File No. 2-86008
811-3828
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. __ |_|
Post-Effective Amendment No. 31 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 30 |X|
- --------------------------------------------------------------------------------
SELIGMAN MUNICIPAL FUND SERIES, INC.
(Exact name of registrant as specified in charter)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
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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)
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It is proposed that this filing will become effective (check the
appropriate box).
|X| immediately upon filing pursuant to paragraph (b) of rule 485
|_| on (DATE) 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 for its fiscal year ended September 30, 1997 on December 10,
1997.
<PAGE>
File No. 2-86008
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 31
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 Series Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Organization and Capitalization
5. Management of the Fund Management Services
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 Funds
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 C
13. Investment Objectives and Policies Investment Objectives, 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; Appendix B
21. Underwriters Distribution Services
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
SELIGMAN MUNICIPAL FUND
SERIES, INC.
SELIGMAN MUNICIPAL
SERIES TRUST
SELIGMAN NEW JERSEY
MUNICIPAL FUND, INC.
SELIGMAN PENNSYLVANIA
MUNICIPAL FUND SERIES
================================================================================
100 Park Avenue
New York, New York 10017
Table of Contents
Page
Summary of Series Expenses ................................... 3
Financial Highlights ......................................... 10
Alternative Distribution System .............................. 20
Investment Objectives and Policies ........................... 21
Management Services .......................................... 29
Purchase of Shares ........................................... 30
Telephone Transactions ....................................... 35
Redemption of Shares ......................................... 36
Administration, Shareholder Services
and Distribution Plans ................................... 39
Exchange Privilege ........................................... 40
Further Information about
Transactions in the Funds ................................ 42
Dividends and Gain Distributions ............................. 42
Taxes ........................................................ 43
Shareholder Information ...................................... 53
Advertising a Series' Performance ............................ 54
Organization and Capitalization .............................. 55
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.
MUNI-1 2/98
================================================================================
PROSPECTUS
================================================================================
SELIGMAN MUNICIPAL FUND
SERIES, INC.
SELIGMAN MUNICIPAL
SERIES TRUST
SELIGMAN NEW JERSEY
MUNICIPAL FUND, INC.
SELIGMAN PENNSYLVANIA
MUNICIPAL FUND SERIES
================================================================================
February 1, 1998
Seeking Income
Free From Regular Income Tax
<PAGE>
SELIGMAN MUNICIPAL FUND SERIES, INC.
National Municipal Series, Colorado Municipal Series, Georgia Municipal Series,
Louisiana Municipal Series, Maryland Municipal Series, Massachusetts
Municipal Series, Michigan Municipal Series, Minnesota Municipal Series,
Missouri Municipal Series, New York Municipal Series, Ohio Municipal Series,
Oregon Municipal Series and South Carolina Municipal Series
SELIGMAN MUNICIPAL SERIES TRUST
California Municipal High-Yield Series, California Municipal Quality Series,
Florida Municipal Series and North Carolina Municipal Series
SELIGMAN NEW JERSEY MUNICIPAL FUND, INC.
SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES
100 Park Avenue o New York, New York 10017
New York Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450--all continental United States
February 1, 1998
This prospectus offers shares of nineteen different series (the "Series")
which include National Municipal Series (the "National Series") and twelve
individual state Series of Seligman Municipal Fund Series, Inc. (the "Municipal
Fund"), four individual state Series of Seligman Municipal Series Trust (the
"Municipal Trust"), Seligman New Jersey Municipal Fund, Inc. (the "New Jersey
Fund"), and Seligman Pennsylvania Municipal Fund Series (the "Pennsylvania Fund"
and collectively with the Municipal Fund, the Municipal Trust and the New Jersey
Fund, the "Funds"). Each of the Funds is a non-diversified, open-end management
investment company.
The Municipal Fund offers the following state Series: Colorado Municipal
Series, Georgia Municipal Series, Louisiana Municipal Series, Maryland Municipal
Series, Massachusetts Municipal Series, Michigan Municipal Series, Minnesota
Municipal Series, Missouri Municipal Series, New York Municipal Series, Ohio
Municipal Series, Oregon Municipal Series and South Carolina Municipal Series
(collectively, the "Municipal Fund State Series"). The Municipal Trust offers
the following state Series: California Municipal Quality Series, California
Municipal High-Yield Series, Florida Municipal Series and North Carolina
Municipal Series (collectively, the "Municipal Trust State Series", and together
with the Municipal Fund State Series, the New Jersey Fund and the Pennsylvania
Fund, the "Series").
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 Statements of
Additional Information, has been filed with the Securities and Exchange
Commission. Statements of Additional Information are 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. (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 Municipal Fund's National Municipal Series seeks to provide to its
shareholders maximum income exempt from regular 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 regular federal income taxes. The investment
objective of each of the individual Municipal Fund State Series is to maximize
income exempt from regular 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 municipal securities of the designated state, its political subdivisions,
municipalities and public authorities.
The Municipal Trust State Series, except for the California Municipal
High-Yield Series, each seek high income exempt from regular 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 municipal securities rated in the four highest rating categories,
except that the California Municipal Quality Series pursues its investment
objective by investing only in municipal securities rated in the three highest
rating categories of Moody's Investors Service, Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P").
The California Municipal High-Yield Series seeks the maximum amount of
income exempt from regular federal income taxes and California personal income
taxes consistent with preservation of capital and with consideration given to
capital gain by investing primarily in California municipal 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 Municipal
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 Municipal High-Yield Series," in
this Prospectus.
The New Jersey Fund seeks to maximize income exempt from regular 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 municipal securities. Investment
grade securities are rated within the four highest rating categories of
"Moody's" or "S&P." Throughout this Prospectus, the New Jersey gross income tax
is referred to as the New Jersey personal income tax.
The Pennsylvania Fund seeks to provide a high level of income exempt from
regular federal and Pennsylvania income taxes consistent with preservation of
capital by investing primarily in investment grade Pennsylvania municipal
securities. Capital appreciation is not a consideration in the selection of
investments. The Fund may also invest in Pennsylvania municipal securities that
are unrated but are believed by the Manager (as defined below) to be of
comparable quality to investment grade securities.
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 the average daily net asset value of the Class A shares. Class
A shares purchased in an amount of $1,000,000 or more are sold without an
initial sales load but are subject to a contingent deferred sales load ("CDSL")
of 1% on redemptions within eighteen months of purchase. Class D shares are sold
without an initial sales load but are subject to a CDSL of 1% imposed on certain
redemptions within one year of purchase, an annual distribution fee of up to
.75% and an annual service fee of up to .25% of the average daily net asset
value of the Class D shares. Any CDSL payable upon redemption of shares will be
assessed on the lesser of the current net asset value or the original purchase
price of the shares redeemed. No CDSL will be imposed on shares acquired through
the reinvestment of dividends or distributions received from any class of
shares. See "Alternative Distribution System." Shares of the Series may be
purchased through any authorized investment dealer.
2
<PAGE>
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 initial sales loads are available in
certain circumstances. Class A shares are not subject to an initial sales load
for purchases of $1,000,000 or more; however, such shares are subject to a CDSL,
a one-time charge, only if the shares are redeemed within eighteen months of
purchase. 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 Fund's Administration, Shareholder Services and
Distribution Plan, to which the caption "12b-1 Fees" relates is discussed under
"Administration, Shareholder Services and Distribution Plans" herein.
<TABLE>
<CAPTION>
NAT'L SERIES CO SERIES GA SERIES
------------------------ ---------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
------- ------ ------- ------- ------ ------
(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
except 1% in the first except 1% the first except 1% the first
first 18 months year; None in first 18 year; None in first 18 year; None
if initial sales thereafter months if thereafter months if thereafter
load was waived initial sales initial sales
in full due to size load was load was waived
of purchase waived in full in full
due to size due to size
of purchase of purchase
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 1997 (as percentage of
average net assets)
Management Fees.................... .50% .50% .50% .50% .50% .50%
12b-1 Fees......................... .09 1.00* .09 1.00* .10 1.00*
Other Expenses..................... .25 .25 .31 .31 .29 .29
---- ---- ---- ---- ---- -----
Total Series Operating Expenses.... .84% 1.75% .90% 1.81% .89% 1.79%
==== ===== ==== ==== ==== =====
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.
NAT'L SERIES CO SERIES GA SERIES
---------------------- ------------------ --------------------
EXAMPLE CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
- ------- ------- ------- ------- ------- -------- -------
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period:
1 yr.............................. $ 56 $ 28+ $ 56 $ 28+ $ 56 $ 28+
3 yrs............................. 73 55 75 57 75 56
5 yrs............................. 92 95 95 98 94 97
10 yrs............................. 146 206 153 213 152 211
</TABLE>
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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: NAT'L--$18; CO--$18; GA--$18.
3
<PAGE>
SUMMARY OF SERIES EXPENSES--(CONTINUED)
<TABLE>
<CAPTION>
LA SERIES MD SERIES MA SERIES
------------------------ ---------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
------- ------ ------- ------ ------- ------
(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
except 1% in the first except 1% the first except 1% the first
first 18 months year; None in first 18 year; None in first 18 year; None
if initial sales thereafter months if thereafter months if thereafter
load was waived initial sales initial sales
in full due to size load was load was waived
of purchase waived in full in full
due to size due to size
of purchase of purchase
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 1997 (as percentage of
average net assets)
Management Fees.................... .50% .50% .50% .50% .50% .50%
12b-1 Fees......................... .10 1.00* .09 1.00* .10 1.00*
Other Expenses..................... .26 .26 .31 .31 .24 .24
---- ---- ---- ---- ---- -----
Total Series Operating Expenses.... .86% 1.76% .90% 1.81% .84% 1.74%
==== ===== ==== ==== ==== =====
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.
LA SERIES MD SERIES MA SERIES
---------------------- ------------------ --------------------
EXAMPLE CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
- ------- ------- ------- -------- ------- -------- -------
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period:
1 yr.............................. $ 56 $ 28+ $ 56 $ 28+ $ 56 $ 28+
3 yrs............................. 74 55 75 57 73 55
5 yrs............................. 93 95 95 98 92 94
10 yrs............................. 149 207 153 213 146 205
</TABLE>
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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: LA--$18; MO--$18; MA--$18.
4
<PAGE>
SUMMARY OF SERIES EXPENSES--(CONTINUED)
<TABLE>
<CAPTION>
MI SERIES MN SERIES MO SERIES
------------------------ ---------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
------- ------- ------- ------ ------- ------
(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
except 1% in the first except 1% the first except 1% the first
first 18 months year; None in first 18 year; None in first 18 year; None
if initial sales thereafter months if thereafter months if thereafter
load was waived initial sales initial sales
in full due to size load was load was waived
of purchase waived in full in full
due to size due to size
of purchase of purchase
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 1997 (as percentage of
average net assets)
Management Fees.................... .50% .50% .50% .50% .50% .50%
12b-1 Fees......................... .10 1.00* .10 1.00* .09 1.00*
Other Expenses..................... .21 .21 .25 .25 .30 .30
---- ---- ---- ---- ---- -----
Total Series Operating Expenses.... .81% 1.71% .85% 1.75% .89% 1.80%
==== ===== ==== ==== ==== =====
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.
NAT'L SERIES CO SERIES GA SERIES
---------------------- ------------------ --------------------
EXAMPLE CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
- ------- ------- ------- ------- ------- -------- -------
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period:
1 yr.............................. $ 55 $ 27+ $ 56 $ 28+ $ 56 $ 28+
3 yrs............................. 72 54 73 55 75 57
5 yrs............................. 90 93 92 95 94 97
10 yrs............................. 143 202 147 206 152 212
</TABLE>
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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--$17; MN--$18; MO--$18.
5
<PAGE>
SUMMARY OF SERIES EXPENSES--(CONTINUED)
<TABLE>
<CAPTION>
NY SERIES OH SERIES OR SERIES
------------------------ ---------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
------- ------- ------- ------- ------- -------
(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
except 1% in the first except 1% the first except 1% the first
first 18 months year; None in first 18 year; None in first 18 year; None
if initial sales thereafter months if thereafter months if thereafter
load was waived initial sales initial sales
in full due to size load was load was waived
of purchase waived in full in full
due to size due to size
of purchase of purchase
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 1997 (as percentage of
average net assets)
Management Fees.................... .50% .50% .50% .50% .50% .50%
12b-1 Fees......................... .09 1.00* .10 1.00* .10 1.00*
Other Expenses..................... .23 .23 .21 .21 .30 .30
---- ---- ---- ---- ---- -----
Total Series Operating Expenses.... .82% 1.73% .81% 1.71% .90% 1.80%
==== ===== ==== ==== ==== =====
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.
NAT'L SERIES CO SERIES GA SERIES
---------------------- ------------------ --------------------
EXAMPLE CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
- ------- ------- ------- ------- ------- -------- -------
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period:
1 yr.............................. $ 55 $ 28+ $ 55 $ 27+ $ 56 $ 28+
3 yrs............................. 72 54 72 54 75 57
5 yrs............................. 91 94 90 93 95 97
10 yrs............................. 144 204 143 202 153 212
</TABLE>
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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: NY--$18; OH--$17; OR--$18.
6
<PAGE>
SUMMARY OF SERIES EXPENSES--(CONTINUED)
<TABLE>
<CAPTION>
SC SERIES CA HIGH-YIELD SERIES CA QUALITY SERIES
------------------------ ---------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
------- ------- ------- ------- ------- -------
(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
except 1% in the first except 1% the first except 1% the first
first 18 months year; None in first 18 year; None in first 18 year; None
if initial sales thereafter months if thereafter months if thereafter
load was waived initial sales initial sales
in full due to size load was load was waived
of purchase waived in full in full
due to size due to size
of purchase of purchase
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 1997 (as percentage of
average net assets)
Management Fees.................... .50% .50% .50% .50% .50% .50%
12b-1 Fees......................... .09 1.00* .10 1.00* .10 1.00*
Other Expenses..................... .25 .25 .27 .27 .22 .22
---- ---- ---- ---- ---- -----
Total Series Operating Expenses.... .84% 1.75% .87% 1.77% .82% 1.72%
==== ===== ==== ==== ==== =====
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.
SC SERIES CA HIGH-YIELD SERIES CA QUALITY SERIES
---------------------- -------------------- --------------------
EXAMPLE CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
- ------- ------- ------- ------- ------- -------- -------
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period:
1 yr.............................. $ 56 $ 28+ $ 56 $ 28+ $ 55 $ 27+
3 yrs............................. 73 55 74 56 72 54
5 yrs............................. 92 95 93 96 91 93
10 yrs............................. 146 206 150 208 144 203
</TABLE>
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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: SC--$18; CA HIGH-YEILD--$18;
CA QUALITY--$17.
7
<PAGE>
SUMMARY OF SERIES EXPENSES--(CONTINUED)
<TABLE>
<CAPTION>
FL SERIES NC SERIES NJ SERIES
------------------------ ---------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
------- ------- ------- ------- ------- -------
(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
except 1% in the first except 1% the first except 1% the first
first 18 months year; None in first 18 year; None in first 18 year; None
if initial sales thereafter months if thereafter months if thereafter
load was waived initial sales initial sales
in full due to size load was load was waived
of purchase waived in full in full
due to size due to size
of purchase of purchase
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 1997 (as percentage of
average net assets)
Management Fees.................... .50% .50% .50% .50% .50% .50%
12b-1 Fees......................... .23 1.00* .24 1.00* .23 1.00*
Other Expenses..................... .31 .31 .35 .35 .33 .33
---- ---- ---- ---- ---- -----
Total Series Operating Expenses.... 1.04% 1.81% 1.09% 1.85% 1.06% 1.83%
===== ===== ===== ===== ==== =====
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.
FL SERIES NC SERIES NJ SERIES
---------------------- ------------------ --------------------
EXAMPLE CLASS A CLASS D CLASS A CLASS D CLASS A CLASS D
- ------- ------- ------- ------- ------- -------- -------
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period:
1 yr.............................. $ 58 $ 28+ $ 58 $ 29+ $ 58 $ 29+
3 yrs............................. 79 57 81 58 80 58
5 yrs............................. 102 98 105 100 103 99
10 yrs............................. 169 213 174 217 171 215
</TABLE>
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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: FL--$18; NC--$19; NJ--$19.
8
<PAGE>
SUMMARY OF SERIES EXPENSES--(CONTINUED)
<TABLE>
<CAPTION>
PA FUND
---------------------------
CLASS A CLASS D
------- -------
(INITIAL (DEFERRED
SALES LOAD SALES LOAD
ALTERNATIVE) ALTERNATIVE)
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as percentage of
offering price)................................... 4.75% None
Sales Load on Reinvested Dividends................ None None
Deferred Sales Load (as percentage
of original price or redemption
proceeds, whichever is lower).................. None; 1% during
except 1% in the first year;
first 18 months None
if initial sales thereafter
load was waived
in full due to size
of purchase
Redemption Fees.................................... None None
Exchange Fees...................................... None None
CLASS A CLASS D
------- -------
ANNUAL SERIES OPERATING EXPENSES FOR
FISCAL 1997 (as percentage of
average net assets)
Management Fees................................. .50% .50%
12b-1 Fees...................................... .23 1.00*
Other Expenses.................................. .46 .46
---- ----
Total Series Operating Expenses................. 1.19% 1.96%
===== =====
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.
PA FUND
--------------------------
EXAMPLE CLASS A CLASS D
- ------- ------- -------
An investor would pay
the following expenses
on a $1,000 investment,
assuming (1) 5% annual
return and (2) redemption
at the end of each time period:
1 yr........................................... $ 59 $ 30+
3 yrs.......................................... 83 62
5 yrs.......................................... 110 106
10 yrs.......................................... 185 229
* Includes an annual distribution fee of .75 of 1% and an annual service fee
of .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: PA--$20.
</TABLE>
9
<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 1997
financial statements and notes contained in the fiscal 1997 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.
"Per share operating performance" data is designed to allow investors to
trace the operating performance, on a per share basis, from the beginning net
asset value to the ending net asset value so that they can 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.
"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>
NET
NET ASSET REALIZED INCREASE NET NET
VALUE & (DECREASE) INCREASE ASSET
AT NET UNREALIZED FROM DIVIDENDS DISTRIBUTIONS (DECREASE) VALUE AT
PER SHARE OPERATING BEGINNING INVESTMENT INVESTMENT INVESTMENT PAID OR FROM NET IN NET END OF
PERFORMANCE: OF PERIOD INCOME@ GAIN (LOSS) OPERATIONS DECLARED GAIN REALIZED ASSET VALUE PERIOD
- ------------------- --------- ---------- ----------- ---------- --------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONAL SERIES--CLASS A
Year ended 9/30/97........ $7.70 $0.39 $0.31 $0.70 $(0.39) -- $0.31 $8.01
Year ended 9/30/96........ 7.58 0.40 0.12 0.52 (0.40) -- 0.12 7.70
Year ended 9/30/95........ 7.18 0.40 0.40 0.80 (0.40) -- 0.40 7.58
Year ended 9/30/94........ 8.72 0.41 (1.04) (0.63) (0.41) $(0.50) (1.54) 7.18
Year ended 9/30/93........ 8.07 0.45 0.78 1.23 (0.45) (0.13) 0.65 8.72
Year ended 9/30/92........ 7.90 0.48 0.20 0.68 (0.48) (0.03) 0.17 8.07
Year ended 9/30/91........ 7.44 0.49 0.54 1.03 (0.49) (0.08) 0.46 7.90
Year ended 9/30/90........ 7.73 0.51 (0.19) 0.32 (0.51) (0.10) (0.29) 7.44
Year ended 9/30/89........ 7.64 0.53 0.11 0.64 (0.53) (0.02) 0.09 7.73
Year ended 9/30/88........ 7.41 0.54 0.55 1.09 (0.54) (0.32) 0.23 7.64
NATIONAL SERIES--CLASS D
Year ended 9/30/97........ 7.70 0.32 0.32 0.64 (0.32) -- 0.32 8.02
Year ended 9/30/96........ 7.57 0.33 0.13 0.46 (0.33) -- 0.13 7.70
Year ended 9/30/95........ 7.18 0.32 0.39 0.71 (0.32) -- 0.39 7.57
2/1/94*- 9/30/94 ......... 8.20 0.22 (1.02) (0.80) (0.22) -- (1.02) 7.18
COLORADO SERIES--CLASS A
Year ended 9/30/97........ 7.27 0.37 0.15 0.52 (0.37) -- 0.15 7.42
Year ended 9/30/96........ 7.30 0.37 (0.03) 0.34 (0.37) -- (0.03) 7.27
Year ended 9/30/95........ 7.09 0.38 0.21 0.59 (0.38) -- 0.21 7.30
Year ended 9/30/94........ 7.76 0.37 (0.59) (0.22) (0.37) (0.08) (0.67) 7.09
Year ended 9/30/93........ 7.34 0.39 0.49 0.88 (0.39) (0.07) 0.42 7.76
Year ended 9/30/92........ 7.22 0.42 0.12 0.54 (0.42) -- 0.12 7.34
Year ended 9/30/91........ 6.91 0.44 0.31 0.75 (0.44) -- 0.31 7.22
Year ended 9/30/90........ 7.06 0.46 (0.15) 0.31 (0.46) -- (0.15) 6.91
Year ended 9/30/89........ 6.87 0.46 0.19 0.65 (0.46) -- 0.19 7.06
Year ended 9/30/88........ 6.38 0.46 0.53 0.99 (0.46) (0.04) 0.49 6.87
COLORADO SERIES--CLASS D
Year ended 9/30/97........ 7.27 0.30 0.15 0.45 (0.30) -- 0.15 7.42
Year ended 9/30/96........ 7.29 0.31 (0.02) 0.29 (0.31) -- (0.02) 7.27
Year ended 9/30/95........ 7.09 0.30 0.20 0.50 (0.30) -- 0.20 7.29
2/1/94*- 9/30/94.......... 7.72 0.20 (0.63) (0.43) (0.20) -- (0.63) 7.09
GEORGIA SERIES--CLASS A
Year ended 9/30/97........ 7.87 0.38 0.28 0.66 (0.38) (0.03) 0.25 8.12
Year ended 9/30/96........ 7.81 0.39 0.11 0.50 (0.39) (0.05) 0.06 7.87
Year ended 9/30/95........ 7.48 0.39 0.43 0.82 (0.39) (0.10) 0.33 7.81
Year ended 9/30/94........ 8.43 0.41 (0.86) (0.45) (0.41) (0.09) (0.95) 7.48
Year ended 9/30/93........ 7.85 0.43 0.62 1.05 (0.43) (0.04) 0.58 8.43
Year ended 9/30/92........ 7.63 0.46 0.25 0.71 (0.46) (0.03) 0.22 7.85
Year ended 9/30/91........ 7.18 0.47 0.46 0.93 (0.47) (0.01) 0.45 7.63
Year ended 9/30/90........ 7.30 0.48 (0.10) 0.38 (0.48) (0.02) (0.12) 7.18
Year ended 9/30/89........ 7.09 0.48 0.22 0.70 (0.48) (0.01) 0.21 7.30
Year ended 9/30/88........ 6.49 0.49 0.60 1.09 (0.49) -- 0.60 7.09
GEORGIA SERIES--CLASS D
Year ended 9/30/97........ 7.88 0.31 0.28 0.59 (0.31) (0.03) 0.25 8.13
Year ended 9/30/96........ 7.82 0.32 0.11 0.43 (0.32) (0.05) 0.06 7.88
Year ended 9/30/95........ 7.49 0.32 0.43 0.75 (0.32) (0.10) 0.33 7.82
2/1/94*- 9/30/94.......... 8.33 0.22 (0.84) (0.62) (0.22) -- (0.84) 7.49
LOUISIANA SERIES--CLASS A
Year ended 9/30/97........ 8.16 0.41 0.23 0.64 (0.41) (0.11) 0.12 8.28
Year ended 9/30/96........ 8.14 0.42 0.08 0.50 (0.42) (0.06) 0.02 8.16
Year ended 9/30/95........ 7.94 0.43 0.34 0.77 (0.43) (0.14) 0.20 8.14
Year ended 9/30/94........ 8.79 0.44 (0.77) (0.33) (0.44) (0.08) (0.85) 7.94
Year ended 9/30/93........ 8.38 0.46 0.51 0.97 (0.46) (0.10) 0.41 8.79
Year ended 9/30/92........ 8.18 0.49 0.24 0.73 (0.49) (0.04) 0.20 8.38
Year ended 9/30/91........ 7.70 0.50 0.50 1.00 (0.50) (0.02) 0.48 8.18
Year ended 9/30/90........ 7.88 0.52 (0.12) 0.40 (0.52) (0.06) (0.18) 7.70
Year ended 9/30/89........ 7.79 0.53 0.15 0.68 (0.53) (0.06) 0.09 7.88
Year ended 9/30/88........ 7.36 0.55 0.49 1.04 (0.55) (0.06) 0.43 7.79
- ----------
@ 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 shares.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
ADJUSTED
RATIO OF RATIO OF
NET ADJUSTED ADJUSTED NET
TOTAL RETURN RATIO OF INVESTMENT NET RATIO OF INVESTMENT
BASED ON EXPENSES INCOME NET ASSETS AT INVESTMENT EXPENSES INCOME
PER SHARE OPERATING NET ASSET TO AVERAGE TO AVERAGE PORTFOLIO END OF PERIOD INCOME TO AVERAGE TO AVERAGE
PERFORMANCE: VALUE NET ASSETS@ NET ASSETS@ TURNOVER (000'S OMITTED) PER SHARE@ NET ASSETS@ NET ASSETS@
------------ ----- ------------ ----------- -------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
National Series--Class A
Year ended 9/30/97......... 9.40% 0.84% 5.05% 20.63% $ 97,481
Year ended 9/30/96......... 6.97 0.80 5.19 33.99 98,767
Year ended 9/30/95......... 11.48 0.86 5.46 24.91 104,184
Year ended 9/30/94......... (7.83) 0.85 5.30 24.86 111,374
Year ended 9/30/93......... 16.00 0.86 5.49 72.68 136,394
Year ended 9/30/92......... 8.84 0.77 6.02 63.99 132,130
Year ended 9/30/91......... 14.24 0.80 6.35 71.67 136,326
Year ended 9/30/90......... 4.10 0.78 6.64 55.01 133,412
Year ended 9/30/89......... 8.62 0.78 6.86 71.90 140,376
Year ended 9/30/88......... 16.43 0.83 7.35 40.58 135,667
National Series--Class D
Year ended 9/30/97......... 8.56 1.75 4.15 20.63 2,279
Year ended 9/30/96......... 6.13 1.67 4.27 33.99 4,826
Year ended 9/30/95......... 10.17 1.95 4.40 24.91 1,215
2/1/94*- 9/30/94 .......... (9.96) 1.76+ 4.37+ 24.86++ 446
Colorado Series--Class A
Year ended 9/30/97......... 7.30 0.90 5.01 3.99 49,780
Year ended 9/30/96......... 4.76 0.85 5.07 12.39 52,295
Year ended 9/30/95......... 8.56 0.93 5.31 14.70 54,858
Year ended 9/30/94......... (2.92) 0.86 5.06 10.07 58,197
Year ended 9/30/93......... 12.54 0.90 5.21 14.09 67,912
Year ended 9/30/92......... 7.74 0.81 5.81 23.22 64,900
Year ended 9/30/91......... 11.15 0.84 6.19 14.60 64,310
Year ended 9/30/90......... 4.38 0.85 6.47 31.89 63,173
Year ended 9/30/89......... 9.70 0.86 6.56 -- 62,515
Year ended 9/30/88......... 16.19 0.88 6.89 12.95 66,257
Colorado Series--Class D
Year ended 9/30/97......... 6.34 1.81 4.10 3.99 238
Year ended 9/30/96......... 3.95 1.75 4.17 12.39 255
Year ended 9/30/95......... 7.26 2.02 4.23 14.70 193
2/1/94*- 9/30/94........... (5.73) 1.78+ 4.05+ 10.07++ 96
Georgia Series--Class A
Year ended 9/30/97......... 8.65 0.89 4.82 12.28 50,614
Year ended 9/30/96......... 6.56 0.83 4.94 16.24 50,995
Year ended 9/30/95......... 11.66 0.91 5.26 3.36 57,678 $0.39 0.96% 5.21%
Year ended 9/30/94......... (5.52) 0.73 5.21 19.34 61,466 0.40 0.93 5.01
Year ended 9/30/93......... 13.96 0.63 5.34 12.45 64,650 0.40 0.93 5.04
Year ended 9/30/92......... 9.64 0.47 5.95 10.24 44,585 0.43 0.87 5.55
Year ended 9/30/91......... 13.30 0.59 6.30 6.07 28,317 0.43 1.09 5.80
Year ended 9/30/90......... 5.19 0.53 6.53 5.83 19,002 0.44 1.03 6.03
Year ended 9/30/89......... 10.15 0.64 6.59 -- 14,452 0.44 1.19 6.04
Year ended 9/30/88......... 17.51 0.36 7.15 6.32 9,752 0.43 1.35 6.17
Georgia Series--Class D
Year ended 9/30/97......... 7.67 1.79 3.92 12.28 2,640
Year ended 9/30/96......... 5.60 1.73 4.03 16.24 2,327
Year ended 9/30/95......... 10.58 1.90 4.28 3.36 2,079 0.31 1.95 4.23
2/1/94*- 9/30/94........... (7.57) 1.76+ 4.28+ 19.34++ 849 0.21 1.90+ 4.15+
Louisiana Series--Class A
Year ended 9/30/97......... 8.17 0.86 5.08 16.08 56,199
Year ended 9/30/96......... 6.32 0.82 5.15 10.08 57,264
Year ended 9/30/95......... 10.30 0.89 5.44 4.82 61,988
Year ended 9/30/94......... (3.83) 0.87 5.31 17.16 61,441
Year ended 9/30/93......... 12.10 0.87 5.40 9.21 67,529
Year ended 9/30/92......... 9.13 0.80 5.89 25.45 57,931
Year ended 9/30/91......... 13.49 0.83 6.31 20.85 50,089
Year ended 9/30/90......... 5.20 0.81 6.62 31.54 43,475
Year ended 9/30/89......... 9.04 0.84 6.82 12.94 43,908
Year ended 9/30/88......... 14.69 0.85 7.19 36.01 42,521
- ----------
+ Annualized.
++ For the year ended 9/30/94.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NET
NET ASSET REALIZED INCREASE NET NET
VALUE & (DECREASE) INCREASE ASSET
AT NET UNREALIZED FROM DIVIDENDS DISTRIBUTIONS (DECREASE) VALUE AT
PER SHARE OPERATING BEGINNING INVESTMENT INVESTMENT INVESTMENT PAID OR FROM NET IN NET END OF
PERFORMANCE: OF PERIOD INCOME@ GAIN (LOSS) OPERATIONS DECLARED GAIN REALIZED ASSET VALUE PERIOD
- ------------------- --------- ---------- ----------- ---------- --------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LOUISIANA SERIES--CLASS D
Year ended 9/30/97........ $8.16 $0.34 $0.22 $0.56 $(0.34) $(0.11) $0.11 $8.27
Year ended 9/30/96........ 8.14 0.35 0.08 0.43 (0.35) (0.06) 0.02 8.16
Year ended 9/30/95........ 7.94 0.35 0.34 0.69 (0.35) (0.14) 0.20 8.14
2/1/94*- 9/30/94.......... 8.73 0.24 (0.79) (0.55) (0.24) -- (0.79) 7.94
MARYLAND SERIES--CLASS A
Year ended 9/30/97........ 7.99 0.40 0.19 0.59 (0.40) (0.04) 0.15 8.14
Year ended 9/30/96........ 7.96 0.40 0.06 0.46 (0.40) (0.03) 0.03 7.99
Year ended 9/30/95........ 7.71 0.41 0.38 0.79 (0.41) (0.13) 0.25 7.96
Year ended 9/30/94 ....... 8.64 0.42 (0.76) (0.34) (0.42) (0.17) (0.93) 7.71
Year ended 9/30/93........ 8.15 0.44 0.59 1.03 (0.44) (0.10) 0.49 8.64
Year ended 9/30/92........ 7.94 0.46 0.24 0.70 (0.46) (0.03) 0.21 8.15
Year ended 9/30/91........ 7.45 0.47 0.49 0.96 (0.47) -- 0.49 7.94
Year ended 9/30/90........ 7.59 0.48 (0.14) 0.34 (0.48) -- (0.14) 7.45
Year ended 9/30/89........ 7.39 0.48 0.20 0.68 (0.48) -- 0.20 7.59
Year ended 9/30/88........ 6.87 0.47 0.56 1.03 (0.47) (0.04) 0.52 7.39
MARYLAND SERIES--CLASS D
Year ended 9/30/97........ 7.99 0.33 0.20 0.53 (0.33) (0.04) 0.16 8.15
Year ended 9/30/96........ 7.97 0.33 0.05 0.38 (0.33) (0.03) 0.02 7.99
Year ended 9/30/95........ 7.72 0.33 0.38 0.71 (0.33) (0.13) 0.25 7.97
2/1/94*- 9/30/94 ......... 8.46 0.23 (0.74) (0.51) (0.23) -- (0.74) 7.72
MASSACHUSETTS SERIES--CLASS A
Year ended 9/30/97........ 7.85 0.40 0.22 0.62 (0.40) (0.08) 0.14 7.99
Year ended 9/30/96........ 7.91 0.41 0.05 0.46 (0.41) (0.11) (0.06) 7.85
Year ended 9/30/95........ 7.66 0.42 0.28 0.70 (0.42) (0.03) 0.25 7.91
Year ended 9/30/94........ 8.54 0.44 (0.67) (0.23) (0.44) (0.21) (0.88) 7.66
Year ended 9/30/93........ 8.06 0.47 0.55 1.02 (0.47) (0.07) 0.48 8.54
Year ended 9/30/92........ 7.86 0.49 0.24 0.73 (0.49) (0.04) 0.20 8.06
Year ended 9/30/91........ 7.26 0.50 0.62 1.12 (0.50) (0.02) 0.60 7.86
Year ended 9/30/90........ 7.65 0.50 (0.31) 0.19 (0.50) (0.08) (0.39) 7.26
Year ended 9/30/89........ 7.62 0.52 0.08 0.60 (0.52) (0.05) 0.03 7.65
Year ended 9/30/88........ 7.20 0.53 0.51 1.04 (0.53) (0.09) 0.42 7.62
MASSACHUSETTS SERIES--CLASS D
Year ended 9/30/97........ 7.84 0.33 0.23 0.56 (0.33) (0.08) 0.15 7.99
Year ended 9/30/96........ 7.90 0.34 0.05 0.39 (0.34) (0.11) (0.06) 7.84
Year ended 9/30/95........ 7.66 0.34 0.27 0.61 (0.34) (0.03) 0.24 7.90
2/1/94*- 9/30/94 ......... 8.33 0.24 (0.67) (0.43) (0.24) -- (0.67) 7.66
MICHIGAN SERIES--CLASS A
Year ended 9/30/97........ 8.46 0.43 0.23 0.66 (0.43) (0.09) 0.14 8.60
Year ended 9/30/96........ 8.54 0.45 0.06 0.51 (0.45) (0.14) (0.08) 8.46
Year ended 9/30/95........ 8.28 0.46 0.30 0.76 (0.46) (0.04) 0.26 8.54
Year ended 9/30/94........ 9.08 0.46 (0.71) (0.25) (0.46) (0.09) (0.80) 8.28
Year ended 9/30/93........ 8.68 0.47 0.59 1.06 (0.47) (0.19) 0.40 9.08
Year ended 9/30/92........ 8.38 0.50 0.35 0.85 (0.50) (0.05) 0.30 8.68
Year ended 9/30/91........ 7.89 0.51 0.51 1.02 (0.51) (0.02) 0.49 8.38
Year ended 9/30/90........ 8.14 0.52 (0.16) 0.36 (0.52) (0.09) (0.25) 7.89
Year ended 9/30/89........ 7.94 0.54 0.23 0.77 (0.54) (0.03) 0.20 8.14
Year ended 9/30/88........ 7.48 0.54 0.58 1.12 (0.54) (0.12) 0.46 7.94
MICHIGAN SERIES--CLASS D
Year ended 9/30/97........ 8.45 0.36 0.23 0.59 (0.36) (0.09) 0.14 8.59
Year ended 9/30/96........ 8.54 0.37 0.05 0.42 (0.37) (0.14) (0.09) 8.45
Year ended 9/30/95........ 8.28 0.37 0.30 0.67 (0.37) (0.04) 0.26 8.54
2/1/94*- 9/30/94.......... 9.01 0.25 (0.73) (0.48) (0.25) -- (0.73) 8.28
MINNESOTA SERIES--CLASS A
Year ended 9/30/97........ 7.68 0.40 0.11 0.51 (0.40) -- 0.11 7.79
Year ended 9/30/96........ 7.82 0.42 (0.12) 0.30 (0.42) (0.02) (0.14) 7.68
Year ended 9/30/95........ 7.72 0.45 0.11 0.56 (0.45) (0.01) 0.10 7.82
Year ended 9/30/94........ 8.28 0.45 (0.44) 0.01 (0.45) (0.12) (0.56) 7.72
Year ended 9/30/93........ 7.89 0.47 0.51 0.98 (0.47) (0.12) 0.39 8.28
Year ended 9/30/92........ 7.81 0.49 0.09 0.58 (0.49) (0.01) 0.08 7.89
Year ended 9/30/91........ 7.49 0.49 0.32 0.81 (0.49) -- 0.32 7.81
Year ended 9/30/90........ 7.60 0.49 (0.06) 0.43 (0.49) (0.05) (0.11) 7.49
Year ended 9/30/89........ 7.52 0.51 0.11 0.62 (0.51) (0.03) 0.08 7.60
Year ended 9/30/88........ 7.12 0.51 0.48 0.99 (0.51) (0.08) 0.40 7.52
MINNESOTA SERIES--CLASS D
Year ended 9/30/97........ 7.68 0.33 0.11 0.44 (0.33) -- 0.11 7.79
Year ended 9/30/96........ 7.82 0.35 (0.12) 0.23 (0.35) (0.02) (0.14) 7.68
Year ended 9/30/95........ 7.73 0.38 0.10 0.48 (0.38) (0.01) 0.09 7.82
2/1/94*- 9/30/94 ......... 8.22 0.25 (0.49) (0.24) (0.25) -- (0.49) 7.73
- ----------
@ 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 shares.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
ADJUSTED
RATIO OF RATIO OF
NET ADJUSTED ADJUSTED NET
TOTAL RETURN RATIO OF INVESTMENT NET RATIO OF INVESTMENT
BASED ON EXPENSES INCOME NET ASSETS AT INVESTMENT EXPENSES INCOME
PER SHARE OPERATING NET ASSET TO AVERAGE TO AVERAGE PORTFOLIO END OF PERIOD INCOME TO AVERAGE TO AVERAGE
PERFORMANCE: VALUE NET ASSETS@ NET ASSETS@ TURNOVER (000'S OMITTED) PER SHARE@ NET ASSETS@ NET ASSETS@
- ------------------- ------------ ---------- ---------- --------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Louisiana Series--Class D
Year ended 9/30/97......... 7.07% 1.76% 4.18% 16.08% $ 509
Year ended 9/30/96......... 5.37 1.72 4.25 10.08 389
Year ended 9/30/95......... 9.17 1.91 4.41 4.82 465
2/1/94*- 9/30/94........... (6.45) 1.78+ 4.33+ 17.16++ 704
Maryland Series--Class A
Year ended 9/30/97......... 7.64 0.90 4.99 14.79 52,549
Year ended 9/30/96......... 6.00 0.84 5.05 5.56 54,041
Year ended 9/30/95......... 10.90 0.96 5.31 3.63 56,290
Year ended 9/30/94 ........ (4.08) 0.92 5.17 17.68 57,263
Year ended 9/30/93......... 13.23 0.97 5.28 14.10 64,472
Year ended 9/30/92......... 9.15 0.86 5.76 29.57 57,208
Year ended 9/30/91......... 13.26 0.88 6.09 18.84 54,068
Year ended 9/30/90......... 4.47 0.87 6.26 16.50 47,283
Year ended 9/30/89........ 9.43 0.87 6.38 2.19 46,643
Year ended 9/30/88......... 15.73 0.91 6.63 17.42 45,939
Maryland Series--Class D
Year ended 9/30/97......... 6.80 1.81 4.08 14.79 2,063
Year ended 9/30/96......... 4.91 1.72 4.14 5.56 2,047
Year ended 9/30/95......... 9.75 2.02 4.27 3.63 630
2/1/94*- 9/30/94 .......... (6.21) 1.80+ 4.26+ 17.68++ 424
Massachusetts Series--Class A
Year ended 9/30/97......... 8.11 0.84 5.06 29.26 110,011
Year ended 9/30/96......... 5.97 0.80 5.24 26.30 109,872
Year ended 9/30/95......... 9.58 0.86 5.51 16.68 115,711
Year ended 9/30/94......... (2.94) 0.85 5.46 12.44 120,149
Year ended 9/30/93......... 13.18 0.88 5.65 20.66 139,504
Year ended 9/30/92......... 9.75 0.77 6.27 27.92 128,334
Year ended 9/30/91......... 15.84 0.83 6.64 14.37 118,022
Year ended 9/30/90......... 2.48 0.79 6.66 19.26 110,246
Year ended 9/30/89......... 8.18 0.79 6.81 7.51 122,515
Year ended 9/30/88......... 15.15 0.84 7.02 21.77 126,150
Massachusetts Series--Class D
Year ended 9/30/97........ 7.29 1.74 4.16 29.26 1,245
Year ended 9/30/96........ 5.01 1.70 4.32 26.30 1,405
Year ended 9/30/95........ 8.33 1.95 4.47 16.68 890
2/1/94*- 9/30/94 ......... (5.34) 1.78+ 4.52+ 12.44++ 1,099
Michigan Series--Class A
Year ended 9/30/97........ 8.16 0.81 5.13 10.98 143,370
Year ended 9/30/96........ 6.16 0.78 5.29 19.62 148,178
Year ended 9/30/95........ 9.56 0.87 5.50 20.48 151,589
Year ended 9/30/94........ (2.90) 0.84 5.32 10.06 151,095
Year ended 9/30/93........ 12.97 0.83 5.41 6.33 164,638
Year ended 9/30/92........ 10.55 0.76 5.93 32.12 144,524
Year ended 9/30/91........ 13.34 0.80 6.28 22.81 129,004
Year ended 9/30/90........ 4.57 0.80 6.47 26.36 112,689
Year ended 9/30/89........ 9.91 0.81 6.67 8.24 111,180
Year ended 9/30/88........ 15.98 0.88 7.06 34.00 104,904
Michigan Series--Class D
Year ended 9/30/97........ 7.19 1.71 4.23 10.98 1,845
Year ended 9/30/96........ 5.09 1.68 4.39 19.62 1,486
Year ended 9/30/95........ 8.36 2.01 4.40 20.48 1,172
2/1/94*- 9/30/94.......... (5.47) 1.75+ 4.40+ 10.06++ 671
Minnesota Series--Class A
Year ended 9/30/97....... 6.85 0.85 5.21 6.88 121,674
Year ended 9/30/96....... 3.99 0.81 5.47 26.89 126,173
Year ended 9/30/95....... 7.61 0.87 5.89 5.57 132,716
Year ended 9/30/94....... 0.12 0.85 5.70 3.30 134,990
Year ended 9/30/93....... 13.06 0.90 5.89 5.73 144,600
Year ended 9/30/92....... 7.71 0.80 6.29 12.08 151,922
Year ended 9/30/91....... 11.10 0.80 6.28 2.61 182,979
Year ended 9/30/90....... 5.79 0.81 6.40 12.10 160,930
Year ended 9/30/89....... 8.34 0.83 6.61 7.55 148,425
Year ended 9/30/88....... 14.76 0.87 6.95 35.37 132,541
Minnesota Series--Class D
Year ended 9/30/97....... 5.89 1.75 4.31 6.88 1,799
Year ended 9/30/96....... 3.06 1.71 4.57 26.89 2,036
Year ended 9/30/95....... 6.45 1.85 4.92 5.57 2,237
2/1/94*- 9/30/94 ........ (3.08) 1.74+ 4.68+ 3.30++ 1,649
- ----------
+ Annualized.
++ For the year ended 9/30/94.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NET
NET ASSET REALIZED INCREASE NET NET
VALUE & (DECREASE) INCREASE ASSET
AT NET UNREALIZED FROM DIVIDENDS DISTRIBUTIONS (DECREASE) VALUE AT
PER SHARE OPERATING BEGINNING INVESTMENT INVESTMENT INVESTMENT PAID OR FROM NET IN NET END OF
PERFORMANCE: OF PERIOD INCOME@ GAIN (LOSS) OPERATIONS DECLARED GAIN REALIZED ASSET VALUE PERIOD
- ------------------- --------- ---------- ----------- ---------- --------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MISSOURI SERIES--CLASS A
Year ended 9/30/97........ $7.71 0.38 $0.19 $ 0.57 $(0.38) $(0.08) $0.11 $7.82
Year ended 9/30/96........ 7.70 0.39 0.08 0.47 (0.39) (0.07) 0.01 7.71
Year ended 9/30/95........ 7.41 0.40 0.36 0.76 (0.40) (0.07) 0.29 7.70
Year ended 9/30/94........ 8.31 0.40 (0.79) (0.39) (0.40) (0.11) (0.90) 7.41
Year ended 9/30/93........ 7.80 0.42 0.57 0.99 (0.42) (0.06) 0.51 8.31
Year ended 9/30/92........ 7.72 0.44 0.15 0.59 (0.44) (0.07) 0.08 7.80
Year ended 9/30/91........ 7.22 0.46 0.50 0.96 (0.46) -- 0.50 7.72
YEAR ENDED 9/30/90 7.28 0.45 (0.06) 0.39 (0.45) -- (0.06) 7.22
Year ended 9/30/89........ 7.10 0.47 0.18 0.65 (0.47) -- 0.18 7.28
Year ended 9/30/88........ 6.57 0.48 0.58 1.06 (0.48) (0.05) 0.53 7.10
MISSOURI SERIES--CLASS D
Year ended 9/30/97........ 7.72 0.31 0.18 0.49 (0.31) (0.08) 0.10 7.82
Year ended 9/30/96........ 7.70 0.32 0.09 0.41 (0.32) (0.07) 0.02 7.72
Year ended 9/30/95........ 7.41 0.32 0.36 0.68 (0.32) (0.07) 0.29 7.70
2/1/94*- 9/30/94 ......... 8.20 0.22 (0.79) (0.57) (0.22) -- (0.79) 7.41
NEW YORK SERIES--CLASS A
Year ended 9/30/97........ 7.98 0.41 0.32 0.73 (0.41) (0.02) 0.30 8.28
Year ended 9/30/96........ 7.86 0.42 0.12 0.54 (0.42) -- 0.12 7.98
Year ended 9/30/95........ 7.67 0.42 0.36 0.78 (0.42) (0.17) 0.19 7.86
Year ended 9/30/94........ 8.75 0.43 (0.88) (0.45) (0.43) (0.20) (1.08) 7.67
Year ended 9/30/93........ 8.13 0.45 0.74 1.19 (0.45) (0.12) 0.62 8.75
Year ended 9/30/92........ 7.94 0.49 0.26 0.75 (0.49) (0.07) 0.19 8.13
Year ended 9/30/91........ 7.40 0.50 0.54 1.04 (0.50) -- 0.54 7.94
Year ended 9/30/90........ 7.71 0.51 (0.26) 0.25 (0.51) (0.05) (0.31) 7.40
Year ended 9/30/89........ 7.57 0.52 0.17 0.69 (0.52) (0.03) 0.14 7.71
Year ended 9/30/88........ 7.28 0.52 0.48 1.00 (0.52) (0.19) 0.29 7.57
NEW YORK SERIES--CLASS D
Year ended 9/30/97........ 7.98 0.34 0.33 0.67 (0.34) (0.02) 0.31 8.29
Year ended 9/30/96........ 7.87 0.34 0.11 0.45 (0.34) -- 0.11 7.98
Year ended 9/30/95........ 7.67 0.34 0.37 0.71 (0.34) (0.17) 0.20 7.87
2/1/94*- 9/30/94 ......... 8.55 0.23 (0.88) (0.65) (0.23) -- (0.88) 7.67
OHIO SERIES--CLASS A
Year ended 9/30/97........ 8.09 0.42 0.17 0.59 (0.42) (0.07) 0.10 8.19
Year ended 9/30/96........ 8.11 0.43 0.02 0.45 (0.43) (0.04) (0.02) 8.09
Year ended 9/30/95........ 7.90 0.44 0.28 0.72 (0.44) (0.07) 0.21 8.11
Year ended 9/30/94........ 8.77 0.44 (0.70) (0.26) (0.44) (0.17) (0.87) 7.90
Year ended 9/30/93........ 8.28 0.46 0.56 1.02 (0.46) (0.07) 0.49 8.77
Year ended 9/30/92........ 8.06 0.49 0.26 0.75 (0.49) (0.04) 0.22 8.28
Year ended 9/30/91........ 7.62 0.51 0.45 0.96 (0.51) (0.01) 0.44 8.06
Year ended 9/30/90........ 7.80 0.52 (0.08) 0.44 (0.52) (0.10) (0.18) 7.62
Year ended 9/30/89........ 7.71 0.54 0.11 0.65 (0.54) (0.02) 0.09 7.80
Year ended 9/30/88........ 7.38 0.54 0.53 1.07 (0.54) (0.20) 0.33 7.71
OHIO SERIES--CLASS D
Year ended 9/30/97........ 8.13 0.35 0.17 0.52 (0.35) (0.07) 0.10 8.23
Year ended 9/30/96........ 8.15 0.36 0.02 0.38 (0.36) (0.04) (0.02) 8.13
Year ended 9/30/95........ 7.92 0.36 0.30 0.66 (0.36) (0.07) 0.23 8.15
2/1/94*- 9/30/94 ......... 8.61 0.24 (0.69) (0.45) (0.24) -- (0.69) 7.92
OREGON SERIES--CLASS A
Year ended 9/30/97........ 7.65 0.38 0.26 0.64 (0.38) (0.04) 0.22 7.87
Year ended 9/30/96........ 7.66 0.40 -- 0.40 (0.40) (0.01) (0.01) 7.65
Year ended 9/30/95........ 7.43 0.40 0.25 0.65 (0.40) (0.02) 0.23 7.66
Year ended 9/30/94........ 8.08 0.40 (0.59) (0.19) (0.40) (0.06) (0.65) 7.43
Year ended 9/30/93........ 7.60 0.42 0.48 0.90 (0.42) -- 0.48 8.08
Year ended 9/30/92........ 7.42 0.42 0.18 0.60 (0.42) -- 0.18 7.60
Year ended 9/30/91........ 6.96 0.44 0.46 0.90 (0.44) -- 0.46 7.42
Year ended 9/30/90........ 7.05 0.44 (0.09) 0.35 (0.44) -- (0.09) 6.96
Year ended 9/30/89........ 6.83 0.44 0.22 0.66 (0.44) -- 0.22 7.05
Year ended 9/30/88........ 6.21 0.45 0.62 1.07 (0.45) -- 0.62 6.83
OREGON SERIES--CLASS D
Year ended 9/30/97........ 7.64 0.31 0.27 0.58 (0.31) (0.04) 0.23 7.87
Year ended 9/30/96........ 7.65 0.33 -- 0.33 (0.33) (0.01) (0.01) 7.64
Year ended 9/30/95........ 7.43 0.33 0.24 0.57 (0.33) (0.02) 0.22 7.65
2/1/94*- 9/30/94 ......... 8.02 0.22 (0.59) (0.37) (0.22) -- (0.59) 7.43
SOUTH CAROLINA SERIES--CLASS A
Year ended 9/30/97........ 8.07 0.40 0.22 0.62 (0.40) (0.13) 0.09 8.16
Year ended 9/30/96........ 7.97 0.41 0.12 0.53 (0.41) (0.02) 0.10 8.07
Year ended 9/30/95........ 7.61 0.41 0.37 0.78 (0.41) (0.01) 0.36 7.97
Year ended 9/30/94........ 8.52 0.41 (0.79) (0.38) (0.41) (0.12) (0.91) 7.61
Year ended 9/30/93........ 8.00 0.43 0.54 0.97 (0.43) (0.02) 0.52 8.52
Year ended 9/30/92........ 7.71 0.45 0.31 0.76 (0.45) (0.02) 0.29 8.00
Year ended 9/30/91........ 7.23 0.46 0.52 0.98 (0.46) (0.04) 0.48 7.71
Year ended 9/30/90........ 7.37 0.48 (0.14) 0.34 (0.48) -- (0.14) 7.23
Year ended 9/30/89........ 7.21 0.48 0.17 0.65 (0.48) (0.01) 0.16 7.37
Year ended 9/30/88........ 6.67 0.50 0.54 1.04 (0.50) -- 0.54 7.21
- ----------
@ 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 shares.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
ADJUSTED
RATIO OF RATIO OF
NET ADJUSTED ADJUSTED NET
TOTAL RETURN RATIO OF INVESTMENT NET RATIO OF INVESTMENT
BASED ON EXPENSES INCOME NET ASSETS AT INVESTMENT EXPENSES INCOME
PER SHARE OPERATING NET ASSET TO AVERAGE TO AVERAGE PORTFOLIO END OF PERIOD INCOME TO AVERAGE TO AVERAGE
PERFORMANCE: VALUE NET ASSETS@ NET ASSETS@ TURNOVER (000'S OMITTED) PER SHARE@ NET ASSETS@ NET ASSETS@
- ------------------- ------------ ---------- ---------- --------- -------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Missouri Series--Class A
Year ended 9/30/97....... 7.70% 0.89% 4.93% 6.47% $ 52,766
Year ended 9/30/96....... 6.27 0.86 5.03 8.04 49,941
Year ended 9/30/95....... 10.67 0.88 5.31 3.88 51,169 $0.39 0.93% 5.26%
Year ended 9/30/94....... (4.85) 0.74 5.18 14.33 52,621 0.39 0.88 5.04
Year ended 9/30/93....... 13.17 0.71 5.29 17.03 56,861 0.41 0.91 5.09
Year ended 9/30/92....... 7.87 0.83 5.71 18.80 49,459
Year ended 9/30/91....... 13.61 0.88 6.10 16.30 47,659
Year ended 9/30/90 5.47 0.84 6.20 30.46 50,875
Year ended 9/30/89....... 9.33 0.96 6.43 32.81 49,162
Year ended 9/30/88....... 16.74 0.86 6.88 12.32 58,457
Missouri Series--Class D
Year ended 9/30/97....... 6.60 1.80 4.02 6.47 474
Year ended 9/30/96....... 5.46 1.76 4.13 8.04 565
Year ended 9/30/95....... 9.49 1.98 4.23 3.88 515 0.32 2.03 4.18
2/1/94*- 9/30/94 ........ (7.16) 1.70+ 4.27+ 14.33++ 350 0.22 1.80+ 4.17+
New York Series--Class A
Year ended 9/30/97....... 9.45 0.82 5.09 23.83 83,528
Year ended 9/30/96....... 6.97 0.77 5.24 25.88 82,719
Year ended 9/30/95....... 10.93 0.88 5.52 34.05 83,980
Year ended 9/30/94....... (5.37) 0.87 5.31 28.19 90,914
Year ended 9/30/93....... 15.26 0.94 5.37 27.90 104,685
Year ended 9/30/92....... 9.80 0.79 6.09 42.90 92,681
Year ended 9/30/91....... 14.56 0.80 6.57 44.57 83,684
Year ended 9/30/90....... 3.19 0.79 6.65 32.14 77,766
Year ended 9/30/89....... 9.35 0.80 6.78 47.69 75,471
Year ended 9/30/88....... 14.74 0.86 6.96 62.42 74,238
New York Series--Class D
Year ended 9/30/97....... 8.60 1.73 4.18 23.83 1,572
Year ended 9/30/96....... 5.86 1.68 4.33 25.88 1,152
Year ended 9/30/95....... 9.87 1.96 4.42 34.05 885
2/1/94*- 9/30/94 ........ (7.73) 1.81+ 4.39+ 28.19++ 476
Ohio Series--Class A
Year ended 9/30/97....... 7.54 0.81 5.19 11.76 154,419
Year ended 9/30/96....... 5.68 0.77 5.32 12.90 162,243
Year ended 9/30/95....... 9.59 0.84 5.56 2.96 170,191
Year ended 9/30/94....... (3.08) 0.84 5.34 9.37 171,469
Year ended 9/30/93....... 12.81 0.85 5.44 30.68 190,083
Year ended 9/30/92....... 9.68 0.75 6.02 7.15 170,427
Year ended 9/30/91....... 12.96 0.77 6.42 13.95 156,179
Year ended 9/30/90....... 5.70 0.77 6.63 16.05 136,251
Year ended 9/30/89....... 8.74 0.79 6.91 12.72 131,900
Year ended 9/30/88....... 15.76 0.83 7.20 26.71 122,386
Ohio Series--Class D
Year ended 9/30/97....... 6.57 1.71 4.29 11.76 1,160
Year ended 9/30/96....... 4.74 1.67 4.42 12.90 1,011
Year ended 9/30/95....... 8.67 1.93 4.48 2.96 660
2/1/94*- 9/30/94 ........ (5.36) 1.78+ 4.41+ 9.37++ 324
Oregon Series--Class A
Year ended 9/30/97....... 8.60 0.90 4.88 19.46 55,239
Year ended 9/30/96....... 5.27 0.86 5.18 28.65 57,345
Year ended 9/30/95....... 9.05 0.86 5.40 2.47 59,549 0.40 0.91 5.35
Year ended 9/30/94....... (2.38) 0.78 5.20 9.43 59,884 0.39 0.89 5.09
Year ended 9/30/93....... 12.21 0.78 5.35 8.08 62,095 0.41 0.93 5.20
Year ended 9/30/92....... 8.35 0.68 5.63 0.21 48,797 0.42 0.83 5.48
Year ended 9/30/91....... 13.25 0.71 6.06 7.60 39,350 0.42 0.91 5.96
Year ended 9/30/90....... 4.99 0.72 6.17 4.09 32,221 0.42 0.93 5.96
Year ended 9/30/89....... 9.95 0.64 6.34 0.19 30,510 0.42 0.96 6.03
Year ended 9/30/88....... 17.89 0.54 6.86 3.94 26,609 0.42 1.01 6.39
Oregon Series--Class D
Year ended 9/30/97....... 7.77 1.80 3.98 19.46 1,678
Year ended 9/30/96....... 4.33 1.76 4.28 28.65 1,540
Year ended 9/30/95....... 7.86 1.83 4.41 2.47 1,495 0.33 1.88 4.36
2/1/94*- 9/30/94 ........ (4.76) 1.72+ 4.32+ 9.43++ 843 0.22 1.82+ 4.22+
South Carolina Series--Class A
Year ended 9/30/97....... 7.99 0.84 5.04 -- 101,018
Year ended 9/30/96....... 6.82 0.80 5.15 20.66 108,163
Year ended 9/30/95....... 10.69 0.88 5.38 4.13 112,421
Year ended 9/30/94....... (4.61) 0.83 5.12 1.81 115,133
Year ended 9/30/93....... 12.52 0.85 5.19 17.69 120,589
Year ended 9/30/92....... 10.08 0.81 5.71 3.37 82,882
Year ended 9/30/91....... 13.95 0.81 6.14 9.05 63,863 0.45 0.91 6.04
Year ended 9/30/90....... 4.48 0.73 6.47 15.26 49,234 0.47 0.84 6.35
Year ended 9/30/89....... 9.41 0.68 6.48 0.03 46,487 0.46 0.88 6.28
Year ended 9/30/88....... 16.18 0.33 7.03 12.36 26,385 0.45 1.00 6.36
- ----------
+ Annualized.
