benefit plans" of employers who have at least 2,000 U.S. employees to whom such
plan is made available and, regardless of the number of employees, if such plan
is established and maintained by any dealer that has a sales agreement with
SFSI. "Eligible employee benefit plans" means any plans or arrangements, whether
or not tax qualified, which provide for the purchase of a Fund's shares. Sales
of shares to such plans must be made in connection with a payroll deduction
system of plan funding or other system acceptable to Seligman Data Corp.
Class D Shares. Class D shares are sold without an initial sales load but are
subject to a CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1%
of the average daily net asset value of Class D shares. SFSI will make a 1%
payment to dealers in respect of purchases of Class D shares.
A CDSL will be imposed on any redemption of Class D shares which were
purchased during the preceding twelve months; however, no such charge will be
imposed on shares acquired through the investment of dividends or distributions
28
<PAGE>
from any Class D shares within the Seligman Group. The amount of any CDSL will
be paid to and retained by SFSI.
To minimize the application of CDSL to a redemption, shares acquired pursuant
to the investment of dividends and distributions (which are not subject to a
CDSL) will be redeemed first; followed by shares purchased at least one year
prior to the redemption. Shares held for the longest period of time within the
applicable one year period will then be redeemed. Additionally, for those shares
determined to be subject to the CDSL, the application of the 1% CDSL will be
made to the current net asset value or original purchase price, whichever is
less.
For example, assume an investor purchased 100 shares in January at a price of
$10.00 per share. During the first year, 5 additional shares were acquired
through investment of dividends and distributions. In January of the following
year, an additional 50 shares are purchased at a price of $12.00 per share. In
March of that year, the investor chooses to redeem $1,500.00 from the account
which now holds 155 shares with a total value of $1,898.75 ($12.25 per share).
The CDSL for this transaction would be calculated as follows:
Total shares to be redeemed
(122.449 @ $12.25) as follows: $1,500.00
=========
Dividend/Distribution shares
(5 @ $12.25) $ 61.25
Shares over 1 year old
(100 @ $12.25) 1,225.00
Shares less than 1 year old subject to
CDSL (17.449 @ $12.25) 213.75
---------
Gross proceeds of redemption $1,500.00
Less CDSL (17.449 shares @ $12.00 =
$209.39 x 1% = $2.09) (2.09)
---------
Net proceeds of redemption $1,497.91
=========
For federal income tax purposes, the amount of the CDSL will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72(m)(7) of the Internal Revenue Code of 1986, as amended;
(b) in connection with (i) distributions from retirement plans qualified under
section 401(a) of the Code when such redemptions are necessary to make
distributions to plan participants (such payments include, but are not limited
to death, disability, retirement, or separation of service), (ii) distributions
from a custodial account under Code section 403(b)(7) or an individual
retirement account ("IRA") due to death, disability, or attainment of age 591/2,
and (iii) a tax-free return of an excess contribution to an IRA; (c) in whole or
in part, in connection with shares sold to current and retired Directors or
Trustees of the Funds; (d) in whole or in part, in connection with shares sold
to any state, county, or city or any instrumentality, department, authority, or
agency thereof, which is prohibited by applicable investment laws from paying a
sales load or commission in connection with the purchase of shares of any
registered investment management company; (e) pursuant to an automatic cash
withdrawal service; (f) in connection with the redemption of Class D shares of a
Fund if it is combined with another mutual fund in the Seligman Group, or
another similar reorganization transaction; and (g) in connection with a Fund's
right to redeem or liquidate an account that holds below a certain minimum
number or dollar amount of shares (currently $500).
If, with respect to a redemption of any Class D shares sold by a dealer, the
CDSL is waived because the redemption qualifies for a waiver as set forth above,
the dealer shall remit to SFSI promptly upon notice an amount equal to the 1%
payment or a portion of the 1% payment paid on such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the Seligman Mutual Funds. SFSI may from time to time pay a bonus or
other incentive to dealers that sell shares of the Seligman Mutual Funds. In
some instances, these bonuses or incentives may be offered only to certain
dealers which employ a registered representative who has sold or may sell a
29
<PAGE>
significant amount of shares of a Fund and/or certain other Funds managed by the
Manager during a specified period of time. Such bonus or other incentive may
take the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered representatives and members
of their families to places within or outside the United States. The cost to
SFSI of such promotional activities and payments will not exceed the amounts of
the sales loads retained by SFSI in respect of sales of shares of the Funds and
the other Seligman Mutual Funds effected through participating dealers and shall
be consistent with the rules of the National Association of Securities Dealers,
Inc., as then in effect.
TELEPHONE TRANSACTIONS
A shareholder whose account has either an individual or joint tenancy
registration may elect to effect the following transactions via telephone by
completing the Telephone Service Election portion of the Account Application or
a separate Telephone Service Election Form: (i) redemption of shares of a Fund,
(ii) exchange of shares of a Fund for shares of another Seligman Mutual Fund,
(iii) change of a dividend and/or capital gain distribution option, and (iv)
change of address. IRA accounts may only elect to effect exchanges or address
changes. By completing the appropriate section of the Account Application or
separate Election Form, all mutual funds with the same account number (i.e.,
registered exactly the same), including any new mutual fund in which the
shareholder invests in the future, will automatically include telephone
services. All telephone transactions are effected through Seligman Data Corp. at
(800) 221-2450.
For accounts registered as joint tenancies, each joint tenant, by electing
telephone transaction services, authorizes each of the other tenants to effect
telephone transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder may
experience difficulty in contacting Seligman Data Corp. to request a redemption
or exchange of shares of a Fund. In these circumstances, the shareholder should
consider using other redemption or exchange procedures. Use of these other
redemption or exchange procedures will result in your redemption request being
processed at a later time than if telephone transactions had been used, and a
Series' net asset value may fluctuate during such periods.
Each Fund and Seligman Data Corp. will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These will
include: recording all telephone calls requesting account activity, requiring
that the caller provide certain requested personal and/or account information at
the time of the call for the purpose of establishing the caller's identity, and
sending a written confirmation of redemptions, exchanges or address changes to
the address of record each time activity is initiated by telephone. As long as
each Fund and Seligman Data Corp. follow instructions communicated by telephone
that were reasonably believed to be genuine at the time of their receipt,
neither they nor any of their affiliates will be liable for any loss to the
shareholder caused by an unauthorized transaction. Shareholders are, of course,
under no obligation to apply for telephone transaction services. In any instance
where a Fund or Seligman Data Corp. is not reasonably satisfied that
instructions received by telephone are genuine, the requested transaction will
not be executed, and neither they nor any of their affiliates will be liable for
any losses which may occur due to a delay in implementing the transaction. If a
Fund or Seligman Data Corp. does not follow the procedures described above, a
Fund or Seligman Data Corp. may be liable for any losses due to unauthorized or
fraudulent instructions. Telephone services must be effected through a
representative of Seligman Data Corp., i.e., requests may not be communicated
via Seligman Data Corp.'s automated telephone answering system. Telephone
transaction services may be terminated by a shareholder at any time by sending a
written request to Seligman Data Corp. Written acknowledgment of termination of
telephone transaction services will be sent to the shareholder.
REDEMPTION OF SHARES
Regular Redemption Procedure. A shareholder may redeem shares held in book
credit form without charge (except the CDSL, if applicable) at any time by
sending a written request to Seligman Data Corp., 100 Park Avenue, New York, New
30
<PAGE>
York 10017. The redemption request must be signed by all persons in whose name
the shares are registered. A shareholder may redeem shares that are not in book
credit form, by surrendering certificates in proper form to the same address.
Certificates should be sent by registered mail. Share certificates must be
endorsed for transfer or accompanied by an endorsed stock power signed by all
shareowners exactly as their name(s) appear(s) on the account registration. The
shareholder's letter of instruction or endorsed stock power should specify the
name of the Series, the account number, class of shares (A or D), number of
shares or dollar amount to be redeemed. The Funds cannot accept conditional
redemption requests. If the redemption proceeds are (i) $50,000 or more, (ii) to
be paid to someone other than the shareholder of record (regardless of the
amount) or (iii) to be mailed to other than the address of record (regardless of
the amount), the signature(s) of the shareholder(s) must be guaranteed by an
eligible financial institution including, but not limited to, the following:
banks, trust companies, credit unions, securities brokers and dealers, savings
and loan associations and participants in the Securities Transfer Association
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or the
New York Stock Exchange Medallion Signature Program (MSP). A Fund reserves the
right to reject a signature guarantee where it is believed that the Fund will be
placed at risk by accepting such guarantee. A signature guarantee is also
necessary in order to change the account registration. Notarization by a notary
public is not an acceptable signature guarantee. Additional documentation may
also be required by Seligman Data Corp. in the event of a redemption by
corporations, executors, administrators, trustees, custodians or retirement
plans. For further information with respect to necessary redemption
requirements, please contact the Shareholder Services Department of Seligman
Data Corp. for assistance. In the case of Class A shares, and in the case of
Class D shares redeemed after one year, a shareholder will receive the net asset
value per share next determined after receipt of a request in good order. If
Class D shares are redeemed within one year of purchase, a shareholder will
receive the net asset value per share next determined after receipt of a request
in good order, less a CDSL of 1% as described under "Purchase Of Shares -- Class
D Shares" above.
A shareholder may also "sell" shares to a Fund through an investment dealer
and, in that way, be certain, providing the order is timely, of receiving the
net asset value established at the end of the day on which the dealer is given
the repurchase order. The Funds make no charge for this transaction, but the
dealer may charge a service fee. "Sell" or repurchase orders received from an
authorized dealer before the close of the NYSE and received by SFSI, the
repurchase agent, before the close of business on the same day will be executed
at the net asset value per share determined at the close of the NYSE on that
day. Repurchase orders received from authorized dealers after the close of the
NYSE or not received by SFSI prior to the close of business, will be executed at
the net asset value determined as of the close of the NYSE on the next trading
day. Shares held in a "street name" account with a broker/dealer may be sold to
a Fund only through a broker/dealer.
Check Redemption Service. The Check Redemption Service allows a shareholder
of Class A shares who owns or purchases shares in a Series worth $25,000 or more
to request Seligman Data Corp. to provide redemption checks to be drawn on the
account associated with the Series in which the shareholder is invested, in
amounts of $500 or more. The shareholder may elect to use this Service on the
Account Application or by later written request to Seligman Data Corp. Shares
for which certificates have been issued will not be available for redemption
under this Service. Dividends continue to be earned through the date preceding
the date the check clears for payment. Use of this Service is subject to Mellon
Bank, N.A. rules and regulations covering checking accounts. Separate checkbooks
will be furnished for each Series.
There is no charge for use of checks. When honoring a check that was
processed for payment, Mellon Bank, N.A. will cause a Fund to redeem exactly
enough full and fractional shares from an account to cover the amount of the
check. If shares are owned jointly, redemption checks will need to be signed by
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<PAGE>
all persons, unless otherwise elected under Section 5 of the Account
Application, in which case a single signature will be acceptable.
In view of daily fluctuations in share value, the shareholder should be
certain that the amount of shares in the account is sufficient in a Series to
cover the amount of checks written on that Series. If insufficient shares are in
the account, the check will be returned marked "insufficient funds." The Funds
will not redeem shares in one Series to cover a check written on another Series.
Seligman Data Corp. will charge a $10.00 processing fee for any check redemption
draft returned marked "unpaid." This charge may be debited from the account the
check was drawn against.
Check Redemption books cannot be reordered unless the shareholder's account
has a value of $25,000 or more and Seligman Data Corp. has a certified tax
identification number on file.
Cancelled checks will be returned to a shareholder under separate cover the
month after they clear. The Check Redemption Service may be terminated at any
time by the Fund or Mellon Bank, N.A. See "Terms and Conditions" on page 50 for
further information. The Check Redemption Service is not available with respect
to Class D shares.
For the protection of the Funds and their shareholders, no proceeds of a
check redemption will be remitted to a shareholder with respect to shares
purchased by check (unless certified) until Seligman Data Corp. has received
notice that the check has cleared, which may be up to 15 days from the credit of
the shares to such shareholder's account.
Telephone Redemptions. Telephone redemptions of uncertificated shares may be
made in an amount of up to $50,000 per day, per account. One telephone
redemption request per day is permitted. Telephone redemption requests must be
received by Seligman Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00
p.m. New York time, on any business day and will be processed as of the close of
business on that day. Redemption requests by telephone will not be accepted
within 30 days following an address change. Keogh Plans, IRAs or other
retirement plans are not eligible for telephone redemptions. Each Fund reserves
the right to suspend or terminate its telephone redemption service at any time
without notice.
For more information about telephone redemptions, including the procedure for
electing such service and the circumstances under which shareholders may bear
the risk of loss for a fraudulent transaction, see "Telephone Transactions"
above.
General
Whether shares are redeemed or repurchased, a check for the proceeds will be
sent to the address of record within seven calendar days after acceptance of the
redemption or repurchase order and will be made payable to all of the registered
owners on the account. The Funds will not mail redemption proceeds with respect
to shares purchased by check (unless certified) until Seligman Data Corp. has
received notice that the check has cleared which may be up to 15 days from the
credit of the shares to the shareholder's account. The proceeds of a redemption
or repurchase may be more or less than the investors' cost.
The Funds reserves the right to redeem shares owned by a shareholder whose
investment in a Fund has a value of less than the minimum specified by the
Fund's Directors or Trustees which is presently $500. Shareholders are sent a
notice before such redemption is processed stating that the value of their
investment is less than the specified minimum and that they have sixty days to
make an additional investment.
Reinstatement Privilege
If a shareholder redeems Class A shares and then decides not to redeem them,
or to shift the investment to one of the other Series or to one of the other
mutual funds in the Seligman Group, a shareholder may, within 120 calendar days
of the date of redemption, use all or any part of the proceeds of the redemption
to reinstate, free of sales load, all or any part of the investment in shares of
such Series; or if the shares redeemed have been held for seven calendar days or
longer a shareholder may reinstate them in shares of any of the other Series of
the Fund or any of the other mutual funds in the Seligman Group. If a
shareholder redeems Class D shares and the redemption was subject to a CDSL, the
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shareholder may reinstate the investment in shares of the same class of the
Series or any of the other mutual funds in the Seligman Group within 120
calendar days of the date of redemption and receive a credit for the CDSL paid.
Such investment will be reinstated at the net asset value per share established
as of the close of the NYSE on the day the request is accepted. Seligman Data
Corp. must be informed that the purchase is a reinstated investment. Reinstated
shares must be registered exactly and be of the same class as the shares
previously redeemed.
Generally, exercise of the Reinstatement Privilege does not alter the federal
income tax status of any capital gain realized on a sale of a Series' shares,
but to the extent that any shares are sold at a loss and the proceeds are
reinvested in shares of the same Series some or all of the loss will not be
allowed as a deduction, depending upon the percentage of the proceeds
reinvested.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
Under an Administration, Shareholder Services and Distribution Plan (the
"Plan"), each Series may pay to Seligman Financial Services, Inc. ("SFSI"), the
Funds' general distributor, an administration, shareholder services and
distribution fee in respect of each Series' Class A and Class D shares. Payments
under the Plan may include, but are not limited to: (i) compensation to
securities dealers and other organizations ("Service Organizations") for
providing distribution assistance with respect to assets invested in a Series,
(ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Series' shareholders,
and (iii) otherwise promoting the sale of shares of each Series, including
paying for the preparation of advertising and sales literature and the printing
and distribution of such promotional materials and prospectuses to prospective
investors and defraying SFSl's costs incurred in connection with its marketing
efforts with respect to shares of the Series. The Manager, in its sole
discretion, may also make similar payments to SFSI from its own resources, which
may include the management fee that the Manager receives from each Series.
Under the Plans, each Series reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of a Series' Class A shares. It is expected that the proceeds from the fee
in respect of Class A shares will be used primarily to compensate Service
Organizations which enter into agreements with SFSI. Such Service Organizations
will receive from SFSI a continuing fee of up to .25% on an annual basis,
payable quarterly, of the average daily net assets of a Series' Class A shares
attributable to the particular Service Organization for providing personal
service and/or the maintenance of shareholder accounts. The fee payable from
time to time is, within such limit, determined by the Directors or Trustees of
the Funds.
The Plan as it relates to the Class A shares of the New Jersey Fund, was
first approved by the Directors on January 12, 1988 and by the shareholders on
December 16, 1988. The Plan as it relates to the Class A shares of the
Pennsylvania Fund, was first approved by the Trustees on June 10, 1986 and by
the shareholders on April 23, 1987. The Plan as it relates to the Class A shares
of the California High-Yield Series and the California Quality Series, was first
approved by the Trustees on July 21, 1992 and by the shareholders on November
23, 1992. The Plan as it relates to the Class A shares of the Florida Series,
was first approved by the Trustees on June 21, 1990 and by the shareholders on
December 7, 1990. The Plan as it relates to Class A shares of the North Carolina
Series, was first approved by the Trustees on June 21, 1990 and by the
shareholders on April 11, 1991. Each Plan as it relates to Class A shares of the
other Series, was first approved by the Directors or Trustees on July 21, 1992
and by the shareholders of each Series on November 23, 1992. The Plans are
reviewed by the Directors or Trustees annually. The total amounts paid for the
year ended September 30, 1994 in respect of each Series' Class A shares, average
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daily net assets pursuant to the Plans were as follows:
% of
Average
Series Net Assets
------ ----------
New Jersey...................................................... .23%
Pennsylvania.................................................... .22
National........................................................ .08
Colorado........................................................ .09
Georgia......................................................... .10
Louisiana....................................................... .10
Maryland........................................................ .09
Massachusetts................................................... .09
Michigan........................................................ .10
Minnesota....................................................... .10
Missouri........................................................ .09
New York........................................................ .08
Ohio............................................................ .10
Oregon.......................................................... .10
South Carolina.................................................. .10
California High-Yield........................................... .09
California Quality.............................................. .09
Florida......................................................... .23
North Carolina.................................................. .24
Under the Plans, each Series reimburses SFSI for its expenses with respect to
Class D shares at an annual rate of up to 1% of the average daily net asset
value of the Class D shares. Proceeds from a Series' Class D distribution fee
are used primarily to compensate Service Organizations for administration,
shareholder services and distribution assistance (including a continuing fee of
up to .25% on an annual basis of the average daily net asset value of a Series'
Class D shares attributable to particular Service Organizations for providing
personal services and/or the maintenance of shareholder accounts) and will
initially be used by SFSI to defray the expense of the 1% payment to be made by
it to Service Organizations at the time of the sale of Class D shares. The
amounts expended by SFSI in any one year upon the initial purchase of Class D
shares may exceed the amounts received by it from Plan payments retained.
Expenses of administration, shareholder services and distribution of a Series'
Class D shares in one fiscal year may be paid from a Series' Class D Plan fees
received in any other fiscal year. Each Plan, as it relates to Class D shares,
was approved by the Directors or Trustees on November 18, 1993 and became
effective February 1, 1994. Each Plan is reviewed by the Directors or Trustees
annually. The total amount paid for the period February 1, 1994 to September 30,
1994, in respect of each Series' Class D shares pursuant to the Plan was 1.00%
per annum of each Series' average daily net assets of the Class D shares.
EXCHANGE PRIVILEGE
A shareholder for seven calendar days or more, may, without charge, exchange
at net asset value any or all of an investment in a Series for shares of another
Series or for shares of the other mutual funds in the Seligman Group. Exchanges
may be made by mail or by telephone if telephone services are elected by the
shareholder.
Class A and Class D shares may be exchanged only for Class A and Class D
shares, respectively, of another Series or another mutual fund in the Seligman
Group on the basis of relative net asset value.
If Class D shares that are subject to a CDSL for Class D shares of another
Series or fund, for purposes of assessing the CDSL payable upon disposition of
the exchanged Class D shares, the one year holding period shall be reduced by
the holding period of the original Class D shares.
Aside from the Series described in this Prospectus, the mutual funds in the
Seligman Group available under the Exchange Privilege are:
o Seligman Capital Fund, Inc: seeks aggressive capital appreciation. Current
income is not an objective.
o Seligman Cash Management Fund, Inc: invests in high quality money market
instruments. Shares are sold at net asset value.
o Seligman Common Stock Fund, Inc: seeks favorable current income and
long-term growth of both income and capital value without exposing capital to
undue risk.
o Seligman Communications and Information Fund, Inc: invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.
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o Seligman Frontier Fund, Inc: seeks to produce growth in capital value,
income may be considered but will only be incidental to the fund's investment
objective.
o Seligman Growth Fund, Inc: seeks longer-term growth in capital value and an
increase in future income.
o Seligman Henderson Global Fund Series, Inc: consists of the Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global Technology
Fund and the Seligman Henderson International Fund all of which seek long-term
capital appreciation primarily through investing in companies either globally or
internationally.
o Seligman High Income Fund Series: seeks high current income by investing in
debt securities. The Fund consists of the U.S. Government Securities Series and
the High-Yield Bond Series.
o Seligman Income Fund, Inc: seeks high current income and the possibility of
improvement of future income and capital value.
All permitted exchanges will be based on the then current net asset values of
the respective funds. Telephone requests for exchanges must be received between
8:30 a.m. and 4:00 p.m. New York time on any business day, by Seligman Data
Corp. at (800) 221-2450 and will processed as of the close of business on that
day. The registration of an account into which an exchange is made must be
identical to the registration of the account from which shares are exchanged.
When establishing a new account by an exchange of shares, the shares being
exchanged must have a value of at least the minimum initial investment required
by the mutual fund into which the exchange is being made. The method of
receiving distributions, unless otherwise indicated, will be carried over to the
new Fund account. Account services, such as Invest-A-Check(R) Service, Directed
Dividends and Automatic Cash Withdrawal Service will not be carried over to the
new Fund account unless specifically requested and permitted by the new Fund.
Exchange orders may be placed to effect an exchange of a specific number of
shares, an exchange of shares equal to a specific dollar amount or an exchange
of all shares held. Shares for which certificates have been issued may not be
exchanged via telephone and may be exchanged only upon receipt of an exchange
request together with certificates representing shares to be exchanged in form
for transfer.
Telephone exchanges are only available to shareholders whose accounts are
registered individually, as joint tenancies or IRAs. The Exchange Privilege via
mail is generally applicable to investments in an IRA and other retirement
plans, although some restrictions may apply. The terms of the exchange offer
described herein may be modified at any time; and not all of the mutual funds in
the Seligman Group are available to residents of all states. Before making any
exchange, contact your authorized investment dealer or Seligman Data Corp. to
obtain prospectuses of any of the mutual funds in the Seligman Group.
A broker/dealer of record will be able to effect exchanges on behalf of a
shareholder only if the broker/dealer has entered into a Telephone Exchange
Agreement with SFSI wherein the broker/dealer must agree to indemnify SFSI and
the Funds from any loss or liability incurred as a result of the acceptance of
telephone exchange orders. Written confirmation of all exchanges will be
forwarded to the shareholder to whom the exchanged shares are registered and a
duplicate confirmation will be sent to the dealer of record listed on the
account. SFSI reserves the right to reject a telephone exchange request. Each
Fund reserves the right to reject any telephone requests for transactions with a
share value exceeding $250,000. Any rejected telephone exchange order may be
processed by mail. For more information about telephone exchanges, including the
procedure for electing such service and the circumstances under which
shareholders may bear the risk of loss for a fraudulent transaction, see
"Telephone Transactions" above.
Exchanges of shares are sales and may result in a gain or loss for federal
and state income tax purposes.
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FURTHER INFORMATION ABOUT
TRANSACTIONS IN THE FUNDS
Because excessive trading (including short-term, "market timing" trading) can
hurt a Series' performance, a Fund, on behalf of a Series, may refuse any
exchange (1) from any shareholder account from which there have been two
exchanges in the preceding three month period, or (2) where the exchanged shares
equal in value the lesser of $1,000,000 or 1% of the Series' net assets. A Fund
may also refuse any exchange or purchase order from any shareholder account if
the shareholder or the shareholder's broker/dealer has been advised that
previous patterns of purchases and redemptions or exchanges have been considered
excessive. Accounts under common ownership or control, including those with the
same taxpayer ID number and those administered so as to redeem or purchase
shares based upon certain predetermined market indicators, will be considered
one account for this purpose. Additionally, each Fund reserves the right to
refuse any order for the purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
Each Series intends to declare dividends of net investment income daily.
Dividends are paid in additional shares on the 17th day of each month. If the
17th day of the month falls on a weekend or holiday on which the NYSE is closed,
the dividend will be distributed on the previous business day. Payments vary in
amount depending on income received from portfolio securities, expenses of
operation and the number of days in the period.
Shares will begin earning dividends on the day on which a Series receives
payment and shares are issued. Shares continue to earn dividends through the
date preceding the date they are redeemed or delivered subsequent to repurchase.
Each Series distributes substantially all of any taxable net long-term and
short-term gain realized on investments to shareholders at least annually in
accordance with requirements under the Internal Revenue Code of 1986, as
amended, and other applicable statutory and regulatory requirements.
Shareholders may elect: (1) to receive both dividends and gain distributions
in shares; (2) to receive dividends in cash and gain distributions in shares;
(3) to receive both dividends and gain distributions in cash. In the case of
prototype retirement plans, dividends and gain distributions are reinvested in
additional shares. Unless another election is made, dividends and gain
distributions will be credited to shareholder accounts in additional shares.
Class D shares acquired through a dividend or gain distribution and credited to
the account are not subject to a CDSL. Dividends and gain distributions paid in
shares are invested at the net asset value on the payable date. Shareholders may
elect to change their dividend and gain distribution options by writing Seligman
Data Corp. at the address listed below. If the shareholder has elected telephone
services, changes may also be telephoned to Seligman Data Corp. between 8:30
a.m. and 5:30 p.m. New York time, by either the shareholder or the broker/dealer
of record on the account. For information about electing telephone services, see
"Telephone Transactions." These elections must be received by Seligman Data
Corp. at least five business days before the payable date, otherwise payment
will be made in accordance with the current option on the shareholder's account.
The per share dividends from net investment income on a Series' Class D
shares will be lower than the per share dividends on a Series' Class A shares as
a result of the higher distribution fee applicable with respect to a Series'
Class D shares. Per share dividends of the two classes may also differ as a
result of differing class expenses (e.g., transfer agency expenses).
Distributions of net capital gains, if any, will be paid in the same amount for
Class A and Class D shares.
Shareholders exchanging into another mutual fund in the Seligman Group will
continue to receive dividends and gains as elected prior to such exchange unless
otherwise specified.
TAXES
Federal Income Taxes
Each Series intends to continue to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended ("Code"). Thus
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qualified, each Series will be relieved of federal income tax on income
distributed to shareholders provided that it distributes each year to its
shareholders at least 90% of its net investment income and net short-term
capital gains, if any.
If, at the close of each quarter of its taxable year, at least 50% of each
Series' total assets is invested in obligations exempt from federal income tax
the Series will be eligible to pay dividends that are excludable by shareholders
from gross income for federal income tax purposes ("exempt interest dividends").
The total amount of exempt interest dividends paid by a Series to shareholders
with respect to any taxable year cannot exceed the amount of federally
tax-exempt interest received by a Series during the year less any expenses
allocable to such interest.
Distributions of net capital gain, i.e., the excess of net long-term capital
gains over net short-term capital losses ("capital gain distributions") are
taxable to shareholders as long-term capital gain, whether received in shares or
cash, regardless of how long a shareholder has held shares in the Series, except
that the portion of net capital gains representing accrued market discount on
tax-exempt obligations acquired after April 30, 1993 will be taxable as ordinary
income. Individual shareholders will be subject to federal income tax on net
capital gains at a maximum rate of 28%. Net long-term capital gain of a
corporate shareholder is taxed at the same rate as ordinary income.
Distributions from a Series' other investment income (other than exempt interest
dividends) or from net realized short-term gain will be taxable to shareholders
as ordinary income, whether received in cash or in additional shares.
Distributions will not, generally, be eligible for the dividends-received
deduction for corporations. Shareholders receiving distributions in the form of
additional shares issued by a Series will be treated for federal income tax
purposes as having received a distribution in an amount equal to the fair market
value on the date of distribution of the shares received.
Interest on indebtedness incurred or continued to purchase or carry shares of
any Series will not be deductible for federal income tax purposes to the extent
that the Series distributions are exempt from federal income tax.
Any gain or loss realized upon a sale or redemption of shares of a Series by
a shareholder who is not a dealer in securities generally will be treated as a
long-term capital gain or loss if the shares have been held for more than twelve
months and otherwise as a short-term capital gain or loss. However, if shares on
which a long-term capital gain distribution has been received are subsequently
sold or redeemed and such shares have been held for six months or less, any loss
realized will be treated as long-term capital loss to the extent that it offsets
the long-term capital gain distribution. Moreover, any loss realized by a
shareholder upon the sale of shares of a Series held six months or less will be
disallowed to the extent of any exempt-interest dividends received by the
shareholders with respect to such shares.
In determining gain or loss on shares of a Series, that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales load incurred
in acquiring such shares to the extent of any subsequent reduction of the sales
load by reason of the Exchange or Reinstatement Privilege offered by a Fund. Any
sales load not taken into account in determining the tax basis of shares sold or
exchanged within 90 days after acquisition will be added to the shareholder's
tax basis in the shares acquired pursuant to the Exchange or Reinstatement
Privilege.
Shareholders are urged to consult their tax advisers concerning the effect of
federal income taxes in their individual circumstances. In particular, persons
who may be "substantial users" (or "related persons" of substantial users) of
facilities financed by industrial development bonds or private activity bonds
should consult their tax advisers before purchasing shares of any Series.
Unless a shareholder includes a taxpayer identification number (social
security number for individuals) on the Account Application and certifies that
such shareholder is not subject to backup withholding, each Fund is required to
withhold and remit to the U.S. Treasury a portion of non-exempt distributions
and other reportable payments to the shareholder. The rate of backup withholding
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is 31%. Shareholders should be aware that, under regulations promulgated by the
Internal Revenue Service, a Fund may be fined up to $50 annually for each
account for which a certified taxpayer identification number is not provided. In
the event that such a fine is imposed with respect to any uncertified account in
any year, a corresponding charge may be made against that account.
California Taxes
In the opinion of Sullivan & Cromwell, counsel to the Funds, provided that at
the end of each quarter of its taxable year at least 50% of the total assets of
the California Quality or California High-Yield Series consist of federally
tax-exempt obligations of the State of California and its political subdivisions
("California Tax-Exempt Securities"), shareholders of each such Series who are
subject to California State taxation on dividends will not be subject to
California personal income taxes on dividends from that Series attributable to
interest received by each such Series on California Tax-Exempt Securities as
well as on certain other federally tax-exempt obligations the interest on which
is exempt from California personal income taxes. To the extent that the
distributions are derived from other income, including long- or short-term
capital gains, such distributions will not be exempt from California personal
income taxation, and, further to the extent that they constitute long-term
capital dividends they will be taxed as long-term gain to a shareholder.
Interest on indebtedness incurred or continued to purchase or carry shares of
the California Quality or California High Yield Series will not be deductible
for California personal income tax purposes to the extent such Series'
distributions are exempt from California personal income tax.
Prospective investors should be aware that an investment in these Series may
not be suitable for persons who are not residents of the State of California or
who do not receive income subject to income taxes of the State.
Colorado Taxes
In the opinion of Ireland, Stapleton, Pryor & Pascoe, Colorado tax counsel to
the Tax-Exempt Fund, individuals, trusts, estates and corporations who are
holders of the Colorado Series and who are subject to the Colorado income tax
will not be subject to Colorado income tax on Colorado Series dividends to the
extent that such distributions qualify as exempt-interest dividends of a
regulated investment company under Section 852(b)(5) of the Code, that are
derived from interest income received by the Colorado Series on (a) obligations
of the State of Colorado or its political subdivisions which are issued on or
after May 1,1980, and if issued before May 1,1980, to the extent such interest
is specifically exempt from income taxation under the laws of the State of
Colorado authorizing the issuance of such obligations, (b) obligations of the
United States and its possessions to the extent included in federal taxable
income, and (c) obligations of territories and possessions of the United States
to the extent federal law exempts interest on such obligations from taxation by
states. To the extent that Colorado Series distributions are attributable to
sources not described in the preceding sentence, such as long or short-term
capital gains, such distributions will not be exempt from Colorado income tax.
There are no municipal income taxes in Colorado. As intangibles, shares in the
Colorado Series are exempt from Colorado property taxes.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Colorado Series, at least 80% of the value of the net assets
of the Colorado Series will be maintained in debt obligations which are exempt
from federal income tax and Colorado income tax.
The Colorado Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Colorado obligations and
exempt from the Colorado income tax.
Florida Taxes
Florida does not presently impose an income tax on individuals and thus
individual shareholders of the Florida Series will not be subject to any Florida
state income tax on distributions received from the Florida Series. However,
Florida imposes an intangible personal property tax on shares of the Florida
Series owned by a Florida resident on January 1 of each year unless such shares
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qualify for an exemption from that tax. The Tax-Exempt Trust has received a
Technical Assistance Advisement from the State of Florida, Department of
Revenue, to the effect that shares of the Florida Series owned by a Florida
resident will be exempt from the intangible personal property tax so long as the
Florida Series' portfolio includes on December 31 of each year only assets, such
as Florida Tax-Exempt Securities and United States Government securities, which
are exempt from that tax. Corporate shareholders may be subject to Florida
income taxes depending on the portion of the income related to the Florida
Series that is allocable to Florida under applicable Florida law.
Georgia Taxes
In the opinion of King & Spalding, Georgia tax counsel to the Tax-Exempt
Fund, under existing Georgia law, shareholders of the Georgia Series will not be
subject to Georgia income taxes on dividends with respect to shares of the
Georgia Series to the extent that such distributions represent "exempt-interest
dividends" for federal income tax purposes that are attributable to
interest-bearing obligations issued by or on behalf of the State of Georgia or
its political subdivisions, or by the governments of Puerto Rico, the Virgin
Islands or Guam (collectively, "Georgia Obligations"), which are held by the
Georgia Series. Dividends, if any, derived from capital gains or other sources
generally will be taxable to shareholders of the Georgia Series for Georgia
income tax purposes. For purposes of the Georgia intangibles tax, shares of the
Georgia Series are taxable to shareholders who are otherwise subject to the
Georgia intangibles tax.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Georgia Series, at least 80% of the value of the net assets
of the Georgia Series will be maintained in debt obligations which are exempt
from federal income tax and Georgia income taxes.
The Georgia Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Georgia Obligations and exempt
from Georgia income taxes.
Louisiana Taxes
In the opinion of Liskow & Lewis, Louisiana tax counsel to the Tax-Exempt
Fund, based upon a private ruling obtained from the Louisiana Department of
Revenue and Taxation (the "Department"), and subject to the current policies of
the Department, shareholders of the Louisiana Series who are either corporations
or individuals and residents of the State of Louisiana and who are otherwise
subject to Louisiana income tax will not be subject to Louisiana income tax on
Louisiana Series dividends to the extent that such dividends are attributable to
interest on tax-exempt obligations of the State of Louisiana or its political or
governmental subdivisions, its governmental agencies or instrumentalities. To
the extent that distributions on the Louisiana Series are attributable to
sources other than those described in the preceding sentence, such
distributions, including but not limited to, long-term or short-term capital
gains, will not be exempt from Louisiana income tax.
Non-resident individuals maintaining their domicile other than in the State
of Louisiana will not be subject to Louisiana income tax on their Louisiana
Series dividends.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Louisiana Series, the Tax-Exempt Fund will maintain at least
80% of the value of the net assets of the Louisiana Series in debt obligations
which are exempt from federal income tax and exempt from Louisiana income tax.
The Louisiana Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Louisiana obligations and
exempt from Louisiana income tax.
Maryland Taxes
In the opinion of Venable, Baetjer and Howard, LLP, Maryland tax counsel to
the Tax-Exempt Fund, as long as dividends paid by the Maryland Series qualify as
interest excludable under Section 103 of the Code and the Maryland Series
qualifies as a "regulated investment company" under the Code, the portion of
exempt-interest dividends that represents interest received by the Maryland
Series on obligations (a) of Maryland or its political subdivisions and
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authorities, or (b) of the United States or an authority, commission,
instrumentality, possession or territory of the United States, will be exempt
from Maryland state and local income taxes when allocated or distributed to a
shareholder of the Maryland Series.
Gain realized by the Maryland Series from the sale or exchange of a bond
issued by Maryland or a political subdivision of Maryland, or of the United
States or an authority, commission or instrumentality of the United States will
not be subject to Maryland state and local income taxes.
To the extent that distributions of the Maryland Series are attributable to
sources other than those described in the preceding sentences, such as interest
received by the Maryland Series on obligations issued by states other than
Maryland, income earned on repurchase contracts, or gains realized by a
shareholder upon a redemption or exchange of Maryland Series shares, such
distributions will be subject to Maryland state and local income taxes.
Income earned on certain private activity bonds will constitute a Maryland
tax preference for individual shareholders.
Interest on indebtedness incurred or continued (directly or indirectly) by a
shareholder of the Maryland Series to purchase or carry shares of the Maryland
Series will not be deductible for Maryland state and local income tax purposes
to the extent such interest is allocable to exempt-interest dividends.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Maryland Series, at least 80% of the value of the net assets
of the Maryland Series will be maintained in debt obligations which are exempt
from federal income tax and are exempt from Maryland state and local income
taxes.
The Maryland Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Maryland obligations and
exempt from Maryland state and local income taxes.
Massachusetts Taxes
In the opinion of Palmer & Dodge, Massachusetts tax counsel to the Tax-Exempt
Fund, assuming that the Tax-Exempt Fund gives the notices described at the end
of this section, holders of the Massachusetts Series who are subject to the
Massachusetts personal income tax will not be subject to tax on distributions
from the Massachusetts Series to the extent that these distributions qualify as
exempt-interest dividends of a regulated investment company under Section
852(b)(5) of the Code which are directly attributable to interest on obligations
issued by the Commonwealth of Massachusetts, its instrumentalities or its
political subdivisions or by the government of Puerto Rico or by its authority,
by the government of Guam or by its authority, or by the government of the
Virgin Islands or its authority (collectively, "Massachusetts Obligations").
Except to the extent excluded as capital gain, distributions of income to
Massachusetts holders of the Massachusetts Series that are attributable to
sources other than those described in the preceding sentence will be includable
in the Massachusetts income of the holders of the Massachusetts Series.
Distributions will not be subject to tax to the extent that they qualify as
capital gain dividends which are attributable to obligations issued by the
Commonwealth of Massachusetts, its instrumentalities or political subdivisions
under any provision of law which exempts capital gain on the obligation from
Massachusetts income taxation. Distributions which qualify as capital gain
dividends under Section 852(b)(3)(C) of the Code and which are includable in
Federal gross income will be includable in the Massachusetts income of a holder
of the Massachusetts Series as capital gain.
Massachusetts Series dividends are not excluded in determining the
Massachusetts excise tax on corporations.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Massachusetts Series, the Tax-Exempt Fund will maintain at
least 80% of the value of the net assets of the Massachusetts Series in debt
obligations which are exempt from federal income tax and Massachusetts personal
income tax.
The Massachusetts Series will notify its shareholders within 60 days after
the close of the year as to the interest and capital gains derived from
Massachusetts Obligations and exempt from Massachusetts personal income tax.
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Michigan Taxes
In the opinion of Dickinson, Wright, Moon, Van Dusen & Freeman, Michigan tax
counsel to the Tax-Exempt Fund, holders of the Michigan Series who are subject
to the Michigan income tax or single business tax will not be subject to the
Michigan income tax or single business tax on Michigan Series dividends to the
extent that such distributions qualify as exempt-interest dividends of a
regulated investment company under Section 852(b)(5) of the Code which are
attributable to interest on tax-exempt obligations of the State of Michigan, or
its political or governmental subdivisions, its governmental agencies or
instrumentalities (as well as certain other federally tax-exempt obligations,
the interest on which is exempt from Michigan tax, such as, for example, certain
obligations of Puerto Rico) (collectively, "Michigan Obligations"). To the
extent that distributions on the Michigan Series are attributable to sources
other than those described in the preceding sentence, such distributions,
including, but not limited to, long or short-term capital gains, will not be
exempt from Michigan income tax or single business tax. The Michigan Department
of Treasury has issued a bulletin stating that holders of interests in regulated
investment companies who are subject to the Michigan intangibles tax will be
exempt from the tax to the extent that the investment portfolio consists of U.S.
obligations and obligations of the State of Michigan or of its political
subdivisions. In addition, Michigan Series shares owned by certain financial
institutions or by certain other persons subject to the Michigan single business
tax are not subject to the Michigan intangibles tax. To the extent the
distributions on the Michigan Series are not subject to Michigan income tax,
they are not subject to the uniform city income tax imposed by certain Michigan
cities.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Michigan Series, at least 80% of the value of the net assets
of the Michigan Series will be maintained in debt obligations which are exempt
from federal income tax and Michigan income and single business taxes.
The Michigan Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Michigan Obligations and
exempt from Michigan income tax.
Minnesota Taxes
In the opinion of Faegre & Benson Professional Limited Liability Partnership,
Minnesota tax counsel to the Tax-Exempt Fund, provided that the Minnesota Series
qualifies as a "regulated investment company" under the Code, shareholders of
the Minnesota Series who are individuals, estates, or trusts and who are subject
to the regular Minnesota personal income tax will not be subject to such regular
Minnesota tax on Minnesota Series dividends to the extent that such
distributions qualify as exempt-interest dividends of a regulated investment
company under Section 852(b)(5) of the Code which are derived from interest on
tax-exempt obligations of the State of Minnesota, or its political or
governmental subdivisions, municipalities, governmental agencies or
instrumentalities. The foregoing will apply, however, only if the portion of the
exempt-interest dividends from such Minnesota sources that is paid to all
shareholders represents 95% or more of the exempt-interest dividends that are
paid by the Minnesota Series. If the 95% test is not met, all exempt-interest
dividends that are paid by the Minnesota Series will be subject to the regular
Minnesota personal income tax. Even if the 95% test is met, to the extent that
exempt-interest dividends that are paid by the Minnesota Series are not derived
from the Minnesota sources described in the first sentence of this paragraph,
such dividends will be subject to the regular Minnesota personal income tax.
Other distributions of the Minnesota Series, including distributions from net
short-term and long-term capital gains, are generally not exempt from the
regular Minnesota personal income tax.
Minnesota presently imposes an alternative minimum tax on individuals,
estates, and trusts that is based, in part, on such taxpayers' federal
alternative minimum taxable income, which includes federal tax preference items.
The Code provides that interest on specified private activity bonds is a federal
tax preference item, and that an exempt-interest dividend of a regulated
investment company constitutes a federal tax preference item to the extent of
its proportionate share of the interest on such private activity bonds.
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Accordingly, shareholders of the Minnesota Series who are individuals, estates,
or trusts may be subject to the Minnesota alternative minimum tax as a result of
the receipt of exempt-interest dividends that are attributable to such private
activity bond interest, even though they are also derived from the Minnesota
sources described in the paragraph above. In addition, the entire portion of
exempt-interest dividends that is received by such shareholders and that is
derived from sources other than the Minnesota sources described in the paragraph
above is subject to the Minnesota alternative minimum tax. Further, should the
95% test that is described in the paragraph above fail to be met, all of the
exempt-interest dividends that are paid by the Minnesota Series, including all
of those that are derived from the Minnesota sources described in the paragraph
above, will be subject to the Minnesota alternative minimum tax, in the case of
shareholders of the Minnesota Series who are individuals, estates or trusts.
Subject to certain limitations that are set forth in the Minnesota rules,
Minnesota Series dividends, if any, that are derived from interest on certain
United States obligations are not subject to the regular Minnesota personal
income tax or the Minnesota alternative minimum tax, in the case of shareholders
of the Minnesota Series who are individuals, estates, or trusts.
Minnesota Series distributions, including exempt-interest dividends, are not
excluded in determining the Minnesota franchise tax on corporations that is
measured by taxable income and alternative minimum taxable income. Minnesota
Series distributions may also be taken into account in certain cases in
determining the minimum fee that is imposed on corporations, S corporations, and
partnerships.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Minnesota Series, at least 80% of the value of the net assets
of the Minnesota Series will be maintained in debt obligations which are exempt
from the federal income tax and the Minnesota personal income tax. The Minnesota
Series will invest so that the 95% test described in the paragraphs above is
met.
The Minnesota Series will notify its shareholders within 30 days after the
close of the year as to the interest derived from Minnesota obligations and
exempt from the Minnesota personal income tax.
Missouri Taxes
In the opinion of Bryan Cave, Missouri tax counsel to the Tax-Exempt Fund,
dividends distributed to individual shareholders of the Missouri Series will be
exempt from the Missouri personal income tax imposed by Chapter 143 of the
Missouri Revised Statutes to the extent that such dividends qualify as exempt
interest dividends of a regulated investment company under Section 852(b)(5) of
the Code and are derived from interest on obligations of the State of Missouri
or any of its political subdivisions or authorities or obligations issued by the
government of Puerto Rico or its authority (collectively, "Missouri
Obligations"). Capital gain dividends, as defined in Section 852(b)(3) of the
Code, distributable by the Fund to individual resident shareholders of the
Missouri Series, to the extent includable in federal adjusted gross income, will
be subject to Missouri income taxation. Shares in the Missouri Series are not
subject to Missouri personal property taxes.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Missouri Series, at least 80% of the value of the net assets
of the Missouri Series will be maintained in debt obligations which are exempt
from federal income tax and Missouri personal income tax.
The Missouri Series will notify its shareholders within 60 days after the
close of the year as to the interest derived from Missouri Obligations and
exempt from the Missouri personal income tax.
New Jersey Taxes
In the opinion of McCarter & English, New Jersey counsel to the New Jersey
Fund, income distributions paid from a "qualified investment fund" are exempt
from the New Jersey personal income tax, to the extent attributable to
tax-exempt obligations specified by New Jersey law. As defined in N.J.S.A.
54A:6-14.1, a "qualified investment fund" is any investment or trust company, or
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series of such investment company or trust registered with the Securities and
Exchange Commission, which for the calendar year in which a distribution is
paid, which has no investments other than interest-bearing obligations,
obligations issued at a discount, and cash and cash items, including
receivables, and which has at least 80% of the aggregate principal amount of all
its investments, excluding cash and cash items, including receivables, invested
in obligations issued by New Jersey, or in obligations that are free from state
or local taxation under New Jersey and federal laws such as obligations issued
by the governments of Puerto Rico, Guam or the Virgin Islands ("Tax-Exempt
Securities"). Interest income and gains realized by the New Jersey Fund upon
disposition of obligations and distributed to the shareholders are exempt from
the New Jersey personal income tax to the extent attributable to Tax-Exempt
Securities. Gains resulting from the redemption or sale of shares of the New
Jersey Fund would also be exempt from the New Jersey personal income tax.
The New Jersey personal income tax is not applicable to corporations. For all
corporations subject to the New Jersey Corporate Business Tax, interest on
Tax-Exempt Securities is included in the net income tax base for purposes of
computing the corporation business tax. Furthermore, any gain upon the
redemption or sale of shares by a corporate shareholder is also included in the
net income tax base for purposes of computing the Corporation Business Tax.
The New Jersey Fund will notify shareholders by February 15 of each calendar
year as to the amounts of all such dividends and distributions which are exempt
from federal income taxes and New Jersey personal income tax and the amounts, if
any, which are subject to such taxes. Shareholders are, however, urged to
consult with their own tax advisors as to the federal, state or local tax
consequences in their specific circumstances.
Prospective investors should be aware that an investment in a state
tax-exempt fund may not be suitable for persons who do not receive income
subject to income taxes of such state.
New York State and City Taxes
In the opinion of Sullivan & Cromwell, counsel to the Funds, holders of the
New York Series who are subject to New York State and City tax on dividends will
not be subject to New York State and City personal income taxes on New York
Series dividends to the extent that such distributions qualify as
exempt-interest dividends under Section 852(b)(5) of the Code and represent
interest income attributable to federally tax-exempt obligations of the State of
New York and its political subdivisions (as well as certain other federally
tax-exempt obligations the interest on which is exempt from New York State and
City personal income taxes such as, for example, certain obligations of Puerto
Rico) (collectively, "New York Obligations"). To the extent that distributions
on the New York Series are derived from other income, including long or
short-term capital gains, such distributions will not be exempt from State or
City personal income taxes.
Dividends on the New York Series are not excluded in determining New York
State or City franchise taxes on corporations and financial institutions.
Except during temporary defensive periods or when acceptable investments are
unavailable to the New York Series, the Tax-Exempt Fund will maintain at least
80% of the value of the net assets of the New York Series in debt obligations
which are exempt from federal income tax and New York State and City personal
income taxes.
The Series will notify its shareholders within 45 days after the close of the
year as to the interest derived from New York Obligations and exempt from New
York State and City personal income taxes.
North Carolina Taxes
In the opinion of Horack, Tally, Pharr & Lowndes, tax counsel to the North
Carolina Series, distributions from the North Carolina Series to shareholders
subject to North Carolina income taxes will not be taxable for North Carolina
income tax purposes to the extent the distributions either (i) qualify as
exempt-interest dividends of a regulated investment company under the Code and
are attributable to interest on obligations issued by the State of North
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Carolina and its political subdivisions or (ii) are dividends attributable to
interest on direct obligations of the United States government and agencies and
possessions of the United States, so long as in both cases the North Carolina
Series provides a supporting statement to the shareholders designating the
portion of the dividends of the North Carolina Series attributable to interest
on obligations issued by the State of North Carolina and its political
subdivisions or direct obligations of the United States government and agencies
and possessions of the United States. In the absence of such a statement, the
total amount of the dividends will be taxable for North Carolina income tax
purposes. Distributions attributable to other sources, including exempt-interest
dividends attributable to interest on obligations of states other than North
Carolina and the political subdivisions of such other states as well as capital
gains, will be taxable for North Carolina income tax purposes.
The North Carolina Series will notify its shareholders within sixty days
after the close of its taxable year as to the amount of dividends and
distributions to the shareholders of the North Carolina Series which are exempt
from North Carolina income taxes and the dollar amount, if any, which is subject
to North Carolina income taxes.
For purposes of the North Carolina tax on the value of intangible personal
property, there will be allowed a percentage reduction in the value of the
shares of the North Carolina Series equal to the percentage of the North
Carolina Series invested in direct obligations of the United States government
and agencies and possessions of the United States and obligations of the State
of North Carolina and its political subdivisions and agencies. In order for this
percentage reduction to apply, information regarding the composition of the
investments of the North Carolina Series must be submitted annually to the North
Carolina Department of Revenue by the North Carolina Series. The North Carolina
Series will provide such information and the percentage reduction in the value
of the shares of the North Carolina Series for North Carolina intangibles tax
purposes to the shareholders annually.
Ohio Taxes
In the opinion of Squire, Sanders & Dempsey, Ohio tax counsel to the
Tax-Exempt Fund, holders of the Ohio Series who are subject to the Ohio personal
income tax, the net income base of the Ohio corporation franchise tax, or school
district or municipal income taxes in Ohio will not be subject to such taxes on
dividend distributions with respect to shares of the Ohio Series to the extent
that such distributions are properly attributable to interest (including accrued
original issue discount) on obligations issued by or on behalf of the State of
Ohio, political subdivisions thereof, or agencies or instrumentalities thereof
("Ohio Obligations"), or by the government of Puerto Rico, the Virgin Islands or
Guam, provided that the Ohio Series qualifies as a "regulated investment
company" for federal income tax purposes and that at all times at least 50% of
the value of the total assets of the Ohio Series consists of Ohio Obligations or
similar obligations of other states or their subdivisions. It is assumed for
purposes of this discussion of Ohio taxes that these requirements are satisfied.
Shares of the Ohio Series will be included in a corporation's tax base for
purposes of computing the Ohio corporation franchise tax on the net worth basis.
Dividends on shares of the Ohio Series that are attributable to gain from the
sale, exchange or other disposition of Ohio Obligations held by the Ohio Series
are not subject to the Ohio personal income tax, the net income base of the Ohio
corporation franchise tax, or school district or municipal income taxes in Ohio.
The Ohio Series is not subject to the Ohio personal income tax, Ohio school
district income taxes, the Ohio corporation franchise tax, or the Ohio dealers
in intangibles tax, provided that, with respect to the Ohio corporation
franchise tax and the Ohio dealers in intangibles tax, the Tax-Exempt Fund
complies with certain reporting requirements.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Ohio Series, the Tax-Exempt Fund will maintain at least 80%
of the value of the net assets of the Ohio Series in debt obligations which are
exempt from federal income tax and the Ohio personal income tax and the net
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income base of the Ohio corporation franchise tax.
The Ohio Series will notify its shareholders within 60 days after the close
of the year as to the status for Ohio tax purposes of distributions with respect
to shares of the Ohio Series.
Oregon Taxes
In the opinion of Schwabe, Williamson & Wyatt, Oregon tax counsel to the
Tax-Exempt Fund, under present law, individual shareholders of the Oregon Series
will not be subject to Oregon personal income taxes on distributions received
from the Oregon Series to the extent that such distributions (1) qualify as
"exempt-interest dividends" under Section 852 (b)(5) of the Code and (2) are
derived from interest on obligations of the State of Oregon or any of its
political subdivisions or authorities or from interest on obligations of the
governments of Puerto Rico, Guam, the Virgin Islands or the Northern Mariana
Islands (collectively, "Oregon Obligations"). Other distributions, including any
long-term and short-term capital gains, will generally not be exempt from
personal income taxes in Oregon.
No portion of distributions from the Oregon Series are exempt from Oregon
excise tax on corporations. However, shares of the Oregon Series are not subject
to Oregon property tax.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Oregon Series, at least 80% of the value of the net assets of
the Oregon Series will be maintained in debt obligations, the interest payments
of which are exempt from federal income tax and Oregon personal income taxes.
The Oregon Series will notify its shareholders within 60 days after the close
of the year as to the interest derived from Oregon Obligations and exempt from
Oregon personal income taxes.
Pennsylvania Taxes
In the opinion of Ballard Spahr Andrews & Ingersoll, Pennsylvania tax counsel
to the Pennsylvania Fund, individual shareholders of the Pennsylvania Fund who
are subject to the Pennsylvania personal income tax will not be subject to
Pennsylvania personal income tax on distributions from the Pennsylvania Fund to
the extent that such distributions are attributable to interest paid on
Pennsylvania Tax-Exempt Securities or U.S. Government obligations. Distributions
attributable to most other sources, including distributions attributable to gain
on the sale of such instruments, will not be exempt from Pennsylvania personal
income tax.
The same rules apply under the tax imposed by the Philadelphia School
District on the unearned income of Philadelphia residents, except that all
capital gain distributions are exempt from the School District tax regardless of
the source from which they are paid.
Corporate shareholders who are subject to the Pennsylvania corporate net
income tax will not be subject to corporate net income tax on distributions from
the Pennsylvania Fund that qualify as "exempt-interest dividends" for federal
income tax purposes or are derived from interest on U.S. Government obligations.
Individual shareholders of the Pennsylvania Fund who are subject to the
Pennsylvania personal property tax will be exempt from Pennsylvania personal
property tax on their shares of the Pennsylvania Fund to the extent that the
Pennsylvania Fund portfolio consists of Pennsylvania Tax-Exempt Securities and
U.S. Government obligations on the annual assessment date. Corporations are not
subject to Pennsylvania personal property taxes.
Shareholders will receive an annual Statement of Account and information
regarding the federal and Pennsylvania income tax status of all distributions
made during the year. Information will also be provided to individual
Pennsylvania shareholders regarding the portion of the value of their shares, if
any, subject to Pennsylvania personal property tax.
Prospective investors should be aware that an investment in the Pennsylvania
Fund may not be suitable for persons who are not residents of the State of
Pennsylvania or who do not receive income subject to income taxes of the State.
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South Carolina Taxes
In the opinion of Sinkler & Boyd, South Carolina tax counsel to the
Tax-Exempt Fund, shareholders of the South Carolina Series who are subject to
South Carolina individual or corporate income taxes will not be subject to such
taxes on South Carolina Series' dividends to the extent that such dividends
qualify as either (1) exempt-interest dividends of a regulated investment
company under Section 852(b)(5) of the Code, which are derived from interest on
tax-exempt obligations of the State of South Carolina or any of its political
subdivisions or on obligations of the Government of Puerto Rico that are exempt
from federal income tax; or (2) dividends derived from interest or dividends on
obligations of the United States and its possessions or on obligations or
securities of any authority or commission exempt from state income taxes under
the laws of the United States (collectively, "South Carolina Obligations"). To
the extent that South Carolina Series' distributions are attributable to other
sources, such as long or short-term capital gains, such distributions will not
be exempt from South Carolina taxes.
Except during temporary defensive periods or when acceptable investments are
unavailable to the South Carolina Series, at least 80% of the value of the net
assets of the South Carolina Series will be maintained in debt obligations which
are exempt from federal income tax and South Carolina income tax.
The South Carolina Series will notify its shareholders within 60-days after
the close of the year as to the interest derived from South Carolina Obligations
and exempt from South Carolina income taxes.
Other State and Local Taxes
The exemption of interest on tax-exempt securities for federal income tax
purposes does not necessarily result in exemption under the income tax laws of
any state or city. Except as noted above with respect to a particular state,
distributions from a Fund may be taxable to investors under state and local law
even though all or a part of such distributions may be derived from federally
tax-exempt sources or from obligations which, if received directly, would be
exempt from such income tax. In some states, shareholders of the National Series
may be afforded tax-exempt treatment on distributions to the extent they are
derived from tax-exempt securities issued by that state or its localities.
Prospective investors should be aware that an investment in a certain State
Series may not be suitable for persons who are not residents of the designated
state or who do not receive income subject to income taxes in that state.
Shareholders should consult their own tax advisers.
SHAREHOLDER INFORMATION
Shareholders will be sent semi-annual reports regarding their Fund. General
information about the Funds may be requested by writing the Corporate
Communications/Investor Relations Department, J. & W. Seligman & Co.
Incorporated, 100 Park Avenue, New York, New York 10017 or telephoning the
Corporate Communications/ Investor Relations Department toll-free by dialing
800-221-7844 from all continental United States, except New York or (212)
850-1864 in New York State and the Greater New York City area. Information about
shareholder accounts may be requested by writing Shareholder Services, Seligman
Data Corp., at the same address or by toll-free telephone by dialing
800-221-2450 from all continental United States. Seligman Data Corp. may be
telephoned Monday through Friday (except holidays), between the hours of 8:30
a.m. and 5:30 p.m. Eastern time and calls will be answered by our service
representatives. 24-hour automated telephone access is available by dialing
1-800-622-4597 on a touchtone phone which provides instant access to price,
yield, account balance, most recent transaction and other information. In
addition, account statements, Form 1099 DIVS and checkbooks can be ordered. To
insure prompt delivery of checks, account statements and other information,
Seligman Data Corp., should be notified immediately in writing of any address
change. Address changes may be telephoned to Seligman Data Corp. if the
shareholder has elected telephone services. For more information about telephone
services, see "Telephone Transactions" above.
Account Services. Shareholders are sent confirmation of financial
transactions.
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Other investor services are available. These include:
o Invest-A-Check(R) enables a shareholder to authorize checks to be drawn on
a checking account at regular intervals for fixed amounts of $50 or more, to
purchase shares. (See "Terms and Conditions" on page 50.)
o Automatic Dollar-Cost-Averaging Service. The Automatic
Dollar-Cost-Averaging Service permits a shareholder of Seligman Cash
Management Fund to exchange a specified amount, of at least $100, into Class
A shares of a Fund at regular monthly or quarterly intervals. The shares of
Seligman Cash Management Fund and the Fund must be registered in the same
name. If the shareholder is opening a new fund account through this service,
a minimum exchange of $1,000 is required.
o Dividends From Other Investments permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Series. (Dividend checks must meet or exceed the required
minimum purchase amount and include the shareholder's name, the name of the
Series and the class of shares in which the investment is to be made and the
shareholder's Series' account number.)
o Automatic CD Transfer Service permits a shareholder to instruct a bank to
invest the proceeds of a maturing bank certificate of deposit ("CD") in
shares of any designated Seligman Mutual Fund. Shareholders who wish to use
this service, should contact Seligman Data Corp. or a broker to obtain the
necessary documentation. Banks may charge a penalty on CD assets withdrawn
prior to maturity. Accordingly, it will not normally be advisable to
liquidate a CD before its maturity.
o Payments at Regular Intervals can be made to a shareholder who owns or
purchases Class A shares worth $5,000 or more and they are held as book
credits under the Automatic Cash Withdrawal Service. Holders of Class D
shares may elect to use this service with respect to shares that have been
held for at least one year. (See "Terms and Conditions" on page 50.)
o Directed Dividends allows a shareholder to pay dividends to another person
or to be directed to another mutual fund in the Seligman Group for purchase
at net asset value. Dividends on Class A and Class D shares may be directed
only to shares of the same class of another mutual fund in the Seligman
Group.
o Overnight Delivery to service shareholder requests is available for a
$15.00 fee which may be deducted from a shareholder's account, if requested.
o Copies of Account Statements will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for years prior thereto are available for a fee of $10.00 per
year, per account, with a maximum charge of $150 per account. Statement
requests should be forwarded, along with a check to Seligman Data Corp.
ADVERTISING A FUND'S PERFORMANCE
From time to time, a Series advertises its "yield," "tax equivalent yield,"
"average annual total return" and "total return" each of which are calculated
separately for each Series' Class A and Class D shares. These figures are based
on historical earnings and are not intended to indicate future performance. The
"yield" of a Series' class refers to the income generated by an investment in
the Series over a 30-day period. This income is then "annualized." That is, the
amount of income generated by the investment during that 30-day period is
assumed to be generated each 30-day period for twelve periods and is shown as a
percentage of the investment. The income earned on the investment is also
assumed to be reinvested at the end of the sixth 30-day period. The "tax
equivalent yield" is calculated similarly to the "yield," except that the yield
is increased using a stated income tax rate to demonstrate the taxable yield
necessary to produce an after-tax yield equivalent to the Series. The "average
annual total return" is the annual rate required for the initial payment to grow
to the amount which would be received at the end of the specified period (one
year, five years, and ten years or since the inception of the Series), i.e., the
average annual compound rate of return, assuming the payment of the maximum
sales load, if any, when the investment was first made and that all
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distributions and dividends by the Series were reinvested on the reinvestment
dates during the period. Total return is calculated with these same assumptions
and shows the aggregate return on an investment in a class over a specified
period (one year, five years and ten years or since the inception of the
Series). Class A total return and average annual total return quoted from time
to time are not adjusted for periods prior to commencement dates, December 27,
1990, in the case of the Florida Series, and January 1, 1993, in the case of the
California High-Yield Series, California Quality Series, and each Series of the
Tax-Exempt Fund, for the annual administration, shareholder services and
distribution fee. Such fee, if reflected, would reduce the performance quoted.
The waiver by the Manager of its fees and reimbursement of certain expenses
during certain periods (as set forth under "Financial Highlights" herein) would
positively affect the performance results quoted.
From time to time, reference may be made in advertising or promotional
material to mutual fund rankings prepared by Lipper Analytical Service, Inc.
("Lipper"), an independent reporting service that monitors the performance of
mutual funds. Lipper ranks funds in various categories by making comparative
calculations using total return. Each Series may quote its Lipper ranking in the
Municipal Bond Fund category or the Single State Municipal Bond Fund category or
its Lipper ranking for all municipal bond funds monitored by Lipper. In
addition, each class of a Series may compare its total return over a certain
period with the average performance of all funds in these Lipper categories for
the same period. As is the case, in calculating the total return of a Series'
Class A and Class D shares, the Lipper analysis assumes investment of all
dividends and distributions paid but does not take into account applicable sales
loads. A Series may also refer in advertisements, or in other promotional
material to articles, comments, listings and columns in the financial and other
press pertaining to a Series' performance. Examples of such financial and other
press publications include Barron's, Business Week, CDA/Wiesenberger Mutual
Funds Investment Report, Christian Science Monitor, Financial Planning,
Financial Times, Financial World, Forbes, Fortune, Individual Investor,
Investment Advisor, Investors Business Daily, Kiplinger's, Los Angeles Times,
MONEY Magazine, Morningstar, Inc., Pensions and Investments, Smart Money, The
New York Times, The Wall Street Journal, USA Today, U.S. News and World Report,
Washington Post, Worth Magazine and Your Money.
ORGANIZATION AND CAPITALIZATION
Each Fund is a non-diversified, open-end management investment company, as
defined in the 1940 Act. The New Jersey Fund was incorporated in Maryland on
March 13, 1987. The Pennsylvania Fund was organized as an unincorporated trust
under the laws of the Commonwealth of Pennsylvania by a Declaration of Trust
dated May 13, 1986. The Tax-Exempt Fund was incorporated in Maryland on August
8, 1983. The Tax-Exempt Trust was established under the laws of the Commonwealth
of Massachusetts by a Declaration of Trust dated July 27, 1984.
The Directors or Trustees of the Funds have authority to create and classify
shares of capital stock or beneficial interest in separate Series, without
further action by shareholders. The Declarations of Trust of the Pennsylvania
Fund and the Tax-Exempt Trust permit the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest in separate Series. To
date, shares of thirteen Series of the Tax-Exempt Fund, four Series of
Tax-Exempt Trust, one Series of the New Jersey Fund and one Series of the
Pennsylvania Fund have been authorized, which shares constitute the interests in
the Series described herein. Further series may be added in the future. Each of
the Series capital stock or shares of beneficial interest has a par value of
$.001 per share and is divided into two classes. Each share of each Series'
Class A and Class D common stock or beneficial interest, is equal as to
earnings, assets and voting privileges, except that each class bears its own
separate distribution and certain other class expenses and has exclusive voting
rights with respect to any matter to which a separate vote of any class is
required by the 1940 Act or applicable state law. Each Fund has received an
order from the Securities and Exchange Commission permitting the issuance and
sale of multiple classes of common stock or beneficial interests. The 1940 Act
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requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. In accordance with the Articles of Incorporation or Declaration of Trust
of each Fund, the Board of Directors or Trustees may authorize the creation of
additional classes of common stock or beneficial interest with such
characteristics as are permitted by the order received from the Securities and
Exchange Commission. Shares entitle their holders to one vote per share. Shares
have noncumulative voting rights, do not have preemptive or subscription rights
and are transferable.
It is the intention of the Funds not to hold Annual Meetings of Shareholders.
The Directors or Trustees may call Special Meetings of Shareholders for action
by shareholder vote as may be required by the 1940 Act, or a Fund's Declaration
of Trust or Articles of Incorporation. Pursuant to the 1940 Act, shareholders
have to approve the adoption of any management contract, distribution plan and
any changes in fundamental investment policies. Shareholders also have the right
to call a meeting of shareholders for the purpose of voting on the removal of
one or more Directors or Trustees.
The shareholders of a Massachusetts business trust (the Tax-Exempt Trust) or
a Pennsylvania trust (the Pennsylvania Fund), could, under certain
circumstances, be held personally liable as partners of its obligations.
However, the Declaration of Trust of each of the Tax-Exempt Trust and the
Pennsylvania Fund, contains an express disclaimer of shareholder liability for
acts or obligations of the Trusts and also provides, for idemnification and
reimbursement of expenses out of the Trusts, or Series thereof, for any
shareholder held personally liable for obligations of the Trust, or Series
thereof.
There is a possibility that one Fund might be liable for any misstatement,
inaccuracy, or incomplete disclosure in this Prospectus concerning any other
Fund contained herein. Based on the advice of counsel, however, the Funds
believe that the potential liability of each Fund with respect to the disclosure
in this Prospectus extends only to the disclosure relating to that Fund.
49
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50
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TERMS AND CONDITIONS
General Account Information
Investments will be made in as many shares of a Series, including fractions
to the third decimal place, as can be purchased at the net asset value plus a
sales load, if applicable, at the close of business on the day payment is
received. If your check received in payment of a purchase of shares is
dishonored for any reason, Seligman Data Corp. may cancel the purchase and may
also redeem additional shares, if any, held in your account in an amount
sufficient to reimburse the Fund for any loss it may have incurred and charge a
$10.00 return check fee. Shareholders will receive dividends from investment
income and any distributions from gain realized on investments in shares or in
cash according to the option elected. Dividend and gain options may be changed
by notifying Seligman Data Corp. in writing at least five business days prior to
the payable date. Stock certificates will not be issued unless requested.
