File No. 2-86008
811-3828
As filed with the Securities and Exchange Commission on January 26, 1996
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. 29 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 28 |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, 1996 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 22, 1995.
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<CAPTION>
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 29
Pursuant to Rule 481(a)
Item in Part A of Form N-1A Location in Prospectus
--------------------------- ----------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Organization and Capitalization
5. Management of the Fund Management Services
5a. Management's Discussion of Fund Management Services
Performance
6. Capital Stock and Other Securities 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 Fund
9. Pending Legal Proceedings Not Applicable
Item in Part B of Form N-1A Location in Statement of Additional Information
10. Cover Page Cover Page
11. Table Of Contents Table Of Contents
12. General Information and History Investment Objectives, Policies and Risks; General Information; Appendix A
13. Investment Objectives and Policies Investment Objective, Policies And Risks; Investment Limitations
14. Management of the Fund Directors and Officers; Management And Expenses
15. Control Persons and Principal Directors and Officers
Holders of Securities
16. Investment Advisory and Other Services Management And Expenses; Distribution Services
17. Brokerage Allocations Administration, Shareholder Services and Distribution Plan;
Portfolio Transactions
18. Capital Stock and Other Securities General Information
19. Purchase, Redemption and Pricing of Purchase and Redemption of Fund Shares; Valuation
Securities Being Offered
20. Tax Status Taxes
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, NY 10017
New York Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450--all continental United States
February 1, 1996
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 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. Investment grade securities
are rated within the four highest rating categories of Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"). 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 investment grade Pennsylvania tax-exempt securities.
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
investment grade securities.
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 impose an individual income tax) consistent with preservation of
capital and with consideration given to capital gain, by investing in tax-exempt
securities rated in the four highest rating categories, except that the
California Tax-Exempt Quality Series pursues its investment objective by
investing only in tax-exempt securities rated in the three highest rating
categories, of Moody's 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 or S&P or
which are unrated. The Series may invest up to 100% of its portfolio in lower
rated bonds, commonly known as "junk bonds." 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. Investors
should carefully assess the risks associated with an investment in this Series.
See "Investment Objectives and Policies--Seligman California Tax-Exempt
High-Yield Series," in this Prospectus.
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
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<TABLE>
<CAPTION>
SUMMARY OF SERIES 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.
NJ FUND PA FUND NAT'L SERIES CO SERIES
------------------------- ------------------------- ------------------------- -------------------------
Class A Class D Class A Class D Class A Class D Class A Class D
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
(Initial (Deferred (Initial (Deferred (Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <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 4.75% None
Sales Load on Reinvested
Dividends ............. None None 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 None 1% during
the first the first the first the first
year; None year; None year; None year; None
thereafter thereafter thereafter thereafter
Redemption Fees.......... None None None None None None None None
Exchange Fees............ None None None None None None None None
Class A Class D Class A Class D Class A Class D Class A Class D
------- ------- ------- ------- ------- ------- ------- -------
Annual Series Operating
Expenses for Fiscal
Year Ended September 30,
1995 (as percentage of
average net assets)
Management Fees........ .50% .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees............. .22 1.00* .22 1.00* .09 1.00* .09 1.00*
Other Expenses......... .34 .34 .49 .49 .27 .27 .34 .34
---- ---- ---- ---- --- ---- --- ----
Total Series
Operating Expenses .. 1.06% 1.84% 1.21% 1.99% .86% 1.77% .93% 1.84%
==== ==== ==== ==== === ==== === ====
In fiscal 1995, the Manager, in its discretion, waived a portion of its fee from the New Jersey Fund. In fiscal 1996, the
Manager does not expect to waive any of its fees, and the expense information in the table has been restated to reflect the
discontinuance of the management fee waiver. The "Other Expenses" disclosed for Class D shares have been restated to reflect the
expense allocation methodology currently being used by the Series.
</TABLE>
<TABLE>
<CAPTION>
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.
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 $ 58 $ 29+ $ 59 $ 30+ $ 56 $ 28+ $ 57 $ 29+
3 years 80 58 84 62 74 56 76 58
5 years 103 100 111 107 93 96 97 100
10 years 171 216 187 232 149 208 156 216
* Includes an annual distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1%. Pursuant to the 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 such shares.
+ 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--$19; PA--$20; NAT'L--$18; CO--$19.
</TABLE>
3
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<CAPTION>
SUMMARY OF SERIES EXPENSES--(continued)
GA SERIES LA SERIES MD SERIES MA SERIES
------------------------- ------------------------- ------------------------- -------------------------
Class A Class D Class A Class D Class A Class D Class A Class D
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
(Initial (Deferred (Initial (Deferred (Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <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 4.75% None
Sales Load on Reinvested
Dividends ............. None None 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 None 1% during
the first the first the first the first
year; None year; None year; None year; None
thereafter thereafter thereafter thereafter
Redemption Fees.......... None None None None None None None None
Exchange Fees............ None None None None None None None None
Class A Class D Class A Class D Class A Class D Class A Class D
------- ------- ------- ------- ------- ------- ------- -------
Annual Series Operating
Expenses for Fiscal
Year Ended September 30,
1995 (as percentage of
average net assets)
Management Fees........ .50% .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees............. .10 1.00* .10 1.00* .09 1.00* .10 1.00*
Other Expenses......... .36 .36 .29 .29 .37 .37 .26 .26
--- ---- --- ---- --- ---- --- ----
Total Series
Operating Expenses .. .96% 1.86% .89% 1.79% .96% 1.87% .86% 1.76%
=== ==== === ==== === ==== === ====
In fiscal 1995, the Manager, in its discretion, waived a portion of its fee from the Georgia Series. In fiscal 1996, the
Manager does not expect to waive any of its fees, and the expense information in the table has been restated to reflect the
discontinuance of the management fee waiver. The "Other Expenses" disclosed for Class D shares have been restated to reflect the
expense allocation methodology currently being used by the Series.
</TABLE>
<TABLE>
<CAPTION>
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.
GA SERIES LA SERIES 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 $ 57 $ 29+ $ 56 $ 28+ $ 57 $ 29+ $ 56 $ 28+
3 years 77 58 75 56 77 59 74 55
5 years 98 101 94 97 98 101 93 95
10 years 160 218 152 211 160 219 149 207
* Includes an annual distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1%. Pursuant to the 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 such shares.
+ 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--$19; LA--$18; MD--$19; MA--$18.
</TABLE>
4
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<TABLE>
<CAPTION>
SUMMARY OF SERIES EXPENSES--(continued)
MI SERIES MN SERIES MO SERIES NY SERIES
------------------------- ------------------------- ------------------------- -------------------------
Class A Class D Class A Class D Class A Class D Class A Class D
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
(Initial (Deferred (Initial (Deferred (Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <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 4.75% None
Sales Load on Reinvested
Dividends ............. None None 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 None 1% during
the first the first the first the first
year; None year; None year; None year; None
thereafter thereafter thereafter thereafter
Redemption Fees.......... None None None None None None None None
Exchange Fees............ None None None None None None None None
Class A Class D Class A Class D Class A Class D Class A Class D
------- ------- ------- ------- ------- ------- ------- -------
Annual Series Operating
Expenses for Fiscal
Year Ended September 30,
1995 (as percentage of
average net assets)
Management Fees........ .50% .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees............. .10 1.00* .10 1.00* .09 1.00* .08 1.00*
Other Expenses......... .27 .27 .27 .27 .34 .34 .30 .30
--- ---- --- ---- --- ---- --- ----
Total Series
Operating Expenses .. .87% 1.77% .87% 1.77% .93% 1.84% .88% 1.80%
=== ==== === ==== === ==== === ====
In fiscal 1995, the Manager, in its discretion, waived a portion of its fee from the Missouri Series. In fiscal 1996, the
Manager does not expect to waive any of its fees, and the expense information in the table has been restated to reflect the
discontinuance of the management fee waiver. The "Other Expenses" disclosed for Class D shares have been restated to reflect the
expense allocation methodology currently being used by the Series.
</TABLE>
<TABLE>
<CAPTION>
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.
MI SERIES MN SERIES 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+ $ 57 $ 29+ $ 56 $ 28+
3 years 74 56 74 56 76 58 74 57
5 years 93 96 93 96 97 100 94 97
10 years 150 208 150 208 156 216 151 212
* Includes an annual distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1%. Pursuant to the 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 such shares.
+ 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--$19; NY--$18.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF SERIES EXPENSES--(continued)
CA
OH SERIES OR SERIES SC SERIES HIGH-YIELD SERIES
------------------------- ------------------------- ------------------------- -------------------------
Class A Class D Class A Class D Class A Class D Class A Class D
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
(Initial (Deferred (Initial (Deferred (Initial (Deferred (Initial (Deferred
Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load Sales Load
Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative) Alternative)
<S> <C> <C> <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 4.75% None
Sales Load on Reinvested
Dividends ............. None None 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 None 1% during
the first the first the first the first
year; None year; None year; None year; None
thereafter thereafter thereafter thereafter
Redemption Fees.......... None None None None None None None None
Exchange Fees............ None None None None None None None None
Class A Class D Class A Class D Class A Class D Class A Class D
------- ------- ------- ------- ------- ------- ------- -------
Annual Series Operating
Expenses for Fiscal
Year Ended September 30,
1995 (as percentage of
average net assets)
Management Fees........ .50% .50% .50% .50% .50% .50% .50% .50%
12b-1 Fees............. .10 1.00* .10 1.00* .10 1.00* .10 1.00*
Other Expenses......... .24 .24 .31 .31 .28 .28 .30 .30
--- ---- --- ---- --- ---- --- ----
Total Series
Operating Expenses .. .84% 1.74% .91% 1.81% .88% 1.78% .90% 1.80%
=== ==== === ==== === ==== === ====
In fiscal 1995, the Manager, in its discretion, waived a portion of its fees from the Oregon Series. In fiscal 1996, the
Manager does not expect to waive any of its fees, and the expense information in the table has been restated to reflect the
discontinuance of the management fee waiver. The "Other Expenses" disclosed for Class D shares have been restated to reflect the
expense allocation methodology currently being used by the Series.
</TABLE>
<TABLE>
<CAPTION>
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.
CA
OH SERIES OR SERIES 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+ $ 56 $ 28+ $ 56 $ 28+ $ 56 $ 28+
3 years 73 55 75 57 74 56 75 57
5 years 92 94 95 98 94 95 95 97
10 years 146 205 154 213 151 209 153 212
* Includes an annual distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1%. Pursuant to the 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 such shares.
+ 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--$18; SC--$18; CA High-Yield--$18.
</TABLE>
6
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<TABLE>
<CAPTION>
SUMMARY OF SERIES EXPENSES--(continued)
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 the first the first
year; None year; None year; 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,
1995 (as percentage of
average net assets)
Management Fees........ .50% .50% .50% .50% .50% .50%
12b-1 Fees............. .10 1.00* .24 1.00* .24 1.00*
Other Expenses......... .29 .29 .29 .29 .44 .44
--- ---- ---- ---- ---- ----
Total Series
Operating Expenses .. .89% 1.79% 1.03% 1.79% 1.18% 1.94%
=== ==== ==== ==== ==== ====
In fiscal 1995, the Manager, in its discretion, waived a portion of its fee from the Florida Series and from the North Carolina
Series. In fiscal 1996, the Manager does not expect to waive any of its fees, and the expense information in the table has been
restated to reflect the discontinuance of the management fee waiver. The "Other Expenses" disclosed for Class D shares have been
restated to reflect the expense allocation methodology currently being used by the Series.
</TABLE>
<TABLE>
<CAPTION>
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.
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 year $ 56 $ 28+ $ 58 $ 28+ $ 59 $ 30+
3 years 75 56 79 56 83 61
5 years 94 97 102 97 109 105
10 years 152 211 167 211 184 226
* Includes an annual distribution fee of up to .75 of 1% and an annual service fee of up to .25 of 1% (collectively,
"distribution fee"). Pursuant to the 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 such shares.
+ 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--$18; NC--$20.
</TABLE>
7
<PAGE>
FINANCIAL HIGHLIGHTS
Each Series' 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 1995
financial statements and notes contained in the fiscal 1995 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 the
effect that 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 a series' 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 Distributions Net Increase
Per Share Operating at Beginning Investment Investment Investment Paid or from Net (Decrease) in
Performance: of Period Income# Gain (Loss) Operations Declared Gain Realized Net Asset Value
------------ --------- ------- ----------- ---------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
New Jersey--Class A
Year ended 9/30/95....... $7.40 $0.39 $0.29 $0.68 $(0.39) $(0.10) $0.19
Year ended 9/30/94....... 8.24 0.41 (0.74) (0.33) (0.41) (0.10) (0.84)
Year ended 9/30/93....... 7.74 0.42 0.61 1.03 (0.42) (0.11) 0.50
Year ended 9/30/92....... 7.49 0.44 0.27 0.71 (0.44) (0.02) 0.25
Year ended 9/30/91....... 7.01 0.44 0.51 0.95 (0.44) (0.03) 0.48
Year ended 9/30/90....... 7.17 0.45 (0.10) 0.35 (0.45) (0.06) (0.16)
Year ended 9/30/89....... 6.98 0.48 0.19 0.67 (0.48) -- 0.19
2/16/88*- 9/30/88........ 7.14 0.30 (0.16) 0.14 (0.30) -- (0.16)
New Jersey--Class D
Year ended 9/30/95....... 7.48 0.33 0.29 0.62 (0.33) (0.10) 0.19
2/1/94**- 9/30/94........ 8.14 0.23 (0.66) (0.43) (0.23) -- (0.66)
Pennsylvania--Class A
Year ended 9/30/95....... 7.55 0.38 0.37 0.75 (0.38) (0.13) 0.24
Year ended 9/30/94....... 8.61 0.39 (0.80) (0.41) (0.39) (0.26) (1.06)
Year ended 9/30/93....... 8.02 0.42 0.71 1.13 (0.42) (0.12) 0.59
Year ended 9/30/92....... 7.74 0.46 0.30 0.76 (0.46) (0.02) 0.28
Year ended 9/30/91....... 7.34 0.47 0.49 0.96 (0.47) (0.09) 0.40
Year ended 9/30/90....... 7.50 0.47 (0.16) 0.31 (0.47) -- (0.16)
Year ended 9/30/89....... 7.31 0.49 0.19 0.68 (0.49) -- 0.19
Year ended 9/30/88....... 6.76 0.50 0.56 1.06 (0.50) (0.01) 0.55
Year ended 9/30/87....... 7.58 0.51 (0.81) (0.30) (0.51) (0.01) (0.82)
7/15/86*- 9/30/86........ 7.14 0.10 0.44 0.54 (0.10) -- 0.44
Pennsylvania--Class D
Year ended 9/30/95....... 7.54 0.31 0.37 0.68 (0.31) (0.13) 0.24
2/1/94**- 9/30/94........ 8.37 0.22 (0.83) (0.61) (0.22) -- (0.83)
National Series--Class A
Year ended 9/30/95....... 7.18 0.40 0.40 0.80 (0.40) -- 0.40
Year ended 9/30/94....... 8.72 0.41 (1.04) (0.63) (0.41) (0.50) (1.54)
Year ended 9/30/93....... 8.07 0.45 0.78 1.23 (0.45) (0.13) 0.65
Year ended 9/30/92....... 7.90 0.48 0.20 0.68 (0.48) (0.03) 0.17
Year ended 9/30/91....... 7.44 0.49 0.54 1.03 (0.49) (0.08) 0.46
Year ended 9/30/90....... 7.73 0.51 (0.19) 0.32 (0.51) (0.10) (0.29)
Year ended 9/30/89....... 7.64 0.53 0.11 0.64 (0.53) (0.02) 0.09
Year ended 9/30/88....... 7.41 0.54 0.55 1.09 (0.54) (0.32) 0.23
Year ended 9/30/87....... 8.48 0.59 (0.74) (0.15) (0.59) (0.33) (1.07)
Year ended 9/30/86....... 7.47 0.64 1.20 1.84 (0.64) (0.19) 1.01
National Series--Class D
Year ended 9/30/95....... 7.18 0.32 0.39 0.71 (0.32) -- 0.39
2/1/94** - 9/30/94 ...... 8.20 0.22 (1.02) (0.80) (0.22) -- (1.02)
Colorado Series--Class A
Year ended 9/30/95....... 7.09 0.38 0.21 0.59 (0.38) -- 0.21
Year ended 9/30/94....... 7.76 0.37 (0.59) (0.22) (0.37) (0.08) (0.67)
Year ended 9/30/93....... 7.34 0.39 0.49 0.88 (0.39) (0.07) 0.42
Year ended 9/30/92....... 7.22 0.42 0.12 0.54 (0.42) -- 0.12
Year ended 9/30/91....... 6.91 0.44 0.31 0.75 (0.44) -- 0.31
Year ended 9/30/90....... 7.06 0.46 (0.15) 0.31 (0.46) -- (0.15)
Year ended 9/30/89....... 6.87 0.46 0.19 0.65 (0.46) -- 0.19
Year ended 9/30/88....... 6.38 0.46 0.53 0.99 (0.46) (0.04) 0.49
Year ended 9/30/87....... 7.07 0.47 (0.66) (0.19) (0.47) (0.03) (0.69)
5/1/86*- 9/30/86......... 7.14 0.19 (0.07) 0.12 (0.19) -- (0.07)
Colorado Series--Class D
Year ended 9/30/95....... 7.09 0.30 0.20 0.50 (0.30) -- 0.20
2/1/94** - 9/30/94....... 7.72 0.20 (0.63) (0.43) (0.20) -- (0.63)
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Total Return Ratio of Investment Adjusted Net
Net Asset Based on Expenses Income Net Assets at Invesment
Per Share Operating Value at Net Asset to Average to Average Portfolio End of Period Income
Performance: End of Period Value Net Assets# Net Assets# Turnover (000's omitted) Per Share#
------------ ------------- ----- ----------- ----------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
New Jersey--Class A
Year ended 9/30/95....... $7.59 9.77% 1.01% 5.29% 4.66% $73,561 $0.39
Year ended 9/30/94....... 7.40 (4.25) 0.90 5.24 12.13 73,942 0.40
Year ended 9/30/93....... 8.24 14.02 0.86 5.37 15.90 82,447 0.40
Year ended 9/30/92....... 7.74 9.70 0.85 5.74 27.13 74,256 0.42
Year ended 9/30/91....... 7.49 13.97 0.81 6.02 14.64 65,044 0.42
Year ended 9/30/90....... 7.01 5.04 0.81 6.32 37.26 54,287 0.43
Year ended 9/30/89....... 7.17 9.91 0.57 6.70 16.10 51,015 0.44
2/16/88*- 9/30/88........ 6.98 1.96 0.40+ 6.92+ 8.20 35,563 0.26
New Jersey--Class D
Year ended 9/30/95....... 7.67 8.79 1.89 4.45 4.66 1,190 0.33
2/1/94**- 9/30/94........ 7.48 (5.47) 1.75+ 4.37+ 12.13++ 986 0.22
Pennsylvania--Class A
Year ended 9/30/95....... 7.79 10.55 1.21 5.05 11.78 33,251
Year ended 9/30/94....... 7.55 (5.00) 1.16 4.91 7.71 34,943
Year ended 9/30/93....... 8.61 14.71 1.19 5.14 40.74 41,296
Year ended 9/30/92....... 8.02 10.04 1.01 5.79 32.87 39,431 0.45
Year ended 9/30/91....... 7.74 13.40 0.98 6.16 25.24 37,853 0.45
Year ended 9/30/90....... 7.34 4.13 0.06 6.24 40.64 35,572 0.45
Year ended 9/30/89....... 7.50 9.53 0.92 6.56 9.05 41,856 0.47
Year ended 9/30/88....... 7.31 16.20 0.83 6.96 4.14 30,796 0.48
Year ended 9/30/87....... 6.76 (4.21) 0.58 6.78 9.19 30,014 0.47
7/15/86*- 9/30/86........ 7.58 7.19 -- 5.92+ -- 19,306 0.07
Pennsylvania--Class D
Year ended 9/30/95....... 7.78 9.53 2.23 4.10 11.78 426
2/1/94**- 9/30/94........ 7.54 (7.50) 2.00+ 4.20+ 7.71++ 43
National Series--Class A
Year ended 9/30/95....... 7.58 11.48 0.86 5.46 24.91 104,184
Year ended 9/30/94....... 7.18 (7.83) 0.85 5.30 24.86 111,374
Year ended 9/30/93....... 8.72 16.00 0.86 5.49 72.68 136,394
Year ended 9/30/92....... 8.07 8.84 0.77 6.02 63.99 132,130
Year ended 9/30/91....... 7.90 14.24 0.80 6.35 71.67 136,326
Year ended 9/30/90....... 7.44 4.10 0.78 6.64 55.01 133,412
Year ended 9/30/89....... 7.73 8.62 0.78 6.86 71.90 140,376
Year ended 9/30/88....... 7.64 16.43 0.83 7.35 40.58 135,667
Year ended 9/30/87....... 7.41 (2.37) 0.74 7.15 64.79 133,341
Year ended 9/30/86....... 8.48 26.17 0.76 7.81 62.28 110,428
National Series--Class D
Year ended 9/30/95....... 7.57 10.17 1.95 4.40 24.91 1,215
2/1/94** - 9/30/94 ...... 7.18 (9.96) 1.76+ 4.37+ 24.86++ 446
Colorado Series--Class A
Year ended 9/30/95....... 7.30 8.56 0.93 5.31 14.70 54,858
Year ended 9/30/94....... 7.09 (2.92) 0.86 5.06 10.07 58,197
Year ended 9/30/93....... 7.76 12.54 0.90 5.21 14.09 67,912
Year ended 9/30/92....... 7.34 7.74 0.81 5.81 23.22 64,900
Year ended 9/30/91....... 7.22 11.15 0.84 6.19 14.60 64,310
Year ended 9/30/90....... 6.91 4.38 0.85 6.47 31.89 63,173
Year ended 9/30/89....... 7.06 9.70 0.86 6.56 -- 62,515
Year ended 9/30/88....... 6.87 16.19 0.88 6.89 12.95 66,257
Year ended 9/30/87....... 6.38 (3.18) 0.77 6.61 16.70 79,961 0.46
5/1/86*- 9/30/86......... 7.07 1.53 0.55+ 6.31+ 12.11 63,796 0.18
Colorado Series--Class D
Year ended 9/30/95....... 7.29 7.26 2.02 4.23 14.70 193
2/1/94** - 9/30/94....... 7.09 (5.73) 1.78+ 4.05+ 10.07++ 96
</TABLE>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Average Net to Average
Assets# Net Assets#
------- -----------
New Jersey--Class A
Year ended 9/30/95....... 1.06% 5.24%
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
Year ended 9/30/95....... 1.94 4.40
2/1/94**- 9/30/94........ 1.87+ 4.25+
Pennsylvania--Class A
Year ended 9/30/95.......
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
Year ended 9/30/95.......
2/1/94**- 9/30/94........
National Series--Class A
Year ended 9/30/95.......
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.......
National Series--Class D
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
Colorado Series--Class A
Year ended 9/30/95.......
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
Year ended 9/30/95.......
2/1/94** - 9/30/94.......
- ----------
# 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 Distributions Net Increase
Per Share Operating at Beginning Investment Investment Investment Paid or from Net (Decrease) in
Performance: of Period Income# Gain (Loss) Operations Declared Gain Realized Net Asset Value
------------ --------- ------- ----------- ---------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Georgia Series--Class A
Year ended 9/30/95....... $7.48 $0.39 $0.43 $0.82 $(0.39) $(0.10) $0.33
Year ended 9/30/94....... 8.43 0.41 (0.86) (0.45) (0.41) (0.09) (0.95)
Year ended 9/30/93....... 7.85 0.43 0.62 1.05 (0.43) (0.04) 0.58
Year ended 9/30/92....... 7.63 0.46 0.25 0.71 (0.46) (0.03) 0.22
Year ended 9/30/91....... 7.18 0.47 0.46 0.93 (0.47) (0.01) 0.45
Year ended 9/30/90....... 7.30 0.48 (0.10) 0.38 (0.48) (0.02) (0.12)
Year ended 9/30/89....... 7.09 0.48 0.22 0.70 (0.48) (0.01) 0.21
Year ended 9/30/88....... 6.49 0.49 0.60 1.09 (0.49) -- 0.60
6/15/87*- 9/30/87........ 7.14 0.13 (0.65) (0.52) (0.13) -- (0.65)
Georgia Series--Class D
Year ended 9/30/95....... 7.49 0.32 0.43 0.75 (0.32) (0.10) 0.33
2/1/94** - 9/30/94....... 8.33 0.22 (0.84) (0.62) (0.22) -- (0.84)
Louisiana Series--Class A
Year ended 9/30/95....... 7.94 0.43 0.34 0.77 (0.43) (0.14) 0.20
Year ended 9/30/94....... 8.79 0.44 (0.77) (0.33) (0.44) (0.08) (0.85)
Year ended 9/30/93....... 8.38 0.46 0.51 0.97 (0.46) (0.10) 0.41
Year ended 9/30/92....... 8.18 0.49 0.24 0.73 (0.49) (0.04) 0.20
Year ended 9/30/91....... 7.70 0.50 0.50 1.00 (0.50) (0.02) 0.48
Year ended 9/30/90....... 7.88 0.52 (0.12) 0.40 (0.52) (0.06) (0.18)
Year ended 9/30/89....... 7.79 0.53 0.15 0.68 (0.53) (0.06) 0.09
Year ended 9/30/88....... 7.36 0.55 0.49 1.04 (0.55) (0.06) 0.43
Year ended 9/30/87....... 7.93 0.55 (0.49) 0.06 (0.55) (0.08) (0.57)
10/1/85*- 9/30/86........ 7.14 0.58 0.79 1.37 (0.58) -- 0.79
Louisiana Series--Class D
Year ended 9/30/95....... 7.94 0.35 0.34 0.69 (0.35) (0.14) 0.20
2/1/94** - 9/30/94....... 8.73 0.24 (0.79) (0.55) (0.24) -- (0.79)
Maryland Series--Class A
Year ended 9/30/95....... 7.71 0.41 0.38 0.79 (0.41) (0.13) 0.25
Year ended 9/30/94....... 8.64 0.42 (0.76) (0.34) (0.42) (0.17) (0.93)
Year ended 9/30/93....... 8.15 0.44 0.59 1.03 (0.44) (0.10) 0.49
Year ended 9/30/92....... 7.94 0.46 0.24 0.70 (0.46) (0.03) 0.21
Year ended 9/30/91....... 7.45 0.47 0.49 0.96 (0.47) -- 0.49
Year ended 9/30/90....... 7.59 0.48 (0.14) 0.34 (0.48) -- (0.14)
Year ended 9/30/89....... 7.39 0.48 0.20 0.68 (0.48) -- 0.20
Year ended 9/30/88....... 6.87 0.47 0.56 1.03 (0.47) (0.04) 0.52
Year ended 9/30/87....... 7.59 0.48 (0.72) (0.24) (0.48) -- (0.72)
10/1/85*- 9/30/86........ 7.14 0.54 0.45 0.99 (0.54) -- 0.45
Maryland Series--Class D
Year ended 9/30/95....... 7.72 0.33 0.38 0.71 (0.33) (0.13) 0.25
2/1/94** - 9/30/94 ...... 8.46 0.23 (0.74) (0.51) (0.23) -- (0.74)
Massachusetts Series--Class A
Year ended 9/30/95....... 7.66 0.42 0.28 0.70 (0.42) (0.03) 0.25
Year ended 9/30/94....... 8.54 0.44 (0.67) (0.23) (0.44) (0.21) (0.88)
Year ended 9/30/93....... 8.06 0.47 0.55 1.02 (0.47) (0.07) 0.48
Year ended 9/30/92....... 7.86 0.49 0.24 0.73 (0.49) (0.04) 0.20
Year ended 9/30/91....... 7.26 0.50 0.62 1.12 (0.50) (0.02) 0.60
Year ended 9/30/90....... 7.65 0.50 (0.31) 0.19 (0.50) (0.08) (0.39)
Year ended 9/30/89....... 7.62 0.52 0.08 0.60 (0.52) (0.05) 0.03
Year ended 9/30/88....... 7.20 0.53 0.51 1.04 (0.53) (0.09) 0.42
Year ended 9/30/87....... 8.07 0.55 (0.69) (0.14) (0.55) (0.18) (0.87)
Year ended 9/30/86....... 7.30 0.60 0.78 1.38 (0.60) (0.01) 0.77
Massachusetts Series--Class D
Year ended 9/30/95....... 7.66 0.34 0.27 0.61 (0.34) (0.03) 0.24
2/1/94** - 9/30/94 ...... 8.33 0.24 (0.67) (0.43) (0.24) -- (0.67)
Michigan Series--Class A
Year ended 9/30/95....... 8.28 0.46 0.30 0.76 (0.46) (0.04) 0.26
Year ended 9/30/94....... 9.08 0.46 (0.71) (0.25) (0.46) (0.09) (0.80)
Year ended 9/30/93....... 8.68 0.47 0.59 1.06 (0.47) (0.19) 0.40
Year ended 9/30/92....... 8.38 0.50 0.35 0.85 (0.50) (0.05) 0.30
Year ended 9/30/91....... 7.89 0.51 0.51 1.02 (0.51) (0.02) 0.49
Year ended 9/30/90....... 8.14 0.52 (0.16) 0.36 (0.52) (0.09) (0.25)
Year ended 9/30/89....... 7.94 0.54 0.23 0.77 (0.54) (0.03) 0.20
Year ended 9/30/88....... 7.48 0.54 0.58 1.12 (0.54) (0.12) 0.46
Year ended 9/30/87....... 8.54 0.56 (0.77) (0.21) (0.56) (0.29) (1.06)
Year ended 9/30/86....... 7.55 0.62 1.09 1.71 (0.62) (0.10) 0.99
Michigan Series--Class D
Year ended 9/30/95....... 8.28 0.37 0.30 0.67 (0.37) (0.04) 0.26
2/1/94** - 9/30/94....... 9.01 0.25 (0.73) (0.48) (0.25) -- (0.73)
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Total Return Ratio of Investment Adjusted Net
Net Asset Based on Expenses Income Net Assets at Invesment
Per Share Operating Value at Net Asset to Average to Average Portfolio End of Period Income
Performance: End of Period Value Net Assets# Net Assets# Turnover (000's omitted) Per Share#
------------ ------------- ----- ----------- ----------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Georgia Series--Class A
Year ended 9/30/95....... $7.81 11.66% 0.91% 5.26% 3.36% $57,678 $0.39
Year ended 9/30/94....... 7.48 (5.52) 0.73 5.21 19.34 61,466 0.40
Year ended 9/30/93....... 8.43 13.96 0.63 5.34 12.45 64,650 0.40
Year ended 9/30/92....... 7.85 9.64 0.47 5.95 10.24 44,585 0.43
Year ended 9/30/91....... 7.63 13.30 0.59 6.30 6.07 28,317 0.43
Year ended 9/30/90....... 7.18 5.19 0.53 6.53 5.83 19,002 0.44
Year ended 9/30/89....... 7.30 10.15 0.64 6.59 -- 14,452 0.44
Year ended 9/30/88....... 7.09 17.51 0.36 7.15 6.32 9,752 0.43
6/15/87*- 9/30/87........ 6.49 (7.61) 0.17+ 6.64+ 21.71 6,382 0.07
Georgia Series--Class D
Year ended 9/30/95....... 7.82 10.58 1.90 4.28 3.36 2,079 0.31
2/1/94** - 9/30/94....... 7.49 (7.57) 1.76+ 4.28+ 19.34++ 849 0.21
Louisiana Series--Class A
Year ended 9/30/95....... 8.14 10.30 0.89 5.44 4.82 61,988
Year ended 9/30/94....... 7.94 (3.83) 0.87 5.31 17.16 61,441
Year ended 9/30/93....... 8.79 12.10 0.87 5.40 9.21 67,529
Year ended 9/30/92....... 8.38 9.13 0.80 5.89 25.45 57,931
Year ended 9/30/91....... 8.18 13.49 0.83 6.31 20.85 50,089
Year ended 9/30/90....... 7.70 5.20 0.81 6.62 31.54 43,475
Year ended 9/30/89....... 7.88 9.04 0.84 6.82 12.94 43,908
Year ended 9/30/88....... 7.79 14.69 0.85 7.19 36.01 42,521
Year ended 9/30/87....... 7.36 0.62 0.73 7.02 10.20 49,661
10/1/85*- 9/30/86........ 7.93 19.47 0.62+ 7.44+ 31.18 45,338 0.57
Louisiana Series--Class D
Year ended 9/30/95....... 8.14 9.17 1.91 4.41 4.82 465
2/1/94** - 9/30/94....... 7.94 (6.45) 1.78+ 4.33+ 17.16++ 704
Maryland Series--Class A
Year ended 9/30/95....... 7.96 10.90 0.96 5.31 3.63 56,290
Year ended 9/30/94....... 7.71 (4.08) 0.92 5.17 17.68 57,263
Year ended 9/30/93....... 8.64 13.23 0.97 5.28 14.10 64,472
Year ended 9/30/92....... 8.15 9.15 0.86 5.76 29.57 57,208
Year ended 9/30/91....... 7.94 13.26 0.88 6.09 18.84 54,068
Year ended 9/30/90....... 7.45 4.47 0.87 6.26 16.50 47,283
Year ended 9/30/89....... 7.59 9.43 0.87 6.38 2.19 46,643
Year ended 9/30/88....... 7.39 15.73 0.91 6.63 17.42 45,939
Year ended 9/30/87....... 6.87 (3.41) 0.87 6.45 21.48 50,580
10/1/85*- 9/30/86........ 7.59 14.11 0.59+ 6.90+ 4.60 46,478 0.53
Maryland Series--Class D
Year ended 9/30/95....... 7.97 9.75 2.02 4.27 3.63 630
2/1/94** - 9/30/94 ...... 7.72 (6.21) 1.80+ 4.26+ 17.68++ 424
Massachusetts Series--Class A
Year ended 9/30/95....... 7.91 9.58 0.86 5.51 16.68 115,711
Year ended 9/30/94....... 7.66 (2.94) 0.85 5.46 12.44 120,149
Year ended 9/30/93....... 8.54 13.18 0.88 5.65 20.66 139,504
Year ended 9/30/92....... 8.06 9.75 0.77 6.27 27.92 128,334
Year ended 9/30/91....... 7.86 15.84 0.83 6.64 14.37 118,022
Year ended 9/30/90....... 7.26 2.48 0.79 6.66 19.26 110,246
Year ended 9/30/89....... 7.65 8.18 0.79 6.81 7.51 122,515
Year ended 9/30/88....... 7.62 15.15 0.84 7.02 21.77 126,150
Year ended 9/30/87....... 7.20 (2.16) 0.79 6.95 16.14 131,404
Year ended 9/30/86....... 8.07 19.49 0.78 7.50 27.39 131,732
Massachusetts Series--Class D
Year ended 9/30/95....... 7.90 8.33 1.95 4.47 16.68 890
2/1/94** - 9/30/94 ...... 7.66 (5.34) 1.78+ 4.52+ 12.44++ 1,099
Michigan Series--Class A
Year ended 9/30/95....... 8.54 9.56 0.87 5.50 20.48 151,589
Year ended 9/30/94....... 8.28 (2.90) 0.84 5.32 10.06 151,095
Year ended 9/30/93....... 9.08 12.97 0.83 5.41 6.33 164,638
Year ended 9/30/92....... 8.68 10.55 0.76 5.93 32.12 144,524
Year ended 9/30/91....... 8.38 13.34 0.80 6.28 22.81 129,004
Year ended 9/30/90....... 7.89 4.57 0.80 6.47 26.36 112,689
Year ended 9/30/89....... 8.14 9.91 0.81 6.67 8.24 111,180
Year ended 9/30/88....... 7.94 15.98 0.88 7.06 34.00 104,904
Year ended 9/30/87....... 7.48 (2.87) 0.79 6.89 15.40 104,053
Year ended 9/30/86....... 8.54 23.73 0.82 7.41 40.68 99,013
Michigan Series--Class D
Year ended 9/30/95....... 8.54 8.36 2.01 4.40 20.48 1,172
2/1/94** - 9/30/94....... 8.28 (5.47) 1.75+ 4.40+ 10.06++ 671
</TABLE>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Average Net to Average
Assets# Net Assets#
------- -----------
Georgia Series--Class A
Year ended 9/30/95....... 0.96% 5.21%
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
Year ended 9/30/95....... 1.95 4.23
2/1/94** - 9/30/94....... 1.90+ 4.15+
Louisiana Series--Class A
Year ended 9/30/95.......
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
Year ended 9/30/95.......
2/1/94** - 9/30/94.......
Maryland Series--Class A
Year ended 9/30/95.......
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
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
Massachusetts Series--Class A
Year ended 9/30/95.......
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.......
Massachusetts Series--Class D
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
Michigan Series--Class A
Year ended 9/30/95.......
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.......
Michigan Series--Class D
Year ended 9/30/95.......
2/1/94** - 9/30/94.......
- ----------
# 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 Distributions Net Increase
Per Share Operating at Beginning Investment Investment Investment Paid or from Net (Decrease) in
Performance: of Period Income# Gain (Loss) Operations Declared Gain Realized Net Asset Value
------------ --------- ------- ----------- ---------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minnesota Series--Class A
Year ended 9/30/95....... $7.72 $0.45 $0.11 $0.56 $(0.45) $(0.01) $0.10
Year ended 9/30/94....... 8.28 0.45 (0.44) (0.01) (0.45) (0.12) (0.56)
Year ended 9/30/93....... 7.89 0.47 0.51 0.98 (0.47) (0.12) 0.39
Year ended 9/30/92....... 7.81 0.49 0.09 0.58 (0.49) (0.01) 0.08
Year ended 9/30/91....... 7.49 0.49 0.32 0.81 (0.49) -- 0.32
Year ended 9/30/90....... 7.60 0.49 (0.06) 0.43 (0.49) (0.05) (0.11)
Year ended 9/30/89....... 7.52 0.51 0.11 0.62 (0.51) (0.03) 0.08
Year ended 9/30/88....... 7.12 0.51 0.48 0.99 (0.51) (0.08) 0.40
Year ended 9/30/87....... 7.99 0.53 (0.66) (0.13) (0.53) (0.21) (0.87)
Year ended 9/30/86....... 7.15 0.58 0.88 1.46 (0.58) (0.04) 0.84
Minnesota Series--Class D
Year ended 9/30/95....... 7.73 0.38 0.10 0.48 (0.38) (0.01) 0.09
2/1/94** - 9/30/94 ...... 8.22 0.25 (0.49) (0.24) (0.25) -- (0.49)
Missouri Series--Class A
Year ended 9/30/95....... 7.41 0.40 0.36 0.76 (0.40) (0.07) 0.29
Year ended 9/30/94....... 8.31 0.40 (0.79) (0.39) (0.40) (0.11) (0.90)
Year ended 9/30/93....... 7.80 0.42 0.57 0.99 (0.42) (0.06) 0.51
Year ended 9/30/92....... 7.72 0.44 0.15 0.59 (0.44) (0.07) 0.08
Year ended 9/30/91....... 7.22 0.46 0.50 0.96 (0.46) -- 0.50
Year ended 9/30/90....... 7.28 0.45 (0.06) 0.39 (0.45) -- (0.06)
Year ended 9/30/89....... 7.10 0.47 0.18 0.65 (0.47) -- 0.18
Year ended 9/30/88....... 6.57 0.48 0.58 1.06 (0.48) (0.05) 0.53
Year ended 9/30/87....... 7.32 0.47 (0.75) (0.28) (0.47) -- (0.75)
7/1/86*- 9/30/86......... 7.14 0.11 0.18 0.29 (0.11) -- 0.18
Missouri Series--Class D
Year ended 9/30/95....... 7.41 0.32 0.36 0.68 (0.32) (0.07) 0.29
2/1/94** - 9/30/94 ...... 8.20 0.22 (0.79) (0.57) (0.22) -- (0.79)
New York Series--Class A
Year ended 9/30/95....... 7.67 0.42 0.36 0.78 (0.42) (0.17) 0.19
Year ended 9/30/94....... 8.75 0.43 (0.88) (0.45) (0.43) (0.20) (1.08)
Year ended 9/30/93....... 8.13 0.45 0.74 1.19 (0.45) (0.12) 0.62
Year ended 9/30/92....... 7.94 0.49 0.26 0.75 (0.49) (0.07) 0.19
Year ended 9/30/91....... 7.40 0.50 0.54 1.04 (0.50) -- 0.54
Year ended 9/30/90....... 7.71 0.51 (0.26) 0.25 (0.51) (0.05) (0.31)
Year ended 9/30/89....... 7.57 0.52 0.17 0.69 (0.52) (0.03) 0.14
Year ended 9/30/88....... 7.28 0.52 0.48 1.00 (0.52) (0.19) 0.29
Year ended 9/30/87....... 8.24 0.55 (0.71) (0.16) (0.55) (0.25) (0.96)
Year ended 9/30/86....... 7.40 0.60 0.94 1.54 (0.60) (0.10) 0.84
New York Series--Class D
Year ended 9/30/95....... 7.67 0.34 0.37 0.71 (0.34) (0.17) 0.20
2/1/94** - 9/30/94 ...... 8.55 0.23 (0.88) (0.65) (0.23) -- (0.88)
Ohio Series--Class A
Year ended 9/30/95....... 7.90 0.44 0.28 0.72 (0.44) (0.07) 0.21
Year ended 9/30/94....... 8.77 0.44 (0.70) (0.26) (0.44) (0.17) (0.87)
Year ended 9/30/93....... 8.28 0.46 0.56 1.02 (0.46) (0.07) 0.49
Year ended 9/30/92....... 8.06 0.49 0.26 0.75 (0.49) (0.04) 0.22
Year ended 9/30/91....... 7.62 0.51 0.45 0.96 (0.51) (0.01) 0.44
Year ended 9/30/90....... 7.80 0.52 (0.08) 0.44 (0.52) (0.10) (0.18)
Year ended 9/30/89....... 7.71 0.54 0.11 0.65 (0.54) (0.02) 0.09
Year ended 9/30/88....... 7.38 0.54 0.53 1.07 (0.54) (0.20) 0.33
Year ended 9/30/87....... 8.09 0.57 (0.59) (0.02) (0.57) (0.12) (0.71)
Year ended 9/30/86....... 7.27 0.61 0.87 1.48 (0.61) (0.05) 0.82
Ohio Series--Class D
Year ended 9/30/95....... 7.92 0.36 0.30 0.66 (0.36) (0.07) 0.23
2/1/94** - 9/30/94 ...... 8.61 0.24 (0.69) (0.45) (0.24) -- (0.69)
Oregon Series--Class A
Year ended 9/30/95....... 7.43 0.40 0.25 0.65 (0.40) (0.02) 0.23
Year ended 9/30/94....... 8.08 0.40 (0.59) (0.19) (0.40) (0.06) (0.65)
Year ended 9/30/93....... 7.60 0.42 0.48 0.90 (0.42) -- 0.48
Year ended 9/30/92....... 7.42 0.42 0.18 0.60 (0.42) -- 0.18
Year ended 9/30/91....... 6.96 0.44 0.46 0.90 (0.44) -- 0.46
Year ended 9/30/90....... 7.05 0.44 (0.09) 0.35 (0.44) -- (0.09)
Year ended 9/30/89....... 6.83 0.44 0.22 0.66 (0.44) -- 0.22
Year ended 9/30/88....... 6.21 0.45 0.62 1.07 (0.45) -- 0.62
10/15/86*- 9/30/87....... 7.14 0.43 (0.93) (0.50) (0.43) -- (0.93)
Oregon Series--Class D
Year ended 9/30/95....... 7.43 0.33 0.24 0.57 (0.33) (0.02) 0.22
2/1/94**- 9/30/94 ....... 8.02 0.22 (0.59) (0.37) (0.22) -- (0.59)
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Total Return Ratio of Investment Adjusted Net
Net Asset Based on Expenses Income Net Assets at Invesment
Per Share Operating Value at Net Asset to Average to Average Portfolio End of Period Income
Performance: End of Period Value Net Assets# Net Assets# Turnover (000's omitted) Per Share#
------------ ------------- ----- ----------- ----------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Minnesota Series--Class A
Year ended 9/30/95....... $7.82 7.61% 0.87% 5.89% 5.57% $132,716
Year ended 9/30/94....... 7.72 0.12 0.85 5.70 3.30 134,990
Year ended 9/30/93....... 8.28 13.06 0.90 5.89 5.73 144,600
Year ended 9/30/92....... 7.89 7.71 0.80 6.29 12.08 151,922
Year ended 9/30/91....... 7.81 11.10 0.80 6.28 2.61 182,979
Year ended 9/30/90....... 7.49 5.79 0.81 6.40 12.10 160,930
Year ended 9/30/89....... 7.60 8.34 0.83 6.61 7.55 148,425
Year ended 9/30/88....... 7.52 14.76 0.87 6.95 35.37 132,541
Year ended 9/30/87....... 7.12 (1.94) 0.89 6.85 16.76 118,093
Year ended 9/30/86....... 7.99 21.25 0.90 7.41 24.98 108,016
Minnesota Series--Class D
Year ended 9/30/95....... 7.82 6.45 1.85 4.92 5.57 2,237
2/1/94** - 9/30/94 ...... 7.73 (3.08) 1.74+ 4.68+ 3.30++ 1,649
Missouri Series--Class A
Year ended 9/30/95....... 7.70 10.67 0.88 5.31 3.88 51,169 $0.39
Year ended 9/30/94....... 7.41 (4.85) 0.74 5.18 14.33 52,621 0.39
Year ended 9/30/93....... 8.31 13.17 0.71 5.29 17.03 56,861 0.41
Year ended 9/30/92....... 7.80 7.87 0.83 5.71 18.80 49,459
Year ended 9/30/91....... 7.72 13.61 0.88 6.10 16.30 47,659
Year ended 9/30/90....... 7.22 5.47 0.84 6.20 30.46 50,875
Year ended 9/30/89....... 7.28 9.33 0.96 6.43 32.81 49,162
Year ended 9/30/88....... 7.10 16.74 0.86 6.88 12.32 58,457
Year ended 9/30/87....... 6.57 (4.20) 0.82 6.51 11.53 59,122 0.47
7/1/86*- 9/30/86......... 7.32 3.87 0.86+ 5.21+ 0.18 45,107 0.10
Missouri Series--Class D
Year ended 9/30/95....... 7.70 9.49 1.98 4.23 3.88 515 0.32
2/1/94** - 9/30/94 ...... 7.41 (7.16) 1.70+ 4.27+ 14.33++ 350 0.22
New York Series--Class A
Year ended 9/30/95....... 7.86 10.93 0.88 5.52 34.05 83,980
Year ended 9/30/94....... 7.67 (5.37) 0.87 5.31 28.19 90,914
Year ended 9/30/93....... 8.75 15.26 0.94 5.37 27.90 104,685
Year ended 9/30/92....... 8.13 9.80 0.79 6.09 42.90 92,681
Year ended 9/30/91....... 7.94 14.56 0.80 6.57 44.57 83,684
Year ended 9/30/90....... 7.40 3.19 0.79 6.65 32.14 77,766
Year ended 9/30/89....... 7.71 9.35 0.80 6.78 47.69 75,471
Year ended 9/30/88....... 7.57 14.74 0.86 6.96 62.42 74,238
Year ended 9/30/87....... 7.28 (2.42) 0.77 6.90 20.42 72,782
Year ended 9/30/86....... 8.24 21.75 0.79 7.44 35.89 64,562
New York Series--Class D
Year ended 9/30/95....... 7.87 9.87 1.96 4.42 34.05 885
2/1/94** - 9/30/94 ...... 7.67 (7.73) 1.81+ 4.39+ 28.19++ 476
Ohio Series--Class A
Year ended 9/30/95....... 8.11 9.59 0.84 5.56 2.96 170,191
Year ended 9/30/94....... 7.90 (3.08) 0.84 5.34 9.37 171,469
Year ended 9/30/93....... 8.77 12.81 0.85 5.44 30.68 190,083
Year ended 9/30/92....... 8.28 9.68 0.75 6.02 7.15 170,427
Year ended 9/30/91....... 8.06 12.96 0.77 6.42 13.95 156,179
Year ended 9/30/90....... 7.62 5.70 0.77 6.63 16.05 136,251
Year ended 9/30/89....... 7.80 8.74 0.79 6.91 12.72 131,900
Year ended 9/30/88....... 7.71 15.76 0.83 7.20 26.71 122,386
Year ended 9/30/87....... 7.38 (0.66) 0.78 7.05 15.00 119,703
Year ended 9/30/86....... 8.09 21.17 0.80 7.62 17.21 114,023
Ohio Series--Class D
Year ended 9/30/95....... 8.15 8.67 1.93 4.48 2.96 660
2/1/94** - 9/30/94 ...... 7.92 (5.36) 1.78+ 4.41+ 9.37++ 324
Oregon Series--Class A
Year ended 9/30/95....... 7.66 9.05 0.86 5.40 2.47 59,549 0.40
Year ended 9/30/94....... 7.43 (2.38) 0.78 5.20 9.43 59,884 0.39
Year ended 9/30/93....... 8.08 12.21 0.78 5.35 8.08 62,095 0.41
Year ended 9/30/92....... 7.60 8.35 0.68 5.63 0.21 48,797 0.42
Year ended 9/30/91....... 7.42 13.25 0.71 6.06 7.60 39,350 0.42
Year ended 9/30/90....... 6.96 4.99 0.72 6.17 4.09 32,221 0.42
Year ended 9/30/89....... 7.05 9.95 0.64 6.34 0.19 30,510 0.42
Year ended 9/30/88....... 6.83 17.89 0.54 6.86 3.94 26,609 0.42
10/15/86*- 9/30/87....... 6.21 (7.68) 0.52+ 6.44+ 20.16 24,434 0.39
Oregon Series--Class D
Year ended 9/30/95....... 7.65 7.86 1.83 4.41 2.47 1,495 0.33
2/1/94**- 9/30/94 ....... 7.43 (4.76) 1.72+ 4.32+ 9.43++ 843 0.22
</TABLE>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Average Net to Average
Assets# Net Assets#
------- -----------
Minnesota Series--Class A
Year ended 9/30/95.......
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.......
Minnesota Series--Class D
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
Missouri Series--Class A
Year ended 9/30/95....... 0.93% 5.26%
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
Year ended 9/30/95....... 2.03 4.18
2/1/94** - 9/30/94 ...... 1.80+ 4.17+
New York Series--Class A
Year ended 9/30/95.......
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.......
New York Series--Class D
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
Ohio Series--Class A
Year ended 9/30/95.......
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.......