++ For the year ended 9/30/94.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NET
NET ASSET REALIZED INCREASE NET NET
VALUE & (DECREASE) INCREASE ASSET
AT NET UNREALIZED FROM DIVIDENDS DISTRIBUTIONS (DECREASE) VALUE AT
PER SHARE OPERATING BEGINNING INVESTMENT INVESTMENT INVESTMENT PAID OR FROM NET IN NET END OF
PERFORMANCE: OF PERIOD INCOME@ GAIN (LOSS) OPERATIONS DECLARED GAIN REALIZED ASSET VALUE PERIOD
- ------------------- --------- ---------- ----------- ---------- --------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOUTH CAROLINA SERIES--CLASS D
Year ended 9/30/97........ $8.06 $0.33 $0.23 $0.56 $(0.33) $(0.13) $0.10 $8.16
Year ended 9/30/96........ 7.97 0.34 0.11 0.45 (0.34) (0.02) 0.09 8.06
Year ended 9/30/95........ 7.61 0.34 0.37 0.71 (0.34) (0.01) 0.36 7.97
2/1/94*- 9/30/94 ......... 8.42 0.22 (0.81) (0.59) (0.22) -- (0.81) 7.61
CALIFORNIA HIGH-YIELD SERIES--CLASS A
Year ended 9/30/97........ 6.50 0.34 0.20 0.54 (0.34) (0.09) 0.11 6.61
YEAR ENDED 9/30/96........ 6.47 0.36 0.05 0.41 (0.36) (0.02) 0.03 6.50
Year ended 9/30/95........ 6.30 0.37 0.17 0.54 (0.37) -- 0.17 6.47
Year ended 9/30/94........ 6.73 0.37 (0.34) 0.03 (0.37) (0.09) (0.43) 6.30
Year ended 9/30/93........ 6.65 0.39 0.28 0.67 (0.39) (0.20) 0.08 6.73
Year ended 9/30/92........ 6.50 0.41 0.16 0.57 (0.41) (0.01) 0.15 6.65
Year ended 9/30/91........ 6.18 0.42 0.33 0.75 (0.42) (0.01) 0.32 6.50
Year ended 9/30/90........ 6.36 0.42 (0.07) 0.35 (0.42) (0.11) (0.18) 6.18
Year ended 9/30/89........ 6.27 0.44 0.15 0.59 (0.44) (0.06) 0.09 6.36
Year ended 9/30/88........ 5.94 0.44 0.39 0.83 (0.44) (0.06) 0.33 6.27
CALIFORNIA HIGH-YIELD SERIES--CLASS D
Year ended 9/30/97......... 6.51 0.28 0.19 0.47 (0.28) (0.09) 0.10 6.61
Year ended 9/30/96......... 6.48 0.30 0.05 0.35 (0.30) (0.02) 0.03 6.51
Year ended 9/30/95......... 6.31 0.31 0.17 0.48 (0.31) -- 0.17 6.48
2/1/94*- 9/30/94........... 6.67 0.21 (0.36) (0.15) (0.21) -- (0.36) 6.31
CALIFORNIA QUALITY SERIES--CLASS A
Year ended 9/30/97......... 6.75 0.34 0.24 0.58 (0.34) -- 0.24 6.99
Year ended 9/30/96......... 6.65 0.35 0.11 0.46 (0.35) (0.01) 0.10 6.75
Year ended 9/30/95......... 6.39 0.34 0.32 0.66 (0.34) (0.06) 0.26 6.65
Year ended 9/30/94......... 7.28 0.35 (0.73) (0.38) (0.35) (0.16) (0.89) 6.39
Year ended 9/30/93......... 6.85 0.37 0.54 0.91 (0.37) (0.11) 0.43 7.28
Year ended 9/30/92......... 6.65 0.40 0.22 0.62 (0.40) (0.02) 0.20 6.85
Year ended 9/30/91......... 6.22 0.40 0.46 0.86 (0.40) (0.03) 0.43 6.65
Year ended 9/30/90......... 6.47 0.40 (0.13) 0.27 (0.40) (0.12) (0.25) 6.22
Year ended 9/30/89......... 6.29 0.42 0.19 0.61 (0.42) (0.01) 0.18 6.47
Year ended 9/30/88......... 6.01 0.42 0.39 0.81 (0.42) (0.11) 0.28 6.29
CALIFORNIA QUALITY SERIES--CLASS D
Year ended 9/30/97......... 6.74 0.28 0.23 0.51 (0.28) -- 0.23 6.97
Year ended 9/30/96......... 6.63 0.28 0.12 0.40 (0.28) (0.01) 0.11 6.74
Year ended 9/30/95......... 6.38 0.28 0.31 0.59 (0.28) (0.06) 0.25 6.63
2/1/94*- 9/30/94 .......... 7.13 0.19 (0.75) (0.56) (0.19) -- (0.75) 6.38
FLORIDA SERIES--CLASS A
Year ended 9/30/97......... 7.67 0.36 0.23 0.59 (0.36) (0.10) 0.13 7.80
Year ended 9/30/96......... 7.71 0.38 0.04 0.42 (0.38) (0.08) (0.04) 7.67
Year ended 9/30/95......... 7.34 0.40 0.37 0.77 (0.40) -- 0.37 7.71
Year ended 9/30/94......... 8.20 0.42 (0.74) (0.32) (0.42) (0.12) (0.86) 7.34
Year ended 9/30/93......... 7.56 0.46 0.65 1.11 (0.46) (0.01) 0.64 8.20
Year ended 9/30/92......... 7.37 0.47 0.19 0.66 (0.47) -- 0.19 7.56
Year ended 9/30/91......... 6.90 0.43 0.47 0.90 (0.43) -- 0.47 7.37
Year ended 9/30/90......... 6.99 0.45 (0.09) 0.36 (0.45) -- (0.09) 6.90
Year ended 9/30/89......... 6.71 0.46 0.28 0.74 (0.46) -- 0.28 6.99
Year ended 9/30/88......... 6.02 0.47 0.69 1.16 (0.47) -- 0.69 6.71
FLORIDA SERIES--CLASS D
Year ended 9/30/97......... 7.68 0.30 0.23 0.53 (0.30) (0.10) 0.13 7.81
Year ended 9/30/96......... 7.72 0.32 0.04 0.36 (0.32) (0.08) (0.04) 7.68
Year ended 9/30/95......... 7.34 0.34 0.38 0.72 (0.34) -- 0.38 7.72
2/1/94*- 9/30/94 .......... 8.10 0.24 (0.76) (0.52) (0.24) -- (0.76) 7.34
NORTH CAROLINA SERIES--CLASS A
Year ended 9/30/97........ 7.84 0.37 0.24 0.61 (0.37) (0.03) 0.21 8.05
Year ended 9/30/96........ 7.74 0.37 0.11 0.48 (0.37) (0.01) 0.10 7.84
Year ended 9/30/95........ 7.30 0.39 0.45 0.84 (0.39) (0.01) 0.44 7.74
Year ended 9/30/94........ 8.22 0.41 (0.87) (0.46) (0.41) (0.05) (0.92) 7.30
Year ended 9/30/93........ 7.61 0.43 0.63 1.06 (0.43) (0.02) 0.61 8.22
Year ended 9/30/92........ 7.39 0.44 0.22 0.66 (0.44) -- 0.22 7.61
Year ended 9/30/91........ 7.04 0.45 0.35 0.80 (0.45) -- 0.35 7.39
8/27/90*- 9/30/90......... 7.14 0.03 (0.10) (0.07) (0.03) -- (0.10) 7.04
NORTH CAROLINA SERIES--CLASS D
Year ended 9/30/97........ 7.83 0.31 0.25 0.56 (0.31) (0.03) 0.22 8.05
Year ended 9/30/96........ 7.74 0.31 0.10 0.41 (0.31) (0.01) 0.09 7.83
Year ended 9/30/95........ 7.29 0.33 0.46 0.79 (0.33) (0.01) 0.45 7.74
2/1/94*- 9/30/94 ......... 8.17 0.23 (0.88) (0.65) (0.23) -- (0.88) 7.29
- ----------
@ 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 shares.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
ADJUSTED
RATIO OF RATIO OF
NET ADJUSTED ADJUSTED NET
TOTAL RETURN RATIO OF INVESTMENT NET RATIO OF INVESTMENT
BASED ON EXPENSES INCOME NET ASSETS AT INVESTMENT EXPENSES INCOME
PER SHARE OPERATING NET ASSET TO AVERAGE TO AVERAGE PORTFOLIO END OF PERIOD INCOME TO AVERAGE TO AVERAGE
PERFORMANCE: VALUE NET ASSETS@ NET ASSETS@ TURNOVER (000'S OMITTED) PER SHARE@ NET ASSETS@ NET ASSETS@
- ------------------- ------------ ---------- ---------- --------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
South Carolina Series--Class D
Year ended 9/30/97....... 7.15% 1.75% 4.13% -- $ 3,663
Year ended 9/30/96....... 5.73 1.70 4.25 20.66% 2,714
Year ended 9/30/95....... 9.63 1.85 4.40 4.13 1,704
2/1/94*- 9/30/94 ........ (7.14) 1.74+ 4.29+ 1.81++ 1,478
California High-Yield Series--Class A
Year ended 9/30/97....... 8.74 0.87 5.26 22.42 52,883
Year ended 9/30/96....... 6.49 0.84 5.49 34.75 50,264
Year ended 9/30/95....... 8.85 0.90 5.84 17.64 51,504
Year ended 9/30/94....... 0.41 0.85 5.74 8.36 48,007
Year ended 9/30/93....... 10.66 0.88 5.94 7.70 51,218
Year ended 9/30/92....... 9.00 0.82 6.20 45.50 49,448
Year ended 9/30/91....... 12.53 0.83 6.67 5.13 49,172
Year ended 9/30/90....... 5.57 0.89 6.68 17.66 49,312
Year ended 9/30/89....... 9.61 0.89 6.85 14.70 51,079
Year ended 9/30/88....... 14.72 0.91 7.17 20.79 53,037
California High-Yield Series--Class D
Year ended 9/30/97....... 7.60 1.77 4.36 22.42 3,320
Year ended 9/30/96....... 5.53 1.74 4.59 34.75 1,919
Year ended 9/30/95....... 7.78 1.91 4.84 17.64 1,277
2/1/94*- 9/30/94......... (2.47) 1.74+ 4.73+ 8.36++ 650
California Quality Series--Class A
Year ended 9/30/97....... 8.87 0.82 4.99 12.16 86,992
Year ended 9/30/96....... 7.00 0.79 5.11 12.84 95,560
Year ended 9/30/95....... 10.85 0.89 5.34 11.24 94,947
Year ended 9/30/94....... (5.46) 0.81 5.20 22.16 99,020
Year ended 9/30/93....... 13.92 0.82 5.30 15.67 111,732
Year ended 9/30/92....... 9.56 0.78 5.86 34.25 93,557
Year ended 9/30/91....... 14.35 0.78 6.19 20.11 77,884
Year ended 9/30/90....... 4.22 0.83 6.31 28.61 61,854
Year ended 9/30/89....... 9.86 0.85 6.53 57.85 59,258
Year ended 9/30/88....... 14.37 0.86 6.74 46.47 58,608
California Quality Series--Class D
Year ended 9/30/97....... 7.75 1.72 4.09 12.16 1,677
Year ended 9/30/96....... 6.20 1.69 4.21 12.84 1,645
Year ended 9/30/95....... 9.61 1.88 4.36 11.24 863
2/1/94*- 9/30/94 ........ (8.01) 1.77+ 4.39+ 22.16++ 812
Florida Series--Class A
Year ended 9/30/97....... 8.01 1.04 4.70 33.68 42,024
Year ended 9/30/96....... 5.54 0.97 4.90 18.53 45,200 $0.38 0.97% 4.90%
Year ended 9/30/95....... 10.87 0.72 5.38 11.82 49,030 0.37 1.03 5.07
Year ended 9/30/94....... (3.99) 0.42 5.49 6.17 49,897 0.38 1.00 4.91
Year ended 9/30/93....... 15.21 0.23 5.82 16.42 52,855 0.40 1.03 5.01
Year ended 9/30/92....... 9.24 0.17 6.32 12.62 37,957 0.41 1.02 5.47
Year ended 9/30/91....... 13.41 0.90 6.00 -- 28,173 0.42 1.15 5.75
Year ended 9/30/90....... 5.23 0.65 6.44 13.08 24,025 0.44 0.90 6.20
Year ended 9/30/89....... 11.28 0.69 6.61 2.41 23,062 0.44 0.94 6.36
Year ended 9/30/88....... 19.82 0.67 7.18 1.07 20,457 0.45 0.91 6.93
Florida Series--Class D
Year ended 9/30/97....... 7.18 1.81 3.93 33.68 1,678
Year ended 9/30/96....... 4.74 1.73 4.14 18.53 1,277 0.32 1.73 4.14
Year ended 9/30/95....... 10.07 1.66 4.53 11.82 603 0.31 1.97 4.22
2/1/94*- 9/30/94 ........ (6.64) 1.29+ 4.61+ 6.17++ 244 0.21 1.84+ 4.06+
North Carolina Series--Class A
Year ended 9/30/97....... 8.01 1.09 4.66 13.04 32,684
Year ended 9/30/96....... 6.39 1.05 4.75 15.12 35,934 0.37 1.06 4.74
Year ended 9/30/95....... 11.92 0.82 5.21 4.38 37,446 0.36 1.18 4.85
Year ended 9/30/94....... (5.80) 0.44 5.29 15.61 38,920 0.35 1.13 4.60
Year ended 9/30/93....... 14.46 0.23 5.44 3.13 38,828 0.35 1.22 4.45
Year ended 9/30/92....... 9.23 0.14 5.83 12.51 21,836 0.34 1.40 4.57
Year ended 9/30/91....... 11.97 0.07 6.10 -- 9,255 0.22 3.22 2.96
8/27/90*- 9/30/90........ (1.40) 0.94+ 4.48+ -- 1,377 0.01 4.48+ 1.04+
North Carolina Series--Class D
Year ended 9/30/97....... 7.33 1.85 3.90 13.04 1,217
Year ended 9/30/96....... 5.45 1.81 3.99 15.12 1,232 0.31 1.82 3.98
Year ended 9/30/95....... 11.19 1.64 4.42 4.38 1,257 0.31 2.00 4.06
2/1/94*- 9/30/94 ........ (8.15) 1.27+ 4.49+ 15.61++ 1,282 0.20 1.95+ 3.82
- ----------
+ Annualized.
++ For the year ended 9/30/94.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NET
NET ASSET REALIZED INCREASE NET NET
VALUE & (DECREASE) INCREASE ASSET
AT NET UNREALIZED FROM DIVIDENDS DISTRIBUTIONS (DECREASE) VALUE AT
PER SHARE OPERATING BEGINNING INVESTMENT INVESTMENT INVESTMENT PAID OR FROM NET IN NET END OF
PERFORMANCE: OF PERIOD INCOME@ GAIN (LOSS) OPERATIONS DECLARED GAIN REALIZED ASSET VALUE PERIOD
- ------------------- --------- ---------- ----------- ---------- --------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NEW JERSEY--CLASS A
Year ended 9/30/97........ $7.60 $0.36 $0.21 $0.57 $(0.36) $(0.25) $(0.04) $7.56
Year ended 9/30/96........ 7.59 0.39 0.01 0.40 (0.39) -- 0.01 7.60
Year ended 9/30/95........ 7.40 0.39 0.29 0.68 (0.39) (0.10) 0.19 7.59
Year ended 9/30/94........ 8.24 0.41 (0.74) (0.33) (0.41) (0.10) (0.84) 7.40
Year ended 9/30/93........ 7.74 0.42 0.61 1.03 (0.42) (0.11) 0.50 8.24
YEAR ENDED 9/30/92 7.49 0.44 0.27 0.71 (0.44) (0.02) 0.25 7.74
Year ended 9/30/91........ 7.01 0.44 0.51 0.95 (0.44) (0.03) 0.48 7.49
Year ended 9/30/90........ 7.17 0.45 (0.10) 0.35 (0.45) (0.06) (0.16) 7.01
Year ended 9/30/89........ 6.98 0.48 0.19 0.67 (0.48) -- 0.19 7.17
2/16/88*- 9/30/88......... 7.14 0.30 (0.16) 0.14 (0.30) -- (0.16) 6.98
NEW JERSEY--CLASS D
Year ended 9/30/97........ 7.68 0.31 0.21 0.52 (0.31) (0.25) (0.04) 7.64
Year ended 9/30/96........ 7.67 0.33 0.01 0.34 (0.33) -- 0.01 7.68
Year ended 9/30/95........ 7.48 0.33 0.29 0.62 (0.33) (0.10) 0.19 7.67
2/1/94*- 9/30/94.......... 8.14 0.23 (0.66) (0.43) (0.23) -- (0.66) 7.48
PENNSYLVANIA--CLASS A
Year ended 9/30/97........ 7.82 0.36 0.24 0.60 (0.36) (0.10) 0.14 7.96
Year ended 9/30/96........ 7.79 0.38 0.12 0.50 (0.38) (0.09) 0.03 7.82
Year ended 9/30/95........ 7.55 0.38 0.37 0.75 (0.38) (0.13) 0.24 7.79
Year ended 9/30/94........ 8.61 0.39 (0.80) (0.41) (0.39) (0.26) (1.06) 7.55
Year ended 9/30/93........ 8.02 0.42 0.71 1.13 (0.42) (0.12) 0.59 8.61
Year ended 9/30/92........ 7.74 0.46 0.30 0.76 (0.46) (0.02) 0.28 8.02
Year ended 9/30/91........ 7.34 0.47 0.49 0.96 (0.47) (0.09) 0.40 7.74
Year ended 9/30/90........ 7.50 0.47 (0.16) 0.31 (0.47) -- (0.16) 7.34
Year ended 9/30/89........ 7.31 0.49 0.19 0.68 (0.49) -- 0.19 7.50
Year ended 9/30/88........ 6.76 0.50 0.56 1.06 (0.50) (0.01) 0.55 7.31
PENNSYLVANIA--CLASS D
Year ended 9/30/97........ 7.81 0.30 0.24 0.54 (0.30) (0.10) 0.14 7.95
Year ended 9/30/96........ 7.78 0.32 0.12 0.44 (0.32) (0.09) 0.03 7.81
Year ended 9/30/95........ 7.54 0.31 0.37 0.68 (0.31) (0.13) 0.24 7.78
2/1/94*- 9/30/94.......... 8.37 0.22 (0.83) (0.61) (0.22) -- (0.83) 7.54
- ----------
@ 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 shares.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
ADJUSTED
RATIO OF RATIO OF
NET ADJUSTED ADJUSTED NET
TOTAL RETURN RATIO OF INVESTMENT NET RATIO OF INVESTMENT
BASED ON EXPENSES INCOME NET ASSETS AT INVESTMENT EXPENSES INCOME
PER SHARE OPERATING NET ASSET TO AVERAGE TO AVERAGE PORTFOLIO END OF PERIOD INCOME TO AVERAGE TO AVERAGE
PERFORMANCE: VALUE NET ASSETS@ NET ASSETS@ TURNOVER (000'S OMITTED) PER SHARE@ NET ASSETS@ NET ASSETS@
- ------------------- ------------ ---------- ---------- --------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New Jersey--Class A
Year ended 9/30/97....... 7.96% 1.06% 4.90% 20.22% $62,597
Year ended 9/30/96....... 5.37 1.02 5.06 25.65 66,293
Year ended 9/30/95....... 9.77 1.01 5.29 4.66 73,561 $0.39 1.06% 5.24%
Year ended 9/30/94....... (4.25) 0.90 5.24 12.13 73,942 0.40 1.07 5.07
Year ended 9/30/93....... 14.02 0.86 5.37 15.90 82,447 0.40 1.11 5.12
Year ended 9/30/92 9.70 0.85 5.74 27.13 74,256 0.42 1.10 5.49
Year ended 9/30/91....... 13.97 0.81 6.02 14.64 65,044 0.42 1.11 5.72
Year ended 9/30/90....... 5.04 0.81 6.32 37.26 54,287 0.43 1.12 6.01
Year ended 9/30/89....... 9.91 0.57 6.70 16.10 51,015 0.44 1.17 6.10
2/16/88*- 9/30/88........ 1.96 0.40+ 6.92+ 8.20 35,563 0.26 1.36+ 5.96+
New Jersey--Class D
Year ended 9/30/97....... 7.10 1.83 4.13 20.22 1,282
Year ended 9/30/96....... 4.56 1.79 4.29 25.65 1,152
Year ended 9/30/95....... 8.79 1.89 4.45 4.66 1,190 0.33 1.94 4.40
2/1/94*- 9/30/94......... (5.47) 1.75+ 4.37+ 12.13++ 986 0.22 1.87+ 4.25+
Pennsylvania--Class A
Year ended 9/30/97....... 7.89 1.19 4.60 32.99 30,092
Year ended 9/30/96....... 6.57 1.11 4.82 4.56 31,139
Year ended 9/30/95....... 10.55 1.21 5.05 11.78 33,251
Year ended 9/30/94....... (5.00) 1.16 4.91 7.71 34,943
Year ended 9/30/93....... 14.71 1.19 5.14 40.74 41,296
Year ended 9/30/92....... 10.04 1.01 5.79 32.87 39,431 0.45 1.16 5.64
Year ended 9/30/91....... 13.40 0.98 6.16 25.24 37,853 0.45 1.23 5.91
Year ended 9/30/90....... 4.13 0.06 6.24 40.64 35,572 0.45 1.31 5.99
Year ended 9/30/89....... 9.53 0.92 6.56 9.05 41,856 0.47 1.17 6.30
Year ended 9/30/88....... 16.20 0.83 6.96 4.14 30,796 0.48 1.08 6.71
Pennsylvania--Class D
Year ended 9/30/97....... 7.07 1.96 3.83 32.99 816
Year ended 9/30/96....... 5.76 1.88 4.05 4.56 876
Year ended 9/30/95....... 9.53 2.23 4.10 11.78 426
2/1/94*- 9/30/94......... (7.50) 2.00+ 4.20+ 7.71++ 43
- ----------
+ Annualized.
++ For the year ended 9/30/94.
</TABLE>
19
<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 expect to maintain their investment for an extended period of
time might choose to 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 higher
distribution fees on Class D shares will be offset to the extent any return is
realized on the additional funds initially invested therein that would have been
equal to the amount of the initial sales load on Class A shares.
Investors who qualify for reduced initial sales loads, as described under
"Purchase of Shares" below, might also choose to purchase Class A shares because
the sales load deducted at the time of purchase would be less or waived in full.
However, investors should consider the effect of the 1% CDSL imposed on shares
on which the initial sales load was waived in full because the amount of Class A
shares purchased reached $1,000,000 or more.
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.
Investors should understand that the purpose and function of the initial
sales load (and deferred sales load, when applicable) with respect to Class A
shares is the same as those of the deferred sales load and higher distribution
fees with respect to Class D shares in that the sales loads and distribution
fees applicable to a Class provide for the financing of the distribution of the
shares of the Series.
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 of each Series. 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.
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DIFFERENCES BETWEEN CLASSES. The primary differences 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.
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.
CDSL of 1% on
redemptions within
18 months of
purchase on
shares on which
initial sales load
was waived in full
due to the size of
the purchase.
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
MUNICIPAL SECURITIES
As used in this Prospectus, "municipal 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 interest may, however, be subject
to the federal alternative minimum tax. Such securities are traded primarily in
the over-the-counter market.
Municipal 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. Municipal 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 municipal 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 regular 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 municipal securities (including
certain industrial development bonds) that are private activity bonds, as
defined in the Internal Revenue Code of 1986, as amended (the "Code"), is
treated as a preference item for purposes of the alternative minimum tax. Each
Series may invest any portion of its assets in municipal securities the interest
on which is subject to the alternative minimum tax. Under normal circumstances,
each Series will invest at least 80% of its net assets in municipal securities
the interest on which is exempt from regular federal income tax (although such
interest may be subject to the federal alternative minimum tax) and state or
local income tax.
Municipal 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.
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Municipal commercial paper are short-term obligations generally having a
maturity of less than nine months.
It should be noted that municipal 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 municipal 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 municipal 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
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 municipal securities in which each
Series may invest and special factors relating to them is set forth in each
Series' Statement of Additional Information.
SELIGMAN MUNICIPAL FUND SERIES, INC.
The Municipal Fund is a non-diversified, open-end management investment
company, as defined in the 1940 Act, incorporated in Maryland on August 8, 1983.
The Municipal Fund consists of a National Series and twelve state Series, as
described below. The Municipal 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 regular 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 regular federal income
taxes. Such interest, however, may be subject to the federal alternative minimum
tax. There can be no assurance that the National Series will be able to meet its
investment objective.
MUNICIPAL FUND STATE SERIES each seek to maximize income exempt from regular
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 Municipal Fund 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 regular federal income taxes and from the personal income taxes of
the designated state. Such interest, however, may be subject to the federal
alternative minimum tax. Each Municipal Fund State Series may also invest in
municipal securities of issuers outside its designated state if such securities
bear interest that is exempt from regular federal income taxes and personal
income taxes of the state. If, in abnormal market conditions, in the judgment of
the Manager, municipal securities satisfying the investment objective of any of
the Municipal Fund State Series are not available or for other defensive
purposes, such Municipal Fund State Series may temporarily invest up to 20% of
the value of its net assets in instruments the interest on which is exempt from
regular federal income taxes, but not State personal income taxes. Such
securities would include those set forth under "Municipal Securities" above,
that would otherwise meet the Series' objective. There can be no assurance that
a Municipal Fund State Series will be able to meet its investment objective.
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<PAGE>
Each Municipal Fund State Series and the National Series are expected to
invest principally, without percentage limitations, in municipal securities that
are rated investment grade on the date of investment. Each Series also may
invest in unrated municipal 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 Municipal 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 municipal 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." 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.
SELIGMAN MUNICIPAL SERIES TRUST
The Municipal 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 Municipal Trust consists of Seligman North
Carolina Municipal Series, Seligman Florida Municipal Series, Seligman
California Municipal Quality Series and Seligman California Municipal High-Yield
Series.
SELIGMAN NORTH CAROLINA MUNICIPAL SERIES (the "North Carolina Series") and
SELIGMAN FLORIDA MUNICIPAL SERIES (the "Florida Series") each seek high income
exempt from regular 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 municipal 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 municipal 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 municipal securities, as applicable, the interest on which
is exempt from regular federal taxes and, if applicable, North Carolina personal
taxes. Such interest, however, may be subject to the federal alternative minimum
tax. In abnormal market conditions if, in the judgment of the Manager, North
Carolina or Florida municipal securities satisfying such Series' objective may
not be purchased, the Municipal 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 bet-
23
<PAGE>
ter, 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 Municipal Fund Series, Inc." Investments in certificates
of deposit of foreign banks and foreign branches of U.S. banks may involve
certain risks, as described above.
Each Series is permitted to purchase project notes and standby commitments;
however, neither Series has any present intention of investing in such
securities.
SELIGMAN CALIFORNIA MUNICIPAL QUALITY SERIES (the "California Quality
Series") seeks high income exempt from regular 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 municipal
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
municipal 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 California Quality
Series ordinarily will have maturities in excess of one year. There can be no
assurance that the California Quality Series will be able to meet its investment
objective.
SELIGMAN CALIFORNIA MUNICIPAL HIGH-YIELD SERIES (the "California High-Yield
Series") seeks the maximum income exempt from regular 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
municipal securities that on the date of investment are rated within the medium
to lower rating categories of 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
municipal 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 the California High-Yield Series invests generally
involve greater volatility of price and risk of loss of principal and income
than securities in higher rating categories. Shares of the California High-Yield
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, 1997 the weighted average ratings
of the California municipal long-term securities held by the California High-
Yield Series were as follows:
PERCENTAGE OF TOTAL
S&P/MOODY'S RATINGS INVESTMENTS
----------------------- --------------------
AAA/Aaa ....................................................... 2%
AA/Aa ......................................................... 9%
A/A ........................................................... 50%
BBB/Baa ....................................................... 17%
BB/Ba ......................................................... --
B/B ........................................................... --
CCC/Caa ....................................................... --
Unrated ....................................................... 22%
California municipal 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 municipal 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 municipal
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 municipal 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
24
<PAGE>
to make bids for the securities of certain issuers that the seller considers
reasonable. Furthermore, because the net asset value of the California
High-Yield Series' shares reflects the degree of willingness of dealers to bid
for California municipal securities, the price of the California High-Yield
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
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 California High-Yield
Series inherent in the investment in lower-rated California municipal 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 municipal
securities rated in the fourth rating category or higher.
Each of the California Quality Series and the 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 regular federal and California personal income taxes. Such
interest, however, may be subject to the federal alternative minimum tax. In
abnormal market conditions if, in the judgment of the Manager, municipal
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 regular 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 Municipal Fund Series, 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 municipal 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 Municipal 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 municipal securities with stand-by
commitments generally would be higher than the price which otherwise would be
paid for the municipal 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
25
<PAGE>
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.
SELIGMAN NEW JERSEY MUNICIPAL 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 regular 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 New Jersey municipal securities that are rated investment grade on
the date of investment. The New Jersey Fund also may invest in New Jersey
municipal 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 New Jersey Fund will be able to
meet its investment objective.
The New Jersey 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 regular federal income tax and
New Jersey personal income tax. Such interest may, however, be subject to the
federal alternative minimum tax. In abnormal market conditions if, in the
judgment of the Manager, municipal securities satisfying the New Jersey Fund's
objective may not be purchased or for other temporary defensive purposes, the
New Jersey Fund may make investments in securities the interest on which is
exempt only from regular 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 New Jersey 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 as defined under "Seligman Municipal Fund Series, Inc." Investments
in certificates of deposit of foreign banks and foreign branches of U.S. banks
may involve certain risks, as described above.
The New Jersey Fund is permitted to purchase project notes and standby
commitments; however, the New Jersey Fund has no present intention of investing
in such securities.
SELIGMAN PENNSYLVANIA MUNICIPAL 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 income exempt from regular federal income
tax and Pennsylvania income taxes consistent with preservation of capital by
investing in Pennsylvania municipal securities that are rated investment grade
on the date of investment. The Pennsylvania Fund also may invest in unrated
Pennsylvania municipal securities if, based upon credit analysis by the Manager,
it is believed that such securities are of comparable quality to investment
grade securities. The securities which the Pennsylvania Fund will hold
ordinarily will have maturities in excess of one year. There can be no assurance
that the Fund will be able to meet its investment objective.
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<PAGE>
The Pennsylvania 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 regular federal and Pennsylvania
income taxes. Such interest, however, may be subject to the federal alternative
minimum tax. In abnormal market conditions if, in the judgment of the Manager,
municipal securities satisfying the Pennsylvania Fund's objectives can not be
purchased, the Pennsylvania Fund may make temporary investments in securities
the interest on which is exempt only from regular 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 Pennsylvania 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 Municipal Fund Series, 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 Pennsylvania Fund, capital
appreciation will not be a factor. However, the Pennsylvania 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 Pennsylvania 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 Pennsylvania Fund is authorized to purchase standby commitments;
however, the Pennsylvania Fund has no present intention of investing in such
securities.
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 Code, 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;
27
<PAGE>
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 municipal 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 its net assets in
illiquid securities including restricted securities, (i.e., securities not
readily marketable without registration under the Securities Act of 1933 (the
"1933 Act")) and other securities that are not readily marketable. Each Series
may purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Manager, acting
pursuant to procedures approved by the Funds' Boards of Directors or Trustees,
may determine, when appropriate, that specific Rule 144A securities are liquid
and not subject to the 15% limitation on illiquid securities. Should this
determination be made, the Manager, acting pursuant to such procedures, will
carefully monitor the security (focusing on such factors, amount others, as
trading activity and availability of information) to determine that the Rule
144A security continues to be liquid. It is not possible to predict with
assurance exactly how the market for Rule 144A securities will further evolve.
This investment practice could have the effect of increasing the level of
illiquidity in a Series, if and to the extent that qualified institutional
buyers become for a time uninterested in purchasing Rule 144A securities.
WHEN LSSUED SECURITIES. Each Series may purchase municipal 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 municipal 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,
28
<PAGE>
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 municipal
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
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 fourteen
other investment companies which, together with the Funds, make up the "Seligman
Group." These 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., Seligman Value Fund
Series, Inc. and Tri-Continental Corporation. The aggregate assets of the
Seligman Group were approximately $18.0 billion at December 31, 1997. The
Manager also provides investment management or advice to institutional and other
accounts having a December 31, 1997 value of approximately $6.3 billion.
Mr. William C. Morris is Chairman 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 recordkeeping functions for each Fund,
maintains the records of shareholder investment accounts and provides related
services.
The Manager is entitled to receive a management fee from each Series for its
services, calculated daily and payable monthly, equal to .50% of the average
daily net assets of each 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 Municipal Fund and
of the Municipal 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 30,1997. 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, 1997.
29
<PAGE>
- --------------------------------------------------------------------------------
ANNUALIZED EXPENSE
MANAGEMENT FEE RATE RATIOS FOR
FOR THE YEAR ENDED THE YEAR ENDED
SERIES 9/30/97 9/30/97
------ ------- ---------------
CLASS A CLASS D
------- -------
National.................. .50% .84% 1.75%
Colorado.................. .50% .90% 1.81%
Georgia................... .50% .89% 1.79%
Louisiana................. .50% .86% 1.76%
Maryland.................. .50% .90% 1.81%
Massachusetts............. .50% .84% 1.74%
Michigan.................. .50% .81% 1.71%
Minnesota................. .50% .85% 1.75%
Missouri.................. .50% .89% 1.80%
New York.................. .50% .82% 1.73%
Ohio...................... .50% .81% 1.71%
Oregon.................... .50% .90% 1.80%
South Carolina............ .50% .84% 1.75%
California
High-Yield.............. .50% .87% 1.77%
California Quality........ .50% .82% 1.72%
Florida................... .50% 1.04% 1.81%
North Carolina............ .50% 1.09% 1.85%
New Jersey................ .50% 1.06% 1.83%
Pennsylvania.............. .50% 1.19% 1.96%
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT. 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
Quality Municipal Fund, Inc. and Seligman Select Municipal Fund, Inc. He is
responsible for more than $1.8 billion in municipal securities. Mr. Moles, with
more than 25 years of experience, has spearheaded Seligman's municipal
investment efforts since joining the Manager in 1983.
The Manager's discussion of each Series' 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
Fund's fiscal 1997 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 Series' 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
30
<PAGE>
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 FOR EACH SERIES;
SUBSEQUENT INVESTMENTS MUST BE IN THE MINIMUM AMOUNT OF $100 (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. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE
SELIGMAN TIME HORIZON MATRIXSM ASSET ALLOCATION PROGRAM IS $10,000. FOR
INFORMATION ABOUT THIS PROGRAM, CONTACT YOUR FINANCIAL ADVISOR.
The minimum amount for initial investment in each Series is $500 for
investors who purchase shares of the Fund through Merrill Lynch's MFA or MFA
Select Programs.
There is no minimum investment required for investors who purchase shares
of the Series through wrap fee programs.
Orders received by an authorized dealer by the close of regular trading on
the New York Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and
accepted by SFSI before the close of business (5:00 p.m. Eastern time) on the
same day will be executed at the Series' net asset value determined as of the
close of regular trading on the NYSE on that day plus, in the case of Class A
shares, any applicable sales load. Orders accepted by dealers after the close of
regular trading on 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, any applicable sales load. The authorized dealer through
which the shareholder purchases shares is responsible for forwarding the order
to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire
payments, dealer orders must first be placed through SFSI's order desk and
assigned a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C (Name of Fund and
Series) (A or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Funds make no charge for this
service, the transmitting bank may impose a wire service fee.
Current shareholders may purchase additional shares of the Fund at any time
through any authorized dealer or by sending a check payable to "Seligman Group
of Funds" in our postage-paid return envelope or directly to SELIGMAN DATA
CORP., P.O. BOX 3947, NEW YORK, NY 10008-3947. Checks for investment must be in
U.S. dollars drawn on a domestic bank. The checks should be accompanied by an
investment slip (provided on the bottom of shareholder account statements) and
include the shareholder's name, address, account number, Fund or Series name and
class of shares (A or D). 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. IF ONLY THE CLASS DESIGNATION IS
MISSING, THE INVESTMENT WILL AUTOMATICALLY BE MADE IN CLASS A SHARES. Credit
card convenience checks and third party checks (i.e., checks made payable to
someone other than the "Seligman Group of Funds") may not be used to open a new
fund account or purchase additional shares of the Fund. 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, any applicable
sales load.
Seligman Data Corp. may charge a $10.00 processing fee for checks returned
to it as uncollectable. This charge may be deducted 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.
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<PAGE>
VALUATION. The net asset value of a Series' shares is determined as of the
close of regular trading on the NYSE (normally, 4:00 p.m. Eastern time), each
day, Monday through Friday, except on days that the NYSE is closed. Net asset
value is calculated separately for each class of a Series. Municipal 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.
Although the legal rights of Class A and Class D shares are substantially
identical, the different expenses borne by each class will result in different
net asset values and dividends. The net asset value of Class D shares will
generally be lower than the net asset value of Class A shares as a result of the
higher distribution fee charged to Class D shares. In addition, net asset value
per share of the two classes will be effected to the extent any other class
expenses differ among classes.
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 Plans" 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- or more* 0 0 0
* Shares acquired at net asset value pursuant to the above schedule will
be subject to a CDSL of 1% if redeemed within 18 months of purchase. See
"Purchase of Shares--Contingent Deferred Sales Load."
- --------------------------------------------------------------------------------
There is no initial sales load on purchases of Class A shares of $1,000,000
or more ("NAV sales"); however, such shares are subject to a CDSL of 1% if
redeemed within eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on NAV sales,
calculated as follows; 1.00% NAV of sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee will be based on
assets held by a "single person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, a 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 the participating eligible employee benefit plan has at least (i)
$500,000 invested in the Seligman Group of Mutual Funds or (ii) 50 eligible
employees to whom such plan is made available. Class A shares representing only
an initial purchase of Seligman Cash Management Fund are not eligible for the
fee. Such shares will become eligible for the fee once they are exchanged for
shares of another Seligman Mutual Fund. The payment is based on cumulative sales
for each Plan during a single calendar year, or portion thereof. The payment
schedule, for each calendar year is as follows: 1.00% of sales up to but not
including $2 million; .80% of sales from $2 million up to but not including $3
million; .50% of sales from $3 million up to but not including $5 million; and
.25% of sales from $5 million and above.
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.
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<PAGE>
Shares purchased without an initial sales load in accordance with the sales
load schedule or pursuant to a Volume Discount, Right of Accumulation or Letter
of Intent are subject to a CDSL of 1% on redemptions within eighteen months of
purchase.
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 an initial 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 shares of any Seligman Mutual Fund sold with an initial sales load
with the total net asset value of shares sold with an initial sales load,
including 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 an initial 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 initial 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 an initial 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 an initial 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."
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 an initial sales load in
connection with the acquisition of cash and securities owned by other investment
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 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; to other
investment companies in the Seligman Group in connection with a deferred fee
arrangement for outside directors; and to "eligible employee benefit plans"
which have at least (i) $500,000 invested in the Seligman Group of Mutual Funds
or (ii) 50 eligible employees to whom such plan is made available. "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. Employee benefit plans eligible for
net asset value sales, as described above, will be subject to a CDSL of 1% for
ter-
33
<PAGE>
minations at the plan level only, on redemptions of shares purchased within
eighteen months prior to plan termination. Sales pursuant to a 401(k) alliance
program which has an agreement with SFSI are available at net asset value and
are not subject to a CDSL.
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% and an annual service fee of up to .25% 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.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on redemptions of
Class D shares which were purchased during the preceding twelve months. The
amount of any CDSL will initially be used by SFSI to defray the expense of the
payment of 1% made by it to Service Organizations (as defined under
"Administration, Shareholder Services and Distribution Plan") at the time of
sale.
A CDSL of 1% will also be imposed on any redemption of Class A shares
purchased during the preceding eighteen months if such shares were acquired at
net asset value pursuant to the sales load schedule provided under "Class A
Shares--Initial Sales Load." Employee Benefit plans eligible for net asset sales
as described above under "Special Programs" may be subject to a CDSL of 1% for
terminations at the plan level only, on redemptions of shares purchased within
eighteen months prior to plan termination.
The 1% CDSL normally imposed on redemptions of certain Class A shares (i.e.,
those purchased during the preceding eighteen months at net asset value pursuant
to the sales load schedule provided under "Class A Shares--Initial Sales Load")
will be waived on shares that were purchased through Dean Witter Reynolds, Inc.
("Dean Witter") by certain Chilean institutional investors (i.e., pension plans,
insurance companies and mutual funds). Upon redemption of such shares within an
eighteen-month period, Dean Witter will reimburse SFSI a pro rata portion of the
fee it received from SFSI at the time of sale of such shares.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and capital gain distributions (which
are not subject to a CDSL) will be redeemed first; followed by shares held for a
period of time longer than the applicable CDSL period. Shares held for the
longest period of time within the applicable CDSL period will then be redeemed.
Additionally, for those shares determined to be subject to a CDSL, the CDSL will
be assessed on the current net asset value or original purchase price, whichever
is less. No CDSL will be imposed on shares acquired through the investment of
dividends or distributions from any Class A or Class D shares of mutual funds in
the Seligman Group.
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 were 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.
34
<PAGE>
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability (as defined in section
72(m)(7) of the Code) of a shareholder or beneficial owner; (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
(an "IRA") due to death, disability, minimum distribution requirements after
attainment of age 701/2, or, for accounts established prior to January 1, 1998,
attainment of age 591/2, and (iii) a tax-free return of an excess contribution
to an IRA; (c) in whole or in part, in connection with shares sold to current
and retired Directors or Trustees of the Funds; (d) in whole or in part, in
connection with shares sold to any state, county, or city or any
instrumentality, department, authority, or agency thereof, which is prohibited
by applicable investment laws from paying a sales load or commission in
connection with the purchase of shares of any registered investment management
company; (e) in whole or in part, in connection with automatic cash withdrawals;
(f) in connection with participation in the Merrill Lynch Small Market 401(k)
Program; and (g) in connection with the redemption of shares of a Fund if it is
combined with another mutual fund in the Seligman Group, or another similar
reorganization transaction.
If, with respect to a redemption of any Class A or 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 payment or a portion of the payment made by SFSI at the time of sale of
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, has the ability to effect the following
transactions via telephone: (i) redemption of Series shares with proceeds sent
to address or record (up to $50,000 per day per fund account), (ii) exchange of
Series shares for shares of the same class 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.
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 services.
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.
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FOR CORPORATIONS OR GROUP RETIREMENT PLANS: Telephone services are not
permitted.
All Seligman Mutual 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 telephone services election form.
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 Series shares via telephone.
In these circumstances, the shareholder should consider using other redemption
or exchange procedures. (See "Redemption of Shares.") Use of these other
redemption or exchange procedures may result in the request being processed at a
later time than if a telephone transaction 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. 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, such Fund or Seligman Data
Corp. may be liable for any losses due to unauthorized or fraudulent
instructions. Telephone transactions 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. Shareholders, of course, may
refuse or cancel telephone transaction services. Telephone services may be
terminated by a shareholder at any time by sending a written request to Seligman
Data Corp. Written acknowledgment of the addition of telephone services to an
existing account or termination of telephone services will be sent to the
shareholder at the address of record.
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit ("uncertificated") form
without charge, except a CDSL, if applicable, at any time by SENDING A WRITTEN
REQUEST to Seligman Data Corp., P.O. Box 3947, New York, NY 10008-3947; or if
request is being sent by overnight delivery service to 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 without charge, except a CDSL, if applicable, by surrendering
certificates in proper form to the same address. Certificates should be sent
certified or registered mail, return receipt is advisable (may increase mailing
time). 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) and number of shares or dollar amount to be
redeemed. The Funds cannot accept conditional redemption requests (i.e.,
requests to sell shares at a specific price or on a future date).
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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 A CORPORATION, EXECUTOR,
ADMINISTRATOR, TRUSTEE, CUSTODIAN OR RETIREMENT PLAN. FOR FURTHER INFORMATION
WITH RESPECT TO REDEMPTION REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES
DEPARTMENT OF SELIGMAN DATA CORP. FOR ASSISTANCE.
In the case of Class A shares (except for shares purchased without an
initial sales load due to the size of the purchase), 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 A
shares which were purchased without an initial sales load because the purchase
amount was $1,000,000 or more are redeemed within eighteen months of purchase, a
shareholder will receive the net asset value per share next determined after
receipt of a request in good order, less a CDSL of 1% as described under
"Purchase of Shares--Class A Shares--Initial Sales Load" above. If Class D
shares are redeemed within one year of purchase, a shareholder will receive the
net asset value per share next determined after receipt of a request in good
order, less a CDSL of 1% as described under "Purchase of Shares -- Class D
Shares" above.
A shareholder may also "sell" shares to a Fund through an investment dealer
and, in that way, be certain, providing the order is timely, of receiving the
net asset value established at the end of the day on which the dealer is given
the repurchase order (less any applicable CDSL). 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 regular trading on
the NYSE (normally 4:00 p.m. Eastern Time) 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.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may be
made once per day, in an amount of up to $50,000 per fund account. Proceeds will
be sent to the address of record. Telephone redemption requests received by
Seligman Data Corp. at (800) 221-2450 by the close of regular trading on the
NYSE (normally 4:00 p.m. Eastern Time) will be processed at the Fund's net asset
value determined as of the close of business on that day. Redemption requests by
telephone will not be accepted within 30 days following an address change. IRAs,
group retirement plans, corporations and trusts for which the name of the
current trustee does not appear in the account registration are not eligible for
telephone redemptions. Each Fund reserves the right to suspend or terminate its
telephone redemption service at any time without notice.
For more information about telephone redemptions, and the circumstances
under which shareholders may bear the risk of loss for a fraudulent transaction,
see "Telephone Transactions" above.
CHECK REDEMPTION SERVICE. The Check Redemption Service allows a shareholder
who owns or purchases
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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. Holders of Class
A shares should bear in mind that check redemptions of Class A shares acquired
at net asset value due to the size of the purchase may be subject to a CDSL.
Holder of Class D shares may use this Service with respect to shares that have
been held for at least one year. 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 and any applicable CDSL. 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 AS UNCOLLECTABLE. THIS CHARGE MAY BE DEDUCTED FROM THE
SHAREHOLDER'S ACCOUNT.
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."
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.
GENERAL. With respect to shares redeemed, a check for the proceeds, less any
applicable CDSL, 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. Payment of redemption proceeds will be
delayed on redemptions of 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 such shares to the shareholder's account. No
interest is paid on the redemption proceeds after the redemption but before the
funds are paid. The proceeds of a redemption or repurchase may be more or less
than the shareholder's cost.
The Funds reserve the right to redeem shares owned by a shareholder whose
investment in a Series has a value of less than minimum amount specified by the
Funds' Directors or Trustees, which is presently $500. Shareholders would be
sent a notice before such redemption is processed stating that the value of
their investment in a Series 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 to reinvest them,
or to shift the investment to one of the other Seligman Mutual Funds, the
shareholder may, within 120 calendar days of the date of redemption, use all or
any part of the proceeds of the
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redemption to reinstate, free of an initial sales load, all or any part of the
investment in Class A shares of the Series or any of the other Seligman Mutual
Funds. If a shareholder redeems 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 applicable 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
RE-DEEMED; AND THE FUND'S MINIMUM INITIAL INVESTMENT AMOUNT MUST BE MET AT THE
TIME OF REINSTATEMENT.
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 PLANS
Under each Fund's Administration, Shareholder Services and Distribution Plan
(the "Plan"), each Series may pay to SFSI 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 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 Class A shares of the Municipal Fund, was first
approved by the Directors on July 21, 1992 and by the shareholders of each
Series on November 23, 1992. 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. 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 total amounts paid for the
year ended September 30, 1997 in respect of each Series' Class A shares' average
daily net assets pursuant to the Plan were as follows:
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% OF
AVERAGE
SERIES NET ASSETS
------ ----------
National.................................................... .09%
Colorado.................................................... .09
Georgia..................................................... .10
Louisiana................................................... .10
Maryland.................................................... .09
Massachusetts............................................... .10
Michigan.................................................... .10
Minnesota................................................... .10
Missouri.................................................... .09
New York.................................................... .09
Ohio........................................................ .10
Oregon...................................................... .10
South Carolina.............................................. .09
California High-Yield....................................... .10
California Quality.......................................... .10
Florida..................................................... .23
North Carolina.............................................. .24
New Jersey.................................................. .23
Pennsylvania................................................ .23
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,
was approved by the Directors or Trustees on November 18, 1993 and became
effective February 1, 1994. The total amount paid for the year ended September
30, 1997, in respect of each Series' Class D shares pursuant to the Plan was
1.00% per annum of each Series' Class D shares' average daily net assets. Each
Plan is reviewed by the Directors or Trustees annually.
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 and Class D shares may be exchanged only for Class A and Class D
shares, respectively, of another Seligman Mutual Fund on the basis of relative
net asset value.
If shares that are subject to a CDSL are exchanged for shares of another
Seligman Mutual Fund, then for purposes of assessing the CDSL payable upon
disposition of the exchanged shares, the applicable holding period shall be
reduced by the period for which the original shares were held.
Aside from the Series described in this Prospectus, the Seligman Mutual
Funds 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
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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 Emerging Markets Growth Fund, 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 Seligman U.S. Government Securities
Series and the Seligman High-Yield Bond Series.
O SELIGMAN INCOME FUND, INC. seeks high current income and the possibility
of improvement of future income and capital value.
O SELIGMAN VALUE FUND SERIES, INC. consists of the Seligman Large-Cap Value
Fund and the Seligman Small-Cap Value Fund, each of which seeks long-term
capital appreciation by investing in equity securities of value companies
primarily located in the U.S.
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 received by the close of regular trading on the NYSE
(normally, 4:00 p.m. Eastern Time) by Seligman Data Corp. at (800) 221-2450 will
be processed as of the close of business on that day. Requests received after
the close of regular trading on the NYSE will be processed at the net asset
value per share calculated the following business 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
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 proper form.
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 or-
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der may be processed by mail. For more information about telephone exchange
privileges, 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 GAIN 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.
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. Cash dividends and
gain distributions are paid by check. 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. Shares acquired through a dividend or
gain distribution and credited to a shareholder's account are not subject to an
initial sales load or a CDSL. Dividends and gain distributions paid in shares
are invested on the payable date using the net asset value of the ex-dividend
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. Eastern 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. before the record date for the dividend or
distribution in order to be effective for such dividend or gain distribution.
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.
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Shareholders exchanging shares for shares of another Seligman Mutual Fund
will continue to receive dividends and gains as elected prior to such exchange
unless otherwise specified. In the event that a shareholder redeems all shares
in an account between the record date and the payable date, the value of any
dividends or gain distributions declared will be paid in cash regardless of the
existing election. A transfer or exchange of all shares (closing an account),
between the record date and payable date, will result in the value of dividends
or gain distributions being paid to the new fund account in accordance with the
option on the closed account, unless Seligman Data Corp. is instructed
otherwise.
TAXES
FEDERAL INCOME TAXES
Each Series intends to continue to qualify as a regulated investment company
under the Code. Thus qualified, each Series will be relieved of regular 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 regular federal
income tax the Series will be eligible to pay dividends that are excludable by
shareholders from gross income for regular 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
distributions of net capital gains at a maximum rate of 28% if designated as
derived from the Series' capital gains from property held for more than one year
and at a maximum rate of 20% if designated as derived from the Series' capital
gains from property held for more than eighteen months. 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
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.
Individual shareholders will be subject to federal income tax as long-term
capital gains at a maximum rate of 28% in respect of shares held for more than
one year and at a maximum rate of 20% in respect of shares held for more than
eighteen months.
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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 advisors 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 advisors 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, A FUND MAY CHARGE A SERVICE FEE OF UP TO
$50 THAT MAY BE DEDUCTED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET AGAINST ANY
UNDISTRIBUTED DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. EACH FUND ALSO RESERVES
THE RIGHT TO CLOSE ANY ACCOUNT WHICH DOES NOT HAVE A CERTIFIED TAXPAYER
IDENTIFICATION NUMBER 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 Municipal 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 Municipal Securities as well
as on certain other federally tax-exempt obligations the interest on which is
exempt from California personal income taxes. To the extent that the
distributions are derived from other income, including long- or short-term
capital gains, such distributions will not be exempt from California personal
income taxation, and, further to the extent that they constitute long-term
capital 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 Municipal 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 or the Colorado alternative
minimum tax on Colorado Series dividends to the extent that such dividends
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, or if issued
before May 1,1980, to the extent such interest is specifically exempt from
income taxation un-
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der 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 and may be subject to Colorado's alternative
minimum 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 regular 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 Municipal 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 Florida 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 United States Government
securities, that 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 Municipal
Fund, under existing Georgia law, shareholders of the Georgia Series will not be
subject to Georgia income taxes on dividends with respect to shares of the
Georgia Series to the extent that such distributions represent "exempt-interest
dividends" for federal income tax purposes that are attributable to
interest-bearing obligations issued by or on behalf of the State of Georgia or
its political subdivisions, or by the governments of Puerto Rico, the Virgin
Islands or Guam (collectively, "Georgia Obligations"), which are held by the
Georgia Series. Dividends, if any, derived from capital gains or other sources
generally will be taxable to shareholders of the Georgia Series for Georgia
income tax purposes.
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 regular 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 Municipal
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 corporations;
individuals and residents of the State of Louisiana; and, for taxable periods
beginning after December 31, 1996, trusts or estates; all of whom 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, or its
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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 Municipal 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 Municipal 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.