Replacement stock certificates will be subject to a surety fee.
Invest-A-Check(R) Service
The Invest-A-Check(R) Service is available to all shareholders. Your
application is subject to acceptance by your bank and Seligman Data Corp. Checks
in the amount specified will be drawn automatically on your bank on the fifth
day of each month (or on the prior business day if the fifth day of the month
falls on a weekend or holiday) in which an investment is scheduled and invested
at the public offering price at the close of business on the same date. After
the initial investment, the value of shares held in your Account must equal not
less than two regularly scheduled investments. If a check is not honored by your
bank, or if the value of shares held falls below the required minimum, the
Service will be suspended. In the event that a check is returned marked
"unpaid," Seligman Data Corp. will cancel the purchase, redeem shares held in
your account for an amount sufficient to reimburse the Fund for any loss it may
have incurred as a result, and charge a $10.00 return check fee. This fee may be
debited from your account. Service will be reinstated upon written request
indicating that the cause of interruption has been corrected. The Service may be
terminated by you or Seligman Data Corp. at any time by written notice. You
agree to hold the Funds and their agents free from all liability which may
result from acts done in good faith and pursuant to these terms. Instructions
for establishing Invest-A-Check(R) Service are given on the Account Application.
In the event you exchange all of your shares from one mutual fund in the
Seligman Group to another, you must re-apply for the Invest-A-Check(R) Service
in the Seligman Fund into which your exchange was made. In the event of a
partial exchange, the Invest-A-Check(R) Service will be continued, subject to
the above conditions, in the Seligman Fund from which the exchange was made.
Automatic Cash Withdrawal Service
Automatic Cash Withdrawal Service is available to Class A shareholders and
to Class D shareholders with respect to Class D shares held for one year or
more. A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment. Redemptions will be made at
the asset value at the close of business on the 15th day of each month (or on
the prior business day if the 15th falls on a weekend or holiday). You may
change the amount of scheduled payments or you may suspend payments by written
notice to Seligman Data Corp. at least ten days prior to the effective date of
such a change or suspension. Your Service may be terminated by you or Seligman
Data Corp. at any time by written notice. It will be terminated upon proper
notification of the death or legal incapacity of the shareholder. This Service
is considered terminated in the event a withdrawal of shares, other than to make
scheduled withdrawal payments, reduces the value of shares remaining on deposit
to less than $5,000. Continued payments in excess of dividend income invested
will reduce and ultimately exhaust capital. Withdrawals, concurrent with
purchases of shares of this or any other investment company, will be
disadvantageous to you because of the payment of duplicative sales loads, if
applicable. For this reason, additional purchases of Fund shares are discouraged
when the Withdrawal Service is in effect.
Letter of Intent -- Class A Shares Only
Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to you or credited to your Account. Upon completion
of the specified minimum purchase within the thirteen-month period, all shares
held in escrow will be deposited in your Account or delivered to you. You may
include the total asset value of shares of the Seligman Funds (on which a sales
load was paid) owned as of the date of a Letter of Intent toward the completion
of the Letter. If the total amount invested within the thirteen-month period
does not equal or exceed the specified minimum purchase, you will be requested
to pay the difference between the amount of the sales load paid and the amount
of the sales load applicable to the total purchase made. If, within 20 days
following the mailing of a written request, you have not paid this additional
sales load to Seligman Financial Services, sufficient escrowed shares will be
redeemed for payment of the additional sales load. Shares remaining in escrow
after this payment will be released to your Account. The intended purchase
amount may be increased at any time during the thirteen-month period by filing a
revised Agreement for the same period, provided that your Dealer furnishes
evidence that an amount representing the reduction in sales load under the new
Agreement, which becomes applicable on purchases already made under the original
Agreement, will be refunded to you and that the required additional escrowed
shares are being furnished by you.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Mutual Fund on which there is a sales load may be
taken into account in completing a Letter of Intent, or for Right of
Accumulation. However, shares of the Fund which have been purchased directly may
not be used for purposes of determining reduced sales loads on additional
purchases of the other Mutual Funds in the Seligman Group.
Check Redemption Service -- Class A Shares Only
If shares are held in joint names, all shareholders must sign Section 5 of
the Account Application. All checks will require all signatures unless a lesser
number is indicated on the face of the application. Accounts in the names of
corporations, trusts, partnerships, etc. must list all authorized signatories.
In all cases, each signature guarantees the genuineness of the other
signatures. Checks may not be drawn for less than $500.
I hereby authorize Mellon Bank, N.A. to honor checks drawn by me on my
account of Class A shares and to effect a redemption of sufficient shares in my
Fund account to cover payment of the check. I understand that shares in one
Series cannot be redeemed to cover a check written on another Series.
Mellon Bank, N.A. shall be liable only for its own negligence. The Fund will
not be liable for any loss, expense or cost arising out of check redemptions.
Each Fund reserves the right to change, modify or terminate this service at any
time upon notification mailed to the address of record of the shareholder(s).
SELIGMAN DATA CORP. WILL CHARGE A $10.00 PROCESSING FEE FOR ANY CHECK
REDEMPTION DRAFT RETURNED MARKED "UNPAID." THIS CHARGE MAY BE DEBITED FROM A
SHAREHOLDER'S ACCOUNT. NO REDEMPTION OF SHARES PURCHASED BY CHECK (UNLESS
CERTIFIED) WILL BE PERMITTED UNTIL THE FUND RECEIVES NOTICE THAT THE CHECK HAS
CLEARED WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF THOSE SHARES TO A
SHAREHOLDER'S ACCOUNT.
2/95
51
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52
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53
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54
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55
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ACCOUNT APPLICATION
<TABLE>
<S> <C>
Please check one:
/ / Seligman New Jersey Tax-Exempt Fund, Inc. Please check one:
/ / Seligman Pennsylvania Tax-Exempt Fund Series / / Class A Shares
/ / Seligman Tax-Exempt Fund Series, Inc.--(Name of Series)______________ / / Class D Shares
/ / Seligman Tax-Exempt Series Trust--(Name of Series)___________________
Mail to: Seligman Data Corp., 100 Park Avenue, New York, NY 10017
(800) 221-2450 All Continental States
-------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION
-------------------------------------------------------------------------------------------------------------------------------
TYPE OF / / Individuals / / Multiple Owners / / Transfer to Minor / / Other (Corporations, Trusts, Organizations,
Partnerships, etc.)
ACCOUNT Use Line 1 Use Lines 1, 2 & 3 Use Line 4 Use Line 5
Multiple Owners will be registered as Joint Tenants with Right of Survivorship.
The first name and Social Security or Taxpayer ID Number on line 1 or 5 of this Account Registration will be used for IRS
reporting.
NAME (Minors cannot be legal owners) PLEASE PRINT OR TYPE
1. __________________________________________________________________________________________________________________________
First Middle Last Social Security Number Birthdate
2. __________________________________________________________________________________________________________________________
First Middle Last Social Security Number Birthdate
3. __________________________________________________________________________________________________________________________
First Middle Last Social Security Number Birthdate
4. ___________________________________, as custodian for ___________________________ under the _________________
Custodian (one only) Minor (one only) State
Uniform Transfers to Minors Act ________________________________ until age ______________________ _____________________
Minor's Social Security Number (Not more than 21) Minor's Birthdate
5. _______________________________________________________________________________________ _________________________________
Name of Corporation or Other Entity. If a Trust, also complete Trust Section below. Taxpayer ID Number
ADDRESS TELEPHONE
________________________________________________ (_______)____________________ (_______)___________________
Street Address or P.O. Box Daytime Evening
___________________________________________________________ U.S. CITIZEN? / / Yes / / No_ ______________________
City State Zip If no, indicate country
- -----------------------------------------------------------------------------------------------------------------------------------
Enclosed is my check payable to (Please indicate below):
/ / Seligman New Jersey Tax-Exempt Fund / / Seligman Tax-Exempt Fund Series, Inc.--
/ / Seligman Pennsylvania Tax-Exempt Fund Series (Name of Series)____________
/ / Seligman Tax-Exempt Series Trust--
INITIAL (Name of Series)____________
INVESTMENT / / Class A Shares for $_____________ / / Class D Shares for $______________
($1,000 MINIMUM) ---------------------------------------------------------------------------------------------------------------
NO REDEMPTION OF SHARES PURCHASED BY CHECK (UNLESS CERTIFIED) WILL BE PERMITTED UNTIL THE FUND HAS RECEIVED
NOTICE THAT THE CHECK HAS CLEARED, WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF THOSE SHARES TO YOUR ACCOUNT.
-------------------------------------------------------------------------------------------------------------------------------
2. TRUST ACCOUNTS
-------------------------------------------------------------------------------------------------------------------------------
TYPE OF ACCOUNT: / / Trust / / Guardianship / / Conservatorship / / Estate / / Other________________________
Trustee/Fiduciary Name______________________________ Trustee Name_________________________________
Trust Name_______________________________, for the benefit of (FBO)_________________________________
Trust Date_______________________________
-------------------------------------------------------------------------------------------------------------------------------
3. SIGNATURE AND CERTIFICATION
-------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury I certify that the number shown on this form is my correct Taxpayer Identification Number (Social
Security Number) and that I am not subject to backup withholding either because I have not been notified that I am subject to
backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified
me that I am no longer subject to backup withholding. I certify to my legal capacity to purchase or redeem shares of the Fund
for my own Account, or for the Account of the organization named below. I have received a current Prospectus of the Funds and
appoint Seligman Data Corp. as my agent to act in accordance with my instructions herein.
A. __________________________________________________________________________________________________________________________
Date Signature of Investor
B. __________________________________________________________________________________________________________________________
Date Signature of Co-Investor, if any
</TABLE>
A
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<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------------------------------------
4. BROKER/DEALER OR FINANCIAL ADVISOR DESIGNATION
-------------------------------------------------------------------------------------------------------------------------------
__________________________________________________________________________________________________________________________
Firm Name
_____________________________________________________________(_________)__________________________________________________
Branch Address Area Code Telephone Number
__________________________________________________________________________________________________________________________
Representative Name Representative Number
-------------------------------------------------------------------------------------------------------------------------------
5. ACCOUNT OPTIONS AND SERVICES
-------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS I elect to receive: / / 1. Dividends in shares, gain distributions in shares.
AND GAIN / / 2. Dividends in cash, gain distributions in shares.
DISTRIBUTIONS / / 3. Dividends in cash, gain distributions in cash.
Please NOTE: IF NO ELECTION IS MADE, OPTION NO. 1 AUTOMATICALLY WILL BE PUT INTO EFFECT.
check one All dividend and/or gain distributions taken in shares will be invested at net asset value.
- -----------------------------------------------------------------------------------------------------------------------------------
/ / Please arrange with my bank to draw pre-authorized checks and invest $_____________ in my Account every:
INVEST-A- / / Month / / 3 Months
CHECK(R) I understand that my checks will be invested on the fifth day of the month for the period designated. I have
($50 MINIMUM) completed the "Bank Authorization to Honor Pre-Authorized Checks" on the following page.
- -----------------------------------------------------------------------------------------------------------------------------------
/ / Please send a check for $__________ beginning on the ____ day of ________________ 19____, and thereafter on
the ________ day specified of every:
AUTOMATIC / / Month / / 3rd Month / / 6th Month / / 12th Month
CASH
WITHDRAWAL Make payments to: Name______________________________________________________________________________________
(Class A or
Class D only Address___________________________________________________________________________________
after Class D
shares are held City________________________________ State____________________________ Zip____________
for one year)
Shares having a current value at offering price of $5,000 or more must be held in the Account at initiation of
Service, and all shares must be in "book credit" form.
- -----------------------------------------------------------------------------------------------------------------------------------
I intend to purchase, although I am not obligated to do so, shares of the above designated Series within a
LETTER 13-month period which, together with the total asset value of shares owned, will aggregate at least:
OF INTENT / / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000 / / $4,000,000
(Class A only) I agree to the escrow provision listed under "Terms and Conditions"in the back of the Prospectus.
- -----------------------------------------------------------------------------------------------------------------------------------
Accounts eligible for the Right of Accumulation or to be used toward completion of a Letter of Intent.
Please check applicable box:
/ / I am a trustee for the following accounts, which are held by the same trust, estate, or under the terms of
RIGHT a pension, profit sharing or other employee benefit trust qualified under section 401 of the Internal
OF Revenue Code.
ACCUMULATION
(Class A only) / / In calculating my holdings for Right of Accumulation or Letter of Intent purposes, I am including the
following additional accounts which are registered in my name, in my spouse's name, or in the name(s) of my
child(ren) under the age of 21.
Name____________________________ Fund______________________________ Account Number_____________________
Name____________________________ Fund______________________________ Account Number_____________________
Name____________________________ Fund______________________________ Account Number_____________________
- -----------------------------------------------------------------------------------------------------------------------------------
If you wish to have your dividend payments made to another party or Seligman Fund, please complete the
following. I hereby authorize and request that my dividend payments be made to:
DIVIDEND Name___________________________________________ Seligman Fund_______________________________________________
DIRECTION
OPTION Address________________________________________
City___________________________________________ Account Number______________________________________________
State, Zip_____________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B
<PAGE>
INVEST-A-CHECK(R) SERVICE
(Please indicate below)
<TABLE>
<S> <C>
/ / Seligman New Jersey Tax-Exempt Fund, Inc. / / Seligman Tax-Exempt Fund Series, Inc.--(Name of Series)_______________
/ / Seligman Pennsylvania Tax-Exempt Fund Series / / Seligman Tax-Exempt Series Trust--(Name of Series)____________________
Please check one:
/ / Class A shares / / Class D shares
</TABLE>
Mail To: Seligman Data Corp., 100 Park Avenue, New York, NY 10017
To start your Invest-A-Check(R) Service, fill out Section A and the "Bank
Authorization to Honor Pre-Authorized Checks" below, and forward it with an
unsigned bank check from your regular checking account (marked "void", if you
wish).
- -------------------------------------------------------------------------------
A. INVEST-A-CHECK(R)
/ / Please arrange with my bank to draw pre-authorized checks and invest ($50
minimum) $____________ in my Account every:
/ / Month / / ___ Months
I understand that my checks will be dated on the fifth day of the month for the
period designated. I have completed the "Bank Authorization to Honor
Pre-Authorized Checks" below and have read and agree to the terms and conditions
applicable to the Invest-A-Check(R) Service as set forth in the Prospectus and
the Account Application included in the Prospectus.
__________________________________
Signature(s) of Investor(s)
__________________________________
- -------------------------------------------------------------------------------
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED CHECKS
- -------------------------------------------------------------------------------
To:____________________________________________________________________________
(Name of Bank)
_______________________________________________________________________________
Address of Bank or Branch (Street, City, State and Zip)
Please honor pre-authorized checks drawn on my account by Seligman Data Corp.,
100 Park Avenue, New York, N.Y. 10017, to the order of the Series designated and
charge them to my regular checking account. Your authority to do so shall
continue until you receive written notice from me revoking it. You may terminate
your participation in this arrangement at any time by written notice to me. I
agree that your rights with respect to each pre-authorized check shall be the
same as if it were a check drawn and signed by me. I further agree that should
any such check be dishonored, with or without cause, intentionally or
inadvertently, you shall be under no liability whatsoever.
_________________________ _________________________________________________
Checking Account Number Name(s) of Depositor(s) -- Please Print
_________________________________________________
Signature(s) of Depositor(s) -- As Carried by Bank
_________________________________________________
===============================================================================
Address (Street) (City) (State, Zip)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
To the Bank Designated above:
Your depositor(s) named in the above form has instructed us to establish
the Invest-A-Check(R) Service for his convenience. Under the terms of the
Service, your depositor(s) has pre-authorized checks to be drawn against his
account in a specific amount at regular intervals to the order of the designated
Series. Checks presented to you will be magnetic-ink coded and will otherwise
conform to specifications of the American Bankers Association.
A letter of indemnification addressed to you and signed by Seligman
Financial Services, Inc., general distributor of the Series, appears below.
If there is anything we can do to help you in giving your depositor(s) this
additional Service which he has requested, please let us know.
SELIGMAN DATA CORP.
INDEMNIFICATION AGREEMENT
To the Bank designated above:
SELIGMAN FINANCIAL SERVICES, INC., distributor of the shares of the Series,
hereby agrees:
(1) To indemnify and hold you harmless against any loss, damage, claim or
suit, and any costs or expenses reasonably incurred in connection therewith,
either (a) arising as a consequence of your actions in connection with the
execution and issuance of any check or draft, whether or not genuine, purporting
to be executed by Seligman Data Corp. and received by you in the regular course
of business for the purpose of payment, or (b) resulting from the dishonor of
any such check or draft, with or without cause and intentionally or
inadvertently, even though such dishonor results in suspension or termination of
the Invest-A-Check(R) Service pursuant to which such checks or drafts are drawn.
(2) To refund to you any amount erroneously paid by you on any such check
or draft, provided claim for any such payment is made within 12 months after the
date of payment.
SELIGMAN FINANCIAL SERVICES, INC.
/s/ Stephen J. Hodgdon
President
- -------------------------------------------------------------------------------
2/95
C
<PAGE>
----------------------------------------------------------------------------
5. ACCOUNT OPTIONS AND SEVICES (continued)
----------------------------------------------------------------------------
TELEPHONE SERVICE ELECTION
By completing this section, I understand that I may place the following
requests by telephone:
o Redemptions up to $50,000 o Exchanges
o Address Changes o Dividend and/or Capital Gain
Distribution Option Changes
AUTHORIZATION
I understand that the telephone services are optional and that by signing
this Form I authorize the Funds, all other Seligman Funds with the same account
number and registration which I currently own or which I invest in the future,
and Seligman Data Corp. ("SDC"), to act upon instructions received by telephone
from me or any other person in accordance with the provisions regarding
telephone services as set forth in the current prospectus of each such Fund, as
amended from time to time. I understand that redemptions of uncertificated
shares of up to $50,000 will be sent only to my account address of record, and
only if such address has not changed within the 30 days preceding such request.
Any telephone instructions given in respect of this account and any account
into which exchanges are made are hereby ratified and I agree that neither the
Fund(s) nor SDC will be liable for any loss, cost or expense for acting upon
such telephone instructions reasonably believed to be genuine and in accordance
with the procedures described in the prospectus, as amended from time to time.
Such procedures include recording of telephone instructions, requesting personal
and/or account information to verify a caller's identity and sending written
confirmations of transactions. As a result of this policy, I may bear the risk
of any loss due to unauthorized or fraudulent telephone instructions; provided,
however, that if the Fund(s) or SDC fail to employ such procedures, the Fund(s)
and/or SDC may be liable. Please sign your name(s) as it appears on the first
page of this Account Application.
X___________________________________ X___________________________________
Date Date
- -------------------------------------------------------------------------------
2/95
- -------------------------------------------------------------------------------
CHECK REDEMPTION SERVICE -- Class A only
Available to shareholders who own or purchase shares having a value of at
least $25,000.00 on deposit with Seligman Data Corp.
If you wish to use this service, you must complete Section 3 and the
Signature Card below. Shareholders electing this service are subject to the
conditions of the Terms and Conditions in the back of the Prospectus.
- -------------------------------------------------------------------------------
CHECK WRITING SIGNATURE CARD
Authorized Signatures
_____________________________________ 1.___________________________________
Name of Fund
_____________________________________ 2.___________________________________
Account Number (If known)
_____________________________________ 3.___________________________________
Account Registration (Please Print)
_____________________________________ 4.___________________________________
/ / Check here if only one signature is required on checks.
/ / Check here if a combination of signatures is required and specify the
number: ________.
ACCOUNTS IN THE NAMES OF CORPORATIONS, TRUSTS, PARTNERSHIPS, ETC., MUST INDICATE
THE LEGAL TITLES OF ALL AUTHORIZED SIGNATORIES. SHAREHOLDERS ELECTING THIS
SERVICE ARE SUBJECT TO THE TERMS AND CONDITIONS LISTED IN THE PROSPECTUS.
D
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- -------------------------------------------------------------------------------
Managed by
LOGO
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
E
<PAGE>
- ------------------------------------------------------------------------------
Seligman New Jersey
Tax-Exempt Fund, Inc.
Seligman Pennsylvania
Tax-Exempt Fund Series
Seligman Tax-Exempt
Fund Series, Inc.
Seligman Tax-Exempt
Series Trust
- ------------------------------------------------------------------------------
100 Park Avenue
New York, New York 10017
TABLE OF CONTENTS
Page
----
Summary Of Fund Expenses................................................. 3
Financial Highlights .................................................... 8
Alternative Distribution System.......................................... 16
Investment Objective And Policies........................................ 17
Management Services...................................................... 25
Purchase Of Shares ...................................................... 26
Telephone Transactions................................................... 30
Redemption Of Shares..................................................... 31
Administration, Shareholder Services
And Distribution Plan.................................................. 33
Exchange Privilege....................................................... 34
Further Information About
Transactions In The Funds.............................................. 36
Dividends And Distributions ............................................. 36
Taxes.................................................................... 37
Shareholder Information ................................................. 46
Advertising A Fund's Performance ........................................ 47
Organization And Capitalization ......................................... 48
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
This prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this prospectus relating to any
other Fund.
TEA1 2/95
- -------------------------------------------------------------------------------
Seligman New Jersey
Tax-Exempt Fund, Inc.
Seligman Pennsylvania
Tax-Exempt Fund Series
Seligman Tax-Exempt
Fund Series, Inc.
Seligman Tax-Exempt
Series Trust
- -------------------------------------------------------------------------------
[Photo]
Prospectus
February 1, 1995
LOGO
- -------------------------------------------------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1995
SELIGMAN TAX-EXEMPT FUND SERIES, INC.
100 Park Avenue
New York, NY 10017
New York City Telephone (212) 850-1864
Toll Free Telephone:
(800) 221-2450 - all continental states
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Tax-Exempt Fund
Series, Inc. (the "Fund"), dated February 1, 1995. It should be read in
conjunction with the Prospectus, which may be obtained by writing or calling the
Fund at the above address or telephone numbers. This Statement of Additional
Information, although not in itself a Prospectus, is incorporated by reference
into the Prospectus in its entirety.
Each of the Fund's thirteen series offers two classes of shares. Class
A shares may be purchased at net asset value plus a sales load of up to 4.75%.
Class D shares may be purchased at net asset value and are subject to a
contingent deferred sales load ("CDSL") of 1% if redeemed within one year.
Each share of Class A and Class D of a Series represents an identical
legal interest in the investment portfolio of a series of the Fund and has the
same rights except for certain class expenses and except that Class D shares
bear a higher distribution fee that generally will cause the Class D shares to
have a higher expense ratio and pay lower dividends than Class A shares. Each
Class has exclusive voting rights with respect to its distribution plan.
Although holders of Class A and Class D shares have identical legal rights, the
different expenses borne by each Class will result in different dividends. The
two classes also have different exchange privileges.
TABLE OF CONTENTS
Page
Investment Objectives, Policies And Risks ................................. 2
Investment Limitations .................................................... 3
Directors And Officers .................................................... 4
Management And Expenses ................................................... 8
Administration, Shareholder Services
And Distribution Plan .................................................... 10
Portfolio Transactions .................................................... 10
Purchase And Redemption of Fund Shares .................................... 11
Distribution Services ..................................................... 13
More About Taxes .......................................................... 15
Valuation ................................................................. 15
Performance Information ................................................... 15
General Information ....................................................... 21
Financial Statements ...................................................... 21
Appendix A ................................................................ 21
Appendix B ................................................................ 24
Appendix C ................................................................ 50
TEA1A
1
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund is a non-diversified, open-end management investment company, or
mutual fund, incorporated in Maryland on August 8, 1983. The Fund consists of
thirteen separate Series: the National Series ("National Series") and the
Colorado Tax-Exempt Series, the Georgia Tax-Exempt Series, the Louisiana
Tax-Exempt Series, the Maryland Tax-Exempt Series, the Massachusetts Tax-Exempt
Series, the Michigan Tax-Exempt Series, the Minnesota Tax-Exempt Series, the
Missouri Tax-Exempt Series, the New York Tax-Exempt Series, the Ohio Tax-Exempt
Series, the Oregon Tax-Exempt Series and the South Carolina Tax-Exempt Series
(collectively, the "State Series").
As stated in the Prospectus, the National Series seeks to maximize income
exempt from federal income taxes to the extent consistent with preservation of
capital and with consideration given to opportunities for capital gain. Each
State Series seeks to maximize income exempt from federal income taxes and from
the personal income taxes of such state to the extent consistent with
preservation of capital and with consideration given to opportunities for
capital gain.
Each Series of the Fund is expected to invest principally, without percentage
limitations, in tax-exempt securities which on the date of investment are within
the four highest ratings of Moody's Investor Service ("Moody's") (Aaa, Aa, A,
Baa for bonds; MIG 1, MIG 2, MIG 3, MIG 4 for notes; P-1 - P-2 for commercial
paper) or Standard & Poor's Corporation ("S&P") (AAA, AA, A, BBB for bonds; SP-1
- - SP-2, for notes; A-1+, A-1/A-2 for commercial paper). Tax-Exempt Securities
rated in these categories are commonly referred to as investment grade. Each
Series of the Fund may invest in tax-exempt securities which are not rated, or
which do not fall into the credit ratings noted above if, based upon credit
analysis by the Manager, it is believed that such securities are of comparable
quality. In determining suitability of investment in a lower rated or unrated
security, the Manager will take into consideration asset and debt service
coverage, the purpose of the financing, history of the issuer, existence of
other rated securities of the issuer and other considerations as may be
relevant, including comparability to other issuers.
Although securities rated in the fourth rating category are commonly referred
to as investment grade, investment in such securities could involve risks not
usually associated with bonds rated in the first three categories. Bonds rated
BBB by S&P are more likely as a result of adverse economic conditions or
changing circumstance to exhibit a weakened capacity to pay interest and re-pay
principal than bonds in higher rating categories and bonds rated Baa by Moody's
lack outstanding investment characteristics and in fact have speculative
characteristics according to Moody's. Tax-exempt securities in the fourth rating
category of S&P or Moody's will generally provide a higher yield than do higher
rated tax-exempt securities of similar maturities; however, they are subject to
a greater degree of fluctuation in value as a result of changing interest rates
and economic conditions. The market value of the tax-exempt securities will also
be affected by the degree of interest of dealers to bid for them, and in certain
markets dealers may be more unwilling to trade tax-exempt securities rated in
the fourth rating categories than in the higher rating categories.
A description of the credit ratings in which each Series of the Fund may
invest is contained in Appendix A to this Statement.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on tax-exempt securities and for providing state and local governments
with federal credit assistance. Reevaluation of the Fund's investment objectives
and structure might be necessary in the future due to market conditions which
may result from future changes in the tax laws.
Tax-Exempt Securities
As stated in the Prospectus, tax-exempt securities include notes and bonds
issued by or on behalf of states, territories, and possessions of the United
States and the District of Columbia, and their political subdivisions, agencies,
and instrumentalities, the interest on which is exempt from federal income taxes
and in certain instances, applicable state or local income taxes. Such
securities are traded primarily in the over-the-counter market. A Series may
invest no more than 20% of its net assets in certain private activity bonds, the
interest on which is treated as a preference item for purposes of the
alternative minimum tax. See "Tax-Exempt Securities" in the Prospectus.
Under the Investment Company Act of 1940, the identification of the issuer of
tax-exempt bonds or notes depends on the terms and conditions of the obligation.
If the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
subdivision and the obligation is backed only by the assets and revenues of the
2
<PAGE>
subdivision, such subdivision is regarded as the sole issuer. Similarly, in the
case of an industrial development revenue bond or pollution control revenue
bond, if the bond is backed only by the assets and revenues of the
nongovernmental user, the nongovernmental user is regarded as the sole issuer.
If in either case the creating government or another entity guarantees an
obligation, the security is treated as an issue of such guarantor to the extent
of the value of the guarantee.
Floating Rate and Variable Rate Securities
As stated in the Prospectus, each Series may invest in participation
interests purchased from banks in variable rate tax-exempt securities (such as
industrial development bonds) owned by banks. A participation interest gives the
purchaser an undivided interest in the tax-exempt security in the proportion
that the Series participation interest bears to the total principal amount of
the tax-exempt security and provides the demand repurchase feature described in
the Prospectus. Participations are frequently backed by an irrevocable letter of
credit or guarantee of a bank that the Manager has determined meets the
prescribed quality standards for the Series. A Series has the right to sell the
instrument back to the bank and draw on the letter of credit on demand, on seven
days' notice, for all or any part of the Series' participation interest in the
tax-exempt security, plus accrued interest. Each Series intends to exercise the
demand under the letter of credit only (1) upon a default under the terms of the
documents of the tax-exempt security, (2) as needed to provide liquidity in
order to meet redemptions, or (3) to maintain a high quality investment
portfolio. Banks will retain a service and letter of credit fee and a fee for
issuing repurchase commitments in an amount equal to the excess of the interest
paid on the tax-exempt securities over the negotiated yield at which the
instruments are purchased by a Series.
When-Issued Securities
As stated in the Prospectus, each Series may purchase tax-exempt securities
on a "when-issued" basis.
Tax-exempt securities purchased on a when-issued basis and the securities
held in each Series are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates (which will generally result in
similar changes in value, i.e., both experiencing appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, to the
extent a Series remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of a Series' assets will vary. Purchasing a
tax-exempt security on a when-issued basis can involve a risk that the yields
available in the market when the delivery takes place may be higher than those
obtained on the security so purchased.
Portfolio Turnover
The Fund's investment policies may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest rates. A change in
securities held by a Series is known as "portfolio turnover" and may involve the
payment by the Series of dealer spreads or underwriting commissions, and other
transaction costs, on the sale of securities, as well as on the reinvestment of
the proceeds in other securities. A Series' portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
for the fiscal year by the monthly average of the value of the portfolio
securities owned during the year. Securities whose maturity or expiration date
at the time of acquisition were one year or less are excluded from the
calculation. The portfolio turnover rates for each Series for the fiscal years
ended September 30, 1994 and 1993 were: National - 24.86% and 72.68%; Colorado -
10.07% and 14.09%; Georgia - 19.34% and 12.45%; Louisiana - 17.16% and 9.21%;
Maryland - 17.68% and 14.10%; Massachusetts - 12.44% and 20.66%; Michigan -
10.06% and 6.33%; Minnesota - 3.30% and 5.73%; Missouri - 14.33% and 17.03%; New
York - 28.19% and 27.90%; Ohio - 9.37% and 30.68%; Oregon - 9.43% and 8.08% and
South Carolina - 1.81% and 17.69%. The fluctuation of portfolio turnover ratios
of certain Series during 1994 and 1993 result from conditions in a specific
state and the market in general.
INVESTMENT LIMITATIONS
Under each Series' fundamental policies, which cannot be changed except by
vote of a majority of the outstanding voting securities of the Series, the
Series may not:
1. Borrow money, except from banks for temporary purposes (such as meeting
redemption requests or for extraordinary or emergency purposes) in an
amount not to exceed 10% of the value of its total assets at the time the
borrowing is made (not including the amount borrowed). A Series will not
purchase additional portfolio securities if such Series has outstanding
borrowings in excess of 5% of the value of its total assets;
3
<PAGE>
2. Mortgage or pledge any of its assets, except to secure permitted borrowings
noted above;
3. Invest more than 25% of total assets at market value in any one industry;
except that tax-exempt securities and securities of the U.S. Government,
its agencies and instrumentalities are not considered an industry for
purposes of this limitation;
4. As to 50% of the value of its total assets, purchase securities of any
issuer if immediately thereafter more than 5% of total assets at market
value would be invested in the securities of any issuer (except that this
limitation does not apply to obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities);
5. Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
6. Purchase or hold any real estate, including limited partnership interests
on real property, except that the Fund may invest in securities secured by
real estate or interests therein or issued by persons (other than real
estate investment trusts) which deal in real estate or interests therein;
7. Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially more
than 0.5% of the securities of that issuer own in the aggregate more than
5% of such securities;
8. Write or purchase put, call, straddle or spread options; purchase
securities on margin or sell "short"; or underwrite the securities of other
issuers;
9. Purchase or sell commodities or commodity contracts; or
10. Make loans except to the extent that the purchase of notes, bonds or other
evidences of indebtedness or the entry into repurchase agreements or
deposits with banks may be considered loans. The Fund has no present
intention of entering into repurchase agreements.
As a matter of policy, with respect to 75% of a Series' assets, no revenue
bond will be purchased by a Series if as a result of such purchase more than 5%
of such Series' assets would be invested in the revenue bonds of a single
issuer. This policy is not fundamental and may be changed by the Directors
without shareholder approval. Although not a fundamental policy subject to
shareholder vote, as long as the Series' shares are registered in certain
states, the Fund may not invest in oil, gas, or mineral leases or other mineral
exploration or development programs.
Under the Investment Company Act of 1940, a "vote of a majority of the
outstanding voting securities" of the Fund or of a particular Series means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or of such Series or (2) 67% or more of the shares of the Fund or of
such Series present at a shareholders' meeting if more than 50% of the
outstanding shares of the Fund or of such Series are represented at the meeting
in person or by proxy.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years are shown below. Each
Director who is an "interested person" of the fund, as defined in the Act, is
indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive
(56) Officer and Chairman of the Executive Committee
Managing Director, Chairman and President, J. & W.
Seligman & Co. Incorporated, investment managers
and advisors; and Seligman Advisors, Inc.,
advisors; Chairman and Chief Executive Officer,
the Seligman Group of Investment Companies;
Chairman, Seligman Financial Services, Inc.,
distributor; Seligman Holdings, Inc., holding
company; Seligman Services, Inc., broker/dealer;
J. & W. Seligman Trust Company, trust company; and
Carbo Ceramics Inc., ceramic proppants for oil and
gas industry; Director or Trustee, Seligman Data
Corp. (formerly, Union Data Service Center Inc.),
shareholder service agent; Daniel Industries,
Inc., manufacturer of oil and gas metering
4
<PAGE>
equipment; Kerr-McGee Corporation, diversified
energy company; and Sarah Lawrence College; and a
Member of the Board of Governors of the Investment
Company Institute; formerly, Chairman, Seligman
Securities, Inc., broker/dealer.
RONALD T. SCHROEDER* Director, President and Member of the Executive
(47) Committee
Director, Managing Director and Chief Investment
Officer, J. & W. Seligman & Co. Incorporated,
investment managers and advisors; Managing
Director and Chief Investment Officer, Seligman
Advisors, Inc., advisors; Director or Trustee and
President and Chief Investment Officer,
Tri-Continental Corporation, closed-end investment
company and the open-end investment companies in
the Seligman Family of Mutual Funds; Director and
President, Seligman Holdings, Inc., holding
company; Director, Seligman Financial Services,
Inc., distributor; Director, Seligman Data Corp.,
shareholder service agent; Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies;
Seligman Henderson Co., advisors; and Seligman
Services, Inc., broker/dealer; formerly, Director,
J. & W. Seligman Trust Company, trust company; and
Seligman Securities, Inc., broker/dealer.
FRED E. BROWN* Director
(81)
Director and Advisor, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, Tri-Continental Corporation,
closed-end investment company; the open-end
investment companies in the Seligman Family of
Mutual Funds; Director, Seligman Financial
Services, Inc., distributor; Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment companies;
Seligman Services, Inc., broker/dealer; Trustee,
Trudeau Institute, non-profit biological research
organization; Lake Placid Center for the Arts,
cultural organization; and Lake Placid Education
Foundation, education foundation; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
ALICE S. ILCHMAN Director
(59)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; NYNEX, telephone company; The
Rockefeller Foundation, charitable foundation; and
the Committee for Economic Development; The Markle
Foundation, philanthropic organization;
International Research and Exchange Board,
intellectual exchanges.
Sarah Lawrence College, Bronxville, New York 10708
JOHN E. MEROW* Director
(65)
Chairman and Senior Partner, Sullivan & Cromwell,
law firm; Director or Trustee, the Seligman Group
of Investment Companies; 457 Madison Avenue
Corporation, real estate; The Municipal Art
Society of New York; the United States Council for
International Business and the United States-New
Zealand Council; Elizabeth Blackwell Foundation;
New York Downtown Hospital; NYH Downtown, Inc.;
and The Society of the New York Hospital Fund,
Inc.; Chairman and Director, American Australian
Association; Chairman, The New York
Hospital-Cornell Medical Center Advisory Board;
and Member of the Board of Governors of the
Foreign Policy Association; Member of the Board of
Governors, New York Hospital; Member, Council on
Foreign Relations.
125 Broad Street, New York, NY 10004
5
<PAGE>
BETSY S. MICHEL Director
(52)
Attorney; Director or Trustee, the Seligman Group
of Investment Companies; National Association of
Independent Schools (Boston), education; Chairman
of the Board of Trustees of St. George's School
(Newport, RI).
St. Bernard's Road, Gladstone, NJ 07934
DOUGLAS R. NICHOLS, JR. Director
(74)
Management Consultant; Director or Trustee, the
Seligman Group of Investment Companies; formerly,
Trustee, Drew University.
790 Andrews Avenue, Delray Beach, FL 33483
JAMES C. PITNEY Director
(68)
Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of
Investment Companies; Public Service Enterprise
Group, public utility; formerly Director, The
Howard Savings Bank, savings bank.
Park Avenue at Morris County, P.O. Box 1945,
Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(67)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn Union
Gas Company; The Committee for Economic
Development; Dow Jones & Co. Inc.; Public
Broadcasting Service; and Co-Chairman of the
Policy Committee of the Tax Foundation; formerly,
Vice Chairman of Mobil Corporation; and Director
and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY 10017
HERMAN J. SCHMIDT Director
(78)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; H. J. Heinz Company; HON Industries,
Inc.; and MAPCO, Inc; formerly, Director of
MetLife Series Fund, Inc. and MetLife Portfolios,
Inc.; Macmillan, Inc. and Ryder System, Inc.
15 Oakley Lane, Greenwich, CT 06830
ROBERT L. SHAFER Director
(62)
Vice President, Pfizer Inc., pharmaceuticals;
Director or Trustee, the Seligman Group of
Investment Companies; and USLIFE Corporation, life
insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(60)
Executive Vice President, Chief Operating Officer
and Director, Sammons Enterprises, Inc., Director
or Trustee, the Seligman Group of Investment
Companies, Director of, C-SPAN; formerly,
President, Sammons Communications, Inc.
300 Crescent Court, Suite 700, Dallas, TX 75202
BRIAN T. ZINO* Director
(42)
Managing Director (formerly, Chief Administrative
and Financial Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, the Seligman Group of
Investment Companies; Chairman, Seligman Data
Corp., shareholder service agent; Director,
Seligman Financial Services, Inc., distributor;
6
<PAGE>
Seligman Services, Inc., broker/dealer; and J. &
W. Seligman Trust Company, trust company; Senior
Vice President, Seligman Henderson Co., advisor;
formerly, Director, Seligman Securities, Inc.,
broker/dealer; Director and Secretary, Chuo
Trust-JWS Advisors, Inc., advisor.
THOMAS G. MOLES Vice President
(52)
Director, Managing Director, (formerly, Vice
President and Portfolio Manager), J. & W. Seligman
& Co. Incorporated, investment managers and
advisors; Vice President and Portfolio Manager,
three other open-end investment companies in the
Seligman Family of Mutual Funds; President and
Portfolio Manager, Seligman Quality Municipal
Fund, Inc. and Seligman Select Municipal Fund,
Inc., closed-end investment companies; Director,
Seligman Financial Services, Inc., distributor;
Seligman Services, Inc., broker/dealer; and J. &
W. Seligman Trust Company, trust company;
formerly, Director, Seligman Securities, Inc.,
broker/dealer.
LAWRENCE P. VOGEL Vice President
(38)
Senior Vice President, Finance, J. & W. Seligman &
Co. Incorporated, investment managers and
advisors; Seligman Financial Services, Inc.,
distributor; and Seligman Advisors, Inc.,
advisors; Vice President (formerly Treasurer), the
Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisors;
formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer; Vice President,
Finance, J. & W. Seligman Trust Company; and
Senior Audit Manager, Price Waterhouse,
independent accountants.
FRANK J. NASTA Secretary
(30)
Secretary, the Seligman Group of Investment
Companies; J. & W. Seligman & Co. Incorporated,
investment managers and advisors; Seligman
Financial Services, Inc., distributor; Seligman
Henderson Co., advisors; Chuo Trust - JWS
Advisors, Inc., advisors; and Seligman Data Corp.,
shareholder service agent; Seligman Services,
Inc., broker/dealer; Vice President, Law and
Regulation, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; formerly,
attorney, Seward & Kissel.
THOMAS G. ROSE Treasurer
(37)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc. and the American
Investors Family of Funds.
The Executive Committee of the Boards act on behalf of the Boards between
meetings to determine the value of securities and assets owned by the Funds for
which no market valuation is available and to elect or appoint officers of the
Funds to serve until the next meeting of the Board.
Compensation Table
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Directors (2)
------------------------ ------------------- ------------- ----------------
<S> <C> <C> <C>
William C. Morris, Director N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C> <C>
Fred E. Brown, Director N/A N/A N/A
Alice S. Ilchman, Director $6279.36 N/A $67,000.00
John E. Merow, Director $6243.64(d) N/A $66,000.00(d)
Betsy S. Michel, Director $6243.64 N/A $66,000.00
Douglas R. Nichols, Jr., Director $6243.64 N/A $66,000.00
James C. Pitney, Director $6279.36 N/A $67,000.00
James Q. Riordan, Director $6243.64 N/A $66,000.00
Herman J. Schmidt, Director $6243.64 N/A $66,000.00
Robert L. Shafer, Director $6243.64 N/A $66,000.00
James N. Whitson, Director $6243.64(d) N/A $66,000.00(d)
Brian T. Zino, Director N/A N/A N/A
</TABLE>
(1) For the year ended December 31, 1994
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors may
elect to defer receiving their fees. Under this arrangement, interest is accrued
on the deferred balances. The annual cost of such interest is included in the
directors' fees and expenses, and the accumulated balance thereof is included in
other liabilities in the Fund's financial statements.
Directors and officers of the Funds are also directors and officers of some
or all of the other investment companies in the Seligman Group.
Directors and officers of the Funds as a group owned directly or indirectly
67,277 shares or less than 1% of the Capital Stock of the National Series and
222,140 shares or less than 1% of the Capital Stock of the New York Tax-Exempt
Series at December 31, 1994.
MANAGEMENT AND EXPENSES
As indicated in the Prospectus, under the Management Agreements, dated
December 29, 1988 subject to the control of the Board of Directors, the Manager
manages the investment of the assets of the Fund, including making purchases and
sales of portfolio securities consistent with the Series' investment objectives
and policies, and administers the Fund's business and other affairs. The Manager
provides the Fund with such office space, administrative and other services, and
executive and other personnel as are necessary for Fund operations. The Manager
pays all of the compensation of directors of the Fund who are employees or
consultants of the Manager and of the officers and employees of the Fund. The
Management Agreement also provides that the Manager will not be liable to the
Fund for any error of judgment or mistake of law, or for any loss arising out of
any investment, or for any act or omission in performing its duties under the
Agreement, except for wilful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Management Agreement.
The Manager also provides senior management for Seligman Data Corp., the Fund's
shareholder service agent.
The Manager is entitled to receive a management fee from each Series for its
services, calculated daily and payable monthly, equal to 0.50% of the average
daily net assets on an annual basis. The Manager, at its discretion may have
waived all or a portion of its management fee with respect to a particular
Series. The following chart indicates the management fees paid by each Series as
well as the percentage such fee represents of a Series' average daily net assets
for the fiscal years ended September 30, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
Fiscal Year Management Fee Paid % of Average Daily Net Assets
- ----------- ------------------- -----------------------------
<S> <C> <C>
National Series
Year ended 9/30/94 $ 621,285 0.50%
Year ended 9/30/93 661,712 0.50
Year ended 9/30/92 670,543 0.50
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Management Fee Paid % of Average Daily Net Assets
- ----------- ------------------- -----------------------------
<S> <C> <C>
Colorado Series
Year ended 9/30/94 $ 318,834 0.50%
Year ended 9/30/93 328,005 0.50
Year ended 9/30/92 323,998 0.50
Georgia Series
Year ended 9/30/94 194,686 0.30*
Year ended 9/30/93 107,583 0.20*
Year ended 9/30/92 36,230 0.10*
Louisiana Series
Year ended 9/30/94 330,062 0.50
Year ended 9/30/93 310,350 0.50
Year ended 9/30/92 269,246 0.50
Maryland Series
Year ended 9/30/94 305,335 0.50
Year ended 9/30/93 302,181 0.50
Year ended 9/30/92 278,302 0.50
Massachusetts Series
Year ended 9/30/94 648,895 0.50
Year ended 9/30/93 664,011 0.50
Year ended 9/30/92 613,183 0.50
Michigan Series
Year ended 9/30/94 791,875 0.50
Year ended 9/30/93 766,158 0.50
Year ended 9/30/92 683,148 0.50
Minnesota Series
Year ended 9/30/94 702,194 0.50
Year ended 9/30/93 724,940 0.50
Year ended 9/30/92 835,123 0.50
Missouri Series
Year ended 9/30/94 201,744 0.36*
Year ended 9/30/93 157,373 0.30*
Year ended 9/30/92 243,566 0.50
New York Series
Year ended 9/30/94 491,715 0.50
Year ended 9/30/93 492,674 0.50
Year ended 9/30/92 437,963 0.50
Ohio Series
Year ended 9/30/94 909,119 0.50
Year ended 9/30/93 893,295 0.50
Year ended 9/30/92 817,190 0.50
Oregon Series
Year ended 9/30/94 241,140 0.39*
Year ended 9/30/93 190,680 0.35*
Year ended 9/30/92 153,698 0.35*
South Carolina Series
Year ended 9/30/94 611,278 0.50
Year ended 9/30/93 496,131 0.50
Year ended 9/30/92 364,052 0.50
</TABLE>
* The Manager waived a portion of the management fees due for this year.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, if any, fees and expenses of independent
attorneys and auditors, taxes and governmental fees, including fees and expenses
of qualifying the Fund and its shares under federal and state securities laws,
cost of stock certificates and expenses of repurchase or redemption of shares,
expenses of printing and distributing reports, notices and proxy materials to
shareholders, expenses of printing and filing reports and other documents with
governmental agencies, expenses of shareholders' meetings, expenses of corporate
9
<PAGE>
data processing and related services, shareholder account services, fees and
disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the Fund not
employed by or serving as a Director of the Manager or its affiliates, insurance
premiums and extraordinary expenses such as litigation expenses. The Fund's
expenses are allocated between the Series in a manner determined by the Board of
Directors to be fair and equitable. The Manager has undertaken to certain state
securities administrators, so long as required, to reimburse the Fund for each
year in the amount by which total expenses, including the management fee, but
excluding interest, taxes, brokerage commissions and extraordinary expenses,
exceed 2 1/2% of the first $30,000,000 of average net assets, 2% of the next
$70,000,000 of average net assets, and 1 1/2% thereafter.
On December 29, 1988, a majority of the outstanding voting securities of the
Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.
The Management Agreement is dated December 29, 1988, and was unanimously
adopted by the Board of Directors at a Meeting held on October 11, 1988 and was
approved by the shareholders at a meeting held on December 16, 1988.
The Management Agreement with respect to a Series will continue in effect
from year to year thereafter if such continuance is approved in the manner
required by the Investment Company Act of 1940 (i.e. (1) by a vote of a majority
of the Board of Directors or of the outstanding voting securities of the Series
and (2) by a vote of a majority of the Directors who are not parties to the
Management Agreement or interested persons of any such party) and, if the
Manager shall not have notified the Fund at least 60 days prior to the
anniversary date of the previous continuance that it does not desire such
continuance. The Management Agreement may be terminated by the Fund, without
penalty, on 60 days' written notice to the Manager and will terminate
automatically in the event of its assignment. The Fund has agreed to change its
name upon termination of the Management Agreement if continued use of the name
would cause confusion in the context of the Manager's business.
The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporations. See Appendix C.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
As indicated in the Prospectus, an Administration, Shareholder Services and
Distribution Plan (the "Plan") for the Fund is in effect under Section 12(b) of
the Act and Rule 12b-1 thereunder.
The Plan was approved on July 16, 1992 by the Directors including a majority
of the Directors who are not "interested persons" (as defined in the Act) of the
Fund and who have no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan (the "Qualified Directors") and
was approved by shareholders of the Fund on November 23, 1992. The plan became
effective on January 1, 1993.
Amendments to the Plan were approved in respect of the Class D shares on
November 18, 1993 by the Directors, including a majority of the Qualified
Directors and became effective with respect to the Class D shares on February 1,
1994. The Plan will continue in effect until December 31 of each year so long as
such continuance is approved annually by a majority vote of both the Directors
and the Qualified Directors of the Fund, cast in person at a meeting called for
the purpose of voting on such approval. The Plan may not be amended to increase
materially the amounts payable under the terms of the Plan without the approval
of a majority of the outstanding voting securities of the Funds and no material
amendment to the Plan may be made except with the approval of a majority of both
the Directors and the Qualified Directors in accordance with the applicable
provisions of the Act and the rules thereunder.
The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review at least quarterly, a written report
of the amounts expended (and purpose therefor) made under the Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors.
PORTFOLIO TRANSACTIONS
No brokerage commissions were paid by the Fund during the fiscal years ended
September 30, 1992, 1993 or 1994. When two or more Series of the Fund or two or
more of the investment companies in the Seligman Group or other investment
advisory clients of the Manager desire to buy or sell the same security at the
same time, the securities purchased or sold are allocated by the Manager in a
10
<PAGE>
manner believed to be equitable to each. There may be possible advantages or
disadvantages of such transactions with respect to price or the size of
positions readily obtainable or saleable.
PURCHASE AND REDEMPTION OF FUND SHARES
Each Series of the Fund issues two classes of shares: Class A shares may be
purchased at a price equal to the next determined net asset value per share,
plus a sales load. Class D shares may be purchased at a price equal to the next
determined net asset value without an initial sales load, but a CDSL may be
charged on certain redemptions within one year of purchase. See "Alternative
Distribution System," "Purchase Of Shares," and "Redemption Of Shares" in the
Fund's Prospectus.
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value.* Using each Series' net asset value at
September 30, 1994, the maximum offering price of each Series' shares is as
follows:
<TABLE>
CLASS A SHARES
<CAPTION>
Net Asset Maximum Sales Load Maximum Offering
Name of Series Value Per Share (4.75% of Offering Price) Price Per Share
- --------------- ------------------- ------------------------- ---------------
<S> <C> <C> <C>
National $ 7.18 $.36 $ 7.54
Colorado 7.09 .35 7.44
Georgia 7.48 .37 7.85
Louisiana 7.94 .40 8.34
Maryland 7.71 .38 8.09
Massachusetts 7.66 .38 8.04
Michigan 8.28 .41 8.69
Minnesota 7.72 .38 8.10
Missouri 7.41 .37 7.78
New York 7.67 .38 8.05
Ohio 7.90 .39 8.29
Oregon 7.43 .37 7.80
South Carolina 7.61 .38 7.99
</TABLE>
CLASS D SHARES
Net Asset Value and Maximum
Name of Series Offering Price Per Share*
- -------------- -------------------------
National $ 7.18
Colorado 7.09
Georgia 7.49
Louisiana 7.94
Maryland 7.72
Massachusetts 7.66
Michigan 8.28
Minnesota 7.73
Missouri 7.41
New York 7.67
Ohio 7.92
Oregon 7.43
South Carolina 7.61
- ---------
* Class D shares are subject to a CDSL of 1% on certain redemptions within one
year of purchase. See "Redemption Of Shares" in the Prospectus.
11
<PAGE>
Class A Shares - Reduced Sales Loads
Reductions Available. Shares of any Seligman mutual fund sold with a sales load
in a continuous offering will be eligible for the following reductions:
Volume Discounts are provided if the total amount being invested in Class A
shares of a Series alone, the other series of a Fund or in any combination of
shares of the other mutual funds in the Seligman Group which are sold with a
sales load, reaches levels indicated in the sales load schedule set forth in the
Prospectuses.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of a Series, the other series of the Fund, Seligman
Capital Fund, Seligman Common Stock Fund, Seligman Communications and
Information Fund, Seligman Frontier Fund, Seligman Growth Fund, Seligman
Henderson Global Fund Series, Seligman High Income Fund Series, Seligman Income
Fund, Seligman New Jersey Fund, the Seligman Pennsylvania Tax-Exempt Fund
Series, or Seligman Tax-Exempt Series Trust that were sold with a sales load
with the total net asset value of shares of those Seligman mutual funds already
owned that were sold with a sales load and the total net asset value of shares
of Seligman Cash Management Fund which were acquired through an exchange of
shares of another mutual fund in the Seligman Group on which there was a sales
load at the time of purchase to determine reduced sales loads in accordance with
the schedule in the Prospectuses. The value of the shares owned, including the
value of shares of Seligman Cash Management Fund acquired in an exchange of
shares of another mutual fund in the Seligman Group on which there is a sales
load at the time of purchase will be taken into account in orders placed through
a dealer, however, only if Seligman Financial Services, Inc. ("SFSI") is
notified by an investor or dealer of the amount owned at the time the purchase
is made and is furnished sufficient information to permit confirmation.
A Letter of Intent allows an investor to purchase Class A shares of a Series
over a 13-month period at reduced sales loads in accordance with the schedule in
the Prospectuses, based on the total amount of Class A shares that the letter
states the investor intends to purchase plus the total net asset value of shares
that were sold with a sales load of the other series of the Fund, Seligman
Capital Fund, Seligman Common Stock Fund, Seligman Communications and
Information Fund, Seligman Frontier Fund, Seligman Growth Fund, Seligman
Henderson Global Fund Series, Seligman High Income Fund Series, Seligman Income
Fund, Seligman New Jersey Fund, Seligman Pennsylvania Tax-Exempt Fund Series,
and Seligman Tax-Exempt Series Trust already owned and the total net asset value
of shares of Seligman Cash Management Fund which were acquired through an
exchange of shares of another mutual fund in the Seligman Group on which there
was a sales load at the time of purchase. Reduced sales loads also may apply to
purchases made within a 13-month period starting up to 90 days before the date
of execution of a letter of intent. For more information concerning the terms of
the letter of intent, see "Terms and Conditions - Letter of Intent" accompanying
the Account Application in the Fund's Prospectus.
Persons Entitled to Reductions. Reductions in sales loads apply to purchases of
Class A shares of each Series by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code,
tax-exempt organizations under Section 501 (c)(3) or (13), and non-qualified
employee benefit plans that satisfy uniform criteria are considered "single
persons" for this purpose. The uniform criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to receive
in bulk and to distribute to each participant on a timely basis the Fund
prospectuses, reports and other shareholder communications.
2. Employees participating in a plan will be expected to make regular periodic
investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12
months and 30 days after the last regular investment in his account. In such
event, the dropped participant would lose the discount on share purchases to
which the plan might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales loads in the Prospectuses
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans," of
employers who have at least 2,000 U.S. employees to whom such plan is made
available or, regardless of the number of employees, if such plan is established
or maintained by any dealer which has a sales agreement with Seligman Financial
Services, Inc. Such sales must be made in connection with a payroll deduction
12
<PAGE>
system of plan funding or other systems acceptable to Seligman Data Corp., the
Fund's shareholder service agent. Such sales are believed to require limited
sales effort and sales related expenses and therefore are made at net asset
value. Contributions or account information for plan participation also should
be transmitted to Seligman Data Corp. by methods which it accepts. Additional
information about "eligible employee benefit plans" is available from investment
dealers or SFSI. The term "eligible employee benefit plan" means any plan or
arrangement, whether or not tax qualified, which provides for the purchase of
Series' shares.
Further Types of Reductions. Class A shares of each Series may be issued without
a sales load in connection with the acquisition of cash and securities owned by
other investment companies and personal holding companies to financial
institution trust departments, to registered investment advisers exercising
investment discretionary authority with respect to the purchase of Series
shares, or pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitation of, its employees, members or
participants in connection with the purchase of shares of the Fund, to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the 1940 Act, to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI, to shareholders of mutual funds
with investment objectives similar to the Series' who purchase shares with
redemption proceeds of such funds and to certain unit investment trusts as
described in the Funds' Prospectus.
Class A shares of each Series may be sold at net asset value to these
persons since such sales require less sales effort and lower sales related
expenses as compared with sales to the general public.
Payment in Securities. In addition to cash, the Fund may accept readily
marketable securities in payment for Series shares sold at the applicable public
offering price. Generally, the Fund will only consider accepting these
securities (1) to increase its holdings in a portfolio security of a Series, or
(2) if the Manager determines that the offered securities are a suitable
investment in a sufficient amount for efficient management. Although no minimum
has been established, it is expected that the Fund would not accept securities
with a value of less than $100,000 per issue in payment for shares. The Fund may
reject in whole or in part offers to pay for shares with securities, may require
partial payment in cash for applicable sales loads, and may discontinue
accepting securities as payment for shares at any time without notice. In
accordance with Texas securities regulations, should the Fund accept securities
in payment for Series shares, such transactions would be limited to a bonafide
reorganization, statutory merger, or to other acquisitions of portfolio
securities (except for municpal debt securities issued by state political
subdivisions or their agencies or instrumentalities) which meet the investment
objectives and policies of a Series; are acquired for investment and not for
resale; are liquid securities which are not restricted as to transfer either by
law or liquidity of market; and have a value which is readily ascertainable (and
not established only be evaluation procedures) as evidenced by a listing on the
American Stock Exchange, the New York Stock Exchange or NASDAQ. The Fund has no
present intention of accepting securities in payment for shares.
More About Redemptions. The procedures for redemption of Fund shares under
ordinary circumstances are set forth in the Prospectus. In unusual
circumstances, payment may be postponed, or the right of redemption postponed
for more than seven days, if the orderly liquidation of portfolio securities is
prevented by the closing of, or restricted trading on, the New York Stock
Exchange during periods of emergency or such other periods as ordered by the
Securities and Exchange Commission. Payment may be made in readily marketable
securities, subject to the review of some state securities commissions. If
payment is made in securities, a shareholder may incur brokerage expenses in
converting these securities into cash.
DISTRIBUTION SERVICES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the shares of the Fund and of the other mutual
funds in the Seligman Group. As general distributor of the Fund's Common Stock,
SFSI allows concessions to all dealers, up to 4.25% on purchases of Class A
shares to which the 4.75% sales load applies. SFSI receives the balance of sales
loads and any CDSL paid on Class D shares, if applicable, paid by investors. The
Fund and SFSI are parties to a Distributing Agreement, dated January 1, 1993.
The following tables set forth the commissions received by SFSI, dealers
concessions and total commissions paid by each Series on sales of Class A shares
of the Fund for the fiscal years ended September 30, 1994, 1993 and 1992. Also
included in the table for the period February 1, 1994 through September 30,
1994, is the amount of any CDSL retained by SFSI:
13
<PAGE>
<TABLE>
<CAPTION>
Fiscal 1994
-----------
Series SFSI Commissions Dealer Concessions Total Commissions CDSL Retained
------ ---------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C>
National $ 19,575 $ 143,977 $ 163,552 $ --
Colorado 9,703 71,208 80,911 1,960
Georgia 50,838 376,174 427,012 49
Louisiana 16,250 123,857 140,107 84
Maryland 13,558 104,817 118,375 70
Massachusetts 17,927 136,115 154,042 40
Michigan 47,057 353,939 400,996 148
Minnesota 25,673 197,561 223,234 508
Missouri 15,167 114,971 130,138 1,363
New York 11,191 85,746 96,937 --
Ohio 41,962 312,461 354,423 --
Oregon 35,873 273,141 309,014 289
South Carolina 68,528 518,381 586,909 202
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1993
-----------
Series SFSI Commissions Dealer Concessions Total Commissions
------ ---------------- ------------------ -----------------
<S> <C> <C> <C>
National $ 30,531 $ 227,385 $ 257,916
Colorado 14,310 110,601 124,911
Georgia 104,149 781,322 885,471
Louisiana 37,905 280,595 318,500
Maryland 20,858 160,890 181,748
Massachusetts 32,759 246,120 278,879
Michigan 79,852 613,391 693,243
Minnesota 34,653 269,931 304,584
Missouri 25,273 196,422 221,695
New York 33,925 258,230 292,155
Ohio 70,429 532,482 602,911
Oregon 63,154 479,855 543,009
South Carolina 120,563 1,185,575 1,306,138
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1992
-----------
Series SFSI Commissions Dealer Concessions Total Commissions
------ ---------------- ------------------ -----------------
<S> <C> <C> <C>
National $ 35,290 $ 273,421 $ 308,711
Colorado 23,734 180,134 203,868
Georgia 83,553 658,066 741,619
Louisiana 43,067 326,020 369,087
Maryland 24,293 191,976 216,269
Massachusetts 63,437 508,405 571,842
Michigan 81,995 649,583 731,578
Minnesota 53,294 430,319 483,613
Missouri 18,835 150,409 169,244
New York 50,197 375,179 425,376
Ohio 79,614 645,060 724,674
Oregon 55,333 437,856 493,189
South Carolina 115,020 897,329 1,012,349
</TABLE>
Class A shares of each Series may be sold at net asset value to present and
retired Trustees, directors, officers, employees (and family members) of the
Fund, the other investment companies in the Seligman Group, the Manager and
other companies affiliated with the Manager. Such sales also may be made to
employee benefit plans for such persons and to any investment advisory,
custodial, trust or other fiduciary account managed or advised by the Manager or
any affiliate. These sales may be made for investment purposes only, and shares
may be resold only to the Fund.
14
<PAGE>
MORE ABOUT TAXES
Under the Tax Reform Act of 1986, each Series of the Fund will be treated as
a separate corporation for federal income tax purposes. As a result,
determinations of net investment income, exempt-interest dividends and net
long-term and short-term capital gain and loss will be made separately for each
Series.
As indicated in the Prospectus, each Series intends to qualify and elect to
be treated as a regulated investment company under the Internal Revenue Code and
thus to be relieved of federal income tax on amounts distributed to
shareholders; provided that it distributes at least 90 percent of its net
investment income and net short-term capital gains, if any.
Qualification as a regulated investment company under the Internal Revenue
Code requires among other things, that (a) at least 90% of the annual gross
income of the Series be derived from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of stocks,
securities or currencies, or other income (including but not limited to gains
from options, futures, or forward contracts) derived with respect to its
business of investing in such stocks, securities or currencies; (b) the Series
derive less than 30% of its gross annual income from gains from the sale or
other disposition of stock, securities and certain other assets held for less
than three months; and (c) the Series diversify its holdings so that, at the end
of each quarter of the taxable year, (i) at least 50% of the market value of the
Series' assets is represented by cash, United States Government securities and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Series' assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than U.S. Government securities).
VALUATION
Net asset value per Series share is determined as of the close of the New
York Stock Exchange ("NYSE") (currently 4:00 p.m. New York City time), on each
day that the NYSE is open. The NYSE is currently closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. The Fund will also determine net asset
value on any day that there is a sufficient degree of trading in the Fund's
portfolio securities that its net asset value might be materially affected but
only if on such day the Fund is required to sell or redeem shares. Net asset
value of a Series is determined by dividing the value of the total assets of
that Series, less liabilities, by the number of outstanding shares of that
Series. All expenses of the Series including the Manager's fee, are accrued
daily and taken into account for the purpose of determining its net asset value.
The securities in which the Fund invests are traded primarily in the
over-the-counter market. Tax-exempt securities and other short-term holdings
maturing in more than 60 days are valued on the basis of quotations provided by
an independent pricing service, approved by the Directors, which uses
information with respect to transactions in bonds, quotations from bond dealers,
market transactions in comparable securities and various relationships between
securities in determining value. In the absence of such quotations, in
accordance with fair value as determined in accordance with procedures approved
by the Directors. Short-term holdings having remaining maturities of 60 days or
less are generally valued at amortized cost.
Generally, trading in certain securities such as tax-exempt securities,
corporate bonds, U.S. government securities, and money market instruments is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in determining the net asset value of
the Series shares are computed as of such times. Events affecting the value of
such securities may occur between such times and the close of the NYSE which
will not be reflected in the computation of the Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities and other assets will be valued at their fair
market value as determined in good faith by the Directors.
PERFORMANCE INFORMATION
The annualized yield for the 30-day period ended September 30, 1994 for each
Series' Class A shares was as follows: National-5.47%, Colorado-4.76%,
Georgia-5.07%, Louisiana-4.73%, Maryland-4.94%, Massachusetts-4.74%,
Michigan-4.89%, Minnesota-4.81%, Missouri-4.84%, New York-5.05%, Ohio-4.66%,
Oregon-4.68%, and South Carolina-4.91%. The annualized yield was computed by
dividing a Series' net investment income per share earned during this 30-day
period by the maximum offering price per share (i.e., the net asset value plus
the maximum sales load of 4.75% of the net amount invested) on September 30,
1994, which was the last day of this period. The average number of Class A
shares were: National-15,660,565, Colorado-8,326,093, Georgia-8,282,060,
Louisiana-7,780,228, Maryland-7,444,172, Massachusetts-15,758,686,
Michigan-18,285,764, Minnesota-17,500,185, Missouri-7,111,225, New
York-11,878,359, Ohio-21,830,044, Oregon-8,090,473 and South Carolina-15,178,761
which was the average daily number of shares outstanding during the 30-
15
<PAGE>
day period that were eligible to receive dividends. Income was computed by
totaling the interest earned on all debt obligations during the 30-day period
and subtracting from that amount the total of all recurring expenses incurred
during the period. The 30-day yield was then annualized on a bond-equivalent
basis assuming semi-annual reinvestment and compounding of net investment
income, as described in the Prospectus.
The tax equivalent annualized yield for the 30-day period ended September
30, 1994 for each of the Series' Class A shares was as follows: National-9.06%,
Colorado-8.29%, Georgia-8.93%, Louisiana-8.13%, Maryland-8.70%,
Massachusetts-8.91%, Michigan-8.49%, Minnesota-8.70%, Missouri-8.33%, New
York-9.08%, Ohio-8.29%, Oregon-8.51% and South Carolina-8.74%. The tax
equivalent annualized yield was computed by first computing the annualized yield
as discussed above. Then the portion of the yield attributable to securities the
income of which was exempt for federal and state income tax purposes was
determined. This portion of the yield was then divided by one minus the
following percentages: National-39.60%, Colorado-42.62%, Georgia-43.22%,
Louisiana-41.83%, Maryland-43.22%, Massachusetts-46.85%, Michigan-42.38%,
Minnesota-44.73%, Missouri-41.94%, New York-44.36%, Ohio-43.77%, Oregon-45.04%
and South Carolina-43.83% which percentages assume the maximum combined federal
and state income tax rate for individual taxpayers that are subject to such
state's personal income taxes. Then the small portion of the yield (for all the
Series except the National Series) attributable to securities the income of
which was exempt only for federal income tax purposes was determined. This
portion of the yield was then divided by one minus 39.6% (39.6% being the
maximum federal income tax rate). These two calculations were then added to the
portion of the Class A shares yield, if any, that was not attributable to
securities, the income of which was not tax exempt.
The average annual total return for the one-year period ended September 30,
1994 for each of the Series' Class A shares was as follows: National-(12.16)%,
Colorado-(7.57)%, Georgia-(10.00)%, Louisiana-(8.42)%, Maryland-(8.63)%,
Massachusetts-(7.59)%, Michigan-(7.48)%, Minnesota-(4.61)%, Missouri-(9.32)%,
New York (9.90)%, Ohio-(7.71)%, Oregon-(6.98)% and South Carolina-(9.10)%; for
the five-year period ended on September 30, 1994 for each of the Series' Class A
shares was: National-5.67%, Colorado-5.40%, Georgia-6.04%, Louisiana-6.00%,
Maryland-5.96%, Massachusetts-6.40%, Michigan-6.47%, Minnesota-6.41%,
Missouri-5.81%, New York-6.17%, Ohio-6.39%, Oregon-6.10%, and South
Carolina-6.01%; for the ten-year period ended on September 30, 1994 for certain
of the Series' Class A shares was: National-9.37%, Massachusetts-8.64%,
Michigan-9.32%, Minnesota-8.78%, New York-8.77%, and Ohio-9.11%; and since
inception through the period ended on September 30, 1994 for certain of the
Series' Class A shares was: Colorado-5.96%, Georgia-6.66%, Louisiana-8.06%,
Maryland-7.16%, Missouri-6.51%, Oregon-6.14% and South Carolina-6.79%. These
amounts were computed by assuming a hypothetical initial payment of $1,000 in
Class A shares of each Series. From this $1,000, the maximum sales load of
$47.50 (4.75% of public offering price) was deducted. It was then assumed that
all of the dividends and distributions by the Series' Class A shares over the
relevant time period were reinvested. It was then assumed that at the end of the
one-year period, the five-year period and since inception of the Series, the
entire amount was redeemed. The average annual total return was then calculated
by calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon redemption (i.e., the average annual
compound rate of return).