Ohio Series--Class D
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
Oregon Series--Class A
Year ended 9/30/95....... 0.91 5.35
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
Year ended 9/30/95....... 1.88 4.36
2/1/94**- 9/30/94 ....... 1.82+ 4.22+
- ----------
# 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 Distributions Net Increase
Per Share Operating at Beginning Investment Investment Investment Paid or from Net (Decrease) in
Performance: of Period Income# Gain (Loss) Operations Declared Gain Realized Net Asset Value
------------ --------- ------- ----------- ---------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
South Carolina Series--Class A
Year ended 9/30/95....... $7.61 $0.41 $0.37 $0.78 $(0.41) $(0.01) $0.36
Year ended 9/30/94....... 8.52 0.41 (0.79) (0.38) (0.41) (0.12) (0.91)
Year ended 9/30/93....... 8.00 0.43 0.54 0.97 (0.43) (0.02) 0.52
Year ended 9/30/92....... 7.71 0.45 0.31 0.76 (0.45) (0.02) 0.29
Year ended 9/30/91....... 7.23 0.46 0.52 0.98 (0.46) (0.04) 0.48
Year ended 9/30/90....... 7.37 0.48 (0.14) 0.34 (0.48) -- (0.14)
Year ended 9/30/89....... 7.21 0.48 0.17 0.65 (0.48) (0.01) 0.16
Year ended 9/30/88....... 6.67 0.50 0.54 1.04 (0.50) -- 0.54
6/30/87*-9/30/87......... 7.14 0.11 (0.47) (0.36) (0.11) -- (0.47)
South Carolina Series--Class D
Year ended 9/30/95....... 7.61 0.34 0.37 0.71 (0.34) (0.01) 0.36
2/1/94** - 9/30/94 ...... 8.42 0.22 (0.81) (0.59) (0.22) -- (0.81)
California High-Yield Series--Class A
Year ended 9/30/95....... 6.30 0.37 0.17 0.54 (0.37) -- 0.17
Year ended 9/30/94....... 6.73 0.37 (0.34) 0.03 (0.37) (0.09) (0.43)
Year ended 9/30/93....... 6.65 0.39 0.28 0.67 (0.39) (0.20) 0.08
Year ended 9/30/92....... 6.50 0.41 0.16 0.57 (0.41) (0.01) 0.15
Year ended 9/30/91....... 6.18 0.42 0.33 0.75 (0.42) (0.01) 0.32
Year ended 9/30/90....... 6.36 0.42 (0.07) 0.35 (0.42) (0.11) (0.18)
Year ended 9/30/89....... 6.27 0.44 0.15 0.59 (0.44) (0.06) 0.09
Year ended 9/30/88....... 5.94 0.44 0.39 0.83 (0.44) (0.06) 0.33
Year ended 9/30/87....... 6.73 0.46 (0.53) (0.07) (0.46) (0.26) (0.79)
Year ended 9/30/86....... 5.96 0.51 0.89 1.40 (0.51) (0.12) 0.77
California High-Yield Series--Class D
Year ended 9/30/95....... 6.31 0.31 0.17 0.48 (0.31) -- 0.17
2/1/94**- 9/30/94........ 6.67 0.21 (0.36) (0.15) (0.21) -- (0.36)
California Quality Series--Class A
Year ended 9/30/95....... 6.39 0.34 0.32 0.66 (0.34) (0.06) 0.26
Year ended 9/30/94....... 7.28 0.35 (0.73) (0.38) (0.35) (0.16) (0.89)
Year ended 9/30/93....... 6.85 0.37 0.54 0.91 (0.37) (0.11) 0.43
Year ended 9/30/92....... 6.65 0.40 0.22 0.62 (0.40) (0.02) 0.20
Year ended 9/30/91....... 6.22 0.40 0.46 0.86 (0.40) (0.03) 0.43
Year ended 9/30/90....... 6.47 0.40 (0.13) 0.27 (0.40) (0.12) (0.25)
Year ended 9/30/89....... 6.29 0.42 0.19 0.61 (0.42) (0.01) 0.18
Year ended 9/30/88....... 6.01 0.42 0.39 0.81 (0.42) (0.11) 0.28
Year ended 9/30/87....... 6.73 0.45 (0.59) (0.14) (0.45) (0.13) (0.72)
Year ended 9/30/86....... 5.98 0.49 0.83 1.32 (0.49) (0.08) 0.75
California Quality Series--Class D
Year ended 9/30/95....... 6.38 0.28 0.31 0.59 (0.28) (0.06) 0.25
2/1/94**- 9/30/94 ....... 7.13 0.19 (0.75) (0.56) (0.19) -- (0.75)
Florida Series--Class A
Year ended 9/30/95....... 7.34 0.40 0.37 0.77 (0.40) -- 0.37
Year ended 9/30/94....... 8.20 0.42 (0.74) (0.32) (0.42) (0.12) (0.86)
Year ended 9/30/93....... 7.56 0.46 0.65 1.11 (0.46) (0.01) 0.64
Year ended 9/30/92....... 7.37 0.47 0.19 0.66 (0.47) -- 0.19
Year ended 9/30/91....... 6.90 0.43 0.47 0.90 (0.43) -- 0.47
Year ended 9/30/90....... 6.99 0.45 (0.09) 0.36 (0.45) -- (0.09)
Year ended 9/30/89....... 6.71 0.46 0.28 0.74 (0.46) -- 0.28
Year ended 9/30/88....... 6.02 0.47 0.69 1.16 (0.47) -- 0.69
11/17/86*- 9/30/87....... 7.14 0.40 (1.12) (0.72) (0.40) -- (1.12)
Florida Series--Class D
Year ended 9/30/95....... 7.34 0.34 0.38 0.72 (0.34) -- 0.38
2/1/94**- 9/30/94 ..... 8.10 0.24 (0.76) (0.52) (0.24) -- (0.76)
North Carolina Series--Class A
Year ended 9/30/95....... 7.30 0.39 0.45 0.84 (0.39) (0.01) 0.44
Year ended 9/30/94....... 8.22 0.41 (0.87) (0.46) (0.41) (0.05) (0.92)
Year ended 9/30/93....... 7.61 0.43 0.63 1.06 (0.43) (0.02) 0.61
Year ended 9/30/92....... 7.39 0.44 0.22 0.66 (0.44) -- 0.22
Year ended 9/30/91....... 7.04 0.45 0.35 0.80 (0.45) -- 0.35
8/27/90*- 9/30/90........ 7.14 0.03 (0.10) (0.07) (0.03) -- (0.10)
North Carolina Series--Class D
Year ended 9/30/95....... 7.29 0.33 0.46 0.79 (0.33) (0.01) 0.45
2/1/94**- 9/30/94 ....... 8.17 0.23 (0.88) (0.65) (0.23) -- (0.88)
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Total Return Ratio of Investment Adjusted Net
Net Asset Based on Expenses Income Net Assets at Invesment
Per Share Operating Value at Net Asset to Average to Average Portfolio End of Period Income
Performance: End of Period Value Net Assets# Net Assets# Turnover (000's omitted) Per Share#
------------ ------------- ----- ----------- ----------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
South Carolina Series--Class A
Year ended 9/30/95....... $7.97 10.69% 0.88% 5.38% 4.13% $112,421
Year ended 9/30/94....... 7.61 (4.61) 0.83 5.12 1.81 115,133
Year ended 9/30/93....... 8.52 12.52 0.85 5.19 17.69 120,589
Year ended 9/30/92....... 8.00 10.08 0.81 5.71 3.37 82,882
Year ended 9/30/91....... 7.71 13.95 0.81 6.14 9.05 63,863 $0.45
Year ended 9/30/90....... 7.23 4.48 0.73 6.47 15.26 49,234 0.47
Year ended 9/30/89....... 7.37 9.41 0.68 6.48 0.03 46,487 0.46
Year ended 9/30/88....... 7.21 16.18 0.33 7.03 12.36 26,385 0.45
6/30/87*-9/30/87......... 6.67 (5.37) 0.02+ 6.34+ -- 12,033 0.08
South Carolina Series--Class D
Year ended 9/30/95....... 7.97 9.63 1.85 4.40 4.13 1,704
2/1/94** - 9/30/94 ...... 7.61 (7.14) 1.74+ 4.29+ 1.81++ 1,478
California High-Yield Series--Class A
Year ended 9/30/95....... 6.47 8.85 0.90 5.84 17.64 51,504
Year ended 9/30/94....... 6.30 0.41 0.85 5.74 8.36 48,007
Year ended 9/30/93....... 6.73 10.66 0.88 5.94 7.70 51,218
Year ended 9/30/92....... 6.65 9.00 0.82 6.20 45.50 49,448
Year ended 9/30/91....... 6.50 12.53 0.83 6.67 5.13 49,172
Year ended 9/30/90....... 6.18 5.57 0.89 6.68 17.66 49,312
Year ended 9/30/89....... 6.36 9.61 0.89 6.85 14.70 51,079
Year ended 9/30/88....... 6.27 14.72 0.91 7.17 20.79 53,037
Year ended 9/30/87....... 5.94 (1.46) 0.83 7.07 16.89 56,598
Year ended 9/30/86....... 6.73 24.79 0.66 7.88 54.08 51,046 0.50
California High-Yield Series--Class D
Year ended 9/30/95....... 6.48 7.78 1.91 4.84 17.64 1,277
2/1/94**- 9/30/94........ 6.31 (2.47) 1.74+ 4.73+ 8.36++ 650
California Quality Series--Class A
Year ended 9/30/95....... 6.65 10.85 0.89 5.34 11.24 94,947
Year ended 9/30/94....... 6.39 (5.46) 0.81 5.20 22.16 99,020
Year ended 9/30/93....... 7.28 13.92 0.82 5.30 15.67 111,732
Year ended 9/30/92....... 6.85 9.56 0.78 5.86 34.25 93,557
Year ended 9/30/91....... 6.65 14.35 0.78 6.19 20.11 77,884
Year ended 9/30/90....... 6.22 4.22 0.83 6.31 28.61 61,854
Year ended 9/30/89....... 6.47 9.86 0.85 6.53 57.85 59,258
Year ended 9/30/88....... 6.29 14.37 0.86 6.74 46.47 58,608
Year ended 9/30/87....... 6.01 (2.59) 0.77 6.76 15.17 58,872
Year ended 9/30/86....... 6.73 23.06 0.67 7.36 28.66 53,388 0.48
California Quality Series--Class D
Year ended 9/30/95....... 6.63 9.61 1.88 4.36 11.24 863
2/1/94**- 9/30/94 ....... 6.38 (8.01) 1.77+ 4.39+ 22.16++ 812
Florida Series--Class A
Year ended 9/30/95....... 7.71 10.87 0.72 5.38 11.82 49,030 0.37
Year ended 9/30/94....... 7.34 (3.99) 0.42 5.49 6.17 49,897 0.38
Year ended 9/30/93....... 8.20 15.21 0.23 5.82 16.42 52,855 0.40
Year ended 9/30/92....... 7.56 9.24 0.17 6.32 12.62 37,957 0.41
Year ended 9/30/91....... 7.37 13.41 0.90 6.00 -- 28,173 0.42
Year ended 9/30/90....... 6.90 5.23 0.65 6.44 13.08 24,025 0.44
Year ended 9/30/89....... 6.99 11.28 0.69 6.61 2.41 23,062 0.44
Year ended 9/30/88....... 6.71 19.82 0.67 7.18 1.07 20,457 0.45
11/17/86*- 9/30/87....... 6.02 (10.74) 0.50+ 6.85+ 28.52 22,228 0.37
Florida Series--Class D
Year ended 9/30/95....... 7.72 10.07 1.66 4.53 11.82 603 0.31
2/1/94**- 9/30/94 ..... 7.34 (6.64) 1.29+ 4.61+ 6.17++ 244 0.21
North Carolina Series--Class A
Year ended 9/30/95....... 7.74 11.92 0.82 5.21 4.38 37,446 0.36
Year ended 9/30/94....... 7.30 (5.80) 0.44 5.29 15.61 38,920 0.35
Year ended 9/30/93....... 8.22 14.46 0.23 5.44 3.13 38,828 0.35
Year ended 9/30/92....... 7.61 9.23 0.14 5.83 12.51 21,836 0.34
Year ended 9/30/91....... 7.39 11.97 0.07 6.10 -- 9,255 0.22
8/27/90*- 9/30/90........ 7.04 (1.40) 0.94+ 4.48+ -- 1,377 0.01
North Carolina Series--Class D
Year ended 9/30/95....... 7.74 11.19 1.64 4.42 4.38 1,257 0.31
2/1/94**- 9/30/94 ....... 7.29 (8.15) 1.27+ 4.49+ 15.61++ 1,282 0.20
</TABLE>
Adjusted
Adjusted Ratio of
Ratio of Net Investment
Expenses to Income
Average Net to Average
Assets# Net Assets#
------- -----------
South Carolina Series--Class A
Year ended 9/30/95.......
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
Year ended 9/30/95.......
2/1/94** - 9/30/94 ......
California High-Yield Series--Class A
Year ended 9/30/95.......
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
California High-Yield Series--Class D
Year ended 9/30/95.......
2/1/94**- 9/30/94........
California Quality Series--Class A
Year ended 9/30/95.......
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
California Quality Series--Class D
Year ended 9/30/95.......
2/1/94**- 9/30/94 .......
Florida Series--Class A
Year ended 9/30/95....... 1.03 5.07
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
Year ended 9/30/95....... 1.97 4.22
2/1/94**- 9/30/94 ..... 1.84+ 4.06+
North Carolina Series--Class A
Year ended 9/30/95....... 1.18 4.85
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
Year ended 9/30/95....... 2.00 4.06
2/1/94**- 9/30/94 ....... 1.95+ 3.82+
- ----------
# 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.
Alternatively, some investors might choose 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,
potentially, 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
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 higher distribution expenses which will cause the
Class D shares to pay lower dividends than the Class A shares. The two classes
also have separate exchange privileges.
The 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 the Funds 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.
16
<PAGE>
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 OBJECTIVES 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, as amended, is treated as a
preference item for purposes of the alternative minimum tax. In the event a
Series invests in tax-exempt securities whose interest is subject to the
alternative minimum tax, no more than 20% of such 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
provided to the bond issuing authority by the applicable state. Under normal
market conditions, if general market interest rates are increasing, the prices
17
<PAGE>
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.
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,
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in abnormal market conditions if, in the judgment of the Manager, tax-exempt
securities satisfying the Fund's objectives can not 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 fixed-income 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 under "Seligman New Jersey
Tax-Exempt Fund, Inc." 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
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 objective 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
include those set forth under "Tax-Exempt Securities" above, that would
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otherwise meet the Series' objective. 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 U.S.
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 under "Seligman New Jersey Tax-Exempt Fund, Inc."
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 unrated 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. There can be no assurance that a Series will be able to meet its
investment objective.
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 U.S. 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 under "Seligman New Jersey
Tax-Exempt Fund, Inc." Investments in certificates of deposit of foreign banks
and foreign branches of U.S. banks may involve certain risks, as described
above.
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Each Series is permitted to purchase project notes and standby commitments;
however, neither Series has any present intention of investing in such
securities.
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 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 are 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). 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 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.
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 only for those
investors who can bear the risk inherent in seeking the highest tax-exempt
yields.
During the fiscal year ended September 30, 1995 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 .............................................. 14%
AA/Aa ................................................ 7%
A/A .................................................. 25%
BBB/Baa .............................................. 13%
BB/Ba ................................................ --
B/B .................................................. --
CCC/Caa .............................................. --
Unrated .............................................. 40%
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.
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
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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 California Quality Series 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 Manager, tax-exempt securities
satisfying a Series' objective 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 U.S. 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
under "Seligman New Jersey Tax-Exempt Fund, Inc." 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 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
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.
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General
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, as amended,
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 Directors or Trustees, as applicable, will not
change a Series' investment objective 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.
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
the Series' Statement of Additional Information.
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.
Illiquid Securities. 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 Funds 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, review the
creditworthiness of the municipality obligated to make payment under the unrated
(or below investment grade, where applicable) lease obligation and consider such
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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.
When lssued 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
Funds' 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 circumstances, 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 interests 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.
Borrowing. Each Series may borrow money only from banks and only for
temporary 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.
MANAGEMENT SERVICES
The Manager. The Board of Directors or Trustees, as applicable, provides
broad supervision over the affairs of the Funds. Pursuant to Management
Agreements approved by the Directors or Trustees and the shareholders of each
Series, the Manager manages the investment of the assets of each Series and
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administers its business and other affairs. The address of the Manager is 100
Park Avenue, New York, NY 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 were approximately $11.1 billion at December 31, 1995. The
Manager also provides investment management or advice to individual and
institutional accounts having a value of approximately $4.1 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 30,1995. 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
ended September 30, 1995.
- --------------------------------------------------------------------------------
Annualized Expense
Management Fee Rate Ratios for
for the year ended the year ended
Series 9/30/95 9/30/95
------ ------------------- ---------------------
Class A Class D
------- -------
New Jersey ................ .45%* 1.01% 1.89%
Pennsylvania .............. .50% 1.21% 2.23%
National .................. .50% .86% 1.95%
Colorado .................. .50% .93% 2.02%
Georgia ................... .45%* .91% 1.90%
Louisiana ................. .50% .89% 1.91%
Maryland .................. .50% .96% 2.02%
Massachusetts ............. .50% .86% 1.95%
Michigan .................. .50% .87% 2.01%
Minnesota ................. .50% .87% 1.85%
Missouri .................. .45%* .88% 1.98%
New York .................. .50% .88% 1.96%
Ohio ...................... .50% .84% 1.93%
Oregon .................... .45%* .86% 1.83%
South Carolina ............ .50% .88% 1.85%
California
High-Yield .............. .50% .90% 1.91%
California Quality ........ .50% .89% 1.88%
Florida ................... .19%* .72% 1.66%
North Carolina ............ .14%* .82% 1.64%
* During the year ended September 30, 1995 the Manager, at its discretion,
waived a portion of its fees from the Florida, Georgia, Missouri, New Jersey,
North Carolina and Oregon Series.
- --------------------------------------------------------------------------------
Portfolio Manager. Thomas G. Moles, Vice President and Senior Portfolio
Manager of each of the Funds, 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. He is responsible for
approximately $1.9 billion in tax-exempt securities. Mr. Moles, with more than
23 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 a Fund
and the Lehman Brothers Municipal Bond Index is included in the respective
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Fund's fiscal 1995 Annual Report to shareholders. Copies of a Fund's Annual
Report may be obtained, without charge, by calling or writing the Funds at the
telephone numbers or address listed on the cover 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 or Trustees may determine,
the Manager may consider sales of shares of the Funds (and, under applicable
laws, of the other Seligman Mutual Funds) as a factor in the selection of
dealers to execute portfolio transactions for the Funds.
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, NY 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 $100 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. EXCEPTIONS TO THESE MINIMUMS ARE
AVAILABLE FOR ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE INVEST-A-CHECK(R)
SERVICE OR THE SELIGMAN(SM) TIME HORIZON(SM) STRATEGY, AN ASSET ALLOCATION
PROGRAM.
Orders received by an authorized dealer before the close of the New York
Stock Exchange ("NYSE") (normally, 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 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.
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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.
Current shareholders may purchase additional shares at any time through any
authorized dealer or by sending a check payable to "Seligman Group of Funds"
directly to Seligman Data Corp., 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. If a shareholder does not provide the required information, Seligman
Data Corp. will seek further clarification and may be forced to return the check
to the shareholder. Orders sent directly to Seligman Data Corp. will be executed
at the net asset value next determined after the 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 debited from the shareholder's
account. 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 such shares to the
shareholder's account.
Valuation. The net asset value of a Series' shares is determined each day,
Monday through Friday, as of the close of the NYSE (normally, 4:00 p.m. New York
City time), on each day that the NYSE is open. Net asset value is calculated
separately for each class of a Series. 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 or Trustees.
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.
- --------------------------------------------------------------------------------
Referral Fee. SFSI shall pay broker/dealers, from its own resources, an
additional fee in respect of certain investments in Class A shares of the
Seligman Mutual Funds by an "eligible employee benefit plan" (as defined below
under "Special Programs") which are attributable to the particular
broker/dealer. The shares eligible for the fee are those on which an initial
front-end sales load was not paid because either (i) the participating eligible
employee benefit plan has at least $1 million invested in the Seligman Mutual
Funds or (ii) the participating employer has at least 50 eligible employees to
whom such plan is made available. The fee, which is paid monthly, is a
percentage of the average daily net asset value of eligible shares based on the
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length of time the shares have been invested in a Seligman Mutual Fund, as
follows: for shares held up to 1 year, .50% per annum; for shares held more than
1 year up to 2 years, .25% per annum; for shares held from 2 years up to 5
years, .10% per annum; and nothing thereafter.
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
other fiduciary or individual account.
o Volume Discounts are provided if the total amount being invested in Class
A shares of a Series alone, or in any combination of shares of the other
Seligman Mutual Funds that are sold with a front-end 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 Seligman Mutual Funds 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 Seligman Mutual Fund on which there was a sales load to
determine reduced sales loads in accordance with the sales load schedule. An
investor or a dealer purchasing shares on behalf of an investor 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
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 that were
acquired by the investor through an exchange of shares of another Seligman
Mutual Fund on which there was a sales load. An investor or a dealer purchasing
shares on behalf of an investor 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 51.
Special Programs. Each Series may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees and their spouses,
(and family members of the foregoing) of the Funds, the other investment
companies in the Seligman Group, the Manager and other companies affiliated with
the Manager. Family members are defined to include lineal descendants and lineal
ancestors, siblings (and their spouses and children) and any company or
organization controlled by any of the foregoing. 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 Series 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 Series 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" (i) which have at least $1 million invested in the Seligman Group
of Mutual Funds or (ii) of employers who have at least 50 eligible employees to
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<PAGE>
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 plan" means any plan or arrangement,
whether or not tax qualified, which provides for the purchase of a Series'
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.
Section 403(b) plans sponsored by public educational institutions are not
eligible for net asset value purchases based on the aggregate investment made by
the plan or number of eligible employees. Participants in such plans are
eligible for reduced sales loads based solely on their individual investments.
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 the 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
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
(the "Code"); (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 section 403(b)(7) of the Code 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
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<PAGE>
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
significant amount of shares of a Fund and/or certain other mutual 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 shall be consistent with the
rules of the National Association of Securities Dealers, Inc., as then in
effect.
TELEPHONE TRANSACTIONS
A shareholder with telephone transaction privileges, and the shareholder's
broker-dealer representative, will have the ability to effect the following
transactions via telephone: (i) redemption of a Fund's shares, (ii) exchange of
Fund shares for shares of another Seligman Mutual Fund, (iii) change of a
dividend and/or capital gain distribution option, and (iv) change of address.
All telephone transactions are effected through Seligman Data Corp. at (800)
221-2450.
For investors who purchase shares by completing and submitting an Account
Application (except those accounts registered as trusts (unless the trustee and
sole beneficiary are the same person), corporations or group retirement plans):
Unless an election is made otherwise on the Account Application, a shareholder
and the shareholder's broker-dealer of record, as designated on the Account
Application, will automatically receive telephone transaction privileges.
For investors who purchase shares through a broker-dealer: Telephone
services for a shareholder and the shareholder's representative may be elected
by completing a supplemental election application available from the
broker-dealer of record.
For accounts registered as trusts (unless the trustee and sole beneficiary
are the same person), corporations or group retirement plans: Telephone services
are not available.
All funds with the same account number (i.e., registered exactly the same)
as an existing account, including any new fund in which the shareholder invests
in the future, will automatically include telephone services if the existing
account has telephone services. Telephone services may also be elected at any
time on a supplemental application.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone transaction services, authorizes each of the other owners to effect
telephone transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative 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
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<PAGE>
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, of course, may
refuse or cancel 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 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 services will be
sent to the shareholder at the address of record.
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, NY
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 OR CUSTODIANS. 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
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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 (less any applicable CDSL in the case of Class D shares).
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, less any applicable
CDSL. 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, less any applicable CDSL. 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 Series 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
all persons, unless otherwise elected under Section 6 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 OF 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
AGAINST WHICH THE CHECK WAS DRAWN.
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 a Fund or Mellon Bank, N.A. See "Terms and Conditions" on page 51 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
SUCH SHARES TO THE SHAREHOLDER'S ACCOUNT.
Telephone Redemptions. Telephone redemptions of uncertificated shares may
be made once per day, in an amount of up to $50,000. 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 City time, on any business day and will be processed
as of the close of business on that day. Redemption requests by telephone will
32
<PAGE>
not be accepted within 30 days following an address change. Each Fund reserves
the right to suspend or terminate its telephone redemption service at any time
without notice.
For more information about telephone redemptions, and the circumstances
under which shareholders may bear the risk of loss for a fraudulent transaction,
see "Telephone Transactions" above.
General. With respect to shares redeemed, a check for the proceeds will be
sent to the shareholder's address of record within seven calendar days after
acceptance of the redemption order and will be made payable to all of the
registered owners on the account. With respect to shares repurchased, a check
for the proceeds will be sent to the investment dealer within seven calendar
days after acceptance of the repurchase order and will be made payable to the
investment dealer. The Funds will not permit redemptions of shares 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 such shares to the shareholder's account. The proceeds of a redemption
or repurchase may be more or less than the shareholder's cost.
The Funds reserves the right to redeem shares owned by a shareholder whose
investment in a Series 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 Seligman Mutual Funds, 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 in shares of any of the other Series of the Funds or any of the
other Seligman Mutual Funds. If a shareholder redeems Class D shares and the
redemption was subject to a CDSL, the shareholder may reinstate the investment
in shares of the same class of the Series or any of the other Seligman Mutual
Funds 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 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 a Series. The
Manager, in its sole discretion, may also make similar payments to SFSI from its
33
<PAGE>
own resources, which may include the management fee that the Manager receives
from each Series.
Under its Plan, 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, 1995 in respect of each Series' Class A shares' average
daily net assets pursuant to the Plans were as follows:
% of
Average
Series Net Assets
------ ----------
New Jersey .................................................... .22%
Pennsylvania .................................................. .22
National ...................................................... .09
Colorado ...................................................... .09
Georgia ....................................................... .10
Louisiana ..................................................... .10
Maryland ...................................................... .09
Massachusetts ................................................. .10
Michigan ...................................................... .10
Minnesota ..................................................... .10
Missouri ...................................................... .09
New York ...................................................... .08
Ohio .......................................................... .10
Oregon ........................................................ .10
South Carolina ................................................ .10
California High-Yield ......................................... .10
California Quality ............................................ .10
Florida ....................................................... .24
North Carolina ................................................ .24
Under its Plan, 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,
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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 year ended September 30, 1995, 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.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts as broker/dealer of record for shareholder
accounts that do not have a designated broker/dealer of record and receives
compensation from a Series pursuant to its Plan for providing personal service
and account maintenance to such accounts and other distribution services.
EXCHANGE PRIVILEGE
A shareholder may, without charge, exchange at net asset value any part 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 the shareholder has telephone services.
Class A shares may be exchanged only for Class A shares, and Class D shares
may be exchanged only for Class D shares, of another Series or another mutual
fund in the Seligman Group. All exchanges will be made on the basis of relative
net asset value.
If Class D shares that are subject to a CDSL are exchanged 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.
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 Growth Opportunities Fund, the Seligman Henderson Global
Smaller Companies Fund, the 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 net asset values of the
respective funds determined at the close of the NYSE on that day. Telephone
requests for exchanges must be received between 8:30 a.m. and 4:00 p.m. New York
City time on any business day, by Seligman Data Corp. at (800) 221-2450 and will
be 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 fund into which the exchange is
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being made. The method of receiving distributions, unless otherwise indicated,
will be carried over to the new fund account, as will telephone services.
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 or jointly. 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 Seligman Mutual Funds.
A broker/dealer representative will be able to effect exchanges on behalf
of a shareholder only if the shareholder has telephone services or if the
broker/dealer has entered into a Telephone Exchange Agreement with SFSI wherein
the broker/dealer must agree to indemnify SFSI and the Seligman Group of Mutual
Funds from any loss or liability incurred as a result of 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 broker/dealer of record listed on the account.
SFSI reserves the right to reject any telephone exchange request. Any
rejected telephone exchange order may be processed by mail. For more information
about telephone exchanges, which, unless objected to, are assigned to certain
shareholders automatically, 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.
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 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.
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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 telephone services, changes may also be telephoned to Seligman
Data Corp. between 8:30 a.m. and 6:00 p.m. New York City time, by either the
shareholder or the broker/dealer of record on the account. For information about
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, if any. 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 (the "Code"). Thus
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 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
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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 addition, no loss will be
allowed on the sale or other disposition of shares of a Series if, within a
period beginning 30 days before the date of such sale or disposition and ending
30 days after such date, the holder acquires (such as through dividend
reinvestment) securities that are substantially identical to the shares of the
Series.
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
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
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income taxation, and, further to the extent that they constitute long-term
capital gain 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, P.C., 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,
which 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 or its possessions to the extent included in federal
taxable income, or (c) obligations of territories or possessions of the United
States to the extent federal law exempts interest on such obligations from
taxation by the 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
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 January 1 of each year only assets, such
as Florida Tax-Exempt Securities and U.S. Government securities, which are
exempt from the Florida intangible personal property 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
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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
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.
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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.
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
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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,
and subject to the discussion in the paragraph below, 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
income on tax-exempt obligations of the State of Minnesota, or its political or
governmental subdivisions, municipalities, governmental agencies or
instrumentalities ("Minnesota Sources"). 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.
Legislation enacted in 1995 provides that it is the intent of the Minnesota
legislature that interest income on obligations of Minnesota governmental units,
including obligations of the Minnesota Sources described above, and
exempt-interest dividends that are derived from interest income on such
obligations, be included in the net income of individuals, estates, and trusts
for Minnesota income tax purposes if it is judicially determined that the
exemption by Minnesota of such interest or such exempt-interest dividends
unlawfully discriminates against interstate commerce because interest income on
obligations of governmental issuers located in other states, or exempt-interest
dividends derived from such obligations, is so included. This provision applies
to taxable years that begin during or after the calendar year in which such
judicial decision becomes final, regardless or the date on which the obligations
were issued, and other remedies apply for previous taxable years. The United
States Supreme Court recently denied certiorari in an Ohio case which upheld an
exemption for interest income on obligations of Ohio governmental issuers, even
though interest income on obligations of non-Ohio governmental issuers, was
subject to tax. However, it cannot be predicted whether a similar case will be
brought in Minnesota or elsewhere, or what the outcome of such case would be.
Minnesota presently imposes an alternative minimum tax on individuals,
estates, and trusts that is based, in part, on such taxpayers' federal
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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, exempt-interest dividends that are attributable to such private
activity bond interest, even though they are derived from the Minnesota Sources
described above, will be included in the base upon which such Minnesota
alternative minimum tax is computed. 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 above is also
subject to the Minnesota alternative minimum tax. Further, should the 95% test
that is described 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 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,
subject to the discussion above. The Minnesota Series will invest so that the
95% test described 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, subject to the discussion above.
Missouri Taxes
In the opinion of Bryan Cave LLP, 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.
Dividends paid by the Missouri Series, if any, that do not qualify as tax
exempt dividends under Section 852 (b)(5) of the Code, will be exempt from
Missouri income tax only to the extent that such dividends are derived from
interest on certain U.S. obligations that the State of Missouri is expressly
prohibited from taxing under the laws of the United States. The portion of such
dividends that is not subject to taxation by the State of Missouri may be
reduced by interest, or other expenses, in excess of $500 paid or incurred by a
shareholder in any taxable year to purchase or carry shares of the Missouri
Series of the Tax-exempt Fund or other investments producing income that is
includable in federal gross income, but exempt from Missouri income tax.
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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
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, has (i) no investments other than interest-bearing obligations,
obligations issued at a discount, and cash and cash items, including
receivables, and financial options, futures, forward contracts, or other similar
financial instruments related to interest-bearing obligations, obligations
issued at a discount or bond indices related thereto (such financial options,
etc. being referred to herein as "Financial Instruments"), and (ii) which has at
least 80% of the aggregate principal amount of all its investments, excluding
Financial Instruments, to the extent such instruments are authorized by section
851(b) of the Code, 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 Corporation 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
shares 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
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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, Talley, Pharr & Lowndes, P.A., 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 Carolina and its political subdivisions or (ii) are dividends attributable
to interest on direct obligations of the U.S. 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 U.S. 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 60 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.
The North Carolina tax on the value of intangible personal property has
been repealed effective January 1, 1995.
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.
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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
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
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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.
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, NY 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 6:00 p.m. New York City time and calls will be answered by a service
representative. 24-HOUR AUTOMATED TELEPHONE ACCESS IS AVAILABLE BY DIALING (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-DIV 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.
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ADDRESS CHANGES MAY BE TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS
TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE
"TELEPHONE TRANSACTIONS" ABOVE.
Account Services. Shareholders are sent confirmation of financial
transactions.
Other investor services are available. These include:
o Invest-A-Check(R) enables a shareholder to authorize checks to be drawn
on a regular checking account at regular monthly intervals in fixed amounts
of $100 or more per fund, or regular quarterly intervals in fixed amounts
of $250 or more per fund, to purchase shares. Accounts may be established
concurrently with the Invest-A-Check(R) Service with a $100 minimum in
conjunction with the monthly investment option, or a $250 minimum in
conjunction with the quarterly investment option. Accounts established in
conjunction with the Invest-A-Check(R) Service must be accompanied by a
minimum initial investment of $100. (See "Terms and Conditions" on page
51).
o Automatic Dollar-Cost-Averaging Service permits a shareholder of Class A
shares of Seligman Cash Management Fund to exchange a specified amount, at
regular monthly intervals in fixed amounts of $100 or more per fund, or
regular quarterly intervals of $250 or more per fund, into Class A shares
of any other Seligman Mutual Fund, registered in the same name. The
shareholder's Cash Management Fund account must have a dollar value of at
least $5,000 at the initiation of the service. Exchanges will be made at
the public offering price.
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 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 Automatic Cash Withdrawal Service permits payments at regular intervals
to be made to a shareholder who owns or purchases Class A shares worth
$5,000 or more held as book credits. 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 51).
o Directed Dividends allows a shareholder to pay dividends to another
person or to direct the payment of such dividends to another Seligman
Mutual Fund 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
Seligman Mutual Fund.
o Overnight Delivery to service shareholder requests is available for a
$15.00 fee which may be debited 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 prior years 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 SERIES' PERFORMANCE
From time to time, a Series advertises its "yield," "tax equivalent yield,"
"average annual total return" and "total return," each of which is 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
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"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
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. 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
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separate Series. To date, shares of thirteen Series of the Tax-Exempt Fund, four
Series of the 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, as applicable,
is equal as to earnings, assets and voting privileges, except that each class
bears its own separate distribution and, potentially, 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.
The 1940 Act 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 Rule 18f-3 under the 1940 Act. All shares
have noncumulative voting rights for the election of directors. Each outstanding
share is fully paid and non-assessable, and each is freely transferable. There
are no liquidation, conversion or preemptive rights.
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 indemnification 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 such Fund.
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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. The
application is subject to acceptance by the shareholder's bank and Seligman Data
Corp. Checks in the amount specified will be drawn automatically on the
shareholder's bank on the fifth day of each month unless otherwise specified (or
on the prior business day if such 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 the shareholder's 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 a Series for any loss it may have incurred as a
result, and charge a $10.00 return check fee. This fee may be debited from the
shareholder's account. Service will be reinstated upon written request
indicating that the cause of interruption has been corrected. The Service may be
terminated by the shareholder or Seligman Data Corp. at any time by written
notice. The shareholder agrees 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 the shareholder exchanges all of the shares
from one Seligman Mutual Fund to another, the shareholder must re-apply for the
Invest-A-Check(R) Service in the Seligman Mutual Fund into which the 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. Accounts established in conjunction with the
Invest-A-Check(R) service must be accompanied by a minimum initial investment of
$100.
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 specific day designated by the
shareholder of each month (or on the prior business day if the day specified
falls on a weekend or holiday). The shareholder may change the amount of
scheduled payments or 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. The Service may be terminated by the shareholder 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. 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 the shareholder or credited to the shareholder's
account. Upon completion of the specified minimum purchase within the
thirteen-month period, all shares held in escrow will be deposited in the
shareholder's account or delivered to the shareholder. The shareholder may
include the total asset value of shares of the Seligman Mutual 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, Inc., sufficient escrowed
shares will be redeemed for payment of the additional sales load. Shares
remaining in escrow after this payment will be released to the shareholder's
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 the
shareholder and that the required additional escrowed shares are being furnished
by the shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by
an exchange of shares of another Seligman 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 Cash Management Fund which have been
purchased directly may not be used for purposes of determining reduced sales
loads on additional purchases of the other Seligman Mutual Funds.
Check Redemption Service -- Class A Shares Only
If shares are held in joint names, all shareholders must sign Section 6 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.
The shareholder hereby authorizes Mellon Bank, N.A. to honor checks drawn
by the shareholder and to effect a redemption of sufficient shares in the
shareholder's account to cover payment of the check. 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. A 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.
2/96
51
<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 Series Expenses ................................................ 3
Financial Highlights ...................................................... 8
Alternative Distribution System ........................................... 16
Investment Objectives And Policies ........................................ 17
Management Services ....................................................... 24
Purchase Of Shares ........................................................ 26
Telephone Transactions .................................................... 30
Redemption Of Shares ...................................................... 31
Administration, Shareholder Services
And Distribution Plan ................................................... 33
Exchange Privilege ........................................................ 35
Further Information About
Transactions In The Funds ............................................... 36
Dividends And Distributions ............................................... 36
Taxes ..................................................................... 37
Shareholder Information ................................................... 47
Advertising A Series' Performance ......................................... 48
Organization And Capitalization ........................................... 49
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.
TE1 2/96
================================================================================
Seligman New Jersey
Tax-Exempt Fund, Inc.
Seligman Pennsylvania
Tax-Exempt Fund Series
Seligman Tax-Exempt
Fund Series, Inc.
Seligman Tax-Exempt
Series Trust
- --------------------------------------------------------------------------------
[PROMOTIONAL ARTWORK]
Prospectus
February 1, 1996
[LOGO]
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
THE SELIGMAN GROUP OF FUNDS
ACCOUNT APPLICATION
Please make your investment check payable to the
"Seligman Group of Funds" and mail it
with this completed Application to:
Seligman Data Corp. TO OPEN A SELIGMAN IRA, SEP OR PENSION/
100 Park Avenue/2nd Floor PROFIT SHARING PLAN, A SEPARATE ADOPTION
New York, NY 10017 AGREEMENT IS REQUIRED. PLEASE CALL
(800) 221-2450 RETIREMENT PLAN SERVICES FOR MORE
INFORMATION AT (800) 445-1777.
1. ACCOUNT REGISTRATION
TYPE OF ||INDIVIDUAL ||MULTIPLE OWNERS ||GIFT/TRANSFER TO MINOR ||OTHER (Corporations, Trusts, Organizations,
ACCOUNT Use Line 1 Use Lines 1, 2 & 3 Use Line 4 Use Line 5 Partnerships, etc.)
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, 4, or 5 below 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 Gift/Transfer 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 below. Taxpayer ID Number
TYPE OF TRUST ACCOUNT: ||Trust ||Guardianship ||Conservatorship ||Estate ||Other _________
Trustee/Fiduciary Name__________________________________ Trust Date__________________________
Trust Name ______________________________,for the benefit of (FBO)_______________________________
2. MAILING ADDRESS
ADDRESS TELEPHONE
___________________________________________ (_______)__________________(_______)_________________
Street Address or P.O. Box Daytime Evening
___________________________________________ U.S. CITIZEN? ||Yes ||No _________________________
City State Zip If no, indicate country
3. INVESTMENT SELECTION
Please indicate the dollar amount(s) you would like to invest in the space
provided below. Minimum initial investment is $1,000 per Fund ($2,500 for
Seligman Communications and Information Fund) except for accounts
established concurrently with the Invest-A-Check(R) Service (see section
6-J. of this application). IF MORE THAN ONE FUND IS SELECTED, ACCOUNTS MUST
HAVE IDENTICAL REGISTRATIONS AND CLASS OF SHARES (except for Seligman Cash
Management Fund).
PLEASE CHOOSE ONE: || Class A Shares || Class D Shares MAKE CHECK PAYABLE TO: SELIGMAN GROUP OF FUNDS
$_____________ TOTAL AMOUNT, INVESTED AS FOLLOWS:
$_____________ Seligman Communications $_____________ Seligman Common Stock Fund
and Information Fund $_____________ Seligman Income Fund
$_____________ Seligman Henderson $_____________ Seligman High-Yield Bond Fund
Global Technology Fund $_____________ Seligman U.S. Government Securities Fund
$_____________ Seligman Frontier Fund $_____________ Seligman National Tax-Exempt Fund
$_____________ Seligman Henderson Global $_____________ Seligman Tax-Exempt Fund (choose one):
Smaller Companies Fund CA-Qlty.|| FL|| MD|| MN|| NY|| OR||
$_____________ Seligman Capital Fund CA-Hy. || GA|| MA|| MO|| NC|| PA||
$_____________ Seligman Henderson Global CO || LA|| MI|| NJ|| OH|| SC||
$_____________ Growth Opportunities Fund
$_____________ Seligman Growth Fund
$_____________ Seligman Henderson
International Fund $_____________ Seligman Cash Management Fund (Class A only)
NO REDEMPTION PROCEEDS WILL BE REMITTED TO A SHAREHOLDER WITH RESPECT TO
SHARES PURCHASED BY CHECK (UNLESS CERTIFIED) UNTIL SELIGMAN DATA CORP.
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.
<PAGE>
4. 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 each Fund for my own
Account, or for the Account of the organization named below. I have
received and read the current Prospectus of each Fund in which I am
investing 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
5. BROKER/DEALER OR FINANCIAL ADVISOR DESIGNATION
________________________________________ _____________________________
Firm Name Representative's Nam
________________________________________ _____________________________
Branch Office Address Representative's ID Number
________________________________________ (______)_____________________
City State Zip Representative's Telephone Number
________________________________________
Branch Number
6. ACCOUNT OPTIONS AND SERVICES
________________________________________________________________________________
A. DIVIDENDS AND GAIN DISTRIBUTION OPTIONS
I choose the following options for each Fund listed: OPTION
------
1 2 3
Option 1. Dividends in shares, gain distributions in shares. || || || FUND NAME
Option 2. Dividends in cash, gain distributions in shares. || || || FUND NAME
Option 3. Dividends in cash, gain distributions in cash. || || || FUND NAME
__________________________________________________________________________________________
NOTE: IF NO ELECTION IS MADE, OPTION 1. WILL AUTOMATICALLY BE PUT INTO EFFECT.
All dividend and/or gain distributions taken in shares will be invested at net asset value.
__________________________________________________________________________________________
________________________________________________________________________________
B. DIVIDEND DIRECTION OPTION
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 from
the following Fund(s)
__________________ __________________ __________________ be made payable to:
Fund Name Fund Name Fund Name
Name______________________ Seligman Fund__________________
Address___________________ (If opening a new account, a minimum of $1,000 is required.)
City______________________ Account Number_________________
State, Zip________________ (For an existing account.)
________________________________________________________________________________
C. LETTER OF INTENT SERVICE (CLASS A ONLY)
I intend to purchase, although I am not obligated to do so,
additional shares of Seligman _________________________
Fund within a 13-month period which, together with the
total asset value of shares owned, will aggregate at least:
||$50,000 ||$100,000 ||$250,000 ||$500,000 ||$1,000,000
||$4,000,000
I AGREE TO THE ESCROW PROVISION LISTED UNDER "TERMS AND CONDITIONS"
IN THE BACK OF EACH PROSPECTUS.
________________________________________________________________________________
D. RIGHT OF ACCUMULATION (CLASS A ONLY)
Please identify any additional Seligman Fund accounts
eligible for the Right of Accumulation or to be used toward
completion of a Letter of Intent, and check applicable box:
|| I am a trustee for the following accounts, which are
held by the same trust, estate, or under the terms of a
pension, profit sharing or other employee benefit trust
qualified under section 401 of the Internal Revenue Code.
|| 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#_____________
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
<PAGE>
________________________________________________________________________________
E. AUTOMATIC CASH WITHDRAWAL SERVICE
(CLASS A, OR CLASS D ONLY AFTER CLASS D SHARES ARE HELD FOR ONE YEAR)
Please send a check for $_________ withdrawn from Seligman
________________________ Fund, beginning on the __ day of
______ 19__, and thereafter on the __ day specified of
every:
||Month ||3rd Month ||6th Month ||12th Month
Make payments to: Name___________________________________
Address________________________________
City___________State________Zip________
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.
________________________________________________________________________________
F. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE
I authorize Seligman Data Corp. to withdraw $ _____________
(minimum: $100 monthly or $250 quarterly) from my Seligman
Cash Management Fund Class A account || Monthly or
|| Quarterly to purchase Class A shares of Seligman
________________________________ Fund, beginning on the
_____ day of __________ 19 ____. Shares in the Seligman
Cash Management Fund Class A account must have a current
value of $5,000 at the initiation of Service and all shares
must be in "book credit" form.
________________________________________________________________________________
G. EXPEDITED REDEMPTION SERVICE, FOR SELIGMAN CASH MGMT. FUND ONLY
I hereby authorize Seligman Data Corp. to honor telephone
or written instructions received from me without a
signature and believed by Seligman Data Corp. to be genuine
for redemption. Proceeds will be wired ONLY to the
commercial bank listed below for credit to my account, or
to my address of record. If Expedited Redemption Service is
elected, no certificates for shares will be issued. I also
understand and agree to the risks and procedures outlined
for all telephone transactions set forth in section 6-H. of
this Application.
Investment by ||Check ______________________________________________________________________
||Wire Name of Commercial Bank (Savings Bank May Not Be Used)
_________________________ ______________________ ______________________
Bank Account Name Bank Account No. Bank Routing No.
_______________________________________________________________________________________
Address of Bank City State Zip Code
X________________________________ X____________________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
______________________________________________________________________________________________________________________
================================================================================
H. CHECK REDEMPTION SERVICE (CLASS A ONLY)
Available to shareholders who own or purchase shares having
a value of at least $25,000 invested in any of the
following: Seligman High-Yield Bond Fund, Seligman Income
Fund, Seligman U.S. Government Securities Fund, and any
Seligman Tax-Exempt Fund, or $2,000 invested in Seligman
Cash Management Fund.
IF YOU WISH TO USE THIS SERVICE, YOU MUST COMPLETE SECTION
4 AND THE SIGNATURE CARD BELOW. SHAREHOLDERS ELECTING THIS
SERVICE ARE SUBJECT TO THE CONDITIONS OF THE TERMS AND
CONDITIONS IN THE BACK OF EACH PROSPECTUS.
- --------------------------------------------------------------------------------
CHECK WRITING SIGNATURE CARD Authorized Signature(s)
___________________________________________ 1.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 2.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 3.______________________________
Name of Fund for Check Redemption Service
__________________________________________ 4.______________________________
Account Number (If known)
__________________________________________
Account Registration (Please Print)
|| 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.
================================================================================
<PAGE>
I. TELEPHONE SERVICE ELECTION
AVAILABLE FOR ALL TYPES OF ACCOUNTS EXCEPT AS NOTED BELOW
Unless I check the box below, I understand that I or my
representative 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
|| I DO NOT WANT TELEPHONE SERVICES FOR MYSELF OR MY
REPRESENTATIVE NAMED IN SECTION 5 OF THIS APPLICATION
AUTHORIZATION
I understand that the telephone services are optional and
that unless I checked the box above, I authorize the Funds,
all other Seligman Funds with the same account number and
registration which I currently own or in which I invest in
the future, and Seligman Data Corp. ("SDC"), to act upon
instructions received by telephone from me or any other
person (including the representative named in section 5 of
this application) 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
each 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.
Telephone services are not available for trusts (unless the
trustee and sole beneficiary are the same person),
corporations or group retirement plans. IRA telephone
services will include only exchanges and address changes.
J. INVEST-A-CHECK(R) SERVICE
To start your Invest-A-Check(R) Service, fill out 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).
ACCOUNTS MAY BE ESTABLISHED CONCURRENTLY WITH THE
INVEST-A-CHECK(R) SERVICE WITH A $100 MINIMUM ($200 minimum
for Seligman Communications and Information Fund) IF THE
MONTHLY INVESTMENT OPTION IS CHOSEN, OR WITH A $250 MINIMUM
IF THE QUARTERLY INVESTMENT OPTION IS CHOSEN.
Please arrange with my bank to draw pre-authorized checks
and invest the following dollar amounts (minimum: $200
monthly or $500 quarterly for Seligman Communications and
Information Fund $100 monthly or $250 quarterly for all
other Funds) in the designated Seligman Fund(s) as
indicated:
_______________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
I understand that my checks will be drawn on the fifth day
of the month, or prior business day, 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 each Prospectus
and as set forth below in the Bank Authorization.
X__________________________________________________________________
Signature of Investor (Please also sign Bank Authorization below.)
X__________________________________________________________________
Signature of Co-Investor, if any
________________________________________________________________________________________
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 Fund(s) designated
below:
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
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
X__________________________________________________
Signature(s) of Depositor(s) -- As Carried by Bank
X__________________________________________________
<PAGE>
- --------------------------------------------------------------------------------
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 Fund(s).
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 Seligman Mutual Funds, 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 Seligman
Mutual Funds, 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
________________________________________________________________________________
<PAGE>
MANAGED BY
[J&W SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1996
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 United 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, 1996. 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 .................................................... 11
Purchase And Redemption of Fund Shares .................................... 11
Distribution Services ..................................................... 14
Taxes ..................................................................... 15
Valuation ................................................................. 16
Performance Information ................................................... 16
General Information ....................................................... 22
Financial Statements ...................................................... 22
Appendix A ................................................................ 22
Appendix B ................................................................ 25
Appendix C ................................................................ 54
TEA1A
1
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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 Tax-Exempt 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").
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 Investors Service, Inc. ("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 rating categories 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. 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 "1940 Act"), 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 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.
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Floating Rate and Variable Rate Securities. 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. 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. A Series' 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, 1995 and 1994 were: National - 24.91% and
24.86%; Colorado - 14.70% and 10.07%; Georgia - 3.36% and 19.34%; Louisiana -
4.82% and 17.16%; Maryland - 3.63% and 17.68%; Massachusetts - 16.68% and
12.44%; Michigan - 20.48% and 10.06%; Minnesota - 5.57% and 3.30%; Missouri -
3.88% and 14.33%; New York - 34.05% and 28.19%; Ohio - 2.96% and 9.37%; Oregon -
2.47% and 9.43% and South Carolina - 4.13% and 1.81%. The fluctuation of
portfolio turnover ratios of certain Series during 1995 and 1994 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;
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;
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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 1940 Act, 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 1940 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 Officer
(57) 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;
and Carbo Ceramics Inc., ceramic proppants for oil and gas
industry; Director or Trustee, Seligman Data Corp.,
shareholder service agent; Daniel Industries, Inc.,
manufacturer of oil and gas metering 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,
J. & W. Seligman Trust Company, trust company and Seligman
Securities, Inc., broker/dealer.
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BRIAN T. ZINO* Director, President and Member of the Executive Committee
(43)
Director and Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W. Seligman &
Co. Incorporated, investment managers and advisors; and
Seligman Advisors, Inc., advisors; Director or Trustee,
the Seligman Group of Investment Companies; President, the
Seligman Group of Investment Companies, except Seligman
Quality Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc.; Chairman, Seligman Data Corp., shareholder
service agent; Director, Seligman Financial Services,
Inc., distributor; Seligman Services, Inc., broker/dealer;
Senior Vice President, Seligman Henderson Co., advisors;
formerly, Director and Secretary, Chuo Trust - JWS
Advisors, Inc., advisors; and Director, J. & W. Seligman
Trust Company, trust company and Seligman Securities,
Inc., broker/dealer.
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(48)
Director, Managing Director and Chief Investment Officer,
Institutional, J. & W. Seligman & Co. Incorporated,
investment managers and advisors; and Seligman Advisors,
Inc., advisors; Director or Trustee, the Seligman Group of
Investment Companies; Director, Seligman Holdings, Inc.,
holding company; Seligman Financial Services, Inc.,
distributor; Seligman Henderson Co., advisors; and
Seligman Services, Inc., broker/dealer; formerly,
President, of the Seligman Group of Investment Companies,
except Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.; and Director, J. & W.
Seligman Trust Company, trust company; Seligman Data
Corp., shareholder service agent; and Seligman Securities,
Inc., broker/dealer.
FRED E. BROWN* Director
(82)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisors; Director
or Trustee, the Seligman Group of Investment Companies;
Seligman Financial Services, Inc., distributor; Seligman
Services, Inc., broker/dealer; Trudeau Institute, Inc.,
non-profit biomedical 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.
JOHN R. GALVIN Director
(66)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group of
Investment Companies; Chairman of the American Council on
Germany; a Governor of the Center for Creative Leadership;
Director of USLIFE, insurance; National Committee on
U.S.-China Relations, National Defense University and the
Institute for Defense Analysis; and Consultant of Thomson
CSF, electronics. Formerly, Ambassador, U.S. State
Department; Distinguished Policy Analyst at Ohio State
University and Olin Distinguished Professor of National
Security Studies at the United States Military Academy.
From June, 1987 to June, 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command.
Tufts University, Packard Avenue, Medford, MA 02155
ALICE S. ILCHMAN Director
(60)
President, Sarah Lawrence College; Director or Trustee,
the Seligman Group of Investment Companies; Chairman, The
Rockefeller Foundation, charitable foundation; and
Director, NYNEX, telephone company; and the Committee for
Economic Development; formerly, Trustee, The Markle
Foundation, philanthropic organization; and Director,
International Research and Exchange Board, intellectual
exchanges.
Sarah Lawrence College, Bronxville, New York 10708
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FRANK A. McPHERSON Director
(62)
Chairman of the Board and Chief Executive Officer,
Kerr-McGee Corporation, energy and chemicals; Director or
Trustee, the Seligman Group of Investment Companies;
Director of Kimberly-Clark Corporation, consumer products,
Bank of Oklahoma Holding Company, American Petroleum
Institute, Oklahoma City Chamber of Commerce, Baptist
Medical Center, Oklahoma Chapter of the Nature
Conservancy, Oklahoma Medical Research Foundation and
United Way Advisory Board; Chairman of Oklahoma City
Public Schools Foundation; and Member of the Business
Roundtable and National Petroleum Council.
123 Robert S. Kerr Avenue, Oklahoma City, OK 73102
JOHN E. MEROW* Director
(66)
Chairman and Senior Partner, Sullivan & Cromwell, law
firm; Director or Trustee, the Seligman Group of
Investment Companies; The Municipal Art Society of New
York; Commonwealth Aluminum Corporation, the U.S. Council
for International Business and the U.S.-New Zealand
Council; Chairman, American Australian Association; Member
of the American Law Institute and Council on Foreign
Relations; Member of the Board of Governors of Foreign
Policy Association and New York Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(53)
Attorney; Director or Trustee, the Seligman Group of
Investment Companies and 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
JAMES C. PITNEY Director
(69)
Partner, Pitney, Hardin, Kipp & Szuch, law firm; Director
or Trustee, the Seligman Group of Investment Companies and
Public Service Enterprise Group, public utility.
Park Avenue at Morris County, P.O. Box 1945, Morristown,
NJ 07962-1945
JAMES Q. RIORDAN Director
(68)
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. and Public
Broadcasting Service; formerly, Co-Chairman of the Policy
Council of the Tax Foundation; Director and Vice Chairman,
Mobil Corporation; Director and President, Bekaert
Corporation; and Director, Tesoro Petroleum Companies,
Inc.
675 Third Avenue, Suite 3004, New York, NY 10017
ROBERT L. SHAFER Director
(63)
Director, Various Corporations; Director or Trustee, the
Seligman Group of Investment Companies; and USLIFE
Corporation, life insurance.
235 East 42nd Street, New York, NY 10017
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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, Red Man Pipe
and Supply Company and C-SPAN.
300 Crescent Court, Suite 700, Dallas, TX 75202
THOMAS G. MOLES Vice President and Senior Portfolio Manager
(53)
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
(39)
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
(31)
Senior Vice President, Law and Regulation and Secretary,
J. & W. Seligman & Co. Incorporated, investment managers
and advisors; Secretary, the Seligman Group of Investment
Companies, Seligman Financial Services, Inc., distributor;
Seligman Henderson Co., advisors; Seligman Services, Inc.,
broker/dealer; Chuo Trust - JWS Advisors, Inc., advisors;
and Seligman Data Corp., shareholder service agent;
formerly, attorney, Seward & Kissel.
THOMAS G. ROSE Treasurer
(38)
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 Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Series for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
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<TABLE>
<CAPTION>
Compensation Table
Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Name and Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Directors (2)
------------------------ ------------------- ------------- ----------------
<S> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
John R. Galvin, Director $ 3,520.16 N/A $ 41,252.75
Alice S. Ilchman, Director 5,725.28 N/A 68,000.00
Frank A. McPherson 3,520.16 N/A 41,252.75
John E. Merow, Director 5,653.84(d) N/A 66,000.00(d)
Betsy S. Michel, Director 5,618.12 N/A 67,000.00
Douglas R. Nichols, Jr., Director* 2,133.68 N/A 24,747.25
James C. Pitney, Director 5,725.28 N/A 68,000.00
James Q. Riordan, Director 5,725.28 N/A 70,000.00
Herman J. Schmidt, Director* 2,133.68 N/A 24,747.25
Robert L. Shafer, Director 5,725.28 N/A 70,000.00
James N. Whitson, Director 5,653.84(d) N/A 68,000.00(d)
</TABLE>
(1) For the year ended December 31, 1995.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
* Retired May 18, 1995.
(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 less than 1% of the
Class A Shares of the National Series and less than 1% of the Class A Shares of
the New York Tax-Exempt Series at January 12, 1996.
MANAGEMENT AND EXPENSES
Under the Management Agreement, 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 Manager is entitled to receive a management fee from each Series for its
services, calculated daily and payable monthly, equal to 0.50% per annum of the
average daily net assets of each Series. The Manager, at its discretion may
waive 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, 1995, 1994 and 1993.
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Fiscal Year Management Fee Paid % of Average Daily Net Assets
- ----------- ------------------- -----------------------------
National Series
Year ended 9/30/95 $ 540,874 0.50%
Year ended 9/30/94 621,285 0.50
Year ended 9/30/93 661,712 0.50
Colorado Series
Year ended 9/30/95 $ 277,393 0.50
Year ended 9/30/94 318,834 0.50
Year ended 9/30/93 328,005 0.50
Georgia Series
Year ended 9/30/95 272,768 0.45*
Year ended 9/30/94 194,686 0.30*
Year ended 9/30/93 107,583 0.20*
Louisiana Series
Year ended 9/30/95 309,651 0.50
Year ended 9/30/94 330,062 0.50
Year ended 9/30/93 310,350 0.50
Maryland Series
Year ended 9/30/95 283,135 0.50
Year ended 9/30/94 305,335 0.50
Year ended 9/30/93 302,181 0.50
Massachusetts Series
Year ended 9/30/95 580,271 0.50
Year ended 9/30/94 648,895 0.50
Year ended 9/30/93 664,011 0.50
Michigan Series
Year ended 9/30/95 749,963 0.50
Year ended 9/30/94 791,875 0.50
Year ended 9/30/93 766,158 0.50
Minnesota Series
Year ended 9/30/95 672,792 0.50
Year ended 9/30/94 702,194 0.50
Year ended 9/30/93 724,940 0.50
Missouri Series
Year ended 9/30/95 233,342 0.45*
Year ended 9/30/94 201,744 0.36*
Year ended 9/30/93 157,373 0.30*
New York Series
Year ended 9/30/95 432,770 0.50
Year ended 9/30/94 491,715 0.50
Year ended 9/30/93 492,674 0.50
Ohio Series
Year ended 9/30/95 847,530 0.50
Year ended 9/30/94 909,119 0.50
Year ended 9/30/93 893,295 0.50
Oregon Series
Year ended 9/30/95 270,412 0.45*
Year ended 9/30/94 241,140 0.39*
Year ended 9/30/93 190,680 0.35*
South Carolina Series
Year ended 9/30/95 563,437 0.50
Year ended 9/30/94 611,278 0.50
Year ended 9/30/93 496,131 0.50
* The Manager waived a portion of its management fee due for this year.