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 regular 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 Municipal
Fund, assuming that the Municipal 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
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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 Municipal Fund will maintain at
least 80% of the value of the net assets of the Massachusetts Series in debt
obligations which are exempt from regular 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 Municipal Fund, holders of the Michigan Series who are subject to
the Michigan income tax or single business tax will not be subject to the
Michigan income tax or single business tax on Michigan Series dividends to the
extent that such distributions qualify as exempt-interest dividends of a
regulated investment company under Section 852(b)(5) of the Code which are
attributable to interest on tax-exempt obligations of the State of Michigan, or
its political or governmental subdivisions, its governmental agencies or
instrumentalities (as well as certain other federally tax-exempt obligations,
the interest on which is exempt from Michigan tax, such as, for example, certain
obligations of Puerto Rico) (collectively, "Michigan Obligations"). To the
extent that distributions on the Michigan Series are attributable to sources
other than those described in the preceding sentence, such distributions,
including, but not limited to, long or short-term capital gains, will not be
exempt from Michigan income tax or single business tax. The Michigan Department
of Treasury has issued a bulletin stating that holders of interests in regulated
investment companies who are subject to the Michigan intangibles tax will be
exempt from the tax to the extent that the investment portfolio consists of U.S.
obligations and obligations of the State of Michigan or of its political
subdivisions. In addition, Michigan Series shares owned by certain financial
institutions or by certain other persons subject to the Michigan single business
tax are not subject to the Michigan intangibles tax. To the extent the
distributions on the Michigan Series are not subject to Michigan income tax,
they are not subject to the uniform city income tax imposed by certain Michigan
cities.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Michigan Series, at least 80% of the value of the net assets
of the Michigan Series will be maintained in debt obligations which are exempt
from regular 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 LLP, Minnesota tax counsel to the
Municipal Fund, provided that the Minnesota Series qualifies as a "regulated
investment company" under the Code, and subject to the discussion
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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 of the date on which the obligations
were issued, and other remedies apply for previous taxable years. The United
States Supreme Court in 1995 denied certiorari in a case in which an Ohio state
court 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. In 1997, the United States Supreme
Court denied certiorari in a subsequent case from Ohio, involving the same
taxpayer and the same issue, in which the Ohio Supreme Court refused to
reconsider the merits of the case on the ground that the previous final state
court judgment barred any claim arising out of the transaction that was the
subject of the previous action. 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
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.
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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 regular federal income tax. Such debt obligations may, however, be
subject to the federal alternative minimum tax. A similar percentage will
generally also apply with respect to the regular Minnesota personal income tax,
and such debt obligations may likewise be subject to the Minnesota alternative
minimum tax, in each case subject to the entire 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 Municipal
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 Municipal Fund or other investments producing income that is
includable in federal gross income, but exempt from Missouri income tax.
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 regular 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,
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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 ("Municipal 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 Municipal 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
Municipal 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
municipal 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
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 Municipal 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 regular 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
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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.
OHIO TAXES
In the opinion of Squire, Sanders & Dempsey L.L.P., Ohio tax counsel to the
Municipal 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
municipal income or school district taxes in Ohio will not be subject to such
taxes on dividend distributions with respect to shares of the Ohio Series
("Distributions") 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"), 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.
Distributions that are properly 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 municipal income or school district taxes in Ohio.
Distributions properly attributable to interest on obligations of Puerto
Rico, the Virgin Islands or Guam, the interest on which is exempt from state
income taxes under the laws of the United States are exempt from the Ohio
personal income tax and municipal income and school district taxes in Ohio, and,
provided such interest is excluded from gross income for Federal income tax
purposes, are excluded from the net income base of the Ohio Corporation
franchise tax.
The Ohio Series is not subject to the Ohio personal income tax or municipal
income or school district taxes in Ohio. The Ohio Series is not subject to
corporation franchise tax or the Ohio dealers in intangibles tax, provided that,
if the Ohio Series has a significant nexus to the State of Ohio to be subject to
Ohio taxation, then such entity shall be exempt from taxes only if it complies
with certain reporting requirements.
Except during temporary defensive periods or when acceptable investments are
unavailable to the Ohio Series, the Municipal Fund will maintain at least 80% of
the value of the net assets of the Ohio Series in debt obligations which are
exempt from regular 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.
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OREGON TAXES
In the opinion of Schwabe, Williamson & Wyatt, Oregon tax counsel to the
Municipal 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 regular 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 Municipal 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 Municipal Securities and
U.S. Government obligations on the annual assessment date. Corporations are not
subject to Pennsylvania personal property taxes.
Shareholders will receive an annual Statement of Account and information
regarding the federal and Pennsylvania income tax status of all distributions
made during the year. Information will also be provided to individual
Pennsylvania shareholders regarding the portion of the value of their shares, if
any, subject to Pennsylvania personal property tax.
Prospective investors should be aware that an investment in the Pennsylvania
Fund may not be suitable for persons who are not residents of the State of
Pennsylvania or who do not receive income subject to income taxes of the State.
Investors should also be aware that there is litigation in progress in the
Pennsylvania courts that may result in the personal property tax being declared
unconstitutional in whole or in part.
SOUTH CAROLINA TAXES
In the opinion of Sinkler & Boyd, South Carolina tax counsel to the
Municipal 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
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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 regular 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 municipal 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 Series 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 municipal securities issued by that state or its
localities. Prospective investors should be aware that an investment in a
certain 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 advisors.
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. Eastern 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 AND FORM 1099-DIV CAN BE ORDERED. TO INSURE PROMPT DELIVERY
OF DISTRIBUTION CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION, SELIGMAN DATA
CORP., SHOULD BE NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS
CHANGES MAY BE TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS
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) SERVICE enables a shareholder to authorize additional
purchases of shares automatically by electronic funds transfer from the
shareholder'S saving or checking account, if the bank that maintains the
account is a member of the Automated Clearing House ("ACH"), or by
preauthorized checks to be drawn on the shareholder's checking account at
regu-
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lar 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 only if accompanied by a check for at least $100
iN conjunction with the monthly investment option, or a check for at least
$250 in conjunction with the quarterly investment option. For investments
into the Seligman Time Horizon MatrixSM Asset Allocation Program, the
minimum amount is $500 at regular monthly intervals or $1,000 at regular
quarterly intervals. By utilizing the Invest-A-Check(R) Service to establish
an account, you are agreeing to continue the Service until the Fund's
minimum investment amount is met. If yoU elect to cancel the Service prior
to meeting the minimum, your account may be subject to closure. (See "Terms
and Conditions.")
O AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of 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, from shares of any class of
the Cash Management Fund into shares of the same class of any other Seligman
Mutual Fund, registered in the same name. For exchanges into the Seligman
Time Horizon MatrixSM Asset Allocation Program, the minimum amount is $500
at regular monthly intervals or $1,000 at regular quarterly intervals. The
shareholder's Cash Management Fund account must have a dollar value of at
least $5,000 at the initiation of the service and all shares must be in
"book credit" form. 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 or another Seligman Mutual Fund. (Dividend
checks must 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.) If the dividends are to be invested in a new fund account,
the first investment must meet the required minimum purchase amount for such
fund.
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 in fixed amounts of $50
or more at regular intervals to be made to a shareholder who owns or
purchases shares worth $5,000 or more held as book credits. Holders of Class
A shares purchased at net asset value because the purchase amount was
$1,000,000 or more should bear in mind that withdrawals may be subject to a
1% CDSL if made within eighteen months of purchase of such shares. Holders
of Class D shares may elect to use this service, although certain
withdrawals may be subject to a CDSL. (See "Terms and Conditions.")
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 will be deducted from a shareholder's account, if
requested.
O COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for 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
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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 "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
"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 Municipal 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 Municipal Fund was incorporated in Maryland on
August 8, 1983. The Municipal Trust was established under the laws of the
Commonwealth of Massachusetts by a Declaration of Trust dated July 27, 1984. 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 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 Penn-
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sylvania Fund and the Municipal Trust permit the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest in separate Series.
To date, shares of thirteen Series of the Municipal Fund, four Series of the
Municipal 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. Each Fund has
adopted a plan (the "Multiclass Plan") pursuant to Rule 18f-3 under the 1940 Act
permitting the issuance and sales of multiple classes of common stock, or
beneficial interest. In accordance with the Articles of Incorporation or
Declaration of Trust of each Fund, the Board of Directors or Trustees may
authorize the creation of additional classes of common stock or beneficial
interest with such characteristics as are permitted by the Multiclass Plan and
Rule 18f-3. 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. All shares have noncumulative voting rights for the
election of directors or trustees, as applicable. 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 Articles of Incorporation or Declaration of Trust. 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 Municipal 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 Municipal 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 the shareholder's 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 and certain waiver of probate
procedures 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 close of
business on the same date. By utilizing the Invest-A-Check(R) Service to
establish an account, you are agreeing to continue the Service until the Fund's
minimum investment amount is met. If you elect to canceL the Service prior to
meeting the minimum, your account may be subject to closure. 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 will be deducted 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 check for at least $100 in
connection with the monthly investment option or a check for at least $250 in
connection with the quarterly investment option.
AUTOMATIC CASH WITHDRAWAL SERVICE
A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment and any applicable CDSL.
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) less, in the
case of Class D shares, any applicable CDSL. Automatic withdrawals of Class A
shares which were purchased at net asset value because the purchase amount was
$1,000,000 or more may be subject to a CDSL if made within 18 months of purchase
of such shares. Under this Service, a Class D shareholder who requests both
dividends and capital gain distributions in additional shares may withdraw up to
10% of the value of the shareholder's fund account (at the time of election) per
annum, without the imposition of a CDSL. A minimum payment amount of $50 per
cycle is needed to establish this Service. 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 into 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
an initial 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, the shareholder has
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
The Check Redemption Service is available to Class A shareholders and to
Class D shareholders with respect to Class D shares held for one year or more.
For Class A shares which were purchased at net asset value because the purchase
amount was $1,000,000 or more, check redemption within 18 months of purchase may
be subject to a CDSL. If shares are held in joint names, all shareholders must
sign the Check Redemption section of the Account Application. All checks will
require all signatures unless a lesser number is indicated in the Check
Redemption section. 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 and any applicable CDSL.
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 AS UNCOLLECTABLE. THIS CHARGE MAY BE DEDUCTED FROM THE
ACCOUNT AGAINST WHICH THE CHECK WAS DRAWN. 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.
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STATEMENT OF ADDITIONAL INFORMATION
February 1, 1998
SELIGMAN MUNICIPAL FUND SERIES, INC.
100 Park Avenue
New York, New York 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 Municipal Fund
Series, Inc. (the "Fund"), dated February 1, 1998. 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 A shares purchased in an amount of $1,000,000 or more are sold without an
initial sales load but are subject to a contingent deferred sales load ("CDSL")
of 1% (of the current net asset value or the original purchase price, whichever
is less) if such shares are redeemed within eighteen months of purchase. Class D
shares may be purchased at net asset value and are subject to a 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............................. 4
Directors and Officers............................. 5
Management and Expenses............................ 9
Administration, Shareholder Services
and Distribution Plan............................. 11
Portfolio Transactions............................. 11
Purchase and Redemption of Fund Shares............. 12
Distribution Services.............................. 14
Taxes.............................................. 16
Valuation.......................................... 16
Performance Information............................ 17
General Information................................ 23
Financial Statements............................... 23
Appendix A......................................... 24
Appendix B......................................... 27
Appendix C......................................... 59
TEA1A
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund is a non-diversified, open-end management investment company, or
mutual fund, incorporated in Maryland on August 8, 1983. The Fund consists of
thirteen separate Series: the National Municipal Series ("National Series") and
the Colorado Municipal Series, the Georgia Municipal Series, the Louisiana
Municipal Series, the Maryland Municipal Series, the Massachusetts Municipal
Series, the Michigan Municipal Series, the Minnesota Municipal Series, the
Missouri Municipal Series, the New York Municipal Series, the Ohio Municipal
Series, the Oregon Municipal Series and the South Carolina Municipal Series
(collectively, the "State Series").
The National Series seeks to maximize income exempt from regular 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 regular 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 municipal 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). Municipal Securities rated in these categories are commonly referred to
as investment grade. Each Series of the Fund may invest in municipal 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. Municipal securities in
the fourth rating category of S&P or Moody's will generally provide a higher
yield than do higher rated municipal 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
municipal 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
municipal 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 municipal 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.
MUNICIPAL SECURITIES. Municipal 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 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. A Series may
invest, without percentage limitations, in certain private activity bonds, the
interest on which is treated as a preference item for purposes of the
alternative minimum tax. See "Municipal Securities" in the Prospectus.
Under the Investment Company Act of 1940 (the "1940 Act"), the
identification of the issuer of municipal 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.
2
<PAGE>
Municipal 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. Municipal 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. Industrial development bonds, which are considered municipal bonds if
the interest paid thereon is exempt from regular federal income tax (such
interest, however, may be subject to the federal alternative minimum tax), are
issued by or on behalf of public authorities to obtain funds to provide various
privately-operated facilities for business and manufacturing, housing, sports,
pollution control, and for airport, mass transit, port and parking facilities.
The two principal classifications of municipal bonds are "general
obligation" and "revenue." General obligation bonds are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and interest. Revenue bonds are payable only 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. Although industrial
development bonds ("IDBs") are issued by municipal authorities, they are
generally secured by the revenues derived from payments of the industrial user.
The payment of principal and interest on IDBs is dependent solely on the ability
of the user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment.
FLOATING RATE AND VARIABLE RATE SECURITIES. Each Series may invest in
participation interests purchased from banks in variable rate municipal
securities (such as industrial development bonds) owned by banks. A
participation interest gives the purchaser an undivided interest in the
municipal security in the proportion that the Series' participation interest
bears to the total principal amount of the municipal 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 municipal 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 municipal
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 municipal securities over
the negotiated yield at which the instruments are purchased by a Series.
WHEN-ISSUED SECURITIES. Each Series may purchase municipal securities on a
"when-issued" basis. Municipal 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
municipal 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.
TAXABLE INVESTMENTS. Under normal market conditions, 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 securities the interest on which is exempt from
regular federal income tax and California personal income tax. Such interest,
however, may be subject to the federal alternative minimum tax. In abnormal
market conditions, if, in the judgment of the Manager, the municipal securities
satisfying the Series' investment objectives may not be purchased, a Series may,
for defensive purposes, temporarily invest in instruments the interest on which
is exempt from regular federal income taxes, but not California personal income
taxes. Such securities would include those described under "California Municipal
Securities" above that would otherwise meet the Series' objectives.
Also, in abnormal market conditions, a Series may invest on a temporary
basis in fixed-income securities, the interest on which is subject to federal,
state or local income taxes, pending the investment or reinvestment in municipal
securities of proceeds of sales of shares or sales of portfolio securities, in
order to avoid the necessity of liquidating portfolio investments to meet
redemptions of shares by investors or where market conditions due to rising
interest rates or other adverse factors warrant temporary investing for
defensive purposes. Investments in taxable securities will be substantially in
securities issued or guaranteed by the United States Government (such as bills,
notes and bonds), its agencies, instrumentalities or authorities; highly-rated
corporate debt securities (rated AA-, or better, by Standard & Poor's
Corporation ("S&P") or Aa3, or better, by Moody's Investors Service, Inc.
("Moody's")); prime commercial paper (rated A-1+/A-1 by S&P or P-1 by Moody's);
and
3
<PAGE>
certificates of deposit of the 100 largest domestic banks in terms of assets
which are subject to regulatory supervision by the U.S. Government or state
governments and the 50 largest foreign banks in terms of assets 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.
Such temporary investments in federal but not state municipal securities and
fully taxable securities will be limited as a matter of fundamental policy to
20% of the value of a Series' net assets under normal market conditions.
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, 1997 and 1996 were: National - 20.63% and
33.99%; Colorado - 3.99% and 12.39%, Georgia - 12.28% and 16.24%, Louisiana -
16.08% and 10.08%, Maryland - 14.79% and 5.56%, Massachusetts - 29.26% and
26.30%, Michigan - 10.98% and 19.62%; Minnesota - 6.88% and 26.89%; Missouri -
6.47% and 8.04%; New York - 23.83% and 25.88%; Ohio - 11.76% and 12.90%; Oregon
- - 19.46% and 28.65% and South Carolina - 0.00% and 20.66%. The fluctuation of
portfolio turnover ratios of certain Series during fiscal years 1997 and 1996
resulted 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:
- 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;
- Mortgage or pledge any of its assets, except to secure permitted borrowings
noted above;
- Invest more than 25% of total assets at market value in any one industry;
except that municipal securities and securities of the U.S. Government, its
agencies and instrumentalities are not considered an industry for purposes
of this limitation;
- 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);
- Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
- 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;
- 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;
- Write or purchase put, call, straddle or spread options; purchase
securities on margin or sell "short"; or underwrite the securities of other
issuers;
- Purchase or sell commodities or commodity contracts; or
4
<PAGE>
- 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.
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
(59) Officer and Chairman of the
Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; Chairman and Chief
Executive Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc., broker/dealer;
and Carbo Ceramics Inc., ceramic proppants for oil and
gas industry; Director, Seligman Data Corp.,
shareholder service agent; Kerr-McGee Corporation,
diversified energy company; and Sarah Lawrence College;
and a Member of the Board of Governors of the
Investment Company Institute; formerly, President, J. &
W. Seligman & Co. Incorporated, Chairman, Seligman
Advisors, Inc., advisers; Seligman Holdings, Inc.,
holding company; Seligman Securities, Inc.,
broker/dealer; and J. & W. Seligman Trust Company,
trust company; and Director, Daniel Industries, Inc.,
manufacturer of oil and gas metering equipment.
BRIAN T. ZINO* Director, President and Member of the Executive
(45) Committee
Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
President, (with the exception of Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc.) and Director or Trustee, the Seligman Group
of Investment Companies; Chairman and President,
Seligman Data Corp., shareholder service agent;
Director, Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc., broker/dealer;
and Seligman Henderson Co., advisers; formerly,
Director, Seligman Advisors, Inc., advisers; Seligman
Securities, Inc., broker/dealer; and J. & W. Seligman
Trust Company, trust company.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(57)
Managing Director, Director of Investments, J. & W.
Seligman & Co. Incorporated; Director of Seligman
Henderson Co. and Trustee Emeritus of Colby College;
formerly, Director, Investment Research at Neuberger &
Berman from May 1993 to September 1996 and Executive
Vice President of McGlinn Capital from July 1987 to May
1993.
5
<PAGE>
JOHN R. GALVIN Director
(68)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group of
Investment Companies; Chairman, American Council on
Germany; a Governor of the Center for Creative
Leadership; Director, USLIFE Corporation, life
insurance; Raytheon Co., electronics; National Defense
University; and the Institute for Defense Analysis;
formerly, Ambassador, U.S. State Department for
negotiations in Bosnia; 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
(62)
President, Sarah Lawrence College; Director or Trustee,
the Seligman Group of Investment Companies; and the
Committee for Economic Development; and Chairman, The
Rockefeller Foundation, charitable foundation;
formerly, Trustee, The Markle Foundation, philanthropic
organization; and Director, NYNEX, telephone company;
and International Research and Exchange Board,
intellectual exchanges. Sarah Lawrence College,
Bronxville, New York 10708
FRANK A. McPHERSON Director
(64)
Director, various corporations; Director or Trustee,
the Seligman Group of Investment Companies; Director,
Kimberly-Clark Corporation, consumer products; Bank of
Oklahoma Holding Company; Oklahoma City Chamber of
Commerce; Baptist Medical Center; Oklahoma Chapter of
the Nature Conservancy; Oklahoma Medical Research
Foundation; and National Boys and Girls Clubs of
America; Chairman of Oklahoma City Public Schools
Foundation; and Member of the Business Roundtable and
National Petroleum Council; formerly, Chairman of the
Board and Chief Executive Officer, Kerr-McGee
Corporation, energy and chemicals.
123 Robert S. Kerr Avenue, Oklahoma City, OK 73102
JOHN E. MEROW Director
(68)
Retired Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee, the Seligman
Group of Investment Companies; Director, Commonwealth
Industries, Inc.; the Foreign Policy Association;
Municipal Art Society of New York; the U.S. Council for
International Business; and The New York and
Presbyterian Hospital; Chairman, American Australian
Association; The New York and Presbyterian Hospital
Care Network, Inc.; Vice Chairman, the U.S.-New Zealand
Council; and Member of the American Law Institute and
Council on Foreign Relations.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(55)
Attorney; Director or Trustee, the Seligman Group of
Investment Companies; Trustee, Geraldine R. Dodge
Foundation, charitable foundation; Chairman of the
Board of Trustees of St. George's School (Newport, RI);
formerly, Director, the National Association of
Independent Schools (Washington, DC), education.
St. Bernard's Road, P. O. Box 449, Gladstone, NJ 07934
6
<PAGE>
JAMES C. PITNEY Director
(71)
Retired Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group of
Investment Companies; formerly, Director, Public
Service Enterprise Group, public utility.
Park Avenue at Morris County, P.O. Box 1945,
Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(70)
Director, various corporations; Director or Trustee,
the Seligman Group of Investment Companies; The Houston
Exploration Company, 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, Tesoro
Petroleum Companies, Inc. and Director and President,
Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY 10017
ROBERT L. SHAFER Director
(65)
Director, various corporations; Director or Trustee,
the Seligman Group of Investment Companies; and USLIFE
Corporation, life insurance; formerly, Vice President,
Pfizer Inc., pharmaceuticals.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(62)
Executive Vice President, Chief Operating Officer and
Director, Sammons Enterprises, Inc.; Director or
Trustee, the Seligman Group of Investment Companies;
C-SPAN; and Commscope, manufacturer of coaxial cables;
formerly, Director, Red Man Pipe and Supply Company,
piping and other materials.
300 Crescent Court, Suite 700, Dallas, TX 75202
THOMAS G. MOLES Vice President and Senior Portfolio Manager
(54)
Director and Managing Director, (formerly, Vice
President and Portfolio Manager), J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
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.,
broker/dealer; Seligman Services, Inc., broker/dealer;
formerly, Director, Seligman Securities, Inc.,
broker/dealer; and J. & W. Seligman Trust Company,
trust company.
LAWRENCE P. VOGEL Vice President
(41)
Senior Vice President, Finance, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
Seligman Financial Services, Inc., broker/dealer; and
Seligman Data Corp., shareholder service agent; Vice
President, the Seligman Group of Investment Companies;
and Seligman Services, Inc., broker/dealer; and
Treasurer, Seligman Henderson Co., advisers; formerly,
Senior Vice President, Finance, Seligman Advisors,
Inc., advisers; and Treasurer, Seligman Holdings, Inc.,
holding company.
7
<PAGE>
FRANK J. NASTA Secretary
(33)
Senior Vice President, Law and Regulation and Corporate
Secretary, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; Secretary, the
Seligman Group of Investment Companies, Seligman
Financial Services, Inc., broker/dealer; Seligman
Henderson Co., advisers; Seligman Services, Inc.,
broker/dealer; and Seligman Data Corp., shareholder
service agent; formerly, Senior Vice President, Law and
Regulation and Corporate Secretary, Seligman Advisors
Inc., advisers; and an attorney at Seward & Kissel, law
firm.
THOMAS G. ROSE Treasurer
(40)
Treasurer, the Seligman Group of Investment Companies
and Seligman Data Corp., shareholder service agent.
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.
<TABLE>
<CAPTION>
Compensation Table
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as part of Fund Complex Paid
Position with Fund from Fund(1) Fund Expenses to Directors (1)(2)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <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
Richard R. Schmaltz, Director N/A N/A N/A
Ronald T. Schroeder, Director** N/A N/A N/A
Fred E. Brown, Director Emeritus*** N/A N/A N/A
John R. Galvin, Director $5,712.67 N/A $67,000.00
Alice S. Ilchman, Director 5,538.62 N/A 65,000.00
Frank A. McPherson 5,676.93 N/A 66,000.00
John E. Merow, Director 5,538.54 N/A 65,000.00
Betsy S. Michel, Director 5,712.64 N/A 67,000.00
James C. Pitney, Director 5,400.19 N/A 64,000.00
James Q. Riordan, Director 5,574.32 N/A 66,000.00
Robert L. Shafer, Director 5,574.34 N/A 66,000.00
James N. Whitson, Director 5,815.24(d) N/A 67,000.00(d)
</TABLE>
(1) For the Fund's fiscal year ended September 30, 1997. Effective January 16,
1998, the per meeting fee for Directors was increased by $1,000, which is
allocated among the Funds in the Fund Complex.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
** Retired May 15, 1997.
*** Retired as Director and designated Director Emeritus on March 20, 1997.
(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. The total amount of
deferred compensation (including interest) payable in respect of the Fund to Mr.
Whitson as of September 30, 1997 was $28,866. Messrs. Merow and Pitney no longer
defer current compensation; however, they have accrued deferred
8
<PAGE>
compensation in the amounts of $84,560 and $60,445, respectively, as of
September 30, 1997. The Fund has applied for and received exemptive relief that
would permit a director who has elected deferral of his or her fees to choose a
rate of return equal to either (i) the interest rate on short-term Treasury
bills, or (ii) the rate of return on the shares of any of the investment
companies advised by the manager, as designated by the director. The Fund may,
but is not obligated to, purchase shares of such investment companies to hedge
its obligations in connection with this deferral arrangement.
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 Fund as a group owned less than 1% of the
Class A capital stock of the National Series at January 2, 1998. Directors and
officers of the Fund as a group owned 201,533 shares or 1.99% of the Class A
capital stock of the New York Series at January 2, 1998. As of the same date, no
Directors or officers of the Fund owned Class A capital stock of any other
Series of the Fund nor did they own any Class D capital stock of any Series of
the Fund.
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, 1997, 1996 and 1995.
SERIES/FISCAL YEAR MANAGEMENT FEE PAID % OF AVERAGE DAILY NET ASSETS
NATIONAL SERIES
Year ended 9/30/97 $ 506,520 0.50%
Year ended 9/30/96 523,545 0.50
Year ended 9/30/95 540,874 0.50
COLORADO SERIES
Year ended 9/30/97 254,781 0.50
Year ended 9/30/96 267,392 0.50
Year ended 9/30/95 277,393 0.50
GEORGIA SERIES
Year ended 9/30/97 261,126 0.50
Year ended 9/30/96 285,693 0.50
Year ended 9/30/95 272,768 0.45*
LOUISIANA SERIES
Year ended 9/30/97 283,702 0.50
Year ended 9/30/96 301,833 0.50
Year ended 9/30/95 309,651 0.50
MARYLAND SERIES
Year ended 9/30/97 275,393 0.50
Year ended 9/30/96 283,435 0.50
Year ended 9/30/95 283,135 0.50
MASSACHUSETTS SERIES
Year ended 9/30/97 551,726 0.50
Year ended 9/30/96 571,658 0.50
Year ended 9/30/95 580,271 0.50
MICHIGAN SERIES
Year ended 9/30/97 731,198 0.50
Year ended 9/30/96 759,311 0.50
Year ended 9/30/95 749,963 0.50
9
<PAGE>
SERIES/FISCAL YEAR MANAGEMENT FEE PAID % OF AVERAGE DAILY NET ASSETS
MINNESOTA SERIES
Year ended 9/30/97 $ 629,693 0.50%
Year ended 9/30/96 659,120 0.50
Year ended 9/30/95 672,792 0.50
MISSOURI SERIES
Year ended 9/30/97 262,926 0.50
Year ended 9/30/96 254,770 0.50
Year ended 9/30/95 233,342 0.45*
NEW YORK SERIES
Year ended 9/30/97 416,749 0.50
Year ended 9/30/96 423,159 0.50
Year ended 9/30/95 432,770 0.50
OHIO SERIES
Year ended 9/30/97 787,121 0.50
Year ended 9/30/96 839,336 0.50
Year ended 9/30/95 847,530 0.50
OREGON SERIES
Year ended 9/30/97 285,086 0.50
Year ended 9/30/96 301,447 0.50
Year ended 9/30/95 270,412 0.45*
SOUTH CAROLINA SERIES
Year ended 9/30/97 535,390 0.50
Year ended 9/30/96 567,688 0.50
Year ended 9/30/95 563,437 0.50
* The Manager waived a portion of its management fee due for this year.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, if any, fees and expenses of independent
attorneys and auditors, taxes and governmental fees, including fees and expenses
of qualifying the Fund and its shares under federal and state securities laws,
cost of stock certificates and expenses of repurchase or redemption of shares,
expenses of printing and distributing reports, notices and proxy materials to
shareholders, expenses of printing and filing reports and other documents with
governmental agencies, expenses of shareholders' meetings, expenses of corporate
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 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.
The Management Agreement 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 until December 29 of each year if (1) such
continuance is approved in the manner required by the 1940 Act (i.e., by a vote
of a majority of the Board of Directors or of the outstanding voting securities
of the Series and 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 (2) the
Manager shall not have notified the Fund at least 60 days prior to December 29
of any year that it does not desire such continuance. The Management Agreement
may be terminated by a Series, 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. On December 29, 1988, a majority of the
10
<PAGE>
outstanding voting securities of the Manager was purchased by Mr. William C.
Morris and a simultaneous recapitalization of the Manager occurred. See Appendix
C for further history of the Manager.
Officers, directors and employees of the Manager are permitted to engage in
personal securities transactions, subject to the Manager's Code of Ethics (the
"Ethics Code"). The Ethics Code proscribes certain practices with regard to
personal securities transactions and personal dealings, provides a framework for
the reporting and monitoring of personal securities transactions by the
Manager's Compliance Officer, and sets forth a procedure of identifying, for
disciplinary action, those individuals who violate the Ethics Code. The Ethics
Code prohibits each of the officers, directors and employees (including all
portfolio managers) of the Manager from purchasing or selling any security that
the officer, director or employee knows or believes (i) was recommended by the
Manager for purchase or sale by any client, including the Fund, within the
preceding two weeks, (ii) has been reviewed by the Manager for possible purchase
or sale within the preceding two weeks, (iii) is being purchased or sold by any
client, (iv) is being considered by a research analyst, (v) is being acquired in
a private placement, unless prior approval has been obtained from the Manager's
Compliance Officer, or (vi) is being acquired during an initial or secondary
public offering. The Ethics Code also imposes a strict standard of
confidentiality and requires portfolio managers to disclose any interest they
may have in the securities or issuers that they recommend for purchase by any
client.
The Ethics Code also prohibits (i) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very limited
circumstances, to engage in personal securities transactions through the
Manager's order desk. The order desk maintains a list of securities that may not
be purchased due to a possible conflict with clients. All officers, directors
and employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
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 1940 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 1940 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 1940 Act and the rules thereunder.
The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review at least quarterly, a written report
of the amounts expended (and 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, 1997, 1996 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.
11
<PAGE>
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 A shares purchased at net asset value without an
initial sales load due to the size of the purchase are subject to a CDSL of 1%
if such shares redeemed within eighteen months of purchase. 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, 1997, 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 $ 8.01 $ .40 $ 8.41
Colorado 7.42 .37 7.79
Georgia 8.12 .40 8.52
Louisiana 8.28 .41 8.69
Maryland 8.14 .41 8.55
Massachusetts 7.99 .40 8.39
Michigan 8.60 .43 9.03
Minnesota 7.79 .39 8.18
Missouri 7.82 .39 8.21
New York 8.28 .41 8.69
Ohio 8.19 .41 8.60
Oregon 7.87 .39 8.26
South Carolina 8.16 .41 8.57
</TABLE>
CLASS D SHARES
Net Asset Value and Maximum
Name of Series Offering Price per Share*
- -------------- -------------------------
National $ 8.02
Colorado 7.42
Georgia 8.13
Louisiana 8.27
Maryland 8.15
Massachusetts 7.99
Michigan 8.59
Minnesota 7.79
Missouri 7.82
New York 8.29
Ohio 8.23
Oregon 7.87
South Carolina 8.16
- ---------
* Class D shares are subject to a CDSL of 1% on redemptions within one year of
purchase. Class A shares purchased at net asset value due to the size of the
purchase are subject to a CDSL of 1% on redemption within eighteen months of
purchase of such shares. See "Redemption of Shares" in the Prospectus.
12
<PAGE>
CLASS A SHARES - REDUCED INITIAL SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Mutual Fund sold with an initial
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 an initial 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 and shares of the other Seligman Mutual
Funds sold with an initial sales load with the total net asset value of shares
of those mutual funds already owned that were sold with an initial 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 Seligman Mutual Fund on
which there was an initial 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 Seligman Mutual
Fund on which there is an initial 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 initial 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 an initial sales load of the other Seligman Mutual
Funds 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
Seligman Mutual Fund on which there was an initial sales load at the time of
purchase. Reduced initial 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 - Class A" in the Fund's
Prospectus.
Class A shares purchased without an initial sales load in accordance with
the sales load schedule in the Prospectus, or pursuant to a Volume Discount,
Right of Accumulation or Letter of Intent are subject to a CDSL of 1% on
redemptions of such shares within eighteen months of purchase.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial 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) of the Code, 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," which have at least (i) $500,000 invested in
the Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such
plan is made available. 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
13
<PAGE>
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 financial institution trust
departments; to registered investment advisers exercising discretionary
investment authority with respect to the purchase of Fund shares; to accounts of
financial institutions or broker/dealers that charge account management fees,
provided the manager or one of its affiliates has entered into an agreement with
respect to such accounts; pursuant to sponsored arrangements with organizations
which make recommendations to or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the Fund;
to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors; and to "eligible employee
benefit plans" which have at least (i) $500,000 invested in the Seligman Mutual
Funds or (ii) 50 eligible employees to whom such plan is made available.
"Eligible employee benefit plan" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Fund shares. Sales of shares
to such plans must be made in connection with a payroll deduction system of plan
funding or other system acceptable to Seligman Data Corp.
Class A shares of the Series may be sold at net asset value to present and
retired 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 Series.
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.
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 commissions to all dealers,
of 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, if applicable,
paid by investors. The Fund and SFSI are parties to a Distribution 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 fiscal years ended September 30, 1997, 1996 and 1995. Also
included in the table are the amounts of CDSL retained by SFSI for the fiscal
years ended September 30, 1997, 1996 and 1995.
14
<PAGE>
<TABLE>
<CAPTION>
FISCAL 1997
-----------------------
SERIES SFSI CONCESSIONS DEALER COMMISSIONS TOTAL COMMISSIONS CDSL RETAINED
------ ---------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C>
National $ 8,749 $ 60,789 $ 69,538 $1,711
Colorado 4,828 36,405 41,233 19
Georgia 7,820 56,992 64,812 6,039
Louisiana 6,792 49,286 56,078 26
Maryland 7,366 52,904 60,270 2,223
Massachusetts 10,093 74,691 84,784 260
Michigan 18,739 141,150 159,889 398
Minnesota 9,979 75,908 85,887 372
Missouri 4,557 36,025 40,582 64
New York 11,532 84,357 95,889 5
Ohio 16,992 124,695 141,687 668
Oregon 9,740 74,960 84,700 105
South Carolina 17,715 133,456 151,171 724
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1996
------------------------
SERIES SFSI CONCESSIONS DEALER COMMISSIONS TOTAL COMMISSIONS CDSL RETAINED
------ ---------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C>
National $15,618 $120,046 $135,664 $1,933
Colorado 6,810 50,693 57,503 ---
Georgia 10,864 82,566 93,430 280
Louisiana 11,649 85,328 96,977 131
Maryland 10,368 73,461 83,829 370
Massachusetts 13,360 93,885 107,245 641
Michigan 21,956 161,994 183,950 1,551
Minnesota 22,738 168,882 191,620 258
Missouri 7,979 61,487 69,466 1,486
New York 11,497 86,499 97,996 1,810
Ohio 20,073 150,807 170,880 ---
Oregon 13,323 100,702 114,025 192
South Carolina 32,649 237,864 270,513 3,624
</TABLE>
<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
</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
years ended September 30, 1997 and 1996 and for the period ended September 30,
1995, SSI received commissions and distribution and service fees in the
following amounts:
15
<PAGE>
<TABLE>
<CAPTION>
FISCAL 1997 FISCAL 1996 FISCAL 1995
----------- ----------- -----------
DISTRIBUTION AND DISTRIBUTION AND DISTRIBUTION AND
SERIES COMMISSIONS SERVICE FEES COMMISSIONS SERVICE FEES COMMISSIONS SERVICE FEES
- ------ ----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
National $ 456 $ 6,388 $ 1,736 $ 6,257 $ 531 $ 2,983
Colorado 4,678 2,918 4,437 2,997 3,110 1,444
Georgia 283 988 525 667 1,598 221
Louisiana 21 685 --- 647 0 366
Maryland 523 1,425 1,251 1,399 1,327 772
Massachusetts 1,865 2,080 689 2,555 417 1,059
Michigan 515 2,537 1,315 2,656 245 914
Minnesota 594 2,087 1,717 2,122 11 925
Missouri 1,220 3,261 1,754 3,149 444 1,371
New York 2,889 12,398 2,144 8,922 1,211 2,976
Ohio 1,485 3,132 2,276 2,929 1,245 1,392
Oregon 24 1,417 763 797 750 394
South Carolina 2,582 1,576 2,229 1,484 1,247 749
</TABLE>
TAXES
Under the Code, 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 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 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) and the Series diversify its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Series' assets is represented by cash, United
States Government securities and other securities limited in respect of any one
issuer to an amount not greater than 5% of the Series' assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities).
VALUATION
The net asset value per share of each class of a Series of the Fund is
determined as of the close of regular trading on the New York Stock Exchange
("NYSE") (normally, 4:00 p.m. Eastern time), on each day that the NYSE is open.
The Fund and the NYSE are currently closed on New Year's Day, Martin Luther
King, Jr. 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. Municipal 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.
16
<PAGE>
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 municipal 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, 1997 for each
Series' Class A shares was as follows: National-4.31%, Colorado-3.90%,
Georgia-4.13%, Louisiana-4.28%, Maryland-4.23%, Massachusetts-4.33%,
Michigan-4.34%, Minnesota-4.11%, Missouri-4.03%, New York-4.23%, Ohio-4.24%,
Oregon-4.27%, and South Carolina-4.18%. 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,
1997, which was the last day of this period. The average number of Class A
shares per Series was: National-12,228,298, Colorado-6,726,538,
Georgia-6,255,605, Louisiana-6,794,561, Maryland-6,465,872,
Massachusetts-13,793,524, Michigan-16,774,608, Minnesota-15,674,714,
Missouri-6,717,933, New York-10,125,957, Ohio-18,882,789, Oregon-7,035,087 and
South Carolina-12,385,932 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, 1997 for each Series' Class A shares was as follows: National-7.14%,
Colorado-6.79%, Georgia-7.27%, Louisiana-7.53%, Maryland-7.51%,
Massachusetts-8.14%, Michigan-7.51%, Minnesota-7.43%, Missouri-7.09%, New
York-7.54%, Ohio-7.55%, Oregon-7.74% and South Carolina-7.44%. 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-46.86%, Michigan-42.26%,
Minnesota-44.73%, Missouri-43.22%, New York-43.90%, Ohio-43.83%, Oregon-45.04%
and South Carolina-43.83% which percentages assume the maximum combined federal
and state income tax rate for individual taxpayers that are subject to such
state's personal income taxes. Then the small portion of the yield (for all the
Series except the National Series) attributable to securities the income of
which was exempt only for federal income tax purposes was determined. This
portion of the yield was then divided by one minus 39.6% (39.6% being the
maximum federal income tax rate). These two calculations were then added to the
portion of the Class A shares yield, if any, that was not attributable to
securities, the income of which was not tax exempt.
The average annual total return for the one-year period ended September 30,
1997 for each Series' Class A shares was as follows: National-4.26%,
Colorado-2.24%, Georgia-3.52%, Louisiana-3.00%, Maryland-2.51%,
Massachusetts-2.99%, Michigan-3.04%, Minnesota-1.81%, Missouri-2.64%, New
York-4.23%, Ohio-2.48%, Oregon-3.46% and South Carolina-2.89%; for the five-year
period ended on September 30, 1997 for each of the Series' Class A shares was:
National-5.85%, Colorado-4.88%, Georgia-5.81%, Louisiana-5.42%, Maryland-5.52%,
Massachusetts-5.61%, Michigan-5.62%, Minnesota-5.22%, Missouri-5.37%, New
York-6.16%, Ohio-5.35%, Oregon-5.40%, and South Carolina-5.47%; for the ten-year
period ended on September 30, 1997 for each Series' Class A shares was:
National-8.08%, Colorado-7.30%, Georgia-8.42%, Louisiana-7.81%, Maryland-7.91%,
Massachusetts-7.86%, Michigan-8.18%, Minnesota-7.32%, Missouri-7.92%, New
York-8.19%, Ohio-7.88%, Oregon-8.07% and South Carolina-8.08%. 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 of each 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).
17
<PAGE>
The annualized yield for the 30-day period ended September 30, 1997 for each
Series' Class D shares was as follows: National-3.63%, Colorado-3.20%,
Georgia-3.44%, Louisiana-3.60%, Maryland-3.55%, Massachusetts-3.65%,
Michigan-3.67%, Minnesota-3.42%, Missouri-3.31%, New York-3.54%, Ohio-3.56%,
Oregon-3.58% and South Carolina-3.49%. 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, 1997 which was the last day of this period. The
average number of Class D shares were: National-583,091, Colorado-32,059,
Georgia-308,801, Louisiana-49,277, Maryland-249,154, Massachusetts-155,927,
Michigan-200,760, Minnesota-230,012, Missouri-57,477, New York-165,657,
Ohio-138,905, Oregon-207,720 and South Carolina-448,548 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, 1997 for each Series' Class D shares was as follows: National-6.01%,
Colorado-5.57%, Georgia-6.06%, Louisiana-6.34%, Maryland-5.63%,
Massachusetts-6.86%, Michigan-6.35%, Minnesota-6.18%, Missouri-5.83%, New
York-6.31%, Ohio-6.34%, Oregon-6.49% and South Carolina-6.21%. 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,
1997 for each Series' Class D shares was as follows: National-7.56%,
Colorado-5.34%, Georgia-6.67%, Louisiana-6.07%, Maryland-5.80%,
Massachusetts-6.29%, Michigan-6.19%, Minnesota-4.89%, Missouri-5.60%, New
York-7.60%, Ohio-5.57%, Oregon-6.77%, and South Carolina-6.15%; and since
inception through the period ended September 30, 1997 for each of the Series'
Class D shares was: National-3.71%, Colorado-3.09%, Georgia-4.19%,
Louisiana-3.94%, Maryland-3.97%, Massachusetts-4.02%, Michigan-3.98%,
Minnesota-3.29%, Missouri-3.71%, New York-4.27%, Ohio-3.84%, Oregon-4.01%, and
South Carolina-3.97%. 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,
1997 or from the commencement of a Series' operation through September 30, 1997
assuming investment of all dividends and capital gain distributions.
<TABLE>
<CAPTION>
CLASS A SHARES
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
NATIONAL
9/30/88 $ 982 $ 48 $ 79 $1,109
9/30/89 994 51 160 1,205
9/30/90 956 64 234 1,254
9/30/91 1,015 81 336 1,432
9/30/92 1,037 88 434 1,559
9/30/93 1,121 122 566 1,809
9/30/94 923 193 551 1,667
9/30/95 975 204 680 1,859
9/30/96 990 207 791 1,988
9/30/97 1,030 215 930 2,175 117.48%
COLORADO
9/30/88 1,025 7 74 1,106
9/30/89 1,054 7 153 1,214
9/30/90 1,032 7 228 1,267
9/30/91 1,078 7 323 1,408
9/30/92 1,096 7 414 1,517
9/30/93 1,158 24 525 1,707
9/30/94 1,057 39 561 1,657
9/30/95 1,089 40 670 1,799
9/30/96 1,086 39 760 1,885
9/30/97 1,107 40 875 2,022 102.23%
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
GEORGIA
9/30/88 $ 1,041 $ - $ 79 $ 1,120
9/30/89 1,071 2 160 1,233
9/30/90 1,054 4 239 1,297
9/30/91 1,121 5 344 1,470
9/30/92 1,153 12 447 1,612
9/30/93 1,238 22 577 1,837
9/30/94 1,098 37 600 1,735
9/30/95 1,147 66 725 1,938
9/30/96 1,156 80 829 2,065
9/30/97 1,192 90 961 2,243 124.34%
LOUISIANA
9/30/88 1,008 8 76 1,092
9/30/89 1,020 16 155 1,191
9/30/90 997 25 231 1,253
9/30/91 1,058 31 333 1,422
9/30/92 1,084 38 429 1,551
9/30/93 1,137 60 542 1,739
9/30/94 1,027 69 576 1,672
9/30/95 1,053 104 687 1,844
9/30/96 1,056 118 787 1,961
9/30/97 1,070 147 904 2,121 112.14%
MARYLAND
9/30/88 1,025 7 71 1,103
9/30/89 1,053 7 147 1,207
9/30/90 1,033 7 221 1,261
9/30/91 1,101 7 320 1,428
9/30/92 1,130 13 415 1,558
9/30/93 1,199 35 531 1,765
9/30/94 1,069 65 559 1,693
9/30/95 1,104 100 673 1,877
9/30/96 1,108 108 774 1,990
9/30/97 1,129 121 892 2,142 114.16%
MASSACHUSETTS
9/30/88 1,008 14 75 1,097
9/30/89 1,012 21 153 1,186
9/30/90 961 32 223 1,216
9/30/91 1,039 38 331 1,408
9/30/92 1,066 47 433 1,546
9/30/93 1,130 65 555 1,750
9/30/94 1,013 97 588 1,698
9/30/95 1,047 108 706 1,861
9/30/96 1,038 133 801 1,972
9/30/97 1,057 155 920 2,132 113.16%
MICHIGAN
9/30/88 1,012 17 76 1,105
9/30/89 1,038 21 156 1,215
9/30/90 1,005 34 231 1,270
9/30/91 1,067 40 332 1,439
9/30/92 1,105 50 436 1,591
9/30/93 1,157 90 551 1,798
9/30/94 1,056 98 592 1,746
9/30/95 1,087 112 713 1,912
9/30/96 1,078 142 810 2,030
9/30/97 1,096 167 933 2,196 119.58%
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
MINNESOTA
9/30/88 $ 1,005 $ 13 $ 74 $ 1,092
9/30/89 1,016 17 150 1,183
9/30/90 1,002 25 225 1,252
9/30/91 1,044 27 320 1,391
9/30/92 1,055 29 414 1,498
9/30/93 1,107 56 531 1,694
9/30/94 1,032 75 589 1,696
9/30/95 1,046 79 700 1,825
9/30/96 1,026 83 788 1,897
9/30/97 1,041 84 902 2,027 102.74%
MISSOURI
9/30/88 1,029 8 75 1,112
9/30/89 1,055 8 152 1,215
9/30/90 1,047 8 227 1,282
9/30/91 1,118 9 329 1,456
9/30/92 1,131 21 419 1,571
9/30/93 1,205 35 538 1,778
9/30/94 1,073 53 565 1,691
9/30/95 1,116 73 683 1,872
9/30/96 1,117 91 781 1,989
9/30/97 1,134 114 895 2,143 114.25%
NEW YORK
9/30/88 991 28 74 1,093
9/30/89 1,008 33 154 1,195
9/30/90 969 38 227 1,234
9/30/91 1,039 41 333 1,413
9/30/92 1,064 55 433 1,552
9/30/93 1,145 84 559 1,788
9/30/94 1,004 111 577 1,692
9/30/95 1,029 157 692 1,878
9/30/96 1,045 159 804 2,008
9/30/97 1,084 171 943 2,198 119.81%
OHIO
9/30/88 995 30 77 1,102
9/30/89 1,006 33 158 1,197
9/30/90 983 47 235 1,265
9/30/91 1,040 52 337 1,429
9/30/92 1,069 61 438 1,568
9/30/93 1,132 79 558 1,769
9/30/94 1,020 103 591 1,714
9/30/95 1,046 124 708 1,878
9/30/96 1,044 132 809 1,985
9/30/97 1,057 151 927 2,135 113.46%
OREGON
9/30/88 1,048 - 75 1,123
9/30/89 1,082 - 153 1,235
9/30/90 1,067 - 229 1,296
9/30/91 1,138 - 330 1,468
9/30/92 1,166 - 425 1,591
9/30/93 1,239 - 546 1,785
9/30/94 1,140 13 589 1,742
9/30/95 1,175 18 707 1,900
9/30/96 1,173 20 807 2,000
9/30/97 1,207 32 933 2,172 117.22%
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
SOUTH CAROLINA
9/30/88 $ 1,030 $ - $ 77 $ 1,107
9/30/89 1,054 1 156 1,211
9/30/90 1,033 1 231 1,265
9/30/91 1,102 8 332 1,442
9/30/92 1,143 11 433 1,587
9/30/93 1,218 16 552 1,786
9/30/94 1,087 39 578 1,704
9/30/95 1,139 44 703 1,886
9/30/96 1,153 49 812 2,014
9/30/97 1,165 81 929 2,175 117.52%
</TABLE>
CLASS D SHARES
<TABLE>
<CAPTION>
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR 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 $ 876 $ - $ 24 $ 900
9/30/95 923 - 69 992
9/30/96 939 - 114 1,053
9/30/97 978 - 165 1,143 14.29%
COLORADO
9/30/94 918 - 25 943
9/30/95 944 - 67 1,011
9/30/96 942 - 109 1,051
9/30/97 961 - 157 1,118 11.78%
GEORGIA
9/30/94 899 - 25 924
9/30/95 939 15 68 1,022
9/30/96 946 22 111 1,079
9/30/97 976 26 160 1,162 16.22%
LOUISIANA
9/30/94 910 - 25 935
9/30/95 932 18 71 1,021
9/30/96 935 26 115 1,076
9/30/97 947 41 164 1,152 15.22%
MARYLAND
9/30/94 913 - 25 938
9/30/95 942 18 69 1,029
9/30/96 944 23 113 1,080
9/30/97 963 29 161 1,153 15.33%
MASSACHUSETTS
9/30/94 920 - 27 947
9/30/95 948 4 73 1,025
9/30/96 941 18 118 1,077
9/30/97 959 29 167 1,155 15.53%
MICHIGAN
9/30/94 919 - 26 945
9/30/95 948 5 71 1,024
9/30/96 938 22 116 1,076
9/30/97 954 35 165 1,154 15.39%
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
MINNESOTA
9/30/94 $ 940 $ - $ 29 $ 969
9/30/95 951 2 79 1,032
9/30/96 934 4 125 1,063
9/30/97 948 4 174 1,126 12.60%
MISSOURI
9/30/94 904 - 24 928
9/30/95 939 10 68 1,017
9/30/96 941 20 111 1,072
9/30/97 954 32 157 1,143 14.27%
NEW YORK
9/30/94 897 - 26 923
9/30/95 920 23 71 1,014
9/30/96 933 24 116 1,073
9/30/97 970 28 168 1,166 16.56%
OHIO
9/30/94 920 - 26 946
9/30/95 947 10 71 1,028
9/30/96 944 15 118 1,077
9/30/97 956 24 168 1,148 14.79%
OREGON
9/30/94 926 - 26 952
9/30/95 954 3 70 1,027
9/30/96 953 4 115 1,072
9/30/97 981 10 164 1,155 15.51%
SOUTH CAROLINA
9/30/94 904 - 25 929
9/30/95 947 2 69 1,018
9/30/96 957 4 115 1,076
9/30/97 969 21 163 1,153 15.34%
</TABLE>
- ---------------
1 For the ten-year period ended September 30, 1997 for Class A shares; and
from commencement of operations for 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 and CDSL, if applicable, 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" reflects the effect of the
CDSL, if applicable, and assumes investment of all dividends and capital
gain distributions.
3 Total return for each Series is calculated by assuming a hypothetical
initial investment of $1,000 at the beginning of the period specified,
subtracting the maximum sales load or CDSL, if applicable; determining total
value of all dividends and distributions that would have been paid during
the period on such shares assuming that each dividend or distribution was
invested in additional shares at net asset value; calculating the total
value of the investment at the end of the period; and finally, by dividing
the difference between the amount of the hypothetical initial investment at
the beginning of the period and its value at the end of the period by the
amount of the hypothetical initial investment.
The waiver by the Manager of its fees and reimbursement of certain expenses
during certain of the periods (as set forth under "Management and Expenses"
herein and "Management Services" in the Prospectus) for which the performance
results have been provided in this section positively affected such results.
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.
22
<PAGE>
GENERAL INFORMATION
The Fund is a Maryland corporation, authorized to issue 1,300,000,000 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 be submitted 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, 801 Pennsylvania, 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,
1997 contains a schedule of the investments of each of the Fund's Series as of
September 30, 1997, as well as certain other financial information as of that
date. The financial statements and notes included in the Annual Report, and the
Independent Auditor's Report thereon, are incorporated herein by reference. The
Annual Report will be furnished, without charge, to investors who request copies
of this Statement of Additional Information.
23
<PAGE>
APPENDIX A
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
MUNICIPAL BONDS
Aaa: Municipal bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa: Municipal 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: Municipal 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: Municipal 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: Municipal 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: Municipal 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: Municipal 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: Municipal 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: Municipal 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.
MUNICIPAL NOTES
Moody's ratings for municipal 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.
24
<PAGE>
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment capacity of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
capacity for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
Issues rated "Not Prime" do not fall within any of the Prime rating
categories.
STANDARD & POOR'S CORPORATION ("S&P")
MUNICIPAL BONDS
AAA: Municipal bonds rated AAA are highest grade obligations. Capacity to
pay interest and repay principal is extremely strong.
AA: Municipal 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: Municipal 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: Municipal 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: Municipal 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.
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COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
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.
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APPENDIX B
SPECIAL FACTORS AFFECTING THE COLORADO MUNICIPAL 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 1,900 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. As of 1995, public debt in
Colorado totalled approximately $16.9 billion, up 33% from 1990. Of that total,
local government debt accounts for $14.1 billion. (Report of the State Auditor:
Government Debt in Colorado, Special Study Fiscal Years 1994 Through 1995). 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% of its actual value
in 1996, and will be assessed at 9.74% of actual value in 1997-98. 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.
The final figure for fiscal year 1996 for assessed value of all taxable real
property in the state is $33,595,086,130, of which approximately 47.0% is
residential, and 32.5% is commercial and industrial. Total revenue from property
taxes in 1995 was $2,784,138,646. Figures for fiscal year 1997 are not yet
available.
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. Without voter approval, revenue may grow
only to account for inflation and increases in population.
State General Fund and cash non-exempt revenues exceeded the TABOR limits
for the first time in fiscal year 1996-97. Excess revenue totalled $139.0
million, which TABOR requires to be refunded to taxpayers. The state legislature
voted to refund $142.1 million to taxpayers by way of credits against income
taxes due for 1997. (The legislature authorized a refund of $142.1 million to
assure that at least the required $139.0 million is refunded.)
Both the Colorado Legislative Council (Staff Report, December 1997) and the
Office of State Planning and Budgeting (Colorado Economic Perspective, December
20, 1997) project that TABOR rebates will become the norm in state finances in
the coming years. For fiscal year 1997-98, allowed revenue growth for the state
is expected to be 5.5%, but state revenue is projected to exceed the new limit
in the range of $324.8 to $360.1 million. For fiscal year 1998-99, allowed
revenue growth is expected to be 5.3 - 5.4% and excess state revenue is
projected in the range of $286.1 to $294.9 million. The Colorado Legislative
Council projects excess revenue will exceed $200 million each year through
fiscal year 2002-03. The Office of State Budgeting and Planning projects excess
revenue will gradually decrease after fiscal year 1997-98 and projects state
revenue within the TABOR limit in fiscal year 2002-03.
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 economic
difficulties and their impact on state and local government finances will not
adversely affect the market value of obligations of the Colorado Municipal
Series or the ability of the respective obligors to pay the debt service on such
obligations.
Colorado experienced an approximately 2.0% increase in population in 1996,
down from a 2.3% increase in 1995, with a net positive migration of
approximately 45,250 in 1996. Preliminary estimates indicate in-migration and
population growth continued at approximately the same rate in 1997 - with
estimates of 1.9 to 2.0% population growth. Colorado economists expect positive
migration into Colorado to continue through 1998, though at a slower rate, with
population growth of 1.8% predicted for that year.
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Local economists have predicted employment growth of between 2.5% and 3.2%
in 1998. This is similar to the 2.5 - 3.4% estimated growth for 1997 and 3.4%
growth in 1996. During 1997, job growth occurred in every major non-agricultural
employment sector except oil, gas and mining. The University of Colorado
Business Economic Outlook predicts growth in 1998 in every major
non-agricultural employment sector, with the strongest growth in services,
government and wholesale/retail trade, but a shortage of labor to fill positions
is a major concern. The unemployment rate in Colorado dropped to a historic low
in July 1997 according to the Colorado Legislative Council (Staff Report,
December 1997). Colorado National Bank predicts a continuing labor shortage
through 1998 and concludes that this is the largest problem facing businesses in
the state.
The increase in personal income in 1997 is estimated by Colorado economists
in the range of 6.5% to 7.0%, and they forecast the same for 1998. In 1997, the
Denver-Boulder metropolitan area's inflation rate, projected to be 3.4% to 3.5%,
outpaced nationwide inflation of 2.4% to 2.7%. Colorado economists forecast the
Denver-Boulder metropolitan area's inflation rate for 1998 at between 3.3% and
3.6%, as compared to an inflation rate forecast of between 2.4% and 3.2% for the
nation. Retail sales increased by approximately 6.0% to 7.0% in 1997, down from
the 1996 increase of between 6.7% and 7.4%. Colorado economists are forecasting
an increase in retail sales in the range of 6.1% to 6.6% in 1998.