The annualized yield for the 30-day period ended September 30, 1994 for each
Series' Class D shares was as follows: National-4.75%, Colorado-4.06%,
Georgia-4.34%, Louisiana-4.01%, Maryland-4.14%, Massachusetts-4.01%,
Michigan-4.15%, Minnesota-4.08%, Missouri-4.09%, New York-4.26%, Ohio-3.93%,
Oregon-3.93% and South Carolina-4.16%. The annualized yield was computed as for
Class A shares by dividing a Series' net investment income per share earned
during this 30-day period by the maximum offering price per share (i.e., the net
asset value) on September 30, 1994, which was the last day of this period. The
average number of Class D shares were: National-61,971, Colorado-13,493,
Georgia-106,574, Louisiana-76,101, Maryland-46,113, Massachusetts-138,219,
Michigan-77,825, Minnesota-193,119, Missouri-61,027, New York-61,064,
Ohio-39,689, Oregon-109,753 and South Carolina-195,754 which was the average
daily number of shares outstanding during the 30-day period that were eligible
to receive dividends.
The tax equivalent annualized yield for the 30-day period ended September
30, 1994 for each of the Series' Class D shares was as follows: National-7.86%,
Colorado-7.07%, Georgia-7.64%, Louisiana-6.89%, Maryland-7.29%,
Massachusetts-7.54%, Michigan-7.20%, Minnesota-7.38%, Missouri-7.04%, New
York-7.66%, Ohio-6.99%, Oregon-7.15% and South Carolina-7.40%. The tax
equivalent annualized yield was computed as discussed above for Class A shares.
The total return for the period from February 1, 1994 through September 30,
1994 for each of the Series' Class D shares was as follows: National-(10.84)%,
Colorado-(6.64)%, Georgia-(8.47)%, Louisiana-(7.36)%, Maryland-(7.13)%,
Massachusetts-(6.26)%, Michigan-(6.39)%, Minnesota-(4.02)%, Missouri-(8.06)%,
New York (8.62)%, Ohio-(6.29)%, Oregon-(5.69)% and South Carolina-(8.04)%. These
amounts were computed by assuming a hypothetical initial payment of $1,000 in
Class D shares of each Series and that all of the dividends and distributions by
the Series' Class D shares over the relevant time period were reinvested. It was
16
<PAGE>
then assumed that at the end of the period, the entire amount was redeemed,
subtracting the applicable 1% CDSL.
The tables below illustrate the total returns on a $1,000 investment in each
of the Series Class A and Class D shares for the ten years ended September 30,
1994 or from the commencement of a Series' operation through September 30, 1994,
assuming investment of all dividends and capital gain distributions.
<TABLE>
CLASS A SHARES
<CAPTION>
Value of Capital Value Total Value
Period Initial Gain of of Total
Ended 1 Investment 2 Distributions Dividends Investment 2 Return 1,3
- ------- ------------ ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
NATIONAL
9/30/85 $ 1,039 $ - $ 96 $ 1,135
9/30/86 1,179 33 221 1,433
9/30/87 1,031 79 289 1,399
9/30/88 1,063 151 415 1,629
9/30/89 1,075 157 537 1,769
9/30/90 1,035 173 633 1,841
9/30/91 1,099 203 802 2,104
9/30/92 1,122 214 953 2,289
9/30/93 1,213 272 1,171 2,656
9/30/94 999 360 1,089 2,448 144.81%
COLORADO
9/30/86 943 - 24 967
9/30/87 851 3 82 936
9/30/88 916 10 161 1,087
9/30/89 941 11 241 1,193
9/30/90 922 10 313 1,245
9/30/91 963 11 410 1,384
9/30/92 979 11 501 1,491
9/30/93 1,035 28 615 1,678
9/30/94 945 41 643 1,629 62.87%
GEORGIA
9/30/87 865 - 14 879
9/30/88 945 - 88 1,033
9/30/89 973 1 164 1,138
9/30/90 957 4 236 1,197
9/30/91 1,018 5 334 1,357
9/30/92 1,046 11 430 1,487
9/30/93 1,124 20 551 1,695
9/30/94 997 34 570 1,601 60.15%
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Value of Capital Value Total Value
Period Initial Gain of of Total
Ended 1 Investment 2 Distributions Dividends Investment2 Return1,3
- ------- ------------ ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
LOUISIANA
9/30/86 $ 1,057 $ - $ 80 $ 1,137
9/30/87 981 11 152 1,144
9/30/88 1,040 21 252 1,313
9/30/89 1,051 31 349 1,431
9/30/90 1,027 42 437 1,506
9/30/91 1,091 49 569 1,709
9/30/92 1,118 58 689 1,865
9/30/93 1,172 85 833 2,090
9/30/94 1,059 95 856 2,010 101.02%
MARYLAND
9/30/86 1,012 - 74 1,086
9/30/87 916 - 133 1,049
9/30/88 986 7 221 1,214
9/30/89 1,012 8 309 1,329
9/30/90 994 7 387 1,388
9/30/91 1,059 8 505 1,572
9/30/92 1,086 15 615 1,716
9/30/93 1,152 39 752 1,943
9/30/94 1,028 71 765 1,864 86.41%
MASSACHUSETTS
9/30/85 1,010 -- 89 1,099
9/30/86 1,116 1 196 1,313
9/30/87 996 28 261 1,285
9/30/88 1,054 48 378 1,480
9/30/89 1,058 58 485 1,601
9/30/90 1,004 72 564 1,640
9/30/91 1,087 81 732 1,900
9/30/92 1,115 94 876 2,085
9/30/93 1,181 120 1,059 2,360
9/30/94 1,059 161 1,071 2,291 129.09%
MICHIGAN
9/30/85 1,018 -- 89 1,107
9/30/86 1,151 17 202 1,370
9/30/87 1,008 57 265 1,330
9/30/88 1,070 85 388 1,543
9/30/89 1,097 92 507 1,696
9/30/90 1,063 108 602 1,773
9/30/91 1,129 119 762 2,010
9/30/92 1,170 136 916 2,222
9/30/93 1,224 195 1,091 2,510
9/30/94 1,116 201 1,120 2,437 143.73%
MINNESOTA
9/30/85 1,007 -- 88 1,095
9/30/86 1,125 7 196 1,328
9/30/87 1,003 39 260 1,302
9/30/88 1,059 59 377 1,495
9/30/89 1,070 65 484 1,619
9/30/90 1,055 76 582 1,713
9/30/91 1,100 80 723 1,903
9/30/92 1,111 83 856 2,050
9/30/93 1,166 121 1,030 2,317
9/30/94 1,087 145 1,088 2,320 132.00%
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Value of Capital Value Total Value
Period Initial Gain of of Total
Ended 1 Investment 2 Distributions Dividends Investment 2 Return 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
MISSOURI
9/30/86 $ 976 $ - $ 13 $ 989
9/30/87 876 - 71 947
9/30/88 947 8 151 1,106
9/30/89 971 8 230 1,209
9/30/90 963 8 304 1,275
9/30/91 1,029 9 411 1,449
9/30/92 1,040 21 502 1,563
9/30/93 1,108 35 626 1,769
9/30/94 988 52 643 1,683 68.28%
NEW YORK
9/30/85 1,011 -- 88 1,099
9/30/86 1,126 17 195 1,338
9/30/87 995 51 260 1,306
9/30/88 1,034 92 372 1,498
9/30/89 1,053 99 486 1,638
9/30/90 1,011 105 574 1,690
9/30/91 1,085 112 739 1,936
9/30/92 1,111 133 882 2,126
9/30/93 1,195 176 1,080 2,451
9/30/94 1,048 206 1,065 2,319 131.89%
OHIO
9/30/85 1,014 -- 90 1,104
9/30/86 1,128 9 201 1,338
9/30/87 1,029 26 274 1,329
9/30/88 1,075 69 395 1,589
9/30/89 1,088 73 510 1,671
9/30/90 1,063 93 610 1,766
9/30/91 1,124 101 770 1,995
9/30/92 1,155 114 919 2,188
9/30/93 1,223 141 1,104 2,468
9/30/94 1,102 172 1,118 2,392 139.23%
OREGON
9/30/87 828 - 51 879
9/30/88 911 - 125 1,036
9/30/89 940 - 193 1,133
9/30/90 928 - 268 1,196
9/30/91 989 - 365 1,354
9/30/92 1,014 - 454 1,468
9/30/93 1,077 - 570 1,647
9/30/94 991 12 605 1,608 60.77%
SOUTH CAROLINA
9/30/87 889 - 12 901
9/30/88 962 - 85 1,047
9/30/89 984 1 160 1,145
9/30/90 964 1 231 1,196
9/30/91 1,027 8 328 1,363
9/30/92 1,067 11 423 1,501
9/30/93 1,136 16 537 1,689
9/30/94 1,015 36 560 1,611 61.06%
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
CLASS D SHARES
Value of Capital Value Total Value
Period Initial Gain of of Total
Ended 1 Investment 2 Distributions Dividends Investment 2 Return 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
NATIONAL
9/30/94 $ 867 $ - $ 25 $ 892 (10.84)%
COLORADO
9/30/94 909 - 25 934 (6.64)
GEORGIA
9/30/94 890 - 25 915 (8.47)
LOUISIANA
9/30/94 900 - 26 926 (7.36)
MARYLAND
9/30/94 903 - 26 929 (7.13)
MASSACHUSETTS
9/30/94 910 - 27 937 (6.26)
MICHIGAN
9/30/94 910 - 26 936 (6.39)
MINNESOTA
9/30/94 931 - 29 960 (4.02)
MISSOURI
9/30/94 895 - 24 919 (8.06)
NEW YORK
9/30/94 888 - 26 914 (8.62)
OHIO
9/30/94 911 - 26 937 (6.29)
OREGON
9/30/94 917 - 26 943 (5.69)
SOUTH CAROLINA
9/30/94 895 - 25 920 (8.04)
</TABLE>
1 For Class A shares from commencement of operations or the ten-year period
beginning on:
Colorado 5/1/86 Missouri 7/1/86
Georgia 6/15/87 National 10/1/81
Louisiana 10/1/85 New York 10/1/84
Maryland 10/1/85 Ohio 10/1/84
Massachusetts 10/1/84 Oregon 10/15/86
Michigan 10/1/84 South Carolina 6/30/87
Minnesota 10/1/84
From commencement of operations of Class D shares on February 1, 1994.
2 The "Value of Initial Investment" as of the date indicated reflects the
effect to the maximum sales load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value of Investment" assumes investment of all dividends and capital
gain distributions.
3 Total return for each Series is calculated by assuming a hypothetical
initial investment of $1,000 at the beginning of the period specified,
subtracting the maximum sales load or CDSL, if applicable; determining total
value of all dividends and distributions that would have been paid during
the period on such shares assuming that each dividend or distribution was
invested in additional shares at net asset value; calculating the total
value of the investment at the end of the period; and finally, by dividing
the difference between the amount of the hypothetical initial investment at
the beginning of the period and its value at the end of the period by the
amount of the hypothetical initial investment.
The waiver by the Manager of its fees and reimbursement of certain expenses
during certain of the periods (as set forth under "Management and Expenses"
herein and "Management Services" in the Prospectus) for which the performance
results have been provided in this section positively affected such results.
20
<PAGE>
A Series' total return and average annual total return for Class A shares
quoted herein does not reflect the deduction of the administration, shareholder
services and distribution fee, for periods prior to January 1, 1993, which fee
if reflected would reduce the performance quoted.
GENERAL INFORMATION
The Fund is a Maryland corporation, authorized to issue 1,000,000,000 shares
of common stock. The Directors have authority to create and classify shares of
common stock in separate Series, without further action by shareholders. To
date, shares of thirteen Series have been authorized, which shares constitute
the interests in the Series described herein and further series may be added in
the future. The Investment Company Act of 1940 requires that where more than one
class or Series of shares exists, each class or Series must be preferred over
all other classes or Series in respect of assets specifically allocated to such
class or Series.
Rule 18f-2 under the Investment Company Act of 1940 provides that any matter
required to be submitted by the provisions of the Investment Company Act of 1940
or applicable state law, or otherwise, to the holders of the outstanding voting
securities of an investment company such as the Fund shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each class or Series affected by such matter. Rule 18f-2
further provides that a class or Series shall be deemed to be affected by a
matter unless it is clear that the interests of each class or Series in the
matter are substantially identical or that the matter does not affect any
interest of such class or Series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distributing contracts
and the election of directors from the separate voting requirements of the Rule.
Custodian. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
City, Missouri 64105, serves as custodian for the Fund. It also maintains, under
the general supervision of the Manager, the accounting records and determines
the net asset value for the Fund.
Auditors. Deloitte & Touche LLP, independent auditors, have been selected
as auditors of the Fund. Their address is Two World Financial Center, New York,
NY 10281.
FINANCIAL STATEMENTS
The Annual Report to Shareholders for the fiscal year ended September 30,
1994 is incorporated by reference into this Statement of Additional Information.
The Annual Report contains a schedule of the investments of each of the Fund's
Series as of September 30, 1994, as well as certain other financial information
as of that date. The Annual Report will be furnished, without charge, to
investors who request copies of the Fund's Statement of Additional Information.
APPENDIX A
Moody's Investors Service
Tax-Exempt Bonds
Aaa: Tax-Exempt bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa: Tax-exempt bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than Aaa bonds because margins
of protection may not be as large or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A: Tax-exempt bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
21
<PAGE>
Baa: Tax-exempt bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be characteristically lacking or may be
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact may have speculative characteristics as well.
Ba: Tax-exempt bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Tax-exempt bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Tax-exempt bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Tax-exempt bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.
C: Tax-exempt bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
Tax-Exempt Notes
Moody's ratings for tax-exempt notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
established cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing. Loans bearing the designation
MIG 2 are of high quality, with margins of protection ample although not so
large as in the preceding group. Loans bearing the designation MIG 3 are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Market access for refinancing in
particular, is likely to be less well established. Notes bearing the designation
MIG 4 are judged to be of adequate quality, carrying specific risk but having
protection commonly regarded as required of an investment security and not
distinctly or predominantly speculative.
Commercial Paper
Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment capacity of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
capacity for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
Issues rated "Not Prime" do not fall within any of the Prime rating
categories.
22
<PAGE>
Standard & Poor's Corporation ("S&P")
Tax-Exempt Bonds
AAA: Tax-exempt bonds rated AAA are highest grade obligations. Capacity to
pay interest and repay principal is extremely strong.
AA: Tax-exempt bonds rated AA have a very high degree of safety and very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree.
A: Tax-exempt bonds rated A are regarded as upper medium grade. They have a
strong degree of safety and capacity to pay interest and repay principal
although it is somewhat more susceptible in the long term to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Tax-exempt bonds rated BBB are regarded as having a satisfactory degree
of safety and capacity to pay interest and re-pay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and re-pay principal for bonds in this category than for bonds in
higher rated categories.
BB, B, CCC, CC: Tax-exempt bonds rated BB, B, CCC and CC are regarded on
balance, as predominantly speculative with respect to capacity to pay interest
and pre-pay principal in accordance with the terms of the bond. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.
C: The rating C is reserved for income bonds on which no interest is being
paid.
D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
Municipal Notes
SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
Commercial Paper
S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
23
<PAGE>
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
The ratings assigned by S&P may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within its major rating categories.
APPENDIX B
Special Factors Affecting the Colorado Tax-Exempt Series
Because of limitations contained in the state constitution, the State of
Colorado issues no general obligation bonds secured by the full faith and credit
of the state. Several agencies and instrumentalities of state government are
authorized by statute to issue bonds secured by revenues from specific projects
and activities. Additionally, the state is authorized to issue short-term
revenue anticipation notes.
There are approximately 1,800 units of local government in Colorado,
including counties, statutory cities and towns, home-rule cities and counties,
charter cities, school districts and a variety of water, irrigation and other
special improvement districts, all with various constitutional and statutory
authority to levy taxes and incur indebtedness. The major source of revenue for
funding the indebtedness is the ad valorem property tax, which presently is
imposed and collected solely at the local level, although the state is also
authorized to levy the tax, and revenue from special projects. Residential real
property was assessed at 12.86% of its actual value in 1994. All other property
is assessed at 29% of its actual value except producing mines and oil and gas
leaseholds and lands. Oil and gas leaseholds and lands are assessed at 87.5% on
primary recovery and 75% on secondary recovery.
In November 1992, voters in Colorado adopted a state constitutional
amendment known as Amendment 1 and as The Taxpayer's Bill of Rights ("TABOR").
Its provisions generally apply to the state or any local government, excluding
enterprises. An enterprise is a government-owned business authorized to issue
its own revenue bonds and receiving under 10% of annual revenue in grants from
other Colorado state and local governments combined. TABOR requires voter
approval in advance for nearly all new taxes, tax rate increases, mill levies
above that for the prior year, assessment valuation ratio increases, extensions
of expiring taxes, and policy changes which cause a net tax revenue gain, as
well as creation of debt and financial obligations without adequate present cash
reserves pledged irrevocably and held for payments in all applicable future
fiscal years. TABOR also imposes spending limits and revenue limits on state and
local governments.
State General Fund and cash non-exempt revenues appear to be below the TABOR
limit for both fiscal years 1994-95 and 1995-96. In fiscal year 1994-95 the
state TABOR limit is estimated to be 7.1%. For 1995-96, the state TABOR limit is
forecast to be 6.5%.
The final figure for fiscal year 1993 for assessed value of all taxable real
property in the state is $28,890,934,470 of which approximately 46.3% is
residential, and 32% is commercial and industrial. Total revenue from property
taxes in 1993 was $2,421,775,987. Figures for fiscal year 1994 are not yet
available.
The factors outlined below are generally indicative of the current economic
status of the State of Colorado. There can be no assurance that additional
factors or further economic difficulties and their impact on state and local
government finances will not adversely affect the market value of obligations of
the Colorado Tax-Exempt Series or the ability of the respective obligors to pay
debt service on certain of such obligations.
Colorado experienced a 2.9% increase in population in 1993, the strongest
since 1983, with a net positive migration of approximately 70,300. Preliminary
estimates indicate in-migration and population growth continued at a somewhat
lower rate in 1994 - 2.5%. Positive migration into Colorado is expected by
Colorado economists to continue through 1995, although at a slower pace.
Population growth of between 1.7% - 2.2% has been predicted for 1995.
Local economists have predicted employment growth of 2.7% in 1995. This is
somewhat lower than the approximately 3.1% - 3.5% rate for 1994 and considerably
lower than the approximately 4.3% - 4.7% rate for 1993. The growth of employment
in the Colorado economy over the last few years has been largely attributed to
several large public works projects, most notably the new international airport.
However, the closure of Lowry Air Force Base, the construction layoffs that have
resulted from near-completion of the new airport, as well as layoffs in the
transportation, public utility, and communications sectors have contributed to
the slower growth which began in 1994 and is expected to continue in 1995.
24
<PAGE>
While the rate of employment growth is slowing in Colorado it continues to grow
at rates above the nation's.
The increase in personal income in 1994 is estimated at 6.7%. Colorado
economists generally expect a decline in 1995. In 1994, the Denver-Boulder
metropolitan area's inflation rate outpaced nationwide inflation - projected to
be 4.4% compared to 2.6% for the nation. A forecast for 1995 is 4.2% versus 2.9%
for the nation. Retail sales increased by approximately 11.3% in 1994, up from
the 1993 increase of approximately 9.7%. Colorado economists are forecasting an
increase in retail sales of between 6.6% to 7.5% in 1995.
Colorado's home-building industry showed strong growth from 1990 through
1994, and appears to have peaked in 1994. New housing permits are expected to
decrease by as much as 6.4% in 1995 (although one estimate calls for a small
increase in 1995). Non-residential construction showed a decrease of somewhere
between 4.0% - 7.4% in 1994, with estimates for 1995 that are mixed - one
forecast calls for a decrease of 3.2% while another expected an increase of
8.3%.
Colorado's economy has experienced a relative boom over the last few years,
due in large part to the impact of several major public works projects which are
now nearing completion. This, together with the closing of Lowry Air Force Base,
has contributed to the slowdown in Colorado which began in 1994 and is expected
to continue in 1995. Colorado remains sensitive to the national business cycle
and Colorado's growth may be far lower than forecast to the extent it is
affected by that cycle.
Special Factors Affecting the Georgia Tax-Exempt Series
Since 1973 the long-term debt obligations of the State of Georgia have been
issued in the form of general obligation debt. Prior to 1973 all of the State's
long-term obligations were issued by ten separate State authorities and secured
by lease rental agreements between the authorities and various State departments
and agencies. Currently, Moody's rates Georgia general obligation bonds Aaa and
Standard & Poor's rates such bonds AA+. There can be no assurance that the
economic and political conditions on which these ratings are based will continue
or that particular obligation issues may not be adversely affected by changes in
economic, political or other conditions that do not affect the above ratings.
In addition to general obligation debt, the Georgia Constitution permits the
issuance by the State of certain guaranteed revenue debt. The State may incur
guaranteed revenue debt by guaranteeing the payment of certain revenue
obligations issued by an instrumentality of the State. The Georgia Constitution
prohibits the incurring of any general obligation debt or guaranteed revenue
debt if the highest aggregate annual debt service requirement for the then
current year or any subsequent fiscal year for outstanding general obligation
debt and guaranteed revenue debt, including the proposed debt, and the highest
aggregate annual payments for the then current year or any subsequent fiscal
year of the State under all contracts then in force to which the provisions of
the second paragraph of Article IX, Section VI, Paragraph I(a) of the Georgia
Constitution of 1976 (supplanted by the Constitution of 1983) are applicable,
exceed 10% of the total revenue receipts, less refunds, of the State treasury in
the fiscal year immediately preceding the year in which any such debt is to be
incurred. As of November 1994, the State's highest total annual commitment in
any current or subsequent fiscal year equalled 17% of fiscal year 1994 estimated
receipts.
The Georgia Constitution also permits the State to incur public debt to
supply a temporary deficit in the state treasury in any fiscal year created by a
delay in collecting the taxes of that year. Such debt must not exceed, in the
aggregate, 5% of the total revenue receipts, less refunds, of the state treasury
in the fiscal year immediately preceding the year in which such debt is
incurred. The debt incurred must be repaid on or before the last day of the
fiscal year in which it is to be incurred out of the taxes levied for that
fiscal year. No such debt may be incurred in any fiscal year if there is then
outstanding unpaid debt from any previous fiscal year which was incurred to
supply a temporary deficit in the state treasury. No such short-term debt has
been incurred under this provision since the inception of the constitutional
authority referred to in this paragraph.
The obligations held from time-to-time in the Georgia Series will, under
present law, have a very high likelihood of having been validated and confirmed
in a judicial proceeding prior to issuance. The legal effect of a validation in
Georgia is to render incontestable the validity of the pertinent obligations and
the security therefor. Certain obligations of certain governmental entities in
the State are not required to be validated and confirmed; however, the
percentage of such non-validated obligations would be very low in relation to
all outstanding tax-exempt obligations issued within the State.
The State operates on a fiscal year beginning July 1 and ending June 30. For
example, "fiscal 1994" refers to the year ended June 30, 1994.
25
<PAGE>
Based on data issued by the State of Georgia for fiscal year 1994, income
tax receipts and sales tax receipts of the State for fiscal year 1994 comprised
approximately 43.9% and 34.5%, respectively, of the State tax receipts. Further,
such data shows that total State tax receipts for fiscal 1994 ($9,409,562,090)
increased by approximately 12.74% over such collections in fiscal 1993. As of
November 1994, the State estimates tax receipts for 1995 at $9,813,760,431.
The average annual employment retake of the civilian labor force in the
State for August 1994 was 5.9% according to preliminary data provided by the
Georgia Department of Labor. The Metropolitan Atlanta area, which is the largest
employment center in the area comprised of Georgia and its five bordering states
and which accounts for approximately 42% of the State's population, has for some
time enjoyed a lower rate of unemployment than the State considered as a whole.
In descending order, wholesale and retail trade, services, manufacturing,
government and transportation comprise the largest sources of employment within
the State.
In March 1989, the U.S. Supreme Court (in Davis v. Michigan Department of
Treasury) ruled unconstitutional the imposition of state income taxes on federal
retirement benefits when state and local benefits were not taxed. Related
lawsuits were filed against Georgia seeking refunds for a period beginning in
1980, producing a maximum potential liability estimated at $591 million. Under
the State's three-year statute of limitations, however, maximum liability is
reported at $100 million. On December 6, 1994, the U.S. Supreme Court reversed
the Georgia Supreme Court's decision in Reich v. Collins (1993), which had
determined that the plaintiff federal retiree was not entitled to a refund of
taxes paid on federal retirement pension benefits for the tax years before 1989.
The U.S. Supreme Court in Reich remanded the case to the Georgia Supreme Court
"for the provision of meaningful backward-looking relief consistent with due
process and the McKesson line of cases." Further proceedings before the Georgia
Supreme Court have not been scheduled.
Many factors affect and could have an adverse impact on the financial
condition of the State and other issuers of long-term debt obligations which may
be held in the Georgia Series, including national, social, environmental,
economic and political policies and conditions, many of which are not within the
control of the State or such issuers. It is not possible to predict whether or
to what extent those factors may affect the State and other issuers of long-term
debt obligations which may be held in the portfolio of the Georgia Series and
the impact thereof on the ability of such issuers to meet payment obligations.
The sources of the information are the official statements of issuers
located in Georgia, other publicly available documents and oral statements from
various Federal and State agencies.
Special Factors Affecting the Louisiana Tax-Exempt Series
Under Louisiana law, certain bonds and obligations constitute general
obligations of the State of Louisiana or are backed by the full faith and credit
of the State of Louisiana, and certain bonds and obligations do not or are not.
The Louisiana Tax-Exempt Series invests in both types of obligations.
The Bond Security and Redemption Fund of the State of Louisiana secures all
general obligation bonds of the State of Louisiana issued pursuant to Article
VII, Sections 6(A) and 6(B) of the constitution of Louisiana and those bonds
issued by State agencies or instrumentalities which are backed by the State's
full faith and credit, pari passu. With certain exceptions, all money deposited
in the State Treasury is credited to the Bond Security and Redemption Fund. In
each fiscal year, an amount sufficient to pay all of the State's current
obligations which are secured by its full faith and credit is allocated from the
Bond Security and Redemption Fund. After such allocation, with certain
exceptions, any money remaining in the Bond Security and Redemption Fund is
credited to the State General Fund.
Any bonds issued by the State of Louisiana other than general obligation
bonds, or any bonds issued by the State of Louisiana or any other issuer that
are not backed by the full faith and credit of the State of Louisiana are not
entitled to the benefits of the Bond Security and Redemption Fund.
The legislature has limited its ability to authorize certain debt and the
State Bond Commission's ability to issue certain bonds. The legislature may not
authorize general obligation bonds or other general obligations secured by the
full faith and credit of the State if the amount of authorized but unissued debt
plus the amount of outstanding debt exceeds twice the average annual revenues of
the Bond Security and Redemption Fund for the last three fiscal years completed
prior to such authorization. This debt limitation is not applicable to or shall
not include the authorization of refunding bonds secured by the full faith and
credit of the State, to authorized or outstanding bond anticipation notes, or to
the issuance of revenue anticipation notes. Bond anticipation notes are issued
in anticipation of the sale of duly authorized bonds or to fund capital
improvements. The State Bond Commission may not issue general obligation bonds
or other general obligations secured by
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the full faith and credit of the State at any time when the highest annual debt
service requirement for the current or any subsequent fiscal years for such
debt, including the debt service on such bonds or other obligations then
proposed to be sold by the State Bond Commission, exceeds 10% of the average
annual revenues of the Bond Security and Redemption Fund for the last three
fiscal years completed prior to such issuance. This debt limitation is not
applicable to the issuance or sale by the State Bond Commission of refunding
bonds secured by the full faith and credit of the State of Louisiana or to bond
anticipation notes.
A new limitation on State borrowing has been established as a result of a
constitutional amendment passed by the voters of Louisiana in October 1993. As a
result of the amendment, the State Bond Commission may not approve the issuance
of general obligation bonds secured by the full faith and credit of the State,
or bonds secured by self-support revenues which in the first instance may not be
sufficient to pay debt service and will then draw on the full faith and credit
of the State, if the debt service requirement exceeds a specified percent of the
estimate of money to be received by the State general fund and dedicated funds
for each respective fiscal year as contained in the official forecast adopted by
the Revenue Estimating Conference at its first meeting at the beginning of each
fiscal year. The percentages are set on a graduated scale, beginning with 13.1%
for the 1993-1994 fiscal year and descending to 6.0% for the 2003-2004 fiscal
year and thereafter. The intent of the amendment is to reduce State borrowing
over time so that there is some limit put on the debt service portion of the
State budget.
The State Bond Commission may also issue and sell revenue anticipation notes
to avoid temporary cash flow deficits. These notes are payable from anticipated
cash, as reflected in the most recent official forecast of the Revenue
Estimating Conference. Unless issued in accordance with the provisions of
Article VIII, Section 6(A) of the State Constitution, the notes do not
constitute a full faith and credit obligation of the State.
The foregoing limitations on indebtedness imposed upon the legislature and
the State Bond Commission do not apply to obligations that are not general
obligations of the State of Louisiana or that are not backed by the full faith
and credit of the State of Louisiana.
Although the manner in which the Bond Security and Redemption Fund operates
is intended to adequately fund all obligations that are general obligations of
the State, or that are secured by the full faith and credit of the State, there
can be no assurance that particular bond issues will not be adversely affected
by expected budget gaps. In this regard, the State's fiscal condition has
degenerated from a recurring budget problem of $250 to $300 million dollars in
fiscal year 1988 to a recurring problem of $700 million dollars in fiscal year
1992. A significant component of Louisiana's annual budget burden arises out of
its debt service obligations which are the highest per capita of any of the 14
southern states. According to the 1990 United States Census Bureau, Louisiana
had a $226 per capita debt service interest payment, compared with $39 per
capita in Mississippi and $28 per capita in the State of Texas. Other factors
attributing to Louisiana's budget gap are the decline in mineral revenues, weak
sales tax collections, expiration of certain taxes, increases in certain tax
credits and the prior utilization of one time monies to balance earlier state
budgets.
Tax increases enacted in 1993 and increased gaming revenues are reducing the
State's recurring fiscal deficit problem. A small surplus occurred in 1993. The
State of Louisiana has announced a potential budget surplus for fiscal year
1994-95. These surplus funds, under current laws, should be used to retire
existing debt. The current surplus cannot be relied upon to assure that a fiscal
1995-96 deficit will not occur which would necessitate further budget reductions
or tax increases.
These same conditions could also adversely affect bonds that are not general
obligations of the State or that are not entitled to the full faith and credit
of the State and that therefore are not secured by the Bond Security and
Redemption Fund. Examples of these bonds include general obligation parish bond
issues, revenue bonds issued by the State of Louisiana or a parish or other
political subdivision or agency, and industrial development bonds. Revenue bonds
are payable only from revenues derived from a specific facility or revenue
source. Industrial development bonds are generally secured solely by the
revenues derived from payments made by the industrial user. With respect to
bonds issued by local political subdivisions or agencies, because the 64
parishes within the State of Louisiana are subject to their own revenue and
expenditure problems, current and long-term adverse developments affecting their
revenue sources and their general economy may have a detrimental impact on such
bonds. Similarly, current adverse developments affecting Louisiana's state and
local economy could have a detrimental impact on revenue bonds and industrial
development bonds.
Louisiana gained over 48,000 net new jobs between June 1993 and June 1994. A
3% growth rate in employment and 3.86% rise in wages places these growth rates
close to the national average rates. Services employment contributed half of the
job gains with medical and business services being the principal sources of job
growth. Gaming employment within
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the amusement and recreation service category contributed 4,500 jobs.
The unemployment rate in July 1994 was 7.7% - an increase from the prior
year rate of 7.1% (August 1993). The rise in unemployment was caused by an
increase in net immigration of workers to Louisiana faster than the rate of job
gains. The state labor force increased by 80,300 persons between August 1993 and
July 1994. All major sectors of the Louisiana economy gained jobs over the past
year except for manufacturing, which had a small loss of only 780 jobs.
Special Factors Affecting the Maryland Tax-Exempt Series
Some of the significant financial considerations relating to the investments
of the Maryland Series are summarized below. This information is derived
principally from official statements released on or before October 5, 1994,
relating to issues of Maryland obligations and does not purport to be a complete
description.
The State's total expenditures for the fiscal years ending June 30, 1992,
June 30, 1993 and June 30, 1994 were $11.585 billion, $11.786 billion and
$12.351 billion, respectively. As of October 5, 1994, it was estimated that
total expenditures for fiscal year 1995 would be $13.374 billion. The State's
General Fund, representing approximately 55%-60% of each year's total budget,
had a deficit on a budgetary basis of $56 million in fiscal year 1992, a surplus
of $11 million in fiscal year 1993 and a surplus of $60 million in fiscal year
1994. The Governor of Maryland reduced fiscal year 1993 appropriations by
approximately $56 million to offset the fiscal year 1992 deficit. The State
Constitution mandates a balanced budget.
In April 1994, the General Assembly approved the $13.3 billion 1995 fiscal
year budget. The Budget includes $2.6 billion in aid to local governments
(reflecting a $102.4 million increase in funding over 1994 that provides for
substantial increases in education, health and police aid), and $104.8 million
in general fund deficiency appropriations for fiscal year 1994, of which $60.5
million is a legislatively mandated appropriation to the Revenue Stabilization
Account of the State Reserve Fund. The Revenue Stabilization Account was
established in 1986 to retain State revenues for future needs and to reduce the
need for future tax increases. When the 1995 Budget was enacted, it was
estimated that the general fund surplus on a budgetary basis at June 30, 1995,
would be approximately $9.7 million; as of October 5, 1994, the estimate was
$49.5 million, which reflects the actual general fund surplus on a budgetary
basis at June 30, 1994, of $60 million.
The public indebtedness of Maryland and its instrumentalities is divided
into three basic types. The State issues general obligation bonds for capital
improvements and for various State-sponsored projects. The Department of
Transportation of Maryland issues limited, special obligation bonds for
transportation purposes payable primarily from specific, fixed-rate excise taxes
and other revenues related mainly to highway use. Certain authorities issue
obligations payable solely from specific non-tax enterprise fund revenues and
for which the State has no liability and has given no moral obligation
assurance.
According to recent available ratings, general obligation bonds of the State
of Maryland are rated "AAA" by Moody's and "AAA" by Standard & Poor's
Corporation, as are those of the largest county of the State, i.e., Montgomery
County in the suburbs of Washington, D.C. General obligation bonds of Baltimore
County, a separate political entity surrounding Baltimore City and the third
largest county in the State are rated "AAA" by Moody's and "AA+" by Standard &
Poor's Corporation. General obligation bonds of Prince George's County, the
second largest county, which is also in the suburbs of Washington, D.C., are
rated "AA" by Moody's and "AA-" by Standard & Poor's Corporation. The general
obligation bonds of those other counties of the State that are rated by Moody's
carry an "A" rating or better. The most populous municipality in Maryland is
Baltimore City, the general obligation bonds of which are rated "A1" by Moody's
and "A" by Standard & Poor's Corporation. The Washington Suburban Sanitary
District, a bi-county agency providing water and sewage services in Montgomery
and Prince George's Counties, issues general obligation bonds rated "AA1" by
Moody's and "AA" by Standard & Poor's.
While the ratings and other factors mentioned above indicate that Maryland
and its principal subdivisions and agencies, overall, are in satisfactory
economic health, there can, of course, be no assurance that this will continue
or that particular bond issues may not be adversely affected by changes in state
or local economic or political conditions.
Special Factors Affecting the Massachusetts Tax-Exempt Series
The Commonwealth of Massachusetts and certain of its cities and towns have
at certain times in the past experienced serious financial difficulties which
have adversely affected their credit standing. The recurrence of such financial
difficulties could adversely affect the market values and marketability of, or
result in default in payment on, outstanding obligations issued by the
Commonwealth or its public authorities or municipalities. In addition, recent
developments regarding the
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Massachusetts statutes which limit the taxing authority of certain Massachusetts
governmental entities may impair the ability of the issuers of some
Massachusetts Tax-Exempt Obligations to maintain debt service on their
obligations.
Annual expenditures by the Commonwealth for programs and services provided
by state government for fiscal years 1990 and 1991 exceeded total current year
revenues. In order to fund the fiscal 1990 budgetary deficit (and certain prior
year Medicaid reimbursement payments), the legislature authorized the issuance
of up to $1.42 billion of bonds. Retroactive application of the proceeds of such
bonds would have resulted in fiscal 1990 positive closing balances of $258.3
million on an adjusted basis. Total expenditures for fiscal 1991 were $13.935
billion and total revenues were $13.913 billion, resulting in a $21.2 million
operating loss. Application of the adjusted fiscal 1990 fund balances of $258.3
million resulted in a final fiscal 1991 budgetary surplus of $237.1 million.
Total expenditures and other uses for fiscal 1992 totalled approximately $13.914
billion and total revenues and other sources totalled approximately $14.226
billion. Overall, the budgeted operating funds ended fiscal 1992 with an excess
of revenues and other sources over expenditures and other uses of $312 million,
and with positive fund balances of approximately $549 million. Total
expenditures and other uses for fiscal 1993 totalled approximately $15.193
billion and total revenues and other sources totalled approximately $15.206
billion. Overall, the budgeted operating funds ended fiscal 1993 with an excess
of revenues and other sources over expenditures and other uses of $13 million,
and with positive fund balances of approximately $563 million. Total
expenditures and other uses for fiscal 1994 totalled approximately $15.952
billion and total revenues and other sources totalled approximately $15.979
billion, resulting in an excess of revenues and other sources over expenditures
and other uses of $27 million and in positive fund balances of approximately
$589 million.
The fiscal 1995 budget is based on estimated total revenues and other
sources of approximately $16.734 billion. Total expenditures and other uses for
fiscal 1994 are currently estimated at approximately $16.852 billion. The fiscal
1995 budget proposes that the $118 million difference between estimated revenues
and other sources and expenditures and other uses be provided for by application
of the beginning fund balances for fiscal 1995, to produce estimated ending fund
balances for fiscal 1995 of approximately $471 million. The fiscal 1995 budget
is based upon numerous spending and revenue estimates, the achievement of which
cannot be assured.
In Massachusetts, the tax on personal property and real estate is the
principal source of tax revenues available to cities and towns to meet local
costs. "Proposition 2 1/2", an initiative petition adopted by the voters of the
Commonwealth of Massachusetts on November 4, 1980, limits the power of
Massachusetts cities and towns and certain tax-supported districts and public
agencies to raise revenue from property taxes to support their operations,
including the payment of debt service. Proposition 2 1/2 required those cities
and towns with property tax levies in excess of 2 1/2% of the full and fair cash
value of their taxable real estate and personal property to reduce their levies
to the 2 1/2% level. It also limited each year's increase in the tax levy for
all cities and towns to 2 1/2% of the prior year's maximum levy, with an
exception for certain property added to the tax rolls and for certain
substantial valuation increases other than as part of a general reevaluation.
The reductions in local revenues and anticipated reductions in local
personnel and services resulting from Proposition 2 1/2 created strong demand
for substantial increases in state funded local aid, which increased
significantly in fiscal years 1982 through 1989. The effect of this increase in
local aid was to shift a major part of the impact of Proposition 2 1/2 to the
Commonwealth. Because of decreased Commonwealth revenues, local aid declined
significantly in fiscal 1990, 1991 and 1992. Local aid increased somewhat in
fiscal 1993 and fiscal 1994 and is expected to increase again in fiscal 1995.
Limitations on state tax revenues have been established by legislation
approved by the Governor on October 23, 1986 and by an initiative petition
approved by the voters on November 4, 1986. The two measures are inconsistent in
several respects, including the methods of calculating the limits and the
exclusions from the limits. The initiative petition, unlike its legislative
counterpart, contains no exclusion for debt service on Commonwealth bonds and
notes. Under both measures, excess revenues are returned to taxpayers in the
form of lower taxes. It is not yet clear how differences between the two
measures will be resolved. State tax revenues in fiscal 1987 did exceed the tax
limit imposed by the initiative petition by an estimated $29.2 million. This
amount was returned to the taxpayers in the form of a tax credit against
calendar year 1987 personal income tax liability pursuant to the provisions of
the initiative petition. State tax revenues since fiscal 1988, have not exceeded
the limit imposed by either the initiative petition or the legislative
enactment.
The Commonwealth maintains financial information on a budgetary basis. Since
fiscal year 1986, the Comptroller also has prepared annual financial statements
in accordance with generally accepted accounting principles (GAAP) as defined by
the Government Accounting Standards Board. GAAP basis financial statements
indicate that the Commonwealth ended fiscal 1990, 1991, 1992, 1993 and 1994 with
fund deficits of approximately $1.896 billion, $761.2 million, $397.4 million,
$184.1 million and $72 million, respectively.
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Special Factors Affecting the Michigan Tax-Exempt Series
The principal sectors of Michigan's diversified economy are manufacturing of
durable goods (including automobiles and components and office equipment),
tourism and agriculture. As reflected in historical employment figures, the
State's economy has lessened its dependence upon durable goods manufacturing. In
1960, employment in such industry accounted for 33% of the State's workforce.
This figure fell to 17.3% in 1991. However, such manufacturing continues to be
an important part of the State's economy. The particular industries are highly
cyclical and in the period 1994-95 are expected to operate at somewhat less than
full capacity but at higher levels than in the immediate prior years. This
factor can usually adversely affect the revenue streams of the State and its
political subdivisions because it adversely impacts tax sources, particularly
sales taxes, income taxes and single business taxes. The Michigan General Fund
balances for the 1989-90 and 1990-91 fiscal years were negative $310 million and
$169.4 million, respectively. Subsequent administration and legislative action
had a positive impact on the fiscal 1990-91 budget and eliminated this deficit
and also eliminated the $310 million deficit carried forward from the previous
fiscal year. The State's budget for the 1991-92 fiscal year was balanced by
several measures taken by the Administration and the Legislature during the
fiscal year. The State's budgets for the 1992-93 and 1993-94 fiscal years were
balanced during the fiscal years by a combination of line veto, deficit
reduction compromise package and some increased revenues. Similar administration
and legislative action is anticipated with respect to the 1994-95 fiscal year
budget. On August 19, 1993, the Governor of the State signed into law Act 145,
Public Acts of Michigan, 1993 ("Act 145"), a measure which would have
significantly impacted financing of primary and secondary school operations and
which has resulted in additional property tax and school finance reform
legislation. In order to replace local property tax revenues lost as a result of
Act 145, the Michigan Legislature, in December 1993, enacted several statutes
which address property tax and school finance reform. The property tax and
school finance reform measures included a ballot proposal ("Proposal A") which
was subject to voter approval and in fact approved on March 15, 1994. Under
Proposal A as approved, effective May 1, 1994, the State sales and use tax was
increased from 4% to 6%, the State income tax was decreased from 4.6% to 4.4%,
the cigarette tax was increased from $0.25 to $0.75 per pack and an additional
tax of 16% of the wholesale price will be imposed on certain other tobacco
products. A 2% real estate transfer tax is effective January 1, 1995, which will
decrease to 0.75% in April of 1995. Beginning in 1994, a State property tax of 6
mills is now imposed on all real and personal property currently subject to the
general property tax. All local school boards can, with voter approval, levy up
to the lesser of 18 mills or the number of mills levied in 1993 for school
operating purposes, on non-homestead property. Proposal A contains additional
provisions regarding the ability of local school districts to levy supplemental
property taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value will revert to the current
assessment level of 50% of true cash value. Under Proposal A, much of the
additional revenue generated by the new taxes will be dedicated to the State
School Aid Fund. Proposal A shifts significant portions of the cost of local
school operations from local school districts to the State and raises additional
State revenues to fund these additional State expenses. These additional
revenues will be included within the State's constitutional revenue limitations
and may impact the State's ability to raise additional revenues in the future.
Currently, the State's general obligation bonds are rated A1 by Moody's and AA
by Fitch. On January 23, 1991, S&P placed the State's general obligation,
unenhanced debt on CreditWatch with negative implications for S&P's AA rating on
such debt. On July 29, 1991, S&P removed the State's general obligation,
unenhanced debt from such CreditWatch and did not modify its rating on such
debt. To the extent that the portfolio of Michigan municipal bonds is comprised
of revenue or general obligations of local governments or authorities, rather
than general obligations of the State of Michigan, ratings on such Michigan
obligations will be different from those given to the State of Michigan and
their value may be independently affected by economic matters not directly
impacting the State.
Special Factors Affecting the Minnesota Tax-Exempt Series
The information set forth below is derived from official statements prepared
in connection with the issuance of obligations of the State of Minnesota and
other sources that are generally available to investors. The information is
provided as general information intended to give a recent historical description
and is not intended to indicate further or continuing trends in the financial or
other positions of the State of Minnesota. Such information constitutes only a
brief summary, relates primarily to the State of Minnesota, does not purport to
include details relating to all potential issuers within the State of Minnesota
whose securities may be purchased by the Minnesota Tax-Exempt Series, and does
not purport to be a complete description.
The State of Minnesota has experienced certain budgeting and financial
problems since 1980.
The State Accounting General Fund balance at June 30, 1987, was positive
$168.5 million. The Commissioner of Finance, in his November 1986 forecast,
estimated an Accounting General Fund balance at June 30, 1989, of negative $800
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million. The Legislature in May 1987 enacted measures expected to yield
approximately $700 million in additional revenues for the 1987-1989 biennium by
broadening the bases of corporate income and sales taxes and raising the rate of
the cigarette excise tax to 38 cents a pack from 23 cents. The corporate tax
rate was lowered to 9.5% from 12%, and a minimum tax was imposed.
Accounting General Fund appropriations for the 1987-1989 biennium were
$11.35 billion, an increase of 9.4%. A $250 million budget reserve also was
approved.
The 1988 Legislature increased 1987-1989 expenditures a total of $223.8
million and revenues a total of $125.5 million.
The Accounting General Fund balance at June 30, 1989, was positive $360
million.
The 1989 Legislature authorized $13.35 billion in spending for the 1989-1991
biennium, a 16.2% increase over the previous biennium, after excluding
intergovernmental fund transfers. In addition, the Legislature approved a $550
million budget reserve.
The 1989 Legislature passed an omnibus tax bill that included $272 million
in property tax relief and a $72 million increase in tax revenues. The Governor
vetoed the omnibus tax bill, demanding that a larger share of property tax
relief go to business and that the state-subsidized property tax system be
reformed. At a special session in the Fall of 1989, a bill was enacted that
included $267 million in property tax relief and a $79 million increase in tax
revenues.
The Commissioner of Finance, in his November 1989 forecast, estimated the
Accounting General Fund balance at June 30, 1991, at negative $161 million. The
Commissioner forecast an $89 million decline in revenues, a $60 million increase
in human services expenditures and a net $29 million decrease due to other
fiscal changes.
The 1990 Legislature enacted budget changes that resulted in a $127 million
net savings for the 1989-1991 biennium. A total of $178 million in spending
reductions were enacted, and increased fees and other revenue changes accounted
for a $12 million gain. New spending totaling $63 million was approved.
A November 1990 forecast estimated a $197 million shortfall for the biennium
ending June 30, 1991, and a $1.2 billion shortfall for the biennium ending June
30, 1993 due to spending pressures and reduced revenues. A March 1991 forecast
reduced the estimated shortfall for the biennium ending June 30, 1993, to $1.1
billion.
In January 1991 the Legislature made $197 million in spending reductions for
the biennium ended June 30, 1991. The State Accounting General Fund balance at
June 30, 1991, was $31 million.
The 1991 Legislature authorized $13.886 billion in spending for the
1991-1993 biennium. Giving effect to inclusion in the Accounting General Fund of
$70 million in dedicated revenues previously budgeted in other funds and
dedication of 1.5 percent of existing sales tax as well as a new .5 percent
local option sales tax to a Local Government Trust Fund, the total increase in
authorized spending was 9.2 percent.
Tax law changes enacted by the 1991 Legislature were expected to yield $590
million in additional revenues for the 1991-1993 biennium. Federal conformity on
individual and corporate income taxes was expected to raise $82 million; changes
in top individual income tax rates and elimination of some deductions and
exemptions were expected to yield an additional $89 million; extension of the
sales tax to kennel services, telephone paging services and some
business-to-business phone services $38 million; a 5 cents a pack cigarette tax
increase to 43 cents $37.2 million; and the .5 percent sales tax increase $370
million.
After the Legislature adjourned in May 1991, the Commissioner of Finance
estimated that at June 30, 1993, the State would have a $400 million budget
reserve, the amount approved by the 1991 Legislature, and a $103.2 million
Accounting General Fund balance.
In February 1992 the Commissioner of Finance estimated the Accounting
General Fund balance at June 30, 1993, at negative $569 million. The balance at
June 30, 1995, was projected at negative $1.75 billion.
The 1992 Legislature reduced expenditures by $262 million for the biennium
ending June 30, 1993, enacted revenue measures expected to increase revenue by
$149 million, and reduced the budget reserve by $160 million to $240 million.
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After the Legislature adjourned in April 1992, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1993, at $2.4 million,
and projected the balance at June 30, 1995, at negative $837 million. A November
1992 forecast estimated the balance at June 30, 1993, at positive $217 million
and projected the balance at June 30, 1995, at negative $769 million.
A March 1993 forecast projected an Accounting General Fund balance at June
30, 1995, at negative $163 million out of a budget for the biennium of
approximately $16.7 billion, and estimated a balance at June 30, 1997, at
negative $1.6 billion out of a budget of approximately $18.7 billion.
The 1993 Legislature authorized $16.519 billion in spending for the
1993-1995 biennium, an increase of 13.0 percent from 1991-1993 expenditures.
Resources for the 1993-1995 biennium were projected to be $16.895 billion,
including $657 million carried forward from the previous biennium. The $16.238
billion in projected non-dedicated and dedicated revenues was 10.3 percent
greater than in the previous biennium and included $175 million from revenue
measures enacted by the 1993 Legislature. The Legislature increased the health
care provider tax to raise $79 million, transferred $39 million into the
Accounting General Fund and improved collection of accounts receivable to
generate $41 million.
After the Legislature adjourned in May 1993, the Commissioner of Finance
estimated that at June 30, 1995, the Accounting General Fund balance would be
$16 million and the budget reserve, as approved by the 1993 Legislature, would
be $360 million. The Accounting General Fund balance at June 30, 1993 was $463
million.
The Commissioner of Finance, in a November 1993 forecast, estimated the
Accounting General Fund balance at June 30, 1995, at $430 million, due to
projected increases in revenues and reductions in expenditures, and the balance
at June 30, 1997, at $389 million. The Commissioner recommended that the budget
reserve be increased to $500 million. He estimated that if current laws and
policies continued unchanged, revenue would grow 7.7 percent and expenditures
6.0 percent in the 1995-1997 biennium.
A March 1994 forecast projected an Accounting General Fund balance at June
30, 1995, at $623 million, principally due to a projected $235 million increase
in revenues to $16.6 billion for the biennium. The balance at June 30, 1997, was
estimated to be $247 million.
The 1994 Legislature provided for a $500 million budget reserve;
appropriated to school districts $172 million to allow the districts, for
purposes of state aid calculations, to reduce the portion of property tax
collections that the school districts must recognize in the fiscal year during
which they receive the property taxes; increased expenditures $184 million; and
increased expected revenues $4 million.
Of the $184 million in increased expenditures, criminal justice initiatives
totaled $45 million, elementary and higher education $31 million, environment
and flood relief $18 million, property tax relief $55 million, and transit $11
million. A six-year strategic capital budget plan was adopted with $450 million
in projects financed by bonds supported by the Accounting General Fund. Other
expenditure increases totalled $16.5 million.
Included in the expected revenue increase of $4 million were conformity with
federal tax changes to increase revenues $27.5 million, a sales tax phasedown on
replacement capital equipment and miscellaneous sales tax exemptions decreasing
revenues $17.3 million, and other measures decreasing revenues $6.2 million.
After the Legislature adjourned in May 1994, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1995, at $130 million.
The Commissioner of Finance, in a November 1994 forecast, estimated the
Accounting General Fund balance at June 30, 1995, at $268 million, due to
projected increases in revenues and decreases in expenditures, and the balance
at June 30, 1997, at $190 million.
The State of Minnesota has no obligation to pay any bonds of its political
or governmental subdivisions, municipalities, governmental agencies, or
instrumentalities. The creditworthiness of local general obligation bonds is
dependent upon the financial condition of the local government issuer, and the
creditworthiness of revenue bonds is dependent upon the availability of
particular designated revenue sources or the financial conditions of the
underlying obligors. Although most of the bonds owned by the Minnesota
Tax-Exempt Series are expected to be obligations other than general obligations
of the
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State of Minnesota itself, there can be no assurance that the same factors that
adversely affect the economy of the State generally will not also affect
adversely the market value or marketability of such other obligations, or the
ability of the obligors to pay the principal of or interest on such obligations.
At the local level, growth in the property tax base of many communities is
being slowed by over capacity in certain segments of the commercial real estate
market. In addition, local finances are affected by the amount of state aid that
is made available. Further, various of the issuers within the State of
Minnesota, as well as the State of Minnesota itself, whose securities may be
purchased by the Minnesota Tax-Exempt Series, may now or in the future be
subject to lawsuits involving material amounts. It is impossible to predict the
outcome of these lawsuits. Any losses with respect to these lawsuits may have an
adverse impact on the ability of these issuers to meet their obligations.
The State's bond ratings in September 1994 were Aa1 by Moody's and AA+ by
S&P. Economic difficulties and the resultant impact on State and local
government finances may adversely affect the market value of obligations in the
portfolio of the Minnesota Tax-Exempt Series or the ability of respective
obligors to make timely payment of the principal and interest on such
obligations.
Special Factors Affecting the Missouri Tax-Exempt Series
Industry and Employment. While Missouri has a diverse economy with a
distribution of earnings and employment among manufacturing, trade and service
sectors closely approximating the average national distribution, the national
economic recession of the early 1980's had a disproportionately adverse impact
on the economy of Missouri. During the 1970's, Missouri characteristically had a
pattern of unemployment levels well below the national averages. However, since
the 1980 to 1983 recession periods Missouri unemployment levels generally
approximated or slightly exceeding the national average. A return to a pattern
of high unemployment could adversely affect the Missouri debt obligations
acquired by the Fund and, consequently, the value of the shares in the Fund.
The Missouri portions of the St. Louis and Kansas City metropolitan areas
contain approximately 1,926,500 and 975,241 residents, respectively,
constituting over fifty percent of Missouri's 1990 population census of
approximately 5,079,385. St. Louis is an important site for banking and
manufacturing activity, as well as a distribution and transportation center,
with eight Fortune 500 industrial companies (as well as other major educational,
financial, insurance, retail, wholesale and transportation companies and
institutions) headquartered there. Kansas City is a major agribusiness center
and an important center for finance and industry. Economic reversals in either
of these two areas would have a major impact on the overall economic condition
of the State of Missouri. Additionally, the State of Missouri has a significant
agricultural sector which is experiencing farm-related problems comparable to
those which are occurring in other states. To the extent that these problems
were to intensify, there could possibly be an adverse impact on the overall
economic condition of the State of Missouri.
Defense related business plays an important role in Missouri's economy. In
addition to the large number of civilians employed at the various military
installations and training bases in the State, aircraft and related businesses
in Missouri are the recipients of substantial annual dollar volumes of defense
contract awards. The contractor receiving the second largest dollar volume of
defense contracts in the United States in 1993 was McDonnell Douglas
Corporation. McDonnell Douglas Corporation is the State's largest employer,
currently employing approximately 25,000 employees in Missouri. Recent changes
in the levels of military appropriations and the cancellation of the A-12
program have affected McDonnell Douglas Corporation in Missouri and over the
last three years it has reduced its Missouri work force by approximately 30%.
There can be no assurances there will not be further changes in the levels of
military appropriations, and, to the extent that further changes in military
appropriations are enacted by the United States Congress, Missouri could be
disproportionately affected.
Desegregation lawsuits in St. Louis and Kansas City, and a U.S. Supreme
Court decision continue to require significant levels of state funding and are
sources of uncertainty; litigation continues on many issues, court orders are
unpredictable, and school district spending patterns have proven difficult to
predict. The State paid $290.0 million for desegregation costs in fiscal 1993
and the budget for fiscal 1994 provided $374 million. This expense accounts for
close to 10% of total state General Revenue Fund spending.
Revenue and Limitations Thereon. Article X, Sections 16-24 of the
Constitution of Missouri (the "Hancock Amendment"), imposes limitations on the
amount of State taxes which may be imposed by the General Assembly of Missouri
(the "general Assembly") as well as on the amount of local taxes, licenses and
fees (including taxes, licenses and fees used to meet debt service commitments
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on debt obligations) which may be imposed by local governmental units (such as
cities, countries, school districts, fire protection districts and other similar
bodies) in the State of Missouri in any fiscal year.
The State limit on taxes is tied to total State revenues for fiscal year
1980-81, as defined in the Hancock Amendment, adjusted annually in accordance
with the formula set forth in the amendment, which adjusts the limit based on
increases in the average personal income of Missouri for certain designated
periods. The details of the amendment are complex and clarification from
subsequent legislation and further judicial decisions may be necessary.
Generally, if the total State revenues exceed the State revenue limit imposed by
Section 18 of Article X by more than one percent, the State is required to
refund the excess. The State revenue limitation imposed by the Hancock Amendment
does not apply to taxes imposed for the payment of principal and interest on
bonds, approved by the voters and authorized by the Missouri Constitution. The
revenue limit also can be exceeded by a constitutional amendment authorizing new
or increased taxes or revenues adopted by the voters of the State of Missouri.
The Hancock Amendment also limits new taxes, licenses and fees and increases
in taxes, licenses and fees by local governmental units in Missouri. It
prohibits counties and other political subdivisions (essentially all local
governmental units) from levying new taxes, licenses and fees or increasing the
current levy of an existing tax, license or fee without the approval of the
required majority of the qualified voters of that county or other political
subdivision voting thereon.
When a local governmental unit's tax base with respect to certain fees or
taxes is broadened, the Hancock Amendment requires the tax levy or fees to be
reduced to yield the same estimated gross revenue as on the prior base. It also
effectively limits any percentage increase in property tax revenues to the
percentage increase in the general price level (plus the value of new
construction and improvements), even if the assessed valuation of property in
the local governmental unit, excluding the value of new construction and
improvements, increases at a rate exceeding the increase in the general price
level.
Special Factors Affecting the New York Tax-Exempt Series
The following information is a summary of special factors affecting the New
York Tax-Exempt Series. It does not purport to be a complete description and is
based on information from official statements relating to securities offerings
of New York issuers and, with respect to information about credit ratings, from
newspaper reports.
General
New York is the third most populous state in the nation and has a relatively
high level of personal wealth. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State's location, air transport facilities and
natural harbors have made it an important link in international commerce. Travel
and tourism constitute an important part of the economy. The State has a
declining proportion of its workforce engaged in manufacturing and an increasing
proportion engaged in service industries. This transition reflects a national
trend.
The State has historically been one of the wealthiest states in the nation.
For decades, however, the State economy has grown more slowly than that of the
nation as a whole, resulting in the gradual erosion of its relative economic
affluence. Statewide, urban centers have experienced significant changes
involving migration of the more affluent to the suburbs and an influx of
generally less affluent residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and the West have had in
attracting people and business. New York City (the "City") has also had to face
greater competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.
During calendar years 1982 and 1983 the State's economy in most respects
performed better than that of the nation. However, in the calendar years 1984
through 1991, the State's rate of economic expansion was somewhat slower than
that of the nation. The unemployment rate in the State dipped below the national
rate in the second half of 1981 and remained lower until 1991. The total
employment growth rate in the State has been below the national average since
1984. In the last decade, total personal income in the State has risen faster
than the national average only in 1986 through 1989. Overall economic activity
declined less than that of the nation as a whole during the 1982-83 recession.
In the recent recession, however, the State, and the rest of the Northeast, was
more heavily impacted.
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The State has for many years had a very high State and local tax burden
relative to other States. The State and its localities have used these taxes to
develop and maintain their transportation networks, public schools and colleges,
public health systems, other social services and recreational facilities.
Despite these benefits, the burden of State and local taxation, in combination
with the many other causes of regional economic dislocation, may have
contributed to the decisions of some businesses and individuals to relocate
outside, or not locate within, the State.
To stimulate the State's economic growth, the State has developed programs,
including the provision of direct financial assistance, designed to assist
businesses to expand existing operations located within the State and to attract
new businesses to the State. Local industrial development agencies raised an
aggregate of approximately $7.8 billion in separate tax-exempt bond issues
through December 31, 1993. There are currently over 100 county, city, town and
village agencies. In addition, the New York State Urban Development Corporation
("UDC") is empowered to issue, subject to certain State constitutional
restrictions and to approval by the Public Authorities Control Board, bonds and
notes on behalf of private corporations for economic development projects. The
State has also taken advantage of changes in Federal bank regulations to
establish a free international banking zone in the City.
In addition, the State has provided various tax incentives to encourage
business relocation and expansion. These programs include direct tax abatements
from local property taxes for new facilities (subject to locality approval) and
investment tax credits that are applied against the State corporation franchise
tax. Furthermore, legislation passed in 1986 authorizes the creation of up to 40
"economic development zones" in economically distressed regions of the State.
Businesses in these zones are provided a variety of tax and other incentives to
create jobs and make investments in the zones. As of the beginning of the
State's 1994-1995 fiscal year, there were 19 such zones.
The 1994-95 budget contains a significant investment in efforts to spur
economic growth. The budget includes provisions to reduce the level of business
taxation in New York, with cuts in the corporate tax surcharge, the alternative
minimum tax imposed on business and the petroleum business tax, repeal of the
State's hotel occupancy tax, and reductions in the real property gains tax to
stimulate construction and facilitate the real estate industry's access to
capital. Complementing the elimination of the hotel tax is a $10 million
investment of State funds in the "I Love New York" program designed to spur
tourism activity throughout the State.
To help strengthen the State's economic recovery, the 1994-95 budget also
includes more than $200 million in additional funding for economic development
programs. Special emphasis is placed on programs intended to enable New York
State to: (i) invest in high technology industries; (ii) expand access to
foreign markets; (iii) strengthen assistance to small businesses, particularly
those owned by women and minorities; (iv) retain and attract new manufacturing
jobs; (v) help companies and communities impacted by continued cutbacks in
Federal defense spending and ongoing corporate downsizings; and (vi) bolster the
tourism industry. In addition, the budget includes increased levels of support
for programs to rebuild and maintain State infrastructure, and provisions to
create 21 new economic development zones.
State Financial Plan
The State Constitution requires the Governor to submit to the Legislature a
balanced Executive Budget which contains a complete plan of expenditures for the
ensuing fiscal year and all moneys and revenues estimated to be available
therefor, accompanied by bills containing all proposed appropriations or
reappropriations and any new or modified revenue measures to be enacted in
connection with the Executive Budget. The entire plan constitutes the proposed
State Financial Plan for that fiscal year. A final budget must be approved
before the statutory deadline of April 1.
The State's fiscal year which commenced on April 1, 1994 and ends on March
31, 1995 is referred to herein as the State's 1994-95 fiscal year. The State's
budget for the 1994-95 fiscal year was enacted by the Legislature on June 7,
1994, more than two months after the start of the fiscal year. Prior to adoption
of the budget, the Legislature enacted appropriations for disbursements
considered to be necessary for State operations and other purposes, including
all necessary appropriations for debt service. The State Financial Plan for the
1994-95 fiscal year was formulated on June 16, 1994 and is based on the State's
budget as enacted by the Legislature and signed into law by the Governor. The
State Financial Plan is updated quarterly pursuant to law.
The economic and financial condition of the State may be affected by various
financial, social, economic and political factors. Those factors can be very
complex, may vary from fiscal year to fiscal year, and are frequently the result
of actions taken not only by the State and its agencies and instrumentalities,
but also by entities, such as the Federal government, that are not under the
control of the State. The State Financial Plan is based upon forecasts of
national and State economic activity. Economic forecasts have frequently failed
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to predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes toward spending, Federal
financial and monetary policies, the availability of credit, and the condition
of the world economy, which would have an adverse effect on the State. There can
be no assurance that the State economy will not experience results in the
current fiscal year that are worse than predicted, with corresponding material
and adverse effects on the State's projections of receipts and disbursements.
The national economy began to expand in 1991, although the growth rate for
the first two years of the expansion was modest by historical standards. The
State economy remained in recession until 1993, when employment growth resumed.
Since early 1993, the State has gained approximately 100,000 jobs. Employment
growth has been hindered during recent years by significant cutbacks in the
computer and instrument manufacturing, utility, and defense industries. Personal
income increased substantially in 1992 and 1993, aided significantly by large
bonus payments in banking and financial industries.
The State Financial Plan is based on a projection of national and State
economic activity which forecasts that the overall rate of growth of the
national economy during calendar year 1994 will be similar to the "consensus" of
a widely followed survey of national economic forecasters. Growth in the real
gross domestic product during 1994 is projected to be moderate (3.5 percent),
with declines in defense spending and net exports more than offset by increases
in consumption and investment. Continuing efforts by business to reduce costs is
expected to exert a drag on economic growth. Inflation, as measured by the
Consumer Price Index, is projected to remain about 3 percent due to moderate
wage growth and foreign competition. Growth rates for personal income and wages
are projected to increase.
New York's economy is expected to continue to expand during 1994. Industries
that export goods and services to the rest of the country and abroad are
expected to benefit from growing national and international markets. Both
upstate and downstate regions are expected to share in this renewed growth.
Employment is expected to grow moderately throughout the year, although the rate
of increase is expected to be below the experience of the 1980's due to cutbacks
in Federal spending and employment, as well as continued downsizing by large
corporations. Both personal income and wages are expected to record moderate
gains in 1994. Bonus payments in the banking and financial industries are
expected to increase modestly from last year's level.
The four governmental fund types that comprise the State Financial Plan are
the General Fund, the Special Revenue Funds, the Capital Projects Funds, and the
Debt Service Funds. The General Fund is the general operating fund of the State
and is used to account for all financial transactions, except those required to
be accounted for in another fund. It is the State's largest fund and receives
almost all State taxes and other resources not dedicated to particular purposes.
In the State's 1994-95 fiscal year, the General Fund is expected to account for
approximately 52 percent of total governmental-fund receipts and 51 percent of
total governmental-fund disbursements. General Fund moneys are also transferred
to other funds, primarily to support certain capital projects and debt service
payments in other fund types. The General Fund is projected to be balanced on a
cash basis for the 1994-95 fiscal year. Total receipts are projected to be
$34.321 billion, an increase of $2.092 billion over total receipts in the prior
fiscal year. Total General Fund disbursements are projected to be $34.248
billion, an increase of $2.351 billion over the total amount disbursed and
transferred in the prior fiscal year.
The projected amount of personal income tax receipts in the 1994-95 fiscal
year of $18.556 billion is an increase of $2.522 billion over the reported
results for the State's 1993-94 fiscal year. Approximately $1.5 billion of this
growth is attributable to year-end transactions between the General Fund and the
tax refund reserve account. Adjusted for the refund-reserve transaction, the
growth in collections is projected at approximately 6 percent, slightly faster
than forecasted growth in 1994 income tax liability, which reflects personal
income growth of approximately 5 percent and certain changes in the tax law.
Receipts from user taxes and fees in the State's 1993-94 fiscal year are
expected to total $6.505 billion, an increase of $209 million from reported
1993-94 results. Underlying growth in the continuing sales tax base is forecast
to be 4.9 percent, accounting for the increase in the category as a whole.
Receipts in 1994-95 are also affected by the repeal of the hotel occupancy tax,
allowance of a vendors' credit under the sales tax and various other minor tax
changes.