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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
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.
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 Management Agreement, except for willful 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.
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 1940 Act (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 for further history of the
Manager.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
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.
10
<PAGE>
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 purposes 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, 1993, 1994 or 1995. 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
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, 1995, the maximum offering price of each Series' shares is as
follows:
<TABLE>
<CAPTION>
CLASS A SHARES
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 $ 7.58 $.38 $ 7.96
Colorado 7.30 .36 7.66
Georgia 7.81 .39 8.20
Louisiana 8.14 .41 8.55
Maryland 7.96 .40 8.36
Massachusetts 7.91 .39 8.30
Michigan 8.54 .43 8.97
Minnesota 7.82 .39 8.21
Missouri 7.70 .38 8.08
New York 7.86 .39 8.25
Ohio 8.11 .40 8.51
Oregon 7.66 .38 8.04
South Carolina 7.97 .40 8.37
</TABLE>
11
<PAGE>
CLASS D SHARES
Net Asset Value and Maximum
Name of Series Offering Price Per Share*
- -------------- -------------------------
National $ 7.57
Colorado 7.29
Georgia 7.82
Louisiana 8.14
Maryland 7.97
Massachusetts 7.90
Michigan 8.54
Minnesota 7.82
Missouri 7.70
New York 7.87
Ohio 8.15
Oregon 7.65
South Carolina 7.97
- ---------
* 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.
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, 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 Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of a Series, 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 Prospectus, 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 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.
12
<PAGE>
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 of 1986,
as amended (the "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 Prospectus
applies to sales to "eligible employee benefit plans" (as defined in the
Prospectus), except that the Fund may sell shares at net asset value to
"eligible employee benefit plans," (i) which have at least $1 million invested
in the Seligman Group of Mutual Funds or (ii) of employers who have at least 50
eligible 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 SFSI. Such sales must be made in connection
with a payroll deduction 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.
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 Fund's 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 municipal 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 by 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.
13
<PAGE>
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 to cash.
DISTRIBUTION SERVICES
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 concessions received by SFSI, dealer
commissions and total commissions paid by each Series on sales of Class A shares
of the Fund for the years ended September 30, 1995, 1994 and 1993. Also included
in the table are the amounts of CDSL retained by SFSI for the period February 1,
1994 through September 30, 1994 and for the year ended September 30, 1995:
<TABLE>
<CAPTION>
Fiscal 1995
Series SFSI Concessions Dealer Commissions Total Commissions CDSL Retained
------ ---------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C>
National $ 11,153 $ 79,889 $ 91,042 $ 101
Colorado 5,942 44,871 50,813 --
Georgia 12,480 93,530 106,010 378
Louisiana 7,730 54,577 62,307 409
Maryland 8,750 66,429 75,179 --
Massachusetts 12,600 94,205 106,805 323
Michigan 30,006 227,211 257,217 796
Minnesota 18,444 140,533 158,977 700
Missouri 6,965 53,304 60,269 428
New York 14,942 112,407 127,349 940
Ohio 23,679 178,085 201,764 100
Oregon 16,678 123,858 140,536 841
South Carolina 30,670 237,827 268,497 356
Fiscal 1994
Series SFSI Concessions Dealer Commissions Total Commissions CDSL Retained
------ ---------------- ------------------ ----------------- -------------
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>
14
<PAGE>
<TABLE>
<CAPTION>
Fiscal 1993
Series SFSI Concessions Dealer Commissions 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>
Effective April 1, 1995, Seligman Services, Inc. ("SSI"), an affiliate of
the Manager became eligible to receive commissions from certain sales of Fund
shares, as well as distribution and service fees pursuant to the Plan. For the
period ended September 30, 1995, SSI received commissions and distribution and
service fees in the following amounts:
Distribution and
Series Commissions Service Fees
------ ----------- ------------
National $ 531 $ 2,983
Colorado 3,110 1,444
Georgia 1,598 221
Louisiana 0 366
Maryland 1,327 772
Massachusetts 417 1,059
Michigan 245 914
Minnesota 11 925
Missouri 444 1,371
New York 1,211 2,976
Ohio 1,245 1,392
Oregon 750 394
South Carolina 1,247 749
Class A shares of each Series may be sold at net asset value to present and
retired trustees, directors, officers, employees (and family members, as defined
in the Prospectus) 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.
TAXES
Under the Tax Reform Act of 1986, as amended, 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.
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
15
<PAGE>
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
The net asset value per share of each class of a Series of the Fund is
determined as of the close of the New York Stock Exchange ("NYSE") (normally,
4:00 p.m. New York City time), on each day that the NYSE is open. The Fund and
the NYSE are 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 for each class of a Series on each
day in which there is a sufficient degree of trading in a Series' portfolio
securities that the net asset value of Series shares might be materially
affected. Net asset value per share for a class of a Series is computed by
dividing that class' share of the value of the net assets of such Series (i.e.,
the value of its assets less liabilities) by the total number of outstanding
shares of such class. All expenses of a Series, including the Manager's fee, are
accrued daily and taken into account for the purpose of determining net asset
value. The net asset value of Class D shares of a Series will generally be lower
than the net asset value of Class A shares of such Series as a result of the
higher distribution fee with respect to Class D shares. It is expected, however,
that the net asset value per share of the two classes will tend to converge
immediately after the recording of dividends, which will differ by approximately
the amount of the distribution and other class expenses accrual differential
between the classes.
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, fair value
will be 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 a Series' 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, 1995 for each
Series' Class A shares was as follows: National-4.73%, Colorado-4.36%,
Georgia-4.44%, Louisiana-4.39%, Maryland-4.24%, Massachusetts-4.38%,
Michigan-4.36%, Minnesota-3.94%, Missouri-4.30%, New York-4.70%, Ohio-4.24%,
Oregon-4.26%, and South Carolina-4.43%. 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,
1995, which was the last day of this period. The average number of Class A
shares were: National-13,853,185, Colorado-7,536,267, Georgia-7,438,996,
Louisiana-7,645,231, Maryland-7,075,870, Massachusetts-14,703,087,
Michigan-17,772,074, Minnesota-17,007,702, Missouri-6,701,672, New
York-10,732,461, Ohio-21,028,828, Oregon-7,799,146 and South Carolina-14,159,321
which was the average daily number of shares outstanding during the 30-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, 1995 for each Series' Class A shares was as follows: National-7.83%,
Colorado-7.60%, Georgia-7.82%, Louisiana-7.73%, Maryland-7.38%,
Massachusetts-8.22%, Michigan-7.55%, Minnesota-7.12%, Missouri-7.57%, New
York-8.41%, Ohio-7.59%, Oregon-7.74% and South Carolina-7.88%. 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-43.22%, Maryland-42.62%, Massachusetts-46.85%, Michigan-42.26%,
Minnesota-44.73%, Missouri-43.22%, New York-44.13%, Ohio-44.13%, Oregon-45.04%
16
<PAGE>
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,
1995 for each Series' Class A shares was as follows: National-6.16%,
Colorado-3.45%, Georgia-6.40%, Louisiana-5.01%, Maryland-5.69%,
Massachusetts-4.41%, Michigan-4.39%, Minnesota-2.56%, Missouri-5.41%, New
York-5.70%, Ohio-4.43%, Oregon-3.88% and South Carolina-5.42%; for the five-year
period ended on September 30, 1995 for each of the Series' Class A shares was:
National-7.14%, Colorado-6.24%, Georgia-7.30%, Louisiana-7.01%, Maryland-7.24%,
Massachusetts-7.83%, Michigan-7.49%, Minnesota-6.79%, Missouri-6.83%, New
York-7.71%, Ohio-7.17%, Oregon-6.90%, and South Carolina-7.26%; for the ten-year
period ended on September 30, 1995 for certain of the Series' Class A shares
was: National-8.64%, Louisiana-8.29%, Maryland-7.53%, Massachusetts-8.09%,
Michigan-8.67%, Minnesota-8.06%, New York-8.35%, and Ohio-8.51%; and since
inception through the period ended on September 30, 1995 for certain of the
Series' Class A shares was: Colorado-6.24%, Georgia-7.26%, Missouri-6.95%,
Oregon-6.46% and South Carolina-7.26%. These returns 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
the ten-year period or since inception period 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, 1995 for each
Series' Class D shares was as follows: National-4.07%, Colorado-3.69%,
Georgia-3.76%, Louisiana-3.70%, Maryland-3.56%, Massachusetts-3.70%,
Michigan-3.68%, Minnesota-3.23%, Missouri-3.60%, New York-4.05%, Ohio-3.53%,
Oregon-3.57% and South Carolina-3.75%. 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, 1995, which was the last day of this period. The
average number of Class D shares were: National-160,196, Colorado-24,022,
Georgia-265,214, Louisiana-57,453, Maryland-79,423, Massachusetts-112,017,
Michigan-137,572, Minnesota-284,298, Missouri-68,894, New York-112,278,
Ohio-91,217, Oregon-207,885 and South Carolina-208,370 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, 1995 for each Series' Class D shares was as follows: National-6.74%,
Colorado-6.43%, Georgia-6.62%, Louisiana-6.51%, Maryland-6.20%,
Massachusetts-6.95%, Michigan-6.37%, Minnesota-5.84%, Missouri-6.34%, New
York-7.25%, Ohio-6.32%, Oregon-6.49% and South Carolina-6.67%. The tax
equivalent annualized yield was computed as discussed above for Class A shares.
The average annual total return for the one-year period ended, September 30,
1995 for each Series' Class D shares was as follows: National-9.17%,
Colorado-6.26%, Georgia-9.58%, Louisiana-8.17%, Maryland-8.75%,
Massachusetts-7.33%, Michigan-7.36%, Minnesota-5.45%, Missouri-8.49%, New
York-8.87%, Ohio-7.67%, Oregon-6.86%, and South Carolina-8.63%; and since
inception through the period end (on September 30, 1995 for each of the Series'
Class D shares was: National-(0.49)%, Colorado-0.67%, Georgia-1.33%,
Louisiana-1.28%, Maryland-1.76%, Massachusetts-1.53%, Michigan-1.46%,
Minnesota-1.90%, Missouri-0.99%, New York-0.83%, Ohio-1.70%, Oregon-1.64%, and
South Carolina-1.09%. These returns 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 then assumed that at the end of the one-year
period and since inception of the Series, the entire amount was redeemed,
subtracting the 1% CDSL, if applicable.
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,
1995 or from the commencement of a Series' operation through September 30, 1995,
assuming investment of all dividends and capital gain distributions.
17
<PAGE>
<TABLE>
<CAPTION>
CLASS A 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
9/30/86 $ 1,082 $ 28 $ 92 $ 1,202
9/30/87 945 66 163 1,174
9/30/88 974 127 266 1,367
9/30/89 986 132 366 1,484
9/30/90 949 145 451 1,545
9/30/91 1,008 170 587 1,765
9/30/92 1,029 180 712 1,921
9/30/93 1,110 227 895 2,232
9/30/94 916 302 836 2,054
9/30/95 967 319 1,004 2,290 129.01%
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
9/30/95 973 43 752 1,768 76.80%
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
9/30/95 1,041 61 686 1,788 78.82%
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
9/30/95 1,085 137 995 2,217 121.71%
</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>
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
9/30/95 1,061 110 896 2,067 106.72%
MASSACHUSETTS
9/30/86 1,054 1 84 1,139
9/30/87 940 24 150 1,114
9/30/88 995 41 247 1,283
9/30/89 999 51 338 1,388
9/30/90 948 62 412 1,422
9/30/91 1,026 70 552 1,648
9/30/92 1,052 82 674 1,808
9/30/93 1,115 104 828 2,047
9/30/94 1,000 139 847 1,986
9/30/95 1,033 153 991 2,177 117.69%
MICHIGAN
9/30/86 1,077 15 86 1,178
9/30/87 943 49 152 1,144
9/30/88 1,001 73 253 1,327
9/30/89 1,026 79 353 1,458
9/30/90 995 93 437 1,525
9/30/91 1,057 102 569 1,728
9/30/92 1,095 117 699 1,911
9/30/93 1,145 168 846 2,159
9/30/94 1,044 173 879 2,096
9/30/95 1,077 190 1,029 2,296 129.64%
MINNESOTA
9/30/86 1,064 6 84 1,154
9/30/87 948 34 150 1,132
9/30/88 1,001 51 247 1,299
9/30/89 1,012 57 338 1,407
9/30/90 997 66 426 1,489
9/30/91 1,040 70 544 1,654
9/30/92 1,051 72 659 1,782
9/30/93 1,103 106 805 2,014
9/30/94 1,028 126 863 2,017
9/30/95 1,041 132 997 2,170 117.02%
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
9/30/95 1,027 72 763 1,862 86.25%
</TABLE>
19
<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>
NEW YORK
9/30/86 $ 1,060 $ 15 $ 85 $ 1,160
9/30/87 937 44 150 1,131
9/30/88 974 79 245 1,298
9/30/89 992 86 342 1,420
9/30/90 952 91 422 1,465
9/30/91 1,022 97 559 1,678
9/30/92 1,046 115 682 1,843
9/30/93 1,126 153 845 2,124
9/30/94 987 179 844 2,010
9/30/95 1,012 234 983 2,229 122.93%
OHIO
9/30/86 1,060 8 87 1,155
9/30/87 967 22 158 1,147
9/30/88 1,010 60 258 1,328
9/30/89 1,022 63 357 1,442
9/30/90 999 80 445 1,524
9/30/91 1,056 87 578 1,721
9/30/92 1,085 99 704 1,888
9/30/93 1,149 121 860 2,130
9/30/94 1,027 148 889 2,064
9/30/95 1,055 174 1,033 2,262 126.23%
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
9/30/95 1,021 17 715 1,753 75.32%
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
9/30/95 1,063 42 678 1,783 78.28%
</TABLE>
CLASS D SHARES
<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>
NATIONAL
9/30/94 $ 867 $ - $ 25 $ 892
9/30/95 923 - 69 992 (0.81)%
COLORADO
9/30/94 909 - 25 934
9/30/95 944 - 67 1,011 1.12
</TABLE>
20
<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>
GEORGIA
9/30/94 $ 890 $ - $ 25 $ 915
9/30/95 939 15 68 1,022 2.21%
LOUISIANA
9/30/94 900 - 26 926
9/30/95 932 18 71 1,021 2.13
MARYLAND
9/30/94 903 - 26 929
9/30/95 942 18 69 1,029 2.93
MASSACHUSETTS
9/30/94 910 - 27 937
9/30/95 948 4 73 1,025 2.54
MICHIGAN
9/30/94 910 - 26 936
9/30/95 948 5 71 1,024 2.43
MINNESOTA
9/30/94 931 - 29 960
9/30/95 951 2 79 1,032 3.17
MISSOURI
9/30/94 895 - 24 919
9/30/95 939 10 68 1,017 1.65
NEW YORK
9/30/94 888 - 26
9/30/95 920 23 71 1,014 1.38
OHIO
9/30/94 911 - 26
9/30/95 947 10 71 1,028 2.84
OREGON
9/30/94 917 - 26 943
9/30/95 954 3 70 1,027 2.73
SOUTH CAROLINA
9/30/94 895 - 25 920
9/30/95 947 2 69 1,018 1.81
</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 10/1/85
Louisiana 10/1/85 New York 10/1/85
Maryland 10/1/85 Ohio 10/1/85
Massachusetts 10/1/85 Oregon 10/15/86
Michigan 10/1/85 South Carolina 6/30/87
Minnesota 10/1/85
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.
21
<PAGE>
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.
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 1940 Act 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 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 Act 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,
1995 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, 1995, 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, Inc. ("Moody's")
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.
22
<PAGE>
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.
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.
23
<PAGE>
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.
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 differ 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 they are 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.
24
<PAGE>
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
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 10.36% actual value in 1995. 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
all 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, valuation for assessment ratio increases, extensions of
expiring taxes, and tax policy changes directly causing a net tax revenue gain,
as well as creation of any multiple fiscal year debt or financial obligations
without adequate present cash reserves pledged irrevocably and held for payments
in all 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 1995-96 and 1996-97. According to the Colorado
Legislative Council Staff Report (December 1995), in fiscal year 1995-96 the
state TABOR growth rate limit is estimated to be 7.0%; and for 1996-97, the
state TABOR growth rate limit is estimated to be 7.3%.
The final figure for fiscal year 1994 for assessed value of all taxable real
property in the state is $29,831,046,666 of which approximately 46.8% is
residential, and 31.2% is commercial and industrial. Total revenue from property
taxes in 1994 was $2,512,514,138. Figures for fiscal year 1995 are not yet
available.
The factors outlined below are generally indicative of the current economic
status of the State of Colorado. Forecasts are based on predictions of several
economists. 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 2.6% increase in population in 1994, the third
strongest since 1983, with a net positive migration of approximately 62,412.
Preliminary estimates indicate in-migration and population growth continued at a
somewhat lower rate in 1995 - with estimates ranging from 1.8% to 2.5%. Positive
migration into Colorado is expected by Colorado economists to continue through
1996, with population growth of between 1.6% - 1.9% predicted for that year.
25
<PAGE>
Local economists have predicted employment growth of between 1.8% and 2.6%
in 1996. This is somewhat lower than the approximately 2.8% - 3.7% rate for 1995
and considerably lower than the approximately 4.7% - 4.9% rate for 1994. During
1995, job growth occurred in every major employment sector except mining. The
Colorado Legislative Council Staff Report (December 1995) predicts for 1996
weakness in the defense, federal government, public utility and home building
sectors, while service job growth and private non-residential building will be
healthy. 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 1995 is estimated at 6.6%. Colorado
economists generally expect a lower rate of increase for 1996. In 1995, the
Denver-Boulder metropolitan area's inflation rate outpaced nationwide inflation
- - projected to be from 4.6% compared to 2.9% for the nation. The Colorado
Legislative Council Staff Report forecasts inflation for 1996 at 4.0%. Retail
sales increased by approximately 4.7% - 5.5% in 1995, down from the 1994
increase of between 11.7% and 12/2%. Colorado economists are forecasting an
increase in retail sales of between 6.2% to 6.6% in 1996.
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 12.3% in 1996. Non-residential construction showed a
large increase of 16.5% - 21.5% in 1995, with estimates for 1996 that are mixed
- - one forecast calls for a decrease of 0.4% while another expects an increase of
8.0%.
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
have been completed. It is expected that growth will continue to slow in
Colorado in 1996, the primary causes of which will be a decline in migration and
an end of the construction boom. Colorado is 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; S&P
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 August 1995, the State's highest total annual commitment in any
current or subsequent fiscal year equaled 5.32% of fiscal year 1995 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.
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The State operates on a fiscal year beginning July 1 and ending June 30.
For example, "fiscal 1995" refers to the year ended June 30, 1995.
Based on data issued by the State of Georgia for fiscal year 1995, income
tax receipts and sales tax receipts of the State for fiscal year 1995 comprised
approximately 47.9% and 38.8%, respectively, of the State tax receipts. Further,
such data shows that total State tax receipts for fiscal 1995 (9,138,000,000)
increased by approximately 6.25% over such collections in fiscal 1995. As of
August 1994, the State estimates tax receipts for 1996 at $9,758,000,000.
The average annual employment of the civilian labor force in the State for
October 1995 was 5.3% 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.
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 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
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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.
Since 1993 the State has experienced recurring small budget surpluses which
have been applied to reduction of outstanding debts. These surplus funds, under
current laws, should be used to retire existing debt. The State has announced an
estimated surplus for 1995-96. However, this cannot be relied upon to assure
that a fiscal 1996-97 deficit will not occur which would necessitate further
budge reductions or tax increases.
A statewide referendum on the continued legality of video poker, riverboat
gambling and land based gaming has been proposed by the newly elected governor.
A revocation of laws legalizing gambling in Louisiana would have serious budge
consequences.
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 issues 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 users. With respect to
bonds issued by local political subdivisions or agencies, because the 64
parished 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 60,000 jobs from September 1994 to September 1995. The 3.5%
rate of job growth from September 1994 to 1995 is among the fastest job growth
gains Louisiana has experienced since the mid-1980's. Personal income rose by 6%
from the second quarter of 1994 to the first quarter of 1995. These strong rates
of growth are likely to slow somewhat as the slowing of national economic growth
since the second half of 1995 begins to affect Louisiana. Manufacturing
employment rose by 1.3% from September 1994 to September 1995. This was the
second consecutive year of rising manufacturing employment in Louisiana.
The unemployment rate fell from 8.1% (1994 Quarter 3) to 6.8% (1995 Quarter
3). The improved Louisiana unemployment rate is still above Mississippi at 6.3%
and Alabama at 6.1%. However, it is a marked improvement in economic condition.
Gaming employment has been a significant contributor to the statewide job gains
since mid-1994.
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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 11, 1995,
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, 1993,
June 30, 1994 and June 30, 1995 were $11.786 billion, $12.351 billion and
$13,527 billion, respectively. As of October 11, 1995, it was estimated that
total expenditures for fiscal year 1996 would be $14.429 billion. The State's
General Fund, the Fund from which all general costs of state government are paid
and to which taxes and other revenues not specifically directed by law to be
deposited in separate funds are recorded and which represents approximately
55%-60% of each year's total budget, had a deficit on a budgetary basis of $56
million in fiscal year 1992,, an unreserved surplus of $11 million in fiscal
year 1993, an unreserved surplus of $60 million in fiscal year 1994 and an
unreserved surplus of $133 million in fiscal year 1995. 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 1995, the General Assembly approved the $14.429 billion 1996 fiscal
year budget. The Budget includes $2.8 billion in aid to local governments
(reflecting a $161 million increase in funding over 1995 that provides for
substantial increases in education, health and police aid), and $134.1 million
in general fund deficiency appropriations for fiscal year 1995, of which $60
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 1996 Budget was enacted, it was
estimated that the general fund surplus on a budgetary basis at June 30, 1996,
would be approximately $7.8 million; as of October 11, 1995, the estimate was
$34.3 million. In addition, it is estimated that there will be $158 million in
the Reserve Stabilization Account of the State Reserve Fund at June 30, 1996.
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 S&P, 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 S&P. 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 S&P. The general
obligation bonds of those other counties of the State that are rated by Moody's
carry an "A" rating or better. Baltimore City's is general obligation bonds are
rated "A1" by Moody's and "A" by S&P. 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 S&P.
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 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
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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 totaled approximately $13.914
billion and total revenues and other sources totaled 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 totaled approximately $15.193
billion and total revenues and other sources totaled 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 totaled approximately $15.952
billion and total revenues and other sources totaled 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. Total expenditures and other uses for fiscal 1995 totaled
approximately $16.794 billion and total revenues and other sources totaled
approximately $16,931 billion. Overall, the budgeted operating funds ended
fiscal 1995 with an excess of revenues and other sources over expenditures and
other uses of $137 million, and with positive fund balances of approximately
$726 million
The fiscal 1996 budget is based on estimated total revenues and other
sources of approximately $17.231 billion. Total expenditures and other uses for
fiscal 1996 are currently estimated at approximately $17.402 billion. The fiscal
1995 budget proposes that the $171 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 1996, to produce estimated ending fund
balances for fiscal 1996 of approximately $555 million. The fiscal 1996 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, fiscal 1994 and fiscal 1995 and is expected to increase again in
fiscal 1996.
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, $381.6 million,
$184.1 million and $72 million, respectively. GAAP basis financial statements
for fiscal 1995 indicate that the Commonwealth ended such year with a fund
equity of $287 million.
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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;
however, such manufacturing continues to be an important part of the State's
economy. These particular industries are highly cyclical and in the period
1994-95 operated at somewhat less than full capacity but at higher levels than
in the immediate prior years. The cyclical nature of these industries and the
Michigan economy can adversely affect the revenue streams of the State and its
political subdivisions because it may adversely impact 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. This negative
balance had been eliminated as of the end of fiscal year 1991-92, which ended
September 30, 1992. The State ended fiscal year 1992-93 with a General Fund
balance of $26 million after the transfer of $282.5 million to its
Counter-Cyclical Budget and Economic Stabilization Fund ("BSF"). The State ended
fiscal year 1993-94 with a General Fund balance of $460.2 million which also was
transferred to the BSF. The State's fiscal year 1994-95 budget was adopted by
the legislature in July, 1994 and the fiscal year 1995-96 budget was adopted in
June 1995. The State's Annual Financial report for fiscal years ending September
30 is generally available at the end of March of the following year.
Beginning in 1993, the Michigan Legislature enacted several statutes which
significantly affect Michigan property taxes and the financing of primary and
secondary school operations. The property tax and school finance reform measures
included a ballot proposal ("Proposal A") which was approved by voters on March
15, 1994. Under Proposal A as approved, effective May 1, 1994, the State sales
and use tax imposed on sales and rentals of tangible personal property and
telecommunications services was increased from 4% to 6%, the State income tax
was decreased from 4.6% to 4.4%, the cigarette tax was increased from $.25 to
$.75 per pack and an additional tax of 16% of the wholesale price was imposed on
certain other tobacco products. A real estate transfer tax became effective
January 1, 1995, at a rate that was ultimately adjusted 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.
Proposal A contains additional provisions regarding the ability of local school
districts to levy supplemental property taxes for operating purposes as well as
a limit on assessment increased for each parcel of property, beginning in 1995
to the lesser of 5% or the rate of inflation.
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 Aa by Moody's and
AA by S&P. Moody's upgraded its rating from A1 to Aa in July 1995. To the extent
that the portfolio of Michigan obligations 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
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.
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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.
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.
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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 totaled $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.
A February 1995 forecast projected an Accounting General Fund balance at
June 30, 1995, at $383 million, due to a $93.5 million increase in projected
revenues and a $21.0 million decrease in expenditures. The balance at June 30,
1997, was projected at $250 million.
The 1995 Legislature authorized $18.220 billion in spending for the
1995-1997 biennium, an increase of $1.395 billion, or 8.3 percent, from
1993-1995 expenditures. Resources for the 1995-1997 biennium were projected to
be $18.774 billion, including $921 million carried forward from the previous
biennium.
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The Legislature authorized 7.1 percent more spending for elementary and
secondary education in the 1995-1997 biennium than in 1993-1995, 0.9 percent
more in local government aids, 14.2 percent more for health and human services,
2.3 percent more for high education, and 25.1 percent more for corrections. The
Legislature set the budget reserve at $350 million and established a
supplementary reserve of $204 million in view of predicted federal cutbacks.
After the Legislature adjourned in May 1995, the Commissioner of Finance
estimated that at June 30, 1997, the Accounting General Fund balance would be
zero. The Accounting General Fund Balance at June 30, 1995, was $481 million.
The Commissioner of Finance, in a November 1995 forecast, estimated the
Accounting General Fund balance at June 30, 1997, at $824 million, due to a $490
million increase in revenues from those projected in May 1995, a $199 million
reduction in projected expenditures, and a $135 million increase in the amount
carried forward from the 1993-1995 biennium. An improved national economic
outlook increased projected net sales tax revenue $257 million and reduced
projected human services expenditures $231 million. The Commissioner estimated
the Accounting General Fund balance at June 30, 1999, at negative $28 million.
Only $15 million of the $824 million projected 1995-1997 surplus is
available for spending. The statute requires that an additional $15 million be
placed in the supplementary budget reserve, and an additional $794 million must
be appropriated to school districts to allow the districts, for purposes of
state aid calculations, to eliminate the 48 percent of property tax collections
that the school districts must recognize in the fiscal year during which they
receive the property taxes.
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 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, the property tax base has recovered after its growth was
slowed in many communities in the early 1990's by over capacity in certain
segments of the commercial real estate market. Local finances are also 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.
Legislation enacted in 1995 provides that it is the intent of the Minnesota
legislature that interest income on obligations of Minnesota governmental units,
and exempt-interest dividends that are derived from interest income on such
obligations, be included in the net income of individuals, estates, and trusts
for Minnesota income tax purposes if it is judicially determined that the
exemption by Minnesota of such interest or such exempt interest dividends
unlawfully discriminates against interstate commerce because interest income on
obligations of governmental issuers located in other states, or exempt-interest
dividends derived from such obligations, is so included. This provision applies
to taxable years that begin during or after the calendar year in which such
judicial decision becomes final, regardless of the date on which the obligations
were issued, and other remedies apply for previous taxable years. The United
States Supreme Court recently denied certiorari in an Ohio case which upheld an
exemption for interest income on obligations of Ohio governmental issuers, even
though interest income on obligations of non-Ohio governmental issuers was
subject to tax. However, it cannot be predicted whether a similar case will be
brought in Minnesota or elsewhere, or what the outcome of such case would be.
Should an adverse decision be rendered, the value of the securities purchased by
the Minnesota Tax-Exempt Series might be adversely affected, and the value of
the shares of the Minnesota Tax-Exempt Series might also be adversely affected.
The State's bond ratings in August 1995 were Aa1 by Moody's, 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.
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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 exceeded 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 1,938,400 and 1,007,000 residents, respectively,
constituting over fifty percent of Missouri's 1995 population census of
approximately 5,237,825. 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.
There are a large number of civilians employed at the various military
installations and training bases in the State and recent action of the Defense
Base Closure and Realignment Commission will result in the loss of a substantial
number of civilian jobs in the St. Louis Metropolitan area. Further, 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 1994 was
McDonnell Douglas Corporation. McDonnell Douglas Corporation is the State's
largest employer, currently employing approximately 24,000 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 four 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 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. A recent Supreme Court
decision favorable to the State may decrease the level of State funding required
in the future, but the impact of this decision is uncertain. The State paid $282
million for desegregation costs in fiscal 1994 and the budget for fiscal 1995
provided $315 million. This expense accounts for close to 7% 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
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.
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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 (the "State") 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.
Although industry and commerce are broadly spread across the State,
particular activities are concentrated in the following areas: Westchester
County -- headquarters for several major corporations; Buffalo -- diverse
manufacturing base; Rochester -- manufacture of photographic and optical
equipment; Syracuse and Utica-Rome area -- production of machinery and
transportation equipment; Albany-Troy-Schenectady -- government and education
center and production of electrical products; Binghampton -- original site of
the International Business Machines Corporation and continued concentration of
employment in computer and other high technology manufacturing; and New York
City -- headquarters for the nation's securities business and for a major
portion of the nation's major commercial banks, diversified financial
institutions and life insurance companies. In addition, the City houses the home
offices of three major radio and television broadcasting networks, most of the
national magazines and a substantial portion of the nation's book publishers.
The City also retains leadership in the design and manufacture of men's and
women's apparel.
Economic Outlook
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 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.
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The national economy began the current expansion in 1991 and has added
over 7 million jobs since early 1992. However, the recession lasted longer in
the State and the State's economic recovery has lagged behind the nation's.
Although the State has added approximately 185,000 jobs since November 1992,
employment growth in the State has been hindered during recent years by
significant cutbacks in the computer and instrument manufacturing, utility,
defense, and banking industries.
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.
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, the State has created 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.
Current Fiscal Year
The State's budget for the 1995-96 fiscal year was enacted by the
Legislature on June 7, 1995, 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 1995-96
budget is the first to be enacted in the administration of the Governor, who
assumed office on January 1, 1995. It is the first budget in over half a century
which proposed and, as enacted, projects an absolute year-over-year decline in
General Fund disbursements.
In his Executive Budget, the Governor indicated that in the 1995-96
fiscal year, the State Financial Plan, based on then-current law governing
spending and revenues, would be out of balance by almost $4.7 billion, as a
result of the projected structural deficit resulting from the ongoing disparity
between sluggish growth in receipts, the effect of prior-year tax changes, and
the rapid acceleration of spending growth; the impact of unfunded 1994-95
initiatives, primarily for local aid programs; and the use of one-time
solutions, primarily surplus funds from the prior year, to fund recurring
spending in the 1994-95 budget. The Governor proposed additional tax cuts, to
spur economic growth and provide relief for low- and middle-income tax payers,
which were larger than those ultimately adopted, and which added $240 million to
the then projected imbalance or budget gap, bringing the total to approximately
$5 billion.
This gap is projected to be closed in the 1995-96 State Financial Plan
based on the enacted budget, through a series of actions, mainly spending
reductions and cost containment measures and certain reestimates that are
expected to be recurring, but also through the use of one-time solutions. The
State Financial Plan projects (i) nearly $1.6 billion in savings from cost
containment, disbursement reestimates, and other savings in social welfare
programs, including Medicaid, income maintenance, and various child and family
care programs; (ii) $2.2 billion in savings from State agency actions to reduce
spending on the State workforce, the State University of New York ("SUNY") and
the City University of New York ("CUNY"), mental hygiene programs, capital
projects, the prison system and fringe benefits; (iii) $300 million in savings
from local assistance reforms, including actions affecting school aid and
revenue sharing while proposing program legislations to provide relief from
certain mandates that increase local spending; (iv) over $400 million in revenue
measures, primarily a new Quick Draw Lottery game, changes to tax payment
schedules, and the sale of assets; and (v) $300 million from reestimates in
receipts.
The State economic forecast is marginally weaker than that on which the
initial formulation of the 1995-96 State Financial Plan was based. The forecast
calls for employment to increase in 1995 and 1996. Employment growth is expected
to slow significantly in 1996 as the pace of national economic growth slackens,
entire industries experience consolidations, and governmental employment
continues to shrink. Personal income is estimated to increase by 5.6 percent in
1995, and at a more moderate 4.0 percent in 1996.
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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 (the "State Financial Plan") 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.
A final budget must be approved before the statutory deadline of April 1. The
State Financial Plan is updated quarterly pursuant to law.
The State's fiscal year which commences on April 1, 1996 and ends on
March 31, 1997 is referred to herein as the State's 1996-97 fiscal year. The
Governor presented his 1996-97 Executive Budget to the Legislature on December
15, 1995, one month before the legal deadline. The Governor may amend his budget
up to 30 days after its submission. The Legislature and the Comptroller will
review the Governor's Executive Budget and are expected to comment on it. There
can be no assurance that the Legislature will enact the Executive Budget into
law, or that the State's adopted budget projections will not differ materially
and adversely from the projections set forth below.
The Governor's Executive Budget projects balance on a cash basis in the
General Fund. It reflects a continuing strategy of substantially reduced State
spending, including program restructurings, reductions in social welfare
spending, and efficiency and productivity initiatives. Total General Fund
receipts and transfers from other funds are projected to be $31.3 billion, a
decrease of $1.4 billion from total receipts projected in the current fiscal
year. Total General Fund disbursements and transfers to other funds are
projected to be $31.2 billion, a decrease of $1.5 billion from spending totals
projected for the current fiscal year. After adjustments and transfers for
comparability between the 1995-96 and 1996-97 State Financial Plans, the
Executive Budget proposes an absolute year-to-year decline in General Fund
spending of 5.8 percent. Spending from all funding sources (including federal
aid) is proposed to increase by only $239 million, or 0.4 percent from the prior
fiscal year.
In his 1996-97 Executive Budget, the Governor indicated that the
1996-97 General Fund Financial Plan (based on current law governing spending and
revenues) would have been out of balance by almost $3.9 billion as a result of
the underlying disparity between receipts and disbursements caused by
anticipated spending demands, the effect of current and prior-year tax changes,
and the use of one-time revenues to fund recurring spending in the 1995-96 State
Financial Plan.
The Executive Budget proposed to close this gap primarily through a
series of spending reductions and cost-containment measures. The Executive
Budget projects (i) over $1.8 billion in savings from cost containment and other
actions in social welfare programs, including Medicaid, welfare and various
health and mental health programs; (ii) $1.3 billion in federal revenues made
available from anticipated changes in the Medicaid program, including an
increase in the federal share of Medicaid; (iii) over $450 million in savings
from reforms and cost avoidance in educational services (including school aid
and higher education), while increasing basic operating assistance for school
districts in the upcoming school year and providing fiscal relief from certain
State mandates that increase local spending; and (iv) $350 million in savings
from efficiencies and reductions in other State programs. The assumption
regarding an increased share of federal Medicaid funding has received bipartisan
Congressional support and would benefit 32 states, including New York.
To make progress toward addressing recurring budgetary imbalances, the
1996-97 Executive Budget proposes significant actions to align recurring
receipts and disbursements in future fiscal years. The Governor has proposed
closing the 1996-97 fiscal year imbalance primarily through General Fund
expenditure reductions and without increases in taxes or deferrals of scheduled
tax reductions. However, there can be no assurance that the Legislature will
enact the Governor's proposals or that the State's actions will be sufficient to
preserve budgetary balance or to align recurring receipts and disbursements in
future fiscal years. The 1996-97 Executive Budget includes actions that will
have an effect on the budget outlook for State fiscal year 1997-98 and beyond.
The net impact of these and other factors is expected to produce a potential
imbalance in receipts and disbursements in State fiscal year 1997-98, which the
Governor will propose to close with further spending reductions. The Executive
Budget contains projections of a potential imbalance in the 1997-98 fiscal year
of $1.4 billion and in the 1998-99 fiscal year of $2.5 billion, assuming
implementation of the 1996-97 Executive Budget recommendations.
Uncertainties with regard to both the economy and potential decisions
at the federal level add further pressure on future budget balance in New York
State. For example, various proposals relating to federal tax and spending
policies could, if enacted, have a significant impact on the State's financial
condition in the current and future fiscal years. Specific budget and tax
proposals under consideration at the federal level but not included in the
State's 1996-97 Executive Budget forecast could also have a disproportionately
negative impact on the longer-term outlook for the State's economy as compared
to other states.
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General Fund Receipts
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 principal 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. General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund types.
In the State's 1995-96 fiscal year, the General Fund is expected to
account for approximately 49 percent of total governmental fund disbursements
and 71 percent of total State-funded disbursements. The General Fund is
projected to be balanced on a cash basis for the 1995-96 fiscal year. Total
receipts and transfers from other funds are projected to be $33.11 billion, a
decrease of $48 million from total receipts in the prior fiscal year.
Personal income tax yield in the 1995-96 fiscal year is projected at
$17.285 billion, a decrease of $305 million from reported collections in the
State's 1994-95 fiscal year. The decrease reflects both the effects of the tax
reductions noted above and the fact that reported collections in the preceding
year were affected by net refund reserve transactions that buoyed collections in
that year by $862 million that will be unavailable in the current year. Without
these changes, the yield of the tax would have grown by more than $1.0 billion
(6 percent), reflecting liability growth for the 1995 tax year projected at
approximately the same rate. The income base for the tax is projected to rise
approximately 5 percent for the 1995 tax year.
User taxes and fees are expected to total $6.697 billion, an increase
of $73 million from reported 1994-95 results. Business tax receipts are
projected at $4.079 billion, a decline of $360 million from reported 1994-95
results.
Total receipts from other taxes in the 1995-96 fiscal year are
projected at $1.102 billion, $6 million less than in the preceding year. The
estimates reflect 1994 and 1995 legislation reducing the burden of the real
property gains tax and estate tax, as well as diversion of a portion of the real
estate transfer tax proceeds to the Environmental Protection Fund.
Miscellaneous receipts in the State's 1995-96 fiscal year are expected
to total $1.596 billion, an increase of $335 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:
1995-96 fiscal year excess sales tax revenues are projected to be $1.341
billion, equal to the amount received in the 1994-95 fiscal year. All other
transfers are projected to increase by $215 million, primarily reflecting the
receipt of $220 million from the Mass Transportation Operating Assistance Fund.
General Fund Disbursements
Disbursements in the General Fund are projected to total $33.055
billion in 1995-96, a decrease of $344 million. Significant decreases from the
prior year result largely from cost-containment initiatives in Medicaid and
other social welfare programs.
Grants to local governments is the largest category of General Fund
disbursements, and accounts for 69 percent of overall General Fund resources.
Disbursements from this category are projected to total $22.910 billion in the
1995-96 State Financial Plan, a decrease of $392 million from 1994-95 levels.
Although spending in this category is reduced, direct payments to local
governments, including school aid and revenue sharing, are maintained largely at
last year's levels. Significant decreases from the prior year result largely
from cost-containment initiatives in Medicaid and other social welfare programs.
Disbursements for State operations are projected at $6.020 billion, a
decrease of $288 million or 4.6 percent. This reflects the impact of a 4.3
percent reduction in the workforce, including approximately 3,200 layoffs. In
addition, the 1995-96 enacted budget achieves significant savings from
productivity initiatives, the abolition of non-critical offices and commissions,
and privatization of certain functions. Most agencies will spend less in 1995-96
than in 1994-95, with the most significant reductions made in the State
University (offset by increases in tuition). Spending for the Department of
Correctional Services increases modestly, reflecting the impact of the
sentencing reform bill adopted by the Legislature as part of the 1995-96 budget.
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Disbursements for general State charges are projected to total $2.080
billion in the 1995-96 State Financial Plan, and are virtually unchanged from
the 1994-95 level. The budgeted amount for general State charges assumes the use
of $110 million from a special reserve for pension supplementation, established
in 1970 and funded through State and local employer contributions in the early
1970s, to offset the State's pension contribution. The Comptroller, as sole
trustee of the Common Retirement Fund and administrative head of the Retirement
System, is in the process of reviewing the legislation that directs the use of
these reserves to determine whether or not to commence legal proceedings to
prevent such proposed use in the enacted 1995-96 State budget as a violation of
the State Constitution, and there is a substantial likelihood that he will do
so. The Executive considers the proposed use of these reserves to be a credit
for prior-year supplementation payments and, therefore, in compliance with the
State Constitution.
Debt service in the General Fund for 1995-96 reflects only the $9
million interest cost of the State's commercial paper program. No cost is
included for a TRAN borrowing, since none is expected to be undertaken. The
State's annual Spring borrowing has been eliminated. Transfers in support of
debt service are projected to total $1.583 billion, an increase of $157 million
or 11 percent. Transfers in support of capital projects are projected to total
$375 million, an increase of $169 million, which reflects significant
investments in both new and ongoing capital programs. All other transfers are
projected to total $78 million, an increase of $9 million from 1994-95 levels.
The 1995-96 opening fund balance of $158 million includes $157 million
which is reserved in the Tax Stabilization Reserve Fund, as well as $1 million
which is reserved in the Contingency Reserve Fund. The closing fund balance in
the General Fund of $213 million reflects a balance of $172 million in the Tax
Stabilization Reserve Fund, following an additional payment of $15 million
during the year, and a balance of $41 million in the Contingency Reserve Fund.
The 1995-96 State Financial Plan includes actions that will have an
effect on the budget outlook for State fiscal year 1996-97 and beyond. The
Division of the Budget estimates that the 1995-96 State Financial Plan contains
actions that provide nonrecurring resources or savings totalling approximately
$900 million. The Division of the Budget also estimates that the 1995-96 State
Financial Plan contains nonrecurring expenditures totalling nearly $250 million.
The net amount of nonrecurring resources used in the 1995-96 State Financial
Plan, accordingly, is estimated by the Division of the Budget at over $600
million.
Special Revenue 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.
Projected receipts in this fund type total $25.547 billion, an increase of
$1.316 billion over the prior year. Projected disbursements in this fund type
total $26.002 billion, an increase of $1.641 billion over 1994-95 levels.
Disbursements from Federal funds, primarily the Federal share of Medicaid and
other social services programs, are projected to total $19.209 billion in the
1995-96 fiscal year. Remaining projected spending of $6.793 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
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.
Disbursements from this fund type are projected to increase by $541
million over prior-year levels, primarily reflecting higher spending for
transportation and mental hygiene projects. Total receipts in this fund type are
projected at $4.17 billion, not including $364 million expected to be available
from the proceeds of general obligation bonds.
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Debt Service Funds
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.
Disbursements are projected at $2.506 billion in the 1995-96 fiscal year, an
increase of $303 million or 13.8 percent from 1994-95. The transfer from the
General Fund of $1.583 billion is expected to finance 63 percent of these
payments. The remaining payments are expected to be financed by pledged
revenues.
Cash Flow
For the second time in many years, the State will meet its cash flow
needs without relying on a spring borrowing. However, this achievement is
predicated on two actions: the issuance of all remaining LGAC bonds authorized
in the 1990 statute; and the passage of proposed legislation permitting the
State to use, for cash flow purposes only, balances in the Lottery Fund.
Temporary transfers will be returned within five months so that all available
Lottery moneys as well as advances of additional aid can be paid to school
districts in September.
The lingering impact of the 1994-95 receipts shortfall -- as well as
the impact of the potential $5 billion 1995-96 imbalance on cash operations --
exerts substantial pressures on the State's cash balance position in the first
three months of the fiscal year. These pressures are expected to abate later in
the 1995-96 fiscal year, as cash outlays decline from previous levels consistent
with cost-savings initiatives proposed in the Executive Budget.
Prior Fiscal Years
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, 1993-94, and 1994-95 fiscal years, the State recorded balanced budgets
on a cash basis, with substantial fund balances in 1992-93 and 1993-94, and a
smaller fund balance in 1994-95.
1994-95 Fiscal Year
The 1994-95 budget contained a significant investment in efforts to
spur economic growth. The budget included 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 was 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 included more than $200 million in additional funding for economic
development programs. Special emphasis was 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 included increased levels
of support for programs to rebuild and maintain State infrastructure, and
provisions to create 21 new economic development zones.
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New York State ended its 1994-95 fiscal year with the General Fund in
balance. The closing fund balance of $158 million reflects $157 million in the
Tax Stabilization Reserve Fund and $1 million in the Contingency Reserve Fund
("CRF"). Compared to the State Financial Plan for 1994-95 as formulated on June
16, 1994, reported receipts fell short of original projections by $1.163
billion, primarily in the categories of personal income and business taxes. Of
this amount, the personal income tax accounts for $800 million, reflecting weak
estimated tax collections and lower withholding due to reduced wage and salary
growth, more severe reductions in brokerage industry bonuses than projected
earlier, and deferral of capital gains realizations in anticipation of potential
Federal tax changes. Business taxes fell short by $373 million, primarily
reflecting lower payments from banks as substantial overpayments of 1993
liability depressed net collections in the 1994-95 fiscal year. These shortfalls
were offset by better performance in the remaining taxes, particularly the user
taxes and fees, which exceeded projections by $210 million. Of this amount, $227
million was attributable to certain restatements for accounting treatment
purposes pertaining to the CRF and Local Government Assistance Corporation
("LGAC"); these restatements had no impact on balance in the General Fund.
Disbursements were also reduced from original projections by $848
million. After adjusting for the net impact of restatements relating to the CRF
and LGAC which raised disbursements by $38 million, the variance is $886
million. Well over two-thirds of this variance is in the category of grants to
local governments, primarily reflecting the conservative nature of the original
estimates of projected costs for social services and other programs. Lower
education costs are attributable to the availability of $110 million in
additional lottery proceeds and the use of LGAC bond proceeds.
The spending reductions also reflect $188 million in actions initiated
in January 1995 by the Governor to reduce spending to avert a potential gap in
the 1994-95 State Financial Plan. These actions included savings from a hiring
freeze, halting the development of certain services, and the suspension of
non-essential capital projects. These actions, together with $71 million in
other measures comprised the Governor's $259 million gap-closing plan, submitted
to the Legislature in connection with the 1995-96 Executive Budget.
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 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.
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.
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 agreements and treaties by which various Indian tribes
transferred to New York title to certain land in 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) 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; (v) challenges to the practice of
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reimbursing certain Office of Mental Health patient care expenses from the
client's Social Security benefits; (vi) alleged responsibility of New York
officials to assist in remedying racial segregation in the City of Yonkers;
(vii) a claim that "Quick Draw", a game of the State Division of the Lottery,
violates the State Constitution provision which bars gambling; (viii) an action
against the State which contends that certain provisions of Ch. 119L. 1995
violates Article Vss.7 of the State Constitution which bars the diminishment of
benefits of membership in the retirement system; and (ix) a claim that the
State's Department of Environmental Conservation prevented the completion of a
cogeneration facility by the projected date by failing to provide data in a
timely manner and that the plaintiff thereby suffered damages. In addition,
aspects of petroleum business taxes are the subject of administrative claims and
litigation.
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. On November
29, 1995, the City submitted to the Control Board the Financial Plan for the
1996-1999 fiscal years, which is a modification to a financial plan submitted to
the Control Board on July 11, 1995 (the "July Financial Plan") and which relates
to the City, the Board of Education ("BOE") and CUNY. The July Financial Plan
set forth proposed actions to close a previously projected gap of approximately
$3.1 billion for the 1996 fiscal year. The proposed actions in the July
Financial Plan for the 1996 fiscal year included (i) a reduction in spending of
$400 million, primarily affecting public assistance and Medicaid payments by the
City; (ii) agency reduction programs, totaling $1.2 billion; (iii) transitional
labor savings, totaling $600 million; and (iv) the phase-in of the increased
annual pension funding cost due to revisions resulting from an actuarial audit
of the City pension systems, which would reduce such costs in the 1996 fiscal
year. Other proposed actions included (i) a delay in the proposed reduction in
the commercial rent tax, which would increase projected revenues by $62 million
in the 1996 fiscal year; (ii) $50 million of proposed additional State aid not
included in the adopted State budget and $75 million of proposed additional
federal aid; (iii) revenue initiatives totaling $190 million; and (iv) savings
from a proposed refunding of outstanding debt, totaling $50 million.
The 1996-1999 Financial Plan published on November 29, 1995, reflects
actual receipts and expenditures and changes in forecast revenues and
expenditures since the July Financial Plan, and projects revenues and
expenditures for the 1996 fiscal year balanced in accordance with GAAP. Changes
in the July Financial Plan for the 1996 fiscal year include (i) a $100 million
reduction in expenditures for other than personal services; (ii) debt service
savings, including savings from a proposed refunding of outstanding debt,
totaling $123 million; (iii) a $129 million increase in projected expenditures,
including $45 million in increased spending to pay for a portion of the cost of
student transit passes; and (iv) a $100 million increase in the General Reserve.
The Financial Plan also sets forth projections for the 1997 through 1999 fiscal
years and outlines a proposed gap-closing program to eliminate projected gaps of
$1.4 billion, $2.3 billion, and $2.7 billion for the 1997, 1998, and 1999 fiscal
years, respectively, after successful implementation of the gap-closing program
for the 1996 fiscal year.
On July 10, 1995, Standard & Poor's Ratings Group revised downward its
rating on City general obligation bonds from A- to BBB+ and removed City bonds
from CreditWatch. Standard & Poor's stated that "structural budgetary balance
remains elusive because of persistent softness in the City's economy,
highlighted by weak job growth and a growing dependence on the historically
volatile financial services sector". Other factors identified by Standard &
Poor's in lowering its rating on City bonds included a trend of using one-time
measures, including debt refinancings, to close projected budget gaps,
dependence on unratified labor savings to help balance the Financial Plan,
optimistic projections of additional federal and State aid or mandate relief, a
history of cash flow difficulties caused by State budget delays, and continued
high debt levels. Fitch Investors Service, Inc. continues to rate the City
general obligation bonds A-. Moody's Investors Service, Inc.'s rating for City
general obligation bonds is Baa1.
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. Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1993, the total indebtedness of all
localities in the State other than New York City was approximately $17.7
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
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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.
Authorities
The fiscal stability of the State is related, in part, to the fiscal
stability of its public authorities. Public authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the State
itself and may issue bonds and notes within the amounts, and as otherwise
restricted by, their legislative authorization. As of September 30, 1994, there
were 18 public authorities that had aggregate outstanding debt of $70.3 billion.
Some authorities also receive moneys from State appropriations to pay for the
operating costs of certain of their programs.
The Metropolitan Transit Authority (the "MTA"), which receives the bulk
of the appropriated moneys from the State, oversees the operation of the City's
bus and subway system by its affiliates, the New York City Transit Authority and
Manhattan and Bronx Surface Transit Operating Authority (collectively, the
"TA"). The MTA has depended and will continue to depend upon federal, state and
local government support to operate the transit system because fare revenues are
insufficient.
Over the past several years, the State has enacted several taxes
(including a surcharge on the profits of banks, insurance corporations and
general business corporations doing business in the 12-county region served by
the MTA and a special one-quarter of one percent regional sales and use tax)
that provide additional revenues for mass transit purposes, including assistance
to the MTA. In addition, a one-quarter of one percent regional mortgages
recording tax paid on certain mortgages creates an additional source of
recurring revenues for the MTA. Further, in 1993, the State dedicated a portion
of the State petroleum business tax to assist the MTA.
In 1993, State legislation authorized the funding of a five-year $9.56
billion MTA capital plan for the five-year period, 1992 through 1996 (the
"1992-96 Capital Program"). The MTA has received approval of the 1992-96 Capital
Program based on this legislation from the 1992-96 Capital Program Review Board,
as State law requires. This is the third five-year plan since the Legislature
authorized procedures for the adoption, approval and amendment of a five-year
plan in 1981 for a capital program designed to upgrade the performance of the
MTA's transportation systems and to supplement, replace and rehabilitate
facilities and equipment. The MTA, the Triborough Bridge and Tunnel Authority,
and the TA are collectively authorized to issue an aggregate of $3.1 billion of
bonds (net of certain statutory exclusions) to finance a portion of the 1992-96
Capital Program. The 1992-96 Capital Program is expected to be financed in
significant part through dedication of State petroleum business taxes referred
to above.
There can be no assurance that all the necessary governmental actions
for the Capital Program will be taken, that funding sources currently identified
will not be decreased or eliminated, or that the 1992-96 Capital Program, or
parts thereof, will not be delayed or reduced. Furthermore, the power of the MTA
to issue certain bonds expected to be supported by the appropriation of State
petroleum business taxes is currently the subject of a court challenge. If the
Capital Program is delayed or reduced, ridership and fare revenues may decline,
which could, among other things, impair the MTA's ability to meet its operating
expenses without additional State assistance.
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 Tax-Exempt Series 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 Tax-Exempt
Series is therefore susceptible to general or particular economic, political 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.
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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 1994 is 11,102,000.
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
16% 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 (5.5% versus 6.1% in
1994). 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 Tax-Exempt Series 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). June 30, 1991 ending fund balances were $135.3
million (GRF) and $300 million (BSF).
The next biennium, 1992-93, presented significant challenges to state
finances, successfully addressed. To allow time to resolve certain budget
differences, an interim appropriations act was enacted effective July 1, 1991;
it included GRF debt service and lease rental appropriations for the entire
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 that FY. 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. In response, 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; the $100.4 million BSF balance, and additional amounts from certain
other funds, were transferred late in the FY to the GRF; and adjustments were
made in the timing of certain tax payments.
A significant GRF shortfall (approximately $520 million) was then projected
for FY 1993. It was addressed by appropriate legislative and administrative
actions, including the Governor's ordering $300 million in selected GRF spending
reductions and subsequent executive and legislative action (a combination of tax
revisions and additional spending reductions). 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.
None of the spending reductions were applied to appropriations needed for
debt service or lease rentals relating to any State obligations.
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The 1994-95 biennium presented a more affirmative financial picture. Based
on June 30, 1994 balances, an additional $260 million was deposited in the BSF.