Colorado's home-building industry showed strong growth from 1990 through
1996. Growth slowed in 1997 and forecasts for 1998 are mixed. Two forecasts
predict that new housing permits will drop between 5.4% and 8.0% in 1998. Other
economists predict a 3.7% increase in housing contracts and a 1.0% rise in the
value of new home construction in 1998. Non-residential construction will
continue to grow but not at the pace of 1996, when growth measured 23.4% to
34.2%. 1997 saw non-residential construction grow by 7.4% to 12.5%, and
predictions for 1998 are in the range between 2.9% and 8.8%. One study predicts
modest, steady growth for several years. Another economist notes that a
substantial increase in military base construction (to $113.9 million in 1998)
will offset a decrease in retail construction.
Local economists concur that Colorado's economic expansion of the early
1990's is decelerating and that in 1998 the state will transition from a period
of relative boom to a period of more normal growth. One possible danger sign is
the growth of business failures in Colorado. Dun & Bradstreet reports that
failures rose 51.5% in 1996, compared to a 1% rise nationwide. (Colorado
National Bank's 1998 Economic Forecast) 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 MUNICIPAL 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 AAA and Fitch rates such bonds AAA. 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 1997, the State's highest total annual commitment in any
current or subsequent fiscal year equaled 5.39% of fiscal year 1997 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
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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 municipal obligations issued within the State.
The State operates on a fiscal year beginning July 1 and ending June 30. For
example, "fiscal 1997" refers to the year ended June 30, 1997.
Based on data issued by the State of Georgia for the fiscal year 1997,
income tax receipts and sales tax receipts of the State for fiscal year 1997
comprised approximately 46.0% and 36.4%, respectively of the State tax receipts.
Further, such data shows that total State Treasury Receipts for fiscal 1997
($11,905,916,973) increased by approximately 6.6% over such State Treasury
Receipts in fiscal 1996. As of August 1997, the State estimates Tax Receipts for
1998 at $11,777,598,880.
The average annual unemployment rate of the civilian labor force in the
State for May 1997 was 4.4% 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, services, wholesale and retail trade, 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 MUNICIPAL 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 Municipal 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
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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
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 of Louisiana has experienced recurring budget
surpluses which have been applied to the reduction of outstanding debts. These
surplus funds, under current laws, are used to retire existing debt. The
Louisiana Commissioner of Administration has announced an estimated surplus for
the 1996-97 fiscal year of between $80 and $300 million. This would be the fifth
consecutive year of budget surplus.
A statewide referendum on the continued legality of video poker, riverboat
gambling, and land based gaming resulted in a continuation of all three forms of
gaming near the major urban areas of Louisiana (Shreveport, Lake Charles, Baton
Rouge, New Orleans, as well as Indian casino gaming near Lafayette). The
Harrah's Casino in New Orleans continued to be in a Chapter 11 bankruptcy which
could be resolved by a resumption of construction and the payment of $100
million per year to the State of Louisiana or by the liquidation of its assets
by the bankruptcy court.
The continuation of general fund surpluses does not assure the revenues for
bonds not entitled to the full faith and credit of the State and that,
therefore, are not secured by the Bond Security and Redemption Fund. Examples of
these bonds include general obligation parish bond issues, revenue bonds issued
by the State of Louisiana or a parish or other political subdivision or agency,
and industrial development bonds. Revenue bonds are payable only from revenues
derived from a specific facility or revenue source. Industrial development bonds
are generally secured solely by the revenues served from payments made by the
industrial users. With respect to bonds issued by local political subdivisions
or agencies, because the 64 parishes within the State of Louisiana are subject
to their own revenue and expenditure problems, current and long-term adverse
developments affecting their revenue sources and their general economy may have
a detrimental impact on such bonds. Similarly, adverse developments affecting
Louisiana's state and local economy could have a detrimental impact on revenue
bonds and industrial development bonds.
Louisiana gained 24,700 jobs from October 1996 to October 1997. The 1.34%
rate of job growth produced a decline in the statewide unemployment rate to
5.7%. The continued growth of the Louisiana economy, as well as the growth of
tax collections due to offshore oil exploration and gaming revenues, allowed the
State, effective July 1, 1997, to repeal one penny of the four
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penny temporary sales taxes originally enacted in 1986. Even with this reduction
in the sales tax rate, a budgetary surplus still appears very possible.
The expansion of deep water offshore oil exploration activity has led to
shortages of skilled labor for the petrochemical services, shipbuilding, oil rig
construction, and boat repair yard industries throughout south Louisiana.
Layoffs by garment makers and employment downsizing caused by acquisitions of
major firms headquartered in Louisiana are offsetting some of the job gains
caused by the petrochemical expansion. Compared to the 4.7% national
unemployment rate, there is still sufficient unemployed labor force in Louisiana
to allow for continued orderly growth in employment.
SPECIAL FACTORS AFFECTING THE MARYLAND MUNICIPAL 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 July 30, 1997,
relating to issues of State of Maryland general obligations and does not purport
to be a complete description.
The State's total expenditures for the fiscal years ending June 30, 1994,
June 30, 1995 and June 30, 1996 were $12.351 billion, $13.528 billion and
$14.169 billion, respectively. As of July 30, 1997, it was estimated that total
expenditures for fiscal year 1997 would be $15.221 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 50%-55% of
each year's total budget, had an unreserved surplus on a budgetary basis of $60
million in fiscal year 1994, an unreserved surplus of $133 million in fiscal
year 1995 and an unreserved surplus of $13.1 million (of which $3.1 million was
designated for fiscal 1997 operations) in fiscal year 1996. As of July 30, 1997,
the unreserved surplus in fiscal year 1997 was estimated to be $144.5 million.
The State Constitution mandates a balanced budget.
In April 1997, the General Assembly approved the $15.438 billion 1998 fiscal
year budget (the "1998 Budget"). The 1998 Budget includes $3.1 billion in aid to
local governments (reflecting a $200 million increase over fiscal 1997) and
incorporates the first year of a five-year phase-in of a 10% reduction in
personal income taxes estimated to reduce revenues by $450 million when fully
phased in. Based on the 1998 Budget, as of July 30, 1997, the State estimated
that the general fund surplus on a budgetary basis at June 30, 1998 will be
approximately $27.9 million. The State also maintains a Revenue Stabilization
Account in its Reserve Fund to retain State revenues for future needs and to
reduce the need for future tax increases. As of July 30, 1997, the State
estimated that the balance in the Revenue Stabilization Account would be
approximately $554 million at June 30, 1998.
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 also rated "Aaa" (provisional) by Moody's and "AAA" 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 "Aa3" by Moody's and "AA-" by
S&P. The general obligation bonds of those other counties of the State with
populations in excess of 100,000 that are rated by Moody's carry an "A" rating
or better. Baltimore City's 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.
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SPECIAL FACTORS AFFECTING THE MASSACHUSETTS MUNICIPAL SERIES
The Commonwealth of Massachusetts and certain of its cities, towns, counties
and other political subdivisions 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 Municipal
Obligations to maintain debt service on their obligations.
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. Total expenditures and other uses for fiscal 1996 totaled
approximately $17.925 billion and total revenues and other sources totaled
approximately $18.371 billion. Overall, the budgeted operating funds ended
fiscal 1996 with an excess of revenues and other sources over expenditures and
other uses of $446 million, and with positive fund balances of approximately
$1.172 billion. Total expenditures and other uses for fiscal 1997 totaled
approximately $18.389 billion and total revenues and other sources totaled
approximately $18.571 billion. The budgeted operating funds ended fiscal 1997
with an excess of revenues and other sources over expenditures and other uses of
$182 million, and with positive fund balances (after the transfer of
approximately $161 million to capital improvements) of approximately $1.194
billion.
The fiscal 1998 budget is based on estimated total revenues and other
sources of approximately $18.691 billion. Total expenditures and other uses for
fiscal 1998 are currently estimated at approximately $18.915. The fiscal 1998
budget proposes that the $224 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 1998, to produce estimated ending fund
balances for fiscal 1998 of approximately $970 million. The fiscal 1998 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, fiscal 1995, fiscal 1996 and fiscal 1997 and is
expected to increase again in fiscal 1998.
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
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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 1992, 1993 and 1994 with fund
deficits of approximately $397.4 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 $287.4 million. GAAP basis
financial statements for fiscal 1996 indicate that the Commonwealth ended such
year with a fund equity of $709.2 million.
SPECIAL FACTORS AFFECTING THE MICHIGAN MUNICIPAL 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
1995-96 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 State 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. General Fund surplus at the end of fiscal years 1992-93
through 1995-96 was transferred, as required by statute, to the Counter-Cyclical
Budget and Economic Stabilization Fund ("BSF"). A General Fund surplus for
fiscal year 1996-97, which ended September 30, 1997, is expected to result in a
preliminary unreserved BSF balance at September 30, 1997 of $1.1754 billion. 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") and constitutional amendment which was
approved by voters on March 15, 1994. Under Proposal A as approved, the State
sales and use tax rates were increased from 4% to 6%, the State income tax and
cigarette tax were increased, the Single Business Tax imposed on business
activity within the state was decreased and, 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.
In July, 1997, the Michigan Supreme Court issued a decision in cases filed
by many of Michigan's local school districts against the State regarding the
manner in which the State disburses funds to school districts for special
education and special education transportation, bilingual education, driver
education and school lunch programs, including a case captioned Donald Durant,
et al. v. State of Michigan. The court held that money damages estimated at $212
million are owed to 84 school districts and legislation has been proposed to pay
that amount from the BSF. Approximately 400 other local school districts have
asserted claims similar to Durant against the State. It is not known at this
time what action will be taken concerning those claims.
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
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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 MUNICIPAL 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 Municipal Series, and does
not purport to be a complete description.
The State of Minnesota has experienced certain budgeting and financial
problems since 1980.
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.
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
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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.
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 higher 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 was
available for spending. The statutes require 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.
A February 1996 forecast projected an Accounting General Fund balance at
June 30, 1997, at $873 million, due to a $104 million increase in projected
revenues, a $19 million increase in expenditures, and a $36 million reduction in
the June 30, 1995, ending balance. The amount available for spending increased
from $15 million to $64 million.
In February 1996, the Commissioner of Finance estimated the Accounting
General Fund balance at June 30, 1999, at $54 million.
The 1996 Legislature reduced the State of Minnesota's commitment to
eliminate the so-called school recognition shift. The 1995 Legislature had voted
to allow school 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
1996 Legislature raised the percentage for the 1995-1997 biennium from zero to 7
percent, saving the State $116 million.
The 1996 Legislature increased expenditures $130 million, including $37
million for elementary education and youth development; $14 million for higher
education; $17 million for health systems and human services reforms; $16
million for
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public safety and criminal justice; and 36 million for transportation,
environment and technology. The Legislature also approved $614 million in
capital projects to be funded by general obligation bonds and appropriations and
increased expected revenues $5 million.
After the Legislature adjourned in April 1996, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1997, at $1 million.
The Accounting General Fund balance at June 30, 1996, was $445 million.
The Commissioner of Finance, in a November 1996 forecast, estimated the
Accounting General Fund balance at June 30, 1997, at $793 million, due to a $646
million increase in revenues from those projected in April 1996, a $209 million
reduction in expenditures, and $63 million in other changes. The longest period
of national economic growth since World War II, through mid-1999, was forecast.
Individual income taxes were forecast to be $427 million more than projected in
April 1996, and sales taxes $81 million more. Of the $209 million reduction in
forecast expenditures, $199 million were health and human services expenditures.
Existing statutes require the first $114 million of the forecast balance to
be dedicated to a new education aid reserve for use in the 1997-1999 biennium.
Another $157 million must be used to increase from 85 to 90 percent the portion
of state aid to school districts that is paid in the fiscal year during which
the districts become entitled to the aid.
In November 1996, the Commissioner of Finance estimated the Accounting
General Fund balance at June 30, 1999, at $1.4 billion.
A February 1997 forecast projected an Accounting General Fund balance at
June 30, 1997 at $866 million (after taking into account the $114 million and
$157 million items referred to above), due to a $236 million increase in
projected revenues and a $108 million decrease in expenditures. The balance at
June 30, 1999 was projected at $1.7 billion.
The 1997 Legislature, in a regular session and June and August special
sessions, authorized $20.924 billion in spending for the 1997-1999 biennium, an
increase of $2.231 billion, or 11.8 percent, from 1995-1997 expenditures.
Resources for the 1997-1999 biennium were projected to be $21.946 billion,
including $1.630 billion carried forward from the previous biennium.
The Legislature authorized 14.8 percent more spending for elementary and
secondary education spending in the 1997-1999 biennium than in 1995-1997, 17.6
percent more for health and human services, 12.5 percent more in local
government aids, 10.7 percent more for higher education, and 0.3 percent more
for all other expenditures. The Legislature set the General Fund budget reserve
at $522 million. The cash flow account was set at $350 million, and a property
tax reform reserve account of $46 million was created for future restructuring
of the property tax system. Other reserves totaled $72 million.
After the Legislature adjourned its second special session in August 1997,
the Commissioner of Finance estimated that at June 30, 1999, the Accounting
General Fund balance would be positive $32 million. The Accounting General Fund
balance at June 30, 1997 was an estimated $861 million.
The Commissioner of Finance, in a November 1997 forecast, estimated the
Accounting General Fund balance at June 30, 1999, at $1.360 billion, $1.328
billion more than estimated after the 1997 legislature adjourned, due to a $729
million increase in projected revenues, a $256 million reduction in projected
expenditures, $21 million increase in dedicated reserves, and a $364 million
increase in the projected amount carried forward from the 1995-1997 biennium.
Higher than anticipated individual income tax payments were the major source of
$272 million in additional revenues in the first half of 1997, and human
services savings were the principal source of $92 million in reduced
expenditures. The Commissioner estimated the Accounting General Fund balance at
June 30, 2001 at $1.284 billion.
Only $453 million of the $1.360 billion projected 1997-1999 surplus was
available for spending. The statutes allocate the first $81 million of the
forecast balance to fund K-12 education tax credits and deductions enacted in
1997. Sixty percent of the remainder plus interest, $826 million, is added to a
property tax reform account.
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 Municipal
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
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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 Municipal 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 in 1995 denied certiorari in a case in which an Ohio state
court 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. In 1997, the United States Supreme
Court denied certiorari in a subsequent case from Ohio, involving the same
taxpayer and the same issue, in which the Ohio Supreme Court refused to
reconsider the merits of the case on the ground that the previous final state
court judgment barred any claim arising out of the transaction that was the
subject of the previous action. 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 Municipal Series might be adversely affected, and the
value of the shares of the Minnesota Municipal Series might also be adversely
affected.
The State's bond ratings in July 1997 were Aaa by Moody's and AAA 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 Municipal Series or the ability of respective obligors to make
timely payment of the principal and interest on such obligations.
SPECIAL FACTORS AFFECTING THE MISSOURI MUNICIPAL 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 1,945,813 and 1,016,475 residents, respectively,
constituting over fifty percent of Missouri's 1995 population census of
approximately 5,339,041. St. Louis is an important site for banking and
manufacturing activity, as well as a distribution and transportation center,
with nine 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 1995 was
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McDonnell Douglas Corporation. McDonnell Douglas Corporation is the State's
largest employer, currently employing approximately 20,000 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. On August 1, 1997, McDonnell
Douglas Corporation became a wholly-owned subsidiary of The Boeing Company. It
is impossible to determine what effect, if any, this acquisition will have on
the operations of McDonnell Douglas Corporation. However, any shift or loss of
production operations now conducted in Missouri would have a negative impact on
the economy of the state and particularly on the economy of the St. Louis
metropolitan area.
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, $315 million for fiscal 1995 and
$274 million in fiscal 1996. This expense accounts for close to 7% of total
state General Revenue Fund spending in fiscal 1994 and 1995 and close to 5% in
fiscal 1996.
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.
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 MUNICIPAL SERIES
The following information is a summary of special factors affecting the New
York Municipal 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 among the most populous states 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
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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.
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; Binghamton -- 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 major radio and television broadcasting networks, many 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 and is traditionally a tourist destination.
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 at times failed to
predict precisely 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, the extent of
corporate and governmental restructuring, federal financial and monetary
policies, the availability of credit, the level of interest rates, and the
condition of the world economy. All these could have an adverse effect on the
State. There can be no assurance that the State's economy will not experience
financial results in the current fiscal year that are worse than predicted, with
corresponding material and adverse effects on the State's projections of
receipts and disbursements.
The national economy has resumed a more robust rate of growth after a "soft
landing" in 1995, with approximately 14 million jobs added nationally since
early 1992. The State economy has continued to expand, but growth remains
somewhat slower than in the nation. Although the State has added approximately
300,000 jobs since late 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. Government downsizing
has also moderated these job gains.
DOB forecasts that national economic growth will be quite strong in the
first half of calendar 1997, but will moderate considerably as the year
progresses. The overall growth rate of the national economy for calendar year
1997 is expected to be practically identical to the consensus forecast of a
widely followed survey of national economic forecasters. Growth in real Gross
Domestic Product for 1997 is projected to be 3.6 percent, with an anticipated
decline in net exports and continued restraint in Federal spending more than
offset by increases in consumption and investment. Inflation, as measured by the
Consumer Price Index, is projected to remain subdued at about 2.6 percent due to
improved productivity and foreign competition. Personal income and wages are
projected to increase by 6.0 percent and 6.7 percent respectively.
The State economic forecast projects steady growth continuing through the
end of 1997. Personal income is projected to increase by 6.1 percent in 1997 and
4.5 percent in 1998, reflecting robust projected wage growth fueled in part by
financial sector bonus payments. The forecast continues to project employment
increases of 1.4 percent in 1997 and 1.0 percent in 1998.
The forecast of the State's economy shows moderate expansion during the
first half of calendar 1997 with the trend continuing through the year. Although
industries that export goods and services are expected to continue to do well,
growth is expected to be moderated by tight fiscal constraints on the health
care and social services industries. On an average annual
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basis, employment growth in the State is expected to be up substantially from
the 1996 rate. Personal income is expected to record moderate gains in 1997.
Bonus payments in the securities industry are expected to increase further from
last year's record level.
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 decision 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, legislation passed in 1986 authorizes the creation of up to 40
"economic development zones" in economically distressed regions of the State.
Businesses in these zones are provided a variety of tax and other incentives to
create jobs and make investments in the zones.
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 commenced on April 1, 1997, and ends on March
31, 1998, is referred to herein as the State's 1997-98 fiscal year.
The State's current fiscal year commenced on April 1, 1997, and ends on
March 31, 1998, and is referred to herein as the State's 1997-98 fiscal year.
The State's budget for the 1997-98 fiscal year was adopted by the Legislature on
August 4, 1997, more than four 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 necessary appropriations for State-supported debt service.
The State Financial Plan for the 1997-98 fiscal year was formulated on August
11, 1997 and is based on the State's budget as enacted by the Legislature, as
well as actual results for the first quarter of the current fiscal year. The
1997-98 State Financial Plan is expected to be updated in October and January.
The adopted 1997-98 budget projects an increase in General Fund
disbursements of $1.7 billion or 5.2 percent over 1996-97 levels. The average
annual growth rate over the last three fiscal years is approximately 1.2
percent. State Funds disbursements (excluding federal grants) are projected to
increase by 5.4 percent from the 1996-97 fiscal year. All Governmental Funds
projected disbursements increase by 7.0 percent over the 1996-97 fiscal year.
The 1997-98 State Financial Plan is projected to be balanced on a cash
basis. The Financial Plan projections include a reserve for future needs of $530
million. As compared to the Governor's Executive Budget as amended in February
1997, the State's adopted budget for 1997-98 increases General Fund spending by
$1.7 billion, primarily from increases for local assistance ($1.3 billion).
Resources used to fund these additional expenditures include increased revenues
projected for the 1997-98 fiscal year, increased resources produced in the
1996-97 fiscal year that will be utilized in 1997-98, reestimates of social
service, fringe benefit and other spending, and certain non-recurring resources.
Total non-recurring resources included in the 1997-98 Financial Plan are
projected by DOB to be $270 million, or 0.7 percent of total General Fund
receipts.
The 1997-98 adopted budget includes multi-year tax reductions, including a
State funded property and local income tax reduction program, estate tax relief,
utility gross receipts tax reductions, permanent reductions in the State sales
tax on clothing, and elimination of assessments on medical providers. These
reductions are intended to reduce the overall level of State and local taxes in
New York and to improve the State's competitive position vis-a-vis other states.
The various elements of the State and local tax and assessment reductions have
little or no impact on the 1997-98 Financial Plan, and do not begin to
materially affect the outyear projections until the State's 1999-2000 fiscal
year. The adopted 1997-98 budget
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also makes significant investments in education, and proposes a new $2.4 billion
general obligation bond proposal for school facilities to be submitted to the
voters in November 1997.
The 1997-98 Financial Plan also includes: a projected General Fund reserve
of $530 million; a projected balance of $332 million in the Tax Stabilization
Reserve Fund; and a projected $65 million balance in the Contingency Reserve
Fund.
The projections do not include any subsequent actions that the Governor may
take to exercise his line-item veto (or vetoing any companion legislation)
before signing the 1997-98 budget appropriation bills into law. Under the
Constitution, the Governor may veto any additions to the Executive Budget within
10 days after the submission of appropriation bills for his approval. If the
Governor were to take such action, the resulting impact on the Financial Plan
would be positive.
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. In addition, 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. The Division of Budget believes that its
projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are reasonable.
GOVERNMENT FUNDS
The four governmental fund types that comprise the State Financial Plan are
the General Fund, the Special Revenue Funds, the Capital Project Funds, and the
Debt Service Funds.
GENERAL FUND RECEIPTS
Total General Fund receipts and transfers from other funds in the 1997-98
fiscal year are projected to be $35.09 billion, an increase of over $2 billion
or roughly 6 percent from the $33.04 billion recorded in the 1996-97 fiscal
year. This total includes $31.68 billion in tax receipts, $1.48 billion in
miscellaneous receipts, and $1.94 billion in transfers from other funds. The
projected $2 billion increase in receipts exaggerates the underlying
year-to-year growth in State tax revenues. This increase is largely the result
of actions undertaken by the State to utilize the $1.4 billion 1996-97 budget
surplus reported by DOB to finance costs in the State's 1997-98 fiscal year.
This transaction reduced reported receipts in the 1996-97 fiscal year and
increased projected receipts in the State's 1997-98 fiscal year. Conversely, the
incremental costs of tax reductions newly effective in 1997-98 and the impact of
new earmarking statutes which divert receipts from the General Fund to other
funds work to depress apparent growth below the underlying growth in the
receipts base attributable to expansion of the State's economy. After adjusting
for these actions, tax receipts are projected to grow by approximately 5 percent
in 1997-98.
DISBURSEMENTS
General Fund disbursements and transfers to capital, debt service and other
funds are projected at $34.60 billion, an increase of $1.7 billion (5 percent)
from 1996-97 fiscal year levels. Over the last two years, spending growth for
most State agencies and programs has been negative or flat, producing an overall
decline in General Fund spending during that period. The 1997-98 adopted budget
reflects negotiated increases for State employee salaries, increased transfers
for debt service, and other mandated increases, as well as increased investments
in school aid, higher education, mental health, and public protection.
Grants to local governments are projected to total $23.63 billion in the
1997-98 State Financial Plan, an increase of $750 million (3.3 percent) from
1996-97 levels.
General Fund payments for Medicaid are projected to be $5.42 billion,
virtually unchanged from the level of $5.38 billion in 1996-97.
Remaining disbursements primarily support community-based mental hygiene
programs, community and public health programs, local transportation programs,
and revenue sharing payments to local governments.
Disbursements for State operations are projected at $6.22 billion, an
increase of $441 million or 7.6 percent over the 1996-97 fiscal year.
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Disbursements in this category, General State charges, are projected to
total $2.18 billion in the 1997-98 State Financial Plan virtually unchanged from
1996-97 levels.
Debt service paid from the General Fund for 1997-98 reflects only the $11
million interest cost of the State's commercial paper program. This is
approximately the same level as last year, reflecting projections for stable
interest rates for the balance of the fiscal year.
Transfers to other funds for debt service are projected at $2.07 billion in
1997-98, an increase of $496 million.
Transfers for capital projects are projected at $184 million for 1997-98, an
increase of $46 million. The 1997-98 State Financial Plan also includes $299
million for subsidies or transfers to other State funds, a decrease of $30
million from last year's level.
NON-RECURRING RESOURCES
The Division of the Budget estimates that the 1997-98 State Financial Plan
contains actions that provide non-recurring resources or savings totaling
approximately $270 million. These include the use of $200 million in federal
reimbursement funds available from retroactive social service claims approved by
the federal government in April 1997. The balance is composed of various other
actions, primarily the transfer of unused special revenue fund balances to the
General Fund.
GENERAL FUND BALANCE
The 1997-98 General Fund opening fund balance of $433 million includes $317
million on deposit in the Tax Stabilization Reserve Fund ("TSRF"), available for
use in the event of an unanticipated General Fund deficit, $41 million on
deposit in the Contingency Reserve Fund ("CRF") available for potential
litigation costs against the State, and a $75 million balance in the Community
Projects Fund. The projected closing fund balance in the General Fund of $927
million reflects a balance of $332 million in the TSRF, following an additional
payment of $15 million at the end of the fiscal year, $65 million in the CRF,
following a deposit of $24 million in 1997-98, and a reserve for future needs of
$530 million.
SPECIAL REVENUE FUNDS
Projected Special Revenue Funds receipts total $28.22 billion, an increase
of $2.51 billion (9.7 percent) over the prior year. Projected disbursements in
this fund type total $28.45 billion, an increase of $2.43 billion (9.3 percent)
over 1996-97 levels. Disbursements from federal funds, primarily the federal
share of Medicaid and other social services programs, are projected to total
$21.19 billion in the 1997-98 fiscal year. Remaining projected spending of $7.26
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 PROJECT FUNDS
Total receipts in Capital Projects Funds are projected at $3.30 billion.
Bond and note proceeds are expected to provide $605 million in other financing
sources. Disbursements from this fund type are projected to be $3.70 billion, an
increase of $154 million (4.3 percent) over prior-year levels. The Dedicated
Highway and Bridge Trust Fund is the single largest dedicated fund, comprising
an estimated $982 million (27 percent) of the activity in this fund type. Total
spending for capital projects will be financed through a combination of sources:
federal grants (29 percent), public authority bond proceeds (31 percent),
general obligation bond proceeds (15 percent), and pay-as-you-go revenues (25
percent).
DEBT SERVICE FUNDS
In the 1997-98 fiscal year, total disbursements in Debt Service Funds are
projected at $3.17 billion, an increase of $641 million or 25.3 percent, most of
which is explained by increases in the General Fund transfer as discussed
earlier. The projected transfer from the General Fund of $2.07 billion is
expected to finance 65 percent of these payments.
The remaining payments are expected to be financed by pledged revenues,
including $2.03 billion in taxes and $601 million in dedicated fees and other
miscellaneous receipts. After required impoundment for debt service, $3.77
billion is expected to be transferred to the General Fund and other funds in
support of State operations. The largest transfer-$1.86 billion-is made to the
Special Revenue fund type in support of operations of the mental hygiene
agencies. Another $1.47
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billion in excess sales taxes is expected to be transferred to the General Fund,
following payment of projected debt service on LGAC bonds.
CASH FLOW
The projected 1997-98 General Fund cash flow will not depend on either
short-term spring borrowing or the issuance of LGAC bonds. The new-money bond
issuance portion of the LGAC program was completed in 1995-96, and provisions
prohibiting the State from returning to a reliance upon cash flow manipulation
to balance its budget will remain in bond covenants until the LGAC bonds are
retired.
The 1997-98 cash flow projects substantially closing balances in each
quarter of the fiscal year, with excesses in receipts over disbursements in
every quarter of the fiscal year, and no monthly balance (prior to March) lower
than $400 million. The closing fund balance is projected at $397 million. The
cash flow projections assume continuation of legislation enacted in 1996-97 that
permits the State to use balances in the Lottery Fund for cash flow purposes.
OUTYEAR PROJECTIONS OF RECEIPTS AND DISBURSEMENTS
The State closed projected budget gaps of $5.0 billion, $3.9 billion, and
2.3 billion for the 1995-96 through 1997-98 fiscal years, respectively. The
1998-99 budget gap was projected at $1.68 billion (before the application of any
assumed efficiencies) in the outyear projections submitted to the Legislature in
February 1997. As a result of changes made in the adopted budget, the 1998-99
gap is now expected to be about the same or smaller than the amount previously
projected, after application of the $530 million reserve for future needs. The
expected gap is smaller than the three previous budget gaps closed by the State.
The Governor has indicated that he will propose to close any potential imbalance
primarily through General Fund expenditure reductions and without increases in
taxes or deferrals of scheduled tax reductions.
The revised expectations for the 1998-99 fiscal year reflect the loss of
$1.4 billion in surplus resources from 1996-97 operations that are being
utilized to finance current year spending, and an incremental effect of
approximately $300 million in legislated State and local tax reductions in the
outyear. Other factors include the annualized costs of certain program increases
in the 1997-98 adopted budget, most of which are subject to annual
appropriation.
Certain actions taken in the State's 1997-98 fiscal year, such as Medicaid
and welfare reforms, are expected to provide recurring savings in future fiscal
years. Continued controls on State agency spending will also provide recurring
savings. The availability of $530 million in reserves created as a part of the
1997-98 adopted budget and included in the Financial Plan is expected to benefit
the 1998-99 fiscal year. Sustained growth in the State's economy and continued
declines in welfare caseload and health care costs would also produce additional
savings in the 1998-99 Financial Plan. Finally, various federal actions,
including the potential beneficial effect on State tax receipts from changes to
the federal tax treatment of capital gains, could potentially provide
significant benefits to the State over the next several years.
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. Through
fiscal year 1995, the State recorded balanced budgets on a cash basis, with
substantial fund balances in each year as described below.
1996-97 FISCAL YEAR
The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a
cash basis, with a 1996-97 General Fund cash surplus of approximately $1.4
billion. The cash surplus was derived primarily from higher-than-expected
revenues and lower-than-expected spending for social services programs. Of the
cash surplus amount, $1.05 billion was previously budgeted by the Governor in
this Executive Budget to finance the 1997-98 Financial Plan, and the additional
$373 million is available for use in financing the 1997-98 State Financial Plan
when enacted by the State Legislature.
Disbursements in Governmental Funds for the 1996-97 fiscal year totaled
$62.95 billion, $3 billion lower than projected at the beginning of the fiscal
year. Much of this variance was due to the uncertainty surrounding federal
action on entitlement spending at the beginning of the fiscal year. Total
unadjusted Governmental Funds spending decreased $278 million or 0.4 percent
below the 1995-96 fiscal year.
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1995-96 FISCAL YEAR
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 in the 1995-96 State Financial Plan was closed 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 called for (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 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.
As a result of these and other efforts, the State ended its 1995-96 fiscal
year with balances in the General Fund, Special Revenue Funds and Debt Service
Funds of $287 million, $499 million and $160 million, respectively, and a
deficit of $292 million in the Capital Projects Funds.
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 statements had no impact on balance in the General Fund.
1994-95 FISCAL YEAR
The 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 TSRF and
$1 million in the CRF. The opening fund balance in State fiscal year 1994-1995
was $265 million.
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.
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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.
CERTAIN LITIGATION
The legal proceedings noted below involve State finances, State programs and
miscellaneous tort, real property and contract claims in which the State is a
defendant and the monetary damages sought are substantial. These proceedings
could affect adversely the financial condition of the State in the 1995-96
fiscal year or thereafter. The State will describe newly initiated proceedings.
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 alleged failure by the State's Department of Environmental
Conservation to provide in a timely manner accurate and complete data, resulting
in plaintiff's inability to complete a cogeneration facility by the projected
date; (v) challenges to the practice of 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 plaintiff seeking reimbursement for
certain Costs arising out of the provision of preschool services and programs
for children with handicapping conditions; (viii) a case challenging the shelter
allowance granted to recipients of public assistance as insufficient for proper
housing; (ix) a challenge to the enactment of the Clean Water/Clean Air Bond Act
of 1996 and its implementing legislation; and (x) a case calling for the
enforcement of the provisions of Articles 12-A, 20 and 28 as applicable to
taxation on motor fuel and tobacco products sold to non-Indian consumers on
Indian reservations. 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 may be affected by the fiscal health of New
York City ("the City"), which continues to require significant financial
assistance from the State. The City depends on State aid both to enable the City
to balance its budget and to meet its cash requirements. The State could also be
affected by the ability of the City to market its securities successfully in the
public credit markets.
The City has achieved balanced operating results for each of its fiscal
years since 1981 as reported in accordance with the then-applicable GAAP
standards. The City's financial plans are usually prepared quarterly, and the
annual financial report for its most recent completed fiscal year is prepared at
the end of October of each year. For current information on the City's four-year
financial plan and its most recent financial disclosure, contact the Office of
the Comptroller, Municipal Building, Room 517, One Centre Street, New York, NY
10007, Attention: Deputy Comptroller, Finance.
FISCAL OVERSIGHT
In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the State
established NYC MAC to provide financing assistance to the City; the New York
State Financial Control Board (the "Control Board") to oversee the City's
financial affairs; and the Office of the State Deputy Comptroller for the City
of New York ("OSDC") to assist the Control Board in exercising its powers and
responsibilities. A "Control Period" existed from 1975 to 1986 during which the
City was subject to certain statutorily-prescribed fiscal controls. Although the
Control Board terminated the Control Period in 1986 when certain statutory
conditions were met and suspended certain Control Board powers, upon the
occurrence or "substantial likelihood and imminence" of the occurrence of
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certain events, including (but not limited to) a City operating budget deficit
of more than $100 million or impaired access to the public credit markets, the
Control Board is required by law to reimpose a Control Period.
Currently, the City and its Covered Organizations (i.e., those which receive
or may receive moneys from the City directly, indirectly or contingently)
operate under a four-year financial plan (the "Financial Plan") which the City
prepares annually and periodically updates. The City's Financial Plan includes
its capital, revenue and expense projections and outlines proposed gap-closing
programs for years with projected budget gaps. The City's projections set forth
in the Financial Plan are based on various assumptions and contingencies, some
of which are uncertain and may not materialize. Unforeseen developments and
changes in major assumptions could significantly affect the City's ability to
balance its budget as required by State law and to meet its annual cash flow and
financing requirements.
Implementation of the Financial Plan is also dependent upon the ability of
the City and certain Covered Organizations to market their securities
successfully. The City issues securities to finance, refinance and rehabilitate
infrastructure and other capital needs, as well as for seasonal financing needs.
OTHER LOCALITIES
Certain localities outside New York City have experienced financial problems
and have requested and received additional State assistance during the last
several State fiscal years. The potential impact on the State of any future
requests by localities for additional assistance is not included in the
projections of the State's receipts and disbursements for the State's 1997-98
fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
re-establishment of the Financial Control Board for the City of Yonkers by the
State in 1984. That Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the State to assist Yonkers could result in
increased State expenditures for extraordinary local assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the City
of Troy in 1994. The Supervisory Board's powers were increased in 1995, when
Troy MAC was created to help Troy avoid default on certain obligations. The
legislation creating Troy MAC prohibits the City of Troy from seeking federal
bankruptcy protection while Troy MAC bonds are outstanding. Troy MAC has issued
bonds to effect a restructuring of the City of Troy's obligations.
Eighteen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities, aid that was largely continued in 1997.
Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1994, the total indebtedness of all localities in
the State other than New York City was approximately $19.0 billion. A small
portion (approximately $102.3 million) of that indebtedness represented
borrowing to finance budgetary deficits and was issued pursuant to State
enabling legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than New York City authorized by State law to issue debt to finance deficits
during the period that such deficit financing is outstanding. Eighteen
localities had outstanding indebtedness for deficit financing at the close of
their fiscal year ending in 1995.
From time to time, federal expenditure reductions could reduce, or in some
cases eliminate, federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities. If
the State, the City or any of the public authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining urban
population, increasing expenditures and other economic trends would 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, 1996, there
were 17 public authorities that had aggregate outstanding debt of $100 million
or more, and the aggregate outstanding debt, including refunding bonds, of all
State Public Authorities was $75.4 billion, only a portion of which constitutes
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State-supported or State-related debt. 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 subway and bus
lines in New York City by its affiliates, the New York City Transit Authority
and Manhattan and Bronx Surface Transit Operating Authority (collectively, the
"TA"). The MTA operates certain commuter rail and bus services in the New York
Metropolitan area through MTA's subsidiaries, the Long Island Rail Road Company,
the Metro-North Commuter Railroad Company, and the Metropolitan Suburban Bus
Authority. In addition, the Staten Island Rapid Transit Operating Authority, an
MTA subsidiary, operates a rapid transit line on Staten Island. Through its
affiliated agency, the Triborough Bridge and Tunnel Authority (the "TBTA"), the
MTA operates certain intrastate toll bridges and tunnels. Because fare revenues
are not sufficient to finance the mass transit portion of these operations, the
MTA has depended, and will continue to depend, for operating support upon a
system of State, local government and TBTA support, and, to the extent
available, federal operating assistance, including loans, grants and subsidies.
If current revenue projections are not realized and/or operating expenses exceed
current projections, the TA or commuter railroads may be required to seek
additional State assistance, raise fares or take other actions.
Since 1980, 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 Metropolitan Transportation Region served by the
MTA and a special one-quarter of 1 percent regional sales and use tax -- that
provide revenue for mass transit purposes, including assistance to the MTA.
Since 1987 State law has required that the proceeds of a one-quarter of 1
percent mortgage recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for operating or
capital expenses. In 1993, the State dedicated a portion of certain additional
State petroleum business tax receipts to fund operating or capital assistance to
the MTA. For the 1997-98 State fiscal year, total State assistance to the MTA is
estimated at approximately $1.09 billion, an increase of $76 million over the
1996-97 fiscal year.
State legislation accompanying the 1996-97 adopted State budget authorized
the MTA, TBTA and TA to issue an aggregate of $6.5 billion in bonds to finance a
portion of a new $12.17 billion MTA capital plan for the 1995 through 1999
calendar years (the "1995-99 Capital Program"). In July 1997, the Capital
Program Review Board ("CPRB") approved the 1995-99 Capital Program, which
supersedes the overlapping portion of the MTA's 1992-96 Capital Program. This is
the fourth capital plan since the Legislature authorized procedures for the
adoption, approval and amendment of MTA capital programs and is designed to
upgrade the performance of the MTA's transportation systems by investing in new
rolling stock, maintaining replacement schedules for existing assets and
bringing the MTA system into a state of good repair. The 1995-99 Capital Program
assumes the issuance of an estimated $5.1 billion in bonds under this $6.5
billion aggregate bonding authority. The remainder of the plan is projected to
be financed through assistance from the State, the federal government, and the
City of New York, and from various other revenues generated from actions taken
by the MTA.
There can be no assurance that all the necessary governmental actions for
the 1995-99 Capital Program or future capital programs will be taken, that
funding sources currently identified will not be decreased or eliminated, or
that the 1995-99 Capital Program, or parts thereof, will not be delayed or
reduced. Should funding levels fall below current projections, the MTA would
have to revise its 1995-99 Capital Program accordingly. If the 1995-99 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 assistance.
SPECIAL FACTORS AFFECTING THE OHIO MUNICIPAL SERIES
As described in the Prospectus under "Ohio Taxes" and except to the extent
investments are in temporary investments, the Ohio Municipal 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 Municipal
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 1995 is
11,157,000.
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
six years the State rates were below the national rates (4.9% versus 5.4% in
1996). 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 Municipal 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.
The 1992-93 biennium 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 Budget Stabilization Fund (BSF, a cash and budgetary
management fund) 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
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 was transferred into the BSF. The significant GRF fund
balance, after leaving in the GRF an unreserved and undesignated balance of $70
million, was transferred to the BSF and other funds including school assistance
funds and, in anticipation of possible federal program changes, a human services
stabilization fund.
From a higher than forecast 1996-97 mid-biennium GRF fund balance, $100
million was transferred for elementary and secondary school computer network
purposes and $30 million to a new State transportation infrastructure fund.
Approximately $400.8 million served as a basis for temporary 1996 personal
income tax reductions aggregating that amount. The 1996-97 biennium-ending GRF
fund balance was $834.9 million. Of that, $250 million goes to school building
construction and renovation, $94 million to the school computer network, $44.2
million for school textbooks and instructional materials and a distance learning
program, and $34 million to the BSF (which had a November 20, 1997 balance of
over $862.7 million), with the $263 million balance to a State income tax
reduction fund.
The GRF Appropriations Act for the 1997-98 biennium was passed on June 25,
1997 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.
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, approved from 1921 to date (the latest
adopted in 1995) Ohio voters authorized the incurrence of State debt and the
pledge of taxes or excises to its payment. At November 20, 1997, $948 million
(excluding certain highway bonds payable primarily from highway use receipts) of
this debt was outstanding. 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 ($30.9 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 ($826.8 million
outstanding); and (c) up to $200 million in general obligation bonds for parks,
recreation and natural resources purposes which may be outstanding at any one
time ($90.9 million and outstanding, with no more than $50 million to be issued
in any one year.
The electors in 1995 approved a constitutional amendment extending 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 authorizing additional highway bonds (expected to be payable primarily from
highway use receipts). The latter supersedes the prior $500 million outstanding
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.
The Constitution also authorizes the issuance of State obligations for
certain purposes, the owners of which do not have the right to have excises or
taxes levied to pay debt service. Those special obligations include obligations
issued by the Ohio Public Facilities Commission and the Ohio Building Authority,
and certain obligations issued by the State Treasurer, over $4.88 billion of
which were outstanding or awaiting delivery at November 20, 1997.
A 1990 constitutional amendment authorizes greater State and political
subdivision participation (including financing) in the provision of housing. The
General Assembly may for that purpose authorize the issuance of State
obligations secured by a pledge of all or such portion as it authorizes of State
revenues or receipts (but not by a pledge of the State's full faith and credit).
A 1994 constitutional amendment pledges the full faith and credit and taxing
power of the State to meeting certain guarantees under the State's tuition
credit program which provides for purchase of tuition credits, for the benefit
of State residents, guaranteed to cover a specified amount when applied to the
cost of higher education tuition. (A 1965 constitutional provision that
authorized student loan guarantees payable from available State moneys has never
been implemented, apart from a "guarantee fund" approach funded essentially from
program revenues).
State and local agencies issue obligations that are payable from revenues
from or relating to certain facilities (but not from taxes). By judicial
interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment
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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. State tax-supported bonds are currently rated (uninsured) "Aa1
by Moody's, "AAA" (highway obligations) and "AA+" by S&P, and "AA+" by Fitch,
and outstanding uninsured State bonds issued by the Ohio Public Facilities
Commissions and Ohio Building Authority (and the lease-rental bonds issued by
the Treasurer) are rated "Aa3" by Moody's and "AA-" by S&P and Fitch.
SCHOOLS AND MUNICIPALITIES. Local school districts in Ohio receive a major
portion (state-wide aggregate approximately 44% in recent years) of their
operating moneys from State subsidies, but are dependent on local property
taxes, and in approximately 119 districts from voter-authorized income taxes,
for significant portions of their budgets. Litigation, similar to that in other
states, has been pending questioning the constitutionality of Ohio's system of
school funding. The Ohio Supreme Court has recently concluded that aspects of
the system (including basic operating assistance and the loan program referred
to below) are unconstitutional, and ordered the State to provide for and fund a
system complying with the Ohio Constitution, staying its order for a year (to
March 1998) to permit time for responsive corrective actions. A small number of
the State's 612 local school districts have in any year required special
assistance to avoid year-end deficits. A program has provided 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 $41.1 million for 28 districts in FY 1994, $71.1 million for 29
districts in FY 1995 (including $29.5 million for one), and $87.2 million for 20
districts in FY 1996 (including $42.1 million for one), and $113 million for 12
districts in 1997 (including $90 million to one for restructuring its prior
loans).
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 and school districts that on occasion have
faced significant financial problems, there are statutory procedures for a joint
State/local commission to monitor the fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. (Similar procedures
have recently been extended to counties and townships.) Since inception for
municipalities in 1979, these "fiscal emergency" procedures have been applied to
24 cities and villages; for 18 of them the fiscal situation was resolved and the
procedures terminated (one village is in preliminary "fiscal watch" status. As
of November 20, 1997, the 1996 school district "fiscal emergency" provision had
been applied to five districts, and nine were on preliminary "fiscal watch"
status.
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 MUNICIPAL SERIES
The following information is a summary of special factors affecting the
Oregon Municipal Series. It does not purport to be a complete description and is
based in part on (i) the December 1995 Oregon Economic and Revenue Forecast
prepared by the Oregon Department of Administrative Services, and (ii) a
September 18, 1997 Official Statement prepared by the Oregon State Treasury for
the issue of two State of Oregon general obligation bonds.
ECONOMIC FORECAST
SHORT TERM OUTLOOK
A cooling off of the manufacturing and construction sectors should keep
Oregon's growth rate trending down. However, income gains already generated in
the State's booming manufacturing industries can be expected to translate into
increased
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job growth in the service-producing sectors during the second half of the year.
Oregon appears in good position to continue expanding faster than the overall
U.S. economy, although its rate of growth is expected to fall below Washington
and remain below Nevada and Utah.
Oregon's personal income is projected to rise 7.3 percent for 1997, up
slightly from 7.0 percent in 1996. Income growth is expected to slow to 6.1
percent in 1998 and 5.4 percent in 1999. Adjusting for inflation (using the
personal consumption expenditure deflator), personal income is expected to rise
5.0 percent in 1997, 3.5 percent in 1998 and 2.6 percent in 1999. The non-farm
payroll employment growth rate is also expected to trend down modestly.
Following a 4.0 percent increase in 1996, employment is projected to rise 3.6
percent in 1997 before slowing further to 2.7 percent in 1998 and 2.0 percent in
1999. Job growth is expected to exceed population increase, keeping Oregon's
labor markets relatively tight. Population is projected to increase 1.7 percent
in 1997 and 1.6 percent in both 1998 and 1999.
Oregon's wage growth is expected to accelerate in 1997 for the fourth
consecutive year. Overall wages in all sectors are expected to rise 5.2 percent
in 1997, up from 4.5 percent in 1996 and 4.2 percent in 1995. During this
period, Oregon's wages have grown considerably faster than the national average.
In 1992, Oregon's wages were $24,439, 88.9 percent of the U.S. average. Overall
wages are projected to average $29,597 in 1997, 93.6 percent of the national
average.
Oregon's rising relative wages can be explained by several factors:
1. CHANGING INDUSTRY MIX. The surge in high-technology
employment, particularly electronics, has pushed up the
overall wage structure. Wages in the electronics sector
averaged $45,400 in 1995 (using covered employment and payroll
data). The jump in construction jobs over the past three years
has also driven up average wages. Construction workers
received $779 per week on average in May of 1997, compared to
the manufacturing average weekly wage for production workers
of $550. Manufacturing wages are significantly higher than
service-producing sector wages on average.
2. YEAR-END BONUSES. Rapidly expanding high-technology firms have
relied heavily on bonuses and stock options to attract skilled
workers. Many of these firms have been very profitable over
the past three years. Since Oregon is well represented in the
high-technology manufacturing industries, bonus payments to
Oregon workers have been significant.
3. TIGHT LABOR MARKETS. Although Oregon's state-wide unemployment
rate crept above the national average in 1996, unemployment in
the Portland metropolitan area remains low. The seasonally
adjusted state-wide unemployment rate stood at 5.1 percent in
June compared to 5.0 percent for the U.S. However, the
Portland-Vancouver area unemployment rate is 4.0 percent.
Tighter labor markets drive up wages as employers bid up the
price of labor to attract the workers they need.
Despite the phasing in of Oregon's new higher minimum wage, overall wage
growth in the State is expected to slow in 1998 and 1999. Wages are projected to
increase 3.7 percent in 1998 and 3.6 percent in 1999. Less favorable industry
mix trends are expected to be the primary factor causing a deceleration in wage
growth. Construction employment is expected to be essentially flat in 1998 and
1999 while manufacturing job growth should be slow considerably. Smaller
year-end bonuses are also expected to contribute to wage deceleration as
corporate profit growth slows from the rapid pace of the past three years.
A key factor behind the forecast of slowing job growth is an anticipated
leveling out of construction activity after a period of extremely rapid growth.
Oregon's construction job growth has slowed modestly over the past year.
Construction jobs increased 8.6 percent between May of 1996 and May of 1997, the
fifth fastest rate among the states. In the prior 12-month period (May 1995 to
May 1996) construction jobs jumped 15.0 percent, second only to Nevada for that
period. Between the second quarter of 1997 and the corresponding period next
year, construction employment is forecast to grow only slightly, adding 900
jobs, an increase of 1.1 percent.
The expectation of modest weakness in the construction sector is based on
two factors. First, Oregon's construction-to-employment ratio has risen to 5.4
percent based on May employment data. The comparable percentage for the U.S. as
a whole is 4.6 percent. This suggests that Oregon is likely to be in the mature
phase of a construction boom. In contrast, the ratio for California is 4.2
percent, indicating that California's construction recovery is in its earliest
stages.
Another indication that Oregon's construction activity is likely to level
off is the ratio of population growth to housing starts. In the long-term, this
ratio should equal the average size of households, about 2.5 persons per house.
After being
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above 2.5 for most of the 1987 to 1993 period, this ratio averaged 2.0 for 1994
to 1996. This ratio is expected to drift up to 2.6 by 2000. Since population
growth is expected to hold roughly constant near 1.6 percent per year, this
means that housing starts will drop off. Housing starts totaled 26,100 in 1996,
the highest number of starts in the State since 1979. They are projected to
drift down to 25,700 in 1997, 23,900 in 1998, and 22,200 in 1999.
PERSONAL INCOME COMPONENTS
The large jump in first quarter durable goods manufacturing earnings means
that wage and salary income is likely to post another year of strong growth. The
projection for 1997 is 9.0 percent which follows gains of 8.7 percent and 8.4
percent in the previous two years. Slower job and wage rate growth should slow
the rate of increase for wage and salary income to 6.4 percent in 1998 and 5.7
percent in 1999. Other labor income, comprised primarily of health and other
benefit compensation, is expected to increase 6.3 percent in 1997 and 6.5
percent in 1998.
Non-farm proprietor income growth is forecast to slow from 7.1 percent in
1996 to 6.3 percent in 1997 and 6.7 percent in 1998. After huge percentage
declines from 1993 to 1996, farm proprietor income is projected to stabilize
over the last two years. The 1997 and 1998 projected growth rates for farm
income are 3.1 percent and 4.2 percent, respectively.
Dividend, interest and rent income is expected to get a boost from higher
short-term interest rates in 1997 and 1998. Dividend, interest and rent income
is projected to increase 4.9 percent in 1997 and 6.6 percent in 1998. Transfer
payment income is expected to grow steadily with increases of 5.6 percent in
1997 and 5.1 percent in 1998.
GOODS-PRODUCING SECTORS
Oregon's manufacturing firms are expected to add 9,800 net new jobs for 1997
as a whole, an increase of 4.1 percent. Rising costs and some slowing in the
national economy should put modest downward pressure on the State's
manufacturing sector. Overall job growth is projected to slow to 2.8 percent in
1998 and 1.2 percent in 1999. For the U.S. as a whole, manufacturing employment
is expected to decline 0.3 percent in 1998 after increasing 0.3 percent this
year.
Individual manufacturing industry employment is expected to generally follow
the overall sector's downward trend. After rising 7.4 percent in 1997, metals
employment is projected to rise a further 3.3 percent in 1998. Similarly,
transportation equipment manufacturing employment is projected to increase 7.5
percent in 1997 and 6.7 percent in 1998. High-technology job growth should
remain relatively strong in the absence of a national recession. Electronics
jobs are projected to increase 6.9 percent in 1997 and 6.2 percent in 1998.
Non-electrical machinery employment is expected to grow 6.4 percent in 1997 and
4.6 percent in 1998, with higher growth rates in the computing and office
equipment component of the industry.
The timber industry, benefiting from healthy demand and stable raw material
supply, is expected to continue the modest recovery it began in late 1996. The
timber harvest is projected to total 4.3 billion board feet in 1997 and 4.3
billion board feet in 1998. Lumber and wood products employment is forecast to
increase 2.4 percent in 1997 and 0.1 percent in 1998. Paper products employment
is expected to increase 2.2 percent in 1997 and 3.6 percent in 1998.
The State's small mining sector, tied closely to local construction, is
expected to increase employment at a 3.8 percent rate for 1997 and 0.9 percent
in 1998.
SERVICE-PRODUCING SECTORS
Oregon's private service-producing sectors are generally expected to
continue growing steadily. Some weakness is expected in financial service
employment as U.S. Bancorp downsizes in response to its merger with First Bank
System. Financial service employment is projected to slow from 4.1 percent
growth in 1997 to 0.5 percent in 1998 as the announced cutbacks begin to show up
in the employment data. Also contributing to this downward trend for financial
service employment is the expected softness in the residential real estate
markets.
Retail trade employment job growth is projected to hold steady at 2.7
percent in 1997 and 2.9 percent in 1998. The wholesale trade sector is expected
to continue growing rapidly at 4.8 percent in 1997 and 4.6 percent in 1998 as
the new Wal-Mart distribution center comes on line in Umatilla County.
Expansion of the Oregon Health Plan approved by the 1997 Legislature should
increase demand for health care services over the next two years. Health service
employment is projected to increase 2.9 percent in 1997 and 3.3 percent in 1998.
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Service employment, exclusive of health is expected to continue expanding with
growth rates of 5.5 percent in 1997 and 4.7 percent in 1998.
Oregon's government sector should see little growth as the federal agencies
continue to cut back and local governments adjust to lower property tax revenue.
Overall government employment is projected to increase 1.2 percent in 1997 and
0.5 percent in 1998. Federal jobs are expected to decline 0.4 percent in 1997
and 1.6 percent in 1998. Local government employment is expected to remain
essentially flat with a 0.9 percent increase in 1997 and no change in 1998.
Gains are expected in local government education and tribal employment, but
these should be largely offset by reduction in city, county, and other local
government payrolls. State government employment is anticipated to increase 2.8
percent in 1997 and 3.1 percent in 1998.
FORECAST RISKS
The biggest risk to Oregon's short-term outlook is the national economy. The
State's large and rapidly expanding durable goods manufacturing sector is
sensitive to changes in national (and international) demand and credit
conditions. Fluctuations in the national economy brought on by rising inflation
and the ensuing higher interest rates would have a significant impact on the
Oregon economy.
The most identifiable risk at the state and regional level is sudden changes
in migration patterns among the western states and its implications for Oregon's
booming construction sector. California and Washington's accelerating economies
and Oregon's rapidly rising home prices could change the dynamics of regional
migration more quickly than expected. This could trigger an outright decline in
the State's construction sector rather than the leveling out anticipated in the
baseline forecast.
EXTENDED OUTLOOK
Oregon is likely to remain a high-growth state over the next six years
though some convergence to the U.S. average is likely. The State and the western
region should continue to benefit from an expanding high-technology sector,
growth in exports to Asia and Latin America, net in-migration from other parts
of the country, and immigration into the U.S.
Jobs and income in the State are expected to grow more slowly than they did
in the previous eight year interval but much faster than the 1979 to 1987
period. Employment is projected to increase 21.5 percent between 1995 and 2003,
while inflation-adjusted personal income rises 29.4 percent. The State's
population is expected to increase 13 percent over the 8-year period. Inflation
adjusted per capita income is forecast to increase 14.6 percent between 1995 and
2003.
Oregon's growth rate is expected to converge toward the national average
over the long-term. Rising relative costs, brought on by higher wages and land
prices is the key assumption behind the forecast of slower growth in Oregon.
However, as the growth rate converges downward, the State's per capita income
and wages are also expected to move toward the national average but in this
case, the converge is from below.
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 $5 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.
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.
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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. Initial
estimates indicated that the amount of principal and interest
owing under the court's ruling would be approximately $280
million.
The parties drafted a proposed settlement agreement which the
court approved on February 26, 1996. Under the agreement, the
State is obligated to pay a total of $225 million. Of that
amount, $145 million has been paid. $80 million must be paid
at the end of the 1999 legislative session. If the State fails
to appropriate the required amounts, the State will be in
breach of the agreement and subject to additional court action
from the plaintiffs.
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
Employees' Retirement System ("PERS") benefits. The plaintiff class consists of
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 Legislative Assembly 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 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.
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 was approximately $44 million for the
1995-97 biennium and is $72 million for the 1997-99 biennium. The trial court
ruled against the State on the breach of contract issues. Plaintiffs, and
others, challenged the adequacy of HB 3349 as a remedy and also sought review
and clarification of portions of the bill.
On the State's motion for reconsideration, the Circuit Court invalidated HB
3349 and enjoined the payment of increased benefits to PERS retirees under HB
3349 that was scheduled to begin in January 1996. However, on appeal the Oregon
Supreme Court upheld the constitutionality of HB 3349 and ruled that the State
must cover the benefits increase for State employees but need not indemnify or
reimburse the local governments for payments made to plaintiffs or the
retirement fund as a result of HB 3349.