Total business tax receipts in the State's 1994-95 fiscal year are projected
at $5.442 billion, a decline of $439 million from reported 1993-94 results. The
decline results from the effects of tax reductions enacted in 1994 and the
previously scheduled diversion of additional petroleum business tax receipts to
dedicated transportation funds.
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Other tax receipts in the State's 1994-95 fiscal year are projected at
$1.088 billion, $34 million less than in the preceding year. The estimates
reflect 1994 legislation reducing the burden of the real property gains tax and
the estate tax on closely held business.
Miscellaneous receipts in the State's 1994-95 fiscal year are expected to
total $1.257 billion, an increase of $11 million above the amount received in
the prior State fiscal year. Transfers from other funds to the General Fund
consist primarily of tax revenues in excess of debt service requirements,
particularly the one cent sales tax used to support payments to the Local
Government Assistance Corporation. In the 1994-95 fiscal year, excess sales tax
revenues are projected to be $1.301 billion, an increase of $25 million from the
1993-94 fiscal year. All other transfers are projected to decrease by $202
million, primarily reflecting the prior-year receipt of $200 million of
non-recurring Federal reimbursements.
Grants to local governments is the largest category of General Fund
disbursements, and such grants are projected to total $23.922 billion in the
1994-95 State Financial Plan, an increase of $1.913 billion from 1993-94 levels.
Significant increases result from a $554 million increase in support for public
schools for the 1994-95 school year, and additional funding for higher education
programs.
Disbursements for State operations are projected at $6.301 billion, an
increase of $197 million or 3.2 percent. This reflects the impact of a general
salary increase for State employees (4.0 percent as of April 1, 1994, and an
additional 1.25 percent on October 1). These increased costs are, in part,
offset by continued cost savings initiatives and reductions in less essential
services. In addition, disbursements in the 1993-94 fiscal year included the
payment of an extra payroll cycle, which has the effect of lowering the
year-over-year increase.
Disbursements for general State charges are projected to total $2.077
billion in the 1994-95 State Financial Plan.
Transfers to other funds from the General Fund are made primarily to finance
certain portions of State capital project spending and debt service on long-term
bonds, where these costs are not funded from other sources. Transfers in support
of debt service are projected to total $1.443 billion, an increase of $49
million or 3.5 percent. This increase is moderated by the availability of
reimbursements from other funds in the 1994-95 fiscal year for debt service
payments made from the General Fund in the 1993-94 fiscal year. Transfers in
support of capital projects are projected to total $406 million, an increase of
$153 million, which reflects significant investments in both new and ongoing
capital programs. The 1994-95 budget includes several new economic development
initiatives, described below in the section "Economic Background -- Taxation and
Economic Incentives, and funding targeted for school maintenance projects. All
other transfers are projected to total $91 million, a decrease of $7 million
from 1993-94 levels.
On October 28, 1994, based on the revised economic outlook and actual
receipts for the first six months of the 1994-95 fiscal year, projected General
Fund receipts for the 1994-95 fiscal year were reduced by $267 million and
projected disbursements were reduced by $281 million.
The 1994-95 opening fund balance of $399 million includes $134 million which
is reserved in the Tax Stabilization Reserve Fund, as well as $265 million which
is reserved in the Contingency Reserve Fund. The Contingency Reserve Fund was
established in 1993-94 to set aside moneys to address adverse judgments or
settlements resulting from litigation against the State. The 1994-95 Financial
Plan assumes that all monies in this fund will be utilized during the current
fiscal year. However, to the extent monies are not necessary for payments
relating to litigation in the current fiscal year, any balance may be reserved
for payments in a subsequent fiscal year. The closing balance in the General
Fund of $207 million reflects: (i) a balance of $157 million in the Tax
Stabilization Reserve Fund, following an additional payment of $23 million
during the year, and (ii) a balance of $50 million in a reserve for payments in
the 1995-96 fiscal year related to the Liberty Scholarship program.
The 1994-95 State Financial Plan contains actions that provide nonrecurring
resources or savings, as well as actions that impose nonrecurring losses of
receipts or costs. DOB believes that the net positive effect of nonrecurring
actions represents considerably less than one-half of one percent of the State's
General Fund, an amount significantly lower than the amount included in the
State Financial Plans in recent years. DOB further believes that those actions
do not materially affect the financial condition of the State.
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In addition to those nonrecurring actions, the 1994-95 State Financial Plan
reflects the use of $1.026 billion in the positive cash margin carried over from
the prior fiscal year, resources that are not expected to be available in the
State's 1995-96 fiscal year.
In addition to the General Fund, the State Financial Plan includes Special
Revenue Funds, Capital Projects Funds and Debt Service Funds.
Special Revenue Funds are used to account for the proceeds of specific
revenue sources such as Federal grants that are legally restricted, either by
the Legislature or outside parties, to expenditures for specified purposes.
Although activity in this fund type is expected to comprise 39 percent of total
government funds receipts and disbursements in the 1994-95 fiscal year, about
three-quarters of that activity relates to Federally-funded programs. Projected
receipts in this fund type total $24.598 billion, an increase of $1.777 billion
over the prior year. Total disbursements in this fund type total $24.982
billion, an increase of $2.259 billion over 1993-94 levels. Disbursements from
Federal funds, primarily the Federal share of Medicaid and other social services
programs, are projected to total $19.048 billion in the 1994-95 fiscal year.
Remaining projected spending of $5.934 billion primarily reflects aid to SUNY
supported by tuition and dormitory fees, education aid funded from lottery
receipts, operating aid payments to the Metropolitan Transportation Authority
funded from the proceeds of dedicated transportation taxes, and costs of a
variety of self-supporting programs which deliver services financed by user
fees.
Capital Projects Funds are used to account for the financial resources used
for the acquisition, construction, or rehabilitation of major state capital
facilities and for capital assistance grants to certain local government or
public authorities. This fund type consists of the Capital Projects Fund, which
is supported by tax dollars transferred from the General Fund, and 37 other
capital funds established to distinguish specific capital construction purposes
supported by other revenues. In the 1994-95 fiscal year, activity in these funds
is expected to comprise 5 percent of total governmental receipts and 6 percent
of total governmental disbursements in the State's 1994-95 fiscal year.
Debt Service Funds are used to account for the payment of principal of, and
interest on, long-term debt of the State and to meet commitments under
lease-purchase and other contractual-obligation financing arrangements. This
fund is expected to comprise 4 percent of total governmental fund receipts and
disbursements in the 1994-95 fiscal year. Receipts in these funds in excess of
debt service requirements are transferred to the General Fund and Special
Revenue Funds, pursuant to law. In the 1994-95 fiscal year, total disbursements
in this fund type are projected at $2.246 billion, an increase of $314 million
or 16.3 percent. The transfer from the General Fund of $1.443 billion is
expected to finance 64 percent of these payments. The remaining payments are
expected to be financed by pledged revenues.
Discussion and Analysis
New York State's financial operations have improved during recent fiscal
years. During the period 1989-90 through 1991-92, the State incurred General
Fund operating deficits that were closed with receipts from the issuance of tax
and revenue anticipation notes ("TRANs"). First, the national recession, and
then the lingering economic slowdown in the New York and regional economy,
resulted in repeated shortfalls in receipts and three budget deficits. For its
1992-93 and 1993-94 fiscal years, the State recorded balanced budgets on a cash
basis, with substantial fund balances in each year as described below.
1993-94 Fiscal Year
The State ended its 1993-94 fiscal year with a balance of $1.140 billion in
the tax refund reserve account, $265 million in its Contingency Reserve Fund
("CRF") and $134 million in its Tax Stabilization Reserve Fund. These fund
balances were primarily the result of an improving national economy, State
employment growth, tax collections that exceeded earlier projections and
disbursements that were below expectations. Deposits to the personal income tax
refund reserve have the effect of reducing reported personal income tax receipts
in the fiscal year when made and withdrawals from such reserve increase receipts
in the fiscal year when made. The balance in the tax refund reserve account will
be used to pay taxpayer refunds, rather than drawing from 1994-95 receipts.
Of the $1.140 billion deposited in the tax refund reserve account, $1.026
billion was available for budgetary planning purposes in the 1994-95 fiscal
year. The remaining $114 million will be redeposited in the tax refund reserve
account at the end of the State's 1994-95 fiscal year to continue the process of
restructuring the State's cash flow as part of the LGAC program. The balance in
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the CRF will be used to meet the cost of litigation facing the State. The Tax
Stabilization Reserve Fund may be used only in the event of an unanticipated
General Fund cash-basis deficit during the 1994-95 fiscal year.
Before the deposit of $1.140 billion in the tax refund reserve account,
General Fund receipts in 1993-94 exceeded those originally projected when the
State Financial Plan for that year was formulated on April 16, 1993 by $1.002
billion. Greater-than-expected receipts in the personal income tax, the bank
tax, the corporation franchise tax and the estate tax accounted for most of this
variance, and more than offset weaker-than-projected collections from the sales
and use tax and miscellaneous receipts. Collections from individual taxes were
affected by various factors including changes in Federal business laws,
sustained profitability of banks, strong performance of securities firms, and
higher-than-expected consumption of tobacco products following price cuts.
The higher receipts resulted, in part, because the New York economy
performed better than forecasted. Employment growth started in the first quarter
of the State's 1993-94 fiscal year, and, although this lagged behind the
national economic recovery, the growth in New York began earlier than
forecasted. The New York economy exhibited signs of strength in the service
sector, in construction, and in trade. Long Island and the Mid-Hudson Valley
continued to lag behind the rest of the Sate in economic growth. Approximately
100,000 jobs were added during the 1993-94 fiscal year.
Disbursements and transfers from the General Fund were $303 million below
the level projected in April 1993, an amount that would have been $423 million
had the State not accelerated the payment of Medicaid billings, which in the
April 1993 State Financial Plan were planned to be deferred into the 1994-95
fiscal year. Compared to the estimates included in the State Financial Plan
formulated in April 1993, lower disbursements resulted from lower spending for
Medicaid, capital projects, and debt service (due to refundings) and $114
million used to restructure the State's cash flow as part of the LGAC program.
Disbursements were higher-than-expected for general support for public schools,
the State share of income maintenance, overtime for prison guards, and highway
snow and ice removal. The State also made the first of six required payments to
the State of Delaware related to the settlement of Delaware's litigation against
the State regarding the disposition of abandoned property receipts.
During the 1993-94 fiscal year, the State also established and funded a
Contingency Reserve Fund ("CRF") as a way to assist the State in financing the
cost of litigation affecting the State. The CRF was initially funded with a
transfer of $100 million attributable to the positive margin recorded in the
1992-93 fiscal year. In addition, the State augmented this initial deposit with
$132 million in debt service savings attributable to the refinancing of State
and public authority bonds during 1993-94. A year-end transfer of $36 million
was also made to the CRF, which, after a disbursement for authorized fund
purposes, brought the CRF balance at the end of 1993-94 to $265 million. This
amount was $165 million higher than the amount originally targeted for this
reserve fund.
1992-93 Fiscal Year
The State ended its 1992-93 fiscal year with a balance of $671 million in
the tax refund reserve account and $67 million in the Tax Stabilization Reserve
Fund. The State's 1992-93 fiscal year was characterized by performance that was
better than projected for the national and regional economies. National gross
domestic product, State personal income, and State employment and unemployment
performed better than originally projected in April 1992. This favorable
economic performance, particularly at year end, combined with a tax-induced
acceleration of income into 1992, was the primary cause of the General Fund
surplus. Personal income tax collections were more than $700 million higher than
originally projected (before reflecting the tax refund reserve account
transaction), primarily in the withholding and estimated payment components of
the tax. There were, however, large and mainly offsetting variances in other
categories of receipts.
1991-1992 Fiscal Year
The 1991-92 State fiscal year was marked by a protracted delay in the
adoption of a budget, disagreements between the Executive and the Legislature
over receipts and disbursements projections and continuing deterioration in the
State economy. Persistent underperformance of the economy led to revenue
shortfalls which were the primary cause of a $531-million deficit TRAN
borrowing.
Certain Litigation
Certain litigation pending against New York or its officers or employees
could have a substantial or long-term adverse effect on New York finances. Among
the more significant of these cases are those that involve: (i) the validity of
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agreements and treaties by which various Indian tribes transferred to New York
title to certain land in central New York; (ii) certain aspects of New York's
Medicaid rates and regulations, including reimbursements to providers of
mandatory and optional Medicaid services, and the eligibility for and nature of
home care services; (iii) challenges to provisions of Section 2807-C of the
Public Health Law, which impose a 13% surcharge on inpatient hospital bills paid
by commercial insurers and employee welfare benefit plans and portions of
Chapter 55 of the laws of 1992, which require hospitals to impose and remit to
the State an 11% surcharge on hospital bills paid by commercial insurers and
which require health maintenance organizations to remit to the State a surcharge
of up to 9%; (iv) contamination in the Love Canal area of Niagara Falls; (v) an
action against the State of New York and New York City officials alleging that
the present level of shelter allowance for public assistance recipients is
inadequate under statutory standards to maintain proper housing; (vi) challenges
to the practice of reimbursing certain Office of Mental Health patient care
expenses from the client's Social Security benefits; (vii) a challenge to the
State's possession of certain funds taken pursuant to the State's Abandoned
Property Law; (viii) alleged responsibility of New York officials to assist in
remedying racial segregation in the City of Yonkers; (ix) an action, in which
New York is a third party defendant, for injunctive or other appropriate relief,
concerning liability for the maintenance of stone groins constructed along
certain areas of Long Island's shoreline; (x) a challenge to the
constitutionality of and seek to enjoin, certain highway, bridge and mass
transportation bonding programs of the new York State Thruway Authority and the
Metropolitan Transportation Authority authorized by Chapter 56 of the laws of
1993; and (xi) challenges, including a challenge by the New York Comptroller, to
the constitutionality of financing programs of the Thruway Authority authorized
by Chapters 166 and 410 of the Laws of 1991.
Adverse developments in those proceedings or the initiation of new
proceedings could affect the ability of New York to maintain a balanced
Financial Plan for the 1994-1995 fiscal year or in subsequent fiscal years. An
adverse decision in any of the above cited proceedings could exceed the amount
of the Revised 1994-1995 State Financial Plan reserve for the payment of
judgments and, therefore, could affect the ability of New York to maintain a
balanced 1994-95 State Financial Plan. In its Notes to its General Purpose
financial statements for the fiscal year ended March 31, 1994, the State reports
its estimated liability for awarded and anticipated unfavorable judgments at
$675 million. The State believes that the State's Financial Plan includes
sufficient reserves for the payment of judgments that may be required during the
1994-1995 fiscal year.
The City of New York
The fiscal health of the State of New York is closely related to the fiscal
health of its localities, particularly the City, which has required and
continues to require significant financial assistance from New York. The City's
independently audited operating results for each of its 1981 through 1993 fiscal
years, which ended June 30, show a General Fund surplus reported in accordance
with GAAP. In addition, the City's financial statements for the 1993 fiscal year
received an unqualified opinion from the City's independent auditors, the
eleventh consecutive year the City has received such an opinion.
In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the State
established the Municipal Assistance Corporation for the City of New York
("MAC") to provide financing assistance to the City; the New York State
Financial Control Board (the "Control Board") to oversee the City's financial
affairs; the Office of the State Deputy Comptroller for the City of New York
("OSDC") to assist the Control Board in exercising its powers and
responsibilities; and a "Control Period" from 1975 to 1986 during which the City
was subject to certain statutorily-prescribed fiscal-monitoring arrangements.
Although the Control Board terminated the Control Period in 1986 when certain
statutory conditions were met, thus suspending certain Control Board powers, the
Control Board, MAC and OSDC continue to exercise various fiscal-monitoring
functions over the City, and upon the occurrence or "substantial likelihood and
imminence" of the occurrence of certain events, including, but not limited to a
City operating budget deficit of more than $100 million, the Control Board is
required by law to reimpose a Control Period. Currently, the City and its
Covered Organizations (i.e., those which receive or may receive monies from the
City directly, indirectly or contingently) operate under a four-year financial
plan which the City prepares annually and periodically updates.
The staffs of OSDC and the Control Board issue periodic reports on the
City's financial plans, as modified, analyzing forecasts of revenues and
expenditures, cash flow, and debt service requirements, as well as compliance
with the financial plan, as modified, by the City and its Covered Organizations.
OSDC staff reports issued during the mid-1980's noted that the City's budgets
benefitted from a rapid rise in the City's economy, which boosted the City's
collection of property, business and income taxes. These resources were used to
increase the City's workforce and the scope of discretionary and mandated City
services. Subsequent OSDC staff reports examined the 1987 stock market crash and
the 1989-92 recession, which affected the New York City region more severely
than the nation, and attributed an erosion of City revenues and increasing
strain on City expenditures to that recession. According to a recent OSDC staff
report, the City's economy is now slowly recovering, but the scope of that
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recovery is uncertain and unlikely, in the foreseeable future, to match the
expansion of the mid-1980's. Also, staff reports of OSDC and the Control Board
have indicated that the City's recent balanced budgets have been accomplished,
in part, through the use of non-recurring resources, tax increases and
additional State assistance; that the City has not yet brought its long-term
expenditures in line with recurring revenues; and that the City is therefore
likely to continue to face future projected budget gaps requiring the City to
increase revenues and/or reduce expenditures. According to the most recent staff
reports of OSDC and the Control Board, during the four-year period covered by
the current financial plan, the City is relying on obtaining substantial
resources from initiatives needing approval and cooperation of its municipal
labor unions, Covered Organizations, and City Council, as well as the State and
Federal governments, among others.
The City requires significant amounts of financing for seasonal and capital
purposes. The City issued $1.75 billion of notes for seasonal financing purposes
during its fiscal year ending June 30, 1994. The City's capital financing
program projects long-term financing requirements of approximately $17 billion
for the City's fiscal years 1995 through 1998. The major capital requirements
include expenditures for the City's water supply and sewage disposal systems,
roads, bridges, mass transit, schools, hospitals and housing.
On January 17, 1995, Standard & Poor's Corporation announced that it was
placing the City's general obligation bonds on its Creditwatch list, indicating
that it was considering a possible downgrading of such debt.
Other Localities
In addition to the City, certain localities, including the City of Yonkers,
could have financial problems leading to requests for additional State
assistance during the State's 1994-95 fiscal year and thereafter. The potential
impact on the State of such requests by localities is not included in the
projections of the State's receipts and disbursements for the State's 1994-95
fiscal year. Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1992, the total indebtedness of all
localities in the State other than New York City was approximately $15.7
billion.
From time to time, Federal expenditure reductions could reduce, or in some
cases, eliminate, Federal funding of some local programs, and accordingly might
impose substantial increased expenditure requirements on affected localities. If
the State, the City or any of the public authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining urban
population, increasing expenditures and other economic trends could adversely
affect localities and require increasing State assistance in the future.
Special Factors Affecting the Ohio Tax-Exempt Series
As described in the Prospectus under "Ohio Taxes" and except to the extent
investments are in temporary investments, the Ohio Trust will invest most of its
net assets in securities issued by or on behalf of (or in certificates of
participation in lease-purchase obligations of) the State of Ohio, political
subdivisions of the State, or agencies or instrumentalities of the State or its
political subdivisions (Ohio Obligations). The Ohio Trust is therefore
susceptible to general or particular political, economic or regulatory factors
that may affect issuers of Ohio Obligations. The following information
constitutes only a brief summary of some of the many complex factors that may
have an effect. The information does not apply to "conduit" obligations on which
the public issuer itself has no financial responsibility. This information is
derived from official statements of certain Ohio issuers published in connection
with their issuance of securities and from other publicly available information,
and is believed to be accurate. No independent verification has been made of any
of the following information.
Generally, the creditworthiness of Ohio Obligations of local issuers is
unrelated to that of obligations of the State itself, and the State has no
responsibility to make payments on those local obligations.
There may be specific factors that at particular times apply in connection
with investment in particular Ohio Obligations or in those obligations of
particular Ohio issuers. It is possible that the investment may be in particular
Ohio Obligations, or in those of particular issuers, as to which those factors
apply. However, the information below is intended only as a general summary, and
is not intended as a discussion of any specific factors that may affect any
particular obligation or issuer.
General. Ohio is the seventh most populous state; the 1990 Census count of
10,847,000 indicated a 0.5% population increase from 1980. The Census estimate
for 1993 is 11,091,000.
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While diversifying more into the service and other non-manufacturing areas,
the Ohio economy continues to rely in part on durable goods manufacturing
largely concentrated in motor vehicles and equipment, steel, rubber products and
household appliances. As a result, general economic activity, as in many other
industrially-developed states, tends to be more cyclical than in some other
states and in the nation as a whole. Agriculture is an important segment of the
economy, with over half the State's area devoted to farming and approximately
15% of total employment in agribusiness.
In prior years, the State's overall unemployment rate was commonly somewhat
higher than the national figure. For example, the reported 1990 average monthly
State rate was 5.7%, compared to the 5.5% national figure. However, for the last
three years the State rates were below the national rates (6.5% versus 6.8% in
1993). The unemployment rate and its effects vary among geographic areas of the
State.
There can be no assurance that future national, regional or state-wide
economic difficulties, and the resulting impact on State or local government
finances generally, will not adversely affect the market value of Ohio
Obligations held in the Ohio Trust or the ability of particular obligors to make
timely payments of debt service on (or lease payments relating to) those
Obligations.
State Finances. The State operates on the basis of a fiscal biennium for its
appropriations and expenditures, and is precluded by law from ending its July 1
to June 30 fiscal year (FY) or fiscal biennium in a deficit position. Most State
operations are financed through the General Revenue Fund (GRF), for which the
personal income and sales-use taxes are the major sources. Growth and depletion
of GRF ending fund balances show a consistent pattern related to national
economic conditions, with the ending FY balance reduced during less favorable
and increased during more favorable economic periods. The State has
well-established procedures for, and has timely taken, necessary actions to
ensure resource/expenditure balances during less favorable economic periods.
Those procedures included general and selected reductions in appropriations
spending.
Key biennium-ending fund balances at June 30, 1989 were $475.1 million in
the GRF and $353 million in the Budget Stabilization Fund (BSF, a cash and
budgetary management fund). In the next two fiscal years necessary corrective
steps were taken to respond to lower receipts and higher expenditures in certain
categories than earlier estimated. Those steps included selected reductions in
appropriations spending and the transfer of $64 million from the BSF to the GRF.
Reported June 30, 1991 ending fund balances were $135.3 million (GRF) and $300
million (BSF).
To allow time to resolve certain budget differences for the latest complete
biennium, an interim appropriations act was enacted effective July 1, 1991; it
included GRF debt service and lease rental appropriations for the entire 1992-93
biennium, while continuing most other appropriations for a month. Pursuant to
the general appropriations act for the entire biennium passed on July 11, 1991,
$200 million was transferred from the BSF to the GRF in FY 1992.
Based on updated results and forecasts in the course of FY 1992, both in
light of a continuing uncertain nationwide economic situation, there was
projected, and then timely addressed, an FY 1992 imbalance in GRF resources and
expenditures. GRF receipts significantly below original forecasts resulted
primarily from lower collections of certain taxes, particularly sales -- use and
personal income taxes. Higher expenditure levels came in certain areas,
particularly human services including Medicaid. The Governor ordered most State
agencies to reduce GRF spending in the last six months of FY 1992 by a total of
approximately $184 million. As authorized by the General Assembly, the $100.4
million BSF balance, and additional amounts from certain other funds, were
transferred late in the FY to the GRF, and adjustments made in the timing of
certain tax payments. Other administrative revenue and spending actions resolved
the remaining imbalance.
A significant GRF shortfall (approximately $520 million) was then projected
for the next year, FY 1993. It was addressed by appropriate legislative and
administrative actions. The Governor ordered, effective July 1, 1992, $300
million in selected GRF spending reductions. Subsequent executive and
legislative action in December 1992 -- a combination of tax revisions and
additional spending reductions -- resulted in a balance of GRF resources and
expenditures for the 1992-93 biennium. The June 30, 1993 ending GRF fund balance
was approximately $111 million, of which, as a first step to BSF replenishment,
$21 million was deposited in the BSF. (Based on June 30, 1994 balances, an
additional $260 million has been deposited in the BSF, which has a current
balance of $281 million).
No spending reductions were applied to appropriations needed for debt
service on or lease rentals relating to any State obligations.
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The GRF appropriations Act for the current 1994-95 biennium was passed and
signed by the Governor on July 1, 1993. It included all necessary GRF
appropriations for State debt service and lease rental payments then projected
for the biennium.
Debt. The State's incurrence or assumption of debt without a vote of the
people is, with limited exceptions, prohibited by current State constitutional
provisions. The State may incur debt, limited in amount to $750,000, to cover
casual deficits or failures in revenues or to meet expenses not otherwise
provided for. The Constitution expressly precludes the State from assuming the
debts of any local government or corporation. (An exception is made in both
cases for any debt incurred to repel invasion, suppress insurrection or defend
the State in war.)
By 13 constitutional amendments, the last adopted in 1993, Ohio voters have
authorized the incurrence of State debt and the pledge of taxes or excises to
its payment. At December 30, 1994, $674.4, million (excluding certain highway
bonds payable primarily from highway use charges) of this debt was outstanding.
The only such State debt then still authorized to be incurred are portions of
the highway bonds, and the following: (a) up to $100 million of obligations for
coal research and development may be outstanding at any one time ($38.9 million
outstanding); (b) $480 million of obligations authorized for local
infrastructure improvements, no more than $120 million of which may be issued in
any calendar year ($608.2 million outstanding); and (c) up to $200 million in
general obligation bonds for parks, recreation and natural resources purposes
which may be outstanding at any one time (no more than $50 million to be issued
in any one year.
The Constitution also authorizes the issuance of State obligations for
certain purposes, the owners of which do not have the right to have excises or
taxes levied to pay debt service. Those special obligations include obligations
issued by the Ohio Public Facilities Commission and the Ohio Building Authority,
and certain obligations issued by the State Treasurer, over $4.4 billion of
which were outstanding or specifically authorized at December 30, 1994.
A 1990 constitutional amendment authorizes greater State and political
subdivision participation (including financing) in the provision of housing. The
General Assembly may for that purpose authorize the issuance of State
obligations secured by a pledge of all or such portion as it authorizes of State
revenues or receipts (but not by a pledge of the State's full faith and credit).
A 1994 constitutional amendment pledges the full faith and credit and taxing
power of the State to meeting certain guarantees under the State's tuition
credit program which provides for purchase of tuition credits, for the benefit
of State residents, guaranteed to cover a specified amount when applied to the
cost of higher education tuition. (A 1965 constitutional provision that
authorized student loan guarantees payable from available State moneys has never
been implemented, apart from a "guarantee fund" approach funded essentially from
program revenues).
State and local agencies issue obligations that are payable from revenues
from or relating to certain facilities (but not from taxes). By judicial
interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued) are
limited in duration to the agency's fiscal period, and are renewable only upon
appropriations being made available for the subsequent fiscal period.
Debt Rating. The outstanding State tax supported bonds are currently rated
"Aa" by Moody's, and "AAA" (highway obligations) and "AA" by S&P, and the
outstanding State bonds issued by the Ohio Public Facilities Commission and Ohio
Building Authority are rated "A1" by Moody's and "A+" by S&P.
Schools and Municipalities. Local school districts in Ohio receive a major
portion (state-wide aggregate in the range of 46% in recent years) of their
operating moneys from State subsidies, but are dependent on local property
taxes, and in 107 districts from voter-authorized income taxes, for significant
portions of their budgets. Litigation, similar to that in other states, is
pending questioning the constitutionality of Ohio's system of school funding.
The trial court recently concluded that aspects of the system (including basic
operating assistance) are unconstitutional, and ordered the State to provide for
and fund a system complying with the Ohio Constitution. The State has appealed.
A small number of the State's 612 local school districts have in any year
required special assistance to avoid year-end deficits. A current program
provides for school district cash need borrowing directly from commercial
lenders, with diversion of State subsidy distributions to repayment if needed.
Borrowings under this program totalled $68.6 million for 44 districts (including
$46.6 million for one district) in FY 1992, $94.5 million for 27 districts
(including $75 million for one) in FY 1993, and $15.6 million for 28 districts
in FY 1994.
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Ohio's 943 incorporated cities and villages rely primarily on property and
municipal income taxes for their operations. With other subdivisions, they also
receive local government support and property tax relief moneys distributed by
the State. For those few municipalities that on occasion have faced significant
financial problems, there are statutory procedures for a joint State/local
commission to monitor the municipality's fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. Since inception in
1979, these procedures have been applied to 23 cities and villages; for 18 of
them the fiscal situation was resolved and the procedures terminated.
Property Taxes. At present the State itself does not levy ad valorem taxes
on real or tangible personal property. Those taxes are levied by political
subdivisions and other local taxing districts. The Constitution has since 1934
limited to 1% of true value in money the amount of the aggregate levy (including
a levy for unvoted general obligations) of property taxes by all overlapping
subdivisions, without a vote of the electors or a municipal charter provision,
and statutes limit the amount of that aggregate levy to 10 mills per $1 of
assessed valuation (commonly referred to as the "ten-mill limitation"). Voted
general obligations of subdivisions are payable from property taxes that are
unlimited as to amount or rate.
Litigation. According to recent State official statements, the State is a
party to various legal proceedings seeking damages or injunctive or other relief
and generally incidental to its operations. The ultimate disposition of those
proceedings is not determinable.
Special Factors Effecting the Oregon Tax-Exempt Series
The following information is a summary of special factors affecting the
Oregon Tax-Exempt Series. It does not purport to be a complete description and
is based in part on the 1993 Annual Report of the Oregon State Treasurer and in
part on the December 1994 Oregon Economic and Revenue Forecast prepared by the
Oregon Department of Administrative Services.
ECONOMIC FORECAST
Short-Term Outlook
Oregon's economy appears set to slow along with the national economy in
1995. Higher costs due to labor shortages and rising interest rates are expected
to moderate the pace of economic activity in 1995 and 1996. Complicating the
state's outlook is the likelihood of further reductions in the timber industry
over the next two years. Despite the expectation of slower growth, continuing
strength in high technology manufacturing, rising exports, and a steady stream
of new residents should keep Oregon's job and income growth rate above the
national average through 1996.
Wage and salary employment is expected to increase 2.6 percent in 1995, down
from an estimated 3.0 percent in 1994. This translates into an increase of
35,800 jobs in 1995, compared to 39,800 the previous year. Employment growth is
expected to slow further to 2.0 percent (28,300 jobs) in 1996.
Oregon's personal income is expected to rise 7.4 percent in 1994, the
highest growth rate since 1990. After adjustment for inflation (using the
consumer expenditure deflator), income is projected to rise 5.1 percent for the
year. If this projection is realized, it would be the highest growth for real
personal income in Oregon since 1978. Personal income growth is expected to slow
to 6.4 percent in 1995 and 5.8 percent in 1996. Adjusted for inflation, personal
income is forecast to rise 3.7 percent in 1995 and 3.0 percent in 1996.
With the unemployment rate near its "natural rate" at five percent, it is
almost inevitable that job growth will slow. The natural rate is defined as the
unemployment rate at which labor markets clear without upward or downward
pressure on wages. The natural rate will be positive because there will always
be unemployed workers either temporarily between jobs or without the skills
required for existing job openings. For the U.S. economy, the natural rate is
currently estimated to be six percent. Although there is room for error in
estimating unemployment rates for small states, Oregon at five percent is
clearly near its natural rate if not below. This means that job growth over the
next year is likely to be limited to increases in the labor force. The labor
force is likely to grow two to three percent as young people enter for the first
time and new residents move to Oregon. If labor shortages lead to higher wages,
there may also be a temporary increase in the labor force as some workers are
coaxed into re-entering the labor market by the prospect of higher income.
Another factor slowing the state economy is the resumption of declining
activity in the timber industry after a one-year respite due to high prices.
Lumber prices have peaked, and industry employment is falling once again. After
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increasing by 900 in 1994, lumber and wood products jobs are expected to decline
3,200 in 1995 and 2,500 in 1996. Paper industry employment is expected to
decrease by 300 over the next two years.
The timber harvest is expected to total 4.7 billion board feet (BBF) in 1994
before declining to 4.4 BBF in 1995 and 4.2 BBF in 1996. With the implementation
of the forest plan, the federal timber harvest is expected to drop to 400
million board feet by 1996, down from an estimated 700 million board feet in
1994. The remaining 3.8 BBF in 1996 will come from state and private lands. The
supply constraints imposed on federal lands have reduced the timber harvest
proportionally more than industry employment. There are several reasons for
this. The first is that segments of the industry where labor adds more value
such as millwork and manufactured housing have increased as a share of industry
employment. Secondly, raw log exports have declined while imports from other
states and countries have increased. Finally, the use of smaller logs increases
the overrun for mills which means that the actual amount of wood available for
production per board foot is greater. The state's construction sector is likely
to slow from the frenetic pace of 1994. Construction employment is estimated to
increase 12.6 percent in 1994, with housing starts climbing 15.1 percent to
21,800. Housing starts are projected to have reached their highest annual total
since 1979. Higher mortgage rates are expected to lower housing starts to 21,100
in 1995 and 20,600 in 1996. Increased non-residential construction is expected
to prevent a decline in construction jobs. Construction employment is expected
to increase 7.0 percent in 1995 and 1.7 percent in 1996.
Oregon's electronics industry is expected to continue expanding rapidly
despite the deceleration taking place in the overall economy. Industry
employment is estimated to increase 12.3 percent in 1994 and 10.8 percent in
1995. Electronics jobs are projected to increase by 7,400 between 1991 and 1995.
The flow of in-migrants from other states is expected to remain a major
stimulative force for the state economy. Population is expected to increase
61,000 in 1995 and 52,000 in 1996. A modest deceleration in the rate of
migration is anticipated due to the assumption of economic recovery in
California.
Income Components
After surging an estimated 8.3 percent in 1994, wage and salary income is
projected to increase 6.7 percent in 1995 and 5.6 percent in 1996. The state's
tight labor markets are expected to put upward pressure on private sector wages.
Manufacturing wages are expected to increase 5.2 percent in 1994 and 4.6 percent
in 1995. Private service wage growth is estimated at 6.0 percent and 4.6 percent
for the two years, respectively. The 1994 growth rates are artificially high
because 1993 was depressed by tax shifting into 1992. Wages in the government
sector are expected to increase 3.1 percent in 1994 and 2.3 percent in 1995.
The state economy's strong performance over the last two years is clearly
evident in proprietor income. Non-farm proprietor's income increased 9.5 percent
in 1993 and an estimated 9.4 percent in 1994. The slowing economy is expected to
pull growth in this income category down to 5.4 percent in 1995. Farm proprietor
income jumped 16.8 percent in 1993 and a projected further 14.7 percent in 1994.
Farm income growth is expected to remain strong at 10.6 percent in 1995 before
slowing to 3.9 percent in 1996.
Rising interest rates are expected to lift dividend, rent, and interest
income to a growth rate of 5.6 percent in 1994 and 5.3 percent in 1995, up from
2.0 percent in 1993. The state's low unemployment rate and small cost-of-living
adjustments for social security are expected to slow transfer payment income
growth to 4.7 percent in 1994, the slowest rate for this category since 1987.
The slowing economy should push transfer payment growth back to 6.1 percent in
1995.
Goods-Producing Sectors
Overall manufacturing employment is projected to increase 3.0 percent for
1994. The only major manufacturing industries in the state expected to
experience declines for the year are scientific instruments and paper. All other
major industries are estimated to have added to payrolls. Manufacturing
employment growth is expected to drop to 0.3 percent in 1995 largely because of
declines in the timber industry. Manufacturing jobs, exclusive of timber are
projected to grow by 4,100, an increase of 2.7 percent.
The slowing national economy is expected to reduce growth in metals
employment from 3.9 percent in 1994 to 1.5 percent in 1995. A similar
deceleration is anticipated for transportation equipment which is forecast to
increase 5.6 percent in 1994 and 3.2 percent in 1995. Small payroll gains are
projected for food processing and printing and publishing.
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Following two years of employment growth above four percent, the state's
mining sector is expected to reduce employment by eight percent in 1994. Job
losses are projected to moderate to 2.2 percent in 1995 before payrolls begin
rising again in 1996.
Service-Producing Sectors
With the exception of financial services, Oregon's private service-producing
sectors have lagged behind the growth of the goods-producing sectors over the
past year. This relationship is expected to change in 1995 as the
interest-sensitive goods-producing sectors slow and the private
service-producing sectors pick up moderately in response to the income already
generated by the goods-producers. Overall private service-producing job growth
is expected to total 25,000 in 1994, 29,700 in 1995, and 27,400 in 1996. The
non-health service sector is expected to account for the largest proportion of
the job growth. Payroll employment in this sector is forecast to increase 12,400
in 1995 and 10,900 in 1996. Health service employment is expected to grow by
3,900 in 1995 and 3,100 in 1996.
Overall trade employment growth should pick up over the next two years. Jobs
in this sector are forecast to rise 2.5 percent in 1994, 2.8 percent in 1995,
and 2.9 percent in 1996. Wholesale trade is likely to benefit from increased
exports and grow 3.9 percent in 1995 and 3.5 percent in 1996. Retail trade,
after some consolidation in 1994, is expected to increase 2.4 percent in 1995
and 2.6 percent in 1996.
Financial services is the service-producing sector most affected by rising
interest rates because a large proportion of the jobs in this sector are in real
estate. Real estate activity is likely to slow from the extremely fast pace of
1994. This will translate into some slowing of job growth is this sector. Job
growth is estimated at 5.5 percent in 1994, 2.7 percent in 1995, and 2.2 percent
in 1996.
The government sector is expected to remain essentially flat over the next
two years. The pattern established in 1993 and 1994 is expected to continue with
federal jobs declining, state jobs virtually flat, and local employment rising
moderately. Overall government job growth in the state is expected to be 0.8
percent in 1994, 0.6 percent in 1995, and 0.5 percent in 1996.
Short-Term Outlook Risks
The biggest short-term risk to the state economy is similar to that for the
national economy. The development of a boom-bust scenario at the national level
with strong growth leading to a surge in interest rates and labor costs followed
by a sharp reduction in construction and manufacturing would have a significant
impact on Oregon. The state's recent growth has depended heavily on construction
and capital goods manufacturers; both sectors are highly sensitive to credit
conditions.
On the upside, the state's labor force may be more elastic than anticipated,
thereby allowing growth to remain strong despite the current low unemployment
rate. This would be the case if in-migration were to pick up and reduce the
threat of shortages for skilled labor.
Extended Outlook
Oregon's income, population, and employment growth are all expected to
exceed the national average for the seven-year period between 1993 and 2000 (see
Table 7). Population is expected to grow nearly twice the national average,
reaching 3,434,000 by the year 2000. On a per capita basis, Oregon's personal
income growth is expected to roughly parallel that of the nation.
Oregon's income and job growth rates have consistently exceeded the national
average since 1987. This has occurred despite the radical downsizing that has
taken place in the state's timber industry. These two patterns are likely to
continue at least until 1998. At that time, the timber industry is expected to
bottom out with the federal timber harvest constant at 400 million board feet
per year. The overall timber harvest from all lands is expected to be 3.9 BBF.
Timber industry employment is expected to be 53,800 in 1998, down from 63,100 in
1994.
Despite the sharp decline in timber industry jobs, overall manufacturing
employment in 2000 is expected to be up slightly from the 1994 level. This means
other manufacturing industries in Oregon are expanding to offset losses in the
timber industry. The following table shows how the proportion of manufacturing
employment in the state's key manufacturing industries changed in the 1980's and
how it is expected to change in the 1990's.
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Oregon Manufacturing Jobs by Industry
(Percentage of Manufacturing Employment)
1980 1990 2000
Lumber and Wood Products 32.4 29.1 20.8
Electronics 4.6 7.9 13.8
Food Processing 11.3 11.3 12.3
Non-electrical Machinery 8.2 8.1 10.1
Metals 11.0 10.2 9.8
Printing and Publishing 4.7 6.6 7.1
Transportation Equipment 4.8 6.1 6.6
Scientific Instruments 9.0 5.5 3.8
Paper 4.8 4.2 3.8
Other nondurable goods 5.0 5.8 6.6
Other durable goods 4.3 5.2 5.2
The biggest change is the lumber and wood products industry's share of
manufacturing employment. Lumber and wood products is expected to account for
20.8 percent of employment in 2000, down from 32.4 percent two decades earlier.
Employment in the paper industry is also declining, dropping from 4.8 percent in
1980 to a projected 3.8 percent in 2000. The other significant decline is
occurring in the scientific instruments industry which is expected to drop all
the way down to 3.8 percent of manufacturing employment by 2000, less than
one-half of its 1980 share.
The largest proportionate gain in the 1980's was in the electronics industry
which increased its share from 4.6 percent in 1980 to 7.9 percent in 1990. The
trend is expected to continue throughout the 1990's, with electronics jobs
comprising 13.8 percent of manufacturing employment by 2000. Non-electrical
machinery, another component of the high technology grouping, is expected to
make up 10.1 percent of manufacturing jobs in 2000, up from 8.1 percent in 1990.
The growing diversity of the state's manufacturing sector is illustrated by
the rising share of jobs attributable to printing and publishing, transportation
equipment, and food processing. The increasingly diverse nature is even more
evident in the steadily rising share of manufacturing jobs in the "other"
durable and nondurable goods industries.
PROPERTY TAX LIMITATION MEASURE
On November 6, 1990, voters of the State approved Ballot Measure 5 which
became an amendment to the Oregon Constitution (Article XI, Section 11b) (the
"Amendment"). This Amendment limits the amount of property taxes which may be
imposed on individual parcels of property. The Amendment did not repeal existing
constitutional or statutory restrictions on property taxes.
The Amendment has an effect on the financial condition of the State since it
(1) requires the Oregon Legislature over a five-year period to replace tax
revenues lost by school districts as a result of enactment of the Amendment, and
(2) restricts the ability of Oregon local governments to raise revenues through
the imposition of property tax increases. While the precise magnitude of the
effect cannot be predicted with any certainty, the Legislative Revenue Office of
the State has prepared an analysis of the possible fiscal impact upon the State.
Although the assumptions used by that office are the best possible given current
information, future information may produce more accurate models and improved
assumptions, which could raise or lower estimates of the Amendment's cost to the
State.
The Legislative Revenue Office's analysis indicates that the State's
obligation to replace school revenues was $491.7 million during the 1991-1993
biennium, and will be $1,606.0 million during the 1993-1995 biennium and
$1,397.5 million during the 1995-96 fiscal year. Under the Amendment, the
State's obligation to replace school revenues terminates after fiscal year
1995-96
The Amendment provides for certain exemptions to its limitations. Taxes
imposed to pay principal and interest on bonded indebtedness authorized by the
Oregon Constitution are not limited by the Amendment. The Amendment will have no
effect on the State's legal ability to levy property taxes to pay debt service
on general obligation bonds authorized by the Oregon Constitution.
47
<PAGE>
1993-95 Legislative Action
The 1993 Legislature approved a measure which was voted on by the people in
November 1993. This measure was a legislative response to Measure 5 that was
intended to provide a long-term solution to education funding in the state. The
measure was overwhelmingly defeated in the November 1993 general election. The
defeat of this measure assured a great deal of uncertainty about future state
fiscal policy.
Debt Management Plan
In response to the property tax limitation measure approved by voters of the
State on November 6, 1990, the State Treasurer announced a Debt Management Plan.
The Debt Management Plan remains in effect. The overall intent of the Debt
Management Plan is to reduce the amount of outstanding State general obligation
debt and reduce the issuance of new debt until the uncertainties created by the
Amendment have been resolved. Under the Debt Management Plan, the state will
issue debt to fund priority capital needs and to take advantage of low interest
rates by issuing refunding obligations where it is economically advantageous to
do so.
OREGON PUBLIC EMPLOYEE INCOME TAX CHALLENGE
HUGHES V. STATE OF OREGON
The 1991 Oregon Legislature enacted legislation, in response to the United
Sates Supreme Court decision in Davis v. Michigan Dept. of Treasury, 489 U.S.
803 (1989), which held that states could not lawfully impose a personal income
tax on federal retirement benefits, while at the same time, fully exempt
retirement benefits received under state and local government retirement system.
The 1991 legislation extended Oregon income taxation to state and local public
retirement income. Previously, Oregon statutes had exempted benefits received
under the Oregon Public Employees' Retirement System from state personal income
taxation.
On August 6, 1992, the Oregon Supreme Court determined that section 1 of the
1992 legislation, which repealed a statute stating that state and local public
retirement benefits "accrued and accruing" would not be subject to state
personal income taxation, impaired a contract, established by statute, between
the participants in the Oregon Public Employees' Retirement System and their
employers. That holding applies, however, only to taxation of benefits that are
attributable to work performed on or before September 28, 1991, the day
immediately preceding the effective date of the 1991 legislation. The court
therefore nullified that section on the ground that it violated the "Contracts
Clause", Article I, section 21 of the Oregon Constitution, with respect to
benefits attributable to work performed on or before September 28, 1991.
The decision affects taxes collected or imposed on those Public Employees'
Retirement System benefits that accrued with respect to work performed on or
before September 28, 1991. The state had already commenced withholding with
respect to those taxes for PERS retirees who had not opted out. The decision
therefore will require the Legislative Assembly to enact an adequate remedy of
some character with respect to those withholdings. Depending on how the
Legislative Assembly addresses this issue, the net negative impact on the state
General Fund budget in the next biennium could range from approximately $50
million to $100 million. Additionally, in the future, the state may not subject
Public Employees' Retirement System benefits that are attributable to work
performed on or before September 28, 1991 to state personal income taxation.
ALSEA VENEER, INC., ET AL V. STATE OF OREGON, ET AL;
ABC ROOFING CO., INC., ET AL V. STATE OF OREGON, ET AL
Two companion class actions were filed in September 1988 by workers'
compensation policyholders insured by the State Accident Insurance Fund
Corporation (SAIF). The plaintiffs sought damages based on the Oregon
Legislative Assembly's 1983 transfer of $81 million in surplus reserves from the
Industrial Accident Fund to the State General Fund under Oregon Laws 1982
(Special Session 3) chapter 2. Because both cases were brought on behalf of the
same class of employer-policyholders, the combined maximum claims in both cases
cannot exceed $81 million, plus interest and attorney fees, if any.
In an opinion dated November 18, 1993, the Oregon Supreme Court held that
Oregon must repay $81 million, with interest, to SAIF, and that SAIF's board
must determine what distributions, if any, would have been made to some or all
classes of employers insured with SAIF, had the $81 million been available to
SAIF in 1982. Damages will presumably be based on this latter determination. The
48
<PAGE>
Supreme Court specifically noted that "SAIF has no legal license to attempt once
again to pass the money to [Oregon's] General Fund . . . "
The total liability, including accrued interest, of the state as a result of
these cases could be as great as $188 million.
LEVEL OF GENERAL OBLIGATION INDEBTEDNESS
As of December 31, 1993, approximately $4.713 billion in general obligation
debt of the state of Oregon was outstanding, including $3.870 billion of
Veteran's Welfare Bonds, a mortgage bond program.
VALUE OF REVENUE BONDS AFFECTED BY ECONOMY
Although revenue obligations of Oregon or its political subdivisions may be
payable from a specific project or source, including lease rentals, there can be
no assurance that economic difficulties, with the resulting effect on state and
local governmental finances, will not adversely affect the market value of
municipal obligations held in the portfolio of the Trust or the ability of the
respective obligors to make required payments on such obligations.
SMALL ACTIVE MARKET
There is a relatively small active market for municipal bonds of Oregon
issuers other than the general obligation bonds of the state itself, and the
market price of such bonds may, therefore, be volatile. If the Trust were forced
to sell a large volume of these bonds for any reason, such as redemptions of a
large number of its shares, the large sale itself might adversely affect the
value of the Series' portfolio.
Special Factors Affecting the South Carolina Tax-Exempt Series
The State of South Carolina has the power to issue general obligation bonds
based on the full faith and credit of the State. Political subdivisions are also
empowered to issue general obligation bonds, which are backed only by the full
faith and credit of that political subdivision, and not by the resources of the
State of South Carolina or any other political subdivision. Political
subdivisions are empowered to levy ad valorem property taxes on real property
and certain personal property to raise funds for the payment of general
obligation bonds. General obligation debt may be incurred only for a public
purpose which is also a corporate purpose of the applicable political
subdivision.
Under Article X of the Constitution of the State of South Carolina, the
State may issue general obligation debt without either a referendum or a
supermajority of the General Assembly, within limits defined by reference to
anticipated sources of revenue for bonds issued for particular purposes. A
referendum or supermajority of the General Assembly may authorize additional
general obligation debt. Article X further requires the levy and collection of
an ad valorem tax if debt service payments on general obligation debt are not
made. Under Article X of the Constitution of the State of South Carolina,
political subdivisions are empowered to issue aggregate general obligation
indebtedness up to 8% of the assessed value of taxable property within the
political subdivision (exclusive of debt incurred before the effective date of
Article X with respect to such subdivisions) without a referendum. A referendum
may authorize additional general obligation debt. The ordinance or resolution
authorizing bonded debt of a political subdivision also directs the levy and
collection of ad valorem taxes to pay the debt. In addition, Article X of the
South Carolina Constitution provides for withholding by the State Treasurer of
any state appropriations to a political subdivision which has failed to make
punctual payment of general obligation bonds. Such withheld appropriations, to
the extent available, may be applied to the bonded debt. Political subdivisions
are not generally authorized to assess income taxes, or to pledge any form of
tax other than ad valorem property taxes, for the payment of general obligation
bonds. Certain political subdivisions have been authorized to impose a
limited-duration 1% sales tax to defray the debt service on general obligation
bonds.
Industrial development bonds and other forms of revenue bonds issued by the
State or a political subdivision are not secured by the full faith and credit of
the State or the issuing entity. Such bonds are payable only from revenues
derived from a specific facility or revenue source.
The State of South Carolina has not defaulted on its bonded debt since 1879.
The State did, however, experience certain budgeting difficulties over several
recent fiscal years through June 30, 1993, resulting in mid-year cutbacks in
funding of state agencies in those years. The State had a budget surplus at
fiscal year end June 30, 1994. Such difficulties have not to date impacted on
the State's ability to pay its indebtedness but have resulted in Standard &
Poor's Corporation lowering its
49
<PAGE>
rating on South Carolina general obligation bonds from AAA to AA+ on January 29,
1993. South Carolina's general obligation bonds are rated Aaa by Moody's. Such
ratings apply only to the general obligation bonded indebtedness of the State,
and do not apply to bonds issued by political subdivisions or to revenue bonds
not backed by the full faith and credit of the State.
APPENDIX C
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing business in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale
of government securities to help finance the Civil War - Joseph Seligman, with
his brothers, established the international banking and investment firm of J. &
W. Seligman & Co. In the years that followed, Seligman played a major role in
the geographical expansion and industrial development of the United States.
Seligman:
...Prior to 1900
o Helps finance America's fledgling railroads.
o Is admitted to the New York Stock Exchange in 1869.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistant to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and Urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the Country's most important companies: Briggs Manufactoring, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nations largest,
diversified closed-end equity investment company, and one of its oldest,
with over $2 billion in assets.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund.
o Establishes Investment Advisory Service.
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...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund.
...1950-1989
o Develops new open-end investment companies. Today, manages 43 mutual fund
portfolios.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-free funds.
o Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.
...1990s
o Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two high quality, closed-end municipal bond funds.
o In 1991 establishes a joint venture with Henderson Administration Group plc,
of London, known as Seligman Henderson Co., to offer global investment
products.
o Introduces two small-cap mutual funds: Seligman Frontier Fund and Seligman
Henderson Global Smaller Companies Fund.
51
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======================================================================
Seligman
Tax-Exempt
Fund
Series, Inc.
----------------------------------------------------------------------
11th Annual Report
September 30, 1994
======================================================================
JWS
<PAGE>
================================================================================
To the Shareholders
- --------------------------------------------------------------------------------
We are pleased to report the long-term investment results, portfolio holdings,
and audited financial statements for the National and 12 state-specific
portfolios in Seligman Tax-Exempt Fund Series for the fiscal year ended
September 30, 1994. Highlights, the performance overview, and portfolio
information begin on page 2.
The economic recovery which has been unfolding over the past several years
was characterized by low inflation, declining interest rates, and steady, albeit
modest, growth. During the second half of 1993, however, the economy began to
show signs of increased strength. In February of 1994, the Federal Reserve Board
(FRB) moved to raise the federal funds rate for the first time in five years in
an effort to slow the economy's rate of growth and keep inflation under control.
Since then, the FRB has raised the federal funds rate an additional four times
as economic reports continued to suggest that the economy was gaining momentum.
Further tightening remains a possibility until such time as the FRB achieves its
goal of moderate growth and stable inflation.
1994 has been a difficult year for the bondmarkets. The increase in
interest rates has led to a decline in the value of fixed-income securities,
including those held in your Fund. The municipal bond market, however, has
experienced less volatility and, in general, has outperformed the taxable bond
markets. Additionally, intermediate-term and long-term municipal bonds still
provide a substantial yield advantage when compared with after-tax returns of
taxable bonds of comparable quality. While the possibility exists that interest
rates will increase further, we believe there is value in the current municipal
market environment.
Early this year, the use of derivatives in the management of mutual fund
portfolios gained substantial media attention, and many of you have inquired
about the use of these securities in your Series. Your Manager does not invest
in derivative securities because, in our opinion, they may increase the
potential of investment risk to your portfolio.
For additional information about your Series, or your investment in its
shares, please write, or call the toll-free telephone numbers listed on page 63.
We thank you for your continued trust and support of Seligman Tax- Exempt
Fund Series.
By order of the Board of Directors,
/s/ WILLIAM C. MORRIS
William C. Morris
Chairman
/s/ RONALD T. SCHROEDER
Ronald T. Schroeder
President
October 28, 1994
1
<PAGE>
================================================================================
Seligman Tax-Exempt Fund Series
- --------------------------------------------------------------------------------
Highlights September 30, 1994
<TABLE>
<CAPTION>
National Colorado Georgia Louisiana Maryland Massachusetts
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets:
Class A (in millions) $111.4 $58.2 $61.5 $61.4 $57.3 $120.1
Class D (in millions) 0.4 0.1 0.8 0.7 0.4 1.1
- -------------------------------------------------------------------------------------------------------------------
Yield:*
Class A 5.47% 4.76% 5.07% 4.73% 4.94% 4.74%
Class D 4.75 4.06 4.34 4.01 4.14 4.01
- -------------------------------------------------------------------------------------------------------------------
Dividends:**
Class A $0.412 $0.375 $0.413 $0.444 $0.420 $0.438
Class D 0.220 0.200 0.224 0.242 0.228 0.240
- -------------------------------------------------------------------------------------------------------------------
Capital Gain Distributions--
Class A** $0.499 $0.079 $0.089 $0.084 $0.174 $0.205
- -------------------------------------------------------------------------------------------------------------------
Net asset value per share:
Class A $7.18 $7.09 $7.48 $7.94 $7.71 $7.66
Class D 7.18 7.09 7.49 7.94 7.72 7.66
- -------------------------------------------------------------------------------------------------------------------
Maximum offering price per share:
Class A $7.54 $7.44 $7.85 $8.34 $8.09 $8.04
Class D 7.18 7.09 7.49 7.94 7.72 7.66
- -------------------------------------------------------------------------------------------------------------------
Moody's/S&P Ratings+
Aaa/AAA 38% 48% 48% 85% 40% 46%
Aa/AA 50 26 25 7 42 15
A/A 10 19 18 5 18 32
Baa/BBB -- 5 6 2 -- 6
Ba/BB -- -- -- -- -- --
Caa/CCC -- -- -- -- -- --
Non-rated 2 2 3 1 -- 1
- -------------------------------------------------------------------------------------------------------------------
Holdings by Market Sector+
Revenue Bonds 82% 88% 65% 78% 70% 74%
General Obligation Bonds 18 12 35 22 30 26
- -------------------------------------------------------------------------------------------------------------------
Weighted Average Maturity (years) 26.8 19.3 22.6 18.1 20.6 18.5
- -------------------------------------------------------------------------------------------------------------------
Michigan Minnesota Missouri New York Ohio Oregon South Carolina
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (in millions) $151.1 $135.0 $ 52.6 $ 90.9 $171.5 $ 59.9 $115.1
Class D (in millions) 0.7 1.6 0.4 0.5 0.3 0.8 1.5
- ------------------------------------------------------------------------------------------------------------------------------------
Yield:*
Class A 4.89% 4.81% 4.84% 5.05% 4.66% 4.68% 4.91%
Class D 4.15 4.08 4.09 4.26 3.93 3.93 4.16
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends:**
Class A $ 0.460 $ 0.454 $ 0.404 $ 0.432 $ 0.442 $ 0.402 $ 0.411
Class D 0.252 0.250 0.217 0.235 0.242 0.221 0.224
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Gain Distributions--
Class A** $ 0.088 $ 0.119 $ 0.109 $ 0.201 $ 0.171 $ 0.064 $ 0.124
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per share:
Class A $ 8.28 $ 7.72 $ 7.41 $ 7.67 $ 7.90 $ 7.43 $ 7.61
Class D 8.28 7.73 7.41 7.67 7.92 7.43 7.61
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum offering price per share:
Class A $ 8.69 $ 8.10 $ 7.78 $ 8.05 $ 8.29 $ 7.80 $ 7.99
Class D 8.28 7.73 7.41 7.67 7.92 7.43 7.61
- ------------------------------------------------------------------------------------------------------------------------------------
Moody's/S&P Ratings+
Aaa/AAA 50% 39% 46% 35% 63% 35% 60%
Aa/AA 13 22 39 19 11 22 16
A/A 27 27 15 28 19 27 20
Baa/BBB 4 -- -- 17 2 9 4
Ba/BB -- -- -- -- -- -- --
Caa/CCC -- 8 -- -- -- -- --
Non-rated 6 4 -- 1 5 7 --
- ------------------------------------------------------------------------------------------------------------------------------------
Holdings by Market Sector+
Revenue Bonds 73% 60% 88% 94% 73% 67% 73%
General Obligation Bonds 27 40 12 6 27 33 27
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Average Maturity (years) 18.0 15.3 18.3 23.7 18.2 17.7 18.6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Current yield representing the annualized yield based upon maximum offering
price for the 30-day period ended September 30, 1994.
** Represents per share amount paid or declared in respect of Class A shares
during the year ended September 30, 1994; and in the case of Class D
shares, for the period February 1, 1994, to September 30, 1994.
+ Percentages based on current market value of long-term holdings.
Note: Results reflect past performance, which is not indicative of future
results. The yield has been computed in accordance with SEC regulations and will
vary, and the principal value of an investment will fluctuate. Shares, if
redeemed, may be worth more or less than their original cost. National Series'
income and a small portion of each State Series' income may be subject to
applicable state and local taxes. A portion of each Series' income dividends may
be subject to the federal alternative minimum tax.
2 & 3
<PAGE>
================================================================================
Annual Performance Overview September 30, 1994
- --------------------------------------------------------------------------------
The following is a biography of your Portfolio Manager, a discussion with him
regarding Seligman Tax-Exempt Fund Series, and a comparison chart and table of
each Series' performance against the Lehman Brothers Municipal Bond Index.
Your Portfolio Manager
Thomas G. Moles is a Managing Director of J. & W. Seligman & Co.
Incorporated, as well as President and Senior Portfolio Manager
of Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, and Vice President and Senior Portfolio Manager of the
Seligman tax-exempt mutual funds which include 19 separate
portfolios. He is responsible for more than $2 billion in
tax-exempt securities. Mr. Moles, with more than 24 years of
experience, has spearheaded Seligman's tax-exempt efforts since
joining the firm in 1983.
[PICTURE]
Investment Policy:
"To manage Seligman Tax-Exempt Fund Series' portfolios for total
return and to provide competitive tax-exempt yields while
striving to minimize risk to principal."
Economic Factors Affecting Seligman Tax-Exempt Fund Series:
"Interest rates have been moving higher since the fourth quarter
of 1993 as steadily improving economic conditions focused attention on the risk
of an acceleration in the rate of inflation. In February of 1994, the Federal
Reserve Board voted to begin raising the federal funds rate in an attempt to
slow the economy's rate of growth and keep inflation under control. Since the
increases began, yields on municipal securities for all maturities have
increased and market values have declined across the yield curve.
"While the economic recovery of 1994 has made for a difficult year for
fixed-income markets, it has generally been positive for municipal issuers. The
improving financial condition of states, cities, and towns has served to
strengthen the creditworthiness of many outstanding municipal bonds, many of
which we currently hold in our portfolios."
Your Manager's Investment Strategy:
"New purchases for the portfolios have been concentrated in higher-quality
municipal bonds, while holdings of lower-rated bonds have been reduced, where
appropriate, in order to enhance the overall quality of the portfolios. We
continue to purchase long-term bonds, despite rising interest rates, because of
the significantly higher yields available compared to those offered by
short-term bonds. By remaining in the long-end of the market, however, the
portfolios have declined more in value than they would have had a greater
percentage of assets been invested in cash or other high-quality, short-term
securities."
Looking Ahead:
"We believe that the Federal Reserve Board ultimately will be successful in
accomplishing its objective and, therefore, do not expect inflation to become a
serious threat. In the interim, however, the bond markets may experience further
volatility. While 1994 has been a difficult year for all fixed-income markets,
municipal securities have generally out- performed other fixed-income
securities, such as U.S. Treasuries. We anticipate that this outperformance will
continue, due mainly to the imbalance in supply and demand which has
characterized the municipal market for most of the year. New issue volume, which
has declined significantly in 1994, is expected to remain subdued while demand
for municipal securities should continue to increase because of the relative
attractiveness of their yields."
4
<PAGE>
================================================================================
Performance Comparison Charts and Tables September 30, 1994
- --------------------------------------------------------------------------------
The following charts compare a $10,000 hypothetical investment made in each
Series of Seligman Tax-Exempt Fund Series Class A shares, with and without the
maximum initial sales charge of 4.75%, for the ten-year period ended September
30, 1994, or since inception where applicable, to a $10,000 hypothetical
investment made in the Lehman Brothers Municipal Bond Index (Lehman Index) for
the same periods. The performance of each Series of Seligman Tax-Exempt Fund
Series Class D shares is not shown in the charts but is included in the table
below each chart. It is important to keep in mind that the Lehman Index excludes
the effects of any fees or sales charges, and does not reflect state-specific
bond market performance.
Seligman National Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/84 9,527 10,000 10,000
12/31/84 10,126 10,629 10,467
3/31/85 10,503 11,024 10,888
6/30/85 11,354 11,917 11,801
9/30/85 11,355 11,918 11,624
12/31/85 12,285 12,895 12,563
3/31/86 13,606 14,282 13,835
6/30/86 13,594 14,269 13,750
9/30/86 14,326 15,037 14,489
12/31/86 14,909 15,649 14,990
3/31/87 15,434 16,200 15,353
6/30/87 14,559 15,282 14,936
9/30/87 13,987 14,681 14,565
12/31/87 14,697 15,426 15,215
3/31/88 15,104 15,854 15,738
6/30/88 15,661 16,439 16,044
9/30/88 16,285 17,093 16,455
12/31/88 16,743 17,574 16,762
3/31/89 16,898 17,737 16,873
6/30/89 17,909 18,798 17,872
9/30/89 17,688 18,566 17,884
12/31/89 18,387 19,300 18,570
3/31/90 18,265 19,171 18,653
6/30/90 18,743 19,674 19,089
9/30/90 18,414 19,327 19,100
12/31/90 19,457 20,423 19,924
3/31/91 19,793 20,776 20,374
6/30/91 20,213 21,216 20,809
9/30/91 21,035 22,079 21,618
12/31/91 21,690 22,766 22,343
3/31/92 21,637 22,711 22,409
6/30/92 22,500 23,617 23,258
9/30/92 22,895 24,031 23,878
12/31/92 23,399 24,561 24,312
3/31/93 24,584 25,805 25,215
6/30/93 25,548 26,816 26,040
9/30/93 26,559 27,877 26,920
12/31/93 26,698 28,023 27,299
3/31/94 24,508 25,725 25,800
6/30/94 24,656 25,880 26,091
9/30/94 24,481 25,696 26,263
The table below shows the average annual total returns for the one-year,
five-year, and ten-year periods through September 30, 1994, for Seligman
National Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman National Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since
One Five Ten Inception
Year Years Years 2/1/94
----- ------ ------- ------------
Seligman National Seligman National
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -12.16% 5.67% 9.37% CDSL (1) -10.84%
Class A without Class D without
Sales Charge (2) -7.83 6.71 9.90 CDSL (2) -9.96
Lehman Index -2.44 7.99 10.14 Lehman Index -4.88
See page 17 for footnotes.
5
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Colorado Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
5/1/86 9,520 10,000 10,000
6/30/86 9,067 9,524 9,931
9/30/86 9,665 10,153 10,465
12/31/86 10,003 10,507 10,826
3/31/87 10,217 10,732 11,089
6/30/87 9,818 10,313 10,788
9/30/87 9,358 9,830 10,519
12/31/87 9,939 10,441 10,989
3/31/88 10,304 10,823 11,367
6/30/88 10,548 11,080 11,588
9/30/88 10,872 11,421 11,885
12/31/88 11,198 11,763 12,106
3/31/89 11,317 11,887 12,187
6/30/89 11,952 12,554 12,908
9/30/89 11,926 12,528 12,917
12/31/89 12,322 12,944 13,412
3/31/90 12,248 12,866 13,473
6/30/90 12,534 13,166 13,787
9/30/90 12,448 13,077 13,795
12/31/90 12,945 13,597 14,390
3/31/91 13,160 13,824 14,715
6/30/91 13,400 14,076 15,030
9/30/91 13,836 14,535 15,614
12/31/91 14,161 14,875 16,137
3/31/92 14,130 14,842 16,185
6/30/92 14,598 15,334 16,799
9/30/92 14,908 15,660 17,246
12/31/92 15,247 16,016 17,560
3/31/93 15,753 16,548 18,212
6/30/93 16,259 17,078 18,808
9/30/93 16,777 17,623 19,444
12/31/93 16,941 17,796 19,717
3/31/94 16,116 16,928 18,634
6/30/94 16,259 17,079 18,845
9/30/94 16,287 17,109 18,969
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
Colorado Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Colorado Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 5/1/86 2/1/94
----- ------- ---------- ------------
Seligman Colorado Seligman Colorado
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -7.57% 5.40% 5.96% CDSL (1) -6.64%
Class A without Class D without
Sales Charge (2) -2.92 6.43 6.58 CDSL (2) -5.73
Lehman Index -2.44 7.99 7.90 Lehman Index -4.88
See page 17 for footnotes.
6
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
Seligman Georgia Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
6/15/87 9,520 10,000
6/30/87 9,413 9,888 10,000
9/30/87 8,795 9,239 9,751
12/31/87 9,409 9,883 10,187
3/31/88 9,746 10,238 10,537
6/30/88 10,010 10,514 10,742
9/30/88 10,335 10,856 11,017
12/31/88 10,692 11,231 11,223
3/31/89 10,791 11,336 11,297
6/30/89 11,430 12,007 11,966
9/30/89 11,383 11,957 11,974
12/31/89 11,747 12,339 12,433
3/31/90 11,747 12,339 12,489
6/30/90 12,008 12,613 12,781
9/30/90 11,973 12,577 12,788
12/31/90 12,571 13,204 13,340
3/31/91 12,801 13,446 13,641
6/30/91 13,058 13,716 13,932
9/30/91 13,566 14,250 14,474
12/31/91 13,950 14,653 14,959
3/31/92 13,941 14,644 15,004
6/30/92 14,509 15,240 15,572
9/30/92 14,874 15,624 15,987
12/31/92 15,206 15,972 16,278
3/31/93 15,646 16,435 16,882
6/30/93 16,176 16,991 17,435
9/30/93 16,950 17,805 18,024
12/31/93 17,062 17,922 18,277
3/31/94 15,897 16,699 17,274
6/30/94 15,995 16,802 17,469
9/30/94 16,015 16,823 17,584
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
Georgia Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Georgia Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 6/15/87 2/1/94
----- -------- -------- ----------
Seligman Georgia Seligman Georgia
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -10.00% 6.04% 6.66% CDSL (1) -8.47%
Class A without Class D without
Sales Charge (2) -5.52 7.06 7.39 CDSL (2) -7.57
Lehman Index -2.44 7.99 8.10 Lehman Index -4.88
See page 17 for footnotes.