The biennium ended June 30, 1995 with a GRF ending fund balance of $928 million,
of which $535.2 million has been transferred into the BSF (which had a January
4, 1996 balance of over $828 million).
The GRF Appropriations Act for the current 1995-96 biennium was passed on
June 28, 1995 and signed (after selective vetoes) by the Governor. All necessary
GRF appropriations for State debt service and lease rental payments then
projected for the biennium were included in that act. In accordance with the
appropriations act, the significant June 30, 1995 GRF fund Balance, after
leaving in the GRF an unreserved and undesignated balance of $70 million, has
been transferred to the BSF and other Funds including school assistance funds
and, in anticipation of possible federal program changes, a human services
stabilization fund.
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 14 constitutional amendments, the last adopted in 1995, Ohio voters have
authorized the incurrence of State debt and the pledge of taxes or excises to
its payment. At January 4, 1996, $898 million (excluding certain highway bonds
payable primarily from highway use charges) of this debt was outstanding or
awaiting delivery. The only such State debt at that date still authorized to be
incurred were 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 ($45.3 million outstanding); (b) $240 million of obligations
previously authorized for local infrastructure improvements, no more than $120
million of which may be issued in any calendar year ($685.4 million outstanding
or awaiting delivery); 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 (47.2 million and outstanding, with no more than $50 million to be
issued in any one year.
The electors approved in November 1995 a constitutional amendment that
extends the local infrastructure bond program (authorizing an additional $1.2
billion of State full faith and credit obligations to be issued over 10 years
for the purpose), and authorized additional highway bonds (expected to be
payable primarily from highway use receipts). The latter supersedes the prior
$500 million highway obligation authorization, and authorizes not more than $1.2
billion to be outstanding at any time and not more than $220 million to be
issued in a fiscal year.
Common resolutions are pending in both houses of the General Assembly that
would submit a constitutional amendment relating to certain other aspects of
State debt. The proposal would authorize, among other things, the issuance of
State general obligation debt for a variety of purposes, with debt service on
all State general obligation debt and GRF-supported obligations not to exceed 5%
of the preceding fiscal year's GRF expenditures.
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, $4.5 billion of which was
outstanding at January 4, 1996.
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).
The House has adopted a resolution that would submit to the electors a
constitutional amendment prohibiting the General Assembly from imposing a new
tax or increasing an existing tax unless approved by a three-fifths vote of each
house or by a majority vote of the electors. It cannot be predicted whether
required Senate concurrence to submission will be received.
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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 uninsured 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 44% in recent years) of their
operating moneys from State subsidies, but are dependent on local property
taxes, and in 117 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 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 appealed and a court of
appeals reversed the trial court's findings for plaintiff districts. The
plaintiff coalition has filed an appeal of the court of appeals' decision to the
Ohio Supreme Court. 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. Recent borrowings under this program totaled $94.5 million for 27
districts (including $75 million for one) in FY 1993, and $41.1 million for 28
districts in FY 1994, and $71.1 million for 29 districts in FY 1995.
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 19 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 (i) the 1994 Annual Report of the Oregon State Treasurer,
(ii) the December 1995 Oregon Economic and Revenue Forecast prepared by the
Oregon Department of Administrative Services, and (iii) a December 7, 1995
Official Statement prepared by the Oregon State Treasury for the issue of two
State of Oregon General Obligation bonds.
ECONOMIC FORECAST
Short-Term Outlook
It is expected that 1996 is to be another good year for the Oregon economy,
but the dwindling supply of skilled labor should limit job growth. The high
technology manufacturing sector is expected to remain the driving force behind
the state's economic growth. The service-producing sectors should continue to
provide the bulk of new jobs. Construction is expected to slow considerably
after three very strong years. Overall, Oregon's total and per capita income,
wages, and jobs are projected to grow faster than the U.S. as a whole.
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Personal income in Oregon is expected to increase 5.9 percent in 1996, down
from an estimated 7.6 percent in 1995 (the highest rate of the decade). More
importantly, Oregon's real personal income (income adjusted for inflation) is
expected to increase a relatively healthy 3.5 percent. Per capita income in
Oregon is projected to rise 3.9 percent, pushing the state up to 94 percent of
the U.S. average. Oregon's per capita income has not been higher relative to the
national average since 1981. Oregon wage rates are also expected to grow faster,
reaching 90.9 percent of the national average in 1996, the highest ratio since
1984. Manufacturing wage rates boosted by the expanding high technology sector
and competition among employers for a shrinking pool of labor are expected to
rise 4.2 percent while wages in the private service-producing sectors increase
3.6 percent on average.
Job growth is expected to slow to 3.0 percent in 1996 after exceeding 4
percent in both 1994 and 1995. Job growth is expected to slow further to 2.7
percent in 1997. A growing shortage of workers makes slower employment growth
almost inevitable. Net in-migration is expected to provide some additional
skilled workers, but movement to Oregon is likely to be limited by higher home
prices and economic recovery in California.
The high technology manufacturing grouping, which consists of nonelectrical
machinery, electronics, and scientific instruments, is expected to add another
4,100 jobs in 1996, down only slightly from the estimated 5,700 in 1995. The
electronics industry is forecast to grow 12.2 percent with the bulk of the
increase occurring in the semiconductors segment of the industry.
The nonhealth service sector is expected to account for 17,500 net new jobs
in 1996, a growth rate of 6.4 percent. This sector is expected to account for 20
percent of all wage and salary jobs in the state in 1996. Large gains are
anticipated in business services (including temporary help), amusement services,
and engineering services.
The most significant slowing is expected to occur in construction. After
three years of boom conditions, construction employment reached an estimated 4.9
percent of wage and salary employment in 1995. This ratio is 4.4 percent for the
U.S. as a whole. A leveling off of net in-migration and investment spending
should begin to move Oregon toward the national average in 1996 and 1997.
Construction job growth is expected to slow to 5.2 percent in 1996 and 1.3
percent in 1997.
Housing starts are projected to total 23,500 in 1996 down from 23,900 in 1995.
Income Components
Wage and salary income is expected to grow 6.4 percent in 1996, down from
8.1 percent in 1995. The 1995 estimated growth rate would be the highest of the
decade. Other labor income which reflects benefit growth is expected to increase
7.7 percent in 1996, down from 10.2 percent in 1995.
Nonfarm proprietor income is forecast to grow 3.8 percent in 1996, in line
with the estimated 1995 growth rate but well below the 10.0 percent averaged
over the 1992-94 period. Dividend, interest, and rent income is projected to
rise 4.7 percent with transfer payments increasing 5.1 percent. Farm proprietor
income is expected to rise 21.6 percent in 1996 after declines in both 1994 and
1995.
Goods-Producing Sectors
Manufacturing employment is expected to increase 0.9 percent in 1996, down
from an estimated 2.8 percent in 1995. Durable goods manufacturers are also
expected to increase employment a modest 0.9 percent while nondurable
manufacturers expand payrolls 0.9 percent. Mining employment is forecast to
increase 2.1 percent in the coming year.
Jobs in the lumber and wood products industry are expected to fall further
in 1996. The decline is estimated at 6.0 percent. Although this would represent
the largest loss since 1991, further major job reductions are not anticipated
through the remainder of the decade. The timber harvest is projected to total
3.9 billion board feet, down slightly from the 1995 estimate. The 1996 timber
harvest is expected to be the lowest of the decade with a modest rebound
anticipated in the late 1990's.
Service-Producing Sectors
Job growth is forecast to slow modestly in retail and wholesale trade. Both
sectors have enjoyed strong growth in 1995, with employment rising 3.5 percent
in the former and 5.1 percent in the latter. Total trade employment is expected
to grow 2.9 percent in 1996 compared to 2.1 percent for the nation as a whole.
Wholesale trade is forecast to rise 3.4 percent as the overall economy slows.
Fierce competition and a modest slowdown in income growth are the key reasons
for an expected drop in retail trade growth to 2.8 percent. Although the rate of
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increase is likely to slow, retail trade is still expected to account for 7,400
net additional new jobs in 1996.
Consolidation in the banking industry is expected to limit financial service
employment growth to 2.3 percent. Transportation services are forecast to rise
1.8 percent while communication and utility employment inches up 1.9 percent.
Oregon's government sector is expected to continue shrinking relative to the
private sector. Overall government jobs are expected to grow 1.3 percent in
1996. Budget cuts are expected to reduce federal jobs by 3.2 percent next year.
State government jobs are expected to inch up 0.5 percent while local
governments expand payrolls 2.7 percent in 1996.
Short-Term Outlook Risks
Idaho's recent experience is indicative of the risks associated with a
construction boom. A year ago, Idaho's construction jobs had grown 17 percent
from the previous year, the fourth fastest growth rate among the states at that
time. The latest state comparison data through August shows Idaho's construction
sector with a loss of 3.0 percent over the past 12 months. Idaho's construction
job growth performance fell from No. 4 a year ago to No. 46 in the current
rankings. Since Oregon's construction sector has grown at an unsustainably rapid
pace over the past three years, it will inevitably slow. However, the slowdown
could turn into an outright contraction very quickly if builders' expectations
get ahead of actual demand. The Idaho experience shows how quickly this can
happen.
Another risk to the state is a sharper dropoff in the rate of in-migration.
This would initially have the effect of raising wage rates but would eventually
slow job growth and overall economic activity more than anticipated in the
baseline forecast.
Extended Outlook
Oregon's income, population, and employment growth are all expected to
exceed the national average for the six-year period between 1995 and 2001.
Population is expected to grow considerably faster than the national average,
reaching 3,457,000 by the year 2001. On a per capita basis, Oregon's personal
income is forecast to move slowly toward the national mean. The state's per
capita income is projected to be 95.2 percent of the U.S. average by 2001, up
from 94.5 percent in 1995. Average wages in Oregon are projected to rise from
90.7 percent of the national average in 1995 to 92.3 percent in 2001.
Comparison of Oregon and U.S. Long-Term Forecasts
(Percentage Change 1995 to 2001)
Oregon U.S.
------ ----
Personal Income 40.9 33.5
Population 10.4 5.4
Per Capita
Personal Income 27.7 26.7
Employment 15.3 10.3
The U.S. Department of Commerce recently released long-term projections on a
state-by-state basis. Although these projections are not entirely consistent
with the December Oregon Economic and Revenue Forecast, they offer some useful
insights. First, Gross State Product (GSP) is forecast, a measure not
incorporated in the state forecast. Second, the time horizon extends out through
2005 rather than the 2001 endpoint used in the current forecast. Finally, the
Commerce Department's long-term forecasts provide a comparison among the states.
Oregon's GSP (adjusted for inflation), a measure comparable to GDP, is
projected to grow at an annual average of rate 2.5 percent, down from the 3.2
percent growth averaged over the 1983 to 1992 period. However, the gap between
Oregon's growth and the U.S. average is expected to remain the same at +0.3
percent per year.
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The Mountain states (along with Florida and Georgia) are expected to record
the highest growth rates. Nevada (which is included in the Far West region) is
expected to grow the fastest at 3.6 percent per year with Utah close behind at
3.5 percent. Idaho and Colorado are each projected to grow at a 2.9 percent
rate.
Oregon's growth rate is above the U.S. average but not in the top tier.
There are several factors likely to keep Oregon out of the highest growth
grouping. First, California's growth rate is projected to be 2.3 percent per
year over the period, slightly above the U.S. average. This will keep more
Californians from migrating to Oregon than was the case in the early 1990's.
Secondly, Oregon's rapidly escalating home prices are likely to deter growth to
some extent by raising the cost-of-living in the state.
Despite these factors keeping Oregon out of the top growth states, the
long-term fundamentals for the state are sound. A positive industry mix, a
skilled labor force, high quality of life, proximity to large markets, and
generally moderate costs should keep Oregon's growth rate above the national
average well into the next decade.
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
"1990 Amendment"). This 1990 Amendment limits the amount of property taxes which
may be imposed on individual parcels of property. The 1990 Amendment did not
repeal existing constitutional or statutory restrictions on property taxes.
The 1990 Amendment (i) required the Legislative Assembly over a five-year
period to replace from the State's General Fund the tax revenues lost by school
districts as a result of enactment of the 1990 Amendment, and (ii) restricted
the ability of Oregon local governments to raise revenues through the imposition
of property tax increases.
The 1995 Legislative Assembly passed a balanced budget for the 1995-97
biennium as required by the Oregon Constitution. The budget fully takes into
account the final and full implementation of the 1990 Amendment. On June 30,
1996, the five-year period ends in which the State must replace the tax revenues
lost by school districts as a result of the enactment of the 1990 Amendment.
It is important to note that the 1990 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
1990 Amendment. Thus, the 1990 Amendment will have no effect on the State's
ability to levy property taxes to pay debt service on general obligation bonds.
LITIGATION
The following summary of litigation relates to matters as to which the State
of Oregon is a party and as to which the State of Oregon has indicated that the
individual claims against the State exceed $10 million. Other litigation may
exist with respect to individual municipal issuers as to which the State of
Oregon is not a party, but which, if decided adversely, could have a materially
adverse effect on the financial condition of the individual municipal issuer.
Liberty Mutual Insurance Co. v. State of Oregon
In 1993, several out-of-State insurance companies filed an action
challenging Oregon's gross premium tax on out-of-State insurers. The plaintiffs
alleged that the tax violated the Equal Protection Clause of the Fourteenth
Amendment to the United States Constitution because the tax treats domestic and
"foreign" insurers differently. The plaintiffs sought (i) a declaration that the
Oregon gross premium tax law was unconstitutional, (ii) refunds of all premium
taxes paid from 1982 to date, and (iii) the recovery of attorney fees. Two other
related cases have been filed since 1993, Pacific Mutual Health and Life
Insurance Co. v. DCBS and DCBS v. Stewart Title Guaranty Corp. If claims were
brought by all affected foreign insurers, the possible refund liability exposure
would probably exceed $30 million. In hearings before the 1993 Oregon
Legislative Assembly concerning the gross premium tax laws, the estimates of the
State's potential refund liability in such a case ranged from $27.4 million to
$174.6 million.
However, the 1995 Oregon Legislative Assembly passed HB 2855 which equalizes
the taxation of foreign and domestic insurers by eliminating the premium tax on
foreign insurers and requiring both foreign and domestic insurers to pay a
corporate excise tax. Liberty Mutual has dismissed its case due to the passage
of HB 2855, and several of the other plaintiffs have indicated that they will
dismiss their claims against the State. Stewart Title has refused to drop its
counter-claim on the equal protection issue. If the Stewart Title case proceeds
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to trial on the equal protection issue, and Stewart prevails, it could open the
door to recovery by other insurers who are not a party to the present action and
who have not allowed the case to be dismissed against them with prejudice. In
that event, the potential refund liability of the State could amount to several
million dollars per year for each year that must be refunded. The State has
amended its complaint to seek only retaliatory tax liability rather than past
premium taxes. However, Stewart Title did not drop its equal protection claim in
its answer to the Amended Complaint.
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
could not exceed $81 million, plus interest and attorney fees.
On November 19, 1993, the Oregon Supreme Court issued an opinion ruling
against the State and holding that the State must return to the Industrial
Accident Fund the $81 million that the legislature transferred to the general
fund. The supreme court remanded the case to the trial court to fashion a decree
based on evidence of what SAIF would have done with the money if the money had
been available to SAIF.
On remand, the trial court ordered the State to return the $81 million to
SAIF, with interest at the rate Industrial Accident Fund investments have earned
since July 1, 1982. Although the exact percentage rate has not yet been
determined, initial estimates indicate that the amount of principal and interest
owing under the court's ruling will be approximately $280 million.
In its 1995 session, the Legislative Assembly appropriated $60 million to
the Industrial Accident Fund. To date, the State has repaid $65 million of the
$81 million principal amount. The State has not yet paid any of the interest
obligation.
Taxation of State Retiree Pension Benefits
Class action certification has been granted in an action filed against the
State and other public entities regarding the taxation of Oregon public employee
retirement benefits. The plaintiff class consists of Public Employees'
Retirement System (PERS) members who have separated from service with their PERS
employer. The defendant class is composed of all employers participating in
PERS. The plaintiffs seek enforcement of the Oregon Supreme Court's decision in
Hughes v. State. In Hughes, the court ruled that a statutory amendment repealing
a tax exemption for retirement benefits violated the constitutional provision
against impairment of contract for benefits received from work performed prior
to the date of the amendment. The court left it up to the Oregon Legislative
Assembly to fashion a remedy. The legislature failed to provide a remedy in its
1993 session. Plaintiffs seek to require public employers to pay breach of
contract damages or increase benefits due to taxation of previously untaxed
pensions.
The 1995 legislature passed HB 3349 which provides a remedy to the PERS
beneficiaries. The bill increases the benefits paid to PERS members as
compensation for damages resulting from the taxation of the PERS benefits and
prohibits any class action suit for damages based upon such taxation. The claims
of the PERS beneficiaries are effectively rendered moot by the legislation. The
fiscal impact statement submitted with HB 3349 indicated that state agencies
will be obligated to pay approximately $27 million in the 1995-97 biennium and
approximately $36 million in the 1997-99 biennium in increased employer
contributions to fund the benefits increase. Of those amounts, only about
one-third are paid out of the general fund. There has been one case filed
challenging the adequacy of HB 3349 as a remedy. The State also has sought
review and clarification of portions of the bill.
Local governments have asserted defenses based upon breach of contract
theories and also seek indemnification from the State for any amounts the local
governments must pay toward a remedy. The passage of HB 3349 does not moot the
claims of local governments. If the local governments are successful, liability
would be imposed directly on the State general fund for the amount of increased
benefits that the local governments must pay as a result of HB 3349. The amount
of liability imposed on the State as a result of the local governments' claims
is uncertain. The fiscal impact statements prepared for HB 3349 indicated that
the total increase in contribution that must be paid by local governments,
community colleges and school districts is approximately $44 million for the
1995-97 biennium and $72 million for the 1997-99 biennium. The trial court has
ruled against the State on the breach of contract issues. However, the State
appealed the ruling.
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On November 15, 1995, the circuit court ruled on the State's motions for
reconsideration of the court's earlier ruling with respect to the local
government claims and on HB 3349. The court upheld its ruling with respect to
local governments. The court also found that the effect of HB 3349 was to
require local governments to pay breach of contract damages in violation of the
court's prior ruling because the local governments would be required to pay
increased contribution amounts to fund the remedy provided in HB 3349. Moreover,
because the source of funding for the increased benefits payments was an
integral part of HB 3349 and could not be severed from the rest of the bill, the
court held that HB 3349 was void in its entirety. Therefore, the court enjoined
the payment of increased benefits to PERS retirees under HB 3349 that was
scheduled to begin in January 1996. The State will appeal the circuit court's
ruling.
Taxation of Federal Retiree Pension Benefits
Several cases have been filed in the Oregon Tax Court and the State Circuit
Courts challenging whether a 1991 increase in PERS benefits, to offset State
taxation of the PERS benefits, violates a holding by the United States Supreme
Court in Davis v. Michigan Dept. of Treasury. The Davis case holds that state
statutes may not provide disparate tax treatment of state and federal pension
benefits. At this time it is too early to estimate the potential impact of
liability under these cases to the State general fund. However, the Oregon
Supreme Court upheld a ruling by the Oregon Tax Court in one of the cases,
Ragsdale v. Dept. of Revenue, that the increase in PERS benefits did not violate
the Davis holding and is constitutional. Plaintiffs have filed a petition for
review with the U.S. Supreme Court of the Oregon Supreme Court's decision.
Suits involving the same plaintiffs and issues have also been filed in the
state circuit court and in the tax court on behalf of a group of federal
retirees seeking refunds of taxes paid to the State. The case has been stayed in
circuit court and is being litigated in the tax court. It is too early to
estimate the potential liability of the State in this case. The plaintiffs are
also challenging the provisions of HB 3349 on the same theory as their challenge
to the 1991 benefits increase.
An additional case filed in Multnomah County challenges the PERS benefits
increase on the same grounds that the court ruled against in the Ragsdale case.
It also seeks to find HB 3349 invalid as a diversion of PERS funds.
Challenge to Initiative Measure Savings
As the result of the passage of Ballot Measure 8 (the Measure) in the 1994
general election (See "NOVEMBER 1994 ELECTION RESULTS" below), the State of
Oregon could realize potential savings exceeding one hundred million dollars per
year in amounts that would not be required to be contributed to the Public
Employees' Retirement System (PERS). Under the Measure, the State would no
longer make a contribution (i) to cover increased benefits due to the inclusion
of accrued sick leave in the benefit calculation or (ii) to "pick up" employees'
mandatory six percent contribution to the retirement system. The Measure also
prohibits PERS from providing any guaranteed rate of return on pension funds.
A number of cases have been brought challenging the validity of the Measure.
The cases challenge the Measure's prohibitions on the use of sick leave, the
employer "pick up" and the guaranteed rate of return. One case challenges the
Measure in its total as an improper revision to the constitution, rather than an
amendment, and as a violation of the federal constitution's guaranty to the
states of a representative form of government. The circuit courts have ruled
against the state in each of these cases, except one for which arguments have
not yet been heard. The Oregon Legislative Assembly enacted legislation that
became effective June 5, 1995, allowing the direct appeal of cases involving the
Measure from the circuit court level to the Oregon Supreme Court. The State has
appealed the rulings of the circuit courts to the Oregon Supreme Court.
If the plaintiffs in these cases are successful, the potential savings to
the State as a result of the Measure will not be realized. However, as a result
of the circuit courts' decisions, the governor has declared that the State will
continue to make the employer "pick up" until a ruling has been issued on
appeal.
Challenge to Oregon Health
Matthews v. Thorne
A class action suit has been filed in federal court seeking to add certain
Medicare beneficiaries, consisting of disabled and elderly persons, to the
groups of persons covered by the Oregon Health Plan (the "Plan"). Under the Plan
certain groups of low income persons are provided specified medical services, as
well as dental care, eye care and prescription benefits. The plaintiff class is
eligible for medical care under the federal Medicare program, but not for the
additional services offered by the Oregon Health Plan. If plaintiffs are
successful, early estimates indicate that it would cost an additional $30
million per biennium to operate the Plan. The state general fund would be
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obligated to pay 38% of the $30 million and the federal government would pay the
balance. However, it is possible that if the cost of operating the Plan
increased by such an amount the legislature would discontinue the Plan entirely.
The State filed a motion to dismiss and for summary judgment. The court
granted the State's motion.
NOVEMBER 1994 ELECTION RESULTS
Five Ballot Measures with a potential impact on the finances of the state
were voted on at the November 8, 1994 general election. Two out of these five
measures were approved by a majority of the voters in the election.
Ballot Measure 8: Public Employee Contributions to Pension Fund
Measure 8 (See "LITIGATION" above) requires public employees to pay six
percent of their salaries toward their pensions. Beginning January 1, 1995, it
bars government employers from contracting to relieve employees of "contribution
duty" or increase of salary or benefits as offsets of the contribution duty. It
further bars government contracts to guarantee an interest rate on public
pension funds. Finally, it prohibits increasing pension benefits as a result of
unused sick leave.
The Legislative Fiscal Office of the State currently estimates that Measure
8 will reduce the State's direct employment costs by approximately $94.5 million
per year. Of that amount, approximately $34.2 million is saved by the State
General Fund. Additional potential savings of $24.3 million per year ($8.8
million General Fund) may result from the provision removing accumulated sick
leave from the final average salary computation, which provision is currently
the subject of litigation.
The State cannot accurately predict the long term financial effect of
Measure 8 on the State as it is currently the subject of multiple lawsuits.
Ballot Measure 11: Mandatory Sentences for Certain Felonies
Measure 11 adopts mandatory minimum prison sentences for certain listed
felonies. A court may impose a longer sentence if allowed by law. The Measure
bars early release, leave, or a reduced sentence for any reason. All persons 15
years of age and older when charged with these crimes are required to be tried
as adults. It applies to crimes committed on or after April 1, 1995.
Information presented to voters prior to the election indicated that Measure
11 would require an estimated 6,085 new prison beds by the year 2001, and call
for State correction facility construction costs of approximately $462 million
in the next five years. No new estimates of costs are available. The 1995
Legislative Assembly will consider and decide from several proposals the
appropriate means for implementing and financing of costs associated with the
voter approved statue. Pre-election data also estimated increases in State
expenditures for correction operations, beginning with an increase of $3.2
million in 1995-1996, with accelerating costs that should peak at an annual
increase of up to $101 million by 1998. Because these demands will be made on
the State General Fund, they will reduce amounts that otherwise would be
available in the future for the Oregon Legislative Assembly to appropriate for
other purposes.
LEVEL OF GENERAL OBLIGATION INDEBTEDNESS
As of December 31, 1994, approximately $4.41 billion in general obligation
debt of the state of Oregon was outstanding, including $3.48 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.
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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 budget surpluses at
fiscal year end June 30, 1994 and June 30, 1995. Such difficulties have not to
date impacted on the State's ability to pay its indebtedness but have resulted
in S&P lowering its 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 businesses 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, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
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The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance 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 to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the Country's largest companies: Briggs Manufacturing, 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 nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
...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, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
55
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...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
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 Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
four separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund and Seligman Henderson Global Growth Opportunities Fund.
56
<PAGE>
================================================================================
Seligman
Tax-Exempt
Fund
Series, Inc.
- --------------------------------------------------------------------------------
12th Annual Report
September 30, 1995
================================================================================
JWS
[LOGO]
<PAGE>
================================================================================
To the Shareholders
- --------------------------------------------------------------------------------
We are pleased to update you on the National and 12 state-specific portfolios of
Seligman Tax-Exempt Fund Series for the fiscal year ended September 30, 1995.
Your Series' total net assets stood at $1,226,464,083 at September 30,
compared to $1,255,408,829 a year ago. Dividends and gains paid to shareholders
during the 12 months totaled $76,002,127.
The past 12 months have been a particularly turbulent period for
fixed-income markets. During the fourth quarter of 1994, a strengthening economy
continued to fuel fears of an acceleration in the inflation rate. By
mid-November, municipal bond yields had climbed to their highest levels since
1991. Investors, until now conspicuous by their absence, were attracted by
higher yields and cautiously began buying. The municipal market, however, was
still trying to absorb an oversupply of inventory as well as attempting to
overcome the aftershocks of the Orange County, California, debacle and thus
improved at a slower rate than the U.S. Treasury market. As 1994 came to a
close, the bond market recovery was firmly under way. The Federal Reserve
Board's (FRB) decision on February 1 to once again raise the federal funds rate
helped to sustain the rally by boosting investor confidence in the FRB's ability
to contain inflation.
The U.S. economy finally began to exhibit signs of moderating during the
second quarter of 1995, spurring further declines in long-term yields. The FRB,
encouraged by economic reports, voted on July 6 to lower the federal funds rate
in order to minimize the risk of a recession. While the bond markets initially
reacted positively to this news, it wasn't long before the next round of
economic reports proved surprisingly robust, prompting speculation that the
economy was not as weak as believed. Long-term yields reversed their decline and
spiked sharply, dashing hopes of an imminent FRB easing. The municipal market
began to improve in late August as signs of economic strength abated. By
September 30, long-term yields were essentially unchanged from a year ago.
For much of the past year, municipal market participants have been focusing
on tax reform legislation. Investors, concerned about the impact on the
tax-exempt status of municipal securities, have been demanding higher yields as
compensation. Currently, long-term municipal bonds, compared with taxable bonds,
are the most attractive they have been all year.
A discussion with your Portfolio Manager about your Series, along with
highlights of performance, long-term investment results, portfolio holdings, and
financial statements, follows this letter.
For any additional information about Seligman Tax-Exempt Fund Series, or
your investment in its shares, please write or call using the toll-free
telephone numbers listed on page 63 of this report.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
November 3, 1995
1
<PAGE>
================================================================================
Seligman Tax-Exempt Fund Series, Inc.
- --------------------------------------------------------------------------------
Highlights September 30, 1995
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
National Colorado Georgia Louisiana Maryland Massachusetts
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets:
Class A (in millions) $104.2 $54.9 $57.7 $62.0 $56.3 $115.7
Class D (in millions) 1.2 0.2 2.1 0.5 0.6 0.9
- ---------------------------------------------------------------------------------------------------------------------------
Yield:*
Class A 4.73% 4.36% 4.44% 4.39% 4.24% 4.38%
Class D 4.07 3.69 3.76 3.70 3.56 3.70
- ---------------------------------------------------------------------------------------------------------------------------
Dividends:**
Class A $0.398 $0.379 $0.395 $0.430 $0.410 $0.425
Class D 0.321 0.302 0.322 0.348 0.330 0.345
- ---------------------------------------------------------------------------------------------------------------------------
Capital Gain Distributions** -- -- $0.103 $0.140 $0.133 $0.032
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value per share:
Class A $7.58 $7.30 $7.81 $8.14 $7.96 $7.91
Class D 7.57 7.29 7.82 8.14 7.97 7.90
- ---------------------------------------------------------------------------------------------------------------------------
Maximum offering price per share:
Class A $7.96 $7.66 $8.20 $8.55 $8.36 $8.30
Class D 7.57 7.29 7.82 8.14 7.97 7.90
- ---------------------------------------------------------------------------------------------------------------------------
Moody's/S&P Ratings+
Aaa/AAA 25% 54% 51% 85% 39% 52%
Aa/AA 60 27 25 7 43 15
A/A 9 16 18 5 18 26
Baa/BBB 4 -- 6 2 -- 5
Caa/CCC -- -- -- -- -- --
Non-rated 2 3 -- 1 -- 2
- ---------------------------------------------------------------------------------------------------------------------------
Holdings by Market Sector+
Revenue Bonds 81% 85% 65% 70% 62% 77%
General Obligation Bonds 19 15 35 30 38 23
- ---------------------------------------------------------------------------------------------------------------------------
Weighted Average Maturity (years) 26.2 19.4 21.9 18.7 20.3 18.8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Michigan Minnesota Missouri New York Ohio Oregon South Carolina
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets:
Class A (in millions) $151.6 $132.7 $51.2 $84.0 $170.2 $59.5 $112.4
Class D (in millions) 1.2 2.2 0.5 0.9 0.7 1.5 1.7
- ------------------------------------------------------------------------------------------------------------------------------------
Yield:*
Class A 4.36% 3.94% 4.30% 4.70% 4.24% 4.26% 4.43%
Class D 3.68 3.23 3.60 4.05 3.53 3.57 3.75
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends:**
Class A $0.458 $0.453 $0.396 $0.420 $0.440 $0.402 $0.414
Class D 0.366 0.379 0.316 0.337 0.355 0.330 0.339
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Gain Distributions** $0.043 $0.014 $0.070 $0.170 $0.074 $0.018 $0.014
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per share:
Class A $8.54 $7.82 $7.70 $7.86 $8.11 $7.66 $7.97
Class D 8.54 7.82 7.70 7.87 8.15 7.65 7.97
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum offering price per share:
Class A $8.97 $8.21 $8.08 $8.25 $8.51 $8.04 $8.37
Class D 8.54 7.82 7.70 7.87 8.15 7.65 7.97
- ------------------------------------------------------------------------------------------------------------------------------------
Moody's/S&P Ratings+
Aaa/AAA 52% 45% 43% 52% 65% 33% 66%
Aa/AA 20 19 41 11 14 22 14
A/A 19 24 16 23 10 27 19
Baa/BBB 3 -- -- 14 2 9 1
Caa/CCC -- 8 -- -- -- -- --
Non-rated 6 4 -- -- 9 9 --
- ------------------------------------------------------------------------------------------------------------------------------------
Holdings by Market Sector+
Revenue Bonds 75% 58% 88% 96% 66% 71% 73%
General Obligation Bonds 25 42 12 4 34 29 27
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Average Maturity (years) 19.2 16.6 18.3 21.7 17.3 16.8 17.5
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Current yield representing the annualized yield for the 30-day period ended
September 30, 1995.
**Represents per share amount paid or declared in respect of Class A and Class
D shares during the year ended September 30, 1995.
+Percentages based on current market value of long-term holdings.
Note: The yield has been computed in accordance with current 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. Past performance is not
indicative of future investment results.
2 & 3
<PAGE>
================================================================================
Annual Performance Overview
- --------------------------------------------------------------------------------
The following is a biography of your Portfolio Manager, a discussion with him
regarding Seligman Tax-Exempt Fund Series, and a chart and table comparing your
Series' performance to the performance of the Lehman Brothers Municipal Bond
Index.
Your Portfolio Manager
[Photo of Thomas G. Moles]
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 25 years of experience, has spearheaded
Seligman's tax-exempt efforts since joining the firm in 1983.
Factors Affecting Seligman Tax-Exempt Fund Series
"In general, the investment environment for municipal securities in 1995 was
much more advantageous than in 1994. Looking back, interest rates continued to
move higher during the fourth quarter of 1994 as negative market sentiment
prevailed. The net asset values on long-term municipal bond mutual funds,
including your Series, declined as a result. The municipal market was further
impacted by the Orange County, California, bankruptcy, which undermined
confidence in the market.
"During the first half of 1995, yields on municipal bonds trended lower as the
economy exhibited signs of moderating. The municipal market, however,
underperformed the U.S. Treasury market due to concerns regarding tax reform.
During the third quarter, stronger-than-expected economic reports caused a brief
spike in interest rates. By September 30, however, the overall decline in
long-term yields over the past 12 months had caused the net asset values of your
Series to improve."
Your Manager's Investment Strategy
"For much of the past year, there has been little difference between yields on
20-year and 30-year municipal bonds. We took advantage of the narrow yield
spread and shortened maturities where opportunities allowed. By implementing
this strategy, the Series was able to maintain yields while lessening
volatility.
"As the bond market gradually improved, your Series assumed a less defensive
posture. Shorter-term prerefunded positions were reduced and replaced with
long-term bonds, as long-term bonds generally realize greater price appreciation
than shorter-term bonds in a declining interest rate environment.
"The Series continues to concentrate new purchases in higher-quality municipal
bonds. The market has not been offering enough of an additional yield on
lower-rated bonds to compensate for their increased risk. In addition, the
Series has focused on bonds issued to provide for essential services, such as
water and sewer facilities, transportation projects, etc. These bonds generally
offer increased security because revenues derived from the projects are often
pledged as repayment for the principal and interest on the bonds."
Looking Ahead
"The municipal market faces many challenges in the months to come. With the
Federal government shifting more and more responsibilities to individual states,
we are concerned about the impact on state budgets. Additionally, the
possibility exists that future tax reform legislation may affect the tax-exempt
status of municipal securities. At present, however, tax reform is not a
consideration in our decision making process. We will continue to stay abreast
of the latest developments and adjust our strategy accordingly. Despite the
challenges, we remain optimistic about the prospects for the municipal market.
We believe a moderating economy and a vigilant Federal Reserve Board should keep
inflation in check and prevent a repeat of the dramatic interest rate increases
that occurred in 1994."
4
<PAGE>
================================================================================
Performance Comparison Charts and Tables September 30, 1995
- --------------------------------------------------------------------------------
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 10-year or since inception (where
applicable) periods ended September 30, 1995, 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 following plot points are represented by a graph in the printed material.
National with sales charge without sales charge Lehman Index
9/30/85 $9,528.06 $10,000.00 $10,000.00
12/31/85 $10,309.09 $10,819.71 $10,807.87
3/31/86 $11,417.73 $11,983.26 $11,902.14
6/30/86 $11,407.75 $11,972.79 $11,829.06
9/30/86 $12,021.68 $12,617.13 $12,464.87
12/31/86 $12,510.83 $13,130.51 $12,895.64
3/31/87 $12,951.55 $13,593.07 $13,207.78
6/30/87 $12,217.47 $12,822.62 $12,849.29
9/30/87 $11,736.82 $12,318.18 $12,529.90
12/31/87 $12,332.87 $12,943.73 $13,089.78
3/31/88 $12,674.69 $13,302.48 $13,539.73
6/30/88 $13,142.13 $13,793.08 $13,802.22
9/30/88 $13,665.43 $14,342.30 $14,156.10
12/31/88 $14,049.70 $14,745.61 $14,420.02
3/31/89 $14,180.12 $14,882.49 $14,515.52
6/30/89 $15,028.54 $15,772.94 $15,374.75
9/30/89 $14,842.77 $15,577.97 $15,385.45
12/31/89 $15,429.42 $16,193.68 $15,975.78
3/31/90 $15,326.87 $16,086.05 $16,047.33
6/30/90 $15,728.36 $16,507.42 $16,422.02
9/30/90 $15,451.50 $16,216.86 $16,431.64
12/31/90 $16,327.20 $17,135.93 $17,140.38
3/31/91 $16,609.38 $17,432.09 $17,527.83
6/30/91 $16,961.43 $17,801.57 $17,901.99
9/30/91 $17,651.44 $18,525.76 $18,597.71
12/31/91 $18,200.45 $19,101.96 $19,221.27
3/31/92 $18,156.32 $19,055.64 $19,278.39
6/30/92 $18,880.36 $19,815.55 $20,009.10
9/30/92 $19,211.86 $20,163.48 $20,541.50
12/31/92 $19,635.19 $20,607.77 $20,915.25
3/31/93 $20,629.63 $21,651.46 $21,692.06
6/30/93 $21,437.93 $22,499.80 $22,401.82
9/30/93 $22,286.52 $23,390.43 $23,159.00
12/31/93 $22,403.01 $23,512.70 $23,484.78
3/31/94 $20,565.58 $21,584.26 $22,195.61
6/30/94 $20,690.07 $21,714.91 $22,439.94
9/30/94 $20,542.58 $21,560.12 $22,593.72
12/31/94 $20,174.36 $21,173.66 $22,270.84
3/31/95 $21,838.46 $22,920.19 $23,844.34
6/30/95 $22,397.13 $23,506.54 $24,418.70
9/30/95 $22,900.58 $24,034.93 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average annual
total returns for the one-year and since-inception periods through September 30,
1995, 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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman National Seligman National
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 6.16% 7.14% 8.64% Class D with CDSL 9.17% n/a
Class A without Sales Charge 11.48 8.19 9.17 Class D without CDSL 10.17 (0.49)%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
5
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Colorado Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
CO TE with sales charge without sales charge Lehman Index
5/1/86 $9,520.00 $10,000.00 $10,000.00
6/30/86 $9,053.33 $9,509.80 $9,931.05
9/30/86 $9,665.20 $10,152.53 $10,464.84
12/31/86 $10,002.60 $10,506.93 $10,826.49
3/31/87 $10,217.02 $10,732.16 $11,088.55
6/30/87 $9,817.82 $10,312.83 $10,787.58
9/30/87 $9,357.88 $9,829.70 $10,519.43
12/31/87 $9,939.36 $10,440.50 $10,989.48
3/31/88 $10,303.52 $10,823.02 $11,367.24
6/30/88 $10,547.76 $11,079.58 $11,587.61
9/30/88 $10,872.48 $11,420.67 $11,884.71
12/31/88 $11,198.27 $11,762.89 $12,106.28
3/31/89 $11,316.55 $11,887.13 $12,186.46
6/30/89 $11,951.67 $12,554.29 $12,907.83
9/30/89 $11,926.56 $12,527.91 $12,916.81
12/31/89 $12,322.36 $12,943.66 $13,412.41
3/31/90 $12,248.17 $12,865.73 $13,472.48
6/30/90 $12,534.43 $13,166.43 $13,787.05
9/30/90 $12,448.68 $13,076.36 $13,795.13
12/31/90 $12,944.33 $13,597.00 $14,390.15
3/31/91 $13,160.16 $13,823.71 $14,715.44
6/30/91 $13,399.80 $14,075.44 $15,029.56
9/30/91 $13,836.82 $14,534.49 $15,613.65
12/31/91 $14,160.68 $14,874.68 $16,137.15
3/31/92 $14,129.46 $14,841.87 $16,185.11
6/30/92 $14,597.55 $15,333.57 $16,798.57
9/30/92 $14,908.07 $15,659.75 $17,245.55
12/31/92 $15,246.70 $16,015.46 $17,559.33
3/31/93 $15,752.97 $16,547.25 $18,211.50
6/30/93 $16,258.36 $17,078.12 $18,807.38
9/30/93 $16,777.14 $17,623.06 $19,443.06
12/31/93 $16,941.18 $17,795.37 $19,716.57
3/31/94 $16,115.38 $16,927.93 $18,634.25
6/30/94 $16,259.10 $17,078.90 $18,839.38
9/30/94 $16,287.30 $17,108.52 $18,968.48
12/31/94 $16,072.58 $16,882.99 $18,697.41
3/31/95 $17,092.08 $17,953.89 $20,018.44
6/30/95 $17,386.02 $18,262.66 $20,500.64
9/30/95 $17,680.87 $18,572.37 $21,090.06
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1995, 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 are the
average annual total returns for the one-year and since-inception periods
through September 30, 1995, 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
<TABLE>
<CAPTION>
Since Since
One Five Inception One Inception
Year Years 5/1/86 Year 2/1/94
---- ----- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Colorado Seligman Colorado
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 3.45% 6.24% 6.24% Class D with CDSL 6.26% n/a
Class A without Sales Charge 8.56 7.27 6.79 Class D without CDSL 7.26 0.67%
Lehman Index 11.18 8.86 8.25* Lehman Index 11.18 3.43
*From 4/30/86.
</TABLE>
See page 17 for footnotes.
6
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
Seligman Georgia Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
GA TE with sales charge without sales charge Lehman Index
6/15/87 $9,520.00 $10,000.00
6/30/87 $9,413.33 $9,887.95 $10,000.00
9/30/87 $8,795.01 $9,238.45 $9,751.43
12/31/87 $9,408.85 $9,883.25 $10,187.16
3/31/88 $9,746.26 $10,237.68 $10,537.34
6/30/88 $10,009.51 $10,514.20 $10,741.62
9/30/88 $10,334.58 $10,855.65 $11,017.03
12/31/88 $10,691.63 $11,230.70 $11,222.43
3/31/89 $10,791.50 $11,335.61 $11,296.75
6/30/89 $11,430.34 $12,006.66 $11,965.45
9/30/89 $11,383.14 $11,957.07 $11,973.78
12/31/89 $11,747.04 $12,339.33 $12,433.20
3/31/90 $11,747.04 $12,339.33 $12,488.89
6/30/90 $12,007.71 $12,613.15 $12,780.49
9/30/90 $11,973.62 $12,577.34 $12,787.97
12/31/90 $12,570.46 $13,204.28 $13,339.55
3/31/91 $12,800.49 $13,445.91 $13,641.09
6/30/91 $13,057.80 $13,716.20 $13,932.28
9/30/91 $13,565.90 $14,249.93 $14,473.73
12/31/91 $13,949.88 $14,653.26 $14,959.01
3/31/92 $13,940.70 $14,643.60 $15,003.46
6/30/92 $14,508.36 $15,239.88 $15,572.15
9/30/92 $14,874.38 $15,624.36 $15,986.49
12/31/92 $15,205.41 $15,972.09 $16,277.36
3/31/93 $15,646.24 $16,435.13 $16,881.92
6/30/93 $16,175.66 $16,991.24 $17,434.29
9/30/93 $16,950.57 $17,805.24 $18,023.56
12/31/93 $17,061.47 $17,921.74 $18,277.11
3/31/94 $15,897.11 $16,698.67 $17,273.80
6/30/94 $15,994.79 $16,801.27 $17,463.96
9/30/94 $16,015.12 $16,822.62 $17,583.63
12/3/94 $15,758.18 $16,552.72 $17,332.35
3/30/95 $16,972.31 $17,828.08 $18,556.93
6/30/95 $17,482.68 $18,364.18 $19,003.93
9/30/95 $17,882.41 $18,784.05 $19,550.32
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1995, 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 are the
average annual total returns for the one-year and since-inception periods
through September 30, 1995, 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
<TABLE>
<CAPTION>
Since Since
One Five Inception One Inception
Year Years 6/15/87 Year 2/1/94
---- ----- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Georgia Seligman Georgia
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 6.40% 7.30% 7.26% Class D with CDSL 9.58% n/a
Class A without Sales Charge 11.66 8.35 7.90 Class D without CDSL 10.58 1.33%
Lehman Index 11.18 8.86 8.46* Lehman Index 11.18 3.43
</TABLE>
*From 6/30/87.
See page 17 for footnotes.
7
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Louisiana Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
Louis TE with sales charge without sales charge Lehman Index
10/1/85 $9,520.00 $10,000.00 $10,000.00
12/31/85 $10,080.96 $10,589.25 $10,807.87
3/31/86 $11,043.83 $11,600.67 $11,902.14
6/30/86 $10,829.37 $11,375.39 $11,829.06
9/30/86 $11,373.93 $11,947.40 $12,464.87
12/31/86 $11,767.52 $12,360.85 $12,895.64
3/31/87 $12,206.43 $12,821.89 $13,207.78
6/30/87 $11,789.64 $12,384.09 $12,849.29
9/30/87 $11,444.19 $12,021.23 $12,529.90
12/31/87 $12,058.64 $12,666.66 $13,089.78
3/31/88 $12,446.30 $13,073.87 $13,539.73
6/30/88 $12,707.73 $13,348.47 $13,802.22
9/30/88 $13,125.09 $13,786.88 $14,156.10
12/31/88 $13,413.94 $14,090.31 $14,420.02
3/31/89 $13,573.57 $14,258.00 $14,515.52
6/30/89 $14,307.19 $15,028.61 $15,374.75
9/30/89 $14,311.14 $15,032.75 $15,385.45
12/31/89 $14,773.55 $15,518.48 $15,975.78
3/31/90 $14,776.15 $15,521.20 $16,047.33
6/30/90 $15,138.66 $15,901.99 $16,422.02
9/30/90 $15,055.42 $15,814.55 $16,431.64
12/31/90 $15,787.62 $16,583.67 $17,140.38
3/31/91 $16,119.26 $16,932.04 $17,527.83
6/30/91 $16,454.70 $17,284.38 $17,901.99
9/30/91 $17,087.06 $17,948.63 $18,597.71
12/31/91 $17,584.60 $18,471.27 $19,221.27
3/31/92 $17,564.30 $18,449.95 $19,278.39
6/30/92 $18,286.76 $19,208.82 $20,009.10
9/30/92 $18,647.15 $19,587.39 $20,541.50
12/31/92 $18,962.19 $19,918.32 $20,915.25
3/31/93 $19,683.82 $20,676.34 $21,692.06
6/30/93 $20,278.75 $21,301.27 $22,401.82
9/30/93 $20,902.77 $21,956.75 $23,159.00
12/31/93 $21,132.92 $22,198.51 $23,484.78
3/31/94 $19,995.13 $21,003.35 $22,195.61
6/30/94 $20,080.54 $21,093.06 $22,439.94
9/30/94 $20,101.36 $21,114.94 $22,593.72
12/31/94 $19,889.31 $20,892.19 $22,270.84
3/31/95 $21,196.48 $22,265.27 $23,844.34
6/30/95 $21,613.04 $22,702.84 $24,418.70
9/30/95 $22,170.71 $23,288.63 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average annual
total returns for the one-year and since-inception periods through September 30,
1995, 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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Louisiana Seligman Louisiana
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 5.01% 7.01% 8.29% Class D with CDSL 8.17% n/a
Class A without Sales Charge 10.30 8.05 8.82 Class D without CDSL 9.17 1.28%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
8
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
Seligman Maryland Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
MD TE with sales charge without sales charge Lehman Index
10/1/85 $9,520.00 $10,000.00 $10,000.00
12/31/85 $9,934.44 $10,435.35 $10,807.87
3/31/86 $10,666.64 $11,204.45 $11,902.14
6/30/86 $10,336.82 $10,857.99 $11,829.06
9/30/86 $10,863.29 $11,411.00 $12,464.87
12/31/86 $11,287.10 $11,856.19 $12,895.64
3/31/87 $11,488.47 $12,067.71 $13,207.78
6/30/87 $10,886.89 $11,435.79 $12,849.29
9/30/87 $10,493.33 $11,022.39 $12,529.90
12/31/87 $11,185.14 $11,749.09 $13,089.78
3/31/88 $11,505.68 $12,085.78 $13,539.73
6/30/88 $11,765.87 $12,359.10 $13,802.22
9/30/88 $12,144.08 $12,756.37 $14,156.10
12/31/88 $12,439.53 $13,066.73 $14,420.02
3/31/89 $12,587.07 $13,221.70 $14,515.52
6/30/89 $13,323.32 $13,995.07 $15,374.75
9/30/89 $13,289.37 $13,959.41 $15,385.45
12/31/89 $13,745.01 $14,438.02 $15,975.78
3/31/90 $13,711.02 $14,402.31 $16,047.33
6/30/90 $13,998.59 $14,704.38 $16,422.02
9/30/90 $13,883.38 $14,583.36 $16,431.64
12/31/90 $14,590.57 $15,326.21 $17,140.38
3/31/91 $14,830.88 $15,578.62 $17,527.83
6/30/91 $15,100.18 $15,861.50 $17,901.99
9/30/91 $15,724.05 $16,516.83 $18,597.71
12/31/91 $16,118.16 $16,930.81 $19,221.27
3/31/92 $16,171.51 $16,986.84 $19,278.39
6/30/92 $16,755.89 $17,600.68 $20,009.10
9/30/92 $17,163.20 $18,028.53 $20,541.50
12/31/92 $17,446.19 $18,325.79 $20,915.25
3/31/93 $18,092.79 $19,005.00 $21,692.06
6/30/93 $18,716.31 $19,659.94 $22,401.82
9/30/93 $19,433.39 $20,413.17 $23,159.00
12/31/93 $19,527.72 $20,512.25 $23,484.78
3/31/94 $18,494.19 $19,426.61 $22,195.61
6/30/94 $18,608.55 $19,546.73 $22,439.94
9/30/94 $18,640.06 $19,579.84 $22,593.72
12/31/94 $18,458.58 $19,389.21 $22,270.84
3/31/95 $19,742.63 $20,738.01 $23,844.34
6/30/95 $20,180.36 $21,197.82 $24,418.70
9/30/95 $20,671.35 $21,713.56 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average annual
total returns for the one-year and since-inception periods through September 30,
1995, 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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Maryland Seligman Maryland
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 5.69% 7.24% 7.53% Class D with CDSL 8.75% n/a
Class A without Sales Charge 10.90 8.29 8.06 Class D without CDSL 9.75 1.76%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
9
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Massachusetts Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
Mass TE with sales charge without sales charge Lehman Index
9/30/85 $9,530.03 $10,000.00 $10,000.00
12/31/85 $10,151.64 $10,652.26 $10,807.87
3/31/86 $10,961.18 $11,501.73 $11,902.14
6/30/86 $10,809.67 $11,342.75 $11,829.06
9/30/86 $11,387.38 $11,948.96 $12,464.87
12/31/86 $11,786.49 $12,367.75 $12,895.64
3/31/87 $12,146.99 $12,746.03 $13,207.78
6/30/87 $11,564.67 $12,134.98 $12,849.29
9/30/87 $11,141.99 $11,691.46 $12,529.90
12/31/87 $11,780.16 $12,361.10 $13,089.78
3/31/88 $12,241.60 $12,845.30 $13,539.73
6/30/88 $12,526.65 $13,144.40 $13,802.22
9/30/88 $12,830.07 $13,462.79 $14,156.10
12/31/88 $13,088.09 $13,733.54 $14,420.02
3/31/89 $13,154.17 $13,802.88 $14,515.52
6/30/89 $13,933.03 $14,620.16 $15,374.75
9/30/89 $13,879.92 $14,564.43 $15,385.45
12/31/89 $14,222.69 $14,924.11 $15,975.78
3/31/90 $14,218.87 $14,920.09 $16,047.33
6/30/90 $14,514.22 $15,230.00 $16,422.02
9/30/90 $14,224.22 $14,925.70 $16,431.64
12/31/90 $14,993.16 $15,732.56 $17,140.38
3/31/91 $15,440.78 $16,202.25 $17,527.83
6/30/91 $15,800.60 $16,579.81 $17,901.99
9/30/91 $16,477.01 $17,289.56 $18,597.71
12/31/91 $16,938.03 $17,773.32 $19,221.27
3/31/92 $17,033.15 $17,873.12 $19,278.39
6/30/92 $17,676.91 $18,548.62 $20,009.10
9/30/92 $18,083.97 $18,975.75 $20,541.50
12/31/92 $18,475.62 $19,386.71 $20,915.25
3/31/93 $19,140.75 $20,084.63 $21,692.06
6/30/93 $19,832.18 $20,810.15 $22,401.82
9/30/93 $20,466.99 $21,476.26 $23,159.00
12/31/93 $20,604.80 $21,620.86 $23,484.78
3/31/94 $19,638.23 $20,606.63 $22,195.61
6/30/94 $19,799.33 $20,775.67 $22,439.94
9/30/94 $19,865.18 $20,844.77 $22,593.72
12/31/94 $19,691.68 $20,662.71 $22,270.84
3/31/95 $20,905.47 $21,936.34 $23,844.34
6/30/95 $21,296.29 $22,346.42 $24,418.70
9/30/95 $21,768.68 $22,842.10 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the
average annual total returns for the one-year and since-inception periods
through September 30, 1995, 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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Massachusetts Seligman Massachusetts
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 4.41% 7.83% 8.09% Class D with CDSL 7.33% n/a
Class A without Sales Charge 9.58 8.88 8.61 Class D without CDSL 8.33 1.53%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
10
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
Seligman Michigan Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
Mich TE with sales charge without sales charge Lehman Index
9/30/85 $9,520.81 $10,000.00 $10,000.00
12/31/85 $10,268.62 $10,785.44 $10,807.87
3/31/86 $11,249.65 $11,815.86 $11,902.14
6/30/86 $11,134.71 $11,695.14 $11,829.06
9/30/86 $11,779.57 $12,372.45 $12,464.87
12/31/86 $12,151.78 $12,763.38 $12,895.64
3/31/87 $12,468.65 $13,096.21 $13,207.78
6/30/87 $11,942.66 $12,543.74 $12,849.29
9/30/87 $11,441.86 $12,017.73 $12,529.90
12/31/87 $12,101.71 $12,710.79 $13,089.78
3/31/88 $12,536.48 $13,167.45 $13,539.73
6/30/88 $12,877.88 $13,526.02 $13,802.22
9/30/88 $13,270.26 $13,938.15 $14,156.10
12/31/88 $13,606.35 $14,291.16 $14,420.02
3/31/89 $13,746.93 $14,438.81 $14,515.52
6/30/89 $14,611.70 $15,347.09 $15,374.75
9/30/89 $14,584.80 $15,318.85 $15,385.45
12/31/89 $15,063.75 $15,821.90 $15,975.78
3/31/90 $15,052.75 $15,810.35 $16,047.33
6/30/90 $15,409.53 $16,185.09 $16,422.02
9/30/90 $15,250.68 $16,018.25 $16,431.64
12/31/90 $15,944.70 $16,747.20 $17,140.38
3/31/91 $16,275.37 $17,094.52 $17,527.83
6/30/91 $16,633.23 $17,470.39 $17,901.99
9/30/91 $17,284.70 $18,154.64 $18,597.71
12/31/91 $17,859.12 $18,757.98 $19,221.27
3/31/92 $17,893.20 $18,793.79 $19,278.39
6/30/92 $18,616.85 $19,553.86 $20,009.10
9/30/92 $19,108.13 $20,069.88 $20,541.50
12/31/92 $19,522.60 $20,505.21 $20,915.25
3/31/93 $20,184.60 $21,200.53 $21,692.06
6/30/93 $20,925.41 $21,978.63 $22,401.82
9/30/93 $21,586.95 $22,673.47 $23,159.00
12/31/93 $21,763.87 $22,859.30 $23,484.78
3/31/94 $20,756.87 $21,801.62 $22,195.61
6/30/94 $20,875.39 $21,926.11 $22,439.94
9/30/94 $20,960.94 $22,015.97 $22,593.72
12/31/94 $20,711.47 $21,753.93 $22,270.84
3/31/95 $22,073.12 $23,184.11 $23,844.34
6/30/95 $22,453.46 $23,583.59 $24,418.70
9/30/95 $22,963.80 $24,119.62 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average annual
total returns for the one-year and since-inception periods through September 30,
1995, 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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Michigan Seligman Michigan
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 4.39% 7.49% 8.67% Class D with CDSL 7.36% n/a
Class A without Sales Charge 9.56 8.53 9.20 Class D without CDSL 8.36 1.46%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
11
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Minnesota Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
Minn TE with sales charge without sales charge Lehman Index
9/30/85 $9,520.64 $10,000.00 $10,000.00
12/31/85 $10,263.86 $10,780.64 $10,807.87
3/31/86 $11,212.86 $11,777.43 $11,902.14
6/30/86 $11,041.21 $11,597.15 $11,829.06
9/30/86 $11,544.03 $12,125.28 $12,464.87
12/31/86 $11,924.87 $12,525.29 $12,895.64
3/31/87 $12,274.63 $12,892.66 $13,207.78
6/30/87 $11,729.22 $12,319.80 $12,849.29
9/30/87 $11,320.19 $11,890.18 $12,529.90
12/31/87 $11,860.87 $12,458.08 $13,089.78
3/31/88 $12,310.84 $12,930.70 $13,539.73
6/30/88 $12,598.04 $13,232.36 $13,802.22
9/30/88 $12,991.02 $13,645.12 $14,156.10
12/31/88 $13,311.56 $13,981.81 $14,420.02
3/31/89 $13,371.67 $14,044.93 $14,515.52
6/30/89 $14,175.83 $14,889.58 $15,374.75
9/30/89 $14,073.85 $14,782.47 $15,385.45
12/31/89 $14,628.17 $15,364.70 $15,975.78
3/31/90 $14,632.85 $15,369.60 $16,047.33
6/30/90 $14,965.27 $15,718.76 $16,422.02
9/30/90 $14,888.67 $15,638.30 $16,431.64
12/31/90 $15,582.33 $16,366.89 $17,140.38
3/31/91 $15,784.50 $16,579.23 $17,527.83
6/30/91 $16,076.49 $16,885.93 $17,901.99
9/30/91 $16,540.76 $17,373.56 $18,597.71
12/31/91 $16,755.42 $17,599.02 $19,221.27
3/31/92 $16,933.12 $17,785.67 $19,278.39
6/30/92 $17,448.70 $18,327.20 $20,009.10
9/30/92 $17,815.81 $18,712.80 $20,541.50
12/31/92 $18,041.16 $18,949.49 $20,915.25
3/31/93 $18,782.66 $19,728.32 $21,692.06
6/30/93 $19,491.89 $20,473.26 $22,401.82
9/30/93 $20,143.05 $21,157.19 $23,159.00
12/31/93 $20,474.37 $21,505.20 $23,484.78
3/31/94 $19,812.79 $20,810.32 $22,195.61
6/30/94 $19,953.68 $20,958.29 $22,439.94
9/30/94 $20,166.50 $21,181.83 $22,593.72
12/31/94 $19,954.75 $20,959.43 $22,270.84
3/31/95 $20,952.36 $22,007.27 $23,844.34
6/30/95 $21,341.24 $22,415.73 $24,418.70
9/30/95 $21,700.87 $22,793.47 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average annual
total returns for the one-year and since-inception periods through September 30,
1995, 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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Minnesota Seligman Minnesota
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 2.56% 6.79% 8.06% Class D with CDSL 5.45% n/a
Class A without Sales Charge 7.61 7.83 8.59 Class D without CDSL 6.45 1.90%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
12
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
Seligman Missouri Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
M0 TE with sales charge without sales charge Lehman Index
7/1/86 $9,520.00 $10,000.00 $10,000.00
9/30/86 $9,887.92 $10,386.47 $10,537.50
12/31/86 $10,184.81 $10,698.33 $10,901.66
3/31/87 $10,438.09 $10,964.38 $11,165.54
6/30/87 $9,992.51 $10,496.33 $10,862.48
9/30/87 $9,472.69 $9,950.31 $10,592.47
12/31/87 $10,152.68 $10,664.58 $11,065.78
3/31/88 $10,521.16 $11,051.64 $11,446.16
6/30/88 $10,796.67 $11,341.05 $11,668.06
9/30/88 $11,058.19 $11,615.74 $11,967.23
12/31/88 $11,417.36 $11,993.03 $12,190.34
3/31/89 $11,473.67 $12,052.18 $12,271.07
6/30/89 $12,133.94 $12,745.74 $12,997.45
9/30/89 $12,090.19 $12,699.79 $13,006.49
12/31/89 $12,495.51 $13,125.54 $13,505.54
3/31/90 $12,488.05 $13,117.71 $13,566.03
6/30/90 $12,818.10 $13,464.41 $13,882.78
9/30/90 $12,750.85 $13,393.76 $13,890.91
12/31/90 $13,361.18 $14,034.85 $14,490.06
3/31/91 $13,620.18 $14,306.91 $14,817.61
6/30/91 $13,938.36 $14,641.13 $15,133.91
9/30/91 $14,486.56 $15,216.98 $15,722.05
12/31/91 $14,879.78 $15,630.01 $16,249.19
3/31/92 $14,883.01 $15,633.40 $16,297.48
6/30/92 $15,437.53 $16,215.88 $16,915.21
9/30/92 $15,626.82 $16,414.70 $17,365.29
12/31/92 $15,958.87 $16,763.49 $17,681.25
3/31/93 $16,501.92 $17,333.92 $18,337.95
6/30/93 $17,076.12 $17,937.07 $18,937.96
9/30/93 $17,685.41 $18,577.09 $19,578.06
12/31/93 $17,778.67 $18,675.05 $19,853.47
3/31/94 $16,693.00 $17,534.64 $18,763.63
6/30/94 $16,788.00 $17,634.43 $18,970.19
9/30/94 $16,827.81 $17,676.25 $19,100.18
12/31/94 $16,655.53 $17,495.28 $18,827.23
3/31/95 $17,872.43 $18,773.53 $20,157.43
6/30/95 $18,199.14 $19,116.71 $20,642.98
9/30/95 $18,623.97 $19,562.96 $21,236.49
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1995, 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 are the
average annual total returns for the one-year and since-inception periods
through September 30, 1995, 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
<TABLE>
<CAPTION>
Since Since
One Five Inception One Inception
Year Years 7/1/86 Year 2/1/94
---- ----- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Missouri Seligman Missouri
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 5.41% 6.83% 6.95% Class D with CDSL 8.49% n/a
Class A without Sales Charge 10.67 7.87 7.52 Class D without CDSL 9.49 0.99%
Lehman Index 11.18 8.86 8.48* Lehman Index 11.18 3.43
</TABLE>
*From 6/30/86.