The parties are engaged in settlement negotiations and have reached an
agreement in principle. Final settlement documents have not been drafted or
filed with the court. Under the terms of the proposed settlement, plaintiffs
will accept the increased benefits payments provided under HB 3349 as full
compensation for their contract claims. Plaintiffs will have the right to reopen
the case if benefits are reduced or repealed without a commensurate reduction in
taxes. Defendant PERS employers will pay $600,000 to plaintiffs for attorneys
fees, of which the state will pay $300,000. Members of the plaintiff class will
have an opportunity to object to the terms of the settlement after the
settlement documents are filed with the court. If there are no objections, a
final judgment will be entered.
54
<PAGE>
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 filed a petition for review
with the U.S. Supreme Court of the Oregon Supreme Court's decision. The U.S.
Supreme Court denied review in the RAGSDALE case and in a related case ATKINS V.
DEPARTMENT OF REVENUE.
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. One case has been stayed in
Circuit Court. The Tax Court ruled in favor of the State, but plaintiffs have
appealed to the Oregon Supreme Court. It is too early to estimate the potential
liability of the State in these cases. 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. The court
ruled in favor of the State and the plaintiff has appealed to the Oregon Supreme
Court.
Oral argument on both cases was to be heard by the court on September 4,
1997.
CHALLENGE TO OREGON HEALTH PLAN
1. 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 were successful, early estimates indicated that it
would cost an additional $30 million per biennium to operate
the Plan. The State General Fund would be obligated to pay $11
million of the total cost 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
Legislative Assembly would discontinue the Plan entirely. The
court granted the State's motion for summary judgment and
dismissal. The plaintiffs sought review of the magistrate's
decision by a district court judge. The judge upheld the
magistrate's decision. The plaintiffs appealed to the United
States Court of Appeals for the Ninth Circuit. The State
prevailed in that appeal.
2. BIBEAU V. PACIFIC NW RESEARCH. This is a federal court class
action suit that has been brought on behalf of inmates and
their families for injuries the inmates sustained in radiation
experiments to which the inmates were subjected in the 1960s
and 1970s. The former head of medical services for the Oregon
State Police is named as one of the defendants in the suit.
The plaintiffs seek $250 million in damages; although it is
unlikely that they will recover the full amount sought, it is
too early to provide an accurate measure of the damages which
plaintiffs may reasonably recover at this stage of the case.
The State has tendered its defense to the insurance company
that provided coverage to the State in the relevant time
frame. Defenses based on statutes of limitation and ultimate
repose were asserted on behalf of the State. The court granted
the State's motion for summary judgment and dismissed the case
based on the statute of limitations. It is expected that
plaintiffs will appeal.
3. KINROSS COPPER CORP. V. STATE. An inverse condemnation case
has been filed against the State which involves the denial of
a permit by the State's Environmental Quality Commission
("EQC"). The Kinross Copper Corporation acquired land for the
purpose of mining copper. As part of the mining operations,
the company intended to dig a huge pit for which a waste water
discharge permit is required. The EQC denied the company's
request for a permit based upon an administrative rule that
prohibits the issuance of a waste water discharge permit in
the area where the copper mine would be located because of the
area's proximity to a river that supplies drinking water for
the City of Salem, Oregon and other communities. The company
alleges a "taking" by the State of the company's property and
damages of $32 million as the
55
<PAGE>
amount of money it would have earned if the company had been
granted a permit and allowed to operate a mine. The State
asserts that because the administrative rule prohibiting the
issuance of a permit in the relevant area was in effect at the
time the company purchased its property, there can be no
"taking." The trial court ruled in favor of the State's motion
for summary judgment. However, the plaintiff has appealed that
decision to the Oregon Court of Appeals. The State believes
that it will prevail and receive any damages based upon the
EQC's denial of the permit.
4. CLASS ACTION FOR OVERTIME. A class action complaint has been
filed against the State on behalf of a class of 3,000 State
managerial employees for unpaid overtime or compensation time.
It is too early in the case to know the exact amount of
potential liability. Initial estimates were that the liability
would probably exceed $1 million but be less than $5 million.
Revised estimates are that the liability could be as high as
$11 million. Plaintiffs' claims are based on a legislative
change that occurred in the 1995 Oregon legislative session.
The legislative assembly amended the statutes relating to the
payment of overtime or allowing compensation time to require
that all persons who work over 40 hours per week receive
overtime or compensation time. There were a number of
exceptions to this requirement drafted for professionals.
However, State managerial employees were not included in the
express statutory exceptions. The parties have submitted cross
motions for summary judgment that would resolve the case. The
legislature enacted an exemption that would cover State
employees in its 1997 session. Therefore, liability may only
be imposed for the period between 1995 and 1997.
5. PRO SE CASES. There are also several pro se cases on the
docket in which plaintiffs representing themselves are suing
the State for many millions of dollars. The possibility of
having to pay anything in any of these cases is negligible.
RECENT DEVELOPMENTS
1997 LEGISLATIVE ACTION
The 1997 Legislative Assembly passed a balanced budget, as required by the
Oregon Constitution, for the 1997-99 fiscal biennium. To complete their work,
the Legislative Assembly met in Regular Session until July 5, 1997. The Regular
Session focused upon maintenance of existing services and implementation of
recently passed ballot measures, such as Ballot Measure 50 discussed below.
The Regular Session funded the Oregon Plan to restore healthy streams and
salmon habitat. Funding is provided by $15 million from the General Fund and $15
million from affected industries. The Oregon Health Plan was expanded to cover
an additional 23,000 persons, funded with $46.7 million of cigarette tax money.
The Legislature also established a lottery-backed revenue bond program to fund
rehabilitation of state park facilities. The program is authorized to issue $105
million and is anticipated to issue $15 million of bonds per year. The
Legislative Assembly approved a one-time lottery-backed revenue bond issue of
$150 million for school district capital costs, conditioned upon voter approval
at a November 1997 special election.
The Legislature also referred a constitutional amendment to the electorate
to authorize the State to guaranty general obligation bonds issued by school
districts. Moneys to fund the guaranty could come from an off-set of amounts
otherwise paid by the State to the district on whose behalf payment was made,
other moneys of the district or the levy of a state-wide ad valorem property
tax.
MEASURE 50
The 1997 Legislative Assembly referred to Oregon voters, and the voters
approved at the May 20, 1997, special election, a constitutional amendment that
replaced the property tax limitations imposed by the former Measure 47. Measure
50 repealed Measure 47 and replaced it with new ad valorem property tax
limitations similar to those enacted under Measure 47 by ordering a 17%
reduction in 1997-98 in operating tax levies (which amounts vary by government
entity) and by limiting the assessed value for the tax year 1997-98 to its
1995-96 "real market value," less ten percent. Thereafter Measure 50 limits the
valuation growth of property assessments on each unit of property to three
percent per year for future tax years. Measure 50 also requires voter approval
of the use of fees, taxes, assessments or other charges as alternative funding
sources to make up for revenue reductions caused by the amended property tax
limits.
56
<PAGE>
Units of local government that levy and collect property taxes are most
directly affected by Measure 50. The State does not levy or collect property
taxes, but relies instead on State income taxes as the main source of revenue
for the State's general fund. Therefore, Measure 50's main impact on the State
will likely be to increase pressure on the Legislative Assembly to use State
funds to replace revenues lost by local governments. Measure 50 requires the
Legislative Assembly to replace the estimated $428 million in revenues that the
public school system, including community colleges, would lose in the 1997-99
biennium because of the property tax limitation. In this manner, Measure 50 may
influence the State budgeting process.
The Oregon Legislative Revenue Office has estimated that the total reduction
in property tax revenues collected by local governments under Measure 50 will be
approximately $389 million for the tax year 1997-98 and approximately $454
million for the tax year 1998-99.
The 1997 Oregon Legislative Assembly passed Senate Bill 1215 to implement
the provisions of Measure 50. Schools remain limited to a $5.00 per $1000 rate
and non-school districts remain limited to a $10 per $1000 rate. Under SB 1215,
the Legislative Assembly chose to make these rates apply to each PROPERTY rather
than to a TAX CODE AREA. Measure 50 requires that all new property taxes be
approved by a majority of the voters in an election where at least 50% of
eligible voters participate, except in the instance of a general election. The
legislature also referred to the electorate a further constitutional amendment
that would repeal these election restrictions and allow new taxes upon approval
by a majority of voters voting on the matter.
One lawsuit has been filed challenging the process by which Measure 50 was
referred from the legislature to the people for a vote as unconstitutional.
However, the State expects to prevail in the case.
LEVEL OF GENERAL OBLIGATION INDEBTEDNESS
As of June 30, 1996, approximately $3.75 billion in general obligation debt
of the state of Oregon was outstanding, including $2.83 billion of Veteran's
Affairs bonds, a mortgage bond program.
VALUE OF REVENUE BONDS AFFECTED BY ECONOMY
Although revenue obligations of Oregon or its political subdivisions may be
payable from a specific project or source, including lease rentals, there can be
no assurance that economic difficulties, with the resulting effect on state and
local governmental finances, will not adversely affect the market value of
municipal obligations held in the portfolio of the Trust or the ability of the
respective obligors to make required payments on such obligations.
SMALL ACTIVE MARKET
There is a relatively small active market for municipal bonds of Oregon
issuers other than the general obligation bonds of the state itself, and the
market price of such bonds may, therefore, be volatile. If the Trust were forced
to sell a large volume of these bonds for any reason, such as redemptions of a
large number of its shares, the large sale itself might adversely affect the
value of the Series' portfolio.
SPECIAL FACTORS AFFECTING THE SOUTH CAROLINA MUNICIPAL 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
57
<PAGE>
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. A statutory enactment provides for
prospective application of state appropriations for school district debt, if a
failure of timely payment appears likely. 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 or to defray
directly the cost of certain improvements.
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 has had budget surpluses at
each fiscal year end since June 30, 1994. Such difficulties have not to date
impacted on the State's ability to pay its indebtedness but did result in S&P
lowering its rating on South Carolina general obligation bonds from AAA to AA+
on January 29, 1993. S&P restored the AAA rating on South Carolina's general
obligation bonds on July 9, 1996. 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.
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<PAGE>
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.
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.
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...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal 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.
...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 plc, of London, known
as Seligman Henderson Co., to offer global investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap
Value Fund.
60
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
NATIONAL SERIES
FACE RATINGS+ MARKET
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- -------- ----------- --------------- ----------- -------
<S> <C> <C> <C>
ALASKA-- 4.9% $5,000,000 Valdez Marine Terminal Rev.
(BP Pipeline Inc. Project),
5 1/2% due 10/1/2028 ............................. Aa2/AA $ 4,912,400
CALIFORNIA-- 2.8% 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 2,833,875
FLORIDA-- 2.7% 2,750,000 Jacksonville Electric Authority
(Electric System Rev.),
5 1/4% due 10/1/2028 ............................. Aa1/AA 2,676,162
ILLINOIS-- 12.3% 3,000,000 Chicago Water Rev., 5 1/2% due 11/1/2022 ............ Aaa/AAA 2,991,750
1,000,000 Illinois Health Facilities Authority Rev.
(Northwestern MemorialHospital),
6.10% due 8/15/2014 .............................. Aa2/AA 1,058,160
1,250,000 Illinois Health Facilities Authority Rev.
(Edward Hospital Project), 6% due 2/15/2019 ..... A2/A+ 1,271,275
2,500,000 Illinois Health Facilities Authority Rev.
(Northwestern Memorial
Hospital), 6% due 8/15/2024 ...................... Aa2/AA 2,586,675
4,000,000 Regional Transportation Authority GOs
(Cook, DuPage, Kane, Lake, McHenry,
and Will Counties), 5.85% due 6/1/2023 ........... Aaa/AAA 4,365,240
KENTUCKY-- 2.1% 1,880,000 Trimble County Pollution Control Rev.
(Louisville Gas & Electric Co. Project),
7 5/8% due 11/1/2020* ............................ Aa2/AA- 2,066,628
MASSA- 2,000,000 Massachusetts Health &Education Facilities
CHUSETTS-- 2.2% Authority Rev. (Amherst College),
6.80% due 11/1/2021 ............................... Aa1/AA+ 2,178,100
MICHIGAN-- 2.4% 2,250,000 Michigan State Strategic Fund Pollution
Control Rev. (General Motors Corp.),
6.20% due 9/1/2020 ............................... A3/A- 2,366,415
MISSOURI-- 5.2% 5,000,000 St. Louis Industrial Development Authority
Pollution Control Rev. (Anheuser-Busch
Companies, Inc. Project),
5 7/8% due 11/1/2026* ............................ A1/A+ 5,141,450
NEW YORK-- 3.8% 2,485,000 New York City GOs, 7 1/4% due 8/15/2024 ............. Baa1/BBB+ 2,703,258
1,015,000 New York City GOs, 7 1/4% due 8/15/2024 ............. Aaa/BBB+ 1,126,498
SOUTH 2,000,000 Oconee County Pollution Control Rev.
CAROLINA-- 2.1% (Duke Power Company Project),
7 1/2% due 2/1/2017 .............................. Aa2/AA- 2,131,960
SOUTH 6,000,000 South Dakota Housing Development Authority Rev.
DAKOTA-- 6.2% (Homeownership Mortgage), 6.15% due 5/1/2026* .... Aa1/AAA 6,130,740
TEXAS-- 22.6% 3,700,000 Harris County Health Facilities Development
Corp. Hospital Rev. (St. Luke's
Episcopal Hospital Project),
6 3/4% due 2/15/2021 ............................. Aa3/AAA 4,073,774
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 ............................... Aa3/AA 2,232,000
2,000,000 Harris County Health Facilities Development
Corp. SCH Health Care System Rev.
(Sisters of Charity of the Incarnate Word),
5 3/4% due 7/1/2027 .............................. Aa3/AA 2,049,640
5,000,000 Potter County Industrial Development Corp.
Pollution Control Rev. (Southwestern
Public Service Company Project),
5 3/4% due 9/1/2016 .............................. Aaa/AAA 5,230,950
2,500,000 San Antonio Electric & Gas Rev.,
5 1/2% due 2/1/2020 .............................. Aa1/AA 2,522,900
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
18
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
NATIONAL SERIES (CONTINUED)
FACE RATINGS+ MARKET
STATE AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- -------- ----------- --------------- ----------- -------
<S> <C> <C> <C>
TEXAS (CONTINUED) $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 $ 2,263,340
2,605,000 Texas Veterans' Housing Assistance GOs,
6.80% due 12/1/2023* ............................. Aa2/AA 2,760,154
1,340,000 Travis County Housing Finance Corporation
(Single Family Mortgage Rev.),
6.95% due 10/1/2027 ............................. NR/AAA 1,437,203
VIRGINIA-- 5.2% 5,000,000 Fairfax County Industrial Development
Authority Health Care Rev. (Inova
Health System Project), 6% due 8/15/2026 ......... Aa2/AA 5,202,200
WASHINGTON-- 13.1% 4,325,000 King County GOs, 6 1/8% due 1/1/2033 ................ Aaa/AAA 4,550,289
3,000,000 Port Seattle Rev., 5 1/2% due 9/1/2021 .............. Aaa/AAA 2,991,930
5,520,000 Seattle Water System Rev., 5 5/8% due 8/1/2026 ...... Aaa/AAA 5,569,404
WISCONSIN-- 6.4% 6,000,000 LaCrosse Resource Recovery Rev.
(Northern States Power Company
Project), 6% due 11/1/2021* ...................... A2/AA- 6,376,680
WYOMING-- 4.2% 4,000,000 Sweetwater County Pollution Control Rev.
(Idaho Power Company Project),
6.05% due 7/15/2026 ............................. A3/A 4,140,640
-----------
TOTAL MUNICIPAL BONDS (Cost $92,747,742)-- 98.2% .................................................... 97,941,690
OTHER ASSETS LESS LIABILITIES-- 1.8% ................................................................ 1,818,580
-----------
NET ASSETS-- 100.0% ................................................................................. $99,760,270
===========
COLORADO SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <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 $ 3,143,340
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 1,614,840
2,000,000 Colorado Health Facilities Authority Rev. (Sisters of Charity
Health Care Systems, Inc.),
6% due 5/15/2013 ........................................................... Aaa/AAA 2,066,760
3,000,000 Colorado Health Facilities Authority Rev.
(North Colorado Medical Center), 6% due 5/15/2020 .......................... Aaa/AAA 3,126,300
2,085,000 Colorado Housing Finance Authority (Single Family Housing Rev.),
5.85% due 11/1/2015 ........................................................ Aa1/AA+ 2,142,421
195,000 Colorado Housing Finance Authority (Single Family Residential Housing Rev.),
8% due 3/1/2017 ............................................................ Aa1/NR 198,249
2,250,000 Colorado Springs, CO Utilities Rev., 6 1/8% due 11/15/2020 ..................... Aa2/AA 2,364,075
105,000 Colorado Water Resources & Power Development Authority (Clean Water Bonds Rev.),
6 7/8% due 9/1/2011 ........................................................ Aa2/AA+ 115,103
2,000,000 Colorado Water Resources & Power Development Authority (Clean Water Bonds Rev.),
6% due 9/1/2014 ............................................................ Aa2/AA 2,122,500
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
19
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
COLORADO SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$1,000,000 Colorado Water Resources & Power Development Authority
(Clean Water Bonds Rev.), 6.30% due 9/1/2014 ............................... Aa2/AA $ 1,083,580
2,000,000 Denver, CO City & County (St. Anthony Hospital Systems Rev.),
7 3/4% due 5/1/2014 ........................................................ Aaa/AAA 2,135,060
2,500,000 Denver, CO City & County (Sisters of Charity of Leavenworth Health
Services Corporation), 5% due 12/1/2023 .................................... Aa3/AA 2,350,550
2,000,000 Denver, CO City &County Department of Aviation Airport System Rev.,
5 1/2% due 11/15/2025 ...................................................... Aaa/AAA 1,994,180
2,250,000 Denver, CO City & County Excise Tax Rev., 6 1/2% due 9/1/2014 .................. Aaa/AAA 2,346,502
1,985,000 Fort Collins, CO GOs Water Bonds, 6 3/8% due 12/1/2012 ......................... Aa2/AA 2,159,084
2,500,000 Fort Collins Pollution Control Rev. (Anheuser-Busch Project),
6% due 9/1/2031 ............................................................ A1/A+ 2,591,550
3,000,000 Fountain Valley Authority, Co Water Treatment Rev.,
6.80% due 12/1/2019 ........................................................ AA/AA 3,262,470
1,895,000 Northglenn, CO Joint Water & Wastewater Utility,
6.80% due 12/1/2008 ........................................................ Aaa/NR 2,100,380
2,500,000 Platte River Power Authority, CO Power Rev.,
6 1/8% due 6/1/2014 ........................................................ Aa3/A+ 2,638,800
1,750,000 Pueblo County, CO Single Family Mortgage Rev.,
7.05% due 11/1/2027 ........................................................ NR/AAA 1,863,278
2,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036 ........................................................ Baa1/A 2,006,800
3,000,000 University of Colorado Hospital Authority Hospital Rev.,
6.40% due 11/15/2022 ....................................................... Aaa/AAA 3,272,670
2,000,000 Westminster, CO (Adams & Jefferson Counties) Sales & Use Tax Rev.,
7% due 12/1/2008 ........................................................... Aaa/AAA 2,178,200
-----------
TOTAL MUNICIPAL BONDS (Cost $45,749,567)-- 97.7% .................................................... 48,876,692
VARIABLE RATE DEMAND NOTES (Cost $300,000)-- 0.6% ................................................... 300,000
OTHER ASSETS LESS LIABILITIES-- 1.7% ................................................................ 841,400
-----------
NET ASSETS-- 100.0% ................................................................................. $50,018,092
===========
GEORGIA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <C> <C>
$ 2,000,000 Atlanta, GA Water & Sewer Rev., 5 1/4% due 1/1/2027 ............................ Aaa/AAA $ 1,953,080
1,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 7.40% due 11/1/2010* ..................................... A1/A+ 1,217,380
2,000,000 Cartersville, GA Development Authority Rev. Water & Wastewater Facilities
(Anheuser-Busch), 6 3/4% due 2/1/2012* ..................................... A1/A+ 2,185,720
3,000,000 Chatham County, GA School District GOs, 5 1/2% due 8/1/2020 .................... Aaa/AAA 3,007,320
750,000 Chatham County Hospital Authority, GA Rev. (Memorial Medical Center, Inc.),
7% due 1/1/2021 ............................................................ Aaa/AAA 826,507
2,000,000 Columbia County, GA School District GOs,
6 1/4% due 4/1/2013 ........................................................ Aaa/AAA 2,189,740
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
20
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
GEORGIA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 1,000,000 Columbia County, GA Water & Sewerage Rev., 6 1/4% due 6/1/2012 ................. Aaa/AAA $ 1,082,390
1,000,000 DeKalb County, GA GOs, 5 1/4% due 1/1/2020 ..................................... Aa1/AA+ 985,720
1,000,000 DeKalb County, GA Water & Sewerage Rev., 7% due 10/1/2014 ...................... Aaa/AA 1,098,560
2,000,000 DeKalb County, GA Water & Sewerage Rev., 5 1/4% due 10/1/2023 .................. Aa/AA 1,969,320
700,000 DeKalb Private Hospital Authority, GA Rev.
(Emory University Project), 6 3/4% due 4/1/2017 ............................ Aa1/AA 769,321
300,000 DeKalb Private Hospital Authority, GA Rev. (Emory University
Project), 7% due 4/1/2021 .................................................. Aa1/AA 332,130
1,000,000 Fayette County, GA School District GOs,
6 1/8% due 3/1/2015 ........................................................ Aa/A+ 1,067,990
3,000,000 Fulton County, GA School District GOS,
5 5/8% DUE 1/1/2021 ........................................................ AA3/AA 3,046,200
2,975,000 Georgia Housing & Finance Authority Rev. (Single Family Mortgage),
5 1/4% due 12/1/2020 ....................................................... Aa2/AA+ 2,874,237
2,500,000 Georgia Municipal Gas Authority Rev. (Southern Storage Gas Project),
6.40% due 7/1/2014 ......................................................... NR/A- 2,686,025
1,000,000 Georgia State GOs, 5 3/4% due 2/1/2011 ......................................... Aaa/AAA 1,046,280
1,750,000 Glynn-Brunswick Memorial Hospital Authority Rev. (Southeast Georgia Health
Systems Project), 6% due 8/1/2016 .......................................... Aaa/AAA 1,857,275
1,000,000 Gwinnett County, GA School District GOs, 6.40% due 2/1/2012 .................... Aa1/AA+ 1,150,870
1,500,000 Henry County School District, GA GOs, 6.45% due 8/1/2011 ....................... A1/A+ 1,711,980
1,000,000 Metropolitan Atlanta Rapid Transit Authority,
GA Sales Tax Rev., 7 1/4% due 7/1/2010 ..................................... A1/AA- 1,042,730
500,000 Metropolitan Atlanta Rapid Transit Authority,
GA Sales Tax Rev., 6 1/4% due 7/1/2018 ..................................... A1/AA- 559,980
2,000,000 Monroe County, GA Development Authority Pollution Control Rev.
(Georgia Power Company Plant-- Scherer Project), 6% due 7/1/2025 ........... Aaa/AAA 2,084,360
2,500,000 Peachtree City, GAWater &Sewerage Authority Sewer System Rev.,
5.60% due 3/1/2027 ......................................................... Aa3/AA 2,554,925
2,500,000 Private Colleges & Universities Authority, GA (Spelman College Project),
6.20% due 6/1/2014 ......................................................... Aaa/AAA 2,722,000
1,500,000 Private Colleges & Universities Authority, GA (Mercer University Project),
6 1/2% due 11/1/2015 ....................................................... Aaa/AAA 1,746,075
3,000,000 Private Colleges & Universities Authority, GA (Agnes Scott College Project),
5 5/8% due 6/1/2023 ........................................................ Aa3/AA- 3,039,810
1,500,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2026 ........................................................ Baa1/A 1,495,560
1,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036 ........................................................ Baa1/A 1,003,400
2,000,000 Savannah, GA Airport Rev., 6 1/4% due 1/1/2015* ................................ Aaa/AAA 2,110,680
-----------
TOTAL MUNICIPAL BONDS (Cost $48,301,223)-- 96.5% ..................................................... 51,417,565
VARIABLE RATE DEMAND NOTES (Cost $1,000,000)-- 1.9% .................................................. 1,000,000
OTHER ASSETS LESS LIABILITIES-- 1.6% ................................................................. 836,449
-----------
NET ASSETS-- 100.0% .................................................................................. $53,254,014
===========
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
21
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
LOUISIANA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 1,055,000 Alexandria, LA Utilities Rev., 5.30% due 5/1/2013 .............................. Aaa/AAA $ 1,058,576
3,000,000 Bastrop, LA Industrial Development Board Pollution Control Rev.
(International Paper Company Project), 6.90% due 3/1/2007 .................. A3/A- 3,296,700
2,500,000 Calcasieu Parish, LA Industrial Development Board (Conoco Inc. Project),
5 3/4% due 12/1/2026* ...................................................... Aa3/AA- 2,524,400
2,420,000 East Baton Rouge Parish, LA Mortgage Finance Authority
(Single Family Mortgage Rev.), 5.40% due 10/1/2025 ......................... Aaa/NR 2,365,356
1,000,000 East Baton Rouge Parish, LA Public Improvement Sales & Use Tax Rev.,
7 1/4% due 2/1/2009 ........................................................ Aaa/AAA 1,057,140
3,000,000 East Baton Rouge Parish, LA Public Improvement Sales & Use Tax Rev.,
5.90% due 2/1/2018 ......................................................... Aaa/AAA 3,148,740
2,000,000 Houma, LA Utilities Rev., 6 1/4% due 1/1/2012 .................................. Aaa/AAA 2,149,280
2,000,000 Jefferson Parish, LA Home Mortgage Authority
(Single Family Mortgage Rev.), 6% due 12/1/2024* ........................... Aa/NR 2,026,840
2,495,000 Louisiana Housing Finance Agency Mortgage Rev. (Single Family),
6.45% due 6/1/2027* ........................................................ Aaa/AAA 2,593,727
2,500,000 Louisiana Public Facilities Authority Hospital Rev.
(Our Lady of Lourdes Regional Medical Center
Project), 6.45% due 2/1/2022 ............................................... Aaa/AAA 2,706,150
2,500,000 Louisiana Public Facilities Authority Rev. (Loyola University Project),
5 5/8% due 10/1/2016 ....................................................... Aaa/AAA 2,571,475
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+ 2,683,675
3,000,000 Louisiana Public Facilities Authority Rev. (Tulane University),
5 3/4% due 2/15/2021 ....................................................... Aaa/AAA 3,077,640
3,000,000 Louisiana State GOs, 6 1/2% due 5/1/2011 ....................................... Aaa/AAA 3,293,610
2,000,000 Louisiana State University & Agricultural & Mechanical College
Auxiliary Rev., 5 3/4% due 7/1/2014 ........................................ Aaa/AAA 2,074,960
2,500,000 Ouachita Parish, LAHospital Service District Rev.
(Glenwood Regional Medical Center), 5 3/4% due 5/15/2021 ................... Aaa/AAA 2,579,175
190,000 Ouachita Parish, LA Industrial Development Rev. (International Paper Company),
6 1/2% due 4/1/2006 ........................................................ NR/NR 190,137
2,500,000 Saint Bernard Parish, LA Exempt Facility Rev. (Mobil Oil
Corporation Project), 5.90% due 11/1/2026* ................................. Aa2/AA 2,576,400
1,250,000 Saint Charles Parish, LA Environmental Improvement Rev.
(Louisiana Power and Light Company Project), 6.20% due 5/1/2023* ........... Baa2/BBB 1,282,063
2,960,000 Saint Charles Parish, LA Waterworks & Wastewater District Utility Rev.,
7.15% due 7/1/2016 ......................................................... Aaa/AAA 3,287,672
1,555,000 Shreveport, LA GOs, 7 1/2% due 4/1/2006 ........................................ Aaa/AAA 1,696,474
1,750,000 Shreveport, LA Water & Sewer Rev., 7 1/8% due 12/1/2014 ........................ Aaa/AAA 1,794,643
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
22
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
LOUISIANA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 2,050,000 Sulphur, LA Housing & Mortgage Finance Trust (Residential Mortgage Rev.),
7 1/4% due 12/1/2010 ....................................................... Aaa/AAA $ 2,354,486
2,500,000 Tangipahoa Parish, LA Hospital Service District No. 1 Rev.
(Northoaks Medical Center), 6 1/4% due 2/1/2024 ............................ Aaa/AAA 2,672,050
-----------
TOTAL MUNICIPAL BONDS (Cost $51,697,171)-- 97.1% .................................................... 55,061,369
VARIABLE RATE DEMAND NOTES (COST $500,000)-- 0.9% ................................................... 500,000
OTHER ASSETS LESS LIABILITIES-- 2.0% ................................................................ 1,146,242
-----------
NET ASSETS-- 100.0% ................................................................................. $56,707,611
===========
MARYLAND SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <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 $ 3,097,710
2,000,000 Baltimore, MD Consolidated Public Improvement GOs,
6 3/8% due 10/15/2006 ...................................................... Aaa/AAA 2,268,060
2,500,000 Baltimore, MD Port Facilities Rev. (Consolidated Coal Sales Co. Project),
6 1/2% due 10/1/2011 ....................................................... Aa3/AA- 2,724,975
2,000,000 Baltimore, MD Project and Refunding Rev. (Water Projects),
5 1/2% due 7/1/2026 ........................................................ Aaa/AAA 2,014,340
2,000,000 Howard County, MD Metropolitan District Project GOs,
5 1/2% due 8/15/2022 ....................................................... Aaa/AA+ 2,016,380
2,000,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Multi-Family Housing), 7.70% due 5/15/2020* ................... Aa/NR 2,122,560
2,465,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Single Family Program), 6.80% due 4/1/2024* ................... Aa/NR 2,616,326
2,500,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Residential Rev.), 5 7/8% due 9/1/2025* ....................... AA2/NR 2,527,850
2,500,000 Maryland Community Development Administration Dept. of Housing & Community
Development (Multi-Family Housing), 6.70% due 5/15/2027 .................... Aa/NR 2,619,300
2,710,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Good Samaritan Hospital), 5 3/4% due 7/1/2019 ............................. A1/A 2,786,449
3,000,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Johns Hopkins University), 7 1/2% due 7/1/2020 ............................ Aa2/AA- 3,135,540
2,000,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Suburban Hospital), 5 1/8% due 7/1/2021 ................................... A1/A+ 1,952,860
2,750,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Ann Arundel Medical Center), 5% due 7/1/2023 .............................. Aaa/AAA 2,619,760
2,500,000 Maryland Health & Higher Educational Facilities Authority Rev.
(Francis Scott Key Medical Center), 5% due 7/1/2023 ........................ Aaa/AAA 2,381,600
2,000,000 Maryland Health &Higher Educational Facilities Authority Rev.
(Mercy Medical Center), 5 3/4% due 7/1/2026 ................................ Aaa/AAA 2,056,340
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
23
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MARYLAND SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 1,000,000 Maryland National Capital Park & Planning Commission GOs
(Prince George's County), 6.90% due 7/1/2010 ............................... Aa2/AA $ 1,089,440
2,000,000 Maryland Transportation Authority Rev. (Baltimore/Washington International
Airport Project), 6 1/4% due 7/1/2014* ..................................... Aaa/AAA 2,143,060
2,500,000 Maryland Transportation Authority Rev. Transportation Facilities Projects,
5 3/4% due 7/1/2015 ........................................................ A1/A+ 2,563,350
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
6.70% due 9/1/2013 ......................................................... Aaa/AAA 1,106,810
1,000,000 Maryland Water Quality Financing Administration Revolving Loan Fund Rev.,
7.10% due 9/1/2013 ......................................................... Aaa/AAA 1,121,130
450,000 Montgomery County, MD Housing Opportunities Commission (Single Family
Mortgage Rev.), 7 3/8% due 7/1/2017 ........................................ Aa2/NR 470,966
1,500,000 Montgomery County, MD Housing Opportunities Commission Rev.,
6.20% due 7/1/2026* ........................................................ Aa2/NR 1,547,340
2,000,000 Northeast Maryland Waste Disposal Authority Solid Waste Rev.
(Montgomery County Resource Recovery Project),
6.30% due 7/1/2016* ........................................................ A/NR 2,113,880
1,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036 ........................................................ BAA1/A 1,003,400
35,000 Puerto Rico Housing Finance Corporation (Single Family
Mortgage Rev. Portfolio 1), 7.80% due 10/15/2021 ........................... Aaa/AAA 35,871
630,000 Puerto Rico Housing Finance Corporation (Single Family Mortgage
Rev. Portfolio 1-C), 6.85% due 10/15/2023 .................................. Aaa/AAA 665,545
2,500,000 Washington Suburban Sanitary District, MD, 6 1/2% due 1/1/2016 ................. Aa1/AA 2,732,725
-----------
TOTAL MUNICIPAL BONDS (Cost $50,452,075)-- 98.0% .................................................... 53,533,567
OTHER ASSETS LESS LIABILITIES-- 2.0% ................................................................ 1,077,988
-----------
NET ASSETS-- 100.0% ................................................................................. $54,611,555
===========
MASSACHUSETTS SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <C> <C>
$ 5,000,000 Boston, MA Water & Sewer Commission General Rev., 5 1/4% due 11/1/2019 ......... A2/A $ 5,025,800
3,000,000 Boston, MA Water & Sewer Commission General Rev., 7.10% due 11/1/2019 .......... Aaa/AAA 3,240,270
5,000,000 Massachusetts Bay Transportation Authority General Transportation System,
5 5/8% due 3/1/2026 ........................................................ A1/A+ 5,033,050
1,505,000 Massachusetts Education Loan Authority Education Loan Rev., 8% due 6/1/2002 .... NR/AAA 1,533,384
3,000,000 Massachusetts Health & Educational Facilities Authority Rev.
(Daughters of Charity National Health Systems--Carney
Hospital), 6% due 7/1/2009 ................................................. Aa2/AA+ 3,151,680
2,500,000 Massachusetts Health & Educational Facilities Authority Rev.
(Daughters of Charity National Health Systems--Carney Hospital),
6.10% due 7/1/2014 ......................................................... Aa2/AA+ 2,645,550
5,000,000 Massachusetts Health & Educational Facilities Authority Rev. (Newton-Wellesley
Hospital), 6% due 7/1/2018 ................................................. Aaa/AAA 5,251,750
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
24
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 3,295,000 Massachusetts Health & Educational Facilities Authority Rev. (Tufts University),
7.40% due 8/1/2018 ......................................................... Aaa/A+ $ 3,456,422
705,000 Massachusetts Health & Educational Facilities Authority Rev. (Tufts University),
7.40% due 8/1/2018 ......................................................... A1/A+ 737,684
3,500,000 Massachusetts Health &Educational Facilities Authority Rev. (Williams College),
5 3/4% due 7/1/2019 ........................................................ Aa1/AA 3,598,595
2,500,000 Massachusetts Health & Educational Facilities Authority Rev. (Suffolk University),
8 1/8% due 7/1/2020 ........................................................ NR/NR 2,784,800
5,100,000 Massachusetts Health & Educational Facilities Authority Rev. (SmithCollege),
5 3/4% due 7/1/2024 ........................................................ Aa2/AA- 5,190,678
5,000,000 Massachusetts Health &Educational Facilities Authority Rev. (Partners Healthcare
System), 5 3/8% due 7/1/2024 ............................................... Aaa/AAA 4,912,500
7,500,000 Massachusetts Health & Educational Facilities Authority Rev.
(Harvard University), 5 5/8% due 11/1/2028 ................................. Aaa/AAA 7,635,375
4,705,000 Massachusetts Housing Finance Agency Rev. (Single Family Housing),
7.30% due 6/1/2014 ......................................................... Aa/A+ 4,806,110
3,500,000 Massachusetts Industrial Finance Agency Rev. (Phillips Academy),
5 3/8% due 9/1/2023 ........................................................ Aa1/AA+ 3,463,600
3,000,000 Massachusetts Industrial Finance Agency Rev. (College of The Holy Cross),
5 5/8% due 3/1/2026 ........................................................ Aaa/AAA 3,045,930
3,000,000 Massachusetts Industrial Finance Agency Rev. (Suffolk University),
5 1/4% due 7/1/2027 ........................................................ Aaa/AAA 2,924,820
2,000,000 Massachusetts Industrial Finance Agency Electric Utility Rev.
(Nantucket Electric Company Project), 5 7/8% due 7/1/2017* ................. Aaa/AAA 2,082,340
3,000,000 Massachusetts Port Authority Special Facilities Rev. (BOSFUEL Project),
5 3/4% due 7/1/2039* ....................................................... Aaa/AAA 3,022,650
2,500,000 Massachusetts Special Obligation Rev. (Highway Improvement Loan),
5.80% due 6/1/2014 ......................................................... Aa3/AA 2,713,200
5,000,000 Massachusetts State Consolidated Loan GOs, 5 1/8% due 11/1/2013 ................ Aaa/AAA 4,980,250
8,475,000 Massachusetts State Port Authority Rev., 7 1/8% due 7/1/2012 ................... Aa3/AA 8,538,817
5,000,000 Massachusetts Water Pollution Abatement Trust Pool Loan Program,
5 5/8% due 2/1/2016 ........................................................ Aaa/AAA 5,197,300
5,500,000 Massachusetts Water Resources Authority General Rev.,
5.60% due 11/1/2026 ........................................................ Aaa/AAA 5,576,835
730,000 Puerto Rico Electric Power Authority Power Rev.,
7 1/8% due 7/1/2014 ........................................................ Baa1/BBB+ 779,297
4,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036 ........................................................ Baa1/A 4,013,600
2,750,000 Puerto Rico Port Authority Rev., 6% due 7/1/2021* .............................. Aaa/AAA 2,806,045
------------
TOTAL MUNICIPAL BONDS (Cost $103,585,106)-- 97.2% ................................................... 108,148,332
VARIABLE RATE DEMAND NOTES (Cost $1,800,000)-- 1.6% ................................................. 1,800,000
OTHER ASSETS LESS LIABILITIES-- 1.2% ................................................................ 1,307,323
------------
NET ASSETS-- 100.0% ................................................................................. $111,255,655
============
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
25
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MICHIGAN SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 5,000,000 Capital Region Airport Authority, MI Airport Rev.,
6.70% due 7/1/2021* ........................................................ Aaa/AAA $ 5,445,300
5,000,000 Detroit, MI GOs, 5 1/2% due 4/1/2016 ........................................... Aaa/AAA 5,027,750
6,000,000 Detroit, MI Water Supply System Rev.,
6 1/4% due 7/1/2012 ........................................................ Aaa/AAA 6,479,700
3,000,000 Grand Haven, MI Electric System Rev.,
5 1/4% due 7/1/2013 ........................................................ Aaa/AAA 2,993,370
5,000,000 Grand Rapids, MI Water Supply System Rev., 5 3/4% due 1/1/2018 ................. Aaa/AAA 5,063,000
1,000,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2012 ...................................... Aaa/AAA 1,065,830
1,500,000 Grand Traverse County, MI Hospital Finance Authority (Munson Healthcare
Obligated Group), 6 1/4% due 7/1/2022 ...................................... Aaa/AAA 1,590,885
3,000,000 Holland School District, MI GOs (School Building and Site Bonds),
7 3/8% due 5/1/2019 ........................................................ NR/NR 3,090,750
5,000,000 Kent County, MI Airport Rev., 6.10% due 1/1/2025* .............................. Aa/AAA 5,304,100
5,000,000 Kent County, MI Refuse Disposal System GOs, 8.40% due 11/1/2010 ................ Aa2/AAA 5,144,100
2,775,000 Kentwood, MI Public Schools Building & Site GOs, 6.40% due 5/1/2015 ............ Aa2/A+ 3,060,742
3,000,000 Lansing, MIBuilding Authority Rev., 5.60% due 6/1/2019 ......................... A1/AA+ 3,060,330
3,250,000 Marquette, MIHospital Finance Authority Hospital Rev.
(Marquette General Hospital), 6.10% due 4/1/2019 ........................... Aaa/AAA 3,441,230
3,000,000 Michigan Public Power Agency Rev. (Belle River Project),
5 1/4% due 1/1/2018 ........................................................ A1/AA- 2,912,370
3,000,000 Michigan State Building Authority Rev., 6 1/4% due 10/1/2020 ................... A1/AA- 3,186,000
6,000,000 Michigan State GOs (Environmental Protection Program), 5.40% due 11/1/2019 ..... Aa2/AA 6,033,900
5,000,000 Michigan State Hospital Finance Authority Hospital Rev.
(St. John Hospital), 5 3/4% due 5/15/2016 .................................. Aaa/AAA 5,117,250
5,000,000 Michigan State Hospital Finance Authority Hospital Rev.
(Henry Ford Health System), 5 3/4% due 9/1/2017 ............................ Aaa/AAA 5,102,550
5,000,000 Michigan State Hospital Finance Authority Hospital Rev.
(Detroit Medical Center), 6 1/2% DUE 8/15/2018 ............................. A2/A 5,373,200
2,000,000 Michigan State Hospital Finance Authority Hospital Rev. (St. John Hospital),
5 1/4% due 5/15/2026 ....................................................... Aaa/AAA 1,925,400
5,000,000 Michigan State Hospital Finance Authority Hospital Rev. (Mercy Health Services
Obligated Group), 5 3/4% due 8/15/2026 ..................................... Aa3/AA- 5,081,400
5,000,000 Michigan State Hospital Finance Authority Hospital Rev.
(Sparrow Obligated Group), 6% due 11/15/2036 ............................... Aaa/AAA 5,265,200
2,500,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.80% due 12/1/2016 ........................................................ NR/AA+ 2,658,050
5,000,000 Michigan State Housing Development Authority Rev. (Rental Housing),
6.65% due 4/1/2023 ......................................................... NR/A+ 5,215,500
4,000,000 Michigan State Housing Development Authority Rev. (Single Family Mortgage),
6.05% due 12/1/2027 ........................................................ NR/AA+ 4,123,280
3,000,000 Michigan State Strategic Fund Pollution Control Rev.
(Detroit Edison Company), 6 1/2% due 2/15/2016 ............................. Aaa/AAA 3,277,530
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
26
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MICHIGAN SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 6,000,000 Michigan State Strategic Fund Pollution Control Rev. (General Motors Corp.),
6.20% due 9/1/2020 ......................................................... A3/A- $ 6,310,440
7,500,000 Michigan State Trunk Line Rev., 5.80% due 11/15/2024 ........................... Aaa/AAA 7,718,850
2,000,000 Midland, MI Water Supply System Rev., 7.20% due 4/1/2010 ....................... A/A 2,164,240
6,300,000 Oxford, MI Area Community Schools GOs, 5 1/2% due 5/1/2021 ..................... Aaa/AAA 6,319,719
5,000,000 University of Michigan Hospital Rev., 6 3/8% due 12/1/2024 ..................... Aa2/AA 5,178,050
5,000,000 Wayne, MI State University Rev., 5.65% due 11/15/2015 .......................... Aaa/AAA 5,113,100
3,000,000 Wyandotte, MI Electric Rev., 6 1/4% due 10/1/2017 .............................. Aaa/AAA 3,222,090
------------
TOTAL MUNICIPAL BONDS (Cost $133,829,878)-- 97.8% .................................................. 142,065,206
VARIABLE RATE DEMAND NOTES (Cost $800,000)-- 0.6% .................................................. 800,000
OTHER ASSETS LESS LIABILITIES-- 1.6% ............................................................... 2,350,143
------------
NET ASSETS-- 100.0% ................................................................................ $145,215,349
============
MINNESOTA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <C> <C>
$ 6,250,000 Becker, MN Pollution Control Rev. (Northern States Power Company),
6.80% due 4/1/2007 ......................................................... A2/A+ $ 6,587,437
1,500,000 Buffalo, MN Independent School District GOs, 6.15% due 2/1/2022 ................ Aaa/AAA 1,578,360
1,500,000 Cloquet, MN Pollution Control Rev. (Potlatch Corporation Projects),
5.90% due 10/1/2026 ........................................................ NR/A- 1,547,040
3,000,000 Dakota County, MN GOs Capital Improvement, 7.30% due 2/1/2008 .................. Aa3/NR 3,032,970
5,000,000 Edina, MN Housing Development Rev. (Edina Park Plaza Project),
7.70% due 12/1/2028 ........................................................ Aa/NR 5,230,800
3,545,000 Fridley, MN Independent School District Gos, 5.35% Due 2/1/2021 ................ Aaa/AAA 3,493,633
1,200,000 Lakeville, MN Independent School District GOs, 6.70% due 2/1/2015 .............. Aaa/AAA 1,240,236
7,500,000 Minneapolis, MN Community Development Agency Tax Increment Rev.,
Zero Coupon Bond due 9/1/2003 .............................................. Aaa/AAA 5,769,825
1,400,000 Minneapolis-St. Paul Metropolitan Area (Metropolitan Council of
the Twin Cities), MN, 5 1/2% due 12/1/2012 ................................. Aaa/AAA 1,444,940
5,000,000 Minneapolis-St. Paul, MN Housing & Redevelopment Authority Health Care Rev.
(Children's Health Care), 5 1/2% due 8/15/2025 ............................. Aaa/AAA 4,957,400
1,500,000 Minneapolis, MN GOs, 6% due 3/1/2016 ........................................... Aaa/AAA 1,574,625
2,000,000 Minneapolis, MN Hospital Facilities Rev. (Lifespan, Inc. --
Abbott-Northwestern Hospital, Inc.), 7 7/8% due 12/1/2014 .................. Aaa/AAA 2,053,460
4,300,000 Minneapolis, MN Special School District GOs, 5% due 2/1/2014 ................... Aa1/AA+ 4,261,816
1,500,000 Minneapolis, MN Tax Increment Rev., 7% due 3/1/2003 ............................ Aaa/AAA 1,519,020
2,775,000 Minnesota Higher Education Facilities Authority Rev. (University
of St. Thomas), 5.40% due 4/1/2022 ......................................... A2/NR 2,767,508
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
27
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MINNESOTA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 830,000 Minnesota Housing Finance Agency (Housing Development),
6 1/4% due 2/1/2020 ........................................................ Aa2/AA $ 840,973
5,000,000 Minnesota Housing Finance Agency (Single Family Mortgage),
6.85% due 1/1/2024* ........................................................ Aa2/AA+ 5,277,900
5,500,000 Minnesota Public Facilities Authority Water Pollution Control Rev.,
7.10% due 3/1/2012 ......................................................... Aaa/AAA 5,982,515
5,000,000 Minnesota State GOs, 5.70% due 5/1/2016 ........................................ Aaa/AAA 5,181,600
5,000,000 North Saint Paul/Maplewood, MN Independent School District GOs,
5 1/8% due 2/1/2025 ........................................................ Aa1/AA+ 4,839,000
5,000,000 Northern Municipal Power Agency, MN Electric System Rev.,
7 1/4% due 1/1/2016 ........................................................ A2/A 5,285,650
2,500,000 Northern Municipal Power Agency, MN Electric System Rev.,
7.40% due 1/1/2018 ......................................................... AAA/AAA 2,653,075
2,500,000 Northfield, MNIndependent School District GOs, 5 1/4% due 2/1/2017 ............. Aa1/NR 2,490,800
2,000,000 Ramsey & Washington Counties, MN Resource Recovery Rev.
(Northern States Power Company Project), 6 3/4% due 12/1/2006 .............. A1/AA- 2,066,480
4,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo Medical Center),
7.45% due 11/15/2006 ....................................................... NR/AA+ 4,384,120
4,500,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo Medical Center),
6 1/4% due 11/15/2014 ...................................................... NR/AA+ 4,825,350
1,000,000 Rochester, MN Health Care Facilities Rev. (Mayo Foundation/Mayo Medical Center),
6 1/4% due 11/15/2021 ...................................................... NR/AA+ 1,068,540
2,575,000 Rochester, MN Independent School District GOs, 5 5/8% due 2/1/2016 ............. Aaa/AA+ 2,658,610
2,715,000 Rochester, MN Independent School District GOs, 5 5/8% due 2/1/2017 ............. Aaa/AA+ 2,795,744
1,000,000 Saint Cloud, MNHospital Facilities Rev. (Saint Cloud Hospital),
5% due 7/1/2020 ............................................................ Aaa/AAA 946,630
223,857 Saint Paul, MN Science Museum Facilities Rev. (Science Museum of
Minnesota Project), 7 1/2% due 12/15/2001 .................................. NR/AAA 239,660
45,000 Saint Paul Port Authority, MN Industrial Development Rev.
Series E, 9 1/8% due 10/1/2000 ............................................. NR/CCC 44,826
5,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series H, 9 1/8% due 12/1/2000 ........................................ NR/CCC 4,979
55,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series I, 9 1/8% due 12/1/2000 ........................................ NR/CCC 54,765
50,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series E, 9 1/8% due 10/1/2001 ........................................ NR/CCC 49,672
10,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series H, 9 1/8% due 12/1/2001 ........................................ NR/CCC 9,930
55,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series I, 9 1/8% due 12/1/2001 ........................................ NR/CCC 54,614
5,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series L, 9 3/4% due 12/1/2001 ........................................ NR/CCC 5,071
50,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series E, 9 1/8% due 10/1/2002 ........................................ NR/CCC 49,510
10,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series H, 9 1/8% due 12/1/2002 ........................................ NR/CCC 9,897
60,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series I, 9 1/8% due 12/1/2002 ........................................ NR/CCC 59,383
10,000 Saint Paul Port Authority, MN Industrial Development
Rev. Series L, 9 3/4% due 12/1/2002 ........................................ NR/CCC 10,148
1,500,000 Southern Minnesota Municipal Power Agency -- Power Supply System Rev.,
5 3/4% due 1/1/2018 ........................................................ A2/A+ 1,513,110
750,000 Southern Minnesota Municipal Power Agency -- Power Supply System Rev.,
5 3/4% due 1/1/2018 ........................................................ AAA/AAA 773,212
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
28
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MINNESOTA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 1,500,000 Southern Minnesota Municipal Power Agency -- Power Supply System Rev.,
4 3/4% due 1/1/2016 ........................................................ A2/A+ $ 1,382,685
3,500,000 Washington County, MN GOs, 5.90% due 2/1/2010 .................................. Aa2/AA- 3,641,330
3,090,000 Western Minnesota Municipal Power Agency-- Power Supply
Rev., 5 1/2% due 1/1/2015 .................................................. A1/A 3,089,938
9,580,000 Western Minnesota Municipal Power Agency-- Power Supply
Rev., 6 3/8% due 1/1/2016 .................................................. Aaa/AAA 10,701,052
------------
TOTAL MUNICIPAL BONDS (Cost $112,978,728)-- 97.2% ................................................... 120,049,839
VARIABLE RATE DEMAND NOTES (Cost $1,900,000)-- 1.6% ................................................. 1,900,000
OTHER ASSETS LESS LIABILITIES-- 1.2% ................................................................ 1,523,460
------------
NET ASSETS-- 100.0% ................................................................................. $123,473,299
============
MISSOURI SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <C> <C>
$ 2,000,000 Columbia, MO Water and Electric System Improvement
Rev., 6 1/8% due 10/1/2012 ................................................. A1/AA $ 2,127,000
2,500,000 Curators of the University of Missouri Health Facilities Rev.
(University of Missouri Health System), 5.60% due 11/1/2026 ................ Aaa/AAA 2,530,775
1,500,000 Hannibal, MO Industrial Development Authority Health Facilities Rev.
(Hannibal Regional Hospital), 5 3/4% due 3/1/2022 .......................... Aaa/AAA 1,541,340
3,775,000 Kansas City, MO Water Rev., 6 1/4% due 12/1/2009 ............................... Aa/NR 3,828,190
1,500,000 Kansas City School District Building Corporation, MO Leasehold Rev.,
7.90% due 2/1/2008 ......................................................... Aaa/AAA 1,550,355
1,000,000 Liberty, MO Waterworks Improvement Rev., 6.30% due 10/1/2012 ................... Aaa/AAA 1,074,740
2,000,000 Little Blue Valley, MO Sewer District Rev., 7 1/4% due 10/1/2007 ............... Aaa/AAA 2,063,460
565,000 Missouri School Boards Pooled Financing Program Certificates of Participation,
7 3/8% due 3/1/2006 ........................................................ Aaa/AAA 584,029
1,270,000 Missouri School Boards Pooled Financing Program Certificates of Participation,
7% due 3/1/2006 ............................................................ Aaa/AAA 1,310,818
1,000,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(State Revolving Fund Program), 6.55% due 7/1/2014 ......................... Aa1/NR 1,087,670
2,500,000 Missouri State Environmental Improvement & Energy Resources Authority Rev.
(Union Electric Company Project), 5.45% due 10/1/2028* ..................... A1/AA- 2,495,525
2,500,000 Missouri State Environmental Improvement & Energy Resources
Authority-- Water Pollution Control Rev. (State Revolving
Fund Program), 5.40% due 7/1/2015 .......................................... Aa1/NR 2,515,500
2,000,000 Missouri State GOs, 5 5/8% due 4/1/2017 ........................................ Aaa/AAA 2,076,780
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 2,534,400
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 ........................................................ Aa1/AA+ 1,589,310
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
29
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
MISSOURI SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 3,500,000 Missouri State Health & Educational Facilities Authority Rev.
(SSM Health Care), 6 1/4% due 6/1/2016 ..................................... Aaa/AAA $ 3,715,880
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 1,070,960
1,000,000 Missouri State Health & Educational Facilities Authority Rev.
(Sisters of Mercy Health System, St. Louis, Inc.), 5% due 6/1/2019 ......... Aa1/AA+ 955,340
2,500,000 Missouri State Health Facilities Rev. (Barnes-Jewish, Inc./
Christian Health Services), 5 1/4% due 5/15/2021 ........................... Aa2/AA 2,459,950
860,000 Missouri State Housing Development Commission Housing Development Bonds
(Federally Insured Mortgage Loans), 6% due 10/15/2019 ...................... Aa2/AA+ 873,889
1,935,000 Missouri State Housing Development Commission Single Family Mortgage Rev.
(Homeownership Loan Program), 6 1/8% due 3/1/2028* ......................... NR/AAA 1,992,682
1,500,000 St. Louis, MO Industrial Development Authority Pollution Control Rev.
(Anheuser-Busch Companies, Inc. Project), 6.65% due 5/1/2016 ............... A1/A+ 1,768,995
1,500,000 St. Louis, MO Municipal Finance Corporation City Justice Center Leasehold
Improvement Rev., 5.95% due 2/15/2016 ...................................... Aaa/AAA 1,589,970
2,400,000 Southeast Missouri Correctional Facility Lease Rev. (Missouri State Project),
5 3/4% due 10/15/2016 ...................................................... Aa/AA 2,461,032
2,500,000 Springfield, MO Waterworks Rev., 5.60% due 5/1/2023 ............................ Aa/A+ 2,513,650
2,750,000 University of Missouri Systems Facilities Rev., 5 1/2% due 11/1/2023 ........... Aa2/AA+ 2,756,958
-----------
TOTAL MUNICIPAL BONDS (Cost $48,548,638)-- 95.9% ..................................................... 51,069,198
VARIABLE RATE DEMAND NOTES (Cost $1,000,000)-- 1.9% .................................................. 1,000,000
OTHER ASSETS LESS LIABILITIES-- 2.2% ................................................................. 1,170,528
-----------
NET ASSETS-- 100.0% .................................................................................. $53,239,726
===========
NEW YORK SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <C> <C>
$ 4,000,000 Metropolitan Transportation Authority, NY
(Commuter Facilities Rev.), 6 1/2% due 7/1/2024 ............................ Baa1/BBB+ $ 4,538,040
3,900,000 Metropolitan Transportation Authority, NY (Transit Facilities Rev.),
6.10% due 7/1/2026 ......................................................... Aaa/AAA 4,156,152
4,000,000 New York City Municipal Water Finance Authority, NY Water & Sewer System Rev.,
6 1/4% due 6/15/2020 ....................................................... A2/A- 4,322,200
1,775,000 New York City, NY GOs, 7 1/4% due 8/15/2024 .................................... Baa1/BBB+ 1,930,898
660,000 New York City, NY GOs, 7 1/4% due 8/15/2024 .................................... Aaa/BBB+ 732,501
1,500,000 New York City, NY GOs, 6% due 8/1/2026 ......................................... Baa1/BBB+ 1,544,430
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
30
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
NEW YORK SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 2,500,000 New York City, NY Industrial Development Agency Civic Facility Rev.
(The Nightingale-Bamford School Project), 5.85% due 1/15/2020 .............. A3/A $ 2,560,775
2,000,000 New York City, NY Trust for Cultural Resources Rev. (American Museum of
Natural History), 5.65% due 4/1/2027 ....................................... Aaa/AAA 2,045,860
3,500,000 New York State Dormitory Authority Rev. (Rockefeller University),
7 3/8% due 7/1/2014 ........................................................ Aaa/AAA 3,662,960
4,000,000 New York State Dormitory Authority Rev. (Fordham University),
5 3/4% due 7/1/2015 ........................................................ Aaa/AAA 4,158,480
4,000,000 New York State Dormitory Authority Rev. (Rochester Institute of Technology),
5 1/2% due 7/1/2018 ........................................................ Aaa/AAA 4,041,040
3,500,000 New York State Dormitory Authority Rev. (Mental Health Services Facilities
Improvement), 5 3/4% due 8/15/2022 ......................................... Baa1/A- 3,522,960
4,000,000 New York State Dormitory Authority Rev. (Skidmore College),
5 3/8% due 7/1/2023 ........................................................ Aaa/AAA 3,904,320
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 2,734,025
3,000,000 New York State Environmental Facilities Corporation Pollution Control Rev.