7
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Louisiana Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/85 10,000 9,520 10,000
12/31/85 10,081 10,589 10,808
3/31/86 11,044 11,601 11,902
6/30/86 10,829 11,375 11,829
9/30/86 11,374 11,947 12,465
12/31/86 11,768 12,361 12,895
3/31/87 12,206 12,822 13,208
6/30/87 11,790 12,384 12,849
9/30/87 11,444 12,021 12,530
12/31/87 12,059 12,667 13,090
3/31/88 12,446 13,074 13,540
6/30/88 12,708 13,348 13,802
9/30/88 13,125 13,787 14,156
12/31/88 13,414 14,090 14,420
3/31/89 13,574 14,258 14,516
6/30/89 14,307 15,029 15,375
9/30/89 14,311 15,033 15,385
12/31/89 14,774 15,518 15,976
3/31/90 14,776 15,521 16,047
6/30/90 15,139 15,902 16,422
9/30/90 15,056 15,815 16,431
12/31/90 15,788 16,584 17,140
3/31/91 16,119 16,932 17,528
6/30/91 16,455 17,284 17,902
9/30/91 17,087 17,949 18,598
12/31/91 17,585 18,471 19,221
3/31/92 17,564 18,450 19,278
6/30/92 18,287 19,209 20,009
9/30/92 18,647 19,587 20,542
12/31/92 18,962 19,918 20,915
3/31/93 19,684 20,676 21,692
6/30/93 20,279 21,301 22,402
9/30/93 20,903 21,957 23,159
12/31/93 21,133 22,199 23,485
3/31/94 19,995 21,003 22,195
6/30/94 20,081 21,093 22,446
9/30/94 20,102 21,115 22,594
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for
Seligman Louisiana Tax-Exempt Series Class A shares, with and without the
maximum initial sales charge of 4.75%, and the Lehman Index. Also
included in the table is the total return for the period since inception
on February 1, 1994, to September 30, 1994, for Seligman Louisiana Tax-
Exempt Series Class D shares, with and without the effect of the 1%
contingent deferred sales load ("CDSL") imposed on shares redeemed within
one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 10/1/85 2/1/94
------ ------ ---------- ------------
Seligman Louisiana Seligman Louisiana
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -8.42% 6.00% 8.06% CDSL (1) -7.36%
Class A without Class D without
Sales Charge (2) -3.83 7.03 8.66 CDSL (2) -6.45
Lehman Index -2.44 7.99 9.48 Lehman Index -4.88
See page 17 for footnotes.
8
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
Seligman Maryland Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/85 9,520 10,000 10,000
12/31/85 9,934 10,435 10,808
3/31/86 10,666 11,204 11,902
6/30/86 10,336 10,858 11,829
9/30/86 10,863 11,411 12,465
12/31/86 11,284 11,853 12,895
3/31/87 11,485 12,065 13,208
6/30/87 10,884 11,433 12,849
9/30/87 10,493 11,022 12,530
12/31/87 11,182 11,746 13,090
3/31/88 11,503 12,083 13,540
6/30/88 11,763 12,356 13,802
9/30/88 12,144 12,756 14,156
12/31/88 12,436 13,063 14,420
3/31/89 12,584 13,218 14,516
6/30/89 13,320 13,991 15,375
9/30/89 13,290 13,959 15,385
12/31/89 13,741 14,434 15,976
3/31/90 13,707 14,398 16,047
6/30/90 13,995 14,700 16,422
9/30/90 13,884 14,583 16,431
12/31/90 14,587 15,322 17,140
3/31/91 14,827 15,574 17,528
6/30/91 15,096 15,857 17,902
9/30/91 15,724 16,517 18,598
12/31/91 16,114 16,926 19,221
3/31/92 16,167 16,982 19,278
6/30/92 16,751 17,596 20,009
9/30/92 17,164 18,028 20,542
12/31/92 17,442 18,321 20,915
3/31/93 18,088 19,000 21,692
6/30/93 18,711 19,655 22,402
9/30/93 19,434 20,413 23,159
12/31/93 19,522 20,507 23,485
3/31/94 18,489 19,421 22,195
6/30/94 18,604 19,542 22,446
9/30/94 18,641 19,580 22,594
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
Maryland Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Maryland Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 10/1/85 2/1/94
------- ------ --------- ------------
Seligman Maryland Seligman Maryland
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -8.63% 5.96% 7.16% CDSL -7.13%
Class A without Class D without
Sales Charge (2) -4.08 7.00 7.75 CDSL -6.21
Lehman Index -2.44 7.99 9.48 Lehman Index -4.88
See page 17 for footnotes.
9
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Massachusetts Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/84 9,530 10,000 10,000
12/31/84 9,897 10,385 10,467
3/31/85 10,345 10,855 10,888
6/30/85 11,088 11,635 11,801
9/30/85 10,990 11,532 11,624
12/31/85 11,707 12,285 12,563
3/31/86 12,640 13,264 13,835
6/30/86 12,466 13,081 13,750
9/30/86 13,132 13,780 14,489
12/31/86 13,592 14,263 14,990
3/31/87 14,008 14,699 15,353
6/30/87 13,336 13,994 14,936
9/30/87 12,849 13,483 14,565
12/31/87 13,585 14,255 15,215
3/31/88 14,117 14,814 15,738
6/30/88 14,446 15,159 16,044
9/30/88 14,796 15,526 16,455
12/31/88 15,093 15,838 16,762
3/31/89 15,169 15,918 16,873
6/30/89 16,067 16,860 17,872
9/30/89 16,006 16,796 17,884
12/31/89 16,402 17,211 18,570
3/31/90 16,397 17,206 18,653
6/30/90 16,738 17,564 19,089
9/30/90 16,404 17,213 19,100
12/31/90 17,291 18,144 19,924
3/31/91 17,807 18,686 20,374
6/30/91 18,222 19,121 20,809
9/30/91 19,001 19,939 21,618
12/31/91 19,534 20,498 22,343
3/31/92 19,643 20,613 22,409
6/30/92 20,386 21,392 23,258
9/30/92 20,855 21,883 23,878
12/31/92 21,307 22,358 24,312
3/31/93 22,074 23,163 25,215
6/30/93 22,871 24,000 26,040
9/30/93 23,603 24,767 26,920
12/31/93 23,762 24,935 27,299
3/31/94 22,648 23,765 25,800
6/30/94 22,833 23,960 26,091
9/30/94 22,909 24,040 26,263
The table below shows the average annual total returns for the one-year,
five-year, and ten-year periods through September 30, 1994, for Seligman
Massachusetts Tax-Exempt Series Class A shares, with and without the maximum
initial sales charge of 4.75%, and the Lehman Index. Also included in the table
is the total return for the period since inception on February 1, 1994, to
September 30, 1994, for Seligman Massachusetts Tax-Exempt Series Class D shares,
with and without the effect of the 1% contingent deferred sales load ("CDSL")
imposed on shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since
One Five Ten Inception
Year Years Years 2/1/94
----- ------ ----- ---------
Seligman Massachusetts Seligman Massachusetts
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -7.59% 6.40% 8.64% CDSL (1) -6.26%
Class A without Class D without
Sales Charge (2) -2.94 7.43 9.17 CDSL (2) -5.34
Lehman Index -2.44 7.99 10.14 Lehman Index -4.88
See page 17 for footnotes.
10
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
Seligman Michigan Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/84 9,528 10,000 10,000
12/31/84 9,862 10,350 10,467
3/31/85 10,288 10,798 10,888
6/30/85 11,101 11,650 11,801
9/30/85 11,071 11,619 11,624
12/31/85 11,940 12,531 12,563
3/31/86 13,081 13,728 13,835
6/30/86 12,947 13,588 13,750
9/30/86 13,697 14,375 14,489
12/31/86 14,130 14,829 14,990
3/31/87 14,498 15,216 15,353
6/30/87 13,886 14,574 14,936
9/30/87 13,304 13,963 14,565
12/31/87 14,071 14,768 15,215
3/31/88 14,577 15,298 15,738
6/30/88 14,974 15,715 16,044
9/30/88 15,430 16,194 16,455
12/31/88 15,821 16,604 16,762
3/31/89 15,984 16,776 16,873
6/30/89 16,990 17,831 17,872
9/30/89 16,959 17,798 17,884
12/31/89 17,515 18,383 18,570
3/31/90 17,503 18,369 18,653
6/30/90 17,918 18,805 19,089
9/30/90 17,733 18,611 19,100
12/31/90 18,540 19,458 19,924
3/31/91 18,925 19,861 20,374
6/30/91 19,341 20,298 20,809
9/30/91 20,098 21,093 21,618
12/31/91 20,766 21,794 22,343
3/31/92 20,806 21,836 22,409
6/30/92 21,647 22,719 23,258
9/30/92 22,219 23,318 23,878
12/31/92 22,700 23,824 24,312
3/31/93 23,470 24,632 25,215
6/30/93 24,332 25,536 26,040
9/30/93 25,101 26,343 26,920
12/31/93 25,307 26,559 27,299
3/31/94 24,136 25,330 25,800
6/30/94 24,273 25,475 26,091
9/30/94 24,373 25,579 26,263
The table below shows the average annual total returns for the one-year,
five-year, and ten-year periods through September 30, 1994, for Seligman
Michigan Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Michigan Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since
One Five Ten Inception
Year Years Years 2/1/94
------ ------ ------ ---------
Seligman Michigan Seligman Michigan
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -7.48% 6.47% 9.32% CDSL (1) -6.39%
Class A without Class D without
Sales Charge (2) -2.90 7.52 9.85 CDSL (2) -5.47
Lehman Index -2.44 7.99 10.14 Lehman Index -4.88
See page 17 for footnotes.
11
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Minnesota Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/84 9,521 10,000 10,000
12/31/84 9,956 10,457 10,467
3/31/85 10,332 10,852 10,888
6/30/85 11,205 11,768 11,801
9/30/85 10,953 11,504 11,624
12/31/85 11,808 12,402 12,563
3/31/86 12,897 13,546 13,835
6/30/86 12,700 13,339 13,750
9/30/86 13,281 13,949 14,489
12/31/86 13,718 14,408 14,990
3/31/87 14,120 14,830 15,353
6/30/87 13,493 14,171 14,936
9/30/87 13,023 13,678 14,565
12/31/87 13,644 14,331 15,215
3/31/88 14,162 14,874 15,738
6/30/88 14,492 15,221 16,044
9/30/88 14,945 15,697 16,455
12/31/88 15,313 16,083 16,762
3/31/89 15,382 16,156 16,873
6/30/89 16,307 17,128 17,872
9/30/89 16,191 17,005 17,884
12/31/89 16,828 17,674 18,570
3/31/90 16,833 17,680 18,653
6/30/90 17,215 18,081 19,089
9/30/90 17,128 17,990 19,100
12/31/90 17,926 18,827 19,924
3/31/91 18,158 19,071 20,374
6/30/91 18,494 19,424 20,809
9/30/91 19,029 19,986 21,618
12/31/91 19,275 20,245 22,343
3/31/92 19,479 20,459 22,409
6/30/92 20,073 21,082 23,258
9/30/92 20,496 21,527 23,878
12/31/92 20,754 21,798 24,312
3/31/93 21,607 22,694 25,215
6/30/93 22,423 23,551 26,040
9/30/93 23,173 24,339 26,920
12/31/93 23,553 24,738 27,299
3/31/94 22,792 23,939 25,800
6/30/94 22,954 24,109 26,091
9/30/94 23,199 24,366 26,263
The table below shows the average annual total returns for the one-year,
five-year, and ten-year periods through September 30, 1994, for Seligman
Minnesota Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Minnesota Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since
One Five Ten Inception
Year Years Years 2/1/94
------ ----- ------- ------------
Seligman Minnesota Seligman Minnesota
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -4.61% 6.41% 8.78% CDSL (1) -4.02%
Class A without Class D without
Sales Charge (2) 0.12 7.45 9.32 CDSL (2) -3.08
Lehman Index -2.44 7.99 10.14 Lehman Index -4.88
See page 17 for footnotes.
12
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
Seligman Missouri Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
7/1/86 9,520 10,000 10,000
9/30/86 9,888 10,387 10,537
12/31/86 10,185 10,698 10,902
3/31/87 10,438 10,964 11,166
6/30/87 9,993 10,496 10,862
9/30/87 9,473 9,950 10,592
12/31/87 10,153 10,665 11,066
3/31/88 10,521 11,052 11,446
6/30/88 10,797 11,341 11,668
9/30/88 11,058 11,616 11,967
12/31/88 11,417 11,993 12,190
3/31/89 11,474 12,052 12,271
6/30/89 12,134 12,746 12,998
9/30/89 12,090 12,700 13,007
12/31/89 12,496 13,126 13,506
3/31/90 12,488 13,118 13,566
6/30/90 12,818 13,464 13,883
9/30/90 12,751 13,394 13,891
12/31/90 13,361 14,035 14,490
3/31/91 13,620 14,307 14,818
6/30/91 13,938 14,641 15,134
9/30/91 14,487 15,217 15,722
12/31/91 14,880 15,630 16,249
3/31/92 14,883 15,633 16,298
6/30/92 15,438 16,216 16,915
9/30/92 15,627 16,415 17,366
12/31/92 15,959 16,763 17,682
3/31/93 16,502 17,334 18,338
6/30/93 17,076 17,937 18,939
9/30/93 17,685 18,577 19,579
12/31/93 17,779 18,675 19,854
3/31/94 16,693 17,535 18,764
6/30/94 16,788 17,634 18,976
9/30/94 16,828 17,676 19,101
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
Missouri Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Missouri Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 7/1/86 2/1/94
------ ----- --------- ----------
Seligman Missouri Seligman Missouri
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -9.32% 5.81% 6.51% CDSL (1) -8.06%
Class A without Class D without
Sales Charge (2) -4.85 6.83 7.14 CDSL (2) -7.16
Lehman Index -2.44 7.99 8.16 Lehman Index -4.88
See page 17 for footnotes.
13
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman New York Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/84 9,522 10,000 10,000
12/31/84 9,851 10,346 10,467
3/31/85 10,270 10,786 10,888
6/30/85 11,106 11,664 11,801
9/30/85 10,990 11,542 11,624
12/31/85 11,906 12,504 12,563
3/31/86 12,834 13,479 13,835
6/30/86 12,773 13,415 13,750
9/30/86 13,381 14,053 14,489
12/31/86 14,021 14,725 14,990
3/31/87 14,390 15,112 15,353
6/30/87 13,685 14,372 14,936
9/30/87 13,056 13,712 14,565
12/31/87 13,832 14,526 15,215
3/31/88 14,214 14,928 15,738
6/30/88 14,508 15,237 16,044
9/30/88 14,980 15,733 16,455
12/31/88 15,411 16,185 16,762
3/31/89 15,467 16,244 16,873
6/30/89 16,463 17,290 17,872
9/30/89 16,381 17,203 17,884
12/31/89 16,858 17,705 18,570
3/31/90 16,679 17,516 18,653
6/30/90 17,161 18,022 19,089
9/30/90 16,903 17,752 19,100
12/31/90 17,563 18,445 19,924
3/31/91 17,971 18,873 20,374
6/30/91 18,436 19,362 20,809
9/30/91 19,364 20,337 21,618
12/31/91 19,938 20,940 22,343
3/31/92 19,967 20,969 22,409
6/30/92 20,890 21,940 23,258
9/30/92 21,262 22,330 23,878
12/31/92 21,794 22,889 24,312
3/31/93 22,803 23,949 25,215
6/30/93 23,663 24,851 26,040
9/30/93 24,505 25,736 26,920
12/31/93 24,685 25,924 27,299
3/31/94 23,052 24,210 25,800
6/30/94 23,208 24,374 26,091
9/30/94 23,190 24,355 26,263
The table below shows the average annual total returns for the one-year,
five-year, and ten-year periods through September 30, 1994, for Seligman New
York Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman New York Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since
One Five Ten Inception
Year Years Years 2/1/94
----- ------ ----- ------------
Seligman New York Seligman New York
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -9.90% 6.17% 8.77% CDSL (1) -8.62%
Class A without Class D without
Sales Charge (2) -5.37 7.19 9.31 CDSL (2) -7.73
Lehman Index -2.44 7.99 10.14 Lehman Index -4.88
See page 17 for footnotes.
14
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
Seligman Ohio Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
9/30/84 9,526 10,000 10,000
12/31/84 9,936 10,431 10,467
3/31/85 10,299 10,812 10,888
6/30/85 11,122 11,676 11,801
9/30/85 11,042 11,592 11,624
12/31/85 11,888 12,480 12,563
3/31/86 12,933 13,577 13,835
6/30/86 12,728 13,362 13,750
9/30/86 13,380 14,046 14,489
12/31/86 13,914 14,606 14,990
3/31/87 14,324 15,037 15,353
6/30/87 13,793 14,479 14,936
9/30/87 13,291 13,953 14,565
12/31/87 14,015 14,712 15,215
3/31/88 14,552 15,276 15,738
6/30/88 15,015 15,762 16,044
9/30/88 15,386 16,152 16,455
12/31/88 15,747 16,531 16,762
3/31/89 15,938 16,732 16,873
6/30/89 16,763 17,598 17,872
9/30/89 16,709 17,540 17,884
12/31/89 17,312 18,173 18,570
3/31/90 17,359 18,223 18,653
6/30/90 17,715 18,597 19,089
9/30/90 17,661 18,540 19,100
12/31/90 18,452 19,370 19,924
3/31/91 18,796 19,732 20,374
6/30/91 19,198 20,153 20,809
9/30/91 19,950 20,943 21,618
12/31/91 20,539 21,562 22,343
3/31/92 20,597 21,622 22,409
6/30/92 21,405 22,471 23,258
9/30/92 21,880 22,969 23,878
12/31/92 22,271 23,380 24,312
3/31/93 23,067 24,216 25,215
6/30/93 23,884 25,073 26,040
9/30/93 24,684 25,912 26,920
12/31/93 24,863 26,101 27,299
3/31/94 23,647 24,824 25,800
6/30/94 23,894 25,084 26,091
9/30/94 23,922 25,113 26,263
The table below shows the average annual total returns for the one-year,
five-year, and ten-year periods through September 30, 1994, for Seligman Ohio
Tax-Exempt Series Class A shares, with and without the maximum initial sales
charge of 4.75%, and the Lehman Index. Also included in the table is the total
return for the period since inception on February 1, 1994, to September 30,
1994, for Seligman Ohio Tax-Exempt Series Class D shares, with and without the
effect of the 1% contingent deferred sales load ("CDSL") imposed on shares
redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since
One Five Ten Inception
Year Years Years 2/1/94
----- ------- ----- ---------
Seligman Ohio Seligman Ohio
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge -7.71% 6.39% 9.11% CDSL -6.29%
Class A without Class D without
Sales Charge -3.08 7.44 9.65 CDSL -5.36
Lehman Index -2.44 7.99 10.14 Lehman Index -4.88
See page 17 for footnotes.
15
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Oregon Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
10/15/86 9,520 10,000 10,000
12/31/86 9,739 10,230 10,170
3/31/87 9,931 10,432 10,416
6/30/87 9,282 9,750 10,133
9/30/87 8,788 9,232 9,881
12/31/87 9,342 9,813 10,323
3/31/88 9,674 10,162 10,678
6/30/88 10,025 10,530 10,885
9/30/88 10,361 10,883 11,164
12/31/88 10,667 11,205 11,372
3/31/89 10,743 11,284 11,448
6/30/89 11,469 12,016 12,125
9/30/89 11,392 11,966 12,134
12/31/89 11,781 12,375 12,599
3/31/90 11,735 12,326 12,656
6/30/90 12,050 12,657 12,951
9/30/90 11,960 12,563 12,958
12/31/90 12,546 13,178 13,517
3/31/91 12,806 13,451 13,823
6/30/91 13,075 13,734 14,118
9/30/91 13,545 14,228 14,667
12/31/91 13,903 14,604 15,159
3/31/92 13,948 14,651 15,204
6/30/92 14,376 15,101 15,780
9/30/92 14,676 15,417 16,200
12/31/92 14,985 15,740 16,495
3/31/93 15,443 16,221 17,107
6/30/93 15,951 16,755 17,667
9/30/93 16,468 17,299 18,264
12/31/93 16,618 17,456 18,521
3/31/94 15,874 16,675 17,504
6/30/94 16,012 16,819 17,702
9/30/94 16,076 16,887 17,819
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
Oregon Tax-Exempt Series Class A shares, with and without the maximum initial
sales charge of 4.75%, and the Lehman Index. Also included in the table is the
total return for the period since inception on February 1, 1994, to September
30, 1994, for Seligman Oregon Tax-Exempt Series Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, and the Lehman Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 10/15/86 2/1/94
------ ----- --------- ------------
Seligman Oregon Seligman Oregon
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -6.98% 6.10% 6.14% CDSL (1) -5.69%
Class A without Class D without
Sales Charge (2) -2.38 7.13 6.80 CDSL (2) -4.76
Lehman Index -2.44 7.99 7.56 Lehman Index -4.88
See page 17 for footnotes.
16
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
Seligman South Carolina Tax-Exempt Series
[THE TABLE BELOW IS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
with sales charge without sales charge Lehman Index
7/1/87 9,520 10,000 10,000
9/30/87 9,009 9,463 9,751
12/31/87 9,583 10,066 10,187
3/31/88 9,906 10,406 10,537
6/30/88 10,142 10,653 10,742
9/30/88 10,467 10,995 11,017
12/31/88 10,776 11,319 11,223
3/31/89 10,834 11,380 11,297
6/30/89 11,530 12,112 11,966
9/30/89 11,452 12,029 11,974
12/31/89 11,919 12,520 12,433
3/31/90 11,873 12,472 12,489
6/30/90 12,161 12,775 12,781
9/30/90 11,964 12,568 12,788
12/31/90 12,635 13,272 13,340
3/31/91 12,881 13,531 13,641
6/30/91 13,152 13,815 13,932
9/30/91 13,633 14,320 14,474
12/31/91 14,091 14,801 14,959
3/31/92 14,154 14,868 15,004
6/30/92 14,692 15,433 15,572
9/30/92 15,007 15,764 15,987
12/31/92 15,273 16,043 16,278
3/31/93 15,783 16,578 16,882
6/30/93 16,321 17,144 17,435
9/30/93 16,886 17,738 18,024
12/31/93 17,061 17,921 18,277
3/31/94 16,007 16,814 17,274
6/30/94 16,103 16,915 17,469
9/30/94 16,106 16,919 17,584
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1994, for Seligman
South Carolina Tax-Exempt Series Class A shares, with and without the maximum
initial sales charge of 4.75%, and the Lehman Index. Also included in the table
is the total return for the period since inception on February 1, 1994, to
September 30, 1994, for Seligman South Carolina Tax-Exempt Series Class D
shares, with and without the effect of the 1% contingent deferred sales load
("CDSL") imposed on shares redeemed within one year of purchase, and the Lehman
Index.
Average Annual Total Returns
Since Since
One Five Inception Inception
Year Years 6/30/87 2/1/94
------ ----- ----------- ----------
Seligman South Carolina Seligman South Carolina
Tax-Exempt Series Tax-Exempt Series
Class A with Class D with
Sales Charge (1) -9.10% 6.01% 6.79% CDSL (1) -8.04%
Class A without Class D without
Sales Charge (2) -4.61 7.06 7.51 CDSL (2) -7.14
Lehman Index -2.44 7.99 8.09 Lehman Index -4.88
(1) Represents the average compound rate of return per year over the specified
period for Class A shares and total return for Class D shares, and reflects
change in price and assumes all distributions within the period are
reinvested in additional shares; also reflects the effect of the 4.75%
maximum initial sales charge or CDSL of 1%, if applicable. No adjustment
was made to Class A shares' performance for periods prior to January 1,
1993, the commencement date for the annual Administration, Shareholder
Services and Distribution Plan fee of up to 0.25% of average daily net
assets of each Series.
(2) Represents the rate of return as above, but does not reflect the effect of
the 4.75% maximum initial sales charge or 1% CDSL.
Investment return and principal value of an investment will fluctuate so that
shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
17
<PAGE>
================================================================================
Portfolios of Investments
- --------------------------------------------------------------------------------
NATIONAL SERIES
<TABLE>
<CAPTION>
Face Ratings Market
State Amount Municipal Bonds Moody's/S&P+ Value
----- -------- ---------------- ------------- -------
<S> <C> <C> <C> <C>
Alabama--1.8% ......... $2,000,000 Tuscaloosa G.O. Warrants, 6 3/4% due 7/1/2020 ........... Aaa/AAA $ 2,055,520
Alaska--4.1% .......... 520,000 Alaska Housing Finance Corp. (Collateralized Home
Mortgage Bonds), 7.30% due 6/1/2025 .................... Aaa/AAA 527,894
5,000,000 Valdez Marine Terminal Rev. (BP Pipeline Inc. Project),
5 1/2% due 10/1/2028 ................................... A1/AA- 4,091,950
Arizona--5.8% ......... 3,000,000 Phoenix Civic Improvement Corporation
(New City Hall Project), 5.10% due 7/1/2028 ............ Aa/AA+ 2,397,420
5,000,000 Salt River Project Agricultural Improvement and Power
District Electric System Rev., 5% due 1/1/2016 ......... Aa/AA 4,092,250
California--2.1% ...... 2,500,000 San Joaquin Hills Transportation Corridor Agency Rev.
(Orange County Senior Lien Toll Road),
6 3/4% due 1/1/2032 .................................... NR/NR 2,336,325
Connecticut--2.6% ..... 3,000,000 Connecticut Housing Finance Authority (Housing Mortgage
Finance Program), 6.20% due 5/15/2014 .................. Aa/AA 2,860,800
Florida--3.8% ......... 2,750,000 Jacksonville Electric Authority (Electric System Rev.),
5 1/4% due 10/1/2028 ................................... Aa1/AA 2,258,795
2,500,000 Jacksonville Health Facilities Authority Hospital Rev.
(Daughters of Charity National Health System --
St. Vincent's Medical Center Inc.), 5% due 11/15/2015 .. Aa/NR 2,023,075
Illinois--10.7 ........ 1,000,000 Illinois Health Facilities Authority Rev.
(Northwestern Memorial Hospital), 6.10% due 8/15/2014 .. Aa/AA 942,350
1,250,000 Illinois Health Facilities Authority Rev.
(Edward Hospital Project),6% due 2/15/2019 ............. A/A 1,090,250
2,500,000 Illinois Health Facilities Authority Rev.
(Northwestern Memorial Hospital), 6% due 8/15/2024 ..... Aa/AA 2,236,800
3,000,000 Metropolitan Water Reclamation District of Greater
Chicago G.O.'s Capital Improvement Bonds,
7% due 1/1/2011 ........................................ Aa/AA 3,173,550
5,000,000 Regional Transportation Authority G.O.'s
(Cook, DuPage, Kane, Lake, McHenry, and Will Counties),
5.85% due 6/1/2023 ..................................... Aaa/AAA 4,504,750
Kansas--2.3% .......... 2,500,000 Burlington Pollution Control Rev.
(Kansas Gas & Electric
Co. Project), 7% due 6/1/2031 .......................... Aaa/AAA 2,611,550
Kentucky--4.6% ........ 3,000,000 Kentucky Housing Corporation Rev.,
5.40% due 7/1/2014 ..................................... Aaa/AAA 2,644,530
1,880,000 Trimble County Pollution Control Rev. (Louisville
Gas & Electric Co. Project), 7 5/8% due 11/1/2020* ..... Aaa/AA 2,011,242
370,000 Trimble County Pollution Control Rev. (Louisville
Gas & Electric Co. Project), 7 5/8% due 11/1/2020* ..... Aaa/AA 421,493
New Hampshire--3.0% ... 4,000,000 New Hampshire Higher Educational &
Health Facilities Authority Rev. (Dartmouth College),
5 3/8% due 6/1/2023 .................................... Aaa/AA+ 3,345,720
New Jersey--3.1% ...... 3,500,000 New Jersey Housing & Mortgage Finance Agency Housing Rev.,
6.60% due 11/1/2014 .................................... NR/A+ 3,490,060
North Dakota--1.8% .... 2,000,000 Mercer County Pollution Control Rev. (Otter Tail
Power Company Project), 6.90% due 2/1/2019 ............. Aa3/AA- 2,036,480
Oklahoma--5.5% ........ 5,000,000 Oklahoma Industrial Authority Health Facilities Rev.
(Sisters of Mercy Health System, St. Louis, Inc.),
5% due 6/1/2013 ........................................ Aa/AA 4,136,250
2,500,000 Oklahoma Industrial Authority Health Facilities Rev.
(Sisters of Mercy Health System, St. Louis, Inc.),
5% due 6/1/2018 ........................................ Aa/AA 1,973,875
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
18
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
NATIONAL SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
State Amount Municipal Bonds Moody's/S&P+ Value
----- -------- ---------------- ------------- -------
<S> <C> <C> <C> <C>
Rhode Island--1.9% ....$ 2,250,000 Rhode Island Depositors Economic Protection Corporation
Rev., 6% due 8/1/2017 .................................. Aaa/AAA $ 2,094,120
South Carolina--2.2% .. 3,000,000 Piedmont Municipal Power Agency Electric Rev.,
5 3/8% due 1/1/2025 .................................... Aaa/AAA 2,507,340
South Dakota-- 4.9% ... 6,000,000 South Dakota Housing Development Authority Rev.
(Homeownership Mortgage), 6.15% due 5/1/2026* .......... Aa1/AA+ 5,459,400
Tennessee--6.5% ....... 45,500,000 Metropolitan Government of Nashville & Davidson County
Health & Educational Facilities Board Rev. (Volunteer
Healthcare), Zero Coupon Bond due 6/1/2021 ............. Aaa/NR 7,261,345
Texas--17.3% .......... 6,000,000 Grapevine - Colleville Independent School District
G.O.'s,5 1/8% due 8/15/2022 ............................ Aaa/AAA 4,878,000
3,000,000 Harris County Health Facilities Development Corp.
Hospital Rev. (St. Luke's Episcopal Hospital
Project), 6 3/4% due 2/15/2021 ......................... Aa/AA 3,020,640
2,000,000 Harris County Health Facilities Development Corp.
SCH Health Care System Rev. (Sisters of Charity
of the Incarnate Word), 7.10% due 7/1/2021 ............. Aa/AA 2,064,060
5,500,000 San Antonio Electric & Gas Rev., 5% due 2/1/2017 ........ Aa1/AA 4,445,815
2,900,000 Texas Veterans' Housing Assistance G.O.'s,
6.80% due 12/1/2023* ................................... Aa/AA 2,885,007
2,000,000 Travis County Housing Finance Corporation
(Single Family Mortgage Rev.), 6.95% due 10/1/2027 ..... NR/AAA 1,992,260
Utah--5.6% ............ 7,500,000 Intermountain Power Agency Power Supply Rev.,
5 1/4% due 7/1/2017 .................................... Aa/AA 6,295,800
Washington--5.8% ...... 4,000,000 Seattle Metropolitan Sewer Rev.,
6.60% due 1/1/2032 ..................................... Aaa/AAA 3,944,840
3,000,000 Washington State Public Power Supply System Nuclear
Project #3 Rev., 5 1/2% due 7/1/2017 ................... Aaa/AAA 2,576,010
Wyoming--2.6% ......... 3,000,000 Chelan County Public Utility District
#1 Hydroelectric System Rev.
(Columbia River Rock Island), 6 3/8% due 6/1/2029 ...... A1/A+ 2,908,140
------------
Total Municipal Bonds (Cost $118,856,279)--98.0% ......................................................... 109,595,706
Variable Rate Demand Notes (Cost $1,000,000)--0.9% ....................................................... 1,000,000
Other Assets Less Liabilities--1.1% ...................................................................... 1,224,610
------------
NET ASSETS--100.0% ....................................................................................... $111,820,316
============
</TABLE>
COLORADO SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- ----------- ----------
<S> <C> <C> <C>
$3,000,000 Adams County, CO Pollution Control Rev.
(Public Service Co. of Colorado Project), 7 3/8% due 11/1/2009 ........ Baa1/BBB+ $ 3,169,020
1,500,000 Colorado Association of School
Boards Lease Purchase Finance Program
Certificates of Participation
(Pueblo School District No. 60), 7 1/4% due 12/1/2009 ................. Aaa/AAA 1,622,310
3,000,000 Colorado Health Facilities Authority Rev.
(Sisters of Charity Health Care Systems, Inc.),
6% due 5/15/2013 ...................................................... Aaa/AAA 2,924,250
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
19
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
COLORADO SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- ----------- ----------
<S> <C> <C> <C>
$ 500,000 Colorado Health Facilities Authority Rev.
(Lutheran Medical Center Project),
7 1/4% due 10/1/2014 .................................................. A1/A+ $ 517,990
1,630,000 Colorado Health Facilities Authority Rev.
(Kaiser Permanente Medical Care Project), 9 1/8% due 8/1/2015 ......... NR/AA 1,717,172
1,220,000 Colorado Health Facilities Authority Rev.
(Mercy Medical Center of Durango Project), 6.20% due 11/15/2015 ....... A1/A+ 1,150,143
3,000,000 Colorado Health Facilities Authority Rev.
(North Colorado Medical Center), 6% due 5/15/2020 ..................... Aaa/AAA 2,874,960
420,000 Colorado Housing Finance Authority Rev.,
7 1/4% due 9/1/2006 ................................................... NR/NR 440,223
605,000 Colorado Housing Finance Authority
(Single Family Housing Rev.), 7 1/4% due 11/1/2010 .................... Aa/AA- 609,544
440,000 Colorado Housing Finance Authority (Single Family
Residential Housing Rev.), 8% due 3/1/2017 ............................ Aa/NR 457,547
2,000,000 Colorado Springs, CO Utilities Rev., 5 7/8% due 11/15/2017 ............. Aaa/AAA 1,904,020
3,500,000 Colorado Springs, CO Utilities Rev., 6 1/8% due 11/15/2020 ............. Aa/AA 3,369,660
1,000,000 Colorado Water Resources & Power Development
Authority (Clean Water Bonds), 6 7/8% due 9/1/2011 .................... Aa/AA+ 1,049,170
2,000,000 Colorado Water Resources & Power Development
Authority (Clean Water Bonds), 6% due 9/1/2014 ........................ Aa/AA 1,919,160
1,000,000 Colorado Water Resources & Power Development
Authority (Clean Water Rev.), 6.30% due 9/1/2014 ...................... Aa/AA 998,800
2,000,000 Denver, CO City & County (St. Anthony Hospital
Systems Rev.), 7 3/4% due 5/1/2014 .................................... Aaa/AAA 2,194,660
2,500,000 Denver, CO City & County (Sisters of Charity of
Leavenworth Health Services Corporation), 5% due 12/1/2023 ............ Aa/NR 1,939,825
2,250,000 Denver, CO City & County Excise Tax Rev., 61/2% due 9/1/2014 ........... Aaa/AAA 2,274,300
1,700,000 Denver, CO Housing Corporation Section 8
Assisted Housing Rev., 6.70% due 10/1/2008 ............................ A/NR 1,709,129
1,985,000 Fort Collins, CO G.O.'s Water Bonds, 6 3/8% due 12/1/2012 .............. Aa/AA 2,010,686
3,000,000 Fountain Valley Authority, CO Water Treatment
Rev., 6.80% due 12/1/2019 ............................................. A1/AA 3,103,350
300,000 Mesa County, CO (Single Family Mortgage Rev.),
7.30% due 6/1/2010 .................................................... NR/AA 295,560
1,480,000 Metropolitan Denver, CO Sewer Disposal District
No. 001, 6 3/4% due 4/1/2012 .......................................... A1/AA 1,528,500
520,000 Metropolitan Denver, CO Sewer Disposal District
No. 001, 6 3/4% due 4/1/2012 .......................................... A1/AA 544,580
3,000,000 Metropolitan Denver, CO Wastewater Reclamation
DistrictSewer Rev., 4 3/4% due 4/1/2012 ............................... Aaa/AAA 2,445,030
2,000,000 Northgate Public Building Authority, CO
(Landowner Assessment Lien), 8 1/4% due 12/1/2001** ................... NR/NR 1,280,000
1,895,000 Northglenn, CO Joint Water & Wastewater
Utility, 6.80% due 12/1/2008 .......................................... Aaa/NR 1,922,326
2,000,000 Platte River Power Authority, CO Power Rev., 51/2% due 6/1/2018 ........ Aa/A+ 1,770,740
305,000 Pueblo County, CO (Single Family Mortgage Rev.),
7.30% due 12/1/2009 ................................................... NR/AA 305,000
1,000,000 Pueblo County, CO Sisters of Charity Health
Care System Rev. (St. Mary -- Corwin
Hospital Project), 7 3/4% due 5/1/2014. ............................... Aaa/AAA 1,107,740
500,000 Regional Transportation District, CO Sales Tax
Rev., 7.10% due 11/1/2010 ............................................. Aaa/AAA 552,645
1,000,000 Regional Transportation District, CO Sales Tax
Rev., 5 3/8% due 11/1/2010 ............................................ Aaa/AAA 915,740
3,500,000 University of Colorado Hospital Authority
Hospital Rev., 6.40% due 11/15/2022 ................................... Aaa/AAA 3,481,555
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
** Non-income producing, security in default.
See notes to financial statements.
20
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
COLORADO SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- ----------- ----------
<S> <C> <C> <C>
$ 875,000 University of Northern Colorado (Greeley University),
7.30% due 6/1/2011 .................................................... Aaa/AAA $ 929,110
2,000,000 Westminster, CO (Adams & Jefferson Counties)
Sales & Use Tax Rev., 7% due 12/1/2008 ................................ Aaa/AAA 2,143,280
-----------
Total Municipal Bonds (Cost $57,120,537)--98.1% .......................................................... 57,177,725
Variable Rate Demand Notes (Cost $700,000)--1.2% ......................................................... 700,000
Other Assets Less Liabilities--0.7% ...................................................................... 415,550
-----------
NET ASSETS--100.0% ....................................................................................... $58,293,275
===========
</TABLE>
GEORGIA SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- ------------
<S> <C> <C> <C>
$1,095,000 Augusta, GA Water & Sewer Rev., 6 1/2% due 5/1/2011 ................. A/NR $ 1,120,776
125,000 Burke County Development Authority, GA
Pollution Control Rev. (Georgia Power
Company Vogtle Project), 8% due 10/1/2016 .......................... A3/A- 132,511
1,000,000 Cartersville, GA Development Authority Rev.
Water & Wastewater Facilities (Anheuser-Busch), 7.40% due 11/1/2010* A1/AA- 1,083,670
2,000,000 Cartersville, GA Development Authority Rev.
Water & Wastewater Facilities (Anheuser-Busch), 6 3/4% due 2/1/2012* A1/AA- 2,023,720
750,000 Chatham County Hospital Authority, GA Rev.
(Memorial Medical Center, Inc.), 7% due 1/1/2021 ................... Aaa/AAA 787,215
1,000,000 Clayton County, GA Water Authority Water &
Sewerage Rev., 5 1/4% due 5/1/2012 ................................. Aaa/AAA 880,540
1,000,000 Cobb-Marietta Coliseum & Exhibit Hall
Authority, GA Rev., 6 3/4% due 10/1/2026 ........................... Aaa/AAA 1,097,770
16,030,000 Colquitt County, GA Development Authority
Rev., Zero Coupon Bond due 12/1/2021 ............................... Aaa/NR 2,225,445
2,000,000 Columbia County, GA School District G.O.'s, 61/4% due 4/1/2013 ...... Aaa/AAA 1,997,820
1,000,000 Columbia County, GA Water & Sewerage Rev., 6 1/4% due 6/1/2012 ...... Aaa/AAA 999,880
700,000 Columbus, GA Water & Sewerage Rev., 6 1/4% due 5/1/2011 ............. Aaa/AAA 698,509
1,000,000 Columbus, GA Water & Sewerage Rev., 6 7/8% due 5/1/2020 ............. NR/NR 1,102,030
5,000,000 DeKalb County, GA Water & Sewerage Rev., 53/4% due 10/1/2006 ........ Aaa/AAA 4,961,500
1,000,000 DeKalb County, GA Water & Sewerage Rev., 7% due 10/1/2014 ........... Aaa/AA 1,105,970
1,000,000 DeKalb County, GA Water & Sewerage Rev., 5 1/4% due 10/1/2023 ....... Aa/AA 827,660
700,000 DeKalb Private Hospital Authority, GA Rev.
(Emory University Project), 6 3/4% due 4/1/2017 .................... Aa1/AA- 707,651
300,000 DeKalb Private Hospital Authority, GA Rev. (Emory
University Project), 7% due 4/1/2021 ............................... Aa1/AA- 308,103
1,000,000 Fayette County, GA School District G.O.'s, 61/8% due 3/1/2015 ....... Aa/A+ 978,860
1,500,000 Fulco Hospital Authority, GA Rev. (Georgia
Baptist Health Care System Project), 6 3/8% due 9/1/2022 ........... Baa1/NR 1,297,440
350,000 Fulton County Development Authority, GA Rev.
(Georgia Scientific and Technical
Research Foundation, Inc. Project), 7 5/8% due 10/1/2003 ........... NR/A+ 384,685
3,000,000 Fulton County, GA School District G.O.'s, 55/8% due 1/1/2021 ........ Aa/AA 2,674,530
1,250,000 Gainesville, GA Water & Sewerage Rev., 5 1/4% due 11/15/2010 ........ Aaa/AAA 1,126,375
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
21
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
GEORGIA SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- ----------- ----------
<S> <C> <C> <C>
$3,000,000 Georgia Housing & Finance Authority Rev.
(Single Family Mortgage), 5 1/4% due 12/1/2020 ..................... Aa/AA+ $ 2,494,980
965,000 Georgia Housing & Finance Authority Homeownership
Opportunity Program, 6 7/8% due 12/1/2020* ......................... Aa/NR 971,977
3,000,000 Georgia Municipal Electric Authority Rev., 6% due 1/1/2026 .......... Aaa/AAA 2,830,560
2,000,000 Georgia Municipal Gas Authority Rev. (Southern
Storage Gas Project), 6.40% due 7/1/2014 ........................... NR/A- 1,943,040
455,000 Georgia Residential Finance Authority
Homeownership Mortgage Rev., 7.20% due 12/1/2011* .................. Aa/AA+ 455,583
500,000 Georgia State G.O.'s, 6% due 2/1/2009 ............................... Aaa/AA+ 504,260
1,000,000 Georgia State G.O.'s, 5 3/4% due 2/1/2011 ........................... Aaa/AA+ 974,100
1,500,000 Gwinnett County, GA Hospital Authority Rev.
Anticipation Certificates
(Gwinnett Hospital System, Inc. Project), 5% due 9/1/2019 .......... Aaa/AAA 1,203,690
1,000,000 Gwinnett County, GA School District G.O.'s, 6.40% due 2/1/2012 ...... Aa1/AA 1,018,820
735,000 Gwinnett County, GA Water & Sewerage Authority
Rev., 6 1/2% due 8/1/2006 .......................................... Aa1/AA+ 744,651
1,500,000 Henry County School District, GA G.O.'s, 6.45% due 8/1/2011 ......... A/A+ 1,515,195
750,000 La Grange, GA Water & Sewerage Authority Rev., 7 3/8% due 1/1/2012 .. NR/NR 835,170
1,000,000 Metropolitan Atlanta Rapid Transit Authority,
GA Sales Tax Rev., 7 1/4% due 7/1/2010 ............................. A/AA- 1,078,020
500,000 Metropolitan Atlanta Rapid Transit Authority,
GA Sales Tax Rev., 6 1/4% due 7/1/2018 ............................. A/AA- 487,865
400,000 Private Colleges & Universities Authority, GA
(Spelman College Project), 7 3/4% due 6/1/2013 ..................... Aaa/AAA 443,236
2,500,000 Private Colleges & Universities Authority, GA
(Spelman College Project), 6.20% due 6/1/2014 ...................... Aaa/AAA 2,455,175
500,000 Private Colleges & Universities Authority, GA
(Emory University Project), 6 7/8% due 5/1/2015 .................... Aa1/AA- 511,175
1,500,000 Private Colleges & Universities Authority, GA
(Mercer University Project), 6 1/2% due 11/1/2015 .................. Aaa/AAA 1,536,375
3,000,000 Private Colleges & Universities Authority, GA
(Agnes Scott College Project), 5 5/8% due 6/1/2023 ................. Aa/AA- 2,646,240
500,000 Private Colleges & Universities Authority, GA
(Emory University Project), 6.40% due 10/1/2023 .................... Aa1/AA- 498,030
2,500,000 Puerto Rico Highway & Transportation Authority
Highway Rev., 5 1/2% due 7/1/2019 .................................. Baa1/A 2,144,900
1,000,000 Putnam County, GA Development Authority
Pollution Control Rev. (Georgia Power
Company Plant), 7 1/4% due 7/1/2021 ................................ Aaa/AAA 1,057,330
2,000,000 Savannah, GA Airport Rev., 6 1/4% due 1/1/2015* ..................... Aaa/AAA 1,970,400
11,310,000 Savannah, GA Economic Development Authority
Rev., Zero Coupon Bond due 12/1/2021 ............................... Aaa/NR 1,570,167
3,505,000 Washington, GA Wilkes Payroll Development
Authority Rev., Zero Coupon Bond due 12/1/2021 ..................... Aaa/NR 486,599
-----------
Total Municipal Bonds (Cost $63,050,227)--97.7% ........................................................ 60,900,198
Variable Rate Demand Notes (Cost $400,000)--0.7% ....................................................... 400,000
Other Assets Less Liabilities--1.6% .................................................................... 1,015,008
-----------
NET ASSETS--100.0% ..................................................................................... $62,315,206
===========
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
22
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
LOUISIANA SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- --------------- ------------
<S> <C> <C> <C>
$1,055,000 Alexandria, LA Utilities Rev., 5.30% due 5/1/2013 ................... Aaa/AAA $ 918,430
3,000,000 Bastrop, LA Industrial Development Board
Pollution Control Rev. (International Paper
Company Project), 6.90% due 3/1/2007 ............................... A3/A- 3,147,960
1,500,000 Caddo Parish, LA Parishwide School District
G.O.'s, 7.20% due 3/1/2005 ......................................... Aaa/AAA 1,582,275
2,470,000 East Baton Rouge Parish, LA Mortgage Finance
Authority (Single Family Mortgage Rev.), 5.40% due 10/1/2025 ....... Aaa/NR 2,069,539
1,000,000 East Baton Rouge Parish, LA Public Improvement
Sales & Use Tax Rev., 7 1/4% due 2/1/2009 .......................... Aaa/AAA 1,079,680
3,500,000 East Baton Rouge Parish, LA Sales Tax Rev., 4.90% due 2/1/2016 ..... Aaa/AAA 2,810,045
2,000,000 Houma, LA Utilities Rev., 6 1/4% due 1/1/2012 ....................... Aaa/AAA 1,978,940
2,000,000 Jefferson Parish, LA Home Mortgage Authority
(Single Family Mortgage Rev.), 6% due 12/1/2024* ................... Aa/NR 1,774,880
2,000,000 Jefferson Parish School Board, LA Sales Tax
School Bonds, 6 1/4% due 2/1/2008 .................................. Aaa/AAA 2,019,460
1,250,000 Lafayette, LA Public Improvement Sales Tax
Rev., 5 1/2% due 3/1/2009 .......................................... Aaa/AAA 1,158,300
3,000,000 Lafayette, LA Public Improvement Sales Tax
Rev., 5.20% due 5/1/2011 ........................................... Aaa/AAA 2,621,190
2,000,000 Louisiana Public Facilities Authority Hospital
Rev. (Southern Baptist Hospitals Inc. Project),
6.80% due 5/15/2012 ................................................ Aaa/AAA 2,074,060
2,250,000 Louisiana Public Facilities Authority Hospital
Rev. (General Health Inc.), 6 1/2% due 11/1/2014 ................... Aaa/AAA 2,254,613
1,000,000 Louisiana Public Facilities Authority Hospital
Rev. (Daughters of Charity Health
Systems--Hotel Dieu), 9 3/4% due 2/1/2015 .......................... Aa/NR 1,084,360
2,000,000 Louisiana Public Facilities Authority Hospital
Rev. (Our Lady of Lourdes Regional
Medical Center Project), 6.45% due 2/1/2022 ........................ Aaa/AAA 1,952,120
3,000,000 Louisiana Public Facilities Authority Hospital
Rev. (General Health Inc.), 6% due 11/1/2022 ....................... Aaa/AAA 2,810,910
2,500,000 Louisiana Public Facilities Authority Rev.
(Sisters of Mercy Health System, St. Louis, Inc.),
7 3/8% due 6/1/2019 ................................................ Aaa/AA 2,770,750
1,900,000 Louisiana Public Facilities Authority Rev.
(Sisters of Mercy Health System, St. Louis, Inc.),
5% due 6/1/2019 .................................................... Aa/AA 1,502,976
3,000,000 Louisiana Public Facilities Authority Rev.
(Tulane University), 5 3/4% due 2/15/2021 .......................... Aaa/AAA 2,700,210
4,875,000 Louisiana State G.O.'s, Zero Coupon Bonds due 8/1/2005 .............. Aaa/AAA 2,612,610
4,000,000 Louisiana State G.O.'s, 6 1/2% due 5/1/2011 ......................... Aaa/AAA 4,074,400
1,000,000 Louisiana State University & Agricultural &
Mechanical College Auxiliary Rev., 5 3/4% due 7/1/2014 ............. Aaa/AAA 924,420
195,000 Ouachita Parish, LA Industrial Development Rev.
(International Paper Company), 6 1/2% due 4/1/2006 ................. NR/NR 191,597
500,000 Saint Bernard Parish, LA Water and Sewer
Commission Water & Sewer Rev., 8% due 8/1/2006 ..................... Aaa/AAA 538,755
1,250,000 Saint Charles Parish, LA Environmental
Improvement Rev. (Louisiana Power
and Light Company Project), 6.20% due 5/1/2023* .................... Baa2/BBB 1,103,350
2,960,000 Saint Charles Parish, LA Waterworks &
Wastewater District Utility Rev., 7.15% due 7/1/2016 ............... Aaa/AAA 3,128,483
1,000,000 Saint Tammany, LA Public Trust Financing
Authority (Single Family Mortgage Rev.), 7.20% due 7/1/2010 ........ NR/AAA 1,084,750
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
23
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
LOUISIANA SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,555,000 Shreveport, LA G.O.'s, 7 1/2% due 4/1/2006 .......................... Aaa/AAA $ 1,760,680
2,000,000 Shreveport, LA Water & Sewer Rev., 7 1/8% due 12/1/2014 ............. Aaa/AAA 2,146,180
2,050,000 Sulphur, LA Housing & Mortgage Finance Trust
(Residential Mortgage Rev.), 7 1/4% due 12/1/2010 .................. Aaa/AAA 2,127,100
3,000,000 Tangipahoa Parish, LA Hospital Service District
No. 1 Rev. (Northoaks Medical Center), 6 1/4% due 2/1/2024 ......... Aaa/AAA 2,883,000
-----------
Total Municipal Bonds (Cost $61,108,390)--98.0% ........................................................... 60,886,023
Variable Rate Demand Notes (Cost $300,000)--0.5% .......................................................... 300,000
Other Assets Less Liabilities--1.5% ....................................................................... 959,793
-----------
NET ASSETS--100.0% ........................................................................................ $62,145,816
===========
</TABLE>
MARYLAND SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Anne Arundel County, MD Economic Development
Rev. (BWI HSR Limited Partnership Facility), 9 5/8% due 9/1/2005 .. NR/AAA $ 2,151,100
3,000,000 Anne Arundel County, MD Pollution Control Rev.
(Baltimore Gas and Electric Company Project), 6% due 4/1/2024 ..... A2/A 2,811,600
2,000,000 Baltimore, MD Consolidated Public Improvement
G.O.'s, 6 3/8% due 10/15/2006 ..................................... Aaa/AAA 2,093,280
1,000,000 Baltimore, MD Consolidated Public Improvement
G.O.'s, 6 3/8% due 10/15/2007 ..................................... Aaa/AAA 1,039,980
2,500,000 Baltimore, MD Port Facilities Rev.
(Consolidated Coal Sales Co. Project), 6 1/2% due 10/1/2011 ....... Aa2/AA 2,530,300
2,000,000 Frederick County, MD Public Facilities G.O.'s, 6.30% due 7/1/2011 .. Aaa/AA- 2,125,940
1,975,000 Howard County, MD Consolidated Public
Improvement G.O.'s, Zero Coupon Bond due 8/15/2008 ................ Aa1/AA+ 859,145
2,000,000 Howard County, MD Metropolitan District Project
G.O.'s, 5 1/2% due 8/15/2022 ...................................... Aa1/AA+ 1,736,960
5,000,000 Maryland Capital Improvement G.O.'s, 5.20% due 4/15/2006 ........... Aaa/AAA 4,770,200
1,000,000 Maryland Community Development Administration
Dept. of Economic & Community
Development (Single Family Program), 7 3/4% due 4/1/2009 .......... Aa/NR 1,045,330
2,000,000 Maryland Community Development Administration
Dept. of Housing & Community
Development (Multi-Family Housing), 7.70% due 5/15/2020* .......... Aa/NR 2,045,140
2,500,000 Maryland Community Development Administration
Dept. of Housing & Community
Development (Single Family Program), 6.80% due 4/1/2024* .......... Aa/NR 2,499,950
2,500,000 Maryland Community Development Administration
Dept. of Housing & Community
Development (Multi-Family Housing), 6.70% due 5/15/2027 ........... Aa/NR 2,476,800
1,000,000 Maryland Community Development Administration
(Housing Mortgage Rev.), 6.20% due 1/1/2018 ....................... Aa/A 967,630
1,000,000 Maryland Health & Higher Educational Facilities
Authority Rev. (Greater Baltimore
Medical Center), 6 3/4% due 7/1/2019 .............................. Aaa/AAA 1,094,770
3,000,000 Maryland Health & Higher Educational Facilities
Authority Rev. (Johns Hopkins
University), 7 1/2% due 7/1/2020 .................................. Aa1/AA- 3,266,730
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
24
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
MARYLAND SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,750,000 Maryland Health & Higher Educational Facilities
Authority Rev. (Ann Arundel Medical
Center), 5% due 7/1/2023 .......................................... Aaa/AAA $ 2,168,430
2,000,000 Maryland Health & Higher Educational Facilities
Authority Rev. (Suburban Hospital), 5 1/8% due 7/1/2021 ........... A1/A 1,589,460
3,000,000 Maryland Health & Higher Educational Facilities
Authority Rev. (Francis Scott Key
Medical Center), 5% due 7/1/2023 .................................. Aaa/AAA 2,365,560
1,350,000 Maryland National Capital Park & Planning
Commission G.O.'s (Prince George's County), 6.90% 7/1/2010 ........ Aa/AA 1,432,161
3,000,000 Maryland Transportation Authority Rev.
Transportation Facilities Projects, 5 3/4% due 7/1/2015 ........... A1/A+ 2,748,450
1,000,000 Maryland Water Quality Financing Administration
Revolving Loan Fund Rev., 6.70% due 9/1/2013 ...................... Aa/AA 1,030,340
1,000,000 Maryland Water Quality Financing Administration
Revolving Loan Fund Rev., 7.10% due 9/1/2013 ...................... Aa/AA 1,062,290
2,500,000 Montgomery County, MD Consolidated Public
Improvement G.O.'s, 4.90% due 10/1/2013 ........................... Aaa/AAA 2,103,150
220,000 Montgomery County, MD Housing Opportunities
Commission (Multi-Family
Housing Rev.), 9 3/8% due 7/1/2015 ................................ Aa/NR 227,700
470,000 Montgomery County, MD Housing Opportunities
Commission (Single Family
Mortgage Rev.), 7 3/8% due 7/1/2017 ............................... Aa/NR 478,023
2,000,000 Northeast Maryland Waste Disposal Authority
Solid Waste Rev. (Montgomery County
Resource Recovery Project), 6.30% due 7/1/2016* ................... A/NR 1,869,800
295,000 Puerto Rico Housing Finance Corporation (Single
Family Mortgage Rev. Portfolio 1), 7.80% due 10/15/2021 ........... Aaa/AAA 304,080
1,000,000 Puerto Rico Housing Finance Corporation (Single
Family Mortgage Rev. Portfolio 1-C), 6.85% due 10/15/2023 ......... Aaa/AAA 1,011,340
1,500,000 University of Maryland Auxiliary Facilities and
Tuition Rev., 6 1/2% due 4/1/2011 ................................. NR/AAA 1,613,400
485,000 University of Maryland Auxiliary Facilities and
Tuition Rev., 6.30% due 2/1/2012 .................................. Aa/AA+ 485,252
2,500,000 Washington Suburban Sanitary District, MD, 61/2% due 1/1/2016 ...... Aa1/AA 2,537,850
-----------
Total Municipal Bonds (Cost $57,171,087)--98.0% ............................................................ 56,542,141
Other Assets Less Liabilities--2.0% ........................................................................ 1,145,386
-----------
NET ASSETS--100.0% ......................................................................................... $57,687,527
===========
</TABLE>
MASSACHUSETTS SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- ------------
<S> <C> <C> <C>
$ 750,000 Boston, MA G.O.'s, 7 3/8% due 2/1/2010 .............................. A/A $ 834,630
2,000,000 Boston, MA G.O.'s, 6 3/4% due 7/1/2011 .............................. Aaa/AAA 2,188,300
5,000,000 Boston, MA Water & Sewer Commission General
Rev., 5 1/4% due 11/1/2019 ......................................... A/A 4,182,800
2,000,000 Boston, MA Water & Sewer Commission General
Rev., 7 1/8% due 11/1/2009 ......................................... Aaa/AAA 2,210,260
1,000,000 Boston, MA Water & Sewer Commission General
Rev., 5 3/4% due 11/1/2013 ......................................... A/A 919,600
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
25
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
MASSACHUSETTS SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Boston, MA Water & Sewer Commission General
Rev., 7.10% due 11/1/2019 .......................................... Aaa/AAA $3,312,090
3,000,000 Chicopee, MA Electric System
Rev., 9 1/8% due 1/1/2020 .......................................... A/A- 3,092,610
5,000,000 Massachusetts Bay Transportation Authority Transportation System
Rev., 6.10% due 3/1/2023 ........................................... A/A+ 4,698,950
1,765,000 Massachusetts Education Loan Authority
Education Loan Rev., 8% due 6/1/2002 ............................... NR/AAA 1,887,120
500,000 Massachusetts Health & Educational Facilities
Authority Rev. (Harvard University),
5 3/4% due 12/1/2011 ............................................... Aaa/AAA 471,340
3,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (Daughters of Charity
National Health Systems--Carney Hospital),
7 3/4% due 7/1/2014 ................................................ Aa/NR 3,415,620
2,500,000 Massachusetts Health & Educational Facilities
Authority Rev. (Daughters of Charity
National Health Systems--Carney Hospital),
6.10% due 7/1/2014 ................................................. Aa/NR 2,339,250
915,000 Massachusetts Health & Educational Facilities
Authority Rev. (Youville Hospital),
9.10% due 8/1/2015 ................................................. Aa/NR 984,357
7,500,000 Massachusetts Health & Educational Facilities
Authority Rev. (Harvard University),
5 1/2% due 12/1/2015 ............................................... Aaa/AAA 6,698,475
2,500,000 Massachusetts Health & Educational Facilities
Authority Rev. (Lahey Clinic
Medical Center), 7 5/8% due 7/1/2018 ............................... Aaa/AAA 2,764,175
3,295,000 Massachusetts Health & Educational Facilities
Authority Rev. (Tufts University),
7.40% due 8/1/2018 ................................................. AAA/A+ 3,623,347
705,000 Massachusetts Health & Educational Facilities
Authority Rev. (Tufts University),
7.40% due 8/1/2018 ................................................. A1/A+ 752,545
2,500,000 Massachusetts Health & Educational Facilities
Authority Rev. (Suffolk University),
8 1/8% due 7/1/2020 ................................................ Baa/BBB 2,883,125
2,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (Boston College),
6 5/8% due 7/1/2021 ................................................ Aaa/AAA 2,018,880
2,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (Amherst College),
6.80% due 11/1/2021 ................................................ Aa1/AA+ 2,061,260
2,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (New England
Deaconess Hospital), 6 7/8% due 4/1/2022 ........................... A/A 1,929,540
1,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (Suffolk University),
6.35% due 7/1/2022 ................................................. NR/AAA 958,430
5,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (Brigham & Women's
Hospital), 6 3/4% due 7/1/2024 ..................................... Aa/A+ 4,999,250
3,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (New England
Medical Center), 5 3/8% due 7/1/2024 ............................... Aaa/AAA 2,499,840
1,000,000 Massachusetts Health & Educational Facilities
Authority Rev. (New England
Medical Center), 6 5/8% due 7/1/2025 ............................... Aaa/AAA 1,007,350
1,000,000 Massachusetts Housing Finance Agency Rev.
(Multi-Family Housing), 10% due 12/1/2005 .......................... NR/AAA 1,049,470
95,000 Massachusetts Housing Finance Agency Rev. (Single
Family Mortgage Purchase),
10 5/8% due 12/1/2009 .............................................. Aa/A+ 98,954
1,600,000 Massachusetts Housing Finance Agency Rev.
(Residential Development),
6 1/4% due 11/15/2012 .............................................. Aaa/AAA 1,565,904
4,705,000 Massachusetts Housing Finance Agency Rev.
(Single Family Housing Rev.),
7.30% due 6/1/2014 ................................................. Aa/A+ 4,912,914
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
26
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
MASSACHUSETTS SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,975,000 Massachusetts Housing Finance Agency Rev.
(Multi-Family Housing), 8 7/8% due 7/1/2018 ........................ Aaa/AAA $ 3,141,838
1,745,000 Massachusetts Municipal Wholesale Electric
Company Power Supply System Rev.,
6 3/4% due 7/1/2017 ................................................ Aaa/NR 1,913,183
755,000 Massachusetts Municipal Wholesale Electric
Company Power Supply System Rev.,
6 3/4% due 7/1/2017 ................................................ A/BBB+ 762,943
2,450,000 Massachusetts Special Obligation Rev. (Highway
Improvement Loan), 6% due 6/1/2013 ................................. A1/AA 2,350,260
5,000,000 Massachusetts State Consolidated Loan G.O.'s,
7% due 12/1/2010 ................................................... Aaa/A+ 5,463,800
5,000,000 Massachusetts State Consolidated Loan G.O.'s,
5 3/4% due 5/1/2012 ................................................ Aaa/AAA 4,719,850
5,000,000 Massachusetts State Consolidated Loan G.O.'s,
4 7/8% due 10/1/2013 ............................................... A/A+ 4,092,250
8,475,000 Massachusetts State Port Authority Rev.,
7 1/8% due 7/1/2012 ................................................ Aa/AA 8,588,311
5,500,000 Massachusetts State Water Resources Authority
Rev., 5 1/2% due 11/1/2015 ......................................... A/A 4,801,885
5,000,000 Massachusetts Turnpike Authority Turnpike Rev.,
5 1/8% due 1/1/2023 ................................................ Aaa/AAA 4,033,350
1,900,000 Puerto Rico Electric Power Authority Power
Rev., 7 1/8% due 7/1/2014 .......................................... Baa1/AAA 2,094,712
730,000 Puerto Rico Electric Power Authority Power Rev.,
7 1/8% due 7/1/2014 ................................................ Baa1/A- 777,925
1,000,000 Puerto Rico Highway & Transportation Authority
Highway Rev., 5 1/2% due 7/1/2019 .................................. Baa1/A- 857,960
2,750,000 Puerto Rico Port Authority Rev., 6% due
7/1/2021* .......................................................... Aaa/AAA 2,640,193
1,290,000 Virgin Islands Port Authority Rev. (Marine
Division), 10 1/8% due 11/1/2005 ................................... NR/NR 1,386,697
------------
Total Municipal Bonds (Cost $117,411,355)--97.3% ........................................................ 117,985,543
Variable Rate Demand Notes (Cost $1,100,000)--0.9% ...................................................... 1,100,000
Other Assets Less Liabilities--1.8% ..................................................................... 2,163,099
------------
NET ASSETS--100.0% ...................................................................................... $121,248,642
============
</TABLE>
MICHIGAN SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- ------------ ----------
<S> <C> <C> <C>
$5,000,000 Capital Region Airport Authority, MI Airport
Rev., 6.70% due 7/1/2021* ......................................... Aaa/AAA $ 5,139,800
1,000,000 Chippewa Valley, MI Schools G.O.'s, 7% due
5/1/2011 .......................................................... NR/AA 1,103,460
2,000,000 Dearborn, MI Economic Development Corporation
(Oakwood Obligated Group),
6.95% due 8/15/2021 ............................................... Aaa/AAA 2,210,940
5,000,000 Detroit, MI Distributable State Aid G.O.'s,
7.20% due 5/1/2009 ................................................ Aaa/AAA 5,495,000
6,000,000 Detroit, MI Water Supply System Rev., 6 1/4%
due 7/1/2012 ...................................................... Aaa/AAA 5,967,420
1,750,000 Detroit, MI Water Supply System Rev., 6 1/2%
due 7/1/2015 ...................................................... Aaa/AAA 1,789,988
1,500,000 Eastern Michigan University Rev. (Board of
Regents), 6 3/8% due 6/1/2014 ..................................... Aaa/AAA 1,499,820
3,000,000 Grand Haven, MI Electric System Rev., 5 1/4%
due 7/1/2013 ...................................................... Aaa/AAA 2,611,230
5,000,000 Grand Rapids, MI Water Supply System Rev.,
5 3/4% due 1/1/2018 ............................................... Aaa/AAA 4,597,650
1,000,000 Grand Traverse County, MI Hospital Finance
Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2012 ............................. Aaa/AAA 989,320
1,500,000 Grand Traverse County, MI Hospital Finance
Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2022 ............................. Aaa/AAA 1,459,380
3,240,000 Holland School District, MI G.O.'s, 6 1/4% due
5/1/2007 .......................................................... Aaa/AAA 3,307,619
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
27
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
MICHIGAN SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Holland School District, MI G.O.'s (School
Building and Site Bonds), 7 3/8% due 5/1/2019 ..................... NR/NR $ 3,257,220
2,500,000 Huron Valley School District, MI G.O.'s, 7.10%
due 5/1/2008 ...................................................... Aaa/AAA 2,772,375
3,000,000 Jackson County, MI Hospital Finance Authority
Rev. (W.A. Foote Memorial Hospital),
7 1/4% due 6/1/2012 ............................................... NR/NR 3,233,100
4,000,000 Jackson County, MI Hospital Finance Authority
Rev. (W.A. Foote Memorial Hospital),
5 1/4% due 6/1/2023 ............................................... Aaa/AAA 3,295,280
1,250,000 Kent County, MI Building Authority G.O.'s
(Correctional Facility Improvements),
6% due 12/1/2009 .................................................. A1/AAA 1,236,375
5,000,000 Kent County, MI Refuse Disposal System G.O.'s,
8.40% due 11/1/2010 ............................................... A1/AAA 5,537,650
2,775,000 Kentwood, MI Public Schools Building & Site
G.O.'s, 6.40% due 5/1/2015 ........................................ Aa/A+ 2,759,099
1,250,000 Lansing, MI Water Supply & Electric Utility
System Rev., 5 3/4% due 7/1/2002 .................................. Aa/AA 1,273,637
1,250,000 Lansing, MI Water Supply & Electric Utility
System Rev., 5 3/4% due 7/1/2003 .................................. Aa/AA 1,265,200
500,000 Lansing, MI Water Supply & Electric Utility
System Rev., 5 3/4% due 7/1/2004 .................................. Aa/AA 503,560
2,750,000 Michigan Municipal Bond Authority Rev. (Local
Government Loan Program),
4 3/4% due 12/1/2009 .............................................. Aaa/AAA 2,292,235
4,000,000 Michigan Municipal Bond Authority Rev. (Local
Government Loan Program--Group 2),
7.30% due 5/1/2016 ................................................ NR/AAA 4,239,440
6,000,000 Michigan Public Power Agency Rev. (Belle River
Project), 5 1/4% due 1/1/2018 ..................................... A1/AA- 4,999,680
2,500,000 Michigan State Building Authority Series II,
6% due 10/1/2009 .................................................. Aaa/AAA 2,468,375
4,680,000 Michigan State Building Authority Rev.,
6 1/4% due 10/1/2020 .............................................. A/A- 4,505,717
1,850,000 Michigan State Comprehensive Transportation
Rev., 5 3/4% due 5/15/2011 ........................................ A1/AA- 1,736,854
1,750,000 Michigan State Comprehensive Transportation
Rev., 7 5/8% due 5/1/2011 ......................................... A1/AA- 1,913,275
2,500,000 Michigan State Comprehensive Transportation
Rev., 7 3/4% due 8/1/2011 ......................................... NR/NR 2,649,050
2,000,000 Michigan State Hospital Finance Authority
Hospital Rev. (Sparrow Obligated Group),
6 1/2% due 11/15/2011 ............................................. Aaa/AAA 2,028,640
5,000,000 Michigan State Hospital Finance Authority
Hospital Rev. (St. John Hospital),
5 3/4% due 5/15/2016 .............................................. Aaa/AAA 4,545,700
5,000,000 Michigan State Hospital Finance Authority
Hospital Rev. (Henry Ford Health System),
5 3/4% due 9/1/2017 ............................................... Aaa/AAA 4,533,850
1,250,000 Michigan State Hospital Finance Authority
Hospital Rev. (Crittenton Hospital),
6 3/4% due 3/1/2020 ............................................... Aaa/AAA 1,271,000
1,000,000 Michigan State Hospital Finance Authority
Hospital Rev. (Daughters of Charity National
Health System--Providence Hospital), 7% due 11/1/2021 ............. Aa/NR 1,031,750
5,000,000 Michigan State Hospital Finance Authority
Hospital Rev. (Detroit Medical Center),
6 1/2% due 8/15/2018 .............................................. A/A- 4,716,850
1,500,000 Michigan State Housing Development Authority
Rev. (Rental Housing),
5.80% due 4/1/2019 ................................................ NR/A+ 1,323,855
5,000,000 Michigan State Housing Development Authority
Rev. (Rental Housing),
6.65% due 4/1/2023 ................................................ NR/A+ 4,955,750
5,350,000 Michigan State Strategic Fund Pollution Control
Rev. (General Motors Corp.),
6 5/8% due 3/1/2007 ............................................... Baa1/BBB+ 5,452,881
3,000,000 Michigan State Strategic Fund Pollution Control
Rev. (Detroit Edison Company),
6 1/2% due 2/15/2016 .............................................. Aaa/AAA 3,026,070
5,000,000 Michigan State Trunk Line Rev., 5 1/2% due
10/1/2021 ......................................................... A1/AA- 4,283,000
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
28
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
MICHIGAN SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Midland, MI Water Supply System Rev., 7.20% due
4/1/2010 .......................................................... A/A+ $ 2,106,300
1,075,000 Novi, MI G.O.'s, 5% due 10/1/2010 .................................. A1/A+ 923,693
2,500,000 Oak Park School District, MI G.O.'s, 7.15% due
6/1/2009 .......................................................... NR/AA 2,703,250
2,000,000 Puerto Rico Highway Authority Highway Rev.,
7 3/4% due 7/1/2016 ............................................... NR/AAA 2,290,100
6,000,000 Royal Oak, MI Hospital Finance Authority Rev.