See page 17 for footnotes.
13
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman New York Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
NY TE with sales charge without sales charge Lehman Index
9/30/85 $9,523.81 $10,000.00 $10,000.00
12/31/85 $10,317.51 $10,833.38 $10,807.87
3/31/86 $11,121.89 $11,677.98 $11,902.14
6/30/86 $11,069.02 $11,622.47 $11,829.06
9/30/86 $11,595.52 $12,175.30 $12,464.87
12/31/86 $12,150.08 $12,757.59 $12,895.64
3/31/87 $12,469.85 $13,093.34 $13,207.78
6/30/87 $11,859.27 $12,452.23 $12,849.29
9/30/87 $11,314.25 $11,879.96 $12,529.90
12/31/87 $11,986.22 $12,585.55 $13,089.78
3/31/88 $12,317.72 $12,933.62 $13,539.73
6/30/88 $12,572.43 $13,201.06 $13,802.22
9/30/88 $12,981.44 $13,630.52 $14,156.10
12/31/88 $13,354.77 $14,022.51 $14,420.02
3/31/89 $13,403.65 $14,073.83 $14,515.52
6/30/89 $14,266.60 $14,979.94 $15,374.75
9/30/89 $14,195.00 $14,904.76 $15,385.45
12/31/89 $14,608.91 $15,339.37 $15,975.78
3/31/90 $14,453.42 $15,176.10 $16,047.33
6/30/90 $14,870.89 $15,614.45 $16,422.02
9/30/90 $14,647.87 $15,380.27 $16,431.64
12/31/90 $15,218.76 $15,979.70 $17,140.38
3/31/91 $15,572.16 $16,350.77 $17,527.83
6/30/91 $15,975.23 $16,774.00 $17,901.99
9/30/91 $16,780.48 $17,619.50 $18,597.71
12/31/91 $17,277.32 $18,141.20 $19,221.27
3/31/92 $17,301.89 $18,166.99 $19,278.39
6/30/92 $18,102.36 $19,007.47 $20,009.10
9/30/92 $18,424.98 $19,346.23 $20,541.50
12/31/92 $18,885.40 $19,829.67 $20,915.25
3/31/93 $19,760.03 $20,748.03 $21,692.06
6/30/93 $20,504.47 $21,529.69 $22,401.82
9/30/93 $21,235.68 $22,297.47 $23,159.00
12/31/93 $21,390.05 $22,459.54 $23,484.78
3/31/94 $19,975.50 $20,974.27 $22,195.61
6/30/94 $20,110.77 $21,116.30 $22,439.94
9/30/94 $20,095.31 $21,100.06 $22,593.72
12/31/94 $19,693.73 $20,678.41 $22,270.84
3/31/95 $21,294.30 $22,359.01 $23,844.34
6/30/95 $21,750.05 $22,837.55 $24,418.70
9/30/95 $22,292.56 $23,407.19 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average total
returns for the one-year and since-inception periods through September 30, 1995,
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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman New York Seligman New York
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 5.70% 7.71% 8.35% Class D with CDSL 8.87% n/a
Class A without Sales Charge 10.93 8.76 8.88 Class D without CDSL 9.87 0.83%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
14
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
Seligman Ohio Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
Ohio TE with sales charge without sales charge Lehman Index
9/30/85 $9,528.18 $10,000.00 $10,000.00
12/31/85 $10,258.31 $10,766.29 $10,807.87
3/31/86 $11,159.80 $11,712.43 $11,902.14
6/30/86 $10,983.35 $11,527.24 $11,829.06
9/30/86 $11,545.28 $12,117.00 $12,464.87
12/31/86 $12,006.29 $12,600.85 $12,895.64
3/31/87 $12,360.41 $12,972.51 $13,207.78
6/30/87 $11,902.29 $12,491.71 $12,849.29
9/30/87 $11,468.81 $12,036.76 $12,529.90
12/31/87 $12,093.82 $12,692.72 $13,089.78
3/31/88 $12,557.35 $13,179.21 $13,539.73
6/30/88 $12,957.01 $13,598.67 $13,802.22
9/30/88 $13,276.83 $13,934.32 $14,156.10
12/31/88 $13,588.77 $14,261.71 $14,420.02
3/31/89 $13,753.66 $14,434.77 $14,515.52
6/30/89 $14,465.59 $15,181.95 $15,374.75
9/30/89 $14,417.93 $15,131.93 $15,385.45
12/31/89 $14,938.93 $15,678.75 $15,975.78
3/31/90 $14,979.42 $15,721.23 $16,047.33
6/30/90 $15,287.29 $16,044.35 $16,422.02
9/30/90 $15,239.96 $15,994.68 $16,431.64
12/31/90 $15,922.42 $16,710.93 $17,140.38
3/31/91 $16,219.67 $17,022.89 $17,527.83
6/30/91 $16,566.32 $17,386.71 $17,901.99
9/30/91 $17,214.64 $18,067.13 $18,597.71
12/31/91 $17,723.97 $18,601.68 $19,221.27
3/31/92 $17,773.53 $18,653.70 $19,278.39
6/30/92 $18,471.24 $19,385.96 $20,009.10
9/30/92 $18,880.31 $19,815.29 $20,541.50
12/31/92 $19,218.43 $20,170.16 $20,915.25
3/31/93 $19,905.51 $20,891.27 $21,692.06
6/30/93 $20,610.31 $21,630.96 $22,401.82
9/30/93 $21,299.41 $22,354.19 $23,159.00
12/31/93 $21,455.25 $22,517.76 $23,484.78
3/31/94 $20,406.04 $21,416.58 $22,195.61
6/30/94 $20,619.30 $21,640.40 $22,439.94
9/30/94 $20,642.96 $21,665.24 $22,593.72
12/31/94 $20,402.50 $21,412.87 $22,270.84
3/31/95 $21,722.19 $22,797.94 $23,844.34
6/30/95 $22,155.54 $23,252.75 $24,418.70
9/30/95 $22,622.43 $23,742.75 $25,120.77
The table below shows the average annual total returns for the one-, five-, and
10-year periods through September 30, 1995, 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 are the average annual total
returns for the one-year and since-inception periods through September 30, 1995,
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
<TABLE>
<CAPTION>
Since
One Five 10 One Inception
Year Years Years Year 2/1/94
---- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Ohio Seligman Ohio
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 4.43% 7.17% 8.51% Class D with CDSL 7.67% n/a
Class A without Sales Charge 9.59 8.22 9.03 Class D without CDSL 8.67 1.70%
Lehman Index 11.18 8.86 9.65 Lehman Index 11.18 3.43
</TABLE>
See page 17 for footnotes.
15
<PAGE>
================================================================================
Performance Comparison Charts and Tables (continued)
- --------------------------------------------------------------------------------
Seligman Oregon Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
OR TE with sales charge without sales charge Lehman Index
10/15/86 $9,520.00 $10,000.00 $10,000.00
12/31/86 $9,739.36 $10,230.41 $10,169.95
3/31/87 $9,932.37 $10,433.16 $10,416.12
6/30/87 $9,282.37 $9,750.39 $10,133.40
9/30/87 $8,788.47 $9,231.59 $9,881.51
12/31/87 $9,343.08 $9,814.16 $10,323.06
3/31/88 $9,675.20 $10,163.02 $10,677.90
6/30/88 $10,025.46 $10,530.94 $10,884.91
9/30/88 $10,360.96 $10,883.35 $11,164.00
12/31/88 $10,667.96 $11,205.83 $11,372.13
3/31/89 $10,743.56 $11,285.24 $11,447.45
6/30/89 $11,440.47 $12,017.28 $12,125.07
9/30/89 $11,391.86 $11,966.22 $12,133.50
12/31/89 $11,781.78 $12,375.80 $12,599.05
3/31/90 $11,735.60 $12,327.29 $12,655.48
6/30/90 $12,051.00 $12,658.60 $12,950.98
9/30/90 $11,960.13 $12,563.14 $12,958.56
12/31/90 $12,546.86 $13,179.46 $13,517.50
3/31/91 $12,806.69 $13,452.38 $13,823.06
6/30/91 $13,075.79 $13,735.06 $14,118.14
9/30/91 $13,545.48 $14,228.43 $14,666.80
12/31/91 $13,904.60 $14,605.65 $15,158.56
3/31/92 $13,948.67 $14,651.94 $15,203.61
6/30/92 $14,377.50 $15,102.41 $15,779.88
9/30/92 $14,676.59 $15,416.57 $16,199.75
12/31/92 $14,985.89 $15,741.47 $16,494.50
3/31/93 $15,443.91 $16,222.57 $17,107.12
6/30/93 $15,952.27 $16,756.57 $17,666.86
9/30/93 $16,468.60 $17,298.93 $18,263.99
12/31/93 $16,619.69 $17,457.63 $18,520.92
3/31/94 $15,875.56 $16,675.98 $17,504.23
6/30/94 $16,013.45 $16,820.82 $17,696.92
9/30/94 $16,077.03 $16,887.61 $17,818.19
12/31/94 $15,861.06 $16,660.75 $17,563.56
3/31/95 $16,835.71 $17,684.52 $18,804.48
6/30/95 $17,171.00 $18,036.72 $19,257.44
9/30/95 $17,532.12 $18,416.06 $19,811.11
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1995, 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 are the
average annual total returns for the one-year and since-inception periods
through September 30, 1995, 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
<TABLE>
<CAPTION>
Since Since
One Five Inception One Inception
Year Years 10/15/86 Year 2/1/94
---- ----- -------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman Oregon Seligman Oregon
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 3.88% 6.90% 6.46% Class D with CDSL 6.86% n/a
Class A without Sales Charge 9.05 7.95 7.05 Class D without CDSL 7.86 1.64%
Lehman Index 11.18 8.86 7.97* Lehman Index 11.18 3.43
</TABLE>
*From 10/31/86.
See page 17 for footnotes.
16
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
Seligman South Carolina Tax-Exempt Series
The following plot points are represented by a graph in the printed material.
SC TE with sales charge without sales charge Lehman Index
6/30/87 $9,520.00 $10,000.00 $10,000.00
9/30/87 $9,009.03 $9,463.26 $9,751.43
12/31/87 $9,582.65 $10,065.81 $10,187.16
3/31/88 $9,906.29 $10,405.76 $10,537.34
6/30/88 $10,141.85 $10,653.20 $10,741.62
9/30/88 $10,466.76 $10,994.49 $11,017.03
12/31/88 $10,776.14 $11,319.46 $11,222.43
3/31/89 $10,833.49 $11,379.69 $11,296.75
6/30/89 $11,530.38 $12,111.72 $11,965.45
9/30/89 $11,451.60 $12,028.97 $11,973.78
12/31/89 $11,918.91 $12,519.84 $12,433.20
3/31/90 $11,873.26 $12,471.89 $12,488.89
6/30/90 $12,161.35 $12,774.50 $12,780.49
9/30/90 $11,964.34 $12,567.55 $12,787.97
12/31/90 $12,635.41 $13,272.46 $13,339.55
3/31/91 $12,881.38 $13,530.84 $13,641.09
6/30/91 $13,152.03 $13,815.13 $13,932.28
9/30/91 $13,633.01 $14,320.36 $14,473.73
12/31/91 $14,090.86 $14,801.30 $14,959.01
3/31/92 $14,154.25 $14,867.87 $15,003.46
6/30/92 $14,692.10 $15,432.84 $15,572.15
9/30/92 $15,007.05 $15,763.67 $15,986.49
12/31/92 $15,273.27 $16,043.31 $16,277.36
3/31/93 $15,782.75 $16,578.47 $16,881.92
6/30/93 $16,321.17 $17,144.05 $17,434.29
9/30/93 $16,886.27 $17,737.64 $18,023.56
12/31/93 $17,061.22 $17,921.41 $18,277.11
3/31/94 $16,007.22 $16,814.26 $17,273.80
6/30/94 $16,102.88 $16,914.75 $17,463.96
9/30/94 $16,106.44 $16,918.48 $17,583.63
12/31/94 $15,917.81 $16,720.34 $17,332.35
3/31/95 $17,068.52 $17,929.05 $18,556.93
6/30/95 $17,423.54 $18,301.98 $19,003.93
9/30/95 $17,828.08 $18,726.90 $19,550.32
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through September 30, 1995, 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
are the average annual total retuns for the one-year and since-inception periods
through September 30, 1995, 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
<TABLE>
<CAPTION>
Since Since
One Five Inception One Inception
Year Years 6/30/87 Year 2/1/94
---- ----- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Seligman South Carolina Seligman South Carolina
Tax-Exempt Series Tax-Exempt Series
Class A with Sales Charge 5.42% 7.26% 7.26% Class D with CDSL 8.63% n/a
Class A without Sales Charge 10.69 8.30 7.90 Class D without CDSL 9.63 1.09%
Lehman Index 11.18 8.86 8.46 Lehman Index 11.18 3.43
</TABLE>
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. Performance data quoted represent changes in price
and assume that all deductions within the periods are invested in additional
shares. The performance of Class D shares will be greater than or less than the
performance shown for Class A shares, based on differences in sales charges and
fees paid by shareholders.
The 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>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL SERIES
Face Ratings Market
State Amount Municipal Bonds Moody's/S&P+ Value
----- ------ --------------- ------------ ---------
<C> <C> <S> <C> <C>
Alabama--2.0% $2,000,000 Tuscaloosa G.O. Warrants, 6 3/4% due 7/1/2020.................... Aaa/AAA $ 2,135,780
Alaska--4.6% 310,000 Alaska Housing Finance Corp. (Collateralized Home Mortgage
Bonds), 7.30% due 6/1/2025.................................... Aaa/AAA 316,054
5,000,000 Valdez Marine Terminal Rev. (BP Pipeline Inc. Project),
5 1/2% due 10/1/2028.......................................... A1/AA- 4,536,550
Arizona--2.5% 3,000,000 Phoenix Civic Improvement Corporation (New City Hall Project),
5.10% due 7/1/2028............................................ Aa/AA+ 2,673,240
California--4.7% 2,500,000 Rancho Water District Financing Authority Rev.,
5.90% due 11/1/2015........................................... Aaa/AAA 2,468,000
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 2,533,950
Florida--4.5% 2,750,000 Jacksonville Electric Authority (Electric System Rev.),
5 1/4% due 10/1/2028.......................................... Aa1/AA 2,484,130
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 2,176,950
Illinois--14.3% 2,000,000 Chicago O'Hare International Airport Rev., 6 3/8% due 1/1/2012... Aaa/AAA 2,085,440
1,000,000 Illinois Health Facilities Authority Rev. (Northwestern Memorial
Hospital), 6.10% due 8/15/2014................................ Aa/AA 1,004,640
1,250,000 Illinois Health Facilities Authority Rev. (Edward Hospital Project),
6% due 2/15/2019.............................................. A/A 1,172,425
2,500,000 Illinois Health Facilities Authority Rev. (Northwestern Memorial
Hospital), 6% due 8/15/2024................................... Aa/AA 2,436,225
3,000,000 Metropolitan Water Reclamation District of Greater Chicago
G.O.'s Capital Improvement Bonds, 7% due 1/1/2011............. Aa/AA 3,410,010
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 4,885,600
Kansas--2.6% 2,500,000 Burlington Pollution Control Rev. (Kansas Gas & Electric
Co. Project), 7% due 6/1/2031.................................. Aaa/AAA 2,753,125
Kentucky--2.0% 1,880,000 Trimble County Pollution Control Rev. (Louisville
Gas & Electric Co. Project), 7 5/8% due 11/1/2020*............. Aa2/AA 2,094,264
Massachusetts--2.0% 2,000,000 Massachusetts Health &Education Facilities Authority Rev.
(Amherst College), 6.80% due 11/1/2021......................... Aa1/AA+ 2,142,220
New 4,000,000 New Hampshire Higher Educational & Health Facilities Authority
Hampshire--3.5% Rev. (Dartmouth College), 5 3/8% due 6/1/2023............... Aaa/AA+ 3,709,760
New York--3.5% 3,500,000 New York City G.O.'s, 7 1/4% due 8/15/2024....................... Baa1/BBB+ 3,662,575
North Dakota--2.0% 2,000,000 Mercer County Pollution Control Rev. (Otter Tail Power Company
Project), 6.90% due 2/1/2019................................... Aa3/AA- 2,128,080
Oklahoma--6.2% 5,000,000 Oklahoma Industrial Authority Health Facilities Rev. (Sisters
of Mercy Health System, St. Louis, Inc.), 5% due 6/1/2013..... Aa/AA 4,424,500
2,500,000 Oklahoma Industrial Authority Health Facilities Rev. (Sisters
of Mercy Health System, St. Louis, Inc.), 5% due 6/1/2018..... Aa/AA 2,145,225
South 2,000,000 Oconee County Pollution Control Rev. (Duke Power Company
Carolina--4.9% Project), 7 1/2% due 2/1/2017.............................. Aa2/AA- 2,241,600
3,000,000 South Carolina Public Service Authority Rev., 5 7/8% due 1/1/2023 Aaa/AAA 2,949,600
</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.
18
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL SERIES (continued)
Face Ratings Market
State Amount Municipal Bonds Moody's/S&P+ Value
----- ------ --------------- ------------ ---------
<C> <C> <S> <C> <C>
South Dakota--5.5% $6,000,000 South Dakota Housing Development Authority Rev.
(Homeownership Mortgage), 6.15% due 5/1/2026*................. Aa1/AA+ $ 5,745,060
Tennessee--2.9% 3,000,000 Metropolitan Government of Nashville & Davidson County G.O.'s,
6.15% due 5/15/2025........................................... Aa/AA 3,019,620
Texas--20.1% 3,000,000 Brazos River Authority Pollution Control Rev. (Houston Light &
Power Company Project), 7 7/8% due 11/1/2018*................. A2/A 3,128,670
3,700,000 Harris County Health Facilities Development Corp. Hospital Rev.
(St. Luke's Episcopal Hospital Project), 6 3/4% due 2/15/2021. Aa/AA 3,860,876
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 2,164,440
5,500,000 San Antonio Electric & Gas Rev., 5% due 2/1/2017................. Aa1/AA 4,836,480
2,000,000 Texas State Turnpike Authority Rev. (Dallas North Thruway--
Addison Airport Toll Tunnel Project), 6 3/4% due 1/1/2015..... Aaa/AAA 2,151,780
2,880,000 Texas Veterans' Housing Assistance G.O.'s, 6.80% due 12/1/2023*.. Aa/AA 2,949,667
2,000,000 Travis County Housing Finance Corporation (Single Family
Mortgage Rev.), 6.95% due 10/1/2027........................... NR/AAA 2,110,280
Utah--6.5% 7,500,000 Intermountain Power Agency Power Supply Rev.,
5 1/4% due 7/1/2017........................................... Aa/AA- 6,880,350
Washington--4.0% 4,000,000 Seattle Metropolitan Sewer Rev., 6.60% due 1/1/2032.............. Aaa/AAA 4,194,080
------------
Total Municipal Bonds (Cost $102,647,964)--98.3%...................................................................... 103,611,246
Other Assets Less Liabilities--1.7%................................................................................... 1,787,847
------------
NET ASSETS--100.0% ................................................................................................... $105,399,093
============
</TABLE>
<TABLE>
<CAPTION>
COLORADO SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 3,000,000 Adams County, CO Pollution Control Rev. (Public Service Co. of Colorado Project),
5 7/8% due 4/1/2014................................................................. Aaa/AAA $ 3,026,910
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 1,659,195
3,000,000 Colorado Health Facilities Authority Rev. (Sisters of Charity Health Care Systems, Inc.),
6% due 5/15/2013.................................................................... Aaa/AAA 3,017,460
1,630,000 Colorado Health Facilities Authority Rev. (Kaiser Permanente Medical Care Project),
9 1/8% due 8/1/2015................................................................. NR/AA 1,669,348
1,220,000 Colorado Health Facilities Authority Rev. (Mercy Medical Center of Durango Project),
6.20% due 11/15/2015................................................................ A1/A+ 1,214,327
3,000,000 Colorado Health Facilities Authority Rev. (North Colorado Medical Center),
6% due 5/15/2020.................................................................... Aaa/AAA 2,992,050
395,000 Colorado Housing Finance Authority Rev., 7 1/4% due 9/1/2006........................... NR/NR 411,167
605,000 Colorado Housing Finance Authority (Single Family Housing Rev.), 7 1/4% due 11/1/2010.. Aa/AA- 607,844
385,000 Colorado Housing Finance Authority (Single Family Residential Housing Rev.),
8% due 3/1/2017..................................................................... Aa/NR 400,161
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,000,000 Colorado Springs, CO Utilities Rev., 5 7/8% due 11/15/2017............................. Aaa/AAA $ 2,048,600
3,500,000 Colorado Springs, CO Utilities Rev., 6 1/8% due 11/15/2020............................. Aa/AA 3,518,725
1,000,000 Colorado Water Resources & Power Development Authority (Clean Water Bonds),
6 7/8% due 9/1/2011................................................................. Aa/AA+ 1,089,080
2,000,000 Colorado Water Resources & Power Development Authority (Clean Water Bonds),
6% due 9/1/2014..................................................................... Aa/AA 2,014,960
1,000,000 Colorado Water Resources & Power Development Authority (Clean Water Rev.),
6.30% due 9/1/2014.................................................................. Aa/AA 1,034,380
2,000,000 Denver, CO City & County (St. Anthony Hospital Systems Rev.), 7 3/4% due 5/1/2014...... Aaa/AAA 2,240,700
2,500,000 Denver, CO City & County (Sisters of Charity of Leavenworth Health Services
Corporation), 5% due 12/1/2023...................................................... Aa/NR 2,134,875
2,250,000 Denver, CO City & County Excise Tax Rev., 6 1/2% due 9/1/2014.......................... Aaa/AAA 2,363,828
1,985,000 Fort Collins, CO G.O.'s Water Bonds, 6 3/8% due 12/1/2012.............................. Aa/AA 2,077,203
3,000,000 Fountain Valley Authority, CO Water Treatment Rev., 6.80% due 12/1/2019................ A1/AA 3,181,500
1,480,000 Metropolitan Denver, CO Sewer Disposal District No. 001, 6 3/4% due 4/1/2012........... A1/AA 1,521,351
3,000,000 Metropolitan Denver, CO Wastewater Reclamation DistrictSewer Rev.,
4 3/4% due 4/1/2012................................................................. Aaa/AAA 2,624,820
2,000,000 Northgate Public Building Authority, CO (Landowner Assessment Lien),
8 1/4% due 12/1/2001**.............................................................. NR/NR 1,120,000
1,895,000 Northglenn, CO Joint Water & Wastewater Utility, 6.80% due 12/1/2008................... Aaa/NR 1,980,446
2,500,000 Platte River Power Authority, CO Power Rev., 6 1/8% due 6/1/2014....................... Aa/A+ 2,534,075
2,000,000 Pueblo County, CO Single Family Mortgage Rev., 7.05% due 11/1/2027..................... NR/AAA 2,119,880
3,000,000 University of Colorado Hospital Authority Hospital Rev., 6.40% due 11/15/2022.......... Aaa/AAA 3,106,560
2,000,000 Westminster, CO (Adams & Jefferson Counties) Sales & Use Tax Rev., 7% due 12/1/2008.... Aaa/AAA 2,227,500
------------
Total Municipal Bonds (Cost $52,758,021)--97.9%....................................................................... 53,936,945
Variable Rate Demand Notes (Cost $200,000)--0.4%...................................................................... 200,000
Other Assets Less Liabilities--1.7%................................................................................... 913,638
------------
NET ASSETS--100.0% ................................................................................................... $ 55,050,583
============
</TABLE>
<TABLE>
<CAPTION>
GEORGIA SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 1,095,000 Augusta, GA Water & Sewer Rev., 6 1/2% due 5/1/2011.................................... A/NR $ 1,159,101
1,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 7.40% due 11/1/2010*.............................................. A1/AA- 1,164,880
2,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 6 3/4% due 2/1/2012*.............................................. A1/AA- 2,089,840
750,000 Chatham County Hospital Authority, GA Rev. (Memorial Medical Center, Inc.),
7% due 1/1/2021..................................................................... Aaa/AAA 826,762
1,000,000 Clayton County, GA Water Authority Water & Sewerage Rev., 5 1/4% due 5/1/2012.......... Aaa/AAA 943,880
16,030,000 Colquitt County, GA Development Authority Rev., Zero Coupon Bond due 12/1/2021......... Aaa/NR 2,674,445
</TABLE>
- ----------------
* Interest income earned from this security is subject to the federal
alternative minimum tax.
+ Ratings have not been audited by Deloitte & Touche LLP.
** Non-income producing, security in default.
See notes to financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
GEORGIA SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,000,000 Columbia County, GA School District G.O.'s, 6 1/4% due 4/1/2013........................ Aaa/AAA $ 2,079,620
1,000,000 Columbia County, GA Water & Sewerage Rev., 6 1/4% due 6/1/2012......................... Aaa/AAA 1,033,690
5,000,000 DeKalb County, GA Water & Sewerage Rev., 5 3/4% due 10/1/2006.......................... Aaa/AAA 5,344,950
1,000,000 DeKalb County, GA Water & Sewerage Rev., 7% due 10/1/2014.............................. Aaa/AA 1,127,890
1,000,000 DeKalb County, GA Water & Sewerage Rev., 5 1/4% due 10/1/2023.......................... Aa/AA 919,120
700,000 DeKalb Private Hospital Authority, GA Rev. (Emory University Project),
6 3/4% due 4/1/2017................................................................. Aa1/AA- 725,998
300,000 DeKalb Private Hospital Authority, GA Rev. (Emory University Project), 7% due 4/1/2021. Aa1/AA- 316,800
1,000,000 Fayette County, GA School District G.O.'s, 6 1/8% due 3/1/2015......................... Aa/A+ 1,020,390
1,500,000 Fulco Hospital Authority, GA Rev. (Georgia Baptist Health Care System Project),
6 3/8% due 9/1/2022................................................................. Baa1/NR 1,411,080
3,000,000 Fulton County, GA School District G.O.'s, 5 5/8% due 1/1/2021.......................... Aa/AA 2,888,220
1,250,000 Gainesville, GA Water & Sewerage Rev., 5 1/4% due 11/15/2010........................... Aaa/AAA 1,214,338
2,975,000 Georgia Housing & Finance Authority Rev. (Single Family Mortgage),
5 1/4% due 12/1/2020................................................................ Aa/AA+ 2,627,193
3,000,000 Georgia Municipal Electric Authority Rev., 6% due 1/1/2026............................. Aaa/AAA 2,974,800
2,000,000 Georgia Municipal Gas Authority Rev. (Southern Storage Gas Project),
6.40% due 7/1/2014.................................................................. NR/A- 2,033,940
425,000 Georgia Residential Finance Authority Homeownership Mortgage Rev.,
7.20% due 12/1/2011*................................................................ Aa/AA+ 447,653
1,000,000 Georgia State G.O.'s, 5 3/4% due 2/1/2011.............................................. Aaa/AA+ 1,030,540
1,500,000 Gwinnett County, GA Hospital Authority Rev. Anticipation Certificates
(Gwinnett Hospital System, Inc. Project), 5% due 9/1/2019........................... Aaa/AAA 1,324,530
1,000,000 Gwinnett County, GA School District G.O.'s, 6.40% due 2/1/2012......................... Aa1/AA 1,097,230
735,000 Gwinnett County, GA Water & Sewerage Authority Rev., 6 1/2% due 8/1/2006............... Aa1/AA+ 742,548
1,500,000 Henry County School District, GA G.O.'s, 6.45% due 8/1/2011............................ A1/A+ 1,628,475
1,000,000 Metropolitan Atlanta Rapid Transit Authority, GA Sales Tax Rev., 7 1/4% due 7/1/2010... A1/AA- 1,097,980
500,000 Metropolitan Atlanta Rapid Transit Authority, GA Sales Tax Rev., 6 1/4% due 7/1/2018... A1/AA- 522,340
2,000,000 Monroe County, GA Development Authority Pollution Control Rev. (Georgia Power
Company Plant-- Scherer Project), 6% due 7/1/2025................................... Aaa/AAA 1,983,320
2,500,000 Private Colleges & Universities Authority, GA (Spelman College Project),
6.20% due 6/1/2014.................................................................. Aaa/AAA 2,566,450
500,000 Private Colleges & Universities Authority, GA (Emory University Project),
6 7/8% due 5/1/2015................................................................. Aa1/AA- 507,265
1,500,000 Private Colleges & Universities Authority, GA (Mercer University Project),
6 1/2% due 11/1/2015................................................................ Aaa/AAA 1,646,130
3,000,000 Private Colleges & Universities Authority, GA (Agnes Scott College Project),
5 5/8% due 6/1/2023................................................................. Aa/AA- 2,879,940
500,000 Private Colleges & Universities Authority, GA (Emory University Project),
6.40% due 10/1/2023................................................................. Aa1/AA- 513,400
2,000,000 Puerto Rico Highway & Transportation Authority Highway Rev., 5 1/2% due 7/1/2019....... Baa1/A 1,850,260
1,000,000 Putnam County, GA Development Authority Pollution Control Rev. (Georgia Power
Company Plant), 7 1/4% due 7/1/2021................................................. Aaa/AAA 1,044,340
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
GEORGIA SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,000,000 Savannah, GA Airport Rev., 6 1/4% due 1/1/2015*........................................ Aaa/AAA $ 2,037,120
3,505,000 Washington, GA Wilkes Payroll Development Authority Rev., Zero Coupon Bond
due 12/1/2021....................................................................... Aaa/NR 577,449
------------
Total Municipal Bonds (Cost $57,180,931)--97.2%....................................................................... 58,073,907
Variable Rate Demand Notes (Cost $500,000)--0.8%...................................................................... 500,000
Other Assets Less Liabilities--2.0%................................................................................... 1,183,528
------------
NET ASSETS--100.0% ................................................................................................... $ 59,757,435
============
</TABLE>
<TABLE>
<CAPTION>
LOUISIANA SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 1,055,000 Alexandria, LA Utilities Rev., 5.30% due 5/1/2013...................................... Aaa/AAA $ 991,710
3,000,000 Bastrop, LA Industrial Development Board Pollution Control Rev. (International Paper
Company Project), 6.90% due 3/1/2007................................................ A3/A- 3,208,980
2,420,000 East Baton Rouge Parish, LA Mortgage Finance Authority (Single Family
Mortgage Rev.), 5.40% due 10/1/2025................................................. Aaa/NR 2,125,075
1,000,000 East Baton Rouge Parish, LA Public Improvement Sales & Use Tax Rev.,
7 1/4% due 2/1/2009................................................................. Aaa/AAA 1,098,520
3,000,000 East Baton Rouge Parish, LA Public Improvement Sales & Use Tax Rev.,
5.90% due 2/1/2018.................................................................. Aaa/AAA 2,963,040
3,500,000 East Baton Rouge Parish, LA Sales Tax Rev., 4.90% due 2/1/2016........................ Aaa/AAA 3,088,260
2,000,000 Houma, LA Utilities Rev., 6 1/4% due 1/1/2012.......................................... Aaa/AAA 2,078,020
2,000,000 Jefferson Parish, LA Home Mortgage Authority (Single Family Mortgage Rev.),
6% due 12/1/2024*................................................................... Aa/NR 1,877,160
1,000,000 Jefferson Parish School Board, LA Sales Tax School Bonds, 6 1/4% due 2/1/2008.......... Aaa/AAA 1,053,630
1,250,000 Lafayette, LA Public Improvement Sales Tax Rev., 5 1/2% due 3/1/2009................... Aaa/AAA 1,246,400
3,000,000 Lafayette, LA Public Improvement Sales Tax Rev., 5.20% due 5/1/2011.................... Aaa/AAA 2,828,490
2,000,000 Louisiana Public Facilities Authority Hospital Rev. (Southern Baptist Hospitals Inc. Project),
6.80% due 5/15/2012................................................................. Aaa/AAA 2,273,420
2,250,000 Louisiana Public Facilities Authority Hospital Rev. (General Health Inc.),
6 1/2% due 11/1/2014................................................................ Aaa/AAA 2,304,810
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 1,039,170
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 2,060,520
3,000,000 Louisiana Public Facilities Authority Hospital Rev. (General Health Inc.),
6% due 11/1/2022.................................................................... Aaa/AAA 2,960,250
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 2,796,575
1,900,000 Louisiana Public Facilities Authority Rev. (Sisters of Mercy Health System, St. Louis, Inc.),
5% due 6/1/2019..................................................................... Aa/AA 1,670,005
3,000,000 Louisiana Public Facilities Authority Rev. (Tulane University), 5 3/4% due 2/15/2021... Aaa/AAA 2,917,830
</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.
22
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 4,000,000 Louisiana State G.O.'s, 6 1/2% due 5/1/2011............................................ Aaa/AAA $ 4,245,720
1,000,000 Louisiana State University & Agricultural & Mechanical College Auxiliary Rev.,
5 3/4% due 7/1/2014................................................................. Aaa/AAA 984,120
190,000 Ouachita Parish, LA Industrial Development Rev. (International Paper Company),
6 1/2% due 4/1/2006................................................................. NR/NR 189,141
500,000 Saint Bernard Parish, LA Water and Sewer Commission Water & Sewer Rev.,
8% due 8/1/2006..................................................................... Aaa/AAA 526,565
1,250,000 Saint Charles Parish, LA Environmental Improvement Rev. (Louisiana Power
and Light Company Project), 6.20% due 5/1/2023*..................................... Baa2/BBB 1,170,262
2,960,000 Saint Charles Parish, LA Waterworks & Wastewater District Utility Rev.,
7.15% due 7/1/2016.................................................................. Aaa/AAA 3,309,606
1,000,000 Saint Tammany, LA Public Trust Financing Authority (Single Family Mortgage Rev.),
7.20% due 7/1/2010.................................................................. NR/AAA 1,062,700
1,555,000 Shreveport, LA G.O.'s, 7 1/2% due 4/1/2006............................................. Aaa/AAA 1,747,742
2,000,000 Shreveport, LA Water & Sewer Rev., 7 1/8% due 12/1/2014................................ Aaa/AAA 2,127,760
2,050,000 Sulphur, LA Housing & Mortgage Finance Trust (Residential Mortgage Rev.),
7 1/4% due 12/1/2010................................................................ Aaa/AAA 2,248,789
3,000,000 Tangipahoa Parish, LA Hospital Service District No. 1 Rev. (Northoaks Medical Center),
6 1/4% due 2/1/2024................................................................. Aaa/AAA 3,045,270
------------
Total Municipal Bonds (Cost $59,271,306)--98.1%....................................................................... 61,239,540
Variable Rate Demand Notes (Cost $200,000)--0.3%...................................................................... 200,000
Other Assets Less Liabilities--1.6%................................................................................... 1,013,452
------------
NET ASSETS--100.0% ................................................................................................... $ 62,452,992
============
</TABLE>
<TABLE>
<CAPTION>
MARYLAND SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 3,000,000 Anne Arundel County, MD Pollution Control Rev. (Baltimore Gas and
Electric Company Project), 6% due 4/1/2024.......................................... A2/A $ 2,995,890
2,000,000 Baltimore, MD Consolidated Public Improvement G.O.'s, 6 3/8% due 10/15/2006............ Aaa/AAA 2,241,960
2,500,000 Baltimore, MD Port Facilities Rev. (Consolidated Coal Sales Co. Project),
6 1/2% due 10/1/2011................................................................ Aa3/AA 2,710,800
2,000,000 Frederick County, MD Public Facilities G.O.'s, 6.30% due 7/1/2011...................... Aaa/AA- 2,221,640
2,000,000 Howard County, MD Metropolitan District Project G.O.'s, 5 1/2% due 8/15/2022........... Aa1/AA+ 1,905,580
4,000,000 Maryland Capital Improvement G.O.'s, 5.20% due 4/15/2006............................... Aaa/AAA 4,081,320
1,000,000 Maryland Community Development Administration Dept. of Economic & Community
Development (Single Family Program), 7 3/4% due 4/1/2009............................ Aa/NR 1,050,780
2,000,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Multi-Family Housing), 7.70% due 5/15/2020*............................ Aa/NR 2,141,220
2,500,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Single Family Program), 6.80% due 4/1/2024*............................ Aa/NR 2,568,550
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
MARYLAND SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,500,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Multi-Family Housing), 6.70% due 5/15/2027............................. Aa/NR $ 2,558,850
3,000,000 Maryland Health & Higher Educational Facilities Authority Rev. (Johns Hopkins
University), 7 1/2% due 7/1/2020.................................................... Aa1/AA- 3,299,190
2,750,000 Maryland Health & Higher Educational Facilities Authority Rev. (Ann Arundel Medical
Center), 5% due 7/1/2023............................................................ Aaa/AAA 2,390,218
2,000,000 Maryland Health & Higher Educational Facilities Authority Rev. (Suburban Hospital),
5 1/8% due 7/1/2021................................................................. A1/A 1,697,780
3,000,000 Maryland Health & Higher Educational Facilities Authority Rev. (Francis Scott Key
Medical Center), 5% due 7/1/2023.................................................... Aaa/AAA 2,607,510
1,000,000 Maryland National Capital Park & Planning Commission G.O.'s (Prince George's County),
6.90% due 7/1/2010.................................................................. Aa/AA 1,089,680
2,000,000 Maryland Transportation Authority Rev. (Baltimore/Washington International
Airport Project), 6 1/4% due 7/1/2014*.............................................. Aaa/AAA 2,061,340
3,000,000 Maryland Transportation Authority Rev. Transportation Facilities Projects, 5 3/4%
due 7/1/2015........................................................................ A1/A+ 2,947,590
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
6.70% due 9/1/2013.................................................................. Aa/AA 1,123,560
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
7.10% due 9/1/2013.................................................................. Aa/AA 1,143,540
2,500,000 Montgomery County, MD Consolidated Public Improvement G.O.'s,
4.90% due 10/1/2013................................................................. Aaa/AAA 2,268,775
220,000 Montgomery County, MD Housing Opportunities Commission (Multi-Family
Housing Rev.), 9 3/8% due 7/1/2015.................................................. Aa/NR 224,400
455,000 Montgomery County, MD Housing Opportunities Commission (Single Family
Mortgage Rev.), 7 3/8% due 7/1/2017................................................. Aa/NR 484,088
2,000,000 Northeast Maryland Waste Disposal Authority Solid Waste Rev. (Montgomery County
Resource Recovery Project), 6.30% due 7/1/2016*..................................... A/NR 2,014,200
280,000 Puerto Rico Housing Finance Corporation (Single Family Mortgage Rev. Portfolio 1),
7.80% due 10/15/2021................................................................ Aaa/AAA 298,757
1,000,000 Puerto Rico Housing Finance Corporation (Single Family Mortgage Rev. Portfolio 1-C),
6.85% due 10/15/2023................................................................ Aaa/AAA 1,046,380
1,500,000 University of Maryland Auxiliary Facilities and Tuition Rev., 6 1/2% due 4/1/2011...... NR/AAA 1,646,940
2,500,000 Washington Suburban Sanitary District, MD, 6 1/2% due 1/1/2016......................... Aa1/AA 2,663,800
------------
Total Municipal Bonds (Cost $51,563,137)--94.0%....................................................................... 53,484,338
Variable Rate Demand Notes (Cost $2,400,000)--4.2%.................................................................... 2,400,000
Other Assets Less Liabilities--1.8%................................................................................... 1,035,695
------------
NET ASSETS--100.0% ................................................................................................... $ 56,920,033
============
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 5,000,000 Boston, MA Water & Sewer Commission General Rev., 5 1/4% due 11/1/2019................. A/A $ 4,554,750
2,000,000 Boston, MA Water & Sewer Commission General Rev., 7 1/8% due 11/1/2009................. Aaa/AAA 2,239,280
3,000,000 Boston, MA Water & Sewer Commission General Rev., 7.10% due 11/1/2019.................. Aaa/AAA 3,356,130
5,000,000 Massachusetts Bay Transportation Authority Transportation System Rev.,
6.10% due 3/1/2023.................................................................. A1/A+ 4,999,700
1,665,000 Massachusetts Education Loan Authority Education Loan Rev., 8% due 6/1/2002............ NR/AAA 1,743,172
3,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Daughters of Charity
National Health Systems--Carney Hospital), 6% due 7/1/2009.......................... Aa/NR 3,054,390
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 2,521,250
915,000 Massachusetts Health & Educational Facilities Authority Rev. (Youville Hospital),
9.10% due 8/1/2015.................................................................. NR/NR 952,176
7,500,000 Massachusetts Health & Educational Facilities Authority Rev. (Harvard University),
5 1/2% due 12/1/2015................................................................ Aaa/AAA 7,364,925
2,500,000 Massachusetts Health & Educational Facilities Authority Rev. (Lahey Clinic
Medical Center), 7 5/8% due 7/1/2018................................................ Aaa/AAA 2,763,550
5,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Newton-Wellesley
Hospital), 6% due 7/1/2018.......................................................... Aaa/AAA 4,968,750
3,295,000 Massachusetts Health & Educational Facilities Authority Rev. (Tufts University),
7.40% due 8/1/2018.................................................................. AAA/A+ 3,630,826
705,000 Massachusetts Health & Educational Facilities Authority Rev. (Tufts University),
7.40% due 8/1/2018.................................................................. A1/A+ 778,257
2,500,000 Massachusetts Health & Educational Facilities Authority Rev. (Suffolk University),
8 1/8% due 7/1/2020................................................................. Baa/BBB 2,890,850
2,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Boston College),
6 5/8% due 7/1/2021................................................................. Aaa/AAA 2,123,420
1,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Suffolk University),
6.35% due 7/1/2022.................................................................. NR/AAA 1,024,120
5,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Brigham & Women's
Hospital), 6 3/4% due 7/1/2024...................................................... A1/A+ 5,194,650
3,000,000 Massachusetts Health & Educational Facilities Authority Rev. (New England
Medical Center), 5 3/8% due 7/1/2024................................................ Aaa/AAA 2,767,320
1,000,000 Massachusetts Health & Educational Facilities Authority Rev. (New England
Medical Center), 6 5/8% due 7/1/2025................................................ Aaa/AAA 1,060,820
1,600,000 Massachusetts Housing Finance Agency Rev. (Residential Development),
6 1/4% due 11/15/2012............................................................... Aaa/AAA 1,613,120
4,705,000 Massachusetts Housing Finance Agency Rev. (Single Family Housing Rev.),
7.30% due 6/1/2014.................................................................. Aa/A+ 4,878,332
3,195,000 Massachusetts Industrial Finance Agency Rev. (Phillips Academy), 5 3/8% due 9/1/2023... Aa1/AA 2,946,110
755,000 Massachusetts Municipal Wholesale Electric Company Power Supply System Rev.,
6 3/4% due 7/1/2017................................................................. A/BBB+ 798,820
2,450,000 Massachusetts Special Obligation Rev. (Highway Improvement Loan), 6% due 6/1/2013...... A1/AA 2,459,089
2,500,000 Massachusetts Special Obligation Rev. (Highway Improvement Loan),
5.80% due 6/1/2014.................................................................. A1/AA- 2,463,325
5,000,000 Massachusetts State Consolidated Loan G.O.'s, 7% due 12/1/2010......................... Aaa/A+ 5,575,550
</TABLE>
- ----------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
25
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 5,000,000 Massachusetts State Consolidated Loan G.O.'s, 5 3/4% due 5/1/2012...................... Aaa/AAA $ 5,040,100
5,000,000 Massachusetts State Consolidated Loan G.O.'s, 4 7/8% due 10/1/2013..................... A1/A+ 4,466,750
8,475,000 Massachusetts State Port Authority Rev., 7 1/8% due 7/1/2012........................... Aa/AA 8,590,684
5,500,000 Massachusetts State Water Resources Authority Rev., 6% due 8/1/2024.................... Aaa/AAA 5,462,105
5,000,000 Massachusetts Turnpike Authority Turnpike Rev., 5 1/8% due 1/1/2023.................... Aaa/AAA 4,434,200
730,000 Puerto Rico Electric Power Authority Power Rev., 7 1/8% due 7/1/2014................... Baa1/A- 790,481
1,000,000 Puerto Rico Highway & Transportation Authority Highway Rev., 5 1/2% due 7/1/2019....... Baa1/A 925,130
2,750,000 Puerto Rico Port Authority Rev., 6% due 7/1/2021*...................................... Aaa/AAA 2,749,670
1,230,000 Virgin Islands Port Authority Rev. (Marine Division), 10 1/8% due 11/1/2005............ NR/NR 1,262,029
------------
Total Municipal Bonds (Cost $109,246,218)--96.4%...................................................................... 112,443,831
Variable Rate Demand Notes (Cost $2,400,000)--2.1%.................................................................... 2,400,000
Other Assets Less Liabilities--1.5%................................................................................... 1,757,580
------------
NET ASSETS--100.0% ................................................................................................... $116,601,411
============
</TABLE>
<TABLE>
<CAPTION>
MICHIGAN SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 5,000,000 Capital Region Airport Authority, MI Airport Rev., 6.70% due 7/1/2021*................. Aaa/AAA $ 5,294,400
5,000,000 Clarkston Community Schools, MI G.O.'s, 5 3/4% due 5/1/2016............................ Aaa/AAA 4,946,150
5,000,000 Detroit, MI Distributable State Aid G.O.'s, 7.20% due 5/1/2009......................... Aaa/AAA 5,554,150
6,000,000 Detroit, MI Water Supply System Rev., 6 1/4% due 7/1/2012.............................. Aaa/AAA 6,224,280
1,500,000 Eastern Michigan University Rev. (Board of Regents), 6 3/8% due 6/1/2014............... Aaa/AAA 1,558,935
3,000,000 Grand Haven, MI Electric System Rev., 5 1/4% due 7/1/2013.............................. Aaa/AAA 2,802,510
7,000,000 Grand Rapids, MI Water Supply System Rev., 5 3/4% due 1/1/2018......................... Aaa/AAA 6,785,800
1,000,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2012............................................... Aaa/AAA 1,032,510
1,500,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2022............................................... Aaa/AAA 1,525,065
3,240,000 Holland School District, MI G.O.'s, 6 1/4% due 5/1/2007................................ Aaa/AAA 3,479,404
3,000,000 Holland School District, MI G.O.'s (School Building and Site Bonds), 7 3/8% due 5/1/2019 NR/NR 3,250,440
3,000,000 Jackson County, MI Hospital Finance Authority Rev. (W.A. Foote Memorial Hospital),
7 1/4% due 6/1/2012................................................................. NR/NR 3,196,440
4,000,000 Jackson County, MI Hospital Finance Authority Rev. (W.A. Foote Memorial Hospital),
5 1/4% due 6/1/2023................................................................. Aaa/AAA 3,587,080
5,000,000 Kent County, MI Airport Rev., 6.10% due 1/1/2025*...................................... Aa/AAA 5,007,450
1,250,000 Kent County, MI Building Authority G.O.'s (Correctional Facility Improvements),
6% due 12/1/2009.................................................................... Aa/AAA 1,300,762
5,000,000 Kent County, MI Refuse Disposal System G.O.'s, 8.40% due 11/1/2010..................... Aa/AAA 5,525,800
2,775,000 Kentwood, MI Public Schools Building & Site G.O.'s, 6.40% due 5/1/2015................. Aa/A+ 2,876,676
1,250,000 Lansing, MI Water Supply & Electric Utility System Rev., 5 3/4% due 7/1/2002........... Aa/AA 1,294,587
</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.