(State Water-- Revolving Fund), 6.90% due 11/15/2015 ....................... Aaa/AAA 3,446,460
3,000,000 New York State Housing Finance Agency Rev. (Phillips Village Project),
7 3/4% due 8/15/2017* ...................................................... A2/NR 3,328,680
3,000,000 New York State Local Government Assistance Corp., 6% due 4/1/2024 .............. A3/A+ 3,168,960
2,000,000 New York State Medical Care Facilities Finance Agency Rev.
(The Hospital for Special Surgery), 6 3/8% due 8/15/2024 ................... Aa2/AA 2,163,560
2,000,000 New York State Mortgage Agency (Homeownership Mortgage),
7 1/2% due 4/1/2016 ........................................................ Aa2/NR 2,100,340
3,000,000 New York State Power Authority General Purpose Rev.,
6 1/2% due 1/1/2019 ........................................................ Aaa/AAA 3,278,070
4,000,000 New York State Thruway Authority Service Contract Rev.,
6 1/4% due 4/1/2014 ........................................................ Baa1/BBB+ 4,283,920
4,000,000 New York State Thruway Authority General Rev., 6% due 1/1/2025 ................. Aaa/AAA 4,205,320
4,000,000 Onondaga County, NY Industrial Development Agency Sewer Facilities Rev.
(Bristol Myers-Squibb Co. Project), 5 3/4% due 3/1/2024* ................... Aaa/AAA 4,254,160
2,250,000 Port Authority of New York and New Jersey Consolidated Rev., 6 1/8% due 6/1/2094 A1/AA- 2,492,573
1,000,000 Puerto Rico Highway & Transportation Authority Rev., 5 1/2% due 7/1/2026 ....... Baa1/A 997,040
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 ..................... A2/NR 5,512,450
-----------
TOTAL MUNICIPAL BONDS (COST $77,416,122)-- 97.6% .................................................... 83,086,174
VARIABLE RATE DEMAND NOTES (Cost $900,000)-- 1.1% ................................................... 900,000
-----------
OTHER ASSETS LESS LIABILITIES-- 1.3% ................................................................ 1,113,456
-----------
NET ASSETS-- 100.0% ................................................................................. $85,099,630
===========
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
31
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
OHIO SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 2,000,000 Barberton, OH Sewer System Mortgage Rev., 6 5/8% due 12/1/2006 ................. Aaa/AAA $ 2,048,840
2,250,000 Beavercreek Local School District, OH GOs (School Improvement Bonds),
5.70% due 12/1/2020 ........................................................ Aaa/AAA 2,321,662
3,450,000 Big Walnut Local School District, OH School Building Construction & Improvement
GOs, 7.20% due 6/1/2007 .................................................... Aaa/AAA 3,857,549
5,000,000 Cleveland, OH Waterworks Improvement Rev., 5 3/4% due 1/1/2021 ................. Aaa/AAA 5,183,750
4,000,000 Columbus, OH GOs, 6 1/2% due 1/1/2010 .......................................... Aaa/AAA 4,356,120
4,500,000 Columbus, OH Municipal Airport Authority Rev. (Port Columbus International
Airport Project), 6% due 1/1/2020* ......................................... Aaa/AAA 4,644,180
3,000,000 DAYTON, OH WATER SYSTEM MORTGAGE REV., 6 3/4% DUE 12/1/2010 .................... AAA/AAA 3,073,890
7,000,000 Erie County, OH Franciscan Services Corp. Rev. (Providence Hospital Inc.),
6% due 1/1/2013 ............................................................ NR/A- 7,168,350
7,000,000 Franklin County, OH GOs, 5 3/8% due 12/1/2020 .................................. Aaa/AAA 7,068,600
7,500,000 Franklin County, OH Hospital Rev. (Riverside United Methodist Hospital),
5 3/4% due 5/15/2020 ....................................................... Aa3/NR 7,610,325
4,000,000 Franklin County, OH Hospital Rev. (Holy Cross Health System Corporation),
5 7/8% due 6/1/2021 ........................................................ Aa3/AA 4,145,640
5,000,000 Hamilton County, OH Health Care System Rev. (Sisters of Charity Health Care),
6 1/4% due 5/15/2014 ....................................................... Aaa/AAA 5,310,400
2,500,000 Hamilton County, OH Sewer System Rev., 5 1/2% due 12/1/2017 .................... Aaa/AAA 2,524,350
7,000,000 Hamilton, OH Electric System Mortgage Rev., 6% due 10/15/2023 .................. Aaa/AAA 7,364,350
4,000,000 Hudson Local School District, OH GOs, 7.10% due 12/15/2013 ..................... A1/NR 4,423,400
1,095,000 Lake County, OH Hospital Improvement Rev. (Lake Hospital System Inc.),
8% due 1/1/2013 ............................................................ Aaa/AAA 1,120,349
4,830,000 Mount Vernon, OH Hospital Rev. (Knox Community Hospital),
7 7/8% due 6/1/2012 ........................................................ NR/NR 4,961,424
2,500,000 Northeast, OH Regional Sewer District Wastewater Rev.,
5.60% due 11/15/2013 ....................................................... Aaa/AAA 2,605,175
5,000,000 Ohio Air Quality Development Authority Pollution Control Rev.
(Ohio Edison Company Project), 7.45% due 3/1/2016 .......................... Aaa/AAA 5,440,600
2,000,000 Ohio Air Quality Development Authority Rev. (Cincinnati Gas & Electric
Company Project), 5.45% due 1/1/2024 ....................................... Aaa/AAA 1,986,000
6,500,000 Ohio Air Quality Development Authority Rev. (JMG Project),
6 3/8% due 1/1/2029* ....................................................... Aaa/AAA 6,980,740
4,430,000 Ohio Housing Finance Agency Residential Mortgage Rev. (Mortgage-Backed
Securities Program), 6.10% due 9/1/2028* ................................... NR/AAA 4,641,444
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
32
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
OHIO SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 3,000,000 Ohio State GOs Infrastructure Improvement, 6 1/2% due 8/1/2011 ................. Aa1/AA+ $ 3,227,700
1,205,000 Ohio State Higher Educational Facilities Commission Rev.
(University of Dayton Project), 7 1/4% due 12/1/2000 ....................... Aaa/AAA 1,337,454
295,000 Ohio State Higher Educational Facilities Commission Rev.
(University of Dayton Project), 7 1/4% due 12/1/2012 ....................... Aaa/AAA 326,031
3,000,000 Ohio State Higher Educational Facilities Commission Rev.
(University of Dayton Project), 5.40% due 12/1/2022 ........................ Aaa/AAA 2,995,650
3,000,000 Ohio State Higher Educational Facilities Commission Rev.
(Oberlin College Project), 5 3/8% due 10/1/2015 ............................ NR/AA 3,010,620
2,000,000 Ohio State Liquor Profits Rev., 6.85% due 3/1/2000 ............................. Aaa/AAA 2,126,800
6,000,000 Ohio State Public Facilities Commission Rev. (Higher Education
Capital Facilities), 6.30% due 5/1/2006 .................................... Aaa/AAA 6,449,820
2,455,000 Ohio State Water Development Authority Rev. (Safe Water),
9 3/8% due 12/1/2010 ....................................................... Aaa/AAA 3,099,757
2,500,000 Ohio State Water Development Authority Solid Waste Disposal Rev.
(North Star BHP Steel, L.L.C. Project-- Cargill, Incorporated, Guarantor),
6.30% due 9/1/2020* ........................................................ Aa3/AA- 2,669,925
8,000,000 Ohio State Water Development Authority Water Development Rev.
(Dayton Power & Light Co. Project), 6.40% due 8/15/2027 .................... Aa3/AA- 8,599,040
3,000,000 Ohio Turnpike Commission, OH Turnpike Rev., 5.70% due 2/15/2017 ................ Aaa/AAA 3,103,830
2,955,000 Pickerington Local School District, OH School Building Construction GOs,
8% due 12/1/2005 ........................................................... Aaa/AAA 3,422,717
4,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036 ........................................................ Baa1/A 4,013,600
775,000 Toledo, OH Sewer System Rev., 7 3/4% due 11/15/2017 ............................ Aaa/AAA 821,965
560,000 Toledo, OH Waterworks Rev., 7 3/4% due 11/15/2017 .............................. Aaa/AAA 593,936
2,500,000 Twinsburg City School District, OH School Improvement GOs,
5.90% due 12/1/2021 ........................................................ Aaa/AAA 2,627,175
3,000,000 University of Toledo, OH General Receipts Bonds,
7.10% due 6/1/2010 ......................................................... Aaa/AAA 3,278,190
2,000,000 Worthington City School District, OH School Building Construction
& Improvement GOs, 8 3/4% due 12/1/2002 .................................... Aaa/AAA 2,225,380
------------
TOTAL MUNICIPAL BONDS (Cost $143,525,556)-- 98.2% .................................................. 152,766,728
VARIABLE RATE DEMAND NOTES (Cost $700,000)-- 0.4% .................................................. 700,000
OTHER ASSETS LESS LIABILITIES-- 1.4% ............................................................... 2,112,466
------------
NET ASSETS-- 100.0% ................................................................................ $155,579,194
============
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
33
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
OREGON SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 1,000,000 Albany, OR GOs Water Bonds, 6 5/8% due 11/1/2009 ............................... Aaa/AAA $ 1,002,260
2,000,000 Chemeketa, OR Community College District GOs,
5.95% due 6/1/2016 ......................................................... Aaa/AAA 2,131,900
2,000,000 Eugene, OR Electric Utility Rev., 5.80% due 8/1/2022 ........................... Aaa/AAA 2,072,520
1,500,000 Eugene, OR Trojan Nuclear Project Rev., 5.90% due 9/1/2009 ..................... Aa1/AA- 1,501,680
730,000 Eugene, OR Water Utility System Rev., 6.55% due 8/1/2003 ....................... A1/AA- 742,454
2,500,000 Hillsboro, OR Hospital Facilities Authority Rev. (Tuality Healthcare),
5 3/4% due 10/1/2012 ....................................................... NR/BBB+ 2,512,200
1,000,000 Metropolitan Service District, OR GOs (Oregon Convention Center),
6 1/4% due 1/1/2013 ........................................................ Aa/AA+ 1,056,430
1,250,000 Multnomah County School District, OR GOs, 6.80% due 12/15/2004 ................. Aa/A+ 1,257,712
1,750,000 Multnomah County School District, OR GOs, 5 1/2% due 6/1/2015 .................. A1/A+ 1,754,637
2,000,000 North Clackamas Parks & Recreation District -- Clackamas County, OR Rev.
(Recreational Facilities), 5.70% due 4/1/2013 .............................. NR/A- 2,041,560
2,000,000 North Wasco County People's Utility District-- Wasco County, OR Rev.
(Bonneville Power Administration), 5.20% due 12/1/2024 ..................... Aa1/AA- 1,957,140
750,000 Ontario, Or Hospital Facility Authority Health Facilities Rev.
Catholic Health Corporation (Dominican Sisters of Ontario Inc.,
D.B.A. Holy Rosary Medical Center Project), 6.10% DUE 11/15/2017 ........... A1/AA- 782,453
2,500,000 Oregon Department of Administrative Services Certificates of Participation,
5.80% due 5/1/2024 ......................................................... Aaa/AAA 2,596,050
1,000,000 Oregon Department of Transportation Regional Light Rail Extension Rev.,
6.20% due 6/1/2008 ......................................................... Aaa/AAA 1,104,480
2,500,000 Oregon Health, Housing, Educational &Cultural Facilities Authority Rev.
(Reed College Project), 5 3/8% due 7/1/2025 ................................ NR/A+ 2,487,275
1,250,000 Oregon Health Sciences University Rev., 5 1/4% due 7/1/2028 .................... Aaa/AAA 1,223,750
10,000 Oregon Housing Agency Mortgage Rev. (Single Family Mortgage Program),
7 3/8% due 7/1/2020* ....................................................... Aa2/NR 10,418
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+ 2,028,500
925,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 5.65% due 7/1/2019* ..................................... Aa2/NR 925,546
855,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 7% due 7/1/2022* ........................................ Aa2/NR 896,391
1,000,000 Oregon Housing & Community Services Department Mortgage Rev. (Single Family
Mortgage Program), 6% due 7/1/2027* ........................................ Aa2/NR 1,024,570
500,000 Oregon State GOs (Veterans' Welfare), 9% due 10/1/2006 ......................... Aa2/AA 662,425
1,460,000 Oregon State GOs (Veterans' Welfare), 5 7/8% due 10/1/2018 ..................... Aa2/AA 1,521,072
500,000 Oregon State GOs (Alternate Energy Project), 8.40% due 1/1/2008 ................ Aa2/AA 536,155
250,000 Oregon State GOs (Elderly & Disabled Housing), 7.20% due 8/1/2021 .............. Aa2/AA 271,333
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
34
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
OREGON SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 1,000,000 Oregon State GOs (Elderly & Disabled Housing), 6.60% due 8/1/2022* ............. Aa2/AA $ 1,088,610
950,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* ........... Aaa/AAA 1,141,776
50,000 Port of Portland, OR International Airport Rev., 7.10% due 7/1/2021* ........... Aaa/AAA 54,347
500,000 Port of Portland, OR International Airport Rev., 5 3/4% due 7/1/2025* .......... Aaa/AAA 509,670
1,500,000 Port of Portland, OR International Airport Rev., 5 5/8% due 7/1/2026* .......... Aaa/AAA 1,510,080
2,000,000 Portland, OR GOs, 5.60% due 6/1/2014 ........................................... Aa/NR 2,077,440
1,250,000 Portland, OR Hospital Facilities Authority Rev. (Legacy Health System),
6 5/8% due 5/1/2011 ........................................................ Aaa/AAA 1,358,187
2,500,000 Portland, OR Sewer System Rev., 5% due 6/1/2015 ................................ Aaa/AAA 2,465,200
1,000,000 Puerto Rico Highway & Transportation Authority Highway Rev.,
5 1/2% due 7/1/2026 ........................................................ Baa1/A 997,040
1,000,000 Puerto Rico Highway &Transportation Authority Highway Rev.,
5 1/2% due 7/1/2036 ........................................................ Baa1/A 1,003,400
630,000 Puerto Rico Housing Finance Corp. (Single Family Mortgage Rev.),
6.85% due 10/15/2023 ....................................................... Aaa/AAA 665,545
1,000,000 Puerto Rico Ports Authority Rev., 7% due 7/1/2014* ............................. Aaa/AAA 1,091,910
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2% due 1/1/2013 ...................... A/A+ 1,020,870
2,600,000 Salem, OR Pedestrian Safety Improvements GOs, 5 3/4% due 5/1/2011 .............. Aaa/AAA 2,758,860
1,000,000 Tri-County Metropolitan Transportation District of Oregon GOs
(Light Rail Extension), 6% due 7/1/2012 .................................... Aa/AA+ 1,051,820
1,110,000 Tualatin Development Commission, OR (Urban Renewal & Redevelopment),
7 3/8% due 1/1/2007 ........................................................ Baa1/NR 1,118,491
1,500,000 Washington County, OR Unified Sewerage Agency Rev.,
5 3/4% due 10/1/2011 ....................................................... Aaa/AAA 1,629,690
-----------
TOTAL MUNICIPAL BONDS (Cost $52,926,085)-- 97.8% .................................................... 55,643,847
VARIABLE RATE DEMAND NOTES (Cost $100,000)-- 0.1% ................................................... 100,000
OTHER ASSETS LESS LIABILITIES-- 2.1% ................................................................ 1,173,450
-----------
NET ASSETS-- 100.0% ................................................................................. $56,917,297
===========
SOUTH CAROLINA SERIES
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<C> <C> <C> <C>
$ 2,500,000 Anderson County, SC Hospital Rev. (Anderson Memorial Hospital),
5 1/4% due 2/1/2012 ........................................................ Aaa/AAA $ 2,504,325
3,800,000 Berkeley County, SC Water & Sewer Rev., 5.55% due 6/1/2016 ..................... Aaa/AAA 3,845,068
745,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.15% due 2/1/2004 ......................................................... A1/A 790,609
770,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.15% due 8/1/2004 ......................................................... A1/A 817,139
800,000 Charleston County, SC Public Facilities Corp. Certificates of Participation,
7.20% due 2/1/2005 ......................................................... A1/A 856,384
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
35
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SOUTH CAROLINA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 750,000 Charleston, SC Waterworks & Sewer System Rev., 7 3/4% due 1/1/2011 ............. Aaa/AAA $ 772,358
2,500,000 Charleston, SC Waterworks & Sewer System Rev., 6% due 1/1/2012 ................. A1/AA- 2,612,150
1,500,000 Clemson University, SC Student & Faculty Housing Rev.,
6.65% due 6/1/2011 ......................................................... Aaa/AAA 1,609,950
1,000,000 Clinton, SC Utility System Rev., 7.20% due 6/1/2011 ............................ Baa1/NR 1,095,770
6,000,000 Darlington County, SC Industrial Development Rev. (Nucor
Corporation Project), 5 3/4% due 8/1/2023* ................................. A1/AA- 6,050,280
2,000,000 Darlington County, SC Industrial Development Rev.
(Sonoco Products Company Project), 6% due 4/1/2026 ......................... A2/A 2,068,500
2,500,000 Fairfield County, SC Pollution Control Rev. (South Carolina
Electric & Gas Company), 6 1/2% due 9/1/2014 ............................... A1/A 2,711,275
1,000,000 Georgetown County, SC Pollution Control Facilities Rev.
(International Paper Company), 7 3/8% due 6/15/2005 ........................ A3/A- 1,049,440
3,000,000 Greenville Hospital System, SC Hospital Facilities Rev., 5 1/2% due 5/1/2016 ... NR/AA- 3,025,740
2,000,000 Greenville Hospital System, SC Hospital Facilities Rev., 5 1/4% due 5/1/2023 ... Aa3/AA- 1,961,280
3,000,000 Greenwood County, SC Hospital Facilities Rev. (Self Memorial Hospital),
5 7/8% due 10/1/2017 ....................................................... Aaa/AAA 3,102,420
2,425,000 Lancaster County, SC School District GOs, 6.60% due 7/1/2011 ................... Aaa/AAA 2,673,175
2,600,000 Lancaster County, SC School District GOs, 6.60% due 7/1/2012 ................... Aaa/AAA 2,866,084
2,000,000 Lancaster County, SC Waterworks & Sewer System Rev., 5 1/4% due 5/1/2021 ....... Aaa/AAA 1,939,400
2,720,000 Laurens County, SC Combined Utility System Rev., 5% due 1/1/2018 ............... Aaa/AAA 2,593,221
1,650,000 Laurens County, SC Combined Utility System Rev., 7 5/8% due 1/1/2018 ........... Aaa/AAA 1,715,010
500,000 Laurens County, SC Health Care System, 7.80% due 1/1/2008 ...................... Aaa/AAA 514,940
1,000,000 Lexington County School District, SC Certificates of Participation
(Red Bank/White Knoll Elementary Project), 7.10% due 9/1/2011 .............. Aaa/AAA 1,105,910
1,000,000 Medical University South Carolina Hospital Facilities Rev., 5.60% due 7/1/2011 . Aaa/AAA 1,066,260
3,000,000 Mount Pleasant, SC Water & Sewer Rev., 6% due 12/1/2020 ........................ Aaa/AAA 3,141,870
2,000,000 Myrtle Beach, SC Waterworks & Sewer System Rev., 5 1/4% due 3/1/2020 ........... Aaa/AAA 1,938,440
1,500,000 North Charleston Sewer District, SC Rev., 6 3/8% due 7/1/2012 .................. Aaa/AAA 1,721,775
1,500,000 North Charleston Sewer District, SC Rev., 7 3/4% due 8/1/2018 .................. Aaa/AAA 1,577,760
5,000,000 Oconee County, SC Pollution Control Rev. (Duke Power Co. Project),
5.80% due 4/1/2014 ......................................................... Aa2/A+ 5,151,550
1,250,000 Piedmont Municipal Power Agency, SC Electric Rev., 6 1/4% due 1/1/2021 ......... Aaa/AAA 1,407,537
4,000,000 Piedmont Municipal Power Agency, SC Electric Rev., 6.30% due 1/1/2022 .......... Aaa/AAA 4,314,400
1,000,000 Puerto Rico Highway &Transportation Authority Highway Rev.,
5 1/2%, due 7/1/2036 ....................................................... Baa1/A 1,003,400
1,000,000 Puerto Rico Telephone Authority Rev., 5 1/2% due 1/1/2022 ...................... A/A+ 1,005,250
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
36
<PAGE>
================================================================================
PORTFOLIOS OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SOUTH CAROLINA SERIES (CONTINUED)
FACE RATINGS+ MARKET
AMOUNT MUNICIPAL BONDS MOODY'S/S&P VALUE
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
$ 2,000,000 Richland County, SC Solid Waste Disposal Facilities Rev.
(Union Camp Corp. Project), 7.45% due 4/1/2021* ............................ A1/A- $ 2,203,440
1,000,000 Richland County, SC Solid Waste Disposal Facilities Rev.
(Union Camp Corp. Project), 7 1/8% due 9/1/2021* ........................... A1/A- 1,089,640
1,000,000 Rock Hill, SC Combined Utilities System Rev., 8% due 1/1/2018 .................. Aaa/AAA 1,030,430
5,000,000 Rock Hill, SC Combined Utilities System Rev., 5% due 1/1/2020 .................. Aaa/AAA 4,723,800
1,000,000 St. Andrews, SC Public Service District Sewer Systems Rev., 7 3/4% due 1/1/2018 Aaa/AAA 1,029,810
6,000,000 SouthCarolina Public Service Authority Rev., 5 7/8% due 1/1/2023 ............... Aaa/AAA 6,226,320
1,740,000 South Carolina State Housing Authority (Single Family Mortgage Purchase),
6.70% due 7/1/2010 ............................................................. Aaa/AAA 1,761,924
500,000 South Carolina State Housing Finance & Development Authority (Homeownership
Mortgage), 7.55% due 7/1/2011 .............................................. Aa/AA 528,845
2,225,000 South Carolina State Housing Finance & Development Authority Rental Housing Rev.
(North Bluff Project), 5.60% due 7/1/2016 .................................. NR/AA 2,219,660
1,000,000 South Carolina State Housing Finance & Development Authority (Multi-Family
Development Rev.), 6 7/8% due 11/15/2023 ................................... Aaa/NR 1,054,420
4,000,000 Spartanburg,SC Water System Rev., 6.10% due 6/1/2021 ........................... Aaa/AAA 4,439,800
3,000,000 University of South Carolina Rev., 5 3/4% due 6/1/2026 ......................... Aaa/AAA 3,080,310
2,000,000 Western Carolina Regional Sewer Authority, SC Sewer System Rev.,
5 1/2% due 3/1/2010 ........................................................ Aaa/AAA 2,065,020
------------
TOTAL MUNICIPAL BONDS (Cost $96,179,289)-- 97.5% .................................................... 102,062,089
VARIABLE RATE DEMAND NOTES (Cost $1,200,000)-- 1.1% ................................................. 1,200,000
OTHER ASSETS LESS LIABILITIES-- 1.4% ................................................................ 1,419,072
------------
NET ASSETS-- 100.0% ................................................................................. $104,681,161
============
</TABLE>
- -----------------
# Ratings have not been audited by Deloitte & Touche LLP.
* Interest income earned from this security is subject
to the federal alternative minimum tax.
See Notes to Financial Statements.
37
<PAGE>
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997
<TABLE>
<CAPTION>
NATIONAL COLORADO GEORGIA LOUISIANA MARYLAND
SERIES SERIES SERIES SERIES SERIES
------------- ------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (see portfolios of investments):
Long-term holdings ................................... $ 97,941,690 $ 48,876,692 $51,417,565 $55,061,369 $53,533,567
Short-term holdings .................................. -- 300,000 1,000,000 500,000 --
------------ ------------ ----------- ----------- -----------
97,941,690 49,176,692 52,417,565 55,561,369 53,533,567
Cash .................................................... 645,185 129,761 105,262 124,734 345,555
Interest receivable ..................................... 1,494,792 905,327 903,896 1,029,218 951,320
Receivable for Capital Stock sold ....................... 29,531 4,800 247 209,208 4,760
Expenses prepaid to shareholder service agent ........... 14,122 7,225 7,225 6,897 8,211
Receivable for securities sold .......................... -- 5,033 -- -- --
Other ................................................... 6,183 1,318 1,064 1,118 2,513
------------ ------------ ----------- ----------- -----------
TOTAL ASSETS ............................................ 100,131,503 50,230,156 53,435,259 56,932,544 54,845,926
------------ ------------ ----------- ----------- -----------
LIABILITIES:
Dividends payable ....................................... 171,093 85,964 86,025 100,655 93,261
Payable for Capital Stock repurchased ................... 72,503 50,495 21,722 45,454 62,541
Accrued expenses, taxes, and other ...................... 127,637 75,605 73,498 78,824 78,569
------------ ------------ ----------- ----------- -----------
TOTAL LIABILITIES ....................................... 371,233 212,064 181,245 224,933 234,371
------------ ------------ ----------- ----------- -----------
NET ASSETS .............................................. $ 99,760,270 $ 50,018,092 $53,254,014 $56,707,611 $54,611,555
============ ============ =========== =========== ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A .............................................. $12,169 $6,707 $6,236 $6,790 $6,452
Class D .............................................. 284 32 324 62 253
Additional paid-in capital .............................. 97,488,324 48,217,539 50,021,714 53,243,361 51,203,248
Undistributed/accumulated net realized gain (loss) ...... (2,934,455) (1,333,311) 109,398 93,200 320,110
Net unrealized appreciation of investments .............. 5,193,948 3,127,125 3,116,342 3,364,198 3,081,492
------------ ------------ ----------- ----------- -----------
NET ASSETS .............................................. $ 99,760,270 $ 50,018,092 $53,254,014 $56,707,611 $54,611,555
============ ============ =========== =========== ===========
NET ASSETS:
Class A ................................................. $97,481,082 $49,779,996 $50,613,828 $56,199,301 $52,549,159
Class D ................................................. $ 2,279,188 $ 238,096 $ 2,640,186 $ 508,310 $ 2,062,396
SHARES OF CAPITAL STOCK
OUTSTANDING ($.001 par value):
Class A ................................................. 12,169,119 6,706,744 6,235,684 6,790,162 6,452,043
Class D ................................................. 284,352 32,098 324,597 61,437 253,031
NET ASSET VALUE PER SHARE:
CLASS A ................................................. $8.01 $7.42 $8.12 $8.28 $8.14
CLASS D ................................................. $8.02 $7.42 $8.13 $8.27 $8.15
- ----------
See Notes to Financial Statements.
</TABLE>
38
<PAGE>
================================================================================
<TABLE>
<CAPTION>
MASSACHUSETTS MICHIGAN MINNESOTA MISSOURI
SERIES SERIES SERIES SERIES
-------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (see portfolios of investments):
Long-term holdings ................................ $108,148,332 $142,065,206 $120,049,839 $51,069,198
Short-term holdings ............................... 1,800,000 800,000 1,900,000 1,000,000
------------ ------------ ------------- -----------
109,948,332 142,865,206 121,949,839 52,069,198
Cash ................................................. 95,557 82,201 150,293 77,691
Interest receivable .................................. 1,690,365 2,717,447 1,779,670 1,025,583
Receivable for Capital Stock sold .................... 3,872 41,065 10,055 250,101
Expenses prepaid to shareholder service agent ........ 15,436 19,706 19,927 7,225
Receivable for securities sold ....................... -- -- -- --
Other ................................................ 3,091 4,490 3,086 1,754
------------ ------------ ------------- -----------
TOTAL ASSETS ......................................... 111,756,653 145,730,115 123,912,870 53,431,552
------------ ------------ ------------- -----------
LIABILITIES:
Dividends payable .................................... 191,584 257,834 222,691 88,334
Payable for Capital Stock repurchased ................ 184,396 107,074 71,522 27,320
Accrued expenses, taxes, and other ................... 125,018 149,858 145,358 76,172
------------ ------------ ------------- -----------
TOTAL LIABILITIES .................................... 500,998 514,766 439,571 191,826
------------ ------------ ------------- -----------
NET ASSETS ........................................... $111,255,655 $145,215,349 $123,473,299 $53,239,726
============ ============ ============= ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ........................................... $ 13,765 $ 16,680 $ 15,619 $ 6,749
Class D ........................................... 156 215 231 61
Additional paid-in capital ........................... 105,378,850 135,710,431 117,067,819 50,327,782
Undistributed/accumulated net realized gain (loss) ... 1,299,658 1,252,695 (681,481) 384,574
Net unrealized appreciation of investments ........... 4,563,226 8,235,328 7,071,111 2,520,560
------------ ------------ ------------- -----------
NET ASSETS ........................................... $111,255,655 $145,215,349 $123,473,299 $53,239,726
============ ============ ============= ===========
NET ASSETS:
Class A .............................................. $110,010,869 $143,370,409 $121,674,045 $52,765,370
Class D .............................................. $ 1,244,786 $ 1,844,940 $ 1,799,254 $ 474,356
SHARES OF CAPITAL STOCK
OUTSTANDING ($.001 par value):
Class A .............................................. 13,765,527 16,680,052 15,619,226 6,749,209
Class D .............................................. 155,828 214,801 230,915 60,665
NET ASSET VALUE PER SHARE:
CLASS A .............................................. $7.99 $8.60 $7.79 $7.82
CLASS D .............................................. $7.99 $8.59 $7.79 $7.82
</TABLE>
<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 ................................ $ 83,086,174 $152,766,728 $55,643,847 $102,062,089
Short-term holdings ............................... 900,000 700,000 100,000 1,200,000
------------ ------------ ------------ ------------
83,986,174 153,466,728 55,743,847 103,262,089
Cash ................................................. 131,788 80,946 285,152 102,317
Interest receivable .................................. 1,273,400 2,636,343 973,262 1,686,312
Receivable for Capital Stock sold .................... 3,000 40,483 6,476 8,737
Expenses prepaid to shareholder service agent ........ 11,167 21,406 8,211 14,933
Receivable for securities sold ....................... -- -- 80,637 --
Other ................................................ 4,138 3,900 1,614 2,961
------------ ------------ ------------ ------------
TOTAL ASSETS ......................................... 85,409,667 156,249,806 57,099,199 105,077,349
------------ ------------ ------------ ------------
LIABILITIES:
Dividends payable .................................... 145,872 279,276 94,252 176,994
Payable for Capital Stock repurchased ................ 58,837 223,472 5,478 95,360
Accrued expenses, taxes, and other ................... 105,328 167,864 82,172 123,834
------------ ------------ ------------ ------------
TOTAL LIABILITIES .................................... 310,037 670,612 181,902 396,188
------------ ------------ ------------ ------------
NET ASSETS ........................................... $ 85,099,630 $155,579,194 $ 56,917,297 $104,681,161
============ ============ ============ ============
COMPOSITION OF NET ASSETS:
Capital Stock, at par:
Class A ........................................... $ 10,086 $ 18,862 $ 7,017 $ 12,375
Class D ........................................... 189 141 213 449
Additional paid-in capital ........................... 79,220,410 145,276,820 53,474,384 98,335,488
Undistributed/accumulated net realized gain (loss) ... 198,893 1,042,199 717,921 450,049
Net unrealized appreciation of investments ........... 5,670,052 9,241,172 2,717,762 5,882,800
------------ ------------ ------------ ------------
NET ASSETS ........................................... $ 85,099,630 $155,579,194 $ 56,917,297 $104,681,161
============ ============ ============ ============
NET ASSETS:
Class A .............................................. $ 83,528,254 $154,419,269 $55,239,617 $101,018,411
Class D .............................................. $ 1,571,376 $ 1,159,925 $ 1,677,680 $ 3,662,750
SHARES OF CAPITAL STOCK
OUTSTANDING ($.001 par value):
Class A .............................................. 10,085,651 18,861,745 7,016,349 12,374,931
Class D .............................................. 189,563 141,001 213,247 449,078
NET ASSET VALUE PER SHARE:
CLASS A .............................................. $8.28 $8.19 $7.87 $8.16
CLASS D .............................................. $8.29 $8.23 $7.87 $8.16
</TABLE>
39
<PAGE>
================================================================================
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1997
<TABLE>
<CAPTION>
NATIONAL COLORADO GEORGIA LOUISIANA MARYLAND
SERIES SERIES SERIES SERIES SERIES
------------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INTEREST .............................. $ 5,959,439 $ 3,016,836 $ 2,983,023 $ 3,372,621 $ 3,244,604
----------- ----------- ----------- ----------- -----------
EXPENSES:
Management fees ....................... 506,520 254,781 261,126 283,702 275,393
Distribution and service fees ......... 132,329 49,865 71,599 59,425 70,856
Shareholder account services .......... 129,467 71,239 70,925 63,874 82,968
Auditing and legal fees ............... 32,344 38,605 33,850 40,598 35,192
Registration .......................... 21,797 5,123 5,786 6,553 7,790
Custody and related services .......... 21,782 12,854 15,392 11,599 13,446
Shareholder reports and communications 18,512 15,848 11,923 13,290 13,799
Shareholders' meeting ................. 8,605 5,428 4,988 3,969 5,776
Directors' fees and expenses .......... 6,550 5,866 5,845 5,956 5,947
Miscellaneous ......................... 6,995 4,567 4,641 1,483 4,748
----------- ----------- ----------- ----------- -----------
TOTAL EXPENSES ........................ 884,901 464,176 486,075 490,449 515,915
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME ................. 5,074,538 2,552,660 2,496,948 2,882,172 2,728,689
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 278,366 (1,295,378) 117,571 96,176 383,873
Net change in unrealized appreciation
of investments ........................ 3,753,003 2,352,484 1,648,469 1,423,177 952,592
----------- ----------- ----------- ----------- -----------
NET GAIN ON INVESTMENTS ............... 4,031,369 1,057,106 1,766,040 1,519,353 1,336,465
----------- ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS $ 9,105,907 $ 3,609,766 $ 4,262,988 $ 4,401,525 $ 4,065,154
=========== =========== =========== =========== ===========
- ----------
See Notes to Financial Statements.
</TABLE>
40
<PAGE>
================================================================================
<TABLE>
<CAPTION>
MASSACHUSETTS MICHIGAN MINNESOTA MISSOURI
SERIES SERIES SERIES SERIES
-------------- ------------ -------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ..................................................... $ 6,511,148 $ 8,694,361 $ 7,625,950 $ 3,056,891
----------- ----------- ----------- -----------
EXPENSES:
Management fees .............................................. 551,726 731,198 629,693 262,926
Distribution and service fees ................................ 120,698 160,396 141,728 53,256
Shareholder account services ................................. 142,926 184,992 187,336 69,822
Auditing and legal fees ...................................... 34,887 33,118 36,765 36,394
Registration ................................................. 12,577 9,169 9,372 7,783
Custody and related services ................................. 34,575 36,288 32,699 12,338
Shareholder reports and communications ....................... 15,673 15,435 20,186 15,324
Shareholders' meeting ........................................ 9,307 13,289 14,465 5,354
Directors' fees and expenses ................................. 6,452 6,699 6,589 5,889
Miscellaneous ................................................ 7,459 9,172 8,476 4,495
----------- ----------- ----------- -----------
Total Expenses ............................................... 936,280 1,199,756 1,087,309 473,581
----------- ----------- ----------- -----------
Net Investment Income ........................................ 5,574,868 7,494,605 6,538,641 2,583,310
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ...................... 1,304,763 1,259,022 757,947 389,565
Net change in unrealized appreciation
of investments ............................................... 1,867,804 2,653,074 978,768 900,350
----------- ----------- ----------- -----------
Net Gain on Investments ...................................... 3,172,567 3,912,096 1,736,715 1,289,915
----------- ----------- ----------- -----------
Increase in Net Assets from Operations ....................... $ 8,747,435 $11,406,701 $ 8,275,356 $ 3,873,225
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NEW YORK OHIO OREGON SOUTH CAROLINA
SERIES SERIES SERIES SERIES
-------- ------- -------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INTEREST ...................................... $ 4,925,293 $ 9,445,041 $ 3,296,520 $ 6,297,775
----------- ----------- ----------- -----------
EXPENSES:
Management fees ............................... 416,749 787,121 285,086 535,390
Distribution and service fees ................. 90,632 165,154 69,239 133,944
Shareholder account services .................. 99,177 196,399 77,799 137,996
Auditing and legal fees ....................... 32,344 33,557 37,306 33,544
Registration .................................. 7,682 11,930 6,560 7,620
Custody and related services .................. 20,082 36,596 18,178 37,139
Shareholder reports and communications ........ 11,861 22,340 14,064 18,666
Shareholders' meeting ......................... 5,911 14,176 5,874 9,110
Directors' fees and expenses .................. 6,282 6,805 5,902 6,232
Miscellaneous ................................. 5,943 9,913 4,888 7,339
----------- ----------- ----------- -----------
TOTAL EXPENSES ................................ 696,663 1,283,991 524,896 926,980
----------- ----------- ----------- -----------
NET INVESTMENT INCOME ......................... 4,228,630 8,161,050 2,771,624 5,370,795
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ....... 200,181 1,052,154 747,838 452,558
Net change in unrealized appreciation
of investments ................................ 3,171,620 2,121,935 1,208,172 2,381,666
----------- ----------- ----------- -----------
NET GAIN ON INVESTMENTS ....................... 3,371,801 3,174,089 1,956,010 2,834,224
----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS ........ $ 7,600,431 $11,335,139 $ 4,727,634 $ 8,205,019
=========== =========== =========== ===========
</TABLE>
41
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONAL SERIES COLORADO SERIES
------------------------------ ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .......................... $ 5,074,538 $ 5,411,626 $ 2,552,660 $ 2,708,720
Net realized gain (loss) on investments ........ 278,366 1,270,012 (1,295,378) 230,074
Net change in unrealized appreciation
of investments ................................. 3,753,003 477,663 2,352,484 (404,283)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS ..................................... 9,105,907 7,159,301 3,609,766 2,534,511
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ..................................... (4,906,738) (5,337,292) (2,542,330) (2,698,764)
Class D ..................................... (167,800) (74,334) (10,330) (9,956)
Net realized gain on investments:
Class A ..................................... -- -- -- --
Class D ..................................... -- -- -- --
-------------
DECREASE IN NET ASSETS FROM ------------- ------------- -------------
DISTRIBUTIONS .................................. (5,074,538) (5,411,626) (2,552,660) (2,708,720)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ..................................... 3,114,125 6,105,129 1,076,262 1,368,525
Class D ..................................... 475,323 940,723 32,754 56,953
Net asset value of shares issued in
payment of dividends:
Class A ..................................... 2,676,250 2,793,160 1,383,913 1,465,852
Class D ..................................... 108,599 56,590 6,306 5,835
Exchanged from associated Funds:
Class A ..................................... 5,221,126 30,244,931 2,519,749 1,429,514
Class D ..................................... 35,760,206 8,276,409 13,676 1,923
Net asset value of shares issued in
payment of gain distribution:
Class A ..................................... -- -- -- --
Class D ..................................... -- -- -- --
------------- ------------- ------------- -------------
Total .......................................... 47,355,629 48,416,942 5,032,660 4,328,602
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ..................................... (10,801,204) (13,127,822) (6,020,226) (5,606,419)
Class D ..................................... (585,245) (326,631) (45,914) (1,000)
Exchanged into associated Funds:
Class A ..................................... (5,287,181) (33,145,022) (2,526,522) (1,047,428)
Class D ..................................... (38,546,451) (5,370,882) (29,141) --
------------- ------------- ------------- -------------
Total .......................................... (55,220,081) (51,970,357) (8,621,803) (6,654,847)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ............................. (7,864,452) (3,553,415) (3,589,143) (2,326,245)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS ......................... (3,833,083) (1,805,740) (2,532,037) (2,500,454)
NET ASSETS:
Beginning of year .............................. 103,593,353 105,399,093 52,550,129 55,050,583
------------- ------------- ------------- -------------
END OF YEAR .................................... $ 99,760,270 $ 103,593,353 $ 50,018,092 $ 52,550,129
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
GEORGIA SERIES LOUISIANA SERIES
------------------------------ ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .............................. $ 2,496,948 $ 2,794,673 $ 2,882,172 $ 3,108,490
Net realized gain (loss) on investments ............ 117,571 234,736 96,176 764,403
Net change in unrealized appreciation
of investments ..................................... 1,648,469 574,897 1,423,177 (27,213)
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS FROM
OPERATIONS ......................................... 4,262,988 3,604,306 4,401,525 3,845,680
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ......................................... (2,406,265) (2,697,792) (2,865,407) (3,091,821)
Class D ......................................... (90,683) (96,881) (16,765) (16,669)
Net realized gain on investments:
Class A ......................................... (180,236) (395,597) (753,044) (467,263)
Class D ......................................... (6,873) (14,504) (5,217) (3,540)
------------ ------------ ------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS ...................................... (2,684,057) (3,204,774) (3,640,433) (3,579,293)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ......................................... 4,134,682 2,193,735 1,489,134 2,360,417
Class D ......................................... 1,056,744 1,001,710 135,107 95,464
Net asset value of shares issued in
payment of dividends:
Class A ......................................... 1,593,994 1,741,886 1,461,539 1,645,661
Class D ......................................... 74,720 77,107 9,122 10,639
Exchanged from associated Funds:
Class A ......................................... 220,471 290,528 21,008 4,573
Class D ......................................... 46,374 7,853 -- --
Net asset value of shares issued in
payment of gain distribution:
Class A ......................................... 140,329 304,162 518,498 317,865
Class D ......................................... 6,295 13,827 3,466 3,070
------------ ------------ ------------ ------------
Total .............................................. 7,273,609 5,630,808 3,637,874 4,437,689
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A ......................................... (6,985,116) (10,153,419) (5,240,608) (8,844,981)
Class D ......................................... (749,883) (419,468) (34,626) (185,368)
Exchanged into associated Funds:
Class A ......................................... (984,750) (1,457,061) (69,802) (467,638)
Class D ......................................... (201,142) (435,462) -- (5,400)
------------ ------------ ------------ ------------
Total .............................................. (8,920,891) (12,465,410) (5,345,036) (9,503,387)
------------ ------------ ------------ ------------
DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ................................. (1,647,282) (6,834,602) (1,707,162) (5,065,698)
------------ ------------ ------------ ------------
DECREASE IN NET ASSETS ............................. (68,351) (6,435,070) (946,070) (4,799,311)
NET ASSETS:
Beginning of year .................................. 53,322,365 59,757,435 57,653,681 62,452,992
------------ ------------ ------------ ------------
END OF YEAR ........................................ $ 53,254,014 $ 53,322,365 $ 56,707,611 $ 57,653,681
============ ============ ============ ============
- ----------
See Notes to Financial Statements.
</TABLE>
42
<PAGE>
================================================================================
<TABLE>
<CAPTION>
MARYLAND SERIES MASSACHUSETTS SERIES
------------------------------ ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .......................... $ 2,728,689 $ 2,850,710 $ 5,574,868 $ 5,969,270
Net realized gain (loss) on investments ........ 383,873 237,843 1,304,763 1,211,500
Net change in unrealized appreciation
of investments ................................. 952,592 207,699 1,867,804 (502,191)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS ..................................... 4,065,154 3,296,252 8,747,435 6,678,579
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A ..................................... (2,647,830) (2,793,641) (5,516,992) (5,917,218)
Class D ..................................... (80,859) (57,069) (57,876) (52,052)
Net realized gain on investments:
Class A ..................................... (281,130) (237,764) (1,068,791) (1,556,813)
Class D ..................................... (11,087) (3,924) (14,031) (12,717)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS .................................. (3,020,906) (3,092,398) (6,657,690) (7,538,800)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ..................................... 1,434,072 2,002,265 2,431,716 3,289,916
Class D ..................................... 510,347 1,482,760 288,117 664,274
Net asset value of shares issued in
payment of dividends:
Class A ..................................... 1,543,240 1,630,540 3,307,753 3,456,082
Class D ..................................... 69,209 47,295 31,220 33,741
Exchanged from associated Funds:
Class A ..................................... 613,677 1,117,092 11,842,999 4,648,026
Class D ..................................... -- -- 8,924 180,514
Net asset value of shares issued in
payment of gain distribution:
Class A ..................................... 205,081 175,287 774,630 1,131,226
Class D ..................................... 10,110 3,460 9,688 9,793
------------- ------------- ------------- -------------
Total .......................................... 4,385,736 6,458,699 18,695,047 13,413,572
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ..................................... (5,400,781) (6,209,930) (11,114,300) (12,032,238)
Class D ..................................... (509,633) (122,344) (510,040) (239,034)
Exchanged into associated Funds:
Class A ..................................... (896,334) (1,151,307) (9,172,465) (5,473,480)
Class D ..................................... (99,960) (10,726) (8,905) (133,437)
------------- ------------- ------------- -------------
Total .......................................... (6,906,708) (7,494,307) (20,805,710) (17,878,189)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ............................. (2,520,972) (1,035,608) (2,110,663) (4,464,617)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS ......................... (1,476,724) (831,754) (20,918) (5,324,838)
NET ASSETS:
Beginning of year .............................. 56,088,279 56,920,033 111,276,573 116,601,411
------------- ------------- ------------- -------------
END OF YEAR .................................... $ 54,611,555 $ 56,088,279 $ 111,255,655 $ 111,276,573
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
MICHIGAN SERIES
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................... $ 7,494,605 $ 8,012,309
Net realized gain (loss) on investments .................. 1,259,022 1,595,202
Net change in unrealized appreciation
of investments ........................................... 2,653,074 (620,275)
------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS ............................................... 11,406,701 8,987,236
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A ............................................... (7,427,374) (7,945,727)
Class D ............................................... (67,231) (66,582)
Net realized gain on investments:
Class A ............................................... (1,581,301) (2,526,473)
Class D ............................................... (17,780) (24,970)
------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS ............................................ (9,093,686) (10,563,752)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................................... 5,064,050 5,017,723
Class D ............................................... 706,948 643,962
Net asset value of shares issued in
payment of dividends:
Class A ............................................... 4,475,470 4,892,727
Class D ............................................... 47,279 43,735
Exchanged from associated Funds:
Class A ............................................... 9,115,725 2,197,763
Class D ............................................... 258,662 210,059
Net asset value of shares issued in
payment of gain distribution:
Class A ............................................... 1,180,119 1,901,806
Class D ............................................... 13,960 21,146
------------- -------------
Total .................................................... 20,862,213 14,928,921
------------- -------------
Cost of shares repurchased:
Class A ............................................... (15,967,293) (13,211,454)
Class D ............................................... (552,079) (368,116)
Exchanged into associated Funds:
Class A ............................................... (10,959,291) (2,652,409)
Class D ............................................... (145,528) (217,280)
------------- -------------
Total .................................................... (27,624,191) (16,449,259)
------------- -------------
DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ....................................... (6,761,978) (1,520,338)
------------- -------------
DECREASE IN NET ASSETS ................................... (4,448,963) (3,096,854)
NET ASSETS:
Beginning of year ........................................ 149,664,312 152,761,166
------------- -------------
END OF YEAR .............................................. $ 145,215,349 $ 149,664,312
============= =============
</TABLE>
43
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
MINNESOTA SERIES MISSOURI SERIES
------------------------------ -----------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ -----------------------------
1997 1996 1997 1996
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .......................... $ 6,538,641 $ 7,189,682 $ 2,583,310 $ 2,553,696
Net realized gain (loss) on investments ........ 757,947 (1,345,678) 389,565 702,168
Net change in unrealized appreciation
of investments ................................. 978,768 (718,882) 900,350 (147,019)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS ..................................... 8,275,356 5,125,122 3,873,225 3,108,845
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ..................................... (6,456,679) (7,091,290) (2,563,601) (2,529,631)
Class D ..................................... (81,962) (98,392) (19,709) (24,065)
Net realized gain on investments:
Class A ..................................... -- (339,461) (542,355) (477,820)
Class D ..................................... -- (5,862) (5,999) (5,541)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS .................................. (6,538,641) (7,535,005) (3,131,664) (3,037,057)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ..................................... 5,444,733 5,136,193 5,524,679 2,604,871
Class D ..................................... 135,740 355,058 39,028 354,207
Net asset value of shares issued in
payment of dividends:
Class A ..................................... 4,394,871 4,809,942 1,240,533 1,314,503
Class D ..................................... 55,878 74,558 15,171 15,852
Exchanged from associated Funds:
Class A ..................................... 356,606 496,211 243,591 90,007
Class D ..................................... 90,000 48,646 100 44,301
Net asset value of shares issued in
payment of gain distribution:
Class A ..................................... -- 270,799 354,701 311,188
Class D ..................................... -- 4,666 5,296 2,649
------------- ------------- ------------- -------------
Total .......................................... 10,477,828 11,196,073 7,423,099 4,737,578
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ..................................... (14,412,829) (13,463,390) (4,255,392) (4,836,102)
Class D ..................................... (503,408) (507,655) (114,612) (304,921)
Exchanged into associated Funds:
Class A ..................................... (1,994,727) (1,423,552) (1,021,172) (788,552)
Class D ..................................... (39,298) (135,371) (40,189) (57,294)
------------- ------------- ------------- -------------
Total .......................................... (16,950,262) (15,529,968) (5,431,365) (5,986,869)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ..................... (6,472,434) (4,333,895) 1,991,734 (1,249,291)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS .............. (4,735,719) (6,743,778) 2,733,295 (1,177,503)
NET ASSETS:
Beginning of year .............................. 128,209,018 134,952,796 50,506,431 51,683,934
------------- ------------- ------------- -------------
END OF YEAR .................................... $ 123,473,299 $ 128,209,018 $ 53,239,726 $ 50,506,431
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NEW YORK SERIES OHIO SERIES
------------------------------ ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .......................... $ 4,228,630 $ 4,425,553 $ 8,161,050 $ 8,922,203
Net realized gain (loss) on investments ........ 200,181 1,161,126 1,052,154 1,396,965
Net change in unrealized appreciation
of investments ................................. 3,171,620 36,180 2,121,935 (1,059,760)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS ..................................... 7,600,431 5,622,859 11,335,139 9,259,408
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ..................................... (4,176,066) (4,381,889) (8,118,451) (8,882,222)
Class D ..................................... (52,564) (43,664) (42,599) (39,981)
Net realized gain on investments:
Class A ..................................... (213,515) -- (1,382,343) (794,088)
Class D ..................................... (3,062) -- (8,277) (3,482)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS .................................. (4,445,207) (4,425,553) (9,551,670) (9,719,773)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ..................................... 3,917,958 3,350,809 3,568,969 4,520,137
Class D ..................................... 431,628 411,499 352,330 348,741
Net asset value of shares issued in
payment of dividends:
Class A ..................................... 2,427,328 2,485,560 5,063,815 5,490,252
Class D ..................................... 36,517 31,604 38,045 34,422
Exchanged from associated Funds:
Class A ..................................... 4,314,919 3,161,968 858,387 939,551
Class D ..................................... 12,295 184,854 15,368 4,272
Net asset value of shares issued in
payment of gain distribution:
Class A ..................................... 166,872 -- 1,060,708 599,050
Class D ..................................... 2,545 -- 7,582 3,281
------------- ------------- ------------- -------------
Total .......................................... 11,310,062 9,626,294 10,965,204 11,939,706
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ..................................... (9,574,807) (9,268,664) (18,663,417) (16,177,726)
Class D ..................................... (68,104) (258,544) (216,985) (24,324)
Exchanged into associated Funds:
Class A ..................................... (3,551,797) (2,173,151) (1,482,349) (2,863,802)
Class D ..................................... (42,506) (116,722) (60,245) (10,486)
------------- ------------- ------------- -------------
Total .......................................... (13,237,214) (11,817,081) (20,422,996) (19,076,338)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ..................... (1,927,152) (2,190,787) (9,457,792) (7,136,632)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS .............. 1,228,072 (993,481) (7,674,323) (7,596,997)
NET ASSETS:
Beginning of year .............................. 83,871,558 84,865,039 163,253,517 170,850,514
------------- ------------- ------------- -------------
End of Year .................................... $ 85,099,630 $ 83,871,558 $ 155,579,194 $ 163,253,517
============= ============= ============= =============
- ----------
See Notes to Financial Statements.
</TABLE>
44
<PAGE>
================================================================================
<TABLE>
<CAPTION>
OREGON SERIES SOUTH CAROLINA SERIES
------------------------------ ------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .............................. $ 2,771,624 $ 3,107,679 $ 5,370,795 $ 5,818,944
Net realized gain (loss) on investments ............ 747,838 286,078 452,558 1,720,268
Net change in unrealized appreciation
of investments ..................................... 1,208,172 (342,324) 2,381,666 (81,642)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS ......................................... 4,727,634 3,051,433 8,205,019 7,457,570
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A ......................................... (2,712,769) (3,041,984) (5,239,991) (5,721,911)
Class D ......................................... (58,855) (65,695) (130,804) (97,033)
Net realized gain on investments:
Class A ......................................... (304,704) (61,975) (1,667,625) (253,251)
Class D ......................................... (8,165) (1,566) (42,381) (5,029)
------------- ------------- ------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS ...................................... (3,084,493) (3,171,220) (7,080,801) (6,077,224)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ......................................... 2,019,494 3,453,799 4,596,375 7,339,428
Class D ......................................... 513,511 410,708 1,258,114 1,431,442
Net asset value of shares issued in
payment of dividends:
Class A ......................................... 1,713,320 1,922,589 3,057,472 3,322,251
Class D ......................................... 43,464 51,715 111,193 85,491
Exchanged from associated Funds:
Class A ......................................... 59,994 554,373 385,497 844,016
Class D ......................................... 105,958 21,324 29,567 --
Net asset value of shares issued in
payment of gain distribution:
Class A ......................................... 232,602 46,901 1,298,064 195,931
Class D ......................................... 6,239 1,353 40,550 4,927
------------- ------------- ------------- -------------
Total .............................................. 4,694,582 6,462,762 10,776,832 13,223,486
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ......................................... (6,926,397) (7,135,242) (16,191,089) (14,837,001)
Class D ......................................... (525,899) (304,546) (432,224) (519,148)
Exchanged into associated Funds:
Class A ......................................... (801,759) (932,697) (1,366,846) (2,478,917)
Class D ......................................... (51,638) (129,221) (106,657) (16,928)
------------- ------------- ------------- -------------
Total .............................................. (8,305,693) (8,501,706) (18,096,816) (17,851,994)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET A
CAPITAL SHARE TRANSACTIONS ......................... (3,611,111) (2,038,944) (7,319,984) (4,628,508)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS .................. (1,967,970) (2,158,731) (6,195,766) (3,248,162)
NET ASSETS:
Beginning of year .................................. 58,885,267 61,043,998 110,876,927 114,125,089
------------- ------------- ------------- -------------
END OF YEAR ........................................ $ 56,917,297 $ 58,885,267 $ 104,681,161 $ 110,876,927
============= ============= ============= =============
</TABLE>
45
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Municipal 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, the
commencement date of Class D shares, 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 A shares purchased in an
amount of $1,000,000 or more are sold without an initial sales charge but are
subject to a contingent deferred sales load ("CDSL") of 1% on redemptions within
18 months of purchase. 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 a CDSL of 1% imposed on 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 other class expenses, and has exclusive voting rights
with respect to any matter on which a separate vote of any class is required.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. SECURITY VALUATION -- All municipal 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. FEDERAL TAXES -- There is no provision for federal income 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.
c. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- 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 than original issue discounts are not amortized.
d. MULTIPLE CLASS ALLOCATIONS -- 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 are specifically attributable to a
particular class, are charged directly to such class. For the year ended
September 30, 1997, distribution and service fees were the only
class-specific expenses.
e. DISTRIBUTIONS TO SHAREHOLDERS -- Dividends are declared daily and paid
monthly. Other distributions paid by the Fund are recorded on the
ex-dividend date. The treatment for financial statement purposes of
distributions made to shareholders 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, or realized 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 SECURITIES -- Purchases and sales of portfolio
securities, excluding short-term investments, for the year ended September 30,
1997, were as follows:
SERIES PURCHASES SALES
- ------- -------------- -----------
National .................................. $20,257,068 $31,445,100
Colorado .................................. 1,971,600 4,980,241
Georgia ................................... 6,297,365 7,704,168
Louisiana ................................. 8,894,825 11,777,281
Maryland .................................. 7,962,960 10,182,170
Massachusetts ............................. 31,357,187 34,857,833
Michigan .................................. 15,757,416 23,896,463
Minnesota ................................. 8,380,328 17,177,125
Missouri .................................. 4,457,100 3,283,300
New York .................................. 19,425,215 21,547,816
Ohio ...................................... 18,308,120 28,742,312
Oregon .................................... 10,855,065 15,713,300
South Carolina ............................ -- 9,536,925
46
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
At September 30, 1997, 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 ................... $5,332,596 $ 138,648
Colorado ................... 3,127,125 --
Georgia .................... 3,223,885 107,543
Louisiana .................. 3,418,841 54,643
Maryland ................... 3,108,634 27,142
Massachusetts .............. 4,564,252 1,026
Michigan ................... 8,235,328 --
Minnesota .................. 7,114,327 43,216
Missouri ................... 2,520,560 --
New York ................... 5,692,572 22,520
Ohio ....................... 9,279,502 38,330
Oregon ..................... 2,717,762 --
South Carolina ............. 5,900,680 17,880
4. MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- 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, calculated daily and payable monthly, is equal to 0.50% per
annum of each Series' average daily net assets.