(William Beaumont Hospital),
6 3/4% due 1/1/2020 ............................................... Aa/AA 6,046,200
5,000,000 University of Michigan Hospital Rev., 6 3/8%
due 12/1/2024 ..................................................... Aa/AA 4,796,300
2,000,000 Vicksburg Community Schools, MI (School
Building and Site Bonds),
7% due 5/1/2007 ................................................... Aaa/AAA 2,213,980
1,075,000 Wayne-Westland Community Schools, MI G.O.'s
(School Building and Site Bonds),
7 3/4% due 5/1/2012 ............................................... Aaa/AAA 1,230,553
3,000,000 Wyandotte, MI Electric Rev., 6 1/4% due
10/1/2017 ......................................................... Aaa/AAA 2,953,260
------------
Total Municipal Bonds (Cost $145,226,972)--97.9% ......................................................... 148,542,731
Variable Rate Demand Notes (Cost $400,000)--0.3% ......................................................... 400,000
Other Assets Less Liabilities--1.8% ...................................................................... 2,822,825
------------
NET ASSETS--100.0% ....................................................................................... $151,765,556
============
</TABLE>
MINNESOTA SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- -------------- ----------
<S> <C> <C> <C>
$7,500,000 Bass Brook, MN Pollution Control Rev.
(Minnesota Power and Light Co. Project),
6% due 7/1/2022 ................................................... A2/A- $ 6,876,450
6,250,000 Becker, MN Pollution Control Rev. (Northern
States Power Company),
6.80% due 4/1/2007 ................................................ A2/A+ 6,397,875
2,000,000 Breckenridge, MN Hospital Facility Rev.
(Franciscan Sisters Health Care, Inc.),
9 3/8% due 9/1/2017 ............................................... NR/NR 2,276,460
3,000,000 Dakota County, MN G.O.'s Capital Improvement,
7.30% due 2/1/2008 ................................................ A1/NR 3,201,870
5,000,000 Edina, MN Housing Development Rev. (Edina Park
Plaza Project), 7.70% due 12/1/2028 ............................... Aa/NR 5,120,500
2,000,000 Goodhue County, MN Hospital Facilities Rev.
(St. John's Regional Health Center),
8 3/4% due 9/1/2016 ............................................... NR/NR 2,244,020
1,200,000 Lakeville, MN Independent School District No.
194 G. O.'s, 6.70% due 2/1/2015 ................................... Aaa/AAA 1,263,756
730,000 Lewiston, MN First Mortgage Nursing Home Rev.
(Deloughery Home Project),
9.80% due 1/15/2013 ............................................... NR/A- 731,015
7,500,000 Minneapolis, MN Community Development Agency
Tax Increment Rev., Zero Coupon
Bond due 9/1/2003 ................................................. Aaa/AAA 4,562,775
5,500,000 Minneapolis, MN Community Development Agency
Tax Increment Rev., Zero Coupon
Bond due 9/1/2004 ................................................. Aaa/AAA 3,137,365
3,000,000 Minneapolis-St. Paul Metropolitan Area
(Metropolitan Council of the Twin Cities), MN,
5 1/2% due 12/1/2006 .............................................. Aaa/AAA 2,950,110
5,500,000 Minneapolis, MN G.O.'s, 6 1/2% due 3/1/2013 ........................ Aaa/AAA 5,765,045
1,735,000 Minneapolis, MN G.O.'s Sales Tax, 6 1/4% due
4/1/2012 .......................................................... Aaa/AAA 1,759,793
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
29
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
MINNESOTA SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Minneapolis, MN Hospital Facilities Rev.
(Lifespan, Inc.--Abbott-Northwestern
Hospital, Inc.), 7 7/8% due 12/1/2014 ............................. Aaa/NR $ 2,210,540
1,500,000 Minneapolis, MN Tax Increment Rev., 7% due
3/1/2003 .......................................................... Aaa/AAA 1,587,165
940,000 Minnesota Housing Finance Agency (Housing
Development), 6 1/4% due 2/1/2020 ................................. A1/A+ 913,163
5,000,000 Minnesota Housing Finance Agency (Single Family
Mortgage), 6.85% due 1/1/2024* .................................... Aa/AA+ 5,063,050
5,500,000 Minnesota Public Facilities Authority Water
Pollution Control Rev., 7.10% due 3/1/2012 ........................ NR/AA+ 5,954,355
5,000,000 Minnesota State G.O.'s, 6.70% due 8/1/2007 ......................... Aaa/AAA 5,336,400
105,000 Minnetonka Housing and Redevelopment Authority,
MN Tax Increment Rev.
(The Cliffs at Ridgedale Project), 12% due 8/1/2002 ............... NR/NR 109,937
250,000 Minnetonka Housing and Redevelopment Authority,
MN Tax Increment Rev.
(The Cliffs at Ridgedale Project), 12% due 8/1/2003 ............... NR/NR 261,755
2,500,000 North Suburban Hospital District, MN Anoka &
Ramsey Counties Hospital Rev. (Health Central System Project),
10% due 10/1/2014 ................................................. NR/A- 2,708,150
5,000,000 Northern Municipal Power Agency, MN Electric
System Rev., 7 1/4% due 1/1/2016 .................................. A/A 5,363,300
2,500,000 Northern Municipal Power Agency, MN Electric
System Rev., 7.40% due 1/1/2018 ................................... Aaa/AAA 2,756,525
5,000,000 Olmsted County, MN Housing & Redevelopment
Authority Public Facility Rev.,
7% due 2/1/2013 ................................................... Aaa/AA+ 5,437,900
2,000,000 Ramsey & Washington Counties, MN Resource
Recovery Rev. (Northern States Power
Company Project), 6 3/4% due 12/1/2006 ............................ A1/AA- 2,106,520
4,000,000 Rochester, MN Health Care Facilities Rev. (Mayo
Foundation/Mayo Medical Center),
7.45% due 11/15/2006 .............................................. NR/AA+ 4,180,880
4,500,000 Rochester, MN Health Care Facilities Rev. (Mayo
Foundation/Mayo Medical Center),
6 1/4% due 11/15/2014 ............................................. NR/AA+ 4,443,795
1,000,000 Rochester, MN Health Care Facilities Rev. (Mayo
Foundation/Mayo Medical Center),
6 1/4% due 11/15/2021 ............................................. NR/AA+ 963,280
2,000,000 Saint Cloud, MN Hydroelectric Generation
Facility Gross Rev., 7 3/8% due 12/16/2018 ........................ NR/A- 2,127,940
336,813 Saint Paul, MN Science Museum Facilities Rev.
(Science Museum of Minnesota Project),
7 1/2% due 12/15/2001 ............................................. NR/AAA 381,132
5,000,000 Saint Paul Port Authority and the Housing &
Redevelopment Authority of the City
of St. Paul, MN (Rental Housing), 7% due 9/1/2022 ................. NR/CCC 3,632,450
765,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series E, 9 1/8% due 10/1/2010 ................... NR/CCC 717,554
4,125,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series L, 7 1/2% due 12/1/2010 ................... NR/CCC 3,331,185
685,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series V, 10 1/4%
due 12/1/2013 ..................................................... NR/CCC 664,450
250,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series H, 9 1/8% due 12/1/2014 ................... NR/CCC 233,115
1,500,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series I, 9 1/8% due 12/1/2014 ................... NR/CCC 1,398,690
250,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series L, 9 3/4% due 12/1/2014 ................... NR/CCC 244,540
750,000 Saint Paul Port Authority, MN Industrial
Development Rev. Series M, 7% due 12/1/2016 ....................... NR/CCC 555,630
2,250,000 Southern Minnesota Municipal Power Agency--
Power Supply System Rev.,
5 3/4% due 1/1/2018 ............................................... A1/A+ 2,071,462
1,500,000 Southern Minnesota Municipal Power Agency--
Power Supply System Rev.,
4 3/4% due 1/1/2016 ............................................... A1/A+ 1,198,230
5,000,000 University of Minnesota G.O.'s, 7 3/4% due
2/1/2010 .......................................................... Aa/AAA 5,296,800
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
30
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
MINNESOTA SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$3,500,000 Washington County, MN G.O.'s, 5.90% due
2/1/2010 .......................................................... Aa/AA- $ 3,400,040
3,000,000 Western Minnesota Municipal Power Agency--Power
Supply Rev., 7% due 1/1/2013 ...................................... A1/A 3,146,970
9,580,000 Western Minnesota Municipal Power Agency--Power
Supply Rev., 6 3/8% due 1/1/2016 .................................. Aaa/AAA 9,983,510
------------
Total Municipal Bonds (Cost $128,935,607)--98.1% ........................................................... 134,067,447
Variable Rate Demand Notes (Cost $700,000)--0.5% ........................................................... 700,000
Other Assets Less Liabilities--1.4% ........................................................................ 1,871,383
------------
NET ASSETS--100.0% ......................................................................................... $136,638,830
============
</TABLE>
MISSOURI SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Columbia, MO Water and Electric System Improvement
Rev., 6 1/8% due 10/1/2012 ........................................ A1/AA $ 1,946,860
775,000 Franklin County, MO Reorganized School District
G.O.'s, 7.40% due 3/1/2005 ........................................ Aaa/AAA 869,240
1,500,000 Kansas City Metropolitan Community Colleges
Building Corp., MO Rev. (The Junior
College District of Metropolitan Kansas City), 7 3/4%
due 7/1/2006 ...................................................... Aaa/AAA 1,596,150
3,775,000 Kansas City, MO Water Rev., 6 1/4% due
12/1/2009 ......................................................... Aa/AA 3,792,743
1,685,000 Kansas City Municipal Assistance Corp., MO
Leasehold Improvement Rev. (H. Roe Bartle
Convention Center Project), Zero Coupon Bond due
4/15/2008 ......................................................... Aaa/AAA 731,273
2,875,000 Kansas City Municipal Assistance Corp., MO
Leasehold Improvement Rev. (H. Roe Bartle
Convention Center Project), Zero Coupon Bond due
4/15/2009 ......................................................... Aaa/AAA 1,151,840
925,000 Kansas City Municipal Assistance Corp., MO
Leasehold Improvement Rev. (H. Roe Bartle
Convention Center Project), Zero Coupon Bond due
4/15/2010 ......................................................... Aaa/AAA 346,949
1,250,000 Kansas City School District Building
Corporation, MO Leasehold Rev., 6 1/2% due 2/1/2008 ............... Aaa/AAA 1,289,575
1,500,000 Kansas City School District Building
Corporation, MO Leasehold Rev.,
7.90% due 2/1/2008 ................................................ Aaa/AAA 1,657,425
1,000,000 Liberty, MO Waterworks Improvement Rev., 6.30%
due 10/1/2012 ..................................................... Aaa/AAA 1,005,590
2,000,000 Little Blue Valley, MO Sewer District Rev., 7
1/4% due 10/1/2007 ................................................ Aaa/AAA 2,131,640
1,000,000 Missouri School Boards Pooled Financing Program
Certificates of Participation,
7 3/8% due 3/1/2006 ............................................... Aaa/AAA 1,078,800
2,000,000 Missouri School Boards Pooled Financing Program
Certificates of Participation,
7% due 3/1/2006 ................................................... Aaa/AAA 2,136,900
1,000,000 Missouri State Environmental Improvement &
Energy Resources Authority Rev.
(State Revolving Fund Program), 6.55% due 7/1/2014 ................ Aa/NR 1,001,990
2,500,000 Missouri State Environmental Improvement &
Energy Resources Authority Rev.
(Union Electric Company Project), 5.45% due 10/1/2028* ............ A1/AA- 2,077,425
2,500,000 Missouri State Environmental Improvement &
Energy Resources Authority--Water
Pollution Control Rev. (State Revolving Fund Program),
5.40% due 7/1/2015 ................................................ Aa/NR 2,168,325
2,500,000 Missouri State Health & Educational Facilities
Authority Rev. (Lester E. Cox Medical
Centers Project), 5 1/4% due 6/1/2015 ............................. Aaa/AAA 2,147,100
1,500,000 Missouri State Health & Educational Facilities
Authority Rev. (Sisters of Mercy Health
System, St. Louis, Inc.), 6 1/4% due 6/1/2015 ..................... Aa/AA 1,436,970
1,865,000 Missouri State Health & Educational Facilities
Authority Rev. (Jewish Hospital
of St. Louis Project), 7 1/4% due 7/1/2015 ........................ Aaa/AAA 1,998,124
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
31
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
MISSOURI SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$3,500,000 Missouri State Health & Educational Facilities
Authority Rev. (SSM Health Care),
6 1/4% due 6/1/2016 ............................................... Aaa/AAA $ 3,438,470
1,000,000 Missouri State Health & Educational Facilities
Authority Rev. (Sisters of Mercy Health
System, St. Louis, Inc.), 7 1/4% due 6/1/2019 ..................... Aaa/AA 1,103,160
1,000,000 Missouri State Health & Educational Facilities
Authority Rev. (Sisters of Mercy Health
System, St. Louis, Inc.), 5% due 6/1/2019 ......................... Aa/AA 796,080
2,500,000 Missouri State Health Facilities Rev. (Barnes-
Jewish, Inc./Christian Health Services),
5 1/4% due 5/15/2021 .............................................. Aa/AA- 2,049,625
230,000 Missouri State Housing Development Commission
(Single Family Residential
Mortgage Rev.), 8% due 8/1/2013 ................................... NR/AAA 234,920
860,000 Missouri State Housing Development Commission
Housing Development Bonds
(Federally Insured Mortgage Loans), 6% due 10/15/2019 ............. Aa/AA+ 783,477
1,500,000 St. Louis, MO Industrial Development Authority
Pollution Control Rev. (Anheuser-Busch
Companies, Inc. Project), 6.65% due 5/1/2016 ...................... A1/AA- 1,613,220
2,400,000 Southeast Missouri Correctional Facility Lease
Rev. (Missouri State Project),
5 3/4% due 10/15/2016 ............................................. Aa/AA 2,195,808
3,000,000 Springfield, MO Public Utility Rev., 5 1/4% due
3/1/2007 .......................................................... Aa/AA 2,836,110
2,500,000 Springfield, MO Waterworks Rev., 5.60% due
5/1/2023 .......................................................... Aa/A+ 2,218,075
2,750,000 University of Missouri University Revenues
Refunding & Improvment Systems Facilities,
5 1/2% due 11/1/2023 .............................................. Aa/AA+ 2,398,962
-----------
Total Municipal Bonds (Cost $50,550,961)--94.8% ............................................................. 50,232,826
Variable Rate Demand Notes (Cost $1,800,000)--3.4% .......................................................... 1,800,000
Other Assets Less Liabilities--1.8 .......................................................................... 938,286
-----------
NET ASSETS--100.0% .......................................................................................... $52,971,112
===========
</TABLE>
NEW YORK SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$2,000,000 Battery Park City Authority, NY Housing Rev.
(FHA Insured Mortgage Loan),
5.65% due 12/1/2013 ............................................... NR/AAA $ 1,812,940
750,000 Erie County Industrial Development Agency, NY
Industrial Development Rev.
(Peter J. Schmitt Co., Project), 10 3/4% due 12/1/2014 ............ NR/NR 785,348
6,875,000 Metropolitan Transportation Authority, NY
(Commuter Facilities Rev.),
6 1/2% due 7/1/2024 ............................................... Baa1/BBB+ 6,689,100
2,500,000 Municipal Assistance Corporation for the City
of New York, NY, 6.90% due 7/1/2007 ............................... Aa/AA- 2,655,875
5,000,000 New York City Municipal Water Finance
Authority, NY Water & Sewer System Rev.,
5 1/2% due 6/15/2019 .............................................. A/A- 4,306,400
4,000,000 New York City, NY G.O.'s, 6 1/2% due 8/1/2012 ...................... Baa1/A- 3,925,120
5,000,000 New York City, NY Health & Hospitals
Corporation Health System,
5 3/4% due 2/15/2022 .............................................. Aaa/AAA 4,481,800
1,250,000 New York City, NY Trust for Cultural Resources
(The Museum of Modern Art),
5.40% due 1/1/2012 ................................................ Aaa/AAA 1,132,525
</TABLE>
- --------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
32
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
NEW YORK SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,750,000 New York State Dormitory Authority Rev.
(Columbia University), 4 3/4% due 7/1/2014 ........................ Aaa/AA+ $1,395,293
3,500,000 New York State Dormitory Authority Rev.
(Rockefeller University), 7 3/8% due 7/1/2014 ..................... Aaa/AAA 3,771,635
5,000,000 New York State Dormitory Authority Rev.
(Fordham University), 5 3/4% due 7/1/2015 ......................... Aaa/AAA 4,639,700
3,540,000 New York State Dormitory Authority Rev.
(Colgate University), 6 1/2% due 7/1/2021 ......................... Aaa/AAA 3,565,346
5,000,000 New York State Dormitory Authority Rev.
(Skidmore College), 5 3/8% due 7/1/2023 ........................... Aaa/AAA 4,248,750
4,500,000 New York State Energy Research & Development
Authority Electric Facilities Rev.
(Consolidated Edison Co. N.Y. Inc. Project), 7 1/2% due
1/1/2026* ......................................................... Aa3/A+ 4,776,435
2,500,000 New York State Energy Research & Development
Authority Gas Facilities Rev.
(Brooklyn Union Gas), 6 3/4% due 2/1/2024* ........................ Aaa/AAA 2,524,800
750,000 New York State Housing Finance Agency Multi-
Family Housing Rev. (Secured Mortgage
Program), 6 1/4% due 8/15/2023 .................................... Aa/NR 711,630
1,500,000 New York State Local Government Assistance
Corporation, 6 1/2% due 4/1/2020 .................................. A/A 1,490,730
3,000,000 New York State Medical Care Facilities Finance
Agency Hospital and Nursing Home Rev.,
5 3/4% due 8/15/2019 .............................................. NR/AAA 2,696,910
1,250,000 New York State Medical Care Facilities Finance
Agency Hospital and Nursing Home Rev.
(Long Island College Hospital), 8.10% due 2/15/2022 ............... Aa/AA 1,391,662
4,000,000 New York State Medical Care Facilities Finance
Agency Rev. (The Hospital for Special
Surgery), 6 3/8% due 8/15/2024 .................................... Aa/AA 3,882,800
2,000,000 New York State Mortgage Agency (Homeownership
Mortgage), 7 1/2% due 4/1/2016 .................................... Aa/NR 2,103,580
5,000,000 New York State Power Authority General Purpose
Rev., 6 1/2% due 1/1/2019 ......................................... Aa/AA- 5,013,100
4,000,000 New York State Thruway Authority General Rev.,
5 3/4% due 1/1/2019 ............................................... A1/A 3,631,240
4,000,000 New York State Thruway Authority Local Highway
and Bridge Service Contract Bonds,
7 1/4% due 1/1/2010 ............................................... Baa1/BBB 4,199,160
2,500,000 Niagara Falls, NY Bridge Commission Toll Bridge
System Rev., 5 1/4% due 10/1/2015 ................................. Aaa/AAA 2,149,750
2,250,000 Port Authority of New York and New Jersey
Consolidated Rev., 6 1/8% due 6/1/2094 ............................ A1/AA- 2,120,153
3,615,000 Triborough Bridge & Tunnel Authority, NY
General Purpose Rev., 5% due 1/1/2015 ............................. Aa/A+ 2,969,939
6,000,000 United Nations Development Corporation, NY
(A Public Benefit Corporation of the State
of New York Senior Lien), 6% due 7/1/2026 ......................... A/NR 5,538,000
-----------
Total Municipal Bonds (Cost $91,155,927)--97.0% ........................................................... 88,609,721
Variable Rate Demand Notes (Cost $1,600,000)--1.7% ........................................................ 1,600,000
Other Assets Less Liabilities--1.3% ....................................................................... 1,180,343
-----------
NET ASSETS--100.0% ........................................................................................ $91,390,064
===========
</TABLE>
OHIO SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,000,000 Alliance, OH Sewerage System Mortgage Rev.,
7 3/4% due 10/15/2010 ............................................. Aaa/AAA $1,099,900
2,000,000 Barberton, OH Sewer System Mortgage Rev.,
6 5/8% due 12/1/2006 .............................................. Aaa/AAA 2,102,340
3,450,000 Big Walnut Local School District, OH School
Building Construction & Improvement
G.O.'s, 7.20% due 6/1/2007 ........................................ Aaa/AAA 3,860,481
1,675,000 Cincinnati, OH Student Loan Funding Corporation
Rev., 6.35% due 7/1/2005* ......................................... Aaa/NR 1,695,217
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
33
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
OHIO SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Clermont County, OH Hospital Facilities Rev.
(Mercy Health System), 5 7/8% due 1/1/2015 ........................ Aaa/AAA $2,830,350
2,000,000 Cleveland, OH Waterworks Improvement Rev.,
6% due 1/1/2017 ................................................... A1/A+ 1,876,260
2,250,000 Cleveland, OH Waterworks Improvement Rev.,
6 1/2% due 1/1/2021 ............................................... Aaa/AAA 2,421,607
5,375,000 Columbus, OH G.O.'s, 6 1/2% due 1/1/2010 ........................... Aa1/AA+ 5,486,585
4,500,000 Columbus, OH Municipal Airport Authority Rev.
(Port Columbus International
Airport Project), 6% due 1/1/2020* ................................ Aaa/AAA 4,237,965
4,250,000 Dayton, OH James M. Cox Dayton International
Airport Rev., 8 1/4% due 1/1/2016 ................................. Aaa/AAA 4,522,085
3,000,000 Dayton, OH Water System Mortgage Rev., 6 3/4%
due 12/1/2010 ..................................................... Aaa/AAA 3,149,940
7,000,000 Erie County, OH Franciscan Services Corp. Rev.
(Providence Hospital Inc.),
6% due 1/1/2013 ................................................... NR/A- 6,357,400
1,000,000 Euclid City School District, OH G.O.'s, 7.10%
due 12/1/2011 ..................................................... A/NR 1,075,700
7,750,000 Franklin County, OH G.O.'s, 5 3/8% due
12/1/2020 ......................................................... Aaa/AAA 6,729,015
7,500,000 Franklin County, OH Hospital Rev. (Riverside
United Methodist Hospital),
5 3/4% due 5/15/2020 .............................................. Aa/NR 6,682,500
5,000,000 Hamilton County, OH Health Care System Rev.
(Sisters of Charity Health Care),
6 1/4% due 5/15/2014 .............................................. Aaa/AAA 4,927,300
5,000,000 Hamilton County, OH Sewer System Rev. (The
Metropolitan Sewer District
of Greater Cincinnati), 7 1/2% due 12/1/2010 ...................... NR/AAA 5,321,800
8,000,000 Hamilton, OH Electric System Mortgage Rev., 6%
due 10/15/2023 .................................................... Aaa/AAA 7,712,480
4,000,000 Hudson Local School District, OH G.O.'s, 7.10%
due 12/15/2013 .................................................... A1/NR 4,452,040
1,095,000 Lake County, OH Hospital Improvement Rev. (Lake
Hospital System Inc.),
8% due 1/1/2013 ................................................... Aaa/AAA 1,179,063
1,090,000 Lake County, OH Hospital Improvement Rev. (Lake
Hospital System Inc.),
8% due 1/1/2013 ................................................... Aaa/AAA 1,183,097
8,000,000 Lucas County, OH Hospital Improvement Rev. (The
Toledo Hospital),
5% due 11/15/2010 ................................................. Aaa/AAA 6,882,960
3,000,000 Lucas County, OH Hospital Rev. (Riverside
Hospital Project), 7 5/8% due 6/1/2015 Baa1/BBB+3,117,750
1,000,000 Montgomery County, OH Rev. (Sisters of Charity
Health Care Systems, Inc.),
6 5/8% due 5/15/2021 .............................................. Aaa/AAA 1,019,940
2,090,000 Mount Vernon, OH Hospital Rev. (Knox Community
Hospital), 7 1/2% due 6/1/1996 .................................... NR/NR 2,148,938
5,000,000 Mount Vernon, OH Hospital Rev. (Knox Community
Hospital), 7 7/8% due 6/1/2012 .................................... NR/NR 5,279,750
1,490,000 Napoleon, OH Health Care Facility Rev.
(Lutheran Orphans & Old Folks' Home Society),
10.70% due 7/15/2015 .............................................. NR/NR 1,667,817
1,500,000 Northeast Ohio Regional Sewer District
Wastewater Improvement Rev.,
6 1/2% due 11/15/2016 ............................................. Aaa/AAA 1,521,480
5,000,000 Ohio Air Quality Development Authority
Pollution Control Rev. (Ohio Edison
Company Project), 7.45% due 3/1/2016 .............................. Aaa/AAA 5,449,700
2,000,000 Ohio Air Quality Development Authority Rev.
(Cincinnati Gas & Electric
Company Project), 5.45% due 1/1/2024 .............................. Aaa/AAA 1,703,420
6,500,000 Ohio Air Quality Development Authority Rev.
(JMG Project), 6 3/8% due 1/1/2029* ............................... Aaa/AAA 6,288,750
6,500,000 Ohio State Building Authority (State
Correctional Facilities), 7.35% due 8/1/2006 ...................... NR/NR 7,212,205
2,000,000 Ohio State Building Authority Workers'
Compensation Facilities
(William Green Building), 4 3/4% due 4/1/2014 ..................... A/A+ 1,577,000
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
34
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
OHIO SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$3,000,000 Ohio State G.O.'s Infrastructure Improvement,
6 1/2% due 8/1/2011 ............................................... Aa/AA $ 3,074,550
1,500,000 Ohio State Higher Educational Facilities
Commission Mortgage Rev.
(University of Dayton Project), 7 1/4% due 12/1/2012 .............. Aaa/AAA 1,617,780
3,000,000 Ohio State Higher Educational Facilities
Commission Rev. (Oberlin College Project),
5 3/8% due 10/1/2015 .............................................. NR/AA 2,619,270
2,000,000 Ohio State Liquor Profits Rev., 6.85% due
3/1/2000 .......................................................... Aaa/AAA 2,149,100
1,000,000 Ohio State Pollution Control Rev. (The Standard
Oil Company Project),
6 3/4% due 12/1/2015 .............................................. A1/AA- 1,038,970
7,000,000 Ohio State Public Facilities Commission Rev.
(Higher Education Capital Facilities),
6.30% due 5/1/2006 ................................................ Aaa/AAA 7,224,070
2,000,000 Ohio State Water Development Authority Rev.
(Safe Water), 6 3/4% due 12/1/2007 ................................ Aaa/AAA 2,078,760
2,775,000 Ohio State Water Development Authority Rev.
(Safe Water), 9 3/8% due 12/1/2010 ................................ Aaa/AAA 3,397,294
6,500,000 Ohio State Water Development Authority Water
Development Rev. (Dayton Power &
Light Co. Project), 6.40% due 8/15/2027 ........................... A1/AA- 6,283,355
2,955,000 Pickerington Local School District, OH School
Building Construction G.O.'s,
8% due 12/1/2005 .................................................. Aaa/AAA 3,446,476
1,000,000 Puerto Rico Industrial, Medical and
Environmental Pollution Control Facilities Financing
Authority Rev. (American Cyanamid Co. Project), 8 3/4%
due 5/1/2013 ...................................................... A3/NR 1,029,120
2,000,000 Puerto Rico Ports Authority Rev., 6% due
7/1/2021* ......................................................... Aaa/AAA 1,920,140
2,000,000 Toledo, OH Sewer System Rev., 7 3/4% due
11/15/2017 ........................................................ Aaa/AAA 2,221,820
1,000,000 Toledo, OH Waterworks Rev., 7 3/4% due
11/15/2017 ........................................................ Aaa/AAA 1,110,910
3,000,000 University of Toledo, OH General Receipts
Bonds, 7.10% due 6/1/2010 ......................................... Aaa/AAA 3,318,210
1,590,000 Westerville, OH City School District School
Improvement G.O.'s, 6 1/4% due 12/1/2008 .......................... A/A+ 1,625,886
2,000,000 Worthington City School District, OH School
Building Construction & Improvement
G.O.'s, 8 3/4% due 12/1/2002 ...................................... Aaa/AAA 2,329,920
-----------
Total Municipal Bonds (Cost $166,468,429)--98.5% .......................................................... 169,258,466
Variable Rate Demand Notes (Cost $100,000)--0.1% .......................................................... 100,000
Other Assets Less Liabilities--1.4% ....................................................................... 2,435,069
-----------
NET ASSETS--100.0% ........................................................................................ $171,793,535
===========
</TABLE>
OREGON SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,000,000 Albany, OR G.O.'s Water Bonds, 6 5/8% due
11/1/2009 ......................................................... Aaa/AAA $1,016,950
1,000,000 Clackamas County, OR Hospital Facility
Authority Rev. (Kaiser Permanente),
6 1/4% due 4/1/2021 ............................................... Aa2/AA 935,160
1,250,000 Clackamas County, OR School District No. 12
G.O.'s (North Clackamas School
District), 5% due 6/1/2011 ........................................ A/A+ 1,087,150
1,500,000 Clackamas & Washington Counties, OR School
District No. 3JT G.O.'s
(West Linn-Wilsonville), 5 7/8% due 8/1/2009 ...................... A1/AA- 1,478,700
850,000 Columbia River People's Utility District, OR
G.O.'s, 7.10% due 5/1/2005 ........................................ Aaa/AAA 878,526
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
35
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
OREGON SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,000,000 Deschutes County Hospital Facility Authority,
OR (St. Charles Medical Center),
7.60% due 1/1/2013 ................................................ A1/NR$ $ 1,069,290
400,000 Emerald People's Utility District, OR Electric
System Rev., 7.20% due 11/1/2006 .................................. Aaa/AAA 418,192
2,000,000 Eugene, OR Electric Utility Rev., 5.80% due
8/1/2022 .......................................................... Aaa/AAA 1,876,740
1,500,000 Eugene, OR Trojan Nuclear Project Rev., 5.90%
due 9/1/2009 ...................................................... Aa/AA 1,477,995
730,000 Eugene, OR Water Utility System Rev., 6.55% due
8/1/2003 .......................................................... A1/AA- 756,747
2,000,000 Hillsboro, OR Hospital Facility Authority
Hospital Rev. (Quality Healthcare),
5 3/4% due 10/1/2012 .............................................. NR/BBB+ 1,808,760
1,000,000 Hood River County School District, OR G.O.'s,
5.65% due 6/1/2008 ................................................ Aaa/AAA 970,270
1,245,000 Lebanon, OR G.O.'s Water Bonds, 7% due
11/1/2009 ......................................................... NR/NR 1,269,526
900,000 Marion County, OR Solid Waste and Electric Rev.
(Ogden Martin Systems of Marion, Inc.
Project), 7.70% due 10/1/2009 ..................................... Aaa/AAA 960,813
1,000,000 Metropolitan Service District, OR G.O.'s
(Oregon Convention Center),
6 1/4% due 1/1/2013 ............................................... Aa/AA+ 1,007,100
1,250,000 Multnomah County School District No. 1J, OR
G.O.'s, 6.80% due 12/15/2004 ...................................... Aa/AA- 1,306,575
1,000,000 North Clackamas Parks & Recreation District-
Clackamas County, OR Rev.
(Recreational Facilities), 5.70% due 4/1/2013 ..................... NR/A- 942,250
2,000,000 North Wasco County People's Utility District-
Wasco County, OR Rev.
(Bonneville Power Administration), 5.20% due 12/1/2024 ............ Aa/AA 1,660,140
2,500,000 Ontario, OR Hospital Facility Authority Health
Facilities Rev. Catholic Health Corporation
(Dominican Sisters of Ontario Inc., dba Holy Rosary
Hospital Project), 7% due 6/1/2012 ................................ A1/A+ 2,619,400
750,000 Ontario, OR Hospital Facility Authority Health
Facilities Rev. Catholic Health
Corporation (Dominican Sisters of Ontario Inc., dba Holy
Rosary Medical
Center Project), 6.10% due 11/15/2017 ............................. A1/A+ 685,913
1,000,000 Oregon Department of Transportation Regional
Light Rail Extension Rev.,
6.20% due 6/1/2008 ................................................ Aaa/AAA 1,020,720
925,000 Oregon Housing Agency Mortgage Rev. (Single
Family Mortgage Program),
7 3/8% due 7/1/2020* .............................................. Aa1/NR 943,629
2,000,000 Oregon Housing & Community Services Department
Housing & Finance Rev.
(Assisted or Insured Multi-Unit Program), 5 3/4% due
7/1/2012 .......................................................... A1/A+ 1,879,140
955,000 Oregon Housing & Community Services Department
Mortgage Rev. (Single Family
Mortgage Program), 5.65% due 7/1/2019* ............................ Aa/NR 828,300
945,000 Oregon Housing & Community Services Department
Mortgage Rev. (Single Family
Mortgage Program), 7% due 7/1/2022* ............................... Aa1/NR 960,914
2,785,000 Oregon State Fair & Exposition Center Rev., 7
3/8% due 10/1/2006 ................................................ NR/NR 2,897,319
500,000 Oregon State G.O.'s (Veterans' Welfare), 9% due
10/1/2006 ......................................................... Aa/AA- 645,605
475,000 Oregon State G.O.'s (Veterans' Welfare), 7.30%
due 7/1/2008 ...................................................... Aa/AA- 538,194
500,000 Oregon State G.O.'s (Alternate Energy Project),
8.40% due 1/1/2008 ................................................ Aa/AA- 566,760
250,000 Oregon State G.O.'s (Elderly & Disabled Housing),
7.20% due 8/1/2021 ................................................ Aa/AA- 261,800
1,000,000 Oregon State G.O.'s (Elderly & Disabled
Housing), 6.60% due 8/1/2022* ..................................... Aa/AA- 1,004,170
750,000 Oregon State Housing Educational & Cultural
Facilities Authority Rev. (Lewis & Clark
College Project), 7 1/8% due 7/1/2020 ............................. Aaa/AAA 831,278
500,000 Port of Portland, OR International Airport Rev.,
6 1/4% due 7/1/2018* .............................................. Aaa/AAA 497,490
1,000,000 Port of Portland, OR International Airport
Rev., 7.10% due 7/1/2021* ......................................... Aaa/AAA 1,062,830
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
36
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
OREGON SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,000,000 Port of Umpqua, OR Pollution Control Rev.
(International Paper Co. Project),
6.60% due 3/15/2005 ............................................... A3/A- $ 1,040,570
1,000,000 Portland, OR G.O.'s Water Bonds, 6% due
11/1/1999 ......................................................... NR/NR 1,002,250
1,000,000 Portland, OR G.O.'s Water Bonds, 6.30% due
11/1/2005 ......................................................... NR/NR 1,002,490
1,250,000 Portland, OR Hospital Facilities Authority Rev.
(Legacy Health System),
6 5/8% due 5/1/2011 ............................................... Aaa/AAA 1,289,063
3,000,000 Portland, OR Sewer System Rev., 6% due
10/1/2012 ......................................................... Aaa/AAA 2,941,770
1,200,000 Portland, OR Sewer System Rev., 6 1/4% due
6/1/2015 .......................................................... A1/A+ 1,182,084
1,000,000 Portland, OR Urban Renewal & Redevelopment Rev.
(Downtown Waterfront),
6.40% due 6/1/2008 ................................................ A/NR 1,010,130
2,500,000 Puerto Rico Highway & Transportation Authority
Highway Rev., 5 1/2% due 7/1/2019 ................................. Baa1/A 2,144,900
1,000,000 Puerto Rico Housing Finance Corp. (Single
Family Mortgage Rev.),
6.85% due 10/15/2023 .............................................. Aaa/AAA 1,011,340
1,000,000 Puerto Rico Ports Authority Rev., 7% due
7/1/2014* ......................................................... Aaa/AAA 1,059,530
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2%
due 1/1/2013 ...................................................... A/A+ 894,880
1,000,000 Tri-County Metropolitan Transportation District
of Oregon G.O.'s (Light Rail Extension),
6% due 7/1/2012 ................................................... Aa/AA+ 977,480
1,110,000 Tualatin Development Commission, OR (Urban
Renewal & Redevelopment),
7 3/8% due 1/1/2007 ............................................... Baa1/NR 1,156,198
2,000,000 Unified Sewerage Agency Washington County, OR
Sewer Rev., 6 1/8% due 10/1/2012 .................................. Aaa/AAA 1,985,960
1,000,000 Washington County School District No. 88J, OR
G.O.'s., 6.10% due 6/1/2012 ....................................... Aaa/AAA 993,480
1,000,000 Washington County School District No. 23JT
Washington & Clackamas Counties,
OR G.O.'s., 6.70% due 1/1/2010 .................................... A1/NR 1,067,590
-----------
Total Municipal Bonds (Cost $58,853,021)--97.0% ......................................................... 58,924,061
Other Assets Less Liabilities--3.0% ..................................................................... 1,803,387
-----------
NET ASSETS--100.0% ...................................................................................... $60,727,448
===========
</TABLE>
SOUTH CAROLINA SERIES
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$1,125,000 Anderson County, SC G.O.'s, 7 3/4% due 4/1/2009 .................... NR/A $ 1,232,629
2,500,000 Anderson County, SC Hospital Rev. (Anderson
Memorial Hospital), 5 1/4% due 2/1/2012 ........................... Aaa/AAA 2,175,225
1,000,000 Anderson County, SC Hospital Rev. (Anderson
Memorial Hospital), 7 1/2% due 2/1/2018 ........................... Aaa/AAA 1,093,130
1,500,000 Beaufort-Jasper Water & Sewer Authority, SC
Waterworks & Sewer System Rev.,
6 1/2% due 3/1/2013 ............................................... Aaa/AAA 1,511,445
3,800,000 Berkeley County, SC Water & Sewer Rev., 5.55%
due 6/1/2016 ...................................................... Aaa/AAA 3,395,186
3,000,000 Charleston County, SC Airport District System
Rev., 4 3/4% due 7/1/2015 ......................................... Aaa/AAA 2,354,550
1,750,000 Charleston County, SC Hospital Facilities Rev.
(Medical Society Health Project),
5 1/2% due 10/1/2019 .............................................. Aaa/AAA 1,494,973
745,000 Charleston County, SC Public Facilities Corp.
Certificates of Participation,
7.15% due 2/1/2004 ................................................ A1/A 795,116
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
37
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
SOUTH CAROLINA SERIES (continued)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- --------------- -------------- -------------
<S> <C> <C> <C>
$ 770,000 Charleston County, SC Public Facilities Corp.
Certificates of Participation,
7.15% due 8/1/2004 ................................................ A1/A $ 821,798
800,000 Charleston County, SC Public Facilities Corp.
Certificates of Participation,
7.20% due 2/1/2005 ................................................ A1/A 851,088
750,000 Charleston, SC Waterworks & Sewer System Rev.,
7 3/4% due 1/1/2011 ............................................... Aaa/AAA 824,130
2,500,000 Charleston, SC Waterworks & Sewer System Rev.,
6% due 1/1/2012 ................................................... A1/AA- 2,421,450
1,500,000 Clemson University, SC Student & Faculty
Housing Rev., 6.65% due 6/1/2011 .................................. Aaa/AAA 1,532,955
1,000,000 Clinton, SC Utility System Rev., 7.20% due
6/1/2011 .......................................................... A/NR 1,057,070
800,000 Columbia, SC G.O.'s., 6 1/2% due 2/1/2010 ....................... Aa/AA 819,008
1,150,000 Columbia, SC Parking Facilities Rev., 6 3/4%
due 12/1/2013 ..................................................... Baa1/A- 1,197,265
2,000,000 Columbia, SC Waterworks & Sewer System Rev.,
6 1/2% due 1/1/2012 ............................................... Aaa/AA 2,116,080
500,000 Columbia, SC Waterworks & Sewer System Rev.,
7.10% due 2/1/2012 ................................................ Aaa/AA 554,755
6,000,000 Darlington County , SC Industrial Development
Rev. (Nucor Corporation Project),
5 3/4% due 8/1/2023* .............................................. A1/AA- 5,296,440
1,500,000 Dorchester County School District No. 002, SC
G.O.'s, 6.65% due 7/1/2010 ........................................ Aaa/AAA 1,544,100
2,500,000 Fairfield County, SC Pollution Control Rev.
(South Carolina Electric & Gas Company),
6 1/2% due 9/1/2014 ............................................... A1/A 2,491,500
1,000,000 Florence County, SC Hospital Rev. (McLeod
Regional Medical Center Project),
5 1/4% due 11/1/2009 .............................................. Aaa/AAA 889,700
1,000,000 Georgetown County, SC Pollution Control
Facilities Rev. (International Paper Company),
7 3/8% due 6/15/2005 .............................................. A3/A- 1,041,040
1,500,000 Grand Strand Water & Sewer Authority, SC
Waterworks and Sewer System Rev.,
7% due 6/1/2019 ................................................... Aaa/AAA 1,616,940
2,000,000 Greenville County, SC Certificates of
Participation Greenville County Public Facilities
Corporation (Detention Center Facilities Project),
6 1/4% due 3/1/2012 ............................................... Aaa/AAA 1,985,180
3,000,000 Greenville Hospital System, SC Hospital
Facilities Rev., 5 1/2% due 5/1/2016 .............................. NR/AA- 2,576,730
1,250,000 Greenville Hospital System, SC Hospital
Facilities Rev., 6% due 5/1/2020 .................................. NR/AA- 1,119,025
3,000,000 Greenwood County, SC Hospital Facilities Rev.
(Self Memorial Hospital),
5 7/8% due 10/1/2017 .............................................. Aaa/AAA 2,754,330
2,425,000 Lancaster County, SC School District G.O.'s,
6.60% due 7/1/2011 ................................................ Aaa/AAA 2,516,471
2,600,000 Lancaster County, SC School District G.O.'s,
6.60% due 7/1/2012 ................................................ Aaa/AAA 2,686,476
2,000,000 Lancaster County, SC Waterworks & Sewer System
Rev., 5 1/4% due 5/1/2021 ......................................... Aaa/AAA 1,661,380
2,000,000 Laurens County, SC Combined Utility System
Rev., 5% due 1/1/2018 ............................................. Aaa/AAA 1,616,960
1,650,000 Laurens County, SC Combined Utility System
Rev., 7 5/8% due 1/1/2018 ......................................... Aaa/AAA 1,825,857
500,000 Laurens County, SC Health Care System, 7.80% due
1/1/2008 .......................................................... Aaa/AAA 550,165
1,000,000 Lexington County School District No. 001, SC
Certificates of Participation (Red Bank/
White Knoll Elementary Project), 7.10% due 9/1/2011 ............... Aaa/AAA 1,065,820
1,000,000 Medical University South Carolina Hospital
Facilities Rev., 5.60% due 7/1/2011 ............................... Aaa/AAA 926,130
3,000,000 Mount Pleasant, SC Water & Sewer Rev., 6% due
12/1/2020 ......................................................... Aaa/AAA 2,870,190
1,725,000 Myrtle Beach, SC Water & Sewer Rev., 6 7/8% due
3/1/2005 .......................................................... Aaa/AAA 1,772,679
2,000,000 Myrtle Beach, SC Waterworks & Sewer System
Rev., 5 1/4% due 3/1/2020 ......................................... Aaa/AAA 1,658,640
1,430,000 North Charleston Sewer District, SC G.O.'s,
5 1/2% due 1/1/2006 ............................................... A/AA 1,384,440
1,500,000 North Charleston Sewer District, SC Rev.,
6 3/8% due 7/1/2012 ............................................... Aaa/AAA 1,514,910
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
38
<PAGE>
================================================================================
September 30, 1994
- --------------------------------------------------------------------------------
SOUTH CAROLINA SERIES (CONTINUED)
<TABLE>
<CAPTION>
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
- -------- ---------------- -------------- -------------
<S> <C> <C> <C>
$1,500,000 North Charleston Sewer District, SC Rev.,
7 3/4% due 8/1/2018 ............................................... Aaa/AAA$ $ 1,667,595
5,000,000 Oconee County, SC Pollution Control Facilities
Rev. (Duke Power Co. Project),
5.80% due 4/1/2014 ................................................ Aa2/AA- 4,616,100
2,000,000 Oconee County, SC Pollution Control Facilities
Rev. (Duke Power Co. Project),
7 1/2% due 2/1/2017 ............................................... Aa2/AA- 2,152,120
1,250,000 Piedmont Municipal Power Agency, SC Electric
Rev., 6 1/4% due 1/1/2021 ......................................... Aaa/AAA 1,207,663
4,000,000 Piedmont Municipal Power Agency, SC Electric
Rev., 6.30% due 1/1/2022 .......................................... Aaa/AAA 3,829,160
4,000,000 Puerto Rico Highway & Transportation Authority
Highway Rev., 5 1/2% due 7/1/2019 ................................. Baa1/A 3,431,840
75,000 Puerto Rico Housing Finance Corporation (Single
Family Mortgage-Portfolio One),
7.80% due 10/15/2021 .............................................. Aaa/AAA 77,309
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2%
due 1/1/2022 ...................................................... A/A+ 863,860
2,000,000 Richland County, SC Solid Waste Disposal
Facilities Rev. (Union Camp Corp. Project),
7.45% due 4/1/2021* ............................................... A1/A- 2,109,280
1,000,000 Richland County, SC Solid Waste Disposal
Facilities Rev. (Union Camp Corp. Project),
7 1/8% due 9/1/2021* .............................................. A1/A- 1,036,940
1,000,000 Rock Hill, SC Combined Utilities System Rev.,
8% due 1/1/2018 ................................................... Aaa/AAA 1,105,940
5,000,000 Rock Hill, SC Combined Utilities System Rev.,
5% due 1/1/2020 ................................................... Aaa/AAA 4,001,750
1,000,000 St. Andrews, SC Public Service District Sewer
Systems Rev., 7 3/4% due 1/1/2018 ................................. Aaa/AAA 1,089,750
1,250,000 South Carolina Public Service Authority Rev.
(Santee Cooper), 5 1/2% due 7/1/2021 .............................. Aaa/AAA 1,076,787
1,000,000 South Carolina Public Service Authority
Electric Rev. & Electric System Expansion,
8% due 7/1/2019 ................................................... AAA/AA- 1,084,570
1,000,000 South Carolina Public Service Authority
Electric Rev. & Electric System Expansion
(Santee Cooper), 6.90% due 7/1/2021 ............................... A1/AA- 1,024,680
4,000,000 South Carolina State G.O.'s, 4 1/4% due
3/1/2009 .......................................................... Aaa/AA+ 3,201,040
1,740,000 South Carolina State Housing Authority (Single
Family Mortgage Purchase),
6.70% due 7/1/2010 ................................................ Aaa/AA 1,779,950
500,000 South Carolina State Housing Finance &
Development Authority (Homeownership
Mortgage), 7.55% due 7/1/2011 ..................................... Aa/AA 505,670
2,450,000 South Carolina State Housing Finance &
Development Authority Rental Housing Rev.
(North Bluff Project), 5.60% due 7/1/2016 ......................... NR/AA 2,166,314
1,000,000 South Carolina State Housing Finance &
Development Authority (Multi-Family
Development Rev.), 6 7/8% due 11/15/2023 .......................... Aaa/NR 1,013,560
500,000 Spartanburg County, SC Certificates of
Participation (Spartanburg County Administrative
Building Project), 7.80% due 8/1/2008 ............................. Aaa/AAA 523,310
1,500,000 Sumter, SC Waterworks & Sewer System Rev.,
7.15% due 6/1/2009 ................................................ Aaa/AAA 1,638,045
2,000,000 Western Carolina Regional Sewer Authority, SC
Sewer System Rev., 5 1/2% due 3/1/2010 ............................ Aaa/AAA 1,854,620
1,080,000 Winnsboro, SC Combined Utility System Rev.,
6.90% due 7/1/2017 ................................................ Aaa/AAA 1,177,578
1,000,000 York County Public Facilities Corporation, SC
Certificates of Participation (York County
Justice Center Project), 7 1/2% due 6/1/2011 ...................... Aaa/NR 1,131,420
------------
Total Municipal Bonds (Cost $116,412,015)--98.6% ......................................................... 114,979,807
Other Assets Less Liabilities--1.4% ...................................................................... 1,631,695
------------
NET ASSETS--100.0% ....................................................................................... $116,611,502
============
</TABLE>
- --------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
39
<PAGE>
================================================================================
Statements of Assets and Liabilities
September 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
National Colorado Georgia Louisiana Maryland
Series Series Series Series Series
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value
(see portfolios
of investments):
Long-term holdings ...... $109,595,706 $57,177,725 $60,900,198 $60,886,023 $56,542,141
Short-term holdings ..... 1,000,000 700,000 400,000 300,000 --
------------ ----------- ----------- ----------- -----------
110,595,706 57,877,725 61,300,198 61,186,023 56,542,141
Cash ...................... 48,470 138,280 115,731 114,092 162,735
Interest receivable ....... 1,958,373 1,254,000 1,189,288 1,111,986 1,193,543
Receivable for Capital
Stock sold .............. 73,487 62,091 71,338 5,310 23,846
Expenses prepaid to
shareholder service
agent ................... 17,449 7,741 11,305 10,568 11,059
Receivable for
securities sold ......... -- 10,067 -- 30,000 --
Other ..................... 18,940 6,436 8,594 9,987 9,129
------------ ----------- ----------- ----------- -----------
Total Assets .............. 112,712,425 59,356,340 62,696,454 62,467,966 57,942,453
------------ ----------- ----------- ----------- -----------
Liabilities:
Payable for Capital
Stock repurchased ....... 573,409 892,119 196,232 139,884 80,536
Dividends payable ......... 209,562 103,103 104,071 108,950 99,441
Deferred directors'
fees payable ............ 13,546 7,755 7,142 8,600 8,600
Accrued expenses,
taxes, and other ........ 95,592 60,088 73,803 64,716 66,349
------------ ----------- ----------- ----------- -----------
Total Liabilities ......... 892,109 1,063,065 381,248 322,150 254,926
------------ ----------- ----------- ----------- -----------
Net Assets ................ $111,820,316 $58,293,275 $62,315,206 $62,145,816 $57,687,527
============ =========== =========== =========== ===========
Composition of Net Assets:
Capital Stock, at par:
Class A ................. 15,512 8,203 8,218 7,736 7,422
Class D ................. 62 14 113 89 55
Additional paid-in
capital ................. 121,216,854 58,814,758 63,620,578 61,277,968 57,324,454
Accumulated net realized
gain (loss) and
distributions in excess
of net realized gain .... (151,539) (586,888) 836,326 1,082,390 984,542
Net unrealized
appreciation
(depreciation)
of investments .......... (9,260,573) 57,188 (2,150,029) (222,367) (628,946)
------------ ----------- ----------- ----------- -----------
Net Assets ................ $111,820,316 $58,293,275 $62,315,206 $62,145,816 $57,687,527
============ =========== =========== =========== ===========
Net Assets:
Class A ................. $111,374,406 $58,197,246 $61,466,115 $61,441,467 $57,263,265
Class D ................. $ 445,910 $ 96,029 $ 849,091 $ 704,349 $ 424,262
Shares of Capital Stock
outstanding ($.001
par value):
Class A ................. 15,511,716 8,203,444 8,217,943 7,736,215 7,422,463
Class D ................. 62,120 13,541 113,428 88,734 54,947
Net Asset Value per share:
Class A ................. $7.18 $7.09 $7.48 $7.94 $7.71
Class D ................. $7.18 $7.09 $7.49 $7.94 $7.72
</TABLE>
================================================================================
Statements of Assets and Liabilities (continued)
September 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Massachusetts Michigan Minnesota Missouri
Series Series Series Series
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Assets:
Investments, at value
(see portfolios
of investments):
Long-term holdings ...... $117,985,543 $148,542,731 $134,067,447 $50,232,826
Short-term holdings ..... 1,100,000 400,000 700,000 1,800,000
------------ ------------ ------------ -----------
119,085,543 148,942,731 134,767,447 52,032,826
Cash ...................... 147,190 142,058 117,418 116,190
Interest receivable ....... 2,401,690 3,153,377 2,221,449 989,941
Receivable for Capital
Stock sold .............. 180,908 123,995 110,526 --
Expenses prepaid to
shareholder service
agent ................... 22,487 25,928 22,241 7,250
Receivable for
securities sold ......... -- -- -- 35,467
Other ..................... 20,690 25,941 18,890 5,464
------------ ------------ ------------ -----------
Total Assets .............. 121,858,508 152,414,030 137,257,971 53,187,138
------------ ------------ ------------ -----------
Liabilities:
Payable for Capital
Stock repurchased ....... 259,861 234,773 225,798 63,552
Dividends payable ......... 229,313 266,256 261,679 92,606
Deferred directors'
fees payable ............ 11,199 10,746 11,199 7,755
Accrued expenses,
taxes, and other ........ 109,493 136,699 120,465 52,113
------------ ------------ ------------ -----------
Total Liabilities ......... 609,866 648,474 619,141 216,026
------------ ------------ ------------ -----------
Net Assets ................ $121,248,642 $151,765,556 $136,638,830 $52,971,112
============ ============ ============ ===========
Composition of Net Assets:
Capital Stock, at par:
Class A ................. 15,688 18,249 17,479 7,098
Class D ................. 144 81 213 47
Additional paid-in
capital ................. 120,174,716 147,669,458 131,247,295 52,794,520
Accumulated net realized
gain (loss) and
distributions in excess
of net realized gain .... 483,906 762,009 242,003 487,582
Net unrealized
appreciation
(depreciation)
of investments .......... 574,188 3,315,759 5,131,840 (318,135)
------------ ------------ ------------ -----------
Net Assets ................ $121,248,642 $151,765,556 $136,638,830 $52,971,112
============ ============ ============ ===========
Net Assets:
Class A ................. $120,149,321 $151,094,898 $134,990,212 $52,620,826
Class D ................. $ 1,099,321 $ 670,658 $ 1,648,618 $ 350,286
Shares of Capital Stock
outstanding ($.001
par value):
Class A ................. 15,688,118 18,248,789 17,479,163 7,098,456
Class D ................. 143,554 80,968 213,396 47,246
Net Asset Value per share:
Class A ................. $7.66 $8.28 $7.72 $7.41
Class D ................. $7.66 $8.28 $7.73 $7.41
</TABLE>
================================================================================
Statements of Assets and Liabilities (continued)
September 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South
New York Ohio Oregon Carolina
Series Series Series Series
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Assets:
Investments, at value
(see portfolios
of investments):
Long-term holdings ...... $88,609,721 $169,258,466 $58,924,061 $114,979,807
Short-term holdings ..... 1,600,000 100,000 -- --
----------- ------------ ----------- ------------
90,209,721 169,358,466 58,924,061 114,979,807
Cash ...................... 106,185 110,373 675,723 113,594
Interest receivable ....... 1,482,444 3,307,961 1,265,037 1,944,665
Receivable for Capital
Stock sold .............. 12,676 68,574 88,013 294,353
Expenses prepaid to
shareholder service
agent ................... 14,008 31,949 9,953 17,695
Receivable for
securities sold ......... -- -- -- --
Other ..................... 11,576 28,861 6,956 11,778
------------ ------------ ------------ -----------
Total Assets .............. 91,836,610 172,906,184 60,969,743 117,361,892
------------ ------------ ------------ -----------
Liabilities:
Payable for Capital
Stock repurchased ....... 169,049 637,100 70,161 428,209
Dividends payable ......... 162,935 299,681 105,738 207,507
Deferred directors'
fees payable ............ 11,199 11,199 7,589 7,142
Accrued expenses,
taxes, and other ........ 103,363 164,669 58,807 107,532
------------ ------------ ------------ -----------
Total Liabilities ......... 446,546 1,112,649 242,295 750,390
------------ ------------ ------------ -----------
Net Assets ................ $91,390,064 $171,793,535 $60,727,448 $116,611,502
============ ============ ============ ===========
Composition of Net Assets:
Capital Stock, at par:
Class A ................. 11,853 21,714 8,059 15,121
Class D ................. 62 41 114 194
Additional paid-in
capital ................. 91,926,866 167,412,564 60,514,665 117,829,017
Accumulated net realized
gain (loss) and
distributions in excess
of net realized gain .... 1,997,489 1,569,179 133,570 199,378
Net unrealized
appreciation
(depreciation)
of investments .......... (2,546,206) 2,790,037 71,040 (1,432,208)
------------ ------------ ------------ -----------
Net Assets ................ $91,390,064 $171,793,535 $60,727,448 $116,611,502
============ ============ ============ ===========
Net Assets:
Class A ................. $90,913,899 $171,469,394 $59,884,068 $115,133,499
Class D ................. $ 476,165 $ 324,141 $ 843,380 $ 1,478,003
Shares of Capital Stock
outstanding ($.001
par value):
Class A ................. 11,852,858 21,713,889 8,059,433 15,121,407
Class D ................. 62,067 40,926 113,555 194,248
Net Asset Value per share:
Class A ................. $7.67 $7.90 $7.43 $7.61
Class D ................. $7.67 $7.92 $7.43 $7.61
</TABLE>
- ------------
See notes to financial statements.
40 & 41
<PAGE>
================================================================================
Statements of Operations
For the year ended September 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
National Colorado Georgia Louisiana Maryland
Series Series Series Series Series
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ...................... $ 7,645,450 $ 3,770,837 $ 3,888,121 $ 4,075,998 $ 3,720,048
------------ ----------- ----------- ----------- -----------
Expenses:
Management fees ............... 621,285 318,834 194,686 330,062 305,335
Shareholder account services .. 159,724 85,316 106,466 89,577 103,480
Distribution and service fees . 105,130 58,185 67,092 66,482 58,807
Custody and related services .. 99,492 26,321 52,095 32,861 33,423
Auditing and legal fees ....... 30,516 33,901 32,180 33,589 33,285
Registration .................. 15,572 3,800 5,390 4,421 5,466
Shareholder reports and
communications .............. 6,621 8,219 9,327 6,314 11,445
Directors' fees and expenses .. 5,800 5,410 5,319 5,311 5,438
Miscellaneous ................. 12,035 6,337 6,025 5,998 6,144
------------ ----------- ----------- ----------- -----------
Total expenses ................ 1,056,175 546,323 478,580 574,615 562,823
------------ ----------- ----------- ----------- -----------
Net investment income ......... 6,589,275 3,224,514 3,409,541 3,501,383 3,157,225
------------ ----------- ----------- ----------- -----------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)
on investments .............. 338,061 (416,365) 840,892 1,087,255 1,412,023
Net change in unrealized
appreciation of
investments ................. (17,056,468) (4,628,524) (7,996,922) (7,149,845) (7,140,388)
------------ ----------- ----------- ----------- -----------
Net loss on investments ....... (16,718,407) (5,044,889) (7,156,030) (6,062,590) (5,728,365)
------------ ----------- ----------- ----------- -----------
Decrease in net assets from
operations .................. ($10,129,132) ($1,820,375) ($3,746,489) ($2,561,207) ($2,571,140)
============ =========== =========== =========== ===========
</TABLE>
================================================================================
Statements of Operations (continued)
For the year ended September 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Massachusetts Michigan Minnesota Missouri
Series Series Series Series
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Interest ...................... $ 8,191,293 $ 9,746,105 $9,187,753 $ 3,264,100
----------- ----------- ----------- -----------
Expenses:
Management fees ............... 648,895 791,875 702,194 201,744
Shareholder account services .. 202,651 228,665 219,966 75,668
Distribution and service fees . 126,045 156,385 141,420 53,218
Custody and related services .. 61,398 71,891 48,074 20,352
Auditing and legal fees ....... 33,576 32,240 37,976 33,691
Registration .................. 8,128 7,753 7,894 7,106
Shareholder reports and
communications .............. 13,912 16,647 18,535 8,071
Directors' fees and expenses .. 5,705 5,934 6,093 5,393
Miscellaneous ................. 12,036 13,905 12,977 5,485
----------- ----------- ----------- -----------
Total expenses ................ 1,112,346 1,325,295 1,195,129 410,728
----------- ----------- ----------- -----------
Net investment income ......... 7,078,947 8,420,810 7,992,624 2,853,372
----------- ----------- ----------- -----------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss)
on investments .............. 1,458,962 1,400,509 252,585 672,212
Net change in unrealized
appreciation of
investments ................. (12,499,475) (14,509,279) (8,005,539) (6,217,058)
----------- ----------- ----------- -----------
Net loss on investments ....... (11,040,513) (13,108,770) (7,752,954) (5,544,846)
----------- ----------- ----------- -----------
Decrease in net assets from
operations .................. ($3,961,566) ($4,687,960) $ 239,670 ($2,691,474)
=========== =========== =========== ===========
</TABLE>
================================================================================
Statements of Operations (continued)
For the year ended September 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Ohio Oregon Carolina
Series Series Series Series
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Interest $ 6,075,554 $11,225,745 $ 3,686,394 $ 7,267,701
----------- ----------- ----------- -----------
Expenses:
Management fees 491,715 909,119 241,140 611,278
Shareholder account services 131,623 263,473 93,222 161,188
Distribution and service fees 76,102 178,045 62,609 124,264
Custody and related services 92,669 90,868 27,810 51,953
Auditing and legal fees 30,516 32,499 34,082 31,716
Registration 5,976 7,125 5,483 8,051
Shareholder reports and
communications 13,898 18,397 6,400 13,098
Directors' fees and expenses 5,557 6,053 5,411 5,562
Miscellaneous 9,595 15,766 6,023 9,851
----------- ----------- ----------- -----------
Total expenses 857,651 1,521,345 482,180 1,016,961
----------- ----------- ----------- -----------
Net investment income 5,217,903 9,704,400 3,204,214 6,250,740
----------- ----------- ----------- -----------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments 1,999,229 1,864,934 636,094 203,935
Net change in unrealized
appreciation of investments (12,683,003) (17,335,724) (5,354,310) (12,270,797)
----------- ----------- ----------- -----------
Net loss on investments (10,683,774) (15,470,790) (4,718,216) (12,066,862)
----------- ----------- ----------- -----------
Decrease in net assets from
operations ($5,465,871) ($5,766,390) ($1,514,002) ($5,816,122)
=========== =========== =========== ===========
</TABLE>
- ------------
See notes to financial statements.