26
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 1,250,000 Lansing, MI Water Supply & Electric Utility System Rev., 5 3/4% due 7/1/2003........... Aa/AA $ 1,292,650
2,750,000 Michigan Municipal Bond Authority Rev. (Local Government Loan Program),
4 3/4% due 12/1/2009................................................................ Aaa/AAA 2,530,743
4,000,000 Michigan Municipal Bond Authority Rev. (Local Government Loan Program--Group 2),
7.30% due 5/1/2016.................................................................. NR/AAA 4,157,360
3,000,000 Michigan Public Power Agency Rev. (Belle River Project), 5 1/4% due 1/1/2018........... A1/AA- 2,766,750
2,500,000 Michigan State Building Authority Series II, 6% due 10/1/2009.......................... Aaa/AAA 2,565,750
4,000,000 Michigan State Building Authority Rev., 6 1/4% due 10/1/2020........................... A1/AA- 4,042,520
1,750,000 Michigan State Comprehensive Transportation Rev., 7 5/8% due 5/1/2011.................. A1/AA- 1,930,320
2,500,000 Michigan State Comprehensive Transportation Rev., 7 3/4% due 8/1/2011.................. NR/NR 2,581,200
6,500,000 Michigan State G.O.'s (Environmental Protection Program), 5.40% due 11/1/2019.......... A1/AA 6,021,535
2,000,000 Michigan State Hospital Finance Authority Hospital Rev. (Sparrow Obligated Group),
6 1/2% due 11/15/2011............................................................... Aaa/AAA 2,094,800
5,000,000 Michigan State Hospital Finance Authority Hospital Rev. (St. John Hospital),
5 3/4% due 5/15/2016................................................................ Aaa/AAA 4,904,900
5,000,000 Michigan State Hospital Finance Authority Hospital Rev. (Henry Ford Health System),
5 3/4% due 9/1/2017................................................................. Aaa/AAA 4,848,300
1,250,000 Michigan State Hospital Finance Authority Hospital Rev. (Crittenton Hospital),
6 3/4% due 3/1/2020................................................................. Aaa/AAA 1,321,050
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 1,071,670
5,000,000 Michigan State Hospital Finance Authority Hospital Rev. (Detroit Medical Center),
6 1/2% due 8/15/2018................................................................ A/A 5,032,050
2,500,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.80% due 12/1/2016................................................................. NR/AA+ 2,604,000
5,000,000 Michigan State Housing Development Authority Rev. (Rental Housing),
6.65% due 4/1/2023.................................................................. NR/A+ 5,101,650
3,000,000 Michigan State Strategic Fund Pollution Control Rev. (Detroit Edison Company),
6 1/2% due 2/15/2016................................................................ Aaa/AAA 3,155,310
5,000,000 Michigan State Strategic Fund Pollution Control Rev. (General Motors Corp.),
6.20% due 9/1/2020.................................................................. Aa/BBB+ 5,020,500
5,000,000 Michigan State Trunk Line Rev., 5 1/2% due 10/1/2021................................... A1/AA- 4,660,350
2,000,000 Midland, MI Water Supply System Rev., 7.20% due 4/1/2010............................... A/A+ 2,147,940
5,000,000 University of Michigan Hospital Rev., 6 3/8% due 12/1/2024............................. Aa/AA 5,077,300
5,000,000 Wayne, MI State University Rev., 5.65% due 11/15/2015.................................. Aaa/AAA 4,867,800
3,000,000 Wyandotte, MI Electric Rev., 6 1/4% due 10/1/2017...................................... Aaa/AAA 3,085,170
------------
Total Municipal Bonds (Cost $141,921,528)--97.0%...................................................................... 148,124,057
Variable Rate Demand Notes (Cost $2,000,000)--1.3%.................................................................... 2,000,000
Other Assets Less Liabilities--1.7%................................................................................... 2,637,109
------------
NET ASSETS--100.0% ................................................................................................... $152,761,166
============
</TABLE>
- ----------------
+ Ratings have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
27
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 6,250,000 Becker, MN Pollution Control Rev. (Northern States Power Company),
6.80% due 4/1/2007.................................................................. A2/A+ $ 6,727,375
2,000,000 Breckenridge, MN Hospital Facility Rev. (Franciscan Sisters Health Care, Inc.),
9 3/8% due 9/1/2017................................................................. NR/NR 2,221,660
3,000,000 Dakota County, MN G.O.'s Capital Improvement, 7.30% due 2/1/2008....................... A1/NR 3,195,870
5,000,000 Edina, MN Housing Development Rev. (Edina Park Plaza Project), 7.70% due 12/1/2028..... Aa/NR 5,297,650
2,000,000 Goodhue County, MN Hospital Facilities Rev. (St. John's Regional Health Center),
8 3/4% due 9/1/2016................................................................. NR/NR 2,204,360
1,200,000 Lakeville, MN Independent School District No. 194 G. O.'s, 6.70% due 2/1/2015.......... Aaa/AAA 1,288,584
700,000 Lewiston, MN First Mortgage Nursing Home Rev. (Deloughery Home Project),
9.80% due 1/15/2013................................................................. NR/A- 757,498
7,500,000 Minneapolis, MN Community Development Agency Tax Increment Rev., Zero Coupon
Bond due 9/1/2003................................................................... Aaa/AAA 5,067,675
5,500,000 Minneapolis, MN Community Development Agency Tax Increment Rev., Zero Coupon
Bond due 9/1/2004................................................................... Aaa/AAA 3,506,250
3,000,000 Minneapolis-St. Paul Metropolitan Area (Metropolitan Council of the Twin Cities), MN,
5 1/2% due 12/1/2006................................................................ Aaa/AAA 3,008,370
1,400,000 Minneapolis-St. Paul Metropolitan Area (Metropolitan Council of the Twin Cities), MN,
5 1/2% due 12/1/2012................................................................ Aaa/AAA 1,380,764
3,000,000 Minneapolis-St. Paul, MN Housing & Redevelopment Authority Health Care Rev.
(Children's Health Care), 5 1/2% due 8/15/2025...................................... Aaa/AAA 2,848,260
5,500,000 Minneapolis, MN G.O.'s, 6 1/2% due 3/1/2013............................................ Aaa/AAA 5,739,250
2,000,000 Minneapolis, MN Hospital Facilities Rev. (Lifespan, Inc.--Abbott-Northwestern
Hospital, Inc.), 7 7/8% due 12/1/2014............................................... Aaa/AAA 2,192,260
1,500,000 Minneapolis, MN Tax Increment Rev., 7% due 3/1/2003.................................... Aaa/AAA 1,592,505
940,000 Minnesota Housing Finance Agency (Housing Development), 6 1/4% due 2/1/2020............ A1/AA 944,117
5,000,000 Minnesota Housing Finance Agency (Single Family Mortgage), 6.85% due 1/1/2024*......... Aa/AA+ 5,155,100
5,500,000 Minnesota Public Facilities Authority Water Pollution Control Rev., 7.10% due 3/1/2012. NR/AAA 6,012,600
2,500,000 North Suburban Hospital District, MN Anoka & Ramsey Counties
Hospital Rev. (Health Central System Project), 10% due 10/1/2014.................... Aaa/NR 2,575,800
5,000,000 Northern Municipal Power Agency, MN Electric System Rev., 7 1/4% due 1/1/2016.......... A/A 5,488,500
2,500,000 Northern Municipal Power Agency, MN Electric System Rev., 7.40% due 1/1/2018........... Aaa/AAA 2,772,325
5,000,000 Olmsted County, MN Housing & Redevelopment Authority Public Facility Rev.,
7% due 2/1/2013..................................................................... Aaa/AA+ 5,571,900
2,000,000 Ramsey & Washington Counties, MN Resource Recovery Rev. (Northern States Power
Company Project), 6 3/4% due 12/1/2006.............................................. A1/AA- 2,160,360
4,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo Medical Center),
7.45% due 11/15/2006................................................................ NR/AA+ 4,526,840
4,500,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo Medical Center),
6 1/4% due 11/15/2014............................................................... NR/AA+ 4,644,720
1,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo Medical Center),
6 1/4% due 11/15/2021............................................................... NR/AA+ 1,024,340
1,275,000 Saint Cloud, MN Hospital Facilities Rev. (Saint Cloud Hospital), 6 3/4% due 7/1/2011... Aaa/AAA 1,379,116
2,000,000 Saint Cloud, MN Hydroelectric Generation Facility Gross Rev., 7 3/8% due 12/16/2018.... NR/A- 2,102,200
</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.
28
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 1,575,000 Saint Paul, MN Housing & Redevelopment Authority Healthcare Facility Rev.
(Children's Hospital), 7% due 12/1/2019............................................. A/A+ $ 1,671,784
301,897 Saint Paul, MN Science Museum Facilities Rev. (Science Museum of Minnesota Project),
7 1/2% due 12/15/2001............................................................... NR/AAA 328,471
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 3,422,550
765,000 Saint Paul Port Authority, MN Industrial Development Rev. Series E, 9 1/8% due 10/1/2010 NR/CCC 683,726
4,125,000 Saint Paul Port Authority, MN Industrial Development Rev. Series L, 7 1/2% due 12/1/2010 NR/CCC 3,182,025
685,000 Saint Paul Port Authority, MN Industrial Development Rev. Series V, 10 1/4%
due 12/1/2013....................................................................... NR/CCC 668,313
250,000 Saint Paul Port Authority, MN Industrial Development Rev. Series H, 9 1/8% due 12/1/2014 NR/CCC 220,865
1,500,000 Saint Paul Port Authority, MN Industrial Development Rev. Series I, 9 1/8% due 12/1/2014 NR/CCC 1,325,190
250,000 Saint Paul Port Authority, MN Industrial Development Rev. Series L, 9 3/4% due 12/1/2014 NR/CCC 233,608
750,000 Saint Paul Port Authority, MN Industrial Development Rev. Series M, 7% due 12/1/2016... NR/CCC 526,080
1,500,000 Southern Minnesota Municipal Power Agency--Power Supply System Rev.,
5 3/4% due 1/1/2018................................................................. A/A+ 1,448,730
750,000 Southern Minnesota Municipal Power Agency--Power Supply System Rev.,
5 3/4% due 1/1/2018................................................................. Aaa/AAA 751,785
1,500,000 Southern Minnesota Municipal Power Agency--Power Supply System Rev.,
4 3/4% due 1/1/2016................................................................. A/A+ 1,278,600
5,000,000 University of Minnesota G.O.'s, 7 3/4% due 2/1/2010.................................... Aa/AAA 5,163,450
3,500,000 Washington County, MN G.O.'s, 5.90% due 2/1/2010....................................... Aa/AA- 3,555,020
3,000,000 Western Minnesota Municipal Power Agency--Power Supply Rev., 7% due 1/1/2013........... A1/A 3,145,500
9,580,000 Western Minnesota Municipal Power Agency--Power Supply Rev., 6 3/8% due 1/1/2016....... Aaa/AAA 9,996,730
------------
Total Municipal Bonds (Cost $122,177,451)--95.6%..................................................................... 128,988,676
------------
Variable Rate Demand Notes
----------------------------
1,000,000 Gulf Coast Waste Disposal Authority, TX Solid Waste Disposal Rev. due 8/1/2023*........ VMIG-1/NR 1,000,000
500,000 Jackson County, MS Individual Sewer Facilities Rev. (Chevron U.S.A. Inc. Project)
due 12/15/2024*..................................................................... P-1/NR 500,000
500,000 Lincoln County, WY Pollution Control Rev. (Exxon Project) due 11/1/2014................ P-1/A-1+ 500,000
4,900,000 New York State Energy Research & Development Authority (Niagara Mohawk)
due 7/1/2015........................................................................ NR/A-1+ 4,900,000
------------
Total Variable Rate Demand Notes (Cost $6,900,000)--5.1%.............................................................. 6,900,000
------------
Other Assets Less Liabilities--(0.7)%................................................................................. (935,880)
------------
NET ASSETS--100.0% ................................................................................................... $134,952,796
============
</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.
29
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
MISSOURI SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,000,000 Columbia, MO Water and Electric System Improvement Rev., 6 1/8% due 10/1/2012.......... A1/AA $ 2,063,460
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 1,565,535
3,775,000 Kansas City, MO Water Rev., 6 1/4% due 12/1/2009....................................... Aa/AA 3,867,752
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 1,342,826
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 400,987
1,250,000 Kansas City School District Building Corporation, MO Leasehold Rev., 6 1/2% due 2/1/2008 Aaa/AAA 1,340,763
1,500,000 Kansas City School District Building Corporation, MO Leasehold Rev.,
7.90% due 2/1/2008.................................................................. Aaa/AAA 1,648,785
1,000,000 Liberty, MO Waterworks Improvement Rev., 6.30% due 10/1/2012........................... Aaa/AAA 1,043,040
2,000,000 Little Blue Valley, MO Sewer District Rev., 7 1/4% due 10/1/2007....................... Aaa/AAA 2,164,660
1,000,000 Missouri School Boards Pooled Financing Program Certificates of Participation,
7 3/8% due 3/1/2006................................................................. Aaa/AAA 1,075,870
2,000,000 Missouri School Boards Pooled Financing Program Certificates of Participation,
7% due 3/1/2006..................................................................... Aaa/AAA 2,138,040
1,000,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(State Revolving Fund Program), 6.55% due 7/1/2014.................................. Aa/NR 1,048,710
2,500,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(Union Electric Company Project), 5.45% due 10/1/2028*.............................. A1/AA- 2,203,075
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 2,366,175
2,000,000 Missouri State G.O.'s, 5 5/8% due 4/1/2017............................................. Aaa/AAA 1,983,980
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 2,334,125
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 1,518,825
3,500,000 Missouri State Health & Educational Facilities Authority Rev. (SSM Health Care),
6 1/4% due 6/1/2016................................................................. Aaa/AAA 3,581,865
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 1,114,420
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 869,810
2,500,000 Missouri State Health Facilities Rev. (Barnes-Jewish, Inc./Christian Health Services),
5 1/4% due 5/15/2021................................................................ Aa/AA 2,208,475
90,000 Missouri State Housing Development Commission (Single Family Residential
Mortgage Rev.), 8% due 8/1/2013..................................................... NR/AAA 95,470
860,000 Missouri State Housing Development Commission Housing Development Bonds
(Federally Insured Mortgage Loans), 6% due 10/15/2019............................... Aa/AA+ 846,515
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- 1,714,920
2,400,000 Southeast Missouri Correctional Facility Lease Rev. (Missouri State Project),
5 3/4% due 10/15/2016............................................................... Aa/AA 2,356,824
3,000,000 Springfield, MO Public Utility Rev., 5 1/4% due 3/1/2007............................... Aa/AA 3,024,120
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
MISSOURI SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,500,000 Springfield, MO Waterworks Rev., 5.60% due 5/1/2023.................................... Aa/A+ $ 2,395,000
2,750,000 University of Missouri University Revenues Refunding & Improvement Systems Facilities,
5 1/2% due 11/1/2023................................................................ Aa/AA+ 2,603,398
------------
Total Municipal Bonds (Cost $49,150,196)--98.5%....................................................................... 50,917,425
Variable Rate Demand Notes (Cost $200,000)--0.4%...................................................................... 200,000
Other Assets Less Liabilities--1.1%................................................................................... 566,509
------------
NET ASSETS--100.0% ................................................................................................... $ 51,683,934
============
</TABLE>
<TABLE>
<CAPTION>
NEW YORK SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 5,000,000 Metropolitan Transportation Authority, NY (Commuter Facilities Rev.),
6 1/2% due 7/1/2024................................................................. Baa1/BBB+ $ 5,100,050
2,500,000 Municipal Assistance Corporation for the City of New York, NY, 6.90% due 7/1/2007...... Aa/AA- 2,663,275
4,000,000 New York City Municipal Water Finance Authority, NY Water & Sewer System Rev.,
5 3/4% due 6/15/2018................................................................ Aaa/AAA 3,886,040
2,500,000 New York City, NY G.O.'s, 7 1/4% due 8/15/2024......................................... Baa1/BBB+ 2,616,125
5,000,000 New York City, NY Health & Hospitals Corporation Health System,
5 3/4% due 2/15/2022................................................................ Aaa/AAA 4,847,850
3,500,000 New York State Dormitory Authority Rev. (Rockefeller University), 7 3/8% due 7/1/2014.. Aaa/AAA 3,858,995
5,000,000 New York State Dormitory Authority Rev. (Fordham University), 5 3/4% due 7/1/2015...... Aaa/AAA 4,947,100
3,540,000 New York State Dormitory Authority Rev. (Colgate University), 6 1/2% due 7/1/2021...... Aaa/AAA 3,742,346
5,000,000 New York State Dormitory Authority Rev. (Skidmore College), 5 3/8% due 7/1/2023........ Aaa/AAA 4,630,300
4,500,000 New York State Energy Research & Development Authority Electric Facilities Rev.
(Consolidated Edison Co. NY Inc. Project), 7 1/2% due 1/1/2026*..................... A1/A+ 4,868,955
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 2,638,800
3,000,000 New York State Environmental Facilities Corporation Pollution Control Rev.
(State Water--Revolving Fund), 6.90% due 11/15/2015................................. Aaa/AAA 3,376,110
3,000,000 New York State Housing Finance Agency Rev. (Phillips Village Project),
7 3/4% due 8/15/2017*............................................................... A/NR 3,232,770
3,500,000 New York State Local Government Assistance Corp., 6% due 4/1/2024...................... A/A 3,438,995
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 4,082,960
2,000,000 New York State Mortgage Agency (Homeownership Mortgage), 7 1/2% due 4/1/2016........... Aa/NR 2,126,400
5,000,000 New York State Power Authority General Purpose Rev., 6 1/2% due 1/1/2019............... Aaa/AAA 5,283,450
4,000,000 New York State Thruway Authority General Rev., 6% due 1/1/2025......................... Aaa/AAA 4,006,040
4,000,000 New York State Thruway Authority Local Highway and Bridge Service Contract Bonds,
7 1/4% due 1/1/2010................................................................. Baa1/BBB 4,329,600
2,500,000 Niagara Falls, NY Bridge Commission Toll Bridge System Rev., 5 1/4% due 10/1/2015...... Aaa/AAA 2,346,875
</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.
31
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,250,000 Port Authority of New York and New Jersey Consolidated Rev., 6 1/8% due 6/1/2094....... A1/AA- $ 2,311,875
5,000,000 United Nations Development Corporation, NY (A Public Benefit Corporation of the State
of New York Senior Lien), 6% due 7/1/2026........................................... A/NR 4,889,600
------------
Total Municipal Bonds (Cost $80,762,259)--98.1%....................................................................... 83,224,511
Other Assets Less Liabilities--1.9%................................................................................... 1,640,528
------------
NET ASSETS--100.0% ................................................................................................... $ 84,865,039
============
</TABLE>
<TABLE>
<CAPTION>
OHIO SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 2,000,000 Barberton, OH Sewer System Mortgage Rev., 6 5/8% due 12/1/2006......................... Aaa/AAA $ 2,130,020
3,450,000 Big Walnut Local School District, OH School Building Construction & Improvement
G.O.'s, 7.20% due 6/1/2007.......................................................... Aaa/AAA 3,953,838
3,000,000 Clermont County, OH Hospital Facilities Rev. (Mercy Health System), 5 7/8% due 1/1/2015 Aaa/AAA 2,994,510
2,000,000 Cleveland, OH Waterworks Improvement Rev., 6% due 1/1/2017............................. A1/A+ 1,983,160
2,250,000 Cleveland, OH Waterworks Improvement Rev., 6 1/2% due 1/1/2021......................... Aaa/AAA 2,509,830
5,000,000 Columbus, OH G.O.'s, 6 1/2% due 1/1/2010............................................... Aa1/AA+ 5,320,850
4,500,000 Columbus, OH Municipal Airport Authority Rev. (Port Columbus International
Airport Project), 6% due 1/1/2020*.................................................. Aaa/AAA 4,493,745
4,250,000 Dayton, OH James M. Cox Dayton International Airport Rev., 8 1/4% due 1/1/2016......... Aaa/AAA 4,405,295
3,000,000 Dayton, OH Water System Mortgage Rev., 6 3/4% due 12/1/2010............................ Aaa/AAA 3,196,890
7,000,000 Erie County, OH Franciscan Services Corp. Rev. (Providence Hospital Inc.),
6% due 1/1/2013..................................................................... NR/A- 6,808,760
1,000,000 Euclid City School District, OH G.O.'s, 7.10% due 12/1/2011............................ A/NR 1,094,230
7,750,000 Franklin County, OH G.O.'s, 5 3/8% due 12/1/2020....................................... Aaa/AAA 7,384,898
7,500,000 Franklin County, OH Hospital Rev. (Riverside United Methodist Hospital),
5 3/4% due 5/15/2020................................................................ Aa/NR 7,143,975
5,000,000 Hamilton County, OH Health Care System Rev. (Sisters of Charity Health Care),
6 1/4% due 5/15/2014................................................................ Aaa/AAA 5,193,650
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 5,216,600
8,000,000 Hamilton, OH Electric System Mortgage Rev., 6% due 10/15/2023.......................... Aaa/AAA 8,044,000
4,000,000 Hudson Local School District, OH G.O.'s, 7.10% due 12/15/2013.......................... A1/NR 4,537,360
1,095,000 Lake County, OH Hospital Improvement Rev. (Lake Hospital System Inc.),
8% due 1/1/2013..................................................................... Aaa/AAA 1,165,474
8,000,000 Lucas County, OH Hospital Improvement Rev. (The Toledo Hospital),
5% due 11/15/2010................................................................... Aaa/AAA 7,406,080
3,000,000 Lucas County, OH Hospital Rev. (Riverside Hospital Project), 7 5/8% due 6/1/2015....... Baa1/BBB+ 3,097,380
1,000,000 Montgomery County, OH Rev. (Sisters of Charity Health Care Systems, Inc.),
6 5/8% due 5/15/2021................................................................ Aaa/AAA 1,059,640
1,090,000 Mount Vernon, OH Hospital Rev. (Knox Community Hospital), 7 1/2% due 6/1/1996.......... NR/NR 1,112,040
</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.
32
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
OHIO SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 5,000,000 Mount Vernon, OH Hospital Rev. (Knox Community Hospital), 7 7/8% due 6/1/2012.......... NR/NR $ 5,213,800
1,490,000 Napoleon, OH Health Care Facility Rev. (Lutheran Orphans' & Old Folks' Home Society),
10.70% due 7/15/2015................................................................ NR/NR 1,609,051
1,500,000 Northeast Ohio Regional Sewer District Wastewater Improvement Rev.,
6 1/2% due 11/15/2016............................................................... Aaa/AAA 1,666,170
5,000,000 Ohio Air Quality Development Authority Pollution Control Rev. (Ohio Edison
Company Project), 7.45% due 3/1/2016................................................ Aaa/AAA 5,541,750
2,000,000 Ohio Air Quality Development Authority Rev. (Cincinnati Gas & Electric
Company Project), 5.45% due 1/1/2024................................................ Aaa/AAA 1,895,140
6,500,000 Ohio Air Quality Development Authority Rev. (JMG Project), 6 3/8% due 1/1/2029*........ Aaa/AAA 6,731,335
6,500,000 Ohio State Building Authority (State Correctional Facilities), 7.35% due 8/1/2006...... Aaa/NR 7,292,220
2,000,000 Ohio State Building Authority Workers' Compensation Facilities
(William Green Building), 4 3/4% due 4/1/2014....................................... A/A+ 1,726,860
3,000,000 Ohio State G.O.'s Infrastructure Improvement, 6 1/2% due 8/1/2011...................... Aa/AA 3,203,670
1,500,000 Ohio State Higher Educational Facilities Commission Mortgage Rev.
(University of Dayton Project), 7 1/4% due 12/1/2012................................ Aaa/AAA 1,681,080
3,000,000 Ohio State Higher Educational Facilities Commission Rev. (Oberlin College Project),
5 3/8% due 10/1/2015................................................................ NR/AA 2,840,010
2,000,000 Ohio State Liquor Profits Rev., 6.85% due 3/1/2000..................................... Aaa/AAA 2,190,660
7,000,000 Ohio State Public Facilities Commission Rev. (Higher Education Capital Facilities),
6.30% due 5/1/2006.................................................................. Aaa/AAA 7,541,170
2,000,000 Ohio State Water Development Authority Rev. (Safe Water), 6 3/4% due 12/1/2007......... Aaa/AAA 2,121,860
2,675,000 Ohio State Water Development Authority Rev. (Safe Water), 9 3/8% due 12/1/2010......... Aaa/AAA 3,385,266
2,500,000 Ohio State Water Development Authority Solid Waste Disposal Rev. (North Star BHP
Steel--LLC Project/Cargill, Inc. Guarantor), 6.30% due 9/1/2020..................... Aa3/AA- 2,501,900
8,000,000 Ohio State Water Development Authority Water Development Rev. (Dayton Power &
Light Co. Project), 6.40% due 8/15/2027............................................. Aa3/AA- 8,255,920
2,955,000 Pickerington Local School District, OH School Building Construction G.O.'s,
8% due 12/1/2005.................................................................... Aaa/AAA 3,488,880
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 1,024,320
775,000 Toledo, OH Sewer System Rev., 7 3/4% due 11/15/2017.................................... Aaa/AAA 865,969
560,000 Toledo, OH Waterworks Rev., 7 3/4% due 11/15/2017...................................... Aaa/AAA 625,733
3,000,000 University of Toledo, OH General Receipts Bonds, 7.10% due 6/1/2010.................... Aaa/AAA 3,376,560
2,000,000 Worthington City School District, OH School Building Construction & Improvement
G.O.'s, 8 3/4% due 12/1/2002........................................................ Aaa/AAA 2,348,880
------------
Total Municipal Bonds (Cost $159,201,432)--97.9%...................................................................... 167,380,429
Variable Rate Demand Notes (Cost $600,000)--0.4%...................................................................... 600,000
Other Assets Less Liabilities--1.7%................................................................................... 2,870,085
------------
NET ASSETS--100.0% ................................................................................................... $170,850,514
============
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
OREGON SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 1,000,000 Albany, OR G.O.'s Water Bonds, 6 5/8% due 11/1/2009.................................... Aaa/AAA $ 1,002,630
1,000,000 Clackamas County, OR Hospital Facility Authority Rev. (Kaiser Permanente),
6 1/4% due 4/1/2021................................................................. Aa3/AA 1,011,300
1,250,000 Clackamas County, OR School District No. 12 G.O.'s (North Clackamas School
District), 5% due 6/1/2011.......................................................... A/A+ 1,176,038
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- 1,525,575
850,000 Columbia River People's Utility District, OR G.O.'s, 7.10% due 5/1/2005................ Aaa/AAA 866,932
1,000,000 Deschutes County Hospital Facility Authority, OR (St. Charles Medical Center),
7.60% due 1/1/2013.................................................................. A1/NR 1,070,500
400,000 Emerald People's Utility District, OR Electric System Rev., 7.20% due 11/1/2006........ Aaa/AAA 413,744
2,000,000 Eugene, OR Electric Utility Rev., 5.80% due 8/1/2022................................... Aaa/AAA 1,999,800
1,500,000 Eugene, OR Trojan Nuclear Project Rev., 5.90% due 9/1/2009............................. Aa/AA 1,499,850
730,000 Eugene, OR Water Utility System Rev., 6.55% due 8/1/2003............................... A1/AA- 759,769
2,000,000 Hillsboro, OR Hospital Facility Authority Hospital Rev. (Quality Healthcare),
5 3/4% due 10/1/2012................................................................ NR/BBB+ 1,880,220
1,000,000 Hood River County School District, OR G.O.'s, 5.65% due 6/1/2008....................... Aaa/AAA 1,026,790
1,245,000 Lebanon, OR G.O.'s Water Bonds, 7% due 11/1/2009....................................... NR/NR 1,248,200
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 948,888
1,000,000 Metropolitan Service District, OR G.O.'s (Oregon Convention Center),
6 1/4% due 1/1/2013................................................................. Aa/AA+ 1,027,960
1,250,000 Multnomah County School District No. 1J, OR G.O.'s, 6.80% due 12/15/2004............... Aa/AA- 1,303,638
2,000,000 North Clackamas Parks & Recreation District-Clackamas County, OR Rev.
(Recreational Facilities), 5.70% due 4/1/2013....................................... NR/A- 1,976,000
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 1,785,700
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+ 2,600,925
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+ 733,020
1,000,000 Oregon Department of Transportation Regional Light Rail Extension Rev.,
6.20% due 6/1/2008.................................................................. Aaa/AAA 1,078,470
530,000 Oregon Housing Agency Mortgage Rev. (Single Family Mortgage Program),
7 3/8% due 7/1/2020*................................................................ Aa1/NR 557,825
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+ 1,957,720
955,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 5.65% due 7/1/2019*.............................................. Aa/NR 883,356
935,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 7% due 7/1/2022*................................................. Aa1/NR 969,904
2,785,000 Oregon State Fair & Exposition Center Rev., 7 3/8% due 10/1/2006....................... NR/NR 2,844,905
500,000 Oregon State G.O.'s (Veterans' Welfare), 9% due 10/1/2006.............................. Aa/AA- 669,225
475,000 Oregon State G.O.'s (Veterans' Welfare), 7.30% due 7/1/2008............................ Aa/AA- 568,090
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
OREGON SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 500,000 Oregon State G.O.'s (Alternate Energy Project), 8.40% due 1/1/2008..................... Aa/AA- $ 571,825
250,000 Oregon State G.O.'s (Elderly & Disabled Housing), 7.20% due 8/1/2021................... Aa/AA- 271,105
1,000,000 Oregon State G.O.'s (Elderly & Disabled Housing), 6.60% due 8/1/2022*.................. Aa/AA- 1,051,080
750,000 Oregon State Housing Educational & Cultural Facilities Authority Rev. (Lewis & Clark
College Project), 7 1/8% due 7/1/2020............................................... Aaa/AAA 846,195
500,000 Port of Portland, OR International Airport Rev., 6 1/4% due 7/1/2018*.................. Aaa/AAA 511,955
1,000,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021*................... Aaa/AAA 1,097,140
500,000 Port of Portland, OR International Airport Rev., 5 3/4% due 7/1/2025*.................. Aaa/AAA 487,430
1,000,000 Port of Umpqua, OR Pollution Control Rev. (International Paper Co. Project),
6.60% due 3/15/2005................................................................. A3/A- 1,041,130
1,250,000 Portland, OR Hospital Facilities Authority Rev. (Legacy Health System),
6 5/8% due 5/1/2011................................................................. Aaa/AAA 1,346,537
3,000,000 Portland, OR Sewer System Rev., 6% due 10/1/2012....................................... Aaa/AAA 3,075,420
1,200,000 Portland, OR Sewer System Rev., 6 1/4% due 6/1/2015.................................... A1/A+ 1,244,328
1,000,000 Portland, OR Urban Renewal & Redevelopment Rev. (Downtown Waterfront),
6.40% due 6/1/2008.................................................................. A/NR 1,043,930
2,500,000 Puerto Rico Highway & Transportation Authority Highway Rev., 5 1/2% due 7/1/2019....... Baa1/A 2,312,825
1,000,000 Puerto Rico Housing Finance Corp. (Single Family Mortgage Rev.),
6.85% due 10/15/2023................................................................ Aaa/AAA 1,046,380
1,000,000 Puerto Rico Ports Authority Rev., 7% due 7/1/2014*..................................... Aaa/AAA 1,107,270
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2% due 1/1/2013.............................. A/A+ 973,820
1,000,000 Tri-County Metropolitan Transportation District of Oregon G.O.'s (Light Rail Extension),
6% due 7/1/2012..................................................................... Aa/AA+ 1,022,250
1,110,000 Tualatin Development Commission, OR (Urban Renewal & Redevelopment),
7 3/8% due 1/1/2007................................................................. Baa1/NR 1,145,154
2,000,000 Unified Sewerage Agency Washington County, OR Sewer Rev., 6 1/8% due 10/1/2012......... Aaa/AAA 2,074,880
1,000,000 Washington County School District No. 88J, OR G.O.'s., 6.10% due 6/1/2012.............. Aaa/AAA 1,045,970
1,000,000 Washington County School District No. 23JT Washington & Clackamas Counties,
OR G.O.'s., 6.70% due 1/1/2010...................................................... NR/NR 1,081,840
------------
Total Municipal Bonds (Cost $57,933,524)--97.9%....................................................................... 59,785,438
Other Assets Less Liabilities--2.1%................................................................................... 1,258,560
------------
NET ASSETS--100.0% ................................................................................................... $ 61,043,998
============
SOUTH CAROLINA SERIES
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 1,125,000 Anderson County, SC G.O.'s, 7 3/4% due 4/1/2009........................................ A/A $ 1,214,887
2,500,000 Anderson County, SC Hospital Rev. (Anderson Memorial Hospital), 5 1/4% due 2/1/2012.... Aaa/AAA 2,325,875
1,000,000 Anderson County, SC Hospital Rev. (Anderson Memorial Hospital), 7 1/2% due 2/1/2018.... Aaa/AAA 1,090,370
1,500,000 Beaufort-Jasper Water & Sewer Authority, SC Waterworks & Sewer System Rev.,
6 1/2% due 3/1/2013................................................................. Aaa/AAA 1,587,000
3,800,000 Berkeley County, SC Water & Sewer Rev., 5.55% due 6/1/2016............................. Aaa/AAA 3,650,736
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
Portfolios of Investments (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 3,000,000 Charleston County, SC Airport District System Rev., 4 3/4% due 7/1/2015................ Aaa/AAA $ 2,590,950
3,000,000 Charleston County, SC Hospital Facilities Rev. (Bon Secours Health System Project),
5 5/8% due 8/15/2025................................................................ Aaa/AAA 2,816,670
1,750,000 Charleston County, SC Hospital Facilities Rev. (Medical Society Health Project),
5 1/2% due 10/1/2019................................................................ Aaa/AAA 1,635,200
745,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.15% due 2/1/2004.................................................................. A1/A 808,683
770,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.15% due 8/1/2004.................................................................. A1/A 835,820
800,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.20% due 2/1/2005.................................................................. A1/A 866,352
750,000 Charleston, SC Waterworks & Sewer System Rev., 7 3/4% due 1/1/2011..................... Aaa/AAA 819,960
2,500,000 Charleston, SC Waterworks & Sewer System Rev., 6% due 1/1/2012......................... A1/AA- 2,548,550
1,500,000 Clemson University, SC Student & Faculty Housing Rev., 6.65% due 6/1/2011.............. Aaa/AAA 1,603,980
1,000,000 Clinton, SC Utility System Rev., 7.20% due 6/1/2011.................................... A/NR 1,070,070
1,150,000 Columbia, SC Parking Facilities Rev., 6 3/4% due 12/1/2013............................. Baa1/NR 1,186,294
2,000,000 Columbia, SC Waterworks & Sewer System Rev., 6 1/2% due 1/1/2012....................... Aaa/AA 2,154,760
500,000 Columbia, SC Waterworks & Sewer System Rev., 7.10% due 2/1/2012........................ Aaa/AA 567,395
6,000,000 Darlington County, SC Industrial Development Rev. (Nucor Corporation Project),
5 3/4% due 8/1/2023*................................................................ A1/AA- 5,643,420
1,500,000 Dorchester County School District No. 002, SC G.O.'s, 6.65% due 7/1/2010............... Aaa/AAA 1,644,285
2,500,000 Fairfield County, SC Pollution Control Rev. (South Carolina Electric & Gas Company),
6 1/2% due 9/1/2014................................................................. A1/A 2,620,275
1,000,000 Florence County, SC Hospital Rev. (McLeod Regional Medical Center Project),
5 1/4% due 11/1/2009................................................................ Aaa/AAA 970,870
1,000,000 Georgetown County, SC Pollution Control Facilities Rev. (International Paper Company),
7 3/8% due 6/15/2005................................................................ A3/A- 1,086,340
1,500,000 Grand Strand Water & Sewer Authority, SC Waterworks and Sewer System Rev.,
7% due 6/1/2019..................................................................... Aaa/AAA 1,633,425
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 2,047,760
3,000,000 Greenville Hospital System, SC Hospital Facilities Rev., 5 1/2% due 5/1/2016........... NR/AA- 2,796,990
3,000,000 Greenwood County, SC Hospital Facilities Rev. (Self Memorial Hospital),
5 7/8% due 10/1/2017................................................................ Aaa/AAA 2,972,550
2,425,000 Lancaster County, SC School District G.O.'s, 6.60% due 7/1/2011........................ Aaa/AAA 2,599,406
2,600,000 Lancaster County, SC School District G.O.'s, 6.60% due 7/1/2012........................ Aaa/AAA 2,773,056
2,000,000 Lancaster County, SC Waterworks & Sewer System Rev., 5 1/4% due 5/1/2021............... Aaa/AAA 1,831,740
2,720,000 Laurens County, SC Combined Utility System Rev., 5% due 1/1/2018....................... Aaa/AAA 2,437,174
1,650,000 Laurens County, SC Combined Utility System Rev., 7 5/8% due 1/1/2018................... Aaa/AAA 1,814,554
500,000 Laurens County, SC Health Care System, 7.80% due 1/1/2008.............................. Aaa/AAA 547,180
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 1,125,760
1,000,000 Medical University South Carolina Hospital Facilities Rev., 5.60% due 7/1/2011......... Aaa/AAA 989,580
3,000,000 Mount Pleasant, SC Water & Sewer Rev., 6% due 12/1/2020................................ Aaa/AAA 3,003,840
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA SERIES (continued)
Face Ratings Market
Amount Municipal Bonds Moody's/S&P+ Value
------ --------------- ------------ -----
<C> <S> <C> <C>
$ 435,000 Myrtle Beach, SC Water & Sewer Rev., 6 7/8% due 3/1/2005............................... Aaa/AAA $ 444,696
2,000,000 Myrtle Beach, SC Waterworks & Sewer System Rev., 5 1/4% due 3/1/2020................... Aaa/AAA 1,827,980
1,500,000 North Charleston Sewer District, SC Rev., 6 3/8% due 7/1/2012.......................... Aaa/AAA 1,625,115
1,500,000 North Charleston Sewer District, SC Rev., 7 3/4% due 8/1/2018.......................... Aaa/AAA 1,666,785
5,000,000 Oconee County, SC Pollution Control Facilities Rev. (Duke Power Co. Project),
5.80% due 4/1/2014.................................................................. Aa2/AA- 4,922,000
1,250,000 Piedmont Municipal Power Agency, SC Electric Rev., 6 1/4% due 1/1/2021................. Aaa/AAA 1,317,088
4,000,000 Piedmont Municipal Power Agency, SC Electric Rev., 6.30% due 1/1/2022.................. Aaa/AAA 4,075,280
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2% due 1/1/2022.............................. A/A+ 950,010
2,000,000 Richland County, SC Solid Waste Disposal Facilities Rev. (Union Camp Corp. Project),
7.45% due 4/1/2021*................................................................. A1/A- 2,183,800
1,000,000 Richland County, SC Solid Waste Disposal Facilities Rev. (Union Camp Corp. Project),
7 1/8% due 9/1/2021*................................................................ A1/A- 1,063,560
1,000,000 Rock Hill, SC Combined Utilities System Rev., 8% due 1/1/2018.......................... Aaa/AAA 1,098,600
5,000,000 Rock Hill, SC Combined Utilities System Rev., 5% due 1/1/2020.......................... Aaa/AAA 4,382,150
1,000,000 St. Andrews, SC Public Service District Sewer Systems Rev., 7 3/4% due 1/1/2018........ Aaa/AAA 1,092,830
1,150,000 South Carolina Public Service Authority Rev., 5 7/8% due 1/1/2014...................... Aaa/AAA 1,152,357
1,000,000 South Carolina Public Service Authority Electric Rev. & Electric System Expansion,
8% due 7/1/2019..................................................................... AAA/AA- 1,059,570
4,000,000 South Carolina State G.O.'s, 4 1/4% due 3/1/2009....................................... Aaa/AA+ 3,481,240
1,740,000 South Carolina State Housing Authority (Single Family Mortgage Purchase),
6.70% due 7/1/2010.................................................................. Aaa/AA 1,773,095
500,000 South Carolina State Housing Finance & Development Authority (Homeownership
Mortgage), 7.55% due 7/1/2011....................................................... Aa/AA 529,010
2,380,000 South Carolina State Housing Finance & Development Authority Rental Housing Rev.
(North Bluff Project), 5.60% due 7/1/2016........................................... NR/AA 2,224,800
1,000,000 South Carolina State Housing Finance & Development Authority (Multi-Family
Development Rev.), 6 7/8% due 11/15/2023............................................ Aaa/NR 1,036,360
1,500,000 Sumter, SC Waterworks & Sewer System Rev., 7.15% due 6/1/2009.......................... Aaa/AAA 1,653,795
2,000,000 Western Carolina Regional Sewer Authority, SC Sewer System Rev., 5 1/2% due 3/1/2010... Aaa/AAA 1,990,060
1,080,000 Winnsboro, SC Combined Utility System Rev., 6.90% due 7/1/2017......................... Aaa/AAA 1,193,152
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 1,160,870
------------
Total Municipal Bonds (Cost $108,233,184)--98.0%...................................................................... 111,815,960
Variable Rate Demand Notes (Cost $700,000)--0.6%...................................................................... 700,000
Other Assets Less Liabilities--1.4%................................................................................... 1,609,129
------------
NET ASSETS--100.0% ................................................................................................... $114,125,089
============
</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>
<TABLE>
<CAPTION>
====================================================================================================================================
Statement of Assets and Liabilities For the year ended September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
National Colorado Georgia Louisiana
Series Series Series Series
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Assets:
Investments, at value (see portfolios of investments):
Long-term holdings ................................ $ 103,611,246 $ 53,936,945 $58,073,907 $61,239,540
Short-term holdings ............................... -- 200,000 500,000 200,000
------------- ------------ ----------- -----------
103,611,246 54,136,945 58,573,907 61,439,540
Cash ................................................. 304,745 59,311 304,858 151,981
Interest receivable .................................. 1,882,951 1,104,920 1,056,608 1,093,010
Expenses prepaid to shareholder service agent ........ 40,623 24,690 29,861 25,819
Receivable for Capital Stock sold .................... 15,828 3,155 3,042 50,353
Receivable for securities sold ....................... -- -- 15,405 5,000
Other ................................................ -- 2,610 -- --
------------- ------------ ----------- -----------
Total Assets ......................................... 105,855,393 55,331,631 59,983,681 62,765,703
------------- ------------ ----------- -----------
Liabilities:
Dividends payable .................................... 188,779 95,821 101,318 112,798
Payable for Capital Stock repurchased ................ 147,379 107,836 31,058 116,206
Payable for securities purchased ..................... -- -- -- --
Accrued expenses, taxes, and other ................... 120,142 77,391 93,870 83,707
------------- ------------ ----------- -----------
Total Liabilities .................................... 456,300 281,048 226,246 312,711
------------- ------------ ----------- -----------
Net Assets ........................................... $ 105,399,093 $ 55,050,583 $59,757,435 $62,452,992
============= ============ =========== ===========
Composition of Net Assets:
Capital Stock, at par:
Class A ........................................... 13,743 7,518 7,387 7,618
Class D ........................................... 160 26 266 57
Additional paid-in capital ........................... 108,904,741 54,132,122 58,502,505 60,015,398
Undistributed/accumulated net realized gain (loss) ... (4,482,833) (268,007) 354,301 461,685
Net unrealized appreciation of investments ........... 963,282 1,178,924 892,976 1,968,234
------------- ------------ ----------- -----------
Net Assets ........................................... $ 105,399,093 $ 55,050,583 $59,757,435 $62,452,992
============= ============ =========== ===========
Net Assets:
Class A ........................................... $ 104,183,596 $ 54,857,534 $57,678,393 $61,987,983
Class D ........................................... $ 1,215,497 $ 193,049 $ 2,079,042 $ 465,009
Shares of Capital Stock outstanding ($.001 par value):
Class A ........................................... 13,743,160 7,517,787 7,386,798 7,617,582
Class D ........................................... 160,463 26,468 265,802 57,161
Net Asset Value per share:
Class A ........................................... $ 7.58 $ 7.30 $ 7.81 $ 8.14
Class D ........................................... $ 7.57 $ 7.29 $ 7.82 $ 8.14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maryland Massachusetts Michigan Minnesota Missouri
Series Series Series Series Series
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value (see portfolios of investments):
Long-term holdings ................................ $ 53,484,338 $112,443,831 $148,124,057 $128,988,676 $50,917,425
Short-term holdings ............................... 2,400,000 2,400,000 2,000,000 6,900,000 200,000
------------ ------------ ------------ ------------ -----------
55,884,338 114,843,831 150,124,057 135,888,676 51,117,425
Cash ................................................. 25,259 148,148 36,029 281,778 54,538
Interest receivable .................................. 1,119,426 1,981,693 3,029,511 2,108,355 1,001,437
Expenses prepaid to shareholder service agent ........ 31,287 56,689 62,929 60,618 22,878
Receivable for Capital Stock sold .................... 40,297 -- 37,500 51,961 46,693
Receivable for securities sold ....................... 5,000 -- -- -- 10,133
Other ................................................ -- -- 4,029 -- --
------------ ------------ ------------ ------------ -----------
Total Assets ......................................... 57,105,607 117,030,361 153,294,055 138,391,388 52,253,104
------------ ------------ ------------ ------------ -----------
Liabilities:
Dividends payable .................................... 97,865 214,238 272,409 267,027 91,096
Payable for Capital Stock repurchased ................ -- 87,279 110,385 178,006 403,135
Payable for securities purchased ..................... -- -- -- 2,846,388 --
Accrued expenses, taxes, and other ................... 87,709 127,433 150,095 147,171 74,939
------------ ------------ ------------ ------------ -----------
Total Liabilities .................................... 185,574 428,950 532,889 3,438,592 569,170
------------ ------------ ------------ ------------ -----------
Net Assets ........................................... $ 56,920,033 $116,601,411 $152,761,166 $134,952,796 $51,683,934
============ ============ ============ ============ ===========
Composition of Net Assets:
Capital Stock, at par:
Class A ........................................... 7,071 14,634 17,742 16,969 6,644
Class D ........................................... 79 113 137 286 67
Additional paid-in capital ........................... 54,759,383 111,953,304 143,991,763 127,879,097 49,585,438
Undistributed/accumulated net realized gain (loss) ... 232,299 1,435,747 2,548,995 245,219 324,556
Net unrealized appreciation of investments ........... 1,921,201 3,197,613 6,202,529 6,811,225 1,767,229
------------ ------------ ------------ ------------ -----------
Net Assets ........................................... $ 56,920,033 $116,601,411 $152,761,166 $134,952,796 $51,683,934
============ ============ ============ ============ ===========
Net Assets:
Class A ........................................... $ 56,290,271 $115,710,797 $151,589,209 $132,715,754 $51,168,963
Class D ........................................... $ 629,762 $ 890,614 $ 1,171,957 $ 2,237,042 $ 514,971
Shares of Capital Stock outstanding ($.001 par value):
Class A ........................................... 7,070,947 14,634,441 17,741,612 16,968,512 6,644,387
Class D ........................................... 79,032 112,702 137,250 285,931 66,862
Net Asset Value per share:
Class A ........................................... $ 7.96 $ 7.91 $ 8.54 $ 7.82 $ 7.70
Class D ........................................... $ 7.97 $ 7.90 $ 8.54 $ 7.82 $ 7.70
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York Ohio Oregon South Carolina
Series Series Series Series
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Investments, at value (see portfolios of investments):
Long-term holdings ................................ $ 83,224,511 $167,380,429 $ 59,785,438 $111,815,960
Short-term holdings ............................... -- 600,000 -- 700,000
------------- ------------ ------------ ------------
83,224,511 167,980,429 59,785,438 112,515,960
Cash ................................................. 486,157 213,687 173,856 113,115
Interest receivable .................................. 1,363,839 3,148,789 1,240,503 1,802,583
Expenses prepaid to shareholder service agent ........ 31,722 67,077 25,010 45,502
Receivable for Capital Stock sold .................... 32,117 78,074 30,566 26,229
Receivable for securities sold ....................... -- -- 91,659 --
Other ................................................ -- -- 691 --
------------- ------------ ------------ ------------
Total Assets ......................................... 85,138,346 171,488,056 61,347,723 114,503,389
------------- ------------ ------------ ------------
Liabilities:
Dividends payable .................................... 155,893 317,799 110,688 206,341
Payable for Capital Stock repurchased ................ -- 149,580 119,117 52,865
Payable for securities purchased ..................... -- -- -- --
Accrued expenses, taxes, and other ................... 117,414 170,163 73,920 119,094
------------- ------------ ------------ ------------
Total Liabilities .................................... 273,307 637,542 303,725 378,300
------------- ------------ ------------ ------------
Net Assets ........................................... $ 84,865,039 $170,850,514 $ 61,043,998 $114,125,089
============= ============ ============ ============
Composition of Net Assets:
Capital Stock, at par:
Class A ........................................... 10,678 20,977 7,775 14,099
Class D ........................................... 112 81 195 214
Additional paid-in capital ........................... 83,337,834 161,869,189 59,123,699 110,282,491
Undistributed/accumulated net realized gain (loss) ... (945,837) 781,270 60,415 245,509
Net unrealized appreciation of investments ........... 2,462,252 8,178,997 1,851,914 3,582,776
------------- ------------ ------------ ------------
Net Assets ........................................... $ 84,865,039 $170,850,514 $ 61,043,998 $114,125,089
============= ============ ============ ============
Net Assets:
Class A ........................................... $ 83,979,665 $170,191,172 $ 59,549,004 $112,421,410
Class D ........................................... $ 885,374 $ 659,342 $ 1,494,994 $ 1,703,679
Shares of Capital Stock outstanding ($.001 par value):
Class A ........................................... 10,678,196 20,976,859 7,775,312 14,098,763
Class D ........................................... 112,473 80,876 195,337 213,872
Net Asset Value per share:
Class A ........................................... $ 7.86 $ 8.11 $ 7.66 $ 7.97
Class D ........................................... $ 7.87 $ 8.15 $ 7.65 $ 7.97
</TABLE>
- ----------------
See notes to financial statements.
38 & 39
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Statements of Operations For the year ended September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
National Colorado Georgia Louisiana Maryland Massachusetts Michigan
Series Series Series Series Series Series Series
------------ ---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest ............................. $ 6,855,375 $3,462,671 $3,720,235 $3,924,379 $3,556,584 $ 7,410,303 $ 9,558,662
------------ ---------- ---------- ---------- ---------- ----------- -----------
Expenses:
Management fees ...................... 540,874 277,393 272,768 309,651 283,135 580,271 749,963
Shareholder account services ......... 152,223 85,664 110,536 86,834 106,397 178,967 214,828
Distribution and service fees ........ 101,668 52,884 73,720 65,902 58,211 119,889 153,603
Custody and related services ......... 55,280 35,630 40,842 30,479 33,116 50,459 106,791
Auditing and legal fees .............. 37,566 39,673 39,067 39,405 39,312 40,128 39,957
Registration ......................... 20,113 4,229 8,342 5,265 6,619 11,226 10,437
Shareholder reports and
communications .................... 15,478 8,982 7,273 5,937 9,020 14,387 18,879
Directors' fees and expenses ......... 5,291 4,794 4,712 4,733 4,849 5,199 5,362
Miscellaneous ........................ 14,833 8,233 8,441 12,642 7,897 15,117 14,397
------------ ---------- ---------- ---------- ---------- ----------- -----------
Total expenses ....................... 943,326 517,482 565,701 560,848 548,556 1,015,643 1,314,217
------------ ---------- ---------- ---------- ---------- ----------- -----------
Net investment income ................ 5,912,049 2,945,189 3,154,534 3,363,531 3,008,028 6,394,660 8,244,445
------------ ---------- ---------- ---------- ---------- ----------- -----------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments ....................... (4,331,294) 318,881 362,501 468,171 236,106 1,446,650 2,565,892
Net change in unrealized appreciation/
depreciation of investments ....... 10,223,855 1,121,736 3,043,005 2,190,601 2,550,147 2,623,425 2,886,770
------------ ---------- ---------- ---------- ---------- ----------- -----------
Net gain on investments .............. 5,892,561 1,440,617 3,405,506 2,658,772 2,786,253 4,070,075 5,452,662
------------ ---------- ---------- ---------- ---------- ----------- -----------
Increase in net assets from
operations ........................ $ 11,804,610 $4,385,806 $6,560,040 $6,022,303 $5,794,281 $10,464,735 $13,697,107
============ ========== ========== ========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Minnesota Missouri New York Ohio Oregon South Carolina
Series Series Series Series Series Series
---------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest ............................. $9,095,910 $3,197,641 $ 5,540,320 $10,867,219 $3,732,085 $ 7,041,025
---------- ---------- ----------- ----------- ---------- -----------
Expenses:
Management fees ...................... 672,792 233,342 432,770 847,530 270,412 563,437
Shareholder account services ......... 215,885 84,942 119,419 251,060 93,199 168,308
Distribution and service fees ........ 148,930 51,267 78,093 170,666 69,241 124,392
Custody and related services ......... 56,642 24,253 65,036 69,315 20,369 71,580
Auditing and legal fees .............. 42,350 38,491 37,558 38,766 39,570 38,766
Registration ......................... 13,039 7,161 8,007 10,687 6,520 10,562
Shareholder reports and
communications .................... 21,383 8,538 9,201 21,032 9,190 12,495
Directors' fees and expenses ......... 5,499 4,786 5,008 5,462 4,814 4,937
Miscellaneous ........................ 17,394 6,975 12,143 20,818 10,500 14,403
---------- ---------- ----------- ----------- ---------- -----------
Total expenses ....................... 1,193,914 459,755 767,235 1,435,336 523,815 1,008,880
---------- ---------- ----------- ----------- ---------- -----------
Net investment income ................ 7,901,996 2,737,886 4,773,085 9,431,883 3,208,270 6,032,145
---------- ---------- ----------- ----------- ---------- -----------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments ....................... 250,044 331,360 (945,837) 810,038 70,060 255,806
Net change in unrealized appreciation/
depreciation of investments ....... 1,679,385 2,085,364 5,008,458 5,388,960 1,780,874 5,014,984
---------- ---------- ----------- ----------- ---------- -----------
Net gain on investments .............. 1,929,429 2,416,724 4,062,621 6,198,998 1,850,934 5,270,790
---------- ---------- ----------- ----------- ---------- -----------
Increase in net assets from
operations ........................ $9,831,425 $5,154,610 $ 8,835,706 $15,630,881 $5,059,204 $11,302,935
========== ========== =========== =========== ========== ===========
</TABLE>
- ----------------
See notes to financial statements.