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 ............... $ 8,749 $ 60,789
Colorado ............... 4,828 36,405
Georgia ................ 7,820 56,992
Louisiana .............. 6,792 49,286
Maryland ............... 7,366 52,904
Massachusetts .......... 10,093 74,691
Michigan ............... 18,739 141,150
Minnesota .............. 9,979 75,908
Missouri ............... 4,557 36,025
New York ............... 11,532 84,357
Ohio ................... 16,992 124,695
Oregon ................. 9,740 74,960
South Carolina ......... 17,715 133,456
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, 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, 1997, the Distributor charged such fees to the Fund pursuant to
the Plan as follows:
ANNUALIZED
TOTAL FEES % OF AVERAGE
SERIES PAID NET ASSETS
------------- ------------- ---------------
National .................... $ 91,999 .09%
Colorado .................... 47,350 .09
Georgia ..................... 48,452 .10
Louisiana ................... 55,423 .10
Maryland .................... 51,056 .09
Massachusetts ............... 106,820 .10
Michigan .................... 144,511 .10
Minnesota ................... 122,699 .10
Missouri .................... 48,358 .09
New York .................... 78,075 .09
Ohio ........................ 155,221 .10
Oregon ...................... 54,461 .10
South Carolina .............. 102,127 .09
Under the Plan, with respect to Class D shares, 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 an 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, 1997, fees paid equivalent to 1%
per annum of the average daily net assets of Class D shares were as follows:
SERIES SERIES
- ----------- -----------
National ............. $40,330 Minnesota .... $19,029
Colorado ............. 2,515 Missouri ..... 4,898
Georgia .............. 23,147 New York ..... 12,557
Louisiana ............ 4,002 Ohio ......... 9,933
Maryland ............. 19,800 Oregon ....... 14,778
Massachusetts ........ 13,878 South Carolina 31,817
Michigan ............. 15,885
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year after purchase and on certain
redemptions of Class A shares occurring within 18 months of purchase. For the
year ended September 30, 1997, such charges were as follows:
47
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
SERIES SERIES
- ------------- -------------
National ............... $1,711 Minnesota ............. $372
Colorado ............... 19 Missouri .............. 64
Georgia ................ 6,039 New York .............. 5
Louisiana .............. 26 Ohio .................. 668
Maryland ............... 2,223 Oregon ................ 105
Massachusetts .......... 260 South Carolina ........ 724
Michigan ............... 398
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of Fund shares, as well as distribution
and service fees pursuant to the Plan. For the year ended September 30, 1997,
Seligman Services, Inc. received commissions from the sale of shares of each
Series and distribution and service fees pursuant to the Plan, as follows:
DISTRIBUTION AND
SERIES COMMISSIONS SERVICE FEES
------------- ---------------- ---------------------
National .................... $ 456 $ 6,388
Colorado .................... 4,678 2,918
Georgia ..................... 283 988
Louisiana ................... 21 685
Maryland .................... 523 1,425
Massachusetts ............... 1,865 2,080
Michigan .................... 515 2,537
Minnesota ................... 594 2,087
Missouri .................... 1,220 3,261
New York .................... 2,889 12,398
Ohio ........................ 1,485 3,132
Oregon ...................... 24 1,417
South Carolina .............. 2,582 1,576
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost for shareholder account services the following
amounts:
SERIES SERIES
------------- ------------
National .............. $128,809 Minnesota ......... $186,678
Colorado .............. 70,580 Missouri .......... 69,163
Georgia ............... 70,267 New York .......... 98,518
Louisiana ............. 63,215 Ohio .............. 195,740
Maryland .............. 82,309 Oregon ............ 77,140
Massachusetts ......... 142,267 South Carolina .... 137,337
Michigan .............. 184,333
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
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 cost of such fees
and interest is included in directors' fees and expenses, and the accumulated
balances thereof at September 30, 1997, are as follows:
SERIES SERIES
---------- -------------
National .............. $18,086 Minnesota ......... $15,369
Colorado .............. 11,295 Missouri .......... 11,298
Georgia ............... 10,582 New York .......... 15,334
Louisiana ............. 12,285 Ohio .............. 15,393
Maryland .............. 12,284 Oregon ............ 11,108
Massachusetts ......... 15,354 South Carolina .... 10,626
Michigan .............. 14,857
5. LOSS CARRYFORWARD -- 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, 1997, the
net loss carryforwards for the National, Colorado, and Minnesota Series amounted
to $2,934,455, $38,129, and $681,481, respectively, which are available for
offset against future taxable net gains, expiring in various amounts through
2005. Accordingly, no capital gain distributions are expected to be paid to
shareholders of the National, Colorado, and Minnesota Series until net capital
gains have been realized in excess of the available capital loss carryforwards.
48
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
6. CAPITAL STOCK TRANSACTIONS -- The Fund has 1,300,000,000 shares of Capital
Stock authorized. At September 30, 1997, 100,000,000 shares were authorized for
each Series of the Fund. Transactions in shares of Capital Stock were as
follows:
<TABLE>
<CAPTION>
NATIONAL SERIES COLORADO SERIES GEORGIA SERIES LOUISIANA SERIES
--------------------------- ------------------------- ------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ------------------------- ------------------------- ------------------------
1997 1996 1997 1996 1997 1996 1997 1996
----------- ----------- ---------- -------- ----------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A .......... 401,292 787,838 146,785 186,485 513,632 278,594 181,700 289,128
Class D .......... 61,208 122,738 4,493 7,709 133,099 125,912 16,439 11,771
Shares issued
in payment
of dividends:
Class A .......... 343,369 362,598 188,633 200,194 200,681 221,658 179,244 201,153
Class D .......... 13,912 7,360 860 799 9,380 9,793 1,120 1,298
Exchanged from
associated Funds:
Class A .......... 672,956 3,977,611 345,869 197,002 28,040 36,617 2,599 559
Class D .......... 4,606,174 1,084,989 1,897 258 5,782 1,004 -- --
Shares issued
in payment of
gain distributions:
Class A .......... -- -- -- -- 17,674 38,308 63,776 38,670
Class D .......... -- -- -- -- 792 1,739 426 374
---------- ---------- ---------- -------- --------- ---------- -------- ----------
Total .............. 6,098,911 6,343,134 688,537 592,447 909,080 713,625 445,304 542,953
---------- ---------- ---------- -------- --------- ---------- -------- ----------
Shares repurchased:
Class A .......... (1,389,619) (1,709,147) (821,576) (766,043) (881,743) (1,294,735) (642,677) (1,076,395)
Class D .......... (75,516) (42,115) (6,235) (139) (94,407) (53,212) (4,237) (22,258)
Exchanged into
associated Funds:
Class A .......... (679,856) (4,341,083) (345,924) (142,468) (123,961) (185,879) (8,595) (56,582)
Class D .......... (4,948,529) (706,332) (4,012) -- (25,271) (55,816) -- (657)
---------- ---------- ---------- -------- ---------- ---------- -------- ----------
Total .............. (7,093,520) (6,798,677) (1,177,747) (908,650) (1,125,382) (1,589,642) (655,509) (1,155,892)
---------- ---------- ---------- -------- ---------- ---------- -------- ----------
Decrease in shares . (994,609) (455,543) (489,210) (316,203) (216,302) (876,017) (210,205) (612,939)
========== ========== ========== ======== ========== ========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
MARYLAND SERIES MASSACHUSETTS SERIES MICHIGAN SERIES MINNESOTA SERIES
------------------------ --------------------------- ------------------------- ---------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------- ------------------------- ---------------------
1997 1996 1997 1996 1997 1996 1997 1996
--------- --------- --------- ----------- --------- --------- --------- --------
Sale of shares:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A .............. 178,081 251,027 308,839 420,626 596,810 590,794 706,910 662,567
Class D .............. 63,517 187,262 36,578 84,893 83,579 75,571 17,609 45,645
Shares issued
in payment
of dividends:
Class A .............. 192,610 203,932 420,799 439,779 529,332 577,449 569,754 622,155
Class D .............. 8,633 5,928 3,981 4,303 5,592 5,165 7,244 9,641
Exchanged from
associated Funds:
Class A .............. 77,084 138,972 1,523,024 598,715 1,080,365 261,523 46,568 63,682
Class D .............. -- -- 1,134 23,224 30,637 24,587 11,509 6,252
Shares issued in
payment of gain
distributions:
Class A .............. 25,571 21,748 98,428 142,832 139,825 222,433 -- 34,629
Class D .............. 1,259 429 1,232 1,238 1,654 2,476 -- 597
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total .................. 546,755 809,298 2,394,015 1,715,610 2,467,794 1,759,998 1,359,594 1,445,168
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A .............. (674,114) (777,341) (1,413,634) (1,532,595) (1,886,059) (1,562,041) (1,868,498) (1,744,913)
Class D .............. (63,960) (15,227) (65,121) (29,941) (65,355) (43,655) (65,288) (65,660)
Exchanged into
associated Funds:
Class A .............. (112,466) (144,008) (1,175,580) (700,147) (1,297,651) (314,340) (258,689) (183,451)
Class D .............. (12,507) (1,335) (1,133) (17,262) (17,125) (25,575) (5,099) (17,466)
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total .................. (863,047) (937,911) (2,655,468) (2,279,945) (3,266,190) (1,945,611) (2,197,574) (2,011,490)
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Decrease in shares ..... (316,292) (128,613) (261,453) (564,335) (798,396) (185,613) (837,980) (566,322)
======== ======== ========== ========== ========== ========== ========== ==========
</TABLE>
49
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MISSOURI SERIES NEW YORK SERIES OHIO SERIES OREGON SERIES
-------------------------- -------------------------- ------------------------ ----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------- ------------------------ ----------------------
1997 1996 1997 1996 1997 1996 1997 1996
---------- ----------- ----------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sale of shares:
Class A .............. 722,053 336,439 486,564 420,183 441,039 556,577 262,547 449,036
Class D .............. 5,024 45,866 52,683 51,905 43,216 42,516 66,778 53,330
Shares issued in
payment of
dividends:
Class A .............. 161,292 170,657 300,867 311,826 626,911 676,616 222,418 250,740
Class D .............. 1,973 2,059 4,524 3,961 4,687 4,228 5,646 6,750
Exchanged from
associated Funds:
Class A .............. 31,545 11,737 540,465 396,166 106,616 115,979 7,803 72,458
Class D .............. 13 5,683 1,501 22,805 1,906 522 13,881 2,730
Shares issued in
payment of gain
distributions:
Class A .............. 46,125 40,153 20,729 -- 131,276 73,144 30,287 6,052
Class D .............. 688 342 316 -- 934 399 813 175
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total .................. 968,713 612,936 1,407,649 1,206,846 1,356,585 1,469,981 610,173 841,271
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A .............. (553,544) (626,785) (1,191,908) (1,161,173) (2,310,439) (1,993,888) (900,692) (932,734)
Class D .............. (15,067) (40,183) (8,476) (31,991) (26,589) (2,985) (68,686) (39,953)
Exchanged into
associated Funds:
Class A .............. (131,979) (102,871) (442,854) (273,410) (184,026) (354,919) (104,744) (122,134)
Class D .............. (5,250) (7,345) (5,338) (14,800) (7,441) (1,268) (6,685) (16,869)
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Total .................. (705,840) (777,184) (1,648,576) (1,481,374) (2,528,495) (2,353,060) (1,080,807) (1,111,690)
-------- -------- ---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease)
in shares ............ 262,873 (164,248) (240,927) (274,528) (1,171,910) (883,079) (470,634) (270,419)
======== ======== ========== ========== ========== ========== ========== ==========
</TABLE>
SOUTH CAROLINA SERIES
-----------------------------
YEAR ENDED
SEPTEMBER 30,
-----------------------------
1997 1996
----------- -----------
SALE OF SHARES:
Class A ..................................... 572,615 909,638
Class D ..................................... 156,977 179,334
Shares issued in payment of dividends:
Class A ..................................... 380,701 412,361
Class D ..................................... 13,850 10,618
Exchanged from associated Funds:
Class A ..................................... 47,863 104,833
Class D ..................................... 3,643 --
Shares issued in payment of gain
distributions:
Class A ..................................... 161,652 24,100
Class D ..................................... 5,056 607
---------- ----------
Total ......................................... 1,342,357 1,641,491
---------- ----------
Shares repurchased:
Class A ..................................... (2,018,325) (1,840,951)
Class D ..................................... (53,697) (65,796)
Exchanged into associated Funds:
Class A ..................................... (170,000) (308,319)
Class D ..................................... (13,276) (2,110)
---------- ----------
Total ......................................... (2,255,298) (2,217,176)
---------- ----------
Decrease in shares ............................ (912,941) (575,685)
========== ==========
50
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, 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, based on average shares
outstanding.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased shares at 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 the net asset value 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 each Series. Total returns for periods of
less than one year are not annualized.
<TABLE>
<CAPTION>
NATIONAL SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- --------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning Of Period $7.70 $7.58 $7.18 $8.72 $8.07 $7.70 $7.57 $7.18 $8.20
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.39 0.40 0.40 0.41 0.45 0.32 0.33 0.32 0.22
Net realized and unrealized
investment gain (loss) 0.31 0.12 0.40 (1.04) 0.78 0.32 0.13 0.39 (1.02)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) From
Investment Operations 0.70 0.52 0.80 (0.63) 1.23 0.64 0.46 0.71 (0.80)
Dividends paid or declared (0.39) (0.40) (0.40) (0.41) (0.45) (0.32) (0.33) (0.32) (0.22)
Distributions
from net gain realized -- -- -- (0.50) (0.13) -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease)
In Net Asset Value 0.31 0.12 0.40 (1.54) 0.65 0.32 0.13 0.39 (1.02)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value,
End of Period $8.01 $7.70 $7.58 $7.18 $8.72 $8.02 $7.70 $7.57 $7.18
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 9.40% 6.97% 11.48% (7.83)% 16.00% 8.56% 6.13% 10.17% (9.96)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average
net assets 0.84% 0.80% 0.86% 0.85% 0.86% 1.75% 1.67% 1.95% 1.76%+
Net investment income to
average net assets 5.05% 5.19% 5.46% 5.30% 5.49% 4.15% 4.27% 4.40% 4.37%+
Portfolio turnover 20.63% 33.99% 24.91% 24.86% 72.68% 20.63% 33.99% 24.91% 24.86%++
Net Assets, End of Period
(000s omitted) $97,481 $98,767 $104,184 $111,374 $136,394 $2,279 $4,826 $1,215 $446
- ------------
See footnotes on page 57.
</TABLE>
51
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
COLORADO SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
Beginning of Period $7.27 $7.30 $7.09 $7.76 $7.34 $7.27 $7.29 $7.09 $7.72
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.37 0.37 0.38 0.37 0.39 0.30 0.31 0.30 0.20
Net realized and unrealized
investment gain (loss) 0.15 (0.03) 0.21 (0.59) 0.49 0.15 (0.02) 0.20 (0.63)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease)
from Investment
Operations 0.52 0.34 0.59 (0.22) 0.88 0.45 0.29 0.50 (0.43)
Dividends paid or declared (0.37) (0.37) (0.38) (0.37) (0.39) (0.30) (0.31) (0.30) (0.20)
Distributions from
net gain realized -- -- -- (0.08) (0.07) -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease)
in Net Asset Value 0.15 (0.03) 0.21 (0.67) 0.42 0.15 (0.02) 0.20 (0.63)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $7.42 $7.27 $7.30 $7.09 $7.76 $7.42 $7.27 $7.29 $7.09
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 7.30% 4.76% 8.56% (2.92)% 12.54% 6.34% 3.95% 7.26% (5.73)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.90% 0.85% 0.93% 0.86% 0.90% 1.81% 1.75% 2.02% 1.78%+
Net investment income
to average net assets 5.01% 5.07% 5.31% 5.06% 5.21% 4.10% 4.17% 4.23% 4.05%+
Portfolio turnover 3.99% 12.39% 14.70% 10.07% 14.09% 3.99% 12.39% 14.70% 10.07%++
Net Assets, End of Period
(000s omitted) $49,780 $52,295 $54,858 $58,197 $67,912 $238 $255 $193 $96
</TABLE>
<TABLE>
<CAPTION>
GEORGIA SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning
of Period $7.87 $7.81 $7.48 $8.43 $7.85 $7.88 $7.82 $7.49 $8.33
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.38 0.39 0.39 0.41 0.43 0.31 0.32 0.32 0.22
Net realized and unrealized
investment gain (loss) 0.28 0.11 0.43 (0.86) 0.62 0.28 0.11 0.43 (0.84)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.66 0.50 0.82 (0.45) 1.05 0.59 0.43 0.75 (0.62)
Dividends paid or declared (0.38) (0.39) (0.39) (0.41) (0.43) (0.31) (0.32) (0.32) (0.22)
Distributions from net gain
realized (0.03) (0.05) (0.10) (0.09) (0.04) (0.03) (0.05) (0.10) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.25 0.06 0.33 (0.95) 0.58 0.25 0.06 0.33 (0.84)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $8.12 $7.87 $7.81 $7.48 $8.43 $8.13 $7.88 $7.82 $7.49
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 8.65% 6.56% 11.66% (5.52)% 13.96% 7.67% 5.60% 10.58% (7.57)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.89% 0.83% 0.91% 0.73% 0.63% 1.79% 1.73% 1.90% 1.76%+
Net investment income to average
net assets 4.82% 4.94% 5.26% 5.21% 5.34% 3.92% 4.03% 4.28% 4.28%+
Portfolio turnover 12.28% 16.24% 3.36% 19.34% 12.45% 12.28% 16.24% 3.36% 19.34%++
Net Assets, End of Period
(000s omitted) $50,614 $50,995 $57,678 $61,466 $64,650 $2,640 $2,327 $2,079 $849
Without management fee waiver:*
Net investment income per
share $0.39 $0.40 $0.40 $0.31 $0.21
Ratios:
Expenses to average net assets 0.96% 0.93% 0.93% 1.95% 1.90%+
Net investment income to
average net assets 5.21% 5.01% 5.04% 4.23% 4.15%+
- ------------
See footnotes on page 57.
</TABLE>
52
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $8.16 $8.14 $7.94 $8.79 $8.38 $8.16 $8.14 $7.94 $8.73
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.41 0.42 0.43 0.44 0.46 0.34 0.35 0.35 0.24
Net realized and unrealized
investment gain (loss) 0.23 0.08 0.34 (0.77) 0.51 0.22 0.08 0.34 (0.79)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.64 0.50 0.77 (0.33) 0.97 0.56 0.43 0.69 (0.55)
Dividends paid or declared (0.41) (0.42) (0.43) (0.44) (0.46) (0.34) (0.35) (0.35) (0.24)
Distributions from net gain
realized (0.11) (0.06) (0.14) (0.08) (0.10) (0.11) (0.06) (0.14) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.12 0.02 0.20 (0.85) 0.41 0.11 0.02 0.20 (0.79)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $8.28 $8.16 $8.14 $7.94 $8.79 $8.27 $8.16 $8.14 $7.94
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 8.17% 6.32% 10.30% (3.83)% 12.10% 7.07% 5.37% 9.17% (6.45)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.86% 0.82% 0.89% 0.87% 0.87% 1.76% 1.72% 1.91% 1.78%+
Net investment income to
average net assets 5.08% 5.15% 5.44% 5.31% 5.40% 4.18% 4.25% 4.41% 4.33%+
Portfolio turnover 16.08% 10.08% 4.82% 17.16% 9.21% 16.08% 10.08% 4.82% 17.16%++
Net Assets, End of Period
(000s omitted) $56,199 $57,264 $61,988 $61,441 $67,529 $509 $389 $465 $704
</TABLE>
<TABLE>
<CAPTION>
MARYLAND SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $7.99 $7.96 $7.71 $8.64 $8.15 $7.99 $7.97 $7.72 $8.46
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.40 0.40 0.41 0.42 0.44 0.33 0.33 0.33 0.23
Net realized and unrealized
investment gain (loss) 0.19 0.06 0.38 (0.76) 0.59 0.20 0.05 0.38 (0.74)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.59 0.46 0.79 (0.34) 1.03 0.53 0.38 0.71 (0.51)
Dividends paid or declared (0.40) (0.40) (0.41) (0.42) (0.44) (0.33) (0.33) (0.33) (0.23)
Distributions from net gain
realized (0.04) (0.03) (0.13) (0.17) (0.10) (0.04) (0.03) (0.13) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.15 0.03 0.25 (0.93) 0.49 0.16 0.02 0.25 (0.74)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period $8.14 $7.99 $7.96 $7.71 $8.64 $8.15 $7.99 $7.97 $7.72
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 7.64% 6.00% 10.90% (4.08)% 13.23% 6.80% 4.91% 9.75% (6.21)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.90% 0.84% 0.96% 0.92% 0.97% 1.81% 1.72% 2.02% 1.80%+
Net investment income to
average net assets 4.99% 5.05% 5.31% 5.17% 5.28% 4.08% 4.14% 4.27% 4.26%+
Portfolio turnover 14.79% 5.56% 3.63% 17.68% 14.10% 14.79% 5.56% 3.63% 17.68%++
Net Assets, End of Period
(000s omitted) $52,549 $54,041 $56,290 $57,263 $64,472 $2,063 $2,047 $630 $424
</TABLE>
- ------------
See footnotes on page 57.
53
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $7.85 $7.91 $7.66 $8.54 $8.06 $7.84 $7.90 $7.66 $8.33
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.40 0.41 0.42 0.44 0.47 0.33 0.34 0.34 0.24
Net realized and unrealized
investment gain (loss) 0.22 0.05 0.28 (0.67) 0.55 0.23 0.05 0.27 (0.67)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.62 0.46 0.70 (0.23) 1.02 0.56 0.39 0.61 (0.43)
Dividends paid or declared (0.40) (0.41) (0.42) (0.44) (0.47) (0.33) (0.34) (0.34) (0.24)
Distributions from net gain
realized (0.08) (0.11) (0.03) (0.21) (0.07) (0.08) (0.11) (0.03) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.14 (0.06) 0.25 (0.88) 0.48 0.15 (0.06) 0.24 (0.67)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $7.99 $7.85 $7.91 $7.66 $8.54 $7.99 $7.84 $7.90 $7.66
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 8.11% 5.97% 9.58% (2.94)% 13.18% 7.29% 5.01% 8.33% (5.34)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.84% 0.80% 0.86% 0.85% 0.88% 1.74% 1.70% 1.95% 1.78%+
Net investment income to
average net assets 5.06% 5.24% 5.51% 5.46% 5.65% 4.16% 4.32% 4.47% 4.52%+
Portfolio turnover 29.26% 26.30% 16.68% 12.44% 20.66% 29.26% 26.30% 16.68% 12.44%++
Net Assets, End of Period
(000s omitted) $110,011 $109,872 $115,711 $120,149 $139,504 $1,245 $1,405 $809 $1,099
</TABLE>
<TABLE>
<CAPTION>
MICHIGAN SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $8.46 $8.54 $8.28 $9.08 $8.68 $8.45 $8.54 $8.28 $9.01
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.43 0.45 0.46 0.46 0.47 0.36 0.37 0.37 0.25
Net realized and unrealized
investment gain (loss) 0.23 0.06 0.30 (0.71) 0.59 0.23 0.05 0.30 (0.73)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.66 0.51 0.76 (0.25) 1.06 0.59 0.42 0.67 (0.48)
Dividends paid or declared (0.43) (0.45) (0.46) (0.46) (0.47) (0.36) (0.37) (0.37) (0.25)
Distributions from net gain
realized (0.09) (0.14) (0.04) (0.09) (0.19) (0.09) (0.14) (0.04) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.14 (0.08) 0.26 (0.80) 0.40 0.14 (0.09) 0.26 (0.73)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $8.60 $8.46 $8.54 $8.28 $9.08 $8.59 $8.45 $8.54 $8.28
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 8.16% 6.16% 9.56% (2.90)% 12.97% 7.19% 5.09% 8.36% (5.47)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.81% 0.78% 0.87% 0.84% 0.83% 1.71% 1.68% 2.01% 1.75%+
Net investment income to
average net assets 5.13% 5.29% 5.50% 5.32% 5.41% 4.23% 4.39% 4.40% 4.40%+
Portfolio turnover 10.98% 19.62% 20.48% 10.06% 6.33% 10.98% 19.62% 20.48% 10.06%++
Net Assets, End of Period
(000s omitted) $143,370 $148,178 $151,589 $151,095 $164,638 $1,845 $1,486 $1,172 $671
</TABLE>
- ------------
See footnotes on page 57.
54
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MINNESOTA SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $7.68 $7.82 $7.72 $8.28 $7.89 $7.68 $7.82 $7.73 $8.22
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.40 0.42 0.45 0.45 0.47 0.33 0.35 0.38 0.25
Net realized and unrealized
investment gain (loss) 0.11 (0.12) 0.11 (0.44) 0.51 0.11 (0.12) 0.10 (0.49)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.51 0.30 0.56 0.01 0.98 0.44 0.23 0.48 (0.24)
Dividends paid or declared (0.40) (0.42) (0.45) (0.45) (0.47) (0.33) (0.35) (0.38) (0.25)
Distributions from net gain
realized -- (0.02) (0.01) (0.12) (0.12) -- (0.02) (0.01) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.11 (0.14) 0.10 (0.56) 0.39 0.11 (0.14) 0.09 (0.49)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $7.79 $7.68 $7.82 $7.72 $8.28 $7.79 $7.68 $7.82 $7.73
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 6.85% 3.99% 7.61% 0.12% 13.06% 5.89% 3.06% 6.45% (3.08)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.85% 0.81% 0.87% 0.85% 0.90% 1.75% 1.71% 1.85% 1.74%+
Net investment income to
average net assets 5.21% 5.47% 5.89% 5.70% 5.89% 4.31% 4.57% 4.92% 4.68%+
Portfolio turnover 6.88% 26.89% 5.57% 3.30% 5.73% 6.88% 26.89% 5.57% 3.30%++
Net Assets, End of Period
(000s omitted) $121,674 $126,173 $132,716 $134,990 $144,600 $1,799 $2,036 $2,237 $1,649
</TABLE>
<TABLE>
<CAPTION>
MISSOURI SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $7.71 $7.70 $7.41 $8.31 $7.80 $7.72 $7.70 $7.41 $8.20
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.38 0.39 0.40 0.40 0.42 0.31 0.32 0.32 0.22
Net realized and unrealized
investment gain (loss) 0.19 0.08 0.36 (0.79) 0.57 0.18 0.09 0.36 (0.79)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.57 0.47 0.76 (0.39) 0.99 0.49 0.41 0.68 (0.57)
Dividends paid or declared (0.38) (0.39) (0.40) (0.40) (0.42) (0.31) (0.32) (0.32) (0.22)
Distributions from net gain
realized (0.08) (0.07) (0.07) (0.11) (0.06) (0.08) (0.07) (0.07) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.11 0.01 0.29 (0.90) 0.51 0.10 0.02 0.29 (0.79)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $7.82 $7.71 $7.70 $7.41 $8.31 $7.82 $7.72 $7.70 $7.41
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 7.70% 6.27% 10.67% (4.85)% 13.17% 6.60% 5.46% 9.49% (7.16)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.89% 0.86% 0.88% 0.74% 0.71% 1.80% 1.76% 1.98% 1.70%+
Net investment income to
average net assets 4.93% 5.03% 5.31% 5.18% 5.29% 4.02% 4.13% 4.23% 4.27%+
Portfolio turnover 6.47% 8.04% 3.88% 14.33% 17.03% 6.47% 8.04% 3.88% 14.33%++
Net Assets, End of Period
(000s omitted) $52,766 $49,941 $51,169 $52,621 $56,861 $474 $565 $515 $350
Without management fee waiver:*
Net investment income per share $0.39 $0.39 $0.41 $0.32 $0.22
Ratios:
Expenses to average net assets 0.93% 0.88% 0.91% 2.03% 1.80%+
Net investment income to
average net assets 5.26% 5.04% 5.09% 4.18% 4.17%+
</TABLE>
- ------------
See footnotes on page 57.
55
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NEWYORK SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $7.98 $7.86 $7.67 $8.75 $8.13 $7.98 $7.87 $7.67 $8.55
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.41 0.42 0.42 0.43 0.45 0.34 0.34 0.34 0.23
Net realized and unrealized
investment gain (loss) 0.32 0.12 0.36 (0.88) 0.74 0.33 0.11 0.37 (0.88)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.73 0.54 0.78 (0.45) 1.19 0.67 0.45 0.71 (0.65)
Dividends paid or declared (0.41) (0.42) (0.42) (0.43) (0.45) (0.34) (0.34) (0.34) (0.23)
Distributions from net gain
realized (0.02) -- (0.17) (0.20) (0.12) (0.02) -- (0.17) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.30 0.12 0.19 (1.08) 0.62 0.31 0.11 0.20 (0.88)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period $8.28 $7.98 $7.86 $7.67 $8.75 $8.29 $7.98 $7.87 $7.67
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 9.45% 6.97% 10.93% (5.37)% 15.26% 8.60% 5.86% 9.87% (7.73)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.82% 0.77% 0.88% 0.87% 0.94% 1.73% 1.68% 1.96% 1.81%+
Net investment income to
average net assets 5.09% 5.24% 5.52% 5.31% 5.37% 4.18% 4.33% 4.42% 4.39%+
Portfolio turnover 23.83% 25.88% 34.05% 28.19% 27.90% 23.83% 25.88% 34.05% 28.19%++
Net Assets, End of Period
(000s omitted) $83,528 $82,719 $83,980 $90,914 $104,685 $1,572 $1,152 $885 $476
</TABLE>
<TABLE>
<CAPTION>
OHIO SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $8.09 $8.11 $7.90 $8.77 $8.28 $8.13 $8.15 $7.92 $8.61
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.42 0.43 0.44 0.44 0.46 0.35 0.36 0.36 0.24
Net realized and unrealized
investment gain (loss) 0.17 0.02 0.28 (0.70) 0.56 0.17 0.02 0.30 (0.69)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.59 0.45 0.72 (0.26) 1.02 0.52 0.38 0.66 (0.45)
Dividends paid or declared (0.42) (0.43) (0.44) (0.44) (0.46) (0.35) (0.36) (0.36) (0.24)
Distributions from net gain
realized (0.07) (0.04) (0.07) (0.17) (0.07) (0.07) (0.04) (0.07) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.10 (0.02) 0.21 (0.87) 0.49 0.10 (0.02) 0.23 (0.69)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period $8.19 $8.09 $8.11 $7.90 $8.77 $8.23 $8.13 $8.15 $7.92
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 7.54% 5.68% 9.59% (3.08)% 12.81% 6.57% 4.74% 8.67% (5.36)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.81% 0.77% 0.84% 0.84% 0.85% 1.71% 1.67% 1.93% 1.78%+
Net investment income to
average net assets 5.19% 5.32% 5.56% 5.34% 5.44% 4.29% 4.42% 4.48% 4.41%+
Portfolio turnover 11.76% 12.90% 2.96% 9.37% 30.68% 11.76% 12.90% 2.96% 9.37%++
Net Assets, End of Period
(000s omitted) $154,419 $162,243 $170,191 $171,469 $190,083 $1,160 $1,011 $660 $324
</TABLE>
- ------------
See footnotes on page 57.
56
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OREGON SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $7.65 $7.66 $7.43 $8.08 $7.60 $7.64 $7.65 $7.43 $8.02
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.38 0.40 0.40 0.40 0.42 0.31 0.33 0.33 0.22
Net realized and unrealized
investment gain (loss) 0.26 -- 0.25 (0.59) 0.48 0.27 -- 0.24 (0.59)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.64 0.40 0.65 (0.19) 0.90 0.58 0.33 0.57 (0.37)
Dividends paid or declared (0.38) (0.40) (0.40) (0.40) (0.42) (0.31) (0.33) (0.33) (0.22)
Distributions from net gain
realized (0.04) (0.01) (0.02) (0.06) -- (0.04) (0.01) (0.02) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.22 (0.01) 0.23 (0.65) 0.48 0.23 (0.01) 0.22 (0.59)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $7.87 $7.65 $7.66 $7.43 $8.08 $7.87 $7.64 $7.65 $7.43
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 8.60% 5.27% 9.05% (2.38)% 12.21% 7.77% 4.33% 7.86% (4.76)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.90% 0.86% 0.86% 0.78% 0.78% 1.80% 1.76% 1.83% 1.72%+
Net investment income to
average net assets 4.88% 5.18% 5.40% 5.20% 5.35% 3.98% 4.28% 4.41% 4.32%+
Portfolio turnover 19.46% 28.65% 2.47% 9.43% 8.08% 19.46% 28.65% 2.47% 9.43%++
Net Assets, End of Period
(000s omitted) $55,239 $57,345 $59,549 $59,884 $62,095 $1,678 $1,540 $1,495 $843
Without management fee waiver:*
Net investment income per share $0.40 $0.39 $0.41 $0.33 $0.22
Ratios:
Expenses to average net assets 0.91% 0.89% 0.93% 1.88% 1.82%+
Net investment income to aver
net assets 5.35% 5.09% 5.20% 4.36% 4.22%+
</TABLE>
<TABLE>
<CAPTION>
SOUTH CAROLINA SERIES CLASS A CLASS D
--------------------------------------------------- -----------------------------------
YEAR ENDED 2/1/94**
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, TO
--------------------------------------------------- -------------------------
1997 1996 1995 1994 1993 1997 1996 1995 9/30/94
----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of
Period $8.07 $7.97 $7.61 $8.52 $8.00 $8.06 $7.97 $7.61 $8.42
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.40 0.41 0.41 0.41 0.43 0.33 0.34 0.34 0.22
Net realized and unrealized
investment gain (loss) 0.22 0.12 0.37 (0.79) 0.54 0.23 0.11 0.37 (0.81)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (Decrease) from
Investment Operations 0.62 0.53 0.78 (0.38) 0.97 0.56 0.45 0.71 (0.59)
Dividends paid or declared (0.40) (0.41) (0.41) (0.41) (0.43) (0.33) (0.34) (0.34) (0.22)
Distributions from net gain
realized (0.13) (0.02) (0.01) (0.12) (0.02) (0.13) (0.02) (0.01) --
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Increase (Decrease) in
Net Asset Value 0.09 0.10 0.36 (0.91) 0.52 0.10 0.09 0.36 (0.81)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of
Period $8.16 $8.07 $7.97 $7.61 $8.52 $8.16 $8.06 $7.97 $7.61
===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 7.99% 6.82% 10.69% (4.61)% 12.52% 7.15% 5.73% 9.63% (7.14)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 0.84% 0.80% 0.88% 0.83% 0.85% 1.75% 1.70% 1.85% 1.74%+
Net investment income to
average net assets 5.04% 5.15% 5.38% 5.12% 5.19% 4.13% 4.25% 4.40% 4.29%+
Portfolio turnover -- 20.66% 4.13% 1.81% 17.69% -- 20.66% 4.13% 1.81%++
Net Assets, End of Period
(000s omitted) $101,018 $108,163 $112,421 115,133 $120,589 $3,663 $2,714 $1,704 $1,478
</TABLE>
- -------------------
* During the periods stated, the Manager, at its discretion, waived portions
of its fees for the Georgia, Missouri, and
Oregon Series.
** Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended September 30, 1994.
See Notes to Financial Statements.
57
<PAGE>
================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN MUNICIPAL 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 Municipal Fund Series, Inc. as of
September 30, 1997, 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, 1997 by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each Series of
Seligman Municipal Fund Series, Inc. as of September 30, 1997, 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
New York, New York
October 31, 1997
- --------------------------------------------------------------------------------
58
<PAGE>
File No. 2-86008
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, 1997.
Financial Highlights for Class D shares for the period February 1, 1994
(commencement of operations) to September 30, 1997.
Part B - Required Financial Statements for each series of the Fund are included
in the Fund's Annual Report to shareholders, dated September 30, 1997,
which is incorporated by reference in the Statement of Additional
Information. These Financial Statements are: Portfolios of Investments
as of September 30, 1997; Statements of Assets and Liabilities as of
September 30, 1997; Statements of Operations for the year ended
September 30, 1997; Statements of Changes in Net Assets for the years
ended September 30, 1997 and September 30, 1996; Notes to Financial
Statements; Financial Highlights for the five years ended September 30,
1997 for the Fund's Class A shares and for the period February 1, 1994
(commencement of operations) to September 30, 1997 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.
(1) Amended and Restated Articles of Incorporation of Registrant.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(2) Amended and Restated By-Laws of the Registrant. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 30 filed on
January 29, 1997.)
(3) Not applicable.
(4) Copy of Specimen certificate of Capital Stock for Class D Shares.
(5) Management Agreement between the Registrant and J. & W. Seligman & Co.
Incorporated. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 30 filed on January 29, 1997.)
(6) Distributing Agreement between Registrant and Seligman Financial
Services, Inc. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 30 filed on January 29, 1997.)
(6a) Sales Agreement between Dealers and Seligman Financial Services, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(7) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(7a) Deferred Compensation Plan for Directors of Seligman Group of Funds.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(8) Custodian Agreement between Registrant and Investors Fiduciary Trust
Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 30 filed on January 29, 1997.)
(9) Not applicable.
(10) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 30 filed on January 29,
1997.)
(11) Consent of Independent Auditors.*
(11a) Opinion and Consent of Colorado Counsel.*
(11b) Opinion and Consent of Georgia Counsel.*
<PAGE>
File No. 2-86008
PART C. OTHER INFORMATION (continued)
-----------------
(11c) Opinion and Consent of Louisiana Counsel.*
(11d) Opinion and Consent of Maryland Counsel.*
(11e) Opinion and Consent of Massachusetts Counsel.*
(11f) Opinion and Consent of Michigan Counsel.*
(11g) Opinion and Consent of Minnesota Counsel.*
(11h) Opinion and Consent of Missouri Counsel.*
(11i) Opinion and Consent of New York Counsel.*
(11j) Opinion and Consent of Ohio Counsel.*
(11k) Opinion and Consent of Oregon Counsel.*
(11l) Opinion and Consent of South Carolina Counsel.*
(12) Not applicable.
(13) Purchase Agreement for Initial Capital for Class D shares.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
30 filed on January 29, 1997.)
(14) The Seligman IRA Plan Agreement.
(Incorporated by reference to Exhibit 14 of Registration Statement No.
333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14a) The Seligman Simple IRA Plan Set-Up Kit.
(Incorporated by reference to Exhibit 14 of Registration Statement No.
333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14b) The Seligman Simple IRA Plan Agreement.
(Incorporated by reference to Exhibit 14 of Registration Statement No.
333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(15) Amended Administration, Shareholder Services and Distribution Plan and
form of Agreement of the Registrant. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 30 filed on January 29,
1997.)
(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. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 30 filed on January 29,
1997.)
(17) Financial Data Schedules 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. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 30 filed on
January 29, 1997.)
Other Exhibits: Powers of Attorney
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT - None.
<PAGE>
File No. 2-86008
PART C. OTHER INFORMATION (continued)
-----------------
ITEM 26. NUMBER OF HOLDERS OF SECURITIES - As of January 2, 1998, the number of
record holders of each Series' Class A and Class D shares of the
Registrant was as follows:
Class A Class D
Title of Series Record Holders Record Holders
--------------- -------------- --------------
National Municipal Series 2,160 52
Colorado Municipal Series 1,334 8
Georgia Municipal Series 1,055 66
Louisiana Municipal Series 897 10
Maryland Municipal Series 1,377 58
Massachusetts Municipal Series 2,377 32
Michigan Municipal Series 3,404 60
Minnesota Municipal Series 3,750 55
Missouri Municipal Series 1,345 23
New York Municipal Series 1,536 31
Ohio Municipal Series 3,654 39
Oregon Municipal Series 1,523 59
South Carolina Municipal Series 2,095 73
ITEM 27. INDEMNIFICATION
Reference is made to the provisions of Articles Twelfth and
Thirteenth of Registrant's Amended and Restated Articles of
Incorporation filed as Exhibit 24(b)(1) and Article IV of
Registrant's Amended and Restated By-Laws filed as Exhibit 24(b)(2)
to Registrant's Post-Effective Amendment No. 30 to the Registration
Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act as is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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 seventeen 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 Municipal Series Trust, Seligman New Jersey Municipal Fund,
Inc., Seligman Pennsylvania Municipal Fund Series, Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman
Select Municipal Fund, Inc., Seligman Value Fund Series, Inc. 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. 801-15798) on June 3, 1997.
<PAGE>
File No. 2-86008
PART C. OTHER INFORMATION (continued)
-----------------
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 Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
Seligman Value Fund Series, Inc.
(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 DECEMBER 31, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the
Board and Chief
Executive Officer
BRIAN T. ZINO* Director President and
Director
RONALD T. SCHROEDER* Director Director
FRED E. BROWN* Director Director
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President and Director None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
ED LYNCH* Senior Vice President, Director None
of Marketing
MARK R. GORDON* Senior Vice President, Director None
of Marketing
GERALD I. CETRULO, III Senior Vice President of Sales None
140 West Parkway
Pompton Plains, NJ 07444
BRADLEY W. LARSON Senior Vice President of Sales None
367 Bryan Drive
Alamo, CA 94526
MICHELLE L. MCCANN Vice President, Manager, Retirement None
Plans Marketing
MICHAEL R. SANDERS Vice President, Product Manager None
Managed Money Services
CHARLES L. VON BREITENBACH, II* Vice President, Product Manager None
Managed Money Services
ROBERT T. HAUSLER* Global Mutual Funds, None
Product Management
</TABLE>
<PAGE>
File No. 2-86008
PART C. OTHER INFORMATION (continued)
-----------------
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF DECEMBER 31, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
MARSHA E. JACOBY* Vice President, National Accounts None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
TRACY A. SALOMON* Vice President, Retirement None
Marketing Manager
HELEN SIMON* Vice President, Sales None
Administration Manager
J. BRERETON YOUNG* Vice President, Mutual Funds None
Product Manager
PETER J. CAMPAGNA Vice President, Regional Retirement None
1130 Green Meadow Court Plans Manager
Acworth, GA 30102
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
BRADFORD C. DAVIS Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
KENNETH DOUGHERTY Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
ANDREW DRALUCK Regional Vice President None
4032 E. Williams Drive
Phoenix, AZ 85024
JONATHAN G. EVANS Senior Vice President of Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
EDWARD S. FINOCCHIARO Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
DAVID L. GARDNER Regional Vice President None
2504 Clublake Trail
McKinney, TX 75070
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
</TABLE>
<PAGE>
File No. 2-86008
PART C. OTHER INFORMATION (continued)
-----------------
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF DECEMBER 31, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
MARK LIEN Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
DAVID L. MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
TIM O'CONNELL Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
THOMAS PARNELL Regional Vice President None
5250 Greystone Drive #107
Inver Grove Heights, MN 55077
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
DAVID K. PETZKE Regional Vice President None
2714 Winding Trail Place
Boulder, CO 80304
NICOLAS ROBERTS Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
BRUCE M. TUCKEY Senior Vice President of Sales None
41644 Chathman Drive
Novi, MI 48375
ANDREW S. VEASEY Senior Vice President of Sales None
14 Woodside
Rumson, NJ 07760
STEVE WILSON Regional Vice President None
83 Kaydeross Park
Saratoga Springs, NY 12866
KELLI A. WIRTH-DUMSER Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
JEFFREY S. DEAN* Assistant Vice President, Marketing None
SANDRA FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
GAIL S. CUSHING* Assistant Vice President, None
National Accounts Manager
JOSEPH M. MCGILL* Assistant Vice President and None
Compliance Officer
JACK TALVY* Assistant Vice President, Internal None
Marketing Services Manager
JOYCE PERESS* Assistant Secretary None
</TABLE>
<PAGE>
File No. 2-86008
PART C. OTHER INFORMATION (continued)
-----------------
* 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
801 Pennsylvania
Kansas City, MO 64105 AND
Seligman Municipal 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, 1997, 1996 and 1995,
the approximate cost of these services for each Series was:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
National Municipal Series $12,400 $13,300 $14,000
Colorado Municipal Series 7,500 7,900 8,600
Georgia Municipal Series 6,300 6,900 7,300
Louisiana Municipal Series 4,800 5,100 5,500
Maryland Municipal Series 7,800 8,200 8,600
Massachusetts Municipal Series 13,100 13,900 14,800
Michigan Municipal Series 19,500 18,900 19,800
Minnesota Municipal Series 20,500 21,800 23,200
Missouri Municipal Series 7,500 7,900 8,300
New York Municipal Series 8,300 8,700 9,400
Ohio Municipal Series 19,600 20,600 21,700
Oregon Municipal Series 8,500 8,900 9,500
South Carolina Municipal Series 11,800 12,800 13,900
</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 certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 31 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 27th day of January, 1998.
SELIGMAN MUNICIPAL 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. 31 has been signed below by the following persons
in the capacities indicated on January 27, 1998.
SIGNATURE TITLE
/s/ WILLIAM C. MORRIS Chairman of the Board (Principal
- ----------------------------------- executive officer) and Director
William C. Morris*
/s/ BRIAN T. ZINO President and Director
- -----------------------------------
Brian T. Zino
/s/ THOMAS G. ROSE Treasurer (Principal financial and
- ----------------------------------- accounting officer)
Thomas G. Rose
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 )
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
File No. 2-86008
SELIGMAN MUNICIPAL FUND SERIES, INC.
Post-Effective Amendment No. 31 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
24 (b)(11) Consent of Independent Auditors
24 (b)(11)(a) Opinion and Consent of Colorado Counsel
24 (b)(11)(b) Opinion and Consent of Georgia Counsel
24 (b)(11)(c) Opinion and Consent of Louisiana Counsel
24 (b)(11)(d) Opinion and Consent of Maryland Counsel
24 (b)(11)(e) Opinion and Consent of Massachusetts Counsel
24 (b)(11)(f) Opinion and Consent of Michigan Counsel
24 (b)(11)(g) Opinion and Consent of Minnesota Counsel
24 (b)(11)(h) Opinion and Consent of Missouri Counsel
24 (b)(11)(i) Opinion and Consent of New York Counsel
24 (b)(11)(j) Opinion and Consent of Ohio Counsel
24 (b)(11)(k) Opinion and Consent of Oregon Counsel
24 (b)(11)(l) Opinion and Consent of South Carolina Counsel
24 (b)(17) Financial Data Schedules
Other Exhibits Powers of Attorney
CONSENT OF INDEPENDENT AUDITORS
Seligman Municipal Fund Series, Inc.:
We consent to the use in Post-Effective Amendment No. 31 to Registration
Statement No. 2-86008 of our report dated October 31, 1997, appearing in the
Annual Report to Shareholders for the year ended September 30, 1997,
incorporated by reference in the Statement of Additional Information, and to the
reference to us under the caption "Financial Highlights" in the Prospectus,
which is also part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
- ----------------------------------
DELOITTE & TOUCHE LLP
New York, New York
January 23, 1998
Ireland Stapleton Pryor Pascoe P.C.
January 14, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
With respect to Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Municipal Fund Series, Inc., formerly known as 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
1675 Broadway, Suite 2600, Denver, Colorado 80202
KING & SPALDING
101 Peachtree Street
Atlanta, Georgia 30303-1763
January 10, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 100017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Municipal Fund Series, Inc., we have reviewed the material relative to Georgia
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 "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
Liskow & Lewis
Attorneys at Law
One Shell Square
701 Poydras Street, Suite 5000
New Orleans, Louisiana
December 2, 1997
Writer's Direct Dial No. (504) 556-4112
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
You have requested our updated opinion with respect to certain
Louisiana income tax consequences of an investment in the Louisiana Municipal
Series of shares of the Seligman Municipal Fund Series, Inc. (the "Fund").
In rendering the opinion contained herein, we have relied upon the
accuracy of the facts and representations previously provided to us as follows:
The Fund is a diversified open-ended investment company incorporated in
Maryland on August 8, 1983, which is, and will maintain its status during all
relevant periods as a regulated investment company for federal income tax
purposes as defined in Section 851 of the Internal Revenue Code of 1986, as
amended, (the "Code").
The Fund consists of several series, one of which is the Louisiana
Municipal Series ("Louisiana Series"). Under normal conditions, the Louisiana
Series attempts to invest 100%, and as a matter of fundamental policy, invests
at least 80% of the value of its net assets in debt securities the interest on
which is exempt from regular federal income
<PAGE>
January 20, 1998 LISKOW & LEWIS
Page 2
tax and Louisiana income tax. Such interest may, however, be subject to the
federal alternative minimum tax. In unusual circumstances, the Fund may invest
up to 20% of the value of its net assets on a temporary basis in fixed income
securities, the interest on which is subject to both federal and Louisiana
income tax, pending the investment or reinvestment of those assets in tax-exempt
securities or in order to avoid the necessity of liquidating portfolio
investments to meet redemptions of shares by investors or where market
conditions due to rising interest rates or other adverse factors warrant
temporary investing for defensive purposes.
The Fund's net investment income is declared daily and paid to
shareholders monthly. The Fund distributes substantially all of any taxable net
long and short-term gains realized on investments to shareholders early in the
year following the year in which such gains are realized. The Louisiana Series
notifies its shareholders within sixty (60) days after the close of the year as
to the interest derived from securities which are exempt from Louisiana income
taxes.
By Act 242 of the 1991 Regular Session of the Louisiana Legislature,
Louisiana Revised Statute 47:293(6) was amended by the addition of subparagraph
(d) which reads:
(d) For the purposes of this Paragraph, income distributed
by a trust, partnership, or mutual fund to an individual
taxpayer shall retain the same character in his hands as
it had in the hands of such distributor to the extent such
income similarly retains it character for federal income
tax purposes.
For purposes of confirming the interpretation of this provision of law
by the Louisiana Department of Revenue (the "Department"), we have obtained an
updated ruling (the "Ruling") which acknowledges that to the extent
distributions from a fund such as the Fund, to resident individual-shareholders
are attributable to interest from obligations whose interest is exempt from
Louisiana income tax pursuant to Louisiana law or the income from which
Louisiana is prohibited from taxing by the Constitution or laws of the United
States, fund dividends will be considered Louisiana tax-exempt interest income
when received by the resident individual-shareholder.
With respect to corporations, the amendment to La. R.S. 47:293 is not
clear, and for that reason, we also sought in the Ruling to obtain from the
Department its position as to the appropriate tax treatment of corporations
receiving distributions from a fund such as the Fund. Concerning corporations,
the Department has concluded that to the extent, for federal income tax
purposes, distributions from a fund such as the Fund retain
<PAGE>
January 20, 1998 LISKOW & LEWIS
Page 3
the same character in the hands of the recipient corporation as they had in the
hands of the fund, they will similarly retain their character for Louisiana
income tax purposes.
We have further sought and obtained from the Department as part of the
Ruling the Department's position with respect to the income tax treatment of
income from a fund such as the Fund received by a trust or an estate. For
taxable periods beginning before January 1, 1997, the Department has concluded
that the law is not clear, although the Department is "inclined" to accept
similar treatment by trusts or estates of distributions from a fund such as the
Fund as would be afforded a trust or an estate under federal law. The Department
specifically reserved the right to consider and apply a different interpretation
at any time in the future.
For taxable periods beginning after December 31, 1996, the Department
has concluded that to the extent, for federal income tax purposes, distributions
from a fund such as the Fund retain the same character in the hands of the
recipient trust or estate as they had in the hands of the fund, they will
similarly retain their character for Louisiana income tax purposes. This change
in the Department's conclusion is the result of specific legislation, Act 41 of
the 1996 Regular Session of the Louisiana Legislature, that conformed the
Louisiana income tax applicable to trusts and estates to the corresponding
provisions of the Code. Act 41 is effective for taxable periods beginning after
December 31, 1996.
With regard to each type of possible shareholder in the Fund considered
by the Department, i.e., individual, corporation, trust, or estate, the
Department also stated that the change in fundamental investment policy made by
the Fund allowing it to invest in debt securities the interest from which could
be subject to the federal alternative minimum tax would not affect the
Department's opinion concerning the taxability of the Fund dividends in
Louisiana. Louisiana does not tax interest in a "specified private activity
bond," as defined in Code section 57(a)(5)(C), issued by the State of Louisiana
or its political or governmental subdivisions, its governmental agencies, or
instrumentalities authorized under the laws of the State of Louisiana to issue
tax-exempt obligations.
We understand that the Department has not issued a written policy
setting forth the right of a taxpayer to rely on a private ruling; nor has the
Department issued a formal written policy stating the conditions under which the
Department may revoke or attempt to revoke a private ruling, and whether such
revocation would be retroactively or prospectively applied. Accordingly, there
can be no assurance that the Department will not issue a formal written policy
in the future which is contrary to its current practices with respect to its
adherence to its private rulings.
<PAGE>
January 20, 1998 LISKOW & LEWIS
Page 4
Subject to the foregoing and based on the Ruling, it is our opinion
that to the extent distributions from the Fund to its Louisiana resident
individual shareholders and corporate shareholders, and for tax periods
beginning after December 31, 1996, to trust or estate shareholders, are
attributable to exempt interest generated from tax-exempt obligations of the
State of Louisiana or its political or governmental subdivisions, its
governmental agencies, or instrumentalities authorized under the laws of the
State of Louisiana to issue tax-exempt obligations ("Louisiana Tax-Exempt
Obligations"), such exempt interest will not be included in an individual's
adjusted gross income within the definition of La. R.S. 47:293, or a
corporation's gross income, or a trust's or estate's gross income, nor will it
constitute taxable income of a corporation, a trust, an estate, or a resident
individual within the definition of La. R.S. 47:293. As a result of the
application of the relevant Louisiana statutes, distributions received from the
Fund by a corporation, a resident individual, a trust, or an estate (for trusts
and estates, for taxable periods beginning after December 31, 1996) will not be
subject to Louisiana income tax to the extent such distributions are
attributable to the interest earned on Louisiana Tax-Exempt Obligations. To the
extent that the distributions under the Louisiana Series are derived from
sources other than interest on Louisiana Tax-Exempt Obligations, including long
term or short term capital gains, such distributions will be subject to
Louisiana income tax except to the extent Louisiana is prohibited from taxing
such distributions by the Constitution or laws of the United States.
Because of the uncertainty in the law and the unwillingness of the
Department to commit itself to a binding position, we render no opinion with
respect to the Louisiana tax treatment of distributions from the Fund received
by a trust or an estate for taxable periods beginning before January 1, 1997.
Non-resident individuals, corporations, and trusts and estates
maintaining their legal domicile other than in the State of Louisiana will not
be subject to Louisiana income tax on their Louisiana Series dividends.
No opinion is expressed herein with respect to the legality or the
enforceability of any future policies or changes in policies of the Department
in connection with the binding effect of its private letter rulings.
You have not requested and accordingly, we are not rendering any
opinion with respect to Louisiana franchise, ad valorem, excise, sales, use, or
other taxes other than Louisiana state income taxes applicable to dividend
distributions from Louisiana Tax-Exempt Obligations to shareholders who are
individuals, corporations, trusts, and estates.
<PAGE>
January 20, 1998 LISKOW & LEWIS
Page 5
This opinion is rendered as of the date hereof, and we make no
undertakings to supplement our opinion with facts or circumstances which come to
our attention or changes in the law, rules, regulations or administrative
policies which may affect such opinions.
We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 31 to the Fund Registration Statement filed with
the Securities and Exchange Commission by or on behalf of the Fund in connection
with the Louisiana Series and to the reference to our firm name therein. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
LISKOW & LEWIS
By: /s/ ROBERT S. ANGELICO
-----------------------------
Roberty S. Angelico
Venable, Baetjer and Howard, LLP
Two Hopkins Plaza, Suite 1800
Baltimore, Maryland 21201-2978
December 19, 1997
J. W. Seligman & Co., Incorporated
100 Park Avenue
New York, NY 10017
Re: SELIGMAN MUNICIPAL FUND SERIES, INC.
------------------------------------
Gentlemen:
We have acted as special Maryland counsel for Seligman Municipal Fund
Series, Inc., a Maryland corporation (the "Fund"). As described in the
prospectus of the Fund, the Fund is an open-end, management investment company,
commonly called a mutual fund, which offers separate series of shares, one of
which is the Maryland Municipal Series (the "Maryland Series").
You have advised us that the Maryland Series intends to qualify as a
"regulated investment company" under Part I of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). We express no opinion as to
whether the Maryland Fund qualifies as a regulated investment company under Part
I of Subchapter M of the Code, and we have not been furnished with any IRS
ruling letter or opinion of counsel as to the status of the Maryland Series as a
regulated investment company.