42 & 43
<PAGE>
================================================================================
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
National Series Colorado Series
-------------------------------- --------------------------------
Year ended September 30 Year ended September 30
-------------------------------- --------------------------------
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........... $ 6,589,275 $ 7,269,215 $ 3,224,514 $ 3,419,581
Net realized gain (loss)
on investments ................ 338,061 7,290,633 (416,365) 519,984
Net change in unrealized
appreciation of investments ... (17,056,468) 5,212,020 (4,628,524) 3,843,313
-------------- -------------- -------------- --------------
Increase (decrease) in
net assets from operations .... (10,129,132) 19,771,868 (1,820,375) 7,782,878
-------------- -------------- -------------- --------------
Distributions to shareholders:
Net investment income:
Class A ....................... (6,579,351) (7,269,215) (3,221,107) (3,419,581)
Class D ....................... (9,924) -- (3,407) --
Net realized gain
on investments--Class A ....... (7,771,486) (2,057,449) (691,165) (648,882)
-------------- -------------- -------------- --------------
Decrease in net assets
from distributions ............ (14,360,761) (9,326,664) (3,915,679) (4,068,463)
-------------- -------------- -------------- --------------
Capital share transactions:*
Net proceeds from sale of
shares:
Class A ....................... 5,971,737 7,812,752 2,002,652 3,858,298
Class D ....................... 465,769 -- 295,950 --
Net asset value of shares
issued in payment of dividends:
Class A ....................... 3,400,031 3,701,543 1,836,135 1,941,391
Class D ....................... 8,413 -- 3,032 --
Exchanged from associated Funds:
Class A ....................... 2,002,989 2,900,790 328,418 705,781
Class D ....................... -- -- -- --
Net asset value of shares
issued in payment of
gain distribution--Class A .... 5,686,643 1,511,088 481,882 457,273
-------------- -------------- -------------- --------------
Total ........................... 17,535,582 15,926,173 4,948,069 6,962,743
-------------- -------------- -------------- --------------
Cost of shares repurchased:
Class A ....................... (14,947,349) (17,897,802) (8,307,267) (7,220,146)
Class D ....................... -- -- (197,843) --
Exchanged into associated Funds:
Class A ....................... (2,671,622) (4,209,515) (325,316) (445,715)
Class D ....................... -- -- -- --
-------------- -------------- -------------- --------------
Total ........................... (17,618,971) (22,107,317) (8,830,426) (7,665,861)
-------------- -------------- -------------- --------------
Increase (decrease)
in net assets from
capital share transactions ...... (83,389) (6,181,144) (3,882,357) (703,118)
-------------- -------------- -------------- --------------
Increase (decrease)
in net assets ................. (24,573,282) 4,264,060 (9,618,411) 3,011,297
Net Assets:
Beginning of year ............... 136,393,598 132,129,538 67,911,686 64,900,389
-------------- -------------- -------------- --------------
End of year ..................... $ 111,820,316 $ 136,393,598 $ 58,293,275 $ 67,911,686
============== ============== ============== ==============
</TABLE>
================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Georgia Series Louisiana Series
------------------------------ ------------------------------
Year ended September 30 Year ended September 30
------------------------------ ------------------------------
1994 1993 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........... $ 3,409,541 $ 2,875,568 $ 3,501,383 $ 3,353,877
Net realized gain (loss)
on investments ................ 840,892 692,811 1,087,255 647,284
Net change in unrealized
appreciation of investments ... (7,996,922) 3,673,217 (7,149,845) 3,110,260
------------- ------------- ------------- -------------
Increase (decrease) in
net assets from operations .... (3,746,489) 7,241,596 (2,561,207) 7,111,421
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ....................... (3,394,688) (2,875,568) (3,489,832) (3,353,877)
Class D ....................... (14,853) -- (11,551) --
Net realized gain
on investments--Class A ....... (697,275) (235,976) (651,148) (694,644)
------------- ------------- ------------- -------------
Decrease in net assets
from distributions ............ (4,106,816) (3,111,544) (4,152,531) (4,048,521)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale
of shares:
Class A ....................... 10,507,635 21,051,172 4,332,380 7,983,823
Class D ....................... 807,930 -- 731,696 --
Net asset value of shares
issued in payment of dividends:
Class A ....................... 2,149,255 1,787,616 1,990,579 2,019,913
Class D ....................... 12,508 -- 8,499 --
Exchanged from associated Funds:
Class A ....................... 388,188 26,976 152,113 232,234
Class D ....................... 67,560 -- -- --
Net asset value of shares
issued in payment of
gain distribution--Class A .... 523,446 174,639 465,656 498,541
------------- ------------- ------------- -------------
Total ........................... 14,456,522 23,040,403 7,680,923 10,734,511
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ....................... (8,509,637) (6,538,659) (5,898,457) (4,078,686)
Class D ....................... (6,557) -- (8,369) --
Exchanged into associated Funds:
Class A ....................... (421,723) (567,180) (443,843) (120,286)
Class D ....................... -- -- -- --
------------- ------------- ------------- -------------
Total ........................... (8,937,917) (7,105,839) (6,350,669) (4,198,972)
------------- ------------- ------------- -------------
Increase (decrease)
in net assets from
capital share transactions .... 5,518,605 15,934,564 1,330,254 6,535,539
------------- ------------- ------------- -------------
Increase (decrease) in
net assets .................... (2,334,700) 20,064,616 (5,383,484) 9,598,439
Net Assets:
Beginning of year ............... 64,649,906 44,585,290 67,529,300 57,930,861
------------- ------------- ------------- -------------
End of year ..................... $ 62,315,206 $ 64,649,906 $ 62,145,816 $ 67,529,300
============= ============= ============= =============
</TABLE>
================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maryland Series Massachusetts Series
------------------------------ ------------------------------
Year ended September 30 Year ended September 30
------------------------------ ------------------------------
1994 1993 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income .......... $ 3,157,225 $ 3,190,231 $ 7,078,947 $ 7,512,052
Net realized gain (loss)
on investments ............... 1,412,023 880,445 1,458,962 2,370,469
Net change in unrealized
appreciation of investments .. (7,140,388) 3,532,333 (12,499,475) 6,546,648
------------- ------------- ------------- -------------
Increase (decrease) in
net assets from operations ... (2,571,140) 7,603,009 (3,961,566) 16,429,169
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ...................... (3,152,145) (3,190,231) (7,052,050) (7,512,052)
Class D ...................... (5,080) -- (26,897) --
Net realized gain
on investments--Class A ...... (1,301,057) (732,294) (3,330,375) (1,157,662)
------------- ------------- ------------- -------------
Decrease in net assets
from distributions ........... (4,458,282) (3,922,525) (10,409,322) (8,669,714)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale
of shares:
Class A ...................... 3,212,373 4,100,009 3,798,317 7,395,265
Class D ...................... 379,503 -- 1,106,567 --
Net asset value of shares
issued in payment
of dividends:
Class A ...................... 1,805,934 1,817,324 4,060,575 4,359,481
Class D ...................... 2,594 -- 22,729 --
Exchanged from associated Funds:
Class A ...................... 291,207 720,421 896,517 414,633
Class D ...................... 58,087 -- 37,901 --
Net asset value of shares
issued in payment of
gain distribution--Class A ... 941,569 531,392 2,447,863 860,702
------------- ------------- ------------- -------------
Total .......................... 6,691,267 7,169,146 12,370,469 13,030,081
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ...................... (5,782,224) (3,001,419) (14,268,282) (9,078,648)
Class D ...................... (7,091) -- (4,051) --
Exchanged into associated Funds:
Class A ...................... (656,915) (583,830) (1,982,187) (541,640)
Class D ...................... -- -- -- --
------------- ------------- ------------- -------------
Total .......................... (6,446,230) (3,585,249) (16,254,520) (9,620,288)
------------- ------------- ------------- -------------
Increase (decrease)
in net assets from
capital share transactions ... 245,037 3,583,897 (3,884,051) 3,409,793
------------- ------------- ------------- -------------
Increase (decrease) in
net assets ................... (6,784,385) 7,264,381 (18,254,939) 11,169,248
Net Assets:
Beginning of year .............. 64,471,912 57,207,531 139,503,581 128,334,333
------------- ------------- ------------- -------------
End of year .................... $ 57,687,527 $ 64,471,912 $ 121,248,642 $ 139,503,581
============= ============= ============= =============
</TABLE>
- ------------
* The Fund began offering Class D shares on February 1, 1994.
See notes to financial statements.
44 & 45
<PAGE>
================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Michigan Series Minnesota Series
----------------------------- -----------------------------
Year ended September 30 Year ended September 30
----------------------------- -----------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ....... $ 8,420,810 $ 8,301,150 $ 7,992,624 $ 8,541,705
Net realized gain (loss)
on investments ............ 1,400,509 976,912 252,585 2,069,895
Net change in unrealized
appreciation of investments (14,509,279) 9,520,922 (8,005,539) 7,035,266
------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations .... (4,687,960) 18,798,984 239,670 17,646,866
------------ ------------ ------------ ------------
Distributions to shareholders:
Net investment income:
Class A. .................. (8,409,762) (8,301,150) (7,964,073) (8,541,705)
Class D ................... (11,048) -- (28,551) --
Net realized gain on
investments--Class A. ..... (1,589,823) (3,201,230) (2,074,841) (2,320,128)
------------ ------------ ------------ ------------
Decrease in net assets
from distributions ........ (10,010,633) (11,502,380) (10,067,465) (10,861,833)
------------ ------------ ------------ ------------
Capital share transactions:*
Net proceeds from sale
of shares:
Class A ................... 10,111,077 16,483,549 5,208,522 7,549,251
Class D ................... 673,043 -- 1,717,093 --
Net asset value of shares
issued in payment
of dividends:
Class A. .................. 5,154,199 5,070,106 5,433,767 5,967,811
Class D ................... 8,610 -- 16,151 --
Exchanged from associated Funds:
Class A ................... 688,118 759,137 1,460,540 982,605
Class D ................... 21,595 -- -- --
Net asset value of shares
issued in payment of
gain distribution--Class A 1,189,231 2,341,608 1,651,286 1,821,004
------------ ------------ ------------ ------------
Total ..................... 17,845,873 24,654,400 15,487,359 16,320,671
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A. .................. (14,462,042) (10,508,263) (11,789,824) (28,812,953)
Class D ................... (15,255) -- (51,319) --
Exchanged into associated Funds:
Class A. .................. (1,542,287) (1,329,146) (1,779,118) (1,615,306)
Class D ................... -- -- -- --
------------ ------------ ------------ ------------
Total ..................... (16,019,584) (11,837,409) (13,620,261) (30,428,259)
------------ ------------ ------------ ------------
Increase (decrease)
in net assets from
capital share transactions 1,826,289 12,816,991 1,867,098 (14,107,588)
------------ ------------ ------------ ------------
Increase (decrease)
in net assets ............. (12,872,304) 20,113,595 (7,960,697) (7,322,555)
Net Assets:
Beginning of year ........... 164,637,860 144,524,265 144,599,527 151,922,082
------------ ------------ ------------ ------------
End of year ................. $151,765,556 $164,637,860 $136,638,830 $144,599,527
============ ============ ============ ============
</TABLE>
================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Missouri Series New York Series
-------------------------------- --------------------------------
Year ended September 30 Year ended September 30
-------------------------------- --------------------------------
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net investment income .......... $ 2,853,372 $ 2,774,514 $ 5,217,903 $ 5,296,464
Net realized gain (loss)
on investments ............... 672,212 610,509 1,999,229 2,403,699
Net change in unrealized
appreciation of investments .. (6,217,058) 3,121,191 (12,683,003) 6,339,726
-------------- -------------- -------------- --------------
Increase (decrease) in
net assets from operations ... (2,691,474) 6,506,214 (5,465,871) 14,039,889
-------------- -------------- -------------- --------------
Distributions to shareholders:
Net investment income:
Class A ...................... (2,843,798) (2,774,514) (5,208,022) (5,296,464)
Class D ...................... (9,574) -- (9,881) --
Net realized gain
o n investments--Class A ...... (749,354) (363,462) (2,401,063) (1,346,620)
-------------- -------------- -------------- --------------
Decrease in net assets
from distributions ........... (3,602,726) (3,137,976) (7,618,966) (6,643,084)
-------------- -------------- -------------- --------------
Capital share transactions:*
Net proceeds from sale
of shares:
Class A ...................... 3,402,151 5,575,439 5,317,038 11,458,599
Class D ...................... 489,521 -- 491,124 --
Net asset value of shares
issued in payment
of dividends:
Class A ...................... 1,500,294 1,448,713 2,808,015 2,930,090
Class D ...................... 899 -- 7,955 --
Exchanged from associated Funds:
Class A ...................... 733,086 255,132 716,645 2,235,659
Class D ...................... 17,699 -- -- --
Net asset value of shares
issued in payment of
gain distribution--Class A ... 498,507 232,927 1,930,880 1,088,110
-------------- -------------- -------------- --------------
Total .......................... 6,642,157 7,512,211 11,271,657 17,712,458
-------------- -------------- -------------- --------------
Cost of shares repurchased:
Class A ...................... (3,359,520) (3,333,230) (9,315,602)
Class D ...................... (136,335) -- -- --
Exchanged into associated Funds:
Class A ...................... (741,558) (145,822) (2,166,255) (2,589,888)
Class D ...................... -- -- -- --
-------------- -------------- -------------- --------------
Total .......................... (4,237,413) (3,479,052) (11,481,857)
-------------- -------------- -------------- --------------
Increase (decrease)
in net assets from
capital share transactions ... 2,404,744 4,033,159 (210,200) 4,607,754
-------------- -------------- -------------- --------------
Increase (decrease) in
net assets ................... (3,889,456) 7,401,397 (13,295,037) 12,004,559
Net Assets:
Beginning of year .............. 56,860,568 49,459,171 104,685,101 92,680,542
-------------- -------------- -------------- --------------
End of year .................... $ 52,971,112 $ 56,860,568 $ 91,390,064 $ 104,685,101
============== ============== ============== ==============
</TABLE>
================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ohio Series Oregon Series
-------------------------------- --------------------------------
Year ended September 30 Year ended September 30
-------------------------------- --------------------------------
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net investment income .......... $ 9,704,400 $ 9,731,226 $ 3,204,214 $ 2,916,291
Net realized gain (loss)
on investments ............... 1,864,934 4,643,538 636,094 93,262
Net change in unrealized
appreciation of investments .. (17,335,724) 7,330,031 (5,354,310) 3,307,240
-------------- -------------- -------------- --------------
Increase (decrease) in
net assets from operations ... (5,766,390) 21,704,795 (1,514,002) 6,316,793
-------------- -------------- -------------- --------------
Distributions to shareholders:
Net investment income:
Class A ...................... (9,697,970) (9,731,226) (3,193,582) (2,916,291)
Class D ...................... (6,430) -- (10,632) --
Net realized gain
on investments--Class A ...... (3,703,561) (1,404,634) (494,099) --
-------------- -------------- -------------- --------------
Decrease in net assets
from distributions ........... (13,407,961) (11,135,860) (3,698,313) (2,916,291)
-------------- -------------- -------------- --------------
Capital share transactions:*
Net proceeds from sale
of shares:
Class A ...................... 9,557,949 14,217,122 7,552,039 13,844,761
Class D ...................... 328,208 -- 896,846 --
Net asset value of shares
issued in payment
of dividends:
Class A ...................... 6,102,997 6,179,201 2,003,359 1,812,298
Class D ...................... 5,793 -- 7,973 --
Exchanged from associated Funds:
Class A ...................... 720,509 1,611,870 437,837 265,817
Class D ...................... -- -- -- --
Net asset value of shares
issued in payment of
gain distribution--Class A ... 2,815,286 1,041,605 372,237 --
-------------- -------------- -------------- --------------
Total .......................... 19,530,742 23,049,798 11,270,291 15,922,876
-------------- -------------- -------------- --------------
Cost of shares repurchased:
Class A ...................... (16,355,416) (10,857,115) (6,282,450) (5,533,614)
Class D ...................... -- -- (40,414) --
Exchanged into associated Funds:
Class A ...................... (2,290,059) (3,105,535) (1,100,956) (491,712)
Class D ...................... -- -- (2,000) --
-------------- -------------- -------------- --------------
Total .......................... (18,645,475) (13,962,650) (7,425,820) (6,025,326)
-------------- -------------- -------------- --------------
Increase (decrease)
in net assets from
capital share transactions ..... 885,267 9,087,148 3,844,471 9,897,550
-------------- -------------- -------------- --------------
Increase (decrease) in
net assetss .................. (18,289,084) 19,656,083 (1,367,844) 13,298,052
Net Assets:
Beginning of year .............. 190,082,619 170,426,536 62,095,292 48,797,240
-------------- -------------- -------------- --------------
End of year .................... $ 171,793,535 $ 190,082,619 $ 60,727,448 $ 62,095,292
============== ============== ============== ==============
</TABLE>
46 & 47
<PAGE>
================================================================================
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
South Carolina Series
--------------------------------
Year ended September 30
--------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Operations:
Net investment income .......... $ 6,250,740 $ 5,153,043
Net realized gain (loss)
on investments ............... 203,935 1,797,467
Net change in unrealized
appreciation of investments .. (12,270,797) 4,988,831
-------------- --------------
Increase (decrease)
in net assets
from operations .............. (5,816,122) 11,939,341
-------------- --------------
Distributions to shareholders:
Net investment income:
Class A ...................... (6,222,624) (5,153,043)
Class D ...................... (28,116) --
Net realized gain
on investments--Class A ...... (1,795,272) (211,369)
-------------- --------------
Decrease in net assets
from distributions ........... (8,046,012) (5,364,412)
-------------- --------------
Capital share transactions:*
Net proceeds from sale
of shares:
Class A ...................... 21,175,039 38,016,745
Class D ...................... 1,541,603 --
Net asset value of shares
issued in payment
of dividends:
Class A ...................... 3,661,681 3,211,090
Class D ...................... 21,347 --
Exchanged from associated Funds:
Class A ...................... 221,817 518,340
Class D ...................... 46,010 --
Net asset value of shares
issued in payment of
gain distributions--Class A .. 1,363,300 158,521
-------------- --------------
Total ........................ 28,030,797 41,904,696
-------------- --------------
Cost of shares repurchased:
Class A ...................... (16,114,470) (10,150,233)
Class D ...................... (66,265) --
Exchanged into associated Funds:
Class A ...................... (1,961,069) (622,504)
Class D ...................... (4,000) --
-------------- --------------
Total ........................ (18,145,804) (10,772,737)
-------------- --------------
Increase (decrease)
in net assets from
capital share transactions ... 9,884,993 31,131,959
-------------- --------------
Increase (decrease)
in net assets ................ (3,977,141) 37,706,888
Net Assets:
Beginning of year .............. 120,588,643 82,881,755
-------------- --------------
End of year .................... $ 116,611,502 $ 120,588,643
============== ==============
</TABLE>
- ------------
* The Fund began offering Class D shares on February 1, 1994.
See notes to financial statements.
48
<PAGE>
===============================================================================
Notes to Financial Statements
- -------------------------------------------------------------------------------
1. Seligman Tax-Exempt Fund Series, Inc. (the "Fund") consists of 13 separate
series: the "National Series," the "Colorado Series," the "Georgia Series," the
"Louisiana Series," the "Maryland Series," the "Massachusetts Series," the
"Michigan Series," the "Minnesota Series," the "Missouri Series," the "New York
Series," the "Ohio Series," the "Oregon Series," and the "South Carolina
Series." Effective February 1, 1994, the Fund began offering two classes of
shares of each Series. All shares existing prior to February 1, 1994, have been
classified as Class A shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class D shares are sold without an initial sales charge but are subject
to a higher distribution fee and contingent deferred sales load ("CDSL") of 1%
imposed on certain redemptions made within one year of purchase. The two classes
of shares represent interests in the same portfolio of investments, have the
same rights and are generally identical in all respects except that each class
bears its separate distribution and certain class expenses and has exclusive
voting rights with respect to any matter to which a separate vote of any class
is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. All tax-exempt securities and other short-term holdings maturing in more
than 60 days are valued based upon quotations provided by an independent
pricing service or, in their absence, at fair value determined in
accordance with procedures approved by the Board of Directors. Short-term
holdings maturing in 60 days or less are generally valued at amortized
cost.
b. There is no provision for federal income or excise tax. Each Series has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
Dividends are declared daily and paid monthly.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income
tax purposes. Interest income is recorded on the accrual basis. The Fund
amortizes original issue discounts and premiums paid on purchases of
portfolio securities. Discounts other then original issue discounts are not
amortized.
d. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares
based upon the relative proportion of the value of settled shares
outstanding of each class. Class-specific expenses, which include
distribution and service fees and any other items that can be specifically
attributed to a particular class, are charged directly to such class.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gains may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, and capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset
value per share of the Fund. At September 30, 1994, realized capital gains
for federal tax purposes exceeded realized capital gains for financial
statement purposes for the National and Colorado Series by $151,539 and
$586,888, respectively.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1994, were as follows:
Series Purchases Sales
- ----------------- ------------ ------------
National $ 30,666,538 $ 38,078,531
Colorado 6,084,130 9,866,591
Georgia 17,152,410 12,426,839
Louisiana 14,681,560 11,207,532
Maryland 10,602,683 12,230,638
Massachusetts 15,761,277 23,776,107
Michigan 16,656,908 15,574,722
Minnesota 4,489,245 4,845,601
Missouri 7,616,430 7,750,530
New York 27,412,390 30,412,079
Ohio 16,713,882 17,278,477
Oregon 9,105,610 5,577,962
South Carolina 12,652,627 2,135,622
49
<PAGE>
===============================================================================
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
At September 30, 1994, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio securities
were as follows:
Total Total
Unrealized Unrealized
Series Appreciation Depreciation
- ----------------- ------------ ------------
National $ 1,045,559 $10,306,132
Colorado 1,771,175 1,713,987
Georgia 1,116,658 3,266,687
Louisiana 2,333,123 2,555,490
Maryland 1,498,331 2,127,277
Massachusetts 4,503,225 3,929,037
Michigan 6,017,834 2,702,075
Minnesota 8,285,625 3,153,785
Missouri 1,923,431 2,241,566
New York 1,505,951 4,052,157
Ohio 7,524,017 4,733,980
Oregon 1,591,480 1,520,440
South Carolina 4,051,413 5,483,621
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. The Manager's fee is calculated daily and payable monthly,
equal to 0.50% per annum of each Series' average daily net assets. For the year
ended September 30, 1994, the Manager, at its discretion, waived portions of its
fee for the Georgia, Missouri, and Oregon Series, equal to $132,626, $74,095,
and $66,201, respectively. The management fees reflected in the Statements of
Operations for the Georgia, Missouri, and Oregon Series represent 0.30%, 0.36%,
and 0.39%, respectively, of the average net assets of the Series.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of each Series' shares and an affiliate of the Manager, received
the following commissions after concessions were paid to dealers for the sale of
Class A shares:
Seligman
Financial Services' Dealer
Series Commissions Concessions
- ----------------- ----------- -----------
National $ 19,575 $143,977
Colorado 9,703 71,208
Georgia 50,838 376,174
Louisiana 16,250 123,857
Maryland 13,558 104,817
Massachusetts 17,927 136,115
Michigan 47,057 353,939
Minnesota 25,673 197,561
Missouri 15,167 114,971
New York 11,191 85,746
Ohio 41,962 312,461
Oregon 35,873 273,141
South Carolina 68,528 518,381
Effective January 1, 1993, the Fund adopted an Administration, Shareholder
Services and Distribution Plan (the "Plan") with respect to Class A shares under
which service organizations can enter into agreements with the Distributor and
receive continuing fees of up to 0.25% on an annual basis, payable quarterly, of
the average daily net assets of the Class A shares attribut-able to the
particular service organizations for providing personal services and/or the
maintenance of shareholder accounts. The Distributor charged such fees to the
Fund pursuant to the Plan as follows:
Total Fees % of Average
Series Paid Net Assets
- ----------------- -------- ----------
National $102,915 .08%
Colorado 57,365 .09
Georgia 63,701 .10
Louisiana 63,910 .10
Maryland 57,640 .09
Massachusetts 120,238 .09
Michigan 153,947 .10
Minnesota 135,539 .10
Missouri 51,017 .09
New York 73,911 .08
Ohio 176,625 .10
Oregon 60,201 .10
South Carolina 117,839 .10
50
<PAGE>
===============================================================================
- -------------------------------------------------------------------------------
Effective February 1, 1994, the Fund adopted a Plan with respect to Class D
shares under which service organizations can enter into agreements with the
Distributor and receive continuing fees for providing personal services and/or
the maintenance of shareholder accounts of up to 0.25% on a annual basis of the
average daily net assets of the Class D shares for which the organizations are
responsible, and fees for providing other distribution assistance of up to 0.75%
on an annual basis of such average daily net assets. Such fees are paid monthly
by the Fund to the Distributor pursuant to the Plan. For the period February 1,
1994 to September 30, 1994, fees paid equivalent to 1% per annum of the average
daily net assets of Class D shares were as follows:
Series
- -----------------
National $2,215
Colorado 820
Georgia 3,391
Louisiana 2,572
Maryland 1,167
Massachusetts 5,807
Michigan 2,438
Minnesota 5,881
Missouri 2,201
New York 2,191
Ohio 1,420
Oregon 2,408
South Carolina 6,425
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For
the period February 1, 1994 to September 30, 1994, such charges were as
follows:
Series
- -----------------
Colorado $1,960
Georgia 49
Louisiana 84
Maryland 70
Massachusetts 40
Michigan 148
Minnesota 508
Missouri 1,363
Oregon 289
South Carolina 202
Seligman Data Corp., formerly Union Data Service Center, Inc., which is owned by
certain associated investment companies, charged at cost for shareholder account
services the following amounts:
Series
- -----------------
National $159,724
Colorado 85,316
Georgia 106,466
Louisiana 89,577
Maryland 103,480
Massachusetts 202,651
Michigan 228,665
Minnesota 219,966
Missouri 75,668
New York 131,623
Ohio 263,473
Oregon 93,222
South Carolina 161,188
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, and/or Seligman Data Corp.
Fees of $62,000 were incurred by the Fund for the legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation agreement under which directors who receive fees may
elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at September 30, 1994, is
shown as deferred directors' fees payable.
51
<PAGE>
===============================================================================
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
5.Class-specific expenses charged to Class A and Class D shares for the year
ended September 30, 1994, which are included in the corresponding captions of
the Statements of Operations, were as follows:
Distribution Shareholder
and reports and
Series service fees Registration communications
- ------------ ------------ ------------ --------------
National:
Class A $102,915 $10,687 $4,052
Class D 2,215 116 13
Colorado:
Class A 57,365 1,785 2,544
Class D 820 41 3
Georgia:
Class A 63,701 3,677 2,072
Class D 3,391 161 12
Louisiana:
Class A 63,910 2,933 1,641
Class D 2,572 128 2
Maryland:
Class A 57,640 3,552 2,536
Class D 1,167 57 13
Massachusetts:
Class A 120,238 4,694 4,412
Class D 5,807 290 10
Michigan:
Class A 153,947 4,060 5,768
Class D 2,438 117 18
Minnesota:
Class A 135,539 3,450 6,724
Class D 5,881 279 24
Missouri:
Class A 51,017 5,165 2,418
Class D 2,201 112 7
New York:
Class A 73,911 3,872 2,814
Class D 2,191 108 9
Ohio:
Class A 176,625 3,315 6,501
Class D 1,420 67 9
Oregon:
Class A 60,201 2,513 2,592
Class D 2,408 113 21
South Carolina:
Class A 117,839 7,027 3,855
Class D 6,425 305 6
52
<PAGE>
===============================================================================
- -------------------------------------------------------------------------------
6.At September 30, 1994, 40,000,000 shares each were authorized for the National
and Missouri Series; 30,000,000 shares each for the Massachusetts, Michigan,
Minnesota, and Ohio Series; 25,000,000 shares for the Colorado Series; and
20,000,000 shares each for the Georgia, Louisiana, Maryland, New York, Oregon,
and South Carolina Series, all at a par value of $.001 per share.
<TABLE>
<CAPTION>
National Series Colorado Series Georgia Series
----------------------- ----------------------- ------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
----------------------- ----------------------- ------------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ................... 764,281 949,795 268,474 515,132 1,300,888 2,621,025
Class D ................... 60,983 -- 40,581 -- 104,340 --
Shares issued in
payment of dividends:
Class A ................... 438,686 447,418 247,700 259,213 272,060 222,064
Class D ................... 1,137 -- 420 -- 1,633 --
Exchanged from
associated Funds:
Class A ................... 259,262 355,188 42,669 94,152 48,335 3,426
Class D ................... -- -- -- -- 8,316 --
Shares issued in
payment of gain
distributions--Class A .... 706,415 191,519 63,489 63,072 63,913 22,447
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... 2,230,764 1,943,920 663,333 931,569 1,799,485 2,868,962
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ................... (1,943,600) (2,166,170) (1,126,423) (964,226) (1,083,796) (809,605)
Class D ................... -- -- (27,460) -- (861) --
Exchanged into
associated Funds:
Class A ................... (345,902) (513,830) (43,792) (59,964) (54,072) (70,580)
Class D ................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... (2,289,502) (2,680,000) (1,197,675) (1,024,190) (1,138,729) (880,185)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease)
in shares ................. (58,738) (736,080) (534,342) (92,621) 660,756 1,988,777
========== ========== ========== ========== ========== ==========
</TABLE>
53
<PAGE>
===============================================================================
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Louisiana Series Maryland Series Massachusetts Series
----------------------- ----------------------- ------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
----------------------- ----------------------- ------------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ................... 511,859 943,369 397,002 495,603 472,153 898,096
Class D ................... 88,738 -- 48,184 -- 136,211 --
Shares issued in
payment of dividends:
Class A ................... 238,291 237,698 222,712 219,279 506,326 529,692
Class D ................... 1,050 -- 330 -- 2,911 --
Exchanged from
associated Funds:
Class A ................... 18,733 27,705 35,901 88,942 111,424 50,002
Class D ................... -- -- 7,334 -- 4,948 --
Shares issued in
payment of gain
distributions--Class A .... 54,209 60,429 113,033 66,424 297,793 107,993
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... 912,880 1,269,201 824,496 870,248 1,531,766 1,585,783
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ................... (712,918) (484,935) (720,685) (361,438) (1,783,099) (1,104,613)
Class D ................... (1,054) -- (901) -- (516) --
Exchanged into
associated Funds:
Class A ................... (54,301) (14,005) (83,511) (70,545) (247,705) (65,403)
Class D ................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... (768,273) (498,940) (805,097) (431,983) (2,031,320) (1,170,016)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease)
in shares ................. 144,607 770,261 19,399 438,265 (499,554) 415,767
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Michigan Series Minnesota Series Missouri Series
----------------------- ----------------------- ------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
----------------------- ----------------------- ------------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ................... 1,164,238 1,881,972 649,224 946,956 432,301 698,171
Class D ................... 79,168 -- 217,891 -- 63,051 --
Shares issued in
payment of dividends:
Class A ................... 595,784 578,380 681,934 749,009 192,135 181,412
Class D ................... 1,022 -- 2,070 -- 119 --
Exchanged from
associated Funds:
Class A ................... 78,106 87,816 181,367 123,480 95,722 31,765
Class D ................... 2,579 -- -- -- 2,376 --
Shares issued in
payment of gain
distributions--Class A .... 133,922 276,459 203,361 234,968 61,773 30,133
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... 2,054,819 2,824,627 1,935,847 2,054,413 847,477 941,481
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ................... (1,673,481) (1,197,223) (1,478,662) (3,630,604) (432,021) (418,311)
Class D ................... (1,801) -- (6,565) -- (18,300) --
Exchanged into
associated Funds:
Class A ................... (176,197) (152,214) (223,599) (202,196) (96,265) (18,535)
Class D ................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... (1,851,479) (1,349,437) (1,708,826) (3,832,800) (546,586) (436,846)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease)
in shares ................. 203,340 1,475,190 227,021 (1,778,387) 300,891 504,635
========== ========== ========== ========== ========== ==========
</TABLE>
54
<PAGE>
===============================================================================
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Series Ohio Series Oregon Series
----------------------- ----------------------- ------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
----------------------- ----------------------- ------------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ................... 644,155 1,372,502 1,140,889 1,686,630 973,723 1,770,692
Class D ................... 61,053 -- 40,208 -- 118,176 --
Shares issued in
payment of dividends:
Class A ................... 345,368 350,840 738,057 732,932 258,985 232,068
Class D ................... 1,014 -- 718 -- 1,057 --
Exchanged from
associated Funds:
Class A ................... 89,847 273,633 86,706 192,626 56,640 33,804
Class D ................... -- -- -- -- -- --
Shares issued in
payment of gain
distributions--Class A .... 230,141 136,184 332,776 127,648 47,000 --
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... 1,371,578 2,133,159 2,339,354 2,739,836 1,455,581 2,036,564
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ................... (1,153,513) (1,257,609) (1,984,770) (1,287,898) (814,995) (709,864)
Class D ................... -- -- -- -- (5,414) --
Exchanged into
associated Funds:
Class A ................... (264,593) (309,975) (276,088) (368,114) (143,668) (62,206)
Class D ................... -- -- -- -- (264) --
---------- ---------- ---------- ---------- ---------- ----------
Total ....................... (1,418,106) (1,567,584) (2,260,858) (1,656,012) (964,341) (772,070)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease)
in shares ................. (46,528) 565,575 78,496 1,083,824 491,240 1,264,494
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
South Carolina Series
-----------------------
Year ended
September 30
-----------------------
1994 1993
---------- ----------
<S> <C> <C>
Sale of shares:
Class A ................... 2,596,435 4,631,206
Class D ................... 194,659 --
Shares issued in
payment of dividends:
Class A ................... 455,988 391,455
Class D ................... 2,743 --
Exchanged from
associated Funds:
Class A ................... 27,515 63,043
Class D ................... 5,929 --
Shares issued in
payment of gain
distributions--Class A .... 164,253 19,965
---------- ----------
Total ....................... 3,447,522 5,105,669
---------- ----------
Shares repurchased:
Class A ................... (2,031,384) (1,235,432)
Class D ................... (8,567) --
Exchanged into
associated Funds:
Class A ................... (249,202) (76,136)
Class D ................... (516) --
---------- ----------
Total ....................... (2,289,669) (1,311,568)
---------- ----------
Increase in shares .......... 1,157,853 3,794,101
========== ==========
</TABLE>
55
<PAGE>
===============================================================================
Financial Highlights
- -------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they may understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item as disclosed in the financial statements
to their equivalent per share amounts using average shares outstanding. The
total return based on net asset value measures the Fund's performance assuming
investors purchased Fund shares at net asset value as of the beginning of the
period, reinvested dividends and capital gains paid at net asset value, and then
sold their shares at the net asset value per share on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. The total returns for
periods of less than one year are not annualized.
<TABLE>
<CAPTION>
Net Increase
Net Asset Realized & (Decrease)
Value at Net Unrealized from Dividends
Per Share Operating Beginning Investment Investment Investment Paid or
Performance: of Period Income* Gain (Loss) Operations Declared
- ------------------- --------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Class A shares:
National Series
Year ended 9/30/94 $8.72 $0.41 ($1.04) ($0.63) ($0.41)
Year ended 9/30/93 8.07 0.45 0.78 1.23 (0.45)
Year ended 9/30/92 7.90 0.48 0.20 0.68 (0.48)
Year ended 9/30/91 7.44 0.49 0.54 1.03 (0.49)
Year ended 9/30/90 7.73 0.51 (0.19) 0.32 (0.51)
Colorado Series
Year ended 9/30/94 7.76 0.37 (0.59) (0.22) (0.37)
Year ended 9/30/93 7.34 0.39 0.49 0.88 (0.39)
Year ended 9/30/92 7.22 0.42 0.12 0.54 (0.42)
Year ended 9/30/91 6.91 0.44 0.31 0.75 (0.44)
Year ended 9/30/90 7.06 0.46 (0.15) 0.31 (0.46)
Georgia Series
Year ended 9/30/94 8.43 0.41 (0.86) (0.45) (0.41)
Year ended 9/30/93 7.85 0.43 0.62 1.05 (0.43)
Year ended 9/30/92 7.63 0.46 0.25 0.71 (0.46)
Year ended 9/30/91 7.18 0.47 0.46 0.93 (0.47)
Year ended 9/30/90 7.30 0.48 (0.10) 0.38 (0.48)
Louisiana Series
Year ended 9/30/94 8.79 0.44 (0.77) (0.33) (0.44)
Year ended 9/30/93 8.38 0.46 0.51 0.97 (0.46)
Year ended 9/30/92 8.18 0.49 0.24 0.73 (0.49)
Year ended 9/30/91 7.70 0.50 0.50 1.00 (0.50)
Year ended 9/30/90 7.88 0.52 (0.12) 0.40 (0.52)
Maryland Series
Year ended 9/30/94 8.64 0.42 (0.76) (0.34) (0.42)
Year ended 9/30/93 8.15 0.44 0.59 1.03 (0.44)
Year ended 9/30/92 7.94 0.46 0.24 0.70 (0.46)
Year ended 9/30/91 7.45 0.47 0.49 0.96 (0.47)
Year ended 9/30/90 7.59 0.48 (0.14) 0.34 (0.48)
Massachusetts Series
Year ended 9/30/94 8.54 0.44 (0.67) (0.23) (0.44)
Year ended 9/30/93 8.06 0.47 0.55 1.02 (0.47)
Year ended 9/30/92 7.86 0.49 0.24 0.73 (0.49)
Year ended 9/30/91 7.26 0.50 0.62 1.12 (0.50)
Year ended 9/30/90 7.65 0.50 (0.31) 0.19 (0.50)
Michigan Series
Year ended 9/30/94 9.08 0.46 (0.71) (0.25) (0.46)
Year ended 9/30/93 8.68 0.47 0.59 1.06 (0.47)
Year ended 9/30/92 8.38 0.50 0.35 0.85 (0.50)
Year ended 9/30/91 7.89 0.51 0.51 1.02 (0.51)
Year ended 9/30/90 8.14 0.52 (0.16) 0.36 (0.52)
</TABLE>
<TABLE>
<CAPTION>
Distributions Net Increase Net Asset Total Return Ratio of
from (Decrease) in Value at Based on Expenses to
Per Share Operating Net Gain Net Asset End Net Asset Average
Performance: Realized Value of Period Value Net Assets*
- ------------------- ------------- ------------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
National Series
Year ended 9/30/94 ($0.50) ($1.54) $7.18 (7.83)% 0.85%
Year ended 9/30/93 (0.13) 0.65 8.72 16.00 0.86
Year ended 9/30/92 (0.03) 0.17 8.07 8.84 0.77
Year ended 9/30/91 (0.08) 0.46 7.90 14.24 0.80
Year ended 9/30/90 (0.10) (0.29) 7.44 4.10 0.78
Colorado Series
Year ended 9/30/94 (0.08) (0.67) 7.09 (2.92) 0.86
Year ended 9/30/93 (0.07) 0.42 7.76 12.54 0.90
Year ended 9/30/92 -- 0.12 7.34 7.74 0.81
Year ended 9/30/91 -- 0.31 7.22 11.15 0.84
Year ended 9/30/90 -- (0.15) 6.91 4.38 0.85
Georgia Series
Year ended 9/30/94 (0.09) (0.95) 7.48 (5.52) 0.73
Year ended 9/30/93 (0.04) 0.58 8.43 13.96 0.63
Year ended 9/30/92 (0.03) 0.22 7.85 9.64 0.47
Year ended 9/30/91 (0.01) 0.45 7.63 13.30 0.59
Year ended 9/30/90 (0.02) (0.12) 7.18 5.19 0.53
Louisiana Series
Year ended 9/30/94 (0.08) (0.85) 7.94 (3.83) 0.87
Year ended 9/30/93 (0.10) 0.41 8.79 12.10 0.87
Year ended 9/30/92 (0.04) 0.20 8.38 9.13 0.80
Year ended 9/30/91 (0.02) 0.48 8.18 13.49 0.83
Year ended 9/30/90 (0.06) (0.18) 7.70 5.20 0.81
Maryland Series
Year ended 9/30/94 (0.17) (0.93) 7.71 (4.08) 0.92
Year ended 9/30/93 (0.10) 0.49 8.64 13.23 0.97
Year ended 9/30/92 (0.03) 0.21 8.15 9.15 0.86
Year ended 9/30/91 -- 0.49 7.94 13.26 0.88
Year ended 9/30/90 -- (0.14) 7.45 4.47 0.87
Massachusetts Series
Year ended 9/30/94 (0.21) (0.88) 7.66 (2.94) 0.85
Year ended 9/30/93 (0.07) 0.48 8.54 13.18 0.88
Year ended 9/30/92 (0.04) 0.20 8.06 9.75 0.77
Year ended 9/30/91 (0.02) 0.60 7.86 15.84 0.83
Year ended 9/30/90 (0.08) (0.39) 7.26 2.48 0.79
Michigan Series
Year ended 9/30/94 (0.09) (0.80) 8.28 (2.90) 0.84
Year ended 9/30/93 (0.19) 0.40 9.08 12.97 0.83
Year ended 9/30/92 (0.05) 0.30 8.68 10.55 0.76
Year ended 9/30/91 (0.02) 0.49 8.38 13.34 0.80
Year ended 9/30/90 (0.09) (0.25) 7.89 4.57 0.80
</TABLE>
<TABLE>
<CAPTION>
Adjusted
Ratio of Net Adjusted Ratio of
Investment Net Assets Adjusted Net Ratio of Net Investment
Income at End of Investment Expenses to Income
Per Share Operating to Average Portfolio Period Income Average Net to Average
Performance: Net Assets* Turnover (000's omitted) Per Share* Assets* Net Assets*
- ------------------- ------------ --------- --------------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
National Series
Year ended 9/30/94 5.30% 24.86% $111,374
Year ended 9/30/93 5.49 72.68 136,394
Year ended 9/30/92 6.02 63.99 132,130
Year ended 9/30/91 6.35 71.67 136,326
Year ended 9/30/90 6.64 55.01 133,412
Colorado Series
Year ended 9/30/94 5.06 10.07 58,197
Year ended 9/30/93 5.21 14.09 67,912
Year ended 9/30/92 5.81 23.22 64,900
Year ended 9/30/91 6.19 14.60 64,310
Year ended 9/30/90 6.47 31.89 63,173
Georgia Series
Year ended 9/30/94 5.21 19.34 61,466 $0.40 0.93% 5.01%
Year ended 9/30/93 5.34 12.45 64,650 0.40 0.93 5.04
Year ended 9/30/92 5.95 10.24 44,585 0.43 0.87 5.55
Year ended 9/30/91 6.30 6.07 28,317 0.43 1.09 5.80
Year ended 9/30/90 6.53 5.83 19,002 0.44 1.03 6.03
Louisiana Series
Year ended 9/30/94 5.31 17.16 61,441
Year ended 9/30/93 5.40 9.21 67,529
Year ended 9/30/92 5.89 25.45 57,931
Year ended 9/30/91 6.31 20.85 50,089
Year ended 9/30/90 6.62 31.54 43,475
Maryland Series
Year ended 9/30/94 5.17 17.68 57,263
Year ended 9/30/93 5.28 14.10 64,472
Year ended 9/30/92 5.76 29.57 57,208
Year ended 9/30/91 6.09 18.84 54,068
Year ended 9/30/90 6.26 16.50 47,283
Massachusetts Series
Year ended 9/30/94 5.46 12.44 120,149
Year ended 9/30/93 5.65 20.66 139,504
Year ended 9/30/92 6.27 27.92 128,334
Year ended 9/30/91 6.64 14.37 118,022
Year ended 9/30/90 6.66 19.26 110,246
Michigan Series
Year ended 9/30/94 5.32 10.06 151,095
Year ended 9/30/93 5.41 6.33 164,638
Year ended 9/30/92 5.93 32.12 144,524
Year ended 9/30/91 6.28 22.81 129,004
Year ended 9/30/90 6.47 26.36 112,689
</TABLE>
- ------------
See page 58 for footnotes.
See notes to financial statements.
56 & 57
<PAGE>
===============================================================================
Financial Highlights (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Increase
Net Asset Realized & (Decrease)
Value at Net Unrealized from Dividends
Per Share Operating Beginning Investment Investment Investment Paid or
Performance: of Period Income* Gain (Loss) Operations Declared
- ------------------- --------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Minnesota Series
Year ended 9/30/94 $8.28 $0.45 ($0.44) ($0.01) ($0.45)
Year ended 9/30/93 7.89 0.47 0.51 0.98 (0.47)
Year ended 9/30/92 7.81 0.49 0.09 0.58 (0.49)
Year ended 9/30/91 7.49 0.49 0.32 0.81 (0.49)
Year ended 9/30/90 7.60 0.49 (0.06) 0.43 (0.49)
Missouri Series
Year ended 9/30/94 8.31 0.40 (0.79) (0.39) (0.40)
Year ended 9/30/93 7.80 0.42 0.57 0.99 (0.42)
Year ended 9/30/92 7.72 0.44 0.15 0.59 (0.44)
Year ended 9/30/91 7.22 0.46 0.50 0.96 (0.46)
Year ended 9/30/90 7.28 0.45 (0.06) 0.39 (0.45)
New York Series
Year ended 9/30/94 8.75 0.43 (0.88) (0.45) (0.43)
Year ended 9/30/93 8.13 0.45 0.74 1.19 (0.45)
Year ended 9/30/92 7.94 0.49 0.26 0.75 (0.49)
Year ended 9/30/91 7.40 0.50 0.54 1.04 (0.50)
Year ended 9/30/90 7.71 0.51 (0.26) 0.25 (0.51)
Ohio Series
Year ended 9/30/94 8.77 0.44 (0.70) (0.26) (0.44)
Year ended 9/30/93 8.28 0.46 0.56 1.02 (0.46)
Year ended 9/30/92 8.06 0.49 0.26 0.75 (0.49)
Year ended 9/30/91 7.62 0.51 0.45 0.96 (0.51)
Year ended 9/30/90 7.80 0.52 (0.08) 0.44 (0.52)
Oregon Series
Year ended 9/30/94 8.08 0.40 (0.59) (0.19) (0.40)
Year ended 9/30/93 7.60 0.42 0.48 0.90 (0.42)
Year ended 9/30/92 7.42 0.42 0.18 0.60 (0.42)
Year ended 9/30/91 6.96 0.44 0.46 0.90 (0.44)
Year ended 9/30/90 7.05 0.44 (0.09) 0.35 (0.44)
South Carolina Series
Year ended 9/30/94 8.52 0.41 (0.79) (0.38) (0.41)
Year ended 9/30/93 8.00 0.43 0.54 0.97 (0.43)
Year ended 9/30/92 7.71 0.45 0.31 0.76 (0.45)
Year ended 9/30/91 7.23 0.46 0.52 0.98 (0.46)
Year ended 9/30/90 7.37 0.48 (0.14) 0.34 (0.48)
Class D shares:
2/1/94** to 9/30/94
National Series 8.20 0.22 (1.02) (0.80) (0.22)
Colorado Series 7.72 0.20 (0.63) (0.43) (0.20)
Georgia Series 8.33 0.22 (0.84) (0.62) (0.22)
Louisiana Series 8.73 0.24 (0.79) (0.55) (0.24)
Maryland Series 8.46 0.23 (0.74) (0.51) (0.23)
Massachusetts Series 8.33 0.24 (0.67) (0.43) (0.24)
Michigan Series 9.01 0.25 (0.73) (0.48) (0.25)
Minnesota Series 8.22 0.25 (0.49) (0.24) (0.25)
Missouri Series 8.20 0.22 (0.79) (0.57) (0.22)
New York Series 8.55 0.23 (0.88) (0.65) (0.23)
Ohio Series 8.61 0.24 (0.69) (0.45) (0.24)
Oregon Series 8.02 0.22 (0.59) (0.37) (0.22)
South Carolina Series 8.42 0.22 (0.81) (0.59) (0.22)
</TABLE>
<TABLE>
<CAPTION>
Distributions Net Increase Net Asset Total Return Ratio of
from (Decrease) in Value at Based on Expenses to
Per Share Operating Net Gain Net Asset End Net Asset Average
Performance: Realized Value of Period Value Net Assets*
- ------------------- ------------- ------------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Minnesota Series
Year ended 9/30/94 ($0.12) ($0.56) $7.72 0.12% 0.85%
Year ended 9/30/93 (0.12) 0.39 8.28 13.06 0.90
Year ended 9/30/92 (0.01) 0.08 7.89 7.71 0.80
Year ended 9/30/91 -- 0.32 7.81 11.10 0.80
Year ended 9/30/90 (0.05) (0.11) 7.49 5.79 0.81
Missouri Series
Year ended 9/30/94 (0.11) (0.90) 7.41 (4.85) 0.74
Year ended 9/30/93 (0.06) 0.51 8.31 13.17 0.71
Year ended 9/30/92 (0.07) 0.08 7.80 7.87 0.83
Year ended 9/30/91 -- 0.50 7.72 13.61 0.88
Year ended 9/30/90 -- (0.06) 7.22 5.47 0.84
New York Series
Year ended 9/30/94 (0.20) (1.08) 7.67 (5.37) 0.87
Year ended 9/30/93 (0.12) 0.62 8.75 15.26 0.94
Year ended 9/30/92 (0.07) 0.19 8.13 9.80 0.79
Year ended 9/30/91 -- 0.54 7.94 14.56 0.80
Year ended 9/30/90 (0.05) (0.31) 7.40 3.19 0.79
Ohio Series
Year ended 9/30/94 (0.17) (0.87) 7.90 (3.08) 0.84
Year ended 9/30/93 (0.07) 0.49 8.77 12.81 0.85
Year ended 9/30/92 (0.04) 0.22 8.28 9.68 0.75
Year ended 9/30/91 (0.01) 0.44 8.06 12.96 0.77
Year ended 9/30/90 (0.10) (0.18) 7.62 5.70 0.77
Oregon Series
Year ended 9/30/94 (0.06) (0.65) 7.43 (2.38) 0.78
Year ended 9/30/93 -- 0.48 8.08 12.21 0.78
Year ended 9/30/92 -- 0.18 7.60 8.35 0.68
Year ended 9/30/91 -- 0.46 7.42 13.25 0.71
Year ended 9/30/90 -- (0.09) 6.96 4.99 0.72
South Carolina Series
Year ended 9/30/94 (0.12) (0.91) 7.61 (4.61) 0.83
Year ended 9/30/93 (0.02) 0.52 8.52 12.52 0.85
Year ended 9/30/92 (0.02) 0.29 8.00 10.08 0.81
Year ended 9/30/91 (0.04) 0.48 7.71 13.95 0.81
Year ended 9/30/90 -- (0.14) 7.23 4.48 0.73
Class D shares:
2/1/94** to 9/30/94
National Series -- (1.02) 7.18 (9.96) 1.76+
Colorado Series -- (0.63) 7.09 (5.73) 1.78+
Georgia Series -- (0.84) 7.49 (7.57) 1.76+
Louisiana Series -- (0.79) 7.94 (6.45) 1.78+
Maryland Series -- (0.74) 7.72 (6.21) 1.80+
Massachusetts Series -- (0.67) 7.66 (5.34) 1.78+
Michigan Series -- (0.73) 8.28 (5.47) 1.75+
Minnesota Series -- (0.49) 7.73 (3.08) 1.74+
Missouri Series -- (0.79) 7.41 (7.16) 1.70+
New York Series -- (0.88) 7.67 (7.73) 1.81+
Ohio Series -- (0.69) 7.92 (5.36) 1.78+
Oregon Series -- (0.59) 7.43 (4.76) 1.72+
South Carolina Series -- (0.81) 7.61 (7.14) 1.74+
</TABLE>
<TABLE>
<CAPTION>
Adjusted
Ratio of Net Adjusted Ratio of
Investment Net Assets Adjusted Net Ratio of Net Investment
Income at End of Investment Expenses to Income
Per Share Operating to Average Portfolio Period Income Average Net to Average
Performance: Net Assets* Turnover (000's omitted) Per Share* Assets* Net Assets*
- ------------------- ------------ --------- --------------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Minnesota Series
Year ended 9/30/94 5.70% 3.30% $134,990
Year ended 9/30/93 5.89 5.73 144,600
Year ended 9/30/92 6.29 12.08 151,922
Year ended 9/30/91 6.28 2.61 182,979
Year ended 9/30/90 6.40 12.10 160,930
Missouri Series
Year ended 9/30/94 5.18 14.33 52,621 $0.39 0.88% 5.04%
Year ended 9/30/93 5.29 17.03 56,861 0.41 0.91 5.09
Year ended 9/30/92 5.71 18.80 49,459
Year ended 9/30/91 6.10 16.30 47,659
Year ended 9/30/90 6.20 30.46 50,875
New York Series
Year ended 9/30/94 5.31 28.19 90,914
Year ended 9/30/93 5.37 27.90 104,685
Year ended 9/30/92 6.09 42.90 92,681
Year ended 9/30/91 6.57 44.57 83,684
Year ended 9/30/90 6.65 32.14 77,766
Ohio Series
Year ended 9/30/94 5.34 9.37 171,469
Year ended 9/30/93 5.44 30.68 190,083
Year ended 9/30/92 6.02 7.15 170,427
Year ended 9/30/91 6.42 13.95 156,179
Year ended 9/30/90 6.63 16.05 136,251
Oregon Series
Year ended 9/30/94 5.20 9.43 59,884 0.39 0.89 5.09
Year ended 9/30/93 5.35 8.08 62,095 0.41 0.93 5.20
Year ended 9/30/92 5.63 0.21 48,797 0.42 0.83 5.48
Year ended 9/30/91 6.06 7.60 39,350 0.42 0.91 5.86
Year ended 9/30/90 6.17 4.09 32,221 0.42 0.93 5.96
South Carolina Series
Year ended 9/30/94 5.12 1.81 115,133
Year ended 9/30/93 5.19 17.69 120,589
Year ended 9/30/92 5.71 3.37 82,882
Year ended 9/30/91 6.14 9.05 63,863 0.45 0.91 6.04
Year ended 9/30/90 6.47 15.26 49,234 0.47 0.84 6.35
Class D shares:
2/1/94** to 9/30/94
National Series 4.37+ 24.86++ 446
Colorado Series 4.05+ 10.07++ 96
Georgia Series 4.28+ 19.34++ 849 0.21 1.90+ 4.15+
Louisiana Series 4.33+ 17.16++ 704
Maryland Series 4.26+ 17.68++ 424
Massachusetts Series 4.52+ 12.44++ 1,099
Michigan Series 4.40+ 10.06++ 671
Minnesota Series 4.68+ 3.30++ 1,649
Missouri Series 4.27+ 14.33++ 350 0.22 1.80+ 4.17+
New York Series 4.39+ 28.19++ 476
Ohio Series 4.41+ 9.37++ 324
Oregon Series 4.32+ 9.43++ 843 0.22 1.82+ 4.22+
South Carolina Series 4.29+ 1.81++ 1,478
</TABLE>
- ----------------
* During the periods stated, the Manager, at its discretion, waived all or
portions of its fees for the Georgia, Missouri, Oregon, and South Carolina
Series. The adjusted net investment income per share and adjusted ratios
reflect what the results would have been had the Manager not waived its fees.
** Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended 9/30/94.
See page 58 for footnotes.
See notes to financial statements.
58 & 59
<PAGE>
===============================================================================
Report of Independent Auditors
- -------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Tax-Exempt Fund Series, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the National, Colorado, Georgia, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon
and South Carolina Series of Seligman Tax-Exempt Fund Series, Inc. as of
September 30, 1994, the related statements of operations for the year then ended
and of changes in net assets for the each of the years in the two-year period
then ended, and the financial highlights for each of the periods presented.
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.
We conducted our audits in accordance with generally accepted auditing
standards. 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
September 30, 1994 by correspondence with the Fund's custodian. 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 audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each Series of
Seligman Tax-Exempt Fund Series, Inc. as of September 30, 1994, the results of
their operations, the changes in their net assets, and the financial highlights
for the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
October 28, 1994
60
<PAGE>
(This page intentionally left blank.)
61
<PAGE>
===============================================================================
Board of Directors
- -------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Chairman and Senior Partner,
Sullivan & Cromwell, Attorneys
Betsy S. Michel 2
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. 2
Management Consultant
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Herman J. Schmidt 2
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2
Executive Vice President and Director, Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino 1
Managing Director, J. & W. Seligman & Co. Incorporated
- ------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
62
<PAGE>
===============================================================================
Executive Officers
- -------------------------------------------------------------------------------
William C. Morris
Chairman
Ronald T. Schroeder
President
Thomas G. Moles
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- -------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp. (formerly
Union Data Service Center, Inc.)
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(800) 622-4597 24-Hour Automated
Telephone
Access Service
63
<PAGE>
Seligman Financial Services, Inc.
an affiliate of
(LOGO GOES HERE)
J. & W. Seligman & Co.
Incorporated
Established 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman Tax-Exempt Fund Series, Inc., which contains information about the
sales charges, management fee, and other costs. Please read the prospectus
carefully before investing or sending money.
TEA2 9/94
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Part A - Financial Highlights for Class A shares for the ten year period ended
September 30, 1994 or from commencements of operations to September
30, 1994.
Financial Highlights for Class D shares for the period 2/1/94
(commencement of offering) to September 30, 1994.
Part B - Required Financial Statements are included in the Fund's Annual Report
to shareholders, dated September 30, 1994, which are incorporated by
reference in the Statement of Additional Information. These Financial
Statements are: Portfolios of Investments as of September 30, 1994;
Statements of Assets and Liabilities as of September 30, 1994;
Statements of Operations for year ended September 30, 1994; Statements
of Changes in Net Assets for the years ended September 30, 1994 and
September 30, 1993; Notes to Financial Statements; Financial
Highlights for the five years ended September 30, 1994 for the Fund's
Class A shares and for the period 2/1/94 (commencement of offering)
through September 30, 1993 and for the year ended September 30, 1994
for the Fund's Class D shares; Report of Independent Auditors.
(b) Exhibits: Incorporated by Reference from Registrant's initial
Registration Statement and amendments filed thereto (File No.
2-86008). All Exhibits have been previously filed except Exhibits
marked with an asterisk (*) which are incorporated herein.
(1) Articles Supplementary to Articles of Incorporation of Registrant.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 26 filed on November 30, 1993.)
(2) By-Laws of the Registrant.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 26 filed on November 30, 1993.)
(4) Specimen certificate of Capital Stock for Class D Shares.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 27 filed on January 31, 1994.)
(5) Copy of New Management Agreement between the Registrant and J. & W.
Seligman & Co. Incorporated.
(Incorporated by Refernce to Registrant's Post-Effective Amendment No.
18 filed on February 1, 1989.)
(6a) Copy of New Distributing Agreement between Registrant and Seligman
Financial Services, Inc.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 25 filed on January 29, 1993.)
(6b) Copy of Sales Agreement between Dealers and Seligman Financial
Services, Inc.*.
(7) Copy of Amended Retirement Income Plan of J. & W. Seligman & Co.
Incorporated and Trust.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
(7a) Copy of Amended Employees' Thrift Plan of Union Data Service Center,
Inc. and Trust.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
(8) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 21 filed on November 30, 1990)
(10) Opinion and Consent of Counsel.*
(11) Consent of Independent Auditors.*
(13) Purchase Agreement for Initial Capital for Class D shares.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 27 filed on January 31, 1994.)
(14) Copy of Amended Individual Retirement Account Trust and Related
Documents.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
(14a) Copy of Amended Comprehensive Retirement Plans for Money Purchase
and/or Prototype Profit Sharing Plan.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
<PAGE>
PART C. OTHER INFORMATION
(14b) Copy of Amended Basic Business Retirement Plans for Money Purchase
and/or Profit Sharing Plans.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
(14c) Copy of Amended 403(b)(7) Custodial Account Plan.
(Incorporated by Reference to Seligman New Jersey Tax-Exempt Fund,
Inc. Pre-Effective Amendment No. 1 filed on January 11, 1988.)
(14d) Copy of Amended Simplified Employee Pension Plan (SEP).
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
(14e) Copy of the amended J. & W. Seligman & Co. Incorporated (SARSEP)
Salary Reduction and Other Elective Simplified Employee
Pension-Individual Retirement Accounts Contribution Agreement (Under
Section 408(k) of the Internal Revenue Code).
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 24 filed on November 30, 1992.)
(15) Copy of amended Administration, Shareholder Services and Distribution
Plan and form of Agreement of the Registrant.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 26 filed on November 30, 1993.)
(16) Schedule for Computation of Tax Equivalent Yield and Schedule for
Computation of each Performance Quotation provided in Registration
Statement to Item 22.
(Incorporated by Reference to Registrant's Post-Effective Amendment
No. 20 filed on February 1, 1990)
Item 25. Persons Controlled by or Under Common Control with Registrant - None.
Item 26. Number of Holders of Securities - As of December 31, 1994, the number
of record holders of each Series' Class A shares of the Registrant was
as follows:
<TABLE>
<CAPTION>
Class A Class D
Title of Series Record Holders Recordholders
--------------- -------------- -------------
<S> <C> <C>
National Tax-Exempt Series 2841 25
Colorado Tax-Exempt Series 1742 6
Georgia Tax-Exempt Series 1439 31
Louisiana Tax-Exempt Series 1143 4
Maryland Tax-Exempt Series 1800 28
Massachusetts Tax-Exempt Series 3014 22
Michigan Tax-Exempt Series 4107 41
Minnesota Tax-Exempt Series 4772 60
Missouri Tax-Exempt Series 1697 14
New York Tax-Exempt Series 1899 20
Ohio Tax-Exempt Series 4557 22
Oregon Tax-Exempt Series 1882 49
South Carolina Tax-Exempt Series 2760 52
</TABLE>
Item 27. Indemnification - Incorporated by Reference from Registrant's
Registration Statement No. 2-86008 and Pre-Effective Amendment Nos. 1
and 2 thereto.
Item 28. Business and Other Connections of Investment Adviser - J. & W.
Seligman & Co. Incorporated, a Delaware corporation ("Manager"), is
the Registrant's investment manager. The Manager also serves as
investment manager to sixteen associated investment companies. They
are Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and
Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth
Fund, Inc., Seligman Henderson Global Fund Series, Inc., Seligman High
Income Fund Series, Seligman Income Fund, Inc., Seligman Portfolios,
Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania
Tax-Exempt Fund Series, Seligman Quality Municipal Fund, Inc.,
Seligman Select Municipal Fund, Inc., Seligman Tax-Exempt Series Trust
and Tri-Continental Corporation.
<PAGE>
PART C. OTHER INFORMATION
Item 28. The Manager has an investment advisory service division which provides
investment management or advice to private clients. The list required
by this Item 28 of officers and directors of the Manager, together
with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D or Form ADV, filed by the Manager pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-5798) was filed on
March 30, 1994.
Item 29. Principal Underwriters
(a) The names of each investment company (other than the Registrant) for
which each principal underwriter currently distributing securities
of the Registrant also acts as a principal underwriter, depositor or
investment adviser follow:
Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and
Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman
Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc.,
Seligman High Income Fund, Inc., Seligman Income Fund, Inc.,
Seligman Portfolios, Inc., Seligman New Jersey Tax-Exempt Fund,
Inc., Seligman Pennsylvania Tax-Exempt Fund Series, Seligman
Tax-Exempt Series Trust.
(b) Name of each director, officer or partner of each principal
underwriter named in the answer to Item 21 of Part II:
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of January 3, 1995
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and
Chief Executive Officer
Ronald T. Schroeder* Director President and Director
Fred E. Brown* Director Director
Michael J. Del Priore* Director None
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
David Watts* Director None
Brian T. Zino* Director Director
Stephen J. Hodgdon* President None
Lynda M. Soleim* Regional Vice President None
14074 Rue St. Raphael Street
Del Mar, CA 92014
Gerald I. Cetrulo, III Vice President and Regional None
140 West Parkway Sales Manager
Pompton Plains, NJ 07444
D. Ian Valentine Vice President and None
307 Braehead Drive Regional Sales Manager
Fredericksburg, VA 22401
Andrew Veasey Regional Vice President None
40 Goshawk Court
Voorhees, NJ 08043
Kelli A. Wirth Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
Judith L. Lyon Regional Vice President None
8384-H Roswell Road NE
Atlanta, GA 30350
David Meyncke Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of January 3, 1995
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
Bradley F. Hanson Vice President and None
9707 Xylon Court Regional Sales Manager
Bloomington, MN 55438
Melinda Nawn Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
Randy D. Lierman Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
Bradley W. Larson Vice President and None
367 Bryan Drive Regional Sales Manager
Danville, CA 94526
Herb W. Morgan Regional Vice President None
11308 Monticook Court
San Diego, CA 92127
Robert H. Ruhm Regional Vice President None
167 Derby Street
Melrose, MA 02176
Todd Volkman Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
Brad Davis Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
Bruce Tuckey Regional Vice President None
316 Woodedge Drive
Bloomfield, MI 48304
Susan Gutterud Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
Lawrence P. Vogel* Senior Vice President - Finance Vice President
Helen Simon* Vice President None
Marsha E. Jacoby* Vice President, National Accounts None
Manager
Vito Graziano* Assistant Secretary Assistant Secretary
William W. Johnson* Vice President, Order Desk None
Frank P. Marino* Assistant Vice President, Mutual
Fund Product Manager None
Aurelia Lacsamana* Treasurer None
</TABLE>
* The principal address of each of these directors and/or officers is 100
Park Avenue, New York, NY 10017
Item 30. Location of Accounts and Records
Custodian: Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105 and
Seligman Tax-Exempt Fund Series, Inc..
100 Park Avenue
New York, NY 10017
<PAGE>
PART C. OTHER INFORMATION
Item 31. Management Services - Seligman Data Corp. ("SDC"), the Registrant's
shareholder service agent, has an agreement with The Shareholder
Services Group ("TSSG") pursuant to which TSSG provides a data
processing system for certain shareholder accounting and recordkeeping
functions performed by SDC, which commenced in July 1990. For the
fiscal year ended September 30, 1994 and 1993, the approximate cost of
these services for each Series was:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
National Tax-Exempt Series $ 14,897 $ 18,356
Colorado Tax-Exempt Series 9,357 11,815
Georgia Tax-Exempt Series 7,353 6,493
Louisiana Tax-Exempt Series 5,747 6,069
Maryland Tax-Exempt Series 8,886 11,043
Massachusetts Tax-Exempt Series 15,890 19,597
Michigan Tax-Exempt Series 20,445 23,128
Minnesota Tax-Exempt Series 26,293 34,879
Missouri Tax-Exempt Series 8,621 10,402
New York Tax-Exempt Series 10,094 12,386
Ohio Tax-Exempt Series 22,932 27,710
Oregon Tax-Exempt Series 9,719 10,221
South Carolina Tax-Exempt Series 14,362 13,209
</TABLE>
Item 32. Undertakings - The Registrant undertakes: (1) if requested to do so by
the holders of at least ten percent of its outstanding shares, to call
a meeting of shareholders for the purpose of voting upon the removal
of a director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company
Act of 1940; and (2) to furnish to each person to whom a prospectus is
delivered, a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 28 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 1st day of February, 1995.
SELIGMAN TAX-EXEMPT FUND SERIES, INC.