40 & 41
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
National Series Colorado Series
---------------------------- ----------------------------
Year ended September 30 Year ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................................ $ 5,912,049 $ 6,589,275 $ 2,945,189 $ 3,224,514
Net realized gain (loss) on investments .............................. (4,331,294) 338,061 318,881 (416,365)
Net change in unrealized appreciation/depreciation
of investments .................................................... 10,223,855 (17,056,468) 1,121,736 (4,628,524)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations ............... 11,804,610 (10,129,132) 4,385,806 (1,820,375)
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (5,878,199) (6,579,351) (2,940,344) (3,221,107)
Class D ........................................................... (33,850) (9,924) (4,845) (3,407)
Net realized gain on investments:
Class A ........................................................... -- (7,771,486) -- (691,165)
Class D ........................................................... -- -- -- --
------------- ------------- ------------- -------------
Decrease in net assets from distributions ....................... (5,912,049) (14,360,761) (2,945,189) (3,915,679)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 2,851,364 5,971,737 1,419,305 2,002,652
Class D ........................................................... 885,065 465,769 102,710 295,950
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 3,020,506 3,400,031 1,614,670 1,836,135
Class D ........................................................... 23,901 8,413 3,014 3,032
Exchanged from associated Funds:
Class A ........................................................... 9,766,862 2,002,989 523,761 328,418
Class D ........................................................... 835,262 -- -- --
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... -- 5,686,643 -- 481,882
Class D ........................................................... -- -- -- --
------------- ------------- ------------- -------------
Total ........................................................... 17,382,960 17,535,582 3,663,460 4,948,069
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ........................................................... (18,952,660) (14,947,349) (7,041,417) (8,307,267)
Class D ........................................................... (112,028) -- (10,731) (197,843)
Exchanged into associated Funds:
Class A ........................................................... (9,700,508) (2,671,622) (1,293,621) (325,316)
Class D ........................................................... (931,548) -- (1,000) --
------------- ------------- ------------- -------------
Total ........................................................... (29,696,744) (17,618,971) (8,346,769) (8,830,426)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from capital share transactions (12,313,784) (83,389) (4,683,309) (3,882,357)
------------- ------------- ------------- -------------
Increase (decrease) in net assets ............................... (6,421,223) (24,573,282) (3,242,692) (9,618,411)
Net Assets:
Beginning of year .................................................... 111,820,316 136,393,598 58,293,275 67,911,686
------------- ------------- ------------- -------------
End of year .......................................................... $ 105,399,093 $ 111,820,316 $ 55,050,583 $ 58,293,275
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Georgia Series Louisiana Series
---------------------------- ----------------------------
Year ended September 30 Year ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................................ $ 3,154,534 $ 3,409,541 $ 3,363,531 $ 3,501,383
Net realized gain (loss) on investments .............................. 362,501 840,892 468,171 1,087,255
Net change in unrealized appreciation/depreciation
of investments .................................................... 3,043,005 (7,996,922) 2,190,601 (7,149,845)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations ............... 6,560,040 (3,746,489) 6,022,303 (2,561,207)
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (3,090,529) (3,394,688) (3,335,643) (3,489,832)
Class D ........................................................... (64,005) (14,853) (27,888) (11,551)
Net realized gain on investments:
Class A ........................................................... (831,300) (697,275) (1,076,420) (651,148)
Class D ........................................................... (13,226) -- (12,456) --
------------- ------------- ------------- -------------
Decrease in net assets from distributions ....................... (3,999,060) (4,106,816) (4,452,407) (4,152,531)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 2,570,447 10,507,635 1,592,654 4,332,380
Class D ........................................................... 1,264,930 807,930 65,763 731,696
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 1,976,148 2,149,255 1,855,635 1,990,579
Class D ........................................................... 57,730 12,508 23,376 8,499
Exchanged from associated Funds:
Class A ........................................................... 1,271,396 388,188 250,945 152,113
Class D ........................................................... 250 67,560 -- --
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... 644,018 523,446 766,089 465,656
Class D ........................................................... 12,212 -- 9,263 --
------------- ------------- ------------- -------------
Total ........................................................... 7,797,131 14,456,522 4,563,725 7,680,923
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ........................................................... (10,210,900) (8,509,637) (5,202,189) (5,898,457)
Class D ........................................................... (125,984) (6,557) (354,393) (8,369)
Exchanged into associated Funds:
Class A ........................................................... (2,507,796) (421,723) (269,863) (443,843)
Class D ........................................................... (71,202) -- -- --
------------- ------------- ------------- -------------
Total ........................................................... (12,915,882) (8,937,917) (5,826,445) (6,350,669)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from capital share transactions (5,118,751) 5,518,605 (1,262,720) 1,330,254
------------- ------------- ------------- -------------
Increase (decrease) in net assets ............................... (2,557,771) (2,334,700) 307,176 (5,383,484)
Net Assets:
Beginning of year .................................................... 62,315,206 64,649,906 62,145,816 67,529,300
------------- ------------- ------------- -------------
End of year .......................................................... $ 59,757,435 $ 62,315,206 $ 62,452,992 $ 62,145,816
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Maryland Series Massachusetts Series
---------------------------- ----------------------------
Year ended September 30 Year ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................................ $ 3,008,028 $ 3,157,225 $ 6,394,660 $ 7,078,947
Net realized gain (loss) on investments .............................. 236,106 1,412,023 1,446,650 1,458,962
Net change in unrealized appreciation/depreciation
of investments .................................................... 2,550,147 (7,140,388) 2,623,425 (12,499,475)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations ............... 5,794,281 (2,571,140) 10,464,735 (3,961,566)
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (2,986,376) (3,152,145) (6,351,161) (7,052,050)
Class D ........................................................... (21,652) (5,080) (43,499) (26,897)
Net realized gain on investments:
Class A ........................................................... (980,988) (1,301,057) (490,162) (3,330,375)
Class D ........................................................... (7,361) -- (4,647) --
------------- ------------- ------------- -------------
Decrease in net assets from distributions ....................... (3,996,377) (4,458,282) (6,889,469) (10,409,322)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 1,825,028 3,212,373 3,096,538 3,798,317
Class D ........................................................... 365,965 379,503 618,045 1,106,567
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 1,711,454 1,805,934 3,662,542 4,060,575
Class D ........................................................... 14,257 2,594 33,446 22,729
Exchanged from associated Funds:
Class A ........................................................... 1,329,821 291,207 5,018,822 896,517
Class D ........................................................... 15,045 58,087 70,140 37,901
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... 716,294 941,569 373,978 2,447,863
Class D ........................................................... 5,227 -- 4,460 --
------------- ------------- ------------- -------------
Total ........................................................... 5,983,091 6,691,267 12,877,971 12,370,469
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ........................................................... (6,866,029) (5,782,224) (14,533,095) (14,268,282)
Class D ........................................................... (132,593) (7,091) (126,610) (4,051)
Exchanged into associated Funds:
Class A ........................................................... (1,469,104) (656,915) (5,616,572) (1,982,187)
Class D ........................................................... (80,763) -- (824,191) --
------------- ------------- ------------- -------------
Total ........................................................... (8,548,489) (6,446,230) (21,100,468) (16,254,520)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from capital share transactions (2,565,398) 245,037 (8,222,497) (3,884,051)
------------- ------------- ------------- -------------
Increase (decrease) in net assets ............................... (767,494) (6,784,385) (4,647,231) (18,254,939)
Net Assets:
Beginning of year .................................................... 57,687,527 64,471,912 121,248,642 139,503,581
------------- ------------- ------------- -------------
End of year .......................................................... $ 56,920,033 $ 57,687,527 $ 116,601,411 $ 121,248,642
============= ============= ============= =============
</TABLE>
- ----------------
* The Fund began offering Class D shares on February 1, 1994
See notes to financial statements.
42 & 43
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Statements of Changes in Net Assets (continued) For the year ended September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan Series Minnesota Series
---------------------------- ----------------------------
Year ended September 30 Year ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................................ $ 8,244,445 $ 8,420,810 $ 7,901,996 $ 7,992,624
Net realized gain (loss) on investments .............................. 2,565,892 1,400,509 250,044 252,585
Net change in unrealized appreciation/depreciation
of investments .................................................... 2,886,770 (14,509,279) 1,679,385 (8,005,539)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations ............... 13,697,107 (4,687,960) 9,831,425 239,670
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (8,206,113) (8,409,762) (7,807,472) (7,964,073)
Class D ........................................................... (38,332) (11,048) (94,524) (28,551)
Net realized gain on investments:
Class A ........................................................... (775,115) (1,589,823) (243,727) (2,074,841)
Class D ........................................................... (3,791) -- (3,101) --
------------- ------------- ------------- -------------
Decrease in net assets from distributions ....................... (9,023,351) (10,010,633) (8,148,824) (10,067,465)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 6,333,074 10,111,077 4,204,185 5,208,522
Class D ........................................................... 580,729 673,043 859,498 1,717,093
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 5,053,914 5,154,199 5,253,143 5,433,767
Class D ........................................................... 30,472 8,610 63,245 16,151
Exchanged from associated Funds:
Class A ........................................................... 864,699 688,118 1,435,131 1,460,540
Class D ........................................................... 104,572 21,595 159,356 --
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... 582,931 1,189,231 192,123 1,651,286
Class D ........................................................... 3,281 -- 2,291 --
------------- ------------- ------------- -------------
Total ........................................................... 13,553,672 17,845,873 12,168,972 15,487,359
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ........................................................... (14,573,617) (14,462,042) (12,629,875) (11,789,824)
Class D ........................................................... (181,421) (15,255) (277,761) (51,319)
Exchanged into associated Funds:
Class A ........................................................... (2,418,114) (1,542,287) (2,382,699) (1,779,118)
Class D ........................................................... (58,666) -- (247,272) --
------------- ------------- ------------- -------------
Total ........................................................... (17,231,818) (16,019,584) (15,537,607) (13,620,261)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from capital share transactions (3,678,146) 1,826,289 (3,368,635) 1,867,098
------------- ------------- ------------- -------------
Increase (decrease) in net assets ............................... 995,610 (12,872,304) (1,686,034) (7,960,697)
Net Assets:
Beginning of year .................................................... 151,765,556 164,637,860 136,638,830 144,599,527
------------- ------------- ------------- -------------
End of year .......................................................... $ 152,761,166 $ 151,765,556 $ 134,952,796 $ 136,638,830
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Missouri Series New York Series
---------------------------- ----------------------------
Year ended September 30 Year ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................................ $ 2,737,886 $ 2,853,372 $ 4,773,085 $ 5,217,903
Net realized gain (loss) on investments .............................. 331,360 672,212 (945,837) 1,999,229
Net change in unrealized appreciation/depreciation
of investments .................................................... 2,085,364 (6,217,058) 5,008,458 (12,683,003)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations ............... 5,154,610 (2,691,474) 8,835,706 (5,465,871)
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (2,720,786) (2,843,798) (4,746,318) (5,208,022)
Class D ........................................................... (17,100) (9,574) (26,767) (9,881)
Net realized gain on investments:
Class A ........................................................... (491,076) (749,354) (1,996,017) (2,401,063)
Class D ........................................................... (3,310) -- (10,892) --
------------- ------------- ------------- -------------
Decrease in net assets from distributions ....................... (3,232,272) (3,602,726) (6,779,994) (7,618,966)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 1,490,314 3,402,151 5,616,771 5,317,038
Class D ........................................................... 221,573 489,521 157,609 491,124
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 1,401,213 1,500,294 2,634,442 2,808,015
Class D ........................................................... 12,801 899 21,246 7,955
Exchanged from associated Funds:
Class A ........................................................... 365,314 733,086 2,263,947 716,645
Class D ........................................................... -- 17,699 364,576 --
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... 321,122 498,507 1,604,994 1,930,880
Class D ........................................................... 3,144 -- 9,747 --
------------- ------------- ------------- -------------
Total ........................................................... 3,815,481 6,642,157 12,673,332 11,271,657
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ........................................................... (6,123,870) (3,359,520) (15,940,087) (9,315,602)
Class D ........................................................... (70,945) (136,335) (156,491) --
Exchanged into associated Funds:
Class A ........................................................... (814,682) (741,558) (5,149,991) (2,166,255)
Class D ........................................................... (15,500) -- (7,500) --
------------- ------------- ------------- -------------
Total ........................................................... (7,024,997) (4,237,413) (21,254,069) (11,481,857)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from capital share transactions (3,209,516) 2,404,744 (8,580,737) (210,200)
------------- ------------- ------------- -------------
Increase (decrease) in net assets ............................... (1,287,178) (3,889,456) (6,525,025) (13,295,037)
Net Assets:
Beginning of year .................................................... 52,971,112 56,860,568 91,390,064 104,685,101
------------- ------------- ------------- -------------
End of year .......................................................... $ 51,683,934 $ 52,971,112 $ 84,865,039 $ 91,390,064
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Ohio Series Oregon Series
---------------------------- ----------------------------
Year ended September 30 Year ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................................ $ 9,431,883 $ 9,704,400 $ 3,208,270 $ 3,204,214
Net realized gain (loss) on investments .............................. 810,038 1,864,934 70,060 636,094
Net change in unrealized appreciation/depreciation
of investments .................................................... 5,388,960 (17,335,724) 1,780,874 (5,354,310)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations ............... 15,630,881 (5,766,390) 5,059,204 (1,514,002)
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (9,410,971) (9,697,970) (3,154,482) (3,193,582)
Class D ........................................................... (20,912) (6,430) (53,788) (10,632)
Net realized gain on investments:
Class A ........................................................... (1,594,353) (3,703,561) (140,983) (494,099)
Class D ........................................................... (3,594) -- (2,232) --
------------- ------------- ------------- -------------
Decrease in net assets from distributions ....................... (11,029,830) (13,407,961) (3,351,485) (3,698,313)
------------- ------------- ------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 4,802,866 9,557,949 3,693,429 7,552,039
Class D ........................................................... 277,972 328,208 897,335 896,846
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 5,871,637 6,102,997 1,966,334 2,003,359
Class D ........................................................... 17,037 5,793 38,946 7,973
Exchanged from associated Funds:
Class A ........................................................... 787,632 720,509 884,994 437,837
Class D ........................................................... 28,117 -- -- --
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... 1,221,569 2,815,286 107,524 372,237
Class D ........................................................... 3,510 -- 1,995 --
------------- ------------- ------------- -------------
Total ........................................................... 13,010,340 19,530,742 7,590,557 11,270,291
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ........................................................... (15,867,883) (16,355,416) (6,179,880) (6,282,450)
Class D ........................................................... (10,683) -- (210,837) (40,414)
Exchanged into associated Funds:
Class A ........................................................... (2,675,846) (2,290,059) (2,472,172) (1,100,956)
Class D ........................................................... -- -- (118,837) (2,000)
------------- ------------- ------------- -------------
Total ........................................................... (18,554,412) (18,645,475) (8,981,726) (7,425,820)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from capital share transactions (5,544,072) 885,267 (1,391,169) 3,844,471
------------- ------------- ------------- -------------
Increase (decrease) in net assets ............................... (943,021) (18,289,084) 316,550 (1,367,844)
Net Assets:
Beginning of year .................................................... 171,793,535 190,082,619 60,727,448 62,095,292
------------- ------------- ------------- -------------
End of year .......................................................... $ 170,850,514 $ 171,793,535 $ 61,043,998 $ 60,727,448
============= ============= ============= =============
</TABLE>
- ----------------
* The Fund began offering Class D shares on February 1, 1994
See notes to financial statements.
44 & 45
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
Statements of Changes in Net Assets (continued) For the year ended September 30, 1995
- -----------------------------------------------------------------------------------------------------
South Carolina Series
-----------------------------
Year ended September 30
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Operations:
Net investment income ................................................ $ 6,032,145 $ 6,250,740
Net realized gain on investments ..................................... 255,806 203,935
Net change in unrealized appreciation/depreciation
of investments .................................................... 5,014,984 (12,270,797)
------------- -------------
Increase (decrease) in net assets from operations ............... 11,302,935 (5,816,122)
------------- -------------
Distributions to shareholders:
Net investment income:
Class A ........................................................... (5,962,919) (6,222,624)
Class D ........................................................... (69,226) (28,116)
Net realized gain on investments:
Class A ........................................................... (207,068) (1,795,272)
Class D ........................................................... (2,607) --
------------- -------------
Decrease in net assets from distributions ....................... (6,241,820) (8,046,012)
------------- -------------
Capital share transactions:*
Net proceeds from sale of shares:
Class A ........................................................... 7,883,988 21,175,039
Class D ........................................................... 440,392 1,541,603
Net asset value of shares issued in payment of dividends:
Class A ........................................................... 3,428,206 3,661,681
Class D ........................................................... 56,548 21,347
Exchanged from associated Funds:
Class A ........................................................... 1,353,402 221,817
Class D ........................................................... 89,667 46,010
Net asset value of shares issued in payment of gain distributions:
Class A ........................................................... 162,756 1,363,300
Class D ........................................................... 2,494 --
------------- -------------
Total ........................................................... 13,417,453 28,030,797
------------- -------------
Cost of shares repurchased:
Class A ........................................................... (17,698,986) (16,114,470)
Class D ........................................................... (360,978) (66,265)
Exchanged into associated Funds:
Class A ........................................................... (2,826,362) (1,961,069)
Class D ........................................................... (78,655) (4,000)
------------- -------------
Total ........................................................... (20,964,981) (18,145,804)
------------- -------------
Increase (decrease) in net assets from capital share transactions (7,547,528) 9,884,993
------------- -------------
Decrease in net assets .......................................... (2,486,413) (3,977,141)
Net Assets:
Beginning of year .................................................... 116,611,502 120,588,643
------------- -------------
End of year .......................................................... $ 114,125,089 $ 116,611,502
============= =============
</TABLE>
- ----------------
* The Fund began offering Class D shares on February 1, 1994
See notes to financial statements.
46
<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." Each Series of the Fund offers two classes of shares. All shares
existing prior to February 1, 1994, were 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 distribution fee of up to 0.75% and
a service fee of up to 0.25% on an annual basis, and contingent deferred sales
load ("CDSL") of 1% imposed on certain redemptions made within one year of
purchase. The two classes of shares for each 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.
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 value of the shares 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.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1995, were as follows:
Series Purchases Sales
------ --------- -----
National $26,406,482 $38,510,292
Colorado 8,032,500 12,691,612
Georgia 1,995,000 8,468,485
Louisiana 2,937,540 5,375,633
Maryland 2,003,020 7,857,632
Massachusetts 18,759,795 28,341,893
Michigan 30,379,770 36,276,102
Minnesota 7,265,731 14,686,729
Missouri 1,957,000 3,803,879
New York 29,010,192 38,452,106
Ohio 4,930,050 12,910,963
Oregon 1,433,885 2,405,000
South Carolina 4,576,189 13,011,164
47
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At September 30, 1995, 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 $3,473,095 $2,509,813
Colorado 2,341,619 1,162,695
Georgia 1,827,427 934,451
Louisiana 2,985,796 1,017,562
Maryland 2,555,361 634,160
Massachusetts 4,443,538 1,245,925
Michigan 6,893,276 690,747
Minnesota 9,663,606 2,852,381
Missouri 2,704,405 937,176
New York 3,147,982 685,730
Ohio 9,537,102 1,358,105
Oregon 2,406,233 554,319
South Carolina 4,744,485 1,161,709
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, 1995, the Manager, at its discretion, waived portions of its
fee for the Georgia, Missouri, and Oregon Series, equal to $28,814, $24,653, and
$28,465, respectively. The management fees reflected in the Statements of
Operations for the Georgia, Missouri, and Oregon Series represent annualized
rates of 0.45%, 0.45%, and 0.45%, 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 concessions after commissions were paid to dealers for the sale of
Class A shares:
Distributor Dealer
Series Concessions Commissions
------ ----------- -----------
National $11,153 $ 79,889
Colorado 5,942 44,871
Georgia 12,480 93,530
Louisiana 7,730 54,577
Maryland 8,750 66,429
Massachusetts 12,600 94,205
Michigan 30,006 227,211
Minnesota 18,444 140,533
Missouri 6,965 53,304
New York 14,942 112,407
Ohio 23,679 178,085
Oregon 16,678 123,858
South Carolina 30,670 237,827
The Fund has 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 attributable to the particular service organizations for
providing personal services and/or the maintenance of shareholder accounts. For
the year ended September 30, 1995, the Distributor charged such fees to the Fund
pursuant to the Plan as follows:
Annualized
Total Fees % of Average
Series Paid Net Assets
------ ---- ----------
National $ 93,899 .09%
Colorado 51,731 .09
Georgia 58,540 .10
Louisiana 59,609 .10
Maryland 53,104 .09
Massachusetts 110,101 .10
Michigan 144,787 .10
Minnesota 129,656 .10
Missouri 47,193 .09
New York 72,017 .08
Ohio 165,972 .10
Oregon 56,992 .10
South Carolina 108,626 .10
48
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
The Fund has 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 year ended September 30, 1995,
fees paid equivalent to 1% per annum of the average daily net assets of Class D
shares were as follows:
Series
------
National $ 7,769
Colorado 1,153
Georgia 15,180
Louisiana 6,293
Maryland 5,107
Massachusetts 9,788
Michigan 8,816
Minnesota 19,274
Missouri 4,074
New York 6,076
Ohio 4,694
Oregon 12,249
South Carolina 15,766
The Distributor is entitled to retain any CDSL imposed on certain redemptions of
Class D shares occurring within one year of purchase. For the year ended
September 30, 1995, such charges were as follows:
Series
------
National $101
Georgia 378
Louisiana 409
Massachusetts 323
Michigan 796
Minnesota 700
Missouri 428
New York 940
Ohio 100
Oregon 841
South Carolina 356
Effective April 1, 1995, Seligman Services, Inc., an affiliate of the Manager
became eligible to receive commissions from certain sales of Fund shares, as
well as distribution and service fees pursuant to the Plan. For the period ended
September 30, 1995, Seligman Services, Inc. received commissions of $12,136 from
sales of shares of the Fund. Seligman Services, Inc. also received distribution
and service fees of $15,566, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment companies,
charged at cost for shareholder account services the following amounts:
Series
------
National $152,223
Colorado 85,664
Georgia 110,536
Louisiana 86,834
Maryland 106,397
Massachusetts 178,967
Michigan 214,828
Minnesota 215,885
Missouri 84,942
New York 119,419
Ohio 251,060
Oregon 93,199
South Carolina 168,308
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
Fees of $56,000 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. Deferred fees and the related accrued interest are not deductible for
federal income tax purposes until such amounts are paid. The annual
49
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
cost of such fees and interest is included in directors' fees and expenses, and
the accumulated balances thereof at September 30, 1995, are as follows:
Series
------
National $15,201
Colorado 9,096
Georgia 8,450
Louisiana 9,988
Maryland 9,988
Massachusetts 12,727
Michigan 12,249
Minnesota 12,727
Missouri 9,096
New York 12,727
Ohio 12,727
Oregon 8,922
South Carolina 8,450
5. Class-specific expenses charged to Class A and Class D shares for the year
ended September 30, 1995, which are included in the corresponding captions of
the Statements of Operations, were as follows:
<TABLE>
<CAPTION>
Shareholder
Distribution reports and
Series and service fees Registration communications
------ ---------------- ------------ --------------
<S> <C> <C> <C>
National:
Class A $ 93,899 $4,514 $1,584
Class D 7,769 1,220 15
Colorado:
Class A 51,731 720 1,346
Class D 1,153 186 2
Georgia:
Class A 58,540 2,650 829
Class D 15,180 865 17
Louisiana:
Class A 59,609 1,191 716
Class D 6,293 790 26
Maryland:
Class A 53,104 2,474 1,484
Class D 5,107 727 12
Massachusetts:
Class A 110,101 2,186 2,059
Class D 9,788 1,642 32
Michigan:
Class A 144,787 1,897 2,981
Class D 8,816 1,791 40
Minnesota:
Class A 129,656 1,547 4,830
Class D 19,274 1,158 141
Missouri:
Class A 47,193 764 1,518
Class D 4,074 665 15
New York:
Class A 72,017 1,471 1,625
Class D 6,076 976 10
Ohio:
Class A 165,972 1,235 3,236
Class D 4,694 799 19
</TABLE>
50
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
Note 5. (continued)
<TABLE>
<CAPTION>
Shareholder
Distribution reports and
Series and service fees Registration communications
------ ---------------- ------------ --------------
<S> <C> <C> <C>
Oregon:
Class A $ 56,992 $1,724 $1,985
Class D 12,249 755 24
South Carolina:
Class A 108,626 60 4,160
Class D 15,766 924 96
</TABLE>
6. In accordance with current federal income tax law, each of the Series' net
realized capital gains and losses are considered separately for purposes of
determining taxable capital gains. At September 30, 1995, the net loss
carryforwards for the National, Colorado and New York Series amounted to
$457,352, $268,007 and $48,960, respectively, which are available for offset
against future taxable net gains, expiring in 2003. Accordingly, no capital gain
distributions are expected to be paid to shareholders of the National, Colorado
and New York Series until net capital gains have been realized in excess of the
available capital loss carryforwards.
7. At September 30, 1995, 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.
Transactions in shares of Capital Stock were as follows:*
<TABLE>
<CAPTION>
National Series Colorado Series Georgia Series
------------------------ ------------------------ -------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
------------------------ ------------------------ -------------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ..................................... 390,656 764,281 197,677 268,474 342,804 1,300,888
Class D ..................................... 119,342 60,983 14,107 40,581 168,888 104,340
Shares issued in payment of dividends:
Class A ..................................... 414,132 438,686 226,321 247,700 263,035 272,060
Class D ..................................... 3,246 1,137 424 420 7,605 1,633
Exchanged from associated Funds:
Class A ..................................... 1,396,452 259,262 73,282 42,669 169,875 48,335
Class D ..................................... 122,280 -- -- -- 32 8,316
Shares issued in payment of gain distributions:
Class A ..................................... -- 706,415 -- 63,489 94,017 63,913
Class D ..................................... -- -- -- -- 1,780 --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... 2,446,108 2,230,764 511,811 663,333 1,048,036 1,799,485
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ..................................... (2,610,634) (1,943,600) (997,269) (1,126,423) (1,363,466) (1,083,796)
Class D ..................................... (14,877) -- (1,468) (27,460) (16,580) (861)
Exchanged into associated Funds:
Class A ..................................... (1,359,162) (345,902) (185,668) (43,792) (337,410) (54,072)
Class D ..................................... (131,648) -- (136) -- (9,351) --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... (4,116,321) (2,289,502) (1,184,541) (1,197,675) (1,726,807) (1,138,729)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in shares .................. (1,670,213) (58,738) (672,730) (534,342) (678,771) 660,756
========== ========== ========== ========== ========== ==========
</TABLE>
- ----------
* The Fund began offering Class D shares on February 1, 1994.
51
<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
------------------------ ------------------------ -------------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ..................................... 203,544 511,859 235,573 397,002 399,337 472,153
Class D ..................................... 8,145 88,738 46,497 48,184 80,201 136,211
Shares issued in payment of dividends:
Class A ..................................... 235,011 238,291 222,065 222,712 475,382 506,326
Class D ..................................... 2,969 1,050 1,836 330 4,357 2,911
Exchanged from associated Funds:
Class A ..................................... 32,811 18,733 174,666 35,901 643,216 111,424
Class D ..................................... -- -- 1,883 7,334 8,872 4,948
Shares issued in payment of gain distributions:
Class A ..................................... 104,944 54,209 101,029 113,033 51,797 297,793
Class D ..................................... 1,269 -- 737 -- 618 --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... 588,693 912,880 784,286 824,496 1,663,780 1,531,766
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ..................................... (660,838) (712,918) (892,644) (720,685) (1,900,781) (1,783,099)
Class D ..................................... (43,956) (1,054) (16,759) (901) (16,608) (516)
Exchanged into associated Funds:
Class A ..................................... (34,105) (54,301) (192,205) (83,511) (722,628) (247,705)
Class D ..................................... -- -- (10,109) -- (108,292) --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... (738,899) (768,273) (1,111,717) (805,097) (2,748,309) (2,031,320)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in shares .................. (150,206) 144,607 (327,431) 19,399 (1,084,529) (499,554)
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Michigan Series Minnesota Series Missouri Series
------------------------ ------------------------ -------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
------------------------ ------------------------ -------------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ..................................... 757,584 1,164,238 544,854 649,224 199,885 432,301
Class D ..................................... 69,200 79,168 111,851 217,891 28,871 63,051
Shares issued in payment of dividends:
Class A ..................................... 607,709 595,784 681,571 681,934 187,773 192,135
Class D ..................................... 3,659 1,022 8,190 2,070 1,688 119
Exchanged from associated Funds:
Class A ..................................... 104,833 78,106 186,606 181,367 49,003 95,722
Class D ..................................... 12,331 2,579 20,768 -- -- 2,376
Shares issued in payment of gain distributions:
Class A ..................................... 75,509 133,922 26,068 203,361 46,811 61,773
Class D ..................................... 425 -- 310 -- 458 --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... 1,631,250 2,054,819 1,580,218 1,935,847 514,489 847,477
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ..................................... (1,759,378) (1,673,481) (1,640,906) (1,478,662) (829,527) (432,021)
Class D ..................................... (22,079) (1,801) (35,960) (6,565) (9,384) (18,300)
Exchanged into associated Funds:
Class A ..................................... (293,434) (176,197) (308,844) (223,599) (108,014) (96,265)
Class D ..................................... (7,254) -- (32,624) -- (2,017) --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... (2,082,145) (1,851,479) (2,018,334) (1,708,826) (948,942) (546,586)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in shares .................. (450,895) 203,340 (438,116) 227,021 (434,453) 300,891
========== ========== ========== ========== ========== ==========
</TABLE>
52
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Series Ohio Series Oregon Series
------------------------ ------------------------ -------------------------
Year ended Year ended Year ended
September 30 September 30 September 30
------------------------ ------------------------ -------------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A ..................................... 759,986 644,155 607,544 1,140,889 491,549 973,723
Class D ..................................... 20,328 61,053 35,134 40,208 119,881 118,176
Shares issued in payment of dividends:
Class A ..................................... 346,619 345,368 742,966 738,057 263,145 258,985
Class D ..................................... 2,790 1,014 2,142 718 5,200 1,057
Exchanged from associated Funds:
Class A ..................................... 307,438 89,847 100,205 86,706 117,527 56,640
Class D ..................................... 46,880 -- 3,512 -- -- --
Shares issued in payment of gain distributions:
Class A ..................................... 233,284 230,141 166,200 332,776 15,449 47,000
Class D ..................................... 1,417 -- 476 -- 287 --
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... 1,718,742 1,371,578 1,658,179 2,339,354 1,013,038 1,455,581
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A ..................................... (2,115,969) (1,153,513) (2,013,198) (1,984,770) (827,019) (814,995)
Class D ..................................... (20,029) -- (1,314) -- (27,866) (5,414)
Exchanged into associated Funds:
Class A ..................................... (706,020) (264,593) (340,747) (276,088) (344,772) (143,668)
Class D ..................................... (980) -- -- -- (15,720) (264)
---------- ---------- ---------- ---------- ---------- ----------
Total .......................................... (2,842,998) (1,418,106) (2,355,259) (2,260,858) (1,215,377) (964,341)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in shares .................. (1,124,256) (46,528) (697,080) 78,496 (202,339) 491,240
========== ========== ========== ========== ========== ==========
</TABLE>
South Carolina Series
-------------------------
Year ended
September 30
-------------------------
1995 1994
---------- ----------
Sale of shares:
Class A ......................................... 1,022,961 2,596,435
Class D ......................................... 56,814 194,659
Shares issued in payment of dividends:
Class A ......................................... 444,222 455,988
Class D ......................................... 7,314 2,743
Exchanged from associated Funds:
Class A ......................................... 173,490 27,515
Class D ......................................... 12,150 5,929
Shares issued in payment of gain distributions:
Class A ......................................... 22,923 164,253
Class D ......................................... 351 --
---------- ----------
Total .............................................. 1,740,225 3,447,522
---------- ----------
Shares repurchased:
Class A ......................................... (2,310,043) (2,031,384)
Class D ......................................... (46,819) (8,567)
Exchanged into associated Funds:
Class A ......................................... (376,197) (249,202)
Class D ......................................... (10,186) (516)
---------- ----------
Total .............................................. (2,743,245) (2,289,669)
---------- ----------
Increase (decrease) in shares ...................... (1,003,020) 1,157,853
========== =========
53
<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 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 using average shares outstanding. The
total return based on net asset value measures a Series' performance assuming
investors purchased 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) Distributions Net Increase
Value at Net Unrealized from Dividends from (Decrease) in
Per Share Operating Beginning Investment Investment Investment Paid or Net Gain Net Asset
Performance: of Year Income* Gain (Loss) Operations Declared Realized Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A shares:
National Series
Year ended 9/30/95 $7.18 $0.40 $0.40 $0.80 $(0.40) $ -- $0.40
Year ended 9/30/94 8.72 0.41 (1.04) (0.63) (0.41) (0.50) (1.54)
Year ended 9/30/93 8.07 0.45 0.78 1.23 (0.45) (0.13) 0.65
Year ended 9/30/92 7.90 0.48 0.20 0.68 (0.48) (0.03) 0.17
Year ended 9/30/91 7.44 0.49 0.54 1.03 (0.49) (0.08) 0.46
Colorado Series
Year ended 9/30/95 7.09 0.38 0.21 0.59 (0.38) -- 0.21
Year ended 9/30/94 7.76 0.37 (0.59) (0.22) (0.37) (0.08) (0.67)
Year ended 9/30/93 7.34 0.39 0.49 0.88 (0.39) (0.07) 0.42
Year ended 9/30/92 7.22 0.42 0.12 0.54 (0.42) -- 0.12
Year ended 9/30/91 6.91 0.44 0.31 0.75 (0.44) -- 0.31
Georgia Series
Year ended 9/30/95 7.48 0.39 0.43 0.82 (0.39) (0.10) 0.33
Year ended 9/30/94 8.43 0.41 (0.86) (0.45) (0.41) (0.09) (0.95)
Year ended 9/30/93 7.85 0.43 0.62 1.05 (0.43) (0.04) 0.58
Year ended 9/30/92 7.63 0.46 0.25 0.71 (0.46) (0.03) 0.22
Year ended 9/30/91 7.18 0.47 0.46 0.93 (0.47) (0.01) 0.45
Louisiana Series
Year ended 9/30/95 7.94 0.43 0.34 0.77 (0.43) (0.14) 0.20
Year ended 9/30/94 8.79 0.44 (0.77) (0.33) (0.44) (0.08) (0.85)
Year ended 9/30/93 8.38 0.46 0.51 0.97 (0.46) (0.10) 0.41
Year ended 9/30/92 8.18 0.49 0.24 0.73 (0.49) (0.04) 0.20
Year ended 9/30/91 7.70 0.50 0.50 1.00 (0.50) (0.02) 0.48
Maryland Series
Year ended 9/30/95 7.71 0.41 0.38 0.79 (0.41) (0.13) 0.25
Year ended 9/30/94 8.64 0.42 (0.76) (0.34) (0.42) (0.17) (0.93)
Year ended 9/30/93 8.15 0.44 0.59 1.03 (0.44) (0.10) 0.49
Year ended 9/30/92 7.94 0.46 0.24 0.70 (0.46) (0.03) 0.21
Year ended 9/30/91 7.45 0.47 0.49 0.96 (0.47) -- 0.49
Massachusetts Series
Year ended 9/30/95 7.66 0.42 0.28 0.70 (0.42) (0.03) 0.25
Year ended 9/30/94 8.54 0.44 (0.67) (0.23) (0.44) (0.21) (0.88)
Year ended 9/30/93 8.06 0.47 0.55 1.02 (0.47) (0.07) 0.48
Year ended 9/30/92 7.86 0.49 0.24 0.73 (0.49) (0.04) 0.20
Year ended 9/30/91 7.26 0.50 0.62 1.12 (0.50) (0.02) 0.60
</TABLE>
<TABLE>
<CAPTION>
Ratio of Net
Net Asset Total Return Ratio of Investment Net Assets
Value at Based on Expenses to Income at End of
Per Share Operating End Net Asset Average to Average Portfolio Year
Performance: of Year Value Net Assets* Net Assets* Turnover (000's omitted)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A shares:
National Series
Year ended 9/30/95 $7.58 11.48% 0.86% 5.46% 24.91% $104,184
Year ended 9/30/94 7.18 (7.83) 0.85 5.30 24.86 111,374
Year ended 9/30/93 8.72 16.00 0.86 5.49 72.68 136,394
Year ended 9/30/92 8.07 8.84 0.77 6.02 63.99 132,130
Year ended 9/30/91 7.90 14.24 0.80 6.35 71.67 136,326
Colorado Series
Year ended 9/30/95 7.30 8.56 0.93 5.31 14.70 54,858
Year ended 9/30/94 7.09 (2.92) 0.86 5.06 10.07 58,197
Year ended 9/30/93 7.76 12.54 0.90 5.21 14.09 67,912
Year ended 9/30/92 7.34 7.74 0.81 5.81 23.22 64,900
Year ended 9/30/91 7.22 11.15 0.84 6.19 14.60 64,310
Georgia Series
Year ended 9/30/95 7.81 11.66 0.91 5.26 3.36 57,678
Year ended 9/30/94 7.48 (5.52) 0.73 5.21 19.34 61,466
Year ended 9/30/93 8.43 13.96 0.63 5.34 12.45 64,650
Year ended 9/30/92 7.85 9.64 0.47 5.95 10.24 44,585
Year ended 9/30/91 7.63 13.30 0.59 6.30 6.07 28,317
Louisiana Series
Year ended 9/30/95 8.14 10.30 0.89 5.44 4.82 61,988
Year ended 9/30/94 7.94 (3.83) 0.87 5.31 17.16 61,441
Year ended 9/30/93 8.79 12.10 0.87 5.40 9.21 67,529
Year ended 9/30/92 8.38 9.13 0.80 5.89 25.45 57,931
Year ended 9/30/91 8.18 13.49 0.83 6.31 20.85 50,089
Maryland Series
Year ended 9/30/95 7.96 10.90 0.96 5.31 3.63 56,290
Year ended 9/30/94 7.71 (4.08) 0.92 5.17 17.68 57,263
Year ended 9/30/93 8.64 13.23 0.97 5.28 14.10 64,472
Year ended 9/30/92 8.15 9.15 0.86 5.76 29.57 57,208
Year ended 9/30/91 7.94 13.26 0.88 6.09 18.84 54,068
Massachusetts Series
Year ended 9/30/95 7.91 9.58 0.86 5.51 16.68 115,711
Year ended 9/30/94 7.66 (2.94) 0.85 5.46 12.44 120,149
Year ended 9/30/93 8.54 13.18 0.88 5.65 20.66 139,504
Year ended 9/30/92 8.06 9.75 0.77 6.27 27.92 128,334
Year ended 9/30/91 7.86 15.84 0.83 6.64 14.37 118,022
</TABLE>
Adjusted
Adjusted Ratio of
Adjusted Net Ratio of Net Investment
Investment Expenses to Income
Per Share Operating Income Average Net to Average
Performance: Per Share* Assets* Net Assets*
- --------------------------------------------------------------------------------
Class A shares:
National Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Colorado Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Georgia Series
Year ended 9/30/95 $0.39 0.96% 5.21%
Year ended 9/30/94 0.40 0.93 5.01
Year ended 9/30/93 0.40 0.93 5.04
Year ended 9/30/92 0.43 0.87 5.55
Year ended 9/30/91 0.43 1.09 5.80
Louisiana Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Maryland Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Massachusetts Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
- ----------
See page 58 for footnotes.
54-55
<PAGE>
================================================================================
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Increase
Net Asset Realized & (Decrease) Distributions Net Increase
Value at Net Unrealized from Dividends from (Decrease) in
Per Share Operating Beginning Investment Investment Investment Paid or Net Gain Net Asset
Performance: of Year Income* Gain (Loss) Operations Declared Realized Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michigan Series
Year ended 9/30/95 $8.28 $0.46 $0.30 $0.76 $(0.46) $(0.04) $0.26
Year ended 9/30/94 9.08 0.46 (0.71) (0.25) (0.46) (0.09) (0.80)
Year ended 9/30/93 8.68 0.47 0.59 1.06 (0.47) (0.19) 0.40
Year ended 9/30/92 8.38 0.50 0.35 0.85 (0.50) (0.05) 0.30
Year ended 9/30/91 7.89 0.51 0.51 1.02 (0.51) (0.02) 0.49
Minnesota Series
Year ended 9/30/95 7.72 0.45 0.11 0.56 (0.45) (0.01) 0.10
Year ended 9/30/94 8.28 0.45 (0.44) (0.01) (0.45) (0.12) (0.56)
Year ended 9/30/93 7.89 0.47 0.51 0.98 (0.47) (0.12) 0.39
Year ended 9/30/92 7.81 0.49 0.09 0.58 (0.49) (0.01) 0.08
Year ended 9/30/91 7.49 0.49 0.32 0.81 (0.49) -- 0.32
Missouri Series
Year ended 9/30/95 7.41 0.40 0.36 0.76 (0.40) (0.07) 0.29
Year ended 9/30/94 8.31 0.40 (0.79) (0.39) (0.40) (0.11) (0.90)
Year ended 9/30/93 7.80 0.42 0.57 0.99 (0.42) (0.06) 0.51
Year ended 9/30/92 7.72 0.44 0.15 0.59 (0.44) (0.07) 0.08
Year ended 9/30/91 7.22 0.46 0.50 0.96 (0.46) -- 0.50
New York Series
Year ended 9/30/95 7.67 0.42 0.36 0.78 (0.42) (0.17) 0.19
Year ended 9/30/94 8.75 0.43 (0.88) (0.45) (0.43) (0.20) (1.08)
Year ended 9/30/93 8.13 0.45 0.74 1.19 (0.45) (0.12) 0.62
Year ended 9/30/92 7.94 0.49 0.26 0.75 (0.49) (0.07) 0.19
Year ended 9/30/91 7.40 0.50 0.54 1.04 (0.50) -- 0.54
Ohio Series
Year ended 9/30/95 7.90 0.44 0.28 0.72 (0.44) (0.07) 0.21
Year ended 9/30/94 8.77 0.44 (0.70) (0.26) (0.44) (0.17) (0.87)
Year ended 9/30/93 8.28 0.46 0.56 1.02 (0.46) (0.07) 0.49
Year ended 9/30/92 8.06 0.49 0.26 0.75 (0.49) (0.04) 0.22
Year ended 9/30/91 7.62 0.51 0.45 0.96 (0.51) (0.01) 0.44
Oregon Series
Year ended 9/30/95 7.43 0.40 0.25 0.65 (0.40) (0.02) 0.23
Year ended 9/30/94 8.08 0.40 (0.59) (0.19) (0.40) (0.06) (0.65)
Year ended 9/30/93 7.60 0.42 0.48 0.90 (0.42) -- 0.48
Year ended 9/30/92 7.42 0.42 0.18 0.60 (0.42) -- 0.18
Year ended 9/30/91 6.96 0.44 0.46 0.90 (0.44) -- 0.46
South Carolina Series
Year ended 9/30/95 7.61 0.41 0.37 0.78 (0.41) (0.01) 0.36
Year ended 9/30/94 8.52 0.41 (0.79) (0.38) (0.41) (0.12) (0.91)
Year ended 9/30/93 8.00 0.43 0.54 0.97 (0.43) (0.02) 0.52
Year ended 9/30/92 7.71 0.45 0.31 0.76 (0.45) (0.02) 0.29
Year ended 9/30/91 7.23 0.46 0.52 0.98 (0.46) (0.04) 0.48
</TABLE>
<TABLE>
<CAPTION>
Ratio of Net
Net Asset Total Return Ratio of Investment Net Assets
Value at Based on Expenses to Income at End of
Per Share Operating End Net Asset Average to Average Portfolio Year
Performance: of Year Value Net Assets* Net Assets* Turnover (000's omitted)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michigan Series
Year ended 9/30/95 $8.54 9.56% 0.87% 5.50% 20.48% $151,589
Year ended 9/30/94 8.28 (2.90) 0.84 5.32 10.06 151,095
Year ended 9/30/93 9.08 12.97 0.83 5.41 6.33 164,638
Year ended 9/30/92 8.68 10.55 0.76 5.93 32.12 144,524
Year ended 9/30/91 8.38 13.34 0.80 6.28 22.81 129,004
Minnesota Series
Year ended 9/30/95 7.82 7.61 0.87 5.89 5.57 132,716
Year ended 9/30/94 7.72 0.12 0.85 5.70 3.30 134,990
Year ended 9/30/93 8.28 13.06 0.90 5.89 5.73 144,600
Year ended 9/30/92 7.89 7.71 0.80 6.29 12.08 151,922
Year ended 9/30/91 7.81 11.10 0.80 6.28 2.61 182,979
Missouri Series
Year ended 9/30/95 7.70 10.67 0.88 5.31 3.88 51,169
Year ended 9/30/94 7.41 (4.85) 0.74 5.18 14.33 52,621
Year ended 9/30/93 8.31 13.17 0.71 5.29 17.03 56,861
Year ended 9/30/92 7.80 7.87 0.83 5.71 18.80 49,459
Year ended 9/30/91 7.72 13.61 0.88 6.10 16.30 47,659
New York Series
Year ended 9/30/95 7.86 10.93 0.88 5.52 34.05 83,980
Year ended 9/30/94 7.67 (5.37) 0.87 5.31 28.19 90,914
Year ended 9/30/93 8.75 15.26 0.94 5.37 27.90 104,685
Year ended 9/30/92 8.13 9.80 0.79 6.09 42.90 92,681
Year ended 9/30/91 7.94 14.56 0.80 6.57 44.57 83,684
Ohio Series
Year ended 9/30/95 8.11 9.59 0.84 5.56 2.96 170,191
Year ended 9/30/94 7.90 (3.08) 0.84 5.34 9.37 171,469
Year ended 9/30/93 8.77 12.81 0.85 5.44 30.68 190,083
Year ended 9/30/92 8.28 9.68 0.75 6.02 7.15 170,427
Year ended 9/30/91 8.06 12.96 0.77 6.42 13.95 156,179
Oregon Series
Year ended 9/30/95 7.66 9.05 0.86 5.40 2.47 59,549
Year ended 9/30/94 7.43 (2.38) 0.78 5.20 9.43 59,884
Year ended 9/30/93 8.08 12.21 0.78 5.35 8.08 62,095
Year ended 9/30/92 7.60 8.35 0.68 5.63 0.21 48,797
Year ended 9/30/91 7.42 13.25 0.71 6.06 7.60 39,350
South Carolina Series
Year ended 9/30/95 7.97 10.69 0.88 5.38 4.13 112,421
Year ended 9/30/94 7.61 (4.61) 0.83 5.12 1.81 115,133
Year ended 9/30/93 8.52 12.52 0.85 5.19 17.69 120,589
Year ended 9/30/92 8.00 10.08 0.81 5.71 3.37 82,882
Year ended 9/30/91 7.71 13.95 0.81 6.14 9.05 63,863
</TABLE>
Adjusted
Adjusted Ratio of
Adjusted Net Ratio of Net Investment
Investment Expenses to Income
Per Share Operating Income Average Net to Average
Performance: Per Share* Assets* Net Assets*
- --------------------------------------------------------------------------------
Michigan Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Minnesota Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Missouri Series
Year ended 9/30/95 $0.39 0.93% 5.26%
Year ended 9/30/94 0.39 0.88 5.04
Year ended 9/30/93 0.41 0.91 5.09
Year ended 9/30/92
Year ended 9/30/91
New York Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Ohio Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91
Oregon Series
Year ended 9/30/95 0.40 0.91 5.35
Year ended 9/30/94 0.39 0.89 5.09
Year ended 9/30/93 0.41 0.93 5.20
Year ended 9/30/92 0.42 0.83 5.48
Year ended 9/30/91 0.42 0.91 5.86
South Carolina Series
Year ended 9/30/95
Year ended 9/30/94
Year ended 9/30/93
Year ended 9/30/92
Year ended 9/30/91 0.45 0.91 6.04
- ----------
See page 58 for footnotes.
56 & 57
<PAGE>
<TABLE>
====================================================================================================================================
Financial Highlights (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net Increase
Net Asset Realized & (Decrease) Distributions Net Increase
Value at Net Unrealized from Dividends from (Decrease) in
Per Share Operating Beginning Investment Investment Investment Paid or Net Gain Net Asset
Performance: of Period Income* Gain (Loss) Operations Declared Realized Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class D shares:
National Series
Year ended 9/30/95 $7.18 $0.32 $0.39 $0.71 $(0.32) $ -- $0.39
2/1/94** to 9/30/94 8.20 0.22 (1.02) (0.80) (0.22) -- (1.02)
Colorado Series
Year ended 9/30/95 7.09 0.30 0.20 0.50 (0.30) -- 0.20
2/1/94** to 9/30/94 7.72 0.20 (0.63) (0.43) (0.20) -- (0.63)
Georgia Series
Year ended 9/30/95 7.49 0.32 0.43 0.75 (0.32) (0.10) 0.33
2/1/94** to 9/30/94 8.33 0.22 (0.84) (0.62) (0.22) -- (0.84)
Louisiana Series
Year ended 9/30/95 7.94 0.35 0.34 0.69 (0.35) (0.14) 0.20
2/1/94** to 9/30/94 8.73 0.24 (0.79) (0.55) (0.24) -- (0.79)
Maryland Series
Year ended 9/30/95 7.72 0.33 0.38 0.71 (0.33) (0.13) 0.25
2/1/94** to 9/30/94 8.46 0.23 (0.74) (0.51) (0.23) -- (0.74)
Massachusetts Series
Year ended 9/30/95 7.66 0.34 0.27 0.61 (0.34) (0.03) 0.24
2/1/94** to 9/30/94 8.33 0.24 (0.67) (0.43) (0.24) -- (0.67)
Michigan Series
Year ended 9/30/95 8.28 0.37 0.30 0.67 (0.37) (0.04) 0.26
2/1/94** to 9/30/94 9.01 0.25 (0.73) (0.48) (0.25) -- (0.73)
Minnesota Series
Year ended 9/30/95 7.73 0.38 0.10 0.48 (0.38) (0.01) 0.09
2/1/94** to 9/30/94 8.22 0.25 (0.49) (0.24) (0.25) -- (0.49)
Missouri Series
Year ended 9/30/95 7.41 0.32 0.36 0.68 (0.32) (0.07) 0.29
2/1/94** to 9/30/94 8.20 0.22 (0.79) (0.57) (0.22) -- (0.79)
New York Series
Year ended 9/30/95 7.67 0.34 0.37 0.71 (0.34) (0.17) 0.20
2/1/94** to 9/30/94 8.55 0.23 (0.88) (0.65) (0.23) -- (0.88)
Ohio Series
Year ended 9/30/95 7.92 0.36 0.30 0.66 (0.36) (0.07) 0.23
2/1/94** to 9/30/94 8.61 0.24 (0.69) (0.45) (0.24) -- (0.69)
Oregon Series
Year ended 9/30/95 7.43 0.33 0.24 0.57 (0.33) (0.02) 0.22
2/1/94** to 9/30/94 8.02 0.22 (0.59) (0.37) (0.22) -- (0.59)
South Carolina Series
Year ended 9/30/95 7.61 0.34 0.37 0.71 (0.34) (0.01) 0.36
2/1/94** to 9/30/94 8.42 0.22 (0.81) (0.59) (0.22) -- (0.81)
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Net Asset Total Return Ratio of Investment Net Assets
Value at Based on Expenses to Income at End of
Per Share Operating End Net Asset Average to Average Portfolio Period
Performance: of Period Value Net Assets* Net Assets* Turnover (000's omitted)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D shares:
National Series
Year ended 9/30/95 $7.57 10.17% 1.95% 4.40% 24.91% $1,215
2/1/94** to 9/30/94 7.18 (9.96) 1.76+ 4.37+ 24.86++ 446
Colorado Series
Year ended 9/30/95 7.29 7.26 2.02 4.23 14.70 193
2/1/94** to 9/30/94 7.09 (5.73) 1.78+ 4.05+ 10.07++ 96
Georgia Series
Year ended 9/30/95 7.82 10.58 1.90 4.28 3.36 2,079
2/1/94** to 9/30/94 7.49 (7.57) 1.76+ 4.28+ 19.34++ 849
Louisiana Series
Year ended 9/30/95 8.14 9.17 1.91 4.41 4.82 465
2/1/94** to 9/30/94 7.94 (6.45) 1.78+ 4.33+ 17.16++ 704
Maryland Series
Year ended 9/30/95 7.97 9.75 2.02 4.27 3.63 630
2/1/94** to 9/30/94 7.72 (6.21) 1.80+ 4.26+ 17.68++ 424
Massachusetts Series
Year ended 9/30/95 7.90 8.33 1.95 4.47 16.68 890
2/1/94** to 9/30/94 7.66 (5.34) 1.78+ 4.52+ 12.44++ 1,099
Michigan Series
Year ended 9/30/95 8.54 8.36 2.01 4.40 20.48 1,172
2/1/94** to 9/30/94 8.28 (5.47) 1.75+ 4.40+ 10.06++ 671
Minnesota Series
Year ended 9/30/95 7.82 6.45 1.85 4.92 5.57 2,237
2/1/94** to 9/30/94 7.73 (3.08) 1.74+ 4.68+ 3.30++ 1,649
Missouri Series
Year ended 9/30/95 7.70 9.49 1.98 4.23 3.88 515
2/1/94** to 9/30/94 7.41 (7.16) 1.70+ 4.27+ 14.33++ 350
New York Series
Year ended 9/30/95 7.87 9.87 1.96 4.42 34.05 885
2/1/94** to 9/30/94 7.67 (7.73) 1.81+ 4.39+ 28.19++ 476
Ohio Series
Year ended 9/30/95 8.15 8.67 1.93 4.48 2.96 660
2/1/94** to 9/30/94 7.92 (5.36) 1.78+ 4.41+ 9.37++ 324
Oregon Series
Year ended 9/30/95 7.65 7.86 1.83 4.41 2.47 1,495
2/1/94** to 9/30/94 7.43 (4.76) 1.72+ 4.32+ 9.43++ 843
South Carolina Series
Year ended 9/30/95 7.97 9.63 1.85 4.40 4.13 1,704
2/1/94** to 9/30/94 7.61 (7.14) 1.74+ 4.29+ 1.81++ 1,478
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
Adjusted
Adjusted Ratio of
Adjusted Net Ratio of Net Investment
Investment Expenses to Income
Per Share Operating Income Average Net to Average
Performance: Per Share* Assets* Net Assets*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class D shares:
National Series
Year ended 9/30/95
2/1/94** to 9/30/94
Colorado Series
Year ended 9/30/95
2/1/94** to 9/30/94
Georgia Series
Year ended 9/30/95 $0.31 1.95% 4.23%
2/1/94** to 9/30/94 0.21 1.90+ 4.15+
Louisiana Series
Year ended 9/30/95
2/1/94** to 9/30/94
Maryland Series
Year ended 9/30/95
2/1/94** to 9/30/94
Massachusetts Series
Year ended 9/30/95
2/1/94** to 9/30/94
Michigan Series
Year ended 9/30/95
2/1/94** to 9/30/94
Minnesota Series
Year ended 9/30/95
2/1/94** to 9/30/94
Missouri Series
Year ended 9/30/95 0.32 2.03 4.18
2/1/94** to 9/30/94 0.22 1.80+ 4.17+
New York Series
Year ended 9/30/95
2/1/94** to 9/30/94
Ohio Series
Year ended 9/30/95
2/1/94** to 9/30/94
Oregon Series
Year ended 9/30/95 0.33 1.88 4.36
2/1/94** to 9/30/94 0.22 1.82+ 4.22+
South Carolina Series
Year ended 9/30/95
2/1/94** to 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
* 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 notes to financial statements.
58 & 59
</TABLE>
<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, 1995, the related statements of operations for the year then ended
and of changes in net assets for 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, 1995 by correspondence with the Fund's custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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, 1995, 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.
/s/ Deloitte & Touche LLP
---------------------
DELOITTE & TOUCHE LLP
New York, New York
November 3, 1995
60
<PAGE>
(This page intentionally left blank.)
61
<PAGE>
================================================================================
Board of Directors
- --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
John R. Galvin 2
Dean, Fletcher School of Law and
Diplomacy at Tufts University
Director, USLIFE Corporation
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation
Frank A. McPherson 2
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow
Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
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
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
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
Ronald T. Schroeder 1
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
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
President
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 Lawrence P. Vogel
Chairman Vice President
Brian T. Zino Thomas G. Rose
President Treasurer
Thomas G. Moles Frank J. Nasta
Vice President Secretary
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Manager General Distributor Important Telephone Numbers
J. & W. Seligman & Co. Seligman Financial Services, Inc. (800) 221-2450 Shareholder Services
Incorporated 100 Park Avenue
100 Park Avenue New York, NY 10017 (800) 622-4597 24-Hour Automated
New York, NY 10017 Telephone
Shareholder Service Agent Access Service
General Counsel Seligman Data Corp.