In rendering our opinion, we have assumed that the Maryland Series
qualifies as a regulated investment company under Part I of Subchapter M of the
Code and that dividends paid by the Maryland Series and designated as
exempt-interest dividends as required by Section 852(b)(5) of the Code will
qualify as interest excludable from a shareholder's gross income for federal
income tax purposes under Section 103 of the Code. In addition, we have assumed
that the obligations that are acquired by the Maryland Series have been or will
be issued in strict compliance with all requirements of Maryland law and, where
applicable, Federal law.
Section 10-203 of the Tax-General Article of the Annotated Code of
Maryland establishes the rule that an individual's Maryland adjusted gross
income is the "individual's federal adjusted gross income" with certain
modifications. For this purpose, the term "individual" is defined to generally
include fiduciaries. Md. Code Ann., Tax-General Article ss. 10-101(e). Sections
10-301 and 10-304 of the Tax-General
<PAGE>
J. W. Seligman & Co., Incorporated
December 19, 1997
Page 2
Article of the Annotated Code of Maryland provide that a corporation's Maryland
taxable income is its federal taxable income for the taxable year with certain
modifications. Thus, exempt-interest dividends paid by the Maryland Series and
excludable from federal adjusted gross income under sections 852 and 103(a) of
the Code, are exempt from Maryland state and local income taxes absent a
modification provision to the contrary.
Exempt-interest dividends paid by the Maryland Series and attributable
to Maryland obligations are not an addition to federal adjusted gross income and
are, therefore, exempt from Maryland income taxation. SEE Income Tax Division
Administrative Release No. 5 (October 1, 1995), Md. Tax Rep. P. 13-005 (CCH);
SEE ALSO, Opinion of the Attorney General, Opinion No. 83-050, 68 Op. Att'y.
Gen. 410 (1983) (income derived from interest on Maryland obligations owned by a
mutual fund receives "pass-through" treatment and, as a result, is exempt from
Maryland income taxation when received by a shareholder of the mutual fund).
However, section 10-204(b) of the Tax-General Article provides that in computing
Maryland adjusted gross income, there is added to Federal adjusted gross income
"interest or dividends, less related expenses, attributable to an obligation or
security of: (1) another state; or (2) a political subdivision or authority of
another state." The same addition applies to corporations. Section 10-305(d)(1)
of the Tax-General Article. Accordingly, interest on obligations of states other
than Maryland is subject to Maryland income taxation, whereas interest on
Maryland obligations is exempt from taxation.
If included in federal adjusted gross income, interest or dividends
attributable to an obligation of the United States or an obligation of an
authority, commission, instrumentality, possession or territory of the United
States is subtracted from federal adjusted gross income of a resident to
determine Maryland adjusted gross income. Section 10-207(c) of the Tax-General
Article. The same subtraction applies to corporations. Section 10-307(f) of the
Tax-General Article. This subtraction applies to a distribution or dividend by a
mutual fund of interest or dividends attributable to a United States government
obligation. Section 10-207(c-1) of the Tax-General Article. SEE ALSO COMPTROLLER
V. FIRST UNITED BANK, 578 A.2d 192 (Md. 1990) (applying federal law). The same
subtraction applies to corporations. Section 10-307(g)(4) of the Tax-General
Article. Thus, interest or dividends from the Maryland Series attributable to an
obligation of the United States or an obligation of an authority, commission,
instrumentality, possession or territory of the United States will be exempt
from Maryland state and local income taxes.
<PAGE>
J. W. Seligman & Co., Incorporated
December 19, 1997
Page 3
Section 10-207(i) of the Tax-General Article provides that "profit
realized from the sale or exchange of a bond issued by the State or a political
subdivision of the State" is subtracted from federal adjusted gross income to
determine Maryland adjusted gross income. The same subtraction applies to
corporations. Section 10-307(g)(1) of the Tax-General Article. This subtraction
applies to a distribution or dividend by a mutual fund attributable to profit
realized from the sale or exchange of a bond issued by Maryland or a political
subdivision of Maryland. Income Tax Division Administrative Release No. 5
(October 1, 1995) Md. Tax Rep. P. 13-005 (CCH). In DONESKI V. COMPTROLLER, 605
A.2d 649 (Md. Ct. Spec. App. 1991), CERT. DENIED, 610 A.2d 796 (Md. 1992), CERT.
DENIED, 506 U.S. 1054 (1993), the Maryland Court of Special Appeals held that
the Maryland treatment of the gain from the sale of U.S. Government obligations
must parallel the treatment of gain from the sale of similar Maryland
obligations. For these purposes, a U.S. Government obligation does not include
obligations issued by the District of Columbia, a territory or possession of the
United States, or a department, agency, instrumentality, or political
subdivision of the District, territory, or possession. 31 U.S.C. ss.3124(b).
Thus, the portion of exempt interest dividends that represents gain from the
sale or exchange of a bond issued by Maryland or a political subdivision of
Maryland or the United States Government will be subtracted from federal
adjusted gross income to determine a shareholder's Maryland taxable income.
In COMPTROLLER V. FIRST UNITED BANK & TRUST, 578 A.2d 192 (Md. 1990),
the Maryland Court of Appeals held that a repurchase agreement concerning United
States obligations is in substance a loan from a mutual fund, secured by a
pledge of the United States obligations. ID. at 201. The income realized on a
repurchase agreement is therefore not earned on United States government
obligations and will be subject to Maryland income tax.
Gain realized by a shareholder from the sale or other disposition of
his shares of the Maryland Fund is taxable for federal income tax purposes.
Maryland provides no subtraction for such gains. Therefore, the gain realized
upon the sale or other disposition of shares of the Maryland Fund is taxable for
Maryland income tax purposes.
Under section 265(a)(2) and (4) of the Code, interest on indebtedness
incurred or continued to purchase or carry obligations distributing tax-exempt
interest or shares of a "regulated investment company" paying exempt-interest
dividends is not deductible for Federal income tax purposes. Maryland law does
not provide a subtraction for interest on such indebtedness.
<PAGE>
J. W. Seligman & Co., Incorporated
December 19, 1997
Page 4
Maryland presently imposes income tax on individuals on certain items
of tax preference. Section 10-205(f) provides that 50% of the sum of certain tax
preference items (as defined in Section 10-222) is added to the federal adjusted
gross income of a resident to determine Maryland adjusted gross income. Tax
preference items are generally defined to include items defined under Section 57
of the Internal Revenue Code, with certain modifications and exclusions,
including interest attributable to obligations of the State of Maryland and a
political subdivision or authority of the State.
Based upon the foregoing, we are of the opinion that:
1. Holders of the Maryland Series who are subject to Maryland state and
local income tax will not be subject to tax in Maryland on Maryland Series
dividends 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 which
are attributable to interest on (i) tax-exempt obligations of the State of
Maryland or its political subdivisions or authorities, (ii) interest on
obligations of the United States or an authority, commission, instrumentality,
possession or territory of the United States, or (iii) gain realized by the
Maryland Series from the sale or exchange of bonds issued by Maryland, a
political subdivision of Maryland or the United States Government (excluding
obligations issued by the District of Columbia, a territory or possession of the
United States or a department, agency, instrumentality or political subdivision
of the District of Columbia, a territory or possession).
2. To the extent that distributions of the Maryland Series are
attributable to sources other than those described above, such as (i) interest
on obligations issued by states other than Maryland or (ii) income from
repurchase contracts, such distributions will not be exempt from Maryland state
and local income taxes. In addition, gain realized by a shareholder upon a
redemption or exchange of Maryland Series shares will be subject to Maryland
taxation.
3. Interest on indebtedness incurred (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.
<PAGE>
J. W. Seligman & Co., Incorporated
December 19, 1997
Page 5
This letter is not to be construed as a prediction of a
favorable tax treatment except as expressly stated herein, or as a guaranty of
any tax result, or as a guaranty that a Maryland state taxing authority will not
differ with our conclusions or raise other questions or issues upon audit, or as
a guaranty that any such action may not be judicially sustained.
We have not examined any of the assets to be purchased and
held by the Maryland Series, and express no opinion as to whether the interest
on any such assets would in fact be tax exempt if directly received by a
shareholder; nor have we made any review of the proceedings relating to the
issuance of Maryland or non-Maryland obligations.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to our firm in such
Registration Statement and the prospectus included therein. In giving such
consent we do not thereby admit that we are within the category of persons whose
consent is required by Section 7 of the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
Very truly yours,
/s/ VENABLE, BAETJER AND HOWARD, LLP
------------------------------------------
Venable, Baetjer and Howard, LLP
Palmer & Dodge
One Beacon Street, Boston, Massachusetts 02108-3190
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
December 1, 1997
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Municipal 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
---------------------------
Palmer & Dodge
DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN
COUNSELLORS AT LAW
500 WOODWARD AVENUE, SUITE 4000
DETROIT, MICHIGAN 48226-3425 BLOOMFIELD HILLS, MICHIGAN
TELEPHONE (313) 223-3500 LANSING, MICHIGAN
FACSIMILE (313) 223-3598 GRAND RAPIDS, MICHIGAN
WASHINGTON, D.C.
CHICAGO, ILLINOIS
http://www.dickinson-wright.com
January 26, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Municipal Fund Series, Inc., we have reviewed the material relative to Michigan
Taxes in the Registration Statement. Subject to such review, our opinion as
delivered to you and as filed with the Securities and Exchange Commission
remains unchanged.
We consent to the filing of this consent as an exhibit to the
Registration Statement and to the reference to us under the heading "Michigan
Taxes." In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
Very truly yours,
/s/ DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN
-------------------------------------------------
Dickinson, Wright, Moon, Van Dusen & Freeman
TDH/kh
Faegre & Benson LLP
2200 Norwest Center, 90 South Seventh Street
Minneapolis, Minnesota 55402-3901
January 25, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Dear Sir or Madam:
We are Minnesota tax counsel to Seligman Municipal 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 Municipal Class of
exempt-interest dividends that are payable with respect to shares of the
Minnesota Municipal 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 Municipal 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
Municipal Class, is, and
<PAGE>
Seligman Municipal Fund Series, Inc.
January 25, 1998
Page 2
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 Municipal 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
Municipal 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 Municipal Class, and has made payments to the
shareholders of the Minnesota Municipal Class, so as to meet the 95% test that
is set forth below, whether based on a fiscal or a calendar year basis. We have
relied, for purposes of this opinion, upon the statements in the documents that
we have reviewed and upon all of the representations that have been made to us,
but have made no independent investigation thereof, and express no opinion with
respect thereto.
Minn. Stat. ss.290.01, subd. 19, provides that the starting point for
the computation of Minnesota taxable income is federal taxable income, to which
various additions, subtractions, and modifications are then made. Minn. Stat.
ss.290.01, subd. 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
<PAGE>
Seligman Municipal Fund Series, Inc.
January 25, 1998
Page 3
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 Municipal Class are
derived from interest income on obligations of the State of Minnesota or its
political or governmental subdivisions, municipalities, governmental
<PAGE>
Seligman Municipal Fund Series, Inc.
January 25, 1998
Page 4
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
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 in 1995 denied certiorari in a case in which an Ohio court
upheld an exemption for interest income on
- --------
1 It should be noted that interest income that is derived from
obligations held through repurchase agreements, even though derived
from the specified obligations the interest income from which would be
exempt, will not qualify under these rules, and any dividends that are
attributable to such interest will be subject to the regular Minnesota
personal income tax.
<PAGE>
Seligman Municipal Fund Series, Inc.
January 15, 1998
Page 5
obligations of Ohio governmental issuers, even though interest income on
obligations of non-Ohio governmental issuers was subject to tax. In 1997, the
United States Supreme Court denied certiorari in a subsequent case from Ohio,
involving the same taxpayer and the same issue, in which the Ohio Supreme Court
refused to reconsider the merits of the case on the ground that the previous
final state court judgment barred any claim arising out of the transaction that
was the subject of the previous action. 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
<PAGE>
Seligman Municipal Fund Series, Inc.
January 15, 1998
Page 6
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 Municipal 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.
Subject to certain limitations that are set forth in the Minnesota
rules, Minnesota Municipal 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 Municipal 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 Municipal Class are not excluded in determining
the Minnesota franchise tax on corporations that is measured by taxable income
and alternative minimum taxable income. Minnesota Municipal 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
Municipal 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
<PAGE>
Seligman Municipal Fund Series, Inc.
January 25, 1998
Page 7
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 27, 1998, 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 LLP
---------------------------
FAEGRE & BENSON LLP
BAA:dac
Bryan Cave
3500 One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2100
January 13, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 30 of the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Fund Series, Inc., we have reviewed the material relative to Missouri Taxes in
the Registration Statement. Subject to such review, our opinion as delivered to
you and as filed with the Securities and Exchange Commission remains unchanged.
We consent to the filing of this consent as an exhibit to the
Registration Statement and to the reference to us under the heading "Missouri
Taxes." In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
Sincerely yours,
/s/ BRYAN CAVE LLP
---------------------------
Bryan Cave LLP
Seligman Municipal Fund Series, Inc.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
(212) 558-4000
January 27, 1998
Seligman Municipal Fund Series, Inc.,
100 Park Avenue, 8th Floor,
New York, New York 10017.
Ladies and Gentlemen:
We have acted as counsel to Seligman Municipal 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
Municipal 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 and 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
<PAGE>
Seligman Municipal Fund Series, Inc. -2-
from gross income for Federal income tax purposes, such as interest on bonds
issued by the Government of Puerto Rico and exempt pursuant to Section 745 of
Title 48 of the United States Code.
In connection with this opinion, we have assumed with your consent
that the New York Series of the Fund is a regulated investment company taxable
under 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 the 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 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 any state other than New
York or a
<PAGE>
Seligman Municipal Fund Series, Inc. -3-
political subdivision of any such state. Such dividends would include, for
example, dividends derived from qualifying interest on obligations issued by the
Government of Puerto Rico.
In this regard, we have reviewed the Notices of the New York State
Income Tax Bureau, dated February 18, 1977 and March 7, 1977, expressing the
view that not only "exempt-interest dividends" derived from obligations of other
states and their political subdivisions but all "exempt-interest dividends"
which are attributable to interest on obligations of any issuer other than New
York State or one of its political subdivisions (such as obligations issued by
the Government of Puerto Rico) must be added to Federal adjusted gross income.
Insofar as these Notices conflict with the regulations, which were adopted after
the 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,
/s/ Sullivan & Cromwell
-----------------------------
Sullivan & Cromwell
Squire, Sanders & Dempsey
LLP
Counsellors at Law
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
January 10, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Re: Ohio Municipal Series
Post-Effective Amendment No. 31
-------------------------------
Ladies and Gentlemen:
You have requested our opinion as to the Ohio tax aspects of the
Ohio Municipal Series ("Ohio Series"), which is part of the Seligman Municipal
Fund Series, Inc. (the "Fund"). We understand that the Fund is a
non-diversified, open-end management company organized as a Maryland corporation
in August, 1983. The Fund's articles of incorporation, as amended, (i) authorize
a number of different classes of common stock, one of which is designated the
Ohio Series, and (ii) provide that all consideration received by the Fund from
the issue or sale of shares of each class, together with all investments of such
consideration, all income, earnings and profits thereon, and all funds or
payments allocated thereto by the Board of Directors of the Fund, shall
irrevocably belong to such class, subject only to the liabilities of that class
and to the rights of creditors of the Fund.
We understand that the Ohio Series will invest primarily in
interest-bearing obligations issued by or on behalf of the State of Ohio,
political subdivisions thereof and agencies and instrumentalities of the State
or its political subdivisions ("Ohio Obligations"), and by the governments of
Puerto Rico, the Virgin Islands and Guam and their authorities or municipalities
("Territorial Obligations," and, together with Ohio Obligations, "Obligations").
<PAGE>
Seligman Municipal Fund Series, Inc.
January , 1998
Page 2
We further understand that, based on the opinion of bond counsel with respect to
each issue of Obligations held or to be held by the Ohio Series, rendered on the
date of issuance thereof, interest on each such issue is excluded from gross
income for federal income tax purposes under Section 103(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), its statutory predecessor or
other provisions of federal law, provided that certain representations are
accurate and certain covenants are satisfied.
We understand that the Ohio Series intends to continue to qualify
as a "regulated investment company" within the meaning of Section 851 of the
Code, and to pay "exempt-interest dividends" within the meaning of Section
852(b) of the Code, I.E., dividends that are excludable from the shareholders'
gross income for federal income tax purposes. We have assumed for the purposes
of this opinion that the Ohio Series qualifies and will continue to qualify as a
regulated investment company within the meaning of Section 851 of the Code and
that at all times at least 50 percent of the value of the total assets of the
Ohio Series will consist of Ohio Obligations, or similar obligations of other
states or their subdivisions (but not including, for this purpose, Territorial
Obligations).
Based upon the foregoing and upon an examination of such
documents and an investigation of such other matters of law as we have deemed
necessary, we are of the opinion that under existing law:
1. The Ohio Series is not subject to the Ohio personal income tax
or municipal or school district income taxes in Ohio. The Ohio Series is not
subject to the Ohio corporation franchise tax or the Ohio dealers in intangibles
tax, provided that, if the Ohio Series has a sufficient nexus to the State of
Ohio to be subject to Ohio taxation, such entity shall be exempt from such taxes
only if it timely complies with the annual filing requirement of Section 5733.09
of the Ohio Revised Code. The Ohio Tax Commissioner has waived this annual
filing requirement for every year since 1990, the first tax year to which such
requirement applied.
2. Shareholders who are subject to the Ohio personal income tax
or municipal or school district income taxes in Ohio will not be subject to such
taxes on distributions with respect to shares of the Ohio Series
("Distributions") that are properly attributable to interest on Ohio
Obligations.
3. Shareholders who are subject to the Ohio corporation franchise
tax computed on the net income basis will not be subject to such tax on
Distributions to the extent that such Distributions (a) are properly
attributable to interest on Ohio Obligations, (b) represent "exempt-interest
dividends" for federal income tax purposes, or (c) are described in both (a) and
(b). Shares of the Ohio Series will be included in a Shareholder's tax base for
purposes of computing the Ohio corporation franchise tax on the net worth basis.
<PAGE>
Seligman Municipal Fund Series, Inc.
January , 1998
Page 3
4. Shareholders who are subject to the Ohio personal income tax,
the Ohio corporation franchise tax computed on the net income basis, or
municipal or school district income taxes in Ohio will not be subject to such
taxes on Distributions of profit made on the sale, exchange, or other
disposition of Ohio Obligations, including Distributions of "capital gain
dividends," as defined in Section 852(b)(3)(C) of the Code, properly
attributable to the sale, exchange, or other disposition of Ohio Obligations.
5. Distributions properly attributable to interest on Territorial
Obligations the interest on which is exempt from state income taxes under the
laws of the United States are exempt from the Ohio personal income tax, and
municipal and school district income taxes in Ohio, and, provided such interest
is excluded from gross income for federal income tax purposes, are excluded from
the net income base of the Ohio corporation franchise tax.
6. Distributions properly attributable to proceeds of insurance
paid to the Ohio Series that represent maturing or matured interest on defaulted
Obligations held by the Ohio Series and that are excluded from gross income for
federal income tax purposes are exempt from the Ohio personal income tax and
municipal and school district income taxes in Ohio, and are excluded from the
net income base of the Ohio corporation franchise tax.
We have not examined any of the obligations to be acquired by the
Ohio Series and express no opinion as to whether such obligations, interest
thereon or gain from the sale or other disposition thereof are in fact exempt
from any federal or Ohio taxes.
Respectfully submitted,
/s/ SQUIRE, SANDERS & DEMPSEY L.L.P.
---------------------------------------
Squire, Sanders & Dempsey L.L.P.
<PAGE>
Seligman Municipal Fund Series, Inc.
January , 1998
Page 4
Squire, Sanders & Dempsey
LLP
Counsellors at Law
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
January 10, 1998
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 10017
Re: Seligman Municipal Fund Series, Inc. -- Post-Effective Amendment No. 31
-----------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as Ohio tax counsel with respect to Post Effective
Amendment No. 31 to the Registration Statement (the "Registration Statement") on
Form N-1A for Seligman Municipal Fund Series, Inc. (the "Fund"). We hereby
consent to the filing of this letter as an exhibit to such Registration
Statement and to the reference to our firm under the caption "Taxes -- Ohio
Taxes" in the Prospectus that is a part of the Registration Statement. In giving
such consent, we do not thereby acknowledge that we are within the category of
persons whose consent is required by Section 7 of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
Very truly yours,
/s/ Squire, Sanders & Dempsey L.L.P.
-----------------------------------------
Squire, Sanders & Dempsey L.L.P.
SCHWABE PACWEST CENTER, SUITES 1600-1800
WILLIAMSON 1211 SOUTHWEST FIFTH AVENUE |X| PORTLAND, OREGON 97204-3795
& WYATT TELEPHONE: 503 222-9981 |X| FAX: 503 796-2900 |X| TELEX: 650-686-1360
ROY D. LAMBERT
P.C.
ATTORNEYS AT LAW
November 25, 1997
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.
PORTLAND
OREGON
503 222-9981
|X|
SEATTLE
WASHINGTON
206 622-1711
|X|
VANCOUVER
WASHINGTON
360 694-7551
|X|
WASHINGTON
DISTRICT OF COLUMBIA
202 624-8901
<PAGE>
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.
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:
SCHWABE WILLIAMSON & WYATT
<PAGE>
3) 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
4) 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.
We hereby consent to the filing of this opinion as an exhibit
to your Post-Effective Amendment No. 31 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
Sinkler & Boyd, P.A.
Attorneys at Law
The Palmetto Center
1426 Main Street, Suite 1200
Columbia, South Carolina 29201-2834
November 19, 1997
Seligman Municipal Fund Series, Inc.
100 Park Avenue
New York, New York 100017
Ladies and Gentlemen:
With respect to Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of Seligman
Municipal 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, PA
----------------------------
Sinkler & Boyd, PA
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ JOHN R. GALVIN (L.S.)
---------------------------------
John R. Galvin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
her attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in her name and stead, in her capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ ALICE S. ILCHMAN (L.S.)
---------------------------------
Alice S. Ilchman
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ FRANK A. MCPHERSON (L.S.)
---------------------------------
Frank A. McPherson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ JOHN E. MEROW (L.S.)
---------------------------------
John E. Merow
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
her attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in her name and stead, in her capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ BETSY S. MICHEL (L.S.)
---------------------------------
Betsy S. Michel
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ WILLIAM C. MORRIS (L.S.)
---------------------------------
William C. Morris
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of November, 1997.
/s/JAMES C. PITNEY (L.S.)
---------------------------------
James C. Pitney
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ JAMES Q. RIORDAN (L.S.)
---------------------------------
James Q. Riordan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ RICHARD R. SCHMALTZ (L.S.)
---------------------------------
Richard R. Schmaltz
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ ROBERT L. SHAFER (L.S.)
---------------------------------
Robert L. Shafer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ JAMES N. WHITSON (L.S.)
---------------------------------
James N. Whitson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
MUNICIPAL FUND SERIES, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 18th day of September, 1997.
/s/ BRIAN T. ZINO (L.S.)
---------------------------------
Brian T. Zino
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>011
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NATIONAL CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 92748
<INVESTMENTS-AT-VALUE> 97942
<RECEIVABLES> 1544
<ASSETS-OTHER> 645
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100131
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 371
<TOTAL-LIABILITIES> 371
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 97501
<SHARES-COMMON-STOCK> 12169<F1>
<SHARES-COMMON-PRIOR> 12821<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2935)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5194
<NET-ASSETS> 97481<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5720<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (813)<F1>
<NET-INVESTMENT-INCOME> 4907<F1>
<REALIZED-GAINS-CURRENT> 278
<APPREC-INCREASE-CURRENT> 3753
<NET-CHANGE-FROM-OPS> 9106
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4907)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1074<F1>
<NUMBER-OF-SHARES-REDEEMED> (2069)<F1>
<SHARES-REINVESTED> 343<F1>
<NET-CHANGE-IN-ASSETS> (3833)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3213)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 486<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 813<F1>
<AVERAGE-NET-ASSETS> 97236<F1>
<PER-SHARE-NAV-BEGIN> 7.70<F1>
<PER-SHARE-NII> .39<F1>
<PER-SHARE-GAIN-APPREC> .31<F1>
<PER-SHARE-DIVIDEND> (.39)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.01<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>014
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NATIONAL CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 92748
<INVESTMENTS-AT-VALUE> 97942
<RECEIVABLES> 1544
<ASSETS-OTHER> 645
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100131
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 371
<TOTAL-LIABILITIES> 371
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 97501
<SHARES-COMMON-STOCK> 284<F1>
<SHARES-COMMON-PRIOR> 627<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2935)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5194
<NET-ASSETS> 2279<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 239<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (71)<F1>
<NET-INVESTMENT-INCOME> 168<F1>
<REALIZED-GAINS-CURRENT> 278
<APPREC-INCREASE-CURRENT> 3753
<NET-CHANGE-FROM-OPS> 9106
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (168)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4667<F1>
<NUMBER-OF-SHARES-REDEEMED> (5024)<F1>
<SHARES-REINVESTED> 14<F1>
<NET-CHANGE-IN-ASSETS> (3833)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3213)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 21<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71<F1>
<AVERAGE-NET-ASSETS> 4039<F1>
<PER-SHARE-NAV-BEGIN> 7.70<F1>
<PER-SHARE-NII> .32<F1>
<PER-SHARE-GAIN-APPREC> .32<F1>
<PER-SHARE-DIVIDEND> (.32)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.02<F1>
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>091
<NAME> SELIGMAN MUNICIPAL FUND SERIES - COLORADO CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 46050
<INVESTMENTS-AT-VALUE> 49177
<RECEIVABLES> 923
<ASSETS-OTHER> 130
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50230
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 212
<TOTAL-LIABILITIES> 212
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48224
<SHARES-COMMON-STOCK> 6707<F1>
<SHARES-COMMON-PRIOR> 7193<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1333)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3127
<NET-ASSETS> 49780<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3002<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (459)<F1>
<NET-INVESTMENT-INCOME> 2543<F1>
<REALIZED-GAINS-CURRENT> (1295)
<APPREC-INCREASE-CURRENT> 2352
<NET-CHANGE-FROM-OPS> 3610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2543)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 493<F1>
<NUMBER-OF-SHARES-REDEEMED> (1168)<F1>
<SHARES-REINVESTED> 189<F1>
<NET-CHANGE-IN-ASSETS> (2532)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (38)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 254<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 459<F1>
<AVERAGE-NET-ASSETS> 50708<F1>
<PER-SHARE-NAV-BEGIN> 7.27<F1>
<PER-SHARE-NII> .37<F1>
<PER-SHARE-GAIN-APPREC> .15<F1>
<PER-SHARE-DIVIDEND> (.37)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.42<F1>
<EXPENSE-RATIO> .90<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>094
<NAME> SELIGMAN MUNICIPAL FUND SERIES - COLORADO CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 46050
<INVESTMENTS-AT-VALUE> 49177
<RECEIVABLES> 923
<ASSETS-OTHER> 130
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50230
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 212
<TOTAL-LIABILITIES> 212
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48224
<SHARES-COMMON-STOCK> 32<F1>
<SHARES-COMMON-PRIOR> 35<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1333)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3127
<NET-ASSETS> 238<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (5)<F1>
<NET-INVESTMENT-INCOME> 10<F1>
<REALIZED-GAINS-CURRENT> (1295)
<APPREC-INCREASE-CURRENT> 2352
<NET-CHANGE-FROM-OPS> 3610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10)<F1>
<DISTRIBUTIONS-OF-GAINS> 1<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6<F1>
<NUMBER-OF-SHARES-REDEEMED> (10)<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (2532)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (38)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5<F1>
<AVERAGE-NET-ASSETS> 252<F1>
<PER-SHARE-NAV-BEGIN> 7.27<F1>
<PER-SHARE-NII> .30<F1>
<PER-SHARE-GAIN-APPREC> .15<F1>
<PER-SHARE-DIVIDEND> (.30)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.42<F1>
<EXPENSE-RATIO> 1.81<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>131
<NAME> SELIGMAN MUNICIPAL FUND SERIES-GEORGIA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 49302
<INVESTMENTS-AT-VALUE> 52418
<RECEIVABLES> 912
<ASSETS-OTHER> 105
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53435
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 181
<TOTAL-LIABILITIES> 181
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50029
<SHARES-COMMON-STOCK> 6236<F1>
<SHARES-COMMON-PRIOR> 6482<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 109
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3116
<NET-ASSETS> 50614<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2851<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (445)<F1>
<NET-INVESTMENT-INCOME> 2406<F1>
<REALIZED-GAINS-CURRENT> 118
<APPREC-INCREASE-CURRENT> 1648
<NET-CHANGE-FROM-OPS> 4263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2406)<F1>
<DISTRIBUTIONS-OF-GAINS> (180)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 542<F1>
<NUMBER-OF-SHARES-REDEEMED> (1006)<F1>
<SHARES-REINVESTED> 218<F1>
<NET-CHANGE-IN-ASSETS> (68)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 179
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 250<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 445<F1>
<AVERAGE-NET-ASSETS> 49914<F1>
<PER-SHARE-NAV-BEGIN> 7.87<F1>
<PER-SHARE-NII> .38<F1>
<PER-SHARE-GAIN-APPREC> .28<F1>
<PER-SHARE-DIVIDEND> (.38)<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.12<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>134
<NAME> SELIGMAN MUNICIPAL FUND SERIES-GEORGIA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 49302
<INVESTMENTS-AT-VALUE> 52418
<RECEIVABLES> 912
<ASSETS-OTHER> 105
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53435
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 181
<TOTAL-LIABILITIES> 181
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50029
<SHARES-COMMON-STOCK> 324<F1>
<SHARES-COMMON-PRIOR> 295<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 109
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3116
<NET-ASSETS> 2640<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 132<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (41)<F1>
<NET-INVESTMENT-INCOME> 91<F1>
<REALIZED-GAINS-CURRENT> 118
<APPREC-INCREASE-CURRENT> 1648
<NET-CHANGE-FROM-OPS> 4263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (91)<F1>
<DISTRIBUTIONS-OF-GAINS> (7)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 139<F1>
<NUMBER-OF-SHARES-REDEEMED> (119)<F1>
<SHARES-REINVESTED> 10<F1>
<NET-CHANGE-IN-ASSETS> (68)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 179
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 41<F1>
<AVERAGE-NET-ASSETS> 2315<F1>
<PER-SHARE-NAV-BEGIN> 7.88<F1>
<PER-SHARE-NII> .31<F1>
<PER-SHARE-GAIN-APPREC> .28<F1>
<PER-SHARE-DIVIDEND> (.31)<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.13<F1>
<EXPENSE-RATIO> 1.79<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 MUNICIPAL FUND SERIES-LOUISIANA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 52197
<INVESTMENTS-AT-VALUE> 55561
<RECEIVABLES> 1247
<ASSETS-OTHER> 125
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56933
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 225
<TOTAL-LIABILITIES> 225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53250
<SHARES-COMMON-STOCK> 6790<F1>
<SHARES-COMMON-PRIOR> 7014<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 93
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3364
<NET-ASSETS> 56199<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3349<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (484)<F1>
<NET-INVESTMENT-INCOME> 2865<F1>
<REALIZED-GAINS-CURRENT> 96
<APPREC-INCREASE-CURRENT> 1423
<NET-CHANGE-FROM-OPS> 4401
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2865)<F1>
<DISTRIBUTIONS-OF-GAINS> (753)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 184<F1>
<NUMBER-OF-SHARES-REDEEMED> (651)<F1>
<SHARES-REINVESTED> 243<F1>
<NET-CHANGE-IN-ASSETS> (946)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 755
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 282<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 484<F1>
<AVERAGE-NET-ASSETS> 56376<F1>
<PER-SHARE-NAV-BEGIN> 8.16<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> .23<F1>
<PER-SHARE-DIVIDEND> (.41)<F1>
<PER-SHARE-DISTRIBUTIONS> (.11)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.28<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>074
<NAME> SELIGMAN MUNICIPAL FUND SERIES-LOUISIANA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 52197
<INVESTMENTS-AT-VALUE> 55561
<RECEIVABLES> 1247
<ASSETS-OTHER> 125
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56933
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 225
<TOTAL-LIABILITIES> 225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53250
<SHARES-COMMON-STOCK> 61<F1>
<SHARES-COMMON-PRIOR> 48<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 93
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3364
<NET-ASSETS> 509<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (7)<F1>
<NET-INVESTMENT-INCOME> 17<F1>
<REALIZED-GAINS-CURRENT> 96
<APPREC-INCREASE-CURRENT> 1423
<NET-CHANGE-FROM-OPS> 4401
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17)<F1>
<DISTRIBUTIONS-OF-GAINS> (5)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16<F1>
<NUMBER-OF-SHARES-REDEEMED> (4)<F1>
<SHARES-REINVESTED> 1<F1>
<NET-CHANGE-IN-ASSETS> (946)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 755
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7<F1>
<AVERAGE-NET-ASSETS> 401<F1>
<PER-SHARE-NAV-BEGIN> 8.16<F1>
<PER-SHARE-NII> .34<F1>
<PER-SHARE-GAIN-APPREC> .22<F1>
<PER-SHARE-DIVIDEND> (.34)<F1>
<PER-SHARE-DISTRIBUTIONS> (.11)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.27<F1>
<EXPENSE-RATIO> 1.76<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>081
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MARYLAND CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 50452
<INVESTMENTS-AT-VALUE> 53534
<RECEIVABLES> 966
<ASSETS-OTHER> 346
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54846
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 234
<TOTAL-LIABILITIES> 234
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51210
<SHARES-COMMON-STOCK> 6452<F1>
<SHARES-COMMON-PRIOR> 6765<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 320
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3082
<NET-ASSETS> 52549<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3128<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (480)<F1>
<NET-INVESTMENT-INCOME> 2648<F1>
<REALIZED-GAINS-CURRENT> 384
<APPREC-INCREASE-CURRENT> 952
<NET-CHANGE-FROM-OPS> 4065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2648)<F1>
<DISTRIBUTIONS-OF-GAINS> (281)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 255<F1>
<NUMBER-OF-SHARES-REDEEMED> (786)<F1>
<SHARES-REINVESTED> 218<F1>
<NET-CHANGE-IN-ASSETS> (1477)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 228
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 265<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 480<F1>
<AVERAGE-NET-ASSETS> 53098<F1>
<PER-SHARE-NAV-BEGIN> 7.99<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .19<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> (.04)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.14<F1>
<EXPENSE-RATIO> .90<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 MUNICIPAL FUND SERIES-MARYLAND CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 50452
<INVESTMENTS-AT-VALUE> 53534
<RECEIVABLES> 966
<ASSETS-OTHER> 346
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54846
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 234
<TOTAL-LIABILITIES> 234
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51210
<SHARES-COMMON-STOCK> 253<F1>
<SHARES-COMMON-PRIOR> 256<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 320
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3082
<NET-ASSETS> 2063<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 117<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (36)<F1>
<NET-INVESTMENT-INCOME> 81<F1>
<REALIZED-GAINS-CURRENT> 384
<APPREC-INCREASE-CURRENT> 952
<NET-CHANGE-FROM-OPS> 4065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (81)<F1>
<DISTRIBUTIONS-OF-GAINS> (11)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 64<F1>
<NUMBER-OF-SHARES-REDEEMED> (77)<F1>
<SHARES-REINVESTED> 10<F1>
<NET-CHANGE-IN-ASSETS> (1477)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 228
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 36<F1>
<AVERAGE-NET-ASSETS> 1982<F1>
<PER-SHARE-NAV-BEGIN> 7.99<F1>
<PER-SHARE-NII> .33<F1>
<PER-SHARE-GAIN-APPREC> .20<F1>
<PER-SHARE-DIVIDEND> (.33)<F1>
<PER-SHARE-DISTRIBUTIONS> (.04)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.15<F1>
<EXPENSE-RATIO> 1.81<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>021
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MASSACHUSETTS CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 105385
<INVESTMENTS-AT-VALUE> 109948
<RECEIVABLES> 1713
<ASSETS-OTHER> 96
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 111757
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 501
<TOTAL-LIABILITIES> 501
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 105393
<SHARES-COMMON-STOCK> 13766<F1>
<SHARES-COMMON-PRIOR> 14004<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1300
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4563
<NET-ASSETS> 110011<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6429<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (912)<F1>
<NET-INVESTMENT-INCOME> 5517<F1>
<REALIZED-GAINS-CURRENT> 1305
<APPREC-INCREASE-CURRENT> 1868
<NET-CHANGE-FROM-OPS> 8747
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5517)<F1>
<DISTRIBUTIONS-OF-GAINS> (1069)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1832<F1>
<NUMBER-OF-SHARES-REDEEMED> (2589)<F1>
<SHARES-REINVESTED> 519<F1>
<NET-CHANGE-IN-ASSETS> (21)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1078
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 545<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 912<F1>
<AVERAGE-NET-ASSETS> 109002<F1>
<PER-SHARE-NAV-BEGIN> 7.85<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .22<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> (.08)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.99<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>024
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MASSACHUSETTS CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 105385
<INVESTMENTS-AT-VALUE> 109948
<RECEIVABLES> 1713
<ASSETS-OTHER> 96
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 111757
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 501
<TOTAL-LIABILITIES> 501
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 105393
<SHARES-COMMON-STOCK> 156<F1>
<SHARES-COMMON-PRIOR> 179<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1300
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4563
<NET-ASSETS> 1245<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 82<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (24)<F1>
<NET-INVESTMENT-INCOME> 58<F1>
<REALIZED-GAINS-CURRENT> 1305
<APPREC-INCREASE-CURRENT> 1868
<NET-CHANGE-FROM-OPS> 8747
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (58)<F1>
<DISTRIBUTIONS-OF-GAINS> (14)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38<F1>
<NUMBER-OF-SHARES-REDEEMED> (66)<F1>
<SHARES-REINVESTED> 5<F1>
<NET-CHANGE-IN-ASSETS> (21)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1078
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24<F1>
<AVERAGE-NET-ASSETS> 1389<F1>
<PER-SHARE-NAV-BEGIN> 7.84<F1>
<PER-SHARE-NII> .33<F1>
<PER-SHARE-GAIN-APPREC> .23<F1>
<PER-SHARE-DIVIDEND> (.33)<F1>
<PER-SHARE-DISTRIBUTIONS> (.08)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.99<F1>
<EXPENSE-RATIO> 1.74<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>031
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MICHIGAN CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 134630
<INVESTMENTS-AT-VALUE> 142865
<RECEIVABLES> 2783
<ASSETS-OTHER> 82
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 145730
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 515
<TOTAL-LIABILITIES> 515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 135727
<SHARES-COMMON-STOCK> 16680<F1>
<SHARES-COMMON-PRIOR> 17517<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1253
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8235
<NET-ASSETS> 143370<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8600<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (1172)<F1>
<NET-INVESTMENT-INCOME> 7428<F1>
<REALIZED-GAINS-CURRENT> 1259
<APPREC-INCREASE-CURRENT> 2653
<NET-CHANGE-FROM-OPS> 11407
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7428)<F1>
<DISTRIBUTIONS-OF-GAINS> (1581)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1678<F1>
<NUMBER-OF-SHARES-REDEEMED> (3184)<F1>
<SHARES-REINVESTED> 669<F1>
<NET-CHANGE-IN-ASSETS> (4449)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1593
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 723<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1173<F1>
<AVERAGE-NET-ASSETS> 144746<F1>
<PER-SHARE-NAV-BEGIN> 8.46<F1>
<PER-SHARE-NII> .43<F1>
<PER-SHARE-GAIN-APPREC> .23<F1>
<PER-SHARE-DIVIDEND> (.43)<F1>
<PER-SHARE-DISTRIBUTIONS> (.09)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.60<F1>
<EXPENSE-RATIO> .81<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 MUNICIPAL FUND SERIES-MICHIGAN CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 142865
<INVESTMENTS-AT-VALUE> 134630
<RECEIVABLES> 3583
<ASSETS-OTHER> 82
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 145730
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 515
<TOTAL-LIABILITIES> 515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 135727
<SHARES-COMMON-STOCK> 215<F1>
<SHARES-COMMON-PRIOR> 176<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1253
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8235
<NET-ASSETS> 1845<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 94<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (27)<F1>
<NET-INVESTMENT-INCOME> 67<F1>
<REALIZED-GAINS-CURRENT> 1259
<APPREC-INCREASE-CURRENT> 2653
<NET-CHANGE-FROM-OPS> 11407
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (67)<F1>
<DISTRIBUTIONS-OF-GAINS> (18)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114<F1>
<NUMBER-OF-SHARES-REDEEMED> (82)<F1>
<SHARES-REINVESTED> 7<F1>
<NET-CHANGE-IN-ASSETS> (4449)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1593
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27<F1>
<AVERAGE-NET-ASSETS> 1588<F1>
<PER-SHARE-NAV-BEGIN> 8.45<F1>
<PER-SHARE-NII> .36<F1>
<PER-SHARE-GAIN-APPREC> .23<F1>
<PER-SHARE-DIVIDEND> (.36)<F1>
<PER-SHARE-DISTRIBUTIONS> (.09)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.59<F1>
<EXPENSE-RATIO> 1.71<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 MUNICIPAL FUND SERIES-MINNESOTA SERIES CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 114879
<INVESTMENTS-AT-VALUE> 121950
<RECEIVABLES> 1813
<ASSETS-OTHER> 150
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123913
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 440
<TOTAL-LIABILITIES> 440
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117083
<SHARES-COMMON-STOCK> 15619<F1>
<SHARES-COMMON-PRIOR> 16423<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (681)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7071
<NET-ASSETS> 121674<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7511<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (1054)<F1>
<NET-INVESTMENT-INCOME> 6457<F1>
<REALIZED-GAINS-CURRENT> 758
<APPREC-INCREASE-CURRENT> 979
<NET-CHANGE-FROM-OPS> 8275
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6457)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 753<F1>
<NUMBER-OF-SHARES-REDEEMED> (2127)<F1>
<SHARES-REINVESTED> 570<F1>
<NET-CHANGE-IN-ASSETS> (4736)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1439)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 620<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1054<F1>
<AVERAGE-NET-ASSETS> 124051<F1>
<PER-SHARE-NAV-BEGIN> 7.68<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .11<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.79<F1>
<EXPENSE-RATIO> .85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>044
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MINNESOTA SERIES CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 114879
<INVESTMENTS-AT-VALUE> 121950
<RECEIVABLES> 1813
<ASSETS-OTHER> 150
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123913
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 440
<TOTAL-LIABILITIES> 440
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117083
<SHARES-COMMON-STOCK> 231<F1>
<SHARES-COMMON-PRIOR> 265<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (681)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7071
<NET-ASSETS> 1799<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 115<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (33)<F1>
<NET-INVESTMENT-INCOME> 82<F1>
<REALIZED-GAINS-CURRENT> 758
<APPREC-INCREASE-CURRENT> 979
<NET-CHANGE-FROM-OPS> 8275
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (82)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7<F1>
<NUMBER-OF-SHARES-REDEEMED> (70)<F1>
<SHARES-REINVESTED> 29<F1>
<NET-CHANGE-IN-ASSETS> (4736)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1439)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 33<F1>
<AVERAGE-NET-ASSETS> 1903<F1>
<PER-SHARE-NAV-BEGIN> 7.68<F1>
<PER-SHARE-NII> .33<F1>
<PER-SHARE-GAIN-APPREC> .11<F1>
<PER-SHARE-DIVIDEND> (.33)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.79<F1>
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>101
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MISSOURI CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 49549
<INVESTMENTS-AT-VALUE> 52069
<RECEIVABLES> 1285
<ASSETS-OTHER> 78
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53432
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 192
<TOTAL-LIABILITIES> 192
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50335
<SHARES-COMMON-STOCK> 6749<F1>
<SHARES-COMMON-PRIOR> 6474<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 385
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2520
<NET-ASSETS> 52766<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3028<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (465)<F1>
<NET-INVESTMENT-INCOME> 2563<F1>
<REALIZED-GAINS-CURRENT> 390
<APPREC-INCREASE-CURRENT> 900
<NET-CHANGE-FROM-OPS> 3873
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2563)<F1>
<DISTRIBUTIONS-OF-GAINS> (542)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 754<F1>
<NUMBER-OF-SHARES-REDEEMED> (686)<F1>
<SHARES-REINVESTED> 207<F1>
<NET-CHANGE-IN-ASSETS> 2733
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 543
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 261<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 465<F1>
<AVERAGE-NET-ASSETS> 52057<F1>
<PER-SHARE-NAV-BEGIN> 7.71<F1>
<PER-SHARE-NII> .38<F1>
<PER-SHARE-GAIN-APPREC> .19<F1>
<PER-SHARE-DIVIDEND> (.38)<F1>
<PER-SHARE-DISTRIBUTIONS> (.08)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.82<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>104
<NAME> SELIGMAN MUNICIPAL FUND SERIES-MISSOURI CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 49549
<INVESTMENTS-AT-VALUE> 52069
<RECEIVABLES> 1285
<ASSETS-OTHER> 78
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53432
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 192
<TOTAL-LIABILITIES> 192
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50335
<SHARES-COMMON-STOCK> 61<F1>
<SHARES-COMMON-PRIOR> 73<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 385
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2520
<NET-ASSETS> 474<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 29<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (9)<F1>
<NET-INVESTMENT-INCOME> 20<F1>
<REALIZED-GAINS-CURRENT> 390
<APPREC-INCREASE-CURRENT> 900
<NET-CHANGE-FROM-OPS> 3873
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (20)<F1>
<DISTRIBUTIONS-OF-GAINS> (6)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5<F1>
<NUMBER-OF-SHARES-REDEEMED> (20)<F1>
<SHARES-REINVESTED> 3<F1>
<NET-CHANGE-IN-ASSETS> 2733
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 543
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9<F1>
<AVERAGE-NET-ASSETS> 490<F1>
<PER-SHARE-NAV-BEGIN> 7.72<F1>
<PER-SHARE-NII> .31<F1>
<PER-SHARE-GAIN-APPREC> .18<F1>
<PER-SHARE-DIVIDEND> (.31)<F1>
<PER-SHARE-DISTRIBUTIONS> (.08)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.82<F1>
<EXPENSE-RATIO> 1.80<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>051
<NAME> SELIGMAN MUNICIPAL FUND SERIES-NEW YORK CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 78316
<INVESTMENTS-AT-VALUE> 83986
<RECEIVABLES> 1291
<ASSETS-OTHER> 132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85410
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 310
<TOTAL-LIABILITIES> 310
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79231
<SHARES-COMMON-STOCK> 10086<F1>
<SHARES-COMMON-PRIOR> 10372<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 199
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5670
<NET-ASSETS> 83528<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4850<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (674)<F1>
<NET-INVESTMENT-INCOME> 4176<F1>
<REALIZED-GAINS-CURRENT> 200
<APPREC-INCREASE-CURRENT> 3172
<NET-CHANGE-FROM-OPS> 7600
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4176)<F1>
<DISTRIBUTIONS-OF-GAINS> (213)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1027<F1>
<NUMBER-OF-SHARES-REDEEMED> (1635)<F1>
<SHARES-REINVESTED> 322<F1>
<NET-CHANGE-IN-ASSETS> 1228
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 215
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 411<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 674<F1>
<AVERAGE-NET-ASSETS> 82069<F1>
<PER-SHARE-NAV-BEGIN> 7.98<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> .32<F1>
<PER-SHARE-DIVIDEND> (.41)<F1>
<PER-SHARE-DISTRIBUTIONS> (.02)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.28<F1>
<EXPENSE-RATIO> .82<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 MUNICIPAL FUND SERIES-NEW YORK CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 78316
<INVESTMENTS-AT-VALUE> 83986
<RECEIVABLES> 1291
<ASSETS-OTHER> 132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85410
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 310
<TOTAL-LIABILITIES> 310
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79231
<SHARES-COMMON-STOCK> 190<F1>
<SHARES-COMMON-PRIOR> 144<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 199
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5670
<NET-ASSETS> 1572<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 75<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (22)<F1>
<NET-INVESTMENT-INCOME> 53<F1>
<REALIZED-GAINS-CURRENT> 200
<APPREC-INCREASE-CURRENT> 3172
<NET-CHANGE-FROM-OPS> 7600
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (53)<F1>
<DISTRIBUTIONS-OF-GAINS> (3)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54<F1>
<NUMBER-OF-SHARES-REDEEMED> (13)<F1>
<SHARES-REINVESTED> 5<F1>
<NET-CHANGE-IN-ASSETS> 1228
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 215
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22<F1>
<AVERAGE-NET-ASSETS> 1257<F1>
<PER-SHARE-NAV-BEGIN> 7.98<F1>
<PER-SHARE-NII> .34<F1>
<PER-SHARE-GAIN-APPREC> .33<F1>
<PER-SHARE-DIVIDEND> (.34)<F1>
<PER-SHARE-DISTRIBUTIONS> (.02)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.29<F1>
<EXPENSE-RATIO> 1.73<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 MUNICIPAL FUND SERIES-OHIO CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 144226
<INVESTMENTS-AT-VALUE> 1153467
<RECEIVABLES> 2702
<ASSETS-OTHER> 81
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 156250
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 671
<TOTAL-LIABILITIES> 671
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145296
<SHARES-COMMON-STOCK> 18862<F1>
<SHARES-COMMON-PRIOR> 20051<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1042
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9241
<NET-ASSETS> 154419<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9385<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (1267)<F1>
<NET-INVESTMENT-INCOME> 8118<F1>
<REALIZED-GAINS-CURRENT> 1052
<APPREC-INCREASE-CURRENT> 2122
<NET-CHANGE-FROM-OPS> 11335
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8118)<F1>
<DISTRIBUTIONS-OF-GAINS> (1383)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 548<F1>
<NUMBER-OF-SHARES-REDEEMED> (2495)<F1>
<SHARES-REINVESTED> 758<F1>
<NET-CHANGE-IN-ASSETS> (7674)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1381
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 782<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1267<F1>
<AVERAGE-NET-ASSETS> 156501<F1>
<PER-SHARE-NAV-BEGIN> 8.09<F1>
<PER-SHARE-NII> .42<F1>
<PER-SHARE-GAIN-APPREC> .17<F1>
<PER-SHARE-DIVIDEND> (.42)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.19<F1>
<EXPENSE-RATIO> .81<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 MUNICIPAL FUND SERIES-OHIO CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 144226
<INVESTMENTS-AT-VALUE> 153467
<RECEIVABLES> 2702
<ASSETS-OTHER> 81
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 156250
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 671
<TOTAL-LIABILITIES> 671
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145296
<SHARES-COMMON-STOCK> 141<F1>
<SHARES-COMMON-PRIOR> 124<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1042
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9241
<NET-ASSETS> 1160<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 60<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (17)<F1>
<NET-INVESTMENT-INCOME> 43<F1>
<REALIZED-GAINS-CURRENT> 1052
<APPREC-INCREASE-CURRENT> 2122
<NET-CHANGE-FROM-OPS> 11335
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (43)<F1>
<DISTRIBUTIONS-OF-GAINS> (8)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45<F1>
<NUMBER-OF-SHARES-REDEEMED> (34)<F1>
<SHARES-REINVESTED> 6<F1>
<NET-CHANGE-IN-ASSETS> (7674)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1381
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17<F1>
<AVERAGE-NET-ASSETS> 994<F1>
<PER-SHARE-NAV-BEGIN> 8.13<F1>
<PER-SHARE-NII> .35<F1>
<PER-SHARE-GAIN-APPREC> .17<F1>
<PER-SHARE-DIVIDEND> (.35)<F1>
<PER-SHARE-DISTRIBUTIONS> (.07)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.23<F1>
<EXPENSE-RATIO> 1.71<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 MUNICIPAL FUND SERIES-OREGON CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 53026
<INVESTMENTS-AT-VALUE> 55744
<RECEIVABLES> 1070
<ASSETS-OTHER> 285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57099
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 182
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53481
<SHARES-COMMON-STOCK> 7016<F1>
<SHARES-COMMON-PRIOR> 7499<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 718
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2718
<NET-ASSETS> 55239<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3212<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (499)<F1>
<NET-INVESTMENT-INCOME> 2713<F1>
<REALIZED-GAINS-CURRENT> 748
<APPREC-INCREASE-CURRENT> 1208
<NET-CHANGE-FROM-OPS> 4728
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2713)<F1>
<DISTRIBUTIONS-OF-GAINS> (305)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 270<F1>
<NUMBER-OF-SHARES-REDEEMED> (1006)<F1>
<SHARES-REINVESTED> 253<F1>
<NET-CHANGE-IN-ASSETS> (1968)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 282
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 278<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 499<F1>
<AVERAGE-NET-ASSETS> 55547<F1>
<PER-SHARE-NAV-BEGIN> 7.65<F1>
<PER-SHARE-NII> .38<F1>
<PER-SHARE-GAIN-APPREC> .26<F1>
<PER-SHARE-DIVIDEND> (.38)<F1>
<PER-SHARE-DISTRIBUTIONS> (.04)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.87<F1>
<EXPENSE-RATIO> .90<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 MUNICIPAL FUND SERIES-OREGON CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 53026
<INVESTMENTS-AT-VALUE> 55744
<RECEIVABLES> 1070
<ASSETS-OTHER> 285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57099
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 182
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53481
<SHARES-COMMON-STOCK> 213<F1>
<SHARES-COMMON-PRIOR> 201<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 718
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2718
<NET-ASSETS> 1678<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 85<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (26)<F1>
<NET-INVESTMENT-INCOME> 59<F1>
<REALIZED-GAINS-CURRENT> 748
<APPREC-INCREASE-CURRENT> 1208
<NET-CHANGE-FROM-OPS> 4728
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (59)<F1>
<DISTRIBUTIONS-OF-GAINS> (8)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 81<F1>
<NUMBER-OF-SHARES-REDEEMED> (75)<F1>
<SHARES-REINVESTED> 6<F1>
<NET-CHANGE-IN-ASSETS> (1968)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 282
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26<F1>
<AVERAGE-NET-ASSETS> 1478<F1>
<PER-SHARE-NAV-BEGIN> 7.64<F1>
<PER-SHARE-NII> .31<F1>
<PER-SHARE-GAIN-APPREC> .27<F1>
<PER-SHARE-DIVIDEND> (.31)<F1>
<PER-SHARE-DISTRIBUTIONS> (.04)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.87<F1>
<EXPENSE-RATIO> 1.80<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>151
<NAME> SELIGMAN MUNICIPAL FUND SERIES-SOUTH CAROLINA CL A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 97379
<INVESTMENTS-AT-VALUE> 103262
<RECEIVABLES> 1713
<ASSETS-OTHER> 102
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 105077
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 396
<TOTAL-LIABILITIES> 396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98348
<SHARES-COMMON-STOCK> 12375<F1>
<SHARES-COMMON-PRIOR> 13400<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 450
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5883
<NET-ASSETS> 101018<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6112<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (872)<F1>
<NET-INVESTMENT-INCOME> 5240<F1>
<REALIZED-GAINS-CURRENT> 452
<APPREC-INCREASE-CURRENT> 2382
<NET-CHANGE-FROM-OPS> 8205
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5240)<F1>
<DISTRIBUTIONS-OF-GAINS> (1668)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 621<F1>
<NUMBER-OF-SHARES-REDEEMED> (2188)<F1>
<SHARES-REINVESTED> 542<F1>
<NET-CHANGE-IN-ASSETS> (6196)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1708
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 519<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 872<F1>
<AVERAGE-NET-ASSETS> 103907<F1>
<PER-SHARE-NAV-BEGIN> 8.07<F1>
<PER-SHARE-NII> .40<F1>
<PER-SHARE-GAIN-APPREC> .22<F1>
<PER-SHARE-DIVIDEND> (.40)<F1>
<PER-SHARE-DISTRIBUTIONS> (.13)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.16<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>154
<NAME> SELIGMAN MUNICIPAL FUND SERIES-SOUTH CAROLINA CL D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 97379
<INVESTMENTS-AT-VALUE> 103262
<RECEIVABLES> 2913
<ASSETS-OTHER> 102
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 105077
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 396
<TOTAL-LIABILITIES> 396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98348
<SHARES-COMMON-STOCK> 449<F1>
<SHARES-COMMON-PRIOR> 337<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 450
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5883
<NET-ASSETS> 3663<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 186<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (55)<F1>
<NET-INVESTMENT-INCOME> 131<F1>
<REALIZED-GAINS-CURRENT> 452
<APPREC-INCREASE-CURRENT> 2382
<NET-CHANGE-FROM-OPS> 8205
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (131)<F1>
<DISTRIBUTIONS-OF-GAINS> (42)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 160<F1>
<NUMBER-OF-SHARES-REDEEMED> (67)<F1>
<SHARES-REINVESTED> 19<F1>
<NET-CHANGE-IN-ASSETS> (6196)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1708
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55<F1>
<AVERAGE-NET-ASSETS> 3168<F1>
<PER-SHARE-NAV-BEGIN> 8.06<F1>
<PER-SHARE-NII> .33<F1>
<PER-SHARE-GAIN-APPREC> .23<F1>
<PER-SHARE-DIVIDEND> (.33)<F1>
<PER-SHARE-DISTRIBUTIONS> (.13)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.16<F1>
<EXPENSE-RATIO> 1.74<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