By: /s/ William C. Morris
-------------------------------
William C. Morris, Chairman*
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 28 has been signed below by the following persons
in the capacities indicated on February 1, 1995.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ William C. Morris Chairman of the Board (Principal
- ------------------------------------------ executive officer) and Director
William C. Morris*
/s/ Ronald T. Schroeder President and Director
- ------------------------------------------
Ronald T. Schroeder*
/s/ Thomas G. Rose Treasurer (Principal financial and
- ------------------------------------------ accounting officer)
Thomas G. Rose
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John E. Merow, Director ) /s/ Brian T. Zino
Betsy S. Michel, Director ) ----------------------------------
Douglas R. Nichols, Jr., Director ) *Brian T. Zino, Attorney-in-fact
James C. Pitney, Director )
James Q. Riordan, Director )
Herman J. Schmidt, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
Brian T. Zino, Director )
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> NATIONAL SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 119856
<INVESTMENTS-AT-VALUE> 110596
<RECEIVABLES> 2049
<ASSETS-OTHER> 67
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112712
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 892
<TOTAL-LIABILITIES> 892
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121232
<SHARES-COMMON-STOCK> 15512<F1>
<SHARES-COMMON-PRIOR> 15633<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (152)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (9261)<F1>
<NET-ASSETS> 111374<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7631<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1052<F1>
<NET-INVESTMENT-INCOME> 6579<F1>
<REALIZED-GAINS-CURRENT> 338
<APPREC-INCREASE-CURRENT> (17056)
<NET-CHANGE-FROM-OPS> (10129)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6579<F1>
<DISTRIBUTIONS-OF-GAINS> 7771<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1024<F1>
<NUMBER-OF-SHARES-REDEEMED> 2290<F1>
<SHARES-REINVESTED> 1145<F1>
<NET-CHANGE-IN-ASSETS> (24573)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 7281<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 620<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1052<F1>
<AVERAGE-NET-ASSETS> 124026<F1>
<PER-SHARE-NAV-BEGIN> 8.72<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> (1.04)<F1>
<PER-SHARE-DIVIDEND> .41<F1>
<PER-SHARE-DISTRIBUTIONS> .50<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.18<F1>
<EXPENSE-RATIO> .85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are Fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> NATIONAL SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 119856
<INVESTMENTS-AT-VALUE> 110596
<RECEIVABLES> 2049
<ASSETS-OTHER> 67
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112712
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 892
<TOTAL-LIABILITIES> 892
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121232
<SHARES-COMMON-STOCK> 62<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (152)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (9261)<F1>
<NET-ASSETS> 446<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 4<F1>
<NET-INVESTMENT-INCOME> 10<F1>
<REALIZED-GAINS-CURRENT> 338
<APPREC-INCREASE-CURRENT> (17056)
<NET-CHANGE-FROM-OPS> (10129)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61<F1>
<NUMBER-OF-SHARES-REDEEMED> 0<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (24573)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4<F1>
<AVERAGE-NET-ASSETS> 343<F1>
<PER-SHARE-NAV-BEGIN> 8.20<F1>
<PER-SHARE-NII> .22<F1>
<PER-SHARE-GAIN-APPREC> (1.02)<F1>
<PER-SHARE-DIVIDEND> .22<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.18<F1>
<EXPENSE-RATIO> 1.76<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are Fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> COLORADO SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 57821
<INVESTMENTS-AT-VALUE> 57878
<RECEIVABLES> 1324
<ASSETS-OTHER> 144
<OTHER-ITEMS-ASSETS> 10
<TOTAL-ASSETS> 59356
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1063
<TOTAL-LIABILITIES> 1063
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58823<F1>
<SHARES-COMMON-STOCK> 8203<F1>
<SHARES-COMMON-PRIOR> 8751<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (587)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 57
<NET-ASSETS> 58197<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3766<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 545<F1>
<NET-INVESTMENT-INCOME> 3221<F1>
<REALIZED-GAINS-CURRENT> (416)
<APPREC-INCREASE-CURRENT> (4629)
<NET-CHANGE-FROM-OPS> (1820)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7269<F1>
<DISTRIBUTIONS-OF-GAINS> 2057<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 311<F1>
<NUMBER-OF-SHARES-REDEEMED> 1170<F1>
<SHARES-REINVESTED> 311<F1>
<NET-CHANGE-IN-ASSETS> (9618)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 513<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 319<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 545<F1>
<AVERAGE-NET-ASSETS> 63714<F1>
<PER-SHARE-NAV-BEGIN> 7.76<F1>
<PER-SHARE-NII> .37<F1>
<PER-SHARE-GAIN-APPREC> (.59)<F1>
<PER-SHARE-DIVIDEND> .37<F1>
<PER-SHARE-DISTRIBUTIONS> .08<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.09<F1>
<EXPENSE-RATIO> .86<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> COLORADO SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 57821
<INVESTMENTS-AT-VALUE> 57878
<RECEIVABLES> 1324
<ASSETS-OTHER> 144
<OTHER-ITEMS-ASSETS> 10
<TOTAL-ASSETS> 59356
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1063
<TOTAL-LIABILITIES> 1063
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58823<F1>
<SHARES-COMMON-STOCK> 14<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (587)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 57
<NET-ASSETS> 96<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 2<F1>
<NET-INVESTMENT-INCOME> 3<F1>
<REALIZED-GAINS-CURRENT> (416)
<APPREC-INCREASE-CURRENT> (4629)
<NET-CHANGE-FROM-OPS> (1820)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41<F1>
<NUMBER-OF-SHARES-REDEEMED> 27<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (9618)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2<F1>
<AVERAGE-NET-ASSETS> 127<F1>
<PER-SHARE-NAV-BEGIN> 7.72<F1>
<PER-SHARE-NII> .20<F1>
<PER-SHARE-GAIN-APPREC> (.63)<F1>
<PER-SHARE-DIVIDEND> .20<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.09<F1>
<EXPENSE-RATIO> 1.78<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GEORGIA SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 63450
<INVESTMENTS-AT-VALUE> 61300
<RECEIVABLES> 1272
<ASSETS-OTHER> 124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 62696
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63629
<SHARES-COMMON-STOCK> 8218<F1>
<SHARES-COMMON-PRIOR> 7671<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 836
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2150)
<NET-ASSETS> 61466<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3867<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 472<F1>
<NET-INVESTMENT-INCOME> 3395<F1>
<REALIZED-GAINS-CURRENT> 841
<APPREC-INCREASE-CURRENT> (7997)
<NET-CHANGE-FROM-OPS> (3746)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3395<F1>
<DISTRIBUTIONS-OF-GAINS> 697<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1349<F1>
<NUMBER-OF-SHARES-REDEEMED> 1138<F1>
<SHARES-REINVESTED> 328<F1>
<NET-CHANGE-IN-ASSETS> (2335)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 693<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 326<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 604<F1>
<AVERAGE-NET-ASSETS> 65115<F1>
<PER-SHARE-NAV-BEGIN> 8.43<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> (.86)<F1>
<PER-SHARE-DIVIDEND> .41<F1>
<PER-SHARE-DISTRIBUTIONS> .09<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.48<F1>
<EXPENSE-RATIO> .73<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GEORGIA SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 63450
<INVESTMENTS-AT-VALUE> 61300
<RECEIVABLES> 1272
<ASSETS-OTHER> 124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 62696
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63629
<SHARES-COMMON-STOCK> 113<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 836
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2150)
<NET-ASSETS> 849<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 6<F1>
<NET-INVESTMENT-INCOME> 15<F1>
<REALIZED-GAINS-CURRENT> 841
<APPREC-INCREASE-CURRENT> (7997)
<NET-CHANGE-FROM-OPS> (3746)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113<F1>
<NUMBER-OF-SHARES-REDEEMED> 1<F1>
<SHARES-REINVESTED> 10<F1>
<NET-CHANGE-IN-ASSETS> (2335)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8<F1>
<AVERAGE-NET-ASSETS> 524<F1>
<PER-SHARE-NAV-BEGIN> 8.33<F1>
<PER-SHARE-NII> .22<F1>
<PER-SHARE-GAIN-APPREC> (.84)<F1>
<PER-SHARE-DIVIDEND> .22<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.49<F1>
<EXPENSE-RATIO> 1.76<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LOUISIANA SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 61408
<INVESTMENTS-AT-VALUE> 61186
<RECEIVABLES> 1128
<ASSETS-OTHER> 124
<OTHER-ITEMS-ASSETS> 30
<TOTAL-ASSETS> 62468
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 322
<TOTAL-LIABILITIES> 322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61286
<SHARES-COMMON-STOCK> 7736<F1>
<SHARES-COMMON-PRIOR> 7680<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1082
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (222)
<NET-ASSETS> 61441<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4060<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 570<F1>
<NET-INVESTMENT-INCOME> 3490<F1>
<REALIZED-GAINS-CURRENT> 1087
<APPREC-INCREASE-CURRENT> (7150)
<NET-CHANGE-FROM-OPS> (2561)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3490<F1>
<DISTRIBUTIONS-OF-GAINS> 651<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 531<F1>
<NUMBER-OF-SHARES-REDEEMED> 767<F1>
<SHARES-REINVESTED> 293<F1>
<NET-CHANGE-IN-ASSETS> (5383)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 647<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 329<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 570<F1>
<AVERAGE-NET-ASSETS> 65745<F1>
<PER-SHARE-NAV-BEGIN> 8.79<F1>
<PER-SHARE-NII> .44<F1>
<PER-SHARE-GAIN-APPREC> (.77)<F1>
<PER-SHARE-DIVIDEND> .44<F1>
<PER-SHARE-DISTRIBUTIONS> .08<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.94<F1>
<EXPENSE-RATIO> .87<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LOUISIANA SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 61408
<INVESTMENTS-AT-VALUE> 61186
<RECEIVABLES> 1128
<ASSETS-OTHER> 124
<OTHER-ITEMS-ASSETS> 30
<TOTAL-ASSETS> 62468
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 322
<TOTAL-LIABILITIES> 322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61286
<SHARES-COMMON-STOCK> 89<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1082
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (222)
<NET-ASSETS> 704<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 5<F1>
<NET-INVESTMENT-INCOME> 11<F1>
<REALIZED-GAINS-CURRENT> 1087
<APPREC-INCREASE-CURRENT> (7150)
<NET-CHANGE-FROM-OPS> (2561)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89<F1>
<NUMBER-OF-SHARES-REDEEMED> 1<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (5383)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5<F1>
<AVERAGE-NET-ASSETS> 402<F1>
<PER-SHARE-NAV-BEGIN> 8.73<F1>
<PER-SHARE-NII> .24<F1>
<PER-SHARE-GAIN-APPREC> (.79)<F1>
<PER-SHARE-DIVIDEND> .24<F1>
<PER-SHARE-DISTRIBUTIONS> .00<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.94<F1>
<EXPENSE-RATIO> 1.78<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MARYLAND SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 57171
<INVESTMENTS-AT-VALUE> 56542
<RECEIVABLES> 1228
<ASSETS-OTHER> 172
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57942
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 255
<TOTAL-LIABILITIES> 255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57332
<SHARES-COMMON-STOCK> 7422<F1>
<SHARES-COMMON-PRIOR> 7458<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 985
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (629)
<NET-ASSETS> 57263<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3713<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 561<F1>
<NET-INVESTMENT-INCOME> 3152<F1>
<REALIZED-GAINS-CURRENT> 1412
<APPREC-INCREASE-CURRENT> (7140)
<NET-CHANGE-FROM-OPS> (2571)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3152<F1>
<DISTRIBUTIONS-OF-GAINS> 1301<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 433<F1>
<NUMBER-OF-SHARES-REDEEMED> 804<F1>
<SHARES-REINVESTED> 336<F1>
<NET-CHANGE-IN-ASSETS> (6784)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 880<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 304<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 561<F1>
<AVERAGE-NET-ASSETS> 60945<F1>
<PER-SHARE-NAV-BEGIN> 8.64<F1>
<PER-SHARE-NII> .42<F1>
<PER-SHARE-GAIN-APPREC> (.76)<F1>
<PER-SHARE-DIVIDEND> .42<F1>
<PER-SHARE-DISTRIBUTIONS> .17<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.71<F1>
<EXPENSE-RATIO> .92<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MARYLAND SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 57171
<INVESTMENTS-AT-VALUE> 56542
<RECEIVABLES> 1228
<ASSETS-OTHER> 172
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57942
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 255
<TOTAL-LIABILITIES> 255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57332
<SHARES-COMMON-STOCK> 55<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 985
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (629)
<NET-ASSETS> 424<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 2<F1>
<NET-INVESTMENT-INCOME> 5<F1>
<REALIZED-GAINS-CURRENT> 1412
<APPREC-INCREASE-CURRENT> (7140)
<NET-CHANGE-FROM-OPS> (2571)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 56<F1>
<NUMBER-OF-SHARES-REDEEMED> 1<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (6784)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2<F1>
<AVERAGE-NET-ASSETS> 181<F1>
<PER-SHARE-NAV-BEGIN> 8.46<F1>
<PER-SHARE-NII> .23<F1>
<PER-SHARE-GAIN-APPREC> (.74)<F1>
<PER-SHARE-DIVIDEND> .23<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.72<F1>
<EXPENSE-RATIO> 1.80<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MASSACHUSETTS SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 118511
<INVESTMENTS-AT-VALUE> 119085
<RECEIVABLES> 2605
<ASSETS-OTHER> 168
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121858
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 610
<TOTAL-LIABILITIES> 610
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 120191
<SHARES-COMMON-STOCK> 15688<F1>
<SHARES-COMMON-PRIOR> 16331<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 484
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 574
<NET-ASSETS> 120149<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8154<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1102<F1>
<NET-INVESTMENT-INCOME> 7052<F1>
<REALIZED-GAINS-CURRENT> 1459
<APPREC-INCREASE-CURRENT> (12499)
<NET-CHANGE-FROM-OPS> (3962)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7052<F1>
<DISTRIBUTIONS-OF-GAINS> 3330<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 584<F1>
<NUMBER-OF-SHARES-REDEEMED> 2030<F1>
<SHARES-REINVESTED> 804<F1>
<NET-CHANGE-IN-ASSETS> 18255
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2355<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 646<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1102<F1>
<AVERAGE-NET-ASSETS> 129180<F1>
<PER-SHARE-NAV-BEGIN> 8.54<F1>
<PER-SHARE-NII> .44<F1>
<PER-SHARE-GAIN-APPREC> (.67)<F1>
<PER-SHARE-DIVIDEND> .44<F1>
<PER-SHARE-DISTRIBUTIONS> .21<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.66<F1>
<EXPENSE-RATIO> .85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are Fund level
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MASSACHUSETTS SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 118511
<INVESTMENTS-AT-VALUE> 119085
<RECEIVABLES> 2605
<ASSETS-OTHER> 168
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121858
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 610
<TOTAL-LIABILITIES> 610
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 120191
<SHARES-COMMON-STOCK> 144<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 484
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 574
<NET-ASSETS> 1100<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 10<F1>
<NET-INVESTMENT-INCOME> 27<F1>
<REALIZED-GAINS-CURRENT> 1459
<APPREC-INCREASE-CURRENT> (12499)
<NET-CHANGE-FROM-OPS> (3962)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 27<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141<F1>
<NUMBER-OF-SHARES-REDEEMED> 1<F1>
<SHARES-REINVESTED> 3<F1>
<NET-CHANGE-IN-ASSETS> 18255
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10<F1>
<AVERAGE-NET-ASSETS> 898<F1>
<PER-SHARE-NAV-BEGIN> 8.33<F1>
<PER-SHARE-NII> .24<F1>
<PER-SHARE-GAIN-APPREC> (.67)<F1>
<PER-SHARE-DIVIDEND> .24<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.66<F1>
<EXPENSE-RATIO> 1.28<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are Fund level
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MICHIGAN SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 145627
<INVESTMENTS-AT-VALUE> 148943
<RECEIVABLES> 3303
<ASSETS-OTHER> 168
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152414
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 648
<TOTAL-LIABILITIES> 648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 147688
<SHARES-COMMON-STOCK> 18249<F1>
<SHARES-COMMON-PRIOR> 18126<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 762
<ACCUM-APPREC-OR-DEPREC> 3316
<NET-ASSETS> 151095<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9731<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1321<F1>
<NET-INVESTMENT-INCOME> 8410<F1>
<REALIZED-GAINS-CURRENT> 1401
<APPREC-INCREASE-CURRENT> (14509)
<NET-CHANGE-FROM-OPS> (4688)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8410<F1>
<DISTRIBUTIONS-OF-GAINS> 1590<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1242<F1>
<NUMBER-OF-SHARES-REDEEMED> 1849<F1>
<SHARES-REINVESTED> 730<F1>
<NET-CHANGE-IN-ASSETS> (12872)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 951<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 791<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1321<F1>
<AVERAGE-NET-ASSETS> 158121<F1>
<PER-SHARE-NAV-BEGIN> 9.08<F1>
<PER-SHARE-NII> .46<F1>
<PER-SHARE-GAIN-APPREC> (.71)<F1>
<PER-SHARE-DIVIDEND> .46<F1>
<PER-SHARE-DISTRIBUTIONS> .09<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 8.28<F1>
<EXPENSE-RATIO> .84<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MICHIGAN SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 145627
<INVESTMENTS-AT-VALUE> 148943
<RECEIVABLES> 3303
<ASSETS-OTHER> 168
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152414
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 648
<TOTAL-LIABILITIES> 648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 147688
<SHARES-COMMON-STOCK> 81<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 762
<ACCUM-APPREC-OR-DEPREC> 3316
<NET-ASSETS> 671<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 4<F1>
<NET-INVESTMENT-INCOME> 11<F1>
<REALIZED-GAINS-CURRENT> 1401
<APPREC-INCREASE-CURRENT> (14509)
<NET-CHANGE-FROM-OPS> (4688)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 82<F1>
<NUMBER-OF-SHARES-REDEEMED> 2<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (12872)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4<F1>
<AVERAGE-NET-ASSETS> 379<F1>
<PER-SHARE-NAV-BEGIN> 9.01<F1>
<PER-SHARE-NII> .25<F1>
<PER-SHARE-GAIN-APPREC> (.73)<F1>
<PER-SHARE-DIVIDEND> .25<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 8.28<F1>
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> MINNESOTA SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 129636
<INVESTMENTS-AT-VALUE> 134767
<RECEIVABLES> 2354
<ASSETS-OTHER> 137
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 619
<TOTAL-LIABILITIES> 619
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 131265
<SHARES-COMMON-STOCK> 17479<F1>
<SHARES-COMMON-PRIOR> 17466<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 242
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5132
<NET-ASSETS> 134990<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9149<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1185<F1>
<NET-INVESTMENT-INCOME> 7964<F1>
<REALIZED-GAINS-CURRENT> 253
<APPREC-INCREASE-CURRENT> (8006)
<NET-CHANGE-FROM-OPS> 240
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7964<F1>
<DISTRIBUTIONS-OF-GAINS> 2075<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 831<F1>
<NUMBER-OF-SHARES-REDEEMED> 1702<F1>
<SHARES-REINVESTED> 885<F1>
<NET-CHANGE-IN-ASSETS> (7961)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2064
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 699<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1185<F1>
<AVERAGE-NET-ASSETS> 139826<F1>
<PER-SHARE-NAV-BEGIN> 8.28<F1>
<PER-SHARE-NII> .45<F1>
<PER-SHARE-GAIN-APPREC> (.44)<F1>
<PER-SHARE-DIVIDEND> .45<F1>
<PER-SHARE-DISTRIBUTIONS> .12<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.72<F1>
<EXPENSE-RATIO> .85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are Fund only.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> MINNESOTA SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 129636
<INVESTMENTS-AT-VALUE> 134767
<RECEIVABLES> 2354
<ASSETS-OTHER> 137
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 619
<TOTAL-LIABILITIES> 619
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 131265
<SHARES-COMMON-STOCK> 213<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 242
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5132
<NET-ASSETS> 1649<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 11<F1>
<NET-INVESTMENT-INCOME> 28<F1>
<REALIZED-GAINS-CURRENT> 253
<APPREC-INCREASE-CURRENT> (8006)
<NET-CHANGE-FROM-OPS> 240
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 218<F1>
<NUMBER-OF-SHARES-REDEEMED> 7<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (7961)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2064
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11<F1>
<AVERAGE-NET-ASSETS> 921<F1>
<PER-SHARE-NAV-BEGIN> 8.22<F1>
<PER-SHARE-NII> .25<F1>
<PER-SHARE-GAIN-APPREC> (.49)<F1>
<PER-SHARE-DIVIDEND> .25<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.73<F1>
<EXPENSE-RATIO> 1.74<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are Fund only.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> MISSOURI SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 52351
<INVESTMENTS-AT-VALUE> 52033
<RECEIVABLES> 997
<ASSETS-OTHER> 122
<OTHER-ITEMS-ASSETS> 35
<TOTAL-ASSETS> 53187
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 216
<TOTAL-LIABILITIES> 216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52802
<SHARES-COMMON-STOCK> 7098<F1>
<SHARES-COMMON-PRIOR> 6845<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 488
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (318)
<NET-ASSETS> 52621<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3251<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 407<F1>
<NET-INVESTMENT-INCOME> 2844<F1>
<REALIZED-GAINS-CURRENT> 672
<APPREC-INCREASE-CURRENT> (6217)
<NET-CHANGE-FROM-OPS> (2691)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2844<F1>
<DISTRIBUTIONS-OF-GAINS> 749<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 528<F1>
<NUMBER-OF-SHARES-REDEEMED> 529<F1>
<SHARES-REINVESTED> 254<F1>
<NET-CHANGE-IN-ASSETS> (3889)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 565<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 275<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 481<F1>
<AVERAGE-NET-ASSETS> 54943<F1>
<PER-SHARE-NAV-BEGIN> 8.31<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> (.79)<F1>
<PER-SHARE-DIVIDEND> .40<F1>
<PER-SHARE-DISTRIBUTIONS> .11<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.41<F1>
<EXPENSE-RATIO> .74<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> MISSOURI SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 52351
<INVESTMENTS-AT-VALUE> 52033
<RECEIVABLES> 997
<ASSETS-OTHER> 122
<OTHER-ITEMS-ASSETS> 35
<TOTAL-ASSETS> 53187
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 216
<TOTAL-LIABILITIES> 216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52802
<SHARES-COMMON-STOCK> 47<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 488
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (318)
<NET-ASSETS> 350<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 4<F1>
<NET-INVESTMENT-INCOME> 9<F1>
<REALIZED-GAINS-CURRENT> 672
<APPREC-INCREASE-CURRENT> (6217)
<NET-CHANGE-FROM-OPS> (2691)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 265<F1>
<NUMBER-OF-SHARES-REDEEMED> 18<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (3889)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4<F1>
<AVERAGE-NET-ASSETS> 339<F1>
<PER-SHARE-NAV-BEGIN> 8.20<F1>
<PER-SHARE-NII> .22<F1>
<PER-SHARE-GAIN-APPREC> (.79)<F1>
<PER-SHARE-DIVIDEND> .22<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.41<F1>
<EXPENSE-RATIO> 1.70<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> NEW YORK A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 92756
<INVESTMENTS-AT-VALUE> 90210
<RECEIVABLES> 1509
<ASSETS-OTHER> 118
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91837
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 447
<TOTAL-LIABILITIES> 447
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 91939
<SHARES-COMMON-STOCK> 11853<F1>
<SHARES-COMMON-PRIOR> 11961<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1997
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2546)
<NET-ASSETS> 90914<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6062<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 8543<F1>
<NET-INVESTMENT-INCOME> 5208<F1>
<REALIZED-GAINS-CURRENT> 1999
<APPREC-INCREASE-CURRENT> (12683)
<NET-CHANGE-FROM-OPS> (5466)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5208<F1>
<DISTRIBUTIONS-OF-GAINS> 2401<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 734<F1>
<NUMBER-OF-SHARES-REDEEMED> 1418<F1>
<SHARES-REINVESTED> 576<F1>
<NET-CHANGE-IN-ASSETS> (13295)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2399<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 491<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 854<F1>
<AVERAGE-NET-ASSETS> 98115<F1>
<PER-SHARE-NAV-BEGIN> 8.75<F1>
<PER-SHARE-NII> .43<F1>
<PER-SHARE-GAIN-APPREC> (.88)<F1>
<PER-SHARE-DIVIDEND> .43<F1>
<PER-SHARE-DISTRIBUTIONS> .20<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.67<F1>
<EXPENSE-RATIO> .87<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> NEW YORK D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 92756
<INVESTMENTS-AT-VALUE> 90210
<RECEIVABLES> 1509
<ASSETS-OTHER> 118
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91837
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 447
<TOTAL-LIABILITIES> 447
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 91939
<SHARES-COMMON-STOCK> 62<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1997
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2546)
<NET-ASSETS> 476<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 4<F1>
<NET-INVESTMENT-INCOME> 10<F1>
<REALIZED-GAINS-CURRENT> 1999
<APPREC-INCREASE-CURRENT> (12683)
<NET-CHANGE-FROM-OPS> (5466)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61<F1>
<NUMBER-OF-SHARES-REDEEMED> 0<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (13295)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4<F1>
<AVERAGE-NET-ASSETS> 341<F1>
<PER-SHARE-NAV-BEGIN> 8.55<F1>
<PER-SHARE-NII> .23<F1>
<PER-SHARE-GAIN-APPREC> (.88)<F1>
<PER-SHARE-DIVIDEND> .23<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.67<F1>
<EXPENSE-RATIO> 1.81<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> OHIO SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 166568
<INVESTMENTS-AT-VALUE> 169358
<RECEIVABLES> 3409
<ASSETS-OTHER> 139
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172906
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1113
<TOTAL-LIABILITIES> 1113
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167434
<SHARES-COMMON-STOCK> 21714<F1>
<SHARES-COMMON-PRIOR> 21676<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1569
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2790
<NET-ASSETS> 171469<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11216<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1518<F1>
<NET-INVESTMENT-INCOME> 9698<F1>
<REALIZED-GAINS-CURRENT> 1865
<APPREC-INCREASE-CURRENT> (17336)
<NET-CHANGE-FROM-OPS> (5766)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9698<F1>
<DISTRIBUTIONS-OF-GAINS> 3704<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1228<F1>
<NUMBER-OF-SHARES-REDEEMED> 2261<F1>
<SHARES-REINVESTED> 1071<F1>
<NET-CHANGE-IN-ASSETS> (18289)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3408<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 908<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1518<F1>
<AVERAGE-NET-ASSETS> 181671<F1>
<PER-SHARE-NAV-BEGIN> 8.77<F1>
<PER-SHARE-NII> .44<F1>
<PER-SHARE-GAIN-APPREC> (.70)<F1>
<PER-SHARE-DIVIDEND> .44<F1>
<PER-SHARE-DISTRIBUTIONS> .17<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.90<F1>
<EXPENSE-RATIO> .84<F1>
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> OHIO SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 166568
<INVESTMENTS-AT-VALUE> 169358
<RECEIVABLES> 3409
<ASSETS-OTHER> 139
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172906
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1113
<TOTAL-LIABILITIES> 1113
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167434
<SHARES-COMMON-STOCK> 41<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1569
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2790
<NET-ASSETS> 324<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 3<F1>
<NET-INVESTMENT-INCOME> 7<F1>
<REALIZED-GAINS-CURRENT> 1865
<APPREC-INCREASE-CURRENT> (17336)
<NET-CHANGE-FROM-OPS> (5766)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40<F1>
<NUMBER-OF-SHARES-REDEEMED> 0<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (18289)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3<F1>
<AVERAGE-NET-ASSETS> 220<F1>
<PER-SHARE-NAV-BEGIN> 8.61<F1>
<PER-SHARE-NII> .24<F1>
<PER-SHARE-GAIN-APPREC> (.69)<F1>
<PER-SHARE-DIVIDEND> .24<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.92<F1>
<EXPENSE-RATIO> 1.78<F1>
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> OREGON SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 58853
<INVESTMENTS-AT-VALUE> 58924
<RECEIVABLES> 1363
<ASSETS-OTHER> 683
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60970
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242
<TOTAL-LIABILITIES> 242
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60523
<SHARES-COMMON-STOCK> 8059<F1>
<SHARES-COMMON-PRIOR> 7682<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 134
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 71
<NET-ASSETS> 59884<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3671<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 478<F1>
<NET-INVESTMENT-INCOME> 3193<F1>
<REALIZED-GAINS-CURRENT> 636
<APPREC-INCREASE-CURRENT> (5354)
<NET-CHANGE-FROM-OPS> (1514)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3193<F1>
<DISTRIBUTIONS-OF-GAINS> 494<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1030<F1>
<NUMBER-OF-SHARES-REDEEMED> 959<F1>
<SHARES-REINVESTED> 306<F1>
<NET-CHANGE-IN-ASSETS> (1368)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 93<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 306<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 544<F1>
<AVERAGE-NET-ASSETS> 61421<F1>
<PER-SHARE-NAV-BEGIN> 8.08<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> (.59)<F1>
<PER-SHARE-DIVIDEND> .40<F1>
<PER-SHARE-DISTRIBUTIONS> .06<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.43<F1>
<EXPENSE-RATIO> .78<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> OREGON SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 58853
<INVESTMENTS-AT-VALUE> 58924
<RECEIVABLES> 1363
<ASSETS-OTHER> 683
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60970
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242
<TOTAL-LIABILITIES> 242
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60523
<SHARES-COMMON-STOCK> 114<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 134
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 71
<NET-ASSETS> 843<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 4<F1>
<NET-INVESTMENT-INCOME> 11<F1>
<REALIZED-GAINS-CURRENT> 636
<APPREC-INCREASE-CURRENT> (5354)
<NET-CHANGE-FROM-OPS> (1514)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 118<F1>
<NUMBER-OF-SHARES-REDEEMED> 6<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (1368)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4<F1>
<AVERAGE-NET-ASSETS> 372<F1>
<PER-SHARE-NAV-BEGIN> 8.02<F1>
<PER-SHARE-NII> .22<F1>
<PER-SHARE-GAIN-APPREC> (.59)<F1>
<PER-SHARE-DIVIDEND> .22<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.43<F1>
<EXPENSE-RATIO> 1.72<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> SOUTH CAROLINA SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-3-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 116412
<INVESTMENTS-AT-VALUE> 114980
<RECEIVABLES> 2257
<ASSETS-OTHER> 125
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117362
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 750
<TOTAL-LIABILITIES> 750
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117844
<SHARES-COMMON-STOCK> 15121<F1>
<SHARES-COMMON-PRIOR> 14158<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 199
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1432)
<NET-ASSETS> 115133<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7228<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 1005<F1>
<NET-INVESTMENT-INCOME> 6223<F1>
<REALIZED-GAINS-CURRENT> 204
<APPREC-INCREASE-CURRENT> (12271)
<NET-CHANGE-FROM-OPS> (5816)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6223<F1>
<DISTRIBUTIONS-OF-GAINS> 1795<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2624<F1>
<NUMBER-OF-SHARES-REDEEMED> 2281<F1>
<SHARES-REINVESTED> 620<F1>
<NET-CHANGE-IN-ASSETS> (3977)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1791
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 608<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1005<F1>
<AVERAGE-NET-ASSETS> 121595<F1>
<PER-SHARE-NAV-BEGIN> 8.52<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> (.79)<F1>
<PER-SHARE-DIVIDEND> .41<F1>
<PER-SHARE-DISTRIBUTIONS> .12<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.61<F1>
<EXPENSE-RATIO> .83<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> SOUTH CAROLINA SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-3-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 116412
<INVESTMENTS-AT-VALUE> 114980
<RECEIVABLES> 2257
<ASSETS-OTHER> 125
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117362
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 750
<TOTAL-LIABILITIES> 750
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117844
<SHARES-COMMON-STOCK> 194<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 199
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1432)
<NET-ASSETS> 1478<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 11<F1>
<NET-INVESTMENT-INCOME> 28<F1>
<REALIZED-GAINS-CURRENT> 204
<APPREC-INCREASE-CURRENT> (12271)
<NET-CHANGE-FROM-OPS> (5816)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 201<F1>
<NUMBER-OF-SHARES-REDEEMED> 9<F1>
<SHARES-REINVESTED> 3<F1>
<NET-CHANGE-IN-ASSETS> (3977)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1791
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11<F1>
<AVERAGE-NET-ASSETS> 992<F1>
<PER-SHARE-NAV-BEGIN> 8.42<F1>
<PER-SHARE-NII> .22<F1>
<PER-SHARE-GAIN-APPREC> (.81)<F1>
<PER-SHARE-DIVIDEND> .22<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.61<F1>
<EXPENSE-RATIO> 1.74<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
Exhibit 6
SALES AGREEMENT
covering shares of capital stock
and/or shares of beneficial interest of
THE SELIGMAN MUTUAL FUNDS
Seligman Capital Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust
between
SELIGMAN FINANCIAL SERVICES, INC.
and
------------------------------------------------------------------
Dealer
The Dealer named above and Seligman Financial Services, Inc., exclusive agent
for distribution of shares of capital stock of Seligman Capital Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman
Henderson Global Fund Series, Inc., Seligman Income Fund, Inc., Seligman New
Jersey Tax-Exempt Fund, Inc., and Seligman Tax-Exempt Fund Series, Inc., and
shares of beneficial interest of Seligman High Income Fund Series, Seligman
Pennsylvania Tax-Exempt Fund, and Seligman Tax-Exempt Series Trust, agree to the
terms and conditions set forth in this agreement.
Dealer Signature
Seligman Financial Services, Inc. Acceptance
_____________________________________ _____________________________________
Principal Officer Stephen J. Hodgdon, President
SELIGMAN FINANCIAL SERVICES, INC.
_____________________________________ 100 Park Avenue
Address New York, New York 10017
_____________________________________ _____________________________________
Employer Identification No. Date
REV 1/95
<PAGE>
The Dealer and Seligman Financial Services, Inc. ("Seligman Financial
Services"), as exclusive agent for distribution of Class A and Class D Shares
(as described in the "Policies and Procedures," as set forth below) of the
Capital Stock and/or Class A and Class D Shares of beneficial interest
(collectively, the "Shares") of Seligman Capital Fund, Inc., Seligman Common
Stock Fund, Inc., Seligman Communications and Information Fund, Inc., Seligman
Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund, Inc.,
Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt
Fund, Seligman Tax-Exempt Fund Series, Inc. and Seligman Tax-Exempt Series Trust
and or any other mutual fund for which Seligman Financial Services is exclusive
agent for distribution (herein called the Funds), agree as follows:
1. The Dealer agrees to comply with the attached "Policies and Procedures"
with respect to sales of Seligman Mutual Funds offering two classes of
shares, as set forth below.
2. An order for Shares of one or more of the Funds, placed by the Dealer with
Seligman Financial Services, will be confirmed at the public offering price
as described in each Fund's current prospectus. Unless otherwise agreed
when an order is placed, the Dealer shall remit the purchase price to the
Fund, or Funds, with issuing instruction, within the period of time
prescribed by existing regulations. No wire orders under $1,000 may be
placed for initial purchases.
3. Shares of the Funds shall be offered for sale and sold by the Dealer only
at the applicable public offering price currently in effect, determined in
the manner prescribed in each Fund's prospectus. Seligman Financial
Services will make a reasonable effort to notify the Dealer of any
redetermination or suspension of the current public offering price, but
Seligman Financial Services shall be under no liability for failure to do
so.
4. On each purchase of Shares by the Dealer, the Dealer shall be entitled,
based on the Class of Shares purchased and except as provided in each
Fund's current prospectus, to a concession determined as a percentage of
the price to the investor as set forth in each Fund's current prospectus.
On each purchase of Class A Shares, Seligman Financial Services reserves
the right to receive a minimum concession of $.75 per transaction. No
concessions will be paid to the Dealer for the investment of dividends in
additional shares.
5. Except for sales to and purchases from the Dealer's retail customers, all
of which shall be made at the applicable current public offering price or
the current price bid by Seligman Financial Services on behalf of the Fund,
the Dealer agrees to buy Shares only through Seligman Financial Services
and not from any other sources and to sell shares only to Seligman
Financial Services, the Fund or its redemption agent and not to any other
purchasers.
6. By signing this Agreement, both Seligman Financial Services and the Dealer
warrant that they are members of the National Association of Securities
Dealers, Inc., and agree that termination of such membership at any time
shall terminate this Agreement forthwith regardless of the provisions of
paragraph 10 hereof. Each party further agrees to comply with all rules and
regulations of such Association and specifically to observe the following
provisions:
(a) Neither Seligman Financial Services nor the Dealer shall withhold
placing customers' orders for Shares so as to profit itself as a
result of such withholding.
(b) Seligman Financial Services shall not purchase Shares from any of the
Funds except for the purpose of covering purchase orders already
received, and the Dealer shall not purchase Shares of any of the Funds
through Seligman Financial Services other than for investment, except
for the purpose of covering purchase orders already received.
<PAGE>
(c) Seligman Financial Services shall not accept a conditional order for
Shares on any basis other than at a specified definite price. The
Dealer shall not, as principal, purchase Shares of any of the Funds
from a recordholder at a price lower than the bid price, if any, then
quoted by or for the Fund, but the Dealer shall not be prevented from
selling Shares for the account of a record owner to Seligman Financial
Services, the Fund or its redemption agent at the bid price currently
quoted by or for such Fund, and charging the investor a fair
commission for handling the transaction.
(d) If Class A Shares are repurchased by a Fund or by Seligman Financial
Services as its agent, or are tendered for redemption within seven
business days after confirmation by Seligman Financial Services of the
original purchase order of the Dealer for such Shares, (i) the Dealer
shall forthwith refund to Seligman Financial Services the full
concession allowed to the Dealer on the original sales and (ii)
Seligman Financial Services shall forthwith pay to the Fund Seligman
Financial Services' share of the "sales load" on the original sale by
Seligman Financial Services, and shall also pay to the Fund the refund
which Seligman Financial Services received under (i) above. The Dealer
shall be notified by Seligman Financial Services of such repurchase or
redemption within ten days of the date that such redemption or
repurchase is placed with Seligman Financial Services, the Fund or its
authorized agent. Termination or cancellation of this Agreement shall
not relieve the Dealer or Seligman Financial Services from the
requirements of this clause (d).
7. (a) Seligman Financial Services shall be entitled to a contingent
deferred sales load ("CDSL") on redemptions within one year of
purchase on any Class D Shares sold. With respect to omnibus accounts
in which Class D Shares are held at Seligman Data Corp. ("SDC") in the
Dealer's name, the Dealer agrees that by the tenth day of each month
it will furnish to SDC a report of each redemption in the preceding
month to which a CDSL was applicable, accompanied by a check payable
to Seligman Financial Services in payment of the CDSL due.
(b) If, with respect to a redemption of any Class D Shares sold by the
Dealer, the CDSL is waived because the redemption qualifies for a
waiver set forth in the Fund's prospectus, the Dealer shall promptly
remit to Seligman Financial Services an amount equal to the payment
made by Seligman Financial Services to the Dealer at the time of sale
with respect to such Class D Shares.
8. In all transactions between Seligman Financial Services and the Dealer
under this Agreement, the Dealer will act as principal in purchasing from
or selling to Seligman Financial Services. The dealer is not for any
purposes employed or retained as or authorized to act as broker, agent or
employee of any Fund or of Seligman Financial Services and the Dealer is
not authorized in any manner to act for any Fund or Seligman Financial
Services or to make any representations on behalf of Seligman Financial
Services. In purchasing and selling Shares of any Fund under this
Agreement, the Dealer shall be entitled to rely only upon matters stated in
the current offering prospectus of the applicable Fund and upon such
written representations, if any, as may be made by Seligman Financial
Services to the Dealer over the signature of Seligman Financial Services.
9. Seligman Financial Services will furnish to the Dealer, without charge,
reasonable quantities of the current offering prospectus of each Fund and
sales material issued from time to time by Seligman Financial Services.
10. Either Party to this Agreement may cancel this Agreement by written notice
to the other party. Such cancellation shall be effective at the close of
business on the 5th day following the date on which such notice was given.
Seligman Financial Services may modify this Agreement at any time by
written notice to the Dealer. Such notice shall be deemed to have been
given on the date upon which it was either delivered personally to the
other party or any officer or member thereof, or was mailed postage-paid,
or delivered to a telegraph office for transmission to the other party at
his or its address as shown herein.
<PAGE>
11. This Agreement shall be construed in accordance with the laws of the State
of New York and shall be binding upon both parties hereto when signed by
Seligman Financial Services and by the Dealer in the spaces provided on the
cover of this Agreement. This Agreement shall not be applicable to Shares
of a Fund in a state in which such Fund Shares are not qualified for sale.
POLICIES AND PROCEDURES
In connection with the offering by the Funds of two classes of shares, one
subject to a front-end sales load and a service fee ("Class A Shares"), and one
subject to a service fee, a distribution fee, no front-end sales load and a
contingent deferred sales load on redemptions within one year of purchase
("Class D Shares"), it is important for an investor to choose the method of
purchasing shares which best suits his or her particular circumstances. To
assist investors in these decisions, Seligman Financial Services has instituted
the following policies with respect to orders for Shares:
1. No purchase order may be placed for Class D Shares for amounts of
$4,000,000 or more.
2. Any purchase order for less than $4,000,000 may be for either Class A
or Class D Shares in light of the relevant facts and circumstances,
including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his Shares; and
c. any other relevant circumstances such as the availability of
purchases under a Letter of Intent, Volume Discount, or Right of
Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than the other. For example, investors who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of a higher ongoing distribution fee. On the other hand,
an investor whose order would not qualify for such a discount may wish to have
all of his or her funds invested in Class D Shares, initially. However, if such
an investor anticipates that he or she will redeem his or her Class D Shares
within one year, the investor may, depending on the amount of the purchase, pay
an amount greater than the sales load and service fee attributable to Class A
Shares.
Appropriate supervisory personnel within your organization must ensure that
all employees receiving investor inquiries about the purchase of Shares of a
Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
Questions relating to this policy should be directed to Stephen J. Hodgdon,
President, Seligman Financial Services at (212) 850-1217.
Exhibit 10.1
[LETTERHEAD OF IRELAND, STAPLETON, PRYOR & PASCOE, P. C.]
January 12, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to Colorado
taxes in the Registration Statement. Subject to such review, our opinion dated
January 23, 1990 remains unchanged, however, we have suggested several revisions
to the language in the Colorado Tax Section in the form attached to this letter.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Colorado Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
IRELAND, STAPLETON, PRYOR &
PASCOE, P.C.
By: /s/ IRELAND, STAPLETON, PRYOR & PASCOE, P.C.
--------------------------------------------
Exhibit 10.2
[LETTERHEAD OF KING & SPALDING]
January 13, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to Georgia
taxes in the Registration Statement. Based upon such review, our opinion
concerning Georgia taxes as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this letter as an exhibit to the Registration
Statement and to the reference to us under the heading "Georgia Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ King & Spalding
---------------------------------
Exhibit 10.3
[LETTERHEAD OF LISKOW & LEWIS]
New Orleans, Louisiana
January 13, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Gentlemen:
You have requested our updated opinion with respect to certain Louisiana
income tax consequences of an investment in the Louisiana Series of shares of
the Seligman Tax-Exempt Fund Series, Inc. (the "Fund").
In rendering the opinion contained herein, we have relied upon the accuracy
of the facts and representations previously provided to us as follows:
The Fund is a diversified open-ended investment company incorporated in
Maryland on August 8, 1983, which is, and will maintain its status during all
relevant periods as a regulated investment company for federal income tax
purposes as defined in Section 851 of the Internal Revenue Code of 1986 (the
"Code").
The Fund consists of several series, one of which is the Louisiana State
Series (the "Louisiana Series"). Under normal conditions, the Louisiana Series
attempts to invest 100%, and as a matter of fundamental policy, invests at least
80% of the value of its net assets in securities the interest on which is exempt
from federal and Louisiana income tax. In abnormal market conditions, if, in the
judgment of the manager of the Fund, the tax-exempt securities satisfying the
Louisiana Series investment objectives may not be purchased, the Louisiana
Series, may, for defensive purposes, temporarily invest up to 20% of the value
of its net assets in instruments, the interest on which is exempt from federal
income tax, but not Louisiana state income tax. In unusual circumstances, the
Fund may invest up to 20% of the value of its net assets on a temporary basis in
fixed income securities, the interest on which is subject to both federal and
Louisiana income tax, pending the investment or reinvestment of those assets in
tax-exempt securities or in order to avoid the necessity of liquidating
portfolio investments to meet redemptions of shares by investors or where market
conditions due to rising interest rates or other adverse factors warrant
temporary investing for defensive purposes.
The Fund's net investment income is declared daily and paid to shareholders
monthly. The Fund distributes substantially all of any taxable net long and
short-term gains realized on investments to shareholders early in the year
following the year in which such gains are realized. The Louisiana Series
notifies its shareholders within forty-five (45) days after the close of the
year as to the interest derived from securities which are exempt from Louisiana
income taxes.
By Act 242 of the 1991 Regular Session of the Louisiana Legislature,
Louisiana Revised Statute 47:293(6) was amended by the addition of subparagraph
(d) which reads:
(d) For the purposes of this Paragraph, income distributed by a trust,
partnership, or mutual fund to an individual taxpayer shall retain the
same character in his hands as it had in the hands of such distributor
to the extent such income similarly retains it character for federal
income tax purposes.
<PAGE>
For purposes of confirming the interpretation of this provision of law by
the Louisiana Department of Revenue and Taxation (the "Department"), we have
obtained an updated ruling (the "Ruling") which acknowledges that to the extent
distributions from a fund such as the Fund, to resident individual-shareholders
are attributable to interest from obligations whose interest is exempt from
Louisiana income tax pursuant to Louisiana law or the income from which
Louisiana is prohibited from taxing by the constitution or laws of the United
States, fund dividends will be considered Louisiana tax-exempt interest income
when received by the resident individual-shareholder.
With respect to corporations, the amendment to La. R.S. 47:293 is not
clear, and for that reason, we also sought in the Ruling to obtain from the
Department its position as to the appropriate tax treatment of corporations
receiving distributions from a fund such as the Fund. Concerning corporations,
the Department has concluded that to the extent, for federal income tax
purposes, distributions from a fund such as the Fund retain the same character
in the hands of the recipient corporation as they had in the hands of the fund,
they will similarly retain their character for Louisiana income tax purposes.
We have further sought and obtained from the Department as part of the
Ruling the Department's position with respect to the income tax treatment of
income from a fund such as the Fund received by a trust. On this point, the
Department has concluded that the law is not clear, although the Department is
"inclined" to accept similar treatment by trusts of distributions from a fund
such as the Fund as would be afforded a trust under federal law. The Department
specifically reserved the right to consider and apply a different interpretation
at any time in the future.
We understand that the Department has not issued a written policy setting
forth the right of a taxpayer to rely on a private ruling; nor has the
Department issued a formal written policy stating the conditions under which the
Department may revoke or attempt to revoke a private ruling, and whether such
revocation would be retroactively or prospectively applied. Accordingly, there
can be no assurance that the Department will not issue a formal written policy
in the future which is contrary to its current practices with respect to its
adherence to its private rulings.
Subject to the foregoing and based on the Ruling, it is our opinion that to
the extent distributions from the Fund to its Louisiana resident individual
shareholders and corporate shareholders are attributable to exempt interest
generated from tax-exempt obligations of the State of Louisiana or its political
or governmental subdivisions, its governmental agencies, or instrumentalities
authorized under the laws of the State of Louisiana to issue tax-exempt
obligations ("Louisiana Tax-Exempt Obligations"), such exempt interest will not
be included in an individual's adjusted gross income or a corporation's gross
income within the definition of La. R.S. 47:293, nor will it constitute taxable
income of a corporation or a resident individual within the definition of La.
R.S. 47:293. As a result of the application of the relevant Louisiana statutes,
distributions received from the Fund by a corporation or a resident individual
will not be subject to Louisiana income tax to the extent such distributions are
attributable to the interest earned on Louisiana Tax-Exempt Obligations. To the
extent that the distributions under the Louisiana Series are derived from
sources other than interest on Louisiana Tax-Exempt Obligations, including long
term or short term capital gains, such distributions will be subject to
Louisiana income tax except to the extent Louisiana is prohibited from taxing
such distributions by the constitution or laws of the United States.
Because of the uncertainty in the law and the unwillingness of the
Department to commit itself to a binding position, we render no opinion with
respect to the Louisiana tax treatment of distributions from the Fund received
by a trust.
<PAGE>
Non-resident individuals and corporations maintaining their legal domicile
other than in the State of Louisiana will not be subject to Louisiana income tax
on their Louisiana Series dividends.
No opinion is expressed herein with respect to the legality or the
enforceability of any future policies or changes in policies of the Department
in connection with the binding effect of its private letter rulings.
You have not requested and accordingly, we are not rendering any opinion
with respect to Louisiana franchise, ad valorem, excise, sales, use or other
taxes other than Louisiana state income taxes applicable to dividend
distributions from Louisiana Tax-Exempt Obligations to shareholders who are
individuals.
This opinion is rendered as of the date hereof, and we make no undertakings
to supplement our opinion with facts or circumstances which come to our
attention or changes in the law, rules, regulations or administrative policies
which may affect such opinions.
We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 28 to the Fund Registration Statement filed with
the Securities and Exchange Commission by or on behalf of the Fund in connection
with the Louisiana Series and to the reference to our firm name therein. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
LISKOW & LEWIS
By: /s/ Liskow & Lewis
_____________________________
Exhibit 10.4
[LETTERHEAD OF VENABLE, BAETJER AND HOWARD, LLP ]
January 9, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on From N-1A under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to Maryland
Taxes in the Registration Statement. Subject to such review, our opinion as
delivered to you and as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Maryland Taxes". In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ Venable, Baetjer and Howard
_____________________________________
Exhibit 10.5
[LETTERHEAD OF PALMER & DODGE]
January 24, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to
Massachusetts Taxes in the Registration Statement. Subject to such review, our
opinion as delivered to you and as filed with the Securities and Exchange
Commission remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Massachusetts Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ Palmer & Dodge
_________________________
Exhibit 10.6
[LETTERHEAD OF DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN]
January 13, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to Michigan
Taxes in the Registration Statement. Subject to such review, our opinion as
delivered to you and as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Michigan Taxes." In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ Dickinson, Wright, Moon, Van Dusen & Freeman
_________________________________________________
Exhibit 10.7
[LETTERHEAD OF FAEGRE & BENSON]
January 24, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Dear Sir or Madam:
We are Minnesota tax counsel to Seligman Tax-Exempt Fund Series, Inc., a
Maryland corporation ("Seligman"). We have been informed that Seligman qualifies
as a regulated investment company as that term is defined and limited in section
851 of the Internal Revenue Code of 1986, as amended (the "Code"), and that it
has taken all other action to ensure that Seligman may pay exempt-interest
dividends as that term is defined in section 852(b)(5)(A) of the Code. We
understand that Seligman has sold separate series of classes of shares, each
generally to residents of specified states, for the purpose of enabling such
residents to receive exempt-interest dividends that are exempt from the regular
federal income tax as well as from the regular income tax imposed by the state
of residence of the recipient shareholder.
You have asked for our opinion as to the Minnesota income tax consequences
of the receipt by a shareholder of the Minnesota Tax-Exempt Class of
exempt-interest dividends that are payable with respect to shares of the
Minnesota Tax-Exempt Class. In responding to your inquiry, we have reviewed the
Articles of Incorporation of Seligman, as amended and supplemented, and certain
other materials that you have supplied to us. In addition, we have reviewed
certain of the laws of the State of Minnesota, and certain provisions of the
Code.
You have told us that each of the classes of Seligman, including the
Minnesota Tax-Exempt Class, is, and intends to continue to qualify as, a "fund"
of Seligman within the meaning of section 851(h) of the Code. As such, you have
informed us that each of the classes of Seligman, including the Minnesota
Tax-Exempt Class, is, and intends to continue to qualify as, a separate
regulated investment company, and that Seligman has taken, and will take, all
other action so as to enable the Minnesota Tax-Exempt Class to pay
exempt-interest dividends within the meaning of the Code. We have also been told
that Seligman has in the past and will in the future attempt to invest the bulk
of the assets belonging to the Minnesota Tax-Exempt Class in any combination of
tax-exempt obligations of the State of Minnesota or its political or
governmental subdivisions, municipalities, governmental agencies or
instrumentalities, so as to generate as large a percentage of tax-exempt income
as is possible. In addition, we have been informed that, during all material
times, Seligman has invested the assets belonging to the Minnesota Tax-Exempt
Class, and has made payments to the shareholders of the Minnesota Tax-Exempt
Class, so as to meet the 95% test that is set forth below, whether based on a
fiscal or a calendar year basis. We have relied, for purposes of this opinion,
upon the statements in the documents that we have reviewed and upon all of the
representations that have been made to us, but have made no independent
investigation thereof, and express no opinion with respect thereto.
Minn. Stat. ss. 290.01, subd. 19, provides that the starting point for the
computation of Minnesota taxable income is federal taxable income, to which
various additions, subtractions, and modifications are then made. Minn. Stat.
ss. 290.01, subd. l9(a), provides for certain additions in the case of
individuals, estates, and trusts, one of which is the following:
(1)(ii) exempt-interest dividends as defined in section 852(b)(5) of the
Internal Revenue Code, except the portion of the exempt-interest dividends
<PAGE>
derived from interest income on obligations of the state of Minnesota or
its political or governmental subdivisions, municipalities, governmental
agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all
shareholders represents 95 percent or more of the exempt-interest dividends
that are paid by the regulated investment company as defined in section
851(a) of the Internal Revenue Code, or the fund of the regulated
investment company as defined in section 851(h) of the Internal Revenue
Code, making the payment;
Accordingly, under these rules, to the extent that (1) the exempt-interest
dividends that are paid by the Minnesota Tax-Exempt class are derived from
interest income on obligations of the State of Minnesota or its political or
governmental subdivisions, municipalities, governmental agencies or
instrumentalities (the "specified obligations"), and (2) the 95% test that is
set forth above is met, such exempt-interest dividends (to the extent that they
are not includable in federal taxable income) will likewise be exempt from the
regular Minnesota personal income tax, and only those exempt-interest dividends
that are derived from other sources will be subject to such tax, in the case of
individuals, estates, and trusts.1
Should the 95% test not be met, all exempt-interest dividends paid by the
Minnesota Tax-Exempt Class will be subject to the regular Minnesota personal
income tax, even if derived from the specified obligations. Finally, even if the
95% test is met, to the extent that distributions do not represent
exempt-interest dividends that are derived from interest income on the specified
obligations, such distributions, including, but not limited to, long-term
capital gains, will generally be subject to the regular Minnesota personal
income tax.
In addition to imposing a regular personal income tax, Minnesota imposes an
alternative minimum tax (see Minn. Stat. ss. 290.091) on individuals, estates,
and trusts that is based, in part, on such taxpayers' federal alternative
minimum taxable income, which includes federal tax preference items. The Code
provides that interest on specified private activity bonds is a federal tax
preference item, and that an exempt-interest dividend of a regulated investment
company constitutes a federal tax preference item to the extent of its
proportionate share of the interest on such private activity bonds. Accordingly,
shareholders of the Minnesota Tax-Exempt Class who are individuals, estates, or
trusts may be subject to the Minnesota alternative minimum tax as a result of
the receipt of exempt-interest dividends that are attributable to such private
activity bond interest, even though they are also attributable to the specified
obligations described in this letter. In addition, the entire portion of
exempt-interest dividends that is attributable to interest other than interest
on the specified obligations is subject to the Minnesota alternative minimum
tax. Finally, should the 95% test that is described above fail to be met, all of
the exempt-interest dividends that are received by the shareholders of the
Minnesota Tax-Exempt Class who are individuals, estates, or trusts, including
all of those that are attributable to the specified obligations, will be subject
to the Minnesota alternative minimum tax.
- -----------
1 It should be noted that interest income that is derived from obligations
held through repurchase agreements, even though derived from the specified
obligations the interest income from which would be exempt, will not qualify
under these rules, and any dividends that are attributable to such interest will
be subject to the regular Minnesota personal income tax.
<PAGE>
Subject to certain limitations that are set forth in the Minnesota rules,
Minnesota Tax-Exempt Class dividends, if any, that are derived from interest on
certain United States obligations are not subject to the regular Minnesota
personal income tax or the Minnesota alternative minimum tax, in the case of
shareholders of the Minnesota Tax-Exempt Class who are individuals, estates, or
trusts.
The above discussion has related, in general, to individuals, estates, and
trusts. Distributions, including exempt-interest dividends, that are paid to
shareholders of the Minnesota Tax-Exempt Class are not excluded in determining
the Minnesota franchise tax on corporations that is measured by taxable income
and alternative minimum taxable income. Minnesota Tax-Exempt Class distributions
may also be taken into account in certain cases in determining the minimum fee
that is imposed on corporations, S corporations, and partnerships.
The opinions expressed herein represent our judgment regarding the proper
Minnesota tax treatment of the specified shareholders of the Minnesota
Tax-Exempt Class who are subject to Minnesota taxation. Our conclusions are
based on our analysis of the Minnesota statutes, tax regulations and case law
which exist as of the date of this opinion, all of which may be subject to
prospective or retroactive change. Our opinion represents our best judgment
regarding the issues presented and is not binding upon the Minnesota Department
of Revenue ("Department") or any court. Moreover, our opinion does not provide
any assurance that a position taken in reliance on such opinion will not be
challenged by the Department or rejected by a court.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement to be filed on or about January 26, 1995, with the
Securities and Exchange Commission, and to the reference to us under the heading
"Minnesota Taxes." In giving such consent, we do not thereby admit that we are
in the category of persons whose consent is required under section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
/s/ FAEGRE & BENSON
__________________________________________
Professional Limited Liability Partnership
Exhibit 10.8
[LETTERHEAD OF BRYAN CAVE]
January 24, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to Missouri
Taxes in the Registration Statement. Subject to such review, our opinion as
delivered to you and as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "Missouri Taxes. " In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Respectfully submitted,
/s/ BRYAN CAVE
___________________________
Exhibit 10.9
[LETTERHEAD OF SULLIVAN & CROMWELL]
January 26, 1995
Seligman Tax-Exempt Fund Series, Inc.,
100 Park Avenue, 8th Floor,
New York, New York 10017.
Ladies and Gentlemen:
We have acted as counsel to Seligman Tax-Exempt Fund Series, Inc. (the
"Fund"), and you have requested our opinion regarding the New York State and
City personal income tax consequences to holders of shares of the New York
Tax-Exempt Series of the Fund (the "New York Series").
The Fund, a Maryland corporation, is an open-end non-diversified management
investment company authorized by its Articles of Incorporation, Articles of
Amendment and Articles Supplementary to such Articles of Amendment
(collectively, the "Articles") to issue shares representing separate investment
series of the Fund, one of which is the New York Series. The Articles provide
that all consideration received by the Fund for the issue or sale of shares of a
particular series, all assets in which such consideration is invested and all
income and proceeds from such assets shall irrevocably belong to that series
only, subject only to the rights of creditors. Dividends on shares of a
particular series may be paid only from the assets belonging to the series. The
income of the New York Series will consist primarily of interest on obligations
of New York State and its municipalities and public authorities which is
excluded from gross income for Federal income tax purposes by Section 103(a) of
the Internal Revenue Code of 1986, as amended (the "Code") and certain other
interest which is excluded from gross income for Federal income tax purposes,
such as interest on bonds issued by the Government of Puerto Rico and exempt
pursuant to Section 745 of Title 48 of the United States Code.
In connection with this opinion, we have assumed with your consent that the
New York Series of the Fund is a regulated investment company taxable under
<PAGE>
Subchapter M of the Code and that dividends paid by the New York Series will
constitute in whole or in part "exempt-interest dividends" within the meaning of
Section 852(b)(5) of the Code.
Adjusted gross income for New York State and City personal income tax
purposes is defined as adjusted gross income for Federal income tax purposes
with certain statutory modifications. One modification is that interest received
by a taxpayer on obligations of any state other than New York or a political
subdivision of any such state generally must be added to Federal adjusted gross
income. Regulations promulgated by the New York State Tax Commission provide
that "exempt-interest dividends" attributable to interest on obligations of any
state other than New York or a political subdivision of any such state must be
added to Federal adjusted gross income in calculating adjusted gross income for
New York State and City personal income tax purposes.
On the basis of the foregoing and our consideration of such matters as we
have considered necessary, we advise you that, in our opinion, for New York
State and City personal income tax purposes, owners of shares in the New York
Series will be entitled to exclude from their adjusted gross income for New York
State and City tax purposes any dividends paid by the New York Series which
qualify as "exempt-interest dividends" under Section 852(b)(5) of the Code and
are not derived from interest on obligations of a state other than New York or a
political subdivision of any such state. Such dividends would include, for
example, dividends derived from qualifying interest on obligations issued by the
Government of Puerto Rico.
In this regard, we have reviewed the Notices of the New York State Income
Tax Bureau, dated February 18, 1977 and March 7, 1977, expressing the view that
not only "exempt-interest dividends" derived from obligations of other states
and their political subdivisions but all "exempt-interest dividends" which are
attributable to interest on obligations of any issuer other than New York State
or one of its political subdivisions (such as obligations issued by the
Government of Puerto Rico) must be added to Federal adjusted gross income.
Insofar as these Notices conflict with the regulations, which were adopted after
the issuance of the Notices and which more closely follow the statutory
language, we regard the regulations as the controlling authority. We note that
the New York State Tax Commission has issued an advisory opinion, TSB-A-82-(5)-I
<PAGE>
(Sept. 22, 1982), in which it concluded that "exempt-interest dividends"
attributable to interest on obligations issued by the Governments of Puerto
Rico, the Virgin Islands and Guam, are exempt from New York State and City
personal income tax.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement for the Fund and to the reference to us under the heading
"New York State and City Taxes." In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Sullivan & Cromwell
______________________________
Exhibit 10.10
[LETTERHEAD OF SQUIRE, SANDERS & DEMPSEY]
January 23, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Re: Seligman Tax-Exempt Fund Series, Inc.--Post-Effective Amendment No. 28
Ladies and Gentlemen:
We have acted as Ohio tax counsel with respect to Post Effective Amendment
No. 28 to the Registration Statement (the "Registration Statement") on Form N-1A
for Seligman Tax-Exempt Fund Series, Inc., a Maryland corporation (the "Fund").
We hereby consent to the filing of this letter as an exhibit to such
Registration Statement and to the reference to our firm under the caption "Taxes
- -- Ohio Taxes" in the Prospectus that is a part of the Registration Statement.
In giving such consent, we do not thereby acknowledge that we are within the
category of persons whose consent is required by Section 7 of the Securities Act
of 1933, as amended, and the rules and regulations thereunder.
Very truly yours,
/s/ Squire, Sanders & Dempsey
__________________________________
<PAGE>
[LETTERHEAD OF SQUIRE, SANDERS & DEMPSEY]
January 23, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Re: Ohio Tax-Exempt Series
Post-Effective Amendment No. 28
Ladies and Gentlemen:
You have requested our opinion as to the Ohio tax aspects of the Ohio
Tax-Exempt Series ("Ohio Series"), which is part of the Seligman Tax-Exempt Fund
Series, Inc. (the "Fund"). We understand that the Fund is a non-diversified,
open-end management company organized as a Maryland corporation in August, 1983.
The Fund's articles of incorporation, as amended, (i) authorize a number of
different classes of common stock, one of which is designated the Ohio Series,
and (ii) provide that all consideration received by the Fund from the issue or
sale of shares of each class, together with all investments of such
consideration, all income, earnings and profits thereon, and all funds or
payments allocated thereto by the Board of Directors of the Fund, shall
irrevocably belong to such class, subject only to the liabilities of that class
and to the rights of creditors of the Fund.
We understand that the Ohio Series will invest primarily in
interest-bearing obligations issued by or on behalf of the State of Ohio,
political subdivisions thereof and agencies and instrumentalities of the State
or its political subdivisions ("Ohio Obligations"), and by the governments of
Puerto Rico, the Virgin Islands and Guam and their authorities or municipalities
("Territorial Obligations," and, together with Ohio Obligations, "Obligations").
We further understand that, based on the opinion of bond counsel with respect to
each issue of Obligations held or to be held by the Ohio Series, rendered on the
date of issuance thereof, interest on each such issue is excluded from gross
income for federal income tax purposes under Section 103(a) of the Internal
Revenue Code of 1986, as amended (the "Code", or other provisions of federal
law, provided that certain representations are accurate and certain covenants
are satisfied.
We understand that the Ohio Series intends to continue to qualify as a
"regulated investment company" within the meaning of Section 851 of the Code,
and to pay "exempt-interest dividends" within the meaning of Section 852(b) of
the Code, i.e., dividends that are excludable from the shareholders' gross
income for federal income tax purposes. We have assumed for the purposes of this
opinion that the Ohio Series qualifies and will continue to qualify as a
regulated investment company within the meaning of Section 851 of the Code and
that at all times at least 50 percent of the value of the total assets of the
Ohio Series will consist of Ohio Obligations, or similar obligations of other
states or their subdivisions (but not including, for this purpose, Territorial
Obligations).
Based upon the foregoing and upon an examination of such documents and an
investigation of such other matters of law as we have deemed necessary, we are
of the opinion that under existing law:
1. The Ohio Series is not subject to (a) the Ohio personal income tax, (b)
school district income taxes in Ohio, (c) the Ohio corporation franchise tax, or
(d) the Ohio dealers in intangibles tax; provided that, in the case of the taxes
<PAGE>
identified in (c) and (d), if the Ohio Series has a sufficient nexus to the
State of Ohio to be subject to Ohio taxation, the Ohio Series will be exempt
from such taxes only if it timely complies with the annual filing requirement of
Section 5733.09 of the Ohio Revised Code. We note, however, that the Ohio Tax
Commissioner has waived this annual filing requirement for each year (including
1995) since it was originally enacted in 1989.
2. Shareholders who are subject to the Ohio personal income tax or
municipal or school district income taxes in Ohio will not be subject to such
taxes on distributions with respect to shares of the Ohio Series
("Distributions") that are properly attributable to interest on Obligations.
3. Shareholders who are subject to the Ohio corporation franchise tax
computed on the net income basis will not be subject to such tax on
Distributions to the extent that such Distributions either (a) are properly
attributable to interest on Obligations, or (b) represent "exempt-interest
dividends" for federal income tax purposes. Shares of the Ohio Series will be
included in a Shareholder's tax base for purposes of computing the Ohio
corporation franchise tax on the net worth basis.
4. Shareholders who are subject to the Ohio personal income tax, the Ohio
corporation franchise tax computed on the net income basis, or municipal or
school district income taxes in Ohio will not be subject to such taxes on
Distributions of profit made on the sale, exchange, or other disposition of Ohio
Obligations, including Distributions of "capital gain dividends," as defined in
Section 852(b)(3)(C) of the Code, properly attributable to the sale, exchange,
or other disposition of Ohio Obligations.
5. Distributions properly attributable to proceeds of insurance paid to the
Ohio Series that represent maturing or matured interest on defaulted Obligations
held by the Ohio Series and that are excluded from gross income for federal
income tax purposes are exempt from the Ohio personal income tax and municipal
and school district income taxes in Ohio, and are excluded from the net income
base of the Ohio corporation franchise tax.
We have not examined any of the obligations to be acquired by the Ohio
Series and express no opinion as to whether such obligations, interest thereon
or gain from the sale or other disposition thereof are in fact exempt from any
federal or Ohio taxes.
Respectfully submitted,
/s/ Squire, Sanders & Dempsey
_________________________________
Exhibit 10.11
[LETTERHEAD OF SCHWABE WILLIAMSON & WYATT]
January 6, 1995
Seligman Tax-Exempt Fund Series, Inc.
One Bankers Trust Plaza
New York, NY 10006
Re: Oregon Series
Ladies and Gentlemen:
We have acted as Oregon counsel to Seligman Tax-Exempt Fund Series, Inc.
(the "Fund"), and you have requested our opinion regarding the State of Oregon
personal income tax consequences to holders of the Oregon Tax-Exempt Class of
the Common Stock of the Fund (the "Oregon Series").
The Fund, a Maryland corporation, is a nondiversified, open-end management
investment company authorized by its Articles of Incorporation and articles
supplementary thereto to issue multiple classes of Common Stock, one of which is
the Oregon Series. The Articles provide that all consideration received by the
Fund for the issue or sale of shares of a particular class, all assets in which
such consideration is invested and all income and proceeds from such assets
shall belong to that class only, subject only to the rights of creditors.
Dividends on shares of a particular class may be paid only from the assets
belonging to the class.
The income of the Oregon Series will consist primarily of interest on
obligations of the State of Oregon and its municipalities and public
authorities, which is excluded from gross income for Federal income tax purposes
by Section 103(a) of the Internal Revenue Code of 1986, as amended (the "Code").
The income of the Oregon Series may also include certain other interest which is
excluded from gross income for Federal income tax purposes, such as interest on
bonds issued by the Government of Puerto Rico (excluded pursuant to 48 USC
Section 745), the Government of Guam (excluded pursuant to 48 USC Section 1423a)
or the Government of the Virgin Islands (excluded pursuant to 48 USC Section
1574).
In connection with this opinion, we have assumed with your consent that the
Oregon Series is a regulated investment company taxable under Subchapter M of
the Code and that dividends paid by the Fund will constitute in whole or in part
"exempt interest dividends" within the meaning of Section 852(b)(5) of the Code.
For purposes of State of Oregon personal income tax, adjusted gross income
is defined as adjusted gross income for federal income tax purposes with certain
statutory modifications. One modification is that interest or dividends on
obligations or securities of any state other than Oregon, or of any political
subdivision or authority of a state other than Oregon, generally must be added
to federal adjusted gross income. Another modification is that interest or
dividends on obligations of any authority, commission, instrumentality or
territorial possession of the United States which by the laws of the United
States are exempt from federal income tax but not from state income taxes also
generally must be added to federal adjusted gross income.
On the basis of the foregoing, and our consideration of such matters as we
have considered necessary, we advise you that, in our opinion, under present law
for State of Oregon personal income tax purposes, owners of the Oregon Series
will be entitled to exclude from State of Oregon adjusted gross income dividends
paid by the Oregon Series which:
<PAGE>
1) qualify as "exempt-interest dividends" under section 852(b)(5) of the
Code; and
2) are derived from:~
(a) interest or dividends on obligations or securities of the State
of Oregon or of a political subdivision or authority of the State
of Oregon; or
(b) interest or dividends on obligations of any authority,
commission, instrumentality or territoriality of the United
States which, by the laws of the United States, are exempt from
state income taxes (such as interest on bonds issued by Puerto
Rico, Guam or the Virgin Islands).
In our opinion, under present law, shares of the Oregon Series will not be
subject to Oregon personal property tax.
We express no opinion as to taxation under the Oregon Corporate Excise Tax
or the Oregon Corporate Income Tax of dividends paid by the Oregon Series.
We hereby consent to the filing of this opinion as an exhibit to your
Post-Effective Amendment No. 28 to the Registration Statement under the
Securities Act of 1933, as amended, of Seligman Tax-Exempt Fund Series, Inc.,
and to the reference to us under the heading "Oregon Taxes." In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
SCHWABE WILLIAMSON & WYATT, P.C.
By: /s/ SCHWABE WILLIAMSON & WYATT, P.C.
____________________________________
Exhibit 10.12
[LETTERHEAD OF SINKLER & BOYD P.A. ]
WRITER'S DIRECT DIAL NUMBER
(803) 540-7808
January 12, 1995
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A under the Securities Act of 1993, as amended, of Seligman
Tax-Exempt Fund Series, Inc., we have reviewed the material relative to South
Carolina Taxes in the Registration Statement. Subject to such review, our
opinion as delivered to you and as filed with the Securities and Exchange
Commission remains unchanged. We have changed the "special factors section" to
reflect recent changes in the South Carolina statutes and recent financial
results of the state. A copy of such revised section is attached.
We consent to the filing of this consent as an exhibit to the Registration
Statement and to the reference to us under the heading "South Carolina Taxes."
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1993,
as amended.
Very truly yours,
/s/ Sinkler & Boyd
_________________________
EXHIBIT 11
Consent of Independent Auditors
Seligman Tax-Exempt Fund Series, Inc.:
We consent to the incorporation by reference in the Statement of Additional
Information in this Post-Effective Amendment No. 28 to Registration Statement
No. 2-86008 of our report dated October 28, 1994, appearing in the annual report
to shareholders for the year ended September 30, 1994, and to the reference to
us under the caption "Financial Highlights" in the Prospectus, which is a part
of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
________________________________
DELOITTE & TOUCHE LLP
New York, New York
January 27, 1995