Sullivan & Cromwell 100 Park Avenue
New York, NY 10017
Independent Auditors
Deloitte & Touche LLP
</TABLE>
63
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended olnly 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 9/95
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part A - Financial Highlights for Class A shares for the ten years ended
September 30, 1995 or from commencements of operations to September 30,
1995. Financial Highlights for Class D shares for the period February
1, 1994 (commencement of operations) to September 30,
1995.
Part B - Required Financial Statements are included in the Fund's Annual
Report to shareholders, dated September 30, 1995, which is incorporated
by reference in the Statement of Additional Information. These
Financial Statements are: Portfolios of Investments as of September 30,
1995; Statement of Assets and Liabilities as of September 30, 1995;
Statements of Changes in Net Assets for the years ended September 30,
1995 and September 30, 1994; Notes to Financial Statements; Financial
Highlights for the five years ended September 30, 1995 for the Fund's
Class A shares and for the period February 1, 1994 (commencement of
operations) to September 30, 1995 for the Fund's Class D shares; Report
of Independent Auditors.
(b) Exhibits: All Exhibits have been previously filed and are incorporated
herein by reference, except Exhibits marked with an asterisk (*) which
are attached hereto.7
(1) Copy of 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) Copy of By-Laws of the Registrant.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
26 filed on November 30, 1993.)
(3) N/A
(4) Copy of 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 Management Agreement between the Registrant and J. & W. Seligman
& Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
18 filed on February 1, 1989.)
(6a) Copy of 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.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
28 filed February 1, 1995.)
(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)
(9) N/A
(10) Opinion and Consent of Counsel.*
(11) Consent of Independent Auditors.*
(12) N/A
<PAGE>
(13) Copy of 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.)
(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 in response to Item 22.*
(17) Financial Data Schedule meeting the requirements of Rule 483 under the
Securities Act of 1933.*
(18) Copy of Multiclass Plan entered into by Registrant pursuant to Rule
18f-3 under the Investment Company Act of 1940.*
Item 25. Persons Controlled by or Under Common Control with Registrant - None.
Item 26. Number of Holders of Securities - As of January 12, 1996, the
number of record holders of each Series' Class A and Class D 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 2,593 44
Colorado Tax-Exempt Series 1,640 10
Georgia Tax-Exempt Series 1,324 76
Louisiana Tax-Exempt Series 1,066 6
Maryland Tax-Exempt Series 1,701 42
Massachusetts Tax-Exempt Series 2,846 32
Michigan Tax-Exempt Series 3,925 63
Minnesota Tax-Exempt Series 4,480 70
Missouri Tax-Exempt Series 1,571 26
New York Tax-Exempt Series 1,780 28
Ohio Tax-Exempt Series 4,328 31
Oregon Tax-Exempt Series 1,791 72
South Carolina Tax-Exempt Series 2,540 64
</TABLE>
<PAGE>
Item 27. Indemnification - Incorporated by reference to Registrant's
Registration Statement on Form N-1A (File 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.
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) on December 4, 1995.
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 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, 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 response to Item 21.
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of January 18, 1996
(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
Brian T. Zino* Director Director and President
Ronald T. Schroeder* Director Director
Fred E. Brown* Director Director
William H. Hazen* Director None
Thomas G. Moles* Director Vice President and Senior
Portfolio Manager
David F. Stein* Director None
David Watts* Director None
Stephen J. Hodgdon* President None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Mark R. Gordon* Senior Vice President,Director None
of Marketing
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of January 18, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Gerald I. Cetrulo, III Senior Vice President of Sales, None
140 West Parkway Regional Sales Manager
Pompton Plains, NJ 07444
Bradley F. Hanson Senior Vice President of Sales, None
9707 Xylon Court Regional Sales Manager
Bloomington, MN 55438
Bradley W. Larson Senior Vice President of Sales, None
367 Bryan Drive Regional Sales Manager
Danville, CA 94526
D. Ian Valentine Senior Vice President of Sales, None
307 Braehead Drive Regional Sales Manager
Fredericksburg, VA 22401
Helen Simon* Vice President, Sales None
Administration Manager
Marsha E. Jacoby* Vice President, National Accounts None
William W. Johnson* Vice President, Order Desk None
James R. Besher Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
Brad Davis Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
Andrew Draluck Regional Vice President None
4215 N. Civic Center
Blvd #273
Scottsdale, AZ 85251
Jonathan Evans Regional Vice Pesident None
222 Fairmont Way
Ft. Lauderdale, FL 33326
Carla Goehring Regional Vice President None
11426 Long Pine
Houston, TX 77077
Susan Gutterud Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
Mark Lien Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
Randy D. Lierman Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
Judith L. Lyon Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
David Meyncke Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of January 18, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Herb W. Morgan Regional Vice President None
11308 Monticook Court
San Diego, CA 92127
Melinda Nawn Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
Robert H. Ruhm Regional Vice President None
167 Derby Street
Melrose, MA 02176
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
Bruce Tuckey Regional Vice President None
41644 Chathman Drive
Novi, MI 48375
Andrew Veasey Regional Vice President None
14 Woodside
Rumson, NJ 07760
Todd Volkman Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
Kelli A. Wirth-Dumser Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
Frank P. Marino* Assistant Vice President, Mutual
Fund Product Manager None
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
</TABLE>
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, NY 10017.
(c) Not Applicable.
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
Item 31. Management Services - Seligman Data Corp. ("SDC"), the
Registrant's shareholder service agent, has an agreement with First
Data Investor Services Group ("FDISG") pursuant to which FDISG
provides a data processing system for certain shareholder
accounting and recordkeeping functions performed by SDC, which
commenced in July 1990. For the fiscal years ended September 30,
1995, 1994 and 1993, the approximate cost of these services for
each Series was:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
National Tax-Exempt Series $14,000 $ 14,897 $ 18,356
Colorado Tax-Exempt Series 8,600 9,357 11,815
Georgia Tax-Exempt Series 7,300 7,353 6,493
Louisiana Tax-Exempt Series 5,500 5,747 6,069
Maryland Tax-Exempt Series 8,600 8,886 11,043
Massachusetts Tax-Exempt Series 14,800 15,890 19,597
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Michigan Tax-Exempt Series $19,800 $ 20,445 $ 23,128
Minnesota Tax-Exempt Series 23,200 26,293 34,879
Missouri Tax-Exempt Series 8,300 8,621 10,402
New York Tax-Exempt Series 9,400 10,094 12,386
Ohio Tax-Exempt Series 21,700 22,932 27,710
Oregon Tax-Exempt Series 9,500 9,719 10,221
South Carolina Tax-Exempt Series 13,900 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. 29 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 26th day of January, 1996.
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. 29 has been signed below by the following persons
in the capacities indicated on January 26, 1996.
Signature Title
/s/ William C. Morris Chairman of the Board (Principal
- -----------------------------
William C. Morris* executive officer) and Director
/s/ Brian T. Zino President and Director
- -----------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer (Principal financial and
- -----------------------------
Thomas G. Rose accounting officer)
Fred E. Brown, Director )
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director ) /s/ Brian T. Zino
Betsy S. Michel, Director )---------------------------------
James C. Pitney, Director ) *Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
Brian T. Zino, Director )
SELIGMAN GROUP OF MUTUAL FUNDS
Plan for Multiple Classes of Shares
THIS PLAN, as it may be amended from time to time, sets forth
the separate arrangement and expense allocation of each class of shares (a
"Class") of each registered open-end management investment company, or series
thereof, in the Seligman Group of Mutual Funds that offers multiple classes of
shares (each, a "Fund"). The Plan has been adopted pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940, as amended (the "Act"), by a majority
of the Board of Directors or Trustees, as applicable ("Directors"), of each Fund
listed on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. General
A. Any Fund may issue more than one Class of voting stock,
provided that each Class:
i. Shall have a different arrangement for shareholder
services or the distribution of securities or both,
and shall pay all of the expenses of that
arrangement;
ii. May pay a different share of other expenses, not
including advisory or custodial fees or other
expenses related to the management of the Fund's
assets, if these expenses are actually incurred in a
different amount by that Class, or if the Class
receives services of a different kind or to a
different degree than other Classes of the same Fund
("Class Level Expenses");
iii. May pay a different advisory fee to the extent that
any difference in amount paid is the result of the
application of the same performance fee provisions in
the advisory contract of the Fund to the different
investment performance of each Class;
iv. Shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its
arrangement;
<PAGE>
v. Shall have separate voting rights on any matter
submitted to shareholders in which the interests of
one Class differ from the interests of any other
Class; and
vi. Shall have in all other respects the same rights and
obligations as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph
B., no types or categories of expenses shall be
designated Class Level Expenses.
ii. The Directors recognize that certain expenses arising
in certain sorts of unusual situations are properly
attributable solely to one Class and therefore should
be borne by that Class. These expenses ("Special
Expenses") may include, for example: (i) the costs of
preparing a proxy statement for, and holding, a
special meeting of shareholders to vote on a matter
affecting only one Class; (ii) the costs of holding a
special meeting of Directors to consider such a
matter; (iii) the costs of preparing a special report
relating exclusively to shareholders of one Class;
and (iv) the costs of litigation affecting one Class
exclusively. J. & W. Seligman & Co. Incorporated (the
"Manager") shall be responsible for identifying
expenses that are potential Special Expenses.
iii. Subject to clause iv. below, any Special Expense
identified by the Manager shall be treated as a Class
Level Expense.
iv. Any Special Expense identified by the Manager that is
material to the Class in respect of which it is
incurred shall be submitted by the Manager to the
Directors of the relevant Fund on a case by case
basis with a recommendation by the Manager as to
whether it should be treated as a Class Level
Expense. If approved by the Directors, such Special
Expense shall be treated as a Class Level Expense of
the affected class.
C. i. Realized and unrealized capital gains and losses
of a Fund shall be allocated to each class of that
Fund on the basis of the aggregate net asset value of
all outstanding shares ("Record Shares") of the Class
in relation to the aggregate net asset value of
Record Shares of the Fund.
<PAGE>
ii. Income and expenses of a Fund not charged directly to
a particular Class shall be allocated to each Class
of that Fund on the following basis:
a. For periodic dividend funds, on the basis of
the aggregate net asset value of Record
Shares of each Class in relation to the
aggregate net asset value of Record Shares
of the Fund.
b. For daily dividend funds, on the basis of
the aggregate net asset value of Settled
Shares of each Class in relation to the
aggregate net asset value of Settled Shares
of the Fund. "Settled Shares" means Record
Shares minus the number of shares of that
Class or Fund that have been issued but for
which payment has not cleared and plus the
number of shares of that Class or Fund which
have been redeemed but for which payment has
not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will
monitor each Fund for the existence of any material conflicts
among the interests of its several Classes. The Directors,
including a majority of the Disinterested Directors, shall
take such action as is reasonably necessary to eliminate any
such conflicts that may develop. The Manager and Seligman
Financial Services, Inc. (the "Distributor") will be
responsible for reporting any potential or existing conflicts
to the Directors. If a conflict arises, the Manager and the
Distributor will be responsible at their own expense for
remedying such conflict by appropriate steps up to and
including separating the classes in conflict by establishing a
new registered management company to operate one of the
classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under the
Act (the "Rule 12b-1 Plan") provides that the Directors will
receive quarterly and annual statements complying with
paragraph (b)(3)(ii) of Rule 12b-1, as it may be amended from
time to time. In the statements, only distribution
expenditures properly attributable to the sale of shares of a
specific Class will be used to support the Rule 12b-1 fee
charged to shareholders of such Class. Expenditures not
related to the sale of a specific Class will not be presented
to the Directors to support Rule 12b-1 fees charged to
shareholders of such Class. The statements, including the
allocations upon which they are based, will be subject to the
review of the Disinterested Directors.
<PAGE>
F. Dividends paid by a Fund with respect to each Class, to the
extent any dividends are paid, will be calculated in the same
manner, at the same time and on the same day and will be in
the same amount, except that fee payments made under the Rule
12b-1 Plan relating to the Classes will be borne exclusively
by each Class and except that any Class Level Expenses shall
be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's
independent auditors to review expense allocations each year
as part of their regular audit process, to inform the
Directors and the Manager of any irregularities detected and,
if specifically requested by the Directors, to prepare a
written report thereon. In addition, if any Special Expense is
incurred by a Fund and is classified as a Class Level Expense
in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing
such allocation, are hereby instructed to report thereon to
the Audit Committee of the relevant Fund and to the Manager.
The Manager will be responsible for taking such steps as are
necessary to remedy any irregularities so detected, and will
do so at its own expense to the extent such irregularities
should reasonably have been detected and prevented by the
Manager in the performance of its services to the Fund.
2. Specific Arrangements for Each Class
The following arrangements regarding shareholder services,
expense allocation and other indicated matters shall be in effect with respect
to the Class A shares and Class D shares of each Fund. The following
descriptions are qualified by reference to the more detailed description of such
arrangements set forth in the prospectus relating to each Fund, as the same may
from time to time be amended or supplemented (for each Fund, the "Relevant
Prospectus"), provided that no Relevant Prospectus may modify the provisions of
this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) Class A Shares
i. Class A shares are subject to an initial sales load
which varies with the size of the purchase, to a
maximum of 4.75% of the public offering price.
Reduced sales loads shall apply in certain
circumstances. Class A shares of Seligman Cash
Management Fund, Inc. shall not be subject to an
initial sales load.
ii. Class A shares shall be subject to a Rule 12b-1 fee
of up to 0.25% of average daily net assets.
<PAGE>
iii. Special Expenses attributable to the Class A shares,
except those determined by the Directors not to be
Class Level Expenses of the Class A shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A
shares. No other expenses shall be treated as Class
Level Expenses of the Class A shares.
iv. The Class A shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
(b) Class D Shares
i. Class D shares are sold without an initial sales load
but are subject to a contingent deferred sales load
of 1% in certain cases if the shares are redeemed
within one year.
ii. Class D shares shall be subject to a Rule 12b-1 fee
of up to 1.00% of average daily net assets.
iii. Special Expenses attributable to the Class D shares,
except those determined by the Directors not to be
Class Level Expenses of the Class D shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class D
shares. No other expenses shall be treated as Class
Level Expenses of the Class D shares.
iv. The Class D shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
<PAGE>
Schedule I
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman Common Stock, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman Henderson Global Growth Opportunities Fund Seligman Henderson Global
Smaller Companies Fund Seligman Henderson Global Technology Fund Seligman
Henderson International Fund Seligman High-Yield Bond Fund Seligman U.S.
Government Securities Fund Seligman National Tax-Exempt Fund Seligman California
Quality Tax Exempt Fund Seligman California High-Yield Tax-Exempt Fund Seligman
Colorado Tax-Exempt Fund Seligman Florida Tax-Exempt Fund Seligman Georgia
Tax-Exempt Fund Seligman Louisiana Tax-Exempt Fund Seligman Maryland Tax-Exempt
Fund Seligman Massachusetts Tax-Exempt Fund Seligman Michigan Tax-Exempt Fund
Seligman Minnesota Tax-Exempt Fund Seligman Missouri Tax- Exempt Fund Seligman
New Jersey Tax-Exempt Fund, Inc. Seligman New York Tax-Exempt Fund Seligman
North Carolina Tax-Exempt Fund Seligman Ohio Tax-Exempt Fund Seligman Oregon
Tax-Exempt Fund Seligman Pennsylvania Tax-Exempt Fund Series Seligman South
Carolina Tax-Exempt Fund
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. 29 to Registration Statement
No. 2-86008 of our report dated November 3, 1995, appearing in the annual report
to shareholders for the year ended September 30, 1995, and to the reference to
us under the caption "Financial Highlights" in the Prospectus, which is a part
of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
January 25, 1996
January 11, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
With respect to Post-Effective Amendment No. 29 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.
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/ William E. Tanis
Vice President
<PAGE>
January 19, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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
KING & SPALDING
<PAGE>
New Orleans, Louisiana
January 9, 1996
Direct Dial No. 504-556-4112
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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
Louisiana 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 "Louisiana
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,
LISKOW & LEWIS
By: /s/ Robert S. Angelico
RSA:hms
<PAGE>
January 12, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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 persosn whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
<PAGE>
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
January 11, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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
<PAGE>
January 15, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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 hereby 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/ Dickenson, Wright, Moon
Van Dusen & Freeman
<PAGE>
January 24, 1996
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.
<PAGE>
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. 19(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 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;
In addition, Minn. Stat. ss.289A.50, subd. 10, which was
enacted by Laws of Minnesota for 1995, Chapter 264, article 1, section 1,
provides as follows:
LIMITATION ON REFUND. If an addition to federal
taxable income under section 290.01, subdivision 19a, clause
(1), is judicially determined to discriminate against
interstate commerce, the legislature intends that the
discrimination be remedied by adding interest on obligations
of Minnesota governmental units and Indian tribes to federal
taxable income. This subdivision applies beginning with the
taxable years that begin during the calendar year in which the
court's decision is final. Other remedies apply for previous
taxable years.
Accordingly, subject to Minn. Stat. ss.289A.50, subd. 10, 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
<PAGE>
As noted above, Minn. Stat. 289A.50, subd. 10, provides that
it is the intent of Minnesota Legislature that interest income on obligations of
Minnesota governmental units, which obligations include the specified
obligations, and exempt-interest dividends that are derived from interest income
on such obligations, be included in the net income of individuals, estates, and
trusts for Minnesota income tax purposes if it is judicially determined that the
exemption by Minnesota of such interest or such exempt-interest dividends
unlawfully discriminates against interstate commerce because interest income on
obligations of governmental units located in other states, or exempt-interest
dividends derived from such obligations, is so included. This provision applies
to taxable years that begin during or after the calendar year in which such
judicial decision becomes final, regardless of the date on which the obligations
were issued, and other remedies apply for previous taxable years. The United
States Supreme Court recently denied certiorari in an Ohio case which upheld an
exemption for interest income on obligations of Ohio governmental issuers, even
though interest income on obligations of non-Ohio governmental issuers was
subject to tax. However, it cannot be predicted whether a similar case will be
brought in Minnesota or elsewhere, or what the outcome of such case would be.
Returning to the requirements of Minn. Stat. ss.290.01, subd.
19(a)(ii), 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, 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, will be included in the base
upon which such Minnesota alternative minimum tax is computed. 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.
<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, 1996, 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
FAEGRE & BENSON
Professional Limited
Liability Partnership
<PAGE>
January 19, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Re: Seligman Tax-Exempt Fund - Missouri Series
Gentlemen:
We have acted as special Missouri tax counsel to the Seligman
Tax-Exempt Fund Series, Inc. (the "Fund") and you have asked for our opinion of
the Missouri personal income tax consequences, under Chapter 143 of the Missouri
Revised Statutes, and Missouri personal property tax consequences to Missouri
resident individuals owning shares of the Missouri Tax-Exempt Class of common
stock of the Fund (the "Missouri Series"). We have assumed, with your
permission, for purposes of rendering this opinion, (i) that the Fund, a
Maryland corporation, is a nondiversified, open-ended management investment
company; (ii) each "series" of the Fund, including the Missouri Series,
qualifies for taxation as a regulated investment company under Part I,
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code");
(iii) that the Fund is authorized by its articles of incorporation to issue
various classes of common stock, one of which is the Missouri Series; (iv) that
the Fund, pursuant to its articles of incorporation, shall treat all
consideration received by it from the issue or sale of shares of the Missouri
Series, all assets in which such consideration is invested, and all income and
proceeds from the investment and disposition of such assets as belonging to the
shareholders of the Missouri Series, subject only to the rights of creditors;
(v) that dividends paid by the Missouri Series will constitute, in whole or in
part, "exempt-interest dividends" within the meaning of Section 852(b)(5) of the
Code; and (vi) that the Missouri Series will at the close of each quarter of its
taxable year invest at least 50% of the value of its assets in debt obligations,
the interest on which is excluded from gross income for purposes of Federal
income taxation.
Our opinion is based upon the present provisions of the
Missouri Revised Statutes, the Code of State Regulations (the "CSR") and the
Missouri Register publications as in effect on the date hereof. In particular,
our opinion is based upon the specific provisions of 12 CSR Section 10-2.155. No
assurance can be given that the opinions below may not be modified by
legislative, judicial or administrative changes which may be retrospective with
respect to transactions prior to the effective date of such changes, subject
only to the limitations in the Missouri and United States Constitutions against
retrospective legislation, administrative determinations or judicial decisions.
We have made no review and express no opinion with regard to (i) matters arising
under the laws of any jurisdiction other than the State of Missouri; (ii) the
creation of the Fund, its income tax status as a regulated investment company or
the validity of the Fund's creation and issuance of shares of the Missouri
Series; (iii) Missouri statutes or local ordinances imposing licensing and fee
requirements (some of which may use an income base for the determination of the
fee); (iv) the validity of various statutes considered herein under the Equal
Protection, Due Process or Commerce Clauses of the United States Constitution
(or similar provisions of the Missouri Constitution); (v) the validity or tax
status of any debt obligations which the Fund or the Missouri Series may
acquire; and (vi) any legislation pending before the current session of the
Missouri General Assembly.
<PAGE>
Based on the foregoing, we are of the opinion that:
1. Under Missouri law by application of 12 CSR Section
10-2.155, the portion of dividends distributed to individual shareholders of the
Missouri Series that qualify as exempt interest dividends under Section
852(b)(5) of the Code equal to the ratio of the interest income allocated to the
Missouri Series under Section 851(h) of the Code and derived from the investment
of assets of the Missouri Series in obligations, the interest on which is
excluded from gross income for Federal income tax purposes and exempt from
Missouri income taxation, over the total interest income allocated to the
Missouri Series under Section 851(h) of the Code and derived from the investment
of the assets of the Missouri Series in obligations, the interest on which is
excluded from gross income for Federal income tax purposes, will be exempt from
the Missouri income tax imposed by Chapter 143 of the Missouri Revised Statutes.
2. Dividends paid by the Missouri Series, if any, that do not
qualify as tax exempt dividends under Section 852(b)(5) of the Code, will be
exempt from Missouri income tax only to the extent that such dividends are
derived from interest on certain U.S. obligations that the State of Missouri is
expressly prohibited from taxing under the laws of the United States. The
portion of such dividends that is not subject to taxation by the State of
Missouri may be reduced by interest, or other expenses, in excess of $500 paid
or incurred by a shareholder in any taxable year to purchase or carry shares of
the Missouri Series of the Tax-exempt Fund or other investments producing income
that is includable in federal gross income, but exempt from Missouri income tax.
3. 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.
4. Shares of the Missouri Series owned by individual
shareholders will not be subject to the Missouri personal property tax under the
current Missouri statutes. While under its Constitution the State of Missouri
has the power to impose an intangible personal property tax on such property
owned by individuals, the State has not, since the repeal of the operative
provisions of Chapter 146 of the Missouri Revised Statutes as of January 1,
1975, exercised that power.
<PAGE>
We consent to the filing of this opinion as an exhibit to the
Registration Statement prepared in connection with the offering of the Fund and
the Missouri Series and to the references to this Firm in the Registration
Statement under the heading "Missouri Taxes".
Very truly yours,
BRYAN CAVE LLP
By: /s/ Bryan Cave LLP
<PAGE>
January 26, 1996
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.
<PAGE>
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 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.
<PAGE>
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 (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,
Sullivan & Cromwell
<PAGE>
January 26, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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 Ohio
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 "Ohio
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/ Squire Sanders & Dempsey
<PAGE>
January 25, 1996
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
certain 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.
<PAGE>
For purposes of State of Oregon personal income tax, taxable
income is defined as taxable 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 is 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:
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
certain 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.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit
to your Post-Effective Amendment No. 29 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/ Roy D. Lambert
Roy D. Lambert
RDL:wpc
<PAGE>
January 3, 1996
Seligman Tax-Exempt Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 29 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 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 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 1933, as amended.
Very truly yours,
/s/ Sinkler & Boyd, P.A.
- --------
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.
<TABLE> <S> <C>
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<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-GEORGIA CL A
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<S> <C>
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<PERIOD-END> SEP-30-1995
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<NET-CHANGE-FROM-OPS> 6560
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<DISTRIBUTIONS-OF-INCOME> (3090)<F1>
<DISTRIBUTIONS-OF-GAINS> (832)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 513<F1>
<NUMBER-OF-SHARES-REDEEMED> (1701)<F1>
<SHARES-REINVESTED> 357<F1>
<NET-CHANGE-IN-ASSETS> (2558)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 836
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 294<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 566<F1>
<AVERAGE-NET-ASSETS> 58991<F1>
<PER-SHARE-NAV-BEGIN> 7.48<F1>
<PER-SHARE-NII> .39<F1>
<PER-SHARE-GAIN-APPREC> .43<F1>
<PER-SHARE-DIVIDEND> (.39)<F1>
<PER-SHARE-DISTRIBUTIONS> (.10)<F1>
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<PER-SHARE-NAV-END> 7.81<F1>
<EXPENSE-RATIO> .91<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>134
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-GEORGIA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 57681
<INVESTMENTS-AT-VALUE> 58574
<RECEIVABLES> 1104
<ASSETS-OTHER> 305
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 226
<TOTAL-LIABILITIES> 226
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58510
<SHARES-COMMON-STOCK> 266<F1>
<SHARES-COMMON-PRIOR> 113<F1>
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 354
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 893
<NET-ASSETS> 2079<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 93<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (29)<F1>
<NET-INVESTMENT-INCOME> 64<F1>
<REALIZED-GAINS-CURRENT> 363
<APPREC-INCREASE-CURRENT> 3043
<NET-CHANGE-FROM-OPS> 6560
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (64)<F1>
<DISTRIBUTIONS-OF-GAINS> (13)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 169<F1>
<NUMBER-OF-SHARES-REDEEMED> (25)<F1>
<SHARES-REINVESTED> 9<F1>
<NET-CHANGE-IN-ASSETS> (2558)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 836
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29<F1>
<AVERAGE-NET-ASSETS> 1478<F1>
<PER-SHARE-NAV-BEGIN> 7.49<F1>
<PER-SHARE-NII> .32<F1>
<PER-SHARE-GAIN-APPREC> .43<F1>
<PER-SHARE-DIVIDEND> (.32)<F1>
<PER-SHARE-DISTRIBUTIONS> (.10)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.82<F1>
<EXPENSE-RATIO> 1.90<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>071
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-LOUISIANA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 59471
<INVESTMENTS-AT-VALUE> 61439
<RECEIVABLES> 1174
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<TOTAL-ASSETS> 62766
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 313
<TOTAL-LIABILITIES> 313
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60023
<SHARES-COMMON-STOCK> 7618<F1>
<SHARES-COMMON-PRIOR> 7736<F1>
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 462
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1968
<NET-ASSETS> 61988<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3885<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (549)<F1>
<NET-INVESTMENT-INCOME> 3336<F1>
<REALIZED-GAINS-CURRENT> 468
<APPREC-INCREASE-CURRENT> 2191
<NET-CHANGE-FROM-OPS> 6022
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3336)<F1>
<DISTRIBUTIONS-OF-GAINS> (1076)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 236<F1>
<NUMBER-OF-SHARES-REDEEMED> (695)<F1>
<SHARES-REINVESTED> 340<F1>
<NET-CHANGE-IN-ASSETS> 307
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1082
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 306<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 549<F1>
<AVERAGE-NET-ASSETS> 61314<F1>
<PER-SHARE-NAV-BEGIN> 7.94<F1>
<PER-SHARE-NII> .43<F1>
<PER-SHARE-GAIN-APPREC> .34<F1>
<PER-SHARE-DIVIDEND> (.43)<F1>
<PER-SHARE-DISTRIBUTIONS> (.14)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.14<F1>
<EXPENSE-RATIO> .89<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>074
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-LOUISIANA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 59471
<INVESTMENTS-AT-VALUE> 61439
<RECEIVABLES> 1174
<ASSETS-OTHER> 152
<OTHER-ITEMS-ASSETS> 0
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<OTHER-ITEMS-LIABILITIES> 313
<TOTAL-LIABILITIES> 313
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60023
<SHARES-COMMON-STOCK> 57<F1>
<SHARES-COMMON-PRIOR> 89<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 462
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1968
<NET-ASSETS> 465<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 40<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (12)<F1>
<NET-INVESTMENT-INCOME> 28<F1>
<REALIZED-GAINS-CURRENT> 468
<APPREC-INCREASE-CURRENT> 2191
<NET-CHANGE-FROM-OPS> 6022
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (28)<F1>
<DISTRIBUTIONS-OF-GAINS> (12)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8<F1>
<NUMBER-OF-SHARES-REDEEMED> (44)<F1>
<SHARES-REINVESTED> 4<F1>
<NET-CHANGE-IN-ASSETS> 307
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1082
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12<F1>
<AVERAGE-NET-ASSETS> 631<F1>
<PER-SHARE-NAV-BEGIN> 7.94<F1>
<PER-SHARE-NII> .35<F1>
<PER-SHARE-GAIN-APPREC> .34<F1>
<PER-SHARE-DIVIDEND> (.35)<F1>
<PER-SHARE-DISTRIBUTIONS> (.14)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.14<F1>
<EXPENSE-RATIO> 1.91<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>081
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MARYLAND CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 53963
<INVESTMENTS-AT-VALUE> 55884
<RECEIVABLES> 1196
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57106
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186
<TOTAL-LIABILITIES> 186
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54767
<SHARES-COMMON-STOCK> 7071<F1>
<SHARES-COMMON-PRIOR> 7422<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 232
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1921
<NET-ASSETS> 56290<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3524<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (538)<F1>
<NET-INVESTMENT-INCOME> 2986<F1>
<REALIZED-GAINS-CURRENT> 236
<APPREC-INCREASE-CURRENT> 2550
<NET-CHANGE-FROM-OPS> 5794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2986)<F1>
<DISTRIBUTIONS-OF-GAINS> (981)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 411<F1>
<NUMBER-OF-SHARES-REDEEMED> (1085)<F1>
<SHARES-REINVESTED> 323<F1>
<NET-CHANGE-IN-ASSETS> (767)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 984
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 281<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 538<F1>
<AVERAGE-NET-ASSETS> 56195<F1>
<PER-SHARE-NAV-BEGIN> 7.71<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> .38<F1>
<PER-SHARE-DIVIDEND> (.41)<F1>
<PER-SHARE-DISTRIBUTIONS> (.13)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.96<F1>
<EXPENSE-RATIO> .96<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>084
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MARYLAND CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 53963
<INVESTMENTS-AT-VALUE> 55884
<RECEIVABLES> 1196
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57106
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186
<TOTAL-LIABILITIES> 186
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54767
<SHARES-COMMON-STOCK> 79<F1>
<SHARES-COMMON-PRIOR> 55<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 232
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1921
<NET-ASSETS> 630<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 32<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (10)<F1>
<NET-INVESTMENT-INCOME> 22<F1>
<REALIZED-GAINS-CURRENT> 236
<APPREC-INCREASE-CURRENT> 2550
<NET-CHANGE-FROM-OPS> 5794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22)<F1>
<DISTRIBUTIONS-OF-GAINS> (7)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 48<F1>
<NUMBER-OF-SHARES-REDEEMED> (27)<F1>
<SHARES-REINVESTED> 3<F1>
<NET-CHANGE-IN-ASSETS> (767)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 985
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10<F1>
<AVERAGE-NET-ASSETS> 505<F1>
<PER-SHARE-NAV-BEGIN> 7.72<F1>
<PER-SHARE-NII> .33<F1>
<PER-SHARE-GAIN-APPREC> .38<F1>
<PER-SHARE-DIVIDEND> (.33)<F1>
<PER-SHARE-DISTRIBUTIONS> (.13)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.97<F1>
<EXPENSE-RATIO> 2.02<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>021
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MASSACHUSETTS CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 111646
<INVESTMENTS-AT-VALUE> 114844
<RECEIVABLES> 2038
<ASSETS-OTHER> 148
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117030
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 429
<TOTAL-LIABILITIES> 429
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111967
<SHARES-COMMON-STOCK> 14634<F1>
<SHARES-COMMON-PRIOR> 15688<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1436
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3198
<NET-ASSETS> 115711<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7348<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (997)<F1>
<NET-INVESTMENT-INCOME> 6351<F1>
<REALIZED-GAINS-CURRENT> 1447
<APPREC-INCREASE-CURRENT> 2623
<NET-CHANGE-FROM-OPS> 10465
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6351)<F1>
<DISTRIBUTIONS-OF-GAINS> (490)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1043<F1>
<NUMBER-OF-SHARES-REDEEMED> (2624)<F1>
<SHARES-REINVESTED> 527<F1>
<NET-CHANGE-IN-ASSETS> (4647)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 484
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 575<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 997<F1>
<AVERAGE-NET-ASSETS> 115443<F1>
<PER-SHARE-NAV-BEGIN> 7.66<F1>
<PER-SHARE-NII> .42<F1>
<PER-SHARE-GAIN-APPREC> .28<F1>
<PER-SHARE-DIVIDEND> (.42)<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.91<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>024
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MASSACHUSETTS CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 111646
<INVESTMENTS-AT-VALUE> 114844
<RECEIVABLES> 2038
<ASSETS-OTHER> 148
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117030
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 429
<TOTAL-LIABILITIES> 429
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111967
<SHARES-COMMON-STOCK> 113<F1>
<SHARES-COMMON-PRIOR> 144<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1436
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3198
<NET-ASSETS> 891<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 62<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (19)<F1>
<NET-INVESTMENT-INCOME> 43<F1>
<REALIZED-GAINS-CURRENT> 1447
<APPREC-INCREASE-CURRENT> 2623
<NET-CHANGE-FROM-OPS> 10465
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (43)<F1>
<DISTRIBUTIONS-OF-GAINS> (5)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89<F1>
<NUMBER-OF-SHARES-REDEEMED> (125)<F1>
<SHARES-REINVESTED> 5<F1>
<NET-CHANGE-IN-ASSETS> (4647)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 484
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 43<F1>
<AVERAGE-NET-ASSETS> 991<F1>
<PER-SHARE-NAV-BEGIN> 7.66<F1>
<PER-SHARE-NII> .34<F1>
<PER-SHARE-GAIN-APPREC> .27<F1>
<PER-SHARE-DIVIDEND> (.34)<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.90<F1>
<EXPENSE-RATIO> 1.95<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>031
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MICHIGAN CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 143921
<INVESTMENTS-AT-VALUE> 150124
<RECEIVABLES> 3134
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153294
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 533
<TOTAL-LIABILITIES> 533
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144009
<SHARES-COMMON-STOCK> 17742<F1>
<SHARES-COMMON-PRIOR> 18249<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2549
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6203
<NET-ASSETS> 151589<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9503<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (1297)<F1>
<NET-INVESTMENT-INCOME> 8206<F1>
<REALIZED-GAINS-CURRENT> 2566
<APPREC-INCREASE-CURRENT> 2887
<NET-CHANGE-FROM-OPS> 13697
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8206)<F1>
<DISTRIBUTIONS-OF-GAINS> (775)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 862<F1>
<NUMBER-OF-SHARES-REDEEMED> (2054)<F1>
<SHARES-REINVESTED> 683<F1>
<NET-CHANGE-IN-ASSETS> (996)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 762
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 746<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1297<F1>
<AVERAGE-NET-ASSETS> 149253<F1>
<PER-SHARE-NAV-BEGIN> 8.28<F1>
<PER-SHARE-NII> .46<F1>
<PER-SHARE-GAIN-APPREC> .30<F1>
<PER-SHARE-DIVIDEND> (.46)<F1>
<PER-SHARE-DISTRIBUTIONS> (.04)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.54<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>034
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MICHIGAN CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 143921
<INVESTMENTS-AT-VALUE> 150124
<RECEIVABLES> 3134
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153294
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 533
<TOTAL-LIABILITIES> 533
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144009
<SHARES-COMMON-STOCK> 137<F1>
<SHARES-COMMON-PRIOR> 81<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2549
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6203
<NET-ASSETS> 1172<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 56<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (18)<F1>
<NET-INVESTMENT-INCOME> 38<F1>
<REALIZED-GAINS-CURRENT> 2566
<APPREC-INCREASE-CURRENT> 2887
<NET-CHANGE-FROM-OPS> 13697
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (38)<F1>
<DISTRIBUTIONS-OF-GAINS> (4)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 81<F1>
<NUMBER-OF-SHARES-REDEEMED> (29)<F1>
<SHARES-REINVESTED> 4<F1>
<NET-CHANGE-IN-ASSETS> (996)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 762
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18<F1>
<AVERAGE-NET-ASSETS> 871<F1>
<PER-SHARE-NAV-BEGIN> 8.28<F1>
<PER-SHARE-NII> .37<F1>
<PER-SHARE-GAIN-APPREC> .30<F1>
<PER-SHARE-DIVIDEND> (.37)<F1>
<PER-SHARE-DISTRIBUTIONS> (.04)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.54<F1>
<EXPENSE-RATIO> 2.01<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>041
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MINNESOTA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 129078
<INVESTMENTS-AT-VALUE> 135889
<RECEIVABLES> 2220
<ASSETS-OTHER> 282
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 138391
<PAYABLE-FOR-SECURITIES> 2846
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 592
<TOTAL-LIABILITIES> 3438
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 127897
<SHARES-COMMON-STOCK> 16969<F1>
<SHARES-COMMON-PRIOR> 17479<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 245
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6811
<NET-ASSETS> 132716<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8966<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (1159)<F1>
<NET-INVESTMENT-INCOME> 7807<F1>
<REALIZED-GAINS-CURRENT> 250
<APPREC-INCREASE-CURRENT> 1679
<NET-CHANGE-FROM-OPS> 9831
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7807)<F1>
<DISTRIBUTIONS-OF-GAINS> (244)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 731<F1>
<NUMBER-OF-SHARES-REDEEMED> (1950)<F1>
<SHARES-REINVESTED> 709<F1>
<NET-CHANGE-IN-ASSETS> 1686
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 242
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 663<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1159<F1>
<AVERAGE-NET-ASSETS> 132825<F1>
<PER-SHARE-NAV-BEGIN> 7.72<F1>
<PER-SHARE-NII> .45<F1>
<PER-SHARE-GAIN-APPREC> .11<F1>
<PER-SHARE-DIVIDEND> (.45)<F1>
<PER-SHARE-DISTRIBUTIONS> (.01)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.82<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>044
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MINNESOTA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 129078
<INVESTMENTS-AT-VALUE> 135889
<RECEIVABLES> 2220
<ASSETS-OTHER> 282
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 138391
<PAYABLE-FOR-SECURITIES> 2846
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 592
<TOTAL-LIABILITIES> 3438
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 127897
<SHARES-COMMON-STOCK> 286<F1>
<SHARES-COMMON-PRIOR> 213<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 245
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6811
<NET-ASSETS> 2237<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 130<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (35)<F1>
<NET-INVESTMENT-INCOME> 95<F1>
<REALIZED-GAINS-CURRENT> 250
<APPREC-INCREASE-CURRENT> 1679
<NET-CHANGE-FROM-OPS> 9831
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (95)<F1>
<DISTRIBUTIONS-OF-GAINS> (3)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 133<F1>
<NUMBER-OF-SHARES-REDEEMED> (69)<F1>
<SHARES-REINVESTED> 9<F1>
<NET-CHANGE-IN-ASSETS> (1686)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 242
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 35<F1>
<AVERAGE-NET-ASSETS> 1913<F1>
<PER-SHARE-NAV-BEGIN> 7.73<F1>
<PER-SHARE-NII> .38<F1>
<PER-SHARE-GAIN-APPREC> .10<F1>
<PER-SHARE-DIVIDEND> (.38)<F1>
<PER-SHARE-DISTRIBUTIONS> (.01)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.82<F1>
<EXPENSE-RATIO> 1.85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>101
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MISSOURI CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 49350
<INVESTMENTS-AT-VALUE> 51117
<RECEIVABLES> 1081
<ASSETS-OTHER> 55
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 52253
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 569
<TOTAL-LIABILITIES> 569
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49592
<SHARES-COMMON-STOCK> 6644<F1>
<SHARES-COMMON-PRIOR> 7098<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 325
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1767
<NET-ASSETS> 51169<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3173<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (452)<F1>
<NET-INVESTMENT-INCOME> 2721<F1>
<REALIZED-GAINS-CURRENT> 331
<APPREC-INCREASE-CURRENT> 2085
<NET-CHANGE-FROM-OPS> 5155
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2721)<F1>
<DISTRIBUTIONS-OF-GAINS> (491)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 249<F1>
<NUMBER-OF-SHARES-REDEEMED> (938)<F1>
<SHARES-REINVESTED> 235<F1>
<NET-CHANGE-IN-ASSETS> (1287)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 488
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 257<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 477<F1>
<AVERAGE-NET-ASSETS> 51302<F1>
<PER-SHARE-NAV-BEGIN> 7.41<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .36<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.70<F1>
<EXPENSE-RATIO> .88<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>104
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-MISSOURI CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 49350
<INVESTMENTS-AT-VALUE> 51117
<RECEIVABLES> 1081
<ASSETS-OTHER> 55
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 52253
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 569
<TOTAL-LIABILITIES> 569
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49592
<SHARES-COMMON-STOCK> 67<F1>
<SHARES-COMMON-PRIOR> 47<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 325
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1767
<NET-ASSETS> 515<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 25<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (8)<F1>
<NET-INVESTMENT-INCOME> 17<F1>
<REALIZED-GAINS-CURRENT> 331
<APPREC-INCREASE-CURRENT> 2085
<NET-CHANGE-FROM-OPS> 5155
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17)<F1>
<DISTRIBUTIONS-OF-GAINS> (3)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29<F1>
<NUMBER-OF-SHARES-REDEEMED> (11)<F1>
<SHARES-REINVESTED> 2<F1>
<NET-CHANGE-IN-ASSETS> (1287)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 488
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8<F1>
<AVERAGE-NET-ASSETS> 404<F1>
<PER-SHARE-NAV-BEGIN> 7.41<F1>
<PER-SHARE-NII> .32<F1>
<PER-SHARE-GAIN-APPREC> .36<F1>
<PER-SHARE-DIVIDEND> (.32)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.70<F1>
<EXPENSE-RATIO> 1.98<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>011
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-NATIONAL CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 102648
<INVESTMENTS-AT-VALUE> 103611
<RECEIVABLES> 1939
<ASSETS-OTHER> 305
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 105855
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 456
<TOTAL-LIABILITIES> 456
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 108919
<SHARES-COMMON-STOCK> 13743<F1>
<SHARES-COMMON-PRIOR> 15512<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4483)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 963
<NET-ASSETS> 104184<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6806<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (928)<F1>
<NET-INVESTMENT-INCOME> 5878<F1>
<REALIZED-GAINS-CURRENT> (4331)
<APPREC-INCREASE-CURRENT> 10224
<NET-CHANGE-FROM-OPS> 11805
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5878)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1787<F1>
<NUMBER-OF-SHARES-REDEEMED> (3970)<F1>
<SHARES-REINVESTED> 414<F1>
<NET-CHANGE-IN-ASSETS> (6421)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (152)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 537<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 928<F1>
<AVERAGE-NET-ASSETS> 107685<F1>
<PER-SHARE-NAV-BEGIN> 7.18<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .40<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.58<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>014
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-NATIONAL CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 102648
<INVESTMENTS-AT-VALUE> 103611
<RECEIVABLES> 1939
<ASSETS-OTHER> 305
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 105855
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 456
<TOTAL-LIABILITIES> 456
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 108919
<SHARES-COMMON-STOCK> 160<F1>
<SHARES-COMMON-PRIOR> 62<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4483)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 963
<NET-ASSETS> 1215<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 49<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (15)<F1>
<NET-INVESTMENT-INCOME> 34<F1>
<REALIZED-GAINS-CURRENT> (4331)
<APPREC-INCREASE-CURRENT> 10224
<NET-CHANGE-FROM-OPS> 11805
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (34)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 242<F1>
<NUMBER-OF-SHARES-REDEEMED> (147)<F1>
<SHARES-REINVESTED> 3<F1>
<NET-CHANGE-IN-ASSETS> (6421)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (152)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15<F1>
<AVERAGE-NET-ASSETS> 763<F1>
<PER-SHARE-NAV-BEGIN> 7.18<F1>
<PER-SHARE-NII> .32<F1>
<PER-SHARE-GAIN-APPREC> .39<F1>
<PER-SHARE-DIVIDEND> (.32)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.57<F1>
<EXPENSE-RATIO> 1.95<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>051
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-NEW YORK CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 80762
<INVESTMENTS-AT-VALUE> 83224
<RECEIVABLES> 1428
<ASSETS-OTHER> 486
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85138
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 273
<TOTAL-LIABILITIES> 273
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83359
<SHARES-COMMON-STOCK> 10678<F1>
<SHARES-COMMON-PRIOR> 11853<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (946)
<OVERDISTRIBUTION-GAINS> (10)
<ACCUM-APPREC-OR-DEPREC> 2462
<NET-ASSETS> 83980<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5501<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (755)<F1>
<NET-INVESTMENT-INCOME> 4746<F1>
<REALIZED-GAINS-CURRENT> (946)
<APPREC-INCREASE-CURRENT> 5008
<NET-CHANGE-FROM-OPS> 8836
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4746)<F1>
<DISTRIBUTIONS-OF-GAINS> (1996)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1067<F1>
<NUMBER-OF-SHARES-REDEEMED> (2822)<F1>
<SHARES-REINVESTED> 580<F1>
<NET-CHANGE-IN-ASSETS> 6525
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1997
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 430<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 755<F1>
<AVERAGE-NET-ASSETS> 86288<F1>
<PER-SHARE-NAV-BEGIN> 7.67<F1>
<PER-SHARE-NII> .42<F1>
<PER-SHARE-GAIN-APPREC> .36<F1>
<PER-SHARE-DIVIDEND> (.42)<F1>
<PER-SHARE-DISTRIBUTIONS> (.17)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.86<F1>
<EXPENSE-RATIO> .88<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>054
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-NEW YORK CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 80762
<INVESTMENTS-AT-VALUE> 83224
<RECEIVABLES> 1428
<ASSETS-OTHER> 486
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85138
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 273
<TOTAL-LIABILITIES> 273
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83359
<SHARES-COMMON-STOCK> 112<F1>
<SHARES-COMMON-PRIOR> 62<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (946)
<OVERDISTRIBUTION-GAINS> (10)
<ACCUM-APPREC-OR-DEPREC> 2462
<NET-ASSETS> 885<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (12)<F1>
<NET-INVESTMENT-INCOME> 27<F1>
<REALIZED-GAINS-CURRENT> (946)
<APPREC-INCREASE-CURRENT> 5008
<NET-CHANGE-FROM-OPS> 8836
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (27)<F1>
<DISTRIBUTIONS-OF-GAINS> (11)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 67<F1>
<NUMBER-OF-SHARES-REDEEMED> (21)<F1>
<SHARES-REINVESTED> 4<F1>
<NET-CHANGE-IN-ASSETS> 6525
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1997
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12<F1>
<AVERAGE-NET-ASSETS> 598<F1>
<PER-SHARE-NAV-BEGIN> 7.67<F1>
<PER-SHARE-NII> .34<F1>
<PER-SHARE-GAIN-APPREC> .37<F1>
<PER-SHARE-DIVIDEND> (.34)<F1>
<PER-SHARE-DISTRIBUTIONS> (.17)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.87<F1>
<EXPENSE-RATIO> 1.96<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>061
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-OHIO CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 159801
<INVESTMENTS-AT-VALUE> 167980
<RECEIVABLES> 3294
<ASSETS-OTHER> 214
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 637
<TOTAL-LIABILITIES> 637
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161890
<SHARES-COMMON-STOCK> 20977<F1>
<SHARES-COMMON-PRIOR> 21714<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 781
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8179
<NET-ASSETS> 170191<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10837<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (1426)<F1>
<NET-INVESTMENT-INCOME> 9411<F1>
<REALIZED-GAINS-CURRENT> 810
<APPREC-INCREASE-CURRENT> 5389
<NET-CHANGE-FROM-OPS> 15631
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9411)<F1>
<DISTRIBUTIONS-OF-GAINS> (1594)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 708<F1>
<NUMBER-OF-SHARES-REDEEMED> (2354)<F1>
<SHARES-REINVESTED> 909<F1>
<NET-CHANGE-IN-ASSETS> (943)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1569
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 845<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1426<F1>
<AVERAGE-NET-ASSETS> 169202<F1>
<PER-SHARE-NAV-BEGIN> 7.90<F1>
<PER-SHARE-NII> .44<F1>
<PER-SHARE-GAIN-APPREC> .28<F1>
<PER-SHARE-DIVIDEND> (.44)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.11<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>064
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-OHIO CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 159801
<INVESTMENTS-AT-VALUE> 167980
<RECEIVABLES> 3294
<ASSETS-OTHER> 214
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 637
<TOTAL-LIABILITIES> 637
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161890
<SHARES-COMMON-STOCK> 81<F1>
<SHARES-COMMON-PRIOR> 41<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 781
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8179
<NET-ASSETS> 659<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 30<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (9)<F1>
<NET-INVESTMENT-INCOME> 21<F1>
<REALIZED-GAINS-CURRENT> 810
<APPREC-INCREASE-CURRENT> 5389
<NET-CHANGE-FROM-OPS> 15631
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (21)<F1>
<DISTRIBUTIONS-OF-GAINS> (4)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38<F1>
<NUMBER-OF-SHARES-REDEEMED> (1)<F1>
<SHARES-REINVESTED> 3<F1>
<NET-CHANGE-IN-ASSETS> (943)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1569
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9<F1>
<AVERAGE-NET-ASSETS> 461<F1>
<PER-SHARE-NAV-BEGIN> 7.92<F1>
<PER-SHARE-NII> .36<F1>
<PER-SHARE-GAIN-APPREC> .30<F1>
<PER-SHARE-DIVIDEND> (.36)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.15<F1>
<EXPENSE-RATIO> 1.93<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>111
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-OREGON CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 57933
<INVESTMENTS-AT-VALUE> 59785
<RECEIVABLES> 1389
<ASSETS-OTHER> 174
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61348
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 304
<TOTAL-LIABILITIES> 304
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59132
<SHARES-COMMON-STOCK> 7775<F1>
<SHARES-COMMON-PRIOR> 8059<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1852
<NET-ASSETS> 59549<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3656<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (502)<F1>
<NET-INVESTMENT-INCOME> 3154<F1>
<REALIZED-GAINS-CURRENT> 70
<APPREC-INCREASE-CURRENT> 1781
<NET-CHANGE-FROM-OPS> 5059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3154)<F1>
<DISTRIBUTIONS-OF-GAINS> (141)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 609<F1>
<NUMBER-OF-SHARES-REDEEMED> (1172)<F1>
<SHARES-REINVESTED> 279<F1>
<NET-CHANGE-IN-ASSETS> 317
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 133
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 292<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 529<F1>
<AVERAGE-NET-ASSETS> 58647<F1>
<PER-SHARE-NAV-BEGIN> 7.43<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .25<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> (.02)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.66<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>114
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-OREGON CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 57933
<INVESTMENTS-AT-VALUE> 59785
<RECEIVABLES> 1389
<ASSETS-OTHER> 174
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61348
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 304
<TOTAL-LIABILITIES> 304
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59132
<SHARES-COMMON-STOCK> 195<F1>
<SHARES-COMMON-PRIOR> 114<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1852
<NET-ASSETS> 1495<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 76<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (22)<F1>
<NET-INVESTMENT-INCOME> 54<F1>
<REALIZED-GAINS-CURRENT> 70
<APPREC-INCREASE-CURRENT> 1781
<NET-CHANGE-FROM-OPS> 5059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (54)<F1>
<DISTRIBUTIONS-OF-GAINS> (2)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 120<F1>
<NUMBER-OF-SHARES-REDEEMED> (44)<F1>
<SHARES-REINVESTED> 5<F1>
<NET-CHANGE-IN-ASSETS> 317
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 133
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23<F1>
<AVERAGE-NET-ASSETS> 1201<F1>
<PER-SHARE-NAV-BEGIN> 7.43<F1>
<PER-SHARE-NII> .33<F1>
<PER-SHARE-GAIN-APPREC> .24<F1>
<PER-SHARE-DIVIDEND> (.33)<F1>
<PER-SHARE-DISTRIBUTIONS> (.02)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.65<F1>
<EXPENSE-RATIO> 1.83<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>151
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-SOUTH CAROLINA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 108933
<INVESTMENTS-AT-VALUE> 112516
<RECEIVABLES> 1874
<ASSETS-OTHER> 113
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114503
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 378
<TOTAL-LIABILITIES> 378
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110297
<SHARES-COMMON-STOCK> 14099<F1>
<SHARES-COMMON-PRIOR> 15121<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 245
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3583
<NET-ASSETS> 112421<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6943<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (980)<F1>
<NET-INVESTMENT-INCOME> 5963<F1>
<REALIZED-GAINS-CURRENT> 256
<APPREC-INCREASE-CURRENT> 5015
<NET-CHANGE-FROM-OPS> 11303
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5963)<F1>
<DISTRIBUTIONS-OF-GAINS> (207)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1197<F1>
<NUMBER-OF-SHARES-REDEEMED> (2686)<F1>
<SHARES-REINVESTED> 467<F1>
<NET-CHANGE-IN-ASSETS> (2486)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 199
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 556<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 980<F1>
<AVERAGE-NET-ASSETS> 111407<F1>
<PER-SHARE-NAV-BEGIN> 7.61<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> .37<F1>
<PER-SHARE-DIVIDEND> (.41)<F1>
<PER-SHARE-DISTRIBUTIONS> (.01)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.97<F1>
<EXPENSE-RATIO> .88<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>154
<NAME> SELIGMAN TAX-EXEMPT FUND SERIES-SOUTH CAROLINA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 108933
<INVESTMENTS-AT-VALUE> 112516
<RECEIVABLES> 1874
<ASSETS-OTHER> 113
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114503
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 378
<TOTAL-LIABILITIES> 378
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110297
<SHARES-COMMON-STOCK> 214<F1>
<SHARES-COMMON-PRIOR> 194<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 245
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3583
<NET-ASSETS> 1704<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 98<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (29)<F1>
<NET-INVESTMENT-INCOME> 69<F1>
<REALIZED-GAINS-CURRENT> 256
<APPREC-INCREASE-CURRENT> 5015
<NET-CHANGE-FROM-OPS> 11303
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (69)<F1>
<DISTRIBUTIONS-OF-GAINS> (3)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69<F1>
<NUMBER-OF-SHARES-REDEEMED> (57)<F1>
<SHARES-REINVESTED> 8<F1>
<NET-CHANGE-IN-ASSETS> (2486)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 199
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69<F1>
<AVERAGE-NET-ASSETS> 1567<F1>
<PER-SHARE-NAV-BEGIN> 7.61<F1>
<PER-SHARE-NII> .34<F1>
<PER-SHARE-GAIN-APPREC> .37<F1>
<PER-SHARE-DIVIDEND> (.34)<F1>
<PER-SHARE-DISTRIBUTIONS> (.01)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.97<F1>
<EXPENSE-RATIO> 1.85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
